SHRI HARI SINGH RANA, BANGALORE V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, JAIPUR

ITA 822/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3717 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 15-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K.C. MEENA
• Keywords: Business income
• Section: 132; 271(1)(c); 143(3); 153A; 139(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 822/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2015-16 SHRI HARI SINGH RANA M-56, YOGAM, SECTOR-11, 9 TH B MAIN, JEEVAN BIMA NAGAR, BANGALORE-560075. CUKE VS. THE ACIT, CENTRAL CIRCLE-1 JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAJPR 8806 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI G. M. MEHTA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/01/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT :20/03/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-4, JAIPUR DATED 23.04.2018 FOR THE ASSESSMEN T YEAR 2015-16 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND S OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACT IN SUSTAINING PENALTY OF RS. 3,00,000/- UNDER SECTION 271AAB OF I T ACT WITHOUT CONSIDERING THE FACT THAT APPELLANT HAD EXPLAINED T HE SOURCE AND SUBSTANTIATED THE MANNER OF RS. 10,00,000/- SEIZED DURING THE COURSE OF SEARCH (ON 30.10.2014) U/S 132 OF IT ACT, INCLUDED THE ITA NO.822/JP/2018 SHRI HARI SINGHRANA VS. ACIT 2 TOTAL AMOUNT AS HIS UNDISCLOSED INCOME IN RETURN OF INCOME SUBMITTED U/S 139(1) OF IT ACT IN WHICH HE CLAIMED THE SEIZED AMOUNT AS PAYMENT TOWARDS HIS ADVANCE TAX LIABILITY THEREFORE PROVISIONS OF SECTION 271(1)(A) IS APPLICABLE AND N OT SECTION 271(1A)(A) OF IT ACT; (2) WITHOUT PREJUDICE TO GROUND NO. (1), LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE PENALTY OF RS. 3,00,000 /- U/S 271AAB OF IT ACT WHEN THE LD. AO DID NOT SPECIFY IN SHOW CAUS E NOTICE DATED 24.12.2016 UNDER WHICH LIMP OF SUB-SECTION OF SECTI ON 271AAB OF IT ACT, THE PENALTY WAS LEVIED. 2. THE LD. AR HAS CONTENDED THAT DURING THE COURSE OF SEARCH ACTION WHICH HAD TAKEN PLACE ON 30.10.2014 IN CASE OF THE ASSESSEE, CASH OF RS. 10,70,000/-WAS FOUND OUT OF WHICH RS. 10 LACS WAS SEIZED, TREATING THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. IN HIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT ON 20.09.2015, ASSESSEE HAS INCLUDED THE AMOUNT OF RS. 10 LACS SO SURRENDERED AND CLAIMED IT AS PAID TOWARDS HIS TAX LIABILITY. WHILE ACCEPTING THE RETURN OF INCOME U/S 143(3) R.W.S 153(B)(1)(B) OF THE ACT, T HE AO INITIATED PENALTY PROCEEDINGS U/S 271AAB OF THE ACT AS PER SH OW CAUSE NOTICE DATED 24.12.2016 AND LEVIED PENALTY @ 30% ON THE A MOUNT SO SURRENDERED IGNORING THE FACT THAT THE ASSESSEE HA D EXPLAINED THE SOURCE AND SUBSTANTIATED THE MANNER IN WHICH IT WAS EARNED, INCLUDED THE SAME IN HIS TOTAL INCOME AS CONSULTANCY CHARGES , DISCLOSED THE SAME IN HIS RETURN OF INCOME AND CLAIMED THE SEIZED AMOU NT AS PAID TOWARDS HIS TAX LIABILITY WHILE FILING HIS RETURN OF INCOM E BEFORE THE SPECIFIED DUE DATE, THE CASE OF THE ASSESSEE AT THE MOST IS COVE RED UNDER CLAUSE (A) OF SECTION U/S 271AAB(1) AND NOT UNDER CLAUSE (C) O F SECTION 271AAB(1) OF IT ACT. ITA NO.822/JP/2018 SHRI HARI SINGHRANA VS. ACIT 3 3. WITHOUT PREJUDICE, IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE DATED 24.12.2016 I N ROUTINE MANNER WITHOUT SPECIFYING UNDER WHICH CLAUSE OF SECTION U/ S 271AAB OF THE ACT, THE ASSESSEE IS LIABLE FOR PENALTY. IT WAS SUBMITTE D THAT THERE IS NO APPLICATION OF MIND BY THE ASSESSING OFFICER AND TH E ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO EXPLAIN HIS CASE FOR SPECIF IC DEFAULT OF LEVY OF PENALTY IN TERM OF CLAUSES (A) TO (C) OF SECTION U/ S 271AAB(1) OF THE ACT, THEREFORE, THE NOTICE ISSUED U/S 271AAB OF THE ACT IS A VAGUE NOTICE UNDER LAW. 4. THE LD. DR IS HEARD WHO HAS VEHEMENTLY ARGUED TH E MATTER AND SUBMITTED THAT IT IS CLEAR CUT CASE OF LEVY OF PENA LTY U/S 271AAB OF THE ACT. THE CASH WAS FOUND IN IMPOSITION OF THE ASSESS EE WHICH CLEARLY FALLS UNDER THE DEFINITION OF UNDISCLOSED INCOME. FURTHER , REFERRING TO THE FINDING OF THE ASSESSING OFFICER AS WELL AS LD. CIT (A), THE LD DR SUBMITTED THAT THE CASE OF THE ASSESSEE CLEARLY FAL LS UNDER CLAUSE (C) OF SECTION 271AAB OF THE ACT ACCORDINGLY, ORDER PASSED BY THE AUTHORITIES BELOW SHOULD BE SUSTAINED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY DURING SEARCH PRO CEEDINGS INITIATED U/S 132 (1) OF THE ACT, CASH AMOUNT OF RS. 10,70,00 0/- WAS FOUND FROM THE RESIDENCE AND THE BANK LOCKER OF THE ASSESSEE AND IT IS CLEARLY IN THE NATURE OF UNDISCLOSED INCOME AS SO DEFINED IN T HE EXPLANATION TO SECTION 271AAB OF THE ACT. AS REGARDS CONTENTION OF THE LD. AR THAT THE SHOW CAUSE NOTICE LACKS APPLICATION OF MIND ON THE PART OF THE ASSESSING ITA NO.822/JP/2018 SHRI HARI SINGHRANA VS. ACIT 4 OFFICER AS IT DOES NOT STATE THE SPECIFIC CLAUSE OF SECTION 271AAB UNDER WHICH THE PENALTY WAS PROPOSED TO BE LEVIED BY THE ASSESSING OFFICER, WE FIND THAT IN TERMS OF SECTION 271AAB OF THE ACT IN CONTRAST TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, THERE I S ONLY A SINGLE CHARGE WHICH HAS BEEN SPECIFIED WHICH IS UNDISCLOSED INCOM E WHICH WAS FOUND DURING THE COURSE OF SEARCH IN THE CASE OF THE ASSE SSEE AND ONCE THAT PRIMARY CONDITION/CHARGE IS SATISFIED, THEN THE QUE STION OF LEVY OF PENALTY @ 10% UNDER CLAUSE (A), 20% UNDER CLAUSE (B ) AND 30% TO 90% ARISES FOR CONSIDERATION. THEREFORE, WE DO NOT SEE ANY LACK OF APPLICATION OF MIND OR ANY INFIRMITY IN THE SHOW CA USE NOTICE SO ISSUED BY THE ASSESSING OFFICER UNDER SECTION 271AAB R/W 2 74 OF THE ACT. FURTHER, WHILE PASSING THE PENALTY ORDER, THE AO HA S GIVEN A SPECIFIC FINDING THAT THE PENALTY IS LEVIABLE UNDER CLAUSE ( C) TO SECTION 271AAB OF THE ACT, THEREFORE, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE ASSESSING OFFICER SO FAR AS THE LEGALITY OF THE PRO CEEDINGS ARE CONCERNED. 6. NOW COMING TO THE ISSUE AS TO WHETHER CLAUSE (A) OF SECTION 271AAB(1) OF THE ACT IS APPLICABLE AS SO CONTENDED BY THE LD. AR OR CLAUSE (C) OF SECTION 271AAB(1) AS INVOKED BY THE A O AND UPHELD BY THE LD. CIT(A). WE FIND THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 20.09.2015 WHICH WAS WELL BEFORE THE DUE DATE OF FI LING OF RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR. IN THE SA ID RETURN OF INCOME, THE ASSESSEE HAS DISCLOSED RS. 10 LACS UNDE R THE HEAD BUSINESS INCOME AND HAS CLAIMED AN EQUAL AMOUNT A S PAID AS ADVANCE TAX WHICH WAS CASH SEIZED AND SUBSEQUENTLY DEPOSITE D WITH THE DEPARTMENT ON 05.11.2014. HOWEVER WHILE PROCESSING THE RETURN OF ITA NO.822/JP/2018 SHRI HARI SINGHRANA VS. ACIT 5 INCOME U/S 143(1), THE ASSESSEE WAS DENIED THE CRED IT OF RS. 10 LACS AND ONLY ON 03.02.2017, THE SAID DEMAND WAS ADJUSTE D FROM THE PD ACCOUNT OF THE PR. CIT(CENTRAL), JAIPUR. AS PER THE ASSESSING OFFICER, SINCE THE ADJUSTMENT HAS HAPPENED ONLY ON 03.02.201 7 OF THE CASH LYING IN THE PD ACCOUNT, THE ASSESSEE HAS NOT PAID THE TAX BEFORE THE SPECIFIED DUE DATE, THE CASE OF THE ASSESSEE FALLS UNDER CLAUSE (C) OF SECTION 271AAB(1) OF THE ACT. DURING THE COURSE OF APPELLATE PROCEEDING BEFORE THE LD CIT(A), IT IS NOTED THAT T HE ASSESSEE HAS SUBMITTED THAT CASH OF RS. 10 LACS WAS SEIZED BY TH E SEARCH TEAM AND THEREAFTER ON 05.11.2014, THE ASSESSEE WAS ASKED TO COME TO INCOME TAX DEPARTMENT, BANGALORE AND TO MAKE A DEMAND DRAF T FOR DEPOSITING IN THE ACCOUNT OF COMMISSIONER OF INCOME TAX (CENTR AL), JAIPUR. THE ASSESSEE IN THE COMPANY OF INSPECTOR OF SEARCH TEAM ALONG WITH THE SEIZED MONEY WENT TO HIS OWN BANK ON THAT DAY, GOT A DEMAND DRAFT PREPARED OF RS. 10,00,000/- AT HIS OWN COST AND DEP OSITED THE SAME IN THE ACCOUNT OF THE DEPARTMENT ON 5.11.2014 AS EVIDE NCED BY THE DEPOSIT RECEIPT ISSUED BY THE BANK. SINCE, THE PAYM ENT WAS MADE THROUGH A DEMAND DRAFT, PREPARED BY THE ASSESSEE HI MSELF FROM HIS OWN BANK ACCOUNT, THE ASSESSEE WAS UNDER FIRM IMPRESSIO N THAT THE SAID AMOUNT IS PAID TOWARDS HIS ADVANCE TAX LIABILITY. A CCORDINGLY IN THE RETURN OF INCOME SUBMITTED ON-LINE ON 20.09.2015, T HE SAID AMOUNT OF RS. 10 LACS WAS CLAIMED TOWARDS ADVANCE TAX PAYMENT AND IN SUPPORT, A LETTER WRITTEN TO THE BANK DATED 19.09.2014 WAS ALS O BROUGHT TO THE NOTICE OF THE LD. CIT(A). IT WAS ACCORDINGLY SUBMIT TED THAT THE CASE OF THE ASSESSEE FALLS UNDER CLAUSE (A) OF SECTION 271A AB(1) OF THE ACT. THE LD CIT(A) DIDNT ACCEPT THE SAID SUBMISSION OF THE ASSESSEE AND HAS HELD THAT THE AO WAS CORRECT IN HIS DECISION AS THE AMOUNT OF RS. 10 ITA NO.822/JP/2018 SHRI HARI SINGHRANA VS. ACIT 6 LACS LYING IN THE PD ACCOUNT CAN ONLY BE ADJUSTED ONLY WITH REGARD TO EXISTING LIABILITY WHICH HAS ARISEN ONLY AFTER PROC ESSING OF RETURN OF INCOME ON 03.02.2017 AND REFERENCE WAS DRAWN TO SEC TION 132B OF THE ACT. IT WAS ACCORDINGLY HELD BY THE LD CIT(A) THAT THE ASSESSEE HAS NOT PAID THE TAX BEFORE THE SPECIFIED DUE DATE AND THE CASE OF THE CASE CLEARLY FALLS UNDER CLAUSE (C) OF SECTION 271AAB(1) OF THE ACT. 7. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE ABO VE FACTUAL MATRIX AND THE RIVAL CONTENTIONS SO ADVANCED BY BOTH THE P ARTIES. ONCE IT IS NOT DISPUTED THAT AN AMOUNT OF RS 10 LACS STAND DEP OSITED IN THE BANK ACCOUNT OF THE DEPARTMENT ON 5.11.2014 AND SUBSEQUE NTLY, THE ASSESSEE FILED HIS RETURN OF INCOME ON 20.09.2015 W HEREIN HE DECLARES HIS UNDISCLOSED INCOME OF RS 10 LACS AND ALSO CLAIM S CREDIT FOR RS 10 LACS AGAINST HIS TAX LIABILITY AND TILL THE TIME OF FILING OF RETURN OF INCOME, THE AMOUNT SO DEPOSITED WAS NOT RELEASED TO THE ASS ESSEE, THE AMOUNT WAS IN POSSESSION OF THE DEPARTMENT AND THE INTENTI ON OF THE DEPARTMENT WAS TO ADJUST THE SAID AMOUNT AGAINST TH E TAX LIABILITY TOWARDS THE SURRENDER SO MADE BY THE ASSESSEE. EVE N THE ASSESSEE WAS UNDER THE IMPRESSION THAT THE AMOUNT SO DEPOSIT ED IS TOWARDS HIS TAX LIABILITY AND THE SAID INTENTION WAS MANIFEST A T THE TIME OF FILING OF RETURN OF INCOME. THEREFORE, MERELY BECAUSE SUCH A DJUSTMENT HAS ACTUALLY HAPPENED SUBSEQUENT TO PROCESSING OF RETUR N OF INCOME U/S 143(1), THE ASSESSEE CANNOT BE PENALIZED THREE TIME S THE PENALTY HE WOULD HAVE PAID OTHERWISE AND WE, THEREFORE, FIND T HAT THERE HAS BEEN AN EFFECTIVE COMPLIANCE AS FAR AS PROVISIONS SO CON TAINED IN CLAUSE (A) TO SECTION 271AAB(1) IS CONCERNED. IN LIGHT OF THE SAME, WE ARE OF THE ITA NO.822/JP/2018 SHRI HARI SINGHRANA VS. ACIT 7 CONSIDERED VIEW THAT THE CASE OF THE ASSESSEE FALLS UNDER CLAUSE (A) AND NOT UNDER (C) OF SECTION 271AAB(1) OF THE ACT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/03/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20/03/2019. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HARI SINGH RANA, BANGALORE. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CENTRAL CIRCLE-1, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 822/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR