Anand Kumar Bansal, Delhi V. DCIT, Faridabad

ITA 1057/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4227 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 132; 139

Judgement Text

ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 1057/DEL/2013 ( ASSESSMENT YEAR: 2009-10) ANAND KUMAR BANSAL 145, BANK ENCLAVE, LAKSHMI NAGAR, DELHI. AAJPB0552D VS DCIT CENTRAL CIRCLE II FARIDABAD. ASSESSEE BY SH. K. SAMPATH, ADV. SH. RAJA KUMAR, ADV. SH. K.C. JAIN, ADV. REVENUE BY SH. RAVI JAIN, CIT DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 22/01/2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS), CENTRAL, GURGAON FOR AY 09-10, WHEREIN THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE PENALTY OF RS. 5,80 4,925/- IMPOSED U/S 271AAA OF THE INCOME TAX ACT, 1961 (IN BRIEF THE A CT). DATE OF HEARING 10.05.2016 DATE OF PRONOUNCEMENT 05.08.2016 ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 2 OF 18 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH WA S CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE O N 5 TH MARCH, 2009 AND CONCLUDED ON 6 TH MARCH, 2009. THE ASSESSEE FILED A RETURN DECLARIN G AN INCOME OF RS. 66,359,720/-. AS AGAINST THIS, THE A SSESSMENT WAS COMPLETED U/S 153B (I)(B) OF THE ACT ON 30/12/2010 ON A TOTAL INCOME OF RS. 66,408,970/- . THUS, AN ADDITION OF ONLY RS. 49,25 0/- WAS MADE AS AGAINST THE RETURNED INCOME AND IT IS THE ASSESSEES CLAIM THAT THIS ADDITION OF RS. 49,250/- PERTAINS TO AN ARITHMETICAL ERROR IN CALCU LATION. DURING THE COURSE OF THE SEARCH, THE STATEMENT OF THE ASSESSEE WAS RE CORDED U/S 132(4) OF THE ACT. IN THE STATEMENT U/S 132(4) OF THE ACT, THE A SSESSEE SURRENDERED A SUM OF RS. 65,000,000/- AS HIS UNDISCLOSED INCOME IN TH E FORM OF FOLLOWING UNDISCLOSED ASSETS FOUND DURING THE SEARCH I. UNACCOUNTED CASH RS. 2,600,000/- II. UNACCOUNTED INVESTMENT IN JEWELLERY RS. 3,200,000 /- III. UNACCOUNTED INCOME UNDER MISCELLANEOUS INCOME RS. 1,200,000/- IV. ADVANCE FOR LAND RS. 45,500,000/- V. ON A/C OF SHARE CAPITAL RS. 12549250 /- TOTAL RS. 65,049,250 /- 2.1 WHILE COMPLETING THE ASSESSMENT U/S 153B (I)(B) OF THE ACT, THE AO ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 3 OF 18 ALSO INITIATED PENALTY PROCEEDINGS U/S 271AAA OF TH E ACT IN RESPECT OF ITEM NOS. (IV) AND (V) ABOVE I.E. ON ADVANCE FOR LAND AN D SHARE CAPITAL. 2.2 IN RESPONSE TO THE SHOW CAUSE NOTICES U/S 271AA A, THE ASSESSEE MADE FIVE FOLD CONTENTIONS BEFORE THE AO AS UNDER: I. THAT THE UNDISCLOSED INCOME WAS SURRENDERED IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT; II. THAT THE ASSESSEE HAD SPECIFIED THE MANNER IN WHICH THE UNDISCLOSED INCOME HAD BEEN DERIVED; III. THAT THE ASSESSEE HAD SUBSTANTIATED THE MANNER IN W HICH THE UNDISCLOSED INCOME WAS DERIVED; IV. THAT THE ASSESSEE HAD PAID THE ENTIRE TAXES WITHIN THE FINANCIAL YEAR AND; V. THAT THERE WAS HARDLY ANY DIFFERENCE BETWEEN THE RE TURNED INCOME AND THE ASSESSED INCOME. 2.3 HOWEVER, THE AO WAS OF THE OPINION THAT THE ASS ESSEE HAD NOT BEEN ABLE TO FULFILL THE CONDITIONS SPECIFIED IN SUB-CLA USE (II) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT WHICH REFERS TO THE SUBST ANTIATION OF THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED. THE AO WAS OF THE OPINION THAT THE ASSESSEE HAD NOT BEEN ABLE TO PROD UCE ANY ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 4 OF 18 PROOF/DOCUMENTARY EVIDENCE WITH RESPECT TO ANY OF T HE DISCLOSURE MADE BY HIM UNDER ANY HEAD EITHER DURING THE ASSESSMENT PRO CEEDINGS OR DURING THE PENALTY PROCEEDINGS SO AS TO PROVE THAT THE UNDISCL OSED INCOME COULD BE CORROBORATED WITH THE EVIDENCE AND THAT IN ABSENCE OF ANY SUCH EVIDENCE/PROOF THE ASSESSEE COULD NOT HAVE IMMUNITY U/S 271AAA OF THE ACT. ACCORDINGLY, THE AO PROCEEDED TO IMPOSE A PEN ALTY OF RS. 45.50 LACS BEING 10% OF THE UNDISCLOSED INCOME OF RS. 4.55 CRO RES PERTAINING TO ADVANCES GIVEN TO VARIOUS PERSONS. ON SIMILAR FOOT ING, THE AO ALSO HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO PROVE THE SOURCE OF MAKING UNEXPLAINED INVESTMENTS IN THE SHARE CAPITAL AMOUNTING TO RS. 1 2,549,250/- AND ACCORDINGLY, IMPOSED A PENALTY @ 10% ON AMOUNTING T O RS. 1,254,925/- ON THIS AMOUNT ALSO. 2.4 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT (APPEALS). THE LD. CIT(APPEALS) OBSERVED THAT ALTH OUGH THERE WAS NO DISPUTE THAT THE ASSESSEE HAD ADMITTED THE UNDISCLO SED INCOME IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT, THE ASSES SEE HAS FAILED TO DEMONSTRATE HOW EXACTLY THE UNDISCLOSED INCOME WAS DERIVED. THE LD. CIT (APPEALS) WAS OF THE OPINION THAT THE ASSESSEE HAS NOT EXPLAINED THE NATURE OF TRANSACTIONS THAT LED TO THE EARNING OF THE UNDI SCLOSED INCOME. THE LD. ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 5 OF 18 CIT (APPEALS) UNDERLINED THE FACT THAT UNLESS THE A SSESSEE DIVULGED THIS VITAL PIECE OF INFORMATION, IMMUNITY FROM THE PROVISION O F SEC. 271AAA COULD NOT BE CLAIMED. THE LD. CIT (APPEALS) WAS OF THE O PINION THAT MERELY STATING THAT THE SUMS HAD BEEN EARNED AS COMMISSION IN LAND DEALS AND IN PROPERTY BUSINESS WAS TOO GENERAL AN EXPLANATION TO BE ACCEPTED. THE LD. CIT (APPEALS) RELIED ON THE DECISION OF THE KOLKATA BENCH OF THE ITAT IN DCIT VS. PIONEER MARBLES AND INTERIORS PVT. LTD., 1 44 TTJ (KOL.) 663 AND CONFIRMED THE IMPOSITION OF PENALTY BY HOLDING THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS OF SUBSTANTIATING THE MANNER IN WHICH THE INCOME WAS DERIVED AS THE CONDITION LAID DOWN IN SECTION 271AA A (2)(II) REMAINED UNFULFILLED. 2.5 AGGRIEVED THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND HAS CHALLENGED THE CONFIRMATION OF THE PENALTY BY THE LD. CIT (APPEALS). 3. THE LD. AR DREW OUR ATTENTION TO QUESTION NOS. 2 3, 24 & 25 OF THE STATEMENT RECORDED AND THE ANSWER THERETO WHICH REA D AS UNDER: QUESTION 23 : I AM SHOWING YOU ANNEXURE A2 WHICH IS A POCKET NOTEBOOK WITH NO. 24 AND THE NAME NEEL GAGAN PRINTED ON IT ONM PAGE NO. 2 OF THIS ANNEXURE A2. THERE ARE CERTAIN DETAILS OF TRANSACT ION RELATING TO EACH PAYMENT OF SHARE APPLICATION. PLEASE STATE IN WHOS E HAND THESE ENTRIES ARE ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 6 OF 18 WRITTEN AND EXPLAIN THE ENTRIES INVOLVED? ANSWER: THESE ENTRIES ARE WRITTEN IN MY OWN HAND A ND THESE RELATE TO CHEQUE RECEIVED AGAINST THE CASH PAID BY ME FOR SHA RE APPLICATION AMOUNTING TO RS. 1,24,25,000/- WHICH HAS BEEN TAKEN BY ME IN THE CURRENT YEAR I.E. BETWEEN 01.04.08 TO 31.03.09 (FY 2008-09) . I HAVE ALSO PAID A SUM OF RS. 1,24,250/- AS COMMISSION @ 1% FOR RECEIPT OF THESE CHEQUES. I HEREBY SURRENDER VOLUNTARILY AS ADDITIONAL INCOME FOR THE CURRENT YEAR RS. 1,25,49,250/- OVER AND ABOVE MY REGULAR INCOME FROM VARIOUS SOURCES DURING THE FY 2008-09. THE AMOUNT HAS BEEN EARNED BY ME AS COMMISSION IN LAND DEALS AND IN PROPERTY BUSINESS. I HEREBY V OLUNTARILY SURRENDER THE AFORESAID AMOUNT AS MY INCOME IN GOOD FAITH AND I W ILL PAY THE ENTIRE TAXES SUBJECT TO THE CONDITION THAT NO PENALTY OR PROSECU TION PROCEEDINGS BE INITIATED AGAINST ME. THE SURRENDER HAS BEEN MADE IN TERMS OF SECTION 271AAA OF THE ACT. QUESTION NO. 24: I AM SHOWING YOU ANNEXURE A2 PAGE S 7,9,11, 12, 14 AND 16 WHICH SHOWS CERTAIN ADVANCES GIVEN TO CERTAIN IN DIVIDUALS ON CERTAIN DATES. PLEASE STATE IN WHOSE HAND THESE ENTRIES HA VE BEEN WRITTEN AND ALSO EXPLAIN THE NATURE OF THESE ENTRIES. ANSWER: THESE ENTRIES ARE IN MY HAND WRITING AND T OTAL OF THESE ENTRIES IS RS. 4,55,00,000/-. THIS IS THE AMOUNT GIVEN BY ME AS ADVANCE TO VARIOUS PERSONS FOR THE PURCHASE OF LAND/PROPERTIES. SINCE I MAY NOT BE ABLE TO EXPLAIN THE NATURE OF THESE ADVANCES I HEREBY SURRE NDER IN MY NAME THE AFORESAID AMOUNT OF RS. 4,55,00,000/- AS MY ADDITIO NAL INCOME FOR THE CURRENT YEAR I.E. FINANCIAL YEAR 2008-09. THIS INC OME HAS EARNED BY ME AS ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 7 OF 18 COMMISSION OUT OF DEALING IN LAND AND PROPERTIES. I PROMISE TO PAY THE TAXES ON ADDITIONAL INCOME SUBJECT TO THE CONDITION THAT NO PENALTY OR PROSECUTION PROCEEDINGS ARE INITIATED AGAINST ME. THE SURRENDE R HAS BEEN MADE BY ME IN TERMS OF SECTION 271AAA OF THE ACT. QUESTION 25: I AM SHOWING YOU ANNEXURE A2 PAG NOS. 7,9,11,12,14 & 16; WHICH SHOWS CERTAIN ADVANCES GIVEN TO CERTAIN INDIV IDUALS ON CERTAIN DATES. PLEASE STATE IN WHOSE HAND THESE ENTRIES HAVE BEEN WRITTEN AND ALSO EXPLAIN THE NATURE OF THESE ENTRIES? ANSWER: THESE ENTRIES ARE IN MY HAND WRITING ON TO TAL OF THESE ENTRIES IS 4,55,00,000/- THIS IS THE AMOUNT GIVEN BY ME AS ADV ANCE TO VARIOUS PERSONS FOR PURCHASE OF LAND/PROPERTIES. I HEREBY SURRENDE R IN MY NAME THE AFORESAID AMOUNT OF RS. 4,55,00,000/- AS MY ADDITIO NAL INCOME FOR THE CURRENT YEAR I.E. FY 2008-09. THIS INCOME HAS EARN ED BY ME AS COMMISSION OUT OF DEALING IN LAND AND PROPERTIES. I PROMISE T O PAY THE TAXES ON ADDITIONAL INCOME SUBJECT TO THE CONDITION THAT NO PENALTY OR PROSECUTION PROCEEDINGS ARE INITIATED AGAINST ME. THE SURRENDE R HAS BEEN MADE BY ME IN TERMS OF SECTION 271AAA OF THE INCOME TAX ACT, 1 961. 3.1 THE LD. AR SUBMITTED THAT THE ASSESSEES STATEM ENT U/S 132(4) OF THE ACT WAS RECORDED BY THE AUTHORIZED OFFICER IN QUEST ION AND ANSWER FORM. THUS, ANY QUESTION REGARDING THE SPECIFICATION AND MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED HAS TO BE RAISED BY THE AUT HORIZED OFFICER RECORDING THE STATEMENT. THE PERSON SEARCHED CANNO T ON HIS OWN PUT WORDS IN THE MOUTH OF THE AUTHORIZED OFFICER TO ELICIT TH E EXPLANATION ENVISAGED IN ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 8 OF 18 THE PROVISIONS CONTAINED IN SECTION 271AAA WHICH WO ULD SATISFY THE DEPARTMENT. IT WAS SUBMITTED THAT U/S 132(4) OF TH E ACT, THE STATEMENT IS RECORDED BY THE OFFICERS AND THE ASSESSEE ONLY STAT ES WHAT THE OFFICER ASKS OR PUTS THE QUERY. IT WAS SUBMITTED THAT A PERUSAL O F THE ABOVE QUESTIONS AND ANSWERS WILL SHOW THAT WHEREVER AND WHENEVER A QUES TION WAS PUT TO THE ASSESSEE REGARDING THE SOURCE AND SUBSTANTIATION TH EREOF, THE ASSESSEE HAS CATEGORICALLY REPLIED TO THEM. WHERE THE AUTHORIZE D OFFICER DID NOT RAISE ANY FURTHER QUERY, THE NATURAL PRESUMPTION IS THAT THE AUTHORIZED OFFICER WAS SATISFIED ABOUT THE REPLY. 3.2 THE LD. AR FURTHER SUBMITTED THAT THE ASSESSMEN T HAD BEEN FRAMED PURELY ON THE BASIS OF SURRENDER MADE BY THE ASSESS EE WHO HAD MADE THE SURRENDER TO AVOID PROTRACTED LITIGATION AND TO BUY PEACE. IT WAS SUBMITTED THAT DE HORS THE SURRENDER MADE BY THE ASSESSEE, THE DEPARTMENT HAS NOT BEEN ABLE TO PROVE THE EXISTENCE OF ANY UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH AND THAT THE RETURNED INCOME H AS BEEN ACCEPTED WITH A MINOR VARIATION ONLY WHICH ALSO IS DUE TO ARITHMETI CAL ERROR. 3.3 IT WAS FURTHER SUBMITTED THAT IN ABSENCE OF ANY SPECIFIC FORMAT/PROCEDURE DESCRIBED IN THE ACT FOR SPECIFYIN G AND SUBSTANTIATING THE UNDISCLOSED INCOME, THE FACT THAT THE SAME HAD BEEN ACCEPTED WITHOUT ANY ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 9 OF 18 VARIATION BY THE AO IS BY ITSELF ENOUGH EVIDENCE TH AT THE ASSESSEE HAS SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED I NCOME HAS BEEN DERIVED. 4. THE LD. DR SUBMITTED THAT U/S 271AAA(2) OF THE A CT, THE ONUS LIES ON THE ASSESSEE TO SPECIFY AND SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED. HE SUBMITTED THAT DURING THE C OURSE OF STATEMENT RECORDED U/S 132(4) OF THE ACT, THE ASSESSEE ACCEPT ED THE UNACCOUNTED INCOME BUT DID NOT SUBSTANTIATE ITS SOURCE. THE LD . DR RELIED HEAVILY ON THE FINDINGS RECORDED BY THE LD. CIT (APPEALS) AND SUBM ITTED THAT THE PENALTY HAS BEEN RIGHTLY CONFIRMED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ITAT DELHI E BENCH HAS DISCUSSED AN IDENTICAL ISSUE BEFORE IT AT LENGTH IN ITA NO. 337/DEL/2013 F OR AY 2010-11. IN ITS DECISION DATED 24 TH JUNE, 2013, THE COORDINATE BENCH, IN PARAS 11 & 12 , HAS DISCUSSED THE ISSUE AS UNDER: 11. WHEN WE COMPARE EXPLANATION 5 TO SECTION 271 (1) OF THE ACT WITH THE PROVISIONS LAID DOWN U/S 271 AAA OF TH E ACT WE FIND A LOT OF SIMILARITY THEREIN UNDER WHICH PENALTY IS NOT AT TRACTED IN A CASE OF SEARCH ON THE UNDISCLOSED INCOME. AS PER EXPLANATIO N 5 TO SECTION 271(1) OF THE ACT IF THE ASSESSEE IN THE COURSE OF SEARCH MAKES A STATEMENT UNDER SUB SECTION (4) OF SECTION 132 THAT ANY MONEY, ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 10 OF 18 BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NGS FOUND IN HIS POSSESSION OR UNDER HIS CONTROL HAS BEEN ACQUIRED O UT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN O F INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SU B SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGE THER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME, THEN T HE ASSESSEE FOR SUCH INCOME WILL NOT BE DEEMED TO HAVE CONCEALED THE PAR TICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME TO ATTRACT THE PENALTY THEREIN. SIMILARLY UNDER THE PROVISIONS OF SECTION 271 AAA OF THE ACT PENALTY IS NOT LEVIABLE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER 1.6.2007 BUT BEFORE 1.7.2012, A ND THE ASSESSEE IN THE COURSE OF SEARCH, IN A STATEMENT UNDER THE SUB SECTION 4 OF SECTION 132,(I), ADMITS THE UNDISCLOSED INCOME (II) SPECIFI ES AND SUBSTANTIATES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, A ND (IIII) PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. FROM THE READING OF BOTH THESE PENAL PROVIS IONS WE FIND THAT ONE REQUIREMENT IS COMMON FOR NON ATTRACTION OF THE PENAL PROVISIONS UNDER BOTH THE SECTIONS I.E. IF THE ASSESSEE IN HIS STATEMENTS RECORDED U/S 132(4) OF THE ACT ADMITS THE UNDISCLOSED INCOME AND SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RES PECT OF SUCH INCOME. THE ONLY ADDITIONAL REQUIREMENT IN THE CASE OF SECT ION 271 AAA IN THIS REGARD IS THAT THE ASSESSEE WILL ALSO HAVE TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BESIDES SPECIFICATION OF THE MANNER IN WHICH SUCH INCOME WA S DERIVED. THE ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 11 OF 18 OTHER DIFFERENCE IS IN THE APPLICATION OF THE PROVI SIONS UNDER BOTH THE SECTIONS. THE PENAL PROVISION U/S 271(1) UNDER EXP LANATION 5 THERETO IS APPLICABLE IN SUCH CASES WHERE SEARCH U/ S 132 WAS INITIATED BEFORE 1.6.2007 WHEREAS U/S 271 AAA, THE PROVISIONS THEREIN ARE APPLICABLE IN A CASE WHERE SEARCH U/S 132 OF THE AC T HAS BEEN INITIATED ON OR AFTER 1.6.2007 BUT BEFORE 1.7.2012. THUS THE INTENTION OF THE LEGISLATURE IS CLEAR TO THIS EXTENT THAT IN A CASE WHEREIN SEARCH WAS INITIATED BEFORE 1.6.2007, PROVISIONS U/S 271(1 ) WILL BE APPLICABLE AND IN SEARCH INITIATED AFTER 1.6.2007 ( BUT BEFORE 1.7.2012) PROVISIONS U/S 271 AAA OF THE ACT WILL BE APPLICABLE. THESE PROVISIONS ARE THUS NOT APPLICABLE SIMULTANEOUSLY B UT THESE ARE PERIOD SPECIFIC. AS DISCUSSED ABOVE, THE ONLY ADDIT IONAL REQUIREMENT FOR NON ATTRACTION OF PENAL PROVISION U/S 271 AAA O F THE ACT IN COMPARISON TO THIS U/S 271(1) IS THAT BESIDES SPEC IFYING THE MANNER IN WHICH THE ADMITTED AN UNDISCLOSED INCOME HAS BEE N DERIVED, THE ASSESSEE WILL ALSO HAVE TO SUBSTANTIATE THIS MANNER . IN VIEW OF THIS RELATIVE STUDY OF BOTH THE PROVISIONS WHEN WE GO TH ROUGH THE DECISIONS RELIED UPON BY THE LD. AR, WE FIND THAT I N THE CASE OF ACIT VS. GEBILAL KANHIALAL (HUF) (SUPRA) BEFORE THE HON BLE SUPREME COURT THE KARTA OF THE ASSESEEE HUF HAD MADE A STAT EMENT U/S 132 (4) ADMITTING CONCEALED INCOME IN THE COURSE OF SEA RCH AND SPECIFIED THE MANNER IN WHICH SUCH INCOME STOOD DERIVED. IN T HIS STATEMENT THE KARTA ALSO SURRENDERED AN AMOUNT OF RS. 42,32,000/- . THE KARTA HOWEVER NEITHER FILED RETURN OF INCOME U/S 139 (1) ON DUE DATE NOR PAID DUE TAX ON THE SURRENDERED INCOME. LATER ON HE ALSO RETRACTED FROM HIS STATEMENT RECORDED U/S 132(4) ABOUT SURREN DER. THE HONBLE ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 12 OF 18 SUPREME COURT AFTER DELIBERATING IN DETAIL ON DIFFE RENT EXPLANATIONS TO SECTION 271(1) HAS BEEN PLEASED TO HOLD THAT TH E ASSESSEE WAS ENTITLED TO IMMUNITY UNDER CLAUSE (2) OF EXPLANATIO N 5 TO SECTION 271(1) OF THE ACT. IN THAT CASE FAILURE TO FILE RE TURN OF INCOME ON 31 ST JULY 1987 AND FAILURE TO PAY TAX THEREON WAS THE M ERE REASON RELIED UPON BY THE DEPARTMENT TO DENY TO THE ASSESS EE THE BENEFIT OF IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTI ON 271(1) OF THE ACT. ACCORDING TO THE DEPARTMENT THE ASSESSEE HAD C OMPLIED WITH ALL THE CONDITIONS OF CLAUSE 2 OF EXPLANATION 5 EXCEPT PAYMENT OF TAX IN TIME. HONBLE SUPREME COURT PLEASED TO HOLD THAT NO TIME LIMIT HAS BEEN PRESCRIBED FOR PAYMENT OF TAX UNDER CLAUSE 2 O F EXPLANATION 5 AND THE ASSESSEE HAVING PAID TAX UPTO THE DATE OF P AYMENT IN RESPECT OF THE UNDISCLOSED INCOME SURRENDERED BY IT IN THE COURSE OF SEARCH, ALL THE THREE CONDITIONS LAID DOWN IN CLAUSE 2 OF E XPLANATION 5 TO SECTION 271(1) STOOD FULFILLED AND THEREFORE THE A SSESSEE IS ENTITLED TO IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 TO SE CTION 271(1) OF THE ACT. IN THE CASE OF CIT VS. RADHA KISHAN GOEL ( SUPRA) BEFORE THE HONBLE ALLAHABAD HIGH COURT THE ISSUE RAISED WAS A S TO WHETHER MERE NON-STATEMENT OF MANNER IN WHICH UNDISCLOSED I NCOME WAS DERIVED WOULD MAKE EXPLANATION 5 (2) TO SECTION 271 (1) INAPPLICABLE. THE FURTHER QUESTION RAISED WAS AS TO WHETHER IN A CASE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEE N STATED IN THE STATEMENT U/S 132(4) BUT IS STATED SUBSEQUENTLY, TH AT AMOUNTS TO COMPLIANCE WITH EXPLANATION 5 (2) TO SECTION 271(1) AND NO PENALTY WOULD BE LEVIABLE UNDER SAID SECTION.. BOTH THESE Q UESTIONS HAVE BEEN REPLIED IN AFFIRMATIVE IN THE DECISION OF THE HONB LE ALLAHABAD HIGH ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 13 OF 18 COURT. AS PER THE DECISION MERE NON STATEMENT OF MA NNER IN WHICH UNDISCLOSED WAS DERIVED WOULD NOT MAKE EXPLANATION 5 (2) TO SECTION 271(1) INAPPLICABLE. SIMILARLY IN A CASE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED IN STATEMENT U /S 132(4) BUT IS STATED SUBSEQUENTLY THAT AMOUNTS TO COMPLIANCE WITH EXPLANATION 5 (2) TO SECTION 271(1) AND NO PENALTY WOULD BE LEVI ABLE. SIMILARLY IN THE CASE OF CIT VS. MAHENDRA G. SHAH BEFORE THE HON BLE GUJARAT HIGH COURT THE BASIC REQUIREMENT FOR IMMUNITY FORM THE LEVY OF PENALTY UNDER EXPLANATION 5 TO SECTION 271(1) OF THE ACT HAS BEEN DISCUSSED AS PER WHICH THE FIRST REQUIREMENT IS DIS CLOSURE IN STATEMENT MADE U/S 132(4) AND PAYMENT OF TAX BEFORE THE ASSESSMENT WAS COMPLETED. FOLLOWING RATIO LAID DOWN IN THIS DE CISION OF HONBLE GUJARAT HIGH COURT, PUNE BENCH OF THE TRIBUNAL IN T HE CASE OF DCIT VS. SHRI INDERCHAND SURAJMAL BOTHRA (SUPRA) WHEREIN PENALTY U/S 271(1) WAS LEVIED HELD THAT IT IS NOT REQUIRED TO SPECIFY THE MANNER IN WHICH THE INCOME WAS EARNED IN RESPECT OF THE AM OUNT OFFERED TO TAX IN THE RETURN OF INCOME FILED TO SEARCH ACTION BY PAYING TAXES THEREON FOR ADOPTING IMMUNITY FROM PENALTY UNDER EX PLANATION 5 OF SECTION 271(A) (C) OF THE ACT: THE CUTTAK BENCH OF THE TRIBUNAL IN THE CASE OF SHRI ASHOK KUMAR SHARMA (HUF) AND OTHERS VS . DCIT (SUPRA) WHEREIN PENALTY U/S 271 AAA WAS LEVIED THE ASSESEE HAD DISCLOSED CONCEALED INCOME WHILE GIVING STATEMENT U /S 132 OF THE ACT DURING THE COURSE OF SEARCH AND HAD PAID THE TAX TH EREON AND SHOWED THE SAID UNDISCLOSED INCOME FILED UNDER THE HEAD I NCOME FROM BUSINESS AND DEPARTMENT HAD ACCEPTED THESE RETURNS AND ACCORDINGLY PASSED THE ASSESSMENT ORDER. PENALTY U/ S 271 AAA WAS ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 14 OF 18 LEVIED. IT WAS HELD THAT UNDISPUTEDLY THE ASSESSEE HAD SHOWN THE UNDISCLOSED INCOME UNDER THE HEAD INCOME FROM BUSI NESS IN THE RETURNS FILED BY THEM AND THAT WAS ACCEPTED BY THE DEPARTMENT BY PASSING THE ASSESSMENT ORDERS ACCORDINGLY, THEREFOR E THE CASE OF THE ASSESSEE FALLS EXACTLY WITHIN THE PURVIEW OF SUB SE CTION 2 OF SECTION 271 AAA. THUS THE IMPUGNED PENALTY LEVIED CONTRARY TO THE PROVISIONS CONTAINED IN SECTION 271 AAA (2) IS NOT SUSTAINABLE. THE PENALTY WAS ACCORDINGLY DELETED. IN THE CASE OF SHR I PRAMOD KUMAR JAIN AND ANOTHER VS. JCIT (SUPRA) BEFORE THE CUTTAK BENCH OF THE TRIBUNAL, THE ASSESEE HAD DISCLOSED THE UNACCOUNTED INCOME BUT HAD FAILED TO SPECIFY THE MANNER IN WHICH SUCH INCOME H AD BEEN DERIVED. THE DEPARTMENT ACCORDINGLY LEVIED PENALTY U/S 271 A AA OF THE ACT. THE SAME WAS UPHELD BY THE FIRST APPELLATE AUTHORIT Y. THE TRIBUNAL HAS HOWEVER DELETED THE PENALTY ON THE BASIS THAT T HERE IS NO PRESCRIBED METHOD TO INDICATE THE MANNER IN WHICH I NCOME WAS GENERATED WHERE THE DEFINITION OF UNDISCLOSED INCO ME HAS BEEN DEFINED IN THE ACT ITSELF WHEN NO INCOME OF THE SPE CIFIED PREVIOUS YEAR REPRESENTED EITHER WHOLLY OR PARTLY WHICH ON US LAY UPON THE ASSESSEE STOOD DISCHARGED. THE DELHI BENCH OF THE T RIBUNAL IN ITS RECENT DECISION IN THE CASE OF MOTHER PRIDE EDUCATI ON PERSONNA PVT. LTD,.VS. DCIT (SUPRA) WHILE PLACING RELIANCE ON ITS EARLIER DECISION IN THE CASE OF SMT. RAJ RANI GUPTA (SUPRA) AND FOLLOWI NG THE RATIO OF THE DECISION OF HONBLE HIGH COURTS IN THE CASE OF CIT VS. RADHI KISHAN GOEL (SUPRA) (ALL) AND CIT VS. MAHENDRA C. SHAH (SU PRA) (GUJ) HAS DELETED THE PENALTY. THE HONBLE ALLAHABAD HIGH COU RT IN THE CASE OF CIT VS. RADHA KISHAN GOEL (SUPRA) HAS BEEN PLEASED TO HOLD THAT U/S ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 15 OF 18 132(4) OF THE I.T. ACT 1961 UNLESS THE AUTHORIZED O FFICER PUTS SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IN THE STATEMENT THE MANNER IN W HICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED BUT HAS BEEN STATE D SUBSEQUENTLY, THAT AMOUNTS TO THE COMPLIANCE WITH EXPLANATION 5 ( 2) TO SECTION 271 (1) (C) OF THE ACT. IT WAS FURTHER HELD THAT IN CAS E THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED U/S 132(4) O F THE ACT IN THE ABSENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE INFERRED THAT SU CH UNDISCLOSED INCOME WAS DERIVED FROM THE BUSINESS WHICH HE WAS C ARRYING ON OR FROM OTHER SOURCES. THE OBJECT OF THE PROVISION IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON-DISCLOSURE OF MONEY , BULLION, JEWELLERY ETC. IT WAS THUS HELD THAT MUCH IMPORTANC E SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND C IRCUMSTANCES OF THE CASE, IN ABSENCE OF ANYTHING TO THE CONTRARY. THERE FORE, MERE NON STATEMENT OF THE MANNER IN WHICH SUCH INCOME WAS DE RIVED WOULD NOT MAKE EXPLANATION 5 (2) INAPPLICABLE, HELD THE HONB LE HIGH COURT. 12. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT VS. MAHENDRA C. SHAH HAS BEEN PLEASED TO HELD AS UNDER: IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF T HE ASSESSEE TO SPECIFY IN THE STATEMENT U/S 132(4) OF THE INCOME T AX ACT 1961 REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEIN G RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUT HORIZED ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 16 OF 18 OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ITS ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZ ED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PE RMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE ST ATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANC E, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANS WER FORM AND THERE WOULD BE NO OCCASION OF AN ASSESSEE TO ST AGE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY TH E PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH ST ATEMENT IS BEING RECORDED, AS NOTED BY THE ALLAHABAD HIGH COUR T IN THE CASE OF CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 45 4. SECONDLY, CONSIDERING THE ILLITERATE, TO BE SPECIFI C AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPT ION NO.2 WHILE MAKING STATEMENT U/S 132(4) OF THE INCOME TAX ACT, 1961. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS THE ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOUL D BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER D ENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLANATION 5 I S COMMENDABLE. 5.1 IN THE PRESENT APPEAL BEFORE US, IT IS SEEN THA T THE DEPARTMENT HAS ACCEPTED THE QUANTUM OF SURRENDER MADE BY THE ASSES SEE IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT. THE TAXES DUE THER EON HAVE ALSO BEEN PAID. ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 17 OF 18 ON HAVING GONE THROUGH THE QUERIES RAISED WHILE REC ORDING THE STATEMENT OF THE ASSESSEE U/S 132(4) OF THE ACT, IT IS EVIDENT T HAT NOWHERE HAS THE AUTHORIZED OFFICER ASKED A SPECIFIC QUESTION WITH R EGARD TO THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED. RES PECTFULLY FOLLOWING THE RATIO OF THE ABOVE CITED DECISIONS OF HONBLE ALLAH ABAD HIGH COURT AND HONBLE GUJARAT HIGH COURT (SUPRA) AND ALSO OF THE COORDINATE E BENCH OF ITAT DELHI, WE HOLD THAT IN ABSENCE OF QUERY RAISED BY THE AUTHORIZED OFFICER DURING THE COURSE OF RECORDING OF A STATEME NT U/S 132(4) ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DER IVED AND ABOUT ITS SUBSTANTIATION, THE AO WAS NOT JUSTIFIED IN IMPOSIN G PENALTY U/S 271AAA OF THE ACT SPECIALLY WHEN THE OFFERED UNDISCLOSED INCO ME HAS BEEN ACCEPTED WITH A VERY MINOR VARIATION OF RS. 49,250/- AND ALS O THE DUE TAX THEREON HAS BEEN PAID BY THE ASSESSEE. WE ALSO NOTE THAT THE R ELIANCE OF THE LD. CIT (A) ON THE CASE OF DCIT VS. PIONEER MARBLES & INTERIORS (P) LTD. (SUPRA) FOR CONFIRMING THE PENALTY IS MISPLACED AS IN THIS CASE THE COORDINATE KOLKATA BENCH HAS HELD THAT WHERE THE ENTIRE TAX AND INTERE ST HAS BEEN DULY PAID WELL WITHIN THE TIME-LIMIT FOR PAYMENT OF NOTICE OF DEMA ND U/S 156 AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED, THE ASSESSEE COULD NOT BE DENIED IMMUNITY U/S 271AAA(2) ONLY BECAUSE THE ENT IRE TAX, ALONG WITH INTEREST, WAS NOT PAID BEFORE FILING OF INCOME TAX RETURN OR, FOR THAT PURPOSE, ITA NO. 1057/D/2013 ANAND KUMAR BANSAL PAGE 18 OF 18 BEFORE CONCLUDING THE ASSESSMENT PROCEEDINGS. WE, THUS, SET ASIDE THE ORDER OF THE LD. CIT (APPEALS) AND DIRECT THE AO TO DELET E THE PENALTY OF RS. 5804925/- LEVIED U/S 271AAA OF THE ACT. 6. IN THE FINAL RESULT, THE ASSESSEES APPEAL IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 05/08/2016 SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA ) VICE PRESIDENT JUDICIAL MEMBER DATED: 05/08/2016 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI