Late Shri Vasudev R. Thacker, L/R Shri Nishant Vasudev Thacker, Bhuj V. The Deputy Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITA 495/RJT/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7713 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJIT SINGH
• Assessee Lawyers: MEHUL J RANPURA
• Keywords: Search and seizure
• Section: 271(1)(c); 201; 132; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO . 495 /RJT /2014 / ASSTT. YEAR : 2009 - 20 10 LATE SHRI VASUDEV R. THAKKA R , L/R. SHRI NISHANT VASUDEV THACKER , PROP. PURVI ESTATE AGENCY , VIJAY NAGAR, BHUJ, KUTCH. PAN: AAOPT1777F VS . D.C.I.T. , CENTRAL CIRCLE - 2 , RAJKOT . (APPLICANT) (RESPON D ENT) ASSESSEE BY : SHRI MEHUL J. RANPURA, A.R REVENUE BY : SHRI RANJIT SINGH , CIT .D R / DATE OF HEARING : 04 / 12 / 201 9 / DATE OF PRONOUNCEMENT: 28 / 01/2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AG AINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV, AHMEDABAD DATED 31/07/2014 ( IN SHORT LD.CIT(A) ) ARISING IN THE MATTER OF PENALTY ORDER PASSED UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') RELE VANT TO THE ASSESSMENT YEAR 2009 - 2010 . ITA NO.495/RJT/2014 ASSTT. YEAR 2009 - 10 2 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE ORDER U/S 271(1)(C) OF THE INCOME - TAX ACT,1961 [HEREINAFTER REFERRED AS TO THE 'ACT'] PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX - IV, AHMEDABAD [HEREINAFTER REFERRED AS TO THE 'ACT'] ON T HE LEGAL HEIR OF DECEASED ASSESSEE [DIED ON 15.09.2009] IS BAD IN LAW AND VOID - AB - INITIO AND DESERVES TO BE QUASHED AND MAY KINDLY BE QUASHED. 3.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LAW IN LEVYING PENALTY U/S. 271(1)(C) OF ACT AT ? 3,12,59,478/ - ON ESTIMATED ENHANCEMENT OF TOTAL INCOME AT RS. 9,22,83,356/ - ON THE ALLEGED GROUND OF CONCEALMENT OF INCOME AND FILING INACCURATE PARTICULARS OF INCOME. THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW, MAY KINDLY BE DELETED. 4.0 WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LAW IN INITIATING PENALTY PROCEEDING U/S.271(1)(C) OF THE ACT INSTEAD OF U/S.271AAA BEING SPECIFIED PREVIOUS YEAR WITHIN THE MEANING OF EXPLANATION (B) TO SECTION 271AAA OF THE ACT HOLDING THAT EXPENSES WERE FOUND TO BE BOGUS OR FALSE DURING THE APPELLANT PROCEEDING ONLY AND THEREFORE THE PROVISION OF SECTION 271AAA ARE NOT APPLICABLE. 5.0 YOUR HONOR'S APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 2. FIRST WE TAKE UP THE GROUND NO. 4 OF THE APPEAL OF THE ASSESSEE. THE ASSESSEE IN GROUND NO.4 HAS RAISED THE ISSUE THAT THE ''LD.CIT(A) ERRED IN LEV YING THE PENALTY U/S 271(1)(C) OF THE ACT INSTEAD OF SECT ION 271 AAA OF THE ACT AS THE YEAR UNDER DISPUTE IS S PECIFIED ASSESSMENT Y EAR. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BU SINESS OF LAND DEALING AND D ERIVED BROKERAGE/COMMISSION FROM THE SAME AC TIVITY. THERE WAS A SEARCH AND SEIZURE OPERATION CARRIED OUT AT THE PREMISES OF THE ASSESSEE DATED 15/12/2008. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 38 CRORES DATED 24/12/2009. HOWEVER, THE AS SESSMENT WAS COMPLETED U/S.143(3) OF THE ACT VIDE ORDER DATED 30/03/2010 AFTER DISALLOW ING DEVELOPMENT EXPENDITURE OF R S.1,88,50,000/ - ONLY. THUS THE TOTAL INCOME WAS ASSESSED AT RS.39,88,50,000/ - . 3.1 ON APPEAL THE ''LD.CIT (A)'' FURTHER ENHANCED THE INCOME OF THE ASSESSEE BY R S.9,22,83,356/ - ONLY. ACCORDINGLY THE ''LD.CIT (A)'' INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. ITA NO.495/RJT/2014 ASSTT. YEAR 2009 - 10 3 3.2 T HE ASSESSEE IN RESPONSE TO THE PENALTY NOTICE INTER ALIA SUBMITTED THAT THE PENALTY PROCEEDINGS FOR THE Y EAR UNDER CONSID ERATION CANNOT BE INITIATED U/S 271(1)(C) OF TH E ACT AS THE YEAR UNDER DISPUTE IS THE SPECIFIED PREVIOUS YEAR WITHIN THE MEANING OF EXPLANATION (B) TO SECTION 271AAA OF THE ACT. 4. HOWEVER, THE ''LD.CIT (A)'' DISREGARDED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ADDITION MADE DURING THE QUANTUM PROCEEDING WAS NOT BASE D ON ANY INCRIMINATING MATERIAL/INFORMATION GATHER ED DURING THE SEARCH PROCEEDING. ACCORDINGLY, THE ''LD.CI T (A)'' CONFIRMED THE PENALTY OF R S. 3 , 12 , 59 , 478/ - UNDER THE PROVISION OF SECTION 271(1)(C) OF THE ACT VIDE ORDER DATED 31/07/2014. BEING AGGRIEVED BY THE ORDER O F THE ''LD.CIT (A)'' , THE ASSESSEE IS IN APPEAL BEFORE US. 5 . THE LD.AR BEFORE US INTER ALIA SUBMITTED THAT THE YEAR UNDER DISPUTE IS THE SPECIFIED PREVIO US YEAR THEREFORE ANY PENALTY IF LEVI ABLE , THE SAME CAN BE IMPOSED U/S 271 AAA OF THE ACT. 6 . ON THE OTHER HAND LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7 . WE HAVE HEAR D THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE ISSUE ON HAND HAS A DIRECT BEARING O N THE PROVISION SPECIFIED U/S 271 AAA OF THE ACT WHICH READS AS UNDER: 45 [ PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 46 [BUT BEFORE THE 1ST DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. ITA NO.495/RJT/2014 ASSTT. YEAR 2009 - 10 4 7 .1 FROM THE ABOVE PROVISION IT IS CLEAR THAT IT BEGIN WITH NON OBSTANT E CLAUSE MEANING THEREBY IT OVER RI DDING EFFECT OVER THE OTHER PROVISION S OF THIS A CT. THUS IF ANY SEARCH HAS BEEN INITIATED U/S 132 OF THE ACT ON OR AFTER FIRST D AY OF JUNE 2007 BUT BEFORE THE FIRST DAY OF JULY 2012 THE ASSESSEE SHALL BE SUBJECT TO THE PENALTY WITH RESPECT TO THE UNDISCLOSED INCOME AT THE RATE OF 10% FOR THE SPECI FIED PREVIOUS YEAR. 7 .2 NOW THE CONTROVERSY ARISES WHETHER THE YEAR UNDER DISPUTE IS THE SPECIFIED PREVIOUS YEAR AS PROVIDED U/S 271 AAA OF THE ACT. ACCORDINGLY, WE REFER TO THE EXPLANATION (B) ATTACH ED TO THE PROVISION OF SECTION 271 AAA OF THE ACT WHICH READS AS UNDER: ( B ) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR ( I ) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF 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.] 7 .3 THE READING OF THE ABOVE PROVISION REVEALS THAT THE YEAR IN WHICH THE SEARCH IS CONDUCTED IS THE SPECIFIED PREVIOUS YEAR. THUS THERE REMAINS NO AMBIGUITY THAT THE YEAR UNDER DISPUTE IS THE SPECIFIED PREVIOUS YEAR AS PROVIDED UNDER THE PROVISION OF SECTION 271AAA OF THE ACT. 7 .4 IN VIEW OF THE ABOVE WE HOLD THAT THE PENALTY IF LEVIABLE CAN ONLY BE IMPOSED U/S 271 AAA OF THE ACT . T HUS THE PENALTY LEVIED BY THE ''LD.CIT (A)'' UNDER THE PROVISION OF 271( 1)(C) OF THE ACT IS NOT SUSTAINABLE. IN HOLDING SO WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF THIS TRIBUNAL IN THE CASE OF DR. NAMAN A. SHASTRI VS. ACIT REPORTED IN 63 TAXMANN.COM 363 WHERE IT WAS HELD AS UNDER: 8. THE SCHEME OF SECTION, WHICH GOVER NS PENALTY ON UNDISCLOSED INCOME FOR THE 'SPECIFIED PREVIOUS YEAR', IS LIKE THIS. IN THE CASES IN WHICH SEARCH IS INITIATED, THE ITA NO.495/RJT/2014 ASSTT. YEAR 2009 - 10 5 PENALTY UNDER SECTION 271AAA WILL COME INTO PLAY IN RESPECT OF 'UNDISCLOSED INCOME' OF 'SPECIFIED PREVIOUS YEAR', AND, TO THAT EXTENT, THE PROVISIONS OF SECTION 271(1)(C) WILL NOT BE APPLICABLE. IN OTHER WORDS, SO FAR AS PENALTY IN RESPECT OF UNDISCLOSED INCOME IS CONCERNED, SECTION 271AAA WILL APPLY TO THE EXTENT OF THE 'SPECIFIED PREVIOUS YEAR' AND, FOR THE OTHER PREVIOUS YEARS, THE PROVISIONS OF SECTION 271(1)(C) WILL CONTINUE TO HOLD THE FIELD. THE EXPRESSION 'SPECIFIED PREVIOUS YEAR' REFERS TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR THE YEAR WHICH HAS ENDED BUT THE DUE DATE FOR FILING OF INCOME TAX RETURN IN RESP ECT OF THE SAME HAS NOT ENDED. 7 .5 ON THE BASIS OF AFORESAID DISCUSSION, WE CONCLUDE THAT THE PENALTY LEV I E D U/S 271(1)(C) OF THE A CT IS CONTRARY TO THE PROVISION AS SPECIFIED UND ER THE A CT. 7 .6 THE LD. D R HAS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE ARGUMENT ADVANCED BY THE LD. AR FOR THE ASSESSEE. 7 .7 ACCORDINGLY WE QUASHED THE PENALTY U/S 271(1)(C) OF THE ACT. AS WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS N OT SUSTAINABLE, WE DO NOT FIND ANY REASON TO ADJUDICATE THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE ON MERIT. ACCORDINGLY WE DISMISS THE SAME. HENCE THE GROUNDS OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED . O RDER PRONOUNCED IN THE COURT ON 28 /01 / 2020 AT AHMEDABAD. - SD - - SD - (RAJPAL YADAV ) (WASEEM AHMED ) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 28 / 01/2020 MANISH