IN THE ITAT KOLKATA BENCH ‘A’
Deputy Commissioner of Income-tax
Versus
Sheo Kumar Kajaria
IT Appeal Nos. 1425-1426 (Kol.) of 2010
[Assessment years 2004-05 and 2005-06]
August 1, 2012
ORDER
Sanjay Arora, Accountant Member
This is a set of two Appeals by the Revenue contesting the Order u/s. 154 r.w.s. 250 of the Income-tax Act, 1961 (‘the Act’ hereinafter) dated 26-05-2010 by the Ld. Commissioner of Income-tax (Appeals)(Central)-III, Kolkata (‘CIT(A)’ for short) for the assessment years (A.Ys.) 2001-02 to 2006-07.
2. The brief facts of the case are that the assessee is a builder. Search and seizure operations in the group cases, including the assessee, u/s. 132 of the Act was conducted by the Department on 23-08-2006. Money, jewellery, investment and other valuables, aggregating to Rs. 121.29 crores, were found during the course of search from the assessee’s residential premises, and duly recorded in the Panchnama. This was followed by a disclosure petition by the assessee on 21-10-2006, admitting an amounting of Rs. 590.63 lakhs as his undisclosed income for the block period, which was spread over A.Ys. 2001-02 to 2007-08, vide returns of income filed u/s. 153A r.w s. 139(1) of the Act, filed subsequently on 28-08-2007. The aggregate returned income was in fact at Rs. 603.39 lakhs on account of some additional disclosure for A.Y 2007-08. The assessments were made accordingly for each of the years u/s.153A r.w.s. 143(3) of the Act, i.e., on the basis of the income as originally returned u/s. 139(1), and the additional income as per the disclosure pursuant to the search, being dated 20/6/2008 for A.Ys. 2004-05 and 2005-06. The assessee having returned a higher income only on the basis of search, and the materials found thereat, penalty proceedings u/s. 271(1)(c) of the Act on the additional income offered vide the disclosure petition/returns u/s. 153A were also initiated for all the years, it appears, up to A.Y. 2005-06; it being trite that the penalty for concealment and/or furnishing inaccurate particulars of income u/s. 271(1)(c) of the Act is to be with reference to the income and its particulars as returned originally (refer: CIT v. Onkar Saran & Sons [1992] 195 ITR 1/62 Taxman 440 (SC)). Penalty under the said section was accordingly levied vide separate orders u/s. 271(1)(c) of even date i.e., 26-12-2008, for the A.Ys. 2001-02 to 2005-06. The assessee was, however, successful in first appeal for A.Ys. 2001-02 to 2003-04 on the basis of the applicability of Explanation 5 to section 271(1)(c) of the Act. The assessee had duly disclosed the manner in which the impugned income had been derived, as also paid tax and interest arising thereon. For A.Ys. 2004-05 and 2005-06, however, the assessee had not paid the full demand of tax and interest and, accordingly, clause-2 of Explanation-5 could not be said to be applicable. The appeal for these two consecutive years was therefore dismissed, allowing that for the initial three years, by the ld. CIT(A) vide his order dated 27-08-2009 (copy on record). The assessee subsequently moved a rectification petition before the ld. CIT(A) for the last two years, i.e., A.Y. 2004-05 and 2005-06, claiming that the entire demand for these years also stood paid prior to the date of the appellate order i.e., 27-08-2009. The assessee’s claim was got verified by the ld. CIT(A) from the Assessing Officer (AO), who confirmed that no demand for the relevant years, i.e., A.Ys. 2004-05 and 2005-06, was outstanding as on 27-08-2009. On the basis of the said confirmation by the AO, vide his remand report dated 10-05-2010, the operating part of which stands reproduced by the ld. CIT(A) at page-3 of his order, he confirmed of a factual infirmity in his earlier order dated 27-08-2009, i.e., in-so-far as it relates to A.Ys. 2004-05 and 2005-06, and accordingly, issued a finding that the conditions of Explanation-5 to section 271(1)(c) of the Act, i.e., for availing immunity from penalty imposed under the Act, stood satisfied by the assessee for the A.Ys 2004-05 and 2005-06 as well. Reference was made to the decision by the hon’ble Supreme Court in the case of CIT v. Hero Cycles (P.) Ltd. [1997] 228 ITR 463/94 Taxman 271 and N. RajamoniAmma v. Dy. CIT [1990] 53 Taxman 331 (Ker.) for the purpose that the CIT had the authority to rectify a mistake in his order, either of fact or of law, as apparent from the record. The penalty for these years was, accordingly, deleted. Aggrieved, the Revenue is appeal before the Tribunal.
3.1 Before us, the ld. DR could not rebut the factual findings by the ld. CIT(A) per his impugned order. On the Bench specifically inquiring of him if all the conditions of Explanation 5 to sec. 271 (1)(c) stood met in the instant case, he confirmed it to be so, i.e., conceded to the applicability of clause (2) of Explanation 5 to sec. 271(1)(c) for the relevant years. The ld. AR, on the other hand, would submit that there is no basis whatsoever for the Revenue’s challenge. The ld. CIT(A) had declined relief in the first instance only on the basis that the entire admitted demand had not been paid by assessee, which finding was factually incorrect. The first appellate authority had called for a remand report from the AO, and only on the latter’s confirmation that no demand, either as to tax or interest thereon, for the relevant years was outstanding as on the date of the appellate order, i.e., on 27-08-2009, rectified the said order in relation to these years; the same clearly bearing a factual mistake in this regard.
3.2 The hearing was closed at this stage, pronouncing the result of these appeals by the Revenue against it; it being the common contention of both the parties that the provision of Explanation 5 to section 271(1)(c) stood attracted and satisfied in the instant case for the relevant years.
4. We have heard the parties, and perused the materials on record, including the assessment order; the penalty orders, as well as those by the appellate authorities in the first round, i.e., prior to the rectification by the ld. CIT(A) of his earlier order confirming the levy of penalty for the relevant years vide the impugned order. The tribunal is supposed to decide an issue/s arising before it on merits, applying the law to the given facts and circumstances, issuing specific finding/s of fact, where and to the extent required, of course, on the basis of the material on record and after hearing the parties to the list.
4.1 Explanation 5 to section 271(1)(c) reads as under:-
