M/s. Tapadia & Kasliwal Associates, Aurangabad V. DeputyCommissioner of Income-tax,

CO 74/PUN/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1326 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR SINGH
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 27; 132; 12; 139

Judgement Text

] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE !' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO.1430/PN/2013 '$ % &% / ASSESSMENT YEAR : 2010-11 DY.CIT, CENTRAL CIRCLE, AURANGABAD . / APPELLANT V/S M/S. TAPADIA & KASLIWAL ASSOCIATES, 215-216, APNA BAZAR, JALNA ROAD, AURANGABAD-431001 PAN NO.AAEFT1753F . / RESPONDENT CO NO. 74/PN/2014 (ASSESSMENT YEAR 2010-11) M/S. TAPADIA & KASLIWAL ASSOCIATES, 215-216, APNA BAZAR, JALNA ROAD, AURANGABAD-431001 PAN NO.AAEFT1753F .. CROSS OBJECTOR V/S DY.CIT, CENTRAL CIRCLE, AURANGABAD .. RESPONDENT / ASSESSEE BY : SHRI S.N. PURANIK / DEPARTMENT BY : SHRI . B.C. MALAKAR SINGH / DATE OF HEARING :05.08.2015 !' / DATE OF PRONOUNCEMENT:12.08.2015 2 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 ' / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE AND THE CO FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 02-04-2013 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION OF SHOPPING MA LL. A SEARCH U/S.132 OF THE I.T. ACT WAS CONDUCTED ON 19-01- 2010 AT THE BUSINESS AND RESIDENTIAL PREMISES OF DIFFERENT MEMBERS/ASSO CIATE CONCERNS OF THE TAPADIA KHINVANSARA AND POWER GROUPS O F AURANGABAD. THE ASSESSEE WAS ALSO COVERED. DURING THE COURSE OF SEARCH, VARIOUS REGISTERS AND DOCUMENTS WERE SEIZED FROM THE PREMISES OF SHRI SANJAY KASLIWAL AT 215-216, APNA BAZAR, J ALGAON ROAD, AURANGABAD. IN RESPONSE TO NOTICE U/S.142(1), THE ASSESSEE FILED HIS RETURN OF INCOME ON 27-09-2011 DECLARING TOTAL IN COME AT RS.6,84,35,910/-. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE AO NOTED THAT DURING THE COURSE OF SEARCH PROCEEDINGS AT THE OFFICE PREMISES OF SHRI JUGAL KISHORE TAPADIA AND TAPADIA CONSTRU CTION LTD. STATEMENT OF SHRI JUGAL KISHORE TAPADIA WAS RECORDED ON 09-03-2010 BY THE ADIT (INVESTIGATION), AURANGABAD. IN REPLY TO Q UESTION NO.24 OF THE STATEMENT, SHRI JUGAL KISHORE TAPADIA, WHO IS A PARTNE R OF THE FIRM, HAD ADMITTED INCOME OF RS. 7 LAKHS FOR THE IMPUGNED ASSESSMENT YEAR. THE AO NOTED THAT THE ASSESSEE IN T HE RETURN OF INCOME FILED HAS DECLARED INCOME OF RS.6,94,02,079/- AS GP FROM THE PROJECT. HE OBSERVED THAT THIS INCOME IS IN PURSUANCE T O THE DECLARATION OF INCOME MADE BY THE ASSESSEE DURING THE SE ARCH, 3 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 THEREFORE, HE DETERMINED THE INCOME OF THE ASSESSEE AT RS.6,84,35,910/- WHICH IS AS PER THE RETURN OF INCOME. THE AO SUBSEQUENTLY INITIATED PENALTY PROCEEDINGS U/S.271AAA OF T HE I.T. ACT. HE NOTED THAT THE ASSESSEE IN HIS COMPUTATION OF INCOME HAD GIVEN A NOTE WHICH READS AS UNDER : NOTE : DURING THE YEAR UNDER CONSIDERATION, THE POS SESSION OF BASEMENT FLOOR & GROUND FLOOR KEEPING SOME BALANCE WORK OF HY PER MARKET IS HANDED OVER TO PUSTI ENTERPRISES PVT. LTD., THE PURCHA SER FOR CARRYING THE FIT OUT WORKS. THE PROPORTIONATE SALE CONSIDERATION A ND PROPORTIONATE PROFIT ON BASEMENT FLOOR AND GROUND FLOOR ON THE BASI S OF POSSESSION HAS BEEN OFFERED TO TAX DURING THE YEAR IN ACCORDANCE W ITH & TO INCLUDE THE AMOUNT DECLARED BY SHRI JUGALKISHOR C. TAPADIYA DURI NG THE COURSE OF SEARCH & SEIZURE PROCEEDINGS ON DATED 09-03-2010. 3. ACCORDING TO THE AO THE INCOME SO DECLARED AS PER T HE ABOVE NOTE IS UNDISCLOSED INCOME FOR WHICH THE PENALTY PROCEEDING S U/S.271AAA OF THE ACT WAS INITIATED ON THE QUANTUM OF RS.6,94,02,079/-. THE ASSESSEE IN HIS REPLY TO SUCH PENALT Y NOTICE SUBMITTED THAT THE FIRM HAS OFFERED PROFIT ON BASEMENT FLOO R AND GROUND FLOOR OF THE HYPER MARKET WHICH IS BEING CONSTRUC TED BY THE FIRM AT GARKHEDA, AURANGABAD AND WHICH IS AGREED TO BE S OLD TO PUSTI ENTERPRISES PVT. LTD. THE INCOME HAS BEEN DECLARED IN T HE STATEMENT RECORDED U/S.132(4) OF THE I.T. ACT BY ONE OF THE PARTNER S OF THE FIRM SHRI JUGAL KISHORE TAPADIA. THE FIRM HAS ALSO PAID TAX ON T HE INCOME OFFERED. THE PARTICULARS OF THIS DISCLOSURE ARE DULY FURNIS HED DURING ASSESSMENT PROCEEDINGS WHICH ARE ACCEPTED. ACCORDINGLY , THE ASSESSEE REQUESTED THE AO TO DROP THE PENALTY PROCEE DINGS U/S.271AAA. 4. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE REFERRED TO THE PROVISIONS OF SUB-SEC TION (2) OF SECTION 4 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 271AAA OF THE I.T. ACT ACCORDING TO WHICH PENALTY IS NOT IMPOSABLE SUBJECT TO FULFILLMENT OF THE FOLLOWING CONDITIONS : (I) IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SUB- SECTION (4) OF SEC.132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH UNDISCLOSED INCO ME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME. HE OBSERVED THAT THE TAX PAYABLE ON THE RETURNED INCO ME WAS RS.2,11,46,696/- AND INTEREST PAYABLE TILL FILING OF THE RETURN WAS RS.14,51,222/-. THEREFORE, THE ASSESSEE SHOULD HAVE PAID RS.2,25,97,918/- BY WAY OF TAX AND INTEREST TILL THE DATE OF FILING OF RETURN OF INCOME. HOWEVER, TILL THAT DATE AND EVEN ON COMPLE TION OF ASSESSMENT THE ASSESSEE HAS PAID ONLY RS.1,84,97,920/- A ND THE BALANCE AMOUNT OF RS.40,99,998/- WAS RECOVERED AFTER ASSE SSMENT. THEREFORE, THE CONDITION LAID DOWN IN THE PROVISIONS OF SECT ION 271AAA(2) OF THE ACT DOES NOT GET SATISFIED. HE OBSERVE D THAT AS PER THE PROVISIONS OF SECTION 140A(1) OF THE ACT, IT IS THE RESPO NSIBILITY OF EVERY ASSESSEE TO PAY THE TAX AND INTEREST PAYABLE, IF ANY, BEFORE FURNISHING OF RETURN OF INCOME. SINCE THE ASSESSEE HAS NOT PAID THE TOTAL TAX AND INTEREST BEFORE FURNISHING THE RETURN OF INCO ME, THEREFORE, THE ASSESSEE, ACCORDING TO THE AO, IS NOT ELIGIBLE FOR THE PURPOSE OF SECTION 271AAA(2). THE AO ACCORDINGLY LEVIED PENALTY OF RS.69,40,208/- BEING 10% OF THE UNDISCLOSED INCOME OF RS.6,94,02,079/- U/S.271AAA OF THE I.T. ACT. 5. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE HAS RECEIVED ADVANCE CONSIDERATION BY BANK CHEQUES AND THE SALE OF T HE PROPERTY 5 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 AND POSSESSION OF THE PROPERTY IN RESPECT OF WHICH THE S AID ADVANCE WAS RECEIVED WAS GIVEN IN SUBSEQUENT YEAR RELEVANT TO A.Y. 2013-14 AND THEREFORE INFACT THE INCOME TAXED BY THE AO IN THE Y EAR UNDER APPEAL IS NOT THE INCOME OF THE ASSESSEE FOR A.Y. 2010-11. THEREFORE, THE SAID AMOUNT OF RS.6,94,02,079/- HAS BEEN INCORRECTLY A SSESSED IN A.Y. 2010-11 AND THEREFORE CANNOT BE CONSIDERED AS THE UNDISCLOSED INCOME OF A.Y. 2010-11. ACCORDINGLY, THE LEVY OF PENALTY IS N OT VALID. IT WAS ARGUED THAT SINCE THE CONSIDERATION HAS BEEN RE CEIVED BY BANK CHEQUES AND SINCE ALL THE TRANSACTIONS HAVE BEEN RECORD ED IN BOOKS OF ACCOUNTS AND THE INCOME OFFERED TO TAX ON PROPORTIONAT E BASIS IN A.Y. 2010-11 ON THE BASIS OF ENTRIES RECORDED IN THE BOOKS OF ACCOUNT, THE SAME CANNOT BE CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE. 6. THE ASSESSEE FURTHER ARGUED THAT AS PER PROVISIONS OF SECTION 132B, EXISTING LIABILITY IS TO BE ADJUSTED AGAINST THE CASH S EIZED AND SUCH ADVANCE TAX LIABILITY IS THE EXISTING LIABILITY OF THE ASSE SSEE. THE SEIZED CASH HAS TO BE ADJUSTED AGAINST THE SAID LIABILITY. IT WAS BROUGHT TO THE NOTICE OF THE LD.CIT(A) THAT AS PER THE AMENDMENT TO SECTION 132B BY THE FINANCE ACT 2013 W.E.F. 01-06-2013, TH E EXISTING LIABILITY WILL NOT INCLUDE ADVANCE TAX LIABILITY W.E.F. 01-06-2013. IT HAS BEEN MENTIONED IN THE MEMORANDUM EXPLAINING THE PROVISION S OF FINANCE BILL 2013 (CLAUSE 31) THAT VARIOUS COURTS HAVE HELD THAT ADVANCE TAX LIABILITY IS EXISTING LIABILITY. IT HAS BEEN FURTHER MENTIONED THAT THE LEGISLATIVE INTENT BEHIND THIS PROVISION IS TO ENSUR E RECOVERY OF OUTSTANDING TAX, INTEREST ETC. WHICH MAY ARISE SUBSEQUEN T TO ASSESSMENT PURSUANT TO SEARCH ACTION. IT WAS ARGUED THAT EVEN IF THE INTENTION OF THE LEGISLATURE MENTIONED ABOVE IS CONSIDERED T HEN ALSO THE TAX ON INCOME DISCLOSED IS TO BE REGARDED AS FULLY PA ID ON 6 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 COMPLETION OF THE ASSESSMENT. IT WAS ACCORDINGLY ARGUED THAT THE THIRD CONDITION THAT THE ASSESSEE PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME IS ALSO FULFILLED. 7. IT WAS BROUGHT TO THE NOTICE OF THE CIT(A) THAT PAYM ENT OF RS.49,64,700/- RAISED BY THE AO FOR A.Y. 2010-11 VIDE ORDER U/S.143(3) DATED 29-12-2011 WAS PAID ON 22-03-2012, I.E., MU CH BEFORE 28-06-2012, I.E. THE DATE OF PENALTY ORDER U/S.271AA A FOR A.Y. 2010-11. RELYING ON THE DECISION OF THE KOLKATA BENCH O F THE TRIBUNAL IN THE CASE OF DCIT VS. PIONEER MARBLES AND INTERIORS PVT. LTD. REPOR TED IN (2012) 14 ITR 608 IT WAS ARGUED THAT NO PENALTY U/S.27 1AAA CAN BE LEVIED IF THE ASSESSEE HAS PAID THE TAX AND INTEREST DUE THEREON WITHIN THE TIME LIMIT PROVIDED IN NOTICE OF DEMAND U/S.156 AND ALS O WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED. RELYING O N VARIOUS DECISIONS IT WAS ARGUED THAT NO PENALTY U/S.271AAA OF THE I.T. ACT COULD BE LEVIED ON THE ASSESSEE. 8. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE A ND RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. GEBILAL KANHAIYAHAL (HUF) REPORTED IN 252 ITR 435 AND THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF PIONEER M ARBLES AND INTERIORS PVT. LTD. (SUPRA) THE LD.CIT(A) DELETED THE PENALT Y LEVIED U/S.271AAA BY HOLDING THAT THE ASSESSEE HAS FULFILLED THE C ONDITION LAID DOWN IN CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA SINC E THE ASSESSEE HAS PAID THE DEMAND OF RS.49,64,700/- MUCH BEFOR E THE DATE OF PENALTY ORDER PASSED U/S.271AAA FOR THE YEAR UNDER APPEAL. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 7 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 69,40 ,208/- IMPOSED U/S 271AAAOF THE ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE CASH SEIZED AT T HE TIME OF SEARCH SHOULD BE CONSIDERED AS 'ADVANCE TAX' PAYMENT, AS THE E XPLANATION TO SECTION 132B OF THE I.T. ACT, IS CLARIFICATORY IN N ATURE, AND HENCE, TO BE CONSIDERED AS RETROSPECTIVE. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT, IN THE CASE OF ACIT VS. GEBILAL KANHAIYALAL (HUF) (S.C.) [252 CTR 345], THE FACTS OF WHICH ARE DISTINGUISHABLE FROM THE FACTS O F THE ASSESSEE'S CASE, AS IN THE PRESENT CASE, THE ASSESSEE HAS PAID LESSER TAX AT THE TIME OF FILING OF RETURN OF INCOME. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE PROVISIONS OF S ECTION 140A(3), WHICH COMPELS THE PAYMENT OF TAX AND INTEREST, BEFORE FILING OF RETURN OF INCOME. 5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY , DELETE, AND AMEND ANY OF THE GROUNDS, AS PER THE CIRCUMSTANCES OF THE CASE. 6) THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER E VIDENCE TO SUBSTANTIATE ITS CASE, AS THE OCCASION MAY DEMAND. 10. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY CHALLENG ED THE ORDER OF THE CIT(A). HE SUBMITTED THAT SINCE THE ASSES SEE HAS NOT PAID THE TAXES AND INTEREST DUE BEFORE FILING OF THE RETURN OF INCOME, THEREFORE, THE THIRD CONDITION PRESCRIBED IN PROVISIONS OF S ECTION 271AAA(2) IS NOT FULFILLED. REFERRING TO THE SAID PROVISION HE SU BMITTED THAT FOR NON LEVY OF PENALTY THE ASSESSEE HAS TO PAY TH E TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME W HICH WAS ADMITTED IN THE STATEMENT RECORDED U/S.132(4) AND THE AS SESSEE IS ABLE TO SUBSTANTIATE THE MANNER IN WHICH SUCH UNDISCLOSE D INCOME WAS DERIVED. SINCE IN THE INSTANT CASE THE ASSESSEE HAS NOT PAID THE TAXES DUE TOGETHER WITH INTEREST IN RESPECT OF SUCH UND ISCLOSED INCOME, THEREFORE, HE IS NOT ENTITLED TO THE IMMUNITY GRANTED IN SE CTION 271AAA. HE SUBMITTED THAT VARIOUS CASE LAWS RELIED ON BY THE 8 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 ASSESSEE BEFORE THE CIT(A) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE C IT(A) BE REVERSED AND THAT OF THE AO BE RESTORED. 11. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT THE AS SESSEE HAD FILED THE RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS.6,84,3 5,910/- AS DISCLOSED BY THE PARTNER OF THE FIRM DURING THE COURSE OF SEARCH. THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,84,97,920/- TOWA RDS INCOME TAX BEFORE FILING OF THE RETURN OF INCOME. THE BALANCE AMOU NT OF RS.40,99,998/- WAS PAID ON 22-03-2012 AFTER THE COMPLETION OF ASSESSMENT BUT MUCH BEFORE THE PENALTY ORDER WHICH WA S PASSED ON 28-06-2013. REFERRING TO PAGES 17 TO 23 OF THE PAPER B OOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENC H TO THE LETTER ADDRESSED TO THE ADIT ON 16-09-2010 AND 22-06-2010 REQUESTING ADJUSTMENT OF SEIZED CASH AGAINST THE TAX PAYABLE IN RES PECT OF THE FIRM. HE SUBMITTED THAT THE DEPARTMENT HAS NEITHER ADJU STED THE CASH SEIZED NOR COMMUNICATED REFUSAL FOR ADJUSTMENT OF SUCH C ASH AGAINST THE TAX PAYABLE BY THE FIRM. REFERRING TO THE PROVISIONS O F SECTION 271AAA HE SUBMITTED THAT THE ACT DOES NOT PRESCRIBE ANY TIME LIMIT FOR PAYMENT OF THE TAXES. REFERRING TO EXPLANATION TO PROVIS IONS OF SECTION 139(9) HE SUBMITTED THAT THE ACT CLEARLY LAYS DOWN THAT RETURN OF INCOME SHALL BE TREATED AS DEFECTIVE IF THE TAX TOGETHER WITH INTEREST, IF ANY, ARRIVED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140A HAS NOT BEEN PAID ON OR BEFORE THE DATE OF FILING OF THE RETURN. T HIS HAS BEEN INSERTED BY THE FINANCE ACT, 2013 W.E.F.01-06-2013. REFERRIN G TO PROVISIONS OF SECTION 140A(3) HE SUBMITTED THAT AS PER THE SAID PROVISION W.E.F,. 01-04-1980 IF ANY ASSESSEE FAILS TO PAY THE W HOLE OR 9 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 ANY PART OF SUCH TAX OR INTEREST OR BOTH IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) HE SHALL WITHOUT PREJUDICE TO A NY OTHER CONSEQUENCES WHICH HE MAY INCUR BE DEEMED TO BE AN AS SESSEE IN DEFAULT IN RESPECT OF THE TAX OR INTEREST OR BOTH REMAININ G UNPAID AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. REFER RING TO PROVISO TO SUB-SECTION (2) TO SECTION 158BFA HE SUBMITTED THAT NO ORDER IMPOSING PENALTY U/S.158BFA SHALL BE MADE IN RESPECT OF A PERSON IF (1) SUCH PERSON HAS FURNISHED A RETURN UNDER CLA USE (A) OF 158BC, (2) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HA S BEEN PAID OR IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFE RS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE AND (3 ) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RETURN. HOWEVER, IN THE P ROVISIONS OF SECTION 271AAA THERE IS NO SUCH CONDITION AS TO WHEN S UCH TAX HAS TO BE PAID. HE ACCORDINGLY SUBMITTED THAT SINCE THE ASSESS EE HAS PAID THE TAX DUE AFTER COMPLETION OF THE ASSESSMENT AND BEFOR E THE PENALTY ORDER WAS PASSED, THEREFORE, THE ORDER OF THE CIT(A) IS IN ACCORDANCE WITH THE LAW AND THEREFORE THE SAME SHOULD BE UPHELD AND THE GROUND S RAISED BY THE REVENUE SHOULD BE DISMISSED. IN HIS ALTERNA TE CONTENTION HE SUBMITTED THAT THE PENALTY, IF ANY IS LEVIABLE, HAS TO BE RESTRICTED TO 10% OF THE UNPAID TAX. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO C ONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTA NT CASE THE SEARCH TOOK PLACE ON 19-01-2010 DURING WHICH THE PARTN ER OF THE FIRM HAD ADMITTED UNDISCLOSED INCOME OF RS.6.94 CRORES IN HIS STA TEMENT RECORDED U/S.132(4) AS INCOME FROM BUSINESS OF BUILDERS. WE FIND THE 10 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 ASSESSEE FILED THE RETURN OF INCOME ON 27-09-2011 DECLARIN G THE AFORESAID INCOME OF RS.6,94,02,079/-. ALTHOUGH THE TAX PAYAB LE AND INTEREST PAYABLE ON SUCH INCOME COMES TO RS.2,25,97,918 (TA X RS.2,11,46,696/- + INTEREST RS.14,51,222/-) WE FIND THE ASSESS EE HAD PAID AN AMOUNT OF RS.1,84,97,920/- ONLY TILL COMPLETION OF ASSESSMENT. THUS, THE ASSESSEE HAS PAID LESS BY RS.40,99 ,998/- FOR WHICH THE AO HELD THAT THE ASSESSEE HAD NOT PAID TAX DUE TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME AN D THEREFORE PENALTY U/S.271AAA IS LEVIABLE ON THE ASSESSEE FIR M. THE AO ACCORDINGLY LEVIED PENALTY OF RS.69,40,208/- WHICH HAS BEEN DELETED BY THE CIT(A). 13. IT IS THE CASE OF THE REVENUE THAT SINCE THE ASSES SEE HAS NOT PAID THE ENTIRE TAX AND INTEREST BEFORE FILING OF THE RETURN OF IN COME, THEREFORE, PENALTY U/S.271AAA IS LEVIABLE. IT IS THE CASE OF THE ASSESSEE THAT THE BALANCE AMOUNT OF RS.40,99,998/- HAS BEEN PAID O N 22-03- 2012 WHICH IS MUCH BEFORE 28-06-2012, I.E. THE DATE OF PENA LTY ORDER PASSED U/S.271AAA. SINCE THERE IS NO TIME LIMIT PRESCRIBED FOR PAYMENT OF TAX U/S.271AAA AND SINCE THE ASSESSEE HAS PAID THE ENTIRE TAX ALONG WITH INTEREST DUE BEFORE PASSING OF THE PENALTY ORDER, THEREFORE, NO PENALTY U/S.271AAA IS LEVIABLE ON THE ASSESSEE. 14. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE KOLKA TA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. PIONEER MARB LES AND INTERIORS PVT. LTD. REPORTED IN 144 TTJ 663. IN THAT C ASE, THE ASSESSEE COMPANY WAS SUBJECT TO SEARCH AND SEIZURE OPERATIONS U/S.132 DURING WHICH THE ASSESSEE MADE THE DISCLOSURE OF RS.50 LAKHS. THE INCOM E SO DECLARED WAS INCLUDED IN THE INCOME SUBSEQUENTLY RETURNE D BY THE ASSESSEE WHICH WAS ACCEPTED BY THE AO IN THE ASSESSME NT ORDER. 11 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 HOWEVER, THE AO INITIATED PENALTY PROCEEDINGS U/S.271AAA ON THE GROUND THAT THE ASSESSEE HAD NOT PAID FULL TAX AND INTE REST ON DISCLOSURE MADE U/S.132(4). IT WAS ARGUED BY THE ASSESSE E THAT WHILE FILING THE RETURN OF INCOME IT HAD NOT COMPUTED LEVY OF INTER EST U/S.234C DUE TO INADVERTENT MISTAKE BUT THE ASSESSEE H AD PAID OVERALL SHORTFALL WITHIN PERMISSIBLE TIME, I.E. UPON RECEIVING THE NOTICE O F DEMAND U/S.156. THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY U/S.271AAA. THE CIT(A) CANCELLED SUCH PENALT Y HOLDING THAT DUE TAXES ALONG WITH INTEREST WAS PAID BEFORE THE P ENALTY PROCEEDINGS WERE CONCLUDED. ON FURTHER APPEAL BY THE RE VENUE THE TRIBUNAL DISMISSED THE APPEAL FILED BY THE REVENUE AND UPHE LD THE ORDER OF THE CIT(A) BY OBSERVING AS UNDER : 6. WE FIND THAT SECTION 271 AAA, WHICH IS APPLICABL E IN RESPECT OF UNDISCLOSED INCOME UNEARTHED AS A RESULT OF SEARCH OPER ATIONS CARRIED OUT ON OR AFTER 1S T JUNE 2007, PROVIDES AS FOLLOWS: PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTE R THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDI TION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PE R CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY I F THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SU B-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT O F THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. 12 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 EXPLANATION : FOR THE PURPOSES OF THIS SECTION, (A) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESEN TED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER V ALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUME NTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WH ICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARC H IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSION ER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESE NTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE REC ORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED ; (B) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT TH E DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE H AS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE TH E SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 7. WE FIND THAT UNDER THE SCHEME OF SECTION 271 AAA, THERE IS A COMPLETE PARADIGM SHIFT SO FAR AS PENALTY IN RESPECT OF UNACCOUN TED INCOME UNEARTHED AS A RESULT OF SEARCH OPERATION CARRIED OUT ON OR AFTER 1S T JUNE 2007 IS CONCERNED. UNLIKE IN THE CASE OF PENALTY UNDE R SECTION 271(1)(C), SECTION 271 AAA, WITHOUT ANY REFERENCE TO FINDINGS O R PRESUMPTIONS OF CONCEALMENT OF INCOME OR THE FINDINGS OR PRESUMPTIONS OF FURNISHING OF INACCURATE PARTICULARS, PROVIDES THAT IN RESPECT OF UN ACCOUNTED INCOME IN THE CASES WHERE SEARCH INITIATED AFTER 1S T JUNE 2007, THE ASSESSEE IS TO PAY A PENALTY @ 10% OF UNACCOUNTED INCOME. SUB SECTION 2 OF SECTION 271 AAA, HOWEVER, RELAXES THE RIGOUR OF THIS PENALTY PROV ISION IN A SITUATION IN WHICH (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SECTION 132(4), ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER I N WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. WHILE PAYMENT OF TAXES, ALONG WITH INTEREST, BY THE ASSESSEE IS ONE OF THE CONDITIONS PRECEDENT FOR AVAILING THE IMMUNITY UNDER SECTION 27 1AAA(2), THERE IS NO TIME LIMIT SET OUT FOR SUCH PAYMENTS BY THE ASSESSEE. ONC E A TIME LIMIT FOR PAYMENT OF TAX AND INTEREST HAS NOT BEEN SET OUT BY TH E STATUTE, IT CANNOT INDEED BE OPEN TO THE ASSESSING OFFICER TO READ SUCH A T IME LIMIT INTO THE SCHEME OF THE SECTION OR TO INFER ONE. THERE IS THUS N O LEGALLY SUSTAINABLE BASIS FOR THE STAND OF THE ASSESSING OFFICER THAT IN A SITU ATION IN WHICH DUE TAX AND INTEREST HAS NOT BEEN PAID IN FULL BEFORE FIL ING OF THE RELEVANT 13 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 INCOME TAX RETURN, THE ASSESSEE WILL NOT BE ELIGIBLE FO R IMMUNITY UNDER SECTION 271 AAA(2). 8. WHILE DEALING WITH EXPLANATION 5 TO SECTION 271( 1)(C), WHICH IS BROADLY ON THE SAME LINES, HONBLE GUJARAT HIGH COURT, IN TH E CASE OF CIT VS MAHENDRA C SHAH (299 ITR 305) HAS OBSERVED THAT, THERE IS NO PRESCRIPTION ABOUT THE POINT OF TIME WHEN THE TAX HA D TO BE PAID QUA THE AMOUNT OF INCOME DECLARED IN THE STATEMENT UNDER SECT ION 132(4) OF THE ACT. WE MUST, HOWEVER, POINT OUT THAT EVEN AFTER MA KING THESE SPECIFIC OBSERVATIONS THEIR LORDSHIPS HAD TO TREAT THE CONCLUSION OF ASSESSMENT PROCEEDINGS AS OUTER LIMIT FOR MAKING PAYMENT OF TAX AND INTEREST BUT THAT WAS BECAUSE OF THE PECULIAR NATURE OF PENALTY PROVISIO NS UNDER SECTION 271(1)(C) WHEREIN ASSESSING OFFICER HAS TO RECORD THE SA TISFACTION IN THE COURSE OF ASSESSMENT PROCEEDINGS ITSE LF SOMETHING WHICH IS NOT A CONDITION PRECEDENT FOR IMPOSITION OF PENALTY UNDER SECTION 271 AAA. THEIR LORDSHIPS HAD HELD THAT HOWEVER, THE OUTER LI MIT HAS TO BE THE POINT OF TIME WHEN THE ASSESSMENT PROCEEDINGS ARE UNDERT AKEN BY THE ASSESSING OFFICER BECAUSE THE OPENING PORTION OF SECTION 271(1) OF THE ACT REQUIRES THE ASSESSING OFFICER TO RECORD SATISFACTION IN T HE COURSE OF SUCH PROCEEDINGS, AND THE SATISFACTION HAS TO BE AS REGARDS T HE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTIC ULARS OF INCOME. SECTION 271 AAA, AS THE STATUTE UNAMBIGUOUSLY PROVIDES, DOES NOT REQUIRE ANY SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER TO BE ARRIVED AT DURING THE ASSESSMENT PROCEEDINGS, AND, THEREFORE, THE OUTER LI MIT OF PAYMENT BEFORE THE CONCLUSION OF ASSESSMENT PROCEEDINGS WILL NOT COME INTO PLAY. 9. IN OUR CONSIDERED VIEW, THEREFORE, ON THE FACTS OF THE PRESENT CASE WHEREIN ENTIRE TAX AND INTEREST HAS BEEN DULY PAID W ELL WITHIN THE TIME LIMIT FOR PAYMENT OF NOTICE OF DEMAND UNDER SECTION 156 AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED, THE ASSESSEE COU LD NOT BE DENIED THE IMMUNITY UNDER SECTION 271AAA(2) ONLY BECAUSE EN TIRE TAX, ALONG WITH INTEREST, WAS NOT PAID BEFORE FILING OF INCOME T AX RETURN OR, FOR THAT PURPOSE, BEFORE CONCLUDING THE ASSESSMENT PROCEEDINGS. 10. FOR THE REASONS SET OUT ABOVE, WE APPROVE THE CONC LUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTE R. 11. IN THE RESULT, THE APPEAL IS DISMISSED. 15. SINCE IN THE INSTANT CASE ALTHOUGH THE ASSESSEE HAS NOT PAID AN AMOUNT OF RS.40,99,998/- BEFORE FILING OF THE RETURN OF INCOME , HOWEVER, THE FACT REMAINS THAT THE DEMAND OF RS.49,64,700/ - RAISED BY THE AO FOR A.Y. 2010-11 VIDE ORDER DATED 29-12-2011 PASSED U/S.143(3) HAS BEEN PAID ON 22-03-2012 WHICH IS MUCH BEF ORE 28-06- 2012, I.E., THE DATE OF PENALTY ORDER PASSED U/S.271AAA FOR THE YEAR UNDER APPEAL. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION O F THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF PIONEER MARBLE S AND 14 ITA NO.1430/PN/2013 AND CO NO.74/PN/2014 INTERIORS PVT. LTD. (SUPRA), WE HOLD THAT NO PENALTY U/S.27 1AAA IS LEVIABLE IN THE INSTANT CASE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 16. SINCE THE APPEAL FILED BY THE REVENUE IS DISMISSED THE C O FILED BY THE ASSESSEE BECOMES INFRUCTUOUS AND ACCORDINGLY TH E SAME IS DISMISSED. 17. IN THE RESULT, BOTH THE APPEAL FILED BY THE REVENUE AS WELL AS CO FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-08-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ' / JUDICIAL MEMBER / ACCOUNTANT MEMBER IQ.KS PUNE ; #$% DATED : 12 TH AUGUST, 2015. LRH'K '()'*+ , &* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' ' ( ( ) S / THE CIT(A),AURANGABAD 4. ' ' ( S / THE CIT, AURANGABAD 5. 6. +,- ., ' .', IQ.KS / DR, ITAT, B PUNE; -0 1 / GUARD FILE. '$ - / BY ORDER , + //TRUE C + //TRUE COPY// 23 4 .5 / SR. PRIVATE SECRETARY ' .', IQ.KS / ITAT, PUNE