Shourya Towers Pvt Ltd v. Dcit

S. RAVINDRA BHAT, J

December 12, 2012

R.V.EASWAR, J

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on : 22.11.2012 Decided on : 12.12.2012 + SHOURYA TOWERS PVT LTD ..... Appellant Through : Sh. Anoop Sharma, Advocate. versus DCIT ..... Respondent Through : Sh. Sanjeev Sabharwal, Sr. Standing Counsel with Sh. Puneet Gupta, Jr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V.EASWAR MR. JUSTICE S.RAVINDRA BHAT % Facts: 1. This is an assesse's appeal under Section 260-A of the Income Tax Act 1961 ("the Act") assailing the order of the Income Tax Appellate Tribunal, Delhi Bench (ITAT) dated 25-3-2011 in ITA No. 701/D/09. The assessee urges that the substantial question which arises in this case, is that the ITAT erred in not applying clause (2) to Explanation 5 to Section 271 (1) (c) of the Act, in the facts and circumstances of the present case. Page 2 2. The facts of the case are that the assessee filed a return of income on 31.10.2005 declaring total loss of `.19,08,840/-. Thereafter, search and seizure operations were conducted in the Nitishree Group, and survey was also conducted at the business premises of the assessee. In the course of search, the statement of Mr. Anil Jain was recorded on oath under Section 132(4) of the Act on 17.02.2006. It was interalia deposed that unaccounted income of various years was invested, benami in the share capital of some companies. Shri Kahshinath Shukla, Director of the assessee company, also introduced unaccounted money benami name as share capital. The details of these were not known to him on the date of search. However, the total amount was quantified at `.15 crores. These details were furnished on 31.07.2006. 3. According to the statement, the assessee's benami share investment for the two years, i.e., assessment years 2005-06 and 2006-07, were shown at `.121 lakhs and `.521.95 lakhs respectively. The total unaccounted income for seven assesses of the group was shown as `.1522.98 lakh. Subsequent to the searches, a notice under Section 153A of the Act was issued to the assessee. In response, it was stated that the return filed under Section 139(1) may be treated as return under Section 153A. Assessment under Section 153A read with section 143(3) was completed on 31.12.2007, in which the surrendered amount of `.121 lakh was deducted from the loss of `.19,08,840/- shown in the return. Thus, the total income was computed at Page 3 `.1,01,91,160/-. Penalty proceedings were initiated under Section 271(1)(c) of the Act. These proceedings were completed on 30.06.2008 by levying minimum penalty of `.44,27,692/-. The Assessing officer, in his order, stated that neither in the original return nor in the letter in response to notice under Section 153A, was the income has declared. Such a conduct was with the aim of concealing income that was surrendered under Section 132(4) from the purview of taxation. It is only in the course of proceedings u/s 153A that the assessee has filed a revised computation of income in which the surrendered income has been taken to be revised return. Thus, if no specific query had been made, even the surrendered income would have escaped assessment. The CIT (A) and the ITAT successively rejected the assessee's appeals. 4. The primary contention of the assessee is that the case falls under Explanation 5(a)(1) to Section 271(1)(c) of the Act as the income mentioned therein or transactions were recorded in the books in the form of share capital of other concerns of the groups. The counsel for the assessee has relied on the case of Commissioner Of Income-Tax v. Chhabra Emporium, reported in 2003 (264) ITR 249 (Del). In that case, it was held that when surrender of the asset has been made on the date of search and when such surrender falls within the explanation 5 to section 271(1)(c) of the Act, the penalty was bound to be cancelled. Page 4 5. The assessee argued that since the undisclosed income was admitted in the statement given on 17.02.2006, i.e., the date of search, the