Income Tax Appellate Tribunal - Ahmedabad
Shri Sureshkumar Jethalal Shah,, ... vs The Acit, Central Circle-1,, Baroda on 28 November, 2019
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'C' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER आयकर अपील (एसएस) सं./I.T(SS).A. Nos. 322 to 326/Ahd/2014 ( नधा रण वष / Assessment Years : 2005-06 to 2009-10) Shri Sureshkumar बनाम/ Assistant Commissioner Jethalal Shah Vs. of Income Tax Giriraj Society, Nr. B. B. Central Circle-1, Aayakar Gandhi Petrol Pump, Bhawan, Race Course Godhra Dahod Road, Circle, Vadodara Godhra - 389001 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AIPPS8732E (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Bandish Soparkar, A.Rs.
यथ क ओर से/Respondent by: Shri L. P. Jain, Sr. D.R.
सन
ु वाई क तार"ख / Date of
21/11/2019
Hearing
घोषणा क तार"ख /Date of
28/11/2019
Pronouncement
आदे श/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The above captioned bunch of five appeals concerning various assessment years relate to the same assessee against the common order of the Commissioner of Income Tax(Appeals)-IV, Ahmedabad ['CIT(A)' in short] dated 16/05/2014 for the Assessment Years (AYs) from 2005-06 to 2009-10.
I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 2 -
2. The issue involved in all these appeals concern imposition of penalt y under s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). As the issue is common, all the five appeals are disposed of b y common order to achieve convenience.
3. IT(SS)A No.322/Ahd/2014 relevant to AY 2005-06 is taken as a lead case for the purposes of adjudication.
IT(SS)A No.322/Ahd/2014 - AY 2005-06
4. In the captioned appeal, the assessee has raised the following ground of appeal for adjudication.
"1. The learned Commissioner of the Income Tax (Appeal) - IV, Ahmedabad erred in fact and in law in confirming the action of Assistant Commissioner of Income Tax, Central Circle-1, Baroda in levying penalty of Rs.16,95,644/- on account of the difference of income between return filed u/s.139(1) and section 153A of the Income Tax Act, 1961 ("the Act")."
5. Briefl y stated, a search action under s.132 of the Act was carried out in R. K. Construction group of cases including the case of the assessee on 09/04/2010. Prior to search, the assessee filed return of income ((ROI) under s.139(1) of the Act for assessment years 2005-06 to 2009-10 and declared varied income. After the search action, the assessee filed fresh return of income in response to statutory notices issued under s.153A of the Act for all these assessment years. The assessee disclosed additional income for all the assessment years in the returns filed under s.153A of the Act. The varied income so declared b y the assessee in different assessment years in appeals and assessed income is tabulated hereunder.
AY Returned Returned Additional Additions Income Penalty on income income income declared made assessed additional u/s.139(1) u/s.153A u/s.153A u/s.153A u/s.153A income imposed 2005-06 3,48,640 53,75,130 50,12,489 -- 53,75,130 16,95,644 I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 3 -
2006-07 3,58,168 48,12,810 44,54,640 -- 48,12,810 15,05,282 2007-08 5,36,030 51,40,740 46,04,714 -- 51,40,740 15,61,250 2008-09 3,83,470 38,83,620 35,00,155 -- 38,83,620 11,96,300 2009-10 6,97,220 57,19,840 50,22,624 -- 57,19,840 17,18,176 The assessment was finalized under s.153A of the Act r.w.s. 143(3) of the Act for all the assessment years. The Assessing Officer (AO) imposed penalty under s.271(1)(c) of the Act on the difference between income assessed under s.153A and returned under s.139(1) of the Act. The C IT(A) also confirmed the imposition of penalty made b y the AO b y taking note of Explanation 5A to section 271(1)(c) of the Act.
6. The assessee has preferred captioned appeals before the Tribunal against the combined order of the C IT(A) assailing confirmation of penalt y. As per its ground of appeal, the challenge of the assessee is limited to the correctness of imposition of penalt y on differential income disclosed in the return filed under s.139(1) of the Act vis-a-vis return filed under s.153A of the Act.
7. In the course of hearing before the Tribunal, the leaned AR for the assessee submitted that in all the 5 assessment years in appeal, the penalt y has been imposed b y the Revenue authorities under s. 271(1)(c) of the Act r.w. Explanation 5A on account of difference between the income declared in the return originall y filed prior to search qua the return as filed subsequentl y in compliance of notice under s.153A of the Act in pursuance of search action.
8. As regards the imposition of penalt y towards difference in the income declared between original return prior to search and subsequent return filed pursuant to search under s.153A of the Act is concerned, the learned AR contended that the Revenue is not entitled to impose penalt y on income declared by the assessee himself under s.153A of the Act. The learned AR referred to the decision of the co-ordinate bench of Tribunal in Dilip Kedia vs. ACIT (2013) 40 taxmann.com 102 (Hyderabad-Trib.) and submitted that the AO was not justified in lev y of I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 4 -
penalt y under s. 271(1)(c) of the Act upon the assessee on agreed additions included in the return of income filed under s.153A of the Act pursuant to search.
9. The Ld.DR for the revenue, on the other hand, relied upon the order of the C IT(A) and submitted that the action of the CIT(A) is in confirmit y with law and therefore no interference thereof is called for. The learned DR also referred to the decision rendered b y the Hon'ble Delhi High Court in Pr.CIT vs. Dr. Vandana Gupta (2018) 92 taxmann.com 229 (Del.) to contend that the assessee cannot be absolved of penalt y for declaration of enhanced income in the return filed under s. 153A of the Act subsequent to search qua the return filed b y the assessee under s.139(1) of the Act prior to search. The learned DR also referred to the decision of the co-ordinate bench in DCIT vs. Shri Sinkaram Chettiar ITA No. 368-373/Coch/2017 order dated 02.08.2018 to buttress its contention that where the additional income declared b y the assessee in the return filed under s.153A of the Act subsequent to search represents undisclosed income of the assessee and did not form part of the regular income declared under s.139(1) of the Act, the Revenue was justified in invoking the provisions of Section 271(1)(c) of the Act. Addressing further, the learned DR referred to the statement of the assessee recorded under s.139(4) of the Act and submitted that cash and other documents were found in the premises of the assessee which was found to be unrecorded in the regular books of accounts. The assessee has categoricall y admitted substantial unaccounted income on the basis of such unaccounted activities and included the same in the return of income. The learned DR submitted that non-imposition of penalt y on such undisclosed income would tantamount to giving the premium to a searched assessee vis-à-vis a regular assessee. It was further pointed out that Explanation 5A to Section 271(1)(c) of the Act deems act of concealment even before return is filed. It was lastl y submitted b y the learned DR that the CIT(A) has examined the issue threadbare and no interference therewith is called for.
I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 5 -
9. We have carefull y considered the rival submissions. In terms of the plea raised, the central question that emerges for determination is whether penalt y under s. 271(1)(c) of the Act can be imposed on additional income declared in the return filed b y the assessee under s.153A of the Act vis-à-vis the income declared in the return filed under s.139(1) of the Act? We find that the issue is no longer res integra. The identical issue has been squarel y considered b y the co-ordinate bench in the case of same combination in Vijay K. Shah vs. ITO in IT(SS)A Nos.54 to 57/Ahd/2014 for AYs 2003-04 to 2006-07, order dated 13/04/2017. It will be apt to reproduce the relevant para dealing with contentions raised on behalf of the assessee:
"9. Notwithstanding that the issue is affirmed in favour of the assessee in the given facts of the case, we are equally inclined to dwell upon the cardinal plea raised on behalf of the assessee for the proposition that as soon as return is filed under s.153A, the imposition of penalty or otherwise has to be seen only with reference to the return filed under s.153A and return filed earlier under s.139 prior to search showing lesser quantum of income fades into insignificance in all circumstances. For this proposition, the decision of the Hon'ble Gujarat High Court in Kirit Dahyabhai Patel vs. ACIT (2015) 280 CTR 216 (Guj.) was heavily relied upon in the course of hearing. In essence thus, it is the case of the assessee that income discovered as a result of search and included in the return filed under s.153A in post search proceedings are not susceptible to penalty under s.271(1)(c) of the Act at all notwithstanding Explanation-5 subsisting in statute at the relevant time.
9.1. We straight away reckon that such sweeping proposition does not find any semblance of acceptability. As noted earlier, Explanation-5 to section 271(1)(c) specifically addresses the aforesaid situation where it is specifically provided that notwithstanding the fact that undisclosed income found as a result of search was declared in the return of income furnished after the date of search, the assessee shall be deemed to fall within the sweep of section 271(1)(c) unless the assessee is covered by 'exit route' provided in the Explanation-5 itself. Thus, the aforesaid proposition canvassed by the assessee that once the return is filed by the assessee after the search in response to notice issued under s.153A including undisclosed income discovered in the course of search, the assessee gets indefeasible right to shun away penalty proceedings on such undisclosed income is squarely at loggerheads with deeming fiction created under Explanation-5 for this purpose. Needless to say, this generic proposition towards non-applicability of penalty on undisclosed income, if seen in affirmative, will render the legislative fiat under Explanation-5 relatable to search cases as otiose and infructuous. As can be seen, the benefit of immunity provided under Explanation-5 is well defined and structured. As provided, it is available only in respect of such year where the due date of filing of the return has not expired before the date of search subject to fulfillment of conditions as contemplated in the said Explanation. I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 6 -
9.2. We shall now advert to the decision in the case of Kirit Dahyabhai Patel (supra) referred to and extensively relied upon on behalf of the assessee. We notice that in that case, the 'substantial question of law' framed for decision before the Hon'ble Gujarat High Court was confined to availability of immunity under clause(2) to Explanation-5 of Section 271(1)(c) in the facts of the case. For ready reference, it is reproduced hereunder:-
"Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in restoring the penalty imposed under Section 271(1)(c) of the Act holding that benefit under explanation 5 to Section 271(1)(c) of the Act would be available only for period where due date for filing the return under Section 139(1) of the Act had not expired?"
In the context of above question posed, the Hon'ble Gujarat High Court after referring to series of decisions of various Courts found that the assessee has broadly satisfied all the conditions required for claiming immunity from payment of penalty under s.271(1)(c) of the Act.
9.3. Significantly, the assessee himself after having raised the general proposition towards claiming immunity towards undisclosed income included in S.153A return, in exercise of its wisdom, paused and went on to withdraw the same at a later stage before the Ld.Third Member in the ITAT proceedings in Kirit Dahyabhai Patel vs. ACIT reported in (2009) 121 ITD 159 (TM) which decision was subject matter of appeal before the Hon'ble Gujarat High Court. Thus, apparently, the Assessee himself while in appeal before Hon'ble High Court, was no longer aggrieved by the proposition that return under s.153A is amenable to penalty provisions under s.271(1)(c) of the Act. To elaborate, the Ld.Third Member clearly recorded a finding that the assessee has not disputed the position that section 271(1)(c) is applicable to an assessment made under s.153A. The substantive question that emerged before the Ld.Third Member of ITAT on account of difference of opinion was whether immunity granted under Explanation-5(2) to section 271(1)(c) is available to the assessee. Thus, on nuanced and contextual analysis of the judgement rendered by the Hon'ble Gujarat High Court in appeal under s.260A of the Act, it is difficult to reckon the case made out by the assessee that additional income declared in the post search returns would be entitled to immunity from penalty in a sweeping manner regardless of the satisfaction of conditions as provided for its non-applicability as enumerated under clause(2) of Explanation-5.
9.4. Needless to say, sentences used while rendering a judgment cannot be read in isolation and their purport and contents are derived from their context. As noted, the law is codified for applicability of penalty in search cases. The legislature has made conscious distinction between the cases where the return of income has already been filed prior to search qua the cases where the return is yet to be filed and has put them on a different pedestal. It is trite law that a judgement cannot be read out of context in which the question arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of a Court divorced from the context of the question in consideration and to treat it to be the complete law declared by the Court. A judgment must be read as a whole and the observations from the judgment have to be considered in the light of questions which were presented before the Court. A decision of the Court I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 7 -
takes its colour from its question in which it is rendered as enumerated in CIT vs. Sun Engineering works Pvt. Ltd. (1992) 198 ITR 297 (SC). Thus, context holds the key and the decision of the Court has to be read in the context of the facts involved therein and not on the basis of what logically flows there from. A stray sentence cannot be allowed to be put into service to draw a meaning which was never probably meant by the author himself. A judgment is not to be read as statute. Thus, in the light of question framed for decision by Hon'ble Gujarat High Court, we are inclined to hold that the abstract proposition of non-applicability of penalty proceedings in all circumstances (wherever undisclosed income has been included in the return filed post-search) is singularly misplaced and is not supported by the factual context in which the decision in Kirit Dahyabhai Patel(supra) was rendered."
10. In view of the aforesaid deliberation, we do not find an y merit in the perspective of the assessee before lower authorities in so far as legal position on the imposition of penalt y is concerned. The assessee is thus required to demonstrate mitigating circumstances for non-application of s.271(1)(c) r.w.s. Ex planation 5A on facts to escape its mischief. Mere inclusion of additional income in the ROI under s.153A per se does not provide blanket exemption from provision of s.271(1)(c) of the Act in search cases.
11. We shall now address ourselves on the application of Explanation 5A in the facts of the case. The search in the instant case has been carried out on 09/04/2010 i.e. after Explanation 5A to section 271(1)(c) was put in statute along with some other structural changes in substitution of Explanation 5 thereof. The Explanation 5A is a deemin g provision. As noted, where search is initiated on or after 01/06/2007, a new Explanation 5A has been specifically inserted to section 271(1)(c) to deal with a situation where higher income was disclosed in the return filed consequent to search operation where the assessee is found to be the owner of money, bullion, jewellery or other valuable articles or things or an y income based on documents or transactions. The AO in the instant case has alleged that the assessee disclosed its unreported income in subsequent return under s.153A post search as reflected b y the incriminating material found during the course of search. The unreported additional income of different amounts so declared is given in the I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 8 -
tabulation provided earlier. It is the case of Revenue that the additional income was declared b y the assessee in the return filed under s.153A due to strenuous exercise carried out b y the Department in the case of assessee group as a result of laying hand on a lot of incriminating documents and facts etc. These documents etc. were confronted to the assessee and escaped income was unearthed.
12. It is also born out from the record that assessee has conceded the undisclosed income in the statement recorded on oath under s.132(4) of the Act. As embodied in s.132(4), the examination of person in respect of books, documents, money, bullion, jewellery or other valuable articles or things etc. is a piece of evidence and is capable of being used against the assessee in Income Tax proceedings thereafter. Thus S.132(4) embodies statutory presumption which is albiet of rebuttable nature. The understanding about the true position and state of affairs in statement under s.132(4) is not shown to be successfull y retracted. Thus, the deposition made on oath under s.132(4) holds the field. It is nowhere borne out from record before us that amount conceded as undisclosed income was given in vacuum or in reckless manner and circumstances for doing so, if an y. The estoppels raised on admitted facts remained unrebutted and on the contrary was further ratified in the ROI filed under s.153A of the Act. We do not see an y rationale in not taking into account the income so conceded in such circumstances for the purposes of penalt y proceedings under s.271(1)(c) which are civil in nature and is a remed y for possible loss of revenue. In view of the aforesaid discussion, we are of the considered view that recourse to Explanation 5A could be rightly taken b y the revenue in the facts and the circumstances of the case.
13. Having regard to the legal and factual position as noted above, we do not find an y merit in the appeals of the assessee towards exoneration from penalt y proceedings in respect of unreported income incorporated in the return filed under s.153A of the Act. The CIT(A) has rightl y I T ( S S ) A N o s . 3 2 2 t o 3 2 6 / Ah d / 1 4 (Shri Su reshkumar J. Shah) AYs. 2005-06 to 2009-10 - 9 -
appreciated the facts and law including decision rendered in the case of Dilip Kedia (supra). We thus decline to interfere.
14. In the result, all the captioned appeals of the assessee are dismissed.
This Order pronounced in Open Court on 28/11/2019
(MAHAVIR PRASAD) (PRADIP KUMAR KEDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated 28/11/2019
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 आयु/त / Concerned CIT
4. आयकर आयु/त- अपील / CIT (A)
5. 3वभागीय 6त6न-ध, आयकर अपील"य अ-धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड< फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील"य अ-धकरण, अहमदाबाद ।