Rajendra Kumar Jain, Kakinada V. The Dy. CIT, Rajamahendravaram

ITA 80/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6793 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V APPALA RAJU
• Assessee Lawyers: P PRABHAKARA MUTHY
• Keywords: Unexplained investment; Search and seizure
• Section: 143(3); 133A; 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 80 & 81 / VIZ /201 7 (ASST. YEAR : 2009 - 10 ) 1) RAJENDRA KUMAR JAIN, PROP. SRI SHAW RAJENDRA KUMAR BHAWARLAL BANKERS, D.NO. 5 - 3 - 25, LATCHIRAJUVARI ST., SURYARAOPET, KAKINADA, E.G. DIST. PAN NO. ACNPB 7683 G V S . D CIT, CENTRAL CIRCLE, RAJAHMUNDRY. 2) BHAWARLAL JAIN, PROP. SRI SHAW RAJENDRA KUMAR SUJIT KUMAR BANKERS, D.NO. 5 - 3 - 25, LATCHIRAJUVARI ST., SURYARAOPET , KAKINADA, E.G. DIST. PAN NO. ACNPB 7683 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. PRABHAKARA MUTHY ADV. DEPARTMENT BY : SHRI V. APPALA RAJU SR. DR DATE OF HEARING : 03 / 0 8 /201 7 . DATE OF PRONOUNCEMENT : 11 / 0 8 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE ARE THE APPEAL S FILED BY THE DIFFERENT ASSESSEE S AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 3 , VISAKHAPATNAM EACH , DATED 21/11 /201 6 FOR THE ASSESSMENT YEAR 2009 - 10 . 2 ITA NO. 80 /VIZ/2017 ( RAJENDRA KUMAR JAIN ) ITA NO. 80/VIZ/2017 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE RAJENDRA KUMAR JAIN IS IN THE BUSINESS OF MONEY LENDING UNDER THE NAME AND STYLE OF SRI SHAW RAJENDRA KUMAR BHAWARLAL BANKERS AT D.NO. 5 - 1 - 83, SURYARAO P ET, KAKINADA . THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED IN THE RESIDENTIAL PREMISES OF ASSESSEE ON 03/02/2009 AT LATCHIRAJUVARI ST . , KAKINADA . THE D OOR NO . 5 - 1 - 83, SURYARAOPET WAS THE COMMON BUSINESS PREMISES FOR HIM AND HIS BROTHER SRI BHAWARLAL JAIN WHERE SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT') WAS SIMULTANEOUSLY CARRIED ON 03/02/2009 . FOR T HE ASSESSMENT YEAR 2009 - 10 BEING THE ASSESSMENT YEAR OF SEARCH, THE ASSESSING OFFICER HAS PASSED THE ORDER UNDER SECTION 143(3) OF THE ACT ON 30/12/2010 BY MAKING AN ADDITION OF 6,86,400/ - AS UNEXPLAINED INVESTMENT IN PAWN BROKING TO THE SHARE OF ASSES SEE. ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER AND ON SUBSEQUENT APPEAL, THE ITAT ALSO CONFIRMED THE ORDER OF THE LD.CIT(A). 3 . THEREAFTER, THE ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS AND PASSED THE ORDER UNDER SECTION 271 AAA OF THE ACT ON 18/09/2013 BY IMPOSING PENALTY OF 68,460/ - . 4 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) . IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT A WARRANT WAS ISSUED IN THE NAME OF RAJENDRA KUMAR JAIN , D.NO. 5 - 3 - 25, LATCHIRAJUVARI ST, PAN/GIR NO. AAIHR7342J/R - 201/GP40 IN THE CAPACITY OF HUF AND THE 3 ITA NO. 80 /VIZ/2017 ( RAJENDRA KUMAR JAIN ) ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153 C OF THE ACT. THE ASSESSEE RECEIVED ANOTHER NOTICE IN THE NAME OF RAJENDRA KUMAR JAIN PROP. PROP. SRI SHAW RAJENDRA KUMAR BHAWARLAL BANKERS, D.NO. 5 - 1 - 8 3 , SURYARAOPET, MAIN ROAD, KAKINADA UNDER SECTION 153C (1) READ WITH SECTION 153A(1)(B) OF THE ACT AND THE ASSESSMENT IS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT DATED 30/1 2/2010. SUBSEQUENTLY, PENALTY UNDER SECTION 271AAA WAS INITI A T ED AND IMPOSED PENALTY. IT IS SUBMITTED THAT WHEN ASSESSMENT IS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153C , NO PENALTY CAN BE LEV I ED UNDER SECTION 271AAA OF THE ACT. 5. LEARNED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT WARRANT ISSUED AGAINST BHAWARLAL , THE PROPRIETOR CONCERN OF THE ASSESSEE AT LATCHIRAJUVARI ST . , KAKINADA . T HE MATERIAL ON WHICH THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER WAS FOUND IN THE OFFICE OF THE ASSESSEE, THEREFORE, THE FIRST CONDITION THAT THERE SHOULD BE INITIATION OF SEARCH IS FULFILLED AND THE CONTENTION OF THE ASSESSEE IS REJECTED AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6 . ON BEING AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 7 . LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN THIS CASE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT DATED 30/12/2010 AND S UBMITTED THAT 271AAA HAS NO APPLICATION TO THE ASSESSEE. 4 ITA NO. 80 /VIZ/2017 ( RAJENDRA KUMAR JAIN ) 8 . ON THE OTHER HAND, L EARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS PASSED BY THE AUTHORITIES BELOW. 9. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW . 10 . THE ASSESSEE IS IN THE BUSINESS OF PAWN BROK ER ING AND THERE IS A SEARCH CONDUCTED IN HIS CASE ON 03/02/2009. SUBSEQUENTLY, A NOTICE UNDER SECTION 132 WAS ISSUED TO ASSESS THE INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE ASSESSMENT RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED. THE ASSESSEE WAS ISSUED ONE MORE NOTICE UNDER SECTION 153C READ WITH SECTION 153A(1)(B) . ACCORDINGLY, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) RE AD WITH SECTION 153C OF THE ACT BY MAKING ADDITION OF 6,86,400/ - AS UNEXPLAINED INVEST M E N T IN PAWN BROKING BUSINESS. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND THE ITAT , WHERE THE ORDER PASSED BY THE ASSESSING OFFICER HAS BEEN CONFIRMED . SUBSEQUENTLY , THE ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE ACT AND ALSO IMPOSED PENALTY OF 68,460/ - . THE MAIN ARGUMENT OF THE L EARNED COUNSEL FOR THE ASSESSEE IS THAT ONCE ASSESSMENT ORDER IS PASSED UNDER SECTION 143 READ WITH SECTION 153C, NO PENALTY CAN BE IMPOSED UNDER SECTION 271AAA OF THE ACT. WE HAVE GONE THROUGH THE DETAILS FILED BY THE ASSESSEE AND ALSO OTHER DETAILS AVAILABLE ON RE C ORD. WE FIND THAT THE ASSESSING OFFICER HAS ISSUED A NOTIC E IN RESPECT OF IMPUGNED ASSESSMENT UNDER SECTION 153C READ WITH 153A(1)(B) OF THE 5 ITA NO. 80 /VIZ/2017 ( RAJENDRA KUMAR JAIN ) ACT AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT AND SUBSEQUENTLY, PENALTY IS IMPOSED UNDER SECTION 271AAA OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF SECTION 271AAA IS EXTRACTED AS UNDER: - 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HA S BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007 BUT BEFORE THE 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. 11 . FROM THE ABOVE , IT IS VERY CLEAR THAT WHERE THERE IS A SEARCH HAS BEEN IN ITIATED UNDER SECTION 132, PENALTY CAN BE IMPOSED UNDER SECTION 271AAA OF THE ACT. IN THIS CASE, FROM THE PAPER BO O K FILED BY THE ASSESSEE AT PAGE NO. 62, THE ASSESSING OFFICER HAS ISSUED NOTICE TO COMPLETE ASSESSMENT OF THE ASSESSEE UNDER SECTI O N 153C READ WITH 153A(1)(B) AND NOT UNDER SECTION 1 32 OF THE ACT. THEREFORE, THE INITIATION OF PENALTY IS VOID A BINITIO AND THEREFORE, THE ORDER UNDER SECTION 271AAA HAS TO BE QUASHED. ACCORDINGLY, WE QUASH THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 271AA. THUS, THIS GR O UND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO. 81/VIZ/2017 12 IN THIS CASE, NOTICE UNDER SECTION 153C OF THE ACT WAS ISSUED TO THE ASSESSEE TO COMPLETE THE ASSESSMENT AND THE ASSESSMENT IS ULTIMATELY COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153C OF THE ACT. SUBSEQUENTLY , A NOTICE UNDER SECTION 271AAA WAS ISSUED AND PENALTY IS LEVIED. THE LD. CIT(A) CONFIRMED THE ORD E R OF THE ASSESSING 6 ITA NO. 80 /VIZ/2017 ( RAJENDRA KUMAR JAIN ) OFFICER. IN VIEW OF OUR DECISION IN ABOVE CASE, WE QUASH THE NOTICE ISSUED BY THE ASSESSING OFFICER TO INITIATE THE PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE ACT. ACCORDINGLY, APPEAL FILED BY THE ASSESSEE IS ALLOWED. 13 I N THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 1 1 T H DAY OF AUGUST , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 1 T H AUGUST , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.