Bhart Bhushan Jindal, Ludhiana V. Deputy Commissioner of Income Tax, Ludhiana

ITA 749/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5065 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 09-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: KANIKA GUPTA
• Section: 143(3); 153A; 27; 132; 139

Judgement Text

/ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.749/CHD/2016 (ASSESSMENT YEAR : 2005-06) BHARAT BHUSHAN JINDAL, VS. THE D.C.I.T., 65-1, SARABHA NAGAR, CENTRAL CIRCLE-II, LUDHIANA. LUDHIANA PAN: ABMPJ9195J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR & MS.KANIKA GUPTA RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 24.04.2017 DATE OF PRONOUNCEMENT : 03.07.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(APPEALS)-5, LUDHIANA DATED 06.05.2 016 RELATING TO ASSESSMENT YEAR 2005-06, CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: I). THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS- 5) LUDHIANA HAS ERRED IN DISMISSING THE APPEAL FILED BY THE ASSESSEE ON ACCOUNT OF PENALTY UNDER SECTION 271(1) OF THE IT ACT 1961 WITHOUT CONSIDERING THE PROVISION OF INCOME TAX, WRITTEN SUBMISSION AND VARIOUS JUDGMENTS ON THE SAME ISSUE. 2 II) THAT IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL 5) LUDHIANA, MAY KINDLY BE SET ASIDE AND PENALTY SO LEVIED BY THE AO MAY KINDLY BE DELETED. II) THAT THE APPELLANT CRAVES TO ADD OR AMEND ANY GRO UNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OF. 3. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT AND THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(APPEA LS) IN CONFIRMING PENALTY TO THE TUNE OF RS.6,09,370/-. 4. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME U /S 139(1) OF THE ACT ON 21.3.2006 DECLARING INCOME OF RS.1,52 ,180/. THEREAFTER SEARCH, U/S 132 OF THE ACT, WAS CONDUCTE D ON THE ASSESSEE ON 11.9.2007. IN RESPONSE TO NOTICE U/S 153A, RETURN DECLARING INCOME OF RS.19,52,180/- WAS FILED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR, WHICH IN CLUDED A SUM OF RS.18 LACS ON ACCOUNT OF MISCELLANEOUS INC OME SURRENDERED. THE ASSESSMENT WAS COMPLETED U/S 153A R.W.S. 143(3) OF THE ACT, ON THE RETURNED INCOME OF RS.19,52,180/-. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT SURRENDER HAD BEEN MADE TO ACCOUNT FOR THE ADVANCE GIVEN DURING THE YEAR OF RS .6 LACS FOR PURCHASE OF TWO FLATS ON 21.7.2005 AND FOR THE PURCHASE OF A PROPERTY AMOUNTING TO RS.11,66,000/- DURING TH E IMPUGNED YEAR. THE ASSESSING OFFICER OBSERVED THAT THE SURRENDER HAD NOT BEEN MADE IN THE STATEMENT RECORD ED U/S 132(4) OF THE ACT AT THE TIME OF SEARCH AND HAD BEE N 3 DISCLOSED AS INCOME AFTER ISSUING NOTICE U/S 153A O F THE ACT. THE ASSESSING OFFICER HELD THAT THE CASE OF THE ASS ESSEE WAS SQUARELY COVERED BY EXPLANATION-5A TO SECTION 271(1 )(C) OF THE ACT AND, THEREFORE, IMPOSED PENALTY ON THE AMOU NT OF ADDITIONAL INCOME WHICH WAS NOT INCLUDED IN THE ORI GINAL RETURN FILED US/ 139(1) OF THE ACT, AMOUNTING TO RS.6,09,370/-. 5. AGGRIEVED BY THE SAME THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHERE THE ASSESSE E FILED WRITTEN SUBMISSIONS, REPRODUCED AT PARA 2.1 OF HIS ORDER. BRIEFLY PUT, THE ASSESSEE CONTENDED THAT THE PENALT Y WAS NOT LEVIABLE SINCE THE ASSESSEE HAD NOT CONCEALED THE P ARTICULARS OF INCOME WHILE FURNISHING THE RETURN FOR THE YEAR UNDER CONSIDERATION AND HAD ALSO DEPOSITED TAXES DUE THER EON. THE ASSESSEE CONTENDED THAT THE NATURE OF THE SURRE NDER HAD ALSO BEEN DISCLOSED TO THE ASSESSING OFFICER. THE ASSESSEE FURTHER CONTENDED THAT THE AMOUNT HAD BEEN SURRENDE RED TO BUY PEACE OF MIND. THE ASSESSEE FURTHER RELIED UPO N A NUMBER OF DECISIONS WHICH ARE REPRODUCED IN THE ORD ER OF THE CIT(APPEALS). THE CIT(APPEALS) AFTER CONSIDERING A SSESSEES SUBMISSIONS HELD THAT THE PRESENT CASE WAS CLEARLY COVERED UNDER EXPLANATION-5A TO SECTION 271(1)(C) OF THE AC T SINCE THE SURRENDERED INCOME OF RS.18 LACS HAD NOT BEEN D ECLARED IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT. HE, THEREFORE, CONFIRMED THE ORDER OF THE ASSESSING OFF ICER. 6. AGGRIEVED BY THE SAME, THE ASSESSEE HAS NOW COM E UP IN APPEAL BEFORE US. DURING THE COURSE OF HEARI NG BEFORE 4 US, THE LD. COUNSEL FOR ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE LOWER AUTHORITIES AND STATED THAT S INCE THE SURRENDERED INCOME HAD BEEN DISCLOSED IN THE RETURN FILED U/S 153A OF THE ACT, NO PENALTY U/S 271(1)(C) OF TH E ACT WAS LEVIABLE. THE LD. COUNSEL FOR ASSESSEE REFERRED TO THE FOLLOWING CASE LAWS IN SUPPORT OF HIS CONTENTIONS: 1) DCIT VS. PURTI SAKHAR KARKHANA (2013) 23 ITR (TRIB) 667 (NAGPUR) 2) DEVIDAS SUKHANI VS. DCIT (2013) 158 TTJ 42 (JD) 3) PREM ARORA VS. DCIT (2012) 149 TTJ 590 (DEL) 4) SMT.PRAMILA D.ASHTEKAR & ORS. VS. ITO (2013) 154 TTJ (PUNE)(UO) 46 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(APPEALS). 8. WE HAVE HEARD CONTENTIONS OF BOTH THE PARTIES, PERUSED THE ORDERS OF AUTHORITIES BELOW AND ALSO GO NE THROUGH THE DOCUMENTS PLACED BEFORE US. THE ISSUE BEFORE US PERTAINS TO LEVY OF PENALTY ON ACCOUNT OF INCOME SURRENDERED PURSUANT TO SEARCH OPERATION CARRIED OU T ON THE ASSESSEE. THEREFORE, THE FOLLOWING FACTS ARE R ELEVANT FOR ADJUDICATING THE PRESENT APPEAL: THE IMPUGNED ASSESSMENT YEAR IS A.Y 2005- 06. THE ORIGINAL RETURN U/S 139(1) WAS FILED BY THE ASSESSEE ON 21.3.2006 DECLARING INCOME OF RS.1,52,180/-. 5 THAT SEARCH WAS CONDUCTED ON 11.9.2007. THAT THE INCOME OF RS.18 LACS WAS SURRENDERED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT ON 11.3.2009 . 9. THE RELEVANT PROVISIONS OF SECTION 271(1)(C) WH ICH ARE ATTRACTED IN THE PRESENT CASE ARE EXPLANATION-5 A TO SECTION 271(1)(C), SINCE SEARCH WAS CONDUCTED ON 11.09.2007 I.E. AFTER 1 ST DAY OF JUNE 2007, AND THE SAME ARE REPRODUCED HEREUNDER: EXPLANATION 5A.--WHERE IN THE COURSE OF A SEARCH IN ITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSE SSEE IS FOUND TO BE THE OWNER OF,-- (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASS ETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH E NTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESEN TS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH AND,-- (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR H AS FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN D ECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SU CH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, 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 PARTI CULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 10. A BARE PERUSAL OF THE ABOVE EXPLANATION REVEAL S THAT THE ASSESEE SHALL BE DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF INCOME FOR THE PURPOSE OF LEVY IF PENALTY U/S 27 1(1)(C) IF, 6 A) SEARCH IS CONDUCTED ON THE ASSESSEE AFTER IST JUNE 2007. B) IN THE COURSE OF SEARCH THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS. C) THE ASSESSEE CLAIMS THAT SUCH ASSETS OR ENTRIES ARE ATTRIBUTABLE OR REPRESENT HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAD ENDED BEFORE THE DATE OF SEARCH. D) AND SUCH INCOME IS NOT DISCLOSED IN THE RETURN OF INCOME FILED BEFORE THE DATE OF SEARCH. 11. THE FACTS AS OUTLINED IN THE ABOVE CASE DEMONSTRATE THAT ON ACCOUNT OF SEARCH CONDUCTED ON 11-09- 07,DOCUMENTS WERE SEIZED WHICH SHOWED THAT THE ASSE SSEE WAS FOUND TO HAVE GIVEN ADVANCE OF RS.6 LACS FOR PU RCHASE OF TWO FLATS IN THE SUCCEEDING YEAR AND PURCHASED A PR OPERTY WORTH RS.11,60,000/- IN THE IMPUGNED YEAR. FURTHER THE ASSESSEE HAD ATTRIBUTED THE SAME TO THE INCOME OF T HE IMPUGNED YEAR, SURRENDERING A SUM OF RS.18,00,000/- ON ACCOUNT OF THE SAME, IN THE RETURN FILED IN RESPONS E TO NOTICE U/S 153A OF THE ACT. ALSO THE ORIGINAL RETURN OF I NCOME FOR THE IMPUGNED YEAR HAD BEEN FILED BEFORE THE DATE OF SEARCH ON 31.3.2006,I.E BEFORE THE DATE OF SEARCH WHICH WA S CONDUCTED ON 11.9.2007 ,AND THE SAID RETURN UNDISPU TEDLY DID NOT REFLECT SUCH INCOME. 12. CLEARLY, THE ASSESSEE, IS COVERED BY THE EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT AND THE 7 LD.CIT(APPEALS) HAS CORRECTLY HELD THE ASSESSEE TO HAVE CONCEALED PARTICULARS OF HIS INCOME RELEVANT TO THE AMOUNTS SURRENDERED OF RS.18 LACS IN THE RETURN OF INCOME. THE EXPLANATION-5A CLEARLY STATES THAT IF THE SAID INCO ME WHICH IS RELATABLE TO THE ASSETS FOUND DURING THE COURSE OF SEARCH OR ANY ASSETS OR INCOME FOUND DURING THE COURSE OF SEARCH IS DECLARED IN THE RETURN OF INCOME FILED AFTER THE DA TE OF SEARCH BUT NOT IN THE RETURN OF INCOME FILED BEFORE THE DATE OF SEARCH, EVEN THEN THE ASSESSEE SHALL BE DEEMED T O HAVE CONCEALED PARTICULARS OF HIS INCOME. THERE IS NO A MBIGUITY IN THE SAID SECTION AND WE, THEREFORE, HOLD THAT TH E LD.CIT(APPEALS) HAS RIGHTLY UPHELD THE LEVY OF PENA LTY IN THE PRESENT CASE. AS FAR AS THE CASE LAWS RELIED UPON BY THE LD. COUN SEL FOR ASSESSEE ARE CONCERNED, WE FIND THAT THEY ARE ALL DISTINGUISHABLE. FIRSTLY, IN ALL THE CASES, SEARCH TOOK PLACE BEFORE 01.06.2007. THEREFORE, EXPLANATION-5 TO SE CTION 271(1)(C) WAS APPLICABLE IN THOSE CASES AND NOT EXPLANATION-5A.BOTH THE EXPLANATIONS ARE PARA MATER IA TO THE EXTENT THAT THEY DEEM ASSESSEES TO HAVE CONCEAL ED OR FURNISHED INACCURATE PARTICULARS OF INCOME IF IN TH E COURSE OF SEARCH THEY ARE FOUND TO BE OWNERS OF ASSETS CLA IMED TO HAVE BEEN ACQUIRED FROM EARLIER YEARS INCOME, WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME FILED FO R THAT YEAR.THE ONE MAJOR DIFFERENCE BETWEEN THE TWO EXPLA NATIONS ,OTHER THAN THEIR SCOPE COVERING SEARCH INITIATED B EFORE AND AFTER 01-06-07 RESPECTIVELY,IS THAT WHILE EXPLANATI ON 5 IS 8 APPLICABLE VIS A VIS ONLY ASSETS,AS REFERRED TO IN THE SECTION) FOUND DURING SEARCH,EXPLANATION 5A ALSO CO VERS INCOME BASED ON ANY ENTRY IN THE BOOKS OR DOCUMENTS FOUND DURING SEARCH .IN ALL THE CASES REFERRED TO BY THE LD .COUNSEL FOR THE ASSESSEE, IT WAS HELD THAT FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT, NO REFERENCE COULD BE MADE TO THE RETURNED INCOME U/S 139 OF THE ACT AND IT WAS ONLY THE INCOME RETURNED U/S 153 A, AS PER THE SCHEME OF SEARCH ASSESSMENT, WHICH COULD BE TAKEN COGNIZANCE OF SINCE THE SCHEME OF SEARCH ASSESSMENT AS DESIGNED BY THE LEGISLATURE DID NOT PRESCRIBE TO TA KE INTO ACCOUNT THE EARLIER ASSESSMENT PROCEEDINGS WHETHER ABATED OR NOT. FURTHER IT WAS HELD, IN ALL THOSE CASES, TH AT THE ASSESSEE COULD NOT BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME AS PER EXPLANATION-5 ALSO SINCE THE ADDITIONAL INCOME DECLARED IN THE RETURN OF INC OME FILED U/S 153A DID NOT PERTAIN TO ANY ASSET I.E MONEY, B ULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN THE POSSESSION OF THE ASSESSEE. IN THIS CONTEXT, IT WAS HELD THAT NO PENALTY U/S 271(1)(C) OF THE ACT COULD NOT BE IM POSED. IN THE PRESENT CASE ,THE ASSESSEE IS CLEARLY DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME AS PER THE APPL ICABLE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AS H ELD ABOVE BY US.THEREFORE THE FACT OF HAVING DISCLOSED THE EN TIRE INCOME IN THE RETURN FILED U/S153A WILL BE OF NO AS SISTANCE TO THE ASSESSEE.SUCH AN INTERPRETATION ,IN OUR CONS IDERED OPINION ,WOULD RENDER EXPLANATION 5A TO SECTION 271 (1)(C) OTIOSE. 9 IN VIEW OF THE SAME, WE UPHOLD THE ORDER OF THE CIT(APPEALS) IN CONFIRMING THE LEVY OF PENALTY AMOU NTING TO RS.6,09,370/-. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 3 RD JULY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH