VIRENDRA M. SHANKLESHA, MUMBAI V. DCIT CEN CIR 1, MUMBAI

ITA 6433/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62270 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Wrong claim; Revised return
• Section: 143(3); 153A; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI R S SYAL, AM & SHRI VIJAY PAL RAO, JM ITA NO. 6431 TO 6433/MUM/2010 (ASST YEAR 2002-03,03-04 & 06-07) VIRENDRA M SHANKLESHA 201 2 ND FLOOR MUTHA HOUSE OPP WELCOME HOTEL SHIVAJI CHOW, KALYAN (W) VS THE DY COMMR OF INCOME TAX CEN CIR 1 , THANE (APPELLANT ) (RESPONDENT) PAN NO. ADRPS0270N ASSESSEE BY SH PIYUSH CHHAJED REVENUE BY SH M RAJAN DT.OF HEARING 17 TH APRIL 2012 DT OF PRONOUNCEMENT 25 TH APRIL 2012 ORDER PER VIJAY PAL RAO, JM THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THREE SEPARATE ORDERS OF THE CIT(A), ALL DATED 30 . 6.2010, ARISING FROM PENALTY ORDER PASSED U/S 271(1 ) ( C ) OF THE I T ACT FOR THE ASSESSMENT YEARS 2002- 03, 2003-04 & 2006-07 RESPECTIVELY. 2 THE ASSESSEE HAS RAISED COMMON GROUNDS IN ALL THE SE APPEALS; THEREFORE, THE GROUNDS RAISED FOR THE ASSESSMENT YEAR 2002-03 ARE REPRODUCED HEREUNDER: THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRE D IN UPHOLDING THE PENALTY AT RS. 14,471/- ON ACCOUNT OF DIFFERENTIAL INCOME OFFERED TO THE EXTENT OF RS. 47,288/- WHILE FILING THE RETURN U/S. 153A WIT HOUT APPRECIATING THE FACT THAT THE APPELLANT HIMSELF HAD FILED RETURN U/S. I 5 3A DISCLOSING THE ADDITIONAL INCOME BASED ON ENTRIES ALREADY RECORDED IN THE BOO KS. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN CONFIRMING THE PENALTY WITHOUT APPRECIATING THE FACT THAT THERE WA S NO CONCEALMENT OF INCOME AS REQUIRED U/S. 271(L)(C) AND THE ASSESSEE H IMSELF HAD TILED THE REVISED RETURN WHICH WAS ACCEPTED BY THE ASSESSING OF FICER IN TOTO. FURTHER THE ADDITIONAL INCOME WAS OFFERED SUO-MOTO AND THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH AND THEREFORE, THE AP PELLANTS CASE IS VIRENDRA M SHANKLESHA ITA NO. 6431 - 6433/MUM/2010 2 SQUARELY COVERED BY THE JUDGEMENT RENDERED BY THE HON. SUPREME COURT IN CASE OF SURESHCHANDRA MITTAL 253 ITR 9. 3 SINCE THE FACTS AND CIRCUMSTANCES WHICH GAVE RISE TO LEVY OF PENALTY ARE IDENTICAL FOR ALL THESE THREE YEARS; THEREFORE, WE HEARD ALL THESE THREE APPEALS TOGETHER AND ARE BEING DISPOSED OFF VIDE THIS COMPO SITE ORDER. 3.1 FOR ALL THESE ASSESSMENT YEARS, THE ASSESSEE HA D ALREADY FILED ITS RETURN OF INCOME U/S 139. THEREAFTER A SEARCH AND SEIZURE AC TION WAS CARRIED OUT AT THE PLACE OF THE ASSESSEE ON 7.12.2006. THE ASSESSEE FILED R ESPECTIVE RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153A ADMITTING A TOTAL INCOM E, WHICH IS MORE THAN THE INCOME RETURNED AS PER THE RETURN FILED U/S 139 OF THE I T ACT. THE ASSESSING OFFICER FINALISED THE ASSESSMENTS FOR ALL THESE THREE YEARS U/S 153A R.W.S 143(3) ON 31.12.2008 ACCEPTING THE INCOME RETURNED BY THE ASSESSEE. PEN ALTY PROCEEDINGS U/S 271(1)( C) WERE INITIATED FOR THE REASON THAT THE ADDITIONAL INCOME HAS BEEN OFFERED AS A RESULT OF SEARCH. SUBSEQUENTLY, THE ASSESSING OFFICER LEV IED PENALTY VIDE SEPARATE ORDERS DATED 29 TH JUNE 2009. 3.2 THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEF ORE THE CIT(A); BUT COULD NOT SUCCEED AS THE CIT(A) HELD THAT EXPLANATION 5 TO SECTION 271(1)( C) IS APPLICABLE WHERE DISCLOSURE IS MADE U/S 132(4) AND THE INCOME IS RETURNED U/S 153A ALONG WITH TAXES PAID WITH INTEREST. 4 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR HAS SUB MITTED THAT THERE IS NO MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH ACTION ON THE BASIS OF WHICH THE ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE ASSESSEE. IT IS A CASE OF VOLUNTARY DISCLOSURE OF INCOME BY THE ASSESSEE IN THE RETURN OF INCOME FILED IN RESPONSE TO VIRENDRA M SHANKLESHA ITA NO. 6431 - 6433/MUM/2010 3 NOTICE U/S 153A. HE HAS FURTHER SUBMITTED THAT IT IS A CASE OF REVISED RETURN OF INCOME, WHICH WAS ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKING ANY ADDITION; THEREFORE, NO PENALTY CAN BE IMPOSED. HE HAS RELIE D UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER O F INCOME-TAX V. SURESH CHANDRA MITTAL REPORTED IN 251 ITR 9(SC); DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. SURESH CHAND BANSAL REPORTED IN 329 ITR 330 (CAL) AND THE THIRD MEMBER DECISION OF THE ITAT DELHI G BENCH IN THE CASE OF ACIT VS PREM CHAND GARG REPORTED IN 119 ITD 97(DEL). 4.1 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE DECISIONS RELIED UPON BY THE LD AR OF THE ASSESSEE HAVE ALREADY BEEN CONSIDE RED AND DISTINGUISHED BY THE CIT(A) ON THE FACTS THAT THERE IS NO DISCLOSURE MAD E BY THE ASSESSEE U/S 132(4); THEREFORE, EXPLANATION 5 TO SEC. 271(1)( C) IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE ASSES SEE HAS ADMITTED THE ADDITIONAL INCOME ONLY BECAUSE OF SEARCH AND SEIZURE ACTION AN D THEREFORE, THE PROVISIONS OF SEC. 271(1) ( C) ARE ATTRACTED ON THE ADDITIONAL I NCOME ADMITTED BY THE ASSESSEE IN THE RETURN FILED U/S 153A. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF AGARWAL (G.C.) V. COMMISSIONER OF INCOME-TAX REPORTED IN 186 ITR 571. 5 AFTER CONSIDERING THE RIVAL CONTENTION AND CAREFU L PERUSAL OF THE RELEVANT MATERIAL ON RECORD, WE NOTE THAT IN ALL THESE THREE YEARS, THE ASSESSING OFFICER HAS ACCEPTED THE RETURN OF INCOME AS ADMITTED BY THE AS SESSEE U/S 153A. SINCE THERE WAS A DIFFERENCE BETWEEN THE INCOME DECLARED U/S 13 9 AND THE INCOME ADMITTED IN THE RETURNS FILED U/S 153A, THEREFORE, THE ASSES SING OFFICER HAS INITIATED PENALTY PROCEEDINGS. IT IS NOT THE CASE OF THE REVENUE THA T THE ADDITIONAL INCOME HAS BEEN ADMITTED BY THE ASSESSEE IN THE RETURN FILED U/S 1 53A BECAUSE OF SOME INCRIMINATING VIRENDRA M SHANKLESHA ITA NO. 6431 - 6433/MUM/2010 4 MATERIAL SHOWING UNDISCLOSED INCOME FOUND OR SEIZED DURING THE SEARCH AND SEIZURE ACTION. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SUCH MATERIAL OR INFORMATION ON THE BASIS OF WHICH THE ADDITIONAL INCOME WOULD H AVE BEEN ADDED TO THE INCOME OF THE ASSESSEE. IT IS A SIMPLE CASE OF ADMITTING THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED U/S 153A. THE ASSESSI NG OFFICER HAS DISCUSSED THE DIFFERENCE IN THE TOTAL INCOME U/S 139 AND U/S 153A IN PARA 7 OF THE ASSESSMENT ORDER, WHICH IS IDENTICAL FOR ALL THE THREE YEARS, EXCEPT THE QUANTUM OF INCOME. THE RELEVANT PART OF THE ASSESSMENT ORDER FOR THE AY 20 02-03 READ AS UNDER: 7. THE DIFFERENCE IN THE TOTAL INCOME U/S 139 AND U/S 153A IS RS. 47,288/- THIS IS DUE TO MISCELLANEOUS INCOME AND INCREASE IN CASH BALANCE. IN VIEW FACT THAT THE RETURN OF INCOME U/S 153A IS MORE THAN THE INCOME DECLARED U/S 139 PENALTY PROCEEDINGS U/S 271(1)( C) IS INITIATED AS THE ASSESSEE HAS CONCEALED AND DISCLOSED, UNDISCLOSED INCOME OF RS. 47,288/- U /S 153A OF THE I T ACT, 1961. 5.1 AS IT IS EVIDENT FROM THE ABOVE OBSERVATION OF THE ASSESSING OFFICER THAT THE DIFFERENCE IN THE TOTAL INCOME WAS DUE TO MISCELLA NEOUS INCOME AND INCREASE IN CASH BALANCE, WHICH IS VERY MUCH SUBJECT MATTER OF THE RETURN OF INCOME U/S 139 AS WELL AS REGULAR ASSESSMENT U/S 143(3). THEREFORE, T HE ADDITIONAL INCOME ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME FILED U/S 153A IS NOT BECAUSE OF ANY EVIDENCE OR MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZ URE ACTION. 5.2 WE FURTHER NOTE THAT THIS ADDITIONAL INCOME WAS NOT BECAUSE OF SOMETHING WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS; BU T IT IS ONLY A REVISED INCOME BASED ON THE SAME BOOKS OF ACCOUNT. THE ASSESSEE H AS PLEADED AND EXPLAINED THE REASONS FOR ADDITIONAL INCOME AS SOME CLERICAL MIST AKE AND OMISSION WHICH WERE RECTIFIED WHILE FILING THE RETURN OF INCOME U/S 153 A. THE AUTHORITIES BELOW HAVE NOT CONTRAVERTED THIS FACTUAL EXPLANATION OF THE ASSESS EE. FURTHER, THERE WAS A DIFFERENCE BETWEEN THE DEDUCTION CLAIMED U/S 80L/80D/80CCC IN THE ORIGINAL RETURN AS WELL AS IN THE RETURN FILED U/S 153A. IT IS SETTLED PROPOS ITION OF LAW THAT IF THE CLAIM OF THE VIRENDRA M SHANKLESHA ITA NO. 6431 - 6433/MUM/2010 5 ASSESSEE NOT ALLOWABLE UNDER THE PROVISIONS OF LAW, THE SAME CANNOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURA TE PARTICULARS OF INCOME OR CONCEALED ANY INCOME, WHEN THE CLAIM ITSELF IS NOT BOGUS. 5.3 IT IS CLEAR FROM THE RECORD THAT THE ADDITIONAL INCOME ADMITTED IN THE RETURN FILED U/S 153A IS NOT BECAUSE OF SOME BOGUS OR AN A BSOLUTELY WRONG CLAIM; BUT BECAUSE OF SOME ERROR OR OMISSION IN THE RETURN OF INCOME AND IN RESPECT OF THE CLAIM U/S 80L/80D/80CC OF THE I T ACT WHICH IS IN T HE NATURE OF VOLUNTARY OFFER OF THE INCOME BY THE ASSESSEE AND WOULD NOT AMOUNT TO CONC EALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FU RTHER, THE AO HAS NOT DISCUSSED OR GIVEN ANY FINDING THAT THE ADDITION WAS OTHERWISE R EQUIRED TO BE MADE BECAUSE OF DETECTION OF INCOME AS FOUND DURING THE COURSE OF S EARCH AND SEIZURE ACTION. THEREFORE, IN THE ABSENCE OF ANY MATERIAL OR FINDI NG BY THE AO THAT THE ADDITIONAL INCOME ADMITTED IN THE RETURN OF INCOME FILED U/S 1 53A IS BECAUSE OF SOME INCRIMINATING MATERIAL OR INFORMATION FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION. IT CANT BE SAID THAT THE CASE OF THE ASSES SEE WOULD ATTRACT THE PROVISIONS OF SEC. 271(1)( C). ACCORDINGLY, THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IS VOLUNTARY AND BASED ON THE BOOKS OF ACCOUNT AND NOT BECAUSE OF ANY NEW MATERIAL OR FACTS CAME TO THE LIGHT DURING THE SEAR CH AND SEIZURE ACTION. 5.4 THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, WHEN THE ASSESSEE HAS DISCLOSED ALL THE PRIMARY FACTS IN THE RETURN OF IN COME FILED U/S 139, THEN THE ADDITIONAL INCOME OFFERED IN THE RETURN FILED U/S 153A BECAUSE OF SOME DISCREPANCY AND ERROR WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME ATTRACTING LEVY OF PENALTY U/ S 271(1)( C) OF THE IT ACT. 6 IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CO NSIDERED OPINION THAT THE LEVY OF PENALTY IS NOT WARRANTED AND ACCORDINGLY, T HE SAME IS DELETED. VIRENDRA M SHANKLESHA ITA NO. 6431 - 6433/MUM/2010 6 7 IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 25 TH ,DAY OF APRIL 2012 SD/ SD/- ( R S SYAL ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 25 TH , APRIL 2012 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI