Income Tax Appellate Tribunal - Ahmedabad
Dr. Yashesh Dalal, Baroda vs Department Of Income Tax on 13 March, 2012
1 ITA No.2275/AHD/2009
Assessment Year 2004-05..
IN THE INCOME TAX APPELLATE TRIBUNAL " A "BENCH, AHMEDABAD
(BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI A.M.)
I.T.A. No. 2275/AHD/2009
(Assessment Year: 200 4 - 05 )
Assistant Commissioner of Vs. Dr. Yashesh Dalal,
Income Tax, Shrushtil Hospital
Central Circle-2, Nr. Akota Garden,
Aayakar Bhavan, Baroda.
Nr. RaceCourse Circle,
Baroda. (Respondent)
(Appellant)
PAN: ACRPP 4051F
Appellant by : Shri Rahulkumar, Sr. D.R.
Respondent by : Shri Mukun Bakshi.
आदे श)/ORDER
(आदे Date of hearing : 13-3-2012 Date of Pronouncement : 30-3-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER.
This appeal is filed by the Revenue against the order of CIT (A)- IV, Baroda dated 22-1-2009 for the Assessment Year 2004-05. In appeal Revenue has raised following grounds:-
1. The Ld. CIT (A) has erred in law and in facts in deleting the penalty of Rs.3,80,785/-.2 ITA No.2275/AHD/2009
Assessment Year 2004-05..
2. The CIT (A) has erred in law and in facts in deleting the penalty without appreciating that the Explanation 5 to section 271(1) is applicable to the assessment year in which the search was carried and return was not filed."
2. The brief facts of the case is that the assessee is a practicing Doctor running a hospital at Akota, Baroda. A search u/s. 132 of the Act was conducted on 24-11-2005 at his place. In the course of search, the assessee made a disclosure of an additional income of Rs.1 crore in the statement recorded u/s. 132(4) on 24-11-2005. The assessee further stated that as per his understanding, about 60% i.e. about Rs.60 lacs was the net undisclosed income of F.Y. 2005-06 and remaining 40% i.e.Rs.40 lacs was for A.Y. 2004-05. The assessee filed returns in response to notice u/s.153A on 1-5-2006 declaring total income of Rs.23,52,480/- as against total income of Rs.11,99,600/- declared u/s.139(1). He also paid the taxes. During the course of assessment proceedings the assessee filed an affidavit dated 27-11- 2007, wherein he stated as under:-
" I have disclosed following amount:
Financial Year Nature of disclosure. Amount disclosed in
Rs.
1999-2000 Other income. 68,700
2003-04 Professional income
(including on money given to 11,50,000
JRH Developers,Brd.
(Rs.900.000)
2004-05 Professional income
[including NSC of Rs.50,000] 20,00,000
2005-06 Professional Income
[including Gold Bar 60,00,000
purchased therefrom]
Total. 98,18,700
3 ITA No.2275/AHD/2009
Assessment Year 2004-05..
I further declare that during my testimony in search proceedings, I have made an error in estimating year-wise distribution of my total; undisclosed income as Rs.40/-lacs in the financial year 2004-05 and Rs.60/- lacs in the financial year 2005-06 due to pressure, tense frame of mind and based only on a rough estimated and limited understanding. On detailed study of my papers while filing revised returns in terms of provisions of section153A(a), the actual year wise distribution of undisclosed income earned from, professional practice is as per chart mentioned above and have paid the appropriate tax on the same along with statutory interest...."
3. The order u/s. 153A was passed on 27-12-2007 and the income was assessed at Rs.23,52,480/-.As the income declared in the return u/s. 153A was higher by Rs.11,52,880/- as compared to the income declared in the return u/s. 139(1), the A.O. concluded it to be an effort on the part of the assessee of concealing of income and accordingly penalty proceedings were initiated against the assessee.
4. In the penalty proceedings before the A.O., the assessee contended that its case was covered by the immunity provided in Explanation-5 to Sec. 271(1)(c) as the assessee had declared undisclosed income in the statement recorded u/s. 132(4) during the course of search and taxes along with interest were paid thereon in the return filed u/s. 153A and accordingly requested to A.O. to drop the penalty proceedings. The A.O. did not agree with the contention of the assessee. According to the A.O., the assessee came forward to disclose income only because of the search action taken by the Revenue Department. According to A.O. as the assessee had failed to 4 ITA No.2275/AHD/2009 Assessment Year 2004-05..
discharge his onus within the meaning of Explanation 1 to Section 271(1)(c) penalty of Rs.3,80,785/- (being 100% of tax sought to be evaded ) was levied.
5. Aggrieved by the order of A.O., the assessee preferred appeal before the CIT (A). CIT (A) deleted the penalty vie order dated 22-1- 2009 holding as under:-
"2.2. The additional income offered by assessee u/s.153A after the search having been accepted in its entirety without detailed discussion of the seized documents. An assessee's statutory obligation u/s.139(1) is to give correct and complete information with the return of income compiled with, then there is no contravention which can attract penalty. In other words, the assessee concealed the income comes to an end when the corresponding amount was offered for taxation when all the necessary particulars are declared by the assessee in the return of income filed u/s. 153A. In a case where all the necessary particulars are declared by the assessee in the return of income, it cannot be said that the assessee has concealed his income or furnished inaccurate particulars of income in respect of the undisclosed income. The Assessing Officer has not discharged the burden to prove the concealment of income, which was levied purely on the basis of voluntary surrender made by the assessee in good faith. Therefore, the assessee had made disclosure after the search cannot be treated as concealment. It cannot be said to be the amount of tax sought to be evaded because the undisclosed income was declared during the course of search only. Further, the disclosure made by Dr. Yashesh Vinodchandra Dalal u/s.132(4) of the Act and is therefore, entitled to the immunity to levy of penalty under Explanation-5 attached to section 271(1)(c ) since taxes along with interest were paid on the disclosure made by the assessee. Keeping in view the above facts and circumstances of the case as well as the cases relied upon by Ld. Counsel (supra), the 5 ITA No.2275/AHD/2009 Assessment Year 2004-05..
penalty imposed u/s. 271(1) (c) is hereby deleted. Hence, the appeal is allowed.
6. Aggrieved by the order of CIT (A), the Revenue is in appeal before us.
7. The Ld. DR contended that the CIT (A) has erred in deleting the penalty. The Ld. DR argued that the assessee's case is not covered by Explanation (1) to section 271(1)(c) but Explanation (5) to section 271(1)(c) is applicable. According to him the assessee is not entitled to immunity by Explanation 5 because benefit of Explanation 5 is confined to the return for the year in respect of which the previous year is to end or even though ended, the time for filing the return u/s. 139(1) is yet to expire. He relied on the decision of ACIT vs. Kirit Dahyabhai Patel (2009) 121 ITD 159. The head note reads as under:-
"Benefit of Explanation 5 is confined to the return for the year in respect of which the previous year is yet to end or even though ended, the time for filing the return under s. 139(1) is yet to expire.."
8. He also relied on the decision of Ajit B. Zota (2010) 40 SOT 543 (Mum.) wherein it was held as under:-
"When compared to the original return already filed and the return filed in response to notice under S. 153A, assessee had offered an additional income of Rs.40,000/- as speculation profit, without disturbing the capital gains working - Explanation 1 to S. 271(1)(c) cannot be invoked as there is no bona fide explanation given why this income was not disclosed at the time 6 ITA No.2275/AHD/2009 Assessment Year 2004-05..
of filing original return - No immunity is available to the assessee when additional income was disclosed in the return under S. 153A - Penalty upheld."
9. The Ld. AR on the other hand argued that the assessee's case falls under Explanation 1 and not Explanation 5. The contention of the Ld. AR is that the disclosure of additional income of Rs.1 crore was based on the disclosure made by the assessee during the course of search and not based on any incriminating material found during the search. It is not the case of detection of undisclosed income during the search. Further during the course of assessment, the assessee, suo-moto, offered the income by means of an affidavit. In the assessment framed u/s. 153A r.w.s. 143(3) the income has been assessed at Rs.23,52,480/- being the income declared and as such there is no change in the income that has been assessed. The Ld. AR further stated that the disclosure was done voluntarily and not based on any incriminating material found during search, no penalty u/s. 271(1)(c) should be levied. He relied on various decisions apart from following decisions for the proposition that no penalty be levied.
(1) Addl. CIT vs. Prem Chand Garg 119 ITD 97 (Del)(TM) (2) DCIT vs. Sushma Devi Agarwal & Ors. ITA No.876/Kol/2008 dated 23-6-2011.
(3) Bhairav Lal Verma vs. UOI (1998) 230 ITR 855 (All) (FB).
10. We have heard the parties, perused the material on record and case laws cited by both the parties.
7 ITA No.2275/AHD/2009Assessment Year 2004-05..
11. It is an undisputed fact that the assessee had declared total income of Rs.23,52,480/- in return u/s. 153A and the taxes thereon were paid by the assessee. The income that was declared was not based on any incriminating material seized during the course of search. The disclosure was done voluntarily and the income was also assessed on the basis of return filed by the assessee.
12. In the case of Bhairav Lal Verma vs. UOI (supra) the Hon'ble High Court has held that it cannot be held as a principle of law that the disclosure of income made after the search/raid cannot be voluntary. It is a question which has to be decided by the Department in each case on the basis of the material on record.
13. It is an undisputed fact that the assessment was made by the A.O. on the basis of admission of the assessee and not on basis of any material found during the course of search. Further the additional income offered by the assessee u/s. 153A after the search has been accepted in its entirety without detailed discussion of the seized documents. In a case where all the necessary particulars are declared by the assessee in the Return of income, it cannot be said that the assessee has concealed his income or furnished inaccurate particulars of income in respect of the undisclosed income. Therefore, the case under consideration is not the case that the assessee has furnished inaccurate particulars or concealed any particulars of income in the return filed u/s. 153A of the Act. The Assessing Officer has not discharged the burden to prove the concealment of income, which was levied purely on the basis of 8 ITA No.2275/AHD/2009 Assessment Year 2004-05..
voluntary surrender made by the assessee. Therefore, the assessee made disclosure after search cannot be treated as concealment. When there is no finding of concealment in respect of return filed by the assessee in response to notice u/s. 153A, we find that penalty u/s. 271(1)(c) cannot be levied. We therefore, cancel the penalty of Rs.3,80,785/- levied u/s. 271(1)(c).
14. In the result, appeal of the Revenue is dismissed.
Order pronounced in Open Court on 30 -3 - 2012.
Sd/- Sd/-
(G.C.GUPTA) (ANIL CHATURVEDI)
VICE PRESIDENT ACCOUNTANT MEMBER
Ahmedabad.
S.A.Patki.
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals)-IV, Baroda.
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad.
9 ITA No.2275/AHD/2009
Assessment Year 2004-05..
1.Date of dictation 13 - 3 -2012
2.Date on which the typed draft is placed before the Dictating 21 / 3 / 2012 Member................Other Member................
3.Date on which the approved draft comes to the Sr.P.S./P.S 29 - 3 -2012.
4.Date on which the fair order is placed before the Dictating Member for pronouncement 30 - 3 -2012
5.Date on which the fair order comes back to the Sr.P.S./P.S 30 - 3 -2012
6.Date on which the file goes to the Bench Clerk 30 - 3 -2012.
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order.................