Shri Mukesh R.Gupta, Ahmedabad V. The Dy.CIT.,Cent.Circle-1(3)., Ahmedabad

ITSSA 289/AHD/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8279 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MATHIVANAN
• Assessee Lawyers: S V AGARWAL
• Keywords: Income from undisclosed sources; Source of fund
• Section: 143(3); 133A; 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA, VP AND SHRI A. MOHAN ALAN KAMONY, AM) IT (SS) A NO. 289 AND 291/AHD/2012 A. Y.: 2007-08 AND 2008-09 MUKESH R. GUPTA, 302, DEVARC COMMERCIAL COMPLEX, BESIDES FUN REPUBLIC CINEMA, S. G. ROAD, AHMEDABAD 380 015 P. A. NO. ABQPG 3546 C VS THE D. C. I. T., CENT. CIR-1(3), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. V. AGARWAL, AR RESPONDENT BY SHRI A. MATHIVANAN, SR. DR DATE OF HEARING: 08-08-2012 DATE OF PRONOUNCEMENT: 07-09-2012 O R D E R PER A. MOHAN ALANKAMONY: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARN ED CIT(A)-I, AHMEDABAD IN APPEAL NO. CIT(A)-I/CC-1(3)/54/2011-12 AND NO. CIT(A)-I/CC-1(3)/55/2011-12 BOTH DATED 17-05-2012, FOR ASSESSMENT YEARS 2007-08 AND 2008-09 PASSED U/S 271(1) (C) REA D WITH SECTION 250 OF THE I. T. ACT. 2. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY THE AS SESSEE IN BOTH THE APPEALS ARE REPRODUCED HEREIN BELOW FOR REFEREN CE: ITA NO.289 AND 291/AHD/2012 (AY 2007-08 & 2008-09) MUKESH R. GUPT VS DCIT, CENT. CIR-1(3), AHMEDABAD 2 AY: 2007-08 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY U/S. 27(1) (C) OF RS.62,000/- LEVIED BY THE A.O. AY: 2008-09 1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY U/S. 27(1) (C) OF RS.35,,000/- LEVIED BY THE A.O. 2) THE TOTAL DISCLOSURE OR RS.98731/- CONSIST OF, RS.30750/- INVESTMENT IN PURCHASE OF DOLLAR RS.67981/- MATURITY VALUE OF POST OFFICE RECURRIN G DEPOSIT IN THE NAME OF MINOR DAUGHTER -------------- RS.98731/- TOTAL ======= THE INVESTMENT IN POST OFFICE RECURRING DEPOSIT OF RS.67981/- WAS NOT FOUND DURING SEARCH BUT DECLARED BY THE ASSESSEE SUO MOTTO VIDE FILING RETURN U/S. 153A (1) (B) OF WHICH SHOULD NOT ATTRACT PENALTY. 3. THE ASSESSEE IS AN INDIVIDUAL FILED RETURN OF IN COME ON 04-07-2007AND 10/07/2008 DECLARING AN INCOME OF RS. 3,75,220/- AND RS.5,00,720/- FOR THE ASSESSMENT YEAR 2007-08 A ND 2008-09 RESPECTIVELY. ACTION U/S 132 WAS CARRIED OUT ON TH E ASSESSEE ON 15- 10-2008 AND NOTICE WAS ISSUED U/S.153A ON 21-07-200 9, IN RESPONSE TO WHICH THE ASSESSEE FILED RETURN OF INCOME ON 25- 06-2010 DECLARING AN INCOME OF RS.5,51,820/- FOR THE ASSESSMENT YEAR 2007-08 AND RS 5,31,470/- FOR THE ASSESSMENT YEAR 2008-09 RESPE CTIVELY. ASSESSMENT WAS FINALIZE U/S 143(3) R. W. S. 153A OF THE ACT FOR BOTH THE YEARS ON 30-11-2010 DETERMINING INCOME AT RS.5, 51,820/- AND RS.5,99,361/- RESPECTIVELY. SUBSEQUENTLY, THE LEARN ED AO LEVIED ITA NO.289 AND 291/AHD/2012 (AY 2007-08 & 2008-09) MUKESH R. GUPT VS DCIT, CENT. CIR-1(3), AHMEDABAD 3 PENALTY OF RS.62,000/- AND RS. 35,000/- U/S 271 ( 1) (C ) OF THE ACT, ON THE AMOUNT OF INCOME SOUGHT TO BE EVADED OF RS.1 ,76,600/- AND RS. 98,641/-, WHICH WAS NOT SHOWN IN THE RETURN FI LED BY THE ASSESSEE ON 04-07-2007 AND 10-07-2008 RESPECTIVELY, FOR BOTH THE ASSESSMENT YEARS, TREATING IT AS A PURE CASE OF CON CEALMENT OF INCOME. THE RELEVANT PARA OF THE PENALTY ORDER PASS ED BY THE LEARNED AO FOR BOTH THE ASSESSMENT YEARS ARE REPRODUCED HER EUNDER FOR REFERENCE: ASSESSMENT YEAR 2007-08 5. THE CASE OF THE ASSESSEE IS NOT COVERED BY THE PROVISIONS OF SECTION 271AAA (2) BECAUSE THE ASSESSEE HAS NOT SPECIFIED THE MANNER IN WHICH SUCH INCOME WAS EARNED. IN THE STATEMENT RECORDED U/S. 132(4), THE ASSESSEE HAS MERELY MADE DISCLOSURE OF RS.75,00,000/- ON A ROUND ABOUT BASIS ON ACCOUNT OF DIFFERENCE IN STOCK OF FAKIRSONS PEPCAM PVT. LTD., OF WHICH THE ASSESSEE IS A DIRECTOR. THE SHOWING OF INCOME OF RS .1,76,600/- IS BASED ON LOSE PAPERS FOUND AND SEIZED DURING SEA RCH AND FOR THIS EXPENDITURE, NO STATEMENT U/S. 132(4) WITH REG ARD TO ADMISSION OF INCOME REPRESENTED BY THESE LOOSE PAPE RS WAS MADE. HENCE, THE CONTENTION OF ASSESSEE THAT HIS CA SE IS COVERED BY SECTION 271AAA (2) IS NOT ACCEPTABLE. AS REGARDS CONTENTION OF ASSESSEE THAT PENAL PROVISIONS OF SEC TION 271 (1) (C ) ARE NOT APPLICABLE, IT IS SUBMITTED THAT THIS CONTENTION IS NOT CORRECT BECAUSE THE INCOME OF RS.1,76,000/- WHICH W AS OFFERED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A WAS NOT SHOWN IN THE RETURN FILED ON 04/07/2007. THIS IS CA SE OF PURE CONCEALMENT AS THE EXPENDITURE IN THE FORM OF PURCH ASE OF DOLLARS FOR FOREIGN TRIP WHICH WAS RECORDED ON PAPE RS FOUND AND SEIZED DURING SEARCH, WHICH WAS ME FROM UNDISCLOSED SOURCES OF INCOME NOT DISCLOSED TO THE DEPARTMENT AND WAS I N THE PRIMARY KNOWLEDGE OF THE ASSESSEE THAT THE EXPENDIT URE WAS UNRECORDED. THEREFORE, THE CASE OF THE ASSESSEE IS COVERED BY PROVISIONS OF SECTION 271(1) (C) READ WITH EXPLANAT ION 1. ITA NO.289 AND 291/AHD/2012 (AY 2007-08 & 2008-09) MUKESH R. GUPT VS DCIT, CENT. CIR-1(3), AHMEDABAD 4 ASSESSMENT YEAR 2008-09 5. THE CASE OF THE ASSESSEE IS NOT COVERED BY PRO VISIONS OF SECTION 271AAAA(2)BECAUSE THE ASSESSEE HAS NOT SPEC IFIED THE MANNER IN WHICH SUCH INCOME WAS EARNED. IN THE STATEMENT RECORDED U/S. 132(4), THE ASSESSEE HAS MERELY MADE DISCLOSURE OF RS.75,00,000/- ON A ROUND ABOUT BASIS ON ACCOUNT OF DIFFERENCE IN STOCK OF FAKIRSONS PEPCAM PVT. LTD., OF WHICH THE ASSESSEE IS A DIRECTOR. THE SHOWING OF INCOME OF RS .30,750/- IS BASED ON DOLLAR PURCHASED FROM UNACCOUNTED INCOME A ND FOR THIS EXPENDITURE, NO STATEMENT U/S. 132(4) WITH REG ARD TO ADMISSION OF INCOME REPRESENTED BY INVESTMENT IN GO LD ORNAMENTS. HENCE, THE CONTENTION OF ASSESSEE THAT H IS CASE IS COVERED BY SECTION 271AAA (2) IS NOT ACCEPTABLE. TH IS IS A CASE OF PURE CONCEALMENT AS THE EXPENDITURE IN THE FORM OF PURCHASE OF DOLLAR. MOREOVER, THE MATURITY AMOUNT OF POST OF FICE DEPOSIT IN THE NAME OF MINOR DAUGHTER AMOUNTING TO RS.67,89 1/- WAS ALSO ADDED WHICH ALSO AMOUNTS TO CONCEALMENT OF INC OME. 4. WHILE THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A), THE LEARNED CIT(A) OBSERVED THAT SEARCH WA S CONDUCTED IN THE CASE OF THE ASSESSEE AFTER 01-06-2007, THEREFOR E THE ASSESSEES CASE, IS NOT COVERED U/S 271AAA OF THE ACT BECAU SE ON THE DATE OF SEARCH VIZ. 15-10-2008 THE ASSESSEE HAD ALREADY FIL ED RETURN OF INCOME ON 04-07-2008 AND 10-07-2008 SHOWING INCOME AT RS.3,75,220/- AND RS.5,00,720/- WITHOUT INCLUDING T HE SUBSEQUENT DISCLOSED AMOUNT OF RS.1,76,600/- AND RS,.98,641/- FOR BOTH THE ASSESSMENT YEARS. THE ASSESSEE HAD FILED REVISED R ETURN OF INCOME AT RS.5,51,820/- AND RS. 5,31,470/- ON 25-06-2010, I.E., ONLY AFTER THE SEARCH, DECLARING THE UNDISCLOSED INCOME OF RS .1,76,600/- AND RS. 30,750/-. THE LEARNED CIT(A) FURTHER CONSIDERIN G THE RIVAL SUBMISSIONS AND FOR THE AFORESAID REASONS UPHELD T HE PENALTY LEVIED BY THE LEARNED AO U/S 271 (1) ( C ) READ WITH EXPL ANATION 1 OF THE ACT. ITA NO.289 AND 291/AHD/2012 (AY 2007-08 & 2008-09) MUKESH R. GUPT VS DCIT, CENT. CIR-1(3), AHMEDABAD 5 5. BOTH THE PARTIES SUBMITTED THAT THE FACTS AND TH E ISSUE INVOLVED IN THE ASSESSEES CASE FOR BOTH THE ASSESSMENT YEAR S ARE EXACTLY IDENTICAL WITH THAT OF THE COMPANIES CASE VIZ. M/S. BALAJI FORMALIN PVT. LTD., FOR THE ASSESSMENT YEAR 2008-09, THEREFORE T HE DECISION TAKEN BY THE BENCH IN THE CASE OF THE COMPANY MAY BE FOLL OWED. IN THE COMPANYS CASE, WE HAVE DELETED THE PENALTY LEVIED DUE TO THE FOLLOWING REASONS: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON PER USING THE APPELLATE ORDER IT IS APPARENT THAT THE DIRECTOR OF THE APPELLANT COMPANY SHRI MUKESH R. GUPTA HAD DISCLOSED AN AMOUN T OF RS.75,00,000/- IN THE STATEMENT RECORDED U/S 131 OF THE ACT FOR THE WHOLE GROUP OF ASSESSEE COMPANY, SISTER CONCERN S AND DIRECTORS OF THESE CONCERNS. THE RELEVANT PARA OF T HE LEARNED CIT(A) APPEAL IS REPRODUCED HEREIN BELOW FOR REFERE NCE: 2.. THE CRUX OF THE ARGUMENT IS THAT SEARCH W AS CONDUCTED AT THE RESIDENCE OF THE DIRECTORS OF THE ASSESSEE COMPANY ON 15.10.2008 AND SURVEY CONNECTED WITH SEARCH WAS ALSO CONDUCTED AT THE FACTORY AND O FFICE PREMISES. IN POST SEARCH PROCEEDINGS IN A STATEMENT RECORDED U/S. 131 ON 25.11.2008, THE DIRECTOR OF TH E COMPANY SHRI MUKESH R. GUPTA DISCLOSED RS.75,00,000 FOR THE WHOLE GROUP CONSISTING OF THE ASSESSEE COMPANY, SISTER CONCERNS, AND CASES OF DIRECTORS. IT WAS ARGUED THAT IN THE RETURN FILED O N 25.6.2010 AT AN AMOUNT OF RS.47,87,940 FOLLOWING AMOUNTS WERE DECLARED UNDER THE HEAD INCOME FROM OTHER SOURCES: DIESEL AND PETROL PURCHASE OF RS. 15,048 TANKER DRIVER SALARY AND INCENTIVES TO EMPLOYEES OF RS.7,32,149 UNACCOUNTED INCOME RS.7,47,197 ITA NO.289 AND 291/AHD/2012 (AY 2007-08 & 2008-09) MUKESH R. GUPT VS DCIT, CENT. CIR-1(3), AHMEDABAD 6 AND THAT THE RETURN OF RS.47,87,940 FILED ON 25.6.2 010 INCLUDED THAT DISCLOSURE COMPRISING RS.7,47,197. IT WAS ARGU ED THAT AS SUBSEQUENT TO SEARCH THE APPELLANT HAD OFFERED DISC LOSURE IN HIS RETURN, WHICH WAS ACCEPTED IN THE ORDER PASSED U/S. 143(3) R. W. S. 153A (1) (B) DATED 30.11.2010, NO PENALTY WAS LEVIABLE IN VIEW OF PROVISIONS OF SECTION 271AAA (2). 8. FROM THE ABOVE FACTS, IT CANNOT BE DISPUTED THAT DISCLOSURE WAS NOT MADE DURING THE SEARCH PROCEEDIN GS. THE DIRECTOR OF THE APPELLANT COMPANY HAD DISCLOSED TOT AL AMOUNT OF RS.75,00,000/- FOR THE WHOLE GROUP INCLUDING ON BEH ALF OF THE ASSESSEE COMPANY AT THE TIME OF SEARCH PROCEEDINGS AND SUBSEQUENT TO THAT ASSESSMENT IN THE HANDS OF THE ASSESSEE COMPANY WAS COMPLETED U/S 143 (3) OF THE ACT. IN TH ESE CIRCUMSTANCES, IT CAN BE JUDICIOUSLY CONCLUDED THAT PROVISIONS OF 271AAA HAS TO BE INVOKED IN ALL FAIRNESS. THE PR OVISIONS OF SECTION 271AAA WHICH WAS INSERTED BY THE FINANCE AC T, 2007 WITH EFFECT FROM 1.4.2007 IS REPRODUCED HEREIN BELO W FOR REFERENCE: PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAA. (1) (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, - (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED, AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME (3). (4) . ITA NO.289 AND 291/AHD/2012 (AY 2007-08 & 2008-09) MUKESH R. GUPT VS DCIT, CENT. CIR-1(3), AHMEDABAD 7 9. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE BEF ORE US, WE ARE OF THE CONSIDERED VIEW THAT THE DISCLOSURE M ADE BY THE DIRECTOR OF THE APPELLANT COMPANY DURING THE SEARCH PROCEEDINGS ON BEHALF OF HIMSELF, SISTER CONCERNS A ND GROUP CONCERNS WILL ENTITLE THE APPELLANT COMPANY WHO IS ONE AMONGST THE GROUP CONCERNS, TO CLAIM BENEFIT U/S 271AAA OF THE ACT THOUGH ITS PROCEEDINGS WERE COMPLETED U/S 133A READ WITH SECTION 143(3) OF THE ACT. THEREFORE, WE HEREBY DEL ETE THE PENALTY LEVIED BY THE LEARNED AO WHICH WAS FURTHER CONFIRMED BY THE LEARNED CIT(A). 6. IT IS PERTINENT TO MENTION THAT THE ASSESSEE WHO IS ONE OF THE DIRECTOR OF THE COMPANY M/S. BALAJI FORMALIN PVT. L TD., HAD ALREADY MADE A DISCLOSURE OF RS.75,00,000/- WITH REGARD TO HIMSELF AND HIS ASSOCIATE CONCERNS IN ORDER TO ESCAPE THE WRATH OF THE PENALTY PROVISIONS U/S 271 AAA OF THE ACT. SINCE, THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE COMPANY M/S. BALAJI FORMALIN PVT . LTD., IS IDENTICAL WITH THAT OF THE ASSESSEES CASE FOR BOTH THE ASSES SMENT YEARS, FOLLOWING THE DECISION HELD IN THE CASE OF M/S. BAL AJI FORMALIN PVT. LTD., WE HEREBY DELETE THE PENALTY LEVIED BY THE LE ARNED AO U/S 271 (1) ( C ) READ WITH SECTION 274 OF THE ACT. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED IN HIS FAVOUR. ORDER PRONOUNCED IN THE OPEN COURT ON 07-09-2012. SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA LAKSHMIKANT DEKA LAKSHMIKANT DEKA LAKSHMIKANT DEKA / // / ITA NO.289 AND 291/AHD/2012 (AY 2007-08 & 2008-09) MUKESH R. GUPT VS DCIT, CENT. CIR-1(3), AHMEDABAD 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: DIRECT DICTATION 09-08-2012 /31-08-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 03-09-12 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: