Income Tax Appellate Tribunal - Ahmedabad
The Dy. Cit, Central Circle-1,, Baroda vs Shri Himanshu B. Joshi,, Baroda on 21 February, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA No. 1089/Ahd/2016
(Assessment Year: 2012-13)
Deputy Commissioner of Income-tax,
Central Circle-1, Aayakar Bhavan,
Race Course Circle, Baroda Appellant
Vs.
Shri Himanshu B. Joshi
Prop. Prasanna Associates, 2nd Floor,
Prasanna House, Associated Society,
Nr. Akota Stadium , Akota, Baroda- 390020 Respondent
PAN: ABQPJ7682J
राज व क ओर से/By Revenue : Shri V. K. Singh, Sr. D.R.
आवेदक क ओर से/By Assessee : Shri Nirav Shah, A.R.
&
ITA No. 1090/Ahd/2016
(Assessment Year: 2012-13)
Deputy Commissioner of Income-tax,
Central Circle-1, Aayakar Bhavan,
Race Course Circle, Baroda Appellant
Vs.
Shri Chandrajit Natwarlal Shah
23/A, Pancham Bunglows, Near Vasna
Jakat Naka, Vasna Road, Baroda- 390015 Respondent
PAN: AGAPS7370R
ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16
Shri Himanshu B. Joshi & 5 Ors. ] -2-
राज व क ओर से/By Revenue : Shri V. K. Singh, Sr. D.R.
आवेदक क ओर से/By Assessee : Shri S. N. Soparkar & Shri Parin Shah,
A.Rs.
&
ITA No. 1091/Ahd/2016
(Assessment Year: 2012-13)
Deputy Commissioner of Income-tax,
Central Circle-1, Aayakar Bhavan,
Race Course Circle, Baroda Appellant
Vs.
M/s. Shree B. R. Patel Corporation,
3, Darshan Park Society, Karelibaug,
Barod, Baroda- 390018 Respondent
PAN: ABQFS4232B
राज व क ओर से/By Revenue : Shri V. K. Singh, Sr. D.R.
आवेदक क ओर से/By Assessee : Written Submission
&
ITA No. 1092/Ahd/2016
(Assessment Year: 2012-13)
Deputy Commissioner of Income-tax,
Central Circle-1, Aayakar Bhavan,
Race Course Circle, Baroda Appellant
Vs.
Shri Rajendra N. Shah
4B, Panchratna Building, Jetalpur
Road, Alkapuri, Baroda- 390007 Respondent
PAN: AGAPS7368B
ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16
Shri Himanshu B. Joshi & 5 Ors. ] -3-
राज व क ओर से/By Revenue : Shri V. K. Singh, Sr. D.R.
आवेदक क ओर से/By Assessee : None
&
ITA No. 1093/Ahd/2016
(Assessment Year: 2012-13)
Deputy Commissioner of Income-tax,
Central Circle-1, Aayakar Bhavan,
Race Course Circle, Baroda Appellant
Vs.
M/s. Amin Associates,
4th Floor, Kothari Chambers, Near Govt.
Press, Kothi Road, Baroda- 390001 Respondent
PAN: AAOFA5006E
राज व क ओर से/By Revenue : Shri V. K. Singh, Sr. D.R.
आवेदक क ओर से/By Assessee : Shri S. N. Soparkar & Shri Parin Shah,
A.Rs.
&
ITA Nos. 1098 & 1099/Ahd/2016
(Assessment Years: 2011-12 & 2012-13)
Deputy Commissioner of Income-tax,
Central Circle-1, Aayakar Bhavan,
Race Course Circle, Baroda Appellant
Vs.
M/s Sun Incorporate,
3rd & 4th Floor, Kothari Chambers, Near
Govt. Press, Kothi Road, Baroda- 390001 Respondent
PAN: ABOFS6911N
ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16
Shri Himanshu B. Joshi & 5 Ors. ] -4-
राज व क ओर से/By Revenue : Shri V. K. Singh, Sr. D.R.
आवेदक क ओर से/By Assessee : Shri S. N. Soparkar & Shri Parin Shah,
A.Rs.
सन
ु वाई क तार ख/Date of Hearing : 15.02.2018
घोषणा क तार ख/Date of
Pronouncement : 21.02.2018
ORDER
PER BENCH Revenue has filed instant batch of seven appeals pertaining to six different assessees for assessment year 2012-13 in all appeals except in case M/s. Sun Incorporate's assessment year 2011-12 & 2012-13; against the CIT(A)-12, Ahmedabad separate orders dated 2.12.2015 (in ITA Nos. 1089, 1090, 1091, 1092, 1098 & 1099/Ahd/2016) and 02.12.2006 (in ITA No. 1093/Ahd/2016), in case nos. CIT(A)-12/368B/CC-1/Baroda/14-15, CIT(A)-12/374B/CC-1/Baroda/14-15, CIT(A)-12/369B/CC-1/Baroda/14-15, CIT(A)-12/379B/CC-1/Baroda/14-15, CIT(A)-12/362B, 363B/CC-1/Baroda/14-15 & CIT(A)-12/376B/CC-1/Baroda/14- 15, deleting penalties of Rs.41,06,568/-, Rs.16,10,000/-, Rs.25,00,000/-, Rs.33,00,000/-, Rs.20,00,000/-, Rs.20,00,000/- & Rs.40,00,000/-; respectively, in proceedings u/s. 271AAA of the Income Tax Act, 1961; in short "the Act".
Heard both the parties. Case files perused.
2. We notice at the outset that the instant batch of seven appeals had emanated from a search action dated 09.08.2011 conducted in case of Suncity/Anil Bholabhai Group of cases. One Shri Rajendra Shah acted as group's authorized person during the course of search to admit undisclosed income of Rs.35crores. S/Shri Akshay Kothari, Shri Chandrajit Shah and Shri Mahesh Kothari also signed the said statement. This followed relevant letters issued to the DDIT-2, Baroda on behalf of the said group giving details of the relevant undisclosed income in corresponding ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16 Shri Himanshu B. Joshi & 5 Ors. ] -5- cases. The search statement in question also stands extracted in CIT(A)'s all orders under challenge before us. These assessees thereafter filed their returns. The same stood accepted in corresponding assessments. The Assessing Officer thereafter initiated the impugned penalty proceedings u/s.271AAA of the Act. He then passed the corresponding penalty order as well alleging therein that these assessees had failed to specify the manner of having derived the above undisclosed income followed by substantiation thereof so as to be eligible for immunity u/s.271AAA of the Act. We are not adverting to facts of each and every case since all parties agree during the course of hearing that there is no distinction in any of these cases in relevant facts and circumstances.
3. The CIT(A) reverses Assessing Officer's action imposing the impugned penalties as under:
"5. While deciding the appeals as above, on facts of the appeals and the issues involved therein, which are identical to those under consideration in present appeals, I have given the grounds of decision and findings which can be summarized as under:
1) Disclosure by key-person of the group for and on behalf of the appellant is sufficient compliance to immunity condition of 271AAA(2)(i): The disclosure made by Key person of the group for the whole group, followed up by appropriate communication to the Investigating Officer or acquiescence by the Investigating Officer followed by filing of return u/s 153A/153C/139 by respective constituents, totalling, in all, to the group disclosure by the key person is held by me to be sufficient compliance to the immunity condition of 271AAA(2)(i) both by key person as also the constituents, particularly when the incomes returned in respective hands is accepted by the AO exclusively on the basis of the "disclosure" in respective hands without any adverse finding. The operative portion of my order in the case of Umesh C Patel (CIT(A)-12/370B,371B/CC-2 Baroda/2013-14 dated 28/10/2015) is reproduced as under:
4.1 After carefully going through the material available and the case law or facts relied upon both by the AO and the AR, I am persuaded by the contentions raised on behalf of the appellant that sufficient and substantial compliance to eligibility conditions for immunity prescribed u/s 271AAA(2)(i) has been made by the appellant. Doubtlessly, the AO till finalization of assessments for relevant years in- the cases of both appellant and Rajesh Shah has proceeded and acted in conformity with the respective "disclosures" made by both appellant and Rajesh Shah, taxing only the "admitted amounts" in their respective hands and no more as per table on page 2 of the assessment order. The AO, in my considered ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16 Shri Himanshu B. Joshi & 5 Ors. ] -6- opinion, can't turn around and deviate, as rightly submitted by the ARs, from a mutually accepted position of admission and taxation. The fact that Shri Rajesh Shah has not been taxed, and appellant has been taxed, on the amount owned up by appellant is in complete contrast to the stand taken by the AO during penalty proceedings to the effect that the appellant has "not admitted the amount u/s 132(4)", The Ld. AR is right that the stand taken by the AO during penalty proceedings is too mechanical and narrow and is also in complete contrast to AO's own action during assessment. The AR is also right that during the course of search, the appellant himself also has signed the statement u/s 132(4) and admitted unaccounted receipts on the basis of seized documents confronted to Rajesh Shah who made the group admission. I also agree with the submission made by the AR that as held in Balaji Formalin (supra), the admission u/s 132(4) by the key person in the hands of various entities is to be deemed to be admission by various constituents of the group, particularly if the AO has also made assessments of various constituents on the basis of, and limited to, the returns filed by constituents disclosing such "declared" income. I also agree with the submission of the Ld. AR that after admission u/s 132(4), and in continuation thereof, the allocation/allotment in various hands for various years, made under s. 131 or through a separate letter addressed to Investigating Officer by the key person is a mere continuation of earlier admission u/s 132(4). Exactly this being the fact in appellant's case, I have no hesitation in agreeing with the ARs that the AO has not only erred but contrasted himself in holding that the admission has not been made by the appellant u/s 132(4). The AO has also erred in being too rigid and mechanical in misreading the requirements of 271AAA(2)(i) and holding against the appellant for a mere venial or technical breach thereof with finding that the appellant himself has not made the disclosure u/s 132(4). The conclusion arrived at as above is not only in conformity with Balaji Formalin (supra), but is also fortified by the SC decision in Hindustan Steel Ltd (1972) 83 ITR 26 with following observations:
.........Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute......
4.2 In the facts and circumstances as discussed above, thus, the appellant is deemed to have made admission u/s 132(4) of amounts as tabulated in para 2. la of the penalty order and para 5 of the assessment order for the years under reference. It is therefore held that appellant has fulfilled the immunity condition of s. 27lAAA(2)(i).
2) Manner and substantiation of earning of unaccounted income: immunity condition 271AAA(i) and (ii) : It has been observed and held by me that the terms "stating the manner and substantiating the same" has not been defined in s. 271AAA and therefore the same is to be understood only in the sense explained in Mahendra C Shah and SidhNathGoel,(supra) as further followed and explained in Geeta prints (supra) by Ahmedabad tribunal, and ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16 Shri Himanshu B. Joshi & 5 Ors. ] -7- thus, it has been held by me that the assessee cannot be expected to provide graphic details, a rupee-to-rupee account and exact and immediate source of unaccounted income/cash in view of social conditions and over all environment of recording of statement u/s 132(4). It is also primarily for the Authorized Officer and thereafter the Investigating Officer to solicit further information and explanation from the assessee or key person while recording the statement u/s 132(4), When the disclosure is clearly based on seized documents, the broad source has been indicated by the assessee or key person, the appellant has "made a clean breast of his admitted unaccounted income" while filing the return u/s 153A/139, and assessment is also framed on the basis of disclosure made in the statement u/s 132(4) and the return, without any alteration to returned income or any adverse finding, the broad indication of manner of earning on the basis of the seized documents forming the basis of disclosure u/s 132(4), as acquiesced in by the Authorized Officer, Investigating Officer and the Assessing Officer, would ipso facto and prima facie be a sufficient compliance to the immunity condition as contained in s. 271AAA(2)(ii). The relevant portion from the order of Umesh C Patel (supra) is reproduced as under:
5. With regard to the second objection of the AO regarding immunity condition of stating the manner of earning unaccounted income disclosed u/s 132(4), and substantiation thereof, as contained in section 271AAA(2)(ii) of the act......... .................. Reliance is placed on:
(i) Decision of Hon'ble Gujarat High Court in case of Commissioner of Income-tax v. Mahendra C. Shah[2008] 172 TAXMAN 58 (GUJ.) ..............The reason was not far to seek. In the first instance, the statement was 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 was being recorded.
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 the Exception No. 2 while making statement under section 132(4). The view taken by the Tribunal 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 is paid, there would be substantial compliance not warranting any further denial of the benefit under the Exception No. 2 in the Explanation 5 was commendable. [Para 15] Hence, the Tribunal was justified in coming to the conclusion that insofar as the value of diamonds was concerned, the assessee having made a declaration under section 132(4) and having paid taxes thereon, had fulfilled all the conditions for availing of the benefit of immunity from levy of penalty as provided under the Explanation 5 to section 271(l)(c).
(ii) Decision of Hon'ble Ahmedabad Tribunal in case of Sulochanadevi A. Agarwal, dated 17 July, 2012 vide ITA No: 1052/Ahd/2012 "......We have heard the submissions of the revenue and carefully perused the materials on record. The learned CIT(A) had deleted the penalty due to the following reasons:
1) The assessee had voluntarily disclosed the sum of Rs.50,00,000/- during the search proceedings with request that no penalty should be levied in respect of such disclosure.
ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16 Shri Himanshu B. Joshi & 5 Ors. ] -8- (2) During the post search proceedings no specific question as regards manner of earning of undisclosed income or substantiation thereof was put forth by the revenue.
(3) The assessee had also paid due tax for the undisclosed income of Rs.50,00,000/- declared voluntarily.
(4) In the decision rendered by the jurisdictional High Court of Gujarat in the case of CIT VsMahendra C. Shah (2008) 299 ITR 305 (Guj) it was held that when undisclosed income admitted by the assessee has been offered for tax in the return of income and the tax thereof duly paid, penalty cannot be levied, specifically, in the absence of any question in this respect by the AO.
At this juncture, we must admit that the reasons pointed out by the learned CIT(A) are justifiable for deleting the penalty levied by the learned AO u/s 271 AAA of the Act. Therefore, we do not find any hesitation to confirm the order of the learned CIT(A)
8. In the result, the appeal of the revenue is dismissed.
(iv) Geeta Prints Pvt Ltd. ITA NO.2093/2011 (Ahd) (Approved by HC in TA NO 565/2015 dtd 14/9/2015) "7. We have heard the Ld. DR and perused the material available on record. We find that CIT(A) while deleting the penalty has noted that the conditions provided u/s. 2yiAAA(2) are required to be fulfilled so as to grant immunity to the asssessee from penalty. He has further noted that all the three conditions have been fulfilled by the assessee and further relying on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Mahendra C Shah (2000) 299 ITR 305 (Gujarat) and CIT vs. Radha Krishna Goel (2005) 278 ITR 454 had held that assessee had made disclosure of unaccounted income while recording statements u/s. 132(4) of the Act and had also paid the tax with interest. He has further given a finding that the AO in the assessment order passed u/s. 143(3) of the Act had accepted the disclosed income declared by the assessee and no addition on account of undisclosed income has been made by the AO, He has further given a finding that AO was satisfied about the disclosed income offered in the return of income and the manner in which the income was derived. We thus find that Ld. CIT(A) by a detailed and reasoned order deleted the penalty. Before us, Revenue has not brought any material on record to controvert the findings of the CIT(A) or how the ratio of decisions relied by Id. CIT(A) not applicable to the present facts. In view of the aforesaid facts, we find no reason to interfere with the order of Ld. CIT(A) and thus this ground of Revenue is dismissed.
...................
5.2 When seen in the light of Mahendra C Shah (supra), I find force in the contention of the ARs that subsequent to admission u/s 132(4), clearly indicating the broad manner of earning to be "being from land transactions, capital gains and miscellaneous" followed by offering in the return, and unconditional and unaltered bringing of the same to tax by the AO, substantially tantamount to stating the manner and substantiating the same, and that the AO cannot hold otherwise during penalty proceedings without bringing in positive evidence to establish the absence of substantiation or the falsity in claim of the appellant or without referring to seized documents. As such, in light of various authorities cited by the AR and also otherwise perused by me, I am of the considered opinion that the fact that the Authorized Officer during search, and Investigating Officer thereafter, has acquiesced in the reply given by the appellant, without any further probe at that time, clearly brings out that. compliance satisfactory to the Investigating Officer has been made by the appellant. Thereafter, once the appellant has filed the return honoring his commitment fully, which has also been accepted during assessment without any modification to returned income, the Ld. ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16 Shri Himanshu B. Joshi & 5 Ors. ] -9- AO's insistence for "stating the manner and substantiating the same" is simply superfluous and uncalled for in the face of clear-cut disclosure of manner of earning of "unaccounted income" by the appellant, and also in light of Mahendra C. Shah (supra). Such insistence of the AO and "non-compliance thereto" by the appellant pleading "sufficient compliance", has obviously not impacted the quantification of income and assessment thereof.
5.3 The fact that the Ld. AO himself has taxed the amount offered u/s 132(4) and further in the return u/s 153A, without contradicting or contesting the basis and quantification of such "undisclosed income" to disprove the same would also, it was vehemently contended, go to establish that the manner as stated by the appellant u/s 132(4) stands not only substantiated as required u/s 271AAA(2)(ii) but the AO is also satisfied about such substantiation right at the assessment stage, and the AO is not expected to suddenly hold otherwise during penalty proceedings unless he brings positive material to disprove the already accepted substantiation by the appellant. I find considerable force in the contentions raised as above and have no hesitation in fully agreeing with the same. While on one hand HC has, in Mahendra C Shah clearly opined that considering the social environment, the appellant cannot be expected to give graphic details of manner of earning unaccounted income, on the other hand, the insistence of the Ld. AO for such details or substantiation has no bearing or relevance during the assessment when due taxes have been paid by the appellant. The appellant already made "a clean breast of his unaccounted income", as in SidhNathGoel,(supra), and there is no further material brought by the Ld. AO to hold otherwise. Thus, I find that the appellant's case is squarely covered by the ratios of MahendraC Shah and SidhNathGoel (supra), and thus it is to be held that the appellant has made effective and sufficient compliance to immunity condition of s. 271AAA(2)(ii) also. I may also add that the law laid down in Mahendra C Shah and SidhNathGoel has been further explained and applied by the Ahmedabad Tribunal in Geeta Prints Put Ltd and Sulochana Devi Agganval in the context of immunity conditions contained in s. 271AAA(2)(i) and (if) in ITA Nos. 2093/2011 and 1052/2012 (supra) holding as above, and, further, Geeta Prints has also been further (approved by the HC in Tax Appeal No 565/2015 dated 14/09/2015.
(3) When penalty is on income returned u/s 153A: In addition to the fulfillment of immunity conditions as prescribed u/s 271AAA(2)(i) and (ii) as above, following Kirit Dahyabhai (supra] as explained and applied by Ahmedabad Tribunal in Sandeep Navneetlal (supra), it has been further held by me in the above referred appeals that in view of the fact that the penalty u/:: 271AAA has been levied on the income already disclosed in the return filed by the appellant u/s 153A, and not on the income assessed "over and above that returned u/s 1S3A or 139", the penalty is not sustainable. The operative portion from my order of Umesh C Patel (supra) is reproduced as under:
................7. Moreover, I also find that the proposition of law laid down in Kirit Dahyabhai (supra) to the effect that penalty, post-search, can be levied or sustained only on the income which has been assessed "over and above" that returned by the assessee u/s 153A after the search, in view of the specific provisions of s. 153A, and cannot be levied on "undisclosed income" already returned u/s 153A, has been followed by ITAT Ahmedabad in Sandip Navnitlal (supra) in the direct context of penalties both u/s 271(l)(c) read with explanation 5A and also u/s 271AAA, Respectfully following the same, also, it ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16 Shri Himanshu B. Joshi & 5 Ors. ] - 10 -
is to be further held that the Ld. AO erred in levying the penalty u/s 271AAA on the "undisclosed income" already returned in the income filed after search, and on this count also the levy of penalty is held not sustainable.
6. As there is no dispute with regard to the fact that immunity condition of 271AAA(2)(iii) is fulfilled by the appellant by way of payment of taxes with interest in the appeal under reference, in view of the discussion as above, following my own findings and understanding of the provisions of s. 271AAAj as explained by various authorities as discussed above and as already applied by me in appeals decided by me as above, the penalty levied by the AO is to be held not sustainable and therefore, the penalty for the year is cancelled. Accordingly, the related grounds are allowed. The appellant would get relief of Rs.41,06,568/-."
4. Learned Departmental Representative vehemently contends that the lower authority herein has committed both illegality and irregularity in deleting the impugned penalties imposed by the Assessing Officer by invoking Section 271AAA of the Act for the reason that all these assessees failed to specify the manner of having derived the undisclosed income during search followed by substantiation thereof. We rather find that the Revenue's sole substantive identical ground in all these appeals pleads that it is only the latter condition of substantiation of the manner of deriving of the undisclosed income that remained to be unfulfilled. We notice in this backdrop that hon'ble jurisdictional high court's recent judgment in Tax Appeal No. 434 of 2017 Pr.CIT vs. Mukeshbhai Ramanlal Prajapati holds after discussing a catena of case laws that it is incumbent for an authorized officer to put the searched assessee to question about the manner of having derived the relevant undisclosed income. Their lordships are of the view that the burden then shifts on the concerned deponents to substantiate the said manner of having derived the undisclosed income in issue. We sought to know from learned Departmental Representative as to whether the authorized officer had raised "manner query" in the course of search statement or not. He fails to pinpoint any such question raised in search statement. Learned counsel refers to CIT(A)'s order(s) under challenge pages 4 onwards extracting the relevant search statement(s) followed by necessary correspondence with the DDIT-1. Mr. Soparkar's case is that no such specific query on the relevant "manner issue" came to be raised from the authorized officer. We therefore quote hon'ble jurisdictional high court's above referred judgment to ITA Nos. 1089 to 1093, 1098 & 1099/Ahd/16 Shri Himanshu B. Joshi & 5 Ors. ] - 11 -
conclude that the CIT(A) has rightly deleted all the impugned penalties after holding that all these assessees had duly complied with the relevant immunity conditions u/s.271AAA of the Act. The Revenue's identical sole substantive grievance in all these appeals is therefore rejected.
5. These seven Revenue's appeals are dismissed.
[Pronounced in the open Court on this the 21st day of February, 2018.] Sd/- Sd/-
(AMARJIT SINGH) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 21/02/2018
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आय!
ु त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।