Pr. Commissioner Of Income Tax, Udaipur v. D.b. Income Tax Appeal

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. *** D.B. Income Tax Appeal No. 26 / 2018 Pr. Commissioner of Income Tax, Udaipur. ----Appellant Versus Shri Shanti Lal Jain, Prop. M/s Meenakshi Property Dealer, Udaipur.----Respondent D.B. Income Tax Appeal No. 28 / 2018Pr. Commissioner of Income Tax, Udaipur. ----Appellant Versus Shri Shanti Lal Jain, Prop. M/s Meenakshi Property Dealer, Udaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.K.Bissa. _____________________________________________________ HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS HON'BLE MR. JUSTICE VINIT KUMAR MATHUR Order (Per Hon’ble Mr.Justice Vinit Kumar Mathur)02/02/2018 The present appeals have been preferred to challenge theorder dated 22.05.2017 passed by the Income Tax AppellateTribunal, Jodhpur Bench, Jodhpur (Hereinafter referred to as‘ITAT’) in Income Tax Appeal Nos.454/Jodh/2015 & 455/Jodh/2015whereby the appeals preferred by the revenue against the ordersdated 03.07.2015 & 06.07.2015 passed by the Commissioner ofIncome Tax (Appeals) have been dismissed. Both these appeals are being decided by this common orderas both the appeals arise out of a common order passed by theITAT. The only difference being of assessment years i.e. 2006-07in appeal No.26/2018 and 2007-2008 in Appeal No.28/2018. Brief facts necessary to be narrated for adjudication of theseappeals are that the respondent- assessee is a property dealerwho is engaged in the business of Real Estate. The assessee isdoing the business in the name of M/s Meenakshi Property Dealersand also earned income from the partnership firm and bankinterest during the assessment year 2005-06. Return of incometax was filed by the assessee on 31.10.2006 declaring the totalincome of Rs.50,96,699/- and agricultural income ofRs.1,26,378/-. A search and seizure operation under section 132of the Income Tax Act, 1961 was carried at the residence andbusiness premise of the assessee on 14.11.2006. Thereafter, therespondent- assessee filed his income tax returns in response tothe notice served upon him under section 153 (A) of the IncomeTax Act, 1961 for the assessment year 2006-07 on 21.10.2008declaring total income of Rs.1,19,78,419/- and agriculture incomeof Rs.1,26,378/-. The Assessing Officer accepted the returns filedby the assessee but at the same time, initiated the penaltyproceedings under section 271 (1) (c) of the Income Tax Act, 1961for concealment of income on the amount offered in the returnsfiled under section 153 (A) of the Income Tax Act. After givingopportunity of hearing to the assessee, the Assessing Officerimposed the penalty of Rs.23,21,400/- for the assessment year2006-07 and penalty of Rs.76,84,910/- for the assessment year 2007-08 respectively vide its order dated 17.06.2009. Theassessing officer further held that the income which wassurrendered by the assessee was not disclosed in the originalreturns and the same was done only after the search wasconducted at his premise and in pursuance of the notice servedunder section 153 (A) of the Income Tax Act, 1961. It was furtherheld that since the disclosure was not voluntary and bonafide,besides the case of the assessee is not covered by Clause 2 ofexplanation 5 to section 271 (1) (c) of the Income Tax Act, 1961,therefore, the penalty levied is just and proper and the same is inaccordance with law. The respondent- assessee aggrieved of this order dated17.06.2009 passed by the assessing officer preferred two separateappeals Nos.144/2009-10 & 145/2009-10 before learnedCommissioner of Income Tax. In appeals, learned Commissioner ofIncome Tax vide its orders dated 03.07.2015 and 06.07.2015while deleting the amount of penalty allowed the appeals in thelight of decision of Hon’ble Supreme Court in the case of ACIT vs. The respondent- assessee aggrieved of this order dated17.06.2009 passed by the assessing officer preferred two separateappeals Nos.144/2009-10 & 145/2009-10 before learnedCommissioner of Income Tax. In appeals, learned Commissioner ofIncome Tax vide its orders dated 03.07.2015 and 06.07.2015while deleting the amount of penalty allowed the appeals in thelight of decision of Hon’ble Supreme Court in the case of ACIT vs. Gebilal Kanhaialal HUF, reported in [2012] 25Taxmann.com 214 (SC) holding therein that the case of therespondent- assessee is fully covered by Clause 2 of Explanation 5to Section 271 (1) (c) of the Income Tax Act and following threeconditions have been satisfied by the assessee:- Firstly, the assessee must make a statement under section132 (4) of the Income Tax Act in course of search stating thatunaccounted assets and incriminating documents found from hispossession during the search have been acquired out of his income. Secondly, the assessee should specify, in his statementunder section 132 (4), manner in which such income stoodderived. Thirdly, the assessee has to pay tax together withinterest, if any, in respect of such undisclosed income. Since, all these conditions were being fulfilled by theassessee in the present case, the Commissioner of Income Tax(Appeals) allowed the appeals filed by the respondent- asseesseerelying upon various judgments cited before him including thejudgment of Hon’ble Supreme Court in the case of GebilalKanhaialal HUF (supra). The revenue assailed validity of ordersdated 03.07.2015 and 06.07.2015 before learned ITAT but learnedITAT after hearing counsel for the parties rejected the appealsfiled by the revenue vide its orders dated 22.05.2017. Heard Mr. K.K.Bissa, learned counsel appearing for therevenue. Learned counsel for the revenue vehemently submitted thatthe conditions enumerated in Clause 2 of explanation to section271 (1) (c) of the Income Tax Act, 1961 have not been followed inthe present case in its true letter and spirit. He submits thatdisclosure of the income was done by the respondent- assesseeafter search and seizure was made at his residence and businesspremise, therefore, disclosure is not bonafide and the assesseehas not disclosed his true and correct income in the returns filedby him under section 139 (1) of the Income Tax Act. Had therebeen no search and seizure on the premise of the assessee, theincome which is disclosed after the notice under section 153 (A) ofthe Income Tax Act would have remained concealed and the revenue would have been put to loss of tax on the same.Therefore, learned counsel prays that substantial question of lawarises in the present case for consideration by this court. We have scanned through the orders passed by theauthorities below. It is an admitted position that for the purpose ofgetting immunity from the penalty imposed under Clause 2 ofexplanation 5 to Section 271 (1) (c) of the Income Tax Act, 1961,three conditions are required to be satisfied by the assessee.Firstly, if the assessee makes a statement under section 132 (4)during the course of search admitting his income. Secondly, if hesatisfies the manner in which such income has been derived andthirdly, if the assessee pays the tax along with interest in respectof such income. We find that all the three conditions in the present case havebeen fulfilled because after the search and seizure, the assesseehad admitted in his statement that income has been derived fromthe land deals in the present case and thereafter, he filed returnsin pursuance of the notice issued to him under section 153 (A) ofthe Income Tax Act by declaring the same in the returns of incomeand further, the assessee had paid tax together with the intereston the undisclosed income thereafter. We find that all the three conditions in the present case havebeen fulfilled because after the search and seizure, the assesseehad admitted in his statement that income has been derived fromthe land deals in the present case and thereafter, he filed returnsin pursuance of the notice issued to him under section 153 (A) ofthe Income Tax Act by declaring the same in the returns of incomeand further, the assessee had paid tax together with the intereston the undisclosed income thereafter. We further find that assessee had already paid tax alongwith interest, although belatedly, but there is no limitationprescribed for the same under Clause 2 of Explanation 5 toSection 271 (1) (c) as held by the Hon’ble Supreme Court in thecase of Gebilal Kanhaialal HUF (supra). Therefore, in view of the concurrent findings of the twoappellate authorities and in the light of judgment rendered byHon’ble Supreme Court in the case of Gebilal Kanhaialal HUF(supra), we are of the opinion that the view taken by theCommissioner of Income Tax (Appeals) and confirmed by learnedITAT is not required to be interfered. As such, there is no force inthe instant appeals and no substantial question of law emerges inthese appeals for consideration by this court. In result, both theappeals fail and are hereby dismissed. (VINIT KUMAR MATHUR) J. (GOPAL KRISHAN VYAS) J. Anil Singh/24 & 26