SHRI BALAJI INDUSTRIES ENGINEERING LTD., Jaipur V. ACIT, Jaipur

ITA 1014/JPR/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1680 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 17-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK BHATRA
• Keywords: Depreciation; Search and seizure; Document seized; Question of law; Revised return; Documents seized; Unabsorbed depreciation
• Section: 69B; 69; 6; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH JESK LH0 KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH. C. SHARMA, AM & SHRI VIJAY PA L RAO, JM VK;DJ VIHY LA- @ ITA NO. 1014/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. 48, JHOTHWARA INDUSTRIAL AREA, JAIPUR- 302012. CUKE VS. THE ACIT, CIRCLE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AADCB 4480 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI ASHOK BHATRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/05/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 10/06/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 09.09.2016 OF THE LD. CIT(A), JAIPUR ARISING FROM T HE PENALTY ORDER PASSED U/S 271AAB OF THE I.T. ACT FOR THE ASSESSMEN T YEAR 2013-14. THE ASSESSEE HAS RAISED FOLLOWING GROUND:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 1 9,50,000/- UNDER SECTION 271AAB AS IMPOSED BY LD. AO. THE ACTI ON OF THE LD. ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 2 CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAIN ST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALTY AMOUNTING TO RS. 19,50,000/- IMPOSED UNDER SECTION 271AAB. 2. THE ASSESSEE COMPANY CARVES ITS RIGHTS TO ADD, A MEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND W HICH READS AS UNDER:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO ERRED IN TREATING THE DECLARED INCOME DURING THE CO URSE OF SEARCH AS UNDISCLOSED INCOME WITHIN THE MEANING AS DEFIN ED IN SECTION 271AAB. ACTION OF THE LD. AO IS ILLEGAL. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALTY ORDER 3. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR O N THE ADMISSION OF THE ADDITIONAL GROUND, WE FIND THAT THE ASSESSEE HAS RAISED A LEGAL ISSUE IN THE ADDITIONAL GROUND THAT THE INCOME SURR ENDERED BY THE ASSESSEE DURING THE COURSE OF SEARCH IS NOT UNDISC LOSED INCOME WITHIN THE MEANING AS DEFINED IN THE EXPLANATION TO SECTIO N 271AAB OF THE IT ACT. THEREFORE, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS PURELY A QUESTION OF LAW AND DOES NOT INVOLVE INVESTIGATION OF ANY NEW FACTS OR INQUIRY FOR ADJUDICATION OF THE SAME. THERE IS NO Q UARREL ON THE POINT THAT THE PARTIES IN APPEAL CAN RAISE A FRESH PLEA O R GROUND BEFORE THIS TRIBUNAL FOR THE FIRST TIME SO LONG AS THE RELEVANT FACTS FOR ADJUDICATION OF SUCH LEGAL PLEA ARE ALREADY ON RECORD. THEREFORE , ONCE THE RELEVANT FACTS ARE ALREADY ON RECORD FOR ADJUDICATION OF THE QUESTION RAISED IN THE ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 3 ADDITIONAL GROUND AND NO NEW FACTS ARE REQUIRED TO BE INVESTIGATED THEN IN VIEW OF THE DECISION OF THE HONBLE SUPREME COUR T IN CASE OF NTPC VS. CIT 229 ITR 383 THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION ALONG WITH THE MAIN GROUN D OF APPEAL. WE MAY MAKE IT CLEAR THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ONLY A PLEA IN RESPECT OF THE MAIN GROUND RAISED IN THE MEMO OF APPEAL. 4. THERE WAS A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE INCOME- TAX ACT ON 06.11.2012 AT VARIOUS PREMISES OF KANODI A GROUP TO WHICH THE ASSESSEE BELONGS. THUS, THE ASSESSEE WAS ALSO C OVERED BY THE SEARCH AND SEIZURE ACTION AND STATEMENT OF SHRI KAI LASH KANODIA A DIRECTOR OF THE ASSESSEE WAS RECORDED U/S 132(4) OF THE ACT ON 06.11.2012 & 07.11.2012. IN THOSE STATEMENTS HE DISCLOSED/SURRENDERED A SUM OF RS. 2 CRORE ON HIS B EHALF AND EQUAL AMOUNT OF RS. 2 CRORE ON BEHALF OF HIS SON SHRI ABH ISHAK KANODIA TOTAL AMOUNTING TO RS. 4 CRORE. THEREAFTER VIDE LETTER DA TED 25.01.2013 OF SHRI KAILASH KANODIA ALSO SURRENDERED A SUM OF RS. 65,00,000/- ON BEHALF OF THE ASSESSEE COMPANY ON ACCOUNT OF CASH P URCHASE OF RAW MATERIAL. THE ASSESSEE FILED ITS RETURN OF INCOME U /S 139(1) OF THE ACT ON 28.09.2013 DECLARING TOTAL INCOME AS LOSS OF RS. 72,92,396/-. THIS LOSS WAS DUE TO UNABSORBED DEPRECIATION WHICH HAS B EEN CARRIED ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 4 FORWARD. THE ASSESSEE FILED ITS REVISED RETURN OF I NCOME ON 21.03.2015 IN WHICH UNDISCLOSED INCOME OF RS. 65,00,000/- WAS ALSO DECLARED AS SURRENDERED VIDE LETTER DATED 25.01.2013. THE AO HA S COMPLETED THE ASSESSMENT ON THE REVISED RETURN OF INCOME ACCEPTIN G THE SURRENDER INCOME OF RS. 65,00,000/-. SUBSEQUENTLY, THE AO INI TIATED THE PROCEEDINGS U/S 271AAB OF THE ACT BY ISSUING SHOW C AUSE NOTICE DATED 19.08.2015. THE ASSESSEE OBJECTED TO THE PROPOSED L EVY OF PENALTY U/S 271AAB OF THE ACT. THE AO WHILE PASSING THE ORDER D ATED 29.09.2015 LEVIED PENALTY @ 30% OF UNDISCLOSED INCOME AMOUNTIN G TO RS. 19,50,000/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 5. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT DURING THE COURSE OF SEARCH ON 06.11.2012 A PAPER EXHIBIT- 2 PAGE 25 WAS FOUND AND SEIZED CONTAINING THE DETAILS OF PAYMENT MADE IN CASH FOR PURCHASE OF RAW MATERIAL. THE LD. AR HAS REFERRED T O THE SAID SEIZED DOCUMENT AND SUBMITTED THAT IT CONTAINS THE DATE OF PAYMENT FOR PURCHASE OF IRON ORE IN CASH HOWEVER, AT THE TIME O F SEARCH THE STOCK FOUND WAS DULY RECORDED IN THE ACCOUNTS. THEREFORE, THERE WAS NO DISCREPANCY FOUND IN THE STOCK OF THE ASSESSEE AT T HE TIME OF SEARCH AND HENCE THE PAYMENT MADE IN CASH FOR PURCHASE OF RAW MATERIAL ITSELF ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 5 IS NOT UNDISCLOSED INCOME OF THE ASSESSEE. THE LD. AR HAS FURTHER CONTENDED THAT AS PER THE DEFINITION OF UNDISCLOSED INCOME GIVEN IN EXPLANATION TO SECTION 271AAB OF THE ACT THE PURCHA SE OF RAW MATERIAL CANNOT BE STATED TO BE INCOME WHICH IS REPRESENTED BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG. IN THE DEFINITION OF UNDISCLOSED INCOME IT TALKS ABOUT INCOME BY WAY OF ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH U/S 132 OF THE ACT. THE INVESTM ENTS WHICH ARE FOUND NOT RECORDED CANNOT BE DEEMED AS UNDISCLOSED INCOME IN THE CONTEXT OF SECTION 271AAB OF THE ACT. THE LD. AR HA S RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL D ATED 11.01.2019 IN CASE OF M/S RAMBHAJOS VS. ACI T IN ITA NO. 991/JP/2017 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT THE INVES TMENT ITSELF CANNOT BE DEEMED AS UNDISCLOSED INCOME FOR THE PURPOSE OF SECTION 271AAB OF THE ACT. HENCE, THE LD. AR HAS SUBMITTED THAT THE D ISCLOSURE MADE BY THE ASSESSEE CANNOT BE HELD AS UNDISCLOSED INCOME A ND THEREFORE, THE PENALTY LEVIED BY THE AO U/S 271AAB OF THE ACT MAY BE DELETED. ALTERNATIVELY, THE LD. AR HAS SUBMITTED THAT THE AS SESSEE FILED LETTER DATED 25.01.2013 WHEREBY THE SURRENDER OF RS. 65,00 ,000/- WAS MADE WITH THE SPECIAL MENTION THAT THE SAME MAY BE TREAT ED AS DISCLOSURE ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 6 U/S 132(4) OF THE ACT. THE DDIT, INVESTIGATION HAS ACCEPTED THE LETTER AND DID NOT OBJECT TO THE SURRENDER AND DISCLOSURE U/S 132(4) OF THE ACT. THE LD. AR HAS FURTHER SUBMITTED THAT SINCE TH E DEPARTMENT ITSELF HAS NOT CONSIDERED THE DOCUMENTS EXEHIBIT-2 PAGE 25 CONTAINING CASH PAYMENTS FOR PURCHASE OF RAW MATERIAL AS INCRIMINAT ING MATERIAL THEREFORE, NO QUESTION WAS ASKED DURING THE STATEME NT RECORDED U/S 132(4) OF THE ACT REGARDING THE SAID DOCUMENTS AND CONSEQUENTLY THE ASSESSEE WAS NOT HAVING ANY OCCASION TO SURRENDER T HE ALLEGED INCOME OF RS. 65,00,000/-. SUBSEQUENTLY, THE ASSESSEE HAS VOLUNTARILY SURRENDERED RS. 65,00,000/- VIDE LETTER DATED 25.01 .2013 WHICH WAS ACCEPTED BY THE DEPARTMENT. SINCE THE ASSESSEE HAS PAID TAX ON THE SAID SURRENDER BEFORE THE DUE DATE AS PROVIDED U/S 271AAB(1)(A)(I) OF THE ACT THEREFORE, THE MERE DECLARATION OF THE SAID AMOUNT IN THE REVISED RETURN OF INCOME WOULD NOT BE A VIOLATION O F PROVISIONS OF SECTION 271AAB OF THE ACT TO ATTRACT THE PENALTY @ 30%. HENCE, THE LD. AR HAS SUBMITTED THAT IN ANY CASE PENALTY @ 10% COU LD HAVE BEEN LEVIED INSTEAD OF 30% OF THE SURRENDERED INCOME. 5.1 THE LD. AR HAS ALSO CHALLENGED THE INITIATION O F THE PENALTY PROCEEDINGS ON THE GROUND THAT THE AO HAS NOT SPECI FIED THE LIMB/DEFAULT OF THE ASSESSEE IN THE SHOW CAUSE NOTI CE ISSUED U/S ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 7 271AAB R.W.S 274 OF THE ACT AND THEREFORE, THERE IS AN ILLEGALITY IN THE SHOW CAUSE NOTICE WHICH RENDERS THE IMPUGNED ORDER PASSED U/S 271AAB OF THE ACT AS INVALID. IN SUPPORT OF HIS CON TENTION, HE HAS RELIED UPON A SERIES OF DECISIONS OF THIS TRIBUNAL INCLUDI NG THE DECISION DATED 13.06.2018 IN CASE OF SHRI RAVI MATHUR VS. DCIUT IN ITA NO. 969/JP/2017, DECISION DATED 02.07.2018 IN CASE OF S HRI SURESH CHAND MITTAL VS. DCIT IN ITA NO. 931/JP/2017 AND ALSO DEC ISION DATED 24.07.2018 IN CASE OF DINESH KUMAR AGARWAL VS. ACIT IN ITA NO. 855 & 856/JP/2017. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS MADE DISCLOSURE VIDE LETTER DATED 25.01.2013 AN D THEREFORE, IT IS A CONSCIOUS DECISION OF THE ASSESSEE TO DISCLOSE THE SAID INCOME BUT THE SAID AMOUNT OF RS. 65,00,000/- WAS NOT DECLARED WHI LE FILING THE RETURN OF INCOME BY THE ASSESSEE AND ONLY IN THE REVISED R ETURN OF INCOME FILED ON 25.03.2015 THE ASSESSEE HAS CLEARED THE SAID INC OME OF RS. 65,00,000/-. THEREFORE, IT IS A CLEAR DEFAULT AND V IOLATION OF PROVISIONS OF SECTION 271AAB(1) OF THE ACT WHICH ATTRACTS THE LEV Y OF PENALTY @ 30% TO 90% OF UNDISCLOSED INCOME. THE LD. DR HAS FURTHE R SUBMITTED THAT ONCE THE SEIZED DOCUMENTS CLEARLY MANIFEST THE CASH PAYMENT BY THE ASSESSEE FOR PURCHASE OF RAW MATERIAL THEN IT IS UN DISCLOSED INCOME OF ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 8 THE ASSESSEE WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE, THE DISCLOSURE MADE BY THE ASSESSEE EVEN VIDE LETTE R DATED 25.01.2013 IS COVERED BY THE DEFINITION OF UNDISCLOSED INCOME U/S 271AAB OF THE ACT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITI ES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF SEARCH AND SEIZURE ACTION CARRIED ON 06.11.2012 THE STATEMENT OF SHRI KAILASH KANODIA THE DIRECTOR OF THE ASSESSEE WAS RECORDED U/S 132(4) ON 06.11.2012 AND 07.11.2012. AFTER GOING THROUGH THE STATEMENT RECOR DED U/S 132(4) OF THE ACT WE NOTE THAT THE DIRECTOR OF THE ASSESSEE C OMPANY SURRENDERED RS. 2 CRORE EACH ON HIS BEHALF AS WELL AS ON BEHALF OF HIS SON SHRI ABHISHAK KANODIA. FURTHER, THERE WAS NO QUESTION AS KED BY THE INVESTIGATING TEAM ABOUT ANY INCRIMINATING MATERIAL OR UNDISCLOSED INCOME IN RESPECT OF THE CASH PURCHASE OF RAW MATER IAL. WE FURTHER NOTE THAT THE SAID SEIZED DOCUMENTS EXHIBIT-2 PAGE 25 CO NTAINS THE DETAILS OF PURCHASE OF RAW MATERIAL ON VARIOUS DATES. THE SUMM ARY OF THE PURCHASES AS RECORDED IN THE SAID DOCUMENTS ARE AS UNDER:- DATE OF PAYMENT AMOUNT (RS.) 7-9-12 15,00,000 21-09-12 10,00,000 ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 9 11-10-12 20,00,000 NO DATE 4,00,000 NO DATE 16,00,000 TOTAL 65,00,000 THE DETAILS AS RECORDED IN THE SEIZED DOCUMENT IS O NLY PURCHASE MADE BY THE ASSESSEE BUT AT THE SAME TIME THE INVESTIGAT ING TEAM HAD INVENTORIED THE STOCK OF THE ASSESSEE AND FOUND NO DISCREPANCY AS FAR AS THE PHYSICAL STOCK AND THE STOCK RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE, THERE WAS NO IRREGULARITY FOUND IN THE B OOKS OF ACCOUNTS SO FAR AS THE STOCK OF RAW MATERIAL IS CONCERNED. HENC E, EVEN IF THE SOME PURCHASES ARE MADE IN CASH IF THE SAID STOCK IS DUL Y RECORDED IN THE BOOKS OF ACCOUNTS AS IT IS EVIDENT FROM THE INVENTO RISATION MADE BY THE INVESTIGATING TEAM ITSELF THEN IT WOULD NOT BE HELD AS UNDISCLOSED INCOME. THUS, WE FIND THAT THE SAID DOCUMENTS CONTA INING THE DETAILS OF PURCHASE OF RAW MATERIAL IN ITSELF DOES NOT DISCLOS E OR CONSTITUTE ANY UNDISCLOSED INCOME WHEN THERE WAS NO EXCESS STOCK O R DISCREPANCY IN THE PHYSICAL STOCK WITH THE STOCK RECORDED IN THE B OOKS OF ACCOUNT FOUND AT THE TIME OF SEARCH. THIS FACT IS RECOGNIZE D BY THE INVESTIGATING TEAM WHEN NO SUCH QUESTION WAS RAISED AT THE TIME O F STATEMENT OF SHRI KAILASH KANODIA RECORDED U/S 132(4) OF THE ACT ON T WO CONSECUTIVE ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 10 DATES I.E. 06.11.2012 & 07.11.2012. THE FACTS WHICH ARE MANIFEST FROM RECORD AND ALSO NOT DISPUTED BY THE DEPARTMENT THAT AT THE TIME OF STATEMENT RECORDED U/S 132(4) OF THE ACT THE DEPART MENT HAS NOT SUSPECTED OR RAISED ANY QUESTION ABOUT ANY UNDISCLO SED INCOME WITH RESPECT TO THE PURCHASE OF RAW MATERIAL AS RECORDED IN THE SEIZED DOCUMENT EXHIBIT-2 PAGE 25. THEREFORE, THE DEPARTME NT WAS SATISFIED ABOUT THE STOCK FOUND AT THE TIME OF SEARCH WHICH W AS DULY INVENTORIED BASED ON THE PHYSICAL STOCK AND WAS COMPARED WITH T HE BOOKS OF ACCOUNTS AND NO DISCREPANCY WAS FOUND. ONCE, NO QUE STION WAS RAISED OR ASKED ABOUT THE UNDISCLOSED INCOME FOR PURCHASE OF IRON ORE AS RECORDED IN THE EXEHIBIT-2 PAGE 25 AT THE TIME OF S EARCH THEN THE DISCLOSURE MADE BY THE ASSESSEE VIDE LETTER DATED 2 5.01.2013 ON ACCOUNT OF THE CASH PURCHASES CANNOT BE CONSIDERED AS UNDISCLOSED INCOME FOR THE PURPOSE OF LEVY OF PENALTY U/S 271AA B OF THE ACT. NEITHER THE INVESTIGATING TEAM NOR THE AO DURING TH E ASSESSMENT PROCEEDINGS DETECTED ANY EXCESS STOCK OR DISCREPANC Y IN THE STOCK AS RECORDED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE I N COMPARISON TO THE STOCK WHICH WAS FOUND AT THE TIME OF SEARCH AND SEI ZURE ACTION. THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF M/S RA MBHAJOS VS. ACIT ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 11 (SUPRA) WHILE CONSIDERING THE ISSUE ON ACCOUNT OF C ASH ADVANCE FOR LAND PURCHASE HAS HELD IN PARA 39 AS UNDER:- 39. NOW, COMING TO SURRENDER MADE ON ACCOUNT OF CA SH ADVANCES FOR LAND PURCHASES IN THE STATEMENT RECORD ED U/S 132(4) OF THE ACT. DURING THE COURSE OF SEARCH, A DIARY HAS BEEN FOUND WHEREIN THERE ARE NOTINGS RELATING TO ADVANCE GIVEN TO VARIOUS PERSONS TOWARDS PURCHASE OF LAND. THE NOTI NGS DESCRIBE THE NAME OF THE PERSONS, THE AMOUNT ADVANCED WHICH RANGES FROM RS 2 LACS TO RS 50 LACS TO 4 PERSONS TOTALING TO RS 1.12 CRORES AND THE DATE OF SUCH ADVANCE DURING THE PERIOD 28.07.2013 TO 3.9.2013 JUST BEFORE THE DATE OF SEAR CH ON 4.9.2013. THEREFORE, WHAT HAS BEEN FOUND DURING THE COURSE OF SEARCH IS CERTAIN ENTRIES RELATING TO UNDISCLOSED I NVESTMENT IN PURCHASE OF LAND. BESIDES THE SAID ENTRIES, THERE A RE NO OTHER DOCUMENTS/MATERIAL IN TERMS OF ANY AGREEMENT TO SEL L, THE DESCRIPTION OF THE PROPERTY ETC, WHICH HAS BEEN FOU ND DURING THE COURSE OF SEARCH. AS PER THE DEFINITION OF UNDISCL OSED INCOME U/S 271AAB, THE UNDISCLOSED INVESTMENT IN SO CALLED PUR CHASE OF LAND CANNOT BE STATED TO BE INCOME WHICH IS REPRESENTED BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING. WHETHER IT CAN THEN BE SAID THAT SUCH UNDISCLOSED I NVESTMENT REPRESENTS INCOME BY WAY OF ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132. AN INVESTMENT PER SE REPRESENTS AN OUTFLOW OF FUNDS FROM THE ASSE SSEES HAND AND AN INCOME PER SE REPRESENTS AN INFLOW OF FUNDS IN THE HANDS OF THE ASSESSEE. THEREFORE, ONCE THERE IS AN INFLO W OF FUNDS BY WAY OF INCOME, THERE COULD BE SUBSEQUENT OUTFLOW BY WAY OF INVESTMENT. INVESTMENT AND INCOME THUS CONNOTES DI FFERENT MEANING AND CONNOTATION AND THUS CANNOT BE USED INT ER- CHANGEABLY. IN THE DEFINITION OF UNDISCLOSED INCOM E, WHERE IT TALKS ABOUT INCOME BY WAY OF ANY ENTRY IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COU RSE OF A ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 12 SEARCH UNDER SECTION 132, WHAT PERHAPS HAS BEEN EN VISAGED BY THE LEGISLATURE IS AN INFLOW OF FUNDS IN THE HANDS OF THE ASSESSEE WHICH HAS BEEN FOUND RECORDED BY WAY OF ANY ENTRY I N THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS, AND WHICH HAS NOT B EEN RECORDED BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED BY THE ASSESSEE IN THE N ORMAL COURSE. WE ARE ALSO CONSCIOUS OF THE FACT THAT THER E ARE DEEMING PROVISIONS IN TERMS OF SECTION 69 AND 69B WHEREIN S UCH INVESTMENTS ARE DEEMED TO BE TREATED AS INCOME IN A BSENCE OF SATISFACTORY EXPLANATION. IN OUR VIEW, THE DEEMING FICTION SO ENVISAGED UNDER SECTION 69 AND SECTION 69B WHERE IN VESTMENTS WHICH ARE FOUND EITHER NOT RECORDED OR FOUND RECORD ED AT A LESSER VALUE IN THE BOOKS OF ACCOUNTS, AND SUCH INVESTMENT S ARE DEEMED TO BE INCOME OF THE ASSESSEE OF THE YEAR IN WHICH S UCH INVESTMENTS HAVE BEEN MADE, CANNOT BE EXTENDED AND APPLIED AUTOMATICALLY IN CONTEXT OF SECTION 271AAB. IT IS A WELL-SETTLED LEGAL PROPOSITION THAT THE DEEMING PROVISIONS ARE L IMITED FOR THE PURPOSES THAT HAVE BEEN BROUGHT ON THE STATUTE BOOK AND HAVE THEREFORE TO BE APPLIED IN THE CONTEXT OF PROVISION S WHEREIN THEY HAVE BEEN BROUGHT ON THE STATUE BOOK AND NOT OTHERW ISE. IN THE INSTANT CASE, THE DEEMING PROVISIONS ARE CONTAINED IN SECTION 69 AND SECTION 69B AND THEREFORE, THE SAME COULD HAVE BEEN APPLIED IN THE CONTEXT OF BRINGING TO TAX SUCH INVESTMENTS TO TAX IN THE QUANTUM PROCEEDINGS, THOUGH THE FACT OF THE MATTER IS THAT THE AO HAS NOT EVEN INVOKED THE SAID DEEMING PROVISIONS IN THE QUANTUM PROCEEDINGS IN THE INSTANT CASE. THEREFORE , EVEN ON THIS ACCOUNT, THE DEEMING FICTION CANNOT BE EXTENDED TO THE PENALTY PROCEEDINGS WHICH ARE SEPARATE AND DISTINCT FROM TH E ASSESSMENT PROCEEDINGS AND MORE SO, WHERE THE PROVISIONS OF SE CTION 271AAB PROVIDE FOR A SPECIFIC DEFINITION OF UNDISCL OSED INCOME. WHERE A SPECIFIC DEFINITION OF UNDISCLOSED INCOME H AS BEEN PROVIDED IN SECTION 271AAB, BEING A PENAL PROVISION , THE SAME MUST BE STRICTLY CONSTRUED AND IN LIGHT OF SATISFAC TION OF CONDITIONS SPECIFIED THEREIN AND IT IS NOT EXPECTED TO EXAMINE OTHER PROVISIONS WHERE THE SAME HAS BEEN DEFINED OR DEEME D FOR THE ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 13 PURPOSES OF BRINGING THE AMOUNT TO TAX. IN LIGHT O F THE SAME, THE UNDISCLOSED INVESTMENT BY WAY OF ADVANCE FOR PURCHA SE OF LAND CAN BE SUBJECT MATTER OF ADDITION IN THE QUANTUM PR OCEEDINGS, AS THE SAME HAS BEEN SURRENDERED DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) AND OFFERED IN TH E RETURN OF INCOME, HOWEVER THE SAME CANNOT BE SAID TO QUALIFY AS AN UNDISCLOSED INCOME IN THE CONTEXT OF SECTION 271AAB READ WITH THE EXPLANATION THERETO AND PENALTY SO LEVIED THERE ON DESERVED TO BE SET-ASIDE. THUS, EVEN THERE IS PAYMENT FOR PURCHASE OF RAW MAT ERIAL THE SAID OUTGO OF MONEY ITSELF CANNOT BE TREATED AS UNDISCLO SED INCOME OF THE ASSESSEE IN THE ABSENCE OF CORRESPONDING ASSET FOUN D AT THE TIME OF SEARCH. A SIMILAR VIEW HAS BEEN TAKEN BY THIS TRIBU NAL IN A SERIES OF DECISION AS RELIED UPON THE LD. AR OF THE ASSESSEE. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THERE WAS NO DI SCREPANCY FOUND IN THE PHYSICAL STOCK AS WELL AS STOCK RECORDED IN THE BOOKS OF ACCOUNT DESPITE THE PHYSICAL VERIFICATION AND INVENTORIZATI ON CARRIED OUT OF INVESTIGATING TEAM AT THE TIME OF SEARCH THEN THE M ERE DETAILS OF PAYMENT FOR PURCHASES IN CASH WOULD NOT CONSTITUTE UNDISCLOSED INCOME AS PER THE DEFINITION PROVIDED IN EXPLANATION TO SE CTION 271AAB OF THE ACT. ACCORDINGLY, THE PENALTY LEVIED U/S 271AAB OF THE ACT IS NOT SUSTAINABLE AND THE SAME IS LIABLE TO BE DELETED. S INCE, WE HAVE DECIDED THE ISSUE OF LEVY OF PENALTY ON MERITS AND DELETED THE PENALTY THEREFORE, ITA NO. 1014/JP/2016 M/S SHRI BALAJI INDUSTRIAL ENGINEERING LTD. VS. ACI T 14 WE DO NOT PROPOSE TO GO INTO THE OTHER PLEA RAISED BY THE LD. AR. EVEN OTHERWISE THE ISSUE OF VALIDITY OF INITIATION WAS N OT RAISED IN ANY OF THE GROUND RAISED BY THE ASSESSEE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/06/2019. SD/- SD/- JESK LH0 KEKZ FOT; IKY JKO (RAMESH. C. SHARMA) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:-10/06/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S SHRI BALAJI INDUSTRIAL ENGINEERI NG LTD., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CENTRAL CIRCLE-1 JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1014/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR