M/s Kakade Construction Company, Pune V. ACIT, Pune

ITA 102/PUN/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9231 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Search and seizure; Loose papers; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings; Retraction
• Section: 143(3); 153A; 234B; 68; 132; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SRI D.KARUNAKARA RAO, AM AND SRI VIKAS AWASTHY, JM . / ITA NOS.12 TO 17/PUN/2013 / ASSESSMENT YEARS : 2003-04 TO 2008-09 SANJAY DATTATRAYA KAKADE, 55/11A, KAKADE PARADISE, ASHOK PATH LANE, NEW LAW COLLEGE ROAD, PUNE 411 004 PAN : ALNPK3325J . /APPELLANT VS. ACIT, CENTRAL CIRCLE-2(2), PUNE . / RESPONDENT . / ITA NOS.100 TO 102/PUN/2013 / ASSESSMENT YEARS : 2006-07 TO 2008-09 M/S. KAKADE CONSTRUCTION COMPANY, KAKADE CAPITAL, 1205, BEHIND SHIROLE PETROL PUMP, NEAR P. JOG CLASSES OF J.M. ROAD, SHIVAJINAGAR, PUNE 411 005 PAN : AABFK7509F . /APPELLANT VS. ACIT, CENTRAL CIRCLE-2(2), PUNE . / RESPONDENT / APPELLANTS BY : SRI HARI KRISHAN, AR / RESPONDENT BY : SRI ACHAL SHARMA, CIT-DR / DATE OF HEARING : 23.02.2018 / DATE OF PRONOUNCEMENT: 28.02.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE NINE APPEALS UNDER CONSIDERATION. THIS INCLUDES SIX APPEALS FILED BY SRI SANJAY D. KAKADE, INDIVIDUAL AND THREE APPEALS FILED BY M/S. KAKADE CONSTRUCTION COMPANY, THE FIRM. ALL THESE APP EALS RELATE TO THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. CONSIDERING THE COMMONALITY OF 2 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY ISSUES, ARGUMENTS AND THE FACTS, ALL THESE APPEALS ARE ADJ UDICATED BY THIS COMPOSITE ORDER FOR THE SAKE OF CONVENIENCE. FACTS IN GENERAL : 2. THE FACTS OF THESE CASES INCLUDE THAT SRI SANJAY D. K AKADE IS AN INDIVIDUAL AND IS A PROPRIETOR OR PARTNER OR DIRECTOR OF VA RIOUS GROUP CONCERNS. M/S. KAKADE CONSTRUCTION COMPANY IS ONE SUCH FIRM WHERE THE ASSESSEE IS A PARTNER. IT IS ENGAGED IN THE CONSTRUCTIO N BUSINESS IN PUNE. THERE WAS A SEARCH AND SEIZURE ACTION U/S.132 OF THE AC T ON THE GROUP CONCERNS AND INDIVIDUALS OF THE GROUP ON 11-02-2009. THE SEARCH RESULTED IN SEIZURE OF INCRIMINATING LOOSE PAPERS, DEFECTIVE BOOKS OF A CCOUNT ETC. AND THE SAME RESULTED IN THE DECLARATION OF ADDITIONAL INCOME OF RS.40 CRORES. DURING THE SEARCH ACTION, SRI SANJAY D. KAKADE GAVE A STATEMENT ON 12-02-2009 ON BEHALF OF THE GROUP CONCERNS AND HIMSELF OFFE RING TO PAY TAX ON SUCH AN INCOME WITHIN A 12 MONTHS (ANSWER TO QUESTIO N NO.5 OF THE PAPER BOOK OF PAGE NO.237). SUBSEQUENTLY, ASSESSEE FILED W RITTEN SUBMISSION VIDE HIS LETTER DATED 12.06.2009 STATING THE FOLLOWING : WE HAVE IN THE COURSE OF SEARCH ACTION U/S.132 OF THE I.T. ACT, 1962, MADE A DECLARATION OF RS.40 CRORES OF ADDITIONAL INCOME, B ASED ON VARIOUS PAPERS, RECORDS, BOOKS OF ACCOUNTS ETC. SEIZED/FOUND AT THE RESIDENCE AND BUSINESS PREMISES IN THE HANDS OF THE VARIOUS MEMBERS OF OUR GROUP. WE ONCE AGAIN CONFIRM THE SAID DECLARATION AND DECLARE OUR SINCER E INTENTION TO ADHERE TO THE SAID DECLARATION MADE IN THE COURSE OF SEARCH ACTIO N VIDE THE STATEMENT U/S.132(4) RECORDED ON 12-02-2009. OUT OF THE SAID TOTAL DECLARATION, A SUM OF RS.10,57,69,958/- (RUPEES TEN CRORES FIFTY SEVEN LACS, SIXTY NINE THOUSAND NINE HUNDRED FIFTY EIGHT ONLY) PERTAINS TO COMPANIES/FIRMS ETC. AS PER DETAILS IN THE STATEMENT ENCLOSED HEREWITH. IN RESPECT OF THE BALANCE AMOUNT OF DECLARATION, THE EXACT DETAILS ARE BEING WORKED OUT ON THE BASIS OF SEIZED RECORDS/PAPERS/BOOKS ETC. FOUND AND THE CONC ERNED INCOME WILL BE OFFERED TO TAX IN THE HANDS OF RESPECTIVE ENTITIES OF OUR GROUP VIDE RETURNS TO BE FILED IN RESPONSE TO NOTICES U/S.153A/139 OF I.T . ACT, 1961. 3. AFTER LOTS OF DEVELOPMENTS AND THE FOLLOW UP ACTIONS, THE ASSESSEES FILED THE RETURNS IN RESPONSE TO NOTICES U/S.153A OF THE A CT. ASSESSEE OFFERED THE SAID ADDITIONAL INCOME IN THE RETURNS AND PAID THE TAXES. THE 3 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY SEARCH ASSESSMENTS IN CASES OF BOTH SRI SANJAY D. KAKA DE AND M/S. KAKADE CONSTRUCTION COMPANY REACHED FINALITY WITH OR WITHO UT FURTHER ADDITIONS. THE DETAILS RELATING TO THE ISSUANCE OF STATUTOR Y NOTICES U/S.153A OF THE ACT, FILING OF THE RETURN OF INCOME ETC. ARE DISCUSSED IN THE RESPECTIVE ASSESSMENT ORDERS OF THE ASSESSEES. IN THE RETURNS FILED BY THE ASSESSEE DECLARED THE ADDITIONAL INCOME WHILE FILING THE RETUR N OF INCOME U/S.153A OF THE ACT. ASSESSEE CLAIMS THAT THE ADDITIONAL I NCOME WAS SUO MOTO IN THE RETURNS UNDER VARIOUS HEADS IN ORDER TO MA KE IT UP THE SAID ADDITIONAL INCOME OF RS.40 CRORES INVOLVING VARIOUS ASSESSEES AND THE ASSESSMENTS OF THE GROUP. THUS, ALL THE ASSESSMENTS WITH THE ADDITIONAL INCOME IN CASES OF BOTH THE ASSESSEES FOR THE AYS UNDE R CONSIDERATION BECAME FINAL WITHOUT ANY LITIGATION ON QUANTUM/ASSESSED INCO ME. FURTHER, THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT FOR CONCEALIN G THE PARTICULARS OF INCOME IN THE ORIGINAL RETURNS WAS INITIATED. EVENTUALLY, AO LEVIED PENALTY U/S 271(1)(C) OF THE ACT AND THE SAME IS CONFIRMED BY THE CIT(A). HENCE, IN THE PRESENT SET OF APPEA LS IN BOTH OF THE SAID ASSESSEES, THE CORRECTNESS OF LEVY OF PENALTY BOTH LEGALLY AND ON MERITS IS THE ISSUE UNDER LITIGATION. RELEVANT FACTS ARE NARRATED IN THE SUCCEEDING PARAGRAPHS. 4. FACTS RELATING TO CONCEALMENT OF PENALTY : DURING THE ASSESSMENT PROCEEDINGS U/S 153A RWS 143(3) OF THE ACT, AO INITIATED P ENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND THE DETAILS OF THE SATISFACTION OF THE AO FOR SUCH INVITATION AND DETAILS OF LEVY OF PENALTY ARE APP ROPRIATELY DISCUSSED IN THE SUBSEQUENT PARAGRAPHS OF THIS ORDER. EV ENTUALLY, AO LEVIED THE PENALTY FOR ALL THE YEARS UNDER CONSIDERATION IN THE CASE OF BOTH THE ASSESSEES I.E. SRI SANJAY D. KAKADE AND M/S.KAKADE C ONSTRUCTION COMPANY. THE CIT(A) CONFIRMED THE SAID PENALTY. THEREFOR E, THE ASSESSEES 4 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY FILED THE APPEALS BEFORE THE TRIBUNAL FOR ALL THE SIX YEARS I NVOLVING A.YRS. 2003-04 TO 2008-09 IN THE CASE OF SRI SANJAY D. KAKADE AND FOR THE A.YRS. 2006-07 TO 2008-09 IN THE CASE OF M/S.KAKADE CONSTRUCTION COMPAN Y. 5. WE SHALL TAKE UP THE PENALTY APPEALS IN THE CASE OF SRI SANJAY D. KAKADE , THE INDIVIDUAL FOR ALL THE SIX A.YRS. FROM A.Y.2003-04 TO 200 8-09. TO START WITH, WE SHALL TAKE UP THE ADJUDICATION OF PENALT Y MATTERS OF THE APPEAL FOR AY 2003 - 04. MOST OF THE ISSUES, FACTS, THE AR GUMENTS AND THE COUNTER ARGUMENTS ARE COMMON FOR ALL THE APPEALS UNDER CONSIDERAT ION. . ITA NO.12/PUN/2013 A.Y.2003-04 SRI SANJA Y D. KAKADE 6. ASSESSEE RAISED A SOLITARY GENERAL GROUND ORIGINALLY IN THE APPEAL. THE SAME READS AS UNDER : IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT SINCE THERE IS NO DIFFERE NCE IN THE ASSESSED INCOME AND INCOME DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED BY THE LD. AO U/S.153A OF THE I.T. ACT, 1961, THE PENALTY LEVIED BY THE LD. AO U/S.271(1)(C) OF THE I.T. ACT, 1961 WAS BAD IN LAW, PATENTLY ILLEGAL, WITHOUT JURISDICTION AND VOID AB- INITIO. THE IMPUGNED PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1961 BY THE L D. AO AND AS CONFIRMED BY THE LD.CIT(A) BEING BAD IN LAW THE SAME MAY PLEASE BE DELETED. 7. FURTHER, THE ASSESSEE FILED 3 SETS OF ADDITIONAL GROUNDS ON DIFFERENT DATES BEFORE US AND THE SAME ARE EXTRACTED AS UNDER: A. IST SET OF ADDITIONAL GROUNDS : 1. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMIN G THE PENALTY OF RS.3,60,000/-LEVIED BY THE ASSESSING OFFICER U/S.27 1(C) OF THE ACT. 2(A). ASSESSMENT YEAR 2003-04 UNDER CONSIDERATION IS A CLOSED ASSESSMENT YEAR AND THE ASSESSMENT WAS NOT PENDING ON THE DATE OF THE SEARCH. AS SUCH THE ASSESSMENT FOR THIS YEAR HAS NOT ABATED. THEREF ORE THE ASSESSING OFFICER COULD NOT HAVE DISTURBED THE CLOSED ASSESSMENT WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. (B) SINCE THE TAXATION OF THE AMOUNT OF RS.8,10,000 /- U/S. 153A OF THE ACT ITSELF DOES NOT HAVE LEGAL BASIS, THE PENALTY U/S. 271(C) OF THE ACT LEVIED IN RESPECT OF THE SAID AMOUNT IS BAD IN LAW. 5 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY (C). PENALTY WAS NOT ATTRACTED IN RESPECT OF INCOME OF RS.8,10,000/- VOLUNTARILY INCLUDED BY THE ASSESSEE IN THE RETURN OF INCOME FILED U/S. 153A OF THE ACT, BECAUSE THE SAID INCOME WAS DECLARED BE FORE ITS DETECTION BY THE DEPARTMENT. 3. THE PENALTY ORDER DATED 30-06-2011 PASSED BY THE ASSESSING OFFICER LEVYING PENALTY U/S 271(C) OF THE ACT IS WITHOUT JU RISDICTION, AB-INITIO VOID AND BAD IN LAW. 4. THE LEARNED ASSESSING OFFICER HAS ERRED IN HOLDI NG THAT THERE IS DEEMED CONCEALMENT AS PER EXPLANATION 5A TO SECTION 271(1) (C) OF THE INCOME TAX ACT. 5. THE AMENDMENT BROUGHT ABOUT IN EXPLANATION 5A TO SECTION 271(1) (C) OF THE ACT BY FINANCE ACT (NO. 2) 2009 WITH RETROSPECTIVE EFFECT FROM 01-06-2007 IS ULTRA-VIRES OF THE CONSTITUTION OF INDIA. B. 2 ND SET OF ADDITIONAL GROUNDS : 1. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAS WRONGLY APPLIED THE PROVISION OF EXPLANATION 5A TO SECTION 271(1) (C) OF THE ACT WHEREAS THE SAID EXPLANATION 5A CANNOT BE APPLIED T O THE ASSESSEES CASE. 2. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AMENDMENT BROUGHT ABOUT IN THE SAID EXPLANATION 5A TO SECTION 271(1) (C) OF THE INCOME TAX ACT BY THE FINANCE (NO.2) ACT 2009, WITH RETROSPECTIVE EFFECT FROM 1 ST JUNE 2006 IS ULTRA- VIRES OF THE CONSTITUTION OF INDIA. C. 3 RD SET OF ADDITIONAL GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING THE PENALTY U/S.271(1)(C) OF THE IT ACT IS WITHOUT JURISDICTION, AB-INITIO VOID, BAD IN LAW AND UNSUSTAINABLE, SINCE NOTICE ISSUED U/S. 274 R.W.S 271(1) (C) OF THE IT A CT IS NOT AS PER LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE PENALTY PROCEEDINGS IN THIS CASE WERE VITIATED BECAUSE, THE ASSESSING OFFICER HAS NOT DELETED/ REMOVED/ STRUCK OFF THE INAPPROPRIATE LIMB /CHARGE FROM THE NOTICE ISSUED U/S. 274 R.W.S 271(1) (C) OF THE IT ACT. THEREFORE, THE PENALTY ORDER PASSED BY THE ASSESSIN G OFFICER U/S. 271(1) (C) OF THE IT ACT IS AB-INITIO VOID, BAD IN LAW AND IS UNS USTAINABLE. THE ABOVE ADDITIONAL GROUNDS ARE FOUND OVERLAPPING ON CER TAIN ISSUES. HOWEVER, THEY REVOLVE AROUND THE LEGAL ISSUES; (1) THE ISSUES RELATING TO APPLICABILITY OF THE PRE-AMENDED EXPLANATION 5A T O SECTION 271(1)(C) OF THE ACT. (2) UNSUSTAINABILITY OF THE PENALTY PROCEE DINGS WHEN THE AMBIGUITY IN THE MIND OF AO IS OBVIOUS FROM THE SATISFAC TION RECORDED IN THE SEARCH ASSESSMENT ORDERS; (3) TAXATION OF CERTAIN INCOME, AS THE SAME IS TAXED HAVING NO LEGAL BASIS AND FINALLY (4) THE ISSUE S OF THE MERITS 6 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY OF LEVY OF PENALTY ON THE ADDITION OF RS.8,10,000/- IS SUSTAINA BLE IN THE PRESENT CASE OF A NON-ABATED ASSESSMENT; (5) IF THE ITEMS OF INCOME OFFERED BY THE ASSESSEES IN THE SEARCH PROCEEDINGS CONSTITUTES A VOLUNTARY ACT AND IN THAT CASE, THE LEVY OF PENALTY ON SUCH INCOME IS JUSTIFIED OR NOT. 8. THE FACTS RELEVANT TO THE APPEAL FOR A.Y. 2003-04 IN T HE CASE OF SRI SANJAY D. KAKADE INCLUDES THAT THIS IS THE CASE WHERE TH E SEARCH U/S.132 OF THE ACT CONDUCTED ON 11-02-2009 AND THE NOTICE U/S .153A OF THE INCOME TAX ACT WAS ISSUED ON 27-07-2009. RESPONDING TO THE S AID NOTICE, ASSESSEE FILED THE RETURN OF INCOME ON 30-09-2010 (I.E. AFTE R 14 MONTHS) DECLARING THE INCOME OF RS.12,25,900/-. OTHERWISE, ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. ON 03-02-2004 ORIGINALLY U/S.1 39 OF THE ACT DECLARING TOTAL INCOME OF RS.4,15,800/-. THE DIFFERENCE IN THE R ETURN OF INCOME OF BOTH THE RETURNS INCLUDES AN ADDITIONAL INCOME OF RS.8,10,000/- SUO MOTO DISCLOSED BY THE ASSESSEE IN THE RETURN U/S.153A OF THE ACT AS INCOME FROM OTHER SOURCES. FURTHER THE EXPLANATION 5 A IS BROUGHT INTO THE STATUTE ORIGINALLY W.E.F. 01-06-2007. AS PER THE SAME, THE NON-FILING OF RETURN OF INCOME BEFORE THE DATE OF SEARCH, ATTRACTS THE PENALTY FOR CONCEALMENT OF INCOME. AS PER THE LANGUAGE USED THEREIN, THE MERE FILING O F RETURN OF INCOME IN TIME (WITH OR WITHOUT DECLARING THE DISC OVERED ITEM OF INCOME DURING SEARCH) PROVIDES IMMUNITY FROM THE SAID PENALT Y. SUBSEQUENTLY, THE EXPLANATION 5A WAS AMENDED W.R.E.F. 01-06 -2007 BY THE FINANCE (NO.2) ACT, 2009 AND IT BECAME THE ACT ON 13-08-2009. THE PRESENT APPEAL RELATES TO THE PENALTY U/S.271(1)(C) OF THE ACT AND THE SAID PENALTY IS DIRECTLY RELATABLE TO THE SAID ADDITIONA L INCOME OF RS.8,10,000/-. 7 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY BACKGROUND FACTS OF THIS INCOME INCLUDES THAT THE ASSESS EE EARNED INTEREST INCOME FROM THE DEPOSITS KEPT WITH THE BANKS VID E THE BANK ACCOUNTS OPENED WITH M/S. THE SHREE SUVARNA SAHAKARI BANK LTD. (A/C. NOS. 88 & 275). AS PER THE ASSESSEE, THE BANK ACCOUNTS WERE DISCLOSED IN THE BOOKS OF ACCOUNTS AND HOWEVER, THE DEPOSITS AND INT EREST INCOME ACCRUED ON THE DEPOSITS WAS NOT OFFERED TO TAX IN THE O RIGINAL RETURN OF INCOME FILED BY THE ASSESSEE ON 03-02-2004 (SUPRA). THE S EARCH DID NOT YIELD ANY DIRECT INCRIMINATING EVIDENCE. ASSESSEE FILED THE RE TURN OF INCOME U/S.153A AND DISCLOSED THE SAME IN THE RETURN OF INCOME. ACCORDING TO THE ASSESSEE, FOR PENALTY PURPOSE, THIS INTEREST INCOME CONST ITUTES VOLUNTARY DISCLOSED INCOME OF THE ASSESSEE AS THE SEARCH ACTION DID NOT RESULT IN ANY SEIZED PAPERS UNEARTHED BY THE DEPARTMENT TO SUPPORT THE SAID DEPOSITS AND THE INTEREST INCOME RECEIPTS. THE ASSESSMENT WAS COMPLETED U/S.153A R.W.S. 143(3) OF THE ACT ON THE RETURNED INCOME ACCEPTING THE RETURN OF INCOME WITHOUT MAKING ANY ADDITIONS. THUS, THE SEARCH AS SESSMENT BECAME FINAL WITHOUT ANY LITIGATION. WHILE MAKING SUCH ASSESSM ENT, THE ASSESSING OFFICER GAVE THE SATISFACTION FOR INITIATING THE PENA LTY PROCEEDINGS BY STATING THAT THE THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME IN THE ORIGINAL RETURN, PENALTY PROCEEDINGS U/S.271 OF THE ACT ARE INITIATED. FURTHER, THE AO VIDE HIS ORDER DATED 30-06-2011 LEVIED THE PENALTY OF RS.3,60,000/- @ 150% OF THE TAX SOUGHT TO BE EVADED ON THE SAID ADDITIONAL INCOME OF RS 8.10 LAKHS AS PER THE DISCUSSION GIVEN IN PAR A NOS. 16, 17 & 18 OF THE PENALTY ORDER. WHILE CHARGING HIGH RATE OF 150%, THE AO MENTIONED THAT THE CONCEALMENT APPEARS DELIBERATE . THE CIT(A) CONFIRMED THE SAID PENALTY REJECTING THE VARIOUS LEGAL PRECEDENTS RELIED UPON BY THE ASSESSEE. HOWEVER, THE CIT(A) DISTINGUISHED WITH THE SAID JUDGMENTS AND JUSTIFIED THE LEVY OF PENALTY @ 150%. AGGRIEVED WITH THE SA ME, ASSESSEE IS IN APPEAL BEFORE US FOR THE A.Y.2003-04. 8 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY BEFORE THE TRIBUNAL LD. COUNSEL FOR THE ASSESSEE AND LD. DR FOR THE REVEN UE MADE VARIOUS ARGUMENTS AND COUNTER ARGUMENTS ON VARIOUS LEGAL AND O THER ISSUES AND THE SAME ARE DETAILED AS FOLLOWS. ARGUMENTS BY LD. COUNSEL FOR THE ASSESSEE 9. BEFORE US, LD.COUNSEL FOR THE ASSESSEE MADE VARIOUS ARG UMENTS AGAINST LEVY OF THE PENALTY AND THEY INCLUDE BOTH LEGAL AN D OTHER THAN LEGAL ARGUMENTS. LD. COUNSEL FOR THE ASSESSEE ALSO FILED WRITTEN SUBMISSIONS STATING THAT THE PENALTY IS UNSUSTAINABLE BOTH ON LAW AND AS WELL AS ON FACTS. THE ARGUMENT BASED SUBMISSIONS ARE ELABORATED IN THE SUBSEQUENT PARAGRAPHS OF THIS ORDER. A. NON-ABATED /COMPLETES ASSESSMENT SUSTAINABILIT Y OF PENALTY LINKED TO ADDITIONS OF RS 8.10 LAKHS - NOT BASED ON ANY INCRIMINATING MATERIAL : ELABORATING THE LEGAL SUBMISSIONS, LD COUNSEL FOR THE ASSES SEE SUBMITTED THAT IT IS A CASE OF CLOSED ASSESSMENT AND THER EFORE A NON ABATED ASSESSMENT WITHIN THE MEANING OF THE 2 ND PROVISO TO SECTION 153A OF THE ACT. EXPLAINING THE RELEVANT FACTS, LD. COUNSEL MENTIONED TH AT THE ASSESSEE FILED RETURN OF INCOME FOR THE A.Y. 2003-04 U/S.139 OF THE ACT ON 03-02-2004 DECLARING THE TOTAL INCOME OF RS.4,15,800/- AND THE ASSESSMENT BECAME FINAL. AS EVIDENT FROM THE FACT, NO NOTIC E WAS ISSUED BY THE ASSESSING OFFICER U/S.143(2) OF THE ACT AND THE TIME FOR THE ISSUANCE OF THE SAME EXPIRED LONG BACK. RELYING ON VARIOUS DECISIONS, THE LD. COUNSEL SUBMITTED THAT WHEN THE ASSESSMENT BECAME FINAL AND WHE N THERE IS NO TIME LEFT FOR ISSUE OF NOTICE U/S.143(2) OF THE ACT, SUCH ASSE SSMENT, BEING ABATED, CAN ONLY BE REOPENED ONLY WHEN AO HAS ANY INC RIMINATING MATERIAL SEIZED DURING THE SEARCH ACTION ON THE ASSESSEE. ON TH ESE FACTS, THERE IS NO 9 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY NEED FOR THE ASSESSEE TO DISCLOSE THE ADDITIONAL INCOME, IF A NY, IN THE RETURN OF INCOME FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S.1 53A OF THE ACT. NEVERTHELESS, ASSESSEE DISCLOSED THE SAME TO CLEAN HIS ACCOUNTS VO LUNTARILY. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, SUCH INCOME DO ES NOT ATTRACT PENALTY U/S.271(1)(C) OF THE ACT. TAKING US THROUGH THE VARIOUS DOCUMENTS AND THE PAPE R BOOKS FILED BEFORE US, AS WELL AS ASSESSMENT ORDER, LD COUNSEL SUBMITT ED THAT THE ADDITION OF RS 8.10 LAKHS WAS NOT SUPPORTED BY ANY INCRIM INATING MATERIAL AND STATED THAT THE SAID AMOUNT CONSTITUTES INTEREST EARNED BY T HE ASSESSEE FROM THE BANKS ON THE DEPOSITS. FURTHER, LD. COUNSEL S UBMITTED THAT THE BANK ACCOUNTS IN QUESTION WERE ALREADY DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THEY ARE NOT CONCEALED BANK ACCOU NTS. IN THAT CASE, THERE IS NO QUESTION OF CONCEALED INCOME AND IT CONSTITUTE S A CASE OF OMISSION, WHICH SHOULD NOT ATTRACT THE PROVISIONS OF 271(1)(C) OF THE ACT. ASSESSEE, FURTHER, FILED WRITTEN SUBMISSIONS, PUTTING FORWARD V ARIOUS LEGAL SUBMISSIONS IN THIS REGARD. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT PARA 3 TO 3.3. ASSESSEES SUBMISSIONS -MAKING ADDITION IN NON-ABATE D ASSESSMENT : 3. IT WAS A CLOSED ASSESSMENT YEAR. 3.1 THE REGULAR RETURN OF INCOME WAS FILED ON 03-0 2-2004 (2 ND PAGE OF PARA 4 OF THE ASSESSMENT ORDER) DECLARING INCOME OF RS.4 ,15,800/-. AS PER SECTION 153(1) OF THE I.T ACT, THE TIME FOR COMPLETING THE REGULAR ASSESSMENT HAS EXPIRED ON 31 ST DECEMBER 2005. ASSESSMENT WAS NOT PENDING ON THE D ATE OF THE SEARCH. THE ASSESSMENT HAS NOT ABATED. THUS IT WAS A CLOSED ASSESSMENT YEAR. 3.2.1 WHEN THE TIME LIMIT TO COMPLETE THE ASSESSMEN T HAS LAPSED AND NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH O PERATION, THE SEARCH ASSESSMENT U/S. 153A IS TO MADE ONLY AS PER THE ORI GINAL ASSESSMENT U/S.143(1) OR U/S. 143(3) OF THE ACT. OM SHAKTI AGENCIES PVT. LTD. 66 TAXMANN.COM 287 ( CHENNAI) YAMINI AGARWAL 83 TAMMANN.COM 209 ( KOLKATA) 3.2.2 COMPLETED ASSESSMENT CAN BE DISTURBED U/S. 1 53A OF THE ACT ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF THE SEARCH. 10 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY MURLI AGRO PRODUCTS 49 TAXMANN.COM 172 (BOMBAY) CONTINENTAL WAREHOUSING CORPORATION 374 ITR 645 ( BOMBAY) AL CARGO GLOBAL LOGISTICS LTD. 137 ITD 287 (MUMBA I) IN THE CASE OF BUDHIYA MARKETING PVT. LTD 154 ITD 6 50 (KOLKATA) IT HAS BEEN HELD THAT IN SEARCH ASSESSMENTS U/S.153A OF THE ACT TOTAL INCOME SHALL BE DETERMINED; IN RESPECT OF ASSESSMENT YEARS FOR WHIC H ORIGINAL ASSESSMENTS HAVE ALREADY BEEN COMPLETED ON THE DATE OF SEARCH, BY RESTRICTING ADDITIONS ONLY TO THOSE ITEMS WHICH FLOW FROM INCRIMINATING MA TERIAL FOUND DURING THE COURSE OF THE SEARCH. IN THE CASE OF MRIDUL COMMODITIES PVT. LTD. 78 TAXM ANN.COM 337 (KOLKATA) IT HAS BEEN HELD THAT WHERE PURSUANT TO NOTICE ISSUED UNDER SECTION 153A, ASSESSEE COMPANY FILED ITS RETURNS FOR RELEVANT YEA RS, SINCE ASSESSMENT FOR SAID YEARS HAD ALREADY COMPLETED AND NO INCRIMINATIN G MATERIAL HAD BEEN FOUND IN COURSE OF SEARCH PROCEEDINGS, IMPUGNED ADD ITION MADE BY ASSESSING OFFICER UNDER SECTION 68 IN RESPECT OF SHARE APPLIC ATION MONEY RECEIVED FROM NON-EXISTENT SUBSCRIBERS, WAS TO BE SET ASIDE. 3.2.3 SINCE THE TAXATION OF THE AMOUNT OF RS.8,10,0 00/- U/S.153A OF THE ACT ITSELF DOES NOT HAVE LEGAL BASIS, THE PENALTY U/S.2 71(1)(C) OF THE ACT LEVIED IN RESPECT OF THIS AMOUNT IS BAD IN LAW. 3.3 WHILE DEALING WITH THIS QUESTION THE HON'BLE PU NE BENCH OF THE TRIBUNAL IN THE CASE OF A GROUP CONCERN KAKADE CONSTRUCTION COM PANY, ITA NO.99/PN/2013 (PB,99) FROM PARA 5 TO PARA 7 OF THE ORDER, WHILE DECIDING THE ISSUE OF PENALTY IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S.80IB (10) OF THE I.T ACT FOR A.Y.2005-06 IN ASSESSMENT U/S.153A OF THE ACT, HAS HELD THAT SINCE THE DEDUCTION WAS NOT DISALLOWED ON ACCOUNT O F ANY MATERIAL FOUND DURING THE COURSE OF THE SEARCH, IN VIEW OF THE JUD GMENT OF THE NAGPUR BENCH OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S . MURLI AGRO PRODUCTS LTD. 49 TAXMANN.COM 172 (BOMBAY) THE INITIATION OF PROCEEDINGS U/S. 153A OF THE ACT WOULD NOT AFFECT THE ASSESSMENT FIN ALIZED PRIOR TO THE DATE OF THE SEARCH. THE HON'BLE PUNE BENCH OF THE TRIBUNAL FURTHER HELD THAT THE ASSESSEE CAN ALWAYS ARGUE HIS CASE AFRESH IN THE PE NALTY PROCEEDINGS ON VARIOUS ISSUES WHICH HE HAD NOT ARGUED DURING THE Q UANTUM PROCEEDINGS AND THAT SINCE THE ASSESSING OFFICER COULD NOT HAVE DIS TURBED THE ASSESSMENT WHICH WAS FINALIZED BEFORE THE DATE OF THE SEARCH T HE QUESTION OF PENALTY DOES NOT ARISE. B. VOLUNTARY DISCLOSURE OF RS.8,10,000/- : FURTHER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE INCO ME OF RS.8,10,000/- IS VOLUNTARILY DECLARED BY THE ASSESSEE BEFO RE ANY DETECTION IS DONE BY THE DEPARTMENT DESPITE THE ACTION U/S.132 OF THE ACT. FURTHER, IT IS THE CASE WHERE THERE IS NO INCRIMINATING MATERIAL FOUN D DURING SEARCH CONNECTING TO THIS ITEM OF INCOME AND THE SAME IS UNDISPUT ED. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ON HIS OW N, DISCLOSED TO COME CLEAN WITH REFERENCE TO THE CASH DEPOSITS IN THE ACCOUNTED BANK ACCOUNTS OF THE ASSESSEE WITH THE SHREE SUVARNA SAHAKARI BANK LTD. AS SUCH, NO 11 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY DISCUSSION OF ANY KIND OR NO ENQUIRY OF ANY KIND OR NO REC ORDING OF ANY STATEMENT ON OATH OF ANY KIND BY THE REVENUE ON THIS INCOME. CONSIDERING THESE FACTS, THE OFFER OF INCOME BECOMES A VOLUNTARY ACT A ND THE PENALTY IS NOT LEVIABLE ON SUCH INCOME. C. AMBIGUITY IN THE MIND OF THE AO WITH REFERENCE T O THE SATISFACTION AT THE TIME OF INITIATING PENALTY PROC EEDINGS LIMBS ETC. LD. COUNSEL FOR THE ASSESSEE MENTIONED THAT THE AOS F AILURE TO SPECIFY THE SATISFACTION IN AN UNAMBIGUOUS EXPRESSIONS OF THE ACT BY SPECIFYING THE LIMB OF THE CLAUSE (C) OF SECTION 271(1) OF THE ACT, THE PENALTY ORDER BECOMES UNSUSTAINABLE IN LAW. ACCORDING TO LD. COUN SEL FOR THE ASSESSEE, THE AOS SATISFACTION INVOKING PENALTY PROCEEDING S SUFFERS FROM AMBIGUITY IN THE MIND OF THE AO. FOR THIS, HE RELIED ON VA RIOUS DECISIONS TO SUPPORT HIS CASE. JUSTIFYING THE SAME, LD. COUNSEL FIND A WRITTEN SUBMISSIONS ON THIS ISSUE AND THE CONTENTS OF PARA 6.3. 2 TO 6.3.8 ARE RELEVANT AS IT CONTAINS THE FACTS OF THE PRESENT CASE A ND THE LEGAL PROPOSITION ON THE SAID SUBJECT. FOR THE SAKE OF COMPLET ENESS, SAID PARAS ARE EXTRACTED HERE AS UNDER: 6.3.2 I RESPECTFULLY SUBMIT THAT, WHILE LEVYING PE NALTY U/S.271(1) (C) OF THE INCOME TAX ACT THE ASSESSING OFFICER HAS DEMONSTRAT ED COMPLETE NON- APPLICATION OF MIND AND CASUALNESS. THE ASSESSING OFFICER HAS USED THE WORDS DELIBERAT E, CONCEALED THE INCOME, CONCEALMENT PENALTY ETC. THE WORD DELIB ERATE DOES NOT FIND PLACE IN SECTION 271(1) (C) OF THE ACT. SIMILARLY THE WOR DS CONCEALED THE INCOME ALSO DO NOT FIND PLACE IN SECTION 271(1) (C) OF THE ACT. 6.3.3 IT IS TRITE LAW THAT THE ASSESSING OFFICER W HILE LEVYING PENALTY U/S. 271(1)(C) OF THE ACT, HAS TO SERIOUSLY APPLY HIS MI ND ON THE QUESTION WHETHER THE PARTICULARS OFFENCE COMMITTED BY THE ASSESSEE F ALLS UNDER THE CHARGE CONCEALED THE PARTICULARS OF INCOME OR UNDER THE CHARGE FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OF FICER CANNOT ADOPT A CASUAL APPROACH IN USE OF THE WORDS WHILE LEVYING P ENALTY. THE PENALTY HAS TO BE LEVIED FOR THE PRECISE OFFENCE COMMITTED BY T HE ASSESSEE. 6.3.4 IN THE CASE OF SH. KISHORY MOHAN BERA VS. THE STATE OF WEST BENGAL, AIR 1972 SC 1749 THE HON'BLE SUPREME COURT HAS VACA TED THE DETENTION ORDER PASSED BY THE DISTT. MAGISTRATE OF HOOGHLY DI STRICT, BECAUSE THE DISTT. MAGISTRATE HAS NOT SERIOUSLY APPLIED HIS MIND IN CH OOSING THE PARTICULAR OFFENCE FOR WHICH HE HAS PASSED THE DETENTION ORDER . IN PARA 5 OF THE 12 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY JUDGMENT THE HON'BLE SUPREME COURT HAS HELD THAT, I F THE POWER IS EXCISED ON A GROUND NOT ENUMERATED IN THE SECTION OR IN RESPEC T OF THE OFFENCE WHICH IS NOT GERMANE TO ANY OF THE CHARGES ENUMERATED IN THE SECTION, SUCH EXCISE OF POWER WOULD BE BEYOND THE JURISDICTION OF THE DISTT . MAGISTRATE AND THEREFORE INVALID. IN PARA 10 OF THE JUDGMENT THE HON'BLE SUPREME COUR T HELD THAT BEFORE THE AUTHORITY INVOKES ITS POWER, IT MUST BE SATISFIED A ND MUST EXPRESSLY SAY IN HIS ORDER THAT ALLEGED OFFENCE OF THE PERSON CONCER NED WAS SUCH THAT IT PRECISELY FELL IN ONE OF THE CHARGES ENUMERATED IN THE SECTION UNDER WHICH THE ORDER IS PASSED. IF IT IS NOT DONE AND THE LANGUAGE IN WHICH THE ORDER IS PASSED DEMONSTRATES AN ELEMENT OF CASUALNESS IN MAK ING THE ORDER, THE ORDER CANNOT BE UPHELD. IN PARA 11 OF THE JUDGMENT THE HON'BLE SUPREME COUR T HAS HELD THAT AN EXTRANEOUS GROUND ON WHICH THE ORDER IS PASSED VITI ATES THE ORDER. 6.3.5 IN PARA 8 OF THE JUDGMENT IN THE CASE OF SMT. KAUSHALLYA 75 TAXMANN 549 (BOM) THE HON'BLE BOMBAY HIGH COURT HAS HELD TH AT ALL DEPENDS ON; IF THE LAPSE ON THE PART OF THE OFFICER DEMONSTRATE NO N APPLICATION OF MIND. THE HON'BLE JURISDICTIONAL HIGH COURT IN PARA 10 OF THE JUDGMENT FURTHER HELD THAT USE OF THE WORD DELIBERATELY WHICH DID NOT EXIST IN SECTION 271(1) (C) OF THE ACT HAS INVALIDATED THE PROCEEDINGS BECAUSE IT HAS DEMONSTRATED NON- APPLICATION OF MIND. 6.3.6 SIMILARLY USE OF THE WORDS THAT ASSESSEE I S LIABLE FOR LEVY OF PENALTY FOR CONCEALMENT DOES NOT ESTABLISH THAT THE PENALT Y HAS BEEN LEVIED FOR THE CHARGE/LIMB CONCEALED THE PARTICULARS OF INCOME. A REFERENCE IN THIS REGARDS CAN BE MADE TO PARA 26 OF THE JUDGMENT OF H ON'BLE A BENCH OF THE PUNE TRIBUNAL IN THE CASE OF KANHAIYALAL D. JAIN IT A NO.1201 TO 1205/PN/2014, WHERE IN IT HAS BEEN HELD THAT THE SA TISFACTION RECORDED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE THAT IT IS LIABLE FOR LEVY OF PENALTY FOR CONCEALMENT DOES NOT ESTABLISH THE CASE OF THE REVENUE AS TO FOR WHICH PARTICULAR LIMB THE ASSESSEE IS LIABLE. I.E. WHETHER IT IS FOR CONCEALMENT OF THE PARTICULARS OF INCOME OR FOR FURNISHING THE INACCUR ATE PARTICULARS OF INCOME. THUS EVEN THE HON'BLE PUNE BENCH OF THE TRIBUNAL I S OF THE VIEW THAT USE OF SUCH WORDS DOES NOT MEET THE REQUIREMENT OF SECTION 271(1) (C) OF THE ACT. 6.3.7 IN VIEW OF THE ABOVE DISCUSSION IT IS SUBMITT ED THAT USE OF THE LOOSE WORDS LIKE CONCEALED THE INCOME, CONCEALMENT PEN ALTY AND DELIBERATE CONCEALMENT DOES NOT AMOUNT TO LEVYING THE PENALTY FOR THE CHARGE/LIMB OF CONCEALED THE PARTICULARS OF INCOME. MOREOVER, U SE OF THESE WORDS WHICH ARE EXTRANEOUS TO SECTION 271(1) (C) OF THE ACT SHO WS CASUALNESS AND NON APPLICATION OF MIND BY THE ASSESSING OFFICER, WHICH HAS RENDERED THE PE NALTY ORDER AS INVALID. 6.3.8. IT IS FURTHER SUBMITTED THAT ONCE THE ASSESS ING OFFICER HAS DISPLAYED NON-APPLICATION OF MIND WHILE LEVYING THE PENALTY, THERE IS NO QUESTION OF TRYING TO FIND OUT WHAT WAS IN THE MIND OF THE ASSE SSING OFFICER WHILE LEVYING THE PENALTY. D. AMBIGUITY WITH REFERENCE TO THE SATISFACTION AT THE TIME OF INITIATION LIMBS OF THE EXPLANATION 5A ETC. REGARDING THE ARGUMENT ON THE EXISTENCE ON THE AMBIGU ITY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SATISFACTION OF THE AO IN THE 13 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY ASSESSMENT ORDER DOES NOT REFER TO THE EXPLANATION 5A OF THE ACT IN GENERAL AND THE POST-AMENDED EXPLANATION 5A, IN PARTICULAR. AO S MIND IS OBVIOUSLY FULL OF CONFUSION AND AMBIGUITY AS THERE IS NO REFER ENCE TO LIMBS/CHARGE WHATSOEVER OF THE SAID EXPLANATION 5A OF SECT ION 271(1)(C) OF THE ACT. FURTHER, RELYING ON THE COORDINATE BENCH DEC ISION OF PUNE IN THE CASE OF KANHAIYALAL D. JAIN VS. ACIT (ITA NOS. 1201 TO 1205 /PN/2014 DATED 30-11-2016) HE RELIED ON THE CONTENTS OF PARA 23 AND 24 OF THE TRIBUNALS ORDER. LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE AMBIGUITY LINKED TO THE REQUIREMENT OF SPECIFYING THE LIMBS EVEN IN CASES OF EXPLANATION 5A WILL MAKE THE PENALTY PROCEEDINGS ILLEGAL AND THEREFORE, THE PENALTY ORDERS BECOME VOID. E. AMENDED EXPLANATION 5A VS PRE-AMENDED EXPLANATIO N 5A : 1. FURTHER, THE ASSESSEE RAISED ANOTHER LEGAL ARGUMENT RELATING TO INAPPLICABILITY OF AMENDED EXPLANATION-5A OF SECTION 271 (1)(C) AC T TO THE FACTS OF THE PRESENT CASE. EXPLAINING THE PROVISIONS OF THE SAID EXPLANATION TO THE CASE OF THE ASSESSEE, LD. COUNSEL SUBMITTED THAT THIS IS THE CASE WHERE ASSESSEE FILED THE RETURN OF INCOME U/S.139 OF THE A CT IN NORMAL COURSE AND THEREFORE, THE PRE-AMENDMENT OF EXPLANATION 5 , AS IT EXISTS AS AT THE RELEVANT POINT OF TIME, SHOULD APPLY TO THE PRESENT CASE. IN THA T CASE, AS PER THE PRE-AMENDED EXPLANATION 5A, ASSESSEE NEEDS TO FULFIL THE REQUIREMENT OF FILING OF RETURN OF INCOME U/S.139 OF THE ACT IN ORDER TO ESCAPE THE RIGOURS OF THE PENALTY. REFERRING TO THE AMEN DMENTS MADE TO THE SAID EXPLANATION 5A WITH RETROSPECTIVE EFFECT FROM 01.06 .2007 BY THE FINANCE (NO. 2) ACT 2009, LD. COUNSEL SUBMITTED THAT, ALTHOU GH IT IS UNSUSTAINABLE, THE SAID AMENDED EXPLANATION-5A IS NOW MADE APPLICABLE RETROSPECTIVELY EVEN TO THOSE CASES WHERE RETURN OF IN COME WAS ALREADY FILED BEFORE THE SEARCH WAS CONDUCTED. THE DISCLOSURE OF THE DISCOVERED INCOME 14 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY IN SEARCH ACTION IF ANY IS THE ESSENTIAL CONDITION FOR FULFILLMENT IF ASSESSEE WANTS TO ESCAPE THE RIGOURS OF SECTION 271(1)(C) OF THE ACT . HE BROUGHT OUR ATTENTION TO VARIOUS FAVOURABLE DECISIONS TO SUPPORT THE INTERPRETATION IN FAVOUR OF THE ASSESSEE. 2. RETROSPECTIVITY OF AMENDED EXPLANATION 5A - VIOLAT ION OF ARTICLE 20 OF THE CONSTITUTION OF INDIA: QUESTIONING THE CORRECTNESS OF SUCH RETROSPECTIVE AMEN DMENT, LD COUNSEL SUBMITTED THAT APPLYING THE SAID AMENDED EXPLANA TION 5A RETROSPECTIVELY WILL TANTAMOUNT TO THE VIOLATION OF ARTICLE 2 0 OF THE CONSTITUTION OF INDIA. ACCORDING TO THE SAID ARTICLE 20, NO PERSON SHALL BE AFFECTED OF ANY OFFENCE EXCEPT IN THE VIOLATION OF LAW ENFORCE AT THE TIME OF THE COMMISSION OF THE ACT CHARGE AS AN OFFENCE, NOR BE SUBJECTED TO A PENALTY GREATER THAN THAT WHICH MIGHT HAVE BEEN INVOKED UNDER THE LAW IN FORC E AT THE TIME THE COMMISSION OF THE OFFENCE. THE FACT OF UPHOLDING THE SAID ARTICLE 20 OF THE CONSTITUTION OF INDIA BY THE SUPREME COURT IN THE CASE OF M/S. STAR INDIA (PRIVATE) LIMITED - 280 ITR 321 AND JURISDICTION HIGH COURT JUDGMENT IN THE CASE OF J.S.W ENERGY LIMITED 16 TAXMANN.COM 303 WAS BROUGH T TO OUR NOTICE. ACCORDING TO THE LD.AR, THE JUDGMENT IN THE CASE OF M/S STAR INDIA PRIVATE LIMITED (SUPRA) WAS DELIVERED IN THE CONTEXT OF LIABILITY OF PAYMENT OF SERVICE TAX BY RETROSPECTIVE AMENDMENT WHEREBY THE BR OADCASTING COMPANIES ARE REQUIRED TO PAY THE SERVICE TAX RETROSPE CTIVELY. FURTHER, THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF J. S.W. EN ERGY LIMITED (SUPRA) WAS DELIVERED IN THE CONTEXT OF APPLICABILITY OF PROVISIO NS OF SECTION 234B OF THE ACT TO THE MAT COMPANIES. THESE JUDGMEN TS WERE DECIDED IN FAVOUR OF THE TAXPAYERS. HOWEVER, NO DIRECT JUDGMENT FRO M THE HIGHER JUDICIARY WAS BROUGHT TO OUR NOTICE INVOLVING THE AMENDM ENT TO 15 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT AND IN FAVOU R OF THE ASSESSEES CONTENTION. RETROSPECTIVITY NOT APPROVED - LATEST DECISIONS OF TRIBUNAL : 3. HOWEVER, BRINGING OUR ATTENTION TO PUNE BENCH DECISION S AVAILABLE IN THE PUBLIC DOMAIN I.E. THE CASE OF M/S CHHORIYA LAND DEVE LOPERS AND CONSTRUCTION COMPANY, IN ITA NO.1389 & 1390/PUN/2012 AN D ORDER IN THE CASE OF RAJNEESH VOHRA VS. DCIT IN ITA NO.516/CHANDIGARH/2012, LD. COUNSEL SUBMITTED THAT IN THE CASE OF RAJNEESH ORA (S UPRA), WHERE THE FACTS INCLUDES THAT THE AO APPLIED THE UNAMENDED EXPLANAT ION-5A AND THE CIT(A) APPLIED THE AMENDED EXPLANATION-5A, THE TRIBUNAL HELD THAT THE AMENDED EXPLANATION 5A APPLY TO THAT ASSESSEE. THEREFO RE, AS PER LD AR, THIS CASE IS DISTINGUISHABLE ON FACTS AND THE ISSUE. ON THE SE FACTS, THE HON'BLE TRIBUNAL HELD THAT THE POWERS OF THE CIT(A) ARE CO -TERMINUS WITH THAT OF THE AO AND THE CIT(A) IS COMPETENT TO APPLY THE AMENDED EXPLANATION-5A. KEEPING THE ISSUE ON RETROSPECTIVELY OF T HE AMENDMENT OPEN, THE TRIBUNAL FURTHER HELD THE RETROSPECTIVITY OF THE AMENDED EXPLANATION-A CANNOT BE ADJUDICATED AT THE LEVEL OF THE TRIBUNAL AS IT FALLS IN THE ORIGINAL JURISDICTION OF THE COMPETENT HON'BLE HIGH COURTS AND SUPREME COURT. FURTHER REFERRING TO THE ANOTHER ORDER OF THE TRIBUNAL IN THE CASE OF CHHORIYA LAND DEVELOPERS AND CONSTRUCTION COMPANY (SUPRA), LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACTS OF THAT CASE ARE ALSO DISTINGUISHABLE. APPLICABILITY OF APEX COURTS JUDGME NT IN THE CASE OF BRIJ MOHAN (SUPRA) IS THE CORE IS AND TRIBUNAL DECIDED AGAINST THE ASSESSEE AND CONFIRMED PENALTY IN THIS CASE. LD AR FOR ASS ESSEE IS CRITICAL OF THIS DECISION AS IT NEVER DEALT WITH THE AFOREMENTIONED A RTICLE 20 OR THE DECISIONS OF THE HIGH COURT. 16 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY 4. FURTHER, TO SUPPORT HIS CASE AND ALSO REFERRING THE DECISIONS OF THE HYDERABAD & VISHAKHAPATNAM BENCH OF THE TRIBUNAL IN CASE S OF NUKALA RAMAKRISHNA (382/VIZAG/2014 DT 16/9/2016) AND DHANEKULA RAMA RAO (SUPRA), LD. COUNSEL SUBMITTED THAT THESE DECISIONS ARE RELEVANT FOR THE FOLLOWING CONCLUSIONS NAMELY,- (1). AMENDED EXPLANATION 5A DOES NOT APPLY ACROSS ALL CASES WHERE SEARCH IS INITIATED AFTER 1/ 7/2007 AND BEFORE 13/8/2009 (DT OF THE ASSENT); (2). RETROSPECTIVITY IS NOT APP ROVED IN VIEW OF ARTICLE 20 AND OTHER JUDGMENTAL LAW; (3). THE EVENT OF FILING T HE RETURN OF INCOME U/S 139(1) OF THE ACT PRIOR TO THE INITIATION OF SEARC H PROVIDES IMMUNITY; (4). THE LAW AS EXISTS AT THE DATE OF SEARCH ACTION APPLIES AND THEREFORE, THE PRE-AMENDED EXPLANATION 5A IS APPLICABLE TO THE CASE ON HAND. FURTHER, ON THE ISSUE OF JUDICIAL DISCIPLINE, LD COUNSEL RELIED HEAVILY ON THE RATIO LAID DOWN ON THE APEX COURTS JUDGMENT IN CASE OF VEGETABLE PRODUCTS 188 ITR 192 . FURTHER, HE ALSO BROUGHT OUR A TTENTION TO THE RECENT DECISION OF THE MUMBAI BENCH DT 03-01-2018 IN THE GROUP CASES OF RELIANCE COMMUNICATION LTD (4672/M/2017 & OTHERS) FOR THE PROPOSITION THAT FAILURE TO FOLLOW AN EXISTING FAVOURABLE DECISION OF THE TRIBUNAL AMOUNTS TO VIOLATING THE SAID APEX COURTS JUDGMENT. F. TO SUM UP, IT IS THE ARGUMENT ON LD. COUNSEL FOR ASSES SEE THAT THE AMENDED EXPLANATION-5A TO SECTION 271(1)(C) WILL NOT APPLY RE TROSPECTIVELY TO ALL THE CASES WHERE THE EVENTS OF (A) THE INITIATION OF SEARCH HAPPENED PRIOR TO THE AMENDMENT TO THE SAID EXPLANATION 5A; OR (B ) THE FILING OF THE RETURN OF INCOME ORIGINALLY U/S 139 (1) OF THE ACT HAPPENED PRIOR TO THE AMENDMENT TO THE SAID EXPLANATION 5A ; (C) FILING OF RETURNS U/S 153A OF THE ACT BECAME DUE PRIOR TO THE AMENDMENT TO THE SAID EXP LANATION 5A; (D) IN PRINCIPLE, THE RIGOUR OF THE AMENDED EXPLANATION 5A IS ALREA DY READ DOWN BY THE SUBSEQUENT DECISIONS OF THE TRIBUNAL BY NOT APPLY ING THEM TO ALL THE 17 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY CASES OF INITIATION OF SEARCHES AFTER 1.7.2007 ETC. (E) THE PRIN CIPLES OF NATURAL JUSTICE QUA ADVERSE EFFECTS OF RETROSPECTIVE AME NDMENTS ARE CONSIDERED UPHELD. (F)APEX COURTS JUDGMENT IN CASE OF VEGE TABLE PRODUCTS 188 ITR 192 AND THE RECENT DECISION OF THE MUMBAI BENC H DT 3/1/2018 IN THE GROUP CASES OF RELIANCE COMMUNICATION LTD (SUPRA) HELPS THE ASSES SEE. G. PENALTY @150% : FURTHER, REFERRING TO THE HIGHER RATE OF 150% AS APPLIED BY THE AO IN LEVYING THE PENALTY, LD. COUNSEL SUBMITTED THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY AT SUCH A HIGH RATE OF 150%. GIVING THE JUSTIFICATIO N, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IN EFFECT C OMPLIED STRICTLY WITH THE DISCLOSURE OF RS.40 CRORES, MADE THE PAYMENT OF TAXES AS PER THE PROVISIONS OF THE ACT, ETC. THE FACT OF PERSONAL PROBLEMS T OGETHER WITH REQUIREMENT OF ATTENDING TO VARIOUS PROCEDURES WITH REGA RD TO THE MAINTENANCE OF BOOKS OF ACCOUNTS LED TO THE DELAY IN PAY MENT OF TAXES. LD. COUNSEL FOR THE ASSESSEE ALSO MENTIONED THAT THE TOTAL DEMAND RAISED ON THE ASSESSEE WORKS OUT TO AROUND 18.06 CRORES AND AG AINST THIS, ASSESSEE ALREADY PAID TOTAL AMOUNT OF RS.18.30 CRORES I.E. MORE THAN THE DEMAND RAISED BY THE AO. ASSESSEE MADE THE ENTIRE PAYMENT B Y 25-10-2011. THEREFORE, THERE IS NO DEFAULT ON PART OF THE ASSESSEE IN PAYING TAXES. REFERRING TO THE RETRACTION OF THE DISCLOSURE, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT ULTIMATELY, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE ADDITIONAL INCOME AND PAID THE TAXES BY 25-10-2011. RELYING ON THE ORDER OF THE TRIBUNAL, CHENNAI BENCH IN THE CASE OF A.N.ANNA MALAI SWAMY, HUF 35 CCH 305, LD. COUNSEL SUBMITTED THAT THE PENALTY IS NOT LEVIABLE U/S.271(1)(C) OF THE ACT WHEN THE ASSESSEE FILED REVISED RETU RNS BEFORE COMPLETION OF ASSESSMENT IN WHICH ADDITIONAL INCOME WAS DISCLO SED DURING THE SEARCH. LD. COUNSEL PRAYED FOR DELETING THE PENALTY. 18 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY ARGUMENTS BY LD. DEPARTMENTAL REPRESENTATIVE FOR TH E REVENUE 10 A. LD. DR FOR THE REVENUE NARRATED THE FACT OF DISCLOSURE OF RS. 40 CRORES, SUBSEQUENT RETRACTIONS, ASSESSEES FAILURE TO PAY THE TAX WITHIN THE TIME FRAME GIVEN BY THE ASSESSEE DURING THE SEARCH ACTIO N ETC. REFERRING TO THE ARGUMENT RELATING TO THE NON-ABATED ASSESSMENT (NO ADDITION CAN BE MADE BY THE AO IN CASE OF A NON-ABATED ASSESSMENT EXC EPT WITH THE BASIS OF INCRIMINATING MATERIAL SEIZED DURING THE SEARCH ACTION), LD .DR FOR THE REVENUE SUBMITTED THAT THE NOTICE ISSUED BY THE AO U/S .153A OF THE ACT RELATES TO SEARCH AND SEIZURE PROVISIONS. THEREFORE, THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE SAID RETURNS CONSTITUTE S UNEXPLAINED INCOME OF THE ASSESSEE. FOR THIS, THERE IS NO REQUIREMENT OF INCRIMINATING MATERIAL. THUS, SINCE THE ADDITIONAL INCOME OFFERED IN THE RET URN OF INCOME U/S.153A OF THE ACT BY THE ASSESSEE IS MORE THAN THE IN COME DISCLOSED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME FILED U/S.139 O F THE ACT, THE SAME CONSTITUTES A CONCEALED INCOME ATTRACTING THE PROV ISIONS U/S.271(1)(C) OF THE ACT. B. THE RETURNED INCOME U/S.153A OF THE ACT CANNOT BE DES CRIBED AS VOLUNTARY ACT AS THE RETURN IS FILED AFTER SEARCH ACTION U /S.132 OF THE ACT. THE OFFER OF CASH DEPOSITS AND THE INTEREST ACCRUALS ARE NOT TO BE CONSTRUED AS SUPERFLUOUS INCOME WITHOUT ANY LEGAL BASIS. C. REFERRING TO THE ARGUMENT RELATING TO THE AMBIGUITY IN TH E MIND OF AO THAT REFERENCE TO 1) SATISFACTION OF AO AT THE TIME OF INIT IATION OF TIME OF PENALTY AND 2) THE FACT OF MENTIONING THE APPROPRIATE LIMB EVEN WHEN EXPLANATION-5A TO SECTION 271(1)(C) IS INVOKED, LD.DR FOR THE R EVENUE SUBMITTED THAT AO HAS GIVEN SATISFACTION AT THE TIME OF INIT IATION AS A CASE OF CONCEALMENT IN PARTICULARS OF INCOME. LD. DR FOR THE RE VENUE ADMITTED 19 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY THAT THE SATISFACTION IS NOT MENTIONED IN THE EXACT EXPRE SSIONS AS SPECIFIED IN THE RELEVANT PROVISIONS OF THE 271(1)(C) OF ACT. D. REFERRING TO THE APPLICABILITY OF THE AMENDED EXPLANATION-5A OF THE 271(1)(C) TO THE PRESENT CASE WHERE SEARCH WAS INITIATED O N 11-02-2009 AND THE RETURN OF INCOME WAS FILED U/S.139 OF THE ACT BEFORE THE SAID SEARC H WAS INITIATED, LD.DR SUBMITTED THAT MERE FILING RETURN OF INCOME IN NORMAL COURSE DOES NOT GRANT IMMUNITY TO THE ASSESSEE FROM TH E PENALTY WHEN THE SAID ADDITIONAL INCOME WAS NOT DECLARED ORIGINALLY IN THE RET URN OF INCOME FILED U/S.139 OF THE ACT. LD. DR FAIRLY SUBMITTED THAT, THOUG H IT IS IN DIFFERENT CONTEXT, THE AMENDMENT TO THE EXPLANATION 5A AR E HELD TO BE RETROSPECTIVE AND CLARIFICATORY IN NATURE. FOR THIS PROPOS ITION, LD.DR RELIED HEAVILY ON THE DECISION OF CIT(A) IN THE CASE RAJNEESH VOHRA AND THE PUNE BENCH DECISION IN THE CASE OF M/S CHHORIYA LAND DEVELOPERS AND CONSTRUCTION COMPANY (SUPRA). REFERRING TO THE AFORE-MENTIONED LATEST DECISIONS OF VIZAG B ENCH IN THE CASES OF NUKALA RAMA RAO (SUPRA) AND DHANIKULA RAMA R AO (SUPRA), LD DR SUBMITTED THAT THESE JUDGMENTS ARE DISTINGUISHABLE ON FACTS. IN THESE CASES, THE RETURNS OF INCOME U/S 153A OF THE ACT WERE FILE D BEFORE THE AMENDMENTS WERE MADE TO SAID EXPLANATION 5A. FURTHER, TH E ASSESSEES UNDER CONSIDERATION WERE NOT COMPARABLE IN MATTERS OF CO MPLIANCE TO THE DEPARTMENTAL PROCEEDINGS, FILING OF RETURNS OF INCOME U/S 153 A OF THE ACT AND THE PAYMENT OF RELEVANT TAXES ON THE DISCLOSED SUM OF ADDITIONAL CONCEALED INCOME OF RS 40 CRORES. LD DR PRAYED FOR CONFIRM ING THE PENALTY LEVIED BY THE AO. 20 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY DECISION OF THE TRIBUNAL ON LEGAL ISSUES 11. WE HEARD BOTH THE PARTIES AND EXAMINED THE FACTS OF THE PRESENT CASE AS WELL AS THE VARIOUS DECISIONS CITED BY BOTH THE PARTIES ON THE ISSUE OF LEVY OF PENALTY FOR THE A.Y. 2003-04 IN RESPECT OF ADDITIONA L INCOME OF RS.8,10,000/- SUO MOTO DISCLOSED BY THE ASSESSEE IN THE R ETURN OF INCOME FILED IN RESPONSE TO SECTION 153A OF THE ACT. THERE ARE V ARIOUS ASPECTS WHICH ARE REQUIRED TO BE ATTENDED BY US AND THE LIST INC LUDE : (A). NON- ABATED (COMPLETED) ASSESSMENT OR NOT; (B). FATE OF ADDITI ONS MADE IN THE NON- ABATED (COMPLETED) ASSESSMENT QUA THE EXISTENCE OF ANY INCRIMINATING MATERIAL; (C) AMBIGUITY IN THE MIND OF THE AO - ALL AYS; (D) PRE-AMENDED EXPLANATION 5A VS. POST-AMENDED EXPLANATION 5A TO SECT ION 271(1)(C) OF THE ACT SPECIFYING THE LIMB AT THE TIME OF INITIATION OF PENALT Y PROCEEDINGS. WE SHALL TAKE UP EACH OF THE ISSUES AND THE ISSUE-WISE E LABORATION IS DISCUSSED IN THE SUCCEEDING PARAGRAPHS OF THIS COMPOSITE ORDER. A. NON-ABATED (COMPLETED) ASSESSMENT OR NOT : ASSESSEE FILED THE RETURN OF INCOME U/S.139 OF THE ACT FOR THE A.Y. 2003-04 O N 03-02-2003. THERE IS NO INFORMATION REGARDING THE COMPLETION OF THE ASS ESSMENT U/S.143(3) OF THE ACT. LD. DR ALSO COULD NOT DEMONSTRATE T HAT THERE WAS SCRUTINY U/S.143(3) OF THE ACT. CONSIDERING THE FACT THAT R ETURN WAS FILED IN THE YEAR 2004 IT IS AN OBVIOUS INFERENCE THAT TIME FOR ISSU E OF STATUTORY NOTICE U/S.143(2) OF THE ACT EXPIRED LONG BACK. WHEN THE T IME FOR ISSUE OF NOTICE U/S.143(2) HAS EXPIRED, THE SAME CONSTITUTES A NON -ABATED ASSESSMENT WITHIN THE MEANING OF THE PROVISIONS OF THE 2 ND PROVISO TO SECTION 153A OF THE ACT. THE DECISIONS IN THE CASE OF O M SHAKTI AGENCIES PVT. LTD. 66 TAXMANN.COM 287 (CHENNAI) AND IN THE CASE OF Y AMINI AGARWAL 83 TAXMANN.COM 209 (KOLKATA) ARE RELEVANT IN THIS REGARD. THEREFORE, IN 21 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY OUR VIEW, THE ASSESSMENT CONSTITUTES A NON-ABATED A SSESSMENT AND CONSEQUENTLY, THE ADDITIONS, IF ANY, TO BE MADE UNDER THE ASSESSMENT U/S.143 R.W.S. 153A OF THE ACT HAVE TO BE DONE ONLY BAS ED ON THE INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH AND SEIZUR E ACTION U/S.132 OF THE ACT. THIS IS THE SETTLED LEGAL POSITION AS TH E JUDGMENTAL LAW STANDS TODAY. B. THE FATE OF ADDITIONS MADE IN THE NON-ABATED (CO MPLETED) ASSESSMENT QUA THE EXISTENCE OF ANY INCRIMINATING M ATERIAL LINKED TO THE ADDITIONAL INCOME OF RS.8.10 LAKHS DECLARED BY THE ASSE SSEE IN THE RETURN FILED IN RESPONSE TO SECTION 153A OF THE ACT. THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE DEPOSITED AMOUNTS IN BANK ACCOUNT NOS. 88 AND 275 MAINTAINED WITH THE SHREE SUVARNA SAHAKARI BANK LTD.. THESE ACCOUNTS ARE DECLARED IN THE FINANCIAL STATEMENTS ORIGINALLY MAINTAINED BY THE ASSESSEE. AO DID NOT DISPUTE THE SAME. THE CASH DEPOSITS AND THE INTEREST INCOME ACCRUE D TO THE ASSESSEE ON THE SAID DEPOSITS WAS NOT OFFERED TO TAX IN THE RETUR N OF INCOME FILED U/S.139 OF THE ACT. ON FINDING THE SAID OMISSION, THE ASSESS EE MADE USE OF THE NOTICE U/S.153A OF THE ACT AND OFFERED THE INTEREST IN COME OF RS.8,10,000/- TO TAX THROUGH THE RETURN FILED U/S.153A OF T HE ACT. AS SUCH, THE BANK PASS BOOK IS NOT THE BOOKS OF ACCOUNTS OF TH E ASSESSEE. OTHERWISE, THE REVENUE HAS NOT DISCOVERED ANY INCRIMINATI NG INFORMATION DIRECTLY OR INDIRECTLY LINKED TO THE SAID RS.8,10,000/-. AS SUCH, THERE IS REFERENCE TO THE TRANSACTIONS IN THE QUESTIONS AND ANSW ERS IN THE STATEMENTS TOO, RECORDED DURING THE SEARCH AND SEIZURE PROCEEDINGS. IT IS PURELY THE DECISION OF THE ASSESSEE TO OFFER THE SAID INCO ME VOLUNTARILY TO COME CLEAN ON THE ISSUE OF UNDISCLOSED INCOME FOR THE ASS ESSMENT YEARS. FOR ALL THESE ARGUMENTS, LD. COUNSEL FOR THE ASSESSEE RELIE D ON THE BINDING 22 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY JUDGMENT IN THE CASE OF MURLI AGRO PRODUCTS REPORTED IN 49 TAXDMANN.COM 173, M/S CONTINENTAL WAREHOUSING CORPORATION REPORTED IN 374 ITR 645 (BOMBAY) AND M/S ALL CARGO GLOBAL LOGISTICS LTD. REPORTED IN 137 ITD 287 ETC. FURTHER, AS PER THE LD. COUNSEL, THE TAXATION OF SUCH IN COME OF RS.8,10,000/- WHICH CONSTITUTES SUPERFLUOUS ONE U/S.153A O F THE ACT, THE SAME CONSTITUTES TAXATION OF INCOME WITHOUT ANY LEGAL BASIS AND THEREFORE, THE PENALTY RELATABLE TO SUCH INCOME HAS NO LEGAL STAND TO SURVIVE. WE HAVE SO FAR DISCUSSED THE FACTS RELATING TO THE ARGU MENTS RELATING TO (1) NON-ABATED ASSESSMENT QUA NO INCRIMINATING MATERIAL AND (2) SUPERFLUOUS INCOME DOES NOT ATTRACT LEVY OF PENALTY. AFTER HEARING BOTH THE PARTIES ON THIS ISSUE OF INTEREST INCOME, WE ARE OF THE OPIN ION THAT THE ASSESSMENT FOR THE A.Y. 2013-14 CERTAINLY CONSTITUTES A NON-ABATED ASSESSMENT AND THERE ARE NO TWO VIEWS ON THIS ISSUE. W E HAVE NO DOUBT ON THIS ASPECT. HAVING HELD SO, THE TAXATION INCOME OF RS.8,10 ,000/- IS NOT ATTRIBUTABLE TO THE ANY PARTICULAR MATERIAL INFORMATION FOUND DURING THE SEARCH ACTION. FURTHER, WE FIND MERE HAPPENING OF THE SEA RCH ACTION DOES NOT IMPLY DISCOVERY OF ANY INCRIMINATING MATERIAL OR INFORMATIO N ON THIS INCOME OF RS.8,10,000/-. THESE ARE THE PENALTY PROCEEDINGS AND THEY ARE TO BE FINALISED INDEPENDENT OF THE ASSESSMENT PROCEEDINGS. THUS, LEGALLY SPEAKING, THE ADDITION OF RS.8,10,000/- IS NOT OTHE RWISE SUSTAINABLE IN THIS NON-ABATED ASSESSMENT FOR A.Y. 2003-04 BUT FOR THE CONCESSIONS MADE BY THE ASSESSEE. CONSIDERING THE OTHERWISE UNSUSTAINABLE NATURE OF THE ADDITION, WE ARE OF THE OPINION, THE PENALTY IS NOT SUSTAINABLE FOR THIS ASSESSMENT YEAR ON THE ADDITION OF RS.8,10,000/-. ACCORDINGLY, RELEVANT ARGUMENTS OF THE ASSESSEES COUNSEL ARE ALLOWED. 23 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY C. AMBIGUITY LINKED TO THE LIMBS OF EXPLANATION 5A / CLAUSE (C) OF SECTION 271(1) OF ACT & FOR ALL AYS UPTO 2008-09 : FURTHER, ON THE ISSUE RELATING TO ALLEGATION OF AMBIGUITY IN THE MIND OF THE AO, WE EXAMINED THE FACTS FROM THE ASSESSMENT AND PENALTY ORDERS OF THE AO. FURTHER, FROM THE ASSESSMENT ORDER, WE FIND THE AO INITIA TED THE PENALTY IN THE A.Y. 2003-04 STATING THE FOLLOWING IN PARA 6 O F THE ASSESSMENT ORDER : EXTRACTS FROM THE ASSESSMENT ORDER : (PARA 6) 6. . . . .THE ASSESSEE HAD CONCEALED PARTICULARS OF THIS INCOME IN THE ORIGINAL RETURN, PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT ARE INITIATED. EXTRACTS FROM PENALTY ORDER : (PARA NOS. 16, 17 & 18) : 16. EVEN UNDER THESE CIRCUMSTANCES THE ASSESSEE CL AIMS THAT THERE IS NO CONCEALMENT ON HIS PART AND PENALTY U/S.271(1)(C) C ANNOT BE LEVIED IN HIS CASE. IN CASE PENALTY U/S.271(1)(C) CANNOT BE LEVI ED, PENALTY U/S. 271(1)(C) MAY NOT BE LEVIABLE IN ANY OTHER CASE. THIS I THIN K MAY NOT BE INTENTION OF LEGISLATURE. INTENTION OF LEGISLATURE IN THIS REGA RD IS CLEAR FROM EXPLANATION (5A) TO SECTION 271(1)(C). 17. FROM THE FACTS OF THE CASE BROUGHT OUT ABOVE IS A FITTEST CASE FOR LEVY OF PENALTY U/S. 271(1)(C). UNDER THESE CIRCUMSTANCES, I TREAT THE ASSESSEE IN DEFAULT U/S. 271(1)(C) OF THE INCOME TAX ACT. 18. . . . . . . . BESIDES THIS, THE CONCEALMENT AP PEARS DELIBERATE. THEREFORE, IT IS NOT AT ALL A FIT CASE FOR LEVY OF MINIMUM PEN ALTY. THE FACTS OF THE CASE CALLS FOR A STIFFER PENALTY THAN THE MINIMUM SPECIF IED IN THE ACT. TAKING INTO CONSIDERATION THE FACTS BROUGHT OUT ABOVE AND THE S ERIOUSNESS OF THE OFFENCE AS NARRATED ABOVE, I AM OF THE VIEW THAT LEVY OF PE NALTY @150% OF THE TAX SOUGHT TO BE EVADED MAY BE PROPER AND JUST. ACCORD INGLY, I LEVY A PENALTY OF RS.3,60,000/- WHICH IS @150 OF TAX SOUGHT TO HAVE B EEN EVADED WHICH I FEEL WOULD MEET THE ENDS OF JUSTICE. FOR THE SAKE OF COMPLETENESS OF THIS COMPOSITE ORDER FOR A.Y. 2003-04 TO 2008-09, WE COMPILED IN TABULAR FORM HERE THE AMBIGUITY LINKED TO THE QUALITY OF SATISFACTION FOR ALL THE SIX ASSESSMENT YEARS : 24 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY A.Y. ASSESSMENT ORDER PENALTY ORDER 2003-04 AS THE ASSESSEE HAD CONCEALED PARTICULARS OF THIS INCOME IN THE ORIGINAL RETURN, PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT ARE INITIATED 16. EVEN UNDER THESE CIRCUMSTANCES ........ IN CASE PENALTY U/S.271(1)(C) CANNOT BE LEVIED IN THIS CASE , PENALTY U/S.271(1)(C) MAY NOT BE LEVIABLE IN ANY OT HER CASE. THIS I THINK MAY NOT BE INTENTION OF L EGISLATURE. INTENTION OF LEGISLATURE IN THIS REGARD IS CLEAR FR OM EXPLANATION (5A) TO SECTION 271(1)(C). 17. FROM THE FACTS OF THE CASE BROUGHT OUT ABOVE IS A FITTEST CASE FOR LEVY OF PENALTY U/S.271(1)(C). UNDER THESE CIRCUMSTANCES, I TREAT THE ASSESSEE IN DEFAUL T U/S.271(1)(C) OF THE INCOME TAX ACT 18. . . . . . . . .BESIDES THIS, THE CONCEALMENT AP PEARS DELIBERATE. THEREFORE, IT IS NOT AT ALL A FIT CASE FOR LEVY OF MINIMUM PENALTY.. . . . . . . . . 2004-05 THE ASSESSEE HAS SHOWN THIS INCOME AS ADDITIONAL INCOME IN THE RETURNS FILED U/S.153A. AS THE ASSESSEE HAD CONCEALED PARTICULARS OF THIS INCOME IN THE ORIGINAL RETURN, PENALTY PROCEEDINGS U/S.271(1) OF THE INCOME TAX ACT ARE INITIATED 14. . . . . . HOWEVER, THE FACT THAT THERE WAS A DELIBERATE CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME ON THE PART O F THE ASSESSEE IS APPARENT. PARA 15 DO- PARA 16 DO- PARA 17 DO- 2005-06 AS THE ASSESSEE HAD CONCEALED PARTICULARS OF THIS INCOME IN THE ORIGINAL RETURN, PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT ARE INITIATED PARA 16 DO- PARA 17 DO- PARA 18 DO- 2006-07 THE ASSESSEE HAS SHOWN THIS INCOME AS ADDITIONAL INCOME IN THE RETURNS FILED U/S.153A. AS THE ASSESSEE HAD CONCEALED PARTICULARS OF THIS INCOME IN THE ORIGINAL RETURN, PENALTY PROCEEDINGS U/S.271(1) OF THE INCOME TAX ACT ARE INITIATED PARA 16 DO- PARA 17 DO- PARA 18 DO- 2007-08 - DO - PARA 16 TO PARA 18 2008-09 AS THE ASSESSEE HAD CONCEALED PARTICULARS OF THIS INCOME IN THE ORIGINAL RETURN, PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT ARE INITIATED. PARA 13. AS FAR AS THE CONTENTION THAT NO PENALTY U/S.271(1)(C) CAN BE LEVIED AS THE ASSESSEE HAS NOT FILED ORIGINAL RETURN OF INCOME IS CONCERNED, THE S AME CANNOT BE ACCEPTED IN VIEW OF EXPLANATION (5A) TO SECTION 271(1)(C) OF I.T. ACT, 1961. ........ INTENTION OF LEGISLATURE IN THIS REGARD I S CLEAR FROM EXPLANATION (5A) TO SECTION 271(1)(C). PARA 14. FROM THE FACTS OF THE CASE BROUGHT OUT AB OVE IS A FITTEST CASE FOR LEVY OF PENALTY U/S.271(1)(C) . . . . . . . PARA 15. UNDER THESE CIRCUMSTANCES, I TREAT THE ASSESSEE IN DEFAULT U/S.271(1)(C) OF THE INCOME TAX ACT. . . . . . . 25 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY FROM THE ABOVE, THE AMBIGUITY IN THE MIND OF THE AO AT THE TIME OF INITIATION WAS ALLEGED BY THE ASSESSEE. ACCORDING TO ASSESS EE, THE FOLLOWING DEFICIENCIES LEADING TO THE CREATION OF AMBIGUITY IN THE MIND O F AO ARE ENLIST,- (A) IN THE ASSESSMENT ORDER, AO DID NOT REFER TO A NY EXPLANATION 5A OF THE TWO FINANCE ACTS I.E. PRE OR POST AMENDMENT. HE MERELY REFERRED TO THE CONCEALED PARTICULARS OF THIS INCOME IN THE ORIGINA L RETURN. THIS REFERENCE IS MADE IN GENERAL CONTEXT AND NOT IN THE CONT EXT OF CLAUSE (C) OR EXPLANATION 5A OF SECTION 271(1) OF THE ACT. (B) AO MADE RE FERENCE TO ORIGINAL RETURN. ON CONSIDERING THE ABOVE LIST OF ITEMS, WE FIND THAT THE S AME CONSTITUTES THE OUTCOME OF THE MICROSCOPIC AND HYPER TE CHNICAL APPROACH OF THE ASSESSEE. IN OUR VIEW, THE AO RIGHTLY USED THE LEGAL EXPRESSI ONS SUCH AS CONCEALMENT OF PARTICULARS OF INCOME WHICH REFLECTS THE INTENTION OF THE AO AND THE SAME IS WITH REFERENCE TO THE LIMB RELATING TO TH E CONCEALMENT OF PARTICULARS OF INCOME. WE ALSO FIND FROM THE AO AND THE PO THAT THE AO EVENTUALLY LEVIED PENALTY FOR THE SAME LIMB OF CONCEALMENT O F PARTICULARS OF INCOME. THIS IS THE PATTERN IN ALL THE NINE ASSESSMENT YEAR S UNDER CONSIDERATION. THEREFORE, IT IS A SETTLED LEGAL PROPOSITION TH AT THE ALLEGATION OF AMBIGUITY IS UNSUSTAINABLE ON THE STRENGTH OF THE AFOREM ENTIONED FACTS. THEREFORE, WE DISMISS THE ARGUMENTS OF THE ASSESSEES AR . ACCORDINGLY, THE GROUNDS/ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED . D. PRE-AMENDED EXPLANATION 5A VS. POST-AMENDED EXPL ANATION 5A TO SECTION 271(1) OF THE ACT SPECIFYING THE LIMB AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS AMBIGUITY IN TH E MIND OF THE AO. WE SHALL NOW TAKE UP THE ARGUMENTS RELATING TO THE APP LICABILITY OF AMENDED EXPLANATION 5A TO SECTION 271(1) OF THE ACT WITH RESTROSPECTIVITY. RELEVANT FACTS INCLUDE THAT (1) THE ASSESSMENT YEARS INVO LVED ARE 26 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY A.YRS.2003-04 TO 2008-09 (2) DATE OF SEARCH IS 11-02-200 9. ALL THE ORIGINAL RETURNS WERE FILED BEFORE THE DUE DATE SPECIFIED U/S.139 OF THE ACT AND ALSO BEFORE THE DATE OF SEARCH. RETURNS U/S 153A OF THE AC T WERE FILED ON 30-09- 2010 IN RESPONSE TO NOTICES U/S 153A DATED 27-07-2009. BACKGROUND OF EXPLANATION 5A: THE EXPLANATION 5A TO SECTION 271(1) OF THE ACT WAS ORIGINALLY INSERTED BY THE FINANCE ACT, 200 7 W.E.F. 01-06- 2007. AS PER THE SAME, THE NON-FILING OF RETURN OF INCOME BEFORE THE DATE OF SEARCH, ATTRACTS THE PENALTY FOR CONCEALMENT OF INCOME. AS PER THE LANGUAGE USED THEREIN, THE MERE FILING OF RETURN OF INCOME IN TIME (WITH OR WITHOUT DECLARING THE DISCOVERED ITEM OF INCOME DURING SEAR CH) PROVIDES IMMUNITY FROM THE SAID PENALTY. THE SAID EXPLANATION 5A WAS AMENDED W.R.E.F. 01-06-2007 BY THE FINANCE (NO.2) ACT, 2009. THEREFORE, AS PER THE AMENDED EX PLANATION 5A TO SECTION 271(1) OF THE ACT, MERE FILING THE RETURN OF INCOME DO ES NOT PROVIDE IMMUNITY FROM PENALTY UNLESS THE ITEM OF INCOME DISCOVERED D URING THE SEARCH ACTION IS DULY DECLARED IN THE SAID RETURN OF INCOM E. ACCORDINGLY, WHEN THE SAME IS NOT DECLARED IN THE RETURN OF INCOME FILED U/S.139 OF THE ACT FILED BEFORE THE SEARCH, THE SAID ITEM OF INCOME SHALL BE DEEMED EITHER AS THE CONCEALMENT OF PARTICULARS OF INCOME OR THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME, AS THE CASE MAY BE. THE PRE AND POST AMENDED EXPLANATION 5A CONTAINS REFERENCE TO BOTH THE LIMBS C OMMON TO THE LIMBS SPECIFIED IN CLAUSE (C) OF SECTION 271(1) OF THE ACT. ASSESSEES CASE PRE-AMENDED EXPLANATION APPLIES : JUSTIFYING THE APPLICATION OF PRE-AMENDED EXPLANATION 5A TO HIS CASE, THE ASSESSEE CLAIMS THAT THE PROVISIONS OF PRE -AMENDED EXPLANATION 5A TO 27 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY SECTION 271(1) OF THE ACT APPLY TO THE FACTS OF THE CASE AS THE SAME WAS EXISTING (1) AT THE TIME OF FILING THE RETURN OF INCOME U/S.139 OF THE ACT; (2) THE AMENDED EXPLANATION 5A BECAME LAW ONLY AFTER THE INIT IATION OF SEARCH ON 11-2-2009; (3) THE RETURN OF INCOME FILED U/S.153A OF TH E ACT RELATES TO THE SEARCH HELD ON 11-02-2009, I.E. SEARCH INITIATED IN THE PERIOD POST 01- 06-2007 (3) AMENDED EXPLANATION 5A WITH RETROSPECTIVE APP LICATION TO THIS AY ADDS MORE TROUBLES TO THE TAXPAYER AND THE SAME A GAINST THE PRINCIPLES OF NATURAL JUSTICE ON ONE SIDE AND THE PROVISIONS OF THE A RTICLE 20 OF THE CONSTITUTION OF INDIA AS WELL AS THE OTHER BINDING JUDGMENTS IN FORCE. REVENUES CASE: PER CONTRA, LD DR SUBMITTED THAT THE RETROSPECTIVE AMENDMENT TO EXPLANATION 5A TO SECTION 271(1) OF THE AC T IS CLARIFICATORY. WITHOUT CONCEDING TO THE FACT OF AOS FAILURE TO REFER TO THE EXPLANATION 5A, AMENDED EXPLANATION, LIMBS ETC IN THE AO, LD. DR FOR THE REV ENUE SUBMITTED THAT THE PENALTY LEVIED IN ALL THE ASSESSMENT YE ARS UNDER CONSIDERATION ARE REQUIRED TO BE CONFIRMED. IN THIS REGA RD, LD. DR SUBMITTED THAT, ON SIMILAR FACTS, THE PUNE BENCH CONFIRMED T HE PENALTY IN THE CASE OF M/S CHHORIYA LAND DEVELOPERS AND CONSTRU CTION COMPANY (SUPRA). 12. IN THE PARAGRAPHS ABOVE, WE DISCUSSED THE FACTS, ARG UMENTS AND THE COUNTER ARGUMENTS AND VIEWS OF THE RIVAL PARTIES, VARIOUS CASE LAWS ETC ON THE ISSUE OF RETROSPECTIVE APPLICATION OF THE AMENDED EXP LANATION 5A. WE SHALL GIVE OUR DECISION ON THE ISSUES RAISED BY THE PARTIES. (1) ON THE RETROSPECTIVE LAW OF EXPLANATION 5A: THE ASSESSEE RELIES ON ORDERS OF THE TRIBUNAL IN THE CASE OF NUKALA RAMAKRISHNA (SUPRA) WHERE DHANEKULA RAMA RAO CASE, SUPRA APART FROM MANY OTHERS AGAINST THE RETROSPECTIVE INTERPRETATION. PER CONTRA, LD. DR RELY ON THE COORDINATE 28 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY BENCH DECISION IN THE CASE OF CHHORIYA LAND DEVELOPERS A ND CONSTRUCTION COMPANY (SUPRA) WHICH IS FAVOUR OF THE RETROSPECTIVE APP LICATION OF THE AMENDED EXPLANATION 5A OF THE ACT. THE OPERATIONAL PARAS FROM THE ORDER OF THE TRIBUNAL IN CA SE OF NUKALA RAMAKRISHNA (SUPRA) READ AS UNDER : 16. . . . . . .A SIMILAR ISSUE HAS BEEN COME UP BE FORE THIS BENCH, IN THE CASE OF DHANEKULA RAMA RAO VS. DCIT CENTRAL CIRCLE, IN ITA NO.665 TO 669 OF 2013. THE COORDINATE BENCH OF THIS TRIBUNAL, AFTER CONSI DERING THE PROVISIONS OF SECTION 271 (1)(C) OF THE ACT, EXPLANATION 5A PR IOR TO THE AMENDMENT AND AMENDED PROVISIONS EXPLANATION 5A BY THE FINANCE AC T, 2009, HELD THAT THE PROVISIONS OF EXPLANATION 5A AS IT STOOD AS ON THE DATE OF SEARCH OR FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S 1 53A OF THE ACT I S APPLICABLE FOR LEVY OF PENALTY, . . . . . . . . . . . . . 13. CONSIDERING ALL THESE ASPECTS AND THE FACT THAT THE ASSESSEE HAS A GOOD CASE ON MERITS AND THAT THE PROVISIONS OF EXPLANATION 5A ARE NOT APPLICABLE ON THE DATE OF FILING OF THE ORIGINAL RE TURN, WE ARE OF THE OPINION THAT EXPLANATION 5A AS IT STOOD ON THE DATE OF FILING THE RETURN IN RESPONSE TO NOTICE UNDER S.153A BY THE ASSESSEE WOULD NOT COVER THE CASE OF THE ASSESSEE, SO AS TO WARRANT LEVY PENALTY UNDER S.271(1)(C). SINCE THE ASSESSEE BONAFIDELY DECLARED THE ADDITIONAL INCOME IN THE COURSE OF SEARCH AND FILED RETURN AND PAID TAXES THEREON, WE ARE OF THE OPINION THAT PENALTY LEVIED ON SUCH AMOUNT CANNOT B E SUSTAINED. ACCORDINGLY, WE ALLOW THE APPEAL OF THE ASSESSEE AN D DELETE THE PENALTY OF RS.12,84,177 SUSTAINED BY THE CIT(A).'.......... 17.. . . . . . . . . THEREFORE, WE ARE OF THE VIEW THAT THE AMENDED PROVISIONS OF EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT IS N OT APPLICABLE IN THE INSTANT CASE. ACCORDINGLY, WE DIRECT THE A.O. TO DELETE TH E PENALTY LEVIED U/S.271(1)(C) OF THE ACT, FOR THE ASSESSMENT YEAR 2 005-06, 2006-07 & 2007- 08. THE OPERATIONAL PARA NO. 10 IN FAVOUR OF TH E REVENUE FROM THE DECISION OF THE TRIBUNAL IN THE CASE OF CHHORIYA LAND DEVELOPERS AND CONSTRUCTION COMPANY (SUPRA) IS EXTRACTED AS UNDER:- 10. . . . . . . . . . . . . IN OTHER WORDS, EXPLA NATION 5A IS AVAILABLE TO THE ASSESSING OFFICER IN ALL CASES, WHERE A SEARCH HAS BEEN INITIATED U/S 132 OF THE ACT ON OR AFTER THE 1ST DAY OF JUNE, 2007, AND IT IS WRONG ON THE PART OF THE RESPONDENT-ASSESSEE TO CANVASS THAT IT IS EXPLA NATION 5 AND NOT EXPLANATION 5A WHICH WOULD APPLY TO YEARS FOR WHICH ASSESSEE HAS FILED RETURNS U/S 139 OF THE ACT PRIOR TO THE SEARCH AND BEFORE 01.06.2007. WE HAVE ALSO PERUSED THE JUDGMENT OF THE HON'BLE SUPRE ME COURT IN THE CASE OF BRIJ MOHAN (SUPRA) WHICH HAS BEEN RELIED UPON BY TH E ASSESSEE FOR THE PROPOSITION THAT FOR LEVYING PENALTY FOR CONCEALMEN T, IT IS THE LAW IN FORCE ON THE DATE OF FILING OF RETURN U/S 139 OF THE ACT, WH ICH IS RELEVANT AND NOT 29 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY EXPLANATION 5A, WHICH WAS NOT ON THE STATUTE AS ON THE DATE OF FILING OF RETURN U/S 139 OF THE ACT BEFORE THE DATE OF SEARCH.. . . . . . . . . . . . . . . . . . . . . . . . . .THE PLEA OF THE ASSESSEE WAS THAT THE PENALTY WAS LIABLE TO BE CONSIDERED ON THE BASIS OF THE LAW AS IT STOOD DURING THE ASSESSM ENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE INCOME WAS EARNED, WHICH WAS PRIOR TO COMING INTO FORCE OF THE AMENDED CLAUSE (III) TO SECTION 2 71(1) INSERTED BY THE FINANCE ACT, 1968. . . . . . . . . . . . . . . . . . . . IN OUR CONSIDERED OPINION, THE AFORESAID JUDGMENT OF THE HON'BLE SUPREME COURT CANNOT BE STR AIGHTAWAY APPLIED IN THE PRESENT CASE TO SAY THAT THE LAW AS ON THE DATE OF THE FILING OF RETURN U/S 139 OF THE ACT BEFORE THE DATE OF SEARCH IS TO BE A PPLIED. THE UNAMBIGUOUS PHRASEOLOGY OF THE EXPLANATION 5A, WHICH WE HAVE AL READY ELUCIDATED EARLIER, CLEARLY MAKES OUT THAT THE LEGISLATIVE INT ENT DEPICTS THAT EXPLANATION 5A IS APPLICABLE WHERE A SEARCH HAS BEE N INITIATED U/S 132 OF THE ACT ON OR AFTER 01.06.2007 AND IT COVERS (A) ANY PRECIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BE FORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED; AND, (B) ANY PRE VIOUS YEAR WHOSE DUE DATE OF FILING OF THE RETURN OF INCOME HAS EXPIRED BUT ASSESSEE HAS NOT FILED THE RETURN TILL THE DATE OF SEARCH, IF OTHER CONDIT IONS PRESCRIBED THEREIN ARE SATISFIED. THEREFORE, THE AFORESAID PLEA OF THE ASS ESSEE, IN OUR VIEW, DOES NOT MERIT INDULGENCE AND IS REJECTED ACCORDINGLY. (2). TWO VIEWS ON RETROSPECTIVITY OF EXPLANATION 5A : WE HAVE CONSIDERED BOTH VIEWS ON THE ISSUE AND ANALYSES THE RE LEVANT FACTS WHICH LED THE TRIBUNAL BENCHES TO THE SAID VIEWS. WHILE THE PUNE BENCH TOOK THE STRICT INTERPRETATION OF AMENDED EXPLANATION 5A, PER CONTRA, THE VIZAG BENCH TOOK THE LINE IN FAVOUR OF LIBERAL INTERPRETATION OF THE SAID PROVISIONS, I.E. IN FAVOUR OF PROSPECTIVE APPLICATION OF THE AMENDED EXPLANATION 5A OF THE ACT WITH CONDITIONS ATTACHED. THEREFORE, IN OUR VIEW, IT IS NOT C ORRECT TO SAY IF THERE EXISTS DIVERGENT VIEW ON RETROSPECTIVITY ON COMMO N FACTS. THE CONDITIONS SET BY THE TRIBUNAL - VIZAG BENCH INCLUDE THE DATE OF SEARCH OR DATE OF FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S 1 53A OF THE ACT. IF THE DATE OF BOTH EVENTS OF SEARCH AND FILING OF RETURN U/ S.153A OF THE ACT ARE PRIOR TO THE DATE OF AMENDMENT TO EXPLANATION 5A T O SECTION 271(1)(C) OF THE ACT THE AMENDED PROVISIONS APPLY PROSPECTIVELY ONL Y. IN FACT, TRIBUNAL REITERATED THE POSITION THAT DATE OF FILING OF RETURNS U/S 1 53A OF THE ACT BECOMES A RELEVANT EVENT AS THE CONCEALMENT OF INCOME IS ALWAYS WITH REFERENCE TO THE RETURNS OF INCOME. FROM THAT POINT OF VIE W, LINKED TO THE FACTS, IN OUR VIEW, IT IS NOT THE CASE EXISTENCE OF DIVERGENT VIEWS. THEREFORE, 30 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY THE ARGUMENTS OF THE LD AR FOR THE ASSESSEE RELYING ON THE JUDGMENTS IN CASES OF VEGETABLE PRODUCTS (SUPRA) AND RELIANCE COMMUNICATION LTD (SUPRA) ARE UNSUSTAINABLE. IN THE INSTANT CASE, THE ASSES SEE FILED THE RETURNS IN RESPONSE TO NOTICE U/S.153A OF THE ACT MUCH AFTER THE AMENDMENT BY THE FINANCE ACT (NO.2), 2009 IS BROUGHT INTO THE STATUTE. HENCE, THE DECISION OF THE TRIBUNAL VIZAG BENCH DOES NOT HELP THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT DECISION OF THE COORDIN ATE BENCH OF PUNE BENCH OF THE TRIBUNAL BECOMES BINDING ON US AND THE SAME IN FAVOUR OF RETROSPECTIVE INTERPRETATION. RELEVANT PARAGRAPHS ARE ALREADY EXTRACTED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. ACCORDINGLY, WE H OLD THE LEGAL ISSUES RAISED IN THE GROUNDS/ADDITIONAL GROUNDS HAVE TO B E DECIDED AGAINST THE ASSESSEE AND THEY STAND DISMISSED . MERITS LINKED GROUNDS FOR AY 2003-04 13. WE SHALL NOW TAKE UP THE GROUNDS PERTAINING TO THE MERITS OF LEVY OF PENALTY ON THE ADDITIONAL INCOME OF RS 8.10 LAKHS RELATING TO BANK DEPOSITS AND INTEREST ACCRUED THEREON S UO MOTTO OFFERED BY THE ASSESSEE IN THE AY 2003-04. IN THE PRECEDING PARAGRAPHS OF THIS ORDER, ON THIS ISSU E, WE HAVE CONCLUDED THAT IT IS CASE OF NON ABATED ASSESSMENT AN D ADDITION IF ANY MADE BY THE AO ON ACCOUNT OF DEPOSIT AND INTEREST BECO MES UNSUSTAINABLE AS THEY ARE NEVER TO BE DONE ON THE STRENGTH OF THE INCRIMINATING MATERIAL. FURTHER WE HAVE HELD THAT THE SAID SUM OF RS 8.10 LAKHS CONSTITUTES OFFER OF INCOME USING THE OPPORTUNITY OF PROCEEDINGS U/S 153A OF T HE ACT DESPITE NON- DISCOVERY OF ANY INCRIMINATING MATERIALS DURING THE SEA RCH ACTION ON 31 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY THE ASSESSEE. FROM THAT POINT OF VIEW, THE SAME ADDITIONA L INCOME IF AO WERE TO MAKE IN ASSESSMENT, THE SAME NEEDS TO BE DELET ED. CONSEQUENTLY, THE PENALTY LEVIED ON THE SAID SUM OF RS.8,10,000/- BY THE AO BECOMES UNSUSTAINABLE TOO. HENCE, ON MERITS TOO, THE PENALTY REQU IRES TO BE DELETED . IN THE RESULT, THE APPEAL OF ASSESSEE FOR A.Y. 2003-04 IS P ARTLY ALLOWED. WE SHALL NOW TAKE UP THE LEGAL AND MERITS LINKED ISSUES PER TAINING TO AY 2004-05 ITA NO. 13/PUN/2013 - A.YR. 2004-05 SRI SANJAY D. KAKADE 14. ASSESSEE RAISED VARIOUS GROUNDS IN APPEAL MEMO. FURTH ER, ASSESSEE VARIOUS LEGAL ADDITIONAL GROUNDS IN THREE INSTALMENTS. BOTH THE PARTIES SUBMITTED THAT THEY ARE SIMILAR TO THE ONES RELATABLE TO AY 2003-04. THIS APPEAL EMANATES FROM THE NON-ABATED ASSESSMENT. IT IS THEIR SUBMISSION THAT THE FACTS BEING SIMILAR, THE ARGUMENTS ARE COMMONLY APPLICABLE TO THIS AY TOO. ON CONSIDERING THE SAME, (1) LEGAL ISSUES (I.E. AMBIGUITY ISSUES, SATISFACTION ISSUE AND THE RETROSPECTIVITY OF THE AMENDED EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT), WE FIND THE CONCLUSIONS DRAWN BY US APPLY TO THIS A.Y. 2004-05 WITH EQUAL FORCE. WE DIRECT THE AO ACCO RDINGLY. IN EFFECT, NONE OF THE ARGUMENTS OF LD. COUNSEL ON THESE LEGAL ISSUES SURVIVES. ACCORDINGLY, RELEVANT ADDITIONAL GROUNDS RELATING TO THE LEG AL ISSUES STAND DISMISSED . 32 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY (2) ON THE MERITS LINKED ISSUES, WE FIND PENALTY IS LEVIED ON T WO ADDITIONS, I.E. THE ADDITION OF RS.45,27,817/- ON ACCOUNT OF B ANK DEPOSITS AND THE INTEREST THEREON AND THE NEGATIVE CASH BALANCE OF RS.25 LAKHS. REGARDING THE FIRST ADDITION AS HELD BY US, IT IS A CASE OF A DDITIONAL INCOME OFFERED SUO MOTU BY THE ASSESSEE IN THE RETURN OF INCOME WITHOUT SU PPORT OF ANY INCRIMINATING MATERIAL. THEREFORE, LIKE IN THE A.Y. 2003-04 , WE FIND FOR THE SAME REASONS NARRATED IN THE RELEVANT APPEAL, WE DIRECT THE AO TO DELETE THE PENALTY. ASSESSEE THUS GETS RELIEF. REGARDING THE PENALTY LEVIED ON THE SAID SUM OF RS.25 LAKH S OF ADDITIONAL INCOME ON ACCOUNT OF NEGATIVE CASH BALANCE, WE FIND THAT THE SOURCE OF THIS DISCREPANCY IS FAULTY CASH BOOK SEIZED BY T HE DEPARTMENT DURING THE SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT. THEREFORE, THE ADDITION OF RS.25 LAKHS AND OTHER SIMILAR ADDITIONAL INCOME IS ATTRIBUTABLE UNDISPUTEDLY TO THE DISCOVERIES OF THE SEARCH ACTION. TH EREFORE, WE HOLD THE AO IS JUSTIFIED IN LEVYING THE PENALTY U/S.271(1)(C) R.W. EXPLANAT ION 5A OF THE ACT. THE JUDGMENT OF SUPREME COURT IN THE CASE OF PRASANNA DU GAR VS. CIT SUPPORTS OUR VIEW. ACCORDINGLY, RELEVANT PENALTY IS CONFIRMED. AO IS DIRECTED TO WORK OUT THE PENALTY AS PER THE DISCUSSION ABOVE. ACCORDINGLY, RELEVANT GROUNDS ON MERITS ARE PARTLY ALLOWED AND THE A DDITIONAL GROUND ON LEGAL ISSUES ARE DISMISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS.14 TO 17/PUN/2013 - A.YRS. 2005-06 TO 2008- 09 SRI SANJAY D. KAKADE 15. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE ARE THE YEARS OF ABATED ASSESSMENTS AND THE ADDITIONS ARE ALLOWE D TO BE MADE WITH OR WITHOUT THE STRENGTH OF THE INCRIMINATING DOCUMENTS IN SUCH 33 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY ASSESSMENTS. FURTHER, LD. COUNSEL FOR THE ASSESSEE BROU GHT OUR ATTENTION TO THE GROUNDS FILED BY THE ASSESSEE FOR THE SAID ASSES SMENT YEARS AND COMPARED THE SAME WITH THAT OF THE GROUNDS/ADDITIONAL GR OUNDS RAISED FOR THE A.Y. 2003-04 AND MENTIONED THAT THE ADDITIONAL GROUND S ARE IDENTICAL ON LEGAL ISSUES . LEGAL ISSUES BEFORE US, ON THE LEGAL ISSUES RAISED IN THE SAID ADDITIONAL GROUNDS, BOTH THE PARTIES SUBMITTED THAT THE LEGAL ISSUES ARE SIMIL AR TO THE ONES RELATABLE TO AY 2003-04. IT IS THEIR SUBMISSION THAT THE FA CTS BEING BROADLY SIMILAR, THE ARGUMENTS ARE COMMONLY APPLICABLE TO THIS AY T OO. FURTHER, LD. COUNSEL SUBMITTED THAT THE CONCLUSION DRAWN BY THE TRIB UNAL FOR A.Y. 2003-04 APPLY TO THESE YEARS UNDER CONSIDERATION. ON HEARING THEM AND ALSO CONSIDERING THE COMMONALITY OF THE ISSUES, WE ARE OF TH E OPINION THAT OUR ADJUDICATION GIVEN IN THE PRECEDING PARAGRAPHS OF THIS ORDER FOR THE A.Y. 2003-04 BECOMES APPLICABLE TO THE A.YRS. 2005-06 TO 200 7-08 MUTATIS MUTANDIS. ACCORDINGLY, THE LEGAL AND ADDITIONAL GROUNDS GROUNDS RAIS ED BY THE ASSESSEE IN THE ABOVE ASSESSMENT YEARS ARE DISMISSED AS IN THE APPEAL FOR A.Y. 2003-04 AND 2004-05 ABOVE. MERIT LINKED ISSUES 16. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUMMARIZED THE ADDITIONS ON WHICH THE PENALTIES U/S.271(1)(C) OF THE ACT ARE LEVIED IN THE CASE OF SRI SANJAY D. KAKADE. THEY ARE EXTRACTED HERE AS UNDER : PENALTIES LEVIED IN THE CASE OF SRI SANJAY D. KAKA DE : SR. NO. PARTICULARS AY 2003-04 AY 2004-05 AY 2005-06 AY 2006-07 AY 2007-08 AY 2008-09 1 DEPOSITS IN BANKS 8,10,000 45,27,817 (INCLUDING INTEREST 38,317) 27,76,510 29,43,867 42,86,000 1,27,440 (INCLUDING INTEREST 19,540) 34 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY 2 NEGATIVE CASH - 25,00,000 2,44,00,000 7,20,00,000 5,36,00,000 - 3 SUPERVISION CHARGES - - - 7,17,000 - - 4 AMOUNT DISCLOSED AS NEGATIVE CASH IN M/S. KAKADE JEWELLERS (FIRM) - - - - - 5,00,000 THE AO LEVIED THE PENALTIES U/S.271(1)(C) OF THE ACT FOR ALL THE 6 ASSESSMENT YEARS IN THE CASE OF SRI SANJAY D. KAKADE FROM A.Y. 2003-04 TO 2008-09. DETAILS OF ADDITIONS ARE PROVIDED IN THE ABOVE TABLE. AS SEEN FRO M THE ABOVE TABLE, THERE ARE FOUR KINDS OF ADDITIONS MADE B Y THE AO IN THE ASSESSMENTS WHICH ATTRACTED PENALTY PROCEEDINGS WHICH IN CLUDES (1) THE ADDITION ON ACCOUNT OF DEPOSITS IN THE BANKS (2) ADDITION ON ACCOUNT OF NEGATIVE CASH (3) ADDITION ON ACCOUNT OF TRANSPORTATION C HARGES AND FINALLY (4) ADDITION ON ACCOUNT OF NEGATIVE CASH OF IN THE NAME OF FIR M, M/S. KAKADE JEWELLERS OWNED UP BY THE ASSESSEE INDIVIDUALLY. WE SHALL TAKE UP EACH OF THESE ADDITIONS IN THE FOLLOWING PARAGRAPHS. 17. REGARDING THE DEPOSITS IN THE BANKS, BACKGROUND DETA ILS WERE ALREADY DISCUSSED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. IN BRIEF, THE FACTS ARE THAT ASSESSEE OWNS DEPOSITS IN THE BANK ACCOUNTS AND THE SAME WERE NOT DETECTED BY THE DEPARTMENT DURING SEARCH ACTION ON TH E ASSESSEE. NO INCRIMINATING EVIDENCES WERE ALSO MADE OUT BY THE REVENUE . AS SUCH, NO SEIZED PAPER WAS REFERRED TO IN THE ORDERS OF THE ASSE SSMENT AS WELL AS THE PENALTY ORDERS. IN FILING RETURNS, IN RESPONSE TO NOTICE U /S.153A OF THE ACT, ASSESSEE MADE USE OF THE SAME, TO COME OUT CLEAN OF ALL T HE DISCREPANCIES IN THE ACCOUNTS, ASSESSEE CAME FORWARD AND SUO MOTU OFFERED THESE DEPOSITS ALONG WITH INTEREST IN THE BANKS FOR ALL THE 5 ASSESSMENT YEARS. THUS, IT IS THE CASE OF THE ASSESSEE BEFORE US BEFORE THE ASSESSEES VOLUNTAR Y DISCLOSURE OF INCOME THE REVENUE WOULD NOT HAVE ADDED THESE DEPOS ITS AS INCOME OF 35 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY THE ASSESSEE. TO THAT EXTENT, THE SAME DOES NOT CONS TITUTE CONCEALED INCOME ATTRACTING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT R.W. EXPLANATION 5A OF THE SAID SECTION. THUS, ON THE GROUND O F VOLUNTARY OFFERING, THE ASSESSEE DESIRES DELETION OF PENALTY ON THESE ADDITIONS. PER CONTRA, LD. DR FOR THE REVENUE SUBMITTED THAT THE D EPOSITS ARE FOUND IN THE BANK ACCOUNT OF THE ASSESSEE WHICH WERE OF COURSE DISCLOSED BANK ACCOUNTS. NEVERTHELESS, THIS INCOME IN ALL THE 5 YEAR S ARE ATTRIBUTABLE TO THE DISCOVERIES MADE BY THE DEPARTMENT DURING THE S EARCH AND SEIZURE ACTION. FROM THIS POINT OF VIEW, THE INCOME ON ACCOUNT OF D EPOSITS IN BANK AND INTEREST THEREON CONSTITUTES THE CONCEALED INCOME A ND THE PENALTY IS VALIDLY LEVIED ON THE SAME. HE ALSO RELIED ON VARIOUS DECIS IONS TO SUPPORT THE CONTENTION THAT IN CASES OF SEARCH AND SEIZURE ACTIO N, THERE IS VOLUNTARY OFFER OF INCOME (BROUGHT TO TAX U/S.153A OF THE ACT) AND ALL THE ADDITIONAL INCOME CONSTITUTES CONCLUDED INCOME ATTRACTING THE PEN AL PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 18. WE HEARD BOTH THE PARTIES ON THIS ISSUE AND LEVY OF P ENALTY ON THE INCOME BY WAY OF DEPOSITS IN THE BANK AND INTEREST THER EON AND FIND THAT THE ADDITIONS MADE IN ALL THE 5 ASSESSMENT YEARS FROM A.Y. 2003-04 TO 2008-09 REQUIRES TO BE DECIDED IN THE FOLLOWING LINES. SO FAR AS THE ADDITION FOR A.Y. 2003-04 (RS.8,10,000/-), A.Y. 20 04-05 (R.45,27,817 INCLUDING INTEREST SEGMENT OF RS.38,317), WE HAV E ALREADY HELD THAT THESE ARE THE CLOSED ASSESSMENTS (NON-ABATED ASSESSMENTS) AND THE ADDITIONS, IF ANY, HAS TO BE MADE STRICTLY BASED ON TH E INCRIMINATING EVIDENCES DISCOVERED DURING THE SEARCH AND SEIZURE ACTIO N. IN THE ABOVE PARAGRAPHS OF THIS ORDER, WE HAVE ALREADY HELD THAT THE ADDITIONS EVEN IF THE SAME ARE NOT OFFERED VOLUNTARILY BY THE ASSESSEE IN THE RETURN OF INCOME 36 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY U/S.153A OF THE ACT, AO WOULD NOT HAVE BEEN ALLOWED TO MA KE SUCH ADDITIONS IN THE NON-ABATED ASSESSMENTS WHEN THE ADDITIO NS ARE NOT PERMITTED TO BE ADDED IN THE ABSENCE OF ANY INCRIMINATING EVIDENCES. IN EFFECT, THE ADDITIONS WOULD NOT HAVE BEEN VALIDLY MADE AND APPROVED BY THE APPELLATE AUTHORITIES. FROM THIS POINT OF VIEW, THE PENALTIES WOULD NOT HAVE SUCCESSFULLY LEVIED. THEREFORE, THE PENALTIES LEVIED ON THESE INVALID ADDITIONS IN THE A.Y. 2003-04 AND 2004-05 REQUIRES TO BE DELETED. ACCORDINGLY, WE ORDER THE SAME AND DIRECT THE AO TO DE LETE THE PENALTY ON THE ADDITION ON ACCOUNT OF DEPOSITS IN BANK FOR THESE TWO ASSESSMENT YEARS. 19. NOW COMING TO THE OTHER ADDITIONS OF THE SAME NATURE IN THE A.YRS. 2005-06 TO 2007-08, WE HAVE CONSIDERED THE ASSESSEES STAND THAT THESE ARE THE VOLUNTARY OFFER OF INCOME SUO MOTU OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A OF THE ACT. WE HAVE ALSO CONSIDERED THE FACT OF THE REVENUE THAT IN SUCH MAT TERS THERE IS NOTHING VOLUNTARY ABOUT THE DISCLOSURE OF INCOME. FOR THIS PROPOSITION, WE TAKE STRENGTH FROM THE JUDGMENT OF SUPREME COURT IN TH E CASE OF PRASANNA DUGAR VS. CIT (2016) 70 TAXMANN.COM 175 (SC) WHICH IS RELEV ANT FOR THE LEGAL PROPOSITION THAT, WHEN THE ASSESSEE VOLUNTARILY ISSUE D A STATEMENT OFFERING THE ADDITIONAL INCOME IN THE RETURN OF INCOME FILED U/S .153A OF THE ACT, THE PENALTY LEVIED IS VALID AND SUSTAINABLE. AS PER TH E SAID SUPREME COURT JUDGMENT, CLAUSE (A) AND (B) OF EXPLANATION 5A TO SEC TION 271(1) WAS EXPLAINED AND HELD THAT THE EXPRESSION VOLUNTARY IS IN T HE CONTEXT OF THE STATEMENT MADE BY THE ASSESSEE WHICH CONVEYS THE ABS ENCE OF EXTORTION FROM HIM BY APPLYING FORCE. IT IS IN THAT CONTEXT THE VO LUNTARY DISCLOSURE WHICH DID NOT CLARIFIED BY THE ASSESSEE BY STATING THAT HE HAD NOT GIVEN ANY STATEMENT UNDER PRESSURE AND HE DID NOT WANT TO RECT IFY OR MODIFY THE STATEMENT MADE BY HIM. ON THIS LEGAL PROPOSITION, THE PENAL TY LEVIED BY THE 37 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY AO ON THE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE IS S USTAINABLE. IN THIS JUDGMENT THE SUPREME COURT CONFIRMS THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. PRASANNA DUGAR (2015) 371 ITR 19 (CAL.). CONSIDERING THE SAME, WE ARE OF THE VIEW THAT TH E PENALTIES LEVIED BY WAY OF DEPOSITS IN THE BANK FOR THE ABOVE THREE ASS ESSMENT YEARS STAND CONFIRMED. ACCORDINGLY, WE ORDER. 20. REGARDING THE NEGATIVE CASH, WE FIND THERE ARE TWO K INDS OF ADDITIONS ON THIS ACCOUNT, I.E. (1) THE NEGATIVE CASH FROM THE BOOKS O F ACCOUNT OF THE ASSESSEE (WORKS OUT TO RS.15 CRORES FOR 3 A.YRS. FROM 20 05-06 TO 2007-08) AND (2) THE NEGATIVE CASH OF RS.5 LAKHS FROM THE BOOKS OF A CCOUNT OF THE FIRM OF THE ASSESSEE NAMED M/S. KAKADE JEWELLERS. REGARDING THE NEGATIVE CASH FROM THE BOOKS OF ACCOUNT O F THE ASSESSEE, THE CASE OF THE ASSESSEE IS THAT THE NEGATIVE CASH IS WORKED OUT FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE FOUND DURING S EARCH AND SEIZURE ACTION AND THE NEGATIVE CASH WAS SEGREGATED THE ASSES SMENT YEAR-WISE. THE BREAK-UP FOR THE SAME IS PROVIDED IN THE TABLE MENTIO NED ABOVE AGAINST SL.NO.2 (NEGATIVE CASH). THIS EXERCISE WAS DONE BY THE ASSE SSEE AT THE TIME OF FILING THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A OF THE ACT AND OFFERED THE SAME IN THE RETURNS OF INCOME FILED AFTER SEARCH ACTION AND PAID THE TAXES. THEREFORE, ACCORDING TO LD. COUNSEL, IT CONSTIT UTES VOLUNTARY OFFER OF INCOME AND THE PENALTY SHOULD NOT BE LEVIED WHEN T HE INCOME IS OFFERED VOLUNTARILY. HE FAIRLY SUBMITTED THAT THE ABSENCE OF ANY DISPUTE ABOUT THE FACTS AND FIGURES OF THE NEGATIVE CASH IN THE BOOKS OF ACCOUN T. PER CONTRA, THE CASE OF THE REVENUE IS THAT THE CASH BALANCE PARTICULARS PROVIDED BY THE ASSESSEE HAVE EMANATED FROM THE BOOKS OF ACCOUNT. THEREFORE, IT IS A CLEAR CASE OF CONCEALMENT OF INC OME FOR ALL THE 4 38 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY ASSESSMENT YEARS, I.E. A.Y. 2004-05 RS.25 LAKHS, A.Y. 2005-0 6 RS.2,44,000/-, A.Y. 2006-07 RS.7,20,00,000/- AND A.Y. 2007-0 8 - RS.5,36,00,000/-. 21. ON HEARING BOTH THE PARTIES, WE FIND THAT THERE IS NO DISPUTE ABOUT THE INACCURACY OF THE CASH BOOKS MAINTAINED BY THE ASSE SSEE AND THE EXISTENCE OF THE NEGATIVE CASH BALANCES FOR ALL THE ASSESS MENT YEARS UNDER CONSIDERATION. THE SOURCE OF THIS NEGATIVE CASH IS UNKNOW N AND UNEXPLAINED BY THE ASSESSEE. HOWEVER, ASSESSEE OFFERED T HE SAME TO TAX AND PAID TAXES TOO. ASSESSEE DESIRES TO WIN THE APPEAL ON THE GROUND OF VOLUNTARY DISCLOSURE OF ADDITIONAL INCOME. HOWEVER, THE JUDG MENT OF SUPREME COURT IN THE CASE OF PRASANNA DUGAR VS. CIT(SUP RA) DOES NOT PERMIT THE SAME. THE RELEVANT ASSESSMENTS ATTAINED THE FINALITY. FROM THIS POINT OF VIEW, THERE IS A CLEAR CASE OF CONCEALMENT OF PAR TICULARS OF INCOME WITHIN THE MEANING OF THE EXPLANATION 5A TO SECTION 271(1 ) OF THE ACT. FURTHER, THERE IS NO DISPUTE ON THE MERITS OF OFFER OF THE SAID INCOME IN ALL THE ASSESSMENT YEARS. THEREFORE, WE ARE OF THE OPINION T HAT THE ADDITIONS BY WAY OF NEGATIVE CASH ATTRACTS CONCEALMENT OF INCOME UNDER THE PENALTY PROCEEDINGS U/S.271(1)(C) R.W. EXPLANATION 5A OF THE ACT. THE CONCEALMENT PENALTY FOR ALL THE ASSESSMENT YEARS IS ACCORDINGLY CONFIRMED . REGARDING THE NEGATIVE CASH OF RS.5 LAKHS FROM THE BOOKS OF ACCOUNT OF M/S. KAKADE JEWELLERS, OFFER OF RS.5,00,000/- WAS MADE IN TH E HANDS OF SRI SANJAY D. KAKADE, ALTHOUGH UNDISPUTEDLY THE RELEVAN T DISCREPANCIES ARE NOTICED IN THE BOOKS OF THE FIRM. IT IS NOT THE CASE OF THE AO THAT THE SAID ADDITIONAL INCOME TAXED IN THE HANDS OF THE FIRM AS WELL. THE DETAILS WHICH LED THE ASSESSEE TO ACCEPT THE SAID DISCREPANCY IN THE ASSESSEES INCOME WERE NOT AVAILABLE ON RECORD. 39 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY ON HEARING BOTH THE SIDES, ON THE CONCEALMENT OF OFFER OF RS.5,00,000/- WE FIND THERE IS NO DISPUTE ABOUT THE EXISTEN CE OF DISCREPANCY IN THE BOOKS OF ACCOUNT OF THE FIRM AND NOT T HE ASSESSEE. LEGALLY SPEAKING, THE SHOULD HAVE BEEN VALIDLY MADE IN THE HANDS OF THE FIRM. THUS, THE PENALTY U/S.271(1)(C) OF THE ACT SHOULD HAVE BEEN ACCORDINGLY LEVIED IN THE HANDS OF THE FIRM ONLY. ON CONSID ERING THE PECULIAR FACTS OF THIS ADDITIONAL INCOME, WE ARE OF THE VIEW TH AT IT IS UNFAIR TO FIX THE CONCEALMENT LIABILITY ON THE INDIVIDUAL, THE PARTNER OF THE FIRM ON THIS PART OF THE ADDITIONAL INCOME. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE PENALTY IN THE HANDS OF THE ASSESSEE-INDIVIDUAL. ACCO RDINGLY, THE ASSESSEE IS ENTITLED TO RELIEF IN THIS A.Y. 2008-09. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR A.YRS. 2005-06 TO 2008-09 ARE PARTLY ALLOWED. 22. WE SHALL TAKE UP THE APPEALS PERTAINING TO M/S. KAKADE CONSTRUCTION COMPANY. ITA NOS. 100 TO 102/PUN/2013 A.YRS. 2006-07 TO 20 08-09 M/S. KAKADE CONSTRUCTION COMPANY LEGAL ISSUES AT THE OUTSET, LD. COUNSEL SUBMITTED THAT THE ASSESSEE FIRM IN THESE THREE APPEALS RAISING BOTH LEGAL AS WELL AS THE MERIT RELATE D GROUNDS ASKED FOR DELETION OF THE PENALTY LEVIED BY THE AO U/S.271(1)(C) OF THE ACT. ON THE LEGAL ISSUES, BOTH THE PARTIES SUBMITTED THAT TH E LEGAL ISSUES ARE SIMILAR TO THE ONES RELATABLE TO THE APPEAL OF THE ASS ESSEE FOR THE AY 2003-04. IT IS THEIR SUBMISSION THAT THE FACTS BEING SIMILAR, THE ARGUMENTS 40 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY OF THE REPRESENTATIVES BECOME COMMONLY APPLICABLE TO THE ASSESS MENT YEARS UNDER CONSIDERATION. CONSIDERING THE COMMONALITY OF THE ISSUES, ARGUMENTS AND C OUNTER ARGUMENTS OF THE PARTIES, WE ARE OF THE OPINION THAT OUR ADJUDICATION GIVEN IN THE PRECEDING PARAGRAPHS OF THIS ORDER FOR THE A.Y. 20 03-04 ARE APPLICABLE TO THE A.YRS. 2006-07 TO 2008-09 MUTATIS MUTANDIS. ACCORDINGLY, THE LEGAL GROUNDS RAISED BY THE ASSESSEE RELATING TO (1) EXISTENCE OF AMBIGUITY IN THE MIND OF THE AO QUA THE AOS FAILURE TO SPE CIFY THE APPLICABLE LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT, (2) APP LICABILITY OF AMENDED EXPLANATION 5A QUA THE DATE OF EVENT OF THE S EARCH ACTION U/S.132 OF THE ACT AS WELL AS THE DATE OF FILING OF THE RETUR NS OF INCOME U/S.153A OF THE ACT BEFORE THE AMENDMENT ETC. IN THE AB OVE ASSESSMENT YEARS STAND DISMISSED . ON MERITS OF PENALTY 23. NOW WE SHALL TAKE UP THE GROUNDS RELATING TO THE ME RITS OF THE LEVY OF PENALTY ON THE ADDITIONAL INCOME/ADDITIONS MADE BY THE AO IN THE ASSESSMENTS. FOR THE SAKE OF CONVENIENCE, LD. COUNSEL FURN ISHED A TABLE GROUPING THE ISSUE-WISE AND ASSESSMENT YEAR-WISE ADDITION S/ADDITIONAL INCOME, THE DETAILS OF THE ADDITIONAL INCOME/ ADDITIONS IN ALL T HE 3 ASSESSMENT YEARS UNDER CONSIDERATION, I.E. A.Y. 2006-07 TO 2008-09 ARE EXTRACTED HERE AS UNDER : SR. NO. PARTICULARS A.Y. 2006-07 A.Y. 2007-08 A.Y. 2008-09 1 AMOUNT ON THE BASIS OF ENTRIES IN THE NOTE BOOK CONTAINING 19 PAGES SEIZED, AS BUNDLE NO.2 FROM THE RESIDENCE OF SRI SANJAY D. KAKADE ON 08-04-2009 2,77,50,000 - - 2 AMOUNT PAID BY SRI SANJAY D. KAKADE TO SRI PUSHKAR S. JOG AS PER PAGE NOS. 11 AND 12 OF YELLOW COLOURED DELUX COBRA FILE SEIZED - 46,00,000 - 41 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY FROM THE RESIDENCE OF SRI SANJAY D. KAKADE ON 08-04-2009 3 AMOUNT RECEIVED FROM SANJAY SIR AS PER PAGE NO.21 OF BUNDLE NO.1 SEIZED FROM THE RESIDENCE OF SRI SANJAY D. KAKADE ON 08-04- 2009 - 50,00,000 - 4 AMOUNT AS PER PAGE NO.19 OF BUNDLE NO.2 SEIZED FROM THE RESIDENCE OF SRI SANJAY D. KAKADE ON 08-04-2009 - 30,00,000 - 5 AMOUNT AS PER PAGE NO.23 OF BUNDLE NO.1 SEIZED FROM THE RESIDENCE OF SRI SANJAY D. KAKADE ON 08-04-2009, REGARDING CASH PAYMENT IN FEBRUARY 2008 FOR ENVIRONMENTAL CLEARANCE - - 18,00,000 6 AMOUNT PAID TO M/S D& M HOTEL PVT. LTD. ON 23-03-2008, AS PER PAGE NO.24 OF BUNDLE NO.1 SEIZED FROM THE RESIDENCE OF SRI SANJAY D. KAKADE ON 08-04-2009 - - 50,00,000 LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO TH E ABOVE TABLE AND SUBMITTED THAT THE FIGURES OF ADDITIONAL INCOME MENTIONE D AT SL.NO.1 TO 4 OF THE CHART CONSTITUTE DOUBLE ADDITIONS OFFERED BY T HE ASSESSEE BOTH THE IN THE HANDS OF THE ASSESSEE-FIRM AS WELL AS IN THE INDIVIDUA L CAPACITY SRI SANJAY D. KAKADE. RELYING ON SEIZED MATERIAL ALREADY REF ERRED TO IN THE TABLE ABOVE, LD. COUNSEL SUBMITTED THAT THE ABOVE NARRA TED INCOME WAS REQUIRED TO BE OFFERED IN BOTH THE HANDS IN ORDER TO MAK E UP THE SAID GROSS DECLARATION OF RS.40 CRORES. THEREFORE, THE SAID INCOMES W ERE OFFERED BOTH IN HIS HANDS AS WELL AS IN THE HANDS OF THE FIRM IN ORDER T O MAKE UP THE GROSS DISCLOSURE OF RS.40 CRORES GIVEN BY THE ASSESSEE D URING THE SEARCH ACTION AND SEIZURE ACTION. OFFERING OF INCOME IN BOTH THE H ANDS OF THE ASSESSEE AS WELL AS THE PARTNERS WAS THE REQUIREMENT IN ORDER TO MEET THE SANCTITY OF RS.40 CRORES OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE SEARCH AND SEIZURE ACTION. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS THE GOOD INTENTION OF COMPLYING WITH THE DISCLOSURES. HOWEVER, SUBMITTED THAT THE CONCEALMENT PENALTY PROCEE DINGS ARE TOTALLY DIFFERENT FROM THAT OF ASSESSMENT PROCEEDINGS, LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS A MATTER OF FACT THAT THE BASE-SEIZED MATERIAL 42 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY IS ONE AND THE SAME AND THE SAME IS VERIFIABLE. ASSESSEE DESIRES THAT SUBJECT TO VERIFICATION OF THE SAME BY THE AUTHORITIES BELO W, THE PENALTY PROCEEDINGS ON THE SAME INCOME IN BOTH THE HANDS SHOUL D NOT BE SUSTAINED. FOR EXAMPLE, REFERRING TO THE OFFER OF ADDITIONAL INCOME OF RS.2,77,50,000/- IN A.Y. 2006-07, LD. COUNSEL FOR THE ASSESSE E DEMONSTRATED BEFORE US THAT THE SAID INCOME IS PART OF RS.7.20 CRORES OFFERED BY THE ASSESSEE FOR A.Y. 2006-07 IN THE CASE OF SR I SANJAY D. KAKADE. SIMILARLY, RS. 40 LAKHS, RS. 50 LAKHS AND RS. 30 LAKHS OFFERED BY THE ASSESSEE IN THE A.Y. 2007-08 ARE THE PART OF RS. 5.3 6 CRORES OFFERED BY THE ASSESSEE IN THE HANDS OF SRI SANJAY D. KAKADE. CON SIDERING THE FACT OF DOUBLE ADDITION, WHEN THE SAME IS FOUND TRUE BY THE AO IN SET-ASIDE PROCEEDINGS, THE PENALTY IN THE HANDS OF THE FIRM NEEDS TO BE DELETED IN THE FAIRNESS OF THE PENALTY PROCEEDINGS. PER CONTRA, LD. DR FOR THE REVENUE OPPOSED VEHEMENTLY AND SUBMITTED THAT THE OFFER OF INCOME OF RS.40 CRORES AS A W HOLE ATTRACTS THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT, WITHOUT PREJUDIC E TO THE NATURE OF INDIVIDUAL ADDITIONS IN WHOSE HANDS, THE SAME IS OFFERED AND TAXED. IN THIS REGARD, LD. DR FOR THE REVENUE RELIED ON VARIOUS DECISIONS INCLUDING THE SUPREME COURT JUDGMENT IN THE CASE OF PRAS ANNA DUGAR VS. CIT (SUPRA) ON HEARING BOTH THE PARTIES, PRIMA-FACIE, WE FIND THERE APPE ARS TO BE A CASE OF DOUBLE TAXATION OF ADDITIONAL INCOME, BOTH IN THE HANDS OF THE ASSESSEE AS WELL AS THE PARTNER OF THE ASSESSEE SRI SA NJAY D. KAKADE. CONCERNED BASE INCRIMINATING DOCUMENTS ARE ONE AND THE SAME SEIZED DURING THE SEARCH ACTION. IT IS ALTO CLAIMED THAT THE SAME ARE WRITTEN BY THE SPOUSE OF SRI SANJAY S. KAKADE. THEREFORE, AS REQUESTED BY THE L D. COUNSEL 43 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY FOR THE ASSESSEE, THE ISSUE OF PENALTY PROCEEDINGS IN ALL T HESE ASSESSMENT YEARS SHOULD RE-VISIT THE FILE OF THE AO FOR FRESH EXAMINATIO N OF FACTS RELATING TO THE CLAIM OF ALLEGATION OF DOUBLE TAXATION OF THE ADDITIONAL INCOMES. THEREFORE, WE REMAND THE ISSUE TO THE FILE OF AO AND DIRECT THE AO TO EXAMINE THE CORRECTNESS OF LEVYING PENALTY TWICE ON THE S AME INCOME, (1) ONCE IN THE HANDS OF THE ASSESSEE AND (2) IN THE HANDS OF HIS FIRM. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, GR OUNDS RELATING TO A.YRS. 2006-07 TO 2007-08 ARE ALLOWED FOR STATISTICAL PURPOSES. 24. REGARDING THE TAXATION OF ADDITIONAL INCOME IN THE HAND S OF THE ASSESSEE-FIRM AMOUNTING TO RS.18 LAKHS AND RS.50 LAKHS IN T HE A.Y. 2008- 09, ASSESSEE SUBMITTED THAT THE BASE DOCUMENTS WERE SEIZED FROM THE RESIDENTIAL PREMISES OF SRI SANJAY KAKADE AND NOT THE BUS INESS PREMISES OF THE ASSESSEE. THE PAYMENT INVOLVES PRIMARILY OF SRI SANJ AY KAKADE AND NOT THE ASSESSEE-FIRM. THEREFORE, IT IS THE PRAYER OF LD. COUNS EL THAT THE MATTER NEEDS TO REVISIT THE FILE OF THE AO FOR FRESH ADJUDICATION. WE FIND THESE ARE THE CASES OF PAYMENT OF CASH ADMITTEDLY BY SRI SANJAY K AKADE AND NOT THE FIRM. THERE IS NEED FOR STUDYING THE MATERIAL (PAGES 23 AND 24 OF BUNDLE NO.1) SEIZED FROM THE RESIDENCE OF SRI SANJAY KAKADE ON 0 8-04-2009. CONSIDERING THESE UNDISPUTED FACTS, WE ARE OF THE OPINION T HAT THE PENALTY LEVIED BY THE AO ON THIS ADDITIONAL INCOME REQUIRED TO BE R EMANDED FOR FRESH ADJUDICATION. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE . ACCORDINGLY, RELEVANT GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE FOR A.YRS. 20 06-07 TO 2008-09 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 44 ITA NOS.12 TO 17/PUN/2013 SANJAY DATTATRAYA KAKADE ITA NOS.100 TO 102/PUN/2013 M/S. KAKADE CONSTRUCTION COMPANY 25. TO SUM UP, APPEALS FILED BY SHRI SANJAY D. KAKADE FOR A .YRS. 2003- 04 TO 2008-09 ARE PARTLY ALLOWED AND THE APPEALS FILED BY M/S. KAKADE CONSTRUCTION COMPANY ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 28 TH FEBRUARY, 2018. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) CENTRAL, PUNE 4. CIT(A) CENTRAL, PUNE 5. , , A BENCH PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PR IVATE SECRETARY , / ITAT, PUNE