DCIT, Central Circle-1, Nashik V. Shri Nandlal S. Bothra, Aurangabad

ITA 1672/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2484 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: PRAMOD KUMAR SHINGTE
• Keywords: Business income; Search and seizure; Salary income; Reasonable cause; Documents seized
• Section: 153A; 132; 139; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 1 672 /PN/201 3 / ASSESSMENT YEAR : 20 0 7 - 08 THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK . / APPELLANT VS. SHRI NANDLAL S. BOTHRA NANDLAL BUILDING, GUJRATHI GALLI, VAIJAPUR, AURANGABAD . / RESPONDENT PAN: AGHPB8555A / APPELLANT BY : SHRI DHEERAJ KUMAR JAIN / RESPONDENT BY : SHRI PRAMOD KUMAR SHINGTE / / DATE OF HEARING : 1 4 . 0 1 .201 6 DATE O F PRONOUNCEMENT: 30 . 0 3 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - I , NASHIK , DATED 2 1 . 0 6 .20 1 3 RELATING TO ASSESSMENT YEAR 20 0 7 - 08 AGAINST DELETION OF PENALTY LEVIED UNDER SECTION 271( 1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT ADDITIONAL INCOME WAS DECLARED BY THE ASSESSEE BY FILING RETURN OF INCOME U/S.153A & SAME WAS FILED CONSEQUENT TO THE SEARCH AND SEIZER OPERATION. IF SEARCH AND SEIZER OPERATION WERE NOT CONDUCTED IN THE ASSESSEE'S CASE, ASSESSEE COULD NOT HAVE BEEN DISCLOSED SUCH ADDITIONAL INCOME BY FILING RETURN OF INCOME U/S.153A OF THE ACT. ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ADDITIONAL INCOME WAS DECLARED BY THE ASSESSEE BY FILING RETURN OF INCOME U/S.153A AND SAME WAS FILED CONSEQUENT TO THE SEARCH OPERATION. DURING THE COURSE OF SEARCH CONSEQUENT TO THE SEARCH OPERATION. DURING THE COURSE OF SEARCH OPERATION A CASH OF RS.15 LAC WERE SEIZED FROM THE LOCKER MAINTAINED BY THE ASSESSEE WITH SBI, VAIJAPUR AND RS.37.97 LAC FROM LOCKER MAINTAINED BY THE ASSESSEE WITH PNB, VAIJAPUR AND 1.49 LAC FROM THE RE SIDENCE OF THE ASSESSEE WERE FOUND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS DECLARED ADDITIONAL INCOME OF RS.42 LAC IN THE RETURN OF INCOME FILED U/S.153A OF THE ACT. SUCH INCOME WAS NOT SHOWN IN THE ORIGINAL INCOME FILED U/S.139(1) OF TH E I. T. ACT. THEREFORE, THE ADDITION WAS MADE ON THE BASIS OF SUCH UNACCOUNTED CASH FOUND DURING THE COURSE OF SEARCH OPERATION. ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE AFTER IT WAS DETECTED BY THE DEPARTMENT DURING THE COURSE OF SEARCH OPERATION. DUR ING THE PENALTY PROCEEDING ASSESSEE COULD NOT PRODUCE ANY EVIDENCE OF SOURCES OF SUCH CASH. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) ERRED IN NOT 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE WAS AWARE OF SUCH CASH KEPT IN THE VARIOUS LOCKE R AND IN THE RESIDENTIAL PREMISES OF THE ASSESSEE AND ALSO THE SOURCES OF SUCH CASH. HOWEVER, DURING THE COURSE OF PENALTY PROCEEDING ASSESSEE COULD NOT EXPLAIN THE SOURCES OF SUCH CASH. THEREFORE, ASSESSEE HAS DELIBERATELY AND INTENTIONALLY CONCEALED PART ICULARS OF INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING PENALTY LEVIED U/S. 271 ( 1 )(C) AND GRANTING IMMUNITY PROVIDED UNDER E XP LANATION 5 TO SECTION 271 (1) (C) OF THE ACT 1961. 5 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING PENALTY LEVIED U/S.271 (1)(C) AND GRANTING IMMUNITY PROVIDED UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT 1961, AS THE UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT 1961, AS THE ASSESSEE HAS FAILED TO FURNISH RETURN OF INCOME U / S 139(1) OF THE I T, ACT 1961 WITHIN THE SPECIFIED TIME. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT MAY CRAVES LEAVES TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. 3. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN DELETING PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL CARRYING ON THE BUSINESS OF FERTILIZER AND WAS ALSO EARNING INCOME FROM SALARY, RENT, MEDICAL CONSULTANCY, INTEREST, AGRICULTURAL INCOM E, ETC. SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132(1) OF THE ACT WERE CONDUCTED AT THE PREMISES OF ASSESSEE ON 22.11.2006 . DURING THE COURSE OF SEARCH OPERATION, CASH OF RS.15 LAKHS WAS FOUND FROM THE LOCKER OF ASSESSEE WITH STATE BANK OF HYDERABAD, VAIJAPUR. FURTHER, CASH OF RS.37.97 LAKHS WAS FOUND FROM PUNJAB NATIONAL VAIJAPUR. FURTHER, CASH OF RS.37.97 LAKHS WAS FOUND FROM PUNJAB NATIONAL ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 3 BANK, AURANGABAD AND CASH OF RS. 1,39,650/ - WAS FOUND FROM THE RESIDENCE OF ASSESSEE. INITIALLY, THE ASSESSEE EXPLAINED IT TO BE OUT OF HIS PERSONAL SAVINGS BUT FINALLY DECLARED ADD ITIONAL INCOME OF RS. 42 LAKHS FROM THE BUSINESS OF COMMISSION FROM FARMERS FOR GETTING AGRICULTURAL PRODUCE SOLD IN THE MARKET. THE ASSESSEE INCLUDED THE SAID SUM OF RS.42 LAKHS IN THE RETURN OF INCOME FILED. FOR THE YEAR UNDER CONSIDERATION , THE ASSESSE E HAD FURNISHED ORIGINAL RETURN OF INCOME DECLARING TOTAL INCOME OF RS.42,74,721/ - AND AGRICULTURAL INCOME OF RS. 3,26,000/ - ON 04.12.2007. THE ASSESSEE SINCE HAD INCLUDED THE SAID INCOME IN RETURN FILED UNDER SECTION 153A OF THE ACT AND HAD NOT SHOWN IN T HE ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT, THE ASSESSEE WAS DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME, IN VIEW OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AND PENALTY PROCEEDINGS IN THIS REGARD WERE INITIATED. THEREA FTER, WHILE PASSING PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT , THE ASSESSING OFFICER NOTED THAT THE RETURN WAS FILED BY THE ASSESSEE ON 04.12.2007 I.E. AFTER SEARCH AND SEIZURE OPERATION AND AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UND ER SECTION 139 (1) OF THE ACT AND SINCE THE ADDITIONAL INCOME OF RS.42 LAKHS WAS OFFERED AS A RESULT OF SEARCH AND SEIZURE OPERATION, CASE OF ASSESSEE WAS HELD TO BE COVERED UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE BENEFIT OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT COULD NOT BE GIVEN TO THE ASSESSEE AS THE INCOME DECLARED IN THE RETURN OF INCOME WAS FOR THE PREVIOUS YEAR 2006 - 07 , WHICH WAS TO END AFTER THE DATE OF SEARCH. THE OBJECTION OF THE ASSESSING OFFICER WAS THAT NO SUCH INCOME WAS RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND FURTHER, THE ASSESSEE HAS ALSO NOT SPECIFIED THE MANNER IN WHICH SUCH INCOME WAS DERIVED WHILE RECORDING OF STATEMENT UNDER SECTION 132(4) OF THE ACT AND ALSO THE FACT THAT THE SAID ADDITIONAL INCOME WAS DISCLOSED PURSUANT TO SEARCH AND SEIZURE OPERATION ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 4 ON THE PREMISES OF ASSESSEE AND IT COULD NOT BE SAID TO BE A CASE OF VOLUNTARY DISCLOSURE. IN VIEW THEREOF, THE ASSESSING OFFICER HELD THE ASSESS EE TO HAVE WITHOUT REASONABLE CAUSE CONCEALED THE PARTICULARS OF INCOME OF RS.42 LAKHS AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND HENCE, WAS LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 13,03,990/ - . 5. THE CIT(A) IN THE FIRST RO UND VIDE ORDER DATED 16.11.2009 CANCELLED PENALTY IMPOSED BY THE ASSESSING OFFICER ON THE B ASIS OF DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. MAHENDRA C. SHAH (2008) IN 299 ITR 305 (GUJ) . HOWEVER, THE TRIBUNAL VIDE ORDER DATED 31.05.2011 SET ASIDE THE ORDER OF CIT(A) ON THE PREMISE THAT THE CIT(A) HAD NOT EXAMINED THE ASPECT AS TO WHAT EXTENT THE INCOME DECLARED UNDER SECTION 153A OF THE ACT WAS HAVING DIRECT RELEVANCE TO THE SEIZED MATERIAL. THE CIT(A) IN THE SECOND ROUND VIDE ORDER DATED 21.06.20 13 DELETED PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AND IT WAS OBSERVED THAT AS REGARDS THE EXAMINATION OF SEIZED MATERIAL RELEVANT TO IT WAS OBSERVED THAT AS REGARDS THE EXAMINATION OF SEIZED MATERIAL RELEVANT TO THE INCOME ON WHICH IMPUGNED PENALTY WAS IMPOSED , AS DIRECTED BY THE TRIBUNAL IN ASSESSEES CASE, THE CIT(A) OBS ERVED THAT THERE WAS NO INCRIMINATING DOCUMENTS SEIZED / FOUND AS A RESULT OF SEARCH ACTION THAT COULD CO - RELATE THE IMPUGNED INCOME ON WHICH PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSED. THE CIT(A) WAS OF THE VIEW THAT THE CASE OF ASSESSEE WAS COVERED BY BOTH THE CLAUSES I.E. ( 1 ) AND ( 2 ) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AND THEREFORE, PENALTY FOR CONCEALMENT WAS NOT LEVIABLE. AS PER THE CIT(A), CLAUSE ( 1 ) OF EXPLANATION WAS APPLICABLE TO THE CASES WHERE THE BOOKS OF ACCOUNT ARE NOT MAINTAINED AND ARE REQUIRED TO BE MAINTAINED UNDER THE PROVISIONS OF LAW . H OWEVER, IN THE PRESENT CASE, NO BOOKS OF ACCOUNT WERE REQUIRED TO BE MAINTAINED UNDER THE PROVISIONS OF LAW. FURTHER, THE SAID CLAUSE CONTAINED A WORD IF ANY MEANS IF APPLIC ABLE, HENCE FIRST LIMB OF CLAUSE (1) WAS NOT APPLICABLE TO THE ASSESSEE, AS SUCH, IT COULD NOT BE SAID THE SAID ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 5 CONDITION IS NOT FULFILLED BY THE ASSESSEE. AS REGARDS THE SECOND LIMB OF THE SAID CLAUSE (1) TO EXPLANATION 5, THE CIT(A) OBSERVED THAT THERE WAS NO PROCEDURE LAID DOWN IN THE ACT TO DISCLOSE THE INCOME TO CHIEF COMMISSIONER OR COMMISSIONER AS FAR AS THE ASSESSEE WAS CONCERNED. HE THUS, HELD THAT THE SAID REQUIREMENT WAS APPLICABLE ONLY TO ABNORMAL TRANSACTIONS, THEREFORE, THE ASSESSEE WAS HELD TO BE ELIGIBLE FOR IMMUNITY FROM LEVY OF PENALTY FOR CONCEALMENT. 6. AS REGARDS CLAUSE (2) OF THE SAID EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, THE CONTENTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAS FAILED TO STATE THE MANNER IN WHICH THE SAID ADDITIONAL INCOME WAS EARNED, WAS FOUND TO BE NOT CORRECT BECAUSE THE ASSESSING OFFICER HIMSELF HAD MENTIONED IN PARA 6 OF HIS ORDER THE MANNER THE INCOME WAS CLAIMED TO BE EARNED BY THE ASSESSEE. APPLYING THE RATIO LAID DOWN BY THE HONBLE GUJAR AT HIGH COURT IN CIT VS. MAHENDRA C. SHAH (SUPRA) , THE CIT(A) HELD THAT THE ASSESSEE WAS CIT VS. MAHENDRA C. SHAH (SUPRA) , THE CIT(A) HELD THAT THE ASSESSEE WAS ENTITLED TO THE IMMUNITY FROM LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN TERMS OF CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. VIDE PARA 4. 2 AT PAGE 7 OF THE APPELLATE ORDER , THE CIT(A) FURTHER HELD THAT THE ASSESSEE HAD DISCLOSED FULL FACTS REGARDING INCOME OFFERED TO TAX IN THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE ACT AND HE HAD ACTED BONAFIDELY AND COOPERATED IN THE ASSESSME NT AND ALSO PENALTY PROCEEDINGS. IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THE MALAFIDE INTENTION ON THE PART OF ASSESSEE, THE CIT(A) HELD THAT THERE WAS NO CONCEALMENT OF INCOME BY THE ASSESSEE AND HENCE, PENALTY LEVIED BY THE ASSESSING OFFICER AT RS .13,03,990/ - WAS CANCELLED. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 6 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASSESSEE WAS CHANGING HIS STAND AND HAD DECLARED THE ADDITIONAL INCOME AT L A ST. HE FURTHER STATED THAT THE ASSESSEE HA D FAILED TO FILE RETURN OF INCOME WITHIN DUE DATE, WHEREIN THE DUE DATE WAS 30.09.2007 AND RETURN OF INCOME INCLUDING THE ADDITIONAL INCOME WAS FILED ON 04.12.2007 . OUR ATTENTION WAS D RAWN TO THE ORDER OF ASSESSING OFFICER BOTH FOR THE ASSESSMENT AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT . 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND, POINTED OUT THAT IN THE FIRST STATEMENT MADE BY THE ASSESSEE ON 23. 11.2006, THERE WAS DECLARATION OF RS.2 CRORES OF ADDITIONAL INCOME FOR THE ENTIRE FAMILY. ANOTHER STATEMENT WAS RECORDED ON 05.12.2006 , WHEREIN NO DECLARATION WAS MADE. ON RECORDING OF THIRD STATEMENT ON 12.12.2006 IN REPLY TO QUESTION NO.2, IT WAS POINT ED OUT THAT THE TOTAL CASH OF RS.90 LAKHS WAS FOUND FROM VARIOUS PLACES / LOCKERS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE FROM VARIOUS PLACES / LOCKERS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE DATE OF SEARCH WAS 22.11.2006 AND THE FINANCIAL YEAR RELATING TO ASSESSMENT YEAR 2007 - 08 WA S STI LL TO END . THE RETURN OF INCOME ADMITTEDLY , WAS FILED TWO MONTHS LATE WITH A REQUEST FOR ADJUSTMENT OF CASH SEIZED AGAINST THE TAXES DUE. OUR ATTENTION WAS DRAWN TO THE COM PUTATION OF INCOME FILED, WHICH ARE PLACED AT PAGES 18 AND 19 OF THE PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN CIT VS. MAHENDRA C. SHAH (SUPRA) WAS SQUARELY APPLICABLE. OUR ATTENTION WAS FURTHER DRAWN TO THE ASSESSMENT ORDER, WHEREIN THE ASSESSING OFFICER FIRST TA LKS OF NON - DECLARATIO N IN RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT BUT TALKS OF THE DECLARATION OF ADDITIONAL INCOME IN THE RETURN FILED PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT. HOWEVER, WHILE LEVYING PENALTY UN DER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER STATES THAT THE ASSESSEE HAS FAILED TO SPECIFY THE MANNER IN ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 7 WHICH THE SAID INCOME WAS EARNED AND ALSO PENALTY WAS LEVIED SINCE THE ADDITIONAL INCOME WAS OFFERED BECAUSE OF SEARCH. REFERRING TO PARA 6 OF THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NO SPECIFIC DEFAULT HAS BEEN POINTED OUT BY THE ASSESSING OFFICER THAT WHETHER IT WAS CASE OF CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS FURTHER POINTED OUT THAT EVEN IN THE NOTICE ISSUED FOR LEVY OF PENALTY AND THE ORDER LEVYING PENALTY, THERE IS NO SPECIFIC DEFAULT MENTIONED WHETHER IT IS THE CASE OF CONCEALMENT OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ENTIRE PROCEEDINGS WERE NOT LEGAL. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN SANJOG T ARACHAND LODHA VS. ITO IN ITA NOS.688 & 689/PN/2014, RELATING TO ASSESSMENT YEARS 2007 - 08 AND 2008 - 09, ORDER DATED 31.08.2015 . FURTHER, RELIANCE WAS PLACED ON THE RATIO S LAID DOWN BY MUMBAI BENCH OF TRIBUNAL IN M/S. PARINEE DEVELOPERS PVT. LTD. VS. ACIT I N ITA NO.6772/M/2013 , RELATING TO ASSESSMENT YEAR 2009 - 10 , ORDER DATED 11.09.2015 AND KOLKATA BENCH OF TRIBUNAL IN SUVAPRASANNA BHATACHARYA VS. ACIT IN ITA NO.1303/KOL/2010 , RELATING TO ASSESSMENT YEAR 2006 - 07 , ORDER DATED 06.11.2015 . THE LEARNED AUTHORIZ ED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT WHERE PENALTY PROCEEDINGS WERE NOT INITIATED VALIDLY AND NO SPECIFIC CHARGE WAS MADE, SO THE ENTIRE PENALTY PROCEEDINGS WERE VITIATED. THE SECOND PROPOSITION RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT THE ASSESSEE WAS STILL ENTITLED TO THE IMMUNITY PROVIDED UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT , WHEREIN THE ASSESSEE HAD MADE DECLARATION DURING THE COURSE OF SEARCH ITSELF AND PAID TAXES THEREIN. OUR ATTENTION WAS DRAWN TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. MAHENDRA C. SHAH (SUPRA) FOR THE PROPOSITION THAT THERE WAS NO NEED OF ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 8 SUBSTANTIAL DECLARATION BY THE ASSESSEE IN ORDER TO GET IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. 1 0 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST PROPOSITION RAISED BY THE ASSESSEE IS THAT PENALTY PROCEEDINGS HAVE NOT BEEN VALIDLY INITIATED IN THE HANDS OF ASSESSEE I.E. THERE IS NO SPECIFIC CHARGE AS TO WHETHER PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE ON CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF SUCH SPECIFIC CHARGE, THE ASSESSEE VEHEMENTLY STATES THAT THE ENTIRE PENA LTY PROCEEDINGS ARE VITIATED. SIMILARLY, IN THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THERE IS NO SPECIFIC CHARGE. THE PERUSAL OF PENALTY ORDER PASSED BY THE ASSESSING OFFICER WITH REFERENCE TO PARA 6, THE CONTENTION OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SEEMS TO BE CORRECT. THE ASSESSING OFFICER REPRESENTATIVE FOR THE ASSESSEE SEEMS TO BE CORRECT. THE ASSESSING OFFICER WHILE LEVYING PENALTY FOR CONCEALMENT HAS OBSERVED THAT HE WAS SATISFIED THAT THE ASSESSEE HAS WITHOUT REASONABLE CAUSE CONCEALED THE PARTICULARS OF INCOME OF RS.42 LAKHS AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND IS THEREFORE, LIABLE TO PENALTY AND HENCE, PENALTY OF RS. 13,03,990/ - . WHILE INITIATING PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C) OF THE ACT, THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAD OBSERVED THAT ADDITIONAL INCOME OF RS.42 LAKHS WAS NOT SHOWN IN THE ORIGINAL RETURN FILED UNDER SECTION 139(1) OF THE ACT, SO THE ASSESSEE WAS DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME, IN VIEW OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT , HENCE, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE SEPARATELY INITIATED. FIRST OF ALL, THE OBSERVATION S OF ASSESSING OFFICER VIS - - VIS ORIGINAL RETURN FILED UNDER SECTION 1 39(1) OF THE ACT ARE NOT CORRECT. SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE ACT WERE CONDUCTED AT THE PREMISES OF ASSESSEE ON 22.11.2006 . ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 9 THEREAFTER, THE ASSESSEE FILED HIS RETURN OF INCOME SHOWING TOTAL INCOME OF RS.42,74,721/ - ON 04.12.200 7 WHICH CON SISTED OF HOUSE PROPERTY INCOME, BUSINESS INCOME, OTHER SOURCES INCLUDING ADDITIONAL INCOME OF RS.42 LAKHS AGGREGATING TO RS.46,00,721/ - AND AFTER CLAIMING DEDUCTION, BALANCE INCOME WAS DECLARED. THE ASSESSEE ADMITTEDLY, HAD FILED RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION BELATEDLY ON 04.12.2007 AND ALSO FILED THE SAME IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME WITHIN DUE DATE, HENCE, WE FIND NO MERIT IN THE OBSERVATIONS O F ASSESSING OFFICER IN THIS REGARD THAT THE ORIGINAL RETURN WAS FILED UNDER SECTION 139(1) OF THE ACT AND THE ASSESSEE HAD NOT DECLARED THE SAID INCOME IN THE SAID ORIGINAL RETURN. CONSEQUENTLY, THE ASSESSEE WAS HELD TO HAVE CONCEALED PARTICULARS OF INCOM E. IN THE PENALTY ORDER, THE ASSESSING OFFICER OBSERVED THAT IN VIEW OF THE FORGOING DISCUSSIONS AND THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, I AM SATISFIED THAT THE ASSESSEE HAS WITHOUT REASONABLE CAUSE CONCEALED THE PARTICULARS OF INC OME OF RS.42,00,000/ - AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND IS THEREFORE LIABLE TO PENALTY. ACCORDINGLY, THE ASSESSEE IS DIRECTED TO PAY A SUM OF RS.13,03,990/ - BY WAY OF PENALTY WHICH IS THE MINIMUM LEVIABLE AS CALCULATED BELOW: WORKING OF PENALTY U/S. 271(1(C) TAX ON ASSESSED INCOME OF RS.46,00,721/ - INCLUSIVE OF AGRICULTURAL INCOME AT RS.3,26,000/ - AND CONCEALED INCOME OF RS.42,00,000/ - RS.14,05,210/ - TAX ON TOTAL INCOME OF RS.7,26,721/ - INCLUSIVE OF AGRICULTURAL AT RS.3,26,00 0/ - INCOME AS REDUCED BY THE CONCEALED INCOME RS. 1,01,222/ - TAX SOUGHT TO BE EVADED RS.13,03,988/ - I.E. RS.13,03,990/ - PENALTY U/S271(1)(C) AT 100% RS.13,03,990/ - 1 1 . THE PERUSAL OF ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE AC T REFLECTS THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE DEFAULTED IN ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 10 CONCEALING PARTICULARS OF INCOME AND ALSO FURNISHING INACCURATE PARTICULARS OF INCOME. UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, IT IS PROVIDED THAT A PERSON IS LIABLE FOR LEVY OF PENALTY WHERE HE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME ; EITHER OF TWO CONDITIONS HAVE TO BE SATISFIED BEFORE PENALTY FOR CONCEALMENT CAN BE LEVIED. THE COURTS HAVE TIME AND AGAIN HELD THAT THE A SSESSING OFFICER HAS TO BE SPECIFIC IN REASONS LEVYING PENALTY FOR CONCEALMENT, WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WHERE THE ASSESSING OFFICER IS NOT CLEAR WHETHER PENALTY IS LEVIED FOR CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS, THEN SUCH AN ORDER SUFFERS FROM NON - APPLICATION OF MIND AND CANNOT BE UPHELD IN LAW. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN SANJOG TARACHAND LODHA VS. ITO (SUPRA) , HELD AS UN DER: - 7. IN THE CONCLUDING PARAGRAPH OF THE ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE PENALTY IS LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALING INCOME. THE RELEVANT EXTRACT OF PARA 7 OF THE ORDER INCOME AND CONCEALING INCOME. THE RELEVANT EXTRACT OF PARA 7 OF THE ORDER READS AS UNDER: 7. I AM SATISFIED THAT THE ASSESSEE HAS WITHOUT ANY REASONABLE CAUSE, FURNISHED AN INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED HIS INCOME TO THE EXTENT OF . FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALING OF INCOME ARE TWO D IFFERENT EXPRESSIONS HAVING DIFFERENT CONNOTATIONS. FOR INITIATING PENALTY PROCEEDINGS, THE ASSESSING OFFICER HAS TO BE VERY SPECIFIC FOR THE REASONS OF LEVYING PENALTY, WHETHER IT IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALING OF INC OME OR FOR BOTH. IN THE PRESENT CASE, A PERUSAL OF NOTICE ISSUED U/S. 271(1)(C) R.W.S. 274 SHOWS THAT THE ASSESSING OFFICER HAS NOT SPECIFIED THE REASONS FOR LEVYING OF PENALTY I.E. WHETHER IT IS FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME OR BOTH. FURTHER, A BARE PERUSAL OF THE ORDER LEVYING PENALTY WOULD SHOW THAT THE ASSESSING OFFICER IS NOT CLEAR WHETHER THE PENALTY IS LEVIED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR BOTH. 1 2 . T HE CASE OF AS SESSEE BEFORE US IS SIMILAR TO THE ISSUE BEFORE PUNE BENCH OF TRIBUNAL AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS NOT SUSTAINABLE IN LAW. ITA NO. 1672 /PN/20 13 SHRI NANDLAL S. BOTHRA 11 1 3 . SINCE WE ARE DELETING PENALTY UNDER SECTION 271( 1)(C) OF THE ACT ON PRELIMINARY ISSUE, WE ARE NOT ADDRESSING THE MERITS OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE HOLD THAT THE ASSESSEE IS NOT EXIGIBLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY APPLYING THE RATIO LAID DOW N BY PUNE BENCH OF TRIBUNAL IN SANJOG TARACHAND LODHA VS. ITO (SUPRA) , SINCE THE ASSESSING OFFICER HAS FAILED TO GIVE FINDING WHETHER THE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS. 1 4 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF MARCH , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH MARCH , 201 6 . / PUNE ; DATED : 30 MARCH , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , NASH IK ; 4. / THE CIT (CENTRAL), NAGPUR , ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETAR Y , / ITAT, PUNE