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TMI Blog2013 (5) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to delete the penalty u/s 271AAA. In favour of assessee. - ITA No.551/Del./2013 - - - Dated:- 30-4-2013 - Shri U. B. S. Bedi And Shri B. C. Meena,JJ. For the Petitioner : Shri K. Sampath Advocate and Shri Raj Kumar, Advocate For the Respondent : Smt. Renuka Jain Gupta, Senior DR ORDER Per B. C. Meena, Accountant Member :- All these three appeals are directed against the three orders made by CIT (Appeals)-XXXII, New Delhi on 22.11.2012. 2. All the appellants are individuals and were Directors in Gupta Company Private Limited. A search operation was conducted on 10.02.2009 on "Gupta Company Pvt. Ltd. Group". All these three assessees were Directors in Gupta Company Pvt. Ltd. A statement u/s 132(4) of Income- tax Act, 1961 was recorded during the search operation of Shri Virendara Kumar Gupta in which in answer to question nos.18 19, the following answer was made :- "Q.18 Do you want to say anything? Ans. Considering the position declared above I as director of M/s. Gupta co. (P) Ltd. declared Rs.20 Crores (Twenty Crore) as additional income for the F.Y. 2008-09 relevant to A.Y. 2009-10. The additional incomes declare of Rs.20 Crores is ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which consists of a Diary (black colour). Please explain the nature of entries in it? Ans. These represents the sell accounts of various parties. These accounts are based on the sale transaction contained in Annexure A-3 as mentioned in Answer No.14." Thus, there was a disclosure of Rs.20 crores by the Group in the statement recorded u/s 132(4) of the Income-tax Act, 1961 during the search operation. The statement recorded u/s 132(4) was started on 10.02.2009 and completed on 12.02.2009. Thereafter, an affidavit by Shri Sharad Jain was also filed on 05.05.2009 wherein the disclosure of Rs.20 crores was maintained and details of Group history were provided. The disclosure was bifurcated in the following manner :- Rs. in Crores a) Effect of discrepancies in the inventory prepared by the Authorised officers on 10.02.2009 at the business premises of M/s Gupta Company Pvt. Ltd., with 7.50 the clarification submitted from time to time. 7.50 b) Income earned through the joint enterprise of Shri Virendara Kumar Gupta, Shri Sudhir Jain and Sharad Jain (the deponent here) compendiously known as Sugandh Sansar" as per the Agreement dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to law, with respect to a particular income. There are no words in the Income Tax Act, which empower the Income Tax Officer or give him an option to tax either the AOP or its members individually. If it is the income of the AOP in law, the association of persons alone has to be taxed; The members of the AOP cannot be taxed individually in respect of the income of the AOP. Consideration of the interest of the revenue has no place in this scheme. In the present case, department has taken a view that the surrendered income of Rs.12.5 crore belongs to the members individually and not to the AOP hence, no different view can be taken in the case of AOP by taxing the same amount again on the ground that the assessee himself had originally filed the return offering the surrendered amount in the hands of AOP. Hence the 2nd revised return filed by the assessee on 08.01.2011 requires consideration. The revisional powers of the Commissioner u/s 264 of the Income Tax Act 1961, has all the trappings of a judicial power. Jurisdictional High Court in the case of Aparna Ashram vs Director of Income Tax (258 ITR 401), after relying upon the judgement of Supreme Court in the case of Dwarka Nath vs I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in case the relief i allowed to the AOP M/s Sugandh Sansar, all the three members of the AOP undertake to withdraw their appeals from the CIT(A). In view of his undertaking, it is further held that the relief granted in the preceding para will be effective only after the appeals have been withdrawn in the case of members of the AOP and the same have become final." While making the assessment in the hands of individual penalty proceedings u/s 271AAA of the Income-tax Act, 1961 was initiated. The Assessing Officer has levied the penalty with the prior approval of Addl.CIT, Central Range 4, New Delhi on 27.06.2011. The assessee went in appeal and the CIT (A) has confirmed the penalty. Now all these three assessees are in appeal before us by taking following grounds of appeal :- "1. The order of the Ld. CIT (Appeals) XXXII, New Delhi is bad in law and on facts. 2. The Ld. CIT (Appeals) XXXII has erred in confirming the penalty order of ACIT, CC-9, New Delhi wherein Ld. ACIT imposed penalty u/s 271AAA of the Act amounting to Rs.41,66,666/-. 3. The Ld. CIT (A) erred in overlooking / summarily rejecting the detailed submissions made by the appellant on the issue of applicabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the Members of AOP. There are no further addition in the declare income. The income of Rs.12.50 crores has been trifurcated. Thus, the amount of disclosure of the Group remains the same which was disclosed during the search operation. It is also a fact that in a continuous search operation for 3 days, no person shall be able to give the exact figures of the disclosure, however, in the case under consideration, even the stock inventory was duplicated and it was of lesser amount and even then for the peace of mind, the disclosure kept in the same level which was disclosed at the time of search operation. The assessee has also narrated the manner in which the income was derived and it has substantiated the manner in which the undisclosed income was derived whenever the assessee was asked to substantiate the same. The assessee has paid the taxes together with interest in respect of this undisclosed income declared in the statement recorded under sub-section (4) of section 132 of the Income-tax Act, 1961. Therefore, the assessee should not be visited by penalty u/s 271AAA of the Income-tax Act, 1961. 4. On the other hand, the ld. DR relied on the orders of the authorities below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees have given an undertaking that in case the relief is allowed to the AOP "Sugandh Sansar", all the members will withdraw the appeals from CIT (A). Thus, the CIT has considered the issue and has finally agreed that the income should be taxed in the hands of the individuals. The taxes had been paid along with the interest in all these individual hands. Since a statement was given during the course of search u/s 132 of Income-tax Act, 1961 admitting the undisclosed income of Rs.20 crores of the Group, the quantum of disclosure of income was affirmed by an affidavit by other person of the Group. The manner was also stated in the statement by which sun income was earned. In our considered view, the Group has also substantiated the manner in which this undisclosed income was derived. In the statement recorded u/s 132(4) of the Act and in an affidavit dated 15.05.2009, the disclosure was maintained. The assessees of the Group have also paid the taxes applicable along with interest. In such a situation, the CIT (A) was not justified in sustaining the penalty u/s 271(1)(c) of the Act levied by the Assessing Officer. Considering all these facts and circumstances, we set aside the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X
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