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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM
आदेश / O R D E R Per A. L. Saini, AM:
The captioned appeal filed by the Revenue, pertaining to assessment year 2013-14, is directed against the order passed by the Commissioner of Income Tax (Appeal)-20, Kolkata in appeal no. CIT(A), Kolkata-20/12458/2015-16, which in turn arises out of a penalty order passed by the Assessing Officer u/s 271AAB of the Income Tax Act, 1961 (in short the Act) dated 28.09.2015.
2.The grounds of appeal raised by the revenue are as follows:
1. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the penalty u/s 271AAB by holding the income disclosed during search u/s 132(4) is not undisclosed income and hence, not liable for penalty u/s M/s EMC Ltd. Assessment Year:2013-14 271AAB after giving the reason that the income on account of cessation of liability is declared u/s 132(4) to co-operate with the department ignoring the facts and circumstances under which the above declaration was made when the assessee company failed to explain genuineness of certain liability shown in the books.
2. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding the declaration made by the assessee u/sl32(4) is on account of cessation of liability and hence, not undisclosed income for the purpose of levying penalty u/s 271AAB ignoring the fact that the declaration u/s 132(4) was made after search & seizure operation when the assessee could not explain the genuineness of certain outstanding liabilities which in the disclosure petition filed by the assessee was given a colour of cessation of liability.
3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the penalty when all the conditions specified in Sec 271AAB(1)(a)(i), Sec 271AAB(l)(a)(ii) and Sec 271AAB(1)(a)(iii) were satisfied for imposing the penalty in respect of the amount of Rs.29,18,82,368/- and of Section 271AAB(C) in respect of the amount of Rs. 81,17,632/-.
4. That the appellant craves to add to and/or alter, amend, modify or rescind the grounds hereinabove before or hearing of thisappeal.
The facts of the case which can be stated quite shortly are as follows: A search & seizure operation was conducted u/s 132 of the Act on the assessee on 04.10.2012. In the statement recorded during the search u/s 132(4) the assessee disclosed income at Rs. 30 crores as being towards non-existing liability / cessation of liability. In the return of income furnished, the assessee offered Rs. 29,18,82,368/- being the quantified write back out of sundry creditors. However, Assessing Officer assessed the said income at Rs. 30 crores as per the statement u/s 132(4) of the Act and has imposed the penalty u/s 271AAB of the Act as follows:
Sl. Undisclosed income Penalty rate Penalty quantum a) Amount of Rs. 29,18,82,368/- included in return @10% u/s 2,91,88,237 of income 271AAB(a) b) 81,17,632[being 30 crores (-) 29,18,82,368] @30% u/s 24,35,290 This income was not included in Return of 271AAB(b) Income. Total 3,16,23,527
M/s EMC Ltd. Assessment Year:2013-14 The Assessing Officer was of the view that assessee had disclosed Rs. 30crores after getting caught while search and seizure operation. Therefore, Assessing Officer was of the view that assessee falls under explanation (c)(i) of Section 271AAB of the Act; and hence he imposed penalty of Rs. 3,16,73,527/-.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the following:
“5.3 . Foremost-there is no evidence nor material; but the statement recorded u/s 132(4). And what is the ‘disclosure’ – that out of the sundry creditors, there could not be ‘no longer existing / cessation of liability’ to the extent of Rs. 30 crores. What are the details – not known. Be as it may, the whosoever no longer existing sundry creditors- these creditors had not been doubted; and pertinently in the relevant A.Y. when the credit liabilities were entered in the regular books of accounts. When the credits are not doubted or disproved or false- how can purported cessation of liability be ‘undisclosed income’? And, it would be ironical if it were that the search u/s 132 was carried out – for cessation of liability. It belittles the search. Be as it may, cessation of liability is purely between the parties. The revenue has no role, nor mentor, nor enforcement role to play. The 132(4) statement ‘disclosure’ is but – the usual, to cooperate with the search. And it would not have been an issue for the appellant to cooperate – for the appellant is a 5- decade old reputed company in business as a world class provider of end-to-end power systems solutions across the world; with revenue’s for this AY 2013-14 at above Rs. 2,000 crores. And the appellant had cooperated. When the return of income was to be furnished, it had quantified such no longer existing sundry creditor liability to almost as stated in the statement u/s 132(4); and the balance which the DCIT A.O. added in the assessment, the appellant did not prefer to dispute. But, however, the appellant could not foresee that for technical reasons, the Assessing Officer would initiate penalty proceedings u/s 271AAB. 5.4. The impugned penalty order- there is no tangible material. It is only mere argument and surmises only. 5.5 Thus, the purported ‘cessation of liability’ to be construed as ‘undisclosed income’ – is too far-fetched; and, it is not within the meaning of ‘undisclosed income’ per the Explanation (c ) in the said section 271AAB. 5.6 Thus, the impugned penalty order is hereby cancelled.
M/s EMC Ltd. Assessment Year:2013-14
Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before us.
The ld. D.R for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has defended the order of the ld. CIT(A).
We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that though in the course of search assessee admitted and offered a sum of Rs. 30 crores as income for AY 2013-14 but the said income was not undisclosed income. It was based on comprehensive review emanating from report of the Internal Auditors and deliberations of Audit Committee and decision of Board of Directors of the company taken much before the date of search and the same was duly recorded in papers and documents maintained in normal course of business which was seized. Based on such reviews, total amount of non-existing liability to sundry creditors was worked out at Rs. 29,18,82,368/- and the said sum was written back and included in the income of Assessment year 2013-14 and tax payable on the returnedincome for the said assessment year was duly paid in accordance with law and credit for the same has been allowed. We note that the income was not detected from any concealed documents or evidence but was based on records maintained in normal course of business. The income was not represented by any undisclosed money, jewellery or any other valuable asset. It was explained by the assessee that the difference of Rs. 81,17,632/- (30,00,00,000 – 28,18,82,368) between initial disclosure amount of Rs. 30 crores and Rs. 28,18,82,368/- written back as income.The initial disclosure was based on approximation only therefore, difference arises at Rs. 81,17,632/-. Therefore, we do not find any infirmity in the order of ld. CIT(A). That being so, we decline to interfere in the order passed by ld. CIT(A), his order on this issue, is hereby accepted and grounds of appeal raised by Revenue is dismissed. Page | 4
M/s EMC Ltd. Assessment Year:2013-14 8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Court on 21.02.2020