Late Shri Brijmohan Bansal, L/H Shri Kamal Raj Bansal, Pune V. Dy. CIT Cir 10 Pune., Pune

ITA 816/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72183 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2013
• Assessment Year: misc
• Appeal Filed On: 23-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Unexplained investment; Search and seizure; Opportunity of being heard; Question of law; Block assessment
• Section: 246; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 816/PN/2012 (BLOCK PERIOD 1997-98 TO 2003-04) LATE SHRI BRIJMOHAN BANSAL, L/H SHRI KAMAL RAJ BANSAL, MZSK & ASSOCIATES, (FORMERLY SHAH KHANDELWAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE, PUNE 411001. .. APPELLANT PAN NO.AARPB 7110R VS. DCIT, CIRCLE-10, PUNE .. RESPONDENT APPELLANT BY : SHRI NILESH KHANDELWAL RESPONDENT BY : SHRI SANTOSH KUMAR DATE OF HEARING : 02-09-2013 DATE OF PRONOUNCEMENT : 19-09-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 02-03-2012 OF THE CIT(A) V, PUNE RELATING TO BLOCK PERIOD 1997-98 TO 2003-04. 2. GROUNDS OF APPEAL NO.1 BY THE ASSESSEE READS AS UNDER : 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, PEN ALTY PROCEEDINGS INITIATED BY THE AO U/S. 158 BFA(2) CONTRARY TO PRO VISIONS AND SCHEME OF THE ACT IS NOT TENABLE IN LAW. IT FURTHER BE HEL D THAT PENALTY PROCEEDINGS FINALIZED BY THE AO WITHOUT GRANTING PR OPER AND ADEQUATE OPPORTUNITY AND IN VIOLATION OF RULES OF NATURAL JU STICE. IMPOSING PENALTY IN TERMS OF PROVISIONS OF SEC 158 BFA(2) IS NOT TEN ABLE IN LAW AND CONTRARY TO THE PROVISIONS AND SCHEME OF THE ACT. I T FURTHER BE HELD THAT NO PENALTY IS LEVY ABLE IN CASE OF THE APPELLANT IN TERMS OF PROVISIONS OF SEC.158BFA(2) OF THE ACT. PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE 1 ST APPELLATE AUTHORITY BE DELETED. IT FURTHER BE HELD THAT PENALTY 2 ORDER PASSED BY THE AO IS BEYOND THE TIME LIMIT PRE SCRIBED UNDER THE ACT AND IS INVALID AND NOT TENABLE IN LAW. THE APPELLAN T BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2.1 FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME TAX ACT WAS CARRIED OUT ON 05-09-2002 AT THE RESIDENTIAL PREMISES OF THE LEGAL HEIRS OF THE ASSESSEE LATE SR I BRIJMOHAN BANSAL WHO HAS DIED ON 15-06-2002. IN RESPONSE TO NOTICE U/S .158BC THE LEGAL HEIRS OF THE ASSESSEE DID NOT FILE ANY BLOCK RETURN WITHIN T HE TIME PRESCRIBED IN THE NOTICE. THE ASSESSING OFFICER COMPLETED THE BLOCK ASSESSMENT ON 29-11- 2004 ASSESSING THE UNDISCLOSED INCOME AT RS.59,42,5 98/- UNDER DIFFERENT HEADS WHICH ARE AS UNDER : 1. UNEXPLAINED INVESTMENT IN FICTITIOUS FDRS WITH AGRASEN CO-OP. BANK LTD. RS.45,29,546/- ADD : INTEREST ACCRUED ON THE FDRS RS.11,69,679/- RS.56,99,225/- 2. UNEXPLAINED INVESTMENT IN FDS/SHARES RS.1,90,28 0/- 3. UNEXPLAINED MEDICAL EXPENSES RS.53,093/- TOTAL UNDISCLOSED INCOME RS.59,42,598/- WHILE COMPLETING THE BLOCK ASSESSMENT PENALTY PROCE EDINGS U/S.158BFA(2) OF THE INCOME TAX ACT WERE INITIATED SEPARATELY IN THE UNDISCLOSED INCOME AND THE PENALTY NOTICE U/S.158BFA(2) WAS ISSUED AND SERVED ON THE LEGAL HEIRS OF THE ASSESSEE. THE ASSESSEE PREFERRED QUAN TUM APPEAL BEFORE THE CIT(A) WHO DISMISSED THE SAME. ON FURTHER APPEAL T HE TRIBUNAL SUSTAINED ADDITION TO THE TUNE OF RS.19,34,239/- ON ACCOUNT O F UNEXPLAINED INVESTMENT IN FIXED DEPOSITS OUT OF TOTAL UNDISCLOSED INCOME O F RS.59,42,598/-. 2.2 IN RESPONSE TO NOTICE U/S.158BFA(2) THE ASSESSE E SUBMITTED THAT NO SPECIFIC FINDING IS RECORDED IN RESPECT OF SPECIFIC ADDITION MADE BY THE ASSESSING OFFICER. FURTHER THE BASE ON WHICH PENAL TY PROCEEDING WAS INITIATED HAS BEEN TOTALLY CHANGED AND THE AMOUNT O F QUANTUM INCOME HAS NOT YET BEEN CONCLUDED. SINCE THE ASSESSEE FILED F URTHER APPEAL BEFORE THE 3 HONBLE MUMBAI HIGH COURT IT WAS ARGUED THAT JUSTIF ICATION LEVYING THE PENALTY IN TERMS OF PROVISIONS OF SECTION 158BFA(2) OF THE INCOME TAX IS ABSENT AND THEREFORE NO PENALTY IS LEVIABLE. 2.3 HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND LEVIED PENALT Y OF RS.13,57,937/- U/S.158BFA(2) BEING 100% OF THE TAX SOUGHT TO BE EV ADED ON THE UNDISCLOSED INCOME OF RS.19,34,239/- WHICH HAS BEEN SUSTAINED BY THE TRIBUNAL. 3. BEFORE THE CIT(A) THE ASSESSEE CHALLENGED THE LE VY OF PENALTY ON THE GROUND THAT NO SEARCH CAN BE CONDUCTED AGAINST A DE CEASED PERSON. IT WAS ARGUED THAT THE QUESTION OF LAW HAS BEEN ADMITTED B Y THE HONBLE BOMBAY HIGH COURT. IT WAS FURTHER ARGUED THAT IN ABSENCE OF FILING OF ANY RETURN, NO PENALTY U/S.158BFA(2) CAN BE LEVIED. THE ASSESSEE ALSO ARGUED THAT THE PENALTY ORDER PASSED U/S.158BFA(2) IS BARRED BY LIM ITATION. 3.1 HOWEVER, THE LD.CIT(A) WAS ALSO NOT CONVINCED W ITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE PENALTY LEV IED BY THE ASSESSING OFFICER U/S.158BFA(2) OF THE INCOME TAX ACT. WHILE DOING SO, HE OBSERVED THAT THE ISSUE REGARDING SEARCH ACTION AGA INST A DESEASED PERSON HAS ALREADY BEEN DECIDED BY THE TRIBUNAL AGAINST TH E ASSESSEE. FURTHER, THE QUESTION OF LAW ADMITTED BY THE HONBLE BOMBAY HIGH COURT IS ON TECHNICAL GROUNDS AND THE APPEAL HAS NOT BEEN ADMIT TED ON QUANTUM ADDITION. AS REGARDS THE ARGUMENT OF THE ASSESSEE THAT NO PENALTY CAN BE LEVIABLE U/S.158BFA(2) IN ABSENCE OF FILING OF RETU RN HE REJECTED THE SAME AS WITHOUT ANY BASIS. 4 3.2 SO FAR AS THE ARGUMENT OF THE LD. COUNSEL FOR T HE ASSESSEE THAT PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS BA RRED BY LIMITATION HE HELD THAT NO EVIDENCE WAS FILED BY THE ASSESSEE IN THIS RESPECT. HE ACCORDINGLY UPHELD THE ORDER OF THE ASSESSING OFFIC ER LEVYING PENALTY OF RS.13,57,837/- BEING 100% OF THE TAX TO BE EVADED. 3.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET D REW THE ATTENTION OF THE BENCH TO THE COPY OF ORDER OF ADMISSION OF APPE AL BY THE HONBLE MUMBAI HIGH COURT ON SUBSTANTIAL QUESTION OF LAW WH ICH READS AS UNDER : ADMIT ON THE FOLLOWING SUBSTANTIAL QUESTION : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE SEARCH U/S.132 AND OR CONSEQUENT BLOCK ASSESSMENT O RDER IS VALID IN LAW. RESPONDENT WAIVES SERVICE. 4.1 REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. RATHOD JEWELLERS VIDE ITA NO.1033/PN/2 008 ORDER DATED 27- 04-2012 FOR THE BLOCK ASSESSMENT PERIOD 1991-92 TO 2001-02 HE SUBMITTED THAT THE TRIBUNAL FOLLOWING THE DECISION OF THE TRI BUNAL IN THE CASE OF ACIT VS. DHARIWAL INDUSTRIES LTD. VIDE ITA NO.580 AND 58 1/PN/2009 ORDER DATED 30-08-2011 HAS HELD THAT WHEN THE HIGH COURT ADMITS THE APPEAL FILED BY THE ASSESSEE ON SUBSTANTIAL QUESTION OF LAW IN Q UANTUM PROCEEDINGS IT LEADS CREDENCE TO THE BONAFIDES OF THE ASSESSEE AND UNDER THESE CIRCUMSTANCES LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 158BFA(2) IS NOT JUSTIFIED. 5 4.2 REFERRING TO THE DECISION OF THE INDORE BENCH O F THE TRIBUNAL IN THE CASE OF SMT. KRISHNA KHANUJA VS. ACIT VIDE IT.(SS) A.NO.82/IND/2010 ORDER DATED 30-12-2011 HE SUBMITTED THAT SIMILAR VI EW HAS BEEN TAKEN IN THE SAID DECISION. THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT. LTD. HA S BEEN RELIED UPON WHEREIN IT HAS BEEN HELD THAT WHEN THE HONBLE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION IT BECOM ES APPARENT THAT ADDITION IS CERTAINLY DEBATABLE AND UNDER SUCH CIRCUMSTANCES THE PENALTY CANNOT BE LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT. THE AD MISSION OF SUBSTANTIAL QUESTION OF LAW LEADS CREDENCE TO THE BONAFIDES OF THE ASSESSEE. ACCORDINGLY, THE PENALTY LEVIED BY THE ASSESSING OF FICER AND UPHELD BY THE CIT(A) HAS BEEN DELETED. REFERRING TO THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF MAMPREET SINGH BHAMRA VS. ITO HE SUBMITTED THAT LEVY OF PENALTY U/S.271(1)(C) PERTA INING TO ADDITIONS IN THE CASE OF A DEAD PERSON HAS BEEN HELD AS NULL AND VOI D. HE ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) BE DELETED. HE ALSO RELIED ON THE DECIS ION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SMT. PRAMILA PRATAP SHAH REPORTED IN 100 ITD 160. 4.3 THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO T HE FACT THAT IN THE QUANTUM APPEAL PROCEEDINGS THE TRIBUNAL HAS SUSTAINED AN AM OUNT OF RS.19,34,239/- 6 ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FDS OUT OF TOTAL ADDITION OF UNDISCLOSED AMOUNT DETERMINED BY THE ASSESSING OFFI CER AT RS.59,42,598/-. WE FIND THE ASSESSING OFFICER LEVIED PENALTY OF RS. 13,57,837/- U/S.158BFA(2) BEING 100% OF THE TAX SOUGHT TO BE E VADED WHICH HAS BEEN UPHELD BY THE LD.CIT(A). THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS APPEALED AGAINST THE ORDER OF THE TRIB UNAL BEFORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT HAS ADMITTED THE APPEAL OF THE ASSESSEE ON SUBSTANTIAL QUESTION OF LAW WHICH HAS A LREADY BEEN REPRODUCED EARLIER. 5.1 WE FIND THE PROVISIONS OF SUB-SECTION(2) AND (3 ) OF SECTION 158BFA READ AS UNDER : (2) THE ASSESSING OFFICER OR THE COMMISSIONER (AP PEALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE A MOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TA X SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFI CER UNDER CLAUSE (C) OF SECTION 158BC : PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MADE IN RES PECT OF A PERSON IF (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAU SE (A) OF SECTION 158BC ; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN H AS BEEN PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS THE MO NEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE; (III) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RETURN; AND (IV) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN : PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDING PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY THE ASSE SSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES TH E PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WH ICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. (3) NO ORDER IMPOSING A PENALTY UNDER SUB-SECTION (2) SHALL BE MADE, (A) UNLESS AN ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD; 7 (B) BY THE ASSISTANT COMMISSIONER [OR DEPUTY COMMI SSIONER] OR THE ASSISTANT DIRECTOR [OR DEPUTY DIRECTOR], AS THE CASE MAY BE, WHERE THE AMOUNT OF PENALTY EXCEEDS TWENTY THOUSAND RUPEES EXCEPT WITH THE PREV IOUS APPROVAL OF THE [JOINT] COMMISSIONER OR THE [JOINT] DIRECTOR, AS THE CASE M AY BE; (C) IN A CASE WHERE THE ASSESSMENT IS THE SUBJECT- MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 [OR SECTION 246A ] OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253 , AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH AC TION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX M ONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEA LS) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COM MISSIONER OR THE COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER; (D) IN A CASE WHERE THE ASSESSMENT IS THE SUBJECT- MATTER OF REVISION UNDER SECTION 263 , AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF TH E MONTH IN WHICH SUCH ORDER OF REVISION IS PASSED; (E) IN ANY CASE OTHER THAN THOSE MENTIONED IN CLAU SES (C) AND (D), AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE C OMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER; (F) IN RESPECT OF SEARCH INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED UNDER SECTION 132A , AFTER THE 30TH DAY OF JUNE, 1995 BUT BEFORE THE 1ST DAY OF JANUARY, 1997. 5.2 IT HAS BEEN HELD BY VARIOUS JUDICIAL DECISIONS THAT THE LEVY OF PENALTY U/S.158BFA(2) IS DISCRETIONARY AND NOT MANDATORY SI NCE THE WORD MAY HAS BEEN USED FOR LEVY OF SUCH PENALTY BY THE ASSES SING OFFICER OR CIT(A). FURTHER, THE ABOVE PROVISION MANDATES THAT THE ASSE SSEE HAS TO BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. HOWEVER, IN THE INSTANT CASE, THE SEARCH WAS ON THE LEGAL HEIRS OF THE ASSESSEE. THE UNEXPLAINED INVESTMENTS IN FDS ETC. WHICH IS THE SUBJECT MATTER OF PENALTY WERE MADE BY SHRI BRIJ MOHAN BANSAL WHO HAS SINCE EXPIRED. UNDER THESE CI RCUMSTANCES, THE ADDITION MAY BE JUSTIFIED. HOWEVER, PENALTY U/S.15 8BFA(2) ON THE DEAD PERSON, IN OUR OPINION, IS NOT JUSTIFIED. IN THIS VIEW OF THE MATTER, WE SET- ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY. GROUND OF APPEAL NO.5 BY THE A SSESSEE IS ACCORDINGLY ALLOWED. 8 6. GROUND OF APPEAL NO.2 BY THE ASSESSEE READS AS U NDER : 2. WITHOUT PREJUDICE TO GROUND NO: 1 AND IN THE ALTERNATIVE IT BE HELD THAT PENALTY WORKED OUT BY THE AO OF RS.13,57,837/- AS AGAINST RS.11,60,543/- ON THE UNDISCLOSED INCOME OF RS.19,3 4,239/- IS WRONG AND NOT AS PER PROVISIONS OF LAW. IT FURTHER BE HEL D THAT THE 1 ST APPELLATE AUTHORITY SHOULD HAVE GRANTED RELIEF TO THE APPELLA NT AS PER PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE . THE APPELLAN T BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 6.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSESS ING OFFICER LEVIED PENALTY OF RS.13,57,837/- ON THE UNDISCLOSED INCOME OF RS.19,34,239/-. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT THERE IS SOME CALCULATION MISTAKE AND THE PENALTY COMES TO RS.11,60,543/- FOR WHICH THE LD.CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE CORREC TNESS OF THE CALCULATION. SINCE THE GROUND OF APPEAL NO.1 BY THE ASSESSEE HAS ALREADY BEEN DECIDED IN ITS FAVOUR, THIS GROUND IN OUR OPINION BECOMES A CADEMIC IN NATURE AND THEREFORE THE SAME DOES NOT REQUIRE ANY ADJUDICATIO N. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 19 TH DAY OF SEPTEMBER 2013. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 19 TH SEPTEMBER 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-V, PUNE 4. THE CIT-V, PUNE 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE