Income Tax Appellate Tribunal - Panji
Bhawarlal Jain,, Kakinada vs The Dy. Cit,, Rajamahendravaram on 11 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
VISAKHAPATNAM BENCH, VISAKHAPATNAM
BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER &
SHRI D.S. SUNDER SINGH, HON'BLE ACCOUNTANT MEMBER
ITA No. 80 & 81/VIZ/2017
(Asst. Year : 2009-10)
1) Rajendra Kumar Jain, vs. DCIT, Central Circle,
Prop. Sri Shaw Rajendra Kumar Rajahmundry.
Bhawarlal Bankers,
D.No. 5-3-25, Latchirajuvari St.,
Suryaraopet, Kakinada, E.G. Dist.
PAN No. ACNPB 7683 G
2) Bhawarlal Jain,
Prop. Sri Shaw Rajendra Kumar
Sujit Kumar Bankers,
D.No. 5-3-25, Latchirajuvari St.,
Suryaraopet, Kakinada, E.G. Dist.
PAN No. ACNPB 7683 H
(Appellant) (Respondent)
Assessee by : Shri P. Prabhakara Muthy - Adv.
Department By : Shri V. Appala Raju - Sr.DR
Date of hearing : 03/08/2017.
Date of pronouncement : 11/08/2017.
ORDER
PER V. DURGA RAO, JUDICIAL MEMBER
These are the appeals filed by the different assessees against the separate orders of Commissioner of Income Tax (Appeals)-3, Visakhapatnam each, dated 21/11/2016 for the Assessment Year 2009-10.
2 ITA No.80 /VIZ/2017
(Rajendra Kumar Jain) ITA No. 80/VIZ/2017
2. Facts of the case, in brief, are that the assessee Rajendra Kumar Jain is in the business of money lending under the name and style of 'Sri Shaw Rajendra Kumar Bhawarlal Bankers' at D.No. 5-1-83, Suryaraopet, Kakinada. There was a search and seizure operation conducted in the residential premises of assessee on 03/02/2009 at Latchirajuvari St., Kakinada. The door no. 5-1-83, Suryaraopet was the common business premises for him and his brother Sri Bhawarlal Jain where survey under section 133A of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') was simultaneously carried on 03/02/2009. For the Assessment Year 2009-10 being the assessment year of search, the Assessing Officer has passed the order under section 143(3) of the Act on 30/12/2010 by making an addition of ₹ 6,86,400/- as 'unexplained investment' in pawn broking to the share of assessee. On appeal, ld. CIT(A) confirmed the order of the Assessing Officer and on subsequent appeal, the ITAT also confirmed the order of the ld.CIT(A).
3. Thereafter, the Assessing Officer has initiated the penalty proceedings and passed the order under section 271AAA of the Act on 18/09/2013 by imposing penalty of ₹ 68,460/-.
4. The assessee carried the matter in appeal before the ld. CIT(A). It was submitted before the ld. CIT(A) that a warrant was issued in the name of Rajendra Kumar Jain, D.No. 5-3-25, Latchirajuvari St, PAN/GIR No. AAIHR7342J/R-201/GP40 in the capacity of HUF and the 3 ITA No.80 /VIZ/2017 (Rajendra Kumar Jain) assessment was completed under section 143(3) read with section 153C of the Act. The assessee received another notice in the name of Rajendra Kumar Jain Prop. Prop. Sri Shaw Rajendra Kumar Bhawarlal Bankers, D.No. 5-1-83, Suryaraopet, Main road, Kakinada under section 153C(1) read with section 153A(1)(b) of the Act and the assessment is completed under section 143(3) read with section 153C of the Act dated 30/12/2010. Subsequently, penalty under section 271AAA was initiated and imposed penalty. It is submitted that when assessment is completed under section 143(3) read with section 153C, no penalty can be levied under section 271AAA of the Act.
5. Learned CIT(A) confirmed the order of the Assessing Officer by observing that warrant issued against Bhawarlal, the proprietor concern of the assessee at Latchirajuvari St., Kakinada. The material on which the Assessing Officer passed the assessment order was found in the office of the assessee, therefore, the first condition that there should be initiation of search is fulfilled and the contention of the assessee is rejected and confirmed the order of the Assessing Officer.
6. On being aggrieved, the assessee carried the matter in appeal before the Tribunal.
7. Learned counsel for the assessee has submitted that in this case, the Assessing Officer has completed the assessment under section 143(3) read with section 153C of the Act dated 30/12/2010 and submitted that 271AAA has no application to the assessee. 4 ITA No.80 /VIZ/2017
(Rajendra Kumar Jain)
8. On the other hand, learned Departmental Representative relied on the orders passed by the authorities below.
9. We have heard both the sides, perused the material available on record and orders of the authorities below.
10. The assessee is in the business of pawn brokering and there is a search conducted in his case on 03/02/2009. Subsequently, a notice under section 132 was issued to assess the income of six years immediately preceding the assessment relevant to the previous year in which the search was conducted. The assessee was issued one more notice under section 153C read with section 153A(1)(b) . Accordingly, assessment was completed under section 143(3) read with section 153C of the Act by making addition of ₹ 6,86,400/- as unexplained investment in pawn broking business. The assessee carried the matter in appeal before the ld. CIT(A) and the ITAT, where the order passed by the Assessing Officer has been confirmed. Subsequently, the Assessing Officer has initiated the penalty proceedings under section 271AAA of the Act and also imposed penalty of ₹ 68,460/-. The main argument of the learned counsel for the assessee is that once assessment order is passed under section 143 read with section 153C, no penalty can be imposed under section 271AAA of the Act. We have gone through the details filed by the assessee and also other details available on record. We find that the Assessing Officer has issued a notice in respect of impugned assessment under section 153C read with 153A(1)(b) of the 5 ITA No.80 /VIZ/2017 (Rajendra Kumar Jain) Act and the assessment was completed under section 143(3) read with section 153C of the Act and subsequently, penalty is imposed under section 271AAA of the Act. For the sake of convenience, the relevant portion of section 271AAA is extracted as under:-
"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. "
11. From the above, it is very clear that where there is a search has been initiated under section 132, penalty can be imposed under section 271AAA of the Act. In this case, from the paper book filed by the assessee at page No. 62, the Assessing Officer has issued notice to complete assessment of the assessee under section 153C read with 153A(1)(b) and not under section 132 of the Act. Therefore, the initiation of penalty is void abinitio and therefore, the order under section 271AAA has to be quashed. Accordingly, we quash the penalty order passed by the Assessing Officer under section 271AA. Thus, this ground of appeal filed by the assessee is allowed. ITA No. 81/VIZ/2017 12 In this case, notice under section 153C of the Act was issued to the assessee to complete the assessment and the assessment is ultimately completed under section 143(3) read with section 153C of the Act. Subsequently, a notice under section 271AAA was issued and penalty is levied. The ld. CIT(A) confirmed the order of the Assessing 6 ITA No.80 /VIZ/2017 (Rajendra Kumar Jain) Officer. In view of our decision in above case, we quash the notice issued by the Assessing Officer to initiate the penalty proceedings under section 271AAA of the Act. Accordingly, appeal filed by the assessee is allowed.
13 In the result, both the appeals filed by the assessees are allowed. Order Pronounced in the open Court on this 11th day of August, 2017.
Sd/- sd/-
(D.S. SUNDER SINGH) (V. DURGA RAO)
Accountant Member Judicial Member
Dated : 11 t h August, 2017.
vr/-
Copy to:
1. The Assessee.
2. The Revenue.
3. The CIT
4. The CIT(A)
5. The D.R.
6. Guard file.
By order
(VUKKEM RAMBABU)
Sr. Private Secretary,
ITAT, Visakhapatnam.