INDUBALA J. JAIN, MUMBAI V. ACIT 15(2), MUMBAI

ITSSA 16/MUM/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1188 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 02-02-2015
• Assessment Year: misc
• Appeal Filed On: 24-02-2010
• Court: TRIBUNAL
• Assessee Lawyers: G P MEHTA
• Keywords: Search and seizure; Opportunity of being heard
• Section: 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T . ( S S) NO. 16/M/2010 (BLOCK PERIOD 1.4.1990 TO 4.8.2000 ) SMT. INDUBALA J. JAIN, C/O. G.P. MEHTA & CO., CAS, 807, TULSIANI CHAMBERS, 212, NARIMAN POINT, MUMBAI 400 007. / VS. ACIT, CIRCLE 15(2), MUMBAI. ./ PAN : AADPJ 7545 C ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI G.P. MEHTA / RESPONDENT BY : SHRI G.M. DOSS, CIT - DR / DATE OF HEARING : 05.10.2015 / DATE OF PRONOUNCEMENT :16 .10.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 24.2.2010 IS AGAINST THE ORDER OF THE CIT (A) - 26, MUMBAI DATED 22.1.2010 FOR THE BLOCK PERIOD 1.4.1990 TO 4.8.2000. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE PENALTY ORDERS PASSED / CONFIRMED BY THE LEARNED LOWER AUTHORITIES U/S 158BFA(2) OF THE ACT IS BAD IN LAW AND BAD IN FACTS. 2. THE PENALTY ORDER PASSED BY THE AO LEVYING PENALTY AT RS. 2,03,400/ - U/S 158BFA(2) OF THE ACT AND UPHELD BY THE LD CIT (A) IS AB - INITIO VOID INASMUCH AS, SAME HAS NOT BE EN PASSED WITHIN THE TIME LIMIT PRESCRIBED U/S 158BFA(3)(C) OF THE ACT. 3. THE PENALTY ORDER PASSED BY T H E LD AO LEVYING PENALTY AT RS. 2,03,400/ - U/S 158BFA(2) OF THE ACT 1961 AND CONFIRMED BY THE LD CIT (A) IS AB - INITIO VOID, INASMUCH AS, THE IMPUGNED PE NALTY HAS BEEN LEVIED WITHOUT GIVING AN ADEQUATE AND REASONABLE OPPORTUNITY OF BEING HEARD. 4. THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN IMPOSING / CONFIRMING THE IMPOSITION OF PENALTY AT RS. 2,03,400/ - U/S 158BFA(2) OF THE ACT THOUGH THE ADDITIO N OF RS. 3,39,000/ - WAS MADE DURING THE ASSESSMENT PROCEEDINGS BY RECOURSE TO DEEMING PROVISIONS CONTAINED IN SECTION 69 OF THE ACT. 5. HAVING REGARD TO THE FACTS OF THE CASE, PROVISIONS OF LAW AND JUDICIAL PROPOSITIONS, THE LEVY OF IMPUGNED PENALTY IN WHO LLY UNCALLED FOR, MORE SO WHEN THE EXPLANATION WITH REGARD TO NATURE AND POSSESSION OF THE VALUABLES FOUND DURING SEARCH FOUND DURING SEARCH PROCEEDINGS WAS NOT REBUTTED. 2 2. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT IN THIS CASE, PENALTY U/S 158BFA(2) OF THE ACT OF RS. 2,03,400/ - WAS LEVIED BY THE AO FOR CONCEALMENT VIS - A - VIS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LIMITED ISSUE FOR ADJUDICATION IN THIS APPEAL RELATES TO THE SUST AINABILITY OF THE SAID PENALTIES LEVIED IN RESPECT OF ONE PACKET CONTAINING TWO PIECES OF DIAMONDS WORTH OF RS. 3,39,000/ - . BRIEFLY STATED RELEVANT FACTS ARE THAT THIS IS THE CASE WHERE THERE WAS A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT. THE JEWEL LERY FOUND DURING THE SEARCH WAS VALUED BY THE DEPARTMENTAL VALUERS . O NE PACKET OF DIAMONDS CONSISTING OF TWO PIECES ROUND SHAPE, WHILE FINE CUT DELUXE OF 2.26 CARATS VALUED AT RS. 3.39 LAKHS WAS THE SUBJECT MATTER OF ADDITION . AO MADE ADDITION OF THE SAME IGNORING THE ASSESSEES SUBMISSIONS. AS PER THE ASSESSEE, THE SAID DIAMONDS WERE DISCLOSED IN THE DECLARATION UNDER VDIS SCHEME , 1997 DECLARED BY THE GOVERNMENT OF INDIA . T HE WEIGHT OF THE JEWELLERY AS PER THE VDIS DECLARATION IS 3.69 CARA TS AND TH E VALUE AS ON 1.4.1997 IS RS. 2,58,300/ - . ASSESSEE EXPLAINED THE SAID DIAMONDS OF 2.26 CARATS FOUND DURING THE SEARCH ACTION WITH THE ABOVE SAID DIAMONDS OF 3.69 CARATS DECLARED UNDER VDIS SCHEME. AO REJECTED THE SAME CONSIDERING THE DISCREPANCY IN THE W EIGHT OF CARATS AS WELL AS THE VALUE. THE TRIBUNAL CONFIRMED THE ADDITION IN QUANTUM APPEAL . MEANWHILE, AO LEVIED THE PENALTY U/S 158BFA(2) OF THE ACT IGNORING THE ASSESSEES SUBMISSIONS . ON APPEAL, CIT (A) CONFIRMED THE SAME. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US. 3. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NOT THE CASE OF NON - DISCLOSURE OF DIAMONDS TO THE DEPARTMENTS. IT IS THE CASE OF REJECTING THE ASSESSEES EXPLANATION, WHICH IS ONE OF THE POSSIBLE EXPLANATIONS. HE ARGUED FOR DROPPING THE PENALTY AS THE ISSUE IS DEBATABLE IN NATURE. 4. ON THE OTHER HAND, LD DR HIGHLIGHTED THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS AND ALSO RELIED ON THE DECISION OF THE TRIBUNAL ON MERITS . 5. ON HEARING BOTH THE PARTIES, WE FIND THAT THERE IS NO DISPUTE ON THE FACT OF DISCLOSURE OF DIAMONDS IN THE VDIS SCHEME AND THE SAME IS ON RECORD. THE FACTS REFER TO TWO SETS OF DIAMONDS VIZ (I) VDIS DISCLOSED DIAMONDS (IN SHORT VDD) AND 3 (II) DIAM ONDS DISCOVERED IN SEARCH (IN SHORT DDS). THE QUESTION IS, IF THE DIAMONDS FOUND DURING THE SEARCH ARE NOT THE ONES DISCLOSED UNDER THE VDIS SCHEME, WHERE ARE THOSE VDIS DISCLOSED DIAMONDS? WHY THEY WERE NOT FOUND AT THE PREMISES DURING THE SEARCH ACTIO N? WE HAVE ALSO EXAMINED THE QUANTITY OF CARATS AND FIND WHAT WAS DISCLOSED IN THE VDIS IS MUCH HIGHER THAN WHAT IS FOUND DURING THE SEARCH ACTION. THEREFORE, IT IS REASONABLE TO INFER THAT THESE TWO SETS OF DIAMONDS ARE REQUIRED TO BE LINKED AT LEAST FOR THE PRESENT PENALTY PROCEEDINGS. EXCHANGE OF DIAMONDS WAS NOT RULED OUT BY THE REVENUE WITH ANY EVIDENCE. THERE IS NO CLINCHING EVIDENCE GATHERE D BY THE REVENUE THAT THESE DIAMONDS ARE NEWLY ACQUIRED AFTER THE SAID VDIS DECLARATIONS. THE PENALTY PROCEEDINGS EXPECT SAME EVIDENCES / INCRIMIN ATING MATERIAL TO SUGGEST THE EXISTENCE OF THE VDD . IN OUR VIEW, THE EXPLANATION GIVEN BY THE ASSESSEE CONST ITUTES POSSIBLE ONE. IN THAT SENSE, WE FIND DEBATABILITY IN THE ADDITION UNDER CONSIDERATION. CONSIDERING THE AVAILABILITY OF DIAMONDS WHICH WERE DI SCLOSED IN VDIS SCHEME, WE FIND THAT IT CAN BE A GOOD CASE FOR MAKING ADDITIONS IN THE ASSESSMENT , BUT THE SAME IS NOT GOOD ENOUGH FOR LEVYING PENALTY U/S 158BFA(2) OF THE ACT. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER , 2015. SD/ - SD/ - (SANDEEP GOSAIN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16 . 10 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 4 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI