TMI Blog2018 (8) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed income and substantiation thereof only upon requisite inquiry in this regard. In the absence of any inquiry in this regard, the assessee cannot be blamed for non-satisfaction of the exit clause provide under s. 271AAA(2) of the Act. - No penalty - Decided against the revenue. - I. T. A. No. 481/Ahd/2016 - - - Dated:- 9-8-2018 - SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SMT. MADHUMITA ROY, JUDICIAL MEMBER For The Appellant : Shri Alok Kumar, Sr. D. R. For The Respondent : Shri M. K. Patel Arti N. Shah, A. R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the Revenue against the order of the CIT(A)-12, Ahmedabad ( CIT(A) in short), dated 28. 10. 2015 arising in the penalty order dated 26. 09. 2014 passed by the Assessing Officer (AO) under s. 271AAA of the Income Tax Act, 1961 (the Act) concerning assessment year 2012-13. 2. Briefly stated, a search under s. 132 of the Act was conducted on the group cases including the case of the assessee on 09. 08. 2011. During the course of search operation, the assessee disclosed an amount of ₹ 2, 41, 50, 000/- on account of unaccounted rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to Q. 9 is not recorded in our books of accounts. Ques 11: During the search at your premises, your partners' premises and various business premises of projects on 9/8/2011, many Agreements (Dastavej) and voluminous documents are found. On close examination of the same, many entries of your income and of your partners and their family members has come to notice. On examination of books of accounts found from yoiir premise, it has been found that the same is not recorded in the books. The some of the document are as under: Party Name Annex No. Pg. No. 1. Prasanna Associates Prop: Himanshu Joshi Prasanna House, Nr. PF Office, Akota Vadodara A/1 4 5 2. Sumati J. Rao B/49, Bhavani Soc., Opp. Water Tank, Karelibaug, Baroda A/2 117 to 121 3. Sumati J. Rao B/49, Bhavani Soc., Opp. Water Tank, Karelibaug, Baroda A/5 167 to 171 Examine this document and explain the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ni l 25, 50, 000 Other Income Under Valuation of Property Nil 1, 76, 88, 600 Business Income Income from Pur . Sale of Land Commission 25, 00, 000 39, 11, 400 . . This will satisfy your honour. Thanking you. Yours faithfully, 4. 3 Similarly, full content of the Return of income filed in response to notice u/s 153A, the assessment order as also the order of penalty have also been perused by me. Upon such perusal, I have noticed as under: 1) Shri Anil Bholabahai has, vide answer to question no. 11 and 12, clearly admitted undisclosed income of ₹ 35 crores for the whole group. This admission is reconfirmed at the bottom of the statement by other 15 individuals of the group, as can be seen on page 7-8 of the statement. 2) Vide answer to question 11, Shri Anil Patel has clearly stated that the admission of ₹ 35 crores is on behalf of various firms and their partners and other related individuals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the manner and substantiating the same laid down in s. 271AAA, as indeed it is to be gathered from not only the statement u/s 132(4) but also the seized documents /assets which are confronted to the appellant. Moreover, in my considered opinion as fortified by various authorities relied upon by the appellant or otherwise perused by me, the very fact that after disclosure u/s 132(4) stating the manner as reflected in the seized documents, when the appellant has shown the disclosure in the return of income in conformity with the statement/ disclosure u/s 132(4) (made a clean breast of unaccounted income), and that no addition has been made in the assessment and no further query has been raised not only by the Authorized Officer but even by the AO during assessment stage, would clearly establish, ipso facto, that the onus under S. 271AAA(2) with regard to manner and substantiation has been flawlessly discharged by the appellant. Thus, it is indeed incomprehensible, as rightly pleaded by the AR, as to how the Ld. AO has come to the conclusion that the Appellant has not stated the manner of earning unaccounted income. The Assessing Officer has not even found or referred to any l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning, followed by offering in the return, and unconditional and unaltered bringing of the same to tax by the AO, substantially tantamount to stating the manner and substantiating the same, and that the AO cannot held otherwise during penalty proceedings without bringing in positive evidence to establish the absence of substantiation or the falsity in claim of the appellant or without referring to seized documents. As such, I am also of the considered opinion that the fact that the Authorized Officer during search and Investigating Officer thereafter has acquiesced in the reply given by the appellant, without any further probe at that time, clearly establishes that compliance satisfactory to the Investigating Officer has been made by the appellant. Thereafter, once the appellant has filed the return honoring his commitment fully, and thus which has also been accepted during assessment without any modification to returned income, the Ld. AO's insistence during penalty proceedings for stating the manner and substantiating the same is simply superfluous and uncalled for in the circumstances, in the face of clear-cut disclosure of manner of earning and/or purpose of disclosu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, if the income is declared and tax thereon is paid, there would be substantial compliance not warranting any further denial of the benefit under the Exception No. 2 e Explanation 5 was commendable. [Para 15] . . (ii) Decision of Hon'ble Ahmedabad Tribunal in case of Sulochanadevi A. Agarwal, dated 17 July, 2012 vide ITA No: 1052/Ah4/2012 . (4) In the decision rendered by the jurisdictional High Court of Gujarat in the case of CIT Vs Mahendra C. Shah (2008) 299 ITR 305 (Guj) it was held that when undisclosed income admitted by the assessee has been offered for tax in the return of income and the tax thereof duly paid, penalty cannot be levied, specifically, in the absence of any question in this respect by the AO. At this juncture, we must admit that the reasons pointed out by the learned CIT(A) are justifiable for deleting the penalty levied by the learned AO u/s 271 AAA of the Act. Therefore, we do not find any hesitation to confirm the order of the learned CIT(A) (iii) Decision of Hon'ble Delhi ITAT F Bench Smt. Raj Rani Gupta v/s DCIT (ITA No. 3371/Del/2011): 11. The clause (2) of explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the social environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated by Exception No. 2 while making statement under s. 132(4) of the Act In view of the above, the penalty is deleted, (iv) CIT v. SudhirJain 41 taxmann. com. 234 (Del. ) A certain sum was surrendered as undisclosed income by an AOP at time of search - Taxes and applicable interest were paid on undisclosed income and manner of earning was recorded in statement of one of members of AOP that income was derived from trading transactions not recorded in books - Whether penalty under section 271 AAA could not be imposed - Held, yes If disclosure made by one of the members of the group, immunity is available to all. (v) Concrete Developers v. ACIT 34 taxmann. com 62 (Nagpur) Whether where during course of search assessee admitted undisclosed income, paid tax together with interest, filed return showing said income as business income and Assessing Officer had accepted same, it could not be said that assessee had not specified manner or could not substantiate manner in which income was der ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 271AAA(2) and, thus, impugned penalty order deserved to be set aside - Held, yes (x) Sita Ram Gupta v. ACIT 48 taxmann 327 (Del. ) In course of search proceedings carried out in case of assessee, cash was found at different places belonging to him - In statement recorded under section 132(4), assessee admitted that said cash represented undisclosed income - Assessing Officer having completed assessment, passed a penalty order under section 271AAA for default of not substantiating manner in which undisclosed income was derived - It was noted from records that assessee made statement that he had earned undisclosed income from various transactions of sale/purchase of land and said statement did not face any rebuttal or rejection at hands of Assessing Officer - It was also undisputed that asses'see had paid due tax on admitted undisclosed income - Whether on facts, impugned penalty order passed by authorities below deserved to be set aside -Held, yes (xi) Ahmedabad ITAT B Bench in case of Sandeep Navnitlal Shah v/s. ACIT (vide ITA No. 506, 507 508/Ahd/2011): 4. In view of above discussion, we find there is no difference between returned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of the Explanation 5 in its entirety to the assessee concerned and the authorized officer could not stop short at a particular stage so as to permit the revenue to take advantage of such a lapse in the statement. The reason was not far to seek. In the first instance, the statement was being recorded in the question and answer form and there would be no occasion for an assessee to state and make averments in the exact format stipulated by the provisions, considering the setting in which such statement was being recorded. Secondly, considering the social environment, it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated by the Exception No. 2 while making statement under section 132(4). The view taken by the Tribunal to the effect that even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon is paid, there would be substantial compliance not warranting any further denial of the benefit under the Exception No. 2 in the Explanation 5 was commendable. [Para 15][emphasis supplied] 9. The above view of the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enial of the benefit under the Exception No. 2 in the Explanation 5 was commendable. , the assessee has in fact made more than sufficient compliance. Therefore, respectfully following the various judgments as cited and discussed above, I find myself in agreement-sea? with the averment of the Ld. AR that on facts, the assessee has made sufficient compliance to the requirement of s. 271AAA(2) so as to deserve immunity from rigors of penalty u/s 271AAA. Such a view in similar circumstances has been taken by Gujarat HC and other Hon'ble HC and ITAT benches as detailed above. 4. 7 Keeping with the paramount judicial requirement of following one's own decision, I have therefore no hesitation in holding, on the basis of cumulative facts as discussed above, that the appellant has disclosed the amount u/s 132(4), stated and substantiated the manner of earning the same within the meaning of s 271AAA(2) (i) and (ii). As such, in my considered opinion in this particular case, the disclosure, followed by detailed note, was based on seized documents not only thus substantiating the manner of earning but forming the sole basis of assessment made by the Ld. AO. In view of this discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I. T. Act, the return of income filed in response to notice under Section 153(a) of the I. T. Act is to be considered as return filed under Section 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under Section 271(1)(c) of the I. T. Act and the penalty is to be levied on the income assessed over and above the income returned under Section 153A, if any. (v) Decision of Hon'ble Ahmedabad ITAT B Bench in case of Sandeep Navnitlal Shah v/s. ACIT (vide ITA No. 5O6, 507 508/Ahd/2011): 4. In view of above discussion, we find there is no difference between returned income and assessed income and as such there is no undisclosed income. It is, undisputed that assessee has paid all the taxes due on returns filed in lieu of notices u/s. 153A. Under these facts and circumstances, we hold that it is not relevant whether return of income was filed by assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of Section 153A of the Income Tax Act, return of income filed in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d our attention to the decision of the Hon ble Gujarat High Court in the case of CIT vs. Mahendra C Shah [2008] 299 ITR 305 (Guj) to the effect that the obligation does not fall upon the assessee to explain the manner and substantiation thereof in the absence of any specific query posed by the Revenue in this regard. The learned AR thus submitted that the CIT(A) has appreciated the fact in proper perspective and is in sync with several judicial precedents in this regard. The learned AR accordingly submitted that no interference with the order of the CIT(A) is called for. 8. We have carefully considered the rival submissions and perused the order passed by the AO and the appellate order passed by the CIT(A) appealed against and case law cited across the bar. The sole issue that arises for determination in the present case is whether the assessee in the facts of the case has fulfilled the conditions for exclusion from clutches of penalty under s. 271AAA of the Act or not. The thrust of the case of the AO is that the assessee has failed to specify the manner in which the income has been derived as well as failed to substantiate the manner as contemplated under s. 271AAA(2) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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