Shri Shailesh K. Mistry, Ahmedabad V. The ACIT, Cent. Circle 1(3), Ahmedabad

ITSSA 265/AHD/2013

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4861 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Revised return
• Section: 147; 132; 271(1)(c); 143(3); 153A; 205; 158BC; 153

Judgement Text

IT(SS )A N o. 265/ Ahd/ 2013 Assess ment Years: 2009-10 Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER (Conducted through Virtual Court) IT(SS)A No.265/Ahd/2013 Assessment Year: 2009-10 Shri Shailesh K. Mistry, vs. Asstt. Commissioner of Income Prop. S.K. Associates, Tax, Central Circle-1(3), Ahmedabad. 316, Abhishek Plaza, Ahmedabad. 1, Jayrath Bungalows, Near Heaven Park Society, Satellite, Ahmedabad – 380 015. [PAN – AGBPM 8919 K] (Appellant) (Respondent) Appellant by : Shri Tushar Hemani, Sr. Advocate & Shri Parimalsinh B. Parmar, A.R. Respondent by : Shri Alok Kumar, CIT D.R. Date of hearing : 09.03.2022 Date of pronouncement : 06.04.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the assessee against the order dated 03.05.2013 passed by the CIT(A)-I, Ahmedabad for the Assessment Year 2009-10. 2. The grounds of appeal are as under: “1. The Ld. CIT(A) has erred in confirming penalty of Rs. 37,50,000/- levied by AO under Section 271(1)(c) of the Act by taking recourse to Explanation 5A despite the fact that the pre-conditions for invoking Explanation 5A are not fulfilled in the case of the assessee. 2. The Ld. CIT(A) has erred in confirming penalty of Rs. 37,50,000/- despite the fact that in the course of search, assesse was not at all found to be owner of any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions which is a mandatory condition for the purpose of invoking Explanation 5A for levying penalty u/s 271(1)(c). IT(SS )A N o. 265/ Ahd/ 2013 Assess ment Years: 2009-10 Page 2 of 6 3. The Ld. CIT(A) has erred in confirming penalty of Rs. 37,50,000/- despite the fact that there is no variation in returned income (i.e. income as per return filed in response to notice u/s 153A) and assessee income. Under such circumstances, penalty u/s 271(1)(c) cannot be levied in view of binding decision of jurisdictional High Court. 4. In any case, the impugned penalty order is barred by limitation and thus without jurisdiction and illegal. 5. In any case, quantification of the penalty levied by AO is erroneous and so also excessive. 6. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignored various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.” 3. A search & seizure operation under section 132 of the Income Tax Act, 1961 was carried out in the case of the assessee on 07.10.2009. During the search, the assessee made disclosure under Section 132(4) of the Act of Rs.1,25,00,000/- for the Assessment Year 2009-10. The assessee filed return of income for the A.Y. 2009-10 declaring total income of Rs.36,40,540/-. After the search & seizure operation under Section 132 of the Act, the Assessing Officer issued notice under section 153A of the Act. Thereafter, the assessee filed return of income on 20.09.2010 declaring total income of Rs.1,60,40,540/- in response to notice under Section 153A of the Act. The Assessing Officer passed assessment order under Section 143(3) read with section 153A and determined the income of the assessee at Rs.1,60,40,540/- for A.Y. 2009-10. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act. The Assessing Officer observed that the assessee concealed the income of Rs.1,25,00,000/- which was not disclosed in the original return of income and thus evaded tax on the income of Rs.37,50,000/- and, therefore, vide order dated 28.06.2012 the Assessing Officer imposed penalty of Rs.37,50,000/- under section 271(1)(c) read with Exaplanation-1. 4. Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. IT(SS )A N o. 265/ Ahd/ 2013 Assess ment Years: 2009-10 Page 3 of 6 5. The Ld. A.R. submitted that the assessee made voluntary disclosure of Rs.1,25,00,000/- purely on estimate basis during search proceedings to buy peace of mind and to co-operate with the Department. The Assessing Officer while passing the assessment order accepted the return of income filed in pursuance to notice issued under Section 153A of the Act without saying any alleged corroborating and incriminating documents on the basis of which it concluded that the assessee did not conceal the particulars of income. The Ld. A.R. further submitted that the assessment has been framed in pursuance to return furnished declaring additional income of Rs.1,25,00,000/- in pursuance to notice under Section 153A of the Act and in absence of any variation in the return the same cannot be said as concealment of income and, therefore, no penalty should be levied. The Ld. A.R. further submitted that no penalty can be levied as per Explanation 5A as applicable for A.Y. 2008-09 for which the original return of income was filed on which the penalty has been levied by the Assessing Officer. In any case, as per the provision of Section 271AAA(2) of the Act, no penalty can be levied in the facts of the case under Section 271(1)(c) of the Act. Once the returned income is accepted by the Assessing Officer in the assessment proceedings and there is no variation, therefore, there is no concealment of particulars of income and, therefore, no penalty under Section 271(1)(c) of the Act can be levied. Section 153A was inserted into statute w.e.f. 01.06.2003 by the Finance Act 2003 and it can be seen that this Section starts with a non-obstante clause relating to normal assessment proceedings covered by Sections 139, 147, 148, 149, 151 & 153 in respect of searches made after 31.05.2003. The Sections so excluded, relate to filing of return, assessment and reassessment proceedings. Further Section 153A intends to assess or reassess total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the legislative intention is not to assess escaped income as in Section 147 or undisclosed income as was assessed under Section 158BC of the Act. The Ld. A.R. relied upon the decision of Sudarshan Silk & Sarees vs. CIT, 300 ITR 205 (SC). The Ld. A.R. further relied upon the decision of the Tribunal in the case of Vithalbhai Gordhanbhai Prajapati vs. DCIT (ITA No.04/Ahd/2018, order dated 19.07.2019) as well as Ashok Arjandas Makhijani vs. DCIT (IT(SS)A Nos.310/Ahd/2014, order dated 25.06.2019. The Ld. A.R. further relied upon the decision of the Hon’ble Delhi High Court in the case of Zoon Communications Pvt. Ltd. (2010) 327 ITR 510. IT(SS )A N o. 265/ Ahd/ 2013 Assess ment Years: 2009-10 Page 4 of 6 6. The Ld. D.R. relied upon the assessment order, penalty order and the order of CIT(A). The Ld. D.R. further submitted that the CIT(A) has rightly observed that there is considerable change in the language Explanation 5 & 5A to Section 271(1)(c) of the Act. Ld. D.R. submitted that in cases where search operation taken place after 01.04.2007, income declared in the return in response to notice under Section 153A and which had not been disclosed in the return filed prior to the search are deemed to be concealed within the meaning of Section 271(1)(c). 7. The Ld. D.R. relied upon the decision of the Hon’ble Delhi High Court in case of CIT vs. Usha International Limited (ITA No. 2026/2010 order dated 23.04.2012) wherein it is held that the question whether a revised return is voluntary or not has to be decided in the light of the entire material brought on record and whether the revised return was filed when the assessee is cornered by the evidence or material collected by the revenue authorities or before that stage. The assessee deliberately chose not to include the income which it had earned in the returns of income filed prior to the search and only included them in the returns of income filed after the search in response to notices issued by Department under Section 153A, even though it knew fully well that the income was to be included in the earlier return filed. 8. We have heard both the parties and perused all the relevant materials available on record. From the perusal of the assessment order passed under Section 143(3) read with Section 153A(1)(b) of the Act, the Assessing Officer has initiated penalty under Section 271(1)(c) of the Act in respect of concealment of income to the extent while filing original return of income. As held in the case of Usha International (supra) by the Hon’ble Delhi High Court the additional income was disclosed by the assessee after the search notice was issued to the assessee. Though the assessee voluntarily disclosed at the stage of proceedings under Section 153A, it cannot be said that the assessee did not conceal while filing returns at the initial stage of filing original return. The Assessing Officer was rightly satisfied that the assessee concealed the income. From A.Y. 2008-09 onwards in cases related to search the statute has provided separate penalty in respect of search matters which is under Section 271AAA of the Act. But in the present assessment order, the Assessing Officer has opted invocation of Section 271(1)(c) of the Act read with Explanation 1 of the Act. Therefore, the Assessing Officer applied parameters of concealment of particulars of income. In respect of Explanation 5A to Section IT(SS )A N o. 265/ Ahd/ 2013 Assess ment Years: 2009-10 Page 5 of 6 271(1)(c), it can be seen that wherein the course of a search initiated under Section 132 before 1 st day of June, 2007, when the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing and the assessee claims that such assets have been acquired by him by utilising his income then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this Section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. Thus, the applicability of Explanation 5A to Section 271(1)(c) is not proper in the present case as the assesse has not made any variation in the return of income filed in response to notice under Section 153A and the income disclosed by the assessee per se. In fact, the Assessing Officer invoked the penalty under Explanation 1 to Section 271 of the Act, but the CIT(A) observed that Explanation 5A is applicable, thus, both the revenue authorities were not aware about which Explanation will be applicable in assessee’s case. Therefore, invocation of Section 271(1)(c) read with Explanation 1 as per Assessing Officer and Explanation 5A as per CIT(A) does not apply in assessee’s case. The decision relied upon by the CIT(A) as well as by the Ld. DR in case of Usha International (supra) will also be not applicable in the present case as the said case does not deal in penalty under Section 271(1)(c) of the Act, but is totally on different footing. Thus, the imposition of penalty under Section 271(1)(c) read with Explanation 1 by the Assessing Officer is not correct as well as confirming the same by observing Explanation 5A by the CIT(A) was also not just and proper. Therefore, appeal of the assessee is allowed. 9. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 6 th day of April, 2022. Sd/- Sd/- (BHAGIRATH MAL BIYANI) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 6 th day of April, 2022 PBN/* IT(SS )A N o. 265/ Ahd/ 2013 Assess ment Years: 2009-10 Page 6 of 6 Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad