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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeals have been filed at the instance of the Revenue against the orders of the Commissioner of Income Tax (Appeals)-12, Ahmedabad (‘CIT(A)’ in short), both dated 2.12.2015 arising in the penalty order dated 21.08.2014 & 16.07.2014; respectively passed by the Assessing Officer (AO) under s. 271AAA of the Income Tax Act, 1961 (the Act) concerning assessment year 2012-13 in both appeals. Since, both appeals raise similar grievance, these are being disposed of by common order for the sake of convenience.
ITA No. 1097/Ahd/2016 (Shree Krishna Developers)
By way of its grounds of appeal, the Revenue has impugned the action of the CIT(A) in deleting the penalty of Rs.28 Lakhs imposed by the AO on the ground that the assessee has failed to comply with the conditions specified under s.271AAA(2) of the Act for exoneration of penalty leviable.
Briefly stated, a search under s. 132 of the Act was conducted on the group cases of Anilbholabhai Patel Group including the case of the captioned assessee on 09.08.2011. During the course of search operation, the assessee disclosed an amount of Rs.2,80,00,000/- on account of unaccounted receipts derived from land trading and commission income. The assessee while filing the return of income, duly admitted and offered the aforesaid undisclosed income declared at the time of search and paid taxes
ITA No.1097 & 1101/Ahd/16 [DCIT vs. M/s. Shree Krishna Developers & Shri Mahendrabhai J. Shah] A.Y. 2012-13 - 3 -
thereon. Consequent upon the return filed by including the additional income aforestated, the return of income was subjected to scrutiny assessment. The disclosure so made was accepted by AO as such. While passing the assessment order, the AO invoked the provisions of Section 271AAA of the Act and imposed penalty @10% on the undisclosed income of the specified previous year at Rs.28 Lakhs. Consequently, the penalty of Rs.28 Lakhs was imposed under s. 271AAA of the Act vide penalty order dated 21.08.2014 concerning AY 2012-13 in question.
Aggrieved by the imposition of penalty, the assessee preferred appeal before the CIT(A).
In the first appeal, the CIT(A) found merit for non-imposition of penalty as pleaded by the assessee. The CIT(A) took note of the case made out by the AO that while the assessee has offered the undisclosed income and has paid taxes thereon, it has failed to specify any particulars/details/specification of such unaccounted income and consequently, has failed to specify the manner of determining undisclosed income and substantiation thereof. The CIT(A) accordingly deleted the penalty imposed after analyzing the factual position in the light of judicial precedents. Without reproducing the text of the order of the CIT(A), it is observed that the CIT(A) essentially held that the case of the assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah & Sidhnath Goel and concluded that the assessee has made effective and sufficient compliance to the immunity conditions of Section 271AAA(2)(ii) of the Act also. The CIT(A) accordingly deleted the penalty imposed under s.271AAA of the Act.
ITA No.1097 & 1101/Ahd/16 [DCIT vs. M/s. Shree Krishna Developers & Shri Mahendrabhai J. Shah] A.Y. 2012-13 - 4 -
Aggrieved by the action of CIT(A) towards cancellation of penalty imposed by the AO, the Revenue preferred appeal before the Tribunal.
The learned DR for the Revenue submitted that the conditions with regard to providing the ‘manner’ in which the undisclosed income has been derived and ‘substantiation’ thereof has not been done by the assessee as contemplated by Section 271AAA(2) of the Act. The learned DR thus submitted that in view of the nonfulfillment of mandatory conditions as provided in the exit clause, the assessee cannot be exonerated from the liability of penalty under s. 271AAA of the Act. The learned DR accordingly submitted that the penalty order of the CIT(A) cancelling penalty wrongly requires to be set aside and the penalty order passed by the AO requires to be restored.
Learned AR, on the other hand, referred to the relevant extract of the statement recorded under s.132(4) of the Act as reproduced in the order of the CIT(A) at para no.3 of its order and submitted that the manner of deriving undisclosed income was answered in a plausible manner. No specific questions were asked to the assessee regarding the substantiation of the manner while recording the statement under s.132(4) of the Act or at any later stage in the course of assessment proceedings. The learned AR thus submitted that without being put to any query on this subject it was not possible for the assessee to visualize the same. The learned AR adverted our attention to the decision of the co-ordinate bench of the Tribunal in the case of (i) DCIT vs. Anilbholabhai Patel ITA No.481/Ahd/2016 order dated 09.08.2018 (same group case) (ii) Shri Jagdishbhai B Chandarana vs. ACIT ITA No. 2199/Ahd/2016
ITA No.1097 & 1101/Ahd/16 [DCIT vs. M/s. Shree Krishna Developers & Shri Mahendrabhai J. Shah] A.Y. 2012-13 - 5 -
order dated 13.02.2018 and (iii) DCIT vs. Shri Himanshu B Joshi & Ors. ITA No. 1089/Ahd/2016 & Ors. order dated 21.02.2018 wherein as per the ratio laid down by 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 and in the absence of any specific query posed by the Revenue in this regard, the embargo under Section 271AAA(2)(i)&(ii) of the Act would not apply. The learned AR thus submitted that the CIT(A) has appreciated the facts in proper perspective and the action of the CIT(A) 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.
We have carefully considered the rival submissions and perused the penalty order passed by the AO and the appellate order passed thereon by the CIT(A) and the case laws cited across the bar. The short controversy 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 undisclosed income has been derived as well as failed to substantiate the manner as contemplated under s.271AAA(2) of the Act. It is the case of the assessee on the other hand that the order of the AO imposing penalty was not sustainable as rightly held by the CIT(A) since the prerequisites specified under s.271AAA(2) of the Act are broadly complied to claim immunity from the imposition of penalty. In this regard, we straightway find that the issue is squarely covered in favour of the assessee by the decision of the
ITA No.1097 & 1101/Ahd/16 [DCIT vs. M/s. Shree Krishna Developers & Shri Mahendrabhai J. Shah] A.Y. 2012-13 - 6 -
Hon’ble Gujarat High Court in the case of Mahendra C Shah (supra) and also by the ratio of the decision of the Hon’ble Gujarat High Court in case of Pr.CIT vs. Mukeshbhai Ramanlal Prajapti [2017] 398 ITR 170 (Guj). In the absence of any evidence on record to show that any specific query was made to the assessee in this regard, the allegation for non-fulfillment of condition of Section 271AAA(2) of the Act does not survive. In view of the binding precedent, the onus would shift on the assessee to specify the manner of earning undisclosed income and substantiation thereof only upon requisite inquiry in this regard. In the absence of any specific inquiry, the assessee cannot be blamed for non-furnishing of manner of earning undisclosed income and substantiation thereof sue motu. It was not shown to us as to whether such query was put even in the course of assessment proceedings. In the absence of any inquiry, the assessee cannot be blamed for non-satisfaction of the exit clause provided under s.271AAA(2) of the Act. Therefore, in the facts and circumstances of the case, the immunity provided under erstwhile provisions of Section 271AAA(1) of the Act cannot be denied. The CIT(A), in our view, has correctly recorded the finding of facts and law enunciated in this regard and has come to a righteous conclusion. The order of CIT(A) is also in parity with the decision of co-ordinate bench in Anil Bholabhai Patel (supra). Thus, we decline to interfere.
In the result, the appeal of the Revenue is dismissed.
ITA No. 1101/Ahd/2016 (Shri Mahendrabhai J. Shah)
The impugned appeal also arises from same search proceedings on Anilbholabhai Group under s.132 of the Act where the impugned assessee was also covered. The Revenue in the captioned appeal has
ITA No.1097 & 1101/Ahd/16 [DCIT vs. M/s. Shree Krishna Developers & Shri Mahendrabhai J. Shah] A.Y. 2012-13 - 7 -
challenged the action of the CIT(A) in deleting the penalty of Rs.22,50,000/- imposed by the AO under s.271AAA of the Act. The facts and circumstances of the case are strikingly similar to the facts involved in the case of Shree Krishna Developers ITA No.1097/Ahd/2016 (supra). Therefore, our observations and conclusion thereon shall apply mutatis mutandis to the facts of the present case. Consequently, we decline to interfere with the order of the CIT(A) deleting the penalty imposed by the AO under s.271AAA of the Act.
In the result, the appeal of the Revenue is dismissed.
In the combined result, both captioned appeals of the Revenue are dismissed.
This Order pronounced in Open Court on 04/ 10 /2018
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 04/10/2018 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।