Shri Rahulbhai Vitthalbhai Vadalia, Jetpur V. The Asstt. Commr. Income Tax, Cen. Circle-1, RAJKOT-GUJARAT

ITSSA 8/RJT/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2757 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 18-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Document seized; Opportunity of being heard; Retrospective amendment; Reasonable cause; Documents seized
• Section: 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) IT(SS)A. NO: 08/RJT/2014 (ASSESSMENT YEAR: 2010-11) SHRIRAHULBHAI VITTHALBHAI VADALIA SONAL, SATYAM PARK, STREET NO. 4,AMARNAGAR ROAD, JETPUR-360370 PAN NO. ADQPV4394R V/S ACIT CENTRAL CIRCLE-1, RAJKOT (APPELLANT) (RESPONDENT) IT(SS)A. NO: 09/RJT/2014 (ASSESSMENT YEAR: 2010-11) SHRI JATINBHAI VITTHALBHAI VADALIA SONAL, SATYAM PARK, STREET NO. 4,AMARNAGAR ROAD, JETPUR-360370 PAN NO. ACLPV6650K V/S ACIT CENTRAL CIRCLE-1, RAJKOT (APPELLANT) (RESPONDENT) IT(SS)A. NOS: 10 & 11/RJT/2014 (ASSESSMENT YEARS: 2005-06 & 2010-11) SHRI BHUPATBHAI JETHABHAI VADALIA SONAL, SATYAM PARK, STREET NO. 4,AMARNAGAR ROAD, V/S ACIT CENTRAL CIRCLE-1, RAJKOT IT(SS)A NOS. 08 TO 12/RJT/2014 . A.YS. 2005-0 6 & 2010-2011 2 JETPUR-360370 PAN NO. AAVPV5773E (APPELLANT) (RESPONDENT) IT(SS)A. NO: 12/RJT/2014 (ASSESSMENT YEAR: 2005-06) SHRI VITTHALBHAI JETHABHAI VADALIA SONAL, SATYAM PARK, STREET NO. 4,AMARNAGAR ROAD, JETPUR-360370 PAN NO. AAVPV5774D V/S ACIT CENTRAL CIRCLE-1, RAJKOT (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.J. RANPURA, C.A. RESPONDENT BY : SHRI YOGESH PANDE, D.R. ( )/ ORDER DATE OF HEARING : 23 -11-201 6 DATE OF PRONOUNCEMENT : 28 -11-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THE ABOVE CAPTIONED APPEALS PREFERRED BY DIFFERENT ASSESSEES AGAINST SEPARATE ORDERS OF THE LD. CIT(A)-IV, AHMEDABAD PER TAINING TO THE RESPECTIVE ASSESSMENT YEARS MENTIONED HEREINABOVE. ALL THESE APPEALS HAVE COMMON ISSUE; THEREFORE, THESE WERE HEARD TOGE THER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 2. THE ONLY GRIEVANCE IN ALL THE IMPUGNED APPEALS RELA TES TO THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT UPHELD BY THE LD. CIT(A). IT(SS)A NOS. 08 TO 12/RJT/2014 . A.YS. 2005-0 6 & 2010-2011 3 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEA RCH AND SEIZURE OPERATION WAS CONDUCTED AT THE PREMISES OF THE IMPUGNED APPEL LANTS ON 25.02.2011. PRIOR TO THE SEARCH, THE IMPUGNED APPELLANTS HAD FI LED THEIR RESPECTIVE RETURN OF INCOME FOR THE RESPECTIVE ASSESSMENT YEAR S U/S. 139(1) OF THE ACT. PURSUANT TO THE SEARCH AND NOTICE U/S. 153A, THE IM PUGNED APPELLANTS FILED THEIR RETURN OF INCOME DECLARING INCOME HIGHER THAN THAT WAS ORIGINALLY RETURNED U/S. 139(1) OF THE ACT. THE RETURNED INCOM E FILED PURSUANT TO NOTICE U/S. 153A WAS ACCEPTED BY THE A.O. HOWEVER, THE A.O. WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAD CONCEALED THE INC OME SO FAR AS THE DIFFERENCE BETWEEN THE RETURNED INCOME U/S. 139(1) AND RETURNED INCOME U/S. 153A OF THE ACT IS CONCERNED. 4. THE A.O. PROCEEDED TO LEVY PENALTY U/S. 271(1)(C) O F THE ACT. 5. THE PENALTY SO LEVIED BY THE A.O. WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY. BEFORE US, THE LD. COUNSEL FOR THE ASSES SEE VEHEMENTLY STATED THAT THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE ACT WAS BAD IN LAW AS THE SAME DID NOT SPECIFY UNDER WHICH LIMB PENALTY U /S. 271(1)(C) OF THE ACT HAD BEEN INITIATED I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL PLACE D RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS73 TAXMANN.COM 248. IT IS SAY OF THE LD. COU NSEL THAT THIS DECISION OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN AFFIRM ED BY THE HONBLE IT(SS)A NOS. 08 TO 12/RJT/2014 . A.YS. 2005-0 6 & 2010-2011 4 SUPREME COURT BY DISMISSING SPECIAL LEAVE PETITION OF THE REVENUE 73 TAXMANN.COM 248. 7. STRONGLY REBUTTING THE CONTENTION OF THE LD. COUNSE L. THE LD. D.R. HEAVILY RELIED UPON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF TEJ BHAN COTTON GINNING & PRESSING FAC TORY 10 TAXMANN.COM 16 WHEREIN IT WAS HELD THAT THE JURISDICTIONAL REQUIREMENT FOR PENALTY WAS EX ISTENCE OF SATISFACTION AND WHEN EXISTENCE OF SATISFACTION WAS CLEAR, THE FORMA T IN WHICH SATISFACTION WAS RECORDED OR REFLECTED COULD NOT AFFECT THE VALIDITY OF LEVY OF PENALTY. 8. THE LD. D.R. FURTHER RELIED UPON THE DECISION OF TH E HONBLE SUPREME COURT IN CASE OF K.P. MADHUSUDAN 251 ITR 99 WHEREIN IT WA S HELD THAT NO EXPRESS INVOCATION OF THE EXPLANATION TO SECTI ON 271 IN THE NOTICE U/S. 271 IS IN OUR VIEW, NECESSARY BEFORE THE PROVISIONS OF THE EXPLANATION THEREIN ARE APPLIED. 9. THE LD. D.R. CONTINUED STATING THAT THE A.R. OF THE ASSESSEE HAS ADMITTED BEFORE THE LD. CIT(A) DURING THE COURSE OF HEARING THAT THE ADDITIONAL INCOME WAS BASED ON THE SEIZED DOCUMENTS ONLY. THE REFORE, THE OBJECTION OF THE ASSESSEE IS IRRELEVANT. 10. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE RIVA L CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. THE UNDISPUTED FACT IT(SS)A NOS. 08 TO 12/RJT/2014 . A.YS. 2005-0 6 & 2010-2011 5 IS THAT THE RETURNED INCOME HAS BEEN ACCEPTED AS SU CH. THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C) OF THE ACT IS AS UNDER:- TO, DATE:- 25.03 .2013 SHRIRAHULBHAI VITHALBHAI VADALIA PAN: ADQPV4394R SONAL SATYAM PARK, STREET NO. 4, AMARNAGAR ROAD, JETPUR. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASST. YEAR 2010-11 (U/S. 153A/143(3))), IT APPEARS TO ME THAT YOU * HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH M E RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTICE GIVEN UNDER SE CTION 22(1)/22(2)/34 OF THE INDIAN INCOME TAX ACT, 1922 OR WHICH YOU WERE REQUI RED TO FURNISH UNDER SECTION 139(1) OR BY A NOTICE GIVEN UNDER SECTION 139(2) /1 48 OF THE INCOME TAX ACT, 1961 NO. ______ DATED ____ OR HAVE WITHOUT REASONABLE CA USE FAILED TO FURNISH IT WITHIN THE TIME ALLOWED AND THE MANNER REQUIRED BY THE SAID SECTION 139(1) OR BY SUCH NOTICE. * HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WI TH A NOTICE UNDER SECTION 22(4) / 23(2) OF THE INDIAN INCOME TAX ACT, 1922 OR UNDER SECTION 142(1) /143(2) OF THE INCOME TAX ACT, 1961. NO.------------------------------ DATED ---------- ---------------- * HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT(SS)A NOS. 08 TO 12/RJT/2014 . A.YS. 2005-0 6 & 2010-2011 6 YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME WITHIN 15 DAYS FROM THE RECEIPT OF THIS NOTICE AND SHOW CAUSE AS TO WHY AN ORDER IMPOS ING A PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271(1)(C) OF THE INCOME T AX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRI TING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271 (1)(C). (ANIL KUMAR SHARMA) ASSISTANT COMMISSIONER OF INC OME TAX CENTRAL CIRCLE-1, RAJKOT 11. A PERUSAL OF THE AFOREMENTIONED NOTICE CLEARLY SHOW S THAT THE A.O. HAS NOT SPECIFIED WHETHER THE NOTICE HAS BEEN ISSUED FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULA RS OF INCOME. 12. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) HAD THE OCCASION TO CONSIDER THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW:- '(1) WHETHER, OMISSION IF ASSESSING OFFICER TO EX PLICITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABL E FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NO TICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AME NDMENT OF SECTION 271 (1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMEN DMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROPERLY RECORDING THE SAT ISFACTION FOR THE SAME? IT(SS)A NOS. 08 TO 12/RJT/2014 . A.YS. 2005-0 6 & 2010-2011 7 (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINST THE REVEN UE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESS EE HAS CONCEALED PARTICULARS OF INCOME?' 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 R EAD WITH SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO B E BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(L)(C) OF THE ACT, THE PEN ALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHI LE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING F ACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.). 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL Q UESTION OF LAW/ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 13. THE REVENUE PREFERRED A SPECIAL LEAVE PETITION AGAI NST THE AFOREMENTIONED JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT AND TH E SAME WAS DISMISSED BY THE HONBLE SUPREME COURT BY HOLDING THAT WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS, ACCOR DINGLY, DISMISSED. 14. CONSIDERING THE AFOREMENTIONED JUDICIAL PROPOSITION , WE FIND THAT THE BALANCE OF CONVENIENCE IS TILTED IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE. 15. THE LD. D.R. HAS RELIED UPON TWO DECISIONS ONE OF H ONBLE PUNJAB AND HARYANA HIGH COURT (SUPRA) AND THE OTHER OF HONBLE SUPREME COURT IT(SS)A NOS. 08 TO 12/RJT/2014 . A.YS. 2005-0 6 & 2010-2011 8 (SUPRA). IN OUR UNDERSTANDING OF THE LAW, BOTH THE DECISIONS ARE MISPLACED INASMUCH AS ONE DECISION REFERS TO THE SATISFACTION AND THE OTHER DECISION REFERS TO THE INVOCATION OF THE EXPLANATION WHEREAS THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IS DIRECTLY ON THE ISS UE UNDER CONSIDERATION. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT QUA THE NOTICE ISSUED U/S. 274 AS EXHIBI TED HEREINABOVE. WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE IMPUGNED PENALTY LEVIED U/S. 271(1)(C) OF THE ACT I N ALL THE IMPUGNED APPEALS. 16. IN THE RESULT, THE APPEALS FILED BY THE RESPECTIVE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 - 11- 2016 . SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,RAJKOT