Habibullah A. Chaudhary, Pune V. Assistant Commissioner of Income-tax,

ITA 115/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0861 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: S N DOSHI
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Initiation of penalty proceedings
• Section: 27; 132; 139

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.115/PN/2014 !$ $ / ASSESSMENT YEAR : 2008-09 SHRI HABIBULLAH A. CHAUDHARY, S.NO.99, PLOT NO.06, YESHWANT NAGAR, TELCO, BHOSARI ROAD, PUNE 18. PAN NO.AABPC1577B . / APPELLANT V/S ACIT, CENTRAL CIRCLE-2(3), PUNE . / RESPONDENT / ASSESSEE BY : SHRI S.N. DOSHI / RESPONDENT BY : SHRI DHEERAJ KUMAR JAIN / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19-11-2013 OF THE CIT(A) CENTRAL, PUNE RELATING TO ASSESSMENT YEAR 2008-09. 2. LEVY OF PENALTY OF RS.4,53,080/- BY THE AO U/S.271AAA A ND CONFIRMED BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE A SSESSEE IN THE GROUNDS OF APPEAL. / DATE OF HEARING :16.11.2015 / DATE OF PRONOUNCEMENT: 30.11.2015 2 ITA NO.115/PN/2014 3. FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH ACTION U /S.132 OF THE ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE O N 24-10-2007. ON 20-11-2007 THE ASSESSEE VOLUNTARILY FILED A LETTER DISC LOSING RS. 4 CRORES OF UNDISCLOSED INCOME EARNED IN THE COURSE OF H IS OWN BUSINESS AS WELL AS THE BUSINESS RUN IN THE NAME OF MR.TA NAJI JAGTAP. ON 30-09-2008, THE ASSESSEE FILED HIS RETURN OF IN COME DISCLOSING A TOTAL INCOME OF RS.5,07,23,750/-. THE AO COMPLETE D THE ASSESSMENT ON 31-12-2009 ASSESSING THE TOTAL INCOM E AT RS.2,01,52,850/- WHICH WAS LESS THAN THE INCOME RETURNED S INCE AN AMOUNT OF RS.3,97,09,216/- DECLARED FOR THIS ASSESSMENT YEAR WAS ASSESSED IN THE ASSESSEES HANDS FOR EARLIER ASSESS MENT YEARS. WHILE COMPLETING THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE AO MADE FURTHER ADDITION OF RS.45,30,800/- TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF DEPOSITS IN CER TAIN ACCOUNTS HELD BY HIM WHICH WERE NOT ACCOUNTED FOR IN HIS BOOKS. THE ASSESSEE ADMITTED BEFORE THE AO THAT 9 BANK ACCOU NTS HAD NOT BEEN DISCLOSED IN HIS BOOKS OF ACCOUNT OUT OF WHICH 4 WER E IN THE NAME OF SHRI TANAJI JAGTAP AND THE REMAINING 5 ARE IN HIS O WN NAME. THE DEPOSITS IN THESE ACCOUNTS WERE MADE BOTH IN CASH AND THROUGH CHEQUES. THE AO DID NOT MAKE ANY ADDITION ON AC COUNT OF CASH DEPOSITS SINCE HE FOUND THE CASH IN HAND WITH THE ASSESSEE TO BE MORE THAN THE CASH DEPOSITED ON ALL OCCASIONS. HOWEV ER, HE MADE AN ADDITION OF RS.45,30,800/- ON ACCOUNT OF CHEQUE D EPOSITS IN 2 BANKS, I.E. THE SEVA VIKAS BANK A/C. NO.14993 RS.17,61,315.05 AND THE SEVA VIKAS COOPERATIVE BANK A/C. NO.2566 RS.27,69,485/-. THE AO NOTED THAT THE TRANSAC TIONS IN THESE ACCOUNTS WERE NEVER DISCLOSED IN THE REGULAR BOOKS OF ACCOU NT AND THERE ARE NO CORRELATION BETWEEN THE REGULAR BOOKS AND THE UNACCOUNTED TRANSACTIONS. THE AO ACCORDINGLY WORKED O UT 3 ITA NO.115/PN/2014 UNEXPLAINED INVESTMENT IN THESE ACCOUNTS AT RS.45,30,800/ -. SINCE THE ASSESSEE HAD AGREED FOR ADDITION OF THE AMOUNT OF RS.45,30,800/- VIDE LETTER DATED 24-12-2009 THE AO LEVIED PENALTY OF RS.4,53,080/- U/S.271AAA OF THE ACT. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS.45,30,800/- REVEALS THE UNDISCLOSED BANK DEPOSITS MADE BY ONE SHRI TANAJI JAGTAP. TO AVOID LITIGATION, THE ASSESSEE MADE DISCLOSURE OF RS.4 CRORES WHICH INCLUDES THE ADDITIONAL AMOU NT OF RS.45,30,800/-. IT WAS SUBMITTED THAT BUT FOR THE CONCESS ION MADE BY THE ASSESSEE THIS ADDITION COULD NOT HAVE BEEN MADE AT ALL BOTH IN LAW AND ON FACTS. REFERRING TO THE PROVISIONS OF SECTION 271AAA IT WAS ARGUED THAT NO PENALTY SHALL BE LEVIED, IF THE ASSESS EE HAS MADE A STATEMENT U/S.132(4) AND ADMITTED THE UNDISCLOSED INCOME AND ALSO PAID THE DUE TAXES THEREON. SINCE THE ASSESSE E HAS COMPLIED WITH THE REQUIREMENTS OF SUB-SECTION (2) OF SECTION 271AAA NO PENALTY U/S.271AAA SHOULD HAVE BEEN LEVIED. VA RIOUS DECISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE CIT(A) TO THE PROPOSITION THAT NO PENALTY U/S.271AAA COULD HAVE BEEN LE VIED BY THE AO IN THE GIVEN CIRCUMSTANCES. 5. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE ARGUMEN TS ADVANCED BY THE ASSESSEE. HE NOTED THAT THE DISCLOSUR E WAS MADE BY THE ASSESSEE VIDE HIS LETTER DATED 20-11-2007. NO S TATEMENT U/S.132(4) WAS BROUGHT TO HIS NOTICE. FURTHER, THE ASSES SEE HAD DENIED OF HAVING SUCH UNDISCLOSED BANK ACCOUNTS DURING T HE SEARCH. THEREFORE, THE AVAILABILITY OF THE IMMUNITY PROVIDED FO R U/S.271AAA(2) TO THE ASSESSEE IS DOUBTFUL. FURTHER, THE DIS CLOSURE WAS MADE BY THE ASSESSEE ON 20-11-2007 AND THE ASSE SSEE FILED HIS RETURN ON 30-09-2008 WHEREIN THE ASSESSEE UNDOUBTEDL Y MUST 4 ITA NO.115/PN/2014 HAVE TAKEN THE DISCLOSED INCOME INTO CONSIDERATION. ACCO RDING TO THE LD.CIT(A) THE AMOUNT OF RS.45,30,800/- WORKED OUT BY T HE AO WAS OVER AND ABOVE THE INCOME DISCLOSED BY THE ASSESS EE AND RETURNED IN THE INCOME. THUS, THE ADDITION OF RS.45,30,800 /- WAS CLEARLY MADE ON ACCOUNT OF BANK ACCOUNTS DISCOVERED WE LL AFTER THE SEARCH ACTION AND AFTER THE DISCLOSURE MADE BY THE ASSE SSEE AND EVEN AFTER THE FILING OF RETURN BY THE ASSESSEE. SINCE THIS ADDITION WAS SEPARATELY ACCEPTED BY THE ASSESSEE VIDE HIS LETTE R DATED 24-12-2009, THEREFORE, THERE IS NO QUESTION OF THIS AMOUNT BEING A PART OF THE DISCLOSURE MADE U/S.132(4). 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOT A SINGLE PIECE OF PAPER WAS FOUND FROM THE ASSESSEES PREMISES. DURING THE COURSE OF SIMULTANEOUS SEARCH CONDUCTED AT THE PREMISE S OF DIFFERENT OTHER PERSONS NAMELY, SHRI CHETAN MEHTA, SHRI TA NAJI JAGTAP AND SHRI HABIBULLAH ABBAS ALI CHAUDHARY, CERTAIN PAPE RS WERE SEIZED WHICH DO NOT BELONG TO THE ASSESSEE. REFERR ING TO THE COMPUTATION OF INCOME, THE LD. COUNSEL FOR THE ASSESSEE D REW THE ATTENTION OF THE BENCH TO THE AMOUNT OF RS.3,97,09,216/- DECLARED BY THE ASSESSEE AND ALSO THE AMOUNT OF UNEXPLAINED INVES TMENT IN THE UNDISCLOSED BANK ACCOUNT MADE BY THE AO AT RS.45,30 ,800/-. HE SUBMITTED THAT THE ASSESSEE HAS PAID ALL THE TAXES ALONG WITH INTEREST WHILE FILING THE RETURN OF INCOME FOR A.Y.2008-09 IN WH ICH THE ASSESSEE ORIGINALLY HAD OFFERED THE ENTIRE AMOUNT OF D ECLARATION OF RS.3.97 CRORES. HOWEVER, THE AO AND THE ASSESSEE HAD TO BIFURCATE THE AMOUNT OF DECLARATION BETWEEN A.Y. 2002-03 T O 2008- 09 BY REFERRING TO THE YEAR IN WHICH THE INVESTMENTS WERE MADE. H E 5 ITA NO.115/PN/2014 SUBMITTED THAT THE ASSESSEE FULFILS ALL THE CONDITIONS LAID DOW N IN SECTION 271AAA FOR IMMUNITY FROM PENALTY. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF D CIT VS. M/S. TAPADIA AND KASLIWAL ASSOCIATES VIDE ITA NO.1430/PN/2 013 ORDER DATED 12-08-2015 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS CANCELLED THE PENALTY LEVIED U/S.271AAA ON THE GROUND THAT THE DEMAND OF RS.49,64,700/- RAISED BY THE AO FOR A.Y. 2010-11 VIDE ORDER DATED 29-12-2011 PASSED U/S.143 (3) HAS BEEN PAID ON 22-03-2012 WHICH IS MUCH BEFORE 28-06-2012 , I.E. MUCH BEFORE 28-06-2012, I.E. THE DATE OF PENALTY ORDER PAS SED U/S.271AAA. REFERRING TO THE COMPUTATION STATEMENT HE S UBMITTED THAT AN AMOUNT OF RS.23,66,640/- IS REFUNDABLE TO THE ASS ESSEE. THUS, SINCE THE ASSESSEE HAS MADE THE PAYMENT BEFORE THE INITIATION OF PENALTY PROCEEDINGS U/S.271AAA, THEREFORE, PENALT Y SO LEVIED U/S.271AAA BY THE AO AND CONFIRMED BY THE CIT(A) S HOULD BE DELETED. 8. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDE RED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE AS AGAINST THE RETURNED INCOME OF RS.5,07,23,750/- THE AO COM PLETED THE ASSESSMENT ON TOTAL INCOME OF RS.2,01,52,850/-. ALTHOUG H NO PAPERS WERE SEIZED FROM THE PREMISES OF THE ASSESSEE AS NOTHING IS COMING OUT OF THE ASSESSMENT ORDER AND AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, WE FIND THE ASSESSEE SUO MOTU VIDE LETTER DATED 20-11-2007 DISCLOSED AN AMOUNT OF RS.4 CRORES AS HIS 6 ITA NO.115/PN/2014 UNDISCLOSED INCOME EARNED IN THE COURSE OF HIS OWN BUSINES S AS WELL AS THE BUSINESS RUN IN THE NAME OF SHRI TANAJI JAGTAP. WE FIND THE AO WHILE COMPLETING THE ASSESSMENT FOR THE IMPUGNE D ASSESSMENT YEAR MADE AN ADDITION OF RS.45,30,800/- ON THE GROU ND THAT THE ASSESSEE HAD 9 BANK ACCOUNTS WHICH WERE NOT DISCLOSED TO THE DEPARTMENT AND WERE OUTSIDE THE BOOKS OF ACCOUNT WHICH INCLUDES 4 BANK ACCOUNTS IN THE NAME OF SHRI TANAJI JAGT AP. ACCORDINGLY, THE AO LEVIED PENALTY OF RS.4,53,080/- ON THE A MOUNT OF RS.45,30,800/- BEING THE UNEXPLAINED BANK DEPOSITS IN TH E 9 BANK ACCOUNTS WHICH WERE NOT REFLECTED IN THE REGULAR BO OKS OF ACCOUNT. 10. IT IS THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ADDITION OF RS.45,30,800/- MADE IN A.Y. 2008-09 DOES GET CO VERED IN THE TOTAL DECLARATION MADE OF RS.3,97,09,216/-. THE ASSES SEE HAS PAID THE TAXES ALONG WITH INTEREST WHILE FILING THE RETUR N OF INCOME. THE ADDITIONAL INCOME SO DECLARED WAS ONLY BIFURCA TED BETWEEN A.Y. 2002-03 TO 2008-09 BY REFERRING TO THE YEA R OF INVESTMENT MADE. IT IS ALSO THE CASE OF THE LD. COUNSEL FO R THE ASSESSEE THAT IN VIEW OF THE CLEAR PROVISIONS OF SUB-SECT ION (1) OF SECTION 271AAA THE ASSESSEE SHOULD NOT BE VISITED WITH T HE LEVY OF PENALTY U/S.271AAA SINCE THE TAXES HAVE ALREADY BEEN PA ID ON THE SAID AMOUNT AND THE ASSESSEE HAS ALSO DECLARED THE MA NNER OF SUCH INCOME WHICH IS FROM BUSINESS. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE DEPOSITS IN THE AFORESAID 9 BANK ACCOUNTS WER E ADMITTED AS THE INCOME OF THE ASSESSEE AND TAXES HAS A LREADY BEEN PAID ON THE ABOVE AND THEREFORE IN VIEW OF THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. TAPADIA AND KASLI WAL ASSOCIATES NO PENALTY U/S.271AAA SHOULD BE LEVIED. 7 ITA NO.115/PN/2014 11. WE FIND FORCE IN THE ABOVE ARGUMENTS OF THE LD. COUN SEL FOR THE ASSESSEE. ADMITTEDLY, NO PAPERS/DOCUMENTS WERE SE IZED FROM THE RESIDENCE OF THE ASSESSEE. THE ASSESSEE HAD VOLUN TARILY DECLARED AN AMOUNT OF RS.4 CRORES. AS AGAINST THE RETUR NED INCOME OF RS.5,07,23,750/- THE AO COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.2,01,52,850/- AS PER THE COMPUTATION STATEME NT FILED AT PAGES 5 TO 8 OF THE PAPER BOOK AN AMOUNT OF RS.23,6 6,640/- IS REFUNDABLE TO THE ASSESSEE. PENALTY ORDER WAS PASSED ON 29-06- 2010 AND THE ASSESSMENT ORDER WAS PASSED ON 31-12-2008. 12. WE FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE C ASE OF M/S. TAPADIA KASLIWAL ASSOCIATES (SUPRA) WHILE DECIDING THE ISS UE OF PENALTY U/S.271AAA HAS OBSERVED AS UNDER : 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FI ND IN THE INSTANT CASE THE SEARCH TOOK PLACE ON 19-01-2010 DURIN G WHICH THE PARTNER OF THE FIRM HAD ADMITTED UNDISCLOSED INCOME O F RS.6.94 CRORES IN HIS STATEMENT RECORDED U/S.132(4) AS INCOME FROM BUSI NESS OF BUILDERS. WE FIND THE ASSESSEE FILED THE RETURN OF INCO ME ON 27-09- 2011 DECLARING THE AFORESAID INCOME OF RS.6,94,02,079 /-. ALTHOUGH THE TAX PAYABLE AND INTEREST PAYABLE ON SUCH INCOME COMES TO RS.2,25,97,918 (TAX RS.2,11,46,696/- + INTEREST RS.14,5 1,222/-) WE FIND THE ASSESSEE HAD PAID AN AMOUNT OF RS.1,84,97,920/- ONLY TILL COMPLETION OF ASSESSMENT. THUS, THE ASSESSEE HAS PAID LESS BY RS.40,99,998/- FOR WHICH THE AO HELD THAT THE ASSESSEE H AD NOT PAID TAX DUE TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME AND THEREFORE PENALTY U/S.271AAA IS LEVIABLE O N THE ASSESSEE FIRM. THE AO ACCORDINGLY LEVIED PENALTY OF RS.69,40 ,208/- WHICH HAS BEEN DELETED BY THE CIT(A). 13. IT IS THE CASE OF THE REVENUE THAT SINCE THE ASSESSEE HAS NOT PAID THE ENTIRE TAX AND INTEREST BEFORE FILING OF THE RET URN OF INCOME, THEREFORE, PENALTY U/S.271AAA IS LEVIABLE. IT IS THE C ASE OF THE ASSESSEE THAT THE BALANCE AMOUNT OF RS.40,99,998/- HAS BEEN PA ID ON 22-03- 2012 WHICH IS MUCH BEFORE 28-06-2012, I.E. THE DATE OF PENALTY ORDER PASSED U/S.271AAA. SINCE THERE IS NO TIME LIMIT PRESCRI BED FOR PAYMENT OF TAX U/S.271AAA AND SINCE THE ASSESSEE HAS PAID THE ENTIRE TAX ALONG WITH INTEREST DUE BEFORE PASSING OF THE PENA LTY ORDER, THEREFORE, NO PENALTY U/S.271AAA IS LEVIABLE ON THE A SSESSEE. 8 ITA NO.115/PN/2014 14. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. PIONEER MARBLES AND INTERIORS PVT. LTD. REPORTED IN 144 TTJ 663. IN TH AT CASE, THE ASSESSEE COMPANY WAS SUBJECT TO SEARCH AND SEIZURE OPERATIONS U/S. 132 DURING WHICH THE ASSESSEE MADE THE DISCLOSURE OF RS.50 LAKHS. THE INCOME SO DECLARED WAS INCLUDED IN THE INCOME SUBSEQUENTLY RETU RNED BY THE ASSESSEE WHICH WAS ACCEPTED BY THE AO IN THE ASSESSMENT ORDE R. HOWEVER, THE AO INITIATED PENALTY PROCEEDINGS U/S.271 AAA ON THE GROUND THAT THE ASSESSEE HAD NOT PAID FULL TAX AND INTE REST ON DISCLOSURE MADE U/S.132(4). IT WAS ARGUED BY THE ASSESSEE THAT WHILE FILING THE RETURN OF INCOME IT HAD NOT COMPUTED LEV Y OF INTEREST U/S.234C DUE TO INADVERTENT MISTAKE BUT THE ASSESSEE HAD PAID OVERALL SHORTFALL WITHIN PERMISSIBLE TIME, I.E. UPON RECEIVING THE NOTICE OF DEMAND U/S.156. THE AO REJECTED THE CONTENTION OF T HE ASSESSEE AND LEVIED PENALTY U/S.271AAA. THE CIT(A) CANCELLED SUCH PENALTY HOLDING THAT DUE TAXES ALONG WITH INTEREST WAS PAID BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED. ON FURTHER APPEAL BY TH E REVENUE THE TRIBUNAL DISMISSED THE APPEAL FILED BY THE REVENUE AND UPHELD THE ORDER OF THE CIT(A) BY OBSERVING AS UNDER : 6. WE FIND THAT SECTION 271 AAA, WHICH IS APPLICABL E IN RESPECT OF UNDISCLOSED INCOME UNEARTHED AS A RESULT OF SEARCH OPERA TIONS CARRIED OUT ON OR AFTER 1S T JUNE 2007, PROVIDES AS FOLLOWS: PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON O R AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENA LTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT TH E RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIO US YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY I F THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SU B-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT O F THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THI S SECTION. EXPLANATION : FOR THE PURPOSES OF THIS SECTION, (A) UNDISCLOSED INCOME MEANS 9 ITA NO.115/PN/2014 (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESEN TED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUN T OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARC H UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARC H IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSION ER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESE NTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPE NSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NO T BEEN CONDUCTED; (B) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT TH E 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 ASSESSE E HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 7. WE FIND THAT UNDER THE SCHEME OF SECTION 271 AAA, THERE IS A COMPLETE PARADIGM SHIFT SO FAR AS PENALTY IN RESPECT OF UNACCOUNTED INCOME UNEARTHED AS A RESULT OF SEARCH OPERATION CARRI ED OUT ON OR AFTER 1S T JUNE 2007 IS CONCERNED. UNLIKE IN THE CASE OF PENALTY UNDER SECTION 271(1)(C), SECTION 271 AAA, WITHOUT ANY REFE RENCE TO FINDINGS OR PRESUMPTIONS OF CONCEALMENT OF INCOME OR THE FINDI NGS OR PRESUMPTIONS OF FURNISHING OF INACCURATE PARTICULARS, PROVIDES THAT IN RESPECT OF UNACCOUNTED INCOME IN THE CASES WHERE SEARCH INITIATED AFTER 1S T JUNE 2007, THE ASSESSEE IS TO PAY A PENALTY @ 10% OF UNACCOUNTED INCOME. SUB SECTION 2 OF SECTION 271 AAA , HOWEVER, RELAXES THE RIGOUR OF THIS PENALTY PROVISION IN A SITUA TION IN WHICH (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SECTION 132(4), ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHIC H SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. WHILE PAYMENT OF TAXES, ALONG WITH INTEREST, BY THE ASSESSEE IS ONE OF TH E CONDITIONS PRECEDENT FOR AVAILING THE IMMUNITY UNDER SECTION 27 1AAA(2), THERE IS NO TIME LIMIT SET OUT FOR SUCH PAYMENTS BY THE ASSESSEE. O NCE A TIME LIMIT FOR PAYMENT OF TAX AND INTEREST HAS NOT BEEN SET OUT BY THE STATUTE, IT CANNOT INDEED BE OPEN TO THE ASSESSING OFFIC ER TO READ SUCH A TIME LIMIT INTO THE SCHEME OF THE SECTION OR TO INFE R ONE. THERE IS THUS NO LEGALLY SUSTAINABLE BASIS FOR THE STAND OF THE ASSESSING OFFICER THAT IN A SITUATION IN WHICH DUE TAX AND INTEREST HAS NOT B EEN PAID IN FULL BEFORE FILING OF THE RELEVANT INCOME TAX RETURN, TH E ASSESSEE WILL NOT BE ELIGIBLE FOR IMMUNITY UNDER SECTION 271 AAA(2). 10 ITA NO.115/PN/2014 8. WHILE DEALING WITH EXPLANATION 5 TO SECTION 271( 1)(C), WHICH IS BROADLY ON THE SAME LINES, HONBLE GUJARAT HIGH COURT , IN THE CASE OF CIT VS MAHENDRA C SHAH (299 ITR 305) HAS OBSERVED THAT , THERE IS NO PRESCRIPTION ABOUT THE POINT OF TIME WHEN THE TAX HAD TO BE PAID QUA THE AMOUNT OF INCOME DECLARED IN THE STATEMENT U NDER SECTION 132(4) OF THE ACT. WE MUST, HOWEVER, POINT OUT THAT EVEN AFTER MAKING THESE SPECIFIC OBSERVATIONS THEIR LORDSHIPS HAD TO TREAT THE CONCLUSION OF ASSESSMENT PROCEEDINGS AS OUTER LIMIT FOR MAKING PAYME NT OF TAX AND INTEREST BUT THAT WAS BECAUSE OF THE PECULIAR NATU RE OF PENALTY PROVISIONS UNDER SECTION 271(1)(C) WHEREIN ASSESSING OFFI CER HAS TO RECORD THE SATISFACTION IN THE COURSE OF ASSESSMENT PROCEE DINGS ITSE LF SOMETHING WHICH IS NOT A CONDITION PRECEDENT FOR IMPO SITION OF PENALTY UNDER SECTION 271 AAA. THEIR LORDSHIPS HAD HELD THAT HOWEVER, THE OUTER LIMIT HAS TO BE THE POINT OF TIME WHEN THE ASSESSM ENT PROCEEDINGS ARE UNDERTAKEN BY THE ASSESSING OFFICER BECA USE THE OPENING PORTION OF SECTION 271(1) OF THE ACT REQUIRE S THE ASSESSING OFFICER TO RECORD SATISFACTION IN THE COURSE OF SUCH PR OCEEDINGS, AND THE SATISFACTION HAS TO BE AS REGARDS THE CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME . SECTION 271 AAA, AS THE STATUTE UNAMBIGUOUSLY PROVIDES, DOES NOT REQ UIRE ANY SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER TO BE ARR IVED AT DURING THE ASSESSMENT PROCEEDINGS, AND, THEREFORE, THE OUTER LI MIT OF PAYMENT BEFORE THE CONCLUSION OF ASSESSMENT PROCEEDINGS WILL NOT COME INTO PLAY. 9. IN OUR CONSIDERED VIEW, THEREFORE, ON THE FACTS OF THE PRESENT CASE WHEREIN ENTIRE TAX AND INTEREST HAS BEEN DULY PAID WE LL WITHIN THE TIME LIMIT FOR PAYMENT OF NOTICE OF DEMAND UNDER SECTION 156 AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED, THE A SSESSEE COULD NOT BE DENIED THE IMMUNITY UNDER SECTION 271AAA(2) ONLY BECAUSE ENTIRE TAX, ALONG WITH INTEREST, WAS NOT PAID BEFORE FILING OF INCOME TAX RETURN OR, FOR THAT PURPOSE, BEFORE CONCLUDING THE ASSESSMENT P ROCEEDINGS. 10. FOR THE REASONS SET OUT ABOVE, WE APPROVE THE CONC LUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MA TTER. 11. IN THE RESULT, THE APPEAL IS DISMISSED. 15. SINCE IN THE INSTANT CASE ALTHOUGH THE ASSESSEE HAS N OT PAID AN AMOUNT OF RS.40,99,998/- BEFORE FILING OF THE RETURN OF INCOME, HOWEVER, THE FACT REMAINS THAT THE DEMAND OF RS.49,64 ,700/- RAISED BY THE AO FOR A.Y. 2010-11 VIDE ORDER DATED 29-12-2011 PASSED U/S.143(3) HAS BEEN PAID ON 22-03-2012 WHICH IS MUCH BEFORE 28-06- 2012, I.E., THE DATE OF PENALTY ORDER PASSED U/S.271AA A FOR THE YEAR UNDER APPEAL. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF PIONEER MARBLES AND INTERIORS PVT. LTD. (SUPRA), WE HOLD THAT NO PENALTY U/S.271AAA IS LEVIABLE IN THE INSTANT CASE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISM ISSED. 13. SINCE IN THE INSTANT CASE THE ASSESSEE HAS PAID THE TAXES BEFORE THE PASSING OF THE PENALTY ORDER, SINCE HUGE AMOUN T IS REFUNDABLE TO THE ASSESSEE AND SINCE THE ADDITION OF RS.45 ,30,800/- 11 ITA NO.115/PN/2014 MADE IN A.Y. 2008-09 GETS COVERED IN THE TOTAL DECLARATION MADE BY THE ASSESSEE AMOUNTING TO RS.3,97,09,216/-, THEREFORE, RESP ECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNA L CITED (SUPRA) WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271AAA OF THE I.T. ACT. WE HOLD AND DIR ECT ACCORDINGLY. THE ORDER OF CIT(A) CONFIRMING THE PENALTY IS T HUS SET ASIDE. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30-11-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED : 30 TH NOVEMBER, 2015. LRH'K ' (!* + / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT ( A ) CENTRAL, PUNE 4. 5. 6. CIT CENTRAL, PUNE ' *, *, IQ.KS / DR, ITAT, A PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE