Income Tax Appellate Tribunal - Chandigarh
Sh. Moti Lal Jindal , Chandigarh vs Dcit, Chandigarh on 18 November, 2016
1
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND Ms. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No. 789/CHD/2016
Assessment year: 2009-10
Sh. Moti Lal Jindal, Vs. The DCIT, Central Circle-1,
14, NAC, Manimajra, Chandigarh
Chandigarh
PAN No. ABIPJ4494N
(Appellant) (Respondent)
Appellant By : Sh. Sudhir Sehgal
Respondent By : Sh. S.K. Mittal
Date of hearing : 16.11.2016
Date of Pronouncement : 18.11.2016
ORDER
PER BHAVNESH SAINI, JM
This appeal by the assessee has been directed against the order of Ld. CIT(A)-3, Gurgaon dated 31.3.2016 for assessment year 2009-10 challenging the levy of penalty u/s 271AAA of the Income-tax Act, 1961 (in short 'the Act').
2
2. Briefly stated the facts of the case as noted in the impugned order are that search and seizure operation was carried out at the residential and business premises of Jindal Group of cases, Panchkula on 15.7.2008. During the course of search and seizure, assessee group made disclosure of Rs. 4 crores vide letter dated 22.7.2008 and explained surrender of Rs. 4 crores earned from their Food processing business / property business consultancy and liaisoning income, the details of the same are noted in the impugned order. The surrender was made in personal hands of Roshan Lal Jindal, Moti Lal Jindal, Ashok Jindal and Amit Jindal on equal share basis as they have a joint family business. The assessee filed return of income declaring total income at Rs. 83,84,510/-. The assessee derived income from salary and others sources. The computation of income of the assessee revealed that assessee had declared sum of Rs. 83,87,500/- as "income voluntarily disclosed in search". The assessee was asked to file the details of the disclosures and was also asked to specify the manner in which such income was derived and substantiate the manner in which income was derived. However, no reply was filed. The assessee was asked to specify the complete details of disclosures. The assessee stated the disclosures of income of Rs. 83,84,510/- was made as follows:-
(i) Cash seized from the residential premises of the assessee group amounting to Rs. 11 lakhs.
(ii) Pages 54-59 of Annexure A-10 of delta 1
(iii) Capital introduced in firms and purchase of shares of
companies amounting to Rs. 69,77,500/-
3
(iv) Jewellery amounting to Rs. 2,50,000/-
As the assessee failed to specify and substantiate the manner in which undisclosed income was earned, the Assessing officer initiated penalty proceedings u/s 271AAA of the I.T. Act. The assessee submitted before Assessing officer at the penalty proceedings that surrender was made at search and different sums were offered on different issues.
The source of income and the nature of earning were also explained and also sources of income were explained while making the offer of surrender. The offer was given after consulting the departmental officials in an amicable and cooperative manner and to settle the search cases. In case Departmental official was not satisfied they could have asked for further clarification. Thus, no fault can be attributed to the assessee, if any. The assessee was not expected to know the technicalities of law. The Assessing officer however, did not accept explanations of the assessee and levied penalty as noted above.
3. The assessee submitted before the Ld. CIT(A) that he has declared the sum while filing the return of income and full payment of tax have been made which have not been disputed by the Assessing officer. The penalty has been imposed merely because the manner of earning income has not been disclosed. He relied upon the order of the ITAT, Chandigarh in the case of Sh. DCIT Vs. Sanjeev Goyal and other in which it was held that where the manner is not disclosed, no penalty u/s 271AAA is leviable and it would be sufficient compliance 4 if income has been disclosed and tax have been paid. The Ld. CIT(A) reproduced the order of the ITAT Chandigarh in the case of Sanjeev Goyal in ITA No. 109/Chd/2015 for assessment year 2011-12 dated 18.11.2015 and deleted the penalty with regard to the capital introduced in firms and purchase of shares of companies amounting to Rs. 69,77,500/-. However, as regards the cash found from a residential preemies of the assessee group amounting to Rs. 11 lakhs, jewellery amounting to Rs. 2,500,000/-, Ld. CIT(A) noted that the assessee has not specified and substantiated the manner of earning of these undisclosed income and, therefore, to that extent penalty was confirmed and appeal of the assessee was partly allowed.
4. The Ld. Counsel for the assessee at the outset submitted that the issue is fully covered by the decision of the ITAT, Chandigarh in DCIT Vs. Sanjeev Goyal and other in ITA No. 109/Chd/2015 etc. dated 18.11.2015 in which the Tribunal dismissed the Departmental appeal on identical facts. The findings in para 8 to 13 of the order of the Tribunal are reproduced asunder:-
"8. We have heard the rival submissions and the perused the orders of the authorities below.
9. The undisputed facts in the present case are that during the course of search and seizure operations u/s 132, the assessee had surrendered an amount of Rs. 1,50,00,000/-. It is also not in dispute that assessee had attributed this 5 income as being derived from speculative dealings in commodities in oral dealings, outside the books of accounts. It is further not in dispute that the assessee had disclosed the surrendered income in its return of income and paid the taxes thereon.
In the above factual background, it is to be seen whether penalty u/s 271AAA is leviable.
It is the contention of the Revenue that though admittedly, the assessee has surrendered an income of Rs. 1,50,00,000/- during the course of search and seizure operation, disclosed the manner of earning the same being from 5 speculative dealings in commodities and also disclosed the income in its return of income, the assessee had not substantiated the manner of earning the undisclosed income and hence not fulfilled all the conditions specified u/s 271AAA for grant of immunity from penalty.
The issue therefore is whether admission of undisclosed income and a description of the nature of the same could be treated as compliance with the condition of specifying and substantiating the manner in which the undisclosed income is earned as required by the section 271AAA(2)(i) and (ii).
10. We find that a similar requirement of disclosing the manner in which undisclosed income is earned is also there in Explanation-5 to section 271(1)(c), interpreting which the Allahabad High Court in the case of CIT vs. Radha Kishan Goel (2005) 278 ITR 454 observed that non disclosure of manner of earning the undisclosed income is 6 not relevant for the purpose of availing benefit under Explanation 5 below section 271(1)(c). In CIT vs. Mahendra C. Shah [2008] 215 CTR 493 (Guj.), it was held the assessee having declared the value of diamonds in his statement under section 132(4) and paid taxes thereon before assessment, was entitled to immunity from penalty under section 271(l)(c) under Explanation 5 thereof even though the statement did not specify the manner in which the income representing value of diamonds was derived. With respect to such requirement in relation to section 271AAA, it has been held in the case of Pramod Kumar Jain v. Dy. CIT [2013] 33 taxmann.com 651 (Ctk.) that the disclosure of income under section 132(4) during the search having been made and the assessee having surrendered certain income for the relevant assessment years in the statements during the course of search and filed returns declaring the same pursuant to notice under section 153A and which returns have been accepted by the AO, levy of penalty under section 271 AAA was not justified on the ground that the assessee has though made disclosure but failed to specify the manner in which such income had been derived. Hon'ble Tribunal further held that no definition could be given to the "specified manner"
and there is no prescribed method given in the statute to indicate the manner in which income was generated. It has been held in the case of Ashok Kumar Sharma v. Dy. CIT [2013] 33 taxmann.com 652 (Ctk.) that when assessee disclosed concealed income while giving statement under section 132(4) during the course of search and paid tax thereon and showed the said undisclosed income in the return under the head "Income from business" and which 7 undisclosed income has been accepted by the Department, penalty under section 271 AAA is not leviable.
11. In view of the above judicial precedents we find that the assessee has specified and substantiated the manner of earning the income and has not violated any of the conditions specified u/s 271AAA(2), for granting immunity from penalty.
12. We therefore hold that no penalty u/s 271AAA could be levied in the present case. Accordingly we uphold the order of the Ld. CIT(A) deleting the penalty.
13. In the result, the appeal of the revenue is dismissed."
5. The copy was supplied to the Ld. DR and Ld. DR did not dispute that issue is covered in favour of the assessee by the aforesaid order.
6. Considering the facts of the case and in the light of the order of the ITAT Chandigarh in the case of DCIT Vs. Sh. Sanjeev Goyal (supra), it is clear that assessee has made surrender of income at the time of search and in the joint surrender of four persons it was explained the amount of the undisclosed income earned was from these food processing business, property business, consultancy and liaisoning income, the details of the same were filed. The undisclosed income was declared in the return of income and tax has been paid which is accepted by the Revenue Department. The issue is, therefore, covered in favour of the assessee by the order of the ITAT, 8 Chandigarh Bench in the case of DCIT Vs. Sanjeev Goyal (supra). Following this order, we set aside the order of the authorities below and cancel the penalty
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court.
Sd/- Sd/- (ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 18 t h November, 2016 Rkk Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR