The ACIT, Cent. Circle 2(3), Ahmedabad V. Shri Shailesh K. Mistry, Ahmedabad

MA 69/AHD/2022

AI Insights

The case involves a Miscellaneous Application filed by the Revenue against the order of the Income Tax Appellate Tribunal, which had previously allowed the appeal of the assessee, Shri Shailesh K. Mistry, concerning the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961. The Revenue contended that the penalty was applicable due to undisclosed income during a search operation. However, the Tribunal had ruled that the penalty under Section 271AAA, specific to search cases, should have been considered instead. The Tribunal's decision was based on the interpretation of the relevant sections of the Income Tax Act and the facts presented, which led to the dismissal of the Revenue's application for rectification of the order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124691 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-01-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 01-09-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 132; 271(1)(c); 139; 143(3); 153A; 274; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER M. A . N o. 69 /A h d /2 0 2 2 ( I n I T( SS ) A N o . 2 6 5 / Ah d/2 0 1 3) ( A s se ss m e nt Y e a r : 20 09- 1 0 ) AC I T C e ntr a l C ir c le - 2 ( 3 ), Ah me da bad V s . Sh r i Sh ai le sh K M i str y Pr op . S . K . A s s oc ia te s 1, J a yr at h Bu nga lo w s , N r. H e a v e n P a r k S o cie t y, Sa t el li te, A h me d ab ad [ P AN N o. A G BP M 8 91 9K ] (Appellant) .. (Respondent) Appellant by : Shri Tushar Hemani, Sr. Adv. & Shri Parimalsinh B. Parmar, A.R. Respondent by : Shri Urjit Shah, Sr. D.R. D a t e of H ea r i ng 06.01.2023 D a t e of P r o no u n ce me nt 11.01.2023 O R D E R PER Ms. SUCHITRA KAMBLE - JM: This Miscellaneous Application is filed by the Revenue in respect of the order dated 06.04.2022. 2. The Ld. D.R. submitted that the order dated 06.04.20222 should be rectified as the provisions of Section 271(1)(c) of the Act are squarely applicable in the present case. The submissions made in the Miscellaneous Application filed by the Revenue are as under: “2. Facts of the case: In this case, the assessee filed his original return u/s 139(1) of the Act for AY 2009-10 on 25/09/2009 by showing income at Rs. 36,40,540/-. Thereafter, a search and seizure action u/s 132 of the IT Act, 1961 was carried out in the case of assessee on 07/10/2009 and in response to notice u/s 153A of the Act, the assessee filed his return by declaring income on 20/09/2010 at Rs. 1,60,40,540/-inclusive of Rs. 1,25,00,000/- disclosed during search action. The search proceedings were finalized vide order u/s 143(3) rws 153A(l)(b) of the Act M.A No.69/Ahd/2022 (in IT(SS)A No. 265/Ahd/2013) ACIT vs. Shri Shailesh K. Mistry Asst.Years–2009-10 - 2 - dated 07/12/2011 by accepting the returned income. On above disclosure, the AO initiated penalty u/s 271(1)(c) of the Act for concealment of income. 3. Thereafter, the AO levied penalty u/s 271(l)(c) rws Explanation (1) of the Act of Rs. 37,50,000/- for concealment of income of Rs. 1,25,00,000/- vide order dated 28/06/2012. Against above order, the assessee filed appeal before CIT(A). The Ld. CIT(A)-1 vide order dated 03/05/2013 dismissed the appeal of the assessee. Aggrieved by order of Ld. CIT(A), the assessee filed further appeal before Hon'ble ITAT against the order of Ld. CIT(A). 4. The Hon'ble ITAT vide its order in IT(SS)A No. 265/Ahd/2013 dated 06/04/2022 has allowed the appeal of the assessee and held that imposition of penalty u/s 271(l)(c) read with Explanation 1 by the Assessing Officer is not correct as well as confirming the same by Ld. CIT(A) was also not just and proper. The Hon'ble ITAT has stated that from A.Y. 2008-09 onwards in cases related to the search the statute has provided separate penalty in respect of search matters which is under Section 271AAA of the Act whereas in the present assessment order, the Assessing Officer has opted invocation of Section 271(l)(c) of the Act read with Explanation 1 of the Act. Therefore, the Assessing Officer applied parameters of concealment of particulars of income. 4.1 With respect to order of Ld. CIT(A), the Hon'ble ITAT has held that in respect of Explanation 5A to Section 271(1)(c), it can be seen that wherein the course of a search initiated under Section 132 before 1st day of June, 2007, when the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing and the assessee claims that such assets have been acquired by him by utilizing his income then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this Section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. Thus, the applicability of Explanation 5A to Section 271(1)(c) is not proper in the present case as the assesse has not made any variation in the return of income filed in response to notice under Section 153A and the income disclosed by the assessee per se. 4.2 Further, the Hon'ble ITAT has held that the decision relied upon by the CIT(A) as well as by the Ld. DR in case of Usha international (supra) will also be not applicable in the present case as the said case does not deal in penalty under Section 271(1)(c) of the Act, but is totally on different footing. 5. It is submitted that the Hon'ble ITAT has allowed the appeal of the assessee on legality without discussing the facts of the case on merits. The Hon'ble ITAT has not properly appreciated the facts of the case and provisions of section 271AAC before allowing the appeal of the assessee. This penalty pertains to A.Y. 2009-10 relevant to F.Y. 2008-09. M.A No.69/Ahd/2022 (in IT(SS)A No. 265/Ahd/2013) ACIT vs. Shri Shailesh K. Mistry Asst.Years–2009-10 - 3 - 5.1 The Hon'ble ITAT has held that in this case, the penalty leviable is u/s 271AAA of the Act and not u/s 271(1)(c) of the Act. In this regard, it is necessary to comprehend the provisions of section 271AAA which are reproduced hereunder: Penalty where search has been initiated. 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 section 132, admits the undisclosed income and specifies 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). (4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.—For the purposes of this section,— (a) "undisclosed income" means— (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has— (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; (b) "specified previous year" means the previous year— M.A No.69/Ahd/2022 (in IT(SS)A No. 265/Ahd/2013) ACIT vs. Shri Shailesh K. Mistry Asst.Years–2009-10 - 4 - (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted. From plain reading of above provisions, it can be seen that this penalty is applicable for “Specified previous year only” and not for entire block covered u/s 153A of the Act. Further, the Specified previous year(s) is explained as the previous year which has ended before the date of search, but the date of filing the return of income u/s 139(1) for such year has not expired before the date of search and the assessee has not furnished the return of income for such previous year before the said date or the previous year in which search was conducted. Hence, in order to levy the penalty u/s 271AAA, following two conditions are required to be fulfilled for specified previous year other than the year of search, which has ended before search date: i) The due date of filing of return of income u/s 139(1) has not expired; and ii) The assessee has not filed return of income u/s 139(1) before said due date. However, in present case, the date of search is 07/10/2009 whereas the assessee had filed original return u/s 139(1) on 25/09/2009 i.e. before search date. Therefore, the FY 2008-09 relevant to AY 2009-10 is not a specified year as per the explanation to section 271AAA and accordingly, the provisions of section 271AA are not applicable for this year and therefore, Assessing Officer had correctly levied penalty u/s 271(1)(c) of the Act for the additional income disclosed in the return of income filed u/s 153A of the Act against income shown in original return of income u/s 139(1) of the Act. 5.2 The explanation 5A of section 271(l)(c) states as under: Explanation 5A.— Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of— (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,— (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or M.A No.69/Ahd/2022 (in IT(SS)A No. 265/Ahd/2013) ACIT vs. Shri Shailesh K. Mistry Asst.Years–2009-10 - 5 - (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. In this case, the assessee had disclosed additional income of Rs. 1,25,00,000/- in the return of income u/s 153A of the Act as against income shown in return u/s 139(1) of the Act for the assessment year 2009-10 which has ended before search action and the assessee has filed the return of income before date of search but above income was not declared therein. Hence, provisions of section 271(1)(c) of the Act are squarely applicable and the AO has levied penalty accordingly. 6. In view of above facts, the Pr. CIT(Central), Ahmedabad vide letter No. Pr. CIIT(C)/ITO(Tech)/SKM/MA/2022-23/2264 dated 02/08/2022 has approved for filing an Miscellaneous Application in this case. 7. Therefore, it is requested to register M.A. (Miscellaneous Application) in the above case. For the purpose, I submit herewith the copy of ITAT order dated 06/04/2022 and copy of Pr. CIT(Central), Ahmedabad’s approval letter dated 02/08/2022 for filing M. A. in this case for Asst. Year 2009-10.” 3. The Ld. A.R. submitted that in Para 8 of the order the Tribunal has categorically given the finding related to the Explanation 5A to Section 271(1)(c) of the Act and has taken a view. The Ld. A.R. further submitted that the Department / Revenue is seeking review of the said order and thus the same is not permissible under the Income Tax statute. 4. We have heard both the parties and perused all the relevant material available on record. The contentions taken by the Ld. D.R. does not sustain as the Department is seeking review of the order passed by this Tribunal. The Tribunal has given the finding related to the applicability of Section 271(1)(c) in consonance with the factual matrix of the present case and therefore, there is no need to interfere with the M.A No.69/Ahd/2022 (in IT(SS)A No. 265/Ahd/2013) ACIT vs. Shri Shailesh K. Mistry Asst.Years–2009-10 - 6 - same. The Ld. D.R. did not pointed out any mistake apparent on record and hence the present Miscellaneous Application is dismissed. 5. In the result, the Miscellaneous Application filed by the Revenue is dismissed. This Order pronounced in Open Court on 11/01/2023 Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 11/01/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 06.01.2023 2. Date on which the typed draft is placed before the Dictating Member 09.01.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .01.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .01.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 11 .01.2023 7. Date on which the file goes to the Bench Clerk 11 .01.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................