IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD Before Shri Rajpal Yadav , JM, & Shri Manish Borad, AM. ITA Nos. 564 to 568/Ahd/2014 Asst. Year: 1999-2000, 2000-01, 2002-03, 2004-05 & 2005-06 Rupesh Jayvadan Kapadia, Vs. ITO, Wd-3(1), Surat. 9/464, Store Sheri, Wadifalia, Surat. Appellant Respondent PAN ACHPK3119P Appellant by Shri M. J. Shah, AR Respondent by Shri James Kurien, Sr. DR Date of hearing: 06/10/2016 Date of pronouncement 20/10/2016 ORDER PER BENCH These appeals of assessee for Asst. Years 1999-2000, 2000- 01, 2002-03, 2004-05 & 2005-06 are directed against separate orders of ld. CIT(A)-IV, Surat of even date 25.11.2013 passed against separate orders u/s 271(1)(c) of IT Act, 1961 (in short Act) all framed on 30.03.2012 by ITO, Wd-3(1), Surat, sustaining penalty of Rs.17,795/-, Rs.3,53,930/-, Rs.95,110/-, Rs.2,37,640/- & Rs. 2,10,900/- respectively, for Asst. Years 1999-2000, 2000-01, 2002- 03, 2004-05 & 2005-06. As facts relating to all 5 years are similar, they have been heard together and are being disposed of by this common order for sake of convenience. We will take facts ITA Nos.564 to 568/Ahd/2014 2 Asst. Year 1999-2000 & others for Asst. Year 2000-01 as leading case to adjudicate these five appeals. 2. Assessee has raised following grounds in its appeal in ITA No.565/Ahd/2014 for Asst. Year 2000-01:- 1. learned CIT Appeals grossly erred in confirming penalty of Rs.3,53,930/- u/s. 271(1)(C) of Act, even though return has been filed voluntary. 2. learned CIT Appeals not considered facts that return has been filed voluntary before issuing notice u/s.148 of I.T. Act. 3. learned CIT Appeals grossly erred for not considering fact that income declared voluntarily without traced out by A.O. 4. A.O. has not considered 2 letters handed over to A.O. for not imposing penalty till appeal decision was pending before CIT (A), Ahmedabad. 5. A.O. has net considered fact that Legal Representative attended for hearing before him personally and mutually agreed that penalty proceedings will be kept in abeyance till "Order Giving Effect to CIT (A) -II, Ahmedabad's Order will be passed. Appeal effect order received after penalty levied order as well as decision order i.e. on 08/02/2014. 6. A.O. has not issued "Order Giving Effect to CIT (A)-II, Ahmedabad's Order" and did not give proper opportunity or did not issue notice to give reasons for not levying penalty u/s.271(1} (c) of Act. and passed order on last date i.e. on 30/03/2012. 7. learned CIT (Appeals)-IV, Surat allowed appellant's appeal No. CAS/IV/II/45/12-13 vide appellate order dated 27/05/2013 of Asst. Year 2003- 04 against penalty levied u/s.271(1}(c) of Act of Rs.1,19,590/- was brought to notice of CIT (Appeals), Surat at time of hearing of this appeal. 8. relief as claimed by appellant may kindly be allowed in toto. 9. appellant craves to add, to alter and to amend grounds of appeal during proceedings of appeal. ITA Nos.564 to 568/Ahd/2014 3 Asst. Year 1999-2000 & others 3. Briefly stated facts of case are that assessee is individual engaged in business of manufacturing of art silk grey cloth. He filed original return of income on 24.07.2001 declaring total income at Rs.96,887/-. Thereafter assessee voluntarily filed revised return of income on 18.01.2006 showing total income at Rs.11,69,390/- which included additional income of Rs.10,72,504/- voluntarily offered on account of interest on fixed deposits, investments and personal expenses. Thereafter notice u/s 148 of Act dated 24.03.2006 was issued and after making addition of Rs.50,000/- towards unexplained cash credit income was assessed at Rs.12,19,391/-. Penalty proceedings were initiated u/s 271(1)(c) of Act. Quantum appeal against impugned addition was dismissed by first appellate authority relating to addition of Rs.50,000/- which was further confirmed by Co-ordinate Bench vide its order in ITA No.3061/Ahd/2010. 4. Subsequently penalty order was passed on 30.02.2012 imposing penalty of Rs.3,70,430/- u/s 271(1)(c) of Act on concealed income of Rs.11,22,504/- (additional income offered in revised return at Rs.10,72,504/- + addition of Rs.50,000/- u/s 68). 5. Aggrieved assessee went in appeal against impugned penalty order before first appellate authority. Ld. CIT(A) deleted penalty u/s 271(1)(c) of Act on addition of Rs.50,000/- and sustained penalty on Rs.3,53,930/- on additional income offered in revised return at Rs.10,72,504/-. ITA Nos.564 to 568/Ahd/2014 4 Asst. Year 1999-2000 & others 6. Assessee is now in appeal before Tribunal. 7. Ld. AR submitted that identical facts existing for 6 Asst. Years including years under reference out of which for Asst. Year 2003- 04, penalty has been deleted by ld. CIT(A). Ld. AR also submitted that allegation of Assessing Officer that additional income was offered due to detection during course of search proceedings u/s 132 of Act is baseless as no proceedings under sec.153C of Act has ever been initiated in case of assessee. Further proceedings u/s 148 of Act were initiated in order to regularize revised return filed on 18.01.2006. Ld AR referred and relied on decision of Co-ordinate Bench Mumbai in case of Ravi Sud vs. ACIT (2015) 39 ITR (T) 356 wherein similar facts have been adjudicated and decided in favour of assessee. Ld. AR also argued on another limb by submitting that notice issued by Assessing Officer u/s 274 of Act was bad in law as he did not specify as to whether section 271(1)(c) of Act has been initiated for concealment of income or furnishing of inaccurate particulars of income. In such situation penalty u/s 271(1)(c) of Act has not been sustained as held by Hon. Karnataka High Court in case of CIT vs. SSA S Emerald Meadows (2016) 73 taxmann.com.241 (Karnataka) which has been further upheld by Hon. Apex Court in (2016) 73 taxmann.com 248 (SC) as there being no substantial law for determination and SLP filed by Revenue was dismissed. 8. On other hand, ld. DR supported orders of lower authorities and submitted that additional income was offered by ITA Nos.564 to 568/Ahd/2014 5 Asst. Year 1999-2000 & others assessee only because same was detected in course of search carried out in case of some other assessee. Also revised return was filed beyond statutory time limit. Therefore, ld. CIT(A) has rightly confirmed penalty on additional income offered in revised return at Rs.10,72,504/-. 9. We have heard rival contentions and perused material on record and through judgments and decision referred and relied on by ld. AR. Solitary grievance of assessee through this appeal is against action of ld. CIT(A) confirming penalty of Rs.3,53,930/- u/s 271(1)(c) of Act. We find that original return of income was filed on 24.07.2001 showing income of Rs.96,887/-. Thereafter on 18.1.2006 revised return of income was furnished showing income of Rs.11,59,390/- after offering income from other sources including interest on fixed deposits, unaccounted investments, personal expenses etc. at Rs.10,72,504/- which were not shown in regular income tax return but voluntarily disclosed in revised return after search in case of some other assessee. We observe that no detail of person(s) searched is available in record placed before us including orders of lower authorities. Revised return was treated as invalid as same was filed after expiry of statutory time limit for filing revised return for Asst. Year 2000-01. Thereafter notice u/s 148 of Act was issued to regularize return. issue of penalty u/s 271(1)(c) of Act is only in relation to penalty imposed on additional income offered at Rs.10,72,504/-. ITA Nos.564 to 568/Ahd/2014 6 Asst. Year 1999-2000 & others 10. We find that similar facts were before Co-ordinate Bench, Mumbai in case of Ravi Sud vs. ACIT (supra) wherein return was furnished on 21st December, 1998 showing income of Rs.1,69,900/- followed by revised return on May 30,2003 declaring additional income of Rs.7,50,000/- and revised return so filed was beyond period of limitation. Thereafter notice u/s 148 of Act was issued on July 30, 2004 in response to which assessee submitted that revised return may be treated as return filed in response to notice u/s 148 of Act. Penalty proceedings u/s 271(1)(c) of Act were initiated on additional income. Assessing Officer noticed that search action u/s 132 of Act was carried out in case of another assessee M/s R. K. Overseas, Amritsar of which assessee was partner. Co-ordinate Bench adjudicated issue of penalty imposed u/s 271(1)(c) of Act in this case and deleted same by observing as under :- 4. We have heard rival contentions and have also gone through record. In this case, it is not disputed that no escapement of income was detected during original assessment proceedings. Though search action was carried out in premises of Shri Vivek Kapoor, chartered accountant, and it was found that said chartered accountant was operating bogus firms, however, no proceedings were initiated against assessee either under section 153C of Act or under section 147 of Act pursuant to said search action against said chartered accountant. assessee himself filed revised return declaring additional income which was claimed in original return to have been received as share of profit from firm M/s. R.K. Overseas. reassessment under section 147(1) was done in this case subsequent to tte filing of revised return so that additional income offered by assessee may be validly assessed as revised return was invalid being time barred. present is not case where any concealment of income was detected either during original assessment proceedings or pursuant to any action of reassessment either under section 153C of Act or under section 147 of Act. assessee in this case has suo motu offered additional income and same was not detected during any course of action by Revenue authorities against assessee. Under such circumstances, it ITA Nos.564 to 568/Ahd/2014 7 Asst. Year 1999-2000 & others cannot be said to be case where any concealment of income is detected against assessee inviting penalty action under section 271(l)(c) of Act. Hence, it cannot be said to be case of concealment of income by assessee so far as assessment proceedings under section 147 are concerned. assessment proceedings under section 147, as discussed above, were carried out just to validate invalid revised return and not on account of any detection of escapement of income. In view of above, we do not find it as case fit for levy of penalty under section 271(l)(c). penalty so levied by lower authorities is, therefore, ordered to be deleted. I.T.A. Nos. 94 and95/Mum/2012for assessment years 1999-2000 and 2000-01 andl.T.A. Nos. 96 to 98/Mum/2012for assessment years 1998-99 to 2000-01 5. Since facts of these appeals are also identical, and in view of our observations made above, all above titled appeals are also hereby allowed and penalty levied under section 271(l)(c) of Act is hereby ordered to be deleted. 6. In result, all appeals of assessee's hereby allowed. 11. On analyzing facts of case before us, we find that facts of present case are squarely similarly to those adjudicated by Co-ordinate Bench, Mumbai in case of Ravi Sud vs. ACIT (supra). As assessee submitted revised return after lapse of limitation period and in response to notice u/s 148 of Act assessee has submitted for treating revised return filed on 18/1/2006 as return filed in compliance of notice u/s 148 of Act. In case before us also search was conducted in case of some other assessee. However, no proceedings were initiated u/s 153 of Act against assessee. Therefore, respectfully following decision of Co-ordinate Bench, Mumbai in above referred case, we are of view that re-assessment proceedings were carried out just to validate revised return and there was no detection of concealed income by Assessing Authority and in such circumstances no penalty u/s 271(1)(c) of Act is leviable. ITA Nos.564 to 568/Ahd/2014 8 Asst. Year 1999-2000 & others Accordingly we delete impugned penalty of Rs.3,53,930/- imposed u/s 271(1)(c) of Act and allow ground of assessee. 12. Other grounds are of general nature, which need no adjudication. 13. Now we take remaining four appeals in ITA Nos.564/Ahd/2014, 566/Ahd/2014, 567/Ahd/2014 & 568/Ahd/2014. In all these appeals solitary grievance of assessee is against imposition of penalty u/s 271(1)(c) of Act and facts are similar to those for Asst. Year 2000-01 as adjudicated above by us in ITA No.565/Ahd/2014 wherein we have deleted penalty imposed u/s 271(1)(c) of Act. Applying same decision we delete penalties u/s 271(1)(c) for all four years imposed at Rs. Rs.17,795/-, Rs.95,110/-, Rs.2,37,640/- & Rs. 2,10,900/- for asst. years 1999- 2000, 2002-03, 2004-05 & 2005-06 and allow grounds of assessee. 14. Other grounds are of general nature, which need no adjudication. ITA Nos.564 to 568/Ahd/2014 9 Asst. Year 1999-2000 & others In result, all appeals of assessee are allowed. Order pronounced in open Court on 20th October, 2016 Sd/- sd/- (Rajpal Yadav) (Manish Borad) Judicial Member Accountant Member Dated 20/10/2016 Mahata/- Copy of order forwarded to: 1. Appellant 2. Respondent 3. CIT concerned 4. CIT(A) concerned 5. DR, ITAT, Ahmedabad 6. Guard File BY ORDER Asst. Registrar, ITAT, Ahmedabad 1. Date of dictation: 18/10/2016 2. Date on which typed draft is placed before Dictating Member: 19/10/2016 other Member: 3. Date on which approved draft comes to Sr. P. S./P.S.: 4. Date on which fair order is placed before Dictating Member for pronouncement: 5. Date on which fair order comes back to Sr. P.S./P.S.: 6. Date on which file goes to Bench Clerk: 20/10/16 7. Date on which file goes to Head Clerk: 8. date on which file goes to Assistant Registrar for signature on order: 9. Date of Despatch of Order: Rupesh Jayvadan Kapadia v. ITO, Wd-3(1), Surat