The ITO, Ward-4(3), Ahmedabad V. Shri Rohit P.Modi, Ahmedabad

ITSSA 82/AHD/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3612 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV SR R
• Assessee Lawyers: K C THAKER
• Keywords: Income from undisclosed sources
• Section: 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ IT(SS)A NO.81/AHD/2016 / ASSTT. YEAR: 2005-2006 ITO, WARD-2(1)(4) AHMEDABAD. VS. SHRI KAMLESH P. MODI B-412, HIMALAYA ARCADE OPP: VASTRAPUR LAKE VASTRAPUR AHMEDABAD. PAN : ABWPM 1385 P ./ IT(SS)A NO.82/AHD/2016 / ASSTT. YEAR: 2005-2006 ITO, WARD-2(1)(4) AHMEDABAD. VS. SHRI ROHIT P. MODI B-412, HIMALAYA ARCADE OPP: VASTRAPUR LAKE VASTRAPUR AHMEDABAD. PAN : ABWPM 1386 Q / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI KC.THAKER, AR REVENUE BY : SHRI S.K. DEV, SR.R ! / DATE OF HEARING : 26/02/2018 '#$ ! / DATE OF PRONOUNCEMENT: 01 /03/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE REVENUE AGAINST SEPARATE ORDERS OF THE LD.CIT(A)-4 DATED IT(SS)A NO.81 AND 82 /AHD/2016 2 18.12.2015 AND 21.12.2015 PASSED FOR THE ASSTT.YEAR 2005-06 ON RESPECTIVE APPEALS OF THE ASSESSEES. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN DELETING PENALTY OF RS.27.00 LAKHS IMPOSED BY THE AO IN THE HANDS OF EACH ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVE, WE HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD THAT SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT IN HIMALAYA GROUP OF CASES ON 22.4.2008. THE ASSESSEES WERE CO VERED UNDER SEARCH ACTION. AN ASSESSMENT ORDER UNDER SECTION 1 53A R.W.S. SECTION 14(3) WAS PASSED IN THE CASES OF EACH RESPO NDENT ON 14.5.2010. THE LD.AO HAS MADE ADDITIONS IN VARIOUS ASSESSMENT YEARS. FOR THE PURPOSE OF ADJUDICATING THIS ISSUE, AS TO WHETHER ASSESSEES DESERVE TO BE VISITED WITH PENALTY OR NOT , DISPUTED ISSUE IS BEING DISCUSSED IN PARA 10.4 (A) OF THE ASSESSME NT ORDER. ACCORDING TO THE AO DURING THE COURSE OF SEARCH INC RIMINATING DOCUMENTS WERE FOUND WHICH WERE INVENTORISED AS ANN EXURE A/14. A PERUSAL OF PAGE NO.48 TO 55 OF THESE DOCUMENTS WO ULD INDICATE THAT THEY ARE RELATED TO HAVELI TRANSACTIONS. ACCO RDING TO THE AO A SUM OF RS.7.5 LAKHS WAS PAID BY EACH ASSESSEE ON 24 .9.2004. IT WAS RETURNED ON 4.3.2005. PAYMENT WAS MADE TO M/S. NAYANKUNJ CO-OP. HSG. SOCIETY. SOCIETY IS WITHIN LIMIT OF JO DHPUR/VEJALPUR AND DUE TO PROXIMITY OF PLACE KNOWN AS HAVELI IN THE AREA, TRANSACTION WAS RECORDED IN THE NAME OF HAVELI. THE LD.AO HARBOURED A BELIEF THAT THE ASSESSEES MUST HAVE MAD E PAYMENT IN CASH FOR THE TRANSACTION. THE SOCIETY MUST HAVE RE TURNED CHEQUE AMOUNT THROUGH CHEQUE BUT MUST HAVE PAID IN CASH. ACCORDING TO IT(SS)A NO.81 AND 82 /AHD/2016 3 HIM, THERE WAS UPSURGE IN THE VALUE OF REAL-ESTATE IN OR AROUND AHMEDABAD FROM 2004 TO 2007. THEREFORE, IT WAS VER Y LIKELY THAT THE ASSESSEE RECEIVED ONLY CHEQUE AMOUNTS OF RS.7.5 LACS AND NOT CASH PAYMENTS, WHICH WAS ENTERED AS SALE VALUE OF T HE LAND AS PER SEIZED PAPERS. THE LD.AO IN THIS WAY MADE ADDITION OF RS.3,42,00,000/- ON ACCOUNT OF UNACCOUNTED INVESTME NT AND RS.22.00 LAKHS ON ACCOUNT OF UNACCOUNTED INCOME. S INCE BOTH THESE ASSESSEES HAVE EQUAL SHARES, THEREFORE, 50% W AS ADDED IN THE HANDS OF EACH ASSESSEE. DURING THE APPELLATE P ROCEEDINGS THE LD.CIT(A) CONFIRMED ADDITION OF RS.81,06,500/- IN T HE HANDS OF EACH ASSESSEE. THE LD.AO INITIATED PENALTY PROCEED INGS UNDER SECTION 271(1)(C) OF THE ACT AND OBSERVED THAT THE ASSESSEE HAS DECLARED TOTAL INCOME FOR THE ASSTT.YEAR 2005-06 AT RS.55,89,030/- (IN THE CASE OF KAMLESH P. MODI); RS .55,52,790/- (IN THE CASE OF SHRI ROHIT P. MODI) AS PER ASSESSME NT ORDER DATED 14.5.2010 WAS DETERMINED AT RS.2,03,99,775/- (IN TH E CASE OF SHRI KAMLESH P. MODI) AND RS.2,03,63,515/- (IN THE CASE OF SHRI ROHIT P. MODI)) AFTER MAKING AN ADDITION OF RS.1,48 ,10,725/- IN THE HANDS OF EACH ASSESSEE IN RESPECT OF SUPPRESSIO N OF MALL AND UNDISCLOSED INVESTMENT IN LAND. THE LD.CIT(A) HAS GRANTED RELIEF TO THE EXTENT OF RS.67,04,225/- AND CONFIRMED ADDIT ION AT RS.81,06,500/- IN THE HANDS OF EACH ASSESSEE. AFTE R HEARING THE ASSESSEE, HE IMPOSED PENALTY OF RS.27 LAKHS IN HAND S OF EACH ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT THESE ADDITIONS WERE CHALLENGED BY THE ASSESSE E IN IT(SS)A.NO.260 AND 264/AHD/2012. REVENUE HAS ALSO CHALLENGED DELETION OF ADDITION BEFORE THE TRIBUNAL. THE TRIB UNAL HAS ALLOWED APPEALS OF THE ASSESSEES AND REJECTED THE APPEALS O F THE REVENUE. IT(SS)A NO.81 AND 82 /AHD/2016 4 THE TRIBUNAL HAS OBSERVED THAT NO TRANSACTION FOR S ALE OR PURCHASE OF VEJALPUR LAND WAS CARRIED OUT, WHICH WAS SIMPLY ASSUMED BY THE AO. ACCORDING TO THE TRIBUNAL THERE WAS NO DOC UMENT FOUND DURING THE COURSE OF SEARCH EXHIBITING EXECUTION OF SUCH TRANSACTION. THE LD.DR WAS UNABLE TO CONTROVERT TH IS CONTENTION OF THE ASSESSEE. COPY OF THE TRIBUNALS ORDER DATED 2 8.6.2017 HAS BEEN PLACED ON RECORD. 5. WE FIND THAT SUB-CLAUSE (III) OF SECTION 271(1)( C) PROVIDES MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEM PLATES THAT THE ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ADDITION TO TAXES, IF ANY, PAYABLE HIM, WHICH SHALL NOT BE LESS THAN, BUT WHIC H SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED B Y REASON OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, THE QUANTIFICATION OF THE PENALTY IS DEPENDED UPON THE ADDITION MADE TO THE INCOME OF THE ASSESSE E. SINCE BASIS FOR VISITING THE ASSESSEE WITH PENALTY HAS BEEN EXTINGU ISHED BY DELETING ADDITIONS BY THE TRIBUNAL IN ITS ORDER DATED 28.6.2 017 (SUPRA) IN THE QUANTUM APPEAL OF THE ASSESSEE THE IMPUGNED PENALTY IS NOT SUSTAINABLE, ACCORDINGLY WE DO NOT FIND ANY ERROR I N THE ORDER OF THE LD.CIT(A), WHICH IS UPHELD AND BOTH APPEALS OF THE REVENUE ARE DISMISSED. 6. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST MARCH, 2018. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/03/2018