Case Law Details
Sureshbhai Gordhanbhai Prajapati Vs DCIT (ITAT Ahmedabad)
Section 153 A provides the procedure for completion of assessment where a search is initiated under Section 132 or books of account, or other documents or any assets are requisitioned under Section 132A after 31.05.2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which (he search was conducted under Section 132 or requisition was made under Section 132A. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or requisition under Section 132A, as the case may be, shall abate. [Ref to Memorandum accompanying the Finance Bill, 2003] Section 153A opens with a non-obstante clause relating to normal assessment procedure covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after May 31, 2003. The sections, so excluded, relate to returns, assessment and reassessment provisions. However, the provisions that are saved are those under Section 153B and 153C, so that these three ^Sections 153A, 153B and 153C are intended to be a complete code for post-search assessments. Considering that the non-obstante clause under Section. 153A excludes the application of, inter alia, Section 139, it is clear that the revised return filed under Section 153A takes the place of the original return under Section 139, for the purposes of all other provisions of the Act.
It is transpired from the assessment order that the assessee has filed the return for the first time u/s 153A of the Act and no return was filed before initiation of search. Therefore, in terms of section 153A of the Act, return filed u/s 153A of the Act would be deemed to be return filed u/s 139 of the Act and all consequential provisions would apply.
FULL TEXT OF THE ITAT JUDGEMENT
These three appeals by three different assessees are directed against three different orders of the Ld. CIT(A)-11, Ahmedabad dated 2.1.2018, 20.12.2017 & 2.1.2018 respectively.
2. First I take up ITA No. 526/Ahd/2018. The assessee has raised following grounds of appeal:
1. The learned CIT(A) has erred in law and on facts in upholding penalty of Rs.19,234/-levied u/s 271(1)(c) without properly appreciating the facts of the appellant.
2. The learned CIT(A) has erred in law on facts in not considering the submission dated 18.8.2015 and the decision of ITAT Delhi relied upon by the assessee in the case of Prem Arora and Pawan Kumar Gupta and ignoring the fact that return income in response to notice u/s 153A is the assessed income u/s 153A(1)(b).
3. On the facts no such penalty u/s 271(1)(c) ought to have been levied.
4. The appellant craves leave to add to alter and/or to modify any ground of appeal.
3. The only effective ground is against confirming the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’). At the outset, Ld. Counsel for the assessee submitted that the assessee had filed return u/s 153A of the Act. Consequent to search u/s 132 of the Act on 6.11.2012 the assessment orders were passed u/s 143(3) r.w.s. 153A(1)(b) of the Act assessing the same income as returned by the assessee without any variation. It was further contended that during the search, no documents pertaining to the additional income was found/seized. Penalty proceedings have been initiated u/s 271(1)(c) of the Act for concealment of income. He submitted that as the income of return filed u/s 153A and assessed income are the same, no penalty can be levied and the case of the assessee is covered by the following decisions:
1. The above appeals are covered by the order of ITAT, in their own case vide ITA No. 4.5.6/Ahd/2018 pronounced on 19/07/2019 by ITAT SMC Bench. The facts are same.
2. Kirit Dahyabhai Patel (2017) 80 com.162(Gujarat)
3. Neeraj Jindal (2017) 79 Com. 96 (Delhi), 393 ITR 1(Delhi) :- The Hon’ble High Court refered to decision of Gujarat High Court in the case of Kirit Dahyabhai Patel (Para.20)
In this case, the decision of Prem Arora V/s. Dy.CIT 149 TTJ (Delhi) 590 has also been mentioned at para-5. This case was relied upon by the assesses before lower authorities.
4. ITAT, Ahmedabad Bench-C ITA No. 2662/A/2017, 2669, 2670, 2671/A/2017 A.Y.2009-10, 2010-11 and 2012-13, ITA No. 2663 to 2668/A/2017 Asstt.years 2007-08 to 2012-13 dtd.08/04/2019- In this case, the decision of Delhi High Court in the case of Neeraj Jindal mentioned above and decision of ITAT Rajkot Bench in case of Mansukhbhai R.Sorathia & Others IT(SS)(A.No.46/RJT/2014 were referred to and penalties were deleted.
4. Ld. D.R. opposed these submissions and supported the orders of the authorities below.
5. In rejoinder, Ld. Counsel for the assessee submitted that the issue is squarely covered in favour of the assessee.
6. I have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Division bench of this Tribunal in the case of Vithalbhai Gordhanbhai Prajapati Vs. DCIT Central Circle-1(2), Ahmedabad for the A.Y. 2008-09 in ITA No. 4/Ahd/2018 dated 19.7.2019 held as under:
6. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the instant case arises whether there will be any penalty under section 271(1)(c) of the Act on the income declared by the assessee in return filed under section 153A of the Act.
6.1 From the preceding discussion and on perusal of the order of the authorities below, we note that there was no reference made to any incriminating document found during the search. Therefore, we re of the view that the addition of undisclosed income was based on the statement furnished under section 132(4) of the Act.
7. Further, reliance is placed on the judgement of the Hon’ble jurisdictional High Court rendered in the case of Kirit Dahyabhai Patel Vs. ACIT (2017) 80 com 162 (Gujarat). The Hon’ble High Court has decided the issue as follows:
13. Considering the facts and circumstances of the case and also considering the decisions relied upon by learned senior advocate for the appellant, we are of the considered opinion that the view taken by the Tribunal is erroneous. The CIT(A) rightly held that it is not relevant whether any return of income was filed by the assessee prior to the date of search and whether any income was undisclosed in that return of income. In view of specific provision of section 153A of the I.T. Act, the return of income filed in response to notice under section 153(a) of the I.T. Act is to be considered as return filed under section 139 of the Act, as the Assessing Officer has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under section 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under section 153A, if any.
8. Further, reliance is placed on the judgement of the Hon’ble Delhi High Court rendered in the case of Principal CIT-19 Vs. Neeraj Jindal (2017) 79 taxmann.com 96 (Delhi). The Hon’ble High Court has decided the issue as follows:
“19. The whole matter can be examined from a different perspective as well. Section 153 A provides the procedure for completion of assessment where a search is initiated under Section 132 or books of account, or other documents or any assets are requisitioned under Section 132A after 31.05.2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which (he search was conducted under Section 132 or requisition was made under Section I32A. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or requisition under Section 132A, as the case may be, shall abate. [Ref to Memorandum accompanying the Finance Bill, 2003] Section 153A opens with a non-obstante clause relating to normal assessment procedure covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after May 31, 2003. The sections, so excluded, relate to returns, assessment and reassessment provisions. However, the provisions that are saved are those under Section 153B and 153C, so that these three ^Sections 153A, 153B and 153C are intended to be a complete code for post-search assessments. Considering that the non-obstante clause under Section. 153A excludes the application of, inter alia, Section 139, it is clear that the revised return filed under Section 153A takes the place of the original return under Section 139, for the purposes of all other provisions of the Act. This is further buttressed by Section 153A (1)(a) which reads:
“Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall-
1. Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139.”
9. The revenue has not brought any contrary binding precedent to our notice. It is transpired from the assessment order that the assessee has filed the return for the first time u/s 153A of the Act and no return was filed before initiation of search. Therefore, in terms of section 153A of the Act, return filed u/s 153A of the Act would be deemed to be return filed u/s 139 of the Act and all consequential provisions would apply. The Ld. D.R. has not rebutted this fact. I therefore, respectfully following judgement of Hon’ble Gujarat High Court rendered in the case of Kirit Dahyabhai Patel Vs. ACIT (supra) and other case laws as relied by the Ld. Counsel for the assessee, direct the A.O. to delete the penalty. The appeal of the assessee is allowed.
10. Now I take up ITA No. 527/Ahd/2018 for the A.Y. 2012-13 and the assessee has raised following grounds of appeal:
1. The learned CIT(A) has erred in law and on facts in upholding penalty of Rs. 51,290/- levied u/s 271(1)(c) without properly appreciating the facts of the appellant.
2. The learned CIT(A) has erred in law and on facts in not considering the submission dated 18.8.2015 and the decision of ITAT Delhi relied upon by the assessee in the case of Prem Arora and Pawerkumar Gupta and ignoring the fact that return income in response to notice u/s 153A is the assessed income u/s 153A(1)(b).
3. On the facts no such penalty u/s 271(1)(c) ought to have been levied.
4. The appellant craves leave to add to alter and/or to modify any ground of appeal.
11. The facts and circumstances in this case are identical as were in that of ITA No. 526/Ahd/2018 for the A.Y. 2012-13. Respective representatives have adopted the same argument as were in ITA No. 526/Ahd/2018, in which I have decided the issue in favour of the assessee. For the same reasoning grounds of appeal are allowed.
12. In view of the above, the appeal filed by the assessee is allowed.
13. Now I take up ITA No. 528/Ahd/2018 for the A.Y. 2012-13 and the assessee has raised following grounds of appeal:
1. The learned CIT(A) has erred in law and on facts in upholding penalty of Rs. 1,46,160/- levied u/s 271(1)(c) without properly appreciating the facts of the appellant.
2. The learned CIT(A) has erred in law and on facts in not considering the submission dated 18.8.2015 and the decision of ITAT Delhi relied upon by the assessee in the case of Prem Arora and Pawerkumar Gupta and ignoring the fact that return income in response to notice u/s 153A is the assessed income u/s 153A(1)(b).
3. On the facts no such penalty u/s 271(1)(c) ought to have been levied.
4. The appellant craves leave to add to alter and/or to modify any ground of appeal.
14. The facts and circumstances in this case are identical as were in that of ITA No. 526/Ahd/2018 for the A.Y. 2012-13. Respective representatives have adopted the same argument as were in ITA No. 526/Ahd/2018, in which I have decided the issue in favour of the assessee. For the same reasoning grounds of appeal are allowed.
15. In view of the above, the appeal filed by the assessee is allowed.
16. In the result, the appeals filed by the assessees in ITA Nos. 526, 527 & 528/Ahd/2018 for the A.Y. 2012-13 are allowed.
Order was pronounced in the open court on 19.09.2019.
