The DCIT, Central Circle-2(2),, Ahmedabad v. Ahura Restaurant Pvt.Ltd.,, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER DATE OF HEARING : 21/1/2011 DRAFTED ON: 25/1/ 2011 APPEALS/COS BY SL.NOS IT(SS)A NOS/ CO NOS. ASSESSMENT YEAR APPELLANT RESPONDENT 1. 311/AHD/2010 2006-07 THE DCIT CC-2(2) AHMEDABA D AHURA RESTAURANT PVT.LTD. 4-B VASANT VIHAR SOCIETY MITHAKHALI CIRCLE NAVRANGPURA AHMEDABAD PAN AABCA 9983G 2. CO.145/AHD/ 2010 ( O/O IT(SS)311/AHD/10 ) 2006-07 AHURA RESTAURANT PVT.LTD. THE DCIT CIRCLE-2(2) AHMEDABAD 3. 312/AHD/2010 2006-07 M/S. MAZDA RESTAURANT PVT.LTD. AHMEDABA D PAN : AABCM 0490 L THE DCIT CIRCLE-2(2) AHMEDABAD 4. CO.146/AHD/ 2010 ( O/O IT(SS)311/AHD/10 ) 2006-07 THE DCIT CIRCLE-2(2) AHMEDABA D M/S.MAZDA RESTAURANT PVT.LTD. ASSESSEE BY: SHRI K.MADUSUDAN SR. D.R. REVENUE BY: SHRI P.M. MEHTA O R D E R PER BENCH : THESE APPEALS HAVE BEEN FILED BY THE REVENUE WHIC H HAVE EMANATED FROM THE ORDERS OF LEARNED CIT(APPEALS)-II I AHMEDABAD BOTH IDENTICALLY DATED 22/1/2010 AND THE RESPONDENT-ASSE SSEES HAVE FILED THE CROSS OBJECTIONS:- IT(SS)A NOS.312 & 3 13/AHD/10 (BY REVENUE) AND CO NOS.145 & 146/AHD/2010 (BY ASSESSEE) THE DCIT VS. MAZDA RESTAURANT PVT.LTD. ASST.YEAR 2006-07 - 2 - 2. IN BOTH THE CASES REVENUE HAS CHALLENGED THE DE LETION OF PENALTY LEVIED U/S.271(1) OF THE I.T.ACT OF IDENTICAL AMO UNT OF RS.3 36 600/-. 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT 1961 DATED 2 5/06/2009 AND THE ASSESSMENT ORDER PASSED U/S.153A OF THE I.T.ACT R.W .S. 143(3) DATED 29/12/2008 WERE THAT A SEARCH U/S.132 WAS CARRIED OUT IN THE GROUP CASES OF MIRCH MASALA ON 04/08/2006. AS PER THE PROVISIO NS OF SECTION 153A OF THE I.T.ACT A NOTICE WAS ISSUED ON 19/3/20 07 AND IN COMPLIANCE A RETURN WAS FILED ON 11/5/2007 DECLARING A TOTAL I NCOME OF RS.41 87 498/-. IT WAS SPECIFICALLY NOTED BY THE ASSESSING OFFICER THAT THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A CON STITUTED THE UNDISCLOSED ADDITIONAL INCOME OF RS.10 LACS WHICH WAS NOT SHOWN IN THE ORIGINAL RETURN OF INCOME. IT IS PERTINENT TO MENTION THAT THE RETURNED INCOME OF RS.41 87 498/- WAS FINALLY ASSESSED BY THE ASSESSIN G OFFICER AS PER THE IMPUGNED ASSESSMENT ORDERS WITHOUT ANY CHANGE. ALL THESE FACTS ARE IN RESPECT OF M/S.AHURA RESTAURANT PVT.LTD. LIKEWISE IN THE OTHER CASE I.E. M/S.MAZDA RESTAURANT PVT.LTD. THE CASE WAS ALSO CO VERED BY THE SAME SEARCH AND THEREUPON A NOTICE U/S.153A OF THE I.T.A CT WAS ISSUED ON 19/3/2007 AND IN COMPLIANCE RETURN WAS FILED ON 11 /5/2007 DECLARING INCOME OF RS.16 97 080/-. IN THIS CASE AS WELL A N ADDITIONAL INCOME OF RS.10 LACS WAS DECLARED AND THE ASSESSMENT WAS COMP LETED U/S.153A R.W.S. 143(3) OF THE I.T.ACT ON THE SAME DECLARED I NCOME WITHOUT ANY ADDITION. IT(SS)A NOS.312 & 3 13/AHD/10 (BY REVENUE) AND CO NOS.145 & 146/AHD/2010 (BY ASSESSEE) THE DCIT VS. MAZDA RESTAURANT PVT.LTD. ASST.YEAR 2006-07 - 3 - 3. HOWEVER IN THESE CASES THE ASSESSING OFFICER H AS RECORDED THAT THE ADDITIONAL INCOME WAS DISCLOSED ONLY AS A RESUL T OF SEARCH THEREFORE THE ASSESSEE IS LIABLE FOR PENALTY. AS PER THE PE NALTY ORDER THE ALLEGATION OF THE ASSESSING OFFICER WAS THAT DURING THE COURSE OF SEARCH CERTAIN INCRIMINATING DOCUMENTS WERE FOUND SHOWING EXCESSIV E SALARY PAYMENT. ON DETECTION THE ASSESSEE HAS OFFERED AN ADDITIO N INCOME OF RS.10 00 000/- BUT SINCE THE OFFER WAS ONLY WHEN T HE CONCEALMENT WAS DETECTED THEREFORE CONCEALMENT PENALTY WAS HELD A S LEVIABLE IN BOTH THE CASES. 4. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHEREIN IT WAS PLEADED THAT THE DATE OF SEARCH WAS 4 TH AUGUST-2006 AND THE DUE DATE OF FILING OF THE RETURN WAS DECEMBER-2006 AND IN BETWEEN ON 16/12/2006 BOOKS OF ACCOUNT HAVE BEEN AUDITED AND T HE ADDITIONAL INCOME WAS DULY INCORPORATED. IT HAS ALSO BEEN EXP LAINED THAT IN COMPLIANCE TO THE NOTICE A RETURN WAS FILED ON 11. 5.2007 ON RS.41 87 498/- WHICH WAS ACCEPTED AS SUCH AND THE A SSESSMENT WAS MADE ON THE DECLARED INCOME. THE LEARNED CIT(APPEALS) W AS CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND FINALLY CONCLUD ED AS UNDER:- THE AO HAD APPARENTLY FOUND THAT THE DISCR4EPANCI ES POINTED OUT AT THE TIME OF SEARCH WHILE RECORDING THE STAT EMENT U/S.132(4) OF SHRI RUSHAD THE M.D. WERE SATISFACTORILY EXPLA INED IN LINE WITH HIS STATEMENT THEN THAT HE WOULD SUBMIT CLARIFICATI ON AFTER VERIFICATION. THUS THE AO DID NOT FIND ANY EXCES S CLAIM OF EXPENSES ON SALARY ETC. NOR DID HE FIND THAT THER E WERE UNACCOUNTED RECEIPTS FROM OUTSIDE CATERING. THE RE TURN OFOR A.Y. 2006-07 WAS NOT DUE AT THE TIME OF SEARCH. IN SUCH FACTS AND CIRCUMSTANCES IT CANNOT BE SAID THAT THERE WAS CON CEALMENT OF IT(SS)A NOS.312 & 3 13/AHD/10 (BY REVENUE) AND CO NOS.145 & 146/AHD/2010 (BY ASSESSEE) THE DCIT VS. MAZDA RESTAURANT PVT.LTD. ASST.YEAR 2006-07 - 4 - INCOME OR FURNISHING OF INACCURATE PARTICULARS. ON A HOLISTIC CONSIDERATION OF THE FACTS/DETAILS ON RECORD THE L EVY OF PENALTY U/S.271(1)(C) CANNOT BE SUSTAINED. IT IS THEREFOR E DELETED. 5. WITH THIS BRIEF BACKGROUND WE HAVE HEARD BOTH T HE SIDES. IT IS WORTH TO MENTION AT THE OUTSET THAT THE QUESTION OF LEVY OF CONCEALMENT PENALTY IN SUCH CIRCUMSTANCES WHEN THE RETURNED INC OME HAS BEEN ACCEPTED WITHOUT ANY CHANGE AND THE DUE DATE OF FIL ING AN INCOME TAX RETURN HAS ALSO NOT BEEN EXHAUSTED BY THAT DATE ON WHICH A SEARCH ACTION WAS CONDUCTED THEN THE COURTS HAS TAKEN A VIEW THA T IF THE DISCLOSURE HAS BEEN MADE IN THE RETURN AND WITHOUT ANY VARIATION O R ADDITION IT WAS ACCEPTED THEN THE PENALTY FOR CONCEALMENT OF INCOM E MUST NOT BE LEVIED. THE RESPONDENT-ASSESSEE HAS PLACED RELIANCE ON FEW DECISIONS BEFORE THE LEARNED CIT(APPEALS) AND ALSO THE EXPLAINED THE REA SON FOR OFFERING THE ADDITIONAL INCOME AT THE TIME OF SEARCH. IN THE PR ESENT CASE THE ADMITTED FACTUAL POSITION IS THAT A SEARCH WAS CONDUCTED ON 04/08/2006 AND IN COMPLIANCE OF NOTICE U/S.153A OF THE I.T.ACT RETURN WAS FILED ON 11/05/2007 DECLARING AN INCOME OF RS.41 87 498/- IN THE CASE OF M/S.AHURA RESTAURANT PVT.LTD. AND RS.16 97 080/- I N THE CASE OF MAZDA RESTAURANT PVT.LTD.]. FOR THE YEAR UNDER CONSIDER ATION THE DUE DATE OF FILING OF A RETURN WAS DECEMBER-2006 AND THE ACCOUN TS HAVE ALSO BEEN AUDITED ON 16/12/2006. THE SAID RETURN WAS THE ON LY RETURN FILED BY THE ASSESSEE WHICH WAS ACCEPTED BY THE ASSESSING OFFICE R AND AS PER THE ASSESSMENT ORDER PASSED U/S.15A R.W.S.143 THE RETU RNED INCOME WAS ASSESSED AS SUCH WITHOUT ANY VARIATION OR ADDITION. ON THESE FACTS CASE LAWS RELIED UPON WERE IN THE CASE OF K.C. BUILDERS & ANR. ASSTT.CIT REPORTED AT (2004)265 ITR 562(SC) IN THE CASE OF B.N. SHARMA VS. CIT IT(SS)A NOS.312 & 3 13/AHD/10 (BY REVENUE) AND CO NOS.145 & 146/AHD/2010 (BY ASSESSEE) THE DCIT VS. MAZDA RESTAURANT PVT.LTD. ASST.YEAR 2006-07 - 5 - REPORTED AT (1997) 226 ITR 442) (SC) AND IN THE CA SE OF CIT VS. SURESH CHANDRA MITTAL (2001) REPORTED AT 251 ITR 09 (SC). MOREOVER IN A LATEST DECISION DATED 06/08/2010 OF ITAT C BENCH AHMEDABAD IN THE CASE OF DY.CIT BHARUCH VS. DR. SATISH B. GUPTA B EARING ITA NO.1482/AHD/2010 FOR ASSESSMENT YEAR 2006-07 IT WAS HELD THAT THE BASIS OF LEVY OF PENALTY IS THE RETURN OF INCOME. IF AN AMOUNT WHICH HAS BEEN SHOWN IN THE RETURN OF INCOME THEN CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. A PENALTY CAN ONLY BE LEVIED WHEN ON SCRUTINY OF RETURN THE ASSESSING OFFICER H AS NOTICED CERTAIN ITEMS OF CONCEALED INCOME NOT DECLARED IN THE RETUR N. IT HAS ALSO BEEN NOTED IN THE SAID ORDER THAT THE SEARCH AND SURVEY OPERATIONS ARE THE MEANS OF COLLECTION OF EVIDENCE AGAINST THE ASSESSE E. AFTER SEARCH IF THE ASSESSEE HAS OFFERED THE INCOME CORRECTLY AND THAT IS MADE THROUGH A RETURN OF INCOME WHICH HAS ALSO BEEN ACCEPTED BY TH E ASSESSING OFFICER THEN SUCH AN ASSESSEE MUST NOT BE CHARGED FOR ANY C ONTUMACIOUS CONDUCT. THEREFORE UNDER THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY REVERSED THE ORDER OF ASSESSING OFFICER AND DIRECTED TO DELETE THE PENALT Y. WE HEREBY CONFIRM THE SAID ORDER BY REJECTING THE GROUNDS OF THE REVE NUE. REVENUES APPEAL IN BOTH THE CASES ARE DISMISSED. CO NOS.145 & 146/AHD/2010 (ARISING OUT OF IT(SS)A N OS.311 & 312/AHD/2010 6. BOTH THE CROSS OBJECTIONS AS REFERRED IN THE NOM ENCLATURE ARE MERELY SUPPORTING THE ORDERS OF THE LEARNED CIT(APP EALS) WITHOUT RAISING ANY SPECIFIC LEGAL OR FACTUAL GRIEVANCES. IN VIEW OF THIS THESE IT(SS)A NOS.312 & 3 13/AHD/10 (BY REVENUE) AND CO NOS.145 & 146/AHD/2010 (BY ASSESSEE) THE DCIT VS. MAZDA RESTAURANT PVT.LTD. ASST.YEAR 2006-07 - 6 - CROSS OBJECTIONS DO NOT REQUIRE ANY FACTUAL OR LEGA L ADJUDICATION HENCE DISMISSED. REVENUES APPEALS AS WELL AS CROSS OBJE CTIONS BOTH ARE DISMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 11/02/2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 11 /02 /2011 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DE PARTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT( APPEALS)-III AHMEDABAD 5. THE DR AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD