Shri Ashok Arjandas Makhijani, Godhra V. The Dy. CIT, Central Circle-1, Baroda

ITSSA 312/AHD/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9508 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TEJ SHAH AR SHRI S K DEV
• Keywords: Income from undisclosed sources; Bonafide mistake
• Section: 271(1)(c); 143(3); 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNT AN T MEMBER AND M S . MADHUMITA ROY, JUDICIAL MEMBER SL. NOS. IT(SS )A NO(S) ASSESSMENT YEAR (S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 310/AHD/2014 2005 - 06 SHRI ASHOK ARJANDAS MAKHIJANI 7,8,9, VARDHMAN SOCIETY NR. SHUKLA SOCIETY POLICE CHOWKI NO.8 PRABHA ROAD GODHRA - 389 001 PAN: ACLPM 1244R (ASSESSEE) DCIT CENTRAL CIRCLE - 1 VADODARA - 390 007 (REVENUE) 2. 311/AHD/2014 2006 - 07 - DO - A SSESSEE - DO - REVENUE 3. 312/AHD/2014 200 7 - 0 8 - DO - A SSESSEE - DO - REVENUE 4. 313/AHD/2014 2008 - 09 - DO - A SSESSEE - DO - REVENUE 5. 314/AHD/2014 2009 - 10 - DO - A SSESSEE - DO - REVENUE ASSESSEE BY : SHRI TEJ SHAH , AR REVENUE BY : SHRI S.K. DEV , SR.DR / DATE OF HEARING 15/05/2019 / DATE OF PRONOUNCEMENT 25/ 06 /2019 / O R D E R PER BENCH : THE CAPTIONED APPEAL S HA VE BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE COMMON ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) IV, A HMEDABAD [CIT (A) IN SHORT] VIDE APPEAL NO S . CIT(A) - IV/98 TO 1 0 2/ BRD/ CC - 1/ 13 - 14 DATED 16/05/2014 ARISING IN THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) R.W.S. 274 OF THE INCOME TAX ACT, 1961( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 28 - 06 - 2013 RELEVANT TO ASSESSMENT YEAR S (AY S ) 2005 - 06 TO 2009 - 10. IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 2 - SINCE C OMMON I SSUE S ARE INVOLVED IN ALL THE ASSESSEE S APPEALS , THEREFORE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST, WE TAKE UP THE ASSESSEE S APPEAL IN IT(SS) A NO.310/AHD/2014 FOR AY 2005 - 06 AS T HE L EAD CASE . THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUND OF APPEAL : THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV, AHMEDABAD [ THE CIT(A) ] ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE DEPUTY COMMISSION OF INCOME TAX, CENTRAL C IRCLE - 1 ( THE ASSESSING OFFICER ) IN LEVYING PENALTY AMOUNTING TO RS.2,16,245/ - ON DIFFERENCE OF INCOME DISCLOSED IN THE RETURN FILED U/S.139(1) AND RETURN FILED U/S.153A OF THE INCOME TAX ACT, 1961 . THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LD. CIT (A) IS ERRED IN CONFIRMING THE PENALTY IMPOSED BY THE AO ON ACCOUNT OF THE DIFFERENCE IN THE INCOME DECLARED IN RETURN FILE D U/S 139 OF THE ACT, AND INCOME DISCLOSED IN THE RETURN FILED U/S 153A OF THE ACT. 2. BRIEFLY STATED FACTS ARE THAT A SEAR CH WAS CARRIED OUT U/S 132 OF THE ACT IN THE R.K. C ONST R UCTION GROUP OF CASES INCLUDING THE ASSESSEE DATED 09 - 04 - 2010. DURING THE SEARCH , PROCEEDING ASSESSEE HAS ADMITTED UNDISCLOSED INCOME OF RS. 7,93,350/ - IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME AT RS 7,53,820/ - WHICH IS INCLUDING THE UNDISCLOSED INCOME OF RS. 7,93,350/ - AFTER CLAIMING THE EXPENSES OF RS. 87,781/ - IN RESPONSE TO THE NOTICE ISSUED U/S 153A OF THE A CT. IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 3 - 2.1 THE AO FRAMED THE ASSESSMENT U /S 143(3) R.W.S 153(A) OF THE ACT DATED 31 - 12 - 2012 AND ASSESSED TOTAL INCOME OF THE ASSESSEE AT RS. 7,99,570/ - AFTER MAKING THE ADDITION OF RS. 45,750/ - ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. 2.2 ACCORDINGLY, THE AO INITIATED THE PENALTY PROCEEDING ON THE UNDISCLOSED INCOME DECLARED IN RETURN FILED UNDER SECTION 153A OF THE ACT IN THE ASSESSMENT ORDER DATED 31 - 12 - 2012 BY ISSUING A NOTICE UNDER SECTION 274/271(1)(C) OF THE ACT TO THE ASSESSEE. THE ASSESSEE IN RESPONSE TO THE NOTICE SUBMITTED AS UNDER: 1) HE HAS DISCLOSED THE INCOME IN RETURN FILED U/S 153A OF THE ACT VOLUNTARILY. 2) AS PER PROVISION OF SECTION 271(1)(C) R.W.S 153A FOR THE PURPOSE IMPOSITION OF PENALTY RETURN FILE U/S 139 OF THE ACT, HAS NOT TO BE CONSIDERED BUT THE RETURN FILE U/S 153A OF THE ACT. 3) TO IMPOSE THE PENALTY , THERE SHOULD BE ADDITIONAL INCOME OVER AND ABOVE THE INCOME DECLARE D IN RETURN FILED U/S 153A OF THE ACT, SHOULD BE CONSIDERED AS CONCEALMENT OF INCOME. 4) THE PROVISIONS OF S ECTION 153A OF THE ACT EXCLUDE THE ASSESSMENT PROCEDURE COVERED UNDER SECTION 139 ,147,148,149,151 AND 153 OF THE ACT. THUS FOR PENALTY PROCEEDINGS , THE RETURN FILED U/S 153A OF THE ACT SHOULD BE CONSIDERED , NOT THE RETURN FILE U/S 139 OF THE ACT. IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 4 - 2.3 HOWEVER , THE AO REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS DISCLOSED THE ADDITIONAL INCOME BASED ON INCRIMINATI NG MATERI AL FOUND DURING THE SEARCH. IF THE SEARCH HAD NOT TAKEN PLACE, THE INCOME DISCLOSED BY THE ASSESSEE WOULD HAVE REMAINED UNTOUCHED. 2.4 ACCORDINGLY , THE AO LEVIED PENALTY ON ACCOUNT OF THE CONCEALMENT OF INCOME U/S 271(1) (C) OF THE ACT AMOUNTING TO RS. 2,16,245/ - ONLY . 3. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A) . T HE ASSESSEE BEFORE THE LD. CIT (A) SUBMITTED AS UNDER: 1) THERE WAS N O INCRIMINATI NG MATERIAL FOUND DURING THE SEARCH , WHICH INDICATE S THE UNDISCLOSED INCOME . THERE WAS ALSO NO REFERENCE MADE BY THE AO TOWARDS ANY SEIZED MATERIAL SUGGESTING THE UNACCOUNTED INCOME. THUS THE ADDITION MADE BY THE AO ONLY BASED ON STATEMENT RECORDED U/S 132(4) OF THE ACT CANNOT BE TREATED AS CONCLUSIVE EVIDENCE TO IMPOSE A PENALTY. 2) IN THE CASE OF SEARCH , THE UNDISCLOSED INCOME SHOULD BE COMPUTED BASED ON MATERIALS FOUND DURING THE SEARCH. EVEN IF THE DISCLOSURE IS MADE , THE SAME SHOULD BE CORROBORAT ED WITH THE EVIDENCE FOUND DURING THE SEARCH. IN VIEW OF THE ABOVE, T HE ASSESSEE SUBMITTED THAT THE E XPLANATION 5A TO SECTION 271(1)(C) OF THE ACT DOES NOT APPLY TO H IS CASE. IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 5 - 4. HOWEVER , THE LD. CIT CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER: 1) THE ASSESSEE FAILED TO ESTABLISH THAT THE OMISSION OF THE DEC LARATION OF INCOME IN RETURN FILED U/S 139 OF THE ACT WAS A BONAFIDE MISTAKE. 2) DISCLOSURE MADE BY THE ASSESSEE IS NOT VOLUNTARY , BUT IT IS BASED ON MATERIAL FOUND DURING SEARCH. 3) DISCLOSURE MADE BY THE ASSESSEE IN THE RETURN FILE U/S 153A OF THE ACT AFTER THE SEARCH U/S 132 OF THE ACT . THEREFORE, THERE CANNOT BE GIVE N ANY RELIEF TO THE ASSESSEE FROM THE PENALTY U/S 271(1) OF THE ACT, R.W . EXPLANATION 5A. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AR BEFORE US SUBMITTED THAT THERE WAS NO DOCUMENTARY EVIDENCE FOUND DURING THE SEARCH QUA THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE STATEMENT FURNISHED UNDER SECTION 132 (4) OF THE ACT. THEREFORE THERE CANNOT BE A NY PENALTY UNDER SECTION 271(1)(C) READ WITH EXPLANATION 5AOF THE ACT. THE LEARNED AR IN SUPPORT OF HIS CLAIM RELIED ON THE JUDGMENT OF H ON BLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT REP ORTED IN 80 TAXMANN.COM 162. IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 6 - 6. ON THE OTHER HAND , THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE ARISES WHETHER THERE WILL BE ANY PENALTY UNDER SECTION 271 ( 1 )(C) OF THE ACT ON THE INCOME DECLARED BY THE ASSESSEE IN RETURN FILED UNDER SECTION 153 A OF THE ACT. 7.1 FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE ASSESSEE DURING THE SEARCH PROCEEDING H AS ADMITTED INCOME IN THE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. AS SUCH, ON PERUSAL OF THE ORDER OF THE AUTHORITIES, WE NOTE THAT THERE WAS NO REFERENCE M ADE TO ANY INCRIMINATING DOCUMENT FOUND DURING THE S EARCH . THEREFORE, WE ARE OF THE VIEW THAT THE ADDITION OF UNDISCLOSED INCOME WAS BASED ON THE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. 7.2 AT THE TIME OF THE HEARING, A QUERY WAS RAISED TO T HE LD. DR WHETHER THE ASSESSEE DISCLOSED THE INCOM E IN PURSUANCE TO THE SEARCH BASED ON THE INCRIMINATING DOCUMENT, BUT HE FAILED TO BRING ANY MATERIAL ON RECORD. THEREFORE, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, WE INFER THAT THE ASSESSEE DISCLOSED T HE INCOM E BASED ON THE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. 7.3 IN THE CASE ON HAND, THE PENALTY PROVISIONS ARE GOVERNED UNDER THE EXPLANATION 5A OF SECTION 271 ( 1 ) (C) THE OF THE ACT WHICH READS AS UNDER: IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 7 - [ EXPLANATION 5A. WHERE, IN THE CO URSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND T HE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RET URN OF INCOME FURNISHED ON OR AFTER THE DATE OF 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 CO NCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.] T HE ABOVE PROVISION REVEALS THAT THE PENALTY UNDER E XPLANATION 5A TO SECTION 271 ( 1 ) (C) , THE OF THE ACT CAN BE ATTRACTED IF THE ASSESSEE WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR AN Y INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS. 7.4 BUT, IN THE CASE ON HAND , THERE WAS NO SUCH ALLEGATION MADE AGAINST THE ASSESSEE EITHER IN THE ASSESSMENT OR PENALTY OR THE CIT (A) ORDER. TH US TH E ISSUE ARISES W HETHER THE PENALTY CAN BE LEVIED UNDER SECTION 271 ( 1 ) (C) R.W. THE EXPLANATION 5A OF THE ACT MERELY ON THE BASIS OF THE STATEMENT FURNISHED UNDER IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 8 - SECTION 132(4) OF THE ACT. IN THIS REGARD , WE ARE INCLINED TO REFER TO THE ORDER OF ITAT IN THE CASE OF AJAY TRADERS VS. DCIT REPORTED IN 81 TAXMANN.COM 463 WHEREIN IT WAS HELD AS UNDER: THE ASSESSEE DISCLOSED AN ADDITIONAL INCOME ON ACCOUNT OF UNACCOUNTED SALES. BASED ON SAID DISCLOSURES, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)( C ) BY INVOKING EXPLANATION 5A TO SAID SECTION. HELD THAT IT WAS UNDISPUTED FACT THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. THE ASSESSEE SURRENDERED THE ADDITIONAL INCOME UNDER SECTION 132(4) AT RS.15 LACS AND REQUESTED NOT TO IMPOSE PENALTY UNDER SECTION 271(1)( C ). THE ASSESSING OFFICER IMPOSED THE PENALTY BY INVOKING THE EXPLANATION 5A TO SECTION 271(1)( C ). FOR IMPOSING THE PENALTY UNDER EXPLANATION 5A O N THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SEARCH, IT IS NECESSARY TO BE FOUND INCRIMINATING DOCUMENTS AND IS TO BE CONSIDERED AT THE TIME OF ASSESSMENT FRAMED UNDER SECTION 153A. AS NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SE ARCH, THEREFORE, EXPLANATION 5A TO SECTION 271(1)( C ) IS NOT APPLICABLE. ACCORDINGLY, THE PENALTY WAS TO BE DELETED. F ROM THE ABOVE ORDER, IT IS CLEAR THAT THERE CANNOT BE ANY PENALTY UNDER EXPLANATION 5 A TO SECTION 271 ( 1 )C OF THE ACT MERELY ON THE BASIS OF THE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT , UNTIL AND UNLESS IT SUPPORTED WITH THE INCRIMINATING DOCUMENT. ACCORDINGLY , WE HOLD THAT THERE CANNOT BE ANY PENALTY UNDER SECTION 271 (1)C OF THE ACT IN THE GIVEN FACTS AND CIRCUMSTANCES. HENCE T HE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. I N THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. COMING TO THE OTHER APPEAL S FILED BY THE ASSESSEE: 8 . IN T HE IDENTICAL FACTS AND CIRCUMSTANCES, WE HAVE DELETED THE PENALTY IMPOSED UNDER SECTION 271 ( 1 ) (C) OF THE ACT V IDE PARAGRAPH NO. 4 & 5 OF THIS IT (SS) A NO S . 310 TO 314/AHD/2014 ASHOK ARJANDAS MAKHIJANI VS. DCIT AS ST.YEAR S 2005 - 06 TO 2009 - 10 - 9 - ORDER. RESPECTFULLY FOLLOWING THE SAME , WE DELETE THE PENALTY IMPOSED BY THE AO WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD. CIT (A) A ND THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. IN THE RESULT , THE APPEAL S OF THE ASSESSEE ARE ALLOWED 9 . I N THE COMBINED RESULT, ALL THE F IVE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 25 / 0 6 / 201 9 - SD - - SD - ( M S .MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER A HMEDABAD; DATED 25 / 0 6 /20 19 . . , . . . / T.C. NAIR, SR. PS