Sandeep Sethi Vs DCIT (ITAT Jaipur)
ITAT Jaipur held that once penal provisions under section 271AAB of the Income Tax Act are applied in case of search addition, invoking provision of section 115BBE is not in accordance with law and accordingly unsustainable.
Facts- Notice u/s 142(1) of the Act was issued to the assessee on 14-09-2017 which was duly served. In response to notice issued u/s 142(1) the assessee furnished his return of income on 31-10-2017 declaring total Income of Rs. 1,77,10,650/-. It includes the surrendered income of Rs. 89.05 lacs which had been accepted by the assessee during the course of search. Penalty proceedings u/s 271AAB(1)(a) of the Income-tax Act, 1961 is being initiated for undisclosed income which was unearthed during the course of search. In the assessment proceeding the learned assessing officer has added a sum of Rs. 5,52,241/- being the unexplained jewellery in addition to what has been disclosed and offered.
Being aggrieved, assessee carried the matter in appeal before CIT(A). Not agreeing to the order of CIT(A), assessee has preferred the present appeal.
Conclusion- We are of the considered view that once the ld. AO has already decided based on the fact that this is the case of search addition and amount declared u/s. 132(4) accepted by the assessee and offered the same in the return of income filed the same will be in accordance with the penal provision of section 271AAB and invoking to provision of section 115BBE in this case is not in accordance with the law and is also against principles of nature justice as no such issue is raised, discussed and confronted with the assessee. Thus, we direct the assessing officer to strict the calculation of tax in accordance with the provision of law as discussed here in above and give the relief in tax calculation accordingly.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
These are two appeals filed by the assessee and is arising out of the orders of the Learned Commissioner of Income Tax (Appeals)-4, Jaipur both dated 17.02.2022 [hereinafter referred to as (CIT(A)] for assessment years 2017-18 respectively.
2. Since the issues involved in these two appeals of the assessee are almost identical and were heard together with the agreement of both the parties and are being disposed off by this consolidated order.
3. At the outset, the ld. AR submitted that the matter pertaining to Shri Sandeep Sethi in ITA No. 155/JPR/2022 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are exactly identical except the difference in the amount. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 155/JPR/2022 is taken as a lead case.
4. Based on the above arguments we have also observed that ground no. 1 & 2 in ITA NO. 154 /JPR/2022 and ground no. 2 & 3 in ITA No. 155/JPR/2022 were common and ground no. 1 in ITA 155/JPR/2022 more thus, except these on the two grounds for both the appeals grounds are similar, facts are similar, arguments were similar and therefore, were heard together the parties and are disposed the case by taking lead case facts, grounds and arguments from the folder in ITA No. 155/JPR/2022.
5. Before moving towards the facts of the case we would like to mention that the assessee has assailed this appeal in ITA No. 155/JPR/2022 before us on the following grounds;
“1. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in making additions of Rs. 4,55,639 towards alleged unexplained investment in jewellery. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire such addition of Rs. 4,55,639/- made by the ld. AO and sustained by the ld. CIT(A).
2. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in invoking the provisions of Section 115BBE by applying the higher rate of tax i.e. 60% as introduced by the Taxation Laws ( Second Amendment) Act, 2016, on the income surrendered by the assessee, during the search conducted on 21.07.2016, at a time when such amended provisions of Section 115BBE were not in force. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of the amended provisions of Section 115BBE done by the ld. AO and confirmed by the ld. CIT(A).
3. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of the ld. AO, in invoking the provisions of Section 115BBE without providing any opportunity to the assessee and discussing anything, in this regard, in the assessment order. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of the amended provisions of Section 115BBE as done by the ld. AO and confirmed by the ld. CIT(A).
4. The assessee craves his right to add, amend or alter any of the grounds on or before the date of hearing.”
6. The fact as culled out from the records is that a search and seizure operation u/s 132(1) of the Income Tax Act, 1961 was carried out on 21.07.2016 at the various premises of Shanti Kumar Sethi Group, Jaipur. Residential premises of the assessee at 417, Hanuman Ji Ka Rasta, Tripolia Bazar, Jaipur was also covered. Consequent to search action the case of the assessee was centralized to this Circle by Pr. CIT/1/ITO(Hqrs.)/JPR/u/s127/2016-17/1550 dated 09.09.2016. The assessee has declared Income from Salary from M/s Nine Jewels Pvt. Ltd., Income from house property, Remuneration & Interest Income from M/s Nine Jewellery (50.00% Share), Income from short term capital gain, Interest Income from saving bank A/c and parties & Interest Income from minor Shaurya sethi & Kashvi during the year.
7. Accordingly notice u/s 142(1) of the Act was issued to the assessee on 14-09-2017 which was duly served. In response to notice issued u/s 142(1) the assessee furnished his return of income on 31-10-2017 declaring total Income of Rs. 1,77,10,650/-. It includes the surrendered income of Rs. 89.05 lacs which had been accepted by the assessee during the course of search. Penalty proceedings u/s 271AAB(1)(a) of the Income-tax Act, 1961 is being initiated for undisclosed income which was unearthed during the course of search. In the assessment proceeding the learned assessing officer has added a sum of Rs. 5,52,241/- being the unexplained jewellery in addition to what has been disclosed and offered. The relevant computation is reproduced herein below:
“5.5 During the course of search, silver articles were also found. Considering the status of the assessee silver utensils and silver jewellery weighing 10 kg. is considered is explained. Therefore, the remaining silver jewellery i.e. 19,500 gram is treated as unexplained.
