CHHAYA VIKAS SHAH LEGAL HEIR & WIFE OF LATE VIKAS SHAH,AHMEDABAD vs. THE DY.CIT, CENTRAL CIRCLE-2(2), AHMEDABAD

The assessee, during years under consideration was involved in trading in land, development and was also involved in construction activities. A search operation u/s 132(2) of the Act was conducted on the assessee on 09-02-05 and various documents/books of account /other valuable articles/ other things were found and seized. Consequently, assessment was completed u/s.153A(b) r.w.s. 144 of the Act. On 28.12.2006 determining total income of Rs.2,97,42,657/- as against income Rs. 10,23,030/-disclosed in the return filed u/s.153A of the Act. Penalty proceedings u/s 271(1)(c) of the Act was also initiated separately. Against the said assessment the assessee filed an appeal before the Ld.CIT (A)-III, Ahmedabad who vide order dated 18.01.2011, confirmed the addition on account of Unaccounted income/receipt of Rs.2,77,46,780/-. The assessee filed appeal before the Tribunal which vide its order in IT(SS)A Nos. 311 to 313/Ahd/2011 dated 21.03.2017, allowed relief and confirmed the additions as detailed below: Particulars A.Y. 1999-2000 A.Y. 2000-2001 A.Y. 2001-2002 Total Income 10,23,030/- 10,89,360/- 6,37,940/- Returned as per return filed u/s 153A in Rs. Total Income 2,97,42,657/- 2,20,94,515/- 69,90,160/- determined as per assessment u/s ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02

During the penal proceedings, the AO noted that the search resulted in seizure of incriminating material from assessee’s car. The AO also noted that the assessee despite seizure of such incriminating documents did not file return of income u/s 153A of the Act, in time, and only after several notices, filed the return of income on 28.12.2006 declaring total income as detailed in the table above for respective assessment years. The AO further recorded that during the assessment proceedings, the assessee was not cooperative for which penalty u/s 271(1)(b) of the Act was also levied on the assessee.

Post assessment the case reached second stage of appeal. The Tribunal confirmed the addition, as detailed in the table above, after allowing some relief. The AO also expressed that though the Hon'ble ITAT had confirmed only a small portion of additions and disallowances made earlier, such addition clearly proved that the assessee had all the intention of concealing his income. The AO noted that even after the search and discovery of incriminating material, the assessee did not disclose his real income in the return filed u/s 153A of the Act. The AO further held that the assessee willfully and deliberately concealed his income as well as furnished

The Ld.CIT(A) partly allowed the appeal of the assessee, after granting relief on penalty relating to amounts of disallowance not pressed for before ITAT. The details of the same are given above. While doing so, the Ld.CIT(A) dealt with the legality of the AO’s order. The relevant paras of the order are reproduced here which is common for all three assessment years, except the amounts specified therein:

1 Now as stated above, it is found from the assessment order that the AO initiated penalty on the entire addition recording " ....for furnishing inaccurate particulars of income/ concealment of income." Thus he has initiated penalty under both the limbs of section 271(1)(c) of the Act. The satisfaction, contrary to the claim of the assessee is noted in the assessment order. Hence the contention of the assessee that "Penalty is not justified in cases where no proper satisfaction is recorded in the assessment order and where there is ambiguity in charge for levy of penalty is rejected. The AO is not required to do more at the time of initiation of the penalty proceedings than he had done. Therefore, ground of appeal 3 is dismissed.

1 Further. the assessee has raised objection in the written submission that while imposing penalty the AO is not clear that which limb was invoked while imposing penalty. In the Page-5 of Order the AO has clearly noted that "Thus, clearly, the assessee wilfully and deliberately concealed his income as well as furnished inaccurate particulars of income." In the Page No. 7 Para 10 of the Order he has concluded that "Therefore. it is a fit case for the levy of penalty u/s. 271(1)(c) of the Act. for furnishing inaccurate particulars of income as thereby concealing income of Rs. 28,93,042/-", Only in the last para while quantifying the penalty he has erroneously only mentioned "...Of furnishing inaccurate particulars of income". His firmed-up opinion is clearly enumerated in Page 7 para 10 (supra) leading to conclusion that the penalty is imposed on both the limbs on the entire undisclosed income of Rs. 28,93,042/-.

While deciding on the merits relating to penalty on disallowances, the Ld.CIT(A) discussed the decisions of Hon’ble Supreme Court relied on by the assessee, namely the decision of Hon’ble Supreme Court in the case Price Waterhouse Coopers P Ltd vs CIT [2012] 348 ITR 306 (SC) as well as CIT vs Reliance Petro Products Pvt Ltd [2010] 322 ITR 158 (SC), where it was held that mere disallowance of a claim or plausible explanation furnished by the assessee apart from the fact that the issues in dispute being highly debatable, no penalty was warranted.

The CIT(A) also concluded that – - the additions have been made on the basis the incriminating material found during the course of search. - the assessee was non-cooperative during the assessment proceedings and was not forthcoming regarding the nature of income that was undisclosed. - by assessee’s own admission, only during the second stage of appeal, as per the direction of the Hon'ble ITAT, Ahmedabad, additional details were filed and during proceeding with ITAT different type of transactions were noted and undisclosed income was determined (as detailed in the table above). - the argument by the assessee is curious as on one hand he hides information to purposely evade taxes and then takes a plea that it is difficult to quantify the actual evasion from the notings on seized pages. - the AO has mentioned in the assessment order the non-cooperation by the assessee during the proceedings.

On the disclosure in the return of income, the Ld.CIT(A) placed reliance on the decision of Hon'ble Supreme Court in the case Mak Data P. Ltd. v. CFT (2013) 358 ITR 593 (SC).

Aggrieved by the order of the Ld.CIT(A), the assessee is, therefore, in appeals before us with following common grounds of appeal(s) for respective assessment years: “The Ld. CIT(A) has erred in law and on facts while partly confirming the penalty U/S. 271(1)(c) of the Act levied by the AO without proper appreciation and consideration of the facts of the case. Considering the facts and submissions filed and the legal decisions relied upon, the entire penalty u/s. 271(1)(c) of the Act is required to be deleted.”

The Ld.Authorised Representative (AR) of the assessee explained the facts and requested to delete the penalty. However, he agreed that the addition was made based on incriminating material found during the search. He also stated that the original returns were not filed by the assessee and all the particulars were filed in the returns filed in response to notice u/s 153A of the Act. On the other hand, the Ld.Departmental Representative (DR) relied on the order(s) of the Ld.CIT(A).

We have carefully considered the rival submissions and perused the orders of the authorities below and case laws cited. We observe that the Revenue has established beyond any reasonable doubt that the assessee had willfully concealed the income and furnished inaccurate particulars. Incriminating material was seized from the assessee’s car and that the return of income under Section 153A of the Act was filed late, after several notices. Non-cooperation from the assessee during assessment proceedings is also noted. The Ld.CIT(A) partly allowed the appeal, granting relief on penalty for amounts of disallowance not pressed before ITAT. The Ld.CIT(A) rejected the assessee’s contention regarding the non-recording of ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02

We find that the AO had sufficiently recorded the satisfaction for initiating penalty proceedings under Section 271(1)(c) of the Act. The ultimate paragraph of the assessment order clearly mentions the initiation of penalty for furnishing inaccurate particulars of income/concealment of income. The assessee’s non-cooperation during assessment proceedings and the subsequent late filing of returns under Section 153A of the Act, despite the discovery of incriminating material, indicate a clear intention of concealment of income and furnishing of inaccurate particulars.

We agree with the Ld.CIT(A)’s findings that the AO was justified in invoking both limbs of Section 271(1)(c) of the Act for the imposition of penalty, based on the clear evidence of tax evasion and the non-disclosure of actual income. The reliance placed by the Ld.CIT(A) on the Hon’ble Supreme Court's decision in Mak Data P. Ltd. v. CIT [2013] 358 ITR 593 (SC) and other relevant case laws is found to be appropriate and supports the conclusion that the penalty was rightly imposed. In case of Mak Data P. Ltd. (supra), the Hon’ble Supreme Court held that voluntary disclosure does not absolve the assessee from penalty if it is found to be a case of deliberate concealment of income.

We have also noted the facts as recorded in the quantum proceedings, it is not a matter for consideration as to whether there was any concealment resorted by the assessee or not. The fact of under-statement of income is discernible. Only matter for consideration is extent of quantification of ITA Nos.584, 585 and 586/Ahd/2023 Chhaya Vikas Shah Legal Heir & Wife of Late Vikas Shah vs. Dy.CIT Asst. Years : 1999-2000, 2000-01, 2001-02

While the penalty on the undisclosed income confirmed by the CIT(A) is upheld, the penalty on the estimated disallowance amount (Rs. 50,000/-) is found to be untenable and is directed to be deleted, as per the Ld.CIT(A)’s order.

As a consequence, we do not find any merit whatsoever in the appeal(s) of the assessee. Thus, conclusion drawn by the Ld.Commissioner (Appeals) does not call for any interference.

In the result, all three appeals of the Assessee are dismissed. Order pronounced in the Open Court on 31 July, 2024 at Ahmedabad. (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER

""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त ( अपील ) / The CIT(A)-12, Ahmedabad

"वभागीय ""त"न"ध , आयकर अपील"य अ"धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड" फाईल /Guard file.