The ACIT, Central Circle-3, Surat V. Shri Piyush H.Patel, Surat

ITA 630/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51108 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S PARIDA
• Assessee Lawyers: KK SHAH
• Keywords: Search and seizure; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH BEFORE SHRI G.C.GUPTA, VICE-PRESIDENT (AZ) AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.630. 631 & 2812/AHD/2009 ASSESSMENT YEAR:2006-07 ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3, ROOM NO.507, AAYAKAR BHAVAN, MAJARA GATE, SURAT ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3, ROOM NO.507, AAYAKAR BHAVAN, MAJARA GATE, SURAT ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, SURAT / V/S . / V/S . / V/S . SHRI PIYUSH H PATEL, 9, SHANTIVAN SOCIETY, LAMBE HANUMAN ROAD, SURAT PAN NO.AEEPD0742R SHRI HANUBHAI VIRAJIBHAI PATEL, 9, SHANTIVAN SOCIETY, LAMBE HANUMAN ROAD, SURAT PAN NO.ADGPP3511N SHRI VALLABHABHAI T HIRPARA, 276/277, LAXMI NAGAR SOCIETY, LAMBE HANUMAN ROAD, SURAT PAN NO.ADTPK8861B / APPELLANT .. / RESPONDENT ASSESSEE BY SHRI K.K. SHAH, AR REVENUE BY SHRI S.S. PARIDA, CIT-DR / DATE OF HEARING 27-12-2001 / DATE OF PRONOUNCEMENT 30-12-2001 ! ! ! ! / // / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- ITA NO.630-31 & 2812/AHD/2009 A.Y. 2006-07 ACIT CIR-2, 3, SRT V. P.H.PATEL, H.V.PATEL & V.T. HIRPARA PA GE 2 THESE THREE APPEALS OF THE REVENUE ARISE FROM THREE DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD EACH FOR THE ASSESSMENT YEAR 2006-07 AS PER DETAILS BELOW:- ITA NO. DATED NAME OF RESPONDENT 630/AHD/2009 09-12-2008 SHRI PIYUSH H PATEL 631/AHD/2009 09-12-2008 SHRI HANUBHAI V PATEL 2812/AHD/2009 20-07-2009 SHRI VALLABHABHAI T HIRPAR A SINCE THE ISSUES IN ALL THE APPEALS ARE IDENTICAL A ND THEREFORE ALL THE APPEALS ARE TAKEN UP BY THIS CONSOLIDATED ORDER. FIRST OF ALL, WE TAKE UP THE REVENUES APPEAL IN ITA NO.631/AHD/2009 IN THE CASE OF SHRI HANUBHAI V PATEL . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.35,12,648/- WHEN THE ASSESSEE HAD FAILED TO FILE THE RETURN OF INCOME AS REQUIRED U/S.139(1) OF IT ACT AND ALSO FAILED TO PA Y TAXES WITHIN THE PRESCRIBED TIME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O IN VIEW O F THE DECISION IN THE CASE OF SHRI ASHOK KUMAR GUPTA VS. CIT REPORTED IN 287 ITR 376. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. 2. THE BRIEF FACTS ARE THAT A SEARCH AND SEIZURE AC TION IN THE CASE OF ASSESSEE WAS CONDUCTED ON 21-10-2005. THE ASSESSEE HAD DECLA RED RS.1.05 CRORES DURING THE COURSE OF SEARCH AND SEIZURE, WHICH WAS INCLUDE D IN THE INCOME OF THE ASSESSEE WHILE FILING THE RETURN OF INCOME. THE ASSESSING OF FICER RELYING UPON DECISIONS OF VARIOUS COURT OF LAWS AND BY REFERRING TO THE EXPLA NATION-5 TO SECTION 271(1)(C) OF THE IT ACT, 1961 OBSERVED THAT THE ASSESSEE HAS FAILED TO GIVE ANY JUSTIFICATION OR ACCEPTABLE EXPLANATION FOR CHARGE OF CONCEALMENT. T HE ASSESSEE HAS WILLFULLY FURNISHED NO RETURN OF INCOME DURING RELEVANT ASSES SMENT YEAR AND AVOIDED PAYING DUE TAXES, WITHIN DUE DATE, IN ORDER TO EVADE TAXES . THE RATIO LAID DOWN IN THE CASE OF NATIONAL TEXTILES V. CIT (2001) AS REPORTED IN 249 ITR 125 (GUJ) OF JURISDIC TIONAL HIGH COURT AND IN THE CASE OF ASHOK GUPTA V. CIT (2006) 287 ITR 376 (P&H) ARE CLEARLY APPLICABLE TO THE CASE OF ASSESSEE. THE ELEMENT OF ANIMUS IS BLATANT IN ASSESSEES ITA NO.630-31 & 2812/AHD/2009 A.Y. 2006-07 ACIT CIR-2, 3, SRT V. P.H.PATEL, H.V.PATEL & V.T. HIRPARA PA GE 3 EVASIVE REPLIES. THEREFORE THERE IS ELEMENT OF CONC EALMENT OF INCOME BY WAY OF FURNISHING INACCURATE PARTICULARS OF INCOME AND ACC ORDINGLY LEVIED THE PENALTY U/S. 271(1)(C) OF THE ACT. 3. LD. CIT(A) FOLLOWING THE DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MAHENDRA C SHAH (2008) AS REPORTED IN 299 ITR 305 (GUJ) CANCELLED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 4. LD. CIT-DR INVITED OUR ATTENTION TO EXPLANATION- 5 TO SECTION 271(1)(C) OF THE ACT AND ARGUED THAT THE ASSESSEE HAS NOT BEEN ABLE TO SHOW HOW THE INCOME HAS BEEN EARNED IN THE ABSENCE OF ANY ASSETS FOUND DURI NG THE COURSE OF SEARCH, WHICH COULD BE RELATED TO BE SAID INCOME. LD. DR THEREFOR E RELIED UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ASHOK KUMAR GUPTA V. CIT (2006) AS REPORTED IN 287 ITR 376 (P&H), THE CASE W HICH HAS BEEN RELIED UPON BY THE ASSESSING OFFICER. THEREFORE HE SUPPORTED THE O RDER OF AO FOR LEVYING THE PENALTY AND PRAYED TO REVERSE THE ORDER OF LD. CIT(A). 5. LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT THE ENTIRE AMOUNT OFFERED FOR TAXATION HAS BEEN DISCLOSED IN D IFFERENT YEARS IN DIFFERENT ASSESSEES CASE. HE FURTHER ARGUED THAT AS PER EXPLA NATION-5, IT IS NOT NECESSARY THAT ASSETS SHOULD BE FOUND DURING THE COURSE OF SEARCH AND SEIZURE. IN THE PRESENT CASE, NO REVISED RETURN HAS BEEN FILED AND TAXES DUE HAVE BEEN PAID., WHICH ARE NOT THE FACTS IN THE CASE OF ASHOK KUMAR GUPTA (SUPRA) RELIED UPON BY THE ASSESSING OFFICER AND LD. DR. LD. COUNSEL FOR THE ASSESSEE RELIED UPO N THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF MAHENDRA C SHAH (SUPRA) AND PRAYED TO CONFIRM THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ARGUMENTS MADE BY LEARNED COUNSEL FOR THE ASSESSEE APPEARS TO BE CONVINCING AND THEREFORE IN THE PRESENT CIRCUMSTANCES AND THE FACTS OF THE CASE AND THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF MAHENDRA C SHAH (SUPRA) APPLIES TO THE PRESENT FACTS AND CIRCUMSTANCES. THE RELEVANT PARA-12 & 13 OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF MAHENDRA C SHAH (SUPRA) IS REPRODUCED FOR THE SAKE OF CLARITY AS UNDER:- ITA NO.630-31 & 2812/AHD/2009 A.Y. 2006-07 ACIT CIR-2, 3, SRT V. P.H.PATEL, H.V.PATEL & V.T. HIRPARA PA GE 4 12. THE CONTENTIONS RAISED ON BEHALF OF THE REVENU E ARE NOT REQUIRED TO BE ACCEPTED FOR THE SIMPLE REASON THAT IN THE FIRST IN STANCE, THERE IS NO PRESCRIPTION TO THE POINT OF TIME WHEN THE TAX HAS TO BE PAID QUA THE AMOUNT OF INCOME DECLARED IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THERE WOULD BE SUFFICIENT COMPLIANCE OF THE PROVISIONS IF TAX IS SHOWN TO HAVE BEEN PAID BE FORE THE ASSESSMENT WAS COMPLETED. THE REASONING WHICH HAS WEIGHED WITH THE TRIBUNAL IS THAT THE SEARCH PROCEEDINGS WERE CONDUCTED ON 3 RD JULY, 1987 WHEN THE STATEMENT U/S.132(4) OF THE ACT WAS MADE. THE LAST DATE FOR PAYMENT OF ADVANCE AX QUA THE LAST INSTALMENT OF ADVANCE TAX WAS 15 TH DEC., 1987 IN SUCH A CASE, ACCORDING TO THE TRIBUNAL, AND IN THE EVENT, THE AS SESSEE DID NO PAY TAX QUA THE INCOME DECLARED IN THE STATEMENT MADE U/S 132(4 ) OF THE ACT, THE ASSESSEE BECAME LIABLE TO PAY INTEREST IN ACCORDANC E WITH THE RELEVANT PROVISIONS OF THE ACT BECAUSE EXCEPTION NO.2 ITSELF SPECIFIES PAYMENT OF TAX, TOGETHER WITH INTEREST, IF ANY, INDICATING THAT LEG ISLATURE DID NOT STIPULATE ANY SPECIFIED TIME LIMIT FOR PAYMENT OF TAX. THERE IS N O INFIRMITY IN THIS REASONING. 13. HOWEVER, THE OUTER LIMIT HAS TO BE THE POINT OF TIME WHEN THE ASSESSMENT PROCEEDINGS ARE UNDERTAKEN BY THE A.O BECAUSE THE O PENING PORTION OF SECTION 271(1)(C) OF THE ACT REQUIRES THE A.O TO RE CORD SATISFACTION IN THE COURSE OF SUCH PROCEEDINGS, AND THE SATISFACTION HA S TO BE AS REGARDS THE CONCEALMENT OF PARTICULARS OF INCOME OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, A SATISFACTION AS TO CONCEA LMENT CAN BE ARRIVED AT THE EARLIEST POINT OF TIME ONLY IN THE COURSE OF ASSESS MENT PROCEEDINGS AND FOR THAT PURPOSE THE A.O IS REQUIRED TO VERIFY AND ASCE RTAIN WHETHER THE INCOME HAS BEEN DECLARED AND TAX PAID THEREON. FOR THE PUR POSE OF EXPLN. 5, WHICH COMES INTO PLAY ONLY IN CASE OF SEARCH AND SEIZURE PROCEEDINGS, RETURN OF INCOME PER SE WOULD HAVE NO RELEVANCE IF ONE READS ENTIRE EXPLN.5, INCLUDING THE TWO EXCEPTIONS. THE EMPHASIS ON DISCLOSURE IN T HE RETURN OF INCOME IS RELEVANT ONLY FOR THE PURPOSES OF AVOIDING THE DEEM ING FICTION OF CONCEALMENT IN RELATION TO THE PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF SEARCH BUT RETURN OF INCOME FOR SUCH YEAR HAD NOT B EEN FURNISHED, OR WHERE RETURN HAS BEEN FILED SUCH INCOME HAS NOT BEEN DISC LOSED. IN SO FAR AS A PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH RETURN OF INCOME WOULD HAVE HARDLY ANY RELEVANCE BECAUSE THE EXPLANA TION ITSELF STIPULATES THAT REGARDLESS OF SUCH INCOME HAVING BEEN DECLARED IN A NY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH THE ASSESS EE WOULD BECOME LIABLE TO IMPOSITION OF PENALTY, THE ONLY EXCEPTION BEING A D ECLARATION AT THE TIME OF SEARCH. AS TO WHAT THAT DECLARATION HAS TO BE ALREA DY BEEN EXAMINED HEREINBEFORE AND IT IS NOT NECESSARY TO REPEAT THE SAME. IN THE CIRCUMSTANCES AND FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT FACTS IN THE CASE OF ASHOK GUPTA (SUPRA) ARE NOT APPLICABLE IN THE PRESENT CASE, SIN CE THE ASSESSEE IN THE CASE OF ASHOK GUPTA (SUPRA) DID NOT PAY THE TAX AFTER FILING BELATED RETURN. THEREFORE RELYING UPON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MAHENDRA C SHAH (SUPRA) MENTIONED HEREINABOVE, WE FIND NO INFIRMIT Y IN THE ITA NO.630-31 & 2812/AHD/2009 A.Y. 2006-07 ACIT CIR-2, 3, SRT V. P.H.PATEL, H.V.PATEL & V.T. HIRPARA PA GE 5 ORDER OF LD. CIT(A) WHO HAS RIGHTLY CANCELLED THE P ENALTY LEVIED BY ASSESSING OFFICER. THUS, GROUND NO.1 AND 2 OF THE REVENUES APPEAL ARE DISMISSED. 7. GROUND NO.3 DOES NOT REQUIRE ANY ADJUDICATION BE ING GENERAL IN NATURE. NOW WE TAKE UP THE APPEAL OF REVENUE IN ITA NO.630/ AHD/2009. 8. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.14,41,770/- WHEN THE ASSESSEE HAD FAILED TO FILE THE RETURN OF INCOME AS REQUIRED U/S.139(1) OF IT ACT AND ALSO FAILED TO PA Y TAXES WITHIN THE PRESCRIBED TIME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O IN VIEW O F THE DECISION IN THE CASE OF SHRI ASHOK KUMAR GUPTA VS. CIT REPORTED IN 287 ITR 376. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL TO TH E FACTS IN REVENUES APPEAL IN ITA NO.631/AHD/2009 WHICH HAS BEEN DECIDED BY US HEREINABOVE, THEREFOR E FOLLOWING THE SAME, WE DISMISS THE APPEAL OF THE REVENUE, BEI NG ON THE IDENTICAL FACTS AND CIRCUMSTANCES. THUS, THE APPEAL OF REVENUE IN ITA N O.630/AHD/2009 IS DISMISSED. NOW WE TAKE UP THE APPEAL OF REVENUE IN ITA NO.2812 /AHD2009. 9. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- I) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT, SINCE THE ASSESSEE HAS NOT FU LFILLED ALL THE CONDITIONS LAID DOWN IN THE EXPLANATION 5 TO SECTION 271(1)(C) OF T HE ACT. II) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT, DISREGARDING THE FACTS THAT T HE ASSESSEE HAS NOT FILED ITS RETURN OF INCOME BEFORE THE DUE DATE U/S. 139(1) OF THE ACT, WHICH IS PRESCRIBED AS ONE OF THE CONDITIONS TO BE FULFILLED IN THE THE EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, FOR GETTING IMMUNITY FROM LEVY OF PENALTY U/S. 271(1)(C) OF THE I.T. ACT. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. IV) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. ITA NO.630-31 & 2812/AHD/2009 A.Y. 2006-07 ACIT CIR-2, 3, SRT V. P.H.PATEL, H.V.PATEL & V.T. HIRPARA PA GE 6 THE FACTS IN THE PRESENT APPEAL ARE IDENTICAL TO T HE FACTS IN REVENUES APPEAL IN ITA NO.631/AHD/2009 WHICH HAS BEEN DECIDED BY US HEREINABOVE, THEREFORE FOLLOWING THE SAME WE DISMISS THE APPEAL OF THE REVENUE, BEIN G ON THE IDENTICAL FACTS AND CIRCUMSTANCES. THUS, THE APPEAL OF REVENUE IN ITA N O. 2812/AHD/2009 IS DISMISSED. 10. IN THE RESULT, APPEALS OF REVENUE IN ITA NO. 630/AHD/2009, 631/AHD/2009 AND 2812/AHD/2009 ARE DISMISSED. ' ! #$% 30 / 12 /2011 ) * + , THIS ORDER PRONOUNCED IN OPEN COURT ON 30/12/ 2011 . SD/- SD/- ( G.C.GUPTA ) ( B.P. JAIN ) (VICE PRESIDENT) (ACCOUNTANT MEMBER) #$%- 30/12/2011 . , DKP* ! ! ! ! //0 //0 //0 //0 1 0 1 0 1 0 1 0 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $$/4 5 / CONCERNED CIT 4. 5- / CIT (A) 5. 08+ ///4, /4, . / DR, ITAT, AHMEDABAD 6. +;< =' / GUARD FILE. BY ORDER/ ! , /TRUE COPY/ >/. $? /4, . ,