The ACIT, Central Circle-1, Baroda V. M/s. R. K. Construction Co., Godhra

ITSSA 330/AHD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3328 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) IT(SS)A. NO: 330/AHD/2014 (ASSESSMENT YEAR: 2010-11) ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, BARODA V/S M/S. R.K. CONSTRUCTION CO., MEZZANINE FLOOR, DOLLOR AVENUE, PRABHA ROAD, GODHRA (APPELLANT) (RESPONDENT) PAN: AADFR3583J APPELLANT BY : SHRI K. MADHUSUDAN, SR. D .R. RESPONDENT BY : SHRI BHAVIN MARFATIA, A.R. ( )/ ORDER DATE OF HEARING : 25 -07-201 7 DATE OF PRONOUNCEMENT : 27-07-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-IV, AHMEDABAD DATED 03.06.2014 PERTAININ G TO A.Y. 2010-11. IT(SS)A NO. 330/AHD/2014 . A.Y. 2010- 11 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD.CI T(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S. 271AAA OF THE AC T AMOUNTING TO RS. 1.50 CRORES. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 28/03/2013 FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT. 4. PURSUANT TO THE SEARCH ACTION CARRIED OUT IN THE R. K. CONSTRUCTION GROUP OF CASES (INCLUDING THE CASE OF THE ASSESSEE) RETURN U/S. 153A WAS FILED SHOWING TOTAL INCOME OF RS. 32,743,74,270/- IN WHICH THE AS SESSEE HAS INCLUDED THE DISCLOSURE OF RS. 15 CRORES. 5. ON THIS DISCLOSURE OF RS. 15 CRORES, PENALTY PROCEE DINGS U/S. 271AAA WERE INITIATED. THE ASSESSEE STRONGLY OBJECTED TO THE IN ITIATION OF PENAL PROCEEDINGS CLAIMING THAT CLAUSE 2 OF SECTION 271AAA CLEARLY EX EMPT THE ASSESSEE FROM THE LEVY OF PENALTY. THE CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO WAS OF THE STRONG BELIEF THAT THE ASSESSEE FAILED TO FULFILL THE SECOND CONDITION OF SUB SECTION (2) OF SECTION 271AAA BECA USE IT COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED IN COME WAS DERIVED. ACCORDINGLY, PENALTY OF RS. 1.50 CRORES WAS LEVIED. 6. ASSESSEE ASSAILED THE PENALTY ORDER BEFORE THE LD. CIT(A). 7. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) FOLLOWED THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN TH E CASE OF MAHENDRA C. SHAH 299 ITR 305 AND THE SAME READS AS UNDER:- IT(SS)A NO. 330/AHD/2014 . A.Y. 2010- 11 3 '15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF THE A SSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT W HEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTI CULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE ST ATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BE ING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN A SSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PRO VISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA) SECONDLY , CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN AS SESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDI NG THE CONDITIONS STIPULATED BY EXCEPTION NO.2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COU RT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOUL D BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UN DER EXCEPTION NO.2 IN EXPLANATION 5 IS COMMENDABLE 8. THE LD. CIT(A), IN THE LIGHT OF THE ABOVE OBSERVAT IONS OF THE HONBLE HIGH COURT, OBSERVED THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE APPELLANT HAS FAILED TO RESPOND TO ANY OF THE QUESTIONS RELAT ING TO THE MANNER OF EARNING UNDISCLOSED INCOME AS WELL AS SUBSTANTIATING THE SA ME EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. CIT(A) WAS CONVI NCED THAT THE APPELLANT HAS FULFILLED ALL THE CONDITIONS OF SECTION 271AAA( 2) OF THE ACT AND ACCORDINGLY DELETED THE PENALTY OF RS. 1.50 CRORES. IT(SS)A NO. 330/AHD/2014 . A.Y. 2010- 11 4 9. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 10. THE LD. D.R. COULD NOT BRING ANY DISTINGUISHING DEC ISION IN FAVOUR OF THE REVENUE. 11. WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS DELE TED THE PENALTY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIN DINGS OF THE LD. CIT(A). 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27 - 07- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY AC COUNTANT MEMBER AHMEDABAD: DATED. 27/07/2017 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,AHME DABAD