P.C. JAIN & SONS HUF, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 928/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3608 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA JCIT DHK
• Assessee Lawyers: PRAVIN SARASWAT
• Keywords: Search and seizure
• Section: 133A; 32; 131; 132; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH HKKXPUN KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 927 & 928/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2011-12 & 12-13. P.C. JAIN & SONS HUF J-24, SUBHASH MARG, C-SCHEME, JAIPUR. CUKE VS. THE ACIT, CENTRAL CIRCLE 2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AADHP 7049 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI PRAVIN SARASWAT (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02.05.2018. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 03/05/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS OF LD. CIT (A)-4, JAIPUR DATED 04.09.2017 ARISING F ROM PENALTY ORDER PASSED UNDER SECTION 271AAA OF THE IT ACT FOR THE ASSESSMENT YEA RS 2011-12 AND 12-13 RESPECTIVELY. THE ASSESSEE HAS RAISED THE COMMON G ROUNDS IN THESE APPEALS. THE GROUND RAISED FOR THE ASSESSMENT YEAR 2011-12 ARE R EPRODUCED AS UNDER :- 1. THAT HE LEARNED CIT (A) HAS SERIOUSLY ERRED BY UPHOLDING THE LEVY OF PENALTY U/S 271AAA BY A.O. NO SEARCH U/S 1 32 WAS EVER INITIATED AGAINST THE ASSESSEE AND THE ASSESSMENTS WERE COMPLETED U/S 53C, THEREFORE, INITIATION & LEVY OF PENALTY U/S 271AAA IS NOT JUSTIFIED AS IT CAN BE LEVIED ONLY IN THE CASE OF INITIATION OF SEARCH U/S 132 OF I.T. ACT, 1961. 2 ITA NO. 927 & 928/JP/2017 PC JAIN & SONS HUF, JAIPUR. 2. THAT THE LEARNED CIT (A) HAS ERRED BY UPHOLDING THE LEVY OF PENALTY U/S 271AAA DESPITE FULFILLING ALL OF THREE CONDITIONS LAID DOWN U/S 271AAA(2) BY ASSESSEE FOR NOT LEVYING THE PENALTY U/S 271AAA. 3. THAT THE APPELLANT CRAVES LEAVE TO RESERVE TO IT SELF THE RIGHT TO ADD ALTER, AMEND, SUBSTITUTE, WITHDRAW AND/OR ANY G ROUND(S) OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2. SINCE THE GROUND NO. 1 RAISED BY THE ASSESSEE RE GARDING VALIDITY OF INITIATION AND LEVY OF PENALTY UNDER SECTION 271AAA WAS NOT RA ISED BEFORE THE AUTHORITIES BELOW, THEREFORE, THE ASSESSEE HAS FILED AN APPLICA TION SEEKING LEAVE OF THE TRIBUNAL TO RAISE THIS GROUND AS AN ADDITIONAL GROUND IN BOT H THE APPEALS. 3. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R ON THE ADMISSION OF ADDITIONAL GROUND. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF LEVY OF PENALTY UNDER SECTION 271AAA ON THE GROUND THAT THERE WAS NO SEAR CH AND SEIZURE ACTION UNDER SECTION 132 OF THE IT ACT IN THE CASE OF THE ASSESS EE AND, THEREFORE, THE PROVISIONS OF SECTION 271AAA CANNOT BE INVOKED IN THE CASE OF THE ASSESSEE FOR LEVY OF PENALTY IN RESPECT OF THE DISCLOSURE MADE BY THE ASSESSEE I N THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT. THUS THE ISSUE RAISED BY T HE ASSESSEE IN THIS ADDITIONAL GROUND IS PURELY LEGAL IN NATURE AND ALL RELEVANT F ACTS REQUIRED FOR ADJUDICATION OF THIS ISSUE ARE ALREADY ON THE RECORD AND NO NEW FACTS OR MATERIAL IS REQUIRED TO BE EXAMINED OR INVESTIGATED FOR THE PURPOSE OF ADJUDIC ATION OF THE ISSUE RAISED BY THE ASSESSEE. ACCORDINGLY IN VIEW OF THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NTPC, 229 ITR 383 (SC), THE ADDITIO NAL GROUND RAISED BY THE ASSESSEE WHICH IS PURELY LEGAL IN NATURE AND DOES N OT REQUIRE ANY EXAMINATION OR INVESTIGATION OF NEW FACTS IS ADMITTED FOR ADJUDICA TION ON MERITS. 3 ITA NO. 927 & 928/JP/2017 PC JAIN & SONS HUF, JAIPUR. ON MERITS : 4. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT A SEARCH UNDER SECTION 132 AND A SURVEY UNDER SECTION 133A OF THE IT ACT WAS C ARRIED ON IN THE CASE OF M/S. GANPATI LOCKERS PVT. LTD. ON 29.06.2011. THE ASSES SEE WAS HAVING A LOCKER NO. 239 AT GANPATI LOCKERS PVT. LTD. ACCORDINGLY, THE ASSE SSEE IN HIS STATEMENT RECORDED UNDER SECTION 131 ON 11 TH JULY, 2011 DISCLOSED AN UNDISCLOSED SINCOME OF RS. 89,600/-. THE ASSESSEE FILED ITS RETURN OF INCOME UNDER SECTION 139(1) ON 30 TH JULY, 2011 DECLARING TOTAL INCOME OF RS. 5,25,230/- INCLU DING RS. 89,600/- AS UNDISCLOSED INCOME WHICH WAS ACCEPTED BY THE AO. THEREFORE, WH EN THE SAID DISCLOSURE OF THE UNDISCLOSED INCOME WAS NOT IN THE PROCEEDINGS UNDER SECTION 132 OR IN THE STATEMENT RECORDED UNDER SECTION 132(4), THEN THE P ROVISIONS OF SECTION 271AAA ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE LD . A/R HAS THUS CONTENDED THAT THE PENALTY LEVIED UNDER SECTION 271AAA IS NOT SUSTAINA BLE IN THE CASE OF THE ASSESSEE AND THE SAME MAY BE DELETED. THE LD. A/R HAS RELIE D UPON THE FOLLOWING DECISIONS :- ACIT VS. PRAVIN S. JAIN ITA NO. 4005/M/2014 (ITAT MUMBAI BENCH) DCIT VS. SAM INDIA ABHIMANYU HOUSING ITA NO. 1257/DEL/2015 (ITAT DELHI BENCH) HIRAL HIMANSHU KANAKIA VS. ACIT ITA NO. 2028/MUM/2012. DCIT VS. K.G. DEVELOPERS ITA NO. 1139/AHD/2012 (AHMEDABAD BENCH) PCIT VS. MUKESHBHAI RAMAN LAL PRAJAPATI TAX APPEAL NO. 434 OF 2017. 4.1. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE ITSELF HAS DI SCLOSED THE UNDISCLOSED INCOME 4 ITA NO. 927 & 928/JP/2017 PC JAIN & SONS HUF, JAIPUR. WHICH WAS DETECTED BY THE DEPARTMENT IN THE COURSE OF SEARCH AND SEIZURE ACTION IN CASE OF GANPATI LOCKERS PVT. LTD. HENCE THE PENALT Y LEVIED UNDER SECTION 271AAA IS JUSTIFIED. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, WE NOTE THAT THERE WAS NO SEARCH AND SEIZUR E ACTION IN THE CASE OF THE ASSESSEE BUT THE SEARCH WAS CARRIED OUT IN THE CASE OF GANPATI LOCKERS PVT. LTD. ON 29 TH JUNE, 2011. SUBSEQUENT TO THE SEARCH, THE STATEME NT OF THE ASSESSEE WAS RECORDED UNDER SECTION 131 ON 11 TH JULY, 2011 WHEREIN THE ASSESSEE HAS DISCLOSED AN INCOME OF RS. 89,600/-. THEREFORE, THERE IS NO DISPUTE THAT THE ASSESSEE DISCLOSED THE INCOME IN THE STATEMENT RECORDED UNDE R SECTION 131 AND NOT IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. HENCE THE PROVISIONS OF SECTION 271AAA CANNOT BE RESORTED TO LEVY THE PENALTY WHEN THERE WAS NO SEARCH AND SEIZURE ACTION RESULTING IN DISCLOSURE OF INCOME BY THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE ASSE SSEE HAS RELIED UPON A SERIES OF DECISIONS ON THIS POINT INCLUDING THE DECISION OF H ONBLE GUJARAT HIGH COURT IN THE CASE OF PCIT VS. MUKESH BHAI RAMAN LAL PRAJAPATI IN TAX APPEAL NO. 434 OF 2017 DATED 24 TH JULY, 2017. THE HONBLE HIGH COURT HAS HELD IN PAR A 13 & 14 AS UNDER :- 13. SUB SECTION (2) OF SECTION 271AAA THUS WHILE RETAINING THE OTHER REQUIREMENTS OF AVOIDING PENALTY AS PROVIDED IN CLA USE (II) OF EXPLANATION 5 HAS NOW INTRODUCED AN ADDITIONAL REQU IREMENT OF THE ASSESSEE HAVING TO SUBSTANTIATE THE MANNER IN WHICH , THE UNDISCLOSED INCOME WAS DERIVED. IT IS THIS REQUIREMENT WHICH TH E COUNSEL FOR THE REVENUE WOULD PLACE GREAT EMPHASIS ON. ACCORDING TO HER, ONUS IS NOW ENTIRELY SHIFTED ON THE ASSESSEE NOT ONLY TO MAKE A DISCLOSURE OF THE UNDISCLOSED INCOME BUT ALSO TO SPECIFY THE MANNER, IN WHICH, THE 5 ITA NO. 927 & 928/JP/2017 PC JAIN & SONS HUF, JAIPUR. INCOME HAS BEEN DERIVED AND TO SUBSTANTIATE THE SAM E. IT WAS THEREFORE, CONTENDED THAT THE EARLIER DECISIONS OF THIS COURT IN CASE OF COMMISSIONER OF INCOME TAX VS. MAHENDRA C. SHAH AND THE DECISION OF ALLAHABAD HIGH COURT IN CASE OF COMMISSIONER OF INC OME TAX VS. RADHA KISHAN GOEL RENDERED IN BACKDROP OF DIFFERENT STATUTORY PROVISIONS WOULD NOT AUTOMATICALLY APPLY. 14. WE DO NOT REJECT THIS CONTENTION TOTALLY. HOWEV ER, INSOFAR AS THE FACTS OF THE PRESENT CASE ARE CONCERNED, THE FIELD WOULD STILL BE HELD BY THE DECISION OF THIS COURT IN CASE OF COMMISSIONER OF INCOME TAX VS. MAHENDRA C. SHAH (SUPRA). SUB SECTION (2) OF SECTIO N 271 AAA IMPOSES AN ADDITIONAL CONDITION OF THE ASSESSEE HAVING TO S UBSTANTIATE THE MANNER IN WHICH, THE UNDISCLOSED INCOME WAS DERIVED . THIS REQUIREMENT, HOWEVER, MUST BE SEEN AS CONSEQUENTIAL TO OR COROLLARY TO THE BASE REQUIREMENT OF SPECIFYING THE MANNER, IN W HICH, THE UNDISCLOSED INCOME WAS DERIVED. IT IS ONLY WHEN SUC H DECLARATION IS MADE, THE QUESTION OF SUBSTANTIATING SUCH DISCLOSUR E OR CLAIM WOULD ARISE. IF, AS IN THE PRESENT CASE, THE REVENUE FAIL ED TO QUESTION THE ASSESSEE WHILE RECORDING HIS STATEMENT UNDER SECTIO N 132(4) OF THE ACT AS REGARDS THE MANNER OF DERIVING SUCH INCOME, THE REVENUE CANNOT JUMP TO THE CONSEQUENTIAL OR LATER REQUIREMENT OF S UBSTANTIATING THE MANNER OF DERIVING THE INCOME. IN THE CONTEXT OF TH E REQUIREMENT OF THE ASSESSEE SPECIFYING THE MANNER OF DERIVING THE INCOME THE DECISION OF THIS COURT IN CASE OF COMMISSIONER OF INCOME TAX VS. MAHENDRA C. SHAH (SUPRA) WOULD HOLD THE FIELD EVEN IN THE CONTE XT OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT. IT IS ONLY WHEN T HE OFFICER OF THE RAIDING PARTY RECORDING THE STATEMENT OF THE ASSESS EE UNDER SECTION 132(4) OF THE ACT ELICITS A RESPONSE FROM THE ASSES SEES THIS REQUIREMENT, THE ASSESSEES RESPONSIBILITY TO SUBST ANTIATE THE MANNER OF DERIVING SUCH INCOME WOULD COMMENCE. WHEN THE B ASE REQUIREMENT ITSELF FAILS, THE QUESTION OF DENYING T HE BENEFIT OF NO PENALTY WOULD NOT ARISE. 6 ITA NO. 927 & 928/JP/2017 PC JAIN & SONS HUF, JAIPUR. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE DISCLOSURE WAS NOT MADE DURING THE SEARCH AND SEIZURE ACTION AND IN TH E STATEMENT RECORDED UNDER SECTION 132(4) AND BY FOLLOWING THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF MUKESH BHAI RAMAN LAL PRAJAPATI (SUPRA), TH E PROVISIONS OF SECTION 271AAA ARE NOT ATTRACTED FOR LEVY OF PENALTY IN RESPECT OF THE DISCLOSURE OF INCOME MADE BY THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTIO N 131 OF THE ACT. ACCORDINGLY, WE DELETE THE PENALTY LEVIED BY THE AO UNDER SECTIO N 271AAA FOR BOTH THE ASSESSMENT YEARS. 6. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/05/2 018. SD/- SD/- HKKXPUN FOT; IKY JKWO (BHAGCHAND) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED :- 03/05/2018. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- P.C. JAIN & SONS HUF, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT CENTRAL CIRCLE-2, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 927 & 928/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 7 ITA NO. 927 & 928/JP/2017 PC JAIN & SONS HUF, JAIPUR.