Dy. CIT, Aurangabad V. M/s Neelvasu Holiday Resorts & Properties, Aurangabad

ITA 1431/PUN/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2314 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: NIKHIL PATHAK B
• Keywords: Unexplained expenditure; Business income; Income from undisclosed sources; Additional evidence
• Section: 153A; 27; 132; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1431/PN/2013 '% % / ASSESSMENT YEAR : 2010-11 DY.CIT, CENTRAL CIRCLE, AURANGABAD . / APPELLANT V/S M/S. NEELVASU HOLIDAY RESORTS AND PROPERTIES, PLOT NO.2, RAJHANS, SURANA NAGAR, AURANGABAD 431 001 PAN NO.AAHFN 0418J . / RESPONDENT / APPELLANT BY : SHRI DHEERAJ KUMAR JAIN / RESPONDENT BY : SHRI NIKHIL PATHAK B / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 02-04-2013 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CINEMA THEATRE AND OTHER RELATED ACTIVITIES. A SEARCH U/S.132 OF THE I.T. AC T WAS CONDUCTED ON 19-01-2010 AT THE BUSINESS AND RESIDENTIA L PREMISES OF THE ASSESSEE GROUP. IN RESPONSE TO NOTICE U/S.142(1) THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS.9,43,62 0/- AND NIL AGRICULTURAL INCOME. THE AO COMPLETED THE ASSES SMENT ON A TOTAL INCOME OF RS.9,43,620/-. DURING THE COURSE OF ASSES SMENT / DATE OF HEARING :21.12.2015 / DATE OF PRONOUNCEMENT:23.12.2015 2 ITA NO.1431/PN/2013 PROCEEDINGS THE AO NOTED THAT ASSESSEE HAD DECLARED IN COME OF RS.1,50,00,000/- AS A CONSEQUENCE OF SEARCH WHICH WAS UNDISCLOSED INCOME. HE THEREFORE INITIATED PROCEEDINGS U/S.271AAA OF THE ACT. 3. DURING THE PENALTY PROCEEDINGS THE AO ASKED THE ASS ESSEE TO SUBMIT HIS EXPLANATION AS TO WHY PENALTY SHALL NOT BE LEVIE D. THE ASSESSEE IN RESPONSE TO THE SAME FURNISHED THE REPLY O N 27-04-2012 WHICH HAS BEEN REPRODUCED BY THE AO AT PARA 5.1 TO 5.3 OF THE ORDER AND WHICH READS AS UNDER : 5.1 DURING THE COURSE OF SEARCH AND IN A STATEMENT U/ S.132(4), ASSESSEE HAD ADMITTED THE UNDISCLOSED INCOME OF RS.1.5 CRO RES. ASSESSEE HAS NOT RETRACTED & HAVE OFFERED ALL THE UNDISCL OSED INCOME IN THE RETURN OF INCOME & HAVE PAID THE TAXES AND INTER EST AS APPLICABLE IN FULL. 5.2 IN THE STATEMENT RECORDED, ASSESSEE HAD SPECIFIED THE MANNER AND HAVE SUBSTANTIATED THE MANNER THAT THEY HAVE EARNED T HE INCOME OUT OF THEIR REAL ESTATE BUSINESS FROM WHICH THEY HAVE DERIVED THE UNDISCLOSED INCOME. 5.3 ASSESSEE HAS CO-OPERATED IN THE ASSESSMENT PROCEEDINGS A ND HAVE PAID ALL THE TAXES AS SUCH. IT IS SINCERELY REQUE STED NOT TO LEVY ANY PENALTY U/S.271AAA(2) AS THE ASSESSEE HAVE MADE ALL THE C OMPLIANCE AS REQUIRED AS PER SUB-SECTION 2 OF 271AAA. 4. HOWEVER, THE AO DID NOT ACCEPT THE ABOVE CONTENTIO N OF THE ASSESSEE. ACCORDING TO HIM, THE ASSESSEE IS A PARTNERSH IP FORM CAME INTO EXISTENCE AS PER THE PARTNERSHIP DEED DATED 22-09 -2008. THE FIRM THEREAFTER PURCHASED THE CINEMA HALLS NAMED AMBA & APSARA AT AURANGABAD. THESE HALLS WERE PURCHASED T HROUGH PURCHASE DEED DATED 27-04-2009. LATER ON, BUSINESS OF RUNNING MOVIES AT THESE CINEMA HALLS AND OTHER ALLIED BUSINESS ACT IVITIES FOUND OUT TO HAVE BEEN CARRIED OUT BY THE ASSESSEE. O N CONCLUSION OF SEARCH U/S.132 OF THE I.T. ACT THE ASSESSEE AND GROU P CONCERNS FILED RETURN OF INCOME U/S.153A FOR A.Y. 2004-05 TO 2009-10. IT ALSO FILED RETURN OF INCOME FOR A.Y.2010-11. IN THE RETURNS OF I NCOME FOR 3 ITA NO.1431/PN/2013 A.Y. 2010-11 THE UNDISCLOSED INCOME OF RS. 6 CFORES WAS SHO WN IN THE HANDS OF THE FOLLOWING PERSONS : 1. SHRI RAVINDRA C. KHIVANSARA RS.4,50,00,000/- 2. NEELAVASU HOLIDAY RESORT & PROPERTIES RS.1,50,00,0 00/- 5. THE AO FURTHER NOTED THAT A STATEMENT U/S.132(4) OF T HE ACT OF SHRI RAVINDRA C. KHIVANSARA, PARTNER AND MAIN PERSON OF KHIVANSARA GROUP WAS RECORDED AT THE BUSINESS PREMISES OF THE ASS ESSEE ON 20- 01-2010. SHRI RAVINDRA KHIVANSARA HAD MADE A DECLARATION OF UNDISCLOSED INCOME OF RS.5.5 CRORES IN REPLY TO QUESTION NO .19 ON PAGES 11 AND 12 OF THE STATEMENT INITIALLY WHICH WAS REV ISED TO RS.6 CRORES IN ANSWER TO QUESTION NO.26 OF THE SAME STATEMEN T. THUS, THE TOTAL DECLARATION OF UNDISCLOSED INCOME FOR A.Y. 2010-11 WAS THAT OF RS.6 CRORES WHICH HAVE BEEN INVESTED IN PURCHASE OF CIN EMA HALLS. ACCORDING TO THE AO FIRST THE CINEMA HALLS CAME INTO EXISTE NCE AND BUSINESS ONLY ON PURCHASE OF CINEMA HALLS AND THEREFORE E ARNING OF UNDISCLOSED INCOME IN THE HANDS OF THE FIRM FROM BUSINESS PR IOR TO PURCHASE OF CINEMA HALLS APPEARS INCORRECT. THE AO REFERR ED TO THE PROVISIONS OF SECTION 271AAA AND CAME TO THE CONCLUSION T HAT THE UNDISCLOSED INCOME DECLARED IN THE HANDS OF THE ASSESSEE HAS NOT BEEN SUBSTANTIATED. THEREFORE, THE ASSESSEE IS NOT ENTIT LED TO IMMUNITY FROM PENALTY U/S.271AAA OF THE ACT. THE AO, ACCOR DINGLY LEVIED PENALTY OF RS.15 LAKHS BEING 10% OF THE UNDISCLOSED INC OME U/S.271AAA OF THE ACT. 6. BEFORE CIT(A) IT WAS SUBMITTED THAT THE UNDISCLOSED INCO ME OFFERED TO TAX IN SEARCH ACTION IN STATEMENT RECORDED U/ S.132(4) HAS BEEN DECLARED IN THE RETURN OF INCOME AT RS.1.50 CRORES A ND DUE TAX AND INTEREST ON THE SAID INCOME HAS ALSO BEEN PAID WITH T HE RETURN OF 4 ITA NO.1431/PN/2013 INCOME. THE SAID INCOME HAS ALSO BEEN EXPLAINED TO BE OUT OF INCOME FROM FILM DISTRIBUTION BUSINESS IN THE SUBMISSION PER SONALLY FILED WITH THE OFFICER OF THE SEARCH PARTY ON 21-01-2010 BU T NO ACKNOWLEDGEMENT OF THE SAID SUBMISSION FILED WITH THE SEARCH PARTY IS AVAILABLE. TO THE ABOVE PROPOSITION THE ASSESSEE FILED AN AFFIDAVIT OF SHRI RAVINDRA C. KHINVANSARA. 6.1 THE CIT(A) FORWARDED THE ABOVE SUBMISSION TO THE AO FOR HIS COMMENTS. THE AO REPORTED THAT THE SUBMISSION CLAIMED T O HAVE BEEN FILED BY THE ASSESSEE WITH THE SEARCH PARTY ON 21- 01-2010 WAS NOT AVAILABLE ON THE RECORD OF THE AO. IN THE SAID SUBMIS SION THE ASSESSEE HAS CLAIMED TO HAVE BEEN OFFERED TO TAX INCOME OF RS.1.50 CRORES AS EARNED FROM FILM DISTRIBUTION BUSINESS. HOWEVER, IN THE SUBMISSION DURING PENALTY PROCEEDINGS THE SAID INCOME HAS BEEN CLAIMED TO HAVE EARNED FROM REAL ESTATE BUSINESS. THEREFO RE, THE CLAIM OF THE ASSESSEE IS FACTUALLY INCORRECT. FURTHER, THE SUBMISSION CLAIMED TO BE FILED BEFORE SEARCH PARTY IS ADDITIONAL EVIDENCE WHICH HAS NOT BEEN FILED OR CLAIMED DURING PENALTY PROCEEDINGS AN D HENCE THE SAME CONSTITUTES ADDITIONAL EVIDENCE AND SHOULD NOT B E ADMITTED IN VIEW OF PROVISIONS OF RULE 46A. 7. IN HIS COUNTER COMMENTS THE ASSESSEE SUBMITTED THA T THE SUBMISSION WAS FILED BEFORE THE SEARCH PARTY AND NOT BEFOR E THE AO. FURTHER, IN REPLY TO QUESTION NO.20 PUT BY THE SEARCH P ARTY THE ASSESSEE HAS STATED THE MANNER OF EARNING OF THE INCOME . RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT ASSESSEE IS ENTITLE D TO IMMUNITY U/S.271AAA OF THE ACT. 5 ITA NO.1431/PN/2013 8. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE PENALTY OF RS.15 LAKHS LEVIED BY THE AO BY OBSERVING AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTI CED THAT THE A.O. HAS LEVIED THE PENALTY STATING THE ONLY REASON THAT T HE APPELLANT HAS NOT FULFILLED THE CONDITION OF SUBSTANTIATING THE INCOME DECLARED DURING SEARCH ACTION AS REQUIRED BY PROVISIONS OF SECTION 271AA A(2) OF THE ACT. IN THIS REGARD, THE A.O. HAS CLAIMED THAT AS THE BUSIN ESS OF CINEMA HALLS HAS COMMENCED AFTER THE DATE OF SEARCH, THE INCOME DI SCLOSED BY THE APPELLANT FIRM COULD NOT BE EARNED BY THE APPELLANT FIRM. IN THIS REGARD, THE APPELLANT HAS CLAIMED THAT IF THE ABOVE CONTENTI ON OF THE AG. THAT THE INCOME OFFERED TO TAX IS NOT THAT OF THE PARTNERSHIP FIRM IS ACCEPTED THEN QUESTION OF LEVYING PENALTY U/S 27IAAA DOES NOT ARISE I N THE ABSENCE OF THE INCOME. 7.1 IN ORDER TO DECIDE THE ISSUE UNDER APPEAL, PROVISI ONS OF SECTION 2 7LAAA ARE RELEVANT AND THE RELEVANT PORTION OF THE SAME IS REPRODUCED BELOW - '271AAA (1) THE ASSESSING OFFICER MAY NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT IN THE CASE WHERE SEARCH HAS BEEN INITIALED U/S 132 ON OR AFTER THE 1 ST DAY OF JUNE 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY IN ADDITIO N TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED @10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY IF THE ASSESSEE; (I) IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SUB SECTION (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCL OSED INCOME WAS DERIVED; AND (III) PAYS THE TAX TO WHETHER WITH INTEREST, IF AN Y, IN RESPECT OF THE UNDISCLOSED INCOME. (3) . . . . . EXPLANATION- FOR THE PURPOSE OF THIS SECTION; (A) 'UNDISCLOSED INCOME' MEANS- (I) ANY INCOME OF SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS - 6 ITA NO.1431/PN/2013 (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEA RCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MENTIONED I N THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF SEA RCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF EXPENSE RECORDED IN BOOKS OF ACCOUNT OR DOCUMENTS MAINTAINE D IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YE AR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. (B) SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH BUT THE D ATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1 ) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRE BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED T HE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE S AID DATE; OR (II) IN WHICH THE SEARCH WAS CONDUCTED. 7.2 FROM THE ABOVE PROVISION OF THE ACT IT HAS BEEN NOTICED THAT THE TERM 'SPECIFIED MANNER' HAS NOT BEEN DEFINED OR EXPLA INED IN THIS SECTION, HOWEVER, THE TERM 'UNDISCLOSED INCOME' HAS BEE N EXPLAINED. IT HAS ALSO BEEN NOTICED THAT THE APPELLANT HAS FILED RET URN OF INCOME DECLARING THE SAID 'UNDISCLOSED INCOME' BY CREDITING T HE SAME TO PROFIT & LOSS ACCOUNT UNDER THE HEAD 'BUSINESS INCOME' AND THE A. O. HAS ASSESSED THE SAME AS DECLARED AND THEREFORE, THE MANNER O F EARNING THE INCOME HAS BEEN ACCEPTED BY THE A.O. IN VIEW OF THE ABOVE FACTS THE APPELLANT HAS CLAIMED THAT THE PENALTY U/S 271AAA IS NOT LEVIABLE. THE ABOVE PROPOSITIONS OF LAW ARE SUPPORTED BY THE FOLLOWI NG DECISIONS - (A) ASHOK KUMAR SHARMA VS. DCIT (2012) 77 DTR 241 (CTK.TRIB.) IN THIS CASE, IT HAS BEEN HELD THAT THE ASSESSEE HAVING D ISCLOSED CONCEALED INCOME WHILE GIVING STATEMENT U/S 132 (4) D URING THE COURSE OF SEARCH AND PAID TAX THEREON AND SHOWED THE SAID UND ISCLOSED INCOME IN THE RETURN UNDER THE HEAD 'INCOME FROM BUSINESS' WH ICH HAS BEEN ACCEPTED BY THE DEPARTMENT, PENALTY U/S 271AAA IS NOT LEVIABLE. (B) PRAMOD KUMAR JAIN VS. DCIT (2012) 77 DTR 244 ( CTK.TRIB.) IN THIS CASE, IT HAS BEEN HELD THAT THE ASSESSEE HAVING SURRENDERED CERTAIN INCOME FOR THE RELEVANT ASSESSMENT Y EAR IN THE STATEMENTS DURING THE COURSE OF SEARCH AND FILED RETURN DECLARING THE SAME PURSUANT TO NOTICE U/S 153A WHICH HAS BEEN ACCEPTE D BY THE A.O., LEVY OF PENALTY U/S 271AAA WAS NOT JUSTIFIED ON THE GR OUND THAT THE ASSESSEE HAS MADE DISCLOSURE BUT FAILED TO SPECIFY THE MANN ER IN WHICH SUCH INCOME HAD BEEN DERIVED. 7.3 IT IS WORTH MENTIONING HERE THAT THE HON'BLE CU TTACK BENCH OF ITAT IN THE CASE OF PRAMOD KUMAR JAIN VS. DCIT (2012) 77 DTR 244 HAS LAID DOWN THAT 'THE LD. COUNSEL FOR THE ASSESSEE SUPPORTE D THE VIEWS EXPRESSED BY THE TRIBUNAL IN BOTH THE ORDERS IN SO FAR AS CONDITIONS FOR 7 ITA NO.1431/PN/2013 INVOKING THE PROVISIONS OF SECTION 271AAA AS NOTED IN SUB-SECTION (2) THEREOF HAVE TO BE CONSIDERED TOGETHER AND NOT IN ISO LATION. THE CONDITION WITH RESPECT TO THE MANNER SPECIFIC FOR THE PURPOSE OF INVOKING THE PROVISIONS HAS NOT BEEN DEFINED BUT ACCEP TED BY THE ASSESSING OFFICER IN AS MANY WORDS. THE DEFINITION OF 'UN DISCLOSED INCOME' CLARIFIED THE MANNER IN SO FAR AS THE ASSESSING O FFICER, AFTER THE SEARCH ONLY CAN INITIATE PENALTY U/S 271AAA WHEN THESE THREE CONDITIONS TOGETHER ARE NOT SATISFIED. PENAL PROVISIONS ARE PUNITIVE AND NOT PART OF TAX STRUCTURE IN SO FAR AS THE INTENTI ON OF THE LEGISLATION WAS NOT TO TAKE 10% OVER AND ABOVE THE TAX AS A MATTE R OF LEVY OF PENALTY U/S 271AAA AUTOMATICALLY.' THE HON'BLE CUTTA CK BENCH OF ITAT HAS FURTHER STATED THAT THE SAID PROVISIONS OF SUB-SECTIO N (2) OF SECTION 271AAA DOES NOT BECOME REDUNDANT AS CLAIMED BY THE DE PARTMENTAL REPRESENTATIVE AS THE ASSESSEE HAS TO FULFILL THE OTHER CO NDITIONS OF SURRENDERING THE INCOME AND DURING SEARCH ACTION, OFF ERING THE UNDISCLOSED INCOME IN RETURN OF INCOME, TO PAY TAX AN D INTEREST ON THE SAID INCOME. THE HON'BLE ITAT HAS FURTHER OBSERVED TH AT EVEN IF ALL CONDITIONS ARE FULFILLED EXCEPT ONE OF THE PURPORTED CONDITION WHICH IS NOT FULFILLED, THE PENALTY U/S 271AAA MAY NOT BE LEV IED. IN THE CASE UNDER APPEAL, THE CONDITIONS OF SURRENDERING THE INCO ME DURING THE SEARCH ACTION, OFFERING THE SAID INCOME IN RETURN OF INCOME AND PAYMENT OF TAX HAVE BEEN UNDISPUTEDLY FULFILLED AND THE A.O. HAS ACCEPTED THE UNDISCLOSED INCOME OFFERED TO TAX IN RETURN AS DECLARE D. 7.4 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND IN VI EW OF THE RATIO LAID DOWN IN THE ABOVE REFERRED DECISIONS, I AM OF TH E CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN HOLDING THAT THE A PPELLANT IS LIABLE FOR PENALTY U/S.271AAA OF THE ACT. THE PENALTY OF RS.15, 00,000/- LEVIED BY THE A.O. U/S.271AAA IS, THEREFORE, CANCELLED. THE A. O. IS DIRECTED ACCORDINGLY. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.15 ,00,000/- IMPOSED U/S 271AAA OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT TH AT THE ASSESSEE FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INC OME WAS EARNED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT PENALTY U/ S 271AAA COULD BE INITIATED ONLY WHEN ALL THREE CONDITIONS TOGETHER AR E NOT SATISFIED, WHICH IS CONTRARY TO THE EXTANT PROVISIONS OF SECTION 27LAAA OF THE ACT, SINCE THE PENALTY CAN BE IMPOSED EVEN IF ONE OF THE CONDIT IONS IS NOT FULFILLED, WHICH RENDERS THE DECISION PERVERSE IN LAW AND ON FACT S. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE, AND AMEND ANY OF THE GROUNDS, AS PER THE CIRCUMSTANCES OF T HE CASE. 8 ITA NO.1431/PN/2013 5. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER E VIDENCE TO SUBSTANTIATE ITS CASE, AS THE OCCASION MAY DEMAND. 10. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY CHALLEN GED THE ORDER OF THE CIT(A). HE SUBMITTED THAT SINCE THE ASSESS EE HAS NOT EXPLAINED THE MANNER OF EARNING OF SUCH UNDISCLOSED INCOME THE ASSESSEE IS NOT ELIGIBLE FOR IMMUNITY UNDER THE PROVISIONS O F SECTION 271AAA OF THE ACT. THE LD.CIT(A) WITHOUT APPRECIATION OF FA CTS CANCELLED THE PENALTY LEVIED BY THE AO U/S.271AAA. THEREFO RE, THE ORDER OF THE CIT(A) BE SET ASIDE AND THE ORDER OF THE AO BE RESTORED. 11. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) DREW THE ATTENTION OF THE BENCH TO THE COPY OF THE ASSESSMENT ORDER AND SUBMITTED THAT T HE AO HAS ACCEPTED THE RETURN OF INCOME AND NO ADDITION HAS BEEN MADE. THE AO HAS NOT SPECIFIED IN THE ASSESSMENT ORDER REGARDING THE MANNER OF DISCLOSURE OF SUCH ADDITIONAL INCOME. REFERRING TO THE COP Y OF THE STATEMENT RECORDED U/S.132(4) OF SHRI RAVINDRA KHINVASARA, A COPY OF WHICH IS PLACED AT PAGES 36 TO 51 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO ANSWER TO QUESTION NO.29 AND SUBMITTED THAT THE ASSESSEE IN HIS REPLY HAS STATED THAT THE INC OME OF RS.1.50 CRORES DISCLOSED AS UNACCOUNTED INCOME OF M/S. NEELAVASU HOLIDAY RESORT PROPERTIES FOR F.Y. 2009-10 AS INCOME DERIVED FROM FILM DISTRIBUTION BUSINESS AND THE SAME HAS BEEN INVESTED BY THE FIRM FOR PURCHASE OF THE PROPERTY IN M/S. NEELASAVU. HE SUBMITTED THAT THE ASSESSEE HAS PAID THE DUE TAX ON THE UNDISCLOSED INCOME FILED ALONG WITH RETURN OF INCOME. THE AO HAS ACCEPTED THE SAME. T HEREFORE, IN VIEW OF PROVISIONS OF SECTION 271AAA(2) THE ASSESSEE IS NOT LIABLE TO PENALTY U/S.271AAA. FOR THE ABOVE PROPOSITION, THE LD. CO UNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS : 9 ITA NO.1431/PN/2013 1. ITO CENTRAL-2, NASHIK VS. SHRI SATISHCHANDRA G. MITTAL ITA NO.970/PN/2011 ORDER DATED 11-05-2015 2. ITO CENTRAL-2, NASHIK VS. SHRI VASUDEO RAMCHAND LALWAN I ITA NO.1610/PN/2011 ORDER DATED 30-11-2015. 3. DY.CIT, CENTRAL CIRCLE, AURANGABAD VS. SHRI BANARASID AS R. JINDAL AND OTHERS ITA NOS. 1436, 1438, 1440/PN/2012 ORDER DATE D 26-06- 2015. 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED T HE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO LEVIED PENALTY OF RS.15 LAKHS U/S.271AAA ON THE GROUND THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION OF SUBSTANTIATING THE INCOME DECLARED DURING THE SEARCH ACTION AS REQUIRED UNDER PROVISIONS OF SECTION 27 1AAA(2) OF THE I.T. ACT. ACCORDING TO THE AO THE ASSESSEE HAS CLAIM ED THAT THE BUSINESS OF CINEMA HALLS HAS COMMENCED AFTER THE DATE OF S EARCH, THEREFORE, THE INCOME DISCLOSED BY THE ASSESSEE FIRM COULD NOT HAVE BEEN EARNED BY THE ASSESSEE FIRM. WE FIND THE LD.CIT(A) D ELETED THE PENALTY LEVIED BY THE AO ON THE GROUND THAT THE ASSESS EE HAS FILED THE RETURN OF INCOME AND DECLARED THE UNDISCLOSED INCOME BY CREDITING SAME TO THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD BUSINESS INCOME AND THE AO HAS ACCEPTED THE SAME AS D ECLARED. THUS, THE MANNER OF EARNING OF THE INCOME HAS BEEN ACCEP TED BY THE AO. SINCE THE ASSESSEE HAS DISCLOSED THE CONCEALED INCOM E WHILE GIVING STATEMENT U/S.132(4) AND PAID THE TAXES THEREON, TH EREFORE, THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN IN PROVISION S OF SECTION 271AAA AND THEREFORE NO PENALTY IS LEVIABLE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE ASSESSEE IN R EPLY TO QUESTION NO.29 HAS STATED THAT THE INCOME OF RS.1.50 CRO RES IS DISCLOSED AS UNACCOUNTED INCOME OF M/S. NEELAVASU HOLIDAY R ESORTS 10 ITA NO.1431/PN/2013 AND PROPERTIES FOR F.Y. 2009-10 AS INCOME DERIVED FROM FILM DISTRIBUTION BUSINESS WHICH HAS BEEN INVESTED BY THE FIRM FO R PURCHASE OF THE PROPERTY IN NEELAVASU. THE ABOVE AMOUN T HAS BEEN CREDITED TO THE PROFIT AND LOSS ACCOUNT AND HAS BEEN O FFERED AS BUSINESS INCOME WHICH HAS BEEN ACCEPTED BY THE AO. THE RE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS PAID THE DUE TAXES ON THE ABOVE DECLARED INCOME WHILE FILING THE RETURN OF INCOME. 13. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SATISHCHANDRA G. MITTAL (SUPRA) HAS DELETED THE PENALTY LEV IED U/S.271AAA OF THE I.T. ACT BY OBSERVING AS UNDER : 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO LE VY OF PENALTY AS PROVIDED UNDER SECTION 271AAA OF THE ACT WHICH PRESCR IBES THAT IN CASE WHERE THE SEARCH UNDER SECTION 132 OF THE ACT HAS BEEN INITIATED ON OR AFTER THE 1ST DAY OF JUNE, 2007 BUT BEFORE THE 1ST DA Y OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, A SUM EQUIVALENT TO 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. THE IMMUNITY FROM THE LEVY OF PENALTY UNDER SECTION 271AAA IS PROVIDED IN SUB-SECTION (2) TO THE SAID SECTION, WHICH READS AS UNDER :- (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE,- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME. 11. SECTION 271AAA(2) OF THE ACT PROVIDES THAT WHERE THE ASSESSEE DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE A CT, ADMITS TO SOME UNDISCLOSED INCOME IN THE STATEMENT RECORDED UNDER SECT ION 132(4) OF THE ACT AND ALSO SUBSTANTIATES THE MANNER IN WHICH UNDI SCLOSED INCOME WAS DERIVED AND PAYS THE TAXES, TOGETHER WITH INTEREST, IF ANY, ON SUCH UNDISCLOSED INCOME THEN NO PENALTY UNDER SUB-SECTION ( 1) OF SECTION 271AAA OF THE ACT CAN BE LEVIED TO THE ASSESSEE. THE ASSESSEE HAS, IN OTHER WORDS, TO FULFILL THE THREE CONDITIONS LAID DOW N IN SUB-SECTION (2) OF SECTION 271AAA OF THE ACT. FIRSTLY, IN THE STATEME NT RECORDED UNDER SECTION 132(4) OF THE ACT, ASSESSEE ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERI VED; SECONDLY, IF THE ASSESSEE SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND, THIRDLY, PAYS THE TAXES, ALONG WITH INTEREST, IF ANY, ON SUCH UNDISCLOSED INCOME, THEN ON FULFILLMENT OF THE AB OVE THREE CONDITIONS, NO PENALTY IS LEVIABLE UNDER SECTION 271AA A OF THE ACT. 11 ITA NO.1431/PN/2013 12. COMING TO THE FACTS OF THE PRESENT APPEAL, SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED ON AT THE PREMISES OF THE A SSESSEE ON 22.11.2007. DURING THE COURSE OF SEARCH, THE ASSESSEE HA D MADE THE UNDER-MENTIONED DECLARATION OF ADDITIONAL INCOME, A S UNDER :- 1. UNRECORDED CASH : RS.1,00,00,000/- 2. CASH PAYMENT TO M/S NIKI AGRO : RS. 50,00,000/- 3. ON ACCOUNT OF SILVER ARTICLES : RS. 3,75,2 57/- 4. ON ACCOUNT OF ERRORS & OMISSIONS : RS. 16,00,000 /- TOTAL : RS.1,69,75,257/- 13. HOWEVER, THE ASSESSEE IN THE RETURN OF INCOME OFFER ED THE FOLLOWING ADDITIONAL INCOME :- 1. GOLD DIAMOND JEWELLERY & SILVER : RS. 3,75,257 /- 2. CASH FOUND AT RESIDENCE AFTER SUBMITTING : RS.89,65 ,875/- EXPLANATION 3. INTEREST RECEIVABLE FROM M/S NIKKY AGRO : RS. 3, 61,500/- 4. COMMODITIES TRADING INCOME AT RAJASTHAN : RS. 57,244/- 5. COMMODITIES TRADING INCOME AT : RS. 25,051 /- AHMADABAD 6. UNRECORDED EXPENDITURE : RS. 85,000/- 7. UNRECORDED INVESTMENT IN DIAMOND & : RS. 1,10 ,550/- JEWELLERY TOTAL : RS.1,00,08,887/- 14. THE ASSESSING OFFICER HAS ACCEPTED THE ADDITIONAL IN COME OFFERED BY THE ASSESSEE AT RS.1,00,08,887/- AND HAS FURTHER MADE ADDITION ON ACCOUNT OF HOUSEHOLD EXPENSES, UNEXPLAINED EXPENDITURE AND ERRORS AND OMISSIONS TOTALING TO RS.47 LAKHS AGAINST WHICH HE HAS INI TIATED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER , IN RESPECT OF ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN THE RETUR N OF INCOME AFTER THE SEARCH AMOUNTING TO RS.1,00,08,887/-, THE ASSESSING O FFICER INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE A CT. 15. AS REFERRED BY US IN THE PARAS HEREINABOVE, CONDIT IONS REGARDING IMMUNITY FROM LEVY OF PENALTY UNDER SECTION 271AAA O F THE ACT IS PROVIDED UNDER SUB-SECTION (2) TO THE SAID SECTION ITS ELF. THE FIRST CONDITION FOR SUCH IMMUNITY IS THAT THE ASSESSEE IN THE COURSE OF SEARCH ITSELF ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MA NNER IN WHICH SUCH INCOME HAS BEEN DERIVED. SECOND ASPECT IS THAT TH E ASSESSEE IS TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED AND THIRDLY, THE ASSESSEE IS TO PAY TAXES TOGETHER WITH INTER EST, IF ANY, ON SUCH UNDISCLOSED INCOME. AS PER THE ASSESSING OFFICER, THE ASSESSE E HAD NOT FULFILLED THE SAID CONDITIONS. ON THE OTHER HAND, TH E LD. CIT(A) HAS DELETED THE ADDITIONS BY HOLDING THAT THE FIRST CONDI TION STANDS FULFILLED AS THE ASSESSEE ADMITTED THE UNDISCLOSED INCOME IN THE ST ATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE CIT(A ) IN PARA 8.2 ADMITS THAT INCOME ON ACCOUNT OF GOLD, DIAMOND AND SILVERY JEWELLERY RS.3,75,257/-, CASH FOUND AT THE RESIDENCE RS.89,65,875 /- AND INTEREST RECEIVABLE FROM M/S NIKKY AGRO RS.3,61,500/- IS SPECIFI CALLY COVERED BY THE ITEMS OFFERED TO TAX IN STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE CIT(A) FURTHER OBSERVED THAT REMAINING INCOME OF 12 ITA NO.1431/PN/2013 RS.3,04,845/- ON ACCOUNT OF COMMODITIES TRADING, UNRE CORDED EXPENDITURE AND UNRECORDED INVESTMENT IN DIAMOND ARE NOT COVERED BY THE ITEMS OF INCOME STATED IN STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE CONCLUSION OF THE CIT(A) WAS THAT TH E FIRST CONDITION LAID DOWN IN SUB-SECTION (2) OF SECTION 271AAA OF THE ACT I S FULFILLED IN RESPECT OF INCOME OFFERED TO TAX TO THE EXTENT OF RS. 97,02,632/-. 16. THE CIT(A) FURTHER NOTES THAT THE SEARCH PARTY H AD NOT ASKED THE ASSESSEE TO SPECIFY AND SUBSTANTIATE THE SOURCE OF INCOME D ISCLOSED. HOWEVER, THE ASSESSEE IN HIS STATEMENT, IN REPLY TO QUERY NO.2 RECORDED DATED 24.11.2007 QUERY NO.11 DATED 13.12.2007 HAD O FFERED THE ADDITIONAL INCOME AND ADMITTED THAT THE SAID UNDISCLO SED WAS EARNED OUT OF UNDISCLOSED SPECULATION INCOME OF COMMODITIES/DE RIVATIVES AND IS NOT SUPPORTED BY DOCUMENTARY PROOF. THE CIT(A) FU RTHER NOTES THAT WHERE THE ASSESSEE HAD MOVED AN APPLICATION FOR ADJUSTME NT OF THE CASH SEIZED OF 1 CRORE AGAINST THE TAXES AND INTEREST LIABIL ITY, THE THIRD CONDITION MENTIONED IN SUB-SECTION (2) TO SECTION 271A AA OF THE ACT WAS FULFILLED AND AS SUCH THERE WAS NO MERIT IN THE LEVY O F PENALTY UNDER SECTION 271AAA OF THE ACT TO THE EXTENT OF RS.97,02,6 32/-. THE BALANCE PENALTY LEVIED IN THE HANDS OF THE ASSESSEE WAS CONFIRMED TO THE EXTENT OF RS.30,625/-. THE LD. AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE HAS NOT POINTED ANY APPEAL HAVING BEEN FILED AGAINST THE SAID CONFIRMATION OF PARTIAL PENALTY UNDER SECTION 271AAA OF THE ACT. TH OUGH, THE REVENUE IS IN APPEAL AGAINST THE DELETION OF PENALTY TO THE EXT ENT OF RS.9,72,632/- ON UNDISCLOSED INCOME OF RS.97,02,632/-. 17. IN ORDER TO AVAIL THE IMMUNITY TO LEVY OF PENAL TY UNDER SECTION 271AAA OF THE ACT, THE FIRST CONDITION TO BE FULFILL ED BY THE ASSESSEE IS THE DECLARATION OF THE ADDITIONAL INCOME DURING THE COU RSE OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, STANDS FULFI LLED IN THE CASE OF THE ASSESSEE WHERE ORIGINALLY THE ASSESSEE HAD OFFERED ADDI TIONAL INCOME TO THE EXTENT OF RS.1.69 CRORES BUT ON ACCOUNT OF FOU R ITEMS HAD RESTRICTED THE DECLARATION IN THE RETURN OF INCOME T O THREE OF THE SAID ITEMS. EVEN THOUGH, THERE WAS DIFFERENCE IN THE QUAN TUM ORIGINALLY DECLARED DURING THE COURSE OF SEARCH AND THOSE OFFERED IN THE RETURN OF INCOME, BUT THE FIRST CONDITION OF SUB-SECTION (2) TO SECTION 271AAA OF THE ACT STANDS FULFILLED. THE PERUSAL OF THE STATEMENT ITSELF REFLECTS THAT THE ASSESSEE ADMITTED TO HAVE ENGAGED IN COMMODITY TRAD ING IN CASH AND EVEN THE GROUP WHICH WAS SIMULTANEOUSLY SEARCHED BY THE INCOME TAX DEPARTMENT, WAS ALSO ENGAGED IN SIMILAR TRADING. WE F IND NO MERIT IN THE ORDER OF THE ASSESSING OFFICER IN THIS REGARD AS TH E ASSESSEE HAVING SUBSTANTIATED ABOVE ADDITIONAL INCOME OF BEING DERIVE D FROM ITS BUSINESS OF COMMODITY TRADING, OUTSIDE THE BOOKS OF ACCO UNT, THE CONDITION NO.1 AND 2 PROVIDED IN SUB-SECTION (2) OF SE CTION 271AAA OF THE ACT ARE APPLICABLE. 18. FOR THE SAID PROPOSITION, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN AC IT VS. MUNISH KUMAR GOYAL (SUPRA), WHEREIN IT WAS HELD AS UNDER :- 10. PLAIN READING OF SUB-SECTION WOULD SHOW THAT I F THE ASSESSEE DURING THE COURSE OF SEARCH IN A STATEMENT ADMITS T O SOME UNDISCLOSED INCOME AND PAY TAXES ON THE SAME THEN PENALTY CANNO T BE LEVIED IN TERMS OF SUB-SEC (1) OF THIS SECTION. IN THE CASE BEFORE US, THE AMOUNT OF RS. 4 CRORE WHICH WAS SURRENDERED DURING SEARCH, HAS BEEN DECLARED BY THE ASSESSEE IN THE RETURN AND TAXES HAVE BEEN PAID ACC ORDINGLY. THEREFORE THE, ASSESSEE IS NORMALLY ENTITLED FOR THE IMMUNITY PROVIDED IN SEC 13 ITA NO.1431/PN/2013 271AAA ITSELF. HOWEVER, THE REVENUE HAS RAISED FURT HER DISPUTE THAT WHETHER THE ASSESSEE HAS DISCLOSED THE MANNER IN WH ICH INCOME HAS BEEN EARNED. IN THE PENALTY ORDER PASSED BY THE ASSESSIN G OFFICER FOLLOWING QUESTIONS AND ANSWERS HAVE BEEN EXTRACTED: 'Q. DO YOU WANT TO SAY ANYTHING MORE? ANS. I VOLUNTARILY SURRENDER A SUM OF RS.4.00 CRORE (RS. FOUR CRORE) FOR CURRENT FINANCIAL YEAR I.E. 2009-10 RELEVANT TO A. Y. 2010-11 IN ANY (SHOULD BE 'MY') INDIVIDUAL CAPACITY. THEY COVER AL L THE DISCREPANCIES IN THE SEIZED PAPERS DURING THE COURSE OF SEARCH PROCE EDINGS.' 11. THEREFORE CLEARLY THE REVENUE HAS NOT ASKED THE ASS ESSEE TO DISCLOSE THE MANNER IN WHICH SUCH INCOME WAS EARNED . IN ANY CASE ONCE THE INCOME IS SURRENDERED DURING THE COURSE OF SEAR CH U/S 132(4) IT CAN BE SAFELY ASSUMED THAT DURING DISCUSSION THE ASSESSEE MUST HAVE DISCLOSED THE MANNER. IN ANY CASE WE FIND FORCE IN THE SUBMIS SIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE EXPLANATION OF THE ASSESSEE HAS BEEN ACCEPTED FOR A SUM OF RS.1987500 OUT OF TOTAL SURRE NDER OF RS.4 CRORE THEN SAME MANNER SHOULD HAVE BEEN ACCEPTED FOR THE WHOLE OF THE AMOUNT. IT IS NOT CLEAR FROM THE PENALTY ORDER HOW EXPLANATION FO R RS.1987500 WAS ACCEPTED. IN ANY CASE THE LD. CIT(A) HAS CONSIDERED ALL THESE ISSUES IN DETAIL AND THE D.R. FOR THE REVENUE HAS NOT REFERRE D TO ANY MATERIAL OR DECISION WHICH CAN CONTROVERT THE FINDINGS OF THE C IT(A). IN THE FOLLOWING CASES WHICH HAVE BEEN RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH WAS CLEARLY HELD THAT PENALTY IS NOT LEVIABLE. 12. FURTHER THE ASSESSEE HAS RELIED ON THE FOLLOWIN G DECISIONS: KANAKIA SPACES (P.) LTD. (SUPRA) A.N. ANNAMALAISAMY (HUF) (SUPRA) PRARNOD KUMAR JAIN (SUPRA) SRNT. RAJ RANI GUPTA (SUPRA) 13. THE LD. D.R. FOR THE REVENUE WAS NOT ABLE TO PL ACE BEFORE US ANY DECISION WHICH SUPPORTS HIS CASE, THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 14. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1003/CHD/2013 IS DISMISSED. 19. FURTHER, THE DELHI BENCH OF THE TRIBUNAL IN SUD HA GUPTA VS. DCIT (SUPRA) HAD LAID DOWN SIMILAR PROPOSITION THAT WHERE D URING THE COURSE OF SEARCH PROCEEDINGS, THE AUTHORIZED OFFICER OF DEPA RTMENT HAD NOT RAISED ANY SPECIFIC QUERY REGARDING THE MANNER IN WHI CH THE UNDISCLOSED INCOME HAVE BEEN DERIVED AND WHERE THE ASSESSEE HAD TRI ED TO EXPLAIN THE EARNING OF THE UNDISCLOSED INCOME IN QUESTION, IN ITS REPLY, DURING THE RECORDING OF THE STATEMENT UNDER SECTION 132(4) AND I N THE ABSENCE OF ANY QUERY RAISED BY THE AUTHORIZED OFFICER ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HAVE BEEN DERIVED AND ABOUT IT S SUBSTANTIATION, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING THE PE NALTY UNDER SECTION 271AAA OF THE ACT. 20. THE THIRD CONDITION OF PAYMENT OF TAXES TOGETHE R WITH INTEREST, IF ANY, IS ALSO FULFILLED IN THE CASE OF THE ASSESSEE WHERE THE ASSESSEE HAD MADE A REQUEST FOR ADJUSTMENT OF THE CASH SEIZED OF RS. 1 CRORE AGAINST HIS TAX AND INTEREST LIABILITY, BOTH DURING THE COURSE OF SEARCH AND AFTER THE COMPLETION OF THE ASSESSMENT. MERELY BECAUSE THE AD JUSTMENT WAS MADE AFTER THE COMPLETION OF ASSESSMENT IN THE HANDS OF THE ASSESSEE HAS NO MERIT TO LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT IN VIEW OF NON FULFILLMENT OF THIRD CONDITION PROVIDED UNDE R SUB-SECTION (2) OF 14 ITA NO.1431/PN/2013 THE SAID SECTION. IN THIS REGARD, WE FIND MERIT IN T HE RELIANCE PLACED UPON BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF THE TRIBUNAL IN DCIT VS. SHRI RAVINDRA CHAMPALAL KHINVASARA (SUPRA) WHEREIN IT WAS HELD AS UND ER :- 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IN OUR OPINION, THE CIT(A) MADE NO MISTAKE IN APPLYING THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA) WHILE EXAMINING THE CONDITION PRESCRIBE D IN CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT IN THE PRESENT CASE. IN THE CASE BEFORE THE HONBLE SUPREME COURT, ISSUE RELATE D TO A PENALTY IMPOSED U/S 271(1)(C) OF THE ACT ON AN AMOUNT OF INCOME SUR RENDERED BY THE ASSESSEE IN A STATEMENT RECORDED U/S 132(4) OF THE ACT. CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT PRESC RIBED IMMUNITY FROM LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WITH RESPE CT TO AN INCOME SURRENDERED IN A STATEMENT U/S 132(4) OF THE ACT. ONE OF THE CONDITIONS PRESCRIBED THEREIN IS TO THE EFFECT THAT ASSESSEE PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. THE REVENUE HAD CONTENDED BEFORE THE HONBLE SUPREME COURT THAT ASS ESSEE THEREIN HAD FAILED TO MAKE PAYMENT OF TAX IN TIME. IN THIS CON TEXT, THE HONBLE SUPREME COURT NOTED THAT THE CONDITION DID NOT PRES CRIBE ANY TIME LIMIT FOR PAYMENT OF SUCH TAX AND THAT THE ONLY REQUIREME NT STIPULATED IN THE THIRD CONDITION WAS FOR THE ASSESSEE TO PAY TAX TO GETHER WITH INTEREST. FACTUALLY, IT WAS CLEAR THAT THE SAID CONDITION STO OD FULFILLED AS ASSESSEE HAD PAID TAX WITH INTEREST UPTO THE DATE OF PAYMENT . THEREFORE, THE HONBLE SUPREME COURT HELD THE ASSESSEE WAS ENTITLE D TO THE IMMUNITY FROM PAYMENT OF PENALTY IN TERMS OF CLAUSE (2) OF E XPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IN THE PRESENT CASE TOO WHER EIN THE ISSUE RELATES TO LEVY OF PENALTY U/S 271AAA OF THE ACT, THE CONDITIO N PRESCRIBED IN CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA OF THE A CT IS PARI-MATERIA TO THE THIRD CONDITION PRESCRIBED IN CLAUSE (2) OF EXPLANA TION 5 TO SECTION 271(1)(C) OF THE ACT. THEREFORE, IN OUR CONSIDERED OPINION THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA) IS SQUARELY APPLICABLE IN THE PRESENT C ASE ALSO. 11. IN THIS BACKGROUND, EVEN IF WE WERE TO GO ALONG WITH THE STAND OF THE ASSESSING OFFICER THAT THE CREDIT FOR THE SEIZE D CASH COULD BE GIVEN FOR TAX LIABILITY ONLY AFTER COMPLETION OF ASSESSMENT Y ET IT FOLLOWS THAT THE ASSESSEE HAS PAID TAX WITH INTEREST AS REQUIRED BY CLAUSE (III) OF SUB- SECTION (2) OF SECTION 271AAA OF THE ACT. THE PHRA SEOLOGY OF CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT IS PAR I-MATERIA WITH THE THIRD CONDITION IN CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT; AND, THEREFORE FOLLOWING THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA), THE CIT(A) MADE NO MISTAKE IN HOLDING THAT ASSESSEE HAS FULFIL LED THE CONDITION OF CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA O F THE ACT AND ACCORDINGLY THE PENALTY OF RS.45,00,000/- LEVIED BY THE ASSESSING OFFICER HAS BEEN JUSTIFIABLY CANCELLED. THE ORDER OF THE C IT(A) IS HEREBY AFFIRMED. 21. IN VIEW OF THE CONDITIONS LAID DOWN FOR CLAIMING IMMUNITY FROM LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT AS P RESCRIBED IN SUB- SECTION (2) TO THE SAID SECTION, HAVING BEEN FULFILLED , WE FIND NO MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THIS RE GARD. WE UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE PENALTY LEV IED UNDER SECTION 271AAA OF THE ACT IN RESPECT OF INCOME OFFERED TO TA X TO THE EXTENT OF RS.97,02,632/- AND CANCELLING THE PENALTY TO THE EXT ENT OF RS.9,70,263/-. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. 15 ITA NO.1431/PN/2013 14. FOLLOWING THE ABOVE DECISION THE PUNE BENCH OF THE TR IBUNAL IN THE CASE OF VASUDEO RAMCHAND LALWANI (SUPRA) HAS ALSO UPHELD THE ORDER OF THE CIT(A) IN DELETING THE PENALTY LEVIED U/S.2 71AAA OF THE ACT. 15. WE FIND IN THE INSTANT CASE THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS IN ORDER TO AVAIL THE IMMUNITY FROM LEVYING OF PEN ALTY U/S.271AAA OF THE ACT, I.E. (1) DECLARED ADDITIONAL INCOME DURING THE COURSE OF RECORDING OF STATEMENT U/S.132(4) OF THE ACT, (2) DECLARED THE INCOME IN THE RETURN OF INCOME AND PAID THE TAXES TH EREON AND (3) EXPLAINED THE MANNER OF EARNING OF THE SAID INCOME DURING THE COURSE OF SEARCH PROCEEDINGS ITSELF. WE FIND IN THE INSTANT CASE THE AUTHORISED OFFICER OF THE DEPARTMENT HAS NOT RAISED ANY S PECIFIC QUERY REGARDING THE MANNER IN WHICH THE SAID UNDISCLOSED INCOME WAS DERIVED. THEREFORE, IN ABSENCE OF SUCH SPECIFIC QUERY RAISED BY THE AUTHORISED OFFICER DURING THE COURSE OF SEARCH AND CO NSIDERING THE FACT THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS LA ID DOWN IN PROVISIONS OF SECTION 271AAA, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE PENALTY LEVIED BY THE AO U/S.271AAA OF T HE ACT. WE ACCORDINGLY UPHOLD THE SAME. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-12-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 23 RD DECEMBER, 2015. 16 ITA NO.1431/PN/2013 ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - I, NASHIK 4. 5. 6. THE CIT-I, NASHIK % ((), ), / DR, ITAT, A PUNE; . / GUARD FILE. / BY ORDER , % // % ( //TRUE COPY// // TRUE COPY // 01 ( ) / SR. PRIVATE SECRETARY ), / ITAT, PUNE