Income Tax Appellate Tribunal - Chandigarh
Sh. Sanjeev Goyal, Chandigarh vs Department Of Income Tax on 18 November, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER
ITA No.109/Chd/2015
Assessment Year:2011-12
The DCI T, Vs. Sh. Sanjeev Goyal
Central Circle H.No. 105
Chandigarh Sector 6
Panchkula
PAN No. AANPG8228P
&
ITA No.108/Chd/2015
Assessment Year:2011-12
The DCI T, Vs. M/s Parabolic Drugs Ltd.
Central Circle SCO 99-100
Chandigarh Sector 17B
Chandigarh
PAN No. AANPG8228P
&
ITA No.110/Chd/2015
Assessment Year:2011-12
The DCI T, Vs. Smt. Payal Goyal
Central Circle H.No. 105
Chandigarh Sector 6
Panchkula
PAN No. AJRPG1035D
(Appellant) (Respondent)
Appellant By : Sh. Manjit Singh
Respondent By : Sh. Ashok Goyal
Date of hearing : 22/09/2015
Date of Pr onouncement :18/11/2015
ORDER
PER ANNAPURNA MEHROTRA A.M. All these appeals of the different assesses are directed against the respective orders of the Commissioner of Income Tax (Appeals)-3, Gurgaon. Since the facts in all the three cases are identical and a common issue arises for 2 consideration in all these appeals, we heard these appeals together and disposed the same by this common order
2. The only issue arises for consideration is with regard to levy of penalty under section 271AAA of the Income Tax Act, 1961.
3. We shall deal with the facts and figures in ITA No. 109/Chd/2015 wherein the Revenue has raised the following grounds:
1. "Whether on facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the total penalty amounting to Rs. 15,00,000/- levied u/s 271AAA of the Act imposed by the A.O. without appreciating the facts of the cases."
2. "Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in granting relief to the assessee when even the basic retirement of the section 271AAA is not fulfilled i.e. The assessee failed to elaborate the manner in which the undisclosed income was derived?."
4. Brief facts of the case are that search and seizure operations were conducted on M/s Nector Group on 17.09.2010. Sh. Sanjeev Goel, the assessee was one of the persons covered. The assessee filed his return of income declaring total income of Rs. 2,12,36,310/- on 29.09.2011. Assessment was completed on 31.01.2013 at a total income of Rs. 2,46,78,850/-. Penalty was initiated u/s 271AAA against the surrendered income of Rs. 1,50,00,000/- and penalty of Rs. 15,00,000/- was levied vide order dated 30.07.2013. Before the Ld. CIT(A) the assessee pleaded that the penalty levied u/s 271AAA was unjustified since the assessee had himself surrendered a sum of Rs. 1,50,00,000/- for the whole Nector Group and specifically surrendered a sum of Rs. 1,50,00,000/- against himself and also stated the source of surrendered income being derived against speculative commodity trading. The assessee further submitted that during the course of assessment, he had also explained the manner in which the income had been earned i.e. through oral dealings, which is a common practice in commodity transaction. Further the assesse stated that as per the provisions of section 271AAA penalty could be levied only on undisclosed income, which meant represented by any assets or documents or entry found 3 during search . In the case of assessee no such undisclosed income was found. The assessee stated that the disclosure / surrender of income at the time of search did not fall under the definition of undisclosed income as it could not be related to any asset, document / entry found during the course of search. The assessee therefore pleaded that no penalty under section 271AAA could be levied on the assessee. The assessee placed reliance on the following judicial decisions in support of his contention.
Assistant Commissioner of Income Tax, Central Circle, Patiala vs. Munish Kumar Goyal [2014] 45 taxman.com 563 (Chandigarh - Trib.) Chandigarh Bench 'A'-- Jurisdictional Hon'ble ITAT Assistant Commissioner of Income tax vs. A.N. Annamalaisamy (HUF) [2013] 38 taxmann.com 440 (Chennai- Trib) in the ITAT Chennai Bench 'C' Pramod Kumar Jain vs. Deputy Commissioner of Income Tax [2013]33 taxmann.com 651 (Cuttak - Trib) in the ITAT Cuttack Bench Smt. Raj Rani Gupta vs. Dy. CIT [IT Appeal No. 3371 (Delhi) of 2011, dated 30.03.2012 ACIT (OSD) vs. Kanakia Spaces P. Ltd. (IT Appeal No. 6763 (Mum.) of 2011 dated 10.07.2013
5. After considering the assessee submissions Ld. CIT(A) deleted the penalty levied by holding that the facts of the present case were covered by various decisions of Hon'ble ITAT.
6. Aggrieved by the same, the revenue filed present the appeal before us.
7. Before us Ld. DR argued that the assessee had not fulfilled the condition provided u/s 271AAA for grant of immunity from penalty. Ld. DR argued that the manner in which the income was derived was neither specified nor substantiated. Ld. DR stated that the complete details of the parties with whom the real estate transactions had been entered into, their names, addresses, the properties as well as evidences of the consideration exchanging hands were not furnished Ld. DR argued that asessee's claim that the surrender related to real estate transaction remained unsubstantiated and therefore, the condition u/s 4 271AAA was not fulfilled and penalty correctly levied. Ld. AR on the other hand placed reliance on the order of Ld. CIT(A) and reiterated that all the conditions specified u/s 271AAA for grant of immunity from penalty has been fulfilled in the present case Ld. AR stated that the surrendered amount had been admitted u/s 132(4) and was also accepted by the A.O. Ld. AR also submitted that the manner of earning the said income had been disclosed being from various speculative real estate transactions. Further Ld. AR stated that the income had been duly disclosed and due taxes thereon paid by the assessee. Thus, Ld. AR argued that there was no case for levy of penalty u/s 271AAA. Ld. AR also stated that since the surrendered income did not relate to any asset, or document or entry found during the course of search u/s 132 it could not be treated as undisclosed income and therefore, no penalty u/s 271AAA was leviable.
8. We have heard the rival submissions and the perused the orders of the authorities below.
9. The undisputed facts in the present case are that during the course of search and seizure operations u/s 132, the assessee had surrendered an amount of Rs. 1,50,00,000/-. It is also not in dispute that assessee had attributed this income as being derived from speculative dealings in commodities in oral dealings, outside the books of accounts. It is further not in dispute that the assessee had disclosed the surrendered income in its return of income and paid the taxes thereon.
In the above factual background, it is to be seen whether penalty u/s 271AAA is leviable.
It is the contention of the Revenue that though admittedly, the assessee has surrendered an income of Rs. 1,50,00,000/- during the course of search and seizure operation, disclosed the manner of earning the same being from 5 speculative dealings in commodities and also disclosed the income in its return of income, the assessee had not substantiated the manner of earning the undisclosed income and hence not fulfilled all the conditions specified u/s 271AAA for grant of immunity from penalty.
The issue therefore is whether admission of undisclosed income and a description of the nature of the same could be treated as compliance with the condition of specifying and substantiating the manner in which the undisclosed income is earned as required by the section 271AAA(2)(i) and (ii).
10. We find that a similar requirement of disclosing the manner in which undisclosed income is earned is also there in Explanation--5 to section 271(1)(c), interpreting which the Allahabad High Court in the case of CIT vs. Radha Kishan Goel (2005) 278 ITR 454 observed that non disclosure of manner of earning the undisclosed income is not relevant for the purpose of availing benefit under Explanation 5 below section 271(1)(c). In CIT vs. Mahendra C. Shah [2008] 215 CTR 493 (Guj.), it was held the assessee having declared the value of diamonds in his statement under section 132(4) and paid taxes thereon before assessment, was entitled to immunity from penalty under section 271(l)(c) under Explanation 5 thereof even though the statement did not specify the manner in which the income representing value of diamonds was derived. With respect to such requirement in relation to section 271AAA, it has been held in the case of Pramod Kumar Jain v. Dy. CIT [2013] 33 taxmann.com 651 (Ctk.) that the disclosure of income under section 132(4) during the search having been made and the assessee having surrendered certain income for the relevant assessment years in the statements during the course of search and filed returns declaring the same pursuant to notice under section 153A and which returns have been accepted by the AO, levy of penalty under section 271 AAA was not justified on the ground that the assessee has though made disclosure but failed 6 to specify the manner in which such income had been derived. Hon'ble Tribunal further held that no definition could be given to the "specified manner" and there is no prescribed method given in the statute to indicate the manner in which income was generated.
It has been held in the case of Ashok Kumar Sharma v. Dy. CIT [2013] 33 taxmann.com 652 (Ctk.) that when assessee disclosed concealed income while giving statement under section 132(4) during the course of search and paid tax thereon and showed the said undisclosed income in the return under the head "Income from business" and which undisclosed income has been accepted by the Department, penalty under section 271 AAA is not leviable.
11. In view of the above judicial precedents we find that the assessee has specified and substantiated the manner of earning the income and has not violated any of the conditions specified u/s 271AAA(2), for granting immunity from penalty.
12. We therefore hold that no penalty u/s 271AAA could be levied in the present case. Accordingly we uphold the order of the Ld. CIT(A) deleting the penalty.
13. In the result, the appeal of the revenue is dismissed.
14. In the result, all the appeals filed by the Revenue are dismissed as indicated above.
Order pronounced in the Open Court.
Sd/- Sd/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated :18/11/2015 AG
Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR