MANISHA M. SHAH, MUMBAI V. DCIT 10(2), MUMBAI

ITA 8542/MUM/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0824 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMAT
• Assessee Lawyers: V H JARIWALA
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI G.S. PANNU , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 8542 /MUM./ 2011 ( ASSESSMENT YEAR : 2006 07 ) SMT. MANISHA M. SHAH 321/7, SIDDHI VINAYAK CHS 1 ST FLOOR, HINGWALA LANE PANT NAGAR, GHATKOPAR (E) MUMBAI 400 077 PAN APCPS3361P .. APPELLANT V/S DY . COMMISSIONER OF INCOM E TAX 10(2) ROOM NO.904, 9 TH FLOOR OLD CGO BUILDING 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ITA NO. 8543 /MUM./ 2011 ( ASSESS MENT YEAR : 2006 07 ) SHRI MINESH D. SHAH 321/7, SIDDHI VINAYAK CHS 1 ST FLOOR, HINGWALA LANE PANT NAGAR, GHATKOPAR (E) MUMBAI 400 077 PAN AAFPS1834H .. APPELLANT V/S DY . COMMISSIONER OF INCOM E TAX 10(2) ROOM NO.904, 9 TH FLOOR OLD CGO BUILDING 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT SMT. MANISHA M. SHAH SHRI MINESH D. SHAH 2 ITA NO. 8544 /MUM./ 2011 ( ASSESSMENT YEAR : 2007 08 ) S HRI MI NES H D . SHAH 321/7, SIDDHI VINAYAK CHS 1 ST FLOOR, HINGWALA LANE PANT NAGAR, GHATKOPAR (E) MUMBAI 400 077 PAN AAFPS1834H .. APPELLANT V/S DY . COMMISSIONER OF INCOM E TAX 10(2) ROOM NO.904, 9 TH FLOOR OLD CGO BUILDING 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : SHRI V.H. JARIWALA REVENUE BY : DR. YOGESH KAMAT DATE OF HEARING 10 . 0 6 .2015 DATE OF ORDER 31.07.2015 O R D E R PER G.S. PANNU, ACCOUNTANT MEMBER TH E PRESENT APPEAL S ARE FILED BY TWO DIFFERENT ASSESSEE S NAMELY SMT. MANISHA M. SHAH, FOR THE ASSESSMENT YEAR 2006 07 AND SHRI MINESH D. SHAH, FOR THE ASSESSMENT YEAR 2006 07 AND 200 7 08 RESPECTIVELY AND ARE DIRECTED AGAINST THE IDENTICAL IMPUGNED ORDER S OF EVEN DATED 14 TH SEPTEMBER 2011 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 22 , MUMBAI . 2. SINCE ALL THESE THREE APPEALS INVOLV E COMMON ISSUE, EXCEPT VARIATION IN FIGURES, WHICH AR E ARISING OUT OF IDENTICAL SET OF FACTS AND SMT. MANISHA M. SHAH SHRI MINESH D. SHAH 3 CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. HOWEVER, IN ORDER TO UNDERSTAND THE IMPLICATION, IT WOULD BE N ECESSARY TO TAKE NOTE OF THE FACTS OF ONE APPEAL. WE ARE, ACCORDINGLY, NARRATING THE FACTS, AS THEY APPEAR IN THE APPEAL IN ITA NO. 8542/MUM./2011, FOR ASSESSMENT YEAR 2006 07. THE SOLE DISPUTE IN THIS APPEAL IS WITH REGARD TO THE DIRECTION OF THE CIT(A) I N UPHOLDING THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 3. FACTS IN BRIEF : A SEARCH OPERATION UNDER SECTION 132 OF THE ACT, WAS CARRIED OUT IN ASSESSEES CASE ON 23 RD AUGUST 2006. TH E ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31 ST JULY 2006, DECLARING INCOME OF ` 2,90,070. SUBSEQUENTLY, IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, RETURN OF INCOME WAS FILED BY THE ASSESSEE DECLARING TOTAL INCOME OF ` 47,99,070, ON 3 RD JUNE 2008, WHICH INCLUDED ADDITIONAL INCOME OF ` 45 LAKH. THE ASSESSEE, DURING THE COURSE OF SEARCH, SURRENDERED ` 45 LAKH AS HER ADDITIONAL INCOME WITH A VIEW TO BUY PE A CE OF MIND AND AVOID LITIGATION. DURING THE QUANTUM PROCEEDINGS, THE ASSESSING OF FICER ASSESSED THE INCOME AT ` 94,49,070, WHEREBY ADDITIONS OF ` 46,50,000, WAS MADE TO THE RETURNED INCOME UNDER SECTION 153A OF THE ACT. THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ABLE TO EXPLAIN THE GENUINENESS, IDENTITY SMT. MANISHA M. SHAH SHRI MINESH D. SHAH 4 AND CREDITWORTHINESS OF THE LOAN RAISED OF ` 80 LAKH AND ALSO THERE WAS AN ADDITION OF ` 5 LAKH AS PER ANNEXURE A/5 AT PAGE 30 TO PANCHANAMA DATED 24 TH AUGUST 2006, IN RESPECT OF ESTIMATION OF DIAMON D SET. THE ADDITION OF ` 80 LAKH FOR UNSECURED LOAN INCLUDED ` 45 LAKH WHICH WAS DECLARED BY THE ASSESSEE AS ADDITIONAL INCOME DURING THE SEARCH PROCEEDINGS. THE QUANTUM ADDITIONS CAME TO BE DELETED BY THE LEARNED CIT(A) WHEREBY BOTH THE ADDITIONS TO THE TUNE OF ` 41.50 LAKH AND ` 5 LAKH WERE DELETED . THE REVENUE IS NOT IN APPEAL IN QUANTUM PROCEEDINGS AND, HENCE, IN THE QUANTUM PROCEEDINGS, ` 45 LAKH WHICH WAS DECLARED BY THE ASSESSEE AS AN ADDITIONAL INCOME DURING THE COURSE OF SEARCH PROCEEDINGS, WAS UPHELD AND ATTAINED FINALITY. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF ` 14,30,500, ON THE INCOME OF ` 45 LAKH SAID TO BE EVADED BY THE ASSESSEE BEING INCOME WHICH HAS BEEN DETECTED DURING THE SEARCH PROCEEDINGS AND BEING COVERED BY EXPLANATION 1 TO SECTION 271(1)(C) HOLDING THAT THE ASSESSEE HAS FILED I NACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF PROVISIONS OF SECTION 271(1)(C) R/W EXPLANATION 1 OF THE ACT, VIDE ITS ORDER DATED 29 TH MARCH 2011. 4. THE LEARNED CIT(A) UPHELD THE PENALTY SO LEVIED BY THE ASSESSING OFFICER HOLDING THAT THE ASSESSEES CASE IS COVERED BY EXPLANATION 1 SMT. MANISHA M. SHAH SHRI MINESH D. SHAH 5 AND EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, BEFORE US, SUBMITTED THAT THE ASSESSEE HAS SURRENDERED ADDITIONAL I NCOME OF ` 45 LAKH DURING THE SEARCH OPERATION CARRIED ON 23 RD AUGUST 2006 UNDER SECTION 132 OF THE ACT IN ORDER TO BUY PE A CE AND TO AVOID LITIGATION WITH THE DEPARTMENT. THE ASSESSEE HAS DULY DECLARED THIS INCOME IN THE RETURN OF INCOME FILED UNDER SECTIO N 153A OF THE A CT AND HAS PAID DUE TAXES TO THE REVENUE. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER HAS ALREADY BEEN DELETED BY THE LEARNED CIT(A) AND THE REVENUE HAS NOT FILED ANY APPEAL AND THE ORD ER OF THE LEARNED CIT(A) HAS ATTAINED FINALITY. SH E SUBMITTED THAT NO EVIDENCE HAS BEEN FOUND DURING THE COURSE OF SEARCH AND, HENCE, THE PENALTY SHOULD NOT BE LEVIED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE, DUTIFULLY ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO EVIDENCE FOUND DURING THE COURSE OF SEARCH WHICH IS INCRIMINATING IN NATURE RATHER THE ASSESSEE HAS, VIDE STATEMENT RE CORDED DURING THE COURSE OF SEARCH, HAS SURRENDERED ADDITIONAL INCOME OF ` 45 LAKH IN ORDER TO BUY PEACE AND SMT. MANISHA M. SHAH SHRI MINESH D. SHAH 6 AVOID LITIGATION WITH THE DEPARTMENT. THOUGH SURRENDER OF ANY INCOME SUO MOTU IN THE SEARCH DOES NOT IPSO FACTO RESULT IN NON LEVY OF PENALTY UNDER SECTION 2611 OF THE ACT, BUT IN THE PRESENT CASE, THERE IS NO MATERIAL TO SUGGEST THAT THE SURRENDER BY THE ASSESSEE WAS LINKED TO ANY ADVERSE OR INCRIMINATING EVIDENCE FOUND DURING THE SEARCH. THE ASSESSEE HAS DULY DECLARED THIS INCOME IN THE RETURN OF I NCOME FILED WITH THE DEPARTMENT UNDER SECTION 153A OF THE ACT AND PAID DUE TAXES TO THE REVENUE. THE ASSESSEES CASE IS COVERED BY EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AND PENALTY LEVIED BY THE REVENUE IS NOT JUSTIFIED. OUR VIEW IS FURTHER FORTIFI ED BY THE FOLLOWING CASE LAWS: CIT V/S ABDUL RASHID, 40 TAXMAN.COM 244 (CHH. HC) KALPANA NURSING HOME, 51 TAXMAN.COM 209 (JODHPUR TRIBUNAL) CIT V/S NEM KUMAR JAIN, 151 TAXMAN 187 (ALL. HC) GEBILAL KANHEL (HUF), 143 TAXMAN 42, (RAJASTHAN HC) RATANLAL DALM IYA V/S ITO, 1 SOT 281 (JODHPUR TRIBUNAL) 8. IN V IEW OF OUR AFORESAID DISCUSSION , W E SET ASIDE THE IMPUGNED ORDERS PASSED BY THE LEARNED CIT(A) IN RESPECT OF BOTH THE ASSESSEE HEREIN FOR THE ASS ESSMENT YEAR 2006 07 AND ALLOW THE GROUND RAISED BY THE ASSESSE E. 9. IN THE CASE OF MINESH D SHAH, WE HAVE NOTED THAT HE HAS SURRENDERED ` 1,60,40,000 DURING SEARCH OPERATION IN ORDER TO BUY SMT. MANISHA M. SHAH SHRI MINESH D. SHAH 7 PEACE AND TO AVOID LITIGATION WHICH HAS BEEN OFFERED TO TAX IN THE ASSESSMENT YEAR 2006 - 07 WHILE THE REVENUE HAS SPREAD THE ADDITIO NS OVER THE TWO YEARS I . E ., ASSESSMENT YEAR 2006 - 07 AND 2007 - 08. THE FACT AND CIRCUMSTANCES OF THE ADDITION REMAIN THE SAME, EXCEPT TO THE ABOVE EXTENT. HENCE, WE ALSO SET ASIDE THE IMPUGNED ORDERS PASSED BY THE LEARNED CIT(A) IN RESPECT OF THE ASSESSEE IN RESPECT OF SH RI MINESH D SHAH FOR ASSESSMENT YEAR 2007 - 08 ALSO. 10. IN THE RESULT, ASSESSEE APPEALS IN RESPECT OF SMT. MANISHA M. SHAH, FOR THE ASSESSMENT YEAR 2006 07 AND SHRI MINESH D. SHAH, FOR THE ASSESSMENT YEAR 2006 07 AND 2007 08 ARE ALLOWED. ORDER P RONOUNCED IN THE OPEN COURT O N 31.07.2015 SD/ - SANJAY GARG JUDICIAL MEMBER SD/ - G.S. PANNU ACCOUNTANT MEMBER MUMBAI, DATED : 31.07.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI