The ITO, Ward-9(2), Surat V. Shri Hanubhai V.Patel, Surat

ITSSA 10/AHD/2012

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7580 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 18-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: KK SHAH
• Keywords: Search and seizure; Revised return
• Section: 153A; 27; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.(SS). NO.10 & 11 / AHD/2012 (ASSESSMENT YEAR 2004-05 & 2005-06) ITO, WARD 9(2), SURAT VS. SHRI HANUBHAI V PATEL, 9, SHANTIVAN SOCIETY, LAMBE HANUMAN ROAD, SURAT-395006 PAN/GIR NO. : ADGPP3511N (APPELLANT) .. (RESPONDENT) APPELLANT BY: B.L.YADAV, SR. DR RESPONDENT BY: SHRI K K SHAH, AR DATE OF HEARING: 19.03.2012 DATE OF PRONOUNCEMENT: 04.2012 O R D E R PER SHRI A. K. GARODIA, AM:- BOTH THESE APPEALS ARE FILED BY THE REVENUE AGAINS T TWO SEPARATE ORDERS OF LD. CIT(A) V, SURAT BOTH DATED 08.09.2011 FOR THE ASSESSMENT YEARS 2004-05 & 2005-06 RESPECTIVELY. THE ISSUE I NVOLVED IS IDENTICAL IN BOTH THESE APPEALS AND THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. 2. SINCE, THE FACTS ARE IDENTICAL IN BOTH THESE CAS ES, WE DECIDE THESE TWO APPEAL BY TAKING ASSESSMENT YEAR 2004-05 AS LEA D YEAR AND THE FACTS OF THAT YEAR TILL THE STAGE IMPOSING PENALTY ARE NO TED BY LD. CIT(A) IN PARA 5 OF HIS ORDER WHICH IS REPRODUCED BELOW: A SEARCH AND SEIZURE ACTION WAS CONDUCTED ON 21.10 .2005. THE APPELLANT HAD DISCLOSED RS. 200/- LACS ADDITIONAL I NCOME IN THE STATEMENT U/S. 132 (4) OF THE ACT ON BEHALF OF HIMS ELF AND HIS SON. HE HAD OWNED UP ADDITIONAL INCOME OF RS. 155 LACS A ND THE REST IN I.T.A.NO.10,11 /AHD/2012 2 THE CASE OF HIS SON PIYUSH H. PATEL. THE UNDISCLOSE D INCOME WAS BIFURCATED IN THE RETURN OF INCOME FOR THE BLOCK YE AR AS UNDER. ASSESSMENT YEARS UNDISCLOSED INCOME 2000-01 1,00,000 2001-02 1,00,000 2002-03 1,00,000 2003-04 1,00,000 2004-05 23,00,000 2005-06 23,00,000 2006-07 1,05,00,000 1,55,00,000 THE APPELLANT HAD FILED RETURN OF INCOME IN RESPONS E TO NOTICE U/S. 153 C OF THE ACT DECLARING TAXABLE INCOME OF RS. 23 ,85,160/- (INCLUSIVE OF INCOME DISCLOSED OF RS. 23/- LACS) ON 10.07.2007 IN THE YEAR UNDER CONSIDERATION. THE LEARNED ACIT HAD ALSO INITIATED PENALTY PROCEEDINGS U/S. 271 (1) (C) OF THE ACT ON ADDITIONAL INCOME OF RS. 23/- LACS. THE APPELLANT HAD FILED TH E REPLY DATED 18.03.2010. THE LEARNED INCOME-TAX OFFICER, HOWEVER , LEVIED PENALTY OF RS. 8,64,671/- ON THE BASE OF VARIOUS RE ASONS AS MENTIONED IN PAGE NO. 6 AND 7 OF THE PENALTY ORDER. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THE PENALTY BY FOLLOWING THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT RENDERED IN THE CASE O F CIT VS KANAHIYALAL AS REPORTED IN 299 ITR 19 AND THE TRIBU NAL DECISION RENDERED IN THE CASE OF SHYAM BIRI WORKS PVT. LTD. VS ACIT A S REPORTED IN 70 TTJ 880. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. LD. D.R. OF THE REVENUE SUPPORTED THE PENALTY OR DER. HE SUBMITTED THAT EXCEPTION (2) TO EXPLANATION (5) TO SECTION 27 1(1)(C) IS NOT APPLICABLE IN THE PRESENT CASE AND, THEREFORE, EXPL ANATION (5) BECOMES APPLICABLE AND PENALTY IS CORRECTLY IMPOSED BY THE A.O. 5. AS AGAINST THIS, LD. A.R. OF THE ASSESSEE SUPPOR TED THE ORDER OF LD. CIT(A) AND HE PLACED RELIANCE ON THOSE TWO JUDGEMEN TS WHICH ARE FOLLOWED BY LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE I.T.A.NO.10,11 /AHD/2012 3 JUDGMENTS FOLLOWED BY LD. CIT(A). FIRST, WE REPROD UCE RELEVANT PARA OF THE ORDER OF LD. CIT(A) AS PER WHICH THIS ISSUE WAS DECIDED BY HIM I.E. PARA 6 OF HIS ORDER WHICH IS AS UNDER: 6. I HAVE CONSIDERED THE PENALTY ORDER AS WELL A S SUBMISSION OF THE AR. THE PENALTY IS LEVIED IN RESPECT OF INCOME DISCLOSED IN THE STATEMENT U/S. 132 (4) OF THE ACT DURING THE SEARCH PROCEEDINGS. THERE IS NO DISPUTE THAT THE INCOME WAS DISCLOSED I N THE STATEMENT U/S. 132 (4) OF THE ACT IN THE SEARCH PROCEEDINGS A ND THE ASSESSEE HAD SHOWN THE INCOME DISCLOSED IN THE RETURN OF INC OME WHICH WERE FILED IN RESPONSE TO NOTICE U/S. 153A OF THE A CT. IN VIEW OF THE DIRECT JUDGMENTS IN THE CASE OF CIT V/S. KANHAIYALA L (2008) 299 ITR 19 (RAJ.) AND SHYAM BIRI WORKS (P) LTD. V/S. AC IT (2001) 70 TTJ (ALL) 880, THE MATERIAL CONDITION IS THAT THE I NCOME SHOULD BE DISCLOSED IN THE STATEMENT U/S. 132 (4) OF THE ACT AND TAXES WITH INTEREST WERE REQUIRED TO BE PAID. IT MEANS THAT, I F THE INCOME IS DISCLOSED NOT IN THE STATEMENT U/S. 132 (4) OF THE ACT BUT DISCLOSED IN THE RETURN OF INCOME WHICH IS FILED LATER ON IN RESPONSE TO NOTICE U/S. 153 / 153C OF THE ACT, THE ASSESSEE IS HIT BY THE PROVISIONS OF EXPLANATION 5 TO SECTION 271 (1) (C) OF THE ACT. IN THIS CASE, THE ASSESSEE HAD DISCLOSED UNDISCLOSED INCOME IN THE ST ATEMENT U/S. 132 (4) OF THE ACT AND HAD PAID TAXES WITH INTEREST AND, THEREFORE, HE IS ENTITLED TO IMMUNITY GRANTED IN EXPLANATION 5 TO SECTION 271 (1) (C) OF THE ACT. THE CASES CITED BY THE AO IN TH E PENALTY ORDER ARE NOT APPLICABLE AS THEY ARE NOT SEARCH CASES. SI NCE THE RETURN OF INCOME IN RESPECT OF UNDISCLOSED INCOME IS TO BE FI LED AGAINST THE NOTICE U/S. 153A / 153C OF THE ACT, THE APPLICATION OF SECTION 139 (1) OF THE ACT DOES NOT ARISE. MERELY BECAUSE, THE ORIGINAL RETURN OF INCOME IS NOT FILED AS PER THE PROVISIONS OF SECTIO N 139 (1) OF THE ACT, THE IMMUNITY GRANTED IN EXPLANATION 5 TO SECTI ON 271 (1) (C) OF THE ACT IS NOT HIT AND IS STILL AVAILABLE. FURTHER, THE LEGISLATURE HAS USED THE WORDS 'PAYMENT OF TAXES WITH INTEREST' ALS O SUGGEST THAT LATE FILING OF RETURN IS IMMATERIAL. SINCE THE APPE LLANT FULFILLED THE MATERIAL CONDITION OF EXPLANATION 5 TO SECTION 271 (1) (C) OF THE ACT I.E. THE DISCLOSURE OF INCOME IN THE STATEMENT U/S. 132 (4) OF THE ACT AND THE PAYMENT OF TAX WITH INTEREST, PENALTY AS PE R THE EXPLANATION 5 TO SECTION 271 (1) (C) OF THE ACT IS NOT LEVIABLE . HENCE, THE PENALTY IS HEREBY DELETED AND THE GROUND OF APPEAL IS ALLOWED. 7. FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A), WE FIND THAT LD. CIT(A) HAS FOLLOWED THE JUDGMENT OF HONBLE RAJASTH AN HIGH COURT RENDERED IN THE CASE OF CIT VS KANAHIYALAL (SUPRA) AND THE TRIBUNAL I.T.A.NO.10,11 /AHD/2012 4 DECISION RENDERED IN THE CASE OF SHYAM BIRI WORKS P VT. LTD. (SUPRA). IN THE CASE OF SHYAM BIRI WORKS PVT. LTD., THE SEARCH WAS CARRIED OUT ON 29.11.1988 AND AN AMOUNT OF RS.82 LACS WAS DECLARED IN THE STATEMENT RECODED U/S 132(4) ON THE SAID DATE OF SEARCH WHICH INCOME WAS DISCLOSED BY THE ASSESSEE IN VARIOUS ASSESSMENT YEARS I.E. AS SESSMENT YEAR 1983-84- 1989-90. IN ASSESSMENT YEARS 1983-84 AND 1985-86, THE INCOME WAS DISCLOSED IN THE HANDS OF SHYAM BIRI WORKS (FIRM) A ND FOR THE REMAINING THREE YEAS I.E. ASSESSMENT YEARS 1987-88 TO 1989-90 , THE INCOME WAS DISCLOSED IN THE HANDS OF SHYAM BIRI WORKS PVT. LTD . THE CASE OF THE COMPANY WAS BEFORE THE TRIBUNAL AND IT IS NOTED BY THE TRIBUNAL THAT FOR ASSESSMENT YEAR 1987-88, AND 1988-89, THE ASSESSMEN T AS COMPLETED ON THE BASIS OF REVISED RETURN FILED ON 30.03.1990 AND THE A.O. IMPOSED PENALTY U/S 271(1)(C) BY REJECTING THE CLAIM OF THE ASSESSEE THAT IMMUNITY IS AVAILABLE IN VIEW OF EXPLANATION (5) TO SECTION 271(1)(C) READ WITH SECTION 132(1) OF THE ACT AND IMPOSED PENALTY OF RS .1.70 LACS IN ASSESSMENT YEAR 1987-99 AND RS.31.30 LACS FOR THE A SSESSMENT YEAR 1988- 90. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A), LD. CIT(A) CONFIRMED THE PENALTY ON THE ADDITIONAL INCOME INCLUDED AS A RESULT OF DISCLOSURE MADE DURING THE COURSE OF SEAR CH. AGAINST THIS ORDER OF LD. CIT(A), ASSESSEE WAS IN APPEAL BEFORE THE TR IBUNAL AND IT WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE TRIBUNAL THAT BENEFIT IS ALLOWABLE TO THE ASSESSEE UNDER CLAUSE 2 OF EXPLANATION (5) TO S ECTION 271(1)(C) OF THE ACT. BEFORE THE TRIBUNAL, IN THAT CASE, IT WAS SUB MITTED BY LD. D.R. THAT THE BENEFIT UNDER CLAUSE (2) OF EXPLANATION (5) TO SECTION 271(1)(C) ARE AVAILABLE ONLY FOR THE PREVIOUS YEAR DURING WHICH T HE SEARCH ACTION HAS TAKEN PLACE AND FOR THIS PURPOSE, HE STRONGLY RELIE D ON THE EXISTENCE OF THE WORD RETURN OF INCOME TO BE FURNISHED BEFORE EXPIR Y OF TIME SPECIFIED IN CLAUSE (A) AND CLAUSE (B) OF SUB-SECTION (1) OF SEC TION 39. AFTER CONSIDERING ALL THE ARGUMENTS, THIS ISSUE WAS DECID ED BY THE TRIBUNAL IN I.T.A.NO.10,11 /AHD/2012 5 THAT CASE IN FAVOUR OF THE ASSESSEE AND THE RELEVAN T PARA OF THIS TRIBUNAL ORDER BEING PARA 11-13 ARE REPRODUCED BELOW: 11. AFTER CAREFUL CONSIDERATION OF CL. (2), WHAT W E ARE ABLE TO UNDERSTAND IS THAT THE WORDS 'RETURN OF INCOME TO B E FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN CLS. (A) AND (B) OF SUB-S. (1) OF S. 139', CANNOT BE READ WITHOUT THE WORDS 'INCOM E WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME' PRECEDING THE AFORESAID WORDS AND IF WE READ THE COMPLETE SENTENC E WHICH IS COMPRISING OUT OF WORDS 'HAS BEEN ACQUIRED OUT OF H IS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN O F INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN CL . (A) OR (B) OF SUB- S. (1) OF S. 139', IT IS ABUNDANTLY CLEARLY THAT EX ISTENCE OF WORDS 'CL. (A) OR CL. (B) OF SUB-S. (1) OF S. 139 DO NOT REFER ONLY TO THE RETURN OF INCOME TO BE FURNISHED RATHER REFERS ALSO TO THE RE TURN OF INCOME WHICH HAS/HAVE BEEN FURNISHED THOUGH OF COURSE THE RETURN(S) SO FURNISHED WERE TO BE FURNISHED IN VIEW OF CLS. (A) AND (B) OF SUB-S. (1) OF S. 139, MEANING THEREBY THAT THIS CLAUSE REF ERS TO THE RETURN(S) ALREADY HAVING BEEN FURNISHED AS WELL AS THE RETURN S WHICH IS YET TO BE FURNISHED. HAD IT NOT BEEN THE CASE THEN WORDS ' WHICH HAS NOT BEEN DISCLOSED SO FAR 'SHOULD NOT HAVE BEEN IN THE PROVISIONS. EXISTENCE OF THESE WORDS CLEARLY LEADS ONE TO UNDER STAND THAT THIS CLAUSE IS APPLICABLE TO THE RETURN(S) ALREADY FURNI SHED AS WELL AS TO THE RETURN TO BE FURNISHED -THOUGH OF COURSE SUCH R ETURNS SHOULD HAVE BEEN FURNISHED UNDER CLS. (A) AND (B) TO SUB-S . (1) OF S. 139. 12. IN VIEW OF THIS INTERPRETATION OF CL. (2) WE AR E OF THE OPINION THAT THE INTERPRETATION PUT BY THE LEARNED DEPARTME NTAL REPRESENTATIVE IS NOT ACCEPTABLE AND CONSEQUENTLY W E HELD THAT IMMUNITY AVAILABLE UNDER CL. (2) WAS FOR PREVIOUS A SSESSMENT YEAR(S) ALSO I.E., THE ASSESSMENT YEARS FOR WHICH R ETURN(S) OF INCOME HAS/HAVE BEEN FURNISHED. SO FAR AS ASSESSEE'S CASE IS CONCERNED IT IS-ADMITTED FACT THAT THE ASSESSEE HAS DISCLOSED AN INCOME OF RS. 82 LAKHS WHICH WAS INCLUSIVE OF INCOME OF SUMS OF RS. 1,70,000 AND RS. 2,30,000 FOR THE ASST. YR. 1987-88 AND 1988-89 AND, THEREFORE, THE ASSESSEE IS ENTITLED TO THE IMMUNITY AVAILABLE UNDER CL. (2) OF EXPLN. 5 OF S. 271(L)(C) OF THE ACT FOR BOTH THESE ASSESSMENT YEARS. 13. IN VIEW OF THESE DISCUSSIONS WE CANCEL THE PENA LTY FOR BOTH THE YEARS. 8. IN THE PRESENT CASE ALSO, THE SEARCH ACTION HAS TAKEN PLACE ON 21.10.2005 AND THE RELEVANT YEAR WHICH ARE BEFORE U S IN WHICH PENALTY HAS BEEN IMPOSED BY THE A.O. ARE ASSESSMENT YEARS 2 004-05 & 2005-06. I.T.A.NO.10,11 /AHD/2012 6 THIS IS THE ADMITTED POSITION OF FACT IN THE PRESEN T CASE THAT IN THE STATEMENT GIVEN BY THE ASSESSEE U/S 132(4), THE ADD ITIONAL INCOME WAS DISCLOSED BY THE ASSESSEE OF RS.23 LACS IN EACH OF THESE TWO YEARS. THE PENALTY IN DISPUTE BEFORE US IN BOTH THE YEARS IS W ITH REGARD TO THIS ADDITIONAL INCOME DISCLOSED IN THE STATEMENT U/S 13 2(4) FOR THESE TWO YEARS. THIS IS ALSO NOT AN ALLEGATION THAT THE TAX WAS NOT PAID BY THE ASSESSEE OR THAT THE MANNER OF EARNING INCOME WAS N OT SPECIFIED IN THE STATEMENT GIVEN U/S 132(4). HENCE, THE FACTS OF TH E PRESENT CASE ARE SIMILAR IF NOT IDENTICAL TO THE FACTS IN THE CASE O F SHYAM BIRI WORKS PVT. LTD. (SUPRA). WE THEREFORE, FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE BECAUSE NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. D.R. 9. THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT REN DERED IN THE CASE OF CIT VS KANAHIYALAL (SUPRA) IS ALSO SUPPORTI NG THE CASE OF THE ASSESSEE AND, THEREFORE, RESPECTFULLY FOLLOWING THE SE TWO JUDGMENTS, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) IN BOTH THESE YEARS. 10. IN THE RESULT, BOTH THESE APPEALS OF THE REVENU E ARE DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO.10,11 /AHD/2012 7 1. DATE OF DICTATION 16/4. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18/4.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 20/4 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.20/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20 /4/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .