Shri Karamashibhai G. Aghara, Morbi V. The Asstt. Commr. of Income Tax, Cen. Cir.-1, RAJKOT-GUJARAT

ITA 159/RJT/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4927 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 271(1)(c); 274; 6; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER SL. NOS. ITA/IT(SS)A NO(S) ASSESSMENT YEAR (S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT (S) RESPONDENT 1. ITA NO.159/RJT/17 2013-14 SHRI KARMASHIBHAI G.AG HARA MATRU KRUPA ANUPAM SOCIETY NAZARBAUG ROAD, MORBI PAN : ABIPA 4153 D THE ACIT CENTRAL CIRCLE-1 RAJKOT 2. IT(SS)A NO.159/RJT/17 2013-14 SHRI NARSHIBHAI G.AGHARA BANSI SOMNATH SOCIETY OPP.DIAMOND HALL, MORBI PAN : ABIPA 4152 C -DO-REVENUE 3. IT(SS)A NO.88/RJT/17 2013-14 SHRI BHARATBHAI T. AGHARA SNEH MILAN SOMNATH SOCEITY NR.PRAN NAGAR RAVAPAR ROAD, MORBI PAN : ABQPA 8615 G -DO-REVENUE 4. IT(SS)A NO.89/RJT/17 2013-14 SHRI KAPILBHAI KARAMSHIBHAI AGHARA MATRU KRUPA ANUPAM SOCIETY NAZARBAUG ROAD, MORBI PAN: AGMPA 5493 P -DO-REVENUE ASSESSEES BY : SHRI MEHUL J. RANPURA, AR REVENUE BY : SHRI B . B . RAJENDRA PRASAD, CIT - DR DATE OF HEARING 10/05/2019 DATE OF PRONOUNCEMENT 16/05/2019 O R D E R PER SHRI PRADIP KUMAR KEDIA, AM: THIS BUNCH OF CAPTIONED FOUR APPEALS HAVE BEEN FI LED AT THE INSTANCE OF THE DIFFERENT ASSESSEES AGAINST THE SEPARATE APPELLATE ORDERS OF THE COMMIS SIONER OF INCOME TAX(APPEALS)-11, AHMEDABAD [CIT(A) IN SHORT] DATED 01/02/2017, 08/09/2017, 20/07/2017 ARISING IN THE ASSESSMENT ORDERS PASSED UNDER S.143(3) OF - 2 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S 'THE ACT') DATED 28/02/2015 & 24/03/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2013- 14. 2. IN ALL THE CAPTIONED 4 CASES, THE ONLY ISSUE AGI TATED BEFORE THE TRIBUNAL IS TOWARDS LEVY OF PENALTY UNDER S.271AAB OF THE ACT B Y THE ASSESSING OFFICER WHICH WAS CONFIRMED BY THE CIT(A)-11, AHMEDABAD. 3. AS ALL THE APPEALS CONCERNING THE GROUP CASES IN VOLVING THE IDENTICAL ISSUE, ALL THE MATTERS WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER. 4. BRIEFLY STATED, A SEARCH ACTION UNDER S.132 OF T HE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 17/01/2013. AS A CONSE QUENCE OF SEARCH, THE ASSESSEE FILED RETURN OF INCOME DECLARING RS.3,42,73,700/- IN THE CASE OF SHRI BHARAT T.AGHARA IN IT(SS)A NO.88/RJT/2017 FOR AY 2013-14 W HICH INCLUDED ADDITIONAL INCOME DECLARED BY THE ASSESSEE AND AMOUNTING TO RS .2,61,13,250/- IN THE COURSE OF SEARCH. THE ASSESSING OFFICER ASSESSED THE INCOME SO DECLARED AS SUCH, TOGETHER WITH SOME OTHER SMALL DISALLOWANCES WITH WHICH WE A RE NOT PRESENTLY CONCERNED WITH. THE ASSESSING OFFICER HOWEVER INITIATED PENA LTY PROCEEDINGS UNDER S.271AAA OF THE ACT ON THE ADDITIONAL INCOME DECLAR ED AMOUNTING TO RS.2,61,13,250/- IN PURSUANCE OF SEARCH. SUBSEQUE NTLY, ON RECEIVING OBJECTIONS FROM THE ASSESSEE, THE ASSESSING OFFICER VIDE CORRI GENDUM DATED 03/07/2015 TO THE ASSESSMENT ORDER, MODIFIED THE PENALTY SECTION AN D SUBSTITUTED THE SAME BY SECTION 271AAB AND CONTINUED PENALTY PROCEEDINGS UNDER THAT SECTION. IN TERMS OF SECTION 271AAB OF THE ACT, THE ASSESSING OFFICER IMPOSED A PENALTY OF RS.26,11,325/- BEING 10% OF THE ADDITIONAL INCOME DECLARED VIDE OR DER PASSED UNDER S.271AAB OF THE ACT. - 3 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 5. THE AFORESAID ACTION OF THE ASSESSING OFFICER WA S AFFIRMED BY THE CIT(A) IN THE FIRST APPEAL. 6. THE ASSESSEE HAS AGITATED THE ACTION OF THE REVENUE BEFORE THE TRIBUNAL AND SEEKS TO CONTEND THAT CONDITIONS OF SECTION 271AAB IS NOT SATISFIED AND, THEREFORE, PENALTY IMPOSED BY THE ASSESSING OFFICER IS NOT SUS TAINABLE IN LAW. 7. ON CONSIDERATION OF RIVAL SUBMISSIONS, WE F IND THAT THE ISSUE HAS ALREADY BEEN ADJUDICATED IN GROUP CASES VIZ. SHRI JITENDRABHAI T HAKARSHI AGHARA VS. ACIT AND TWO OTHERS IN IT(SS)A NOS.1, 02 & 03/RJT/2017 ORDER DATED 01/06/2018 ON IDENTICAL FACTS. THE CO-ORDINATE BENCH HAS DELETED THE PENA LTY IN THE SIMILARLY PLACED FACTS. SIMILAR DECISION WAS RENDERED IN ITA NO.157/RJT/201 7 FOR AY 2013-14 DATED 15/11/2018 IN SOME OTHER GROUP CASES IN THE SAME SE ARCH. THE RELEVANT PORTION OF THE SAID ORDER READS AS UNDER : 9. ADVERTING TO THE MAIN GRIEVANCE, THE LA A. R FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT IN THE SEARCH ACTION UNDER SECTION 132 CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 17.01.2013, NO UNACCOUNTED MONEY, ASSETS, INVESTMEN TS ETC. WERE RECOVERED. THE LD. A.R ADVERTED TO THE PENALTY ORDER APPEALED AGAINST AND SUBMITTED THAT IT IS ADMITTED POSITION THAT THE ASSESSEE IN THE STATEMENT RECORDED UNDER S ECTION 132(4) OF THE ACT, ADMITTED ADDITIONAL INCOME ON AD-HOC BASIS FOR THE FAMILY & GROUP CONCERNS AS A WHOLE. OUT OF THE VOLUNTARILY DECLARATIONS OF ADDITIONAL INCOME, THE ASSESSEE INCLUDED RS. 2,54,13,250/- ON AD-HOC BASIS IN HIS RETURN OF INCOME. THE INCOME DE CLARED BY THE ASSESSEE HI THE RETURN OF INCOME WAS ACCEPTED IN TOTO WITHOUT ANY MODIFICATIO N. THE LD. A.R POINTED OUT FROM THE PENALTY ORDER THAT THE DECLARATIONS WERE MADE AND H ONOURED SUBSEQUENTLY IN THE RETURN OF INCOME FILED ONLY TO AVOID LONG DRAWN LITIGATIONS A ND TO BUY PEACE OF MIND. THE LD. A.R VEHEMENTLY REITERATED ITS SUBMISSION MADE BEFORE TH E AO THAT NOTHING INCRIMINATING HI THE FORM OF CASH, GOLD, VALUABLES OR ANY DOCUMENTS .OR DATA EVIDENCING THE UNDISCLOSED INCOME WAS FOUND. THE LD. A.R THEREFORE CONTENDED THAT A D ECLARATION MADE ON AD-HOC, BASIS TO COVER UP DEFECTS OR DISCREPANCIES IN THE BOOKS OF A CCOUNT, IF ANY, WITHOUT ANY DETECTION OF FALSITY CANNOT BE EQUATED WITH THE 'UNDISCLOSED INC OME' AS STATUTORILY DEFINED UNITE SECTION 271AAB OF THE ACT. TO SUPPORT ITS CONTENTION, THE L D, A.R SUBMITTED THAT FOR THE PURPOSES - 4 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 OF PENALTY, THE AO HAS MERELY RELIED UPON SOME AD-H OC DECLARATION MADE IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT WITHOUT AN Y MAKING ANY REFERENCE TO THE PARTICULARS OF UNACCOUNTED MONEY, ASSETS, INVESTMEN TS OR EXPENDITURE ETC. GIVING RISE TO THE DISCLOSURE SO MADE. THE LD. AH THEREAFTER REFERRED TO THE PROVISIONS OF SECTION 271AAB AND SUBMITTED THAT THE SCOPE OF SECTION 271AAB DOES NOT EXTEND BEYOND THE 'UNDISCLOSED INCOME' AS DEFINED UNDER SECTION 271AAB OF THE ACT. IT WAS CONTENDED THAT IN THE ABSENCE OF ANY FINDINGS IN THE PENALTY ORDER ON THE PARTICU LARS OF UNDISCLOSED INCOME REPRESENTED BY MONEY, BULLION, JEWELLERY ETC. ETC. AS DEFINED, SECTION 271AAB HAS NO APPLICATION. IN REITERATION, THE LD. A.R VEHEMENTLY SUBMITTED THA T AN AD-HOC DECLARATION NOT BACKED BY TANGIBLE ITEMS SPECIFIED HI THE STATUTORY DEFINITIO N CANNOT BE REGARDED AS 'UNDISCLOSED INCOME' FOR THE PURPOSES OF SECTION 271AAB OF THE A CT. THE LD. A.R ONCE AGAIN RESTATED THAT ASSESSING OFFICER HAS ALSO NOT MADE ANY REFERE NCE TO ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH PER SE WHILE ASSESSING AD-H OC DECLARATION AND ACCEPTING THE INCOME FILED BY THE ASSESSEE IN ITS RETURN OF INCOME. SIMI LARLY, NO REFERENCE HAS BEEN MADE TO ANY INCRIMINATING MATERIAL WHATSOEVER FOR THE PURPOSES OF IMPOSITION OF PENALTY AND THEREFORE 'SATISFACTION' DRAWN BY THE AO FOR IMPOSITION OF PE NALTY IS DE HORSE ANY INCRIMINATING MATERIAL AND SOLELY BASED ON THE CONDITIONAL VOLUNT ARY DISCLOSURE. IT WAS THUS CONTENDED THAT IN THE ABSENCE OF ANY REFERENCE TO THE INCRIMI NATING MATERIAL, THE CLAIM OF THE ASSESSES ABOUT THE NON EXISTENCE OF ANY 'UNDISCLOSED INCOME' STANDS VINDICATED. THE LD. A.R THEREAFTER ADVERTED TO THE DECISION OF THE CO-ORDIN ATE BENCH IN THE CASE OF ACIT VS. MARBLE ASSOCIATES (2018) 92 TAXMANN.COM 109 (VISHAK HAPATNAM) AND THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. NIRAJ JINDAL (2017) 393 ITR 1 (DELHI) TO SUPPORT ITS CASE FOR DELETION OF PENALTY. 10. THE LD. D.R, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE CIT(A) AND SUBMITTED IN FURTHERANCE MAT WHERE THE ASSESSEE HIMSELF HAS A DMITTED CERTAIN INCOME IN THE COURSE OF SEARCH AND INCLUDED THE SAME AS PART OF RETURN, THE CONSEQUENCES OF PENALTY UNDER SECTION 271AAB CANNOT BE ESCAPED 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. TH E CORE CONTROVERSY INVOLVED IN THE PRESENT APPEAL IS TOWARDS MAINTAINABILITY OF IMPOSI TION OF PENALTY UNDER SECTION 271AAB HI THE FACTS AND CIRCUMSTANCES OF THE CASE. 11.1 IT IS THE CASE OF THE ASSESSEE THAT THE INCOME DECLARED IN. THE RETURN OF INCOME ARISES OUT OF REGULAR STREAM OF INCOME FROM VARIOUS SOURCE S AND AD-HOC DECLARATION COMBINEDLY MADE FOR GROUP CONCERN AND INCLUDED IN THE RETURN O F INCOME TOWARDS ITS SHARE, DOES NOT TANTAMOUNT TO 'UNDISCLOSED INCOME' AS CODIFIED IN T HE EXPLANATION-(C) BELOW SECTION 271AABOFTHEACT. - 5 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 11.2 TO PADDLE ITS POINT OF VIEW, THE ASSESSEE HAS STRONGLY RELIED ON THE STATUTORY DEFINITION OF 'UNDISCLOSED INCOME'. WE FIND THAT ID ENTICAL ISSUE CAME UP FOR CONSIDERATION IN THE CASE OF JASUBHAI ARJANBHAI VAGHASIA VS. ACIT , ITA NO. 58/RJT/2017 ORDER DATED 17.05,2018 IN THE CONTEXT OF SECTION 271AAA OF THE ACT. THEREFORE, IT IS CONSIDERED EXPEDIENT TO REPRODUCE THE RELEVANT OPERATIVE PARA OF THE DECISION OF THE CO-ORDINATE BENCH ON THE ISSUE:- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. TH E CORE CONTROVERSY INVOLVED IN THE PRESENT APPEAL IS TOWARDS MAINTAINABILITY OF IMPOSI TION OF PENALTY UNDER SECTION 271AAA IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8.1 THE CASE OF THE ASSESSEE IS TWOFOLD (I) THE INC OME DECLARED IN THE RETURN OF INCOME AMOUNTING TO RS. 2,25,61,020/- ARISES OUT OF THE RE GULAR STREAM OF INCOME FROM VARIOUS SOURCES INCLUDING RS. 90 LAKHS TOWARDS AD-HOC DECLA RATION AND THEREFORE THERE IS NO ELEMENT OF 'UNDISCLOSED INCOME' AS DEFINED IN THE E XPLANATION BELOW SECTION 271AAA OF THE ACT. (II) IN THE ALTERNATIVE, IN ANY EVENT, THE INC IDENCE OF PENALTY UNDER SECTION 271AAA CANNOT EXCEED RS. 9 LAKHS (10% OF RS. 90 LAKHS) ATT RIBUTABLE TO AD-HOC INCOME. 8.2 TO BUTTRESS ITS POINT OF VIEW, THE ASSESSES HA S STRONGLY HARPED ON THE STATUTORY DEFINITION OF 'UNDISCLOSED INCOME'. IT -WOULD THERE FORE BE APPOSITE TO REPRODUCE SECTION 271AAA OF THE ACT FOR READY REFERENCE:- '271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED,( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIA TED .UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE, BY HIM, A SUM COM PUTED AT THE RATE OFTEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSES, (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 MAN NER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN -WHICH THE UNDISCL OSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER-WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSES IN RESPECT OF THE UNDISCL OSED INCOME REFERRED TO IN SUB-SECTION (1). - 6 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, 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 SEAR CH 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 COMMI SSIONER OR COMMISSIONER, BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YE AR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (!) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSES HAS NOT FURNISHED THE RETUR N OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE.; OR (II) IN WHICH SEARCH WAS CONDUCTED. 8.3. PERUSAL OF SPECIAL PROVISIONS OF SECTION 271 AAA, CONCERNING SEARCH CASES THAT IT IS APPLICABLE IN RESPECT OF 'UNDISCLOSED INCOME' IN CO NTRAST TO 'CONCEALED INCOME' RELEVANT FOR THE PURPOSES OF PENALTY PROCEEDINGS UNDER NORMAL PROVIS IONS OF SECTION 271(1)(C) OF THE ACT. THE APPLICABILITY OF PENALTY UNDER SECTION 271AAA THUS REVOLVES WITHIN THE SPHERE OF 'UNDISCLOSED INCOME ', 8.4. A PLANE READING OF THE AFORESAID DEFINITION OF 'UNDISCLOSED INCOME' CLEARLY SHOWS THAT THE UNDISCLOSED INCOME SHOULD BE REPRESENTED BY MONEY, BULLION JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR ANY UNRECORDED ENTRY AS PER DOCUMENTS FOUND OR ANY FALSE ENTRY RECORDED IN THE BOOKS OF ACCOUNT ETC. NO SUCH REFERENCE OR NEXUS OF DISCL OSURE TO SUCH SPECIFIED ITEMS WERE MADE IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER. IN VIEW O F THE STATUTORY DEFINITION OF UNDISCLOSED INCOME, A DISCLOSURE MADE MERELY TO BUY PEACE DOES NOT TANT AMOUNT TO 'UNDISCLOSED INCOME' PER SE. THE - 7 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 APPLICABILITY OF SECTION 271AAA IS DEPENDENT UPON T HE INCOME FALLING WITHIN THE SWEET OF CLEAR AND EXPRESS DEFINITION OF EXPRESSION 'UNDISCLOSED INCOM E'. AN AD-HOC AND LUMSUM DECLARATION AS A CONSEQUENT OF SEARCH WITHOUT ANY REFERENCE MADE BY A.O 'TOWARDS ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT ETC. CANNOT BE DEEMED TO BE AUTOMATICALLY AN UNDISCLOSED INCOME FOR THE PURPOSE S OF IMPOSITION OF PENALTY UNDER SECTION 271AAA OF THE ACT. THE ONUS IS ON A.O TO BRING ON RECORD MATERIAL WHICH POINTS TO 'UNDISCLOSED INCOME' AS DEFINED UNDER SECTION 271AAA OF THE ACT. AS NOTED, NO REFERENCE TO UNDERLYING MATERIAL IS FOUND IN THE ORDERS OF LOWER AUTHORITIES. A SIMP LE DISCLOSURE MADE IN THE COURSE OF SEARCH UNDER SECTION 132(4) IN ITSELF CANNOT BE DEEMED TO BE 'UN DISCLOSED INCOME' IN VIEW OF THE LIMITATIONS PLACED IN THE DEFINITION THEREOF. 9. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT I N THE ABSENCE OF ANY INCRIMINATING MATERIAL REFERRED FOR THE PURPOSES OF ASSESSING ALLEGED UNDI SCLOSED INCOME, THE IMPOSITION OF PENALTY UNDER SECTION 271 AAA IS WITHOUT ANY LEGAL FOUNDATI ON AND THUS NOT PERMISSIBLE. 10. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT CONSIDER IT NECESSARY TO ADVERT TO THE ALTERNATIVE PLEA OF THE ASSESSEE FOR IMPOSITION OF PENALTY WITH REFERENCE TO AD-HOC AMOUNT OF DECLARATION ALONE. 11. THE ORDER OF THE ASSESSING OFFICER TOWARDS IMPO SITION OF PENALTY UNDER SECTION 271AAA IS THEREFORE SET ASIDE AND THE ASSESSING OFFICER IS DI RECTED TO DELETE THE PENALTY SO IMPOSED. 12. IN THE RESULT APPEAL OF THE ASSESSES IS AL LOWED. 11.3 AS NOTED ABOVE, THE CO-ORDINATE BENCH HAS DE ALT WITH IDENTICAL ISSUE AND HELD THAT IN THE ABSENCE OF ANY REFERENCE TO TANGIBLE MATERIA L, MERE ACT OF ACQUIESCE OF AD-HOC INCOME UNDER SECTION 132(4) OF THE ACT. CANNOT BE C OVERED WITHIN THE SWEEP OF 'UNDISCLOSED INCOME' FOR THE PURPOSES OF IMPOSITION OF PENALTY UNDER SECTION 271AAA OF THE ACT. IN THE PRESENT CASE, THE PENALTY HAS BEEN IMPOSED IN TERMS OF THE AMENDED PROVISION FOR IMPOSITION OF PENALTY UNDER SECTION 2 71AAB OF THE ACT. HOWEVER, THE DEFINITION OF 'UNDISCLOSED INCOME' UNDER ERSTWHILE SECTION 271AAA AND SECTION 271AAB ARE IDENTICAL. THEREFORE, THE PLEA OF THE ASSESSEE THAT IN THE ABSENCE OF REFERENCE TO ANY INCRIMINATING MATERIAL, IMPOSITION OF PENALTY UNDER SECTION 271AAB IS WITHOUT ANY LEGAL FOUNDATION, GETS SUPPORT FROM THE DECISION OF CO-OR DINATE BENCH. 11.4. IT IS ALSO PERTINENT TO STATE THAT THE AO IM POSED PENALTY IN A NONCHALANT MANNER AND HAS PROBABLY MIS-UNDERSTOOD THE IMPOSITION OF PENAL TY AS AN AUTOMATIC CONSEQUENCE. THE INCOME OFFERED HAS NEITHER BEEN RELATED TO SPECIFIE D PREVIOUS YEAR NOR THE REFERENCE WAS MADE ANY DOCUMENT ETC, TO COVER THE DECLARATION WIT HIN THE SPHERE OF 'UNDISCLOSED INCOME'. SUCH SUMMARY ACTION OF THE ASSESSING OFFICER FUNCTI ONING IN QUASI JUDICIAL CAPACITY CANNOT BE ENDORSED. THE PENALTY ORDER IS THUS VITIATED DUE TO NON APPLICATION OF MIND ALSO. THE ORDER OF THE ASSESSING OFFICER DATED 16.07.2015 TOW ARDS IMPOSITION OF PENALTY UNDER - 8 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 SECTION 271AAB IS THEREFORE SET ASIDE AND CONSEQUEN TLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY SO IMPOSED. 8. AT THIS STAGE, WE WOULD ALSO LIKE TO REFER TO TH E DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. SANDEEP CHANDAK (2018) 93 TAXMANN.COM 405 (ALLAHABAD) RELIE D UPON ON BEHALF OF THE REVENUE TO DEFEND ITS CASE AND SUBMIT THAT PENALTY UNDER S.271AAB IS EXIGIBLE TO THE ASSESSEE ON INCOME SURRENDERED IN THE STATEMEN T UNDER S.132(4) OF THE ACT. HOWEVER, ON A CLOSER STUDY, WE OBSERVE THAT THERE I S A FUNDAMENTAL DIFFERENCE BETWEEN FACTS OF THAT CASE QUA THE FACTS OF THE PRE SENT CASE. IN THE CASE BEFORE HONBLE HIGH COURT, THE DECLARATION WAS MADE ON THE BASIS OF VARIOUS INCRIMINATING DOCUMENTS FOUND AND SEIZED AND THE ASSESSEE HAS SPE CIFIED THE MANNER OF EARNING THE UNDISCLOSED INCOME MENTIONED IN SUCH DOCUMENTS. THUS, THE UNDISCLOSED INCOME WITH BACKED BY INCULPATORY DOCUMENTS. IN TH E INSTANT CASE, IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS, NO CORROBORATION OF IN COME DECLARED UNDER S.132(4) PER SE IS AVAILABLE. THUS, SUCH ADDITIONAL INCOME ON THE BASIS OF STANDALONE STATEMENT UNDER S.132(4) OF THE ACT WOULD NOT FALL WITHIN THE SWEEP OF EXPRESSION UNDISCLOSED INCOME CONTEMPLATED FOR THE PURPOSES OF SECTION 271AAB OF THE ACT AS HELD BY THE COORDINATE BENCH IN GROUP CASES. TH EREFORE, TO OUR MIND, THE AFORESAID JUDGEMENT OF THE HONBLE ALLAHABAD HIGH C OURT DO NOT COME TO THE AID AND ASSISTANCE OF THE REVENUE. 9. IN PARITY WITH THE DECISION RENDERED IN THE GROU P CASES IN IDENTICAL SET OF FACTS, WE ARE DISPOSED TO HOLD IN FAVOUR OF THE ASSESSEE. THE APPELLATE ORDER PASSED BY THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO DELETE THE PENALTY AMOUNTING TO RS.26,11,325/- SO IMPOSED U/S .271AAB OF THE ACT. - 9 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 10. IN THE RESULT, APPEAL OF THE ASSESSEE IN THE CA SE OF SHRI BHARATBHAI T.AGHARA IN IT(SS) A NO.88/RJT/2017 FOR AY 2013-14 IS ALLOWE D. 11. WE SHALL NOW ADVERT TO OTHER CAPTIONED APPEALS IN ITA NO.159/RJT/2017, IT(SS)A NOS.159/RJT/2017 & 89/RJT/2017 INVOLVING ID ENTICAL ISSUE. IN THE ABSENCE OF ANY CHANGE IN FACTS POINTED OUT IN THE COURSE OF HEARING BY EITHER SIDE, OUR VIEW IN IT(SS)A NO.88/RJT/2017 FOR AY 2013-14(SUPRA) SHALL APPLY MUTATIS MUTANDIS . THUS, THE GRIEVANCE TOWARDS IMPOSITION OF PENALTY ON MERI TS IS ADJUDICATED IN FAVOUR OF THE ASSESSEE. HENCE, THE LEVY OF PENALTY OF RS.1,87,50 0/- U/S.271AAB IN ITA NO.159/RJT/2017, RS.1,50,000/- IN IT(SS)A NO.159/RJ T/2017 AND RS.2,90,200/- IN IT(SS)A NO.89/RJT/2017 STANDS DELETED. 11. IN THE COMBINED RESULT, ALL THE FOUR CAPTIONED APPEALS ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16 / 05 /201 9 SD/- SD/- ( RAJPAL YADAV ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 05 /2019 .., . ../ T.C. NAIR, SR. PS - 10 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-11, AHMEDABAD 5. '#$ , % , /DR,ITAT, RAJKOT 6. $23 45 / GUARD FILE. / BY ORDER, // ' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, RAJKOT 1. DATE OF DICTATION ..10.5.19 (DICTATION-PAD 3-PAG ES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.5.19 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.16.5.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.5.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER SL. NOS. ITA/IT(SS)A NO(S) ASSESSMENT YEAR (S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT (S) RESPONDENT 1. ITA NO.159/RJT/17 2013-14 SHRI KARMASHIBHAI G.AG HARA MATRU KRUPA ANUPAM SOCIETY NAZARBAUG ROAD, MORBI PAN : ABIPA 4153 D THE ACIT CENTRAL CIRCLE-1 RAJKOT 2. IT(SS)A NO.159/RJT/17 2013-14 SHRI NARSHIBHAI G.AGHARA BANSI SOMNATH SOCIETY OPP.DIAMOND HALL, MORBI PAN : ABIPA 4152 C -DO-REVENUE 3. IT(SS)A NO.88/RJT/17 2013-14 SHRI BHARATBHAI T. AGHARA SNEH MILAN SOMNATH SOCEITY NR.PRAN NAGAR RAVAPAR ROAD, MORBI PAN : ABQPA 8615 G -DO-REVENUE 4. IT(SS)A NO.89/RJT/17 2013-14 SHRI KAPILBHAI KARAMSHIBHAI AGHARA MATRU KRUPA ANUPAM SOCIETY NAZARBAUG ROAD, MORBI PAN: AGMPA 5493 P -DO-REVENUE ASSESSEES BY : SHRI MEHUL J. RANPURA, AR REVENUE BY : SHRI B . B . RAJENDRA PRASAD, CIT - DR DATE OF HEARING 10/05/2019 DATE OF PRONOUNCEMENT 16/05/2019 O R D E R PER SHRI PRADIP KUMAR KEDIA, AM: THIS BUNCH OF CAPTIONED FOUR APPEALS HAVE BEEN FI LED AT THE INSTANCE OF THE DIFFERENT ASSESSEES AGAINST THE SEPARATE APPELLATE ORDERS OF THE COMMIS SIONER OF INCOME TAX(APPEALS)-11, AHMEDABAD [CIT(A) IN SHORT] DATED 01/02/2017, 08/09/2017, 20/07/2017 ARISING IN THE ASSESSMENT ORDERS PASSED UNDER S.143(3) OF - 2 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S 'THE ACT') DATED 28/02/2015 & 24/03/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2013- 14. 2. IN ALL THE CAPTIONED 4 CASES, THE ONLY ISSUE AGI TATED BEFORE THE TRIBUNAL IS TOWARDS LEVY OF PENALTY UNDER S.271AAB OF THE ACT B Y THE ASSESSING OFFICER WHICH WAS CONFIRMED BY THE CIT(A)-11, AHMEDABAD. 3. AS ALL THE APPEALS CONCERNING THE GROUP CASES IN VOLVING THE IDENTICAL ISSUE, ALL THE MATTERS WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER. 4. BRIEFLY STATED, A SEARCH ACTION UNDER S.132 OF T HE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 17/01/2013. AS A CONSE QUENCE OF SEARCH, THE ASSESSEE FILED RETURN OF INCOME DECLARING RS.3,42,73,700/- IN THE CASE OF SHRI BHARAT T.AGHARA IN IT(SS)A NO.88/RJT/2017 FOR AY 2013-14 W HICH INCLUDED ADDITIONAL INCOME DECLARED BY THE ASSESSEE AND AMOUNTING TO RS .2,61,13,250/- IN THE COURSE OF SEARCH. THE ASSESSING OFFICER ASSESSED THE INCOME SO DECLARED AS SUCH, TOGETHER WITH SOME OTHER SMALL DISALLOWANCES WITH WHICH WE A RE NOT PRESENTLY CONCERNED WITH. THE ASSESSING OFFICER HOWEVER INITIATED PENA LTY PROCEEDINGS UNDER S.271AAA OF THE ACT ON THE ADDITIONAL INCOME DECLAR ED AMOUNTING TO RS.2,61,13,250/- IN PURSUANCE OF SEARCH. SUBSEQUE NTLY, ON RECEIVING OBJECTIONS FROM THE ASSESSEE, THE ASSESSING OFFICER VIDE CORRI GENDUM DATED 03/07/2015 TO THE ASSESSMENT ORDER, MODIFIED THE PENALTY SECTION AN D SUBSTITUTED THE SAME BY SECTION 271AAB AND CONTINUED PENALTY PROCEEDINGS UNDER THAT SECTION. IN TERMS OF SECTION 271AAB OF THE ACT, THE ASSESSING OFFICER IMPOSED A PENALTY OF RS.26,11,325/- BEING 10% OF THE ADDITIONAL INCOME DECLARED VIDE OR DER PASSED UNDER S.271AAB OF THE ACT. - 3 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 5. THE AFORESAID ACTION OF THE ASSESSING OFFICER WA S AFFIRMED BY THE CIT(A) IN THE FIRST APPEAL. 6. THE ASSESSEE HAS AGITATED THE ACTION OF THE REVENUE BEFORE THE TRIBUNAL AND SEEKS TO CONTEND THAT CONDITIONS OF SECTION 271AAB IS NOT SATISFIED AND, THEREFORE, PENALTY IMPOSED BY THE ASSESSING OFFICER IS NOT SUS TAINABLE IN LAW. 7. ON CONSIDERATION OF RIVAL SUBMISSIONS, WE F IND THAT THE ISSUE HAS ALREADY BEEN ADJUDICATED IN GROUP CASES VIZ. SHRI JITENDRABHAI T HAKARSHI AGHARA VS. ACIT AND TWO OTHERS IN IT(SS)A NOS.1, 02 & 03/RJT/2017 ORDER DATED 01/06/2018 ON IDENTICAL FACTS. THE CO-ORDINATE BENCH HAS DELETED THE PENA LTY IN THE SIMILARLY PLACED FACTS. SIMILAR DECISION WAS RENDERED IN ITA NO.157/RJT/201 7 FOR AY 2013-14 DATED 15/11/2018 IN SOME OTHER GROUP CASES IN THE SAME SE ARCH. THE RELEVANT PORTION OF THE SAID ORDER READS AS UNDER : 9. ADVERTING TO THE MAIN GRIEVANCE, THE LA A. R FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT IN THE SEARCH ACTION UNDER SECTION 132 CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 17.01.2013, NO UNACCOUNTED MONEY, ASSETS, INVESTMEN TS ETC. WERE RECOVERED. THE LD. A.R ADVERTED TO THE PENALTY ORDER APPEALED AGAINST AND SUBMITTED THAT IT IS ADMITTED POSITION THAT THE ASSESSEE IN THE STATEMENT RECORDED UNDER S ECTION 132(4) OF THE ACT, ADMITTED ADDITIONAL INCOME ON AD-HOC BASIS FOR THE FAMILY & GROUP CONCERNS AS A WHOLE. OUT OF THE VOLUNTARILY DECLARATIONS OF ADDITIONAL INCOME, THE ASSESSEE INCLUDED RS. 2,54,13,250/- ON AD-HOC BASIS IN HIS RETURN OF INCOME. THE INCOME DE CLARED BY THE ASSESSEE HI THE RETURN OF INCOME WAS ACCEPTED IN TOTO WITHOUT ANY MODIFICATIO N. THE LD. A.R POINTED OUT FROM THE PENALTY ORDER THAT THE DECLARATIONS WERE MADE AND H ONOURED SUBSEQUENTLY IN THE RETURN OF INCOME FILED ONLY TO AVOID LONG DRAWN LITIGATIONS A ND TO BUY PEACE OF MIND. THE LD. A.R VEHEMENTLY REITERATED ITS SUBMISSION MADE BEFORE TH E AO THAT NOTHING INCRIMINATING HI THE FORM OF CASH, GOLD, VALUABLES OR ANY DOCUMENTS .OR DATA EVIDENCING THE UNDISCLOSED INCOME WAS FOUND. THE LD. A.R THEREFORE CONTENDED THAT A D ECLARATION MADE ON AD-HOC, BASIS TO COVER UP DEFECTS OR DISCREPANCIES IN THE BOOKS OF A CCOUNT, IF ANY, WITHOUT ANY DETECTION OF FALSITY CANNOT BE EQUATED WITH THE 'UNDISCLOSED INC OME' AS STATUTORILY DEFINED UNITE SECTION 271AAB OF THE ACT. TO SUPPORT ITS CONTENTION, THE L D, A.R SUBMITTED THAT FOR THE PURPOSES - 4 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 OF PENALTY, THE AO HAS MERELY RELIED UPON SOME AD-H OC DECLARATION MADE IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT WITHOUT AN Y MAKING ANY REFERENCE TO THE PARTICULARS OF UNACCOUNTED MONEY, ASSETS, INVESTMEN TS OR EXPENDITURE ETC. GIVING RISE TO THE DISCLOSURE SO MADE. THE LD. AH THEREAFTER REFERRED TO THE PROVISIONS OF SECTION 271AAB AND SUBMITTED THAT THE SCOPE OF SECTION 271AAB DOES NOT EXTEND BEYOND THE 'UNDISCLOSED INCOME' AS DEFINED UNDER SECTION 271AAB OF THE ACT. IT WAS CONTENDED THAT IN THE ABSENCE OF ANY FINDINGS IN THE PENALTY ORDER ON THE PARTICU LARS OF UNDISCLOSED INCOME REPRESENTED BY MONEY, BULLION, JEWELLERY ETC. ETC. AS DEFINED, SECTION 271AAB HAS NO APPLICATION. IN REITERATION, THE LD. A.R VEHEMENTLY SUBMITTED THA T AN AD-HOC DECLARATION NOT BACKED BY TANGIBLE ITEMS SPECIFIED HI THE STATUTORY DEFINITIO N CANNOT BE REGARDED AS 'UNDISCLOSED INCOME' FOR THE PURPOSES OF SECTION 271AAB OF THE A CT. THE LD. A.R ONCE AGAIN RESTATED THAT ASSESSING OFFICER HAS ALSO NOT MADE ANY REFERE NCE TO ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH PER SE WHILE ASSESSING AD-H OC DECLARATION AND ACCEPTING THE INCOME FILED BY THE ASSESSEE IN ITS RETURN OF INCOME. SIMI LARLY, NO REFERENCE HAS BEEN MADE TO ANY INCRIMINATING MATERIAL WHATSOEVER FOR THE PURPOSES OF IMPOSITION OF PENALTY AND THEREFORE 'SATISFACTION' DRAWN BY THE AO FOR IMPOSITION OF PE NALTY IS DE HORSE ANY INCRIMINATING MATERIAL AND SOLELY BASED ON THE CONDITIONAL VOLUNT ARY DISCLOSURE. IT WAS THUS CONTENDED THAT IN THE ABSENCE OF ANY REFERENCE TO THE INCRIMI NATING MATERIAL, THE CLAIM OF THE ASSESSES ABOUT THE NON EXISTENCE OF ANY 'UNDISCLOSED INCOME' STANDS VINDICATED. THE LD. A.R THEREAFTER ADVERTED TO THE DECISION OF THE CO-ORDIN ATE BENCH IN THE CASE OF ACIT VS. MARBLE ASSOCIATES (2018) 92 TAXMANN.COM 109 (VISHAK HAPATNAM) AND THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. NIRAJ JINDAL (2017) 393 ITR 1 (DELHI) TO SUPPORT ITS CASE FOR DELETION OF PENALTY. 10. THE LD. D.R, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE CIT(A) AND SUBMITTED IN FURTHERANCE MAT WHERE THE ASSESSEE HIMSELF HAS A DMITTED CERTAIN INCOME IN THE COURSE OF SEARCH AND INCLUDED THE SAME AS PART OF RETURN, THE CONSEQUENCES OF PENALTY UNDER SECTION 271AAB CANNOT BE ESCAPED 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. TH E CORE CONTROVERSY INVOLVED IN THE PRESENT APPEAL IS TOWARDS MAINTAINABILITY OF IMPOSI TION OF PENALTY UNDER SECTION 271AAB HI THE FACTS AND CIRCUMSTANCES OF THE CASE. 11.1 IT IS THE CASE OF THE ASSESSEE THAT THE INCOME DECLARED IN. THE RETURN OF INCOME ARISES OUT OF REGULAR STREAM OF INCOME FROM VARIOUS SOURCE S AND AD-HOC DECLARATION COMBINEDLY MADE FOR GROUP CONCERN AND INCLUDED IN THE RETURN O F INCOME TOWARDS ITS SHARE, DOES NOT TANTAMOUNT TO 'UNDISCLOSED INCOME' AS CODIFIED IN T HE EXPLANATION-(C) BELOW SECTION 271AABOFTHEACT. - 5 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 11.2 TO PADDLE ITS POINT OF VIEW, THE ASSESSEE HAS STRONGLY RELIED ON THE STATUTORY DEFINITION OF 'UNDISCLOSED INCOME'. WE FIND THAT ID ENTICAL ISSUE CAME UP FOR CONSIDERATION IN THE CASE OF JASUBHAI ARJANBHAI VAGHASIA VS. ACIT , ITA NO. 58/RJT/2017 ORDER DATED 17.05,2018 IN THE CONTEXT OF SECTION 271AAA OF THE ACT. THEREFORE, IT IS CONSIDERED EXPEDIENT TO REPRODUCE THE RELEVANT OPERATIVE PARA OF THE DECISION OF THE CO-ORDINATE BENCH ON THE ISSUE:- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. TH E CORE CONTROVERSY INVOLVED IN THE PRESENT APPEAL IS TOWARDS MAINTAINABILITY OF IMPOSI TION OF PENALTY UNDER SECTION 271AAA IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8.1 THE CASE OF THE ASSESSEE IS TWOFOLD (I) THE INC OME DECLARED IN THE RETURN OF INCOME AMOUNTING TO RS. 2,25,61,020/- ARISES OUT OF THE RE GULAR STREAM OF INCOME FROM VARIOUS SOURCES INCLUDING RS. 90 LAKHS TOWARDS AD-HOC DECLA RATION AND THEREFORE THERE IS NO ELEMENT OF 'UNDISCLOSED INCOME' AS DEFINED IN THE E XPLANATION BELOW SECTION 271AAA OF THE ACT. (II) IN THE ALTERNATIVE, IN ANY EVENT, THE INC IDENCE OF PENALTY UNDER SECTION 271AAA CANNOT EXCEED RS. 9 LAKHS (10% OF RS. 90 LAKHS) ATT RIBUTABLE TO AD-HOC INCOME. 8.2 TO BUTTRESS ITS POINT OF VIEW, THE ASSESSES HA S STRONGLY HARPED ON THE STATUTORY DEFINITION OF 'UNDISCLOSED INCOME'. IT -WOULD THERE FORE BE APPOSITE TO REPRODUCE SECTION 271AAA OF THE ACT FOR READY REFERENCE:- '271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED,( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIA TED .UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE, BY HIM, A SUM COM PUTED AT THE RATE OFTEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSES, (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 MAN NER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN -WHICH THE UNDISCL OSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER-WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSES IN RESPECT OF THE UNDISCL OSED INCOME REFERRED TO IN SUB-SECTION (1). - 6 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, 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 SEAR CH 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 COMMI SSIONER OR COMMISSIONER, BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YE AR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (!) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSES HAS NOT FURNISHED THE RETUR N OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE.; OR (II) IN WHICH SEARCH WAS CONDUCTED. 8.3. PERUSAL OF SPECIAL PROVISIONS OF SECTION 271 AAA, CONCERNING SEARCH CASES THAT IT IS APPLICABLE IN RESPECT OF 'UNDISCLOSED INCOME' IN CO NTRAST TO 'CONCEALED INCOME' RELEVANT FOR THE PURPOSES OF PENALTY PROCEEDINGS UNDER NORMAL PROVIS IONS OF SECTION 271(1)(C) OF THE ACT. THE APPLICABILITY OF PENALTY UNDER SECTION 271AAA THUS REVOLVES WITHIN THE SPHERE OF 'UNDISCLOSED INCOME ', 8.4. A PLANE READING OF THE AFORESAID DEFINITION OF 'UNDISCLOSED INCOME' CLEARLY SHOWS THAT THE UNDISCLOSED INCOME SHOULD BE REPRESENTED BY MONEY, BULLION JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS OR ANY UNRECORDED ENTRY AS PER DOCUMENTS FOUND OR ANY FALSE ENTRY RECORDED IN THE BOOKS OF ACCOUNT ETC. NO SUCH REFERENCE OR NEXUS OF DISCL OSURE TO SUCH SPECIFIED ITEMS WERE MADE IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER. IN VIEW O F THE STATUTORY DEFINITION OF UNDISCLOSED INCOME, A DISCLOSURE MADE MERELY TO BUY PEACE DOES NOT TANT AMOUNT TO 'UNDISCLOSED INCOME' PER SE. THE - 7 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 APPLICABILITY OF SECTION 271AAA IS DEPENDENT UPON T HE INCOME FALLING WITHIN THE SWEET OF CLEAR AND EXPRESS DEFINITION OF EXPRESSION 'UNDISCLOSED INCOM E'. AN AD-HOC AND LUMSUM DECLARATION AS A CONSEQUENT OF SEARCH WITHOUT ANY REFERENCE MADE BY A.O 'TOWARDS ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT ETC. CANNOT BE DEEMED TO BE AUTOMATICALLY AN UNDISCLOSED INCOME FOR THE PURPOSE S OF IMPOSITION OF PENALTY UNDER SECTION 271AAA OF THE ACT. THE ONUS IS ON A.O TO BRING ON RECORD MATERIAL WHICH POINTS TO 'UNDISCLOSED INCOME' AS DEFINED UNDER SECTION 271AAA OF THE ACT. AS NOTED, NO REFERENCE TO UNDERLYING MATERIAL IS FOUND IN THE ORDERS OF LOWER AUTHORITIES. A SIMP LE DISCLOSURE MADE IN THE COURSE OF SEARCH UNDER SECTION 132(4) IN ITSELF CANNOT BE DEEMED TO BE 'UN DISCLOSED INCOME' IN VIEW OF THE LIMITATIONS PLACED IN THE DEFINITION THEREOF. 9. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT I N THE ABSENCE OF ANY INCRIMINATING MATERIAL REFERRED FOR THE PURPOSES OF ASSESSING ALLEGED UNDI SCLOSED INCOME, THE IMPOSITION OF PENALTY UNDER SECTION 271 AAA IS WITHOUT ANY LEGAL FOUNDATI ON AND THUS NOT PERMISSIBLE. 10. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT CONSIDER IT NECESSARY TO ADVERT TO THE ALTERNATIVE PLEA OF THE ASSESSEE FOR IMPOSITION OF PENALTY WITH REFERENCE TO AD-HOC AMOUNT OF DECLARATION ALONE. 11. THE ORDER OF THE ASSESSING OFFICER TOWARDS IMPO SITION OF PENALTY UNDER SECTION 271AAA IS THEREFORE SET ASIDE AND THE ASSESSING OFFICER IS DI RECTED TO DELETE THE PENALTY SO IMPOSED. 12. IN THE RESULT APPEAL OF THE ASSESSES IS AL LOWED. 11.3 AS NOTED ABOVE, THE CO-ORDINATE BENCH HAS DE ALT WITH IDENTICAL ISSUE AND HELD THAT IN THE ABSENCE OF ANY REFERENCE TO TANGIBLE MATERIA L, MERE ACT OF ACQUIESCE OF AD-HOC INCOME UNDER SECTION 132(4) OF THE ACT. CANNOT BE C OVERED WITHIN THE SWEEP OF 'UNDISCLOSED INCOME' FOR THE PURPOSES OF IMPOSITION OF PENALTY UNDER SECTION 271AAA OF THE ACT. IN THE PRESENT CASE, THE PENALTY HAS BEEN IMPOSED IN TERMS OF THE AMENDED PROVISION FOR IMPOSITION OF PENALTY UNDER SECTION 2 71AAB OF THE ACT. HOWEVER, THE DEFINITION OF 'UNDISCLOSED INCOME' UNDER ERSTWHILE SECTION 271AAA AND SECTION 271AAB ARE IDENTICAL. THEREFORE, THE PLEA OF THE ASSESSEE THAT IN THE ABSENCE OF REFERENCE TO ANY INCRIMINATING MATERIAL, IMPOSITION OF PENALTY UNDER SECTION 271AAB IS WITHOUT ANY LEGAL FOUNDATION, GETS SUPPORT FROM THE DECISION OF CO-OR DINATE BENCH. 11.4. IT IS ALSO PERTINENT TO STATE THAT THE AO IM POSED PENALTY IN A NONCHALANT MANNER AND HAS PROBABLY MIS-UNDERSTOOD THE IMPOSITION OF PENAL TY AS AN AUTOMATIC CONSEQUENCE. THE INCOME OFFERED HAS NEITHER BEEN RELATED TO SPECIFIE D PREVIOUS YEAR NOR THE REFERENCE WAS MADE ANY DOCUMENT ETC, TO COVER THE DECLARATION WIT HIN THE SPHERE OF 'UNDISCLOSED INCOME'. SUCH SUMMARY ACTION OF THE ASSESSING OFFICER FUNCTI ONING IN QUASI JUDICIAL CAPACITY CANNOT BE ENDORSED. THE PENALTY ORDER IS THUS VITIATED DUE TO NON APPLICATION OF MIND ALSO. THE ORDER OF THE ASSESSING OFFICER DATED 16.07.2015 TOW ARDS IMPOSITION OF PENALTY UNDER - 8 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 SECTION 271AAB IS THEREFORE SET ASIDE AND CONSEQUEN TLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY SO IMPOSED. 8. AT THIS STAGE, WE WOULD ALSO LIKE TO REFER TO TH E DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. SANDEEP CHANDAK (2018) 93 TAXMANN.COM 405 (ALLAHABAD) RELIE D UPON ON BEHALF OF THE REVENUE TO DEFEND ITS CASE AND SUBMIT THAT PENALTY UNDER S.271AAB IS EXIGIBLE TO THE ASSESSEE ON INCOME SURRENDERED IN THE STATEMEN T UNDER S.132(4) OF THE ACT. HOWEVER, ON A CLOSER STUDY, WE OBSERVE THAT THERE I S A FUNDAMENTAL DIFFERENCE BETWEEN FACTS OF THAT CASE QUA THE FACTS OF THE PRE SENT CASE. IN THE CASE BEFORE HONBLE HIGH COURT, THE DECLARATION WAS MADE ON THE BASIS OF VARIOUS INCRIMINATING DOCUMENTS FOUND AND SEIZED AND THE ASSESSEE HAS SPE CIFIED THE MANNER OF EARNING THE UNDISCLOSED INCOME MENTIONED IN SUCH DOCUMENTS. THUS, THE UNDISCLOSED INCOME WITH BACKED BY INCULPATORY DOCUMENTS. IN TH E INSTANT CASE, IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS, NO CORROBORATION OF IN COME DECLARED UNDER S.132(4) PER SE IS AVAILABLE. THUS, SUCH ADDITIONAL INCOME ON THE BASIS OF STANDALONE STATEMENT UNDER S.132(4) OF THE ACT WOULD NOT FALL WITHIN THE SWEEP OF EXPRESSION UNDISCLOSED INCOME CONTEMPLATED FOR THE PURPOSES OF SECTION 271AAB OF THE ACT AS HELD BY THE COORDINATE BENCH IN GROUP CASES. TH EREFORE, TO OUR MIND, THE AFORESAID JUDGEMENT OF THE HONBLE ALLAHABAD HIGH C OURT DO NOT COME TO THE AID AND ASSISTANCE OF THE REVENUE. 9. IN PARITY WITH THE DECISION RENDERED IN THE GROU P CASES IN IDENTICAL SET OF FACTS, WE ARE DISPOSED TO HOLD IN FAVOUR OF THE ASSESSEE. THE APPELLATE ORDER PASSED BY THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO DELETE THE PENALTY AMOUNTING TO RS.26,11,325/- SO IMPOSED U/S .271AAB OF THE ACT. - 9 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 10. IN THE RESULT, APPEAL OF THE ASSESSEE IN THE CA SE OF SHRI BHARATBHAI T.AGHARA IN IT(SS) A NO.88/RJT/2017 FOR AY 2013-14 IS ALLOWE D. 11. WE SHALL NOW ADVERT TO OTHER CAPTIONED APPEALS IN ITA NO.159/RJT/2017, IT(SS)A NOS.159/RJT/2017 & 89/RJT/2017 INVOLVING ID ENTICAL ISSUE. IN THE ABSENCE OF ANY CHANGE IN FACTS POINTED OUT IN THE COURSE OF HEARING BY EITHER SIDE, OUR VIEW IN IT(SS)A NO.88/RJT/2017 FOR AY 2013-14(SUPRA) SHALL APPLY MUTATIS MUTANDIS . THUS, THE GRIEVANCE TOWARDS IMPOSITION OF PENALTY ON MERI TS IS ADJUDICATED IN FAVOUR OF THE ASSESSEE. HENCE, THE LEVY OF PENALTY OF RS.1,87,50 0/- U/S.271AAB IN ITA NO.159/RJT/2017, RS.1,50,000/- IN IT(SS)A NO.159/RJ T/2017 AND RS.2,90,200/- IN IT(SS)A NO.89/RJT/2017 STANDS DELETED. 11. IN THE COMBINED RESULT, ALL THE FOUR CAPTIONED APPEALS ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16 / 05 /201 9 SD/- SD/- ( RAJPAL YADAV ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 16/ 05 /2019 .., . ../ T.C. NAIR, SR. PS - 10 - ITA NO.159/RJT/2017 & IT(SS)A NO.159/RJT/2017, IT(SS)A NOS.88 & 89/RJT/20 17 SHRI KARAMSHIBHAI G.AGHARA & 3 ORS. VS. ACIT ASST.YEAR 2013-14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-11, AHMEDABAD 5. '#$ , % , /DR,ITAT, RAJKOT 6. $23 45 / GUARD FILE. / BY ORDER, // ' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, RAJKOT 1. DATE OF DICTATION ..10.5.19 (DICTATION-PAD 3-PAG ES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.5.19 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.16.5.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.5.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER