HEMANT KUMAR, MUMBAI V. ACIT CEN CIR 18 & 19, MUMBAI

ITA 745/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2672 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 03-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SATHYA MOORTHYDR
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Source of fund
• Section: 143(3); 132

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/745/MUM/2015, /ASSESSMENT YEARS: 2011-12 HEMANT KUMAR A-602, SWARNA BLDG, SECTOR-7, KHARGHAR MUMBAI-400 020. PAN:AFXPK 4638 Q VS. ACIT CENTRAL CIRCLE-18 & 19 AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI N. SATHYA MOORTHY-DR ASSESSEE BY: SHRI RAJESH SHAH / DATE OF HEARING: 19.07.2016 / DATE OF PRONOUNCEMENT: 19.07.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 17/12/2014,OF THE CIT(A )-51,MUMBAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL.AN ACTION U/S. 132 (1) OF THE ACT WA S CARRIED OUT IN THE CASE OF ISPAT INDUSTRIES AND GROUP COMPANIES,PROMOTERS AND EXECUT IVES IN 30/11/2010. THE ASSESSEE,WORKING AS PRESIDENT (LEGAL) OF THE GROUP COMPANIES, WAS ALSO COVERED BY THE SEARCH AND SEIZURE ACTION. DURING THE COURSE OF SEA RCH CASH OF RS.54.97 LAKHS,KEPT INTO BANK LOCKERS STANDING IN THE NAME OF THE ASSESSEE,WAS SE IZED.IN THE ASSESSMENT COMPLETED,U/S. 143(3) OF THE ACT,THE AO BROUGHT TO TAX THE SEIZED CASH AS INCOME FROM UNDISCLOSED SOURCES HOLDING THAT THE ASSESSEE HAD FAILED TO EXPLAIN THE SOURCES OF INCOME OF SEIZED CASH. HE ALSO INITIATED PENALTY PROCEEDINGS U/S. 271AAA OF THE AC T. 2. IN THE COURSE OF PENALTY PROCEEDINGS,BEFORE THE AO, THE ASSESSEE ARGUED THAT CASH SEIZED REPRESENTED HIS PROFESSIONAL INCOME FOR THE YEAR UN DER CONSIDERATION, THAT SAME HAD BEEN KEPT IN THE LOCKER FOR SAFETY PURPOSES. HOWEVER THE AO D ID NOT CONSIDER THE SAID EXPLANATION IS TENABLE. HE HELD THAT NEITHER DURING THE ASSESSMENT NOR DURING THE PENALTY PROCEEDINGS THE ASSESSEE WOULD EXPLAIN THE SOURCES OF SEIZED CASH,T HAT HE HAD FAILED TO SUBSTANTIATE THE SAME, THAT HAD THERE BEEN NO SEARCH INCOME SHOWN BY THE A SSESSEE WOULD HAVE ESCAPED TAXATION. THE AO FURTHER HELD THAT ASSESSEE WAS LIABLE TO PEN ALTY U/S. 271 AAA OF THE ACT. FINALLY, HE IMPOSED PENALTY OF RS.5.49 LAKHS (10% OF RS. 54.97 LAKHS). 745/M/15-HEMANT KUMAR 2 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS CONTENDE D THAT IN THE STATEMENT RECORDED U/S. 132(4),ON 20/12/2010,THE ASSESSEE HAD STATED THAT T HE CASH FOUND IN THE LOCKERS REPRESENTED HIS INCOME,THAT IN RESPONSE TO QUESTION 4 OF THE ST ATEMENT,HE HAD STATED THAT INCOME/CASH WAS FROM HIS PROFESSIONAL KNOWLEDGE AND IT HAD NO CONNE CTION WITH ANY OF THE FUND OF ISPAT GROUP,THAT AT THE TIME OF THE SEARCH PROCEEDINGS TH E ASSESSEE WAS NOT WORKING WITH THE GROUP AS HE HAD LEFT THE JOB AND HAD STARTED HIS LEGAL AC TIVITY.REFERRING TO THE PROVISIONS OF SECTION 271 AAA(II) OF THE ACT,THE ASSESSEE ARGUED THAT PEN ALTY LEVIED BY THE AO SHOULD BE CANCELLED. 3.1 AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,TH E FAA HELD THAT THE ASSESSEE WAS REQUIRED TO FULFILL ALL THE CONDITIONS OF THE SECTI ON 271AAA,THAT HE HAD STATED THAT SEIZED CASH REPRESENTED HIS PROFESSIONAL INCOME,THAT HE HAD FAI LED TO SUBSTANTIATE THE MANNER IN WHICH THE INCOME WAS DERIVED,THAT DURING THE APPELLATE PROCEE DINGS THE ASSESSEE WAS SPECIFICALLY ASKED TO GIVE DETAILS SUCH AS TO WHOM CONSULTANCY/ ADVOCA CY SERVICES WERE PROVIDED AND THE DETAILS OF REMUNERATION RECEIVED, THAT THE ASSESSEE SHOWED HIS INABILITY TO GIVE THE REQUIRED DETAILS, THAT ALL THE CONDITIONS WERE CLEARLY FOR ESCAPING T HE RIGOURS OF PENALTY WHICH HAD BEEN CUMULATIVELY SATISFIED, THAT THE ASSESSEE HAD NOT C OMPLIED WITH ALL THE CONDITIONS AS STIPULATED IN SUBSECTION (2)OF SECTION 271 AAA. FINALLY,HE UPH ELD THE ORDER OF THE AO. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)ARGUED T HAT THE ASSESSEE HAD FULFILLED ALL THE CONDITIONS STIPULATED IN THE SECTION,THAT CASH REPR ESENTED HIS PROFESSIONAL INCOME, THAT HE HAD LEFT THE EMPLOYMENT OF ISPAT FOUR MONTHS BEFORE THE SEIZURE TOOK PLACE, THAT THE ASSESSEE HAD PAID TAXES,THAT WORD SUBSTANTIATE WAS NOT DEFINED IN THE ACT,THAT THE ASSESSEE HAD EXPLAINED THE MANNER IN WHICH INCOME WAS EARNED.HE RELIED UPO N THE CASES OF SITA RAM GUPTA(ITA/1835/ DEL/2013-AY.2009-10,DTD.30.06.2014) ,NIRAT SINGAL(37TAXMANN.COM189) AND CONCRETE DEVELOPERS (34TAXMANN.COM62).DEPARTMEN TAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT CASH OF RS.54. LAKHS WAS SEIZED FROM THE ASSESSEE,THAT H E ADMITTED THAT IT REPRESENTED HIS UNACCOUNTED PROFESSIONAL RECEIPTS,THAT HE HAD PAID DUE TAXES ON THE UNDISCLOSED INCOME,THAT THE FAA HAD CONFIRMED THE PENALTY AS HE WAS OF THE OPINION THAT THE ASSESSEE HAD NOT SUBSTANTIATED THE DISCLOSURE.WE FIND THAT IN THE CA SE OF SITA RAM GUPTA(SUPRA),THE TRIBUNAL HAS HELD AS UNDER : 745/M/15-HEMANT KUMAR 3 ... THERE IS NO SPECIFIC FORMAT/PROCEDURE PRESCRIB ED IN THE ACT FOR SPECIFYING AND SUBSTANTIATING AND UNDISCLOSED INCOME. THE STATEMEN T OF THE ASSESSEE, SPECIFYING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND SUBSTANTIATED, DID NOT FACE ANY REBUTTAL OF REJECTION AT THE HANDS OF THE AO. A S PER THE STATEMENT RECORDED . IT HAD BEEN ADMITTED THAT THE ASSESSEE HAD ENTERED INT O VARIOUS TRANSACTIONS OF SALE AND PURCHASE OF LAND DURING THE CONCERNED PERIOD. THE I NCOME ARISING OUT OF THE SAID TRANSACTIONS WAS DECLARED. THIS INCLUDED THE UNDISC LOSED AMOUNT. LATER, DUE TAXES THEREON WERE ALSO PAID. XXXXXXXX 22. FOR THE ABOVE DISCUSSION, WE HOLD THAT THE ASSE SSEE HAD SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THA T BEING SO, THE CONDITION LAID DOWN BY SECTION 271 AAA (2) (II) HAS BEEN DULY MET. IN THE CASE OF CONCRETE DEVELOPERS (SUPRA) THE TRIB UNAL HAS HELD THAT WHERE THE ASSESSEE HAD DISCLOSED CERTAIN AMOUNT DURING THE COURSE OF SEARC H AND HAD PAID TAXES THEREON, FILED RETURN SHOWING SAID INCOME AS BUSINESS INCOME AND SAME HAD BEEN ACCEPTED BY THE AO UNDER THE HEAD BUSINESS INCOME, PENALTY U/S. 271 AAA WAS NO T LEVIABLE. IN THE CASE OF PRAMOD KUMAR JAIN(33 TAXMANN.COM651), IT HAS BEEN HELD BY THE TRIBUNAL THAT THERE WAS NO PRESCRIBED METHOD TO INDICATE THE MANNER IN WHICH I NCOME WAS GENERATED.CONSIDERING THE FACTS THAT THE ASSESSEE HAD PAID TAXES ON THE UNDIS CLOSED INCOME AND HAD STATED THE SEIZED CASH REPRESENTED HIS PROFESSIONAL INCOME,WE ARE OF THE OPINION THAT NO PENALTY IS LEVIABLE U/S.271AAA OF THE ACT.IN OUR OPINION,THE JUDGMENT D ELIVERED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C. SHAH(299ITR305) S UPPORT THE VIEW TAKEN BY THE TRIBUNAL IN THE ABOVE MENTIONED CASES.SO, REVERSING THE ORDE R OF THE FAA,WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE . AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALL OWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JULY,2016. 19 , 2016 SD/- SD/- ( . . !' / C.N. PRASAD ) ( #$ / RAJENDRA ) '% / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 19.07.2016. JV.SR.PS. 745/M/15-HEMANT KUMAR 4 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / &' 2. RESPONDENT / !(&' 3. THE CONCERNED CIT(A)/ ')* +,- , 4. THE CONCERNED CIT / ')* +,- 5. DR E BENCH, ITAT, MUMBAI / ! , , . . . 6. GUARD FILE/ . '( ! //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.