TaxTMI 
TaxTMI 
2015 (7) TMI 121
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....members/associate concerns of the Kalika group of Jalna. The assessee's premises was also covered. In response to notice u/s.153A the assessee filed return of income on 18-07-2011 declaring total income at Rs. 42,67,042/- and agricultural income at Rs. 73,510/-. During the course of assessment proceedings the Assessing Officer noted that the assessee in its computation of income has shown income of Rs. 19,57,468/- "as income declared in search u/s.132". He noted that this income is in addition to the income declared originally in return of income filed u/s.139 of the I.T. Act. On being questioned by the Assessing Officer the assessee vide submission filed on 18-10-2011 has stated as under : "The assessee has accepted income u/s.132 during the year though there is no such direct evidence of such sales were noticed or such sales were made by the assessee company/Director. The assessee has declared income in order to buy peace, to avoid litigation and paid the tax according & honoured the declaration." The Assessing Officer therefore noted that this income declared by the assessee was resultant of search action. Had the search not taken place the assessee would not have shown th....
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....come in the returned income after the date of search such income has to be considered as concealed income. He further observed that although the assessee and the group as such have cooperated during assessment proceedings it does not give immunity from imposition of penalty for concealing of income. Rejecting the explanation given by the assessee and distinguishing the decision of the Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd., (Supra) cited before him the Assessing Officer levied penalty of Rs. 6,58,884/- u/s.271(1)(c) of the I.T. Act being 100% of tax sought to be evaded. 6. Before CIT(A) the assessee submitted that the income of Rs. 19,57,468/- has been offered to tax in the hands of the assessee only to avoid protracted litigation and to buy peace of mind. The said income represents profit on alleged suppressed sale of Kalika Steel Alloys Pvt. Ltd., in which the assessee is a Director. Therefore, as held by the CIT(A), Aurangabad while deciding the appeals in the cases of Kalika Steel Alloys Pvt.Ltd. for A.Ys.2004-05 to 2010-11 and Kalika Steel Jalna Pvt. Ltd. for A.Ys.2006-07 to 2010-11 vide orders dated 14/05/2012, the income from manufacturing ....
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....the material in the case of the KSAPL & KSJPL is as follows - KSAPL KSJPL FY 06-07 61.50% FY 06-07 87.80% FY 07-08 68% FY 07-08 87.70% Thus, even if the GP rates are accepted 35% and 15% respectively, the unaccounted income would be as follows - Sr. No. Name of company F.Y. F.Y. Amount of goods removed GP% as Undisclosed income 1 Kalika Steel Alloys Pvt.Ltd. 06-07 11185330.00 @35-3914936 11107800.00 @35-3887730 2 Kalika Steel Jalna Pvt. Ltd. 06-07 16167552.00 @15-2425133 39954004.00 @i5-5993101 56810071.00 @15-8521511 3. Giriraj Re-Rolls Pvt. Ltd. 05-06 2225850.00 @35-779048 3794717.00 @35-1328151 4 Bhoomi Re-Rolls Pvt. Ltd. 07-08 3514942 @35-1230230 TOTAL 144760566.00 28079840 I want to state that I am disclosing the said amounts to buy peace of mind, however in principle, I am not accepting such result unaccounted sale. The details of the same are as follows - Sr.No Name of company Directors FY 05-06 FY 06-0....
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.... amount of Rs. 19,57,468/- is, therefore, cancelled. The A.O. is directed accordingly. The appellant has also raised another contention without prejudice to above contention that the A.O. has invoked Explanation-5A for levying penalty u/s 271(1)(c) of the I.T. Act which is applicable only when the ownership of any asset such as money, bullion, jewellery or other valuable article or thing, is found and it is found that the said asset was acquired out of income which was not disclosed; in the case of the appellant no such facts existed and the income has been offered during search action to buy peace of mind and to avoid protracted litigation. This contention of the appellant is not required to be adjudicated as the first contention of the appellant is accepted and penalty has been cancelled." Ground Nos. 2 & 3 are allowed." 8. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : "1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty of Rs. 6,58,884/- imposed u/s 271(1)(c) of the Act. 2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A)....
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....rein the gross profit of various companies are worked out on alleged clandestine removal of goods for the F.Yrs. 2005-06, 2006-07 and 2007-08 at Rs. 2,80,79,840/-. Referring to the said statement he drew the attention of the Bench to the income declared in the respective financial years by respective individuals. Referring to Question No.16 of the said statement (page 27 and 28 of the paper book) he submitted that the final tally of declaration of Rs. 14,01,61,595/- is income and in that the first item is unaccounted sale as per details mentioned in Question in 2 & 3 amounting to Rs. 2,80,79,840/- which is the amounts relating to clandestine removal of goods by these companies. He submitted that it is clear from the above that the income declared by these individuals in A.Yrs. 2006-07 to 2008-09 on which penalty u/s.271(1)(c) has been levied is the income on account of alleged clandestine removal of goods by these companies which has been offered in the hands of the individuals. He submitted that it is also clear from the above that the income offered by these individuals in A.Y. 2010-11 is on account of their personal income earned by them which is clearly mentioned in Question No....
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....(2013) 40 taxmann.com 102 3. DCIT Vs. Purti Sekhar Karkhana (2013 59 SOT 29 4. Devidas Sukhani Vs. DCIT (2013) 158 TTJ 42 5. CIT Vs. Mahendra Shah (2008) 299 ITR 305 6. CIT Vs. Kirit Dahyabhai Patel (2009) 121 ITD 159 7. CIT Vs. Shri Inderchand Surajmal Bothra - ITA No.137/PN/2010 order dated 30-11-2011. 11.1 He submitted that when the income has been declared u/s.132(4) with the condition that no penalty should be levied then the statement should be accepted in totality and not in part. He submitted that during the course of search the statement of Shri Ghanshyam Goyal was recorded u/s.132(4) in the presence of Shri Naresh B. Jindal, Shri Arun S. Agrawal and Shri Anil N. Goyal, Accordingly, the declaration u/s.132(4) was conditional to the fact that no concealment of the penalty should be levied. 12. Referring to the decision of the Mumbai Bench of the Tribunal in the case of DCIT Vs.Goyal Properties and Estates Pvt. Ltd. vide ITA No.7132/Mum/2010 order dated 07-05-2012 he submitted that the Tribunal in the said decision has held that when the assessee has given the declaration during the course of the survey to file the revised return of income to withdraw th....
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.... of Rs. 14 crores in the name of 4 persons @ Rs. 3.5 crores each, the details of which are as under : 1 Shri Ghanshyam Chunilal Goyal Rs.3.50 Crores 2 Shri Arun Shrikishan Agrawal Rs.3.50 Crores 3 Shri Anil Nandkishor Goyal Rs.3.50 Crores 4 Shri Naresh Banarasidas Jindal Rs.3.50 Crores Total Rs. 14 Crores 15.1 We find in response to Question No.4 recorded u/s.131 on 17-08-2009 Shri Ghanshyam C. Agrawal had replied as under : 14 "Q.No.4 It is to be noted that, as the assessee had claimed all expenses, direct and indirect, during the respective years, hence the total value of the goods so removed shall be unaccounted income of the assessee. Please comment. Ans:- I deny contention of DGCI that the members of Kalika group as mentioned in Q.No.2 had clandestinely removed the products. Even if it is assumed that such products are removed then a fact may be considered that all indirect expenses were already debited. However, since the purchase of the raw material was not accounted for, hence the credit should be given to the assessee for the same. It is to be considered that the amount of Raw material is incurred @ ....
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....f the same are as follows : Sr.No. Particulars Amount 1. On account of unaccounted sale as per details mentioned in (Question No.2 & 3) 2,80,79,844 2. Investment in Stock (Question No.14) 2,55,52,503 3. Unaccounted sale/petty loans in case of Shri Anil R. Goyal (Question No.6) 10,00,000 4. Investment in Construction (Question No.5) 86,48,831 5. Investment in stock of Sagar Paridhan Pvt. Ltd., (Question No.7) 24,35,417 6. Investment in furniture in Sagar Paridhan Pvt. Ltd., (Quesetion No.7) 5,00,000 7. Unaccounted Income from badla transaction (Question No.10) 85,10,000 8. Unaccounted transactions as explained (Question No.13) 6,54,35,000 TOTAL 14,01,61,595 The assessee declared an amount of Rs. 19,57,468/- as undisclosed income for the impugned assessment year which is a part of unaccounted sale of the companies at Rs. 2,80,79,844/- and which has been accepted by the Assessing Officer in the return of income. However, he initiated penalty proceedings u/s.271(1)(c) of the I.T. Act read with Explanation 5A and levied penalty of Rs. 6,58,884/-. We find the Ld.CIT(A) deleted....
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....(c) read with Explanation 5A. The order of the CIT(A) is therefore upheld and the grounds raised by the Revenue are dismissed. 16. Similar penalty of Rs. 6,63,642/- has been deleted by CIT(A) in A.Y. 2008-09 for which Revenue has filed appeal vide ITA No.1432/PN/2013. Facts being similar, therefore, following same reasonings, the appeal filed by the Revenue for A.Y. 2008-09 is also dismissed. ITA Nos. 1441 & 1442/PN/2013-Shri Ghanshyam C. Goyal - (A.Yrs. 2007-08 & 2008-09) : ITA Nos.1446, & 1447/PN/2013-Shri Anil Nandkishor Goyal (A.Yrs. 2007-08 & 2008-09) : 17. After hearing both the sides, we find penalty has been levied by the Assessing Officer u/s.271(1)(c) of the I.T. Act which has been deleted by the CIT(A), the details of which are as under : Name Asst. year Income declared Penalty levied Shri Ghanshyam C. Goyal 2007-08 27,56,978/- 6,79,388/- Shri Ghanshyam C. Goyal 2008-09 32,72,017/- 11,13,338/- Shri Anil Goyal 2007-08 12,12,567/- 4,01,967/- Shri Anil Goyal 2008-09 48,25,871/- 16,67,256/- 18. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 19. After hearing b....
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....h the explanation given by the assessee. He noted that assessee has not been able to substantiate the income so derived at the time of search. Although the assessee has mentioned that income was substantiated on the basis of statement of assets and liabilities prepared for each assessee, however, such income declaration was not substantiated with respective assets on the date of search. The assessee also could not give the details of income declared and it had shown the income so declared in the profit and loss account as income from other sources. This according to the Assessing Officer shows that the income declared was not supported by any asset on the date of search, therefore, the income declared has to be considered as not substantiated. The Assessing Officer accordingly imposed penalty of Rs. 16,35,875/- u/s.271AAA of the I.T. Act. 22. Before CIT(A) the assessee submitted that the group has declared major amount of Rs. 7,39,74,375/- in the hands of the different assessees which is as under : Name of the appellant Hundi, petty loans, sales receivable Rs. Badla income Rs. Total Rs. 1) Sunil Goyal 1,13,58,750 21,27,500 1,34,86,250 2) Nandkishor Goy....
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....earch has been initiated u/s 132 on or after the 1st day of June 2007, the assessee shall pay by way of penalty,, in addition to tax, if any, payable by him, a sum computed @10% of the undisclosed income of the specified previous year (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of search, in a statement under sub-section (4) of section 132 admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax to Whether with interest, if any, in respect of the undisclosed income. (3) . . . . . Explanation.-For the purpose of this section,- (a) "undisclosed income" means - (i) any income of specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has - (A) not been recorded on or before the date of search in the books of account or other documents mentioned in the normal course relating to such ....
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.... the A.O., levy of penalty u/s 271AAA was not justified on the ground that the assessee has made disclosure but failed to specify the manner in which such income had been derived. (c) DCIT Vs. Rajendra Prasad Dokania (2012) 32 CCH 260 I Ahd.Trib.) In this case, the Hon'ble ITAT has laid down that, neither at the stage of recording the statement of the assessee nor at the stage of assessment proceedings, the assessee was asked, either by authorized officer or by the A.O., to substantiate manner in which such undisclosed income was derived. Under these circumstances, the assessee be deemed to have discharged his onus of substantiating the manner in which the undisclosed income was derived by him. 8.3 It is worth mentioning here that the Hon'ble Cuttack Bench of ITAT in the case of Pramod Kumar Jain Vs. DCIT (2012) 77 DTK 244 has laid down that "the Ld. Counsel for the assessee supported the views expressed by the Tribunal in both the orders in so far as conditions for invoking the provisions of section 271AAA as noted in sub-section (2) thereof have to be considered together and not in isolation. The condition with respect to the manner specific for the purpose of in....
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....e date of search, the income declared by the assessee was not represented by any asset. 3) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in relying upon the decisions of Hon'ble ITAT, Cuttack Bench, and Hon'ble ITAT, Ahmedabad Bench, the facts of which are distinguishable from the facts of the assessee's case. 4) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that penalty u/s 271AAA could be initiated only when all three conditions together are not satisfied, which is contrary to the extant provisions of Section 271AAA of the Act, since the penalty can be imposed even if one of the conditions is not fulfilled, which renders the decision perverse on facts and in law. 5) The appellant craves leave to add, alter, modify, delete, and amend any of the grounds, as per the circumstances of the case. 6) The appellant prays leave to adduce such further evidence to substantiate its case, as the occasion may demand." 26. The Ld. Departmental Representative heavily relied on the order of the Assessing Officer. 27. The Ld. Counsel for the assessee while supporting the order ....
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....ed the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that during the course of search an amount of Rs. 14 crores was declared by Shri Ghanshyam Goyal the main person of the group in the hands of 4 different persons @ Rs. 3.5 crores each, the details of which are already given at para 15 of the impugned order. In response to Question No.16 the bifurcation of the declared income was given which amounts to Rs. 14,01,61,595/-. The break-up of Rs. 6,54,35,000/- and Rs. 85,10,000/- totalling to Rs. 7,39,74,375/- has already been given at para 22 of this order. Accordingly, the assessee had declared an amount of Rs. 1,63,68,750/- as his undisclosed income being income from Hundi, petty loans, sales receivable etc. It is an undisputed fact that the assessee has paid the taxes and interest due thereon in the return filed in response to notice u/s.153A. It is the case of the revenue that assessee has not substantiated the manner in which the undisclosed income was derived and has not specified the manner in which such income has been derived. It ....
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....not stop short at a particular stage so as to permit the Revenue to take advantage of such a lapse in the statement. The reason is not far to seek. In the first instance, the statement is being recorded in the question and answer form and there would be no occasion for an assessee to state and make averments in the exact format stipulated by the provisions considering the setting in which such statement is being recorded. Secondly, considering the social environment it is not possible to expect from an assessee, whether literate or illiterate, to be specific and to the point regarding the conditions stipulated in the second exception while making statement under section 132(4). Even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit." 4.1 In this case, the assessee was asked to explain the entries in the 'work-in-progress sheet' and assessee in the course of statement offered the income with a plea not to initiate penalty proceedings. The assessee was not asked about the manner in which such income was earned and....