DCIT CEN CIR 12, MUMBAI V. SAMEER N.SHAH, MUMBAI

ITA 5282/MUM/2013

• Counselvise Citation: 528219914 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 02-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 30-07-2013
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: RAJESH GUPTE
• Keywords: Revised return
• Section: 147; 132; 15; 139; 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & MS. SUSHMA CHOWLA , J M ./ I TA NO. 5282 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 03 - 04 ) ACIT, CENTRAL CIRCLE - 12, MUMBAI VS. SHRI SAMEER N SHAH, 2/20, ZALAWAD NAGAR, JUHU LANE, ANDHERI (W), MUMBAI - 400058 ./ ./ PAN/GIR NO. : A A CPS 0634 C ( / APPELL ANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI NEIL PHILIP /ASSESSEE BY : SHRI RAJESH GUPTE / DATE OF HEARING : 0 2 /0 6 / 2015 / DATE OF PRONOUNCEMENT 10/06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 37 , MUMBAI , DATED 30 - 5 - 2013 FOR THE ASSESSMENT YEAR 20 03 - 04 , IN THE MATTER OF ORDER IMPOSITION OF PENALTY U/S.271(1)(C) OF THE I.T. ACT , WHEREIN TH E REVENUE IS AGGRIEVED IN DELETION OF PENALTY SO IMPOSED BY THE ASSESSING OFFICER. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED . FACTS IN BRIEF ARE THAT THE ASSESSEE CLAIMED ALLEGED LONG TERM CAPITAL GAINS ON SALE PROCEEDS OF PENNY STOCK SHARES OF M/S DATA BASE FINANCE LTD.. DURING THE COURSE OF SEARCH, THE ASSESSEE CONCEDED THE FURNISHING OF ITA NO. 5282 /1 3 2 INACCURATE PARTICULARS OF INCOME ON ALLEGED LONG TERM CAPITAL GAINS ON THE SALE OF PENNY STOCK SHARES OF M/S DATA BASE FINANCE LTD.. ACCORDINGLY, THE ASSESS EE FILED RETURN U/S.153A BY OFFERING THE SAID LTC G AS INCOME FROM OTHER SOURCES. THEREAFTER THE AO COMPLETED THE ASSESS MENT AFTER MAKING ADDITION OF RS. 2,60,329/ - TOWARDS UNACCOUNTED COMMISSION FOR OBTAINING LTCG. THE AO ALSO NOTED THAT THE ASSESSEE DID N OT DISCLOSE HIS CORRECT INCOME IN ITS RETURN FILED ORIGINALLY AND FURNISHED INACCURATE PARTICULARS OF HIS INCOME, THEREFORE, LEVIED PENALTY U/S.271(1)(C) OF THE ACT. 3. IN APPEAL, THE CIT(A) CANCELLED THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT IN REGARD TO LONG TERM CAPITAL GAIN OF RS.52,06,574/ - , AFTER HAVING FOLLOWING OBSERVATION : - 5.5. LD. AR POINTED OUT THAT ON SAME SET OF FACTS, HON'BLE IT AT, MUMBAI IN THE CASE OF APPELLANT'S BROTHER SHRI AMIT SHAH AND FATHER, SHRI NAROTTAM M. SHAH AS, IN IT.A. N O. 908/MUM/2009 DATED 24/04/10 AND IT.A NO. 907/MUM/2009 DATED 22112/10 HAS HELD THAT PENALTY U/S. 271(1)(C) WAS NOT IMPOSABLE ON THE AMOUNT OF CAPITAL GAINS DECLARED IN THE RETURNED FILED U/S.153A. RELEVANT PART OF THE HON'BLE TRIBUNAL'S ORDER IN IT.A NO. 908/MUM/2009 IS AS UNDER: 'IN OUR HUMBLE OPINION, THE PENALTY IN QUESTION IS LEVIED ONLY WITH REFERENCE OF THE RETURN OF INCOME FILED U/S 153A. THE AO WHILE PASSING AN ORDER U/S.143(3), DID NOT HOLD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IN THE RETURN FILE U/S 153A ON 15/09/2006 EXCEPT FOR AN AMOUNT OF RS. 2,59,829/ - . THUS TO HOLD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS WITH REFERENCE TO THE RETURN OF INCOME BASED ON WHICH PENALTY U/S. 271 (1)(C) HAS BEEN INITIATED, WOULD B E BAD IN LAW EXCEPT TO THE EXTENT OF RS.2, 59,829/ - . THE ORIGINAL RETURN FILED U/S.139(1) IS NOT THE BASIS ON WHICH THE ASSESSMENT HAS BEEN COMPLETED NOR IS IT THE BASIS ON WHICH THE PENALTY U/S 271(1)(C) HAS BEEN INITIATED. THE RETURN FILED U/S153A CANNO T BE CONSIDERED A REVISED RETURN. THUS AS THERE IS NOT VARIATION BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME, EXCEPT TO THE TUNE OF RS.2,59,821/ - , WE HOLD THAT LEVYING PENALTY U/S271(1)(C) ON THE AMOUNT OF RS.51,96,559/ - IS BAD IN LAW. AS FAR AS TH E LEVY OF PENALTY ON COMMISSION OF RS. 2, 59, 829/ - IS CONCERNED, THE SAME HAS NOT BEEN FURNISHED IN THE RETURN OF INCOME ITA NO. 5282 /1 3 3 AND HENCE TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS AND WE UPHOLD THE LEVY OF PENALTY ON THE SAME. COMING TO THE ARGUMENT OF THE ASSESSEE ON THE ISSUE OF APPLICABILITY OF EXPLN.5 TO SEC.271(1)(C), WE FIND THAT THE SAME DOES NOT APPLY TO THIS CASE FOR THE REASON THAT THE STATEMENT U/S.132(4) DOES NOT REFER TO ANY MONEY/BULLION/JEWELLERY OR OTHER VALUABLE ARTICLE OR THING. THE DE CLARATION STATED THAT THE LONG TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE WAS NON - GENUINE. CLAUSE(2) OF EXPLN.5 READS AS FOLLOWS: (2) HE, IN THE COURSE OF SEARCH, MAKES A STATEMENT UNDER SUB - SEC.(4) OF SEC. 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB - SEC(1) OF SEC 139, AND ALSO S PECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE T A X, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. AS THE DECLARATION IS NOT IN CONNECTION WITH MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR TH ING FOUND IN THE CONTROL OF THE ASSESSEE, IN OUR HUMBLE OPINION, THE IMMUNITY CANNOT BE EXTENDED. IN VIEW OF THE ABOVE FINDING, WE NEED NOT DISCUSS THE OTHER CASE LAWS RELIED UPON BY THE ASSESSEE AS THE SAME WOULD BE AN ACADEMIC EXERCISE. IN THE RESULT, WE PARTLY CONFIRM THE PENALTY LEVIED U/S 271(1)(C) AND HOLD THAT THE PENALTY ON AN AMOUNT OF RS.51,25, 144/ - IS BAD IN LAW AND HENCE DELETED AND THAT LEVY ON AN AMOUNT OF RS.2,59,829/ - IS HEREBY CONFIRMED. 5.6 AS THE FACTS OBTAINING IN THE PRESENT CASE A RE SAME AS IN THE ABOVE ORDER OF THE TRIBUNAL, RESPECTFULLY FOLLOWING THE SAME, PENALTY IMPOSED ON LONG TERM CA PITAL GAIN OF RS. 52 ,06,574/ - , IS DIRECTED TO BE CANCELLED. THE ABOVE VIEW IS ALSO FORTIFIED BY THE DECISION OF HONBLE DELHI BENCH OF THE ITAT I N THE CASE OF PREM ARORA VS. DCIT (2012) 78 DT R (DEL) (TRIB) 91. THE HEAD NOTES AND SUMMARY OF DECISION IN THE ABOVE CASE ARE AS' UNDER: PENALTY U/S. 271 (1 )(C) - CONCEALMENT - DISCLOSURE OF ADDITIONAL INCOME IN THE RETURN FILED UNDER SEC. 153A - NORMAL ASSESS MENT PROCEDURE COVERED BY SECTIONS. 139, 147, 148, 149, 151 AND 153 HAS BEEN COMPLETELY EXCLUDED BY OPERATION OF NON OBSTANTE CLAUSE OCCURRING IN SEC. 153A AND THEREFORE, THE SEARCH ASSESSMENT UNDER SEC. 153A CANNOT BE TREATED AS CONTINUANCE OF NORMAL ASSE SSMENT PROCEEDINGS, WHETHER ABATED OR NOT - THERE IS COMPLETE DETACHMENT OF ASSESSMENT. PROCEEDINGS UNDER SEC.143 OR SEC. 147 FROM SEARCH ASSESSMENT U/S.153A - WHEN THE SCHEME OF SEARCH ASSESSMENT DOES NOT TAKE INTO ACCOUNT THE EARLIER ASSESSMENT PROCEEDINGS , WHETHER ABATED OR NOT, IT IS NOT PROPER TO REFER TO THE RETURNED INCOME UNDER SEC. 139 FOR THE PURPOSE OF IMPOSITION OF PENALTY ITA NO. 5282 /1 3 4 ULS.271(1)(C) - THUS, THE CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO THE ADDITIONAL INCOME BROUGHT TO TAX OVER AND A BOVE THAT RETURNED BY THE ASSESSEE IN RESPONSE TO NOTICE ISSUED UNDER SEC. 15 U/S.153A - PENALTY ULS.271(1)(C) IS IMPOSABLE WHEN THERE IS VARIATION BETWEEN THE ASSESSED INCOME AND RETURNED INCOME - WHERE RETURNED INCOME DISCLOSED IN THE RETURN FILED UNDER SE C. 153A IS ACCEPTED BY THE AO, THERE IS NOT CONCEALMENT AND CONSEQUENTLY PENALTY ULS.271(1)(C) IS NOT LEVIABLE - IN THIS CASE, THOUGH THE AO HAS REJECTED THE CASH FLOW STATEMENT PREPARED FROM THE SEIZED MATERIAL FOR ALL THE SIX ASSESSMENT YEARS AND ESTIMATIO N OF COMMISSION INCOME BY THE ASSESSEE, HE HAS ACCEPTED THE RETURNED UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN RESPONSE TO NOTICE ULS. 153A - SINCE THE RETURNED INCOME HAS BEEN ACCEPTED, NO SATISFACTION IS RECORDED BY THE AO THAT THE ASSESSEE HAS CONCEA LED INCOME WITH REFERENCE TO THE RETURN FILED BY HIM M RESPONSE TO NOTICE ULS. 153A - LT IS ALSO NOT DISCERNIBLE FROM THE ASSESSMENT ORDER - HENCE, PENALTY ULS.271(1)(C) IS NOT LEVIABLE - AS PER EXPLN. 5A, IN CASE OF A SEARCH INITIATED ON OR AFTER 1 ST JUNE, 2007 , THE ASSESSEE WOULD BE LIABLE FOR PENALTY U/S,271(I1)(C) BOTH IN RESPECT OF ASSETS OF ASSETS AS WELL AS ANY INCOME BASED ON NAY ENTRY IN BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS - NO SUCH PROVISION RELATING TO ENTRIES WAS IN EXISTENCE IN EXPLN. 5 PRIOR TO INSERTION OF EXPLN.5A IN SEC.271 (1) - HENCE, TILL INSERTION OF EXPLN. 5A AND SEC. 271AAA BY THE FINANCE ACT, 2007, THE SCHEME OF ASSESSMENT GAVE IMMUNITY TO THE ASSESSEE IN RESPECT OF UNDISCLOSED INCOME BASED ON THE ENTRIES IN THE SEIZED MATERIA L - IN THE INSTANT CASE, CASH OF RS.1,11,45,350 WAS FOUND FROM THE POSSESSION OF THE ASSESSEE AT THE TIME OF SEARCH ON 2~D NOV.,2006 - EXPLN. 5 TO SEC.271(1)(C) CANNOT BE INVOKED IN A. Y.2004 - 05 MERELY ON THE PRESUMPTION THAT THE ASSESSEE MIGHT HAVE BEEN IN PO SSESSION OF CASH THROUGHOUT THE PERIOD COVERED BY THE SEARCH ASSESSMENTS - UNLIKE PROVISIONS OF EXPLN.5A, THE PROVISION OF EXPLN. 5 CANNOT BE INVOKED IN A. Y. 2004 - 05 IN RESPECT OF ENTRIES RECORDED IN THE SEIZED MATERIAL - HENCE, THE CONTENTION OF THE REVENUE THAT THE ASSESSEE WAS IN POSSESSION OF CASH THROUGHOUT THE PERIOD OF SIX ASSESSMENT YEARS HAS TO BE REJECTED - THUS, EVEN THE AMENDED PROVISIONS OF EXPLN.5 CANNOT BE APPLIED IN A. Y.2004 - 05 - CONSEQUENTLY, PENALTY U/S.271(1)(C) CANNOT BE IMPOSED EVEN BY INVO KING EXPLN. 5 IN A. Y. 2004 - 05 IN RESPECT OF THE CASH FOUND DURING THE SEARCH. HELD : THE PROVISIONS OF SECTIONS 153A, 1538 AND 153C ARE COMPLETE CODE FOR SEARCH ASSESSMENTS WHEREIN SEARCH HAS BEEN INITIATED AFTER 31ST MAY, 2003. THE EXISTENCE OF THE WOR DS 'ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION' IN EXPLN. (I) TO SEC.153A MAKE IT CLEAR THAT IN SEARCH ASSESSMENTS, AMONGST OTHERS THE PROVISIONS RELATING TO PENALTY AND PROSECUTION WILL ALSO BE APPLICABLE. HOW EVER, WHEN NORMAL ASSESSMENT PROCEDURE COVERED BY SECTIONS 139, 147 , 148, 149, 151 AND 153 HAS BEEN COMPLETELY EXCLUDED BY OPERATION OF NON OBSTANTE CLAUSE 'NOTWITHSTANDING ANYTHING CONTAINED' THE SEARCH ASSESSMENTS MADE U/S.153A CANNOT BE TREATED AS ITA NO. 5282 /1 3 5 CONTI NUANCE OF NORMAL ASSESSMENT PROCEEDINGS WHETHER ABATED OR NOT. ' THUS THERE IS COMPLETE DETACHMENT OF ASSESSMENT PROCEEDINGS U/S.143 OR SEC. 147 FROM SEARCH PROCEEDINGS U/S.153A. WHEN SCHEME OF SEARCH ASSESSMENT AS DESIGNED BY THE LEGISLATURE DOES NOT PRE SCRIBE TO TAKE INTO ACCOUNT THE EARLIER ASSESSMENT PROCEEDINGS WHETHER ABATED OR NOT, IT WILL NOT BE PROPER OR JUSTIFIED TO REFER TO RETURNED INCOME U/S. 139 FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S.271(1)(C). IT FOLLOWS THAT THE CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO ADDITIONAL INCOME BROUGHT TO TAX OVER AND ABOVE RETURNED BY THE ASSESSEE IN 'RESPONSE TO NOTICE ISSUED UNDER SEC. 153A. ACCORDINGLY FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SEC. 271(1)(C) RESULTING AS A RESULT OF SEAR CH ASSESSMENT MADE UNDER SEC. 153A, THE ORIGINAL RETURN OF INCOME FILED UNDER SEC. 139 CANNOT BE CONSIDERED. FURTHER IN THE CASE OF SEARCH INITIATED AFTER 1ST JUNE, 2003 A RETURN OF INCOME IS ALWAYS FILED ON ISSUE OF NOTICE UNDER SEC. 153A. THE PENALTY UND ER SEC. 271(1)( C) IS IMPOSABLE WHEN THERE IS VARIATION IN ASSESSED AND RETURNED INCOME), IF THERE IS NO VARIATION, THERE WILL BE NO CONCEALMENT WHEN THERE IS NO CONCEALMENT, QUESTION OF PENALTY U/S. 271(1)( C) WILL NOT ARISE. THIS - IS SETTLED POSITION OF L AW, THE CONCEPT OF VOLUNTARY RETURN OF INCOME MAY BE IMPORTANT IN PENALTY PROVISION INITIATED IN COURSE OF NORMAL ASSESSMENT PROCEEDINGS MADE U/S.143(3)OR SEC.147 BUT NOT U/S. 153A. LFT.OM ABOVE DISCUSSION IT FOLLOWS THAT WHERE RETURNED INCOME FILED U/S. 1 53A IS ACCEPTED BY THE AD, THERE WILL BE NOT CONCEALMENT OF INCOME AND CONSEQUENTLY PENALTY U/S.271(1)(C) CANNOT BE IMPOSED. [EMPHASIS SUPPLIED] 4. LD. DR BEFORE US SUBMITTED THAT AS THE ASSESSEE HAS OFFERED THE SALE PROCEEDS OF SHARES OF ABOVE PETTY STO CK COMPANY OF RS.52,06,574/ - AND COMMISSION OF RS.2,60,329/ - AS INCOME FROM OTHER SOURCES, THEREFORE, THE ABOVE AMOUNTS HAS RIGHTLY BEEN TREATED BY THE AO AS INCOME FROM OTHER SOURCES AND TAXED ACCORDINGLY. HOWEVER, THE CIT(A) DID NOT PAY HEED TO THE ALLEG ED ARTIFICIAL LONG TERM CAPITAL GAIN OF RS.52,06,574/ - AS THE INCOME OF THE ASSESSEE. 5. ON THE OTHER HAND, LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). ITA NO. 5282 /1 3 6 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND THAT THE AFTER FOLLOWING THE ORDER OF THE TRIBUNAL DECIDED IN THE CASE OF ASSESSEES FATHER AND BROTHER IN ITA NO. 907&908/MUM/2009 , DATED 24 - 4 - 2010 AND DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CASE OF PREM ARORA VS. DCIT (2012) 78 DTR (DEL) ( TRIB) 91, THE CIT(A) HAD CANCELLED THE PENALTY IMPOSED ON LONG TERM CAPITAL GAIN OF RS.52,06,574/ - . IN THE INSTANT CASE, WE FOUND THAT THE PENALTY IS IMPOSED WITH REFERENCE OF THE RETURN OF INCOME FILED U/S.153A. WE ALSO FOUND THAT AS THERE IS NO VARIATION BETWEEN THE RETURNED INCOME AND THE ASS ESSED INCOME, EXCEPT TO THE TU NE OF RS.2,60,329/ - , THE CIT(A) HAS RIGHTLY HELD THAT THE LEVYING PENALTY U/S.271(1)(C) OF THE ACT ON THE AMOUNT OF RS.52,06,574/ - IS BAD IN LAW. ACCORDINGLY, WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF CIT(A) DELETING THE PENALTY BY FOLLOWING THE DECISION OF COORDINATE BENCH HAVING SIMILAR FACTS. 7 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10/06 / 201 5 . SD/ - SD/ - ( ) ( SUSHMA CHOWLA ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10/06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/