M/s. Simandhar Construction, Baroda V. The ACIT, Central Circle-1, Baroda

ITSSA 281/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3072 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: ABBAS GULAMHUSAINWALA
• Section: 271(1)(c); 153A; 132

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.(SS) NO. 281/AHD/2014 ( ASSESSMENT YEAR : 2009-10) M/S SIMANDHAR CONSTRUCTION S/202, SHRI RAM CHAMBERS, MALHAR POINT, OLD PADRA ROAD, BARODA- 391020 / VS. ACIT CC-1, VADODARA. ./ ./ PAN/GIR NO. : ABI FS0 469 E ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : ABBAS GULAMHUSAINWALA, AR / RESPONDENT BY : LALIT P. JAIN, SR. DR DATE OF HEARING 26/02/2019 !'# / DATE OF PRONOUNCEMENT 28/02/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE TO ASSAIL THE IMPOSITION OF PENALTY OF RS. 24,08,800/- CONFIRMED BY THE CIT(A) ARISING FROM THE PENALTY OR DER PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 271(1)(C) OF THE AC T DATED 27/09/2013 CONCERNING ASSESSMENT YEAR 2009-10. 2. THE SUBSTANTIVE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER:- IT(SS) NO.281/AHD/2014 [SIMANDHAR CONSTRUCTION VS. ACIT] A.Y. 2009-10 - 2 - 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEAL) (CI T(A)) ERRED IN FACT AND IN LAW IN CONFIRMING THE PENALTY OF RS. 24,08,8 00/- UNDER S. 271(1)(C) WITHOUT APPRECIATING THE FACTS THAT DECLARATION IN SEARCH WAS MADE WITHOUT INCREMENTALLY MATERIAL AND IT WAS ASSESSED WITHOUT ANY ADJUSTMENT IN THE RETURN OF INCOME. 2. THE CIT(A) ERRED IN FACTS AND IN LAW IS NOT CONS IDERING THE ADDITIONAL GROUND OF THE APPELLANT AND DENIED THE RELIEF FOR T HE INCORRECT AMOUNT WORKED OUT BY THE AO. 3. BRIEFLY STATED, A SEARCH UNDER S. 132 OF THE INC OME TAX ACT WAS CONDUCTED ON 09/04/2010 IN THE PREMISES OF R. K. CO NSTRUCTION GROUP OF CASES INCLUDING THE CASE OF THE ASSESSEE. AS A CONSEQUENCE OF SEARCH, THE PROCEEDINGS 153A OF THE ACT WERE INITIA TED. THE ASSESSEE FILED ITS RETURN OF INCOME UNDER S. 153A OF THE DEC LARING TOTAL INCOME AT RS. 1,60,08,210/- WHICH INCLUDED A DISCLOSURE OF RS. 61,94,647/- MADE IN THE COURSE OF SEARCH UNDER S. 132(4) OF THE ACT. THE ASSESSMENT WAS COMPLETED UNDER S. 153A AND THE INCO ME WAS ASSESSED AT RS. 1,60,08,210/- WHICH WAS DECLARED IN THE REVI SED RETURN UNDER S. 153A OF THE ACT. THE AO ALLEGED THAT THE AMOUNT OF RS. 61,94,647/- WAS DISCOVERED AS UNDISCLOSED INCOME IN THE COURSE OF SEARCH FOR THE SPECIFIED YEAR AND CONSEQUENTLY PENALTY UNDER S. 271(1)(C) OF THE ACT WAS JUSTIFIED FOR CONCEALMENT OF PARTICULARS OF INCOME. THE AO ACCORDINGLY IMPOSED PENALTY OF RS. 24,08,800/- ON T HE ADDITIONAL INCOME OF RS. 61,94,647/- DECLARED BY THE ASSESSEE. THE CIT(A) IN FIRST APPEAL ALSO CONFIRMED THE ACTION OF THE AO TO WARDS IMPOSITION OF PENALTY. 4. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE T HE TRIBUNAL FOR CANCELLATION OF PENALTY. 5. THE LD. AR FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT IN THE COURSE OF SEARCH PROCEEDINGS CONDUCTED IN APRIL 201 0, THE ASSESSEE CONFESSED BOOKING OF BOGUS SUB-CONTRACTORS IN THE A SSESSMENT YEAR 2008-09 TO THE TUNE OF RS. 61,94,647/-. AS A CONSE QUENCE OF SEARCH, IT(SS) NO.281/AHD/2014 [SIMANDHAR CONSTRUCTION VS. ACIT] A.Y. 2009-10 - 3 - THE RETURN ORIGINALLY FILED UNDER S. 139(1) OF THE ACT AT RS. 98,13,557/- WAS REVISED AND THE RETURN WAS FILED UNDER S. 153A OF THE ACT AFTER INCLUDING THE ADDITIONAL INCOME BY REVERSING THE BO GUS EXPENSE. THE TAX AND APPLICABLE INTEREST WAS ALSO PAID THEREON. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH, A STATE MENT WAS RECORDED UNDER S. 132(4) OF THE ACT IN WHICH THE ASSESSEE HA S ACCEPTED THE EXPENSE TOWARDS SUB-CONTRACT AMOUNTING TO RS. 61,94 ,647/- AS BOGUS. HOWEVER, NO INCRIMINATING MATERIAL WAS FOUND BY THE DEPARTMENT TO SUPPORT THE ALLEGED BOGUS TRANSACTION EXCEPT THE OR AL EVIDENCE RECORDED UNDER S. 132(4) OF THE ACT. THE AO HAS AL SO ACCEPTED THE INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN FILE D UNDER S. 153A OF THE ACT WITHOUT ANY ADDITION THERETO. IT WAS THUS CONTENDED THAT WHEN THE RETURN FILED UNDER S. 153A IS ACCEPTED BY THE A O WITHOUT ANY ADDITIONS/VARIATIONS, NO CONCEALMENT OF INCOME PER SE CAN BE INFERRED WITH REFERENCE TO THE RETURN FILED SUBSEQUENTLY UND ER S. 153A OF THE ACT AS ASSESSED. THE LD. AR FURTHER EMPHATICALLY P OINTED OUT THAT WHILE THE AO IN THE PENALTY ORDER HAS OBSERVED ABOU T THE EXISTENCE OF INCRIMINATING DOCUMENTS AND FACTS, NO SUCH DOCUMENT S OR FACTS ARE REFERRED IN THE ASSESSMENT EXCEPT THE STATEMENT OF THE ASSESSEE. THEREFORE, THE OBSERVATIONS OF THE AO ARE BALD AND VAGUE TO THIS EXTENT. THE LD. AR THUS SUBMITTED THAT MERELY ON A CCOUNT OF ORAL EVIDENCE UNDER S. 132(4), THE PENALTY UNDER S. 271( 1)(C) CANNOT BE INVOKED. THE LD. AR FURTHER POINTED OUT FROM THE A SSESSMENT ORDER THAT THE SATISFACTION OF THE AO TOWARDS CONCEALMENT WAS WITH REFERENCE TO THE SPECIFIED YEAR WHEREAS THE INCOM E WAS DECLARED WITH REFERENCE TO ASST. YEAR 2008-09 WHICH FALLS IN A NO N-SPECIFIED PREVIOUS YEAR. THE LD. AR SUBMITTED THAT WHERE THE INCOME RELATES TO SPECIFIED YEAR, THE IMPOSITION OF PENALTY WAS REQUI RED TO BE DECIDED ON THE TOUCH STONE OF SEC. 271AAA OF THE ACT AS AGAINS T THE ACTION OF THE AO UNDER S. 271(1)(C) OF THE ACT. THUS, THE PENALT Y IMPOSED BY THE IT(SS) NO.281/AHD/2014 [SIMANDHAR CONSTRUCTION VS. ACIT] A.Y. 2009-10 - 4 - AO REQUIRED TO BE STRIKE DOWN ON SUCH MUTUALLY CONT RADICTORY STAND AS WELL. 6. THE LD. DR ON THE OTHER HAND RELIED UPON THE ACTION OF THE LOWER AUTHORITIES AND ALSO THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF PRASANNA DUGGAR 371 ITR 19 (CA L) IN JUSTIFICATION OF THE ACTION OF THE REVENUE ON THE BASIS OF ORAL E VIDENCE. THE LD. DR FURTHER SUBMITTED THAT SLP AGAINST THE AFORESAID JUDGMENT OF THE CALCUTTA HIGH COURT WAS DISMISSED BY THE HONBLE HI GH COURT AS REPORTED IN 373 ITR 681 (C). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ON. IN TERMS OF THE PLEA RAISED, THE CENTRAL QUESTION THAT EMERGES FOR DETERMINATION IS WHETHER PENALTY UNDER S. 271(1)(C) CAN BE IMPOSED I N THE FACTS AND CIRCUMSTANCES OF THE CASE NARRATED IN PRECEDING PAR AS. AT THE OUTSET, WE NOTICE PECULIAR OBSERVATIONS OF THE AO THAT THE ALLEGED UNDISCLOSED INCOME OF RS. 61,94,647/- RELATES TO THE SPECIFIED YEAR WHICH HAS BEEN ASSIGNED A STATUTORY MEANING UNDER S. 271AAA OF THE ACT. THE UNDISCLOSED INCOME ACCORDING TO THE STATEMENT OF TH E ASSESSEE UNDER S. 132(4) RELATES TO ASSESSMENT. YEAR 2008-09 WHICH AP PEARS TO HAVE BEEN ASSESSED IN ASSESSMENT YEAR 2009-10 AS PER THE RETU RN OF INCOME FILED BY THE ASSESSEE UNDER S. 153A OF THE ACT. THEREFOR E, WHERE THE CASE OF THE AO IS THAT INCOME PERTAINS TO SPECIFIED YEAR AS CATEGORICALLY OBSERVED IN THE ASSESSMENT YEAR AS WELL AS IN THE P ENALTY ORDER, THE RIGHT COURSE OF ACTION AVAILABLE TO THE AO IS TO IN VOKE SEC. 271AAA OF THE ACT FOR THE PURPOSES OF IMPOSITION OF PENALTY O N UNDISCLOSED INCOME PERTAINING TO SPECIFIED YEAR. THE PENALTY H AS BEEN INVOKED IN THE PRESENT CASE UNDER S. 271(1)(C) OF THE ACT WHIC H IS NOT SYNC WITH THE SCHEME OF THE ACT. EXPLANATION 5A TO SECTION 2 71(1)(C) ENABLES IMPOSITION OF PENALTY FOR A PERIOD OTHER THAN SPEC IFIED PREVIOUS YEAR CONTEMPLATED UNDER S. 271AAA OF THE ACT. THEREFORE THE SATISFACTION IT(SS) NO.281/AHD/2014 [SIMANDHAR CONSTRUCTION VS. ACIT] A.Y. 2009-10 - 5 - OF THE AO QUA A WRONG SECTION FOR THE PURPOSES OF P ENALTY OF STRICT NATURE IS CLEARLY NO SATISFACTION IN THE EYES OF LA W. THE WHOLE ACTION OF THE AO CARRIED UNDER S. 271(1)(C) IS THUS VITIAT ED AND A NULLITY IN LAW. IN THE BACKDROP OF THESE OBSERVATIONS WE DO N OT CONSIDER IT EXPEDIENT TO EXAMINE ANY OTHER ASPECT OF THE MATTER . THE ENTIRE PROCEEDINGS IS BAD IN LAW AT THE THRESHOLD. THE PE NALTY IMPOSED UNDER S. 271(1)(C) OF THE ACT IS THUS NO SUSTAINABLE IN L AW. THE AO IS ACCORDINGLY DIRECTED TO DELETE AMOUNT PENALTY LEVIE D UNDER S. 271(1)(C) OF THE ACT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 28/02/2019 TANMAY TRUE COPY !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 28/02/ 2019