Mahavir Prasad Jaipuria, New Delhi V. ACIT, New Delhi

ITA 6643/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4188 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 14-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Revised return
• Section: 153A; 132

Judgement Text

ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 6643/DEL/2015 ASSESSMENT YEAR: 2012-13 MAHAVIR PRASAD JAIPURIA, 8, PRITHVIRAJ ROAD, NEW DELHI-110001 (PAN: AAEPJ4353R) VS ACIT, CENTRAL CIRCLE-07 (ERSTWHILE CENTRAL CIRCLE-12), JHANDEWALAN EXTENSION, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MANOJ KUMAR, CA RESPONDENT BY: SHR I ATIQ AHMAD, SR. DR DATE OF HEARING: 05. 09.2017 DATE OF PRONOUNCEMENT: 04.10.201 7 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF THE LD. CIT (A) 24, NEW DELHI WHEREI N VIDE ORDER DATED 12.10.2015, THE LD. CIT (A) HAS CONFIRM ED THE IMPOSITION OF PENALTY OF RS. 30,000/- U/S 271AAA OF THE INCOME TAX ACT, 1961 FOR AY 2012-13. ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E BELONGS TO JAIPURIA GROUP OF CASES WHICH WAS SUBJEC TED TO SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 ON 27 TH OF MARCH 2012. THE STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132 (4) OF THE INCOME TAX ACT, 1961 AND THE ASSESSEES SON SHRI ANURAG JA IPURIA ALSO OFFERED A TOTAL AMOUNT OF RS. 5 CRORES AS UNDI SCLOSED INCOME IN THE HANDS OF VARIOUS INDIVIDUALS AND ENTI TIES ASSOCIATED WITH THE JAIPURIA GROUP. IN THE ORIGINAL RETURN OF INCOME FILED ON 31/07/2012, THE ASSESSEE HAD OFF ERED A TOTAL INCOME OF RS. 10,26,175/- TO TAX. SUBSEQUENTL Y, HE FILED A REVISED RETURN OF INCOME ON 07/06/2013 DISC LOSING TOTAL INCOME OF RS. 13,26,175/-. DURING THE COURSE OF SEARCH AND POST SEARCH INVESTIGATION, THE ASSESSEE DID NOT SURRENDER ANY INCOME BUT DURING THE COURSE OF ASSES SMENT PROCEEDINGS UNDER SECTION 143 (3) OF THE INCOME TAX ACT 1961, THE ASSESSEE SURRENDERED AN AMOUNT OF RS. 3 L ACS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH W AS SHOWN IN THE COMPUTATION OF INCOME UNDER THE HEAD OTHER SOURCES. ASSESSMENT WAS COMPLETED UNDER SECTION 14 3 (3) ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 3 OF THE INCOME TAX ACT, 1961 AFTER MAKING AN ADDITIO N OF RS. 11,92,800/- ON ACCOUNT OF UNEXPLAINED CASH. SUBSEQUENTLY, PENALTY PROCEEDINGS UNDER SECTION 271 AAA OF THE INCOME TAX ACT, 1961 WERE INITIATED BY ISSUA NCE OF NOTICE UNDER SECTION 274. IT WAS THE RESPONSE OF TH E ASSESSEE THAT PENALTY PROCEEDINGS UNDER SECTION 271 AAA OF THE INCOME TAX ACT, 1961 HAD NOT BEEN INITIATED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) OF TH E INCOME TAX ACT, 1961 AND FURTHER THERE WAS NO UNDIS CLOSED INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SEC TION 271 AAA OF THE ACT AND, THEREFORE, THE PROPOSAL TO IMPO SE PENALTY UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961 ON THAT BASIS WAS ERRONEOUS. HOWEVER, THE ASSESSING OFFICER PROCEEDED TO IMPOSE PENALTY OF RS. 30,000/- UNDER S ECTION 271AAA ON THE ALLEGED UNDISCLOSED INCOME OF RS. 3 L ACS WHICH WAS SURRENDERED BY THE ASSESSEE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (APPEALS) WH O UPHELD THE CONFIRMATION OF THE PENALTY AND NOW THE ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 4 ASSESSEE HAS APPROACHED THE ITAT AND HAS CHALLENGED THE IMPOSITION OF PENALTY. 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT RS. 4,82,800/- OUT OF RS. 17,49,800/- FOUND DURING THE COURSE OF SEARCH WAS FOUND FROM THE ALMIRAH OF THE ASSESSE ES WIFE SMT. PUSHPA JAIPURIA WHICH WAS HER PIN MONEY, SAVIN GS, CASH PRESENTS AND GIFTS RECEIVED BY HER ON VARIOUS FUNCTIONS AND OTHER OCCASIONS. HOWEVER, IN ORDER TO BUY PEACE OF MIND AND AVOID LITIGATION, THE ASSESSEE HA D VOLUNTARILY ADDED THE AMOUNT OF RS. 3 LACS OUT OF T HIS RS. 4,82,800/- WITH THE HOPE AND PRAYER THAT NO PENALTY SHALL BE LEVIED. IT WAS SUBMITTED THAT THE ASSESSING OFFI CER HAD FAILED TO APPRECIATE THAT THERE WAS NO UNDISCLOSED INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 27 1AAA OF THE INCOME TAX ACT, 1961 AND, THEREFORE, THE IMPOSI TION OF PENALTY UNDER THE SAID SECTION WAS LEGALLY NOT TENA BLE. IT WAS ALSO SUBMITTED THAT THE ASSESSEES SON SH. ANUR AG JAIPURIA HAD OFFERED RS. 5 CRORES AS INCOME IN HIS HAND, HIS FAMILY MEMBERS, HUF, FIRMS AND ITS PARTNERS, ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 5 COMPANIES AND ITS DIRECTORS AND ASSOCIATES IN HIS STATEMENT RECORDED UNDER SECTION 132 (4) OF THE INC OME TAX ACT, 1961 DURING THE COURSE OF SEARCH AND SEIZURE OPERATION WITH THE UNDERSTANDING THAT NO PENALTY PROCEEDINGS OF ANY KIND WILL BE TAKEN AGAINST HIM A ND HIS GROUP. IT WAS ALSO SUBMITTED THAT THE ADDITIONAL IN COME OF RS. 3 LACS WAS SURRENDERED BY THE ASSESSEE IN HIS COMPUTATION OF INCOME ONLY TO HONOUR THE COMMITMENT MADE TO DISCLOSE THE ADDITIONAL INCOME BY THE SON O F THE ASSESSEE EVEN THOUGH THE SOURCE OF THE SAID CASH FO UND WAS DULY EXPLAINED BY THE ASSESSEE IN HIS STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS. IT WAS SUBMITTED THAT THE ADDITIONAL INCOME DECLARED BY TH E ASSESSEE IN HIS RETURN OF INCOME WAS NOT AN UNDISCL OSED INCOME AS CONTEMPLATED IN SECTION 271AAA OF THE INC OME TAX ACT, 1961 AS THE SAID CASH ITSELF WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE BUT BELONGED TO HIS WIFE WHO HAD PASSED AWAY AFTER THE DATE OF SEARCH AND SEIZUR E OPERATION. IT WAS SUBMITTED THAT THE SAME HAD BEEN ELABORATELY EXPLAINED BY THE ASSESSEE IN HIS COMPUT ATION OF ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 6 INCOME AS WELL AS IN HIS REPLY DATED 01/03/2014 FIL ED IN RESPONSE TO THE QUESTIONNAIRE DATED 01/11/2013. IT WAS ALSO SUBMITTED THAT THE AO HAD ALSO DRAWN A WRONG INFERENCE THAT THE CASH HAD NOT BEEN SUBSTANTIATED AND THAT THE LD. AT CIT APPEALS HAD ALSO MISAPPLIED THE PROVISIONS OF THE ACT WHILE CONFIRMING THE PENALTY. 4. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, PLACED RELIANCE ON THE ORDER OF THE LD. CIT ( APPEALS) AND VEHEMENTLY ARGUED THAT THE PENALTY IN THIS CASE WAS RIGHTLY UPHELD AND, THEREFORE, THE SAME SHOULD NOT BE DELETED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PER USED THE MATERIAL ON RECORD. BEFORE PROCEEDING TO E XAMINE THE RIVAL CONTENTIONS, IT WOULD BE WORTHWHILE TO RE PRODUCE SECTION 271AAA. SECTION 271AAA READS AS UNDER: THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHIN G CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY PAYABLE BY HIM A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCL OSED INCOME OF THE SPECIFIED PREVIOUS YEAR. ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 7 (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE: (I) IN THE COURSE OF SEARCH, IN A STATEMENT UNDER S UB SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME' 5.1 THE FACTS OF THE CASE REVEAL THAT THE AMOUNT WA S FOUND DURING THE COURSE OF SEARCH WHICH THE ASSESSEE CLAI MED TO BE HIS WIFES SAVINGS/PIN MONEY. THIS AMOUNT WAS NO T SURRENDERED AT THE TIME OF SEARCH BUT WAS SURRENDER ED SUBSEQUENTLY DURING THE COURSE OF ASSESSMENT PROCEE DINGS BY ASSESSEE SURRENDERING THE SAME IN HIS OWN HANDS IN THE COMPUTATION OF INCOME. THEREFORE, AS PER THE SPECIF IC PROVISIONS OF SECTION 271AAA, THIS AMOUNT DOES NOT SPECIFICALLY FALL UNDER THE DEFINITION OF UNDISCLOS ED INCOME FOUND DURING THE COURSE OF SEARCH. IT IS ALSO NOTEW ORTHY THAT THE ASSESSING OFFICER ACCEPTED THIS SURRENDER WITHOUT ANY QUESTIONS ASKED. EVEN IF FOR THE SAKE OF ARGUME NT, THE SAME IS ACCEPTED AS TO BE CASH FOUND DURING THE COU RSE OF ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 8 SEARCH, IT IS UNDISPUTED THAT THE ASSESSEE HAS PAID TAX DUE THEREON. THE ONLY QUESTION THEREAFTER REMAINING IS WHETHER THE SAME WAS SUBSTANTIATED BY THE ASSESSEE OR NOT. THE ASSESSEE HAS ALREADY EXPLAINED THE SOURCE THAT IS SAVINGS/PIN MONEY OF HIS WIFE AND AS FAR AS THE SUBSTANTIATION IS CONCERNED, IT WOULD BE RELEVANT T O MENTION HERE THAT GIVEN THE FACT THAT IT IS A SEARCH CASE, THE QUESTION OF SPECIFYING AND SUBSTANTIATING THE MANNER IN WHICH T HE UNDISCLOSED INCOME HAS BEEN DERIVED CAN BE SOMEWHAT GENERAL AND OMNIBUS AND NO PRECISE CALCULATIONS OR COMPUTATIONS CAN BE DONE WITH REFERENCE THERETO. THE CUTTACK BENCH OF THE INCOME- TAX APPELLATE TRIBUNAL IN THE CASE OF SRI PRAMOD KUMAR JAIN VS DE PUTY COMMISSIONER OF BARGARH INCOME TAX, CIRCLE 2(1) AND M/S JRC RESOURCES (P) LTD VS. CIT SAMBALPUR IN ITA NOS. 131 , 132 AND 133/CTK/2012 HELD THAT HAVING ACCEPTED THE SURRENDE RED INCOME ON THE BASIS OF RETURNS FILED BY AN ASSESSEE, SATIS FACTION AS TO THE SPECIFYING AND SUBSTANTIATING THE MANNER IN WHICH T HE SAME HAS BEEN EARNED GETS ANSWERED AUTOMATICALLY. IN THIS RE GARD THE FOLLOWING COMMENTS OF THE INCOME-TAX. APPELLATE TRI BUNAL ARE TOPICAL AND RELEVANT: ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 9 'WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT NO DEFINITION COULD BE GIVEN TO THE 'SPECIFIED MANNER' INSOFAR AS THE VERY STATEMENT ON OATH U/S 132(4) SPECIFIES THE MAN NER ON WHICH THE ASSESSEE IS PREPARED TO PAY TAX THEREON. THE INSCRIBING IN THE BOOKS OF ACCOUNT WAS TAKEN CARE O F BY THE ASSESSEE WHEN HE FILED THE RETURNS IN PURSUANCE TO NOTICE U/S 153A ACCOUNTING THE ASSETS. THEREFORE, THE CASE LAW S CITED AT THE BAR CLEARLY INDICATE THAT THE PENALTY IS NOT AU TOMATIC IF ONE OF THE PURPORTED CONDITIONS IS NOT FULFILLED ALTHOU GH ALL THE CONDITIONS HAVE BEEN AGREED TO OF HAVING FULFILLED BY THE ASSESSING OFFICER INSOFAR AS THE TAX AND INTEREST H AS BEEN RECOVERED. PENALTY HAS BEEN LEVIED AFTER THE TAX HA S BEEN RECOVERED THEREFORE ANSWERS THE QUERIES RAISED BY T HE LEARNED DR FOR THAT THE SAID PROVISIONS BECOME REDUNDANT WA S NOT THE INTENTION OF THE LEGISLATION. THE MANNER, DURING TH E SEARCH OPERATION, IS NOTED BY THE SEARCH PARTY WHICH THE A SSESSING OFFICER HAS ACCEDED TO. THEREFORE, FOLLOWING THE DE CISIONS AS RELIED UPON BY THE LEARNED COUNSEL FOR ASSESSEE, WH EREIN THE TRIBUNAL WAS PLEASED TO CONSIDER CANCELLING THE PEN ALTY SO LEVIED ARE ALSO APPLICABLE TO THE ASSESSES CASE BE FORE US INSOFAR AS THERE IS NO PRESCRIBED METHOD TO INDICAT E THE MANNER IN WHICH INCOME WAS GENERATED WHEN THE DEFINITION O F 'UNDISCLOSED INCOME' HAS BEEN DEFINED IN THE ACT IT SELF 'WHEN NO INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED ' EITHER WHOLLY OR PARTLY' WHICH ONUS LAY UPON THE ASSESSEE STOOD D ISCHARGED. 5.2 IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE LEVY OF PENALTY U/S 271 AAA IN THE INSTANT CASE WAS NOT JUSTIFIED AND AS SUCH, WE CANCEL THE PENALTY SO LEVIED U/S 27 1AAA FOR THE YEAR UNDER CONSIDERATION. 6. IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ITA NO. 6643/DEL/2015 ASSESSMENT YEAR 2012-13 10 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 4 TH OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 4 TH OCTOBER, 2017 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR