DCIT, UDAIPUR V. Shri Mansoor Ali Hitawala, UDAIPUR

ITA 530/JODH/2013

• Counselvise Citation: 53023314 RSA 2013
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-03-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SEHGAL
• Assessee Lawyers: RISHAB AGRAWAL
• Keywords: Search and seizure; Revised return
• Section: 143(3); 142(1); 139(5); 131; 246; 132; 139

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 NO. 530/JU/2013 ASSESSMENT YEAR: 2010-11 THE DY. CIT VS. SHRI MANSOOR ALI HITAW ALA CENTRAL CIRCLE -1 S/O LATE SHRI FAKHRUDDIN HITAWALA UDAIPUR 1/28, KHAROL COLONY, UDAIPUR PAN NO. AAHPH 5148 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RISHAB AGRAWAL DEPARTMENT BY : SHRI DEEPAK SEHGAL, DR DATE OF HEARING : 05.03.2014 DATE OF PRONOUNCEMENT : 05.03.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE CIT(A), CENTRAL, JAIPUR, DATED 20.09.2 013 FOR A.Y 2010-2011. 2 2. THIS APPEAL EMANATES FROM A PENALTY ORDER DATED 11.05.2012 PASSED U/S 271AAA OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT', FOR SHORT]. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME [ROI] FOR A.Y. 2010-11 ON 4.8.2010 DECLARING TOTAL INCOME OF RS. 1,19,89,531/ -. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AT THE RESI DENTIAL AS WELL AS THE BUSINESS PREMISES OF THE ASSESSEE ON 6. 10.2009. SUBSEQUENTLY, THE ASSESSEE FILED HIS REVISED RETURN ON 25.1.2011 DECLARING TOTAL INCOME. HOWEVER, ASSESSME NT WAS COMPLETED U/S 143(3) OF THE ACT AT RS. 1,37,62,280/ - VIDE ORDER DATED 29.11.2011. SUBSEQUENTLY, ON THE GROUND OF DISCLOSURE OF UNDISCLOSED INCOME PENALTY OF RS. 13, 25,354/- WAS IMPOSED VIDE ORDER DATED 11.5.2012. AGAINST TH IS ORDER, THE ASSESSEE WENT IN FIRST APPEAL AND THE LD. CIT(A ) HAS DELETED THE ENTIRE PENALTY. THE REVENUE HAS COME I N APPEAL BEFORE THE APPELLATE TRIBUNAL AGAINST THIS DELETION OF PENALTY. 3 4. IT WAS SUBMITTED BY THE LD. CIT, DR SHRI DEEPAK SEHGAL THAT THE ASSESSEE HAS DISCLOSED THE SOURCE(S) OF IN COME DISCLOSED AS A CONSEQUENCE OF SEARCH AND THEREFORE, IS EXIGIBLE TO PENALTY U/S 271AAA OF THE ACT. 5. ON THE OTHER HAND, THE LD. A.R. SHRI RISHAB AGRA WAL, HAS SUPPORTED THE FINDING OF THE LD. CIT(A) APART FROM PLACING ON RECORD THE ENTIRE RECORD PERTAINING TO THE INITIATI ON AND IMPOSITION OF THIS PENALTY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE FOUN D THAT THE ASSESSEE HAD MADE DISCLOSURE IN HIS REVISED RETURN ON 25.1.2011. AS PER THE A.O, THIS CANNOT BE TREATED AS A VOLUNTARY DISCLOSURE OF INCOME BECAUSE IT WAS RESUL T OF SEARCH THAT THE ASSESSEE FILED THE REVISED RETURN. AS PER THE A.O, THE ASSESSEE DID NOT DISCLOSE THE INCOME IN HIS ORIGINA L RETURN FILED ON 4.7.2010 BUT HAS DISCLOSED THE SAME IN THE REVIS ED RETURN FILED ON 25.1.2011. THUS, IN VIEW OF THE A.O., IN THE ABOVE CIRCUMSTANCES, THE ASSESSEE IS NOT ENTITLED TO BENE FIT OF 4 SECTION U/S 271AAA OF THE ACT AS THE ASSESSEE HAS N OT SPECIFIED THE MANNER IN WHICH THE INCOME IS DERIVED IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT. THE A.O. HAS ALSO OBSERVED THAT THE NON DISCLOSURE OF CORRECT INCOME SEEMS TO BE INTENTIONAL ACT OF THE ASSESSEE. 7. THE LD. CIT(A) HAS OBSERVED THAT THE PENALTY ORD ER WAS PASSED ON 1.5.2012 BY REJECTING THE SUBMISSIONS OF THE ASSESSEE AFTER GIVING A FINDING THAT THE ASSESSEE I S GUILTY OF AVOIDING PAYMENT OF TAX. HOWEVER, IT HAS NOT BEEN DISCUSSED BY THE A.O. AS TO WHY BENEFIT OF SECTION 271AAA OF THE ACT IS NOT ALLOWABLE TO THE ASSESSEE. ACCORDING TO HIM, T HE RETURN WAS FILED ON 4.7.2010, WITHIN THE TIME AS SPECIFIED U/S 139 OF THE ACT AND DISCLOSURE OF SURRENDERED INCOME WAS MA DE IN THE REVISED RETURN FILED U/S 139(5) OF THE ACT. HE HAS OBSERVED THAT NOTICE U/S 143(2) WAS ISSUED ON 27.1.2011 AFTE R FILING OF THE REVISED RETURN ON 25.1.2011. HE HAS FURTHER OBS ERVED THAT THE ASSESSEE IN HIS STATEMENT RECORDED U/S 132(4) O F THE ACT ADMITTED UNDISCLOSED INCOME AND SPECIFIED THE MANNE R IN WHICH THE INCOME HAD BEEN DERIVED WHICH WAS FROM TH E BUSINESS OF PROPERTY AND CONSTRUCTION. THIS FACT W AS ALSO 5 REAFFIRMED DURING THE POST SEARCH PROCEEDINGS IN TH E STATEMENT RECORDED U/S 131 OF THE ACT DURING VERIFI CATION FROM THE REGULAR BOOKS OF ACCOUNT. HE HAS OBSERVED THAT THE ABOVE FACTS HAVE NOT BEEN DISPUTED BY THE A.O. ANYWHERE I N THE PENALTY ORDER OR IN THE ASSESSMENT ORDER. THE MAIN OBSERVATION IS THAT THE ASSESSEE HAS NOT ONLY ADMIT TED UNDISCLOSED INCOME BUT HAS ALSO SUBSTANTIATED THE M ANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. REGARDIN G OBSERVATION OF THE A.O. THAT IN THE STATEMENT RECOR DED U/S 132(4) OF THE ACT, THE ASSESSEE FAILED TO SUBSTANTI ATE THE MANNER IN WHICH INCOME WAS DERIVED IS NOT FOUND TO BE CORRECT AFTER PERUSAL OF THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND RECORDED U/S 131 OF THE ACT. HE HAS ALSO OBSER VED THAT THE PENALTY PROCEEDINGS U/S 271AAA OF THE ACT WERE REQUIRED TO BE INITIATED BEFORE 1.7.2012 AS THE SEARCH WAS I NITIATED AFTER 1.6.2007. HE HAS OBSERVED THAT THE A.O. HAS ACCEPTED THE RETURNED DISCLOSED INCOME IN THE REVISED RETURN BUT THE REASON GIVEN FOR INITIATING PENALTY IS THAT THE DIS CLOSURE IS NOT VOLUNTARY. WITH THESE OBSERVATIONS, THE LD. CIT(A) HAS DELETED THIS PENALTY. 6 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE INCLINED TO GO ALONGWITH THE LD. CIT(A). IT IS TRUE THAT IN ITIATION AND IMPOSITION OF PENALTY U/S 271AAA OF THE ACT ARISES ONLY IN SEARCH CASES. IT IS ALSO A LEGAL FACT THAT THE ASS ESSEE CAN SEEK EXONERATION FROM THE PENALTY U/S 271AAA OF THE ACT. THEREFORE, NATURALLY THE DISCLOSURE HAS TO BE MADE CONSEQUENT UPON THE SEARCH CONDUCTED U/S 132 OF THE ACT. BUT WHEN THE ASSESSEE FULFILLS THE CONDITIONS OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT, HE IS ENTITLED TO BENEFIT OF THI S PROVISION. BUT THE ASSESSEE HAS OFFERED UNDISCLOSED INCOME OF RS. 1,10,18,966/- IN HIS ORIGINAL RETURN FILED FOR A.Y. 2010-11 AGAINST THE ACTUAL UNDISCLOSED INCOME OF RS. 1,27,9 1,718/-. THE REVISED RETURN ADMITTED COMPLETE UNDISCLOSED IN COME OF RS. 1,27,91,718/- WAS FILED BEFORE THE A.O. ISSUED NOTICE U/S 142(1) AND WITHIN THE TIME LIMIT PRESCRIBED U/S 139 (5) OF THE ACT. THUS, IT IS FOUND THAT THE ASSESSEE HAS DISCL OSED THE ENTIRE UNDISCLOSED INCOME AND HAS OFFERED IT FOR TA XATION. THE ASSESSEE HAS ALSO EXPLAINED THE UNDISCLOSED INCOME WAS EARNED FROM HIS BUSINESS ALONGWITH PROVIDING DETAILS OF PR OJECTS COMPLETED/INCOMPLETE WHILE REPLYING TO QUESTION NO. 3 OF HIS STATEMENT RECORDED U/S 132(4) OF THE ACT. COPY OF THIS 7 STATEMENT IS PLACED AT PAGE 16 OF THE PAPER BOOK. WE ARE SATISFIED THAT THE ASSESSEE HAS EXPLAINED THE MODUS OF EARNING THIS INCOME IN HIS STATEMENT EITHER U/S 132(4) AND 131 OF THE ACT. IT IS TRUE THAT NO SPECIFIC MANNER OF DISCLOS ING THE UNDISCLOSED INCOME IS PROVIDED IN THE ACT. THEREFO RE, ONLY ON THIS ULTRA TECHNICAL POINT, PENALTY U/S 271AAA OF T HE ACT CANNOT BE IMPOSED. IN THIS REGARD, DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA K ISHAN GOEL [2006] 152 TAXMAN 290 [ALL] AND THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH [2008] 172 TAXMAN 58 [GUJ] ARE RELEVANT. MOREOVER, FROM THE STATEMENTS, WE HAVE OBSERVED THAT THE AUTHORIZED OF FICER HAS NOT SPECIFICALLY ASKED TO THE ASSESSEE DURING SUCH PROCEEDINGS ABOUT THE MANNER IN WHICH THE ASSESSEE HAS EARNED UNDISCLOSED INCOME. REGARDING OBSERVATION OF THE A .O. THAT THE ASSESSEE SHOULD HAVE APPEALED AGAINST THE INITI ATION OF PENALTY PROCEEDINGS, THERE IS NO SUCH PROVISION U/S 246 (1) TO FILE APPEAL AGAINST SUCH INITIATION OF PENALTY PROC EEDINGS. ALSO THE A.O. WITHOUT MAKING FURTHER ADDITION ASSES SED THE INCOME AT RETURNED INCOME IN THE ASSESSMENT ORDER. THUS, THE OBSERVATION OF THE A.O. THAT THE ASSESSEE HAD INTEN TIONALLY 8 EVADED TAX IS BASED ON INCORRECT FACTS. ACCORDINGL Y,, WE FIND FORCE IN THE OBSERVATIONS OF THE LD. CIT(A) AND THE REFORE, CONFIRM HIS FINDINGS. WE DO NOT FIND MERIT IN THE GROUNDS RAISED IN THIS APPEAL WHICH ARE LIABLE TO BE DISMIS SED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 05.03.2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 5 TH MARCH, 2014 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT BY ORDER THE CIT(A) THE DR ASSISTANT REGISTRAR ITAT, JODHPUR