Sh. Surinder Paul, Morinda V. DCIT, Chandigarh

ITA 494/CHANDI/2001

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5386 (ITAT-CHANDIGARH)
• Duration Of Justice: 16 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 26-09-2016
• Assessment Year: 1994-1995
• Appeal Filed On: 12-06-2001
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S K MUKHI
• Section: 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.494/CHD/2001 (ASSESSMENT YEAR : 1994-95) SHRI SURINDER PAUL, VS. THE D.C.I.T., GOLDSMITH, PURANA BAZAR, INV. CIRCLE 2(1), MORINDA. CHANDIGARH. PAN: -- & ITA NO.496/CHD/2001 (ASSESSMENT YEAR : 1993-94) SHRI RAJ KUMAR, VS. THE D.C.I.T., GOLDSMITH, PURANA BAZAR, INV. CIRCLE 2(1), MORINDA. CHANDIGARH. PAN: -- (APPELLANT) RESPONDENT) APPELLANT BY : SHRI S.K. MUKHI, ADV. RESPONDENT BY : SHRI MANJIT SINGH, SR.DR DATE OF HEARING : 03.01.2018 DATE OF PRONOUNCEMENT : 09.01.2018 ORDER PER ANNAPURNA GUPTA, A.M.: BOTH THE ABOVE APPEALS HAVE BEEN FIXED BEFORE US AN D HEARD IN PURSUANCE TO THE DIRECTIONS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT VIDE THEIR CONSOLIDATED ORDER DA TED 18.1.2016 RESTORING THE CASE TO THE TRIBUNAL FOR RE - ADJUDICATING THE ISSUE OF PENALTY LEVIED AS PER E XPLANATION- 5 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN THE LIGHT OF INTERPRETATION GIVEN TO THE SAID SECTION BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. GEBILAL KANHAIALAL, HUF (2012) 348 ITR 561. 2 2. SINCE THE ISSUE IS SAME IN BOTH THE APPEALS, THE Y WERE HEARD TOGETHER AND ARE BEING DISPOSED BY THIS CONSO LIDATED ORDER. FOR THE SAKE OF CONVENIENCE, WE SHALL BE TA KING UP THE APPEAL OF THE ASSESSEE SHRI SURINDER PAUL IN IT A NO.494/CHD/2001 AND THE DECISION RENDERED THEREIN S HALL APPLY TO THE APPEAL OF OTHER ASSESSEE IN ITA NO.496/CHD/2001 WITH EQUAL FORCE. 3. THE BACKGROUND OF THE CASE IS THAT SEARCH AND SE IZURE OPERATION WAS CARRIED OUT ON THE ASSESSEE ON 30-08- 93 AND THEREAFTER THE ASSESSEE FILED HIS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1994-95 ON 23.5.1994 DECLARING THE INCOME AT RS.4,70,000/- INCLUSIVE OF SURRENDER MAD E UNDER SECTION 132(4) OF THE ACT. THE ASSESSING OFFICER VI DE ORDER DATED 31.1.2000 FRAMED THE ASSESSMENT ACCEPTING THE RETURNED/SURRENDERED INCOME AT RS.4,70,000/-. THE DEPUTY COMMISSIONER OF INCOME TAX, INVESTIGATION CIRCLE 2( 1), VIDE ORDER DATED 27.7.2000 LEVIED PENALTY OF RS.1,87,040 /- UNDER SECTION 271(1)(C) OF THE ACT READ WITH EXPLA NATION 5, FOR THE ASSESSMENT YEAR 1994-95 ON THE AMOUNT DISCL OSED UNDER SECTION 132(4). THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS) WHICH WAS DISMISSED. THEREAFTER, T HE ASSESSEE APPROACHED THE TRIBUNAL. THE TRIBUNAL VID E ORDER DATED 31.8.2004 UPHELD THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) AND DISMISSED THE APPEA L OF THE ASSESSEE. THEREAFTER THE ASSESSEE FILED APPEAL BEF ORE THE HON'BLE HIGH COURT WHO AFTER QUOTING EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT DEALT WITH THE INTERPR ETATION OF 3 THE SAID SECTION BY THE HON'BLE APEX COURT IN THE C ASE OF GEBILAL KANHAIALAL, HUF (SUPRA). THE HON'BLE HIGH COURT THEREAFTER HELD THAT THE ORDER OF THE I.T.A.T. SHOW ED THAT IN THE FACTUAL MATRIX INVOLVED IN THE CASE THE ISSUE O F LEVY OF PENALTY AS PER EXPLANATION-5 TO SECTION 271(1)(C) O F THE ACT REQUIRES TO BE RE-ADJUDICATED IN THE LIGHT OF THE INTERPRETATION GIVEN BY THE HON'BLE APEX COURT IN T HE CASE OF GEBILAL KANHAIALAL, HUF (SUPRA). THE RELEVANT FIND INGS OF HE HON'BLE HIGH COURT IN THIS REGARD AT PARA 10 OF THE ORDER AND ITS CONSEQUENT DIRECTION TO THE TRIBUNAL ARE AS UN DER: THE TRIBUNAL HAD ONLY RECORDED THAT THE INCOME DECLARED BY THE ASSESSEE WOULD NOT PROVIDE THE IMMUNITY TO HIM FROM THE IMPOSITION OF PENALTY UNDER SECTION 271(1) OF THE ACT UNLESS THE CONDITIONS MENTIONED IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT AS WELL AS THE CONDITIONS LAID DOWN IN CLAUSE (2) OF EXPLANATION 5,TO SECTION 271 OF THE ACT ARE FULFILLED.IT FURTHER RECORDED TH AT THE TAX AUTHORITIES WERE FULLY JUSTIFIED THAT THE ASSESSEE WAS NOT ENTITLED TO THE IMMUNITY AND IMPOSITION OF PENALTY AMOUNTS. A PERUSAL OF THE ORDER OF THE TRIBUNAL SHOWS THAT THE ORDER PASSED BY HE TRIBUNAL IN THE FACTUAL MATRIX INVOLVED HEREIN REQUIRES TO BE RE-ADJUDICATED IN THE LIGHT O F THE INTERPRETATION GIVEN BY THE APEX COURT IN GEBILAL S CASE (SUPRA) TO CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AS THE TRIBUNAL I S THE FINAL FACT FINDING AUTHORITY WHO IS REQUIRED TO DEAL WITH ALL ASPECTS OF FACTS AND LAW BEFORE RECORDING ITS CONCLUSIONS BASED THEREON. ACCORDINGLY, THE IMPUGNED ORDERS ARE SET ASIDE AND THE MATTER IS REMANDED TO THE TRIBUNAL TO DECIDE THE SAME AFRESH AFTER HEARING THE PARTIES AND BY PASSING A SPEAKING ORDER IN ACCORDANCE WITH LAW. NEEDLESS TO SAY ANYTHING OBSERVED HEREINBEFORE SHALL NOT BE TAKEN TO BE EXPRESSION OF OPINION ON THE MERITS OF THE CONTROVERSY. 4. THUS THE ISSUE BEFORE US IS TO EXAMINE THE FULFI LLMENT OF THE CONDITIONS SPECIFIED IN CLAUSE (2) TO EXPLANATI ON-5 TO SECTION 271(1)(C) OF THE ACT IN THE FACTS OF THE PR ESENT CASE, 4 SO AS TO ENTITLE THE ASSESSEE TO CLAIM IMMUNITY FRO M LEVY OF PENALTY UNDER THE SAID SECTION. FOR A BETTER UNDER STANDING OF THE ISSUE AT HAND, IT IS PERTINENT TO REPRODUCE EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT AS UN DER: [EXPLANATION 5.WHERE IN THE COURSE OF A [SEARCH INITIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007], THE ASSESSEE IS FOUND TO BE THE OWNER OF 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, (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FO R SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFT ER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH , HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENAL TY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION , BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, [UNLESS, (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING I N SUCH INCOME ARE RECORDED, (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE DATE OF THE SEARCH ; AND (II) IN A CASE FALLING UNDER CLAUSE (B), ON OR BEFO RE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE [[PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR [PRINCIPAL COMMISSIONER OR] COMMISSIONER] BEFORE THE SAID DATE ; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER H IS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH 5 HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN [* * *] SUB-SECTION (1) OF SECTION 139 , AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME.] 5. AS PER THE SAID SECTION THE ASSESSEE IS DEEMED T O HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF HIS INCOME SO AS TO ATTRA CT LEVY OF PENALTY IF HE ATTRIBUTES THE MONEY, BULLION, JEWELL ERY OR OTHER VALUABLE ARTICLES OR THING FOUND IN HIS POSSESSION DURING SEARCH, TO INCOME OF ANY PREVIOUS YEAR WHICH HAS NO T BEEN DISCLOSED BY HIM EITHER BY WAY OF NOT FILING THE RE TURN OF INCOME IN THE SAID YEAR OR BY NOT DISCLOSING THE IN COME IN THE RETURN FILED, IF ANY. THE SAID DEEMING PROVISI ON APPLIES FOR INCOME OF ANY PREVIOUS YEAR WHICH HAS ENDED BEF ORE THE DATE OF SEARCH. IN CASES WHERE THE OWNERSHIP OF AS SETS IS ATTRIBUTED TO INCOME OF A PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH THEN EVEN IF THE SAID INCO ME IS DECLARED IN THE RETURN OF INCOME FILED, HE SHALL BE DEEMED TO HAVE CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME. CLAUSE(2) OF THE SAID SECTION OUTLINES CON DITIONS ON THE FULFILLMENT OF WHICH THE ASSESSEE BECOMES ELIGI BLE TO IMMUNITY FROM THE LEVY OF PENALTY. NOW THE ISSUE BEFORE US BEING THE EXAMINATION OF THE FULFILLMENT OF THE CON DITIONS ENUMERATED IN CLAUSE (2), IT IS NECESSARY TO BRING OUT THE CONDITIONS WHICH NEED TO BE FULFILLED AS PER THE SA ID CLAUSE WHICH ARE AS UNDER: A) THE ASSESSEE MAKES A STATEMENT UNDER SECTION 132(4) THAT THE ASSETS FOUND IN ITS POSSESSION OR UNDER 6 HIS CONTROL HAVE BEEN ACQUIRED OUT OF HIS INCOME WH ICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCO ME FURNISHED BEFORE EXPIRY OF TIME SPECIFIED IN SECTIO N 139(1) OF THE ACT. B) SPECIFIES IN THE STATEMENT THE MANNER IN WHICH T HE INCOME HAS BEEN DERIVED AND C) PAYS TAXES TOGETHER WITH INTEREST IN RESPECT OF SUCH INCOME. 6. DURING THE COURSE OF HEARING BEFORE US THE LD. C OUNSEL FOR ASSESSEE WAS CONFRONTED WITH THE SPECIFICATION OF CLAUSE (2) TO EXPLANATION-5 TO SECTION 271(1)(C) OF THE AC T AND WAS ASKED TO DEMONSTRATE BEFORE US AS HOW THE ASSESSEE FULFILLED THE AFORESAID CONDITIONS. THE LD. COUNSE L FOR ASSESSEE EXPRESSED HIS INABILITY TO DEMONSTRATE THE FACTS BEFORE US STATING THAT THEY WERE NOT READILY AVAILA BLE ON RECORD AND PLEADED THAT THE ISSUE BE RESTORED TO TH E ASSESSING OFFICER BEFORE WHOM ALL NECESSARY FACTS W OULD BE DEMONSTRATED BY THE ASSESSEE. 7. THE LD. DR ALSO AGREED THAT THE NECESSARY FACTS RELEVANT FOR THE PURPOSE OF DETERMINING THE LIABILI TY OF THE ASSESSEE TO CLAIM IMMUNITY FROM PAYMENT OF TAX AS P ER CLAUSE (2) OF EXPLANATION-5 T SECTION 271(1)(C) OF THE ACT WERE NOT READILY AVAILABLE ON RECORD AND FURTHER DI D NOT OBJECT TO THE RESTORATION OF THE ISSUE TO THE ASSE SSING OFFICER FOR THE SAID PURPOSE. 8. IN VIEW OF THE ABOVE, WE CONSIDER IT FIT TO REST ORE THE ISSUE TO THE ASSESSING OFFICER TO EXAMINE THE FULFI LLMENT OF THE CONDITIONS AS SPECIFIED IN CLAUSE (2) TO EXPLAN ATION-5 TO 7 SECTION 271(1)(C) OF THE ACT AS DIRECTED BY THE HON 'BLE HIGH COURT. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF HEARING AND IS FREE TO ADDUCE ALL EV IDENCES IN THIS REGARD. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 9 TH JANUARY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH