DCIT, CC-2, Faridabad V. A2Z Infra Engineers Ltd., Gurgaon

ITA 813/DEL/2019

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the penalty imposed by the Assessing Officer under Section 271AAA of the Income Tax Act, 1961, concerning the assessment year 2012-13. The penalty was initially imposed due to the assessee's failure to substantiate the manner of earning undisclosed income amounting to Rs. 35,92,22,907. The CIT(A) found merit in the assessee's appeal, noting that the penalty was not justified as the assessee had disclosed the income based on seized documents during a search operation under Section 132 of the Act. The Tribunal upheld the CIT(A)'s decision, referencing similar judgments and confirming that the assessee had complied with the obligations under Section 271AAA.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121481 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2019
• Other Referred Cases: Pr. CIT vs. Emirates Technologies P. Ltd., Pr. CIT vs. Sundeep Gupta
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 27; 69C; 153A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER I.T.A No.813/DEL/2019 Assessment Year 2012-13 DCIT, Central Circle-II, Faridabad. v. M/s. A2Z Infra Engineers Ltd., (previously A2Z Maintenance & Engineering Services Ltd.) O-116, 1 St Floor Shopping Mall, Arjun Marg, DLF, Phase-I, Gurgaon. TAN/PAN: AAECA1203A (Appellant) (Respondent) Assessee by: Ms. Ritu Kamal Kishore, CA Department by: Shri P. Praveen Sidharth, CIT-DR Date of hearing: 07 02 2023 Date of pronouncement: 29 03 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The capt ioned appeal has been f il ed b y t he Re ven ue agai nst the or der of the Co mmi ssioner of I nc o me Tax (A ppeal s)- III , Gur gaon [ ‘CI T(A ) ’ in short ], dated 30. 11. 2018 ar isi ng f r o m the penal t y or der dat ed 12. 03.2018 passed b y t he Assessi ng Of fi cer ( AO) under Sect ion 271A AA of t he I nco me Tax Act, 1961 (t he Act ) concer ni ng AY 2012- 13. 2. The Re venue i n t he inst ant case has chall enged the acti on of t he CIT(A) holdi ng t he penal t y i mposed b y t he Assessi ng Of fi cer under Secti on 271AAA of the Act on account of I.T.As No.813/Del/2019 2 addit ions ma de unde r Sect i ons 68 and 69C of the Act f or t he reason t hat the a ssessee coul d n ot substanti ate the manner i n whic h the inc o me was deri ved. 3. Br iefl y stated, the search and sei zur e operati on under Secti on 132 of the Act was car ri ed out at t he pr e mises of t he assessee on 24. 04. 2012. Duri ng t he fi nan ci al year 2012 -13, the assessee f il ed ret ur n of i nco me s ubsequent t o sear ch a nd t he assess ment was c ar ri ed out unde r Sect i on 153A r. w. Secti on 143( 3) of t he A ct . The Assessi ng Offi cer i ni ti at ed penalt y pr ocee din gs u nder 2 71AA A of t he Act i n r espect of disclosur e of Rs. 35, 92,22,90 7/- as t he assessee f ai led t o s ubst anti at e t he ma nner of ear nin g such undi scl osed i nco me. 4. Aggri eved b y th e i mposit i on of penalt y, t he assessee prefer red a ppeal befor e t he CIT( A). The C IT( A) t ook not e of the enact me nt of Se ct ion 271AAA of t he Act a nd al so t he sub mi ssi ons made on behal f o f t he assessee. The C IT(A ) f ound me rit in t he pl ea of the Assessee for rever sal of penalt y i mp osed on di scl osur e made. The releva nt oper ati ve para gr aph of th e or der of t he CI T(A) gr ant ing re l ief t o the assessee fr o m i mposit i on of penalt y under Se ct i on 271AAA of t he Act reads as under: “ I ha v e g o n e th r o ug h t h e a s s e s s m e n t o r d e r , p e na l t y o r d e r a n d t he s ub m i s s i o n s f il e d by t h e ap pe l l a nt f o r t he y e ar un de r c o n s i de r at i o n a n d t h e f ol l o w i n g o b s e r v at i o ns ar e m a d e : - ( i ) T h e or de r u s 2 71 A A A o f t he A c t w a s p as s e d b y t he A O i s as p e r p r o v i s i o n s o f t h e A c t a s i t r e l at e t o " u n di s c l o s e d i n c o m e " of " s pe c i f i e d p r e v i ou s y e a r " a s d e fi n e d i n E x pl a n a t i o n t o Se c . 2 7 1A A A o f th e A c t . ( i i ) Th e A O h a s i m po s e d t o t he pe n a lt y a s it w a s h el d t h a t t he I.T.As No.813/Del/2019 3 a p pe l l a n t c o m pa n y di d n ot f u l f il t h e c o nd i t i o n f or i m m u ni t y s pe c i f i e d i n s e c t i o n 2 71 A A A (2 ) (1 ) r e l a t e d t o s ub s t ant i a ti n g t he m an ne r i n w hi c h t he u n di s c l o s e d i n c o m e w a s d e r i v e d . ( i i i ) Th e c o nt e n ti o n of t h e A O c an n ot b e ac c e p t e d be c au s e a ) T he d i s c lo s u r e w a s m a d e b y t he a pp e l l a n t o n t h e b a s i s o f s e i z e d d o c u m e n t s . b ) I n t he c a s e o f t h e a pp e l l an t , d u r i n g t h e s e ar c h , t w o v e r s i o n s of A S - 7 w o r k i ng w e r e f ou nd i n t h e s af e o f S h . S ub a s h Me ht a , V P F i n a n c e of t h e ap p e ll a n t c o m p a ny . Th e v e r s i o n m e nt io ne d a s 'A s p e r a c c ou n t s ' r e f le c t e d t he v e r s i o n o n t h e ba s i s of w h i c h B al a nc e S h e e t w as t o b e pr e p a r e d, w h i le t h e v e r s i on f o r t he 'p e r u s a l o f M D ' r e f l e c t e d t h e v e r s i o n s ta t i n g t he t r ue f i na n c i a l aff a ir s o f t he c o m p a n y . I t i s no t i c e d t ha t t h e s e v e r s i o n s h ad d i f fe r e nt f i gu r e s of s al e s a nd e x p e n s e s , s o a s t o i nf l a t e t he e x p e n s e s an d r e du c e t he s al e s . Th e a p p e l l a nt c om pa ny of f e r e d a n a m ou nt of R s . 2 0 , 2 6 , 2 1, 9 0 7/ - w hi c h w a s t h e di f f e r e nc e i n n e t sa l e s d u r i ng t he y e a r u n de r c on s i d e r at i o n . T h e a p p e l l an t f u r t he r of fe r e d a s a d di t i on a l i nc o m e , t h e s u m o f R s . 15 , 6 6, 0 1 , 00 0/ - o n a c c ou n t of b o gu s e x pe n s e s , b o g u s s u b c o n tr ac t , u n a c c ou n te d s c ra p s al e e t c . f o r t he y e a r u n d e r c on s i d e r at i o n. T h u s , t he t o t al am ou n t o f f e r e d a s a d di t i on a l in c o m e w a s R s . 3 5 , 9 2 , 2 2, 9 0 7/ - . c ) O n t h e o t h e r h a nd , i n t he c a s e o f t h e a pp e l l a n t , s o u r c e of e a r n i ng i nc o m e i s n ot u n de r d i s p u t e . T h e s u r r e n d e r m a de b y t he a p pe l l a n t i s o n a c c o u n t o f t h e d i f f e r e nc e i n t w o s et s o f v e r s i o n s of A S - 7 w o r k i n g f ou n d d ur i n g t h e s e a r c h . It i s t h u s c le a r t h a t t he i n c om e d e c l a r e d w a s o n b a s i s o f c e r t a i n do c um e nt s fou n d a n d n o t o n t he b a s i s o f a n y a m o un t c r e d i t e d i n t h e bo o k s o f ac c o un t s m ai n t ai n e d by t h e a pp e l l a n t . T h e A 0 h as p r o v i d e d t he s c an n e d c o pi e s o f t he s a i d d o c um e n t s a t pa ge 3 an d 4 o f th e as s e s s m e nt o r d e r . Th e a p pe l l a n t c o m p a ny h a s t a k e n t he h i gh e r fig u r e of r e v e n ue i n a ud i t b al a nc e s h e e t i t s e l f i . e . t h e h i ghe r f i gu r e m ar k e d f o r M D . F ur t h e r , d i s c l o s ur e of R s . 15 . 6 6 c r or e u/ s . 1 3 2 (4 ) w a s m ad e t o w a r d b og u s p ur c h a s e , u na c c o u nt e d s c r ap s a l e s a n d b o gu s s ub c on t r a c t e x pe n s e s e t c w h ic h ar e a ls o r e l a te d to t he bu s i n e s s of t h e ap p e l l a n t . d ) T hu s , i t i s e v i d e nt t h a t t h e ad d i t i o n a l i n c o m e de c l ar e d b y t he a p pe l l a n t d ur i ng t h e c ou r s e of s e a r c h us 13 2 (4 ) of t h e A c t e m an at e d f r o m t h e s e i z e d pa p e r s du r i n g s e a r c h an d th i s s ub s t an t i at e d t h e m an ne r i n w hi c h u nd i s c l o s e d i nc o me w a s d e r i v e d. I n v i e w o f t h e a bo v e d i s c u s s i o n , i t i s h e l d t h a t p en a l t y u s 2 7 1A A A o f t he A c t c a nn o t b e i m p o s e d o n t h e a p pe l l a nt f o r no t s ub s t an t i at i n g t h e m a n n e r i n w hi c h t h e u nd i s c l os e d i nc o m e w a s d e r i v e d. A s a r e s u l t, t he ap p e ll a n t g e t i m m u ni t y fro m P e n al t y u / s . I.T.As No.813/Del/2019 4 2 7 1A A A a s i t f ul f i l l s t he c o nd i t i o n s s p e c i f i e d i n se c t io n 2 7 1A A A (2 ) o f t he A c t . H e nc e p e na l t y im p o s e d by t h e A 0 i s de l e t e d. A s a r e s ul t , t h e ap pe a l o f t h e a p p e l la n t i s al l o w e d. ” 5. Aggri eved b y t he r el ief grante d b y the C IT( A) , the Reve nue i s in appeal befor e t he Tr ibunal . 6. The i mposit i on of penalt y of Rs.3, 59, 22,29 0/- @ 10% of the undisclose d i nco me i s i n issue. As poi nted out on behalf of the assessee and perusal of t he recor ds, i t appea rs t hat the assessee has dul y expl ai ned the surr ender of Rs.35.92 cror es i n hi s state ment under Secti on 132(4) of t he Act . The surr ender was ma de on t he basi s of doc u ment (s) sei zed f ro m t he pr e mi ses of the assessee and such docu ment s i tself ar e the proof of ma nner i n whi ch suc h i nco me w as deri ved. T he sour ce of revenue deri ve d fr o m t he pr oject s w as expl ai ned i n the cour se of search. T he assessee i ncluded t he i nco me s urre nder ed i n t he retur n of inc o me a nd paid t axes as appl i ca ble. 7. The onl y quest i on re mains w hether t he assessee has f ai led to subst ant iat e t he manner i n whi ch t he undi scl osed inco me was der ived. I n t hi s r egar d, t he assessee sub mit s that no s peci fi c quest i on was rai sed under Sect i on 132( 4) of the Act f or substant iati on but however t he sei zed doc u ments it sel f substant iate t he ma nner of der ivi ng undi scl osed i nco me. The Assessee cont ends t hat there was no occasi on for t he Assessee to elaborate on ma nner and subst anti at i on of undi scl os ed i nco me in t he absence an y inquir y i n t he course of search. 8. The issue is squar el y covere d b y t he jud g ment of Hon ’bl e I.T.As No.813/Del/2019 5 Del hi Hi gh C our t i n t he case of Pr. CIT vs. Emir at es Technol o gies P. L td., (2017) 399 IT R 189 (Del ) a nd Pr. CIT vs. Sundeep Gupt a (D HC ) I T Appeal No. 967- 68/ 20 17 dat ed 13. 11. 2017. 9. The o bli gati on c ast on t he assessee spel led out under Secti on 271AAA are t hus f ull y co mpl i ed i n t he fact s of t he case and he nce we se e no err or i n th e concl usion dra wn by t he CIT( A) . We t hus decl ine to i nt erf ere therewi t h. 10. I n t he resul t, t he appeal of t he Reve nue i s dismi ssed. Order pronounced in the open Court on 29/03/2023. Sd/- Sd/- [ANUBHAV SHARMA] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /03/2023 Prabhat