The DCIT, Central Circle-1(4), Ahmedabad V. Shri Prahladbhai Kishanchand Sewani, Ahmedabad

ITSSA 65/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2545 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 12-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Section: 131; 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ IT(SS)A NO.65/AHD/2016 / ASSTT. YEAR: 2012-13 DCIT, CENT.CIR.1(4) AHMEDABAD. VS. SHRI PRAHALDBHAI KISCHANCHAND SEWANI VIPA BHAVAN, FATEHBHAI NI HAVELI RATANPOLE, AHMEDABAD 380 001. PAN : AFQPS 1591 B / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.K. DEV, SR.DR REVENUE BY : SHRI BANDISH SOPARKAR, AR ! / DATE OF HEARING : 21/02/2019 '#$ ! / DATE OF PRONOUNCEMENT: 7 /03/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-11, AHMEDABAD DATED 7.10.2015 PASSED FOR THE ASSTT.YEAR 2012-13. 2. THOUGH THE REVENUE HAS TAKEN FOUR GROUNDS OF APP EAL, BUT ITS SOLITARY SUBSTANTIAL GRIEVANCE IS THAT THE LD.C IT(A) HAS ERRED IN DELETING THE PENALTY OF RS.38 LAKHS IMPOSED UNDER S ECTION 271AAA OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH WAS CON DUCTED AT THE PREMISES OF THE ASSESSEE ON 20.12.2011. THE ASSESS EE HAS FILED IT(SS)A NO.65 /AHD/2016 2 RETURN OF INCOME ELECTRONICALLY ON 30.9.2012 DECLAR ING TOTAL INCOME AT RS.4,30,37,740/-. HE INCLUDED A SUM OF RS.3,80,00,000/- WHICH ACCORDING TO HIM IS PART OF RS.10.13 CRORES ADMITTED AT THE TIME OF SEARCH BY SHRI SUNIL P. SEWANI IN HIS STATEMENT RECORDED UNDER SECTION 132(4). THE C ASE OF THE ASSESSEE IS THAT A SUM OF RS.3.80 CRORES WAS ALLOC ATED TOWARDS THE ASSESSEE BY SHRI SUNIL P. SEWANI AND IT WAS ADM ITTED BY THE ASSESSEE ALSO. BIFURCATION OF RS.10.13 CRORES HAS BE EN GIVEN IN THE ASSESSMENT ORDER. THE LD.AO ACCEPTED THE RETURN FI LED BY THE ASSESSEE WITHOUT MAKING ANY ADDITION. HE INITIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE ACT. THE A O IMPOSED PENALTY OF RS.38 LAKHS EQUIVALENT TO 10% OF THE UND ISCLOSED INCOME ADMITTED DURING THE COURSE OF SEARCH. THE AO WAS OF THE OPINION THAT THE ASSESSEE FAILED TO DISCLOSE THE MA NNER AND SUBSTANTIATE THE MANNER, HOW THIS INCOME WAS EARNED . ON APPEAL, THE LD.CIT(A) HAS DELETED PENALTY BY OBSERV ING THAT DURING THE COURSE OF SEARCH, THE ASSESSEE HAS EXPLAINED MA NNER IN WHICH THE INCOME WAS DERIVED AND ALSO SUBSTANTIATED THE M ANNER IN WHICH INCOME WAS DISCLOSED. ACCORDINGLY, THE LD.CI T(A) DELETED THE PENALTY. 4. BEFORE US, THE LD.DR CONTENDED THAT THOUGH IT IS NOT DISCERNIBLE, WHETHER A QUESTION WAS PUT TO DECLARAN T DURING THE COURSE OF SEARCH ABOUT THE MANNER IN WHICH UNDISCLO SED INCOME WAS DERIVED, BUT DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE LD.AO DID ASK THE QUESTION. THE ASSESSEE FAILE D TO DISCLOSE THE DETAILS, AND THEREFORE PENALTY IS IMPOSABLE UPON HI M. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESSEE CONTEND ED THAT IDENTICAL ISSUE WAS CONSIDERED BY THE ITAT IN THE C ASE OF ACIT VS. SWAPNA ENTERPRISE RENDERED IN ITA NO.1355/AHD/2014. THE IT(SS)A NO.65 /AHD/2016 3 TRIBUNAL HAS UPHELD THE DELETION OF PENALTY AND THI S ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE HIGH COURT ALSO. HE HAS PLACED ON RECORD COPY OF THE TRIBUNALS ORDER. 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. WE FIND THAT IDENTICAL SITUA TION HAS BEEN CONSIDERED BY THE ITAT IN THE CASE OF SWAPNA ENTERP RISES (SUPRA). THE DISCUSSION MADE BY THE TRIBUNAL READS AS UNDER: 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD. FOR APPRECIATING THE CONTROVER SY INVOLVED, IT IS INCUMBENT UPON US TO TAKE NOTE OF SECTION 271 AAA. THE RELEVANT PART OF THIS SECTION READS AS UNDER: 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, 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 UND ISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I ) IN THE COURSE OF THE SEARCH, IN A S TATEMENT UNDER SUB- SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED; (II ) SUBSTANTIATES THE MANNER IN WHICH T HE UNDISCLOSED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTERES T, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB- SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON TH E ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFER RED TO IN SUB-SECTION (1). 6. A BARE PERUSAL OF THIS SECTION WOULD INDICATE TH AT SUB- SECTION (1) AUTHORISE THE AO TO LEVY PENALTY AT THE RATE OF 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREV IOUS IT(SS)A NO.65 /AHD/2016 4 YEAR. SUB-SECTION (2) PROVIDES CONDITIONS ON WHOSE FULFILLMENT THE ASSESSEE COULD BE ABSOLVED FROM THE LEVY OF PENALTY. A PERUSAL OF SUB-SECTION (2) WOULD INDICA TE THAT IT POSTULATES THREE CONDITIONS FOR AN ASSESSEE ON WHOS E FULFILLMENT HE WILL BE ABSOLVED FROM LEVY OF PENALT Y. IN THE PRESENT CASE, IN THE ASSESSMENT ORDER THE AO HIMSEL F DID NOT DISPUTE THAT DURING THE COURSE OF SEARCH, IT WAS AD MITTED BY SHRI ALPESHBHAI KOTADIYA THAT THIS INCOME WAS EARNE D BY ACCEPTING ON-MONEY IN ITS BUILDING PROJECT GREEN C ITY. THIS MANNER HAS ALSO BEEN DISCLOSED. IT HAS ALSO BEEN P OINTED OUT THAT THE UNDISCLOSED INCOME WAS RECEIVED BY THE ASSESSEE AS ON-MONEY. THUS, TAKING INTO CONSIDERATI ON FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD.C IT(A) HAS RIGHTLY DELETED THE PENALTY, AND ACCORDINGLY, WE DI SMISS THE APPEAL OF THE REVENUE. 6. IN THE LIGHT OF THE ABOVE, LET US EXAMINE FACTS OF THE PRESENT CASE. THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTE NTION TOWARDS STATEMENT OF SHRI SUNIL P. SEWANI DATED 21.12.2011 RECORDED UNDER SECTION 132(4) OF THE ACT. SHRI SUNIL SEWANI WAS CONFRONTED WITH ANNEXURE A/1 CONTAINING 53 PAGES. IN REPLY TO QUESTION NO.4, HE ADMITTED UNDISCLOSED INCOME OF RS.13 CRORES ON H IS BEHALF AND OTHER FAMILY MEMBERS AND DIFFERENT COMPANIES. THER E IS NO DISPUTE WITH REGARD TO THE DISCLOSURE MADE AT RS.13 CRORES. HIS STATEMENT WAS AGAIN RECORDED ON 20.4.2012 UNDER SEC TION 131 OF THE ACT. IN HIS STATEMENT RECORDED UNDER SECTION 1 32(4) WHOSE COPY OF RELEVANT QUESTION IS AVAILABLE ON PAGE NO.1 TO 3 OF THE PAPER BOOK. HE STATED THAT DETAILED BIFURCATION WI LL BE GIVEN WITHIN SEVEN DAYS. HOWEVER, BIFURCATION HAS BEEN G IVEN IN HIS STATEMENT RECORDED UNDER SECTION 131 ON 20.4.2012. RELEVANT PART OF THIS STATEMENT READS AS UNDER: A.I MY NAME IS SUNIL PRAHALADBHAI SEWANI, AGE 34 YRS, RESIDING AT 45, ASHWAMEGH PART-ILL, SATELLITE, AHME DABAD. IT(SS)A NO.65 /AHD/2016 5 Q.2 YOU ARE ASKED TO GIVE PERSON WISE AND Y EAR WISE BIFURCATION IN RESPECT OF CASH PAYMENTS TOTALING TO RS.10.13 CRORE PAID BY YOU AS REVEALED FROM PAGE NO. 31 OF T HE SEIZED ANNEXURE A-L WHICH HAS BEEN ADMITTED BY YOU IN YOUR STATEMENT U/S. 132 (4) OF THE ACT DATED 21.12.2011. IN REGARD YOU ARE ALSO ASKED TO EXPLAIN THE SOURCES OF THE CASH AND ALSO COMPLETE NAMES AN ADDRESSES AND PAN OF THE PERSONS, PURPOSE FOR WHICH THE CASH TOTALING TO RS. . 10.13 CRORE WAS GIVEN TO THEM BY YOU AND ALSO DETAILS/LOC ATION OF THE LAND FOR WHICH THE ADVANCE WAS GIVEN. ALSO GIVE BIFURCATION OF THE DISCLOSURE OF RS. 13 CRORE MADE BY YOU IN THE STATEMENT U/S. 131 (4) OF THE ACT ON 21.12.2011 AND ALSO CONFIRMED IN STATEMENT U/S. 131 OF THE ACT DAT ED 18.01.2012. SIR OUT OF THE TOTAL CASH PAID OF RS. 10.13 CRORE, CASH OF RS. 7.00 CRORE WAS PAID BY SEWANI CONSTRUCTION AND RS. 3 .13 CRORE WAS PAID BY PRAHALADBHAI KISHANCHAND & CO. AS REGARDS THE BIFURCATION OF THE TOTAL DISCLOSURE OF RS. 13 CRORE, THE SAME IS AS FOLLOWS: NAME OF THE PERSON FINANCIAL YEAR AMOUNT SUNIL P. SEWANI PROP. OF SEWANI CONSTRUCTION 2011 - 12 70000000 SHRI PRAHALADBHAI K. SEWANI, PROP. PRAHALADBHAI KISHANCHAND & CO. 2011 - 12 31300000 SMT. BHARTIBEN SEWANI 2010 - 11 9200000 SMT. KIRANBEN S. SEWANI 2010 - 11 9200000 OUT OF JEWELLERY FOUND FROM RESIDENCE 2011 - 12 4800000 OUT OF CASH FOUND FROM RESIDENCE 2011 - 12 426000 MISC. DISCLOSURE 2011 - 12 5074000 TOTAL 13,00,00,000 IT(SS)A NO.65 /AHD/2016 6 THE SOURCE OF THE CASH PAID FOR INVESTMENT IN LAND IS INCOME EARNED FROM VARIOUS BUSINESS ACTIVITIES DURI NG THE F.Y. 2011-12. THE PURPOSE FOR MAKING THE PAYMENTS W AS ADVANCE PAID FOR RESERVING LAND. THE ADDRESS OF THE PERSONS TO WHOM CASH WAS PAID IS RIOT KNOWN TO ME AS THE CA SH WAS PAID TO REPRESENTATIVES OF VARIOUS BROKERS. THE PAY MENTS WERE MADE FOR SCOUTING VARIOUS LANDS IN AND ROUND AHMEDABAD AND GUJARAT AND THOSE WERE NOT MADE FOR A NY SPECIFIC LAND AS IT WAS ONLY ADVANCE PAYMENTS MADE TO SCOUTING AND RESERVE THE LAND. BUT FINALLY NONE OF THE LANDS HAS ACTUALLY BEEN FINALIZED SOME OF THE MONEY HAS A LSO BEEN RECEIVED BACK. COPY OF THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT OF THE ASSESSEE IS ALSO AVAILABLE ON PAGE NO.11 OF THE PAPER BOOK. THE ASSESSEE ENDORSED STATEMENT OF SHRI SUNIL P. SE WANI. NOW LET US TAKE NOTE OF THE BREAK-UP OF UNDISCLOSED INCOME NOTICED BY THE AO IN THE ASSESSMENT ORDER. THAT PART READ AS UNDE R: THE PERSON WISE BREAK UP OF CASH PAID AS ADVANCE FO R PURCHASE OF LAND IS SUMMARIZED AS FOLLOWS: SR.NO. NAME OF THE ENTITY/ PERSON F.Y. AMOUNT 1 SEWANI CONSTRUC TION PROP. SHRI SUNIL P. SEWANI 2011 - 12 RS.7.00 CRORES 2 PRAHALADBHAI KISHANCHAND & CO. PROP. SHRI PRAHALADBHAI K. SEWANI 2011 - 12 RS.3.13 CRORES TOTAL RS.10.13 CRORES 4.4 IN ADDITION TO THE ABOVE DISCLOSURE OF RS.3.13 CRORES, THE ASSESSEE HAS ALSO MADE A DISCLOSURE OF RS.54,50 ,000/- ON ACCOUNT OF JEWELLERY AND RS.12,50,000/- TO COVER UP THE OTHER DISCREPANCIES, THEREBY MAKING A TOTAL DISCLOS URE OF RS.43.80 CRORES. THUS, THE ASSESSEE HAS MADE TOTAL IT(SS)A NO.65 /AHD/2016 7 DISCLOSURE OF RS.3,80,00,000/- AND THE SAME HAS BEE N OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME FOR A.Y.202- 13 AND ALSO PAID THE TAXES ON THE DISCLOSURE. 7. A CONJOINT READING OF ALL THE MATERIAL WOULD IND ICATE THAT TO THE EXTENT OF RS.3.13 CRORES INCOME WAS DECLARED DU RING THE COURSE OF SEARCH BY SHRI SUNIL P. SEWANI ON BEHALF OF THE ASSESSEE. THIS HAS BEEN RETURNED BY THE ASSESSEE. HOWEVER, WITH REGARD TO THE REMAINING PART I.E. RS.54.50 LAK HS ON ACCOUNT OF JEWELLERY AND RS.12.50 LAKHS ON ACCOUNT OF OTHER DI SCPRENACY ADMITTED IN THE RETURN, THERE IS NO CORRESPONDING D ECLARATION AT THE TIME OF SEARCH. THUS, QUA THIS AMOUNT, IMMUNITY AVAILABLE UNDER SUB-CLAUSE (2) OF SECTION 271AAA IS NOT AVAIL ABLE. THE LD.CIT(A) HAS ERRED IN DELETING PENALTY QUA THIS UNDISCLOSED INCOME. THEREFORE, WE PARTLY ALLOW THE APPEAL OF T HE REVENUE AND RESTORE PENALTY QUA ADDITION OF RS.54.50 LAKHS AND RS.12.50 LAKHS. IN OTHER WORDS, THERE WILL NOT BE ANY PENALTY TO TH E EXTENT OF UNDISCLOSED INCOME ADMITTED AT RS.3.13 CRORES AND P ENALTY AT THE RATE OF 10% FOR THE BALANCE UNDISCLOSED INCOME OF R S.67.00 LAKHS OUT OF RS.3.80 CRORES WOULD BE CALCULATED AND LEVIE D I.E. (RS.3.80 CRORES MINUS RS.3.13 CRORES). WE PARTLY ALLOW THE G ROUND OF APPEAL OF THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE COURT ON 7 TH MARCH, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 07/03/2019