ACIT CEN CIR 32, MUMBAI V. HICONS DEVELOPERS, MUMBAI

ITA 913/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1756 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 26-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Keywords: Search and seizure
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI RAJENDRA, AM AND SHRI SANDEEP GOSAIN , AM ./ ITA NO. 913/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) ACIT, CENTRAL CIRCLE - 32 ROOM NO. 32(2), GROUND FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 /APPELLANT / VS. M / S. HICONS DEVELOPERS / RESPONDENT B - 201, LEO APARTMENT, 24 TH ROAD KOHINOOR CHS, KHAR (W) MUMBAI 400052 ./ PAN - AAEFH3282M / APPELLANT BY: M/S. KUSUM BANSAL / RESPONDENT BY : SHRI DEEPAK TRALSHAWALA / DATE OF HEARING : 24.11.2015 / DATE OF PRONOUNCEMENT : 30 .12.2015 / O R D E R PER SANDEEP GOSAIN, J.M THIS APPEAL IS PREFERRED BY REVENUE AGAINST THE ORDER DATED 2 8 . 11.2013 PASSED BY CIT(A) - 39 , MUMBAI AND IT PERTAINS TO A.Y. 200 9 - 10 ON THE GROUNDS MENTIONED BELOW: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT PENALTY UNDER SECTION 271AAA IS NOT LEVIABLE IN SPITE OF THE FACT THAT THE 2 ITA NO. 913/MUM/2014 M / S. HICONS DEVELOPERS ASSESSEE FILED A RETURN OF INCOME EVEN WHEN THE TAX IS DUE FROM THE ASSESSEE. 2. O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE CASH SEIZED FROM THE ASSESSEE IS DEEMED TO BE ADJUSTED AVAINST THE TAX DUE FROM THE ASSESSEE. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS DEALI NG IN THE BUSINESS OF DEVELOPER AND BUILDER. AN ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON THE ASSESSEE ON 24.02.2009. DURING THE COURSE OF SEARCH, ASSESSEE HAD MADE DISCLOSURE OF INCOME OF ` 6,82,56,790/ - . THE SAID DISCLOSURE WAS SPECIFIED TO B E IN RESPECT OF SALE OF CERTAIN FLATS IN LA - FONTE AND LA - MARQUE PROJECT S AND AFTER ADJUSTING CASH EXPENSES, THE NET INCOME OF ` 6,82,56,790/ - WAS ADMITTED AND OFFERED TO TAX. THE RETURN OF INCOME WAS FILED FOR THE RELEVANT YEAR OFFERING THE SAID INCOME. AO HAD INITIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE ACT FOR THE REASON THAT ALL THE CONDITIONS AS SPECIFIED IN SUB - SECTION (2) HAVE NOT BEEN SATISFIED. PENALTY WAS LEVIED VIDE ORDER DATED 30.06.2011. 3 . AGGRIEVED BY ORDER OF PENALTY ASSESSEE FILED A N APPEAL BEFORE CIT(A) AND THE CIT(A), VIDE ORDER DATED 22.07.2011 ALLOWED THE APPEAL FILED BY ASSESSEE AND DELETED THE PENALTY. 4 . AGAINST THE ORDER CIT(A) REVENUE PREFERRED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED ABOVE. SINCE BOTH THE GROUNDS AND INTERCONNECTED AND INTERRELATED, THEY ARE DISPOSED OFF BY THIS CONSOLIDATED ORDER. AT THE VERY OUTSET THE LEARNED D.R. REPRESENTING THE DEPARTMENT HAS SUBMITTED THAT DURING THE SEARCH AND SEIZURE ACTION, ASSESSEE VOLUNTARILY DISCLOSED INCOME OF AN AM OUNT OF ` 6,82,56,790/ - . THEREFORE PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE INCOME TAX ACT WAS INITIATED FOR DISCLOSURE OF INCOME OF ` 6,82,56,790/ - . IT WAS FURTHER SUBMITTED THAT SINCE ASSESSEE HAS NOT 3 ITA NO. 913/MUM/2014 M / S. HICONS DEVELOPERS FULFILLED THE CONDITIONS AS LAID DOWN IN SUBSECT ION (2) OF SECTION 271AAA OF THE ACT, THEREFORE PENALTY PROCEEDINGS WERE RIGHTLY INITIATED SINCE ASSESSEE HAS NOT PAID TAX TOGETHER WITH INTEREST ON UNDISCLOSED INCOME ADMITTED UNDER SECTION 132(4) OF THE ACT. THE LEARNED D.R. RELIED UPON THE ORDER PASSED BY AO REGARDING LEVY OF PENALTY. 5 . ON THE OTHER HAND, THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SEARCH, ASSESSEE HAD MADE DISCLOSURE OF INCOME OF ` 6,82,56,790/ - . THE SAID DISCLOSURE WAS SPECIFICALLY TO BE IN RESPECT OF SALE OF FLAT S IN LA - FONTE AND LA - MARQUE PROJECTS AND AFTER ADJUSTING THE CASH EXPENSES NET INCOME OF ` 6,82,56,790/ - WAS OFFERD TO TAX. THE RETURN OF INCOME WAS FILED IN THE RELEVANT YEAR OFFERING THE SAID INCOME. AO HAD INITIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA ONLY FOR THE REASON THAT ALL THE CONDITIONS AS SPECIFIED IN SUBSECTION (2) ARE NOT SATISFIED. IN THIS RESPECT IT WAS SUBMITTED BY ASSESSEE THAT SUBSEQUENT TO THE SEARCH ACTION ON 24.02.2009 RETURN OF INCOME WAS FIELD WITHIN THE PRESCRIBED TIME DECLA RING INCOME OF ` 6,82,56,790/ - WHICH WAS ENHANCED TO ` 7,99,82,150/ - BY THE AO. IT WAS FURTHER SUBMITTED THAT THE RETURNED INCOME INCLUDED CASH SEIZED WHICH WAS IN CONSONANCE WITH THE DECLARATION MADE DURING THE SEARCH ACTION UNDER SECTION 132 AS IN THE STAT EMENT RECORDED UNDER SECTION 132(4) OF THE ACT. ASSESSEE HAD SPECIFIED AND SUBSTANTIATED THE MANNER IN WHICH SUCH INCOME IS DERIVED. THE LEARNED A.R. FOR THE ASSESSEE FURTHER SUBMITTED THAT UNDER SUBSECTION (2) TO SECTION 271AAA IMMUNITY IS PROVIDED IN SUC H CASES IF ASSESSEE HAS ADMITTED UNDECLARED INCOME IN STATEMENT UNDER SECTION 132(4) AND SPECIFIES AND SUBSTANTIATE THE MANNER IN WHICH SUCH INCOME IS DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDECLARED INCOME. 4 ITA NO. 913/MUM/2014 M / S. HICONS DEVELOPERS 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. WE HAVE ALSO PERUSED THE DETAILED ORDER PASSED BY CIT(A) WHILE DELETED PENALTY. THE CIT(A) HAS CATEGORICALLY MENTIONED IN PARA 8 OF HIS ORDER AS UNDER: - WHEN THE RECTIFICATION APPLICATION DATED 24.1.2011, WA S PENDING, THE A.O HAD ISSUED PENALTY ORDER UNDER S. 271AAA DATED 30.6.2011 IMPOSING PENALTY OF RS.68,25,679/ - ON THE GROUND THAT THE ASSESSEE HAS NOT PAID THE TAX TOGETHER WITH INTEREST ON UNDISCLOSED INCOME ADMITTED UNDER S. 132(4). HOWEVER, SUBSEQUENTLY AS PER REMAND REPORT SUBMITTED BY THE A.O IT HAS BEEN STATED THAT THE SEIZED CASH OF RS.2,48,89,000/ - HAS BEEN TREATED AS REGULAR TAX PAYMENT AND THE SAME WAS DEPOSITED THROUGH CHALLAN DATED 103.2011. THUS IT CAN BE SEEN THAT THE SEIZED CASH HAS BEEN ADJU STED TOWARDS THE TAX DUE ON INCOME AS DISCLOSED IN THE RETURN, ALBEIT AS REGULAR TAX. EVEN THOUGH IT HAS BEEN REMITTED AS REGULAR TAX, THE FACT OF THE MATTER IS THE ENTIRE SEIZED CASH WHICH WAS IN THE CUSTODY OF THE DEPARTMENT, HAD ALL ALONG BEEN REQUESTED BY THE ASSESSEE TO ADJUST AGAINST THE TAX ALONGWITH INTEREST ON THE INCOME AS DISCLOSED. FURTHER, THERE IS NO DISPUTE THAT THE APPELLANT HAS SPECIFIED AND SUBSTANTIATED THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED. THE ONLY FACT DISPUTED IS WHETHER TAX ALONGWITH INTEREST IF ANY, TAX HAS BEEN PAID UNDER THE PROVISIONS. WHEN A REQUEST HAS BEEN MADE WHEN THE RETURN WAS FILED FOR ADJUSTING THE TAX AGAINST THE INCOME AS DISCLOSED AND WHEN THE SEIZED CASH HAS FINALLY BEEN ADJUSTED BY THE A.O AG AINST THE TAX DEMANDED, THE APPELLANT CANNOT BE PENALIZED STATING THAT THE ASSESSEE HAS NOT PAID THE TAX ALONGWITH INTEREST IN RESPECT OF THE UNDISCLOSED INCOME. ON THE SAID SPECIFIC FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THIS IS NOT A FIT CA SE FOR LEVY OF PENALTY UNDER S. 271AAA FOR THE REASON THAT WHEN A REQUEST FOR ADJUSTMENT ON THE SEIZED CASH HAD BEEN MADE AS IT IS EVIDENT FROM THE COMPUTATION OF INCOME FILED ALONGWITH RETURN OF INCOME, AND WHEN THE A.Q HAD FINALLY MADE THE ADJUSTMENT, TH E CONDITIONS AS STIPULATED IN SUB - SECTION (III) TO SECTION 271AAA(2) IS ALSO DEEMED TO HAVE BEEN SATISFIED. THE PENALTY IMPOSED OF RS.68,25,679/ - IS HEREBY DELETED. 7 . WE HAVE CONSIDERED THE ORDER PASSED BY CIT(A) WHEREIN THE CIT(A) HAS CLEARLY MENTIONED THA T SUBSEQUENTLY AS PER REMAND REPORT C' A) C) 4 5 ITA NO. 913/MUM/2014 M / S. HICONS DEVELOPERS SUBMITTED BY THE A.O IT HAS BEEN STATED THAT THE SEIZED CASH OF ` 2,48,89,000/ - HAS BEEN TREATED AS REGULAR TAX PAYMENT AND THE SAME WAS DEPOSITED THROUGH CHALLAN DATED 103.2011. THEREFORE IT CAN BE SEEN THAT THE SEIZED C ASH HAS BEEN ADJUSTED TOWARDS THE TAX DUE ON INCOME AS DISCLOSED IN THE RETURN, ALTHOUGH THE SAME HAS BEEN REMITTED AS REGULAR TAX. CIT(A) HAS CLEARLY MENTIONED IN HIS ORDER THAT THE ENTIRE SEIZED CASH WHICH WAS IN THE CUSTODY OF THE DEPARTME NT, HAD ALL ALONG BEEN REQUESTED BY THE ASSESSEE TO ADJUST AGAINST THE TAX ALONGWITH INTEREST ON THE INCOME AS DISCLOSED. NOW AS PER THE AFOREMENTIONED FACTS, IT IS CLEAR THAT W HEN A REQUEST HAS BEEN MADE WHEN THE RETURN WAS FILED FOR ADJUSTING THE TAX AGA INST THE INCOME AS DISCLOSED AND WHEN THE SEIZED CASH HAS FINALLY BEEN ADJUSTED BY THE A.O AGAINST THE TAX DEMANDED, ASSESSEE CANNOT BE PENALIZED STATING THAT THE ASSESSEE HAS NOT PAID THE TAX ALONGWITH INTEREST IN RESPECT OF THE UNDISCLOSED INCOME. WE HAVE NOTICED THAT THE BASIS FOR PENALTY LEVIED BY AO WAS THAT THE ASSESSEE HAS NOT PAID FULL TAX ALONGWITH INTEREST ON THE UNDISCLOSED INCOME WHICH IS REQUIRED UNDER SECTION 271AAA(2)(III) OF THE ACT WHEREAS IN THE PRESENT CASE THE ENTIRE AMOUNT HAS ALREAD Y BEEN DEPOSITED. THEREFORE IT WAS RIGHTLY HELD BY THE CIT(A) THAT IT IS NOT A FIT CASE FOR PENALTY UNDER SECTION 271AAA FOR THE REASONS THAT THE REQUEST FOR ADJUSTMENT OF SEIZED CASH HAS BEEN MADE AND IT IS EVIDENT FROM THE COMPUTATION OF INCOME FILED ALO NGWITH THE RETURN OF INCOME AND MORE PARTICULARLY WHEN AO HAS FINALLY MA D E ADJUSTMENT . THEREFORE THE CONDITIONS AS STIPULATED IN SUB - SECTION (III) TO SECTION 271AAA(2) IS ALSO DEEMED TO HAVE BEEN SATISFIED. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF THE CIT(A) NEED NO INTERFERENCE FROM OUR PART. WE UPHOLD THE SAME. C' A) C) 4 6 ITA NO. 913/MUM/2014 M / S. HICONS DEVELOPERS 8 . IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2015. 30.12.2015 SD/ - SD/ - ( RAJENDRA ) ( SANDEEP GOSAIN ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI , DATED 30 TH DECEMBER, 2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) - 34 , MUMBAI 4. / THE CIT - 24 , MUMBAI 5. , , / DR, H BENCH ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER //TRUE COPY// /ASSTT. REGISTRAR) , /ITAT, MUMBAI N.P.