Shri Mangilal Lunawat, UDAIPUR V. DCIT, UDAIPUR

ITA 51/JODH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78182 (ITAT-JODHPUR)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 24-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Depreciation; Salary income
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NOS. 51/JODH/2014 (A.Y. 2006-07) SHRI MANGI LAL LUNAWAT VS. THE DY. C.I.T PROP. M/S CHETAK MINERALS CENTRAL CIRCE - 1 E-263, MIA, UDAIPUR UDAIPUR PAN NO. AAUPL 6877 G ITA NOS.55/JODH/2014 (A.Y. 2006-07) SHRI PRADEEP LUNAWAT VS. THE DY. C.I.T PROP. M/S CHETAK MINERALS CENTRAL CIRCE - 1 E-263, MIA, UDAIPUR UDAIPUR PAN NO. AACPL 3379 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEVENDRA MEHTA SHRI NEERAJ BHANDARI DEPARTMENT BY : SHRI N.A. JOSHI, DR. DATE OF HEARING : 24.04.2014 DATE OF PRONOUNCEMENT : 13.05.2014 2 ORDER PER HARI OM MARATHA, J.M. THESE ARE TWO APPEALS BY TWO DIFFERENT BUT CONNECT ED ASSESSEES, FOR A.YS. 2006-07 IN WHICH ALMOST IDENTI CAL ISSUES ARE INVOLVED AND EMANATE FROM THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 ['THE ACT', FOR SHORT] DATED 21.3.2011 AND 9.12.2013 VIDE WHICH THE DCIT, CIRCLE-1 HAD IM POSED PENALTY OF RS. 2,33,080/- AND RS. 1,73,444/- RESPECTIVELY. THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, WE ARE PROCEED ING TO DECIDE THEM BY A COMMON ORDER. ITA NOS. 51/JODH/2014 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT S EARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON 14.12.2006 A T THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEES GROUP. O N THE BASIS OF INCRIMINATING EVIDENCE GATHERED DURING THE SEARCH O PERATIONS, NOTICE U/S 153A OF THE ACT WAS ISSUED ON 19.11.2007 , WHICH WAS 3 COMPLIED WITH BY THE ASSESSEE BY FILING RETURN OF I NCOME [ROI] ON 31.03.2008 DECLARING INCOME OF RS 38,62,340/-. ASS ESSMENT WAS FRAMED U/S 153A /143(3) OF THE ACT AT TOTAL INCOME OF RS. 35,54,100/-. PENALTY PROCEEDINGS U/S 271(1)(C) OF T HE ACT WAS INITIATED ON 30.10.2008 AND A PENALTY OF RS. 2,33,0 80/- WAS IMPOSED ON THE ASSESSEE. THIS PENALTY HAS BEEN CONFIRMED B Y THE LD. CIT(A) AS WELL. FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BY RAISING THE MATERIAL GROUND AGAINST THE CONFIRMATIO N OF PENALTY OF RS. 2,33,080/-. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BOTH THE PA RTIES HAVE REITERATED THE SAME ARGUMENTS WHICH WERE TAKEN BEFO RE THE LD. CIT(A). WE HAVE FOUND THAT THE ASSESSEE, AS INDIVI DUAL, DERIVED INCOME FROM SALARY, RENT, INTEREST AND BUSINESS. H E IS THE PROPRIETOR OF M/S CHETAK MINERALS WHICH IS ENGAGED IN THE TRADING OF MARBLE AND MINERALS. THE ASSESSEE FILED RETURN OF INCOME [ROI] IN COMPLIANCE TO NOTICE U/S 153A ON 31.3.2008 DECLARIN G TOTAL INCOME OF RS. 38,62,340/-. THE ASSESSED INCOME INCLUDED U NDISCLOSED INCOME DECLARED BY THE ASSESSEE AT RS. 6,92,448/- I N HIS STATEMENT 4 RECORDED U/S 132(4) AND ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF VARIOUS EXPENSES AND REDUCTION IN RETURNED INCOM E ON ACCOUNT OF RENTAL INCOME. THIS INCOME CONSISTED OF PURCHASE O F SHARES TO THE TUNE OF RS. 6,50,224/- AND PURCHASE OF GYM MACHINER Y OF RS. 42,224/-. THE A.O. ALSO DISALLOWED OUT OF VEHICLE REPAIRS AND MAINTENANCE EXPENSES AND DEPRECIATION TO THE TUNE O F RS. 1 LAKH. IN FACT, THE ASSESSEE HAS ADMITTED UNDISCLOSED INCO ME OF RS. 40 LAKHS IN HIS STATEMENT RECORDED U/S 132(4) OF THE A CT ON BEHALF OF HIMSELF AND ON BEHALF OF OTHER MEMBERS OF HIS FAMIL Y TOWARDS INVESTMENT IN SHARES. THIS UNDISCLOSED INCOME PERT AINS TO A.Y. 2006-07. THE BREAK-UP OF THIS UNDISCLOSED INCOME I N VARIOUS PERSONS HANDS IS AS UNDER: SL. NO. NAME OF THE ASSESSEE UNDISCLOSED INCOME REPRESENTED BY INVESTMENT IN SHARES REMARKS 1. SHRI SUNIL LUNAWAT RS. 6,54,028/ - OFFERED FOR TAXATION IN THE CASE OF SHRI SUNIL LUNAWAT 2. SMT. VIJAYSHREE LUNAWAT RS. 6,50,925/ - OFFERED FOR TAXATION IN THE CASE OF SMT. VIJAYSHREE LUNAWAT 3. SHRI PRADEEP LUNAWAT RS. 6,53,478/ - OFFERED FOR TAXATION IN THE CASE OF SHRI PRADEEP LUNAWAT 5 4. SHRI MANGILAL LUNAWAT RS. 6,50,224/ - OFFERED FOR TAXATION IN THE CASE OF SHRI MANGILAL LUNAWAT 5. SMT. ANUSHREE LUNAWAT RS. 6,51,426/ - OFFERED FOR TAXATION IN THE CASE OF SMT. ANUSHREE LUNAWAT 6. SMT. SAYARDEVI LUNAWAT RS. 6,47,220/ - OFFERED FOR TAXATION IN THE CASE OF SMT. SAYARDEVI LUNAWAT RS. 39,07,301/ - IN THE ROI FILED PURSUANT TO NOTICE ISSUED U/S 153A OF THE ACT THE ASSESSEE AND OTHER MEMBERS OF THE FAMILY OFFERED TH E AFOREMENTIONED INVESTMENT IN SHARES FOR TAXATION A ND ALSO PAID DUE TAXES THEREON ALONGWITH INTEREST. IN ADDITION TO IT , THE ASSESSEE OFFERED UNDISCLOSED INCOME OF RS. 42,224/- ON ACC OUNT OF PURCHASE OF GYM MACHINERY. THE ASSESSEE INCLUDED THIS AS HI S UNDISCLOSED INCOME AND SURRENDERED THE SAME IN THE ROI FILED ON 31.3.2008. DURING PENALTY PROCEEDINGS, THE ASSESSEE ARGUED THA T NO PENALTY CAN BE IMPOSED IN THESE FACTS AS EXPLANATION 5 TO S ECTION 271(1)(C) OF THE ACT COMES AS HIS SAVIOR AS HE HAD OFFERED AD DITIONAL INCOME FOR TAXATION U/S 132(4) OF THE ACT, IDENTIFIE D THE ASSETS TOWARDS WHICH THE INCOME WAS APPLIED AND PAID ALL T AXES DUE THEREON ALONGWITH INTEREST THEREON. IN THIS REGARD , RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE JURISDICTIONA L HIGH COURT IN 6 THE CASE OF CIT VS. KANHAIYALAL SARUPARIA 299 ITR 1 9 [RAJ], INTER ALIA. WHEN EXPLANATION 5 TO SECTION 271(1)(C) OF T HE ACT IS A SAVING CLAUSE, THE ARGUMENT OF THE REVENUE IS THAT INCOME HAS BEEN DISCLOSED ONLY WHEN THE ASSESSEE WAS CORNERED AND T HUS THIS DECLARATION AND DISCLOSURE OF ADDITIONAL INCOME IS NOT VOLUNTARY. EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS E XTRACTED FOR READY REFERENCE WHICH READS AS UNDER: EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION RE FERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH AS SETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS O F 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 PART) FOR ANY PREVIOUS YEAR, WHICH H AS ENDED BEFORE THE DATE OF SEARCH AND, 7 (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 FILED 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 PURP OSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SEC TION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED T HE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 4. ON A PLAIN READING OF THE ABOVE PROVISION IT IS NOTICED THAT IN CASE THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG AND THEREAFTER THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQ UIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME WHICH IS RELATED TO ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SE ARCH AND THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NO T BEEN DECLARED FURNISHED BEFORE THE DATE OF SEARCH OR FOR SUCH PREVIOUS 8 YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH AND SUCH INCOME IS DECLARED BY HIM IN HIS ROI FURNISHED ON OR AFTER THE DATE OF SEARCH. HOWEVER, THIS DEEMING PROVISION ABOUT CON CEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME SHALL NOT BE APPLICABLE WHEN SUCH INCOME OR TRANSACTION R ESULTING INCOME WHICH ARE RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT MAINTAINED REGULARLY DURING THE COURSE OF B USINESS OR WHEN HE MAKES A DECLARATION IN HIS STATEMENT U/S 132(4) OF THE ACT THAT MONEY ETC FOUND IN HIS POSSESSION OR UNDER HIS CONT ROL WAS ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED IN H IS ROI TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SE CTION 139(1) AND SPECIFIES THE MANNER IN WHICH THE SAID INCOME HAS B EEN DERIVED AND PAYS DUE TAX THEREON TOGETHER WITH INTEREST IN RESP ECT OF SUCH INCOME. THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED ALL THESE ASPECTS IN THE CASE OF KANHIAYALAL SARUPARIA [SUPRA]. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, IN VIEW OF THE JUDGMENT OF THE HON'BLE RAJASTHAN HIGH COURT, A PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE IMPOSED. THE ASSESS EE HAS FULFILLED THE CONDITIONS LAID DOWN IN EXPLANATION 5 ABOVE. A CCORDINGLY, WE ORDER TO DELETE THE IMPUGNED PENALTY AND ALLOW THE APPEAL. 9 ITA NOS. 51/JODH/2014 THE GROUNDS RAISED, FACTS AND CIRCUMSTANCES, AND SUBMISSIONS OF THIS CASE ARE MUTATIS MUTANDIS IDENT ICAL TO THE CASE OF SHRI MANGILAL LUNAWAT DISCUSSED AND DEC IDED ABOVE, EXCEPT FOR THE AMOUNT IN QUESTION. THEREFOR E, IN THIS CASE ALSO, WE ORDER TO DELETE THE IMPUGNED PEN ALTY IN THE SAME LINES AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES STAND ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13 TH MAY, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH MAY, 2014 VL/- 10 COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR