Abu Mansur Ali, Kolkata V. DCIT, CC-XVIII, KOLKATA, Kolkata

ITA 92/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9204 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 06-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2014
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA SHRI RAJAT KUMAR
• Keywords: Search and seizure
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI N.V.VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.92/KOL/2014 ( / ASSESSMENT YEAR:2009-2010) ABU MANSUR ALI, RAIGACHI, AZADNAGAR, RAJARHAT, KOLKATA-700135 VS. DCIT, CC-XVIII, KOLKATA, 110, SHANTI PALLY, E.M.BYE PASS KASBA, KOLKATA-700107 ./ ./PAN/GIR NO.: AJWPA 0693 E ( /APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI S.M.SURANA, ADVOCATE REVENUE BY : SHRI RAJAT KUMAR KUREEL, JCIT / DATE OF HEARING : 06/03/2017 /DATE OF PRONOUNCEMENT 22/03/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO THE ASSESSMENT YEAR 2009-2010, IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A), CENTRAL-II, KOLKATA IN APPEAL NO.94/CC-XVII I/CIT(A)C-II/11-12, DATED 19.11.2013, WHICH IN TURN ARISES OUT OF AN OR DER PASSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT), DATED 31.12 .2010. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T A SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE INCOME TAX ACT, 1 961 WERE CONDUCTED IN THE M/S.KAUSHALYA INFRASTRUCTURE GROUP OF CASES ON 26/27.03.2009 AND ON SUBSEQUENT DATES (AT CERTAIN SPOTS). THIS INCLUD ED SEARCH ALSO AT THE RESIDENCE OF THE ASSESSEE AT VILL: RAIGACHI, AZAD N AGAR, RAJARHAT, 24 PGS(N), KOLKATA-136 BY VIRTUE OF A SEARCH WARRANT D ATED 25.03.2009. DURING THE COURSE OF SEARCH SOME DIARIES AND DOCUME NTS/PAPERS VIDE ID MARKS AMA/L TO AMA/7 AS PER ANNEXURE-'A' WERE FOUND AND SEIZED. ITA NO.92/14 ABU MANSUR ALI 2 BESIDES, CASH OF RS.8,300/ WAS ALSO FOUND BUT HOT S EIZED VIDE ANNEURE-2 AND SOME BANK ACCOUNTS AS PER ANNEXURE-3 TO PANCHAN AMA DATED 27.03.2009. ONE DIARY WITH ID MARK AM/1 VIDE ANNEXU RE-A TO PANCHANAMA DATED 19.05.2009 WAS FOUND AND SEIZED. O N VERIFICATION OF ABOVE SEIZED DIARIES AND DOCUMENTS, IT IS OBSERVED THAT THE SAME CONTAINED SOME ROUGH ENTRIES OF SOME OF THE LAND DE ALS CONDUCTED BY THE ASSESSEE ON BEHALF OF M/S.KAUSHALYA INFRASTRUCTURE GROUP OF CASES MENTIONING THEREIN CERTAIN AMOUNTS RECEIVED BY THE ASSESSEE THROUGH BANK AND CASH AND VARIOUS EXPENSES I.E. RELATING TO PAYMENTS MADE TO LAND OWNERS, PAYMENTS TOWARDS REGISTRATION COST AND OTHER RELATED EXPENSES INCURRED BY THE ASSESSEE IN CONNECTION WIT H LAND DEALS. IT IS ALSO-OBSERVED THAT THESE ROUGH ENTRIES WERE RELATED TO FINANCIAL' YEAR/2007 -08 & 2008-09 CORRESPONDING TO THE ASSESS MENT YEARS 2008-09 AND 2009-10 ONLY. THEREFORE BASED ON THESE DOCUMENT S THE AO HAS COMPLETED THE ASSESSMENT BY MAKING ADDITION ON ESTI MATED BASIS @1.35% OF THE GROSS AMOUNT RECEIVED FROM KAUSHALYA GROUP COMPANIES AMOUNTING TO RS.17,76,43,101/- WHICH COMES TO RS.23 ,98,192/- WHICH IS CONSIDERED AS TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-2010 FORM HIS ACTIVITIES OF LAND DEALINGS. THE REFORE, THE AO MADE THE ADDITION BASED ON ESTIMATION BASIS @ RS.23,98,1 92/-. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S.271AAA OF THE I.T .ACT. 3. AGGRIEVED FROM THE ORDER OF AO U/S.271AAA, THE A SSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE PENALTY LEVIED BY THE AO U/S.271AAA OF THE ACT OBSERVING THE FOLLOWINGS : - ITA NO.92/14 ABU MANSUR ALI 3 5. I HAVE CONSIDERED THE' SUBMISSION OF THE APPELL ANT AND PERUSED THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER. ON C AREFUL CONSIDERATION OF FACTS AND IN LAW, I AM OF THE OPINION THAT THE A O WAS JUSTIFIED IN IMPOSING THE PENALTY U/S 271AAA OF THE ACT BECAUSE THE INCOME WAS FOUND RECORDED IN THE SEIZED DIARIES WHICH WERE NOT THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT. FURTHER, THE SIMILAR NATU RE OF INCOME PERTAINING TO THE PRECEDING YEAR I.E. A.Y. 2008-09 WAS ALSO FO UND RECORDED ON THESE DIARIES AND THE APPELLANT DID NOT FILE THE RETURN U /S 139(1) OF THE ACT FOR THAT YEAR. THE APPELLANT CAME FORWARD TO ADMIT THE INCOME AS PER THE SEIZED DIARIES ONLY SUBSEQUENT TO THE SEARCH OPERAT ION BOTH FOR A.Y. 2008-09 AS WELL AS A.Y. 2009-10. HOWEVER, NO DECLAR ATION WAS MADE U/S 132( 4) OF THE ACT. IN FACT, FROM THE CONDUCT OF TH E APPELLANT IT IS APPARENT THAT THE INCOME ARISING OUT OF THE TRANSACTIONS OF LAND DEALING AS PER THE SEIZED DIARIES WAS NOT MEANT FOR DECLARATION IN THE RETURN OF INCOME BECAUSE NO RETURN WAS FILED FOR THE PRECEDING YEAR. FURTHER, THE AO HAS MADE ESTIMATION OF INCOME BECAUSE THE APPELLANT HAS FAILED TO SUBSTANTIATE THE PROFIT DECLARED BY HIM IN THE RETU RN OF INCOME. AGAIN, IN THE 'COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT AS CLAIMED THAT HE HAS PAID THE TAX ALONG WITH INTEREST ON THE INCOME DECL ARED BY HIM. HOWEVER, ON PERUSAL OF ASSESSMENT ORDER IT IS OBSERVED THAT THE AO HAS ASSESSED THE INCOME AT RS.24,01,946/- ON WHICH THE TAX LIABI LITY ALONG WITH INTEREST WAS COMPUTED AT RS.9,65,222/-. THERE IS NO CREDIT O F PRE-PAID TAXES. IT MEANS THAT THE APPELLANT HAD NOT PAID THE TAX EVEN ON THE RETURNED INCOME OTHERWISE THE AO WOULD HAVE GIVEN THE CREDIT FOR THE SAME. UNDER THE CIRCUMSTANCES, I AM OF THE VIEW THAT THE CONDIT IONS AS LAID DOWN IN SUB-SECTION (2) OF SECTION 271AAA ARE NOT SATISFIED AND, THEREFORE, THE AO HAS RIGHTLY IMPOSED THE PENALTY U/S 271AAA OF THE A CT. THE PENALTY IMPOSED BY HIM IS CONFIRMED. THE GROUND NO. 2 TO 4 ARE DISMISSED. 4. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S OF APPEAL :- 1. FOR THAT THE ORDER OF THE LD. CIT (A) IS ARBITR ARY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY WHEN THE TAX PAYER FILED THE RETURN BEFORE THE DUE DATE PROV IDED IN HIS CASE UNDER EXPLANATION-(3) TO SECTION 271 (1) (C) A ND THE PROVISIONS OF SEC. 271AAA WERE NOT APPLICABLE SINCE THE TAX PAYER WAS NOT AN ASSESSEE WITHIN THE MEANING OF THE PROVISIONS OF INCOME TAX ACT, 1961 AT THE TIME OF SEARCH. 3. FOR THAT IN VIEW OF THE PROVISIONS CONTAINED IN IT. ACT, 1961 MAKING CLEAR DISTINCTION BETWEEN THE WORD 'PERSON' AND WORD 'ASSESSEE' THE TAX PAYER WAS NOT LIABLE TO THE PENA LTY UNDER SEC. 271AAA. 4. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN IMPOSING PENALTY U/S. 271AAA OF RS. 2,40,195/- B EING 10% OF ASSESSED INCOME WHEN EVEN OTHERWISE THE ASSESSEE SATISFIED THE CONDITIONS OF 271AAA(2). ITA NO.92/14 ABU MANSUR ALI 4 5. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN IMPOSING PENALTY WHEN THE UNDISCLOSED INCOME WAS ADMITTED DURING THE COURSE OF SEARCH THE MANNER OF DERIVING THE UNDISCLOSED INCOME FROM LAND DEALINGS WAS SUBSTANTI ATED AND THE CIT(A) ERRED IN ASSUMING THAT THE TAXES WERE NO T PAID ON THE ASSESSED INCOME. 6. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN IMPOSING PENALTY WHEN THE ADDITIONS TO THE RETUR N INCOME WAS MADE ONLY ON ESTIMATE BASIS NOT ON THE BASIS OF ANY SEIZED DOCUMENT. 7. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN TH E RELIEF PRAYED FOR. 8. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTE R OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 5. ALTHOUGH IN THIS APPEAL, THE ASSESSEE HAS RAISED EIGHT GROUNDS OF APPEAL BUT AT THE TIME OF HEARING THE SOLITARY GRIE VANCE OF THE ASSESSEE HAS BEEN CONFINED TO THE ISSUE THAT THE AO CANNOT IMPOSE PENALTY U/S.271AAA WITHOUT ANY INCREMENTING MATERIA L FOUND DURING THE SEARCH. BESIDES THE ADDITION WAS MADE BY THE AO ON ESTIMATED BASIS AND NOT ON THE BASIS OF ANY SEIZED DOCUMENT T HEREFORE PENALTY U/S.271AAA SHOULD NOT BE LEVIED. 5.1. LD. AR FOR THE ASSESSEE HAS SUBMITTED BEFORE U S THAT THE AO HAS LEVIED PENALTY U/S.271AAA WITHOUT SATISFYING CONDIT ION U/S.271AAA. THE LD. AR ALSO SUBMITTED THAT UNDISCLOSED INCOME WAS A DMITTED DURING THE COURSE OF SEARCH I.E. MANNER OF VERIFYING THE UNDIS CLOSED INCOME FROM LAND DEALINGS WAS SUBSTANTIATED AND CIT(A) ERRED IN ASSUMING THAT THE TAXES WERE NOT PAID ON THE ASSESSED INCOME. THE LD. AR FOR THE ASSESSEE HAS SUBMITTED THAT IN ORDER TO LEVY THE PE NALTY U/S.271AAA THERE SHOULD BE AN INCRIMINATING MATERIAL. IN ASSESSEES CASE UNDER ITA NO.92/14 ABU MANSUR ALI 5 CONSIDERATION THERE IS NO INCRIMINATING MATERIAL EX CEPT TO ONE DIARY SEIZED DURING THE COURSE OF SEARCH. THE ASSESSEE UNDER CON SIDERATION USED TO WORK FOR OTHER PARTY AS A MIDDLEMAN AND USED TO REC EIVE CASH AMOUNT FOR LAND DEALINGS. BESIDES, THE SECTION 271AAA CLEARLY SAYS THAT PENALTY IS LEVIED ON UNDISCLOSED INCOME OF THE ASSESSEE BUT IN THIS CASE THERE IS NO ANY UNDISCLOSED INCOME BASED ON THE INCRIMINATING M ATERIAL FOUND DURING THE SEARCH ACTION. EXPLANATION TO SECTION 271AAA DE FINES THE UNDISCLOSED INCOME AS ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OT HER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH I N THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR. THE LD. AR FOR THE ASSESSEE ALSO POI NTED OUT THAT THE AO HAS MADE THE ADDITION ON THE BASIS OF ESTIMATION AN D NOT ON THE BASIS OF ANY SEIZED DOCUMENT. THEREFORE, PENALTY U/S.271AAA SHOULD NOT BE LEVIED. 5.2. LD. DR FOR THE REVENUE HAS PRIMARILY RELIED O N THE FINDINGS OF THE AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 5.3. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMI SSIONS OF THE ASSESSEE, AS THE PROPOSITION CANVASSED BY LD. AR FOR THE ASSE SSEE ARE SUPPORTED BY THE FACTS NARRATED BY HIM ABOVE AND THE CASE LAWS C ITED BY HIM ABOVE. AS ITA NO.92/14 ABU MANSUR ALI 6 LD. AR FOR THE ASSESSEE HAS POINTED OUT THAT DURING SEARCH AND SEIZURE NO ANY INCRIMINATING MATERIAL WAS FOUND AND THERE I S NO ANY UNDISCLOSED INCOME BELONGING TO THE ASSESSEE UNDER CONSIDERATIO N I.E. SEARCH PARTY DID NOT FIND ANY UNDISCLOSED INCOME PERTAINING TO T HE ASSESSEE. IN ADDITION TO THIS THE AO MADE THE ADDITION BASED ON ESTIMATION. ALL THE FIGURES ARE RELATING TO KAUSHALYA GROUP, THEREFORE, ADDITION MADE BY THE AO IS NOT BASED ON ANY SEIZED MATERIAL BUT IT IS BA SED ONLY ON ESTIMATION, SURMISE AND CONJECTURE. THEREFORE, PENALTY U/S.271A AA SHOULD NOT BE LEVIED. CONSIDERING THE ABOVE FACTUAL POSITION WE A RE OF THE VIEW THAT THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LD. C IT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE PENALTY U/S.271 AAA. 5.4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22/0 3/2017. SD/ - (N.V.VASUDEVAN) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 22/03/2017 '#$%& /PRAKASH#MISHRA ,SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) $ % , / ITAT, KOLKATA 1. / THE APPELLANT-ABU MANSUR ALI 2. / THE RESPONDENT.- DCIT, CC-XVIII, KOLKATA 3. 0 ( ) / THE CIT(A), KOLKATA. 4. 0 / CIT 5. 12 3 4456 , 56 , / DR, ITAT, KOLKATA 6. 3 78 / GUARD FILE. 1 4 //TRUE COPY//