DCIT, New Delhi V. Sh. M.L. Sehajpal, Chandigarh

ITA 6808/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4067 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 17-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Revised return

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH E , NEW DELHI BEFORE : SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 6808/DEL./2014 ASSESSMENT YEAR: 2010 - 11 D.C.I.T., CENTRAL CIRCLE - 29, NEW DELHI. (APPELLANT) VS. M.L. SEHAJPAL, SCO 1042 - 43, SECTOR 22 - B, CHANDIGARH. PAN - AFDPS0851D. (RESPONDENT) APPELLANT BY MS. EKTA JAIN, SR. DR RESPONDENT BY NONE ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 13.08.2014 OF LD. CIT(A) - XXXIII, NEW DELHI FOR THE ASSESSMENT YEAR 2010 - 11 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS. 17,50,000/ - LEVIED BY AO WITHOUT APPRECIATING THE FACT THAT SURRENDER OF RS. 1,75,00,000/ - PURPORTEDLY AS UNDISCLOSED INCOME WAS MADE TO COVER UP ALL THE UNACCOUNTED EXPENSES, INVESTMENTS ETC. AND ASSESSEE HAS FAILED TO SUBSTANTIATE OR THROW ANY LIGHT AS TO THE MANNER IN WHICH SUCH INCOME WAS DERIVED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS. 17,50,000/ - WITHOUT APPRECIATING THE FACT THAT CONDITIONS PRESCRIBED UNDER SUB - SECTION (2) OF SECTION 271AAA DATE OF HEARING 21.09.2017 DATE OF PRONOUNCEMENT 17 .10.2017 ITA NO. 6808/DEL/2014 2 HAVE TO BE CUMULATIVELY SATISFIED FOR GRANTING IMMUNITY FROM THE PENAL PROVISIONS. 3. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 2. BY WAY OF ABOVE GROUNDS OF APPEAL, THE REVENUE HAS CHALLENGED THE DELETION OF PENALTY IMPOSED AGAINST THE ASSESSEE U/ S. 271AAA OF THE ACT. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT IN THE CASE OF ASSESSEE WAS COMPLETED 153A/143(3) OF THE ACT AT A TOTAL INCOME OF RS.2,46,41,303/ - , AS RETURNED BY THE ASSESSEE. AS PER AO, THE ASSESSEE HAD DISCLOSED AN ADDITIONAL I NCOME OF RS.1,75,00,000/ - , BUT THE ASSESSEE DID NOT SPECIFY THE MANNER IN WHICH THE SAID ADDITIONAL INCOME HAD BEEN DERIVED. THE AO, THEREFORE, BEING NOT SATISFIED WITH THE DETAILED SUBMISSIONS OF THE ASSESSEE, IMPOSED A PENALTY OF RS.17,50,000/ - U/S. 271 AAA OF THE ACT REPRESENTING TO 10% OF THE UNDISCLOSED INCOME SHOWN AS ADDITIONAL INCOME IN THE RETURN OF INCOME. THE FIRST APPELLATE AUTHORITY DELETED THE PENALTY VIDE IMPUGNED ORDER OBSERVING AS UNDER : 3.3 DECISION: - I HAVE PERUSED THE PENALTY ORDER, WRITTEN SUBMISSION AND ARGUMENTS OF LD. AR. THE LD. ASSESSING OFFICER HAS LEVIED PENALTY U/S 271AAA ON THE SOLE GROUND THAT DURING THE SWORN STATEMENT RECORDED DURING THE SEARCH AND SEIZURE OPERATION, THE APPELLANT HAS NO WHERE MENTIONED ABOUT MODE AND MANNER IN WHICH SUCH INCOME WAS DERIVED. THE LD. AR HAS ARGUED THAT QUESTION WAS NEVER ASKED DURING THE RECORDING OF STATEMENT AS TO HOW UNDISCLOSED WAS EARNED I.E. MANNER AND ITA NO. 6808/DEL/2014 3 MODE OF EARNING SUCH DISCLOSED INCOME. LD. AR ARGUED THAT THE APPELLANT HAS PAID TAX ON SUCH UNDISCLOSED INCOME. UNDER THESE CIRCUMSTANCES, THE PENALTY U/S 271AAA IS NOT LEVIABLE. LD. AR RELIED ON FOLLOWING JUDICIAL PRONOUNCEMENTS: - 1. NEERAJ SINGHAL VS. ACIT (2013) 37 TAXMAN.COM (DELHI - TRIB.) 2. ACIT VS. A.N. ANNAMALAISAMY HUF 38 TAXMAN.COM 440(CHENNAI - TRIB) I HAVE PERUSED THESE DECISIONS . RELEVANT PORTION OF THE JUDGMENT IS REPRODUCED AS UNDER : - A) NEERAJ SINGHAL VS. AC I T (2013) 37 TAXMANN.COM 189 (DELHI - TRIB.) ' 16 . IN VIEW OF ABOVE FACTS OF THE PRESENT CA SE WHEREFROM IT IS EVIDENT THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE AUTHORIZED OFFICER OF THE DEPARTMENT HAD NOT RAISED ANY SPECIFIC QUERY REGARDING THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ON THE CONTRARY THE ASSESSEE HAS TR IED TO EXPLAIN THE EARNING OF THE UNDISCLOSED INCOME IN QUESTION IN ITS REPLY DURING T HE COURSE OF RECORDING OF HIS STATEMENT U/S 132(4) OF THE ACT AND THEREAFTER. WE THUS RESPECTFULLY FOLLOWING THE RATIO OF ABOVE CITED DECISIONS OF HON BLE ALLAHABAD HIGH COURT AND HON'BLE GUJARAT HIGH COURT HOLD THAT IN ABSENCE OF QUERY RAISED BY THE AUTHORIZED OFFICER DURING THE COURSE OF RECORDING OF STATEMENT U/S 132(4) ABOUT THE MAN N ER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT U/S 271AAA OF THE ACT SPE CIALLY WHEN THE OFFERED UNDISCLOSED INCOME HAS BEEN ACCEPTED AND DUE TAX THEREON HAS BEEN PAID BY THE ASSESSEE. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORIZES BELOW IN THIS REGARD DIRECT THE AO TO DELETE THE PENALTY OF RS. 12,5 0,000 / - LEVIED U/S 271A AA OF THE ACT. THE GROUND IS ACCORDINGLY ALLOWED . ' B) ACIT VS. A.N. ANNAMALAISAMY HUF (2013) 38 TAXMANN.COM 440 (CHENNAI TRIB.) ''WE FIND THAT THE AO WAS CARRIED AWAY BY THE ORIGINAL RETURN FILED BY THE ASSESSEE, WHEREIN ORIGINALLY THE INCOME ADMITTED IN THE COURSE OF SEARCH WAS NOT RETURNED BY IT. BUT THE FACT IS THAT THE ASSESSEE HAD FILED A REVISED RETURN BEFORE COMPLETING THE ITA NO. 6808/DEL/2014 4 A SSESSMENT. WHEN THAT IT THE CASE, THE FIRST RETURN FILED BY THE ASSESSEE IS NON EST. THE ONLY VALID RETURN, THE AMOUNT ADMITTED BY THE ASSESSEE AT THE TIME OF SEARCH WAS OFFERED FOR TAXATION. THE ASSESSEE AT THE TIME OF SEARCH WAS OFFERED FOR TAXATION. THE ASSESSEE HAS PAID THE TAX: HE HAS PAID THE INTEREST. HE HAS NOT PREFERRED ANY QUANTUM APPEAL HE HAS ALSO EXPLAINED ABOUT THE BUSINESS AND STATED THAT THE JEWELLERY WAS ACQUIRED OVER A PERIOD OF TIME. WHEN ALL THE PIECES ARE PUT TOGETHER, WE FIND THAT THE CIT(A) IS JUSTIFIED IN HOLDING THAT THERE IS NO GROUND TO LEVY PENALTY IN THE PRESENT CASE UNDER S. 271AAA. ACCORDINGLY, THE ORDER PASSED BY THE C1T(A) IS UPHELD. ' IN PRESENT CASE, ABOVE DECISION IS APPLICABLE AS THERE WAS NO QUESTION U/S 132(4) REGARDIN G MANNER OF EARNING THE UNDISCLOSED. FURTHER, LD. AR ARGUED THAT THERE WAS NO SPECIFIC DOCUMENTS OR UNACCOUNTED ASSETS FOUND, DURING THE SEARCH AND RELIED BY THE ASSESSING OFFICER IN THE PENALTY ORDER IN SUPPORT OF UNDISCLOSED INCOME, THEREFORE, PENALTY U /S 271AAA(1) IS NOT APPLICABLE. I HAVE PERUSED THE PENALTY ORDER, THERE IS NO MENTION OF ANY SPECIFIC UNACCOUNTED ASSET OR DOCUMENTS IN THE PENALTY ORDER. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I HEREBY CANCEL THE PENALTY LEVIED. 3. THE LD. DR REITERATING THE CONTENTS OF PENALTY ORDER, SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CANCELING THE PENALTY IGNORING THE FACT THAT THE CONDITIONS ENVISAGED UNDER SUB - SEC. (2) OF SECTION 271AAA HAD TO BE CUMULATIVELY SATISFIED FOR GRAN TING IMMUNITY FROM THE PENAL PROVISIONS. ON THE OTHER HAND, THE LD. AR RELIED ON THE IMPUGNED ORDER AND THE CASE LAWS CITED BY THE LD. CIT(A). BEFORE US, THE LD. AR ALSO RELIED ON THE DECISION OF CO - ORDINATE BENCH IN THE CASE OF ACIT VS. EMIRATES TECHNOLOG IES PVT. LTD. (ITA NO. 476/DEL/2014 ORDER DATED 28.10.2016), WHICH STOOD CONFIRMED BY ITA NO. 6808/DEL/2014 5 HON BLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 18.07.2017 IN ITA NO. 400/2017 . 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE DECISION REACHED BY THE LD. CIT(A). IT IS NOT IN DISPUTE THAT THE STATEMENTS RECORDED AT THE TIME OF SEARCH DO NOT DEPICT ANY QUERY RAISED BY THE SEARCH PARTY AB OUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED BY THE ASSESSEE . IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS DEPOSITED DUE TAX ON THE ADDITIONAL INCOME SHOWN IN THE RETURN OF INCOME AND THAT THE ADDITIONAL INCOME SHOWN BY THE ASSESSEE S TANDS ACCEPTED BY THE DEPARTMENT. IT IS ALSO A FACT THAT THE ASSESSEE DID NOT SURRENDER ANY UNDISCLOSED INCOME IN THE STATEMENTS RECORDED U/S. 132(4) OF THE ACT, BUT RETURNED THE ADDITIONAL INCOME WHILE FILING THE RETURN OF INCOME WHICH STOOD ACCEPTED BY T HE DEPARTMENT. IN PRESENCE OF ALL THESE FACTS, ATTENDING TO THE PRESENT CASE, THE DECISIONS RELIED BY THE LD. CIT(A) IN THE CASE OF NEERAJ SINGHAL VS. ACIT (SUPRA) AND ACIT VS. A.N. ANNAMALAISAMY HUF (SUPRA) ARE FOUND SQUARELY APPLICABLE TO THE PRESENT CAS E. THE CO - ORDINATE BENCH IN THE CASE OF ACIT VS. EMIRATES TECHNOLOGIES PVT. LTD. (SUPRA) WHICH STANDS AFFIRMED BY HON BLE JURISDICTIONAL HIGH COURT, ON THE IDENTICAL ISSUE OF PENALTY HAS ALSO DELETED THE PENALTY RELYING ON THE AFORESAID DECISION IN THE CAS E OF ITA NO. 6808/DEL/2014 6 NEERAJ SINGHAL (SUPRA). NO COUNTER CASE HAS BEEN PUT FORTH BEFORE US ON BEHALF OF THE REVENUE TO DISCARD THE FINDINGS REACHED BY THE LD. CIT(A). WE, ACCORDINGLY, DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE IMPUGNED ORDER. AS A RESULT, THE APPEAL OF THE REVENUE, BEING DEVOID OF MERITS, DESERVES TO FAIL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.10.2017 . SD/ - SD/ - ( BHAVNESH SAINI ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17.10.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI