DCIT, New Delhi V. M/s. Punj Lloyd Industrial Ltd., New Delhi

ITA 5745/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6807 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 26-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 25-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Income from undisclosed sources; Search and seizure; Revenue expenditure
• Section: 153A; 27; 132; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F, NEW DELHI) BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NO.5745/DEL/2013 (ASSESSMENT YEAR 2005-06) DCIT, CIRCLE 14(1), VS. PUNJ LLOYD INDUSTRIAL LTD. , NEW DELHI. 17-18, NEHRU PLACE, NEW DELHI -110 019 GIR / PAN : AAACW1168L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI F. R. MEENA, SR. DR RESPONDENT BY : SHRI AKSHAT JAIN, CA DATE OF HEARING : 10.02.2017 DATE OF PRONOUNCEMENT : 14.02.2017 ORDER PER BEENA A. PILLAI, JM: THE PRESENT PENALTY APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 04/07/13 PASSED BY LD. CIT(A)-III, NEW DELHI FOR ASSESSMENT YEAR 2005-06 O N THE FOLLOWING GROUND OF APPEAL: WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS.53,26,776/- IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT. 2. ADMITTEDLY THE BRIEF FACTS OF THE PRESENT CASE A RE AS UNDER: 2.1 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENTS AND TRADING IN SHARES AND SECURITIES. ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME UN DER 2 I.T.A.NO.5745/DEL/2013 SECTION 139 OF THE ACT ON 28/10/2005 DECLARING TOTA L LOSS OF RS.1,45,77,465/-. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 17/03/201 0 IN THE CASE OF PUNJ LLOYD GROUP OF CASES. DURING THE C OURSE OF THE SEARCH CARRIED OUT AT DIFFERENT PREMISES LOC ATED IN INDIA IN PUNJ LLOYD GROUP, THE CASE OF ASSESSEE WAS ALSO COVERED. VARIOUS DOCUMENTS AND DATA STORAGE DEVICES ETC. BELONGING TO THE ASSESSEE COMPANY WERE FOUND AND SE IZED. 2.2 CONSEQUENT UPON THE SEARCH AND CENTRALIZATION, OF ASSESSMENT, NOTICE UNDER SECTION 153A OF THE ACT WA S ISSUED TO THE ASSESSEE ON 25/08/2010, WHICH WAS DUL Y SERVED UPON THE ASSESSEE, AND THE ASSESSEE WAS DIRE CTED TO FURNISH TRUE AND CORRECT RETURN OF INCOME FOR TH E YEAR UNDER CONSIDERATION. 2.3 THE RETURN OF INCOME UNDER SECTION 153A WAS FIL ED BY THE ASSESSEE ON 19/10/2010 DECLARING TOTAL LOSS OF RS.20,450/-. DURING THE ASSESSMENT PROCEEDINGS, THE LD. AO OBSERVED THAT THE RETURNED LOSS DECLARED IN THE RETURN OF INCOME UNDER SECTION 153A WAS LESS THAN THAT OF THE LOSS DECLARED IN THE ORIGINAL RETURN FILED UNDER SE CTION 139(1) OF THE ACT. THE LD. AO ACCEPTED THE RETURN F ILED IN VIEW OF NOTICE ISSUED UNDER SECTION 153A OF THE ACT AND RECORDED HIS SATISFACTION REGARDING THE SUPPRESSION OF INCOME BY THE ASSESSEE TO AN EXTENT OF RS.1,45,57,0 15/- (1,45,77,465 - 20,450) WHILE FILING THE ORIGINAL RE TURN OF INCOME UNDER SECTION 139(1) AND THAT THE ASSESSEE I S LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE AC T. 3 I.T.A.NO.5745/DEL/2013 2.4 A SHOW CAUSE NOTICE UNDER SECTION 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 10/04/2012 AND TH E ASSESSEE FILED A REPLY WIDE LETTER DATED 17/04/2012 AS UNDER: A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 O F THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE PUN J LLOYD GROUP OF CASES ON 17.03.2010 AND THE CASE-OF ASSESSEE WAS ALSO COVERED UNDER SEARCH. CONSEQUENT UPON, THE ASSESSEE FILED HIS RETURN OF INCOME UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 ON 19.10.2010 DECLARING LOSS OF RS.20,450/- WHICH INTE R ALIA INCLUDES DISALLOWANCE OF DEFERRED REVENUE EXPENDITURE AMOUNTING TO RS.1,05,077/- AND LONG TERM CAPITAL LOSS OF RS.1,45,77,465/-. AS REGARD LEVY OF PENALTY UNDER SECTION 271(1)(C) ON ACCOUNT OF DIFFERENCE IN INCOME DECLARED IN ORIG INAL RETURN OF INCOME FILED UNDER SECTION 139 AND RETURN OF INCOME FILED UNDER SECTION 153A OF THE INCOME TAX ACT, 1961, WE WOULD LIKE TO SUBMIT THAT THE SAID DIFFERENCE WAS DUE TO INADVERTENT MISTAKE IN CLAIMI NG DEFERRED REVENUE EXPENDITURE AMOUNTING TO RS.1,05,077/- IN THE RETURN OF INCOME FILED U/S 139 OF THE' INCOME TAX ACT, 1961. THE ASSESSEE VOLUNTARILY RECTIFIED THE SAID MISTAKE IN HIS RETURN OF INCOME FILED UNDER SECTION 153A AFTER CONSIDERING THE SAME AND PAID TAX AND INTEREST THEREON. . . . . . ... IT WAS ONLY INADVERTENT MISTAKE WHILE FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE INCOME TAX ACT, 1961 WHICH HAS RECTIFIED IN THE RET URN OF INCOME FILED UNDER SECTION 153A BY THE ASSESSEE COMPANY.' 2.5 THE LD. AO LEVIED PENALTY OF RS.53,26,776/- FOR CONCEALMENT OF INCOME OF RS.1,45,57,015/-IN THE ORI GINAL RETURN FILED UNDER SECTION 139(1) OF THE ACT, AS TH E ASSESSEE IS COVERED UNDER EXPLANATION 5A TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 4 I.T.A.NO.5745/DEL/2013 3. AGGRIEVED BY THE ORDER OF THE LD.AO, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT (A). THE LD. CIT (A) HELD AS UNDER: 4.8 IN THE APPELLANT'S CASE IT IS SEEN THAT LOSS OF RS.1,45,77,465/- UNDER THE HEAD LONG TERM CAPITAL GAIN WAS REFLECTED BOTH IN THE RETURN OF INCOME FIL ED UNDER SECTION 139 AS WELL AS UNDER SECTION 153A. HAVING SAID THAT, ONCE THE RETURN HAS BEEN FILED UN DER SECTION 153A OF THE ACT AND THE SAME IS ACCEPTED AS IT IS BY THE A.O. THEN IN MY HUMBLE VIEW THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOSED BY COMPARING THE RETURN FILED UNDER SECTION 153A WITH RETURN OF INCOME FILED UNDER SECTION 139 OF THE ACT BECAUSE AS PER LAW SECTION 153A HAS AN OVERRIDING AFFECT AND IT IS STARTS WITH THE NON-OBSTANTE CLAUS E THAT' NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 SINCE IN THE PRESENT CASE THE RETURN OF INCOME FILED UNDER SECTION 153A HAS BEEN ACCEPTED BY THE AO, THEREFORE, EVEN AS PER EXPLANATION 5A TO SECTIO N 271(1)(C) OF THE INCOME TAX, NO PENALTY IS LEVIABLE IN THE INSTANT CASE BECAUSE IT IS APPLICABLE ONLY IN T HOSE CASES WHERE DURING THE SEARCH THE ASSESSEE IS FOUND TO THE OWNER OF SOME UNACCOUNTED ASSETS AND THE SUCH UNACCOUNTED ASSETS HAVE NOT BEEN DECLARED IN THE RETURN OF INCOME FILED UNDER SECTION 153A. THEREFORE, FROM THE ABOVE DISCUSSION, I FIND THAT IN THE PRESENT CASE THE CONDITIONS LAID DOWN IN SEC TION 271(1) (C) ARE NOT BEING FULFILLED AS 'INACCURATE PARTICULARS' MEANS THE DETAILS FILED IN THE RETURN OF INCOME ARE NOT ACCURATE OR EXACT OR CORRECT ACCORDI NG TO TRUTH OR ERRONEOUS. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT (A) THE RE VENUE IS IN APPEAL BEFORE US NOW. 5. THE LD. DR SUBMITTED THAT SEARCH SEIZURE OPERATI ON IN THIS CASE WAS CARRIED OUT ON 17/03/2010 AND EXPLANATION 5A TO SECTION 271(1)(C) IS A DEEMING PR OVISION 5 I.T.A.NO.5745/DEL/2013 WHICH HAS BEEN INSERTED W.R.E.F. 01/6/2007. AS PER EXPLANATION 5A, ASSESSEE TO HAS CONCEALED PARTICULA RS OF INCOME, AS THE ASSESSEE HAD CONCEALED ITS TRUE INCOME/LOSS IN THE RETURNS FILED UNDER SECTION 139( 1). HE SUBMITTED THAT, THE DEEMING PROVISION OF EXPLANATIO N 5A TO SECTION 271(1)(C) OF THE ACT ARE ATTRACTED. HE F URTHER SUBMITTED THAT ALL THE THREE CONDITIONS ARE FULFILL ED AS PER EXPLANATION 5A TO SECTION 271(1)(C) I.E., SEARCH CO NDUCTED ON OR AFTER 01/6/2007, UNACCOUNTED INCOME DISCLOSED BY THE ASSESSEE PURSUANT TO RETURNS FILED UNDER SECTIO N 153A, WHICH HAS NOT BEEN DISCLOSED IN THE ORIGINAL RETURN FILED ON 28/10/2005. 6. ON THE CONTRARY THE LD. AR SUBMITTED THAT THE LO SS OF RS.1,45,77,465/- UNDER THE HEAD LONG TERM CAPIT AL GAIN WAS REFLECTED IN BOTH THE RETURN OF INCOME FIL ED UNDER SECTION 139(1) AS WELL AS UNDER SECTION 153A OF THE ACT WHICH HAS BEEN ACCEPTED BY THE LD. AO, THEN THE PEN ALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOSED FOR FILIN G INACCURATE PARTICULARS OF INCOME. THE LD. AR SUBMIT TED BEFORE US THE COPY OF THE RETURN FILED U/S.139(1) O F THE ACT, DATED 28/10/2005 AND RETURN FILED U/S.153A OF THE A CT DATED 19/10/2010. HE HAS PLACED HIS RELIANCE UPON T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PRICEWATERHOUSE COOPERS (P.) LTD VS. CIT REPORTED I N (2012) 25 TAXMAN.COM 400. 6 I.T.A.NO.5745/DEL/2013 7. WE HAVE PERUSED THE RECORDS PLACED BEFORE US, TH E ORDERS PASSED BY THE AUTHORITIES BELOW AND THE DECI SIONS RELIED UPON BY BOTH THE SIDES. 7.1 ON PERUSAL OF THE COPIES OF THE RETURN OF INCOM E FILED UNDER SECTION 139 AND 153A OF THE ACT, WE OBSERVE T HAT THE DIFFERENCE IN THE RETURN FILED UNDER SECTION 15 3A WAS DUE TO THE LOSS SHOWN UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. THE LD.AR SUBMITTED THAT THERE WAS OMISSION IN THE ORIGINAL RETURN TO INCLUDE THE DEFERRED TAX EXPENDITURE WHILE CALCULATING INCOME UNDER THE HEAD BUSINESS AND PROFESSION AMOUNTING TO RS.1,05,077/- IN THE RETURN OF INCOME FILED U/S.139 OF THE ACT. HE SUBMITTED THAT WHILE FILING THE RETURN IN LIEU OF N OTICE UNDER SECTION 153A, THE ASSESSEE RECTIFIED THIS ERR OR VOLUNTARILY DECLARING LOSS OF RS.20,450/-. 7.2. FURTHER FROM THE RETURN FILED BY THE ASSESSEE UNDER SECTION 139 AND SECTION 153A OF THE ACT, IT APPEARS THAT THE ASSESSEE HAD CARRIED FORWARD THE BUSINESS LOSS AMOUNTING TO RS.1,25,527/-. THE LD.AR HAS NOT PRESE NTED BEFORE US COMPLETE AUDITED FINANCIAL STATEMENTS FIL ED ALONG WITH THE RETURN OF INCOME UNDER SECTION 139 A ND SECTION 153A OF THE ACT. AT THIS JUNCTURE WE DO NOT WISH TO ANALYSE WHETHER THE EXPENDITURE THAT HAS BEEN SHOWN AS DEFERRED REVENUE EXPENDITURE IN THE COMPUTATION ANN EXED TO THE RETURNS FILED UNDER SECTION 153A, RELATES TO THE YEAR UNDER CONSIDERATION 7 I.T.A.NO.5745/DEL/2013 7.3. BE THAT AS IT MAY SUCH OMISSION OR NON-INCLUSI ON OF THE DEFERRED REVENUE EXPENDITURE IN THE ORIGINAL RE TURN BY THE ASSESSEE WAS DISCOVERED AT THE TIME WHEN THE ASSESSMENT PROCEEDINGS WERE GOING ON, POST SEARCH. 7.4. THE LD. AR HAS PLACED HIS RELIANCE UPON THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATER HOUSE COOPERS PVT. LTD. VS. CIT REPORTED IN (2012) 25 TAXMAN.COM 400. THE FACTS OF THE PRESENT CASE IN HA ND ARE VERY MUCH DIFFERENT FROM THE FACTS IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD (SUPRA). THE ASSESSMENT YEAR INVOLVED IN THE CASE OF PRICE WATERHOUSE COOPE R PRIVATE LIMITED (SUPRA) IS 2000-01. IN THAT CASE TH E ASSESSING OFFICER HAD REOPENED THE ASSESSMENT ON TH E BASIS OF ITS FINDING THAT PROVISION TOWARDS PAYMENT OF GRATUITY WAS NOT ALLOWABLE AS SOME EMPLOYEES OF THE ASSESSEE THEREIN HAD BEEN TAKEN OVER UPON ACQUISITI ON OF A BUSINESS, BUT THESE EMPLOYEES WERE NOT MEMBERS OF AN APPROVED GRATUITY FUND UNLIKE OTHER EMPLOYEES OF TH E ASSESSEE THAT. THE ASSESSEE THEREIN, HAD CLAIMED DEDUCTION THEREOF IN ITS RETURN OF INCOME AND ON RE ALISING THE MISTAKE ASSESSEE THEREIN REVISED ITS RETURN. HO NBLE SUPREME COURT ALSO OBSERVED THAT IN THE TAX AUDIT REPORT FILED ALONG WITH THE RETURN HAD STATED THAT THE PRO VISION FOR PAYMENT WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT AND THAT TO SUCH PECULIAR FACTS, IMPOSITION OF PENALTY U/S.271(1) (C ) WAS NOT JUSTIFIED. IN THE CASE BEFO RE HONBLE 8 I.T.A.NO.5745/DEL/2013 SUPREME COURT, THE ASSESSMENT WAS NOT UNDER SECTION 153A OR 153C. 7.5. THE ASSESSMENT YEAR INVOLVED IN THE PRESENT CA SE BEFORE US IS 2005-06 AND SEARCH WAS CARRIED OUT ON 17/03/2010. EXPLANATION 5A TO SEC.271(1) (C ) HAS B EEN INSERTED BY FINANCE (NO. 2) ACT, 2009 WITH RETROSPE CTIVE EFFECT FROM 1/06/2007, AND IS APPLICABLE, WHERE SEA RCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER 1 ST DAY OF JUNE 2007. THE LD. AO HAS LEVIED PENALTY UNDER SECT ION 271 (1) (C ) BY INVOKING DEEMING EXPLANATION 5A. UN DER SUCH DIFFERENCE IN THE FACTUAL POSITION THE DECISIO N OF HONBLE SUPREME COURT IN PRICE WATERHOUSE COOPER PVT.LTD., (SUPRA) CANNOT BE APPLIED TO THE FACTS IN HAND BEFORE US. 7.6. IT IS OBSERVED THAT LD. CIT (A), HAS BEEN DELE TED PENALTY BY HOLDING THAT THE CONDITIONS LAID DOWN TO SATISFY THE REQUIREMENT OF FURNISHING INACCURATE PARTICULARS HAS NOT BEEN FULFILLED TO LEVY THE PENALTY UNDER SECTIO N 271 (1) (C ) OF THE ACT. FROM THE COMPUTATION OF PENALTY IN THE PENALTY ORDER IT IS OBSERVED THAT THE LD. AO HAS SO UGHT TO LEVY PENALTY OF RS.53,26,776/- ON THE CONCEALED INC OME OF RS.1,45,57,015/-, BEING THE DIFFERENCE BETWEEN THE RETURNED LOSS DECLARED IN THE RETURN UNDER SECTION 139 (1) AND SECTION 153A OF THE ACT. IT IS INTERESTING TO N OTE THAT ASSESSEE FILED ORIGINAL RETURN OF INCOME BY DECLARI NG CAPITAL LOSS OF RS.1,45,77,465/-AND A CARRY FORWARD THE BUSINESS LOSS AMOUNTING TO RS.1,25,527/-. SUBSEQUEN TLY 9 I.T.A.NO.5745/DEL/2013 AS A RESULT OF SEARCH, THE BUSINESS LOSS WAS REDUCE D TO RS.20,450/-BY REDUCING THE DEFERRED REVENUE EXPENDI TURE AMOUNTING TO RS.1,05,077/- AND ASSESSEE CHOSE NOT T O CARRY FORWARD SUCH BUSINESS LOSS. EXPLANATION 5A TO SECTION 271 (1) (C) IS NOW VERY CLEAR, THAT IF THER E IS A DIFFERENCE IN THE ORIGINAL RETURN FILED UNDER SECTI ON 139 (1) OF THE ACT AND THE RETURN FILED IN RESPONSE TO SECT ION 153A OF THE ACT, THE ASSESSEE IS DEEMED TO HAVE CONCEALE D THE INCOME. WE DO NOT FIND ANY SCOPE OF ANY EXPLANATION TO BE GIVEN BY THE ASSESSEE WHEN EXPLANATION 5A OF THE AC T HAS BEEN INVOKED. THUS IN OUR CONSIDERED OPINION THE LD .AO WAS CORRECT IN LEVYING THE PENALTY UNDER SECTION 27 1 (1) (C) BY INVOKING EXPLANATION 5A OF THE ACT. HOWEVER HE C ANNOT INCLUDE SUCH INCOME/LOSS THAT WAS ALREADY DECLARED IN THE ORIGINAL RETURN OF INCOME. THE CAPITAL LOSS OF RS.1,45,77,465/- THAT WAS DECLARED BY ASSESSEE SHOU LD BE EXCLUDED WHILE CALCULATING THE PENALTY. ACCORDINGLY WE SET ASIDE THE ISSUE BACK TO THE FILES OF AO FOR RE-COMP UTING THE AS PER LAW. IN THE RESULT THE APPEAL FILED BY THE REVENUE STAND S STATISTICALLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2017. (N. K. SAINI) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 14.02.2017 10 I.T.A.NO.5745/DEL/2013 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER