SAMIR SHAH, MUMBAI V. ACIT CEN CIR 47, MUMBAI

ITA 6205/MUM/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0694 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT PAL SINGH DAIA
• Keywords: Search and seizure; Set aside
• Section: 143(3); 153A; 264; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.6205/MUM/2016 ASSESSMENT YEAR: 2012-13 SAMIR SHAH 1404, SHIV TAPI APARTMENT H.G.ROAD, GAMDEVI MUMBAI-400 007 VS. ACIT, CENTRAL CIRCLE-47 AAYKAR BHAWAN, NEW MARINE LINES MUMBAI-400 020 PAN ALFPS3255F (ASSESSEE) (REVENUE) ITA NO.7277/MUM/2016 ASSESSMENT YEAR: 2012-13 SAMIR SHAH 1404, SHIV TAPI APARTMENT H.G.ROAD, GAMDEVI MUMBAI-400 007 VS. DCIT, CENTRAL CIRCLE-8(4) ROOM NO. 658, 6 TH FLOOR AAYKAR BHAWAN, NEW MARINE LINES MUMBAI-400 020 PAN ALFPS3255F (REVENUE) (ASSESSEE) REVENUE BY : SHRI AJIT PAL SINGH DAIA ASSESSEE BY : SHRI PRAKASH JHUNJHUNWALA DATE OF HEARING :26.04.2019 DATE OF PRONOUNCEMENT : 24.05.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER 1. THE CROSS APPEALS BY THE ASSESSEE AS WELL AS BY THE REVENUE IS ARISING OUT OF THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-50 HEREINAFTER CALLED [CIT(A)], MUMBAI, IN APPEAL NO.CIT(A)-50/IT-749/2014-15, ORDER DATED 26/08/2016 . THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF PENALT Y U/S 2 IT A NO.6205/MUM/2016 &7277/MUM/2016 271AAA TO THE TUNE OF RS. 2 LACS WHEREAS THE REVEN UE HAS CHALLENGED THE DELETION OF PENALTY OF RS. 30,82,765 /-. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL. 1. LD.COMMISSIONER OF INCOME TAX HAS ERRED IN CONFIRMI NG PENALTY U/S 271 AAA OF RS. 2,00,000/- WITHOUT PROPERLY CONS IDERING THE FACTS AVAILABLE ON THE RECORDS. YOUR APPELLANT RESPECTFULLY SUBMITS THAT DURING THE COURSE OF APPEAL PROCEEDINGS DETAILED SUBMISSIONS WERE MADE A LONG WITH VARIOUS JUDICIAL DECISIONS. LEARNED CIT-APPEALS AFT ER CONSIDERING DETAILED SUBMISSIONS OF THE APPELLANT C ONCLUDED THAT PENALTY U /S 271AAA WILL BE RESTRICTED TO THE INCOME OF RS. 20,00,000/- AS THE SAME AS NOT BEEN DISCLOSED BY T HE APPELLANT DURING THE COURSE OF SEARCH AND HENCE PRO VISION OF SUB-SECTION 1 OF 271AAA IS APPLICABLE IN RESPECT OF THE UNDISCLOSED INCOME OF RS. 20,00,000/- YOUR APPELLANT RESPECTFULLY SUBMITS THAT LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT ADDITIONAL INCOME OF RS.20 ,00,000/- DISCLOSED BY THE APPELLANT IS IN CONTINUATION OF TH E DECLARATION OF UNDISCLOSED INCOME MADE BY YOUR APPELLANT DURING THE COURSE OF SEARCH. IN VIEW OF ABOVE YOUR APPELLANT RESPECTFULLY SUBMIT S THAT PENALTY U/S 271AAA WILL NOT BE APPLICABLE ON ADDITI ONAL DECLARED BY YOUR APPELLANT OF RS. 20,00,000/- AND H ENCE NEEDS TO BE DELETED. 2. YOUR APPELLANT CRAVES LEAVE HAVE TO ADD, ALTER AND/ OR AMEND THE ABOVE GROUNDS OF APPEAL. 3. THE FACTS IN BRIEF ARE THAT THE SEARCH AND SEIZURE ACTION U/S 132 OF I.T. ACT WAS CARRIED OUT AT THE RESIDEN CE AND VARIOUS PREMISES OF ROHAN GROUP AND RELATED ENTITIE S ON 26/05/2011 BY DDIT INVESTIGATION UNIT-3, MUMBAI. TH E ASSESSEE FILED RETURN INCOME ON 06/03/2014 DECLARIN G INCOME OF RS. 3,08,27,650/- FOR THE YEAR UNDER CONSIDERATION DECLARING THE UNDISCLOSED INCOME ADMI TTED 3 IT A NO.6205/MUM/2016 &7277/MUM/2016 DURING THE COURSE OF SEARCH ACTION ON THE ASSESSEE. PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH , THE ASSESSEE HAS MADE A DISCLOSURE OF RS. 2,20,00,000/- ON THE BASIS OF INCRIMINATING DOCUMENTS ON ACCOUNT OF CASH AND JEWELLERY WHICH WAS FOUND TO BE NOT ACCOUNTED F OR IN THE BOOKS OF ACCOUNTS. THE AO INITIATED THE PENALT Y U/S 271AAA OF THE ACT ON THE INCOME DECLARED DURING THE SEARCH AS WELL AS ON THE INCOME OF RS. 20,00,000/- WHICH WAS OFFERED IN THE RETURN OF INCOME OVER AND ABOVE THE INCOME OF RS.2,20,00,000/- DECLARED DURING SEARCH. THE AO ISSUED PENALTY NOTICE U/S 271AAA OF THE ACT ON 31/03/2014 AND 26/08/2014 WHICH ACCORDING TO THE AO WERE NOT REPLIED BY THE ASSESSEE AND THEREFORE HE CONCLUDED THAT ASSESSEE HAS NOTHING TO SAY ON THIS ACCOUNT. THEREAFTER THE AO BY REFERRING TO THE PROV ISION OF SECTION 271AAA OF THE ACT LEVIED THE PENALTY EQUAL 10% OF THE UNDISCLOSED INCOME ON THE GROUND THAT ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOS ED INCOME WAS DERIVED AND THEREFORE ASSESSEE IS NOT EN TITLED FOR IMMUNITY AS PER THE PROVISION OF SECTION 271AA A OF THE ACT. FINALLY THE AO IN PARA 5 OF THE PENALTY O RDER STATED THAT ASSESSEE HAS DELIBERATELY CONCEALED TH E INCOME AND FURNISHED INACCURATE PARTICULAR OF INCO ME TO THE TUNE OF RS. 3,08,27,650/- AND LEVIED A PENALTY EQUAL TO 10% OF THE UNDISCLOSED INCOME AT RS. 30,82,765 /- VIDE ORDER DATED 16/09/2014. 4. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) AFTER TAKING INTO ACCOUNT THE SUBMISSIONS OF THE ASSESSEE AND VA RIOUS CONTENTIONS RAISED IN THE APPELLATE PROCEEDINGS, PA RTLY 4 IT A NO.6205/MUM/2016 &7277/MUM/2016 ALLOWED THE APPEAL OF THE ASSESSEE. THE LD. CIT(A) OBSERVED THAT OUT OF TOTAL INCOME OF RS. 3,08,27,65 0/- DECLARED BY THE ASSESSEE, IN THE RETURN OF INCOME, ONLY THE INCOME OF RS. 2,40,00,000/- WAS SHOWN IN THE RE TURN OF INCOME AND FALLS UNDER THE AMBIT OF UNDISCLOSE D INCOME. THE LD. CIT(A) FURTHER SEPARATED THE AMOUNT OF RS. 2,40,00,000/- INTO TWO PARTS, FIRST COMPONENT I S RS. 2,20,00,000/- WHICH WAS DECLARED BY THE APPELLATE I N THE RETURN OF INCOME AND ALSO DISCLOSED IN THE STATEME NT RECORDED U/S 132(4) OF THE ACT IN THE SEARCH PROCE EDINGS AND SECOND RS. 20 LACS WHICH WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME SUO-MOTO BUT WAS N OT DISCLOSED IN THE STATEMENT RECORDED IN THE U/S 132( 4) OF THE ACT QUA WHICH NO SEIZER IN THE FORM OF INCRIMI NATING DOCUMENT OR CASH, JEWELER WAS MADE DURING THE COUR SE OF SEARCH. THE LD. CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAS FULFILLED ALL THE THREE CONDITIONS AS MENTIONED IN SUBSECTION (2) OF 271AAA OF THE ACT A S THE ASSESSEE HAS DISCLOSED THE MANNER IN WHICH THE INCO ME UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARC H WAS DERIVED WHEREAS THE SUSTAINED THE PENALTY IN RE SPECT OF 20.00 LACS WHICH WAS DECLARED OVER AND ABOVE THE DISCLOSURE MADE DURING THE COURSE OF SEARCH AS ADD ITIONAL INCOME IN THE RETURN OF INCOME FOR VARIOUS DISCREP ANCIES / ANOMALIES IN THE BOOKS OF ACCOUNTS. THE LD. CIT (A) CONFIRMED THE PENALTY BY HOLDING THAT THE SECOND COMPONENT OF DISCLOSURE OF RS. 20 LACS IS NOT COVER ED BY THE PROVISIONS OF SECTION 271 AAA(2)(I) OF THE CT A S THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE 5 IT A NO.6205/MUM/2016 &7277/MUM/2016 INCOME WAS DERIVED AND THUS CONFIRMED THE PENALTY O F 10% WHICH WORKED OUT TO RS. 2 LACS . THE ASSESSEE I S IN APPEAL AGAINST THE CONFIRMATION OF PENALTY ON THE GROUND OF RS. 20 LACS WHICH WAS OFFERED SUO-MOTO BY THE ASSESSEE IN THE RETURN OF INCOME WHEREAS THE REVENU E IS IN APPEAL AGAINST THE DELETION OF PENALTY OF RS. 20,0 0,000/- ON THE AMOUNT OF RS. 2,00,00,000/- WHICH WAS DISCLO SED DURING THE COURSE OF SEARCH OPERATION. 3. AFTER HEARING BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD, WE OBSERVE THAT THE CIT(A) HAS PASSED THE C ORRECT AND SPEAKING ORDER IN RESPECT OF THE DELETION OF PENALT Y ON THE UNDISCLOSED INCOME OF RS. RS. 2,20,00,000/- AS SURR ENDERED DURING THE COURSE OF SEARCH IN THE STATEMENT RECORD ED U/S 132(4) OF THE ACT AND CLEARLY GAVE A FINDING THAT THE ASS ESSEE SUBSTANTIATED THE MANNER IN WHICH THE INCOME RS. 2,20,00,000/- WAS DERIVED BY THE ASSESSEE BY REFERR ING TO THE SOURCE OF INCOME AS FINANCE & BROKERAGE BUSINESS UN DERTAKEN BY THE ASSESSEE AND ALSO AS SUBSTANTIATED BY INVENTOR IES OF NOTE BOOKS, PAPERS, DIARIES, COMPUTER PRINTOUTS AND ELE CTRONIC DATA. THUS WE ARE IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE CIT(A) THAT THE CASE OF THE ASSESSEE IS SQUARELY C OVERED BY THE PROVISIONS OF SECTION 271AAA(2)(II) AND THUS RIGHTL Y DELETED THE PENALTY ON THE ON THE INCOME OF RS. 2,20,00,000/. WE ARE OF THE VIEW THAT THE APPEAL OF THE DEPARTMENT DOES NOT HA VE ANY MERIT AS THE PENALTY WAS RIGHTLY DELETED BY THE LD. CIT(A ). THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE VARIOUS DEC ISIONS REFERRED BY THE LD. AR IN THE CASE OF PIYUSH A. VORA VS AC IT ITA 3224/M/2017 AY 2011-12, THE COORDINATE BENCH HAS HE LD THAT 6 IT A NO.6205/MUM/2016 &7277/MUM/2016 NO PENALTY WAS ISSUED TO BE LEVIED WHERE THE ASSE SSEE HAS SUBSTANTIATED THE MANNER IN WHICH THE INCOME DISCLO SED DURING THE COURSE OF SEARCH IS DERIVED BY THE ASSESSEE. T HE CASE OF THE ASSESSEE IS ALSO SQUARELY COVERED BY THE DECISION I N THE CASE OF PR. CIT VS SAPNA ENTERPRISE( 2018) 91 TAXMANN.COM 2 012 GUJ., PROMOD KUMAR JAIN VS DCIT 2013 33 TAXMANN.COM 651 C UTTAK TRIB. CONCRETE DEVELOPERS VS. ACIT 2013 34 TAXMANN. COM 62 NAGPUR TRIB. ACCORDINGLY WE UPHOLD THE ORDER OF CIT (A) ON THIS ISSUE AND APPEAL OF THE REVENUE IS DISMISSED. 4. SO FAR AS THE APPEAL OF THE ASSESSEE IS CONCERNE D CHALLENGING THE CONFIRMATION OF THE PENALTY OF RS. 2,00,000/- ON AN INCOME OF RS. 20 LACS WHICH WAS SUO-MOTO DISCLOS ED BY THE ASSESSEE IN THE RETURN OF INCOME FILED AFTER THE CO NCLUSION OF SEARCH, WE NOTICE THAT THE ASSESSEE HAS SUO-MOTO DI SCLOSED RS. 20 LACS IN THE RETURN OF INCOME WHICH WAS OVER AND ABOVE THE DISCLOSURE OF INCOME MADE IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND IS NOT BASED ON THE INCRIMINATING M ATERIAL FOUND DURING THE COURSE OF SEARCH. IN OUR OPINION THE DE PARTMENT WAS NOT HAVING ANY INCRIMINATING MATERIAL QUA THE SAID INCOME SHOWN BY THE ASSESSEE SUO MOTTO IN THE RETURN OF IN COME FOR THE POSSIBLE DISCREPANCIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN THIS CASE THE ASSESSEE HAS NOT SURRENDERED THE SAID AMOUNT DURING SEARCH BUT OFFERED THE SAID INCOME IN THE R ETURN OF INCOME FILED IN PURSUANCE NOTICE ISSUED U/S 153A OF THE INCOME TAX ACT. IN OUR OPINION THE PENALTY CANNOT B E LEVIED ON THE SAID AMOUNT AS THE ASSESSEE HAS DULY PAID TAXE S ON THE AMOUNT OF INCOME. MOREOVER THERE WAS NO INCRIMINATI NG 7 IT A NO.6205/MUM/2016 &7277/MUM/2016 MATERIALS IN THE HANDS OF THE REVENUE WHICH WAS FOU ND DURING THE COURSE OF SEARCH AND SEIZURE. 5. THE CASE OF THE ASSESSEE SQUARELY COVERED BY TH E DECISION OF KOLKATTA BENCH IN THE CASE OF DCIT VS SALASAR STOC K BROKING LIMITED 2016 47 ITR TRIBUNAL 616 (KOL) AND MAHAVI R PRASAD VS ACIT CC ,NEW DELHI (2017) 86 TAXMANN.COM 264 DELHI TRIB IN WHICH IDENTICAL ISSUE HAS BEEN DECIDED BY THE COOR DINATE BENCH IN FAVOUR OF THE ASSESSEE BY HOLDING THAT INCOME WH ICH WAS NOT SURRENDERED DURING THE COURSE OF SEARCH OPERATION , NO PENALTY U/S 271AAA OF THE ACT COULD BE INVOKED. IN THE BOTH THE CASES IT HAS BEEN DECIDED THE INCOME NOT DISCLOSED DURING S EARCH OPERATION BUT DISCLOSED THEREAFTER WOULD BE ENTITL ED TO IMMUNITY FROM LEVY OF PENALTY AND IN THE SECOND CASE IT HAS BEEN HELD THAT EVEN THE INCOME DECLARED BY THE ASSESSEE IN THE PRO CEEDING U/S 143(3) AFTER THE CONCLUSION OF SEARCH , PENALTY U /S 271AAA OF THE ACT WOULD NOT BE ATTRACTED. WE THEREFORE, RESP ECTFULLY FOLLOWING THE DECISIONS OF COORDINATE BENCHES SET ASIDE THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE PENAL TY. 6. IN RESULT THE APPEAL OF THE REVENUE IS DISMISSED AND THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 4 TH MAY, 2019. SD/- SD/- (AMARJIT SINGH) (RAJES H KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED : 24 TH MAY, 2019 * THIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 8 IT A NO.6205/MUM/2016 &7277/MUM/2016 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI