RADHEYSHYAM MITTAL, Jaipur V. DCIT, Jaipur

ITA 1013/JPR/2013

• Counselvise Citation: 101323114 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Keywords: Bogus purchase; Unexplained cash credit; Gift; Income from undisclosed sources; Question of law; Retraction; Revised return
• Section: 153A; 132; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 1013, 1014 & 1015/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04 TO 2006-07 SHRI RADHEY SHYAM MITTAL B-18, SARDAR PATEL MARG, CHOMU HOUSE K[R CUKE VS. THE DCIT CENTRAL CIRCLE- 3 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADAPM 3684 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL, CA SHRI MRIDUL GOYAL, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 1/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 4/12/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THESE ARE ASSESSEES APPEALS ARISING OUT OF LD. CIT (A), CENTRAL, JAIPUR THREE DIFFERENT ORDERS DATED 17-10-2013 CHAL LENGING CONFIRMATION OF PENALTY IMPOSED U/S 271(1)(C) OF THE ACT AS UNDE R:- AY CONCEALMENT OF INCOME HELD BY AO PENALTY U/S 271(1)(C) LEVIED 2003-04 4,00,000 1,20,146 2005-06 5,00,000 1,53,469 2006-07 1,29,697 25,959 ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 2 2.1 BRIEF FACTS AS CLAIMED ARE THE ASSESSEE IS AN I NDIVIDUAL, REGULARLY ASSESSED TO INCOME TAX IN EARLIER YEARS DERIVING IN COME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. REGULAR RET URNS FOR THE IMPUGNED YEARS WERE ALSO DULY FILED. THE DEPARTMENT CARRIED OUT SEARCH & SEIZURE OPERATIONS OVER THE RESIDENTIAL AND BUSIN ESS PREMISES OF THE ASSESSEE GROUP ON 27/08/2008, DURING THE COURSE OF SEARCH NO INCRIMINATING MATERIAL, EVIDENCE OR DOCUMENTS WHATS OEVER WERE FOUND. SINCE SEARCH OFFICER UNRELENTINGLY DEMANDED DECLARA TION OF ADDITIONAL INCOME, ASSESSEE HAD NO ALTERNATIVE BUT TO SURRENDE R CERTAIN INCOME IN SEARCH STATEMENT, RELEVANT PART OF THE STATEMENT IS AS UNDER: I HAVE PERUSED THE AFFIDAVIT NOTARIZED ON 14-09-2 010 WHEREIN IT HAS BEEN AVERRED BY THE APPELLANT THAT T HE EXPENSES ON THE MARRIAGE OF HIS SON SHRI PRAFUL MIT TAL WAS INCURRED OUT OF THE CASH GIFTS RECEIVED FROM THE IN -LAWS OF SHRI PRAFUL MITTAL AND OTHER RELATIVES AND FRIENDS. HOWEVER, NO OTHER POSITIVE EVIDENCE HAS BEEN ADDED WITH TH IS AFFIDAVIT. THE A.R. OF THE APPELLANT HAS CONTENDE D THAT DURING THE COURSE OF STATEMENT U/S 132(4) THE APPEL LANT HAS SURRENDERED THE AMOUNT IN ABSENT OF ANY POSITIVE EV IDENCE. BUT EVEN WHILE FILING THE AFFIDAVIT NO POSITIVE EV IDENCE HAS BEEN ADDUCED TO SUBSTANTIATE THE AVERMENTS MADE IN THE AFFIDAVIT BY THE APPELLANT. NO DETAILS OF THE NAMES , ADDRESSES, CONFIRMATIONS OF THE PERSONS WHO GAVE SU CH GIFTS TO THE ASSESSEE ALONG WITH THE DETAILS OF THE AMOUN T OF GIFTS, SOURCE OF WITHDRAWAL, COPY OF CASH BOOK OR BANK ACC OUNT HAS BEEN FILED ALONG WITH THIS AFFIDAVIT. IN ABSENC E OF ANY DETAILS OF SUBSTANTIATING EVIDENCE IT IS NOT CLEAR HOW THE AO WAS REQUIRED TO VERIFY THE AVERMENTS MADE IN THIS A FFIDAVIT. ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 3 THE AO HAS THEREFORE HELD THIS AFFIDAVIT TO BE SELF SERVING EVIDENCE AND HAS REJECTED IT WHILE PASSING THE ORDE R U/S 271(1)(C). EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS THE AR HAS NOT ADDUCED ANY EVIDENCE TO SUPPORT THE AVER MENTS MADE IN THIS AFFIDAVIT AND THEREFORE THIS AFFIDAVIT IS HELD TO BE UNRELIABLE EVIDENCE. III) THE SUBMISSION OF THE APPELLANT THAT THE SURRENDER MADE VOLUNTARILY IS ALSO NOT SUPPORTED BY FACTS. THE EXCERPTS OF THE RELEVANT PORTION OF THE STATEME NT OF THE APPELLANT TAKEN ON 27.08.2008, U/S 132(4) IS REPROD UCED HEREUNDER FOR READY REFERENCE: IZ'U-6 VKI }KJK MIY{; DJK;S X;S DEI;WVJ FIZAV VKMV LS IRK YXRK GS FD 01-04-04 DKS SUNDRY CREDITORS 380872 @& FKS ,OA BUESA LS FDLH DKS DKSBZ HKQXRKU FOFRR; OKZ 2004 &05 ESA UGHA FD;K X;K GSA FNUAKD 31-03-05 DKS SUNDRY CREDITORS 3800872 @&A D`I;K CRK;S FD ;S DKSU&DKSU LS SUNDRY CREDITORS GSA\ RFKK BUDK HKQXRKU DC GQVK NLRKOST IZLRQR DJSA MRRJ ESJS IKL MIJKSDR SUNDRY CREDITORS DH DKSBZ FYLV MIYC/K UGHA GSA EQ>S IRK UGHA GS FD SUNDRY CREDITORS DC LS PYS VK JGS GSA RFKK BUDK HKQXRKU DHKH FD;K X;K UGHA VFKOK UGHA ESJH TKUDKJH ESA UGHA GSAA IZ'U-7 D`I;K CRK;SA ESA FERY ,AM DEIIUH ESA D;K DKE GKSRK FKK] DC RD O;KIKJ GQVK VKSJ EKY FDLLS [KJHNUS FKS\ MRRJ MJ PHARMA DH C&F FKH TKS FD 2003 LS 2005 RD FKHA IZ'U-8 LK{KH DS VHKKO ESA SUNDRY CREDITORS DS NKF;RO VK;DJ VF/KFUF;E DH 411 DS RGR VK; ESA D;KSA UGHA EKU FY ;K X;K\ MRRJ ESA LR;KFIR DJUS ESA VLEFKZ GWWAWAAS IZ'U-9 FOFRR; OKZ 2004&05 DH JKSDM+ CGH IS'K DJS R KFD JKSDM+H TRANSACTION DK VERIFICATION GKS LDSA MRRJ ESA JKSDM+ CGH IS'K DJUS ES VLEFKZ GWWAA ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 4 IZ'U-10 VKI 'KIFK IWOZD CRK;S FD D;K VKIUS JH EUKST VXZOKY LS 20-04- 04 DKS 17]350@& :I;S JH FUFRU TSU 05-04-04 DKS 18]5 00@& :I;S ,OA JH JKELO:I EH.KK LS 10-04-04 DKS 19]350@& M/KKJ FY; S FKSA MRRJ ESA 'KIFK IWOZD C;KU DJRK GWWA FD MIJKSDR JKF' K ESAUS IJ FY[KH RKJH[KKSA ESA M/KKJ FY;S FKS ,OA CDK;K DS ORZEKU IR S ESA VKIDSK IS'K DJ NWAXKA (HANDWRITING IS CHANGE FROM HERE) CKN ESSA CRK;K FD ESA MIJKSDR O;FDR;KSA LS FY[KKBZ XBZ TEK DKS LR;KFIR DJUS ESA VLEFKZ GWWA ,OA ;G JKF'K ESJH BUSINESS CONCERN M/S MITTAL & CO. ESA UNRECORDED BUSINESS LS DEKBZ XBZ JKF'K TEK FY[KKBZ XBZ GSA IZ'U 12- D`I;K CRK;SA FD VKIDS IQ= LKSJHK DH 'KKNH ESA FD;S X;S [KPSZ DH ,OT ESA VKIDS FUOKL IJ IKBZ GSAA MLDK D;K L=KSR GSA \ ,OA BL IZDKJ DH VKSJ FDRUH VK; GS\ MRRJ ESJH VK; BU ,D EK= L=KSR PHARMACEUTICAL CO. DS FOFHKUU ITEMS DH TRADING ,OA BL O;KIKJ LS ESUS YXHKX 30 YK[K :I;S DH V?KKSFKR VK; VFTZR DH GSA FTLESA LS 7&8 YK[K :I;S ESJS IQ= DH 'KKNH ESA UNRECORDED [KPKZ FD;K ,OA 7&8 YK[K :I;S DH V?KKSFKR JEWELLARY ESA FUOS'K DH RFKK YXHKX 5 YK[K :I;S ESA C-1, MITTAL CHAMBERS ESA FINYS OKZ N'KKZ;S X;S FUOS'K DS VYKOK FOFU;KSX FD; K RFKK 'KSK JKF'K ESAUS VIUS IFJFPR O;FDR;KSA DKS M/KKJ FN;KA ON PERUSAL OF THE STATEMENTS IT IS SEEN THAT THE APPELLANT HAD FABRICATED SEALS OF DIFFERENT BUSINES S CONCERNS. THESE WERE USED TO GENERATE BOGUS BILLS AND THE SUN DRY CREDITORS FOR SUCH BOGUS PURCHASES COULD NOT BE VER IFIED BY HIM. IT WAS ON THE BASIS OF THESE DOCUMENTS THAT HE ADMITTED TO HAVING EARNED UNACCOUNTED INCOME FROM THE BUSINE SS CONCERN M/S MITTAL & COMPANY AND IN RESPONSE TO QUE STION 12 HE HAS ADMITTED THAT HE HAD SPENT THIS AMOUNT ON THE MARRIAGE OF HIS SONS AND PURCHASE OF THE JEWELLERY WHICH WAS ALSO FOUND DURING THE COURSE OF SEARCH AND THE QUANTITY AND VALUE OF WHICH WAS LISTED AS PER PANCHANAM PREP ARED. THUS IT CANNOT BE SAID THAT THERE WAS O INCRIMINATI NG EVIDENCE/DOCUMENTS FOUND DURING THE COURSE OF SEARC H ON THE ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 5 BASIS OF WHICH THE SURRENDER WAS MADE BY THE APPELL ANT. IT WAS ONLY DURING THE COURSE OF SEARCH THAT IT WAS FO UND THAT HE EARNED UNACCOUNTED INCOME FROM HIS PHARMACEUTICA L CONCERN WHICH WAS USED TO PURCHASE JEWELLERY FOR TH E MARRIAGE OF HIS SONS AND OTHER EXPENSES ON THESE MA RRIAGES. IT WAS ON THE BASIS OF THESE DOCUMENTS THAT THE SUR RENDER WAS MADE. IN SEARCH STATEMENT, THE ASSESSEE THUS DECLARED RS. 30.00 LACS AS HIS UNDISCLOSED INCOME FROM PHARMACEUTICAL BUSINESS AND ADDITIONAL INCOME OF RS. 10,84,897/- QUA MARRIAGE EXPENSES OF SON SAU RABH AND HOUSE RENOVATION WERE DECLARED IN THE RETURNS FILED U/S 1 53A FOR AY 2003-04, AY 2005-06 AND AY 2006-07. FOR BALANCE AMOUNT RS. 1 9,15,303/- ASSESSEE RETRACTED HOWEVER, LD AO NOT ACCEPTING THE RETRACTION MADE THE ADDITION OF RS. 19,15,303/- IN AY 2009-10, WHICH WA S CONFIRMED BY LD CIT(A). 2.2 IN SECOND APPEAL, THIS ADDITION WAS DELETED BY ITAT IN ASSESSEE'S OWN CASE IN ITA NO. 420/JP/2012 VIDE ORDER DATED 2 6/08/2013. (THE COPY OF ORDER PLACED ON PAPER BOOK). 2.3 ADVERTING TO PENALTY PROCEEDINGS IN QUESTION LD . COUNSEL CONTENDS THAT ASSESSEE IN ORDER TO GET RID OF ANY OTHER ISSU E WHICH MAY BE RACKED BY LD. AO, PURSUANT TO NOTICE U/S 153A, SUO MOTU OFFER ED, FURTHER INCOME OVER AND ABOVE THE STATEMENT TAKEN DURING SEARCH AS UNDER:- ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 6 AY DATE OF FILING TOTAL INCOME DECLARED ADDITIONAL INCOME DECLARED PARTICULARS OF ADDITIONAL INCOME 2003-04 30-03- 2009 495210 4,00,000 INCOME SURRENDERED IN STATEMENT U/S 132(4) ON ACCOUNT OF MARRIAGE OF SON SHRI PRAFFUL MITTAL 5,00,000 INCOME SURRENDERED IN STATEMENT U/S 132(4) ON ACCOUNT OF MARRIAGE OF SON SHRI DEEPAK MITTAL 2005-06 30-03- 2009 661150 55,200 INCOME SURRENDERED ON ACCOUNT OF UNEXPLAINED CASH CREDITORS RECORDED IN REGULAR BOOKS 2006-07 30-03- 2009 262400 1,29,697 INCOME SURRENDERED IN STATEMENT U/S 132(4) ON ACCOUNT OF REPAIRS AND RENOVATION OF HOUSE A) THE ASSESSMENTS FOR AY 2003-04, AY 2005-06 AND AY 2 006-07 WERE FRAMED U/S 153A BY LD. AO VIDE HIS ORDERS DATE D 31.05.2010 ACCEPTING THE AMOUNTS OF INCOME RETURNED IN RESPECTIVE YEARS AND MADE NO OTHER ADDITION. B) LD. AO THEREAFTER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF INCOME TAX ACT QUA THE SUO MOTU FURTHER INCOME DECL ARED IN THE RETURNS FILED U/S 153A AS MENTIONED ABOVE. ASSE SSEE FILED DETAILED EXPLANATION CONTENDING THAT THE PENALTY WA S NOT LEVIABLE ON MERITS AS WELL UNDER LAW. QUA THESE ITE MS OF INCOME NEITHER ANT INCRIMINATING MATERIAL WAS FOUND DURING SEARCH, NOR ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 7 ANY STATEMENT WAS RECORD AND NO AMOUNT WAS OFFERED. THERE WAS NO JUSTIFICATION OF PENALTY IN A CASE ASSESSEE SUO MOTU OFFERED FURTHER INCOME TO AVOID ANY COMPLICATIONS. THE EXPLANATION DID NOT FIND FAVOR WITH LD. AO WHO IMPO SED THE IMPUGNED PENALTY IN RESPECTIVE YEARS AS MENTIONED I N ABOVE TABLE. AGGRIEVED FROM THE ASSESSMENT ORDER OF THE L D AO THE ASSESSEE FILED APPEAL BEFORE THE LD CIT(A). THE LD CIT(A) UPHELD THE FINDINGS OF AO AND CONFIRMED THE LEVY OF PENALTY. 2.4 AGGRIEVED FROM THE ORDERS OF LD CIT(A), ASSESSE E IS IN APPEALS BEFORE. 2.5 LD. COUNSEL CONTENDS THAT DURING THE COURSE OF SEARCH THE DEPARTMENT HAS NOT FOUND ANY INCRIMINATING EVIDENCE OR DOCUMENTS IN RESPECT OF ABOVE ITEMS OF INCOME SUO MOTU OFFERED I N RETURNS BY ASSESSEE IN A BONA FIDE MANNER. IN SEARCH STATEMENT THOUGH N O DOCUMENT OR RECORD WAS FOUND ABOUT PHARMACEUTICAL BUSINESS. LOOKING AT THE UNRELENTING ATTITUDE OF THE DEPARTMENT AND TO STOP THE AGONY OF FAMILY MEMBERS CAUSED BY SEARCH PROCEEDINGS ON ALL THE RESIDENTIAL AND BUSINESS PREMISES, ASSESSEE DECLARED AN AMOUNT OF RS.30.00 LACS QUA ON LY ALLEGED PHARMACEUTICAL BUSINESS AND RS.10,84,897/- REPRESEN TING THE UNACCOUNTED EXPENSES IN MARRIAGE AND RENOVATION IN HOUSE. AS M ENTIONED ABOVE THE RETRACTION OF BALANCE AMOUNT RS. 19,15,303/- BY THE ASSESSEE HAS BEEN ULTIMATELY UPHELD BY ITAT IN ITA NO. 420/JP/2012 VI DE ORDER DATED ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 8 26/08/2013. LD. COUNSEL CONTENDS THE PENALTIES HAVE BEEN CONFIRMED BY APPLYING DEEMING PROVISIONS OF EXPLANATION 5A TO SE CTION 271(1)(C) OF INCOME TAX ACT WHICH READ AS UNDER:- [ EXPLANATION 5A : WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME F OR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENAL TY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE D EEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME.] ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 9 FROM THE READING OF ABOVE PROVISION, IT IS CLEAR T HAT IN THE CASE OF SEARCHES CARRIED OUT AFTER 01.06.2007 THE PENALTY F OR THE PREVIOUS YEARS CAN ONLY BE IMPOSED WHERE THE ASSESSEE IS: - (I) FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND ACQUIRED BY UTILIZING THE INCOME OF PREVIOUS YEAR (II) OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS ENTRI ES IN WHICH REPRESENTS TO INCOME OF THE ASSESSEE FOR ANY PREVIOUS YEAR. IT IS NOT DISPUTE THAT QUA THE ABOVE ITEMS ASSESSEE WAS NOT FOUND TO BE OWNER OF ANY DOCUMENTS/BOOKS OF ACCOUNTS FOUND BY T HE SEARCH PARTY INDICATING THAT THE ASSESSEE MADE UNEXPLAINED EXPEN DITURE IN THE MARRIAGE OF THESE TWO SONS OR RENOVATION IN HOUSE. THE LOWER AUTHORITIES HAVE NOT SHOWN ANY NEXUS WITH THE INCOME SURRENDERED IN THE RETURNS FILED U/S 153A WITH THE ENTRY IN ANY BOOKS OR OTHER DOCUMENTS . THE ADDITIONAL INCOME OFFERED IN THE RETURNS FILED U/S 153A WAS PU RELY ON THE BASIS OF DISCLOSURE MADE IN SEARCH STATEMENT, THEREFORE DEEM ING PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) ARE NOT AT ALL ATTRACTED IN ASSESSEES CASE, CONSEQUENTLY IMPUGNED PENALTY CAN NOT BE IMPO SED UNDER THESE FACTS CASE OF THE ASSESSEE. SINCE THE PENALTY UNDE R EXPLANATION 5A TO SECTION 271(1)(C) IS DEEMING IN NATURE CONSEQUENTLY PENALTY CANNOT BE LEVIED ON THE INCOME QUA FOR WHICH THE INGREDIENTS OF EXPLANATION ARE ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 10 ABSENT. THE RETURN FILED IN RESPONSE TO NOTICE UNDE R SECTION 153A BEING CONSEQUENT TO SEARCH IS DISTINCT FROM THE RETURN FI LED UNDER SECTION 139 OF THE ACT. IN PENALTY PROCEEDINGS ASSESSEE FILED A PR OPER REPLY RAISING LEGAL AND FACTUAL OBJECTION EXPLAINING THAT THE EXPENSES ON THE MARRIAGES OF SON PRAFFUL AND DEEPAK WERE INCURRED FROM CASH GIFTS RE CEIVED FROM THEIR IN LAWS, RELATIVES AND FRIENDS; RENOVATION EXPENSES WE RE INCURRED OUT OF PAST SAVINGS. LONG TIME HAD PASSED BY THE TIME PENALTY P ROCEEDINGS WERE TAKEN FOR HEARING, ASSESSEE COULD NOT PRODUCE EVIDE NCE SUPPORTING THE CASH GIFTS, THEREFORE, ASSESSEE SUO MOTU OFFERED IN COME IN 153A RETURNS EVEN THOUGH THERE WAS NEITHER INCRIMINATING MATERIA L NOR ANY DECLARATION BY STATEMENT . IN PENALTY PROCEEDINGS, ASSESSEE TO THIS EFFECT ALS O FILED A DULY SWORN AFFIDAVIT TO SUPPORT HIS CONTENTIONS WHI CH IS PLACED ON PAPER BOOK. LD AO EXCEPT SUMMARILY HOLDING IT TO BE SELF- SERVING DOCUMENT HAS NOT CONTROVERTED IT AS NO FURTHER VERIFICATION, ENQUIRY OR ASSESSEES CROSS EXAMINATION WAS DONE. TO CONTROVERT OR REBUT IT. IT IS SETTLED LAW THAT WHEN THE CONTENTS OF AFFIDAVITS ARE NOT CONTRO VERTED THE DEPOSITION SHOULD BE ACCEPTED CORRECT. RELIANCE IS PLACED ON T HE FOLLOWING DECISIONS:- (I) MEHTA PARIKH & CO V CIT [1958] 30 ITR 181 (SC) (II) DILIP KUMAR RAO VS CIT (1974) 94 ITR 1 (BOM); ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 11 (III) MALWA KNITTING WORKS VS CIT (1977) 107 ITR 379, 381 MP AND (IV) SRI KRISHNA VS CIT (1983) 142 ITR 618 (ALL). ADDITIONAL INCOME DECLARED IN RETURN FILED U/S 153A IS PART OF THE DECLARATION OF RS. 30.00 LACS IN STATEMENT U/S 132( 4). ASSESSEE HAD NO PHARMACEUTICAL BUSINESS AT ALL WHICH WAS ARBITRARIL Y FORCED ON ASSESSEE AND IN ASSESSMENT ASSESSEES VERSION WAS FOUND TO B E CORRECT AS NO ADDITION WAS MADE. EVEN THOUGH NO INCRIMINATING MAT ERIAL WHATSOEVER WAS FOUND IN SEARCH IN THIS BEHALF, TO SPARE THE WR ATH OF THE DEPARTMENT ASSESSEE SUO MOTU OFFERED RS. 10,84,897/- AS UNACCO UNTED EXPENSES IN MARRIAGE AND RENOVATION IN HOUSE IN THESE YEARS. TH E FACT THAT DESPITE THERE BEING NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH ASSESSEE ARE MADE TO DECLARE ADDITIONAL INCOME ITSE LF INDICATES THE ARBITRARY METHODS ADOPTED BY THE SEARCH OFFICERS. E VEN CBDT BY CIRCULARS HAS WARNED SEARCH PARTIES NOT TO EXTRACT SUCH STATEMENTS AND DECLARATION WITHOUT INCRIMINATING MATERIAL. THE ADD ITION FOR THE BALANCE AMOUNT RS. 19,15,303/- ALSO STANDS DELETED BY ITAT WHICH CLEARLY IMPLIES THAT THE ADDITIONS ULTIMATELY RETURNED WERE NOT BASED ON ANY INCRIMINATING MATERIAL AND OFFERED BY ASSESSEE TO W ARD OFF THE RIGOR CREATED BY SEARCH ACTIONS AND CONSEQUENT PROCEEDING S. IMPOSITION OF FURTHER PENALTY IS HIGHLY UNJUSTIFIED IN THESE FACT S AND CIRCUMSTANCES. ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 12 PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE AND E VEN THE LEGALITY OF ADDITION MADE CAN BE CHALLENGED IN PENALTY PROCEEDI NGS. IT IS NOT DISPUTED THAT NO MATERIAL WHATSOEVER FOUND DURING THE COURSE OF SEARCH. ORIGINAL ASSESSMENTS FOR AY 2003-04, AY 2005-06 HAD BECOME F INAL BY THE TIME SEARCH ON 27/08/2008 WAS CARRIED OUT. IN THESE CIRC UMSTANCES THE ASSESSMENTS REMAINING UNABATED NO PENALTY QUA THESE ITEMS CAN BE IMPOSED. FURTHER RELIANCE IS PLACED:- (I) SUDARSHAN SILKS AND SAREES V. CIT (2008) 300 IT R 205 (SC). ON A SEARCH CONDUCTED IN THE PREMISES OF THE ASSESS EE, APART FROM CASH AND JEWELLERY, INCRIMINATING DOCUMENTS EVIDENCING CONCEALMENT OF INCOME WERE UNEARTHED. IT WAS FOUND THAT THE ASSESSEE WAS MAINTAINING DOUBLE SETS OF BOOKS OF ACCOUNT AND WAS ACCOUNTING FOR ONLY 50 PERCENT OF THE SALES IN THE REGULAR SET OF BOOKS AND CERTAIN PURCHASES WERE NOT ACCOUNTED FOR. IN ORDER TO AVOID DIFFICULTIES AND LITIGATION, THE ASSESSEE CAME FORWARD WITH AN OFFER OF INCOME ADDITIONAL TO THAT ESTIMATED BY THE ASSESSIN G OFFICER AND FILED REVISED RETURNS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS PENAL ACTION WAS INITIATED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 , IN WHICH THE MAXIMUM PENALTY WAS LEVIED REPELLING THE ASSESSEE'S CONTENTION THAT A PROMISE HAD BEEN MADE NOT TO LEVY PENALTY. ON APPEAL, THE COMMISSIONER (APPEALS) HELD (I) THAT THE ASSESSEE OFFERED THE AMOUNT FOR TAXATION FOR THE PURPOSE OF PURCHASING PEACE ; (II) THAT NO BOOKS OF ACCOUNT OR ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 13 OTHER DOCUMENTARY EVIDENCE WAS DISCOVERED THAT PROVED ANY CONCEALMENT, AND THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, NO CASE FOR PENALTY WAS MADE OUT. THE APPELLATE TRIBUNAL UPHELD THE FINDING S OF THE COMMISSIONER (APPEALS) AND RECORDED THAT ALTHOUGH THERE WAS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE WAS GIVEN AN ASSURANCE THAT NO PENALTY WAS LEVIED, THE FACTS CLEARLY SUGGESTED THAT SUCH AN INDUCEMENT MUST HAVE BEEN GIVEN BY THE SEARCHING PARTY; THAT WHEN ONLY PARTIAL EVIDENCE IN SUPPORT O F CONCEALMENT FOR A VERY LIMITED PERIOD WAS DETECTED THERE WAS NO REASON WHY ANY PERSON WOULD GO TO OFFE R MUCH HIGHER AMOUNTS FOR A LARGE NUMBER OF YEARS ; THAT IN VIEW OF THE DEPOSITION GIVEN UNDER SECTION 132(4) FOLLOWED BY THE CO-OPERATING ATTITUDE OF THE ASSESSEE IN PAYING THE TAX NO PENALTY WOULD BE LEVIABLE UNDER SECTION 271(1)(C) ; THAT THE INCRIMINATING MATERIALS FOUND DURING THE SEARCH WER E NOT USED BY THE DEPARTMENTAL AUTHORITIES IN MAKING THE ASSESSMENTS ; AND THE REVISED RETURNS SHOULD, THERE FORE, BE CONSIDERED TO HAVE BEEN FILED IN GOOD FAITH. THE TRIBUNAL REFERRED TO THE HIGH COURT THE QUESTION WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN UPHOLDING TH E ORDER OF THE COMMISSIONER (APPEALS) IN CANCELLING T HE PENALTY UNDER SECTION 271(1)(C). THE HIGH COURT ANSWERED THE REFERENCE IN FAVOUR OF THE DEPARTMENT. ON APPEAL TO THE SUPREME COURT: HELD , REVERSING THE DECISION OF THE HIGH COURT, THAT THE FINAL FACT-FINDING AUTHORITY WAS THE APPEL LATE TRIBUNAL AND ITS DECISION ON THE FACTS COULD BE GON E INTO BY THE HIGH COURT ONLY IF A QUESTION HAD BEEN REFERRED ON WHETHER THE FINDING OF THE TRIBUNAL WAS PERVERSE, IN THE SENSE THAT IT WAS SUCH AS COULD NO T REASONABLY HAVE BEEN ARRIVED AT ON THE MATERIAL PLA CED ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 14 BEFORE THE TRIBUNAL. IN THE ABSENCE OF SUCH A QUEST ION THE HIGH COURT HAD TO ACCEPT THE FINDING OF FACT ARRIVED AT BY THE TRIBUNAL AND THEN PROCEED TO DECI DE THE QUESTION OF LAW REFERRED. IN THIS CASE THE QUES TION OF LAW REFERRED TO THE HIGH COURT WAS WHETHER THE TRIBUNAL WAS RIGHT IN UPHOLDING THE FINDINGS OF THE COMMISSIONER (APPEALS) IN CANCELLING THE PENALTY LEVIED UNDER SECTION 271(1)(C). THE QUESTION AS TO THE PERVERSITY OF THE FINDINGS RECORDED BY THE TRIBUNAL WAS NEITHER RAISED NOR REFERRED TO THE HIGH COURT. THE TRIBUNAL IS THE FINAL COURT OF FACT. THE DECISION OF THE TRIBUNAL ON THE FACTS CAN BE GONE I NTO BY THE HIGH COURT IN THE REFERENCE JURISDICTION ONL Y IF A QUESTION HAS BEEN REFERRED TO IT WHETHER THE FIND ING ARRIVED AT BY THE TRIBUNAL ON THE FACTS WAS PERVERS E IN THE SENSE THAT NO REASONABLE PERSON COULD HAVE TAKE N SUCH A VIEW. THE LD. AR OF THE ASSESSEE SUBMITTED THAT ASSESSMEN T PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO SEPARATE PROCEEDINGS. T HE ADDITIONS MADE DURING ASSESSMENT PROCEEDINGS OR ADDITIONAL DISCLOS URES MADE IN RETURNS FILED U/S 153A DOES NOT LEAD TO CONCLUSION THAT THE ASSESSEE WAS HAVING SOME UNDISCLOSED INCOME OR CONCEALED THE PARTICULAR S OF HIS INCOME. THE ADDITIONS IN ASSESSMENT ORDER OR IN RETURN FILED U/ S 153A MAY BE BECAUSE OF SOME TECHNICAL REASONS WHICH ALWAYS DOES NOT MEA N THAT THE ASSESSEE HAD CONCEALED INCOME, THEREFORE FOR IMPOSING A PENA LTY THE ASSESSING OFFICER HAS TO PROVE THAT THE ASSESSEE WAS HAVING C ONCEALED INCOME WHICH WAS NOT PROVED IN THE CASE OF THE ASSESSEE. FURTHE R THE PENALTY ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 15 PROCEEDINGS ARE SEPARATE FROM ASSESSMENT PROCEEDING S AND THE FINDING IN THE ASSESSMENT PROCEEDINGS DOES NOT LEAD TO CONCLUS ION THAT THE ASSESSEE HAS CONCEALED THE INCOME. THE PENALTY U/S. 271(1)(C ) IS NOT AUTOMATIC. THE LD AO HAS NOT BROUGHT ON RECORD ANY POSITIVE MA TERIAL TO SHOW THAT THE INCOME IS BASED ON THE ENTRIES RECORDED IN SEIZ ED DOCUMENTS. THERE MUST BE INDEPENDENT FINDING AS HELD BY HONBLE CALC UTTA HIGH COURT IN THE CASE OF DURGA KAMAL RICE MILLS VS. CIT (2004) 2 65 ITR 25 (CAL.). FURTHER SINCE, THE ASSESSEE HAS NOT ACTED DELIBERAT ELY IN DEFIANCE OF LAW OR WAS NOT GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST , OR HAS NOT ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION, PENALTY CANN OT BE LEVIED. IN THIS REGARD YOUR KIND ATTENTION IS DRAWN TOWARDS THE SUP REME COURT DECISION IN THE CASE OF HINDUSTAN STEELS LTD. VS. STATE OF O RISSA, 83 ITR 26 (SC). HONBLE APEX COURT HAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMI NAL PROCEEDING AND PENALTY WILL NOT ORDINARILY BE IMPOS ED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEF IANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY W ILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WH ETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY I S PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE P ENALTY ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 16 WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF T HE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. IT IS SUBMITTED PENALTIES CONFIRMED BY THE LD. CIT( A) U/S 271(1)(C) MAY BE DELETED. 2.6 LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELO W. IT IS NOT DISPUTED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND DECLARED INCOME STANDS DELETED BY ITAT AND THE ADDITIONS IN QUESTION WERE DECLARED IN THE RETURN BY THE ASSESSEE. LD. DR FURT HER CONTENDS THAT EXPLANATION 5A TO SECTION 271(1)(C) IS APPLICABLE I NASMUCH AS SUB CLAUSE II THEREOF REFERS TO WORD TRANSACTION AND THE IMP UGNED ADDITION IMPLIEDLY MEAN TO BE THE TRANSACTIONS OF THE ASSESS EE. IT IS CONTENDED THAT PENALTIES HAVE BEEN RIGHTLY IMPOSED. 2.7 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE RELEVANT FACTS HAVE BEEN N ARRATED ABOVE IN DETAILS. IN MY CONSIDERED VIEW ASSESSEES CASE IS N OT FIT FOR IMPOSITION OF IMPUGNED PENALTIES AS: ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 17 (I) IT IS TRITE LAW THAT PENALTIES SHOULD NOT BE IM POSED UNLESS THE CASE FALLS UNDER THE FOUR CORNERS OF LAW MANDATING THE PENALTY. THUS SUCH LAWS ARE TO BE STRICTLY IMPLEMEN TED. ADVERTING TO EXPLANATION 5A TO SECTION 271(1)(C) IF EXPLICITL Y REFERS TO WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER S ECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FO UND TO BE THE OWNER OF.. IT IS NOT DISPUTED THAT DURING THE SEARCH ASSESSEE WAS NOT FOUND TO BE OWNER OF ANY GOLD, BULLION, A/C BOO KS ETC. AS NO INCRIMINATING MATERIAL WAS DISCOVERED. THIS IS FURT HER CONFIRMED BY THE FACT THAT MUCH ALLEGED PHARMACEUTICAL BUSINESS WAS NOT FOUND TO BE AT ALL CARRIED OUT BY ASSESSEE AND THE ADDITI ONS STAND DELETED BY ITAT. EXPLANATION 5A HAS SPECIFIC APPLICATION, T HE CONTENTION OF LD. DR. THAT PENALTY ARE SUSTAINABLE DUE TO THE IMPLICATION OF WORD TRANSACTION MENTIONED IN SUB CLAUSE II OF EXPL ANATION. 5A CANNOT BE ACCEPTED. THIS IS SIMPLY SO AS THERE IS N O MENTION OF ANY SPECIFIC TRANSACTION. BESIDE THERE SHOULD BE ANY EV IDENCE FOUND DURING THE COURSE OF SEARCH. THUS IN MY CONSIDERED VIEW IMPUGNED PENALTIES CANNOT BE SUSTAINED UNDER EXPLANATION 5A TO SECTION 271(1)(C). (II) WHILE INTERPRETING PROVISO TO SEC. 153A, VARIO US JUDICIAL FORUMS HAVE HELD THAT ADDITIONS IN RESPECT OF FINALIZED ASSESSMENTS CANNOT BE MADE UNLESS INCRIMINATING MAT ERIAL IS DISCOVERED DURING THE COURSE OF SEARCH PROCEEDINGS. IN THESE CIRCUMSTANCES IMPUGNED ASSESSMENTS FOR AY 2003-04, AY 2005- 06 BEING UNABATED, NO ADDITIONS COULD HAVE BEEN MAD E IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. BESIDES FOR AY 2006-07 ALSO SMALL PENALTY FOR HOUSE RENOVATION EXPENSES CA N BE SUSTAINED ON MERITS AS NO INCRIMINATING MATERIAL, EVIDENCE OR NATURE OF RENOVATION IS EVER INQUIRED. ASSESSEES AFFIDAVIT A LSO REMAINS UNCONTROVERTED ON RECORD. 2.8 IN VIEW OF THESE FACTS, CIRCUMSTANCES AND LEGA L PROVISIONS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS CITE D BY THE ASSESSEE, IMPUGNED PENALTIES CONFIRMED BY THE LD. CIT(A) U/S 271(1)(C) ARE DELETED. ITA NO. 1013/JP/2013 SHRI RADHEY SHYAM MITTAL VS. DCIT,CENTRAL CIRCLE- 3 , JAIPUR . 18 3.0 IN THE RESULT ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 /12/20 15 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 4 /12/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RADHEY SHYAM MITTAL, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE- 3,JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1013/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR