DCIT, JODHPUR V. Shri Vinod Singhvi, JODHPUR

ITA 52/JODH/2014

• Counselvise Citation: 5223314 RSA 2014
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Assessee Lawyers: U C JAIN
• Keywords: Sale consideration of property below Jantri Value; Income from undisclosed sources; Search and seizure
• Section: 50C; 153A; 132

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 52 /JODH/201 4 (A.Y. 200 8 - 09 ) DCIT, CENTRAL CIRCLE - 2 , VS. SHRI VINOD SINGHVI , JODHPUR . 3, DEV NAGAR, PAL LINK ROAD, JODHPUR. PAN NO. AIAPS 0053 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN & SHRI RAJENDRA JAIN. DEPARTMENT BY : DR. DEEPAK SEHGAL - D.R. DATE OF HEARING : 06 / 0 5 /201 4 . DATE OF PRONOUNCEMENT : 16/ 0 7 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 19 / 11 /2013 OF L D . CIT(A), CENTRAL , JAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)(C) , JAIPUR HAS ERRED IN RESTRICTING THE PENALTY AT RS. 4,42,824/ - LEVIED U/S 271AAA OF THE I.T. ACT, 1961 AS AGAINST LEVIED BY THE AO OF RS. 13,72,000/ - BECAUSE IN THE SEARCH STATEMENT THE ASSESSEE HAD NOT 2 SPECIFIE D THE MANNER IN WHICH SUCH INCOME WAS DERIVED AND ALSO FAILED TO SUBSTANTIATE THE MANNER IN WHICH IT WAS DERIVED AND THEREFORE, NO IMMUNITY FROM PENALTY WAS AVAILABLE. 2. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. 2 FACTS OF THE CASE , IN BRIEF, ARE THAT SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED FROM 25/03/2008 TO 27/03/2008 AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE. DURING THE COURSE OF SEARCH, CERTAIN INCREMENTING EVIDENCES WERE GATHERED, A NOTICE U/S 153A OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) WAS ISSUED ON 12/09/2008. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FURNISHED THE RETURN OF INCOME ON 11/02/2009 DECLARING AN INCOME OF RS. 2,90,93,278/ - . H OWEVER, ASSESSMENT WAS COMPLETED U/S 153A R.W.S. 144 OF THE ACT ON 29/12/2009 AT A TOTAL INCOME OF RS. 7,05,51,9 1 0/ - AND THE PENALTY U/S 271AAA OF THE ACT AMOUNTING TO RS. 13,72,000/ - WAS LEVIED. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) , WHO ALLOWED RELIEF BY OBSERV ING AS UNDER: - I HAVE CAREFULLY PERUSED THE CASES RELIED ON BY THE AR AND FIND THAT THEY ARE DIFFERENT FROM THE FACTS OF THE CASE OF THE APPELLANT . IN THE CASES RELIED ON THE PENALTY WAS IMPOSED UNDER EXPLANATION - 5 TO 271(1)(C) WHEREAS IN THE CASE OF THE APPELLANT IT IS IMPOSABLE U/S 271AAA. THEREFORE, THE FINDING WITH REFERENCE TO PROVISIONS OF EXPLANATION - 5 TO 271(1)(C) BY THE HON. JUDICIAL AUTH ORITIES IN THE ABOVE CASES WOULD NOT BE APPLICABLE TO THE FACTS 3 OF THE CASE OF THE APPELLANT BECAUSE THEY COME WITHIN THE PURVIEW OF THE PROVISIONS OF SEC. 271AAA WHICH IS NON - OBSTAN TE CLAUSE WITH VERY SPECIFIC C ON D ITION FOR I MPOSITION OF PENALTY IN CASES WHERE SEARCH WAS INITIATED U/S 132 AFTER 01/07/2007 BUT BEFORE 01/07/2012. AS DISCUSSED ABOVE, THE FACTS OF THE CASE OF THE APPELLANT DO NOT FULFILL THE CONDITIONS FOR RELIEF UNDER SUB SEC. 2 TO SEC. 271AAA. VI) ON PERUSAL OF THE PENALTY ORDER IT IS SEEN THAT THE AO HIMSELF HAS NOT IMPOSED THE PENALTY ON RS. 14,94,697/ - BEING UNEXPLAINED CASH FOUND AT THE PREMISES OF THE APPELLANT SINCE THE MATTER HAD BEEN SET ASIDE BY THE HON. ITAT FOR VERIFICATION. THE PENALTY ON THIS AMOUNT WOULD BE INITIATED AFTER PASSING THE SET ASIDE ORDER. PENALTY HAS BEEN IMPOSED ON RS. 19,81,311/ - BEING UNACCOUNTED INCOME FROM BOGUS CLIENTS AND RS. 1,42,000/ - AS CONFIRMED U/S 50C BY THE HON. ITAT. HOWEVER, SUBSEQUENTLY THE ADDITION OF R S. 19,81,311/ - WAS DELETED BY THE HON. ITAT IN RESPONSE TO THE MA FILED BY THE ASSESSEE VIDE ITS ORDER D A TED 17/06/2013 THEREFORE NO PENALTY CAN BE IMPOSED ON THIS AMOUNT. SIMILARLY NO PENALTY CAN BE IMPOSED ON THE ADDITION ON CAPITAL GAINS MADE U/S 50C A S THE AO HIMSELF HAS ADMITTED IN THE ASSESSMENT ORDER THAT NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH REGARDING EXTRA PAYMENT HAVING BEEN RECEIVED BY THE APPELLANT. THE MATTER WAS REFERRED TO THE DVO AND THE ADDITION WAS MADE U/S 50C(3). I HAVE CONSISTENTLY FOLLOWED THE FINDING OF THE CASE OF HON. MUMBAI ITAT IN THE CASE OF RENU HINGORANI VS. ACIT , ITA NO. 2210/MUM/2010 FOR THE A.YS. 2006 - 07 DATED 22/12/2010 . HOWEVER, PENALTY IS RESTRICTED TO THE UN DISCLOSED INCOME FOR THIS A.Y. TO THE EXTENT OF RS. 44,28,239/ - AS PER CHART ON PAGE 16 WHICH IS THE DIFFERENCE BETWEEN THE INVESTMENT IN ASSETS DISCLOSED BY THE APPELLANT DURING THIS A.Y. AND THE SURRENDER OF INCOME IN THE THREE A.Y. ON ACCOUNT OF TRADIN G IN DUMMY CLIENT ACCOUNTS. THE DEFICIT IN THE SOURCE OF INVESTMENT HAS NOT BEEN EXPLAINED DURING THIS A.Y. EVEN AFTER GIVING THE TELESCOPING EFFECT OF THE SURRENDER OF INCOME MADE IN THE THREE A.Y., THE SOURCE OF INVESTMENT TO THE EXTENT OF RS. 44,28,23 9/ - REMAINED UNEXPLAINED. THEREFORE, PENALTY U/S 271AAA IS IMPOSABLE ON THE UNDISCLOSED INCOME OF RS. 44,28,239/ - . NOW THE DEPARTMENT IS IN APPEAL. 4 4. LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND A GAINST THE DEPARTMENT VIDE ORDER DATED 12/03/2014 IN ASSESSEES OWN CASE IN I.T.A.NO. 547, 33 & 34/JU/2013 , COPY OF THE SAID ORDER WAS FURNISHED. 5. IN HIS RIVAL SUBMISSIONS, LEARNE D D.R. ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. I T IS NOTICED THAT A SIMILAR ISSUE HAVING IDENTICAL FACTS HAD ALREADY BEEN ADJUDICATED BY THIS B ENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A.NO. 547, 33 & 34/JU/2013 FOR THE A.Y. 2006 - 07 TO 2008 - 09 WHEREIN THE PENALTY SUSTAINED BY THE LD. CIT(A) HAD BEEN DELETED WHILE DECIDING THE APPEAL OF THE ASSESSEE. THE RELEVANT FINDINGS H A VE BEEN GIVEN IN PARA 6 TO 9 OF THE ORDER DATED 12/03/2014 WHICH READ AS UNDER: - ' 6. AS WE HAVE ALREADY NARRATED THE RELEVANT AND MATERIAL FACTS OF THESE CASES WHILE NARRATING FOR A.Y. 2008 - 09, THE ARGUMENTS RAISED BY THE PARTIES FOR AND AGAINST THEIR CASES ARE ALMOST SAME AND SIMILAR. AFTER SURRENDER W AS MADE ON THE BASIS OF ASSETS AS INCOME EARNED WHILE MAKING STATEMENT U/S 132(4) 5 OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME ON THE BASIS THEREOF IN VIEW OF EXPLANATION 5A AND OF SECTION U/S 271(1)(C) AND SUB - SECTION (2) OF SECTION 271AAA OF THE ACT W HICH IS AS UNDER: A. CONSTRUCTION OF HOUSE RS. 4000000 B. INVESTMENT IN CLIENTS CODE FOR WHICH NO CONFIRMATION WAS FILED RS. 1150593 C. UNEXPLAINED CASH RS. 4555303 D. GOLD ORNAMENTS RS. 1888743 7. THE BREAK - UP OF INCOME OF RS. 44,28,239/ - ON WHICH PENALTY IS SUSTAINED IS AS UNDER: INCOME DISCLOSED IN FORM OF ASSETS IN THE A.Y. 2008 - 09: LESS INCOME DECLARED IN [CIT(A) PARA D PAGE 16 RS. 1,15,94,639/ - A. A.Y. 2006 - 07 RS. 3,07,729/ - B. A.Y. 2007 - 08 RS. 16,84,860/ - C A.Y. 2008 - 09 RS. 51,73,811/ - RS. 71,66,400/ - INCOME ON WHICH PENALTY SUSTAINED RS. 44,28,239/ - 8. AS WE HAVE ALREADY DISCUSSED AND HELD IN A.Y. 2008 - 09, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASES, NO PENALTY IS IMPOSABLE EITHER ON INCOME DISCLOSED U/S 271(1)(C) FOR A.YS. 2006 - 07 AND 2007 - 08 OR U/S 271AAA OF THE ACT FOR A.Y. 2008 - 09. THE STATEMENT RECORDED U/S 132(4) WHEN READ ALONGWITH EXPLANATION 5A AS STATED ABOVE, THE INTENTION OF LAW BECOME CLEAR. IT IS NOTICED THAT INCOME SURRENDERE D IN A.YS. 2006 - 07 TO 2008 - 09 IS MUCH MORE THEN COMPUTED BY THE A.O. FROM CLIENT CODE FOR ALL THE YEARS WHICH COMES TO RS. 7,12,208/ - . THE BREAK - UP OF THE SAME IS AS UNDER: A. A.Y. 2006 - 07 RS. 3,07,729/ - B. A.Y. 2007 - 08 RS. 16,84,860/ - 6 C A.Y. 2008 - 09 RS. 1,15,94,639/ - RS. 1,35,87,228/ - THE INCOME DISCLOSED BY THE ASSESSEE IS REQUIRED TO BE REDUCED FROM NET INCOME ASSESSED BY THE A.O. FROM CLIENTS CODE AMOUNTS TO DOUBLE ADDITION AND THUS, IN OUR CONSIDERED OPINION, THE LD. CIT(A) HA S COMMITTED MISTAKE IN CONFIRMING PENALTY AS WELL AS ENHANCING PENALTY U/S 271(1)(C) FOR A.YS. 2006 - 07 AND 2007 - 08. 9. THE FOLLOWING DECISIONS SUPPORT OUR ABOVE FINDING: A. DEVI DAS SUKHANI VS. DCIT 94 DTR 121 [JODHPUR] B. DCIT VS. NARESH KUMAR AGARWAL ITA NO 1289 - 1290/KOL/2012 DATED 17.1.2014 [ITAT, KOLKOTA C BENCH] C. CIT VS. KRISHI TYRE RETREADING AND RUBBER INDUSTRIES 360 ITR 580 [RAJ] D. ACIT VS. A.N. ANNAMALAISWAMY 87 DTR 202 [CHENNAI] E. NEERAT SINGHAL VS. ACIT 146 ITD 152 [DEL] F. CIT VS. MAHENDRA C. SHAH 299 ITR 305 G. CIT VS. KANHAIYA LAL 299 ITR 19 [RAJ] ACCORDINGLY, WE FIND MERIT IN ALL THE APPEALS AND ORDER TO DELETE THE PENALTY IMPOSED IN THESE CASES AS WELL. TO SUM UP, THE ENTIRE PENALTIES ARE DELETED. 7 . WE, THEREFORE, BY RESPECTFULLY FOLLO WI NG THE AFORESAID REFERRED TO ORDER, DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT BECAUSE THE PENALTY U/S 271 A AA OF THE ACT SUSTAINED BY THE LD. CIT(A) HAD ALREADY BEEN DELETED ON THE APPEAL OF THE ASSESSEE. 7 8 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 1 6 TH JULY , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH JULY , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR .