Sh. Ajay Kumar Gupta, New Delhi V. DCIT, New Delhi

ITA 6104/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3009 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Salary income
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.-6104/DEL/2014 ( ASSESSMENT YEAR: 2011-12) AJAY KUMAR GUPTA 43/1, RAIPUR ROAD, CIVIL LINES NEW DELHI- 110054 VS . DCIT, CC - 04 NEW DELHI APPELLANT RESPONDENT ASSESSEE BY: SH. R.S.SINGHVI, A DV. REVENUE BY: SHRI N.K.BANSAL, SR.DR ORDER PER SUDHANSHU SRIVASTAVA, J.M.: THIS APPEAL IS PREFERRED AGAINST THE ORDER OF THE LD. CIT (APPEALS)-33, NEW DELHI WHEREIN, VIDE ORDER DATED 0 2.07.2014, THE LD. CIT (APPEALS) HAS UPHELD IMPOSITION OF PENALTY AMOUNTING TO RS. 1,75,000/- IMPOSED U/S 271(AAA) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE M/S. DH ARAMPAL SATYAPAL LTD. GROUP IS ENGAGED IN THE MANUFACTURING AND TRADING OF CHEWING TOBACOO AND PREMIUM PAN MASALA BESIDES OTHER DATE OF HEARING 13.02.2019 DATE OF PRONOUNCEMENT 27.02.2019 2 ITA N O. 6104/DEL/2014 (AJAY KUMAR GUPTA) BUSINESSES. A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT ON 21.01.2011 IN THE DHARAMPAL SATYAPAL GROUP OF CASES. THE ASSESSEE, WHO IS A DIRECTOR IN THE GROUP , HAD DURING THE YEAR EARNED INCOME FROM SALARY, BUSINESS AND PROFES SION AND OTHER SOURCES AND THE RETURN OF INCOME WAS FILED AT AN IN COME OF RS. 56,99,270/-. THE ASSESSEES RESIDENCE WAS ALSO COVE RED IN THE SEARCH AS CARRIED OUT ON 21.01.2011. DURING THE COU RSE OF SEARCH AT THE ASSESSEES RESIDENCE, CASH OF RS. 21,00,000/ - WAS FOUND AND UNEXPLAINED CASH OF RS. 17,50,000/- WAS SEIZED. IN THE RETURN FILED BY THE ASSESSEE, THIS AMOUNT OF RS. 17,50,000 /- WAS ADDED TO HIS INCOME AS INCOME FROM OTHER SOURCES. THE AO OBS ERVED THAT THE ASSESSEE COULD NOT EXPLAIN THE MANNER OF EARNIN G THIS INCOME DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS . THE ASSESSMENT WAS COMPLETED AT THE RETURNED INCOME OF RS. 56,99,720/-. HOWEVER, PENALTY PROCEEDINGS U/S. 271A AA WERE ALSO INITIATED AND, SUBSEQUENTLY, VIDE ORDER DATED 30.09 .2013 PENALTY OF RS. 1,75,000/- WAS IMPOSED U/S 271AAA OF THE ACT BE ING 10% OF THE UNDISCLOSED INCOME OF RS. 17,50,000/-. THE ASSE SSEES APPEAL AGAINST THE IMPOSITION OF PENALTY WAS DISMISSED BY THE LD. CIT (APPEALS) AND NOW THE ASSESSEE HAS APPROACHED THE I TAT AND HAS CHALLENGED THE IMPUGNED ORDER BY RAISING THE FOLLO WING GROUNDS OF APPEAL :- 3 ITA N O. 6104/DEL/2014 (AJAY KUMAR GUPTA) 1. THE ORDER PASSED BY THE LD. CIT (A) IS BAD IN L AW & NATURE, HENCE IT IS LIABLE TO BE QUASHED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN HOLDING THE PENALTY UNDER S ECTION 271AAA DESPITE THE FACT THE ASSESSEE FULFILLED THE CONDITION UNDER SECTION 271AAA SUB SECTION (2). THE REFORE, THE SAME IS LIABLE TO BE DELETED. 3. THE APPELLANT CRAVES LEAVE FOR ADDITION, MODIFIC ATION, ALTERATION, AMENDMENT OF ANY OF THE GROUNDS OF APPE AL. 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE ALLEGATION OF THE AO THAT THE ASSESSEE DID NOT SPEC IFY THE SOURCE OF UNEXPLAINED INCOME FOUND DURING THE COURS E OF SEARCH IS INCORRECT IN SO FAR AS NO QUERY WAS RAISE D BY THE AO WHILE RECORDING THE STATEMENT U/S 132(4) OF THE ACT . IN THIS REGARD, HE DREW OUR ATTENTION TO THE COPY OF STATEM ENT RECORDED DURING THE COURSE OF SEARCH. IT WAS ALSO S UBMITTED THAT THE SURRENDER OF THIS AMOUNT WAS NOT MADE BY T HE ASSESSEE DURING THE COURSE OF SEARCH BUT WAS SURREN DERED AS INCOME IN THE RETURN OF INCOME FILED. IT WAS FURTHE R SUBMITTED THAT THE RETURN FILED BY THE ASSESSEE WAS ACCEPTED BY THE AO AND NO FURTHER ADDITIONS WERE MADE. THE LD. AUTHORI SED REPRESENTATIVE PLACED RELIANCE ON THE JUDGMENT OF H ONBLE DELHI HIGH COURT IN THE CASE PR. COMMISSIONER OF IN COME TAX 4 ITA N O. 6104/DEL/2014 (AJAY KUMAR GUPTA) VS. EMIRATES TECHNOLOGY PVT. LTD. REPORTED (2017) 3 99 ITR 189 (DELHI) AND SUBMITTED THAT THE HONBLE DELHI HIGH C OURT HAD IN THIS CASE UPHELD THE ORDER OF THE TRIBUNAL HOLDI NG THAT WHERE NO QUERY IS RAISED BY THE ASSESSING OFFICER R EGARDING THE MANNER OF DERIVATION OF INCOME FROM UNEXPLAINED SOU RCES, THE DELETION OF PENALTY WAS JUSTIFIED. THE LD. AUTHORIS ED REPRESENTATIVE SUBMITTED THAT PENALTY WAS NOT IMPOS ABLE IN THIS CASE. 4. IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE SUBSEQUENT CASE OF RITU SINGHAL VS. CIT (2018-TIOL- 438-HC- DEL-IT) HAD HELD THAT A MERE STATEMENT THAT THE SUM SURRENDERED DURING THE SEARCH WAS UNDISCLOSED INCOM E BUT NOT DISCLOSING THE SOURCE OF SUCH INCOME CANNOT BE CONSTRUED AS SATISFACTION OF CONDITION U/S 271AAA. IT WAS SUB MITTED AND VEHEMENTLY ARGUED BY THE LD. SR. DEPARTMENTAL REPRESENTATIVE THAT THE PENALTY HAD BEEN RIGHTLY IM POSED AND UPHELD AND FURTHER THAT THE ASSESSEES APPEAL DESER VED TO BE DISMISSED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE HAV E ALSO PERUSED THE STATEMENT OF THE ASSESSEE WHICH WAS REC ORDED 5 ITA N O. 6104/DEL/2014 (AJAY KUMAR GUPTA) U/S 132(4) OF THE ACT ON THE DATE OF SEARCH I.E. 21 /01/2011. A PERUSAL OF THE SAID STATEMENT SHOWS THAT NO SURREND ER OF THE AMOUNT OF CASH SEIZED I.E. RS. 17,50,000/- WAS MADE BY THE ASSESSEE DURING THE COURSE OF SEARCH/IN THE STATEME NT RECORDED U/S 132(4). THE AMOUNT OF RS. 17,50,000/- WAS OFFERED FOR TAX BY THE ASSESSEE AS INCOME FROM OTHE R SOURCES FOR THE FIRST TIME IN HIS RETURN OF INCOME WHICH WA S DULY ACCEPTED BY THE AO AND THE ASSESSMENT WAS COMPLETED AT THE RETURNED INCOME WITHOUT ANY FURTHER QUERY OR INVEST IGATION BY THE AO. THEREFORE, ON THE PECULIAR FACTS OF THIS CA SE, IT IS OUR CONSIDERED OPINION THAT THE RIGOURS OF SECTION 271A AA WILL NOT BE ATTRACTED. THE JUDGMENT OF THE HONBLE DELHI HIG H COURT IN THE CASE OF RITU SINGHAL WILL NOT BE OF ANY HELP TO THE DEPARTMENT AS IN THIS CASE THE ASSESSEE HAD SURREND ERED A CERTAIN AMOUNT AS UNDISCLOSED INCOME IN THE STATEME NT RECORDED DURING THE SEARCH PROCEEDINGS AND HAD, THE REAFTER, NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOS ED INCOME WAS EARNED. HOWEVER, IN THE PRESENT CASE, TH ERE WAS NO SURRENDER BY THE ASSESSEE AND THE SEIZED CASH WA S INCLUDED IN THE COMPUTATION OF INCOME AND OFFERED F OR TAX WHICH WAS DULY ACCEPTED BY THE AO WITHOUT ANY FURTH ER QUERY. WE ALSO NOTE THAT THIS CASE IS COVERED IN FA VOUR OF THE 6 ITA N O. 6104/DEL/2014 (AJAY KUMAR GUPTA) ASSESSEE BY AN ORDER OF THE COORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF MAHAVIR PRASAD JAIPURIA VS. ACIT REP ORTED IN 167 ITD 253 (DELHI TRIB) WHEREIN THE COORDINATE B ENCH HAD HELD THAT WHERE THE AO HAD ACCEPTED THE ASSESSEES SURRENDER WITHOUT ANY QUESTIONS BEING ASKED, NO PENALTY U/S 2 71AAA WAS LEVIABLE. THEREFORE, ON THE SAME ANALOGY, WE DO NOT FIND THIS CASE A FIT CASE FOR IMPOSITION OF PENALTY. THE IMPUGNED ORDER IS SET ASIDE AND THE AO IS DIRECTED TO DELETE THE PENALTY. 6. IN THE FINAL RESULT, APPEAL OF THE ASSESSEE STAN D ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.02.2019. SD/- SD/- (R.K.PANDA) (SUDHANSHU SR IVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 27.02.2019 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA N O. 6104/DEL/2014 (AJAY KUMAR GUPTA) DATE OF DICTATION 12/02/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 27.02.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 27.02.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 27.02.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER