The DCIT, Central Circle-1(3), Ahmedabad V. Shri Mukeshbhai Balabhai Patel, Mumbai

ITSSA 64/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6793 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 12-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HIREN TRIVEDI
• Keywords: Income from undisclosed sources; Search and seizure; Salary income; Question of law; Set aside
• Section: 132

Judgement Text

PAGE 1 OF 6 , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, AHMEDABAD BEFORE , SHR I A.D. JAIN , VICE PRESIDENT AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ IT (SS) A NO.6 4/AHD/2016 / ASSTT. YEAR : 2012 - 2013 D.C.I.T, CIRCLE - 1(3), AHMEDABAD. VS . SHRI MUKESHBHAI BALABHAI PATEL , PLOT NO.2 , 901 SHIVING, 10 TH ROAD , JVPD SCHEME, VILLE PARLE(W) MUMBAI - 400056 . PAN: AAPPP8456N (APPLICANT) ( RESPON D ENT ) REVENUE BY : SMT. SOMOGYAN PAL , SR. D .R ASSESSEE BY : SHRI HIREN TRIVEDI , A. R / DATE OF HEARING : 20 / 06 / 201 9 / DATE OF PRONOUNCEMENT: 18 /07 /2 01 9 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) - 11 , AHMEDABAD [ LD. CIT (A) IN SHORT] , DATED 1 5 / 10 / 2015 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143 (3) R.W.S 153B(1)(B) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 24 / 03 / 201 4 RELEVANT TO ASSESSMENT YEAR (A . Y . ) 2012 - 13 . IT (SS) A NO .6 4 /AHD/2016 ASSTT. YEAR 2012 - 13 PAGE 2 OF 6 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING THE PENALTY U/S.271AAA OF JLS.80,00,000/ - MADE ON ACCOUNT OF UNDISCLOSED INCOME WITHOUT APPRECIATING THE FACTS OF THE CASE & RELEVANT PROVISIONS.' 2. THE LD.CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN HOLDING THAT THE ASSESSEE HAD SUBSTANTIATED THE SOURCE AND MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY WAY OF STATEMENT RECORDED U/S.132(4). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 4. IT I S, THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. T HE ONLY EFFECTIVE ISSUE RAISED BY THE ASSESS EE IS THAT THE LEARNED CIT (A) ERRED IN DELETING THE P ENALTY IMPOSED BY THE AO FOR 8 0 LAKHS UNDER SECTION 271 AAA OF THE ACT. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND DERIVING HIS INCOME UNDER THE HEAD SALARY, BUSINESS AND PROFESSION , AND THE OTHER SOURCES. THERE WAS A SEARCH AND SEIZURE OPER ATION CARRIED OUT UNDER SECTION 132 OF THE ACT DATED 17 TH FEBRUARY 2012 IN THE CASE OF SHIP BREAKERS GROUP OF BHAVNAGAR. THE ASSESSEE WAS ALSO PART OF THE GROUP , AND THEREFORE HE WAS ALSO COVERED UNDER THE SEARCH AND SEIZURE OPERATION. THE ASSESSEE AS A RE SULT OF THE SEARCH DISCLOSED INCOME OF 8 CRORES FOR THE YEAR UNDER CONSIDERATION FROM THE BUSINESS OF SHIP BREAKING AND THE REAL ESTATE ACTIVITIES. THE ASSESSEE ALSO CLAIMED TO HAVE APPLIED SUCH INCOME FOR THE PURCHASE OF GOLD AND DIAMOND JEWELLERY AS WE LL AS FOR THE LENDING AND INVESTMENT PURPOSES. IT (SS) A NO .6 4 /AHD/2016 ASSTT. YEAR 2012 - 13 PAGE 3 OF 6 2.1 HOWEVER, THE AO FOUND THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH SUCH INCOME WAS EARNED. THEREFORE , THE AO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271 AAA OF THE ACT BY ISSUING A NOTICE UNDER SECTION 274 OF THE ACT DATED 24 TH MARCH 2014. 2.2 THE ASSESSEE IN RESPONSE TO THE NOTICE SUBMITTED THAT HE HA D DIS CLOSE D THE MANNER IN WHICH SUCH INCOME WAS EAR N ED IN THE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. THE ASSESSEE IN S UPPORT OF HIS CLAIM HAS ALSO SUBMITTED THE REPLY OF QUESTION NO. 9 RAISED BY THE S EARCH TEAM DURING THE SEARCH PROCEEDINGS. HOWEVER , THE AO DISAGREED WITH THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT HE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE INC OME WAS EARNED BASED ON ANY DOCUMENTARY EVIDENCE. ACCORDINGLY , HE LEVIED THE PENA LTY OF 8 0 LAKHS BEING 10% OF THE UNDISCLOSED INCOME UNDER SECTION 271AAA OF THE ACT . 3. THE A GGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO HAS DELETED TH E PENALTY IMPOSED BY THE AO BY OBSERVING AS UNDER: THE CONTENTS OF STATEMENT OF SHRI MUKESH B. PATEL RECORDED U/S. 132(4) ARE CATEGORICAL AND SELF EVIDENT ABOUT THE MANNER IN WHICH THE INCOME WAS DERIVED AND ALSO SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. AS MENTIONED EARLIER, THE ASSESSEE PAID TAX AS WELL AS INTEREST ON THE UNDISCLOSED INCOME IN THE RETURN FILED IN PURSUANCE TO NOTICE U/S.153A OF THE ACT. THE MANNER OF EARNING INCOME AND ITS SUBSTANTIATION WAS NOT QUESTIONED BY THE AUTHORIZED OFFICER DURING THE RECORDING OF STA TEMENT OF SHRI MUKESH B. PATEL. THE AO MENTIONED IN PARA 3 OF PAGE 2 IN THE ASSESSMENT ORDER THAT 'THE ASSESSEE DERIVED INCOME FROM SALARY, INCOME FROM PROFITS AND GAINS FROM BUSINESS/PROFESSION AND INCOME FROM OTHER SOURCES'. THIS UNACCOUNTED INCOME WAS A PPLIED IN THE PURCHASE OF JEWELLERY AND ALSO FOR LENDING AND INVESTMENT. THIS INCOME WAS OFFERED IN THE RETURN OF INCOME FOR A.Y.2012 - 13 UNDER THE HEAD 'INCOME FROM PROFIT AND GAINS FROM BUSINESS/PROFESSION' AND THE SAME INCOME WAS ACCE PTED BY THE AO WITHOUT ANY VARIANCE. THIS FACT WAS SELF EVIDENCING THAT THE ASSESSEE HAS PASSED THE TEST OF SECTION 271AAA OF THE ACT. THERE IS NO SPECIFIC FORMAT OR PROCEDURE PRESCRIBED IN THE ACT FOR SPECIFYING AND SUBSTANTIATING UNDISCLOSED INCOME AS H ELD BY THE COURTS. THE STATEMENT ON BEHALF OF .THE ASSESSEE, SPECIFYING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND SUBSTANTIATED, DID NOT FACE ANY REBUTTAL OR IT (SS) A NO .6 4 /AHD/2016 ASSTT. YEAR 2012 - 13 PAGE 4 OF 6 REJECTION AT THE END OF THE AO. IN THE STATEMENT IT WAS ADMITTED THAT THE ASSESSE E HAD ENTERED INTO VARIOUS TRANSACTIONS OF SALE AND PURCHASE OF LAND AND ALSO DOING BUSINESS OF SHIP BREAKING DURING THE CONCERNED PERIOD. THE QUESTION OF SPECIFYING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED WAS STOOD DULY ANSWERED BY THEASSJE SSEE BEFORE THE AUTHORIZED OFFICER WHICH WAS AGAIN EXPLAINED BEFORE A.O. ALSO. THE A.O. ACCEPTED THE UNDISCLOSED INCOME WITHOUT ANY FURTHER ADDITION ON THE GROUND OF UNACCOUNTED INCOME. THEREFORE, THE RATIO LAID DOWN IN THE DECISIONS, AS RELIED UPON BY THE AR FOR TFIE ASSESSEE AND ALSO THE OTHER DECISIONS AVAILABLE ON THIS ISSUE, PARTICULARLY THE RULINGS OF THE ALLAHABAD HIGH COURT IN THE CASES OF SIDH NATH GOEL 359 IT 481, RADHA KISHAN GOEL 278 ITR 454(AIL), MAHINDRA C.SHAH 299 ITR 305.(GUJ.).AND GEETA PRI NTS P. LTD - TAX APPEAL NO.565 OF 2015 DATED 14.09.2015(GUJ.) ARE FULLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. AFTER HAVING REGARD TO THE CONTENTS OF THE ASSESSMENT ORDER, ORDER OF PENALTY, STATEMENT OF SHRI MUKESH B. PATEL, SUBMISSION OF THE APPELLANT AND THE COURT RULINGS ON THE ISSUE, IT IS MY CONSIDERED OPINION THAT THE ASSESSEE FULFILLED THE CONDITIONS PRESCRIBED IN SUB SECTION 2 OF SECTION 271AAA OF THE ACT. ACCORDINGLY, THE APPEAL IS ALLOWED. 4. B EING AGGRIEVED BY THE ORD ER OF THE LEA RNED CIT (A), THE R EVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED DR AND THE LEARNED AR RELIED ON THE ORDER OF THE AUTHORITIES BELOW AS FAVORABLE TO THEM. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AV AILABLE ON RECORD. FROM THE PRECEDING DISCUSSION , WE NOTE THAT THE ASSESSEE HAS FURNISHED THE DETAILS OF THE INCOME AND THE MANNER IN WHICH HE EARNED SUCH INCOME IN THE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. HOWEVER , AT THE TIME OF SUCH, THERE WAS NO QUESTION RAISED UPON HIM ( ASSESSEE ) TO SUBSTANTIATE THE MANNER IN WHICH SUCH INCOME WAS EARNED BASED ON THE DOCUMENTARY EVIDENCE. THEREFORE, THE ASSESSEE HAD NO OCCASION TO SUBSTANTIATE THE MANNER OF INCOME DISCLOSED IN T HE STATEMENT FURNISHED UNDER SECTION 132 ( 4 ) OF THE ACT. AT THIS JUNCTURE, WE FIND IT IMPORTANT TO REFER THE PROVISIONS OF SECTION 271AAA OF THE ACT WHICH READS AS UNDER: IT (SS) A NO .6 4 /AHD/2016 ASSTT. YEAR 2012 - 13 PAGE 5 OF 6 '271AAA(1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 [BUT BEFORE THE 1ST DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB - SECTION (1) SHALL APPLY IF THE ASSESSEE, - ( I ) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SEC TION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; ( II ) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND ( III ) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB - SECTION (1).' 6.1 THE PROVISION OF SUBSECTION (2) OF 271AAA OF THE ACT PROVIDES IMMUNITY FROM THE PENALTY , WHICH IS APPLICABLE IN THE GIVEN FACTS & CIRCUMSTANCES. AS THERE WAS NO QUESTION RAISED BY THE SEARCH TEAM TO SUBSTANTIATE THE MAN N ER IN WHICH THE INCOME WAS EARNED BASED ON THE DOCUMENTARY EVIDENCE, TH EREFORE THERE THE ASSESSEE IS ENTITLED T O THE IMMUNITY FROM THE PENALTY. IN SUCH FACTS AND CIRCUMSTANCES , THE COUR TS HAVE HELD THAT THERE CANNOT BE ANY PENALTY ON THE ASSESSEE UNDER SECTION 271 AAA OF THE ACT. IN THIS REGARD , WE FIND SUPPORT AND GUIDANCE FR OM THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF P RINCIPAL CIT VERSUS AMBIKA DEVELOPERS IN TAX APPEAL NO. 827 OF 20 17 WHEREIN IT WAS HELD AS UNDER: 7. IN THE PRESENT CASE, THE ASSESSEE HAS ADMITTED THE UNDISCLOSED INCOME IN THE STATEMENT GIV EN UNDER SUB - SECTION (4) OF SECTION 132. HE HAS ALSO PROVIDED ALL THE DETAILS TO THAT EFFECT, AND HAS OFFERED AN INCOME OF RS.6.50 CRORES. IT WAS CLEARLY EXPLAINED IN THE STATEMENT DATED 20.01.2011 RECORDED U/S.132(4) OF THE ACT THAT THE UNACCOUNTED INCOME REPRESENTED NET TAXABLE INCOME OF THE PROJECTS UNDERTAKEN BY L|E| WESTERN BUSINESS PARK AND WESTERN RESIDENCY. THE ASSESSEE HAS ALSO PAID TAXES AS WELL AS INTEREST. THUS, THE CONTENTION OF THE REVENUE THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE MAN NER IN WHICH THE UNDISCLOSED INCOME IS DERIVED, DOES NOT MERIT ACCEPTANCE. NO EVIDENCE WAS FOUND WHICH WOULD SUGGEST THAT THE ASSESSEE HAD EARNED THE UNDISCLOSED INCOME FROM ANY OTHER SOURCE INSTEAD OF PROJECTS. IT (SS) A NO .6 4 /AHD/2016 ASSTT. YEAR 2012 - 13 PAGE 6 OF 6 SIGNIFICANTLY, NO QUESTION WAS ASKE D BY THE ASSESSING OFFICER TO THE ASSESSEE TO SUBSTANTIATE THE MANNER OF UNDISCLOSED INCOME. IN OUR CONSIDERED OPINION THE CIT(A) WHILE PLACING RELIANCE ON THE JUDGMENT IN THE CASE OF MAHENDRA C SHAH (SUPRA) HAS RIGHTLY HELD THAT WHEN SUCH QUESTIONS ARE NOT RAISED BY THE AUTHORIZED OFFICER, THE ASSESSEE IS NOT EXPECTED TO SPECIFY ON HIS OWN MANNER IN WHICH THE INCOME WAS EARNED TO SUBSTANTIATE THE SAME. AS OBSERVED IN THE JUDGEMENT IN MAHENDRA C SHAH (SUPRA), WHEN THE STATEMENT IS BEIN G RECORDED BY THE AUTHORIZED OFFICE, IT IS INCUMBENT UPON HIM TO EXPLAIN THE PROVISION IN ITS ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH LAPSE IN THE STATEMENT. THUS, THE CONDITIONS MENTIONED IN SECTION 27LAAA(2) FOR GRANTING IMMUNITY FROM THE PENALTY - ARE SATISFIED IN THE PRESENT CASE AS THE ASSESSEE IN HIS STATEMENT UNDER SECTION 132(4) HAS MADE A DISCLOSURE OF UNACCOUNTED INCOME; THE MANNER IN WHICH THE SAME WAS EARNED WAS ALSO CLEARLYSTATED AND THE TAXES WERE ALSO PAID. 8. ON OVERALL ANALYSIS OF THE ENTIRE MATERIAL ON RECORD AS WELL AS THE ORDER IMPUGNED, WE UNHESITATINGLY CONCLUDE THAT NO ERROR IS COMMITTED BY THE TRIBUNAL IN CONFIRMING THE ORDER OF CIT(A) IN DELETING THE PENALTY IMPOSED ON THE ASSESSEE UNDER SECTION 271AAA OF THE ACT. NO QUESTION OF LAW ARISES FROM THE IMPUGNED ORDER. CONSEQUENTLY, THE APPEAL, BEING SANS MERIT, STANDS DISMISSED. 7. IN VIEW OF THE ABOVE, WE HOLD THAT THE PENALTY UNDER SECTION 271AAA OF THE ACT CANNOT BE IMPOSED ON THE ASSESSEE AS HE HAS COMPLIED THE CONDITIONS SPECIFIED IN THE SECTION FOR CLAIMING THE IMMUNITY F RO M THE PENALTY. HENCE, THE APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 18 /07 / 2019 AT AHMEDABAD. - SD - - SD - (A.D. JAIN ) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 18 / 07 /2019 M ANISH