The D C I T -3(1), INDORE v. Shri Deepak Kalra , Indore

ITA 679/Ind/2019 | 2009-2010
Pronouncement Date: 08-03-2021 | Result: Dismissed

Appeal Details

RSA Number 67922714 RSA 2019
Assessee PAN ALGPK9075L
Bench Indore
Appeal Number ITA 679/Ind/2019
Duration Of Justice 1 year(s) 9 month(s) 2 day(s)
Appellant The D C I T -3(1), INDORE
Respondent Shri Deepak Kalra , Indore
Appeal Type Income Tax Appeal
Pronouncement Date 08-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 08-03-2021
Last Hearing Date 18-02-2021
First Hearing Date 18-02-2021
Assessment Year 2009-2010
Appeal Filed On 06-06-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE HONBLE KUL BHARAT JUDICIAL MEMBER AND HONBLE MANISH BORAD ACCOUNTANT MEMBER ITA NO.679/IND/2019 ASSESSMENT YEAR 2009-10 DCIT-3(1) INDORE : REVENUE V/S SHRI DEEPAK KALRA 6 SHRIRAM NAGAR RTO ROAD INDORE : ASSESSEE PAN : ALGPK9075L REVENUE BY SHRI HARSHIT BARI SR.DR ASSESSEE BY SHRI S.S. SHEETAL ADV. DATE OF HEARING 18.02 .2021 DATE OF PRONOUNCEMENT 03 . 0 3 . 202 1 O R D E R PER MANISH BORAD A.M THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE O F THE REVENUE PERTAINING TO ASSESSMENT YEAR 2009-10 IS DI RECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX(APPEAL S)-3 (IN SHORT LD. CIT] BHOPAL DATED 14.03.2019 WHICH IS ARISIN G OUT OF THE ORDER DEEPAK KALRA ITA NO.679/IND/2019 2 U/S 271(1)(C) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 31.03.2018 FRAMED BY JCIT (OSD) CENTRAL-I INDORE. 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALT Y U/S 271(I)(C) OF RS.1 43 45 000/-WITHOUT APPRECIATING T HE FACTUAL POSITION OF THE ISSUE? 2. WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN THE DELETING THE PENALTY OF RS. 1 43 45 000/- WITHOUT CONSIDERING THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF M/S MAK DATA (P) LTD (2 013) 38 TAXMAN.COM 48 THOUGH THE SAME WAS SPECIFICALLY R ELIED UPON IN THE PENALTY ORDER? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALT Y AMOUNTING TO RS. 1 43 45 000/- MADE BY THE AO UNDER SECTION 271(I)(C) OF THE I.T. ACT BY NOT APPRECIATI NG THE FACT THAT THE DISCLOSURE OF INCOME WAS THE RESULT OF SEA RCH OPERATION ON THE ASSESSEE AND NOT VOLUNTARY? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A) WAS JUSTIFIED IN IGNORING THAT IF IN PURSUANT TO SEARCH OPERATION PENALTY IS NOT LEVIED FOR UNEARTH ING OF ADDITIONAL INCOME DETECTED DURING A SEARCH IT WOUL D BE AN OPEN INCENTIVE TO ALL TO CONCEAL THEIR INCOME TILL SUCH TIME IT IS DETECTED BY THE REVENUE? DEEPAK KALRA ITA NO.679/IND/2019 3 5. THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT. FRO M OR OTHERWISE AMEND THE ABOVE GROUNDS OF APPEAL. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND BELONGS TO APOLLO (NRK) GROUP OF INDORE. MAJOR SOURCE OF HIS INCOME ARE FROM CIVIL C ONTRACT COLONIZER AND BUILDER. SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WERE CARRIED OUT ON APOLLO GROUP INDORE INCLUDING THE AS SESSEE ON 21.9.2012. DURING THE SEARCH PROCEEDINGS ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SHARE APPLICATION MONEY OF RS .3.69 CRORES GIVEN BY M/S. AIREN ADITYA DEV P. LTD TO M/S EXOT IC EXPORTS P. LTD (WHERE THE ASSESSEE IS THE DIRECTOR AND SHARE HOLDE R). NO INCRIMINATING MATERIAL RELATING TO THE ALLEGED TRAN SACTION WAS FOUND DURING THE COURSE OF SEARCH. STILL THE ASSESSEE AC CEPTED TO OFFER THE ALLEGED AMOUNT TO TAX AND THE SAME WAS INCLUDED IN THE TOTAL INCOME OF RS.4 31 58 695/- DECLARED IN THE INCOME T AX RETURN FOR ASSESSMENT YEAR 2009-10 FILED IN COMPLIANCE TO THE NOTICE U/S 153A ON 30.12.2014. THE ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT WAS COMPLETED ON 24.03.2015 ACCEPTING THE RETUR NED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF LD. A.O INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FO R THE ADDITIONAL DEEPAK KALRA ITA NO.679/IND/2019 4 INCOME OFFERED IN THE INCOME TAX RETURN. SHOW CAUS E NOTICE WAS ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT. 4. DURING THE PENALTY PROCEEDINGS ASSESSEE MADE SUB MISSIONS PRAYING FOR NOT TO LEVY THE PENALTY BUT THE LD. A.O WAS NOT SATISFIED AND HE LEVIED THE PENALTY AT RS.1 43 45 000/-. 5. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) AND CHALLENGED THE LEVY OF PENALTY ON LEGAL GROUND CONT ENDING THAT PROPER SHOW CAUSE NOTICE WAS NOT ISSUED AND ON MERI TS RELIED ON VARIOUS DECISIONS CONTENDING THAT PENALTY WAS NOT L EVIABLE SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE ASSESSEE HAS SUO MOTO OFFERED THE ADDITIONAL INCOME FOR TAX. LD. CIT(A) WAS SATISFIED WITH THE SUBMISSIONS AND D ELETED THE PENALTY BOTH ON LEGAL GROUND AS WELL AS ON MERITS O BSERVING AS FOLLOWS:- 4.1 . GROUND NO.1 TO 2 :- THROUGH THESE GR O UND OF APPEAL THE APPELLANT HAS CHALLENGED THE PENALTY PROCEEDINGS U / S 271 (1)(C). THE ASSESSEE HAS FILED RETURN OF INCOME U / S 153A FOR AY 2009-10 ON 30.12.2014 DECLARING TOTAL INCOME AT RS. 4 31 58;695/- W HICH WAS ASSESSED AT RS. 4 31 58 700/- INCLUDING ADDITIONAL INCOME OFFERED OF RS. 4 22 00 000 /-. THE AO HAS ACCEPTED THE RETURN OF INCOME FILED BY THE APPELLANT. THE AO ON 24.03.2015 AND 20.02.2018 ISSUED NOTICE U / S 271(I)(C) . IN COMPLIANCE DEEPAK KALRA ITA NO.679/IND/2019 5 THE AR OF THE ASSESSEE ATTENDED AND SUBMITTED THAT PENALTY NOT TO BE IMPOSED FOR CONCEALMENT OF INCOME. THE AO C O NSIDERI N G THE ENTIRE FACTS O N RECORD LEVIED PENALTY U / S 271(I)(C) . IN AY 2009-10. IT HAS BEEN HELD BY HONBLE M.P. HIGH COURT WHICH HAS BEEN U PHELD BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS SURESH CHANDRA MITTAL [2001] 25 1 ITR 9 THAT WHERE THE ASSESSEE FILED REVISED RETURN SHOWING HIGHER IN COME AFTER SEARCH AND NOTICE FOR RE-OPENING OF ASSESSMENT TO PU RCHASES PEACE AND AVOID LITIGATION THE DEPARTMENT SIMPLY RESTED ITS CO NCLUSION ON THE ACT OF VOLUNTARILY SURRENDERED DONE BY THE ASSESSEE IN GOOD FAITH. HIGH COURT WAS JUSTIFIED IN HOLDING THAT NO PENALTY COULD BE LEVIED. IN VIEW O F THE ABOVE FACTS THE AO IS NOT JUSTIFIED IN IMPOSING THE PENALTY ON THE RETURNED INCOME. APPELLANT DURING APPELLATE PR O CEEDINGS SUBMITTED THAT HONBLE ITAT IN D O RE VIDE ITA NE 85 TO. 87/LNDJ2017 DATED 10.01.2019 HAS DELETED ENTIRE PENALTY F O R A.Y. 2007-08 2008-09 AND 2010 -11 ON THE SAME FACTS AND GROUNDS. LOOKING TO THE FACTS AND CIRCUMS TANC ES EVIDENCE AND ORDER OF THE ITAT THE PENALTY IMPOSED BY T HE AO AMOUNTING TO RS.I 43 45 000 /- -IN AY 2009-10 U / S 271(1)(C) IS DELETED. THEREFORE THE APPEAL ON THESE GROUNDS IS ALLOWED . 6. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL CHALLENGING THE FINDING OF LD. CIT(A). 7. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D SUPPORTING THE ORDER OF LD. A.O AND ALSO SUBMITTED THAT IF THE SEARCH U/S 132 OF THE ACT HAD NOT TAKEN PLACE THE A SSESSEE WOULD HAVE NOT OFFERED THE ADDITIONAL INCOME TO TAX. DEEPAK KALRA ITA NO.679/IND/2019 6 8. PER CONTRA LD. COUNSEL FOR THE ASSESSEE REFERRIN G TO THE PAPER BOOK RUNNING PAGE 1 TO 180 FILED ON 30.7.2020 AND A LSO SUPPORTING THE ORDER OF LD. CIT(A) SUBMITTED THAT THE PENALTY PROCEEDINGS NEEDS TO BE QUASHED AS LEGAL GROUND BEING BAD IN LA W SINCE SPECIFIC CHARGE WAS NOT MENTIONED IN THE SHOW CAUSE NOTICE AS HELD BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V/S KULWANT SINGH BHATIA IN ITA NO.9 OF 2018 (M.P) DATED 9.5.20 18. SIMILAR VIEW WAS TAKEN BY THIS TRIBUNAL IN ASSESSEES OWN CASE F OR ASSESSMENT YEARS 2007-08 2008-09 2010-11 2012-13 & 2013-14 ITA NOS 85 TO 90/IND/2017 DATED 10.1.2019. 9. WITH REGARD TO THE MERIT OF THE CASE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO INCRIMINATING MATERIAL W AS FOUND DURING THE COURSE OF SURVEY RELATING TO THE ALLEGED SURRENDER MADE BY THE ASSESSEE THEREFORE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT APPLICABLE. HE ALSO SUBMITTED THAT LD. A.O WAS HIMSELF NOT CERTAIN ABOUT THE ADDITIONS TO BE MADE IN THE C ORRECT HANDS AS HE MADE SIMILAR ADDITION FOR THE ALLEGED SHARE APPL ICATION MONEY RECEIVED IN THE HANDS OF THE COMPANY NAMELY M/S EXO TIC EXPORTS P. LTD ALSO. IN OTHER WORDS ON ONE HAND THE LD. A.O H AS LEVIED THE DEEPAK KALRA ITA NO.679/IND/2019 7 PENALTY FOR THE ALLEGED SHARE APPLICATION MONEY DIS CLOSED IN THE RETURN OF INCOME BY THE ASSESSEE AND ON THE OTHER H AND HAS MADE THE ADDITION ON THE SAME BASIS IN THE CASE OF M/S E XOTIC EXPORTS P. LTD (IN THE BOOKS OF WHICH THE SHARE APPLICATION MO NEY WAS RECEIVED). THE ADDITION MADE IN THE HANDS OF M/S EX OTIC EXPORTS P. LTD WAS SUBSEQUENTLY DELETED. FURTHER LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISIONS REFERRED BY HIM BEFORE LD. CIT(A) INCLUDING THE JUDGMENT OF HON'BLE HIGH COURT OF ANDHRA PRADES H IN THE CASE OF V.V. PROJECTS AND INVESTMENTS PVT. LTD V/S DCIT300 ITR 40 AND THE CO-ORDINATE BENCH KOLKATA IN THE CASE OF DCIT V/S M/S SHREE SALASAR PROPERTIES & FINANCE PVT LTD IN ITA NO 108 1/KOL/2013 `ORDER DATED 15.4.2016. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE DEC ISIONS REFERRED AND RELIED BY LD. COUNSEL BEFORE LD. CIT(A) AND ALS O BEFORE US. REVENUES SOLE GRIEVANCE IS AGAINST THE FINDING OF LD. CIT(A) DELETING THE PENALTY MADE U/S 271(1)(C) OF THE ACT AT RS.1 4 3 45 000/- ON THE INCOME SURRENDERED DURING THE COURSE OF SEARCH AND OFFERED TO TAX IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 1 53A OF THE ACT. SEARCH WAS CARRIED OUT AT THE PREMISES OF THE ASSES SEE ON DEEPAK KALRA ITA NO.679/IND/2019 8 21.09.2012 BEING PART OF THE APOLLO (NRK) GROUP IN DORE. THERE WAS A TRANSACTION OF SHARE APPLICATION MONEY OF RS. 3.90 CRORES RECEIVED BY M/S EXOTIC EXPORTS P. LTD (WHERE THE AS SESSEE IS DIRECTOR AND SHARE HOLDER) WHICH WAS RECEIVED FROM M/S AIREN ADITYA DEV P. LTD. THIS FACT IS NOT DISPUTED AT TH E END OF REVENUE THAT NO INCRIMINATING MATERIAL WITH REGARD TO THE A LLEGED TRANSACTION OF SHARE APPLICATION MONEY RECEIVED BY M/S EXOTIC EXPORTS P. LTD WAS FOUND DURING THE COURSE OF SEARC H CARRIED OUT U/S 132 OF THE ACT. HOWEVER ASSESSEE ACCEPTED TO O FFER TO TAX THE ALLEGED SHARE APPLICATION MONEY AND OTHER AMOUNT OF RS.53 00 000/- TOTALING TO RS.4 22 00 000/- AS ADDI TIONAL INCOME AND THE SAME WAS DULY DISCLOSED IN THE INCOME TAX R ETURN FILED ON 30.12.2014. THE RETURNED INCOME WAS ACCEPTED BY TH E LD. A.O AS ASSESSED INCOME. THE LD. A.O INITIATED THE PENALTY PROCEEDINGS AND LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT ON THE ADDITIONAL INCOME OFFERED AT RS.4 22 00 000/-. 11. NOW THE QUESTION BEFORE US ARE THAT WHETHER UNDER GIVEN FACTS THE ACTION BY LD. A.O OF LEVY OF PENALTY U/S 271(1 )(C) OF THE ACT WAS JUSTIFIED ON LEGAL GROUND AS WELL AS ON MERITS. DEEPAK KALRA ITA NO.679/IND/2019 9 12. THOUGH IT IS THE REVENUES APPEAL BUT IN THE FI NDING OF LD. CIT(A) THE ASSESSEES APPEAL HAS BEEN ALLOWED BOTH ON LEGAL AND MERITS THEREFORE ADJUDICATION ABOUT THE LEGALITY O F PENALTY PROCEEDING IS NECESSARY AT THIS JUNCTURE. 13. WE WILL FIRST TAKE UP THE LEGAL GROUND. WE FIN D THAT FOLLOWING SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE:- TO SHRI DEEPAK KALRA 6 SHRIRAM NAGAR INDORE 452001 NOTICE UNDER SECTION 274 READWITH SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE A.Y. 2008-09 IT APPEARS TO ME THAT YOU :- HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME . YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 03 .30 PM ON 10/04/2015 AND SHOW CAUSE WHY AN ORDER IMPOSING PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT 1961. IF YOU DO NOT WISH TO AV AIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUG H AUTHORISED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING OR B EFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271(1)(C). SD/- (RAM KUMAR YADAVA) DY.COMMISSIONER OF INCOME TAX (CENTRAL)-1 INDOR E DEEPAK KALRA ITA NO.679/IND/2019 10 14. FROM GOING THROUGH THE ABOVE SHOW CAUSE NOTICE IT IS VERY MUCH CLEAR THAT THE LD. A.O FAILED TO STRIKE OFF ON E OF THE SPECIFIC CHARGE LEVIED AGAINST THE ASSESSEE WHICH THUS VIOLA TES THE PRINCIPLE OF NATURAL JUSTICE AVAILABLE TO THE ASSESSEE AS PRO VIDED U/S 274 OF THE ACT. IN SIMILAR SET OF FACTS IN ASSESSEES OW N CASE FOR ASSESSMENT YEARS 2007-08 2008-09 2010-11 2012-13 & 2013-14 THIS TRIBUNAL IN ITA NOS 85 TO 90/IND/2017 DATED 1 0.1.2019 DELETED THE LEVY OF PENALTY BY HOLDING THE PENALTY PROCEEDINGS AS VOID AB INITIO RELYING ON THE JUDGMENT OF HON'BLE HIGH COURT IN T HE CASE OF KULAWANT SINGH BHATIA (SUPRA) OBSERVING AS FOLLOWS:- 6. WE FIND THAT THE NOTICE ISSUED FOR LEVY OF PENAL TY DATED 24.3.2015 DO NOT CONTAIN THE SPECIFIC CHARGE. THE NOTICE DATED 24.3. 2015 IS REPRODUCED AS UNDER FOR THE SAKE OF CLARITY: TO M/S SM AND SM RESORTS-N-HOTELS INTERNATIONAL LTD NRK BUSINESS PARK B1 PU-4 3 RD FLOOR. SCHEM NO.54 BEHIND MANGAL CITY INDORE 452001 NOTICE UNDER SECTION 274 READWITH SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE DEEPAK KALRA ITA NO.679/IND/2019 11 A.Y. 2011-12 IT APPEARS TO ME THAT YOU :- HAVE CONCEALED THE PARTICULARS OF YOUR INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME . YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 03 .30 PM ON 10/04/2015 AND SHOW CAUSE WHY AN ORDER IMPOSING PENALTY ON YOU SHOULD NOT BE MADE UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT 1961. IF YOU DO NOT WISH TO AV AIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD IN PERSON OR THROUG H AUTHORISED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING OR B EFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECTION 271(1)(C). SD/- (RAM KUMAR YADAVA) DY.COMMISSIONER OF INCOME TAX (CENTRAL)-1 INDOR E 7. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF PCIT-I VS KULWANT SINGH BHATIA (SUPRA) IN PARAS 9 TO 11 HAS HELD AS U NDER:- 9. CONSIDERING THE AFORESAID THE TRIBUNAL HAS HELD THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT OF 1961 I S NOT SUSTAINABLE IN LAW AS NO SPECIFIC CHARGE WAS LEVIED IN PENALTY SHOW-CAUSE NOTICES AND ALLOWED THE APPEAL NO.ITA (APPEAL) 414/ IND/2012 AND OTHER FIVE APPEALS. 10. IT IS SUBMITTED THAT THE PROVISION OF SECTION 271(1)(C) TOGETHER WITH EXPLANATION 5(A) BRINGS THE ASSESSEE LIABLE FO R IMPOSITION OF PENALTY IN RESPECT OF ADDITIONAL INCOME WHICH HAS BEEN OFFERED FOLLOWING THE SEARCH AND THE ASSESSING OFFICER IS S ATISFIED THAT IT IS A FIT CASE FOR INITIATION OF PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) AND 271(AA) OF THE ACT OF 1961. THE LEARN ED TRIBUNAL HAS COMMITTED AN ERROR IN ALLOWING THE APPEAL AND SETTI NG ASIDE THE WELL REASONED ORDER OF PENALTY. SHE ALSO SUBMITS THAT TH E ITAT ERRED IN DEEPAK KALRA ITA NO.679/IND/2019 12 NOT CONSIDERED THE SATISFACTION RECORDED BY THE ASS ESSING OFFICER. SHE DURING THE COURSE OF THE ARGUMENTS VERY SPECIFI CALLY ADMITTED THAT TAX EFFECT IN THIS CASE IS ONLY RS.2 84 090/- FOR THE ASSESSMENT YEAR 2002-03. THE TOTAL AMOUNT OF PENALTY FOR THE A SSESSMENT YEAR IN ALL THESE APPEALS FOR THE ASSESSMENT YEARS 2002- 03 TO 2007-08 IS RS.24 39 753 AND THE LEARNED ITAT HAS DECIDED ALL T HESE APPEALS BY COMPOSITE ORDER DATED 11.8.2017. IT IS COVERED I N PARA 5 OF THE CIRCULAR NO.21 OF 2015 DATED 10.12.2015 AND THEREF ORE THE PRESENT APPEALS HAVE BEEN FILED. 11. ON DUE CONSIDERATION OF THE ARGUMENTS OF THE LE ARNED COUNSEL FOR THE APPELLANT SO ALSO CONSIDERING THE FACT THAT TH E GROUND MENTIONED IN SHOW-CAUSE NOTICE WOULD NOT SATISFY THE REQUIREM ENT OF LAW AS NOTICE WAS NOT SPECIFIC WE ARE OF THE VIEW THAT TH E LEARNED TRIBUNAL HAS RIGHTLY RELYING ON THE DECISION OF CIT V/S. MAN JUNATHA COTTON GINNING FACTORY (SUPRA) AND CIT V/S. SSA'S EMERALD MEADOWS (SUPRA) RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER OF PENALTY IMPOSED BY THE AUTHORITIES. NO SUB STANTIAL QUESTION OF LAW IS ARISING IN THESE APPEALS. ITA.NO(S).9/201 8 10/2018 11/2018 12/2018 13/2018 AND 14/2018 FILED BY THE APPELLANT HAVE NO MERIT AND ARE HEREBY DISMISSED. 8. THE REVENUE HAS NOT BROUGHT ANY CONTRARY MATER IAL SUGGESTING THAT A VALID NOTICE WAS SERVED ON THE ASSESSEE FOR INITIAT ING PROCEEDINGS U/S 271(1)(C ) OF THE ACT. THIS TRIBUNAL IS BOUND BY TH E JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. RESPECTFULLY FOLLOWING THE SAME PENALTY PROCEEDINGS INITIATED BY THE A.O VIDE NOTICE DATED 24.3.2015 ARE HELD TO BE BAD IN LAW AND CONTRARY TO THE JUDGMENT OF THE HON BLE M.P. HIGH COURT IN THE CASE OF PCIT-I VS. KULWANT SINGH BHATIA (SUPRA) . ACCORDINGLY THE IMPUGNED PENALTY ORDER IS HEREBY QUASHED BEING BAD IN LAW. DEEPAK KALRA ITA NO.679/IND/2019 13 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN ITA NO.789/IND/2017 IS ALLOWED. 15. LD. DEPARTMENTAL REPRESENTATIVE FAILED TO CONTR OVERT THE FACT THAT THE LEGAL ISSUE RAISED IN THE INSTANT APPEAL I S SQUARELY COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE. WE THEREFORE RESPECTFULLY FOLLOWING THE SAME ARE OF TH E CONSIDERED VIEW THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE P ENALTY ON LEGAL GROUND BY HOLDING THE PENALTY PROCEEDINGS AS VOID AB INITIO AS THE LD. A.O FAILED TO LEVEL THE SPECIFIC CHARGE AGAINST THE ASSESSEE. THUS ON THE LEGAL GROUND ITSELF THE APPEAL OF REVEN UE DESERVES TO BE DISMISSED. 16. HOWEVER FOR ACADEMIC PURPOSE WE WOULD LIKE TO D EAL WITH THE MERITS OF THE CASE. NO INCRIMINATING MATERIAL WAS FOUND DURING THE CURSE OF SEARCH RELATING TO THE ALLEGED SURRENDER O F INCOME MADE BY THE ASSESSEE IN THE INCOME TAX RETURN. THE ASSESSE E SUO MOTO OFFERED THE ADDITIONAL INCOME IN THE RETURN AND PAI D TAXES THERE ON. IT IS ALSO AN ESTABLISHED FACT IN THE INSTANT CASE THAT LD. A.O WAS NOT SURE THAT WHICH ASSESSEE HAS CONCEALED THE PART ICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. EVEN THOUGH DEEPAK KALRA ITA NO.679/IND/2019 14 THE SHARE APPLICATION MONEY WAS RECEIVED BY M/S EXO TIC EXPORTS P LTD AND DULY REFLECTED IN ITS BOOKS OF ACCOUNTS BUT LD. A.O ACCEPTED THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN HI S INDIVIDUAL CAPACITY AND LEVIED THE PENALTY ALSO. SIMULTANEOUS LY THE LD. A.O ALSO MADE ADDITION IN THE HANDS OF M/S EXOTIC EXPOR TS P LTD FOR THE SIMILAR AMOUNT OF SHARE APPLICATION MONEY AND INITI ATED THE PENALTY PROCEEDINGS. IN THE GIVEN FACTS AND CIRCUMSTANCES ITSELF THE REVENUE FAILS TO SUCCEED AND THE ACTION OF INITIATI NG PENALTY BY LD. A.O IS UNJUSTIFIED. 17. WE ALSO OBSERVE THAT THE HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF V.V. PROJECTS AND INVESTMENTS PVT. LTD IN SIMILAR SET OF FACTS HELD THE ACTION OF LD. A.O OF INVOKING POWER U/S 271(1)(C) OF THE ACT AS UNJUSTIFIED OBSERVING AS FO LLOWS:- THE HON 'BLE HIGH COURT IN THE CASE OF V. V. P R OJE CT S AND INVESTMENTS PVT. LTD. VS. D C IT 300 ITR 40 (A.P.) HELD THA T THE LANGUAGE OF SUBSECTION(1) OF SECTION 271 ITSELF MAKES IT CLEAR THAT RECORDING OF SATISFA CTION OF CONCEALMENT O/INCOME. BY A PERSON 'OR FURNISHING INACCURATE PARTICULARS O F SUCH INCOM E IS A CONDITION PRECEDENT FOR LEVYING PENALTY INVOKING THE POWER UN DER SECTION 271 (1/ THE AO HAS TO FORM HIS .OWN OPINION AND RECORD HIS SATISFA CTION OF CONCEALMENT A/INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOM E BEFORE INITIATING PENALTY PROCEEDINGS UNDER S. 271 (1)(C) OF THE ACT. IT IS ALSO CLEAR THAT SUCH SATIS FACTION OF DEEPAK KALRA ITA NO.679/IND/2019 15 THE AO MUST BE SPELT OUT IN THE ORDER OF ASSESSMENT ITSELF BUT CANNOT BE ASSUMED FROM THE ISSUE OF A NOTICE UNDER S. 2 7 1 (1)(C) OF THE ACT. FAILURE TO RECORD SUCH SATISFACTION AMOUNTS TO A JURISDICTIONAL DEFECT WHI CH CANNOT BE CURED. IT IS ALSO RELEVANT TO NOTE THAT WHETHER THE ASSESSEE HAS CONC EALED HIS INCOME OR HAS D ELIBERATELY FURNISHED INACC UR ATE PARTICULARS THEREOF IS ESSENTIALLY. A FIND I NG OF FACT WHICH HAS TO BE SPELT OUT BYWAY A/RECORDING THE SAT I SFACTION OF THE AO AS REQUIRED UNDER S. 271 (1) OF THE ACT. THEREFORE IN THE ABSENCE OF SUCH A FINDING IN THE ASSESSMENT ORDER NO PENALTY PROCEEDINGS CAN BE INITIATED: THE DECLARATION OF INCOME MADE BY THE. ASSESSEE IN REVISED RETURN AND THE ;EXPLANATION THAT IT HAD DONE SO TO BUY PEACE WITH THE DEPARTMENT AND TO AVO ID PROTRACTED LITIGATION. W A S ACCEPTED BY THE AD WITHOUT RAISING ANY OBJECTION. A DMI TTEDLY THE AO ACCEPTED THE RETURN FILED BY THE ASSESSEE AFTER VERIFICATION OF THE INFORMATION FILED AND BOOKS OF ACCOUNT PRODUCED. THUS; THE ASSESSMENT WAS COMPLETE D ACCEPTING THE RETURNED NET INCOME AS PER THE REVISED RETURN OF INCOME. NO T ONLY THE ASSESSMENT ORDER DID' NOT REFLECT ANY SATISFACTION AS REQUIRED UNDER S. 271 (L){C) OF THE ACT BUT EVEN' THE' SHOW-CAUSE NOTICE' WAS SILENT 'WITH REFERENCE TO TH E SATISFACTION ARRIVED AT BY THE AO WITH REFERENCE TO THE CONCEALMENT OF INCOME BY THE ASSESSEE. NOTHING HAS BEEN PLACED BY T HE REVENUE TO SHOW ' THAT ANY OTHER MATERIAL W A S AVAILABLE WITH THE A 0 TO THE' EFFECT THAT THE ASSESSEE' CONCEALED THE' INCOME . IN THE CI RCUMSTANCES; IT IS NOT OPEN TO THE AD TO INVOKE THE POWER UNDER S. 271(1)(C) LEVYING P ENALTY. '. IN THE CASE OF M / S. BHANDARI CONSTRUCTION COMP A NY DCIT ITAT PUNE BENCH HELD THAT SO FAR AS TH E ADDITION REGARDING LOAN OBTAINED FROM MR. SONI IS CONCERNED. IT IS A FACT THAT THE ASSESSEE HAS ADMITTED AND NOT C ONTESTED THE ' ADDITION IN THE QUANTUM APPEAL. THE LOAN OBTAINED' F ROM' MR. SONI WAS ALREADY REFLECTED IN THE BALANCE SHEET 'FILED ALONGWITH THE ORIGINAL RETURN OF INCOME WHICH WAS FILED PRIOR TO THE DATA OF SEARCH. MERELY BECAU SE T HE ASSESSEE DID NOT CONTEST THE ADDITION AND ACCEPTED THE SAME PENALT Y U / S.271 (1)(C) 'OF THE INCOME TAX IN DEEPAK KALRA ITA NO.679/IND/2019 16 THE GIVEN FACTS AND CIRCUMST A NCES OF THE CASE IS NOT. L EVIABLE:. PENALTY IS L EVIABLE ONLY IF ANY INCRIMI N A T ING MATERIAL IS FOUND DURING THE COURSE OF SEARCH. 18. IN ALMOST IDENTICAL FACTS SIMILAR VIEW WAS TAKE N BY THE CO- ORDINATE BENCH KOLKATA IN THE CASE OF DCIT V/S M/S SHREE SALASAR PROPERTIES & FINANCE LTD ITA NO.1081/KOL/2013 ORDER DATED 15.4.2016 (SUPRA) AND RELEVANT EXTRACT OF THE FINDING OF TRIBUNAL IS REPRODUCED BELOW WHICH HAS BEEN ARRIVED AT AFTER RE LYING ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF SUDHARSHAN SILKS & SAREES V/S CIT (2008) 300 ITR 205 AND OTHER JUDGMENTS OF CO- ORDINATE BENCHES:- 8.4. FROM THE ABOVE DEFINITION IT IS VERY CLEAR TH AT THERE SHOULD BE SOME UNDISCLOSED INCOME IN THE FORM OF MONEY BULLION ET C OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND THE SAME SH OULD BE FOUND IN THE COURSE OF SEARCH. IT IS UNDISPUTED THAT NOTHING INC RIMINATING WAS FOUND DURING THE COURSE OF SEARCH BY THE SEARCH PARTY WIT H REGARD TO THE ASPECT OF SHARE CAPITAL AND LOANS WHICH WERE ULTIMATELY OF FERED TO TAX BY THE ASSESSEE IN THE SUM OF RS. 1.75 CRORES. HENCE IT GO ES TO PROVE BEYOND DOUBT THAT THE OFFER OF UNDISCLOSED INCOME OF RS. 1 .75 CRORES WAS MADE VOLUNTARILY BY THE ASSESSEE WITHOUT ANY DETECTION B Y THE DEPARTMENT AND ACCORDINGLY THE ARGUMENT OF THE LEARNED DR THAT BUT FOR THE SEARCH THIS INCOME WOULD NOT HAVE BEEN OFFERED DOES NOT HOLD AN Y WATER AND DESERVES TO BE DISMISSED. IT IS ALREADY WELL SETTLED THAT TH OUGH THE INCOME IS NOT DISCLOSED IN THE RETURN FILED U/S 139(1) OF THE ACT BUT DULY DISCLOSED IN THE PETITION FILED U/S 132(4) OF THE ACT FOLLOWED BY TH E FILING OF RETURN IN RESPONSE TO SECTION 153A OF THE ACT AND TAXES PAID THEREON THEN THE DEEPAK KALRA ITA NO.679/IND/2019 17 ASSESSEE WOULD NOT BE INVITED WITH THE LEVY OF PENA LTY. WE FIND THAT IF THE ARGUMENT OF THE LEARNED DR THAT SINCE THE ASSESSEE HAD NOT OFFERED THE SAID INCOME IN RETURN FILED U/S 139(1) OF THE ACT T HEREBY LEVY OF PENALTY IS IN ORDER IS TO BE ACCEPTED THEN IT WOULD MAKE THE IMMUNITY PROVISIONS CONTEMPLATED U/S 271AAA(2) OF THE ACT REDUNDANT. TH E LEGISLATURE IN ITS WISDOM HAD GIVEN A THOUGHTFUL CONSIDERATION ON THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ASSESSEE WOULD NOT BE INVITED WITH THE LEVY OF PENALTY PURSUANT TO THE SEARCH SUBJECT TO F ULFILLMENT OF CERTAIN CONDITIONS STIPULATED IN THE SAID SECTION . HENCE I N VIEW OF THE ABOVE WE HOLD THAT THE LEVY OF PENALTY IS NOT AUTOMATIC AND ASSESSEE IS CLEARLY ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY. 19. EXAMINING THE FACTS OF THE INSTANT CASE IN THE LIGHT OF ABOVE DECISIONS WE FIND THAT IN THE CASE OF ASSESSEE PEN ALTY WAS LEVIED ON THE ADDITIONS MADE FOR UNEXPLAINED SHARE APPLICATIO N MONEY AND UNSECURED LOANS. NO INCRIMINATING MATERIAL WAS FOU ND DURING THE COURSE OF SEARCH RELATING TO THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE DURING THE COURSE OF SEARCH WHICH WAS SUBS EQUENTLY HONOURED BY DISCLOSING IN THE RETURN OF INCOME AND PAYING TAXES THEREON. TRANSACTION OF ALLEGED SHARE APPLICATION M ONEY WAS DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS. UNDER THESE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE RATIO LAID DOWN I N THE ABOVE REFERRED DECISIONS IS SQUARELY APPLICABLE ON THE IS SUE BEFORE US AND WE THEREFORE RESPECTFULLY FOLLOWING THE SAME ARE OF THE CONSIDERED DEEPAK KALRA ITA NO.679/IND/2019 18 VIEW THAT ON MERITS ALSO THE REVENUE FAILS TO SUCCE ED AS THE LD. A.O WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S 271(1) (C) OF THE ACT. SINCE THE REVENUE FAILED TO SUCCEED ON BOTH LEGAL G ROUND AS WELL AS GROUND ON MERITS NO INTERFERENCE IS CALLED FOR IN THE FINDING OF LD. CIT(A). ALL EFFECTIVE GROUNDS RAISED BY THE REVENU E ARE DISMISSED. 20. IN THE RESULT APPEAL OF THE REVENUE STANDS DISM ISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 08.03.2021. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 8 TH MARCH 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR ITAT INDORE/GUARD FILE. BY ORDER ASSTT.REGISTRAR I.T.A.T. INDORE