DCIT CEN CIR 1, MUMBAI V. MEGHRAJ J SHANKLESHA, MUMBAI

ITA 6780/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8867 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 6780/MUM/2010 (ASSESSMENT YEAR: 2007-08) DCIT, CENTRAL CIRCLE-1 SHRI MEGHRAJ H. SHANKLESHA THANE 201, 2ND FLOOR, MUTHA HOUSE VS. OPP. WELCOME HOTEL, SHIVAJI CHOWK KALYAN (W) 421301 PAN - ADRPS 0271 P APPELLANT RESPONDENT APPELLANT BY: SHRI MOHIT JAIN RESPONDENT BY: SHRI PIYUSH CHHAJED DATE OF HEARING: 20.09.2012 DATE OF PRONOUNCEMENT: 20.09.2012 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE REVE NUE AND IT PERTAINS TO A.Y. 2007-08. 2. PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C), H AVING BEEN CANCELLED BY THE CIT(A), THE REVENUE IS IN APPEAL B EFORE US. THE FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE THAT THE A SSESSEES BUSINESS PREMISES AND RESIDENTIAL PREMISES WERE SURVEYED UND ER SECTION 133A AS WELL AS SEARCH WAS ALSO UNDERTAKEN ON 07.12.2006 WHEREIN JEWELLERY HAVING NET WEIGHT OF 727.450 GMS, VALUED AT ` 6,06,068/- WAS FOUND. FURTHER JEWELLERY WORTH ABOUT ` 12,30,383/- WAS ALSO FOUND IN LOCKER NO. 324 OF SAN GLI BANK, KALYAN BRANCH. DURING THE COURSE OF SEARCH PROCEEDI NGS THE ASSESSEE SUBMITTED THAT OUT OF THE JEWELLERY FOUND, ABOUT 50 0 GMS MUST BE THE OLD JEWELLERY AVAILABLE WITH HIS WIFE AND JEWELLERY HAV ING NET WEIGHT OF 493.770 BELONG TO SMT. CHANDU M. CHAJED, DAUGHTER OF THE AS SESSEE. IT WAS FURTHER STATED THAT OUT OF THE TOTAL JEWELLERY OF 1716.080 GMS, ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF ACQUISITION OF 1216.80 GMS AND HENCE HE OFFERED THE ITA NO. 6780/MUM/2010 SHRI MEGHRAJ H. SHANKLESHA 2 VALUE OF THE SAID JEWELLERY AS UNEXPLAINED INCOME. ACCORDINGLY THE ASSESSMENT WAS COMPLETED. THEREAFTER PENALTY PROCEE DINGS WERE INITIATED BY THE AO. 3. THE ASSESSEE CLAIMED IMMUNITY FROM PENALTY ON THE G ROUND THAT THE ASSESSEE OFFERED THE UNDISCLOSED INCOME AT THE TIME OF SEARCH PROCEEDINGS AND HENCE PENALTY IS NOT LEVIABLE IN VIEW OF EXPLAN ATION 5 TO SECTION 271(1)(C) OF THE ACT. 4. THE AO OBSERVED THAT AT THE TIME OF MAKING DECLARAT ION UNDER SECTION 132(4), THOUGH THE TIME FOR FILING RETURN OF INCOME FOR A.Y. 2007-08 WAS AVAILABLE, APPARENTLY THE INTENTION OF THE ASSESSEE WAS NOT TO DISCLOSE THE UNACCOUNTED INVESTMENT VOLUNTARILY. FURTHER, THE AS SESSEE HAS DISCLOSED THIS ADDITIONAL INCOME ONLY AFTER THE SEARCH ACTION WAS CONDUCTED THAT TOO WITH REGARD TO THE UNEXPLAINED JEWELLERY, WHICH WAS NOT RECORDED IN HIS REGULAR BOOKS OF ACCOUNT. THUS, BUT FOR THE SEARCH ACTION THIS UNACCOUNTED JEWELLERY WOULD NOT HAVE COME TO LIGHT. THEREFORE, IT IS ADMITTEDLY CONCEALED INCOME OF THE ASSESSEE. 5. AGGRIEVED ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE ADDITIONAL INCOME WAS OFFERED TO TAX UNDER SECTION 132(4) OF T HE ACT SO THAT THE ASSESSEE IS ENTITLED TO IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE ITAT H BENCH MUMBAI IN THE CASE OF VINOD K. BHAGAT VS. ACIT 118 ITD 574 IN SUPPORT OF HIS CONTENTION THAT IF AN INCOME IS ADMITTED DURING THE SEARCH AND TAXES ALONGWITH INTEREST WERE PAID, ASSESSEE WOULD BE ENT ITLED TO IMMUNITY AS PROVIDED BY EXPLANATION 5 TO SECTION 271(1)(C). 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) CANCELLED THE PENALTY LEVIED BY THE AO. 7. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. THE CASE OF THE REVENUE IS THAT MERE DISCLOSURE OF UNEXPLAINED INVESTMENT IS N OT SUFFICIENT TO CLAIM IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C) O F THE ACT. IT IS THE DUTY OF THE ASSESSEE TO DISCLOSE THE MANNER IN WHICH INC OMES DISCLOSED IS EARNED BY HIM, WHICH IS APPARENTLY NOT STATED IN THE INSTA NT CASE. THE LEARNED D.R. ITA NO. 6780/MUM/2010 SHRI MEGHRAJ H. SHANKLESHA 3 SUBMITTED THAT EXCEPT OFFERING THE INCOME AS UNDISC LOSED INVESTMENT ASSESSEE HAS NOT STATED AS TO WHAT WAS THE SOURCE O F THE UNEXPLAINED INVESTMENT AND HENCE PENALTY IS LEVIABLE IN THE INS TANT CASE. 8. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT IN RESPONSE TO QUESTION NO. 11 IN THE STATEMEN T TAKEN UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE CATEGORICALLY STATE D THAT THE JEWELLERY WEIGHING 1216.80 GMS AND THE VALUE THEREOF IS DISCL OSED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERA TION AND HE WAS PREPARED TO PAY THE TAXES THEREON. IT IS NOT IN DIS PUTE THAT THE ASSESSEE HAS PAID THE TAXES. HE HAS ALSO RELIED UPON THE DECISIO N OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH (2008) 299 ITR 305 IN SUPPORT OF HIS CONTENTION THAT EVEN IF THE STATEMEN T GIVEN UNDER SECTION 132(4) OF THE ACT DOES NOT SPECIFY THE MANNER IN WH ICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAXES THEREO N WERE PAID, IT WOULD AMOUNT TO SUBSTANTIAL COMPLIANCE IN WHICH EVENT THE ASSESSEE IS ENTITLED TO IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C) O F THE ACT. THE HON'BLE GUJARAT HIGH COURT HELD, IN PARA 15 THEREOF, AS UND ER: - 15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER S. 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFI CE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORI ZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISIONS OF EXPLN. 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE ST ATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, T HE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENT S IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAH ABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA). SECONDLY, CONSID ERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN AS SESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE P OINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKI NG STATEMENT UNDER S. 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNA L AS WELL AS ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBST ANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UN DER EXCEPTION NO. 2 IN EXPLN. 5 IS COMMENDABLE. ITA NO. 6780/MUM/2010 SHRI MEGHRAJ H. SHANKLESHA 4 9. ADMITTEDLY IN THE INSTANT CASE THE SEARCH PARTY DI D NOT SPECIFICALLY ASK FOR THE SOURCE FROM WHICH THE INCOME IS OFFERED TO TAX. SIMILARLY IN THE CASE OF VERENDRA M. SHANKLESHA (SON OF THE ASSESSEE ) ITAT F BENCH MUMBAI (ITA NO. 6781/MUM/2010 DATED 21 ST MARCH, 2012) CONSIDERED IDENTICAL ISSUE WHEREIN IT WAS HELD THAT IT IS NOT NECESSARY TO EXPLAIN THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND IT WOULD BE SUFFICIENT COMPLIANCE IF INCOME IS DECLARED VOLUNTARILY DURING THE SEARCH PROCEEDINGS AND TAXES ARE PAID THEREON TO CLAIM IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. HAVING REGARD TO THE FACTS OF THE CASE AND IN THE LIGHT OF THE DECISION CITED SUPRA WE ARE OF THE OPINION THAT THE ORDER PA SSED BY THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. THE LEARNED D.R. WAS UNABLE TO PLACE ANY CONTRARY DECISION ON THE ISSUE. UNDER THE CIRCUMSTA NCES WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER 2012. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 20 TH SEPTEMBER 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 1, THANE 4. THE CIT (CENTRAL) PUNE 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.