ITO, Nashik V. Shri Vasudeo Ramchand Lalwani, Nashik

ITA 1610/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0832 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Business income; Income from undisclosed sources; Documents seized
• Section: 27; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM . / ITA NO.1610/PN/2012 ' ( ( / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, CENTRAL 2, NASHIK . / APPELLANT VS. SHRI VASUDEO RAMCHAND LALWANI, YASH VILLA, MADHUKAMAL DOWNTOWN, NEAR ARIHANT HOSPITAL, GANGAPUR ROAD, NASHIK. . RESPONDENT PAN: AAHPL3027H / APPELLANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 09.11.2015 / DATE OF PRONOUNCEMENT: 30.11.2015 ) / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-I, NASHIK, DATED 23.05.2012 RELATING TO ASSESSMENT YEAR 2009-1 0 AGAINST PENALTY LEVIED UNDER SECTION 271AAA OF THE ACT OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A)-I, NASIK ERRED IN DELETING THE PENALTY OF RS.3,16,281/ - LEVIED UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961. ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A)-I, NASIK ERRED IN APPLYING THE RATIO IN THE CASE OF MA HENDRA C.SHAH 299 ITR 305 (GUJ) SINCE THE DECISION RENDERED IN THAT C ASE RELATED TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHEREAS IN THE A SSESSEES CASE THE PENALTY IS LEVIED UNDER SECTION 271AAA OF THE ACT A ND THEREFORE DISTINGUISHABLE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A)-I, NASIK ERRED IN DELETING THE PENALTY LEVIED ON ADDIT ION MADE OF RS.1,40,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY BY WRONGLY INTERPRETING THE CBDT INSTRUCTION NO.1916. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A)-I, NASIK ERRED IN DELETING THE PENALTY LEVIED ON ADDIT ION MADE OF RS.1,00,000/- ON ACCOUNT OF UNEXPLAINED CREDIT/LOAN WHICH IS CONTRARY TO THE EVIDENCE ON RECORD. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIFY THE GROUNDS OF APPEAL, IF CONSIDERED NECESSARY SUBSEQUENTLY. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS I N RELATION TO THE DELETION OF PENALTY LEVIED UNDER SECTION 271AAA OF THE ACT AT R S.3,16,281/-. 4. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 30 .01.2009. THE ASSESSEE DURING THE COURSE OF SEARCH, HAD DECLARED ADDITIONA L INCOME OF RS.29,22,812/- CONSISTING OF VARIOUS ITEMS AS ENLISTED UNDER PARA 6 OF THE ASSESSMENT ORDER. THE SAID ADDITIONAL INCOME WAS FURTHER DECLARED IN THE RETURN OF INCOME FILED PURSUANT TO NOTICE ISSUED TO THE ASSESSEE TO FURNIS H THE RETURN OF INCOME. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE AS SESSEE HAD DECLARED THE SAID INCOME AS A RESULT OF SEARCH AND NOT VOLUNTARILY DE CLARED, PROCEEDINGS UNDER SECTION 271AAA OF THE ACT MERITS TO BE INITIATED AN D THE SAME WERE INITIATED. FURTHER, THE ASSESSING OFFICER FROM THE PERUSAL OF THE DOCUMENTS SEIZED FROM THE RESIDENCE OF THE ASSESSEE DURING THE COURSE OF SEARCH, FOUND TWO PROMISSORY NOTES OF RS.1 LAKH EACH. IN REPLY TO TH E QUERY IN THIS REGARD, THE ASSESSEE ADMITTED THAT THE SAME WERE PROMISSORY NOT ES AND WERE UNACCOUNTED. IN RESPECT OF PAGE 20, THE ASSESSEE S TATED THAT THE SAME WAS FOR RENEWAL WITH CHANGE IN INTEREST RATE. THE ASSESSIN G OFFICER NOTED THAT ON PAGE 20, THERE WAS NO NAME WRITTEN ON IT AND THE DATE WA S 20.05.2008. SINCE CLEAR DATE WAS WRITTEN ON IT AND FURTHER NO EVIDENCE WAS FILED WHICH COULD INDICATE THAT ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 3 THE SAME WAS RENEWAL OF PROMISSORY NOTE DATED 20.04 .2005, IN THE ABSENCE OF ANY OTHER CONFIRMATION, AMOUNT OF RS.1 LAKH WAS TRE ATED AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. IN RESPECT OF FIRST PROM ISSORY NOTE DATED 20.04.2005, THE CLAIM OF THE ASSESSEE THAT IT IS ALREADY DECLAR ED AS UNDISCLOSED ADVANCE IN THE CHART OF UNDISCLOSED INCOME, NO FURTHER ADDITIO N WAS MADE BY THE ASSESSING OFFICER. ANOTHER ISSUE RAISED BY THE ASSESSING OFF ICER WAS THE GOLD OF 1204 GMS. FOUND DURING THE COURSE OF SEARCH. THE ASSESS EE DECLARED GOLD OF RS.4,28,888/- IN ASSESSMENT YEAR 2006-07 AND RS.1,2 8,959/- IN ASSESSMENT YEAR 2009-10. HE FURTHER CLAIMED THAT THE JEWELLER Y BELONGED TO HIM, HIS WIFE AND TO HIS SON, DAUGHTER-IN-LAW AND GRAND-SON. SO, IN VIEW OF CBDTS CIRCULAR, THE ASSESSEE CLAIMED THAT THE BALANCE JEWELLERY WAS EXPLAINED. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONSIDERING 100 GMS. TO BE INVESTMENT OUT OF UNDISCLOSED SOURCE S, ADDITION OF RS.1,40,000/- WAS MADE. DURING THE COURSE OF PENALTY PROCEEDINGS INITIATED UNDER SECTION 271AAA OF THE ACT, THE ASSESSEE FURNISHED WRITTEN S UBMISSIONS WHICH ARE INCORPORATED UNDER PARA 3. HOWEVER, THE ASSESSEE W AS TREATED TO BE A PERSON IN DEFAULT FOR VIOLATING THE PROVISIONS OF SECTION 271AAA OF THE ACT AND PENALTY @ 10% ON THE ADDITIONAL INCOME I.E. RS.31,62,812/- WAS LEVIED AMOUNTING TO RS.3,16,281/-. 5. THE CIT(A) NOTED THAT THE ASSESSEE HAD DECLARED THE ADDITIONAL INCOME DURING THE COURSE OF RECORDING STATEMENT UNDER SECT ION 132(4) OF THE ACT, WHICH IN TURN WAS FURTHER DECLARED IN THE RETURN OF INCOM E FILED UNDER SECTION 139(1) OF THE ACT, AFTER THE SEARCH PROCEEDINGS AT THE PREMIS ES OF THE ASSESSEE. FURTHER, THE ASSESSEE HAD PAID THE TAXES ALONG WITH INTEREST ON THE SAID INCOME. WHERE THE ASSESSEE HAD OFFERED THE INCOME AS HAVING BEEN EARNED FROM ITS BUSINESS INCOME, THE CIT(A) HELD THAT THERE WAS NO JUSTIFICA TION FOR IMPOSITION OF PENALTY ON SUM OF RS.29,22,812/- I.E. ADDITIONAL INCOME OFF ERED BY THE ASSESSEE CONSEQUENTLY, THE PENALTY LEVIED UNDER SECTION 271A AA OF THE ACT ON THE ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 4 AFORESAID AMOUNT WAS DELETED. WITH REGARD TO THE O THER ADDITION OF RS.1 LAKH, THE CIT(A) DELETED THE SAME ON THE BASIS THAT THE L OAN RECEIVED, FROM A PERSON COULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE AN D HENCE, NO JUSTIFICATION FOR LEVY OF PENALTY ON SUCH ADDITION. THE NEXT ADDITIO N WAS ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN GOLD ORNAMENTS OF RS.1,40 ,000/-, ON WHICH ALSO PENALTY UNDER SECTION 271AAA OF THE ACT WAS LEVIED. THE CIT(A) HELD THAT IN VIEW OF INSTRUCTION NO.1916 ISSUED BY THE CBDT, WHE REIN IT HAS BEEN PROVIDED THAT REASONABLE JEWELLERY WHICH COULD BE HELD BY EA CH PERSON, CANNOT BE SEIZED IN CASE THE SAID CIRCULAR IS APPLIED, THEN THE TOTA L JEWELLERY FOUND FROM THE POSSESSION OF THE ASSESSEE AFTER THE SURRENDER WAS EXPLAINED AND HENCE, THERE IS NO MERIT IN LEVY OF PENALTY ON SUCH ADDITION, WH ICH IS NOT JUSTIFIED. 6. THE REVENUE IS IN APPEAL AGAINST THE AFORESAID O RDER OF CIT(A) IN DELETING THE PENALTY UNDER SECTION 271AAA OF THE AC T. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE POINTED OUT THAT THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271AAA O F THE ACT ON THE CONDITION OF DECLARATION OF INCOME HAS BEEN DELIBERATED UPON BY THE TRIBUNAL IN ITO VS. SHRI SATISHCHANDRA G. MITTAL IN ITA NO.970/PN/2011, RELA TING TO ASSESSMENT YEAR 2008-09, ORDER DATED 11.05.2015. FURTHER, THE LEAR NED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THE P ERUSAL OF THE STATEMENT RECORDED DURING THE COURSE OF PROCEEDINGS REFLECTS THAT IN RESPONSE TO THE QUERIES RAISED, THE ASSESSEE HAD EXPLAINED THE SOUR CE OF ADDITIONAL INCOME BEING FROM CONSTRUCTION BUSINESS AND THEREAFTER, TH E AMOUNT WAS OFFERED TO TAX AND ALSO TAX WAS PAID. IN VIEW THEREOF, THERE WAS NO MERIT IN THE AFORESAID LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT. THE NE XT CONTENTION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS ALSO COVERED BY THE ORDER OF TRIBUNAL IN THE CASE OF HIS BROTHER SHRI HERO RAMCHAND LALWANI IN ITA NO.1609/PN/2012 RELATI NG TO ASSESSMENT YEAR ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 5 2009-10, ORDER DATED 30.04.2014, WHEREIN THE RELIEF WAS GIVEN EVEN THOUGH THE ADDITIONAL INCOME WAS OFFERED BY MR. VASUDEO R LALW ANI ON BEHALF OF HERO RAMCHAND LALWANI. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACING RELIANCE ON THE ORDER OF ASSESSING OFFICER FAIRLY C ONCEDED THAT THE ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OF SHRI HERO RAMCHAND LALWANI. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO LEV Y OF PENALTY UNDER SECTION 271AAA OF THE ACT. PURSUANT TO SEARCH ON THE PREMI SES OF THE ASSESSEE ON 30.01.2009, ADDITIONAL INCOME WAS OFFERED BY THE AS SESSEE AND THE SAME WAS DECLARED IN THE RETURN OF INCOME. THE TOTAL DECLAR ATION MADE BY THE ASSESSEE WAS RS.75 LAKHS AND FOR THE IMPUGNED ASSESSMENT YEA R, THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.29,22,812/-. THE BREAK-UP OF THE SAID DECLARATION INCLUDED SHORTAGE OF CASH OF RS.24,95,965/-, INTERE ST INCOME OF RS.1,02,972/-. THE ASSESSEE HAD DECLARED THE SAID ADDITIONAL INCOM E IN THE RETURN OF INCOME AND HAD PAID DUE TAXES THEREON. DURING THE COURSE OF PROCEEDINGS, THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT WHILE DECLARING THE SAID ADDITIONAL INCOME, THE ASSESSEE POINTED OUT THAT HI S SOURCE WAS FROM THE CONSTRUCTION BUSINESS. THE ASSESSEE ALONG WITH HIS THREE BROTHERS HAD MADE A TOTAL DECLARATION OF ADDITIONAL INCOME OF RS.2.25 C RORES AND THE MANNER OF EARNING THE SAID INCOME BY EACH ONE OF THEM WAS DEC LARED BY THE ASSESSEE HIMSELF, IN REPLY TO THE QUERY RAISED IN THIS REGAR D I.E. QUESTION NO.20 OF THE STATEMENT. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, THE ISSUE ARISING BEFORE US IS WHETHER WHERE THE ADDITIONAL I NCOME SURRENDERED BY THE ASSESSEE HAS BEEN DECLARED IN THE RETURN OF INCOME AND ALSO THE MANNER OF INCOME HAVING BEEN EXPLAINED BY THE ASSESSEE, WHETH ER THE ASSESSEE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT. ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 6 10. THE TRIBUNAL IN ITO VS. SHRI SATISHCHANDRA G. M ITTAL (SUPRA) HAD DELIBERATED UPON THE CIRCUMSTANCES, WHICH JUSTIFY T HE LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT. THE RELEVANT FINDINGS O F THE TRIBUNAL ARE AS UNDER:- 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO LEV Y OF PENALTY AS PROVIDED UNDER SECTION 271AAA OF THE ACT WHICH PRESCRIBES THAT IN CASE WHERE THE SEARCH UNDER SECTION 132 OF THE ACT HAS BEEN INITIATED ON OR AFT ER THE 1ST DAY OF JUNE, 2007 BUT BEFORE THE 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, A SUM EQUIVALENT TO 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. THE IMMUNITY FROM THE LEVY OF PENALTY UNDER SECTION 271AAA IS PROVIDED IN SUB- SECTION (2) TO THE SAID SECTION, WHICH READS AS UND ER :- (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL A PPLY 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 B EEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. 11. SECTION 271AAA(2) OF THE ACT PROVIDES THAT WHER E THE ASSESSEE DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT, ADMITS TO SOME UNDISCLOSED INCOME IN THE STATEMENT RECORDED UNDER SECTION 132( 4) OF THE ACT AND ALSO SUBSTANTIATES THE MANNER IN WHICH UNDISCLOSED INCOM E WAS DERIVED AND PAYS THE TAXES, TOGETHER WITH INTEREST, IF ANY, ON SUCH UNDISCLOSED INCOME THEN NO PENALTY UNDER SUB-SECTION (1) OF SECTION 271AAA OF THE ACT CAN BE LEVIED TO THE ASSESSEE. THE ASSESSEE HAS, IN OTHER WORDS, TO FUL FILL THE THREE CONDITIONS LAID DOWN IN SUB-SECTION (2) OF SECTION 271AAA OF THE AC T. FIRSTLY, IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, ASSESSEE ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOM E HAS BEEN DERIVED; SECONDLY, IF THE ASSESSEE SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND, THIRDLY, PAYS THE TAXES, A LONG WITH INTEREST, IF ANY, ON SUCH UNDISCLOSED INCOME, THEN ON FULFILLMENT OF THE ABOVE THREE CONDITIONS, NO PENALTY IS LEVIABLE UNDER SECTION 271AAA OF THE ACT . 12. COMING TO THE FACTS OF THE PRESENT APPEAL, SEAR CH UNDER SECTION 132 OF THE ACT WAS CARRIED ON AT THE PREMISES OF THE ASSES SEE ON 22.11.2007. DURING THE COURSE OF SEARCH, THE ASSESSEE HAD MADE THE UND ER-MENTIONED DECLARATION OF ADDITIONAL INCOME, AS UNDER :- 1. UNRECORDED CASH : RS.1,00,00,000/- 2. CASH PAYMENT TO M/S NIKI AGRO : RS. 50,00,0 00/- 3. ON ACCOUNT OF SILVER ARTICLES : RS. 3,75 ,257/- 4. ON ACCOUNT OF ERRORS & OMISSIONS : RS. 16,0 0,000/- TOTAL : RS.1,69,75,257/- 13. HOWEVER, THE ASSESSEE IN THE RETURN OF INCOME O FFERED THE FOLLOWING ADDITIONAL INCOME :- ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 7 1. GOLD DIAMOND JEWELLERY & SILVER : RS. 3,75,25 7/- 2. CASH FOUND AT RESIDENCE AFTER SUBMITTING : RS.8 9,65,875/- EXPLANATION 3. INTEREST RECEIVABLE FROM M/S NIKKY AGRO : RS. 3,61,500/- 4. COMMODITIES TRADING INCOME AT RAJASTHAN : RS. 57,244/- 5. COMMODITIES TRADING INCOME AT : RS. 25,0 51/- AHMADABAD 6. UNRECORDED EXPENDITURE : RS. 85,000/- 7. UNRECORDED INVESTMENT IN DIAMOND & : RS. 1, 10,550/- JEWELLERY TOTAL : RS.1,00,08,887/- 14. THE ASSESSING OFFICER HAS ACCEPTED THE ADDITION AL INCOME OFFERED BY THE ASSESSEE AT RS.1,00,08,887/- AND HAS FURTHER MADE A DDITION ON ACCOUNT OF HOUSEHOLD EXPENSES, UNEXPLAINED EXPENDITURE AND ERR ORS AND OMISSIONS TOTALING TO RS.47 LAKHS AGAINST WHICH HE HAS INITIA TED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, IN RESPECT OF ADDIT IONAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AFTER THE SEARCH A MOUNTING TO RS.1,00,08,887/-, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEED INGS UNDER SECTION 271AAA OF THE ACT. 15. AS REFERRED BY US IN THE PARAS HEREINABOVE, CON DITIONS REGARDING IMMUNITY FROM LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT IS PROVIDED UNDER SUB-SECTION (2) TO THE SAID SECTION ITSELF. THE FIRST CONDITION FOR SUCH IMMUNITY IS THAT THE ASSESSEE IN THE COURSE OF SEAR CH ITSELF ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHIC H SUCH INCOME HAS BEEN DERIVED. SECOND ASPECT IS THAT THE ASSESSEE IS TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED AND THIRDLY, T HE ASSESSEE IS TO PAY TAXES TOGETHER WITH INTEREST, IF ANY, ON SUCH UNDISCLOSED INCOME. AS PER THE ASSESSING OFFICER, THE ASSESSEE HAD NOT FULFILLED THE SAID CO NDITIONS. ON THE OTHER HAND, THE LD. CIT(A) HAS DELETED THE ADDITIONS BY HOLDING THAT THE FIRST CONDITION STANDS FULFILLED AS THE ASSESSEE ADMITTED THE UNDISCLOSED INCOME IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE CIT( A) IN PARA 8.2 ADMITS THAT INCOME ON ACCOUNT OF GOLD, DIAMOND AND SILVERY JEWE LLERY RS.3,75,257/-, CASH FOUND AT THE RESIDENCE RS.89,65,875/- AND INTEREST RECEIVABLE FROM M/S NIKKY AGRO RS.3,61,500/- IS SPECIFICALLY COVERED BY THE I TEMS OFFERED TO TAX IN STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE CIT(A) FURTHER OBSERVED THAT REMAINING INCOME OF RS.3,04,845/- ON ACCOUNT OF COMMODITIES TRADING, UNRECORDED EXPENDITURE AND UNRECORDED INVE STMENT IN DIAMOND ARE NOT COVERED BY THE ITEMS OF INCOME STATED IN STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE CONCLUSION OF THE CIT(A) WA S THAT THE FIRST CONDITION LAID DOWN IN SUB-SECTION (2) OF SECTION 271AAA OF THE AC T IS FULFILLED IN RESPECT OF INCOME OFFERED TO TAX TO THE EXTENT OF RS.97,02,632 /-. 16. THE CIT(A) FURTHER NOTES THAT THE SEARCH PARTY HAD NOT ASKED THE ASSESSEE TO SPECIFY AND SUBSTANTIATE THE SOURCE OF INCOME DISCLOSED. HOWEVER, THE ASSESSEE IN HIS STATEMENT, IN REPLY TO QUERY NO .2 RECORDED DATED 24.11.2007 QUERY NO.11 DATED 13.12.2007 HAD OFFERED THE ADDITIONAL INCOME AND ADMITTED THAT THE SAID UNDISCLOSED WAS EARNED O UT OF UNDISCLOSED SPECULATION INCOME OF COMMODITIES/DERIVATIVES AND I S NOT SUPPORTED BY DOCUMENTARY PROOF. THE CIT(A) FURTHER NOTES THAT W HERE THE ASSESSEE HAD MOVED AN APPLICATION FOR ADJUSTMENT OF THE CASH SEI ZED OF 1 CRORE AGAINST THE TAXES AND INTEREST LIABILITY, THE THIRD CONDITION M ENTIONED IN SUB-SECTION (2) TO ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 8 SECTION 271AAA OF THE ACT WAS FULFILLED AND AS SUCH THERE WAS NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT TO THE EXTENT OF RS.97,02,632/-. THE BALANCE PENALTY LEVIED IN THE HANDS OF THE ASSE SSEE WAS CONFIRMED TO THE EXTENT OF RS.30,625/-. THE LD. AUTHORIZED REPRESEN TATIVE FOR THE ASSESSEE HAS NOT POINTED ANY APPEAL HAVING BEEN FILED AGAINST TH E SAID CONFIRMATION OF PARTIAL PENALTY UNDER SECTION 271AAA OF THE ACT. THOUGH, T HE REVENUE IS IN APPEAL AGAINST THE DELETION OF PENALTY TO THE EXTENT OF RS .9,72,632/- ON UNDISCLOSED INCOME OF RS.97,02,632/-. 17. IN ORDER TO AVAIL THE IMMUNITY TO LEVY OF PENAL TY UNDER SECTION 271AAA OF THE ACT, THE FIRST CONDITION TO BE FULFILLED BY THE ASSESSEE IS THE DECLARATION OF THE ADDITIONAL INCOME DURING THE COURSE OF STATEMENT RE CORDED UNDER SECTION 132(4) OF THE ACT, STANDS FULFILLED IN THE CASE OF THE ASS ESSEE WHERE ORIGINALLY THE ASSESSEE HAD OFFERED ADDITIONAL INCOME TO THE EXTEN T OF RS.1.69 CRORES BUT ON ACCOUNT OF FOUR ITEMS HAD RESTRICTED THE DECLARATIO N IN THE RETURN OF INCOME TO THREE OF THE SAID ITEMS. EVEN THOUGH, THERE WAS DI FFERENCE IN THE QUANTUM ORIGINALLY DECLARED DURING THE COURSE OF SEARCH AND THOSE OFFERED IN THE RETURN OF INCOME, BUT THE FIRST CONDITION OF SUB-SECTION (2) TO SECTION 271AAA OF THE ACT STANDS FULFILLED. THE PERUSAL OF THE STATEMENT ITS ELF REFLECTS THAT THE ASSESSEE ADMITTED TO HAVE ENGAGED IN COMMODITY TRADING IN CA SH AND EVEN THE GROUP WHICH WAS SIMULTANEOUSLY SEARCHED BY THE INCOME TAX DEPARTMENT, WAS ALSO ENGAGED IN SIMILAR TRADING. WE FIND NO MERIT IN TH E ORDER OF THE ASSESSING OFFICER IN THIS REGARD AS THE ASSESSEE HAVING SUBST ANTIATED ABOVE ADDITIONAL INCOME OF BEING DERIVED FROM ITS BUSINESS OF COMMOD ITY TRADING, OUTSIDE THE BOOKS OF ACCOUNT, THE CONDITION NO.1 AND 2 PROVIDED IN SUB-SECTION (2) OF SECTION 271AAA OF THE ACT ARE APPLICABLE. 18. FOR THE SAID PROPOSITION, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN ACIT VS. MUNISH KUMAR GOYAL (SUPRA), WHEREIN IT WAS HELD AS UNDER :- 10. PLAIN READING OF SUB-SECTION WOULD SHOW THAT I F THE ASSESSEE DURING THE COURSE OF SEARCH IN A STATEMENT ADMITS T O SOME UNDISCLOSED INCOME AND PAY TAXES ON THE SAME THEN PENALTY CANNO T BE LEVIED IN TERMS OF SUB-SEC (1) OF THIS SECTION. IN THE CASE B EFORE US, THE AMOUNT OF RS. 4 CRORE WHICH WAS SURRENDERED DURING SEARCH, HA S BEEN DECLARED BY THE ASSESSEE IN THE RETURN AND TAXES HAVE BEEN PAID ACCORDINGLY. THEREFORE THE, ASSESSEE IS NORMALLY ENTITLED FOR TH E IMMUNITY PROVIDED IN SEC 271AAA ITSELF. HOWEVER, THE REVENUE HAS RAISED FURTHER DISPUTE THAT WHETHER THE ASSESSEE HAS DISCLOSED THE MANNER IN WH ICH INCOME HAS BEEN EARNED. IN THE PENALTY ORDER PASSED BY THE ASS ESSING OFFICER FOLLOWING QUESTIONS AND ANSWERS HAVE BEEN EXTRACTED : 'Q. DO YOU WANT TO SAY ANYTHING MORE? ANS. I VOLUNTARILY SURRENDER A SUM OF RS.4.00 CRORE (RS. FOUR CRORE) FOR CURRENT FINANCIAL YEAR I.E. 2009-10 RELE VANT TO A. Y. 2010-11 IN ANY (SHOULD BE 'MY') INDIVIDUAL CAPACITY . THEY COVER ALL THE DISCREPANCIES IN THE SEIZED PAPERS DURING T HE COURSE OF SEARCH PROCEEDINGS.' 11. THEREFORE CLEARLY THE REVENUE HAS NOT ASKED THE ASS ESSEE TO DISCLOSE THE MANNER IN WHICH SUCH INCOME WAS EARNED . IN ANY CASE ONCE THE INCOME IS SURRENDERED DURING THE COURSE OF SEAR CH U/S 132(4) IT CAN BE SAFELY ASSUMED THAT DURING DISCUSSION THE ASSESS EE MUST HAVE DISCLOSED THE MANNER. IN ANY CASE WE FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE EXPLAN ATION OF THE ASSESSEE HAS BEEN ACCEPTED FOR A SUM OF RS.1987500 OUT OF TO TAL SURRENDER OF ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 9 RS.4 CRORE THEN SAME MANNER SHOULD HAVE BEEN ACCEPT ED FOR THE WHOLE OF THE AMOUNT. IT IS NOT CLEAR FROM THE PENALTY ORD ER HOW EXPLANATION FOR RS.1987500 WAS ACCEPTED. IN ANY CASE THE LD. CIT(A) HAS CONSIDERED ALL THESE ISSUES IN DETAIL AND THE D.R. FOR THE REV ENUE HAS NOT REFERRED TO ANY MATERIAL OR DECISION WHICH CAN CONTROVERT THE F INDINGS OF THE CIT(A). IN THE FOLLOWING CASES WHICH HAVE BEEN RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH WAS CLEARLY HELD THAT PENALTY IS NOT LEVIABLE. 12. FURTHER THE ASSESSEE HAS RELIED ON THE FOLLOWIN G DECISIONS: KANAKIA SPACES (P.) LTD. (SUPRA) A.N. ANNAMALAISAMY (HUF) (SUPRA) PRARNOD KUMAR JAIN (SUPRA) SMT. RAJ RANI GUPTA (SUPRA) 13. THE LD. D.R. FOR THE REVENUE WAS NOT ABLE TO PL ACE BEFORE US ANY DECISION WHICH SUPPORTS HIS CASE, THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SA ME. 14. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1003/CHD/2013 IS DISMISSED. 19. FURTHER, THE DELHI BENCH OF THE TRIBUNAL IN SUD HA GUPTA VS. DCIT (SUPRA) HAD LAID DOWN SIMILAR PROPOSITION THAT WHER E DURING THE COURSE OF SEARCH PROCEEDINGS, THE AUTHORIZED OFFICER OF DEPARTMENT H AD NOT RAISED ANY SPECIFIC QUERY REGARDING THE MANNER IN WHICH THE UNDISCLOSED INCOME HAVE BEEN DERIVED AND WHERE THE ASSESSEE HAD TRIED TO EXPLAIN THE EAR NING OF THE UNDISCLOSED INCOME IN QUESTION, IN ITS REPLY, DURING THE RECORD ING OF THE STATEMENT UNDER SECTION 132(4) AND IN THE ABSENCE OF ANY QUERY RAIS ED BY THE AUTHORIZED OFFICER ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HA VE BEEN DERIVED AND ABOUT ITS SUBSTANTIATION, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING THE PENALTY UNDER SECTION 271AAA OF THE ACT. 20. THE THIRD CONDITION OF PAYMENT OF TAXES TOGETHE R WITH INTEREST, IF ANY, IS ALSO FULFILLED IN THE CASE OF THE ASSESSEE WHERE TH E ASSESSEE HAD MADE A REQUEST FOR ADJUSTMENT OF THE CASH SEIZED OF RS. 1 CRORE AGAINST HIS TAX AND INTEREST LIABILITY, BOTH DURING THE COURSE OF SEARC H AND AFTER THE COMPLETION OF THE ASSESSMENT. MERELY BECAUSE THE ADJUSTMENT WAS MADE AFTER THE COMPLETION OF ASSESSMENT IN THE HANDS OF THE ASSESSEE HAS NO MERI T TO LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT IN VIEW OF NON FULFILLMEN T OF THIRD CONDITION PROVIDED UNDER SUB-SECTION (2) OF THE SAID SECTION. IN THIS REGARD, WE FIND MERIT IN THE RELIANCE PLACED UPON BY THE LD. AUTHORIZED REPRESEN TATIVE FOR THE ASSESSEE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF THE TRIBUN AL IN DCIT VS. SHRI RAVINDRA CHAMPALAL KHINVASARA (SUPRA) WHEREIN IT WAS HELD AS UNDER :- 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IN OUR OPINION, THE CIT(A) MADE NO MISTAKE IN APPLYING THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA) WHILE EXAMINING THE CONDITION PRESCRIBED IN CLAUSE (III) OF SUB- SECTION (2) OF SECTION 271AAA OF THE ACT IN THE PRE SENT CASE. IN THE CASE BEFORE THE HONBLE SUPREME COURT, ISSUE RELATED TO A PENALTY IMPOSED U/S 271(1)(C) OF THE ACT ON AN AMOUNT OF INCOME SURREND ERED BY THE ASSESSEE IN A STATEMENT RECORDED U/S 132(4) OF THE ACT. CLA USE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT PRESCRIBED IMMUNITY FROM LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WITH RESPECT TO AN INCOME SURR ENDERED IN A STATEMENT U/S 132(4) OF THE ACT. ONE OF THE CONDITIONS PRESC RIBED THEREIN IS TO THE EFFECT THAT ASSESSEE PAYS THE TAX, TOGETHER WITH I NTEREST, IF ANY, IN RESPECT OF SUCH INCOME. THE REVENUE HAD CONTENDED BEFORE THE HONBLE ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 10 SUPREME COURT THAT ASSESSEE THEREIN HAD FAILED TO M AKE PAYMENT OF TAX IN TIME. IN THIS CONTEXT, THE HONBLE SUPREME COURT N OTED THAT THE CONDITION DID NOT PRESCRIBE ANY TIME LIMIT FOR PAYMENT OF SUC H TAX AND THAT THE ONLY REQUIREMENT STIPULATED IN THE THIRD CONDITION WAS F OR THE ASSESSEE TO PAY TAX TOGETHER WITH INTEREST. FACTUALLY, IT WAS CLE AR THAT THE SAID CONDITION STOOD FULFILLED AS ASSESSEE HAD PAID TAX WITH INTER EST UPTO THE DATE OF PAYMENT. THEREFORE, THE HONBLE SUPREME COURT HELD THE ASSESSEE WAS ENTITLED TO THE IMMUNITY FROM PAYMENT OF PENALTY IN TERMS OF CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IN THE PRESENT CASE TOO WHEREIN THE ISSUE RELATES TO LEVY OF PENALTY U/S 27 1AAA OF THE ACT, THE CONDITION PRESCRIBED IN CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT IS PARI-MATERIA TO THE THIRD CONDITION PRES CRIBED IN CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE REFORE, IN OUR CONSIDERED OPINION THE RATIO OF THE JUDGEMENT OF THE HONBLE S UPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA) IS SQUARELY APPLI CABLE IN THE PRESENT CASE ALSO. 11. IN THIS BACKGROUND, EVEN IF WE WERE TO GO ALONG WITH THE STAND OF THE ASSESSING OFFICER THAT THE CREDIT FOR THE SEIZE D CASH COULD BE GIVEN FOR TAX LIABILITY ONLY AFTER COMPLETION OF ASSESSMENT Y ET IT FOLLOWS THAT THE ASSESSEE HAS PAID TAX WITH INTEREST AS REQUIRED BY CLAUSE (III) OF SUB-SECTION (2) OF SECTION 271AAA OF THE ACT. THE PHRASEOLOGY OF CLAUSE (III) OF SUB- SECTION (2) OF SECTION 271AAA OF THE ACT IS PARI-MA TERIA WITH THE THIRD CONDITION IN CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT; AND, THEREFORE FOLLOWING THE RATIO OF THE JUDGEMENT OF T HE HONBLE SUPREME COURT IN THE CASE OF GEBILAL KANHAIALAL HUF (SUPRA), THE CIT(A) MADE NO MISTAKE IN HOLDING THAT ASSESSEE HAS FULFILLED THE CONDITIO N OF CLAUSE (III) OF SUB- SECTION (2) OF SECTION 271AAA OF THE ACT AND ACCORD INGLY THE PENALTY OF RS.45,00,000/- LEVIED BY THE ASSESSING OFFICER HAS BEEN JUSTIFIABLY CANCELLED. THE ORDER OF THE CIT(A) IS HEREBY AFFIR MED. 21. IN VIEW OF THE CONDITIONS LAID DOWN FOR CLAIMIN G IMMUNITY FROM LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT AS PRESCRIB ED IN SUB-SECTION (2) TO THE SAID SECTION, HAVING BEEN FULFILLED, WE FIND NO MER IT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THIS REGARD. WE UPHOLD TH E ORDER OF THE CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271AAA OF THE ACT IN RESPECT OF INCOME OFFERED TO TAX TO THE EXTENT OF RS.97,02,632/- AND CANCELLING THE PENALTY TO THE EXTENT OF RS.9,70,263/-. THE GROUNDS OF APPEAL RAI SED BY THE REVENUE ARE THUS, DISMISSED. 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 11. ADMITTEDLY, THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS IN ORDER TO AVAIL THE IMMUNITY FROM LEVY OF PENALTY UNDER SECTION 271 AAA OF THE ACT. THE FIRST CONDITION TO BE FULFILLED WAS THE DECLARATION OF AD DITIONAL INCOME DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 132( 4) OF THE ACT, WHEREIN THE ASSESSEE HAD OFFERED ADDITIONAL INCOME TO THE EXTEN T OF RS.75 LAKHS IN ALL. FURTHER, THE ASSESSEE HAD DECLARED THE SAID INCOME IN THE RETURN OF INCOME AND PAID TAXES THEREON, THE MANNER OF EARNING THE SAID INCOME WAS ALSO EXPLAINED ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 11 DURING THE COURSE OF SEARCH PROCEEDINGS ITSELF. HO WEVER, IN THE ABSENCE OF AUTHORIZED OFFICER OF THE DEPARTMENT HAVING RAISED ANY SPECIFIC QUERY REGARDING THE MANNER IN WHICH THE SAID DISCLOSED INCOME WAS D ERIVED AND FOLLOWING THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN THE IT O VS. SHRI SATISHCHANDRA G. MITTAL (SUPRA) IN TURN RELYING ON CHANDIGARH BENCH OF TRIBUNAL IN ACIT VS. MUNISH KUMAR GOYAL (2014) 45 TAXMANN.COM 563 (CHAND IGARH TRIB) AND THE DELHI BENCH OF TRIBUNAL IN SUDHA GUPTA VS. DCIT IN ITA NO.5445/DEL/2012, ORDER DATED 22.08.2014, WE UPHOLD THE ORDER OF CIT( A) IN DELETING THE PENALTY UNDER SECTION 271AAA OF THE ACT ON THE ADDITIONAL I NCOME OFFERED BY THE ASSESSEE. FURTHER, THE TRIBUNAL IN ASSESSEES BROT HERS CASE ON IDENTICAL FACTS HAS DELETED THE PENALTY UNDER SECTION 271AAA OF THE ACT. 12. NOW, COMING TO THE OTHER TWO ADDITIONS I.E. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY OF RS.1,40,000/- AND THE PR OMISSORY NOTES FOUND OF RS.1 LAKH EACH. ADMITTEDLY, THE SAID ADDITIONAL INCOME WAS NOT OFFERED BY THE ASSESSEE DURING THE COURSE OF SEARCH AND TAX ON SUC H INCOME WAS NOT PAID. IN VIEW THEREOF THE IMMUNITY GRANTED TO ASSESSEE UNDER SECTION 271AAA OF THE ACT IS NOT AVAILABLE. HENCE, WE UPHOLD LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT ON SUCH ADDITIONAL INCOME OF RS.2.40 LAKHS. TH E ORDER OF CIT(A) TO THIS EXTENT IS REVERSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF NOVEMBER, 2015. SD/- SD/- (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) $ / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH NOVEMBER, 2015 . GCVSR/SUJEET ITA NO.1610/PN/2012 SHRI VASUDEO RAMCHAND LALWANI 12 ) * +,- .-+ / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; * * + () THE CIT(A)-I, NASHIK; * * + / THE CIT-I, NASHIK; ./0 1123, * 23 , 5 / DR B, ITAT, PUNE; 067 8 / GUARD FILE. )' / BY ORDER . 1 // TRUE COPY // 9:; 1< 2= / SR. PRIVATE SECRETARY * 23 ,