ACIT, Nashik V. Shri TARACHAND BACHUMAL DALWANI, Nashik

ITA 1550/PUN/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1846 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Search and seizure; Document seized; Retrospective amendment; Documents seized
• Section: 69C; 143(3); 153A; 69; 132; 12; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1550/PN/2013 #& & / ASSESSMENT YEAR : 2008-09 ACIT, CENTRAL CIRCLE-1, NASHIK . / APPELLANT V/S SHRI TARACHAND BACHUMAL DALWANI, PROP. OF RAJAN BACHUMAL & CO., DR.B.A. ROAD, NASHIK ROAD, NASHIK. PAN NO.AANPD2375G . / RESPONDENT / ASSESSEE BY : SHRI PRAMOD SHINGTE / REVENUE BY : SHRI HITENDRA NINAWE / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 01-05-2013 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEAR 2008-09. 2. DELETION OF PENALTY OF RS.12,30,220/- LEVIED U/S.271(1)(C) BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE REVENUE IN THE VARIOUS GROUNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL ENGAGED IN THE BUSINESS OF WHOLESALE TRADING IN FOO D / DATE OF HEARING :10.03.2016 / DATE OF PRONOUNCEMENT:09.05.2016 2 ITA NO.1550/PN/2013 GRAIN, PULSES ETC. HE FILED HIS ORIGINAL RETURN OF INCOME ON 10 -10- 2008 SHOWING TOTAL INCOME OF RS.16,38,890/-. A SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED BY THE INVESTIGATION WING ON 06-01-2010 AT THE RESIDENTIAL PREMIS ES OF THE ASSESSEE DURING WHICH CERTAIN BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED. IN RESPONSE TO NOTICE U/S.153A THE ASSESSEE FURNISHED THE RETURN OF INCOME ON 11-11-2011 D ECLARING TOTAL INCOME OF RS.57,39,630/-. THE ABOVE INCOME INCLUDED ADDITIONAL INCOME OF RS.41 LAKHS, THE DETAILS OF WHICH ARE AS UNDER : (A) ON ACCOUNT OF LAND MR.VARDHAMAN JAIN 14 LAKH S (B) PROFIT OF UNRECORDED TRANSACTIONS IN KIRANA 10 LAKHS (C) LAND - MR.DILIP PHADOL 17 LAKHS 4. THE AO COMPLETED THE ASSESSMENT U/S.153A R.W.S.143(3) DETERMINING THE TOTAL INCOME AT RS.57,39,630/- WHICH WAS TH E INCOME DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A. 5. SUBSEQUENTLY, THE AO INITIATED PENALTY PROCEEDINGS AND ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY SHOULD NOT BE LEVIED. THE ASSESSEE EXPLAINED THAT THE ASSESSEE WHILE PR EPARING THE RETURN OF INCOME HAS OFFERED ADDITIONAL INCOME OF RS.41 L AKHS ON ACCOUNT OF ESTIMATED GP/BROKERAGE VOLUNTARILY IN CONS ONANCE WITH THE STATEMENT RECORDED. THE SAME INCOME HAS BEEN ACCEPTED. THE ASSESSEE MADE THE VOLUNTARY DECLARATION TO BUY PEACE. SINCE THE ADDITIONAL INCOME OFFERED FOR TAXATION IS ON ACCOUNT OF ESTIMATION WHICH HAS BEEN ACCEPTED BY THE A O, THEREFORE, NO PENALTY SHOULD BE LEVIED. 3 ITA NO.1550/PN/2013 6. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM, HAD THERE BEEN NO SEARCH THE INCOME WOULD NOT HAVE BEEN UNEARTHED. THER EFORE, IT WAS NOT A VOLUNTARY DISCLOSURE AND THE ASSESSEE HAS CO NCEALED THE PARTICULARS OF SUCH INCOME WITHIN THE MEANING OF EXPLAN ATION 1 AND 5A TO SECTION 271(1)(C) OF THE I.T. ACT. THE AO FURTH ER NOTED THAT THE INCOME OF RS.41 LAKHS DISCLOSED U/S.132(4) AND OFFERE D IN THE RETURN U/S.153A IS BASED ON ENTRIES IN BOOKS OF ACCO UNT AND OTHER DOCUMENTS AND TRANSACTIONS, THEREFORE, CLAUSE (II) OF EXPLANATION 5A TO SECTION 271(1)(C) IS SQUARELY APPLICABLE IN THE INSTANT CASE AND THE ASSESSEE IS LIABLE FOR PENALTY FOR CON CEALING THE INCOME OF RS.41,00,470/-. REJECTING THE ARGUMENTS AD VANCED BY THE ASSESSEE THE AO LEVIED PENALTY OF RS.12,30,220/- BEING THE MINIMUM PENALTY LEVIABLE AT 100% OF THE TAX SOUGHT TO BE EVADED. 7. IN APPEAL THE LD.CIT(A) DELETED THE PENALTY BY OBSERV ING AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER, THE IMPUGNED PENALTY ORDER AND THE SUB MISSIONS OF THE APPELLANT. THE ADDITIONAL INCOME OF RS.41,00, 000/- CONSISTS OF THE FOLLOWING AMOUNTS:- ESTIMATED GROSS PROFIT - RS.10,00,000/- 1) BROKERAGE INCOME AND COMMISSION RECEIVED FROM MR.VARDHAMAN JAIN BY CHEQUE DT. 26-02-208 - RS.14,00,000/- FROM MR. DILIP PHADOL 15,00,000/- RECEIVED BY CHEQUE DT.26-02-2008 AND RS.2,00,000/- BY CASH - RS.17,00,000/- --------------------- RS.41,00,000/- ---------------------- THE A.O. HAS IMPOSED THE IMPUGNED PENALTY BY INVOKING EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT, RELE VANT PORTION OF WHICH READS AS UNDER: 'EXPLANATION 5A- WHERE IN THE COURSE OF SEARCH INITIA TED U/S.132 ON OR AFTER IST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF- 4 ITA NO.1550/PN/2013 (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAS BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PRE VIOUS YEAR. (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF A CCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENT S HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR; IN THE CASE UNDER APPEAL NO MONEY, BULLION, JEWELLER Y OR OTHER VALUABLE ARTICLE IS INVOLVED WITH REGARD TO THE ESTIM ATED GROSS PROFIT OF RS.10,00,000/- AND RS.14,00,000/- AND RS.17,00,000/ - ON A/C OF BROKERAGE INCOME RECEIVED FROM MR. VARDHAMAN JAIN A ND SHRI DILIP PHADOL RESPECTIVELY WAS OFFERED AS AN ADDITIONAL INCOM E. OUT OF THE BROKERAGE INCOME OF RS.31,00,000/-, RS.14,00,000/- AN D RS.17,00,000/- = RS.31,00,000/- WERE RECEIVED FROM SH RI VARDHAMAN JAIN AND SHRI DILIP JAIN RESPECTIVELY. THE COMMISSION OF RS.14,00,000/- WAS RECEIVED FROM SHRI VARDHAMAN JAIN BY CHEQUE ON 26/02/2008 ON WHICH TDS OF RS.1,40,000/- WAS ALSO MADE , WHICH IS RECORDED IN THE REGULAR BOOKS OF A/C OF THE ASSESSEE FOR THAT ASSESSMENT YEAR. RS.2,00,000/- IN CASH WAS RECEIVED FROM S HRI DILIP PHADOL ON A/C OF UNDATED CHIT. THIS COMMISSION INCOME OF RS.31,00,000/- WAS NOT OFFERED TO TAX IN THE REGULAR RETURN OF INCOME FILED U/S 139 FOR A.Y. 2008-09 ON THE GROUND THAT TH E SAME WAS AN ADVANCE BECAUSE THE TRANSACTION RELATING TO THAT WAS N OT FINALIZED DURING F.Y. 2007-08. THE ASSESSEE DEMONSTRATED THAT THE PROPERTY TRANSACTION ON WHICH THE IMPUGNED COMMISSION/BROKERAGE WAS RECEIVED GOT FINALIZED DURING THE F.Y. 2009-10, WHE N THE SEARCH TOOK PLACE FOR WHICH THE RETURN OF INCOME WAS NOT DUE. HO WEVER, THE ASSESSEE HAS OFFERED THE SAID RECEIPT AS ADDITIONAL INCOME OF A.Y. 2008-09 DURING THE SEARCH. 7.1 WHILE INITIATING PENALTY PROCEEDINGS U/S 271(1)(C ), THE ASSESSING OFFICER IN THE ASSESSMENT ORDER U/S 143(3) R.W.S. 153A D ATED 30/12/2011 FOR THE YEAR HAS RECORDED THE FOLLOWING I DENTICAL FINDINGS: 'THOUGH THE ASSESSEE HAS DECLARED ADDITIONAL INCOME OF RS.41,00,000/- IN THE RETURN FILED U/S LS3A WHICH WAS NOT SHOWN IN THE RETURN FILED U/S 139. IT WAS DETECTED DURING SEARC H AND SEIZURE OPERATION CONDUCTED AT HIS RESIDENCE. HAD THE SEARCH N OT BEEN CONDUCTED, THIS INCOME WOULD NOT HAVE BEEN UNEARTHED . IT IS, THEREFORE, NOT A VOLUNTARY DISCLOSURE AND THE ASSESSEE H AS CONCEALED THE PARTICULARS OF SUCH INCOME WITHIN THE MEANING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE LT. ACT'. THEREFORE, PENALTY PROCEEDING WERE INITIATED. HOWEV ER, ON GOING THROUGH THE FACTS OF THE CASE REPRODUCED ABOVE, IT IS SEEN THAT THERE IS NO MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTI CLE, THEREFORE, THIS EXPLANATION 5A IS NOT APPLICABLE TO THE CASE UNDER A PPEAL. THIS PROPOSITION OF LAW IS SUPPORTED BY THE RATIO LAID DOWN IN THE FOLLOWING DECISIONS: 1. CIT VS. MOHANLAL SHARMA 281 ITR 384 (ALLA). 2. T. KODEESWARAN L/H OF LATE A. THANGAM VS. ITO 123 TT J 230. 5 ITA NO.1550/PN/2013 7.2 IN FACT EXPLANATION-I IS APPLICABLE TO THE CASE UNDER APPEAL, THE RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 'EXPLANATION-I - WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFF ERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER APPEALS OR COMMISSIONER TO BE FALSE OR; (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION I S BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM; THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING TH E TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPO SES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED TO REPRESENT, THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7.3 THE APPELLANT HAS OFFERED TO TAX THE ADDITIONAL INCOME OF RS.10,00,000/- AS ESTIMATED GROSS PROFIT AND RS.31,00,00 0/- ON A/C OF BROKERAGE INCOME TO TAX TO BUY PEACE OF MIND. THE A PPELLANT HAS ALSO PAID ALL THE TAXES. THE ABOVE EXPLANATION OF THE APP ELLANT IS FOUND TO BE PLAUSIBLE AND HENCE BONAFIDE. FURTHER, THE EXPLAN ATION IS NOT FOUND TO BE FALSE. IN VIEW OF THE ABOVE FACTS AND IN VIEW OF EXPLANATION-I TO SECTION 271(1)(C) THE PENALTY IMPOSE D BY THE A.O. FOR THESE ASSESSMENT YEARS IS NOT JUSTIFIED. THIS PROPOSITIO N OF LAW IS SUPPORTED BY THE FOLLOWING DECISIONS : 1) NATIONAL TEXTILES VS. CIT 249 ITR 125 (GUJ.) 2) HERGOPALSINGH VS. CIT 258 ITR 85 (P&H) IN THE CASE OF CIT VS. BHIMJI BHAMJI & CO. 146 ITR 14 5 (BOM.) IT HAS BEEN HELD THAT JUST BECAUSE THE ASSESSEE HAS AGREED TO AN ADDITION DOES NOT IMPLY THAT HE AGREES THAT THE INCOME WAS CONC EALED. THE HON'BLE ITAT, PUNE IN THE CASE OF CHANDAN K. SH EWANI VS. DCIT, PUNE I.T.A. NO.235 AND 236/PN/2010 ORDER DATED 29/0 8/2012 HAS HELD THAT A PENALTY U/S 271(1)(C) CANNOT BE LEVIED O N THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN RETURNS FILED U/S 153A OF THE ACT. THIS DECISION HAS BEEN FOLLOWED BY HON'BLE ITAT PUNE I N THE CASE OF ITO CENTRAL-3 VS, PRAKASH CHAMPALAL KANKARIA, I.T.A. NO.1465 TO 1467/PN/2011 DATED 22/03/2013. THE FACTS OF THE ASSESSEE 'S CASE ARE IDENTICAL WITH THESE DECISIONS. THE ASSESSEE'S CASE THE REFORE, IS COVERED BY THESE DECISIONS OF THE JURISDICTIONAL TRIBUN AL AND FORTIFY MY DECISION. IN VIEW OF THE ABOVE FACTS AND PROVISIONS OF EXPLANATI ON-I TO SECTION 271(1)(C), THE APPELLANT IS NOT LIABLE TO PENALTY U/ S. 271(1)(C). IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CO NSIDERED VIEW THAT ON THE GIVEN FACTS AND THE POSITION OF LAW ON T HE SUBJECT, THERE IS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PA RTICULARS OF INCOME, THEREFORE, THE A.O. IS NOT JUSTIFIED IN IMPOSI NG PENALTY OF RS.12,30,220/- U/S 271(1)(C) OF THE ACT. THE IMPUGNE D PENALTY ORDER U/S, 271(1)(C) DATED 22/06/2012 IMPOSING PENALT Y OF RS.12,30,220/- IS, THEREFORE, CANCELLED. 6 ITA NO.1550/PN/2013 8. IN THE RESULT, THE APPEAL IS ALLOWED. 8. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 9. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOS ED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE LD CIT(A) HAS DELETED THE PENALTY BY HOLDING THAT NEITHER EXPLANATION 1 NOR EXP LANATION 5A TO SECTION 271 (1)(C) IS APPLICABLE TO THE ASSESSEES CAS E . HOWEVER, THE SAME IS NOT CORRECT. HE HAS ACCEPTED TH E CONTENTION OF THE ASSESSEE THAT THE AMOUNT OF COMMISSION/BROKERAGE OF RS.31 LAKHS WAS NOT OFFERED IN THE REGULAR RETURN OF INCOME FILED U/S.139 AS THESE AMOUNTS WERE IN THE FORM OF ADVANCES FO R WHICH THE PROPERTY TRANSACTION WAS NOT FINALIZED IN THE FINANCIAL YEAR RELEVANT TO A.Y. 2008-09. HE SUBMITTED THAT THE ABOVE P LEA WAS NEVER RAISED BEFORE THE AO EITHER DURING THE COURSE OF A SSESSMENT PROCEEDINGS OR DURING THE COURSE OF PENALTY PROCEEDINGS . EVEN THE CIT(A) HAS NOT GIVEN ANY OPPORTUNITY TO THE AO ON T HE ADDITIONAL GROUND RAISED BEFORE HIM DURING THE APPEAL PROCEEDINGS. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THA T DURING THE COURSE OF SEARCH THE ASSESSEE IN HIS STATEME NT RECORDED U/S.132(4) HAS DECLARED ADDITIONAL INCOME OF RS.41 LAKHS AND OFFERED THE SAME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A. THE DECLARATION MADE BY TH E ASSESSEE WAS ON THE BASIS OF ENTRIES FOUND IN THE BOOKS OF ACCOUNT, OTHER DOCUMENTS AND TRANSACTIONS, SEIZED/IMPOUN DED DURING THE SEARCH ACTION. THEREFORE, THE ASSESSEE HAS COMMITTED DEFAULT UNDER THE PROVISIONS OF CLAUSE (II) OF EXPLANATION 5A T O SECTION 271(1)(C) OF THE ACT. HE SUBMITTED THAT THE CIT(A) H AS 7 ITA NO.1550/PN/2013 DELETED THE PENALTY BY HOLDING THAT THE EXPLANATION OF THE ASSESSEE IS BONAFIDE BECAUSE HE HAS OFFERED THE ADDITIONAL INCOME TO BUY PEACE OF MIND. HOWEVER, THE SAME IS CONTRARY TO PROVISION S OF THE ACT. RELYING ON THE DECISION OF THE PUNE BENCH OF THE T RIBUNAL IN THE CASE OF MRS. SARITAKAUR MANJEET SINGH CHOPRA VIDE IT A NO.1562/PN/2013 ORDER DATED 30-10-2015 FOR A.Y. 2009-10 HE SUBMITTED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE . 10. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO THE COPY OF THE ASSESSMENT ORDER, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS NOT MENTIONED AS TO WHAT ARE THE PAPERS FO UND OR THE NATURE OF SUCH DOCUMENT. REFERRING TO PAGES 100 AND 10 1 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE A TTENTION OF THE BENCH TO THE NOTINGS MADE THEREON AND SUBMITTED T HAT THOSE PAPERS DO NOT BEAR ANY DATE. FURTHER, THE CHEQUES WE RE RECEIVED IN THE YEAR 2010 AND THE PARTY HAS DEDUCTED TDS, THER EFORE, THE ASSESSEE COULD HAVE DECLARED THE INCOME IN THE YEAR 201 0-11. IF THE ASSESSEE WOULD HAVE DECLARED SUCH INCOME IN A.Y. 2010 -11, THE IMMUNITY PROVIDED U/S.271AAA COULD HAVE BEEN AVAILABLE TO THE ASSESSEE. HOWEVER, DUE TO SOME CONFUSION THE ASSE SSEE HAS DECLARED THE SAME IN A.Y. 2008-09. MERELY BECAUSE THE ASSESSEE HAS OFFERED THE ADDITIONAL INCOME IN A.Y. 2008-09 DUE TO W RONG APPRECIATION OF FACTS WHEREAS THE INCOME SHOULD HAVE BEEN DECLARED IN A.Y. 2010-11, THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY LEVIED BY THE AO WAS NOT CORRECT AND THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE SA ME. HE SUBMITTED THAT THE ASSESSEE CAN ALWAYS ADVANCE NEW A RGUMENTS 8 ITA NO.1550/PN/2013 DURING PENALTY PROCEEDINGS SINCE THE ASSESSMENT PROCEED INGS AND PENALTY PROCEEDINGS ARE DIFFERENT. 11. SO FAR AS THE DECISION RELIED ON BY THE LD. DEPARTME NTAL REPRESENTATIVE IN THE CASE OF MRS. SARITA KAUR MANJEET S INGH CHOPRA IS CONCERNED HE SUBMITTED THAT THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE FURTHER S UBMITTED THAT THE AMOUNT OF RS.10 LAKHS HAS BEEN DECLARED ON EST IMATE BASIS ON ACCOUNT OF UNRECORDED TRANSACTIONS IN KIRANA. HE SUBMITTED THAT VARIOUS COURTS HAVE HELD THAT PENALTY CA NNOT BE LEVIED ON ESTIMATED ADDITIONS. HE ACCORDINGLY SUBMITTED TH AT LEVY OF PENALTY BY THE AO WAS UNJUSTIFIED UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE PENALTY. HE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. ITO VS. PRAKASH CHAMPALAL KANKARIA AND OTHERS IT A NOS. 1465 TO 1467/PN/2011, ITA NOS. 1468 TO 1470/PN/2011 AND ITA NOS. 1471 TO 1473/PN/2011 ORDER DATED 22-03-2013. 2. CHANDAN K. SHEWANI VS. DCIT ITA NO.235 & 236/P N/2010 ORDER DATED 29-08-2012. 3. DILIP YESHWANT OAK VS. ACIT REPORTED IN (2011) 10 TAXMANN.COM 264 (PUNE). 4. RAJAN H. SHINDE VS. DCIT REPORTED IN (2006) 104 T TJ 445 TM (PUNE). 5. HARIGOPAL SINGH VS. CIT REPORTED IN (2002( 125 TA XMAN 242 ( PUNJ. & HAR.). 6. CIT VS. BHIMJI BHANJEE & CO. REPORTED IN (1985) 2 1 TAXMAN 290 (BOM.). 7. T. KODEESWARAN VS. ITO REPORTED IN (2009) 33 SOT 3 (CHENNAI) (URO). 8. NATIONAL TEXTILES VS. CIT REPORTED IN 249 ITR 125 (GUJ.). 9 ITA NO.1550/PN/2013 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND THE LD.CIT(A) AN D THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CASE HAS DECLARED ADDITIONAL INCOM E OF RS.41 LAKHS IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.1 53A WHICH HAS BEEN ACCEPTED BY THE AO IN THE ORDER DATED 30-12-2011 PASSED U/S.143(3)/153A. WE FIND THE AO LEVIED PENALTY U/S.271(1)(C) AMOUNTING TO RS.12,30,220/- ON ACCOUNT OF UNDISCLOSED INCOME OF RS.41,00,470/- ON THE GROUND THAT TH E ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME TO THE EXTENT OF RS.41,00,470/-. HAD THERE BEEN NO SEARCH THE ASSESSEE WOULD NOT HAVE DECLARED SUCH ADDITIONAL INCOME OF RS.41 LAKHS. THEREFORE, THE DISCLOSURE IS NOT VOLUNTARY FOR WHICH THE AS SESSEE IS LIABLE FOR PENALTY WITHIN THE MEANING OF SECTION EXPLANATION 1 AND 5A TO SECTION 271(1)(C) OF THE I.T. ACT. IT IS THE SUBM ISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE COMMISSION INCO ME WHICH WAS DECLARED IN THE ASSESSMENT YEAR A.Y. 2008-09 IN FACT BELONGS TO A.Y. 2010-11. M/S.VARDHAMAN TRADING COMPANY H AS DEDUCTED TAX AT SOURCE, COPY OF WHICH IS PLACED AT PAGE 98 OF THE PAPER BOOK. SIMILARLY, THE AMOUNT OF RS.17,00,000/- RECEIVE D FROM MR. DILIP PHADOL ALSO RELATES TO A.Y. 2010-11. MERELY BECAUSE THE ASSESSEE ON WRONG ASSUMPTION OF FACTS HAS DECLARED THE INCOME IN A.Y. 2008-09 WHEREAS THE INCOME RELATES TO A.Y. 2010-11, THEREFORE, PENALTY SHOULD NOT BE LEVIED ON ACCOUN T OF LAND TRANSACTIONS. SO FAR AS THE ADDITIONAL INCOME DECLARE D ON ACCOUNT OF KIRANA STORE IS CONCERNED, IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT PENALTY SHOULD NOT BE LEVIED ON ESTIMATED ADDITIONS. 10 ITA NO.1550/PN/2013 13. WE FIND SOME FORCE IN THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. COPY OF THE SEIZED DOCUMENT G IVING THE DETAILS OF TRANSACTION WITH MR. VARDHAMAN JAIN IS PLACED AT P AGE 100 OF THE PAPER BOOK AND THE SAME DOES NOT CONTAIN A NY DATE. THE ASSESSEE HAS DECLARED ADDITIONAL INCOME FROM LAND TRANSACTION IN RESPECT OF MR. VARDHAMAN JAIN TO THE TUNE OF RS.14 LAKHS, WHICH IS ONE OF THE ENTRIES OUT OF THE 5 ENTRIE S MENTIONED ON THE SAID SEIZED DOCUMENT. FROM THE CONFIRMA TION OF ACCOUNT OF MR. VARDHAMAN JAIN, COPY OF WHICH IS PLACED AT PAPER BOOK PAGE 97, WE FIND THE AMOUNTS OF RS.14 LAKHS HAS BEEN PAID BY MR. VARDHAMAN JAIN ON 30-03-2010 AND 31-03-2010 BY CHEQUES ON WHICH TDS OF RS.1,40,000/- HAS ALSO BEEN DEDUCT ED. THE TDS CERTIFICATE COPY IS PLACED AT PAGE 98 OF THE PAPE R BOOK. THEREFORE, WHETHER THE AMOUNT OF RS.14 LAKHS RELATE TO A.Y. 2008- 09 OR A.Y. 2010-11 HAS NOT BEEN EXAMINED FOR THE PURPOS E OF LEVY OF PENALTY. THE TDS CERTIFICATE FILED AT PAGE 98 OF THE PAPER BOOK ALSO SHOWS THAT THE AMOUNT OF RS.14 LAKHS RELATES TO THE PERIOD FROM 01-04-2009 TO 31-03-2010 RELATING TO A.Y. 2010-11. WE THEREFORE FIND FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT LEVY OF PENALTY ON THIS RS.14 LAKHS IS UNJUS TIFIED SINCE THE ASSESSEE COULD HAVE AVAILED IMMUNITY AS PER THE PROVISIONS OF SECTION 271AAA HAD HE DECLARED THE SAME IN A.Y. 2010-11. IT IS THE SETTLED POSITION OF LAW THAT PENALTY PR OCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINCT. THE ASSESSEE CAN ADVANCE NEW ARGUMENTS DURING PENALTY PROCEEDINGS. WE FIND ALTHOUGH THE ABOVE DOCUMENTS WERE FILED BEFORE THE LOWER AUTHORITIES AS CERTIFIED IN THE PAPER BOOK , HOWEVER, THE LOWER AUTHORITIES HAVE NOT COMMENTED UPON THIS ISSUE EITHER IN THE ASSESSMENT ORDER OR PENALTY ORDER O R IN THE 11 ITA NO.1550/PN/2013 ORDER OF CIT(A). WE THEREFORE ARE OF THE OPINION THAT LEV Y OF PENALTY U/S.271(1)(C) ON THE AMOUNT OF RS.14 LAKHS IS NOT WARRANTED UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E IF THE CHEQUES ARE RECEIVED IN A.Y. 2010-11. HOWEVER, THE SAME NEEDS VERIFICATION AT THE LEVEL OF THE AO. THE AO SHALL VERIFY THE TDS CERTIFICATE AND BANK STATEMENT OF THE ASSESSEE REGARDING THE RECEIPT OF THE SAME IN A.Y. 2010-11 AND IF FOUND CORRECT T O DELETE THE PENALTY ON THE AMOUNT OF RS.14,00,000/-. 14. SO FAR AS THE OTHER AMOUNTS ARE CONCERNED, I.E RS.17 LAKHS FROM LAND TRANSACTION WITH MR. DILIP PHADOL AND UNACCOUNTED PROFIT FROM KIRANA BUSINESS AT RS.10 LAKHS IS CONCERNED, TH E SAME WERE DECLARED IN THE STATEMENT RECORDED U/S.132(4) ON THE BASIS OF THE VARIOUS DISCREPANCIES FOUND BY THE SEARCH PA RTY. THERE IS NO PROOF THAT THE SAME WERE RECEIVED IN A.Y. 201 0-11 LIKE IN THE CASE OF MR. VARDHAMAN JAIN. THEREFORE, THE QUESTION THAT ARISES IS AS TO WHETHER PENALTY CAN BE LEVIED ON THE ABO VE AMOUNTS WITHIN THE MEANING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. WE FIND A SOMEWHAT IDENTICAL ISSUE HAD COME UP BEFORE THE PUNE BENCH OF THE TRIBUNAL IN THE CAS E OF MRS. SARITA KAUR MANJEET SINGH CHOPRA (SUPRA). WE FIND THE TRIBUNAL AFTER CONSIDERING VARIOUS DECISIONS HAS UPHELD THE PENALTY LEVIED UNDER THE PROVISIONS OF EXPLANATION 5A TO S ECTION 271(1)(C) OF THE ACT BY OBSERVING AS UNDER : 15. NOW, COMING TO THE ISSUE THAT WHERE THE ASSESSEE HAD OFFERED THE INCOME IN THE RETURN OF INCOME FILED AFTER SURRE NDERING THE ADDITIONAL INCOME, CAN THE ASSESSEE BE HELD TO HAVE CO NCEALED ITS INCOME VIS--VIS ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. SECTION 271(1) OF THE ACT MAKES PROVISION FOR LEVYING PENALTIES ON ASSESSEE IN DIFFERENT EVENTUALITIES, ONE SUCH EVENTUALITY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PA RTICULARS OF INCOME. ONLY ON FULFILLMENT OF THE CONDITIONS STIPUL ATED IN SECTION 12 ITA NO.1550/PN/2013 271(1)(C) OF THE ACT, THERE ARISES A QUESTION OF EXERC ISING POWER UNDER THE SAID PROVISION TO IMPOSE PENALTY. THE SAID SEC TION LAYS DOWN THAT WHERE THE ASSESSING OFFICER OR T HE CIT(A) I N THE COURSE OF ANY PROCEEDINGS UNDER THE ACT IS SATISFIED THAT ANY PE RSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED I NACCURATE PARTICULARS OF SUCH INCOME, THEN HE MAY DIRECT THAT SU CH PERSON SHALL PAY BY WAY OF PENALTY STIPULATED IN THE AFORESAID PRO VISION. THE EXPLANATION/S UNDER SECTION 271(1)(C) OF THE ACT SET O UT THE CIRCUMSTANCES, WHICH JUSTIFIES THE LEVY OF PENALTY. FOR SEARCHES INITIATED UNDER SECTION 132 OF THE ACT BEFORE FIRST D AY OF JUNE, 2007, EXPLANATION 5 WAS INTRODUCED BY THE FINANCE ACT, 200 7 WITH RETROSPECTIVE EFFECT FROM 01.04.2003. UNDER THE SAID SECTION, WHERE THE ASSESSEE WAS FOUND TO BE OWNER OF ANY MONEY, BULLION , JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS AND THE ASSESSEE CLA IMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR IN PART HIS INCOME, FOR ANY PREVIOUS YEAR, WHICH HAD ENDED BEFOR E THE DATE OF SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAD NO T BEEN FURNISHED BEFORE THE SAID DATE, OR WHERE THE RETURN OF INCOME HAD BEEN FURNISHED BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN OR FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DAT E OF SEARCH, THEN NOTWITHSTANDING THAT SUCH INCOME WAS DECLARED BY HIM I N THE RETURN OF INCOME, HE WAS DEEMED TO HAVE CONCEALED PARTICUL ARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, UNLESS THE INCOME OR THE TRANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNT OR THE PERSON IN THE COURSE OF SEARCH MAKES A STATEMENT UN DER SECTION 132(4) OF THE ACT THAT THE SAID MONEY, BULLION, JEWE LLERY, VALUABLE ARTICLES OR THINGS, HAS BEEN ACQUIRED BY HIM OUT OF H IS INCOME, WHICH HAS NOT BEEN SO FAR DISCLOSED, BUT SPECIFIES THE MANNER IN WHICH THE SAID INCOME HAS BEEN DERIVED AND PAYS THE TAXES TOGETHE R WITH INTEREST. UNDER EXPLANATION 5, AN EXEMPTION WAS PROVI DED TO THE PERSON WHO WAS SEARCHED AND WAS FOUND IN POSSESSION OF MON EY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS, THEN IN CASE HE DECLARED THE SAME UNDER THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT AND THEREAFTER, PAYS THE TAXES ON T HE SAME, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED ON SUCH PERSON. 16. HOWEVER, FOR SEARCHES INITIATED UNDER SECTION 132 OF THE ACT ON OR AFTER FIRST DAY OF JUNE, 2007, ANOTHER EXPLANATIO N 5A WAS APPLICABLE, WHICH WAS INTRODUCED BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007. THE ORIGINAL EXPLANATION 5A PROVIDED TH AT WHERE IN THE COURSE OF SEARCH, THE ASSESSEE WAS FOUND TO BE THE OWNER O F ANY MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THI NGS AND THE ASSESSEE CLAIMS THAT SUCH ASSET HAD BEEN ACQUIRED BY HIM BY UTILIZING WHOLLY OR IN PART HIS INCOME FOR ANY PREVI OUS YEAR OR ANY INCOME IS BASED ON ANY ENTRY IN BOOKS OF ACCOUNT OR O THER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT THE SAME R EPRESENTS HIS INCOME FOR ANY PREVIOUS YEAR, THEN WHERE THE PERI OD HAS ENDED BEFORE THE DATE OF SEARCH AND THE DUE DATE FOR FILIN G THE RETURN OF INCOME FOR SUCH YEAR HAS EXPIRED AND THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME, THEN NOTWITHSTANDING THAT SUCH INC OME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENAL TY UNDER SECTION 271(1)(C) OF THE ACT, BE DEEMED TO HAVE CONC EALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PART ICULARS OF INCOME. THE SAID EXPLANATION 5A WAS SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01. 06.2007 WITH THE 13 ITA NO.1550/PN/2013 AMENDMENT THAT WHERE THE RETURN OF INCOME FOR SUCH P REVIOUS YEAR HAD BEEN FURNISHED BEFORE THE DATE OF SEARCH, BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN OR WHERE THE DUE DATE OF FILING THE RETURN OF INCOME FOR OTHER PREVIOUS YEAR HAS EXPIRED, BUT TH E ASSESSEE HAD NOT FILED THE RETURN OF INCOME, THEN NOTWITHSTANDING THE FACT THAT THE SAID INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOM E FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HA VE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PART ICULARS OF HIS INCOME. 17. THE DEEMING PROVISIONS OF EXPLANATION 5A UNDER SEC TION 271(1)(C) OF THE ACT ARE APPLICABLE TO ALL THE SEARC HES INITIATED UNDER SECTION 132 OF THE ACT ON OR AFTER FIRST DAY OF JUNE, 2007. THE CONDITIONS LAID DOWN IN THE EXPLANATION 5A IS WHERE D URING THE COURSE OF SEARCH, THE ASSESSEE IS FOUND TO BE IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY, VALU ABLE ARTICLES OR TH INGS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILIZING WHOLLY OR IN PART HIS INCOME, FOR ANY PREV IOUS YEAR ON ANY INCOME BASED ON ANY ENTRIES IN BOOKS OF ACCOUNT, OR OT HER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRIE S IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REP RESENT HIS INCOME FOR ANY PREVIOUS YEAR, THEN IN CASES WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAD BEEN FURNISHED BY TH E ASSESSEE PRIOR TO THE DATE OF SEARCH, BUT THE SAID INCOME HAD NOT BEEN DECLARED IN THE SAID RETURN OF INCOME OR THE DUE DAT E FOR FILING THE RETURN OF INCOME HAD EXPIRED FOR SUCH PREVIOUS YEAR A ND THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME, IT IS FURTH ER LAID DOWN THAT NOTWITHSTANDING THE FACT THAT SUCH INCOME WHICH HAS BEEN DISCOVERED DUE TO THE SEARCH PROCEEDINGS, IS DECLARED BY HIM IN ANY RETURN FURNISHED ON OR AFTER THE DATE OF SEARCH, BUT IRRESPECTIVE OF THE SAME, HE WOULD BE DEEMED TO HAVE CONCEALED THE P ARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. READING THE ABOVE SAID PROVISIONS OF THE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, IT IS NOTED THAT THE PERSON IS DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PART ICULARS OF SUCH INCOME, WHICH IS EQUIVALENT TO THE VALUE OF MONEY, B ULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS FROM THE POSSESSION OF THE ASSE SSEE DURING THE COURSE OF SEARCH CONDUCTED ON OR AFTER FIR ST DAY OF JUNE, 2007. FURTHER, WHERE ANY INCOME IS BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE C LAIMS THAT ALL THE ABOVE SAID REPRESENTS HIS INCOME FOR ANY PREVIOUS YE AR, THEN THE EXPLANATION LAYS DOWN TO THAT EXTENT, THE PERSON WOU LD BE DEEMED TO HAVE CONCEALED HIS PARTICULARS OF INCOME OR FURNISH ED INACCURATE PARTICULARS OF INCOME. 18. NOW, COMING TO THE MAIN PROVISIONS WHICH CONSTITUT E TWO PORTIONS I.E. WHAT IS CONCEALMENT AND QUANTUM OF PEN ALTY TO BE LEVIED. THE QUESTION IS QUANTUM OF INCOME ON WHICH P ENALTY IS TO BE LEVIED. THE SAID ISSUE WAS BEFORE THE PUNE BENCH OF TRI BUNAL IN ACIT VS. MULAY CONSTRUCTION P. LTD. & ORS. IN ITA NOS.116 TO 119/PN/2012 & ORS. AND IT WAS HELD AS UNDER:- 16. THE NEXT LIMB OF ARGUMENT OF THE LD. COUNSEL IS THAT EXPLANATION 5A(II) CONTEMPLATES INCOME AND NOT THE EXPENDITURE. IN THIS CASE, IT IS UNDISPUTED FACT TH AT THE ASSESSEE CAME FORWARD AND DECLARED INCOME WHICH WAS 14 ITA NO.1550/PN/2013 PERTAINING TO THE AMOUNT COVERED BY THE UNRECORDED EXPENDITURE BUT THE FACT REMAINS THAT THE ASSESSEE DID N OT DECLARE ANY EXPENDITURE BUT IT IS ONLY THE INCOME . THE LD. COUNSEL REFERRED TO THE DEFINITION OF THE INCOME GIV EN IN SEC. 2(24) OF THE ACT. THE SCOPE OF THE SAID DEFINITION HA S BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE O F EMIL WEBBER (SUPRA) WHICH HAS BEEN RELIED UPON BY THE LD. COUNSEL THE RELEVANT PORTION IS IN PARA NO 7 WHICH RE ADS AS UNDER: 7. THE DEFINITION OF 'INCOME' IN CLAUSE (24) OF SEC TION 2 OF THE ACT IS AN INCLUSIVE DEFINITION. IT ADDS SEVERA L ARTIFICIAL CATEGORIES TO THE CONCEPT OF INCOME BUT O N THAT ACCOUNT THE EXPRESSION 'INCOME' DOES NOT LOSE IT S NATURAL CONNOTATION. INDEED, IT IS REPEATEDLY SAID T HAT IT IS DIFFICULT TO DEFINE THE EXPRESSION 'INCOME' IN PRECISE TERMS. ANYTHING WHICH CAN PROPERLY BE DESCRIBED AS INCOME IS TAXABLE UNDER THE ACT UNLESS, O F COURSE, IT IS EXEMPTED UNDER ONE OR THE OTHER PROVISION OF THE ACT. IT IS FROM THE SAID ANGLE THAT W E HAVE TO EXAMINE WHETHER THE AMOUNT PAID BY BALLARPUR BY WAY OF TAX ON THE SALARY AMOUNT RECEIVE D BY THE ASSESSEE CAN BE TREATED AS THE INCOME OF THE ASSESSEE. IT CANNOT BE OVERLOOKED THAT THE SAID AMOUNT IS NOTHING BUT A TAX UPON THE SALARY RECEIVED BY THE ASSESSEE. BY VIRTUE OF THE OBLIGATION UNDERTAKEN BY BALLARPUR TO PAY TAX ON THE SALARY RECEIVED BY THE ASSESSEE AMONG OTHERS, IT PAID THE SAID TAX. THE SAID PAYMENT IS, THEREFORE, FOR AND ON BEHALF OF THE ASSESSEE. IT IS NOT A GRATUITOUS PAYMENT. BUT FOR THE SAID AGREEMENT AND BUT FOR THE SAID PAYMENT, THE SAID TAX AMOUNT WOULD HAVE BEEN LIABLE TO BE PAID BY THE ASSESSEE HIMSELF HE COULD NOT HAVE RECEIVED THE SALARY WHICH HE DID BUT FOR THE SAID PAYMENT OF TAX. THE OBLIGATION PLACED UPON BALLARPUR BY VIRTUE OF SECTI ON 195 OF THE INCOME TAX ACT CANNOT ALSO BE IGNORED IN THIS CONTEXT. IT WOULD BE UNREALISTIC TO SAY THAT THE SAID PAYMENT HAD NO INTEGRAL CONNECTION WITH THE SALARY RECEIVED BY THE ASSESSEE. WE ARE, THEREFORE, OF THE OPINION THAT THE HIGH COURT AND THE AUTHORITIES UNDE R THE ACT WERE RIGHT IN HOLDING THAT THE SAID TAX AMOU NT IS LIABLE TO BE INCLUDED IN THE INCOME OF THE ASSESSEE DURING THE SAID TWO ASSESSMENT YEARS. 17. AS PER INTERPRETATION MADE BY THE HON'BLE SUPRE ME COURT OF SEC. 2(24) OF THE ACT, IT IS CLEAR THAT IT IS AN INCLUSIVE DEFINITION AND IT COVERS ALL INCOME COME UNDER CHARG ING PROVISIONS OF THE ACT. IF THE ARGUMENT OF THE LEARNED COUNSEL IS TO BE ACCEPTED THEN NO INCOME CAN BE TAXED U/S. 68, 69, 69A, 69B, 69C & 69D. 18. IT IS NECESSARY TO REFER TO EXPLANATION 5A WHICH R EADS AS UNDER: EXPLANATION 5A WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR BEFORE THE 1ST DAY OF 15 ITA NO.1550/PN/2013 JUNE 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELER OR OTHER VALUABLE ARTICLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY OTHER INCOME BASED ON ANY ENTRY IN ANY BOOK S OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHE R DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEA R HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER TH E DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITIO N OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF TH IS SECTION, HE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 19. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED, CLAUSE (II ) TO EXPLANATION 5A IS APPLICABLE. ADMITTEDLY, THE EXPEND ITURE WHICH WAS NOT RECORDED HAS BEEN FOUND BY WAY OF ENTRI ES IN THE SEIZED DOCUMENTS. WHILE EXPLAINING THE SCOPE OF EXPLANATION 5A IN THE CASE OF CHANDAN K. SHEWANI (SUP RA) THE TRIBUNAL HAS HELD THAT TO PATCH OUT THE LACUNA DUE T O THE JUDICIAL INTERPRETATION OF EXPL. 5 OF SEC. 271(1)(C ) WHICH WAS ON THE STATUTE BOOK UPTO 31-5-2007, EXPLANATION 5A H AS BEEN SUBSTITUTED FOR EXPL. 5 BY THE FINANCE ACT, 2007 W.E. F 1-6- 2007. THE SAID EXPLANATION WAS FURTHER AMENDED BY THE FINANCE(NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FR OM 01- 07-2007 WHICH IS REPRODUCED HEREINABOVE. THE LD. COU NSEL HAS RAISED AN IMPORTANT LEGAL QUESTION WHETHER THE INC OME DECLARED BY THE ASSESSEE WHICH IS PERTAINING TO THE UNRECORDED EXPENDITURE CAN SAID TO BE THE INCOME WHI CH IS CONTEMPLATED IN EXPLANATION 5A(II)? THE ANSWER TO TH IS QUESTION IS IN SEC. 69-C WHICH READS AS UNDER:- WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR TH E 16 ITA NO.1550/PN/2013 EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR; 20. SO FAR AS THE EXPL.- 5 WHICH WAS ON THE STATUTE BO OK, THE COURTS HAVE TAKEN A VIEW THAT IT WAS HAVING A LIMITED APPLICATION ONLY TO THE EXTEND OF THE MONEY, BULLIO N, JEWELLERY OR ANY VALUABLE ASSETS OR THINGS WHICH WERE FOUND DURIN G THE COURSE OF SEARCH AND SEIZER OPERATION AND OWNED BY THE ASSESSEE. BUT THE OTHER INCOME WHICH WAS FOUND RECORDED BY ANY ENTRY IN THE DOCUMENT SEIZED OR OTHERWISE WAS NOT COVERED. IT IS PERTINENT TO NOTE THAT SEC. 69C PROVID ES THAT IF ANY UNRECORDED EXPENDITURE IS FOUND AND THE ASSESSEE FAI LS TO EXPLAIN THE SOURCE OF THE SAID EXPENDITURE OR EXPLANA TION OF THE ASSESSEE IS NOT SATISFACTORY, THEN TO THE EXTENT OF TH E AMOUNT COVERED BY SUCH EXPENDITURE IS TREATED AS INCOM E. ULTIMATELY WHAT IS TAXED UNDER SEC. 69 C OF THE ACT IS NOT THE EXPENDITURE BUT IT IS BASICALLY THE UNDISCLOSED INCOME WHICH HAS BEEN APPLIED FOR INCURRING THE UNRECORDED EXPEND ITURE. IN OUR VIEW, THERE IS NO MERIT IN THE ARGUMENT OF TH E LD. COUNSEL THAT THE ASSESSEE HAS ONLY DECLARED THE AMOUNT EXPENDITURE. WE THEREFORE, HOLD THAT TO THE EXTENT OF THE INCOME OFFERED BY THE ASSESSEE PERTAINING TO THE EXPEND ITURE IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S 153A, EXPLANATION-5A IS APPLICABLE AND AS THERE IS A LEGAL PRESUMPTION AGAINST THE ASSESSEE IN RESPECT OF THE SAID INCOME DETECTED DURING THE COURSE OF SEARCH AND SEIZUR E OPERATION, THE ASSESSEE CASE IS SQUARELY COVERED BY EXPLANATION- 5(II) AS THE ASSESSEE HIMSELF HAS ADMITTED TH E SAID UNDISCLOSED INCOME. 19. APPLYING THE SAID PROPOSITION TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE INCOME OFFERED BY THE ASSESSEE PERTAINING TO THE CASH SEIZED FROM THE ASSESSEE AND THE DECLARATION OF THE ASSESSEE THAT THE SAID CASH RELATES TO THE UNACCOUNTED CASH RECEIVED VIDE THE SALE TRANSACTION ENTERED INTO BY THE ASSESSEE, WHICH IN TURN, WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED PURSUANT T O ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT, IS THE INCOME DETECTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AND THE ASSESSEE IS EXIGIBLE TO LEV Y OF PENALTY ON SUCH INCOME WHICH WAS DETECTED DURING THE COURSE OF SEA RCH AND SEIZURE OPERATION, WHICH IN TURN HAS BEEN OFFERED BY THE ASSESSEE IN RETURN OF INCOME FILED PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE ON THE OTHER HAND HAS PLACED RELIANCE ON THE RATIO L AID DOWN IN DCIT VS. PURTI SAKHAR KARKHANA (SUPRA), WHICH IS A DECISION OF NAGPUR BENCH OF TRIBUNAL AND HYDERABAD BENCH OF TRIBUNAL I N SHRI PV RAMANA REDDY VS. ITO (SUPRA). IN VIEW OF BINDING PREC EDENT OF PUNE BENCH ON THE SAID ISSUE, WE FIND NO MERIT IN THE RELIA NCES PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR TH E ASSESSEE ON DCIT VS. PURTI SAKHAR KARKHANA (SUPRA) AND SHRI PV RA MANA REDDY VS. ITO (SUPRA). THE OTHER RELIANCE PLACED UPON BY TH E LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE DECISIO N OF PUNE 17 ITA NO.1550/PN/2013 BENCH OF TRIBUNAL IN SMT. PRAMILA D. ASHTEKAR VS. ITO (2013) 39 TAXMANN.COM 103 (PUNE TRIB.), IT MAY BE POINTED O UT THAT THE SAID ORDER OF PUNE BENCH OF TRIBUNAL HAS BEEN RECALLED I N MA NO.112/PN/2013, ORDER DATED 21.06.2013 AND HAS NO BI NDING EFFECT FOR DECIDING THE PRESENT ISSUE. FURTHER REFERENCE WAS M ADE TO THE DECISION OF CIT VS. CONTINENTAL WAREHOUSING CORPORATIO N (NHAVA SHEVA) LTD. & ANR. (SUPRA), WHERE THE HONBLE BOMBAY HIGH COURT HAS DELIBERATED UPON THE SCOPE OF 153A PROVISIONS AND H AS NO RELEVANCE TO THE ISSUE BEFORE US. 15. SINCE THE ASSESSEE IN THE INSTANT CASE HAS DECLARED THE AMOUNT OF RS.17,00,000/- AND RS.10,00,000/- RESPECTIVELY ON THE BASIS OF VARIOUS DISCREPANCIES FOUND IN THE SEIZED DOCUME NTS DURING THE COURSE OF SEARCH AND THE ASSESSEE HAS DECLA RED THE SAME IN THE STATEMENT RECORDED U/S.132(4), THEREFORE, RES PECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUN AL CITED (SUPRA) WE HOLD THAT THE ASSESSEE IS LIABLE TO PENALT Y U/S.271(1)(C) OF THE ACT FOR CONCEALING THE PARTICULARS OF HIS INCOME TO THE EXTENT OF INCOME ARISING FROM LAND BUSINESS W ITH MR. DILIP PHADOL RS.17 LAKHS AND PROFIT OF UNRECORDED TRANSACTION IN KIRANA RS.10 LAKHS. THE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE THAT PENALTY CANNOT BE LEVIED O N ESTIMATED ADDITION OF INCOME ON KIRANA IS NOT APPLICABLE UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AO IS DIREC TED TO RECOMPUTE THE PENALTY ACCORDINGLY. THE APPEAL FILED BY T HE REVENUE IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09-05-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 09 TH MAY, 2016. 18 ITA NO.1550/PN/2013 ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - I , NASHIK 4. 5. 6. THE CIT-I, NASHIK $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // TRUE COPY // // $ ' //TRUE /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE