Shri Nathabhai Lakhabhai Mavani, Jetpur V. The Asstt. Commr. Income Tax, Cen. Circle-1, RAJKOT-GUJARAT

ITSSA 18/RJT/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3106 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Opportunity of being heard; Question of law; Reasonable cause; Documents seized
• Section: 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. IT(SS)A NOS.17 TO 19/RJT/2014 (ASSESSMENT YEARS:2005-06, 2007-08 & 2009-10) SHRI NATHABHAI LAKHABHAI MAVANI SAGAR, NR. SATYAM PARK, AMARNAGAR MAIN ROAD, JETPUR - 360370 APPELLANT VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, RAJKOT, 2 ND FLOOR, AMRUTA ESTATE BUILDING, RAJKOT - 360001 RESPONDENT PAN: ACDPM4820F /BY ASSESSEE : SHRI M. J. RANPURA, A.R. /BY REVENUE : SHRI YOGESH PANDEY, CIT. D.R. /DATE OF HEARING : 16.02.2017 /DATE OF PRONOUNCEMENT : 27.02.2017 ORDER PER BENCH THESE THREE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2005-06, 2007-08 & 2009-10 ARISE AGAINST CIT(A)-IV, AHMEDABADS ORDE R DATED 22.05.2014, PASSED IN CASES NOS. CIT(A)-IV/190-192/RJT/CC-1/13- 14, UPHOLDING ASSESSING OFFICERS ACTION IMPOSING PENALTIES OF RS .3,13,231/-, RS.7,70,209/- AND 2,31,368/-; RESPECTIVELY, IN PROCEEDINGS U/S.2 71(1)(C) OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT. IT(SS)A NOS. 17 TO 19/RJT/2014 (SHRI NATHABHAI L. M AVANI VS. ACIT) A.Y. 2005-06, 07-08 & 09-10 - 2 - 2. WE COME TO RELEVANT FACTS FIRST. THE DEPARTMENT APPEARS TO HAVE CARRIED OUT THE SEARCH IN QUESTION IN ASSESSEES CA SE ON 25.02.2011. THE SAME CULMINATED INTO ISSUANCE OF SECTION 153A PROCEEDING S VIDE NOTICES DATED 15.06.2011. THE ASSESSEE FILED RETURNS IN FURTHERA NCE THERETO STATING INCOME OF RS.10,68,880/-, RS.24,93,190/- & RS.9,89,180/- A S AGAINST THE ONCE DECLARED EARLIER IN REGULAR RETURNS FILED U/S.139(1 ) OF THE ACT OF RS.1,78,470/-, RS.1,88,230/- AND RS.1,94,140/- IN THE THREE IMPUGN ED ASSESSMENT YEARS; RESPECTIVELY. THE ASSESSING OFFICER THEREAFTER FRA MED ASSESSMENTS ON 25.03.2013 ACCEPTING THE ABOVE STATED INCOME DISCLO SED IN POST SEARCH RETURNS. HE HOWEVER INITIATED THE IMPUGNED PENALTY PROCEEDINGS BY WAY OF IDENTICALLY WORDED SECTION 274 R.W.S. 271(1)(C) NOT ICES; ALL DATED 25.03.2013 STATING THEREIN THAT YOU (THE ASSESSEE) HAVE CONCE ALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 3. WE COME TO THE IMPUGNED PENALTY PROCEEDINGS. TH E ASSESSEE FILED ITS REPLY ON IDENTICAL LINES DATED 12.06.2013 IN ALL TH REE ASSESSMENT YEARS PLEADING THEREIN THAT HE HAD DULY DISCLOSED SOURCE OF THE UNACCOUNTED INCOME / INVESTMENT UNEARTH DURING SEARCH. HE FURTHER HIG HLIGHTED TO HAVE MADE THE ABOVE STATED DISCLOSURE IN GOOD FAITH. WE FIND FRO M PENALTY ORDERS DATED 13.09.2013 THAT THE ASSESSING OFFICER INVOKED SECTI ON 271(1)(C) EXPLANATION 5A OF THE ACT TO CONCLUDE THAT THE ASSESSEES ABOVE STATED QUANTUM ACTION IN NOT DISCLOSING THE INCOME UNEARTH DURING SEARCH IN HIS EARLIER REGULAR RETURNS (SUPRA) AMOUNTED TO A DEEMED CONCEALMENT. HE THUS IMPOSED THE IMPUGNED PENALTIES STATED IN PRECEDING PARAGRAPHS AS UPHELD IN THE LOWER APPELLATE ORDER UNDER CHALLENGE. 4. WE HAVE HEARD BOTH THE PARTIES. LEARNED COUNSEL REPRESENTING ASSESSEE INVITES OUR ATTENTION TOWARDS ASSESSING OFFICERS P ENALTY SHOW CAUSE NOTICES NOWHERE INDICATING AS TO WHETHER THE SAME WERE ISSU ED FOR CONCEALMENT OF IT(SS)A NOS. 17 TO 19/RJT/2014 (SHRI NATHABHAI L. M AVANI VS. ACIT) A.Y. 2005-06, 07-08 & 09-10 - 3 - INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. LEARNED DEPARTMENTAL REPRESENTATIVE IS UNABLE TO DISPUTE TH IS FACTUAL POSITION. WE NOTICE IN THIS FACTUAL BACKDROP THAT A CO-ORDINATE BENCH IN A GROUP CASES NOS. 08 TO 12/RJT/2014 DECIDED ON 28.11.2016 ALSO DELETE S IDENTICAL PENALTIES ARISING FROM THE VERY SEARCH DATED 25.02.2011 AFTER QUOTING A CATENA OF CASE LAWS AS UNDER: 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE PREMISES OF THE IMPUGNED APPELLANT S ON 25.02.2011. PRIOR TO THE SEARCH, THE IMPUGNED APPELLANTS HAD FILED THEIR RESPECTIVE RETURN OF INCOME FOR THE RESPECTIVE ASSESSMENT YEARS U/S. 139(1) OF THE ACT. PURSUANT TO THE SEARCH AND NOTICE U/S. 153A, THE IMPUGNED APPELLANT S FILED THEIR RETURN OF INCOME DECLARING INCOME HIGHER THAN THAT WAS ORIGIN ALLY RETURNED U/S. 139(1) OF THE ACT. THE RETURNED INCOME FILED PURSUANT TO N OTICE U/S. 153A WAS ACCEPTED BY THE A.O. HOWEVER, THE A.O. WAS OF THE FIRM BELIE F THAT THE ASSESSEE HAD CONCEALED THE INCOME SO FAR AS THE DIFFERENCE BETWE EN THE RETURNED INCOME U/S. 139(1) AND RETURNED INCOME U/S. 153A OF THE ACT IS CONCERNED. 4. THE A.O. PROCEEDED TO LEVY PENALTY U/S. 271(1)(C ) OF THE ACT. 5. THE PENALTY SO LEVIED BY THE A.O. WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY. BEFORE US, THE LD. COUNSEL FOR THE ASSES SEE VEHEMENTLY STATED THAT THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE ACT WAS BAD IN LAW AS THE SAME DID NOT SPECIFY UNDER WHICH LIMB PENALTY U/S. 271(1)(C) OF THE ACT HAD BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL PL ACED RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS73 TAXMANN.COM 248. IT IS SAY OF THE LD. COU NSEL THAT THIS DECISION OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT BY DISMISSING SPECIAL LEAVE PETITION OF THE R EVENUE 73 TAXMANN.COM 248. 7. STRONGLY REBUTTING THE CONTENTION OF THE LD. COU NSEL. THE LD. D.R. HEAVILY RELIED UPON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF TEJ BHAN COTTON GINNING & PRESSING FACTORY 10 T AXMANN.COM 16 WHEREIN IT WAS HELD THAT THE JURISDICTIONAL REQUIREMENT FOR PENALTY WAS EX ISTENCE OF SATISFACTION AND WHEN EXISTENCE OF SATISFACTION WAS CLEAR, THE FORMAT IN WHICH SATISFACTION WAS RECORDED OR REFLECTED COULD NOT AFFECT THE VALIDITY OF LEVY OF PENALTY. 8. THE LD. D.R. FURTHER RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF K.P. MADHUSUDAN 251 ITR 99 WHEREIN IT WA S HELD THAT IT(SS)A NOS. 17 TO 19/RJT/2014 (SHRI NATHABHAI L. M AVANI VS. ACIT) A.Y. 2005-06, 07-08 & 09-10 - 4 - NO EXPRESS INVOCATION OF THE EXPLANATION TO SECTI ON 271 IN THE NOTICE U/S. 271 IS IN OUR VIEW, NECESSARY BEFORE THE PROVI SIONS OF THE EXPLANATION THEREIN ARE APPLIED. 9. THE LD. D.R. CONTINUED STATING THAT THE A.R. OF THE ASSESSEE HAS ADMITTED BEFORE THE LD. CIT(A) DURING THE COURSE OF HEARING THAT TH E ADDITIONAL INCOME WAS BASED ON THE SEIZED DOCUMENTS ONLY. THEREFORE, THE OBJECTION OF THE ASSESSEE IS IRRELEVANT. 10. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. THE UNDISPUTED FACT IS THAT THE RETURNED INCOME HAS BEEN ACCEPTED AS SUCH. THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE ACT IS AS UNDER:- TO, DATE:- 25.03.2013 SHRIRAHULBHAI VITHALBHAI VADALIA PAN: ADQPV4394R SONAL SATYAM PARK, STREET NO. 4, AMARNAGAR ROAD, JETPUR. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASST. YEAR 2010-11 (U/S. 153A/143(3))), IT APPEARS TO ME THAT YOU * HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH M E RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVE N UNDER SECTION 22(1)/22(2)/34 OF THE INDIAN INCOME TAX ACT, 1922 O R WHICH YOU WERE REQUIRED TO FURNISH UNDER SECTION 139(1) OR BY A NO TICE GIVEN UNDER SECTION 139(2) /148 OF THE INCOME TAX ACT, 1961 NO. ______ DATED ____ OR HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED BY THE SAID SECTION 139(1) OR BY SUCH NOTICE. * HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WI TH A NOTICE UNDER SECTION 22(4) / 23(2) OF THE INDIAN INCOME TAX ACT, 1922 OR UNDER SECTION 142(1) /143(2) OF THE INCOME TAX ACT, 1961. NO.------------------------------ DATED ---------- ---------------- * HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME WITHIN 15 DAYS FROM THE RECEIPT OF THIS NOTICE AND SHOW CAUSE AS TO WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL Y OURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUT HORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271 (1)(C). IT(SS)A NOS. 17 TO 19/RJT/2014 (SHRI NATHABHAI L. M AVANI VS. ACIT) A.Y. 2005-06, 07-08 & 09-10 - 5 - (ANIL KUMAR SHARMA) ASSISTANT COMMISSIONER OF INCOME TA X CENTRAL CIRCLE-1, RAJKOT 11. A PERUSAL OF THE AFOREMENTIONED NOTICE CLEARLY SHOWS THAT THE A.O. HAS NOT SPECIFIED WHETHER THE NOTICE HAS BEEN ISSUED FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 12. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) HAD THE OCCASION TO CONSIDER THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW:- '(1) WHETHER, OMISSION IF ASSESSING OFFICER TO EX PLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISH ING OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVE D BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE P ENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVA LID DESPITE THE AMENDMENT OF SECTION 271 (1B) WITH RETROSPECTIVE EF FECT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIAT ED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAI NST THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOU T TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSI NG OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME?' 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 274 READ WITH SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECT ION 271(L)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E ., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 25 0 (KAR.). 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBS TANTIAL QUESTION OF LAW/ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 13. THE REVENUE PREFERRED A SPECIAL LEAVE PETITION AGAI NST THE AFOREMENTIONED JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT AND TH E SAME WAS DISMISSED BY THE HONBLE SUPREME COURT BY HOLDING THAT WE DO NO T FIND ANY MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS, ACCORDINGL Y, DISMISSED. IT(SS)A NOS. 17 TO 19/RJT/2014 (SHRI NATHABHAI L. M AVANI VS. ACIT) A.Y. 2005-06, 07-08 & 09-10 - 6 - 5. WE ALSO DRAW SUPPORT FROM THE ABOVE CO-ORDINATE BENCH DECISION TO CONCLUDE THAT THE IMPUGNED PENALTIES ARE NOT LIABLE TO BE SUSTAINED IN VIEW OF THE FACT THAT THE SHOW CAUSE NOTICES CORRESPONDING THERETO SUFFER FROM A GROSS NON APPLICATION OF MIND. WE THUS ACCEPT ASSESSEES CONTENTIONS TO DELETE THE IMPUGNED PENALTIES. 6. THESE THREE ASSESSEES APPEALS ARE ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF FEBRUARY, 2017.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 27/02/2017 TRUE COPY S.K.SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT