Smt. Dropadi Kalra, Indore V. THE DCIT (Central-I), Indore

ITA 97/IND/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7496 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-12-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S SHEETAL
• Assessee Lawyers: K G GOYAL
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 271(1)(c); 40A(3); 143(3); 153A; 132; 15; 27

Judgement Text

ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NOS.78 TO 80/IND/2017 ASSESSMENT YEARS: 2010-11, 2011-12 & 2012-13 RESPECTIVELY ITA NOS.85 TO 89/IND/2017 ASSESSMENT YEARS: 2007-08, 2008-09, 2010-11, 2012- 13 & 2013-14 RESPECTIVELY M/S. SM & SM RESORTS & HOTELS INTERNATIONAL LTD. 6-SHRIRAM NAGAR, INDORE VS. DCIT(CENTRAL) - 1 INDORE (APPELLANT) (RESPONDENT ) PAN NO .AAHCS5800L SHRI DEEPAK KALRA 6, SHRIRAM NAGAR INDORE VS. DCIT(CENTRAL) - 1 INDORE (APPELLANT) (RESPONDENT ) PAN NO. ALGPK9075L ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 2 ITA NOS.90 TO 94/IND/2017 ASSESSMENT YEARS: 2007-08 TO 2011-12 ITA NOS.95 TO 97/IND/2017 ASSESSMENT YEARS: 2007-08 TO 2009-10 REVENUE BY SHRI S.S. SHEETAL, A.R. ASSESSEE BY SHRI K.G. GOYAL, D.R. DATE OF HEARING 12 .12.2018 DATE OF PRONOUNCEMENT 10 .01.2019 O R D E R PER BENCH: THIS BUNCH OF 16 APPEALS BY FOUR DIFFERENT ASSES SEES ARE DIRECTED AGAINST ORDER OF THE CIT(A)-III, INDORE DATED 7.12.2016 FOR THE ASSESSMENT YEARS 2007-08 TO 2013- 14. ALL THE APPEALS PERTAINING TO THE SAME GROUP WERE TAKEN UP SHRI NANAKRAM KALRA 6, SHRIRAM NAGAR INDORE VS. DCIT(CENTRAL) - 1 INDORE (APPELLANT) (RESPONDENT ) PAN NO. AKXPK2781P S MT. DROPADI KALRA 6, SHRIRAM NAGAR INDORE VS. DCIT(CENTRAL) - 1 INDORE (APPELLANT) (RESPONDENT ) PAN NO .ACWPN1 380N ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 3 TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BRE VITY. FIRST WE TAKE UP ITA NO.78/IND/2017 IN THE CASE OF SM & SM RESORTS N HOTELS INTERNATIONAL LTD. VS. DCIT (CENT RAL)- 1, INDORE. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEALS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND, IN LAW, THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS)-III, I NDORE ERRED IN CONFIRMING THE PENALTY OF RS.92,700/- LEVIED U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 BY THE ASSISTANT COMMISSIONER OF INCOME TAX (CENTRAL)-I, INDORE. 2. THE APPELLATE ORDER BEING NOT BASED ON FACTS, AND I N LAW, IS ILLEGAL AND WRONG. 3. THE APPELLANT COMPANY CRAVES LEAVE TO ADD/ALTER/AME ND THE ABOVE GROUNDS OF APPEAL, IF AND WHEN, NECESSITY OR OCCASI ON ARISES. 2. BRIEFLY STATED FACTS ARE THAT A SEARCH & SEIZURE OPERATION WAS CARRIED OUT IN THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE APPELLANT GROUP, INDORE INCLUDING THE ASSESSEE ALONG WITH OTHER CONCERNS/BUS INESS ASSOCIATES ON 21.9.2012. SUBSEQUENTLY, A NOTICE U/S 15 3A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS TH E ACT) WAS ISSUED. IN RESPONSE THERETO, THE ASSESSEE FILED RETURN ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 4 OF INCOME. THE A.O. FRAMED ASSESSMENT U/S 153A R.W.S . 143(3) OF THE ACT VIDE ORDER DATED 24.3.2015. WHILE FRAMING THE ASSESSMENT, THE A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2010-11 & 2011-12 AN D PENALTY U/S 271AAB OF THE ACT FOR THE ASSESSMENT YEAR 2012-13. SUBSEQUENTLY, THE A.O. IMPOSED A PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF APPEAL UNDER CONSIDERATION VIDE ORDER DATED 23.9.2015 THEREBY THE ASSESSING OFFICER IMPOSED A PENALTY OF RS.92,700/- U/S 271(1)(C) OF THE ACT. AGAINST THIS, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING TH E SUBMISSIONS DISMISSED THE APPEAL. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 3. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE PENALTY IS BAD IN LAW AND IS CONTRARY TO THE JUDIC IAL PRONOUNCEMENTS, MORE PARTICULARLY JUDGEMENT OF THE ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 5 HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CAS E OF PCIT-I VS. KULWANT SINGH BHATIA IN ITA NO.9 OF 2018 (M .P.) DATED 9.5.2018. LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THERE IS NO SPECIFIC CHARGE BY THE ASSESSING OFFI CER. FURTHER, IT IS CONTENDED THAT THE LD. CIT(A) DID NOT CONSIDER THE SUBMISSIONS OF THE ASSESSEE. HE SUBMITTED THAT T HE A.O. OUGHT TO HAVE MADE SPECIFIC CHARGE, MOREOVER THE NOTICE U/S 271(1)(C) OF THE ACT DATED 24.3.2015 IS E X-FACIE DEFECTIVE AND CONTRARY TO THE JUDGEMENT OF THE HON'BL E JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT-I VS. K ULWANT SINGH BHATIA (SUPRA). 4. PER CONTRA, LD. D.R. OPPOSED THE SUBMISSIONS OF T HE ASSESSEE AND SUBMITTED THAT IN PURSUANCE TO THE NOTICE, THE ASSESSEE PARTICIPATED INTO THE PROCEEDINGS AND DID NOT RAISE ANY OBJECTION BEFORE THE A.O. ABOUT THE LEGALITY OF THE NOTICE DATED 24.3.2015. THEREFORE, HE SUBMITTED TH AT ASSESSEE CANNOT TAKE SHELTER UNDER THE JUDGEMENT OF TH E ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 6 HON'BLE JURISDICTIONAL HIGH COURT, WHICH WAS ON THE DIFFERENT SET OF FACTS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORDS AND GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A ) HAS DECIDED THE ISSUE IN PARAS 3.1 TO 3.6.2 OF THE IMPUGN ED ORDER, WHICH IS REPRODUCED AS UNDER: ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 7 ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 8 6. WE FIND THAT THE NOTICE ISSUED FOR LEVY OF PENALT Y DATED 24.3.2015 DO NOT CONTAIN THE SPECIFIC CHARGE. THE NO TICE DATED 24.3.2015 IS REPRODUCED AS UNDER FOR THE SAKE OF CLARITY: ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 9 ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 10 7. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT-I VS. KULWANT SINGH BHATIA (SUPRA) IN PARAS 9 TO 11 HAS HELD AS UNDER: ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 11 8. THE REVENUE HAS NOT BROUGHT ANY CONTRARY MATERIAL SUGGESTING THAT A VALID NOTICE WAS SERVED ON THE ASSESSE E FOR INITIATING PROCEEDINGS U/S 271(1)(C) OF THE ACT. THIS TRIBUNAL IS BOUND BY THE JUDGEMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT. RESPECTFULLY FOLLOWING T HE SAME ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 12 PENALTY PROCEEDINGS INITIATED BY THE A.O. VIDE NOTICE DATED 24.3.2015 ARE HELD TO BE BAD IN LAW AND CONTRARY TO THE JUDGEMENT OF THE HON'BLE M.P. HIGH COURT IN THE CASE OF PCIT-I VS. KULWANT SINGH BHATIA (SUPRA). ACCORDINGLY, THE IMPUGNED PENALTY ORDER IS HEREBY QUASHED, BEING BAD IN LAW. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.78/IND/2017 IS ALLOWED. ITA NO.79/IND/2017: 10. NOW WE TAKE UP ITA NO.79/IND/2017. IN THIS APPEAL OF THE ASSESSEE, THE FACTS AND GROUNDS ARE IDENTICAL TO ITA NO.78/IND/2017 WHEREIN WE HAVE HELD AS UNDER:- 7. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF PCIT-I VS. KULWANT SINGH BHATIA (SUPRA) IN PARAS 9 TO 11 HAS HELD AS U NDER: ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 13 ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 14 8. THE REVENUE HAS NOT BROUGHT ANY CONTRARY MATERIA L SUGGESTING THAT A VALID NOTICE WAS SERVED ON THE ASSESSEE FOR INITIATING PR OCEEDINGS U/S 271(1)(C) OF THE ACT. THIS TRIBUNAL IS BOUND BY THE JUDGEMENT OF TH E HON'BLE JURISDICTIONAL HIGH COURT. RESPECTFULLY FOLLOWING THE SAME PENALTY PROC EEDINGS INITIATED BY THE A.O. VIDE NOTICE DATED 24.3.2015 ARE HELD TO BE BAD IN L AW AND CONTRARY TO THE JUDGEMENT OF THE HON'BLE M.P. HIGH COURT IN THE CAS E OF PCIT-I VS. KULWANT SINGH BHATIA (SUPRA). ACCORDINGLY, THE IMPUGNED PENALTY ORDER IS HEREBY QUASHED, BEING BAD IN LAW. FOR THE SAME REASONING THE IMPUGNED PENALTY ORDER IS HEREBY QUASHED BEING BAD IN LAW. ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 15 ITA NO.80/IND/2017: 11. THIS APPEAL BY THE ASSESSEE IS AGAINST CONFIRMING T HE PENALTY U/S 271AAB OF THE ACT. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND, IN LAW, THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS)-III, I NDORE ERRED IN CONFIRMING THE PENALTY OF RS.1,50,000/- LEVIED U/S 271AAB(1)(C) OF THE INCOME TAX ACT, 1961 BY THE ASSISTANT COMMISSIO NER OF INCOME TAX (CENTRAL)-I, INDORE. 2. THE APPELLATE ORDER BEING NOT BASED ON FACTS, AND I N LAW, IS ILLEGAL AND WRONG. 3. THE APPELLANT COMPANY CRAVES LEAVE TO ADD/ALTER/AME ND THE ABOVE GROUNDS OF APPEAL, IF AND WHEN, NECESSITY OR OCCASI ON ARISES. 12. BRIEFLY STATED FACTS ARE THAT A SEARCH & SEIZURE OPERATION WAS CARRIED OUT IN THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE APPELLANT GROUP, INDORE INCLUDING THE ASSESSEE ALONG WITH OTHER CONCERNS/BUS INESS ASSOCIATES ON 21.9.2012. SUBSEQUENTLY, A NOTICE U/S 15 3A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS TH E ACT) WAS ISSUED. IN RESPONSE THERETO, THE ASSESSEE FILED RETURN OF INCOME. THE A.O. FRAMED ASSESSMENT U/S 153A R.W.S . 143(3) OF THE ACT VIDE ORDER DATED 24.3.2015. WHILE ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 16 FRAMING THE ASSESSMENT, THE A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2010-11 & 2011-12 AN D PENALTY U/S 271AAB OF THE ACT FOR THE ASSESSMENT YEAR 2012-13. SUBSEQUENTLY, THE A.O. IMPOSED A PENALTY U/S 271AAB OF THE ACT IN RESPECT OF APPEAL UNDER CONSIDER ATION VIDE ORDER DATED 23.9.2015 THEREBY THE ASSESSING OFFI CER IMPOSED A PENALTY OF RS.1,50,000/- U/S 271AAB(1)(C) O F THE ACT I.E. PERTAINING TO THE ASSESSMENT YEAR 2012-13. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 13. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN LEVYING AND CONFIRMING THE SAME. HE SUBMITTED THAT THE DISCLOSUR E OF INCOME WAS NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL . ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 17 HE CONTENDED THEREFORE, THE IMPOSITION OF PENALTY IS ARBITRARY AND UNJUSTIFIED. LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT( A). 14. PER CONTRA, LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED ORDERS OF THE AUTHORITIES BELOW. HE SUBMI TTED THAT NOWHERE UNDER THE ACT IT IS PRESCRIBED THAT THE PENALTY U/S 271AAB OF THE ACT CAN BE IMPOSED ONLY FOR THE ADDITIONS MADE ON THE BASIS OF INCRIMINATING MATERIAL. H E FURTHER SUBMITTED THAT THE JUDGEMENT OF THE HON'BLE APEX COURT RENDERED IN THE CASE OF MAK DATA PVT. LTD. VS. C IT IN CIVIL APPEAL NO.9772/2013 HAS RIGHTLY BEEN APPLIED. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT DURING THE COURSE OF SEARCH, IT WAS NOTI CED BY THE REVENUE AUTHORITIES THAT THE ASSESSEE HAD MADE ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 18 TRANSACTION FOR PURCHASE OF MATERIAL IN CASH, WHICH WAS NO T RECORDED IN THE BOOKS OF ACCOUNTS. IT WAS ONLY WHEN CONFRONTED, THE SAME WAS OFFERED FOR TAXATION AS INCOME FROM UNDISCLOSED SOURCES. AS PER SECTION 271AAB OF THE ACT, THE A.O. CAN DIRECT THE ASSESSEE TO PAY A SUM COMPUTED @ 10% IN THE UNDISCLOSED INCOME OF THE SPE CIFIED PREVIOUS YEAR, IF SUCH ASSESSEE IN THE COURSE OF THE SEARCH IN A STATEMENT UNDER SUB SECTION 4 OF SECTION 132 OF THE ACT ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOM E WAS DERIVED AND ON OR BEFORE THE SPECIFIED DATE PAYS T HE TAXES TOGETHER AS INTEREST, IF ANY IN RESPECT OF UNDI SCLOSED INCOME AND FURNISHES THE RETURN OF INCOME IN THE SPE CIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THERE IN. ANOTHER SITUATION AS STIPULATED BY THAT PROVISION IS TH AT PENALTY @ 20% WHERE IN THE COURSE OF SEARCH IN A ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 19 STATEMENT UNDER SUB-SECTION 4 OF SECTION 132 OF THE ACT DOES NOT ADMIT THE UNDISCLOSED INCOME AND ON OR BEFOR E THE SPECIFIED DATE DECLARED SUCH INCOME IN THE RETURN OF INCOME FURNISHED FOR THE SPECIFIED PREVIOUS YEAR AND PAYS THE TAXES TOGETHER WITH INTEREST, IF ANY IN RESPECT OF THE UNDISCLOSED INCOME. ANOTHER SITUATION IS STIPULATED WHERE THE ASSESSEES CASE IS NOT COVERED BY THE AFORESAID CONDITIONS. THE RATE OF PENALTY WOULD BE 60%. IN TH E PRESENT CASE, ASSESSING OFFICER HAS INVOKED THE PROVI SIONS OF SECTION 271AAB(1)(C) OF THE ACT ON THE BASIS THAT THE ADDITION PERTAINS TO SPECIFIED PREVIOUS YEAR AND THE ASSESSEE COULD NOT SPECIFY AND SUBSTANTIATE THE MANNER I N WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED. THE LD. CIT(A) DECIDED THE ISSUE IN PARA 3.1 TO 3.7 OF HIS O RDER WHICH IS REPRODUCED AS UNDER: 3.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE APPELLANTS CONTENTIONS. THE CRUX OF THE SUBMISSIONS MADE BEFO RE THE ASSESSING OFFICER WAS THAT SINCE THE ADDITIONAL INCOME WAS OFFERED IN THE RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S 153A AND NO SEPARATE ADDITION HAD BEEN MADE, NO PENALTY IS ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 20 LEVIABLE. THE ASSESSING OFFICER HELD THAT THE ASSE SSEE HAD OFFERED THE ADDITIONAL INCOME ONLY AS A RESULT OF THE SEARCH AND SEIZURE O PERATION. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ASSESSMENT ORDER. FURTHER, THE ASSESSEE COULD NOT EXPLAIN THE MANNER. 3.2 DURING THE APPELLATE PROCEEDINGS IT IS AGAIN R EITERATED THAT THE APPELLANT HAS MADE DISCLOSURE OF ADDITIONAL INCOME AMOUNTING TO RS.5,00,000/- ON ACCOUNT OF VARIOUS PAYMENTS MADE IN CASH FOR MAT ERIAL PURCHASE AS WELL AS FOR LABOUR/CONTRACTOR PAYMENTS AS A PRECAUTION TO S AFEGUARD FROM FUTURE LITIGATION/PENAL ACTIONS. THE SAID ADDITIONAL INCO ME WAS ADMITTED DURING THE COURSE OF SEARCH ITSELF U/S 132(4) BEFORE INVESTIG ATION WING. THE APPELLANT HAS SUBMITTED THAT NO INCRIMINATING DOCUMENTS/ENTRIES W ERE FOUND DURING THE COURSE OF THE SEARCH. 3.3. IT IS SEEN THAT THE APPELLANT IN ITS SUBMISSI ONS BEFORE THE ASSESSING OFFICER AND THE UNDERSIGNED IS PLACING UNDUE IMPORT ANCE ON THE VOLUNTARY DISCLOSURE MADE TO BUY THE PEACE OF MIND. THE HON' BLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD., (2013) 38 TAXMANN.COM 44 8 HAS HELD THAT THE AO SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESS EE LIKE VOLUNTARY DISCLOSURE, BUY PEACE, AVOID LITIGATION, AMICABLE SETTLEME NT, ETC. TO EXPLAIN AWAY ITS CONDUCT. 3.4 THE FINANCIAL YEAR UNDER CONSIDERATION WAS THE SPECIFIED PREVIOUS YEAR, HENCE PROVISIONS OF SECTION 271AAB WOULD APPL Y. IT WOULD BE USEFUL TO REPRODUCE THE MEANING OF UNDISCLOSED INCOME FOR L EVYING THE PENALTY U/S 271AAB OF THE ACT. SAME IS PROVIDED AS EXPLANATION (C) TO THIS SECTION 271AAB OF THE ACT, AND REPRODUCED AS UNDER: EXPLANATION FOR THE PURPOSES OF THIS SECTION,-- (C) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY BY ANY MONEY, BULLION, JEWELLERY OR OTHER VA LUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEA RCH IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN THE NORMA L COUIRSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMM ISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED, EITHER WHOLLY ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 21 OR PARTLY BY ANY ENTRY IN RESPECT OF AN EXPENSE REC ORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. 3.5 IN VIEW OF THE ADDITIONAL INCOME ADMITTED U/S 132(4) AND OFFERED BY THE APPELLANT IN THE RETURN OF INCOME FILED U/S 153 A FOR A.Y. 2012-13 IT IS CLEAR THAT THERE WAS UNDISCLOSED INCOME WHICH HAS BEEN DI SCLOSED ON ACCOUNT OF VARIOUS PAYMENTS MADE IN CASH FOR MATERIAL PURCHASE AS WELL AS FOR LABOUR/CONTRACTOR PAYMENTS OF RS.5,00,000/-. THAT THERE WAS UNDISCLOSED INCOME OF RS.5,00,000/- WHICH COULD NOT BE EXPLAINE D ON ACCOUNT OF WHICH ADDITIONAL INCOME HAS BEEN ADMITTED, SUCH INCOME . 3.0 2012-13 5,00,000/- OUT OF EXPENSES CLAIMED IN T RADING & P&L A/C THE ASSESSEE COMPANY HAS MADE CASH PAYMENTS FOR MAT ERIAL PURCHASE AND LABOUR/CONTRACTORS PAYMENTS WHICH IS UNAVOIDABL E IN THE TRADE AS THAT OF THE ASSESSEE COMPANY BUT CONSIDERING THE PR OVISIONS OF SECTION 40A(3) AS APPLICABLE IN THIS RELEVANT ASSESSMENT YE AR, AND TO AVOID ANY FURTHER LITIGATION IN THIS MATTER, THE ASSESSEE COM PANY WISH TO SURRENDER THIS AMOUNT AS ITS UNDISCLOSED INCOME FOR A.Y. 2012 -13. 3.1 TOTAL SURRENDER MADE BY M/S. SM& SM RESORTS N HOTEL S INTERNATIONAL LTD. FOR A.Y. 2012-13 RS.5,00,000/- THEREFORE, TWIN CONDITIONS TO ATTRACT LEVY OF PENAL TY U/S 271AAB BEING UNDISCLOSED INCOME AND THE FINANCIAL YEAR BEING THE SPECIFIED PREVIOUS YEAR HAVE BEEN SATISFIED IN THE PRESENT CASE. 3.6 THE ASSESSING OFFICER HAS LEVIED PENALTY @ 30% U/S 271AAB (1)(C)HOLDING THAT THE ASSESSEE COULD NOT EXPLAIN THE MANNER IN W HICH THE UNDISCLOSED INCOME WAS DERIVED IN THE INSTANT CASAE A STATEMENT WAS GI VEN ON THE DATE OF SEARCH DISCLOSING ADDITIONAL INCOME WHICH WAS REITERATED I N THE LETTER FILED BEFORE THE INVESTIGATION WING. IN THE DETAILS OF THE SURRENDE R MADE BY THE APPELLANT BEFORE THE INVESTIGATION WING ONLY THE DETAILS OF THE DISC LOSURE HAVE BEEN GIVEN AND THE MANNER OF EARNING THE UNDISCLOSED INCOME HAS NOT BE EN STATED. AS THE MANNER OF EARNING THE UNDISCLOSED INCOME HAS NOT BEEN EXPL AINED I HOLD THAT PENALTY IS TO BE LEIVED @ 30% OF THE UNDISCLOSED INCOME U/S 27 1AAB(1)(C). 3.7 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE IT IS HELD THAT PENALTY IS ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 22 LEVIABLE U/S 271AAB (1)(C) @ 30% OF THE UNDISCLOSED INCOME GROUIND NOS.1 AND 2 ARE DISMISSED. 16. IT IS RECORDED BY THE A.O. THAT DURING THE COURS E OF SEARCH EVIDENCES RELATED TO PAYMENT IN CASH FOR MATERIAL PURCHASE WAS FOUND AND ON EXAMINATION OF BOOKS OF ACCOUNTS, IT WAS FOUND THAT THESE AMOUNTS WERE NOT ACCOUNTED FOR BY THE ASSESSEE. IT IS ALSO STATED BY TH E ASSESSING OFFICER THAT THROUGH THIS LETTER SHRI DEEPAK KALRA STATED THAT THESE PAYMENTS WERE MADE OUT OF INCOME FRO M UNDISCLOSED SOURCES AND ADMITTED THESE AMOUNTS AS ADDITIONAL INCOME FROM UNDISCLOSED SOURCES. THIS FAC T IS NOT REBUTTED BY THE ASSESSEE BY PLACING ANY CONTRARY MATERIAL ON RECORD. SINCE THERE IS NO AMBIGUITY UNDER THE LAW AND THE ASSESSEE HAS NOT PLACED ANY MATERIAL WHICH COULD SUGGEST THAT THESE PAYMENTS IN CASH FOR MATERIAL PURCHASES WAS RECORDED IN BOOKS OF ACCOUNTS BEFORE SEA RCH WAS CONDUCTED. THE GROUNDS RAISED IN THIS APPEAL ARE DISMISSED AND ORDER OF THE LD. CIT(A) IS AFFIRMED. ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 23 ITA NO.85/IND/2017: 17. NOW WE TAKE UP ITA NO.85/IND/2017. THE GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND, IN LAW, THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS)-III, INDORE ER RED IN CONFIRMING THE PENALTY OF RS.10,66,050/- LEVIED U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961 BY THE ASSISTANT COMMISSIONER OF INCOME TAX (CENTRA L)-I, INDORE. 2. THE APPELLATE ORDER BEING NOT BASED ON FACTS, AND I N LAW, IS ILLEGAL AND WRONG. 3. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND THE A BOVE GROUNDS OF APPEAL, IF AND WHEN, NECESSITY OR OCCASION ARISES. 18. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE PENALTY SO INITIATED IS VITIATED DUE TO DEFECT IVE NOTICE ISSUED BY THE A.O. HE SUBMITTED THAT THE PEN ALTY ORDER TO BE QUASHED ON THIS GROUND ALONE IN VIEW OF TH E HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CAS E OF PRINCIPAL CIT VS. KULWANT SINGH BHATIA IN ITA NO.9 OF 2018. 19. LD. D.R. OPPOSED THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 24 20. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE NOTICES I SSUED FOR LEVY OF PENALTY DATED 24.3.2015 DO NOT CONTAIN THE SPECIFIC CHARGES. THE NOTICES DATED 24.3.2015 FOR TH E A.Y. 2007-08, IS REPRODUCED AS UNDER FOR THE SAKE OF CLARI TY: ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 25 21. THE REVENUE HAS NOT BROUGHT ANY CONTRARY MATERIAL SUGGESTING THAT A VALID NOTICE WAS SERVED ON TH E ASSESSEE FOR INITIATING PROCEEDINGS U/S 271(1)(C) OF THE ACT. THIS TRIBUNAL IS BOUND BY THE JUDGEMENT OF THE HON'B LE JURISDICTIONAL HIGH COURT RESPECTIVELY FOLLOWING THE SAME PENALTY PROCEEDINGS INITIATED BY THE A.O. VIDE NOTICE DATED 24.3.2015 ARE HELD TO BE BAD IN LAW AND CONTRARY TO THE JUDGEMENT OF THE HON'BLE M.P. HIGH COURT IN THE CASE OF PCIT-I VS. KULWANT SINGH BHATIA (SUPRA). ACCORDINGLY, THE IMPUGNED PENALTY ORDER IS HEREBY QUASHED. 22. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I N ITA NO.85/IND/2017 IS ALLOWED. ITA NOS.86 TO 87/IND/2017: 23. NOW WE TAKE UP ITA NO.86 TO 87/IND/2017. IN THESE APPEALS OF THE ASSESSEE, THE FACTS AND GROUNDS ARE IDENTICAL TO ITA NO.85/IND/2017 ADJUDICATED ABOVE AND T HE ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 26 PARTIES HAVE ADOPTED THE SAME ARGUMENT AND BASED ON THE FINDINGS GIVEN, THE A.O. IS DIRECTED TO DELETE THE PENALTY AND HENCE, THESE APPEALS OF THE ASSESSEE ARE ALSO ALLOWED. ITA NOS.88 & 89/IND/2017: 24. NOW WE TAKE UP ITA NOS.88 & 89/IND/2017. IN THESE APPEALS OF THE ASSESSEE, THE FACTS AND GROUNDS ARE IDENTICAL TO ITA NO.80/IND/2017 ADJUDICATED ABOVE AND T HE PARTIES HAVE ADOPTED THE SAME ARGUMENT. BASED ON THE FINDINGS GIVEN ABOVE, THE GROUNDS RAISED IN THESE APPE ALS ARE DISMISSED. ITA NOS.90 TO 94/IND/2017: 25. NOW WE TAKE UP ITA NOS.90 TO 94/IND/2017. IN THESE APPEALS OF THE ASSESSEE, THE FACTS AND GROUNDS ARE IDENTICAL TO ITA NO.78/IND/2017 ADJUDICATED ABOVE AND T HE PARTIES HAVE ADOPTED THE SAME ARGUMENT. BASED ON THE FINDINGS GIVEN ABOVE, THE A.O. IS DIRECTED TO DELETE THE ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 27 PENALTY AND HENCE, THESE APPEALS OF THE ASSESSEE ARE ALSO ALLOWED. ITA NOS.95 TO 97/IND/2017: 26. NOW WE TAKE UP ITA NOS.95 TO 97/IND/2017. IN THESE APPEALS OF THE ASSESSEE, THE FACTS AND GROUNDS ARE IDENTICAL TO ITA NO.78/IND/2017 ADJUDICATED ABOVE AND T HE PARTIES HAVE ADOPTED THE SAME ARGUMENT. BASED ON THE FINDINGS GIVEN, THE A.O. IS DIRECTED TO DELETE THE PENALTY AND HENCE, THESE APPEALS OF THE ASSESSEE ARE ALSO ALLOWED. 27. IN THE RESULT, THE APPEALS FILED BY DIFFERENT ASSE SSEES IN ITA NOS.78 & 79/IND/2017, ITA NOS.85 TO 87/IND/2017 , ITA NOS.90 TO 94/IND/2017 AND ITA NOS.95 TO 97/IND/2017 ARE ALLOWED AND THE APPEALS RAISED IN ITA NO.80/IND/2017 AND NOS.88 & 89/IND/2017 ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.01. 2019. SD/- SD/- (MANISH BORAD) (KULBHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER / DATED : 10 TH JANUARY, 2019 VG/SPS ITA NOS.78 TO 80 & 85 TO 97/IND/2017 M/S. SM & SM RESORTS N HOTELS INTERNATIONAL LTD., INDORE AND SHRI DEEPAK KALRA, INDORE & OTHERS 28 COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE