Shri Mahendrakumar M.Bhatt, Ahmedabad V. The Dy.CIT.,Cent.Circle-1(1), Ahmedabad

ITSSA 581/AHD/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1618 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 03-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI SOMOG
• Keywords: Search and seizure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .. , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER SL. NO(S) IT (SS) A NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY : APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 581/AHD/2012 2002 - 03 SHRI MAHENDRAKUMAR M.BHATT 32, SHIVALI SOCIETY OPP. ADC BANK JIVRAJPARK AHMEDABAD PAN:AEHPB 5253R THE DCIT CENTRAL CIRCLE-1(1) AHMEDABAD 2. 582/AHD/2012 2003 - 04 - DO - ASSESSEE - DO - REVENUE 3. 583/AHD/2012 2004 - 05 - DO - ASSESSEE - DO - REVENUE 4. 584/AHD/2012 2006 - 07 - DO - ASSESSEE - DO - REVENUE 5. 585/AHD/2012 2005 - 06 - DO - ASSESSEE - DO - REVENUE ! ' / APPELLANT BY : MS. URVASHI SHODHAN, AR $% ! & ' / RESPONDENT BY : SHRI SOMOGYAN PAL, SR.DR '( & ) / DATE OF HEARING 08/03/2016 *+,- & ) / DATE OF PRONOUNCEMENT /03/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINS T THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS )-I, AHMEDABAD [CIT(A) IN SHORT] DATED 23/10/2012 PERTAINING TO ASSESSMENT YEARS (AYS) 2002-03, 2003-04, 2004-05, 2006-07 & 2005-06. THE ASSESSEE HAS RAISED FOLLOWING COMMON GROUNDS OF APPEALS(EXC EPT QUANTUM):- IT(SS)A NOS.581 TO 585 /AHD/20 12 SHRI MAHENDRAKUMAR M.BHATT VS. DCIT AYS 2002-03 TO 2004-05, 2006-07& 2005-06 RESPECTI VELY - 2 - GROUNDS EXTRACTED FROM IT(SS)A NO.581/AHD/2012 FOR AY 2002- 03 1. IN LAWS AND ON FACTS AS WELL AS IN THE CIRCUMSTANC ES OF THE APPLICANTS CASE, THE LEARNED CIT(APPEALS) HAS GROS SLY ERRED IN DISMISSING GROUND NO.1 OF THE APPELLANTS APPEAL CH ALLENGING THE VALIDITY OF THE PENALTY ORDER IMPUGNED BEFORE HIM O N THE GROUND THAT IT HAD BEEN PASSED IN TOTAL DISREGARD TO THE F ACT THAT THE APPELLANTS APPLICATION FOR GRANTING IMMUNITY FROM PENALTY U/S.273AA WAS STILL PENDING BEFORE THE HONBLE COMM ISSIONER OF INCOME TAX. 2. WITHOUT PREJUDICE TO THE FOREGOING, IN LAW AND ON F ACTS AS WELL AS IN THE CIRCUMSTANCES OF THE CASE OF THE APPLICANT, THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED IN SUSTAINING PENALT Y OF RS.17,700/- LEVIED UNDER SECTION 271(1)(C) VIDE ORDER IMPUGNED BEFORE HIM WHEN HE OUGHT TO HAVE DELETED THE SAME. 3. WITHOUT PREJUDICE TO FOREGOING, THE ORDER UNDER SEC TION 271(1)(C) IS VOID, IN VIEW OF THE FACT THAT ASSUMPTION OF JURISD ICTION BY THE ASSESSING OFFICER UNDER SEC.153C IS VOID AND ILLEGA L. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 2. FIRST, WE TAKE UP THE APPEAL IN IT(SS)A NO.581/A HD/2012 FOR AY 2002-03 AS A LEAD CASE. THIS APPEAL ARISES FROM TH E ORDER OF THE LD.CIT(A)-I, AHMEDABAD DATED 10/2012 IN APPEAL NO. CIT(A)- I/CC.(1)/101/2011-12 CONFIRMING PENALTY OF RS.17,70 0/- IN PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. BOTH THE PARTIES ARE IN AGREEMENT DURING THE CO URSE OF HEARING THAT THESE BUNCH OF FIVE APPEALS RAISE IDENTICAL ISSUE O F VALIDITY OF THE IMPUGNED PENALTY ON FACTS AND LAW. IT(SS)A NOS.581 TO 585 /AHD/20 12 SHRI MAHENDRAKUMAR M.BHATT VS. DCIT AYS 2002-03 TO 2004-05, 2006-07& 2005-06 RESPECTI VELY - 3 - 4. FACTS OF THE CASE AS THEY EMERGE FROM THE ASSESS MENT ORDER AND PENALTY ORDER ARE THAT THE APPELLANT-ASSESSEE IS AN EMPLOYEE OF MEGHMANI GROUP OF COMPANIES. SEARCH AND SEIZURE PROCEEDINGS WERE CARRIED OUT IN THE MEGHMANI GROUP OF COMPANIES U/S.132(1) ON 22 /9/2005 AND THEIR DIRECTORS. DURING THE COURSE OF SEARCH AT THE PREM ISES OF LALIT PATEL, THE MAIN PERSON OF MEGHMANI GROUP, CERTAIN DOCUMENTS WE RE FOUND AND SEIZED. THE SEIZED MATERIAL ALSO INCLUDED A PEN DRIVE AND THE DATA CONTAINED IN THE PER-DRIVE RELATED TO THE APPELLANT AND ALSO OTHER PERSONS. THE AO HAD INITIATED THE PROCEEDINGS U/S.153C OF TH E ACT IN THE CASE OF THE APPELLANT-ASSESSEE FOR THE REASON THAT A PEN DR IVE FOUND FROM SHRI LALIT PATEL CONTAINED DETAILS OF SALARY PAYMENT AND THAT IT CONTAINED NAME OF THE APPELLANT-ASSESSEE AGAINST ONE SUCH AMOUNT. IT WAS OBSERVED BY THE AO THAT THE DETAILS NOTED IN THE PEN DRIVE, INC LUDED DETAILS OF SALARY AND BONUS AND PAYMENT BY CHEQUE AND CASH TO THE DIF FERENT PERSONS WORKING WITH MEGHMANI GROUP OF COMPANIES. IN THE S TATEMENT OF STATEMENT OF SHRI LALIT PATEL RECORDED ON 21/11/200 5 IT WAS EXPLAINED BY HIM AS UNDER:- Q-10 ON 22/9/05, A PEN DRIVE WAS FOUND FROM YOUR RESIDENCE, WHICH IS SIZED AS ZIP DRIVE IN ANN.A/11. THERE IS AN EXCEL SHEET IN ITS NAMED SALARY. I AM SHOWING YO U ITS PRINTED COPY AD SOFT COPY. PLEASE SEE THIS AND EXP LAIN WHAT IS IT AND RELATED TO WHAT?. IT(SS)A NOS.581 TO 585 /AHD/20 12 SHRI MAHENDRAKUMAR M.BHATT VS. DCIT AYS 2002-03 TO 2004-05, 2006-07& 2005-06 RESPECTI VELY - 4 - A-10 THIS SHEET CONTAINS DETAILS OF SALARY TO EMPL OYEES AND THE APPROXIMATE AMOUNT OF EXPENSES REQUIRED TO BE I NCURRED BY THEM. Q-11 LOOKING TO THE DATA, IT SEEMS THAT THIS IS RE LATED TO SALARY AND IT IS DETAILS OF SALARY PAID IN CHEQUE A ND CASH. THEN, ON WHAT BASIS YOU ARE SAYING THEM AS PERSONAL EXPENSES. A-11 THIS SHEET CONTAINS DETAILS OF SALARY PAID TO EMPLOYEES AND WHERE CASH IS MENTIONED. IN FACT, IT SHOWS THE DETAILS OF APPROXIMATE LIMIT OF EXPENSES REQUIRED TO BE INCURR ED BY THEM FOR THE PURPOSE OF BUSINESS 4.1. THE PROCEEDINGS U/S.153C OF THE ACT, WERE THUS INITIATED FOR THE BLOCK PERIOD OF 6 YEARS IN THE APPELLANTS CASE AND THE ASSESSMENT ORDERS WERE PASSED U/S.153C OF THE ACT. IN THE MEA NTIME, THE APPELLANT HAD APPROACHED BEFORE THE SETTLEMENT COMMISSION SHO WING CERTAIN INCOME BY FILING APPLICATIONS U/S.245C OF THE CT. THE SAID APPLICATIONS WERE NOT DECIDED BY THE SETTLEMENT COMMISSION U/S.2 45D UPTO 31.03.2008. BY VIRTUE OF THE PROVISIONS OF SECTION 245HA INSERTED BY THE FINANCE ACT 2007, THE PROCEEDINGS BEFORE THE SETTLE MENT COMMISSION ABATED BECAUSE THE FINAL ORDERS U/S.245D WERE NOT P ASSED BY 31.03.2008. THE AO THEREAFTER PASSED ASSESSMENT ORDERS U/S.143( 3) READ WITH SECTION 153C OF THE ACT, WHEREIN HE MADE ADDITIONS TO THE R ETURNED INCOME. THE ASSESSEE FILED APPEALS BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS ) VIDE HIS ORDER DATED 29.12.2009 DECIDED THE APPEALS, WHEREIN CERTA IN RELIEF WERE GIVEN IT(SS)A NOS.581 TO 585 /AHD/20 12 SHRI MAHENDRAKUMAR M.BHATT VS. DCIT AYS 2002-03 TO 2004-05, 2006-07& 2005-06 RESPECTI VELY - 5 - BUT PART OF THE ADDITION MADE BY THE AO WAS CONFIRM ED. DURING THE YEAR UNDER APPEAL (AY 2002-03) THE APPELLANT HAD SHOWN A TOTAL INCOME OF RS.2,14,720/- IN THE RETURN FILED U/S.158C OF THE A CT. HOWEVER, BEFORE THE SETTLEMENT COMMISSION , THE APPELLANT OFFERED AN AD DITIONAL INCOME OF RS.59,000/-. THE AO ASSESSED THE INCOME AT RS.2,73 ,720/-. THE APPELLANT FILED AN APPEAL BEFORE COMMISSIONER OF IN COME TAX (APPEALS) HOWEVER EVEN AFTER THE APPEAL, THE INCOME WAS DETER MINED AT RS.2,73,720/-. THE AO HAS, THEREFORE, LEVIED PENAL TY OF RS.17,700/- U/S.271(1)(C) OF THE ACT, HOLDING THAT THE APPELLAN T HAD NOT FULLY AND TRUTHFULLY DISCLOSED THE ENTIRE INCOME IN THE RETUR N OF INCOME FILED I RESPONSE TO NOTICE U/S.153C OF THE ACT. AGGRIEVED ASSESSEE, FILED APPEAL BEFORE THE LD.CIT(A), WHO CONFIRMED THE PENALTY. 5. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESS EE SUBMITTED THAT IN THE CONNECTED-MATTER, THE ISSUE TRAVELLED UPTO THE STAG E OF THE TRIBUNAL (ITAT D BENCH AHMEDABAD) BY WAY OF IT(SS)A NOS.57 9 & 580/AHD/2012 FOR AYS 2002-03 & 2003-04 RESPECTIVELY IN THE CASE OF ALKESH M.PATEL VS. DCIT, VIDE ORDER DATED 29/01/201 6, HAS DELETED THE PENALTY. 5.1. ON THE CONTRARY, THE LD.SR.DR SUPPORTED THE OR DER OF THE AUTHORITIES BELOW. IT(SS)A NOS.581 TO 585 /AHD/20 12 SHRI MAHENDRAKUMAR M.BHATT VS. DCIT AYS 2002-03 TO 2004-05, 2006-07& 2005-06 RESPECTI VELY - 6 - 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS DECISION OF THE TRIBUNAL RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. WE FIND THAT THE COORDINATE BENCH IN THE CASE OF ALKESH M.PATEL VS. DCIT(SUPRA) HAS DELETED THE PENALTY IMP OSED BY THE LD.CIT(A), BY OBSERVING AS UNDER:- 6. WE HAVE HEARD RIVAL CONTENTIONS. RELEVANT FACT S SET OUT HEREINABOVE ARE NOT REPEATED FOR THE SAKE OF BREVIT Y. 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 WH ICH COULD PROVE THAT ASSESSEES EMPLOYER HAS NOT BOOKED THE CORRESPONDIN G SUM AS EXPENDITURE IN ITS ACCOUNTS MAINTAINED. THE ASSESS EES CASE IS THAT HE HAS SPENT THE IMPUGNED SUMS FOR THE PURPOSE OF THE BUSINESS OF HIS EMPLOYER. HE FAILS TO SUBSTANTIATE THE SAME. THIS HAS LED TO ASSESSMENT OF THE IMPUGNED SUM IN HIS HANDS AS UNDISCLOSED INC OME. WE REITERATE THAT HE ALREADY ADMITTED THE SAME AS INCOME BEFORE THE SETTLEMENT COMMISSION. THE REVENUE STRONGLY DRAWS SUPPORT FRO M THIS ACTION. THERE CAN HARDLY BE ANY DISPUTE ABOUT THE SETTLED L EGAL POSITION THAT QUANTUM AND PENALTY PROCEEDINGS STAND ON DIFFERENT FOOTING AND EACH AND EVERY ADDITION OF UNDISCLOSED INCOME DOES NOT L EAD TO IMPOSITION OF PENALTY. WE OBSERVE IN THESE FACTS AND CIRCUMSTANC E THAT WE ARE DEALING WITH A TAX STATUTE WHEREIN LEVY OF PENALTY BY INVOKING A PENAL PROVISION AFTER FINALIZATION OF QUANTUM IS NOT AUTO MATIC. WE VIEW THE CASE FROM THIS ANGLE AND HOLD THAT THE PRESENT ONE IS AN INSTANCE WHERE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE HIS EXPL ANATION OF HAVING SPENT THE IMPUGNED EXPENDITURE LIMIT FOR HIS EMPLOY ER COMPANY FOR THE PURPOSE OF THE BUSINESS AND ALSO THE REVENUE HAS FA ILED TO REFER TO THE EMPLOYERS BOOKS SO AS TO NEGATE THE SAME BY HOLDIN G THAT THE VERY SUMS HAVE NOT BEEN CLAIMED AS EXPENDITURE. WE REITERATE THAT THIS IS A PENALTY CASE LIABLE TO BE STRICTLY INTERPRETED. TH IS FACTUAL POSITION LEADS US TO A CONCLUSION THAT THE AUTHORITIES BELOW HAVE WRONGLY IMPOSED THE IT(SS)A NOS.581 TO 585 /AHD/20 12 SHRI MAHENDRAKUMAR M.BHATT VS. DCIT AYS 2002-03 TO 2004-05, 2006-07& 2005-06 RESPECTI VELY - 7 - 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. 6.1. THE AFORESAID FINDING OF THE COORDINATE BENCH HAS NOT BEEN CONTROVERTED BY THE LD.SR.DR BY PLACING ANY CONTRAR Y MATERIAL ON RECORD. THEREFORE, TAKING A CONSISTENT VIEW, WE HEREBY DELE TE THE PENALTY AND ACCORDINGLY ASSESSEES APPEAL IN IT(SS)A NO.581/AHD /2012 FOR AY 2002-03 IS ALLOWED. 7. IN REMAINING FOUR APPEALS OF THE ASSESSEE, I.E. IT(SS)A NO.582, 583, 584, 585/AHD/2012, SINCE THE FACTS AND CIRCUMS TANCES ARE IDENTICAL TO THE FACTS OF ASSESSEES APPEAL IN IT(SS)A NO.581 /AHD/2012 FOR AY 2002-03(SUPRA), THE IMPOSED PENALTIES IN THESE APPE ALS ARE ALSO HEREBY DELETED. THUS, ASSESSEES APPEALS FOR AYS 2003-04, 2004-05,2006-07 & 2005-06 ARE ALSO ALLOWED. 8. IN THE COMBINED RESULT, ALL THE FIVE APPEALS FIL ED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 11TH D AY OF MARCH, 2016 AT AHMEDABAD. SD/- SD/- (.. ) ( ) ( N.K. BILLAIYA) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/ 03 /2016 2).., '.../ T.C. NAIR, SR. PS IT(SS)A NOS.581 TO 585 /AHD/20 12 SHRI MAHENDRAKUMAR M.BHATT VS. DCIT AYS 2002-03 TO 2004-05, 2006-07& 2005-06 RESPECTI VELY - 8 - !'#'$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. $% ! / THE RESPONDENT. 3. 3345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-I, AHMEDABAD 5. 7'8 $45 , ) 45- , / DR, ITAT, AHMEDABAD 6. 8:; <( / GUARD FILE. / BY ORDER, // %7 $ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 9.3.2016 (DRAFT- PAGES ATTAC HED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 9.3.2016 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 11.3.16 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.3.16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER