Shri Yash Devendra Vayla, Surat V. The ACIT.,Cent.Circle-3., Surat

ITSSA 600/AHD/2010

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8867 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-11-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 12-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Keywords: Unexplained investment; Benefit of exemption
• Section: 5(2); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER IT(SS)A NO.600-604/AHD/2010 ASSESSMENT YEARS:2002-03 TO 2006-07 DATE OF HEARING:11.11.10 DRAFTED:11.11.10 SHRI YASH DEVENDRA VAYLA, 2/5175, GEEET GOVIND, RESTAMPURA, FARM STREET, SURAT PAN NO.AAZPV4892N V/S . ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI HARDIK VORA, AR REVENUE BY:- SHRI R.K. DHANESTA, DR O R D E R PER BENCH:- THESE FIVE APPEALS BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD IN APPEAL NOS. CIT(A)- II/CC.3/65-69/2009-10 DATED 02-06-2010. THE ASSESSM ENTS WERE FRAMED BY ACIT, CENTRAL CIRCLE-3, SURAT U/S143(3) R.W.S. 153A OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ERS OF EVEN DATE 17-12-2008 FOR ASSESSMENT YEARS 200-03 TO 2006-07 RESPECTIVELY. TH E PENALTIES FOR THE ABOVE ASSESSMENT YEARS UNDER DISPUTE WERE LEVIED BY ASSES SING OFFICER VIDE HIS ORDERS OF EVEN DATE 16-06-2009 U/S.271(1)(C) OF THE ACT. 2. THE ONLY COMMON ISSUE IN THESE APPEALS OF ASSESS EE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT FOR THE FIVE ASSESSMENT YEARS. THE ASSESSEE HAS RAISED THE COMMON GROUND IN THE ALL THE APPEALS EXCEPT THE AMOUNT, AND FOR THE SAKE OF BREVITY, WE ARE REP RODUCING THE GROUND AS RAISED IN IT(SS)A NO.600/AHD/2010 FOR THE ASSESSMENT YEAR 2002-03:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN CONFIRMING IT(SS)A NO600-604/AHD/2010 A.YS.02-03 TO 06-07 SH YASH D VAYLA V. ACIT, CC-3, SURAT PAGE 2 THE ACTION OF THE ASSESSING OFFICER OF LEVYING PENA LTY OF RS.19,176 U/S 271(1)(C) OF THE I.T ACT. 3. A SEARCH U/S.132 OF THE ACT WAS CARRIED OUT ON T HE RESIDENTIAL & BUSINESS PREMISES OF THE ASSESSEE GROUP ON 07-11-2006. DURIN G THE COURSE OF SEARCH VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED SHOWI NG UNEXPLAINED DEPOSITS IN FDRS AND ALSO EARNED UNACCOUNTED INTEREST THEREON. THE ASSESSEE DISCLOSED INCOME OF RS.50,000/- FOR UNEXPLAINED DEPOSITS PLUS RS.49,371/- AS UNACCOUNTED INTEREST FOR ASSESSMENT YEAR 2002-03; RS.45,863/- A S INTEREST ON UNACCOUNTED BANK DEPOSITS FOR ASSESSMENT YEAR 2003-04, RS.3.70 LAKH AS UNEXPLAINED INVESTMENT IN FDRS PLUS RS.71,267/- AS INTEREST FOR ASSESSMENT YE AR 2004-05, RS.79,653/- AND RS.71,879/- AS UNACCOUNTED FDRS AND BANK INTEREST F OR ASSESSMENT YEAR 2005-06 AND 2006-07. THE ASSESSEE DISCLOSED THE SAME IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT ON 25-03-2008. THE RETUR NED INCOME WAS ACCEPTED. HOWEVER, THE ASSESSING OFFICER LEVIED PENALTY U/S 2 71(1)(C) OF THE ACT BY INVOKING THE EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT A ND HOLDING THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION PROVIDED IN EXPLANATION-5 TO SECTION 271(1) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT (A). 4. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT IN PARA-5 OF HIS APPELLATE ORDER AS UNDER:- 5. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS . I DO NOT AGREE WITH THE APPELLANTS VIEW. THE DECISION OF HONBLE GUJARAT H IGH COURT IN THE CASE OF CIT VS MAHENDRA C. SHAH (SUPRA), WAS GIVEN IN THE CASE WHEN THE ASSESSMENT YEAR UNDER CONSIDERATION WAS THE CURRENT YEAR WHEN ON THE DATE OF SEARCH, DUE DATE FOR FILING THE RETURN OF INCOME WAS NOT EXPIRED. HERE, THE ASSESSMENT YEARS UNDER CONSIDERATION ARE BACK YEARS WHEN THE APPELLANT FILED ORIGINAL RETURN OF INCOME AND DID NOT DISCLOS E THE INCOME WHICH IS FOUND IN THE SEARCH. THE DISCLOSED INCOME IS FILED ONLY I N THE RETURN FILED U/S.153A OF THE ACT. THE HONBLE ITAT AHMEDABAD BENCH IN THE CA SE OF ACIT VS KIRIT DAYABHAI PATEL, IN ITA NO.2344/AHD/2007 FOR A.Y. 2002-03 AND IN THE CASE OF SHRI RAJESH A PATEL IN ITA NO.2345, 2346, 2348 & 2389/AHD/2007 FOR A.YS 98-99, 99-2000, 2001-02 & 2002-03 DATED 25/06/2009 [GIVEN BY SHRI R.V. EASWAR VICE PRESIDENT AND THIRD MEMBER], HAVE CONSI DERED THE POINT OF APPLICABILITY OF EXPLANATION 5 TO SECTION 271(1) F OR THE YEARS EARLIER TO THE YEAR OF SEARCH. THE HONBLE MEMBER DID NOT APPROVE THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS S.D.V. CHANDRU 266 ITR 175 AND RAJASTHAN HIGH COURT DECISION IN THE CASE OF CIT VS KANHAIYALAL 299 ITR 19 AND ORDER OF THE ALLAHABAD BENCH OF ITAT IN THE CASE OF SHYAM BIRI WORKS P.LTD. VS ACIT 70 TTJ 880. INSTEAD THE MEMBER HAVE FOLLOWED THE D ECISION OF BOMBAY HIGH COURT IN THE CASE OF SHERATON APPEARALS VS ACIT 256 ITR 20 AND ITAT IT(SS)A NO600-604/AHD/2010 A.YS.02-03 TO 06-07 SH YASH D VAYLA V. ACIT, CC-3, SURAT PAGE 3 AHMEDABAD BENCH IN THE CASE OF RUPESH GODHIDAS PATEL 309 ITR (AT) 271 AND HELD THAT BENEFIT OF EXPLANATION 5(2) TO SECTIO N 271(1)(C) IS CONFIRMED TO THE YEAR IN RESPECT OF WHICH THE DUE DATE FOR FILIN G THE RETURN IS YET TO COME BUT THE BENEFIT IS NOT AVAILABLE TO EARLIER YEARS WHERE DUE DATE TO FILE THE RETURN OF INCOME U/S. 139(1) HAS EXPIRED. AS THE DECISION OF HONBLE ITAT AHMEDABAD [ THIRD MEMBER ] IS BINDING THE SAME IS BEING FOLLOWED. ACCORDINGL Y, IT IS HELD THAT THE APPELLANT IS NOT ENTITLED TO THE BENEFIT O F EXEMPTION UNDER EXPLANATION 5(2) TO SECTION 271(1)(C) OF THE I.T. FURTHER, THE DOCUMENTS WERE FOUND IN THE SEARCH WHI CH SHOWED THAT THE APPELLANT HAS MADE INVESTMENTS IN THE BANK DEPOSITS AND FDRS AND THIS WAS THE INTANGIBLE ASSETS FOUND DURING THE SEARCH IN RE SPECT OF WHICH THE INCOME HAS BEEN DISCLOSED. AS PER DECISION OF THE HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT V. MISHRIMAL SONI (2007) 209 CTR (RAJ) 438, WHEREIN IT HAS BEEN HELD THAT EXPLANATION 5 TO SECTION 271 APPLIES TO DISCLOSURE OF UNDISCLOSED ASSETS, BOTH TANGIBLE AS WELL AS INTANG IBLE ASSETS. THEREFORE, IT IS HELD THAT THE APPELLANT IS SHIT BY EXPLANATION 5 TO SECTION 271(1)(C) BUT HE IS NOT ENTITLED FOR BENEFIT OF EXEMPTION UNDER EXPLANA TION 5 TO SECTION 271(1) OF THE ACT THEREFORE, THE PENALTY IS LEVIABLE BY INVOK ING EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY LEVI ED ARE JUSTIFIED AND CONFIRMED. 5. WE FIND FROM THE ARGUMENTS OF BOTH THE SIDES THA T THE ASSESSEES MAIN CONTENTION IS THAT ONCE INCOME IS RETURNED IN THE R ETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A OF THE ACT, THE PENALTY U/S.271(1) WILL NOT BE ATTRACTED IN VIEW OF EXPLANATION-5 TO SECTION 271(1) AS THE ASSESSEE HA S FULFILLED ALL THE CONDITIONS LAID DOWN. WE FIND THAT THE TRIBUNAL IN SIMILAR CIRCUMST ANCES HAS CONSIDERED EXPLANATION-5 TO SEC. 271(1) : (I) THAT EXPLANATION 5 TO SECTION 271(1) OF THE A CT WOULD NOT COME TO THE RESCUE OF THE ASSESSEE AS THERE WAS NO TIME AVAILAB LE FOR FILING OF RETURN UNDER SECTION 139(1) AS MENTIONED IN CLAUSE 2 OF EX PLANATION 5 TO SECTION 271(1). THE ASSESSMENT YEAR FOR WHICH THE INCOME W AS ADMITTED UNDER SECTION 132(4) WAS THE ASSESSMENT YEAR 1998-99 AND THE SEARCH WAS CONDUCTED ON SEPTEMBER 4, 2003. IT MEANT THAT NO TI ME WAS LEFT FOR FILING THE RETURN UNDER SECTION 139(1) OF THE ACT. THE ASSESSE E HAD FILED HIS ORIGINAL RETURN OF INCOME AND IN THIS RETURN HE HAD NOT DECL ARED THE INCOME DETECTED DURING THE COURSE OF SEARCH. THE ORDER OF THE COMMI SSIONER (APPEALS) WAS TO BE REVERSED AND THE PENALTY WAS TO BE CONFIRMED. (II) THAT UNDER THE SECOND PROVISO TO SECTION 153A THE PENDING ASSESSMENT OR REASSESSMENT FALLING WITHIN THE PERIOD OF SIX ASSES SMENT YEARS REFERRED TO IN SECTION 153A ON THE DATE OF INITIATION OF SEARCH UN DER SECTION 132 SHALL ABATE. IT MEANS THAT ONLY THOSE ASSESSMENTS FILED HIS ORIG INAL RETURN OF INCOME FOR THE ASSESSMENT YEAR 1998-99 ON OCTOBER 27, 1998 AND NO PROCEEDINGS WERE PENDING AS ON THE DATE OF THE SEARCH, I.E. SEPTEMBE R 4, 2003. THE ASSESSEE SUBSEQUENTLY DISCLOSED A SUM OF RS.5 LAKHS IN HIS R ETURN OF INCOME FILED UNDER SECTION 153A(A) AS DECLARED UNDER SECTION 132(4) AN D ACCEPTED THE IT(SS)A NO600-604/AHD/2010 A.YS.02-03 TO 06-07 SH YASH D VAYLA V. ACIT, CC-3, SURAT PAGE 4 ASSESSMENT ALSO. THE COMMISSIONER (APPEALS) ERRED I N IGNORING THE RETURN FILED ORIGINALLY ON OCTOBER 27, 1998 IN VIEW OF THE SECOND PROVISO TO SECTION 153A OF THE ACT. BY THE FINANCE BILL, 2007, IT WAS PROPOSED TO AMEND EXPLANATION 5 SO AS TO PROVIDE THAT THE PROVISIONS OF THE EXPLANATION SHALL BE APPLICABLE ONLY IN A CASE WHERE SEARCH UNDER SECTIO N 132 WAS INITIATED BEFORE JUNE 1, 2007. ACCORDINGLY, THE REASONING GIVEN BY T HE COMMISSIONER (APPEALS) THAT THE INTRODUCTION OF SECTION 271AAA O F THE ACT ITSELF SHOWS THAT NO PENALTY UNDER SECTION 271(1)(C) WAS IMPOSSIBLE O N THE INCOME RETURNED UNDER SECTION 153A WAS CLEARLY A WRONG INTERPRETATI ON OF THE EXPLANATION. THE COMMISSIONER (APPEALS) WAS TO ADJUDICATED THE PENAL TY ON THE MERITS. THE TRIBUNAL HAS HELD THIS VIEW IN THE CASE OF ACIT V. RUPESH BHOLIDAS PATEL (2009) 309 ITR (AT) 217 (AHD) BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SHERATION APPARELS : MAX CORPORATION : TRESSA FASHI ON V. ACIT (2002) 256 ITR 20 (BOM). NOW THE ISSUE IS COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE AND NOTHING NEW HAS BEEN BROUGHT BY THE ASSESSEE, RESPECTFULLY FOLLOWING THE ABOVE VIEW OF THIS TRIBUNAL, WE CONFI RMED THE ORDER OF CIT(A) CONFIRMING THE PENALTY LEVIED BY ASSESSING OFFICER. 6. IN THE RESULT, ASSESSEES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11/11/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 11/11/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-II, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD