Shri Jagdishchandra Rasiklal Kaswala, Surat V. The ACIT.,Cent.Circle-3, Surat

ITSSA 152/AHD/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2340 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 28-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER JAGDISHCHANDRA RASIKLAL KASWALA, B - 304, SHREENATHDWAR APARTMENTS, A.K. ROADS, SURAT PAN: AFQPK1110E (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 3, SURAT (RESPONDENT) REVENUE BY : S MT. VIBHA BHALLA, CIT - D . R. ASSESSEE BY: S H RI M.K. PATEL , A.R. DATE OF HEARING : 28 - 07 - 2 016 DATE OF PRONOUNCEMENT : 05 - 08 - 2 016 / O RDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE THREE ASSESSEE S APPEAL S FOR A.YS. 2003 - 04 , 2005 - 06 & 2006 - 07, AR ISE FROM SEPARATE ORDER S OF THE CIT(A) - VIII, AHMEDABAD DATED 01 - 03 - 2013 IN FIRST AND THIRD ASSESSMENT YEAR AND DATED 25 - 02 - 2013 IN THE SE COND ASSESSMENT YEAR, IN APPEAL NO S . CIT(A) - II/CC - I T (SS) A NO . 151, ITA NO. 83 4 & IT(SS)A NO. 152 / A HD/20 13 A SSESSMENT YEAR 200 3 - 04, 05 - 06 & 06 - 07 I.T(SS) A NO S . 151 & 152 & ITA NO. 834 /AHD /2013 PAGE NO JAGDISHCHANDRA RASIKLAL KASWALA VS. ACIT 2 3/13/2011 - 12 , CIT(A) - II/CC - 3/14 & 15/2011 - 12 & CIT(A) - II/CC - 3/16/2011 - 12 , CONFIRMING ASSESSING OFFICER S ACTION IN IMPOSING PENALTIES OF RS. 5,21,681/ - RS. 2,27,767/ - AND RS. 3,27,438/ - ; RESPECTIVELY , PROC EEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . WE PROCEED ASSESSMENT YEAR - WISE FOR THE SAKE OF CONVENIENCE AND BREVITY. ASSESSMENT YEAR 2003 - 04 IT(SS)A 151/AHD/2013 2. THIS ASSESSEE - AN INDIV ID UAL MANAGES AND RUNS TUI TION CLASSES. THE DEPARTMENT CARRIED OUT A SEARCH AT THE RESIDENCE OF ONE SHRI JITENDRABHAI B. SOJITRA ON 07 - 11 - 2006 ENGAGED IN THE VERY VOCATION. THE ASSESSEE HEREIN WAS ADMITTEDLY ASSOCIATED TO THE SAID SEARCHED PERSON. THIS SEARCH FOLLOWED A SURVEY C ONDUCTED ON THE VERY DAY AT ASSESSEE TUITION PLACE. HE DISCLOSED UNACCOUNTED INCOME OF RS. 31 LACS IN THEREOF. 3. THE ASSESSING OFFICER ISSUED SECTION 153C NOTICE ON 08 - 02 - 2008. THE ASSESSEE FILED RETURN ON 04 - 03 - 2008 STATING INCOME OF RS. 1,27,302/ - . THE ASSESSING OFFICER THEREAFTER COMPLETED ASSESSMENT ON 19 - 12 - 2008 MAKING TWO ADDITIONS I.E. FIRST ONE OF UNEXPLAINED INVESTMENT IN A PROPERTY INVOLVING AN AMOUNT OF RS. 85 LACS COMPRISING OF RS. 40 LACS PURCHASE PRICE AND RS. 40 TO 45 LACS SPENT ON CON STRUCTION. LATTER ADDITION WAS OF RS. 2,47,748/ - UNDER THE HEAD I.T(SS) A NO S . 151 & 152 & ITA NO. 834 /AHD /2013 PAGE NO JAGDISHCHANDRA RASIKLAL KASWALA VS. ACIT 3 OF SUPPRESSED RECEIPTS FROM UNRECORDED TUITION ACTIVITIES. THESE TWO ADDITIONS AGGREGATED TO A SUM OF RS. 87,47,748/ - . THE ASSESSING OFFICER FURTHER INITIATED THE IMPUGNED PENALTY PROCEEDIN GS U/S. 271(1)(C) OF THE ACT ALLEGING THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME. 4. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) PARTLY CONFIRMED FORMER ADDITION OF UNEXPLAINED INVESTMENT OF RS. 85 LA CS (SUPRA) TO 17 LACS ONLY I.E. @ 20% COMING TO 1/5 SHARE BY HOLDING THAT THE ASSESSEE OWNED ONLY THE SAID SHARE IN THE PROPERTY IN QUESTION. HE RESTRICTED THE LATTER ADDITION TO RS. 1,23,748/ - THEREBY GIVING TELESCOPING EFFECT TO THE FORMER ADDITION AMO UNT RECOMPUTED TO RS. 15,76,252/ - ONLY. 5. THE ASSESSEE FILED ITA 45/AHD/2010 BEFORE THIS TRIBUNAL. A LEARNED CO - ORDINATE BENCH IN ITS ORDER DATED 07 - 03 - 2014 AFFIRMED THE FORMER ADDITION AND DELETED THE LATTER ONE. IT OBSERVED THAT ASSESSEE S DISCLOSU RE OF RS. 31 LACS (SUPRA) COULD NOT BE TAXED ONCE AGAIN IN THE IMPUGNED ASSESSMENT YEAR AS FOLLOWS: - 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY AND HAVE PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND ALSO THE COPY OF THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SURVEY ON 7.11.2006 FILED IN THE COMPILATION BEFORE THE TRIBUNAL. WE FIND THAT THERE WERE DISCREPANCIES IN THE RECEIPT OF FEES AS PER THE STATEMENT OF THE ASSESSEE RECORDED DURING THE SURVEY ON 7.11.2006 AND AS SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME FOR THE DIFFERENT ASSESSMENT YEARS. THE AO HAS REPRODUCED IN TABULAR FORM THE RELEVANT FIGURES AT PAGE NO.5 OF THE ASSESSMENT ORDER. THE TOTAL OF SUCH DIFFERENCE IN RECEIPT OF FEES FOR THE ASSESSMENT YEARS 2001 - 02 TO 2007 - 08 COMES TO RS.34,30,223/ - . THE ASSESSEE HAS CLAIMED THAT I.T(SS) A NO S . 151 & 152 & ITA NO. 834 /AHD /2013 PAGE NO JAGDISHCHANDRA RASIKLAL KASWALA VS. ACIT 4 THE STATEMENT OF THE ASSESSEE WAS RECORDED NEARLY FOUR YEARS AFTER THE END OF THE RELEVANT ACCOUNTING PERIOD, AND THE ASSESSEE DID NOT HAVE THE SUPPORT OR ADVICE OF HIS ACCOUNTANT OR TAX CONSULTANT AND COULD NOT REFER TO HIS RECORDS. THE FIGURE OF TUITION FEES FOR THE DIFFERENT ASSESSMENT YEARS WERE PROVIDED BY THE ASSESSEE DURING THE SURVEY UNDER SECTION 133A PURELY ON ESTIMATE BASIS. THE ASSESSEE TO COVER UP THE DIFFERENCE FOUND IN THE RECEIPT OF FEES AS PE R THE STATEMENT RECORDED AND AS SHOWN IN THE RETURN OF INCOME FOR THE DIFFERENT ASSESSMENT YEARS, MADE A SURRENDER OF RS.31 LAKHS IN THE ASSESSMENT YEAR 2007 - 08 RELEVANT TO THE DATE OF SURVEY I.E. 7.11.2006. WE FIND THAT THE ASSESSEE HAS NOT RETRACTED FROM HIS STATEMENT RECORDED ON 7.11.2006 WHEREIN THE OFFER TO MAKE SURRENDER OF RS.31 LAKHS WAS MADE AND HAS SURRENDERED THE SAID AMOUNT OF RS.31 LAKHS AS INCOME IN THE ASSESSMENT YEAR 2007 - 08 AND HAS PAID TAX THEREON. IN THESE FACTS AND IN VIEW OF THE FACT TH AT THE DIFFERENCE OF RS.31 LAKHS WAS SEPARATELY TAXED IN ASSESSMENT YEAR 2007 - 08, WE ARE OF THE CONSIDERED VIEW THAT TAXING THE SAME AMOUNT OF D IFFERENCE BETWEEN THE RECEIPT OF FEES AS PER THE STATEMENT RECORDED THE SURVEY ON 7.11.2006 AND THE FEE RECEIP TS AS SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME IN THE ASSESSMENT YEARS 2001 - 02 TO 2007 - 08 SEPARATELY, IS NOT JUSTIFIED AND SHALL AMOUNT TO TAXING THE SAME FIGURE OF DIFFERENCE TWICE, WHICH AMOUNTS TO DOUBLE TAXATION, WHICH IS NOT PERMITTED UNDER THE L AW, AND ACCORDINGLY, WE HOLD THAT NO SEPARATE ADDITION ON ACCOUNT OF DIFFERENCE IN THE FIGURE OF RECEIPT OF FEES, IS CALLED FOR. WE FIND THAT THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE CLAIM OF THE ASSESSEE THAT THE RECEIPT OF RS. 1,24,000/ - FROM MOUNI TUIT ION CLASSES WAS NOT EARNED BY THE ASSESSEE AS HE WAS PROVIDING HONORARY SERVICE TO THE SAID INSTITUTE, WHICH IS EVIDENT FROM THE CERTIFICATE ISSUED BY MOUNI STUDY CENTRE. IN THIS VIEW OF THE MATTER, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE, AS THERE IS NO JUSTIFICATION IN MAKING THE ADDITION ON ACCOUNT OF DIFFERENCE IN FIGURES OF RECEIPT OF TUITION FEES FOR THE RELEVANT ASSESSMENT YEAR SEPARATELY, THE SAME IS DELETED AND THE GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. QUANTUM PROCEEDINGS SEEM TO HAVE ATTAINED FINALITY AT THIS STAGE. I.T(SS) A NO S . 151 & 152 & ITA NO. 834 /AHD /2013 PAGE NO JAGDISHCHANDRA RASIKLAL KASWALA VS. ACIT 5 6 . WE COME TO THE IMPUGNED PENALTY PROCEEDINGS NOW. THE ASSESSING OFFICER IN HIS ORDER DATED 29 - 03 - 2011 HEAVILY RELIED ON QUANTUM DEVELOPMENTS UPTO THE CIT(A) S ORDER TO CONCLUDE THAT THE ASSESSE HAD CONCEALED HIS TAXABL E INCOME BY FURNISHING INACCURATE PARTICULARS THEREOF. HE ACCORDINGLY LEVIED THE IMPUGNED PENALTY OF RS. 5,21,681/ - . THE CIT(A) CONFIRMS THE SAME. 7 . HEARD BOTH SIDES. CASE FILE PERUSED. THERE IS NO DISPUTE THAT THE SOLE SURVIVING ISSUE IN THE INS TANT APPEAL IS Q UA CORRECTNESS OF SECTION 271(1)(C) PENALTY IN QUESTION ARISING FROM UNEXPLAINED ADDITION AMOUNT OF R S. 17 LACS. IT HAS ALREADY COME ON RECORD THAT THIS TRIBUNAL IN QUANTUM PROCEEDINGS HAS ALREADY HELD THE ASSESSEE TO HAVE INCLUDED IMPUGN ED ASSESSMENT YEARS UNACCOUNTED INCOME IN HIS DISCLOSURE OF RS. 31 LACS MADE DURING SURVEY AND ASSESSED IN ASSESSMENT YEAR 2007 - 08. WE ACCORDINGLY ARE OF THE OPINION THAT THE ASSESSEE DESERVES TO BE GIVEN TELESCOPING EFFECT AS HE HAS DECLARED THE IMPUGNED ASSESSMENT YEAR INCOME REMAINING UNACCOUNTED IN ASSESSMENT YEAR 2007 - 08. LEARNED CO - ORDINATE BENCH IN QUANTUM PROCEEDINGS HAS ALREADY ADJUDICATED THE RELEVANT ISSU E . THE SAME HAS BECOME FINAL. WE CONCLUDE IN THES E PECULIAR FACTS THAT THE ABOVE STATED TE LESCOPING EFFECT OF THE INCOME DECLARED IN SURVEY CAN BE REASONABLY TREATED AS SOURCE OF ASSESSEE S UNEXPLAINED INVESTMENTS IN QUESTION. WE REITERATE THAT QUANTUM AND PENALTY ARE SEPARATE PROCEEDINGS AND EACH AND EVERY DISALLOWANCE /ADDITION MADE IN FORM ER DOES NOT LEAD TO AUTOMATIC APPLICATION OF THE LATTER PENAL PROVISION AS HELD BY HON BLE APEX COURT IN CIT VS. RELIANCE PETRO - I.T(SS) A NO S . 151 & 152 & ITA NO. 834 /AHD /2013 PAGE NO JAGDISHCHANDRA RASIKLAL KASWALA VS. ACIT 6 PRODUCTS 322 ITR 158 (SC). WE ACCEPT ASSESSEE S ARGUMENTS ACCORDI NGLY. THE IMPUGNED PENALTY OF R S. 5,21,681/ - STANDS DELETED. IT(SS)A 151/AHD/2013 IS ACCEPTED. ASSESSMENT YEAR 2005 - 06 ITA 834/AHD/2013 8 . BOTH PARTIES STATE AT THE OUTSET THAT SECTION 271(1)(C) PENALTY IN QUESTION OF RS. 2,27,767/ - EMANATES FROM SUPPRESSED RECEIPTS FROM UN - RECORDED TUITION CLASSES BEING ADDED T O T HE TUNE OF RS. 4,13,550/ - AND RS . 3,50,000/ - UNDER THE HEAD UNEXPLAINED INVESTMENTS. 9 . WE PUT UP A SPECIFIC TO THE PARTIES ABOUT THE FINALITY OF QUANTUM PROCEEDINGS. SMT. BHALA IS LEARNED CIT - DEPARTMENTAL REPRESENTATIVE APPEARING AT REVENUE S BEHEST. SHE VEHEMENTLY CONTENDS THAT QUANTUM ADDITION HAS BECOME FINAL SINCE CIT(A) S ORDER THEREIN WAS NEVER CHALLENGED BEFORE THIS TRIBUNAL. THE ASSESSEE AT THIS STAGE INVITES OUR ATTENTION TO THE FACTS THAT THE CIT(A) HAS PASSED A COMMON ORDER WITH RESPECT T O TWO IDENTICAL PENALTIES IN THE IMPUGNED ASSESSMENT YEAR AS WELL AS PRECEDING ASSESSMENT YEAR . HE STATES THAT HE DID NOT PREFER ANY QUANTUM APPEAL BEFORE THIS TRIBUNAL IN THE IMPUGNED ASSESSMENT YEAR WHEREAS HIS CORRESPONDING APPEAL CHALLENGING MERITS O F THE ADDITIONS AS WELL AS IDENTICAL PENALTY IN PRECEDING ASSESSMENT YEAR 2004 - 05 ALREADY STAND S ACCEPTED BY THE LD. C - ORDINATE BENCH ON 07 - 03 - 2014. I.T(SS) A NO S . 151 & 152 & ITA NO. 834 /AHD /2013 PAGE NO JAGDISHCHANDRA RASIKLAL KASWALA VS. ACIT 7 10 . SMT. BHALA AT THIS STAGE REITERATES HER EARLIER ARGUMENTS SUPPORTING REVENUE S CASE IN FAVOUR OF THE IMPUGNED PENALTY. 11 . WE HAVE HEARD BOTH SIDES. THERE IS NO DISPUTE THAT MERITS OF T HE ISSUE FORMING BACKBONE OF THE IMPUGNED PENALTY ARE THE SAME IN THE IMPUGNED ASSESSMENT YEAR AS WELL AS THOSE IN THE PRECEDING ASSESSMENT YEAR 2004 - 05. THE ASSESSEE HA S ALREADY SUCCEEDED IN THE SAID ASSESSMENT YEAR. HE HAS NOT PREFERRED ANY QUANTUM APPEAL IN THE IMPUGNED ASSESSMENT YEAR. WE DRAW SUPPORT FROM ABOVE QUOTED HON BLE APEX JUDGMENT TO CONCLUDE THAT QUANTUM AND PENALTY ARE SEPARATE PROCEEDINGS (SUPRA). WE A CCORDINGLY OBSERVE THAT ONCE THE ASSESSEE HAS SUCCEEDED ON QUANTUM ISSUE IN PRECEDING ASSESSMENT YEAR, THE MERE FACT THAT HE HAS NOT PREFERRED ANY SEPARATE APPEAL IN THE IMPUGNED ASSESSMENT YEAR IS NOT TO BE TAKEN AS THE SOLE REASON FOR CONFIRMING THE PENA LTY IN QUESTION. WE ACCORDINGLY DRAW SUPPORT LEARNED CO - ORDINATE BENCH DECISION IN PRECEDING ASSESSMENT YEAR IN QUANTUM PROCEEDING TO THE LIMITED EXTENT OF THE IMPUGNED PENAL ACTION AND ACCEPT ASSESSEE S ARGUMENTS. THE IMPUGNED PENALTY OF RS. 2,27,767/ - STANDS DELETED. ITA 834/AHD/2013 SUCCEEDS. ASSESSMENT YEAR 2006 - 07 IT(SS)A 152/AHD/2013 12 . THIS ASSESSEE S APPEAL CHALLENGES SECTION 271(1) (C) PENALTY OF RS. 3,27,438/ - EMANATING FROM UNEXPLAINED INVESTMENT ACTION OF RS . 10,26,000/ - MADE IN COURSE OF Q UANTUM PROCEEDINGS. BOTH THE LD. I.T(SS) A NO S . 151 & 152 & ITA NO. 834 /AHD /2013 PAGE NO JAGDISHCHANDRA RASIKLAL KASWALA VS. ACIT 8 REPRESENTATIVES FAIRLY STATE THAT LD. CO - ORDINATE BENCH IN ASSESSEE S QUANTUM APPEAL ITA 46/AHD/2010 HAS DELETED THE MAIN ADDITION ITSELF. WE ACCORDINGLY CONCLUDE THAT THE IMPUGNED PENALTY HAS NO LEGS TO STAND. THE SAME I S DELETED. IT(SS)A 152/AHD/2013 IS ALSO ACCEPTED. 13 . THE ASSESSEE SUCCEEDS IN ALL THE THREE APPEALS . ORDER PR ONOUNCED IN THE OPEN C OURT ON 05 - 08 - 201 6 SD/ - SD/ - ( MANISH BORAD ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 05 /08 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,