United Builders, Nashik V. ACIT, Nashik

ITA 1650/PUN/2012

• Counselvise Citation: 165024514 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 07-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings; Revised return; Reassessment proceedings
• Section: 143(3); 133A; 153A; 27; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1650/PN/2012 (ASSTT.YEAR : 2006-07) UNITED BUILDERS, UNITED HOUSE, KULKARNI COLONY, SHARANPUR ROAD, NASHIK-422002 PAN NO.AAAFU1741L .. APPELLANT VS. ACIT, CENTRAL CIRCLE-2, NASHIK .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SMT. SHAILJA RAI DATE OF HEARING : 10-01-2014 DATE OF PRONOUNCEMENT : 28-02-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 05-06-2012 OF THE CIT(A)-II, NASHIK RELATING TO A.Y . 2006-07. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOP ER. IT FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31-10 -2006 DECLARING A LOSS OF RS.15,69,393/-. A SURVEY ACTION U/S.133A W AS CONDUCTED IN THE CASE OF THE ASSESSEE ON 18-07-2007. PURSUANT TO TH E SAID SURVEY THE ASSESSEE FIELD A REVISED RETURN ON 31-07-2007 DECLA RING AN ADDITIONAL INCOME OF RS.50 LAKHS ON ACCOUNT OF UNDISCLOSED INV ESTMENT IN PURCHASE OF LAND AT PUNE. THE AO COMPLETED THE ASSESSMENT O N 16-12-2008 U/S143(3) AT RS.30,56,660/- INCLUDING ADDITIONAL IN COME OF RS. 50 LAKHS 2 DISCLOSED ON ACCOUNT OF UNDISCLOSED INVESTMENT. TH EREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT ON THE SAID UNDISCLOSED INVESTMENT OF RS.50 LAKHS. DURING THE PENALTY PROCEEDINGS IT WAS SUBMITTED THAT THE ASSESSEE HAS OFFERED AN A MOUNT OF RS.50 LAKHS IN THE RETURN OF INCOME FILED AND THEREFORE NO PENA LTY IS LEVIABLE U/S.271(1)(C) OF THE I.T. ACT. HOWEVER, THE AO REJ ECTED THE ABOVE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY OF RS .9,95,548/- ON ACCOUNT OF CONCEALED INCOME OF RS.50 LAKHS BEING PENALTY @1 00% OF TAX SOUGHT TO BE EVADED. 3. BEFORE THE CIT(A) THE ASSESSEE CHALLENGED THE PE NALTY LEVIED BY THE AO BUT WITHOUT ANY SUCCESS. THE LD.CIT(A) WHIL E UPHOLDING THE PENALTY LEVIED BY THE ASSESSING OFFICER REJECTED TH E CONTENTION OF THE ASSESSEE THAT THE INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT IS BARRED BY LIMITATION ON THE GROUND THAT THE CIT(A)-II, NASHIK HAS PASSED ORDER ON 15-05-2009 AND THE TIME AVAILAB LE FOR LEVY OF PENALTY AS PER SECTION 275(1)(A) WAS TILL 31-03-201 1, I.E. ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE CIT(A) WAS RECEIVED BY THE CIT. THE AO HAS LEVIED PENALTY ON 31-03-2011 AND THEREFORE THE PENALTY HAS BEEN LEVIED IN TIME AND I S WELL IN ACCORDANCE WITH THE PROVISIONS OF SECTION 275(1)(A) OF THE I.T . ACT. EVEN OTHERWISE ALSO THE REVENUE HAD FILED AN APPEAL BEFORE THE TRI BUNAL AND THE ORDER OF THE TRIBUNAL WAS RECEIVED BY CIT-II, NASHIK ON 25-0 3-2011 AND THE AO PASSED THE ORDER LEVYING PENALTY U/S.271(1)(C) OF T HE I.T. ACT ON 31-03- 2011, I.E. WITHIN A PERIOD OF 6 MONTHS FROM THE REC EIPT OF THE ORDER OF THE TRIBUNAL. RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE 3 CASE OF CIT VS. MOHAIR INVESTMENT AND TRADING CO, P VT. LTD. VIDE ITA NO.511/2011 THE LD.CIT(A) REJECTED THE GROUND RAISE D BEFORE HIM THAT THE INITIATION OF PENALTY PROCEEDINGS ARE BARRED BY LIMITATION. 3.1 SO FAR AS THE CONTENTION OF THE ASSESSEE THAT H E HAD VOLUNTARILY REVISED HIS RETURN AND OFFERED RS.50 LAKHS TO TAX I S CONCERNED HE OBSERVED THAT AN ACTION U/S.132 WAS CONDUCTED IN TH E PARWANI GROUP OF PUNE ON 06-06-2007. DURING THE COURSE OF SEARCH A MEMORANDUM OF UNDERSTANDING BETWEEN SHRI YOGESH KARIA OF PUNE AND ASSESSEE, I.E. M/S. UNITED BUILDERS, NASHIK FOR PURCHASE OF A LAND AT K HARADI, PUNE WAS FOUND AND SEIZED. THIS MOU INTERALIA SHOWED A PAYM ENT OF RS.50 LAKHS IN CASH. THE AFORESAID SEIZED MOU DATED 17-03-2006 INTERALIA MENTIONED A PAYMENT OF RS.11 LAKHS VIDE CHEQUE NO.1 18948 DATED 01- 03-2006 ON UTI BANK BY M/S. UNITED BUILDERS. PURSU ANT TO THE SAID SEARCH A SURVEY ACTION U/S.133A WAS CONDUCTED AT TH E PREMISES OF UNITED BUILDERS IN NASHIK ON 18-07-2007. SHRI RAJAN ASAN DARYANI, ONE OF THE PARTNERS OF THE ASSESSEE FIRM ACCEPTED THE FACT OF PAYMENT OF RS.50 LAKHS IN CASH BY THE ASSESSEE FIRM IN 2006-07. THE ASSES SEE FIRM HAD FILED RETURN OF INCOME FOR A.Y. 2006-07 ON 31-10-2006 IN WHICH PARTICULARS IN REGARD TO THE SAID CASH PAYMENT OF RS.50 LAKHS IN C ASH WAS NOT REFLECTED. WHEN THE PARTNER OF THE FIRM WAS CONFRONTED WITH TH E SAID CASH PAYMENT THE ASSESSEE FIRM REVISED THE RETURN OF INCOME ON 3 1-07-2007 FOR A.Y. 2006-07 INCLUDING THEREIN RS.50 LAKHS AS ADDITIONAL INCOME ON ACCOUNT OF UNDISCLOSED INVESTMENT AND PAID TAX THEREON. TH E LD.CIT(A) ANALYSED THE CONTENTS OF THE ENQUIRY ACCORDING TO W HICH THE MOU GIVES THE DETAILS OF PAYMENT INCLUDING ON MONEY. HE AL SO REFERRED TO THE 4 STATEMENT OF SHRI RAJAN ASAN DARYANI RECORDED ON OA TH U/S.133A OF THE I.T. ACT WHEREIN THE PARTNER HAS ACCEPTED THAT THE LAND DEAL WAS MADE IN THE NAME OF UNITED BUILDERS. 3.2 REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND RELYING ON VARIOUS DECISIONS HE CAME TO THE CONCLUS ION THAT BUT FOR THE SURVEY THE ASSESSEE WOULD NOT HAVE DISCLOSED THE UN EXPLAINED INVESTMENT IN LAND AND THE ASSESSEE, WITH A MALAFIDE INTENTION , FURNISHED INACCURATE PARTICULARS AND CONCEALED ITS TRUE INCOME. THE REV ISED RETURN FILED BY THE ASSESSEE WAS NOT BONAFIDE OR THE ACCOUNTS DISCLOSED WAS NOT VOLUNTARY. THE ASSESSEE FILED A REVISED RETURN ONLY ON COMING TO KNOW ABOUT THE DETECTION OF CONCEALMENT BY THE DEPARTMENT. HE ACC ORDINGLY UPHELD THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT BY THE ASSESSING OFFICER. 3.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE T O EACH OTHER -ON FACTS AND IN LAW 1] THE ID. CIT(A) ERRED IN CONFIRMING THE LEVY OF P ENALTY OF RS.9,95,548/- U/S.271(1)(C)OF THE ACT. 2] THE ID. CIT(A) FAILED TO APPRECIATE THAT THE ORD ER LEVYING PENALTY IN RESPECT OF THE ADDITION OF RS. 50 LACS WAS BARRED BY LI MITATION AND THEREFORE HE OUGHT TO HAVE DECLARED IN NULL AND VOI D. 3] THE ID. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HA D CONCEALED ITS INCOME AND THEREFORE, THE A.O. WAS JUSTIFIED IN LEVYI NG THE PENALTY U/S.271(L)(C). 4] THE ID. CIT(A) ERRED IN HOLDING THAT THE AMOUNT OF RS. 50 LACS WAS OFFERED BY THE ASSESSEE TO TAX ONLY AFTER DETECTION BY THE DEPT. AND HENCE THE LEVY OF PENALTY WAS JUSTIFIED. 5] THE ID. CIT(A) FAILED TO APPRECIATE THAT THE INC OME OF RS. 50 LACS WAS OFFERED BY THE ASSESSEE TO TAX ONLY TO BUY PEACE AND TO CO-OPERATE WITH THE DEPARTMENT AND THEREFORE, THERE WAS NO REASON TO LEVY THE PENALTY ON THE SAID AMOUNT. 5 6] THE ID. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSE E HAD ADMITTED THE ADDITIONAL INCOME OF RS. 50 LACS VOLUNTARILY AND IT W AS NOT DETECTED BY THE DEPARTMENT AND HENCE THE QUESTION OF LEVY OF ANY PENALTY DOES NOT ARISE. 4. THE ASSESSEE HAS ALSO FILED AN ADDITIONAL GROUND WHICH READS AS UNDER: THE LD.CIT(A) FAILED TO APPRECIATE THAT THE ORDER PASSED U/S.143(3) WAS INVALID IN LAW AND HENCE THE PENALTY U/S.271(1)(C) L EVIED IN PURSUANCE TO THE SAID ORDER WAS BAD IN LAW. 4.1 AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E FACT THAT THE GROUND RAISED BY THE ASSESSEE IS A LEGAL ONE THE AD DITIONAL GROUND RAISED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION. 5. THE LD. COUNSEL FOR THE ASSESSEE MADE TWO FOLD A RGUMENTS. HE SUBMITTED THAT WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER WAS AWARE OF THE SEIZED DOCUMENT, I.E. COPY OF THE MOU FOUND AT THE PREMISES OF SHRI CHANDAN PARWANI WHEN THE SEARCH TO OK PLACE U/S.132 ON 26-06-2007. THEREFORE, THE ASSESSMENT SHOULD HAVE BEEN COMPLETED U/S.153C/153A AND NOT U/S.143(3). SINCE THE ASSESS ING OFFICER HAS NOT FOLLOWED THE PROVISIONS OF THE I.T. ACT BY COMPLETI NG ASSESSMENT U/S.153C/153A, THEREFORE, THE ORDER PASSED U/S.143( 3)/147 IS VOID AB- INITIO AND ILLEGAL. HE SUBMITTED THAT BY NOT FOLLOW ING THE PROVISIONS OF SECTION 153C/153A WHICH IS A SPECIFIC PROVISION, TH E ASSESSING OFFICER HAS MADE THE PROVISION REDUNDANT. ACCORDING TO LD. AR, SINCE ON THE DATE OF SEARCH I.E., ON 26-06-2007, THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS PENDING, THE SAME STOOD ABATED IN VIEW OF THE 2 ND PROVISO TO SECTION 153A(1). RELYING ON A NUMBER OF DECISIONS HE SUBMITTED THAT THE ASSESSMENT IN THE INSTANT CASE IS INVALID. HE SUBM ITTED THAT IT HAS BEEN JUDICIALLY DECIDED IN A NUMBER OF DECISIONS THAT IF THE ASSESSMENT ORDER IS 6 INVALID IN LAW, THE PENALTY LEVIED HAS TO BE DELETE D EVEN IF THE ASSESSEE HAD NOT CHALLENGED THE VALIDITY OF THE ASSESSMENT O RDER. HE ACCORDINGLY SUBMITTED THAT THE ORDER LEVYING THE PENALTY U/S.27 1(1)(C) OF THE I.T. ACT IS QUASHED. REFERRING TO THE DECISION IN THE CASE OF SSP AVIATION LTD. VS. DCIT REPORTED IN 70 DTR (DEL) 275 HE DREW THE A TTENTION OF THE BENCH TO THE FOLLOWING : 14. NOW THERE CAN BE A SITUATION WHEN DURING THE SE ARCH CONDUCTED ON ONE PERSON UNDER SECTION 132, SOME DOCUMENTS OR VAL UABLE ASSETS OR BOOKS OF ACCOUNT BELONGING TO SOME OTHER PERSON, IN WH OSE CASE THE SEARCH IS NOT CONDUCTED, MAY BE FOUND. IN SUCH CASE, TH E ASSESSING OFFICER HAS TO FIRST BE SATISFIED UNDER SECTION 153C, WHICH PRO VIDES FOR THE ASSESSMENT OF INCOME OF ANY OTHER PERSON, I.E., ANY OTHE R PERSON WHO IS NOT COVERED BY THE SEARCH, THAT THE BOOKS OF ACCOUNT OR OTHER VALUABLE ARTICLE OR DOCUMENT BELONGS TO THE OTHER PERSON (PER SON OTHER THAN THE ONE SEARCHED). HE SHALL HAND OVER THE VALUABLE ARTICL E OR BOOKS OF ACCOUNT OR DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDICTIO N OVER THE OTHER PERSON. THEREAFTER, THE ASSESSING OFFICER HAVING JURISDIC TION OVER THE OTHER PERSON HAS TO PROCEED AGAINST HIM AND ISSUE NOTICE TO THAT PERSON IN ORDER TO ASSESS OR REASSESS THE INCOME OF SUCH OTHER PERSO N IN THE MANNER CONTEMPLATED BY THE PROVISIONS OF SECTION 153A . NOW A QUESTION MAY ARISE AS TO THE APPLICABILITY OF THE SECOND PROVISO TO SECTION 153A IN THE CASE OF THE OTHER PERSON, IN ORDER TO EXAMINE THE QUESTION OF PENDING PROCEEDINGS WHICH HAVE TO ABATE. IN THE CASE OF THE SE ARCHED PERSON, THE DATE WITH REFERENCE TO WHICH THE PROCEEDINGS FOR ASSESS MENT OR REASSESSMENT OF ANY ASSESSMENT YEAR WITHIN THE PERIOD OF TH E SIX ASSESSMENT YEARS SHALL ABATE, IS THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR THE REQUISITION UNDER SECTION 132A. F OR INSTANCE, IN THE PRESENT CASE, WITH REFERENCE TO THE PURI GROUP OF CO MPANIES, SUCH DATE WILL BE 5.1.2009. HOWEVER, IN THE CASE OF THE OTHER PERSON, WHICH IN THE PRESENT CASE IS THE PETITIONER HEREIN, SUCH DATE WILL B E THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS S EIZED OR REQUISITION BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. IN THE CASE OF THE OTHER PERSON, THE QUESTION O F PENDENCY AND ABATEMENT OF THE PROCEEDINGS OF ASSESSMENT OR REASSESSMENT T O THE SIX ASSESSMENT YEARS WILL BE EXAMINED WITH REFERENCE TO SUCH DATE. 5.1 THE SECOND PLANK OF THE ARGUMENT BY THE LD. COU NSEL FOR THE ASSESSEE IS THAT TO BUY PEACE OF MIND TO AVOID PROL ONGED LITIGATION, THE ASSESSEE DECLARED THE ADDITIONAL INCOME OF RS.50 LA KHS. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITI ON MAY BE JUSTIFIED BUT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1) (C) OF THE I.T. ACT. HE ALSO RELIED ON THE FOLLOWING DECISIONS : 7 (1) DEEP CHAND KOTHARI VS. CIT REPORTED IN 171 ITR 3 81 (2) CIT VS. RATANCHAND MEHTA REPORTED IN 221 ITR 16 (3) CHANDAN K. SHEWANI VS. DCIT ITA NOS.235 TO 236/ PN/2010 (4) MOTI PUNJABI HUF AND OTHERS VS. ACIT ITA NO.147 9/PN/2011 (5) TIDEWATER MARINE INTERNATIONAL INC. VS. DCIT REP ORTED IN 96 ITD 406 6. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). SHE SUBMITTED T HAT IN THIS CASE THE ASSESSEE FILED THE ORIGINAL RETURN ON 31-10-2006 AN D THE SEARCH TOOK PLACE IN THE PREMISES OF PARWANI GROUP ON 26-06-2007. SU BSEQUENT TO THE SEARCH, A SURVEY ACTION U/S.133A WAS CONDUCTED AT T HE PREMISES OF THE ASSESSEE ON 18-07-2007. THE ASSESSEE FILED A REVIS ED RETURN ON 31-07- 2007 WHICH WAS TREATED AS INVALID BY THE ASSESSING OFFICER. HOWEVER, THE ISSUE OF VALIDITY OF THE REVISED RETURN HAS BEE N DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ITS ORDER DATED 28- 02-2011. 6.1 SHE SUBMITTED THAT SINCE THE REFERENCE WAS RECE IVED BY THE ASSESSEE'S JURISDICTIONAL AO ONLY ON 02.03.2010, TH E DATE OF INITIATION OF SEARCH REFERRED TO IN THE SECOND PROVISO TO [SUB-SE CTION (1) OF] SECTION 153A SHALL BE CONSTRUED AS 02.03.2010 AND NOT 26.06 .2007 AS CONTENTED BY THE LD. AR. SHE SUBMITTED THAT THE ASSESSMENT O R REASSESSMENT PROCEEDINGS PENDING ON THE DATE OF INITIATION OF SE ARCH (IN THIS CASE 02.03.2010) GET ABATED. SINCE THE ASSESSMENT ORDER FOR A.Y. 2006-07 WAS ALREADY COMPLETED IN THE ASSESSEE'S CASE BEFORE 02. 03.2010, THE QUESTION OF THE ASSESSMENT GETTING ABATED DOES NOT ARISE. FO R THIS PROPOSITION SHE RELIED ON THE UNAMBIGUOUS PROVISIONS OF SECTION 153 A, 153B, 153C AND CBDT CIRCULAR NO.7 OF 2003 DATED 05-09-2003. SHE AC CORDINGLY SUBMITTED THAT THE CONTENTION RAISED BY THE ID. AR THAT THE ASSESSMENT ORDER PASSED ON 16.12.2008 U/S 143(3) SHOULD HAVE B EEN ABATED AND 8 HENCE THE ORDER IS BAD IN LAW, DOES NOT HAVE ANY ME RIT. THE ORIGINAL ASSESSMENT ORDER DATED 16.12.2008 PASSED U/S 143(3) BY THE AO WHICH WAS COMPLETED BEFORE 02.03.2010, THE DATE OF REFERE NCE BEING RECEIVED BY THE JURISDICTIONAL AO, IS VALID IN LAW AND SHALL NOT BE CONSIDERED TO HAVE BEEN ABATED. AS REGARDS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT TO BUY PEACE OF MIND THE ASSESSEE DEC LARED ADDITIONAL INCOME OF RS.50 LAKHS AND THEREFORE THE ADDITION MA Y BE MADE BUT NO PENALTY MUST BE LEVIED U/S.271(1)(C) OF THE I.T. AC T, SHE SUBMITTED THAT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF MAKDATA PVT. LTD. THIS ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE CANNOT BE ACCEPTED NOW. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUT E TO BE DECIDED IN THE IMPUGNED APPEAL IS AS TO WHETHER THE PENALTY LEVIED BY THE ASSESSING OFFICER AMOUNTING TO RS.9,95,548/- AND UPHELD BY TH E CIT(A) IS JUSTIFIED OR NOT. WE FIND THE ASSESSEE IN THE INSTANT CASE F ILED THE REVISED RETURN ON 31-07-2007 DECLARING ADDITIONAL INCOME OF RS.50 LAK HS ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE PURCHASE OF LAND AT P UNE AFTER THE SURVEY ACTION U/S.133A WAS CONDUCTED IN THE CASE OF THE AS SESSEE ON 18-07- 2007. SINCE THE ASSESSEE HAD NOT FILED THE ADDITIO NAL INCOME SUOMOTO AND FILED THE SAME AFTER THE DISCOVERY BY THE DEPAR TMENT THE ASSESSING OFFICER LEVIED PENALTY U/S.271(1)(C) OF THE I.T. AC T WHICH HAS BEEN UPHELD BY THE CIT(A). 9 7.1 IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS VOID AB-INITIO SINCE THE ASSESSING OFFICER HAS NOT PASSED THE ORDER U/S. 153C/153A AND HAS PASSED THE SAME U/S.143(3). ACCORDING TO THE LD. C OUNSEL FOR THE ASSESSEE, WHEN THE MOU WAS FOUND AT THE PREMISES OF CHANDAN PARWANI DURING THE COURSE OF SEARCH ON 26-06-2007, THEREFOR E, THE ASSESSING OFFICER SHOULD HAVE PASSED THE ASSESSMENT ORDER U/S .153C/153A AND NOT U/S.143(3). SINCE THE ORDER HAS BEEN PASSED U/S.14 3(3), THEREFORE, THERE IS VIOLATION OF PROVISIONS OF SECTION 153C/153A. ACCO RDING TO HIM ONCE THE ASSESSMENT IS TREATED AS INVALID THEN THE PENAL TY SO LEVIED HAS TO BE DELETED. IT IS ALSO THE SUBMISSION OF THE LD. COUN SEL FOR THE ASSESSEE THAT SINCE THE ASSESSEE HAD VOLUNTARILY OFFERED THE AMOU NT OF RS.50LAKHS AS ADDITIONAL INCOME TO BUY PEACE OF MIND, THEREFORE, THE ADDITION MAY BE JUSTIFIED BUT IT DOES NOT CALL FOR LEVY OF ANY PENA LTY U/S.271(1)(C) OF THE I.T. ACT. 7.2 WE DO NOT FIND ANY MERIT IN THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. IT IS A FACT THAT AFTER THE SEARCH WAS CONDUCTED IN THE PARWANI GROUP ON 06-06-2007 A SURVEY U/S.133 A WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 18-07-2007 BY THE INVES TIGATION WING. PURSUANT TO THE SAID SURVEY THE ASSESSEE FILED THE REVISED RETURN ON 31- 07-2007 DISCLOSING ADDITIONAL INCOME OF RS.50 LAKHS . THE SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE REFERE NCE WAS RECEIVED BY THE ASSESSEES JURISDICTIONAL ASSESSING OFFICER REG ARDING THE MATERIAL SEIZED AT THE PREMISES OF PARWANI GROUP ON 02-03-2 010 AND THEREFORE THE DATE OF INITIATION OF SEARCH REFERRED TO IN THE 2 ND PROVISO TO SUB-SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS 02-03-2010 AN D NOT 26-06-2007 10 COULD NOT BE CONTROVERTED BY THE LD.COUNSEL FOR THE ASSESSEE. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER SHOULD HAVE COMPLETED THE ASSESSMENT U/S.153C/153A AND NOT U/S.143(3). 7.3 SO FAR AS THE SECOND LIMB OF ARGUMENT OF THE LD . COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS OFFERED ADDITIONAL I NCOME OF RS.50 LAKHS TO BUY PEACE OF MIND AND IN THE INSTANT CASE ADDITION MAY BE SUSTAINED BUT DOES NOT CALL FOR PENALTY U/S.271(1)(C) IS ALSO WIT HOUT ANY MERIT. WE FIND THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA P . LTD. VIDE CIVIL APPEAL NO.9772/2013 ORDER DATED 30-10-2013 HAS OBSE RVED AS UNDER : 6. WE HAVE HEARD COUNSEL ON EITHER SIDE. WE FULLY C ONCUR WITH THE VIEW OF THE HIGH COURT THAT THE TRIBUNAL HAS NOT PRO PERLY UNDERSTOOD OR APPRECIATED THE SCOPE OF EXPLANATION 1 TO SECTION 27 1(1)(C) OF THE ACT, WHICH READS AS FOLLOWS :- EXPLANATION 1 WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, -- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFF ERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION I S BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO TH E COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMO UNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSO N AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB -SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. THE AO, IN OUR VIEW, SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE VOLUNTARY DISCLOSURE, BUY PEACE, AVOID LITIGATION, AMICABLE SETTLEMENT, ETC. TO EXPLAIN AWAY ITS CON DUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTIC ULARS OF INCOME. EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AO, BETWEEN REPO RTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERW ISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVEN UE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE. 11 8. ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE AD DITIONAL SUM OF RS.40,74,000/- WITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCTIV E WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME TAX DEPARTM ENT. STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENCES UNDER THE EXPLAN ATION 1 TO SECTION 271(1)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUN TARY DISCLOSURE DOES NOT RELEASE THE APPELLANT-ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A V OLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAD TO BE ABSOLV ED FROM PENALTY. 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME I N THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COM PANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT OR DERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOU NDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUC TED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSE SSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FIL ED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETU RN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED L ATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS C LEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO D ECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEA R TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECT ION 274 OF THE INCOME TAX ACT, 1961. 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCEED INGS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS A ND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR M ANNER OR REDUCE IT INTO WRITING. THE SCOPE OF SECTION 271(1)(C) HAS ALSO BEEN ELABORATELY DISCUSSED BY THIS COURT IN UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2008) 13 SCC 369 AND CIT VS. ATUL MOHAN BIN DAL (2009) 9 SCC 589. 11. THE PRINCIPLE LAID DOWN BY THIS COURT, IN OUR V IEW, HAS BEEN CORRECTLY FOLLOWED BY THE REVENUE AND WE FIND NO IL LEGALITY IN THE DEPARTMENT INITIATING PENALTY PROCEEDINGS IN THE INST ANT CASE. WE, THEREFORE, FULLY AGREE WITH THE VIEW OF THE HIGH CO URT. HENCE, THE APPEAL LACKS MERIT AND IS DISMISSED. THERE SHALL BE NO ORDER AS T O COSTS. 7.4 THE LD. COUNSEL FOR THE ASSESSEE ALSO COULD NOT POINT OUT ANYTHING AS TO HOW THE PENALTY ORDER PASSED BY ASSESSING OFF ICER IS BARRED BY LIMITATION. SINCE IN THE INSTANT CASE THE ASSESSEE HAS NOT FILED ANY REVISED RETURN BEFORE DETECTION BY THE DEPARTMENT REGARDING THE PAYMENT OF 12 UNACCOUNTED CASH OF RS.50 LAKHS AND THE ASSESSEE CO ULD NOT SUBSTANTIATE WITH ANY EVIDENCE REGARDING THE BONAFIDENESS OR NON -DISCLOSURE OF SUCH CASH PAYMENT, THEREFORE, UNDER THE FACTS AND CIRCUM STANCES OF THE CASE, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND UPH ELD BY THE CIT(A) IS JUSTIFIED. WE HOLD AND DIRECT ACCORDINGLY. THE GR OUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28-02-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE, DATED : 28 TH FEBRUARY 2014 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE