M/s. Rajiv Kumar Gupta, New Delhi V. DCIT, New Delhi

ITSSA 40/DEL/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2210 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-04-2016
• Assessment Year: misc
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NANDITA KANCHAN
• Keywords: Search and seizure
• Section: 158BFA; 143(3); 158BC(c)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI H S SIDHU JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.:- 40/DEL /2012 BLOCK PERIOD: 1.4.1996 TO 17.7.2002 RAJIV KUMAR GUPTA, 124, LANE-1, ANUPAM GARDEN SAIDUILLAHJAB, IGNOU ROAD, SAINIK FARM, NEW DELHI 110 068 PAN AAHPG2006P VS. DCIT CO. CIRCLE -20 NEW DELHI. (APPELLANT) (RESPONDENT) O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. CIT(A) XXXI, NEW DELHI DATED 31.7.2012 WHEREIN PENALTY U/S 158BFA(2) OF RS. 5,19,750/- LEVIED BY THE AO IS CONFIRMED. THE FOLLOWING GROUNDS OF APPE AL ARE RAISED BY THE ASSESSEE :- I) THE ORDER OF LD. CIT(A)-XI, NEW DELHI DATED 31.7.2 012 IS BAD IN LAW AND ON FACTS. ASSESSEE BY : SHRI AJAY WADHWA, ADV. DEPARTMENT BY: MS. NANDITA KANCHAN, CIT (DR) DATE OF HEARING 13/04/2016 DATE OF PRONOUNCEMENT 13/06/2016 ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 II) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 158BFA(2) OF THE INCOME TAX A CT, 1961. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, PENALTY U/S 158BFA(2) OF RS. 519,750/- IS NOT LEVIABLE AS NO EV IDENCE INDICATING UNDISCLOSED INCOME NOT DISCLOSED IN THE BLOCK RETURN, WAS UNEARTHED DURING THE COURSE OF SEARCH U/S 132(1 ) OF THE INCOME TAX ACT, 1961 CONDUCTED ON 17.7.2012. IV) THE APPELLANT CRAVES LEAVE TO ALTER, AMEND OR ADD A NY OTHER GROUND OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING. 2. THE FIRST GROUND OF APPEAL IS GENERAL IN NATURE AND THEREFORE IS DISMISSED. 3. ALL THE OTHER GROUNDS OF THE APPEAL SIMPLY RELATES TO THE LEVY OF PENALTY UNDER SECTION 158BFA (2) OF RS. 5 19750/-. THEREFORE WE D EAL WITH THE ALL THE GROUNDS OF THE APPEAL ON THE MERIT OF THE ADDITION AND ON T HE QUANTUM OF THE PENALTY. 4. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENCE OF THE ASSESSEE ON 17.7.2002. ON C OMPLETION OF THE ASSESSMENT PROCEEDINGS PURSUANT TO SEARCH OPERATION CASH OF RS. 3,26,000/- FOUND DURING THE SEARCH AND RS. 1,93,750/- ON ACCOU NT OF UNEXPLAINED JEWELLERY WERE BOTH ADDED U/S 69A OF THE INCOME TAX ACT WERE CONFIRMED UPTO THE LEVEL OF THE TRIBUNAL AND NOT FURTHER AGIT ATED BY THE ASSESSEE. ON THESE TWO ADDITIONS THE PENALTY U/S 158BFA (2) OF R S. 5,19,750/- WAS LEVIED BY AO VIDE HIS ORDER DATED 30.6.2009. THE ASSESSEE CON TESTED THIS PENALTY IN APPEAL BEFORE LD. CIT(A). LD. CIT(A) REJECTED THE C ONTENTION OF THE ASSESSEE HOLDING THAT THE APPELLANT HAD NOT DECLARED HIS INC OME TRULY AND ACTED DELIBERATELY IN NOT SHOWING THE ABOVE INCOME. THERE FORE, HE UPHELD THE PENALTY. ASSESSEE FILED AN APPEAL BEFORE US AGAINST THIS. ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 5. BEFORE US THE LD. AR OF THE APPELLANT MADE AN AP PLICATION FOR ADMISSION OF ADDITIONAL GROUNDS FOR RAISING AN ADDITION VIDE PR AYER DATED 13 TH APRIL, 2016 WHICH IS AS UNDER :- THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY LEVIED ON THE INCOME SOUGHT TO BE EVADED WHEREAS AS PER SECTI ON 158BFA(2) PENALTY HAS TO BE LEVIED ON THE TAX SOUGHT TO BE EVADED AND NOT THE INCOME SOUGHT TO BE EVADED. THIS GROUND OF APPEAL IS A LEGAL GRO UND AND NOT AGITATED BY LD. DR AND NO FURTHER FACTS ARE REQUIRED TO BE VERI FIED. THEREFORE IT IS ADMITTED AND TO BE ADJUDICATED. 6. ON THE MERITS OF THE CASE LD. AR SUBMITTED THAT REG ARDING ADDITION OF THE CASH OF RS.3,27,000/- THE ADDITION WAS MADE BASED O N THE STATEMENT OF THE APPELLANT, WHICH WAS RETRACTED ON 27.9.2009, AND F URTHER THE SOURCE OF THE CASE FOUND WAS BELONGED TO THE SAVING OF THE ENTIRE FAMILY. FURTHER RS. 2,85,000/- BELONG TO M/S. CAIN TECHNOLOGIES (INDIA) PVT. LTD. WHEREIN ASSESSEE WAS THE DIRECTOR AND ON THE DATE OF SEARCH AS PER T HE BOOKS OF ACCOUNTS OF THE COMPANY, CASH BALANCE OF RS. 6,29,336/- WAS AVA ILABLE. THEREFORE, HE SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE WAS REJECTED. BUT IT WAS NOT FALSE. REGARDING THE SECOND ADDITION ON ACCOUNT OF JEWELLERY, HE SUBMITTED THAT THE JEWELLERY WAS ACQUIRED BY MOTHER OF THE AS SESSEE AND THOUGH THIS AFFIDAVIT WAS FILED BEFORE THE LD. AO, WHICH REMAIN ED UNCONTROVERTED. FURTHER HE STATED THAT BENEFIT OF CIRCULAR NO. 1916 DATED 1 1.5.1994 HAS NOT ALSO BEEN GIVEN. HE FURTHER RELIED ON THE DECISION OF THE HO NBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RATANLAL VYAPARILAL JAIN (2010) 45 DTR 290 AND OTHER DECISIONS. HE FURTHER STATED THAT PENALTY U/S 158BF A IS NOT AUTOMATIC AND ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 CANNOT BE LEVIED ON THE SIMPLE FACT THAT ADDITION H AS BEEN CONFIRMED. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN CIT VS. HARKARAN DAS VED PAL (2011) 336 ITR 8 (DELHI). IN V IEW OF THE ABOVE FACTS, HE SUBMITTED THAT THE PENALTY MAY BE DELETED ON THE ME RITS OF THE CASE. 7. LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIE S AND SUBMITTED THAT ASSESSEE HAS NOT DISCLOSED THE INCOME, WHICH WAS UN EARTHED DURING THE COURSE OF SEARCH, AND WAS ADDED U/S 69A OF THE INCO ME TAX ACT 1961. THE PENALTY HAS RIGHTLY BEEN LEVIED BY THE LD. AO AND C ONFIRMED BY THE LD. CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND DEAL THE ISSUE ON MERITS AND QUANTUM OF THE PENALTY AS UNDER :- I) FIRSTLY COMING ON THE MERIT OF THE OF PENALTY, 1. `CASH FOUND :- IT HAS BEEN LEVIED ON UNACCOUNTED CASH, WHICH WAS F OUND DURING THE COURSE OF THE SEARCH AND NOT DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME. THE ASSESSEE HAS EXPLAINED THAT CASH FOUND DURING THE COURSE OF SEAR CH BEING RS. 40500 FROM THE BEDROOM OF THE ASSESSEE, R S. 2 85000 FROM THE OFFICE OF THE ASSESSEE AND RS. 50,00 0 FROM THE BEDROOM OF THE ASSESSEES PARENTS TO BE BELONGI NG TO ONE OF THE COMPANY IN WHICH THE APPELLANT WAS ONE O F THE DIRECTORS AND ON THE DATE OF SEARCH , THAT COMPANY WAS ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 HAVING CASH ON HAND OF RS. 6.29 LAKHS . THIS EXPLA NATION OF THE ASSESSEE WAS DISBELIEVED. REGARDING, THE SOURCE OF THE CASE FOUND FROM THE BEDROOM OF THE ASSESSEES PAREN TS AND FROM THE BEDROOM OF THE ASSESSEE, IT WAS SUBMIT TED THAT THEY ARE OUT OF THE FAMILY SAVINGS. CONCURRENT LY THE ADDITIONS HAVE BEEN UPHELD IN THE HANDS OF THE ASSE SSEE BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THE INCOME TAX APPELLATE TRIBUNAL. THE MAIN REASON FOR UPHOLDING THE ADDITION BY THE HONBLE ITAT WAS THAT DURING THE COURSE OF SEARCH NOWHERE THE ASSESSEE HAD STATE D THAT CASH WAS BELONGING TO THE COMPANY CAIN TECHNOLOGIES INDIA PRIVATE LIMITED AND THE BANK STATEMENT OF THA T PARTICULAR COMPANY WAS NOT PRODUCED AND THE BOOKS O F ACCOUNTS OF THE COMPANY WERE NOT PRODUCED SUPPORTIN G THE CONTENTION OF THE AVAILABILITY OF THE CASH IN T HE HANDS OF THE COMPANY. THEREFORE, THE ADDITION WAS CONFIRM ED. DURING THE PENALTY PROCEEDINGS THE ASSESSEE HAS SUB MITTED THE COPY OF THE CASH ACCOUNT OF THE ABOVE COMPANY F ROM 01/04/2002 TO 31 ST OF MARCH 2003 THE CASH BALANCE AS ON 10/07/2002 SHOWS BALALNCE OF RS. 629336.75. THEREFO RE, IN THE PENALTY PROCEEDINGS ASSESSEE HAS SUBMITTED THE EVIDENCE REGARDING THE SOURCE OF CASH AVAILABLE WIT H THE ASSESSEE BEFORE LD. AO AS WELL AS CIT (A). BOTH TH E AUTHORITIES DID NOT CONSIDER THIS ASPECT AND CONFI RMED THE ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 PENALTY MECHANICALLY. REGARDING THE CASH AVAILABLE FROM THE BEDROOM OF THE ASSESSEE AS WELL AS FROM THE BED ROOM OF THE PARENTS, NO FINDING HAS BEEN GIVEN BY THE COORDINATE BENCH IN ITS ORDER DATED 26/09/2008. 2. JEWELLERY REGARDING ADDITION OF THE JEWELLERY IT WAS SUBMITTE D BY THE ASSESSEE DURING THE PENALTY PROCEEDINGS THAT IT BEL ONGED TO THE MOTHER OF THE ASSESSEE MRS SURJEET GUPTA AND DURING THE COURSE OF PENALTY PROCEEDINGS HE SUBMITTED THE RETURN OF INCOME OF THE MOTHER OF THE ASSESSEE AS WELL AS THE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT . AFFID AVIT OF THE APPELLANTS MOTHER WAS ALSO SUBMITTED ON 25/09/ 2002 WHEREIN SHE CLAIMED OWNERSHIP OF THE SAID JEWELLE RY WORTH RS. 411432/-. THIS AFFIDAVIT HAS NOT BEEN CO NTROVERTED BY REVENUE EVEN IN APPELLATE PROCEEDINGS OF PENALT Y. FURTHER IT WAS SUBMITTED THAT ASSESSEE SHOULD HAVE BEEN GIVEN THE BENEFIT OF CIRCULAR NO. 1916 DATED 11 TH MAY 1994 REGARDING THE SOURCES OF JEWELLERY IN THE HANDS OF VARIOUS PERSONS OF THE FAMILY. IT WAS FURTHER STATED THAT IF THE BENEFIT OF THE CIRCULAR IS GIVEN TO THE ASSESSEE TH AT THE ADDITION ALSO WOULD NOT HAVE BEEN MADE BASED ON SEVERAL JUDICIAL PRECEDENTS RELIED UPON BY THE ASSE SSEE. ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 II) WE HAVE CONSIDERED THE WHETHER THE PENALTY UNDER SE CTION 158BFA CAN BE LEVIED ON THE ABOVE TWO ADDITIONS SU STAINED CONCURRENTLY BY THE AUTHORITIES. IT IS NOW A SETTLE D ISSUE THAT PENALTY UNDER SECTION 158 BFA IS NOT AUTOMATIC AND CANNOT BELIEVE LEVIED MERELY BECAUSE THE ADDITION HAS BEEN CONFIRMED. ON BOTH THE TWO ADDITIONS ABOVE IT IS APPARENT THAT HAD THE ASSESSEE PRODUCED THE CASHBOOK AS WELL AS THE WITHD RAWAL OF CASH IN THE HANDS OF THOSE COMPANY WHERE RS. 448299 WAS AN OPENING BALANCE AND THE WITHDRAWAL OF CASH IS FROM BANK, PERHAPS THE ADDITION WOULD NOT HAVE BEEN SUSTAINED. CASHBOOK PRODUCED BEFORE THE LOWER AUTHORITIES EVIDENTLY PRO VES THAT THERE WAS CASH ON HAND AVAILABLE WITH THE ASSESSEE FROM THE COMPANY OF WHICH ASSESSEE IS ONE OF THE DIRECTOR. F URTHER THE BALANCE CASH ON HAND THE HANDS OF THE ASSESSEES PA RENTS AS WELL AS ON THE BEDROOM OF THE ASSESSEE IS ALSO COVE RED BY THE AMOUNT OF CASH ON HAND WITH THAT COMPANY. FURTHER, THIS EXPLANATION WAS ALREADY AVAILABLE BY LETTER DATED 2 7/09/2002 FILED BEFORE THE DEPUTY DIRECTOR OF INCOME TAX ( IN VESTIGATION). SIMILARLY, THE EXPLANATION FOR THE JEWELLERY FOUND WAS ALSO GIVEN VIDE SAME LETTER . THEREFORE, THOUGH THE ADDITIONS HAVE BEEN CONFIRMED ON THE BASIS THAT THIS IS AN AFTERTHOUGHT BUT MERELY BECAUSE THE ADDITION HAS BEEN CONFIRMED, THE PENALT Y UNDER SECTION 158BFA , WHICH IS NOT AUTOMATIC, CANNOT BE LEVIED. ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 THEREFORE, ON THE MERITS ON BOTH THE ABOVE ADDITION S WE DELETE THE PENALTY. III) COMING TO THE QUANTUM OF THE PENALTY THAT WHETHER T HE PENALTY U/S 158BFA IS LEVIABLE ON THE AMOUNT OF UNDISCLO SED INCOME OR ON THE AMOUNT OF TAX ON UNDISCLOSED INCOME. IN THE PRESENT CASE LD., ASSESSING OFFICER HAS LEVIED PENALTY UNDER SE CTION 158 BFA ON UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. HE HAS NOT WORKED OUT AMOUNT OF MAXIMUM PENALTY LEVIABLE AND MINIMUM PENALTY LEVIABLE AND THEN DETERMINING THE AMOUNT OF THE PENALTY LEVIED .THE PROVISIONS OF SECTION 158BFA (2) ARE A S UNDER :- (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APP EALS), IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY D IRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT B E LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE (C ) OF SECTION 158BC : ACCORDING TO THE PROVISIONS OF SECTION 158BFA (2) T HE ASSESSING OFFICER IS REQUIRED TO WORK OUT 100 % OF TAX SO UGHT TO BE EVADED ON ACCOUNT OF THE UNDISCLOSED INCOME AND ALS O MAXIMUM PENALTY LEVIABLE AT 300% OF THE TAX ON UN DISCLOSED INCOME AND THEN LEVY PENALTY BETWEEN THESES LIMITS . IN THE PRESENT CASE, THE PENALTY HAS BEEN LEVIED ON THE AM OUNT OF UNDISCLOSED INCOME WITHOUT PROVIDING ANY WORKING OF MAXIMUM AND MINIMUM PENALTY LEVIABLE. THEREFORE, ON THIS GROUND ALSO THE PENALTY ORDER IS VITIATED. ITA NO. 40/DEL/2012 ITA 40 DEL 2012 RAJEEVKUMAR GUPTA V DCIT BLOCK PER IOD 01 04 1996 TO 17 07 2012 9. IN THE RESULT WE REVERSE THE ORDER OF THE LD CIT ( A) AND ALLOW THE APPEAL OF THE ASSESSEE DELETING THE PENALTY LEVIED UNDER SECT ION 158BFA (2) OF RS. 5 19750/-. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/06/2016. SD/- SD/- (H.S. SIDDHU) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13/06/2016 VEENA VEENA VEENA VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI