Raghuveer Singh, R R Dist, Hyderabad V. DCIT, Central Circle-7, Hyd, Hyderabad

ITA 522/HYD/2015

• Counselvise Citation: 52222514 RSA 2015
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 09-10-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 05-05-2015
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Keywords: Search and seizure; Salary income
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 522/HYD/2015 ASSESSMENT YEAR: 2003-04 RAGHUVEER SINGH, NO. 9-87, KAMALANAGAR COLONY, MEDIPALLY VILLAGE, GHATKESAR MANDAL, R.R. DISTRICT. [PAN: ATYPS2913F] VS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-7, HYDERABAD (APPELLANT) (RESPONDENT) I.T.A. NO. 523/HYD/2015 ASSESSMENT YEAR: 2005-06 BODIGA RAMDAS GOUD, NO. 2-100, GANDHI NAGAR, PARVATHAPUR, UPPAL, R.R. DISTRICT. [PAN: AROBP8568K] VS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-7, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS , AR FOR REVENUE : SHRI B. KURMI NAIDU , DR DATE OF HEARING : 3 0 - 1 0 - 201 5 DATE OF PRONOUNCE MENT : 18 - 1 1 - 2015 O R D E R THESE TWO APPEALS BY RESPECTIVE ASSESSEES ARE AGAI NST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- I, GUNTUR, DATED 18-02-2015, CONFIRMING THE PENALTIES LEVIED U /S. 271(1)(C) OF THE INCOME TAX ACT [ACT] IN RESPECTIVE ASSESSMENT Y EARS. BOTH THE ASSESSEES HAVE RAISED COMMON GROUNDS STATING THAT T HE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED T O THE FACTS OF THE CASE SO AS TO LEVY PENALTY UNDER THAT SECTION. I.T.A. NOS. 522 & 523/HYD/2015 :- 2 -: 2. BRIEFLY STATED, THERE WERE SEARCH AND SEIZURE OP ERATIONS ON 15-09-2008 IN THE RESIDENTIAL PREMISES OF SHRI B. R AMDAS GOUD AND OTHER ASSESSEE SHRI RAGHUVEER SINGH, WAS AN ASS OCIATE. PROCEEDINGS U/S. 153A WERE INITIATED IN THE CASE OF SHRI B. RAMDAS GOUD, WHEREAS PROCEEDINGS U/S. 153C WERE INITIATED IN THE CASE OF SHRI RAGHUVEER SINGH. AFTER THE SEARCH AND SEIZURE OPERATIONS, BOTH THE ASSESSEES HAVE DECLARED THE INCOMES CONSIS TING OF COMMISSION, CAPITAL GAINS, RENT, INTEREST, SALARY A ND LEASE INCOME ETC., FOR AYS. 2002-03 TO 2008-09. CONSEQUENT TO T HE DECLARATION GIVEN TO THE DY. DIRECTOR OF INCOME TAX, INVESTIGAT ION, HYDERABAD, ASSESSEES HEREIN HAVE FILED RETURNS WHEN NOTICES WE RE ISSUED U/ 153A AND 153C RESPECTIVELY AND THESE WERE ACCEPTED IN THE SCRUTINY ASSESSMENT COMPLETED SUBSEQUENTLY. FOR TH E IMPUGNED AY. 2005-06, IN THE CASE OF SHRI B. RAMDAS GOUD, AS SESSEE OFFERED COMMISSION INCOME OF RS. 3,13,870/- AND INTEREST IN COME OF RS. 31,500/-, LEASE RENT OF RS. 5,000/- MAKING TOTAL IN COME OF RS. 3,95,370/-. THIS INCOME ALONG WITH AGRICULTURAL IN COME OF RS. 3,58,000/- HAS BEEN OFFERED BY ASSESSEE IN THE RETU RN FILED WHICH WAS ACCEPTED. SIMILARLY, IN THE CASE OF SHRI RAGHU VEER SINGH EVEN THOUGH WAS NOT COVERED BY THE SECTION 132, HOWEVER, DECLARED INCOMES FROM AY. 2002-03 TO 2008-09 UNDER THE HEAD COMMISSION, CAPITAL GAINS, SALARY IN RESPECTI VE ASSESSMENT YEARS. AS DECLARED BEFORE THE DY. DIRECTOR OF INCO ME TAX, INVESTIGATION, HYDERABAD, ASSESSEE FILED RETURN FOR THE AY. 2003-04 DECLARING COMMISSION INCOME OF RS. 69,600/-, CAPITA L GAINS OF RS. 5,000/-, SALARY INCOME OF RS. 12,000/-, TOTAL BEING 82,100/-. 3. WHILE ACCEPTING THE RETURN FILED IN THE RESPECTI VE ASSESSEES CASES, AO WAS OF THE VIEW THAT SINCE THESE ASSESSEE S WERE NOT INCOME TAX ASSESSEES EARLIER AND SINCE THE INCOMES HAVE BEEN I.T.A. NOS. 522 & 523/HYD/2015 :- 3 -: DECLARED CONSEQUENT TO SEARCH AND SEIZURE PROCEEDIN GS, THE INCOMES DECLARED BY ASSESSEES ARE CONCEALED INCOMES , ACCORDINGLY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED. 4. ASSESSEES HAVE NOT RESPONDED TO THE NOTICES ISSU ED. THEREFORE, AO CONSIDERING THAT THERE IS NO EXPLANAT ION TO BE GIVEN BY ASSESSEES, LEVIED PENALTY OF RS. 1,06,000/- IN T HE CASE OF SHRI B. RAMDAS GOUD AND RS. 7,000/- IN THE CASE OF SHRI RAG HUVEER SINGH. 5. BEFORE THE LD. CIT(A), IT WAS CONTENDED THAT PRO VISIONS OF SECTION 271(1)(C) ARE NOT ATTRACTED AS THE INCOME R ETURNED WERE ACCEPTED AS SUCH AND THERE WAS NO INCRIMINATING MAT ERIAL FOUND DURING THE SEARCH. HOWEVER, LD. CIT(A) RELYING ON THE PROVISIONS OF EXPLANATION-5A OF SECTION 271(1)(C), CONFIRMED THE PENALTY. 6. BEFORE US, LD. COUNSEL SUBMITTED THAT CIT(A) WAS WRONG IN CONSIDERING THAT EXPLANATION-5A IS APPLICABLE. AS FAR AS THE CASE OF SHRI RAGHUVEER SINGH IS CONCERNED, HE IS NOT AN ASSESSEE WHO HAS BEEN SEARCHED. PROCEEDINGS ARE INITIATED U/S. 153C, THEREFORE, PROVISIONS OF EXPLANATION-5A ARE NOT APPLICABLE. T HEREFORE, THE ONLY PROVISION WHICH IS APPLICABLE IS EXPLANATION-1 . WITH REFERENCE TO SHRI B. RAMDAS GOUD, WHILE ADMITTING THAT ASSESS EE WAS SEARCHED U/S. 132 OF THE ACT, HOWEVER, SUBMITTED TH AT EXPLANATION-5A IS NOT APPLICABLE. HE REFERRED TO T HE STATEMENT RECORDED U/S. 132(4) WHICH CLEARLY INDICATE THAT TH ERE WAS NO SEIZURE OF ASSETS LIKE CASH ETC OR ANY INCRIMINATIN G MATERIAL WAS FOUND OR IDENTIFIED, THEREFORE, THE PROVISIONS OF E XPLANATION-5A ARE NOT APPLICABLE. IT WAS SUBMITTED THAT CONDITIONS U /S. 271(1)(C) WERE NOT APPLICABLE IN BOTH THE CASES AS THESE PROC EEDINGS I.T.A. NOS. 522 & 523/HYD/2015 :- 4 -: U/S. 153A/153C ARE INDEPENDENT AND HAS NO RELATION TO OTHER ASSESSMENT PROCEEDINGS. FURTHER, IT WAS SUBMITTED THAT INVOKING EXPLANATION-5A, THERE SHOULD BE A FINDING THAT ASSE SSEE IS THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER ART ICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS. HE FURTHER REFERRED TO THE DECLARATION GIVEN BEFORE THE DY. DIRECTOR TO SUBMIT THAT ASSESS EE HAS ESTIMATED INCOMES, THEREFORE, PENALTY CANNOT BE LEVIED ON EST IMATED INCOMES. LD. DR HOWEVER, RELIED ON THE ORDERS OF THE AO AND CIT(A). 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE PROCEEDINGS. IN BOTH THE CASES, THERE IS A FINDING THAT THERE IS NO INCRIMINATING MATERIAL FOUND IN THE CASE OF SEARCH. HE STATEMENT RECORDED U/S. 132(4) IN THE CASE OF SHRI B. RAMDAS GOUD PLACED ON RECORD DO CONFIRM THIS ABOVE FACT. THE QUESTION AN D ANSWER ARE AS UNDER: Q.NO. 3: DURING THE SEARCH AND SEIZURE PROCEEDINGS, THE SEARCH TEAM HAS NOT SEIZED ANY MATERIAL OR BOOKS OF ACCOUNT/MON EY/BULLION OR ANY ARTICLE OR THING FROM YOUR RESIDENCE. ARE YOU CONFIRMING THE SAME? ANS: YES, I AM CONFIRMING THAT NO ARTICLE OR THING OR ANY BOOKS OF ACCOUNT/DOCUMENTS/LOSE SHEETS ARE SEIZED FROM MY RE SIDENCE DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS. THE ABOVE QUESTION AND ANSWER RECORDED IN SRI RAMD AS GOUD CASE INDICATE THAT THERE WAS NO INCRIMINATING MATERIAL O R ANY ASSETS FOUND CONSEQUENT TO THE SEARCH. I.T.A. NOS. 522 & 523/HYD/2015 :- 5 -: 8. EXPLANATION-5A OF SECTION 271(1)(C) IS SPECIFICA LLY MADE APPLICABLE FOR ALL THE SEARCHES INITIATED U/S. 132 ON OR AFTER FIRST DAY OF JUNE, 2007. THE SEARCH IN THE IMPUGNED CASE WAS INITIATED ON 15-09-2008, CONSEQUENTLY WHETHER EXPLANATION-5A IS APPLICABLE TO THE FACTS OF THESE CASES IS TO BE CONSIDERED. 9. EXPLANATION 5 HAS BEEN AMENDED BY THE FINANCE AC T, 2007 TO RESTRICT THE APPLICATION OF THAT EXPLANATION TO SEA RCHES INITIATED BEFORE 01-06-2007. A NEW EXPLANATION 5A WAS INTRODU CED BY FINANCE ACT 2007, W.E.F 01-06-2007 TO COVER SEARCHE S INITIATED AFTER 01-06-2007 WHICH READ 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 VALUABLE ARTICLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASS ETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR ; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH E NTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESEN TS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH AND THE DUE DATE FOR FILING THE RETURN OF IN COME FOR SUCH YEAR HAS EXPIRED AND THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INC OME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PUR POSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C)OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. 9.1. WHILE THE NEW EXPLANATION DOES AWAY WITH THE E XEMPTION FROM PENALTY IF THE ASSESSEE OFFERS THE PAYMENT IN THE COURSE OF STATEMENT U/S. 132(4), BUT UNDER THIS EXPLANATION A S IT STOOD AT THE TIME OF INTRODUCTION, DEEMED CONCEALMENT OF INCOME ASSESSED IN CONSEQUENCE OF SEARCH APPLIED ONLY IF THE ASSESSEES HAD NOT HAD I.T.A. NOS. 522 & 523/HYD/2015 :- 6 -: FILED A RETURN OF INCOME BEFORE THE DUE DATE FOR FI LING OF RETURN IN THE RESPECTIVE YEARS. EXPLANATION 5A WAS FURTHER AM ENDED BY FINANCE ACT (NO.2) 2009 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 ASSE SSEE IS FOUND TO BE THE OWNER OF- (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILI ZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR ; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH E NTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESEN TS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, W HICH HAS ENDED BEFORE THE DATE OF SEARCH AND,- (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN D ECLARED 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 INC OME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSE S OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION , BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. 10. IN THE CIRCULAR NO 5/2010 DATED 03-06-2010 ISSU ED BY THE CBDT EXPLAINING THE PROVISIONS OF THE FINANCE ACT (NO.2) 2009, THE AMENDMENT TO EXPLANATION 5A WAS EXPLAINED AS UN DER: 53.2 BY SUBSTITUTING THE EXPLANATION 5A IT HAS BEE N CLARIFIED THAT THE SCOPE EXTENDS TO THE CASES WHERE THE ASSESSEE HAS F ILED THE RETURN OF INCOME FOR ANY PREVIOUS YEAR AND THE INCOME FOUND DURING T HE COURSE OF SEARCH RELATES TO SUCH PREVIOUS YEAR AND HAD NOT BEEN DISC LOSED IN THE SAID RETURN, THEN SUCH INCOME SHALL REPRESENT DEEMED CONCEALMENT OF INCOME AND ASSESSEE SHALL BE LIABLE TO PAY PENALTY UNDER SECTI ON 271. I.T.A. NOS. 522 & 523/HYD/2015 :- 7 -: 11. THUS, AS PER THE EXISTING EXPLANATION-5A PRIOR TO THE AMENDMENT BY FINANCE (NO.2) ACT 2009, IF AN ASSESSE E HAD FILED THE RETURN OF INCOME FOR THE YEARS COVERED BY THE S EARCH, THEN THE ADDITION MADE SHALL NOT BE CONSIDERED AS DEEMED CON CEALMENT. IT IS ONLY BY THE AMENDMENT TO EXPLANATION 5A BY THE F INANCE (NO.2) ACT 2009, THAT ADDITION MADE IN THE COURSE OF ASSES SMENT U/S 153A, WILL BE DEEMED TO BE CONCEALED INCOME, EVEN I F THE ASSESSEE HAD FILED A RETURN OF INCOME EARLIER FOR THE RELEVA NT ASSESSMENT YEAR. PRIOR TO THE AMENDMENT, IF AN ASSESSEE HAD AL READY FILED A RETURN OF INCOME, THE ADDITION MADE IN THE ASSESSME NT MADE U/S 153A CANNOT BE DEEMED TO BE CONCEALED INCOME. 12. NO DOUBT, THE UN-AMENDED PROVISIONS AS APPLICAB LE BETWEEN 01-06-2007 AND 01-04-2009 OF EXPLANATION-5A IS APPL ICABLE, PROVIDED THE CONDITIONS AS SPECIFIED IN ITEM NOS. 1 & 2 ARE SATISFIED. AS ALREADY STATED ABOVE, ASSESSEE IS NOT FOUND TO BE THE OWNER OF EITHER ANY MONEY/BULLION/JEWELLERY OR OTHE R AVAILABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY I N BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS. THUS, EXPLANATION- 5A EITHER PRE-AMENDMENT OR POST-AMENDMENT IS NOT AP PLICABLE TO THE FACTS OF THE CASE. THEREFORE, CIT(A)S ORDER CO NFIRMING THE PENALTIES INVOKING THE EXPLANATION-5A IN BOTH THE C ASES IS WITHOUT SATISFYING THE CONDITIONS THEREIN AND THEREFORE, T O THAT EXTENT, CIT(A)S ORDER IS TO BE SET ASIDE. 13. THERE WERE NO INCRIMINATING MATERIAL IN BOTH CA SES. PARTICULARLY IN THE CASE OF SHRI RAGHUVEER SINGH, A S NO SEARCH HAS OCCURRED IN HIS PLACE, EXPLANATION-5A CANNOT BE INV OKED. IN THE CASE OF SHRI B. RAMDAS GOUD, EVEN THOUGH SEARCH HAS OCCURRED, NOTHING WAS FOUND THEREFORE, SO EXPLANATION-5A IS N OT APPLICABLE. I.T.A. NOS. 522 & 523/HYD/2015 :- 8 -: IN BOTH THE CASES, ASSESSEES EXPLANATION WAS THAT INCOMES WERE OFFERED ON ESTIMATION BASIS WHICH WERE ACCEPTED BY THE AOS WITHOUT ANY ADDITION. PROCEEDINGS U/S. 153A/153C A RE SEPARATE PROCEEDINGS AND HAS NO RELEVANCE TO THE EARLIER ASS ESSMENT PROCEEDINGS. THERE IS NO VARIATION BETWEEN INCOME RETURNED AND INCOME ASSESSED IN THESE CASES. CONSEQUENTLY, IT C ANNOT BE HELD THAT THERE IS ANY CONCEALED INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT PROCEEDINGS U/S. 271(1)(C). IN VIEW OF THIS, I AM OF THE OPINION THAT LEVY OF PENALTY U/S. 271(1)(C) IS NOT WARRANTED AND ACCORDINGLY, THE IMP UGNED ORDERS OF THE AO ARE CANCELLED. 14. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2015 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 18 TH NOVEMBER, 2015 TNMM I.T.A. NOS. 522 & 523/HYD/2015 :- 9 -: COPY TO : 1. RAGHUVEER SINGH, NO. 9-87, KAMALANAGAR COLONY, MEDIPALLY VILLAGE, GHATKESAR MANDAL, R.R. DISTRICT. 2. BODIGA RAMDAS GOUD, NO. 2- 100, GANDHI NAGAR, PARVATHAPUR, UPPAL, R.R. DISTRICT. C/O. B. NARSING RAO & CO., CHARTERED ACCOUNTANTS, P LOT NO. 554, ROAD NO. 92, JUBILEE HILLS, HYDERABAD. 3. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 7 , HYDERABAD. 4 . CIT(APPEALS) - I , GUNTUR. 5 . THE PR. CIT , CENTRAL, HYDERABAD . 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.