D.C.I.T CC - V,kolkata, Kolkata V. Shree Salsar Properties & Finance (P) Ltd, Kolkata

ITA 1081/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5078 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 08-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: K K CHHAPARIAFCA LD A
• Keywords: Unexplained investment; Business income; Search and seizure; Tax effect; Revised return
• Section: 143(3); 153A; 27; 132; 2; 139

Judgement Text

ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI N.V.VASUDEVAN, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTAN T MEMBER ITA NO. 1081/KOL/2013 A.Y : 2009-10 D.C.I.T, C.C-V, KOLKATA VS. M/S. SHREE SALASAR P ROPERTIES & FINANCE PV T. LTD PAN: AADCS6101Q (APPELLANT) (RE SPONDENT) FOR THE APPELLANT/DEPARTMENT: MD. GH AYAS UDDIN ANSARI, JCIT, LD.SR.DR FOR THE RESPONDENT/ASSESSEE: SHR I K.K. CHHAPARIA, FCA, LD.AR DATE OF HEARING: 08-04-2016 DATE OF PRONOUNCEMENT: 15- 4 -2 016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORD ER OF THE LEARNED CIT(A), CENTRAL-I, KOLKATA IN APPEAL NO. 347/CC-V/CIT(A)C- I/12-13 DATED 4.2.2013 AGAINST THE ORDER OF THE LEARNED AO FOR THE ASST YEAR 2009- 10 LEVYING PENALTY U/S 271AAA OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE PENALTY U/S 271AAA OF THE ACT COULD BE LEVIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS:- (1) THAT THE LD. CIT(A) ERRED IN DELETING THE PENAL TY U/S. 271AAA. (2) THAT THE LD. CIT(A) ERRED IN HOLDING THAT ADDI TIONAL INCOME DISCLOSED U/S. 132(4) DID NOT QUALIFY AS UNDISCLOSE D INCOME WITHIN THE MEANING OF SECTION 271AAA. (3) THAT THE LD. CIT(A) ERRED IN ALLOWING RELIEF T O THE ASSESSEE BY NOT CONSIDERING THE FACT THAT THE PROVISIONS OF CLA USE (II) OF SUB- ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 2 SECTION (2) OF SEC. 271AAA HAS NOT BEEN FULFILLED I N THE ASSESSEES CASE. 4. THE BRIEF FACTS OF THIS CASE ARE THAT A SEAR CH AND SEIZURE OPERATION WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 11.9.20 09. IN THE COURSE OF SEARCH AND SEIZURE OPERATION IN THE OFFICE PREMISES OF THE ASS ESSEE JOINTLY HELD WITH M/S SALASAR STOCK BROKING LTD AND M/S KRISHNA TRADE & COMMERCE PVT. LTD, THE FOLLOWING BOOKS AND DOCUMENTS WERE FOUND / SEIZED :- ANNEXURE WITH DATE DESCRIPTION FOUND SEIZED A DT.12 - 9 - 09 BOOKS OF A/CS SSB - 1 TO SSB - 15 SSB - 1 TO SSB - 15 C DT. 12-9-09 CASH RS. 14,82,430/- RS.14.50 LAKHS 2 DT. 12-9-09 INVENTORY OF BANK A/C 25 BANK A/C S NOT SEIZED DT. 7 - 11 - 09 CPU ONE ONE PURSUANT TO THE SEARCH, NOTICE U/S 153A OF THE ACT WAS SERVED UPON THE ASSESSEE. THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT ON 31.5.2010 SHOWING TOTAL INCOME OF RS. 1,76,31,590/- . IT WAS STATED THAT M/S ELEGANT SHARE BROKING PRIVATE LIMITED (PAN AABCE4828J) WA S AMALGAMATED WITH THE ASSESSEE COMPANY BY VIRTUE OF ORDER OF HONBLE CALC UTTA HIGH COURT DATED 28.7.2009 WITH EFFECTIVE DATE AS 1.4.2008. THE TRIAL BALANCE OF M/S ELEGANT SHARE BROKING PRIVATE LIMITED AS ON 31.3.2009 WAS CASTED IN THE A CCOUNTS OF THE ASSESSEE BY JOURNAL ENTRIES. THE LEARNED AO OBSERVED THAT DURING THE F INANCIAL YEAR 2008-09, M/S ELEGANT SHARE BROKING PRIVATE LIMITED HAD RAISED SHARE CAPI TAL INCLUDING SHARE PREMIUM OF RS. 10,35,00,000/-. THE ASSESSEE HAD ALSO RAISED SHARE CAPITAL DURING THE YEAR FOR RS. 3,25,00,000/- INCLUDING SHARE PREMIUM. PURSUANT T O THE SEARCH, THE ASSESSEE FILED A DISCLOSURE PETITION BEFORE THE ADIT (INVESTIGATION) , UNIT-III(4), DISCLOSING ADDITIONAL INCOME OF RS. 1,75,00,000/- FOR THIS YEAR AS EVIDEN CES REQUIRED IN SUPPORT OF SOURCE OF ALL SUCH SHARE CAPITAL MAY NOT BE READILY AVAILABLE . ACCORDINGLY THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED U/S 1 53A OF THE ACT OFFERING RS. ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 3 1,76,31,590/- ( RS. 1,31,590/- + RS. 1,75,00,000/-) . THE ASSESSMENT WAS COMPLETED U/S 153A / 143(3) OF THE ACT ON 11.5.2011 DETERMINING T OTAL INCOME OF RS. 1,79,63,280/-. PENALTY PROCEEDINGS U/S 271AAA OF THE ACT WAS INITI ATED BY THE LEARNED AO. 5. THE ASSESSEE PLEADED BEFORE THE LEARNED AO TH AT THE ASSESSEE HAD MADE DISCLOSURE PETITION U/S 132(4) OF THE ACT SOON AFTE R THE SEARCH. THE ASSESSEE PLEADED THAT THE SAID DISCLOSURE OF RS. 1,75,00,000/- FOR T HE ASST YEAR 2009-10 TO AVOID LONG DRAWN LITIGATION AND TO BUY PEACE AS THE ASSESSEE W AS INSTANTLY NOT ABLE TO PRODUCE ALL THE RELEVANT DOCUMENTATION OR PAPER WORK AS REQUIRE D BY THE DEPARTMENT. IT WAS ALSO PLEADED THAT THE DISCLOSURE PETITION ALSO STATED TH AT THE ASSESSEE HAS BEEN CARRYING ON BONAFIDE AND REGULAR TRANSACTIONS. IT WAS FURTHER PLEADED THAT THIS CLAIM ABOUT THE BONAFIDE AND REGULAR TRANSACTIONS ALSO GETS STRENGT HENED FROM THE FACT THAT DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS, THE LEARNE D AO COULD NOT FIND ANY INFIRMITY IN THE BOOKS OF ACCOUNTS. THE ASSESSEE PLEADED THA T IT IS ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY AS ALL THE CONDITIONS STIPULATED IN SECTION 271AAA(2) OF THE ACT HAVE BEEN SATISFIED. THE LEARNED AO DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO LEVY PENALTY U/S 271AAA OF THE ACT IN THE SUM OF RS. 17,50,000/- ON THE CONTENTION THAT THE ADDITIONAL DISCLOSURE OF RS. 1, 75,00,000/- WAS NOT RETURNED BY THE ASSESSEE IN THE RETURN FILED U/S 139(1) OF THE ACT BUT INCLUDED ONLY IN THE RETURN FILED U/S 153A OF THE ACT. THE PENALTY WAS ALSO LEVIED O N THE GROUND THAT BUT FOR THE SEARCH, THE ASSESSEE WOULD NOT HAVE COME FORWARD WITH THE A DDITIONAL DISCLOSURE. MOREOVER, IT WAS OBSERVED BY THE LEARNED AO THAT THE ASSESSEE HA D NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY THE ASS ESSEE AND ACCORDINGLY HELD THAT ASSESSEE IS NOT ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY. 6. ON FIRST APPEAL, THE ASSESSEE ARGUED THAT T HE CONTENTION OF THE LEARNED AO THAT THE DISCLOSURE MADE U/S 132(4) OF THE ACT WAS NOT I NCLUDED IN THE RETURN FILED U/S 139(1) OF THE ACT WAS NOT ONLY FACTUALLY INCORRECT BUT ALSO MISLEADING. IT WAS ARGUED THAT THE SEARCH GOT CONCLUDED ON 7.11.2009 BEING TH E LAST DATE OF PANCHANAMA DRAWN ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 4 BY THE AUTHORIZED OFFICER AND THE DISCLOSURE U/S 13 2(4) OF THE ACT WAS MADE BY THE ASSESSEE ON 7.11.2009 ON WHICH DATE, THE RETURN OF INCOME U/S 139(1) OF THE ACT HAD ALREADY BEEN FILED. HENCE THE ASSESSEE CANNOT BE E XPECTED TO OFFER THE ADDITIONAL INCOME IN THE RETURN FILED U/S 139(1) OF THE ACT. IT WAS ALSO ARGUED THAT IN ORDER TO AVAIL THE IMMUNITY PROVIDED IN SECTION 271AAA(2) OF THE ACT, IT IS NOT NECESSARY THAT THE DISCLOSURE U/S 132(4) SHOULD BE INCLUDED IN THE RETURN FILED U/S 139(1). IT WAS ARGUED THAT IT WOULD SUFFICE IF THE ADDITIONAL INCO ME DISCLOSED U/S 132(4) WAS INCLUDED IN THE RETURN FILED U/S 153A OF THE ACT AND TAX ALO NG WITH INTEREST WAS PAID THEREON. IT WAS ALSO ARGUED THAT THERE IS ABSOLUTELY NO REFEREN CE TO ANY SEIZED MATERIAL BROUGHT ON RECORD BY THE LEARNED AO WITH REGARD TO THE ADDITIO NAL INCOME OFFERED BY THE ASSESSEE AND HENCE THE ENTIRE ADDITION HAS BEEN ACCEPTED BY THE LEARNED AO ONLY BASED ON THE OFFER MADE VOLUNTARILY BY THE ASSESSEE AND NOT WITH REFERENCE TO ANY SEIZED MATERIALS. IT WAS ALSO ARGUED BY DRAWING ATTENTION TO THE DISC LOSURE PETITION U/S 132(4) OF THE ACT THAT THE ASSESSEE HAD BEEN CARRYING OUT REGULAR AND BONAFIDE TRANSACTIONS WHICH HAS NOT BEEN DISAPPROVED BY THE LEARNED AO AND DISCLOSURE W AS PERTAINING TO THE TRANSACTIONS CARRIED OUT BY THE AMALGAMATING COMPANY WHICH MIGHT NOT BE SATISFACTORILY PROVED BY PROPER DOCUMENTATION AND PAPER WORK AT THIS JUNCTUR E AND ACCORDINGLY HAD COME FORWARD TO MAKE ADDITIONAL DISCLOSURE OF RS. 1.75 C RORES TO AVOID UNNECESSARY LONG DRAWN LITIGATION AND TO BUY PEACE WITH THE DEPARTME NT. IT WAS ALSO ARGUED THAT THE DISCLOSURE MADE U/S 132(4) OF THE ACT DOES NOT REPR ESENT ANY UNDISCLOSED ASSET OR UNRECORDED ENTRY IN THE BOOKS OF ACCOUNTS OR FALSE EXPENSES AND ACCORDINGLY THE SAID OFFER IS COMPLETELY OUTSIDE THE SCOPE OF DEFINITION OF UNDISCLOSED INCOME DEFINED IN SECTION 271AAA OF THE ACT. THE ASSESSEE ALSO PLACED RELIANCE ON CERTAIN DECISIONS BEFORE THE LEARNED CIT(A) IN SUPPORT OF ITS PROPOSI TIONS. WITHOUT PREJUDICE, IT WAS FURTHER ARGUED THAT THE ASSESSEE IS STILL ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY EVEN IF THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE MA NNER IN WHICH THE UNDISCLOSED INCOME ADMITTED U/S 132(4) OF THE ACT HAD BEEN DERI VED. FOR THIS PROPOSITION, RELIANCE WAS PLACED ON THE DECISION OF THE CO-ORDIN ATE BENCH OF AHMEDABAD TRIBUNAL IN THE CAES OF DCIT VS SULCHANADEVI A AGARWAL IN IT A NO. 1052/AHD/2012 DATED ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 5 20.7.2012 . THE LEARNED CITA BASED ON THE AFORESAID SUBMISS IONS DULY APPRECIATED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE PEN ALTY. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 7. THE LEARNED DR VEHEMENTLY RELIED ON THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR REITERATED THE SUBMISSIONS MAD E BEFORE THE LEARNED CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD NOT DISCLOSE D THE ADDITIONAL INCOME IN THE RETURN FILED U/S 139(1) OF THE ACT. FOR THIS, WE ARE IN A GREEMENT WITH THE ARGUMENT OF THE LEARNED AR THAT THE RETURN U/S 139(1) OF THE ACT WA S FILED MUCH EARLIER TO THE DATE OF DISCLOSURE PETITION U/S 132(4) OF THE ACT AND HENCE THE ASSESSEE CANNOT BE EXPECTED TO OFFER THE ADDITIONAL INCOME IN THE RETURN U/S 139(1 ) OF THE ACT. THE ASSESSEE HAD MADE DISCLOSURE PETITION U/S 132(4) OF THE ACT SUBSTANTI ATING THE REASONS FOR OFFERING THE ADDITIONAL INCOME . FOR THE SAKE OF CONVENIENCE, T HE DISCLOSURE PETITION U/S 132(4) OF THE ACT IS REPRODUCED HEREUNDER:- DISCLOSURE PETITION U/S 132(4) OF THE ACT IN THE CA SE OF M/S SHREE SALASAR PROPERTIES & FINANCE PVT LTD TO THE LD. A.D.LT. (INV) UNIT - III (4) AAYAKAR BHAWAN ANNEXE P-13,CHOWRINGHEE SQUARE, KOLKATA - 700 069 RESPECTED SIR, RE : DISCLOSURE CONSEQUENT TO SEARCH AND SEIZURE OP ERATIONS CARRIED OUT BY THE INCOME TAX DEPARTMENT ON OUR PRE MISES ON 11 TH SEPTEMBER' 2009/12 TH SEPTEMBER' 2009 ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 6 WE ARE A NON BANKING FINANCIAL COMPANY AND WE ARE I NTO THE BUSINESS OF FINANCIAL ACTIVITIES AND RELATED SECTOR. IN THE LAST FINANCIAL YEAR, ELEGANT STOCK BROKING PRIVATE LIMITED GOT AMALGAMATED INTO OUR COMPANY WITH EFFECT FROM 1.4.2008, PURSUANT TO KOLKATA HIGH COUR T'S ORDER. THE SAID ELEGANT STOCK BROKING PRIVATE LIMITED AND OURSELVES HAVE PROCURED FINANCE IN THE FORM OF SHARE CAPITAL AND L OANS AND SUCH FUNDS ARE ROUTED INTO ACTIVITIES OF FINANCIAL SECTOR. SUC H FUNDS HAVE BEEN RAISED FROM VARIOUS SOURCES. YOUR GOODSELF HAS RAISED A QU ERY ON EXPLAINING THE SOURCES OF ALL SUCH RECEIPTS. WE HAVE BEEN CARRYING OUT REGULAR AND BONAFIDE TRANSACTIONS. HOWEVER, WE ARE NOT ABLE TO INSTANTLY PRODUCE ALL THE RELEVANT DOCUMENTATION OR PAPER WORK WHICH MAY BE REQUIRED BY THE DEPARTMENT. HENCE TO DEMONSTRATE OUR CO-OPERATIVE A TTITUDE AND TO AVOID UNNECESSARY LONG DRAWN LITIGATIONS WITH THE DEPARTM ENT AND TO BUY PEACE, WE ARE OFFERING AN ADDITIONAL INCOME OF RS.1,75,00, 000/- FOR FINANCIAL YEAR 2008-09, WHICH INCLUDE INCOME OF THE SAID ELEG ANT STOCK BRAKING PRIVATE LIMITED WHICH GOT AMALGAMATED INTO THE COMP ANY. THESE FUNDS HAVE BEEN DEPLOYED IN REGULAR FINANCIAL ACTIVITIES OF THE COMPANY INCLUDING ADVANCING OF LOANS AND SECURITIES BUSINES S. WE SHALL FILE RETURN ACCORDINGLY IN ACCORDANCE WITH LAW AFTER MAKING TECHNICAL ADJUSTMENTS (IF ANY) AND PAY TAXES THEREO N. WE ALSO UNDERSTAND THAT WE SHALL NOT BE PENALIZED I N ANY MANNER FOR MAKING THE ABOVE STATEMENTS. THANKING YOU FOR SHREE SALASAR PROPERTIES & FINANCE PRIVATE LIMI TED SD/- R.K. SARAOGI DIRECTOR. 8.1. FROM THE ABOVE DISCLOSURE STATEMENT , WE FIND THAT THE ASSESSEE HAD IMPLIEDLY SUBSTANTIATED THE FACT THAT THE INCOME PERTAINS TO THE AMALGAMATING COMPANY M/S ELEGANT STOCK BROKING PRIVATE LIMITED IN THE FORM O F SHARE CAPITAL AND LOANS, THE SOURCES OF WHICH MIGHT NOT BE PROVED TO THE SATISF ACTION OF THE DEPARTMENT WITH PROPER DOCUMENTATION AND PAPER WORK. WE ALSO FIND THAT E VEN THE LEARNED AO HAD ACCEPTED THE SAID OFFER FOR THE SAID REASON IN HIS ASSESSMEN T ORDER. SINCE THE INCOME PERTAINS TO ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 7 THE AMALGAMATING COMPANY, IT WOULD BE UNFAIR TO EXP ECT THE AMALGAMATED COMPANY (ASSESSEE HEREIN) TO SUBSTANTIATE THE MANNER IN WHI CH THE UNDISCLOSED INCOME WAS DERIVED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES , WE HOLD THAT THE ASSESSEE CANNOT BE EXPECTED TO SATISFY THE SECOND CONDITION CONTEMPLAT ED IN SECTION 271AAA(2) OF THE ACT FOR CLAIMING IMMUNITY FROM LEVY OF PENALTY. 8.2. WE FIND THAT THE ASSESSEE HAD NOT RETRACTED F ROM THE DISCLOSURE PETITION . WE FIND THAT THE ASSESSEE HAD DULY OFFERED THE ADDITIONAL I NCOME OF RS. 1,75,00,000/- FOR THE ASST YEAR 2009-10 IN THE RETURN FILED U/S 153A OF T HE ACT AND PAID TAXES THEREON. HENCE WE FIND THAT THE ASSESSEE HAD DULY SATISFIED ALL THE THREE CONDITIONS CONTEMPLATED IN SECTION 271AAA(2) FOR CLAIMING IMMU NITY FROM LEVY OF PENALTY. 8.3. WE FIND FROM THE PROFIT AND LOSS ACCOUNT OF T HE ASSESSEE, THIS ADDITIONAL INCOME OF RS. 1.75 CRORES IS NOT FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS THE SAME DOES NOT BELONG TO THE ASSESSEE AND INFACT PER TAINS TO THE AMALGAMATING COMPANY. HENCE THE SAME IS OFFERED ONLY IN THE RET URN OF INCOME BY THE ASSESSEE. IT IS ALSO PERTINENT TO NOTE THAT THIS OFFER HAS BEEN VOL UNTARILY BY THE ASSESSEE WITHOUT ANY INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH BY THE SEARCH PARTY AND NO IRREGULARITIES WERE FOUND IN THE COURSE OF SEARCH O N THE ASPECT OF SHARE CAPITAL OR LOANS WHICH HAVE BEEN OFFERED BY THE ASSESSEE COMPANY. HE NCE WE HOLD THAT THE SAME DOES NOT FALL WITHIN THE DEFINITION OF UNDISCLOSED INCO ME. WE FIND THAT THE EXPRESSION UNDISCLOSED INCOME IS DEFINED IN EXPLANATION TO S ECTION 271AAA OF THE ACT AS BELOW:- SECTION 271AAA PENALTY WHERE SEARCH HAS BEEN INIT IATED EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'UNDISCLOSED INCOME' MEANS ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 8 (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACT IONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132 , WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE REL ATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE 87 [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 87 [PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECOR DED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE REL ATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS Y EAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BU T THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISH ED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 8.4. FROM THE ABOVE DEFINITION, IT IS VERY CLEAR THAT THERE SHOULD BE SOME UNDISCLOSED INCOME IN THE FORM OF MONEY, BULLION ETC OR ANY ENT RY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND THE SAME SHOULD BE FOUND IN THE COURS E OF SEARCH. IT IS UNDISPUTED THAT NOTHING INCRIMINATING WAS FOUND DURING THE COURSE O F SEARCH BY THE SEARCH PARTY WITH REGARD TO THE ASPECT OF SHARE CAPITAL AND LOANS WHI CH WERE ULTIMATELY OFFERED TO TAX BY THE ASSESSEE IN THE SUM OF RS. 1.75 CRORES. HENCE IT GOES TO PROVE BEYOND DOUBT THAT THE OFFER OF UNDISCLOSED INCOME OF RS. 1.75 CRORES WAS MADE VOLUNTARILY BY THE ASSESSEE WITHOUT ANY DETECTION BY THE DEPARTMENT AN D ACCORDINGLY THE ARGUMENT OF THE LEARNED DR THAT BUT FOR THE SEARCH, THIS INCOME WOU LD NOT HAVE BEEN OFFERED DOES NOT HOLD ANY WATER AND DESERVES TO BE DISMISSED. IT IS ALREADY WELL SETTLED THAT THOUGH THE INCOME IS NOT DISCLOSED IN THE RETURN FILED U/S 139 (1) OF THE ACT, BUT DULY DISCLOSED IN ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 9 THE PETITION FILED U/S 132(4) OF THE ACT FOLLOWED B Y THE FILING OF RETURN IN RESPONSE TO SECTION 153A OF THE ACT AND TAXES PAID THEREON, TH EN THE ASSESSEE WOULD NOT BE INVITED WITH THE LEVY OF PENALTY. WE FIND THAT IF THE ARGU MENT OF THE LEARNED DR THAT SINCE THE ASSESSEE HAD NOT OFFERED THE SAID INCOME IN RETURN FILED U/S 139(1) OF THE ACT THEREBY LEVY OF PENALTY IS IN ORDER IS TO BE ACCEPTED, THEN IT WOULD MAKE THE IMMUNITY PROVISIONS CONTEMPLATED U/S 271AAA(2) OF THE ACT RE DUNDANT. THE LEGISLATURE IN ITS WISDOM HAD GIVEN A THOUGHTFUL CONSIDERATION ON THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ASSESSEE WOULD NOT BE INVITED WITH THE LE VY OF PENALTY PURSUANT TO THE SEARCH SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS STIPUL ATED IN THE SAID SECTION . HENCE IN VIEW OF THE ABOVE, WE HOLD THAT THE LEVY OF PENALTY IS NOT AUTOMATIC AND ASSESSEE IS CLEARLY ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY. 8.5. WE ALSO FIND THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUDARSHAN SILKS & SAREES VS CIT REPORTED IN (2008) 300 ITR 205 (SC) SUPPORTS THE CASE OF THE ASSESSEE. THE BRIEF FACTS OF THIS ARE AS BELOW:- 3. A SEARCH WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 14 AND 15-10- 1987 AND INCRIMINATING DOCUMENTS EVIDENCING CONCEAL MENT OF INCOME BY THE ASSESSEE WERE UNEARTHED APART FROM CASH AND JEWELLE RY FOUND AT THE TIME OF SEARCH. IT WAS FOUND THAT THE APPELLANT WAS MAINTAI NING DOUBLE SET OF BOOKS AND WAS ACCOUNTING FOR ONLY 50 PER CENT OF SALES IN THE REGULAR SET OF BOOKS. THIS FACT WAS ADMITTED BY SHRI 1.S. RAMESH, A PARTNER OF THE FIRM IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. SHRI 1.S. RAMESH IS THE PERSON-IN- CHARGE OF THE ENTIRE GROUP. THE TOTAL TURNOVER SUPP RESSED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1987-88 WAS FOUND TO BE TO THE TUNE OF RS. 44,07,783. THESE HAVE BEEN DISCUSSED IN DETAIL IN THE ORDER OF ASSES SMENT. ASSESSING OFFICER ESTIMATED THAT THE SALES OF THE ASSESSEE WERE RS. 5 0,000 PER DAY, WHEREAS THE ACCOUNTED SALES WERE NOT FOUND EVEN 50 PER CENT OF THE TOTAL SALES. APART FROM THIS, IT WAS FOUND THAT CERTAIN PURCHASES WERE ALSO NOT BEING ACCOUNTED FOR. SIMILARLY CERTAIN PAYMENTS MADE WERE NOT BEING ACCO UNTED FOR. ALL THESE WERE POINTED OUT TO THE ASSESSEE. THE ASSESSEE CAME FORW ARD WITH OFFER OF ADDITIONAL INCOME. ASSESSEE FILED A REVISED RETURN ON 31-3-198 9 DECLARING A TOTAL INCOME FOR THIS YEAR AT RS. 3,74,226 AS AGAINST THE EARLIE R AMOUNT OF RS. 43,650. THIS WAS ACCEPTED AND AFTER VERIFICATION THE ASSESSMENT WAS COMPLETED ON 29-12- 1989. ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 10 4. DURING THE COURSE OF RECORDING THE STATEMENT UN DER SECTION 132(4) OF THE ACT, SHRI RAMESH AGREED TO DECLARE SUCH ADDITIONAL INCOME AS HAD BEEN ESTIMATED BY THE SEARCH PARTY IN THE OFFICE OF THE APPELLANT AND ITS SISTER CONCERNS. ON THE BASIS OF THESE CALCULATIONS, REVIS ED RETURNS WERE FILED BY THE APPELLANT FOR ALL THE YEARS UNDER APPEAL. THE INCOM E AS PER REVISED RETURNS WERE ALSO ACCEPTED IN TOTO. IN THE COURSE OF ASSESS MENT PROCEEDINGS, PENAL ACTION UNDER SECTION 271(1)(C) OF THE ACT WAS INITI ATED AND, AFTER CONSIDERING THE REPLY FILED BY THE APPELLANT, THE LEARNED ASSIS TANT COMMISSIONER OF INCOME- TAX/ASSESSING OFFICER CHOSE TO LEVY MAXIMUM PENALTY UNDER SECTION 271(1)(C). WHILE LEVYING THE PENALTY, THE ASSESSING OFFICER RE PELLED THE CONTENTION OF THE APPELLANT THAT A PROMISE HAD BEEN MADE NOT TO LEVY THE PENALTY, AS THERE WAS NO EVIDENCE TO THIS EFFECT ON RECORD. IT WAS ALSO HELD THAT THE APPELLANT WAS NOT ENTITLED TO THE IMMUNITY GIVEN UNDER SECTION 132(4) READ WITH SECTION 271(1)(C) OF THE ACT. THE LEARNED CIT(A) DELETED THE LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT. ON SECOND APPEAL BY THE REVENUE, THE TRIBUNAL HELD AS FOLLOWS :- 'ALTHOUGH THERE IS NOTHING ON RECORD TO SHOW THAT HE WAS GIVEN AN ASSURANCE THAT NO PENALTY WOULD BE LEVIED, THE FACT HOWEVER CLEARLY SUGGEST THAT SUCH AN INDUCEMENT MUST HAVE BEEN GIVE N BY THE SEARCHING PARTY. WHEN ONLY PARTIAL EVIDENCE IN SUPPORT OF CON CEALMENT FOR A VERY LIMITED PERIOD WAS DETECTED DURING THE SEARCH, WHY WOULD A MAN GO TO OFFER MUCH HIGHER AMOUNTS FOR A LARGE NUMBER OF YEA RS UNLESS HE WAS PROMISED SOME RECIPROCAL BENEFIT LIKE NOT BEING VIS ITED WITH PENALTY? THE LEARNED DR HAS TRIED TO ARGUE BEFORE US THAT A CHAN GE OF HEART MIGHT HAVE TAKEN PLACE AS A RESULT OF WHICH SRI RAMESH CAME FO RWARD WITH ALL THE DISCLOSURES FOR DIFFERENT YEARS VOLUNTARILY. BUT LO OKING INTO THE HARD FACTS OF LIFE AND THE GENERAL EXPERIENCE OF MANKIND, ESPE CIALLY WITH REGARD TO FINANCIAL AFFAIRS, IT WOULD BE DIFFICULT TO ACCEPT SUCH A PROPOSITION. EVIDENTLY, HUGE AMOUNT OF UNEXPLAINED INVESTMENTS I NCLUDING UNEXPLAINED STOCK WAS FOUND AT THE TIME OF SEARCH. ULTIMATELY, ALMOST THE SAME AMOUNT OF INCOME WAS OFFERED BY THE ASSESSEES OVER A NUMBE R OF YEARS. AS THE TAX RATES OVER THE ENTIRE PERIOD WAS MORE OR LESS THE S AME, THE TAX EFFECT, EITHER FROM THE POINT OF VIEW OF THE DEPARTMENT, OR THE ASSESSEE WOULD HAVE MORE OR LESS THE SAME, HAD THE ENTIRE UNDISCLO SED ASSETS BEEN SUBJECTED TO TAX IN THE YEAR OF SEARCH OR THE ENTIR E INCOME WAS SPREAD OVER A NUMBER OF YEARS AS HAS BEEN DONE IN THE PRESENT A SSESSMENTS. IN VIEW OF THE DEPOSITION GIVEN UNDER SECTION 132(4) FOLLOWED BY THE COOPERATING ATTITUDE OF THE ASSESSEE IN PAYING UP THE TAX, IT W OULD BE CLEAR THAT NO PENALTY UNDER SECTION 271(1) WOULD HAVE BEEN LEVIAB LE HAD THE ENTIRE ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 11 UNDISCLOSED INCOME BEEN ASSESSED IN THE YEAR OF SEA RCH. INSTEAD OF GOING FOR THAT SIMPLE WAY, SRI RAMESH WENT INTO THE QUEST ION OF ADMITTING UNDISCLOSED INCOME ON ESTIMATED BASIS FOR THE DIFFE RENT PAST YEARS. HE MUST HAVE FELT THAT IN THAT PROCESS ALONE, HE WOULD AVOID THE LEVY OF PENALTY BY THE DEPARTMENTAL AUTHORITIES. THE FACTS AND CIRCUMSTANCES STRONGLY INDICATE THAT AN INDUCEMENT AND AN ALLUREM ENT HAD BEEN PROVIDED TO HIM AT THE TIME OF SEARCH IN THAT MATTER. AGAIN, ALTHOUGH INCRIMINATING MATERIALS WERE FOUND OUT DURING THE SEARCH, SUCH MATERIALS WERE HOWEVER ULTIMATELY NOT USED BY THE DEPARTMENTAL AUTHORITIES IN MAKING THE ASSESSMENTS. THE ASSESSME NTS WERE MADE TOTALLY ON THE BASIS OF ESTIMATION INCOME FOR THE EARLIER Y EARS AS DISCLOSED IN THE REVISED RETURNS. THE REVISED RETURNS SHOULD THEREFO RE BE CONSIDERED AS HAVING BEEN FILED IN GOOD FAITH. SO FAR AS ASSESSME NT OF THE UNDISCLOSED INCOME IS CONCERNED, SUCH REVISED RETURNS WOULD BE SUFFICIENT EVIDENCE FOR THAT PURPOSE. HOWEVER, FOR LEVYING PENALTY, SOME FU RTHER AND STRONGER EVIDENCES WERE SURELY REQUIRED. IN THE CASES RELIED UPON BY THE LEARNED DR, THE SEARCH ITSELF DISCOVERED THE UNDISCLOSED IN COME. IN THE INSTANT CASES, THE SEARCH MERELY LED TO CERTAIN CLUES TO TH E UNDISCLOSED INCOME AND BUT FOR THE STATEMENT MADE BY SRI RAMESH, IT WO ULD PERHAPS HAVE NOT BEEN POSSIBLE FOR THE DEPARTMENT TO ASSESS THE UNDI SCLOSED INCOME OVER ALL THESE YEARS IN THE WAY IN WHICH SUCH ASSESSMENT S HAVE BEEN MADE. THE ONLY WAY FOR THE DEPARTMENT IN SUCH A CASE WOULD HA VE BEEN TO ASSESS THE ENTIRE AMOUNT OF UNDISCLOSED INVESTMENTS FOR THE YE AR OF SEARCH AS HAS BEEN DISCUSSED BY US ABOVE, THE DEPTT. COULD NOT HA VE BEEN IN A POSITION TO LEVY PENALTY FOR CONCEALMENT IN SUCH A CASE. WE ARE THEREFORE OF THE OPINION THAT THE CASE LAWS AS CITED BY THE DEPARTME NT, DO NOT EXACTLY SUPPORT ITS CASE, SO FAR AS THE PRESENT APPEALS ARE CONCERNED. ON THE OTHER HAND, MOST OF THE JUDGMENTS CITED BY THE LEARNED CO UNSEL FOR THE ASSESSEE SUPPORT THE CASE OF THE ASSESSEE THAT ON ACCOUNT OF STRONG CIRCUMSTANTIAL EVIDENCES BEING THERE ABOUT INDUCEMENT HAVING BEEN GIVEN BY THE DEPARTMENTAL AUTHORITIES FOR NOT LEVYING PENALTY IN CASE OF DISCLOSURE OF INCOME OVER THE EARLIER YEARS, NO PENALTY CAN ACTUA LLY BE LEVIED BY THE DEPARTMENT.' THESE FINDINGS HAVE BEEN FINALLY APPROVED BY THE HO NBLE SUPREME COURT BY OBSERVING AS UNDER:- 17. ACCORDINGLY, THE ORDERS UNDER APPEAL ARE SET AS IDE AND THAT OF THE CIT(APPEALS) AND TRIBUNAL RESTORED. IT IS HELD THA T IN THE FACTS AND ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 12 CIRCUMSTANCES OF THE CASE, PENALTY UNDER SECTION 27 1(1)(C ) WAS NOT EXIGIBLE. THE APPEALS ARE ACCEPTED WITH COSTS. 8.6. WE FIND THAT THE FOLLOWING DECISIONS SUPPORT THE CASE OF THE ASSESSEE :- A) DECISION OF CO-ORDINATE BENCH OF CUTTACK TRIBUNA L IN THE CASE OF PRAMOD KUMAR JAIN VS DCIT REPORTED IN (2013) 33 TAXMANN.COM 651 (CUTTACK TRIB.) 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT NO DEFINITIO N COULD BE GIVEN TO THE 'SPECIFIED MANNER' INSOFAR AS THE VERY STATEMENT ON OATH U/S. 132(4) SPECIFIES THE MANNER ON WHICH THE ASSESSEE IS PREPA RED TO PAY TAX THEREON. THE INSCRIBING IN THE BOOKS OF ACCOUNT WAS TAKEN CA RE OF BY THE ASSESSEE WHEN HE FILED THE RETURNS IN PURSUANCE TO NOTICE U/ S. 153A ACCOUNTING THE ASSETS. THEREFORE, THE CASE LAWS CITED AT THE BAR C LEARLY INDICATE THAT THE PENALTY IS NOT AUTOMATIC IF ONE OF THE PURPORTED CO NDITION IS NOT FULFILLED ALTHOUGH ALL THE CONDITIONS HAVE BEEN AGREED TO OF HAVING FULFILLED BY THE ASSESSING OFFICER INSOFAR AS THE TAX AND INTEREST H AS BEEN RECOVERED. PENALTY HAS BEEN LEVIED AFTER THE TAX HAS BEEN RECO VERED THEREFORE ANSWERS THE QUERIES RAISED BY THE LEARNED DR FOR TH AT THE SAID PROVISIONS BECOME REDUNDANT WAS NOT THE INTENTION OF THE LEGIS LATION. THE MANNER, DURING THE SEARCH OPERATION, IS NOTED BY THE SEARCH PARTY WHICH THE ASSESSING OFFICER HAS ACCEDED TO. THEREFORE, FOLLOW ING THE DECISIONS AS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE , WHEREIN THE TRIBUNAL WAS PLEASED TO CONSIDER CANCELLING THE PENALTY SO L EVIED ARE ALSO APPLICABLE TO THE ASSESSEES' CASES BEFORE US INSOFA R AS THERE IS NO PRESCRIBED METHOD TO INDICATE THE MANNER IN WHICH I NCOME WAS GENERATED WHEN THE DEFINITION OF 'UNDISCLOSED INCOME' HAS BEE N DEFINED IN THE ACT ITSELF WHEN NO INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED 'EITHER WHOLLY OR PARTLY' WHICH ONUS LAY UPON THE ASSESSEE STOOD DISCHARGED. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW TH AT THE LEVY OF PENALTY U/S. 27LAAA IN THE INSTANT CASES ARE NOT JUSTIFIED AND AS SUCH, WE CANCEL THE PENALTY SO LEVIED U/S. 271 AAA FOR THE AYS UNDE R CONSIDERATION IN THE CASE OF RESPECTIVE ASESSEES. IN THE RESULT, ALL THE APPEALS FILED BY THE A SSESSES ARE ALLOWED. B) DECISION OF CO-ORDINATE BENCH OF NAGPUR TRIBUNAL IN THE CASE OF CONCRETE DEVELOPERS VS ACIT REPORTED IN (2013) 34 TAXMANN.CO M 62 (NAGPUR-TRIB.) SECTION 271AAA OF THE INCOME-TAX ACT, 1961 - PENAL TY - WHERE SEARCH HAS BEEN INITIATED - ASSESSMENT YEAR 2009-10 - WHET HER WHERE DURING ITA NO. 1081/KOL/2013-B-AM SHREE SALASAR PROPERTIES & FINACE PVT. LTD 13 COURSE OF SEARCH ASSESSEE ADMITTED UNDISCLOSED INCO ME, PAID TAX TOGETHER WITH INTEREST, FILED RETURN SHOWING SAID INCOME AS BUSINESS INCOME AND ASSESSING OFFICER HAD ACCEPTED SAME, IT COULD NOT B E SAID THAT ASSESSEE HAD NOT SPECIFIED MANNER OR COULD NOT SUBSTANTIATE MANNER IN WHICH INCOME WAS DERIVED - HELD, YES - WHETHER, THEREFORE , PENALTY UNDER SECTION 271AAA WAS NOT LEVIABLE AS ASSESSEE'S CASE FELL UNDER SUB- SECTION (2) OF SECTION 271AAA - HELD, YES [PARA 9] [IN FAVO UR OF ASSESSEE] 9. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCE S AND SPECIFIC FINDINGS GIVEN BY US AND IN VIEW OF THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR IMMUNITY FROM LEVY OF PENA LTY U/S 271AAA(2) OF THE ACT AND ACCORDINGLY THE PENALTY LEVIED BY THE LEARNED AO IS CANCELLED. THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 -4-2016. 1.. THE APPELLANT/DEPARTMENT: THE DCIT, CC-V, AAYK AR BHAWAN POORVA, 3 RD FL., 110 SHANTIPALLY KOLKATA-107. 2 THE RESPONDENT/ASSESSEE: M/S. SHREE SALASAR PROPE RTIES & FINACE PVT. LTD MUKTI CHAMBER, 4A CLIVE ROW, KOL-1. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- (N.V.VASUDEVAN, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE -4 -2016 COPY OF THE ORDER FORWARDED TO:-