M/s Sai Ram Builders, Visakhapatnam V. THE ACIT, CIRCLE - 1(1), Visakhapatnam

CO 12/VIZ/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2261 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M N MURTHY NAIKDR
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Initiation of penalty proceedings; Revised return; Documents seized
• Section: 143(3); 132; 12; 11; 15

Judgement Text

ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.738/VIZAG/2013 ( / ASSESSMENT YEAR: 2008-09) ACIT , CIRCLE - 1(1) , VISAKHAPATNAM VS. M/S. SAI RAM BUILDERS VISAKHAPATNAM [PAN: ABBFS6547G ] ( / APPELLANT) ( / RESPONDENT) C.O. NO.12/VIZAG/2014 ( ARISING OUT OF I.T.A.NO.738/VIZAG/2013) ( / ASSESSMENT YEAR: 2008-09) M/S. SAI RAM BUILDERS VISAKHAPATNAM VS. ACIT, CIRCLE - 1(1), VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI M.N. MURTHY NAIK,DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 28.01.2016 / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON FILED BY THE ASSESSEE, ARE DIRECTED AGAINST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 22.10.2013 AND IT PERTAINS TO THE ASSESSMENT YEAR 2 008-09. ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 2 2. BY WAY OF ITA.NO. 738/V/2013, THE REVENUE HAS RA ISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS ON FACTS A ND IN LAW. 2. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF T HE ASSESSING OFFICER IN HOLDING THAT THE ASSESSEE HAS NOT EXPLAINED THE MAN NER IN WHICH THE UNACCOUNTED INCOME WAS DERIVED AS REQUIRED IN SUB-S ECTION (2) OF SECTION 271AAA OF THE I.T. ACT. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE H AS SATISFIED THE CONDITION OF PAYMENT OF TAXES AS STIPULATED IN SUB- SECTION(2) OF SECTION 271AAA OF THE I.T. ACT WITHOUT APPRECIATING THAT THE ASSESSEE DID NOT PAY TAX ON THE REVISED INCOME. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTA TE DEVELOPMENT. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS CONDUCTED IN THE CASE ON 30.1.2008. DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS , SUPPRESSION OF SALES WAS DETECTED AND WHICH WAS ADMITTED BY THE AS SESSEE. WHILE ADMINISTERING THE OATH BEFORE THE INVESTIGATION OFF ICER, THE ASSESSEE HAS ADMITTED THE SUPPRESSED SALES AND ALSO MADE DISCLOS URE OF RS.3 CRORES IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE ON 28.9.2008, IT HAS A DMITTED A TOTAL INCOME OF RS.6,92,770/-. SUBSEQUENTLY, THE CASE HAS BEEN CENTRALIZED TO CENTRAL CIRCLE AND ACCORDINGLY, STATUTORY NOTICE HA S BEEN ISSUED. IN RESPONSE TO STATUTORY NOTICE, THE ASSESSEE HAD FILE D REVISED RETURN ON 17.8.2009 ADMITTING A TOTAL INCOME OF RS.4,35,64,79 0/- INCLUDING ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 3 UNDISCLOSED INCOME OF RS.4,28,72,020/-. THE ASSESSM ENT WAS COMPLETED U/S 143(3) OF THE ACT, ON 31.12.2009 AND DETERMINED TOTAL INCOME OF RS.5,21,30,208/-. ON APPEAL BY THE ASSESSEE, THE CI T(A)-1, HYDERABAD RESTRICTED THE TOTAL INCOME TO RS.4,70,80,208/-. ON FURTHER APPEAL BEFORE THE ITAT, THE ITAT HAD GIVEN FURTHER RELIEF AND ACC ORDINGLY, THE TOTAL INCOME WAS REDUCED TO RS.4,47,30,210/-. FINALLY, T HE A.O. HAS PASSED CONSEQUENTIAL ORDER GIVING EFFECT TO ITAT ORDER ON 10.7.2010 AND DETERMINED TOTAL INCOME OF RS.4,40,37,440/-, AFTER REDUCING INCOME ADMITTED IN THE ORIGINAL RETURN. 4. THE A.O. ISSUED A SHOW CAUSE NOTICE U/S 271AAA O F THE ACT AND ASKED TO EXPLAIN WHY PENALTY SHALL NOT BE LEVIED FO R ADDITIONAL UNDISCLOSED INCOME DISCLOSED DURING THE COURSE OF S EARCH. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE HAS FILED WRITTE N SUBMISSION ON 26.10.2010 AND CONTENDED THAT NO PENALTY CAN BE LEV IED U/S 271AAA OF THE ACT, AS THE CONDITIONS STIPULATED UNDER PROVISI ONS OF SECTION 271AAA(1) &(2) OF THE ACT HAVE NOT BEEN FULFILLED. THE ASSESSEE FURTHER SUBMITTED THAT IT HAD ADMITTED THE UNDISCLOSED INCO ME DURING THE COURSE OF SEARCH AND ALSO FILED REVISED RETURN DISCLOSING THE UNDISCLOSED INCOME ADMITTED DURING THE COURSE OF SEARCH. THE A.O. HAS DETERMINED SLIGHTLY HIGHER TOTAL INCOME OVER AND ABOVE THE RETURNED UND ISCLOSED INCOME ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 4 AND THE DIFFERENCE IS ON ACCOUNT OF DIFFERENCE IN C LOSING STOCK VALUATION OF RS.11,65,418/-, WHICH IS NOT A DELIBERATE CONCEA LMENT OF INCOME. THEREFORE, SUB SECTION 1 OF SECTION 271AAA OF THE A CT HAS NO APPLICATION. SIMILARLY, THE ASSESSEE SUBMITTED THAT IT HAS ADMITTED THE UNDISCLOSED INCOME DURING THE COURSE OF SEARCH IN T HE STATEMENT U/S 132(4), EXPLAINED THE MANNER IN WHICH SUCH INCOME H AS BEEN DERIVED, SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED AND ALSO PAID THE TAXES ON SUCH UNDISCLOSED INCOME. THEREFORE, THE CONDITIONS PRESCRIBED UNDER CLAUSE (I) & (II) OF SU B SECTION 2 OF SECTION 271AAA OF THE ACT ARE NOT FULFILLED TO LEVY THE PEN ALTY U/S 271AAA(1) OF THE ACT. 5. THE A.O. AFTER CONSIDERING THE EXPLANATIONS FURN ISHED BY THE ASSESSEE, LEVIED THE PENALTY OF RS.44,03,744/- U/S 271AAA(1) OF THE ACT. WHILE DOING SO, THE A.O. HELD THAT IT IS TRUE THAT T HE ASSESSEE HAS ADMITTED THE UNDISCLOSED INCOME IN THE STATEMENT RE CORDED UNDER SUB SECTION 4 OF SECTION 132, BUT FAILED TO SPECIFY THE MANNER IN WHICH SUCH UNDISCLOSED INCOME HAS BEEN DERIVED AND ALSO FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THE A.O. FURTHER HELD THAT ON PERUSAL OF STATEMENT RECORDED U/S 132( 4) OF THE ACT ON 2.2.2008, IT IS CLEAR FROM THE ABOVE STATEMENT THAT THE ASSESSEE ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 5 ADMITTED UNDISCLOSED INCOME OF RS.3 CRORES, BUT IN THE STATEMENT IT IS NOT SPECIFIED AND SUBSTANTIATED THE MANNER IN WHICH SUCH UNDISCLOSED INCOME WAS DERIVED. THE A.O. FURTHER HELD THAT THOU GH SEARCH WAS CONDUCTED ON 30.1.2008, THE ASSESSEE HAS NOT ADMITT ED THE UNDISCLOSED INCOME DECLARED DURING THE COURSE OF SEARCH IN THE REGULAR RETURN FILED FOR THE ASSESSMENT YEAR ON 28.9.2008, WHICH SHOWS T HE ASSESSEES INTENTION OF NOT TO DISCLOSE THE INCOME AND PAY TAX ES. THE A.O. FURTHER HELD THAT ASSESSEE ADMITTED UNDISCLOSED INCOME IN T HE REVISED RETURN, BUT NOT PAID THE TAXES AS PER THE REVISED RETURN AN D PAID TAXES AFTER THE COMPLETION OF ASSESSMENT. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE A.O. WAS OF THE OPINION THAT THE CONDITIONS SPECIFIED UNDER CLAUSE (I) AND (II) OF SUB SECTION (2) OF 271 AAA OF THE ACT AND ACCORDINGLY, LEVIED 10% PENALTY. 6. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURT HER SUBMITTED THAT THE A.O. WAS NOT CORRECT IN STATING THAT THE ASSESS EE HAS NOT ADMITTED UNDISCLOSED INCOME DECLARED DURING THE COURSE OF SE ARCH IN THE REGULAR RETURN FILED ON 28.9.2008, AS AT THE TIME OF FILING THE ORIGINAL RETURN, ITS CASE WAS NOT NOTIFIED AND ALSO IT DID NOT HAVE THE SEIZED DOCUMENTS, ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 6 THEREFORE, NOT DISCLOSED THE ADDITIONAL INCOME DECL ARED DURING THE COURSE OF SEARCH. THE ASSESSEE FURTHER SUBMITTED TH AT IT HAS TAKEN THE XEROX COPIES OF THE SEIZED BOOKS OF ACCOUNTS AND OT HER RELEVANT MATERIALS AND IN RESPONSE TO STATUTORY NOTICE, IT H AS FILED THE REVISED RETURN AND DISCLOSED THE UNDISCLOSED INCOME ADMITTE D IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THE ASSESSEE FURTHE R SUBMITTED THAT THERE WAS NO DEFAULT ON ITS PART IN DISCLOSING THE ADDITIONAL INCOME AS PER THE SEIZED MATERIAL. IT WAS FURTHER SUBMITTED T HAT IT HAD EXPLAINED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERI VED AND ALSO PAID THE TAXES BEFORE INITIATION OF PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT SEC. 271AAA OF THE ACT DOES NOT PRESCRIBE ANY UPPER TIME LIMIT FOR PAYMENT OF TAXES , FOR WHICH IT HAS PLACED RELIANCE IN THE DECISION OF HONBLE SUPREME COURT IN ACIT VS. GEBILAL KANHAIALAL (HUF) (2012) 348 ITR 561 (SC). 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF A SSESSEE, DELETED THE PENALTY LEVIED U/S 271AAA(1) OF THE ACT. THE C IT(A) HELD THAT THE ONLY DIFFERENCE AS REGARDS THE QUANTUM OF UNDISCLOS ED INCOME WAS THE DIFFERENCE IN CLOSING STOCK VALUE OFRS.11,65,418/-. THE ASSESSEE HAS EXPLAINED THE REASONS FOR DIFFERENCE IN CLOSING STO CK VALUATION. HOWEVER, THE AO HAS ADOPTED A DIFFERENT METHOD OF V ALUATION OF CLOSING ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 7 STOCK AND AS PER A.O., THERE WAS A DIFFERENCE OF RS .11,65,418/-. THEREFORE, THE DIFFERENCE IN THE VALUE OF CLOSING S TOCK CANNOT BE CONSIDERED TO BE DISCREPANCY IN THE UNDISCLOSED INC OME DECLARED BY THE ASSESSEE AND AS SUCH IT WOULD NOT HAVE A BEARING ON THE CONDITIONS PRESCRIBED IN SUB SECTION 2 OF SECTION 271AAA OF TH E ACT. THE CIT(A) FURTHER HELD THAT THE ASSESSEE HAS EXPLAINED THE MA NNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND ALSO SUBSTANTIAT ED THE UNDISCLOSED INCOME, AT THE TIME OF STATEMENT U/S 132(4) OF THE ACT. THE CONDITIONS SPECIFIED UNDER SUB CLAUSE (I) & (II) OF SUB SECTIO N (2) OF SECTION 271AAA OF THE ACT ARE FULFILLED, THEREFORE, NO PENALTY CAN BE LEVIED UNDER SUB SECTION (1) OF SECTION 271AAA. THE CIT(A) FURTHER H ELD THAT THE ASSESSEE HAS PAID THE ENTIRE TAXES ON THE UNDISCLOSED INCOME AFTER THE COMPLETION OF THE ASSESSMENT AND BEFORE INITIATION OF PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. THE ACT DOES NOT SPECIFY ANY UPP ER TIME LIMIT FOR PAYMENT OF TAXES ON UNDISCLOSED INCOME AND WHICH WA S SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F ACIT VS. GEBILAL KANHAIALAL (HUF) (2012) 348 ITR 561 (SC). THEREFORE , THERE IS A MERIT IN THE CONTENTION OF THE ASSESSEE THAT CLAUSE (III) OF SUB SECTION 2 OF SECTION 271AAA OF THE ACT IS NOT FULFILLED TO LEVY PENALTY. WITH THESE OBSERVATIONS, THE CIT(A) DELETED THE PENALTY LEVIED U/S 271AAA OF THE ACT. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 8 8. THE LD. D.R. SUBMITTED THAT THE ORDER OF THE CIT (A) IS ERRONEOUS ON FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. D.R . FURTHER SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. IN HOLDING THAT THE ASSESSEE HAS NOT EXPLAINED THE MAN NER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AS REQUIRED IN SUB S ECTION (2) OF SECTION 271AAA OF THE ACT. THE LD. D.R. FURTHER SUBMITTED THAT THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAS SATISFIED THE COND ITION OF PAYMENT OF TAXES AS STIPULATED IN SUB SECTION (II) OF SECTION 271AAA OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT PAY TAXES ON THE UNDISCLOSED INCOME BEFORE FILING REVISED INCOME. TH EREFORE, THE PENALTY LEVIED BY THE AO SHOULD BE UPHELD. 9. ON THE OTHER HAND, THE LD. A.R. STRONGLY SUPPORT ED THE ORDER OF THE CIT(A). THE LD. A.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE HELD THAT INITIATION OF PENALTY PROCEEDINGS U/ S 271AAA OF THE ACT AT A LATER STAGE SUBSEQUENT TO RECEIPT OF ORDER OF ITA T IN QUANTUM APPEAL IS NOT IN ACCORDANCE WITH LAW. THE A.R. FURTHER SUB MITTED THAT THE A.O. WAS NOT JUSTIFIED IN LEVYING PENALTY U/S 271AAA OF THE ACT, EVEN FOR THE REASON THAT THE A.O. HAS ALREADY EXAMINED THE CASE U/S 271(1)(C) OF THE ACT FOR THE VERY SAME CONCEALMENT OF INCOME ALLEGED BY HIM. THEREFORE, REQUESTED TO UPHOLD THE ORDER OF CIT(A). ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 9 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED ON 30.1.2008. DURING THE COURSE OF SEARCH, SUPPRESSION OF SALES W AS DETECTED AND WHICH WAS ADMITTED BY THE ASSESSEE. THE ASSESSEE H AS GIVEN A STATEMENT U/S 132(4) OF THE ACT AND DISCLOSED UNDIS CLOSED INCOME OF RS.3 CRORES AT THE TIME OF SEARCH. SUBSEQUENTLY, T HE CASE HAS BEEN NOTIFIED AND ACCORDINGLY, STATUTORY NOTICE WAS ISSU ED. IN RESPONSE TO NOTICE, THE ASSESSEE HAS FILED REVISED RETURN AND D ISCLOSED UNDISCLOSED INCOME ADMITTED DURING THE COURSE OF SEARCH. THE AS SESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 31.12.2009 AND D ETERMINED TOTAL INCOME OF RS.5,21,30,208/-. ON APPEAL BY THE ASSESS EE, FINALLY THE UNDISCLOSED INCOME WAS DETERMINED AT RS.4,47,30,210 /-. SUBSEQUENTLY, THE A.O. HAS LEVIED PENALTY U/S 271AAA OF THE ACT F OR THE REASON THAT THE ASSESSEE HAS NOT EXPLAINED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND ALSO NOT SUBSTANTIATED THE M ANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. THE A.O. WAS OF THE O PINION THAT THE ASSESSEE HAS NOT PAID THE TAX ON THE UNDISCLOSED IN COME ADMITTED IN THE REVISED RETURN. THE CONDITIONS SPECIFIED IN CLAUSE (I),(II) &(III) OF SUB SECTION (2) OF SECTION271AAA OF THE ACT IS SATISFIE D, THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY, LEVIED PE NALTY U/S 271AAA OF ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 10 THE ACT. IT WAS THE CONTENTION OF THE ASSESSEE THAT IT HAS ADMITTED THE UNDISCLOSED INCOME AT THE TIME OF SEARCH, DISCLOSED THE UNDISCLOSED INCOME IN THE REVISED RETURN IN RESPONSE TO NOTICE AND ALSO PAID THE TAXES BEFORE INITIATION OF PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. THEREFORE, THE CONDITIONS SPECIFIED IN SUB SECTION (2) ARE FULFILLED AND HENCE, NO PENALTY CAN BE LEVIED U/S 271AAA OF THE A CT. 11. THE A.O. LEVIED THE PENALTY FOR THE SOLE REASON THAT THE ASSESSEE HAS NOT EXPLAINED THE MANNER IN WHICH THE UNDISCLOS ED INCOME HAS BEEN DERIVED. THE A.O. FURTHER HELD THAT THE ASSESSEE H AS NOT PAID THE TAXES AS PER THE REVISED RETURN ON THE UNDISCLOSED INCOME . THE CONDITION SPECIFIED IN CLAUSE (I),(II) (III) OF SUB SECTION ( 2) ARE NOT FULFILLED, THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY. BE FORE WE GO INTO THE MERITS OF THE CASE, LET US UNDERSTAND THE PROVISIONS OF LA W AS ENUMERATED UNDER SECTION 271AAA OF THE ACT. SECTION271AAA (1) OF THE ACT PROVIDES FOR LEVY OF PENALTY, WHERE THE ASSESSING OFFICER MA Y, NOTWITHSTANDING ANYTHING CONTAINED IN ANY PROVISIONS OF THIS ACT, D IRECT THAT, IN A CASE, WHERE SEARCH HAS BEEN INITIATED ON OR AFTER FIRST D AY OF JUNE, 2007 (BUT BEFORE FIRST DAY OF JULY, 2012), THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM C OMPUTED @ 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YE AR. SUB SECTION (2) OF ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 11 SECTION 271AAA OF THE ACT, PROVIDES THAT NOTHING CO NTAINED IN SUB SECTION (1) SHALL APPLY IF THE ASSESSEE, (I) IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SUB SECTION (4) OF SECTION 132, ADM ITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOM E HAS BEEN DERIVED (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED AND (III) SHALL PAY TAX TOGETHER WITH INTER EST, IF ANY IN RESPECT OF THE UNDISCLOSED INCOME. IF ALL THE THREE CONDITIONS ARE FULFILLED, THEN THE PROVISIONS OF SUB SECTION (1) OF SECTION 271AAA OF THE ACT, SHALL HAVE NO APPLICATION. IN THE PRESENT CASE ON HAND, ON PERUSA L OF THE FACTS, WE FIND THAT THE ASSESSEE HAS ADMITTED THE UNDISCLOSED INCO ME AT THE TIME OF SEARCH, WHILE RECORDING THE STATEMENT U/S 132(4) OF THE ACT. THE ASSESSEE HAS EXPLAINED THE MANNER IN WHICH SUCH UND ISCLOSED INCOME HAS BEEN DERIVED. IT WAS THE EXPLANATION OF THE ASS ESSEE THAT THE UNDISCLOSED INCOME WAS DERIVED BECAUSE OF SUPPRESSI ON OF SALES TURNOVER RELATES TO HIS BUSINESS. THE ASSESSEE FUR THER EXPLAINED THAT THE SUPPRESSED SALE WAS ON ACCOUNT OF SALE OF FLATS, WH ICH WERE NOT DISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS. THE ASS ESSEE EXPLAINED THE UNDISCLOSED INCOME EVEN AT THE TIME OF SEARCH WHILE RECORDING STATEMENT U/S 132(4) OF THE ACT AND ALSO EXPLAINED BEFORE THE A.O. AT THE TIME OF ASSESSMENT, WHICH WAS EVIDENT FROM PARA -5 AND 5.1 OF THE ASSESSMENT ORDER. THEREFORE, IN OUR CONSIDERED OPIN ION, CLAUSE (I) & (II) ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 12 OF SUB SECTION (2) OF SECTION 271AAA OF THE ACT IS FULFILLED AND HENCE, NO PENALTY CAN BE LEVIED U/S 271AAA OF THE ACT. THE AS SESSEE FURTHER SUBMITTED THAT IT HAS PAID THE TAXES ON THE TOTAL U NDISCLOSED INCOME ADMITTED IN THE REVISED RETURN, BEFORE INITIATION O F PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. THE ASSESSEE SUBMITTED THAT THE ACT DID NOT SPECIFY ANY UPPER LIMIT FOR PAYMENT OF TAXES. THERE FORE, IF TAX AND INTEREST PAYABLE BY HIM HAS BEEN PAID BEFORE INITIA TION OF PENALTY PROCEEDINGS U/S 271AAA OF THE ACT, THEN NO PENALTY CAN BE LEVIED UNDER CLAUSE (III) OF SUB SECTION (2) OF SECTION 271AAA O F THE ACT. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THA T ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, IT WAS CLEAR THAT THE AS SESSEE HAS PAID THE ENTIRE SELF ASSESSMENT TAX ADMITTED IN THE REVISED RETURN BEFORE INITIATION OF PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. THOU GH ASSESSEE HAS NOT PAID THE TOTAL TAXES ALONG WITH REVISED RETURN OF I NCOME, IT HAS EXPLAINED THE REASONS FOR NON-PAYMENT OF TAXES BEFORE COMPLET ION OF ASSESSMENT, HOWEVER, HAS PAID THE TOTAL TAXES BEFORE INITIATION OF PENALTY U/S 271AAA OF THE ACT. THEREFORE, IN OUR OPINION, THE ASSESSEE HAS FULFILLED THE CLAUSE (III) OF SUB SECTION (2) OF SECTION 271AAA O F THE ACT, HENCE, NO PENALTY CAN BE LEVIED U/S 271AAA OF THE ACT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. GEBILAL KANHA IALAL (HUF) (2012) 348 ITR 561 (SC). ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 13 12. IT IS PERTINENT TO MENTION HERE THE CASE LAWS R ELIED UPON BY THE ASSESSEE. THE ASSESSEE RELIED UPON THE HONBLE SUPR EME COURT JUDGEMENT IN THE CASE OF ACIT VS. GEBILAL KANHAIALA L (HUF) (2012) 348 ITR 561 (SC). THE HONBLE SUPREME COURT, IN THE ABO VE CASE, HELD THAT CLAUSE (2) DID NOT PRESCRIBED ANY TIME LIMIT WITHIN WHICH THE ASSESSEE SHOULD PAY TAX ON INCOME DISCLOSED IN THE STATEMENT U/S 132(4) OF THE ACT. THE RELEVANT PORTION HAS REPRODUCED HEREUNDER: EXPLANATION 5 IS A DEEMING PRO - VISION WHICH PROVIDES WHERE, IN COURSE OF SEARCH U/S 132, ASSESSEE IS FOUND TO BE OWNER OF UN ACCOUNTED ASSETS AND ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR PARTLY, HIS INCOME FOR ANY PREVIOUS YEAR WHICH H AS ENDED. BEFORE DATE OF SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF S EARCH, THEN, IN SUCH A SITUATION, NOTWITHSTANDING THAT SUCH INCOME IS DECL ARED BY HIM U+-ANY RETURN OF INCOME - FURNISHED ON OR AFTER DATE OF SEARCH, HE SHALL BE D EEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME FOR THE PUR POSES OF IMPOSITION OF PENALTY U/S 271(1)(C) ONLY EXCEPTIONS TO SUCH A DEEMING PRO VISION OR TO SUCH A PRESUMPTION OF CONCEALMENT ARE GIVEN IN SUB-CLAUSES (1) AND (2) OF EXPLANATION 5 THREE CONDITIONS HAVE GOT TO BE SATISFIED BY ASSE SSEE, FOR CLAIMING IMMUNITY FROM PAYMENT OF PENALTY UNDER CL (2) OF EXPL. 5 TO S. 271(1)(C), I.E. CONDITION NO 1 ASSESSEE MUST MAKE A STATEMENT U/S 132(4) IN C OURSE OF SEARCH STATING THAT UNACCOUNTED ASSETS AND INCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION DURING THE SEARCH HAVE BEEN ACQUIRED OUT OF HIS INC OME, WHICH HAS NOT BEEN DISCLOSED IN RETURN OF INCOME TO BE FURNISHED BEFOR E EXPIRY OF TIME SPECIFIED IN S 139(1), SUCH STATEMENT WAS MADE BY KARTA DURING SEA RCH WHICH CONCLUDED ON AUGUST 1, 1987 CONDITION NO .1 WAS FULFILLED. CONDI TION NO. 2. ASSESSEE SHOULD SPECIFY, IN HIS STATEMENT U/S. 132(4), MANNER IN - WHICH SUCH INCOME STOOD DERIVED CONDITION NO 2 ALSO SATISFIED. CONDITION NO 3 ASSESSEE HAD TO PAY TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH UNDISCLOSED INCOME HOWEVER, AS NO TIME LIMIT FOR PAYMENT OF SUCH TAX STOOD -PRE SCRIBED UNDER CLAUSE (2), THIRD CONDITION ALSO STOOD FULFILLED. ASSESSEE HAS PAID TAX WITH INTEREST UPTO DATE OF PAYMENT. THEREFORE, ASSESSEE WAS ENTITLED TO IMM UNITY UNDER CL (2) OF EXPL 5 TO S 271(1)(C). APPEAL DISMISSED. 13. THE ASSESSEE RELIED UPON ITAT, CHENNAI BENCH DE CISION IN THE CASE OF ACIT VS. A.N. ANNAMALASAMY (HUF) (2013) 87 DTR (CHENNAI) ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 14 (TRIB) 202. THE COORDINATE BENCH OF THIS TRIBUNAL, WHILE DELETING THE PENALTY U/S 271AAA OF THE ACT, HELD THAT WHEN THE A SSESSEE HAS ADMITTED THE INCOME IN THE COURSE OF SEARCH AND HAS DISCLOSED INCOME BY WAY OF REVISED RETURN AND HAS EXPLAINED THE NATU RE OF SOURCE OF UNDISCLOSED INCOME AND PAID THE TAX TOGETHER WITH I NTEREST, PENALTY CANNOT BE LEVIED U/S 271AAA OF THE ACT. THE RELEVAN T PORTION IS REPRODUCED HEREUNDER: THE AO WAS CARRIED AWAY BY THE ORIGINAL RETURN FILE D BY THE ASSESSEE, WHEREIN ORIGINALLY THE INCOME ADMITTED IN THE COURS E OF SEARCH WAS NOT RETURNED BY IT BUT THE FACT IS THAT THE ASSESSEE HA D FILED A REVISED RETURN BEFORE COMPLETING THE ASSESSMENT. WHEN THAT IS THE CASE, THE FIRST RETURN FILED BY THE ASSESSEE IS A NON EST. THE ONLY VALID RETURN IS THE REVISED RETURN FILED BY THE ASSESSEE. IN THAT RETURN, THE AM OUNT ADMITTED BY THE ASSESSEE AT THE TIME OF SEARCH WAS OFFERED FOR TAXA TION. THE ASSESSEE HAS PAID THE TAX; HE HAS PAID THE INTEREST. HE HAS NOT PREFERRED ANY QUANTUM APPEAL. HE HAS ALSO EXPLAINED ABOUT THE BUSINESS AN D STATED THAT THE JEWELLERY WAS ACQUIRED OVER A PERIOD OF TIME. WHEN ALL THE PIECES ARE PUT TOGETHER, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THERE WAS NO GROUND TO LEVY PENALTY IN THE PRESENT CASE UNDER SEC.271AAA. ACCORDINGLY, THE ORDER PASSED BY THE CIT(A) WAS UPHELD. 14. THE ASSESSEE RELIED UPON ITAT, KOLKATA A BENC H DECISION IN THE CASE OF DCIT VS. PIONEER MARBLES & INTERIORS PVT. L TD. (2012) 144 TTJ 663. THE COORDINATE BENCH OF THIS TRIBUNAL, WHILE D ELETING THE PENALTY U/S 271AAA OF THE ACT, HELD THAT NO TIME LIMIT IS S ET OUT FOR PAYMENT OF TAXES FOR AVAILING THE IMMUNITY U/S 271AAA(2) OF TH E ACT. THEREFORE, ONCE THE ENTIRE TAX AND INTEREST HAS BEEN DULY PAID WELL BEFORE THE COMPLETION OF THE PENALTY PROCEEDINGS, THE ASSESSEE CANNOT BE DENIED ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 15 IMMUNITY U/S 271AAA (2) OF THE ACT. THE RELEVANT P ORTION IS REPRODUCED HEREUNDER: UNLIKE IN THE CASE OF PENALTY UNDER S. 271(1)(C), S. 271AAA, WITHOUT ANY REFERENCE TO FINDINGS OR PRESUMPTIONS OF CONCEA LMENT OF INCOME OR THE FINDINGS OR PRESUMPTIONS OF FURNISHING OF INACCURAT E PARTICULARS, PROVIDES THAT IN RESPECT OF UNACCOUNTED INCOME IN THE CASES WHERE SEARCH IS INITIATED AFTER 1ST JUNE, 2007, THE ASSESSEE IS TO PAY A PENALTY @ 10 PER CENT OF UNACCOUNTED INCOME. SUB-S. (2) OF S. 271AAA, HOWEVE R, RELAXES, THE RIGOUR OF THIS PENALTY PROVISION IN A SITUATION IN WHICH A SSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S. 132(4), ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED, (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. WHILE PAYMENT OF TAXES, ALONG WITH INTERE ST, BY THE ASSESSEE IS ONE OF THE CONDITIONS PRECEDENT FOR AVAILING THE IM MUNITY UNDER S 271AAA(2), THERE IS NO TIME-LIMIT SET OUT FOR SUCH PAYMENTS BY THE ASSESSEE. ONCE A TIME-LIMIT FOR PAYMENT OF TAX AN D INTEREST HAS NOT BEEN SET OUT BY THE STATUTE, IT CANNOT INDEED BE OPEN TO THE AO TO READ SUCH A TIME-LIMIT INTO THE SCHEME OF THE SECTION OR TO INF ER ONE. THERE IS THUS NO LEGALLY SUSTAINABLE BASIS FOR THE STAND OF THE AO T HAT IN A SITUATION IN WHICH DUE TAX AND INTEREST HAS NOT BEEN PAID IN FULL BEFO RE FILING OF THE RELEVANT IT RETURN, THE ASSESSEE WILL NOT BE ELIGIBLE FOR IMMUN ITY UNDER S 271AAA(2). SEC 271AAA, AS THE STATUTE UNAMBIGUOUSLY PROVIDES, DOES NOT REQUIRE ANY SUBJECTIVE SATISFACTION OF THE AO TO BE ARRIVED AT DURING THE ASSESSMENT PROCEEDINGS, AND, THEREFORE, THE OUTER LIMIT OF PAY MENT BEFORE THE CONCLUSION OF ASSESSMENT PROCEEDINGS WILL NOT COME INTO PLAY. THEREFORE, ON THE FACTS OF THE PRESENT CASE WHEREIN ENTIRE TAX AN D INTEREST HAS BEEN DULY PAID WELL WITHIN THE TIME-LIMIT FOR PAYMENT OF NOTI CE OF DEMAND UNDER156 AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLU DED, THE ASSESSEE COULD NOT BE DENIED THE IMMUNITY UNDER S 271AAA(2) ONLY BECAUSE ENTIRE TAX, ALONG WITH INTEREST, WAS NOT PAID BEFORE FILIN G OF IT RETURN OR, FOR THAT PURPOSE, BEFORE CONCLUDING THE ASSESSMENT PROCEEDIN GS CIT VS MAHENDRA C. SHAH (2008) 215 CTR (GUJ) 493 (2008) 3 DTR (GUJ) 1 :(2008) 299 ITR 305 (GUJ) APPLIED. 15. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE CONDITIONS SPECIFIED IN CLAUSE (I) , (II) & (III) OF SUB SECTION (2) OF SECTION 271AAA OF THE ACT ARE SATISF IED. THEREFORE, NO PENALTY CAN BE LEVIED UNDER SEC. 271AAA(1) OF THE A CT. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS, DELETED THE PENAL TY LEVIED BY THE A,O. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PA SSED BY THE CIT(A). ITA NO.738/VIZAG/2013 M/S. SAI RAM BUILDERS, VISAKHAPATNAM 16 HENCE, WE INCLINED TO UPHOLD THE ORDER PASSED BY TH E CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY LEVIED U/S 271AAA(1) OF THE ACT. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 17. THE CROSS OBJECTION FILED BY THE ASSESSEE IS SU PPORTING THE ORDER OF THE CIT(A). THEREFORE, FOR THE REASONS RECORDED IN THE PRECEDING PARAGRAPHS, WE DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE. 18. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH MAR16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER # /VISAKHAPATNAM: ' /DATED : 18.03.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-1(1), VISAKHAPA TNAM 2. / THE RESPONDENT M/S. SAIRAM BUILDERS, D.NO.47-1 1-9, DWARAKANAGAR, VISAKHAPATNAM 3. + / THE CIT-1, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM