Dy.CIT, Circle-2(1), Hyderabad V. Shri Y Jithin Kumar, Hyderabad

ITA 628/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5517 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1999-2000
• Appeal Filed On: 01-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Search and seizure; Period of limitation; Block assessment; Time period of passing order
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NOS. 628, 629, 630 & 631/HYD/2013 ASSESSMENT YEARS: 1999-00, 2000-01, 2001-02 & 2003- 04 DY. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 2(1), HYDERABAD. VS. SHRI Y. JITHIN KUMAR, RESPONDENT HYDERABAD. (PAN AAIPY 5615R) C.O. NOS. 47, 48, 49 & 50/H/13 (IN ITA NOS. 628, 629, 630 & 631/HYD/2013 ASSESSMENT YEARS: 1999-00, 2000-01, 2001-02 & 2003- 04 SHRI Y. JITHIN KUMAR, CROSS OBJEC TOR HYDERABAD. (PAN AAIPY 5615R) VS. DY. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 2(1), HYDERABAD. REVENUE BY : SHRI B. YADAGIRI ASSESSEE BY : SHRI A.V. RAGHU RAM DATE OF HEARING : 11/03/2014 DATE OF PRONOUNCEMENT : 14/03/2 014 ORDER PER P. MADHAVI DEVI, J.M.: THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DELETING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEARS 1999-00 TO 200 3-04 ITA NOS 628 TO 631/HYD/13& CO NOS. 47 TO 50/HYD/12 SHRI Y. JITIN KUMAR 2 WHILE THE ASSESSEE HAS FILED CROSS OBJECTIONS THA T THE PENALTY ORDERS ARE BARRED BY LIMITATION OF TIME U/S 275 OF THE IT ACT. 2. BRIEF FACTS RELATING TO THE LEVY OF PENALTY ARE AS UNDER: 3. THE ASSESSEE IS AN INDIVIDUAL. HE FILED HIS RET URNS OF INCOME FOR THE RESPECTIVE ASSESSMENT YEARS. THEREAF TER, A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON THE A SSESSEE ON 07/10/2004 U/S 132 OF THE IT ACT. THE ASSESSEE, SUBSEQUENTLY, FILED HIS RETURN OF INCOME FOR THE RE SPECTIVE ASSESSMENT YEARS ON 16/08/2005 ADMITTING ADDITIONAL INCOME WHICH WAS NOT OFFERED IN HIS ORIGINAL RETURN OF INC OME. BLOCK ASSESSMENTS U/S 143(3) READ WITH SECTION 153A OF TH E ACT WERE COMPLETED DETERMINING THE TAXABLE INCOME BY AC CEPTING THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE AND A LSO MAKING ADDITIONS ON ACCOUNT OF UNDISCLOSED INVESTME NT, INTEREST INCOME RECEIVED, DIFFERENCE IN INVESTMENT IN ASSETS AND DIFFERENCE IN COST OF CONSTRUCTION FOR ALL THE ASSESSMENT YEARS. THE ASSESSEE PREFERRED APPEALS BEFORE THE CI T(A) AND THEREAFTER BEFORE THE ITAT AND ALL THE ADDITIONS W ERE DELETED EXCEPT ONE OF THE ADDITIONS MADE IN RESPECT OF DIFF ERENCE IN COST OF CONSTRUCTION FOR ALL THE ASSESSMENT YEARS. THE ADDITION WAS, HOWEVER, PARTLY CONFIRMED BY THE ITAT. 4. IN THE MEANTIME, THE AO HAD INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT BY ISSUANCE OF A NOTICE U/S 274 READ WITH SECTION 271(1)(C) ON 31/12/2010. THE ASSESSEE FURNISHED HIS REPLY ON 17/06/2011 STATING THAT FOR LEVY OF PENALTY THERE SHOULD BE INCOME ASSESSED AND FURTHER SUCH INCOME SHOULD BE HELD TO BE CONCEALED INCOME O R SHOULD ITA NOS 628 TO 631/HYD/13& CO NOS. 47 TO 50/HYD/12 SHRI Y. JITIN KUMAR 3 BE HELD THAT THE ASSESSEE FURNISHED INACCURATE PART ICULARS OF SUCH INCOME. THE AO AFTER CONSIDERING THE ASSESSEE S EXPLANATION, HELD THAT THE ASSESSEE HAD VOLUNTARILY OFFERED ADDITIONAL INCOME IN THE RETURNS FILED AFTER SEARCH OPERATION AND, THEREFORE, IT WAS CLEAR THAT, HAD THERE NOT BE EN A SEARCH AND SEIZURE OPERATION AND CONSEQUENT INCOME TAX PROCEEDINGS, THIS AMOUNT MIGHT NOT HAVE BEEN ASSESS ED TO TAX. HE FURTHER OBSERVED THAT THE ITAT HAS CONFIRME D PART OF THE ADDITION ON ACCOUNT OF DIFFERENCE IN COST OF CO NSTRUCTION ON THE BASIS OF DVOS REPORT AND, THEREFORE, THE AS SESSEE HAS NOT ONLY CONCEALED THE INCOME BUT HAS ALSO FURNISHE D INACCURATE PARTICULARS OF INCOME. HE, THUS, HELD TH AT THE PROVISIONS OF SECTION 271(1)(C) ARE ATTRACTED AND H E, ACCORDINGLY, LEVIED THE MINIMUM PENALTY OF 100% OF THE TAX SOUGHT TO BE EVADED FOR ALL THE ASSESSMENT YEARS UN DER CONSIDERATION. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERA TION STATING THAT THE PENALTY ORDERS ARE BARRED BY LIMIT ATION AND ALSO THAT PENALTY LEVIED FOR CONFIRMATION OF THE AD DITION ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION IS NO T VALID AS THE ADDITION HAS BEEN MADE ON AN ESTIMATE BASIS AND , THEREFORE, PENALTY IS NOT JUSTIFIED. 6. THE LEARNED CIT(A) DELETED THE PENALTY LEVIED ON THE CONFIRMED ADDITION ON ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION HOLDING THAT THE SAID ADDITION HAS BEE N CONFIRMED BY THE ITAT ON ESTIMATE BASIS AND PENALTY ON ACCOUNT OF ESTIMATED INCOME IS NOT LEVIABLE. HE FUR THER HELD THAT THE PENALTY IS NOT LEVIED BECAUSE OF ANY MATER IAL FOUND ITA NOS 628 TO 631/HYD/13& CO NOS. 47 TO 50/HYD/12 SHRI Y. JITIN KUMAR 4 AND SEIZED DURING THE COURSE OF SEARCH. THUS, PENAL TY FOR ALL THE ASSESSMENT YEARS HAS BEEN DELETED. 7. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US WHILE THE ASSESSEE IS IN CRO SS OBJECTIONS AGAINST THE ORDER OF CIT(A) IN NOT CONSI DERING THE ASSESSEES OBJECTIONS ABOUT LIMITATION PERIOD IN PA SSING THE ORDERS. 8. AS THE ISSUE OF LIMITATION GOES TO THE ROOT OF T HE MATTER, WE DEEM IT FIT AND PROPER TO DISPOSE OF THE CROSS O BJECTIONS FIRST. THE ASSESSEE HAS FILED A SYNOPSIS OF THE SE QUENCE OF EVENTS FOLLOWING THE DATE OF SEARCH ON 07/10/2004. THE SAID SYNOPSIS IS REPRODUCED HEREUNDER: DATE DESCRIPTION 07/10/2004 SEARCH U/S 132 16/08/2005 ROI AGAINST NOTICE U/S 153A 29/11/2006 ASST. ORDER U/S 143(3) R.W.S. 153A 13/03/2008 ORDER OF CIT(A) FEB.2009 PENALTY SCS U/S 271(1)(C) 16/03/2009 EXPLN OF THE ASSESSEE NO PENALTY ORDER PASSED AND IT IS DEEMED TO HAVE BEEN DROPPED 26/03/2009 ITAT ORDER IN CROSS APPEALS OF THE ASSESSEE AND REVENUE 31/12/2010 CONSEQUENTIAL ORDER TO ITAT ORDER. 07/06/2011 PENALTY SCN U/S 271(1)(C) 17/06/2011 REPLY TO PENALTY SCN 29/06/2011 PENALTY ORDER 9. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI A.V. RAGHURAM, SUBMITTED THAT THE PROVISIONS OF SECTION 275 PROVIDE FOR THE PERIOD OF LIMITATION IN PASSING OF PENALTY ORDERS. ACCORDING TO HIM, CLAUSE (A) OF SUB-SECTION (1) OF SECTION 275 AND PROVISO THERETO CLEARLY PROVIDES TH AT WHERE AN ASSESSMENT OR OTHER ORDER IS THE SUBJECT MATTER OF APPEAL BEFORE THE CIT(A), A PENALTY ORDER SHALL NOT BE PAS SED AFTER ITA NOS 628 TO 631/HYD/13& CO NOS. 47 TO 50/HYD/12 SHRI Y. JITIN KUMAR 5 EXPIRY OF THE FY IN WHICH THE ASSESSMENT ORDER HAS BEEN PASSED OR SIX MONTHS FROM THE END OF THE MONTH IN W HICH THE ORDER OF THE CIT(A) IS RECEIVED BY THE CCIT OR CIT, WHICHEVER IS LATER. HE SUBMITTED THAT THE ORDER OF THE CIT(A) IS DATED 13/03/2008 AND THE AO INITIATED PENALTY PROCEEDINGS BY ISSUANCE OF SHOW CAUSE NOTICE IN FEBRUARY, 2009 AND THE ASSESSEE FILED HIS EXPLANATION ON 16/03/2009. HE SU BMITTED THAT PURSUANT TO THE SAID NOTICE, NO PENALTY ORDER HAS BEEN PASSED AND, THEREFORE, IT IS DEEMED TO HAVE BEEN DR OPPED. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, PENALTY WAS INITIATED ON THE OFFERING OF ADDITIONAL INCOME IN THE RETURN FILED SUBSEQUENT TO SEARCH AND ALSO ON THE ADDITION S MADE ON ACCOUNT OF DIFFERENCE IN THE COST OF CONSTRUCTION. HE SUBMITTED THAT CONSEQUENT TO THE ORDER OF CIT(A) IN THE QUANTUM PROCEEDINGS, PENALTY PROCEEDINGS U/S 271(1) (C) ON ACCOUNT OF OFFERING OF ADDITIONAL INCOME SHOULD HAV E BEEN PASSED WITHIN 6 MONTHS FROM THE DATE OF RECEIPT OF THE CIT(A)S ORDER BY THE CCIT OR CIT. THE CIT(A) HAS N OT CONSIDERED THIS GROUND OF APPEAL RAISED BY THE ASSE SSEE, BUT, HAS DELETED THE PENALTY ON A DIFFERENT GROUND ON M ERITS. THE DATE OF RECEIPT OF THE ORDER BY THE CCIT OR CIT IS NOT ON RECORD. EVEN, OTHERWISE, THE ORDER OF THE CIT(A) IS DATED 13/03/2008 AND SUBSEQUENT THERETO, THE SHOW CAUSE N OTICE WAS ISSUED IN FEBRUARY, 2009. SIX MONTHS FROM FEBRU ARY, 2009 WOULD EXPIRE IN AUG., 2009 BUT NO PENALTY ORDE R HAS BEEN PASSED PURSUANT TO THE SHOW CAUSE NOTICE DT. F EBRUARY, 2009. THEREFORE, AS POINTED OUT BY THE LEARNED COUN SEL FOR THE ASSESSEE, IT HAS TO BE DEEMED THAT AS REGARDS T HE PENALTY ON ACCOUNT OF ADDITIONAL INCOME OFFERED BY THE ASSE SSEE IS CONCERNED, THE PROCEEDINGS ARE DROPPED. ITA NOS 628 TO 631/HYD/13& CO NOS. 47 TO 50/HYD/12 SHRI Y. JITIN KUMAR 6 9.1 APART FROM THIS, WE FIND THAT THE PENALTY HAS A LSO BEEN LEVIED ON ACCOUNT OF DIFFERENCE IN THE COST OF CONS TRUCTION OF IMMOVABLE PROPERTY. AS SEEN FROM THE COPIES OF ORDE RS OF THE CIT(A)AND ITAT FOR THE AYS 1999-00 TO 2005-06, WHIC H ARE FILED BEFORE US, WE FIND THAT THE ITAT HAS CONFIRME D THE ORDER OF THE CIT(A) IN ESTIMATING THE COST OF CONSTRUCTIO N AND HAS ALLOWED THE ASSESSEE A DEDUCTION OF 15% ON ACCOUNT OF ADOPTION OF CPWD RATES BY VALUATION CELL AND FURTHE R 10% ON ACCOUNT OF SELF SUPERVISION, WHICH WAS NOT ALLOWED EARLIER. THUS, IT IS A CLEAR CASE OF ESTIMATION OF COST OF C ONSTRUCTION AND AS RIGHTLY POINTED BY THE CIT(A) THERE WAS NO M ATERIAL FOUND DURING THE COURSE OF SEARCH ON THE BASIS OF W HICH SUCH ADDITION HAS BEEN MADE. THEREFORE, WE DO NOT SEE AN Y REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) DELETING PENALTY. AS HELD BY THE COURTS IN A CATENA OF CASES, EVERY ADDI TION WILL NOT AUTOMATICALLY ATTRACT PENALTY AND FURTHER AS HE LD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AER O TRADERS (P) LTD., 322 ITR 316, PENALTY IS NOT LEVIABLE ON E STIMATED INCOME. 9.2 WITH REGARD TO PERIOD OF LIMITATION IN PASSING THE PENALTY ORDER PURSUANT TO ITAT ORDERS, WE FIND THAT IT IS T O BE CONSIDERED SUB-SECTION (1A) OF SECTION 275. ACCORDI NG TO THE SAID PROVISION, THE AO OUGHT TO HAVE LEVIED PENALTY WITHIN THE SIX MONTHS FROM THE DATE OF RECEIPT OF ORDER OF ITA T BY THE CCIT OR CIT. AS SEEN FROM THE SYNOPSIS OF DATES, T HE ITAT HAD PASSED THE ORDER ON 26/03/2009 WHILE THE AO HAS GIVEN EFFECT TO THE ITATS ORDER ON 31/12/2010 AND THE PE NALTY ORDER IS PASSED ON 29/06/2011 I.E. WITHIN SIX MONTH S FROM THE DATE OF THE ORDER GIVING EFFECT TO THE ITATS ORDER . HOWEVER, THE DATE OF RECEIPT OF ITATS ORDER BY CCIT OR CIT IS NOT ON RECORD. THEREFORE, WE ARE UNABLE TO ADJUDICATE THIS ISSUE AT ITA NOS 628 TO 631/HYD/13& CO NOS. 47 TO 50/HYD/12 SHRI Y. JITIN KUMAR 7 THIS STAGE AND AS RELIEF IS GIVEN TO THE ASSESSEE O N MERITS, WE DO NOT THINK IT FIT AND NECESSARY TO REMIT THE ISSU E TO THE FILE OF THE CIT(A) FOR RECONSIDERATION AS NO USEFUL PURP OSE WOULD BE SERVED BY DOING SO. 10. IN THE RESULT, APPEALS OF THE REVENUE AND THE C .OS. BY THE ASSESSEE ARE DISMISSED FOR ALL THE YEARS UNDER CONSIDERATION. PRONOUNCED IN THE OPEN COURT ON 14/03/2014. SD/- SD/- (CHANDRA POOJARI) (P. MADHAV I DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 14/03/2014 KV COPY TO:- 1) DY. CIT, CIRCLE 2(1), HYDERABAD. 2) SHRI Y. JITIN KUMAR, PLOT NO. 321, MLA & MPS C OLONY, ROAD NO. 10C, JUBILEE HILLS, HYDERABAD 3) CIT(A)-III, HYDERABAD 4) THE CIT-II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A. T., HYDERABAD.