VELJI DHARMSHI VAVIA, NAVI MUMBAI V. ACIT CC 1, MUMBAI

ITA 5711/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9751 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 17-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Search and seizure
• Section: 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NOS.5711 & 5713/M/2013 ASSESSMENT YEARS: 2005-06 & 2007-08 SHRI VELJI DHARMSHI VAVIA, B-200, ARENJA CORNER, PLOT NO.71, SECTOR-17, VASHI, NAVI MUMBAI-400 703 PAN: ABSPV 8228Q VS. ACIT, CENTRAL CIRCLE-1, ROOM NO.29, B-WING, 6 TH FLOOR, ASHAR I.T. PARK, WAGLE ESTATE, THANE 400 604 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI HARI S. RAHEJA, A.R. REVENUE BY : MS. POOJA SWAROOP, D.R. DATE OF HEARING : 15.06.2017 DATE OF PRONOUNCEMENT : 28.07.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AGAINST THE COMMON ORDER DATED 08.07.2013 OF THE COMMISSIONER O F INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEARS 2005-06 & 2007-08. ITA NO.5711/M/2013 FOR A.Y. 2005-06 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED THE RETURN OF INCOME UNDER SECTION 139 OF THE ACT ON 31.12.2005 D ECLARING INCOME OF RS.96,815/-. SEARCH AND SEIZURE ACTION UNDER SECTI ON 132 OF THE ACT WAS CONDUCTED IN PATEL GROUP OF CASES ON 17.01.2008 IN WHICH ASSESSEES RESIDENTIAL PREMISES WAS ALSO COVERED. CONSEQUENT TO THE ASSIGNMENT OF CASE TO ACIT, CENTRAL CIRCLE-1, NOTICE UNDER SECTION 153 A WAS ISSUED TO THE ASSESSEE AND THE ASSESSEE FILED THE RETURN OF INCOM E ON 31.03.2009 ADMITTING THE TOTAL INCOME OF RS.6,02,465/- AND AGRICULTURAL INCOME OF RS.1,81,250/-. ITA NOS.5711 & 5713/M/2013 SHRI VELJI DHARMSHI VAVIA 2 ASSESSMENT UNDER SECTION 143 READ WITH SECTION 53 O F THE ACT WAS COMPLETED ON 30.12.09. THE PENALTY PROCEEDINGS WERE INITIATE D ON ACCOUNT OF CASH PAYMENT OF RS.4 LAKHS INCURRED IN PREVIOUS YEAR REL EVANT TO A.Y. 2005-06 ON ACCOUNT OF PURCHASE OF LAND. THE SHOW CAUSE NOTICE WAS GIVEN. IN REPLY TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT ASSE SSEE HAS DECLARED THE INCOME UNDER SECTION 132(4) OF THE ACT DURING THE C OURSE OF SEARCH AND THE SAME IS ADMITTED IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 153A. ANOTHER GROUND IS THAT ONCE THE SEARCH IS CONDUCTED IN A CASE THE PENDING ASSESSMENT GETS ABATED AND THE RETURN FILED EARLIER UNDER SECTION 139 BECOMES NON-EST. AFTER CONSIDERING THE REPLY OF THE ASSESS EE, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) HAS LEVIED THE PENALTY OF RS.1,22,403/- UNDER SECTION 271(1)(C) OF THE ACT. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE APPEAL. 4. THE LD. A.R. HAS TAKEN THE PRELIMINARY OBJECTION THAT THE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) SHOULD SPEC IFY WHETHER THE PENALTY IS INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE INSTANT CASE, THE LD . A.R. HAS DRAWN OUR ATTENTION TO THE ASSESSMENT ORDER AND SUBMITTED THAT IN ASSES SMENT ORDER THE ONLY WORD WRITTEN PENALTY IS INITIATED WHILE IN THE PENALTY O RDER THE AO HAS NOT STATED WHETHER THE PENALTY IS IMPOSED FOR CONCEALMENT OF T HE INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. A.R. SUBMITTED THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF HONBLE J URISDICTIONAL BOMBAY HIGH COURT AND VARIOUS DECISIONS OF THE TRIBUNAL. SECON DLY, THE LD. A.R. SUBMITTED THAT IN THIS CASE THE ASSESSEE HAS ADMITTED THAT TH E INCOME WAS ASSESSED IN THE ASSESSMENT PROCEEDING UNDER SECTION 132 ITSELF AND AS PER DECLARATION MADE BEFORE INVESTIGATION AUTHORITY, ASSESSEE HAS FILED THE RETURN AND PAID THE TAXES WHICH WERE ACCEPTED BY THE AO WITHOUT FURTHER ADDIT ION. SINCE THE ASSESSEE ITA NOS.5711 & 5713/M/2013 SHRI VELJI DHARMSHI VAVIA 3 HAS FILED THE RETURN IN ORDER TO SETTLE THE MATTER, THERE CANNOT BE ANY PENALTY. FURTHER, IT WAS CONTENDED THAT THE PROVISIONS OF EX PLANATION 5A UNDER SECTION 271(1)(C) CANNOT BE INVOKED AS ASSESSEES SEARCH WA S CONDUCTED MUCH BEFORE AMENDED PROVISION WAS APPROVED BY PRESIDENT ON 13.0 8.09. THEREFORE, THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF ASHISH KUMAR AGARWAL IN ITA NOS.16 TO 20/HYD/2015 DATED 14.10.20 15 IS APPLICABLE IN THIS CASE. THE LD. A.R. FURTHER SUBMITTED THAT SINCE TH E SAID PROCEEDINGS HAVE BEEN CONDUCTED BEFORE EXPLANATION 5A HAS COME INTO EFFEC T, THE PROVISIONS OF EXPLANATION 5A ARE NOT APPLICABLE ON THE DATE OF FI LING OF THE ORIGINAL RETURNS. 5. THE LD. D.R. HAS RELIED UPON THE ORDER OF LD. CI T(A). 6. THE LD. A.R. HAS FURTHER RELIED UPON THE FOLLOWI NG DECISIONS: 1. CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMANN .COM 248 (SC) 2. ANIL KUMAR SUREKHA & NISHA ANIL SUREKHA VS. ACIT IN ITA NOS.3861 TO 3864/M/2015 & ITA NOS.3856 TO 3860/M/20 15 DECIDED ON 06.04.2017 3. HONBLE BOMBAY HIGH COURT DECISION IN THE CASE O F CIT VS. SAMSON PERINCHERY IN ITA NO.1154, 953, 1097 & 1226 OF 2014 4. SHRI KRISHNAKANTH AGARWAL VS. DCIT IN ITA NOS.97 6 TO 978/HYD/2015 & ITA NOS.979 TO 982/HYD/2015 DECIDED ON 23.09.2016 5. DILIP KEDIA VS. ACIT (2013) 40 TAXMANN.COM 102 (HYDERABAD TRIB.) 6. ACIT VS. ASHOK RAJ NATH (2013) 33 TAXMANN.COM 58 8 (DELHI TRIB.) 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS THE APPLICABILITY OF EXPLANATION 5A IS CONCERNED, WE FULLY AGREE WITH THE CONTENTIONS OF THE LD. DR THAT THE L ANGUAGE OF EXPLANATION 5A MAKES IT AMPLY CLEAR THAT WHENEVER ADDITIONAL INCOM E IS DECLARED IN A RETURN OF INCOME FILED AFTER THE DATE OF SEARCH, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHING OF INAC CURATE PARTICULARS WITHIN THE ITA NOS.5711 & 5713/M/2013 SHRI VELJI DHARMSHI VAVIA 4 MEANING OF SECTION 271(1)(C). THE CITED JUDGMENT OF HONBLE DELHI HIGH COURT WAS RENDERED IN THE CONTEXT OF EXPLANATION 5 AND HENCE, THE SAME DO NOT APPLY TO THE CASE OF THE ASSESSEE. HOWEVER, WE HAVE ALSO NOTED THAT THE PENALTY HAS BEEN INITIATED ON ONE LIMB BUT FINALLY IMPOSED FOR ANOTHER LIMB. FURTHER, THE SHOW-CAUSE NOTICE U/S 274 READ WITH SECTION 271 (1)(C) ISSUED TO THE ASSESSEE DID NOT SPECIFY THE LIMB FOR WHICH THE PEN ALTY PROCEEDINGS WERE BEING INITIATED AGAINST THE ASSESSEE WHICH TOOK AWAY A VA LUABLE RIGHT OF THE ASSESSEE AND THEREFORE, VITIATES THE PENALTY PROCEEDINGS. OU R VIEW STANDS FORTIFIED BY THE ABOVE-CITED JUDGMENT OF APEX COURT WHERE THE DECISI ON OF HONBLE KARNATAKA HIGH COURT HAS BEEN CONFIRMED, WHICH IN TURN, RELIE D UPON THE JUDGMENT OF SAME COURT IN CIT VS MANJUNATHA COTTON & GINNING FA CTORY [359 ITR 565]. RESPECTFULLY FOLLOWING THE SETTLED JUDICIAL DISCIPL INE / PRECEDENT, WE HOLD THE PENALTY PROCEEDINGS TO BE BAD IN LAW AND THEREFORE, QUASH THE SAME. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.5713/M/2013 FOR A.Y. 2007-08 8. THE COMMON GROUNDS TAKEN BY THE ASSESSEE IN THIS APPEAL ARE ALREADY ADJUDICATED IN ITA NO.5711/M/2013 FOR A.Y. 2005-06 AS ABOVE. HENCE, APPLYING THE SAME RATIO FOLLOWED IN ITA NO.5 711/M/2013 FOR A.Y. 2005-06, WE DECIDE THIS APPEAL ALSO IN FAVOUR OF TH E ASSESSEE. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.07.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 28.07.2017. * KISHORE, SR. P.S. ITA NOS.5711 & 5713/M/2013 SHRI VELJI DHARMSHI VAVIA 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.