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TMI Blog2016 (5) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... Act redundant. The Legislature in its wisdom had given a thoughtful consideration on the facts and circumstances under which the assessee would not be invited with the levy of penalty pursuant to the search subject to fulfilment of certain conditions stipulated in the said section. Hence, in view of the above, we hold that the levy of penalty is not automatic and the assessee is clearly entitled for immunity from levy of penalty. - Decided in favour of assessee - ITA No. 1082 /Kol/2013 - - - Dated:- 15-4-2016 - N. V. Vasudevan (Judicial Member) And M. Balaganesh (Accountant Member) For the Petitioner :Md. Ghayas Uddin Ansari For the Respondent : K. K. Chhaparia ORDER M. Balaganesh (Accountant Member) 1. This appeal of the Revenue arises out of the order of the learned Commissioner of Income-tax (Appeals), Central-I, Kolkata, in Appeal No. 348/CC-V/CIT(A)C-I/12-13 dated February 4, 2013, against the order of the learned Assessing Officer for the assessment year 2009-10 levying penalty under section 271AAA of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. The only issue to be decided in this appeal is as to whether the penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from various parties including advances, margin money and deposits. The assessee explained that it was carrying on the activity of s ale and purchase of shares for its own and also carried on the same on behalf of the clients to earn brokerage. The Learned AO found that closing balance of margin money, out of receipts from various clients as advance / deposit during the year was ₹ 1,45,5 0,000/- as on 31.3.2009 from seven clients, three of which belongs to the group. The assessee had the following income and losses during the year :- Share trading Rs. (-) 7,04,47,593/- F O Income ₹ 1,12,23,048/- Intraday trading income ₹ 79,46,637/- Brokerage income ₹ 19,26,662/- Mutual Fund Trading ₹ 55,94,908/- Other Income (including disclosure) ₹ 4,60,28 ,734/- -------------------------- ₹ 22, 72,396/- After deducting administrative cost of ₹ 3,70,13,193, finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty. 6. On first appeal, the assessee argued that the contention of the learned Assessing Officer that the disclosure made under section 132(4) of the Act was not included in the return filed under section 139(1) of the Act was not only factually incorrect but also misleading. It was argued that the search got concluded on November 7, 2009, being the last date of panchanama drawn by the authorised officer and the disclosure under section 132(4) of the Act was made by the assessee on November 7, 2009, on which date, the return of income under section 139(1) of the Act had already been filed. Hence, the assessee cannot be expected to offer the additional income in the return filed under section 139(1) of the Act for the assessment year 2009-10. It was also argued that in order to avail of the immunity provided in section 271AAA(2) of the Act, it is not necessary that the disclosure under section 132(4) should be included in the return filed under section139(1). It was argued that it would suffice if the additional income disclosed under section 132(4) was included in the return filed under section 153A of the Act and tax along with interest was paid thereon. It was also ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by ₹ 2 crores by offering the same as additional income under section 132(4) and it never had any intention to pay tax on the same. In response to this, the learned authorised representative reiterated the submissions made before the learned Commissioner of Income-tax (Appeals) and also stated that the assessee had in fact also paid taxes on the additional disclosure of ₹ 2 crores made and, accordingly, he argued that the statement of the learned Departmental representative is factually incorrect as could be evident from the assessment order itself. 8. We have heard the rival submissions and perused the materials available on record. The learned authorised representative stated that the learned Assessing Officer had not initiated any penalty proceedings under section 271AAA of the Act for the assessment year 2010-11, being the year of search, for the additional disclosure made under section 132(4) of the Act in the sum of ₹ 2 crores, in view of the fact that the same was offered in the return filed under section 139(1) of the Act. In this regard, it is pertinent to note that the assessee had time to file its return under section 139(1) of the Act and, hence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the financial year 2008-09 and ₹ 2,00,00,000 for the financial year 2009-10 respectively. During the course of search, certain documents pertaining to the company were inventorised at our office premises at 4A, Clive Row, Suit No. 411, 301A, 301B, 301C Kolkata 700 001. Based on various seized documents, we hereby offer a sum of ₹ 7,00,00,000 as our income for the financial year 2009-10 up to the period of search. Reference may be made to seized document, SSB/6, pages 1 to 25 and 35-36. The aforesaid income have been deployed in the working capital of the company including securities and margin money with stock exchanges. We shall file return accordingly in accordance with law after making technical adjustments (if any). We have tried to project a full and true picture on an estimated basis of all the income and we assure you that we shall make full and true disclosure in the return accordingly and pay taxes thereon. We also understand that we shall not be penalised in any manner for making the above statements. Thanking you, For Salasar Stock Broking Ltd. R.K. Saraogi (Director). 8.1. From the above disclosure statement, we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee would not be invited with the levy of penalty pursuant to the search subject to fulfilment of certain conditions stipulated in the said section. Hence, in view of the above, we hold that the levy of penalty is not automatic and the assessee is clearly entitled for immunity from levy of penalty. 8.2. We also find that the decision of the hon'ble Supreme Court in the case of Sudarshan Silks and Sarees v. CIT reported in [2008] 300 ITR 205 (SC) supports the case of the assessee. The brief facts of this are as below (page 207) : A search was conducted on the premises of the assessee on October 14, 15, 1987, and incriminating documents evidencing concealment of income by the assessee were unearthed apart from cash and jewellery found at the time of search. It was found that the appellant was maintaining double set of books and was accounting for only 50 per cent. of sales in the regular set of books. This fact was admitted by Shri J. S. Ramesh, a partner of the firm in the statement recorded under section 132(4) of the Act. Shri J. S. Ramesh is the person-in charge of the entire group. The total turnover suppressed by the assessee for the assessment year 1987-88 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of years unless he was promised some reciprocal benefit like not being visited with penalty ? The learned Departmental representative has tried to argue before us that a change of heart might have taken place as a result of which Sri Ramesh came forward with all the disclosures for different years voluntarily. But looking into the hard facts of life and the general experience of mankind, especially with regard to financial affairs, it would be difficult to accept such a proposition. Evidently, huge amount of unexplained investments including unexplained stock was found at the time of search. Ultimately, almost the same amount of income was offered by the assessee over a number of years. As the tax rates over the entire period was more or less the same, the tax effect, either from the point of view of the Department, or the assessee would have more or less the same, had the entire undisclosed assets been subjected to tax in the year of search or the entire income was spread over a number of years as has been done in the present assessments. In view of the deposition given under section 132(4) followed by the co-operating attitude of the assessee in paying up the tax, it woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department. These findings have been finally approved by the hon'ble Supreme Court by observing as under (page 213) : Accordingly, the orders under appeal are set aside and that of the Commissioner of Income-tax (Appeals) and the Tribunal restored. It is held that in the facts and circumstances of the case, penalty under section 271(1)(c) was not exigible. The appeals are accepted with costs. 8.3. We find that the following decisions support the case of the assessee : (a) The decision of the co-ordinate Bench of the Cuttack Tribunal in the case of Pramod Kumar Jain v. Deputy CIT reported in [2013] 33 taxmann.com 651 (Cuttack-Trib.) 6. We have heard the rival contentions and perused the material available on record. On consideration of the facts and circumstances of the case, we are inclined to hold that no definition could be given to the 'specified manner' in so far as the very statement on oath under section 132(4) specifies the manner on which the assessee is prepared to pay tax thereon. The inscribing in the books of account was taken care of by the assessee when he filed the returns in pursuance to notice under section 153A accounting th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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