Jai Kumar Kankaria, Kolkata V. PCIT, Central-1, Kolkata, Kolkata

ITA 881/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1698 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND R BAIW AN
• Keywords: Search and seizure
• Section: 143(3); 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI A.T. VARKEY, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 881/KOL/201 7 ASSESSMENT YEAR : 2013-1 4 JAI KUMAR KANKARIA -VS- PR . COMMISSIONER OF INCOME TAX CENTRAL-I, KOLKATA [PAN: AKGPK 4751 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOUMITRA CHOU DHURY, ADVOCATE FOR THE RESPONDENT : SHRI ANAND R. BAIWAN, C IT DATE OF HEARING : 10.08.2017 DATE OF PRONOUNCEMENT : 18.08.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL ARISES OUT OF THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL) [IN SHORT THE LD. CIT(A)] U/S 263 OF THE INCOME TAX ACT, 1961 [IN SHORT THE ACT] DATED 30.03.2017 FOR THE ASSESSMENT YEAR 2013 -14 SETTING ASIDE THE ORDER PASSED BY THE DCIT, CENTRAL CIRCLE-2(1), KOLKATA [IN SHORT THE AO] LEVYING PENALTY U/S 271AAB OF THE ACT. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT WAS JUSTIFIED IN INVOKING THE REVISIONARY JURISDICTION U/S 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS APPEAL IS THAT THERE WAS A SEARCH AND SEIZURE OPERATION CARRIED OUT IN RESPECT OF KANKARIA GROUP OF CASES ON 11.1 0.2012. THE ASSESSEE IS ONE OF THE KEY PERSONS OF THIS GROUP. DURING THE COURSE OF SEA RCH AND SEIZURE OPERATION, THE ASSESSEE ADMITTED AND DISCLOSED INCOME OF RS. 5 CRO RES FOR THE ASSESSMENT YEAR 2013-14 2 ITA NO.881/KOL/2017 JAI KUMAR KANKARIA A.YR.2013-14 2 ON ACCOUNT OF JEWELLERY VIDE DISCLOSURE PETITION U /S 132(4) OF THE ACT MADE BEFORE THE DDIT(INV.). THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 26.09.2013 DECLARING TOTAL INCOME OF RS. 5,72,71,76 0/- WHICH ADMITTEDLY INCLUDED THE DISCLOSURE OF RS. 5 CRORES MADE PURSUANT TO THE SEA RCH. THE ASSESSEE ALSO PAID THE TAXES FOR THIS DISCLOSURE OF RS. 5 CRORES IN DECEMBER, 20 12 ITSELF AS ADVANCE TAX. THE ASSESSMENT WAS COMPLETED BY THE LD. AO U/S 143(3) ON 13.03.2015 DETERMINING THE TOTAL INCOME OF RS. 5,93,89,544/-. THE DIFFERENCE B ETWEEN ASSESSED INCOME AND THE RETURN OF INCOME WAS ONLY ON ACCOUNT OF DISALLOWANC E MADE U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES. HENCE, EFFECTIVELY, THE RETURN OF INCOME OF THE ASSESSEE HAS BEEN ACCEPTED BY THE LD. AO SUBJECT TO FURTHER DISA LLOWANCE MADE U/S 14A OF THE ACT. THE LD. AO ON COMPLETION OF ASSESSMENT INITIATED PE NALTY PROCEEDINGS U/S 271AAB OF THE ACT. DURING THE COURSE OF PENALTY PROCEEDINGS, THE LD AO OBSERVED THAT THE ASSESSEE HAS DULY COMPLIED WITH THE PROVISIONS OF 271AAB(1)( A) OF THE ACT BY COMPLYING ALL THE THREE CUMULATIVE CONDITIONS PRESCRIBED THEREON AND ACCORDINGLY LEVIED PENALTY @ 10% OF UNDISCLOSED INCOME IN THE SUM OF RS. 50 LACS. (1 0% OF 5 CRORES). THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST THE ORDER AND IT WAS STAT ED BY THE LD. AR THAT THE SAID PENALTY OF RS. 50 LACS. WAS ALSO PAID BY THE ASSESSEE. 4. LATER THE LD. CIT SOUGHT TO REVISE THE SAID PENA LTY ORDER PASSED U/S 271AAB OF THE ACT BY THE LD. AO ON 30.07.2015, ON THE GROUND THAT THE LD. AO OUGHT TO HAVE LEVIED MINIMUM 30% OF UNDISCLOSED INCOME AS PENALTY AS AGA INST 10% LEVIED BY HIM, THEREBY TREATING HIS ORDER ERRONEOUS AND IN AS MUCH AS IT I S PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE BASIC PREMISE OF THE LD. CIT FOR ISSUI NG SHOW CAUSE NOTICE IN THIS REGARD WAS THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOM E U/S 139(1) OF THE ACT ON 26.09.2013 WHICH IS BEYOND THE SPECIFIED DATE AS PRESCRIBED U/ S 139(1) OF THE ACT AND HENCE, THE ASSESSEE DOES NOT SPECIFY THE THIRD MANDATORY REQUI REMENT OF FILING THE RETURN OF INCOME BEFORE THE SPECIFIED DATE IN TERMS OF 271AAB (1)(A) (III) OF THE ACT. ACCORDING TO THE LD. CIT THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE ASSESSEE WOULD BE 31 ST JULY, 2013 3 ITA NO.881/KOL/2017 JAI KUMAR KANKARIA A.YR.2013-14 3 AND SINCE, THE RETURN WAS FILED ON 26.09.2013 AND I N VIEW OF THE FACT THE ASSESSEE IS NOT LIABLE FOR TAX AUDIT, IN THE OPINION OF THE LD. CIT , THE ASSESSEE HAS NOT SATISFIED THE CUMULATIVE CONDITION PRESCRIBED U/S 271AAB(1)(A)(II I)(B) OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE THROUGH AUTHORIZED REPRESENTATIVE STATED THAT, IN THE INSTANT CASE, THE ASSESSEE IS SUBJECT TO TAX AUDIT AND HENCE THE DUE DATE OF FILING OF RETURN OF INCOME WOULD BE 30.09.013. THE ASSESSEE ALSO FUR NISHED A COPY OF THE TAX AUDIT REPORT ON 03.06.2013 BEFORE THE OFFICE OF ADDITIONA L COMMISSIONER OF INCOME TAX, RANGE-II (CENTRAL), KOLKATA DULY ENCLOSING FORM 3CB AND 3CD TOGETHER WITH ANNEXURES. THE LD. CIT HOWEVER FOUND FROM THE GENE RAL AUDIT INFORMATION COLUMN OF RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013 WHERE , IN RESPONSE TO QUERY MADE IN THE RETURN OF INCOME AS ARE YOU LIABLE FOR AUDIT, THE ASSESSEE HAD RESPONDED IN THE NEGATIVE. IN OTHER WORDS, ACCORDING TO THE LD. CIT, THE ASSESSEE HAD STATED THAT HE IS NOT LIABLE FOR TAX AUDIT FOR THE ASSESSMENT YEAR 2013-1 4 AS PER INFORMATION FURNISHED BY HIM IN THE RETURN OF INCOME IN THE RELEVANT COLUMN THER EON. ACCORDINGLY, HE CONCLUDED THAT THE CONTENTION OF THE ASSESSEE THAT HE IS LIABLE FO R TAX AUDIT REQUIRES FURTHER ENQUIRY/VERIFICATION BY THE LD. AO TO VERIFY AS TO WHETHER THE ASSESSEE IS ACTUALLY LIABLE TO TAX AUDIT AND WHETHER SUCH TAX AUDIT HAD BEEN AC TUALLY CONDUCTED IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER APPEAL. HE DIRECTED THA T DUE DATE OF FILING OF RETURN OF INCOME WOULD DEPEND ON THIS VERIFICATION, WHICH WOU LD IN TURN DECIDE THE APPLICABILITY OF PROVISIONS OF 271AAB(1)(A) OR 271AAB(1)(C) I.E. 10% OR 30% OF UNDISCLOSED INCOME , AS THE CASE MAY BE, FOR LEVY OF PENALTY T HEREON. ACCORDINGLY, HE TREATED THE ORDER OF PENALTY U/S 271AAB OF THE ACT PASSED BY TH E LD. AO ON 30.07.2015 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE AND SET ASIDE THE SAME BY INVOKING REVISIONARY JURISDICTION U/S 263 OF THE AC T. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. FOR THAT ON THE FACTS OF THE CASE THE ORDER PASS ED BY THE LD. CIT, (CENTRAL)-1, KOLKATA U/S 263 IS COMPLETELY ARBITRARY, UNJUSTIFIE D AND ILLEGAL. 4 ITA NO.881/KOL/2017 JAI KUMAR KANKARIA A.YR.2013-14 4 2. FOR THE ON THE FACTS OF THE CASE THE ORDER OF TH E LD. PR. CIT (CENTRAL)-1, KOLKATA PASSED U/S 263 DATED 30.03.2017 SHOULD BE Q UASHED. 3. FOR THAT ON THE FACTS OF THE CASE THE LD. PR. CI T (CENTRAL)-1, KOLKATA WAS WRONG AN INITIATING PROCEEDING U/S 263 OF THE I.T. ACT WHEN THE PENALTY ORDER WAS COMPLETED U/S 271AAB ON 30.07.2015 WHEREIN THE SAID ISSUE HAS BEEN DULY CONSIDERED THEREFORE, THE WHOLE PROCEEDING IS COMPL ETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 4. FOR THAT ON THE FACTS OF THE CASE, THE LD. PR. C IT (CENTRAL)-1, KOLKATA WAS WRONG IN PASSING THE ORDER U/S 263 AS HE HAS ASKED THE AO TO DO RE-EXAMINATION AND RE-VERIFICATION THE PENALTY ORDER U/S 271AAB(1) (A), THEREFORE, THE WHOLE ORDER SHOULD BE QUASHED. 5. FOR THAT ON THE FACTS OF THE CASE, THE LD. PR. C IT (CENTRAL)-1, KOLKATA WAS WRONG IN PASSING THE ORDER U/S 263 BY SETTING ASIDE THE PENALTY ORDER U/S 271AAB(1)(A), FOR REEXAMINING AND PROPER ENQUIRIES TO ASCERTAIN THE DUE DATE OF RETURN FILING OF RETURN INCOME, ALTHOUGH THE AUDIT REPORT U/S 44AB AS ON 31.03.2013 HAS BEEN DONE ON 31.05.2013 WHICH WAS DU LY FILED IN THE OFFICE OF ADDL. CIT, R-II, CENTRAL, KOLKATA ON 03.06.2013 AND FILED THE RETURN U/S 139(1) WITHIN DUE DATED I.E. 26.09.2014, THEREFORE, THE DI RECTION GIVEN BY THE LD. PR. CIT TO AO IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLE GAL. 6. FOR THAT ON THE FACTS OF THE CASE THE LD. PR. CI T (CENTRAL)-1, KOLKATA WAS WRONG IN PASSING THE ORDER U/S 263 BY SETTING ASIDE THE PENALTY ORDER U/S 271AAB(1)(A) AND NOT CONSIDERING THE FACTS THAT THE ASSESSEE DISCLOSED THE INCOME U/S 132(4) & THE RETURN FOR THE ASSESSMENT Y EAR 2013-14 HAS DULY FILED WITHIN THE DUE DATE, THEREFORE, THE ASSESSEES CASE NOT FALLS UNDER THE MEANING AND SCOPE OF 271AAB(1)(C) OF THE I.T. ACT, SO THE D IRECTION GIVEN BY THE LD. PR. CIT IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGA L. 7. FOR THAT THE APPELLANT RESERVES THE RIGHT TO ADD UCE ANY FURTHER GROUND OR GROUNDS, IF NECESSARY, AT OR BEFORE THE HEARING OF THE APPEAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE PRIMAR Y FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FO R THE SAKE OF BREVITY. THE SHORT POINT THAT ARISES FOR OUR CONSIDERATION FOR ADJUDICATION OF THE DISPUTE BEFORE US IS TO DECIDE WHETHER THE ASSESSEE IS LIABLE FOR TAX AUDIT FOR AS SESSMENT YEAR 2013-14 OR NOT. THIS WOULD DECIDE THE DUE DATE OF FILING THE RETURN OF I NCOME DEFINING THE SPECIFIED DATE 5 ITA NO.881/KOL/2017 JAI KUMAR KANKARIA A.YR.2013-14 5 WITHIN THE MEANING OF 271AAB OF THE ACT. WE FIND FR OM PAGE 12 OF THE PAPER BOOK FILED BY THE ASSESSEE THAT THE ASSESSEE HAD INDEED GOT HIS ACCOUNTS TAX AUDITED U/S 44AB OF THE ACT HAD FURNISHED THE TAX AUDIT REPORT IN FO RM 3CB AND 3CD DATED 31.05.2013 TOGETHER WITH ITS ANNEXURES ON 03.06.2013 BEFORE TH E OFFICE OF ADDL. CIT, RANGE-II (CENTRAL), KOLKATA. THE SEAL OF THE INCOME TAX DEPA RTMENT STAND AS AN EVIDENCE TO THIS EFFECT. ONCE, THE ACCOUNTS ARE LIABLE FOR TAX AUDIT AND THE TAX AUDIT REPORT HAS BEEN FILED BEFORE THE LD. AO MUCH BEFORE THE DUE DATE, THE DUE DATE OF FILING OF RETURN OF INCOME (SPECIFIED DATE) WOULD BE 30 TH SEPTEMBER, 2013 AND ACCORDINGLY THE ASSESSEE HAVIN G FILED THE RETURN OF INCOME ON 26.09.2013 WOULD HAVE TO BE CONSIDERED AS HAVING FILED WITHIN TIME. HENCE, IN OUR OPINION, THE ASSESSEES CASE SQUARELY FALLS ONLY UNDER 271AAB(1)(A) OF THE ACT AND IS ACCORDINGLY ELIGIBLE ONLY FOR 10% LEVY OF PENALTY THEREON, WHICH HAS BEEN RIGHTLY LEVIED BY THE LD. A O. HENCE, THERE CANNOT BE ANY ERROR THAT COULD BE ATTRIBUTED IN THE SAID ORDER OF THE L D. AO. WE FIND THAT THE LD. CIT IS ONLY TREATING TO SUBSTITUTE HIS OWN OPINION IN THE PLACE OF OPINION ALREADY FRAMED BY THE LD. AO, WHICH IN OUR CONSIDERED VIEW, IS NOT PERMISSIB LE AS PER LAW. WE FIND THAT THE LD. AO HAD TAKEN ONE POSSIBLE VIEW IN THE MATTER. IN TH IS REGARD WE FIND THAT THE RELIANCE PLACED BY THE LD. AR ON THE DECISION OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL IN THE CASE OF BANGIYA GRAMIN VIKASH BANK VS. CIT IN I.T.A . NO. 877/KOL/2015 DATED 12.05.2017 SUPPORTS THE CASE OF THE ASSESSEE WHEREI N IT WAS HELD THAT : 10.. IT WAS A POSSIBLE VIEW WHICH THE AO HAS TAKEN AND JUST BECAUSE CIT DOES NOT AGREE WITH THE VIEW EXPRE SSED BY THE AO JURISDICTION U/S 263 OF THE ACT CANNOT BE INVOKED. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES LTD. 243 ITR 83 C LEARLY SUPPORTS THE PLEA OF THE ASSESSEE IN THIS REGARD. BESIDES THE ABOVE, WE ARE ALSO OF THE VIEW THAT THE AO HAD MADE PROPER ENQUIRIES BEFORE CONCLUDING THE ASS ESSMENT AND SINCE THE CIT HAS INVOKED THE JURISDICTION U/S 263 OF THE ACT FOR FAILURE ON THE PART OF THE AO TO MAKE PROPER ENQUIRIES THE ACTION OF CIT ON THIS ISS UE CANNOT BE SUSTAINED. 7. WE ALSO FIND THAT THE DECISION OF HONBLE PUNJAB & HARIYANA HIGH COURT CLEARLY SUPPORTS THE CASE OF THE ASSESSEE RENDERED IN THE C ASE OF CIT VS. RAKESH NAIN TRIVEDI REPORTED IN [2017] 80 TAXMANN.COM 238 (P & H) DATED 29.10.2015 WHEREIN IT WAS HELD 6 ITA NO.881/KOL/2017 JAI KUMAR KANKARIA A.YR.2013-14 6 THAT INITIATION OF THE PROCEEDING U/S 263 OF THE AC T BY THE CIT WAS NOT JUSTIFIED, AND THAT THE TRIBUNAL WAS RIGHT IN HOLDING THAT AFTER EXAMIN ING THE RECORD OF THE ASSESSEE IN EXERCISE OF POWERS U/S 263, WHERE THE CIT FINDS TH AT THE AO HAD NOT INITIATED PENALTY PROCEEDINGS, HE CANNOT DIRECT THE AO TO INITIATE TH E PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. ACCORDINGLY, IT WAS HELD THAT INITIATION O F THE PROCEEDING U/S 263 OF THE ACT WAS NOT JUSTIFIED AND TO THE ORDER OF THE TRIBUNAL CANC ELLING THE REVISION ORDER PASSED BY THE CIT WAS UPHELD BY THE HONBLE PUNJAB & HARYANA HIGH COURT. 9. IN VIEW OF THE AFORESAID FACTS AND FINDINGS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT TH E ORDER OF LD. CIT SEEKING TO REVISE THE PENALTY ORDER U/S 271AAB OF THE ACT DESERVES TO BE QUASHED. ACCORDINGLY, WE QUASH THE REVISION ORDER PASSED U/S 263 OF THE ACT. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 18.08.2017 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18.08.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. JAI KUMAR KANKARIA, 5, MIDDLETON STREET, KOLKATA -700071 2. PR. CIT, CENT-1, KOLKATA, 110, SHANTIPALLY, AAYA KAR BHAWAN POORVA, KOLKATA-700107 3..C.I.T.(A), CENTRAL-1, KOLKATA 4. C.I.T.- KOLK ATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 7 ITA NO.881/KOL/2017 JAI KUMAR KANKARIA A.YR.2013-14 7