Kanayalal Chetandas Manwani, Nashik V. Assistant Commissioner of Income-tax,

ITA 141/PUN/2014

• Counselvise Citation: 14124514 RSA 2014
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V L JAIN
• Keywords: Search and seizure; Document seized; Reasonable cause; Revised return; Documents seized
• Section: 69C; 143(3); 153A; 69; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.141/PN/2014 ASSESSMENT YEAR: 2009-10 SHRI KANAYALAL CHETANDAS MANWANI 7/A, HOLARAM COLONY, SADHU WASWANI ROAD, SHARANPUR ROAD, NASHIK 422002 . APPELLANT PAN: AEGPM7310B VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK . RESPONDENT APPELLANT BY : SHRI V.L. JAIN RESPONDENT BY : SHRI RAJESH DAMOR DATE OF HEARING : 12-01-2015 DATE OF PRONOUNCEMENT : 20-02-2015 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-I, NASHIK DATED 19.12.2013 RELATING TO ASSESSMENT YEAR 2009 -10 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CONFI RMING THE PENALTY OF RS.8,49,750/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVES TO AMEND OR ALTER ANY O F APPEAL OR ADD TO THE SAME, IF DEEMED NECESSARY. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 2 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE AT THE OUTSET, POINTED OUT THAT THE ISSUE OF LEVY OF PENALTY UND ER SECTION 271(1)(C) OF THE ACT, PURSUANT TO THE SEARCH CONDUCTED AT THE PREMISES OF THE ASSESSEE AND THE INCOME BEING DECLARED UNDER SEC TION 132(4) OF THE ACT, IS SQUARELY COVERED AGAINST THE ASSESSEE BY TH E RATIO LAID DOWN BY PUNE BENCH OF THE TRIBUNAL IN ACIT VS. MULAY CONSTRUCT IONS (P) LTD., IN ITA NOS.116 TO 119/PN/2012, VIDE ORDER DATED 25.06.2013. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLAC ED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. 7. THE BRIEF FACTS OF THE CASE ARE THAT, SEARCH AND SEIZU RE OPERATIONS UNDER SECTION 132(1) OF THE ACT WERE CARRIED O UT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND ALSO AT THE BUSIN ESS PREMISES OF M/S. HAPPY HOME DEVELOPER, IN WHICH THE ASSESSEE WAS O NE OF THE PARTNERS. CERTAIN INCRIMINATING BOOKS OF ACCOUNT AND OTHE R DOCUMENTS WERE SEIZED DURING THE COURSE OF SEARCH. THE ASSESSEE HAD ORIGINALLY FILED ITS RETURN OF INCOME ON 29.07.2009 DECLARING TO TAL INCOME OF RS.16,74,270/-. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE FURNISHED THE RETU RN OF INCOME DECLARING INCOME OF RS.41,74,270/- ON 17.01.2011. THE ASSES SEE INCLUDED THE ADDITIONAL INCOME OF RS.25 LAKHS ON ACCOUNT OF O N-MONEY RECEIVED ON SALE OF LAND FROM SHRI PRAMOD TULSIDAS SOMAIYA IN THE RETURN OF INCOME FURNISHED IN RESPONSE TO THE NOTICE UNDE R SECTION 153A OF THE ACT. THE SAID INCOME WAS NOT INCLUDED IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. THEREAFTER, ASSESS MENT UNDER ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 3 SECTION 143(3) OF THE ACT R.W.S. 153A OF THE ACT WAS COMPLE TED AGAINST THE ASSESSEE AT ASSESSED INCOME OF RS.41,74,270/-. THE ASSESSING OFFICER HAD ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALING PARTICULARS OF ADDITIONAL INCOME OF R S.25 LAKHS. THE CASE OF THE ASSESSEE BEFORE THE ASSESSING OFFIC ER WAS THAT, DURING THE COURSE OF SEARCH MR. VINOD K. MANWANI, HIS SON H AD VOLUNTARILY DISCLOSED THE INCOME OF RS.25 LAKHS ON ACCOUNT OF AMOUNT RECEIVED FROM M/S. GAJANAN BUILDERS AGAINST SALE OF PLOT IN NASHIK. THE TOTAL AMOUNT RECEIVED BY THE ASSESSEE WAS RS.38 LAK HS, OUT OF WHICH RS.25 LAKHS PERTAINS TO ASSESSMENT YEAR 2009-10. THE ASS ESSEE HAD DECLARED THE SAID INCOME IN THE REVISED RETURN OF INCO ME FILED IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT AND THE TAXES DUE ALONG WITH INTEREST, WERE PAID ON THE SAID ADDITIONAL INCOME. IT WAS CONTENDED BY THE ASSESSEE THAT WHERE THE ASSESSMENT HAD BEEN COMPLETED ON THE BASIS OF REVISED RETURN WITHOUT ANY FURT HER ADDITION, NO PENALTY WAS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. T HE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSE E AND IN VIEW OF THE FACT THAT THE SAID INCOME WAS DECLARED BY THE AS SESSEE PURSUANT TO THE SEARCH, THE CONTENTION OF THE ASSESSEE ABOUT VO LUNTARY DISCLOSURE WAS HELD TO BE NOT CORRECT. THE ASSESSING OFFIC ER HELD THAT THE ASSESSEE HAD COMMITTED DEFAULT WITHIN THE MEANING OF E XPLANATION (1) AND CLAUSE (II) OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. 8. THE CIT(A) HAD REJECTED THE PLEA OF THE ASSESSEE THA T IT HAD OFFERED THE ADDITIONAL INCOME IN THE RETURN OF INCOME FILED AND CONSEQUENTLY, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT APPLICABLE, IN VIEW OF THE EXPLANATION 5A TO SECTION 271(1)(C) OF THE AC T. THE CIT(A) NOTED THAT AS PER THE EXPLANATION 5A TO SECTION 2 71(1)(C) OF THE ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 4 ACT, PENALTY FOR CONCEALMENT WAS LEVIABLE IN THE CASES WHER E THE INCOME RELATED TO EARLIER YEARS AND ADDITIONAL INCOME WAS O FFERED TO TAX IN THE RETURN FILED AFTER THE DATE OF SEARCH. FURTHER , THE EXPLANATION OF THE ASSESSEE THAT THE ADDITIONAL INCOME WAS OFFERED VOLUNTARILY, WAS FOUND TO BE NOT TENABLE AS THE AMOUNT W AS OFFERED PURSUANT TO RECOVERY OF DOCUMENTS DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT AT HIS RESIDENTIAL AND BUSINESS PRE MISES. THE SAID ADDITIONAL INCOME OF THE ASSESSEE WAS WORKED OUT ON THE BASIS OF SEIZED DOCUMENTS I.E. PAGE NO.3 OF ANNEXURE A-1/12 SEIZE D FROM THE RESIDENTIAL PREMISES OF SHRI PRAMOD TULSIDAS SOMAIYA, WHO IN HIS STATEMENT STATED THAT NOTINGS ON THE SAID PAGE WERE C ASH PAYMENTS MADE TO THE ASSESSEE AND SMT. POOJA VINOD MANWANI TO WHOM HE HAD MADE TOTAL PAYMENTS AMOUNTING TO RS.44 LAKHS. OUT OF THE SAID SUM OF RS.44 LAKHS, RS.6 LAKHS WAS PAID VIDE TWO CHEQUES OF RS .3 LAKHS EACH TO MRS. POOJA VINOD MANWANI AND THE BALANCE OF RS.38 LAKHS WAS PAID IN CASH TO THE ASSESSEE. THE SAID PAYMENTS WERE O N-MONEY PAID FOR ACQUIRING LAND, WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT, WAS ADMITTED BY THE PAYER, WHO IN TURN, HAD DISCLOSED THE SUM OF RS.30 LAKHS AS UNDISCLOSED INCOME IN THE HANDS OF M/S. GA JANAN BUILDERS FOR ASSESSMENT YEARS 2009-10 AND 2010-11. PUR SUANT THEREOF, THE ASSESSEE HAD DISCLOSED RS.25 LAKHS IN ASSESSM ENT YEAR 2009-10 AND RS.13 LAKHS IN THE HANDS OF HIS FATHER SHRI KA NAYALAL MANWANI IN ASSESSMENT YEAR 2010-11. THE CIT(A) PLACED RELIANCE ON THE RATIO LAID DOWN BY PUNE BENCH OF THE TRIBUNAL IN ACIT VS. MULAY CONSTRUCTIONS (P) LTD. (SUPRA). 9. THE TRIBUNAL IN ACIT VS. MULAY CONSTRUCTIONS (P) LTD. (SUP RA) HAD HELD AS UNDER:- ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 5 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE CORD. IN THIS CASE, THERE ARE TWO TYPES OF INCOMES WHICH A RE SUBJECTED TO THE PENAL CONSEQUENCES U/S 271(1)(C) OF THE ACT. THE RE WAS SEARCH AND SEIZURE OPERATION CARRIED OUT AGAINST TH E ASSESSEE ON 10-10-2007. THE ASSESSEE FILED RETURN OF INCOME DECLARI NG UNDISCLOSED INCOME. IT IS TRUE THAT IN THE COURSE OF SEARCH AND SEIZURE OPERATION, IT WAS REVEALED THAT THE ASSESSEE H AS EARNED INCOME WHICH WAS NOT RECORDED AS WELL AS THERE WAS EX PENDITURE WHICH WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCO UNT. THE ASSESSEE ADMITTED AND OFFERED THE AMOUNT COVERED BY THE EXPENDITURE WHICH WAS FOUND UNRECORDED IN THE DOCUM ENTS SEIZED. THE ASSESSEE DID NOT DECLARE THE INCOME WHIC H WAS DETECTED IN CONSEQUENCE 8 OF THE SEARCH AND SEIZURE OPERATION. THE DETAILS OF THE UNRECORDED EXPENDITURE ARE GIVEN I N THIS ORDER ITSELF HEREINABOVE. 13. NOW THE ISSUE BEFORE US IS WHETHER THE INCOME OF FERED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U /S 153A OF THE ACT CAN BE SUBJECTED TO PENALTY U/S 271(1)(C) OF THE ACT. IT IS PERTINENT TO NOTE HERE THAT THE ASSESSEE HAS PLACED HEAVY RELIANCE ON THE DECISION IN THE CASE OF SMT. PRAMILA D. ASHTEK AR AND OTHERS (SUPRA). IN THOSE CASES THE SEARCH AND SEIZURE OPERAT ION U/S 132(1) OF THE ACT WAS CONDUCTED ON 26-10-2005. THE A.O LEVIED PENALTY ON THE INCOME DECLARED IN THE RETURNS OF IN COME FILED IN RESPONSE TO NOTICES ISSUED UNDER SEC. 153A OF THE A CT. THE TRIBUNAL EXAMINED THE DETAILS OF THE DISCLOSURE MADE BY THOSE ASSESSEES IN THE RETURNS FILED. THE TRIBUNAL NOTED THA T THERE WAS NO DISCLOSURE IN RESPECT OF ANY MONEY, BULLION, JEWELRY OR ANY VALUABLE ASSETS OR THINGS. THE TRIBUNAL, THEREFORE, HELD T HAT SO FAR AS THE EXPL. 5 TO SEC. 271(1)(C) IS CONCERNED, IT IS NOT APPLICABLE WHICH IS A DEEMING PROVISION WHICH CREATES LEGAL PRE SUMPTION AGAINST THE ASSESSEE IN A SITUATION MENTION THEREIN THAT THERE IS CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTI CULARS OF INCOME. THE TRIBUNAL FOLLOWED THE DECISION IN THE CASE OF CHAN DAN K. SHEWANI VS. DCIT ITA NO. 235 AND 236/PN/2010, ORDER DA TED 29-8-2012. THE OPERATIVE PART OF THE FINDINGS OF THE TRIBUNA L IN THE CASE OF SMT. PRAMILA D. ASHTEKAR AND OTHERS (SUPRA) IS AS UND ER: 6. WE FIND THAT THE ASSESSEES CASE IS OTHERWISE SQUARELY COVERED VIDE THE DECISION OF ITAT,PUNE IN T HE CASE OF CHANDAN K. SHEWANI VS. DCIT, ITA NOS. 235 & 236/PN/2010. IN THE SAID CASE, THE ADDITIONAL INCOME WAS DECLARED DURING THE COURSE OF SEARCH TO COVER UP TH E EXPENDITURE AS WELL AS DEPOSIT IN BANK A/CS. THE TRIBU NAL CONSIDERED THE EXPLANATIONS- 3, 5 & 5A TO SEC. 271(1)(C ) OF THE ACT AND HELD AS UNDER : 8. WHILE DECIDING ASSESSEES APPEAL FOR A.YS. 1999-2000 AND 2001-02, THE PENALTY LEVIED ON THE INCOME OFFERED TOWARDS THE PERSONAL EXPENDITURE OF THE ASSESSEE AND HIS DIVORCEE SISTER HAS BEEN DELETED. EVEN THOUGH THE PARLIAMENT HAS INSERTED EXPLANATION 5A TO SEC. 271(1)(C), SAID EXPLANATION IS ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 6 APPLICABLE IN RESPECT OF THE SEARCH INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007. SECTION 5A IS INTRODUCED TO PATCH OUT THE LACUNAE IN THE EXISTING PROVISIONS MO RE PARTICULARLY TO OVERCOME THE JUDICIAL INTERPRETATION OF EXPLANATION -5. IF THE SEARCH IS INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007 THEN THERE IS A LEGAL PRESUMPTION THAT ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHICH IS CLAIMED AS INCOME BY THE ASSESSEE, THE SAME WOULD BE TREATED AS DEEMED CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED, THE DATE OF SEARCH IS 15.6.2004 AND HENCE, EXPLANATION 5A TO SEC. 271(1)((C ) IS NOT APPLICABLE. IT IS WELL SETTLED RULE OF INTERPRETATION OF THE PENALTY PROVISIONS THAT THE SAME SHOULD BE STRICTLY INTERPRETED AND THERE IS NO SCOPE FOR ANY PRESUMPTION FOR LEVY OF THE PENALTY UNLESS STATUTE SPECIFICALLY PROVIDES SAME. 9. SO FAR AS THE EXPLANATION-3 TO SEC. 271(1)(C) IS CONCERNED, WHICH READS AS UNDER : EXPLANATION 3.- WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) OF SECTION 153 A RETURN O F HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTI CE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB-SECTIO N (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED TH AT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PERSONAL SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME A T ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148. THE SAID EXPLANATION PRESUMES THAT THERE IS A CONC EALMENT OF PARTICULARS OF INCOME OR FILING OF THE INACCURAT E PARTICULARS OF INCOME IN THE SITUATION WHERE THE A SSESSEE DID NOT FILE RETURN OF INCOME U/S. 139 OR WITHIN THE T IME LIMIT PRESCRIBED U/S. 153(1) OF THE ACT BUT FILES THE RETUR N OF INCOME IN RESPONSE TO NOTICE U/S. 148. THE SAID EXPLANATION IS ALSO SILENT IN THE SITUATION IF THE ASS ESSEE HAS NOT FILED THE RETURN OF INCOME FOR ANY PARTICULA R A.Y. BUT FILED THE RETURN OF INCOME FOR THE FIRST TIME IN RES PONSE TO NOTICE U/S. 153A, THEN WHAT WOULD BE THE LEGAL PRESUMPTION ? IN OUR OPINION, EXPLANATION-3 HAS NO APPLICATION, WHEN THE RETURN IS FILED IN RESPONSE TO NOTICE U/S. 153A. WE, THEREFORE, HOLD THAT AS PER THE FACTS OF THIS ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 7 CASE AND LAW APPLICABLE, THERE IS NO JUSTIFICATION TO LEVY THE PENALTY FOR THE A.Y. 2002-03 IN THE INCOME DECLARED B Y THE ASSESSEE IN THE RETURN OF INCOME IN RESPONSE TO NOT ICE U/S. 153A EVEN FOR THE SAID INCOME IS BASED ON SOME ENTR IES FOUND IN THE DIARIES OR OTHER DOCUMENTS OR EVEN BANK ACCOUNT DURING THE COURSE OF SEARCH. WE, ACCORDINGLY DELET E THE PENALTY SUSTAINED BY THE LD CIT(A). 7. IN ALL THE APPEALS BEFORE US, EXPLANATION-3 CANNOT B E APPLIED, AS HELD IN THE CASE OF CHANDAN K. SHEWANI (SUPRA). SO FAR AS EXPLANATION 5A IS CONCERNED, IT IS BROUGHT ON THE STATUTE BOOK W.E.F. 1.6.2007 I.E. FROM T HE ASSESSMENT YEAR 2007-08 SO FAR AS THE ASSESSMENTS I N ALL THESE CASES ARE CONCERNED, NO ADDITION IS MADE BY THE ASSESSING OFFICER OVER AND ABOVE THE INCOME DECLARE D IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTICE U/ S. 153A AS THE EXPRESSION TAX SOUGHT TO BE EVADED APPEARING IN CLAUSE (C) TO SEC. 271(1) IS TO BE UNDERSTOOD AS A DIF FERENCE BETWEEN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AND THE INCOME FINALLY ASSESSED. AFTER INTRODUCTION OF SEC. 153A W.E.F. 1.6.2003, THERE IS NO SPECIFIC PENALTY PROVISION TO DEAL WITH THE ASSESSMEN TS FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT. IN THE PRESENT CASE, AS THE RETURNED INCOME AND INCOME ASSESSED ARE THE SAME, OTHERWISE ALSO, NO PENALTY CAN BE LEVIED. WE, THEREFORE, HOLD THAT IN ALL TH E APPEALS BEFORE US, THE ASSESSING OFFICER WAS NOT JUST IFIED IN LEVYING THE PENALTY U/S. 271(1)(C ) OF THE ACT. WE, ACCORDINGLY, DELETE THE PENALTIES LEVIED BY THE ASSESS ING OFFICER IN ALL THE APPEALS FOR THE ABOVE MENTIONED REASON S. 14. IT IS NOTICED THAT IN PARA 7, THE TRIBUNAL HAS MAD E OBSERVATION SO FAR AS EXPLANATION 5A IS CONCERNED, IT IS BROUGH T ON THE STATUTE BOOK W.E.F. 1.6.2007 I.E. FROM THE ASSESSMENT YEAR 2007- 08. THE LD. COUNSEL SUBMITS THAT THE SAID OBSERVATION IS FINDING OF THE TRIBUNAL. WITH DUE RESPECT, WE ARE UNABLE TO ACCE PT THE SUBMISSION OF THE LD. COUNSEL. ADMITTEDLY, IN A VERY CLE AR TERMS, THE TRIBUNAL HAS HELD THAT THE FACTS IN THE CASES O F SMT. PRAMILA ASHTEKAR AND OTHERS (SUPRA) ARE CLEARLY COVERED BY TH E DECISION IN THE CASE OF CHANDAN K. SHEWANI (SUPRA) AND THE TRIBUN AL FOLLOWED THE DECISION OF CHANDAN K. SHEWANI (SUPRA). WH ILE REPRODUCING THE OBSERVATIONS IN THE SUMMARIZED FORM , IT APPEARS THAT THERE IS A MISTAKE IN PARA NO. 7 IN THE ORDER O F SMT. PRAMILA K. ASHTEKAR AND ORS. (SUPRA). ADMITTEDLY, NO INTERPRETATI ON IS MADE BY THE TRIBUNAL TO MAKE OUT A DIFFERENT CASE TH AN CHANDAN K. SHEWANI (SUPRA). IT IS ALSO PERTINENT TO NOTE THAT THOUGH THE CONSTITUTION OF ANOTHER BENCHE IS DIFFERENT WHICH HA S RENDERED THOSE DECISIONS BUT THE AUTHOR MEMBER IS THE SAME I N BOTH THOSE CASES. IN OUR OPINION, RELIANCE PLACED BY THE LD. COU NSEL IS NOT HELPFUL AS IN THE CASE OF CHANDAN K. SHEWANI (SUPRA) WHICH DECISION HAS BEEEN FOLLOWED FOR DECIDING THE CASES OF PRAMILA D. ASHTEKAR AND OTHERS (SUPRA), THE TRIBUNAL HAS EXPLAINE D THE SCOPE OF EXPL. 5A BELOW SEC. 271(1)(C) WHICH IS AS UNDER: ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 8 EXPLANATION 5A WHERE, IN THE COURSE OF A SEARCH I NITIATED UNDER SECTION 132 ON OR BEFORE THE 1ST DAY OF JUNE 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MON EY, BULLION, JEWELER OR OTHER VALUABLE ARTICLE OR THING (HEREI NAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIO US YEAR; OR 11 (II) ANY OTHER INCOME BASED ON ANY ENTRY IN ANY BOO KS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE C LAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN P ART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR 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 ASSESSEE 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 O F IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUBSECTIO N (1) OF THIS SECTION, HE DEEMED TO HAVE CONCEALED THE PARTICU LARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF S UCH INCOME. 15. THE LD. COUNSEL ALSO RELIED ON THE DECISION IN THE CASE OF SANJAY D. KAKADE (SUPRA) IN WHICH, THE DECISION IN T HE CASE OF SMT. PRAMILA ASHTEKAR AND OTHERS (SUPRA) IS FOLLOWED BY THE TRIBUNAL. THERE IS NO INDEPENDENT INTERPRETATION ON T HE APPLICABILITY OF EXPLANATION 5A. WE WOULD LIKE TO MAKE IT CLEAR THAT IN THE CASE OF CHANDAN K. SHEWANI (SUPRA), THE S EARCHES WERE PRIOR TO 1-6-2007 AND HENCE, THE QUESTION OF APPL ICABILITY OF A.Y. 07-08 WAS NEVER BEFORE THE TRIBUNAL. WE, THEREFORE, REJECT THE ARGUMENT OF THE LD. COUNSEL THAT THE ISSUE ARISING IN THIS APPEAL IS CLEARLY COVERED BY THE DECISION OF SMT. PRAMILA AS HTEKAR AND OTHERS (SUPRA) TO THE EXTENT OF THE INCOME DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. 16. THE NEXT LIMB OF ARGUMENT OF THE LD. COUNSEL IS THA T EXPLANATION 5A(II) CONTEMPLATES INCOME AND NOT THE EXPENDITURE. IN THIS CASE, IT IS UNDISPUTED FACT THA T THE ASSESSEE CAME FORWARD AND DECLARED INCOME WHICH WAS PERTAIN ING TO THE AMOUNT COVERED BY THE UNRECORDED EXPENDITURE BUT TH E FACT REMAINS THAT THE ASSESSEE DID NOT DECLARE ANY EXPEN DITURE BUT IT IS ONLY THE INCOME. THE LD. COUNSEL REFERRED TO THE DEFINITIO N OF THE INCOME GIVEN IN SEC. 2(24) OF THE ACT. THE SCOPE OF T HE SAID DEFINITION HAS BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN THE 12 CASE OF EMIL WEBBER (SUPRA) WHICH HAS BEEN REL IED UPON ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 9 BY THE LD. COUNSEL THE RELEVANT PORTION IS IN PARA NO 7 WHICH READS AS UNDER: 7. THE DEFINITION OF 'INCOME' IN CLAUSE (24) OF SEC TION 2 OF THE ACT IS AN INCLUSIVE DEFINITION. IT ADDS SEVERAL ART IFICIAL CATEGORIES TO THE CONCEPT OF INCOME BUT ON THAT ACC OUNT THE EXPRESSION 'INCOME' DOES NOT LOSE ITS NATURAL CONNOTA TION. INDEED, IT IS REPEATEDLY SAID THAT IT IS DIFFICULT TO DE FINE 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 OTH ER PROVISION OF THE ACT. IT IS FROM THE SAID ANGLE THAT W E HAVE TO EXAMINE WHETHER THE AMOUNT PAID BY BALLARPUR BY W AY OF TAX ON THE SALARY AMOUNT RECEIVED BY THE ASSESSE E CAN BE TREATED AS THE INCOME OF THE ASSESSEE. IT CANNOT B E OVERLOOKED THAT THE SAID AMOUNT IS NOTHING BUT A TAX UPON THE SALARY RECEIVED BY THE ASSESSEE. BY VIRTUE OF T HE OBLIGATION UNDERTAKEN BY BALLARPUR TO PAY TAX ON THE SALARY RECEIVED BY THE ASSESSEE AMONG OTHERS, IT PAID THE SA ID TAX. THE SAID PAYMENT IS, THEREFORE, FOR AND ON BEHALF OF THE ASSESSEE. IT IS NOT A GRATUITOUS PAYMENT. BUT FOR THE S AID AGREEMENT AND BUT FOR THE SAID PAYMENT, THE SAID TAX AMOUNT WOULD HAVE BEEN LIABLE TO BE PAID BY THE ASSESS EE HIMSELF HE COULD NOT HAVE RECEIVED THE SALARY WHICH H E DID BUT FOR THE SAID PAYMENT OF TAX. THE OBLIGATION PLAC ED UPON BALLARPUR 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 INT EGRAL CONNECTION WITH THE SALARY RECEIVED BY THE ASSESSEE. WE ARE, THEREFORE, OF THE OPINION THAT THE HIGH COURT AN D 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 INCLUS IVE DEFINITION AND IT COVERS ALL INCOME COME UNDER CHARGING PROVISION S OF THE ACT. IF THE ARGUMENT OF THE LEARNED COUNSEL IS TO BE A CCEPTED 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 SE ARCH INITIATED UNDER SECTION 132 ON OR BEFORE THE 1ST DAY OF JUNE 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELER OR OTHER VALUABLE ARTICLE O R THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO A S ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY OTHER INCOME BASED ON ANY ENTRY IN ANY BOO KS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE C LAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DO CUMENTS ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 10 OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN P ART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND13 (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR 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 ASSESSEE HAS NOT FILED THE RETURN THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE D ATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A P ENALTY UNDER CLAUSE (C) OF SUBSECTION (1) OF THIS SECTION, HE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. 19. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED, CLAU SE (II) TO EXPLANATION 5A IS APPLICABLE. ADMITTEDLY, THE EXPENDITUR E WHICH WAS NOT RECORDED HAS BEEN FOUND BY WAY OF ENTRIES I N THE SEIZED DOCUMENTS. WHILE EXPLAINING THE SCOPE OF EXPLANATION 5A IN THE CASE OF CHANDAN K. SHEWANI (SUPRA) THE TRIBUNAL HAS H ELD THAT TO PATCH OUT THE LACUNA DUE TO THE JUDICIAL INTERPRETATI ON OF EXPL. 5 OF SEC. 271(1)(C) WHICH WAS ON THE STATUTE BOOK UPTO 31-5-2 007, EXPLANATION 5A HAS BEEN SUBSTITUTED FOR EXPL. 5 BY THE FINANCE ACT, 2007 W.E.F 1-6-2007. THE SAID EXPLANATION WAS FUR THER AMENDED BY THE FINANCE(NO.2) ACT, 2009 WITH RETROSPECTI VE EFFECT FROM 01-07-2007 WHICH IS REPRODUCED HEREINABOVE. THE L D. 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 WH ICH IS CONTEMPLATED IN EXPLANATION 5A(II)? THE ANSWER TO TH IS 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 EXPLANAT ION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSE SSING] 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 FI NANCIAL YEAR; 20. SO FAR AS THE EXPL.- 5 WHICH WAS ON THE STATUTE BO OK, THE COURTS HAVE TAKEN A VIEW THAT IT WAS HAVING A LIMITED APPLICATION ONLY TO THE 14 EXTEND OF THE MONEY, BULLION, JEWELLERY O R ANY VALUABLE ASSETS OR THINGS WHICH WERE FOUND DURING THE COURSE OF SEACH AND SEIZER OPERATION AND OWNED BY THE ASSESSE E. 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 E XPENDITURE IS FOUND AND THE ASSESSEE FAILS TO EXPLAIN THE SOURCE O F THE SAID ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 11 EXPENDITURE OR EXPLANATION OF THE ASSESSEE IS NOT S ATISFACTORY, THEN TO THE EXTENT OF THE AMOUNT COVERED BY SUCH EX PENDITURE IS TREATED AS INCOME. ULTIMATELY WHAT IS TAXED UNDER SEC. 69 C OF THE ACT IS NOT THE EXPENDITURE BUT IT IS BASICALLY THE UN DISCLOSED INCOME WHICH HAS BEEN APPLIED FOR INCURRING THE UNR ECORDED EXPENDITURE. IN OUR VIEW, THERE IS NO MERIT IN THE AR GUMENT OF THE LD. COUNSEL THAT THE ASSESSEE HAS ONLY DECLARED THE A MOUNT EXPENDITURE. WE THEREFORE, HOLD THAT TO THE EXTENT OF THE INCOME OFFERED BY THE ASSESSEE PERTAINING TO THE EXPENDITUR E IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S 153A, EXPLANA TION-5A IS APPLICABLE AND AS THERE IS A LEGAL PRESUMPTION AGAINST THE ASSESSEE IN RESPECT OF THE SAID INCOME DETECTED DUR ING THE COURSE OF SEARCH AND SEIZURE OPERATION, THE ASSESSEE CASE I S SQUARELY COVERED BY EXPLANATION- 5(II) AS THE ASSESSEE HIMSELF HAS ADMITTED THE SAID UNDISCLOSED INCOME. 21. .. 22. .. 23. IN THE RESULT, ALL THE FOUR APPEALS FILED BY THE REVENUE FOR A.YS. 2003-04 TO 2006-07 ARE PARTLY ALLOWED, THE ASSESSEES APP EAL FOR THE A.Y.2006-07 IS DISMISSED AND ALL THE CROSS OBJECTION S OF THE ASSESSEE ARE ALSO DISMISSED. 10. THE ISSUE RAISED BEFORE US IS AGAINST THE LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITIONAL INCOME OFFERED PURSUANT TO SEARCH OPERATIONS CARRIED OUT UNDER SECTION 132 OF T HE ACT. THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 132( 4) OF THE ACT HAD OFFERED AN ADDITIONAL INCOME OF RS.25 LAKHS PURSUANT TO VARIO US DOCUMENTS / EVIDENCES FOUND DURING THE COURSE OF SEARCH UPON THE ASSESSEE AND CONNECTED PAPERS. THE SAID ADDITIONAL INCO ME OFFERED BY THE ASSESSEE WAS INCLUDED AS AN ADDITIONAL INCOME IN THE R ETURN OF INCOME FILED PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES WHERE, ORIGINALLY BEFORE THE DATE OF SEARCH, THE ASSESSEE HAD FUR NISHED THE RETURN OF INCOME, BUT HAD NOT INCLUDED THE ADDITIONAL INCOME IN HIS HANDS, WHICH WAS SUBSEQUENTLY INCLUDED IN THE RETURN OF IN COME FILED PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE AC T, THE PROVISIONS OF EXPLANATION 5A TO SEC 271(1)(C) OF THE ACT WER E ATTRACTED. ITA NO.141/PN/2014 SHRI KANAYALAL CHETANDAS MANWANI 12 IN VIEW THEREOF, THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FOLLOWING THE RATIO LAID DOWN BY PUNE B ENCH OF THE TRIBUNAL IN ACIT VS. MULAY CONSTRUCTIONS (P) LTD. (SUPRA) , WE UPHOLD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE AC T. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF FEBRUARY, 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH FEBRUARY, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE