ACIT, New Delhi V. M/s SSA, International Ltd., New Delhi

ITA 5051/DEL/2013

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5854 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 22-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5051/DEL./2013 (ASSESSMENT YEAR : 2010-11) ACIT, CENTRAL CIRCLE 7, VS. M/S. SSA INTERNATIONAL LTD., NEW DELHI. M 71, MARKET, GREATER KAILASH PART- II, NEW DELHI 110 048. (PAN : AACCS2413A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL KAPOOR, ADVOCATE SHRI SUMIT LAL CHANDANI, ADVOCATE MS. ANANYA KAPOOR, ADVOCATE REVENUE BY : SHRI S.S. RANA, CIT DR DATE OF HEARING : 26.04.2018 DATE OF ORDER : 30.05.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, ASSISTANT COMMISSIONER OF INCOME-TA X, CENTRAL CIRCLE 7, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL, SOUGHT TO S ET ASIDE THE IMPUGNED ORDER DATED 03.06.2013 PASSED BY LD. CIT ( APPEALS)-1, NEW DELHI QUA THE ASSESSMENT YEAR 2010-11 DELETING THE PENALTY LEVIED U/S 271AAA ON THE GROUNDS INTER ALIA THAT :- ITA NO.5051/DEL./2013 2 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. C IT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED BY AO AMO UNTING TO RS.2,10,00,000/- U/S 271AAA OF INCOME TAX ACT. 196 1. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS INTO THE BUSI NESS OF RICE MILLING AND PROCESSING. DURING THE SEARCH AND SEIZ URE OPERATION CONDUCTED AT THE BUSINESS AND RESIDENTIAL PREMISES OF SSA INTERNATIONAL GROUP OF COMPANIES WHEREIN THEY HAVE ADMITTED RS.21 CRORES AS UNDISCLOSED INCOME. AO COMPLETED T HE ASSESSMENT AT THE RETURNED INCOME OF RS.25,52,64,410/-, HOWEVE R DIRECTED TO INITIATE THE PENALTY PROCEEDINGS U/S 271AAA OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT). AO INITIATED THE PENALTY PROCEEDINGS U/S 271AAA BUT DECLINED TO ACCEPT THE C ONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAS SURRENDERED ADDI TIONAL INCOME OF RS.21 CRORES AT THE TIME OF SEARCH TO BUY PEACE AND TO AVOID ANY PROTRACTED LITIGATION AND HAS DEPOSITED THE TAX ON THE ADDITIONAL INCOME IN AY 2010-11 AND LEVIED THE PENALTY OF RS.2 ,10,00,000/- U/S 271AAA. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEAL BEF ORE THE LD. CIT (A) WHO HAS DELETED THE PENALTY BY ACCEPTING TH E APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.5051/DEL./2013 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, DURING THE SEARCH AND SEIZURE OPER ATION CONDUCTED AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE U/S 132(1) ON 11.12.2009, ASSESSEE SURRENDERED ADDI TIONAL INCOME OF RS.21 CRORES. IT IS ALSO NOT IN DISPUTE THAT IN THE RETURN FILED BY THE ASSESSEE FOR AY 2010-11, ASSESSEE DECLARED UNDI SCLOSED INCOME OF RS.21 CRORES WHICH INCLUDES RS.9.25 CRORE S ON ACCOUNT OF EXCESS STOCK AND RS.11.75 CRORES AS INCOME FROM OTHER SOURCES IN THE COMPUTATION OF INCOME ANNEXED WITH THE TAX R ETURN. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS EXPRESSED HIS INABILITY TO EXPLAIN CERTAIN SEIZED DOCUMENTS RATHER STATED THAT THOSE MAY BE INCLUDED TO FORM PART OF THE AMOUNTS SURRENDERED DU RING SEARCH AND SEIZURE OPERATION. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HAS ALREADY PAID TAX TOGETHER WITH INTEREST ON THE SURRENDERED INCOME OF RS.21 CRORES. 6. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY LD. REVENUE AUTHORITIES B ELOW, ARGUMENTS ADVANCED BY LD. AR FOR THE PARTIES, THE SOLE QUESTI ON ARISES FOR DETERMINATION IN THIS CASE IS :- ITA NO.5051/DEL./2013 4 AS TO WHETHER ASSESSEE HAS FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME OF RS.21 CRORES WAS DE RIVED AND IS LIABLE TO BE PENALIZED U/S 271AAA OF THE ACT. 7. TO PROCEED FURTHER, PROVISIONS CONTAINED UNDER S ECTION 271AAA (2) ARE REPRODUCED AS UNDER FOR READY PERUSA L :- 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTAN DING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UND ER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 BUT BEFORE TH E 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALT Y, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT T HE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCL OSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY , IN RESPECT OF THE UNDISCLOSED INCOME 8. UNDER SECTION 271AAA(2)(I) OF THE ACT, PENALTY @ 10% OF THE UNDISCLOSED INCOME SHALL NOT BE IMPOSED IF THE ASSESSEE, IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB- SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST IF ANY ON THE UNDISCLOSE D INCOME. 9. DURING THE COURSE OF SEARCH, A SPECIFIC QUESTION WAS PUT TO SHRI ANIL MITTAL, MD OF THE ASSESSEE COMPANY TO EXP LAIN CERTAIN ITA NO.5051/DEL./2013 5 SEIZED DOCUMENTS AND DISCREPANCIES IN THE STOCK WHO HAS ANSWERED AS UNDER :- I HAVE SEEN QUESTION NO.43 AND THE REPLY OF SHRI A .K. NIJHAWAN TO IT AND ACKNOWLEDGE THE SAME TO BE TRUE. REGARDIN G THE DISCREPANCY TO STOCK FOUND BY YOUR SEARCH TEAM, DUR ING THE COURSE OF SEARCH, I AM UNABLE TO RECONCILE THE SAME . HOWEVER, IN ORDER TO BUY A PEACE OF MIND AND AVOID THE LITIGATI ON WITH DEPARTMENT, I WILL ACCEPT THE INVENTORY OF STOCK TA KEN BY YOUR TEAM DURING THE COURSE OF SEARCH ON 11.12.2009. THI S WILL FORM THE PART OF SURRENDER WHICH I HAD ALREADY MADE AT T HE TIME OF SEARCH. THIS VOLUNTARY DISCLOSURE IS MADE IN ORDER TO BUY PEACE OF MIND AND AVOID ANY LITIGATION MADE BY THE DEPART MENT. IT IS STATED THAT THIS DISCLOSURE IS MADE TO AVOID ANY PA NEL-ACTION INCLUDING PENALTIES AND PROSECUTION'. 10. THE LD. CIT (A) DELETED THE PENALTY ON THE PREM ISE THAT IF NO SPECIFIC QUESTION WAS PUT TO ASSESSEE U/S 132(4), I T CANNOT BE CONCLUDED THAT THE ASSESSEE HAS FAILED TO REPLY OR SPECIFY/ SUBSTANTIATE THE MANNER OF CONCEALMENT. IT IS SETT LED PRINCIPLE OF LAW THAT ASSESSEE HAS TO SPECIFY THE MANNER IN WHIC H INCOME HAS BEEN DERIVED AND SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AT THE TIME OF SEARC H IN ITS STATEMENT RECORDED U/S 132(4) AND NOT THEREAFTER. 11. HOWEVER, ANSWER TO THE QUESTION NO.43 REPRODUCE D ABOVE CATEGORICALLY GOES TO PROVE THAT THE ASSESSEE HAS S HOWN HIS INABILITY TO RECONCILE THE DISCREPANCY IN THE STOCK FOUND AND FAILED TO SUBSTANTIATE THE MANNER IN WHICH INCOME HAS BEEN DE RIVED BY THE SEARCH TEAM DURING THE COURSE OF SEARCH, HOWEVER HA S MADE THE DISCLOSURE ONLY IN ORDER TO BUY PEACE OF MIND AND T O AVOID ITA NO.5051/DEL./2013 6 LITIGATION. SO, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS FAILED TO SATISFY THE CONDITIONS LAID DOWN IN SECTI ON 271AAA (2) SO AS TO GET THE GENERAL AMNESTY U/S 271AAA(2) BECAUSE THE ASSESSEE HAS NEITHER SPECIFY THE MANNER NOR SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. 11. THE LD. AR FOR THE ASSESSEE RELIED UPON PLETHOR A OF CASE LAWS CITED AS UNDER :- S.NO. CASE NAME CITATION 1. PR. CIT VS. MUKESH BHAI RAMAN LAL TAX APPEAL 434 OF2017 2. PCIT VS. EMIRATES TECHNOLOGIES PVT. LTD. [2017] 399 ITR 189 (DELHI) 3. PCIT V S. SANDEEP GUPTA (DHC) ITA NO. 967-68/2017 DATED 13.11.2017 4. PCIT VS. SWAPNA ENTERPRISE [2018] 401 ITR 488 (GUJRAT HC) 5. SMT. RAJ RANI GUPTA VS. DCIT (DELHI I.T. TRIB.) ITA NO. 3371/DE1/2011 DATED 30.03.2012 6. ACIT V S. SHREENARAYAN SITARAM MUNDRA [2017] 83 TAXMANN.COM 231 (AHMEDABAD- TRIB) 7. NEERAT SINGAL VS. ACIT [2013] 37 TAXMANN.COM 189 (DELHI- TRIB.) 8. ACIT VS. BHAVI CHAND JINDAL (DELHI I.T. TRIB.) ITA NO. 6810/DE1/2015 DATED 17.04.2018 9. DCIT VS. ASHOK NAGRATH [2015] 57 TAXMANN.COM 15 (DELHI-TRIB.) 10. ASHWANI KUMAR ARORA VS. ACIT [2017] 81 TAXMANN.COM 440 (DELHI-TRIB.) 11. CONCRETE DEVELOPERS VS. ACIT [2013] 34 TAXMANN. COM 62 (NAGPUR- TRIB.) 12. SITA RAM GUPTA VS. ACIT [2014] 48 TAXMANN.COM 327 (DELHI-TRIB.) 13. CIT VS. RADHA KISHAN GOEL [2005] 278 ITR 454 (ALLAHABAD- TRIB.) 14. CIT VS. MAHENDRA C. SHAH [2008] 299 ITR 305 ITA NO.5051/DEL./2013 7 (GUJRAT-H.C.) 15. MOTHERS PRIDE EDUCATION PERTSONNA P. LTD. (DELHI I.T. TRIB.) ITA NO. 3372/DE1/2011 DATED 12.10.2012 16. JCIT VS. SHRI JAYENDRA N. SHAH (AHMEDABAD I.T. TRIB.) ITA NO 1552/AHD/2016 DATED 16.03.2018 17. SANTOSH KUMAR VS. DCIT (DELHI I.T. TRIB.) ITA NO. 267/DEL/2014 DATED 13.04.2018 12. MORE PARTICULARLY, THE DECISION OF HONBLE HIGH COURT OF GUJARAT CITED AS PR. CIT-2 VS. MUKESHBHAI RAMANLAL PRAJAPATI TAX APPEAL NO.434 OF 2017 ORDER DATED 24.07.2017 WHEREIN DECISION RENDERED IN CIT VS. MAHENDRA C SHAH 299 ITR 307 AND CIT VS. RADHA KISHAN GOEL 278 ITR 454 (ALL.) HAVE BEEN DISCUSSED AND IN THE CASE CITED AS PCIT VS. EMIRATES TECHNOLOGIES PVT. LTD. (2017) 399 ITR 189 (DELHI) RELIED UPON BY THE LD. AR ALSO WHEREIN HONBLE DELHI HIGH COURT HELD THAT WHE N NO QUERY RAISED BY THE AO REGARDING MANNER OF DERIVATION OF SUCH INCOME AND ITS SUBSTANTIATION, PENALTY U/S 271AAA IS NOT S USTAINABLE. 13. HOWEVER, HONBLE HIGH COURT OF DELHI IN A CASE RELIED UPON BY THE LD. CIT DR CITED AS PR.CIT VS. SMT. RITU SINGAL (2018) 92 TAXMANN.COM 224 (DELHI) AFTER DISCUSSING THE DECISIONS RELIED UPON BY THE LD. AR RENDERED BY HONBLE APEX COURT IN ACIT VS. GEBILAL KANHAIALAL 348 ITR 561 (SC) AND MAK DATA (P .) LTD. VS. CIT 358 ITR 539 (SC), HONBLE HIGH COURT OF GUJARAT IN CIT VS. MAHENDRA C. SHAH 299 ITR 305 (GUJ.), HONBLE ALLA HABAD ITA NO.5051/DEL./2013 8 HIGH COURT IN CIT VS. RADHA KISHAN GOEL - 278 ITR 4 54 (ALL.), HONBLE DELHI HIGH COURT IN MOTHERS PRIDE EDUCATION PERSONNEL (P.) LTD. VS. DCIT ITA NO.3372 (DELHI OF 2011 DATED 12.10.2012 , REVERSED THE DECISION RENDERED BY THE TRIBUNAL SE TTING ASIDE THE PENALTY ON THE GROUND THAT IN THE ABSENCE OF THE QUERY RAISED BY THE AUTHORIZED OFFICER DURING THE COURSE OF RECORDING OF STATEMENT U/S 132 (4) TO SPECIFY AND SUBSTANTIATE T HE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY RETURNI NG THE FOLLOWING FINDINGS :- 16. THAT THE INCOME WHICH WAS ULTIMATELY BROUGHT T O TAX PURSUANT TO THE DISCLOSURE MADE, WHICH WAS VOLUNTAR Y ON THE PART OF THE ASSESSEE IS STATING THE OBVIOUS. THE ASSESSE E MERELY STATED THAT THE SUMS ADVANCED WERE UNDISCLOSED INCOME. HOW EVER, SHE DID NOT SPECIFY HOW SHE DERIVED THAT INCOME AND WHA T HEAD IT FELL IN (RENT, CAPITAL GAIN, PROFESSIONAL OR BUSINESS IN COME OUT OF MONEY LENDING, SOURCE OF THE MONEY ETC). UNLESS SUC H FACTS ARE MENTIONED WITH SOME SPECIFICITY, IT CANNOT BE SAID THAT THE ASSESSEE HAS FULFILLED THE REQUIREMENT THAT SHE, IN HER STATEMENT (UNDER SECTION 132 (4)) 'SUBSTANTIATES THE MANNER I N WHICH THE UNDISCLOSED INCOME WAS DERIVED'. SUCH BEING THE CAS E, THIS COURT IS OF OPINION THAT THE LOWER APPELLATE AUTHORITIES MISDIRECTED THEMSELVES IN HOLDING THAT THE CONDITIONS IN SECTIO N 271 AAA (2) WERE SATISFIED BY THE ASSESSEE. 14. HOWEVER, THE INSTANT CASE IS ON BETTER FOOTING THAN SMT. RITU SINGHAL (SUPRA) CASE BECAUSE IN REPLY TO THE SPECIFIC QUER Y RAISED BY THE AO DURING SEARCH PROCEEDINGS, ASSESSEE HAS E XPRESSED HIS INABILITY TO EXPLAIN THE DISCREPANCY IN THE STOCK I N ORDER TO SUBSTANTIATE THE MANNER IN WHICH INCOME IN QUESTION HAS BEEN DERIVED RATHER CATEGORICALLY STATED THAT HE HAS MAD E VOLUNTARY ITA NO.5051/DEL./2013 9 SURRENDER OF RS.21 CRORES IN ORDER TO BUY PEACE OF MIND AND AVOID LITIGATION. SO, WHEN THE ASSESSEE HAS FAILED TO SP ECIFY THE MANNER AND SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSE D INCOME WAS DERIVED RATHER EMBARK UPON THE MERCY PLEA THAT HE I S MAKING SURRENDER TO BUY PEACE OF MIND AND AVOID LITIGATION , HE IS NOT ENTITLED FOR BENEFIT OF SECTION 271AAA(2) OF THE AC T. CASE LAWS RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO TH E FACTS AND CIRCUMSTANCES OF THE CASE. FOLLOWING THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN CASE CITED AS PR.CIT VS. SMT. RITU SINGAL (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS.2,10,00,000/- U /S 271AAA, HENCE APPEAL FILED BY THE REVENUE IS HEREBY ALLOWED AND PENALTY ORDER PASSED BY THE AO IS RESTORED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF MAY, 2018. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF MAY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-1, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.