ITO, Jaipur V. ANURAG SHARMA, Jaipur

ITA 72/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5160 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DAGUR
• Assessee Lawyers: G G MUNDRA C A DHK
• Keywords: Bogus Share capital; Capital receipt
• Section: 153A; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 72/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. THE INCOME TAX OFFICER, WARD 1(3), JAIPUR. CUKE VS. SHRI ANURAG SHARMA, A-16, SHRI SAKET, SHASTRI NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AGXPS 0460 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DAGUR (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20.06.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 22/06/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD.CIT(APPEALS)-I, JAIPUR DATED 20.11.2013 PERTAINING TO A.Y. 2007-08. THE SOLITARY GROUND RAISED IN THE APPEAL READS AS UNDER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE PE NALTY OF RS. 30,53,113/- LEVIED U/S 271(1)(C) OF THE I.T. ACT. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSMENT UNDER SECTION 153A READ WITH SECTION 153B/143(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 24.12.2009. WH ILE FRAMING THE ASSESSMENT, THE AO ALSO INITIATED PENALTY PROCEEDINGS UNDER SEC TION 271(1)(C) OF THE ACT ON THE UNDISCLOSED INCOME DECLARED UNDER SECTION 132(4) OF THE ACT DURING THE SEARCH 2 ITA NO. 72/JP/2014 ITO VS. SHRI ANURAG SHARMA PROCEEDINGS. SUBSEQUENTLY PENALTY ORDER UNDER SECTI ON 271(1)(C) READ WITH SECTION 274 OF THE ACT WAS PASSED LEVYING PENALTY OF RS. 3 0,53,113/-. THE ASSESSEE AGGRIEVED BY THIS ORDER, PREFERRED APPEAL BEFORE LD . CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS AND RELYING ON THE HONBLE APEX COU RT JUDGMENT RENDERED IN THE CASE OF ACIT VS. GEBI LAL KANHAIYA LAL (2012) 348 I TR 561 (SC) AND ALSO DECISION OF HONBLE GUJARAT HIGH COURT REPORTED IN 299 ITR 305 (GUJ.) DELETED THE PENALTY. 3. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. D/R ARGUED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE PENALTY. HE SUBMITTED THAT ALTHOUGH THE ASSESSEE H AD OFFERED UNDISCLOSED INCOME FOR TAXATION IN HIS RETURN OF INCOME, HOWEVER, NO T AX WAS DEPOSITED ON THIS INCOME. THE AO OBSERVED THAT THE INCOME WAS DECLARED IN THE RETURN OF INCOME BUT NOT AT THE TIME OF SEARCH. 4.1. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE HAS SUPPORTED THE ORDER OF LD. CIT (A) AND SUBMITTED THAT THE FACTS AS NARRATED IN THE PENALTY ORDER ARE CONTRARY TO RECORD. HE SUBMITTED THAT THE LD. CIT (A) HAS EXAM INED THE ENTIRE FACTS AND HAS GIVEN FINDING OF FACT. 4.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE LD. CIT (A) HAS DECIDED THE ISSUE IN PARA 6.1 TO 6.3 OF HIS ORDER OBSERVING AS UNDER :- 6.1. NOW, COMING TO THE MERITS OF THE CSE, IT IS S EEN THAT IN THE STATEMENT RECORDED U/S 132(4) ON 03.05.2007, THE AP PELLANT, IN RESPONSE TO QUESTION NO. 14 HAD STATED THAT HE WAS SURRENDERING APPROX. RS. 84 LAKHS AS BOGUS SHARE CAPITAL RECEIPT S IN RESPECT OF TWO COMPANIES. FINALLY, WHILE FILING THE RETURN, AN AMO UNT OF RS. 78,50,000/- WAS DECLARED IN THE YEAR UNDER CONSIDER ATION. SIMILARLY, THE MOUNT OF RS. 13,00,000/- OUT OF POCKET DIARY EX PENSES WHICH WAS PART OF THE TOTAL SURRENDER OF RS. 1.40 CRORES MADE IN THE COURSE OF STATEMENT U/S 132(4) WAS ALSO DECLARED IN THIS YEAR . THE TOTAL 3 ITA NO. 72/JP/2014 ITO VS. SHRI ANURAG SHARMA SURRENDER IN THIS YEAR IN THE HANDS OF THE APPELLAN T, THEREFORE, AMOUNTED TO RS. 91,50,000/- WHICH WAS ACCEPTED BY T HE AO IN THE ORDER PASSED U/S 153A/143(3). THE AO WHILE IMPOSING THE PENALTY HAS MENTIONED THIS AMOUNT IN THE FIRST PARA OF THE PENA LTY ORDER BUT WHILE DISCUSSING THE ISSUE IN THE BODY OF THE ORDER, HE H AS MENTIONED THE AMOUNT AS RS. 82,00,000/-. THUS, IT IS APPARENT THA T THE AO IS DISCUSSING SOME OTHER AMOUNT IN PARAS 1 TO 4 (IN HI NDI) OF THE ORDER AS THE CORRECT AMOUNT SHOULD BE RS. 91,50,000/-. 6.2. IT IS FURTHER NOTED THAT DEPOSITING THE TAX BE FORE FILING THE IT RETURN WAS NOT A CONDITION PRECEDENT FOR AVAILING I MMUNITY UNDER EXPLANATION 5 TO SEC. 271(1)(C), WHERE THE SEARCH W AS INITIATED BEFORE 01.06.2007. IT HAS BEEN SO HELD BY THE APEX COURT I N THE CASE OF GEBI LAL (348 ITR 361). IT WAS ALSO HELD BY THE GUJARAT HIGH COURT THAT FOR THE PURPOSES OF EXPLANATION 5 TO SEC. 271(1)(C), IT IS SUFFICIENT IF THE DISCLOSURE IS MADE DURING SEARCH AND TAX IS PAID BE FORE COMPLETION OF ASSESSMENT (299 ITR 305). HENCE, THE FACT THAT TAX WAS NOT DEPOSITED BEFORE FILING OF THE RETURN WOULD NOT AFFECT THE IM MUNITY AVAILABLE TO THE APPELLANT, AS THE SEARCH WAS INITIATED ON 03.05 .2007 IN THIS CASE. IN VIEW OF THESE FACTS, IT IS APPARENT THAT THE CAS E OF THE APPELLANT IS COVERED BY THE PROVISIONS OF EXPLANATION 5 TO SEC. 271(1)(C). THE LEVY OF PENALTY OF THE AMOUNT OF RS. 91,50,000/-, THEREF ORE, APPEARS TO BE UNJUSTIFIED AND IS, ACCORDINGLY, CANCELLED. 6.3. SO FAR AS THE PENALTY LEVIED ON THE REMAINING AMOUNT IS CONCERNED, IT IS SEEN THAT THIS IS WITH REFERENCE T O DISALLOWANCE OF EXPENSES AMOUNTING TO RS. 1,35,150/- ON ACCOUNT OF INTEREST PAID AS THE APPELLANT FAILED TO ESTABLISH NEXUS BETWEEN THI S EXPENDITURE AND THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES . THE CIT (A) REDUCED THIS DISALLOWANCE TO RS. 1,07,000/-. THUS, THIS DISALLOWANCE HAS BEEN MADE ONLY ON THE BASIS OF ESTIMATION. THER E ARE NO FACTS TO SHOW THAT THERE WAS AN ELEMENT OF CONCEALMENT OF PA RTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS IN T HIS RESPECT. HENCE, THE PENALTY LEVIED ON THIS AMOUNT IS ALSO DELETED. THE ABOVE FINDING OF THE LD. CIT (A) IS NOT CONTROV ERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE IN HIS RETURN OF INCOME HAS DECLARED UNDISCLOSED INCOME AS WAS DE CLARED DURING THE COURSE OF SEARCH UNDER SECTION 132(4) OF THE ACT. AS PER EXPL ANATION-5 TO SECTION 271(1)(C) OF THE ACT, IMMUNITY IS PROVIDED TO THE ASSESSEE AGAIN ST LEVYING OF PENALTY SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. ONE OF THE CONDI TIONS IS THAT THE UNDISCLOSED INCOME 4 ITA NO. 72/JP/2014 ITO VS. SHRI ANURAG SHARMA IS REQUIRED TO BE INCORPORATED INTO THE RETURN OF I NCOME TO BE FURNISHED BEFORE EXPIRY OF TIME SPECIFIED IN SECTION 139(1) OF THE ACT AND ALSO SPECIFY IN THE STATEMENT, MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA Y THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH UNDISCLOSED IN COME. WE FIND THAT LD. CIT (A) HAS GIVEN A FINDING OF FACT THAT WHILE FILING THE RETUR N, AN AMOUNT OF RS. 78,50,000/- WAS DECLARED IN THE YEAR UNDER APPEAL. SIMILARLY, THE AMOUNT OF RS. 13,00,000/- OUT OF POCKET DIARY EXPENSES WHICH WAS PART OF THE TOTAL S URRENDER OF RS. 1.40 CRORES MADE IN THE COURSE OF STATEMENT UNDER SECTION 132(4) WAS ALSO DECLARED IN THE YEAR UNDER APPEAL. HENCE THE TOTAL SURRENDER IN THE YEAR IN HA NDS OF THE APPELLANT, AMOUNTED TO RS. 91,50,000/- WHICH WAS ACCEPTED BY THE AO IN THE ORDER PASSED UNDER SECTION 153A/143(3) OF THE ACT. THIS FACT IS NOT CONTROVER TED BY THE REVENUE BY PLACING ANY OTHER MATERIAL ON RECORD. THE LD. CIT (A) HAS RELI ED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF ACIT VS. GEBI LAL KANHAIYA LAL (SUPRA) WHEREIN THE HONBLE APEX COURT HAS HELD AS UNDER :- TO ANSWER THE ABOVE QUESTION, IT WOULD BE WORTHWH ILE TO REPRODUCE EXPLANATION 5 READ WITH CLAUSE (2) OF SECTION 271(1 )(C), WHICH IS QUOTED HEREINBELOW : EXPLANATION 5. WHERE IN THE COURSE OF A SEARCH U NDER SECTION 132, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREI NAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOL LY OR IN PART) HIS INCOME, - (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DA TE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETUR N HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR 5 ITA NO. 72/JP/2014 ITO VS. SHRI ANURAG SHARMA (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER T HE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME, UNLESS, - (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEM ENT UNDER SUB- SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSES SION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURN ISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN CLAUSE (A) OR CLAUSE (B ) OF SUB-SECTION (1) OF SECTION 139, AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX , TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. EXPLANATION 5 IS A DEEMING PROVISION. IT PROVIDES THAT WHERE, IN THE COURSE OF SEARCH UNDER SECTION 132, THE ASSESSEE IS FOUND TO BE THE OWNER OF UNACCOUNTED ASSETS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING WHOLL Y OR PARTLY, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF S EARCH, THEN, IN SUCH A SITUATION, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER T HE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CONCEALED THE PA RTICULARS OF HIS INCOME FOR THE PURPOSES OF IMPOSITION OF PENALTY UN DER SECTION 271(1)(C). THE ONLY EXCEPTION TO SUCH A DEEMING PRO VISION OR TO SUCH A PRESUMPTION OF CONCEALMENT ARE GIVEN IN SUB- CLAUSES (1) AND (2) OF EXPLANATION 5. IN THIS CASE, WE ARE CO NCERNED WITH THE INTERPRETATION OF CLAUSE (2) OF EXPLANATION 5, WHIC H HAS BEEN QUOTED ABOVE. THREE CONDITIONS HAVE GOT TO BE SATIS FIED BY THE ASSESSEE FOR CLAIMING IMMUNITY FROM PAYMENT OF PENA LTY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C). THE FIRST CONDITION WAS THAT THE ASSESSEE MUST MAKE A STATEMENT UNDER S ECTION 132(4) IN THE COURSE OF SEARCH STATING THAT THE UNACCOUNTE D ASSETS AND INCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION D URING THE SEARCH HAVE BEEN ACQUIRED OUT OF HIS INCOME, WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME TO BE FURNISHED B EFORE EXPIRY OF TIME SPECIFIED IN SECTION 139(1). SUCH STATEMENT WA S MADE BY THE KARTA DURING THE SEARCH WHICH CONCLUDED ON AUGUST 1 , 1987. IT IS NOT IN DISPUTE THAT CONDITION NO. 1 WAS FULFILLED. THE SECOND CONDITION FOR AVAILING OF THE IMMUNITY FROM PENALTY UNDER SECTION 271(1)(C) WAS THAT THE ASSESSEE SHOULD SPECIFY, IN HIS STATEMENT 6 ITA NO. 72/JP/2014 ITO VS. SHRI ANURAG SHARMA UNDER SECTION 132(4), THE MANNER IN WHICH SUCH INCO ME STOOD DERIVED. ADMITTEDLY, THE SECOND CONDITION, IN THE P RESENT CASE ALSO STOOD SATISFIED. ACCORDING TO THE DEPARTMENT, THE A SSESSEE WAS NOT ENTITLED TO IMMUNITY UNDER CLAUSE (2) AS HE DID NOT SATISFY THE THIRD CONDITION FOR AVAILING OF THE BENEFIT OF WAIVER OF PENALTY UNDER SECTION 271(1)(C) AS THE ASSESSEE FAILED TO FILE HI S RETURN OF INCOME ON JULY, 31, 1987, AND PAY TAX THEREON PARTICULARLY WHEN THE ASSESSEE CONCEDED ON AUGUST 1, 1987, THAT THERE WAS CONCEALMENT OF INCOME. THE THIRD CONDITION UNDER CLAUSE (2) WA S THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH UNDISCLOSED INCOME. HOWEVER, NO TIM E LIMIT FOR PAYMENT OF SUCH TAX STOOD PRESCRIBED UNDER CLAUSE ( 2). THE ONLY REQUIREMENT STIPULATED IN THE THIRD CONDITION WAS F OR THE ASSESSEE TO PAY TAX TOGETHER WITH INTEREST. IN THE PRESENT CASE, THE THIRD CONDITION ALSO STOOD FULFILLED. THE ASSESSEE HAS PA ID TAX WITH INTEREST UP TO THE DATE OF PAYMENT. THE ONLY CONDIT ION WHICH WAS REQUIRED TO BE FULFILLED FOR GETTING THE IMMUNITY, AFTER THE SEARCH PROCEEDINGS GOT OVER, WAS THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDISCLOS ED INCOME UP TO THE DATE OF PAYMENT. CLAUSE (2) DID NOT PRESCRIBE T HE TIME LIMIT WITHIN WHICH THE ASSESSEE SHOULD PAY TAX ON INCOME DISCLOSED IN THE STATEMENT UNDER SECTION 132(4). RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ONBLE SUPREME COURT, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD. CIT (A), WHIC H IS HEREBY UPHELD. THE GROUND IS REJECTED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 22/06/2016 . SD/- SD/- VH-VKJ-EHUK] ( DQY HKKJR ) ( T.R. MEENA) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 22/06/2016. DAS/ 7 ITA NO. 72/JP/2014 ITO VS. SHRI ANURAG SHARMA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ITO WARD 1(3), JAIPUR. 2. THE RESPONDENT- SHRI ANURAG SHARMA, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 72/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR