The ITO, Ward-1, Valsad V. Shri Ashwin H.Shah, Valsad

ITSSA 321/AHD/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0150 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 05-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: K M BHATT
• Keywords: Unexplained investment; Search and seizure
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M & SHRI ANIL CHATURVEDI , A.M.) I.T(SS). A. NO. 321/AHD/2011 (ASSESSMENT YEAR: 2004-05) THE I.T.O WARD-1, VALSAD V/S SHRI ASHWIN H SHAH, 3, NUTAN NAGAR SOCIETY, TITHAL ROAD, VALSAD. (APPELLANT) (RESPONDENT) PAN: ACRPS 0134G APPELLANT BY : SHRI O.P. VAISHNAV, CIT D. R. RESPONDENT BY : SHRI K.M. BHATT ( )/ ORDER DATE OF HEARING : 03-06-2014 DATE OF PRONOUNCEMENT : 13 -06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), VALSAD ORDER DATED 24.12.2010 FOR A.Y. 2004-05. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING IN COME FROM PARTNERSHIP SHARE, INCOME FROM OTHER SOURCES AND SHORT TERM CAPITAL GA IN. A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CARRIED OUT AT THE B USINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE AND HIS GROUP CONCERNS ON 18.06.2003. ASSESSEE THEREAFTER FILED HIS RETURN OF INCOME FOR A.Y. 04-0 5 ON 31.10.2004 DECLARING TOTAL INCOME AT RS. 1,21,038/-. SUBSEQUENTLY, A REV ISED RETURN OF INCOME OF IT(SS)A NO 3 21/AHD/2011 . A.Y. 2004- 05 2 INCOME WAS FILED ON 02.08.2005 DECLARING TOTAL INCO ME AT RS. 14,84,795/-. THEREAFTER ASSESSMENT WAS FRAMED U/S. 153A READ WIT H SECTION 143(3) VIDE ORDER DATED 19.12.2005 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 18,14,530/- BY MAKING AN ADDITION ON ACCOUNT OF UNE XPLAINED CASH, UNACCOUNTED INVESTMENT IN GOLD JEWELLERY, UNACCOUNT ED INVESTMENT IN SILVER. ON THE AFORESAID ADDITIONS MADE, PENALTY PROCEEDING S U/S. 271(1)(C) WERE INITIATED AND VIDE ORDER DATED 24.03.2008 PENALTY O F RS. 5,60,000/- U/S. 271(1)(C) WAS LEVIED ON THE ASSESSEE. AGGRIEVED BY THE ORDER OF PENALTY, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) A LLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 5.2 SUBMISSION OF THE A.R. :- THE AR OF THE APPELLANT HAS SUBMITTED IN RESPECT OF PENALTY ORDER PASSED U/S.271(I)(C) OF THE ACT THAT THE LAO HAS LEVIED PENALTY SINCE, ACCORDING TO HIM THE THE APPELLANT HAD NOT DISCLOSED THE INCOME SUO- MOTTO AND THE DISCLOSURE WAS SOLELY FOR THE REASON THAT THE DEPARTMENT HAD UNEARTHED THE UNACCOUNTED INVESTMENTS IN THE SEARCH PROCEEDINGS U/S. 132 OF T HE I.T. ACT. INVOKING THE PROVISION OF EXPLANATION 5 TO SECTION 271(1) (C) OF THE ACT AND LEVIED THE PEN ALTY. THE AR OF THE APPELLANT ARGUED THAT AS PER PROVISIONS OF EXPLANATION 5 TO SECTION 271(1) (C) O F THE ACT, PENALTY IS NOT LEVIABLE WHERE THE SEARCH ED PERSON DISCLOSES THE INCOME ON ACCOUNT OF THE MONEY , BULLION, JEWELLERY, ETC. FOUND DURING THE COURSE OF PROCEEDINGS U/S. 132: PAYS THE TAXES ON SUCH INC OME ALONG WITH THE INTEREST, IF ANY DISCLOSES THE MANNER IN WHICH SUCH INCOME IS DERIVED. IN THE CASE OF THE APPELLANT IT IS ADMITTED FACT THAT THE APPELLANT HAD DISCLOSED THE INCOME ON ACCOUNT OF TH E CASH AND JEWELLERY FOUND DURING THE COURSE OF SEARCH PROCEEDINGS. THE APPELLANT HAS ALSO PAID TAX ES AND INTEREST ON THE ADDITIONAL INCOME SO DISCLOSED. THE APPELLANT HAS DISCLOSED THE SOURCE O F INCOME FROM WHICH HE HAS ACQUIRED THE CASH AND THE JEWELLERY FOUND AT THE TIME OF SEARCH. THUS, AL L CONDITIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT ARE SATISFIED. THEREFORE, THE REASON STATED BY THE LAO THAT THE DISCLOSURE WAS NOT SUO-MOTTO AND THAT THE APPELLANT HAD DISCLOSED THE INCOME ONL Y ON ACCOUNT OF THE SEARCH PROCEEDINGS U/S. 132 ARE NOT GERMANE FOR LEVYING PENALTY U/S. 271(1)(C) OF T HE ACT. CONSIDERING THE AFFORSAID FACTS, PENALTY LEVIED U/S. 271(1)(C) OF THE ACT IS PRAYED TO DELET ED. 53 CONCLUSION:- I HAVE CONSIDERED THE OBSERVATION MADE BY THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED BY THE A.R. OF THE APPELLANT IN THE WRITTEN SUBMISSION. I AGREE WITH THE APPELLANT THAT AS PER EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT, PENA LTY IS NOT LEVIABLE WHERE THE SEARCHED PERSON DISCLOSES THE INCOME ON ACCOUNT OF THE MONEY, BULLI ON, JEWELLERY, ETC, FOUND DURING THE COURSE OF PROCEEDINGS U/S. 132 OF THE ACT AND PAYS THE TAXES ON SUCH INCOME ALONG WITH THE INTEREST, IF ANY DISCLOSES THE MANNER IN WHICH SUCH INCOME IS DERIVE D. THEREFORE, IN THE INTEREST OF JUSTICE, I ALLOW THE APPEAL IN FAVOUR OF THE APPELLANT. 4. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD. D.R. RELIED ON THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE CIT(A) AND S UPPORTED HIS ORDER. IT(SS)A NO 3 21/AHD/2011 . A.Y. 2004- 05 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE ORDER OF CIT(A), WE FIND THAT CIT(A) H AS NOTED THAT AS PER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, PENA LTY IS NOT LEVIABLE WHEN THE SEARCHED PERSON DISCLOSES THE INCOME ON ACCOUNT OF MONEY, BULLION, JEWELLERY, ETC. FOUND DURING THE COURSE OF PROCEEDI NGS UNDER SECTION 132 OF THE ACT AND PAYS THE TAXES ON SUCH INCOME ALONG WIT H INTEREST IF ANY AND DISCLOSES THE MANNER IN WHICH SUCH INCOME IS DERIVE D. HE HAS GIVEN A FINDING THAT THE CONDITIONS SPECIFIED FOR NON LEVY OF PENAL TY HAS BEEN SATISFIED IN THE CASE OF ASSESSEE. BEFORE US, THE LD. D.R. COULD NO T CONTROVERT THE FINDINGS OF CIT(A) NOR COULD BRING ANY CONTRARY MATERIAL ON REC ORD IN SUPPORT OF ITS CONTENTION. WE THEREFORE FIND NO REASON TO INTERFER E WITH THE ORDER OF CIT(A) AND THUS DISMISS THIS GROUND OF REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 06 - 2014. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD