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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI V. DURGA RAO
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER These appeals filed by three different assessees are against different orders of the Commissioner of Income Tax (Appeals)-I, Chennai for the above assessment years. Since issues in these appeals are common in nature, these appeals are combined, heard together, and disposed of by a common order for the sake of convenience.
The common ground raised by the assessees in these appeals is that the Commissioner of Income Tax (Appeals) erred in confirming the addition made by the Assessing Officer when it was not provided in u/s.153A of the Act and that there was no incriminating material I.T.A.Nos. 2739 to 2749/Mds/2014 :- 3 -: found during the course of search action u/s.132 of the Act. Further, it was stated by the assessee that the issue is squarely covered by the order of the Special Bench in the case of All Cargo Global Logistics Ltd 137 ITD 287 (Mum) (SB).
The brief facts of the case are that there was search action in these group on 2.11.2010 and consequent to this, search notice u/s.153A was issued to the assessees and the assessments were framed. For better understanding, we herein narrate the basis of addition herein below:-
Joseph Prince for the assessment year 2006-07
Total income as per return : 1,01,972/- Add: Income from other sources as discussed : 4,79,301/- ------------- Gross total income : 5,81,273/- ------------- for the assessment year 2007-08
Gross total income as per return : 18,01,604/- Add: Unexplained cash deposit as discussed Above : 2,30,000/- Depreciation as discussed above : 1,87,068/- Short term capital gain (as discussed above) : 9,65,007/- Disallowance u/s.40A(3) : 24,588/- ------------------------- Gross Total Income : 32,08,267/- Less: Deduction u/c VIA as claimed : 1,00,000/- ------------------------- Total income : 31,08,267/- ------------------------- I.T.A.Nos. 2739 to 2749/Mds/2014 :- 4 -: for the assessment year 2008-09
Gross total income as per return 41,88,425 Add unproved an unexplained gifts 66,195 Disallowance of depreciation 3,34,647 Unexlained cash credit 14,793 4,15,635 Assessed Income 46,04,060 Less Deduction under Chapter VIA 1,00,000 ------------ Taxable income 45,04,060 -----------
Sheeba Prince for the assessment year 2005-06
Total income (as returned) 93,49,490 Add Income from other sources (claimed to be 1,72,000 Agricultural income) ------------- Total income 95,21,490
Income Tax thereon 28,30,447 Less Rebate u/s.88C 5,000 ------------- Income tax payable 28,25,447 ------------ for the assessment year 2008-09
Total income (as returned u/s153A) 1,23,55,470 Add Addition u/s.68 as discussed above 68,000 Add Undisclosed income as discussed above 30,000 ---------------- Total income 1,24,53,470 --------------- for the assessment year 2011-12
Total income declared by the assessee 1,34,69,681 Addition u/s.69A 10,63,043 ----------------- Total income 1,45,32,724 ----------------- I.T.A.Nos. 2739 to 2749/Mds/2014 :- 5 -:
Princeson Jose for the assessment year 2005-06
Total income (as returned) 90,52,420 Add Income from undisclosed sources (as 5,30,000 discussed) -------------- Total Income 95,82,420 -------------- for the assessment year 2006-07
Total income (as returned) 2,02,97,344 Add Income from undisclosed sources (as 46,000 discussed) --------------- Total Income 2,03,43,344 --------------- for the assessment year 2007-08
Total income (as returned) 5,49,10,923 Add Disallowance made in order u/s.143(3) 1,50,717 Add Income from undisclosed source (as 29,600 discussed) --------------- Total Income 5,50,91,240 -------------- for the assessment year 2008-09
Total income (as returned) 2,06,37,269
Add Income from undisclosed source (as 70,301 discussed) 70,000 --------------- 2,07,77,570 Total Income --------------- I.T.A.Nos. 2739 to 2749/Mds/2014 :- 6 -: for the assessment year 2011-12
Total income (as returned) 2,14,48,066
Add Undisclosed income as discussed 20,000 above ---------------- Total Income 2,14,68,066 --------------- According to the ld. Authorised Representative for assessees additions made by the Assessing Officer were only on the basis of particulars disclosed by the assessees in their original returns of income which were filed before the due date of filing return of income and also before date of search and there was no incriminating material found during the search to suggest additions. Further, he submitted that certain additions in assessment years 2007-08 & 2008-09 were made in the case of Joseph Prince on the reason that consent was given by the assessee to make additions in respect of unexplained credit, deposit into bank account and short term capital gain and disallowance u/s.40A(3) of the Act and these additions cannot be sustained. Even if the assessee agreed at the time of assessment, these additions cannot be legally sustainable. For this proposition, the ld. Authorised Representative for assessees relied on the judgment of Madras high court in the case of Mariam Aysha vs. CIT 104 ITR 381 wherein it is held that consent of the assessee cannot give jurisdiction to Assessing I.T.A.Nos. 2739 to 2749/Mds/2014 :- 7 -:
Officer and the taxing authorities can act only if there is power under the statute to do so. He further relied on the order of the co-ordinate bench in 561, 562, 563 & 564/Mds/2014 for the assessment years 2004-05 to 2009-10 in the case of A.R. Murugadoss vide order dated 16.06.2014, wherein the Tribunal held that in case no incriminating material is found on account of search or requisition, the question of re-assessment of the concluded assessment does not arise, and the re-assessment of the concluded assessment is permitted in assessment u/s.153A only if incriminating material are found in the course of search. The ld. Authorised Representative for assessee further placed reliance on the order of the co-ordinate bench in ITA Nos.1065, 1066 and 1067/Mds/2014 and others for the assessment year 2003-04 to 2005-06 in the case of Rm.K. Viswanatha Pillai & Sons and others vide order dated 05.02.2015 for the above propositions.
He also relied on the order of Special Bench in the case of All Cargo
On the other hand, the ld. Departmental Representative placed reliance on the order of the Commissioner of Income Tax (Appeals) and submitted that there were excess cash and jewellery found and the addition was made on this count also in certain assessment years and re-assessment was framed on the basis of search action when it I.T.A.Nos. 2739 to 2749/Mds/2014 :- 8 -: came to notice that certain credits and investments are not properly explained.
We have heard both the parties and perused the material on record. There are certain additions made by the Assessing Officer on the basis of information which was available with the assessing authorities in the form of earlier returns of income and financial statement attached thereof. In our opinion, additions could be made in the case of completed assessments (assessment years which were not abated) only on the basis of incriminating material found during the course of search. Admittedly, the Assessing Officer did not found any incriminating material warranting addition. Being so, we are inclined to direct the Assessing Officer to make addition only on the basis of incriminating material if any found during the course of search. Further, regarding addition on account of cash disclosed by Sheeba Prince for the assessment year 2011-12, if the said cash belongs to her family members, addition cannot be made in the hands of the assessee (Sheena Prince) if it is disclosed in their respective return of income. Regarding jewellery, we make it clear that if the assessee has already disclosed jewellery in the regular return of income, it cannot be considered for addition in assessment completed u/s.143(3) of the Act r.w.s.153A of the Act. Accordingly, we direct the I.T.A.Nos. 2739 to 2749/Mds/2014 :- 9 -:
Assessing Officer to pass fresh order in the light of the order of the Special bench in the case of All Cargo Global Logistics Ltd (cited supra). With these observations, all these appeals filed by the assessees are remitted to the Assessing Officer to make addition only on the basis of seized material found during course of search action in these cases. Thus, the appeals of the assessees are partly allowed for statistical purposes.
Coming to the the issue in this appeal is with regard to levy of penalty u/s.271(1) (c) of the Act.
The facts of the case are that the assessee is one of the Director of M/s. Prince Gem & Jewellery Pvt. Ltd. During the course of assessment proceedings the Assessing Officer observed that the assessee’s two minor sons i.e Antony Prince and Joseph Prince claimed to have received gifts by cash of �2,65,000/- each from one Mr. T.P.
Joseph but when asked to substantiate the gifts with supporting evidences, the assessee furnished copies of gift deeds devoid of address of the donor. However, the assessee agreed for the addition of �5,30,000/- subject to not to initiate penalty proceedings. Since the assessee did not prove the genuineness of the gift, the same was added to assessee’s total income and penalty proceedings u/s.271(1)
I.T.A.Nos. 2739 to 2749/Mds/2014 :- 10 -:
(c) of the Act were initiated and levied penalty of �1,61,733/-.
Aggrieved the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
On appeal, the Commissioner of Income Tax (Appeals) confirmed the penalty by observing that the assessee failed to offer satisfactory explanation before the Assessing Officer with regard to the gifts amounting to �5,30,000/- supposed to have been received from one Mr. T.P. Joseph. It was also seen that the assessee could not substantiate with any cogent evidence to prove the genuineness of the gifts. Therefore, the conclusion drawn by the Assessing Officer are based on facts and sound logic. During the appellate proceedings also the Authorised Representative failed to substantiate with any evidence with regard to the genuineness of the gifts. In view of the above, the action of the Assessing Officer is justified in levying the penalty of �1,61,733/- u/s.271(1) (c) of the Act. As per the provisions of section 271(1) (c), if the Assessing Officer or the Commissioner of Income Tax or Commissioner of Income Tax (Appeals), in the course of any proceedings under the Act, is satisfied that any person has either concealed the particulars of his income or (ii) furnished inaccurate particulars of such income, he may, in addition to the tax, if any payable, direct that such person shall pay by way of penalty a sum I.T.A.Nos. 2739 to 2749/Mds/2014 :- 11 -: which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of concealment of particulars of his income or the furnishing of inaccurate particulars of such income. The Explanations of 271(1)(c) have been held to be an integral part of the above section. While considering an appeal against an order made u/s. 271(1)(c), which is required to be examined is the record which the Assessing Officer imposing penalty had before him and if that record can sustain the finding that there has been concealment, that would be sufficient to sustain the penalty. The assessee has returned the income at �93,02,420/- (including agricultural income of �2,50,000/-). However, during the assessment proceedings, the Assessing Officer has made additions to the tune of �5,30,000/- to the returned income of �93,02,420/- while doing so, the Assessing Officer has asked the assessee to furnish the fresh confirmation from the donor and to prove identity and capacity f the donor. The assessee has not proved identity and capacity of the donor with any cogent evidence before the Assessing Officer. As per the explanation 1 contained in Section 271(1) (c) which is self-contained in the sense that it treats every difference between the reported and the assessed income as concealed income. But, at the same time, it provides the criteria where penalty would be warranted. Penalty was I.T.A.Nos. 2739 to 2749/Mds/2014 :- 12 -: leviable for concealment, where an assessee fails to offer any explanation for the difference or offers an explanation, which was found to be false. In these cases, penalty can be treated as mandatory. Against this, the assessee is in appeal before us.
We have heard both the parties and perused the material on record. In this assessment year, the assessee said to have received cash of �5,30,000/- as gift in the name of minor sons (i.e �2,65,000/- each from his sons Joseph Prince and Antony Prince). The assessee was not able to properly explain the source. The Assessing Officer stated that the gift has been received by the assessee from a person who is a close relative to him. According to the Assessing Officer, the assessee filed a gift deed on the stamp paper of �20/- which was purchased on 27.05.2006 and this document does not have complete address of the donor and the gift which was issued in the form of cash only. The assessee explained that he received the gift from Shri. T.P.
Joseph who is his close relative. After verifying original return of income, it was clear that there is no incriminating material found in the course of search. Being so, in our opinion that the assessment cannot be made u/s.153A of the Act without any incriminating material found during the course of search and levying of penalty on the basis of some record which was filed by the assessee is not proper. Being so, I.T.A.Nos. 2739 to 2749/Mds/2014 :- 13 -: in our opinion levy of penalty is not justified consequent to assessment u/s.143(3) r.w.s 153A of the Act. Accordingly, the penalty is deleted.
In the result, the appeal of the assessees in 2740, 2741, 2742, 2743, 2744, 2746, 2747, 2748, 2749/Mds/2014 are partly allowed for statistical purposes and ITA No.2745/Mds/2014 is allowed.
Order pronounced on Thursday, the 25th day of June, 2015, at Chennai.