Income-tax Officer, Central-3, Nashik V. Shri Prakash Champalal Kankaria, Nashik

ITA 1467/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1978 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJIV HARITT
• Keywords: Business income; Search and seizure; Salary income; Proportionate interest; Reasonable cause
• Section: 143(3); 153A; 148; 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1465 TO 1467/PN/2011 ASSESSMENT YEAR S : 2002 - 03 , 2004 - 05 & 2006 - 07 INCOME-TAX OFFICER, CENTRAL-3 3 RD FLOOR, KENDIYA RAJASWA BHAVAN, R.G. GADKARI CHOWK, OLD AGRA ROAD, NASHIK VS. PRAKASH CHAMPALAL KANKARIA, M/S. PRAKASH TRADERS, SAJAN BUNGLOW, INGLE NAGAR, TAKLI ROAD, NASHIK (APPELLANT) (RESPONDENT) PAN NO.AGXPK3179M ITA NO.1468 TO 1470/PN/2011 ASSESSMENT YEARS :2002 - 03, 2004 - 05 & 2006 - 07 INCOME-TAX OFFICER, CENTRAL-3 3 RD FLOOR, KENDIYA RAJASWA BHAVAN, R.G. GADKARI CHOWK, OLD AGRA ROAD, NASHIK VS. KANTILAL CHAMPALAL KANKARIA, M/S. BUILDERS MARKET, SAJAN BUNGLOW, INGLE NAGAR, TAKLI ROAD, NASHIK (APPELLANT) (RESPONDENT) PAN NO.AHXPK6431H ITA NO.1471 TO 1473/PN/2011 ASSESSMENT YEARS :2002 - 03, 2004 - 05 & 2006 - 07 INCOME-TAX OFFICER, CENTRAL-3 3 RD FLOOR, KENDIYA RAJASWA BHAVAN, R.G. GADKARI CHOWK, OLD AGRA ROAD, NASHIK VS. SURESH CHAMPALAL KANKARIA, M/S. SAI KIRAN TRADRES, DATTA MANDIR ROAD, NASHIK ROAD, NASHIK (APPELLANT) (RESPONDENT) PAN NO.ABAPK9381R APPELLANT BY: SHRI ABHAY AVCHAT RESPONDENT BY: SHRI RAJIV HARITT DATE OF HEARING : 07-03-2013 DATE OF PRONOUNC EMENT : 22-03-2013 ORDER PER R.S. PADVEKAR, JM: THIS BATCH OF 9 APPEALS ARE FILED BY THE REVENUE CHALLENG ING THE RESPECTIVE IMPUGNED ORDER OF THE LD. CIT(A)-I, NASHIK, IN R ESPECT OF THE 3 DIFFERENT ASSESSEES DELETING THE PENALTY LEVIED BY THE ASSE SSING OFFICER U/S.271(1)(C) OF THE INCOME-TAX ACT. THE FACTS AND ISSUES ARE IDENTICAL IN ALL THE APPEALS AND HENCE, THIS BATCH OF APPEALS ARE DISPO SED OF BY THIS CONSOLIDATED ORDER. 2 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 2. WE FIRST TAKE UP THE APPEALS IN THE CASE OF PRAKASH CHAMPALAL KANKARIA BEING ITA NOS. 1465, 1466 AND 1467/PN/2011 . THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN DELETING PENALTY LEVIED U/S.271(1)(C) AMOU NTING TO RS.78,273 WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO OF FER ANY EXPLANATION REGARDING THE DIFFERENCE IN INCOME RETURNED VIDE R ETURN FILED U/S 139 AND 153A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ADDITIONAL INCOM E IN THE NATURE OF CAPITAL GAIN WAS OFFERED ONLY IN THE RETURN FILED U/S 153A FOR WHICH THE ASS ESSEE DID NOT OFFER ANY EXPLANATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN APPLYING EXPLANATION 1 TO SECTION 271 (1)( C) INSTEAD OF EXPLANATION 5 A OF THAT SECTION ON THE FACTS OF THE CASE THUS R ENDERING HIS DECISION PERVERSE AND BAD IN LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT BUT FOR THE SEARCH OPERATIONS THE ASSESSEE WOULD NOT HAVE OFFERED ADDITIONAL INCOME I N THE RETURN FILED U/S153A WHICH IS EVIDENCED BY HIS FAILURE TO OFFER THE SAID ADDITIONAL INCOME IN THE RETURN FILED U/S139. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN IGNORING THE DECISION OF JURISDICTI ONAL TRIBUNAL IN THE GROUP CASES OF THAKKAR AND KALANTRI GROUP IN APPEAL NOS.911 TO 930/PN/2009 AND 1006 TO 1008/PN/2009 DATED 10-02-2010 WHICH WAS A DIRECT DECISION. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE DISCLOSED ADDI TIONAL INCOMES ONLY TO BUY PEACE OF MIND WHILE ACKNOWLEDGING VIDE PARA 9.1 OF HIS ORDER THAT THE ASSESSEE RETURNED ADDITIONAL INCOME IN THE RETURN F ILED 153A ON SPECIFIC ISSUES, THUS RENDERING HIS DECISION CONTRADICTORY A ND PERVERSE. 3. THE GROUNDS ARE IDENTICAL IN ALL OTHER APPEALS VERBATIM SAME THE AMOUNT OF PENALTY. 4. THE FACTS WHICH ARE REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SUPPLY OF CEMENT, STEEL AND OTHER BUILDING MATERIAL. A SEARCH AND SEIZURE ACTION U/S.132 OF TH E INCOME- TAX ACT, 1961 WAS CONDUCTED AGAINST THE ASSESSEE ON 3 0-08-2007. IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATION ASSESSEE W AS ISSUED THE NOTICES REQUIRING HIM TO FILE THE RETURNS OF INCOME U/S.153 A OF THE ACT. THE ASSESSEE HAS FILED THE RETURNS OF INCOME IN RESPONSE TO NOTICE U/S 153A AND ESTIMATED PROFIT @ 5% ON UNRECORDED SALES FOR T HE A.YS. 2002- 03, 2004-05 AND FOR 2006-07. THE ASSESSEE HAS ALSO OFFER ED FOR DISALLOWANCE OF PROPORTIONATE INTEREST OF RS.50,000/- IN RES PECT OF 3 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA ADVANCE IS GIVEN IN EXCESS OF UNSECURED LOAN AMOUNTING TO RS. 5,43,665/-. SO FAR AS THE THIRD ADDITION IS CONCERNED IT IS ONLY FOR THE A.Y. 2006-07 AND NO PROFIT IS ESTIMATED BY THE ASSESSING O FFICER IN THE A.Y. 2006-07. TO UNDERSTAND THE FACTS AND FIGURE OF THE IS SUE THE FOLLOWING CHART IS HELPFUL: A.Y INCOME SHOWN IN THE RETURNS FILED U/S. 139 ADDITIONAL INCOME DECLARED IN SEARCH U/S. 132 INCOME SHOWN IN THE RETURNS FILED U/S. 153A ADDITION MADE IN THE ASSESSMENT U/S. 143(3) R.W.S. 153A INCOME ASSESSED U/S. 153A INCOME ON WHICH PENALTY U/S. 271(1)(C) LEVIED PENALTY LEVIED. 2002-03 216880 117985 344870 137805 472670 255790 7 8273 2004-05 168510 30350 198860 35449 234310 65799 1974 0 2006-07 239780 3358480 3598260 50000 3648260 335848 4 724457 5. IN SUM AND SUBSTANCE, SO FAR AS ASSESSMENT YEARS 2 003-04 AND 2004-05 ARE CONCERNED THE ASSESSING OFFICER MADE THE AD DITION ON AND ABOVE THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE BUT WHICH WAS IN RESPECT OF ESTIMATED PROFIT @ 5% OF UNRECORDED SALES FOR T HE A.Y.S 2002- 03 AND 2004-05. SO FAR AS A.Y. 2006-07 IS CONCERNED TH E ONLY ADDITION IS RS.50,000/- I.E. IN RESPECT DISALLOWANCE OF INTEREST @ 8.95 % IN EXCESS OF UNSECURED LOAN AMOUNTING TO RS.5,43,665/-. THE ASSESS ING OFFICER INITIATED THE PENALTY PROCEEDINGS AND LEVIED THE PENALTY OF RS. 78,273/- AND 19,740/- FOR THE A.YS. 2002-03, 2004-05 AND RS.7,24,457 /- FOR A.Y. 2006-07 U/S. 71(1)(C) OF THE INCOME-TAX ACT, 1961 RESPECT IVELY. THE PENALTY WAS WORKED OUT ON THE ADDITIONAL INCOME DECLARED AND OFFERED BY THE ASSESSEE IN THE RETURNS FILED U/S.153A OF THE ACT. AS PER THE ABOVE CHART THE LD. CIT(A) DELETED THE PENALTY BY HOLDING THAT THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE IS NOT IN RESPECT OF AN Y MONEY, BILLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS IN THE COUR SE OF SEARCH AND HENCE, EXPLANATION (5) (NOT 5A) TO SECTION 271(1)(C) IS NOT APP LICABLE TO THE ASSESSEES CASE. NOW THE REVENUE HAS CHALLENGED T HE IMPUGNED ORDERS PASSED BY THE LD. CIT(A) BEFORE US. 4 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 6. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. IN THE PRESENT CASE, THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE UNDISPU TEDLY RELATE TO THE UNRECORDED SALES DETECTED. DURING THE COURSE O F SEARCH, ASSESSEE OFFERED THE ESTIMATED PROFIT ON THE UNRECORDED SALES WHICH WAS AGAIN ESTIMATED @ 5% OF TOTAL UNRECORDED SALES. DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS MADE ES TIMATED ENHANCEMENT BY ADOPTING THE GP RATE @ 10.84% IN THE A. YS. 2002-03 AND 2004-05 AND HENCE THE INCOME WAS FURTHER ENHANCED IN THESE TWO ASSESSMENT YEARS BY RS.1,37,805/- AND RS.35,449/-. THE ASSESSING OFFICER HAS LEVIED THE PENALTY IN RESPECT OF THE DIFFERENCE OF THE FINAL INCOME ASSESSED AND THE INCOME DECLARED BY THE ASSESSEE. 7. NOW THE ISSUE BEFORE US IS WHETHER THE LD. CIT(A) JUST IFIED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER IN THES E THREE ASSESSMENT YEARS U/S.271(1)(C) OF THE ACT. ADMITTEDLY, EXP LANATION 5 TO SECTION 271(1)(C) IS NOT APPLICABLE TO THE ASSESSEES CASE A S NO INCOME IS DETECTED OR OFFERED IN RESPECT OF ANY MONEY, GOLD, JEWELLER Y, BILLION OR ANY OTHER VALUABLE ASSETS. IT IS TRUE THAT UNRECORDED SALES WERE DETECTED AND IN RESPECT OF THOSE UNRECORDED SALES, ASSESSEE OFFERED AD DITIONAL INCOME BY SURRENDERING PROFIT ELEMENT IN THOSE SALES FOR TAX. THE ASSESSING OFFICER HAS MADE SOME ENHANCEMENT ADOPTING DIFFERENT PROFIT RATE. APART FROM THAT IN THE FIRST TWO ASSESSMENT YEARS, NO FUR THER INCOME IS ASSESSED. 8. SO FAR AS THE THIRD ASSESSMENT YEAR IS CONCERNED I.E. A.Y.2006-07 ONLY ADDITION IS IN RESPECT OF THE DISALLOWANCE OF INTEREST O F RS.50,000/- WHICH IS ALSO ON THE ADHOC BASIS. 9. THE NEXT ISSUE WILL BE WHETHER IS THERE ANY PROFIT AND JUSTIFICATION OF THE ASSESSING OFFICER TO LEVY THE PENALTY ON THE ASSE SSEE U/S. 271(1)(C) OF THE ACT ON THE AMOUNT OF THE DIFFERENCE BETWEEN THE I NCOME FINALLY 5 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA DETERMINED INCLUDING THE INCOME OFFERED BY THE ASSESSEE IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S.153A. THERE WILL BE TWO ASP ECTS TO BE CONSIDERED WHETHER PENALTY CAN BE LEVIED ON (1) THE AD DITIONAL INCOME DECLARED BY THE ASSESSEE IN THE RETURNS U/S.153A AND ON (2) ADDITION MADE BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT. SO FAR AS THE FIRST ASPECT IS CONCERNED IT STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT PUNE, IN THE CASE OF CHANDAN K. SHEWANI VS. DY. CIT, PUNE, ITA NO. 235 AND 236/PN/2010 ORDER DT. 29- 08-2012. THE TRIBUNAL EXPLAINED THE SITUATION IN WHICH NO PENALTY CAN BE LEVIED IF THE ASSESSEE HAS OFFERED ADDITIONAL INCOME WHICH IS ALSO IN CONSE QUENCE OF SEARCH ACTION AGAINST HIM IN THE RETURNS FILED U/S.153A O F THE ACT. THE OPERATIVE PART OF THE ORDER IS AS UNDER: 8. WHILE DECIDING ASSESSEES APPEAL FOR A.YS. 1999-2000 AND 2001-02, THE PENALTY LEVIED ON THE INCOME OFFERED TOWA RDS THE PERSONAL EXPENDITURE OF THE ASSESSEE AND HIS DIVORCEE SISTER HAS BEEN DELETED. EVEN THOUGH THE PARLIAMENT HAS INSERTED EXPLANATION 5A TO SEC. 271(1)( C ), SAID EXPLANATION IS APPLICABLE IN RE SPECT OF THE SEARCH INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007. SECTION 5A IS INTRODUCED TO PATCH OUT THE LACUNAE IN THE EXISTING PROVISIONS MORE PARTICULARLY TO OVERCOME THE JUDICIAL INTERPRETATION OF EXPLANATION -5. IF THE SEARCH IS INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007 THEN THERE IS A LEGAL PRESUMPTION THAT ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACT IONS, WHICH IS CLAIMED AS INCOME BY THE ASSESSEE, THE SAME WOULD BE T REATED AS DEEMED CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. SO FAR AS THE PRE SENT ASSESSEE IS CONCERNED, THE DATE OF SEARCH IS 15.6.2004 AND HENCE, EXPLANATION 5A TO SEC. 271(1)((C ) IS NOT APPLICABLE. IT IS WELL SETT LED RULE OF INTERPRETATION OF THE PENALTY PROVISIONS THAT THE SAME SHOULD BE STRICTLY INTERPRETED AND THERE IS NO SCOPE FOR ANY PRESUMPTION FOR LEVY OF THE PENALTY UNLESS STATUTE SPECIFICALLY PROVIDES SAM E. 9. SO FAR AS THE EXPLANATION-3 TO SEC. 271(1)(C) IS CON CERNED, WHICH READS AS UNDER : EXPLANATION 3.- WHERE ANY PERSON FAILS, WITHOUT REASO NABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB -SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS RE QUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESS MENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTICE HAS BE EN ISSUED TO HIM UNDER CLAUSE (I) OF SUB-SECTION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMIS SIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESS MENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PERSONAL SHA LL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, B E DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RE SPECT OF 6 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSO N FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER T HE EXPIRY OF THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148. THE SAID EXPLANATION PRESUMES THAT THERE IS A CONCEA LMENT OF PARTICULARS OF INCOME OR FILING OF THE INACCURATE P ARTICULARS OF INCOME IN THE SITUATION WHERE THE ASSESSEE DID NOT FILE RETU RN OF INCOME U/S. 139 OR WITHIN THE TIME LIMIT PRESCRIBED U/S. 153(1) OF THE ACT BU T FILES THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148. THE SAID EXPLANATION IS ALSO SILENT IN THE SITUATION IF THE AS SESSEE HAS NOT FILED THE RETURN OF INCOME FOR ANY PARTICULAR A.Y. BUT FILED THE RETURN OF INCOME FOR THE FIRST TIME IN RESPONSE TO NOTICE U/S. 153A, THEN WHAT WOULD BE THE LEGAL PRESUMPTION ? IN OUR OPINION, EXPLANATION- 3 HAS NO APPLICATION, WHEN THE RETURN IS FILED IN RES PONSE TO NOTICE U/S. 153A. WE, THEREFORE, HOLD THAT AS PER THE FACTS OF THIS CASE AND LAW APPLICABLE, THERE IS NO JUSTIFICATION TO LEVY THE PENALTY FOR THE A.Y. 2002-03 IN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A EVEN FOR THE SAID INCOME IS BASED ON SOME ENTRIES FOUND IN THE DIARIES OR OTHER D OCUMENTS OR EVEN BANK ACCOUNT DURING THE COURSE OF SEARCH. WE, A CCORDINGLY DELETE THE PENALTY SUSTAINED BY THE LD CIT(A). 13. IN THE A.Y. 2003-04, IT IS ADMITTED FACTUAL POSITION T HAT THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF IN COME FILED IN RESPONSE TO NOTICE U/S. 153A IS RS. 37,99,170/-. IN THIS YEAR, THE ASSESSEE FILED THE RETURN OF INCOME ON 29.4.2005 I.E. WIT HIN 2 YEARS FROM THE END OF THE A.YS. 2003-04 AS PER THE TIME LIMIT P RESCRIBED U/S. 153(1) FOR COMPLETING THE ASSESSMENT U/S. 143 OR 144 OF THE ACT. WHILE COMPLETING THE ASSESSMENT, THE A.O MADE THE MERE ADDITION OF RS. 50,000/- BUT OTHERWISE, THE RETURN OF IN COME WAS ACCEPTED. AS INTERPRETED BY THE DIFFERENT JUDICIAL P RONOUNCEMENT, THE EXPRESSION TAX SOUGHT TO BE EVADED APPEARING IN CLAUSE (C) IN SEC. 271(1) IS TO BE UNDERSTOOD AS A DIFFERENCE BETWE EN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AN D INCOME FINALLY ASSESSED. AFTER INTRODUCTION OF SEC. 153A W.E.F. 1.6.20 03, THERE IS NO SPECIFIC PENALTY PROVISION TO DEAL WITH THE ASSES SMENT FRAMES IN CONSEQUENCES OF SEARCH AND SEIZURE ACTION U/S. 132 O F THE ACT. EXCEPT RS. 75,807/- DECLARED BY THE ASSESSEE AS A CASH , THERE IS NO DECLARATION BASED ON ANY MONEY, BULLION, JEWELLERY OR OT HER VALUABLE ARTICLES OR THING IN THE NATURE OF ASSETS. AS DISCUS SED IN THE ASSESSEES APPEAL FOR A.Y. 2002-03, EXPLANATION 5A IS APP LICABLE FROM 1.6.2007 AND HENCE, IN THIS YEAR, WE ARE ONLY CONC ERNED WITH EXPLANATION-5 AS THE DATE OF SEARCH IS PRIOR TO 1.6.200 7. EXCEPT THE ESTIMATED ADDITION OF RS. 50,000/-, NO ADDITION IS MADE BY THE A.O. THE A.O HAS ACCEPTED THE INCOME DECLARED BY THE ASSE SSEE IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/SEC . 153A AND IN RESPECT OF SAID INCOME. EXPLANATION-5 CANNOT BE APPLI ED. MOREOVER, NO OTHER INCOME IS ADDED WHICH IS BASED ON ANY INCR IMINATING MATERIAL WHICH CAN BE SUBJECTED TO THE PENAL CONSEQUEN CES. IT IS TRUE THAT THE ASSESSEE FILED THE RETURN OF INCOME FO R THE A.Y. 2003-04 ONLY AFTER SEARCH ACTION BY THE DEPARTMENT, BUT, AS TH ERE IS NO SPECIFIC PROVISION TO LEVY THE PENALTY ON THE INCOM E DECLARED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U /S. 153A, EXCEPT EXPLANATION-5, WE HAVE TO APPLY PROVISIONS OF SEC. 271 (1)(C ) AS ARE APPLICABLE IN THE NORMAL ASSESSMENTS. 7 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 10. THE ABOVE DECISION IS FOLLOWED IN THE CASE OF SMT. PRAMILA D. ASHTEKAR AND ORS. VS. ITO, CIRCLE-2, PUNE IN ITA NOS. 3 54 TO 358/PN/10, ITA NO. 359 TO 369/PN/10, ITA NOS. 363 TO 365/PN/10 AND ITA NO. 366 /PN/10 ORDER DT. 14-09-2012. THE OPERATIVE PART OF THE SAID DECISION IS AS UNDER: 5. WE HAVE ALSO HEARD THE LD. D.R., WHO SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. ON THE PERUSAL OF THE ASSESSMENT ORDERS IN ALL THESE APPEALS, IT IS ADMITTED FACT THAT THERE IS NO AD DITION OVER AND ABOVE THE INCOME DECLARED BY THESE ASSESSEES IN TH E RETURNS OF INCOME FILED IN RESPONSE TO NOTICES U/S. 153A OF THE ACT. IT IS ALSO ADMITTED FACT THAT NO DECLARATION IS BASED ON ANY MO NEY, JEWELLERY, BULLION OR ANY OTHER VALUATION ARTICLES DETECTED OR S EIZED IN THE COURSE OF THE SEARCH OPERATION. AT THE FIRST INSTAN CE, THE LD. COUNSEL PLEADED THAT THESE ASSESSEES ARE ENTITLED FOR THE IMMUN ITY IN VIEW OF EXPL.- SEC. 5 TO SEC. 271(1)(C ) OF THE ACT BECAUSE THE INCOME ADMITTED DURING THE COURSE OF THE SEARCH HAS BEEN DE CLARED IN THE RETURN OF INCOME AS WELL AS THE TAX ON THE ADMITTED I NCOME HAS ALSO BEEN PAID. THE SCOPE OF EXPLANATION-5 HAS BEEN CONSID ERED BY THE ITAT, AHMEDABAD BENCH IN THE CASE OF ACIT VS. KIRIB DAYABHAI PATEL, 121 ITD 159 (TM ) WITH SPECIFIC REFERENCE WHETH ER THE IMMUNITY IS AVAILABLE FOR ALL THE ASSESSMENT YEARS OR O NLY FOR THE ASSESSMENT YEAR IN WHICH THE DATE OF FILING OF THE RETURN HAS BEEN EXPIRED AT THE TIME OF SEARCH OR FOR THE ASSESSMENT YEAR IN RESPECT OF WHICH, THE PREVIOUS YEAR WAS YET TO END ON THE DA TE OF SEARCH. IN THIS CASE, SEARCH WAS CONDUCTED ON 26 OCTOBER, 2005, HENCE, AT THE MOST, THE BENEFIT OF THE IMMUNITY CAN BE GIVEN FOR TH E ASSESSMENT YEAR 2006-07. 6. WE FIND THAT THE ASSESSEES CASE IS OTHERWISE SQU ARELY COVERED VIDE THE DECISION OF ITAT, PUNE IN THE CASE OF CHANDAN K. SHEWANI VS. DCIT, ITA NOS. 235 & 236/PN/2010. IN THE S AID CASE, THE ADDITIONAL INCOME WAS DECLARED DURING THE COURSE O F SEARCH TO COVER UP THE EXPENDITURE AS WELL AS DEPOSIT IN BANK A/CS. THE TRIBUNAL CONSIDERED THE EXPLANATIONS- 3, 5 & 5A TO SEC . 271(1)(C ) OF THE ACT AND HELD AS UNDER : 8. WHILE DECIDING ASSESSEES APPEAL FOR A.YS. 1999-2000 AND 2001-02, THE PENALTY LEVIED ON THE INCOME OFFERED TOWARDS THE PERSONAL EXPENDITURE OF THE ASSESSEE AND HIS DIVORCEE SISTER HAS BEEN DELETED. EVEN THOUGH THE PA RLIAMENT HAS INSERTED EXPLANATION 5A TO SEC. 271(1)(C), SAID EXPLANATION IS APPLICABLE IN RESPECT OF THE SEARCH I NITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007. SECTION 5A IS INTRODUCED TO PATCH OUT THE LACUNAE IN THE EXISTING PROVISIONS MORE PARTICULARLY TO OVERCOME THE JUDICIAL INTERPRETATION OF EXPLANATION -5. IF THE SEARCH IS INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007 THEN THERE IS A LEGAL PRESUMPTION THAT ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT O R OTHER DOCUMENTS OR TRANSACTIONS, WHICH IS CLAIMED AS INCOME BY THE ASSESSEE, THE SAME WOULD BE TREATED AS DEEMED CONCEAL MENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURA TE PARTICULARS OF INCOME. SO FAR AS THE PRESENT ASSESS EE IS 8 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA CONCERNED, THE DATE OF SEARCH IS 15.6.2004 AND HENCE, EXPLANATION 5A TO SEC. 271(1)((C ) IS NOT APPLICABLE. I T IS WELL SETTLED RULE OF INTERPRETATION OF THE PENALTY PROVISI ONS THAT THE SAME SHOULD BE STRICTLY INTERPRETED AND THERE IS NO S COPE FOR ANY PRESUMPTION FOR LEVY OF THE PENALTY UNLESS STATUT E SPECIFICALLY PROVIDES SAME. 9. SO FAR AS THE EXPLANATION-3 TO SEC. 271(1)(C) IS CONCERNED, WHICH READS AS UNDER : EXPLANATION 3.- WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFI ED IN SUB-SECTION (1) OF SECTION 153 A RETURN OF HIS INC OME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFT ER THE 1 ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB-SECTION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT O F SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PERSONAL SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESS MENT YEAR, NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SEC TION 148. THE SAID EXPLANATION PRESUMES THAT THERE IS A CONCE ALMENT OF PARTICULARS OF INCOME OR FILING OF THE INACCURATE P ARTICULARS OF INCOME IN THE SITUATION WHERE THE ASSESSEE DID NOT FI LE RETURN OF INCOME U/S. 139 OR WITHIN THE TIME LIMIT PRESCRIBED U /S. 153(1) OF THE ACT BUT FILES THE RETURN OF INCOME IN R ESPONSE TO NOTICE U/S. 148. THE SAID EXPLANATION IS ALSO SILENT I N THE SITUATION IF THE ASSESSEE HAS NOT FILED THE RETURN O F INCOME FOR ANY PARTICULAR A.Y. BUT FILED THE RETURN OF INCOME FOR THE FIRST TIME IN RESPONSE TO NOTICE U/S. 153A, THEN WHAT WOULD BE THE LEGAL PRESUMPTION ? IN OUR OPINION, EXPLANATION-3 HAS NO APPLICATION, WHEN THE RETURN IS FILED IN RESPONSE TO NOTICE U/S. 153A. WE, THEREFORE, HOLD THAT AS PER THE FACTS OF THI S CASE AND LAW APPLICABLE, THERE IS NO JUSTIFICATION TO LEVY THE PENALTY FOR THE A.Y. 2002-03 IN THE INCOME DECLARED BY THE ASS ESSEE IN THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 1 53A EVEN FOR THE SAID INCOME IS BASED ON SOME ENTRIES FOUND IN THE DIARIES OR OTHER DOCUMENTS OR EVEN BANK ACCOUNT DUR ING THE COURSE OF SEARCH. WE, ACCORDINGLY DELETE THE PENALTY SUSTAINED BY THE LD CIT(A). 7. IN ALL THE APPEALS BEFORE US, EXPLANATION-3 CANNOT BE APPLIED, AS HELD IN THE CASE OF CHANDAN K. SHEWANI (SUPRA). S O FAR AS EXPLANATION 5A IS CONCERNED, IT IS BROUGHT ON THE ST ATUTE BOOK W.E.F. 9 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 1.6.2007 I.E. FROM THE ASSESSMENT YEAR 2007-08 SO FAR A S THE ASSESSMENTS IN ALL THESE CASES ARE CONCERNED, NO ADDITI ON IS MADE BY THE ASSESSING OFFICER OVER AND ABOVE THE INCOME DECLARED IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTICE U/S. 1 53A AS THE EXPRESSION TAX SOUGHT TO BE EVADED APPEARING IN CLAUSE (C) TO SEC. 271(1) IS TO BE UNDERSTOOD AS A DIFFERENCE BETWEEN T HE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AN D THE INCOME FINALLY ASSESSED. AFTER INTRODUCTION OF SEC. 153A W.E. F. 1.6.2003, THERE IS NO SPECIFIC PENALTY PROVISION TO DEAL WITH T HE ASSESSMENTS FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT. IN THE PRESENT CASE, AS THE RETURNED INCOME AND INCOME ASSESSED ARE THE SAME, OTHERWISE ALSO, NO PENALTY CAN BE LEVIED. WE, THEREFORE, HOLD THAT IN ALL THE APPEALS BEFORE US, T HE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S . 271(1)(C ) OF THE ACT. WE, ACCORDINGLY, DELETE THE PENALTIES LEVIED BY THE ASSESSING OFFICER IN ALL THE APPEALS FOR THE ABOVE MENTIONED REASO NS. 11. ADMITTEDLY, SO FAR AS THE FIRST TWO ASSESSMENT YEARS ARE CONCERNED I.E. 2003-04 AND 2004-05 NO PENALTY CAN BE LEVIED AS HELD IN THE CASE OF SHRI CHANDAN K. SHEWANI (SUPRA). THE SAME PRINCIPLES ARE ALSO APPLICABLE TO THE A.Y. 2006-07 HENCE WE HOLD THAT TO THE EXTENT OF THE INCOME DECLARED BY THE ASSESSEE IN THE RETURNS FILED U/S. 153A NO PENALTY IS LEVIABLE. 12. THE NEXT ASPECT WILL BE WHETHER THE PENALTY IS LEVIAB LE ON THE ADDITION MADE BY THE ASSESSING OFFICER. CERTAINLY THIS ASPE CT IS TO BE EXAMINED IN VIEW OF EXPL.-1 TO SECTION 271(1)(C) OF THE ACT WH ICH IS READS AS UNDER: EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MATE RIAL TO BE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS A CT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [C OMMISSIONER (APPEALS)] [OR THE COMMISSIONER] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT A BLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATIO N IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATER IAL TO COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PUR POSES OF CLAUSE(C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCO ME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 10 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 13. ADMITTEDLY, DURING THE COURSE OF SEARCH AND SEIZURE ACTION UNRECORDED SALES WERE DETECTED. ASSESSEE CAME FORWARD WITH OFFERING ADDITIONAL INCOME BY WAY OF PROFIT ELEMENT IN THE UNRECORDED SALES. HE OFFERED THE PROFIT @ 5% BUT THE ASSESSING OFFICER ESTIMATED P ROFIT ELEMENT BY ADOPTING DIFFERENT PERCENTAGE. NO SPECIFIC EXPLANATION I S OFFERED BY THE ASSESSEE ON AMOUNT OF THE ENHANCED INCOME BUT THE FACT REMAINED THAT ULTIMATELY IT IS OFF SHOOT OF SEARCH AND SEIZURE OPERA TION IN WHICH UNRECORDED SALES WERE DETECTED. ONCE THE ADDITION IS MA DE BY THE ASSESSING OFFICER TO THE RETURNED INCOME EVEN WHICH IS FILED U/S.153A AND IF THE ASSESSEE DID NOT GIVE THE SATISFACTORY EXPLANA TION IN THAT CASE IT IS TO BE HELD THAT THE ASSESSEE HAS CANCELLED THE PAR TICULARS OF INCOME TO THE EXTENT OF THE ADDITION MADE BY THE ASSESSING OFFICE R AS IN THE PRESENT CASE. WE THEREFORE PARTLY UPHOLD THE PENALTY LE VIED BY THE ASSESSING OFFICER MORE PARTICULARLY ON THE ADDITION TO THE TOTAL INCOME BY ENHANCING THE PROFIT ELEMENT IN THE UNRECORDED SALES AND ACCORDINGLY TO THAT EXTENT PENALTY IS CONFIRMED. SO FAR AS A.Y. 2006-07 I S CONCERNED ENHANCEMENT MADE BY THE ASSESSING OFFICER IS IN RESPECT O F THE DISALLOWANCE OF THE INTEREST ON ADHOC BASIS THE SAID DISALLO WANCE HAS NO DIRECT NEXUS WITH ANY SEARCH AND SEIZURE OPERATION. HEN CE, ON THE ADDITION OF RS. 50,000/- ALSO NO PENALTY IS JUSTIFIED. WE THER EFORE PARTLY UPHOLD ORDER OF THE LD. CIT(A) FOR THE A.YS. 2002-03 AND 20 04-05 AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE PENALTY IN THE LIGHT O F ABOVE OBSERVATIONS. IN RESPECT OF A.Y. 2006-07, THE ORDER OF T HE LD. CIT(A) IS CONFIRMED. 14. ACCORDINGLY THE APPEALS OF THE REVENUE FOR THE A.YS. 2002-03 AND 2004-05 ARE PARTLY ALLOWED AND APPEAL FOR THE A.Y. 2006-07 IS DISMISSE D. 15. NOW WE TAKE UP THE REVENUES APPEAL IN THE CASE O F KANTILAL CHAMPALAL KANKARIA BEING ITA NOS. 1468, 1469 AND 14 70/PN/2011. 11 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 16. THIS ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDING MA TERIAL AND SANITARY WARES. A SEARCH AND SEIZURE ACTION U/S.132 OF T HE INCOME-TAX ACT, 1961 WAS CONDUCTED ON 30-08-2007. THE ASSESSEE HAS FILED THE REGULAR RETURNS OF INCOME IN WHICH HE HAS DECLARED THE INC OME OF RS.1,94,140/-, RS.1,62,360/- AND RS.1,94,550/- FOR A.YS. 2002-0 3, 2004-05 AND 2006-07 RESPECTIVELY. THE ASSESSEE FILED TH E RETURNS OF INCOME IN RESPONSE TO NOTICE U/S.153A DECLARING INCOME OF RS.2,55,910/-, RS.177,220/- AND RS.35,53,390/- FOR A.YS. 2002 -03, 2004-05 AND 2006-07 RESPECTIVELY. THE ASSESSMENT OF T HE ASSESSEE WAS COMPLETED U/S.153A R.W.S. 143(3) OF THE INCOME-TAX ACT, 1 961 ON 29.12.2009 DETERMINING THE TOTAL INCOME OF RS.5,64,790/-, RS.2,51,530/- AND RS. 35,53,390/- FOR A.YS. 2002-03, 2004-05 AND 2006-07 RESPECTIVELY. 17. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION T HE ASSESSEE OFFERED ADDITIONAL INCOME IN RESPECT OF UNRECORDED SALES DET ECTED BY ESTIMATING PROFIT @ 5% FOR THE A.YS. 2002-03 AND 2004-05. SO FAR AS THE A.Y. 2006-07 IS CONCERNED THE ASSESSEE HAS OFFERED ADDITIO NAL INCOME TOWARDS LONG TERM CAPITAL GAINS. THE FOLLOWING CHART IS HELP FUL TO UNDERSTAND THE FACTS AND FIGURES IN THIS ASSESSEES CASE. A.Y INCOME SHOWN IN THE RETURNS FILED U/S. 139 ADDITIONAL INCOME DECLARED IN SEARCH U/S. 132 INCOME SHOWN IN THE RETURNS FILED U/S. 153A ADDITION MADE IN THE ASSESSMENT U/S. 143(3) R.W.S. 153A INCOME ASSESSED U/S. 153A INCOME ON WHICH PENALTY U/S. 271(1)(C) LEVIED PENALTY LEVIED. 2002- 03 194140 61775 255910 308874 564790 370644 103767 2004- 05 162360 14862 177220 74308 251530 89170 26751 2006- 07 194550 3358835 3553390 NIL 3553390 3358835 753952 12 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 18. SO FAR AS THE A.YS. 2002-03 AND 2004-05 ARE CONCER NED THE ASSESSING OFFICER MADE THE ADDITIONS OF RS.3,08,874/- AND RS.74,308/- BY ENHANCING PROFIT ON THE UNRECORDED SALES AS PER THE FACT ON RECORD. THE INCOME OFFERED BY THE ASSESSEE IN THE A.YS. 2002-03 A ND 2004-05 IS ONLY CONFINED TO THE PROFITS ON UNRECORDED SALES. THERE WAS NO INCOME DECLARED IN RESPECT OF ANY MONEY, BILLION, JEWELLERY OR ANY OT HER VALUABLE ITEM OR THING AND HENCE EXPLANATION-5 IS NOT APPLICABLE. S O FAR AS APPLICABILITY OF EXPLANATION-5A IS CONCERNED THE SAME IS ALSO NOT APPLICABLE AS THE ASSESSMENT YEARS BEFORE US ARE PRIOR T O A.Y. 2007-08. IDENTICAL ISSUES ARE DECIDED IN THE CASE OF PRAKASH CHAMP ALAL KANKARIA IN ITA NO. 1465, 1466, 1467/PN/2011, FOLLOWING OUR REASONING IN THE CASE OF PRAKASH CHAMPALAL KANKARIA, WE HOLD THAT TO THE EXTENT OF THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED U/S. 1 53A NO PENALTY IS LEVIABLE. 19. SO FAR AS THE ADDITION MADE BY THE ASSESSING OFFICER IN THESE TWO ASSESSMENT YEARS I.E. RS.3,08,874/- AND RS.74,308/- BY E NHANCING THE PROFIT ELEMENT IN THE UNRECORDED SALES TO THE EXTENT OF SAID AMOUNT PENALTY U/S.271(1) (C) OF THE ACT IS LEVIABLE. SO FAR AS A.Y. 2 006-07 IS CONCERNED THE ASSESSEE OFFERED THE ADDITION INCOME TO EX TEND OF RS.33,58,835/- WHICH INCLUDES RS.33,58,484/- TOWARDS LON G TERM CAPITAL GAINS FROM SALE OF LAND ON 22-08-2005 AND INCOME FRO M OTHER SOURCES OF RS. 351/-. HENCE, IN OUR OPINION FOR THE A.Y. 2 006-07 ALSO EXPLANATION-5 AS WELL AS EXPLANATION 5A ARE NOT APPLICABLE. THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION TO THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U /S.153A OF THE ACT AND HENCE, FOLLOWING THE REASONS GIVEN IN THE CASE OF PRAKA SH CHAMPALAL KANKARIA WE HOLD THAT NO PENALTY IS LEVIABLE AT ALL U/S. 271 (1)(C) OF THE ACT FOR THE A.Y. 2006-07. 13 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 20. TO SUM UP REVENUES APPEAL FOR THE A.YS. 2002-03 A ND 2004-05 ARE PARTLY ALLOWED AND THE ASSESSING OFFICER IS DIRECTED T O RE-WORK THE PENALTY ON THE ADDITIONS MADE IN THE A.YS. 2002-03 AND 20 04-05 IN THE LIGHT OF OUR ABOVE OBSERVATIONS. SO FAR AS A.Y. 2006-07 IS CONCERNED THE ORDER OF THE LD. CIT(A) IS CONFIRMED AND REVENUES APPEAL IS DISMISSED. 21. NOW WE TAKE UP THE REVENUES APPEAL IN THE CASE OF SURESH CHAMPALAL KANKARIA BEING ITA NOS. 1471, 1472 AND 14 73/PN/2011. 22. THE ASSESSEE DERIVES INCOME FROM BUSINESS UNDER THE NAME AND STYLE M/S. SAI KIRAN TRADERS, INCOME FROM OTHER SOURCES AND SALARY INCOME FROM PRAKASH TRADERS. IN THE CASE OF THIS ASSES SEE ALSO THERE WAS A SEARCH AND SEIZURE ACTION U/S. 132 OF THE INCOME- TAX ACT, 1961 ON 30-08-2007. THE ASSESSEE HAS FILED THE REGULAR RETURNS OF INCOME U/S.139 OF THE ACT FOR THE A.YS. 2002-03, 2004-05 AND 20 06-07. IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION, THE ASSES SEE FILED THE RETURNS OF INCOME IN RESPONSE TO NOTICES ISSUED U/S.153 A OF THE ACT DECLARING THE ADDITIONAL INCOME OF RS.13,28,000/-, RS.7,43,000/- AND RS.7,55,860/- FOR THE A.YS. 2002-03, 2004-05 AND 2006-07 RESPECTIVELY. THE ASSESSMENT OF THE ASSESSEE HAVE BEEN COMPLETED U/ S. 143(3) R.W.S. 153A OF THE ACT ACCEPTING THE INCOME DECLARED BY THE AS SESSEE IN THE RETURNS FILED IN RESPONSE TO NOTICES U/S. 153A OF THE ACT . THE FOLLOWING CHART IS HELPFUL TO UNDERSTANDS AND AMOUNTS OF THE FACTS AND FIGURES PENALTY IS LEVIED: A.Y INCOME SHOWN IN THE RETURNS FILED U/S. 139 ADDITIONAL INCOME DECLARED IN SEARCH U/S. 132 INCOME SHOWN IN THE RETURNS FILED U/S. 153A ADDITION MADE IN THE ASSESSMENT U/S. 143(3) R.W.S. 153A INCOME ASSESSED U/S. 153A INCOME ON WHICH PENALTY U/S. 271(1)(C) LEVIED PENALTY LEVIED. 2002 - 03 76130 1328000 1404130 NIL 1404130 132 8000 398833 14 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 2004 - 05 63780 743000 806780 NIL 806780 743000 214278 2006 - 07 133200 755860 889060 NIL 889060 755860 217666 23. ON THE PERUSAL OF THE ABOVE CHART, ADMITTEDLY NO ADD ITION IS MADE BY THE ASSESSING OFFICER TO THE INCOME DECLARED BY THE A SSESSEE IN THE RETURNS FILED IN RESPONSE TO A.YS. 2002-03, 2004-05 AND 2006-07. 24. THE NEXT QUESTION IS WHETHER THE EXPLANATION-5 BELOW U/S.271(1)(C) IS ATTRACTED ANY OF THE ASSESSMENT YEARS. T HE ASSESSEE HAS DECLARED THE ADDITIONAL INCOME IS AS UNDER: A.Y PAR TICULARS AMOUNT 2002 - 03 TOWARDS STOCK 3,00,000/ - 2004 - 05 CASH FOR FLAT ADVANCE 2,85,000/ - 2006 - 07 BUSINESS INCOME 7,43,000/ - TOTAL = 13,28,000/ - 25. FROM THE ABOVE CHART, IT IS SEEN THAT INCOME DECLARED BY THE ASSESSEE IS NOT IN RESPECT OF ANY MONEY, BILLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLE OR THING, HENCE EXPLANATION-5 IS NOT APPLICAB LE. SO FAR AS EXPLANATION-5A IS CONCERNED, AS THE ASSESSMENT YEAR S ARE PRIOR TO 2007-08 HENCE, WE CANNOT EXAMINE THE ISSUE OF PENALTY AP PLYING THE SAID EXPLANATION. THE DECISION OF THE ITAT, PUNE IN THE CAS E OF CHANDAN K. SHEWANI (SUPRA) HAS BEEN FOLLOWED IN THE CASE OF PRAKASH CHAMPALAL KANKARIA (SUPRA). WE THEREFORE FOLLOWING THE PRINCIPLES LAID DO WN IN THE CASE OF CHANDAN K. SHEWANI (SUPRA) HOLD THAT NO PENALTY IS LEVIABLE IN THE CASE OF THE PRESENT ASSESSEE FOR THE A.YS. 2002-03, 2004-05 AND 2006-07. ACCORDINGLY, THE ORDERS OF THE LD. CIT(A) ARE UPH ELD AND THE GROUNDS TAKEN BY THE REVENUES ARE DISMISSED. 15 ITA NO.1465 TO 1467/PN/11, PRAKASH CHAMPALAL KANKAR IA, ITA NO. 1468 TO 1470/PN/11, KANTILAL CHAMPALAL KANKARIA & ITA NO. 1471 TO 1473/PN/11, SURESH CHAMPALAL KANKAR IA 26. IN THE RESULT, TO SUM UP THE REVENUES APPEALS BEIN G ITA NOS. 1465, 1466, 1468, 1469/PN/11 ARE PARTLY ALLOWED AND REVE NUES APPEAL IS BEING ITA NOS. 1467, 1470, 1471, 1472 AND 1473/PN/11 A RE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF MARCH 2013. SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 22/03/2013 COPY TO 1 DEP ARTMENT 2 ASSESSEE 3 THE CIT(A) , NASHIK 4 THE CIT ( C ) , NAGPUR 5 THE DR, B BENCH, PUNE . 6 GUARD FILE. // TRUE COPY // BY ORDER PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE