C/TAXAP/837/2019 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 837 of 2019 PRINCIPAL COMMISSIONER OF INCOME TAX-2 Versus YAMUNAJI CORPORATION Appearance: MRS MAUNA M BHATT(174) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 10/02/2020 ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1 This Tax Appeal under Section 260A of Income Tax Act, 1961 [for short, 'the Act, 1961'] is at instance of Revenue and is directed against order passed by Income Tax Appellate Tribunal, Ahmedabad Bench 'B', Ahmedabad dated 24th April 2019 in ITA No.3308/Ahd/2016 for A.Y. 2012 13. 2 Revenue has proposed following solitary question of law for consideration of this Court: Whether Appellate Tribunal has erred in law and on facts in upholding order of CIT(A) deleting penalty of Rs.6,93,70,500/ on account of on money receipts offered for taxation after being detected by department as result of survey action u/s.133A? Page 1 of 6 Downloaded on : Fri Feb 14 09:41:46 IST 2020 C/TAXAP/837/2019 ORDER 3 It appears from materials on record that assessee firm is engaged in business of construction of shops and residential lats. assessee filed its return of income declaring total income at Rs.28,27,20,720/ . In consequent of search operation was undertaken of Ankur Dalal Group, survey action was carried out under Section 133A of Act in case of assessee on 28th March 2012. In course of survey action, assessee disclosed income of Rs.22.45 Crore for A.Y. 2012 13. In return of income, assessee declared income of Rs.28,27,20,720/ and assessee included disclosed income. 4 assessment was completed under Section 143(3) of Act, 1961 determining total income at Rs.28,27,20,720/ accepting returned income. Assessing Officer levied penalty of Rs.6,93,70,500/ under Section 271(1)(c) on premise that assessee had concealed particulars of its income and furnished inaccurate particulars of its income. Assessing Officer took view that assessee had offered on money receipts for taxation after being caught by department on account of survey action. 5 assessee being dissatisfied preferred appeal before CIT(A) against penalty order passed by AO under Section 271(1)(c) of Act, 1961. CIT(A) allowed appeal of assessee holding as under: 4 I have carefully perused material available, and also relevant statutory provisions and Authorities relied upon by appellant. Some fundamental and most relevant facts are not in dispute. appellant was covered u/s 133A, and not u/s 132. appellant filed its return of income u/s 139(1)at Rs.28,27,20,720/ which remained unenhanced in assessment framed by AO u/s 143(3). No addition/disallowance has been made by AO. Whether, and if yes, What admission u/s 132(4) was made by partner or third party in appellant s hands has, in my considered opinion, no direct or indirect relevance in assessment of appellant or consequent other proceedings Page 2 of 6 Downloaded on : Fri Feb 14 09:41:46 IST 2020 C/TAXAP/837/2019 ORDER including penal proceedings against appellant. As such, no such relevance statutory or otherwise has been brought out by AO. Moreover, admission made in appellant s hands u/s 132(4) has been fully honoured by appellant as is clear from assessment and penalty orders passed by AO. In these facts, it completely defies comprehension as to how AO has come to even prima facie satisfaction during proceedings u/s 143(3) that appellant has concealed or furnished inaccurate particulars of income. As ruled by Apex Court in Reliance Petroproducts Pvt. Ltd. 322 ITR 158, everything starts with return of income filed by assessee . Seen in light of Apex Court ruling, obviously, there is no concealment/inaccuracy in return of income filed by appellant. Thus, facts of case clearly and unambiguously go out of purview of positive inaccuracy/concealment as envisaged in main clause 271(1)(c). Indeed, only perceivable concealment found by AO therefore painstakingly needs to be attempted to be discovered by referring to Explanations 1 to 5A to see whether somehow AO s action fits anywhere therein. Explanation 1 is ruled out as there is no addition / disallowance made by AO. Explanations 2 to Explanation 5 are also clearly not applicable or relevant. Explanation 5A .is also ruled out on multiple counts. First, there is no warrant u/s 132 executed in case of appellant, therefore, words in Explanation where in course of search, assessee is found to be th e owner of would exclude non searched entities like appellant. Secondly, even if we presume that non searched entities are also covered under Explanation 5A, then also assessment year under appeal is beyond mischief, as Explanation 5A applies to Assessment Years for which return of income has already been filed by assessee or time limit for filing same has expired as on date of search. As search was on 28 / 3 / 20 12, obviously, assessment year under appeal being A.Y. 2012 13 is beyond purview of Explanation 5A. Thus, AO himself has consciously excluded application of Explanation 5A. Relevant to mention is also that appellant suo motu and un prompted by any notice from AO filed return of income u/s 139 Which came to be accepted without addition/disallowance in assessment u/s 143(3). Possibly section 271AAA would apply? Though, this possibility presently is beyond purview of my consideration as AO has not levied this penalty u/s 271AAA, not even recorded his satisfaction during assessment in this behalf, I do believe that AO rightly realized that in non searched entity, there is no question of initiating penalty u /s 271AAA also. In conclusion, thus, there is no way that penalty levied by AO is legally even conceivable, leave aside being sustainable. Ld. AR is absolutely right that AO has unlawfully just surmised that amount included and returned u/ s 139 is only on account of survey u / s 133A. Even if it were so, provisions of section 271(1)(c) do not authorise levy of penalty for mere desire to conceal particulars or evade tax When in fact no such concealment or evasion is resorted to by assessee in return of income that finally came to be filed. As such, on similar facts, I have already taken view that Page 3 of 6 Downloaded on : Fri Feb 14 09:41:46 IST 2020 C/TAXAP/837/2019 ORDER penalty u/s 271(1)(c) is not sustainable when no addition/disallowance is made by AO in assessment framed u/s 143(3) on regular return filed u/s 139 by & non searched entity, despite fact that income returned and assessment framed does include amount disclosed u/s 132. 15 Thus, and in other words, Explanation 5A, only provision enabling AO to initiate / levy penalty u/s 271(1)(c) notwithstanding relevant amount having been disclosed in any return filed subsequent to search, applies to assessment years other than and preceding to specified previous years as defined u/s 271AAA. Obviously, Assessment Year under reference is assessment year subsequent to search relevant specified previous years , and therefore, Explanation 5A is clearly not applicable. I also agree with Ld. AR that when for enabling AO in levying penalty u/s 271(1)(c) on amount already forming part of income returned, enactment of Explanation 5A is considered necessary by Legislature, by necessary implication, in no other circumstance can penalty u/s 271(1)(c) be levied by AO When no addition to income returned has been made by her. Similarly, Ld. AO has, when confronted with reality that it is impossible to bring case Within four comers of express language of 271(1)(c) [to effect that she is supposed to be satisfied that assessee has concealed particulars of his income or furnished inaccurate particulars of such income , i.e. it is real and concluded as against likely action of concealment of or furnishing of inaccurate particulars of income which need to be established], has not at all attempted to do so but has rather relied on irrelevant considerations and phrases like disclosure cannot be considered to be voluntary or but for search action assessee would not have disclosed this income or assessee never intended to disclose foreign bank account and income earned thereon. Had assessee intended to show foreign bank income in her return of income, interim withdrawals made in her case would have been shown, but fact that even interim withdrawals were not shown in her return of income emphasize assessee s Willful act of concealment of income . However, even mere plain reading of provisions would and should have enlightened AO that even if all these presumptuous allegations were established by her as against having been merely surmised or suspected, then also, unless some addition or disallowance were made to income returned u/s 139, no penalty u/s 271(1)(c) is leviable except by invoking Explanation 5A. As such, absence of concealment or inaccuracy is impliedly admitted by AO herself by way of not making any addition/disallowance in assessment framed. computation machinery also has been wrongly applied by AO. In sum total therefore, I agree with vehement contention of Ld. AR that no penalty u/s 271( 1)(c) is leviable in view of fact that no addition/disallowance has been made by AO and further fact that computation machinery as provided in Explanation 1 clearly fails. In conclusion, I find favour with each of contention raised Page 4 of 6 Downloaded on : Fri Feb 14 09:41:46 IST 2020 C/TAXAP/837/2019 ORDER by ld. AR as listed above, and and none of contention of AO tenable. As such, I also find that facts of appellant s case are squarely covered by SC decision in Reliance Petro products and Jurisdictional ITAT decision in Dr. Satish Gupta (both supra), and therefore, I have no hesitation in cancelling penalty. Accordingly, penalty of Rs. 17,96,638/ levied by AO u/s 271(1)(c) is hereby cancelled. appellant gets equivalent relief. related ground succeeds. 6 Revenue being dissatisfied with order passed by CIT(A) preferred appeal before Tribunal. Tribunal while dismissing appeal preferred by Revenue and affirming order passed by CIT(A) held as under: 4 We have considered rival submissions and gone through record carefully. Undisputed facts of case is that survey under section 133A was carried out at premises of assessee on 28.3.2012 I.e. much prior to closing dates of accounts and date of filing of return under section 139(1) of Act. assessees have `admitted amount of Rs.7O lakhs and Rs.22.45 crores respectively during survey action Which were subsequently shown in regular returns of income filed under section 139(1) of Act. These returns were accepted by AO without any addition or disallowance nor pointed out any discrepancies during assessment. However, impugned penalty was levied on premise that assessee would not have disclosed receipt of on money, but for survey action. It is case of assessee that income admitted during survey u/s.133A when disclosed in return of income furnished on or before due date and same is accepted by AO, there cannot be & case for levy of penalty. When due date for filing return of income was not expired, then how AO could infer that assessee would not disclose income in its return. assessee has disclosed this income in its return and AO has accepted same without any addition or disallowance. Id AO has simply carried away by surmise that had survey note taken place, assessee would not have disclosed this income This assumption and surmises of facts are Without any he Id.AO cannot anticipate that assessee Will not disclose & particular income. There are number of judgments available on this issue where it is held that when assessee has made complete disclosure in return of income and offered admitted amount for taxation, then there is no question of concealment of income or furnishing inaccurate particulars of income so as to attract provisions of section 271(1)(c) of Act. Hon ble Delhi High Court in case 01 SAS Pharmaceuticals (supra) has held that When assessee discloses amount during action under section 133A, and same is honoured by filing return of income subsequent Page 5 of 6 Downloaded on : Fri Feb 14 09:41:46 IST 2020 C/TAXAP/837/2019 ORDER thereto, no penalty u/s.271(1)(c) of Act is sustainable. Id. CIT(A) has made detailed analysis of issue in light of of various judgments and rightly come to conclusion that levy of impugned penalty is neither sustainable can facts nor in law. We uphold of order of Id. CIT(A) and reject ground of appeal of Revenue. 7 Thus, Tribunal proceeded on principle of law that when assessee disclosed amount during survey action under Section 133A and same is honoured by filing return of income, there cannot be any order of penalty under Section 271(1)(c) of Act, 1961. Tribunal took support of decision of Delhi High Court in case of CIT vs. SAS Pharmcaceuticals, 11 taxmann.com 207(Del). 8 Having heard learned counsel appearing for Revenue and having gone through materials on record, we are of view that no error, not to speak of any error of law could be said to have been committed by Tribunal in passing impugned order. question proposed by Revenue, in our opinion, cannot be termed as substantial question of law involved in this appeal. 9 In result, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) CHANDRESH Page 6 of 6 Downloaded on : Fri Feb 14 09:41:46 IST 2020 Principal Commissioner of Income-tax-2 v. Yamunaji Corporation