The ITO, Ward-2(2), Surat V. M/s. Radha Krishna & Co., Surat

ITSSA 90/AHD/2013

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9511 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: S K KABRA
• Keywords: Income from undisclosed sources; Search and seizure; Opportunity of being heard
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , , , , BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND .., ! '# '# '# '# SHRI T.R. MEENA, ACCOUNTANT MEMBER $%.. , &' ( & ! ) & ! ) & ! ) & ! ) IT(SS)A NOS. 90 & 91/AHD/2013 ASSESSMENT YEARS : 2005-06 & 06-07 INCOME-TAX OFFICER, WARD-2(2), ROOM NO.117, 1 ST FLOOR, AYAKAR BHAVAN, MAJURAGATE, SURAT-395001 V/S . M/S. RADHA KRISHNA & CO. 4019, JASH TEXTILE MARKET, RING ROAD, SURAT.-395002 PAN NO. A A BTR 0308R (APPELLANT) .. (RESPONDENT) ( * + & BY REVENUE SHRI P. L. KUREEL, SR. D.R. & * + & /BY ASSESSEE SHRI S. K. KABRA, A.R. , * -%' /DATE OF HEARING 12.09.2013 ./0 * -%' /DATE OF PRONOUNCEMENT 22.11.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS TWO APPEALS FILED BY THE REVENUE AGAINST THE O RDER OF THE CIT(A)-II, AHMEDABAD, ORDER DATED 23 RD OCTOBER, 2012 FOR A.Y.2005-06 & 2006-07. THE SOLE GROUND OF APPEAL RAISED BY THE REVENUE IS AGAI NST DELETING THE PENALTY U/S. 271(1)(C) BY THE LD. CIT(A). IT(SS)A NOS. 90 & 91/AHD/2013, A.YS. 05-06 & 06-07 PAGE 2 2. THE A.O. IMPOSED PENALTY U/S.271(1)(C) VIDE ITS ORDER DATED 30.06.2008 IN BOTH YEARS AT RS.3,53,430/- FOR A.Y. 05-06 AND R S.67,48,830/- FOR A.Y. 06- 07. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 24.08.2005. NOTICE U/S. 153A(A) WAS ISSUED TO THE ASSESSEE ON 08.10.20 07 RESPECTIVELY. THE ASSESSEE FILED ITS RETURN OF INCOME IN BOTH THE YEA RS ON 07.12.2007 DECLARING TOTAL INCOME AT RS.10 LACS IN A.Y. 05-06 AND RS. 2 CRORE IN A.Y. 06-07. DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDING THE STA TEMENT OF SHRI ALPESHBHAI GANDHI ONE OF THE MEMBER OF AOP I.E. RADHAKRISHNA & CO. WAS RECORDED AND HE ADMITTED UNACCOUNTED INCOME OF RS.10 LACS FOR A. Y. 05-06 AND RS.2 CRORE FOR A.Y. 06-07. THE A.O. PASSED ORDER U/S. 143(3) R.W.S. 153A IN BOTH THE YEARS AT RETURNED INCOME. THE A.O. INITIATED PENAL TY PROCEEDING U/S.271(1)(C) IN BOTH THE YEARS FOR DISCLOSURE MADE DURING THE CO URSE OF SEARCH. THE A.O. BEFORE IMPOSING PENALTY U/S. 271(1)(C) ISSUED SHOW CAUSE NOTICE AND GAVE THE REASONABLE OPPORTUNITY OF BEING HEARD WHICH WAS AVA ILED BY THE ASSESSEE VIDE REPLY DATED 13.06.2008. AFTER CONSIDERING THE ASSESSEES REPLY, THE A.O. OBSERVED AS UNDER: 1. PENALTY PROVISIONS U/S.271(1)(C) IN THE CASES W HERE SEARCH AND SEIZURE HAS TAKEN PLACE IS GOVERNED BY EXPLANAT ION 5 OF SEC. 271(1)(C). ON THE PLAIN READING ITSELF OF EXPLANATI ON 5 IT CAN BE SEEN THAT IT GRANTS IMMUNITY FROM IMPOSITION OF PEN ALTY ONLY WITH REGARDS TO CURRENT YEAR. FOR THE DISCLOSURE MADE FO R OTHER THAN THE CURRENT YEAR NO IMMUNITY IS GRANTED. EXPLANATION 5 OF SEC. 271(1)(C) IS REPRODUCED AS UNDER : 'WHERE IN COURSE OF A (SEARCH INITIATED UNDER SEC. 132 BEFORE THE 1 ST DATE OF JUNE, 2007) THE ASSESSEE IS FOUND TO BE TH E IT(SS)A NOS. 90 & 91/AHD/2013, A.YS. 05-06 & 06-07 PAGE 3 OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLES OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME:- (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SU CH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHE RE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAID DATE, SUC H INCOME HAS NOT BEEN DECLARED THEREIN :OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE D ATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF PENALTY UNDER CLAUSE (C) OF SUB SECTION (1) OF THIS SECTION , BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME IT IS CRYSTAL CLEAR THAT ASSESSEE CAN ASK IMMUNITY FROM PENALTY U/S. 271(1)(C) ON DISCLOSURE MADE FOR THE C URRENT YEAR ONLY. 2. SECONDLY, IT IS PERTINENT TO MENTION HERE THAT T HE ASSESSEE HAS DISCLOSED HIS UNACCOUNTED INCOME DUE TO SEARCH AND SEIZURE ACTION CONDUCTED. IF THE SEARCH WAS NOT CONDUCTED THERE WAS NOT POSSIBILITY OF ASSESSEE COMING FORWARD AND DISCLOSI NG HIS UNACCOUNTED INCOME OR ASSESSEE WAS HAVING ANY INTEN TION OF DISCLOSING HIS UNACCOUNTED INCOME. IT(SS)A NOS. 90 & 91/AHD/2013, A.YS. 05-06 & 06-07 PAGE 4 3. BEING AGGRIEVED BY HE ORDER OF THE A.O., THE ASS ESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD DELETED THE PENALT Y BY CONSIDERING THE ITAT AHMEDABAD DECISION IN CASE OF KAUSHAL M. KHANNA & SANGEETABEN K. KHANNA VS. DCIT IN ITA NOS. 2883, 2885 & 2848/AHD/2 009. HE FURTHER OBSERVED THAT DURING THE COURSE OF SEARCH, APPELLAN T HAD ADMITTED UNDISCLOSED INCOME OF RS.10 LACS IN CURRENT YEAR BUT NO CORRESP ONDING ASSETS HAD DEFINED IN EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WA S FOUND IN CURRENT ASSESSMENT YEAR BEING A.Y. 05-06. THE CASH AND UNE XPLAINED INVESTMENTS IN BUNGALOW WERE FOUND IN A.Y. 06-07 AND NOT IN CURREN T ASSESSMENT YEAR. EVEN THE ASSESSING OFFICER HAD NOT OBSERVED THAT DISCLOS URE OF RS.10 LACS MADE IN CURRENT ASSESSMENT YEAR IS REPRESENTED BY ANY ASSET S AS DEFINED IN EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. HE NCE, ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING PENALTY U/S. 271(1)(C) OF THE ACT. FURTHER, THE APPELLANT FILED THE RETURN BY DECLARING TOTAL INCOME OF RS.10 LACS WHICH WAS ACCEPTED BY ASSESSING OFFICER AND NO ADDITION OR DISALLOWANCE W AS MADE BY THE A.O. IN THE ASSESSMENT ORDER. HENCE, EXPLANATION 1 TO SECT ION 271(1)(C) IS ALSO NOT APPLICABLE. 3(I). IN A.Y. 06-07, THE LD. CIT(A) HELD THAT THE U NDISPUTED FACTS OF THE PRESENT CASE ARE THAT SEARCH ACTION U/S.132 WAS CAR RIED OUT IN CASE OF APPELLANT ON 24 TH AUGUST, 2005 AND IN STATEMENT RECORDED U/S. 132(4) OF THE ACT, THE DISCLOSURE OF RS.2 CRORE WAS MADE IN CURRE NT YEAR AND RS.10 LACS MADE IN A.Y. 05-06. AS ON DATE OF SEARCH F.Y. 05-0 6 RELEVANT TO A.Y. 06-07 HAS NOT COMPLETED AND DUE DATE OF FILING OF RETURN OF INCOME FOR CURRENT IT(SS)A NOS. 90 & 91/AHD/2013, A.YS. 05-06 & 06-07 PAGE 5 ASSESSMENT YEAR HAS NOT EXPIRED AND APPELLANT HAS F ILED ITS RETURN OF INCOME FOR CURRENT ASSESSMENT YEAR AT RS.2 CRORE, WHICH WA S LATER ACCEPTED AS SUCH. IN ASSESSMENT PROCEEDING WITHOUT MAKING ANY ALTERAT ION, THE ASSESSING OFFICER HAD LEVIED PENALTY ON DISCLOSURE OF RS.2 CR ORE MADE DURING THE COURSE OF SEARCH AND DENIED IMMUNITY UNDER EXPLANATION 5 T O SECTION 271(1)(C) OF THE ACT. THE LD. CIT(A) ON PAGE NOS. 10, 11 & 12 OF HI S ORDER REPRODUCED THE STATEMENT RECORDED U/S. 132(4) OF SHRI ALPESHBHAI A ND SHRI MANOJBHAI, MEMBERS OF AOP. BOTH THE MEMBERS OF THE AOP HAD AD MITTED THAT THEY WERE IN THE BUSINESS OF LAND DEALING AND FROM SUCH BUSIN ESS THEY HAD EARNED RS.10 LACS IN A.Y. 05-06 AND RS. 2 CRORE IN A.Y. 06-07 AN D SUCH INCOME OF RS.2,10,00,000/- HAD BEEN DISCLOSED AS UNDISCLOSED INCOME AOP IN RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE ALSO PAI D THE TAX AS PER ADMISSION BEFORE FILING THE RETURN AND SOURCE OF IN COME HAD BEEN EXPLAINED AS FROM BUSINESS OF PURCHASE AND SALE OF THE LAND. TH E ASSETS FOUND DURING HE COURSE OF SEARCH IN FORM OF CASH, INVESTMENT TOWARD S THE BUNGALOW, LOAN AND ADVANCES AND MANNER OF EARNING INCOME WAS CLAIMED T O BE OUT OF DEALING IN LAND WHICH HAD NOT BEEN DISPUTED BY THE AUTHORIZED OFFICER DURING THE COURSE OF SEARCH PROCEEDING AND BY THE ASSESSING OFFICER I N ASSESSMENT PROCEEDING. THEREFORE, THE ASSESSEE IS ENTITLED IMMUNITY UNDER EXPLANATION 5 OF SECTION 271(1)(C). HE ALSO RELIED UPON FOLLOWING CASES: K. P. MADHUSUDANAN VS. CIT 251 ITR 99 (SC), CIT VS. RAJESHWAR SINGH [1986] 162 ITR 173, ROSHAN LAL MADAN VS. ASSTT. CIT [1998] 62 TTJ (CHD) (TM) 1 : [ 2000] 245 ITR 36 (AT) (CHD), ACIT VS. RASILA S MEHTA 82 ITD 27 (MUM.), KA USHAL M. KHANNA & IT(SS)A NOS. 90 & 91/AHD/2013, A.YS. 05-06 & 06-07 PAGE 6 SANGEETABEN K. KHANNA VS. DCIT (SUPRA), CHHAGANLAL SUTARIAY VS. ITO 337 ITR 350, BHAGWANDAS NARAYANDAS 98 ITR 194, PREM ARO RA 24 TAXMAN.COM 260, CIT VS. RADHA KISHAN GOEL [2005] 278 ITR 454, BRIJ MOHAN VS. CIT [1979] 120 ITR 1, CIT VS. ONKAR SARAN & SONS [1992] 195 ITR 14, ASHOK KUMAR GUPTA VS. CIT [2006] 287 ITR 376 (PUNJ. & HAR .), MAHENDRA C SHAH 299 ITR 305, , ITAT AHMADABAD DECISIONS IN CASE OF TARACHAND R. KHURANA IN ITA NO. 1178/AHD/2010 & ITAT MUMBAI BENCH DECISI ON IN CASE OF ACIT VS. SHRI PANNALAL K. BANTHIA IN ITA NO.6145/MUM/2010. FINALLY THE LD. CIT(A) HELD THAT ALL THE CONDITIONS MENTIONED IN EXPLANATI ON 5 HAVE BEEN FULFILLED BY THE APPELLANT. THE ASSESSEE IS ENTITLED TO GET IMM UNITY UNDER EXPLANATION 5 OF SECTION 271(1)(C). ACCORDINGLY, IN BOTH THE YEARS, HE DELETED THE PENALTY. 4. NOW, THE REVENUE IS BEFORE US. LD. SR. D.R. REL IED UPON THE ORDER OF THE A.O. AT THE OUTSET, LD. COUNSEL FOR THE APPELL ANT SUPPORTED THE ORDER OF THE CIT(A). HE FILED THE PAPER BOOK WHICH INCLUDES COP Y OF PANCHNAMA, COPY OF STATEMENT U/S.132(4) OF SHRI ALPESHBHAI GANDHI AND SHRI MANOJBHAI GANDHI DATED 24.08.2005. HE FURTHER RELIED IN CASE OF CIT VS. RADHA KISHAN GOEL (SUPRA) WHEREIN IT WAS HELD THAT ASSESSEE IS COVERED UNDER 2 ND EXCEPTION OF EXPLANATION 5 AND NO PENALTY COULD BE LEVIED. ON T HE BASIS OF ITAT AHMADABAD BENCH DECISION IN CASE OF KAUSHAL M. KHANNA VS. DCIT (SUPRA), HE REQUESTED TO CONFIRM THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL ON RECORD. THE SEARCH WAS CONDUCTED ON 24.08.2005. THE RETURN FOR THE A.Y. 05-06 WAS DUE BUT WAS NOT FILED. THE RETURN FOR A.Y. 06-07 W AS NOT DUE WHICH WAS FILED IT(SS)A NOS. 90 & 91/AHD/2013, A.YS. 05-06 & 06-07 PAGE 7 AFTER DATE OF SEARCH ON 07.12.2007. THE LD. A.O. I SSUED NOTICE U/S.153A ON 08.10.2007 FOR A.Y. 05-06 AND 07.12.2007 FOR A.Y. 0 6-07. THE MEMBER OF AOP SHRI ALPESHBHAI & SHRI MANOJBHAI HAD CATEGORICA LLY ADMITTED UNDISCLOSED INCOME U/S.132(4) ON 24.08.2005 IN ANSW ER TO QUESTION NOS. 16 & 17 THAT UNACCOUNTED INCOME AS DISCLOSURE OF AOP AT RS. 10 LACS FOR A.Y. 05- 06 AND RS.2 CRORE FOR A.Y. 06-07. THE ASSESSEE ALS O EXPLAINED THE MANNER OF EARNING AND PAID THE TAX AS PER ADMISSION AS PER EX PLANATION 5 OF SECTION 271(1)(C). THE ASSESSEE IS TO BE THE OWNER OF THE ANY ASSETS AND ACQUIRED BY HIM BY UTILIZING HIS INCOME FOR ANY PREVIOUS YEAR W HICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE RETURN OF INCOME FOR SUCH Y EAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATED OR, WHERE SUCH INCOME HAS NOT BEEN DECLARED THEREIN OR FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER T HE DATE OF SEARCH TO BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. UNLESS THESE TRANSACTIONS FALLING UND ER CLAUSE (A) BEFORE THE DATE OF SEARCH OR IN CLAUSE (B) ON OR AFTER THE DATE OF SEARCH, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE O F INCOME OR DURING THE COURSE OF SEARCH HE MADE STATEMENT U/S.132(4) THAT THE ASSETS FOUND DURING THE COURSE OF SEARCH IS UNACCOUNTED AND ACQUIRED FR OM UNDISCLOSED INCOME AND FURNISHED THE RETURN OF INCOME BEFORE THE EXPIR Y OF TIME SPECIFIED IN SUB- SECTION 1 OF SECTION 139, AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX , TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. THE ASSESSEE GE TS IMMUNITY FROM THE PENALTY IMPOSABLE U/S.271(1)(C). THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS IT(SS)A NOS. 90 & 91/AHD/2013, A.YS. 05-06 & 06-07 PAGE 8 AS PER EXPLANATION 5 OF SECTION 271(1)(C). THEREFO RE, CIT(A) WAS RIGHT IN DELETING THE PENALTY. WE, ACCORDINGLY UPHOLD THE O RDER OF THE CIT(A). 6. IN THE RESULT, REVENUES APPEALS IN BOTH YEARS A RE DISMISSED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 22.11.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA &1 &1 &1 &1 * ** * 2-3 2-3 2-3 2-3 4&30- 4&30- 4&30- 4&30- / COPY OF ORDER FORWARDED TO:- 1. (/ REVENUE 2. & / ASSESSEE 3. ## - 9 / CONCERNED CIT 4. 9- / CIT (A) 5. 3= 2- , , / DR, ITAT, AHMEDABAD 6. ? @A / GUARD FILE. BY ORDER/ &1 &, / # , )