Brief of the Case
ITAT Pune held In the case of DCIT vs. M/s. Tapadia & Kasliwal Associates that in an identical issue before the Kolkata Bench of the Tribunal in the case of DCIT vs. Pioneer Marbles and Interiors Pvt. Ltd. reported in 144 TTJ 663, it was held that wherein entire tax and interest has been duly paid well within the time limit for payment of notice of demand under section 156 and well before the penalty proceedings were concluded, the assessee could not be denied the immunity under section 271AAA (2) only because entire tax, along with interest, was not paid before filing of income tax return or, for that purpose, before concluding the assessment proceedings. Since in the instant case although the assessee has not paid an amount of Rs.40,99,998/- before filing of the return of income, however, the fact remains that the demand raised by the AO u/s.143(3) has been paid on 22-03-2012 which is much before 28-062012, i.e., the date of penalty order passed u/s.271AAA. Therefore, respectfully following the above decision, we hold that no penalty u/s.271AAA is leviable in the instant case.
Facts of the Case
A search action was carried out in the case of Tapadia Khinvansara and power groups; assessee was part of this group. The AO noted that the assessee in the return of income filed has declared income of Rs.6,94,02,079/- as GP from the project. He observed that this income is in pursuance to the declaration of income made by the assessee during the search therefore, he determined the income of the assessee at Rs.6,84,35,910/- which is as per the return of income. The AO subsequently initiated penalty proceedings u/s.271AAA.
The assessee in his reply to such penalty notice submitted that the firm has offered profit on basement floor and ground floor of the hyper market which is being constructed by the firm at Garkheda, Aurangabad and which is agreed to be sold to Pusti Enterprises Pvt. Ltd. The income has been declared in the statement recorded u/s 132(4) by one of the partners of the firm Shri Jugal Kishore Tapadia. The firm has also paid tax on the income offered. The particulars of this disclosure are duly furnished during assessment proceedings which are accepted.
Contention of the Assessee
The ld counsel of the assessee submitted that the assessee had filed the return of income disclosing total income of Rs.6,84,35,910/- as disclosed by the partner of the firm during the course of search. The assessee has paid an amount of Rs.1,84,97,920/- towards income tax before filing of the return of income. The balance amount of Rs.40,99,998/- was paid on 22-03-2012 after the completion of assessment but much before the penalty order which was passed on 28-06-2013. Referring to the provisions of section 271AAA he submitted that the Act does not prescribe any time limit for payment of the taxes. He accordingly submitted that since the assessee has paid the tax due after completion of the assessment and before the penalty order was passed, therefore, the order of the CIT(A) is in accordance with the law and therefore the same should be upheld and the grounds raised by the Revenue should be dismissed. In his alternate contention he submitted that the penalty, if any is leviable, has to be restricted to 10% of the unpaid tax.
Contention of the Revenue
The ld counsel of the revenue strongly challenged the order of the CIT (A). He submitted that since the assessee has not paid the taxes and interest due before filing of the return of income, therefore, the third condition prescribed in provisions of section 271AAA (2) is not fulfilled. Referring to the said provision he submitted that for non levy of penalty the assessee has to pay the tax together with interest, if any, in respect of the undisclosed income which was admitted in the statement recorded u/s.132(4) and the assessee is able to substantiate the manner in which such undisclosed income was derived. Since in the instant case the assessee has not paid the taxes due together with interest in respect of such undisclosed income, therefore, he is not entitled to the immunity granted in section 271AAA.
Held by CIT (A)
Based on the arguments advanced by the assessee and relying on the decision of Hon’ble Supreme Court in the case of ACIT Vs. Gebilal Kanhaiyahal (HUF) reported in 252 ITR 435 and the decision of the Kolkata Bench of the Tribunal in the case of Pioneer Marbles and Interiors Pvt. Ltd. (Supra) the CIT(A) deleted the penalty levied u/s.271AAA by holding that the assessee has fulfilled the condition laid down in clause (iii) of sub-section (2) of section 271AAA since the assessee has paid the demand of Rs.49,64,700/- much before the date of penalty order passed u/s.271AAA for the year under appeal.
Held by ITAT
ITAT held that it is the case of the Revenue that since the assessee has not paid the entire tax and interest before filing of the return of income, therefore, penalty u/s.271AAA is leviable. It is the case of the assessee that the balance amount of Rs.40,99,998/- has been paid on 22-03-2012 which is much before 28-06-2012, i.e. the date of penalty order passed u/s.271AAA. Since there is no time limit prescribed for payment of tax u/s.271AAA and since the assessee has paid the entire tax along with interest due before passing of the penalty order, therefore, no penalty u/s.271AAA is leviable on the assessee.
We find an identical issue had come up before the Kolkata Bench of the Tribunal in the case of DCIT Vs. Pioneer Marbles and Interiors Pvt. Ltd. reported in 144 TTJ 663. In that case, the assessee company was subject to search and seizure operations u/s.132 during which the assessee made the disclosure of Rs.50 lakhs. The income so declared was included in the income subsequently returned by the assessee which was accepted by the AO in the assessment order. However, the AO initiated penalty proceedings u/s.271AAA on the ground that the assessee had not paid full tax and interest on disclosure made u/s.132(4). It was argued by the assessee that while filing the return of income it had not computed levy of interest u/s.234C due to inadvertent mistake but the assessee had paid overall shortfall within permissible time, i.e. upon receiving the notice of demand u/s.156. The AO rejected the contention of the assessee and levied penalty u/s.271AAA. The CIT (A) cancelled such penalty holding that due taxes along with interest was paid before the penalty proceedings were concluded. On further appeal by the Revenue the Tribunal dismissed the appeal filed by the Revenue and upheld the order of the CIT (A).
Since in the instant case although the assessee has not paid an amount of Rs.40,99,998/- before filing of the return of income, however, the fact remains that the demand of Rs.49,64,700/- raised by the AO for A.Y. 2010-11 vide order dated 29-12-2011 passed u/s.143(3) has been paid on 22-03-2012 which is much before 28-062012, i.e., the date of penalty order passed u/s.271AAA for the year under appeal. Therefore, respectfully following the decision of the Kolkata Bench of the Tribunal in the case of Pioneer Marbles and Interiors Pvt. Ltd., we hold that no penalty u/s.271AAA is leviable in the instant case. Accordingly, the order of the CIT (A) is upheld and the grounds raised by the Revenue are dismissed.
Accordingly appeal of the revenue dismissed.