Income Tax Appellate Tribunal - Ahmedabad
The Dcit, Central Circle-2(2),, ... vs Shanti Builders,, Ahmedabad on 17 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMEDABAD
BEFORE, SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
AND SHRI S. S. GODARA, JUDICIAL MEMBER
ITA No. 3556/Ahd/2015
(Assessment Year: 2012-13)
Deputy Commissioner of
Income-tax,
Central Circle-2(2), Ahmedabad Appellant
Vs.
Shanti Builders,
1125, Old Madhupura Market,
O/s. Delhi Gate, Madhupura,
Ahmedabad. Pin: 380006 Respondent
PAN: ABRFS9323E
राज व क ओर से / By Revenue : Shri Mudit Nagpal, Sr. D.R.
आवेदक क ओर से / By Assessee : Shri Bandish Soparkar, A.R.
सन
ु वाई क तार ख/Date of Hearing : 12.04.2018
घोषणा क तार ख/Date of
Pronouncement : 17.04.2018
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This Revenue's appeal for assessment year 2012-13 arises against the CIT(A) - 12, Ahmedabad's order dated 31.08.2015, in case no. CIT(A)-
12/548A/DCIT/CC-2(2)/2014-15, reversing Assessing Officer's action
ITA No. 3556/Ahd/2015 [DCIT vs. Shanti Builders]
A.Y. 2012-13 -2-
imposing penalty of Rs.22,50,000/- in order dated 30.09.2014, in proceedings u/s. 271AAA of the Income Tax Act, 1961; in short "the Act".
Heard both the parties. Case file perused.
2. We notice at the outset that the CIT(A)'s detailed discussion deleting the impugned penalty reads as under:
"7. I have perused the material on record and the contentions both of the AO and the AR and have given a thoughtful and careful consideration to the contentions raised and the material available on record. The Ld. AO is absolutely right when he observes in the penalty order at para 2 that unit-wise receipt of on-money has not been disclosed by the assessee, and this aspect is not in dispute. But what the Ld. AR, in substance, has disputed is whether such requirement of furnishing unit-wise receipt of on-money and disclosure is to be read in law in s. 271AAA(2), after relying on various judicial pronouncements. I find that the Ld. AO has, though, indeed based his assessment exclusively on the disclosure u/s 132(4) coupled with the Return of Income filed u/s 153A. The answer to Q. 4 of the statement u/s 132(4) contained a prayer for immunity u/s 271AAA in conjunction with the disclosure being made. Moreover, the undisclosed income of Rs. 2.25 crores is in fact described in Answer-4 as "unaccounted on-money receipt of M/s Shanti Builders...etc", Assessee also owned up the corresponding income in return u/s 153A and paid taxes thereon. These depositions and statements of the assessee have not only not been rebutted by the Ld. AO but in fact relied upon by him to bring the returned income to tax. Thus, I find on facts, that notwithstanding that the assessee has not furnished the unit-wise details of receipt of on-money, the assessee has explained the manner of earning unaccounted income, which from the very nature of receipts described, stands both substantiated and so accepted by the Ld. AO. Moreover, in light of the fact that even the authorized officer was satisfied about the manner of earning unaccounted income disclosed in answer to question no. 4 of the statement u/s 132(4) and that no further question was put to the partner, no adverse view, in my opinion, ought to or need be taken. Thus, on facts, the assessee's case falls under s. 271AAA(2) and hence assessee is eligible for immunity under the same. The Ld. AR had also drawn my attention to various decisions of Ld. ITAT wherein, under similar circumstances, the assessee was held to be covered by Exception contained in s. 271AAA and therefore penalty was held to be not sustainable, and therefore also the finding of fact of substantial compliance as arrived at by me stands supported:
1) Pramod Kumar Jain v. DCIT 33 taxmann.com 651(cuttack)
6. We have heard the rival contentions and perused the material available on record. On consideration of the facts and ITA No. 3556/Ahd/2015 [DCIT vs. Shanti Builders] A.Y. 2012-13 -3-
circumstances of the case, we are inclined to hold that no definition could be given to the "specified manner" insofar as the very statement on oath u/s. 132(4) specifies the manner on which the assessee is prepared to pay tax thereon. The inscribing in the books of account was taken care of by the assessee when he filed the returns in pursuance to notice u/s. 153A accounting the assets. Therefore, the case laws cited at the Bar clearly indicate that the penalty is not automatic if one of the purported conditions is not fulfilled although all the conditions have been agreed to of having fulfilled by the Assessing Officer insofar as the tax and interest has been recovered. Penalty has been levied after the tax has been recovered therefore answers the queries raised by the learned for that the said provisions become redundant was not the intention of the legislation. The manner, during the search operation, is noted by the search party which the Assessing Officer has acceded to. Therefore, following the decisions as relied upon by the learned Counsel for the assessee, wherein the Tribunal was pleased to consider cancelling the penalty so levied, are also applicable to the assessees1 cases before us insofar as 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. In view of the above, we are of the considered view that the levy of penalty u/s. 271AAA in the instant cases are not justified and as such, we cancel the penalty so levied u/s. 271AAA for the AYs under consideration in the case of respective assessees.
2) Headnotes : [2014] 45 taxmann.com 563 (Chandigarh - Trib.)ACIT v. MunishGoyal Section 271AAA of the Income-tax Act, 1961 - Penalty - Where search has been initiated (Applicability of) - Assessment year 2010-11 - where assessee having surrendered certain income in course of search, filed return wherein said amount was duly disclosed and taxes were paid accordingly, there was sufficient compliance of provisions of section 271AAA(2) and, thus, impugned penalty order deserved to be set aside - Held, yes [Para 10] [In favour of assessee]IT : Where assessee having surrendered certain income in course of search, filed return wherein said amount was duly disclosed and taxes were paid accordingly, there was sufficient compliance of provisions of section 271AAA(2) and, thus, impugned penalty order deserved to be set aside.[emphasis supplied] ITA No. 3556/Ahd/2015 [DCIT vs. Shanti Builders] A.Y. 2012-13 -4-
3) [2014] 48 taxmann.com 327 (Delhi - Trib.)Sita Ram Gupta v.Assistant Commissioner of Income-tax, Central Circle-I, Faridabad* [head notes] Section 271AAA of the Income-tax Act, 1961 - Penalty - Where search has been initiated (Applicability of) - Assessment year 2009-10 - In course of search proceedings carried out in case of assessee, cash was found at different places belonging to him - In statement recorded under section 132(4), assessee admitted that said cash represented undisclosed income - Assessing Officer having completed assessment, passed a penalty order under section 271AAA for default of not substantiating manner in which undisclosed income was derived - It was noted from records that assessee made statement that he had earned undisclosed income from various transactions of sale/purchase of land and said statement did not face any rebuttal or rejection at hands of Assessing Officer - It was also undisputed that assessee had paid due tax on admitted undisclosed income - Whether on facts, impugned penalty order passed by authorities below deserved to be set aside - Held, yes [Para 21] [emphasis supplied].
8. Apart from the above decisions, the Ld. AR has also heavily relied on Jurisdiction HC decision in the case of CJT v. Mahendra C Shah 299 ITR 305 drawing my attention to the following observation of the Hon'ble HC with reference to requirement of Explanation 5 to s. 271(l)(c) which is in part materia with requirement of s. 271AAA(2):
Insofar as the alleged failure on the part of the assessee to specify in the statement under section 132(4) regarding the manner in which such income had been derived, when the statement was being recorded by the authorized officer, it was incumbent upon him to explain the provision of the Explanation 5 in its entirety to the assessee concerned and the authorized officer could not stop short at a particular stage so as to permit the revenue to take advantage of such a lapse in the statement. The reason was not far to seek. In the first : instance, the statement was 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 was being recorded. 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 the Exception No. 2 while making statement under section 132(4)1 The view taken by the Tribunal to the effect that even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon is paid, there would be substantial compliance not warranting any further denial] of the benefit under the Exception ITA No. 3556/Ahd/2015 [DCIT vs. Shanti Builders] A.Y. 2012-13 -5- No. 2 in the Explanation 5 was commendable. [Para 15][emphasis supplied]
9. The above view of the Hon'ble Gujarat HC has also been reiterated by Hon'ble Allahabad HC in connection with clause (2) of Explanation 5 to s. 271(1)(c) in CIT v. Sidh Nath Goel 359 ITR 481:
7. The ITAT relied upon judgments of Madras High Court in CIT v. S.D.V. Chandru [20041 266 ITR 175/136 Taxman 537;and Rajasthan High Court in CIT v. MishrimalSoni [2007] 289 ITR 77/162 Taxman 53 and Gujarat High Court in CIT v. Mahendra C. Shah [2008] 299 ITR 305/172 Taxman 58, which have explained the extent and scope of Explanation 5 to Section 271(1)(c) of the Act, which deals with a situation in which any assets are found to be in the ownership of the assessee in the course of search under Section 132 of the Act.
Clause (2) of Explanation 5 makes it clear that where in the course of search the assessee makes a statement under Section 132 (4) and owns that he acquired any of such assets out of his undisclosed income, not so far returned, and further states the manner in which such income has been derived and pays tax together with interest if any in respect of such income, no presumption of concealment has to be drawn, notwithstanding the admission to that effect. In other words to the extent the assessee makes a clean of his undisclosed income represented by assets found to be in the possession of the assessee he is not deemed to have concealed his income or concealed particulars thereof. The explanation is not confined to physical possession but extends to other forms of possession, [emphasis supplied]
10. Thus, the judicial opinion is unambiguous to the effect that what section 271AAA(2) fundamentally requires is that the assessee "makes a clean breast" u/s 132(4) and sticks to same by filing return u/s 153A and paying taxes. The other requirement of specification and substantiation of manner of earning is only to be broadly, insisted upon. As observed by Gujarat HC (supra), "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 the Exception No. 2 while making statement under section 132(4). The view taken by the Tribunal to the effect that even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon is paid, there would be substantial compliance not warranting any further denial of the benefit under the Exception No. 2 in the Explanation 5 was commendable.", the assessee has in fact made more than sufficient compliance. Therefore, respectfully following the various judgments as cited and discussed above, I find myself in agreement with the averment of the Ld. AR that on facts, the assessee has made sufficient compliance to the requirement of s. 271AAA(2) so as to deserve immunity from rigors of penalty u/s 271AAA. Such a view in similar circumstances has been taken by Gujarat HC and other Hon'ble HC and ITAT benches as detailed above.
ITA No. 3556/Ahd/2015 [DCIT vs. Shanti Builders]A.Y. 2012-13 -6-
11. In view of this discussion, I hold that the assessee has made sufficient compliance to requirement of s. 271AAA(2), so as to deserve immunity. Penalty levied by the Ld. AO is therefore not sustainable and requires to be cancelled. The penalty levied by the Ld. AO amounting to Rs.22,50,000/- is therefore cancelled and deleted. The assessee-appellant gets an equivalent relief."
3. Learned Departmental Representative submits during the course of hearing that the CIT(A) has erred in law as well as on facts in deleting the impugned penalty on account of undisclosed income despite the fact that the assessee's search statement failed to satisfy the former two conditions of immunity of specifying the manner of having derived the undisclosed income in question followed by its substantiation, as envisaged u/s.271AAA(2) of the Act. He therefore seeks to revive the impugned penalty. We find no merit in the instant argument. There is first of all no material in the case file which could indicate that the authorized officer during the course of search in question dated 28.03.2012 had applied that the relevant legal conditions as per hon'ble jurisdictional high court's decision in Mahendra C. Shah's case (supra). It is evident that hon'ble jurisdictional high court's recent decision in Tax Appeal No.826 of 2017 Pr.CIT vs. M/s. Swapna Enterprise decided on 22.01.2018 has reiterated the following legal principles in such a case as under:
"8. Thus, insofar as satisfaction of clause (i) and clause (ii) of sub-section (2) of section 271AAA of the Act is concerned, both the Commissioner (Appeals) as well as the Tribunal have recorded concurrent findings of fact that Shri Kotadia, during the course of recording of his statement at the time of the search, had stated that the income was earned by accepting on-money in its building project. Therefore, the manner in which the income had been derived has been clearly specified in the statement made by Shri Kotadia.
Insofar as substantiating the manner in which the undisclosed income was derived is concerned, the Tribunal has recorded that it had been pointed out that the undisclosed income was received by the assessee as on-money. It is not the case of the appellant that during the course of recording of the statement of Shri Kotadia any specific questions had been asked to substantiate the manner in which the income was derived. Thus, it cannot be said that the findings recorded by the Commissioner (Appeals) and the Tribunal regarding satisfaction of clauses (i) and (ii) of sub-section (2) of section 271AAA of the Act suffers from any legal infirmity."
ITA No. 3556/Ahd/2015 [DCIT vs. Shanti Builders]A.Y. 2012-13 -7-
4. We take into account their lordships' above decision to conclude that the assessee's search statement in question had duly satisfied the above two limbs on immunity (supra) as rightly held in the lower appellate proceedings. We accordingly see no reason to interfere with the CIT(A)'s order deleting the impugned penalty.
5. This Revenue's appeal is dismissed.
[Pronounced in the open Court on this the 17th day of April, 2018.] Sd/- Sd/-
(N. K. BILLAIYA) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 17/04/2018
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।