IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `F': NEW DELHI)
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
And
SHRI T. S. KAPOOR, ACCOUNTANT MEMBER
ITA Nos. 4652, 4653,4654, 4655/DEL/2011
(Assessment Years: 2004-05, 2005-06,,2006-07, 2007-08)
Pawan Kumar Gupta Vs. ACIT
Flat No. 203-206, Second Floor Central Circle-6
Hoover Apartments, New Delhi.
Khasra No. 773 & 774, Sant Nagar
Buradi, Delhi.
PAN AAEPG9014E
(APPELLANT) (RESPONDENT)
Assessee by :Shri Ajay Wadhwa, CA
Revenue by :Shri Manoj Kumar Chopra, Sr. DR
ORDER
PER I. C. SUDHIR, JUDICIAL MEMBER:
In all these appeals the assessee has questioned upholding of
penalty imposed u/s 271(1)© of the Act by the Ld. CIT(A).
2. The main contention of the Ld. AR is that when no concealment
was detected by the revenue and the income declared in the return filed
u/s 153A was voluntary which was accepted as such in the assessment
made u/s 153A / 143(3) of the Act, there was no question of levy of
penalty u/s 271(1)© of the Act. He submitted further that the issue
2
ITA Nos.4652,4653,4654,4655/DEL/2011
raised is fully covered in favour of the assessee in almost similar facts by
the following decisions :-
i) Prem Arora vs. DCIT (2012) 24 Taxman.Com 260 (Delhi
ii) Neeraj Lal T. Galea (HUF) vs. ACIT (2013) 33 taxman. Com
620 (Mumbai)
iii) Suman Rajeja vs. DCIT ITA No. 4411 and 4412/Del/2011 (asstt.
years 2-001-02 and 2002-03 order dated 25.5.2012
iv) Nutan Gupta vs. DCIT ITA 4728 to 4731/Del/2011 (asstt.years
2001-02 to 2006-07) order dated 24.8.2012
v) Shri Kiran Shah vs. ACIT ITA Nos. 5919 to 5925/Mumbai/2011
for asstt. yaer 1999-200 to 2005-06 order dated 8.1.2014
3. Ld. DR on the other hand placed reliance on the orders of the
authorities below and the decisions relied upon by them. He submitted
that it is an admitted fact in all these appeals that only after the search
conducted the assessee disclosed its income revealed during the course
of search.
4. In view of above submissions and the decisions relied upon, we
have considered the orders of the authorities below. The relevant facts
are that the Hoover Builders (P) Ltd. was carrying on the business of
constructing and sale of flats. The AO observed during assessment
proceedings that the assessee had not disclosed the correct income in
3
ITA Nos.4652,4653,4654,4655/DEL/2011
the return filed on 29.9.2004 with ITO ward 12 (4) as he has declared
an income of Rs. 2,10,000/- in the asstt. years 2004-05, Rs. 3 lac in the
asstt. year 2005-06 Rs. 5,55,746/- and Rs. 2,41,560/- was demanded
for asstt. year 2007-08 hence subsequent to the search carried out at
the premises of the assesee, the assesee filed its return u/s 153A
showing an income of Rs. 3,35,000/- including an income of Rs.
1,25,000/- from undisclosed sources for the asstt. year 2004-05, in asstt
year 2005-06 it showed income of Rs. 22 lacs which included an income
of Rs. 19 lac from undisclosed sources in asstt. year 2006-07 it showed
an income of Rs. 18,62,746/- which included undisclosed income of Rs.
12,75,000/-. In asstt. year 2007-08 it returned income of Rs. 8,18,320/-
was accepted in the assessment framed u/s 143(3) and disallowance of
Rs. 15,000/- was made out of the payment made to the creditors. In all
these years asstt. u/s 153A / 143(3) were framed on the income
undisclosed by the assessee in its return of income filed in response to
the notice issued u/s 153A of the Act. During the course of appellate
proceedings it was explained by the assesee that by Hoover Building (P)
Ltd. flats are sold in finished and semi finished conditions. Finished flats
are standardised. Some customers had purchased semi finished flats
and wanted extra work for finishing. In order to maintain customers
relations and good will and also to provide services with the underlying
4
ITA Nos.4652,4653,4654,4655/DEL/2011
objective of selling the flats the said work for the customers on no profit
no loss basis has to be undertaken. Money are received from the
customers for the purpose of finishing according to their satisfactions
and the entire amount is spent for on the said job. This is an additional
service which is being provided in order to boost sales of the flats. It
was explained that this activity was being carried on by one of the
Directors Mr. P.K. Gupta on an individual basis since there was no profit
from this activity, no income from the same was shown in the original
returns. But now he himself has offered to tax suo moto voluntarily and
prior to any query in the matter, net amount appearing in the seized
material ( receipt less expenses so stated) even though the same
amounts are mere scribbling to which no meaning can be described in
the absence of any corroborative evidence to support of the same. It
was accordingly submitted that the income returned may be accepted
without any penal action since the same is voluntary and bonafide and
has been declared even though there is no evidence of the same having
being earned. Penal proceedings were initiated and the AO levied
penalty u/s 271(1)© of the Act on the declared undisclosed income. The
Ld. CIT(A) has also justified the action of the AO saying that the case of
the assessee falls within the general provisions of section 271(1)(C) as
well as within the Explanation 5 thereof. We find that an identical issue
5
ITA Nos.4652,4653,4654,4655/DEL/2011
was raised before Delhi Bench of the Tribunal in the case of Prem Arora
vs. DCIT(supra) wherein after discussing related provisions in detail, the
Tribunal has come to the conclusion that for the purpose of imposition
of penalty u/s 271(1)(c) as a result of search assessments made u /s
153A, original return of income filed u/s 139 cannot be considered. It
was held that concealment of income has to be seen with reference to
additional income brought to tax over and above the income returned by
the assesee in response to notice issued u/s 153A and therefore once
return of income u/s 153A is accepted by AO, it can neither be a case of
concealment of income nor furnishing of inaccurate particulars of such
income. In that case search was conducted on 22.11.2006 and cash was
found from possession of the assessee. The assessee has drawn cash
flow statement for entire period of 6 years in order to determination of
undisclosed income based on seized material for each of six assessment
years. The question raised before the Tribunal was as to whether
penalty u/s 271(1)(C) cannot be imposed by invoking Explanation 5 in
asstt. year 2004-05 in respect of cash found in previous year relevant to
asstt. years 2007-08, merely on presumption that assessee might have
been in possession of cash throughout period covered by search
assessments. It was answered in affirmative i.e. in favour of the
assessee. The Tribunal held further that the word `pending' occurring in
6
ITA Nos.4652,4653,4654,4655/DEL/2011
the second proviso to section 153A and words "all other provisions of
this Act shall apply to the assessment made under this section" as
occurring in (Explanation I) to section 153A of the Income Tax Act 1961.
Similar view has been expressed by the other coordinate benches of the
Tribunal in the above cited cases by the Ld. AR. Respectfully following
the above decisions we find that the Ld. CIT(A) was not justified in
upholding the penalty levied by the AO in the present case wherein
returned undisclosed income in response to the notice issued u/s 153A
was accepted by the AO in the assessment framed u/s 153A / 143(3) of
the Act. We thus while setting aside orders of the authorities below
direct the AO to delete the penalty in question levied in the years in
appeals. The ground is accordingly allowed in favour of the assessee.
In the result appeals are allowed.
The order is pronounced in the open court on 25th July, 2014.
sd/- sd/-
(T.S. KAPOOR) ( I.C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 25th July, 2014
*Veena
Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
7
ITA Nos.4652,4653,4654,4655/DEL/2011
5. DR By Order
Asstt. Registrar, ITAT
|
