The ITO, Ward-1(3), RAJKOT-GUJARAT V. Shri Virjibhai Ghushabhai Parsana, RAJKOT-GUJARAT

ITA 465/RJT/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6642 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDE
• Assessee Lawyers: MJ RANPURA
• Keywords: Search and seizure
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY , MEMBER ITA NO. 465 / RJT /201 3 ASS T. YEAR : 20 1 0 - 11 ITO, WARD - 1(3) (APPELLANT) VS SHRI VIRJIBHAI GHUSABHAI PARSANA C/O. J.V. PHARMA 107 - 108, AALAP - B, LIMDA CHOWK, RAJKOT (RESPONDENT) PAN : ADPPP7321P APPELLANT BY : SHRI YOGESH PANDE, DR RESPONDENT BY : SHRI M.J. RANPURA, CA DATE OF HEARING : 2 4 /0 3 /201 7 DATE OF PRONOUNCEMENT : 24 /0 3 /201 7 O R D E R PER K. NAR A SIMHA CHARY, MEMBER, JM : THIS APPEAL BY THE REVENUE IS CHALLENGING THE ORDER DATED 23.9.2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV, AHMEDABAD (FOR SHORT HEREINAFTER REFERRED TO AS LD. CIT(A) ) IN APPEAL NO. CIT(A) - IV/24/RJT/CC - 1/12 - 13 WHEREUNDER THE LD. CIT(A) DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS ONE OF THE PARTNERS OF M/S. J.V. PHARMA AND DERIVING HIS INCOME FROM SUCH FIRM TOWARDS REMUNERATION, INTEREST ON CAPITA L AND SHARE OF PROFIT FROM THE FIRM. ON 25.3.2010, A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE 2 ITA NO. 465/RJT/2013 SHRI VIRJIBHAI G. PARSANA RESIDENTIAL PREMISES OF THE ASSESSEE U/S 132 OF THE INCOME TAX ACT, 1961 (FOR SHORT HEREINAFTER REFERRED TO AS THE ACT ) AND DURING THE COURSE OF 132(4 ) STATEMENT, ASSESSEE VOLUNTARILY SURRENDERED A SUM OF RS.1.40 CRORES ON AD - HOC BASIS AS ADDITIONAL INCOME. SUBSEQUENTLY, ON 3.3.2011, THE ASSESSEE FILED A RETURN DECLARING A SUM OF RS. 1,40,82,040/ - , WHICH INCLUDES THE ADMITTED ADDITIONAL INCOME OF RS.1.40 CRORES. ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT WAS COMPLETED BY ORDER DATED 26.12.2011 ACCEPTING THE RETURN FILED BY THE ASSESSEE, BUT THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SEC. 271AAA(2) OF THE ACT, AS SUCH, LIABLE TO SUFFER PENALTY PROCEEDINGS AND LEVIED PENALTY OF RS.14 CR ORES BY ORDER DATED 26.6.2012 U/S 271AAA OF THE ACT. 3. THE APPEAL PREFERRED BY ASSESSEE WAS ALLOWED BY THE LD. CIT(A), AS SUCH, REVENUE IS BEFORE US IN THIS APPEAL CONTENDING THAT THE LD. CIT(A) ERRED IN LAW AND IN FACT IN DELETING THE PENALTY OF RS. 1 4,00,000/ - LEVIED U/S 271AAA OF THE ACT EVEN THOUGH THE ASSESSEE HAS NOT FULFILLED ALL THE THREE CONDITIONS MANDATORY FOR I MMUNITY FROM LEVY OF PENALTY. 4. PER CONTRA , THE ARGUMENT OF ASSESSING OFFICER IS THAT BY SURRENDER OF RS.1.40 CRORES DURING THE S TATEMENT U/S 132(4) OF THE ACT, THE FIRST CONDITION OF SEC. 271AAA(2) OF THE ACT IS COMPLIED WITH. IN RESPECT OF CONDITION NOS. 2 & 3, AS TO THE MANNER OF DERIVING SUCH INCOME, AND SUBSTANTIATING THEREON IS CONCERNED, LD. COUNSEL SUBMITS THAT IT IS THE DU TY OF ASSESSING OFFICER TO ADVERT TO SUCH ASPECTS WHILE RECORDING THE STATEMENT U/S 132(4) OF THE ACT AS HAS BEEN HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MAHENDRA C. SHAH, (2008) 299 ITR 305 3 ITA NO. 465/RJT/2013 SHRI VIRJIBHAI G. PARSANA (GUJ) . INSOFAR AS THE LAST LIMB OF PAYMENT O F TAXES AND INTEREST THEREON IS CONCERNED, ASSESSEE SUBMITS THAT EVEN BEFORE FILING THE RETURN OF INCOME HE HAS SUBMITTED A LETTER OF REQUEST TO THE AUTHORITIES FOR APPROPRIATING THE SEIZED CASH TOWARDS PAYMENT OF TAXES FOR ASSESSMENT YEAR 2010 - 11 BY WAY O F LETTER DATED 1.3.2011 AND THE BALANCE AMOUNT OF RS.14,56,290/ - WAS PAID BY THE ASSESSEE ON 18.4.2011, I.E. WITHIN 1 MONTHS AFTER FILING OF RETURN, BUT WELL WITHIN PASSING OF THE ASSESSMENT ORDER. HE, THEREFORE, SUBMITS THAT ALL THE CONDITIONS U/S 271A AA(2) OF THE ACT ARE FULFILLED AND NO PENALTY IS LEVI ABLE AGAINST THE ASSESSEE. 5. WE HAVE CAREFULLY GONE THROUGH THE RECORD IN THE LIGHT OF THE STATEMENT MADE ON EITHER SIDE. IT IS ADMITTED FACT THAT DURING THE COURSE OF RECORDING OF 132(4) STATEMENT, A SSESSEE VOLUNTARILY ADMITTED AN ADDITIONAL INCOME OF RS.1.40 CRORES. INSOFAR AS REVEALING THE MANNER IN WHICH THE SAID ADDITIONAL INCOME WAS DERIVED AND SUBSTANTIATING SUCH MANNER IS CONCERNED, THE HON BLE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C. SHA H (SUPRA) HAS CLEARLY HELD AS FOLLOWS : - 15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZ ED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY TH E PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA). 4 ITA NO. 465/RJT/2013 SHRI VIRJIBHAI G. PARSANA SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITER ATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPLANATION 5 IS COMMENDAB LE. 6. IT, THEREFORE, DOES NOT ADMIT OF ANY DOUBT THAT UNLESS A SPECIFIC QUESTION IS ASKED WHILE RECORDING THE STATEMENT OF THE ASSESSEE U/S 132(4) OF THE ACT, OR SUBSEQUENT THERETO, FAILURE CANNOT BE ATTRIBUTED TO THE ASSESSEE AS TO REVEALING OF THE MAN NER OF DERIVING THE ADDITIONAL INCOME OR THE FAILURE TO SUBSTANTIATE SUCH MANNER IN DETAIL. THEREFORE, THE ORDER OF ASSESSING OFFICER IN THIS RESPECT CANNOT BE UPHELD AND THE LD. CIT(A) IS RIGHT IN HIS OBSERVATION ON THIS COUNT VIDE PARA 6.4 OF HIS ORDER. 7. NOW, COMING TO THE PAYMENT OF TAXES AND INTEREST, THE LD. CIT(A) IN HIS ORDER VIDE PARA 6.8 REFERRED TO THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C. SHAH (SUPRA), WHEREIN IT IS EMPHATICALLY HELD THAT THERE IS NO PRESCRIPTION A S TO THE POINT OF TIME WHEN THE TAX HAS TO BE PAID QUA THE AMOUNT OF INCOME DECLARED IN THE STATEMENT MADE U/S 132(4) OF THE ACT. IT IS AN ADMITTED FACT, AND AS IS DEMONSTRATED BEFORE US VIDE PAGES 5 & 6 OF THE PAPER BOOK THAT WAY BACK ON 1.3.2011 ASSESSE E MADE A REQUEST TO THE AUTHORITIES TO APPROPRIATE THE SEIZED CASH TOWARDS THE PAYMENT OF TAXES FOR ASSESSMENT YEAR 2010 - 11. IT IS ALSO AN ADMITTED FACT THAT THE BALANCE 5 ITA NO. 465/RJT/2013 SHRI VIRJIBHAI G. PARSANA AMOUNT OF RS. 14,56,290/ - WAS PAID ON 18.4.2011 BUT APPROPRIATED AT A LATER POINT OF T IME ONLY DUE TO PROCEDURAL COMPLIANCE. THEREFORE, IT IS NOT UPON THE REVENUE TO CONTEND THAT THERE IS FAILURE ON THE PART OF ASSESSEE TO COMPLY WITH THE REQUIREMENTS OF PAYING TAXES AND INTEREST IN RESPECT OF UNDISCLOSED INCOME. 8. ON THE FACE OF THESE FA CTS AND FIGURES, AS WE FIND FROM THE RECORD, AND AS CLEARLY NARRATED BY THE LD. CIT(A) IN HIS ORDER VIDE PARA 6.3 ONWARDS, WE DO NOT FIND ANY FAILURE ON THE PART OF ASSESSEE IN COMPLYING WITH THE REQUIREMENTS OF SEC. 271AAA(2) OF THE ACT, AS SUCH, THE PENA LTY ORDER CANNOT BE SUSTAINED. WE ARE IN PERFECT AGREEMENT WITH THE LD. CIT(A) IN HIS FINDING, AS SUCH, UPHOLD THE SAME. THE GROUNDS OF APPEAL ARE DEVOID OF ANY MERIT AND THE APPEAL IS LIABLE TO BE DISMISSED. WE DO. SO. 9. IN THE RESULT, APPEAL OF THE R EVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 T H MARCH, 2017. SD/ - SD/ - ( S.V. MEHROTRA ) ACCOUNTANT MEMBER (K. NARASIMHA CHARY) JUDICIAL MEMBER RAJKOT , DATE : 2 4 T H MARCH , 201 7 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, RAJKOT 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, RAJKOT 6 ITA NO. 465/RJT/2013 SHRI VIRJIBHAI G. PARSANA SR. NO. PARTICULARS DATE INITIALS PERSON CONCERNED 1 DRAFT DICTATED ON 2 4 .03.2017 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 2 4 .03.2017 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER