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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI MANISH BORAD
आयकर अपीलीय अिधकरण, अहमदाबाद �यायपीठ आयकर अपीलीय अिधकरण अहमदाबाद �यायपीठ ‘सी’ अहमदाबाद। अहमदाबाद। आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण अहमदाबाद �यायपीठ अहमदाबाद �यायपीठ अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER SN IT(SS)A/ITA No. AY Appellant Respondent 1 ITA No. 2004-05 ACIT, Shri Raghubhai B. Vaghela, 1034/Ahd/2013 Central Circle 1 (4), 8, riddhi Siddhi Bunglows, Ahmedabad Sanand, Ahmedabad-382210 PAN : AFGPV 8496 N 2 ITA No. 2009-10 Revenue Assessee 1035/Ahd/2013 3 ITA No. 2010-11 Revenue Assessee 1036/Ahd/2013 4 IT(SS)A No. 2004-05 Assessee Revenue 153/Ahd/2014 5 IT(SS)A No. 2009-10 Assessee Revenue 154/Ahd/2014 6 IT(SS)A No. 2010-11 Assessee Revenue 155/Ahd/2014 7 IT(SS)A No. 2004-05 Assessee Revenue 36/Ahd/2016 8 IT(SS)A No. 2005-06 Assessee Revenue 37/Ahd/2016 9 IT(SS)A No. 2009-10 Assessee Revenue 38/Ahd/2016 10 IT(SS)A No. 2010-11 Assessee Revenue 39/Ahd/2016 Revenue by : Ms. Vibha Bhalla, CIT-DR Assessee by : Shri Sakar Sharma, AR सुनवाई क� तार�ख/Date of Hearing : 03/05/2017 घोषणा क� तार�ख /Date of Pronouncement: 11/05/2017 आदेश/O R D E R PER BENCH :
This is a bunch of 10 appeals, out of which first six appeals, i.e. ITA Nos. 1034 to 1036/Ahd/2013 & IT(SS)A Nos. 153 to 155/Ahd/2014 are the cross- appeals filed by the Revenue and assessee respectively against the respective order of the CIT(A)-I, Ahmedabad of even date 31.01.2013 for AYs 2004-05, 2009-10 & 2010-11 and rest of the four appeals by assessee, i.e., IT(SS) Nos. 36 to 39/Ahd/2016, are directed against the respective order of the CIT(A)-3, Ahmedabad of even date 05.11.2015 for AYs 2004-05, 2005-06, 2009-10 & 2010-
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This bunch of appeals was heard together since common issues are involved and are disposed of by this consolidated order for the sake of convenience.
ITA Nos. 1034 to 1036/Ahd/2013 – Revenue’s appeals
First we deal with Revenue’s appeal for AYs 2004-05, 2009-10 & 2010-11 vide ITA Nos. 1034 to 1036/Ahd/2013.
We find that the Revenue is in appeal before us for the respective assessment years being aggrieved by the order of ld. CIT(A) in deleting the addition of Rs.30,00,000/- (unaccounted income) for AY 2004-05, Rs.15,00,000/- (unaccounted investment) for AY 2009-10 and Rs.19,06,800/- (unaccounted commission income) for AY 2010-11. We find that prima-facie these appeals of the Revenue are not maintainable in view of CBDT Circular No. 21/2015 in F.No.279/Misc. 142/2007-ITJ (Pt) dated 10th December 2015, vide which it has been provided that if the tax effect by virtue of the Commissioner of Income-tax (Appeals)’s order is below Rs. 10 lacs, then that order would not be challenged before the Tribunal in further appeal. The Board has provided exemptions at clause (8) of the Instructions wherein it has been provided that these instructions will not be applicable, if vires of any provisions has been quashed by impugned order or addition was made on some audit objections or the addition relates to undisclosed foreign assets/bank accounts, etc. We find these cases of Revenue do not fall within the exemption clause and the tax in each case is less than Rs.10 lacs; therefore, these appeals are not maintainable and hence dismissed.
In the result, appeals filed by the Revenue are dismissed. IT(SS)A Nos. 153 to 155/Ahd/2014 – Assessee’s appeals
Now we take-up assessee’s appeals for AYs 2004-05, 2009-10 & 2010-11 vide ITA Nos. 1034 to 1036/Ahd/2013.
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Following grounds are raised by the assessee:- AY 2004-05 1. The ld. CIT(A) erred on facts and in law in confirming addition of Rs.5,00,000/- on account of unaccounted investment in share trading activity without any basis. 2. The ld. CIT(A) erred on facts and in law in confirming addition of Rs.20,560/- on account of unexplained expenditure in agricultural activities. AY 2009-10 1. The ld. CIT(A) erred on facts and in law in confirming addition of Rs.6,50,000/- on account of unaccounted investment in land without any basis and justification. 2. The ld. CIT(A) erred on facts and in law in confirming addition of Rs.77,010/- on account of unexplained expenditure in agricultural activities. AY 2010-11 1. The ld. CIT(A) erred on facts and in law in confirming addition of Rs.2,93,000/- on account of unaccounted commission income without any basis and justification. 2. The ld. CIT(A) erred on facts and in law in confirming addition of Rs.95,070/- on account of unexplained expenditure in agricultural activities.
The assessee has filed these appeals late by 351 days. From the record, it is observed that the assessee has filed application for condonation of delay along with affidavit. The relevant abstract of the affidavit is as under:- “1. That I have preferred appeal in IT(SS)A No 155/Ahd/ 2014 in Form No 36 for A.Y. 2010-11 on 09.04.2014 which is delayed by 351 days as per notice issued to me by the Hon'ble Tribunal. 2. That the delay in filing of appeal is due to bonafide and justified reasons. I submit that I received order of the Ld. CIT (A) on 22.02.2013 and therefore, had time to appeal before the Hon'ble Tribunal upto 23rd April,2013. Before I could file appeal, I came to know that Assessing officer had already preferred an appeal before the Hon'ble Tribunal in IT(SS)A No 1036/Ahd/2013 on 12.04.2013 and I was told by my accountant that since Assessing Officer has preferred an appeal, issues arising from the order of the Ld. CIT (A) could be argued before the Hon'ble Tribunal as and when the hearing of the department's appeal is fixed. Due to these reasons, I could not prefer appeal to the Hon'ble Tribunal before the due date. Later on when penalty orders were received and when I approached the chartered accountant for filing of appeal before the Ld. CIT (A) against penalty orders, the chartered accountant inquired as about the appeal before the Hon'ble
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Tribunal and at this stage he informed me that irrespective of department's appeal, separate appeal was required to be filed against the additions sustained by the Ld. CIT (A) and he advised me to file appeal before the Tribunal. Accordingly, appeal in IT(SS)A No 155/Ahd/20-14 has been preferred by me albeit after the expiry of the specified time period. I submit that I am not a literate person and have no knowledge of the taxation law and was solely dependent on the accountant who is also not conversant with the appellate procedures due to which due to which filing of appeal got late. I, therefore, submit that delay in filing of appeal is due to bonafide reasons. 3. That affidavit is made to appraise the Hon'ble Tribunal about the facts leading to delay in filing of appeal and to consider my request for condonation for delay in filing of appeal in the interest of justice. 4. That I am not a literate person and have no knowledge of the English Language and therefore, contents of this affidavit have been briefed to me in the presence of Notary Public in the Gujarati Language which I understand properly.”
The ld. Counsel for the assessee argued the condonation application on the basis of assessee's condonation application and affidavit and submitted that the delay in filing of appeals was due to bonafide and justified reasons due to ignorance of law in filing the application before the Tribunal.
The ld. Departmental Representative, on the other hand, objected to the condonation of delay in filing the appeals.
We have heard both the parties and perused the records. It is pertinent to note here that these appeals are heard for limited purpose i.e. on condonation application filed by the assessee and not on merit. It has been noticed that on identical set of facts the Co-ordinate Bench of this Tribunal in ITA Nos. 1238 & 1239/Del/2011 in the case of M/s. Shree Balaji Woollen Mills vs. ACIT, vide order dated 26.11.2012 has rejected the condonation application of the assessee, by relying on various judgments in the cases of viz. P.K. Ramachandran v. State of Kerala, AIR 1998 SC 2276; Sri Venkatesa Paper & Boards Ltd vs. DCIT, 98 ITD 200; Vinay Extraction (P) Ltd vs. Vijay Khanna [2004] 271 ITR 450 (Guj), Nihalkaran vs. CWT [1989] 175 ITR 14 etc. The
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relevant finding of the Tribunal in the case of M/s. Shree Balaji Woollen Mills (supra) is reproduced as under :- “3. In the instant case also the assessee seems to be quite negligent by not taking the necessary steps for filing the appeal within the time prescribed by the statute .The conduct of the assessee reveals that the assessee takes the condonation of delay provision as granted. The assessee did not care to submit any request for condonation of delay , even when it was brought specifically to his notice at the time of filing of appeal itself. In granting the indulgence and condoning the delay, it must be proved beyond the shadow of doubt that the assessee was diligent and was not guilty of negligence whatsoever. The sufficient cause within the contemplation of the limitation provision must be a cause which is beyond the control of the party invoking the aid of the provisions. In the case of Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361, the Hon'ble Apex Court held that the cause for the delay in filing the appeal, which by due care and attention, could have been avoided, cannot be a sufficient cause within the meaning of the limitation provision. The rule of limitation also contains a rule of justice, especially where a person chooses not to take up requisite legal remedies for an inordinate length of time and without reasonable cause, the Tribunal should apply the rule of limitation. Seekers of justice must come with clean hands. In the instant case, we do not find any reasonable cause for condoning the delay. 4. In the light of aforesaid decisions, the burden is on the party claiming condonation of delay to place before the court, in clear and explicit terms, all facts on which the party relies, so that the court can come to the conclusion that it is not a case of want of diligence or inaction on the part of the assessee. Inaction or want of diligence on the part of the assessee would not entitle him to the benefit of the provisions of section 253(5) of the Act. In the case under consideration, admittedly, the assessee has not shown any action or vigilance for a period of more than 902 days after the impugned order was served upon . In the facts of the present case, the assessee has not proved any inaction or negligence on the part of a third party, much less have they pleaded any action or vigilance on their own part. 5. In view of the foregoing, especially when the assessee has not come with clean hands before us and has also failed to establish with cogent and proper evidence that there existed sufficient cause for not presenting the appeal within the stipulated period, delay of 902 days in filing appeal, can not be condoned.. As the appeal is barred by limitation, it deserves to be rejected on this ground alone. Therefore , we decline to admit the quantum appeal in ITA no.1238/Del./2011.”
We are aware that adopting a liberal view in condoning delay is one of the guiding principles in the realm of belated appeals, but liberal approach cannot be equated with a licence to file appeals at will-disregarding the time
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limits fixed by the statutes. No doubt that assessees are entitled to wait until the last date of the limitation for filing of the appeal, but when they allow the limitation to expire and come forward with a explanation enumerating reasonable causes for not filing the appeal within the time prescribed under the statute, then the causes, so shown, must establish that because of some event or circumstances arose before limitation expired. Except for the inaction and negligence of the assessee, there are no other reasons for filing a belated appeal. We have avoided using adjectives before the words inaction and negligence, which are generally used by the higher forums of judiciary when they find that delay is result of total lack of prudence. Timely action is the essence of day- today activities of human being. A farmer not sowing his fields in time after the rains has to suffer. Principles of nature are equally applicable to human behaviour, including the judicial system. In the case of the assessee, the reason mentioned in the affidavit cannot be a reasonable cause from any angle, because the plea taken by him that he was told by his consultant that “since the Assessing Officer has preferred an appeal, issues arising from the order of ld. CIT(A) could be argued as and when the hearing of the Department’s appeal is fixed” do not stand for the reason that the assessee is now at the second stage of filing the appeal. He was very well assisted by the consultant to file the appeal before the ld. CIT(A) against the order of the ld. AO. The reason said by the assessee cannot stand for in this circumstances and it is just an afterthought to get immunity from the delay the appeal. We, therefore, respectfully following the foresaid decision of the Tribunal in the case M/s. Shree Balaji Woollen Mills (supra), our discussion made above and in view of the fact that the assessee has failed to establish with cogent and proper evidence that there existed sufficient cause for not presenting the appeal within the stipulated period, delay of 351 days in filing the appeal cannot be condoned; thus, we reject the application for condonation of delay. Since we have rejected the assessee's condonation application, the appeals of the assessee are dismissed in limine. We are not expressing any opinion on the merit of the case.
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In the result, appeals filed by the assessee are dismissed in limine.
IT(SS)A No. 36 to 39/Ahd/2016 – Assessee’s appeals
This leaves us with assessee’s appeals vide IT(SS)A No. 36 to 39/Ahd/2016 for AYs. 2004-05, 2005-06, 2009-10 & 2010-11. The only grievance of the assessee in these appeals is against the penalty imposed by the Assessing Officer of Rs. 1,56,168/-, Rs. 9,364/-, Rs. 1,72,619/- u/s 271(1)(c) of the Act for AY 2004-05, 2005-06 and 2009-10 respectively and Rs.29,300/- levied u/s. 271AAA of the Act for AY 2010-11.
First we take-up the appeals of the assessee against the order of ld. CIT(A) confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act.
Briefly stated facts commonly for all the three years are that a search under Section 132 of the Act was carried out on 04.03.2010, being a group case of B. Nanji Group of cases. Accordingly, a notice under Section 153A of the Act was issued and served upon the assessee. In response thereto assessee filed return of income for all the three assessment years. Order under Section 143 r.w.s. 153A(1)(b) was passed after making certain additions. In the appeal before the ld. CIT(A), assessee got substantial relief and on the additions sustained, the ld. Assessing Officer imposed penalty under Section 271(1)(c) of the Act. For better understanding of the demand raised and relief granted by the ld. CIT(A), we are giving hereunder the following chart:-
AY Addition made by Assessing Officer Relief Granted by ld. CIT(A) Addition confirmed Unexplained Unaccounted Unaccounted Unaccounted Unexplained Unaccounted Unaccounted Unaccounted Unexplained Unaccounted Unaccounted investment Income profit expenses for investment Income profit expenses for investment profit expenses for agriculture agriculture agriculture 2004-05 10,00,000 30,00,000 6,08,990 50,120 10,00,000 30,00,000 1,08,990 25,060 - 5,00,000 25,060 2005-06 20,00,000 - - 64,436 20,00,000 - - 32,218 - - 32,218 2009-10 21,50,000 - - 1,54,020 15,00,000 - - 77,010 6,50,000 - 77,010
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From the perusal of above chart, we observe that ld. CIT(A) has granted major relief to the assessee against the quantum addition. However, against the penalty imposed under Section 271(1)(c) of the Act, the assessee could not succeed before the ld. CIT(A).
Aggrieved, the assessee is now in appeal before the Tribunal.
Ld. Authorized Representative for the assessee submitted that only two types of addition have been sustained by the ld. CIT(A). Firstly, as regards agricultural expenses, it is not disputed that the assessee is an agriculturist and is regularly earning income from agriculture. Ld. Assessing Officer disallowed 20% of the total agricultural income for want of proper evidence of expenses incurred in connection with some agricultural expenses. The ld. CIT(A) has scaled down these disallowance to further 10%. In such circumstances, assessee should not be penalized under Section 271(1)(c) of the Act as the disallowances are made merely on estimated basis. Secondly, with regard to the additions sustained on account of investment in AY 2004-05, the ld. CIT(A) has upheld the addition of Rs.5,00,000/- and penalty has been imposed on this amount for the alleged addition in investment in trading of shares. The quantum addition was made by completely ignoring the fact, repeatedly submitted before the lower authorities, that the assessee was never engaged in the share trading business either in the year prior to the year under consideration and in subsequent years and the confusion arose only because of resemblance of name with that of the appellant in the seized document which led to the conclusion that the appellant was indulged in share trading. Further, no enquiries whatsoever nature was made by the Assessing Officer with the share-broker, with whom the transactions were affected in order to establish that the appellant was the person who carried out the trading in shares. Ld. Counsel further added that if the addition was made for unexplained investment in shares for the unaccounted profits, then the Assessing Officer should have
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given the credit for the loss in the share trading appearing in the seized documents. Day-to-day books of accounts, financial statements, balance-sheet and capital account which were furnished by the assessee were never doubted. Therefore, the assessee should not be penalized for concealment of particulars of income or furnishing of inaccurate particulars under Section 271(1)(c) of the Act. Ld. Counsel further submitted that with regard to AY 2009-10, wherein the unexplained investment of Rs.6,50,000/- was sustained by the ld. CIT(A) and this addition was sustained in similar fashion as was made in AY 2004-05 treating the assessee as a dealer in share trading. Ld. Counsel referred to the submissions made above for AY 2004-05 and prayed for deleting the penalty under Section 271(1)(c) of the Act.
The ld. Departmental Representative, on the other hand, relied on the orders of the lower authorities.
We have heard the rival contentions and perused the record placed before us. In these three appeals the assessee is aggrieved by the order of the ld. CIT(A) confirming penalty under Section 271(1)(c) of the Act. We find that in the case of assessee, a search under Section 132 of the Act was carried out on 04.03.2010. Assessee filed return in response to notice under Section 153A of the Act and declared income including agricultural income. Ld. Assessing Officer made additions over and above the retuned income on the basis of alleged statements of the assessee given during the course of search but retracted thereafter. The ld. CIT(A) gave major relief to the assessee by deleting most of the additions. Ld. Assessing Officer thereafter imposed penalty under Section 271(1)(c) of the Act on the additions sustained by the ld. CIT(A). From the perusal of records and submissions of ld. Counsel, we observe that penalty has been commonly imposed for two types of additions sustained viz. (i) unexplained expenses for agriculture and (ii) unaccounted profit/unexplained investment in share business.
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21 With regard to additions sustained for unexplained expenses for agriculture, we notice that the assessee is undisputedly holding the agricultural land and earning income from agricultural operation. He has disclosed the income from agriculture for all the three years under consideration and has provided copy of bills and copy of 7/12 extract before the assessing authority. The ld. Assessing Officer called for the evidence in respect of bills and vouchers for expenses incurred for cultivation. In absence of such evidence, ld. Assessing Officer made lump-sum disallowance of 20% of the agricultural income shown by the assessee. When the matter came up before the ld. CIT(A), this addition was scaled down again on lump-sum basis to 10% of the agricultural income. From going through these series of facts, we notice that nowhere any details filed by the assessee has been held to be incorrect by the lower authorities with the support of any evidence which can show that the assessee has concealed any particulars of income or furnished inaccurate particulars of income. It is evident that if an assessee who is holding agricultural land and has earned income and if such net agricultural income is not disputed, then certainly some expenses must have been incurred to earn the agricultural income. It is well known fact that the agriculturists are not so well-versed in keeping the regular accounting of day-to-day expenses of agricultural operations, but that does not mean that the expenses have not been incurred. In the case of assessee for all the three assessment years, an ad-hoc disallowance has been made by ld. Assessing Officer and some relief has been granted by the ld. CIT(A). Certainly, in these circumstances, assessee do not deserve to be visited with penalty under Section 271(1)(c) of the Act for concealment of particulars of income or furnishing of inaccurate particulars of income. We accordingly delete the penalty imposed under Section 271(1)(c) of the Act for all the three years calculated on the sustained addition on account of unexplained expenses for earning agricultural income.
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Now, we take up the issue relating to the penalty imposed on explained investment in share business. Without reiterating the facts mentioned by ld. Counsel, we observe that, for AY 2004-05 the addition for unaccounted profit in share business made by ld. Assessing Officer at Rs.6,08,990/- was reduced to Rs.5,00,000/- by ld. CIT(A). This sustained addition was towards unaccounted investment in share trading. We notice that since the initiation of search proceedings and till the issue reached the level of ld. CIT(A), the assessee has repeatedly submitted that the he has never entered into any share transactions and the documents seized during the course of search related to another person of similar name “Shri Raghuvirsingh D. Vaghela”, whereas his name is “Raghubhai B. Vaghela”. The assessee also took an additional plea that all the seized documents showing the share business also revealed that there has been a loss incurred in the share business and therefore, though the addition of Rs.5,00,000/- has wrongly been sustained but even if it has been sustained so, then the credit of loss incurred in share business should have been allowed to be set off against this income.
Similarly, for AY 2009-10, the addition for unexplained investment of Rs.21,50,000/- made by the ld. Assessing Officer has been reduced to Rs.6,50,000/- by ld. CIT(A) by accepting that the assessee received Rs.15,00,000/- from Shri Bhikhubhai N. Padsala and the remaining amount was treated as unexplained investment, which again was alleged to be invested into share business.
Now, while examining the above additions vis-à-vis the penalty under Section 271(1)(c) of the Act, we notice that the assessee has repeatedly submitted that he is not into the share business and the documents seized do not pertain to him as his name is Raghubhai B. Vaghela and the name appearing in the seized documents relating to share business is Shri Raghuvirsingh D. Vaghela. Further, the ld. Assessing Officer in order to ride over the provisions of Section 271(1)(c) of the Act should have collected some
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more evidence like copy of demat account, proof of share trading business in earlier or subsequent years, linkage of share trading transactions in the bank account etc. Further it is also well evident that the major additions made by the ld. Assessing Officer has either been deleted by ld. CIT(A) or sustained to a very little extent, which proves that ld. Assessing Officer’s working of calculating the unaccounted income was not up to the mark. Most of the additions which have been scaled down by the ld. CIT(A) were on the basis of verification of bank statement showing amount received from other parties which were enough to cover the unaccounted investment. In these total series of facts, there is no firm conclusion drawn by the ld. Assessing Officer in order to satisfy the conditions for imposing penalty under Section 271(1)(c) of the Act. We are, therefore, of the considered view that the assessee, in the given case, has furnished details which were mostly found correct by ld. CIT(A) and the additions of concealed income was mainly made on hypothetical basis and also not firmly concluded by giving set off of the loss in share trading business appearing in the seized documents. We are, therefore, of the view that the penalty imposed under Section 271(1)(c) of the Act on the sustained additions for AYs 2004-05 and 2009-10 related to unaccounted profit and unexplained investment at Rs.5,00,000/- and Rs.6,50,000/- respectively need to be deleted. We order accordingly.
In the result, appeal of the assessee for AYs 2004-05, 2005-06 and 2009-10 against the order of ld. CIT(A) confirming penalty under Section 271(1)(c) of the Act are allowed.
Now we take up IT(SS)A No.39/Ahd/2016 for AY 2010-11, wherein the assessee has challenged the order of the ld. CIT(A) confirming the penalty of Rs.29,300/- under Section 271AAA of the Act.
The brief facts of the this case relating to AY 2010-11 are that during the course of search under Section 132 of the Act conducted on 04.03.2010, the
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assessee disclosed an amount of Rs.25,00,000/- as commission earned from land deal. However, at the time of filing the return of income, assessee merely offered sum of Rs.3,00,000/- on the land deal between M/s. B. Nanji Enterprise Ltd and the farmers of Vejelaka and Siyal lands. The ld. Assessing Officer completed the assessment by making addition of Rs.22,00,000/- towards unaccounted commission. In appeal before the ld. CIT(A), this addition for unaccounted commission was restricted to Rs.2,39,000/-. The ld. Assessing Officer thereafter imposed penalty under Section 271AAA of the Act at Rs.29,300/- @ 10% of Rs.2,39,000/-. Appeal against the order under Section 271AAA of the Act by the assessee before the ld. CIT(A) did not bring any relief and the penalty was confirmed by ld. CIT(A). Now, the assessee is in appeal before the Tribunal.
The ld. Counsel for the assessee submitted that the assessee has correctly disclosed the commission income of Rs.3,00,000/- and has paid due taxes thereon. Ld. CIT(A) has hypothetically calculated the commission income by applying the rate between 1 to 2% on the alleged transactions of Rs.2,96,60,000/-. He further contended that when the ld. CIT(A) himself has mentioned the rate of commission between 1 to 2% and 1% of the alleged land deal amount of Rs.2.97 crores, which assessee has calculated at Rs.3,00,000/- only, then the amount worked out by him at Rs.5,93,200/- by applying 2% is a mere estimation. Therefore, no penalty should have been imposed under Section 271AAA of the Act.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities.
We have heard the rival contentions and perused the record placed before us. The issue before us relates to penalty under Section 271AAA of the Act at Rs.29,300/- by ld. Assessing Officer on the sustained addition of Rs.2,93,000/- by ld. CIT(A). From the perusal of provision of Section 271AAA of the Act, we find that provision of Section 271AAA(1) relating to computation
ITA Nos.1034to1036 Ahd 13, ITSS 153to155 Ahd 14 & ITSS 36to39 of 16- Assessee- Raghubhai B. Vaghela AY : 2004-0, 2009-10 & 2010-11 - 14 –
of penalty amount @ 10% will not apply to the assessee if he has fulfilled three conditions mentioned in sub-clause (2) of Section 271AAA of the Act, viz, firstly he admits the undisclosed income during the course of search and specifies the manner in which such income has been earned; secondly he substantiates the manner in which the undisclosed income was derived; and thirdly, he pays the tax, together with interest, if any, in respect of the undisclosed income. Here in the case of the assessee, ld. Assessing Officer has imposed the penalty on the sustained addition of Rs.2,93,000/-. He has nowhere mentioned about the non- fulfillment of above referred three conditions embedded in the provisions of Section 271AAA of the Act. It seems that he has casually applied the rate of 10% on the sustained addition.
From the perusal of the assessment order, we notice that ld. Assessing Officer first of all had a suspicion that the unaccounted commission income of the assessee is at Rs.1,30,16,500/-. Thereafter, going through the submissions of the assessee, he was satisfied that the unaccounted income of the assessee is at Rs.22,00,000/-, which he calculated after giving set off ofRs.3,00,000/- (being the income disallowed by assessee) against the original disclosure of Rs.25,00,000/- made by the assessee during the course of search. When this issue travelled to the file of the ld. CIT(A), he calculated the unaccounted commission income by applying the rate of 2% on the alleged land deal of Rs.2,96,60,000/-. From going through the above details, we find that the ld. Assessing Officer has also changed his opinion before finalizing the assessment order and again ld. CIT(A) has taken a basis of commission income by accepting that the normal commission charges are between 1 to 2% in the land deals and the assessee has only shown 1%, but he concluded it applying 2% of the alleged land deal of Rs.2,96,60,000/-. In the above given facts, it is well established that the ld. Assessing Officer has not taken the basis of undisclosed income surrendered during the course of search a Rs.25,00,000/- as the basis for computing the penalty under Section 271AAA of the Act. He has rather taken the basis of sustained addition of Rs.2,93,000/-. Once the Assessing Officer has
ITA Nos.1034to1036 Ahd 13, ITSS 153to155 Ahd 14 & ITSS 36to39 of 16- Assessee- Raghubhai B. Vaghela AY : 2004-0, 2009-10 & 2010-11 - 15 –
missed the starting point provided in Section 271AAA(2) of the Act relating to admission of undisclosed income under Section 132(4) of the Act, then the amount disclosed by the assessee in the return of income should be taken as basis. In the case of assessee, the assessee has admitted to have earned unaccounted commission income during the course of search proceedings and has declared Rs.3,00,000/- has commission earned from the land deal specified above and has paid due taxes along with interest, then in our considered view, as he has satisfied all the three conditions of Section 271AAA(2) of the Act, then he does not deserve to be visited with penalty under Section 271AAA of the Act at Rs.29,300/-. We accordingly delete the same. In the result, this appeal of the assessee is also allowed.
In the combined result, assessee’s appeal bearing IT(SS)A No. 36 to 39/Ahd/2016 are allowed, assessee’s appeal bearing IT(SS)A Nos. 153 to 155/Ahd/2014 are dismissed and the Revenue’s appeal bearing ITA Nos. 1034 to 1036/Ahd/2013 are dismissed.
Order pronounced in the Court on 11th May, 2017 at Ahmedabad.
Sd/- Sd/-
(RAJPAL YADAV) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated, 11/05/2017 **bt आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. � यथ� / The Respondent. 3. संबं$धत आयकर आयु&त / Concerned CIT आयकर आयु&त ( अपील ) 4. / The CIT(A)- 5. �वभागीय ��त�न$ध , आयकर अपील�य अ$धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड0 फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ$धकरण ITAT, Ahmedabad