Income Tax Appellate Tribunal - Chandigarh
Sh. Chetan Rupal, Ludhiana vs Acit, Cc-Ii, Ludhiana on 24 April, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A' , CHANDIGARH
ी एन. के. सैनी, उपा य एवं ी संजय गग", याय#क सद%य
BEFORE SHRI N.K. SAINI, VICE PRESIDENT
AND SHRI SANJAY GARG, JUDICIAL MEMBER
आयकर अपील सं./ ITA No.267/Chd/2018
नधा रण वष / Assessment Year : 2014-15
Sh. Chetan Rupal, बनाम The A.C.I.T.,
H.N. 374, Baba Balak Central Circle-II,
Nath Road, civil Lines, Ludhiana.
Ludhiana.
थायी लेखा सं./PAN NO.AGAPR0397P
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : S/Shri Ashwani Kumar, CA
& Aditya Kumar, CA
राज व क ओर से/ Revenue by : Shri Rohit Mehra, S.DR
सन
ु वाई क तार$ख/Date of Hearing : 10.04.2019
उदघोषणा क तार$ख/Date of Pronouncement: 24.04.2019
आदे श/ORDER
Per N.K.Sai ni, Vice President:
This is an appeal filed by the assessee against the order dated 7.12.2017 of learned Commissioner of Income T a x ( A p p e a l s ) - 5 , L u d h i a n a ( i n short 'CI T( A') .
2. The ground raised by the assessee reads as under:
" T h a t o r d e r p a s s e d u / s 2 5 0 ( 6 ) o f t h e I n c o me T ax Act, 1961 by the Ld. Commissioner of Income T ax (Appeals)-5, Ludhiana upholding levy f penalty u/s 271AAB at Rs.6,00,000/- is against l a w a n d f a c t s o n t h e f i l e i n a s mu c h n o s u c h penalty wa s exigible in the f acts and c i r c u ms t a n c e s o f t h e c a s e . "
3. The only grievance in this appeal relates to sustenance of penalty of Rs.6 lacs u/s 271AAB of the Income Tax Act, 1961 (hereinafter referred as 'Act') 2 ITA No.267/Chd/2018 A.Y.2014-15
4. Facts of the case i n bri ef are that a search and se i zure operati on under secti on 132( 1) of the I ncome Ta x Act, 1961 ( herei nafter referred to as 'Act' ) was carri ed o ut at the busi ness premi ses of the assessee on 24.10.2013.
5. Duri ng the course of assessment proceedi ngs i t was found that the assessee at the ti me of search p roceedi ngs u/s 132 of the A ct, had admi tted undi scl osed i nc ome of Rs. 60,00,000/- under secti on 132( 4) of the Act and the return of i ncome was fi l ed on 31.7.20 14. The Assessi ng Offi cer i ni ti ated the penal t y proceedi ngs on the undi scl osed i ncome under secti on 271AAB of the Act, and requi red the assessee to sho w cause as to why the penal t y under secti on 271AAB of the Act should not be i mposed. I n response the assessee submi tted as under:
" It is res pec tf ul l y sub mi tted th at a se arch u/s 13 2 of the Inco me T ax Ac t, 1961 was conduc ted at bus iness pre mise s of the group concerns on d ate d
24. 10. 2013. During the course of assess men t proceed ings a de tail ed re pl y wi th res pec t to inco me decl ared/surrend er to cover v ar io us d iscre p anc ies sub jec t to no pe n al ac tion, adde d in the re turne d inco me and wh ol e due tax th ereon h ad been al re ad y de pos i te d, was f urnished /ex pl ained, wh ic h was surrendered u/s 132( 4) of th e Inco me T ax Ac t, 1961. In order to esc ape the r igou rs of penal ty u/s 271AAB of the In co me T ax Ac t, 19 61 an assessee i s requ ired to s pec i f y and subs tan ti ate the manner i n wh ic h the und is cl osed inco me has been der ived . T he question of spec if ying the manner in wh ich th e inco me h as bee n der ived is du l y ans we red an d thus i t c an s af ely s aid th at the assessee h as dul y co mpl ied wi th the rel ev an t pr ov is ions and if prov is ions of sec tion 271AAB are perused th e o pen ing sen tence re ad as under: -
271AAB( 1) T he Assess ing O ff icer may, no t wi th s tand ing an yth ing con tain ed in an y o ther prov is ions of th is Ac t, d irec t th at, in a c ase wh ere se arch h as been in i ti ated under sec tion 132 on o r af ter the 1s t d ay of Jul y, 2012, the assessee sh al l 3 ITA No.267/Chd/2018 A.Y.2014-15 p ay b y way of pen al ty, in add i ti on to tax, if an y, p ayabl e b y h i m, -
It cl e arl y sho ws th at i t is the d is cre tion of the Ld. A. O. to l ev y or no t to l ev y pen al ty u/s 271AAB in as much as the l eg isl ature in its o wn wis do m h as used the wo r d 'M ay' and no t ' sh al l '.
In v ie w of th e above, i t is res pec tf ul l y sub mi tted th at th e pen al ty procee d ings in ques tion may k indl y be f il ed as no such pen al ty i s ch arge abl e in th e f ac ts and c irc u ms tances of th e c ase".
The Assessi ng Offi cer, ho wever, di d not fi nd meri t i n the submi ssi ons of the assessee a nd l evi ed the pen al t y under secti on 271AAB( 1) of the Act, @ 10% of the undi scl osed i ncome. Accordi ngl y penal t y of Rs. 6,00,000/- was levi ed.
6. Bei ng aggri eved the assessee carri ed the matter to the Ld. CI T( A) and submi tted that penal t y was not mandator y as i t was the di scret i on of the Assess i ng Offi cer to lev y or not to l ev y the penal t y as the l egi sl ature used the word "ma y" and not "shal l ". I t was further stated that the assessee had admi tted undi scl osed i ncome under secti on 132( 4) of the Act and substanti ate d the manner of deri vi ng the i n come and al so pai d the ta x together with i nterest in respect of undi scl osed i ncome before the sp eci fi ed date, the refore, the penal t y under se cti on 271AAB ( 1) of the Act was n ot l evi abl e. Ld. CI T( A) ho wev er di d not fi nd meri t i n the sub mi ssi on of the assessee and sustai ned the penal t y by observi ng i n para 4.5 of the i mpugned order as under:
"The facts of the case, the order of the AO imposing the penalty and the arguments of the AR have been considered. The AO has mentioned that the assessee surrendered undisclosed income amounting to Rs. 60,00,000/- for the A.Y. under consideration on account of 'Income earned from trading of textiles fabrics and invested in 4 ITA No.267/Chd/2018 A.Y.2014-15 jewellery, machinery and other personal assets etc/ as per the statement recorded u/s 132(4) dated 28.11.2013. The assessee offered this additional income over and above the normal income only after the search and seizure action undertaken by the Income Tax Authorities. On the other hand, the AR has submitted that the appellant has duly declared the income in his return of income along with the undisclosed income offered in the statement and has also specified the manner of earning such undisclosed income. Dues taxes along with interest have already been paid before filing the return. The AR further argued that the penalty u/s 271AAB is not automatic and cited certain judgments in support of his claim.
As the search action in this case was conducted on 24.10.2013, therefore, provisions of section 271AAB are applicable. It is also not in dispute that the case of the assessee is covered under sub-section (l)(a) of Section 271AAB because in the submission filed before the AO, it was argued that penalty at a rate of 10% only is attracted in this case. During the appellate proceedings, the AR in the submissions has reproduced the provision of section 271AAB. The language of the Section is very clear and unambiguous that in a case where the assessee admits the undisclosed income under Section 132(4), pays the tax together with the interest on the undisclosed income before the specified date and also specifies the manner in which the undisclosed income was derived, then the assessee shall pay penalty equal to 10% of the undisclosed income. The AO has accepted that all these conditions are fulfilled in the case of the assessee in respect of the undisclosed income of Rs. 60,00,000/- surrendered after the search. The AR has not been able to rebut the findings of the AO during the appellate proceedings. Therefore, under the facts and the circumstances of the case and in view of the clear provisions of law, the penalty imposed by the AO in this case @ 10% of undisclosed income is found sustainable as per law and hence confirmed.
Accordingly, this ground of appeal is dismissed."
7. No w the assessee i s i n appeal .
8. Ld. Counsel for the assessee submi tted that the penal t y u/s 271AAB of t he Act l evi ed by the Assessi ng Offi cer was vo id ab in i tio bec ause he has not taken the pri or approval under secti on 274( 2) of the Act, whi ch was accorded vi de l etter No. 1034 dated 30.09.2016 whi l e the penal t y order was passed by the Assessi ng Offi cer on 29.09.2016 i.e. pri or 5 ITA No.267/Chd/2018 A.Y.2014-15 to taki ng the approval from the Addi ti onal CI T, Central Ci rcl e, Range Ludhi ana.
9. In hi s ri val submi ssi ons the Ld. Sr. DR str ongl y supported the orders of the authori ti es bel o w and further submi tted that there ma y be a t ypographi cal mi stake i n the order passed under secti on 271AAB( 1) of the Act and by mi stake the dat e was menti one d as 29.09.2016 whi l e the DCR number was dated 30.09.2016.
10. We have consi der ed the submi ssi o ns of both the pa rti es and perused the materi al avai l abl e on the record. To resol ve the present controvers y i t i s rel evant to refer the provi si ons contai ned i n Secti on 274( 2) of the Act whi ch read as under:
"Sec tion 274( 1)... .........
( 2) No order i mpo s ing a pen al ty u nder th is Ch ap te r sh al l be made-
( a) b y th e Inco me - tax Of f icer, wh e re the pen al ty exceeds ten thou s and rupees;
( b ) by the Ass is tan t Co mmis s i oner or De pu ty Co mmis s ioner, where the pen al ty exceeds t we n ty thous and rupees, exce p t wi th th e pr ior approv al of the Jo in t Co mmis s ioner. "
11. From the above provi si ons contai ned i n secti on 2 74 of the Act, i t i s crystal cl ear that the penal t y under secti on 271AAB of the Act, whi ch fal l s i n Chapter XXI of the Act shal l not be i m posed by the A ssessi ng Offi cer unti l and unl ess pri or approval i s taken from the conc erned Joi nt Commi ssi oner of I ncome Ta x ( JCI T) . The use of word "shal l "
make it mandator y to take the pri or approval of the JCI T/Addi ti onal CI T before passi ng the order i mposing the penal t y under secti on 271AAB of the Act. I n the present case i t i s cr ystal cl ear from the penal t y order passed by the 6 ITA No.267/Chd/2018 A.Y.2014-15 Assessi ng Offi cer that the order was passed on 29.09.2016 whi l e the approval from the Additi onal CI T, Range Ludhi ana was accorded vi de l etter no. 1034 dated 30.09.2016, whi ch cl earl y establ i shed that the pena l t y order was pa ssed by the Assessi ng Offi cer on 29.09.2016 before taki ng the approval from the conce rned Addi ti onal CI T/JCI T. The refore the penal t y order pa ssed by the Asse ssi ng Offi cer for lev yi ng the penal t y under se cti on 271AAB of the Act was vo id ab in i tio. I n that vi e w of the matter the i mpugned penal t y levi ed u/s 271AAB of the Act by the Assessi ng Offi cer and sustai ned by the Ld. CI T( A) i s del eted.
1 2. I n t h e r es u l t , t h e a p p e a l of t h e a ss e s s e e i s a l l o w e d.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t o n 2 4. 0 4 . 2 019 .
Sd/- Sd/-
संजय गग" एन. के. सैनी
(SANJAY GARG ) (N.K. SAINI
याय#क सद%य/ Judicial Member उपा य / Vice President
'दनांक /Dated: 24th April, 2019
*रती*
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय-
ु त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File
आदे शानस
ु ार/ By order,
सहायक पंजीकार/ Assistant Registrar