Income Tax Appellate Tribunal - Indore
Smt. Dropadi Kalra, Indore vs The Dcit (Central-I), Indore on 10 January, 2019
ITA Nos.78 to 80 & 85 to 97/Ind/2017
M/s. SM & SM Resorts N
Hotels International Ltd., Indore and
Shri Deepak Kalra, Indore & others
आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA Nos.78 to 80/Ind/2017
Assessment Years: 2010-11, 2011-12 & 2012-13
respectively
M/s. SM & SM Resorts & DCIT(Central)-1
Hotels International Ltd. Vs. Indore
6-Shriram Nagar, Indore
(Appellant) (Respondent )
PAN No.AAHCS5800L
ITA Nos.85 to 89/Ind/2017
Assessment Years: 2007-08, 2008-09, 2010-11, 2012-
13 & 2013-14 respectively
Shri Deepak Kalra DCIT(Central)-1
6, Shriram Nagar Vs. Indore
Indore
(Appellant) (Respondent )
PAN No.ALGPK9075L
1
ITA Nos.78 to 80 & 85 to 97/Ind/2017
M/s. SM & SM Resorts N
Hotels International Ltd., Indore and
Shri Deepak Kalra, Indore & others
ITA Nos.90 to 94/Ind/2017
Assessment Years: 2007-08 to 2011-12
Shri Nanakram Kalra DCIT(Central)-1
6, Shriram Nagar Vs. Indore
Indore
(Appellant) (Respondent )
PAN No.AKXPK2781P
ITA Nos.95 to 97/Ind/2017
Assessment Years: 2007-08 to 2009-10
Smt. Dropadi Kalra DCIT(Central)-1
6, Shriram Nagar Vs. Indore
Indore
(Appellant) (Respondent )
PAN No.ACWPN1380N
Revenue by Shri S.S. Sheetal, A.R.
Assessee by Shri K.G. Goyal, D.R.
Date of Hearing 12.12.2018
Date of 10.01.2019
Pronouncement
ORDER
PER BENCH:
This bunch of 16 appeals by four different assessees are directed against order of the CIT(A)-III, Indore dated 7.12.2016 for the assessment years 2007-08 to 2013-14.
All the appeals pertaining to the same group were taken up 2 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others together and are being disposed of by way of this consolidated order for the sake of convenience and brevity. First we take up ITA No.78/Ind/2017 in the case of SM & SM Resorts N Hotels International Ltd. Vs. DCIT (Central)- 1, Indore. The assessee has raised following grounds of appeals:
1. On the facts and in the circumstances of the case, and, in law, the Hon'ble Commissioner of Income Tax (Appeals)-III, Indore erred in confirming the penalty of Rs.92,700/- levied u/s 271(1)(c) of the Income Tax Act, 1961 by the Assistant Commissioner of Income Tax (Central)-I, Indore.
2. The appellate order being not based on facts, and in law, is illegal and wrong.
3. The appellant company craves leave to add/alter/amend the above Grounds of Appeal, if and when, necessity or occasion arises.
2. Briefly stated facts are that a search & seizure operation was carried out in the business as well as residential premises of the appellant group, Indore including the assessee along with other concerns/business associates on 21.9.2012. Subsequently, a notice u/s 153A of the Income Tax Act, 1961 (hereinafter called as 'the Act') was issued. In response thereto, the assessee filed return 3 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others of income. The A.O. framed assessment u/s 153A r.w.s. 143(3) of the Act vide order dated 24.3.2015. While framing the assessment, the A.O. also initiated penalty proceedings u/s 271(1)(c) of the Act in the case of the assessee for the assessment years 2010-11 & 2011-12 and penalty u/s 271AAB of the Act for the assessment year 2012-13. Subsequently, the A.O. imposed a penalty u/s 271(1)(c) of the Act in respect of appeal under consideration vide order dated 23.9.2015 thereby the assessing officer imposed a penalty of Rs.92,700/- u/s 271(1)(c) of the Act. Against this, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions dismissed the appeal. Now the assessee is in further appeal before this Tribunal.
3. Ld. Counsel for the assessee vehemently argued that the penalty is bad in law and is contrary to the judicial pronouncements, more particularly judgement of the 4 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others Hon'ble jurisdictional High Court rendered in the case of PCIT-I Vs. Kulwant Singh Bhatia in ITA No.9 of 2018 (M.P.) dated 9.5.2018. Ld. Counsel for the assessee submitted that there is no specific charge by the assessing officer. Further, it is contended that the Ld. CIT(A) did not consider the submissions of the assessee. He submitted that the A.O. ought to have made specific charge, moreover the notice u/s 271(1)(c) of the Act dated 24.3.2015 is ex-facie defective and contrary to the judgement of the Hon'ble jurisdictional High Court in the case of PCIT-I Vs. Kulwant Singh Bhatia (supra).
4. Per contra, Ld. D.R. opposed the submissions of the assessee and submitted that in pursuance to the notice, the assessee participated into the proceedings and did not raise any objection before the A.O. about the legality of the notice dated 24.3.2015. Therefore, he submitted that assessee cannot take shelter under the judgement of the 5 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others Hon'ble jurisdictional High Court, which was on the different set of facts.
5. We have heard the rival submissions, perused the materials available on records and gone through the orders of the authorities below. We find that the Ld. CIT(A) has decided the issue in paras 3.1 to 3.6.2 of the impugned order, which is reproduced as under:
6
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others 7 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others
6. We find that the notice issued for levy of penalty dated 24.3.2015 do not contain the specific charge. The notice dated 24.3.2015 is reproduced as under for the sake of clarity:
8
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others 9 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others
7. The Hon'ble jurisdictional High Court in the case of PCIT-I Vs. Kulwant Singh Bhatia (supra) in paras 9 to 11 has held as under:10
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others
8. The revenue has not brought any contrary material suggesting that a valid notice was served on the assessee for initiating proceedings u/s 271(1)(c) of the Act. This Tribunal is bound by the judgement of the Hon'ble jurisdictional High Court. Respectfully following the same 11 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others penalty proceedings initiated by the A.O. vide notice dated 24.3.2015 are held to be bad in law and contrary to the judgement of the Hon'ble M.P. High Court in the case of PCIT-I Vs. Kulwant Singh Bhatia (supra). Accordingly, the impugned penalty order is hereby quashed, being bad in law.
9. In the result, the appeal filed by the assessee in ITA No.78/Ind/2017 is allowed.ITA No.79/Ind/2017:
10. Now we take up ITA No.79/Ind/2017. In this appeal of the assessee, the facts and grounds are identical to ITA No.78/Ind/2017 wherein we have held as under:-
7. The Hon'ble jurisdictional High Court in the case of PCIT-I Vs. Kulwant Singh Bhatia (supra) in paras 9 to 11 has held as under:12
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others 13 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others
8. The revenue has not brought any contrary material suggesting that a valid notice was served on the assessee for initiating proceedings u/s 271(1)(c) of the Act. This Tribunal is bound by the judgement of the Hon'ble jurisdictional High Court. Respectfully following the same penalty proceedings initiated by the A.O. vide notice dated 24.3.2015 are held to be bad in law and contrary to the judgement of the Hon'ble M.P. High Court in the case of PCIT-I Vs. Kulwant Singh Bhatia (supra). Accordingly, the impugned penalty order is hereby quashed, being bad in law."
For the same reasoning the impugned penalty order is hereby quashed being bad in law.
14
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others ITA No.80/Ind/2017:
11. This appeal by the assessee is against confirming the penalty u/s 271AAB of the Act. The assessee has raised following grounds of appeal:
1. On the facts and in the circumstances of the case, and, in law, the Hon'ble Commissioner of Income Tax (Appeals)-III, Indore erred in confirming the penalty of Rs.1,50,000/- levied u/s 271AAB(1)(c) of the Income Tax Act, 1961 by the Assistant Commissioner of Income Tax (Central)-I, Indore.
2. The appellate order being not based on facts, and in law, is illegal and wrong.
3. The appellant company craves leave to add/alter/amend the above Grounds of Appeal, if and when, necessity or occasion arises.
12. Briefly stated facts are that a search & seizure operation was carried out in the business as well as residential premises of the appellant group, Indore including the assessee along with other concerns/business associates on 21.9.2012. Subsequently, a notice u/s 153A of the Income Tax Act, 1961 (hereinafter called as 'the Act') was issued. In response thereto, the assessee filed return of income. The A.O. framed assessment u/s 153A r.w.s. 143(3) of the Act vide order dated 24.3.2015. While 15 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others framing the assessment, the A.O. also initiated penalty proceedings u/s 271(1)(c) of the Act in the case of the assessee for the assessment years 2010-11 & 2011-12 and penalty u/s 271AAB of the Act for the assessment year 2012-13. Subsequently, the A.O. imposed a penalty u/s 271AAB of the Act in respect of appeal under consideration vide order dated 23.9.2015 thereby the assessing officer imposed a penalty of Rs.1,50,000/- u/s 271AAB(1)(c) of the Act i.e. pertaining to the assessment year 2012-13. Against this, the assessee preferred an appeal before the Ld. CIT(A), who after considering the submissions dismissed the appeal. Now the assessee is in further appeal before this Tribunal.
13. Ld. Counsel for the assessee submitted that the authorities below were not justified in levying and confirming the same. He submitted that the disclosure of income was not on the basis of any incriminating material. 16
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others He contended therefore, the imposition of penalty is arbitrary and unjustified. Ld. Counsel for the assessee relied upon the submissions made before the Ld. CIT(A).
14. Per contra, Ld. D.R. opposed the submissions and supported orders of the authorities below. He submitted that nowhere under the Act it is prescribed that the penalty u/s 271AAB of the Act can be imposed only for the additions made on the basis of incriminating material. He further submitted that the judgement of the Hon'ble Apex court rendered in the case of Mak Data Pvt. Ltd. Vs. CIT in Civil appeal No.9772/2013 has rightly been applied.
15. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that during the course of search, it was noticed by the revenue authorities that the assessee had made 17 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others transaction for purchase of material in cash, which was not recorded in the books of accounts. It was only when confronted, the same was offered for taxation as income from undisclosed sources. As per section 271AAB of the Act, the A.O. can direct the assessee to pay a sum computed @ 10% in the undisclosed income of the specified previous year, if such assessee in the course of the search in a statement under sub section 4 of section 132 of the Act admits the undisclosed income and specifies the manner in which such income has been derived. To substantiate the manner in which the undisclosed income was derived and on or before the specified date pays the taxes together as interest, if any in respect of undisclosed income and furnishes the return of income in the specified previous year declaring such undisclosed income therein. Another situation as stipulated by that provision is that penalty @ 20% where in the course of search in a 18 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others statement under sub-section 4 of section 132 of the Act does not admit the undisclosed income and on or before the specified date declared such income in the return of income furnished for the specified previous year and pays the taxes together with interest, if any in respect of the undisclosed income. Another situation is stipulated where the assessee's case is not covered by the aforesaid conditions. The rate of penalty would be 60%. In the present case, assessing officer has invoked the provisions of section 271AAB(1)(c) of the Act on the basis that the addition pertains to specified previous year and the assessee could not specify and substantiate the manner in which the undisclosed income has been derived. The Ld. CIT(A) decided the issue in para 3.1 to 3.7 of his order which is reproduced as under:
"3.1 I have gone through the assessment order and the appellant's contentions. The crux of the submissions made before the Assessing Officer was that since the additional income was offered in the return filed in response to notice issued u/s 153A and no separate addition had been made, no penalty is 19 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others leviable. The Assessing Officer held that the assessee had offered the additional income only as a result of the search and seizure operation. The assessee has not filed any appeal against the assessment order. Further, the assessee could not explain the manner.
3.2 During the appellate proceedings it is again reiterated that the appellant has made disclosure of additional income amounting to Rs.5,00,000/- on account of various payments made in cash for material purchase as well as for labour/contractor payments as a precaution to safeguard from future litigation/penal actions. The said additional income was admitted during the course of search itself u/s 132(4) before Investigation Wing. The appellant has submitted that no incriminating documents/entries were found during the course of the search.
3.3. It is seen that the appellant in its submissions before the Assessing Officer and the undersigned is placing undue importance on the voluntary disclosure made to buy the peace of mind. The Hon'ble Supreme Court in the case of Mak Data (P) Ltd., (2013) 38 Taxmann.com 448 has held that the AO shall not be carried away by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct.
3.4 The Financial Year under consideration was the specified previous year, hence provisions of section 271AAB would apply. It would be useful to reproduce the meaning of "undisclosed income" for levying the penalty u/s 271AAB of the Act. Same is provided as Explanation (c) to this Section 271AAB of the Act, and reproduced as under:
"Explanation For the purposes of this section,--
(c) "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 accounts or other documents maintained in the normal couirse relating to such previous year; or (B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search; or
(ii) any income of the specified previous year represented, either wholly 20 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others 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."
3.5 In view of the additional income admitted u/s 132(4) and offered by the appellant in the return of income filed u/s 153A for A.Y. 2012-13 it is clear that there was undisclosed income which has been disclosed on account of various payments made in cash for material purchase as well as for labour/contractor payments of Rs.5,00,000/-. That there was undisclosed income of Rs.5,00,000/- which could not be explained on account of which additional income has been admitted, such income .
3.0 2012-13 5,00,000/- out of expenses claimed in Trading & P&L A/c The assessee company has made cash payments for material purchase and labour/contractors payments which is unavoidable in the trade as that of the assessee company but considering the provisions of section 40A(3) as applicable in this relevant assessment year, and to avoid any further litigation in this matter, the assessee company wish to surrender this amount as its undisclosed income for A.Y. 2012-13. 3.1 Total surrender made by M/s. SM& SM Resorts N Hotels International Ltd. for A.Y. 2012-13 Rs.5,00,000/- Therefore, twin conditions to attract levy of penalty u/s 271AAB being undisclosed income and the financial year being the specified previous year have been satisfied in the present case. 3.6 The Assessing Officer has levied penalty @ 30% u/s 271AAB (1)(c)holding that the assessee could not explain the manner in which the undisclosed income was derived in the instant casae a statement was given on the date of search disclosing additional income which was reiterated in the letter filed before the investigation wing. In the details of the surrender made by the appellant before the Investigation Wing only the details of the disclosure have been given and the manner of earning the undisclosed income has not been stated. As the manner of earning the undisclosed income has not been explained I hold that penalty is to be leived @ 30% of the undisclosed income u/s 271AAB(1)(c). 3.7 In view of the facts and circumstances of the case it is held that penalty is 21 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others leviable u/s 271AAB (1)(c) @ 30% of the undisclosed income Grouind Nos.1 and 2 are dismissed."
16. It is recorded by the A.O. that during the course of search evidences related to payment in cash for material purchase was found and on examination of books of accounts, it was found that these amounts were not accounted for by the assessee. It is also stated by the assessing officer that through this letter Shri Deepak Kalra stated that these payments were made out of income from undisclosed sources and admitted these amounts as additional income from undisclosed sources. This fact is not rebutted by the assessee by placing any contrary material on record. Since there is no ambiguity under the law and the assessee has not placed any material which could suggest that these payments in cash for material purchases was recorded in books of accounts before search was conducted. The grounds raised in this appeal are dismissed and order of the Ld. CIT(A) is affirmed. 22
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others ITA No.85/Ind/2017:
17. Now we take up ITA No.85/Ind/2017. The grounds raised by the assessee are reproduced as under:
1. On the facts and in the circumstances of the case, and, in law, the Hon'ble Commissioner of Income Tax (Appeals)-III, Indore erred in confirming the penalty of Rs.10,66,050/- levied u/s 271(1)(c) of the Income Tax Act, 1961 by the Assistant Commissioner of Income Tax (Central)-I, Indore.
2. The appellate order being not based on facts, and in law, is illegal and wrong.
3. The appellant craves leave to add/alter/amend the above Grounds of Appeal, if and when, necessity or occasion arises.
18. At the outset, Ld. Counsel for the assessee submitted that the penalty so initiated is vitiated due to defective notice issued by the A.O. He submitted that the penalty order to be quashed on this ground alone in view of the Hon'ble jurisdictional High Court decision in the case of Principal CIT Vs. Kulwant Singh Bhatia in ITA No.9 of 2018.
19. Ld. D.R. opposed the submissions of the Ld. Counsel for the assessee.
23
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others
20. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. We find that the notices issued for levy of penalty dated 24.3.2015 do not contain the specific charges. The notices dated 24.3.2015 for the A.Y. 2007-08, is reproduced as under for the sake of clarity: 24
ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others
21. The revenue has not brought any contrary material suggesting that a valid notice was served on the assessee for initiating proceedings u/s 271(1)(c) of the Act. This Tribunal is bound by the judgement of the Hon'ble jurisdictional High Court respectively following the same penalty proceedings initiated by the A.O. vide notice dated 24.3.2015 are held to be bad in law and contrary to the judgement of the Hon'ble M.P. High Court in the case of PCIT-I Vs. Kulwant Singh Bhatia (supra). Accordingly, the impugned penalty order is hereby quashed.
22. In the result, the appeal filed by the assessee in ITA No.85/Ind/2017 is allowed. ITA Nos.86 to 87/Ind/2017:
23. Now we take up ITA No.86 to 87/Ind/2017. In these appeals of the assessee, the facts and grounds are identical to ITA No.85/Ind/2017 adjudicated above and the 25 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others parties have adopted the same argument and based on the findings given, the A.O. is directed to delete the penalty and hence, these appeals of the assessee are also allowed. ITA Nos.88 & 89/Ind/2017:
24. Now we take up ITA Nos.88 & 89/Ind/2017. In these appeals of the assessee, the facts and grounds are identical to ITA No.80/Ind/2017 adjudicated above and the parties have adopted the same argument. Based on the findings given above, the grounds raised in these appeals are dismissed.
ITA Nos.90 to 94/Ind/2017:
25. Now we take up ITA Nos.90 to 94/Ind/2017. In these appeals of the assessee, the facts and grounds are identical to ITA No.78/Ind/2017 adjudicated above and the parties have adopted the same argument. Based on the findings given above, the A.O. is directed to delete the 26 ITA Nos.78 to 80 & 85 to 97/Ind/2017 M/s. SM & SM Resorts N Hotels International Ltd., Indore and Shri Deepak Kalra, Indore & others penalty and hence, these appeals of the assessee are also allowed.
ITA Nos.95 to 97/Ind/2017:
26. Now we take up ITA Nos.95 to 97/Ind/2017. In these appeals of the assessee, the facts and grounds are identical to ITA No.78/Ind/2017 adjudicated above and the parties have adopted the same argument. Based on the findings given, the A.O. is directed to delete the penalty and hence, these appeals of the assessee are also allowed.
27. In the result, the appeals filed by different assessees in ITA Nos.78 & 79/Ind/2017, ITA Nos.85 to 87/Ind/2017, ITA Nos.90 to 94/Ind/2017 and ITA Nos.95 to 97/Ind/2017 are allowed and the appeals raised in ITA No.80/Ind/2017 and Nos.88 & 89/Ind/2017 are dismissed.
The order pronounced in the open Court on 10.01.2019.
Sd/- Sd/-
(MANISH BORAD) (KULBHARAT)
ACCOUNTANT MEMBER JUDICIAL MEMBER
दनांक /Dated : 10th January, 2019
VG/SPS
27
ITA Nos.78 to 80 & 85 to 97/Ind/2017
M/s. SM & SM Resorts N
Hotels International Ltd., Indore and
Shri Deepak Kalra, Indore & others
Copy to: The Appellant/Respondent/CIT concerned/CIT(A)
concerned/ DR, ITAT, Indore/Guard file.
By Order, Asstt.Registrar, I.T.A.T., Indore 28