ACIT, New Delhi V. Shri Raj Kumar Kedia, Delhi

ITA 4808/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3133 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWROOP
• Keywords: Search and seizure; Transactions in derivatives; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.4807/DEL/2015 ASSESSMENT YEAR : 2010-11 ACIT, CENTRAL CIRCLE- 03, NEW DELHI. VS. BEENA KEDIA, E-282, GREATER KAILASH, PART-II, DELHI. PAN : AALPK1803C (APPELLANT) (RESPONDENT) ITA NO.4808/DEL/2015 ASSESSMENT YEAR : 2010-11 ACIT, CENTRAL CIRCLE- 03, NEW DELHI. VS. RAJ KUMAR KEDIA, 59/17, BAHUBALI APARTMENT, NEW ROHTAK ROAD, DELHI. PAN : AAOPK7634A (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. SHEFALI SWROOP, CIT-DR ASSESSEE BY : SHRI AMIT GOYAL, CA DATE OF HEARING : 26-02-2018 DATE OF PRONOUNCEMENT : 28-02-2018 O R D E R PER R. K. PANDA, AM : THE ABOVE TWO APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE SEPARATE ORDERS DATED 23.05.2015 OF THE CIT(A)- 23, NEW DELHI RELATING TO ASSESSMENT YEAR 2010-11. SINCE IDENTICAL GROUNDS H AVE BEEN TAKEN BY THE 2 ITA NOS.4807 & 4808/DEL/2015 REVENUE IN BOTH THE APPEALS, THEREFORE, THESE APPEA LS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.4808/DEL/2015 : 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271AAA AMOUNTING TO RS.13, 93,340/- LEVIED ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT PROVIDING EXCLUSIVE INFORMATION WITHOUT ANY E VIDENCE SUBSTANTIATES THE MANNER OF EARNING UNDISCLOSED INCOME. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE HAD FILED ITS RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF RS.1 ,83,70,980/-. IN THIS CASE, A SEARCH AND SEIZURE OPERATION U/S 132 WAS CARRIED OUT ON 03.03.2010. THE ASSESSMENT WAS COMPLETED ON TOTAL INCOME OF RS.1,85 ,80,976/-. THEREAFTER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271AAA OF THE I.T. ACT. IT WAS SUBMITTED BY THE ASSESSEE THAT IT WAS NOT A CAS E FOR LEVY OF PENALTY U/S 271AAA OF THE I.T. ACT. HOWEVER, THE ASSESSING OFF ICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT IN RE SPECT OF INCOME DISCLOSED DURING THE COURSE OF SEARCH, THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED VIDE ORDER SHEET ENTRY DATED 12.12.2011. IT WAS REPLIED BY THE ASSESSEE THAT DU RING THE COURSE OF SEARCH 3 ITA NOS.4807 & 4808/DEL/2015 PROCEEDINGS, THE INCOME WHICH WAS OFFERED IN THE ST ATEMENT RECORDED U/S 132(4) HAS BEEN DULY DECLARED IN THE RETURN OF INCOME FILE D AND THE ASSESSEE HAD ALSO SUBSTANTIATED THE MANNER IN WHICH THE INCOME WAS EA RNED BY EXPLAINING THAT THE SAME WAS EARNED FROM THE SHARE TRANSACTIONS I.E. SP ECULATIVE AND F&O DEALING. FURTHER, APPLICABLE TAXES HAD ALREADY BEEN PAID. T HE ASSESSING OFFICER, THEREAFTER, OBSERVED THAT THE ASSESSEE HAS NOT PROD UCED ANY DOCUMENTS IN SUPPORT OF HIS CLAIM ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME IS RS.1,39,33,400/- WAS EARNED OR HAS NOT SUBSTANTIATE D THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. HE, THEREFORE, APP LYING THE PROVISIONS OF SECTION 271AAA LEVIED PENALTY OF RS.1,39,33,400/-. 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT IN THE STATEMENT RECORDED U/S 132(4) AT THE TIME OF SEARCH AN AMOUNT OF RS.1,50,0 0,000/- WAS VOLUNTARILY DECLARED WHICH WAS SUO MOTU AND NO INCRIMINATING MATERIAL WAS FOUND. FURTHER, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT AT THE INCOME DECLARED BY THE ASSESSEE AND NO REFERENCE TO ANY INCRIMINATING MATERIAL HAS BEEN MADE. IT WAS ARGUED THAT HAD THE ASSESSEE NOT DECLARED THE A MOUNT, THERE WOULD HAVE BEEN NO ADDITIONAL INCOME AS PER SEIZED MATERIAL. THE ASSESSEE HAS FULLY PAID THE TAXES AND INTEREST THEREON AND IT WAS EXPLAINED THAT THE AFORESAID AMOUNT HAS BEEN EARNED FROM SHARE TRANSACTIONS AND F&O DEALING S. IT WAS FURTHER ARGUED THAT THE ASSESSING OFFICER HIMSELF HAS MENTIONED TH ESE FACTS IN THE ASSESSMENT ORDER AND HAS EVEN ACCEPTED THE HEAD OF INCOME IN W HICH SUCH INCOME WAS 4 ITA NOS.4807 & 4808/DEL/2015 DECLARED BY THE ASSESSEE. THEREFORE, THE REMARKS O F THE ASSESSING OFFICER THAT NO DOCUMENTARY EVIDENCE HAS BEEN FURNISHED IS MISPL ACED. WITHOUT PREJUDICE TO THE ABOVE, IT WAS SUBMITTED THAT NO SPECIFIC QUE RY WAS RAISED AT THE TIME OF RECORDING OF STATEMENT U/S 132(4) TO SUBSTANTIATE T HE MANNER OF EARNING OF DECLARING INCOME. RELYING ON VARIOUS DECISIONS, IT WAS ARGUED THAT THE PENALTY U/S 271AAA IS NOT LEVIABLE. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, LD. CIT(A) DELETED THE PENALTY SO LEVIED BY THE ASSESSING OFFICER BY OBSER VING AS UNDER :- 4.1 I HAVE CONSIDERED THE ASSESSMENT ORDER, THE PE NALTY ORDER, SUBMISSIONS OF THE APPELLANT AND THE SURROUNDING FACTS AND CIRCUMSTANC ES OF THE CASE. THE BASIS FOR CHARGING TAX ON THE APPELLANT IS ADMISSION MADE U/S 132(4) DURING SEARCH AND SEIZURE. ACCORDING TO THE AO, THE SAID ADMISSION WA S BASED ON CERTAIN DOCUMENTS SEIZED DURING THE SEARCH INDICATING SHARE TRANSACTI ONS, INVESTMENTS, MONEY ADVANCED, CASH DEPOSITS IN BANK ACCOUNTS, ETC. IT IS UNDISPUT ED THAT THE APPELLANT ADMITTED TO EARNING UNDISCLOSED INCOME. THE ONLY REASON AO HAS IMPOSED PENALTY U/S 271AAA IS THAT APPELLANT FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. CLAIM OF THE APPELLANT IS THAT THERE WAS N O SUBSTANTIAL DIFFERENCE IN THE RETURNED AND ASSESSED INCOME IMPLYING THAT RETURNED INCOME HAD BEEN ACCEPTED BY THE DEPARTMENT, AND FURTHER THAT THE APPELLANT HAD ADMITTED THE AMOUNT ON OWN VOLITION WITHOUT ANY DOCUMENTARY EVIDENCE AND THERE FORE THE QUESTION OF SUBSTANTIATING SUCH EXCLUSIVE INFORMATION DID NOT A RISE. 4.2 I DO NOT FIND ANY SPECIFIC INSTANCE IN THE ASSE SSMENT ORDER THAT ANY DOCUMENT INDICATING UNDISCLOSED INCOME WAS SEIZED. THEREFORE , THE CLAIM OF THE APPELLANT THAT THE DISCLOSURE MADE WAS EXCLUSIVE INFORMATION WITHO UT ANY EVIDENCE APPEARS CORRECT. FURTHER, I DO NOT FIND THAT APPELLANT WAS CONFRONTE D WITH THE PROVISION CONTAINED U/S 271AAA DURING THE COURSE OF SEARCH AND SPECIFICALLY ASKED TO SUBSTANTIATE HIS CLAIM. THEREFORE, IT CANNOT BE HELD THAT APPELLANT FAILED TO SUBSTANTIATE THE UNDISCLOSED INCOME ADMITTED. 4.3 IN THE ABOVE CIRCUMSTANCES, THE PENALTY IMPOSED CANNOT BE LEGALLY SUSTAINED AND IS CANCELLED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5 ITA NOS.4807 & 4808/DEL/2015 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING FILED A COPY OF THE PUNCHNAMA AND THE STATEMENT RECORDED DURING THE COU RSE OF SEARCH AND SUBMITTED THAT NO SPECIFIC QUERY WAS RAISED. REFER RING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF NEERAT S INGAL VS. ACIT REPORTED IN (2013) 37 TAXMANN.COM 189, HE SUBMITTED THAT THE TR IBUNAL IN THE SAID DECISION HAS HELD THAT IN ABSENCE OF ANY QUERY RAISED BY AUT HORIZED OFFICER DURING THE COURSE OF RECORDING OF STATEMENT U/S 132(4) ABOUT T HE MANNER IN WHICH UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT IT SU BSTANTIATION, PENALTY U/S 271AAA IS NOT LEVIABLE. 8. REFERRING TO THE DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF PR. CIT VS. M/S EMIRATES TECHNOLOGIES PVT. LTD. VID E ITA NO.400/2017 ORDER DATED 18.07.2017, HE SUBMITTED THAT THE HON'BLE HIG H COURT IN THE SAID DECISION HAS UPHELD THE DECISION OF THE TRIBUNAL WHEREIN THE APPEAL FILED BY THE REVENUE WAS DISMISSED ON THE GROUND THAT NO SPECIFIC QUERY HAD BEEN PUT TO THE ASSESSEE BY DRAWING HIS ATTENTION TO THE PROVISIONS OF SECTI ON 271AAA ASKING HIM TO SPECIFY THE MANNER IN WHICH THE UNDISCLOSED INCOME SURRENDERED DURING THE COURSE OF SEARCH HAD BEEN DERIVED. HE ACCORDINGLY SUBMITTED THAT THIS BEING A COVERED MATTER IN FAVOUR OF THE ASSESSEE, THE GROUN DS RAISED BY THE REVENUE SHOULD BE DISMISSED. 6 ITA NOS.4807 & 4808/DEL/2015 9. LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. RELYING ON VARIOUS DECISIONS, SHE DREW TH E ATTENTION OF THE PROPOSITION LAID DOWN BY THE VARIOUS DECISIONS WHICH ARE AS UND ER :- 1. ANAND SANCHETI VS DCIT [ITA NO.305/NAG/2015] WHERE HON'BLE ITAT NAGPUR UPHELD LEVY OF PENALTY U/ S 271AAA ON THE GROUND THAT THE ASSESSEE HAD FAILED TO SPECIFY THE MANNER IN WHICH THE SAID INCOME HAD BEEN DERIVED AND HAD ALSO NOT SUBSTANTIATED THE MAN NER. 2. K. KRISHNAMURTHY VS DCIT [ITA NO.667 (BANG) 2015 ] WHERE HON'BLE ITAT BANGALORE HELD THAT SINCE THE AS SESSEE HAD NOT COMPLIED WITH THE SPECIFIC REQUIREMENTS OF SUB SECTION (2) O F SECTION 271AAA ABOUT PAYMENT OF TAXES AND INTEREST, LEVY OF PENALTY U/S 271AAA CONFIRMED. 3. ACIT VS SHAILESH GOPAL MHASKE [[2017] 86 TAXMANN .COM 263 (PUNE - TRIB.)] WHERE HON'BLE ITAT PUNE HELD THAT WHERE ASSESSEE MA DE STATEMENT THAT INVESTMENT MADE IN LAND/PLOTS AND MOVABLE AND IMMOV ABLE PROPERTIES REPRESENTED ITS UNDISCLOSED INCOME, HOWEVER, HE HAD NOT EXPLAINED SOURCES FROM WHERE HE MADE SAID INVESTMENTS AND TAXES DUE ON SAI D INCOME WERE ALSO NOT PAID, PENALTY IMPOSED UNDER SECTION 271AAA WAS JUST IFIED. 4. ACIT VS. SMT. J. MYTHILI [2013] 35 TAXMANN.COM 8 6 ITAT CHENNAI. WHERE THERE WAS A SEARCH UPON ASSESSEE AND SHE SUBS EQUENT TO SEARCH, IN PURSUANCE OF NOTICE ISSUED UNDER SECTION 153A, FILED RETURNS FOR RELEVANT ASSESSMENT YEARS AND AMOUNT SHOWN IN RETURNS FILED AS OTHER INCOME WAS NOT A PART OF HER REGULAR ACCOUNTS, SUCH AMOUNT WOULD SQUARELY COME WITHIN PU RVIEW OF CONCEALED INCOME LIABLE TO PENALTY UNDER SECTION 271(1)(C). 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. IT IS AN ADMITTED FACT THAT THE ASSESSE E DURING THE COURSE OF SEARCH HAS SURRENDERED THE AMOUNT OF RS.1,50,00,000/- ON WHICH TAX HAS BEEN PAID. A PERUSAL OF THE STATEMENT RECORDED DURING THE COURSE OF SEARCH SHOWS THAT NO SPECIFIC QUERY WAS ASKED BY THE SEARCH PARTY TO THE ASSESSEE REGARDING THE MANNER IN WHICH SUCH UNDISCLOSED INCOME HAS BEEN DE RIVED AND ABOUT ITS SUBSTANTIATION. THEREFORE, IN ABSENCE OF ANY SUCH QUERY PUT BY THE AUTHORIZED 7 ITA NOS.4807 & 4808/DEL/2015 OFFICER OF THE SEARCH PARTY AND IN ABSENCE OF DRAWI NG THE ATTENTION OF THE ASSESSEE TO THE PROVISIONS OF SECTION 271AAA ASKING HIM TO SUBSTANTIATE THE MANNER IN WHICH SUCH UNDISCLOSED INCOME HAD BEEN EA RNED, PENALTY U/S 271AAA IN OUR OPINION IS NOT LEVIABLE IN VIEW OF TH E DECISION OF THE HONBLE DELHI HIGH COURT CITED (SUPRA). THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SURRENDER WAS VOLUNTARILY AND NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH COULD NOT BE CONT ROVERTED BY THE LD. DR. FURTHER, THE SUBMISSIONS OF THE ASSESSEE THAT HAD T HE ASSESSEE NOT SURRENDERED THE INCOME, THE DEPARTMENT COULD NOT HAVE MADE ANY ADDITION IN ABSENCE OF ANY INCRIMINATING MATERIAL ALSO COULD NOT BE CONTROVERT ED BY THE LD. DR. SINCE THE ASSESSEE, IN THE INSTANT CASE, HAS VOLUNTARILY SURR ENDERED AN AMOUNT OF RS.1,50,00,000/- AND PAID TAXES DUE THEREON AND IT WAS EXPLAINED THAT SUCH INCOME WAS ON ACCOUNT OF SHARE TRANSACTIONS I.E. SP ECULATIVE AND F&O DEALING, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD. CIT(A) CANCELLING THE PENALTY SO LEVIED BY THE ASSESSING OFFICER U/S 271AAA OF THE I.T. ACT. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMI SSED. ITA NO.4807/DEL/2015 : 11. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW A ND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271AAA AMOUNTING TO RS.15, 00,000/- LEVIED ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. 8 ITA NOS.4807 & 4808/DEL/2015 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT PROVIDING EXCLUSIVE INFORMATION WITHOUT ANY E VIDENCE SUBSTANTIATES THE MANNER OF EARNING UNDISCLOSED INCOME. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 12. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS RAISED BY THE REVENUE ARE IDENTICAL TO GROUNDS RAISED IN ITA NO.4808/DEL/ 2015. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE REV ENUE HAVE BEEN DISMISSED. FOLLOWING SIMILAR REASONING, THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE DISMISSED. 13. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH FEBRUARY, 2018. SD/- SD/- (BEENA A. PILLAI) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28-02-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI