Anand Construwel P.Ltd., V. ACIT, Nasik,

ITA 981/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3404 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 17-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJU AAJWANI
• Keywords: Search and seizure
• Section: 271(1)(c); 153A; 27; 6; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE. BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER. I.T.A. NOS. 981.982&983/PN/2009 ASSESSMENT YEARS : 2002-03,03-04&04-05. ANAND CONSTRUWELL PVT. LTD., ASSTT. COMMISSIONER OF 1, RAMCHANDRA APARTMENT, VS. INCOME-TAX, CENTRAL CIR.-1, MAKHMALABAD NAKA, NASHIK. PANCHAVATI, NASHIK-03. PAN AAHFA 2847 G APPELLANT RESPONDENT. APPELLANT BY : SHRI M.K. KULKARNI. RESPONDENT BY : SMT. MANJU AAJWANI. O R D E R PER I.C. SUDHIR, J.M. IN THESE APPEALS THE ASSESSEE HAS IMPUGNED THE FI RST APPELLATE ORDER ON THE GROUND THAT THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY (OF RS.9,72,292, RS. 1,19,437/- AND RS.98,6 56/- IN ASSESSMENT YEARS 2002- 03, 2003-04 AND 2004-05 RESPECTIVELY) LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVA NCED BY THE PARTIES IN VIEW OF THE ORDERS OF THE LOWER AUTHORIT IES AND THE DECISIONS RELIED UPON. 3. THE RELEVANT FACTS ARE THAT M/S AMBA CONSTRUCTI ON WAS SUBJECTED TO SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WHEREI N UNVOUCHED AND UNRECORDED 2 EXPENDITURE WAS FOUND RECORDED IN THE DIARIES MARKE D ANNEXURE 1/57. THE TOTAL EXPENDITURE FOUND WAS RS.1,19,40,000/-. THERE WERE FOUR PARTNERS IN M/S AMBA CONSTRUCTIONS AND THE ASSESSEE IS ONE OF THEM. IN S TATEMENTS RECORDED U/S 132(4) OF THE PARTNERS OF M/S AMBA CONSTRUCTION, THEY STAT ED THAT THE EXPENDITURE WAS EQUALLY CONTRIBUTED BY THE FOUR PARTNERS AND OFFERE D THE SAME TO TAX IN THE HANDS OF EACH PARTNER TOWARDS UNVOUCHED AND UNRECORDED EX PENDITURE AT RS.29,87,500/-. THE EXPENDITURE WAS OFFERED TO TAX BY EACH PARTNER AT RS.16,87,500/-, RS.10,25,000/- AND RS.2,75,000/- FO R ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 RESPECTIVELY. THE OTHER PARTNER S DECLARED THE SAME IN RETURN OF INCOME FILED BY THEM. THE ASSESSE, HOWEVER, DECL ARED THE SAME AT RS.5 LAKHS, RS.7 LAKHS AND RS. NIL IN ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 RESPECTIVELY. IN THE ASSESSMENT YEAR 2002-03 THE AS SESSEE OFFERED SAID INCOME OF RS.5 LAKHS IN RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT AND ALSO OFFERED TO TAX RS.2,02,500/- DURING ASSESSMENT PROCEEDINGS. IN THE ASSESSMENT YEAR 2003-04 THE ASSESSEE DECLARED ADDIT IONAL INCOME OF RS.7 LAKHS ON ACCOUNT OF HIGHER CHARGES RECEIVED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT AND CLAIMED THE S AME TO HAVE BEEN SPENT FOR UNVOUCHED EXPENDITURE FOR M/S AMBA CONSTRUCTIONS. T HE AO ALSO MADE ADDITION OF RS.3,25,000/- TOWARDS UNDISCLOSED UNVOUCHED EXPE NDITURE INCURRED BY THE ASSESSEE FOR M/S AMBA CONSTRUCTION. IN THE ASSESSME NT YEAR 2004-05 THE ASSESSEE DID NOT OFFER TAX IN THE RETURN OF INCOME IN RESPECT OF RS.2,75,000/- WHICH WAS OFFERED TO TAX IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THE ASSESSEE STATED THAT IT HAD OFFERED TO TAX THE SAID UNVOUCHED AND UNRECORDED EXPENDITURE DURING THE ASSESSMENT PROCEEDINGS TO BU Y PEACE OF MIND WITH THE REQUEST THAT NO PENALTY U/S 271(1)(C) OF THE ACT SH ALL BE INITIATED/LEVIED. 3 4. IN THE ASSESSMENT YEAR 2002-03 THE AO LEVIED PE NALTY U/S 271(1)(C) ON THE OFFERED INCOME OF RS.5 LAKHS IN THE RETURN O F INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT AND ALSO ON THE OFFERED RS.2,02,500/- TO TAX DURING THE ASSESSMENT PROCEEDINGS ON THE BASIS THAT DUE TO SEA RCH ACTION AND EVIDENCE FOUND THEREIN THE ASSESSEE DISCLOSED THE CONCEALED INCOME. IN ASSESSMENT YEAR 2003-04 THE AO LEVIED PENALTY U/S 271(1)(C) ON THE ADDITIONAL INCOME OF RS.7 LAKHS OFFERED TO TAX BY THE ASSESSEE ON ACCOUNT OF HIGHER CHARGES RECEIVED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT AND ALSO ON ADDITION OF RS.3,25,000/- OFFERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE SIMILAR BASIS. IN ASSESSMENT YEAR 2004-05 THE A O HAS LEVIED PENALTY U/S 271(1)(C) ON THE ADDITIONAL INCOME OF RS.2,75,000/- OFFERED TO TAX BY THE ASSESSEE ON ACCOUNT OF UNVOUCHED AND UNRECORDED EXPENDITURE OF M/S AMBA CONSTRUCTION INCURRED BY THE ASSESSEE COMPANY. 5. THE LEARNED CIT(APPEALS) IN THE ASSESSMENT YEAR 2002-03 FOLLOWING THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF SMT. SARLA M. AHUJA ITA O. 1301/PN/2007 HAS DELETED PENALTY LEVIED BY THE A O ON THE OFFERED AMOUNT OF RS.5 LAKHS TO TAX IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT AND HAS UPHELD THE PENALTY LEVIED BY THE AO ON ADDITION OF RS.2,02,500/-. SIMILARLY IN THE ASSESSMENT YEAR 2003-04 THE LEARNE D CIT(APPEALS) HAS DELETED THE PENALTY LEVIED BY THE AO ON THE AMOUNT OF RS. 7 LAK HS OFFERED TO TAX IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF T HE ACT AND UPHELD THE PENALTY LEVIED BY THE AO ON ADDITION OF RS.3,25,000/-. IN T HE ASSESSMENT YEAR 2004-05 THE LEARNED CIT(APPEALS) HAS UPHELD THE PENALTY LEVIED BY THE AO ON THE ADDITION OF RS.2,75,000/- OFFERED BY THE ASSESSEE TO TAX DURING THE ASSESSMENT PROCEEDINGS. 4 6. THE ASSESSEE HAS QUESTIONED THE ABOVE ACTION OF THE LEARNED CIT(APPEALS) IN SUSTAINING THE PENALTY IN QUESTION. THE REVENUE IS, HOWEVER, NOT IN APPEAL, AS WE HAVE BEEN INFORMED BY THE PARTIES, AGAINST THE RELIEF GRANTED BY THE LEARNED CIT(APPEALS). 7. THE MAIN CONTENTION OF THE LEARNED AR AGAINST T HE PENALTY SUSTAINED REMAINED BEFORE US THAT THE ASSESSEE HAD OFFERED AD DITIONAL INCOME TO TAX BEFORE THE AO TO BUY PEACE OF MIND WITH THE REQUEST THAT N O PENALTY U/S 271(1)(C) OF THE ACT SHALL BE INITIATED/LEVIED. THE REVENUE ACCEPTED THE OFFER OF ADDITIONAL INCOME FOR TAX BUT DENIED THE REQUEST PART OF THE ASSESSEE BY INITIATING THE PENALTY PROCEEDINGS AND LEVYING OF THE PENALTY. SINCE THE A SSESSEE HAD OFFERED ADDITIONAL INCOME DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO ONLY TO BUY PEACE OF MIND AND WITH THIS CONDITION THAT NO PENALTY U/S 27 1(1)(C) OF THE ACT SHALL BE INITIATED/LEVIED, THE ACTION OF THE LOWER AUTHORITI ES IN IMPOSING THE PENALTY IN QUESTION IN BREACH OF THOSE CONDITIONAL OFFER OF IN COME TO TAX IS AGAINST THE BASIC PRINCIPLE OF LAW. HE ACCORDINGLY REQUESTED THAT THE PENALTY IN QUESTION SHOULD BE DELETED. IN THIS REGARD HE PLACED RELIANCE ON THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SURSH CHANDRA MITTAL ( 2001) 251 ITR 9 (SC) AND DECISION OF NAGPUR BENCH OF THE TRIBUNAL IN THE CAS E OF ACIT VS. MALU ELECTRODES (P) LTD. (2000) 33 DTR (NAG)(TRIB) 487. 8. THE LEARNED DR, ON THE OTHER HAND, TRIED TO JUST IFY THE FIRST APPELLATE ORDER SUSTAINING THE PENALTY IN QUESTION WITH THIS SUBMISSION THAT THE SUBJECT MATTER OF THE PENALTY IS THOSE OFFERED INCOME WHICH WAS NOT SHOWN IN THE RETURN OF INCOME BUT OFFERED TO TAX DURING THE ASSESSMENT PROCEEDINGS WHICH WAS ADDED BY THE AO AS UNDISCLOSED INCOME OF THE ASSESSEE. 5 9. CONSIDERING THE ABOVE SUBMISSIONS WE FIND THAT THE AO HAD LEVIED PENALTY ON TWO TYPES OF ADDITION. FIRSTLY ON THE AM OUNTS OFFERED AS UNDISCLOSED INCOME DURING THE COURSE OF SEARCH PROCEEDINGS BY W AY OF STATEMENTS RECORDED U/S 132(4) OF THE ACT AND SHOWN IN THE RETURN OF IN COME FILED IN RESPONSE TO NOTICE ISSUED U/S 153A. THE SAME HAS BEEN DELETED B Y THE LEARNED CIT(APPEALS) AS DISCUSSED ABOVE. SINCE THE REVENUE IS NOT IN APPEAL S BEFORE US AGAINST THOSE RELIEFS GRANTED BY THE LEARNED CIT(APPEALS) WE ARE NOT COMMENTING ON MERITS OF THOSE ACTION OF THE LEARNED CIT(APPEALS). THE SECON D TYPE OF PENALTY WAS LEVIED BY THE AO ON THE ADDITION MADE AGAINST THE ADDITION AL INCOME THOUGH NOT SHOWN IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT BUT OFFERED TO TAX DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SUCH TYPE OF PENALTY LEVIED BY THE AO HAS BEEN UPHELD BY THE LEARNED CIT(APPEAL S) WHICH HAS BEEN QUESTIONED BEFORE US. THE MAIN CONTENTION OF THE LE ARNED AR AGAINST SUCH ACTION OF THE LEARNED CIT(APPEALS) BEFORE US REMAINED THAT THE ADDITIONAL INCOME WAS OFFERED TO TAX BEFORE THE AO DURING THE COURSE OF A SSESSMENT PROCEEDINGS TO BUY PEACE OF MIND AND TO AVOID LITIGATION WITH THIS REQ UEST THAT NO PENALTY SHALL BE INITIATED/LEVIED AGAINST SUCH OFFER. THUS BY ACCEPT ING THE OFFER WITHOUT ACCEPTING THE CONDITION FOR SUCH OFFER, THE DEPARTMENT WAS NO T JUSTIFIED IN LEVYING THE PENALTY. IN SUPPORT THE LEARNED AR CITED THE ABOVE REFERRED DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL (SUPRA) AND OF NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MALU ELECTRODES (P) LTD. (SUPRA). HAVING GONE THROUGH THE PROVISIONS LAID DOWN U/S 27 1(1)(C) OF THE ACT, WE ARE UNABLE TO ACCEPT THE ABOVE CONTENTION OF THE LEARNE D AR THAT IN CASE OF A CONDITIONAL OFFER BY THE ASSESSEE FOR TAXATION THE REVENUE IS NOT SUPPOSED TO INITIATE OR LEVY PENALTY U/S 271(1)(C) OF THE ACT. IN ABSENCE OF SUCH PROVISION LAID 6 DOWN U/S 271(1)(C) OF THE ACT WE DO NOT FIND INFIRM ITY IN THE ACTION OF THE LOWER AUTHORITIES IN IMPOSING THE PENALTY U/S 271(1)(C) O F THE ACT ON THE OFFERED INCOME BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. THE AO AND THE FIRST APPELLATE AUTHORITY IN THE PRESENT CASE AS DI SCUSSED ABOVE HAVE ACTED AS PER THE PROVISIONS OF LAW AND THEY WERE HAVING NO REASO N TO ACCEPT THE CONDITION OF THE ASSESSEE AS NOT TO IMPOSE PENALTY AGAINST THE O FFERED INCOME IN ABSENCE OF ANY DISCRETION GRANTED TO THEM IN THIS REGARD IN T HE PROVISIONS OF THE LAW. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. SURESH CHANDRA MITTAL (SUPRA) WHICH HAS ALSO BEEN FOLLOWED BY THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MALU ELECTRODES (P) LTD. (S UPRA) HAS BEEN PASSED UNDER THE FACTS AND CIRCUMSTANCES OF THAT CASE. IN THAT CASE THE REVENUE HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND HAD SIMPLY RE STED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH AND THUS IT WAS HELD THAT PENALTY COULD NOT BE LEVIED. ON THE CONTRARY I N THE PRESENT CASE BEFORE US THERE WAS SUFFICIENT EVIDENCE IN THE SHAPE OF MATER IAL SEIZED DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS ON THE BASIS OF WHIC H ASSESSEE OFFERED THE AMOUNT TO TAX IN THEIR STATEMENTS RECORDED U/S 132( 4) OF THE ACT, DISCLOSED THE SAME IN ITS RETURNS OF INCOME FILED IN RESPONSE TO THE NOTICES ISSUED U/S 153A OF THE ACT AND AGAIN OFFERED ADDITIONAL INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS DISTINGUISHABLE FACTS ARE THERE I N THE PRESENT CASE, HENCE THE CITED DECISIONS ARE NOT HELPFUL TO THE ASSESSEE. TH E CIRCUMSTANCES UNDER WHICH THE ASSESSEE HAS OFFERED INCOME TO TAX DURING THE C OURSE OF SEARCH PROCEEDINGS AND AGAIN ADDITIONAL INCOME OFFERED TO TAX DURING T HE COURSE OF ASSESSMENT PROCEEDINGS IN THE PRESENT CASE ITSELF SUGGEST THAT THE AMOUNT IN QUESTION ON WHICH PENALTY HAS BEEN LEVIED AND UPHELD BY THE LOW ER AUTHORITIES IS CONCEALED 7 INCOME OF THE ASSESSEE AND INACCURATE PARTICULARS T HEREOF WERE FURNISHED BY THE ASSESSEE. THE FIRST APPELLATE ORDER UPHOLDING SUCH PENALTY IN QUESTION IS THUS AFFIRMED. THE GROUND IS ACCORDINGLY REJECTED. 10. CONSEQUENTLY THE APPEALS ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST 2010 SD/- SD/- (A.L. GEHLOT) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER. PUNE, DATED : 13 TH AUGUST 2010 COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT. 3. C.I.T. 4. CIT(APPEALS) 5. D.R. ,ITAT, B-BENCH, PUNE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, PUNE. WAKODE.