Chhaya Vikas Shah Legal Heir & wife of Late Vikas Shah, Ahmedabad V. The Dy.CIT, Central Circle-2(2), Ahmedabad

ITA 584/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5464 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-07-2024
• Assessment Year: 1999-2000
• Appeal Filed On: 26-07-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Peak credit; Initiation of penalty proceedings
• Section: 271(1)(c); 153A; 274

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ “सी“, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद । ।। । IN THE INCOME TAX APPELLATE TRIBUNAL “ C ” BENCH, AHMEDABAD ी स , स एवं ी म रं वसंत मह ेव र, े स े सम ! ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER Sl. No(s) आयकर अपील सं/ ITA No(s)/ र / Assess- ment Year(s) Appeal(s) by : अपील / य / Appellant ब म/vs. Respondent 1. 584/Ahd/2023 1999-2000 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah 210, Anal Flats Near Vijay Cross Roads Navrangpura, Ahmedabad Gujarat 380 009 PAN: APWPS 4465G (Assessee) The Dy.CIT Central Circle-2(2) Ahmedabad (Revenue) 2. 585/Ahd/2023 2000-01 -do- Assessee -do- Revenue 3. 586/Ahd/2023 2001-02 -do- Assessee -do- Revenue Assessee by : Shri Suresh Gandhi, AR Revenue by : Shri Ashok Kumar Suthar, Sr.DR स क र /Date of Hearing : 25 /07/2024 !" क र /Date of Pronouncement: 31/07/2024 आ ेश/O R D E R PER SHRI MAKARAND V. MAHADEOKAR, AM: These three appeals by the Assessee are directed against the separate orders of the Ld.Commissioner of Income Tax(Appeals)-12, Ahmedabad [hereinafter referred to as “the Ld.CIT(A)” in short] all identically dated ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 2 30/05/2023 pertaining to Assessment Years (AYs) 1999-2000, 2000-2001 & 2001-02 respectively against the imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as “the Act). Since the issues are inter-connected, these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. Facts of the Case 2. The assessee, during years under consideration was involved in trading in land, development and was also involved in construction activities. A search operation u/s 132(2) of the Act was conducted on the assessee on 09-02-05 and various documents/books of account /other valuable articles/ other things were found and seized. Consequently, assessment was completed u/s.153A(b) r.w.s. 144 of the Act. On 28.12.2006 determining total income of Rs.2,97,42,657/- as against income Rs. 10,23,030/-disclosed in the return filed u/s.153A of the Act. Penalty proceedings u/s 271(1)(c) of the Act was also initiated separately. Against the said assessment the assessee filed an appeal before the Ld.CIT (A)-III, Ahmedabad who vide order dated 18.01.2011, confirmed the addition on account of Unaccounted income/receipt of Rs.2,77,46,780/-. The assessee filed appeal before the Tribunal which vide its order in IT(SS)A Nos. 311 to 313/Ahd/2011 dated 21.03.2017, allowed relief and confirmed the additions as detailed below: Particulars A.Y. 1999-2000 A.Y. 2000-2001 A.Y. 2001-2002 Total Income Returned as per return filed u/s 153A in Rs. 10,23,030/- 10,89,360/- 6,37,940/- Total Income determined as per assessment u/s 2,97,42,657/- 2,20,94,515/- 69,90,160/- ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 3 153A(b) r.w.s.144 of the Act in Rs. Total Additions confirmed by Tribunal in Rs. 27,84,533/- 11,83,041/- 9,56,596/- - Income calculated at 8% of the receipts Related to constructio n activities Rs. 4,09,902/- 45,604/- 1,256/- - Net peak amount of the cash and finance Transaction s Rs. 12,39,631/- 11,37,437/- 8,15,340/- - Rent income (received) Rs. 11,35,000/- 11,35,000/- 1,40,000/- - Expenses disallowed confirmed by CIT(A) not pressed before ITAT Rs. (CIT(A) gave relief in penalty on account of this amount) 50,000/- 50,0000/- 40,000/- Income concealed as well as furnished inaccurate particulars of 28,93,042/- 12,33,041/- 9,96,596/- ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 4 income amounting to Rs. Penalty imposed by AO being 100% of tax sought to be evaded in Rs. 12,47,520/- 3,94,800/- 3,36,940/- Penalty confirmed by CIT(A) on amount Rs. 27,84,533/- 11,83,041/- 9,56,596/- 2.1. During the penal proceedings, the AO noted that the search resulted in seizure of incriminating material from assessee’s car. The AO also noted that the assessee despite seizure of such incriminating documents did not file return of income u/s 153A of the Act, in time, and only after several notices, filed the return of income on 28.12.2006 declaring total income as detailed in the table above for respective assessment years. The AO further recorded that during the assessment proceedings, the assessee was not cooperative for which penalty u/s 271(1)(b) of the Act was also levied on the assessee. 2.2. Post assessment the case reached second stage of appeal. The Tribunal confirmed the addition, as detailed in the table above, after allowing some relief. The AO also expressed that though the Hon'ble ITAT had confirmed only a small portion of additions and disallowances made earlier, such addition clearly proved that the assessee had all the intention of concealing his income. The AO noted that even after the search and discovery of incriminating material, the assessee did not disclose his real income in the return filed u/s 153A of the Act. The AO further held that the assessee willfully and deliberately concealed his income as well as furnished ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 5 inaccurate particulars of income as detailed in the table above for respective assessment years. 3. The Ld.CIT(A) partly allowed the appeal of the assessee, after granting relief on penalty relating to amounts of disallowance not pressed for before ITAT. The details of the same are given above. While doing so, the Ld.CIT(A) dealt with the legality of the AO’s order. The relevant paras of the order are reproduced here which is common for all three assessment years, except the amounts specified therein: “7. The Ground of appeal 3 is the legal challenge to the imposition of penalty and is dealt with first. The assessee has alleged that the AO has not recorded any satisfaction as to whether the penalty has been initiated for furnishing of inaccurate particulars of income or concealment of income or both and having simply stated that "Penalty has been initiated separately". Thus, the penalty order suffers from the vice of non-application of mind and therefore requires to be quashed as held in the binding decision of the Hon'ble Gujarat High Court in the case of CIT vs. Whiteford India Itd. [2013] 38 taxmann.com 15/219 Taxman 98 (Mag.) (Guj). 7.1 From the Assessment order it is seen that the AO in the ultimate para on page 7 had initiated penalty for furnishing inaccurate particulars of income/ concealment of income...". Thus the primary objection that the AO has simply stated that "Penalty has been initiated separately" is incorrect. Further on this issue of satisfaction note to be recorded at the time of passing the assessment order, the Delhi HC in the case Madhushree Gupta vs. Union of India [2009] 183 TAXMAN 100 (DELHI) held that: "19 In the result, our conclusion are as follows: - (i) Section 271(1B) of the Act is not violative of Article 14 of the Constitution. (ii) The position of law both pre and post amendment is similar, in as much, the Assessing Officer will have to arrive at a prima facie satisfaction during the course of proceedings with regard to the assessee having concealed particulars of income or furnished inaccurate particulars, before he initiates penalty proceedings. ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 6 (iii) Prima facie satisfaction of the Assessing Officer that the case may deserve the imposition of penalty should be discernible from the order passed during the course of the proceedings. Obviously, the Assessing Officer would arrive at a decision, i.e, a final conclusion only after hearing the assessee. (iv) At the stage of initiation of penalty proceeding the order passed by the Assessing Officer need not reflect satisfaction vis-a-vis each and every item of addition or disallowance if overall sense gathered from the order is that a further prognosis is called for. (v) However, this would not debar an assessee from furnishing evidence to rebut the prima facie satisfaction of the Assessing Officer; since penalty proceedings are not a continuation of assessment proceedings. [See Jain Brothers v. Union of India (1970) 77 VTR 107(SC)) (vi) Due compliance would be required to be made in respect of the provisions of Section 274 and 275 of the Act." (vii) The proceedings for initiation of penalty proceeding cannot be set aside only on the grounds that the assessment order states penalty proceedings are initiated separately' If otherwise, it conforms lo the parameters ser out hereinabove are met. 7.1.1 As per the said sub-section, where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under section 271(1)(c), such an order shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under section 271(1)(c) of the Act. Further it is not necessary that the AO initiates penalty proceedings for each and every issue of addition separately. There is no format or manner in which such a satisfaction for initiation of penalty is to be recorded. The same should be discernible from the facts leading to the addition/disallowance. 7.2 The assessee relied upon the case of CIT vs. Whiteford India Lid. /2013] 38 taxmann.com 15/219 Taxman 98 (Maq.) (Guj.). The ratio here is that the Assessing Officer is required to give clear finding whether the assessee is guilty of concealing the income and/or furnishing incorrect particulars of income. It was based on the decision of the Gujarat High Court in the case of CIT v. Manu Engineering Works 122 TR 306 where it was held: ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 7 "We find from the order of the IAC, in the penalty proceedings. that is the final conclusion as expressed in para 4 of the order: "I am of the opinion that it will have to be said that the assessee had concealed its income and or that it had furnished inaccurate particulars of such income". Now, the language of "and/or" may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi-criminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear-cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down." 7.2.1 Now as stated above, it is found from the assessment order that the AO initiated penalty on the entire addition recording " ....for furnishing inaccurate particulars of income/ concealment of income." Thus he has initiated penalty under both the limbs of section 271(1)(c) of the Act. The satisfaction, contrary to the claim of the assessee is noted in the assessment order. Hence the contention of the assessee that "Penalty is not justified in cases where no proper satisfaction is recorded in the assessment order and where there is ambiguity in charge for levy of penalty is rejected. The AO is not required to do more at the time of initiation of the penalty proceedings than he had done. Therefore, ground of appeal 3 is dismissed. 7.3.1 Further. the assessee has raised objection in the written submission that while imposing penalty the AO is not clear that which limb was invoked while imposing penalty. In the Page-5 of Order the AO has clearly noted that "Thus, clearly, the assessee wilfully and deliberately concealed his income as well as furnished inaccurate particulars of income." In the Page No. 7 Para 10 of the Order he has concluded that "Therefore. it is a fit case for the levy of penalty u/s. 271(1)(c) of the Act. for furnishing inaccurate particulars of income as thereby concealing income of Rs. 28,93,042/-", Only in the last para while quantifying the penalty he has erroneously only mentioned "...Of furnishing inaccurate particulars of income". His firmed-up opinion is clearly enumerated in Page 7 para 10 (supra) leading to conclusion that the penalty is imposed on both the limbs on the entire undisclosed income of Rs. 28,93,042/-. ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 8 In any case, no specific ground of appeal on this issue was raised. The argument is otherwise rejected.” 3.1. While deciding on the merits relating to penalty on disallowances, the Ld.CIT(A) discussed the decisions of Hon’ble Supreme Court relied on by the assessee, namely the decision of Hon’ble Supreme Court in the case Price Waterhouse Coopers P Ltd vs CIT [2012] 348 ITR 306 (SC) as well as CIT vs Reliance Petro Products Pvt Ltd [2010] 322 ITR 158 (SC), where it was held that mere disallowance of a claim or plausible explanation furnished by the assessee apart from the fact that the issues in dispute being highly debatable, no penalty was warranted. 3.2. The CIT(A) also concluded that – - the additions have been made on the basis the incriminating material found during the course of search. - the assessee was non-cooperative during the assessment proceedings and was not forthcoming regarding the nature of income that was undisclosed. - by assessee’s own admission, only during the second stage of appeal, as per the direction of the Hon'ble ITAT, Ahmedabad, additional details were filed and during proceeding with ITAT different type of transactions were noted and undisclosed income was determined (as detailed in the table above). - the argument by the assessee is curious as on one hand he hides information to purposely evade taxes and then takes a plea that it is difficult to quantify the actual evasion from the notings on seized pages. - the AO has mentioned in the assessment order the non-cooperation by the assessee during the proceedings. ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 9 - there is no reference to any original return being filed. - the return of income called for under section 153A was filed at the fag end on 26/12/2006. - the assessee is trying to gain advantage out of its own malafide behavior. - it is immaterial whether the assessee has included certain income in the return of income u/s 153A or not. - additions were made only because the assessee had wilfully hidden the transaction from the Income tax department and also falsified the particulars of his income. - it was a clear-cut case of tax evasion by design. Not only receipts and transactions were hidden but also while filing 153A Return half- baked attempt by furnishing inaccurate particulars of income was made to procrastinate the income tax action. - the estimation of the income by tribunal, on the basis of estimated rate and application of peak credit principle was forced, as the entire receipts of construction and finances were intentionally not disclosed, and the assessee was not forthcoming. - even the rental income from godown was undisclosed. Discovery of the same, forced the assessee to declare the said income in return of income filed u/s 153A of the Act. - such income would have remained out of tax net if a search action not conducted upon the assessee. 3.3. On the disclosure in the return of income, the Ld.CIT(A) placed reliance on the decision of Hon'ble Supreme Court in the case Mak Data P. Ltd. v. CFT (2013) 358 ITR 593 (SC). ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 10 4. Aggrieved by the order of the Ld.CIT(A), the assessee is, therefore, in appeals before us with following common grounds of appeal(s) for respective assessment years: “The Ld. CIT(A) has erred in law and on facts while partly confirming the penalty U/S. 271(1)(c) of the Act levied by the AO without proper appreciation and consideration of the facts of the case. Considering the facts and submissions filed and the legal decisions relied upon, the entire penalty u/s. 271(1)(c) of the Act is required to be deleted.” 5. The Ld.Authorised Representative (AR) of the assessee explained the facts and requested to delete the penalty. However, he agreed that the addition was made based on incriminating material found during the search. He also stated that the original returns were not filed by the assessee and all the particulars were filed in the returns filed in response to notice u/s 153A of the Act. On the other hand, the Ld.Departmental Representative (DR) relied on the order(s) of the Ld.CIT(A). 6. We have carefully considered the rival submissions and perused the orders of the authorities below and case laws cited. We observe that the Revenue has established beyond any reasonable doubt that the assessee had willfully concealed the income and furnished inaccurate particulars. Incriminating material was seized from the assessee’s car and that the return of income under Section 153A of the Act was filed late, after several notices. Non-cooperation from the assessee during assessment proceedings is also noted. The Ld.CIT(A) partly allowed the appeal, granting relief on penalty for amounts of disallowance not pressed before ITAT. The Ld.CIT(A) rejected the assessee’s contention regarding the non-recording of ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 11 proper satisfaction by the AO for the initiation of penalty proceedings while dealing with the decisions relied on. 6.1. We find that the AO had sufficiently recorded the satisfaction for initiating penalty proceedings under Section 271(1)(c) of the Act. The ultimate paragraph of the assessment order clearly mentions the initiation of penalty for furnishing inaccurate particulars of income/concealment of income. The assessee’s non-cooperation during assessment proceedings and the subsequent late filing of returns under Section 153A of the Act, despite the discovery of incriminating material, indicate a clear intention of concealment of income and furnishing of inaccurate particulars. 6.2. We agree with the Ld.CIT(A)’s findings that the AO was justified in invoking both limbs of Section 271(1)(c) of the Act for the imposition of penalty, based on the clear evidence of tax evasion and the non-disclosure of actual income. The reliance placed by the Ld.CIT(A) on the Hon’ble Supreme Court's decision in Mak Data P. Ltd. v. CIT [2013] 358 ITR 593 (SC) and other relevant case laws is found to be appropriate and supports the conclusion that the penalty was rightly imposed. In case of Mak Data P. Ltd. (supra), the Hon’ble Supreme Court held that voluntary disclosure does not absolve the assessee from penalty if it is found to be a case of deliberate concealment of income. 6.3. We have also noted the facts as recorded in the quantum proceedings, it is not a matter for consideration as to whether there was any concealment resorted by the assessee or not. The fact of under-statement of income is discernible. Only matter for consideration is extent of quantification of ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 12 understatement of income. ITAT as a final fact-finding authority has lent objectivity to such estimation. Thus, quarrel about quantum of estimated undisclosed income also does not survive any more. In these circumstances, we do not see any rational ground for granting latitude to the assessee in the matter of relief pleaded. The assessee has referred to certain case laws before the Ld.CIT(A) however, facts as noted in elaboration in the quantum proceedings by the Coordinate Bench of ITAT (IT(SS)A Nos. 311 to 313/Ahd/2011 dated 21.03.2017), the assessee, in the instant case, stands on a very different footing of facts. 6.4. While the penalty on the undisclosed income confirmed by the CIT(A) is upheld, the penalty on the estimated disallowance amount (Rs. 50,000/-) is found to be untenable and is directed to be deleted, as per the Ld.CIT(A)’s order. 6.5. As a consequence, we do not find any merit whatsoever in the appeal(s) of the assessee. Thus, conclusion drawn by the Ld.Commissioner (Appeals) does not call for any interference. 7. In the result, all three appeals of the Assessee are dismissed. Order pronounced in the Open Court on 31 July, 2024 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमद ब द/Ahmedabad, %द ंक/Dated 31/07/2024 & .सी. यर, . .स./T.C. NAIR, Sr. PS ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02 13 आद)* क +ल,प अ-), /Copy of the Order forwarded to : 1. अपील / The Appellant 2. य / The Respondent. 3. संबं. आयकर आय / / Concerned CIT 4. आयकर आय / )अपील (/ The CIT(A)-12, Ahmedabad 5. , 2 3ीय . ,आयकर अपील य अ. कर ,र ज"क&/DR,ITAT, Ahmedabad, 6. 3 5 6 ल /Guard file. आद)* स र/ BY ORDER, स य ,प //True Copy// सह यक पंजीक र (Asstt. Registrar) आयकर अपील य अ. कर , ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 29.7.2024 2. Date on which the typed draft is placed before the Dictating Member. : 29.7.2024 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 31.7.24 7. Date on which the file goes to the Bench Clerk. : 31.7.24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :