DCIT, C.C.XXVII, Kolkata, Kolkata V. M/s. Pratap Properties Ltd., Kolkata

ITA 1386/KOL/2010

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3151 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 03-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 02-07-2010
• Court: TRIBUNAL
• Department Lawyers: NONGOTHUN G JUNGIO JCITLD
• Assessee Lawyers: A K TIBREWAL FCA LD
• Keywords: Search and seizure; Loose papers; Document seized; Retrospective amendment; Question of law; Initiation of penalty proceedings; Documents seized
• Section: 143(3); 133A; 153A; 147; 27; 132; 139

Judgement Text

1 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA IN THE INCOME TAX APPELLATE TRIBUNAL C BENC H : KOLKATA BEFORE HON. SRI MAHAVIR SINGH, J UDICIAL MEMBER, AND HON. SRI M.BALAGANESH, ACCOUNTANT MEMBER ITA NO. 1386/KOL/2010- ASST YEAR 2005-06 ITA NO. 1387/KOL/2010- ASST YEAR 2006-07 ITA NO. 1388/KOL/2010- ASST YEAR 2007-08 DCIT, C.C XXVIII, KOLKATA VS. M/S. PRATAP PROPER TIES PVT. LTD PAN:AADCP6647E ( APPELLANT ) ( RESPONDENT ) FOR THE APPELLANT : SHRI N ONGOTHUNG JUNGIO, JCIT, LD.SR.DR FOR THE RESPONDENT : SHRI A.K TIBREWAL, FCA, LD.AR DATE OF HEARING : 03-02-2016 DATE OF PRONOUNCEMENT: 10 -02-2016 ORDER SHRI SRI M.BALAGANESH, AM: THESE APPEALS OF THE REVENUE ARISE OUT OF THE SEPAR ATE ORDERS OF THE LEARNED CIT(A), CENTRAL-II, KOLKATA IN APPEAL NO. 110/CC-XXVII/CIT( A)-C-II/KOL./09-10 DATED 22.3.2010 FOR ASST YEAR 2005-06 ; APPEAL NO. 111/CC -XXVII/CIT(A)-C-II/KOL./09- 10 DATED 22.3.2010 FOR ASST YEAR 2006-07 AND APPEA L NO. 112/CC-XXVII/CIT(A)-C- II/KOL./09-10 DATED 22.3.2010 FOR ASST YEAR 2007-08 AGAINST THE ORDER OF THE LEARNED AO LEVYING PENALTY U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA 2. THE ONLY ISSUE INVOLVED IN ALL THESE APPEALS I S THAT WHETHER THE ASSESSEE IS ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY ON ACCOU NT OF EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT IN RESPECT OF INCOME OFFERED AFTER THE SEARCH BUT IN THE RETURN FILED U/S 153C OF THE ACT. SINCE IDENTICAL ISSUE IS INVOLVED IN ALL THE APPEALS, THEY ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 28.3.2007 U/S 132 OF THE ACT IN THE BUSINESS PRE MISES OF HOTEL & RESORT VENTURE PRIVATE LIMITED, BINDAL LEFIN PRIVATE LIMITED, FORE X FINANCE LIMITED AND SALKIA ESTATE DEVELOPMENT PRIVATE LIMITED. THE LEARNED AO OBSERVED THAT DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS EVIDENCING TRAN SACTION OF PRATAP PROPERTIES LTD (ASSESSEE HEREIN) WERE FOUND AND SEIZED. THE LEARN ED AO OF SECTION 153A ASSESSEE OBSERVED THAT CERTAIN DOCUMENTS FOUND AND SEIZED BE LONGED TO ASSESSEE AND ACCORDINGLY NOTICE U/S 153C OF THE ACT WAS ISSUED T O THE ASSESSEE ON 11.8.2008. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RET URN U/S 153C OF THE ACT ON 19.12.2008 FOR THE ASST YEARS 2005-06 & 2006-07 AND RETURN U/S 139(1) OF THE ACT ON 19.12.2008 FOR THE ASST YEAR 2007-08 DECLARING TAXABLE INCOME OF RS. 24,54,178/- ; RS. 97,85,800/- AND RS. 50,50,982/- FOR THE ASST YEARS 2005-06 ; 2006-07 & 2007-08 RESPECTIVELY. 3.1. IN THE COURSE OF SEARCH, INVENTORY OF VARIOUS DOCUMENTS VIDE IDENTIFICATION MARKED HRV/1 TO HRV/22 AND OTHER DOCUMENTS WERE MAD E. THE ASSESSEE SOUGHT TO EXPLAIN BEFORE THE LEARNED AO THAT THE ADDITIONAL I NCOME WAS DECLARED WITH A VIEW TO COOPERATING WITH THE DEPARTMENT BASED ON CERTAIN SC RIBBLINGS ON LOOSE PAPERS ETC FOUND IN PURSUANCE OF ACTION U/S 132 OF THE ACT IN THE CA SE OF NANGALIA, SARAF AND AGARWAL GROUP OF CASES FOR WHICH PANCHANAMA WAS DRAWN IN TH E NAME OF HOTEL & RESORT VENTURE P LTD, BINDAL LEAFIN PRIVATE LIMITED, FOREX FINANCE LIMITED AND SALKIA ESTATE DEVELOPMENT PRIVATE LIMITED. THE ASSESSEE A LSO EXPLAINED THT IN THE COURSE OF SEARCH, NO MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING BELONGING TO THE 3 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA ASSESSEE WERE FOUND AND SEIZED. IT WAS ALSO ARGUED THAT CERTAIN LOOSE PAPERS WERE FOUND RECORDING VARIOUS NOTINGS WHICH ARE NEITHER A UTHENTICATED NOR SIGNED BY ANY PERSON INCLUDING THE ASSESSEE. SHRI BIMAL KUMAR JH UNJHUNWALA, KEY PERSON IN THE GROUP, FURNISHED A STATEMENT U/S 132(4) OF THE ACT ON 23.4.2007 AND DISCLOSED A SUM OF RS. 5 CRORES ON BEHALF OF THE GROUP CONCERNS AS A WHOLE. IT WAS FURTHER ARGUED THAT THE BASIS OF FILING THE RETURN U/S 153C AND 139(1) AND THE ADDITION IN THE SEARCH ASSESSMENT IS THE LOOSE SHEETS WHICH IN THE EYES OF LAW ARE MERELY DUMB DOCUMENTS. THE ASSESSEE STATED THAT HOWEVER WITH A VIEW TO COO PERATING WITH THE DEPARTMENT FILED RETURNS OF INCOME U/S 153C OF THE ACT FOR THE ASST YEARS 2005-06 & 2006-07 OFFERING ADDITIONAL INCOME VOLUNTARILY AND RETURN U/S 139(1) OF THE ACT OFFERING REGULAR INCOME FOR ASST YEAR 2007-08 AND PAID TAXES THEREON. THE LEARNED AO FOR THE ASST YEARS 2005-06 , 2006-07 AND 2007-08 LEVIED PENALTY U/S 27 1(1)(C ) OF THE ACT BY STATING THAT THE ASSESSEE HAD NOT DEMONSTRATED THE MANNER OF DER IVING THE UNDISCLOSED INCOME AND HAD MADE THE DISCLOSURE U/S 132(4) OF THE ACT FOLLO WED BY OFFERING THE SAME IN THE RETURNS FILED U/S 153C AND 139(1) OF THE ACT , AS T HE CASE MAY BE, ONLY BECAUSE OF THE SEARCH AND NOT OTHERWISE AND IN TERMS OF EXPLANATIO N 5 TO SECTION 271(1)(C ) OF THE ACT, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE P ARTICULARS OF INCOME. 3.2. THE ASSESSEE HAD OFFERED THE UNDISCLOSED INCO ME BASED ON THE CASH FLOW STATEMENT AND CASH ROTATION STATEMENT AND HAD DULY OFFERED THE INTEREST INCOME ARISING OUT OF ROTATION OF CASH IN ITS RETURN OF INCOME. B UT THE LEARNED AO WITHOUT APPRECIATING THE SAME AND THOUGHT THAT IT IS AN INT EREST EXPENDITURE CLAIMED BY THE ASSESSEE WHICH COULD NOT BE AVAILABLE WITH THE ASSE SSEE AS SOURCE IN HIS CASH FLOW STATEMENT AND ACCORDINGLY BROUGHT THE FOLLOWING SUM S TO TAX SEPARATELY IN THE ASSESSMENTS COMPLETED U/S 153C OF THE ACT AND SECTI ON 143(3) OF THE ACT FOR THE ASST YEARS 2005-06 AND 2007-08 RESPECTIVELY :- 4 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA ASST YEAR 2005-06 TOWARDS UNDISCLOSED INTEREST RS. 9,06,250/- ASST YEAR 2007-08 TOWARDS UNDISCLOSED INTEREST RS. 36,51,503/- 4. THE LEARNED CITA APPRECIATED THE CONTENTIONS OF THE ASSESSEE AND THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE DELETED THE PENALT Y U/S 271(1)(C ) OF THE ACT FOR ALL THE THREE YEARS. AGGRIEVED, THE REVENUE IS IN APPEAL B EFORE US FOR ALL THE THREE YEARS. THE GROUNDS RAISED FOR ASST YEAR 2005-06 ARE REPRODUCED HEREINBELOW FOR THE SAKE OF BREVITY AND THERE IS NO CHANGE IN THE GROUNDS FOR O THER ASST YEARS EXCEPT CHANGE IN FIGURE OF PENALTY LEVIED :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) HAS ERRED IN CANCELLING THE PENALTY OF RS. 12,29,6651 LEVIED U/S 271 (1 )(C) OF THE ACT, HOLDING THAT ALL THE CONDIT IONS FOR IMMUNITY OF THE PENALTY LAID DOWN IN CLAUSE (2) OF EXPLANATION 5 OF SECTION 271 (1)( C) OF THE ACT ARE FULFILLED IN THIS CASE ,WHEREAS THE ASS ESSEE HAD FAILED TO SPECIFY IN THE STATEMENT U/S. 132(4) OF THE ACT THE MANNER IN WHICH SUCH INCOME WAS DERIVED. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CANCELING THE PENALTY OF RS. 12 ,29,6651 LEVIED U/S 271 (1 )(C) OF THE ACT, WITHOUT APPRECIATING THAT H AD THERE BEEN NO SEARCH THE ASSESSEE WOULD NOT HAVE DISCLOSED THE INCOME ON WHICH PENALTY WAS LEVIED. 3. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUND(S) OF APPEAL AND / OR ADDUCE ADDITIONAL EVID ENCE AT THE TIME OF HEARING OF THE CASE. 5. THE ASSESSEE DID NOT PREFER ANY CROSS APPEAL OR CROSS OBJECTIONS BEFORE US, BUT HAD PREFERRED A PETITION IN TERMS OF RULE 27 OF THE INC OME TAX APPELLATE TRIBUNAL RULES (ITAT IN SHORT) OBJECTING TO THE VALIDITY OF THE PE NALTY PROCEEDINGS IN AS MUCH AS NO SATISFACTION WAS RECORDED BY THE LEARNED AO OF SECT ION 153A ASSESSEE AS TO CERTAIN SEIZED DOCUMENTS BELONGING TO THE ASSESSEE HEREIN, BEFORE HANDING OVER THE SAID DOCUMENTS TO THE LEARNED AO OF SECTION 153C (ASSESS EE HEREIN) ASSESSEE. THE 5 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA LEARNED AR ALSO TRIED TO ARGUE THAT THE SAID ISSUE EVENTHOUGH NOT RAISED IN ORIGINAL ASSESSMENT PROCEEDINGS , THE ASSESSEE IS NOT DEBARR ED FROM RAISING THE SAME IN THE PENALTY PROCEEDINGS AS BOTH THE PROCEEDINGS AND DIS TINCT, SEPARATE AND INDEPENDENT. HE ARGUED THAT THIS ASPECT GOES INTO THE ROOT OF TH E MATTER AND HENCE COULD BE RAISED AT ANY TIME DURING THE APPELLATE PROCEEDINGS AND RELIE D ON CERTAIN CASE LAWS IN SUPPORT OF HIS CONTENTIONS. IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY OBJECTED TO THE SAME AND ARGUED THAT THE VALIDITY OF SEARCH ASSESSMENT P ROCEEDINGS WAS NEVER OBJECTED BY THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS AND ACCO RDINGLY PRAYED FOR DISMISSAL OF THE PETITION IN TERMS OF RULE 27 OF THE ITAT RULES. 5.1. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THIS I SSUE. WE ARE NOT IN AGREEMENT WITH THE ARGUMENT ADVANCED BY THE LEARNED AR THAT THE JU RISDICTION ISSUE COULD BE RAISED BY HIM IN PETITION UNDER RULE 27 OF ITAT RULES WITH OUT PREFERRING CROSS APPEAL OR CROSS OBJECTIONS. THE PROVISIONS OF RULE 27 OF ITA T RULES IS REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE :- THE RESPONDENT THOUGH HE MAY NOT HAVE APPEALED, MA Y SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAI NST HIM. WE FIND THAT THE ASSESSEE HAD NOT QUESTIONED THE VA LIDITY OF SEARCH ASSESSMENT AND CONSEQUENTIAL PENALTY LEVIED THEREON IN THE GROUNDS RAISED BEFORE THE LEARNED CIT(A). HENCE THE LEARNED CIT(A) COULD NOT GET AN OCCASION TO ADJUDICATE THE SAID ISSUE. WE HOLD THAT THE RECOURSE TO RULE 27 OF ITAT RULES COU LD BE RESORTED BY THE RESPONDENT ASSESSEE ONLY IN RESPECT OF GROUNDS DECIDED AGAINST HIM BY THE LEARNED CIT(A). HERE IS A CASE WHERE NO GROUND WAS RAISED BEFORE LEARNED CIT(A). WE HOLD THAT TWO ESSENTIAL ELEMENTS OF RULE 27 COME TO THE FORE ON I TS BARE READING. FIRST IS THE CONDITION PRECEDENT FOR INVOKING THIS RULE AND THE SECOND IS SCOPE OF INTERFERENCE. IN SO FAR AS THE FIRST ELEMENT IS CONCERNED, WE FIND T HAT THIS RULE HAS BEEN ENSHRINED WITH A VIEW TO DISPENSE JUSTICE TO AN ASSESSEE WHO IS OT HERWISE ENTTIELD TO ASSAIL THE 6 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA CORRECTNESS OF THE IMPUGNED ORDER BY FILING APPEAL OR CROSS OBJECTION, WHETHER OR NOT ACTUALLY FILED. THIS IS BORNE OUT FROM THE EXPRESS ION THOUGH HE MAY NOT HAVE APPEALED USED IN THE CONTEXT OF AN ASSESSEE. THIS AMPLY INDICATES THE EXISTENCE OF A PRE-RIGHT OF THE RESPONDENT TO APPEAL, WHICH MAY HA VE REMAINED UN-AVAILED. THIS RULE CANNOT HELP THE RESPONDENT IN A SITUATION WHERE HE IS OTHERWISE DEBARRED FROM FILING CROSS APPEAL OR CROSS OBJECTION. IF NO RIGHT TO FIL E A CROSS APPEAL OR CROSS OBJECTION STATUTORILY VESTS IN THE RESPONDENT, THEN IT CANNOT BE INFERRED INDIRECTLY BY TAKING RECOURSE TO RULE 27. THE NEXT ELEMENT IS THE SCOP E OF INTEREFERENCE BY THE RESPONDENT. THIS IS CONTAINED IN THE LATER PART OF THE RULE, WH ICH PROVIDES THAT THE RESPONDENT MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GR OUNDS DECIDED AGAINST HIM. CRUX OF THE MATTER IS THAT THE ORDER APPEALED AGAINST CA N BE CHALLENGED BY THE ASSESSEE ONLY QUA THE ASPECTS OF THE ISSUE DECIDED AGAINST HIM IN DEC IDING SUCH OVERALL ISSUE AGAINST THE ASSESSEE, WHICH HAS BEEN ASSAILED IN THE APPEAL . IT MEANS THAT THERE IS AN INHERENT LIMITATION ON THE POWER OF THE ASSESSEE IN NOT CHAL LENGING THE ORDER APPEALED AGAINST UNDER RULE 27 DE HORS THE GROUND DECIDED AGAINST THE ASSESSEE. IN ALL THE CASE LAWS RELIED UPON BY THE LEARNED AR, THE ASSESSEE THEREIN HAD RAISED A SPECIFIC GROUND BEFORE THE LEARNED CIT(A) AND GOT IT DISMISSED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL ENTERTAINED THE PETITION UNDER RULE 27 OF ITAT RULE S, WHEREAS IN THE INSTANT CASE, NO GROUND WAS RAISED BY THE ASSESSEE BEFORE THE LEARNE D CIT(A) REGARDING NON-RECORDING OF SATISFACTION IN TERMS OF SECTION 153C OF THE AC T AND VALIDITY OF SEARCH ASSESSMENTS THEREON. HENCE THE PETITION FILED BY THE ASSESSEE FOR THE TH REE ASST YEARS IN TERMS OF RULE 27 OF THE ITAT RULES IS DISMISSED AS UNADMI TTED. 6. APROPOS THE GROUNDS RAISED BY THE REVENUE, THE LEARNED DR ARGUED THAT BUT FOR THE SEARCH, THE ASSESSEE WOULD NOT HAVE COME FORWARD TO DISCLOSE THESE UNDISCLOSED INCOMES AND HENCE ASSESSEE HAS CONCEALED THE PARTIC ULARS OF INCOME AND ARGUED THAT PENALTY IS LEVIABLE IN TERMS OF EXPLANATION 5 TO SE CTION 271(1)(C ) OF THE ACT. HE ARGUED THAT THE ASSESSEE HAD NOT DEMONSTRATED THE M ANNER OF DERIVING THE UNDISCLOSED INCOME AND HENCE HAS NOT SATISFIED THE CUMULATIVE C ONDITIONS STIPULATED IN CLAUSE 2 OF 7 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT VIZ. , (1) ASSESSEE SHOULD HAVE MADE DISCLOSURE U/S 132(4) OF THE ACT FOLLOWED BY DISCLO SURE OF THE SAME IN THE RETURN OF INCOME ; (2) ASSESSEE SPECIFIES IN THE DISCLOSURE S TATEMENT THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED BY HIM AND (3) ASSES SEE PAYS THE TAX TOGETHER WITH INTEREST ON SUCH UNDISCLOSED INCOME. HE FURTHER AR GUED THAT, EVEN ASSUMING WITHOUT CONCEDING, IMMUNITY IS AVAILABLE FOR THE ASSESSEE IN TERMS OF CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT, IT IS AVAILABLE ONLY FOR THE YEAR OF SEARCH AND FOR THE PREVIOUS YEAR FOR WHICH THE DUE DATE OF FILING THE RETURN HAD NOT EXPIRED AND HENCE THE IMMUNITY, IN ANY CASE, IS NOT AVAILABLE FOR THE EAR LIER YEARS OTHER THAN THESE TWO YEARS. IN OTHER WORDS, THE IMMUNITY CANNOT BE MADE AVAILAB LE TO THE ASSESSEE FOR THE ASST YEARS 2005-06 AND 2006-07. 7. IN RESPONSE TO THIS, THE LEARNED AR ARGUED THAT THE ASSESSEE IS ENTITLED FOR IMMUNITY PROVIDED IN CLAUSE 2 OF EXPLANATION 5 TO S ECTION 271(1)(C ) OF THE ACT FOR ALL THE THREE ASSESSMENT YEARS ( I.E AYS 2005-06 , 2006 -07 & 2007-08) AND ALSO ARGUED THAT THOUGH THE ASSESSEE HAD DULY STATED THE MANNER IN WHICH UNDISCLOSED INCOME HAS BEEN DERIVED IN THE SWORN STATEMENT RECORDED FROM S HRI BIMAL KUMAR JHUNJHUNWALA U/S 132(4) OF THE ACT ON 29.3.2007 DURING CONTINUAN CE OF SEARCH PROCEEDINGS THAT COMMENCED ON 28.3.2007 VIDE REPLY TO QUESTION NO. 1 0, 14 , 16 & 19. THE LEARNED AR FURTHER ARGUED THAT THE MANNER OD DERIVI NG THE UNDISCLOSED INCOME NEED NOT BE DEMONSTRATED BY THE ASSESSEE. HE ARGUED FUR THER THAT THE MOMENT DISCLOSURE U/S 132(4) IS MADE AND TAXES TOGETHER WITH INTEREST ARE PAID BY THE ASSESSEE, SUBSTANTIVE COMPLIANCE HAS BEEN MADE BY THE ASSESSEE AND ACCORD INGLY ENTITLED FOR IMMUNITY. 7.1. HE FURTHER ARGUED THAT THE IMMUNITY PROVIDED I N CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT IS AVAILABLE TO THE A SSESSEE WHEN THE RETURN FILED U/S 153A / 153C OF THE ACT HAS BEEN ACCEPTED BY THE LEARNED AO ULTIMATELY IN THE ASSESSMENT. 8 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA 7.2. HE ALSO STATED THAT THE LEARNED AO HAD ERRONE OUSLY MISUNDERSTOOD THE FACTS WITH REGARD TO THE INTEREST ELEMENT IN THE CASH FLOW STA TEMENT. HE EXPLAINED THAT THE ASSESSEE HAD SHOWED THE INTEREST INCOME EARNED THRO UGH ROTATION OF CASH AS A SOURCE IN THE CASH FLOW STATEMENT AND HAD DULY CONSIDERED THE SAME WHILE OFFERING THE INCOME U/S 132(4) FOLLOWED BY FILING OF RETURN U/S 153C OF THE ACT AND NO INTEREST EXPENDITURE WAS CLAIMED BY THE ASSESSEE AS STATED BY THE LEARNE D AO. 7.3. HE ARGUED THAT NO SATISFACTION AS TO CONCEALM ENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IS NOT DISCERNIBLE EITHER IN THE THE SHOW CAUSE NOTICE FOR INITIATING PENALTY PROCEEDINGS U/S 274 READ WIT H SECTION 271(1)(C ) OF THE ACT OR FROM THE ASSESSMENT ORDER. IN RESPONSE TO THIS, THE LEARNED DR RELIED ON THE PROVISIONS OF SECTION 271(1B) OF THE ACT WHICH IS I NTRODUCED WITH RETROSPECTIVE EFFECT FROM 1.4.1989. HE RELIED ON VARIOUS CASE LAWS IN SUPPORT OF HIS VARIOUS CONTENTIONS STATED SUPRA. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE VARIOUS PAPER BOOKS FILED BY THE ASSE SSEE CONTAINING THE ENTIRE ASSESSMENT AND APPELLATE RECORDS AND THE COMPILATIO N OF VARIOUS CASE LAWS ON THE IMPUGNED SUBJECT. THE FACTS STATED HEREINABOVE REM AIN UNDISPUTED AND THE SAME ARE NOT REITERATED HEREIN FOR THE SAKE OF BREVITY. WE FIND THAT NO ADDITION HAS BEEN MADE IN THE ASSESSMENT BY THE LEARNED AO IN THE SEARCH ASSE SSMENTS COMPLETED FOR ASST YEARS 2005-06 , 2006-07 AND 2007-08. EVEN THE UNDISCLOSE D INTEREST INCOME THOUGH ADDED SEPARATELY BY THE LEARNED AO IN THE ASSESSMENT ORDE RS FOR THE ASST YEARS 2005-06 AND 2007-08, WE FIND THAT THE SAME HAS BEEN DULY CONSID ERED ALREADY BY THE ASSESSEE IN ITS COMPUTATION OF INCOME AND HENCE THE SAME CANNOT BE CONSTRUED AS AN ADDITION MADE TO THE RETURNED INCOME. THE REVENUE HAD RAISED AN OBJ ECTION FOR GRANTING IMMUNITY CONTEMPLATED UNDER CLAUSE 2 OF EXPLANATION 5 TO SEC TION 271(1)(C ) OF THE ACT SINCE ACCORDING TO REVENUE, THE ASSESSEE HAS NOT DEMONSTR ATED THE MANNER OF DERIVING THE 9 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA UNDISCLOSED INCOME. IN THIS REGARD, IT WOULD BE P ERTINENT TO GET INTO THE VARIOUS QUESTIONS AND REPLIES GIVEN BY SHRI BIMAL KUMAR JHU NJHUNWALA, KEY PERSON OF THE ASSESSEE GROUP, IN HIS SWORN STATEMENT RECORDED ON 29.3.2007. THE RELEVANT PORTIONS ARE EXTRACTED HEREIN BELOW FOR THE SAKE OF CONVENIE NCE:- Q.NO.10. KINDLY GO THROUGH THE BUNCH OF LOOSE SHEE TS MARKED HRV-1 AND EXPLAIN THE CONTENTS THEREIN ? ANS. THIS BUNCH CONTAINS WRITTEN PAGES FROM 1 TO 48 . OF THESE THE FOLLOWING ARE EXPLAINED BELOW PAGE 1 - PAGES 2 -8 - . PAGES 9 TO 10 - .. PAGES 11 TO 48 RELATE TO M/S PRATAP PROPERTIES LTD (PPL). THIS I S COMPANY WHICH HAS INVESTMENT IN VARIOUS PROPERTIES IN KOLKA TA AND HOWRAH. THE COMPANY ORIGINALLY BELONGED TO THE CHAMARIAS BUT IS IN THE PROCESSOF BEING TAKEN OVER BY US. THE CASH FLOW STATEMENTS FROM PA GES 30 -42 CONTAIN TRANSACTIONS WHICH ARE BOTH ACCOUNTED AS WELL AS UN ACCOUNTED. THE QUANTUM OF UNACCOUNTED PAYMENTS WILL BE SUBMITTED B Y VERIFYING THE SAME WITH THE REGULAR BOOKS IN DUE COURSE . Q. NO. 14. PLEASE GO THROUGH THE BUNCH OF LOOSE SH EETS MARKED HRV -5 AND EXPLAIN THE CONTENTS THEREIN ? ANS. PAGES 1 TO 72 RELATE TO M/S PPL. OF THESE PAGES 71, 72 CONTAINT HE CASH FLOW STATEMENT OF M/S PPL AS ON 17.3.2007. TH E DETAILS OF VARIOUS UNACCOUNTED EXPENSES. THE LAST MENTIONED HEAD OF EX PENSES AMOUNTING TO RS. 22.345 LAKHS IS NOT ACCOUNTED FOR. THE QUANTUM OF UNACCOUNTED EXPENSES UNDER THE HEADS NEEDS TO BE DETERMINED. PAGES 75 TO 87 CONTAINED THE DETAILS OF CASH RECEIVED AND PAYMENT MADE BY THE GROUP DURING THE FINANCIAL YEAR 06-07. THE EXA CT QUANTUM OF UNACCOUNTED TRANSACTION AS PER THESE PAGES NEEDS TO BE DETERMINED. Q. NO. 16. PLEASE GO THROUGH THE BUNCH OF LOOSE SH EETS MARKED HRV -7 AND EXPLAIN THE CONTENTS THEREIN ? 10 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA ANS. PAGE 1 RELATES TO PURCHASE OF PROPERTY AT 42, CHOWRINGHEE ROAD, KO;-11 . THIS IS SAME AS THE TRANSACTION RECORDED IN THE BUNCH OF LOOSE SHEET MARKED HRV -1 PAGES 9 AND 10. PAGE 5 & 6 CO NTAINED CASH SHEETS OF THIS PREMISES AS ON 12.8.06. PAGE 5,6 IS THE CASH SHEET OF THE PREMISES AS ON 12 .08.06. AN AMOUNT OF RS. 14.40 LAKHS WAS RECEIVED IN THIS OFFICE OUT OF BOOKS. PAGES 7 TO 13 RELATE TO LEGAL EXPENSES OF M/S PPL. PAGES 19 TO 22 - PAGES 23 TO 27 - PAGES 28 TO 32 - . PAGE 33 - .. PAGE 34 - .. PAGES 35 TO 37 - .. PAGES 39 TO 46 . Q. NO. 19. PLEASE GO THROUGH THE BUNCH OF LOOSE SH EETS MARKED HRV -10 AND EXPLAIN? ANS. THIS BOUND PAGES 1 TO 53 RELATES TO ACCOUNTED AND UNACCOUNTED TRANSACTION OF M/S PPL. WE FIND THAT THE ASSESSEE HAD DEMONSTRATED THE MANN ER OF DERIVING THE UNDISCLOSED INCOME VIS- A- VIS THE SEIZED DOCUMENTS TO SOME EXTENT AND HENCE THE STATEMENT OF THE LEARNED AO THAT THE SAME WAS NOT DEMONSTRATED AT AL L IS NOT ACCEPTABLE. WE ALSO HOLD THAT THE MANNER OF DERIVING THE UNDISCLOSED INCOME NEED NOT BE DEMONSTRATED BY THE LEARNED AO IN FULL WHEN SUBSTANTIAL COMPLIANCE OF I MMUNITY CLAUSES HAVE BEEN SATISFIED BY THE ASSESSEE VIZ. FILING OF DISCLOSURE PETITION U/S 132(4) FOLLOWED BY FILING OF RETURN THEREON U/S 153C AND PAYING TAXES THEREON . WE PLACE RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS M AHENDRA C SHAH REPORTED IN (2008) 299 ITR 305 (GUJ) , IT WAS HELD THAT AT PAGE 315 :- IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF TH E ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH 11 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA SUCH INCOME HAS BEEN DERIVED, SUFFICE IT STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCU MBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXP LANATION 5 IN ITS ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICE R CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAK E ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO S EEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND M AKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERI NG THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY THE A LLAHABAD HIGH COURT IN THE CASE OF CIT RADHA KISHAN GOEL (2005) 248 ITR 45 4 . SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIB LE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPE CIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO .2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE ACT. THE VIE W TAKEN BY THE TRIBUNAL AS WELL AS THE ALLAHABAD HIGH COURT TO THE EFFECT T HAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANER IN WHICH THE INCOME IS D ERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBST ANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLANATION 5 IS COMMENDABLE. HENCE, THE TRIBUNAL WAS JUSTIFIED IN COMING TO THE CONLUSION THAT IN SO FAR AS THE VALUE OF DIAMONDS WAS CONCERNED, THE ASSESSE E HAVING MADE A DECLARATION UNDER SECTION 132(4) OF THE ACT AND PAI D TAXES THEREON, HAD FULFILLED ALL THE CONDITIONS FOR AVAILING OF THE BE NEFIT OF IMMUNITY FROM LEVY OF PENALTY AS PROVIDED UNDER EXPLANATION 5 TO SECTI ON 271(1)(C ) OF THE ACT. IN THE ABSENCE OF ANY INFIRMITY IN THE ORDER OF THE TRIBUNAL ON THIS COUNT THE QUESTION REFERRED IS ANSWERED IN THE AFFIRMATIVE, I .E IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8.1. THE NEXT ASPECT IS WITH REGARD TO THE FACT AS TO WHETHER PENALTY COULD BE LEVIED WHEN THERE WAS NO ADDITIONS MADE IN THE SEARCH ASSE SSMENTS BY THE LEARNED AO. WE FIND THAT THE LEARNED AO DID NOT INDEPENDENTLY WORK OUT THE QUANTUM OF UNDISCLOSED INCOME WHICH WAS DIFFERENT FROM OR IN EXCESS OF WHA T WAS PROMISED IN THE STATEMENT GIVEN U/S 132(4) OF THE ACT FOLLOWED BY FILING OF R ETURN U/S 153C AND U/S 139(1) OF THE ACT. IT WILL BE RELEVANT TO DISCUSS THE FOLLOWIN G CASE LAW AT THIS JUNCTURE I.E THE DECISION OF ITAT DELHI BENCH IN THE CASE OF PREM ARORA VS DCIT REPORTED IN 12 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA (2012) 24 TAXMANN.COM 260 (DELHI ) WHEREIN THE HEAD NOTES ARE REPRODUCED HEREIN BELOW:- SECTION 271(1)(C ), READ WITH SECTION 153A, OF THE INCOME TAX ACT, 1961 PENALTY FOR CONCEALMENT OF INCOME ASSESSMENT YE AR 2004-05 WHETHER FOR PURPOSE OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C ) RESULTING AS A RESULT OF SEARCH ASSESSMENTS MADE UN DER SECTION 153A, ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139 C ANNOT BE CONSIDERED HELD, YES WHETHER CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO ADDITIONAL INCOME BROUGHT TO TAX OVER AND ABOVE INCOME RETURNED BY ASSESSEE IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A AND, THEREFORE, ONCE RETURNED INCOME UNDER SECTION 153A IS ACCEPTED BY ASSESSING OFFICER, IT CAN NEITHER BE A CASE OF CONCEALMENT OF INCOME N OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME HELD, YES SEARCH WAS CONDUCTED ON 22-11-2006 AND CASH WAS FOUND FROM POSSESSION OF ASSESSEE ASSESSEE HAD DRAWN CASH FLOW STATEMENT FOR ENTIRE PERIOD OF SIX YEARS IN ORDER TO DETERMINE UNDISCLOSED INCOME BASED ON SEIZED MATERI AL FOR EACH OF SIX ASSESSMENT YEARS WHETHER PENALTY UNDER SECTION 27 1(1)(C ) CANNOT BE IMPOSED BY INVOKING EXPLANATION 5 IN ASSESSMENT YEA R 2004-05 IN RESPECT OF CASH FOUND IN PREVIOUS YEAR RELEVANT TO ASSESSME NT YEAR 2007-08 , MERELY ON PRESUMPTION THAT ASSESSEE MIGHT HAVE BEEN IN POS SESSION OF CASH THROUGHOUT PERIOD COVERED BY SEARCH ASSESSMENTS H ELD, YES [ IN FAVOUR OF ASSESSEE] 8.1.1. WE FIND THAT THIS DECISION OF DELHI TRIBUNA L HAS BEEN FOLLOWED BY THIS TRIBUNAL IN THE CASE OF DCWT VS VIVEK KR. KATHOTIA IN WTA NOS. 02 TO 08 / KOL / 2013 DATED 15.5.2015, WHEREIN IT WAS HELD THAT :- THAT THE CONCEPT OF A VOLUNTARY RETURN OF INCOME MA Y BE IMPORTANT IN PENALTY PROCEEDINGS INITIATED IN THE NORMAL ASSESSM ENT PROCEEDINGS U/S 143(3) OR 147 OF THE ACT BUT NOT U/S 153A OF THE AC T. WHEN ACCEPTED BY THE AO THEN THERE IS NO CONCEALMENT OF INCOME AND CONSE QUENTLY PENALTY U/S 271(1)(C ) OF THE ACT CANNOT BE IMPOSED. THE CONCE ALMENT OF INCOME IS TO BE DETERMINED WITH REGARD TO THE RETURN OF INCOME I N RESPONSE TO NOTICE U/S 153A OF THE ACT. THEREFORE, IN THE PRESENT CIRCUMSTANCES AND FACT S OF THE CASE ONCE THE RETURNED WEALTH IS ACCEPTED BY THE AO U/S 153A OF THE ACT THEN THERE CANNOT BE A CASE OF CONCEALMENT OF INCO ME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE CIRCUMSTA NCES AND FACTS OF THE CASE THE DECISION IN THE CASE OF PREM ARORA VS DCIT (24 TAXMANN.COM 260) 13 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA (DELHI TRIBUNAL) IS SQUARELY APPLICABLE IN THE PRES ENT CASE, SINCE IN THE PRESENT CASE THE ASSESSEE HAS DISCLOSED GOLD AND DI AMOND IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT DURING THE SEARCH OP ERATION ITSELF, IN THE WEALTH TAX RETURN THE TRIBUNAL HAS APPROVED THE FIN DINGS IN QUANTUM WITH REGARD TO THE GENUINENESS OF THE DECLARATION OF GOL D AND DIAMONDS. ACCORDINGLY THE ASSESSEE IS NOT LIABLE TO HAVE PENA LTY U/S 271(1)(C ) OF THE ACT. 8.1.2. WE FIND THAT THE ASSESSEE HAD MADE A DISCLO SURE STATEMENT U/S 132(4) OF THE ACT AFTER THE SEARCH OFFERING UNDISCLOSED INCOME, EXPLA INING THE MANNER IN WHICH SUCH INCOME WAS DERIVED AND PAID TAXES THEREON TOGETHER WITH INTEREST. THE ASSESSEE ALSO DULY OFFERED THE SAID UNDISCLOSED INCOME IN THE RET URNS FILED IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT AND ASSESSMENTS COMPL ETED ACCORDINGLY. WE HOLD THAT THE EXPRESSION TO BE FURNISHED IN CLAUSE 2 OF EXP LANATION 5 TO SECTION 271(1)(C ) OF THE ACT HAS TO BE UNDERSTOOD AS REQUIRED TO BE FU RNISHED WHICH IN TURN HAS TO BE UNDERSTOOD AS A RETURN REQUIRED TO BE FURNISHED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. IN THIS REGARD, WE PLACE RELIANCE ON THE DECI SION OF THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT VS BRIJENDRA GUPTA IN ITA NO. 330 OF 2009 DATED 8.6.2015 , WHEREIN THE QUESTION RAISED BEFORE THEIR LORDSHIP S AND THEIR DECISION RENDERED THEREON IS AS UNDER:- THE FOLLOWING QUESTION OF LAW WAS SUGGESTED BY THE REVENUE:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED TRIBUNAL WAS JUSTIFIED IN LAW IN CONFIRMING THE ORDER OF THE CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C ) OF THE INCO ME TAX ACT, 1961 ON THE GROUND THAT THE ASSESSEE IS ENTITLED TO IMMUNITY FR OM PENALTY ON ACCOUNT OF EXPLANATION 5 TO SECTION 271(1)(C ) WHEN THE ASSESS EES CASE DOES NOT COME UNDER THE PURVIEW OF THE EXCEPTIONS PROVIDED THEREI N. HELD THAT : CLAUSE (A) OF EXPLANATION 5 TO SECTION 271(1)(C ) C ONTEMPLATES INCOME FOR ANY PREVIOUS YEAR FOR WHICH RETURNS HAS BEEN FURNIS HED BUT THE INCOME SINCE DISCLOSED HAD NOT BEEN SHOWN. IT IS AXIOMATI C THAT IF SUCH INCOME HAD BEEN DISCLOSED IN THE RETURNS FILED UNDER SECTION 1 39, THE QUESTION OF 14 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA UNDISCLOSED INCOME WOULD NOT HAVE ARISEN. WHEN THE RETURN HAD BEEN FILED BUT THE INCOME SINCE DISCOVERED WAS NOT DISCLOSED, THE QUESTION OF CONCEALMENT NATURALLY ARISES. THE LEGISLATURE, HOW EVER, MADE A CONSCIOUS DEPARTURE BY CARVING OUT AN EXCEPTION PROVIDED THE CONDITIONS LAID DOWN IN CLAUSE (I) OR CLAUSE (II) THEREOF HAVE BEEN COMPLI ED WITH. WE ARE, IN THIS CASE, CONCERNED WITH CLAUSE (II). ONE OF THE CONDITIONS IS THAT THE ASSESSEE MAKES A STATEMENT UNDER SECTION 1 32(4) THAT THE ASSETS UNEARTHED HAVE BEEN ACQUIRED OUT OF HIS INCOME WHIC H HAS NOT BEEN DISLOSED SO FAR IN HIS RETURNS OF INCOME ALREADY FI LED. THE DIFFICULTY ARISES BY THE USE OF THE EXPRESSION TO BE FURNISHED BEFOR E THE EXPIRY OF TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 139. A CO NFUSION IS LIKELY TO ARISE AS TO WHETHER THE DEPARTURE HAS BEEN SOUGHT TO BE M ADE BY THE LEGISLATURE ONLY FOR THOSE CASES WHERE THE STATEMENT AS REGARDS UNDISCLOSED INCOME WAS MADE PERTAINING TO A PREVIOUS YEAR FOR WHICH TI ME TO FILE RETURN UNDER SECTION 139 HAD NOT EXPIRED. BUT THAT WAS NOT THE INTENTION BECAUSE THE EXPRESSION UNLESS APPEARS AFTER CLAUSES (A) AND ( B) OF EXPLANATION WHICH PROVIDES FOR IMPOSITION OF PENALTY. THEREFOR E, UNLESS HAS TO APPLY TO THE PROVISION FOR IMPOSITION OF PENALTY. THEREF ORE, THE AFORESAID EXPRESSION TO BE FURNISHED HAS TO BE INTERPRETED AS REQUIRED TO BE FURNISHED. ONLY IN THAT CASE THE SECTION WILL MAK E A MEANING OTHERWISE THE SECTION DOES NOT MAKE ANY MEANING. WE ARE SUPPORTED IN OUR VIEW BY THE JUDGEMENT OF TH E MADRAS HIGH COURT IN THE CASE OF CIT VS S.D.CHANDRU REPORTED IN (2004 ) 266 ITR 175 (MAD)WHEREIN A DIVISION BENCH OPINED THAT THE ADDI TIONAL WORDS WHICH REFER TO THE TIME SPECIFIED IN SECTION 139(1) ARE O NLY A REITERATION OF THE LEGAL REQUIREMENT REGARDING THE TIME WITHIN WHICH R ETURNS SHOULD NORMALLY BE FILED. IN THAT VIEW OF THE MATTER, THE QUESTION PROPOSED B Y REVENUE IS ANSWERED IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL IS THUS DISPOSED OF. 8.1.3. WE WOULD LIKE TO PLACE RELIANCE ON THE FOLL OWING DECISIONS ON THE IMPUGNED ISSUE BEFORE US : - A) JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SHRI SAMIT ROY IN ITA 354 OF 2009 DATED 3.9.2015, WHEREIN THE QUESTIONS RAISED BEFORE THEIR LORDSHIPS AND THEIR DECISION RENDERED THEREON IS AS BELOW:- 15 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE INCOME TAX APPELLATE TRIBUNAL ERRED IN LAW IN U PHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) HOLDIN G THEIR AMOUNTS DISCLOSING AFTER SEARCH, WHICH WAS NOT PREV IOUSLY OFFERED TO TAX IS NOT A CONCEALMENT ON THE PART OF THE RESPOND ENT / ASSESSEE ? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE INCOME TAX APPELLATE TRIBUNAL ERRED IN LAW IN UPHOL DING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) HOLDING THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING PENALTY UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR S 2003-04 TO 2005-06 ? SINCE BOTH THE QUESTIONS ARE COVERED BY THE JUDGEME NTS PASSED BY THIS COURT IN ITA 39 OF 2010 (COMMISSIONER OF INCO ME TAX , CENTRAL I, KOLKATA VS AMARDEEP SINGH DHANJAL) AND IN ITA 330 OF 2009 (COMMISSIONER OF INCOME TAX, CENTRAL III, KOL KATA VS BRIJENDRA GUPTA), BOTH THE QUESTIONS ARE ANSWERED I N THE NEGATIVE, AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL IS DISMISSED. B) JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS TAP AN KUMAR GHOSH IN ITA 6 OF 2010 DATED 3.9.2015, WHEREIN THE QUESTIONS RAISED BEFORE THEIR LORDSHIPS AND THEIR DECISION RENDERED THEREON IS AS BELOW:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED TRIBUNAL HAS COMMITTED ERROR IN APPLYING TH E PROVISIONS OF THE EXPLANATION 5 OF SECTION 271(1)(C ) OF THE INCO ME TAX ACT, 1961 AND THEREBY COMMITTED ERROR IN LAW IN MODIFYING THE ORDER OF PENALTY OF RS. 4,17,926/- IN RELATION TO THE ASSESSMENT YE ARS 2003-04 AND 2005-06 SINCE WE FIND THAT THE ISSUE STANDS COVERED BY THE JUDGEMENTS DELIVERED IN ITA 39 OF 2010 (COMMISSIONER OF INCO ME TAX , CENTRAL I, KOLKATA VS AMARDEEP SINGH DHANJAL) AND IN ITA 3 30 OF 2009 (COMMISSIONER OF INCOME TAX, CENTRAL III, KOLKATA VS BRIJENDRA GUPTA), IN FAVOUR OF THE ASSESSEE, THE QUESTION IS ANSWERED IN THE NEGATIVE, AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL IS DISMISSED. 16 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA C) GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI P ATEL VS ACIT IN TAX APPEAL NO. 1181 OF 2010 WITH TAX APPEAL NO. 118 2 TO 1185 OF 2010 DATED 3.12.2014 , WHEREIN THE QUESTION RAISED BEFORE THEIR LORDSHIPS AND THEIR DECISION RENDERED THEREON IS AS BELOW:- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN RESTORING TH E PENALTY IMPOSED UNDER SECTION 271(1)(C ) OF THE ACT HOLDING THAT BE NEFIT UNDER EXPLANATION 5 TO SECTION 271(1)( C) OF THE ACT WOUL D BE AVAILABLE ONLY FOR PERIOD WHERE DUE DATE FOR FILING THE RETUR N UNDER SECTION 139(1) OF THE ACT HAD NOT EXPIRED ? 13. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE DECISIONS RELIED UPON BY LEARNED SE NIOR ADVOCATE FOR THE APPELLANT, WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS ERRONEOUS. THE CIT(A) RIG HTLY HELD THAT IT IS NOT RELEVANT WHETHER ANY RETURN OF INCOME WAS FILED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND WHETHER ANY INCOME WAS UNDISCLOSED IN THAT RETURN OF INCOME. IN VIEW OF SPECIFIC PROV ISION OF SECTION 153A OF THE I.T.ACT, THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE I.T.A ACT IS TO BE CONSID ERED AS RETURN FILED UNDER SECTION 139 OF THE ACT, AS THE ASSESSIN G OFFICER HAS MADE ASSESSMENT ON THE SAID RETURN AND THEREFORE, THE RE TURN IS TO BE CONSIDERED FOR THE PURPOSE OF PENALTY UNDER SECTION 271(1)(C ) OF THE I.T.ACT AND THE PENALTY IS TO BE LEVIED ON THE INCO ME ASSESSED OVER AND ABOVE THE INCOME RETURNED UNDER SECTION 153A, I F ANY. 14. FURTHER, IN THE PRESENT CASE, IT APPEARS FROM T HE RECORD THAT THE ASSESSES HAD SATISFIED ALL THE CONDITIONS WHICH ARE REQUIRED FOR CLAIMING IMMUNITY FROM PAYMENT OF PENALTY UNDER SEC TION 271(1)(C )OF THE ACT. THE PROVISION DOES NOT SPECIFY ANY TI ME LIMIT DURING WHICH THE AFORESAID AMOUNT I.E THE AMOUNT OF PENALT Y WITH INTEREST HAS TO BE PAID. ADMITTEDLY WHEN THE ASSESSEE HEREIN HAVE PAID THE ENTIRE AMOUNT WITH INTEREST, THE ASSESSING OFFICER OUGHT TO HAVE GRANTED THEM IMMUNITY AVAILABLE UNDER SECTION 271(1 )(C ) OF THE INCOME TAX ACT. 18. FOR THE FOREGOING REASONS, THE PRESENT APPEALS STAND ALLOWED. THE ORDER OF THE TRIBUNAL IS QUASHED AND SET ASIDE. CONSEQUENTLY, THE ORDER OF THE CIT(A) IS RESTORED. THE QUESTION OF LAW INVOLVED IN THIS APPEALS IS ANSWERED IN FAVOUR OF THE ASSESEE A ND AGAINST THE REVENUE. 17 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA D. RAJASTHAN HIGH COURT IN THE CASE OF CIT VS KANHAIA LAL REPORTED IN (2008) 299 ITR 19 (RAJ) , IT WAS HELD THAT :- WHERE THE ASSESSING OFFICER HAD FOUND THE INCOME TO RELATE TO DIFFERENT ASSESSMENT YEARS, IN DIFFERENT VOLUMES, A S CONTRA DISTINGUISHED TO THE ONE SUBMITTED BY THE ASSESSEE, AND HAD ACCORDINGLY MADE THE ASSESSMENTS, WHICH ASSESSMENTS HAD BECOME FINAL AND WERE NOT THE SUBJECT MATTER OF CHALLENGE, PENALTY U/S 271(1)(C ) COULD NOT BE IMPOSED BY VIRTUE OF EXPLAN ATION 5. E. MADRAS HIGH COURT IN THE CASE OF CIT VS S.D.CHA NDRU REPORTED IN (2004) 266 ITR 175 (MAD) , I T WAS HELD THAT :- PENALTY U/S 271(1)( C) WAS NOT LEVIABLE BY OPERATIO N OF EXPLANATION 5 IN A CASE WHERE A STATEMENT U/S 132(4) WAS FILED IN COURSE OF A SEARCH AND SEIZURE AND THEREFORE, ADMITTED A LARGER INCOME FOR THE EARLIER YEARS ON WHICH TAX WITH INTEREST HAD BEEN P AID. F. RAJASTHAN HIGH COURT IN THE CASE OF ACIT VS GEB ILAL KANHAIALAL REPORTED IN (2004) 270 ITR 523 (RAJ) , IT WAS HELD THAT:- PENALTY U/S 271(1)(C ) WAS NOT LEVIABLE BY OPERATIO N OF EXPLANATION 5 IN A CASE WHERE A STATEMENT U/S 132(4) WAS FILED IN COURSE OF A SEARCH AND SEIZURE AND THEREAFTER THE ASSESSEE HAS DISCLOSED A PARTICULAR CONCEALED INCOME AND SURRENDERED IT FOR TAX AND TAX HAD BEEN TOGETHER WITH INTEREST. 8.2. THE NEXT ASPECT IS AS TO WHETHER THE IMMUNITY PROVIDED IN CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT IS AVAILABLE TO ALL THE ASSESSMENT YEARS. WE HOLD THAT THE IMMUNITY PROVIDED IN CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT IS AVAILABLE TO ALL THE ASSESSMENT YEARS PRIOR TO THE YEAR OF SEARCH IF THE CONDITIONS STIPULATED THEREON ARE SATISFIED. RELIANCE IN THI S REGARD IS PLACED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS RAM ESH CHAND GOYAL IN G.A.NO. 2347 OF 2010 IN ITAT NO. 181 OF 2010 DATED 11.8.201 0 , WHEREIN THE QUESTION RAISED BEFORE THEIR LORDSHIPS AND DECISION RENDERED THEREO N IS AS BELOW:- 18 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED TRIBUNAL WAS JUSTIFIED IN LAW IN CANCELLING THE ORD ER OF PENALTIES FOR RS. 3,99,476/- , RS. 5,24,169/-, RS. 5,96,020/-, RS. 4, 86,030/- AND RS. 25,12,525/- FOR THE ASSESSMENT YEARS 2002-03 , 2003 -04, 2004-05, 2005-06 AND 2006-07 RESPECTIVELY ON THE GROUND THAT THE EXP LANATION 5 TO SECTION 271(1)( C) PROTECTS THE ASSESSEE FROM PENALTY ON AD MITTED UNDISCLOSED INCOME UNDER SECTION 132(4) OF THE ACT WITHOUT APPR ECIATING THAT THE ASSESSEE HAS MADE THE DISCLOSURE IN THE ASSESSMENT YEARS 2006-07 AND THE IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)( C) IS AVAILABLE FOR THE YEARS FOR WHICH THE RETURN IS YET TO BE FURNISHED B EFORE THE EXPIRY OF TIME LIMIT UNDER SECTION 139(1) OF THE ACT WHEREAS THE D UE DATE FOR FILING OF RETURN UNDER SECTION 139(1) OF THE ACT FOR THE ASSE SSMENT YEARS 2001-02 TO 2005-06 HAD ALREADY EXPIRED AND RETURNS FILED PRIOR TO THE DATE OF SEARCH AND FOR THE ASSESSMENT YEARS 2006-07 ALSO THE RETUR N WAS NOT FILED ON THE DUE DATE. WE HAVE HEARD MR.SINHA EXTENSIVELY AND GONE THROUGH THE IMPUGNED JUDGEMENT AND ORDER OF THE LEARNED TRIBUNAL. THE L EARNED TRIBUNAL HAS RECORDED THE FACT THAT THE RECORD DOES NOT SHOW THA T THE ASSESSING OFFICER HAD DETECTED THE ADDITIONAL INCOME IN THE ASSESSMEN T PROCEEDINGS. IT FURTHER RECORDED UPON PERUSAL OF THE RECORDS THAT S MALL VARIATION IN INCOME WAS DUE TO BONA FIDE MISTAKES AND DIFFICULTIES IN W ORKING OUT THE UNDISCLOSED INCOME. IT IS FURTHER RECORDED THAT TH E VOLUNTARY ACTION ON THE PART OF THE ASSESSEE TO SETTLE THE TAX ISSUES FOR P EACE OF MIND APPEARS FROM THE CONDUCT OF THE ASSESSEE. WHILE RECORDING THE A FORESAID FACT, THE LEARNED TRIBUNAL ULTIMATELY RELIED ON A DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF ADDITIONAL CIT VS PREM CHAND GARG. MR. SINHA, HOWEVER, IS UNABLE TO SAY WHETHER THE EARLIER DECISION OF THE T RIBUNAL IN THE CASE OF PREM CHAND GARG HAS BEEN CHALLENGED OR NOT. MOREOV ER, THE LEARNED TRIBUNAL HAS ALSO RELIED ON A LARGE NUMBER OF DECIS IONS OF THE VARIOUS COURT ON THE SAME POINT. HENCE WHEN THE POINT IS COVERED , WE DO NOT FIND ANY MERIT IN THIS APPEAL FOR ADMISSION. ACCORDINGLY, T HE SAME IS DISMISSED. 8.3. THE NEXT ASPECT TO BE CONSIDERED IS AS TO WHE THER PROPER SATISFACTION WAS RECORDED BY THE LEARNED AO EITHER IN THE SHOW CAUSE NOTICE F OR INITIATING PENALTY PROCEEDINGS OR IN THE ASSESSMENT ORDER. WE HOLD THAT IT IS THE BO UNDEN DUTY OF THE LEARNED AO THAT HE HAS TO RECORD THE SPECIFIC CHARGE ON WHICH THE ASSE SSEE HAS COMMITTED THE CRIME AND WHICH HAS TO BE ANSWERED BY HIM I.E WHETHER ASSESSE E HAS CONCEALED THE PARTICULARS OF 19 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. THIS SHOULD BE CLEARLY SPELT OUT IN THE ASSESSMENT ORDER AND IN THE SHOW CAUSE N OTICE AND SHOULD BE CLEARLY DISCERNIBLE THEREON. IN THIS REGARD, WE PLACE RELI ANCE ON THE RECENT DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT , PANCHKULA V S JAI LAXMI RICE MILLS AMBALA CITY REPORTED IN (2015) 64 TAXMANN.COM 75 (SC) VIDE ORDER DATED 20.11.2015, WHEREIN IT WAS HELD THAT :- 5. AS POINTED OUT ABOVE, IN SO FAR AS, FRESH ASSESS MENT ORDER IS CONCERNED, THERE WAS NO SATISFACTION RECORDED REGARDING PENALT Y PROCEEDING UNDER SECTION 271E OF THE ACT, THOUGH IN THAT ORDER THE A SSESSING OFFICER WANTED PENALTY PROCEEDING TO BE INITIATED UNDER SECTION 27 1(1)(C ) OF THE ACT. THUS, IN SO FAR AS PENALTY UNDER SECTION 271E IS CO NCERNED, IT WAS WITHOUT ANY SATISFACTION AND, THEREFORE, NO SUCH PENALTY CO ULD BE LEVIED. THESE APPEALS ARE, ACCORDINGLY, DISMISSED. 8.3.1. WE ALSO PLACE RELIANCE ON THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS ACIT IN ITA NO. 1303/K OL/2010 FOR ASST YEAR 2006-07 DATED 6.11.2015 , WHICH IN TURN PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & A NR VS MANJUNATHA COTTON AND GINNING FACTORY REPORTED IN 359 ITR 565 (KAR) AND WHICH CONSIDERED THE APPLICABILITY OF NEWLY INSERTED PROVISION OF SECTION 271(1B) OF THE ACT WITH RETROSPECTIVE EFFECT FROM 1.4.1989 AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MS. MADHUSHREE GUPTA VS UNION OF IND IA REPORTED IN 317 IR 107 (DEL) . IN THIS JUDGEMENT, THE RELEVANT OPERATIVE PORTIO NS ARE REPRODUCED HEREIN BELOW:- 6. WE SHALL NOW DEAL WITH THE QUESTION WHETHER PRO PER SATISFACTION WAS ARRIVED AT BY THE AO FOR INITIATING PENALTY PROCEED INGS U/S.271(1)(C), IN THE COURSE OF CONCLUDING THE ASSESSMENT PROCEEDINGS, WH EREIN THE ADDITIONS IN RESPECT OF WHICH PENALTY WAS IMPOSED WERE MADE. ON THE ABOVE ISSUE, THE FIRST ASPECT WHICH, WE NOTICE IS THAT IN THE ORDER OF ASSESSMENT, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER, N OWHERE SPELLS OUT OR INDICATES THAT THE AO WAS OF THE VIEW THAT THE ASSE SSEE WAS GUILTY OF EITHER CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF 20 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA INCOME. THE OFFER TO TAX OF INCOME BY THE ASSESSEE HAS JUST BEEN ACCEPTED. IT IS NO DOUBT TRUE THAT IT IS NOT THE REQUIREMENT OF THE LAW THAT THE SATISFACTION HAS TO BE RECORDED IN A PARTICULAR MAN NER, ESPECIALLY AFTER THE INTRODUCTION OF THE PROVISIONS OF SEC.271(1B) OF TH E ACT WITH RETROSPECTIVE EFFECT FROM 1.4.1989. NEVERTHELESS, AS LAID DOWN B Y THE HONBLE DELHI HIGH COURT IN THE CASE OF MS.MADHUSHREE GUPTA (SUPRA), T HE POSITION OF LAW BOTH PRE AND POST SEC.271(1B) OF THE ACT IS SIMILAR , INASMUCH, THE AO WILL HAVE TO ARRIVE AT A PRIMA FACIE SATISFACTION DURING THE COURSE OF PROCEEDINGS WITH REGARD TO THE ASSESSEE HAVING CONC EALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS, BEFORE HE INITIATES PENALTY PROCEEDINGS PRIMA FACIE SATISFACTION OF THE AO THAT THE CASE MAY DESERVE THE IMPOSITION OF PENALTY SHOULD BE DISCERNIBLE FRO M THE ORDER PASSED DURING THE COURSE OF THE PROCEEDINGS. AT THE STAGE OF INITIATION OF PENALTY PROCEEDING, THE ORDER PASSED BY THE AO NEED NOT REF LECT SATISFACTION VIS-A- VIS EACH AND EVERY ITEM OF ADDITION OR DISALLOWANCE , IF OVERALL SENSE GATHERED FROM THE ORDER IS THAT A FURTHER PROGNOSIS IS CALLED FOR. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F MAK DATA (P) LTD. (SUPRA) HAS TO BE UNDERSTOOD IN THE CONTEXT OF THE FACTS OF THE SAID CASE. THE RELEVANT PORTION OF THE JUDGMENT IN THE AFORESAID C ASE, READS THUS: 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSES SMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER 8 DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURS E OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2 003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS COND UCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCO ME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DIS CLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INC LUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASS ESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY O F THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAI N THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RE TURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDE D A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEAL ED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 21 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCE EDINGS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT INTO WRITING. 7. THE REVENUE PLACES RELIANCE ONLY ON THE SENTENCE APPEARING IN PARA-10 OF THE JUDGMENT WITHOUT READING IT IN THE C ONTEXT OF THE OBSERVATIONS IN THE LAST PORTION OF PARA-9 OF THE SAID JUDGMENT. THEREFORE EVEN THE HONBLE SUPREME COURTS DECISION SUGGESTS THAT THE SATISFACTION NEED NOT BE RECORDED IN A PARTICULAR MANNER BUT FRO M A READING OF THE ASSESSMENT ORDER AS A WHOLE SUCH SATISFACTION SHOUL D BE CLEARLY DISCERNIBLE. IF THE AO ACCEPTS ALL THE CONTENTIONS OF THE ASSESS EE AND THE OFFER OF INCOME THAT HAS NOT BEEN DECLARED IN THE RETURN OF INCOME TO TAX WITHOUT INDICATING EITHER DIRECTLY OR INDIRECTLY THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E, IT CANNOT BE SAID THAT SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS IS DISCERNIBLE FROM THE ORDER OF ASSESSMENT. IF THE ASSESSEE IN GOOD FAITH OFFERS INCOME TO TAX VOLUNTARILY PRIOR TO ANY POSITIVE DETECTION BY THE AO, SUCH VOLUNTARY OFFER CANNOT BE TAKEN ADVANTAGE OF BY THE AO TO INITIATE PENALTY PROCEEDINGS AGAINST THE ASSESSEE WITHOUT SPECIFYING THE REASONS WHY PENALTY PROCEEDINGS ARE INITIATED U/S.271(1)(C) OF THE ACT. IN THE PRESENT CASE, WE HAVE READ THE ORDER OF ASSESSMENT AS A WHOLE AND AR E SATISFIED THAT SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS IS NOT DISCERNIBLE FROM THE ORDER OF ASSESSMENT. WE THEREFORE CONCUR WITH THE A RGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT INITIATION OF PENALTY PROCEEDINGS WAS NOT PROPER IN THE PRESENT CASE AND ON THAT GROUND THE I MPOSITION OF PENALTY U/S.271(1)( C) OF THE ACT IS UNSUSTAINABLE. 8.2 THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. V. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS LAID DOWN THE FOLLOWING PRINCIPLES TO BE FOLLOWED IN THE MATTER O F IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. THE FINAL CONCLUSION OF THE HONBLE COURT WAS AS FO LLOWS:- 63. IN THE LIGHT OF WHAT IS STATED ABOVE, WHAT EME RGES IS AS UNDER: A) PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIAB ILITY. B) MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSI NG PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES. C) WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY. 22 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA D) EXISTENCE OF CONDITIONS STIPULATED IN SECTION 2 71(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271. E) THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORIT Y OR REVISIONAL AUTHORITY. F) EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CONDITIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FRO M THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALME NT BECAUSE OF DEEMING PROVISION. G) EVEN IF THESE CONDITIONS DO NOT EXIST IN THE AS SESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDIN GS UNDER SECTION 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFI CER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAI NED IN SECTION 1(B). H) THE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMI SSIONER. I) THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. J) IMPOSITION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. K) EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORD ER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTER EST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERN IBLE FROM THE ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNE ARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITTED AND IF NOT IT WOU LD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER. L) ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPL ANATION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATION OFFERED IS NOT BONA FIDE, AN ORDER IMPO SING PENALTY COULD BE PASSED. M) IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUB STANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONA FIDE AND ALL FACT S RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. N) THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECTION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. 23 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA O) IF THE ASSESSING OFFICER HAS NOT RECORDED ANY S ATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEE DINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE A UTHORITY AND NOT THE ASSESSING AUTHORITY. P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPEC IFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETH ER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T PARTICULARS OF INCOME Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. R) THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE H AS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUST ICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED TO THE ASSESSEE. S) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AN D FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. T) THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE A SSESSMENT PROCEEDINGS. THE PROCEEDINGS FOR IMPOSITION OF PENA LTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT IS INDEP ENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. U) THE FINDINGS RECORDED IN THE ASSESSMENT PROCEED INGS IN SO FAR AS 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INCORREC T PARTICULARS' WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PR OCEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSU ANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED A S INVALID IN THE PENALTY PROCEEDINGS. (EMPHASIS SUPPLIED) IT IS CLEAR FROM THE AFORESAID DECISION THAT ON THE FACTS OF THE PRESENT CASE THAT THE SHOW CAUSE NOTICE U/S. 274 OF THE ACT IS DEFECT IVE AS IT DOES NOT SPELL OUT THE GROUNDS ON WHICH THE PENALTY IS SOUGHT TO BE IM POSED. FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, WE HO LD THAT THE ORDERS IMPOSING PENALTY IN ALL THE ASSESSMENT YEARS HAVE T O BE HELD AS INVALID AND CONSEQUENTLY PENALTY IMPOSED IS CANCELLED. 24 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA 8.4. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTAN CES OF THE CASE AND IN VIEW OF THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON HEREINA BOVE INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT AND OTHER HIGH COURTS, WE ARE OF THE CONSIDERED OPINION THAT : - THE ASSESSEE HAS CUMULATIVELY SATISFIED ALL THE C ONDITIONS STIPULATED IN CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)( C) OF THE ACT AND HENCE ENTITLED FOR IMMUNITY FROM LEVY OF PENALTY FOR ALL THE ASSESSMENT YEARS U NDER APPEAL; - THE ASSESSEE HAD FILED THE RETURNS U/S 153C AND U /S 139(1) OF THE ACT AS THE CASE MAY BE, AND THE SAME HAS BEEN ACCEPTED IN THE SEARC H ASSESSMENTS AND REGULAR ASSESSMENT, NO PENALTY U/S 271(1)(C ) OF THE ACT CO ULD BE LEVIED ; - THE EXPRESSION TO BE FURNISHED MENTIONED IN CLA USE 2 OF EXPLANATION 5 TO SECTION 271(1)(C ) HAS TO BE CONSTRUED AS REQUIRED TO BE FURNISHED U/S 153A OF THE ACT - NO SATISFACTION WITH REGARD TO SPECIFIC CHARGE OF CONCEALMENT, AS CONTEMPLATED IN SECTION TWO LIMBS OF SECTION 271(1)(C ) OF THE ACT , WAS RECORDED BY THE LEARNED AO AND THE SAME IS NOT DISCERNIBLE EITHER FROM THE SHOW CAUSE NOTICE OR FROM THE ASSESSMENT ORDER; ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE FOR ALL THE ASSESSMENT YEARS ARE DISMISSED. 25 ITA NOS. 1386 TO 1388/KOL/2010-C-AM M/S. PRATAP PROPERTIES LTD, KOLKATA 9. TO SUM UP, THE APPEALS OF THE REVENUE ARE DISMI SSED AND THE PETITION FILED BY THE ASSESSEE UNDER RULE 27 FOR THE THREE ASSESSMENT YEA RS ARE ALSO DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 10 - 02-2016 SD/- ( ( MAHAVIR SINGH, JUDICIAL MEMBER) SD/- ( (M. BALAGANESH, ACCOUNTANT MEMBER). DATE: 10 - 02-2016 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ) : DY. COMMISSIONER OF INCOME TAX, CC XXVII, 5 TH FL., 18 RABINDRA SARANI, KOL-1. 2 RESPONDENT ) : M/S. PRATAP PROPERTIES LIMITED ,17 M.G ROAD, 2 ND FL., ROOM NO.110, KOL - 7. 3 . 4. THE CIT, THE CIT(A)- 5 . DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES, KOLKATA *PP SR.PS