The ACIT, Central Circle 1, Baroda V. Shri Prakashbhai G. Patel, Anand

ITSSA 311/AHD/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2929 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 143(3); 153A; 27; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ IT(SS)A.NO.311/AHD/2013 / ASSTT. YEAR: 2009-2010 ACIT, CENT.CIR.1 BARODA. VS. SHRI PRAKASHBHAI G. PATEL D/26, GAJANAND PARK KISHOR PLAZA, ANAND. PAN : ADMPP 9513 G. ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI PRASOON KABRA, SR.DR ASSESSEE BY : SHRI S.N. SOPARKAR / DATE OF HEARING : 13/01/2017 / DATE OF PRONOUNCEMENT: 20/03/2017 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-IV, AHMEDABAD DATED 20.5.2013 PASSED FOR THE ASSTT.YEAR 2009- 10. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) ERRED IN DELETING PENALTY OF RS.14.60 LAKHS IMPOSED BY THE A O UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CARRIED OUT IN BARODA BUSHING GROUP. THE ASSESSEE WAS COVERED UNDER THE SEARCH OPERATION. THIS SEARCH WAS CARRIED OUT ON 1 0.9.2009. DURING THE IT(SS)A NO311/AHD/2013 2 COURSE OF SEARCH, SHRI KIRITBHAI PATEL, HEAD OF FAM ILY HAS DEPOSED UNDER SECTION 132(4) OF THE ACT. HE MADE A VOLUNTARY DIS CLOSURE OF UNACCOUNTED INCOME OF RS.11.35 CRORES ON BEHALF OF HIMSELF AND HIS FAMILY MEMBERS TOWARDS INVESTMENT IN LAND. THE ASSESSEE HAS FILED RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 153A. HE INCLUDED A SUM OF RS .1.46 CRORES DISCLOSED BY THE HEAD OF THE FAMILY ON HIS BEHALF. IN THIS WAY, TOTAL INCOME OF RS.3,02,95,710/- WAS RETURNED BY THE ASSESSEE. TH IS RETURN WAS ACCEPTED BY THE AO AS IT IS, IN AN ASSESSMENT ORDER PASSED UNDE R SECTION 153A OF THE ACT R.W.S. 143(3) ON 30.12.2011. THE LD.AO HAS INITIAT ED PENALTY PROCEEDINGS AND IMPOSED A PENALTY OF RS.14.6 LAKHS UNDER SECTION 27 1AAA OF THE ACT I.E. 10% OF THE ALLEGED UNDISCLOSED INCOME OF RS.1.46 CRORES . 3. ON APPEAL, THE LD.CIT(A) HAS DELETED THE PENALTY . THE RELEVANT FINDING OF THE CIT(A) READS AS UNDER: 6.3 SO FAR AS THE SUBMISSION MADE SUBSEQUENT TO TH E SEARCH PROCEEDINGS WHICH INCLUDED THE HEADWISE, YEARWISE A ND ASSETWISE DETAILS OF THE DISCLOSURE OF UNACCOUNTED INCOME BAS ED ON THE SCRUTINY OF SEIZED INCRIMINATING DOCUMENTS, BEFORE THE DY. D IRECTOR OF INCOME- TAX (INV.), BARODA IS CONCERNED, THE SAME MAY BE TR EATED AS DISCLOSURE MADE AS PER STATEMENT U/S 132(4) OF THE ACT ONLY, M AINLY IN VIEW OF THE FACT THAT PROPER SCRUTINY OF SEIZED MATERIAL IS OFT EN NOT POSSIBLE FOR MAKING DISCLOSURE DURING THE COURSE OF SEARCH. EVEN OTHERWISE, THE DISCLOSURE OF UNDISCLOSED INCOME OF RS. 1,46,00,000 /- DURING THE COURSE OF IN THE CASE OF THE APPELLANT IS DULY ACCEPTED BY THE AO AS NOTED IN THE ASSESSMENT ORDER. 6.4 IT IS THE CONTENTION OF THE APPELLANT THAT THE APPELLANT HAS DULY ADMITTED THE UNDISCLOSED INCOME IN THE STATEMENT RE CORDED U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH AND HAS ALSO SPECIFIED AND SUBSTANTIATED THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED AND PAID TAX TOGETHER WITH INTEREST AND, THEREFORE, IS ENTITLED FOR IMMUNITY FROM PENALTY U/S 271AAA OF THE ACT. SO FAR AS THE M ANNER OF EARNING OF THE SAID UNDISCLOSED INCOME IS CONCERNED, I AGREE W ITH THE APPELLANT THAT THE KEY PERSON OF THE FAMILY IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT HAS CLEARLY MENTIONED THE MANNER OF EARNING SUCH INCOME IT(SS)A NO311/AHD/2013 3 WHICH IS MAINLY ON ACCOUNT OF UNRECORDED TRANSACTIO NS IN RESPECT OF TRADING IN LAND. 6.5 SO FAR AS SUBSTANTIATING THE MANNER IN WH ICH INCOME HAS BEEN EARNED, IT IS QUITE OBVIOUS AS PER THE STATEMENT AS WELL AS POST-SEARCH SUBMISSION MADE IN THIS REGARD THAT THE SOURCES OF UNEXPLAINED INVESTMENT IN PURCHASE OF LAND IS MAINLY ON ACCOUNT OF THE UNRECORDED BUSINESS TRANSACTIONS IN RESPECT OF TRADING OF LAND FOR WHICH THE DETAILS OF PURCHASE AND SALE OF LANDS AS PER RECORDED TRANS ACTIONS ARE ALREADY AVAILABLE ON RECORD. THE DETAILS OF PURCHASE OF LAN D AS PER REGISTERED SALE DEEDS ARE ALSO ON RECORD. THUS, EVEN THE MANNE R OF EARNING UNDISCLOSED INCOME IS SUBSTANTIALLY SUBSTANTIATED. EVEN OTHERWISE, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY SUCH QUESTION WAS ASKED TO THE APPELLANT EITHER IN THE STATEMENT RECORDED U /S 132(4) OF THE ACT OR EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS . IT IS NOTED THAT THE APPELLANT HAS RESPONDED TO ALL THE QUESTIONS AS KED U/S 132(4) OF THE IT ACT RELATING TO THE FINANCIAL AFFAIRS. UNLESS SP ECIFIC QUESTION IS ASKED TO THE APPELLANT EITHER IN THE STATEMENT RECORDED U /S 132(4) OR EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT MAY NOT BE PROPER TO ATTRIBUTE THE FAILURE, IF ANY, FOR NOT SPECIFYING T HE MANNER AND SUBSTANTIATING THE MANNER IN WHICH INCOME WAS EARNE D, TO THE APPELLANT. IN THIS REGARD THE DECISION OF THE HON'B LE HIGH COURT OF GUJARAT IN THE CASE OF MAHENDRA C. SHAH [2008] 299 ITR 305 (GUJ) WHICH IS IN THE CONTEXT OF IMMUNITY FROM PENALTY U/ S 271(1)(C) READ WITH EXPLANATION 5 IS REPRODUCED AS UNDER: '15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT RE GARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT T O STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFIC ER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIO NS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHO RIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT TH E REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REA SON 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 OCCA SION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT F ORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUC H STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA) SECONDLY, CONSIDERING THE SOCIAL ENVIR ONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERA TE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY IT(SS)A NO311/AHD/2013 4 EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTIO N 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLA HABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPEC IFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLA RED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WAR RANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPL ANATION 5 IS COMMENDABLE.' IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINIO N THAT SO FAR AS THE MANNER OF EARNING THE INCOME AND SUBSTANTIATING THE SAME IS CONCERNED, THE APPELLANT HAS, IN MY VIEW, SPECIFIED THE MANNER OF EARNING THE UNDISCLOSED INCOME AS WELL AS SUBSTANTI ATED THE SAME TO THE EXTENT OF QUESTIONS HAVING BEEN ASKED IN THIS REGAR D IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE APPELLANT HAS FAILED TO RESPOND TO ANY OF THE QUESTIONS RELATING TO THE MANNER AS WELL AS SUBSTANTIATING THE SAME EV EN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF THIS, THE APPELLANT HAS FULFILLED FIRST TWO CONDITIONS FOR AVAILING OF IMMU NITY FROM PENALTY PROCEEDINGS U/S 271AAA OF THE THERE IS NO DISPUTE A BOUT THE THIRD CONDITION AS THE APPELLANT HAS PAID TAX WITH INTERE ST ON THE UNDISCLOSED INCOME. THUS, THE APPELLANT HAS FULFILLED ALL THE CONDITIONS REQUIRED FOR IMMUNITY FROM LEVY OF PENALTY U/S.271AAA OF THE ACT . 6.7 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OP INION THAT THE APPELLANT IS ELIGIBLE FOR IMMUNITY FROM PENALTY U/S .271AAA OF THE ACT AND, THEREFORE, PENALTY LEVIED BY THE AO OF RS.14,6 0,000/- IS HEREBY CANCELLED. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT HEAD OF THE FAMILY HAS MADE A DISCLOSURE OF RS.11.35 CRORES ON BEHALF OF HIMSELF, HIS FAMILY MEMBERS AND BUSINESS CONCERN, IN HIS STATEME NT RECORDED UNDER SECTION 132(4) OF THE ACT DURING THE SEARCH. SHORT QUESTION BEFORE US WHETHER THE ASSESSEE HAS FULFILLED ALL CONDITIONS STIPULATE D IN SUB-SECTION (2) OF SECTION 271AAA OF THE ACT, THAT ABSOLVES HIM FROM THE RIGOU RS OF PENALTY. IT IS PERTINENT TO TAKE NOTE OF RELEVANT PART OF SECTION 271AAA. IT READS AS UNDER: (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANY THING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS IT(SS)A NO311/AHD/2013 5 BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1S T DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION T O TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I ) IN THE COURSE OF THE SEARCH, IN A S TATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND S PECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II ) SUBSTANTIATES THE MANNER IN WHICH T HE UNDISCLOSED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTERES T, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN R ESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). 5. AS FAR AS CONDITIONS ENUMERATED IN SUB-CLAUSE (I ) OF SUB-SECTION (2) IS CONCERNED, THERE IS NO DISPUTE WITH REGARD TO FULFI LLMENT OF THESE CONDITIONS. A SUM OF RS.1.46 CRORES WAS DISCLOSED IN THE STATEM ENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE MANNER IN WHICH SUC H INCOME HAS BEEN DERIVED, THAT WAS ALSO DISCLOSED BY THE ASSESSEE. SIMILARLY, THERE IS NO DISPUTE WITH REGARD TO FULFILLMENT OF CONDITIONS MENTIONED IN SUB-CLAUSE (III). THE LD.CIT(A) HAS TAKEN NOTE OF QUESTION 18 AND QUESTIO N 5 OF THE STATEMENT OF SHRI KIRITBHAI PATEL. IT READS AS UNDER: ' Q-18 DO YOU ADMIT RS. 11.35 CRORES AS THE UNACCOU NTED INVESTMENT BY YOU & YOUR FAMILY MEMBERS? A-18 I ADMIT RS. 11.35 CRORES AS UNDISCLOSED AN D UNACCOUNTED INVESTMENT BY ME AND FAMILY MEMBERS.' THE RELEVANT QUESTION AND ANSWER FROM THE STATEMENT DATED 11.9.2010 OF SHRI K IRITBHAI ARE AS UNDER: 'Q-5 PLEASE GIVE SOURCES AND DETAILED BREAK-UP OF ADMITTED UNDISCLOSED INCOME. IT(SS)A NO311/AHD/2013 6 A-5 I HAVE EARNED THE UNACCOUNTED INCOME FROM TRADING IN LAND. I WILL SUBMIT THE DETAILS OF LAND UNACCOUNTED TRANSAC TION IN A WEEK TIME. 6. ONLY GRIEVANCE OF THE REVENUE IS THAT THE ASSESS EE FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERI VED. IT IS PERTINENT TO OBSERVE THAT THE LD.CIT(A) HAS RECORDED A CATEGORIC AL FINDING THAT NO SPECIFIC QUESTION WAS ASKED FROM THE ASSESSEE DURING THE COU RSE OF SEARCH OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE FURTHER F IND THAT IN THE ASSESSMENT ORDER THE LD.AO HAS OBSERVED THAT THE ASSESSEE HAS SUBMITTED REQUISITE DETAILS AS AND WHEN CALLED FOR. THERE IS NO ALLEGATION OF THE AO IN THE ASSESSMENT ORDER OR DURING THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE FAILED TO SUBMIT ANY INFORMATION CALLED FOR IN THE ASSESSMENT OF INC OME. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FULFILLED ALL INGRED IENTS, AND THE LD.CIT(A) HAS APPRECIATED THE CONTROVERSY IN RIGHT PERSPECTIVE, W HICH DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, APPEAL OF THE REVENUE I S DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 20 TH MARCH, 2017 AT AHMEDABAD. SD/- SD/- ( PRADIP KUMAR KEDIA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 20/03/2017