Income Tax Appellate Tribunal - Chandigarh
Dcit, Cc-1, Ludhiana vs Sh. Rajat Jain, Ludhiana on 28 April, 2021
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी" , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "B", CHANDIGARH (VIRTUAL COURT) ी एन.के.सैनी, उपा य! एवं ी आर.एल. नेगी, या$यक सद&य BEFORE: SHRI. N.K.SAINI, VP & SHRI R.L. NEGI, JM Miscellaneous Application No. 15/Chd/2020 (आयकर अपील सं./ ITA No. 920/Chd/2018 नधा रण वष / Assessment Year : 2016-17 The DCIT बनाम Shri Rajat Jain, Central Circle-1 9-A, Aggar Nagar, Ludhiana, Ludhiana. Punjab.
थायी लेखा सं./PAN NO: ABAPJ4619D अपीलाथ /Appellant यथ /Respondent Miscellaneous Application No. 16 /Chd/2020 (आयकर अपील सं./ ITA No. 722/Chd/2018 नधा रण वष / Assessment Year : 2016-17 The DCIT बनाम Shri Saurav Jain, Central Circle-1 9-A, Aggar Nagar, Ludhiana, Ludhiana. Punjab.
थायी लेखा सं./PAN NO: AETPJ9724P अपीलाथ /Appellant यथ /Respondent राज व क ओर से/ Revenue by : Shri Ashok Khanna Addl.CIT (DR) नधा "रती क ओर से/Assessee by : Shri Ashwani Kumar, CA सन ु वाई क तार&ख/Date of Hearing : 28/04/2021 उदघोषणा क तार&ख/Date of Pronouncement : 28 /04/2021 आदे श/Order PER N.K. SAINI, VICE PRESIDENT These two Miscellaneous Applications by the department are directed against the common order dated 19/09/2019 in ITA Nos. 920 & 922/Chd/2018 for the A.Y. 2016-17 passed by this Bench of the ITAT.
2. In these Miscellaneous Applications, the department has stated as under:
"The assessee belongs to Maharaja Group of cases, Ludhiana. A Search u/s. 132 of the Income Tax Act, 1961 was conducted at the residential premises of the assessee on 27.08.2015. Accordingly Notice u/s 142(1) of the Act requiring the assessee to file his return of income was issued on 30.09.2016. In response thereto, a return declaring an income of Rs.94,59,120/- was 2 M.A. No 15 & 16/Chd/2020 DCIT Vs Rajat Jain & One Ar.
filed by the aforesaid assessee and the assessment in this case was completed 143(3) of the Income Tax Act, 1961 on 11.12.2017 and returned income of Rs.94,59,120/- was accepted. As the income retuned was included an amount of Rs.80,00,000/- which was 'undisclosed income' within the meaning of section 132(4) of the Act and penalty proceedings u/s 271AAB was also initiated on this account.
2. Further, a penalty u/s 271 AAB(l)(a) amounting to Rs.8.00 Lac was imposed @10% on the assessee on the undisclosed income amounting to Rs.80.00 Lacs admitted by the family head of the assessee u/s 132(4) of the Income Tax Act by order dated 28.02.2018. Aggrieved, the assessee filed an appeal before the Ld.CIT (A)-5, Ludhiana.
2.1 That the Ld. CIT (A)-5, Ludhiana vide order dated 28.05.2018 in appeal No.l31/IT/CIT(A)- 5/Ldh/2017-18 confirmed the levied penalty u/s 271AAB. Aggrieved with this order, the assessee filed further appeal before the Hon'ble ITAT, Chandigarh with ITA No.920/Chd/2018.
Decision of Hon'ble ITAT 3 That the Hon'ble ITAT vide composite order dated 19.09.2019 has allowed the appeal of the assessee relying upon its own decision in the case of Smt. Veena Rani & Others Vs. DOT, Central Circle-1, Ludhiana in ITA No. 1238 to 1240/Chd/2018 for the A.Y 2016-17 and in the case of M/s. R. D. Palace Pvt. Ltd., Ludhiana Vs. DOT, Central Circle-1, Ludhiana in ITA No. 1240 & 1242/Chd/2018 for the A.Y. 2015-16 & 2016-17. It is pertinent to mention here that the Hon'ble ITAT has decided the case of Smt. Veena Rani & Others relying upon its own decision in the case of M/s SEL Textiles Ltd. Vs. DCIT in ITA No.695/Chd/2018 dated 18.04.2019. In the order, Hon'ble ITAT in ITA No.695/Chd/2018 held as under:-
"12. it cannot be said that assessee had claimed any inadmissible expenditure which would fall within the definition of" undisclosed Income" as defined under the provisions of section 271AAB of the Act. Except the aforesaid disallowance made by the Assessing Officer on debatable issues, there is no case of the Department in respect of any inadmissible expenditure claimed by the assessee which would cover the surrendered income ofRs.14 Crores. From the facts on the file, it is established that the aforesaid surrender of Rs.14 Crores was based on the mere statement of the assessee and nothing incriminating material which would constitute "undisclosed income" as per the Provisions of section 271AAB of the Act was detected or found during the search action. In view of the various case laws as discussed above, the aforesaid amount for Rs.14 Crores would not fall in the definition of 'undisclosed income' as defined under section 27 1AAB of the Act and hence, the penalty is not leviable on the said amount under the provisions of Section 271AAB of the Act."
3.1 Brief facts of the cases are that assessment in these cases have been completed vide orders dated 11.12.2017 initiating penalty proceedings u/s 271AAB of the IT. Act,1961.The AO has finalized penalty proceedings levying penalties u/s 271AAB(1)(a) at the rate of 10% as the 3 M.A. No 15 & 16/Chd/2020 DCIT Vs Rajat Jain & One Ar.
assessee(s) surrendered the undisclosed income of Rs.17 Crores u/s 132(4) of the IT. Act, 1961 on account of the incriminating documents found during the search which was addressed by Sh. Sukhdarshan Kumar in the statement u/s 132(4) of the I.T.Act,1961 recorded on 24.09.2015 while answering the question No.30 on behalf of the family members surrendered Rs.17 Crores as additional income as under:-
Q30 ...........
Ans. As submitted earlier, the profits earned by the individuals are those derived from the unaccounted and disclosed transactions from sale and purchase of properties, bullion and commodity trading etc, during the current financial year i.e. FY 2015-16. These also include certain receivable on account of profits earned from the sale of properties etc. Some of these profits have been utilized to purchase gold jewellery and kept as cash etc which has been seized earlier by the Income Tax Department during the course of search from our residential premises and from the lockers. Some profits have been utilized for household expenditure etc. and also as temporary advance, the details of which are not available at this moment. However, in order to avoid any prolonged litigation and to buy peace of mind. I on behalf of my family members offer to disclose additional income of Rs. 17.00 cr the details of which are as under:-
S.No. Amount (In Lacs)
Name FY 2014-15 FY 2015-16
1. M/s R.D. Palace Pvt. Ltd. 200 100
2 M/s Big Digs Resorts Ltd. 100 50
3 M/s Maharaja Light & Tent Service - 50
4 Sukhdarshan Kumar - 230
5 Rama Rani - 200
6 Rajat Jain - 80
7 Vani Jain - 90
8 Deepak jain - 75
9 Veena jain - 190
10 Gaurav Jain - 80
11 Shweta Jain - 90
12 Saurav Jain - 80
13 Niti Jain - 85
Total 300 1400
The additional income in the hands of the entities mentioned at Sr.No.l to 3 above is as a result of certain unaccounted business transactions such as unaccounted receipts, inflation of expenditure etc. As regard persons/individuals mentioned at Sr. No. 4 to 13, the additional income is as a result of unaccounted transactions of purchase/sale of properties, 4 M.A. No 15 & 16/Chd/2020 DCIT Vs Rajat Jain & One Ar.
shares/commodities, gold/silver/bullion and receipt of gifts. It is further submitted the additional income so offered for the respective assessment years as mentioned above is over and above the normal income of the above mentioned entities / individuals. "
3.2 However, the Hon'ble ITAT, restricted the penalty upto the value of the jewellery found during the search operation i.e. Rs. Nil, in this case. The respective chart, as provided by the assessee is as under for your kind consideration. It is apparent that facts of the case have not been appreciated in correct prospective in the orders in ITA No.920 & 922/Chd/2018 dated 19.09.2019 passed by the Hon'ble ITAT, Chandigarh. These orders are required to be rectified and bringing to your notice that penalty had been correctly levied u/s 271AAB(l)(a) by the AO on the undisclosed income which was admitted by the Director of the company u/s 132(4) of the Act and relief has been erroneously allowed by the Hon'ble Tribunal. Hence, the M.A. is filed before Hon'ble ITAT. (figure in Lakhs) Sr. Particulars Rajat Jain Saurav Jain No. AY2016-17 AY2016-17 1 Jewellery 0 0 2 Silver 0 0 3 Income declared 80 80 Total 80 80
4. Grounds on which M.A. is proposed for filing 4.1 That the Hon'ble ITAT has not appreciated this case is fully covered under sub clause (i) of clause(a) of the sub-section (1) of the section 271AAB of the Income Tax Act, 1961 in view of the family head admission in the statement recorded u/s 132(4) of the Income Tax Act, 1961 wherein reply to Q no.21 the director of the assessee company conceded that the transaction recorded in the diary annexed as Ann-AA5 are unrecorded transactions and is the undisclosed income of company assessee.
4.2 That the Hon'ble ITAT has erred in ignoring the fact that the director of the assessee company in reply to Q No.30 in his statement recorded u/s 132(4) of the Income Tax Act, 1961 has further admitted the undisclosed income of his group including company assessee of Rs.14 Crore in F.Y. 2015-16 and Rs.3 Crore in F.Y. 2014-15 in aggregate on account of transaction recorded in the diary marked as Ann-AA5 and as such case falls under sub-clause
(i) of clause(a) of the sub-section (1) of the section 271AAB of the Income Tax Act, 1961.
4.3 That the Hon'ble ITAT has not appreciated the facts of the case which are duly covered under sub-clause (ii) of clause (a) of the sub section (1) of the section 271AAB of the Income 5 M.A. No 15 & 16/Chd/2020 DCIT Vs Rajat Jain & One Ar.
Tax Act, 1961 in view of the family head of the assesee reply in the statement recorded u/s 132(4) of the Income Tax Act, 1961 wherein reply to Q. No.22 he has substantiated the manner in which the aforesaid undisclosed income recorded in the diary marked as Ann-AA5 was earned.
4.4 That the Hon'ble HAT has not appreciated the material fact of assessee's categorical admission in the statement recorded u/s 132(4) of the Income Tax Act, 1961 wherein the assesee company through its director Sh. Sukhdarshan Kumar (family head) with regard to the transaction recorded in the diary marked as Ann-AA5 in reply to Q No. 19 has admitted that "Sir these transactions are not recorded in regular books of accounts", and thus the facts of the case falls under the sub clause (A) of the clause (c) of the explanation to the section 271AAB of the Income Tax Act, 1961.
4.5 That the Hon'ble ITAT has erred in ignoring the ratio decided by the Hon'ble Allahabad High Court in the case of PCIT Vs Sanddep Chandok against which the SLP filed by assessee has been dismissed by Hon'ble Apex Court (2018) 93 taxmann.com (406) (SC) wherein it is held that where assessee in course of search admits undisclosed income and manner in which such income has been derived, then provisions of section 271AAB would automatically attract. As in the instant case also the ingredients of provisions of section of section 271AAB are fulfilled, the penalty u/s 271AAB of the Income Tax Act, 1961 is liable.
4.6 That it may be noted that during the course of search & seizure operation carried out u/s 132 of the Income Tax Act, 1961 on 27.08.2015 certain incriminating documents (Ann-AA5) were found which has prompted the assessee to include the additional undisclosed income in his/her returned income for the year under consideration. Otherwise the assessee would have gone scot-free. Thus mere inclusion of undisclosed income detected during the course of search in a return was filed u/s 139(1) will not absolve the assessee from penalty u/s 271AAB.
5. In the light of the above, it is prayed that the Hon'ble ITAT may kindly be pleased to rectify the aforesaid mistake in its order."
3. During the course of hearing, the ld. Sr.DR reiterated the contents of the aforesaid Misc. applications.
4. In his rival submissions, the ld. Counsel for the assessee furnished the written submissions dated 27/04/2021 which read as under:
"Sub: MA Nos. 15 and 16/Chandi/2020 in the cases of Sh. Rajat Jain and Sh. Saurav Jain for A/Y 2016-17 Sir, 6 M.A. No 15 & 16/Chd/2020 DCIT Vs Rajat Jain & One Ar.
Respectfully the following is submitted for Your Honour's kind consideration and necessary adjudication: -
ITA Nos 920 and 922/Chandi/2018 in the cases of Sh Rajat Jain and Sh Saurav Jain were adjudicated upon by the Hon'ble Bench vide order 19. 09. 2019 vide which the penalty levied u/s 271AAB was deleted in both the cases While deciding these appeals, the Hon'ble Bench relied on an earlier decision of the Hon'ble" Bench in the case of Smt Veena Rani and Others in ITA Nos. 1238 to 1242/Chandi/2018 decided vide order 12.07.2019.
The Department had filed miscellaneous applications in the case of Sh Rajat Jain and Sh Saurav Jain which are listed for hearing for tomorrow i.e 28.04 2021. The Department had filed miscellaneous applications against orders passed by the Hon'ble Bench in ITA Nos 1238 to 1242/Chand/2018 referred to supra which have already been decided by the Hon'ble Bench in MA Nos 3 to 7/Chandi/2020 vide order dated 06 10.2020. Copy of order dismissing the miscellaneous applications in MA Nos. 3 to 7/Chandi/2020 is enclosed for facility of reference.
It is prayed that as the issue involved in the present miscellaneous applications is identical to the issue in the miscellaneous applications already adjudicated by the Hon'ble Bench the issue may kindly be adjudicated accordingly Thanking you Yours faithfully (Ashwani Kumar) C. A Counsel for the Respondents Encl as above Dated 27.04.2021"
5. During the course of hearing, the ld. Counsel for the assessee reiterated the contents of the aforesaid written submission.
6. We have considered the submissions of both the parties and perused the material available on record. In the present case, it is an admitted fact that the ITAT Bench "B", Chandigarh while deciding the appeals of the assessee in ITA Nos. 920 & 922/Chd/2018 vide order dated 19/09/2019 followed the earlier order dated 12/07/2019 in the cases of Smt. Veena Rani & Others, Ludhiana Vs DCIT, Central Circle-1, Ludhiana in ITA Nos. 1238 to 1242/Chd/2018. Against the said 7 M.A. No 15 & 16/Chd/2020 DCIT Vs Rajat Jain & One Ar.
order also, the department filed Miscellaneous Applications being M.A. No. 3 to 07/Chd/2020 which have been disposed off by this Bench of the ITAT vide order dated 06/10/2020 and the relevant findings have been given in para 2 and 3 of the said order dated 06/10/2020 which read as under:
"2. A perusal of the above stated Misc. Applications reveal that the Department through t hese applications wants to contest the cases afresh. Reference has been made to certain additional facts and evidences stating that the Tribunal has erred in not t aking note of these additional facts and evidences. However, the attention of the Ld. DR was invited to the record of the case but he failed to point out which fact or ev idence on the file has escape d attention of the Tribunal. The Ld. DR could not point out any mistake in the i mpugned or de r which can be said t o be a mistake apparent from record. In fact, the Department through these applications seeks the review of the or der by way of pleading additional facts which is not per missible in a rectification application u/s 254(2) of the Income Tax Act, 1961. This Tribunal does not have any power to review its own order. Moreover, there is no mistake appare nt on the record in the order dated 12.07.2019 (supr a) passe d by the Tribunal in the aforesaid cases. If the Department has any grievance agai nst the impugned order, proper course is to agitate the same before the next appellate authority / Hon'ble High Court . The Hon'ble Bombay High Court in the case of 'Commissioner Of Inc ome-Tax vs Ramesh Electric And Trading Co.' 1993 203 I TR 497 (Bom.), while relying upon the decision of the Hon'ble Supreme Court in the case of 'T. S. Balaram, ITO v. Volkart Brother s' [ 1971] 82 ITR 50 and further relying upon the decisions of the various High Courts has categorically held that the power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent; mistake which is appar ent from the record, and not a mistake which requires to be established by arguments and a long drawn proc ess of reas oning on points on which there may conceivably be two opinions. Even failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgme nt and under such circumstances the Tribunal has no jurisdiction under section 254(2) to pass the se cond order. However, in this case the Ld. DR has failed to point out what fact or even any ar gument coming from r ecord, the Tribunal has failed to consider in the or der dated 12.7.2019.8
M.A. No 15 & 16/Chd/2020 DCIT Vs Rajat Jain & One Ar.
3. In view of our above observations and the legal position as stated above, we do not find any me rit in the captioned applications and the same are hereby dismissed."
7. Since the facts of the present Miscellaneous Applications are identical to the facts involved in the aforesaid Miscellaneous Applications No. 03 to 07/Chd/2020 in the cases of ACIT, Central Circle-1, Ludhiana Vs Smt. Veena Rani & Others, so respectfully following the said order dated 06/10/2020, we do not see any merit in these Miscellaneous Applications of the department. Accordingly, the same are dismissed.
8. In the result, both these Miscellaneous Applications of the department are dismissed.
(Order pronounced in the Court on 28/04/2021)
Sd/- Sd/-
आर.एल. नेगी एन.के.सैनी,
(R.L. NEGI) (N.K. SAINI)
या$यक सद&य/ Judicial Member उपा य! / VICE PRESIDENT
Date: 28/04/2021
*Ranjan
आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु/त/ CIT
4. आयकर आयु/त (अपील)/ The CIT(A)
5. -वभागीय त न4ध, आयकर अपील&य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File