DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SURAT vs. SHRI VASUDEV D. GOPLANI, SURAT

INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.154/SRT/2017 (AY 2012-13) (Hearing in Virtual Court) DCIT, Central Circle-3, Shri Vasudev D Goplani, Room No. 507, 5th Floor, 3-B, Chandan Park Society, Vs Aayakar Bhawan, Near Adajan Road, Majura Gate, Surat. Surat-395001. PAN : ABHPG3609B Revenue / Appellant Assessee /Respondent

Revenue by Ms. Anupama Singla, Sr.DR Assessee by Sh. P.M. Jagasheth –CA Date of hearing 22.06.2021 Date of pronouncement 05.07.2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of learned Commissioner of Income Tax (Appeals)-4, hereinafter referred as “ld. CIT(A)” Surat dated 07.07.2017, which in turn arises against the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the assessment year (AY) 2012-13. The Revenue has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs.64,49,270/- imposed under section 271(1)(c) of the Act. The Ld.CIT(A) did not appreciate the fact that Explanation 5A of section 271 of the Act is clearly applicable to this case as return of income was not filed till the date of search and due date of filing return of income had already expired. .

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani 2. On facts and circumstances of the case, the Ld.CIT(A) ought to have upheld the penalty order of the Assessing Officer. 3. It is, therefore, prayed that the order of the Ld.CIT(A) may be set-aside and that of Assessing Officer may be restored to the above extent. 2. Brief facts of the case are that the assessee has not filed his return of income under section 139 of the Act for AY 2012-13. A search action under section 132 was carried out on Diamond Group of Surat. The assessee is one of the sub-group of Ruchandani & Goplani group, was also covered in the search. During the search the assessee declared additional income of Rs. 3,12,00,000/- on account of on ‘money received’ on sale of Sultanabad land. Consequent upon search a notice under section 153A was issued to the assessee on 28.10.2013. In response to notice under section 153A, the assessee filed his return of income for AY 2012-13 on 31.03.2014 declaring total income of Rs. 3,19,08,290/-. The assessee while filing return of income included the additional income of Rs. 3,12,00,000/- on account of on ‘money received’ on sale of Sultanabad land in his total income. Assessment was completed under section 143(3) read with section 153A on 27.03.2015 by making addition of Rs. 1,00,05,580/- on account of Short Term Capital Gain (STCG), addition of Rs. 2,21,93,000/- as Long Term Capital Gain (LTCG) and addition of Rs. 1,71,96,000/- on account of Income from Other Sources. The Assessing Officer (AO) while passing the assessment order initiated the penalty proceedings under section 271(1)(c) of the Act on additional 2

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani income declared by assessee of Rs. 3,12,00,000/- on account of ‘on money’ received on sale of Sultanabad land. The basis of offering additional income of Rs. 3.12 crore was that assessee along with other five co-owner had sold land admeasuring 9000 sq. yard of land out of R.S. No. 11 of Sultanabad, Surat to M/s Milestone Developer. During the course of search, certain incriminating evidence was found disclosing payment of on money of Rs. 10.02 crore on sale of such plot. The said documents was inventorised and seized. On the basis of alleged incriminating material, the assessee declared undisclosed income of Rs. 3.12 crore. The additional income offered by assessee was accepted by AO without any variance. The AO issued show-cause notice under section 274 read with section 271(1)(c) on 27.03.2015. The assessee filed his reply on 28.08.2015. In the reply, the assessee contended that he has filed appeal before the ld. CIT(A) and requested to keep the penalty proceeding in abeyance till the disposal of appeal. The AO noted that assessee has filed appeal against the various additions. No appeal is filed by assessee on offering such income of Rs. 3.12 Crore. The AO held that the penalty initiated on the amount of Rs. 3.12 crore, which was not shown in the original return of income on account of on money received on sale of land of Sultanabad, Surat. The AO further noted that at the time of filing return of income under section 153A, the assessee declared additional income and that the case of assessee is squarely covered under 3

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani Explanation-5A of section 271(1)(c) of the Act and that the assessee has committed default in concealing the income and furnishing inaccurate particular without reasonable cause and liable for levy of penalty. The AO levied the minimum penalty @ 100% of tax sought to be evaded. 3. Aggrieved by the levying of penalty under section 271(1)(c) the assessee filed appeal before ld.CIT(A). Before the ld. CIT(A), the assessee filed detailed written submission as recorded in para-6 of the order. In the written submission, the assessee stated that a search was carried out on 05.03.2013. During the search, some loose paper were found showing receipt of ‘on money’ from on sale of land to Milestone Developer. The assessee was one of the co-owner of the said land. The land was purchased in two parts and similarly sold in two parts. The assessee disclosed additional income of Rs. 3.12 crore during the search. The assessee while filing return of income in response to the notice under section 153A disclosed the capital gain on 31.03.2014. The last date for filing return of income under section 139(4) for AY 2012-13 was 31.03.2014. At the time of search, last date for filing return of income for AY 2012-13 has not expired and as per Explanation-5A of section 271(1)(c) of the Act, penalty is leviable only where return of income for such previous year has been furnished before the date of search but such income has not been declared therein or the due date for filing return of income for such previous year has expired and the assessee has not filed 4

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani return. The assessee further stated that due date for filing return of income under section 139(4) has not expired and the assessee filed return of income under section 153A on 31.03.2014, within the due date of section 139(4). The AO has wrongly applied the provision of Explanation-5A to section 271(1)(c), without appreciating the fact that due date for filing of return has not been expired on the date of search. Hence, the case of assessee is not covered under Explanation-5A. Therefore, penalty levied by AO is liable to be deleted. The assessee also relied upon the decision of Mumbai Tribunal in ITO Vs Gope M. Rochlani (2014 - 151 ITD 642), wherein it was held that provision of section 139(4) is actually extension of due date of section 139(1) and therefore, the due date for filing of return of income can also be reckoned with the date mentioned in section 139(4). 4. In without prejudice submission, the assessee also raised a legal plea that the AO while initiating penalty has not specified the specific limb of charges specified under section 271(1)(c) of the Act. There was no specific charge in the show cause notice for levying the penalty, hence, the order based on such defective notice is not sustainable. It was further stated that assessee has not filed original return as search action was conducted on 05.03.2013, i.e. before due date of filing return of income and return was filed only under section 153A.

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani 5. The ld. CIT(A) after considering the order of penalty, submission of assessee held that assessee has declared the additional income in the return of income filed in response to notice under section 153A or under section 139(4). The ld. CIT(A) clarified that penalty has been levied on income declared in the return, filed in response to notice under section 153A and not on the additions/deviations made in the assessment order, with respect to which satisfaction has been recorded separately and penalty was initiated. The ld. CIT(A) also relied on the decisions of Hon’ble Delhi High Court in S.A.S. Pharmaceutical ( 335 ITR 259 and Hon’ble Gujarat High Court in Krit Dahyabhai Patel vs. ACIT (280 CTR 216), wherein it was held that penalty is not imposable, if the income has been declared in the return of income in response to the notice under section 153A. The ld. CIT(A) after referring the decision of Tribunal in ITO Vs Goplani & Ruchandani (supra) and decision of Ahmedabad Tribunal in Hitesh Mulchandani Doshi Vs ACIT in IT (SS) A No. 24/RJT/2013 dated 16.05.2016 held that no penalty is imposable as the assessee declared the impugned income in the return filed. Thus, aggrieved by the order of ld. CIT(A),the Revenue has filed this appeal before this Tribunal. 6. We have heard the submission of Senior departmental representative (DR) for the Revenue and learned authorized representative (AR) of the assessee and have gone through the orders of authorities below. The ld. 6

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani DR for the Revenue supported the order of AO. The ld. DR submits that the case was clearly falls within the Explanation-5A of section 271(1)(c) of the Act. The ld. CIT(A) deleted the penalty on wrong premises. The ld. CIT(A) failed to appreciate the fact that assessee has not filed the return of income within due date as prescribed under section 139(4) of the Act. 7. On the other hand, the ld. AR for the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submits that case of assessee is clearly covered by the decision of Mumbai Tribunal in ITO Vs Ruchandani (supra) and the decision of Rajkot Tribunal in Hitesh Mulchand Doshi (supra). The ld. AR of the assessee further submits that admittedly, initially, the assessee has not filed return of income. A search was carried out on 05.03.2013 on the assessee and its group. On the date of search, due date of filing return of income under section 139(4) has not been expired. The assessee filed return of income on 31.03.2014 within due date. The AO wrongly applied Explanation-5A to section 271(1)(1)(c) of the Act without appreciating the fact that due date of filing return has not been expired on the date of search, hence, the case of assessee is not covered by the Explana;tion-5A, it has been held so by Mumbai Tribunal in ITO Vs Goplani & Ruchandani (supra). The ld. AR for the assessee also relied on the decision of Jurisdictional High Court in Kirit Dahyabhai Patel Vs ACIT (2017) 80 taxmann.com 162(Gujarat).

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani 8. The ld. AR of the assessee in alternative submission submits that the AO while issuing show-cause notice under section 274 read with section 271(1)(c) of the Act has not strike out inappropriate portion of the charge of the notice, if it was issued for concealment of income or for furnishing inaccurate particulars. It was submitted that the assessee raised this plea before the ld. CIT(A). However, alternate submission of assessee was not adjudicated as the assessee was granted relief on merit. To support his contention that in absence of clear finding of AO whether the assessee is guilty of concealment of income or furnishing inaccurate particular of income, penalty cannot be levied under section 271(1)(c) of the Act, relied on the decision of jurisdictional High Court in CIT v/s. White Ford India [(2013) 38 taxmann.com 15 (Gujarat)]. 9. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have also deliberated on the various case laws relied by ld. CIT(A) and by learned AR for the assessee. There is no dispute that a search action was carried out on the assessee group on 05.03.2013. The assessee disclosed additional income of Rs. 3.12 crore during the search. The assessee while filing return of income in response to the notice under section 153A disclosed the capital gain on 31.03.2014. The last date for filing return of income under section 139(4) for AY 2012-13 was 31.03.2014. The additional income declared by the assessee was offered and accepted by the assessing 8

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani officer without any variation. The assessing officer levied penalty by invoking the Explaination-5 of section 271(1)(c) and levied penalty @ of 100% of tax sought to be evaded. The ld. CIT(A) deleted the entire penalty by taking view that the assessee the impugned income of Rs. 3.12 Crore has been declared in the return of income filed in response to the notice under section 153A or under section 139(4). The ld CIT(A) also relied on the decision of Mumbai and Rajkot Tribunal in ITO Vs Gope M Rochlani (supra) and Hitesh Moolchand Doshi (supra) respectively. 10. The Hon’ble Gujarat High Court in Kirit Dahyabhai Patel Vs ACIT (supra), while considering the question of law “whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in restoring the penalty imposed under Section 271(1)(c) of the Act holding that benefit under explanation 5 to Section 271(1)(c) of the Act would be available only for period where due date for filing the return under Section 139(1) of the Act had not expired” held that in view of of specific provision of section 153A, the return of income filed in response to notice under section 153A is to be considered as return filed under section 139, 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) and the penalty is to be levied on the income assessed over and above the income returned under section 153A, if any. It was also held that no penalty under section 271(1)(c) cannot be 9

ITA No. 154/SRT/2017 (A.Y. 2012-13) Shri Vasudev D Goplani levied on the income shown in the return of income filed in response to the notice under section 153A. The coordinate bench of Mumbai Tribunal in ITO Vs Gope M Rochlani (supra) also held that in absence of any limitation or restriction to words “due date” given in clause (b) of Explanation 5A to section 271(1)(c), it can also date of filing of return of income under section 139(4). 11. Considering the aforesaid factual and legal discussions, we affirm the order passed by ld CIT(A). In the result the ground of appeal raised by the revenue are dismissed. As we have dismissed the grounds of appeal on the primary submissions of the assessee, therefore, the consideration of other submissions and adjudication thereof have become academic. 12. In the result the appeal filed by the revenue is dismissed. Order announced on 05th July 2021, by placing result on the notice board as per Rule 34(5) of Income Tax (Appellate Tribunal) Rules 1963. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 05/07/2021 SK, (PS on tour) Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File True copy/ By order / / TRUE COPY / / Assistant Registrar, ITAT, Surat 10