Deputy Commissioner of Income-tax, V. Shri Kantilal A. Oswal, Pune

ITA 1563/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7446 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Cost of acquisition
• Section: 143(3); 153A; 131; 27

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1563/PUN/2015 / ASSESSMENT YEAR : 2012-13 DY. COMMISSIONER OF I NCOME TAX , CENTRAL CIRCLE 2(1), PUNE. C WING, 4 TH FLOOR, PMT BUILDING, SWARGATE, PUNE 37. . / APPELLANT V/S SHRI KANTILAL A. OSWAL, SHOP NO.9, ASHOK VIJAY COMPLEX, 326 M.G. ROAD, PUNE 411 001. PAN :AAAPO8094N. . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI AJAY MODI. / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 12, PUNE DT.02. 09.2015 FOR THE ASSESSMENT YEAR 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- / DATE OF HEARING : 27.07.2017 / DATE OF PRONOUNCEMENT: 13.09.2017 2 ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BU SINESS OF JEWELLARY. A SEARCH ACTION U/S 132(4) OF THE ACT WAS C ONDUCTED ON 27.04.2011. DURING THE COURSE OF SEARCH, ASSESSEE OFFER ED ADDITIONAL INCOME OF RS.2,63,65,374/- ON ACCOUNT OF EXCESS ST OCK OF GOLD, SILVER AND DIAMONDS THAT WAS FOUND IN THE SHOP OF M /S. FULCHAND JEWELLARS AT THE TIME OF SURVEY CONDUCTED IN CO NSEQUENCE OF SEARCH ALONG WITH CERTAIN UNACCOUNTED CASH. ASSESSEE FILED ITS RETURN OF INCOME ON 27.09.2012 DECLARING TOTAL INCOME OF RS.2,72,03,278/- WHICH INCLUDED THE AMOUNT DISCLOSED AT TH E TIME OF SEARCH. THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S 153A OF THE ACT ON 27.01.2014 ACCEPTING THE INCOME DISCLOSED BY THE ASSESSEE. ON THE AMOUNT OF RS.2,63,65,374/- THAT WAS DISC LOSED BY THE ASSESSEE, AO WAS OF THE VIEW THAT ASSESSEE WAS LIABLE FOR PENALTY U/S 271AAA OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS.26,36,537/- VIDE ORDER DT.30.07.2014. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DEL ETED THE PENALTY BY HOLDING AS UNDER : 6. THE RELIANCE WAS PLACED ON THE JUDICIAL PRECED ENTS AS UNDER:- BUT WHERE THE AO ACCEPTS THE INCOME DECLARED IN THE RETURN OF INCOME THEN THE ASSESSEE CANNOT BE CHARGED FOR A NY CONTUMACIOUS CONDUCT. THUS WHERE RETURNED INCOME IS ACCEPTED THERE IS NO CASE FOR LEVY OF PENALTY. - CIT VS. PRAKASH INDUSTRIES LTD. ( 2010) 322 ITR 622 - (P & H) AND. SMT. GOVINDA DEVI VS. CIT (2008) 220 CTR ( ALL) 189 : (2008 14 DTR (ALL) 341: (2008) 304 ITR 340 RELIED ON. THUS, THE VARIOUS PRINCIPLES AND THE LAW INDICATE THAT THE PROCEEDINGS UNDER SECTION 271(1)( C) ARE INDEPENDENT AND REQUIRES SATISFACTION OF VARIOUS PROVISIONS AS PRESCRIBED. IN THIS CASE RELIANCE IS ALSO PLACED ON THE HON'BLE ITAT PUNE BENCH DECISION IN THE CASE OF PRAMILA D. ASHTEKAR & ORS VS. ITO 3 (2013) 154 TTJ (PUNE 'B' TRIB) 46 THE PROPOSITION T HAT WHERE NO DIFFERENCE IN ASSESSED INCOME AND RETURNED INCOME FILED SINCE NO ADDITION WAS MADE BY THE A.O. OVER AND ABOVE THE INCOME DECLARED IN THE RETURN OF INCOME, THEREFORE RETURNED INCOME AND ASSESSED INCOME WERE THE SAME, PENALTY LEVIED U/S. 271 (1)( C) WAS NOT SUSTAINABLE. IN VIEW OF THE LEGAL POSITION OBTAINING THIS CASE N O PENALTY IS LEVIABLE AND IT BE HELD ACCORDINGLY.' FINDINGS:- 6. THE ARGUMENTS CANVASSED BY THE APPELLANT ON THE ISSUE ARE CAREFULLY EXAMINED. I HAVE ALSO GONE THROUGH THE AS SESSMENT ORDER, THE PENALTY ORDER AND SUBMISSIONS FILED BY THE APPE LLANT IN THE COURSE OF APPEAL. THE APPELLANT HAS BROUGHT TO THE NOTICE IN HIS SUBMISSION THAT HE HAS FULFILLED ALL THE PRECONDITI ONS FOR GETTING IMMUNITY FROM LEVY OF PENALTY U/S 271AAA. HE HAS REL IED UPON THE STATEMENT GIVEN BY APPELLANT, HIS SON AND CONFIRMAT ION THEREOF BY THE APPELLANT AND PAYMENT OF TAXES ON THE DECLARATION M ADE BEFORE FILING OF THE RETURN IN DUE DATE. FROM THE REPLIES TO VARI OUS QUESTIONS IN THE STATEMENTS OF THE APPELLANT RECORDED DURING THE COU RSE OF SEARCH ACTION AND FROM THE PERUSAL OF THE SAID REPLIES IT APPEARS THAT THE APPELLANT HAS STATED THAT HE HAS EARNED THE UNDISCL OSED INCOME OF RS.2,61,03,983 IN THE TRADING ACTIVITY OF JEWELLERY , SILVER AND DIAMONDS. IT IS IMPORTANT TO NOTE THAT DURING THE S URVEY IN THE SHOP PREMISES DIFFERENCE IN VALUE OF PHYSICAL STOCK AND BOOK VALUE OF STOCK WAS ON ACCOUNT OF DIFFERENCE IN QUANTITY AS WELL AS ON ACCOUNT OF METHOD OF VALUATION. STOCK OF JEWELLERY WAS VALUED AT CURRENT MARKET PRICE AS AGAINST AVERAGE PURCHASE COST CONSISTENTLY ADOPTED BY THE APPELLANT. -THE APPELLANT HAS ACCEPTED THE DIFFEREN CE IN VALUATION AND PAID THE TAXES DUE ON THE UNDISCLOSED INCOME RE SULTING OUT OF HIS TRADING ACTIVITY. IN THE STATEMENT U/S 132(4) DATED 27.04.2011 CONSEQUENT UPON THE SEARCH AT RESIDENCE THE APPELLA NT IN AN ANSWER TO QUESTION NO.38 ADMITTED THE UNDISCLOSED INCOME O F RS. 2,61,03,983/- FOR A.Y. 2012-13, THE RELEVANT CONTENTS OF THE STAT EMENT IS REPRODUCED AS UNDER: Q.NO. 38. DURING THE COURSE OF SURVEY CARRIED OUT AT YOUR BUSINESS PREMISES AT SHOP NO.9, ASHOK VIJAY COMPLEX , 326 M. G. ROAD, PUNE 411 001, STOCK VALUED AT RS. 3,57,72,586 .20. HOWEVER, AS TENTATIVE TRADING ACCOUNT DRAWN BY YOU A S ON 27.04.2011, STOCK IS VALUED AT RS. 96,56,039.97. THE STOCK HAS BEEN INVENTORIED AND VALUED ITEM WISE BY THE SURVEY TEAM AND THEY HAVE COME ACROSS THE FACT THAT THE CLOSING STOCK IS EXCE SS TO THE TUNE OF RS. 2,61,03,983/-. PLEASE OFFER YOUR CO MMENT. ANS.: I HAVE GONE THROUGH THE INVENTORY PREPARED AN D VALUATION MADE BY THE SURVEY TEAM AT THE BUSINESS PREMISES OF FULCHAND JEWELLERS AND I CONFIRM THAT T HE SAME IS TO MY SATISFACTION. I ADMIT THAT THE EXCESS STOCK TO THE TUNE OF RS. 2,61,03,983/- CORRESPONDS' TO TH E UNACCOUNTED INVESTMENT MADE IN GOLD AND SILVER BY ME IN THE CURRENT FINANCIAL YEAR OUT OF UNDISCLOSED INCOM E EARNED FROM MY JEWELLERY BUSINESS, IN VIEW OF ANTICIPATED RISE IN THE PRICE OF GOLD AND SILVER. N OW, I IN THE CAPACITY OF PROPRIETOR OF FULCHAND JEWELLERS 4 VOLUNTARY DISCLOSED AN AMOUNT OF RS. 2,61,03,983/- AS MY UNACCOUNTED INCOME FOR THE CURRENT YEAR AND I WI LL BE PAYING THE TAXES THEREON. -------------' 6.1 THERE WAS NO OTHER INCRIMINATING MATERIAL FOUND DURING THE SEARCH FOR THE YEAR UNDER CONSIDERATION. DISCLOSURE OF ADDITIONAL INCOME OF RS 2,61,03,983 WAS MADE IN THE STATEMENT RECORDED U/S 131 OF THE IT ACT IN THE COURSE OF SURVEY. THE ADMI SSION OF ADDITIONAL INCOME OF RS 2,61,03,983 BY THE APPELLANT WAS BASED ON VALUATION OF EXCESS STOCK FOUND IN HIS TRADING ACTIVITY DURING T HE COURSE OF SURVEY AND NOT ON THE BASIS OF ENTRY IN THE BOOKS OF ACCOU NT OR TRANSACTIONS OR ASSETS FOUND IN THE COURSE OF SEARCH U/S 132. IN REPLY TO QUESTION NO. 38, IN THE STATEMENT U/S 132(4) APPELLANT HAS C ONFIRMED THE DIFFERENCE IN VALUE OF STOCK AT RS. 2,61,03,983. TH IS AMOUNT OF INVESTMENT WAS OFFERED AS INCOME FROM UNDISCLOSED S OURCES FOR ASSESSMENT YEAR 2012-13 U/S 132(4) OF THE IT ACT. I N HIS STATEMENT U/S 132(4) HE HAS ONLY RATIFIED THE STATEMENT OF HIS SON RECORDED DURING THE COURSE OF SURVEY. 6.2 IN THIS MANNER, APPELLANT SPECIFIED SOURCE OF E ARNING OF UNACCOUNTED INVESTMENT MADE IN GOLD AND SILVER OF R S.2,61,03,983 BEING FROM JEWELLERY BUSINESS. AO HAD SIMPLY DISBEL IEVED THE MANNER SPECIFIED BY THE APPELLANT. SHE HAD ACCEPTED THE INCOME DECLARED BY THE APPELLANT IN TOTO WITHOUT BRINGING OUT ANY MATERIAL ON RECORD TO PROVE OTHERWISE. AS NO RECORDS OF JEWE LLERY TRADING BUSINESS WERE FOUND MAINTAINED FOR THE YEAR EXCEPT SALE BILL OF 5 GMS OF GOLD, APPELLANT EXPRESSED HIS INABILITY TO PROVI DE ANY FURTHER DETAILS TO SUBSTANTIATE THE MANNER OF EARNING . 6.3 AT THIS STAGE, IT IS IMPORTANT TO REPRODUCE T HE MEANING OF 'UNDISCLOSED INCOME' FOR LEVYING THE PENALTY U/S 27 1AAA OF THE ACT. SAME IS PROVIDED AS EXPLANATION (A) TO THIS SECTION 271AAA OF THE ACT, AND REPRODUCED AS UNDER : EXPLANATION: FOR THE PURPOSES OF THIS SECTION,- (A) '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 THI NG OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT S 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 CHIEF 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 ACCO UNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE 5 RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FO UND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. IN VIEW OF THE ABOVE DEFINITION, THE EXCESS STOCK O F JEWELLARY OF RS. 2,61,03,983 DOES NOT QUALIFY AS UNDISCLOSED INCOM E FOR PURPOSE OF LEVY PENALTY U/S. 271AAA AS IT WAS FOUND DURING THE COURSE OF SURVEY AND NOT DURING THE COURSE OF SEARCH. 6.4 WITHOUT PREJUDICE, EVEN IF IT IS CONSIDERED TH AT ENTIRE ADDITIONAL INCOME OF RS.2,61,03,983 ADMITTED AND OF FERED U/S 132(4) QUALIFIES AS 'UNDISCLOSED INCOME' AS PER EXP LANATION U/S 271AAA, THE NEXT ILUE COMES WHETHER THE APPELLA NT IS QUALIFIED FOR IMMUNITY IN TERMS OF THE CONDITIONS M ENTIONED U/S 271AAA (2) OF THE ACT WHICH ARE REPRODUCED AS UNDER : (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE,- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER 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) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY , IN RESPECT OF THE UNDISCLOSED INCOME. THEREFORE, IN ORDER TO BE ELIGIBLE FOR IMMUNITY THE APPELLANT HAS TO SPECIFY THE MANNER IN WHICH THE INCOME WAS DERIVED AND ALSO TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED. AS STATED ABOVE, DURING THE COURSE OF SEARCH EXCESS STOCK OF RS.2,61,03,983 WAS FOUND AND THE APPELLANT STATED T HAT HIS ONLY SOURCE OF INCOME WAS TRADING IN JEWELLERY BUSINESS AND THE VALUE REPRESENT INCREASE IN VALUE OF ASSETS DURING THE CO URSE OF THE BUSINESS OF CARRYING OUT JEWELLERY TRANSACTIONS. IN THE CIRCUMSTANCES, IT APPEARS THAT MANNER HAS BEEN SPECIFIED BY THE AP PELLANT. SINCE NO DOCUMENTS OR OTHER EVIDENCES WERE FOUND DURING THE COURSE OF SEARCH, THE APPELLANT HAD SHOWN HIS INABILITY TO FURNISH AN Y FURTHER EVIDENCE TO SUBSTANTIATE THE MANNER. HE HAS PAID DUE TAXES A ND SPECIFIED THE MANNER HENCE CLAIMED THE IMMUNITY IN THE FACTS OF HI S CASE . THE APPELLANT HAS PLACED RELIANCE ON JUDICIAL DECISIONS WHICH SUPPORTS THIS PROPOSITION. 6.5 I HAVE ALSO CONSIDERED THE JUDGMENT IN THE FOLL OWING JUDICIAL DECISIONS I) ACIT VS. M/S. KANAKIA SPACES PVT. LTD., ITA NO. 6963/MUM/2011 II) DCIT CENTRAL CIRCLE VS. SHRI BANARSIDAS R JINDA L AND OTHERS, ITA NO.1436, 1438, 1440/PN/2013 PUNE ITAT. III) BISHNU KUMAR AGARWAL VS. DEPARTMENT OF INCOME TAX ITA NO.1289-1290/KOL/2012. 6.5.1 MUMBAI BENCH OF TRIBUNAL IN THE CASE OF M/S KANAKIA SPACES PVT. LTD (SUPRA) HAS HELD THAT THE REQUIREMENT ON THE PART OF THE APPELLANT TO SUBSTANTIATE THE SOURCE OF INCOME CANN OT BE TAKEN TO MEAN THAT ALL EVIDENCES IN RESPECT OF THE SAID UNDI SCLOSED INCOME HAS 6 TO BE PRODUCED. THE VERY FACT THAT THE DISCLOSURE I S MADE IN RESPECT OF UNDISCLOSED INCOME, THE APPELLANT IS REQUIRED TO ME NTION THE PROXIMATE NATURE OF ACQUISITION OF SUCH INCOME AND DOES NOT REQUIRE SUPPORTING IT WITH EVERY MINUTE DETAIL IN ORDER TO GET THE IMMUNITY FROM PENALTY. 6.5.2 THE KOLKATTA BENCH OF TRIBUNAL IN THE CASE O F BISHNU KUMAR AGARWAL (SUPRA) HAS HELD THAT IF NO DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH ACTION WHICH COULD EVEN INDICA TE ANY UNDISCLOSED INCOME EARNED BY THE APPELLANT, THE QUE STION OF SUBSTANTIATING THE SAME IS IMPRACTICAL. THEREFORE T HE APPELLANT COULD NOT BE DENIED IMMUNITY UNDER SECTION 271AAA(2) OF T HE ACT. 6.5.3 THE APPELLANT HAS RELIED ON THE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF CIT VS MAHENDRA C SHAH 299 ITR 305, WHICH HAVE BEEN FOLLOWED BY THE JURISDICTIONAL ITAT IN THE CAS E OF SHRI BANARSIDAS R JINDAL WHEREIN IT HAS BEEN HELD THAT THE LANGUAGE OF EXPLANATION 5 AND SECTION 271AAA(2) IN RESPECT OF T HE EXPRESSION SUBSTANTIATE THE MANNER IS AT PARI MATERIA. 6.5.4 THE FACT OF THE MATTER IS THAT THE REQUIREM ENT AS PER THE PROVISION OF SECTION 271AAA IS THAT THE APPELLANT H AS TO SUBSTANTIATE THE MANNER OF EARNING THE UNDISCLOSED INCOME BY STA TING THE SOURCE OF EARNING SUCH UNDISCLOSED INCOME. THE SOURCE OF U NDISCLOSED INCOME DOES NOT MEAN THAT THE APPELLANT HAS TO GIVE OR JUSTIFY EVERY MINUTE DETAILS OF SUCH UNDISCLOSED INCOME. IT WILL BE SUFFICIENT ON THE PART OF THE APPELLANT IF HE JUSTIFIES THE MANNER OF EARNING SUCH UNDISCLOSED INCOME BY ITS PROXIMATE NATURE OF EARNI NG SUCH INCOME AND WHICH THE APPELLANT HAS POSITIVELY ADMITTED IN HIS STATEMENT THAT THE SAID INCOME IS FROM HIS BUSINESS OF DEALING IN JEWELLERY BUSINESS. IN THE PENALTY ORDER THE AO HAS NEITHER DISPUTED TH E QUANTIFICATION OF INCOME OFFERED BY HIM NOR BROUGHT ANY MATERIAL TO PR OVE HIS VERSION INCORRECT. NO INCRIMINATING MATERIAL WAS FOUND CONT RARY TO THE MANNER SPECIFIED BY THE APPELLANT. APPELLANT CANNOT BE EXP ECTED TO PRODUCE EVIDENCES TO SUPPORT UNACCOUNTED TRADING OPERATIONS WHEN NO RECORDS WERE FOUND DURING SEARCH. HENCE AFTER THE A PPELLANT DULY INCLUDED THE SAID UNDISCLOSED INCOME IN THE RETURN AND ALSO PAID THE TAX DUE ON THE INCOME DISCLOSED, HE IS ENTITLED TO IMMUNITY PROVIDED U/S 271AAA(2) OF THE ACT. AFTER EXAMINING THE FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL PRECEDENCE I T IS HELD THAT THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY U/S 271AAA OF THE INCOME-TAX ACT IN RESPECT OF THE UNDISCLOSED INCOME OFFERED TO TAX. ACCORDINGLY AO IS DIRECTED TO DELETE THE PENALTY OF RS. 26,36,5 37/- IN RESPECT OF THE ABOVE UNDISCLOSED INCOME. THUS THE GROUND RAISED IS HEREBY ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSE E HAS SUBSTANTIATED THE MANNER OF DERIVING UNDISCLOSED IN COME WHEREAS THE ASSESSEE HAD SIMPLY DISCLOSED THE INCOME AND DI D NOT FURNISH ANY OTHER MATERIAL OR EVIDENCE TO SUPPORT SUBSTANTI ATE THE CLAIM. 7 2. THE LD.CIT(A) FELL IN ERROR WHEN HE HELD THAT TH E ASSESSEE WAS NOT REQUIRED TO JUSTIFY THE MANNER OF UNDISCLOSED INCOM E WHICH THE ASSESSEE CLAIMED TO BE DERIVED FROM JEWELLERY TRAD ING AND COULD HAVE BEEN EARNED BY TRADING TURNOVER OF RS.15 CRS. TO BE MADE IN 26 DAYS PERIOD FOR WHICH NO EVIDENCE LIKE PARTIES, FUN DS EMPLOYED, MODE OF PAYMENT, RECEIPT AND DELIVERY OF JEWELLERY ETC. WAS PROVIDED. 3. THE ORDER OF THE LD.CIT(A) MAY BE VACATED AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 3. BEFORE US, LD.DR. TOOK US THROUGH THE ORDER OF AO AN D STRONGLY SUPPORTED THE ORDER OF AO. HE FURTHER SUBMITT ED THAT IMMUNITY U/S 271AAA(2) IS NOT AVAILABLE TO THE ASSESSEE BE CAUSE TO CLAIM IMMUNITY ASSESSEE HAS TO SUBSTANTIATE THE MANNER I N WHICH THE UNDISCLOSED INCOME WAS DERIVED, THE MANNER OF DERIVING INCOME HAS TO BE PROVED BEYOND DOUBT. HE FURTHER SUBMITTED T HAT IN THE PRESENT CASE, THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE INCOME WAS DERIVED AND THEREFORE THE ASSESSEE WAS NOT ENTITLED TO IMMUNITY UNDER THE ACT. HE FURTHER SUBMITTED THAT THE CASE LAWS RELIED UPON BY LD.CIT(A) WHILE DELETING THE PENALTY ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE THE FACTS ARE DISTINGUISHABLE. LD.AR. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A). LD.AR. FURTHER SUBMITTED THAT THE DISCLOSURE OF UNDISCLOSED AMOUNT WAS MADE AT THE TIME OF SURVEY IN THE SHOP PREMISES AND WAS ON ACC OUNT OF THE DIFFERENCE IN VALUATION METHOD (STOCK OF JEWELLARY WAS VALU ED AT CURRENT MARKET PRICE AS AGAINST AVERAGE PURCHASE COST CONSISTENTLY ADOPTED BY THE ASSESSEE) AND THIS ASPECT IS UNDISPUTED AS REVENUE HAS NOT FILED ANY GROUND ON IT. HE POINTED TO THE FINDINGS OF LD.CIT(A) AT PAGE 19 WHEREIN LD.CIT(A) HAS NOTED THAT THE STOCK WAS FOUND DURING THE COURSE OF SURVEY AND NOT DURING THE CO URSE OF SEARCH AND THEREFORE THE EXCESS STOCK OF JEWELLERY FOUN D DOES NOT QUALIFY TO BE AN UNDISCLOSED INCOME FOR THE PURPOSE OF LE VY OF 8 PENALTY U/S 271AAA OF THE ACT. HE FURTHER PLACED RELIANC E ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF ACIT VS. G EBILAL KANHAILAL HUF REPORTED IN (2012) 348 ITR 0561, THE DECISION OF M/S. NAVAL KISHORE AGARWAL VS. ACIT IN ITA NO.32/NAG/2013 DT.29.03.2017 AND THE DECISION OF PUNE TRIBUNAL IN THE CASE OF DCIT VS. BANARASIDAS R. JINDAL IN ITA NO.1436/PN/2013 DT.26.06.20 15 AND HE ALSO PLACED ON RECORD THE COPY OF THE ABOVE SAID DECISIONS. HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPE CT TO LEVY OF PENALTY U/S 271AAA OF THE ACT. IT IS AN UNDISPUTED FAC T THAT ASSESSEE HAD ADMITTED TO UNDISCLOSED INCOME IN THE STATE MENT RECORDED U/S 132(4) OF THE ACT AT THE TIME OF SEARCH. THE ASSESSEE HAD EARNED SUCH AN INCOME, FILED THE RETURN OF INCOME AND ALSO PAID THE TAX WITH INTEREST ON SUCH SUM. AO HAD IMPOSED PEN ALTY ON THE GROUND THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE MANNER OF EARNING THE INCOME. WE FIND THAT LD.CIT(A) WHILE DELETING THE PENALTY HAS NOTED THE EXCESS STOCK OF RS.2.61 CRORES D ID NOT QUALIFY AS UNDISCLOSED INCOME AS IT WAS FOUND DURING THE COURSE OF SURVEY AND NOT DURING THE COURSE OF SEARCH AND FURTHER THE AD DITION TO CLOSING STOCK WAS DUE TO THE DIFFERENCE IN THE METHOD OF VALUATION OF STOCK AND THEREFORE PROVISIONS OF SEC.271AAA ARE NOT APP LICABLE. WE FIND THAT ON THE AFORESAID FACTUAL FINDINGS OF LD.CIT(A), REVE NUE HAS NOT PREFERRED ANY APPEAL MEANING THEREBY THAT THE FINDINGS OF LD.CIT(A) THAT THE INCOME WAS FOUND DURING THE COURSE OF SURVEY AND NOT DURING SEARCH, HAS BEEN ACCEPTED BY REVENUE. WE FURTHER FIND THAT LD.CIT(A) EVEN ON MERITS OF THE ALTERNATIVE CONTE NTION THAT 9 THE AMOUNT WAS FOUND DURING SEARCH AND THEREFORE LIABLE FO R PENALTY, HAS OBSERVED THAT THE ASSESSEE HAD SUBSTANT IATED THE MANNER OF EARNING OF THE UNDISCLOSED INCOME BY STATING THE SOURCE OF ITS EARNING, NO INCRIMINATING MATERIAL WAS FOUND CONTRARY TO THE MANNER SPECIFIED BY THE ASSESSEE AND THE UNDISCLOSED INCO ME WAS DULY OFFERED BY THE ASSESSEE AND THE TAXES WERE ALSO P AID THEREON. NO MATERIAL HAS BEEN PLACED BY REVENUE TO DEMONSTRATE THAT THE AFORESAID FINDINGS OF LD.CIT(A) IS CONTRARY TO THE FACTS OR IS INCORRECT. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF T HE VIEW THAT NO INTERFERENCE TO THE ORDER OF LD.CIT(A) IS CALLED FOR AND THUS, THE GROUNDS OF REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 13 TH DAY OF SEPTEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 13 TH SEPTEMBER, 2017. YAMINI '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. COMMISSIONER OF INCOME TAX-(A)-12, PUNE. PRL.CIT, CENTRAL, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER , // / TRUE COPY / // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.