Income Tax Appellate Tribunal - Jaipur
P.C. Jain & Sons Huf, Jaipur vs Assistant Commissioner Of Income Tax, ... on 3 May, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM
vk;dj vihy la-@ITA No. 927 & 928/JP/2017
fu/kZkj.k o"kZ@Assessment Years : 2011-12 & 12-13.
P.C. Jain & Sons HUF cuke The ACIT,
J-24, Subhash Marg, Vs. Central Circle - 2,
C-Scheme, Jaipur.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AADHP 7049 D
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@Assessee by : Shri Pravin Saraswat (C.A.)
jktLo dh vksj ls@ Revenue by : Smt. Seema Meena (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 02.05.2018.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 03/05/2018.
vkns'k@ ORDER
PER VIJAY PAL RAO, J.M.
These two appeals by the assessee are directed against two separate orders of ld. CIT (A)-4, Jaipur dated 04.09.2017 arising from penalty order passed under section 271AAA of the IT Act for the assessment years 2011-12 and 12-13 respectively. The assessee has raised the common grounds in these appeals. The ground raised for the assessment year 2011-12 are reproduced as under :-
" 1. That he learned CIT (A) has seriously erred by upholding the levy of penalty u/s 271AAA by A.O. No search u/s 132 was ever initiated against the assessee and the assessments were completed u/s 53C, therefore, initiation & levy of penalty u/s 271AAA is not justified as it can be levied only in the case of initiation of search U/s 132 of I.T. Act, 1961.2
ITA No. 927 & 928/JP/2017 PC Jain & Sons HUF, Jaipur.
2. That the learned CIT (A) has erred by upholding the levy of penalty U/s 271AAA despite fulfilling all of three conditions laid down U/s 271AAA(2) by assessee for not levying the penalty U/s 271AAA.
3. That the appellant craves leave to reserve to itself the right to add alter, amend, substitute, withdraw and/or any ground(s) of appeal at or before the time of hearing.
2. Since the Ground No. 1 raised by the assessee regarding validity of initiation and levy of penalty under section 271AAA was not raised before the authorities below, therefore, the assessee has filed an application seeking leave of the Tribunal to raise this ground as an additional ground in both the appeals.
3. We have heard the ld. A/R as well as the ld. D/R on the admission of additional ground. The assessee has challenged the validity of levy of penalty under section 271AAA on the ground that there was no search and seizure action under section 132 of the IT Act in the case of the assessee and, therefore, the provisions of section 271AAA cannot be invoked in the case of the assessee for levy of penalty in respect of the disclosure made by the assessee in the statement recorded under section 131 of the Act. Thus the issue raised by the assessee in this additional ground is purely legal in nature and all relevant facts required for adjudication of this issue are already on the record and no new facts or material is required to be examined or investigated for the purpose of adjudication of the issue raised by the assessee. Accordingly in view of the decision of the Hon'ble Supreme Court in the case of CIT vs. NTPC, 229 ITR 383 (SC), the additional ground raised by the assessee which is purely legal in nature and does not require any examination or investigation of new facts is admitted for adjudication on merits. 3
ITA No. 927 & 928/JP/2017 PC Jain & Sons HUF, Jaipur.
On merits :
4. The ld. A/R of the assessee has submitted that a search under section 132 and a survey under section 133A of the IT Act was carried on in the case of M/s. Ganpati Lockers Pvt. Ltd. on 29.06.2011. The assessee was having a locker no. 239 at Ganpati Lockers Pvt. Ltd. Accordingly, the assessee in his statement recorded under section 131 on 11th July, 2011 disclosed an undisclosed sincome of Rs. 89,600/-. The assessee filed its return of income under section 139(1) on 30th July, 2011 declaring total income of Rs. 5,25,230/- including Rs. 89,600/- as undisclosed income which was accepted by the AO. Therefore, when the said disclosure of the undisclosed income was not in the proceedings under section 132 or in the statement recorded under section 132(4), then the provisions of section 271AAA are not applicable in the case of the assessee. The ld. A/R has thus contended that the penalty levied under section 271AAA is not sustainable in the case of the assessee and the same may be deleted. The ld. A/R has relied upon the following decisions :-
ACIT vs. Pravin S. Jain ITA No. 4005/M/2014 (ITAT Mumbai Bench) DCIT vs. Sam India Abhimanyu Housing ITA No. 1257/Del/2015 (ITAT Delhi Bench) Hiral Himanshu Kanakia vs. ACIT ITA No. 2028/Mum/2012. DCIT vs. K.G. Developers ITA No. 1139/Ahd/2012 (Ahmedabad Bench) PCIT vs. Mukeshbhai Raman Lal Prajapati Tax Appeal No. 434 of 2017.
4.1. On the other hand, the ld. D/R has relied upon the orders of the authorities below and submitted that the assessee itself has disclosed the undisclosed income 4 ITA No. 927 & 928/JP/2017 PC Jain & Sons HUF, Jaipur.
which was detected by the department in the course of search and seizure action in case of Ganpati Lockers Pvt. Ltd. Hence the penalty levied under section 271AAA is justified.
5. Having considered the rival submissions as well as the relevant material on record, we note that there was no search and seizure action in the case of the assessee but the search was carried out in the case of Ganpati Lockers Pvt. Ltd. on 29th June, 2011. Subsequent to the search, the statement of the assessee was recorded under section 131 on 11th July, 2011 wherein the assessee has disclosed an income of Rs. 89,600/-. Therefore, there is no dispute that the assessee disclosed the income in the statement recorded under section 131 and not in the statement recorded under section 132(4) of the Act. Hence the provisions of section 271AAA cannot be resorted to levy the penalty when there was no search and seizure action resulting in disclosure of income by the assessee in the statement recorded under section 132(4) of the Act. The assessee has relied upon a series of decisions on this point including the decision of Hon'ble Gujarat High Court in the case of PCIT vs. Mukesh Bhai Raman Lal Prajapati in Tax Appeal No. 434 of 2017 dated 24th July, 2017. The Hon'ble High Court has held in para 13 & 14 as under :-
" 13. Sub section (2) of Section 271AAA thus while retaining the other requirements of avoiding penalty as provided in clause (ii) of Explanation 5 has now introduced an additional requirement of the assessee having to substantiate the manner in which, the undisclosed income was derived. It is this requirement which the counsel for the Revenue would place great emphasis on. According to her, onus is now entirely shifted on the assessee not only to make a disclosure of the undisclosed income but also to specify the manner, in which, the 5 ITA No. 927 & 928/JP/2017 PC Jain & Sons HUF, Jaipur.
income has been derived and to substantiate the same. It was therefore, contended that the earlier decisions of this Court in case of Commissioner of Income Tax vs. Mahendra C. Shah and the decision of Allahabad High Court in case of Commissioner of Income Tax vs. Radha Kishan Goel rendered in backdrop of different statutory provisions would not automatically apply.
14. We do not reject this contention totally. However, insofar as the facts of the present case are concerned, the field would still be held by the decision of this Court in case of Commissioner of Income Tax vs. Mahendra C. Shah (supra). Sub section (2) of section 271 AAA imposes an additional condition of the assessee having to substantiate the manner in which, the undisclosed income was derived. This requirement, however, must be seen as consequential to or corollary to the base requirement of specifying the manner, in which, the undisclosed income was derived. It is only when such declaration is made, the question of substantiating such disclosure or claim would arise. If, as in the present case, the Revenue failed to question the assessee while recording his statement under section 132(4) of the Act as regards the manner of deriving such income, the Revenue cannot jump to the consequential or later requirement of substantiating the manner of deriving the income. In the context of the requirement of the assessee specifying the manner of deriving the income the decision of this Court in case of Commissioner of Income Tax vs. Mahendra C. Shah (supra) would hold the field even in the context of sub-section (2) of section 271AAA of the Act. It is only when the officer of the raiding party recording the statement of the assessee under section 132(4) of the Act elicits a response from the assessee's this requirement, the assessee's responsibility to substantiate the manner of deriving such income would commence. When the base requirement itself fails, the question of denying the benefit of no penalty would not arise."6
ITA No. 927 & 928/JP/2017 PC Jain & Sons HUF, Jaipur.
In view of the facts and circumstances of the case when the disclosure was not made during the search and seizure action and in the statement recorded under section 132(4) and by following the decision of Hon'ble Gujarat High Court in the case of Mukesh Bhai Raman Lal Prajapati (supra), the provisions of section 271AAA are not attracted for levy of penalty in respect of the disclosure of income made by the assessee in the statement recorded under section 131 of the Act. Accordingly, we delete the penalty levied by the AO under section 271AAA for both the assessment years.
6. In the result, appeals of the assessee are allowed.
Order pronounced in the open court on 03/05/2018.
Sd/- Sd/-
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(BHAGCHAND) ( VIJAY PAL RAO )
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated :- 03/05/2018.
das/
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- P.C. Jain & Sons HUF, Jaipur.
2. izR;FkhZ@ The Respondent-The ACIT Central Circle-2, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File {ITA No. 927 & 928/JP/2017} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 7 ITA No. 927 & 928/JP/2017 PC Jain & Sons HUF, Jaipur.