DCIT, New Delhi V. Sh. Himanshu Verma, Delhi

ITA 6905/DEL/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2334 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N MEENA
• Assessee Lawyers: R N POONIA
• Keywords: Document seized; Principle of natural justice; Accommodation entries; Onus to prove; Revised return; Documents seized
• Section: 143(3); 153A; 201; 27; 132; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL M EMBER ITA NO. 6905/DEL/2015 [A.Y 2012-13] THE D.C.I.T VS. SHRI HIMANSHU VERMA CENTRAL CIRCLE 20 FLAT NO. H 104, FRIENDS CGHS LTD NEW DELHI PLOT NO. 49, I.P. EXTENSION PATPARGANJ, DELHI PAN: AFBPV 8131 K (APPLICANT) ( RESPONDENT) ASSESSEE BY : SHRI R.N. POO NIA, AR DEPARTMENT BY : SHRI S.N. MEENA, SR. DR DATE OF HEARING : 05.12.2019 DATE OF PRONOUNCEMENT : 06.12.2019 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, WITH THIS APPEAL, THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE COMMISSIONER OF INCOME TAX [APPEAL S] - 27, NEW DELHI DATED 28.10.2015 PERTAINING TO ASSESSMENT YEAR 201 2-13. 2 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 76,42,611/- LEVIED U /S 271AAA OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'T HE ACT']. 3. THE ROOTS FOR LEVY OF PENALTY LIE IN THE ASSESSM ENT ORDER DATED 31.03.2014 FRAMED U/S 143(3) R.W.S 153A OF THE ACT. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT S EARCH OPERATION U/S 132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 29.03.2012. THE RETURN OF INCOME ORIGINALLY FILED DECLARED AN INCOME OF RS. 58,38,490/-. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, REVISED RETURN OF INCOME WAS FILED DEC LARING INCOME OF RS. 3.71 CRORES. 5. WHILE FRAMING THE ASSESSMENT ORDER, THE ASSESSIN G OFFICER FORMED A BELIEF THAT THE ASSESSEE WAS INVOLVED IN PROVIDIN G ACCOMMODATION ENTRIES, AND ACCORDINGLY, RETURNED INCOME WAS ASSES SED AT RS. 5,99,94,55,170/-. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND THE LD. CIT(A) DISPOSED OF THE APPEAL VIDE ORDER DATED 26.1 2.2014. QUANTUM 3 ADDITIONS MADE BY THE ASSESSING OFFICER WERE DELETE D AND CONSIDERING THAT THE ASSESSEE WAS INVOLVED IN PROVIDING ACCOMMO DATION ENTRIES, COMMISSION INCOME WAS ESTIMATED AT RS. 5,06,19,100/ - AND FURTHER ADDITION IN RESPECT OF PAY ORDERS AMOUNTING TO RS. 2,64,68,506/- AND CASH OF RS. 50 LAKHS WERE ALSO ADDED. 7. AFTER GIVING APPEAL EFFECT, THE ASSESSING OFFICE R COMPUTED THE INCOME AT RS. 8,22,64,607/-AND WORKED OUT UNDISCLOS ED INCOME AT RS. 7,64,26,117/- AND PROPOSED TO LEVY PENALTY U/S 271A AA OF THE ACT @ 10% TAX ON UNDISCLOSED INCOME AND COMPUTED THE PENA LTY AT RS. 76,42,611/-. 8. DURING THE COURSE OF PENALTY PROCEEDINGS, THE AS SESSEE STRONGLY CONTENDED THAT THE PROVISIONS OF SECTION 271AAA OF THE ACT DO NOT APPLY ON THE FACTS OF THE CASE FOR THE SIMPLE REASO N THAT THE COMMISSION INCOME HAS BEEN ESTIMATED BY THE APPELLA TE AUTHORITY. IT WAS FURTHER CONTENDED THAT THE PROPOSED PENALTY IS SOLELY FOR THE REASON THAT CERTAIN AMOUNT HAS BEEN CONFIRMED BY TH E LD. CIT(A). IT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT NO SPECIFIC SEIZED DOCUMENTS OR STATEMENTS OF THE ASSESSEE HAVE BEEN POINTED OUT, WHICH MAY SUGGEST THAT THE AMOUNT ON WHICH PEN ALTY IS PROPOSED 4 TO BE LEVIED WAS UNDISCLOSED INCOME WITHIN THE MEAN ING OF SECTION 271AAA OF THE ACT. 9. THE ASSESSING OFFICER DISMISSED THE CONTENTIONS OF THE ASSESSEE BY HOLDING AS UNDER: IN THE PRESENT CASE, THE ASSESSEE HAS FAILED ALL TH E THREE CONDITIONS AS MENTIONED ABOVE. THE ASSESSEE HAS NOT SPECIFY THE MANNER IN INCOME HAS BEEN DERIVED AND HAS NOT PAID TAXES AN INTEREST THEREON IN RESPECT OF UNDISCLOSED INCOME. FURTHER, THE CASE LAWS AS RELIED UPON BY THE ASSESSEE ARE ALSO N OT A HELP AS THE FACTS AND CIRCUMSTANCES OF THOSE CASES ARE ENTIRELY DIFFERENT THAT OF ASSESSEES CASE. THEREFORE, I HELD THE ASSESSEE AS LIABLE TO PENALIZE U/S 271AAA OF THE ACT AND A PENALTY OF RS. 76,42,611 /- AS COMPUTED BELOW IS IMPOSED UPON THE ASSESSEE. AMOUNT OF PENALTY IS COMPUTED AS UNDER: UNDISCLOSED INCOME PENALTY COMPUTED @10% PENALTY IMPOSED PENALTY LEVIED @ 10% OF TAX ON UNDISCLOSED INCOME 10. PENALTY SO LEVIED WAS AGITATED BEFORE THE LD. C IT(A) AND ONCE AGAIN THE ASSESSEE POINTED OUT THAT THE PROVISIONS OF SECTION 271AAA OF THE ACT DO NOT APPLY ON THE FACTS OF THE CASE. IT WAS BROUGHT TO THE RS.7,64,26,117/ - RS. 76,42,611/- RS. 76,42,6117- RS. 76,42,611/ - 5 NOTICE OF THE LD. CIT(A) THAT PENALTY U/S 271AAA OF THE ACT IS ATTRACTED WHEN SEARCH IS CONDUCTED AND THE ASSESSEE IS FOUND TO BE HAVING UNDISCLOSED INCOME FOR SPECIFIED YEARS. 11. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, TH E LD. CIT(A) HELD AS UNDER: I HAVE GONE THROUGH THE SUBMISSIONS AND THE ORDER OF THE ASSESSING OFFICER AND ALL THE RELEVANT FACTS AND CI RCUMSTANCES OF THE CASE. I DELETE THE PENALTY U/S 271AAA FOR TH E FOLLOWING MAIN REASONS; 1. THE AO HAS PRIMARILY LEVIED THE PENALTY U/S 271 AA A AS THE CIT(A) HAS CONFIRMED ADDITIONS TO A CERTAIN EXT ENT. 2. THE AO HAS NOT EXAMINED THE MATTER TO DETERMINE WHETHER THE ADDITIONS CONFIRMED CAN BE CALLED TO BE UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 27 1 AAA OF THE ACT. 3. LOOKING AT THE FACTS AND CIRCUMSTANCES OF THE MATTE R I DO NOT CONSIDER THAT THE ADDITIONS CONFIRMED CAN BE TREATED AS UNDISCLOSED INCOME AS DEFINED IN SECTI ON 271 AAA. 4. ADDITIONS HAVE BEEN CONFIRMED ONLY ON ESTIMATED BAS IS OR FOR THE INABILITY OF THE APPELLANT TO PRODUCE AU DITED ACCOUNTS OF CERTAIN ENTITIES. CIT(A) HAD SPECIFICAL LY NOTED IN THE QUANTUM PROCEEDINGS THAT THE PRINCIPLE S OF NATURAL JUSTICE WERE NOT FOLLOWED. 12. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6 13. THE LD. DR, THROUGH HIS WRITTEN SUBMISSIONS, ON CE AGAIN REITERATED THE FINDINGS OF THE ASSESSING OFFICER AN D STRONGLY CONTENDED THAT THE LD. CIT(A) HAS GROSSLY ERRED IN DELETING T HE PENALTY. STRONG RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF PCIT VS. RITU SINGAL 92 TAXMANN.COM 224 AND ANAND SANCHETI ITA NO. 305/N AG/2015. 14. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE RE ITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 15. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW AND HAVE ALSO CONSIDERED THE JUDI CIAL DECISIONS RELIED UPON BY THE LD. REPRESENTATIVES. A BARE PERUSAL OF THE PENALTY ORDER SHOWS THAT THE ASSESSING OFFICER HAS LEVIED THE PEN ALTY MECHANICALLY BY TAKING DIFFERENCE IN THE RETURN OF INCOME AND ASSES SED INCOME. ENTIRE PENALTY ORDER IS DEVOID OF ANY SPECIFIC FINDINGS IN RESPECT OF ANY SPECIFIC SEIZED MATERIAL OR UNDISCLOSED INCOME DETE CTED AS A RESULT OF SEARCH. IN OUR UNDERSTANDING OF THE LAW, IT WAS IN CUMBENT UPON THE ASSESSING OFFICER TO FIRST ESTABLISH THAT THERE WAS UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAA OF THE ACT BEF ORE ANY PENALTY UNDER THE SAID SECTION COULD BE LEVIED. 7 16. SECTION 271AAA READS AS UNDER: 271AAA (1) THE ASSESSING OFFICER MAY, NOTWITHSTAND ING ANYTHING CONTAINED ANY OTHER PROVISIONS OF THIS ACT , DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UND ER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007 BUT BEFORE THE I S ' DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY O F PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMP UTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF T HE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB- SECTION OF ADMITS THE UNDISCLOSED INCOME AND SPECIF IES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDI SCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WILL INTEREST, IF AN Y, IN RESPECT OF THE UNDISCLOSED INCOME. 3. NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C ) OF SUB- SECTION (1) SHALL BE IMPOSED UPON THE ASSESSEE IN R ESPECT OF 8 THE UNDISCLOSED INCOME REFERRED TO IN SUBSECTION ( 1). 4. THE PROVISIONS OF SECTION 274AND 275SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION - FOR THE PURPOSES OF THIS SECTION, - (I) UNDISCLOSED INCOME MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESEN TED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEW ELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE PRINCIPAL C HIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COM MISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESEN TED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN 9 CONDUCTED ; (EMPHASIS SUPPLIED) (A) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR- (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FLING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 FOR SUCH NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (I) IN WHICH SEARCH WAS CONDUCTED. 17. IT CAN BE SEEN FROM THE AFORESAID PROVISIONS TH AT UNDISCLOSED INCOME HAS BEEN DEFINED AND IS MEANT TO BE ANY INCO ME EITHER WHOLLY OR PARTLY, REPRESENTED BY ANY MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH IS NOT RECORDED ON OR BEFORE THE DATE OF SEAR CH OR NOT DISCLOSED BY THE PCIT BEFORE THE DATE OF SEARCH OR ANY INCOME REPRESENTED EITHER WHOLLY OR PARTLY BY ANY ENTRY IN RESPECT OF ANY EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER D OCUMENTS. 10 18. AT THE VERY OUTSET, THE THIRD LIMB HAS TO BE EX CLUDED BECAUSE NO EXPENSE WAS FOUND RECORDED IN THE BOOKS OF ACCOUNT WHICH REPRESENTS ANY INCOME OF THE SPECIFIED PREVIOUS YEAR. 19. AS MENTIONED ELSEWHERE, WHILE LEVYING THE PENAL TY, THE ASSESSING OFFICER HAS NOWHERE MENTIONED SPECIFICALLY ANY UNDI SCLOSED INCOME WITHIN THE MEANING OF UNDISCLOSED INCOME GIVEN U/S 271AAA OF THE ACT. ON THE CONTRARY, THE FACTS AVAILABLE ON RECORD INDI SPUTABLY ESTABLISH THAT THE QUANTUM OF INCOME CONFIRMED BY THE LD. CIT (A) WAS PURELY ON ESTIMATE BASIS AND IN OUR HUMBLE OPINION, ESTIMATED INCOME CANNOT BE SAID TO BE UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAA OF THE ACT. 20. IN THE CASE OF DURGA KAMAL RICE MILLS 265 ITR 2 5, THE HON'BLE HIGH COURT OF CALCUTTA HAS HELD AS UNDER: WHEN TWO VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE CAN BE DRAWN, IN A PENALTY PROCE EDING, PENALTY CANNOT BE IMPOSED.IN QUANTUM PROCEEDINGS, A PARTICULAR PROVISION MIGHT BE ATTRACTED FOR ADDITIO N TO THE INCOME OF THE ASSESSEE. BUT WHEN TI COMES TO THE Q UESTION OF IMPOSITION OF PENALTY, THEN INDEPENDENT OF THE F INDING 11 ARRIVED AT IN THE QUANTUM PROCEEDINGS THE AUTHORITY HAS TO FIND CONCLUSIVELY THAT EH ASSESSEE OWNS THE CONCEAL ED AMOUNT. 21. IN THE LIGHT OF THE AFOREMENTIONED DECISION OF THE HON'BLE CALCUTTA HIGH COURT, WE ARE OF THE CONSIDERED VIEW THAT THE BURDEN OF PROOF IN THE PENALTY PROCEEDINGS IS INDEPENDENT AND LARGER THAN IN THE ASSESSMENT PROCEEDINGS AND THE ASSESSMENT PROCEEDIN GS AND PENALTY PROCEEDINGS ARE DIFFERENT. FINDINGS IN THE ASSESSME NT PROCEEDINGS ARE NOT SUFFICIENT TO IMPOSE PENALTY. FURTHER, PENALTY CANNOT BE IMPOSED WHEN ASSESSMENT HAS BEEN ENHANCED MERELY ON ESTIMAT ES. CONSIDERING THE FACTS OF THE CASE IN TOTALITY, WE DO NOT FIND A NY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). 22. BEFORE PARTING, THE TWO DECISIONS RELIED UPON B Y THE LD. DR ARE MISPLACED IN AS MUCH AS IN THE CASE OF RITU SINGAL [SUPRA], LEVY OF PENALTY WAS UPHELD BECAUSE THE ASSESSEE DID NOT SPE CIFY IN SEARCH PROCEEDINGS AS TO HOW SHE DERIVED UNDISCLOSED INCOM E AND UNDER WHAT HEAD IT FELL AND IN THE CASE OF ANAND SANCHETI, THE TRIBUNAL UPHELD THE LEVY OF PENALTY ON THE GROUND THAT THE ASSESSEE HAD FAILED TO SPECIFY THE MANNER IN WHICH THE SAID INCOME HAD BEEN DERIVE D. FACTS OF THE 12 CASE IN HAND AS MENTIONED ELSEWHERE, DO NOT FIT IN THE FACTS OF THE DECISIONS RELIED UPON BY THE LD. DR. 23. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 6905/DEL/2015 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.12. 2019. SD/- SD/- [ SUCHITRA KAMBLE ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06 TH DECEMBER, 2019 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 13 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER