Income Tax Appellate Tribunal - Kolkata
Dcit, Central Circle - 1(1), Kolkata vs Shri Gopal Krishna Agarwal , Kolkata on 5 February, 2020
आयकर अपील य अधीकरण, यायपीठ - "ए" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA BENCH "A" KOLKATA
Before Shri S.S.Godara, Judicial Member and
Dr. A.L. Saini, Accountant Member
ITA No.2224/Kol/2018
Assessment Year :2013-14
DCIT, Central Circle- V/s. Shri Gopal Krishan
1(1), 3 r d Floor, Aayakar Agarwal, 29F, Ram
Bhawan Purba 110, Krishna Samadhi Marg,
Shantipally, E.M. Kakurgachi, Kolkata-54
Bypass, Kolkata-107 [P AN No. ACGP A 0157 L]
अपीलाथ /Appellant .. यथ /Respondent
अपीलाथ क ओर से/By Appellant Shri Dhrubajyaati Roy, JCIT-DR
यथ क ओर से/By Respondent Shri A.K. Tulsyan, FCA
सन
ु वाई क तार ख/Date of Hearing 16-01-2020
घोषणा क तार ख/Date of Pronouncement 05-02-2020
आदे श /O R D E R
PER S.S.Godara, Judicial Member:-
This Revenue's appeal for assessment year 2013-14 arises against the Commissioner of Income Tax (Appeals)-20, Kolkata's order dated 29.08.2018 passed in cash No. CIT(A), Kolkat-20/12433/2015-16 involving penalty proceedings u/s 271AAB of the Income Tax Act, 1961; in short 'the Act'.
Heard both the parties. Case file perused.
2. The Revenue's sole substantive grievance pleaded in the instant appeal seeks to reverse the CIT(A)' action deleting sec. 271AAB penalty of ITA No.2224/Kol/2018 A.Y. 2013-14 DCIT, CC-1(1), Kol. Vs. Sh. Gopal Krishna Agarwal Page 2 ₹16052500/- imposed by the Assessing Officer in his order dated 22.09.2015. The CIT(A)'s detailed discussion to this effect reads as under:-
"5. Discussion, and, Decision:
My discussion will be mostly like-wise as for the AY 2012-13.
5.1 Foremost, the subject matter - what is that 'undisclosed income'?
It is only a mere statement. Though the statement is recorded u/s. 132(4), but in the absence of any identifiable income or asset, or, specific entry found in any books of account or documents or transactions - the statement is reduced to but a mere recorded statement.
Such statements of 'disclosure' are obviously - to cooperate for the statistical success of the search, aka, to buy peace.
5.2 And the assessee has respected his cooperation - for he has shown it in the return of income filed u/s. 153A. But it is merely a typed line in the computation of income.
What and where is that income? it still is in the void - unknown, unidentifiable.
5.3 'Undisclosed income' for the purpose of the penalty - is defined in the Explanation (c) to the said section 271AAB.
In this instant case the said Explanation (c) cannot be applied - for there is no found as a result of the search that can be identified or linked to the purported disclosure either 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 the search.
Thus, in the absence of the requisite essential facts for the attraction of the penalty provisions itself -there is no locus standi for cause for the penalty. / JCIT has reproduced in the penalty order only the clause (a) to the sub- section (1) to the said section 271AAB -but is only regarding the quantum.
Preceding to the clause (a), in the opening operative phrase of the section - is the word 'may'.
It is 'may' because the Explanation (c) definition of 'undisclosed income' has to first find place. And - as discussed above, the Explanation (c) does not find place in this instant case.
So, in the impugned penalty order to reproduce the clause (a) to the sub- section (1) to the said section 271AAB - was only to put in some stuffing for the body of the penalty order.
5.5 The ACIT AO / JCIT has started the argument for imposing the penalty - that the assessee had not filed appeal against the assessment.
This argument is out of context - for when the assessee had honoured the 132(4) statement, offered the additional amount in the return of income, and ITA No.2224/Kol/2018 A.Y. 2013-14 DCIT, CC-1(1), Kol. Vs. Sh. Gopal Krishna Agarwal Page 3 the assessment has been made accepting the returned income - then it is an illogical argument that the assessee has not filed appeal against the assessment order.
In this context to, the ACIT AO has stated in the opening 2nd para of the impugned penalty order that in the assessment made that addition of the income stated u/s. 132(4) at ₹16,05,24,000/- was made. This is not so. The assessee had suo moto offered the said amount in the return of income filed u/s. 153A - as is evident from the statement of facts to the appeal memorandum. It is hereunder:
GOPAL KRISHNA AGARWAL ASST. YEAR: 2013-14 STATEMENT OF FACTS BEFORE THE CIT(A)-20, KOLKATA A search & seizure operation under sec.132 of the Income Tax Act, 1961 was carried out by the Investigation Wing at the residence as well as business premises in respect of 'Mahaluxmi Group' and others and also at the residence of assessee on 03.07.2012 and on subsequent dates. During the course of search, various documents and books of account were found and seized from the office premises of assessee group.
The assessee filed his return declaring total income of Rs.17,60,15,380/-. In the course of search and seizure operations, the assessee disclosed an additional income of Rs.16,05,25,000/- and the same was duly disclosed in his return of Income. Assessment under sec. 143(3) of the Act was completed on 31.03.2015 determining total income of Rs.17,60,23,230/-. Consequently, penalty proceedings under sec. 271AAB of the I. Tax Act was initiated and penalty of Rs.1,60,52,500/- being 10% of the income disclosed under sec. 132(4) of the Act was levied vide order dt. 22.09.2015.
Being aggrieved, the assessee has come in appeal on the following grounds:-
GROUNDS OF APPEAL
1) That the AO was wrong in imposing penalty of rs.1,60,52,500/- u/s 271AAB, being the 10% of the income disclosed under sec. 132(4) of the Act. The penalty so levied is wrong and need to be deleted.
2) The assessee craves leave to add, alter, amend or withdraw any ground or grounds of appeal before or at the time of hearing.
Sd/- illegible.
The appellant had suo-moto offered the income stated -honouring the statement u/s. 132(4).
5.6 Coming back to the crux of the issue - regarding income merely in statement recorded - there is the decision of the Hon'ble Supreme Court in Sudarshan Silk Mills Vs. CIT [2008 LL-0411 8.169 TAXMAN 321, 300 ITR ITA No.2224/Kol/2018 A.Y. 2013-14 DCIT, CC-1(1), Kol. Vs. Sh. Gopal Krishna Agarwal Page 4 205, 216 CTR 12] -that penalty for concealment purported undisclosed income offered merely in statement recorded during search in the absence of any specific evidence / asset / document / transactions found during the search is not justified."
3. Learned CIT-DR vehemently contends during the course of hearing that the CIT(A) has erred in law and on facts in deleting the impugned penalty. More particularly, by not dealing with the factual matrix of the relevant issue and going by hon'ble apex court's judgment in "Sudarshan Silk Mills" which does not apply in the facts of the instant case.
4. Mr. Tulsyan strongly supported the CIT(A)'s action deleting the impugned penalty in view of the fact that the assessee's search statement making disclosing undisclosed income of ₹ 16,05,25,000/- had been duly complied with in his return as accepted in the course of assessment. It is further submitted that the Assessing Officer had wrongly levied the impugned penalty in the given facts and circumstances of the case.
5. We have given our thoughtful consideration to the foregoing rival pleadings. There can hardly be any dispute that the impugned penal provision i.e. u/s 271AAB comes into play in case of a search initiated on or after 01.07.2012. This statutory provision applies in case of an undisclosed income defined in sec. 271AAB Explanation (c). It emerges from a perusal of the CIT(A)'s order that he has nowhere examined the relevant facts qua assessee's alleged undisclosed income as to whether the same represented any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other document in the light of the foregoing explanation. We also notice that their lordships judgment in Sudarshan Silk Mills (supra) does not deal with the impugned statutory provision but involved sec.271(1)(c) penalty proceedings only. We therefore reverse the CIT(A)'s lower appellate findings under challenge to this effect in principle.
ITA No.2224/Kol/2018 A.Y. 2013-14DCIT, CC-1(1), Kol. Vs. Sh. Gopal Krishna Agarwal Page 5
6. Next comes yet another most important aspect involved in the instant lis as to whether there is any "undisclosed" income involved going by sec. 271AAB Explanation (c) or not. A perusal of the case file suggests that the assessee's sec. 132(4) disclosure made during the course of search dated 03.07.2012 declared total income of ₹16,05,25,000/- involving capital introduced, profit as per P&L account, capital in the name of sundry creditors, profit on sales @ 5%, commodity profit with miscellaneous and other income etc., involving corresponding sum(s) of ₹80000000/- ₹18708706/-, ₹86870789/-, ₹214739/-, ₹50146549/- and ₹3784217; respectively. Out of this, the assessee's books had duly recorded initial capital, sundry creditors and miscellaneous income (supra) totaling to ₹914,55,006/- and the balance amount of ₹69069994/- (involving commodity profits of ₹501,46,549/-, of profits as P&L account of ₹187,07,706/-, estimated 5% profit of ₹214739/-) stood not recorded in the regular books of account u/s. 271AAB explanation-
(c)(A) of the Act. Mr. Tulsiyan fails to dispute that this latter undisclosed income component has seen light of the day due to search wherein the corresponding seized documents have been marked as PG-10 of MRA-10 pages 29 to 32 and 84 to 91 of the Pt/1 and PT/1 MNN-18B) / 1; respectively. We therefore conclude in these peculiar facts and circumstances that the Assessing Officer was very well justified in invoking the impugned penal provision qua the assessee's undisclosed income of ₹690,69,994/- than the entire disclosure of ₹16,05,25,000/-. We make it clear that Revenue has failed to pin-point any material in the nature of seized documents indicating the remaining three components of initial capital, sundry creditors and miscellaneous income (supra) which could be held to be undisclosed income going by sec.271AAB Explanation (c) of the Act. The Assessing Officer's action penalizing the assessee qua the said disclosed / duly recorded income is found to be not sustainable therefore. We make it clear that we have ourselves assumed our jurisdiction of the final fact-finding authority under the provision of the Act to decide upon correctness of impugned entire penalty than remitting the issue back to the Assessing Officer or the CIT(A) for afresh ITA No.2224/Kol/2018 A.Y. 2013-14 DCIT, CC-1(1), Kol. Vs. Sh. Gopal Krishna Agarwal Page 6 adjudication. The Assessing Officer is now directed to frame consequential computation of the impugned penalty as per law qua the assessee's undisclosed income of ₹690,69,994/-only. Ordered accordingly.
7. This Revenue's appeal is partly allowed in above terms.
Order pronounced in the open court 05/02/2020
Sd/- Sd/-
(लेखा सद&य) ( या(यक सद&य)
( A.L.Saini) (S.S.Godara)
(Accountant Member) (Judicial Member)
Kolkata,
*Dkp Sr.P.S.
)दनांकः- 05/02/2020 कोलकाता ।
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ /Appellant-DCIT, C.C.1(1), 3rd Floor, Aaykar Bhawan Purba 110, Shantipally E.M. Bypass, Kolkata-107
2. यथ /Respondent-Shri Gopal Krishna Agarwal, 29F, Ram Krishna Samadhi Marg Kakurgachi, Kolkat-54
3. संब4ं धत आयकर आय5 ु त / Concerned CIT Kolkata
4. आयकर आय5 ु त- अपील / CIT (A) Kolkata
5. 8वभागीय (त(न4ध, आयकर अपील य अ4धकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड= फाइल / Guard file.
By order/आदे श से, /True Copy/ सहायक पंजीकार आयकर अपील य अ4धकरण, कोलकाता ।