Shri Alkesh M.Patel, Ahmedabad V. The Dy.CIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 579/AHD/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1411 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 03-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER ALKESH M. PATEL, 51, SHYAM SARA N, BUNGLOWS, BOPAL AHMEDAB AD - 380058 PAN: AAMPP7018F (APPELLANT) VS DCIT, CENTRAL CIRCLE - 1(1) AHMEDABAD (RESPONDENT) REVENUE BY : S H RI R.K. GUPTA , SR. D . R. ASSESSEE BY: S MT. URVASHI SODHAN , A.R. DATE OF HEARING : 30 - 10 - 2 015 DATE OF PRONOUNCEMENT : 29 - 01 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE S E TWO ASSE SSEE S APPEALS FOR A.Y. 2002 - 03 & 2003 - 04, ARISE FROM ORDER OF THE CIT(A) - I , AHMEDABAD S ORDERS; BOTH DATED 23 - 10 - 2012 IN APPEAL NO S . CIT(A) - I/CC.1(1)/139/2011 - 12 AND CIT(A) - I/CC.1(1)/73/2011 - 12 , CONFIRMING PENALTIES OF RS. 11,010/ - AND RS. 33,300 / - ; RESPECTIVELY , IN PROCEEDINGS UNDER SECT ION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T (SS) A NO S . 579 & 580 / A HD/20 12 A SSESSMENT YEAR 200 2 - 03 & 2003 - 04 I.T (SS) .A NOS. 579 - 580 /AHD/20 12 A.Y. 2002 - 03 & 2003 - 04 PAGE NO ALKESH M. PATEL VS. DCIT 2 BOTH PARTIES ARE IN UNISON DURING THE COURSE OF HEARING THAT THESE TWO APPEAL S RAISE IDENTICAL ISSUE OF VALI DI TY OF THE IMPUGNED PENALTY ON FACTS AND LAW. WE TREAT ITA 579/AHD/2012 AS THE LEAD CASE IN THESE FACTS AND CIRCUMSTANCES . 2. THIS ASSESSEE - I N D IVIDUAL WORKED WITH M/S MEGHMANI GROUP AS ITS MANAGER (IMPORT/EXPORT) ON SALARY BASIS. THE DEPARTMENT CARRIED OUT A SEARCH IN THIS GROUP S CASE ON 2 2 - 09 - 2005. IT WOULD RECOVER ALLEGED INCRIMINATING MATERIAL IN THE SHAPE OF A DIARY/PEN DRIVE REVEALS ASSESEE S NAME AND PERSONAL MEMORANDUM . THE DEPARTMENT WOULD ALSO RECORD STATEMENT OF MR. LALIT K. PATEL FROM WHOSE RESIDENT SOME NOTINGS REGARDING HAS B EEN RECOVERED. THIS CULMINATED INTO ISSUANCE OF SECTION 153C R.W.S. 153A NOTICE DATED 05 - 04 - 2006. THE ASSESSEE FILED HIS RETURN ON 30 - 04 - 2007 STATING INCOME OF RS. 1,10,881/ - . THE ASSESSING OFFICER TOOK UP S CRUTINY. THE ASSESSEE STATED THEREIN THAT HE HAD ALREADY APPROACHED SETTLEMENT C OMMISSION FOR OFFERING ADDITIONAL INCOME OF RS. 36,700/ - ALONG WITH SIMILAR OTHER SUMS IN PRECEDING AND SUCCEEDING ASSESSMENT YEAR. THE ASSESSING OFFICER OBSERVED THAT SETTLEMENT COMMISSION STOOD ABATED FOR WANT OF ORDER WITHIN THE TIME PERIOD PRESCRIBED. HE REFERRED TO INCRIMINATING EVIDENCE OF MR. PATEL S STATEMENT ALLEGED DISCLO SING NOTINGS THEREIN REPRESENT ING OVERALL LIMITS OF EXPENDITURE TO BE INCURRED BY VARIOUS EMPLOYEES. THE ASSESSEE S NAME ADMITTEDLY APPEAR S IN THESE DOCUMENTS. THE ASSESSING OFFICER WAS OF THE PRIMA FACIE OPINION THAT ASSESSEE S ACT I.T (SS) .A NOS. 579 - 580 /AHD/20 12 A.Y. 2002 - 03 & 2003 - 04 PAGE NO ALKESH M. PATEL VS. DCIT 3 AND CONDUCT BEFORE SETTLEMENT COMMISSION IN ADMITTING UNDISCLOSED INCOME INDICATED NON - UTILIZATION OF SOME OF THE EXPENDITURE REMAINING UN - SPENT FOR THE PURPOSE O F SEARCHED ENTITY S BUSINESS EXPENSE. 3 . THE ASSESSEE FILED HIS REPLY INTER ALIA PLEADING THAT THE IMPUGNED INCRIMINATING EVIDENCE WAS NOWHERE SUBJECTED TO CROSS VERIFICATION, SECTION 153C DID NOT SPECIFY ANY REASONS, DREW ATTENTION TOWARDS HIS SEARCH S TATEMENT DATED 28 - 12 - 2005 STATING THAT THE IMPUGNED SUMS WERE IN FACT EXPENDITURE LIMIT ALLOCATED IN CORRESPONDING ASSESSMENT YEAR AND NOT HIS INCOME, AND THAT THE IMPUGNED UNDISCLOSED INCOME OF RS. 36,700/ - HAD BEEN ADMITTED IN SETTLEMENT COMMISSION TO AV OID LITIGATION. A LL THIS FAILED TO CONVINCE THE ASSESSING AUTHORITY. IT REJECTED THE SAME AFTER HOLDING THAT SECTION 153C REASONS STOOD SUPPLIED, M/S. MEGHMANI GROUP HAVE HABITUALLY OF EARNING UNACCOUNTED INCOME BY WAY OF OVERPRICING ITS PURCHASES AND UND ERSTATEMENT OF SALES. AN INFERENCE WAS DRAWN THAT ITS EMPLOYEES INTEGRAL PART OF ALL THIS PLOT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE WAS NO EVIDENCE OF INCURRING OF THE EXPENDITURE QUA THE CORRESPONDING LIMITS AS STATED HEREINABOVE. AND THA T ASSESSEE WAS A SALARIED EMPLOYEE NOT ENTITLED TO CLAIM ANY CORRESPONDING INCOME THERETO. THE ASSESSMENT ORDER DATED 30 - 09 - 2009 ACCORDINGLY TREATED THE ALLEGED EXPEND IT URE SUM LIMIT SALARY AND BONUS THEREBY ADDING THE IMPUGNED SUM OF RS. 36,700/ - AS UNDI SCLOSED INCOME OF THE RELEVANT PREVIOUS YEAR. THE ASSESSING OFFICER FURTHER INITIATED THE INSTANT PENALTY PROCEEDINGS ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. I.T (SS) .A NOS. 579 - 580 /AHD/20 12 A.Y. 2002 - 03 & 2003 - 04 PAGE NO ALKESH M. PATEL VS. DCIT 4 CASE RECORDS REVEAL THAT THE CIT(A) AFFIRMED ASSESSING O FFICER S ACTION. QUANTUM PROCEEDINGS SEEM TO HAVE ATTAINED FINALITY AT THIS STAGE. 4 . THE ASSESSING OFFICER RESUMED WITH THE INSTANT PENALTY PROCEEDINGS . THE ASSESSEE S REPLY APPEARS TO HAVE AVERRED THAT NEITHER THE FACTS OF THE CASE COMPRISE OF ANY CONCEALM ENT NOR FURNISHING OF INACCURATE PARTICULAR S OF INCOME IN VIEW OF THE ABOVE STATED FACTUAL POSITION. THE ASSESSING OFFICER QUOTED THE FACTUAL CHRONOLOGY HEREINABOVE FOR HOLDING THAT ASSESSEE S ACT AND CONDUCT IN ADMITTING UNDISCLOSED INCOME OF RS. 36,700/ - AMOUNTED TO CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS THEREOF. THIS RESULTED IN LEVY OF THE IMPUGNED PENALTY OF RS. 11,010/ - BEING IMPOSED. THE CIT(A) UPHOLDS THE SAME. THIS LEAVES THE ASSESSEE AGGRIEVED. 5 . HEARD BOTH SIDES. CA SE FILE PERUSED. THE ASSESSEE REITERATES HIS EXPLANATION THROUGHOUT AND PRAYS FOR DELETING THE IMPUGNED PENALTY INTER ALIA ON THE GROUND THAT THIS IS NEITHER A CASE OF CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE PEN DRIVE IN QUESTI ON HAD BEEN RECOVERED FROM HIS EMPLOYER ONLY, THE UNDISCLOSED INCOME HAD ALREADY BEEN DECLARED BEFORE THE SETTLEMENT COMMISSION AND THAT THERE IS NO SPECIFIC FINDING BY THE LOWER AUTHORITIES AS TO WHETHER THE FACTS OF THE INSTANT CASE AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. HE ACCORDINGLY PRAYS FOR ACCEPTANCE OF THE INSTANT APPEAL. THE REVENUE I.T (SS) .A NOS. 579 - 580 /AHD/20 12 A.Y. 2002 - 03 & 2003 - 04 PAGE NO ALKESH M. PATEL VS. DCIT 5 STRONGLY SUPPORTS THE LOWER AUTHORITIES ACTION IN IMPOSING THE IMPUGNED PENALTY. 6. WE HAVE HEARD RIVAL CONTENTIONS. RELEVANT F ACTS SET OUT HEREINABOVE ARE NOT REPEATED FOR THE SAKE OF BREVITY. THERE IS NO DISPUTE THAT ASSESSEE AS WELL AS HIS EMPLOYER HAVE BEEN STATING THAT THIS UNDISCLOSED INCOME IS IN FACT AN EXPENDITURE LIMIT ALLOWED TO BE INCURRED TO THE RESPECTIVE EMPLOYEES. THERE IS NO EVIDENCE QUOTED IN THE SHAPE OF INCRIMINATING MATERIAL OR OTHERWISE WHICH COULD PROVE THAT ASSESSEE S EMPLOYER HAS NOT BOOKED THE CORRESPONDING SUM AS EXPENDITURE IN ITS ACCOUNTS MAINTAINED. THE ASSESSEE S CASE IS THAT HE HAS SPENT THE IMPUG NED SUMS FOR THE PURPOSE OF THE BUSINESS OF HIS EM PLOYER. HE FAILS TO SUBSTANTIATE THE SAME. THIS HAS LED TO ASSESSMENT OF THE IMPUGNED SUM IN HIS HANDS AS UNDISCLOSED INCOME. WE REITERATE THAT HE ALREADY ADMITTED THE SAME AS INCOME BEFORE THE SETTLEMEN T COMMISSION . THE REVENUE STRONGLY DRAWS SUPPORT FROM THIS ACTION. THERE CAN HARDLY BE ANY DISPUTE ABOUT THE SETTLED LEGAL POSITION THAT QUANTUM AND PENALTY PROCEEDINGS STAND ON DIFFERENT FOOTING AND EACH AND EVERY ADDITION OF UNDISCLOSED INCOME DOES NOT LEAD TO IMPOSITION OF PENALTY. WE OBSERVE IN THESE FACTS AND CIRCUMSTANCE TH AT WE ARE DEALING WITH A TAX STATUTE WHEREIN LEVY OF PENALTY BY INVOKING A PENAL PROVISION AFTER FINALIZATION OF QUANTUM IS NOT AUTOMATIC. WE VIEW THE CASE FROM THIS ANGLE AND HO LD THAT THE PRESENT ONE IS AN INSTANCE WHERE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE HIS EXPLANATION OF HAVING SPENT THE IMPUGNED EXPENDITURE LIMIT FOR HIS EMPLOYER COMPANY FOR THE PURPOSE OF THE I.T (SS) .A NOS. 579 - 580 /AHD/20 12 A.Y. 2002 - 03 & 2003 - 04 PAGE NO ALKESH M. PATEL VS. DCIT 6 BUSINESS AND ALSO THE REVENUE HAS FAILED TO REFER TO THE EMPLOYER S BOOKS SO AS TO NEGATE THE SAME BY HOLDING THAT THE VERY SUMS HAVE NOT BEEN CLAIMED AS EXPENDITURE. WE REITERATE THAT THIS IS A PENALTY CASE LIABLE TO BE STRICTLY INTERPRETED. THIS FACTUAL POSITION LEADS US TO A CONCLUSION THAT THE AUTHORITIES BELOW HAVE WRONGLY IMPOSED THE IMPUGNED PENALTY OF RS. 11,010/ - U/S. 271(1) (C) OF THE ACT. THE SAME STANDS DELETED. IT(SS)A 579/AHD/2012 IS ACCEPTED. 7. SAME ORDER TO FOLLOW IN IT(SS)A 580/AHD/2012. 8. BOTH THESE ASSESSEE S APPEALS ARE ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 29 - 01 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29 /01/2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,