IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO S . 1 251 TO 1254 /PN/20 1 3 / ASSESSMENT YEAR S : 200 6 - 0 7 TO 2009 - 10 THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK . / APPELLANT VS. SHRI RAHUL SHANTARAM SAWALE, PROP. OF M/S. SHANTUSHA B UILDERS, 28, AMBALIKA BUNGALOW, BEHIND HOTEL TAPASVI, INDIRA NAGAR, NASHIK 422009 . / RESPONDENT / APPELLANT BY : SHRI DHEERAJ KUMAR JAIN / RESPOND ENT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 04 .0 1 .201 6 / DATE OF PRONOUNCEMENT: 29 . 0 1 .201 6 / ORDER / PER SUSHMA CHOWLA, JM: THIS BUNCH OF FOUR A PPEAL S RELATING TO THE SAME ASSESSEE FILED BY THE REVENUE ARE AGAINST THE CONSOLIDATED ORDER OF CI T (A) - I , NASHIK , DATED 1 5 . 0 3 .201 3 RELATING TO ASSESSMENT YEAR S 200 6 - 0 7 TO 2009 - 10 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 2 2. THIS BUNCH OF FOUR APPEALS FILED BY THE REVENUE RELATING TO THE SAME ASSE SSEE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3 . THE REVENUE IN ITA NO. 1 251 /PN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN DELETING PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS.11,27,841/ - WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATION REGARDING THE DIFFERENCE IN INCOME RETURNED VIDE RETURN FILED U/S 13 9 OF THE ACT AND 153A OF THE ACT AT RS.2 , 03,010 AND 37,66,627/ - . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ADDITIONAL INCOME OF RS.34,40,700/ - WAS OFFERED ONLY IN THE RETURN FILED U/S 153A OF THE ACT ON SPECIFIC ISSUES BASED ON INCRIMINATING SEIZED DOCUMENTS FOR WHICH THE ASSESSEE DID NOT OFFER ANY EXPLANATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT BUT FOR THE SEARC H OPERATIONS THE ASSESSEE WOULD NOT HAVE OFFERED ADDITIONAL INCOME IN THE RETURN FILED UNDER SECTION 153A OF THE ACT WHICH IS EVIDENCED BY HIS FAILURE TO OFFER THE SAID ADDITIONAL INCOME IN THE RETURN FILED UNDER SECTION 139 OF THE ACT. 4. ON THE FACTS A ND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS 4. ON THE FACTS A ND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY TO THE TUNE OF RS.30,295/ - LEVIED U/S 271(1)(C) OF THE ACT, ON THE ADDITIONAL INCOME OF RS.90,000/ - OFFERED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NO TICE UNDER SECTION 153A OF THE ACT WITHOUT APPRECIATING THAT THE OFFER OF ADDITIONAL INCOME WAS MADE BY THE ASSESSEE ONLY ON ACCOUNT OF THE NOTINGS ON THE INCRIMINATING SEIZED DOCUMENTS FOUND DURING THE SEARCH. 5. ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY TO THE TUNE OF RS.4,039/ - LEVIED U/S 271(1)(C) OF THE ACT, ON THE ADDITIONAL INCOME OF RS.12,000/ - OFFERED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS WITHOUT APPRECIATING THAT THE OFF ER OF THIS INCOME WAS MADE BY THE ASSESSEE ONLY ON BEING CONFRONTED WITH THE FACT THAT THE INCOME WAS REQUIRED TO BE BROUGHT TO TAX DURING ASSESSMENT PROCEEDINGS AND THE ESTIMATE OF THE SAID INCOME IS THAT OF THE ASSESSEE HIMSELF. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY TO THE TUNE OF RS.20,196/ - LEVIED U/S 271 (1)(C) OF THE ACT, ON THE ADDITIONAL INCOME OF RS.60,000/ - OFFERED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS WITH OUT APPRECIATING THAT THE OFFER OF THIS INCOME WAS MADE BY THE ASSESSEE ONLY ON BEING CONFRONTED WITH THE FACT THAT THE INCOME WAS REQUIRED TO BE BROUGHT TO TAX DURING ASSESSMENT PROCEEDINGS AND THE ESTIMATE OF THE SAID INCOME IS THAT OF THE ASSESSEE HIMSE LF. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN HOLDING THAT PROVISIONS OF EXPLANATION 1 OF SECTION 271 (1 )(C) OR EXPLANATION 5A OF THAT SECTION DOES NOT APPLY TO THE FACTS OF THE CASE WHICH IS CONTRARY TO THE EVID ENCE ON RECORD, THUS RENDERING HIS DECISION PERVERSE AND BAD IN LAW. ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 3 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE, AMEND ANY OF THE GROUNDS AS PER THE CIRCUMSTANCES OF CASE. 9. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO S UBSTANTIATE ITS CASE AS OCCASION MAY DEMAND. 4. THE ISSUE ARISING IN ALL THE APPEALS IS AGAINST DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 5. THE ASSESSING OFFICER HAD LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 11,86,410/ - IN ASSESSMENT YEAR 2006 - 07, RS.28,35,080/ - IN ASSESSMENT YEAR 2007 - 08 , RS.25,61,400/ - IN ASSESSMENT YEAR 2008 - 09 AND RS.15,08,250/ - IN ASSESSMENT YEAR 2009 - 10. THE BASIS FOR LEVY OF PENALTY WAS , FIRST , THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN TH E RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE SECOND SET OF ADDITIONS MADE IN THE HANDS OF THE ASSESSEE W ERE THE ADDITIONAL INCOME OFFERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ON WHICH PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT WAS LEVIED. THE FACTS AND ISSUES RAISED IN PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT WAS LEVIED. THE FACTS AND ISSUES RAISED IN THE PRESENT SET OF APPEALS ARE IDENTICAL AND WE PROCEED TO DECIDE THE PRESENT SET OF APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 6. BRIEFLY, IN THE FACTS OF THE PRES ENT CASE, SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 06.01.2010 AND SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE OFFICE PREMISES OF THE ASSESSEE. CERTAIN BOOKS OF ACCOUNT AND OT HER INCRIMINATING DOCUMENTS WERE SEIZED AND IMPOUNDED FROM THE SEARCH / SURVEY PREMISES. THE ASSESSEE FOR THE YEAR UNDER APPEAL I.E. ASSESSMENT YEAR 2006 - 07 HAD FILED THE ORIGINAL RETURN OF INCOME UNDER SECTION 139 OF THE ACT ON 14.03.2007 DECLARING TOTAL INCOME OF RS. 2,03,010/ - . IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE FURNISHED THE RETURN OF INCOME ON 30.09.2010 DECLARING TOTAL INCOME OF RS.37,66,627/ - , INCLUDING ADDITIONAL INCOME OF RS. 34,40,700/ - . THE ADDITIONAL INCOME OF RS. 33,50,700/ - WAS ON ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 4 ACCOUNT OF ADVANCES RECEIVED AGAINST BOOKING OF FLATS / PLOTS AND RS.90,000/ - WAS ON ACCOUNT OF GIFT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ADDITION OF RS.12,000/ - ON ACCOUNT OF RENTAL INCOME FROM TWO PROPERTIES, RS.60,000/ - ON ACCOUNT OF INCOME FROM HOTEL AMANTRAN AT TRIMBAK ROAD, NASHIK AND RS.12,000/ - ON - MONEY RECEIVED FROM SALE OF PLOTS AT WADALA, NASHIK, WERE ADDED TO THE INCOME DECLARED UNDER SECTION 153A OF THE ACT. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS F OR CONCEALMENT AGAINST THE ASSESSEE AND ISSUED REQUISITE NOTICE THEREUNDER. IN RESPONSE TO THE NOTICE, THE ASSESSEE POINTED OUT THAT DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 132( 4 ) OF THE ACT, THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME O F RS. 3,11,66,761 / - FOR ASSESSMENT YEAR S 2004 - 05 TO 2010 - 11, IN ADDITION FURTHER ADDITIONAL INCOME WAS OFFERED IN THE NAME OF ASSESSEES WIFE MRS. SNEHAL R. SAWALE AT RS.25,03,888/ - . THE ASSESSEE POINTED OUT THAT THE ADDITIONAL INCOME WAS ASSESSED IN THE H ANDS OF ASSESSEE , AGAINST WHICH IT HAD NOT FILED ANY APPEAL. IN VIEW THEREOF, THE CLAIM OF THE ASSESSEE WAS THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIABLE, WHERE THE ADDITIONAL INCOME HAS BEEN DECLARED BY THE ASSESSEE AND DUE TAXES HAVE B EEN PAID. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH, BOOKS OF ACCOUNT AND OTHER INCRIMINATING DOCUMENTS WERE SEIZED AND STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132(4) OF THE ACT, IN WHICH HE ADMITTED TO THE ADDITIONAL INCOM E OF ADVANCES CREDITED IN CASH IN HIS BOOKS OF ACCOUNT. THE ASSESSEE STATED THAT HE HAD NO EVIDENCE IN RESPECT OF AMOUNT TOTALING RS. 2,17,98,431/ - . FURTHER, THE ASSESSEE ALSO ADMITTED THAT HE HAD NO DOCUMENTARY EVIDENCE IN SUPPORT OF GIFT CLAIMED OF RS.9 0,000/ - AND RS.8,17,500/ - IN ASSESSMENT YEARS 200 6 - 0 7 AND 200 7 - 0 8 RESPECTIVELY. HE FURTHER OFFERED RS.55 LAKHS RECEIVED AS ADDITIONAL INCOME FOR ASSESSMENT YEAR 2010 - 11 ON ACCOUNT OF SEIZED DOCUMENTS. ANOTHER DISCLOSURE MADE BY THE ASSESSEE WAS ON ACCOUN T OF STOCK OF TD R AMOUNTING TO RS. 16,89,185/ - RELATING TO ASSESSMENT YEAR 2008 - 09 . THE ASSESSING OFFICER NOTED DURING THE COURSE OF PENALTY PROCEEDINGS THAT THE ASSESSEE HAD DISCLOSED THE ADDITIONAL INCOME OF ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 5 RS.34,40,700/ - FOR THE ASSESSMENT YEAR 2006 - 07 ON ACCOUNT OF ENTRIES IN THE BOOKS OF ACCOUNT AND OTHER INCRIMINATING DOCUMENTS FOUND / IMPOUNDED. THE ASSESSING OFFICER FURTHER OBSERVED THAT IN CASE THERE WAS NO SEARCH ACTION IN THE CASE OF ASSESSEE, THE UNDISCLOSED INCOME WOULD NOT HAVE BEEN UNEARTHE D, HENCE, THE CONTENTION OF THE ASSESSEE ABOUT VOLUNTARY DISCLOSURE OF INCOME TO BUY PEACE OF MIND AND AVOID LITIGATION, WAS FOUND TO BE INCORRECT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE COMMITTED DEFAULT WITHIN THE MEANI NG OF EXPLANATION (1) AND CLAUSE (II) OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AND HELD THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY. FURTHER, THE ASSESSEE HAD OFFERED RENTAL INCOME OF RS.12,000/ - FROM TWO PROPERTIES, RS.60,000/ - ON ACCOUNT OF INCOME FROM HOTEL AMANTRAN AT TRIMBAK ROAD, NASHIK AND RS.12,000/ - ON ACCOUNT OF ON - MONEY ON SALE OF PLOTS AT NASHIK AND THIS WAS ALSO NOT A VOLUNTARY DISCLOSURE AND THE ASSESSEE WAS HELD TO HAVE CONCEALED THE PARTICULARS OF INCOME WITHIN THE MEANING OF EXPLANAT ION 5A TO SECTION 271(1)(C) OF THE ACT. IN VIEW THEREOF, THE ASSESSEE WAS H ELD TO HAVE CONCEALED THE PARTICULARS OF INCOME TO THE EXTENT OF RS.35,24,700/ - AND PENALTY OF RS. 11,86,410/ - WAS LEVIED. 7. THE CIT(A) HELD THAT WHERE THE ASSESSEE HAD RECORDED THE ENTRIES OF ADVANCES FROM CUSTOMERS IN THE BOOKS AND SHOWN THE SAME IN THE BALANCE SHEET AS LIABILITY AND NOT AS INCOME, THEREFORE, THE FIRST PORTION OF CLAUSE (II) TO EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WAS NOT APPLICABLE TO THE FACTS OF TH E CASE. AS REGARD S THE SECOND PORTION THAT THE ASSESSEE CLAIMED SUCH ENTRY IN THE BOOKS OF ACCOUNT AS INCOME, WHERE THE ASSESSEE HAS CLAIMED THE FIRST PORTION IS NOT APPLICABLE, THE SECOND PORTION IS ALSO NOT RELEVANT. THE CIT(A) OBSERVED THAT THE PROVIS IONS OF CLAUSE (I) OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT HAD BEEN INSERTED FOR BRINGING INTO AMBIT OF SECTION 271(1)(C) OF THE ACT , THE AMOUNT OF INCOME RECORDED IN THE BOOKS OF ACCOUNT, BUT WHICH HAS BEEN OFFERED IN THE RETURN OF INCOME FILED AFTER SEARCH BEYOND THE TIME LIMIT ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 6 PRESCRIBED UNDER SECTION 139(1) OF THE ACT, WAS CORRECT AND THE SAID INCOME RECORDED IN THE BOOKS OF ACCOUNT WAS NOT LIABLE TO PENALTY AS PER EXPLANATION 5. IN RESPECT OF OTHER ADDITIONS MADE ON ACCOUNT OF GIFT SHOWN IN THE BOOKS OF ACCOUNT, THE CIT(A) OBSERVED THAT THE ASSESSEE HAD CLAIMED RECEIPTS OF GIFT FROM HIS PARENTS AND CLOSE RELATIVES RECEIVED BY CHEQUE AND IN CASH. THE SAID GIFTS WERE RECORDED IN THE BOOKS OF ACCOUNT NOT AS INCOME, BUT AS GIFT AND WERE REFLECTE D IN THE CAPITAL ACCOUNT AND BALANCE SHEET FILED ALONG WITH RETURN OF INCOME PRIOR TO THE DATE OF SEARCH. IN VIEW THEREOF, THE CIT(A) HELD THAT THE SAME DID NOT REPRESENT INCOME AND THE CLAUSE (II) OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WAS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. THE CIT(A) DELETED PENALTY LEVIED ON GIFTS SHOWN IN THE BOOKS OF ACCOUNT AT RS. 90,000/ - AND RS.8,17,200/ - RELATING TO ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 RESPECTIVELY. SIMILARLY, PENALTY ON LOAN OF RS.4,15,000/ - SHOWN IN THE BOOKS OF ACCOUNT AND BALANCE SHEET FILED WITH RETURN OF INCOME FOR ASSESSMENT YEAR 2007 - 08 , WAS DELETED BY THE CIT(A) AS EXPLANATION 5A WAS NOT ATTRACTED SINCE THE LOAN HAD BEEN REFLECTED IN TH E BALANCE SHEET PRIOR TO THE DATE OF SEARCH AND TH E SAME WAS RECORDED IN THE BOOKS OF ACCOUNT REGULARLY MAINTAINED IN THE CASE OF THE BUSINESS, THEREFORE, IT COULD NOT BE SAID THAT THE SAID LOAN WAS ASSESSED AS INCOME WAS UNEARTHED AS A RESULT OF SEARCH UNDER SECTION 132 OF THE ACT. 8. ANOTHER PENALTY LEVIED FOR ASSESSMENT YEAR 2007 - 08 IN RESPECT OF CHANGE OF HEAD OF INCOME FROM CAPITAL GAIN TO BUSINESS AMOUNTING TO RS.24,48,300/ - WAS ALSO DELETED BY THE CIT(A) AS NO PENALTY WAS LEVIABLE ON CHANG ING HEAD OF INCOME BY THE ASSESSING OFFICER IN ASSESSMENT OF INCOME. SIMILARLY, PENALTY LEVIED ON ADDITION OF RS. 18,61,000/ - UNDER SECTION 40(A)(IA) OF THE ACT RELATING TO ASSESSMENT YEAR 2009 - 10 WAS DELETED BY THE CIT(A) SINCE THE ADDITION WAS MERELY ON DEEMING PROVISIONS. ANOTHER PENALTY LEVIED ON PROFIT ON S ALE OF FLAT RS.22,250/ - AND 42,250/ - IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 WAS CONFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 7 IS NOT IN APPEAL. THE ASSESSING OFFICER HAD FURTHER LEVIED PENALTY IN RESPECT OF RENT FROM SHOP AND HOUSE OF RS.12,000/ - I N ASSESSMENT YEARS 200 6 - 0 7 TO 2009 - 10 . SINCE THE ADDITION WAS MADE ON NOTIONAL BASIS, THE CIT(A) HELD THAT WHERE THE EXPLANATION OFFERED BY THE ASSESSEE WAS FOUND TO BE BONAFIDE, THERE WAS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. F URTHER, ADDITION W AS MADE ON ACCOUNT OF INCOME FROM HOTEL OF RS.60,000/ - IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, WAS ALSO DELETED BY THE CIT(A) AS THE ESTIMATED INCOME WAS OFFERED BY THE ASSESSEE TO BUY PEACE OF MIND AND TO AVOID LITIGATION AND IT WAS NO T PROVED THAT THE ASSESSEE HAS IN FACT EARNED INCOME FROM HOTEL BUSINESS AT RS.60,000/ - . AN ADDITION OF RS.12,000/ - ON SALE OF PLOT AT VADALA IN ASSESSMENT YEAR 2006 - 07 WAS CONFIRMED IN THE HANDS OF ASSESSEE, AGAINST WHICH THE ASSESSEE HAS NOT POINTED OUT THAT WHETHER THERE IS ANY APPEAL. SIMILAR ADDITION OF RS.10,000/ - ON SALE OF PLOT AT VADALA IN ASSESSMENT YEAR 2007 - 08 WAS ALSO CONFIRMED BY THE CIT(A). THE PENALTY IN RESPECT OF BOTH WAS DELETED BY THE CIT(A). 8. THE REVENUE IS IN APPEAL AGAINST THE O RDER OF CIT(A). 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE FIRST ISSUE RAISED IN THE PRESENT APPEAL ON ACCOUNT OF OFFERING ADDITIONAL INCOME PURSUANT TO SEARCH IS DECIDED AGAINST THE ASSESSEE BY THE ORDER OF TRIBUNAL I N MRS. SARITA KAUR MANJEET SINGH CHOPRA VS. ITO IN ITA NO.1562/PN/2013 , RELATING TO ASSESSMENT YEAR 2009 - 10 , ORDER DATED 30.10.2015 . SINCE THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN THE ADDITION MADE ON ADDITIONAL INCOME IN RESPECT OF ITEM NOS.4 AND 9, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE SAID ADDITIONS WERE CONFIRMED BY THE CIT(A) AND THE ASSESSEE IS NOT IN APPEAL. IN RESPECT OF ITEMS 5 TO 8, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT TH AT PENALTY IN RESPECT OF SAME WAS DELETED BY THE CIT(A). THE ITEM 5 IS ON ACCOUNT OF ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 8 ESTIMATED RENTAL FOR THE SECOND HOUSE AND WHERE THE SAID RENTAL WAS NOT SHOWN BY THE ASSESSEE, THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY. IN RESPECT OF ITEM 6 I.E. DIS ALLOWANCE MADE SINCE THE TDS WAS NOT DEDUCTED ON LABOUR PAYMENTS UNDER SECTION 40(A)(IA) OF THE ACT, THE SAME WAS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FURTHER, THE ASSESSEE HAD OFFERED RENTAL INCOME DURING THE COURSE OF ASSESSMEN T PROCEEDINGS AND ON SUCH RENTAL INCOME, PENALTY NEEDS TO BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE NEXT ADDITION MADE IN THE HANDS OF ASSESSEE WAS BY TAXING INCOME SHOWN AS LONG TERM CAPITAL GAINS IN THE ORIGINAL RETURN OF INCOME AS BUSINESS INCO ME DURING THE COURSE OF 153A PROCEEDINGS. THE CIT(A) HAD DELETED THE SAID PENALTY SINCE ALL DETAILS WERE FILED AND ISSUE WAS DEBATABLE. HOWEVER, RELIANCE WAS PLACED ON THE ORDER OF ASSESSING OFFICER AND IT WAS POINTED OUT THAT THE ASSESSING OFFICER GAVE CLEAR FINDING IN ASSESSMENT YEAR 2007 - 08 , WHICH MERITS TO BE PENALTY LEVIED. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF TRIBUNAL IN AJIT B. ZOTA VS. ACIT (2010) 40 SOT 543 (MUM - TRI B ). HE FURTHER POINTED OUT THAT THE ASSESSMENT HEAD WAS CHANGED BECAUSE OF CHA R GES DURING THE COURSE OF SEARCH. 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ONE OF PLOTS WAS HELD BY THE ASSESSEE FOR 8 YEARS AND THE SECOND P LOT WAS ALSO HELD FOR LONG PERIOD AND HE FURTHER STATED THAT IN THE ORIGINAL RETURN OF INCOME, THE PROFIT ARISING ON SALE OF PLOT WAS SHOWN AS LONG TERM CAPITAL GAIN. OUR ATTENTION WAS DRAWN TO THE NARRATION IN THE ASSESSMENT ORDER AND POINTED OUT THAT TH E ASSESSEE WAS IN THE CONSTRUCTION ACTIVITY. HE STRESSED THAT THE TRADER COULD HOLD TWO PORTFOLIOS AND IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AND JUST BECAUSE INCOME WAS ASSESSED IN THE HEAD BUSINESS INCOME DOES NOT MERIT LEVY OF PENALTY FOR C ONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. BENNET COLEMAN & CO. LTD. (2013) 87 DTR 368 ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 9 (BOM) AND HONBLE HIGH COURT OF MADRAS IN CIT VS. GANESAN BUIL DERS LTD. (2008) 299 ITR 403 (MAD) . 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT READ WITH EXPLANATION 5A UNDER THE SAID SECTI ON. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF LAND DEVELOPERS. SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE ACT WERE CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 06.01.2010 . THE STATEMENT UNDER SECT ION 132(4) OF THE ACT WAS RECORDED ON THE DATE OF SEARCH AND THE ASSESSEE OFFERED ADDITIONAL INCOME ON ACCOUNT OF ADVANCES RECEIVED IN CASH FROM THE CUSTOMERS AMOUNTING TO RS.33,35,700/ - IN ASSESSMENT YEAR 2006 - 07, RS.49,10,200/ - IN ASSESSMENT YEAR 2007 - 08 , RS.75,01,500/ - IN ASSESSMENT YEAR 2008 - 09 AND RS.25,22,100/ - IN ASSESSMENT YEAR 2009 - 10 . FURTHER, ADDITIONAL INCOME WAS OFFERED DURING THE COURSE OF SEARCH ITSELF UNDER STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT ON ACCOUNT OF GIFT SHOWN IN THE B OOKS OF RECORDED UNDER SECTION 132(4) OF THE ACT ON ACCOUNT OF GIFT SHOWN IN THE B OOKS OF ACCOUNT AMOUNTING TO RS.90,000/ - AND RS.8,17,200/ - IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 AND ALSO ON ACCOUNT OF UNSECURED LOAN SHOWN IN THE BOOKS OF ACCOUNT OF RS.4,15,000/ - IN ASSESSMENT YEAR 2007 - 08. ADMITTEDLY, THE SAID ADVANCES FROM CUSTOMER S, GIFTS AND UNSECURED LOANS HAD BEEN RECORDED IN THE BOOKS OF ACCOUNT, BALANCE SHEET AND THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE RESPECTIVE YEARS, WHICH W ERE FILED BEFORE SEARCH ACTION TAKEN UNDER SECTION 132 OF THE ACT. FURTHER, ADDITIONS WER E MADE IN ASSESSMENT YEARS 2006 - 07 TO 2009 - 10 ON ACCOUNT OF UNDISCLOSED RENT FROM TWO PROPERTIES @ RS.12,000/ - PER ANNUM . I N ASSESSMENT YEAR 2008 - 09 , ADDITION WAS MADE ON ACCOUNT OF UNDISCLOSED PROFITS ON SALE OF FLAT AT RS.22,250/ - AND IN ASSESSMENT YEAR 2009 - 10 AT RS.42,250/ - . FURTHER, IN RESPECT OF DISALLOWANCE ON LABOUR PAYMENTS IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, ADDITIONAL INCOME WAS OFFERED IN ASSESSMENT YEAR 2009 - 10 AT RS. 18, 61,000/ - . ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 10 ANOTHER ADDITION MADE IN THE HANDS OF A SSESSEE WAS THE ESTIMATED RENTAL INCOME FROM HOTEL OF RS.60,000/ - EACH IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 . FURTHER, THE ASSESSEE HAD RECEIVED ON - MONEY ON SALE OF PROPERTY OF RS. 12,000/ - IN ASSESSMENT YEAR 2006 - 07 AND RS. 10,000/ - IN ASSESSMENT YEAR 20 07 - 08 . THE TOTAL ADDITION MADE IN THE HANDS OF ASSESSEE OF RS.11,86,410/ - IN ASSESSMENT YEAR 2006 - 07, RS.28,35,0 0 0/ - IN ASSESSMENT YEAR 2007 - 08, RS.25,61,400/ - IN ASSESSMENT YEAR 2008 - 09 AND RS.15,08,250/ - IN ASSESSMENT YEAR 2009 - 10. IN VIEW OF THE ABOVE SAID ADDITIONS MADE IN THE HANDS OF ASSESSEE, THE ASSESSING OFFICER HELD THE ASSESSEE TO BE LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND SUM OF RS.11,86,410/ - WAS LEVIED AS PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IN ASSESSMENT YEAR 2006 - 07, RS.28,35,0 0 0/ - IN ASSESSMENT YEAR 2007 - 08, RS.25,61,400/ - IN ASSESSMENT YEAR 2008 - 09 AND RS.15,08,250/ - IN ASSESSMENT YEAR 2009 - 10 . THE TABULATED DETAILS OF THE INCOME OFFERED IN THE RETURN OF INCOME FILED PURSUANT TO ISSUE OF NO TICE UNDER SECTION 153A OF THE ACT ARE AVAILABLE AT PAGE S 2 AND 3 OF THE APPELLATE ORDER IN ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 12. THE ISSUE ARISING BEFORE US IS IN RELATION TO LEVY OF SAID PENALTY UPON THE ASSESSEE IN THE RESPECT IVE YEARS, WHICH HAD BEEN DELETED BY THE CIT(A) AND THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). IN RESPECT OF FIRST ADDITION MADE IN ALL THE RESPECTIVE YEARS I.E. ASSESSMENT YEAR S 2006 - 07 TO 2009 - 10 WITH REGARD TO ADVANCES RECEIVED IN CASH FROM THE CUSTOMERS, WHICH IN TURN, HAVE BEEN SHOWN IN THE BALANCE SHEET. THE AFORESAID ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE DURING THE COURSE OF SEARCH PROCEEDINGS, IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE QUESTION ARISES THAT W HERE THE ASSESSEE HAD ADMITTED TO THE ADDITIONAL INCOME, WHICH IN TURN, WAS DISCLOSED IN ITS RETURN OF INCOME AND TAXES THERE UPON WERE PAID, WHETHER THE ASSESSEE WAS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 11 13. WE FIND THAT SIMILAR ISSUE OF LEVY OF PENALTY UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AROSE BEFORE THE TRIBUNAL IN SARITA KAUR MANJEET SINGH CHOPRA VS. ITO (SUPRA) . THE TRIBUNAL VIDE ORDER DATED 30.10.2015 HELD AS UNDER: - 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SEARCH AND SEIZURE ACTION WAS CARRIED OUT AGAINST THE ASSESSEE ON 09.12.2009. WHILE TRAVELLING FROM PUNE TO DELHI BY AIR, THE ASSESSEE WAS FOUND TO BE IN POSSESSION OF CASH OF RS.1,60,76,800/ - . THE ASSESSEE WAS SEARCHED BY THE I NVESTIGATION WING UNDER SECTION 132 OF THE ACT ON 09.12.2009 AND RESIDENCE WAS ALSO SEARCHED AND CASH OF RS.1.60 CRORES WAS SEIZED DURING THE SEARCH PROCEEDINGS. IN THE COURSE OF RECORDING OF STATEMENT DURING THE SEARCH PROCEEDINGS, THE ASSESSEE ADMITTED THAT SHE HAD SOLD HER ANCESTRAL PROPERTY AT DELHI FOR RS.3.40 CRORES, FOR WHICH THE AGREEMENT WAS MADE FOR RS.1.70 CRORES AND THE BALANCE AMOUNT WAS RECEIVED IN CASH. THE CLAIM OF THE ASSESSEE WAS THAT THOUGH SHE HAD 50% SHARE IN THE IMPUGNED PROPERTY AND THE BALANCE 50% SHARE WAS OWNED BY HER SISTER MRS. TRIPTA KAUR, BUT SHE HAD RECEIVED THE ENTIRE CASH CONSIDERATION AND THE CHEQUE CONSIDERATION WAS DIVIDED 50 : 50. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE OFFERED 50% OF T HE AGREEMENT VALUE I.E. RS.85 LAKHS AND 100% OF THE CASH ELEMENT I.E. RS.1.70 CRORES IN HER HAND AND COMPUTED THE INCOME FROM CAPITAL GAINS AND DECLARED TOTAL INCOME OF RS.2,04,91,850/ - ON 13.09.2010. AGAINST THE INCOME FROM CAPITAL GAINS COMPUTED AT RS.2 ,41,17,168/ - , THE ASSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT AT RS.38,40,098/ - , ON ACCOUNT OF INVESTMENT IN MEGA POLIS PROPERTY. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT, NOTED THAT THE ASSESSEE HAD NOT DECLARED THE SALE CONSIDER ATION OF RS.2.55 CRORES IN THE ORIGINAL RETURN OF INCOME FILED AND SUBSEQUENTLY AFTER THE SEARCH, THE DECLARATION WAS MADE ON ACCOUNT OF TOTAL AMOUNT OF CAPITAL GAINS. THE ASSESSING OFFICER RECORDED SATISFACTION IN THE BODY OF THE ASSESSMENT ORDER TO THE EXTENT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AND PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. BESIDE THE ABOVE SAID, THERE WAS ANOTHER ASPECT OF SALE OF PROPERTY, WHEREIN THE ASSESSEE HAD CLAIMED THAT IT HAD S OLD FITTINGS AND FIXTURES OF THE SAID BUNGALOW FOR RS.10 LAKHS. HOWEVER, IN THE ABSENCE OF LIST OF FURNITURE OR PERSONAL EFFECTS SOLD, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE FITTINGS AND FIXTURES ATTACHED TO THE PROPERTY WERE INEXTRICABLY LINKED T O THE BUILDING AND CONSIDERATION RECEIVED THEREON, WAS TO BE TREATED AS CAPITAL GAINS. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) CAPITAL GAINS. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WITH REGARD TO THE SAID ADDITION. CONSEQUENT THERETO, THE ASSESSING OFFICER REJECTING THE CLAIM OF THE ASSESSEE THAT IT HAD SUO MOTU OFFERED THE INCOME FROM LONG TERM CAPITAL GAINS, AND NO MALAFIDE INTENTION COULD BE ATTRIBUTED TO THE SAID DISCLOSURE, HENCE, THERE WAS NO MERIT IN LEVY OF PENALTY, HELD THE ASSESSEE EXIGIBLE TO LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.47,11,104/ - . THE CIT(A) ELABORATELY CONSIDERED THE ISSUE AND UPHELD THE LEVY OF PENALTY. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE LEVY OF PENALTY UNDE R SECTION 271(1)(C) OF THE ACT. 14. THE FIRST ASPECT OF THE ISSUE RAISED BY THE ASSESSEE BEFORE US IS THAT WHERE NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER, SINCE IN THE HANDS OF ASSESSEE, THERE WAS NO ADDITION WHATSOEVER, AS THE INCOME OF FERED BY THE ASSESSEE WAS ACCEPTED IN TOTO, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD BE LEVIED. FROM THE PERUSAL OF ASSESSMENT ORDER, IT IS CLEAR THAT THE ASSESSING OFFICER AFTER CONSIDERING THE FACTS OF THE CASE AND ALSO THE RETURN OF INCOME F ILED BY THE ASSESSEE PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT VIDE PARA 3.2 NOTED THAT THE TOTAL SALE CONSIDERATION OF THE ANCESTRAL PROPERTY WAS RS.3.40 CRORES, OUT OF WHICH RS.1.70 CRORES WAS RECEIVED IN CASH AND RS.1.70 CRORES WAS RECEI VED IN CHEQUE. THE CHEQUE AMOUNT WAS SHARED BY THE CO - OWNER. HOWEVER, THE ENTIRE CASH AMOUNT WAS CLAIMED TO BE RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER FURTHER CONSIDERED THAT THE ASSESSEE HAD OFFERED THE CHEQUE AMOUNT AND CASH AMOUNT AGGREGATING TO RS.2.55 CRORES FOR TAXATION UNDER THE HEAD LONG TERM CAPITAL GAINS. THE ASSESSING OFFICER FURTHER OBSERVED THAT SINCE THE ASSESSEE HAD NOT DECLARED THIS AMOUNT OF CAPITAL GAINS IN HER ORIGINAL RETURN AND SUBSEQUENTLY, AFTER SEARCH HAS DECLARED THE T OTAL AMOUNT OF CAPITAL GAINS AND THUS, CONCEALED THE PARTICULARS OF INCOME AND CONSEQUENTLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED SEPARATELY BY THE ASSESSING OFFICER. THE ABOVE SAID FINDING OF THE ASSESSING OFFICER IS THE DEEMED SATISFACTION RECORDED BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND IN VIEW THEREOF, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD. 15. NOW, COMING TO THE ISSUE THAT WHERE THE ASSESSEE HAD OFFERED THE INCOME IN THE RETURN OF INCOME FILED AFTER SURRENDERING THE ADDITIONAL INCOME, CAN THE ASSESSEE BE HELD TO HAVE ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 12 CONCEALED ITS INCOME VIS - - VIS ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. SECTION 271(1) OF THE ACT MAKES PROVIS ION FOR LEVYING PENALTIES ON ASSESSEE IN DIFFERENT EVENTUALITIES, ONE SUCH EVENTUALITY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ONLY ON FULFILLMENT OF THE CONDITIONS STIPULATED IN SECTION 271(1)(C) OF THE ACT, THERE ARISES A QUESTION OF EXERCISING POWER UNDER THE SAID PROVISION TO IMPOSE PENALTY. THE SAID SECTION LAYS DOWN THAT WHERE THE ASSESSING OFFICER OR THE CIT(A) IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTI CULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY STIPULATED IN THE AFORESAID PROVISION. THE EXPLANATION/S UNDER SECTION 271(1)(C) OF THE ACT SET OUT THE CIRCUMSTANCES, WHICH JUSTIFIES THE LEVY OF PENALTY. FOR SEARCHES INITIATED UNDER SECTION 132 OF THE ACT BEFORE FIRST DAY OF JUNE, 2007, EXPLANATION 5 WAS INTRODUCED BY THE FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 01.04.2003. UNDER THE SAID SECTION, WHERE THE A SSESSEE WAS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR IN PART HIS INCOME, FOR ANY PREVIOUS YEAR, WHICH HAD ENDED BEFORE THE DATE OF SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAD NOT BEEN FURNISHED BEFORE THE SAID DATE, OR WHERE THE RETURN OF INCOME HAD BEEN FURNISHED BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN OR FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH, THEN NOTWITHSTANDING THAT SUCH INCOME WAS DECLARED BY HIM IN THE RETURN OF INCOME, HE WAS DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, UNLESS THE INCOME OR THE TRANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNT OR THE PERSON IN THE COURSE OF SEARCH MAKES A STATEMENT UNDER SECTION 132(4) OF THE ACT THAT THE SAID MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS, HAS BEEN ACQUIRED BY HIM OUT OF HIS INCOME, WHICH HAS NOT BEEN SO FAR DIS CLOSED, BUT SPECIFIES THE MANNER IN WHICH THE SAID INCOME HAS BEEN DERIVED AND PAYS THE TAXES TOGETHER WITH INTEREST. UNDER EXPLANATION 5, AN EXEMPTION WAS PROVIDED TO THE PERSON WHO WAS SEARCHED AND WAS FOUND IN POSSESSION OF MONEY, BULLION, JEWELLERY, V ALUABLE ARTICLES OR THINGS, THEN IN CASE HE DECLARED THE SAME UNDER THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT AND THEREAFTER, PAYS THE TAXES ON THE SAME, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED ON SUCH PERSON. 16. HOWEVER, FO R SEARCHES INITIATED UNDER SECTION 132 OF THE ACT ON OR AFTER FIRST DAY OF JUNE, 2007, ANOTHER EXPLANATION 5A WAS APPLICABLE, WHICH WAS INTRODUCED BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007. THE ORIGINAL EXPLANATION 5A PROVIDED THAT WHERE IN THE COURSE OF SEARCH, THE ASSESSEE WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS ASSESSEE WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS AND THE ASSESSEE CLAIMS THAT SUCH ASSET HAD BEEN ACQUIRED BY HIM BY UTILIZING WHOLLY OR IN PART HIS INCOME FOR ANY PREVIOUS YEAR OR ANY INCOME IS BASED ON ANY ENTRY IN BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT THE SAME REPRESENTS HIS INCOME FOR ANY PREVIOUS YEAR, THEN WHERE THE PERIOD HAS ENDED BEFORE THE DATE OF SEARCH AND THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH YEAR HAS EXPIRED AND THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME, THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE SAID EXPLANATION 5A WAS SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.06.2007 WITH T HE AMENDMENT THAT WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAD BEEN FURNISHED BEFORE THE DATE OF SEARCH, BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN OR WHERE THE DUE DATE OF FILING THE RETURN OF INCOME FOR OTHER PREVIOUS YEAR HAS EXPIRED, BUT TH E ASSESSEE HAD NOT FILED THE RETURN OF INCOME, THEN NOTWITHSTANDING THE FACT THAT THE SAID INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF HIS INCOME. 17. THE DEEMING PROVISIONS OF EXPLANATION 5A UNDER SECTION 271(1)(C) OF THE ACT ARE APPLICABLE TO ALL THE SEARCHES INITIATED UNDER SECTION 132 OF THE ACT ON OR AFTER FIRST DAY OF JUNE, 2007. THE CONDITIONS LAI D DOWN IN THE EXPLANATION 5A IS WHERE DURING THE COURSE OF SEARCH, THE ASSESSEE IS FOUND TO BE IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING WHOLL Y OR IN PART HIS INCOME, FOR ANY PREVIOUS YEAR ON ANY INCOME BASED ON ANY ENTRIES IN BOOKS OF ACCOUNT, OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRIES IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENT HIS INCOME FOR AN Y PREVIOUS YEAR, THEN IN CASES WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAD BEEN FURNISHED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH, BUT THE SAID INCOME HAD NOT BEEN DECLARED IN THE SAID RETURN OF INCOME OR THE DUE DATE FOR FILING THE RETURN OF INCOME HAD EXPIRED FOR SUCH PREVIOUS YEAR AND THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME, IT IS FURTHER LAID DOWN THAT NOTWITHSTANDING THE FACT THAT SUCH INCOME WHICH HAS BEEN DISCOVERED DUE TO THE SEARCH PROCEEDINGS, IS DECLARED BY HIM ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 13 IN ANY RETURN FURNISHED ON OR AFTER THE DATE OF SEARCH, BUT IRRESPECTIVE OF THE SAME, HE WOULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. READING THE ABOVE SAID PROVISIONS OF THE EXPLANATION 5A TO SECTION 271(1 )(C) OF THE ACT, IT IS NOTED THAT THE PERSON IS DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, WHICH IS EQUIVALENT TO THE VALUE OF MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS FROM THE POSSE SSION OF THE ASSESSEE DURING THE COURSE OF SEARCH CONDUCTED ON OR AFTER FIRST DAY OF JUNE, 2007. FURTHER, WHERE ANY INCOME IS BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT ALL THE ABOVE SAID REPRESENTS HI S INCOME FOR ANY PREVIOUS YEAR, THEN THE EXPLANATION LAYS DOWN TO THAT EXTENT, THE PERSON WOULD BE DEEMED TO HAVE CONCEALED HIS PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 18. NOW, COMING TO THE MAIN PROVISIONS WHICH CONSTITUTE TW O PORTIONS I.E. WHAT IS CONCEALMENT AND QUANTUM OF PENALTY TO BE LEVIED. THE QUESTION IS QUANTUM OF INCOME ON WHICH PENALTY IS TO BE LEVIED. THE SAID ISSUE WAS BEFORE THE PUNE BENCH OF TRIBUNAL IN ACIT VS. MULAY CONSTRUCTION P. LTD. & ORS. IN ITA NOS.116 TO 119/PN/2012 & ORS. AND IT WAS HELD AS UNDER: - 16. THE NEXT LIMB OF ARGUMENT OF THE LD. COUNSEL IS THAT EXPLANATION 5A(II) CONTEMPLATES INCOME AND NOT THE EXPENDITURE. IN THIS CASE, IT IS UNDISPUTED FACT THAT THE ASSESSEE CAME FORWARD AND DECLARE D INCOME WHICH WAS PERTAINING TO THE AMOUNT COVERED BY THE UNRECORDED EXPENDITURE BUT THE FACT REMAINS THAT THE ASSESSEE DID NOT DECLARE ANY EXPENDITURE BUT IT IS ONLY THE INCOME. THE LD. COUNSEL REFERRED TO THE DEFINITION OF THE INCOME GIVEN IN SEC. 2 (24) OF THE ACT. THE SCOPE OF THE SAID DEFINITION HAS BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF EMIL WEBBER (SUPRA) WHICH HAS BEEN RELIED UPON BY THE LD. COUNSEL THE RELEVANT PORTION IS IN PARA NO 7 WHICH READS AS UNDER: 7. THE DEFIN ITION OF 'INCOME' IN CLAUSE (24) OF SECTION 2 OF THE ACT IS AN INCLUSIVE DEFINITION. IT ADDS SEVERAL ARTIFICIAL CATEGORIES TO THE CONCEPT OF INCOME BUT ON THAT ACCOUNT THE EXPRESSION 'INCOME' DOES NOT LOSE ITS NATURAL CONNOTATION. INDEED, IT IS REPEATEDLY SAID THAT IT IS DIFFICULT TO DEFINE THE EXPRESSION 'INCOME' IN PRECISE TERMS. ANYTHING WHICH CAN PROPERLY BE DESCRIBED AS INCOME IS TAXABLE UNDER THE ACT UNLESS, OF COURSE, IT IS EXEMPTED UNDER ONE OR THE OTHER PROVISION OF THE ACT. IT IS FROM THE SAID ANG LE THAT WE HAVE TO OR THE OTHER PROVISION OF THE ACT. IT IS FROM THE SAID ANG LE THAT WE HAVE TO EXAMINE WHETHER THE AMOUNT PAID BY BALLARPUR BY WAY OF TAX ON THE SALARY AMOUNT RECEIVED BY THE ASSESSEE CAN BE TREATED AS THE INCOME OF THE ASSESSEE. IT CANNOT BE OVERLOOKED THAT THE SAID AMOUNT IS NOTHING BUT A TAX UPON THE SALARY RECE IVED BY THE ASSESSEE. BY VIRTUE OF THE OBLIGATION UNDERTAKEN BY BALLARPUR TO PAY TAX ON THE SALARY RECEIVED BY THE ASSESSEE AMONG OTHERS, IT PAID THE SAID TAX. THE SAID PAYMENT IS, THEREFORE, FOR AND ON BEHALF OF THE ASSESSEE. IT IS NOT A GRATUITOUS PAYMEN T. BUT FOR THE SAID AGREEMENT AND BUT FOR THE SAID PAYMENT, THE SAID TAX AMOUNT WOULD HAVE BEEN LIABLE TO BE PAID BY THE ASSESSEE HIMSELF HE COULD NOT HAVE RECEIVED THE SALARY WHICH HE DID BUT FOR THE SAID PAYMENT OF TAX. THE OBLIGATION PLACED UPON BALLARP UR BY VIRTUE OF SECTION 195 OF THE INCOME TAX ACT CANNOT ALSO BE IGNORED IN THIS CONTEXT. IT WOULD BE UNREALISTIC TO SAY THAT THE SAID PAYMENT HAD NO INTEGRAL CONNECTION WITH THE SALARY RECEIVED BY THE ASSESSEE. WE ARE, THEREFORE, OF THE OPINION THAT THE H IGH COURT AND THE AUTHORITIES UNDER THE ACT WERE RIGHT IN HOLDING THAT THE SAID TAX AMOUNT IS LIABLE TO BE INCLUDED IN THE INCOME OF THE ASSESSEE DURING THE SAID TWO ASSESSMENT YEARS. 17. AS PER INTERPRETATION MADE BY THE HON'BLE SUPREME COURT OF SEC. 2 (24) OF THE ACT, IT IS CLEAR THAT IT IS AN INCLUSIVE DEFINITION AND IT COVERS ALL INCOME COME UNDER CHARGING PROVISIONS OF THE ACT. IF THE ARGUMENT OF THE LEARNED COUNSEL IS TO BE ACCEPTED THEN NO INCOME CAN BE TAXED U/S. 68, 69, 69A, 69B, 69C & 69D. 18. IT IS NECESSARY TO REFER TO EXPLANATION 5A WHICH READS AS UNDER: EXPLANATION 5A WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR BEFORE THE 1 ST DAY OF JUNE 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF ( I ) ANY MONEY, BULLION, JE WELER OR OTHER VALUABLE ARTICLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 14 SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR ( II ) ANY OTHER INCOME BAS ED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE TH E DATE OF SEARCH AND ( A ) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN OR ( B ) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSES SEE HAS NOT FILED THE RETURN THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB - SECTION (1) OF THIS SECT ION, HE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 19. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED, CLAUSE (II) TO EXPLANATION 5A IS APPLICABLE. ADMITTEDLY, THE EXPENDITURE WHICH WAS NOT RE CORDED HAS BEEN FOUND BY WAY OF ENTRIES IN THE SEIZED DOCUMENTS. WHILE EXPLAINING THE SCOPE OF EXPLANATION 5A IN THE CASE OF CHANDAN K. SHEWANI (SUPRA) THE TRIBUNAL HAS HELD THAT TO PATCH OUT THE LACUNA DUE TO THE JUDICIAL INTERPRETATION OF EXPL. 5 OF SEC . 271(1)(C) WHICH WAS ON THE STATUTE BOOK UPTO 31 - 5 - 2007, EXPLANATION 5A HAS BEEN SUBSTITUTED FOR EXPL. 5 BY THE FINANCE ACT, 2007 W.E.F 1 - 6 - 2007. THE SAID EXPLANATION WAS FURTHER AMENDED BY THE FINANCE(NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01 - 07 - 2007 WHICH IS REPRODUCED HEREINABOVE. THE LD. COUNSEL HAS RAISED AN IMPORTANT LEGAL QUESTION WHETHER THE INCOME DECLARED BY THE ASSESSEE WHICH IS PERTAINING TO THE UNRECORDED EXPENDITURE CAN SAID TO BE THE INCOME WHICH IS CONTEMPLATED IN EXPLANATION 5A(II )? THE ANSWER TO THIS QUESTION IS IN SEC. 69 - C WHICH READS AS UNDER: - QUESTION IS IN SEC. 69 - C WHICH READS AS UNDER: - WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFF ERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR; 20. SO FAR AS THE EXPL. - 5 WH ICH WAS ON THE STATUTE BOOK, THE COURTS HAVE TAKEN A VIEW THAT IT WAS HAVING A LIMITED APPLICATION ONLY TO THE EXTEND OF THE MONEY, BULLION, JEWELLERY OR ANY VALUABLE ASSETS OR THINGS WHICH WERE FOUND DURING THE COURSE OF SEACH AND SEIZER OPERATION AND OWN ED BY THE ASSESSEE. BUT THE OTHER INCOME WHICH WAS FOUND RECORDED BY ANY ENTRY IN THE DOCUMENT SEIZED OR OTHERWISE WAS NOT COVERED. IT IS PERTINENT TO NOTE THAT SEC. 69C PROVIDES THAT IF ANY UNRECORDED EXPENDITURE IS FOUND AND THE ASSESSEE FAILS TO EXPLA IN THE SOURCE OF THE SAID EXPENDITURE OR EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY, THEN TO THE EXTENT OF THE AMOUNT COVERED BY SUCH EXPENDITURE IS TREATED AS INCOME. ULTIMATELY WHAT IS TAXED UNDER SEC. 69 C OF THE ACT IS NOT THE EXPENDITURE BUT IT IS BASICALLY THE UNDISCLOSED INCOME WHICH HAS BEEN APPLIED FOR INCURRING THE UNRECORDED EXPENDITURE. IN OUR VIEW, THERE IS NO MERIT IN THE ARGUMENT OF THE LD. COUNSEL THAT THE ASSESSEE HAS ONLY DECLARED THE AMOUNT EXPENDITURE. WE THEREFORE, HOLD THAT TO THE EXTENT OF THE INCOME OFFERED BY THE ASSESSEE PERTAINING TO THE EXPENDITURE IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S 153A, EXPLANATION - 5A IS APPLICABLE AND AS THERE IS A LEGAL PRESUMPTION AGAINST THE ASSESSEE IN RESPECT OF THE SAID INCOME DETECTE D DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, THE ASSESSEE CASE IS SQUARELY COVERED BY EXPLANATION - 5(II) AS THE ASSESSEE HIMSELF HAS ADMITTED THE SAID UNDISCLOSED INCOME. 19. APPLYING THE SAID PROPOSITION TO THE FACTS OF THE PRESENT CASE, WE HOL D THAT THE INCOME OFFERED BY THE ASSESSEE PERTAINING TO THE CASH SEIZED FROM THE ASSESSEE AND THE DECLARATION OF THE ASSESSEE THAT THE SAID CASH RELATES TO THE UNACCOUNTED CASH RECEIVED VIDE THE SALE ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 15 TRANSACTION ENTERED INTO BY THE ASSESSEE, WHICH IN TURN, WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT, IS THE INCOME DETECTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AND THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY ON SUCH INCOME WHICH WAS DETECTED DURING THE COURSE OF ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY ON SUCH INCOME WHICH WAS DETECTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, WHICH IN TURN HAS BEEN OFFERED BY THE ASSESSEE IN RETURN OF INCOME FILED PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND HAS PLACED RELIANCE ON THE RATIO LAID DOWN IN DCIT VS. PURTI SAKHAR KARKHANA (SUPRA), WHICH IS A DECISION OF NAGPUR BENCH OF TRIBUNAL AND HYDERABAD BENCH OF TRIBUNAL IN SHRI PV RAMANA REDDY VS. ITO (SUPRA). IN VIEW OF BINDING PRECEDENT OF PUNE BENCH ON THE SAID ISSUE, WE FIND NO MERIT IN THE RELIANCES PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON DCI T VS. PURTI SAKHAR KARKHANA (SUPRA) AND SHRI PV RAMANA REDDY VS. ITO (SUPRA). THE OTHER RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN SMT. PRAMILA D. ASHTEKAR VS. ITO (2013) 39 TAXMANN.COM 103 (PUNE TRIB.), IT MAY BE POINTED OUT THAT THE SAID ORDER OF PUNE BENCH OF TRIBUNAL HAS BEEN RECALLED IN MA NO.112/PN/2013, ORDER DATED 21.06.2013 AND HAS NO BINDING EFFECT FOR DECIDING THE PRESENT ISSUE. FURTHER REFERENCE WAS MADE TO THE DECISION OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. & ANR. (SUPRA), WHERE THE HONBLE BOMBAY HIGH COURT HAS DELIBERATED UPON THE SCOPE OF 153A & ANR. (SUPRA), WHERE THE HONBLE BOMBAY HIGH COURT HAS DELIBERATED UPON THE SCOPE OF 153A PROVISIONS AND HAS NO RELEVANCE TO THE ISSUE BEFORE US. 20. ANOTHER ASPECT OF THE ISSUE O F LEVY OF PENALTY US 271(1)(C) OF THE ACT IS THE WRONG CLAIM OF DEDUCTION MADE BY THE ASSESSEE UNDER SECTION 54 AND 54F OF THE ACT. THE CIT(A) VIDE PARA 3.10 TO 3.11 HAS DELIBERATED UPON THE FACTUAL ASPECTS OF THE ISSUE, WHICH ARE BEING REFERRED, BUT NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. 21. THE ASSESSEE HAVING MADE A WRONG CLAIM IN THE RETURN OF INCOME I.E. BY WAY OF CLAIM OF DEDUCTION UNDER SECTION 54 ON ACCOUNT OF INVESTMENT IN TWO PROPERTIES AND IN RESPECT OF CAPITAL GAINS ACCOUNT WITH BANK NO T HAVING BEEN MADE BY THE ASSESSEE, TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND JUSTIFIABLY, PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE ON SUCH FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE IN A WRITTEN NOTE HAD FURNISHED THE BREAK - UP OF INCOME ON WHICH PENALTY WAS LEVIED, WHICH IS AS UNDER: - PARTICULARS AMOUNT (RS.) UNACCOUNTED SALE PROCEEDS ON SALE OF PROPERTY 1,70,00,000 WITHDRAWAL OF EXEMPTION CLAIMED U/S.54 O F THE ACT 32,77,070 22. WE UPHOLD THE ORDER OF CIT(A) IN CONFIRMING THE LEVY OF PENALTY ON THE ABOVE SAID TWO ACCOUNTS. DISMISSING THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE, WE UPHOLD THE ORDER OF CIT(A). 14. THE TRIBUNAL IN THE AFORESAID DECISION HAD HELD THAT AS PER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, WHICH WAS SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.06.2007 , WHEREIN IT WAS PROVIDED THAT WHERE THE ASSESSEE DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT ON OR AFTER 1 ST DAY OF JUNE, 2007 WAS FOUND TO BE THE OWNER OF MONEY, BULLION, JEWELLERY, VALUABLE ARTICLE OR THING, AND THE ASSESSEE CLAIMS THAT SUCH ASSETS WERE ACQUIRED BY HIM, BY UTILIZING WHOLLY OR IN PART, INCOME FOR ANY PREVIOUS YEAR OR CLAUSE (II) ANY INCOME BASED ON ANY ENTRY IN BOOKS OF ACCOUNT OR ANY OTHER DOCUMENTS OR TRANSACTIONS AND WHERE HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENT THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENT ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 16 HIS INCOME, WHOLE OR IN PART, FOR ANY PREVIOUS YEAR, WHICH HAD ENDED BEFORE THE DATE OF SEARCH AND (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE, BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN OR ( B ) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH AS SESSMENT YEAR HAD EXPIRED, BUT THE ASSESSEE HAD NOT FILED THE RETURN, THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FILED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SUB - SECTION (1)(C), BE DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME . A S HELD BY THE TRIBUNAL IN SARITA KAUR MANJEET SINGH CHOPRA VS. ITO (SUPRA) , THE DEEMING PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) O F THE ACT ARE APPLICABLE TO ALL SEARCHES INITIATED UNDER SECTION 132 OF THE ACT ON OR AFTER 01.06.2007 . ADMITTEDLY, IN THE CASE OF THE ASSESSEE BEFORE US, SEARCH ON THE PREMISES OF THE ASSESSEE UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 06.01.2010, H ENCE, THE AMENDED PROVISIONS ARE ATTRACTED. THE TRIBUNAL FURTHER HELD THAT WHERE THE CONDITIONS LAID DOWN IN EXPLANATION 5A ARE ATTRACTED, THE PERSON IS DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME, WHICH IS EQUIVALENT TO THE VALUE OF ANY MONEY, BULLION, JEWEL LERY, VALUABLE ARTICLE OR THING FOUND FROM THE POSSESSION OF THE ASSESSEE DURING THE COURSE OF SEARCH. FURTHER, WHERE ANY INCOME IS BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTI ONS AND HE CLAIMS THAT THE SAME REPRESENT HIS INCOME IN PREVIOUS YEAR, THEN THE EXPLANATION LAYS DOWN THAT TO THAT EXTENT, THE PERSON WOULD BE DEEMED TO HAVE CONCEALED HIS PARTICULARS OF INCOME OR FURNISH ED INACCURATE PARTICULARS OF INCOME, WH ERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE DATE OF SEARCH, BUT SUCH INCOME HAD NOT BEEN DECLARED THEREUNDER OR WHERE THE DUE DATE FOR FI L ING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAD EXPIRED, BUT THE ASSESSEE HAD NO T FILED THE RETURN. EVEN IF THE ADDITIONAL INCOME WAS DECLARED BY HIM IN THE RETURN OF INCOME FURNISHED ON ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 17 OR AFTER THE D ATE OF SEARCH, HE WOULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 15 . IN THE FACTS OF THE PRESENT CASE, THE CONDITION AS IN CLAUSE ( II ) OF EXPLANATION 5A IS APPLICABLE I.E. THE INCOME IS BASED ON THE ENTRY IN BOOKS OF ACCOUNT OF THE ASSESSEE AND OTHER DOCUMENTS AND HE DECLARED THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTH ER DOCU MENTS REPRESENTS HIS INCOME FOR ANY PREVIOUS YEAR, WHICH HAD ENDED BEFORE THE DATE OF SEARCH. FURTHER, THOUGH THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR BEFORE THE DATE OF SEARCH, BUT SUCH INCOME HAD NOT BEEN DECLARED TH EREUNDER, IN SUCH CIRCUMSTANCES, THE ASSESSEE EVEN IF ASSESSEE HAD DECLARED THE SAID AMOUNT IN THE RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . IN THE FACTS OF THE PRESENT C ASE, WE HOLD THAT THE DECLARATION MADE BY THE ASSESSEE ON ACCOUNT OF ADVANCES RECEIVED IN CASH FROM THE CUSTOMERS WHICH WAS SHOWN IN THE BOOKS OF ACCOUNT, BALANCE SHEET AND EVEN IN THE RETURN OF INCOME, FILED BEFORE THE DATE OF SEARCH, IN VIEW OF THE DECLA RATION EVEN IN THE RETURN OF INCOME, FILED BEFORE THE DATE OF SEARCH, IN VIEW OF THE DECLA RATION OF THE ASSESSEE WHILE RECORDING THE STATEMENT UNDER SECTION 132(4) OF THE ACT, DURING THE COURSE OF SEARCH AND SEIZURE ACTION AT THE PREMISES OF THE ASSESSEE ON 06.01.2010, REPRE SENTS THE ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE, WHICH HAVE BE EN DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT. SUCH ADDITIONAL INCOME OFFERED BY THE ASSESSEE FALLS WITHIN THE PURVIEW OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT OF THE ACT AND T HE ASSESSEE IS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE AFORESAID AMOUNTS OFFERED BY THE ASSESSEE ON ACCOUNT OF ADVANCES RECEIVED IN CASH FROM CUSTOMERS SHOWN IN THE BALANCE SHEET. SIMILARLY, THE ASSESSEE IS THUS, HELD TO BE LI ABLE FOR LEVY OF PENALTY ON THE ADDITIONAL INCOME OF RS. 33,50,700/ - , 49,10,200/ - RS.75,01,500/ - AND RS.25,22,100/ - IN ASSESSMENT YEAR S 2006 - 07 TO 2009 - 10. SIMILARLY, THE GIFTS SHOWN IN THE BOOKS OF ACCOUNT WHICH HAVE BEEN OFFERED AS ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 18 ADDITIONAL INCOME BY T HE ASSESSEE DURING THE COURSE OF SEARCH ITSELF , IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT IS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT I.E. ON OFFER OF INCOME OF RS. 90,000/ - IN ASSESSMENT YEAR 2006 - 07 AND RS.8,17,200/ - I N ASSESSMENT YEAR 2007 - 08 . WE FIND NO MERIT IN THE ORDER OF CIT(A) IN THIS REGARD THAT WHERE THE ADVANCES FROM CUSTOMERS, GIFTS RECEIVED BY THE ASSESSEE AND UNSECURED LOAN HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNT AND WERE PART OF THE BALANCE SHEET FILED BY THE ASSESSEE ALONG WITH RETURN OF INCOME ORIGINALLY FILED BY THE ASSESSEE PRIOR TO DATE OF SEARCH DOES NOT WARRANT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN VIEW OF THE AMENDED PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT , THE SAID FINDING OF THE CIT(A) IS REVERSED AND WE HOLD THAT THE ASSESSEE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE INCOME OFFERED BY THE ASSESSEE PURSUANT TO SEARCH CARRIED OUT AT HIS PREMISES, DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 132(4) OF THE ACT AND BY WAY OF ADDITIONAL INCOME IN THE RETURN OF INCOME FILED PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT. 1 6 . SIMILARLY, UNSECURED LOANS SHOWN IN THE BOOKS OF ACCOUNT OF RS.4,15,000/ - IN ASSESSME NT YEAR 2007 - 08 IS LIABLE FOR LEVY OF PENALTY UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, WHICH WAS OFFERED BY THE ASSESSEE AS ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND ALSO DECLARED IN THE RETURN OF INCOME FILED PURSUANT TO NOTICE UND ER SECTION 153A OF THE ACT. 1 7 . APPLYING THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN SARITA KAUR MANJEET SINGH CHOPRA VS. ITO (SUPRA) , WE HOLD THAT THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT ON T HE INCOMES OFFERED IN THE RETURN OF INCOME PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT. ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 19 1 8 . NOW, COMING TO SECOND SET OF ADDITIONS MADE TO THE RETURN OF INCOME IN RELATION TO THE ADDITIONS MADE BY THE ASSESSING OFFICER WHILE COMPLETING ASSE SSMENT PROCEEDINGS UNDER SECTION 153A R.W.S. 143(3) OF THE ACT. THE VARIOUS ADDITIONS MADE IN THE HANDS OF THE ASSESSEE ARE AS UNDER: - SR NO PARTICULARS A.Y. 2006 - 07 A.Y. 2007 - 08 A.Y. 2008 - 09 A.Y. 2009 - 10 1 UNDISCLOSED PROFIT ON SALE OF FLAT - - 22 ,250 42,250 2 UNDISCLOSED RENT FROM SHOP AND HOUSE 12,000 12,000 12,000 12,000 3 DISALLOWANCE OF LABOUR PAYMENT U/S.40(A)(IA) - - - 18,61,000 4 RENT INCOME FROM HOTEL 60,000 60,000 - - 5 OFFERED TO TAX AS CAPITAL GAIN IN RETURN, WHEREAS TAXES BY A.O. AS BU SINESS INCOME - 24,48,300 - - 6 ONMONEY RECEIVED ON SALE OF PLOT AT VADALA 12,000 10,000 - - 1 9 . THE FIRST ADDITION MADE IN THE HANDS OF ASSESSEE IS ON ACCOUNT OF UNDISCLOSED RENT FROM SHOP AND HOUSE ADDED IN THE HANDS OF ASSESSEE ON ESTIMATED BASIS @ 1 2,000/ - IN EACH OF THE YEARS. THE ASSESSING OFFICER VIDE PARA 9 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006 - 07 HAD MADE THE AFORESAID ADDITION ON ACCOUNT OF HOUSE PROPERTY AT MALEGAON AND SHOP AT NASHIK, AS NO INCOME IN RESPECT OF THE SAID PROPERTY H AS BEEN OFFERED TO TAX . THE ASSESSEE OFFERED TO TAX THE NOTIONAL INCOME IN RESPECT OF THE SAID VACANT HOUSE AT MALEGAON AND SHOP AT NASHIK. THE ASSESSEE ADMITTEDLY, HAD NOT RECEIVED ANY INCOME FROM TWO PROPERTIES AND THE INCOME WAS ASSESSED IN THE HANDS OF ASSESSEE ON NOTIONAL BASIS AS THE ASSESSEE OWNED ONE SELF OCCUPIED PROPERTY AT NASHIK. THE SAID ADDITION WAS MADE IN THE HANDS OF ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NO INFORMATION IN THIS REGARD WAS FOUND DURING THE COURSE OF SEAR CH PROCEEDINGS. IN VIEW THEREOF, THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT ARE NOT APPLICABLE. HOWEVER, THE SUBSTANTIVE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE ATTRACTED, BUT IN VIEW OF THE ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 20 NOTIONAL INCOME BEING ASSESSED IN THE HANDS OF ASSESSEE AND IN THE ABSENCE OF ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH OR OTHERWISE AS TO THE RECEIPT OF RENTAL INCOME FROM THE SAID PROPERTIES, WE FIND NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SUCH NOTIONAL RENT. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD WITH SPECIAL REFERENCE TO PARA 11.3 AT PAGE 22 OF THE APPELLATE ORDER. THE PENALTY WAS LEVIED BY THE ASSESSING OFFICER ON SUCH ADDITION IN ASSESSMENT YEARS 2006 - 07 TO 2009 - 10 AND WE UPHOLD THE ORDER OF CIT(A) IN ALL THE YEARS IN DIRECTING THE ASSESSING OFFICER TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 20 . THE SECOND ADDITION MADE IN THE HANDS OF ASSESSEE IS ON ACCOUNT OF NOTIONAL RENTAL INCOME FROM HOTEL OF RS.60,000/ - IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 . THE OFFER OF THE RENTAL INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS TO BUY PEACE OF MIND AND TO AVOID LITIGATION . HOWEVER, THERE IS NO FINDING OF ANY OF THE AUTHORITIES THAT THE ASSESSEE HAD INDEED RECE IVED THE AFORESAID RENTAL INCOME FROM THE SAID HOTEL. IN VIEW OF THE EXPLANATION OF THE ASSESSEE, WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND ADDITION WAS MADE IN THE HANDS OF ASSESSEE ON NOTIONAL BASIS, DOES NOT JUSTIFY THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE FURTHER HOLD THAT ON SUCH ADDITIONS MADE IN THE HANDS OF ASSESSEE AND IN THE ABSENCE OF ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH, EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT ATTRACTED. ACCORDINGLY, WE UPHO LD THE ORDER OF CIT(A) IN DELETING PENALTY ON THE AFORESAID ESTIMATED INCOME ASSESSED IN THE HANDS OF ASSESSEE IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 . 2 1 . ANOTHER ADDITION HAS BEEN MADE IN THE HANDS OF ASSESSEE O N ACCOUNT OF UNDISCLOSED PROFIT ON SALE OF FLAT OF RS.22,250/ - AND RS.42,250/ - IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 . THE ASSESSING OFFICER MADE THE AFORESAID ADDITION SINCE THE PROFIT ON SALE OF FLATS HAD NOT BEEN DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 21 FILED, BUT WAS OFFERED TO TAX D URING THE SCRUTINY ASSESSMENT. THE CLAIM OF THE ASSESSEE IN THIS REGARD I S THAT THE SAID INCOME WAS VOLUNTARILY OFFERED BY THE ASSESSEE AND WAS NOT FOUND DURING THE COURSE OF SEARCH. IN CASE, NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH, THEN ADMITT EDLY, THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED. HOWEVER, THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT UNDER THE SUBSTANTIVE PROVISIONS SINCE THE ASSESSEE HAD FAILE D TO DISCLOSE THE PROFITS EARNED BY IT ON THE SALE OF FLATS OF RS.22,500/ - AND 42,250/ - IN ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 . ACCORDINGLY, WE REVERSE THE ORDER OF CIT(A) IN THIS REGARD AND DIRECT THE ASSESSING OFFICER TO LEVY PENALTY UNDER SECTION 271( 1)(C) OF THE ACT ON ADDITIONS OF RS.22,250/ - AND RS.42,250/ - IN ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 . 2 2 . NOW, COMING TO THE NEXT ADDITION OF ON - MONEY RECEIVED ON SALE OF PLOT OF RS. 12,000/ - IN ASSESSMENT YEAR 2006 - 07 AND RS.10,000/ - IN ASSESSMENT YEAR 20 07 - 08. ADMITTEDLY, THE SAID ON - MONEY RECEIVED BY THE ASSESSEE WAS NOT DISCLOSED BY HIM IN THE RETURN OF INCOME . T HOUGH NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IN THIS REGARD, BUT THE F ACTUM OF ON - MONEY RECEIVED WAS ACCEPTED BY THE ASSESSEE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIEW THEREOF, WHERE THE ASSESSEE HAD NOT OFFERED TRUE TAXES ON THE INCOME DECLARED BY THE ASSESSEE AND ADDITION WAS MADE ON ACCOUNT OF ON - MONEY RECEIVED ON SALE OF PLOTS IN THE HANDS OF ASSESSEE, THEN THE PROVIS IONS OF SECTION 271(1)(C) OF THE ACT WITH REGARD TO CONCEALMENT OF INCOME ARE ATTRACTED AND THE ASSESSEE IS LIABLE TO LEVY OF PENALTY UNDER SUBSTANTIVE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. WE REVERSE THE ORDER OF CIT(A) IN THIS REGARD AND UPHOLD TH E LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON RECEIPT OF ON - MONEY OF RS.12,000/ - IN ASSESSMENT YEAR 2006 - 07 AND RS.10,000/ - IN 2007 - 08 . ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 22 2 3 . THE NEXT ADDITION MADE IN THE HANDS OF ASSESSEE IS ON ACCOUNT OF DISALLOWANCE OF LABOUR PAYMENT OF RS.1 8,61,000/ - IN ASSESSMENT YEAR 2009 - 10 I.E. FOR NON - PAYMENT OF TAXES AT SOURCE. THE ADDITION WAS MADE IN THE HANDS OF ASSESSEE BY THE ASSESSING OFFICER FOR NON - DEDUCTION OF TAX AT SOURCE AND IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE D ISALLOWANCE WAS MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF DEEMING PROVISIONS OF THE ACT. HOWEVER, IT IS NOT THE CASE OF REVENUE AUTHORITIES THAT THE AFORESAID AMOUNT ON ACCOUNT OF LABOUR WAS NOT PAID BY THE ASSESSEE . ME RELY BECAUSE THE ADDITION HAS BEE N MADE IN THE HANDS OF ASSESSEE, DOES NOT JUSTIFY THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE HOLD THAT THERE IS NO MERIT IN THE ORDER OF ASSESSING OFFICER IN THIS REGARD AND UPHOLDING THE ORDER OF CIT(A) IN DELETING THE PENALTY LEVIED ON T HE SAID ADDITION OF RS. 18,61,000/ - IN ASSESSMENT YEAR 2009 - 10 , WE CONFIRM THE ORDER OF CIT(A) IN THIS REGARD. 2 4 . THE LAST ADDITION MADE IN THE HANDS OF ASSESSEE IN ASSESSMENT YEAR 2007 - 08 2 4 . THE LAST ADDITION MADE IN THE HANDS OF ASSESSEE IN ASSESSMENT YEAR 2007 - 08 WAS ON ACCOUNT OF CHANGE IN HEAD OF ASSESSING OF PARTICULAR INC OME O N LONG TERM CAPITAL GAINS OFFERED TO TAX IN THE RETURN OF INCOME AT RS.24,48,300/ - , WAS ASSESSED AS BUSINESS INCOME IN THE HANDS OF THE ASSESSEE BY THE ASSESSING OFFICER. THE ASSESSEE HAD FURNISHED COMPLETE PARTICULARS IN THIS REGARD, WHICH HAD NOT BEEN DOUBTED. THE ASSESSEE IS UNDOUBTEDLY CARRYING ON THE BUSINESS OF DEVELOPERS, BUT IT CAN HOLD ASSETS IN T WO FIELD S I.E. ON ACCOUNT OF TRADING OR ON ACCOUNT OF INVESTMENT. MERELY BECAUSE THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM BEFORE THE ASSES SING OFFICER AND HAD OFFERED THE SAID INCOME TO BE ASSESSED AS BUSINESS INCOME, INSTEAD OF UNDER THE HEAD CAPITAL GAINS AS SHOWN IN THE RETURN OF INCOME, DOES NOT JUSTIFY THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD AND WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. BENNET COLEMAN & CO. LTD. (SUPRA) , WHEREIN IT HAS BEEN HELD THAT WHERE IN ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 23 VIEW OF THE FACT THAT WHERE THE ASSESSEE ONLY CHANGED HEAD OF ACCOUNT AND IN THE ABSENCE OF ANY FACTS THAT CLAIM OF ASSESSEE WAS NOT BONAFIDE, THE DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE TRIBUNAL WAS UPHELD. IN THE PRESENT CA SE ALSO, THERE IS NO FINDING THAT THE CLAIM OF THE ASSESSEE WAS NOT B ONAFIDE. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD. 2 5 . IN VIEW OF OUR FINDING IN THE PARAS HEREINABOVE, WE HOLD THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS UPHELD ON THE FOLLOWING ADDITIONS: - I ) ADVANCES RECEIVED IN CASH FROM CU STOMERS OF RS. 33,50,700/ - , RS.49,10,200/ - , 75,01,500/ - AND 25,22,100/ - IN ASSESSMENT YEARS 2006 - 07 TO 2009 - 10, RESPECTIVELY; II ) GIFTS SHOWN IN BOOKS OF ACCOUNT OF RS.90,000/ - IN ASSESSMENT YEAR 2006 - 07 AND RS.8,17,200/ - IN ASSESSMENT YEAR 2007 - 08; AND III ) UNSEC URED LOAN OF RS.4,15,000/ - IN ASSESSMENT YEAR 2007 - 08 2 6 . THE ABOVE SAID INCOMES WERE OFFERED AS ADDITIONAL INCOME IN THE RETURN OF INCOME UNDER SECTION 153A OF THE ACT AND PENALTY LEVIABLE ON AFORESAID ADDITIONS IS UPHELD. FURTHER, WE ALSO UPHOLD THE L EVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE FOLLOWING ADDITIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS : - I ) UNDISCLOSED PROFIT ON SALE OF FLAT OF RS.22,250/ - IN ASSESSMENT YEAR 2008 - 09 AND RS.42,250/ - IN ASSESSMENT YEAR 2009 - 10 ; AND II ) O N - MONEY RECEIVED ON SALE OF PLOT AT VADALA OF RS.12,000/ - IN ASSESSMENT YEAR 2006 - 07 AND RS.10,000/ - IN ASSESSMENT YEAR 2007 - 08. 2 7 . HOWEVER, WE UPHOLD THE ORDER OF CIT(A) IN DELETING THE PENALTY LEVIED ON THE FOLLOWING ADDITIONS: - I ) UNDISCLOSED RENT FROM SHOP AND HOUSE OF RS.12,000/ - EACH IN ASSESSMENT YEARS 2006 - 07 TO 2009 - 10; II ) DISALLOWANCE OF LABOUR PAYMENT U/S.40(A)(IA) OF RS. 18,61,000/ - IN ASSESSMENT YEAR 2009 - 10; ITA NO S. 1251 TO 1254 /PN/201 3 SHRI RAHUL S SAWALE 24 III ) RENT INCOME FROM HOTEL OF RS.60,000/ - EACH IN ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 ; AND IV ) OFFERED TO TAX AS CAPITAL GAIN IN RETURN, WHEREAS TAXED BY A.O. AS BUSINESS INCOME OF RS. 24,48,300/ - IN ASSESSMENT YEAR 2007 - 08 THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, PARTLY ALLOWED. 2 8 . IN THE RESULT, ALL THE APPEAL S OF THE REVENUE ARE P ARTLY ALLOWED. ORDER PRONOUNCED ON THIS 29 TH D AY JANUARY , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 29 TH JANUARY, 2016. GCVSR / COPY OF THE ORDER IS FORWARDED TO : / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , NASHIK ; 4. / THE CIT - (CENTRAL), NAGPUR ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE