Shri Ishwarbhai Ambalal Prajapati, Ahmedabad V. The ACIT.,Cent.Circle-2(2), Ahmedabad

ITSSA 329/AHD/2013

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2312 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 12-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ADITYA SHUKLA
• Assessee Lawyers: PF JAIN
• Keywords: Cost of acquisition; Agreed addition
• Section: 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ASSESSEE(S) BY : SHRI P.F. JAIN, AR REVENUE BY : SHRI ADITYA SHUKLA, SR. DR / DATE OF HEARING : 12/07/2016 / DATE OF PRONOUNCEMENT: 21/09/2016 / O R D E R THESE APPEALS BY TWO DIFFERENT ASSESSEES ARE DIREC TED AGAINST THE ORDERS OF LD. CIT(A)-III, AHMEDABAD DATED 27.06.201 3 IN THE CASE OF SHRI ISWARBHAI AMBALAL PRAJAPATI FOR AYS 2006-07 & 2009- 10 AND AGAINST A COMMON ORDER OF LD. CIT(A)-III, AHMEDABAD DATED 27. 06.2013 IN THE CASE OF SHRI CHANDULAL AMBALAL PRAJAPATI FOR AYS 2007-08 TO 2009-10. ASSESSEES HAVE FILED THESE APPEALS FOR RESPECTIVE ASSESSMENT YEARS CHALLENGING THE IMPOSITION OF PENALTY LEVIED BY THE ASSESSING OFFIC ER U/S 271(1)(C) OF THE ACT AS UNDER:- ASSESSEE AY PENALTY U/S 271(1)( C) 1) SHRI ISHWARBHAI AMBALAL PRAJAPATI 2006-07 RS. 59, 466/- 2009-10 RS. 73,780/- 2) SHRI CHANDUBHAI AMBALAL PRAJAPATI 2007-08 RS.1,39,8 70/- 2008-09 RS.1,65,611/- 2009-10 RS. 50,596/- 2. THE BRIEF FACTS, AS CULLED OUT FROM THE RECORD, ARE AS UNDER:- SN IT(SS)A NO. AY APPELLANT RESPONDENT 1-2 328 & 329/AHD/2013 2006-07 2009-10 ISHWARBHAI AMBALAL PRAJAPATI, 43, VAIBHAV BUNGLOW, VIBHAG-3, NEAR GULAB TOWER, SOLA ROAD, AHMEDABAD PAN : ALWPP 0878 Q ACIT, CENTRAL CIRCLE-2(2), AHMEDABAD 3-5 330 TO 332/AHD/2013 2007-08 2008-09 2009-10 CHANDUBHAI AMBALAL PRAJAPATI, PROP. OF M/S. JAY KHODIYAR BRICKS WORKS, KHODIYAR KRUPA BUNGALOW, NR. SB TRUST VADI, NEW VADAJ, AHMEDABAD-13 PAN: AEIPP 9281 J ACIT, CENTRAL CIRCLE-2(2), AHMEDABAD SMC-IT(SS)A NOS. 328 TO 332/AHD/2013 - ISHWARBHAI A. PRAJAPATI & CHANDUBHAI A. PRAJAPATI AYS: 2006-07 TO 2009-10 2 2.1 SEARCH U/S 132 OF THE ACT WAS CONDUCTED IN THE CASE OF PRAJAPATI FAMILY ON 08.12.2009 AND THEREAFTER THE ASSESSEES F ILED RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED U/S 153A. DURING THE COU RSE OF SEARCH, IN THE CASE OF ISHWARBHAI A. PRAJAPATI, IT WAS FOUND THAT THE A SSESSEE HAS SOLD A RESIDENTIAL PROPERTY FOR TOTAL SALE CONSIDERATION O F RS.5,40,000/- FOR AY 2006- 07, BUT NO CAPITAL GAIN WAS DECLARED IN THE RETURN. THEREFORE, THE AO MADE ADDITION OF RS.2,91,500/- ON ACCOUNT OF LONG TERM C APITAL GAIN WHICH WAS ACCEPTED BY THE ASSESSEE. THEREAFTER, THE LD. AO L EVIED PENALTY OF RS.59,466/- U/S 271(1)(C) FOR AY 2006-07 ON THE GRO UND THAT THE ASSESSEE FAILED TO SUBMIT ANY PROOF TO SUBSTANTIATE THE COST OF ACQUISITION CLAIMED BY IT. SIMILARLY, IN AY 2009-10, THE AO LEVIED PENALT Y U/S 271(1)(C) OF THE ACT OF RS.73,780/- ON ACCOUNT OF UNACCOUNTED RECEIPTS O F RS.2,94,360/- FOUND DURING THE COURSE OF SEARCH. 2.2 SIMILARLY, IN THE CASE OF CHANDULAL AMBALAL PRA JAPATI ALSO, DURING THE COURSE OF SEARCH, ASSESSEE ADMITTED SOME UNEXPLAINE D RECEIPTS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION AND ACCORDINGL Y HE MADE ADDITIONS IN RESPECT OF AYS 2007-08 TO 2009-10. THEREAFTER, THE AO LEVIED PENALTY OF RS.1,39,870/-, RS.1,65,611/- AND RS.50,596/- FOR AY S 2007-08, 2008-09 AND 2009-10 RESPECTIVELY U/S 271(1)(C) OF THE ACT FOR C ONCEALMENT OF PARTICULARS OF INCOME. 3. AGGRIEVED BY AFORESAID PENALTY ORDERS, THE ASSES SEES PREFERRED FIRST APPEALS, WHERE THE LD. CIT(A) DISMISSED THESE APPEA LS BY FOLLOWING OBSERVATIONS:- SHRI ISHWARBHAI AMBALAL PRAJAPATI AY 2006- 07 10. WHEN THE FACTS OF THE CASE ARE EXAMINED IN VI EW OF THIS LEGAL POSITION, IT IS FOUND THAT DURING THE COURSE OF SEARCH IT WAS FO UND THAT APPELLANT HAS SOLD RESIDENTIAL PROPERTY BUT NOT DECLARED CAPITAL GAIN ON THE SAME IN HIS RETURN. IN THE RETURN FILED BY THE APPELLANT, SUM OF RS.2,9 1,500/- WAS NOT INCLUDED AND IT WAS ONLY DURING THE COURSE OF ASSESSMENT THA T APPELLANT AGREED FOR SMC-IT(SS)A NOS. 328 TO 332/AHD/2013 - ISHWARBHAI A. PRAJAPATI & CHANDUBHAI A. PRAJAPATI AYS: 2006-07 TO 2009-10 3 ADDITION OF THIS AMOUNT ON ACCOUNT OF CAPITAL GAIN FOR THE YEAR. IN SUCH SITUATION, IT CANNOT BE HELD THAT HE MADE TRUE AND FULL DISCLOSURE OF HIS INCOME IN RETURN FILED BY HIM. MOREOVER, IF THERE W AS NO SEARCH IN HIS CASE HE WOULD HAVE NEVER DISCLOSED THIS AMOUNT. 11. FROM THE ABOVE MENTIONED FACTS, IT IS CLEAR THA T APPELLANT FURNISHED INACCURATE PARTICULARS OF HIS INCOME IN THE RETURN FILED. I THEREFORE, HOLD THAT LEVY OF PENALTY U/S 271(1)(C) IN SUCH A SITUATION IS JUSTIFIED AND THE SAME IS CONFIRMED. SHRI ISHWARBHAI AMBALAL PRAJAPATI AY 2009-10 10. WHEN THE FACTS OF THE CASE ARE EXAMINED IN VI EW OF THIS LEGAL POSITION, IT IS FOUND THAT DURING THE COURSE OF SEARCH DETAILS O F UNACCOUNTED SALES MADE BY APPELLANT WERE FOUND. ON THE BASIS OF THESE DET AILS AO MADE ADDITION OF RS.2,94,360/- WHICH WAS ALSO ADMITTED AS INCOME FOR AY 2009-10 BY APPELLANT. IN THE RETURN FILED BY THE APPELLANT TH IS INCOME WAS NOT INCLUDED AND IT WAS ONLY DURING THE COURSE OF ASSESSMENT THA T APPELLANT AGREED FOR ADDITION OF THIS AMOUNT OF RS.2,94,360/-. IN SUCH SITUATION, IT CANNOT BE HELD THAT HE MADE TRUE AND FULL DISCLOSURE OF HIS INCOME IN RETURN FILED BY HIM. MOREOVER, IF THERE WAS NO SEARCH IN HIS CASE HE WOU LD HAVE NEVER DISCLOSED THIS AMOUNT. 11. I THEREFORE, HOLD THAT LEVY OF PENALTY OF RS.73 ,780/- IN SUCH A SITUATION IS JUSTIFIED AND THE SAME IS CONFIRMED. CHANDUBHAI AMBALAL PRAJAPATI AYS 2007-08 TO 2009- 2010 11. WHEN THE FACTS OF THE CASE ARE EXAMINED IN VI EW OF THIS LEGAL POSITION, IT IS FOUND THAT DURING THE COURSE OF SEARCH A LOOS E PAPER WAS FOUND ON THE BASIS OF WHICH APPELLANT ADMITTED THAT CERTAIN SUM HAS BEEN ADVANCED BY HIM WHICH IS NOT RECORDED IN REGULAR BOOKS. ON THE BAS IS OF NOTINGS ON THIS PAGE, INTEREST INCOME WAS ALSO ADMITTED AS INCOME FOR THE SE THREE YEARS BY APPELLANT. IN THE RETURN FILED BY THE APPELLANT TH IS INTEREST INCOME WAS NOT INCLUDED AND IT WAS ONLY DURING THE COURSE OF ASSES SMENT THAT APPELLANT AGREED FOR ADDITION OF INTEREST INCOME FOR THESE TH REE YEARS. IN SUCH A SITUATION, IT CANNOT BE HELD THAT HE MADE TRUE AND FULL DISCLOSURE OF HIS INCOME IN RETURNS FILED BY HIM. MOREOVER, IF THERE WAS NO SEARCH IN HIS CASE HE WOULD HAVE NEVER DISCLOSED THIS AMOUNT. 12. FROM THE ABOVE MENTIONED FACTS IT IS CLEAR THAT APPELLANT FURNISHED INACCURATE PARTICULARS OF HIS INCOME IN THE RETURNS FILED FOR THESE THREE YEARS. I THEREFORE, HOLD THAT LEVY OF PENALTY U/S 271(1)(C) IN SUCH A SITUATION IS JUSTIFIED AND THE SAME IS CONFIRMED FOR ALL THE THR EE YEARS. GROUND NO. 1 & 2 OF THE APPEAL ARE THUS DISMISSED FOR ALL THE THREE YEARS. SMC-IT(SS)A NOS. 328 TO 332/AHD/2013 - ISHWARBHAI A. PRAJAPATI & CHANDUBHAI A. PRAJAPATI AYS: 2006-07 TO 2009-10 4 4. AGGRIEVED BY THE ORDERS OF THE LD. CIT(A) CONFIR MING THE PENALTY IMPOSED BY THE AO U/S 271(1)(C), THE ASSESSEES ARE NOW IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT T HE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY U/S 271(1)(C) OF THE ACT. HE SUBMITS THAT THE PROPERTY HAS BEEN ALLOTTED TO THE ASSESSEES AS PER DIVISION OF FAMILY ASSETS AND THUS, THE SAID PROPERTY IS HUF PROPERTY AND NOT LIABLE TO TAX IN ASSESSEES HANDS. IT WAS NOT KNOWN AS TO WHETHER A NY SALE DEED IN THIS REGARD HAS BEEN EXECUTED GIVING RISE TO CAPITAL GAI N BECAUSE EXCEPT ONE LETTER THERE WAS NO DOCUMENT TO SUPPORT THE CAPITAL GAIN WHICH IS ON PRESUMPTION ONLY. OTHERWISE ALSO EVEN IF CAPITAL GA IN IS ASSUMED IT WILL BE TAXABLE IN THE HANDS OF HUF OF THE ASSESSEE. THEREF ORE, THE ASSESSEE DID NOT SHOW ANY CAPITAL GAIN IN HIS INDIVIDUAL RETURN FILE D AND THEREFORE THE QUESTION OF CONCEALING THE PARTICULARS OF INCOME IN RESPECT OF CAPITAL GAIN ON THE ALLEGED SALE OF ANCESTRAL PROPERTY DOES NOT ARI SE. FURTHER, THE ASSESSEE HAS PLACED RELIANCE ON FOLLOWING JUDGMENTS OF HONB LE HIGH COURTS AND CONTENDED THAT THE GROSS AMOUNT OF SALE CANNOT BE T REATED AS INCOME:- CIT VS. PRESIDENT INDUSTRIES, 258 ITR 654 (GUJARAT ) CIT VS. BALCHAND AJITKUMAR, 263 ITR 610 (MP) MANMOHAN SADANI VS. CIT, 304 ITR 52 (MP) FURTHER, THE LD. COUNSEL FOR THE ASSESSEE CONTENDE D THAT THE ASSESSEE HAS AGREED FOR ADDITION ONLY TO BUY PIECE AND AVOID LITIGATION, OTHERWISE NO TAX WAS PAYABLE ON THIS AMOUNT AND THE AO HAS WRONG LY ADDED GROSS SALE AS INCOME INSTEAD OF NET PROFIT THEREON. FURTHER, IT IS CONTENDED THAT THE QUANTUM ADDITION IS NOT BASED ON ANY DIRECT EVIDENC E BUT ON ESTIMATE AND THE PENALTY U/S 271(1)(C) SHOULD NOT BE IMPOSED ON ESTIMATED INCOME. RELIANCE IS PLACED ON ITAT, NAGPUR BENCH JUDGMENT I N THE CASE OF ACIT VS. SMC-IT(SS)A NOS. 328 TO 332/AHD/2013 - ISHWARBHAI A. PRAJAPATI & CHANDUBHAI A. PRAJAPATI AYS: 2006-07 TO 2009-10 5 MALU ELECTRODES (P) LTD, REPORTED IN (2011) 7 ITR 0 256, WHEREIN IT WAS HELD AS UNDER:- MERE FACT OF AGREED ADDITION DOES NOT RESULT INTO A CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED AS INCOME IS CONCEALED IN COME; IN SUCH A CASE, THE AO SHOULD FURTHER BRING SOME MATERIAL ON RECORD SO T HAT IT IS CONCLUSIVELY ESTABLISHED THAT SUCH SURRENDER, IN FACT, REPRESENT ED THE REAL INCOME OR UNDISCLOSED INCOME OF THE ASSESSEE; ON THE FACTS OF THE CASE, PENALTY WAS NOT LEVIABLE IN RESPECT OF SURRENDER OF SHARE CAPITAL A S INCOME. THUS, THE LD. COUNSEL FOR THE ASSESSEE PLEADED THAT IN VIEW OF ABOVE FACTS AND DECISIONS OF HONBLE HIGH COURTS AND ITAT , THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) MAY BE CANCELLE D. 6. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HA ND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY CONT ENDS THAT THE ASSESSEES THEMSELVES HAVE ACCEPTED THE UNDISCLOSED INCOME AND THE FACT THAT IT WAS NOT DECLARED EITHER IN THE BOOKS OF ACCOUNTS OR IN THE RETURNS OF INCOME. THE FACT ABOUT CONCEALED INCOME CAME TO SURFACE ONLY WH EN THE SEARCH WAS CONDUCTED AND RELEVANT INCRIMINATING MATERIAL WAS U NEARTHED. THE INCRIMINATING MATERIALS HAVE NOT BEEN DISPUTED BY T HE ASSESSEE IN ANY MANNER. IN THESE CIRCUMSTANCES, IT CANNOT BE HELD THAT THE ASSESSEES OFFERED THE INCOME FOR BUYING PEACE AND AVOIDING LITIGATION . THE ASSESSEES WERE MADE REPEATED ATTEMPTS OF CONCEALMENT OF INCOME. T HEREFORE, THERE IS NO JUSTIFICATION IN ASSESSEES CLAIM THAT THE DISCLOSU RE WAS MADE TO BUY PEACE. SIMILARLY, THE DECISION OF ITAT, NAGPUR BENCH IN TH E CASE OF ACIT VS. MALU ELECTRODES (P) LTD (SUPRA) HAS NO APPLICATION IN TH E ASSESSEES CASE. THE ASSESSEES CASE, ON THE OTHER HAND, IS COVERED BY T HE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. VS. C IT, REPORTED (2013) 358 ITR 593, WHERE THE HONBLE SUPREME COURT HELD THAT THE DISCLOSURE IS PRIMA FACIE EVIDENCE OF CONCEALMENT AND UNLESS THE ASSESSEE GI VES SATISFACTORY EXPLANATION TO JUSTIFY THE CONCEALMENT, THE PENALTY IS IMPOSABLE. SMC-IT(SS)A NOS. 328 TO 332/AHD/2013 - ISHWARBHAI A. PRAJAPATI & CHANDUBHAI A. PRAJAPATI AYS: 2006-07 TO 2009-10 6 7. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. A) IT IS UNDISPUTED FROM RECORD THAT BOTH THE ASSESSEE S WERE ENGAGED IN CONCEALED TRANSACTIONS FROM YEAR TO YEAR. B) THE TRANSACTIONS AND INCOME IN QUESTION WERE NEITHE R DISCLOSED IN THE BANK ACCOUNT NOR IN THE RETURNS OF INCOME. THUS, TH ERE WERE DELIBERATE AND REPEATED ATTEMPTS TO INDULGE IN CONC EALING THE TRANSACTIONS AND INCOME THERE FROM. C) MERELY BECAUSE THE ASSESSEES HAVE NOT CHALLENGED TH E ADDITIONS DOES NOT MEAN THAT IT IS A BENEVOLENT ACT OF BUYING PEAC E. THE FACTS CLEARLY SPELL OUT THAT THE ASSESSEES WERE LEFT WITH NO ALTE RNATIVE BUT TO ACCEPT THE UNDISCLOSED TRANSACTIONS AND INCOME. D) IN THESE PECULIAR FACTS, THE DECISION OF ITAT, NAGP UR BENCH IN THE CASE OF ACIT VS. MALU ELECTRODES (P) LTD (SUPRA) IS NOT APPLICABLE TO THE ASSESSEES CASES AND IMPOSITION OF PENALTY IS COVER ED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. (SUPRA). IN VIEW OF THE FOREGOING, I SEE NO INFIRMITY IN THE ORDERS OF THE LD. CIT(A) IN CONFIRMING THESE PENALTIES WHICH ARE UPHE LD. 8. IN THE RESULT, ALL APPEALS FILED BY THE ASSESSEE S ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21 ST SEPTEMBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 21/09/2016 *BIJU T. SMC-IT(SS)A NOS. 328 TO 332/AHD/2013 - ISHWARBHAI A. PRAJAPATI & CHANDUBHAI A. PRAJAPATI AYS: 2006-07 TO 2009-10 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD