Sh. Dipti Lal, Morinda V. DCIT, Chandigarh

ITA 495/CHANDI/2001

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4881 (ITAT-CHANDIGARH)
• Duration Of Justice: 16 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2018
• 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
• Assessee Lawyers: RAJIV SHARMA
• Section: 6; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.495/CHD/2001 (ASSESSMENT YEAR :1994-95) SH. DIPTI LAL, VS. THE D.C.I.T., GOLDSMITH, PURANA BAZAR, INVESTIGATION CIRCLE 2(1), MORINDA. CHANDIGARH. PAN: - (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJIV SHARMA, ADV. RESPONDENT BY : SMT.CHANDERKANTA, ADDL.CIT DATE OF HEARING : 03.04.2018 DATE OF PRONOUNCEMENT : 09.04.2018 ORDER PER ANNAPURNA GUPTA, A.M. : THE ABOVE APPEAL HAS BEEN FIXED BEFORE US AND HEARD IN PURSUANCE TO THE DIRECTIONS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT VIDE THEIR CONSOLIDATED ORDER IN ITA NO. 47,104 OF 2005 AND ITA NO.386 OF 2004, DATED 18.1.2016, RESTO RING THE CASE TO THE TRIBUNAL FOR RE-ADJUDICATING THE ISSUE OF PENALTY LEVIED AS PER EXPLANATION-5 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN THE LI GHT OF INTERPRETATION GIVEN TO THE SAID SECTION BY THE HON 'BLE SUPREME COURT IN THE CASE OF ACIT VS. GEBILAL KANHA IALAL, HUF (2012) 348 ITR 561. 2. THE BACKGROUND OF THE CASE IS THAT SEARCH AND SE IZURE OPERATION WAS CARRIED OUT ON THE ASSESSEE ON 30-08- 93 AND 2 THEREAFTER THE ASSESSEE FILED HIS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 1994-95, INCLUSIVE OF SURRENDER MAD E UNDER SECTION 132(4) OF THE ACT. THE ASSESSING OFFI CER FRAMED THE ASSESSMENT ACCEPTING THE RETURNED/SURREN DERED INCOME BUT AT THE SAME TIME INITIATED PENALTY PROC EEDINGS U/S 271(1) OF THE ACT, BEING SATISFIED THAT THE AS SESSEE WAS DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INC OME AS PER EXPLANATION 5 TO THE SECTION, SINCE HE HAD FAIL ED TO FILE RETURN U/S 139(1) AND PAY TAX ALONGWITH INTEREST TH EREON IN RESPECT OF INCOME DISCLOSED. THEREAFTER PENALTY WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT READ WITH EXPLA NATION 5, ON THE AMOUNT DISCLOSED UNDER SECTION 132(4). THE A SSESSEE CHALLENGED THE LEVY OF PENALTY BEFORE THE CIT(APPEA LS), WHO DISMISSED THE ASSESSEES APPEAL. THE MATTER WAS CARR IED IN APPEAL BEFORE THE TRIBUNAL ,WHO THEIR VIDE ORDER DA TED 31.8.2004, UPHELD THE ORDER OF THE CIT(APPEALS) DI SMISSING THE ASSESSEES APPEAL. THEREAFTER THE ASSESSEE FIL ED APPEAL BEFORE THE HON'BLE HIGH COURT, WHO AFTER QUOTING EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT DEALT WITH THE INTERPRETATION OF THE SAID SECTION BY THE HON'BLE A PEX COURT IN THE CASE OF GEBILAL KANHAIALAL, HUF (SUPRA). TH E HON'BLE HIGH COURT THEREAFTER HELD THAT THE ORDER OF THE I. T.A.T. SHOWED THAT IN THE FACTUAL MATRIX INVOLVED IN THE C ASE, THE ISSUE OF LEVY OF PENALTY AS PER EXPLANATION-5 TO SE CTION 271(1)(C) OF THE ACT NEEDED TO BE RE-ADJUDICATED IN THE LIGHT OF THE INTERPRETATION GIVEN BY THE HON'BLE APEX CO URT IN THE 3 CASE OF GEBILAL KANHAIALAL, HUF (SUPRA). THE RELEV ANT FINDINGS OF HE HON'BLE HIGH COURT IN THIS REGARD AT PARA 10 OF THE ORDER AND THE CONSEQUENT DIRECTION TO THE TR IBUNAL ARE AS UNDER: 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 THE 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. 3. IN PURSUANCE TO THE ABOVE DIRECTION OF THE HON, BLE HIGH COURT THE CASE WAS HEARD BY US. 4. THE ISSUE BEFORE US, AS IS EVIDENT FROM THE ORDE R OF THE HONBLE HIGH COURT, IS TO EXAMINE THE FULFILLMENT O F THE CONDITIONS SPECIFIED IN CLAUSE (2) TO EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT IN THE FACTS OF THE PRESENT CA SE, IN THE LIGHT OF THE INTERPRETATION OF THE HONBLE SUPREM E COURT OF 4 THE SAID SECTION IN THE CASE OF GEBILAL KANHAIYALAL (SUPRA), SO AS TO ENTITLE THE ASSESSEE TO CLAIM IMMUNITY FRO M LEVY OF PENALTY UNDER THE SAID SECTION. 5. THE LD. COUNSEL FOR ASSESSEE AT THE OUTSET POINT ED OUT THAT IDENTICAL ISSUE HAS BEEN ADJUDICATED BY THE TR IBUNAL IN THE CASE OF SURINDER PAUL IN ITA NO.494/CHD/2001 A ND SHRI RAJ KUMAR IN ITA NO.496/CHD2001 ,WHICH CASES HAD AL SO BEEN RESTORED TO THE ITAT BY THE HONBLE HIGH COURT VIDE ITS ABOVE REFERRED CONSOLIDATED ORDER ,GIVING IDENTICA L DIRECTION TO EXAMINE FULFILLMENT OF CONDITIONS SPECIFIED IN C LAUSE 2, EXPLANATION 5 TO SECTION 271(1). COPY OF THE ORDER WAS PLACED BEFORE US AND DRAWING ATTENTION TO THE SAME, LD.COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE IT AT HAD ACCEPTED THE PLEA MADE BY THE LD.COUNSEL FOR THE AS SESSEE THAT RELEVANT FACTS BEING NOT ON RECORD THE SAME WO ULD BE BROUGHT BEFORE THE ASSESSING OFFICER WHO IN TURN CO ULD EXAMINE THE ISSUE AFTER VERIFYING THE FACTS AND HAD THEREFORE RESTORED THE ISSUE TO THE ASSESSING OFFICER TO EXA MINE THE FULFILLMENT OF THE CONDITIONS AS SPECIFIED IN CLAUS E(2) TO EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT AS DI RECTED BY THE HON'BLE HIGH COURT . THE LD. COUNSEL FOR ASSES SEE DREW OUR ATTENTION TO THE RELEVANT PORTION OF THE I.T.A. T. AS UNDER: FOR A BETTER UNDERSTANDING OF THE ISSUE AT HAND, I T IS PERTINENT TO REPRODUCE EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT AS UNDER: [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 5 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 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 TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS 6 INCOME SO AS TO ATTRACT LEVY OF PENALTY IF HE ATTRIBUTES THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THING FOUND IN HIS POSSESSION DURING SEARCH, TO INCOME OF ANY PREVIOUS YEAR WHICH HAS NOT BEEN DISCLOSED BY HIM EITHER BY WAY OF NOT FILING THE RETURN OF INCOME IN THE SAID YEAR OR BY NOT DISCLOSING THE INCOME IN THE RETURN FILED, I F ANY. THE SAID DEEMING PROVISION APPLIES FOR INCOME OF ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH. IN CASES WHERE THE OWNERSHIP OF ASSETS IS ATTRIBUTED TO INCOME OF A PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH THEN EVEN IF THE SAID INCOME IS DECLARED IN THE RETURN O F INCOME FILED, HE SHALL BE DEEMED TO HAVE CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME. CLAUSE(2) OF THE SAID SECTION OUTLINES CONDITIONS O N THE FULFILLMENT OF WHICH THE ASSESSEE BECOMES ELIGIBLE TO IMMUNITY FROM THE LEVY OF PENALTY. NO W THE ISSUE BEFORE US BEING THE EXAMINATION OF THE FULFILLMENT OF THE CONDITIONS ENUMERATED IN CLAUSE (2), IT IS NECESSARY TO BRING OUT THE CONDITIONS WH ICH NEED TO BE FULFILLED AS PER THE SAID CLAUSE WHICH ARE AS UNDER: A) THE ASSESSEE MAKES A STATEMENT UNDER SECTION 132(4) THAT THE ASSETS FOUND IN ITS POSSESSION OR UNDER HIS CONTROL HAVE BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME FURNISHED BEFORE EXPIRY OF TIME SPECIFIED IN SECTION 139(1) OF THE ACT. B) SPECIFIES IN THE STATEMENT THE MANNER IN WHICH THE 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. COUNSEL FOR ASSESSEE WAS CONFRONTED WITH THE SPECIFICATION OF CLAUSE (2) TO EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT 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 AVAILABLE ON RECORD AND PLEADED THAT THE ISSUE BE RESTORED TO THE ASSESSING OFFICER BEFORE WHOM ALL NECESSARY FACTS WOULD BE DEMONSTRATED BY THE ASSESSEE. 7. THE LD. DR ALSO AGREED THAT THE NECESSARY FACTS RELEVANT FOR THE PURPOSE OF DETERMINING THE LIABILITY OF THE ASSESSEE TO CLAIM IMMUNITY FROM PAYMENT OF TAX AS PER CLAUSE (2) OF EXPLANATION-5 T SECTION 271(1)(C) OF THE ACT WERE NOT READILY AVAILABLE ON RECORD AND FURTHER DID NOT OBJECT TO 7 THE RESTORATION OF THE ISSUE TO THE ASSESSING OFFICER FOR THE SAID PURPOSE. 8. IN VIEW OF THE ABOVE, WE CONSIDER IT FIT TO RESTORE THE ISSUE TO THE ASSESSING OFFICER TO EXAMINE THE FULFILLMENT OF THE CONDITIONS AS SPECIFIED IN CLAUSE (2) TO EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT AS DIRECTED BY THE HON'BLE HIG H COURT. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF HEARING AND IS FREE TO ADDUCE ALL EVIDENCES IN THIS REGARD. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSES ARE ALLOWED FOR STATISTICAL PURPOSES . 6. LD.COUNSEL FOR THE ASSESSEE PLEADED THAT AS IN T HE AFORESTATED CASE, THE RELEVANT FACTS PROVING FULFI LLMENT OF CONDITIONS SPECIFIED IN CLAUSE 2 TO EXPLANATION 5 T O SECTION 271(1), FOR BEING ELIGIBLE FOR IMMUNITY FROM PENAL TY WERE NOT ON RECORD. LD.COUNSEL FOR THE ASSESSEE STATED T HAT ALL RELEVANT FACTS WOULD BE ADDUCED BEFORE THE AO WHO I N TURN COULD VERIFY THEM ALSO. HE THEREFORE PLEADED THAT AS IN THE CASE OF SURINDER PAUL (SUPRA) THE ISSUE BE RESTORED BACK TO THE AO. LD.DR DID NOT OBJECT TO THE SAME AND FAIRLY AGREED THAT THE ISSUE WAS COVERED BY THE JUDGMENT OF THE I .T.A.T. IN THE CASE OF SHRI SURINDER PAUL AND SHRI RAJ KUMA R (SUPRA). 7. CONSIDERING THE ABOVE, WE RESTORE THE ISSUE TO T HE ASSESSING OFFICER TO EXAMINE THE FULFILLMENT OF THE CONDITIONS OF CLAUSE(2) TO EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT AS INTERPRETED BY THE APEX COURT IN GEB ILAL KANHAIYALA (SUPRA), IN THE PRESENT CASE, AND AS DIR ECTED BY THE I.T.A.T. IN THE CASE OF SHRI SURINDER PAUL AND SHRI RAJ KUMAR (SUPRA) AND THEREAFTER ADJUDICATE THE ISSUE I N 8 ACCORDANCE WITH LAW. WE MAY ADD THAT THE ASSESSEE B E GIVEN DUE OPPORTUNITY OF HEARING AND IS FREE TO ADDUCE AL L EVIDENCES IN THIS REGARD. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 9 TH APRIL, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH