M/s K.P.SINGH BHADORIA CONTRACTOR, Gwalior V. DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR

ITA 102/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8918 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 29-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Business income; Loose papers; Document seized; Initiation of penalty proceedings; Reasonable cause; Documents seized
• Section: 40A(3); 273B; 143(3); 153A; 132; 139; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 102/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 M/S K.P. SINGH BHADORIA CONTRACTOR, E-46-A, BALWANT NAGAR, GANDHI ROAD, THATIPUR, GWALIOR, (M.P.) CUKE VS. THE DCIT, CENTRAL CIRCLE-3, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAFFK 6124 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 08/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-4, JAIPUR DATED 15.12.2017 FOR THE ASSESSMEN T YEAR 2013-14 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE LEVY OF PENALTY OF RS. 40,57,188/- U/S 271AAB OF TH E IT ACT. 1.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN LEVYING THE PENALTY OF RS. 28,95,284/- U/S 271AAB @ 30% OF THE UNDISCLOSED ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 2 INCOME OF RS. 96,50,946/- DECLARED IN THE RETURN OF INCOME FILED IN RESPONSE TO SECTION 153A. 1.2 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN LEVYING THE PENALTY OF RS. 11,61,904/- U/S 271AAB @ 30% ON THE DISALLOWANCE MADE U/S 40A(3) AND ADDITION MADE ON A CCOUNT OF INTEREST INCOME. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A CIVIL CONTRACTOR AND A SEARCH WAS CONDUCTED ON 17.07.2013 IN THE CASE OF MRS GROUP, JAIPUR TO WHICH THE ASSESSEE BELONGS AND IN RESPONSE TO THE NOTICE ISSUED U/S 153A, THE ASSESSEE FILED ITS RETURN OF INCOME ON 20.01.2016 FOR THE IMPUGNED ASSESSMENT YEAR DECLARI NG TOTAL INCOME OF RS. 2,54,36,880/-. IN THE RETURN OF INCOME SO FILED BY THE ASSESSEE, IT HAS DECLARED AN ADDITIONAL INCOME OF RS. 96,50,946/ - ON ACCOUNT OF UNDISCLOSED BUSINESS RECEIPTS. AS PER ASSESSING OF FICER, THE ADDITIONAL INCOME SO DECLARED BY THE ASSESSEE IS DULY COVERED UNDER THE PROVISIONS OF SECTION 69A OF THE ACT AS UNACCOUNTED /UNDISCLOSED CASH/MONEY, WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION ABOUT THE SOURCE OF THE SAME. ACCORDINGLY, THE SAME WAS BROUGHT TO TAX U/S 115BBE(1)(A) LIABLE FOR TAX @ 30%. FURTHER, ON PERUSAL OF THE DE TAILS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE AO OBSERVED THAT THE ASSESSEE HAS RECEIVED INTEREST AM OUNTING TO RS. 91,38,971/- AS PER FORM 26AS, HOWEVER, THE ASSESSEE OFFERED TO TAX INTEREST INCOME OF ONLY RS. 87,16,479/. ACCORDINGLY , THE DIFFERENTIAL INTEREST INCOME OF RS. 4,22,492/- WAS BROUGHT TO TA X IN THE HANDS OF THE ASSESSEE. FURTHER, ON EXAMINATION OF THE DETAILS FI LED BY THE ASSESSEE IN ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 3 RESPECT OF DOCUMENTS/PAPERS SEIZED FROM PREMISES OF THE ASSESSEE, THE AO OBSERVED THAT THE ASSESSEE HAS MADE EXPENSES ON ACCOUNT OF DIESEL & PETROL TO A SINGLE PARTY ABOVE RS. 20,000/- IN CA SH ON THE SAME DAY, WHICH IS IN CONTRAVENTION OF SECTION 40A(3) OF THE ACT TOTALING RS. 34,50,520/-. THE SAME WAS ACCORDINGLY BROUGHT TO TA X IN THE HANDS OF THE ASSESSEE. THE INCOME WAS ACCORDINGLY ASSESSED A T A FIGURE OF RS. 2,93,81,890/- U/S 143(3) R.W.S. 153A OF THE ACT VID E ORDER DATED 22.03.2016. ON THESE THREE AMOUNTS AS DISCUSSED ABO VE, THE AO INITIATED PENALTY PROCEEDING BY ISSUANCE OF NOTICE U/S 271AAB R.W.S. 274 OF THE ACT DATED 22.03.2016. 3. DURING THE COURSE OF PENALTY PROCEEDINGS, A FRES H SHOW CAUSE WAS ISSUED TO THE ASSESSEE DATED 02.08.2016 AND SUB MISSIONS OF THE ASSESSEE WERE CALLED FOR AND CONSIDERED BY THE ASSE SSING OFFICER, HOWEVER THE SAME WERE NOT FOUND ACCEPTABLE. IN THE PENALTY PROCEEDINGS, THE AO OBSERVED THAT MERELY BECAUSE TH E ASSESSEE HAS SURRENDERED AN AMOUNT OF RS. 96,50,946/-IN ITS RETU RN OF INCOME AND HAVE PAID TAXES THEREON, THE SAME CANNOT BE BASIS F OR CLAIMING MANDATORY IMMUNITY FROM THE PENALTY PROCEEDINGS AS UNDISCLOSED INCOME WAS DETECTED FROM THE RESIDENTIAL AND OFFICE PREMISES OF THE ASSESSEE AS A CONSEQUENCE OF THE SEARCH PROCEEDING CARRIED OUT U/S 132 OF THE ACT. IT WAS HELD BY THE ASSESSING OFFICE R THAT THE SAID UNDISCLOSED INCOME OF RS. 96,50,946/-WAS NOT ADMITT ED BY THE ASSESSEE IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT DUR ING THE SEARCH PROCEEDING BUT THE SAME WAS DECLARED BY THE ASSESSE E IN ITS RETURN OF INCOME FILED U/S 139(1) R.W.S. 153A OF THE ACT. REG ARDING THE ASSESSEES CONTENTION THAT ADDITION OF RS. 34,50,52 0/- HAS BEEN DOUBLED ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 4 TAXED AS SURRENDERED INCOME AND ALSO U/S 40A(3), TH E SAME WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER AS THE SU RRENDERED INCOME OF RS. 96,50,946/- WAS ON ACCOUNT OF UNDISCLOSED BUSI NESS RECEIPT AND DISALLOWANCES U/S 40A(3) PERTAINS TO EXPENDITURE IN CURRED IN CASH AMOUNTING TO RS. 34,50,520/-. IT WAS FURTHER HELD B Y THE ASSESSING OFFICER THAT AS THE CONTRAVENTION OF SECTION 40A(3) HAS BEEN DETECTED DURING THE ASSESSMENT PROCEEDINGS AND AS A RETURN O F INCOME WAS NOT FURNISHED WITHIN THE SPECIFIED DATE THEREFORE, PE NALTY U/S 271AAB(1)(C) WAS LEVIABLE. REGARDING UNDISCLOSED INTEREST INCOME OF RS. 4,22,492/-, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSE SSEE HAS NOT PROVIDED ANY PROOF THAT THIS INTEREST WAS RECEIVED IN SUBSEQUENT YEARS NOR IT HAS SPECIFIED AS TO WHEN THIS AMOUNT WAS REC EIVED. THE ASSESSEE WAS REQUIRED TO DISCLOSE THE SAME AS INCOME DURING THE FINANCIAL YEAR. FINALLY, THE AO HELD THAT THE ASSESSEE HAS MADE SUR RENDER OF UNDISCLOSED INCOME OF RS. 96,50,946/- FROM BUSINESS ONLY IN ITS RETURN OF INCOME FILED FOR THE A.Y. 2013-14 AND NOT IN ITS STATEMENT RECORDED U/S 132(4) OF THE ACT. IT WAS FURTHER HELD THAT THE ASSESSEE HAS FAILED TO FILE ITS RETURN OF INCOME WITHIN SPECIFIED DATE A S MENTIONED IN EXPLANATION (A) OF SECTION 271AAB OF THE ACT. ACCOR DINGLY, IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271AAB(1)(C) OF THE ACT AND ACCORDINGLY, PENALTY OF RS. 40,57,188/- WAS LEVIED ON THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE SAID LEVY OF P ENALTY U/S 271AAB HOLDING THE SAME AS MANDATORY IN NATURE. REGARDING ASSESSEES CONTENTION THAT NO PENALTY IS LEVIABLE ON THE DISAL LOWANCE MADE BY THE AO U/S 40A(3) OF THE ACT, THE LD. CIT(A) OBSERVED T HAT EVEN THOUGH THE ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 5 APPELLANT HAS STATED IN THE AUDIT REPORT THAT THERE ARE INSTANCE OF VIOLATION U/S 40A(3) UNDER COLUMN 21(D) OF THE AUDI T REPORT, NO DETAILS DETAILING THE SAME HAVE BEEN FURNISHED AND INFACT, THE AO CAUGHT SUCH CASH PAYMENTS FROM THE SEIZED DOCUMENTS AS DISCUSSE D IN THE ASSESSMENT PROCEEDINGS. FURTHER, THE ASSESSEE HAS N OT ABLE TO DEMONSTRATE AS TO HOW SUCH CASH PAYMENT WERE CLAIME D AS EXPENDITURE IN THE ACCOUNTS ACCORDINGLY, HE CONFIRMED THE LEVY OF PENALTY OF DISALLOWANCE SO MADE BY THE AO U/S 40A(3) OF THE AC T. ON THE ISSUE OF SUPPRESSION OF INTEREST RECEIPT, THE LD. CIT(A) REF ERRED TO THE DISCUSSION MADE BY THE AO IN THE ASSESSMENT ORDER AND HELD THA T DESPITE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTANCY, INTEREST OF RS. 4 ,22,492/- WAS NOT OFFERED FOR TAXATION AND SUCH INCOME WILL COME WITH IN THE MEANING OF UNDISCLOSED INCOME U/S 271AAB OF THE ACT. AGAINST THE SAID FINDING OF THE LOWER AUTHORITIES, THE ASSESSEE IS IN APPEAL BE FORE US. 5.1 DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE PENALTY U/S 271AAB IS NOT MANDATORY BUT DISCRETIONA RY IN NATURE. IT WAS SUBMITTED THAT FROM THE PLAIN READING OF THE SECTIO N IT CAN BE NOTED THAT THE WORD USED IN THE SECTION 271AAB IS MAY. THE W ORD MAY INDICATES DISCRETION OF THE AUTHORITY EITHER TO LEV Y OR NOT TO LEVY A PENALTY. IN OTHER WORDS, THE IMPOSITION OF PENALTY IS NOT MANDATORY. IT WOULD DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. THE AO IS NOT OBLIGED TO LEVY THE PENALTY IN EACH AND EVERY C ASE IN A ROUTINE MANNER. HE HAS TO APPLY HIS MIND AS TO WHETHER THE FACTS AND CIRCUMSTANCES OF THE CASE JUSTIFY IMPOSITION OF PEN ALTY. DISCRETION IS TO BE EXERCISED JUDICIALLY HAVING REGARD TO THE NATURE AND EXTENT OF BREACH AND OTHER RELEVANT CIRCUMSTANCES. THEREFORE, IT IS NOT MANDATORY TO ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 6 IMPOSE THE PENALTY BUT ADISCRETION IS VESTED NOT TO IMPOSE THE PENALTY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THAT CAS E. 5.2 IT WAS SUBMITTED THAT THE LANGUAGE OF SECTION 2 71AAB IS SIMILAR TO THAT OF SECTION 158BFA(2). SECTION 158BFA(2) PRO VIDES THAT THE ASSESSING OFFICER MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY...'. WITH REFERENCE TO THIS SECTION VARIOUS COURTS INCLUDING THE RAJASTHAN HIGH COURT HAVE HELD THAT PENALTY UNDER T HIS SECTION IS DISCRETIONARY AND NOT MANDATORY. IN SUPPORT, RELIAN CE WAS PLACED ON THE FOLLOWING DECISIONS:- CIT VS. SATYENDRA KUMAR DOSI 315 ITR 172 (RAJ) CIT VS. DR. GIRIRAJ AGARWAL GIRI 346 ITR 152 (RAJ) CIT VS. DODSAL LTD. 312 ITR 112 (BOM) 5.3 IT WAS FURTHER SUBMITTED THAT THE KOLKATA BENC H OF ITAT IN CASE OF DCIT VS. MANISH AGARWALA IN ITA NO. 1479/KOL/201 5 FOR AY 2013-14 VIDE ORDER DATED 09.02.2018 AFTER RELYING ON THE DE CISION OF ITAT LUCKNOW BENCH IN CASE OF SANDEEPCHANDAK& OTHERS VS. CIT 55 ITR (TRIB.) 209 HAS HELD THAT THE PROVISION OF SECTION 271AAB OF THE ACT ARE NOT MANDATORY AS THE SECTION USES THE WORD MAY AN D NOT SHALL. MAY CANNOT BE EQUATED WITH SHALL ESPECIALLY IN PENALTY PROCEEDINGS. USING THE WORD MAY GIVES DISCRETION TO THE AO TO LEVY THE PENALTY OR NOT TO LEVY EVEN IF THE ASSESSEE HAS MADE THE DEFAU LT UNDER THE SAID PROVISIONS. THEREFORE, THE FINDING OF THE LD. CIT(A ) THAT PENALTY U/S 271AAB IS MANDATORY IS INCORRECT AND AGAINST THE PL AIN LANGUAGE OF THE SECTION. ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 7 5.4 IT WAS ACCORDINGLY SUBMITTED THAT PENALTY U/S 2 71AAB IS LEVIABLE ON THE UNDISCLOSED INCOME. THE UNDISCLOSED INCOME I S DEFINED IN THE SECTION AS REPRODUCED ABOVE. AS PER THIS DEFINITION FOLLOWING INCOME ARE UNDISCLOSED INCOME: I) ANY INCOME REPRESENTED BY AN ASSET; II) ANY INCOME REPRESENTED BY ANY ENTRY IN THE BOOKS OF ACCOUNTS; III) ANY INCOME REPRESENTED BY ANY ENTRY IN OTHER DOCUME NTS OR TRANSACTIONS; FOUND IN SEARCH U/S 132 WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN NORMAL CO URSE ON OR BEFORE THE DATE OF SEARCH OR OTHERWISE NOT DISCLOSED TO CO MMISSIONER BEFORE THE DATE OF SEARCH; IV) ANY INCOME REPRESENTED BY ANY ENTRY OF ANY EXPENS ES RECORDED IN BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN NORMAL COURSE WHICH IS FOUND TO BE FALSE AND WOULD NOT HAV E BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. 5.5 IT WAS SUBMITTED THAT IN THE PRESENT CASE, AMOU NT ON WHICH PENALTY U/S 271AAB IS IMPOSED IS NOT AN UNDISCLOSED INCOME AS PER THE DEFINITION OF UNDISCLOSED INCOME GIVEN ABOVE. THE S AME IS EXPLAINED AS BELOW:- (A) THE ASSESSEE IN THE RETURN HAS DECLARED EXTRA I NCOME OF RS.96,50,946/-. IN FACT THIS AMOUNT REPRESENT THE D IFFERENCE IN THE ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 8 RECEIPTS SLIPS OF RS.5,13,70,810/- AND PAYMENT SLIP OF RS.4,17,57,000/-, I.E. RS.96,13,810/-. THE ASSESSEE IN COURSE OF ASSE SSMENT PROCEEDINGS VIDE LETTER DT. 16.02.2016 HAS EXPLAINED THAT MOST OF THESE SLIPS ARE UNSIGNED, THERE IS NO NEXUS BETWEEN THESE SLIPS AND THE TRANSACTIONS, THESE SLIPS DO NOT CONTAIN THE NATURE OF TRANSACTIO N OR ANY OTHER RELEVANT PARTICULARS AND THERE IS NO CORROBORATIVE & SUPPORTIVE MATERIAL TO RELATE IT TO ANY TRANSACTION. HOWEVER, STILL AS A GESTURE OF GOODWILL, COOPERATION WITH THE DEPARTMENT AND TO AVOID VEXED LITIGATION, THE ASSESSEE OFFERED THIS AMOUNT IN THE RETURN OF INCOM E EVEN WHEN THERE IS NO ADMISSION FOR SUCH INCOME U/S 132(4). IT MAY ALSO BE NOTED THAT AS ON THE DATE OF SEARCH THE DUE DATE OF FILING THE RETURN HAS NOT EXPIRED. THEREFORE, ONLY BECAUSE ASSESSEE HAS INCLU DED SUCH AMOUNT IN THE RETURN WOULD NOT MAKE IT AN UNDISCLOSED INCOME AND THEREFORE, ON THIS AMOUNT PENALTY U/S 271AAB IS NOT LEVIABLE. (B) IN RESPECT OF LEVY OF PENALTY U/S 271AAB ON ADD ITION OF RS.4,22,492/- ON ACCOUNT OF DIFFERENCE IN THE INTER EST INCOME AS DECLARED IN THE BOOKS OF ACCOUNTS AND THAT SHOWN IN FORM 26AS IS CONCERNED, IT IS SUBMITTED THAT ASSESSEE HAS DECLAR ED THE INTEREST INCOME ON FDR OBTAINED FOR FURNISHING THE PERFORMAN CE GUARANTEE TO VARIOUS GOVERNMENT DEPARTMENTS AS PER ITS OWN CALCU LATION AT RS.87,16,479/- AS AGAINST INTEREST OF RS.91,38,971/ -REFLECTED IN FORM 26AS. IN FACT THE ASSESSEE CALCULATES THE INTEREST ON FDR BY APPLYING THE RATE OF INTEREST ON SUCH FDR BUT THE BANK CALCU LATES THE INTEREST IN ITS OWN MANNER. IT IS FOR THIS REASON THAT IN SOME YEAR THE INTEREST DECLARED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS I S LESS BUT IN SOME YEAR THE INTEREST DECLARED IS MORE THAN WHAT IS REF LECTED IN FORM 26AS. ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 9 FROM THE DETAILS AT PB 13-14, IT CAN BE NOTED THAT OVER AY 2011-12 TO AY 2014-15, INTEREST DECLARED BY THE ASSESSEE IN TH E BOOKS OF ACCOUNTS IS RS.3,66,86,312/- WHEREAS INTEREST AS PER FORM 26 AS IS RS.3,14,49,154/-. THUS, ASSESSEE HAS DECLARED HIGHE R INTEREST WHEN ALL THE FOUR YEARS ARE CONSIDERED TOGETHER. EVEN IN THE INDIVIDUAL WORKING IT CAN BE NOTED THAT IN SOME CASES ASSESSEE HAS DECLAR ED HIGHER INTEREST BUT IN SOME CASES THE INTEREST DECLARED IS LOWER TH AN REFLECTED IN FORM 26AS WHICH IS FOR THE REASON THAT SUCH INTEREST IS DECLARED BY THE ASSESSEE EITHER IN THE PREVIOUS YEAR OR IN THE SUBS EQUENT YEARS. IN ANY CASE IT IS NOT THE CASE OF THE DEPARTMENT THAT INTE REST INCOME IS NOT AT ALL DECLARED OR THAT THE FDR IS NOT DISCLOSED. HENC E, SUCH DIFFERENCE WHICH IS NOT ARISING AS A RESULT OF SEARCH U/S 132( 4) IS NOT COVERED BY THE DEFINITION OF UNDISCLOSED INCOME U/S 271AAB AND THEREFORE, ON SUCH AMOUNT NO PENALTY IS LEVIABLE UNDER THIS SECTION. (C) IN RESPECT OF LEVY OF PENALTY U/S 271AAB ON DIS ALLOWANCE OF RS.34,50,520/- U/S 40A(3) ON ACCOUNT OF PAYMENT MAD E FOR DIESEL AND PETROL EXPENSES TO A SINGLE PARTY IN CASH EXCEEDING THE PRESCRIBED LIMIT IS CONCERNED, IT MAY BE NOTED THAT THESE EXPENSES A RE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. IT IS NOT THE CASE O F AO THAT THE EXPENSES ON DIESEL AND PETROL RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED IN THE NORMAL COURSE IS FOUND TO BE FALS E AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CO NDUCTED. THEREFORE, SUCH DISALLOWANCE IS OUT OF THE SCOPE OF UNDISCLOSED INCOME AS DEFINED U/S 271AAB AND THEREFORE, NO PENALTY ON SUCH AMOUNT IS LEVIABLE UNDER THIS SECTION. ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 10 5.6 IT WAS ACCORDINGLY SUBMITTED THAT WITHOUT PREJ UDICE TO ABOVE, PENALTY LEVIED @ 30% ON THE ALLEGED UNDISCLOSED INC OME OF RS.96,50,946/- IS NOT CORRECT. THIS IS BECAUSE THOU GH THE ASSESSEE HAS NOT ADMITTED ANY UNDISCLOSED INCOME IN THE STATEMEN T RECORDED U/S 132(4), HE HAS INCLUDED THE SAME IN THE RETURN OF I NCOME AND TAX ON SUCH INCOME IS ALSO PAID IN AS MUCH AS THE ENTIRE T AX IS ADJUSTED FROM THE TAX DEDUCTED AT SOURCE. THE ONLY ISSUE IS WHETH ER THE ASSESSEE HAS FILED THE RETURN BEFORE THE SPECIFIED DATE OR NOT. SPECIFIED DATE MEANS THE DATE ON WHICH PERIOD SPECIFIED IN THE NOTICE IS SUED U/S 153A FOR FURNISHING RETURN OF INCOME EXPIRES. IN THE PRESENT CASE, AO HAS ISSUED NOTICE U/S 153A DT. 23.11.2015 PROVIDING 15 DAYS TI ME FOR FILING THE RETURN FROM SERVICE OF NOTICE. IT MAY BE NOTED THAT THE CASE OF ASSESSEE WAS CENTRALIZED FROM ITO, GWALIOR TO ACIT, CENTRAL CIRCLE-3, JAIPUR VIDE ORDER DT. 18.11.2015, A COPY OF WHICH WAS PROVIDED TO THE ASSESSEE ON 03.12.2015. HOWEVER, BEFORE THIS DATE THE DCIT, CEN TRAL CIRCLE-3, JAIPUR HAS ISSUED NOTICE U/S 153A. IMMEDIATELY THE ASSESSE E VIDE LETTER DT. 03.12.2015 OBJECTED TO TRANSFER OF THIS CASE TO JAI PUR AND REQUESTED THE DCIT, CENTRAL CIRCLE-3, JAIPUR TO STAY THE PROCEEDI NGS AND GRANT TIME TILL DETERMINATION OF PROPER JURISDICTION. THEREAFTER, V IDE LETTER DT. 17.12.2015 IT IS INFORMED THAT ON THE ADVICE OF DCI T, CENTRAL CIRCLE-3, JAIPUR, THEY HAVE ACCEPTED THE ORDER U/S 127 AND TH EREFORE, REQUESTED TO EXTEND THE DATE OF FILING OF THE RETURN AS IT WA S A STUPENDOUS TASK TO ANALYZE SEIZED PAPERS, DOCUMENTS, OTHER RELEVANT PA PERS AND BOOKS OF ACCOUNTS FOR PREPARING AND FILING THE RETURN FOR 7 YEARS. THE AO HAS NOT DENIED THE REQUEST OF ASSESSEE FOR EXTENDING THE TI ME LIMIT FOR FILING THE RETURN. THEREAFTER, THE RETURN WAS FILED ON 20.01.2 016. IN THESE CIRCUMSTANCES THERE IS A REASONABLE CAUSE FOR NOT F ILING THE RETURN ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 11 WITHIN THE PERIOD SPECIFIED IN NOTICE ISSUED U/S 15 3A PARTICULARLY WHEN THE REQUEST FOR EXTENDING THE TIME FOR FILING THE R ETURN IS NOT REFUSED BY THE AO PARTICULARLY WHEN TAX ON SUCH INCOME IS ALRE ADY PAID BY WAY OF DEDUCTION OF TAX AT SOURCE. THE HONBLE ITAT, CHAND IGARH BENCH IN CASE OF DCIT VS. SH. HARI SINGH IN ITA NO.598/CHD/2017 F OR AY 2013-14 ORDER DT. 20.09.2017 HELD THAT WHERE ASSESSEE HAS P AID THE TAXES BEFORE THE SPECIFIED DATE BUT THERE IS A DELAY IN F ILING THE RETURN AS THE FILES WERE MISPLACED, NO BENEFIT IS ACCRUED BY DELA YING THE RETURN AS THERE WAS A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B FOR NOT FILING THE RETURN IN THE SPECIFIED TIME AND THE REFORE, THE PENALTY LEVIED WAS RESTRICTED TO 10% OF UNDISCLOSED INCOME AS AGAINST 30% OF THE UNDISCLOSED INCOME. THEREFORE, EVEN IF THE PENA LTY IS HELD LEVIABLE U/S 271AAB WITH REFERENCE TO THE AMOUNT OF RS.96,50 ,946/-, THE CASE OF ASSESSEE WOULD FALL UNDER SUB-CLAUSE (B) TO SECTION 271AAB AND HENCE, LEVY OF PENALTY ON THIS AMOUNT SHOULD BE RESTRICTED TO 20% OF UNDISCLOSED INCOME AS AGAINST 30% IMPOSED BY THE AO . 5.7 IT WAS FURTHER SUBMITTED THAT THE NOTICE ISSUE D FOR LEVY OF PENALTY IS AMBIGUOUS AND IS THUS NOT VALID. THIS IS BECAUSE IN THE NOTICE ISSUED U/S 274 R.W.S. 271 OF THE ACT IT IS NOT CLEAR THAT AS TO UNDER WHICH SECTION PENALTY PROCEEDINGS HAVE BEEN INITIATED. TH IS IS BECAUSE THE NOTICE CONTAINS REFERENCE TO VARIOUS SECTIONS, I.E. 271(1)(B), 271(1)(C), 271A, 271AAB, 271B, 271C, ETC. BUT IT IS NOT MARKED THAT FOR WHICH SECTION THE NOTICE IS ISSUED. FOR AY 2011-12, AO HA S SPECIFICALLY TICKED THE SECTION 271(1)(C) IN THE PENALTY NOTICE ISSUED FOR THAT YEAR. HOWEVER FOR AY 2013-14 , HE HAS NOT TICKED ANY SECT ION. THUS, THE NOTICE ISSUED FOR THE YEAR UNDER CONSIDERATION IS V AGUE AND NOT SPECIFIC. ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 12 ON THE BASIS OF SUCH NOTICE NO PENALTY CAN BE LEVIE D AS HELD BY HONBLE ITAT CHENNAI BENCH IN CASE OF DCIT VS. SHRI R. ELAN GOVANIN ITA NO.1199/CHNY/2017 ORDER DT. 05.04.2018. HENCE, FOR THIS REASON ALSO THE PENALTY IMPOSED IS NOT VALID AND THE PENALTY OR DER BE QUASHED. 6. THE LD DR HAS VEHEMENTLY ARGUED THE MATTER AND T AKEN US THROUGH THE FINDINGS OF THE AO AND THE LD CIT(A) WH ICH WE HAVE NOTED ABOVE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO HAS INVOKED THE PROVISI ONS OF SECTION 271AAB OF THE ACT FOR THE PURPOSE OF LEVY OF PENALT Y, IT WOULD, THEREFORE, BE RELEVANT TO REFER TO THE PROVISIONS OF SECTION 2 71AAB OF THE ACT WHICH ARE REPRODUCED AS UNDER:- PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAB. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANY THING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JULY, 2012 49 [BUT BEFORE THE DATE ON WHICH THE TAXATION LAWS (SECOND AMENDMENT) BILL, 2016 RECEIVES THE ASSENT O F THE PRESIDENT 50 ], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITI ON TO TAX, IF ANY, PAYABLE BY HIM, (A ) A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE U NDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSE SSEE (I ) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB - SECTION (4) OF SECTION 132 , ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED; ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 13 (II ) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III ) ON OR BEFORE THE SPECIFIED DATE (A ) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; AND (B ) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B ) A SUM COMPUTED AT THE RAT E OF TWENTY PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSE SSEE (I ) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB - SECTION (4) OF SECTION 132 , DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II ) ON OR BEFORE THE SPECIFIED DATE (A ) DECLARES SUCH INCOME IN THE RETURN OF INCOME FURNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B ) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; (C ) A SUM 51 [COMPUTED AT THE RATE OF SIXTY PER CENT] OF THE UND ISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLAUSES (A) AND (B). 52 [(1A) THE ASSESSING OFFICER MAY, NOTWITHSTANDING AN YTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, I N A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE DATE ON WHICH THE TAXATION LAWS (SECOND AMENDMENT) BILL, 2016 RECEIVE S THE ASSENT OF THE PRESIDENT, THE ASSESSEE SHALL PAY BY WAY OF PEN ALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 14 (A ) A SUM COMPUTED AT THE RATE OF THIRTY PER CENT OF TH E UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF THE ASSES SEE (I ) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB - SECTION (4) OF SECTION 132 , 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 ) ON OR BEFORE THE SPECIFIED DATE (A ) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; AND (B ) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B ) A SUM COM PUTED AT THE RATE OF SIXTY PER CENT OF THE UNDISCLO SED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED UNDER THE PROVISIONS OF CLAUSE (A).] (2) NO PENALTY UNDER THE PROVISIONS OF 53 [ SECTION 270A OR] CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SU B-SECTION (1) 52 [OR SUB-SECTION (1A)]. (3) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, AS FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THI S SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A ) 'SPECIFIED DATE' MEANS THE DUE DATE OF FURNISHING O F RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A FOR FURNISHING OF RETURN OF INCOME EXPIRES, AS THE CASE MAY BE; ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 15 (B ) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR (I ) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPI RED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RE TURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE DATE OF SEA RCH; OR (II ) IN WHICH SEARCH WAS CONDUCTED; (C ) 'UNDISCLOSED INCOME' MEANS (I ) ANY INCOME OF THE SPECIFIED PREVIOU S YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEW ELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132 , WHICH HAS (A ) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH 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 54 [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 54 [PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II ) A NY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTE D, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED 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 N OT BEEN CONDUCTED. ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 16 8. IN THE PRESENT CASE, THE SEARCH HAS BEEN INITIAT ED AND CONDUCTED ON THE ASSESSEE ON 17.07.2013 AND THE DUE DATE OF F ILING OF RETURN OF INCOME HAS NOT EXPIRED ON THE DATE OF SEARCH AND TH E ASSESSEE HAS NOT FILED ITS RETURN BEFORE THE DATE OF SEARCH. THE ASS ESSEE HAS FILED ITS RETURN OF INCOME PURSUANT TO ISSUANCE OF NOTICE U/S 153A W HICH HAS BEEN ASSESSED UNDER SECTION 143(3) R/W 153A OF THE ACT. THE PENALTY PROCEEDINGS HAVE BEEN VALIDLY INITIATED BY ISSUANCE OF NOTICE UNDER SECTION 274 READ WITH SECTION 271AAB OF THE ACT DAT ED 22.03.2016. THE PENALTY NOTICE SO ISSUED IS CLEAR AND UNAMBIGUOUS A S TO WHY THE PENALTY SHOULD NOT BE LEVIED UNDER SECTION 271AAB ON ASSESS ED UNDISCLOSED INCOME. THEREFORE, AS FAR AS INITIATION OF PENALTY PROCEEDINGS ARE CONCERNED, WE DONOT SEE ANY INFIRMITY THEREIN AND T HEREFORE, THE CONTENTION OF THE LD AR THAT NOTICE IS VAGUE AND NO T SPECIFIC IS NOT ACCEPTABLE. 9. NOW COMING TO THE SPECIFIC NATURE OF INCOME IN R ESPECT OF WHICH THE PENALTY UNDER SECTION 271AAB HAS BEEN LEVIED BY THE AO, WE FIND THAT THERE IS A UNDISCLOSED BUSINESS INCOME OF RS. 96,50,946/- WHICH HAS BEEN DECLARED BY THE ASSESSEE IN ITS RETURN OF INCO ME FILED PURSUANT TO NOTICE U/S 153A OF THE ACT. BESIDES THAT, THERE IS AN ADDITION MADE BY THE AO OF RS. 4,22,492/- ON ACCOUNT OF DIFFERENCE B ETWEEN THE INTEREST DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME AN D AS PER FORM 26AS FOR THE IMPUGNED ASSESSMENT YEAR. FURTHER, THERE IS AN ADDITION OF RS. 34,50,520/- ON ACCOUNT OF DISALLOWANCE U/S 40A(3) O F THE ACT ON WHICH PENALTY HAS BEEN LEVIED. THE QUESTION FOR CONSIDERA TION IS WHETHER THESE ITEMS OF INCOMES WILL QUALIFY IN THE CATEGORY OF U NDISCLOSED INCOME AS ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 17 DEFINED IN SECTION 271AAB OF THE ACT AND WHICH HAS BEEN FOUND IN THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT. 10. REGARDING UNDISCLOSED BUSINESS INCOME OF RS. 96 ,50,946/-, IT IS NOTED THAT THE SAME HAS BEEN DISCLOSED BY THE ASSES SEE IN ITS RETURN OF INCOME BASED ON DOCUMENTS/LOOSE PAPERS FOUND AND IM POUNDED DURING THE COURSE OF SEARCH AND LISTED AS PER AS-1 TO AS-2 6 OF SEIZED DOCUMENTS. THESE ARE DOCUMENTS REGARDING VARIOUS B USINESS RECEIPTS AND PAYMENTS OF THE ASSESSEE NOT REFLECTED IN ITS R EGULAR BOOKS OF ACCOUNTS SO THESE ARE CLEARLY UNRECORDED TRANSACTIO NS WHICH HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS REGULARLY MA INTAINED BY THE ASSESSEE BEFORE THE DATE OF SEARCH. FURTHER, WE HA VE GONE THROUGH THE THE SUBMISSION OF THE ASSESSEE MADE BEFORE THE DCIT DURING THE COURSE OF ASSESSMENT PROCEEDING DATED 16.02.2016 AND IT IS NOTED THAT IN ITS SUBMISSION, THE ASSESSEE HAS SAID VERY CLEARLY THAT THERE IS VERY CLOSE & INEXTRICABLE LINKAGE BETWEEN THE RECEIPTS AND PAYME NTS SLIPS AND THEREFORE, THE DIFFERENCE BETWEEN THE RECEIPT TOTAL S OF LOOSE SLIPS & PAYMENT TOTALS AMOUNTING TO RS. 96 LACS AND ODD HAS BEEN SURRENDERED AND OFFERED AS INCOME FOR THE ASSESSMENTS YEAR 2013 -14 AND WHICH HAS SUBSEQUENTLY BEEN ACCEPTED BY THE AO. THEREFORE, A S FAR AS THE SAID UNDISCLOSED BUSINESS RECEIPT (NET OF EXPENDITURE) I S CONCERNED, THE SAME IS CLEARLY WITHIN THE MEANING OF UNDISCLOSED INCOM E FOUND AS A RESULT OF SEARCH AND WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED IN THE NORMAL COURSE RELATING TO PREVIOU S YEAR RELEVANT TO IMPUNGED ASSESSMENT YEAR. ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 18 11. REGARDING ADDITION OF RS. 4,22,492/- ON ACCOUNT OF DIFFERENCE IN INTEREST INCOME AS DECLARED IN THE BOOKS OF ACCOUNT AND SHOWN IN FORM 26AS IS CONCERNED, WE FIND THAT THERE IS NOTHING AV AILABLE ON RECORD WHICH IN ANY WAY SUGGEST THAT SUCH DIFFERENCE IN IN TEREST INCOME HAS BEEN DETECTED AS A RESULT OF SEARCH U/S 132(4) OF T HE ACT. SUCH AN ADDITION HAS BEEN MADE BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS BASED ON REVIEW OF FORM 26AS AND INCOME AS DECLARED BY THE ASSESSEE. SUCH DIFFERENTIAL INTEREST INCOME FO UND DURING THE COURSE OF ASSESSMENT PROCEEDINGS EVEN THOUGH HAS BEEN BROU GHT TO TAX BY THE AO, THE SAME DOESNT QUALIFY AS UNDISCLOSED INCOME FOUND AS A RESULT OF SEARCH AND THUS OUTSIDE THE PURVIEW OF LEVY OF PENA LTY UNDER SECTION 271AAB OF THE ACT. 12. REGARDING ADDITION OF RS. 34,50,520/- U/S 40A(3 ) OF THE ACT, THE ASSESSING OFFICER IN THE QUANTUM PROCEEDINGS HAS ST ATED THAT ON EXAMINATION OF DETAILS FILED BY THE ASSESSEE WITH R ESPECT TO DOCUMENTS/PAPERS SEIZED FROM PREMISES OF THE ASSESS EE, IT IS FOUND THAT THE ASSESSEE HAS MADE CASH PAYMENT ON ACCOUNT OF DI ESEL AND PETROL TO A SINGLE PARTY IN CONTRAVENTION OF SECTION 40A(3) O F THE ACT. ACCORDINGLY, HE HAS DISALLOWED THE SAME AND BROUGHT TO TAX IN TH E HANDS OF THE ASSESSEE. IN THE PENALTY PROCEEDINGS, THE AO STATES THAT AS THE CONTRAVENTION OF SECTION 40A(3) HAS BEEN DETECTED D URING THE ASSESSMENT PROCEEDING AND AS THE RETURN OF INCOME W AS NOT FURNISHED WITHIN THE SPECIFIED DUE DATE AS DEFINED, THE PENAL TY IS LEVIABLE U/S 271AAB OF THE ACT. THE LD. CIT(A) HAS STATED THAT THE AO HAS CAUGHT SUCH CASH PAYMENTS FROM THE SEIZED DOCUMENTS AND TH E ASSESSEE HAS ALSO NOT BEEN ABLE TO DEMONSTRATE AS TO HOW SUCH CA SH PAYMENTS HAS ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 19 BEEN CLAIMED AS EXPENDITURE IN THE ACCOUNTS. THEREF ORE, HE HAS CONFIRMED THE LEVY OF PENALTY. IN THIS REGARD, WE A GAIN REFER TO THE DEFINITION OF UNDISCLOSED INCOME IN SECTION 271AA B WHEREIN IT WAS PROVIDED THAT ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHIC H IS FOUND TO BE FALSE AND WOULD NOT HAVE FOUND TO BE SO, HAD THE SEARCH N OT BEEN CONDUCTED. IN THE PRESENT CASE, THERE ARE ENTRIES RELATING TO PAYMENT OF DIESEL AND PETROL EXPENSES TO A SINGLE PARTY IN CASH AND THE S AID ENTRIES HAVE BEEN FOUND RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED I N THE NORMAL COURSE OF ASSESSEES BUSINESS FOR THE PREVIOUS YEAR RELEVA NT TO IMPUNGED ASSESSMENT YEAR, THEREFORE, WHAT HAS TO BE SEEN IS THAT WHETHER SUCH ENTRIES WHICH ARE RECORDED IN THE BOOKS OF ACCOUNT ARE FOUND TO BE FALSE AS A RESULT OF SEARCH OR NOT. IN THE PRESENT CASE, THE AO HAS NOT CHALLENGED THE AUTHENTICITY/GENUINENESS OF THE TRAN SACTIONS HAVING BEEN CARRIED OUT BY THE ASSESSEE. ALL THE AOS CASE IS THAT THESE TRANSACTIONS HAVE BEEN CARRIED OUT IN CASH AND ARE HIT BY THE PR OVISIONS OF SECTION 40A(3) OF THE ACT. THE SAID FINDING OF THE AO OF A SSESSEE CARRYING OUT THESE TRANSACTIONS IN CASH IS BASED ON EXAMINATION OF DOCUMENTS/PAPERS SEIZED DURING THE PREMISES OF THE ASSESSEE. THE LI MITED CASE OF THE REVENUE, THEREFORE, IS THE VIOLATION OF SECTION 40A (3) OF THE ACT AND NOT THAT THE ENTRIES SO FOUND RECORDED IN THE BOOKS OF ACCOUNT ARE FALSE. THEREFORE, IN OUR VIEW, THE SAME DOES NOT FALL WITH IN THE DEFINITION OF UNDISCLOSED INCOME AS SO DEFINED AND THUS NOT SUBJE CT TO LEVY OF PENALTY FOR THE PURPOSE OF SECTION 271AAB OF THE ACT. ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 20 13. FURTHER, WE FIND THAT THERE IS A REASONABLE CAU SE FOR DELAY IN FILING THE RETURN OF INCOME BY THE ASSESSEE AS THE ASSESSE E HAS CHALLENGED THE TRANSFER OF HIS JURISDICTION FROM GWALIOR TO JAIPUR AND HAS ALSO SPECIALLY REQUESTED THE AO FOR SEEKING EXTENSION OF TIME FOR FILING THE RETURN OF INCOME WHICH HAS ALSO NOT BEEN REFUSED BY THE ASSES SING OFFICER, THEREFORE, GIVEN THE FACT THAT THE ASSESSEE HAS FIL ED THE RETURN OF INCOME PURSUANT TO ISSUANCE OF NOTICE U/S 153A ON 20.01.20 16 AND THE DUE TAXES HAVE BEEN PAID, THE CASE OF THE ASSESSEE FALL S U/S 271AAB(1)(B) OF THE ACT WHEREIN THE PENALTY IS LEVIABLE @ 20% OF TH E UNDISCLOSED INCOME AS AGAINST 30% PRESENTLY IMPOSED BY THE AO. 14. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY CONFIRM THE LE VY OF PENALTY @ 20% ON UNDISCLOSED BUSINESS INCOME OF RS 96,50,946 UNDE R THE PROVISIONS OF SECTION 271AAB(1)(B) OF THE ACT AND BALANCE PENALTY SO LEVIED BY THE AO IS HEREBY DELETED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/10/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/10/2018. * SANTOSH ITA NO. 102 /JP/2018 M/S K.P. SINGH BHADORIA CONTRACTOR VS. DCIT 21 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S K.P. SINGH BHADORIA CONTRACTOR, GWALIOR (M.P.) 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE-3, 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. 102/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR