Ashwani Kumar Arora, New Delhi V. ACIT, New Delhi

ITA 844/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7684 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: SALIL KAPOOR SANAT KAPOOR; SUMIT LAL CHANDANI S
• Keywords: Search and seizure; Document seized; Additional evidence; Initiation of penalty proceedings; Revised return; Documents seized
• Section: 153A; 27; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.844/DEL./2014 (ASSESSMENT YEAR : 2008-09) SHRI ASHWANI KUMAR ARORA, VS. ACIT, UNIT NO.134, IST FLOOR, CENTRAL CIRCLE 19, RECTANGLE 1, SAKET DISTRICT CENTRE, NEW DELHI. SAKET, NEW DELHI 110 017. (PAN : AEIPA8562R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL KAPOOR, SANAT KAPOOR & SUMIT LALCHANDANI, ADVOCATES REVENUE BY : SHRI RAVI JAIN, CIT DR DATE OF HEARING : 21.04.2016 DATE OF ORDER : 19.05.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, SHRI ASHWANI KUMAR ARORA (HEREINAFTER R EFERRED TO AS THE ASSESSEE), BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 10.10.2013 PASSED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII, NEW DELHI QUA THE A SSESSMENT YEAR 2008-09 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE CIT(A) HAS, IN VIEW OF THE FACTS AND C IRCUMSTANCES OF THE CASE, ERRED ON FACTS AND IN LAW IN UPHOLDING THE PENALTY ORDER ITA NO.844/DEL./2014 2 PASSED BY THE AO. THE PENALTY ORDER IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 2. THAT THE CIT(A) HAS, IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE CASE, ERRED ON FACTS AND IN LAW IN UPHOLDING THE PENALTY OF RS.12,24,600/- LEVIED BY THE AO U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961. 3. THAT THE CIT(A) HAS, IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE CASE, ERRED ON FACTS AND IN LAW IN UPHOLDING THE PENALTY OF RS.12,24,600/- WHEN THE RETURNED INCOME AND THE ASS ESSED INCOME ARE THE SAME AND NO ADDITIONS HAVE BEEN MADE BY THE AO IN THE ASSESSMENT ORDER. 4. THAT THE CIT(A) HAS, IN VIEW OF THE FACTS AND CI RCUMSTANCES OF THE CASE, ERRED ON FACTS AND IN LAW IN UPHOLDING THE INVOCATION OF EXPLANATION 5A TO SEC 271 (1)( C) OF THE INCOME TAX ACT, 1961. 5. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL OF THE ASSESSEE AND THE CIT(A) HAS FAILE D TO ADJUDICATE THE MATTER IN A JUDICIOUS MANNER. 6. THAT THE EVIDENCE AND SUBMISSIONS FILED AND MATE RIALS AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSTRUE D AND JUDICIOUSLY INTERPRETED, HENCE THE PENALTY LEVIED I S UNCALLED FOR. 7. THAT THE VARIOUS OBSERVATIONS MADE BY THE CIT(A) IN THE IMPUGNED ORDER ARE ILLEGAL, BAD IN LAW, CONTRARY TO THE FACTS ON RECORD AND BASED ON SURMISES AND CONJECTURES. 8. THAT IN ANY CASE THE PENALTY IS HIGHLY EXCESSIVE AND SHOULD BE REDUCED. 9. THAT THE APPELLANT RESERVES THE RIGHT TO ALTER, AMEND AND ADD THE GROUNDS OF APPEAL ANYTIME DURING PENDENCY OF TH E APPEAL. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE : ASSES SEE HAS FILED ITS ORIGINAL RETURN OF INCOME DECLARING ITS TOTAL INCOM E AT RS.22,77,695/- ON 23.12.2008. ON THE BASIS OF SEAR CH CARRIED OUT ON 10.02.2009 IN DAWAT GROUP OF CASES INCLUDING THE ASSESSEE, THE ASSESSEE WAS CALLED UPON TO FILE ITS RETURN OF INCO ME UNDER SECTION 153A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT) WHICH IT ITA NO.844/DEL./2014 3 HAS FILED ON 08.12.2009 DECLARING INCOME AT RS.59,8 0,520/-, INCLUSIVE OF ADDITIONAL INCOME FROM TRADING BUSINES S AMOUNTING TO RS.36,02,828/-. THE ASSESSMENT OF THE ASSESSEE U/S 153A OF THE ACT WAS COMPLETED ON 31.12.2010 AT RS.59,80,520/- A ND THE PENALTY PROCEEDINGS U/S 271(1)(C) READ WITH EXPLANA TION 5A WERE ORDERED TO BE INITIATED. 3. ASSESSEE, IN RESPONSE TO THE NOTICE ISSUED U/S 2 71(1)(C) READ WITH SECTION 274 OF THE ACT, FILED REPLY DATED 31.0 1.2011 WHICH WAS EXAMINED BY THE AO IN THE LIGHT OF THE EXPLANAT ION 5A OF SECTION 271(1)(C) EFFECTIVE FROM 1.6.2007. ASSESSE E FOUND TO HAVE NOT DECLARED INCOME FROM THE TRADING BUSINESS AMOUN TING TO RS.36,02,828/- IN ORIGINAL RETURN OF INCOME WHICH H E HAS DECLARED IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT ON TH E BASIS OF SEIZED DOCUMENTS IN WHICH NUMEROUS UNACCOUNTED CASH TRANSA CTIONS WERE FOUND. ASSESSEE CHOSE TO FILE THE INCOME AND EXPEN DITURE ACCOUNT OF SUCH TRANSACTIONS DESCRIBING THE TOTAL INCOME FR OM TRADING BUSINESS QUANTIFYING THE SHARE OF EACH INDIVIDUAL. SO, HAD THE SEARCH NOT BEEN CONDUCTED, ADDITIONAL INCOME SHOWN BY THE ASSESSEE IN RESPECT OF TRADING BUSINESS COULD NOT H AVE BEEN DISCLOSED. NO CONDITION MOOTED OUT BY THE ASSESSEE FOR NON-LEVY OF THE ASSESSEE HAS BEEN ACCEPTED DURING THE ASSESS MENT PROCEEDINGS. SO, THE AO CAME TO THE CONCLUSION THA T THE ASSESSEE ITA NO.844/DEL./2014 4 HAS MADE CONCEALMENT OF PARTICULARS OF INCOME AND C ONSEQUENTLY, A PENALTY TO THE TUNE OF RS.12,24,600/- WHICH IS 100% OF THE TAX EVADED BY THE ASSESSEE HAS BEEN LEVIED U/S 271(1)(C ) OF THE ACT. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) WHO HAS AFFIRMED THE PENALTY ORDER BY DISMISSING THE APPEAL . FEELING AGGRIEVED, THE ASSESSEE CAME UP IN APPEAL BEFORE TH E TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIB UNAL, THE ASSESSEE BY MOVING AN APPLICATION SOUGHT TO INCORPO RATE FOLLOWING ADDITIONAL GROUNDS OF APPEAL, HEREINAFTER MENTIONED , ON THE GROUND THAT THESE ARE THE LEGAL GROUNDS GOING TO THE ROOT OF THE ISSUE INVOLVED IN THE CASE :- 10. THAT THE NOTICE ISSUED AND THE PENALTY ORDER P ASSED U/S 271(1)(C) ARE ILLEGAL, BAD IN LAW AND WITHOUT JURIS DICTION AS SEARCH HAS TAKEN PLACE AFTER 01.06.2007 AND AS PER PROVISI ON OF SECTION 271AAA SUB-SECTION 3 NO PENALTY U/S 271(1)(C) CAN B E IMPOSED IN RESPECT OF THE ALLEGED UNDISCLOSED INCOME. 11. THAT NO SATISFACTION HAS BEEN RECORDED WHILE CO MPLETING THE ASSESSMENT, HENCE NOTICE ISSUED U/S 274 AND THE ORDER PASSED U/S 271(1)(C) OF THE ACT ARE ILLEGAL, BAD IN LAW AN D WITHOUT JURISDICTION. 12. THAT THE PENALTY HAS BEEN INITIATED VIDE NOTICE U/S 274 DATED 31.12.2010 WITHOUT ANY SPECIFIC CHARGE, HENCE, THE NOTICE AND THE ORDER PASSED U/S 271(1)(C) ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 6. KEEPING IN VIEW THE SETTLED PRINCIPLE OF LAW THA T ADDITIONAL EVIDENCE IF NECESSARY FOR COMPLETE ADJUDICATION OF THE CONTROVERSY IN HAND CANNOT BE DISALLOWED ON HYPER TECHNICAL GRO UND AND SINCE ITA NO.844/DEL./2014 5 THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE L EGAL IN NATURE AND NECESSARY FOR COMPLETE ADJUDICATION OF THE CONTROVE RSY AT HAND, PRESENT APPLICATION IS ALLOWED AND ASSESSEE IS ALLO WED TO INCORPORATE ADDITIONAL GROUNDS. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT IS NOT SUSTAINABLE IN VIEW OF THE AMENDE D PROVISIONS CONTAINED UNDER SUB-SECTION (1) OF SECTION 271AAA O F THE ACT EFFECTIVE FROM 1.6.2007; THAT THE AO HAS WRONGLY IN VOKED THE EXPLANATION 5A TO SECTION 271 OF THE ACT TO IMPOSE THE PENALTY IN THIS CASE. HOWEVER, ON THE OTHER HAND, THE LD. DR RELIED UPON THE PENALTY ORDER AS WELL AS THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). 9. BEFORE PROCEEDING FURTHER, WE WOULD LIKE TO DECI DE THE LEGAL ISSUE FIRST, AS TO WHETHER PENALTY IMPOSED UPON THE ASSESSEE U/S 271(1)(C) OF THE ACT VIDE ORDER DATED 28.06.2011, A FFIRMED BY THE LD. CIT (A) VIDE IMPUGNED ORDER, IS LEGALLY NOT SUSTAINABLE ITA NO.844/DEL./2014 6 IN VIEW OF THE AMENDED PROVISIONS CONTAINED UNDER S UB-SECTION OF SECTION 271AAA OF THE ACT?. 10. FOR FACILITY OF REFERENCE, PROVISIONS CONTAINED UNDER SUB- SECTION (2) OF SECTION 271AAA ARE REPRODUCED AS UN DER :- 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS B EEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 [BUT BEFORE THE 1 ST 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 UND ISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND ( III ) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE ( C ) OF SUB- SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). 11. UNDISPUTEDLY, ASSESSEE HAS FILED ORIGINAL RETUR N OF INCOME, DECLARING HIS TOTAL INCOME AT RS.22,77,695/- ON 23. 12.2008 BUT THEREAFTER CONSEQUENT UPON THE SEARCH CONDUCTED IN DAWAT GROUP OF CASES INCLUDING THE ASSESSEE U/S 132 OF THE ACT ON 10.02.2009, THE ASSESSEE FILED REVISED RETURN OF HIS INCOME U/S 153A OF THE ACT ON 08.12.2009 DECLARING HIS TOTAL INCOME AT RS.59,8 0,520/- WHICH ITA NO.844/DEL./2014 7 INCLUDES INCOME FROM TRADING BUSINESS AMOUNTING TO RS.36,02,828/-, WHICH HE HAS NOT DISCLOSED EARLIER. IT IS ALSO NOT IN DISPUTE BETWEEN THE PARTIES TO THE APPEAL THAT THE PENALTY PROCEEDINGS WERE IMITATED U/S 271(1)(C) READ WITH E XPLANATION 5A. 12. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE DUR ING THE SEARCH AND SEIZURE PROCEEDINGS CATEGORICALLY ADMITTED THAT THE UNDISCLOSED INCOME OF RS.36,02,828/- HAS BEEN ACCRUED TO HIM AL ONG WITH HIS THREE BROTHERS IN THEIR INDIVIDUAL CAPACITY BY WAY OF TRADING IN VARIOUS COMMODITIES AND REAL ESTATES AND ALL THESE FACTS GOT DULY CORROBORATED FROM THE SEIZED MATERIAL. 13. WHEN AFORESAID UNDISPUTED FACTS ARE EXAMINED IN THE LIGHT OF THE AMENDED PROVISIONS CONTAINED UNDER SUB-SECTION (2) AND (3) OF SECTION 271AAA, THE PENALTY IN THIS CASE, IF AT ALL LEVIABLE, IT SHOULD HAVE BEEN LEVIED UNDER SECTION 271AAA (1) AND NOT U /S 271(1)(C) AS HAS CATEGORICALLY BEEN PROVIDED IN SUB-SECTION ( 3) OF SECTION 271AAA. INTENTION OF THE LEGISLATIVE IN INCORPORAT ING THE PROVISIONS CONTAINED U/S 271AA EFFECTIVE DURING THE PERIOD 1 ST JUNE, 2007 TO 1 ST JULY, 2012 IS TO PROVIDE GENERAL AMNESTY IN SEARCH AND SEIZURE CASES, AND THE CASE OF THE ASSESSEE UND ISPUTEDLY FALLS U/S 271AAA AND CANNOT BE DEALT WITH U/S 271(1)(C) B Y ANY STRETCH OF IMAGINATION EVEN. ITA NO.844/DEL./2014 8 14. SO, WE ARE OF THE CONSIDERED VIEW THAT THE VERY INITIATION OF THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S 27 1(1)(C) ARE VITIATED IN VIEW OF THE AMENDED PROVISIONS OF LAW A PPLICABLE EFFECTIVE FROM 1.6.2007 TILL 1.7.2012, AS THE ADDIT IONAL INCOME TO THE TUNE OF RS.36,80,520/- WAS DISCLOSED BY THE ASS ESSEE ON THE BASIS OF SEARCH OPERATION CONDUCTED ON 10.02.2009. SO, WITHOUT GOING INTO THE MERITS OF THE CASE, WE ARE OF THE CO NSIDERED VIEW THAT INITIATION OF PENALTY PROCEEDINGS AS WELL AS PENALT Y ORDERS AND IMPUGNED ORDER PASSED BY THE LD. CIT (A) ARE NOT SU STAINABLE IN THE EYES OF LAW. HENCE, PRESENT APPEAL IS ALLOWED AND PENALTY IMPOSED IN THIS CASE TO THE TUNE OF RS.12,24,600/- IS HEREB Y DELETED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF MAY, 2016. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 19 TH DAY OF MAY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT-XXXIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.