VISHNU PRASAD MAHARWAL, Jaipur V. ACIT, Jaipur

ITA 764/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9694 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 17-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: GULSHAN AGGARWALCA
• Section: 142(1); 5(2); 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 HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 764/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. SHRI VISHNU PRASAD MAHARWAL 60, RATAN NAGAR, DEHAR KE BALAJI, SIKAR ROAD, JAIPUR. VS. THE ACIT,CENTRAL CIRCLE- 1,JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AGSPP 1347 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL & GULSHAN AGGARWAL(CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/02/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 10 /03/2017 VKNS'K@ ORDER PER SHRI KUL BHARAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT (A)- 4, JAIPUR DATED 15.06.2016 PERTAINING TO A.Y. 2010- 11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. UNDER THE ACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE WORTHY CIT(A)-4, JAIPUR HAS ERRED IN CONFIRMING THE PENALTY IMPOSED UNDER SECTION 271AAA OF IT ACT, 1961 AMOUNTING TO R S. 3,00,000/- ON THE SURRENDERED INCOME OF RS. 30,00,000/- DECLARED IN THE INCOME-TAX RETURN FILED U/S 153A OF IT ACT, 1961 BY HOLDING TH AT THE ASSESSEE HAS 2 ITA NO. 764/JP/2016 SHRI VISHNU PRASAD MAHARWAL NOT CLARIFIED AND FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE ASSESSEE HAD DERIVED UNDISCLOSED INCOME. 2. THE ASSESSEE PRAYS FOR LEAVE TO ADD, TO AMEND, TO D ELETE, TO MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE HEARI NG OF APPEAL. 2. THE ONLY EFFECTIVE GROUND IS AGAINST SUSTAINING THE PENALTY UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961(HEREINAF TER REFERRED TO AS THE ACT). 3. BRIEFLY, STATED THE FACTS ARE THAT A SEARCH ACTI ON WAS UNDER SECTION 132 OF THE ACT IN SHRI MAHAVEER SINGH SANKHALA GROUP O N 23/7/2009 IN RESPONSE OF THE NOTICE THAT ASSESSEE UNDER SECTION 142(1) OF THE ACT. THE ASSESSEE STATED THAT A RETURN OF INCOME IS ALREADY FILED ON 30/09/2010 DECLARED TOTAL INCOME OF RS. 70,24,010/-. WHILE FRAMING THE ASSESS MENT, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA ON THE AMOUNT OF RS. 30 LAKHS. SUBSEQUENTLY, A PENALTY ORDER UNDER SECTION 271AAA OF THE ACT WAS PASSED ON THE GROUND THAT ASSESEE HAS NEITHER S PECIFIED THE MANNER IN WHICH INCOME HAS BEEN DERIVED NOR SUBSTANTIATE THE MANNER OF DERIVING SUCH UNDISCLOSED INCOME. THEREBY, THE ASSESSING OFFICER LEVIED A PENALTY OF 3 LAKHS AT THE RATE OF 10% OF UNDISCLOSED INCOME. AGGRIEVE D BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER C ONSIDERING THE SUBMISSIONS DISMISS THE APPEAL. 3 ITA NO. 764/JP/2016 SHRI VISHNU PRASAD MAHARWAL 4. NOW, THE ASSESSE IN FURTHER APPEAL BEFORE THIS T RIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION AS MADE IN THE WRITTEN BRIEF. 4.1 ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTATI VES OPPOSED THE SUBMISSIONS AND SUBMITTED THAT THE PROVISIONS ARE C LEAR. THERE IS NO CONFUSION IT IS INCUMBENT UPON THE ASSESSEE TO DEMO NSTRATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. 4.2 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE RECORDS. THERE IS NO DISPUTE WITH REGARD TO THE FA CT THAT THE SURRENDERED INCOME WAS DULY DISCLOSED INTO THE RETURN OF INCOME BY THE ASSESSEE. HOWEVER, THE PENALTY WAS IMPOSED ON THE GROUND THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS EARNED AS PER 271AAA OF THE ACT. THE ASSESSING OFFICER IN A CASE , WHERE SEARCH HAS BEEN INITIATED DIRECT THE ASSESSEE TO PAY BY WAY OF PENA LTY IF ANY PAYABLE BY HIM A COMPUTED AT THE RATE OF 10% OF THE UNDISCLOSED INCO ME OF SPECIFIED PREVIOUS YEAR. HOWEVER, SUB-SECTION (1) WOULD NOT BE APPLIC ABLE IF THE ASSESSEE IN THE CASE OF SEARCH IN A STATEMENT UNDER SUB-SECTION 132 (4) ADMITS THE UNDISCLOSED INCOME AND SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVE SUBSTANTIATE THE MANNER AND UNDISCLOSED INCO ME WAS DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST IF ANY IN RESPECT OF UNDISCLOSED INCOME. IN THE 4 ITA NO. 764/JP/2016 SHRI VISHNU PRASAD MAHARWAL PRESENT CASE, THE ASSESSEE HAS ADMITTED AN UNDISCLO SED INCOME PAID THE TAX TOGETHER WITH INTEREST IN RESPECT OF THE UNDISCLOSE D INCOME. HOWEVER, THE ASSESSING OFFICER IMPOSED PENALTY ON THE BASIS THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE MANNER AND UNDISCLOSED INCOME WAS DERIVED. WE FIND THAT DURING THE STATEMENT RECORDED U/S 132(4) ENCLOSED A T PAPER BOOK PAGE NOS. 9 TO 17, THE ASSESSEE HAD ADMITTED THE UNDISCLOSED IN COME IN ANSWER TO QUESTION NO. 18. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER DID NOT ASK THE ASSESSEE TO SPECIFY THE MAN NER AND SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. HE SUBMITTED THAT UNDER THE IDENTICAL FACTS THE COORDINATE BENCH IN T HE CASE OF ACIT VS. M/S KANAKIA SPACES PVT. LTD. IN ITA NO. 6763(MUM)/2011 DELETED THE PENALTY ON THE GROUND THAT ASSESSEE WAS NOT ASKED ABOUT THE MA NNER IN WHICH SUCH INCOME WAS EARNED ALSO TO SUBSTANTIATE THE MANNER I N WHICH UNDISCLOSED INCOME WAS DERIVED. HE SUBMITTED THAT THE COORDINA TE BENCH HAS RELIED UPON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDER ED IN THE CASE OF CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 454(ALL). THE REL IANCE IS ALSO PLACED UPON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT REND ERED IN THE CASE OF CIT VS. MAHENDER C. SHAH 299 ITR 305. 4.3 WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THER E IS NO DISPUTE WITH REGARD TO THE FACT THE ASSESSEE AS PER SECTION 271A AA IS REQUIRED TO ADMIT THE UNDISCLOSED INCOME AND SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN 5 ITA NO. 764/JP/2016 SHRI VISHNU PRASAD MAHARWAL DERIVED, SUBSTANTIATE THE MANNER IN WHICH THE UNDI SCLOSED INCOME WAS DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST IF ANY IN RESPECT OF UNDISCLOSED INCOME. THE CONTENTION OF THE ASSESSEE IS THAT, THAT NO QUESTION WAS POSED WHILE RECORDING THE STATEMENT UNDER SECTI ON 132(4) OR SUBSTANTIATING THE MANNER IN WHICH THE INCOME HAS B EEN DERIVED. IT IS CONTENDED THAT IF NO QUESTION IS ASKED THAN THE ASS ESSEE IS NOT REQUIRED TO SUBSTANTIATE THE MANNER IN WHICH THE INCOME WAS DER IVED. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDER C. SHAH 299 ITR 305 HAS HELD THAT SO FAR AS ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT U/S 132(4) OF THE ACT, REGARDING THE MANN ER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN TH E STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER, IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISION OF EXPLANATION 5 I N ITS ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SH ORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SU CH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM A ND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENT IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS, CONSIDERING THE SETTI NG IN WHICH STATEMENT IS BEING RECORDED. THE HONBLE COURT FURTHER AFFIRMED THE VIEW OF THE HONBLE ALLAHABAD HIGH COURT AND THE TRIBUNAL TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS 6 ITA NO. 764/JP/2016 SHRI VISHNU PRASAD MAHARWAL DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBST ANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENY OF THE BENEFIT UNDER AC T EXCEPTION NO. 2 IN EXPLANATION 5 IS COMMENDABLE. HONBLE ALLAHABAD HI GH COURT IN THE CASE OF CIT VS. RADHA KISHAN GOEL 278 ITR 454 (SUPRA) HAS H ELD THAT U/S 132(4) OF THE ACT UNLESS THE AUTHORIZED OFFICERS PUTS A SPECI FIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN T HE CASE IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED, BUT IT HAS BEEN STATED SUBSEQUENTLY, THAT AMOUNTS TO COMPLIANC E WITH EXPLANATION 5(2) OF THE ACT. IT WAS FURTHER HELD THAT, IN THE ABSEN CE OF SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERI VED IT CAN BE INFERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVED FROM THE B USINESS HE WAS CARRYING ON FROM OTHER SOURCES. THE OBJECT OF THE PROVISION IS ACHIEVED BY MAKING THIS STATEMENT ADMITTED THE NON-DISCLOSURE OF MONEY, BUL LION, JEWELLERY ETC. THEREFORE, IT WAS HELD THAT MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED IT CAN BE INFERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE , IN THE ABSENCE OF ANYTHING TO THE CONTRARY. THEREFORE, MERE NON-STAT EMENT OF THE MANNER IN WHICH HAS INCOME WAS DERIVED WOULD NOT MAKE EXPLANA TION 5(2) IN APPLICABLE 4.4 IN THE LIGHT OF THE ABOVE JUDGMENT WHEN IN THE PRESENT CASE ALSO ADMITTEDLY, THERE IS NO SPECIFIC QUERY BY THE ASSES SING OFFICER, HENCE, THE 7 ITA NO. 764/JP/2016 SHRI VISHNU PRASAD MAHARWAL ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING THE PENALTY. THEREFORE, WE HEREBY DIRECT THE ASSESSING OFFICE TO DELETE THE PE NALTY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 10/03/ 2017. SD/- SD/- HKKXPAN DQY HKKJR (BHAGCHAND) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 10/03/2017. POOJA/- VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI VISHNU PRASAD, MAHARWAL-60, JAI PUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CENTRAL CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 764/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 8 ITA NO. 764/JP/2016 SHRI VISHNU PRASAD MAHARWAL