Sh. Rajeev Mehra, Ludhiana V. DCIT, CC-III, Ludhiana

ITA 1469/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7623 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 28-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA; ITA NOS TO CHD
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Transactions in derivatives; Earning of tax free income; Period of limitation; Valuation report; Right to appeal; Commercial expediency; Time period of passing order; Documents seized; Set aside
• Section: 143(3); 14A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.1466/CHD/2018 / ASSESSMENT YEAR : 2014-15 SHRI AMIT MEHRA, C/O M/S JAGAN NATH RAM SAHAI, BAZAR SARAFAN, LUDHIANA VS. THE DCIT, CENTRAL CIRCLE- III, LUDHIANA ! ' ./ PAN NO: AAMPM8655N !#/ APPELLANT %& !# / RESPONDENT ./ ITA NO.1470/CHD/2018 / ASSESSMENT YEAR : 2014-15 M/S JAGAN NATH RAM SAHAI, BAZAR SARAFAN, LUDHIANA VS. THE DCIT, CENTRAL CIRCLE-III, LUDHIANA ! ' ./ PAN NO: AAAFJ8417C !#/ APPELLANT %& !# / RESPONDENT ./ ITA NO.1471/CHD/2018 / ASSESSMENT YEAR : 2014-15 M/S JAGAN NATH RAM SAHAI & SONS, BAZAR SARAFAN, LUDHIANA VS. THE DCIT, CENTRAL CIRCLE- III, LUDHIANA ! ' ./ PAN NO: AACFJ8534E !#/ APPELLANT %& !# / RESPONDENT ()*+ /ASSESSEE BY : SH. SUDHIR SEHGAL, ADVOCATE *+ / REVENUE BY : SMT. CHANDRAKANTA, SR DR & ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 2 ./ ITA NO.1467/CHD/2018 / ASSESSMENT YEAR : 2014-15 SHRI SANJEEV KUMAR MEHRA, C/O M/S JAGAN NATH RAM SAHAI, BAZAR SARAFAN, LUDHIANA VS. THE DCIT, CENTRAL CIRCLE- III, LUDHIANA ! ' ./ PAN NO: AAVPM3824G !#/ APPELLANT %& !# / RESPONDENT ./ ITA NO.1468/CHD/2018 / ASSESSMENT YEAR : 2014-15 SHRI SUMIT MEHRA, C/O M/S JAGAN NATH RAM SAHAI, BAZAR SARAFAN, LUDHIANA VS. THE DCIT, CENTRAL CIRCLE- III, LUDHIANA ! ' ./ PAN NO: ADVPM3825H !#/ APPELLANT %& !# / RESPONDENT ./ ITA NO.1469/CHD/2018 / ASSESSMENT YEAR : 2014-15 SHRI RAJEEV MEHRA, C/O M/S JAGAN NATH RAM SAHAI, BAZAR SARAFAN, LUDHIANA VS. THE DCIT, CENTRAL CIRCLE- III, LUDHIANA ! ' ./ PAN NO: ADRPM1975G !#/ APPELLANT %& !# / RESPONDENT !#/ APPELLANT %& !# / RESPONDENT ()*+ /ASSESSEE BY : SH. SUDHIR SEHGAL, ADVOCATE *+ / REVENUE BY : SMT. ZEENIA HONDA, SR DR , -*) .' /DATE OF HEARING : 08.07.2019 /0 *) .' / DATE OF PRONOUNCEMENT : 16.07.2019 / ORDER ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 3 PER SANJAY GARG, JUDICIAL MEMBER: THESE BUNCH OF APPEALS PREFERRED BY THE DIFFERENT B UT RELATED ASSESSEES ARISE OUT OF THE SEPARATE ORDERS DATED 07 .12.2016 OF THE LD. CIT(A)-5, LUDHIANA [HEREINAFTER REFERRED TO AS CIT( A)] AGITATING THE ACTION OF THE CIT(A) IN CONFIRMING THE PENALTY LEV IED BY THE ASSESSING OFFICER U/S 271AAB OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. ALL THE APPEALS ARE BARRED BY LIMITATION PERIOD OF 634 DAYS. SEPARATE APPLICATIONS HAVE BEEN MOVED IN THE CASE O F EACH OF THE ASSESSEE FOR CONDONATION OF DELAY, WHEREIN, IDENTIC AL EXPLANATION HAS BEEN GIVEN ABOUT THE REASONS BECAUSE OF WHICH THE A PPEALS COULD NOT BE FILED WITHIN TIME PRESCRIBED FOR THE SAME. IT HAS BEEN PLEADED IN THE APPLICATIONS THAT ALL THE ASSESSEES ARE CLOSELY REL ATED. THAT THEIR INDIVIDUAL INCOME TAX MATTERS AS WELL AS OF THE TWO CONCERNS NAMED ABOVE WERE BEING LOOKED INTO BY SHRI NARINDER KUMAR , PARTNER IN M/S JAGAN NATH RAM SAHAI, LUDHIANA. THAT THE ASSESSEES HAVE EMPLOYED A PART TIME ACCOUNTANT SHRI AMARJEET SEKHRI FOR LOOKI NG AFTER INCOME TAX MATTERS WHO IS DOING THIS JOB WITH THE ASSESSEES FO R THE LAST 15 YEARS. THAT THE IMPUGNED ORDERS OF THE CIT(A) CONFIRMING T HE LEVY OF PENALTY U/S 271AAB OF THE ACT WERE RECEIVED BY THE ASSESSE E ON 3.1.2017 AND THAT THE SAME WERE HANDED OVER TO SHRI AMARJEET SEK HRI, ACCOUNTANT FOR ONWARD FILING OF THE APPEALS BEFORE THIS TRIBUNAL. HOWEVER, SHRI AMARJEET SEKHRI GOT MISPLACED THE COPIES OF THE IMP UGNED ORDERS AND ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 4 ALSO EVEN DID NOT DISCUSSED ABOUT THE SAME WITH THE ASSESSEES AND EVEN WITH SHRI NARINDER KUMAR WHO WAS LOOKING AFTER THE INCOME TAX MATTERS. HOWEVER, WHEN SHRI AMARJEET SEKHRI, ACCOUN TANT GOT TRACED THE SAID ORDERS OF THE CIT(A), THE APPEALS WERE IMMEDIA TELY FILED BEFORE THIS TRIBUNAL. THE AVERMENTS MADE IN THE APPLICATIO NS HAVE BEEN SUPPORTED WITH THE AFFIDAVIT OF SHRI NARINDER KUMAR . FURTHER, AN AFFIDAVIT OF SHRI AMARJEET SEKHRI, WHO IS EMPLOYED AS PART TIME ACCOUNTANT WITH THE ASSESSEE, HAS ALSO BEEN FILED. IT HAS BEEN DEPOSED IN THE SAID AFFIDAVIT THAT, IN FACT, HE (AMARJEET S EKHRI) HAD TAKEN THE COPIES OF THE IMPUGNED ORDERS TO HIS HOUSE NO. 51, NEW KUMDANKPURI, CIVIL LINES, LUDHIANA. THAT CERTAIN RENOVATIONS / R EPAIRS AND WHITE WASHING WAS GOING ON IN HIS HOUSE WHICH CONTINUED FOR 4 5 MONTHS AND DURING THAT PERIOD, THERE WAS DISLOCATION OF V ARIOUS ARTICLES / DOCUMENTS. THE APPEAL PAPERS ALSO GOT MISPLACED AT HIS RESIDENCE AND IT ALSO WENT OUT OF HIS MIND THAT THE NECESSARY APPEAL S HAD TO BE FILED BEFORE THE ITAT, CHANDIGARH. THAT IT WAS ONLY IN TH E MONTH OF NOVEMBER 2018, WHEN HE WAS SEGREGATING THE RECORD O F VARIOUS PARTIES WHICH WAS LYING AT HIS RESIDENCE, THE APPEAL ORDERS OF THE CIT(A) IN THE CASES OF THE ASSESSEES WERE LOCATED. HE, IMMEDIATEL Y BROUGHT THIS LAPSE ON HIS PART TO THE KNOWLEDGE OF THE ASSESSEES AND S HRI NARINDER KUMAR AND IMMEDIATELY THE APPEALS WERE FILED BEFORE THIS TRIBUNAL. SINCE THE AVERMENTS IN THE APPLICATIONS HAVE BEEN S UPPORTED WITH THE AFFIDAVIT OF NOT ONLY OF THE CONCERNED PERSON S HRI NARINDER KUMAR ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 5 WHO HAS BEEN LOOKING AFTER THE INCOME TAX MATTERS OF THE ASSESSEES, BUT ALSO OF THE CONCERNED ACCOUNTANT SHRI AMARJEET SEKH RI AND ALSO CONSIDERING THE NATURE OF THE APPEALS BEING AGAINST THE LEVY OF PENALTY, IN OUR VIEW, THE INTEREST OF JUSTICE WILL BE WELL S ERVED IF THE DELAY IN FILING THE PRESENT APPEALS IS CONDONED. WE ORDER AC CORDINGLY. 3. NOW COMING TO THE MERITS OF THE CASES, FOR THE S AKE OF CONVENIENCE, WE TAKE THE CASE OF SHRI AMIT MEHRA, I TA NO. 1266/CHD/2018 AS A LEAD CASE FOR NARRATION OF THE F ACTS. 4. THE BRIEF FACTS RELATING THE ISSUE ARE THAT A SE ARCH ACTION U/S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE AFOR ESAID ASSESSEES ON 27.03.2014. DURING THE SEARCH ACTION, THE ASSESSEE SURRENDERED AN AMOUNT OF RS. 10,00,000/- AS HIS ADDITIONAL INCOM E. SIMILAR SURRENDERS WERE MADE IN THE CASE OF OTHER ASSESSEES ALSO. THE ASSESSING OFFICER OBSERVED THAT AS PER SECTION 271AAB OF THE ACT, TH E LEVY OF PENALTY WAS MANDATORY IN THE CASE OF SURRENDERED / UNEXPLAI NED INCOME IN THE COURSE OF SEARCH ACTION. HE, ACCORDINGLY INITIATED PENALTY PROCEEDINGS U/S 271AAB OF THE ACT AND LEVIED THE MINIMUM PENALT Y @ 10% OF SURRENDERED UNDISCLOSED INCOME IN THE CASE OF THE A FORESAID ASSESSEES. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEES PREFERRED APPEALS BEFORE THE LD. CIT(A) BUT REMAINED UNSUCCESSFUL. ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 6 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEES, AT THE OUTSET, HAS SUBMITTED THAT NO INCRIMINATING DOCUMENTS OR MATERI AL WAS FOUND DURING THE SEARCH ACTION U/S 132 OF THE ACT AT THE PREMISE S OF THE ABOVE NAMED ASSESSESS. THAT THOUGH THE ASSESSEES HAD OFFERED T HE ADDITIONAL INCOME DURING THE SEARCH ACTION BUT THE SAME DOES NOT FALL IN THE DEFINITION OF UNDISCLOSED INCOME AS DEFINED UNDER THE RELEVANT PROVISIONS OF SECTION 271AAB OF THE ACT. THAT, EVEN OTHERWISE, TH E LEVY OF PENALTY U/S 271AAB IS NOT MANDATORY. THAT THOUGH THE ASSESS EES HAD SURRENDERED CERTAIN AMOUNT OF ADDITIONAL INCOME AND PAID DUE TAXES THEREUPON, BUT THE PENAL PROVISIONS OF SECTION 271A AB WERE NOT ATTRACTED IN THE CASES OF THE ASSESSEE. THE LD. CO UNSEL IN THIS RESPECT HAS RELIED UPON THE RECENT DECISION OF THE COORDINA TE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF M/S SEL TEXTILES LT D. VS DCIT, ITA NO. 695/CHD/2018 ORDER DATED 18.04.2019. 7. ON THE OTHER HAND, THE LD. DR THOUGH COULD NOT C ONTROVERT OR REBUT THE CONTENTION OF THE LD. COUNSEL FOR THE ASS ESSEE THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION, HOWEVER, HAS SUBMITTED THAT LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271AAB OF THE ACT IS MANDATORY. HE IN THIS RESPECT HAS R ELIED UPON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF PRINCIPAL CIT VS SANDEEP CHANDAK AND ORS. ITA NO. 122 OF 2017 ORDER DATED 27.11.2017. ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 7 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SO FAR AS ISSUE OF LEVY OF PENALTY U/S 271AAB OF THE ACT WHETHER IS MANDATO RY OR NOT IS CONCERNED, THE ISSUE HAS BEEN DEALT WITH BY THE COO RDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S SEL TEXTILES LTD. VS D CIT (SUPRA). THE TRIBUNAL IN THE ABOVE CASE HAS RELIED UPON THE FOLL OWING DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL:- ACIT VS. MARVEL ASSOCIATES, ITA NO. 147/VIZAG/2017 ORDER DATED 16.3.2018 (ITAT VISAKHAPATNAM BENCH) ; DCIT VS. M/S RASHMI METAL IKS LTD. , ITA NO. 1608/KOLKATA/2017 DATED 1.2.2019; (ITAT KOLKATA BEN CH); DCIT VS. RASHMI CEMENT LTD, ITA NO. 1606/KOLKATA/2017 ORDER DATED 28.2.2019((ITAT KOLKA TA BENCH) 9. THE TRIBUNAL AFTER ANALYZING THE AFORESAID DECIS IONS, WHEREIN, RELIANCE HAS BEEN PLACED ON THE DECISIONS OF THE HO N'BLE HIGH COURTS HAS HELD THAT LEVY OF PENALTY U/S 271AAB OF THE ACT IS NOT MANDATORY AS THE PROVISIONS OF SECTION 274 OF THE ACT HAVE BEEN MADE APPLICABLE IN RELATION TO THE PENALTY REFERRED TO SECTION 271AAB OF THE ACT. IT HAS BEEN HELD THAT THE PENALTY U/S 271AAB WILL NOT BE A TTRACTED IF THE SURRENDERED INCOME WOULD NOT FALL IN THE DEFINITION OF UNDISCLOSED INCOME AS DEFINED UNDER EXPLANATION TO SECTION 271 AAB OF THE ACT. THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL IN M/S SEL TEXTILES LTD. VS ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 8 DCIT DATED 18.04.2019(SUPRA) FOR THE PURPOSE OF RE ADY REFERENCE IS REPRODUCED AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE AL SO GONE THROUGH THE RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PROVISIONS OF SECTI ON 271AAB OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE A CT') ARE NOT ATTRACTED AT ALL IN THE CASE IN HAND. HE HA S SUBMITTED THAT THE INCOME DECLARED BY THE ASSESSEE DURING THE SEARCH ACTION DOES NOT FALL WITHIN THE DEFINITION OF UNDISCLOSED INCOME AS DEFINED UNDER THE PROVISIONS OF SECTION 271AAB OF THE ACT . 6. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED TH AT THE ASSESSEE HIMSELF HAD SURRENDERED AN AMOUNT OF R S. 14,39,99,258/- AS ITS UNDISCLOSED INCOME OF THE YEA R AND SINCE THE ASSESSEE DID NOT SUBSTANTIATE THE MANNER OF EARNING OF THE SAID INCOME, HENCE, THE ASSESSING OF FICER RIGHTLY IMPOSED THE PENALTY UNDER THE PROVISIONS OF SECITON271AAB (1)(C) OF THE ACT. HE HAS FURTHER SUBMITTED THAT EVEN OTHERWISE, AS PER THE PROVISION S OF SECTION 271AAB OF THE ACT, THE LEVY OF PENALTY IS MANDATORY. HOWEVER, THE RATE AT WHICH THE PENALTY IS TO BE LEVIED DEPENDS UPON CERTAIN CONDITIONS AS ENUMER ATED IN CLAUSE (A), CLAUSE (B) AND CLAUSE (C) RESPECTIVE LY TO SUB SECTION (1) TO SECTION 271ABB OF THE ACT. HE, I N THIS RESPECT HAS RELIED UPON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. SHRI SANDEEP CHANDAK AND ORS., ITA NO. 122 OF 2017 ORDER DATED 27.11.2017. 7. IN REBUTTAL, THE LD. AR HAS SUBMITTED THAT AS PE R THE PROVISIONS OF SECTION 274 OF THE ACT WHICH IS M ADE APPLICABLE IN RELATION TO THE PENALTY REFERRED TO S ECTION 271AAB, THE LEVY OF PENALTY IS NOT MANDATORY. HE, I N THIS RESPECT HAS RELIED UPON THE FOLLOWING DECISIONS OF THE COORDINATE BENCHES :- ACIT VS. MARVEL ASSOCIATES, ITA NO. 147/VIZAG/2017 ORDER DATED 16.3.2018 (ITAT VISAKHAPATNAM BENCH); ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 9 DCIT VS. M/S RASHMI METALIKS LTD., ITA NO. 1608/KOLKATA/2017 DATED 1.2.2019; (ITAT KOLKATA BENCH); DCIT VS. RASHMI CEMENT LTD, ITA NO. 1606/KOLKATA/2017 ORDER DATED 28.2.2019((ITAT KOLKATA BENCH). 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE LD . COUNSEL FOR THE PARTIES AND GONE THROUGH THE RECORD , ALSO EXAMINED THE RELEVANT PROVISIONS OF THE ACT AN D CASE LAWS ON THE ISSUE. FOR THE SAKE OF READY REFER ENCE, THE RELEVANT PROVISIONS OF SECTION 271AAB AND SECTI ON 274 OF THE INCOME TAX ACT ARE REPRODUCED AS UNDER: PENALTY WHERE SEARCH HAS BEEN INITIATED 271AAB: (1) THE ASSESSING OFFICER MAY, NOTWITHSTAND ING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIA TED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION T O TAX, IF ANY, PAYABLE BY HIM (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT OF T HE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH 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 UNDISCLOSED INCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT O F THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 10 (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II) ON OR BEFORE THE SPECIFIED DATE (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FURNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER C ENT BUT WHICH SHALL NOT EXCEED NINETY PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLAUSES (A) AND (B). (2) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB- SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON TH E ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFER RED TO IN SUB-SECTION (1). (3) THE PROVISIONS OF SECTION 274 AND 275 SHALL, AS FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED T O IN THIS SECTION. EXPLANATION:--- FOR THE PURPOSE OF THIS SECTION,__ (A) (B). (C) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE 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 (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 11 PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. SECTION 274 PROCEDURE 274 (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD, OR HAS BEE N GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. (2) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE MADE- (A) BY THE INCOME- TAX OFFICER, WHERE THE PENALTY EXCEEDS TEN THOUSAND RUPEES; (B) BY THE ASSISTANT COMMISSIONER, WHERE THE PENALT Y EXCEEDS TWENTY THOUSAND RUPEES, EXCEPT WITH THE PRI OR APPROVAL OF THE DEPUTY COMMISSIONER.] (3) AN INCOME- TAX AUTHORITY ON MAKING AN ORDER UNDER THIS CHAPTER IMPOSING A PENALTY, UNLESS HE IS HIMSELF TH E ASSESSING OFFICER, SHALL FORTHWITH SEND A COPY OF SUCH ORDER TO THE ASSESSING OFFICER. 9. IT IS PERTINENT TO MENTION HERE THAT CO-ORDINATE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF M/S . RASHMI METALIKS LTD. (SUPRA) HAS EXTENSIVELY ANAL YZED THE AFORESAID PROVISIONS OF SECTION 217AAB WHILE FU RTHER RELYING UPON THE DECISION OF THE VISAKHAPATNAM BEN CH OF THE ITAT IN THE CASE OF ACIT VS. MARVEL ASSOCIATES(SUPRA) AND OTHER CASE LAWS. THE RELEVAN T PART OF THE SAID ORDER OF KOLKATA BENCH IS REPRODUC ED AS UNDER: AT THE OUTSET WE NOTE THAT IT HAS BEEN THE SUBMIS SION OF THE AO AS WELL AS THE LD. DR THAT THE LEVY OF PENAL TY UNDER SECTION 271AAB IS MANDATORY AND AUTOMATIC AND THERE FORE IN THE MATTER OF LEVY OF PENALTY THE AO HAD NO DISC RETION ONCE THE ASSESSEE ADMITS OF ANY UNDISCLOSED INCOME IN HIS STATEMENT U/S 132(4) OF THE ACT. SUCH A VIEW GOES A GAINST THE WORDS USED IN SECTION 271AAB AND SECTION 274 OF THE ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 12 ACT. FOR SAYING SO WE NOTE THAT IF THE INTENTION OF THE LEGISLATURE TO LEVY THE PENALTY WAS MANDATORY AND AUTOMATIC THEN THE RIGHT OF APPEAL U/S 246A WOULD N OT HAVE BEEN PROVIDED FOR BY THE LEGISLATURE AGAINST T HE ORDER OF PENALTY PASSED U/S 271AAB OF THE ACT. WE A LSO NOTE THAT WHILE ENACTING SECTION 271AAB THE LEGISLA TURE HAS CONSCIOUSLY USED THE WORD MAY IN CONTRADISTIN CTION TO THE WORD SHALL IN THE OPENING WORDS OF SECTION 271AAB OF THE ACT. THE CHOICE OF THE EXPRESSION MA Y AND NOT SHALL IN THE OPENING SECTION OF 271AAB SHOWS THAT THE LEGISLATURE DID NOT INTEND TO MAKE THE LEVY OF PENALTY STATUTORY, AUTOMATIC AND BINDING ON THE AO BUT THE AO WAS GIVEN DISCRETION IN THE MATTER OF LEVY OF PENAL TY. OUR FOREGOING VIEW FINDS SUPPORT IN THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL AT VISHAKHAPATNAM IN THE CASE OF ACIT VS MARVEL ASSOCIATES (170 ITD 353) WHICH IN TURN RELIED ON HONBLE ANDHRA PRADESH HIGH COURT RATIO IN RADHA KRISHNA VIHAR (INFRA). THE FOLLOWING OBSERVATIONS OF THE TRIBUNAL IN THE SAID DECISION A RE RELEVANT IN THIS REGARD: 6. CAREFUL READING OF SECTION 271AAB OF THE ACT, T HE WORDS USED ARE 'AO MAY DIRECT' AND 'THE ASSESSEE SH ALL PAY BY WAY OF PENALTY'. SIMILAR WORDS ARE USED SECT ION 158BFA(2) OF THE ACT. THE WORD MAY DIRECT INDICATES THE DISCRETION TO THE AO. FURTHER, SUB SECTION (3) OF SECTION 271AAB OF THE ACT, FORTIFIES THIS VIEW. . . 7. THE LEGISLATURE HAS INCLUDED THE PROVISIONS OF SECTION 274 AND SECTION 275 OF THE ACT IN 271AAB OF THE ACT WITH CLEAR INTENTION TO CONSIDER THE IMPOSI TION OF PENALTY JUDICIALLY. SECTION 274 DEALS WITH THE PROCEDURE FOR LEVY OF PENALTY, WHEREIN, IT DIRECTS THAT NO ORDER IMPOSING PENALTY SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THEREFORE, FROM PLAIN READING OF SECTION 271AAB OF THE ACT, IT IS EVIDENT THAT THE PENALTY CANNOT BE IMPOSED UNLESS T HE ASSESSEE IS GIVEN A REASONABLE OPPORTUNITY AND ASSESSEE IS BEING HEARD. ONCE THE OPPORTUNITY IS GI VEN TO THE ASSESSEE, THE PENALTY CANNOT BE MANDATORY AN D IT IS ON THE BASIS OF THE FACTS AND MERITS PLACED B EFORE THE A.O. ONCE THE A.O. IS BOUND BY THE ACT TO HEAR THE ASSESSEE AND TO GIVE REASONABLE OPPORTUNITY TO EXPL AIN HIS CASE, THERE IS NO MANDATORY REQUIREMENT OF IMPOSING PENALTY, BECAUSE THE OPPORTUNITY OF BEING HEARD AND REASONABLE OPPORTUNITY IS NOT A MERE FORMALITY BUT IT IS TO ADHERE TO THE PRINCIPLES OF NATURAL JUSTICE. HON'BLE A.P. HIGH COURT IN THE CAS E OF RADHAKRISHNAVIHAR IN ITTA NO.740/2011 WHILE DEALING WITH THE PENALTY U/S 158BFA HELD THAT 'WE ARE OF TH E ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 13 OPINION THAT WHILE THE WORDS SHALL BE LIABLE UNDER SUB SECTION (1) OF SECTION 158BFA OF THE ACT THAT ARE ENTITLED TO BE MANDATORY, THE WORDS MAY DIRECT IN S UB SECTION 2 THERE OF INTENDED TO DIRECTORY'. IN OTHER WORDS, WHILE PAYMENT OF INTEREST IS MANDATORY LEVY OF PENALTY IS DISCRETIONARY. IT IS TRITE POSITION OF L AW THAT DISCRETION IS VESTED AND AUTHORITY HAS TO BE EXERCI SED IN A REASONABLE AND RATIONAL MANNER DEPENDING UPON THE FACTS AND CIRCUMSTANCES OF THE EACH CASE. PLAIN READING OF SECTION 271AAB AND 274 OF THE ACT INDICA TES THAT THE IMPOSITION OF PENALTY U/S 271AAB OF THE AC T IS NOT MANDATORY BUT DIRECTORY. ACCORDINGLY WE HOLD TH AT THE PENALTY U/S 271AAB IS NOT MANDATORY BUT TO BE IMPOSED ON MERITS OF THE EACH CASE. 9. AS FAR AS TO THE JUDGMENT OF THE HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF PR. CIT VS SANDEEP CHANDAK (SU PRA) IS CONCERNED, WE NOTE THAT THE FACTS OF THE PRESENT CA SE ARE DISTINGUISHABLE FROM THE FACTS INVOLVED IN THAT JUD GMENT. IN SANDEEP CHANDAK (SUPRA) THE ASSESSEE HAD NOT ONL Y MADE THE DISCLOSURE/SURRENDER OF THE AMOUNT BUT ALS O HAD SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED I.E. FROM THE TRADING OF F&O AND DERIVATIVE S AND WAS ADVANCED FOR PURCHASE OF LAND. THAT IS NOT THE CASE IN THE PRESENT APPEAL; THERE IS NO EXPLANATION BY T HE ASSESSEE THE MANNER OF DERIVING THE SURRENDER MADE DURING SEARCH. AS DISCUSSED IN THE FOREGOING, IT IS A MATTER OF RECORD THAT IN THE COURSE OF SEARCH NO UNDISCLOS ED ASSET OR THING WAS FOUND NOR ANY INCRIMINATING MATERIAL W AS FOUND FROM WHICH ANY UNDISCLOSED INCOME OR UNEXPLAI NED EXPENDITURE COULD BE INFERRED. IN THE CIRCUMSTANCE S THE BALD OFFER MADE BY THE ASSESSEE TO PAY TAX ON ADDIT IONAL INCOME IN THE STATEMENT U/S 132(4) CANNOT BE CONSID ERED TO BE UNDISCLOSED INCOME WITHIN THE MEANING OF SE C. 271AAB OF THE ACT. SO THE RIGORS OF SECTION 271AAB OF THE ACT IS NOT ATTRACTED. HAVING REGARD TO THESE MATERI AL FACTS THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RELIED UPON BY THE LD. DR, HAS NO APPLICATION IN THE FACTS OF T HE INSTANT CASE. .. .. 11. SO FOR THE REASONS AS AFORERSTATED AND RE LYING ON THE HONBLE ANDHRA PRADESH HIGH COURT RATIO IN R ADHA KRISHNA VIHAR (SUPRA), WE CANNOT AGREE WITH THE REV ENUE THAT THE LEVY OF PENALTY UNDER SECTION 271AAB WAS MANDATORY AND AUTOMATIC. WE FURTHER NOTE THAT THE PENALTY LEVIABLE UNDER SECTION 271AAB MUST HAVE NECESSARY AND PROXIMATE NEXUS WITH DISCOVERY OF UNDISCLOSED INCOME IN THE COURSE OR AS A RESULT O F SEARCH. THE EXPRESSION UNDISCLOSED INCOME FOR THE PURPOSE S OF ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 14 LEVY OF PENALTY U/S 271AAB HAS A DEFINITE AND SPECI FIC MEANING AND THE SAID WORD OR EXPRESSION DOES NOT HA VE ANY LOOSE OR COLLOQUIAL MEANING. UNLESS AND UNTIL I NCOME OFFERED TO TAX BY AN ASSESSEE COMES WITHIN THE MISC HIEF OF UNDISCLOSED INCOME AND THAT TOO OF THE SPECIFIED PR EVIOUS YEAR IT IS NOT OPEN FOR THE AO TO INVOKE PROVISIONS OF SECTION 271AAB OF THE ACT. . 12. FROM THE FOREGOING DEFINITION OF UNDISCLOS ED INCOME WE FIND THAT THIS EXPRESSION IS GIVEN A DEF INITE AND SPECIFIC MEANING AND THE WORD HAS NOT BEEN DESC RIBED IN AN INCLUSIVE MANNER SO AS TO ENABLE THE TAX AUTH ORITIES TO GIVE WIDER OR ELASTIC MEANING WHICH ENABLES THEM TO BRING WITHIN ITS AMBIT THE SPECIES OF INCOME NOT SPECIFICALLY COVERED BY THE DEFINITION. FROM BARE P ERUSAL OF THE DEFINITION OF THE WORD UNDISCLOSED INCOME WE FIND THAT IN ORDER TO BRING A RECEIPT OR SPECIE OF INCOM E WITHIN THE MEANING OF THE SAID EXPRESSION, IT IS OBLIGATOR Y FOR THE AO TO DEMONSTRATE AND PROVE THAT THE INCOME IS REPRESENTED EITHER WHOLLY OR PARTLY BY ANY MONEY, B ULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN THE COURSE OF SEARCH U/S 132 AND WHICH WAS NOT RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUN TS OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE REL ATING TO SUCH PREVIOUS YEAR OR OTHERWISE NOT DISCLOSED TO THE COMMISSIONER BEFORE THE DATE OF SEARCH. FROM THE BA RE PERUSAL OF THE ASSESSMENT ORDER AND THE PENALTY ORD ER, WE NOTE THAT THE ASSESSEE HAD VOLUNTARILY INCLUDED RS. 69 CRORES AS ITS INCOME FOR AY 2013-14. WE HOWEVER FIN D THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO WHICH IN ANY MANNER EVEN SUGGESTED LET ALONE PROVED WITH COG ENT MATERIAL THAT THE SAID INCOME WAS ACTUALLY REPRESEN TED EITHER WHOLLY OR PARTLY BY ANY SUM OF MONEY, BULLIO N, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND WH ICH WAS FOUND IN THE COURSE OF SEARCH. SINCE NO SUM OF MONE Y, BULLION, VALUABLE OR ARTICLE EQUIVALENT TO RS.69 CR ORES WAS DISCOVERED BY THE REVENUE IN THE COURSE OF SEARCH, THE ADDITIONAL REQUIREMENT OF THE SAME BEING FOUND NOT RECORDED IN THE BOOKS OR OTHER DOCUMENTS WAS REDUND ANT. WE THEREFORE FIND THAT THE CONDITIONS PRESCRIBED IN FIRST LIMB OF CLAUSE (I) OF CLAUSE (C) OF EXPLANATION WER E NOT SATISFIED. 13. THE SECOND LIMB OF SUB-CLAUSE (I) PROVIDES THAT UNDISCLOSED INCOME SHALL MEAN ANY INCOME REPRESEN TED EITHER WHOLLY OR PARTLY BY ANY ENTRY IN THE BOOKS O F ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTIONS FOUND I N THE ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 15 COURSE OF SEARCH UNDER SECTION 132 BUT WHICH WERE N OT RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOO KS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN THE NORMA L COURSE RELATING TO SUCH PREVIOUS YEAR OR OTHERWISE NOT BEEN DISCLOSED TO THE COMMISSIONER BEFORE THE DATE OF SEARCH. WE FIND THAT EVEN IN RESPECT OF THE SECOND LIMB NO MATERIAL OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO WHICH SHOWED THAT THE INCOME OF RS.69 CRORES WAS REPRESENTED BY ANY ENTRY IN THE BOOKS OF ACCOUNTS O R OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF SE ARCH. .. .. 14. FROM THE FOREGOING FINDINGS RECORDED BY THE AO IN PARA 7 OF THE ASSESSMENT ORDER, WE FIND T HAT SAVE & EXCEPT MAKING REFERENCE TO THE VOLUNTARY OF FER MADE THROUGH JOINT DECLARATION PETITION DATED 18.04.2013, THE AO HAD NOT BROUGHT ON RECORD ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H FROM WHICH ONE COULD INFER THAT THE INCOME OF RS.69 CROR ES WAS REPRESENTED IN PART OR WHOLE BY ANY ENTRY MADE IN T HE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTION S FOUND IN THE COURSE OF SEARCH. . 15. FROM THE FOREGOING FINDINGS OF THE AO, WE N OTE THAT IN THE ASSESSMENT ORDER U/S 143(3), THE AO HAD ADMITTED THAT THE ASSESSEE HAD SATISFACTORILY EXPLA INED THE CONTENTS OF THE DOCUMENTS IDENTIFIED AS RASHMI/ 1 TO RASHMI/5 AND RCPL/1 TO RCPL/7 AND THERE WAS NO FIND ING IN THE SAID ASSESSMENT ORDER WHICH IN ANY MANNER EV EN SUGGESTED LET ALONE PROVED THAT THE INCOME OF RS.69 CRORES OFFERED BY THE ASSESSEE IN ITS RETURN OF INC OME WAS RELATABLE TO OR REPRESENTED BY THE ENTRIES MADE IN DOCUMENTS IDENTIFIED AS RASHMI/1 TO RASHMI/5 AND RCPL/1 TO RCPL/7. IN THE COURSE OF APPELLATE HEARI NG THE FOREGOING SUBMISSION OF THE LD. AR WENT UN-REBUTTED FROM THE LD. DR WHO COULD NOT BRING TO OUR ATTENTION ANY SPECIFIC NOTING IN THE SAID DOCUMENTS FROM WHICH IT COULD BE CONSTRUED THAT THE INCOME DISCLOSED WAS RELATABL E TO DOCUMENTS SEIZED IN THE COURSE OF SEARCH. .. ..16. FROM THE FOREGOING DISCUSSION AND MATERIAL ON RECORD, WE FIND THAT APPLYING BOTH THE LIMBS CONTAI NED IN CLAUSE (C) OF EXPLANATION TO SECTION 271AAB, THE ADDITIONAL INCOME OF RS.69 CRORES OFFERED BY THE AS SESSEE THROUGH ITS JOINT DECLARATION WAS NEITHER REPRESENT ED BY ANY ASSETS FOUND IN THE COURSE OF SEARCH NOR REPRES ENTED BY ANY ENTRY MADE IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF SE ARCH. ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 16 WE THEREFORE FIND THAT THE INCOME VOLUNTARILY OFFER ED BY THE ASSESSEE DID NOT COME WITHIN THE AMBIT AND SCOP E OF THE EXPRESSION UNDISCLOSED INCOME AS DEFINED FOR THE PURPOSES OF SECTION 271AAB OF THE ACT. 17. FROM THE PLAIN READING OF SECTION 271AAB WE FIN D THAT THE LEVY OF PENALTY IS PERMISSIBLE IF AND ONLY IF T HERE EXISTS UNDISCLOSED INCOME. FINDING OR UNEARTHING OF UNDI SCLOSED INCOME IN THE COURSE OR AS A RESULT OF SEARCH CONDU CTED U/S 132 OF THE ACT IS SINE QUA NON FOR INVOKING PEN AL PROVISIONS OF SECTION 271AAB OF THE ACT. DISCOVERY AND CONSEQUENT ASSESSMENT OF UNDISCLOSED INCOME IS A CONDITION PRECEDENT FOR LEVY OF PENALTY UNDER SECTI ON 271AAB OF THE ACT. IT HAS TO BE BORNE IN MIND THAT EVERY OFFER OF THE ASSESSEE TO PAY TAX ON HIS OR HER INCO ME IN THE COURSE OF RECORDING OF STATEMENT U/S 132 DOES NOT A MOUNT TO FINDING OF UNDISCLOSED INCOME. A MERE OFFER OR DISCLOSURE BY AN ASSESSEE TO PAY TAX ON SOME ADDITI ONAL AMOUNT WITH A VIEW TO AVOID PROTRACTED LITIGATION C ANNOT AND DOES NOT AMOUNT TO DISCOVERY OF UNDISCLOSED INC OME FOR THE PURPOSES OF LEVY PENALTY U/S 271AAB OF THE ACT. THE LEGISLATURE HAS ALL ALONG BEEN CONSCIOUS IN PRO VIDING FOR LEVY OF PENALTY ONLY IN RESPECT OF UNDISCLOSED INCOME. WE FIND THAT IN ALL PENAL PROVISIONS SUCH AS EXPLANATION 5A OF SECTION 271(1)(C), SECTION 271AAA & SECTION 271AAB, THE LEGISLATURE HAS RESTRICTED THE SCOPE OF PENAL PROVISION ONLY TO UNDISCLOSED INCOME AND NOT ASSESSED TOTAL INCOME. MOREOVER THE TERM/EXPRESSION UNDISCLOSED INCOME HAS BEEN DEFINED BY THE LEGISL ATURE IN ALL SUCH PENAL PROVISIONS IN A SPECIFIC AND REST RICTED MANNER AND NOT IN AN INCLUSIVE MANNER. FOR THAT REA SON THE DEFINITION OF UNDISCLOSED INCOME NOWHERE PROVID ES THAT THE SAID EXPRESSION SHALL INCLUDE ALL AND EV ERY SPECIES OF INCOME BUT THE WORD USED IS UNDISCLOSED INCOME MEANS. THE CONSCIOUS USE OF THE EXPRESSION MEANS IN CONTRADISTINCTION TO THE USE OF WORD INCLUDES IND ICATE THAT THE LEGISLATURE INTENDED TO RESTRICT THE SCOPE OF PENAL PROVISIONS ONLY TO INCOME WHICH CAME WITHIN THE KEN OF THE SAID EXPRESSION AND NOT BEYOND. APPLYING THE DEFINITION OF UNDISCLOSED INCOME TO THE INCOME OF R S.69 CRORES, WE FIND THAT SUCH INCOME WAS OFFERED IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT AT THE TIM E OF SEARCH. HOWEVER ONLY FOR THE SAID REASON, IT COULD NOT BE BROUGHT WITHIN THE AMBIT OF UNDISCLOSED INCOME PARTICULARLY WHEN SUCH INCOME WAS NOT REPRESENTED B Y ANY VALUABLE ASSET OR ENTRY IN BOOKS OF ACCOUNTS OR WHI CH WAS NOT FOUND AS A RESULT OF SEARCH NOT RECORDED IN THE BOOKS. ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 17 WE THEREFORE FIND MUCH FORCE IN THE LD. ARS ARGUME NTS THAT SINCE THE SUM OF RS.69 CRORES VOLUNTARILY OFFE RED TO TAX WAS NOT IN THE NATURE OF UNDISCLOSED INCOME, TH E LEVY OF PENALTY U/S 271AAB WAS UNSUSTAINABLE. 18. IN THIS REGARD WE RELY ON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACI T VS KANWARSAIN GUPTA IN ITA NO.538/KOL/2017 DATED 29.06.2018 INVOLVING SIMILAR SET OF FACTS AND CIRCUMSTANCES. IN THE INSTANT CASE ALSO THE ASSESSE E HAD VOLUNTARILY OFFERED SUM OF RS.1,00,00,000/- TO TAX IN HIS STATEMENT U/S 132(4) WITHOUT ANY PROOF OF CONCEALME NT. THE AO ASSESSED SUCH SUM TO TAX SOLELY BASED ON THE ASSESSEES DISCLOSURE PETITION AND THERE WAS NO MAT ERIAL BROUGHT ON RECORD TO INDICATE THAT IT WAS REPRESENT ED BY ANY VALUABLE ASSET OR ANY ENTRY FOUND IN ANY BOOKS OR OTHER DOCUMENTS SEIZED IN THE COURSE OF SEARCH. THE AO THEREAFTER ALSO LEVIED PENALTY U/S 271AAB @ 10% WHI CH WAS DELETED BY LD. CIT(A). ON APPEAL THIS TRIBUNAL UPHELD THE ORDER OF LD. CIT(A) BY OBSERVING AS UNDER: 4. LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED THAT THE ASSESSING OFFICER HAD RIGHTLY IMPOSED THE IMPUG NED PENALTY IN ASSESSEES CASE @10% OF HIS UNDISCLOSED INCOME OF RS.1 CRORE COMING RS.10,00,000 IN QUESTIO N. WE FIND NO SUBSTANCE IN REVENUES INSTANT ARGUMENTS . WE FIRST OF ALL MAKE IT CLEAR THAT SECTION 271AAB O F THE ACT APPLIES IN RELATION TO THE IMPUGNED PENALTY @10 % OF THE UNDISCLOSED INCOME AS STOOD DEFINED IN EXPLANATION (C) THERETO. THERE IS NO MATERIAL IN TH E CASE FILE TO INDICATE THAT THE ASSESSEES UNDISCLOS ED INCOME REPRESENTS ANY MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE OR ANY ENTRY IN THE BOOKS OR OTHER DOCUMENTS THEREIN. WE MAKE IT CLEAR THAT WE ARE DEALING WITH A PENALTY PROVISION IN TAX STATUTE WHI CH IS TO BE STRICTLY INTERPRETED. WE THEREFORE ARE OF THE OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE IMPUGNED PENALTY AS THE ASSESEES SEARCH STATEMENT NOWHERE INDICATED THE CORRESPONDING UNDISCLOSED INCOME AS PER SPECIFIC REQUIREMENT IN THE ACT. THE CIT(A)S FINDINGS UNDER CHALLENGE DELETING PENALTY IN QUESTION ARE ACCORDINGLY CONFIRMED. 19. WE ALSO RELY ON THE DECISION OF THIS COORDINATE BENCH OF TRIBUNAL IN THE CASE OF DCIT VS LILADHAR AGARWAL IN ITA NO. 1605/KOL/2017 DATED 26.12.2018 WHEREIN IDENTICA L ISSUE HAD COME UP FOR CONSIDERATION AND THE TRIBUNA L UPHELD THE CIT(A)S ORDER DELETING THE LEVY OF PENA LTY SINCE THERE WAS NO MATERIAL TO SUGGEST THAT THE INCOME OF FERED TO TAX WAS A CONSEQUENCE OF ANY VALUABLE ASSET OR ANY ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 18 ENTRY FOUND IN ANY BOOKS OR OTHER DOCUMENTS SEIZED IN THE COURSE OF SEARCH. . 20. WE MAY ALSO REFER TO THE DECISION OF THE COORDI NATE BENCH OF THE TRIBUNAL AT VISHAKHAPATNAM IN THE CASE OF ACIT VS MARVEL ASSOCIATES (SUPRA) WHEREIN IT WAS H ELD AS FOLLOWS: 9. PENALTY U/S 271AAB ATTRACTS ON UNDISCLOSED INCO ME BUT NOT ON ADMISSION MADE BY THE ASSESSEE U/S 132(4 ). THE AO MUST ESTABLISH THAT THERE IS UNDISCLOSED INC OME ON THE BASIS OF INCRIMINATING MATERIAL. IN THE INST ANT CASE A LOOSE SHEET WAS FOUND ACCORDING TO THE A.O., IT WAS INCRIMINATING MATERIAL EVIDENCING THE UNDISCLOS ED INCOME. IN THE PENALTY ORDER THE AO OBSERVED THAT LOOSE SHEET SHOWS THE COST PER SQUARE FEET IS RS.35 71/- PER SFT. AND ASSESSEE STATED TO HAVE SUBMITTED IN S WORN STATEMENT COST PER SQ. FEET AT RS.2200/- TO RS.2300 /- PER SQ. FEET. HOWEVER NEITHER THE AO NOR THE LD.CIT (A) HAS VERIFIED THE COST OF CONSTRUCTION WITH THE BOOK S AND PROJECTIONS FOUND AT THE TIME OF SEARCH. THE COUNSEL ARGUED THAT IT WAS MERE PROJECTION BUT NOT THE ACTUALS. THE WRITE UP HEADING ALSO MENTIONED THAT SUMMARY OF THE PROJECTED PROFITABILITY STATEMENT. THERE IS NO EVIDENCE TO ESTABLISH THAT PROJECTIONS REFLECTED IN THE LOOSE SHEET IS REAL. NO OTHER MATE RIAL WAS FOUND DURING THE COURSE OF SEARCH INDICATING TH E UNDISCLOSED INCOME. THERE WAS NO MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE OR THING OR ENTRY IN THE BOOKS OF ACCOUNTS OR DOCUMENTS TRANSACTIONS WERE FOUND DURING THE COURSE OF SEARCH INDICATING THE AS SETS NOT RECORDED IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE, WHOLLY O R PARTLY. THE REVENUE DID NOT FIND ANY UNDISCLOSED AS SET, ANY OTHER UNDISCLOSED INCOME OR THE INFLATION OF EXPENDITURE DURING THE SEARCH/ ASSESSMENT PROCEEDINGS. THOUGH A LOOSE SHEET OF PAGE NO.107 OF ANNEXURE A/GS/MA/1 WAS FOUND THAT DOES NOT INDICATE ANY SUPPRESSION OF INCOME BUT IT IS ONLY PROJECTION OF PROFIT STATEMENT. THE AMOUNT OF RS.3571/- MENTIONED IN THE PROJECTIONS REFERS TO COST AND PROFIT WHICH IS APPROXIMATE SALE PRICE BUT NOT THE COST AS STATED B Y THE AO IN THE PENALTY ORDER. THE COST OF CONSTRUCTI ON IN THE PROJECTIONS PROJECTED AT RS.2177/- WHICH IS IN SYNCH WITH THE STATEMENT GIVEN BY THE ASSESSEE. THE AO WAS HAPPY WITH THE DISCLOSURE GIVEN BY THE ASSESSEE AND DID NOT VERIFY THE FACTUAL POSITION WITH THE BO OKS OF ACCOUNTS AND PROJECTIONS AND BRING THE EVIDENCE TO UNEARTH THE UNDISCLOSED INCOME. NEITHER THE A.O. NO R THE INVESTIGATION WING LINKED THE COST OF PROFIT OR COST OF ASSET TO THE ENTRIES IN THE BOOKS OF ACCOUNTS OR TO THE SALES CONDUCTED BY THE ASSESSEE TO THE SALE DEE DS. THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION O F ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 19 THE REVENUE THAT THE LOOSE SHEET FOUND DURING THE COURSE OF SEARCH INDICATES ANY UNDISCLOSED INCOME O R ASSET OR INFLATION OF EXPENDITURE. THE HON'BLE ITAT DELHI BENCH IN THE CASE OF AJAY SHARMA V. DY. CIT [2013] 30 TAXMANN.COM 109 HELD THAT WITH RESPECT TO THE ADDITION ON ACCOUNT OF ALLEGED RECEIVABLES AS P ER SEIZED PAPER, THERE IS NO DIRECT MATERIAL WHICH LEA DS AND ESTABLISHES THAT ANY INCOME RECEIVED BY THE ASSESSEE HAS NOT BEEN DECLARED BY THE ASSESSEE. AN ADDITION HAS BEEN MADE ON THE BASIS OF LOOSE DOCUME NT, WHICH DID NOT CLOSELY PROVE ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSE E. HENCE PENALTY U/S 158BFA (2) OF THE ACT IS NOT LEVIABLE. THE FACTS OF THE ASSESSEE'S CASE SHOWS THAT THERE W AS NO UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARCH AND NO INCRIMINATING MATERIAL WAS FOUND, HEN CE WE HOLD THAT THERE IS NO CASE FOR IMPOSING PENALTY U/S 271AAB OF THE ACT, ACCORDINGLY, WE SET ASIDE THE OR DER OF THE LOWER AUTHORITIES AND CANCEL THE PENALTY U/S 271AAB OF THE ACT. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 21. USEFUL REFERENCE IN THIS REGARD MAY ALSO BE MAD E TO THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUN AL AT JAIPUR IN THE CASE OF SHRI DINESH KUMAR AGARWAL VS. ACIT IN ITA NO. 855 & 856/JP/2017 DATED 24/07/2018 WHERE IN IT WAS HELD AS FOLLOWS: 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE N OTE THAT THE SURRENDER OF RS. 1,65,38,920/- WAS MADE BY THE ASSESSEE DURING THE COURSE OF SEARCH AND SEIZUR E PROCEEDINGS AND OFFERED TO TAX FOR THE YEAR UNDER CONSIDERATION. THE DETAILS OF THE SURRENDERED INCOM E PERTAINS TO THE YEAR UNDER CONSIDERATION ARE AS UND ER:- ON ACCOUNT OF DEBTORS (ADVANCES GIVEN) RS. 80,00,00 0/- UNEXPLAINED CASH FOUND RS. 10,00,000/- ACCRUED INTEREST ON DEBTORS RS. 20,00,00 0/- EXCESS STOCK FOUND DURING SEARCH RS. 55, 38,920/- TOTAL RS. 1,65,38,920/- WE FIND THAT OUT OF THESE FOUR ITEMS OF SURRENDERS ONLY ADVANCES OF RS. 80,00,000/- IS BASED ON THE INCRIMINATING MATERIAL AND ALL OTHER ITEMS ARE NOT ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 20 BASED ON THE SEIZED MATERIAL. THE INTEREST ON ADVANCES/ DEBTORS IS ONLY AN ESTIMATED AMOUNT DISCLOSED DURING THE YEAR BUT NO RECORD OR ANY DOCUMENT WAS FOUND DURING THE SEARCH AND SEIZURE ACTION. AS REGARDS THE EXCESS STOCK WE FIND FROM TH E RECORD AS PRODUCED BEFORE US BY THE LD. DR THAT THE VALUATION REPORT IS BASED ON THE MARKET PRICE OF TH E GOLD JEWELLERY PREVAILING ON THE DATE OF SEARCH AS AGAINST THE COST OR REALIZATION WHEREVER IS LESS. THEREFORE, THE COMPUTATION OF EXCESS STOCK BASED ON THE MARKET PRICE OF THE STOCK CANNOT BE CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE AS IT IS THE SUB JECT MATTER OF REGULAR ASSESSMENT AND CANNOT BE REGARDED AS UNDISCLOSED INCOME BASED ON INCRIMINATING MATERIAL. THERE IS NO SUCH FACT EITHER RECORDED DUR ING THE SEARCH AND SEIZURE PROCEEDING OR IN THE ASSESSM ENT ORDER OR IN THE PENALTY PROCEEDING TO SHOW THAT THE RE WAS DISCREPANCY IN THE STOCK AS RECORDED IN THE BOO KS OF ACCOUNT AND FOUND AT THE TIME OF SEARCH. IN THE ABSENCE OF ANY DISCREPANCY IN THE QUANTITY OF STOCK THE VALUATION OF THE STOCK IS PURELY A QUESTION OF ASSESSMENT AND CANNOT BE HELD AS UNDISCLOSED INCOME DETECTED DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDING. THEREFORE, TO THE EXTENT OF EXCESS STOC K BASED ON THE VALUATION REPORT THE DISCLOSURE OF THE INCOME BY THE ASSESSEE WOULD NOT FALL IN THE CATEGO RY OF UNDISCLOSED INCOME AS PER EXPLANATION TO SECTION 271AAB OF THE ACT. IT IS NOT THE CASE OF THE REVENU E THAT ANY STOCK OF JEWELLERY WAS FOUND WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT BUT THE VALUE OF S TOCK IS COMPUTED BASED ON THE VALUATION REPORT OF THE DEPARTMENTAL VALUER. ONCE THE DIFFERENCE IN THE VAL UE OF STOCK IS ONLY DUE TO MARKET PRICE AS AGAINST THE COST OF THE SAID STOCK, THE SAME WILL NOT FALL IN THE AM BIT OF UNDISCLOSED INCOME AS DEFINED UNDER CLAUSE-(C) OF EXPLANATION -1 OF SECTION 271AAB OF THE ACT. 19. SIMILARLY THE ACCRUED INTEREST OF RS. 20,00,000 /- IS ALSO ONLY ESTIMATED AND NOT BASED ON ANY INCRIMINATING DOCUMENTS. THIS AMOUNT WAS ESTIMATED AS THERE WERE ADVANCES AS PER THE ENTRIES OF THE SE IZED MATERIAL. EVEN OTHERWISE ACCRUED INTEREST IS DEPEND ENT ON THE OUTCOME OF THE LEVY OF PENALTY IN RESPECT OF ADVANCES GIVEN BY THE ASSESSEE. WE HAVE CONSIDERED THE ISSUE OF ADVANCES FOR THE ASSESSMENT YEAR 2013- 14 AND ACCORDINGLY IN VIEW OF OUR FINDING ON THE SAID ISSUE THE PENALTY U/S 271AAB OF THE ACT IS NOT SUSTAINABL E IN RESPECT OF THE SURRENDER AMOUNT OF RS. 1,65,38,920/ -. 22. WE ALSO RELY ON THE DECISION OF THE COORDINATE BENCH AT RANCHI IN THE CASE OF RINKU AGARWAL IN ITA NO. 262/RAN/2017 DATED 30.11.2018. IN THE INSTANT CASE AS WELL IN THE COURSE OF SEARCH OPERATIONS CONDUCTED A T THE ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 21 MICA MOD GROUP ON 21.11.2012, THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME OF RS.5,00,000/- U/S 132 (4) WHICH SHE HAD OFFERED TO TAX IN HER RETURN OF INCOM E. THE AO LEVIED PENALTY U/S 271AAB ON SUCH ADDITIONAL INC OME OFFERED TO TAX. THE TRIBUNAL NOTED THAT NEITHER THE INVESTIGATION WING IN THE POST SEARCH NOR DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER FOUND ANY INCRIMINATING EVIDENCE OF UNDISCLOSED INC OME OTHERWISE THE DECLARATION OF THE ASSESSEE FOR MAKIN G THE ADDITION. FOLLOWING THE DECISION RENDERED IN THE CA SE OF ACIT VS KANWAR SAIN GUPTA (SUPRA), THE TRIBUNAL DEL ETED THE PENALTY LEVIED U/S 271AAB OF THE ACT. 23. RESPECTFULLY FOLLOWING THE DECISIONS IN THE FOR EGOING AND HAVING REGARD TO OUR FINDING THAT THE INCOME OF RS.69 CRORES VOLUNTARILY OFFERED TO TAX WAS NOT IN THE NA TURE OF UNDISCLOSED INCOME DEFINED IN CLAUSE (C) OF EXPLA NATION TO SECTION 271AAB, WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN CANCELLING THE PENALTY LEVIED U/S 271A AB OF THE ACT. ACCORDINGLY THE ORDER OF THE LD. CIT(A) IS UPH ELD FOR THE REASONS DISCUSSED ABOVE AND THE REVENUES APPEA L STANDS REJECTED. 10. NOW COMING TO THE FACTS OF THE CASE BEFORE US, THE ASSESSEE IN THIS CASE HAS SURRENDERED AS TOTAL INC OME OF RS. 14,39,99,158/- DURING THE SEARCH ACTION CARRIED OU T AT HIS PREMISES U/S 132 OF THE ACT, OUT OF WHICH RS. 14 CRORES WAS SURRENDERED TO COVER ANY DISALLOWANCE OF EXPENSES/ADDITIONS, WHEREAS, THE REMAINING AMOUNT O F RS. 39,99,158/- WAS SURRENDERED REPRESENTING PROFIT EARNED ON STOCK FOUND SHORT. THEREAFTER THE ASSESSE E FILED ITS RETURN OF INCOME AND DULY INCLUDED THE SURRENDERED AMOUNT IN ITS INCOME FOR THE PURPOSE OF TAXATION. THE ASSESSING OFFICER CARRIED OUT THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT AND INDEPENDENTLY SCRUTINIZED AND VERIFIED THE DIFFEREN T HEADS OF INCOME AND EXPENDITURE AND COMPUTED THE ADDITIONAL INCOME OF RS. 33,13,304/- ON ACCOUNT OF STOCK FOUND SHORT DURING SEARCH ACTION, HOWEVER, GIVING T HE ASSESSEE SET OFF OF AMOUNT OF RS. 39,99,158/- SURRENDERED UNDER THE HEAD PROFIT ON STOCK FOUND SHORT ADDED THE BALANCE AMOUNT OF RS. 2,58,20,577/- INTO THE INCOME OF THE ASSESSEE ON ACCOUNT OF STOCK FOUND SHORT DURING THE SEARCH ACTION. APART FROM THAT, THE ASSESSING OFFIC ER HAD MADE THE ADDITIONAL DISALLOWANCE OF RS. 2,83,98,545/- ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 22 UNDER SECTION 14A OF THE ACT WHICH WAS IN ADDITION TO THE SUO MOTU DISALLOWANCE OF RS. 3,45,49,868/- RETURNED BY THE ASSESSEE IN THIS RESPECT IN HIS INCOME TAX RETU RN. THE ASSESSING OFFICER ALSO MADE AN ADDITION OF RS. 2,25,54,011/- U/S 36 (1)(III) OF THE ACT. THOUGH TH E ASSESSEE DURING THE ASSESSMENT PROCEEDINGS SUBMITTE D THAT THE SET OFF OF RS. 14 CRORES DECLARED ON ACCOUNT OF DISALLOWANCE BY THE ASSESSEE OF EXPENSES/ADDITIONS BE GIVEN TO THE ASSESSEE, HOWEVER, THE ASSESSING OFFIC ER REJECTED THE ABOVE CONTENTION OF THE ASSESSEE SINCE THE ASSESSEE HAD NOT GIVEN ANY BIFURCATION OF ANY SURRENDERED INCOME OF RS. 14 CRORES. APART FROM THAT, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 9,23,231/- U/S 36(1) (V) OF THE INCOME TAX ACT AND ASSESSED THE TOTAL INCOME AT A LOSS OF RS. 33,73,75,950/- AS AGAINST THE LOSS DECLARED / RETURNED BY THE ASSE SSEE AT RS. 41,50,72,313/-. 11. THE RELEVANT FACT IN THIS CASE IS THAT THOUGH T HE ASSESSING OFFICER EXAMINED INDIVIDUALLY EACH AND EV ERY ITEM OF INCOME AND EXPENDITURE AND MADE SEPARATE DISALLOWANCES, HOWEVER, THE ASSESSING OFFICER DID N OT POINT OUT ANY EXCESS OR WRONG EXPENDITURE CLAIMED S O FAR AS THE SURRENDER OF RS. 14 CRORES ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE / ADDITION WAS CONCERNE D. EVEN THE ASSESSING OFFICER DID NOT ALLOW THE TELESC OPIC BENEFIT / SET OFF OF THE AMOUNT SURRENDERED AS AGAI NST THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER TH E PROVISIONS OF SECTION 40A, 36 (1)(III) AND 36 (1)(V ) OF THE ACT. THERE IS NO MENTION IN THE ASSESSMENT ORDER TH AT THE ASSESSEE HAD CLAIMED ANY EXTRA OR INADMISSIBLE EXPENDITURE IN RESPECT OF ANY OTHER ITEM. IT ALSO APPARENT FROM THE FACTS ON THE FILE THAT EVEN DURIN G THE SEARCH ACTION, NO INCRIMINATING MATERIAL IN RESPECT OF EXCESSIVE OR INADMISSIBLE EXPENDITURE WAS FOUND DUR ING THE SEARCH ACTION. THE ASSESSEE SIMPLY SURRENDERED THE AMOUNT OF RS. 14,39,99,158/- AND IN THE BIFURCATION OFFERED RS. 39.99 LACS TOWARDS PROFITS OF STOCK FOUND SHORT AND REMAINING AMOUNT OR RS. 14 CRORES WAS SURRENDERED ON ACCOUNT OF DISALLOWANCE OF EXPENSES/ADDITION. HOWEVER, NEITHER DURING THE SEA RCH ACTION NOR DURING THE ASSESSMENT PROCEEDINGS, NO SU CH ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 23 DISALLOWANCE OF EXPENDITURE AND CONSEQUENT ADDITION HAS BEEN MADE EXCEPT AS DISCUSSED ABOVE. HOWEVER, THE ASSESSING OFFICER HAS ADDED THE AFORESAID DISALLOWA NCE MADE BY HIM SEPARATELY INTO THE INCOME OF THE ASSES SEE. SO FAR AS THE DISALLOWANCE U/S 14A IS CONCERNED, TH E ASSESSEE HAD TAKEN A PLEA BEFORE THE ASSESSING OFFI CER THAT IT DID NOT EARN ANY TAX-EXEMPT INCOME DURING T HE YEAR. FURTHERMORE, THAT INVESTMENTS WERE MADE OUT O F ITS OWN / INTEREST FREE FUNDS AVAILABLE WITH THE ASSESS EE AND THAT NO DISALLOWANCE U/S 14A OF THE ACT WAS WARRANT ED. SIMILAR PLEA WAS ALSO TAKEN BY THE ASSESSEE IN RESP ECT OF DISALLOWANCE MADE U/S 36(1)(III) OF THE ACT THAT TH E ADVANCES/INVESTMENTS WERE MADE BY THE ASSESSEE OUT OF ITS OWN/INTEREST FREE FUNDS AVAILABLE WITH IT. A PL EA WAS ALSO TAKEN THAT THE ADVANCES WERE GIVEN OUT OF COMMERCIAL EXPEDIENCY. SO FAR AS THE DISALLOWANCE U /S 36(1)(V) WAS CONCERNED, A PLEA WAS TAKEN THAT THE CONTRIBUTION TO EMPLOYEES PROVIDENT FUND WAS MADE WITHIN THE STIPULATED PERIOD AND THAT NO DISALLOWAN CE WAS ATTRACTED. 12. CONSIDERING THE NATURE OF DISALLOWANCE MADE BY THE ASSESSING OFFICER AND THE PLEA OF THE ASSESSEE, IT IS QUITE APPARENT THAT THE ISSUE OF DISALLOWANCE OF EXPENDITURE ON THE AFORESAID THREE ISSUES WAS A DEBATABLE ONE AND IN FACT IN THE LIGHT OF THE VARIO US DECISIONS OF THE HON'BLE HIGH COURTS, THE ASSESSEE HAS A FAIR CASE ON MERITS AND THAT IT CANNOT BE SAID THAT THERE WAS ANY INTENTIONAL ACT ON THE PART OF THE ASSESSEE TO CLAIM ANY INADMISSIBLE EXPENDITURE, RATHER, THE ASSESSEE HAD PUT A BONAFIDE CLAIM OF THE ALLOWANCE/EXPENDITURE ON THESE ISSUES. WHAT WE WISH TO CONVEY THROUGH THE AFORESAID DISCUSSION IS THAT EVE N DESPITE CERTAIN DISALLOWANCES MADE BY THE ASSESSING OFFICER, AS DISCUSSED ABOVE, IT CANNOT BE SAID THAT ASSESSEE HAD CLAIMED ANY INADMISSIBLE EXPENDITURE WHICH WOULD FALL WITHIN THE DEFINITION OF UNDISCLO SED INCOME AS DEFINED UNDER THE PROVISIONS OF SECTION 271AAB OF THE ACT. EXCEPT THE AFORESAID DISALLOWANC E MADE BY THE ASSESSING OFFICER ON DEBATABLE ISSUES, THERE IS NO CASE OF THE DEPARTMENT IN RESPECT OF ANY INADMISSIBLE EXPENDITURE CLAIMED BY THE ASSESSEE WH ICH WOULD COVER THE SURRENDERED INCOME OF RS. 14 CORES. ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 24 FROM THE FACTS ON THE FILE, IT IS ESTABLISHED THAT THE AFORESAID SURRENDER OF RS. 14 CRORES WAS BASED ON THE MERE STATEMENT OF THE ASSESSEE AND NOTHING INCRIMIN ATING MATERIAL WHICH WOULD CONSTITUTE UNDISCLOSED INCOME AS PER THE PROVISIONS OF SECTION 271AAB OF THE ACT WAS DETECTED OR FOUND DURING THE SEARCH ACTION. IN VIEW OF THE VARIOUS CASE LAWS AS DISCUSSED ABOVE, THE AFORE SAID AMOUNT FOR RS. 14 CORES WOULD NOT FALL IN THE DEFINITION OF UNDISCLOSED INCOME AS DEFINED UNDER SECTION 271AA B OF THE ACT AND, HENCE, THE PENALTY IS NOT LEVIABLE ON THE SAID AMOUNT UNDER THE PROVISIONS OF SECTION 271AAB OF THE ACT. 13. SO FAR AS THE RELIANCE OF THE LD. DR ON THE DEC ISION IN THE CASE OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. SHRI SANDEEP CHANDAK AND ORS . (SUPRA) IS CONCERNED, AS DISCUSSED IN THE AFORESAID DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN DCIT VS. RASHMI CEMENT LTD, (SUPRA) THE FACTS IN THE CASE OF PRINCIPAL CIT VS. SHRI SANDEEP CHANDAK AND ORS (SUPRA) ARE DISTINGUISHABLE AND DO NOT APPLY T O THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND IN THE LIGHT OF THE DISCUSSION MADE IN THE ABOVE REFERRED TO DEC ISION OF THE KOLKATA BENCH OF THE TRIBUNAL. 14. HOWEVER, SO FAR AS THE SURRENDERED AMOUNT OF RS. 39.99 LACS IS CONCERNED, SAME WAS OFFERED ON ACCOUN T OF PROFITS ON STOCK FOUND SHORT DURING THE SEARCH ACTI ON. ADMITTEDLY, THE STOCK WAS FOUND SHORT DURING THE SE ARCH ACTION. IN FACT, THE ASSESSING OFFICER APART FROM T HE ABOVE SURRENDER OF RS. 39.99 LACS HAS MADE FURTHER ADDITION OF RS. 2.58 CORES ON THIS ISSUE. IT IS APPARENT THAT THE AFORESAID PROFIT ON SHORT STOCK WERE NOT ACCOUNTED FOR BY THE ASSESSEE BUT WAS ONLY DETECTED DURING THE SEARCH ACTION. HOWEVER, THE ASSESSEE HAS SUBSTANTIATED THE MANNER OF EARNING OF THE SAID INC OME WHICH INCLUDE THE SURRENDER INCOME OF RS. 39.99 LACS, HENCE, PENALTY @ 10% IS LEVIABLE ON THE AFORESAID AMOUNT AS PER THE PROVISIONS OF SECTION 271AAB (1)( A) OF THE I.T. ACT. 14. IN VIEW OF THIS, THE PENALTY IN THIS CASE IS RE STRICTED TO 10% OF THE SURRENDERED INCOME OF RS. 39,99,158/- ON ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 25 ACCOUNT OF STOCK FOUND SHORT AS PER THE PROVISIONS OF SECTION 271AAB (1)(A) OF THE ACT. HOWEVER, THE REMAINING PART OF THE PENALTY IS ORDERED TO BE DELE TED. 10. FROM THE PERUSAL OF THE ABOVE DECISION, IT CAN BE NOTICED THAT THE TRIBUNAL HAS CATEGORICALLY HELD THAT IF NO INCRIMIN ATING MATERIAL IS FOUND DURING THE SEARCH ACTION AND THE SURRENDERED INCOME DOES NOT FALL IN THE DEFINITION OF UNDISCLOSED INCOME AS DEFINED U/S 2 71AAB OF THE ACT, THE PENALTY IS NOT WARRANTED. THE COORDINATE BENCH OF THE TRIBUNAL HAS ALSO DISCUSSED THE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE ALLAHABAD HIGH COURT IN THE PRINCIPAL CIT VS SANDE EP CHANDAK AND ORS. (SUPRA) AND HAS HELD THAT THE FACTS OF THE SA ID CASE ARE DISTINGUISHABLE AND DO NOT APPLY TO THE FACTS OF TH E CASE IN WHICH NO INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH ACTION. IT IS A MATTER OF RECORD THAT IN THE CASE IN HAND D URING THE COURSE OF SEARCH ACTION, NO UNDISCLOSED ASSET, ANY MONEY, BULLION, JEWELLERY, OR ANY OTHER INCRIMINATING MATERIAL WAS FOUND WHICH CO ULD CONSTITUTE OR FALL IN THE DEFINITION OF UNDISCLOSED INCOME AS D EFINED U/S 271AAB OF THE ACT. 11. IN VIEW OF OUR DISCUSSION MADE ABOVE AND ALSO IN THE LIGHT OF THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S SEL TEXTILES LTD. VS DCIT ORDER DATED 18.04.2019 ( SUPRA), THE LEVY OF PENALTY U/S 271AAB OF THE ACT IS NOT WARRANTED AN D THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. ITA NOS. 1466 TO 1471-CHD-2018- SHRI AMIT MEHRA & ORS, LUDHIANA 26 SINCE THE FACTS AND CIRCUMSTANCES INVOLVED IN ALL THE APPEALS ARE IDENTICAL, HENCE, IN VIEW OF OUR DECISION MADE ABOV E, THE IMPUGNED PENALTY IS ORDERED TO BE DELETED IN ALL THE CAPTION ED APPEALS. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.07.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! ' / SANJAY GARG) #$% / VICE PRESIDENT &' / JUDICIAL MEMBER DATED : 16.07.2019 .. 2*%)3454) / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. %& !# / THE RESPONDENT 3. , 6) / CIT 4. , 6) ( )/ THE CIT(A) 5. 47 %)8 , . 8 , 9:;< / DR, ITAT, CHANDIGARH 6. ;= - / GUARD FILE 2 , / BY ORDER, > / ASSISTANT REGISTRAR