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Sri Naresh Chandra Agrawalla Versus A.C.I.T., Central Circle-XII, Kolkata

2015 (9) TMI 133 - ITAT KOLKATA

Levy of penalty u/s 271AAA - Held that:- It is seen from the assessment order that the ld. AO had stated that the assessee had no option but to accept the truth and come forward with the disclosure and hence concluded that but for the search the assessee would not have come forward with the offer of undisclosed income and on that ground levy of penalty is justified. We find that if this argument of the ld. AO is to be appreciated, then the very purpose of providing immunity u/s 271AAA(2) of the .....

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proceeding, which gets abated pursuant to the search. Thus we hold that the assessee had cumulatively satisfied the three conditions contemplated in section 271AAA(2) of the Act and accordingly is eligible for immunity from levy of penalty - Decided in favour of assessee. - ITA Nos.1773 & 1774/Kol/2012 - Dated:- 20-8-2015 - Shri Mahavir Singh and Shri M.Balaganesh, JJ. For The Appellant: Shri S.M.Surana, Advocate For The Respondent: Shri Amitava Bhattacharjee, JCIT,Sr.DR ORDER Per Shri M.Balagan .....

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taken up together and disposed off by a common order for the purpose of convenience. 2. The only issue to be decided in these appeals is as to whether the ld. CIT(A) is right in confirming the levy of penalty u/s 271AAA of the Act in the facts and circumstances of the case. 3. The brief facts of the case are that the a search was conducted at the premises of the assessee on 11.09.2008. The assessee during the course of search made a disclosure u/s 132(4) of the Act offering undisclosed income to .....

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39(1) of the Act for A.Y. 2008-09 but however, was filed within the time limit prescribed u/s 139(4) of the Act. The assessee originally made 132(4) disclosure statement for assessment years put together to the tune of ₹ 1,60,06,550/ which was later rectified by the assessee by way of revised disclosure statement of realizing the genuine mistake committed by him in the statement filed originally. The revised disclosure statement for A.Y. 2008-09 was ₹ 27,88,222/- and for A.Y.2009-10 .....

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isclosure statement. The assessment was ultimately completed u/s 153A r. W. S. 143(3) of the Act on 31.12.2010 for A.Y. 2008-09 assessing the taxable income at ₹ 35,64,390/-. Similarly for A.Y. 2009-10 the assessee filed return of income on 30.03.2010 declaring taxable income of ₹ 1,64,70,993/- which admittedly includes income of ₹ 1,59,71,000/- disclosed by him u/s 132(4) of the Act during the search proceedings. The assessment u/s 143(3) of the Act for A.Y. 2009-10 was comple .....

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y substantiated the manner in which he has derived the undisclosed income. He further concluded that the assessee has not paid the tax together with the interest on the undisclosed income disclosed by him u/s 132(4) of the Act and no further evidence were produced by the assessee either before AO or before him as proof for payment of tax and accordingly the assessee is not entitled for immunity from levy of penalty u/s 271AAA (2) of the Act. Aggrieved, the assessee challenged this issue before t .....

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osure statement, the ld. AR had duly taken into account the seized materials and accordingly made disclosure at ₹ 27,88,222/- for A.Y. 2008-09 and the balance for A.Y. 2009-10. The assessee later on realizing the calculation mistake committed in the said disclosure statement made a revised disclosure as below :- A.Y. 2008-09 : ₹ 27,88,222/- A.Y. 2009-10 : Rs.1,59,71,000/- The ld. AR further argued that though there was 132(4) disclosure made in the covering letter to the tune of S .....

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.Y. 2009-10 are as below :- Cash found during the search Rs.1,78,75,000 Less: Cash balance available as per regular Books of account ₹ 19,04,000 Cash offered as undisclosed income for A.Y. 2009-10 Rs.1,59,71,000 The ld. AR further vehemently argued that the contentions raised by the ld. AO as to assessee not substantiating the manner in which the undisclosed income was derived and the contention of the ld. CIT(A) as to assessee not paying the tax together with the interest of the undisclos .....

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search and seizure operation, the assessee, vide his disclosure petition filed before the ADIT (Investigation), Unit-III(4), Kolkata had disclosed an amount of ₹ 1,60,06,550/- being his undisclosed income during the F.Y. 2007-08 relevant to the Assessment Year 2008-09. During the course of the assessment proceedings, a statement of the assessee was recorded u/s 131 of the Act on 10.11.2010. In his statement, in reply to Question No.2, while explaining the basis, working and the manner in w .....

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153A for the A.Y. 2008-09 (relevant to the F.Y. 2007-08) and ₹ 1,59,71,000/- in my return of income filed u/s 139 for the A.Y. 2009-10 (relevant to the F.Y.2008-09). I have thus disclosed ₹ 1,87,59,222/- in aggregate instead of ₹ 1,60,06,550/- disclosed by me earlier. I am explaining the basis, working and the manner in which the said income disclosed was earned as follows :- F.Y.2007-08 I have disclosed ₹ 27,58,222/- being cash paid to land seller for purchase of land at .....

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ion at 41C & 41D, N.S.C. Bose Road, Kolkata-40 on the basis of the Page No.2 of the documents impounded with Identification Mark AG/5 from the business premises of M/s. Adya Towers Pvt. Ltd. and others at 35A, Dr. Sarat Banerjee Road, Kolkata-29 during the survey conducted therein on 11.09.2008. Thus, I have disclosed ₹ 27,88,222/- (Rs.27,58,222/- + ₹ 30,000/-) in my return of income filed for the A.Y. 2008-09. F.Y.2008-09 During the course of the search & seizure operation c .....

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my disclosure petition on this account. I have also disclosed the same amount in my return of income filed u/s 139 for the A.Y. 2009-10. The said cash books will be produced before you and cash flow statements of Shri Yogesh Chandra Agrawalla and Smt. Mona Agrawalla for the period from 01.04.2008 to 11.09.2008 shall also be furnished to you for your necessary verification. I would like to state here that during the course of the search conducted in my residence on 11.09.2008, certain loose docum .....

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from M/s. Akshara Highrise Pvt. Ltd. in which I was a director due to some disputes. For this, the Net Worth of M/s Akshara Highrise Pvt. Ltd. was worked out to ₹ 68,03,117/- as appears from this Page No0.21 of ALT/15. I received 1/3rd share of the same, i.e., ₹ 22,67,672/- (Rs.60,000/- in cheque and ₹ 22,07,672/- in cash) on behalf of my group/family during the F.Y. 2007-08 itself from Shri Prakash Chandra Agrawalla and his group which is known as the Akshara Group . I would .....

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T. to A. C.I.T., Central Circle-XII, Kolkata in F. No. A-13/10-11/CIT(CII)/ Kol/Akshara/2010-11 dated 10.02.2012 releasing the balance amount of ₹ 58,51,344/-, after adjustment of the seized cash towards the existing tax liability in terms of section 132B of the Act read with Rule 112C of the Income Tax Rules. The ld. AR further argued that nowhere in the statute, the law prescribes the time limit within which the tax has to be paid. Hence, he argued that he has satisfied all the cumulativ .....

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nent in the construction business carried on by the assessee was derived by the assessee was not clearly substantiated before the AO. Accordingly he argued that clause (ii) of 271AAA(2) has not been satisfied by the assesee. He further argued that the taxes on the undisclosed income offered u/s 132(4) disclosure statement should have been paid by the assessee atleast at the time of filing of return of income. Whereas in the instant case, the assessee did not bother to do so and the seized cash o .....

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emplated in 271AAA(2) are satisfied by the assessee, no immunity from levy of penalty can be granted to the assessee. Accordingly, he prayed for confirmation of the orders of the lower authorities. 7. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had initially made a disclosure statement u/s 132(4) of the Act pursuant to the search conducted on 11.09.2008 to the tune of ₹ 1,60,06,550/- for A. Yrs. 2008-09 and 2009- .....

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r return of income for A.Y. 2008-09 on 31.03.2009. The due date of filing the return of income for 2008-09 is 30.09.2008 and admittedly the search happened on 11.09.2008 and hence we can conclude that on the date of search the due date of filing the return of income had not expired for A.Y. 2008-09. Hence the assessee is entitled to make disclosure statement u/s 132(4) of the Act and claim immunity provided in 271AAA(2) of the Act provided the cumulative conditions contemplated therein are satis .....

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atement made by the assessee which was also not retracted later on while filing the return of income in response to the notice issued u/s 153A of the Act for A.Y. 2008-09 and regular return filed for A.Y. 2009-10 being the year of search. Reliance in this regard is placed on the decision of CIT vs Careers Education and Infotech P. Ltd. (2011) 336 ITR 257 (P&H). The headnotes is reproduced herein below : PENALTY - CONCEALMENT OF INCOME - SURRENDER OF INCOME DURING SURVEY - FINDING BY TRIBUNAL .....

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that there was no material to infer concealment of income or furnishing of inaccurate particulars : Held accordingly, that penalty could not be imposed under section 271(1)(c) of the Income-tax Act, 1961. It is also held by the Hon ble Apex Court in the case of CIT vs. Suresh Chandra Mittal [2001] 251 ITR 9 (SC) wherein their lordships have observed that where the assessee has filed a revised return showing higher income and the assessee has surrendered the income after persistent queries by th .....

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there any adverse observation in the assessment order, with regard to any discrepancy to correlate the same with the amount of disclosure. Hence we find that there was no malafide intention on the part of the assessee to conceal the figures from the department while giving the disclosure statement u/s 132(4) of the Act. Now it is to be seen that whether the assessee had satisfied the cumulative conditions contemplated in 271AAA(2) of the Act. For the sake of convenience the provisions are repro .....

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substantiated the manner of deriving undisclosed income as could be seen from the replies to question no.2 and 3 reproduced herein above and even in the disclosure statement the assessee had clearly stated the manner of deriving the undisclosed income and the application of the same thereon. Now the only point which is to be addressed is that whether the tax has been paid in time by the assessee on the undisclosed income. We held that the statute does not prescribe any time limit for paying tax .....

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rit. This issue has been duly adjudicated by the Hon ble Apex Court in the case of ACIT vs M/s. Gebilal Kanhaialal (HUF) reported in (2012) 348 ITR 561 where the lordships have held as below :- Three conditions have got to be satisfied by the assessee for claiming immunity from payment of penalty under clause (2) of Explanation 5 to section 271(1)(c). The first condition was that the assessee must make a statement under section 132(4) in the course of search stating that the unaccounted assets a .....

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in his statement under section 132(4), the manner in which such income stood derived. Admittedly, the second condition, in the present case also stood satisfied. According to the Department, the assessee was not entitled to immunity under clause (2 ) as he did not satisfy the third condition for availing the benefit of waiver of penalty under section 271(1)(c) as the assessee failed to file his return of income on 31st July, 1987 and pay tax thereon particularly when the assessee conceded on Aug .....

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the date of payment. The only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income upto the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement under section 132(4). It is seen from the assessment order that the ld. AO had stated that the assessee had no .....

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as contemplated in 271AAA(2) of the Act. The levy of penalty u/s 271AAA cannot be made automatic pursuant to the search. We also find that the decision of the Hon ble Apex court rendered in the case of MAK Data P. Ltd vs CIT reported in 358 ITR 593(SC) is also distinguishable in the facts and circumstances of the case as in the case before the Hon ble Supreme Court the immunity clause provided in 271AAA(2) of the Act had not been discussed. We also hold that the reasoning of the assessee had to .....

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hen it was found that the assessee had concealed the particular of his income, it would amount concealment in the course of any proceedings. The words in the course of any proceedings under this Act are prefaced by the satisfaction of the AO or the Commissioner of Income Tax (Appeals). When the survey is conducted by a survey team, the question of satisfaction of AO or the Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is the AO who initiated the penal .....

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he income tax return filed by it. There is sufficient indication of this in the judgment of this court in the case of CIT v. Mohan Das Hassa Nand (1983) 141 ITR 203 (Del) and in Reliance Petroproducts Pvt. Ltd. (supra), the Supreme Court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the income tax return filed by the assesses. This view gets supported by Explanation 4 as well as 5 and 5A of section 271 of the Act .....

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ns are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Section 271(1)(c) of the Act has to be construed strictly. Unless it is found that there is actually a concealment of non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee ha .....

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