The Principal Commissioner Of Income Tax 3 v. Vijay Jitendra Trivedi

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 805 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 ? ======================================THE PRINCIPAL COMMISSIONER OF INCOME TAX 3 Versus VIJAY JITENDRA TRIVEDI ======================================Appearance: MRS MAUNA M BHATT(174) for the APPELLANT(s) No. 1for the RESPONDENT(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAHandHONOURABLE MR.JUSTICE A.Y. KOGJE Date : 09/07/2018 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0]Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad “D” Bench, Ahmedabad (hereinafter referred to as “the learned Tribunal”) in IT(SS) No.225/Ahd/2014 for the Assessment Year 2010-11 by which the learned Tribunal has dismissed the Appeal preferred by the revenue and has confirmed the order passed by the learned CIT(A) deleting the penalty of Rs.28,20,000/- levied on undisclosed income under Section 271AAA of the Income Tax Act by the Assessing Officer, revenue has preferred the present Tax Appeal with the following proposed question of law; “Whether in the facts and circumstances of the case, the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT(A) and thereby deleting the penalty of Rs.28,20,000/- levied on undisclosed income under Section 271AAA of the Act, 1961 by the Assessing Officer?” [2.0]We have heard Mrs Mauna Bhatt, learned advocate appearing on behalf of the revenue. At the outset, it is required to be noted that the Assessing Officer imposed /levied the penalty under Section 271AAA of the Income Tax Act on the ground that the assessee did not disclose the source of undisclosed income unearthed at the time of search. The Assessing Officer was of the opinion that for making an exception under Section 271AAA of the Income Tax Act, Sub Section (2) of Section 271AAA of the Income Tax Act namely that the assessee must have admitted the undisclosed income in the course of search and in a statement under Sub Section (4) of Section 32 the assessee should specify the manner in which such income has been derived. According to the Assessing Officer as the assessee did not disclose /specify the manner in which the undisclosed income was derived, and therefore, penalty under Section 271AAA of the Income Tax Act was levied. [3.0]Learned CIT(A) deleted the said penalty levied under Section 271AAA of the Income Tax Act, which has been confirmed by the learned Tribunal, after following the decision of the Division Bench of this Court in the case of Principal Commissioner of Income Tax Vs. Mukeshbhai Ramalal Prajapati rendered in Tax Appeal No.434/2017. In the case of Mukeshbhai Ramalal Prajapati (Supra) while considering penalty under Section 271AAA of the Income Tax Act this Court has observed and held in paragraph 14 as under; manner in which the undisclosed income was derived, and therefore, penalty under Section 271AAA of the Income Tax Act was levied. [3.0]Learned CIT(A) deleted the said penalty levied under Section 271AAA of the Income Tax Act, which has been confirmed by the learned Tribunal, after following the decision of the Division Bench of this Court in the case of Principal Commissioner of Income Tax Vs. Mukeshbhai Ramalal Prajapati rendered in Tax Appeal No.434/2017. In the case of Mukeshbhai Ramalal Prajapati (Supra) while considering penalty under Section 271AAA of the Income Tax Act this Court has observed and held in paragraph 14 as under; “14. We do not reject this contention totally. However, insofar as the facts of the present case are concerned, the field would still be held by the decision of this Court in case of Commissioner of Income Tax vs. Mahendra C.Shah (supra). Sub-section (2) of section 271AAA imposes an additionalcondition of the assessee having to substantiate the manner in which, the undisclosed income was derived. This requirement, however, must be seen as consequential to or corollary to the base requirement of specifying the manner, in which, theundisclosed income was derived. It is only when such declaration is made, the question of substantiating such disclosure or claim would arise. If, as in the present case, the Revenue failed to question the assessee while recording his statement under section 132 (4) of the Act as regards the manner of deriving such income, the Revenue cannot jump to the consequential or later requirement of substantiating the manner of deriving the income. In the context of the requirement of the assessee specifying the manner of deriving the income the decision of this Court in case of Commissioner of Income Tax vs. Mahendra C.Shah (supra) would hold the field even in the context of sub-section (2) of section 271AAA of the Act. It is only when the officer of the raiding party recording the statement of the assessee under section 132(4) of the Act elicits a response from the assesse's this requirement, the assessee's responsibility to substantiate the manner of deriving such income would commence. When the base requirement itself fails, the question of denying the benefit of no penalty would not arise.” [4.0]Considering the aforesaid decision of the Division Bench of this Court, it cannot be said that the learned Tribunal has committed any error and /or any question of law, much less substantial question of law arises. Under the circumstances, present Tax Appeal deserves to be dismissed and is accordingly dismissed. (M.R. SHAH, J.) siji (A.Y. KOGJE, J)