Income Tax Appellate Tribunal - Delhi
Sh. Ashwani Kumar Arora, New Delhi vs Acit, New Delhi on 16 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'D' BENCH,
NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND
SHRI B.P. JAIN, ACCOUNTANT MEMBER,
ITA No. 6615/DEL/2013
[Assessment Year: 2009-10]
Shri Ashwani Kumar Arora Vs. The A.C.I.T
Unit No. 134, First Floor Circle - 19
Rectangle - 1, Saket Distt. Centre New Delhi
New Delhi
PAN : AEIPA 8562 R
[Appellant] [Respondent]
Date of Hearing : 29.06.2017
Date of Pronouncement : 16.08.2017
Assessee by : Shri Salil Kapoor
Shri Sumit Lalchandani
Ms. Ananya Kapoor, Advocates
Revenue by : Shri S.S. Rana, CIT-DR
ORDER
PER B.P. JAIN, ACCOUNTANT MEMBER,
This appeal of the assessee arises from the order dated 02.08.2013 of ld. CIT(A) XXXIII, New Delhi for AY 2009-10 in respect of penalty under section 271AAA of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] . 2 ITA No. 6615/DEL/2013
2. The Grounds of appeal raised by the appellant are as under :-
"1. That the CIT(A) has, in view of the facts and circumstances of the case, erred on facts and in law in upholding the penalty order passed by the AO. The penalty order is illegal, bad in law and without jurisdiction.
2. That the CIT(A) has, in view of the facts and circumstances of the case, erred on facts and in law in upholding the penalty of Rs 16,55,218/- levied by the AO u/s 271 AAA .
3. That the CIT(A) has , in view of the facts and circumstances of the case, erred on facts and in law in observing that the case of the appellant does not fit into the scope of Sec 271 AAA .
4. That the CIT(A) has, in view of the facts and circumstances of the case, grossly erred on facts and in law in observing that the surrender made by the assessee is not in course of the statement recorded u/s 132(4) and hence Sec 271 AAA benefit cannot be granted to the appellant .
5. That the CIT(A) has erred on facts and in law in dismissing the appeal of the assessee and the CIT(A) has failed to adjudicate the matter in a judicious manner .
6. That the evidence and submissions filed and materials available on record have not been properly construed and judiciously interpreted, hence the penalty levied is uncalled for.3 ITA No. 6615/DEL/2013
7. That the various observations made by the CIT(A) in the impugned order are illegal , bad in law, contrary to the facts on record and based on surmises and conjectures .
8. That in any case the penalty is highly excessive and should be reduced."
3. The brief facts of the case are that a search was commenced on the Dawat group on 10.02.2009 and the assessee was also covered under the search. During the course of search a statement under section 132(4) of the Act was recorded. In continuation to the said statement the group filed a letter dated 17.03.2009 surrendering an amount of Rs 17 crores in all the entities of the group including the companies, directors and their family members. It was stated in the said letter that the tax shall be paid in the respective hands on the respective incomes determined after going through the seized material. The assessee filed a return of income declaring income of Rs 88,46,380/- on 08.12.2009. The assessee also filed a letter dated 21.01.2010 with reference to earlier letter dated 17.03.2009 declaring the additional income of Rs 47,79,685/- (Rs 47,79,685/- is part of Rs 88,46,380/-) and also explained the manner in which the income is earned i.e. trading in various commodities and real estate and also stated that this fact is substantiated from the seized material. It was also stated that the surrender made during the 4 ITA No. 6615/DEL/2013 course of search vide letter dated 17.03.2009 is modified to that extent. The assessee filed another letter before the AO on 28.12.2010 further modifying his surrender made on 17.03.2009 by declaring additional income of Rs 1,17,72,500/- for the relevant AY 2009-10 in addition to additional income of Rs 47,79,685/- which was already offered to tax in return dated 08.12.2009. Thereby the additional income offered by the assessee was Rs 1,65,52,185/- in addition to its regular income. According to the assessee the total declared income including the additional income was Rs 2,06,18,880/-. The assessment order was passed at Rs 2,06,18,880/- on 31.12.2010 and penalty proceedings under section 271AAA.
4. The case of the assessee before the AO in penalty proceedings was that the assessee has surrendered the additional income during the course of search and as such the penalty under section 271AAA of the Act should not be levied. The case of the AO is that the income was declared by the group but the same is retracted by them and only a small portion of the undisclosed income was reflected in the returns and as such the immunity of Section 271AAA(2) of the Act is not available and as such he imposed penalty of Rs 16,55,218/- being 10% of the undisclosed income of Rs 1,65,52,185/-. 5 ITA No. 6615/DEL/2013
5. The assessee preferred appeal before CIT(A). The CIT(A) has dismissed the appeal on the ground that the search was concluded on 10.02.2009 as the panchnama at various factory premises and registered offices was closed on 10.02.2009. Only the lockers of the lady members of the group were operated on 23.03.2009, 25.03.2009 and 27.03.2009 and as such the letter dated 17.03.2009 cannot be treated as statement under section 132(4) of the Act. According to CIT(A) the surrender was of Rs 17 crores and the declared income is much less and hence he confirmed the action of the AO.
6. During the course of hearing, the ld counsel for the assessee submitted that the letter dated 17.03.2009 was filed in continuation of the statement recorded under section 132(4) of the Act and this fact is mentioned in the letter itself. The amount of Rs 17 crores was surrendered to cover all the entities of the group and all the family members of the group including the assessee. The last panchnama of the group was drawn on the dates when the lockers of the family members of the group were operated. It was the search on the whole group and not on the assessee only and as such it cannot be said that the letter dated 17.03.2009 was not filed 6 ITA No. 6615/DEL/2013 during the search. The search had taken place on various premises including the residences and lockers of the family members and the search continued till the last panchnama was drawn in respect of lockers.
7. The ld counsel further submitted that the letters dated 21.01.2010 and 28.02.2010 were filed in modification of earlier letter dated 17.03.2009 and as such this is not a case of retraction. The surrender was made with reference to the seized documents and the same is accepted by the AO while completing the assessment as the income assessed and the income returned/surrendered are same. It is submitted that the purpose of the provision is that if the income is surrendered by the assessee during the search then the penalty under section 271AAA of the Act is not to be imposed and in this case the surrender was of Rs 17 crores for the whole group without looking at the seized material and the income returned/surrendered by the assessee is the income earned by the assessee based on the seized documents and this fact is clear from the assessment order as the income surrendered/returned and the assessed are same. The ld counsel has relied on the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd vs. State of Orissa 83 ITR 26 (SC) for the 7 ITA No. 6615/DEL/2013 proposition that penalty should not be imposed merely because it is imposable.
8. On the other hand, the ld. DR appearing on behalf of the revenue argued that the penalty has been rightly imposed. He submitted that the assessee had surrendered Rs. 17 crores but did not pay the tax on that amount. He referred to the provisions of the Act and stated that the assessee has not shown the manner of income earned. He submitted that the letters filed by the assessee are not in consonance with the provisions of the Act. According to him, the conditions of Section 271AAA(2) of the Act are not fulfilled. It is stated that the assessee has not paid the tax on Rs 1,17,72,500/- which was surrendered vide letter dated 28.02.2010 as it was not part of the returned income and as such the penalty under section 271 AAA of the Act is rightly imposed.
9. In the rejoinder, the ld counsel for the assessee submitted on instructions that the tax has also been paid on Rs 1,17,72,500/-. He also submitted that it is not the case of AO or ld. CIT(A) that the manner in which the surrendered income is earned is not shown. He stated that in any case, the assessee vide letter dated 21.01.2010 8 ITA No. 6615/DEL/2013 clearly stated that additional income has been earned by him along with his three brothers in their individual capacity by way of trading in various commodities and real estate and this fact is substantiated in the seized material.
10. We have heard the rival contentions and perused the facts of the case. The search was initiated on 10.02.2009 on the Dawat group of cases. The search was conducted at various places including the factory premises, registered offices, residences, lockers etc. Different panachnamas were made at different premises on different dates. Admittedly the last panchnamas of the group were made on 23.03.2009, 25.03.2009 and 27.03.2009. The letter dated 17.03.2009 surrendering the amount of Rs 17 crores was also filed in respect of Dawat group and it covered all the group companies, directors and individual family members of the group. Hence we are of the view that the letter dated 17.03.2009 cannot be said that it was not filed during the course of search.
11. The assessee had filed letters dated 21.01.2010 and 28.12.2010 in continuation and in reference to letter dated 17.03.2009 declaring the exact income belonging to him based on the seized documents. According to the assessee he modified the 9 ITA No. 6615/DEL/2013 surrender made in respect of income belonging to him based on the seized documents. There is no dispute about the fact that the AO assessed the same income as declared or surrendered by the assessee. The AO has not assessed the income of Rs 17 crores but has assessed the income at the same amount declared or surrendered by the assessee on the basis of the seized documents.
12. It is not the case of the revenue that the income belonging to the assessee was more than what is surrendered by him. The assessee has modified the surrender made during the course of search on 17.03.2009 and as such it cannot be that it is a case of retraction because the income declared by the assessee which is assessed by the AO. The letter dated 17.03.2009 was filed before the Director of Income Tax (Investigations) I New Delhi who was the in charge of the search and it is also stated in the said letter this surrender is for the whole group and the taxes shall be paid in respective hands/ persons after going through the seized material. It is clear that when this letter was filed the seized material was not with the assessee. The subsequent letters modifying the surrendered amount are based on the income belonging to the assessee on seized material.
10ITA No. 6615/DEL/2013
13. The ld DR has pointed out that the manner of earning of the surrendered income has not been disclosed by the assessee whereas the assessee by letter dated 21.01.2010 has disclosed the manner of earning the said income by way of trading in commodities and real estate and also stated this fact is substantiated from the seized material. Moreover this factual position is not denied by the AO and this is not the basis for imposing the penalty. In that view of the matter and in view of such facts and circumstances of the case, the CIT(A) is not justified in confirming the action of the AO and accordingly, we direct the AO to delete the penalty imposed under section 271AAA of the Act. Accordingly, the appeal of the assessee is allowed.
14. In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on 16.08.2017.
Sd/- Sd/- [H.S. SIDHU] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 16th AUGUST, 2017 VL/ 11 ITA No. 6615/DEL/2013 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi