ITA Nos. 4398, 4399, 4400 and 4401/Del./2012, (Assessment Year: 2005-2006;2006-2007). Case: ITO, Ward 35(4) Vs Ankur Aggarwal and Ors.. ITAT (Income Tax Appellate Tribunal)
| Case Number | ITA Nos. 4398, 4399, 4400 and 4401/Del./2012, (Assessment Year: 2005-2006;2006-2007) |
| Judges | N.K. Saini, Member (A) and A.T. Varkey, Member (J) |
| Issue | Income Tax Act, 1961 - Sections 132, 132(4), 132A, 139, 139(1), 143, 143(3), 147, 148, 149, 151, 153, 153A, 153A(1)(a), 153B, 153C, 158BC, 158BC(c), 158BF, 158BFA, 171(1)(c), 234A, 234B, 234C, 263, 264, 271, 271(1), 271(1)(c), 271(c), 271A, 271AAA, 271B |
| Judgement Date | August 19, 2015 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
(ITAT Delhi 'G' Bench)
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These four appeals filed by the revenue are directed against the separate orders of the Commissioner of Income-tax (Appeals)-XXVII, New Delhi all dated 16.05.2012 for the assessment years 2005-06 and 2006-07. As the issue is common in all the four appeals, the same are disposed of by this common order for the sake of brevity.
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First, we take up ITA No. 4398/Del/2012 for the assessment year 2005-06.
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The grounds of appeal taken by the revenue read as under:-
"1. The order of the CIT(A) is bad in law and is against the facts of the case.
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The CIT(A) erred in law and on facts in deleting the penalty amounting to Rs. 7,29,100/- made by the A.O. under section 271(1)(c) of the Act by not appreciating the fact that the disclosure of income was the result of search operation on the assessee and not voluntary.
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On the facts and circumstances of the case the I.d. CIT(A) has erred in ignoring the fact that provision of explanation 5(1) & explanation 5(2) of the section 271(1)(c) of the Act are not applicable in this case.
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Whether the disclosure made in response of the notice u/s. 153A(1)(a) in respect of earlier assessment year i.e. A.Y. 2005-06 over and above already returned income after the search operation held on 11.01.2007 can be said voluntary in nature.
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The CIT(A) erred in law and on facts by ignoring that if in pursuant to search operation, penalty is not levied for unearthing of additional income detected during a search, it would be an open incentive to all to conceal their income till such time it is detected by the department.
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The appellant craves leave to add, alter or amend any/all the grounds of appeal before or during the course of hearing of the appeal."
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For the relevant assessment year i.e. A.Y. - 2005-06, the return declaring an income of Rs. 1,72,799/- was filed under Section 139(1) of the Income-tax Act, 1961 (hereinafter 'the Act') on 30.12.2005.
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The assessee belonged to M/s. J.M. Estate Developers Pvt. Ltd. group of cases. Search and seizure operation u/s. 132(4) of the Act was carried out on 11.01.2007 on the Group and directors of the aforesaid company. A disclosure of Rs. 16.00 Crores was made by the Group u/s. 132(4) of the Act on behalf of different directors and relatives of the directors. During the search, cash amounting to Rs. 5,26,530/- and jewellery worth Rs. 17,85,785/- were found from the premises and lockers of the assessee. Out of these assets, cash amounting to Rs. 4,06,930/- was seized, whereas no jewellery was seized. Notice u/s. 153A of the Act was issued on 26.02.2008, in response to which the assessee filed his return of Income on 23.10.2008 declaring an income of Rs. 23,38,731/-, thus showing additional income of Rs. 21,65,932/-. The Assessing Officer completed the assessment u/s. 153A read with section 143(3) of the Act on 31.12.2008 after accepting the declared income by observing that, "After examination of the details filed and discussion with AR of the assessee the income of the assessee is accepted and assessed at Rs. 23,38,731/-."
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The A.O. also initiated penalty proceedings u/s. 271(1)(c) in the assessment order by observing as under:
From the seized records it is noticed that the assessee group had offered a sum of Rs. 16 Crores as unaccounted, income. However, as the disclosure is consequence of the search, I am of the view that the assessee has concealed the income. Thus, penalty proceedings u/s. 271(1)(c) is being initiated separately.
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Thereafter, the AO passed the penalty order u/s. 271(1)(c) of the Act on 26.06.2009 by imposing penalty amounting to Rs. 1,34,640/- being 100% of the amount of tax sought to be evaded on the concealed income of Rs. 4 Lakhs.
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The assessee filed a revision petition u/s. 264 of the Act dated 06.08.2009 before the CIT (Central-II), New Delhi against the order passed by the A.O. The CIT (Central-II), New Delhi vide his order dated 10.03.2011, has held as under:-
However, since the penalty order in question had already been set aside by the undersigned and the proceedings had been restored back to the file of the A.O. u/s. 263 of the Act, the present proceedings u/s. 264 before me becomes infructuous and is accordingly disposed off.
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With respect to proceedings u/s. 263 of the Act referred to by the CIT (Central-II) as above, CIT observed that the A.O. had imposed penalty on the concealed income of only Rs. 4,00,000/-, whereas in the return of income filed by the assessee in response to notice u/s. 153A, the assessee had declared additional income of Rs. 21,65,932/-. Therefore, the CIT (Central-II) passed order u/s. 263 of the Act on 10.3.2011 by holding that the order passed by the A.O. was erroneous and prejudicial to the interests of the revenue because the A.O. had passed the penalty order by erroneously taking the figure of concealed income at Rs. 4,00,000/- as against the additional income of Rs. 21,65,932/- declared by the assessee. The CIT (Central-II), therefore, set aside the penalty order and proceedings were restored back to the file of the A.O. with the directions to dispose of the matter in accordance with provisions with the Income-tax Act vis-à-vis judicial pronouncements on the issue, after affording proper opportunity to the assessee.
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In pursuance of these directions of the CIT (Central-II), the A.O. passed penalty order u/s. 271(1)(c) of the Act dated 29.09.2011 levying penalty of Rs. 7,29,100/- being 100% of the amount of tax sought to be evaded on the concealed income of Rs. 21,65,932/-.
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Aggrieved, the assessee filed an appeal before the first appellate authority and the CIT(A) deleted the penalty by observing as under:-
"22. I have carefully considered the submissions of the appellant, the observations made by the A.O. in the penalty order and the facts of the case. Penalty u/s. 271(1)(c) has been imposed in this case on the ground that the additional income shown by the appellant in the return of income filed in response to notice u/s. 153A of the Act was not a voluntarily disclosure. It has further been held by the A.O. that incriminating documents were found during the course of the search and seizure operations and disclosure made by the appellant u/s. 132(4) of the Act was as consequence of the search operations. Had there been no search at the premises of M/s. J.M. Estate Developers Pvt. Ltd. group including the appellant, the appellant would not have disclosed the additional income nor would he have offered the same for taxation. The appellant on the other hand submitted that he had shown the additional income of Rs. 21,65,932/- voluntarily in his Return of Income filed in response to notice issued u/s. 153A on the basis of disclosure made by him u/s. 132(4) of the Act during the course of search. Such disclosure was made by the appellant voluntarily to buy peace of mind, to cooperate with the department and to avoid protracted litigation. It has been contended by the appellant that no incriminating documents/material were found during the course of search and no reference has been made by the A.O. to any incriminating documents either in the assessment order or in the penalty order. The income declared by the appellant in Return of Income filed in response to notice u/s. 153A has been accepted as such. Therefore, there was no concealment of income with reference to the Return of Income and in view of the provisions of section 153A, the return filed in response to notice u/s. 153A(1)(a) is treated as return filed u/s. 139 of the Act. Therefore, there was no concealment of any income and penalty u/s. 271(1)(c) was not imposable in this case.
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With regard to the case laws relied upon by the A.O., it is seen that none of these case laws belonged in a situation where the income declared in the return of income filed in response to the notice u/s. 153A of the Act was accepted as such. Further, in the appellant's case no incriminating material was found during the course of the search and none was pointed out or brought on record by the A.O. either in the assessment order or in the penalty order. In the case of Biland Ran Hargyan Dass (supra), the matter before the Hon'ble Allahabad High Court related to the A.Y. 1978-79 much before Explanation-5 to section 271(1)(c) and Section 153A were brought on the statute. In the case of K.P. Sampath Reddy (supra), on the basis of documentary evidence found during the course of survey, the assessee had agreed to be assessed at a...
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