Vipin Kumar, Hosur V. ITO, Salem

ITA 487/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8839 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: LAKSHMICHAND NAHATA
• Keywords: Search and seizure
• Section: 139(5); 132; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.487/MDS/2016 ' (' / ASSESSMENT YEAR : 2007-08 SHRI VIPIN KUMAR, HIG 5, AVALAPALLI HOUSING BOARD, BRINDAVAN NAGAR, PHASE VII,TNHB HOSUR 636 109. PAN : AAFPB 9262 Q V. THE INCOME TAX OFFICER, CENTRAL CIRCLE, SALEM. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI LAKSHMICHAND NAHATA, FCA ,-*+ . / / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT 0 . 1$ / DATE OF HEARING : 05.05.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 15.07.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 18, CHEN NAI, DATED 19.02.2016 AND PERTAINS TO ASSESSMENT YEAR 2007-08, CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.487/MDS/16 2. SHRI LAKSHMICHAND NAHATA, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THERE WAS SEARCH IN THE PR EMISES OF THE ASSESSEE ON 13.03.2009. A NOTICE UNDER SECTION 153 C OF THE ACT WAS ISSUED. THE ASSESSEE FILED RETURN OF INCOME AD MITTING TOTAL INCOME OF ` 56,37,130/-. THE ASSESSMENT WAS COMPLETED ON 30.12.2010. ACCORDING TO THE LD. REPRESENTATIVE, T HE RETURN FILED BY THE ASSESSEE WAS ADMITTED BY THE ASSESSING OFFICER WITHOUT MAKING ANY FURTHER ADDITION. THE RETURN FILED CONSEQUENT TO THE NOTICE ISSUED UNDER SECTION 153C OF THE ACT, ON 26.11.2010 IS THE FIRST RETURN FILED BY THE ASSESSEE. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT HE DISCLOSED ENTIRE INCOME IN THE RETURN OF INCOME AND THE SAME WAS ACCEPTED WITHOUT ANY FURTHER ADDITION, THEREFORE, T HERE CANNOT BE ANY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFICER REJECTED THE EXPLANATION OF T HE ASSESSEE AND LEVIED PENALTY ON THE GROUND THAT THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME EITHER UNDER SECTION 139(1) OR WIT HIN THE EXTENDED PERIOD UNDER SECTION 139(5) OF THE ACT. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE RETURN FILED BY THE ASSESSE E CANNOT BE TREATED AS THE RETURN FILED VOLUNTARILY. THE CIT( APPEALS) HAS 3 I.T.A. NO.487/MDS/16 CONFIRMED THE ORDER OF THE ASSESSING OFFICER AFTER REFERRING TO EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. 3. REFERRING TO EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED T HAT THERE IS NO MANDATE TO APPLY AUTOMATICALLY. THE LD. REPRESENTA TIVE PLACED HIS RELIANCE ON THE DECISION OF THIS BENCH OF THE TRIBU NAL IN SHRI A.V. ELANGO V. ITO IN I.T.A. NOS.1768 TO 1770/MDS/2012 D ATED 26.11.2012. ACCORDING TO THE LD. REPRESENTATIVE, T HE RETURN FILED CONSEQUENT TO THE NOTICE ISSUED UNDER SECTION 153C OF THE ACT HAS TO BE CONSTRUED AS FILED UNDER SECTION 139(1) OF TH E ACT. THEREFORE, THERE IS NO QUESTION OF LEVY OF PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT. THE LD. REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISION OF THIS BENCH IN TIRUPATHY CONSTRUCTION COMPANY V. DCI T IN I.T.A. NOS.1203 & 1204/MDS/2013 DATED 23.08.2013. THE LD. REPRESENTATIVE HAS ALSO PLACED HIS RELIANCE ON THE DECISION OF CUTTACK BENCH OF THIS TRIBUNAL IN SARAT CHANDRA SAH OO V. DCIT (2015) 152 ITD 326 AND SUBMITTED THAT WHEN THE ASS ESSEE HAS NOT FILED RETURN EARLIER AND THE RETURN WAS FILED ONLY CONSEQUENT TO THE NOTICE UNDER SECTION 153C OF THE ACT, THE RETURN FI LED BY THE ASSESSEE HAS TO BE CONSTRUED AS RETURN FILED UNDER SECTION 139(1) 4 I.T.A. NO.487/MDS/16 OF THE ACT FOR THE FIRST TIME, THEREFORE, THERE CAN NOT BE ANY LEVY OF PENALTY. THE LD. REPRESENTATIVE HAS ALSO PLACED HI S RELIANCE ON THE DECISION OF THIS TRIBUNAL IN S.M.J. FOUNDATION V. D CIT IN I.T.A. NO.549/MDS/2011 DATED 24.06.2011. THE LD. REPRESEN TATIVE HAS ALSO PLACED HIS RELIANCE ON THE DECISION OF KOLKATA BENCH OF THIS TRIBUNAL IN DCIT V. PRATAP PROPERTIES PVT. LTD. IN I.T.A. NOS.1386 TO 1388/KOL/2010 DATED 10.02.2016. 4. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME. THERE WAS SEARCH CONDUCTED UNDER SECTIO N 132 OF THE ACT ON 13.03.2009 IN THE CASE OF SHRI KUSHAL RAJ BO KADIA, FATHER OF THE ASSESSEE. DURING THE COURSE OF SEARCH OPERATIO N, IT WAS FOUND THAT THE ASSESSEE HAS PURCHASED A LAND TO THE EXTEN T OF 6.42 ACRES AT HOSUR. SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF INVESTMENT TO THE EXTENT OF ` 59,78,930/- FOR PURCHASE OF 6.42 ACRES OF LAND, THE ASSESSEE ADMITTED AS INCOME IN THE RET URN FILED CONSEQUENT TO THE ISSUE OF NOTICE UNDER SECTION 153 C OF THE ACT. 5. REFERRING TO EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT WHEN THE DUE DATE FOR FILING OF RETURN OF INCOME WAS EXPIRED AND THE ASSESSEE HAS 5 I.T.A. NO.487/MDS/16 NOT FILED THE RETURN OF INCOME, THEN NOTWITHSTANDIN G THAT SUCH INCOME IS DECLARED IN THE RETURN OF INCOME FURNISHE D AFTER THE DATE OF SEARCH, FOR THE PURPOSE OF SECTION 271(1)(C) OF THE ACT, IT HAS TO BE DEEMED THAT THE ASSESSEE HAS CONCEALED THE PARTI CULARS OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREF ORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) AFTER REFERRING TO E XPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, FOUND THAT THE ASSESS EE IS LIABLE TO PAY PENALTY IN RESPECT OF THE INCOME DETECTED DURING TH E COURSE OF SEARCH AND SEIZURE OPERATION. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS SEARCH OPERATION IN THE CASE OF THE ASSESSEES FATHER SHRI KUSHAL RAJ BOKADIA ON 13.03.2009. ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N, A NOTICE WAS ISSUED UNDER SECTION 153C OF THE ACT CALLING FOR TH E ASSESSEE TO FILE THE RETURN OF INCOME. THE ASSESSEE, IN FACT, FILED THE RETURN OF INCOME ON 26.11.2010 DISCLOSING A SUM OF ` 59,78,930/- BEING THE INVESTMENT MADE IN THE PURCHASE OF LANDED PROPERTY AT HOSUR. THE 6 I.T.A. NO.487/MDS/16 QUESTION ARISES FOR CONSIDERATION IS WHETHER THE AS SESSEE HAS FILED INACCURATE PARTICULARS OR CONCEALED ANY PART OF INC OME SO AS TO ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT? 6. WE HAVE CAREFULLY GONE THROUGH EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, WHICH READS AS FOLLOWS:- EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY O F JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF-- (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR ; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PA RT) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT F ILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION , BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 7 I.T.A. NO.487/MDS/16 IN VIEW OF THE ABOVE EXPLANATION, A DEEMING FICTION WAS CREATED FOR THE PURPOSE OF LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT. IN OTHER WORDS, IF THE RETURN WAS NOT FILED BEFORE THE DUE DATE, THEN THERE WAS A DEEMED CONCEALMENT OF INCOME IN RESPECT OF THE INCOME. 7. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 271AAA WHICH READS AS FOLLOWS:- 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDI NG ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 BUT BEFORE THE 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION T O TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN P ER CENT. OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY IF THE ASSESSEE - (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPE CIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED ; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED ; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FAR A S MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THI S SECTION. 8 I.T.A. NO.487/MDS/16 EXPLANATION FOR THE PURPOSES OF THIS SECTION,- (A) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS? (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NOR MAL COURSE RELATING TO SUCH PREVIOUS YEAR ; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE PRINCIPAL CH IEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COM MISSIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH ; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPE NSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHIC H IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD TH E SEARCH NOT BEEN CONDUCTED ; (B) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YE AR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) O F SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE ; OR (II) IN WHICH SEARCH WAS CONDUCTED. IN VIEW OF SUB-SECTION 3 OF SECTION 271AAA OF THE A CT, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHALL BE IMPOSED IN A CASE WHERE SEARCH WAS INITIATED ON OR AFTER 1.6.2007 BUT BEFOR E 1.7.2012. IN THE CASE BEFORE US, THE SEARCH WAS ADMITTEDLY INITIATED ON 13.03.2009. THEREFORE, NO PENALTY COULD BE IMPOSED UNDER SECTIO N 271(1)(C) OF THE ACT. MOREOVER, A CO-ORDINATE BENCH OF THIS TRI BUNAL IN TIRUPATHY 9 I.T.A. NO.487/MDS/16 CONSTRUCTION COMPANY (SUPRA) FOUND THAT THE RETURN FILED CONSEQUENT TO THE NOTICE UNDER SECTION 153C OF THE ACT HAS TO BE CONSTRUED AS RETURN FILED UNDER SECTION 139(1) OF T HE ACT. THE TRIBUNAL ULTIMATELY FOUND THAT THERE CANNOT BE ANY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 8. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE AUTHORITIES BELOW AND ACCORDINGLY THE SAME ARE SET ASIDE AND THE PENALTY LEVIED IS DELETED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 15 TH JULY, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 15 TH JULY, 2016. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-18, CHENNAI 4. PRINCIPAL CIT, CENTRAL-2, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.