Sh. Ashwani Kumar Arora, New Delhi V. ACIT, New Delhi

ITA 6615/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5229 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Document seized; Retraction; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI B.P. JAIN, ACCOUNTANT MEMBER, ITA NO. 6615/DEL/2013 [ASSESSMENT YEAR: 2009-10] SHRI ASHWANI KUMAR ARORA VS. THE A.C.I.T UNIT NO. 134, FIRST FLOOR CIRCLE 19 RECTANGLE 1, SAKET DISTT. CENTRE NEW DELHI NEW DELHI PAN : AEIPA 8562 R [APPELLANT] [RESPONDENT] DATE OF HEARING : 29.06.2017 DATE OF PRONOUNCEMENT : 16.08.2017 ASSESSEE BY : SHRI SALIL KAPOOR SHRI SUMIT LALCHANDANI MS. ANANYA KAPOOR, ADVOCATES REVENUE BY : SHRI S.S. RANA, CIT-DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, THIS APPEAL OF THE ASSESSEE ARISES FROM THE O RDER DATED 02.08.2013 OF LD. CIT(A) XXXIII, NEW DELHI FOR AY 2 009-10 IN RESPECT OF PENALTY UNDER SECTION 271AAA OF THE INCO ME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHOR T] . 2 ITA NO. 6615/D EL/2013 2. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT AR E AS UNDER :- 1. THAT THE CIT(A) HAS, IN VIEW OF THE FACTS AND C IRCUMSTANCES OF THE CASE, ERRED ON FACTS AND IN LAW IN UPHOLDING THE PENALTY ORDER PASSED BY THE AO. THE PENALTY ORDER IS ILLEGA L, BAD IN LAW AND WITHOUT JURISDICTION. 2. THAT THE CIT(A) HAS, IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE CASE, ERRED ON FACTS AND IN LAW IN UPHOLDING THE PENALTY OF RS 16,55,218/- LEVIED BY THE AO U/S 271 AAA . 3. THAT THE CIT(A) HAS , IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ERRED ON FACTS AND IN LA W IN OBSERVING THAT THE CASE OF THE APPELLANT DOES NOT FIT INTO TH E SCOPE OF SEC 271 AAA . 4. THAT THE CIT(A) HAS, IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE CASE, GROSSLY ERRED ON FACTS AND IN LAW IN O BSERVING THAT THE SURRENDER MADE BY THE ASSESSEE IS NOT IN COURSE OF THE STATEMENT RECORDED U/S 132(4) AND HENCE SEC 271 AAA BENEFIT CANNOT BE GRANTED TO THE APPELLANT . 5. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL OF THE ASSESSEE AND THE CIT(A) HAS FAILE D TO ADJUDICATE THE MATTER IN A JUDICIOUS MANNER . 6. THAT THE EVIDENCE AND SUBMISSIONS FILED AND MATE RIALS AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSTRUE D AND JUDICIOUSLY INTERPRETED, HENCE THE PENALTY LEVIED I S UNCALLED FOR. 3 ITA NO. 6615/D EL/2013 7. THAT THE VARIOUS OBSERVATIONS MADE BY THE CIT(A) IN THE IMPUGNED ORDER ARE ILLEGAL , BAD IN LAW, CONTRARY T O THE FACTS ON RECORD AND BASED ON SURMISES AND CONJECTURES . 8. THAT IN ANY CASE THE PENALTY IS HIGHLY EXCESSIVE AND SHOULD BE REDUCED. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH WA S COMMENCED ON THE DAWAT GROUP ON 10.02.2009 AND THE ASSESSEE W AS ALSO COVERED UNDER THE SEARCH. DURING THE COURSE OF SEARCH A STA TEMENT UNDER SECTION 132(4) OF THE ACT WAS RECORDED. IN CONTINUA TION TO THE SAID STATEMENT THE GROUP FILED A LETTER DATED 17.03.2009 SURRENDERING AN AMOUNT OF RS 17 CRORES IN ALL THE ENTITIES OF THE G ROUP INCLUDING THE COMPANIES, DIRECTORS AND THEIR FAMILY MEMBERS. IT W AS STATED IN THE SAID LETTER THAT THE TAX SHALL BE PAID IN THE RESPE CTIVE HANDS ON THE RESPECTIVE INCOMES DETERMINED AFTER GOING THROUGH T HE SEIZED MATERIAL. THE ASSESSEE FILED A RETURN OF INCOME DEC LARING INCOME OF RS 88,46,380/- ON 08.12.2009. THE ASSESSEE ALSO FIL ED A LETTER DATED 21.01.2010 WITH REFERENCE TO EARLIER LETTER DATED 1 7.03.2009 DECLARING THE ADDITIONAL INCOME OF RS 47,79,685/- ( RS 47,79,685/- IS PART OF RS 88,46,380/-) AND ALSO EXPLAINED THE MANN ER IN WHICH THE INCOME IS EARNED I.E. TRADING IN VARIOUS COMMODITIE S AND REAL ESTATE AND ALSO STATED THAT THIS FACT IS SUBSTANTIATED FRO M THE SEIZED MATERIAL. IT WAS ALSO STATED THAT THE SURRENDER MAD E DURING THE 4 ITA NO. 6615/D EL/2013 COURSE OF SEARCH VIDE LETTER DATED 17.03.2009 IS MO DIFIED TO THAT EXTENT. THE ASSESSEE FILED ANOTHER LETTER BEFORE TH E AO ON 28.12.2010 FURTHER MODIFYING HIS SURRENDER MADE ON 17.03.2009 BY DECLARING ADDITIONAL INCOME OF RS 1,17,72,500/- FOR THE RELEVANT AY 2009-10 IN ADDITION TO ADDITIONAL INCOME OF RS 47,7 9,685/- WHICH WAS ALREADY OFFERED TO TAX IN RETURN DATED 08.12.2009. THEREBY THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE WAS RS 1, 65,52,185/- IN ADDITION TO ITS REGULAR INCOME. ACCORDING TO THE AS SESSEE THE TOTAL DECLARED INCOME INCLUDING THE ADDITIONAL INCOME WAS RS 2,06,18,880/-. THE ASSESSMENT ORDER WAS PASSED AT R S 2,06,18,880/- ON 31.12.2010 AND PENALTY PROCEEDINGS UNDER SECTION 271AAA. 4. THE CASE OF THE ASSESSEE BEFORE THE AO IN PENALT Y PROCEEDINGS WAS THAT THE ASSESSEE HAS SURRENDERED THE ADDITIONA L INCOME DURING THE COURSE OF SEARCH AND AS SUCH THE PENALTY UNDER SECTION 271AAA OF THE ACT SHOULD NOT BE LEVIED. THE CASE OF THE AO IS THAT THE INCOME WAS DECLARED BY THE GROUP BUT THE SAME IS RETRACTED BY THEM AND ONLY A SMALL PORTION OF THE UNDISCLOSED INCOME WAS REFLECTED IN THE RETURNS AND AS SUCH THE IMMUNITY OF SECTION 271AAA( 2) OF THE ACT IS NOT AVAILABLE AND AS SUCH HE IMPOSED PENALTY OF RS 16,55,218/- BEING 10% OF THE UNDISCLOSED INCOME OF RS 1,65,52,185/-. 5 ITA NO. 6615/D EL/2013 5. THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) HAS DISMISSED THE APPEAL ON THE GROUND THAT THE SEARCH WAS CONCLUDED ON 10.02.2009 AS THE PANCHNAMA AT VARIOUS FACTORY P REMISES AND REGISTERED OFFICES WAS CLOSED ON 10.02.2009. ONLY T HE LOCKERS OF THE LADY MEMBERS OF THE GROUP WERE OPERATED ON 23.03.20 09, 25.03.2009 AND 27.03.2009 AND AS SUCH THE LETTER DA TED 17.03.2009 CANNOT BE TREATED AS STATEMENT UNDER SECTION 132(4) OF THE ACT. ACCORDING TO CIT(A) THE SURRENDER WAS OF RS 17 CROR ES AND THE DECLARED INCOME IS MUCH LESS AND HENCE HE CONFIRMED THE ACTION OF THE AO. 6. DURING THE COURSE OF HEARING, THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LETTER DATED 17.03.2009 WAS FILE D IN CONTINUATION OF THE STATEMENT RECORDED UNDER SECTION 132(4) OF T HE ACT AND THIS FACT IS MENTIONED IN THE LETTER ITSELF. THE AMOUNT OF RS 17 CRORES WAS SURRENDERED TO COVER ALL THE ENTITIES OF THE GR OUP AND ALL THE FAMILY MEMBERS OF THE GROUP INCLUDING THE ASSESSEE. THE LAST PANCHNAMA OF THE GROUP WAS DRAWN ON THE DATES WHEN THE LOCKERS OF THE FAMILY MEMBERS OF THE GROUP WERE OPERATED. I T WAS THE SEARCH ON THE WHOLE GROUP AND NOT ON THE ASSESSEE O NLY AND AS SUCH IT CANNOT BE SAID THAT THE LETTER DATED 17.03.2009 WAS NOT FILED 6 ITA NO. 6615/D EL/2013 DURING THE SEARCH. THE SEARCH HAD TAKEN PLACE ON VA RIOUS PREMISES INCLUDING THE RESIDENCES AND LOCKERS OF THE FAMILY MEMBERS AND THE SEARCH CONTINUED TILL THE LAST PANCHNAMA WAS DRAWN IN RESPECT OF LOCKERS. 7. THE LD COUNSEL FURTHER SUBMITTED THAT THE LETTER S DATED 21.01.2010 AND 28.02.2010 WERE FILED IN MODIFICATIO N OF EARLIER LETTER DATED 17.03.2009 AND AS SUCH THIS IS NOT A CASE OF RETRACTION. THE SURRENDER WAS MADE WITH REFERENCE TO THE SEIZED DOC UMENTS AND THE SAME IS ACCEPTED BY THE AO WHILE COMPLETING THE ASS ESSMENT AS THE INCOME ASSESSED AND THE INCOME RETURNED/SURRENDERED ARE SAME. IT IS SUBMITTED THAT THE PURPOSE OF THE PROVISION IS THAT IF THE INCOME IS SURRENDERED BY THE ASSESSEE DURING THE SEARCH THEN THE PENALTY UNDER SECTION 271AAA OF THE ACT IS NOT TO BE IMPOSED AND IN THIS CASE THE SURRENDER WAS OF RS 17 CRORES FOR THE WHOLE GROUP W ITHOUT LOOKING AT THE SEIZED MATERIAL AND THE INCOME RETURNED/SURREND ERED BY THE ASSESSEE IS THE INCOME EARNED BY THE ASSESSEE BASED ON THE SEIZED DOCUMENTS AND THIS FACT IS CLEAR FROM THE ASSESSMEN T ORDER AS THE INCOME SURRENDERED/RETURNED AND THE ASSESSED ARE SA ME. THE LD COUNSEL HAS RELIED ON THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD VS. STATE OF ORISSA 83 ITR 26 (SC) FOR THE 7 ITA NO. 6615/D EL/2013 PROPOSITION THAT PENALTY SHOULD NOT BE IMPOSED MERE LY BECAUSE IT IS IMPOSABLE. 8. ON THE OTHER HAND, THE LD. DR APPEARING ON BEHAL F OF THE REVENUE ARGUED THAT THE PENALTY HAS BEEN RIGHTLY IM POSED. HE SUBMITTED THAT THE ASSESSEE HAD SURRENDERED RS. 17 CRORES BUT DID NOT PAY THE TAX ON THAT AMOUNT. HE REFERRED TO THE PROVISIONS OF THE ACT AND STATED THAT THE ASSESSEE HAS NOT SHOWN THE MANNER OF INCOME EARNED. HE SUBMITTED THAT THE LETTERS FILED BY THE ASSESSEE ARE NOT IN CONSONANCE WITH THE PROVISIONS OF THE AC T. ACCORDING TO HIM, THE CONDITIONS OF SECTION 271AAA(2) OF THE ACT ARE NOT FULFILLED. IT IS STATED THAT THE ASSESSEE HAS NOT PAID THE TAX ON RS 1,17,72,500/- WHICH WAS SURRENDERED VIDE LETTER DAT ED 28.02.2010 AS IT WAS NOT PART OF THE RETURNED INCOME AND AS SU CH THE PENALTY UNDER SECTION 271 AAA OF THE ACT IS RIGHTLY IMPOSED . 9. IN THE REJOINDER, THE LD COUNSEL FOR THE ASSESSE E SUBMITTED ON INSTRUCTIONS THAT THE TAX HAS ALSO BEEN PAID ON RS 1,17,72,500/-. HE ALSO SUBMITTED THAT IT IS NOT THE CASE OF AO OR LD. CIT(A) THAT THE MANNER IN WHICH THE SURRENDERED INCOME IS EARNED IS NOT SHOWN. HE STATED THAT IN ANY CASE, THE ASSESSEE VIDE LETTER D ATED 21.01.2010 8 ITA NO. 6615/D EL/2013 CLEARLY STATED THAT ADDITIONAL INCOME HAS BEEN EARN ED BY HIM ALONG WITH HIS THREE BROTHERS IN THEIR INDIVIDUAL CAPACIT Y BY WAY OF TRADING IN VARIOUS COMMODITIES AND REAL ESTATE AND THIS FAC T IS SUBSTANTIATED IN THE SEIZED MATERIAL. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE SEARCH WAS INITIATED ON 10.02.2009 ON THE DAWAT GROUP OF CASES. THE SEARCH WAS CONDUCTED AT VARIOUS PLACE S INCLUDING THE FACTORY PREMISES, REGISTERED OFFICES, RESIDENCES, L OCKERS ETC. DIFFERENT PANACHNAMAS WERE MADE AT DIFFERENT PREMIS ES ON DIFFERENT DATES. ADMITTEDLY THE LAST PANCHNAMAS OF THE GROUP WERE MADE ON 23.03.2009, 25.03.2009 AND 27.03.2009. THE LETTER D ATED 17.03.2009 SURRENDERING THE AMOUNT OF RS 17 CRORES WAS ALSO FI LED IN RESPECT OF DAWAT GROUP AND IT COVERED ALL THE GROUP COMPANIES, DIRECTORS AND INDIVIDUAL FAMILY MEMBERS OF THE GROUP. HENCE WE AR E OF THE VIEW THAT THE LETTER DATED 17.03.2009 CANNOT BE SAID THA T IT WAS NOT FILED DURING THE COURSE OF SEARCH. 11. THE ASSESSEE HAD FILED LETTERS DATED 21.01. 2010 AND 28.12.2010 IN CONTINUATION AND IN REFERENCE TO LETT ER DATED 17.03.2009 DECLARING THE EXACT INCOME BELONGING TO HIM BASED ON THE SEIZED DOCUMENTS. ACCORDING TO THE ASSESSEE HE MODIFIED THE 9 ITA NO. 6615/D EL/2013 SURRENDER MADE IN RESPECT OF INCOME BELONGING TO HI M BASED ON THE SEIZED DOCUMENTS. THERE IS NO DISPUTE ABOUT THE FAC T THAT THE AO ASSESSED THE SAME INCOME AS DECLARED OR SURRENDERED BY THE ASSESSEE. THE AO HAS NOT ASSESSED THE INCOME OF RS 17 CRORES BUT HAS ASSESSED THE INCOME AT THE SAME AMOUNT DECLARED OR SURRENDERED BY THE ASSESSEE ON THE BASIS OF THE SEIZED DOCUMENTS. 12. IT IS NOT THE CASE OF THE REVENUE THAT THE I NCOME BELONGING TO THE ASSESSEE WAS MORE THAN WHAT IS SURRENDERED BY H IM. THE ASSESSEE HAS MODIFIED THE SURRENDER MADE DURING THE COURSE OF SEARCH ON 17.03.2009 AND AS SUCH IT CANNOT BE THAT IT IS A CASE OF RETRACTION BECAUSE THE INCOME DECLARED BY THE ASSES SEE WHICH IS ASSESSED BY THE AO. THE LETTER DATED 17.03.2009 WAS FILED BEFORE THE DIRECTOR OF INCOME TAX (INVESTIGATIONS) I NEW D ELHI WHO WAS THE IN CHARGE OF THE SEARCH AND IT IS ALSO STATED IN TH E SAID LETTER THIS SURRENDER IS FOR THE WHOLE GROUP AND THE TAXES SHAL L BE PAID IN RESPECTIVE HANDS/ PERSONS AFTER GOING THROUGH THE S EIZED MATERIAL. IT IS CLEAR THAT WHEN THIS LETTER WAS FILED THE SEIZED MATERIAL WAS NOT WITH THE ASSESSEE. THE SUBSEQUENT LETTERS MODIFYING THE SURRENDERED AMOUNT ARE BASED ON THE INCOME BELONGING TO THE ASS ESSEE ON SEIZED MATERIAL. 10 ITA NO. 6615/D EL/2013 13. THE LD DR HAS POINTED OUT THAT THE MANNER OF EA RNING OF THE SURRENDERED INCOME HAS NOT BEEN DISCLOSED BY THE AS SESSEE WHEREAS THE ASSESSEE BY LETTER DATED 21.01.2010 HAS DISCLOS ED THE MANNER OF EARNING THE SAID INCOME BY WAY OF TRADING IN COMMOD ITIES AND REAL ESTATE AND ALSO STATED THIS FACT IS SUBSTANTIATED F ROM THE SEIZED MATERIAL. MOREOVER THIS FACTUAL POSITION IS NOT DEN IED BY THE AO AND THIS IS NOT THE BASIS FOR IMPOSING THE PENALTY. IN THAT VIEW OF THE MATTER AND IN VIEW OF SUCH FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO AND ACCORDINGLY, WE DIRECT THE AO TO DELETE THE PENALTY IMPOSED UNDER SECTION 271AAA OF THE ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.08 .2017. SD/- SD/- [H.S. SIDHU] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 TH AUGUST, 2017 VL/ 11 ITA NO. 6615/D EL/2013 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI