Sh. Moti Lal Jindal, Chandigarh V. DCIT, Chandigarh

ITA 789/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8995 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 14-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Search and seizure; Salary income; Source of fund
• Section: 153A; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 789/CHD/2016 ASSESSMENT YEAR: 2009-10 SH. MOTI LAL JINDAL, VS. THE DCIT, CENTRAL CIRCLE -1, 14, NAC, MANIMAJRA, CHANDIGARH CHANDIGARH PAN NO. ABIPJ4494N (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUDHIR SEHGAL RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 16.11.2016 DATE OF PRONOUNCEMENT : 18.11.2016 ORDER PER BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A)-3, GURGAON DATED 31.3.2016 FOR ASSESSMEN T YEAR 2009-10 CHALLENGING THE LEVY OF PENALTY U/S 271AAA OF THE I NCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 2. BRIEFLY STATED THE FACTS OF THE CASE AS NOTED IN THE IMPUGNED ORDER ARE THAT SEARCH AND SEIZURE OPERATION WAS CAR RIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF JINDAL GROUP O F CASES, PANCHKULA ON 15.7.2008. DURING THE COURSE OF SEARCH AND SEIZU RE, ASSESSEE GROUP MADE DISCLOSURE OF RS. 4 CRORES VIDE LETTER DATED 2 2.7.2008 AND EXPLAINED SURRENDER OF RS. 4 CRORES EARNED FROM THE IR FOOD PROCESSING BUSINESS / PROPERTY BUSINESS CONSULTANCY AND LIAISO NING INCOME, THE DETAILS OF THE SAME ARE NOTED IN THE IMPUGNED ORDER . THE SURRENDER WAS MADE IN PERSONAL HANDS OF ROSHAN LAL JINDAL, MOTI L AL JINDAL, ASHOK JINDAL AND AMIT JINDAL ON EQUAL SHARE BASIS AS THEY HAVE A JOINT FAMILY BUSINESS. THE ASSESSEE FILED RETURN OF INCOME DECLA RING TOTAL INCOME AT RS. 83,84,510/-. THE ASSESSEE DERIVED INCOME FROM SALARY AND OTHERS SOURCES. THE COMPUTATION OF INCOME OF THE ASSESSEE REVEALED THAT ASSESSEE HAD DECLARED SUM OF RS. 83,87,500/- AS IN COME VOLUNTARILY DISCLOSED IN SEARCH. THE ASSESSEE WAS ASKED TO FIL E THE DETAILS OF THE DISCLOSURES AND WAS ALSO ASKED TO SPECIFY THE MANNE R IN WHICH SUCH INCOME WAS DERIVED AND SUBSTANTIATE THE MANNER IN W HICH INCOME WAS DERIVED. HOWEVER, NO REPLY WAS FILED. THE ASSESSEE WAS ASKED TO SPECIFY THE COMPLETE DETAILS OF DISCLOSURES. THE AS SESSEE STATED THE DISCLOSURES OF INCOME OF RS. 83,84,510/- WAS MADE A S FOLLOWS:- (I) CASH SEIZED FROM THE RESIDENTIAL PREMISES OF TH E ASSESSEE GROUP AMOUNTING TO RS. 11 LAKHS. (II) PAGES 54-59 OF ANNEXURE A-10 OF DELTA 1 (III) CAPITAL INTRODUCED IN FIRMS AND PURCHASE OF SHA RES OF COMPANIES AMOUNTING TO RS. 69,77,500/- 3 (IV) JEWELLERY AMOUNTING TO RS. 2,50,000/- AS THE ASSESSEE FAILED TO SPECIFY AND SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS EARNED, THE ASSESSING OFFICE R INITIATED PENALTY PROCEEDINGS U/S 271AAA OF THE I.T. ACT. THE ASSES SEE SUBMITTED BEFORE ASSESSING OFFICER AT THE PENALTY PROCEEDINGS THAT SURRENDER WAS MADE AT SEARCH AND DIFFERENT SUMS WERE OFFERED ON D IFFERENT ISSUES. THE SOURCE OF INCOME AND THE NATURE OF EARNING WERE ALSO EXPLAINED AND ALSO SOURCES OF INCOME WERE EXPLAINED WHILE MAK ING THE OFFER OF SURRENDER. THE OFFER WAS GIVEN AFTER CONSULTING THE DEPARTMENTAL OFFICIALS IN AN AMICABLE AND COOPERATIVE MANNER AND TO SETTLE THE SEARCH CASES. IN CASE DEPARTMENTAL OFFICIAL WAS NOT SATISFIED THEY COULD HAVE ASKED FOR FURTHER CLARIFICATION. THUS, NO FAULT CAN BE ATTRIBUTED TO THE ASSESSEE, IF ANY. THE ASSESSEE W AS NOT EXPECTED TO KNOW THE TECHNICALITIES OF LAW. THE ASSESSING OFFIC ER HOWEVER, DID NOT ACCEPT EXPLANATIONS OF THE ASSESSEE AND LEVIED PENA LTY AS NOTED ABOVE. 3. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THA T HE HAS DECLARED THE SUM WHILE FILING THE RETURN OF INCOME AND FULL PAYMENT OF TAX HAVE BEEN MADE WHICH HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THE PENALTY HAS BEEN IMPOSED MERELY BECAUS E THE MANNER OF EARNING INCOME HAS NOT BEEN DISCLOSED. HE RELIED UP ON THE ORDER OF THE ITAT, CHANDIGARH IN THE CASE OF SH. DCIT VS. SANJE EV GOYAL AND OTHER IN WHICH IT WAS HELD THAT WHERE THE MANNER IS NOT DISCLOSED, NO PENALTY U/S 271AAA IS LEVIABLE AND IT WOULD BE SUF FICIENT COMPLIANCE 4 IF INCOME HAS BEEN DISCLOSED AND TAX HAVE BEEN PAI D. THE LD. CIT(A) REPRODUCED THE ORDER OF THE ITAT CHANDIGARH IN THE CASE OF SANJEEV GOYAL IN ITA NO. 109/CHD/2015 FOR ASSESSMENT YEAR 2 011-12 DATED 18.11.2015 AND DELETED THE PENALTY WITH REGARD TO T HE CAPITAL INTRODUCED IN FIRMS AND PURCHASE OF SHARES OF COMPA NIES AMOUNTING TO RS. 69,77,500/-. HOWEVER, AS REGARDS THE CASH FOUND FROM A RESIDENTIAL PREEMIES OF THE ASSESSEE GROUP AMOUNTIN G TO RS. 11 LAKHS, JEWELLERY AMOUNTING TO RS. 2,500,000/-, LD. CIT(A) NOTED THAT THE ASSESSEE HAS NOT SPECIFIED AND SUBSTANTIATED THE MA NNER OF EARNING OF THESE UNDISCLOSED INCOME AND, THEREFORE, TO THAT EX TENT PENALTY WAS CONFIRMED AND APPEAL OF THE ASSESSEE WAS PARTLY ALL OWED. 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE ISSUE IS FULLY COVERED BY THE DECISION OF THE ITAT, CHANDIGARH IN DCIT VS. SANJEEV GOYAL AND OTHER IN ITA NO. 109/CH D/2015 ETC. DATED 18.11.2015 IN WHICH THE TRIBUNAL DISMISSED TH E DEPARTMENTAL APPEAL ON IDENTICAL FACTS. THE FINDINGS IN PARA 8 T O 13 OF THE ORDER OF THE TRIBUNAL ARE REPRODUCED ASUNDER:- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND THE PER USED THE ORDERS OF THE AUTHORITIES BELOW. 9. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THA T DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS U/S 132 , THE ASSESSEE HAD SURRENDERED AN AMOUNT OF RS. 1,50,00,0 00/-. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HAD ATTRIBU TED THIS 5 INCOME AS BEING DERIVED FROM SPECULATIVE DEALINGS I N COMMODITIES IN ORAL DEALINGS, OUTSIDE THE BOOKS OF ACCOUNTS. IT IS FURTHER NOT IN DISPUTE THAT THE ASS ESSEE HAD DISCLOSED THE SURRENDERED INCOME IN ITS RETURN OF I NCOME AND PAID THE TAXES THEREON. IN THE ABOVE FACTUAL BACKGROUND, IT IS TO BE SEEN W HETHER PENALTY U/S 271AAA IS LEVIABLE. IT IS THE CONTENTION OF THE REVENUE THAT THOUGH ADM ITTEDLY, THE ASSESSEE HAS SURRENDERED AN INCOME OF RS. 1,50,00,000/- DURING THE COURSE OF SEARCH AND SEIZU RE OPERATION, DISCLOSED THE MANNER OF EARNING THE SAME BEING FROM 5 SPECULATIVE DEALINGS IN COMMODITIES AND ALSO DISCLOSED THE INCOME IN ITS RETURN OF INCOME, THE A SSESSEE HAD NOT SUBSTANTIATED THE MANNER OF EARNING THE UNDISCLOSED INCOME AND HENCE NOT FULFILLED ALL THE CONDITIONS SPECIFIED U/S 271AAA FOR GRANT OF IMMUNI TY FROM PENALTY. THE ISSUE THEREFORE IS WHETHER ADMISSION OF UNDISCL OSED INCOME AND A DESCRIPTION OF THE NATURE OF THE SAME COULD BE TREATED AS COMPLIANCE WITH THE CONDITION OF SPEC IFYING AND SUBSTANTIATING THE MANNER IN WHICH THE UNDISCLO SED INCOME IS EARNED AS REQUIRED BY THE SECTION 271AAA( 2)(I) AND (II). 10. WE FIND THAT A SIMILAR REQUIREMENT OF DISCLOSIN G THE MANNER IN WHICH UNDISCLOSED INCOME IS EARNED IS ALS O THERE IN EXPLANATION-5 TO SECTION 271(1)(C), INTERP RETING WHICH THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V S. RADHA KISHAN GOEL (2005) 278 ITR 454 OBSERVED THAT NON DISCLOSURE OF MANNER OF EARNING THE UNDISCLOSED INC OME IS 6 NOT RELEVANT FOR THE PURPOSE OF AVAILING BENEFIT UN DER EXPLANATION 5 BELOW SECTION 271(1)(C). IN CIT VS. MAHENDRA C. SHAH [2008] 215 CTR 493 (GUJ.), IT WAS HELD THE ASSESSEE HAVING DECLARED THE VALUE OF DIAMONDS IN HIS STATEMENT UNDER SECTION 132(4) AND PAID TAXES THERE ON BEFORE ASSESSMENT, WAS ENTITLED TO IMMUNITY FROM PE NALTY UNDER SECTION 271(L)(C) UNDER EXPLANATION 5 THEREOF EVEN THOUGH THE STATEMENT DID NOT SPECIFY THE MANNER IN WHICH THE INCOME REPRESENTING VALUE OF DIAMONDS WAS DERIV ED. WITH RESPECT TO SUCH REQUIREMENT IN RELATION TO SEC TION 271AAA, IT HAS BEEN HELD IN THE CASE OF PRAMOD KUMA R JAIN V. DY. CIT [2013] 33 TAXMANN.COM 651 (CTK.) TH AT THE DISCLOSURE OF INCOME UNDER SECTION 132(4) DURING TH E SEARCH HAVING BEEN MADE AND THE ASSESSEE HAVING SURRENDERED CERTAIN INCOME FOR THE RELEVANT ASSESSM ENT YEARS IN THE STATEMENTS DURING THE COURSE OF SEARCH AND FILED RETURNS DECLARING THE SAME PURSUANT TO NOTICE UNDER SECTION 153A AND WHICH RETURNS HAVE BEEN ACCEPTED B Y THE AO, LEVY OF PENALTY UNDER SECTION 271 AAA WAS NOT JUSTIFIED ON THE GROUND THAT THE ASSESSEE HAS THOUG H MADE DISCLOSURE BUT FAILED TO SPECIFY THE MANNER IN WHIC H SUCH INCOME HAD BEEN DERIVED. HON'BLE TRIBUNAL FURTHER H ELD THAT NO DEFINITION COULD BE GIVEN TO THE 'SPECIFIED MANNER' AND THERE IS NO PRESCRIBED METHOD GIVEN IN THE STAT UTE TO INDICATE THE MANNER IN WHICH INCOME WAS GENERATED. IT HAS BEEN HELD IN THE CASE OF ASHOK KUMAR SHARMA V. DY. CIT [2013] 33 TAXMANN.COM 652 (CTK.) THAT WHEN ASSE SSEE DISCLOSED CONCEALED INCOME WHILE GIVING STATEMENT U NDER SECTION 132(4) DURING THE COURSE OF SEARCH AND PAID TAX THEREON AND SHOWED THE SAID UNDISCLOSED INCOME IN T HE RETURN UNDER THE HEAD 'INCOME FROM BUSINESS' AND WH ICH 7 UNDISCLOSED INCOME HAS BEEN ACCEPTED BY THE DEPARTM ENT, PENALTY UNDER SECTION 271 AAA IS NOT LEVIABLE. 11. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS WE FIN D THAT THE ASSESSEE HAS SPECIFIED AND SUBSTANTIATED THE MA NNER OF EARNING THE INCOME AND HAS NOT VIOLATED ANY OF THE CONDITIONS SPECIFIED U/S 271AAA(2), FOR GRANTING IM MUNITY FROM PENALTY. 12. WE THEREFORE HOLD THAT NO PENALTY U/S 271AAA CO ULD BE LEVIED IN THE PRESENT CASE. ACCORDINGLY WE UPHOLD T HE ORDER OF THE LD. CIT(A) DELETING THE PENALTY. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 5. THE COPY WAS SUPPLIED TO THE LD. DR AND LD. DR D ID NOT DISPUTE THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID ORDER. 6. CONSIDERING THE FACTS OF THE CASE AND IN THE LIG HT OF THE ORDER OF THE ITAT CHANDIGARH IN THE CASE OF DCIT VS. SH. SAN JEEV GOYAL (SUPRA), IT IS CLEAR THAT ASSESSEE HAS MADE SURREND ER OF INCOME AT THE TIME OF SEARCH AND IN THE JOINT SURRENDER OF FOUR P ERSONS IT WAS EXPLAINED THE AMOUNT OF THE UNDISCLOSED INCOME EARN ED WAS FROM THESE FOOD PROCESSING BUSINESS, PROPERTY BUSINESS, CONSUL TANCY AND LIAISONING INCOME, THE DETAILS OF THE SAME WERE FIL ED. THE UNDISCLOSED INCOME WAS DECLARED IN THE RETURN OF INCOME AND TAX HAS BEEN PAID WHICH IS ACCEPTED BY THE REVENUE DEPARTMENT. THE IS SUE IS, THEREFORE, COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE ITAT, 8 CHANDIGARH BENCH IN THE CASE OF DCIT VS. SANJEEV GO YAL (SUPRA). FOLLOWING THIS ORDER, WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH NOVEMBER, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR