ACIT, New Delhi V. Sh. Sandeep Yadav, New Delhi

ITA 6551/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7196 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARCHANA K AWASTHI
• Keywords: Business income; Income from undisclosed sources
• Section: 132

Judgement Text

\IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.6551/DEL/2013 A.Y. : 2010-11 ACIT, CENTRAL CIRCLE-14, ROOM NO. 320, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS. SH. SANDEEP YADAV, 6/7, SHANTI NIKETAN, NEW DELHI (PAN:AAAPY2675D) (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. ARCHANA K. AWASTHI, CIT(DR) ASSESSEE BY : SH. SANJAY GARG, CA DATE OF HEARING : 25-05-2016 DATE OF ORDER : 21-06-2016 ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 26/8/2013 PASSED BY THE LD. ITA NO. 6551/DEL/2013 2 COMMISSIONER OF INCOME TAX (APPEALS-XXXIII), NEW DEL HI ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CANCELLING THE PENALTY OF RS. 16,00,000/- LEVIED BY THE AO UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THAT TRADE ADVANCES IS ONLY APPLICATION AND NOT SOURCE OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE WAS NOT ASKED IN STATEMENT U/S. 132(4) TO SUBSTANTIATE THE MANNER OF DERIVING INCOME WITHOUT APPRECIATING THAT IN CLAUSE (II) OF SEC. 271AAA(2), THERE IS NO REFERENCE TO SECTION 132(4) AND THE ASSESSEE FAILED TO SUBSTANTIATE THE MANNER OF DERIVING INCOME EVEN DURING THE ASSESSMENT PROCEEDINGS. ITA NO. 6551/DEL/2013 3 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2. THE FACTS IN BRIEF ARE THAT A SEARCH AND SEI ZURE ACTION U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRE D AS THE ACT) WAS CONDUCTED BY THE DEPARTMENT ON 30.7.2009 A T THE BUSINESS PREMISES OF VARIOUS GROUP COMPANIES AS WEL L AS RESIDENTIAL PREMISES OF THE DIRECTORS AND IMPORTANT EMPLOYEES OF THE RAMPRASTHA GROUP INCLUDING THE ASSESSEE. DUR ING THE COURSE OF SEARCH SH. BALWANT SINGH, CHAIRMAN OF THE RAMAPRASTHA GROUP OF COMPANIES SURRENDERED AN AMOUN T OF RS. 1,60,00,000/- IN THE HAND OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE DID N OT SPECIFY THE MANNER IN WHICH THE INCOME HAD BEEN DERIVED, HE NCE, AO INITIATED THE PENALTY PROCEEDINGS U/S. 271AAA OF THE ACT AND ACCORDINGLY, SHOW CAUSE NOTICE U/S. 271AAA READ WITH SECTION 274 OF THE ACT WAS ISSUED ON 29.12.2011 REQUIRING THE ITA NO. 6551/DEL/2013 4 ASSESSEE TO SHOW CAUSE ON 20.1.2012 AS TO WHY AN OR DER IMPOSING PENALTY U/S. 271AAA OF THE ACT SHOULD NOT BE MADE. BUT NO REPLY WAS RECEIVED BY THE AO. ANOTHER SHO W CAUSE NOTICE DATED 1.5.2012 WAS DULY SERVED UPON THE ASSESS EE. IN RESPONSE THERETO A REPLY DATED 07.5.2012 WAS RECEIV ED FROM THE ASSESSEE STATING THEREIN THE FOLLOWING SUBMISS IONS:- I) THAT THE ASSESSEE HAS SURRENDERED THE BUSINESS ADVANCES AS INCOME U/S. 132(4) OF RS. 1,60,00,000/-. DURING THE COURSE OF SEARCH OPERATIONS ON 31.7.2009 AS INCOME FROM REAL ESTATE BUSINESS ACTIVITIES. THE IN COME HAS BEEN ASSESSED AS BUSINESS INCOME IN THE ASSESSM ENT COMPLETED U/S. ON 29.12.2011. II) IT HAD BEEN EXPLAINED THAT THE INCOME HAD BEEN EARNED OUT OF REAL ESTATE BUSINESS CONDUCTED BY THE ASSESSEE DURING THE YEAR. III) THAT THE ASSESSEE HAS ALREADY PAID THE IT ON T HE SAID INCOME ALONGWITH INTEREST THEREON. 2.1 AFTER CONSIDERING THE AFORESAID REPLY FILED BY THE ASSESSEE, AO OBSERVED THAT THE ASSESSEE HAD NOT SPEC IFIED THE ITA NO. 6551/DEL/2013 5 MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED AND ALSO FAILED TO SUBSTANTIATE, IT AND ACCORDINGLY, HE IMPO SED THE PENALTY OF RS. 16,00,000/- ON THE ASSESSEE FOR SUCH FAILURE BY PASSING AN ORDER DATED 28.6.2012 U/S. 271AAA OF THE I .T. ACT, 1961. 3. BEING AGGRIEVED WITH THE AFORESAID PENALTY ORDE R, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMP UGNED ORDER DATED 26.8.2013 HAS DELETED THE PENALTY AND AL LOWED THE APPEAL OF THE ASSESSEE. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING LD. DR RELIED UPON THE ORD ER OF THE AO AND REITERATED THE CONTENTIONS RAISED BY THE REV ENUE IN THE GROUNDS AND REQUESTED THAT PENALTY IN DISPUTE IMPOS ED BY THE AO MAY BE SUSTAINED. 6. ON THE CONTRARY, DURING THE HEARING, LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE STATED THAT LD. CIT(A ) HAD DELETED THE PENALTY IN DISPUTE BY FOLLOWING THE VA RIOUS ITAT ORDERS, HONBLE HIGH COURTS ORDERS IN WHICH SIMILAR AND ITA NO. 6551/DEL/2013 6 IDENTICAL ISSUES HAVE BEEN DEALT WITH. HE DRAW OUR ATTENTION TOWARDS THE PARA NO. 3.3 OF THE IMPUGNED ORDER AT P AGES 9 TO 11. HE FURTHER STATED THAT THE ISSUE IN DISPUTE IS ALSO COVERED BY THE VARIOUS DECISIONS RENDERED BY THE ITAT AND T HE HONBLE HIGH COURTS AS MENTIONED IN THE LD. CIT(A)S ORDER AND REQUESTED THAT THE ORDER OF THE LD. CIT(A) MAY BE UP HELD AND REVENUES APPEAL MAY BE DISMISSED. 7. WE HAVE HEARD THE BOTH PARTIES AND PERUSED AND CONSIDERED THE RELEVANT RECORDS AVAILABLE WITH US E SPECIALLY THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). WE FIND T HAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN DISPUTE BY CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND ADJUDICATED THE ISSUE IN DISPUTE VIDE PARA NO. 3.3 AT PAGES 9 TO 11 IN HIS IMPUGNED ORDER. THE SAID RELEVANT PARA S OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER:- 3.3 DECISION:- I HAVE CONSIDERED THE PENALTY ORDER U/S 271AAA, WRITTEN SUBMISSION AND ARGUMENTS OF LD. AR DURING THE APPELLATE PROCEEDINGS. THE ASSESSING OFFICER HA S LEVIED THE PENALTY U/S 271AAA ON THE GROUND THAT TH E ITA NO. 6551/DEL/2013 7 CONDITIONS CONTAINED IN SUB-SECTION(2) SPECIFYING T HE CONDITIONS FOR NON-LEVY OF PENALTY UNDER SUB- SECTION(1) OF SUB-SECTION 271AAA ARE NOT FULFILLED. PRECISELY, THE ASSESSING OFFICER HAS POINTED THAT T HE MANNER IN WHICH SUCH INCOME WAS DERIVED WAS NOT STATED BY THE APPELLANT. FURTHER, HE CONCLUDED THAT APPELLANT ALSO FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. DURING THE APPELLATE PROCEEDINGS, LD. AR HAS FILED COPY OF STATEMENT OF SH. BALWANT SINGH ULS 132(4) OF I.T. ACT DATED 3L.7.2009, WHO HAS MADE THE DISCLOSURE OF UNACCOUNTED INCOME FOR THE ENTIRE GROUP OF RAMPRASTHA BUILDERS. LD. AR'S MAIN CONTENTION IS THAT DURING THE STATEMENT U/S 132(4), SH. BALWANT SINGH WHILE MAKING THE DISCLOSURE IN THE NAME OF THE APPELLANT HAS CLEARLY STATED THAT UNDISCLOSED INCOME IS UNACCOUNTED TRADE ADVANCE TO PERSONS AMOUNTING TO RS. 1,60,00,000/-. THE APPELLANT HAS DISCLOSED THE ITA NO. 6551/DEL/2013 8 SAID INCOME IN HIS RETURN OF INCOME AS BUSINESS INCOME WHICH HAS BEEN ASSESSED BY THE LD. ASSESSING OFFICER. FURTHER, LD. AR HAS ARGUED THAT DURING THE STATEMEN T U/S 132(4), THE AUTHORISED OFFICER HAS NOT ASKED TH E MANNER IN WHICH SUCH UNDISCLOSED INCOME WAS EARNED. FURTHER, THE AUTHORISED OFFICER HAS ALSO NOT ASKED DURING THE STATEMENT RECORDED U/S 132(4), TO SUBSTANTIATE THE MANNER IN WHICH SUCH INCOME WAS EARNED. HE HAS RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS CITED SUPRA SPECIALLY HON'BLE ITAT, DELHI JUDGEMENT IN THE CASE OF MOTHER PRIDE EDUCATION PERSONA PRIVA TE LIMITED WHERE HON'BLE TRIBUNAL HAS DELETED THE PENALTY U/S 271AAA ON THE GROUND THAT THE AUTHORISED OFFICER WHILE RECORDING THE STATEMENT HA S NOT ASKED THE MANNER IN WHICH UNDISCLOSED INCOME WAS EARNED AND ALSO HAS NOT PUT A QUESTION TO SUBSTANTIATE THE MANNER IN WHICH SUCH INCOME WAS EARNED. IT IS INCUMBENT UPON THE AUTHORISED OFFICER ITA NO. 6551/DEL/2013 9 WHILE RECORDING THE STATEMENT TO EXPLAIN THE PROVISIONS OF LAW WHILE TAKING THE DISCLOSURE U/S 132(4). I HAVE CONSIDERED ALL THE ARGUMENTS OF LD. AR AND PERUSED THE STATEMENT RECORDED U/S 132(4) WHERE INCOME WAS DISCLOSED. IN PRESENT CASE, INCOME AS DISCUSSED WAS TRADE ADVANCE, THEREFORE, BY VIRTUE O F THE WORDS 'TRADE ADVANCE' IT IS APPARENT THAT IT IS UNACCOUNTED BUSINESS INCOME. THE APPELLANT HAS PAID TAXES ON SUCH UNDISCLOSED INCOME, THE ASSESSING OFFICER HAS ASSESSED SUCH INCOME AS BUSINESS INCOME WITHOUT MAKING ANY ADDITIONS, THEREFORE, IN MY VIEW THE MANNERED TO EARN UNDISCLOSED INCOME WAS THERE IN THE STATEMENT U/S 132(4). IT IS NOT DISPUTED THAT THERE WAS DISCLOSUR E U/S 132(4) OF I.T. ACT. AND THE ASSESSEE HAS HONOURED THE DISCLOSURE AND PAID TAX THEREON AND FILED RETURN TO THAT AFFECT. I HAVE CONSIDERED THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY LD. AR CITED SUPRA NAMELY :- ITA NO. 6551/DEL/2013 10 HONBLE ITAT DELHI IN THE CASE OF MOTHERS PRIDE EDUCATION PERSONNA (P) LTD. VS. DCIT (ITA NO. 3372/DEI/2011). THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA KISHAN GEOL (SUPRA) THE HONORABLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C SHAH 298 ITR 305(SUPRA) 10 305 (SUPRA) HONORABLE ITAT CUTTAK IN THE CASE OF ASHOK KUMAR SHARMA V S. DEPUTY COMMISSIONER OF INCOME TAX (ITA NO. 476, 477, 478,479 AND 480/CTKJ2011). HONORABLE ITAT AHMADABAD IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX V S. RAJENDRA PRASAD DOKANIA (ITA NO. 525/AHD/2012) . HONORABLE ITAT AHMADABAD IN THE CASE OF SULOCHANADEVI A. AGARWAL, SURAT VS DEPARTMENT OF INCOME TAX (ITA NO. 10521 AHD/2012). ITA NO. 6551/DEL/2013 11 AFTER CONSIDERING THE ENTIRE FACTS & CIRCUMSTANCES OF THE CASE IN MY VIEW PENALTY LEVIED U/S 271AAA CANNOT BE SUSTAINED. ACCORDINGLY I HEREBY CANCEL THE PENALTY LEVIED U/S 271AAA. THIS GROUND OF APPEAL IS ALLOWED. AS A RESULT, THE APPEAL IS ALLOWED 7.1 AFTER GOING THROUGH THE AFORESAID ORDER PASSED BY THE LD. CIT(A) ON THE ISSUE IN DISPUTE AS WELL AS THE ORDER S OF THE TRIBUNAL AND THE HONBLE HIGH COURTS RELIED UPON BY THE LD. CIT(A) WHILE DELETING THE PENALTY IN DISPUTE, WE ARE OF THE VIEW THAT THE LD. FIRST APPELLATE AUTHORITY HAS PA SSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERE ON OUR PART. THEREFORE, RESPECTFULLY FOLLOWING THE PRECEDENTS OF THE ITAT AS WELL AS HONBLE HIGH COURTS AS MENTIONED IN THE LD. CIT(A)S ORDER, WE UPHOLD THE ORDER OF THE LD. CIT(A) WHEREI N THE LD. CIT(A) HAS DELETED THE PENALTY IN DISPUTE AND ACCOR DINGLY, WE DISMISS THE APPEAL OF THE REVENUE. ITA NO. 6551/DEL/2013 12 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/06/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 21/06/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES