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Income Tax Appellate Tribunal, DELHI BENCH “D”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
Date of Hearing : 25-05-2016 Date of Order : 21-06-2016
ORDER PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned order dated 26/8/2013 passed by the Ld. Commissioner of Income Tax (Appeals-XXXIII), New Delhi on the following grounds:-
“1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in cancelling the penalty of Rs. 16,00,000/- levied by the AO under section 271AAA of the Income Tax Act, 1961 without appreciating that “Trade Advances” is only application and not source of income.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the assessee was not asked in statement u/s. 132(4) to substantiate the manner of deriving income without
appreciating that in clause (ii) of Sec.
271AAA(2), there is no reference to section 132(4) and the assessee failed to substantiate the manner of deriving income even during the assessment proceedings.
3. The order of the CIT(A) is erroneous and is not tenable on facts and in law.
4. The appellant craves leave to add, alter or amend any / all of the grounds of appeal
before or during the course of the hearing of the appeal.”
The facts in brief are that a search and seizure action u/s. 132 of the Income Tax Act, 1961 (hereinafter referred as the Act) was conducted by the Department on 30.7.2009 at the business premises of various group companies as well as residential premises of the Directors and important employees of the Ramprastha Group including the assessee. During the course of search Sh. Balwant Singh, Chairman of the Ramaprastha Group of Companies surrendered an amount of Rs. 1,60,00,000/- in the hand of the assessee. During the course of assessment proceedings the assessee did not specify the manner in which the income had been derived, hence, AO initiated the penalty proceedings u/s. 271AAA of the Act and accordingly, Show cause notice u/s. 271AAA read with section 274 of the Act was issued on 29.12.2011 requiring the assessee to show cause on 20.1.2012 as to why an order imposing penalty u/s. 271AAA of the Act should not be made.
But no reply was received by the AO. Another show cause notice dated 1.5.2012 was duly served upon the assessee. In response thereto a reply dated 07.5.2012 was received from the assessee stating therein the following submissions:- i) That the assessee has surrendered the business advances as income u/s. 132(4) of Rs. 1,60,00,000/-.
During the course of search operations on 31.7.2009 as income from real estate business activities. The income has been assessed as business income in the assessment completed u/s. on 29.12.2011. ii) It had been explained that the income had been earned out of real estate business conducted by the assessee during the year. iii) That the assessee has already paid the IT on the said income alongwith interest thereon.
2.1 After considering the aforesaid reply filed by the Assessee, AO observed that the assessee had not specified the manner in which the undisclosed income was earned and also failed to substantiate, it and accordingly, he imposed the penalty of Rs. 16,00,000/- on the assessee for such failure by passing an order dated 28.6.2012 u/s. 271AAA of the I.T. Act, 1961.
Being aggrieved with the aforesaid penalty order, assessee appealed before the Ld. CIT(A), who vide impugned order dated 26.8.2013 has deleted the penalty and allowed the appeal of the Assessee.
Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal.
At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that penalty in dispute imposed by the AO may be sustained.
On the contrary, during the hearing, Ld. Authorised Representative of the Assessee stated that ld. CIT(A) had deleted the penalty in dispute by following the various ITAT orders, Hon’ble High Courts orders in which similar and identical issues have been dealt with. He draw our attention towards the Para No. 3.3 of the impugned order at pages 9 to
He further stated that the issue in dispute is also covered by the various decisions rendered by the ITAT and the Hon’ble High Courts as mentioned in the Ld. CIT(A)’s order and requested that the order of the Ld. CIT(A) may be upheld and Revenue’s Appeal may be dismissed.
We have heard the both parties and perused and considered the relevant records available with us especially the impugned order passed by the Ld. CIT(A). We find that Ld. First Appellate Authority has elaborately discussed the issue in dispute by considering the submissions of the assessee and adjudicated the issue in dispute vide para no. 3.3 at pages 9 to 11 in his impugned order. The said relevant paras of the impugned order are reproduced as under:-
“3.3 Decision:-
I have considered the penalty order u/s 271AAA, written submission and arguments of Ld. AR during the appellate proceedings. The Assessing Officer has levied the penalty u/s 271AAA on the ground that the conditions contained in Sub-section(2) specifying the conditions for non-levy of penalty under sub- section(1) of sub-section 271AAA are not fulfilled.
Precisely, the Assessing Officer has pointed that the manner in which such income was derived was not stated by the appellant. Further, he concluded that appellant also failed to substantiate the manner in which the undisclosed income was derived.
During the appellate proceedings, Ld. AR has filed copy of statement of Sh. Balwant Singh uls 132(4) of I.T. Act dated 3l.7.2009, who has made the disclosure of unaccounted income for the entire group of Ramprastha Builders.
Ld. AR's main contention is that during the statement U/S 132(4), Sh. Balwant Singh while making the disclosure in the name of the appellant has clearly stated that undisclosed income is unaccounted trade advance to persons amounting to Rs. 1,60,00,000/-. The appellant has disclosed the 7 said income in his return of income as business income which has been assessed by the Ld. Assessing Officer.
Further, Ld. AR has argued that during the statement U/S 132(4), the Authorised Officer has not asked the manner in which such undisclosed income was earned. Further, the Authorised Officer has also not asked during the statement recorded U/S 132(4), to substantiate the manner in which such income was earned.
He has relied on various judicial pronouncements cited supra specially Hon'ble ITAT, Delhi Judgement in the case of Mother Pride Education Persona Private Limited where Hon'ble tribunal has deleted the penalty u/s 271AAA on the ground that the Authorised Officer while recording the statement has not asked the manner in which undisclosed income was earned and also has not put a question to substantiate the manner in which such income was earned. It is incumbent upon the Authorised Officer while recording the statement to explain the provisions of law while taking the disclosure u/s 132(4).
I have considered all the arguments of Ld. AR and perused the statement recorded U/S 132(4) where income was disclosed. In present case, income as discussed was trade advance, therefore, by virtue of the words "Trade Advance" it is apparent that it is unaccounted business income. The appellant has paid taxes on such undisclosed income, the Assessing Officer has assessed such income as business income without making any additions, therefore, in my view the mannered to earn undisclosed income was there in the statement U/S 132(4). It is not disputed that there was disclosure U/S 132(4) of I.T. Act. and the Assessee has honoured the disclosure and paid tax thereon and filed return to that affect. I have considered the judicial pronouncements relied upon by Ld. AR cited supra namely :-
• Hon’ble ITAT Delhi in the case of Mothers Pride Education Personna (P) Ltd. vs. DCIT (ITA No. 3372/DeI/2011).
• The Hon'ble Allahabad High Court in the case of Radha Kishan Geol (Supra)
• The Honorable Gujarat High Court in the case of CIT vs. Mahendra C shah 298 ITR 305(supra) 10 305 (Supra)
• Honorable ITAT Cuttak in the case of Ashok Kumar Sharma V s. Deputy Commissioner of Income Tax (ITA No. 476, 477, 478,479 and 480/CTKJ2011).
• Honorable ITAT Ahmadabad in the case of Deputy Commissioner of Income Tax V s. Rajendra Prasad Dokania (ITA No. 525/Ahd/2012) .
Honorable ITAT Ahmadabad in the case of Sulochanadevi A. Agarwal, Surat vs Department of Income Tax (ITA No. 10521 AHD/2012).
After considering the entire facts & circumstances of the case in my view penalty levied U/S 271AAA cannot be sustained.
Accordingly I hereby cancel the penalty levied u/s 271AAA. This ground of appeal is allowed.
As a result, the appeal is allowed”
7.1 After going through the aforesaid order passed by the Ld. CIT(A) on the issue in dispute as well as the orders of the Tribunal and the Hon’ble High Courts relied upon by the Ld. CIT(A) while deleting the penalty in dispute, we are of the view that the Ld. First Appellate Authority has passed a well reasoned order which does not need any interfere on our part.
Therefore, respectfully following the precedents of the ITAT as well as Hon’ble High Courts as mentioned in the Ld. CIT(A)’s order, we uphold the order of the Ld. CIT(A) wherein the Ld. CIT(A) has deleted the penalty in dispute and accordingly, we dismiss the Appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 21/06/2016.