SURESH SHETH, MUMBAI V. I.T.O.21(2)(4), MUMBAI

ITA 6916/MUM/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5689 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 12-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Search and seizure; Opportunity of being heard; Revised return
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6916/MUM/2012 ASSESSMENT YEAR: 2009 - 10 SURESH SHETH KUSUM NIWAS S.V. ROAD, IRLA, VILE PARLE, MUMBAI - 400057. VS. ITO - 21(2)(4), MUMBAI PAN NO. AJMPS0119H APPELLANT RESPONDENT ASSESSEE BY : MR. SHAILESH PARMAR, AR REVENUE BY : MR. V. JUSTIN, DR DATE OF HEARING : 30/05/2018 DATE OF PRONOUNCEMENT: 11/07/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 32, MUMBAI [IN SHORT CIT(A) ] AND ARISES OUT OF PENALTY LEVIED U/S 271AAA OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE SOLE GROUND RAISED BY THE ASSESSEE /APPELLANT IN THIS APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMED THE PENALTY OF RS.1,35,640/ - LEVIED BY THE AO U/S 271AAA OF THE ACT. SURESH SHETH ITA NO. 6916/MUM/2012 2 3. IN A NUTSHELL, THE FACTS OF THE CASE ARE THAT THE APPELLANT WAS COVERED BY A SEARCH AND SEIZURE ACTION U/S 132 CONDUCT ED ON 27.08.2008 BY THE REVENUE. INITIALLY, THE APPELLANT FILE A RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009 - 10 ON 29.09.2009 DECLARING AN INCOME OF RS.6,72,160/ - . SUBSEQUENTLY, HE FILED A REVISED RETURN ON 25.11.2009 DECLARING AN INCOME OF RS.20,28 ,563/ - . THE REVISED RETURN WAS FILED TO OFFER AN AMOUNT OF RS.13,56,405/ - , BEING JEWELLERY SEIZED DURING THE COURSE OF SEARCH. THE APPELLANT VIDE HIS STATEMENT DATED 15.10.2008 OFFERED AN AMOUNT OF RS.7,00,000/ - ON ACCOUNT OF THE JEWELLERY SEIZED. IN RESPO NSE TO A QUERY RAISED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO EXPLAIN THE SOURCE OF INVESTMENT OF THE SAID JEWELLERY, THE ASSESSEE SUBMITTED THAT THE SOURCE COULD NOT BE EXPLAINED AND THE AMOUNT HA D BEEN OFFERED AS ADDITIONAL INCOME WHILE FILING THE REVISED RETURN ON 25.11.2009. SUBSEQUENTLY, THE AO LEVIED A PENALTY OF RS.1,35,640/ - U/S 271AAA (10% OF ADDITIONAL INCOME OF RS.13,56,405/ - OFFERED BY THE APPELLANT) ON THE REASON THAT THE CASE FALLS WITHIN A PURVIEW OF SECTION 271AAA(1) OF TH E ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT THE INCOME OF RS.13,56,405/ - IS UNDISCLOSED INCOME AND EVEN IN THE STATEMENT U/S 132(4), THE INCOME REPRESENTING THE JEWELLERY OF RS. 13,56,405/ - WAS NOT DISCLOSED AS THE INCOME ACCEPTED U/S 132(4) WAS ONLY FOR RS.7,00,000/ - AND HENCE IT CANNOT BE SAID THAT THE INCOME OF RS.13,56,405/ - WAS FULLY DISCLOSED U/S 132(4). ALSO THE LD. CIT(A) OBSERVED THAT THE MANNER OF ITS EARNING WAS NOT EXP LAINED AND FURTHER NO TAXES WERE PAID BEFORE THE SURESH SHETH ITA NO. 6916/MUM/2012 3 RETURN WAS FILED ON 29.09.2009 ON THE INCOME OF RS.13,56,405/ - NOR THE SAID INCOME WAS OFFERED IN THE ORIGINAL RETURN. THEREFORE, THE LD. CIT(A) UPHELD THE PENALTY OF RS.1,35,640/ - LEVIED BY THE AO U/S 271AA A. 5 . BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THEY HAD WRITTEN A LETTER DATED 26.02.2018 ADDRESSED TO THE CONCERNED AO REQUESTING FOR A COPY OF THE STATEMENT RECORDED ON 15.10.2008 WHEREIN DECLARATION ON ACCOUNT OF JEWELLERY AMOUNTING TO RS .7,00,000/ - WAS MADE U/S 132(4) OF THE ACT, AS THE APPELLANT WAS NOT IN POSSESSION OF THE SAID STATEMENT. HOWEVER, THE AO FAILED TO PROVIDE THE APPELLANT A COPY OF THE SAID STATEMENT. AGAIN THE APPELLANT FILED A REMINDER DATED 21.03.2018 BEFORE THE AO REQU ESTING FOR A COPY OF THE SAID STATEMENT. THE AO COULD NOT PROVIDE THE ASSESSEE A COPY OF THE ABOVE STATEMENT. THE LD. COUNSEL RELIES ON THE DECISION IN ACIT V. EMIRATES TECHNOLOGIES (P) LTD . (2017) 88 TAXMANN.COM 637 (DELHI - TRIB) , ACIT V. SHREENARAYAN SIT ARAM MUNDRA (2017) 83 TAXMANN.COM 231 (AHMEDBAD - TRIB), PRINCIP AL CIT V. MUKESHBHAI RAMANLAL PRAJAPATI (2017 - TIOL - 1455 - HC - AHM - IT) AND MR. ALPESH BHAGWANJI GADA V. ITO (ITA NO.4955/MUM/2015) (ITAT A BENCH, MUMBAI) . IN EMIRATES TECHNOLOGIES (P) LTD. (SUPRA), THE ASSESSEE HAD OFFERED ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND THIS INCOME WAS ACCEPTED BY THE AO IN THE ASSESSMENT ORDER. THEREAFTER, THE AO LEVIED PENALTY U/S 271AAA IN RESPECT OF SURRENDER OF SAID UNEXPLAINED INCOME. THE TRIBUNAL H ELD THAT IN ABSENCE OF THE QUERY ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND ABOUT ITS SUBSTANTIATION, THE AO WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S 271AAA SPECIALLY WHEN SURESH SHETH ITA NO. 6916/MUM/2012 4 THE OFFERED UNDISCLOSED INCOME WAS ACCEPTED BY THE AO AND TA X DUE THEREO N HAD BEEN PAID BY THE ASSESSEE. IN SHREENARAYAN SITARAM MUNDRA (SUPRA), IT HAS BEEN HELD THAT WHERE NO QUESTION WAS ASKED DURING STATEMENT RECORDED U/S 132(4) IN RESPECT OF EARNING OF INCOME DECLARED, REVENUE LATER COULD NOT PLEAD DEFICIENC Y ON PART OF THE ASSESSEE FOR SATISFYING MANNER OF EARNING SAID INCOME; PENALTY U/S 271AAA COULD NOT BE LEVIED. IN MUKESHBHAI RAMANLAL PRAJAPATI (SUPRA), IT HAS BEEN HELD THAT WHEN REVENUE HAS FAILED TO QUESTION THE ASSESSEE WHILE RECORDING HIS STATEMEN T U/S 132(4) AS REGARDS THE MANNER OF DERIVING UNDISCLOSED SUCH INCOME, THE REVENUE CANNOT JUMP TO THE CONSEQUENTIAL REQUIREMENT OF SUBSTANTIATING THE MANNER OF DERIVING SUCH INCOME. IN MR. ALPESH BHAGWANJI GADA (SUPRA), THE ASSESSEE WAS AGGRIEVED B Y THE PENALTY U/S 271(1)(C) LEVIED BY THE AO AND CONTENDED THAT THE AO IGNORED THE FACT THAT ADDITIONAL INCOME WAS SHOWN IN THE REVISED RETURN ON WHICH TAXES AND INTEREST WERE PAID BY HIM. IN THAT CASE A SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY THE DEPARTMEN T IN THE PREMISES OF THE ASSESSEE ON 12.07.2007. THE AO IMPOSED PENALTY ON THE ADDITIONAL INCOME OF RS.6,62,070/ - WHICH WAS AGREED BY THE ASSESSEE AND OFFERED IN THE REVISED RETURN. THE ASSESSEE ALSO PAID TAXES THEREON ALONG WITH INTEREST. THE TRIBUNAL OBS ERVED THAT THE AO COMPLETED THE ASSESSMENT PROCEEDINGS ON THE RETURN OF INCOME FILED BY THE ASSESSEE WITHOUT BRINGING ANY CONCRETE EVIDENCE TO CONCLUDE THAT EITHER THE ASSESSEE CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. SURESH SHETH ITA NO. 6916/MUM/2012 5 IN T HE INSTANT CASE, THE ISSUE BEFORE US, IS THE IMPOSITION OF PENALTY U/S 271AAA WHEREAS IN THE ABOVE CASE THE ISSUE WAS PENALTY U/S 271(1)(C). 6. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER OF THE LD. CIT(A) AND SUBMITS THAT IN THE INSTANT CASE THE IN COME OF RS.13,56,405/ - IN RESPECT OF SEIZED JEWELLERY DISCLOSED IN THE REVISED RETURN IS AN UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 271AAA. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. THE APPELLANT AS THE PROPRIETOR OF M/S NAMRATA PAPER AGENCIES. A SEARCH AND SEIZURE ACTION WAS CARRIED OUT IN THE CASE OF THE ASSESSEE AND OTHERS BY THE DEPARTMENT ON 25.11.2008. THE RESIDENTIAL PREMISES OF THE ASSESSEE WERE COV ERED AND VARIOUS SEIZURES WERE MADE. IN THE WRITTEN SUBMISSION DATED 28.08.2012 FILED BY THE ASSESSEE BEFORE THE LD. CIT(A), IT HAS BEEN STATED THAT SUBSE QUENT TO THE SEARCH PROCEEDINGS, THE ASSESSEE FILED RETURN OF INCOME ON 29.09.2009 DECLARING INCOME OF RS.6,72,160/ - . SUBSEQUENTLY, REVISED RETURN WAS FILED ON 25.11.2009 DECLARING INCOME OF RS.20,28,563/ - . IN THE STATEMENT RECORDED U/S 132(4), THE ASSESSEE HAD OFFERED RS.7,00,000/ - AND NOT THE AMOUNT OF RS.13,56,405/ - IN RESPECT OF JEWELLERY SEIZED DURI NG THE SEARCH. THIS IS CLEARLY EVIDENT FROM THE COMPUTATION OF TAX LIABILITY FOR THE IMPUGNED ASSESSMENT YEAR SIGNED BY THE ASSESSEE. SURESH SHETH ITA NO. 6916/MUM/2012 6 7.1 THE AFORESAID PENALTY OF 10% OF UNDISCLOSED INCOME U/S 271AAA OF THE SPECIFIED PREVIOUS YEAR CAN BE AVOIDED IF T HE FOLLOWING CONDITIONS ARE SATISFIED: (A) IF THE ASSESSEE IN A STATEMENT U/S 132(4) IN THE COURSE OF THE SEARCH, ADMITS THE UNDISCLOSED INCOME. (B) FURTHER, HE SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. (C) HE SUBSTANTIATES THE MANNER IN WHICH SUC H INCOME IS DERIVED. (D) HE PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. IF THE ABOVE FOUR CONDITIONS ARE SATISFIED, PENALTY U/S 271AAA (I.E. 10% OF UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR) CAN BE AVOIDED . 7.2 THE ISSUE HERE IS THE PENALTY LEVIED BY THE AO U/S 271AAA OF THE ACT. AS MENTIONED HEREINBEFORE THE STATEMENT RECORDED U/S 132(4) DURING THE COURSE OF SEARCH IS VITAL IN ARRIVING AT A FINDING WHETHER PENALTY U/S 271AAA IS LEVIABLE OR NOT. AS MENTIONED AT PARA 5 HEREINBEFORE , THOUGH THE ASSESSEE FILED LETTER DATED 26.02.2018 AND 21.03.2018 BEFORE THE AO REQUESTING FOR A COPY OF THE STATEMENT RECORDED ON 15.10.2008 , THE AO FAILED TO PROVIDE A COPY OF THE SAID STATEMENT TO THE ASSESSEE. THERE IS NO DENYING THE FACT THAT STATEMENT RECORDED U/S 132(4) IS CRUCIAL IN DETERMINING THE ISSUE. IN VIEW OF THE ABOVE FACTS, WE SET ASIDE THE ORDER OF THE AO AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER AFTER PROVIDING A COPY OF THE ST ATEMENT RECORDED U/S 132(4) ON 15.10.2008 TO SURESH SHETH ITA NO. 6916/MUM/2012 7 THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. NEEDLESS TO SAY THE AO WOULD GIVE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZING TH E ORDER. 8 . IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/201 8 . SD/ - SD/ - ( JOGINDER SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 11/07/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI