DCIT CEN CIR-1, THANE V. NARESH K. SHANKLESHA, MUMBAI

ITA 5396/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79469 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K SHIVRAMNEELAM JADHAV
• Section: 5(2); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 5396/MUM/2010 ASSESSMENT YEAR: 2007-08 DCIT CC-(1) PAWAR INDUSTRIAL ESTATE 2 ND FLOOR. EDULJI ROAD, CHARARI, THANE (W) VS. SHRI NARESH K. SHANKLESHA 303, 304, 305 & 3-6 PUNYODAYA , COMPLEX. NEAR AHILYABAI, CHOWK, KALYAN (W) (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- ACKPS 4886 Q ASSESSEE BY : SHRI K. SHIVRAM/NEELAM JADHAV REVENUE BY : SMT. AMRITA SINGH DATE OF HEARING : 14.07.2014 DATE OF PRONOUNCEMENT : 18 . 07 .201 4 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD.CIT(A)-1, THANE DATED 15.02.2010 DELETING THE PE NALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2007-08. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS THE PROPRIETOR OF M/S. PRATAP JEWELERS AND A SEARCH ACTION WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 07.12.2006 WHICH WAS FOLLOWED BY FILING OF A RETURN OF INCOME ON 31.10.2007 ADMITTING A TOTAL INCOME OF RS.33,87,690/-. THE ASS ESSMENT WAS COMPLETED ON 31.12.2008 AT A TOTAL INCOME OF RS.39,26,390/- U/S 153B(B) OF THE ACT. THE AO, THEN, INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) A ND LEVIED A SUM OF RS.11,78,000/- BEING A MINIMUM PENALTY U/S 271(1)(C). THE FURTHER FACTS ARE THAT DURING THE SURVEY, EXCESS STOCK OF GOLD AND SILVER ORNAMENTS WORTH RS. 31,63,700/- AND RS.60,000/- RESPECTIVELY WERE FOUND. HOWEVER, IN THE RETURN FIL ED, THE ASSESSEE OFFERED AN ADDITIONAL INCOME OF RS.26,25,000/- ON ACCOUNT OF U NEXPLAINED INVESTMENT IN ITA NO. 5396/MUM/2010 SHRI NARESH K. SHANKLESHA ASSESSMENT YEAR: 2007-08 2 JEWELLERY, I.E., THE INVESTMENT IN UNEXPLAINED JEWE LLERY WAS UNDERSTATED BY A SUM OF RS.5,48,700/-. DURING THE ASSESSMENT PROCEEDINGS, T HE ASSESSEE AGREED FOR AN ADDITION OF RS.5,58,700/- AND ACCORDINGLY IT WAS AD DED TO THE TOTAL INCOME. SIMILARLY, A SUM OF RS.5,00,000/- OF CASH WAS FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF THE ASSESSEE. RS.2,50,000/- WAS OFFERED IN THE H ANDS OF THE ASSESSEE AND THE OTHER RS.2,50,000/- WAS OFFERED IN THE HANDS ONE SH RI KEWALCHAND C. SHANKLESHA PROPRIETOR OF KAMLESH JEWELERS AND THE PENALTY THUS WAS IMPOSED ON THE ENTIRE ADDITIONAL INCOME OFFERED DURING THE SEARCH. ON APP EAL, THE LD.CIT(A) DELETED THE IMPUGNED LEVY OF PENALTY AS THE ASSESSEE HAVING DEC LARED U/S132(4), THE INVESTMENTS IN UNEXPLAINED GOLD ORNAMENTS, SILVER I TEMS AND CASH AND THE SAME HAVING BEEN ADMITTED IN THE RETURN FILED IN RESPONS E TO THE NOTICE U/S 153A WITH PAYMENT OF TAXES AND INTEREST, THE ASSESSEE IS NOT LIABLE TO PENALTY U/S 271(1)(C) OF THE ACT IN VIEW OF EXPLANATION 5(2). THE LD.CIT(A) FURTHER DELETED THE PENALTY LEVIED ON THE ADDITION OF RS.5,38,000/- ON THE REASON THAT THE SAID ADDITION HAD ARISEN DUE TO DIFFERENCE IN VALUATION. AGGRIEVED BY THE IMPUGN ED DECISION, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE US. 3. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE ASSESSEE HAS MADE A D ECLARATION U/S 132(4) OF RS.31,63,700/- ON ACCOUNT OF 3722 GRAMS OF GOLD JEW ELLERY, RS.60,000/- FOR SILVER ORNAMENTS AND RS.2,50,000/- FOR UNEXPLAINED CASH. F URTHER IN THE RETURN, THE ASSESSEE OFFERED A SUM OF RS.26,25,000/- AS INVESTM ENT IN UNEXPLAINED GOLD JEWELLERY INSTEAD OF RS.31,63,700/- DECLARED U/S 13 2(4). DURING THE ASSESSMENT PROCEEDINGS, IT HAS BEEN THE CONTENTION OF THE ASSE SSEE THAT UNACCOUNTED GOLD ORNAMENTS OF 3372 GMS HAS BEEN VALUED AT RS.31,63,7 00/- BY ADOPTING A VALUE OF RS.8,500 PER 10 GMS FOR 24 CARROT GOLD IN ACCORDANC E WITH THE RATE STATED IN THE READY RECKONER AS ON 01.04.2006. HOWEVER, THE ASSES SEE, IN THE RETURN OF INCOME HAS QUANTIFIED THE UNACCOUNTED IIVESTMENT AT RS.26, 25,000/- AT THE RATE OF RS.7,500 PER 10 GMS FOR 22 CT GOLD. THUS, THE INCOME IS AS A GAINST RS.31,63,700/- DECLARED U/S 132(4). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE AGREED TO BE ASSESSEED ON THE ENTIRE DECLARED INCOME OF RS.31,63 ,700/- AND THEREBY THE ASSESSEE HAS ALSO AGREED FOR THE ADDITION OF RS.5,38,700/-. THUS, THE ASSESSED INCOME IS ITA NO. 5396/MUM/2010 SHRI NARESH K. SHANKLESHA ASSESSMENT YEAR: 2007-08 3 RS.39,26,690/- AS AGAINST THE RETURNED INCOME OF RS .33,86,690/-, WHICH MEANS THAT THE VARIATION BETWEEN THE INCOME AS RETURNED AND IN COME AS ASSESSED IS ONLY RS.5,38,700/-. HOWEVER, THE AO HAS LEVIED A PENALTY WITH REFERENCE TO A SUM OF RS.34,73,700/-, WHICH IN OUR VIEW IS UNWARRANTED AN D LEGALLY NOT TENABLE AS PENALTY CAN ONLY BE LEVIED WITH REFERENCE TO THE DIFFERENCE BETWEEN INCOME AS RETURNED AND INCOME ASSESSED. THE SAID DIFFERENCE OF RS.5,38,700 /- IS ALSO DUE TO THE FACT THAT THERE IS A DIFFERENCE IN VALUATION OF GOLD ARRIVED AT FOR 24 CT GOLD DURING THE SEARCH/ SURVEY ACTION AND THE DIFFERENCE IS DUE TO THE VALU ATION OF THE SAME FOR 22 CT GOLD AT THE TIME OF FILING THE RETURN INSTEAD OF 24 CT GOLD DECLARED IN THE STATEMENT. MOREOVER, THE ASSESSEE HAS AGREED FOR THE ADDITION OF THE SAID DIFFERENCE ALSO. SINCE THE INCOME HAS BEEN DECLARED BY THE ASSESSEE IN A S TATEMENT RECORDED U/S 132(4) IN THE COURSE OF SEARCH ACTION ITSELF, AS PER EXPLANAT ION 5(2) U/S 271(1)(C), NO PENALTY IS LEVIABLE IN THIS CASE AS THE IMMUNITY OF LEVY OF PENALTY ON ACCOUNT OF DECLARATION MADE IN STATEMENT U/S 132(4) OF THE ACT IS AVAILABL E TO THE ASSESSEE. 3.1 IT IS ALSO NOTED THAT ON IDENTICAL FACTS ARISIN G OUT OF THE SAME SEARCH IN THE CASE OF M. SHANKLESHA IN ITA NO.6781/MUM/2010 FOR T HE A.Y. 2007-08, THE TRIBUNAL VIDE ITS ORDER DATED 21.03.2002 CONFIRMED THE ORDER OF THE CIT(A) DELETING THE PENALTY LEVIED BY THE AO IN SIMILAR CIRCUMSTANCES. 3.2 AS REGARDS THE CONTENTION OF THE REVENUE THAT T HE ASSESSEE HAS FAILED TO DISCLOSE, WHILE RECORDING THE STATEMENT U/S 132(4), THE MANNER IN WHICH THE INCOME DISCLOSED IS EARNED BY THE ASSESSEE, WHICH IS THE R EQUIREMENT AS PER EXPLANATION 5(2) U/S 271(1)(C), IT IS RELEVANT TO STATE THAT WH ILE RECORDING THE STATEMENT, THE ASSESSEE HAS NOT BEEN ASKED ANY SUCH QUESTION AS TO THE MANNER IN WHICH INCOME DISCLOSED HAS BEEN EARNED BY THE ASSESSEE. IN THIS CONNECTION, IT IS PERTINENT TO MENTION THAT THE ASSESSEE CANNOT BE EXPECTED TO ANS WER/PROVIDE STATEMENT TO THAT EFFECT WHEN THE SAME IS NOT ASKED FOR. MOREOVER, TH E ASSESSMENT ORDER AND THE PENALTY ORDER CLEARLY STATES THAT THE ASSESSEE IS T HE PROPRIETOR OF M/S. PRATAP JEWELERS AND IN THE COURSE OF SURVEY PROCEEDINGS EX CESS/UNACCOUNTED STOCK OF GOLD AND SILVER HAVE BEEN FOUND. THIS INDICATES THAT THE DEPARTMENT HAS NOT DISPUTED THE FACT THAT THE INCOME DISCLOSED IS ON ACCOUNT OF EXC ESS/UNACCOUNTED STOCK OF GOLD ITA NO. 5396/MUM/2010 SHRI NARESH K. SHANKLESHA ASSESSMENT YEAR: 2007-08 4 AND SILVER LINKED TO THE BUSINESS OF THE ASSESSEE A ND HENCE WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE REVENUE. IN VIEW OF THE FA CT THAT THE LD.CIT(A) HAS CORRECTLY TAKEN COGNIZANCE OF THE SAID FACTS AND THE POSITION OF LAW FOR RIGHTLY DELETING THE IMPUGNED LEVY OF PENALTY, WE DO NOT FIND ANY JUSTIF IABLE REASON TO INTERFERE WITH THE SAID ORDER AND THUS THE SAME IS UPHELD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THI S 18 TH DAY OF JULY 2014. SD/- SD/- (SANJAY ARORA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.07.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.