Income Tax Appellate Tribunal - Ahmedabad
Jayendra K. Doshi,, Ahmedabad vs Department Of Income Tax on 30 March, 2006
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, AHMEDABAD
BEFORE S/SHRI D.T. G AR ASI A, J.M AND N. S. S AINI, AM
WTA No.26/ Ahmd/2006
Assessment year 1985-86
ACW T,
Ahmadabad Circle-3,
Ahmedabad ......Appellant
V/s
Jayendra K Doshi
PAN AAOPP6556A
12, Lavanya Soc.l
Paldi,
Ahmedabad .... Respondent
ITA No.1543/ Ahmd/2006
Assessment year 1985-86
ACIT,
Ahmedabad-3, ...Appellant
V/s
Jayendra K Doshi ..Respondent
Revenue by : Shri Nandlal Parihar
Assessee by : Shri Dhiren Shah
(आदे श)/ORDER
Per D T Garasia, JM
These are the two appeals filed by the revenue and assessee directed against the order dated 30.3.2006 passed by the CIT(A)-VII, Ahmedabad for the assessment year 1985-
86. Since these appeals are directed against the same appellate order for the sake of convenience these were heard together and are being decided by this common order. IT A No.26/Ahmd/2006 2 IT A No.1543/Ahmd/2006 ITA No.1543/ Ahmd/2006
2. Only ground taken by the revenue in this appeal is against canceling the penalty of Rs.56,97,551/- levied under section 271(1)( c ).
3. Facts leading to this dispute are that the assessee filed is original return on 23.7.1985 showing income of Rs.50,531/- There was a search of assessee's premises on 8.8.1990 and 11.8.1990. Statement of the assessee was recorded under section 132(4) read explanation to section 271(1)( c ) of the Act and section 18(1)( c ) of the Act. The assessee has filed declaration petition before the Officer- in- charge in the search proceedings giving break -up of assessment year wise income the manner of earning the said income and so also identification of assets where the income was invested. The breakup of disclosure and identification of asset in the cae of the assessee was as under :
A) quantum of disclosure Amount in lakhs A s s e s s m e n t Ye a r Rs.
1985-86 38.10
1986-87 09.00
1987-88 -
1988-89 05.55
1989-90 0.6.50
1990-91 0.5.30
1991-92 39.30
IT A No.26/Ahmd/2006
3 IT A No.1543/Ahmd/2006
To t a l 103.75
B ) i n ve s t m e n t / a s s e t s
of the amount
disclosed:
i ) s h a r e s o f P a t wa
i n ve s t m e n t and 38.10
finance ltd
ii) share of L yk a
leasing and financing 57.65
ltd etc.
iii) cash balance
( A s s e s s m e n t Ye a r . 9 1 -
92)
4. The assessment of the assessee was re-opened and in reply to the notice, the assessee filed a return of income showing income of Rs.38,60,531/- which included disclosure of Rs.38.10 lakhs as mention in the second statement recorded under section 132(4) and while filing the revised return, the addition was sustained to the tune of Rs.911249/-.
Therefore on the penalty should not be imposed and after hearing the assessee the Assessing Officer has imposed the penalty of Rs.56,97,55/-.
5. The matter carried to CIT(A), who deleted the penalty vide paragraph "4. I have considered the submissions made and I have gone through the entire papers submitted by the assessee in this regard. I have also gone through the various assessment orders, appellate orders and statement recorded under section 132(4) r.w.s 271(1)(c ) of the Act. It is noticed that at the time of assessment a lot of addition were made by the Assessing Officer and most of those additions which were made by the Assessing Officer were deleted till the level of ITAT and CIT(A). In fact, the latest order under secton 154 shows that income is Rs.88,23,535/- and on proper analysis its bifurcation would be as under : IT A No.26/Ahmd/2006 4 IT A No.1543/Ahmd/2006
(i) income as per original return Rs.50,531/-
(ii additional income disclosed in return filed in pursuance of notice under section 148 as per the declaration made in statement under section 132(4) r.w. section 271(1)( c ) of the Act. Rs.38,10,000
iii) . amount made as the in respect of shares of M/s Lyka Leasing and finance as upheld in appeal Rs.12,50,000
iv) income brought to tax by CIT(A) by shifting income of earlier years i.e. for Assessment Year 1990-91 Rs. 5,30,000 Assessment Year 1991-92 - 31,30,000 Rs.36,60,00 (Related to contribution to share income) Total Rs.82,70,531 The balance amount is in relation of further addition in respect of income from M/s Patwa traders which has been restored back to the Assessing Officer by CIT(A) in the second appellate order and therefore, on this amount no penalty can be sustained at this stage"
6. The Ld. DR submitted that there was a search conducted on 8.8.90. As a result of which the assessee disclosed an amount of Rs.2.03 crores under section 132(4) of the IT Act. The assessee floated six companies. Subsequent to this search the assessee filed a disclosure petition in which the year wise discloser was shown l as also the investment /asset of the amount disclosed . The amount disclosed in the petition was invested in the share holding of Patwa Investment and finance Ltd, Lyka Leasing and Finance Ltd and Dharnidhar Leasing and Finance ltd to the tune of Rs.95.75 lakhs. As per modus operandi of earning the IT A No.26/Ahmd/2006 5 IT A No.1543/Ahmd/2006 undisclosed income was stated to be commission income from M/s Patwa Traders and M/s International Agency for Assessment Year 1985-86, 86-87, 88-89 and 89-90. The amount of commission income disclosed represented the sub- commission paid to various persons who were not carrying out any genuine business activities The profit made in investment in the share holding of various companies floated by the assessee from the commission so received by them by depositing cash and by pay orders in these companies. The assessee conducted its shareholdings business in the name of bogus persons. These persons made investment in shares of various companies on commission paid by them to the assessee. The admission made by the assessee that shareholding made in the companies which were floated by him. Therefore addition of Rs.38,10,000/- was made . Therefore the assessee has made admission of this amount, therefore, penalty is justified.
7. The learned AR submitted that the assessee has declared the income under statement made under section 132(4) of the Act before detection by the Assessing Officer. The assessee has offered income before detection by Assessing Officer. The assessee has filed return of income in response to notice under section 148 for the assessment year 1985-86 and the same was done in the assessment year 1990- 91 and 1991-92. The income offered by the assessee in return of income. The assessee stated that the CIT(A) has only IT A No.26/Ahmd/2006 6 IT A No.1543/Ahmd/2006 shifted the income from Assessment Year 1990-91 to 1985-86. The assessee did not disputed the shifting of the income from 1990-91 and 1991-92 to 1985-86 as the same stands disclosed by the assessee himself even before detection by the income tax authorities This has not been disputed by the assessee and the assessee has not disputed the shifting of income. The assessee has disclosed the amount of Rs.30.10 lakhs as bogus capital. Therefore the provisions of section 271(1)( c) and explanation 5 to section 271(1)( c ) clearly provided where the assessee has not disclosed his income in the return filed for previous year which ended prior to end of search and the statement given under section 132(4), the assessee admitted undisclosed income of this year and specifically manner in which the income has been derived and thereafter pays the tax thereon on undisclosed income with interest such undisclosed income immunize from levy of penalty. In support of his submissions the learned AR relied on the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts )India) Ltd V/s ITO and others reported in 259 ITR 19(Supreme Court). He also invited the attention of the Tribunal to the finding of the Hon'ble Supreme Court which reads as under"
":.We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the IT Act is issued, the proper course of action for the notice is to file a return and if he so desire, to IT A No.26/Ahmd/2006 7 IT A No.1543/Ahmd/2006 seek reason for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. In receipt of reasons, the notices is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objection, if filed by passing speaking order, before proceedings with the assessments in respect of the above said five assessment years:
8. W e have heard both the parties, we have also gone through the provisions of Explanation 5 to Section 271(1)( c ) of the Act and also gone through the Supreme Court decision relied upon by the AR. W e find that in the present case the search action was taken on 8.8.1990 and the statement of assessee was recorded on 20.8.1990 u/s 132(40 r.w. section 271(1)( c ) and explanation 5 thereto. The statement under section 132(4) on 11.10.90 in which the assessee declared his undisclosed income of Rs. 103.75 lakhs which includes Rs.38,60,531/- W e find that the Explanation 5 to section 271(1)(c ) says that :
"provisions of section 271(1)( c) and explanation 5 to section 271(1)( c ) clearly provided where the assessee has not disclosed his income in the return filed for previous year which ended prior to end of search and the statement given under section 132(4), the assessee admitted undisclosed income of this year and specifically manner in which the income has been derived and thereafter pays the tax thereon on undisclosed income with interest such undisclosed income immunize from levy of penalty.
Accordingly, following the provisions Explanation 5 to section 271(1) (c ) immunize from levy of penalty. W e also find from IT A No.26/Ahmd/2006 8 IT A No.1543/Ahmd/2006 the decision of the Hon'ble Supreme Court that after issuance of notice u/s 148, the Assessing Officer has to give specific reasons to the reply filed by the assessee. In the present case, the assessee in response to the notice, the assessee has filed revised return declaring income of Rs.38,60,531/- i.e before the end of search proceedings. Therefore, the provisions of Explanation 5 to the Section 271(1)( c ). Protect the assessee from penalty. Therefore, we see no reasons to interfere in the order of the CIT(A). Accordingly, we dismiss the appeal of the revenue.
WTA No.26/ Ahmd/2006
9. This appeal by the revenue is interconnected matter with the revenue's appeal bearing ITA No. 1543/Ahd/2006. Since we have confirmed the order of the CIT(A) deleting the penalty therein, this being similar matter we do not take any different stand than the stand so taken therein with detailed findings. Therefore,. W e dismiss this appeal also.
10. In the result both the appeals are dismissed.
Order pronounced in the open court on_____ (N S SAINI) (D.T. GARASIA) Accountant Member Judicial Member AHMEDAB AD DATED :IT A No.26/Ahmd/2006
9 IT A No.1543/Ahmd/2006
Copy to:
(1) The Assessee, (2) The Revenue, (3) The CIT concerned, (4) The CIT(A) concerned, (5) The DR "B" Bench, ITAT Ahmedabad, (6) Guard File.
SRL:779 DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES