SHRI RAMPAL GUPTA, JAMMU V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, JAMMU

ITA 58/ASR/2021

AI Insights

The case revolves around a penalty imposed on Shri Rampal Gupta by the Deputy Commissioner of Income Tax, Central Circle, Jammu, under section 271(1)(c) of the Income Tax Act, 1961, for alleged concealment of income. The penalty was based on the addition of undeclared short-term capital gains from the sale of property, which was initially not declared in the original return but was later included in a revised return filed after a search operation under section 132(1) of the Act. The Tribunal examined whether the penalty was justified, considering the timing of the revised return and the lack of incriminating evidence during the search.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 115018 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2022
• Appeal Filed By: Assessee
• Order Result: AllowedAllowed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2022
• Assessment Year: misc
• Appeal Filed On: 19-09-2022
• Other Referred Cases: M/s NSE IT Ltd. vs. DCIT- 8(2), Mumbai, D. Prasad vs. ITO-Ward/1(4), ACIT vs. Ashok Raj Nath, DCIT vs. Smt. Indira Agrawal, Ajay traders vs. DCIT, Central Circle, Alwar
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Document seized; Revised return; Documents seized; TDS; Capital Gains
• Section: 132; 271(1)(c); 139; 143(3); 153A; 250; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No.58/Asr/2021 Assessment Years: 2016-17 Shri Rampal Gupta, M/s Royal Technologies, R/o 121 A/D Gandhi Nagar Jammu. [PAN:-ABYPG6940J] (Appellant) Vs. Dy.CIT, Central Circle,Jammu (Respondent) Appellant by Sh. R.K. Gupta, CA Respondent by Sh.Rajiv Wadhera, Sr.DR. Date of Hearing 09.11.2022 Date of Pronouncement 08.12.2022 ORDER Per:Anikesh Banerjee, JM: The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-5, Ludhiana, [in brevity the ld. CIT(A)] bearing appeal no.10149/CIT(A)-5/Ldh/(144)/2019-20,date of order 18.06.2021, the order passed u/s 250 (6)of the Income Tax Act 1961, [in brevity the Act] for I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 2 A.Y. 2016-17. The impugned order was emanated from the order of the ld. Dy. Commissioner of Income Tax, Central Circle, Jammu, ( in brevity the AO), order passed u/s 271(1)(c) of the Act date of order 25.06.2019. 2. The assessee has taken the following grounds which reads as under: “1.That the worthy CIT(A) is not justified in confirming the penalty imposed by the ld. AO amounting to Rs.3,56,768/- in order passed u/s 271(1)(c) of Income Tax Act, 1961. 2. That the appellant craves, leaves to alter, amend and add to substitute any ground of appeal before or at the time of hearing.” 3. Brief fact of the case is that the assessment wascompleted u/s 153A/143(3) accordingly; addition was made on basis of undeclared short term capital gain for sale of property. The assessee filed return u/s 139 (1) on 16. 10.2016, declared income of Rs.34,83,075/-. A search was conducted u/s 132(1) on 19.01.2017. After the search proceedings the assessee filed his revised return on dated 30.03.2018 and declaring the additional income amount of Rs.11,54,595/- under the head “income from short term capital gain”. The notice u/s 153A was issued on dated 13.09.2018. The ld. AO did not consider the revised return and addition was made on basis seized documents during the search. The tax was computed on concealed income and accordingly the penalty was levied amount to Rs.3,00,432/-. The I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 3 assessee filed an appeal before the ld. CIT(A) against the order of the ld. AO. The assessee had the grievance related to the levy of penalty u/s 271(1)(c) on the ground which was declared in revised return,after search, but before the issuance of the notice u/s 153A. The ld. CIT(A) upheld the order of the ld. AO. 4. The aggrieved assessee filed an appeal before us. 5. During hearing the ld. Counsel filed a written submission in paper book which is kept in the record. The ld. Counsel first pointed out the relevant para of the assessment order passed u/s 153A r.w.s. 143(3) of the Act. The para 2 of the said order is reproduced as below: “In this case, assessee, filed his return of income on 16-10-2016 u/s 139(1) of the I. T. Act, 1961 declaring an income of Rs. 34,83,075/- under the head Income from Business and Profession. Later search and seizure action was conducted in the case of the assessee u/s 132(1) of the I. T. Act, 1961 on 19-01-2017. During the course of search proceedings, an annexure “A-21” was found and seized. In the said annexure, there is detail of purchase and sale of immovable property by the assessee. Thereafter, assessee revised his return of income on 30-03-2018 and declared an additional income of Rs. 11,54,595/- under the head “Income from Short Term Capital Gains” apart from income already declared in original return. Assessee had failed to declare his income under the head “Income from Short term I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 4 capital gains” and only after an action u/s 132(1) of the I. T. Act, 1961 was conducted in his case and details of the purchase and sale of property was seized as per Annexure “A-21” then the assessee revised his return of income and declared the income under the head “Income from Short Term Capital Gains” amounting to Rs. 11,54,595/- in his return of income on 30-03-2018. Therefore, I am of the view that assessee has willfully concealed the particulars of his income when he filed his original returnon 16-10-2016.” 6. The ld. Counsel further mentioned that the annexure ‘A-21’ was duly annexed in paper book running page no. 1.It is clearly indicated that the said property which was declared in the revised return was not the incriminating material during the search. Accordingly, the argument of the ld. Counsel is that the revenue has not pointed out the mistake of the assessee for declaring in the income from short term capital gain. In his argument he further supported the paper bookpage no. 9, the computation filed with the return u/s 139(1) were the deduction of TDS amount of Rs.58,000/- related to transaction Rs.58 lacs for sale of property which was declared in return and allowed for credit. It is mere mistake of the accountant who had filed the original return of the assessee. The mistake I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 5 was certainly rectified by the assessee by filing the revised return and declared the income in the total income of the assessee. 7. The ld. Sr. DR relied on the order of both the revenue authorities. He first pointed out the Explanation-5A of section 271 of the Act. The relevant para 2.2 of the order of ld. CIT(A) is extracted as below: “2.2 So, the plea taken by the assessee regarding the mistake being committed by his counsel is misplaced. Further, Explanation 5A to the section 271 of the Income Tax Act, 1961 clarifies the position regarding on the concealment of income related to search cases. Explanation 5A to section 271 of the Act states that: "Explanation 5A.—Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of— (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 6 of account or other documents or transactions represents his income wholly or in part) for any previous year, which has ended before the date of search and,— (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income.” 8. We heard the rival submission and relied on the documents available in the record. The entire issue is precisely depending on the observation made by the revenue during search. In annexure ‘A-21’ in search documents, the said property was not in the list. So it cannot be said the incriminating documents. The assessee revised its return and took the benefit of rectification is mistake apparent from the I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 7 record. The revised return was submitted and income was declared before issuance of notice u/s 153A. The assessee relied on the order of the Coordinate Benches of the ITAT in the cases of; i. M/s NSE IT Ltd. vs. DCIT- 8(2), Mumbai in ITA No.5935/Mum/2014 order dated 28.03.2018. ii. D. Prasad, vs. ITO-Ward/1(4), in ITA 51/Vizag/2016 order dated 10.06.2016. iii. ACIT vs. Ashok Raj Nath,in ITA 2970/Del/2012 order dated 31.08.2012. iv. DCIT vs. Smt. Indira Agrawal, in ITA 1444/JP/2018 order dated 22.03.2019. The relevant para 4.4 of the order, ITA 1444/JP/2018 is extracted as below: “4.4 In above factual situation, the penalty u/s 271(1)(c) cannot be levied as the matter is covered one. Apart from the consideration given on the several case laws cited by the applicant it is worth to place the reliance on the decision Hon’ble ITAT, Jaipur Bench, Jaipur in the case of Ajay traders V/s DCIT, Central Circle, Alwar (ITA No. 296/ JP/2014) pronounced on 06.05.2016 as follows: - “4.3. We have heard rival contentions and perused the material on record. It is undisputed fact that during the course of search, no incriminating documents were found and seized. The assessee surrendered the additional income under section I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 8 132(4) at Rs. 15 lacs and requested not to impose penalty u/s 271(1)(c) of the IT Act. The ld. AO imposed the penalty by invoking the Explanation 5A to section 271(1)(c) of the Act, which has been confirmed by ld. CIT (A) by considering the judgment of Hon’ble Supreme Court in the case of MAK Data Pvt. Ltd. (supra). But for imposing the penalty under Explanation 5A on the basis of statement recorded during the course of search, it is necessary to be found incriminating documents and is to be considered at the time of assessment framed under section 153A of the Act. The issue has been considered by various High Courts as well as by ITAT as relied upon by the assessee, which are squarely applicable to the case of the assessee. As no incriminating documents were found during the course of search, therefore, Explanation 5A to section 271(1)(c) is not applicable. Accordingly, we delete the penalty confirmed by ld. CIT (A). It is undisputed fact that, the no incriminating documents were found during the course of search to prove the concealment of income and the penalty was imposed merely on the basis of income surrendered by the appellant in his statement and shown in the ITR filed u/s 153A of the Act. The income so surrender by the appellant was reported in the return filed u/s 153A which has been accepted without further addition. No I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 9 incriminating documents are not used to alter the income reported by the appellant or prove the income so surrender by the applicant as real undisclosed income. Therefore, issue is squarely covered with the above citation. 4.5 In view of the above discussions and considering the overall facts and attending circumstances of the appellant’s case and with regards to the various juridical pronouncements discussed herein above, I found that it is undisputed fact in this case that the impugned income subjected to the assessment is only income which is surrendered by the appellant during the search and also disclosed in return of income filed under section 153A. There is no corroborative evidence/material /document in support of income so surrendered and offered for taxation and the same is only on the basis of the statement of the assessee recorded during search. The declared income is also finally assessed as such. Following, the decisions discussed in paras 4.4 the penalty levied on this account under section 271(1)(c) of the Income Tax Act is not sustainable and accordingly the same stands as cancelled. Accordingly, this ground of appeal 1 to 6 is allowed.” 8.1 Considering the catena of the judgment respectfullysubmitted by the ld. Counsel for assessee the whole issue is depicted in a manner that the said income was declared during revised return before finding by the revenue. So, considering I.T.A. No.58/Asr/2021 Assessment Year: 2016-17 10 the revised return of the assessee there is no concealment of inaccurate particular of income. He relied on the order of the Coordinate Bench of the ITAT Jaipur. Further the ld. Sr. DR has not able to produce any contrary judgment related to the submission of the ld. Counsel. Accordingly, the penalty levied by the ld. AO Rs.3,00,432/- is quashed. 9. In the result, the appeal of the assessee bearing ITA No. 58/Asr/2021 is allowed. Order pronounced in the open court on 08.12.2022 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order