JAYANT B PATEL HUF, MUMBAI V. DCIT CC-2(3), MUMBAI

ITA 4619/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8197 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2001-2002
• Appeal Filed On: 27-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SA MADHA MULLAMUDI SR
• Assessee Lawyers: V CHANDRASHEKHAR
• Keywords: Capital Gains
• Section: 271(1)(c); 153A; 274; 48; 13; 153; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ( V I RT UAL COURT DB - II ) , MUMBAI BEFORE SHRI C.N,PRASAD , J M & SHRI M.BALAGAN ESH, A M I TA NO. 4619 /MUM/ 2018 ( ASSESSMENT YEAR : 2001 - 02 ) I TA NO. 46 20 /MUM/ 2018 ( ASSESSMENT YEAR : 200 2 - 0 3 ) I TA NO. 46 21 /M UM/ 2018 ( ASSESSMENT YEAR : 200 3 - 0 4 ) I TA NO. 46 22 /MUM/ 2018 ( ASSESSMENT YEAR : 200 4 - 0 5 ) I TA NO. 46 23 /MUM/ 2018 ( ASSESSMENT YEAR : 200 5 - 0 6 ) I TA NO. 46 24 /MUM/ 2018 ( ASSESSMENT YEAR : 200 6 - 0 7 ) & I TA NO. 46 2 5 /MUM/ 2018 ( ASSESSMENT YEAR : 200 7 - 0 8 ) JAYANT B PATEL HUF B /27, C LIFTON SOCIETY NEAR CENTAUR HOTEL JUHU, MUMBA I 400 049 VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2(3) MUMBAI PAN/GIR NO. AAAHJIO8 1 L (APPELLANT ) .. (RESPONDENT ) ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 2 ASSESSEE BY SHRI V. CHANDRASHEKHAR , ADVOCATE REVENUE BY MS. SA MADHA MULLAMUDI , SR AR DATE OF HEARING 07 / 07 /2020 DATE OF PRONO U N C EMENT 13 / 07 /2020 / O R D E R PER BENCH : TH ESE APPEAL S IN ITA NO. 4619/MUM/2018 , ITA NO.4620/MUM/201 8 , ITA NO .4621/MUM/201 8 , ITA NO.4 622/MUM/201 8 , 4623/MUM/2018 & 4624/MUM/2018 & 46 25/MUM/2018 FOR A.Y. 20 01 - 0 2,200 2 - 03 ,2003 - 04 ,2004 - 05 , 2005 - 06 , 2006 - 07 & 2007 - 08 RESPEC TIVELY ARI SE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 48 , MUMBAI IN APPEAL NO S . CIT(A) - 48/I.T - 42,44 & 48/DC CC2(3)/2017 - 18 , CIT(A) - 48/I.T - 4 3 ,4 5,46 & 4 7 /DC CC2(3)/2017 - 18 DATED 14/06/2018 , 31/05/2018 (LD. CIT(A) IN SHORT) IN THE MA TTER OF IMP OSITION OF PEN ALTY U/S.271(1)(C) R.W.S. 274 & 271(1)(C) RESPECTIVELY OF THE INCOME TAX ACT, 1961. ALSO INCLUDE THE DETAILS OF ASST YEAR 2007 - 08 . 2. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ONLY EFFECTIVE ISSUE INVOLVED IN ALL THESE APPE AL S IS AS TO W HETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMIN G THE LEVY OF PENALTY U/S.271(1 )(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE . HE ALSO SUBMITTED THAT A.Y.2001 - 02 BEING THE FIRST YEAR IN SEARCH ASSESSMENT BE TAKE N U P AS THE LEAD C ASE . THE LD. DR ALSO AGREED F OR THE S AME. HENCE, WI TH THE CONSENT OF BOTH THE PARTIES, APPEAL FOR THE A.Y.2001 - 02 IS TAKEN AS THE LEAD CASE AND TAKEN UP FOR ADJUDICATION. ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 3 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE F IND THAT THE RE WAS A SEARC H U/S.132 OF THE ACT IN THE CASE OF SHRI JAYA NT B PATEL AND PERSONS CONNECTED WITH HIM ON 10/01/2007 IN THE PREMISES OF CLIFFTON SOCIETY, JUHU. PURSUANT TO THE SEARCH , NOTICE S U/S.153A OF THE ACT W ERE ISSUED TO THE ASSESSEE FOR AL L THE ASSESS MENTS YEARS CO MMENCING FROM A.Y.2001 - 02 ONWARDS. IT IS NOT I N DISPUTE THAT AT THE TIME OF SEARCH, CERTAIN D A I R IES NUMBERED AS A - 1 TO A - 6 IN THE PANCHANAMA DATED 10/01/2007 WERE FOUND WHICH ADMITTEDLY CONTAIN ED CERTAIN TRANSACTIONS OF UNDIS CLOS ED I NCOME. T HE ASSESSEE DU RING THE COURSE OF SEARCH HAD GIVEN A DECLARATION S TATEMENT U/S.132(4) OF THE ACT ACCEPTING TO T HE CONTENTS O F THE D A I RIES AND THE RELATED UNDISCLOSED INCOME REFLECTED THEREON BY DULY SUBSTANTIATING THE MANN ER IN WHICH SUCH UNDISC LOSED INCOME WAS DERIVED B Y HIM . IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD DULY DISCLOSED THE TRANSACTIONS REFLECTED IN T HE SAID D A I RIES IN THE RETURN S FILED PURSUANT TO NOTICE U/S.153A OF THE A C T AND PAID TAXES T HEREO N . HEN CE, ALL THE THREE CONDITIONS FO R CLAIMING I MMUNITY F ROM L EVY OF PENALTY VIZ. DECLARATION MADE U/S.132(4) OF THE ACT BY DULY SUBSTANTIATING MANNER IN WHICH SUCH UNDISCLOSED IN COME WAS DE RIVED ; INCLUDING THOSE UNDISCLOSED INCOME IN THE RETURN FILED U/S.153A OF THE ACT AND THE PAYMENT OF T AXES THEREO N WERE DULY COM PLIED WITH BY THE ASSESSEE IN THE INSTANT CASE. HENCE, THE CASE OF THE ASSESSEE FALLS WITHIN THE EXPLANATION - 5 , CLAUSE - 2 OF SE CT ION 271(1) ( C ) OF THE ACT WHEREIN IMMUNITY FROM LEVY OF PENALTY IS SQUARELY PROVIDED IN THE STAT UTE ITS ELF. WE FIND THAT THE LD. AO HAD LEVIED THE PENALTY AS UNDER FOR VARIOUS ASSESSMENT YEARS : - ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 4 ITA NO. AY ON INCOME DECLARED IN RETURN U/S.153A AS GROSS P RO FIT ON DAIRY BUSINESS ON ADDITIONS MADE BY THE ASSESSING OFFICER ON TRANSACTION OF SHARES TOTAL 4619 2001 - 02 311, 899 167,407 47 9,306 4620 2002 - 03 320,484 NA 320,484 4621 2003 - 04 331,193 16,322 347,515 4622 2004 - 05 304,040 NA 304,040 4623 2005 - 06 310 , 361 NA 310,361 4624 2006 - 07 161,058 NA 161,058 4625 2007 - 08 NIL 119,610 119,610 TOTAL 17,39,035 3,0 3,339 20,42, 374 3.1. FRO M THE ABOV E TABLE READ TOGETHER WITH THE PROVISIONS OF EXPLANATION - 5 CLAUSE - 2 OF S ECTION 271(1) (C) OF THE ACT, IT COULD BE SAFELY CONCLUDED THAT NO PENALTY COULD AT ALL BE LEVIED IN THE TOTAL SUMS OF RS.17 ,39,035/ - AS D ETAILED IN THE AFORESAI D TABLE FOR TH E A.YRS. 2001 - 02 TO 2006 - 07 SINCE THE SAME REPRESENTS THE INCOME DISCLOSED BY THE ASSESSEE IN THE RETURNS FILED U/S.153A OF THE A CT , WHICH WOULD BE ELIGIBLE FOR IMMUNITY IN TERMS OF C LAUSE - 2 OF EXPLANATION - 5 OF SECTION 271(1) (C) O F THE ACT . H ENCE, WE ARE I N AGREEMENT WITH THE ARGUMENT ADVANCED BY THE LD. AR THAT NO PENALTY AT ALL COULD BE INITIATED IN RESPECT OF THE SAID SUMS DISCLOSE D BY THE ASSESSEE IN THE RETURNS FILED U/S .153A OF THE ACT. 3.2. THE REMAINING PENALTY OF RS.3 , 03 , 339/ - ARE LE VIED AS UNDER: - ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 5 A.Y.2001 - 02 - RS.1 , 67 , 407/ - A.Y.2003 - 04 - RS. 16,32 2/ - A.Y.2007 - 08 - RS.1,19,610/ - TOTAL RS.3,03,339/ - === = ==== 3.3. WE FIND FROM THE PERUSAL OF THE ASSESSMENT ORDER U/S.143(3) R.W. S.153A OF THE ACT DATED 16/12/2011 F OR THE A.Y.200 1 - 02 THAT THE LD. AO WHILE MAKING THREE ADDITIONS THEREON HAD RECORDED HIS SATISFACTION AS U NDER: - (A) ADDITION TOWARDS UNEXPLAINED C A SH EXPENDIT URE OF RS. 48,554/ - - PENALTY INITIATED FOR CONCEALMENT OF INCOME . (B) ADD ITION ON ACCOUNT OF BOGUS LON G - TERM CAPITAL GAINS O F RS. 5,14,965/ - - PENALTY IN ITIATED FOR I NACCURATE P ARTICULARS OF IN COME OR CONCEALMENT OF INCOME . (C) ADDITION MADE TOWARDS AGR I CULTURAL INCOME TREATING THE SAME AS BOGUS OF R S. 1,00,000/ - - PENALTY INITIATED FOR INACCURATE PA RTICULARS OF INCOME O R CON CEALMENT OF INCOME . 3.4. OUT OF THE AFORESAID THREE AD DITIONS, TH IS TRIBUNAL IN THE QUANT UM APPEAL PROCEEDING S, HAD SUSTAINED ADDITION TOWARDS BOG U S LONG TERM CAPITAL GAIN TO THE EXTENT OF RS.4 , 84 , 965/ - AND ADDITION TOWARDS UNEXP LAINED CASH EXPENDITURE TO THE TUNE OF RS.24,248/ - . 3. 5. WE FIND THAT THE LD. AO HAD LEVIED P ENALT Y FOR THE A.Y.2001 - 02 BY APPLYING THE EXPLANATION - 5 TO SECTION 271(1) (C) O F THE ACT FOR THE FOLLOWING THREE SUMS. ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 6 (A) UNDISCLOSED D AIRY SALES FOUND DURING THE COURSE OF SEARCH REFLECT ED IN THE RETURN FILED U/S.153A OF THE ACT - RS.9,4 5 ,000/ - (B) ADDITION MADE TOWARDS BOGUS LONG TERM CAPITAL GAIN - RS.4,84 ,965/ - (C) A D DITION MADE T OWARDS UNEXPLAINED CASH EXPENDITURE - RS. 24,248/ - ___ TOTAL RS.14 ,52,219/ - 3.6 . WE FIND THAT THE LD. AO IN PAGE 3 IN PARA 8 OF HIS PENALTY ORDER DAT ED 31/07/2017 HAD MENTIONED IN BOLD LETTERS BY SUPPL YING MORE EMPHASIS TH E REO N THAT THE AFORESAID THREE ITEMS WOULD CONSTITUTE UNDISCLOSED INCOME OF THE ASSESSE E ELIGIBLE F OR LEVY OF PEN ALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME (UNDERL I N ING AND EMPHASIS PROVIDED BY US) . 3.7. BUT WE FIND THAT THE LD. AO IN PARA 12 OF HIS PENALTY OR D ER HAD MENTIONED THAT THE PEN ALTY IS LEVIED FOR BOTH CONCEALMENT OF INC OME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE AND ACCORDI NGLY, LEVIED PENALTY OF RS.4 , 79 , 306/ - FOR THE A.Y.2001 - 0 2. THE BREAK - UP OF THE SAID PENALTY IS AS UNDER: - PENAL TY FOR INCOME DISCLOSED IN THE RETURN FILED U/S.153A O F THE ACT - RS.3,11,89 9/ - PENALTY FOR ADDITIONS MADE IN THE 153 A ASSE SSMENT - RS.1 , 67 , 407/ - TOTAL RS.4 ,79,306/ - ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 7 3.8. WE FIND THAT THE LD. AR HAS ALSO PLACED ON R E CORD THE COPY OF THE SHOW - CAUSE NOTICE ISSUED U/S.274 OF THE ACT R.W.S. 271(1) (C) O F THE ACT DATE D 16/12/2011 FOR THE A.Y.2001 - 02 WHEREIN , WE FIND THAT THE LD. AO HAD NOT S TRUC K - OFF THE RELEVANT PORTION AND HAD NOT SPEC IFIED THE OFF ENCE COMMITTED BY THE A SS ESSEE I.E. WHETHER THE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF HIS INCOME. WITH THIS FACTUAL BACKGROUND , THE ISSUE BEFORE US REQUIRES TO BE ADJUDICATED. 4 . IT COULD BE SEEN THAT ORIGINALLY IN THE ASSESSMENT ORDER, THE LD . AO VIDE PAR A 7.2 AND PARA 7.3 PAGE 8 HAD RECORDED HIS SATISFACTION THA T PENALTY PR OCEEDINGS A RE B EING INITIATED SEPARATELY U/S.271(1) (C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME O R CONCEALMENT OF INCOME IN RESPECT OF ONE ADDITION AND IN RESPECT OF ANO TH ER A DDITION PENALTY PROCEEDINGS WERE INITIATED FOR CONC EALMENT OF I NCOME. BUT IN THE FINAL PENALTY ORDER VIDE PARA 8 THEREO N, HE HAD RECORDED HIS SATISFACTION THAT PENALTY IS LEVIABLE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. BUT AGAIN IN PARA 12 OF THE SAME PENALTY ORDER , THE LD. AO STATES THAT PENALTY IS L EVIED F OR BOTH CON CEA LM ENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS CLEARLY SHOWS THE COMPLETE CONFUS ED STATE OF MIND OF THE LD. AO AND NON - APPLICATION OF MIND BY THE L D. AO BY NOT CLEARLY MENTIONING THE SPE CI FIC OFFEN CE COMMITTED B Y THE ASSESS EE AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE DIVERGENT STAND TAKEN AT THE TIME OF RECORDING SATISFACTI ON IN THE ASSESSMENT PROCEEDINGS AND AT THE TIME OF FRAMING OF P EN ALTY ORDER IS VERY MUCH EVIDENT FROM THE AFORE SAID NARRATION OF FACTS. HENCE, THIS IS A CLASSIC CASE OF BOTH NON - APPLICATION OF MIND ON THE PART OF THE LD. AO MENTIONING THE SPECIFIC OFFENCE A ND ALSO INITIAT ING PENALTY O N ONE LIMB OF THE ALL E GED OFFENCE AN D LEVYING PENALTY ON THE OTHER LIMB OF THE ALLEGED ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 8 OFFENCE THEREON . HENCE, THE RA TIO LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAMS ON PERI N CHER Y ITA NO.1154/2014 DATED 05/01/2017 SQ UARELY BECOMES A PPLICAB LE TO THE AS SE SS EE S CASE AND RESPECTFU LLY FOLLOWING THE SAID DECISION, THE PENALTY LEVIED FOR THE A.Y.2001 - 02 IN TH E SUM OF RS.1 , 67 , 407/ - DESERVES TO BE DELETED. 4.1 . THE LD. DR VEHEMENTLY PLACED RELIANCE ON THE RECENT DECISION OF THE HON BLE BOMBAY HIGH COURT IN VE NTURA TEXTILES CASE IN ITA N O.958 /2017 DATED 12/06/2020 BY DRAWING SPECIFIC REFERENCE TO PARA 26 OF THE SAID DECISION THEREO N . THE MAIN CRUX OF THE SAID DECISION IS THAT THE HON BLE BOMBAY HIGH COURT HAD HELD THAT EVEN IF THE PENALTY NOTICE DOE S NOT MENTIO N THE SPECIFIC CHARGE OF OFF E NC E COMMITTED BY THE ASSESSEE , IF THE LD. AO HAS DULY RECORDED HIS SATISFACTION IN THE QUANTUM ASSESSMENT ORDER ITSELF, THE ASSESSEE IS COMP LETELY MADE AWARE OF THE OFFENCE COMMITTED BY HIM AND ALSO THE MIND OF THE LD. AO. SUBS EQUENTLY, I F T HE PENALTY IS LE VI ED BY THE LD. AO ON THE VERY SAME LI MB FOR WHICH SATISFACTION WAS RECORDED IN THE QUAN TUM ASSESSMENT ORDER, THEN THE PENALTY LEV IED WOULD BE SUSTA INABLE IN THE EYES OF LAW AND CANNOT BE STRUCK DOWN MERELY BECAUSE THERE IS A DEFECT IN THE PENALTY NOTICE. IN OTHER WORDS, THE HON BLE BOMBAY HIGH COURT HAD OBSERVED THAT IN THE CASE OF VENTURA TEXTILES, THE ASSESSEE WAS DULY INFORMED ABOUT THE SPECIFIC LIMB ON WHICH PENALTY IS INITIATED BY WAY OF PROPER SATISFACTION RE C ORDED IN TH E QUANTUM ASSE SSMENT ORDER. WE F IND THAT THIS DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF VEN TURA TEXTILES CANNOT BE MADE APPLICABLE TO THE FACTS OF THE INSTANT CASE AND IT IS FACTUALLY DISTINGUISHABLE AS IS EVIDENT FROM THE AFO RESAID NARRATION OF FACTS. 4.2 . WE HOLD THAT T HE DECISION OF HON BLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS SAMSON PER INCHER Y IN ITA NO.1154/ 2014 DATED 05/01/2 017 ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 9 WOULD H OLD THE FI ELD IN THE FACTS OF THE INSTANT CASE. RESPECTFULLY FOLLOWING THE SAID DE CISION, THE PENALTY LEVIED FOR A.Y.2001 - 0 2 IS HEREBY DIRECTED TO BE DELETED. 5 . HENCE WE HOLD THAT IN RESPECT OF PENALTIES LEVIED FOR THE AD DITIONS MADE IN THE SECTION 153A AS SESSMEN TS, T HE DE CISION RENDERED FOR A.Y.2001 - 02 FOR CANCELLATION OF PENALTY IN THE SUM OF R S.1,67,407/ - T HEREON WOULD APPLY WITH EQUAL F ORCE FOR DELETING THE PENALTIES OF RS.1 6,322/ - AND RS.1 ,19,610/ - FOR T HE A. YRS 2003 - 04 AND 2007 - 08 RE S PECTIVELY ALSO , IN VIE W OF THE IDENT ICAL ISSUE. 6 . TO SUM UP , WE HOLD (A ) NO PENALTY UNDER EX PLA NATION - 5 TO SECTION 271 (1)(C) OF THE ACT COULD BE LEVIED IN RESPECT OF UNDISCLOSE D I NCOME FOUND IN THE COURSE OF SEARCH BUT WHICH WERE DULY RETURNED BY THE ASSESSEE IN THE RETURN FILED U/S.153 A OF THE ACT TOGETHER WITH COMPL IANCE OF OTHER CONDITI ONS SUB MITTED IN CL AUSE - 2 OF EXPL ANATION - 5 TO SECTION 271(1)(C) OF THE ACT WHICH PROVIDES IMM UNI TY TO THE ASSESSEE FROM LEVY OF PENALTY. BY TH IS , THE PENALTY LEVIED FOR ALL THE ASSESS MENT YE ARS IN THE TOTAL SUM OF RS.17 , 39 , 035/ - IS DELETED. (B) IN RESPECT OF PEN ALTY O N ADDI TIONS MADE DUR ING THE COURSE OF ASSESSMENT S FRAMED U/S.153A OF THE ACT FOR T HR EE ASSESSMENT Y EARS I.E. A.YRS 2001 - 02, 2003 - 04 AND 2007 - 08, WE HO LD THAT THE SAME IS DELETED FOR RECORDING IMPROPER SATISFACTION ON THE PART OF THE LD . AO BY NOT MEN TIONI NG THE SPECI FIC OFFEN CE COMMITTED BY THE ASSESSEE IN THE QUANTUM AS SESSMENT ORDER AND ALSO FOR INITIATING PENALTY ON ONE LIMB AND LEVYING PENALTY ON THE OTHER LIMB OF THE ALLEGED OFFEN CE. BY THIS, THE ITA NO . 4619/MUM/2018 AND OTHER APPEALS JAYANT B PATEL HUF 10 PENALTY LEVIED FOR THREE ASSESSMENT YEARS IN THE SUM OF RS.3 , 03,339/ - IS DE LETED. 5 .2. ACCORDINGLY, THE GROUNDS RAISED F OR ALL THE ASSESSMENT YEARS ARE ALLOWED. 6 . IN THE RESULT, ALL THE AP PEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 13 / 07 / 2020 BY WAY OF PROPER M ENTIONING IN T HE NOTICE BOARD. SD/ - ( C N PRASAD ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 07 / 2020 KARUNA , SR.PS COPY OF THE O RDER FORWARDED TO : BY ORDER, ( ASSTT. REGIST RAR) ITAT, MU MBAI 1. THE APPELLANT 2. THE RES PONDENT. 3. T HE CIT(A), MUMBAI. 4. CIT 5. DR, ITA T, MUMBAI 6. GUARD FILE. //TR U E COPY//