Principal Commissioner Of Income Tax 3 v. Savy Construction

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 774 of 2018 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH andHONOURABLE MR.JUSTICE A.Y. KOGJE ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ?allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?question of law as to the interpretation of the Constitution of India or any order made thereunder ? ======================================PRINCIPAL COMMISSIONER OF INCOME TAX 3 Versus SAVY CONSTRUCTION ====================================== Appearance: MRS MAUNA M BHATT(174) for the APPELLANT(s) No. 1MR B S SOPARKAR(6851) for the RESPONDENT(s) No. 1====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAHand HONOURABLE MR.JUSTICE A.Y. KOGJE Date : 24/07/2018 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0]Feeling aggrieved and dissatisfied with the impugned order dated 11/10/2017 passed by the learned Income Tax Appellate Tribunal “C” Bench, Ahmedabad (hereinafter referred to as “the learned Tribunal”)(hereinafter referred to as “the learned Tribunal”)in IT(SS) No.75/AHD/2014 for the Assessment Year 2007-08 by which the learned Tribunal has dismissed the said Appeal preferred by the revenue and has confirmed the order passed by the learned CIT(A) deleting the penalty under Section 271(1)(c) of the Income Tax Act, revenue has preferred the present Tax Appeal to consider the following proposed question of law; “Whether in the facts and the circumstances of the case, the Appellate Tribunal was right in upholding the order of CIT(A) and thereby deleting the penalty of Rs.67,32,000/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961, without considering the fact that the assessee had failed to ‘Specify’ and ‘Substantiate’ the manner in which the undisclosed income has been derived?” [2.0]Asearch under Section 132(2) of the Income Tax Act was conducted in the case of Savvy Group on 14/02/2007 and various documents /books of accounts /other valuable articles /other things were found and seized from various premises covered under Sections 132(1) and 132(1A) of the Income Tax Act. During the course of search, partners of the assessee firm made voluntary disclosure of income of Rs.2 Crore in the statement recorded under Section 132(4) of the Income Tax Act on 15/02/2007 for the Assessment Year 2007-08. Subsequently, the return of income was filed on 04/06/2008 declaring the income at Rs.1,19,12,160/- inter alia including undisclosed income of Rs.2 Crores. The case was selected for scrutiny. The assessment was finalized under Section 143(3) read with Section 153A read with Section 153(B)(i)(b) of the Income Tax Act on 31/12/2008 accepting the return of income of Rs.1,19,12,160/-. Thereafter penalty proceedings under Section 271(1)(c) of the Income Tax Act was initiated on the unaccounted income, which was disclosed by the assessee. It was the case on behalf of the Department that the unaccounted income was accepted by the assessee only after the search, and therefore, considering Section 271(1)(c) of the Income Tax Act, the assessee was liable to the penalty as he concealed the particulars of the income. The assessee objected to the same relying upon Clause (2) of Explanation 5 of Section 271(1)(c) of the Income Tax Act. However, the learned Assessing Officer did not accept the same and levied the penalty of Rs.67,32,000/- on unaccounted income of Rs.2 Crores levied under Section 271(1)(c) of the Income Tax Act. Feeling aggrieved and dissatisfied with the order passed by the learned Assessing Officer levying penalty under Section 271(1)(c) of the Income Tax Act, assessee preferred Appeal before the learned CIT(A). Learned CIT(A) accepted the submission on behalf of the assessee relying upon Clause (2) of Explanation 5 of Section 271(1)(c) of the Income Tax Act and quashed and set aside the penalty levied under Section 271(1)(c) of the Income Tax Act. On appeal before the learned Tribunal, by the impugned order the learned Tribunal has dismissed the Appeal preferred by the revenue by observing that all the three conditions of immunity provided under Clause (2) of Explanation 5 of Section 271(1)(c) of the Income Tax Act are satisfied. Feeling aggrieved and dissatisfied with the impugned order passed by the learned Tribunal, revenue has preferred the present Tax Appeal with the aforesaid proposed question of law. [3.0]Having head Mrs Mauna Bhatt, learned advocate appearing on behalf of the revenue and Shri B.S. Soparkar, learned advocate appearing on behalf of the respondent – assessee and considering Clause (2) of Explanation 5 of Section 271(1)(c) of the Income Tax Act, the fact that after the disclosure during the search, the assessee filed the return of income and as such paid the tax with interest and whatever was disclosed in the return of income was accepted by the learned Assessing Officer and there was no further addition, we are of the opinion that the assessee shall be entitled to the immunity as per Clause (2) of Explanation 5 of Section 271(1)(c) of the Income Tax Act, which reads as under; “271(1)(c)he, in the course of the search, makes a statement under sub-section (4) of Section 132 that any money, bullion, jewelery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified clause (a) or clause (b) sub-section (1) of Section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income.” [4.0]We are in complete agreement with the view taken by the learned Tribunal. No substantial question of law arises. Under the circumstances, present Tax Appeal deserves to be dismissed and is accordingly dismissed. (M.R. SHAH, J.) (A.Y. KOGJE, J.) siji