The DCIT, Central Circle-1(3), Ahmedabad V. M/s. Bansal International Ltd., Bhavnagar

ITSSA 238/AHD/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6272 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 10-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: A L THAKKAR
• Keywords: Income from undisclosed sources; Initiation of penalty proceedings; Set aside
• Section: 143(3); 201

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH , ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ./ IT(SS) NO. 238 /AHD/2016 & / ASSTT. YEAR: 2012 - 2013 D.C.I.T., CENTRAL CIRCLE - 1 (3) , AHMEDABAD VS . M/S. BANSAL INTERNATIONAL LTD. PLOT NO.2137, NR. GOLDEN ARC COMPLEX , ATTABHAI CHOWK , BHAVNAGAR. PAN: AACCB4796K (APPLICANT) (RESPONENT) REVENUE BY : SHRI LALIT P. JAIN, SR.D.R ASSESSEE BY : SHRI A.L. THAKKAR, A.R / DATE OF HEARING : 1 6 / 01 / 201 9 / DATE OF PRONOUNCEMENT: 25 / 01 /201 9 / O R D E R PER MS MADHUMITA ROY, JUDICIAL MEMBER : THE INSTANT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) - 13, AHMEDABAD DATED 06.05. 2016, ARISI NG OUT OF ORDER OF THE DATED 24.09. 2014, PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) BY DCIT, CENTRAL CIRCLE - 1(3), AHMEDABAD, FOR THE ASSESSMENT YEARS 2012 - 13. IT(SS) NO .238 /AHD/2016 A.Y .2012 - 13 2 2. THE BRIEF FACTS LEADING TO THE CASE IS THIS THAT A SEARCH WAS CONDUCTED U/S.132 OF THE ACT IN THE CASE OF SHIP BR EAKERS GROUP OF BHAVNAGAR ON 17.02. 2012. DURING THE COURSE OF SEARCH SHRI VIJAY K. BANSAL MADE A DISCLOSURE OF RS.4.65 CRORES FOR THE FINANCIAL YEAR 2011 - 12 IN THE CASE OF ASSESSEE COMPANY ; THE SAME WAS DECLARED AND/OR DISCLOSED IN T HE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2012 - 13. THE CONSEQUENTIAL TAXES WAS ALSO DULY PAID BY THE ASSESSEE COMPANY . A PENALTY PROCEEDING WAS ALSO INITIATED BY THE AO WITH THE M AIN CONTENTION THAT DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSES SEE COMPANY COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNACCOUNTED INCOME WAS EAR NED. HOWEVER, THE ASSESSEE DULY EXPLAINED REGARDING THE INITIATION OF PENALTY PROCEEDINGS AGAINST THE NOTICE BY AND UNDER REPLY DATED 12.09. 2014 STATING THAT THE DISCLOSUR E WA S TRUE AND FULL. T HE EXPLANATION RENDERED BY THE ASSESSEE BEFORE THE AUTHORIZED OFFICER REGARDING THE MANNER IN WHICH SUCH INCOME WAS DERIVED IS EVIDENT FROM THE STATEMENT SO RECORDED U/S.132(4) OF THE ACT, UPON WHICH NO FURTHER QUERY WAS MADE AS ALSO CONCL UDED BY THE ASSESSEE. T HE AMOUNT SO DISCLOSED WAS ACCEPTED AND THE SAME WAS ASSESSED AS INCOME FROM OTHER SOURCES. NO ADDITION, WHATSOEVER WAS MADE ON ACCOUNT OF SUCH UNDISCLOSED INCOME FALLING WITHIN THE EXPLANATION U/S.271AAA OF THE ACT . I N THAT VIEW OF THE MATTER PENAL PROVISION U/S.271AAA OF TH E ACT HAS BEEN WRONGLY APPLIED IN THE CASE OF THE ASSESSEE AS ALSO SUBMITTED BY THE ASSESSEE IN THE SAID REPLY. IT IS RELEVANT TO MENTION THAT THE SAID INCOME WAS ASSESSED UNDER THE HEAD BUSINESS/PROFESSION AND NOT INCOME FROM UN DISCLOSED SOURCES. THEREAFTER, ALLEGATI ON AGAINST THE ASSESSEE COMPANY IN NOT SUBSTANTIATING THE MANNER IN WHICH THE UNACCOUNTED INCOME WAS EARNED IS NOT CORRECT AT ALL AS ALSO CONTENTED BY THE ASSESSEE . H OWEVER, SUCH PLEA WAS NOT ACCEPTED BY THE AO AND 10% OF THE TOTAL DISCLOSURE OF RS.4 . 65 , 0 0 ,000/ - RESULTING INTO RS.46,50,000/ - HAS BEEN IMPOSED AS PENALTY U/S.271AAA OF THE ACT. IT(SS) NO .238 /AHD/2016 A.Y .2012 - 13 3 3. IN APPEAL BEFORE, LD.CIT (A) QUASHED THE PENALTY PROCEEDING IMPOSED U/S.271AAA OF THE ACT ON THE BASIC PRINCIPLE THAT NO SUCH SPECIFIC QUESTION AS REGARDS MANNER OF EARNING OF UNDISCLOSED INCOME MADE BY THE DEPARTMENT DURING THE ASSESSMENT PROCEEDING. 4 . AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LD.REPRESTATIVE OF THE REVENUE RELIED UPON THE ORDER PASSED BY THE AO IN IMPOSING PENALTY. 5 . ON THE OTHER HAND LD.COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED IN SUPPORT OF HIS CASE WITH THE CONTENTIONS THAT NO PENALTY SHOULD BE LEVIED IN RESPECT OF VOLUNTARY DISCLOSURE OF INCOME. IT WAS ALSO ARGUED BY HIM THAT THE ASSESSEE DULY PAID TAX F OR THE UNDISCLOSED INCOME DECLARED VOL UNTARILY. HE FURTHER CONTENTED BEFORE US THAT NO SPECIFIC QUERY REGARDING THE MANNER OF EARNING OF SUCH UNDI SCLOSED INCOME WAS PUT BY THE REVENUE DURING ASSESSMENT. T HEREFORE , LEVY OF PENALTY ON THE GROUND THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE MANNE R IN WHICH THE UNDISCLOSED INCOME WAS DERIVED IS ABSOLUTELY NON APPLICATION OF MIND AND BAD IN LAW AND LIABLE TO BE SET ASIDE. IN SUPPORT OF HIS ARGUMENT HE RELIED UPON THE JUDGMENT PASSED BY THE CO - ORDINATE BENCH IN THE MATTER OF SMT. SULOCHANADEVI A. AGA RWAL. IT IS RELEVANT TO MENTION THAT THE ASSESSEE FILED ITS E - RETURN FOR ASSESSMENT YEAR 2012 - 13 ON 29.09.2012 DECLARING TOTAL INCOME AT RS.7,37,67,830/ - AND BOOK PROFIT U/S.115JB OF THE ACT AT RS.7,28,07,407/ - . HOWEVER, THE ASSESSMENT PROCEEDING WAS FINAL IZED U/S.143(3) R.W.S 153B(1)(B) OF THE ACT ON 18.03.2014 DETERMINING TOTAL INCOME AT RS.7,37,67,830/ - . IT(SS) NO .238 /AHD/2016 A.Y .2012 - 13 4 6 . WE HAVE HEARD THE RESPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE AO WHILE IMPOSING PUNISHMENT RECORDED AS FOLLOWS: 5. THE POSITION OF LAW REGARDING SECTION 271AAA AND THE CONTENTIONS HE ASSESSEE ARE DISCUSSED HEREUNDER : A. FIRSTLY, AS PER PROVISIONS OF SECTION 271AAA(1) PENALTY @ 10% OF THE UNDISCLOSED INCOME IS LEVIABLE IN ALL CASES EXCEPT FOR THE FULFI LLMENT OF CONDITIONS LAID DOWN IN SUBSECTION (2) OF SECTION 271AAA OF THE ACT. B. SECONDLY, IMMUNITY FROM PENALTY PROVIDED IF THE CONDITIONS LAID IN SUB SECTION (2) OF SECTION 271AAA ARE FULFILLED, VIZ: - I. IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPE CIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED: I I. SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED: AND III. PAYS THE TAX, TOG ETHER WITH INT EREST, IF ANY, IN RESPECT OF THE UNDISCLOSED I NCOME. 6. IN THE PRESENT CASE THE ASSESSEE DID NOT SPECIFIED AND SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED IN HIS STATEMENT U/S. 132(4) OF THE ACT. IT(SS) NO .238 /AHD/2016 A.Y .2012 - 13 5 6.1 IN VIEW OF THE FACTS AND POSITION OF LAW DISCUSSED ABOVE PENALTY U/S 27/1 AAA IS LEVIABLE IN CASE OF THE ASSESSEE. THE CONTENTIONS RAISED BY THE ASSESSEE ARE OF NO HELP TO HIM AS THE CONDITIONS LAID - CLOWN IN SECTION 271AAA(2) HAS NOT BEEN COMPLIED WITH 7 . ON THE CONTRARY WE ALSO PERUSED THE JUD GMENT RELIED UPON BY THE LD.CIT (A) AS ALSO THE LD.AR, PASSED BY THE CO - ORDINATE BENCH IN THE CA S E OF SMT. SULOCHANADEVI A. AGARWAL, ITA NO.1052/AHD/2012 DEALING THE SIMILAR ISSUE. THE RELEVANT PORTION IS REPRODUCED HEREIN BELOW: ' PARA 7. WE HAVE HEARD THE SUBMISSIONS OF THE REVENUE AND CAREFULLY PERUSED THE MATERIALS ON RECORD. THE LEARNED CIT(A) HAD DELETED THE PENALTY DUE TO THE 'FOLLOWING REASONS : (1) THE ASSESSES HAD VOLUNTARILY DISCLOSED THE SUM OF RS.50,00,000/ - DURING THE SEARCH PROCEEDINGS WITH REQUEST THAT NO PENALTY SHOULD BE LEVIED IN RESPECT OF SUCH DISCLOSURE. (2) DURING THE POST SEARCH PROCEEDINGS NO SPECIFIC QUESTION AS REGARDS MANNER OF EAR NING OF UNDISCLOSED INCOME OR SUBSTANTIATION THEREOF WAS PUT FORTH BY THE REVENUE. (3) THE ASSESSEE HAD ALSO PAID DUE TAX FOR THE UNDISCLOSED INCOME OF RS.50,00,000/ - DECLARED VOLUNTARILY. (4) IN THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT VS MAHENDRA C. SHAH (2008) 299 ITR 305 (GUJ) IT WAS HELD THAT WHEN UNDISCLOSED INCOME ADMITTED BY THE ASSESSEE HAS BEEN OFFERED FOR TAX IN THE RETURN OF INCOME AND THE TAX THEREOF DULY PAID, PENALTY CANNOT BE LEVIED, SPECIFICALLY, IN THE ABSENCE OF ANY QUESTION IN THIS RESPECT BY THE AO. AT THIS JUNCTURE, WE MUST ADMIT THAT THE REASONS POINTED OUT BY THE LEARNED CIT(A) ARE JUSTIFIABLE FOR DELETING THE PENALTY LEVIED BY THE LEARNED AO U/S.S. 271A.AA OF THE ACT. THEREFORE, WE DO NOT FIND ANY HESITATION TO CONFIRM THE ORDER OF THE LEARNED CIT(A) IT(SS) NO .238 /AHD/2016 A.Y .2012 - 13 6 7. THUS, IT CAN BE SEEN THAT IF THE APPELLANT HAS VOLUNTARILY MADE A DISCLOSURE, WHICH WAS OWNED UP IN THE RETURN FILED AND ALL THE DUE TAXES HAVE BEEN PAID, THE / IMPOSITION OF PENALTY U/S.S. 271AAA IS UNWARRANTED, IF NO SPECIFIC QUESTION AS REGARDS MANNER OF EARNING OF UNDISCLOSED INCOME OR SUBSTANTIATION THEREOF WAS PUT FORTH BY THE DEPARTMENT. THE HON'BLE ITAT HAS ALSO OBLIQUELY RELIED ON THE JUDGEMENT OF HON'BLE HIGH COURT OF GUJARAT IN TH E CASE OF CIT V/S. MAH ENDRA C. SHAH 299 ITR 305 (GUJ) 7 .1 THE CONDITION S AS WE FIND FROM THE ABOVE JUDGMENT HAS ALREADY BEEN FULFIL L ED BY THE ASSESSEE BEFORE US. THERE IS A SPECIFIC STATEMENT AND ALSO ARGUMENT OF THE ASSESSEE THAT NO SPECIFIC QUESTION WAS ASKED BY THE AUTHORIZED OFFICER TO SUBSTANTIATE THE MANNER IN WHICH TH E UNDISCLOSED INCOME WAS EARNED DURING THE ASSESSMENT PROCEEDING. 7 .2 THE LD.REPRESENTATIVE OF TH E REVENUE ALSO FAILED TO CONTRADICT THE SAME BEFORE US WITH CORROBORATING DOCUMENT ON RECORD. 7 .3 WE HAVE ALSO GONE THROUGH THE JUDGMENT PASSED BY CO - ORDINATE BENCH OF ITAT IN ITA NO.1961/AHD/2014 REGARDING THE STATEMENT RELATING TO THE MANNER IN WHICH SUCH UNDISCLOSED INCOME HAS BEEN DERIVED. THE RELEVANT PORTION OF JUDGMENT IS AS FOLL OWS: ..7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDERS. 'LD.AR HAS CITED AN ORDER OF CO - ORDINATE BENCH IN IT A NO.L954/AHD/2014 FOR ASST. YEAR 2009 - 10 IN THE MATTER OF ACIT VS. SHRI NAVIN NATUBHAI PATEL. IN THE SAME ORDER, OBSERVATION OF JURISDICTIONAL HIGH COURT IN THE MATTER OF MAHENDRA C. SHAH 299 ITR 305 HAS BEEN MENTIONED WHICH IS REPRODUCED HERE AS UNDER: IT(SS) NO .238 /AHD/2016 A.Y .2012 - 13 7 '15. INSOFAR AS THE ALLEGED FAILURE ON THE PORT OF THE ASSESSEE TO SPECIFY IN THE STAT EMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER M WHICH SUCH INCOME HAS BEEN, DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR, AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GAEL (SUPRA) SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPU LATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE, INC OME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLANATION 5 IS COMMENDABLE. ' 8. WE FIND THAT ID. CIT(A) HAS FOLLOWED THE AFORESAID DECISION OF JURISDICT IONAL HIGH COURT AND PASSED REASONED AND DETAILED ORDER. THEREFORE, WE DO NOT WANT TO INTERFERE IN THE ORDERS PASSED BY THE LD.CIT(A) AND RESPECTFULLY FOLLOWING THE ABOVE SAID JUDGMENT WE DISMISS BOTH APPEAL OF THE DEPARTMENT IT(SS) NO .238 /AHD/2016 A.Y .2012 - 13 8 7 .4 IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS NEVER PUT TO ANSWER THE SPECIFIC QUERY AS TO WHICH MANNER THE UNDISCLOSED INCOME WAS DERIVED DURING THE ASSESSMENT PROCEEDING IN THE ABSENCE OF WHICH IF THE STATUTORY RULES ARE APPLIED AND ALSO THE JUDGMENT S CITED A BOVE THEN WE CAN FAIRLY CONCLUDE THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE PENALTY CANNOT BE LEVIED AGAINST THE APPELLANT P ARTICULARLY WHEN NO ADDITION WAS MADE BY THE AO DURING ASSESSMENT AND THE INCOME SO DI SCLOSED, DUE TAX PAID THEREON WAS ACCEPTE D BY THE REVENUE. 7 .5 IN THAT VIEW OF THE MATTER WE FIND NO INFIRMITY IN THE ORDER PASSED BY LD.CIT (A) . THE SAME IS THU S CONFIRM. 8 . IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 25 /01/2019 AT AHMEDABAD. - SD - - SD - ( AMARJIT SINGH ) ACCOUTANT MEMBER ( MS MADHUMITA ROY ) JUDICIAL MEMBER (TRUE COPY) AHMEDABAD; DATED 25 / 01 /201 9 MANISH