Ashok Gupta, Faridabad V. DCIT, Faridabad

ITA 4619/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3046 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMANJANEYULU
• Assessee Lawyers: KAUSHAL C SINGHAL
• Keywords: Search and seizure
• Section: 143(3); 132

Judgement Text

1 ITA NO. 4619/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 4619/DEL/201 6 ( A.Y 2009-10) ASHOK GUPTA HOUSE NO. 114, SECTOR-15 FARIDABAD AAHPG3179R (APPELLANT) VS DCIT CENTRAL CIRCLE-1 FARIDABAD (RESPONDENT) APPELLANT BY SH. KAUSHAL C. SINGHAL RESPONDENT BY SH. B. RAMANJANEYULU, SR. DR ORDER PER SUCHITRA KAMBLE, JM THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORD ER DATED 17/6/2016 PASSED BY CIT(A)-3, GURGAON. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE ORDER OF THE LEARNED DEPUTY COMMISSI ONER OF INCOME TAX, CENTRAL CIRCLE-1, FARIDABAD IS BAD IN LAW AND ON FACTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ASSESSEE DENIES HIS LIABILITIES TO PENALTY LEVIED VIDE ORDER U/S 271AAA OF THE INCOME TAX, 1961 AND CONSEQUENTLY TO PAY THIS PENAL TY BASED ON SUCH ORDER. THE NOTICE ISSUED U/S 156 TO THE ASSES SEE IS THEREFORE BAD IN LAW AND DESERVES TO BE QUASHED. DATE OF HEARING 26.10.2017 DATE OF PRONOUNCEMENT 29.11.2017 2 ITA NO. 4619/DEL/2016 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1 , FRIDABAD, ERRED IN LEVY OF PENALTY U/S 271AAA OF THE INCOME T AX, 1961. 3. A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI ASHOK GUPTA WHO IS DIRECTOR OF M/S ANCHIT ISPAT PVT. LTD., M/S APOLO SYSTEM AND SERVICES (P) LTD. AND OF SEVERAL OTHER COMPANIES ON 29/1/2009. RETURN OF INCOME WAS FIELD BY THE ASSESSEE ON 29/12/2009 DECLARING AN INCOME OF RS.59,50,860/-. ASSESSMENT IN THE INSTANT CASE WAS COMPLETED U/S 143(3) R.W.S. 153B ( 1) (B) OF THE I.T. ACT ON 27/12/2010. AFTER HEARING THE ASSESSEE, THE INCOME RETURNED AT RS.59,50,860/- WAS ACCEPTED. DURING THE COURSE OF S EARCH OPERATION, THE ASSESSEE MADE A SURRENDERED OF RS.50,00,000/- WHICH WAS INCORPORATED BY THE ASSESSEE IN HIS RETURN OF INCOME UNDER THE HEAD INC OME FROM OTHER SOURCES. IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SECTION 132(4), THE ASSESSEE ADMITTED THE UNDISCLOSED INCOME AND SPECIFIED AND S UBSTANTIATED THE MANNER IN WHICH INCOME WAS DERIVED BY STATING THAT THE UND ISCLOSED INCOME WAS EARNED FROM TRADING OF STEEL, THEREFORE, THE CONDIT ION U/S 271AAA STANDS SATISFIED PARTICULARLY WHEN NO OTHER SPECIFIC QUEST ION WAS RAISED BY THE AUTHORIZED OFFICER WHILE ENQUIRING, RECORDING AND C ONCLUDING STATEMENT U/S 132(4). AS REGARD TO TAX ON THE INCOME DECLARED, TH E ASSESSEE INFORMED THAT THE TAX ON TOTAL INCOME OF RS.59,51,080/- INCLUDING INC OME DECLARED OF RS.50,00,000/- WAS PAID TOGETHER WITH INTEREST AS U NDER AS SHOWN IN THE RETURN OF INCOME:- TDS RS.1,94,678/- ADVANCE TAX RS.16,18,128/- PAID U/S 140A RS.1,51,850/- TOTAL RS.19,64,655/- THE ADVANCE TAX OF RS.16,18,128/- CLAIMED AS ABOVE INCLUDED AN AMOUNT OF RS.16 LACS, CASH SEIZED BY THE DEPARTMENT ON 29/ 1/2009. THE ISSUE WITH REGARD TO CREDIT OF SAID RS.16 LACS ON ACCOUNT OF A DVANCE TAX PAYMENT WAS 3 ITA NO. 4619/DEL/2016 SETTLED BY THE CIT(A) VIDE ORDER DATED 25/4/2012. THE ORDER TO GIVE APPEAL EFFECT TO THE ORDER OF THE CIT(A) WAS PASSED BY THE ASSESSING OFFICER ON 4/5/2012. WITH THIS NO DISPUTE REMAINED WITH REGAR D TO PAYMENT OF TAX AND INTEREST ON THE ADMITTED UNDISCLOSED INCOME. THUS, THE CONDITION U/S 271AAA WITH REGARD TO PAYMENT OF TAX TOGETHER WITH INTERES T WAS ALSO SATISFIED. 4. BEING AGGRIEVED THE ORDER OF THE PENALTY U/S 271 AAA THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE EXPLANATION TO SEC TION 271 (1)(C) OF THE INCOME-TAX ACT, 1961 IS SIMILAR TO THE LANGUAGE OF SECTION 271 AAA OF THE ACT. THEREFORE, THE RATIO LAID DOWN IN CASE OF ACIT VS. GEBILAL KANHAIALAL HUF (2012) 25 TAXMAN.COM 214 (S.C) IS APPLICABLE IN THE PRESENT CASE. 6. THE LD. DR RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES AND CIT(A) AND HELD THAT ALL THE AUTHORITIES HAD RIGHTLY IMPOS ED PENALTY U/S 271AAA. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. SECTION 271AAA IS INSERTED IN THE STATUTE BY FINANCE ACT , 2007 (HEREINAFTER REFERRED TO AS 'ACT, 2007') WITH EFFEC T FROM 1.4.2007. SUB-SECTION (1) PROVIDES FOR IMPOSITION OF PENALTY IN ADDITION TO TAX, IF ANY, PAYABLE BY AN ASSESSEE AT THE RATE OF 10 PER CENT OF THE UNDISCLO SED INCOME OF SPECIFIED PREVIOUS YEAR. SUB-SECTION (2) IS AN EXCEPTION TO S UCH LIABILITY OF PENALTY PROVIDED ASSESSEE HAS COMPLIED WITH CERTAIN REQUIRE MENTS AS DETAILED IN CLAUSE (I), (II) AND (III) OF SUB-SECTION (2) AND I F THAT HAS BEEN DONE, SUB-SECTION (2) STATES THAT SUB-SECTION (1) SHALL NOT APPLY TO SUCH AN ASSESSEE. SUB-SECTION (2) ENABLE AN ASSESSEE TO ABSOLVE HIMSELF FROM THE LIABILITY OF PENALTY UNDER SUB-SECTION (1), AFTER OBSERVING/COMPLYING WITH CER TAIN REQUISITES IN THE COURSE OF SEARCH AND SEIZURE AND THEREAFTER: 4 ITA NO. 4619/DEL/2016 (1) ASSESSEE MUST HAVE ADMITTED, IN THE STATEMENT U NDER SECTION 132 (4) OF ACT, 1961, UNDISCLOSED INCOME; AND, MUST ALSO HAVE SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, (2) ASSESSEE MUST ALSO SUBSTANTIATE THE MANNER IN W HICH UNDISCLOSED INCOME WAS DERIVED, I.E., MUST ADDUCE ADEQUATE MATE RIAL TO SUPPORT THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED BY H IM WHICH HE HAS SPECIFIED, IF ANY, IN HIS STATEMENT UNDER SECTION 132 (4); AND, (3) ASSESSEE PAYS TAX TOGETHER WITH INTEREST, IF AN Y, IN RESPECT TO UNDISCLOSED INCOME. IF ALL THESE STEPS HAVE BEEN TAKEN BY ASSESSEE, BES IDES SAVING LIABILITY OF PENALTY UNDER SECTION 271AAA (1), HE WOULD ALSO HIMSELF SAVE FROM ANOTHER PENALTY UNDER SECTION 271 (A) (C). SUB-SECTION (3) FURTHER PROVIDES THAT NO PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON ASSESSEE IN RESPECT TO UNDISCLOSED INCOME REFE RRED TO IN SUB-SECTION (1) IF SUB-SECTION (2) STANDS COMPLIED. THEREFORE, WHEN TH E STEPS PROVIDED IN SUB- SECTION (2) OF SECTION 271AAA ARE OBSERVED BY ASSESSEE, BESIDES THE FACT, HE SHALL ABSOLVE HIMSELF FROM THE LIABILITY OF PENALTY UNDER SUB-SECTION (1) OF SECTION 271AAA , HE WILL ALSO LEGALLY ESCAPE FROM LIABILITY OF PEN ALTY UNDER SECTION 271 (1) (C) IN RESPECT TO UNDISCLOSED INCOME VIDE SUB- SECTION (3) OF SECTION 271AAA . IN THE PRESENT CASE, THE ADVANCE TAX OF RS.16,18,12 8/- CLAIMED AS ABOVE INCLUDED AN AMOUNT OF RS.16 LACS, CASH SEIZED BY TH E DEPARTMENT ON 29/1/2009. THE ISSUE WITH REGARD TO CREDIT OF SAID RS.16 LACS ON ACCOUNT OF ADVANCE TAX PAYMENT WAS SETTLED BY THE CIT(A) VIDE ORDER DATED 25/4/2012. THE ORDER TO GIVE APPEAL EFFECT TO THE ORDER OF THE CIT(A) WAS PASSED BY THE ASSESSING OFFICER ON 4/5/2012. WITH THIS NO DISPUT E REMAINED WITH REGARD TO PAYMENT OF TAX AND INTEREST ON THE ADMITTED UNDISCL OSED INCOME. THUS, THE 5 ITA NO. 4619/DEL/2016 CONDITION U/S 271AAA WITH REGARD TO PAYMENT OF TAX TOGETHER WITH INTEREST WAS ALSO SATISFIED. SECTION 271AAA AND EXPLANATION 5 (2) OF SECTION 271 (1) (C) CAME TO BE CONSIDERED BEFORE HONBLE APEX COURT IN ASSISTANT C OMMISSIONER OF INCOME TAX VS. GEBILAL KANHAILAL (SUPRA). THE HONBLE APEX COU RT SAID THAT IT PROVIDES, WHERE, IN THE COURSE OF SEARCH UNDER SECTION 132 , THE ASSESSEE, FOUND TO BE OWNER OF UNACCOUNTED ASSETS, CLAIMS THAT SUCH ASSET S HAVE BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR PARTLY, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH, THEN IN SUCH A SITUATION, NOTWITHSTANDING T HAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTE R THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CONCEALED PARTICULARS OF HI S INCOME FOR THE PURPOSE OF IMPOSITION OF PENALTY, BUT THERE ARE TWO EXCEPTIONS TO SUCH DEEMING PROVISION OR TO SUCH A PRESUMPTION OF CONCEALMENT WHICH ARE G IVEN IN SUB-CLAUSES (1) AND (2) OF EXPLANATION (5). REFERRING TO CLAUSE (2) OF EXPLANATION 5, THE HONBLE APEX COURT SAID THAT THREE CONDITIONS HAVE TO BE SA TISFIED BY THE ASSESSEE FOR CLAIMING IMMUNITY FOR PAYMENT OF PENALTY THEREUNDER . THEREFORE, WE ARE IN AGREEMENT WITH THE LEGAL PROPO SITION STATED BY THE LD. AR THAT EXPLANATION TO SECTION 271(1)(C) OF THE ACT IS SIMILAR TO THAT OF WORDINGS OF SECTION 271AAA OF THE ACT. SINCE THE ASSESSEE MA DE PAYMENT OF TAX ALONG WITH INTEREST, THE PENALTY U/S 271AAA WILL NOT BE A TTRACTED AS PER THE PROVISIONS OF SECTION 274 OF THE ACT. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2017 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 29/11/2017 R. NAHEED * 6 ITA NO. 4619/DEL/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 26/10/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 26/10/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30.11.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 30.11.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE 7 ITA NO. 4619/DEL/2016 HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.