Gyan Kumar Agarwal, Hyderabad V. Asst.CIT, Cir-2(2), Hyderabad

ITSSA 19/HYD/2012

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8865 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: SYED JAMEELUDDIN
• Keywords: Unexplained investment; Search and seizure; Share purchase agreement; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL M EMBER IT(SS)A NO. 19/HYD/2012 BLOCK PERIOD COVERING ASSESSMENT YEARS 1997-98 TO 2002-03 AND FROM 1.4.2002 TO 21.1.2003 SHRI GYAN KUMAR AGARWAL, HYDERABAD. ( PAN - ABGPA 5780 L ) V/S. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 2(2), (FORMERLY ACIT, CENTRAL CIRCLE 6) HYDERABAD (APPLICANT) (RESPONDENT) APPELLANT BY : SHRI SYED JAMEELUDDIN, RESPONDENT BY : SMT. AMISHA S.GUPT, DR DATE OF HEARING 06.03.2013 DATE OF PRONOUNCEMENT 06.03.2013 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) III, HYDERA BAD DATED 1.11.2012, CONFIRMING THE PENALTY OF RS.7,66,710 LE VIED UNDER S.158BFA OF THE ACT FOR THE BLOCK PERIOD FROM COVER ING ASSESSMENT YEARS 1997-98 TO 2002-03 AND FROM 1.4.2002 TO 21.1 .2003. 2. FACTS OF THE CASE IN BRIEF ARE THAT SEARCH AND SEIZURE OPERATIONS UNDER S.132 OF THE INCOME TAX ACT, 1961, WERE CONDUCTED ON 21.1.2003 AT THE RESIDENTIAL PREMISES OF THE ASS ESSEE AND HIS BROTHER, SUNIL KUMAR AGARWAL, AND OTHER MEMBERS OF THEIR FAMILIES. CONSEQUENT TO SEARCH, BLOCK ASSESSMENTS UNDER S.158 BC/158 BD OF THE ACT WERE COMPLETED IN THE CASE OF THE ASSESSEE AS WELL AS IN THE IT(SS)A NO.19/.HYD/2012 SHRI GYAN KUMAR AGARWAL, HYDERABAD 2 CASES OF OTHER MEMBERS OF THE GROUP. BLOCK ASSESSME NT IN THE CASE OF ASSESSEE WAS COMPLETED UNDER S.158BD OF THE ACT ON 28.1.2005 DETERMINING THE TOTAL UNDISCLOSED INCOME OF THE ASS ESSEE FOR THE BLOCK PERIOD COMPRISING OF ASSESSMENT YEARS 1997-98 TO 20 02-03 AND UPTO 21.1.2003 AT RS.2,74,96,745, BY MAKING THE FOLLOWIN G ADDITIONS TO THE RETURNED UNDISCLOSED INCOME OF RS.7,29,745- (A) UNEXPLAINED INVESTMENT IN SHARES OF M/S. JEEVIKA LEASING & FINANCE CO. LTD. (AS AGAINST RS.2,25,000/- ADMITTED BY THE ASSESSEE RS. 14,42,000 (B) UNEXPLAINED INVESTMENT IN MONEY LENDING RS.2,55,50,000 WHILE THUS COMPLETING THE ASSESSMENT FOR THE BLOCK PERIOD, THE ASSESSING OFFICER ALSO INITIATED PROCEEDINGS FOR LE VY OF PENALTY UNDER S.158BFA, WITH REFERENCE TO THE ADDITIONS MADE TO T HE RETURNED INCOME AS NOTED ABOVE. NOT CONVINCED WITH THE EXPL ANATION OF THE ASSESSEE IN RESPONSE TO THE PENALTY NOTICE AND FIND ING NO MERIT IN THE CONTENTIONS OF THE LEARNED AUTHORISED REPRESENTATIV E FOR THE ASSESSEE URGED DURING THE PENALTY PROCEEDINGS, THE ASSESSIN G OFFICER ULTIMATELY IMPOSED PENALTY OF RS.7,66,710, VIDE PEN ALTY ORDER 29.5.2008, WITH THE FOLLOWING CONCLUDING OBSERVATIO NS- 6.0. IN VIEW OF THESE REASONS, THE OBJECTIONS OF THE ASSESSEE ARE NOT ACCEPTABLE. FAILURE TO OFFER THE S AID INCOME TO TAX RESULTED IN ADDITION TO THE UNDISCLOSED INCOME WHICH ASSESSEE OUGHT TO HAVE ADMITTED. I AM, THEREFORE , OF THE FIRM OPINION THAT THIS IS A FIT CASE FOR LEVY OF PENALTY UNDER SEC.158BFA(2) OF THE I.T. ACT, 1961. THE MINIMUM A ND MAXIMUM PENALTY LEVIABLE IS WORKED OUT AS UNDER- TOTAL UNDISCLOSED INCOM E DETERMINED VIDE BLOCK ASSESSMENT ORDER UNDER SEC.158BC DATED 31.01.2005 RS.2,74,96,745 IT(SS)A NO.19/.HYD/2012 SHRI GYAN KUMAR AGARWAL, HYDERABAD 3 LESS: ADDITION TOWARDS UNEXPLAINED INVESTMENT SET ASIDE BY ITAT RS.2,55,50,000 RS. 19,45,745 LESS: UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE BLOCK PERIOD RS. 7,29,745 UNDISCLOSED INCOME NOT OFFERED TO TAX RS. 12,17, 000 . WITH REFERENCE TO THE ABOVE UNDISCLOSED INCOME NOT OFFERED TO TAX OF RS.12,17,000, THE ASSESSING OFFICER IMPOSED A MINIM UM PENALTY OF RS.7,66,710, WORKING OUT THE SAME AT 100% OF TAX SO UGHT TO BE EVADED. 3. ON APPEAL, THE CIT(A) CONFIRMED THE SAID PENALT Y IMPOSED BY THE ASSESSING OFFICER. HENCE, ASSESSEE IS IN SEC OND APPEAL BEFORE US. 4. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED OR DERS OF THE LOWER AUTHORITIES. IT HAS BEEN BROUGHT TO OUR NOTICE AT THE VERY OUTSET THAT THE ISSUE INVOLVED IN THE PRESENT CASE, VIZ. JUSTIFICATION FOR THE PENALTY FOR CONCEALMENT OF INCOME, IMPOSED UNDE R S.158BFA OF THE ACT, IS COVERED IN FAVOUR OF THE ASSESSEE AND A GAINST THE REVENUE BY THE ORDER OF THIS TRIBUNAL IN THE CASE OF ASSESS EES BROTHER SHRI SUNIL KUMAR AGARWAL IN IT(SS)A NO.26/HYD/2011, AND A COPY OF THE ORDER OF THE TRIBUNAL DATED 24.2.2012 IN THAT CASE IS ALSO FURNISHED BEFORE US. WE FIND THAT THE TRIBUNAL CONSIDERING I DENTICAL FACTS AND CIRCUMSTANCES OF THE CASE AS INVOLVED IN THE PRESEN T CASE, IN THE CASE OF ASSESSEES BROTHER, CANCELLED CORRESPONDING PENA LTY OF RS.6,35,270 LEVIED IN THAT CASE. THE TRIBUNAL IN THAT CASE HAS NOTED THAT THE ASSESSING OFFICER, NOT HAVING ACCEPTED THE AMOUNT R ECORDED IN THE SHARE CERTIFICATES, RESORTED TO ESTIMATION OF SHARE VALUE AT RS.11 PER IT(SS)A NO.19/.HYD/2012 SHRI GYAN KUMAR AGARWAL, HYDERABAD 4 SHARE ON THE BASIS OF BREAK UP VALUE, AND THIS ESTI MATION IS BASED ON THE PRESUMPTION THAT THE ASSESSEE MIGHT HAVE PAID T HE SAME TO THE ALLEGED TRANSFERORS, FOR MAKING THE ADDITION TO THE UNDISCLOSED INCOME. THE TRIBUNAL FURTHER OBSERVING THAT WHEN ADDITIONS HAVE BEEN MADE ON ESTIMATE BASIS, PENALTY UNDER S.158BFA(2) CANNOT BE LEVIED, AND THAT IN ANY EVENT, LEVY OF PENALTY UNDER S.158BFA(2)(2) IS DISCRETIONARY AND NOT MANDATORY, AS HELD BY THE HONBLE BOMBAY HI GH COURT IN THE CASE OF CIT V/S. DODSAL LTD. (312 ITR 112), CANCELL ED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER S.158BFA OF T HE ACT. IN THE ABSENCE OF ANYTHING TO THE CONTRARY BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, AND FACTS AND CIRCUMSTANCES OF THE CASE LEADING TO THE IMPOSITION OF THE PENALTY I MPUGNED IN THE PRESENT APPEAL, BEING IDENTICAL TO THOSE CONSIDERED BY THE TRIBUNAL IN THE CASE OF ASSESSEES BROTHER, SHRI SUNIL KUMAR AG ARWAL, RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL, WE CAN CEL THE IMPUGNED PENALTY OF RS.7,66,710 IMPOSED BY THE ASSESSING OF FICER AND SUSTAINED BY THE CIT(A), ALLOWING THE GROUNDS OF TH E ASSESSEE IN THIS APPEAL. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 06.03.2013 SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 06 MARCH, 2013 IT(SS)A NO.19/.HYD/2012 SHRI GYAN KUMAR AGARWAL, HYDERABAD 5 COPY FORWARDED TO: 1. SHRI GYAN KUMAR AGARWAL, C/O.SYED JAMEELUDDIN, I.T. CONSULTANT, 16-7-302, ERRAM COTTAGE, AZAMPURA, HY D 500 024. 2. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 2(2) HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) - III, HYDERABAD. 4. COMMISSIONER OF INCOME - TAX CENTRAL HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.