Dy. CIT, Aurangabad V. Shri ARUN S AGRAWAL, Jalna

ITA 1432/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93853 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI; B C MALAKAR
• Keywords: Sale consideration of property below Jantri Value; Income from undisclosed sources; Difference of opinion; Assessment record; Revised return
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NOS.1433 AND 1432/PN/2013 (ASSESSMENT YEARS : 2007-08 AND 2008-09) DY.CIT, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SHRI ARUN S. AGRAWAL, BEHIND POST OFFICE, NEAR BARWALE BUNGALOW, JALNA- 431 203 PAN NO.AATPA 5347B .. RESPONDENT ITA NOS.1441 AND 1442/PN/2013 (ASSESSMENT YEARS : 2007-08 & 2008-09) DY.CIT, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SHRI GHANSHYAM C. GOYAL, GIRIRAJ 40, CIVIL CLUB ROAD, JALNA 431 203 PAN NO.AIAPG3250C .. RESPONDENT ITA NO.1437/PN/2013 (ASSESSMENT YEAR : 2010-11) DY.CIT, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SHRI NARENDRA S. AGRAWAL, SAGAR PARIDHAN, JINDAL SUPER MARKET, JALNA 431203 PAN NO.AATPA5348Q .. RESPONDENT ITA NO.1439 /PN/2013 (ASSESSMENT YEAR : 2010-11) DY.CIT, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SHRI GOPAL GHANSHYAM GOYAL, GIRIRAJ 40, CIVIL CLUB ROAD, JALNA 431 203 PAN NO.AIAPG3251D .. RESPONDENT 2 ITA NOS.1446 AND 1447/PN/2013 (ASSESSMENT YEARS : 2007-08 & 2008-09) DY.CIT, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SHRI ANIL NANDKISHOR GOYAL, PLOT NO.18-19, PRITI SUDHA NAGAR, JALNA 431 203 PAN NO.AAWPG1283B .. RESPONDENT ITA NO.1448/PN/2013 (ASSESSMENT YEAR : 2010-11) DY.CIT, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SHRI NANKISHOR T. GOYAL, PLOT NO.18-19, PRITI SUDHA NAGAR, JALNA 431 203 PAN NO.AAWPG1289M .. RESPONDENT APPELLANT BY : SHRI J.P. BAIRAGRA DEPARTMENT BY : SHRI A.K. MODI & SHRI B.C. MALAKAR DATE OF HEARING : 05-06-2015 DATE OF PRONOUNCEMENT : 26-06-2015 ORDER PER R.K. PANDA, AM : THE ABOVE BATCH OF 9 APPEALS FILED BY THE REVENUE IN CASE OF DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE SEPARATE OR DERS DATED 01-04-2013 OF THE CIT(A), AURANGABAD RELATING TO DIFFERENT ASSESSMENT YEARS MENTIONED THEREIN. FOR THE SAKE OF C ONVENIENCE, ALL THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED O F BY THIS COMMON ORDER. 2. FIRST WE TAKE UP ITA NO.1433/PN/2013 IN THE CASE OF SHRI ARUN S. AGRAWAL FOR A.Y. 2007-08 AS THE LEAD CASE. 3 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL. A SEARCH ACTION U/S.132 OF THE I.T. ACT WAS CON DUCTED ON 16-06-2009 AT THE BUSINESS AND RESIDENTIAL PREMISES OF DIFFERENT MEMBERS/ASSOCIATE CONCERNS OF THE KALIKA GROUP OF JALNA . THE ASSESSEES PREMISES WAS ALSO COVERED. IN RESPONSE TO NOTICE U/S.153A THE ASSESSEE FILED RETURN OF INCOME ON 18-07-201 1 DECLARING TOTAL INCOME AT RS.42,67,042/- AND AGRICULTURAL INCO ME AT RS.73,510/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE IN ITS COMPUTAT ION OF INCOME HAS SHOWN INCOME OF RS.19,57,468/- AS INCOME DECLA RED IN SEARCH U/S.132. HE NOTED THAT THIS INCOME IS IN ADDIT ION TO THE INCOME DECLARED ORIGINALLY IN RETURN OF INCOME FILED U/S.139 OF THE I.T. ACT. ON BEING QUESTIONED BY THE ASSESSING OFFICER THE ASSESSEE VIDE SUBMISSION FILED ON 18-10-2011 HAS STATED AS UNDER : THE ASSESSEE HAS ACCEPTED INCOME U/S.132 DURING THE YEAR THOUGH THERE IS NO SUCH DIRECT EVIDENCE OF SUCH SALES WERE NOT ICED OR SUCH SALES WERE MADE BY THE ASSESSEE COMPANY/DIRECTOR. THE ASSE SSEE HAS DECLARED INCOME IN ORDER TO BUY PEACE, TO AVOID LIT IGATION AND PAID THE TAX ACCORDING & HONOURED THE DECLARATION. THE ASSESSING OFFICER THEREFORE NOTED THAT THIS INCOME DEC LARED BY THE ASSESSEE WAS RESULTANT OF SEARCH ACTION. HAD THE S EARCH NOT TAKEN PLACE THE ASSESSEE WOULD NOT HAVE SHOWN THIS INCO ME. HE THEREFORE HELD THAT THE ASSESSEE HAS CONCEALED THE PAR TICULARS OF INCOME TO THE EXTENT OF RS.19,57,468/-. HE THEREFORE INITIA TED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT READ WITH EXPLANATION 5A. 4. IN RESPONSE TO THE PENALTY NOTICE THE ASSESSEE SUB MITTED AS UNDER : 5.1 THE ASSESSEE GROUP HAS DECLARED INCOME DURING T HE COURSE OF SEARCH TO COVER ALL DEFICIENCIES & MISTAKES & HONOURED THE DECLARATION & PAID TAXES. 4 5.2 THE ASSESSEE HAS CO-OPERATED IN ALL PROCEEDINGS & SHALL CO- OPERATE. 5.3 THE ASSESSEE HAS NEVER FILED INACCURATE PARTICULA RS & NOT HIDDEN ANY MATERIAL FACTS. 5.4 THE ASSESSEE HAS NOT CONCEALED ANY INCOME WITH T HE INTENTION TO EVADE TAX & IN GUILT MIND. THE PENALTY U/S 271(1)(C) CAN BE LEVIED ONLY WHEN THERE MUST BE CONCEALMENT OR THERE MUST BE INACC URATE PARTICULARS OF INCOME. TO AVOID LITIGATION, THE ASSESSEE AGREED FOR ADDITION. 5.5 THE ASSESSEE ALSO RELIES UPON THE LATEST JUDGMENT GIVEN BY THE SUPREME COURT IN CIT VS RELIANCE PETRO-PRODUCTS PVT. LTD. 5. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT ST ATEMENT OF SHRI GHANSHYAM GOYAL, MAIN CONCERNED PERSON OF KALIKA GRO UP WAS RECORDED U/S.132(4) OF THE I.T. ACT. AT THE TIME OF SE ARCH AT KALIKA STEEL ALLOYS PVT. LTD. ON 08-07-2009 IN THE STATEMEN T SHRI GHANSHYAM GOYAL MADE DECLARATION OF INCOME OF RS.14 CRORE S. LATER ON IN THE STATEMENT RECORDED U/S.131 OF THE ACT BY THE ADIT (INVESTIGATION) AURANGABAD ON 17-08-2009 SHRI GHANSHYAM GOYAL REITERATED THE DECLARATION OF INCOME AND GAVE DETAILED BIFUR CATION OF THE INCOME DECLARED AT RS.14 CRORES. IN REPLY TO QUES TION NO.4 OF THE SAID STATEMENT SHRI GHANSHYAM GOYAL DECLARED AN AMO UNT OF RS.19,57,468/- AS UNDISCLOSED INCOME IN THE HANDS OF SHRI AR UN S. AGRAWAL, I.E. THE ASSESSEE FOR A.Y. 2007-08. HE OBSERVED THAT THE DECLARATION OF INCOME MADE BY SHRI GHANSHYAM GOYAL WA S ON ACCOUNT OF PROFIT EARNED ON UNACCOUNTED SALE DETERMINED BY DGCE IN THE CASES OF KALIKA STEEL ALLOYS PVT. LTD. FOR VARIOUS ASSE SSMENT YEARS. THE INCOME ESTIMATED ON UNACCOUNTED SALES WAS D ECLARED IN THE HANDS OF THE DIRECTORS. THE ASSESSEE WAS ONE OF SUCH DIRECTORS AND AN AMOUNT OF RS.19,57,468/- WAS DECLARED FOR THE A.Y. 2007-08. HE THEREFORE HELD THAT THE PROVISIONS OF EXP LANATION 5A TO SECTION 271(1)(C) OF THE I.T. ACT ARE ATTRACTED. FU RTHER, IRRESPECTIVE OF DECLARING INCOME IN THE RETURNED INCOME AFT ER THE 5 DATE OF SEARCH SUCH INCOME HAS TO BE CONSIDERED AS CON CEALED INCOME. HE FURTHER OBSERVED THAT ALTHOUGH THE ASSESSEE AND THE GROUP AS SUCH HAVE COOPERATED DURING ASSESSMENT PROC EEDINGS IT DOES NOT GIVE IMMUNITY FROM IMPOSITION OF PENALTY FOR CONCEALIN G OF INCOME. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND DISTINGUISHING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD., (SUPRA) CITED BEFO RE HIM THE ASSESSING OFFICER LEVIED PENALTY OF RS.6,58,884/- U/S.271(1)(C ) OF THE I.T. ACT BEING 100% OF TAX SOUGHT TO BE EVADED. 6. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE INCOME OF RS.19,57,468/- HAS BEEN OFFERED TO TAX IN THE HANDS OF THE ASSESSEE ONLY TO AVOID PROTRACTED LITIGATION AND TO BUY PEACE OF MIND. THE SAID INCOME REPRESENTS PROFIT ON ALLEGED SUPPRESS ED SALE OF KALIKA STEEL ALLOYS PVT. LTD., IN WHICH THE ASSESSEE IS A DI RECTOR. THEREFORE, AS HELD BY THE CIT(A), AURANGABAD WHILE DECIDING T HE APPEALS IN THE CASES OF KALIKA STEEL ALLOYS PVT.LTD. FOR A.YS.2004-05 TO 2010-11 AND KALIKA STEEL JALNA PVT. LTD. FOR A.YS.2006- 07 TO 2010-11 VIDE ORDERS DATED 14/05/2012, THE INCOME FROM MANUFACTURING ACTIVITY OF THE COMPANIES IS TO BE ASSESSED IN THE HANDS OF THE SAID COMPANIES AND NOT IN THE HANDS OF THE DIRECTORS. IT WAS FURTHER ARGUED THAT THE CIT(A), AURANGABAD HAS NOT ALLOWED TELESCOPING OF PROFIT OF THE SAID COMPANIES ON ACCOUNT OF ALLE GED SUPPRESSED SALE AGAINST THE SAME PROFIT OFFERED TO TAX IN THE HANDS OF THE DIRECTORS AS THE STATUS OF THE COMPANIES AND DIRE CTORS ARE DIFFERENT. IT WAS SUBMITTED THAT IN VIEW OF THE ABOVE FACT S, IT IS EVIDENT THAT THE SAID INCOME OF RS.19,57,468/- AS HELD BY CIT(A) IS INCOME OF KALIKA STEEL ALLOYS PVT.LTD. IT WAS ARGUED THAT IT IS THE SETTLED LAW THAT THE INCOME INCORRECTLY OFFERED IN THE HAN DS OF ANY ASSESSEE IS NOT LIABLE TO PENALTY U/S.271(1)(C) OF THE ACT, AS THE 6 INCOME ITSELF IS INCORRECTLY OFFERED AND TAXED, THE CONCEALM ENT PENALTY HAS NO LEGS TO STAND. 7. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT BY OBSERVING AS UNDER : 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. IT IS UNDISPUTED FACT THAT DURING THE C OURSE OF SEARCH & POST SEARCH PROCEEDINGS, THE COMPANIES OF KALIKA GROUP HAVE OFFERED TO TAX PROFIT ON THEIR ALLEGED SUPPRESSED SALE TO BUY P EACE OF MIND, WHICH HAS BEEN OFFERED TO TAX IN THE HANDS OF THE DI RECTORS. THE RELEVANT PORTION OF STATEMENT RECORDED ON 17/08/2009 GIVING DETAILS OF THE SAID INCOME OFFERED IS EXTRACTED BELOW - 'Q.NO.4 IT IS TO BE NOTED THAT, AS THE ASSESSEE HAD CLAI MED ALL EXPENSES, DIRECT AND INDIRECT, DURING THE RESPECTIVE YEARS, HEN CE THE TOTAL VALUE OF THE GOODS SO REMOVED SHALL BE UNACCOUNTED INCOME OF THE ASSESSEE. PLEASE COMMENT. ANS:- I DENY CONTENTION OF DGCI THAT THE MEMBERS OF K ALIKA GROUP AS MENTIONED IN Q.NO.2 HAD CLANDESTINELY REMOVED THE PR ODUCTS. EVEN IF IT IS ASSUMED THAT SUCH PRODUCTS ARE REMOVED THEN A FACT MAY BE CONSIDERED THAT ALL INDIRECT EXPENSES WERE ALREADY DE BITED. HOWEVER, SINCE THE PURCHASE OF THE RAW MATERIAL WAS NOT ACCOUNT ED FOR, HENCE THE CREDIT SHOULD BE GIVEN TO THE ASSESSEE FOR THE SAME. IT IS TO BE CONSIDERED THAT THE AMOUNT OF RAW MATERIAL IS INCURR ED @ 60-70% IN THE CASE OF MANUFACTURING OF INGOTS/BILLETS AND THAT O F 85-90% FOR THE MANUFACTURING OF BARS. HENCE IT WOULD BE REASONABLE T O COMPUTE THE GP @ 35% AND 15% RESPECTIVELY OF THE UNACCOUNTED SALE SO EFFECTED. FROM THE RECORD OF THE COMPANY, IT CAN BE SEEN THAT THE COST OF THE MATERIAL IN THE CASE OF THE KSAPL & KSJPL IS AS FOLLOW S KSAPL KSJPL FY 06-07 61.50% FY 06-07 87.80% FY 07-08 68% FY 07-08 87.70% THUS, EVEN IF THE GP RATES ARE ACCEPTED 35% AND 15% R ESPECTIVELY, THE UNACCOUNTED INCOME WOULD BE AS FOLLOWS SR. NO. NAME OF COMPANY F.Y. AMOUNT OF GOODS REMOVED GP% AS UNDISCLOSED INCOME 1 KALIKA STEEL ALLOYS PVT.LTD. 06-07 11185330.00 @35-3914936 11107800.00 @35-3887730 2 KALIKA STEEL JALNA PVT. LTD. 06-07 16167552.00 @15-2425133 39954004.00 @I5-5993101 56810071.00 @15-8521511 7 3 GIRIRAJ RE-ROLLS PVT. LTD. 05-06 2225850.00 @35-779048 3794717.00 @35-1328151 4 BHOOMI RE-ROLLS PVT. LTD. 07-08 3514942 @35-1230230 TOTAL 144760566.00 28079840 I WANT TO STATE THAT I AM DISCLOSING THE SAID AMOUNTS TO BUY PEACE OF MIND, HOWEVER IN PRINCIPLE, I AM NOT ACCEPTING SUCH RESULT UNACCOUNTED SALE. THE DETAILS OF THE SAME ARE AS FOLLO WS SR.NO NAME OF COMPANY DIRECTORS FY 05-06 FY 06-07 FY 07-08 1 KALIKA STEEL ALLOYS PVT.LTD. GHANSHYAM G GOYAL -- 1957468 1943865 ARUN AGRAWAL -- 1957468 1943865 2 KALIKA STEEL ANIL GOYAL 2996551 1212567 4260756 JALNA PVT.LTD. NARESH JINDAL 2996551 1212567 4260756 3 GIRIRAJ RE - ROLLS PVT.LTD. GHANSHYAM G GOYAL 779048 -- 1328152 4 BHOOMI RE - ROLLS PVT.LTD. ANIL GOYAL -- -- 615115 SUNIL GOYAL -- -- 615115 TOTAL 6772150 6340070 1,49,67,624 FROM THE ABOVE CHARTS, IT IS EVIDENT THAT THE PROFIT OFFERED TO TAX BY THE DIRECTORS OF THE ABOVE MENTIONED COMPANIES, INCLUDING THE APPELLANT, IN THEIR HANDS IN FACT BELONGED TO THE SAID COMPANIES WHICH HAVE BEEN EARNED BY THE SAID COMPANIES FROM THEIR MANUFACTURING ACTIVITY. THEREFORE, THE INCOME FROM ALLEGED SUPPRESSED SALE IS TO BE TAXED IN THE HANDS OF THE COMPANIES AND NOT THE DIRECTORS. WHIL E DECIDING THE QUANTUM APPEALS IN THE CASES OF KALIKA STEEL ALLOYS PVT . LTD. FOR A.YS.2004-05 TO 2010-11 AND KALIKA STEEL JALNA PVT.L TD. FOR A.YS.2006- 07 TO 2010-11 VIDE ORDERS DATED 14/05/2012, IT HAS BE EN HELD BY THE UNDERSIGNED THAT THE PROFIT ON SUPPRESSED SALE OF THE C OMPANIES IS TO BE TAXED IN THE HANDS OF THE MANUFACTURING COMPANIE S AND NOT IN THE HANDS OF THE DIRECTORS. FURTHER AS THE STATUS OF COMPANI ES & VARIOUS DIRECTORS ARE DIFFERENT TELESCOPING OF INCOME WAS ALSO NOT ALLOWED. IT IS SETTLED POSITION THAT IN ORDER TO LEVY PENALTY U/S 2 71(1)(C), THERE HAS TO BE 'INCOME' OF THE ASSESSEE IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IF THE AMOUNT ON WHICH THE PEN ALTY U/S 271(1)(C) HAS BEEN LEVIED IS NOT IN FACT THE 'INCOME' OF THE ASSESSEE, THE PENALTY U/S 271(1)(C) CANNOT BE LEVIED BY INVOKI NG EITHER EXPLANATION-1 OR EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CON SIDERED VIEW THAT AS THE INCOME OF RS.19,57,468/- IS NOT ASSESSABLE IN THE HANDS OF 8 THE APPELLANT BUT IS ASSESSABLE IN THE HANDS OF THE MANUF ACTURING COMPANIES, PENALTY U/S 271(1)(C) IS NOT LEVIABLE IN TH E CASE OF THE APPELLANT. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN LEVY ING PENALTY U/S 271(1)(C) ON THE AMOUNT OF RS.19,57,468/-. THE PENAL TY U/S 271(1)(C) OF RS.6,58,884/- ON THE AMOUNT OF RS.19,57,468/- IS, T HEREFORE, CANCELLED. THE A.O. IS DIRECTED ACCORDINGLY. THE APPELLANT HAS ALSO RAISED ANOTHER CONTENTION WITH OUT PREJUDICE TO ABOVE CONTENTION THAT THE A.O. HAS INVOKED EXPLANATI ON-5A FOR LEVYING PENALTY U/S 271(1)(C) OF THE I.T. ACT WHICH IS APPLIC ABLE ONLY WHEN THE OWNERSHIP OF ANY ASSET SUCH AS MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, IS FOUND AND IT IS FOUND T HAT THE SAID ASSET WAS ACQUIRED OUT OF INCOME WHICH WAS NOT DISCLOSED; IN THE CASE OF THE APPELLANT NO SUCH FACTS EXISTED AND THE INCOME HAS BEEN OFFERED DURING SEARCH ACTION TO BUY PEACE OF MIND AND TO AVO ID PROTRACTED LITIGATION. THIS CONTENTION OF THE APPELLANT IS NOT R EQUIRED TO BE ADJUDICATED AS THE FIRST CONTENTION OF THE APPELLANT IS ACCEPTED AND PENALTY HAS BEEN CANCELLED. GROUND NOS. 2 & 3 ARE ALLOWED. 8. 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 AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 6 ,58,884/- IMPOSED U/S 271(1)(C) OF THE ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE AMOUNT ON WHICH PENALTY IS LEVIED, WAS NOT INCOME OF THE ASSESSEE, IGNORING THE FAC T THAT SUCH INCOME WAS OFFERED BY THE ASSESSEE HIMSELF IN THE RETURN OF INCOME, WHICH RENDERS THE DECISION PERVERSE ON FACTS AND IN LAW . 3) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY , DELETE, AND AMEND ANY OF THE GROUNDS, AS PER THE CIRCUMSTANCES OF T HE CASE. 4) THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE, AS THE OCCASION MAY DEMAND. 9. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOSE D THE ORDER OF THE CIT(A) CANCELLING THE PENALTY. REFERRING TO TH E STATEMENT OF SHRI GHANSHYAM GOYAL RECORDED U/S.132(4) ON 18-07- 2009 THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN RESPONSE TO QUESTION NO.50 SHRI GHANSHYAM GOYAL HAD DE CLARED AN AMOUNT OF RS.14 CRORES IN THE HANDS OF 4 DIRECTORS @ RS.3.5 CRORES EACH. HE SUBMITTED THAT IN HIS REPLY HE HAS ALSO MENTIONED THAT THE SAID DISCLOSURE IS TO COVER UP ALL THE 9 DISCREPANCIES/DIFFERENCES IN THE BOOKS OF ACCOUNT, DIFFERENCE IN STOCK AND DIFFERENCE OF OPINION IN REGARD TO THE ISSUES RAIS ED AND ALSO IN RELATION TO PERSONAL BALANCE SHEET DISCREPANCIES OF PARTNERS, DIRECTORS OR ANY OTHER ASSESSEE OF THIS GROUP. HE SUBM ITTED THAT THE INCOME DECLARED BY THESE ASSESSEES IS ON ACCOUNT O F INCOME EARNED BY THEM AND NOT ON ACCOUNT OF DISCREPANCIES FOUN D IN THE CASE OF THE COMPANIES. THUS, THE ASSESSEE HAS NOT EXP LAINED THE SOURCE OF INCOME AND MERELY TO BUY PEACE OF MIND HAS DE CLARED THE INCOME WITHOUT SUBSTANTIATING THE SOURCE OF THE SAME. TH EREFORE, THE PENALTY U/S.271(1)(C) OF THE I.T. ACT IS CLEARLY ATTRACTE D. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE RE VERSED AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 10. THE LD. COUNSEL FOR THE ASSESSEE WHILE SUPPORTING TH E ORDER OF THE CIT(A) DREW THE ATTENTION OF THE BENCH TO QUESTION NOS. 46, 47 AND 48 OF THE SAID STATEMENT AND SUBMITTED THAT THE SE STATEMENTS ARE IN RESPECT OF ALLEGED CLANDESTINE REMOVAL OF GOODS IN THE CASE OF KALIKA STEEL ALLOYS PVT. LTD. AND KALIKA STE EL JALNA PVT. LTD. REFERRING TO THE STATEMENT OF SHRI GHANSHYAM G OYAL RECORDED U/S.131 OF THE I.T. ACT BY THE SEARCH PARTY ON 17-08- 2009, A COPY OF WHICH IS PLACED AT PAGES 18 TO 30 OF THE PAPER BOOK, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTIO N OF THE BENCH TO THE REPLY OF THE ASSESSEE TO QUESTION NO.4 WH EREIN THE GROSS PROFIT OF VARIOUS COMPANIES ARE WORKED OUT ON ALLEG ED CLANDESTINE REMOVAL OF GOODS FOR THE F.YRS. 2005-06, 2006-0 7 AND 2007-08 AT RS.2,80,79,840/-. REFERRING TO THE SAID STATEME NT HE DREW THE ATTENTION OF THE BENCH TO THE INCOME DECLARED IN THE RESPECTIVE FINANCIAL YEARS BY RESPECTIVE INDIVIDUALS. REFERRING TO QUESTION NO.16 OF THE SAID STATEMENT (PAGE 27 AND 28 OF T HE PAPER BOOK) HE SUBMITTED THAT THE FINAL TALLY OF DECLARATION OF 10 RS.14,01,61,595/- IS INCOME AND IN THAT THE FIRST ITEM IS UNACCOUNTED SALE AS PER DETAILS MENTIONED IN QUESTION IN 2 & 3 AMOUNTING TO RS.2,80,79,840/- WHICH IS THE AMOUNTS RELATING TO CLANDESTINE REMOVAL OF GOODS BY THESE COMPANIES. HE SUBM ITTED THAT IT IS CLEAR FROM THE ABOVE THAT THE INCOME DECLARED BY THESE INDIVIDUALS IN A.YRS. 2006-07 TO 2008-09 ON WHICH PENALTY U/S.271(1)(C) HAS BEEN LEVIED IS THE INCOME ON ACCOUNT OF ALLEG ED CLANDESTINE REMOVAL OF GOODS BY THESE COMPANIES WHICH HAS BEEN OFFERED IN THE HANDS OF THE INDIVIDUALS. HE SUBMITTED THAT IT IS ALSO CLEAR FROM THE ABOVE THAT THE INCOME OFFERED BY THESE IND IVIDUALS IN A.Y. 2010-11 IS ON ACCOUNT OF THEIR PERSONAL INCOME EARNED BY THEM WHICH IS CLEARLY MENTIONED IN QUESTION NO.50 OF THE STATEMENT RECORDED U/S.132(4) ON WHICH HEAVY RELIANCE HAS BEEN PLACED BY THE REVENUE. HE SUBMITTED THAT SINCE THE SEA RCH TOOK PLACE ON 08-07-2009 RELATING TO A.Y. 2010-11 THE RETURN OF INCOME WAS NOT DUE TO BE FILED ON THE DATE OF SEARCH AND THER EFORE THE SAME HAS BEEN DECLARED BY THESE INDIVIDUALS IN THE RETURN OF INCOME AND PAID TAXES AND ACCORDINGLY THE PENALTY U/S.27 1AAA HAS ALSO BEEN CORRECTLY DELETED BY THE CIT(A). HE SUBMIT TED THAT SINCE THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME DOES NOT BELONG TO HIM AND NO PARTICULARS OF INCOME HAS B EEN CONCEALED BY THE ASSESSEE, THEREFORE, PENALTY CANNOT BE LEVIED U/S.271(1)(C) OF THE I.T. ACT ON THIS ISSUE AND THEREFORE THE CIT(A) WAS FULLY JUSTIFIED IN CANCELLING THE PENALTY. 11. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED T HAT THE ASSESSING OFFICER HAS LEVIED PENALTY BY APPLYING THE PROVISI ONS OF SECTION 5A TO SECTION 271(1)(C) OF THE I.T. ACT. HE SUBMITTE D THAT EXPLANATION 5A IS APPLICABLE WHERE SEARCH TAKES PLACE ON O R AFTER 01-06-2007, I.E. FROM A.Y. 2007-08 WHICH CAN BE LEVIABLE ONLY AFTER 11 THE ASSESSEE IS FOUND TO BE THE OWNER ON ANY ASSET SU CH AS MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ETC. OR OWNER OF ANY INCO ME BASED ON ANY ENTRY IN BOOKS OF ACCOUNT AND HE CLAIMS TH AT SUCH ENTRY IN THE BOOKS OF ACCOUNT REPRESENTS HIS INCOME. IN SHORT IN THE SECOND LIMB OF EXPLANATION 5A IT IS PROVIDED THAT NO PE NALTY CAN BE LEVIED IF THE ASSESSEE DOES NOT CLAIM THAT SUCH AN ENTRY REPRESENTS HIS INCOME. REFERRING TO QUESTION NO.50 PUT BY THE SEARCH PARTY AND THE REPLY THEREOF HE SUBMITTED THAT NO SUCH FACTS EXISTED AND THE ASSESSEE IN HIS STATEMENT RECORDED U/S .132(4) HAS CATEGORICALLY STATED THAT HE IS OFFERING THE INCOME TO BUY PEACE OF MIND AND TO AVOID PROTRACTED LITIGATION. RELYING ON VARIOUS DECISIONS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF THE ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S.1 53A, DECLARED UNDISCLOSED INCOME AND THE RETURN WAS ACCEPTED BY THE ASSESSING OFFICER (EXCEPT SMALL AMOUNT OF BANK INTEREST OF RS.1,769/- WHICH WAS NOT OFFERED BY MISTAKE WHICH IS BONAF IDE ONE SINCE IT IS EXEMPT U/S.80L WHICH WAS PREVIOUSLY THERE IN T HE STATUTE) PENALTY U/S.271(1)(C) OF THE I.T. ACT CANNOT BE LEV IED. FOR THE ABOVE PROPOSITION HE RELIED ON THE FOLLOWING DECISIONS : 1. SMT. PRAMILA D. ASHTEKAR VS. ITO (2014) 61 SOT 1 13 2. DILIP KEDIA VS.ADIT (2013) 40 TAXMANN.COM 102 3. DCIT VS. PURTI SEKHAR KARKHANA (2013 59 SOT 29 4. DEVIDAS SUKHANI VS. DCIT (2013) 158 TTJ 42 5. CIT VS. MAHENDRA SHAH (2008) 299 ITR 305 6. CIT VS. KIRIT DAHYABHAI PATEL (2009) 121 ITD 159 7. CIT VS. SHRI INDERCHAND SURAJMAL BOTHRA ITA NO.137/PN/2010 ORDER DATED 30-11-2011. 11.1 HE SUBMITTED THAT WHEN THE INCOME HAS BEEN DECLARE D U/S.132(4) WITH THE CONDITION THAT NO PENALTY SHOULD BE LEV IED THEN THE STATEMENT SHOULD BE ACCEPTED IN TOTALITY AND NOT IN PART. HE SUBMITTED THAT DURING THE COURSE OF SEARCH THE STATEME NT OF SHRI GHANSHYAM GOYAL WAS RECORDED U/S.132(4) IN THE PRESENCE OF SHRI 12 NARESH B. JINDAL, SHRI ARUN S. AGRAWAL AND SHRI ANIL N. GOYA L, ACCORDINGLY, THE DECLARATION U/S.132(4) WAS CONDITIONAL TO TH E FACT THAT NO CONCEALMENT OF THE PENALTY SHOULD BE LEVIED. 12. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS.GOYAL PROPERTIES AND ESTA TES PVT. LTD. VIDE ITA NO.7132/MUM/2010 ORDER DATED 07-05-2012 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT WHEN THE ASSESSEE HAS GIVEN THE DECLARATION DURING THE COURSE OF THE SURVEY TO FILE THE REVISED RETURN OF INCOME TO WITHDRA W THE CLAIM OF DEDUCTION U/S.80IB(10) WITH THE CLEAR UNDERSTANDING AND ASSURANCE THAT NO PENALTY IS TO BE LEVIED THE DEPARTMEN T CANNOT ACCEPT ONE PART OF THE DECLARATION, I.E., FILING OF THE REVISED RETURN O F INCOME WITHDRAWING THE CLAIM AND IGNORE THE OTHER PART OF INCOME, I.E. ASSURING NOT TO LEVY PENALTY. 13. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KIRAN AND COMPANY REPORTED IN 217 ITR 326 HE SUBMITTED THAT THE HONBLE HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL DELETING THE PENALTY WHERE THE ASSESSEE HAD MADE CONDITIONAL OFFER OF SETTLEMENT STATING THAT NO PENALTY SHOU LD BE LEVIED ON THE ASSESSEE. SINCE THE ORDER WAS MADE WITH T HE CLEAR UNDERSTANDING THAT NO PENALTY SHOULD BE LEVIED PENALTY LEV IED U/S.271(1)(C) OF THE I.T.ACT WAS HELD AS NOT JUSTIFIED. HE ALSO RELIED ON THE FOLLOWING DECISIONS ON THE ABOVE PRINCIPLE : 1. BHAGAT & COMPANY VS. ACIT (2006) 101 TTJ (MUM) 55 3 2. DCIT VS. DR. SATISH B. GUPTA (2011) 135 TTJ (AHD) 611 3. AMIT CHAND VS. ITO (1994) 49 ITD 606 HE ACCORDINGLY SUBMITTED THAT THE LD.CIT(A) HAS RIGHTLY D ELETED THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT AND THEREFORE T HE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 13 14. THE LD. DEPARTMENTAL REPRESENTATIVE IN HIS REJOINDER SUBMITTED THAT AFTER DISCLOSING THE ADDITIONAL INCOME THE AS SESSEE HAS NOT FILED THE BALANCE SHEET AS TO THE MANNER OF ITS UTILISATION. SO FAR AS THE CONDITIONAL OFFER IS CONCERNED THE LD. DEPAR TMENTAL REPRESENTATIVE REFERRED TO THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF MAK DATA P. LTD. REPORTED IN 358 ITR 593 AND SUBMITTED THAT THE HONBLE SUPREME COURT HAS ALREADY D ECIDED THE ISSUE UNDER SUCH SITUATION WHICH IS AGAINST THE ASSESSEE. THEREFORE, THE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE H AVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE A SEARCH TOOK PLACE IN THE RESIDENTIAL PREMIS ES OF DIFFERENT PERSONS/ASSOCIATE CONCERNS OF THE KALIKA GROUP O F JALNA. THE STATEMENT OF SHRI GHANSHYAM C. GOYAL, WHO IS THE MAIN PERSON OF THE GROUP, WAS RECORDED U/S.132(4) OF THE I.T. A CT IN WHICH HE HAS DECLARED UNDISCLOSED INCOME OF RS.14 CRORES IN THE NAME OF 4 PERSONS @ RS.3.5 CRORES EACH, THE DETAILS OF WH ICH ARE AS UNDER : 1. SHRI GHANSHYAM CHUNILAL GOYAL RS.3.50 CRORES 2. SHRI ARUN SHRIKISHAN AGRAWAL RS.3.50 CRORES 3. SHRI ANIL NANDKISHOR GOYAL RS.3.50 CRORES 4. SHRI NARESH BANARASIDAS JINDAL RS.3.50 CRORES ------------------- TOTAL RS. 14 CRORES ------------------ 15.1 WE FIND IN RESPONSE TO QUESTION NO.4 RECORDED U/S.131 ON 17-08-2009 SHRI GHANSHYAM C. AGRAWAL HAD REPLIED AS UNDER : 14 'Q.NO.4 IT IS TO BE NOTED THAT, AS THE ASSESSEE HAD CLAI MED ALL EXPENSES, DIRECT AND INDIRECT, DURING THE RESPECTIVE YEARS, HEN CE THE TOTAL VALUE OF THE GOODS SO REMOVED SHALL BE UNACCOUNTED INCOME OF THE ASSESSEE. PLEASE COMMENT. ANS:- I DENY CONTENTION OF DGCI THAT THE MEMBERS OF K ALIKA GROUP AS MENTIONED IN Q.NO.2 HAD CLANDESTINELY REMOVED THE PR ODUCTS. EVEN IF IT IS ASSUMED THAT SUCH PRODUCTS ARE REMOVED THEN A FACT MAY BE CONSIDERED THAT ALL INDIRECT EXPENSES WERE ALREADY DE BITED. HOWEVER, SINCE THE PURCHASE OF THE RAW MATERIAL WAS NOT ACCOUNT ED FOR, HENCE THE CREDIT SHOULD BE GIVEN TO THE ASSESSEE FOR THE SAME. IT IS TO BE CONSIDERED THAT THE AMOUNT OF RAW MATERIAL IS INCURR ED @ 60-70% IN THE CASE OF MANUFACTURING OF INGOTS/BILLETS AND THAT O F 85-90% FOR THE MANUFACTURING OF BARS. HENCE IT WOULD BE REASONABLE T O COMPUTE THE GP @ 35% AND 15% RESPECTIVELY OF THE UNACCOUNTED SALE SO EFFECTED. FROM THE RECORD OF THE COMPANY, IT CAN BE SEEN THAT THE COST OF THE MATERIAL IN THE CASE OF THE KSAPL & KSJPL IS AS FOLLOW S KSAPL KSJPL FY 06-07 61.50% FY 06-07 87.80% FY 07-08 68% FY 07-08 87.70% THUS, EVEN IF THE GP RATES ARE ACCEPTED 35% AND 15% R ESPECTIVELY, THE UNACCOUNTED INCOME WOULD BE AS FOLLOWS SR. NO. NAME OF COMPANY F.Y. AMOUNT OF GOODS REMOVED GP% AS UNDISCLOSED INCOME 1 KALIKA STEEL ALLOYS PVT.LTD. 06-07 11185330.00 @35-3914936 11107800.00 @35-3887730 2 KALIKA STEEL JALNA PVT. LTD. 06-07 16167552.00 @15-2425133 39954004.00 @I5-5993101 56810071.00 @15-8521511 3 GIRIRAJ RE-ROLLS PVT. LTD. 05-06 2225850.00 @35-779048 3794717.00 @35-1328151 4 BHOOMI RE-ROLLS PVT. LTD. 07-08 3514942 @35-1230230 TOTAL 144760566.00 28079840 I WANT TO STATE THAT I AM DISCLOSING THE SAID AMOUNTS TO BUY PEACE OF MIND, HOWEVER IN PRINCIPLE, I AM NOT ACCEPTING SUCH RESULT UNACCOUNTED SALE. THE DETAILS OF THE SAME ARE AS FOLLO WS 15 SR.NO NAME OF COMPANY DIRECTORS FY 05-06 FY 06-07 FY 07-08 1 KALIKA STEEL ALLOYS PVT.LTD. GHANSHYAM G GOYAL -- 1957468 1943865 ARUN AGRAWAL -- 1957468 1943865 2 KALIKA STEEL ANIL GOYAL 2996551 1212567 4260756 JALNA PVT.LTD. NARESH JINDAL 2996551 1212567 4260756 3 GIRIRAJ RE - ROLLS PVT.LTD. GHANSHYAM G GOYAL 779048 -- 1328152 4 BHOOMI RE - ROLLS PVT.LTD. ANIL GOYAL -- -- 615115 SUNIL GOYAL -- -- 615115 TOTAL 6772150 6340070 1,49,67,624 15.2 SIMILARLY WE FIND IN REPLY TO QUESTION NO.16 OF THE SAI D STATEMENT HE HAS GIVEN THE BIFURCATION OF THE AMOUNT OF RS.14,01,61,595/- THE DETAILS OF WHICH ARE AS UNDER : Q.NO.16 WOULD YOU LIKE TO SAY ANYTHING FURTHER? ANS: YES, WANT TO STATE THAT AS A RESULT OF THE SEARCH ACTION I AM OFFERING THE AMOUNT OF RS.14,01,61,595/-. THE DETAILS OF THE SAME ARE AS FOLLOWS : SR.NO. PARTICULARS AMOUNT 1. ON ACCOUNT OF UNACCOUNTED SALE AS PER DETAILS MENTIONED IN (QUESTION NO.2 & 3) 2,80,79,844 2. INVESTMENT IN STOCK (QUESTION NO.14) 2,55,52,503 3. UNACCOUNTED SALE/PETTY LOANS IN CASE OF SHRI ANIL R. GOYAL (QUESTION NO.6) 10,00,000 4. INVESTMENT IN CONSTRUCTION (QUESTION NO.5) 86,48,831 5. INVESTMENT IN STOCK OF SAGAR PARIDHAN PVT. LTD., (QUESTION NO.7) 24,35,417 6. INVESTMENT IN FURNITURE IN SAGAR PARIDHAN PVT. LTD., (QUESETION NO.7) 5,00,000 7. UNACCOUNTED INCOME FROM BADLA TRANSACTION (QUESTION NO.10) 85,10,000 16 8. UNACCOUNTED TRANSACTIONS AS EXPLAINED (QUESTION NO.13) 6,54,35,000 TOTAL 14,01,61,595 THE ASSESSEE DECLARED AN AMOUNT OF RS.19,57,468/- AS UNDISCLOSED INCOME FOR THE IMPUGNED ASSESSMENT YEAR WHICH IS A PART OF UNACCOUNTED SALE OF THE COMPANIES AT RS.2,80,79,844/- AND WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE RETURN OF INCOME. HOWEVER, HE INITIATED PENALTY PROCEEDINGS U/S.271(1)(C ) OF THE I.T. ACT READ WITH EXPLANATION 5A AND LEVIED PENALTY O F RS.6,58,884/-. WE FIND THE LD.CIT(A) DELETED THE PENALTY HOLDIN G THAT THE PROFIT OFFERED TO TAX BY THE DIRECTORS OF THE DIFFE RENT COMPANIES INCLUDING THE ASSESSEE IN THEIR HANDS IN FACT BE LONGS TO THE SAID COMPANIES WHICH HAVE BEEN EARNED BY THE SAID C OMPANIES FROM THEIR MANUFACTURING ACTIVITY. THEREFORE, SUCH INCOME HA S TO BE TAXED IN THE HANDS OF THE RESPECTIVE COMPANIES AND N OT IN THE HANDS OF THE DIRECTORS. ACCORDING TO THE LD.CIT(A) IT IS TH E SETTLED PROPOSITION OF LAW THAT IN ORDER TO LEVY PENALTY U/S.271(1)(C) THERE HAS TO BE INCOME OF THE ASSESSEE IN RESPECT OF WHICH PA RTICULARS HAVE BEEN CONCEALED. SINCE IN THE INSTANT CASE IT IS NOT THE INCOME OF THE ASSESSEE AND THE INCOME BELONGS TO THAT OF THE R ESPECTIVE COMPANIES, THEREFORE, PENALTY U/S.271(1)(C) OF THE I.T. ACT C ANNOT BE LEVIED BY INVOKING EITHER EXPLANATION 1 OR EXPLANATION 5A TO PROVISIONS OF SECTION U/S.271(1)(C) OF THE I.T. ACT. HE ACCORD INGLY DELETED THE ADDITION. WE DO NOT FIND ANY INFIRMITY IN THE ABO VE FINDING GIVEN BY THE LD.CIT(A). EVEN IN THE HANDS OF THE COM PANY, THE ASSESSEE IN PRINCIPLE HAS NOT ACCEPTED THE RESULT O F SUCH UNACCOUNTED SALE WHICH HAS BEEN CATEGORICALLY STATED BY SHRI GHANSHYAM C. GOYAL IN HIS REPLY TO QUESTION NO.4. AS PER THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) PENALTY CAN BE LEVIED IF SEARCH TOOK PLACE ON OR AFTER 01-06-2007 AND T HE ASSESSEE 17 IS FOUND TO BE THE OWNER OF ANY ASSET SUCH AS MONEY, BU LLION, JEWELLERY OR OTHER VALUABLES ETC OR OWNER OF ANY INCOME B ASED OF ANY ENTRY IN BOOKS OF ACCOUNT AND HE CLAIMS THAT SUCH E NTRY IN THE BOOKS OF ACCOUNTS REPRESENTS HIS INCOME. THEREFORE, IN T HE INSTANT CASE ALTHOUGH THE SEARCH HAS TAKEN PLACE AFTER 01-06-2 007, HOWEVER, THE FACT REMAINS THAT IN VIEW OF SECOND LIMB OF TH E EXPLANATION 5A NO PENALTY CAN BE LEVIED IF THE ASSESSEE DO ES NOT CLAIM THAT SUCH AN ENTRY REPRESENTS HIS INCOME. IN THE INSTANT CASE THE INCOME DECLARED AND ACCEPTED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A AS UNDISCLOSED INCOME ACTUALLY BELONGS TO THE COMPANY AND HE IS NOT THE OWNE R OF SUCH INCOME. THE LD. COUNSEL FOR THE ASSESSEE ALSO MADE A STA TEMENT AT THE BAR THAT THE ASSESSEE HAS NOT TAKEN ANY BENE FIT OUT OF THE AMOUNT DISCLOSED. THE TAX PAID ON SUCH UNDISCLOSED INCOME HAS GONE WASTE AS NO BENEFIT OUT OF SUCH INCOME HAS BEEN A VAILED BY THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) READ WITH EXPLANATION 5A. THE ORDER OF THE CIT(A) IS THEREFORE UPHE LD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 16. SIMILAR PENALTY OF RS. 6,63,642/- HAS BEEN DELETED BY C IT(A) IN A.Y. 2008-09 FOR WHICH REVENUE HAS FILED APPEAL VIDE ITA NO.1432/PN/2013. FACTS BEING SIMILAR, THEREFORE, FOLLOWING SAME REASONINGS, THE APPEAL FILED BY THE REVENUE FOR A.Y. 2008-09 IS ALSO DISMISSED. ITA NOS. 1441 & 1442/PN/2013-SHRI GHANSHYAM C. GOYA L - (A.YRS. 2007-08 & 2008-09) : ITA NOS.1446, & 1447/PN/2013-SHRI ANIL NANDKISHOR G OYAL (A.YRS. 2007-08 & 2008-09) : 18 17. AFTER HEARING BOTH THE SIDES, WE FIND PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE I.T. ACT WHICH HA S BEEN DELETED BY THE CIT(A), THE DETAILS OF WHICH ARE AS UNDER : NAME ASST. YEAR INCOME DECLARED PENALTY LEVIED SHRI GHANSHYAM C. GOYAL 2007-08 27,56,978/- 6,79,388/- SHRI GHANSHYAM C. GOYAL 2008-09 32,72,017/- 11,13,338/- SHRI ANIL GOYAL 2007-08 12,12,567/- 4,01,967/- SHRI ANIL GOYAL 2008-09 48,25,871/- 16,67,256/- 18. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 19. AFTER HEARING BOTH THE SIDES, WE FIND THE FACTS OF THE ABOVE APPEALS ARE IDENTICAL TO THE FACTS IN ITA NO.1433/PN/2013. WE HAVE ALREADY DECIDED THE ISSUE AND THE ORDER OF THE CIT (A) DELETING THE PENALTY HAS BEEN UPHELD. FOLLOWING THE SAME REASONINI GS, THE ORDER OF THE CIT(A) IN THE ABOVE APPEALS ARE ALSO UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.1439/PN/2013 - SHRI GOPAL GHANSHYAM GOYAL (A. Y. 2010-11) : 20. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL. A SEARCH U/S.132 OF THE I.T. ACT WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESSEE ALONG WITH THE GROUP CONCERNS AND RELATED PARTIES. IN RESPONSE TO NOTICE U/S.142(1) TH E ASSESSEE FILED THE RETURN OF INCOME ON 05-12-2011 DECLARING TOTAL INC OME AT RS.1,86,13,321/- WHICH WAS AS PER DECLARATION U/S.132(4). T HIS DECLARATION WAS FOUND OUT TO BE ON ACCOUNT OF HUNDI, PETT Y LOANS, PURCHASE, SALES RECEIVABLE ETC. THE ASSESSING OFFICER ACCEP TED THE INCOME SO DECLARED AND THEREAFTER INITIATED PENALTY PROCEE DINGS U/S.271AAA. THE ASSESSEE IN RESPONSE TO THE SAME SUBM ITTED THAT DURING THE COURSE OF SEARCH THE GROUP HAS DECLARED ADD ITIONAL 19 INCOME OF RS.14 CRORES IN THE HANDS OF DIFFERENT MEMBERS. T HE ASSESSEE HAD ALREADY DECLARED SUCH INCOME U/S.132(4) AND PAID TAXES. IT HAS ALSO COOPERATED DURING THE COURSE OF SEA RCH AND DECLARED UNDISCLOSED INCOME WHICH WAS CALCULATED ON THE BA SIS OF SEIZED MATERIALS. IT WAS ALSO SUBMITTED THAT SUCH INCOME HAS BEEN DERIVED FROM THE PROFIT EARNED FROM OTHER SOURCES LIKE SALE/PURCHASE OF IMMOVABLE PROPERTIES. THE ASSESSEE HAS PAID TAXES TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDIS CLOSED INCOME. IT HAS SUBSTANTIATED THE UNDISCLOSED INCOME BY SPECIFYIN G THE MANNER IN WHICH SUCH UNDISCLOSED INCOME WAS DERIVED ON TH E BASIS OF STATEMENT OF ASSETS AND LIABILITIES PREPARED FOR EAC H ASSESSEE. THE PROVISIONS OF SECTION 271AAA WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER ACCORDING TO WHICH PENALTY C ANNOT BE LEVIED U/S.271AAA IF THE ASSESSEE ADMITS IN THE COURSE OF PROCEEDINGS U/S.132(4) ANY UNDISCLOSED INCOME AND PAID TAXE S TOGETHER WITH INTEREST ON SUCH INCOME AND SPECIFIES AND SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. IT WAS ARGUED THAT THE ASSESSEE FULFILS THE COND ITIONS FOR IMMUNITY FROM PENALTY U/S.271AAA AND THEREFORE THE PROCEE DINGS SHOULD BE DROPPED. 21. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH T HE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT ASSES SEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE INCOME SO DERIVED AT THE TIME OF SEARCH. ALTHOUGH THE ASSESSEE HAS MENTIONED THAT INCOM E WAS SUBSTANTIATED ON THE BASIS OF STATEMENT OF ASSETS AND LIA BILITIES PREPARED FOR EACH ASSESSEE, HOWEVER, SUCH INCOME DECLARA TION WAS NOT SUBSTANTIATED WITH RESPECTIVE ASSETS ON THE DATE O F SEARCH. THE ASSESSEE ALSO COULD NOT GIVE THE DETAILS OF INCOME DECLARED AND IT HAD SHOWN THE INCOME SO DECLARED IN THE PROFIT AND LOSS ACCOUNT AS 20 INCOME FROM OTHER SOURCES. THIS ACCORDING TO THE ASSES SING OFFICER SHOWS THAT THE INCOME DECLARED WAS NOT SUPPORTED BY A NY ASSET ON THE DATE OF SEARCH, THEREFORE, THE INCOME DECLARED HAS TO BE CONSIDERED AS NOT SUBSTANTIATED. THE ASSESSING OFFICER AC CORDINGLY IMPOSED PENALTY OF RS.16,35,875/- U/S.271AAA OF THE I.T. ACT. 22. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE GROUP HAS DECLARED MAJOR AMOUNT OF RS.7,39,74,375/- IN THE HANDS OF T HE DIFFERENT ASSESSEES WHICH IS AS UNDER : NAME OF THE APPELLANT HUNDI, PETTY LOANS, SALES RECEIVABLE RS. BADLA INCOME RS. TOTAL RS. 1) SUNIL GOYAL _ 1,13,58,750 21,27,500 1,34,86,250 2) NANDKISHOR GOYAL 50,00,000 - 50,00,000 3) NARENDRA AGRAWAL 1,63,88,125 21,27,500 1,85,15,625 4) JAIBHAGWAN JINDAL 1,13,58,750 21,27,500 1,34,86,250 5) BANARASIDAS JINDAL 50,00,000 - 50,00,000 6) GOPAL AGRAWAL 1,63,58,750 - 1,63,58,750 7) GHANDSHYAMDAS GOYAL 21,27,500 21,27,500 TOTAL 6,54,64,375 85,10,000 7,39,74,375 23. REFERRING TO THE ABOVE TABLE IT WAS SUBMITTED THAT T HE ASSESSEE HAS DECLARED AN AMOUNT OF RS.1,63,58,750/- BEING HUNDI, PETTY LOANS, SALES RECEIVABLE ETC. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT THE ASSESSEE FULFILS THE CON DITIONS PRESCRIBED U/S.271AAA FOR IMMUNITY FROM PENALTY AND THERE FORE THE PENALTY LEVIED BY THE ASSESSING OFFICER SHOULD BE DELETED. 24. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER : 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICE D THAT THE A.O. HAS LEVIED THE PENALTY STATING THE ONLY REASON THAT TH E APPELLANT HAS NOT FULFILLED THE CONDITION OF SUBSTANTIATING THE INC OME DECLARED DURING; SEARCH ACTION AS REQUIRED BY PROVISIONS OF SECTI ON 271AAA(2) 21 OF THE ACT. IN THIS REGARD, THE A.O. HAS CLAIMED THAT THE INCOME DECLARED BY THE APPELLANT IS NOT SUPPORTED BY ANY ASSETS ON THE D ATE OF THE SEARCH ACTION. ON THE OTHER HAND THE APPELLANT HAS CL AIMED THAT THE SAID INCOME OFFERED TO TAX HAS BEEN INVESTED IN/SUPPORT ED BY THE ASSETS MENTIONED IN THE SEIZED MATERIAL FOUND; THE SAID INCOME HAS BEEN CREDITED TO PROFIT & LOSS ACCOUNT AND REFLECTED IN CAPITAL ACCOUNT APPEARING IN THE BALANCE SHEET FILED WITH THE RETURN OF INCOME; THE ASSETS IN THE BALANCE SHEET ARE SOURCED OUT OF CAPITAL A CCOUNT AND LIABILITIES APPEARING IN THE OTHER SIDE OF THE BALAN CE SHEET. THE AR OF THE APPELLANT HAS POINTED OUT THAT THE SAID INCOME IS REPRESENTED BY THE ASSETS I.E. RECEIVABLE HUNDI, LOANS, SALES ETC. ON VE RIFICATION OF THE ASSESSMENT RECORD, THE ABOVE CONTENTION OF THE APPELLAN T IS FOUND TO BE CORRECT. 8.1 IN ORDER TO DECIDE THE ISSUE UNDER APPEAL, PROVIS IONS OF SECTION 271AAA ARE RELEVANT AND THE RELEVANT PORTION OF THE SAME IS REPRODUCED BELOW '271AAA (1) THE ASSESSING OFFICER MAY NOTWITHSTANDING A NYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT IN THE CASE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER TH E 1 ST DAY OF JUNE 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY,, IN ADDI TION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED @10% OF THE UNDI SCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY I F THE ASSESSEE,- (I) IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SU B-SECTION (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME AND SPECIFIES T HE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED 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 REPRESENTE D, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHE R 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 SECTI ON 132, WHICH HAS - (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MENTIONED IN THE NORMAL C OURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMM ISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR RE PRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF EXPENSE RECORDED IN BOOKS OF ACCOUNT OR DOCUMENTS MAINTAINED IN THE NORMAL CO URSE RELATING TO 22 THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH. NOT BEEN CON DUCTED, (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YE AR,.. (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH B UT THE DATE 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 THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH THE SEARCH WAS CONDUCTED.' 8.2 FROM THE ABOVE PROVISION OF THE ACT IT HAS BEEN N OTICED 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 FIL ED RETURN OF INCOME DECLARING THE SAID 'UNDISCLOSED INCOME' UNDER THE HEAD 'DECLARATION U/S 132(4) OF THE ACT' AND THE A.O. HAS ASSESSED THE SAME AS DECLARED. FURTHER, IT HAS BEEN NOTICED THAT NEITHER AT THE STAG E OF RECORDING OF STATEMENT OF THE ASSESSEE NOR AT THE STAGE OF ASSESSMENT PRO CEEDINGS, THE ASSESSEE WAS ASKED EITHER BY AUTHORIZED OFFICER OR BY THE A.O., TO SUBSTANTIATE MANNER IN WHICH SUCH UNDISCLOSED INCOME WAS DERIVED. THE PENALTY U/S 271AAA IS, THEREFORE, NOT LEVIABLE. T HE ABOVE PROPOSITIONS OF LAW ARE SUPPORTED BY THE FOLLOWING DEC ISIONS (A) ASHOK KUMAR SHARMA VS. DCIT (2012) 77 DTK 24 1 (CTK.TRIB.) IN THIS CASE, IT HAS BEEN HELD THAT THE ASSESSEE HAVING DISCLOSED CONCEALED INCOME WHILE GIVING STATEMENT U/S 132 (4) D URING THE COURSE OF SEARCH AND PAID TAX THEREON AND SHOWED THE S AID UNDISCLOSED INCOME IN THE RETURN UNDER THE HEAD 'INCO ME FROM BUSINESS' WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT, PE NALTY U/S 271AAA IS NOT LEVIABLE. (B) PRAMOD KUMAR TAIN VS. DCIT (2012V 77 DTR 24 4 (CTK.TRIB.) IN THIS CASE, IT HAS BEEN HELD THAT THE ASSESSEE HAVING SUR RENDERED CERTAIN INCOME FOR THE RELEVANT ASSESSMENT YEAR IN THE STATEMENTS DURING THE COURSE OF SEARCH AND FILED RETURN DECLARIN G THE SAME PURSUANT TO NOTICE U/S 153A WHICH HAS BEEN ACCEPTED BY THE A.O., LEVY OF PENALTY U/S 271AAA WAS NOT JUSTIFIED ON THE GROUND THAT THE ASSESSEE HAS MADE DISCLOSURE BUT FAILED TO SPECIFY THE MANN ER IN WHICH SUCH INCOME HAD BEEN DERIVED. (C) DCIT VS. RAJENDRA PRASAD DOKANIA (2012) 32 CCH 260 I AHD.TRIB.) IN THIS CASE, THE HON'BLE ITAT HAS LAID DOWN THAT, NEI THER AT THE STAGE OF RECORDING THE STATEMENT OF THE ASSESSEE NOR AT THE STA GE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED, EITHER BY AUTH ORIZED OFFICER OR BY THE A.O., TO SUBSTANTIATE MANNER IN WH ICH SUCH UNDISCLOSED INCOME WAS DERIVED. UNDER THESE CIRCUMSTANCE S, THE ASSESSEE BE DEEMED TO HAVE DISCHARGED HIS ONUS OF SUBSTANTIA TING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY HIM. 8.3 IT IS WORTH MENTIONING HERE THAT THE HON'BLE CUT TACK BENCH OF ITAT IN THE CASE OF PRAMOD KUMAR JAIN VS. DCIT (2012) 77 DTK 244 HAS LAID DOWN THAT 'THE LD. COUNSEL FOR THE ASSESSEE SUPPO RTED THE 23 VIEWS EXPRESSED BY THE TRIBUNAL IN BOTH THE ORDERS IN S O FAR AS CONDITIONS FOR INVOKING THE PROVISIONS OF SECTION 271AA A AS NOTED IN SUB-SECTION (2) THEREOF HAVE TO BE CONSIDERED TOGETHER AND NOT IN ISOLATION. THE CONDITION WITH RESPECT TO THE MANNER SP ECIFIC FOR THE PURPOSE OF INVOKING THE PROVISIONS HAS NOT BEEN DEFINED BUT ACCEPTED BY THE ASSESSING OFFICER IN AS MANY WORDS. THE DEFINITION OF 'UNDISCLOSED INCOME' CLARIFIED THE MANNER IN SO FAR AS THE ASSESSING OFFICER, AFTER THE SEARCH ONLY CAN INITIATE PENALTY U/S 271AAA WHEN THESE THREE CONDITIONS TOGETHER ARE NOT SATISFIED. PEN AL PROVISIONS ARE PUNITIVE AND NOT PART OF TAX STRUCTURE IN SO FAR AS TH E INTENTION OF THE LEGISLATION WAS NOT TO TAKE 10% OVER AND ABOVE THE TA X AS A MATTER OF LEVY OF PENALTY U/S 271AAA AUTOMATICALLY.' THE HON'B LE CUTTACK BENCH OF ITAT HAS FURTHER STATED THAT THE SAID PROVISIONS OF SUB-SECTION (2) OF SECTION 271AAA DOES NOT BECOME REDUNDANT AS CLAIMED BY THE DEPARTMENTAL REPRESENTATIVE AS THE ASSESSEE HAS TO FULFI LL THE CONDITION OF SURRENDERING THE INCOME DURING SEARCH AC TION, OFFERING THE UNDISCLOSED INCOME IN RETURN OF INCOME, TO PAY TA X AND INTEREST, ON THE SAID INCOME AND SUBSTANTIATE THE MANNER OF EARNING THE INCOME. THE HON'BLE COURT HAS FURTHER OBSERVED THAT EVEN IF A LL CONDITIONS ARE FULFILLED EXCEPT ONE OF THE PURPORTED CONDITION WHI CH IS NOT FULFILLED, THE PENALTY U/S 271AAA MAY NOT BE LEVIED. IN THE CASE UNDER APPEAL, THE CONDITIONS OF SURRENDERING THE INCOME DURING THE SEARCH ACTION, OFFERING THE SAID INCOME IN RETURN OF INCOME AND PAY MENT OF TAX HAVE BEEN UNDISPUTEDLY FULFILLED AND THE A.O, HAS ACCEPTE D THE UNDISCLOSED INCOME OFFERED TO TAX IN RETURN AS DECLARED. 8.4 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 THE CONSIDERED VIEW THAT THE A.O, IS NOT JUSTIFIED IN HOLDING THAT T HE APPELLANT HAS NOT SUBSTANTIATED THE INCOME DECLARED AT THE TIME OF SEARC H AS THE INCOME SO DECLARED WAS NOT SUPPORTED BY ANY ASSETS ON THE DATE OF SEARCH AND ACCORDINGLY HOLDING THAT HE IS LIABLE TO PENALTY U/S 271AAA OF THE ACT, THE PENALTY OF RS.16,35,875/- LEVIED BY THE A.O. U/S 271AAA IS, THEREFORE, CANCELLED. THE A.O. IS DIRECTED ACCORDIN GLY. GROUND NOS.2 & 3 ARE ALLOWED. 25. 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 AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.16 ,35,875/- IMPOSED U/S 271AAAOF THE ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT T HAT ON THE DATE OF SEARCH, THE INCOME DECLARED BY THE ASSESSEE WAS NOT REPRE SENTED BY ANY ASSET. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RELYING UPON THE DECISIONS OF HON'BLE ITAT, CUTTACK BENCH, AND HON'BLE ITAT, AHMEDABAD BENCH, T HE FACTS OF WHICH ARE DISTINGUISHABLE FROM THE FACTS OF THE ASSESSEE'S CASE. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT PENALTY U/S 271A AA COULD BE INITIATED ONLY WHEN ALL THREE CONDITIONS TOGETHER AR E NOT SATISFIED, 24 WHICH IS CONTRARY TO THE EXTANT PROVISIONS OF SECTION 271AAA OF THE ACT, SINCE THE PENALTY CAN BE IMPOSED EVEN IF ONE OF THE CONDITIONS IS NOT FULFILLED, WHICH RENDERS THE DECISION PERVERSE ON FACTS AND IN LAW. 5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY , DELETE, AND AMEND ANY OF THE GROUNDS, AS PER THE CIRCUMSTANCES OF T HE CASE. 6) THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE, AS THE OCCASION MAY DEMAND. 26. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER. 27. THE LD. COUNSEL FOR THE ASSESSEE WHILE SUPPORTING TH E ORDER OF THE CIT(A) SUBMITTED THAT THE ASSESSEE DURING THE COU RSE OF SEARCH IN HIS STATEMENT RECORDED U/S.132(4) HAS ACCEPTED UNDISCLOSED INCOME AND SUBSTANTIATED THE MANNER IN WHICH SUCH INCOME WAS DERIVED. WHILE FILING THE RETURN U/S.153A THE AS SESSEE DECLARED SUCH UNDISCLOSED INCOME IN THE COMPUTATION STAT EMENT AND PAID TAXES ON THE SAME. THEREFORE, PENALTY CANNOT B E LEVIED IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (2) OF SECTION 271AAA. HE FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH WHILE RECORDING THE STATEMENT U/S.132(4) THE SEARCH PARTY HAS NOT ASKED ANY QUERY ABOUT THE MANNER IN WHICH SUCH UNDIS CLOSED INCOME HAS BEEN DERIVED AND TO SUBSTANTIATE THE SAME. REFERRING TO QUESTION NO.50 HE SUBMITTED THAT THE SEARCH PARTY HAS SIMPLY ASKED THE ASSESSEE TO SAY ANYTHING ELSE FOR AVAILING THE BENEFIT OF SECTION 271AAA. AFTER SHRI GHANSHYAM GOYAL DECLARED ADD ITIONAL INCOME OF RS.14 CRORES FOR THE GROUP NO FURTHER QUESTION WAS ASKE D REGARDING THE MANNER IN WHICH UNDISCLOSED INCOME HAS BEE N DERIVED AND ABOUT ITS SUBSTANTIATION. 28. REFERRING TO VARIOUS DECISIONS HE SUBMITTED THAT SINCE THE ASSESSEE HAS ACCEPTED UNDISCLOSED INCOME ON THE BASIS O F THE SEIZED PAPERS FOUND DURING THE COURSE OF SEARCH AND PA ID THE TAXES 25 AND INTEREST THERE ON WHILE FILING THE RETURN OF INCOME IN RE SPONSE TO NOTICE U/S.153A, THEREFORE, PENALTY U/S.271AAA IS NOT LEV IABLE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) SH OULD BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DELETED. HE RELIED ON THE FOLLOWING DECISIONS WHERE UNDER IDENTICAL FACTS AND CIRCUMSTANCES PENALTY LEVIED U/S.271AAA HAS BEEN DELETED. 1. NEERAT SINGAL VS. ACIT (2013) 37 TAXMANN.COM 189 (DELHI TRIBUNAL) 2. ASHOK KUMAR SHARMA VS. DCIT (2013 33 TAXMANN.COM 6 52 (CUTTACK TRIBUNAL (2012) 149 TTJ 33 (CUTTACK TRIBUN AL) 3. PRAMOD KUMAR JAIN VS. DCIT (2013) 33 TAXMANN.COM 651/(2012) 149 TTJ 63 (CUTTACK TRIBUNAL) 4. RAJENDRA PRASAD DOKANIA VS. DIT ITA NO.525/AHD/2 012 DATED 04-05-2012 5. ACIT VS. MUNISH KUMAR GOYAL (2014) 45 TAXMANN.COM 563 (CHANDIGARH TRIBUNAL) 6. ACIT VS. M/S. KANAKIA SPACES PVT. LTD., - ITA NO. 6763/MUM/2011 7. DCIT VS. PIONEER MARBLES & INTERIORS PVT. LTD., (20 12) 50 SOT 571 8. ACIT VS. SHRI SUSHIL KUMAR GUPTA ORDER DATED 14-08 -2014 ITA NO. 3856/DEL/2013 2014-TIOL-544-ITAT-DEL 29. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE H AVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT DURING THE COURSE OF SEARCH AN AMOUNT OF RS.14 CRORES WAS DECLARED BY SHRI GHANSHYAM GOYAL THE M AIN PERSON OF THE GROUP IN THE HANDS OF 4 DIFFERENT PERSONS @ RS.3.5 CRORES EACH, THE DETAILS OF WHICH ARE ALREADY GIVEN AT P ARA 15 OF THE IMPUGNED ORDER. IN RESPONSE TO QUESTION NO.16 THE BIFURCATION OF THE DECLARED INCOME WAS GIVEN WHICH AMOUNTS TO RS.14,01,61,595/-. THE BREAK-UP OF RS.6,54,35,000/- AND 26 RS.85,10,000/- TOTALLING TO RS.7,39,74,375/- HAS ALREADY BEEN GIVEN AT PARA 22 OF THIS ORDER. ACCORDINGLY, THE ASSESSE E HAD DECLARED AN AMOUNT OF RS.1,63,68,750/- AS HIS UNDISCLOSED IN COME BEING INCOME FROM HUNDI, PETTY LOANS, SALES RECEIVABLE ETC. I T IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS PAID THE TAXES A ND INTEREST DUE THEREON IN THE RETURN FILED IN RESPONSE TO NOTICE U/S .153A. IT IS THE CASE OF THE REVENUE THAT ASSESSEE HAS NOT SUBS TANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND HA S NOT SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED . IT IS THE CASE OF THE ASSESSEE THAT IN HIS STATEMENT DURING T HE COURSE OF SEARCH, HE HAS CLEARLY SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND HAS SUBSTANTIATED THE MANNER IN W HICH THE UNDISCLOSED INCOME WAS DERIVED. 30. FROM THE STATEMENT RECORDED DURING THE COURSE OF SEARCH FROM THE MAIN PERSON OF THE GROUP SHRI GHANSHYAM C. GOYA L AND SUBSEQUENT STATEMENT RECORDED U/S.131 WE FIND THE AUTH ORISED OFFICER HAS NOT RAISED ANY QUERY REGARDING THE MANNER IN WHICH UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT ITS SUBSTA NTIATION. ON A POINTED QUERY BY THE BENCH THE LD. DEPARTMENTAL REPRESENTATIVE HAS FAIRLY CONCEDED THAT NO SUCH QUERY WAS RAISED REGARDING THE MANNER IN WHICH UNDISCLOSED INCOME HAS BEE N DERIVED AND ABOUT ITS SUBSTANTIATION. 31. WE FIND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF N EERAT SINGHAL (SUPRA) HAS HELD THAT LEVY OF PENALTY U/S.271AAA IS NOT JUSTIFIED IN ABSENCE OF ANY QUERY RAISED BY THE AUTHORISED OFFICER DURING THE COURSE OF RECORDING OF STATEMENT U/S.132(4) ABO UT THE MANNER IN WHICH UNDISCLOSED INCOME HAS BEEN DERIVED AND A BOUT ITS SUBSTANTIATION. THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF MUNISH KUMAR GOYAL (SUPRA) HAS HELD THAT WHERE TH E 27 ASSESSEE SURRENDERED CERTAIN INCOME IN THE COURSE OF SE ARCH, FILED THE RETURN DISCLOSING THE SAID AMOUNT AND PAID TAXES THE REON, THERE WAS SUFFICIENT COMPLIANCE OF PROVISIONS OF SECTION 271AA A(2) AND PENALTY U/S.271AAA IS NOT LEVIABLE. 32. WE FIND THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF KANAKIA SPACES PVT. LTD. (SUPRA) WHILE DISMISSING THE APPEAL FILED BY THE REVENUE WHERE THE CIT(A) HAS DELETED THE PENALTY LEVIED U/S.271AAA HAS OBSERVED AS UNDER : 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). THE OR DER IS IN TUNE WITH THE PRINCIPLES LAID DOWN BY VARIOUS CO-ORDINATE BENCH ES AND HIGH COURTS PARTICULARLY WITH REFERENCE TO DISCLOSURE MADE UNDER SECTION 132(4). IN THE CASE OF CIT VS. MAHENDRA C. SHAH (299 ITR 305) THE HON'BLE GUJARAT HIGH COURT CONSIDERED SIMILAR STATEMEN T UNDER SECTION 132(4) TO GRANT IMMUNITY UNDER SECTION 271(1 )(C). THE HON'BLE HIGH COURT HELD AS UNDER:- 'WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORI ZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, TH E STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND TH ERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETT ING IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE , WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE PO INT REGARDING THE CONDITIONS STIPULATED IN THE SECOND EXCEPTION WHILE MA KING STATEMENT UNDER SECTION 132(4). EVEN IF THE STATEMENT DOES NOT SP ECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIAN CE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT.' 4.1 IN THIS CASE, THE ASSESSEE WAS ASKED TO EXPLAIN THE EN TRIES IN THE 'WORK-IN-PROGRESS SHEET' AND ASSESSEE IN THE COURSE OF STATE MENT OFFERED THE INCOME WITH A PLEA NOT TO INITIATE PENA LTY PROCEEDINGS. THE ASSESSEE WAS NOT ASKED ABOUT THE MANNER IN WHICH SUCH INCO ME WAS EARNED AND ALSO TO SUBSTANTIATE THE MANNER IN WHICH UN DISCLOSED INCOME WAS DERIVED. THE PROVISION OF CLAUSE-2 OF EXPLA NATION-V APPENDED TO SECTION 271(1)(C) ARE SIMILAR TO SECTION 271AAA(2). THE SCOPE AND MEANING HAS BEEN LUCIDLY EXPLAINED BY THE H ON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA KISH AN GOEL (2005) 278 ITR 454 (ALL.), WHICH WAS FOLLOWED BY THE HON'BL E GUJARAT HIGH COURT IN THE ABOVE REFERRED CASE. IN VIEW OF THE ABO VE PRINCIPLES LAID DOWN, WE ARE OF THE OPINION THAT IMMUNITY PROVIDED UNDER S/S.(2) OF SECTION 271AAA IS APPLICABLE AND ACCORDINGLY, THE ORD ER OF CIT(A) DOES NOT REQUIRE ANY MODIFICATION. REVENUE'S GROUNDS A RE REJECTED. 28 33. WE FIND THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE O F PIONEER MARBLES & AND INTERIORS PVT. LTD. (SUPRA) HAS HELD THAT PENALTY U/S.271AAA COULD NOT BE LEVIED WHERE ASSESSEE PA ID ENTIRE TAX AND INTEREST WITHIN TIME LIMIT PROVIDED IN NOTICE OF DEMA ND U/S.156 AND ALSO WELL BEFORE PENALTY PROCEEDINGS WERE CONCLUDED. 34. IN VIEW OF THE DECISIONS CITED (SUPRA) AND CONSIDERING THE FACT THAT THE ASSESSEE HAS FILED THE RETURN DISCLOSING THE INC OME DECLARED DURING THE COURSE OF SEARCH ON THE BASIS OF SEIZED MATERIAL AND PAID THE TAXES THEREON WE ARE OF THE CONSIDERED O PINION THAT THE ASSESSEE HAS SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THE IMMUNITY PROVIDED U/S.271AAA(2) ARE APPLICABLE. IN THIS VIEW OF THE MATTER AN D IN VIEW OF THE DETAILED ORDER PASSED BY LD.CIT(A) RELYING ON V ARIOUS DECISIONS, WE FIND NO INFIRMITY IN HIS ORDER CANCELLING THE PENA LTY LEVIED U/S.271AAA OF THE I.T. ACT. GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. ITA NO.1437/PN/2013-SHRI NARENDRA S. AGRAWAL - (A.Y .2010-11) : ITA NO.1448/PN/2013-SHRI NANDKISHOR T. GOYAL (A.Y. 2010-11): 35. AFTER HEARING BOTH THE SIDES, WE FIND THE REVENUE HAS CHALLENGED THE ORDER OF THE CIT(A) IN DELETING THE PENALTY OF RS.18,51,562/- AND RS. 5 LAKHS RESPECTIVELY LEVIED U/S.271AA A OF THE I.T. ACT BY THE ASSESSING OFFICER. WE FIND THE FACTS IN THE ABOVE APPEALS ARE IDENTICAL TO THE FACTS IN ITA NO.1439/PN/2013. HERE ALSO THE RESPECTIVE ASSESSEES HAVE FILED THE RETURN OFFER ING THE INCOME DECLARED DURING THE COURSE OF SEARCH AND PAID THE TAXES THEREON. THEREFORE, FOLLOWING THE REASONING GIVEN IN ITA NO.1439/PN/2013 WE FIND NO REASON TO INTERFERE WITH THE O RDER OF 29 THE CIT(A) AND ACCORDINGLY THE SAME IS UPHELD. GROUNDS R AISED BY THE REVENUE ARE DISMISSED. 36. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26-06-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 26 TH JUNE, 2015 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A), AURANGABAD 4. CIT, AURANGABAD 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE