Income Tax Appellate Tribunal - Ahmedabad
The Acit, Central Circle 1,, Baroda vs Shri Prakashbhai G. Patel, Anand on 20 March, 2017
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ ।
IN THE INCOME TAX APPELLATE TRIBUNAL,
"C" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
आयकर अपील सं./ IT(SS)A.No.311/Ahd/2013
नधा रण वष / Asstt. Year: 2009-2010
ACIT, Cent.Cir.1 Shri Prakashbhai G. Patel
Baroda. Vs. D/26, Gajanand Park
Kishor Plaza, Anand.
PAN : ADMPP 9513 G.
(Applicant) (Responent)
Revenue by : Shri Prasoon Kabra, Sr.DR
Assessee by : Shri S.N. Soparkar
सन
ु वाई क तार ख/ Dateof Hearing : 13/01/2017
घोषणा क तार ख / Date of Pronouncement: 20/03/2017
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-IV, Ahmedabad dated 20.5.2013 passed for the Asstt.Year 2009-
10.
2. Solitary grievance of the Revenue is that the ld.CIT(A) erred in deleting penalty of Rs.14.60 lakhs imposed by the AO under section 271AAA of the Income Tax Act, 1961.
3. Brief facts of the case are that a search and seizure operation was carried out in Baroda Bushing Group. The assessee was covered under the search operation. This search was carried out on 10.9.2009. During the IT(SS)A No311/Ahd/2013 2 course of search, Shri Kiritbhai Patel, head of family has deposed under section 132(4) of the Act. He made a voluntary disclosure of unaccounted income of Rs.11.35 crores on behalf of himself and his family members towards investment in land. The assessee has filed return in response to the notice under section 153A. He included a sum of Rs.1.46 crores disclosed by the head of the family on his behalf. In this way, total income of Rs.3,02,95,710/- was returned by the assessee. This return was accepted by the AO as it is, in an assessment order passed under section 153A of the Act r.w.s. 143(3) on 30.12.2011. The ld.AO has initiated penalty proceedings and imposed a penalty of Rs.14.6 lakhs under section 271AAA of the Act i.e. 10% of the alleged undisclosed income of Rs.1.46 crores.
3. On appeal, the ld.CIT(A) has deleted the penalty. The relevant finding of the CIT(A) reads as under:
"6.3 So far as the submission made subsequent to the search proceedings which included the headwise, yearwise and assetwise details of the disclosure of unaccounted income based on the scrutiny of seized incriminating documents, before the Dy. Director of Income- tax (Inv.), Baroda is concerned, the same may be treated as disclosure made as per statement u/s 132(4) of the Act only, mainly in view of the fact that proper scrutiny of seized material is often not possible for making disclosure during the course of search. Even otherwise, the disclosure of undisclosed income of Rs. 1,46,00,000/- during the course of in the case of the appellant is duly accepted by the AO as noted in the assessment order.
6.4 It is the contention of the appellant that the appellant has duly admitted the undisclosed income in the statement recorded u/s 132(4) of the Act during the course of search and has also specified and substantiated the manner in which such income has been derived and paid tax together with interest and, therefore, is entitled for immunity from penalty u/s 271AAA of the Act. So far as the manner of earning of the said undisclosed income is concerned, I agree with the appellant that the key person of the family in the statement recorded u/s 132(4) of the Act has clearly mentioned the manner of earning such income IT(SS)A No311/Ahd/2013 3 which is mainly on account of unrecorded transactions in respect of trading in land.
6.5 So far as substantiating the manner in which income has been earned, it is quite obvious as per the statement as well as post-search submission made in this regard that the sources of unexplained investment in purchase of land is mainly on account of the unrecorded business transactions in respect of trading of land for which the details of purchase and sale of lands as per recorded transactions are already available on record. The details of purchase of land as per registered sale deeds are also on record. Thus, even the manner of earning undisclosed income is substantially substantiated. Even otherwise, there is nothing on record to suggest that any such question was asked to the appellant either in the statement recorded u/s 132(4) of the Act or even during the course of assessment proceedings. It is noted that the appellant has responded to all the questions asked u/s 132(4) of the IT Act relating to the financial affairs. Unless specific question is asked to the appellant either in the statement recorded u/s 132(4) or even during the course of assessment proceedings, it may not be proper to attribute the failure, if any, for not specifying the manner and substantiating the manner in which income was earned, to the appellant. In this regard the decision of the Hon'ble High Court of Gujarat in the case of Mahendra C. Shah [2008] 299 ITR 305 (GUJ) which is in the context of immunity from penalty u/s 271(1)(c) read with Explanation 5 is reproduced as under:
"15. Insofar as the alleged failure on the part of the assessee to specify in the statement under section 132(4) of the Act regarding the manner in which such income has been derived, suffice it to state that when the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in entirety to the assessee concerned and the authorized officer cannot stop short at a particular stage so as to permit the revenue to take advantage of such a lapse in the statement. The reason is not far to seek. In the first instance, the statement is 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 is being recorded, as noted by Allahabad High Court in case of Radha Kishan Goel (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 IT(SS)A No311/Ahd/2013 4 Exception No. 2 while making statement under section 132(4) of the Act. The view taken by the Tribunal as well as Allahabad High Court 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 paid, there would be substantial compliance not warranting any further denial of the benefit under Exception No. 2 in Explanation 5 is commendable."
In view of the above, I am of the considered opinion that so far as the manner of earning the income and substantiating the same is concerned, the appellant has, in my view, specified the manner of earning the undisclosed income as well as substantiated the same to the extent of questions having been asked in this regard in the statement recorded u/s 132(4) of the Act. There is nothing on record to suggest that the appellant has failed to respond to any of the questions relating to the manner as well as substantiating the same even during the course of assessment proceedings. In view of this, the appellant has fulfilled first two conditions for availing of immunity from penalty proceedings u/s 271AAA of the There is no dispute about the third condition as the appellant has paid tax with interest on the undisclosed income. Thus, the appellant has fulfilled all the conditions required for immunity from levy of penalty u/s.271AAA of the Act.
6.7 In view of the above, I am of the considered opinion that the appellant is eligible for immunity from penalty u/s.271AAA of the Act and, therefore, penalty levied by the AO of Rs.14,60,000/- is hereby cancelled."
4. With the assistance of the ld.representatives, we have gone through the record carefully. There is no dispute with regard to the fact that head of the family has made a disclosure of Rs.11.35 crores on behalf of himself, his family members and business concern, in his statement recorded under section 132(4) of the Act during the search. Short question before us whether the assessee has fulfilled all conditions stipulated in sub-section (2) of section 271AAA of the Act, that absolves him from the rigours of penalty. It is pertinent to take note of relevant part of section 271AAA. It reads as under:
"(1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has IT(SS)A No311/Ahd/2013 5 been initiated under section 132 on or after the 1st day of June, 2007, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year.
(2) Nothing contained in sub-section (1) shall apply if the assessee,--
(i ) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;
(ii ) substantiates the manner in which the undisclosed income was derived; and (iii ) pays the tax, together with interest, if any, in respect of the undisclosed income.
(3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1)."
5. As far as conditions enumerated in sub-clause (i) of sub-section (2) is concerned, there is no dispute with regard to fulfillment of these conditions. A sum of Rs.1.46 crores was disclosed in the statement recorded under section 132(4) of the Act. The manner in which such income has been derived, that was also disclosed by the assessee. Similarly, there is no dispute with regard to fulfillment of conditions mentioned in sub-clause (iii). The ld.CIT(A) has taken note of question 18 and question 5 of the statement of Shri Kiritbhai Patel. It reads as under:
"Q-18 Do you admit Rs. 11.35 crores as the unaccounted investment by you & your family members?
A-18 I admit Rs. 11.35 crores as undisclosed and unaccounted Investment by me and family members." The relevant question and answer from the statement dated 11.9.2010 of Shri Kiritbhai are as under:
"Q-5 Please give sources and detailed break-up of admitted undisclosed income.
IT(SS)A No311/Ahd/2013 6 A-5 I have earned the unaccounted income from trading in land. I will submit the details of land unaccounted transaction in a week time."
6. Only grievance of the Revenue is that the assessee failed to substantiate the manner in which the undisclosed income was derived. It is pertinent to observe that the ld.CIT(A) has recorded a categorical finding that no specific question was asked from the assessee during the course of search or during the course of assessment proceedings. We further find that in the assessment order the ld.AO has observed that the assessee has submitted requisite details as and when called for. There is no allegation of the AO in the assessment order or during the assessment proceedings that the assessee failed to submit any information called for in the assessment of income. Therefore, we are of the view that the assessee has fulfilled all ingredients, and the ld.CIT(A) has appreciated the controversy in right perspective, which does not call for any interference. Accordingly, appeal of the Revenue is dismissed.
7. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Court on 20th March, 2017 at Ahmedabad.
Sd/- Sd/- (PRADIP KUMAR KEDIA) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/03/2017