DCIT, New Delhi V. M/s Aggarwal Associates (Promoters) Ltd., New Delhi

ITA 4356/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65956 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA
• Assessee Lawyers: AMIT GOEL
• Keywords: Revised return
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4356/DEL/2012 ASSESSMENT YEAR : 2005-06 DCIT, AGGARWAL ASSOCIATES (PROMOTERS) CIRCLE-1(1), LTD., 10, NEW RAJDHANI ENCLAVE, NEW DELHI. V. VIKAS MARG, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACA AAACA AAACA AAACA- -- -2789 2789 2789 2789- -- -D DD D APPELLANT BY : SHRI RAM BILASH MEENA, SR. DR. RESPONDENT BY : SHRI AMIT GOEL, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF LD CIT(A) DATED 8.5.2012. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. THE LD CIT(A) ERRED ON FACT IN LAW IN DELETING THE CONCEALMENT PENALTY LEVIED U/S 271(1)( C) OF THE ACT. 2. THE LD CIT(A) HAS INTRERALIE NOT APPRECIATED THAT NO ADDITIONAL INCOME WAS DECLARED FOR ASSESSMENT YEAR 2005-06 THE ASSESSMENT YEAR UNDER CONSIDERATION ADDITIONAL INCOME DE CLARED FOR ANY OTHER ASSESSMENT YEAR IS NOT RELEVANT FOR APPLY ING EXPLANATION 5 TO SECTION 271(1)9 C) IN ASSESSMENT YEAR 2005-06. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL I N ANY TIME ITA NO4356/DEL/12 2 BEFORE OR DURING THE HEARING OF THIS APPEAL. THE APP ELLANT CRAVES LEAVE FOR RESERVING FOR RIGHT TO AMEND, MODIFY. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SE IZURE OPERATION WAS CARRIED OUT ON 18.11.2005 AND DURING SEARCH DOCUM ENTS, EVIDENCING PAYMENT OF ` .21 LAKHS WAS SEIZED. THESE PAYMENTS WERE HELD TO BE MADE OUT OF BOOKS OF ACCOUNTS. THE ASSESSEE SU RRENDERED AN AMOUNT OF ` . 5 CRORES IN ASSESSMENT YEAR 2006-07 WHICH INCLUDED THE AMOUNT OF ` .21 LAKHS AND PAID TAXES AND INTEREST ON THE ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER OBSERVED THAT THE PAYMENTS OF ` .21 LAKHS RELATED TO ASSESSMENT YEAR 2005-06 AND THEREFORE HE MADE ADDITION OF ` .21 LAKHS TO THE RETURNED INCOME IN THE ASSESSMENT YEAR 2005-06 AND PROCEEDED TO IMPOSE PENALTY U/S 271(1) (C) OF THE INCOME TAX ACT, 1961. WHEN CONFRONTED TH E LD AR OF THE ASSESSEE SUBMITTED THAT IT HAS DECLARED THE SAID AMOUNT IN THE ASSESSMENT YEAR 2006-07 AS PART OF SURRENDERED AMOUNT OF ` .5 CRORES 6AND THEREFORE NO INACCURATE PARTICULARS WERE FURNISH ED AND PENALTY WAS NOT IMPOSABLE. THE LD AR FURTHER SUBMITTED THAT A SSESSING OFFICER DID NOT EXCLUDE THE SAID AMOUNT FROM THE INCOME OF A SSESSMENT YEAR 2006-07 RESULTING INTO DOUBLE TAXATION OF THE SAME AM OUNT. RELIANCE WAS PLACED IN THE JUDGMENTS OF FOLLOWING CASES:- 1. LAKSHMIPAT SINGHANIA V. CIT 72 ITR 291 (SC) 2. TATA IRON & STEEL CO. V. UNION OF INDIA 75 ITR 676. 3. THE LD AR OF THE ASSESSEE ALSO RELIED UPON CLAUSE (2) OF EXPLANATION (5) TO SECTION 271(1) (C) READ WITH SECTI ON 132(4) AND ARGUED THAT PENALTY WAS NOT IMPOSABLE. HOWEVER, THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTIONS OF LD AR AND IMP OSED PENALTY OF ` .7,69,903/-. ITA NO4356/DEL/12 3 4. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED AS UNDER:- 1. THAT THE ASSESSEE HAD ALREADY DECLARED THE AMOUNT OF ` .21 LAKHS AS ITS INCOME IN THE ASSESSMENT YEAR 2006-07 AND PENALTY CANNOT BE IMPOSED ON THE FACT THAT THE AMOUNT RELATE D TO ASSESSMENT YEAR 2005-06. 2. THAT HON'BLE CIT(A) AS WELL AS ITAT HAS HELD THAT THE SAID AMOUNT OF ` .21 LAKHS WAS TO BE EXCLUDED FROM THE INCOME OF ASSESSME NT YEAR 2006-07. 3. THAT IN RESPECT OF INCOME SURRENDERED/DECLARED FOR TH E YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND DUE DAT E FOR FILING OF RETURN FOR SUCH YEAR HAS EXPIRED AND ASSESSEE HAS NOT FILED THE RETURN OF INCOME THEN NOTWITHSTANDING THAT SINCE INCO ME IS DECLARED IN THE RETURN FILED AFTER THE DATE OF SEARC H, PENALTY U/S 271 (1) (C) CAN BE LEVIED ONLY IN THE CASE OF SEARCH INITIATED ON OR AFTER 1.6.2007. RELIANCE WAS PLACED IN THE CASE OF C IT V. SDV CHANDRU 266 ITR 175 (MAD) WHEREIN IT WAS HELD BY THE HON'BLE HIGH COURT THAT WHERE THE ASSESSEE HAS NOT DISCLOSED HIS IN COME IN THE RETURNS FILED FOR THE PREVIOUS YEARS WHICH HAV E ENDED PRIOR TO THE DATE OF SEARCH AND IN THE STATEMENT GIVEN U/S 1 32(4), THE ASSESSEE ADMITS THE RECEIPT OF UNDISCLOSED INCOME FOR THOSE YEARS AND THEREFORE PAYS TAXES ON THE UNDISCLOSED INCOME , SUCH UNDISCLOSED INCOME WOULD BE IMMUNIZED FROM THE LEVY O F PENALTY. SIMILARLY, RELIANCE WAS PLACED IN THE CASE O F CIT V. SURESH CHAND MITAL 241 ITR 124 (MP) WHEREIN THE HON' BLE HIGH COURT HAD HELD THAT WHERE THE ASSESSEE GIVES AN EXPLANAT ION THAT ADDITIONAL INCOME IS DECLARED TO BUY PEACE WITH THE DEPARTMENT AND TO COME OUT WITH THE VEXED LITIGATIO N, PENALTY U/S 271(1)( C) WAS NOT LEVIABLE. SIMILARLY, RELIANCE WAS PLACED ON ITA NO4356/DEL/12 4 THE CASE OF CIT V. SURAJ BHAN 294 ITR 481 (P&H) WHER EIN PURSUANT TO SEARCH & SEIZURE OPERATION, THE ASSESSEE FILED REVISED RETURN DECLARING HIRE INCOME AND THE HON'BLE COURT HAD HELD THAT SINCE THE ASSESSEE SURRENDERED ADDITIONAL INCOM E TO BUY PEACE OF MIND NO INFERENCE OF ADMISSION OF CONCEA LMENT COULD BE DRAWN. 5. THE LD CIT(A) AFTER GOING THROUGH THESE SUBMISSIONS O F LD AR DELETED THE PENALTY IMPOSED BY THE ASSESSING OFFICER. TH E RELEVANT PORTION OF LD CIT(A)S ORDER IS REPRODUCED BELOW:- THE SHORT QUESTION TO BE DECIDED IN THIS CASE IS THAT W HETHER PENALTY FOR CONCEALMENT U/S 271(1)( C) IS IMPOSABLE IN THE FACTS OF THE CASE. THE CLAIM OF THE ASSESSEE IS THAT HE HAD MAD E A TOTAL SURRENDER OF ` .5.00 CRORES DURING THE COURSE OF SEARCH WHICH WAS INITIATED ON 18.11.2005. THE ABOVE SURRENDER INCL UDES ` .21 LAKHS ON WHICH PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER. THE APPELLANT HAS DECLARED THIS AMOUNT AS I NCOME FOR ASSESSMENT YEAR 2006-07 WHEREAS ACCORDING TO THE ASSESSING OFFICER IT WAS TO BE ASSESSED FOR ASSESSMENT YEAR 2005-06. THE CLAIM OF THE ASSESSEE IS THAT SINCE THE ADDITIONAL INCOM E HAS BEEN DECLARED U/S 132(4) OF THE IT ACT THEREFORE RE AD WITH EXPLANATION 5 TO SECTION 271(1)( C), THE ASSESSEE CLAIM S THAT IMMUNITY FROM CONCEALMENT PENALTY IS LEVIABLE TO HIM AND THEREFORE THE PENALTY LEVIED BE DELETED. FROM THE SUBMISSIONS MADE BY THE APPELLANT, IT IS OBSERVED THAT RELIANCE H AS BEEN PLACED ON THE DECISION IN THE CASE OF CIT V. SDV CHAN DRU 189 CTR 272 (MAD.) WHEREIN IT IS OBSERVED THAT CLAUSE (2) TO EXPLANATION 5 OF SECTION 271(1)(C) DOES NOT MAKE ANY DISTINCTION BETWEEN THE PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF ITA NO4356/DEL/12 5 SEARCH AND THE PREVIOUS YEAR WHICH IS TO END ON OR AFT ER THE DATE OF SEARCH. THAT IT HAS BEEN HELD IN THIS CASE THAT WHEN THE ASSESSEE FILED HIS RETURNS FOR EARLIER YEARS ADMITTING A L ARGER INCOME AND ALSO PAID TAX TOGETHER WITH INTEREST AFTER HIS STATEMENT WAS RECORDED U/S 132(4), THE ASSESSEE WAS ENTITLE D TO IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C ) A ND PENALTY WAS NOT IMPOSABLE. IN HIS SUBMISSION THE APPELLANT HAS AL SO REFERRED TO THE RELEVANT PORTION OF THE RATIO LAID DOWN IN THE ABOVE CASE. FURTHER TO THIS THE APPELLANT HAS ALSO RELI ED ON THE DECISION IN CASE OF CIT V. SURESH CHAND MITTAL 241 ITR 124 (MP) WHICH HAS BEEN UPHELD BY APEX COURT AS REPORTED IN 2 51 ITR 9. UPON GOING THROUGH THE RATIO OF THE ABOVE DECISIONS, I AM OF THE CONSIDERED VIEW THAT THE FACTS OF THE APPELLANTS CASE ARE SIMILAR AS IN THE CASES REFERRED ABOVE AND ACCORDINGLY NO CONC EALMENT PENALTY IS LEVIABLE IN THE FACTS OF THE APPELLANTS C ASE. THIS IS ONLY A CASE WHERE THE YEAR OF TAXABILITY OF THE AMOUNT HA S BEEN CHANGED WHICH IS THE SUBJECT MATER OF DISPUTE AND NO A DDITIONAL INCOME HAS BEEN ADDED. FURTHER IT IS ALSO RELEVANT TO NOTE THAT A NEW PROVISION BY WAY OF EXPLANATION 5A HAS BEEN INSERT ED IN SECTION 271(1)( C) TO THE IT ACT THROUGH FINANCE ACT , 2007 WHICH IS APPLICABLE FOR SEARCHES INITIATED ON OR AFTER 12.6. 2007. ON A READING OF THE MEMORANDUM EXPLAINING THE PROVISIONS R ELATING TO FINANCE BILL 2007 AS WELL AS THE PROVISIONS CONTAINED I N EXPLANATION 5A OF SUB SECTION 271(1)( C) ITSELF IT IS APPARENT THAT THIS PROVISION EXPRESSLY LAYS DOWN THAT WHERE THE RETURN OF INCOME FOR A PREVIOUS YEAR HAS BEEN FURNISHED BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN THEN NOTWITHSTANDING TH AT SUCH INCOME IS DECLARED IN THE RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, THE ASSESSEE SHALL FOR THE PURPOSES OF SECTION 271(1)(C) BE DEEMED TO HAVE CONCEALED THE PARTICULA RS OF HIS ITA NO4356/DEL/12 6 INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME . THE FACT THAT EXPLANATION 5A HAS BEEN INCORPORATED ON THIS SUBJ ECT FROM 1.6.2007 IMPLICITLY LEADS TO THE CONCLUSION THAT UND ER THE EARLIER PROVISION OF EXPLANATION 5 TO SECTION 271(1) (C) NO P ENALTY WAS IMPOSABLE FOR CONCEALMENT WHERE THE ASSESSEE MAKES A DISCLOSURE OF ADDITIONAL INCOME U/S 132(4) AND FILES HI S RETURN OF INCOME DISCLOSING SUCH ADDITIONAL INCOME, EVEN IF SUCH ADDITIONAL INCOME WAS NOT SHOWN IN HIS RETURN OF INCOME WHICH WAS FILED PRIOR TO THE DATE OF SEARCH. 6. AGGRIEVED THE REVENUE FILLED APPEAL BEFORE THIS T RIBUNAL. 7. AT THE OUTSET, THE LD DR READ OUT LAST PARA OF ASSESS MENT ORDER AND ARGUED THAT IMMUNITY AVAILABLE VIDE CLAUSE (2) O F EXPLANATION-5 TO SECTION 271(1)(C) READ ALONG WITH SECTION 132(4) IS AP PLICABLE ONLY FOR THE CURRENT YEAR AND IT IS NOT A GENERAL AMNESTY TO A SSESSEE IN PRECEDING YEAR AND HE, THEREFORE, RELIED UPON THE O RDER OF ASSESSING OFFICER. 8. THE LD AR OF THE ASSESSEE, ON THE OTHER HAND, READ F ROM THE SYNOPSIS FILED AND ARGUED THAT THE ASSESSEE HAD NOT CONC EALED THE AMOUNT OF ` .21 LAKHS NOR IT HAD FURNISHED INACCURATE PARTICULARS OF INCOME RATHER THE AMOUNT WAS DULY OFFERED FOR INCOME TAX AND TAXES WERE PAID. HE FURTHER ARGUED THAT THE ASSESSING OFFICE R HAS IMPOSED PENALTY MERELY ON THE FACT THAT ASSESSEE HAD SHOWN IT IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 INSTEAD OF ASSESSMEN T YEAR 2005-06. HE FURTHER ARGUED THAT TAX RATES ALMOST WERE SAME IN BOTH THE YEARS AND THEREFORE THERE WAS NO REVENUE LOSS. HE FURTHER ARGUED THAT ADDITION OF ` .21 LAKHS FOR ASSESSMENT YEAR 2006-07 HAS NOT RESULTED INTO DETECTION OF ANY ADDITIONAL INCOME AND BOTH CIT(A) AND ITAT HAD HELD THAT THAT AMOUNT WAS TO BE REDUCED FRO M THE RETURNED ITA NO4356/DEL/12 7 INCOME OF ASSESSMENT YEAR 2006-07. RELIANCE WAS PLACED O N THE JUDGMENTS IN THE FOLLOWING CASES:- 1. HUMBOLDTHE WEDAG INDIA LTD. & OTHERS V. ACIT 26 ITR 845 (CAL.) WHEREIN IT WAS HELD THAT ONCE THE INCOME WAS SUBJECT T O ASSESSMENT IN ANY PARTICULAR YEAR IT CANNOT BE SAID THAT THE INCOME HAD ESCAPED ASSESSMENT IN ANOTHER YEAR. 2. CIT V. SAS PHARMACEUTICALS 335 ITR 259 WHEREIN IT WA S HELD THAT UNLESS IT WAS FOUND THAT THERE IS ACTUAL CONCEALMENT OR NON DISCLOSURE OF PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED EVEN THOUGH THE ASSESSEE WAS EXPOSED DURING SURVEY. IT WAS FURTHER ARGUED THAT THE EXPLANATION (5) TO SEC TION 271(1)( C) IS NOT APPLICABLE IN THE PRESENT CASE AS THE SAID EXPLANAT ION CAN BE APPLIED FROM ASSESSMENT YEAR 2008-09 ONLY. RELIANCE WA S PLACED IN THE CASE OF PREM ARORA V. DCIT ITAT DELHI IN I.T.A. NO.4702. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DURING SEARCH OPERATION, THE ASSESSEE SURRENDERED AN AMOU NT OF ` .5 CRORES U/S 132(4) OF THE INCOME TAX ACT, 1961 WHICH I NCLUDED THE AMOUNT OF ` .21 LAKHS EARNED IN THE YEAR OF ASSESSMENT YEAR 2005-06. CLAUSE (II) OF EXPLANATION 5 TO SECTION 271(1)(C) STIP ULATES THAT PENALTY U/S 271(1)(C) CANNOT BE IMPOSED IN A CASE WHERE IN THE CASE OF A SEARCH THE ASSESSEE MAKES A STATEMENT UNDER SUB SECTION (4 ) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OT HER VALUABLE ARTICLES OR THINGS UNDER HIS CONTROL HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR AS IN HIS RETURN OF I NCOME AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH IN COME HAS BEEN DERIVED AND PAYS TAXES TOGETHER WITH INTEREST. IN THE PRESENT CASE, THE ITA NO4356/DEL/12 8 STATEMENT U/S 132(4) WAS RECODED AND ASSESSEE HAS EXPLAINE D THAT AMOUNT OF ` .21 LAKHS WAS PAID OUT OF BOOKS OF ACCOUNTS AND HAD ALSO GIVEN AN EXPLANATION THAT ADDITIONAL INCOME WAS DECL ARED TO BUY PEACE OF MIND. THEREFORE, THE PENALTY U/S 271(1)( C) WAS NO T IMPOSABLE. MOREOVER THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. SDV CHANDRU (SUPRA) HAD HELD THAT WHERE THE ASSESSEE HAD NO T DISCLOSED HIS INCOME IN THE RETURN FILED FOR THE PREVIOUS YEAR WHICH ENDED PRIOR TO THE DATE OF SEARCH AND IN THE STATEMENT GIVEN U/S 132( 4) THE ASSESSEE ADMITS THE RECEIPT OF UNDISCLOSED INCOME FOR THOSE YEA RS AND THEREAFTER PAYS THE TAXES ON THE UNDISCLOSED INCOME. SU CH UNDISCLOSED INCOME WOULD GET IMMUNIZED FROM THE LEVY OF PENALTY . FOLLOWING THE ABOVE JUDICIAL PRONOUNCEMENTS, WE HOLD THAT PENALTY IN THE PRESENT CASE WAS NOT LEVIABLE AND LD CIT(A) HAS RIGHTLY DELETE D THE SAME. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN T HE ORDER OF LD CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH DAY O F DECEMBER, 2012. SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 07.12.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER ITA NO4356/DEL/12 9 (ITAT, NEW DELHI). DATE OF HEARING 11.10.2012 DATE OF DICTATION 3.12.2012 DATE OF TYPING 3.12.2012 DATE OF ORDER SIGNED BY 7.12.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 7.12.2012 & SENT TO THE BENCH CONCERNED.