Income Tax Appellate Tribunal - Panji
Rajendra Singh Bhamboo, Jhunjhunu vs Dcit, Jaipur on 14 June, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM
vk;dj vihy la-@ITA No. 137/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2012-13
Rajendra Singh Bhamboo, cuke A.C.I.T.,
D-30, Indra Nagar, Vs. Central Circle-2,
Jhunjhunu. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAMPB 4899 A
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 160/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2012-13
D.C.I.T., cuke Rajendra Singh Bhamboo,
Central Circle-2, Vs. D-30, Indra Nagar,
Jaipur. Jhunjhunu.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAMPB 4899 A
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 135/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2012-13
Rajendra Singh Dangi, cuke A.C.I.T.,
Jatawas Bagar, Vs. Central Circle-2,
Jhunjhunu. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAWPD 4615 N
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri K.L. Moolchandani (CA)
jktLo dh vksj ls@ Revenue by : Shri B.K. Gupta (CIT DR)
lquokbZ dh rkjh[k@ Date of Hearing : 26/05/2017
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 14/06/2017
2 ITA 137, 160 & 135/JP/2016_
Rajendra Singh Bhamboo Vs ACIT
vkns'k@ ORDER
PER: KUL BHARAT, J.M. ITA No. 137/JP/2016 and 160/JP/2016 are the appeals filed by the assessee and revenue and ITA No. 135/JP/2016 filed by the assessee arise against the separate orders dated 23/12/2015 passed by the ld.
CIT(A)-4, Jaipur pertaining to the assessment year 2012-13. The grounds taken by the assessee as well as the revenue are as under:-
Ground of assessee's appeal ITA No. 137/JP/2016 "1 On the facts and in the circumstances of the case, the authorities below have factually and legally erred in imposing and confirming penalty of Rs. 24,41,026/-
U/s 271AAA of the Act without appreciating the facts of the case in right perspective. The penalty so imposed and confirmed deserves to be deleted."
Ground of revenue's appeal ITA No. 160/JP/2016 "1 Whether on the facts and the circumstances of the case the CIT(A) was right in deleting the penalty of Rs. 51,66,579/- levied U/s 271AAA of the IT Act, without appreciating the fact that in this case the assessee has failed to specify the manner in which the undisclosed income was derived as per sub clause (i) of Section 271AAA(2) of the IT Act, 1961.
(2) Whether on the facts and the circumstances of the case the CIT(A) was right in deleting the penalty of Rs. 51,66,579/- levied U/s 271AAA of the IT Act, without appreciating the fact that in this case the 3 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT assessee has failed to substantiate the manner in which the undisclosed income was derived as per sub clause (ii) of Section 271AAA(2) of the IT Act, 1961."
Ground of assessee's appeal ITA No. 133/JP/2016 "1 On the facts and in the circumstances of the case, the authorities below have factually and legally erred in imposing and confirming penalty of Rs. 24,14,987/- U/s 271AAA of the Act without appreciating the facts of the case in right perspective. The penalty so imposed and confirmed deserves to be deleted."
2. All the three appeals are being heard together and for the sake of convenience and brevity, a common order is being passed.
3. Firstly we take assessee's appeal being ITA No. 137/JP/2016.
Briefly stated facts of the case are that a search and seizure operation was carried out at the residential and business premises of Bhamboo group on 15/03/2012. During search, incriminating documents were found, which was inventorised and seized as per the panchnama. A notice U/s 153A of the Income Tax Act, 1961 (hereinafter referred as the Act) was issued. In pursuance to that, the assessee filed return of income on 26/09/2012 declaring income of Rs. 3,10,68,140/- including undisclosed income of Rs. 2,41,29,870/-, which was surrendered as undisclosed income of the assessee on account of various discrepancies 4 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT found during the search. Subsequently, the assessment U/s 143(3) read with Section 153B(1)(b) was completed on 31/03/2014 at total income of Rs. 3,13,48,532/- after making an addition of Rs. 2,80,392/- on account of addition made U/s 69A of the Act for unexplained jewellery and also penalty was initiated U/s 271AAA of the Act in respect of unaccounted income of Rs. 2,44,10,262/-. A penalty order was passed on 26/09/2014 levying the penalty @ 10% of the undisclosed income.
4. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who after considering the submissions, dismissed the appeal of the assessee.
5. Now the assessee is in appeal before us challenging the correctness of the order of the ld. CIT(A). The only effective ground of the assessee's appeal is against confirming the penalty U/s 271AAA of the Act. The ld AR of the assessee has reiterated the submissions as made in the written submissions. He further submitted that the authorities below were not justified in levying the penalty and confirming the same U/s 271AAA of the Act. He further submitted that the assessee had duly included the income surrendered during the course of search.
He submitted that initiation of penalty by the Assessing Officer is 5 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT contrary to the spirit of the provisions of Section 271AAA of the Act. He also submitted that in the statement recorded during the course of search, the assessee had duly replied. He drew our attention towards page No. 12 of the paper book in support of the contention that the assessee had surrendered income for taxation in reply to question No.
16. He submitted that this is not a fit case where the ld. CIT(A) ought to have confirmed the penalty.
6. On the contrary, the ld CIT DR has vehemently supported the orders of the authorities below and submitted that the provisions are clear where the assessee surrenders income he has to substantiate in the manner such income was earned in the absence of such substantiation.
The authorities would be within their power to impose penalty.
7. We have heard the rival contentions of both the parties, perused the material available on the record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee had surrendered a sum of Rs. 2,44,10,262/- as undisclosed income during the course of search. It is also not in dispute that this income was duly included into the return filed in pursuance to the notice issued U/s 153A of the Act. Now under these facts, we need to 6 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT adjudicate whether the authorities below were justified in imposing the penalty under the facts of the present case. For the sake of clarity, the relevant provisions of Section 271AAA of the Act is reproduced hereinbelow:
(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 7 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT (B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of the 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--
(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 the reading of the above provision, it is clear that as per Sub-
section (1) of Section 271AAA of the Act, the Assessing Officer may direct that in a case where the search has been initiated U/s 132 on or after first day of June, 2007, 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. As per Sub-Section (2) of Section 271AAA of the Act 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 ;
8 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT
(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.
Now coming to the facts of the present case, the assessee in his statement U/s 132 of the Act admitted undisclosed income and specified the manner in which such income was derived, which is evident from the reply to question No. 16 recorded during the course of search. The revenue has not disputed the fact that the assessee had paid tax together with the interest if any in respect of the undisclosed income, therefore, out of the three conditions for immunity against the penalty under sub-section (i) of Section 271AAA of the Act are duly specified in the present case. The basis of imposing penalty, confirming the same by the revenue is that the assessee has not substantiated the manner in which the undisclosed income was derived. We find that in the case of DCIT Vs. Rajendra Singh Bhamboo in ITA No. 160/JP/2016, the ld.
CIT(A) has deleted the penalty by observing as under:-
"During the penalty proceeding, AO issued a notice u/s 271 AAA to the appellant company by alleging that assessee has failed to specify and substantiate the manner in which the undisclosed income of Rs. 51,66,579/- has been derived. In response to the notice the assessee stated that
9 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT provisions contained in section 271 AAA of the Act are inapplicable to the facts of the appellant company and complete taxes had been paid by the appellant company. However, AO was not convinced with assessee's contention and levied penalty. Now it needs to be examined as to whether the assessee has been able to fulfill the requirement of section 271 AAA for claiming exemption from levy of the penalty there under. Having gone through the provisions laid down u/s 271 AAA of the Act, I find that in respect of unaccounted income in the cases where search is initiated after 1.6.2007 and before 1.7.2012, the assessee is to pay a penalty @ 10% of unaccounted income but sub section (2) of section 271 AAA also provides exemption from this penalty provisions in a situation in which (i) during the course of search In a statement under section 132(41 the assessee 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 the interest, if any, in respect of the undisclosed income. The AO in the impugned penalty order has held that the assessee has not fulfilled conditions as laid down in clause (iii) to sub section (2) of Section 271 AAA of the Act. On perusal of sworn statement recorded on oath u/s 132(4) of the assessee, it is seen that though no specific question has been raised to the assessee about specification of the manner in which such income has been derived and substantiation of the manner in which the undisclosed income was derived, but the assessee in answer to question No. 16, has specified the manner that the undisclosed income was from the business operations. It is also an admitted fact that the undisclosed income of Rs. 51,66,579/- has been accepted by the AO in the assessment completed u/s 143(3) r.w.s. 153A of the Act. Here I would like to quote the decision of Hon'ble ITAT Bench New Delhi in case of 2009 M/s. Spaze Tower Pvt. Ltd reported in IT A No. 2296/Del/2012 Assessment Year: 2008-09, which is quite identical to the facts of the appellant assessee as under:-
"We have gone through certain following decisions on an identical issue while deciding the question in the case of Neeraj Singhal vs. ACIT, ITA No. 337/D/2013 (asstt. 2010-11) order dated 24.6.2013. These decisions are of Hon'ble Allahabad High Court in the case of CIT vs. Radha Kishan Goel (2005) 278ITR 454 (All) and Hon'ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah (2008) 298 ITR 305 (Guj.). The Hon'ble Allahabad High Court in the case of CIT vs. Radha Kishan Goel (supra) has been pleased to
10 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT hold that u/s 132(4) unless the authorized officer puts a 14 specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard and in case in the statement the manner in which income has been derived has not been stated but has been stated subsequently, that amounts to the compliance with Explanation 5(2) to section 271(1)(C) of the Act. It has been further held by the Hon'ble High Court that in case there is nothing to the contrary in the statement recorded under section 132(4) of the Act, in the absence of any specific statement about the manner in which such income has been derived, it can be inferred that such undisclosed income was derived from the business which he was carrying on and not from other sources. The object of the provision is achieved by making the statement admitting the non-disclosure of money, bullion, jewellery, etc. It was held that much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in the absence of anything to the contrary. Therefore, mere non-statement of the manner in which such income was derived would not make Explanation 5(2) inapplicable held Hon'ble High Court. Similar view has been expressed by the Hon'ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah (supra) For a ready reference relevant extract of the said decision of Hon'ble Gujarat High Court is reproduced hereunder:-
"In so far as the alleged failure on the part of the assessee to specify in the statement under section 132(4) of the Act regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in its entirety to the assessee concerned and the authorized officer cannot stop short at a particular stage so as to permit the Revenue to take advantage of such a lapse in the statement The reason is not far to seek. In the first instance, the statement is being recorded in the question and answer form and there would be no occasion for an assessee to state and make averments in the exact format stipulated by the provisions considering the setting in which such statement is being recorded, as noted by the Allahabad High Court in the case of CIT V. Radha Kishan Goel [2005] 278 ITR 454. Secondly, considering the social environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated by exception No. 2 while making statement under section 132(4) of the Act The view taken by the Tribunal as well as the Allahabad High Court to the effect that even if the
11 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit under exception No. 2 in Explanation 5 is commendable."
The Cuttack Bench of the Tribunal in the case of Ashok Sharma and others vs. DCIT (ITA No. 476 to 480/CTK/2011 referred in the case of Neeraj Singhal vs. ACIT(supra), has observed that penalty u/s 271AAA was levied, the assessee had disclosed huge income while giving statement u/s 132 of the Act during the course of search and had paid tax thereon and the income shown from business, department had accepted these returns and accordingly passed the assessment order. It was held that undisputedly the assessee has shown undisclosed income under the head "income from business" in the returns filed by them and that was accepted by the department by passing the assessment accordingly, the case of the assessee falls exactly within the purview of sub section 2 of section 271 AAA. Thus the impugned penalty levied contrary to the provisions contained in section 271 AAA (2) is not sustainable. It was deleted accordingly. In the case of Shri Pramod Kumar Jain vs. JCIT (supra) before the Cuttack Bench of the Tribunal, the assessee had disclosed the unaccounted income but had failed to specify the manner in which such income has been derived. The department levied penalty u/s 271AAA and the same was upheld by the first appellate authority. The Tribunal had however deleted the penalty on the basis that there is no prescribed method to indicate the manner in which income was generated when the definition of "undisclosed income" has been defined in the Act itself when no income of the specified previous year represented "either wholly or partly which onus lay upon the assessee stood discharged.
12. When we examine the facts of the present case in view of the above Decisions, we find that no specific question was raised by the department during the course of recording of statement u/s 132(4) of the Act to specify the manner in which such income has been derived and to substantiate it, instead the assessee in reply to question No. 18 has stated that undisclosed income was from the business. Respectfully following the above decision we hold that in absence of specific query raised in this regard, the assessee would not be expected to specify the manner in which the said undisclosed income was derived and substantiate it. still the assessee has specify the manner substantiation of which cannot be 12 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT disputed in absence of any adverse finding on the manner explained by the assessee and accepted as such in the assessment framed u/s 153A of the Act. We are thus of the view that the authority below were not justify in imposing and sustaining the penalty of Rs. 80 lacs u/s 271 AAA of the Act keeping in view the facts and circumstances of the present case as discussed above. The same is directed to be deleted. (Stress by underlying supplied by me) Hon'ble ITAT New Delhi while deciding the case of Neeraj Singhal has also referred decisions of following cases:-
* Ashok Kumar Sharma Vs. Dy. CIT (2013) 33 taxmann.com (Cuttack) * Asstt. CIT Vs. Gebilal Kanhaialal (HUF) (2012) 252 CTR (SC) 345:
(2012) 76 DTR (SC) 345 * Dy. CIT Vs. Inderchand Surajmal Bros. (ITA No. 139/Pune/2010) * Mothers Pride Education Personna (P) Ltd. Vs. Dy. CIT (ITA No. 3372/Del/2011, dt. 12th Oct. 2012) * Pramod Kumar Jain Vs. Dy. CIT (2012) 149 TTJ (Ctk) (UO) 36 : (2012) 77 DTR (Ctk) (Trib) 244 * Smt. Sulochanadevi A. Agarwal Vs. ITO (ITA No. 1052/Ahd/2012) In case of Neeraj Singhal (Supra) Hon'ble ITAT New Delhi has observed that in absence of query raised by AO during the course of recording of statement u/s 132(4) about the manner in which the undisclosed income has been derived and about it substantiation, the AO was not justified in imposing penalty u/s 271 AAA specially when the offered undisclosed income has been accepted and due tax thereon has been paid by the assessee. On similar facts, various courts have decided the issue on the same line, and in this regard, further reliance can be placed on the following decisions
(i) 299ITR 305 (Guj) CIT vs. Mahendra C. Shah
(ii) 270 ITR 523 (Raj) Gebitlal Kanhaialal (HUF) vs. ACIT
(iii) 299 ITR 19 (Raj.) CIT vs. Kanhaiyalal
(iv) 286 ITR 626 (Mad) CIT vs. E. V. Balashanmugham
(v) 264 ITR 249 (Del) CIT vs. Chhabra Emporium
(vi) 247 ITR 742 (Ker) CIT vs. Santhosh Financiers
(vii) 278 ITR 454 (All) CIT vs. Radha Kishan Goel However, in this case, assessee in answer to question No. 16 of the sworn statement recorded on oath u/s 132(4) of the Act has clearly specified the
13 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT manner of deriving undisclosed income. Therefore, when assessee has complied with Sub section (2) of section 271 AAA of the Act, AO's action cannot be justified and sustained. In view of facts and circumstances discussed above, penalty levied of Rs.51,66,579/= is hereby deleted. Assessee's appeal in ground no. 1 is allowed."
However, in the present case, he has sustained the penalty on the ground that the assessee has failed to substantiate the manner in which the undisclosed income was derived. The facts are identical and arise from the same search, therefore, the finding of the ld. CIT(A) is contradictory. Under these facts and circumstances, we restore this appeal to the file of the ld. CIT(A) for decision afresh.
8. Now we take assessee's appeal in ITA No. 135/JP/2016.
In this case, the facts and identical as were in ITA No. 137/JP/2016 pertaining to the A.Y. 2012-13 except the change of figures.
The parties have adopted same argument as were in ITA No. 137/JP/2016. By taking a consistent view, we also restore this issue to the file of the ld. CIT(A) for deciding afresh.
9. Now we take revenue's appeal in ITA No. 160/JP/2016 The only effective issue is against deleting the penalty of Rs.
51,66,579/- by the ld. CIT(A). The ld CIT DR has vehemently supported 14 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT the order of the Assessing Officer and submitted that the ld. CIT(A) was not justified in deleting the penalty.
10. On the contrary, the ld AR of the assessee has vehemently supported the order of the ld. CIT(A).
11. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the authorities below. Since the assessee had also challenged the order of the ld. CIT(A) in the case of Rajendra Singh Bhamboo Vs. ACIt and the other assessee Rajendra Singh Dangi Vs. ACIT in ITA No. 137/JP/2016 and 135/JP/2016 respectively. In both the appeals, we have set aside the order of the ld. CIT(A) and restored the appeal to the file of ld. CIT(A) for decision afresh. Therefore, in this case also, the facts are identical as were made in those appeals, by taking a consistent view, we deem it appropriate the order of the ld. CIT(A) is set aside and the appeal of the revenue to be restored to the file of the ld. CIT(A) for decision afresh. The ld. CIT(A) would give finding after considering all the facts and material available on record and giving sufficient opportunity of being heard to the assessee.
15 ITA 137, 160 & 135/JP/2016_ Rajendra Singh Bhamboo Vs ACIT
12. In the result, both the appeals of the assessee and the appeal of the revenue are allowed for statistical purposes only.
Order pronounced in the open court on 14/06/2017.
Sd/- Sd/-
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(BHAGCHAND) (Kul Bharat)
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Tk;iqj@Jaipur
fnukad@Dated:- 14th June, 2017
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- (i) Shri Rajendra Singh Bhamboo, Jhnunjhnu.
(ii) Shri Rajendra Singh Dangi, Jhnunjhnu.
2. izR;FkhZ@ The Respondent- The ACIT/DCIT, Central Circle-2, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 137/JP/2016, 160/JP/2016 & 135/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar