M/s Gillco Developers and Builders Pvt.Ltd, Ropar V. DCIT, Chandigarh

ITA 168/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6932 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 24-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA
• Keywords: Business income; Search and seizure; Opportunity of being heard; Period of limitation; Non compliance; Time period of passing order
• Section: 5(2); 27; 132; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER& MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 168/CHD/2017 ASSESSMENT YEAR: 2012-13 M/S GILLCO DEVELOPERS AND BUILDERS VS. THE DCIT, CE NTRAL CIRCLE-II, PVT., LTD., CHANDIGARH ROPAR (PUNJAB) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PARIKSHIT AGGARWAL RESPONDENT BY : SMT. C. CHANDRAKANTA DATE OF HEARING : 29.05.2017 DATE OF PRONOUNCEMENT : 28.08.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-3[HERE INAFTER REFERRED TO AS CIT(A)],GURGAON DATED 30.12.2016 AGITATING THE CON FIRMATION OF THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271AAA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONS IDERATION ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CA RRIED ON 2.9.2011 ON THE 2 BUSINESS AND RESIDENTIAL PREMISES OF THE GILLCO GRO UP OF CASES LEAD BY SHRI RANJIT SINGH GILL. THE ASSESSEEM/S GILLCO DEVELOPE RS AND BUILDERS PVT. LTD. IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEV ELOPMENT. DURING THE COURSE OF SEARCH OPERATION, THE ASSESSEE HAD SURREN DERED A SUM OF RS. 20.75 CRORES AS ADDITIONAL UNDISCLOSED INCOME ON AC COUNT OF UNEXPLAINED ADVANCES AND PAYMENTS TO CERTAIN LAND OWNERS AS NAM ED IN THE PENALTY ORDER. THE STATEMENT OF SHRI RANJIT SINGH GILL WAS RECORDED U/S 132(4) REGARDING THE DISCLOSURE OF ADDITIONAL INCOME. THE ASSESSEE DULY REFLECTED THE SURRENDERED AMOUNT IN ITS RETURN OF INCOME AS B USINESS INCOME. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER OBSERVED THAT IN THE STATEMENT OF SH. RANJI T SINGH GIL, RECORDED DURING THE COURSE OF SEARCH AND ALSO FROM THE SUBSE QUENT SUBMISSION BEFORE THE DEPARTMENT, THE ASSESSEEWAS NOT ABLE TO SUBSTAN TIATE THE MANNER OF EARNING OF UNDISCLOSED INCOME DECLARED BY IT DURING THE COURSE OF SEARCH. HE, THEREFORE, INITIATED PENALTY PROCEEDINGS U/S 27 1AAA OF THE ACT. IN THE PENALTY PROCEEDINGS, THE ASSESSEESUBMITTED THAT SIN CE IT HAD COMPLIED WITH THE REQUISITE CONDITIONS OF EXCEPTION PROVISIONS AS PROVIDED UNDER SECTION 271AAA(2,THE PENALTY COULD NOT BE LEVIED UPON IT. I T WAS SUBMITTED THAT THE MANNER AND SOURCE OF DERIVING THE SURRENDERED I NCOME STOOD EXPLAINED AS THE SURRENDERED INCOME HAS BEEN OFFERED UNDER TH E HEAD BUSINESS AND PROFESSION AND THE SAME HAS BEEN ACCEPTED AS SUCH BY THE ASSESSING OFFICER. THE ASSESSEE HAD ALMOST PAID THE TAX AMOU NT ALONGWITHINTEREST. THE ASSESSEE FURTHER SUBMITTED THAT EVEN OTHERWISE THERE WASNO TIMELIMIT SET UNDER THE PROVISIONS OF SECTION 271AAA FOR PAYM ENT OF TAX AND INTEREST. THE ASSESSEE ALSO RELIED UPON VARIOUS CAS E LAWS. 3 THE LD. ASSESSING OFFICER, HOWEVER, WAS NOT SATISFI ED WITH THE ABOVE CONTENTION OF THE ASSESSEE. HE OBSERVED THAT THE AS SESSEE HAD FAILED TO SUBSTANTIATE THEMANNER IN WHICH THE UNDISCLOSED INC OME HAS BEEN DERIVED WITH DOCUMENTARY EVIDENCES. FURTHER, THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT COMPLETE AT THE TIME OF SEARCH. T HAT MERE PASSING OF ENTRIES IN THE BOOKS OF ACCOUNT WAS NOT SUFFICIENT TO EXPLAINTHE SOURCE OF UNDISCLOSED INCOME. THE ASSESSEEWAS REQUIRED TO EXP LAIN ALL DEPOSITS, WITHDRAWALS ALONG WITH DOCUMENTARY EVIDENCES. HE, T HEREFORE, LEVIED THE PENALTY @ 10% OF THE UNDISCLOSED INCOME AT RS. 2,07 ,50,000/-. 3. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSES SING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND REI TERATED ITS AFORESAID SUBMISSIONS. APART FROM THAT, THE ASSESSEERAISED A LEGAL GROUND REGARDING THE LIMITATION PERIOD PRESCRIBED FOR LEVY OF PENALT Y AND CONTENDED THAT THE PENALTY ORDER WAS TIME BARRED. THE LD. COUNSEL ALSO RAISED ANOTHER LEGAL PLEA THAT THE VERY INITIATION OF THE PENALTY OTHERW ISE WAS BAD IN LAW BECAUSE THE NOTICE ISSUED U/S 274 OF THE ACT WAS DE FECTIVE. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT NO QUE STION REQUIRING THE ASSESSEE TO DISCLOSE THE MANNER AND SUBSTANTIATESUC H MANNER IN WHICH UNDISCLOSED INCOME HAD BEEN DERIVED WAS EVER RAISED BY THE SEARCH PARTY TO THE ASSESSEE EITHER AT THE TIME OF SEARCH OR EVEN I N ANY OF THE POST SEARCH PROCEEDINGS. IN THE ABSENCE OF ANY QUERY, THERE WAS NO OCCASION FOR THE ASSESSEE TO DISCLOSE AND SUBSTANTIATE SUCH MANNER O F DERIVING THE SURRENDERED INCOME. THE ASSESSEE FURTHER RELIED UPO N THE FOLLOWING CASE LAWS:- 1. ACIT VS. MUNISH KUMAR GOYAL (CHD TRIB.) 152 ITR 45 3 4 2. SUNIL KUMAR BANSAL V DCIT (CHD TRIB.) 70 SOT 137 3. S.K. IMPEXVS. DCIT (DELHI TRIB.) ITA 5674/DELHI/201 5 DATED 28.6.2015 4. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,RECORDED HIS FINDINGS IN PARA 5 OF THE IMP UGNED ORDER. SO FAR AS THE CONTENTION RAISEDBY THE ASSESSEE THAT IT WAS EV IDENT FROM THE STATEMENT OF THE ASSESSEERECORDED AT THE TIME OF SEARCH AND A LSO FROM THE SURRENDER LETTER, THAT NO QUESTIONREQUIRING THE ASSESSEE TO S UBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSEDINCOME WAS DERIVED WAS RAISED , THE LD. CIT(A) AFTER RECORDING THE ABOVE CONTENTION AND ALSO RECORDING T HAT THE ASSESSEE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE TRIBUN AL IN THE CASE OF ACIT VS. MANISH KUMAR GOYAL AND SUNIL KUMAR BANSAL VS DC IT (SUPRA) PROCEEDED TO DISCUSS THE ANOTHER ASPECT OF THE CA SE REGARDING THEPAYMENT OF TAXES TOGETHER WITH INTEREST IN RESPECT OF UNDIS CLOSEDINCOME TO BE ELIGIBLE TO GET THE IMMUNITY FROM PENALTY U/S 271AA A OF THE ACT. HE THEREAFTER OBSERVED THAT THE ASSESSEEHAD PAID ONLY PART PAYMENT OF THE TAXES ALONG WITH DUE INTEREST AS ON THE DATE OF PEN ALTY ORDER DATED 28.9.2015. HE, THEREFORE, HELD THAT THE ASSESSEE HA D NOT FULFILLED THE CONDITION OF CLAUSE (III) OF SECTION 271AAA (2) OF THE ACT REQUIRING THE PAYMENT OF TAX TOGETHER WITH INTEREST TO GET IMMUNI TY FROM THE LEVY OF PENALTY. HE ULTIMATELY HELD THAT SINCE THE ASSESSEE HAD PAID THE TAXES MUCH BEYOND THE DATE OF PENALTY ORDER, THE PENALTY WAS L IABLE TO BE CONFIRMED FOR NON COMPLIANCE OF THE PROVISIONS OF SECTION271A AA (2)(III) OF THE ACT. THE LD. CIT(A) ALSO REJECTED THE OTHER CONTENTIONS OF THE ASSESSEE VIZ. THAT THE SURRENDER INCOME DID NOT AMOUNT TO UNDISCLOSED INCOME OR THAT THE 5 INITIATION OF THE PENALTY WAS BEYOND THE LIMITATION PERIOD AS PRESCRIBED U/S275 OF THE ACT. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) ,THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE FIRST CONTENTION RAISED BY THE COUNSEL FOR THE ASSESSEE IS THAT DURING THE COURSE OF SEARCH ACTION, THE ASSESSEE WA S NOT PUT A SPECIFIC QUESTION BY THE SEARCH PARTY REGARDING THE SOURCE A ND MANNER OF EARNING OF SURRENDERED INCOME AND ALSO FOR SUBSTANTIATING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THE NEXT CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE SURRENDEREDAMOUNT HAS BEEN OFFERED FOR TAXATION UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HENCE, THE SOURCE AND MANNER OF EARNING OF INCOME STOOD EXPLAINED AND THEREWAS NO F URTHER REQUIREMENT TO SUBSTANTIATE THE SAID MANNER BECAUSE OF THE FACT OF ACCEPTANCE OF THE RETURNED INCOME BY THE ASSESSING OFFICER WITHOUT AN Y OBJECTION IN THIS REGARD. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO R ELIED UPON THE BELOW MENTIONED DECISIONSIN SUPPORT OF THE ABOVE CONTENTI ON: I) ITAT CHANDIGARH BENCH - DCIT VS. SH. SANJEEY GOYAL & OTHERS ITA NO. 109/CHD/2015 & OTHERS ORDER DATED 18.11.2015 II) ITAT CHANDIGARH BENCH -ACIT VS. SHRI OM PARKASH SAH NI IN ITA NO. 178/CHD/2016 ORDER DATED 13.6.2016 THE LD. COUNSEL HAS FURTHER RAISED THE CONTENTION T HAT THE LEVY OF PENALTY U/S 271AAA OF THE ACT WAS NOT DEPENDENT ON THE ADDI TIONS MADE IN 6 QUANTUM ASSESSMENT PROCEEDINGS. THE PENALTY PROCEED INGS U/S 271AA CAN BE INITIATED AND EVEN CONCLUDED INDEPENDENT OF THE ASSESSMENT PROCEEDINGS. THEREFORE, THE PROVISIONS OF SECTION 2 75(1)(C) WERE APPLICABLE AND NOT THE PROVISIONS OF SECTION 275(1)(A) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE ALSO INVITED OUR ATTENTION TO PAGE 111 OF THE PAPER BOOK WHICH IS COPY OF THE NOTICE ISSUED TO THE ASSESSEE U/S 274 READ WITH SECTION 271AAA OF THE ACT. THE LD. COUNSEL HAS POINTED OUT THATGROUNDS MENTIONEDIN THE NOTICE DID NOTCONFORM TO THE PROVIS IONS OF SECTION 271AAA OF THE ACT AND HENCE, THE VERY INITIATION OF THE PENALTY WAS BAD IN LAW. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT LD . CIT(A) HAS WRONGLY AND ILLEGALLY EXTENDED THE SCOPE OF PENALTY SO LEVI EDBY THE ASSESSING OFFICER. THOUGH THE ASSESSING OFFICER HAD LEVIED TH E PENALTY OBSERVING THAT THE ASSESSEE HAD FAILED TO COMPLYWITH THE PROVISION S OF SECTION 271AAA(2)(I) AND (II) OF THE ACT, HOWEVER, THE LD. CIT(A) HAS CONFIRMED THE PENALTY FOR NON COMPLIANCE OF PROVISIONS OF SEC TION 271AAA (2)(III) OF THE ACT BY WRONGLY AND ILLEGALLY EXTENDED THE SCOPE OF THE LEVY OF PENALTY. HE THEREFORE HAS SUBMITTED THAT THE IMPUGNED PENALT Y LEVIED BY THE AO AND FURTHER CONFIRMED BY THE CIT(A), BUT ON A DIFFERENT GROUND, IS LIABLE TO BE DELETED. 7. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E FINDINGS OF THE LOWER AUTHORITIES AND HAS SUBMITTED THAT THE PENALT Y HAS BEEN RIGHTLY INITIATED AND LEVIED IN THE CASE OF ASSESSEE. THAT THE ASSESSEE HAD SURRENDERED THE INCOME BECAUSE HE COULD NOT EXPLAIN THE SOURCE OF INCOME. EVEN THAT THE LD. CIT(A) WASAUTHORIZED TO TAKE A D IFFERENT STAND FROM THAT OF ASSESSING OFFICER. FURTHER, THAT INITIATION OF PENALTY IN THIS CASE WAS DEPENDENT UPON THE ASSESSMENT PROCEEDINGS. THAT AS PER THE PROVISIONS OF 7 SECTION 271AAA, THE SURRENDERED INCOME FALLS UNDER THE DEFINITION OF UNDISCLOSED INCOME AND THE ASSESSMENT YEAR IN QUES TION IS ALSO THE SPECIFIEDYEAR AS DEFINED U/S 271AAA OF THE ACT; TH EREFORE, THE PENALTY LEVIED BY THE LOWER AUTHORITIES WAS LIABLE TO BE CO NFIRMED. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. TO PRO PERLY APPRECIATE THE RIVAL CONTENTION RAISED BY THE LD. REPRESENTATIVES OF BOTH THE PARTIES, WE THINK IT PROPER TO FIRST REPRODUCE HEREIN THE PROVI SIONS OF SECTION 271AAA OF THE ACT. 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.(1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CON TAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR A FTER 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 COMP UTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF T HE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I ) IN THE COURSE OF THE SEARCH, IN A S TATEMENT UNDER 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 T HE UNDISCLOSED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTERES T, 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 ASSESS EE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTIO N (1). (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, 8 (A ) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEW ELLERY 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 D ATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B ) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FA LSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH N OT BEEN CONDUCTED; (B ) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARC H, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTI ON (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE S AID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 9. THE PERUSAL OF THE ABOVE PROVISIONS OF SECTION 2 71AAA OF THE ACT, REVEALS THAT THE PENALTY UNDER THE SAID PROVISIONS CAN BE LEVIED BY THE ASSESSING OFFICER IN A CASE WHERE SEARCH HAS BEEN I MITATED U/S 132 ON OR AFTER FIRST DAY OF JUNE 2007 BUT BEFORE FIRST DAY O F JULY 2012. ADMITTEDLY, THE SEARCH IN THIS CASE WAS INITIATED ON 2.9.2011 W HICH FALLS WITHIN THE 9 STIPULATED PERIOD AS PROVIDED. THE SECOND PART OF S UB SECTION (1) STATES THAT THE ASSESSEE SHALL PAY BY WAY OF PENALTY IN ADDITIO N TO TAX A SUM COMPUTED @ 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED P REVIOUS YEAR. THE UNDISCLOSED INCOME HAS BEEN DEFINED IN CLAUSE (A) OF THE EXPLANATION TO SECTION 271AAA OF THE ACT,WHEREAS THE SPECIFIED PRE VIOUS YEAR HAS BEEN DEFINED UNDER CLAUSE (B) OF THE EXPLANATIONAS REPRO DUCED ABOVE. ADMITTEDLY, THE INCOME WAS SURRENDERED BY THE ASSES SEEBECAUSE OF CERTAIN DOCUMENTS OR TRANSACTIONS FOUND DURING THE COURSE O F SEARCH U/S 132 OF THE ACT AND FURTHER THE SAID INCOME HAS NOT BEEN RECORD ED IN THE BOOKS OF ACCOUNT ON OR BEFORE THE DATE OF SEARCH AND NEITHER THE SAME HAS BEEN DISCLOSED TO THE CONCERNEDAUTHORITIES BEFORE THE DA TE OF SEARCH. HENCE IN OUR VIEW, THE SURRENDERED INCOME FALLS WITHIN THE D EFINITION OF UNDISCLOSED INCOME AS EXPLAINED UNDER THE PROVISIONS OF SECTION 271AAA OF THE ACT. THE SURRENDERED INCOME PERTAINS TO THE YEAR IN WHIC H THE SEARCH WAS CONDUCTED, HENCE,IT CAN BE SAFELY SAID TO BE INCOME OF THE SPECIFIED PREVIOUS YEAR AS PROVIDED UNDER SECTION 271AA, SO PRIMA FACIE, CONDITIONS FOR THE LEVY OF THE PENALTY SEEMS TO BE SATISFIED. THUS THE CONTENTION OF THE ASSESSEE THAT THE SURRENDERED INC OME WAS NOT THE UNDISCLOSED INCOME OF THE ASSSESEE IS NOT TENABLE, HENCE REJECTED. 10. NOW COMING TO THE EXCEPTIONS PROVIDING IMMUN ITY FROM LEVY OF PENALTY AS PROVIDED UNDER THE PROVISIONS OF SUB SEC TION (2) OF SECTION271AAA OF THE ACT, THE THREE CONDITIONS PRE SCRIBED ARE: (I) THE ASSESSEE IN HIS STATEMENT RECORDED UNDER SUB SECTIO N (4) OF SECTION 132 SHOULD ADMIT THE UNCLOSEDINCOME ANDSPECIFY THE MANN ER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATE THE MAN NER IN WHICH THE 10 UNDISCLOSED INCOME WAS DERIVED AND (III) PAY THE TA X TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE SAID UNDISCLOSEDINCOME. ADMITTEDLY, THE ASSESSEEIN THIS CASE, IN HIS STATEM ENT RECORDED UNDER SUB SECTION (4) OF SECTION 132 OF THE ACT, HAS SURRENDE RED THE INCOME IN QUESTION AND THUS HAS ADMITTED THE UNDISCLOSED INCO ME. SO FAR AS THE MANNER OF DERIVING THE SURRENDERED INCOME ANDSUBSTA NTIATION OF THE SAID MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVEDI S CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACEDRELIANCE UPON TH E VARIOUS CASE LAWS, AS MENTIONED ABOVE, TO STRESS THE POINT THAT THE QUEST IONABOUT THE MANNER AND SUBSTANTIATING THE MANNER OF EARNING OFSURRENDERED INCOME SHOULD COME FROM THE SEARCH PARTY DURING THE COURSE OF SEARCHAC TION; IF NO SUCH QUESTION IS BEING ASKED TO THE ASSESSEE DURING THE SEARCH ACTION, THE ASSESSEE WAS NOT SUPPOSED TO DISCLOSE THE MANNER IN WHICH THE SURRENDERED INCOME WAS DERIVED. HE HAS FURTHER SUBMITTED THAT S INCE THE SURRENDEREDAMOUNT HAS BEEN DECLARED IN THE RETURN O F INCOME, AND DUE TAXES HAVE BEEN PAID AND THE RETURNED INCOME HAS BE EN ACCEPTED BY THE ASSESSING OFFICER, HENCE, THECONDITION OF DISCLOSIN G THE MANNER OF DERIVING OF THE UNDISCLOSED INCOME AND FURTHER SUBSTANTIATIO N OF THE SAID MANNER STOOD COMPLIED WITH. THE LD. COUNSEL FOR THE ASSES SEEHAS FURTHER INVITED OUR ATTENTION TO THE COPY OF THE RELEVANT PART OF T HE ASSESSMENT ORDER DATED 13.1.2014 WHEREIN THE ASSESSING OFFICER HAS REPRODU CED THE STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) OF THE ACT AS WELL AS SURRENDERLETTER DATED 3.9.2011 OF THE OF THE ASSESSEEDECLARING THE SURREN DERED INCOME. THE SAIDPART OF THE ASSESSMENT ORDERFOR READY REFERENCE , IS REPRODUCED AS UNDER:- 11 THE STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) REGARDING DISCLOSURE OFADDITIONAL INCOME IS REPRODUCED BELOW: Q.1 . PLEASE IDENTITY YOURSELF. ANS. I AM RANJIT SINGH GILL S/O SH. NAIB SINGH R/O AS MENTIONED ABOVE. Q.2 I AM SHOWING YOU PAGE NO. 22 TO 38 OF ANNEXURE A-1, WHICH ARE THREE IKRARNAMA (I.E. AGREEMENT TO SELL). THE RECEIPTS OF THESE THREE AGREEMENTS ARE ALSO ON THE BACKSIDE OF RELEVANT PAGE NO. 22-38. PLEASE EXPLAIN THE DOCUMENTS. ANS. THESE ARE FULL AND FINAL PURCHASE AGREEMENTS B ETWEEN GILLCO DEVELOPERS AND BUILDERS (P) LTD AND THE FOLL OWING PARTIES. PAGE 36 -38 SELLER BALWINDER SINGH S/O HARCHAND SIN GH. THE BACKSIDE OF PAGE 38 SHOWS PAYMENT OF RS. 4,16,92,5 00/- PAGE 34-35 SELLER HARCHAND SINGH S/O NAVRANG SINGH. THE BACKSIDE OF PAGE 35 SHOWS CASH PAYMENT OF RS. 3,92, 495/-. THE POWER OF ATTORNEY HAS BEEN OBTAINED IN THE NAME OF MY EMPLOYEE SUKHJIT SINGH FOR THE ABOVE TWO LANDS. PAAGE 26-28 SELLER SATNAM, JASWINDER AND HARMIDNER. THE BACKSIDE OF PAGE 26 SHOWS CASH PAYMENT OF RS. 3.0 C RORES. THE TOTAL CASH PAYMENT MADE BY THE COMPANY IN THESE THREE DEALS I.E. RS. 7.20,84,995/-. THESE PAYMENTS HAVE BEEN MADE IN CASH OUTSIDE THE R EGULAR BOOKS OF ACCOUNT OF THE COMPANY. SINCE I CANNOT EXP LAIN THE SOURCE OF THESE PAYMENTS, I HEREBY SURRENDERTHESE A MOUNT TO TAX U/S 132 (4) OF THE I.T. ACT, 1961 SUBJECT TO NO PEN AL ACTION, AS THE INCOME OF THE COMPANY OF THE FINANCIAL YEAR 201 1-12 (CO GOBPL) OVER AND ABOVE ITS NORMAL BUSINESS INCOME OF THE SAID FINANCIAL YEAR. Q.3 I AM SHOWING YOU A DIARY NAMED ANNEXURE A-2, AT THE FOLLOWING PAGES 16, 17, 17-B (BACKSIDE) 18 AND 19. PLEASE EXPLAIN THESE. ANS. SIR, THERE ARE ENTRIES OF ADVANCES GIVEN TO TH E FOLLOWING PERSONS; DALBIR SINGH 2 CRORE PARAMJIT 2.5 CRORE 12 SATNAM& OTHERS 30 LACS HARMINDER 3.05 CRORE MANDEEP 2.75 CRORE KARAMJIT 2.5 CRORE HARPAL 25 LACS TOTA1 3.35 CRORE THESE ARE ADVANCES GIVEN IN CASH TO CERTAIN DEALERS IN THE MARKET FOR PURCHASE OF LAND. THESE HAVE BEEN MADE OUTSIDE THE REGULAR BOOKS OF ACCOUNT OF THE COMPANY GILLCODEVEL OPER AND BUILDERS (P) LTD. I CANNOT EXPLAIN THE SOURCE OF TH ESE PAYMENTS. I THEREFORE SURRENDER THIS AMOUNT OF RS. 13.35 CROR ES TO FAX U/S 132 (4) OF THE IT. ACT, 1961 SUBJECT TO IS FURTHER ACTION AS THE INCOME OF M/S GDBPL FOR THE F.Y. 2011-12 OVER AND A BOVE THE NORMAL BUSINESS INCOME FOR THE SAID F. Y. Q.4 AS PER THE TRIAL BALANCE OF THE COMPANY GDB PL, (THE CASH IN HAND IS RS. 45 LACS. BUT NO CASH (ONLY AROU ND RS, 6000) WAS FOUND THERE. PLEASE EXPLAIN THE CASH OF RS. 3,6 15007- FOUND AT YOUR HOME. ANS.SIR, THE TRIAL BALANCE WAS PREPARED AS ON 27.08 .2011, AS THE BOOKS ARE NOT FULLY UPDATED, THE CASH BELONGS TO T HE COMPANY BUT I DO NOT KNOW THE CASH IN HAND SITUATION TODAY. (FOR LACK OF A SATISFACTORY EXPLANATION, CASH OF RS. 3 LACS I S BEING SEIZED) Q.5 DO YOU WANT TO STATE ANYTHING ELSE. ANS. SIR, ON ACCOUNT OF THE VARIOUS DOCUMENTS FOUND AND SEIZED AT VARIOUS PREMISES OF MY BUSINESS CONCERN WHICH I HAVE NOT SEEN COMPLETELY, (EXCEPT FOR THE DOCUMENTS AS SHOWN BY YOU TO ME). I HEREBY SURRENDER A TOTAL AMOUNT OF RS. 21 CR ORES TO TAX AS PER THE SURRENDER LETTER SUBMITTED TODAY. GDBPL :RS. 20.75 CR GCPL : RS. 15 LACS JEWELLERY IN HANDS OF MYSELF : RS. 10 LACS (EXPECTED TO BE FOUND IN THE LOCKER) I WISH TO CLARIFY THAT IN THE SURRENDER LETTER SUBM ITTED BY ME THE TOTAL ADVANCES / AMOUNTS PAID TO SATNAM AND OTHERS IS 3.3 CR OUT OF WHICH 3 CR IS ON ACCOUNT OF CASH PAYMENT FOR PURCHASE OF 13 LAND AS PER REGISTRY SEIZED VIDE ANNEXURE A-1, PG - 26 AND 30 LACS IS ON ACCOUNT OF CASH ADVANCES GIVEN TO THEM A S PER DIARY ANNEXURE A-2. PG-17.1 ALSO WISH TO STATE THAT THE A BOVE SURRENDER IS BEING MADE VOLUNTARILY AND WITHOUT ANY PRESSURE, FEAR OR COERCION, SUBJECT TO NO PENAL ACTION WHATSO EVER.' THE ASSESSEE LATER ON FILED A LETTER DATED 03.09.20 11 TO THE INVESTIGATION WING DECLARING THE SURRENDERED INCOME . RELEVANT PART OF THE SAID SURRENDER LETTER IS REPRODUCED BEL OW; 'ON 02.09.2011 A SEARCH WAS CONDUCTED AT MY RESIDEN CE AND BUSINESS PREMISES BY VARIOUS TEAMS OF THE INCOM E TAX DEPARTMENT, DURING THE COURSE OF SEARCH CERTAIN DOCUMENTS HAVE BEEN FOUND BY (HE SEARCH TEAM AT MY RESIDENCE AS WELL AS MY BUSINESS PREMISES. IN ORDER TO BUY PEACE OF MIND AND TO AVOID UNDUE LITIGATION/PENAL A CTION I HEREBY VOLUNTARILY DECLARE AN AMOUNT OF RS. 2100 CR ORE (RUPEES TWENTY ONE CRORES ONLY) AS THE UNDISCLOSED BUSINESS INCOME OF M/S GILLO DEVELOPERS & BUILDERS PVT. LTD., M/S GILICO COLONIZERS PVT. LTD THE COMPANIES AND RANJITSINGH GILL FOR THE FINANCIAL YEAR 2011-12 OVE R AND ABOVE (HE NORMAL BUSINESS INCOME OF THE COMPANY / S ALARY AND INTEREST INCOME FOR THE SAID FINANCIAL YEAR. TH E DETAIL OF THIS INCOME DERIVED IS AS FOLLOWS: IN THE CASE OF GILLCO DEVELOPERS AND BUILDERS PVT L TD. ADVANCES TO SH. DALBIRSINGH RS. 2,00,00,000 ADVANCES TO SH. PARAMJIT RS. 2,50,00,000 ADVANCES TO SH. HARBINDER RS. 3.05,00,000 ADVANCES TO SH. MANDIP RS. 2,75,00,000 ADVANCES TO SH. KARAMJIT RS. 2,50,00,000 ADVANCES TO SH. HARPAL SINGH RS. 25,00,000 ADVANCES TO SH. HARCHANDSINGH RS. 3,92.495 ADVANCES TO SH. BALWINDER SINGH RS. 4,16,92,500 PAYMENT TO SATNAM / JASWINDER / HARBINDER RS.3,30,00,000/- MISC. DISCREPANCIES RS. 19,15,000 RS.20.75,00,000 IN THE CASE OF GILLCO COLONIZERS PVT LTD TO COVER UP DISCREPANCIES RS. 15,00,000 IN THE COVER OF SH. RANJIT SINGH GILL 14 ON ACCOUNT OF JEWELLERY RS., 10,00,000/- TOTAL SURRENDER RS. 21,00,00,000 THE DISCLOSURE IS BEING MADE U/S 132(4) OF THE INCO ME TAX ACT, 1961 TO COVER VARIOUS DISCREPANCIES IN THE SEIZED/ IMPOUNDED RECORDS, DOCUMENTS AND INVENTORIES MADE AND STATEME NTS RECORDED DURING THE COURSE OF SEARCH. WE INTEND TO COVER THE DISCREPANCIES WHICH MIGHT ARISE IN ANY SUBSEQUENT P ROCEEDINGS ALSO RELATING TO SEARCH. THE OFFER MADE BY THE GROU P DURING THE COURSE OF THE ABOVE PROCEEDINGS IS WITH AN UNDERSTA NDING THAT THE SAID INCOME WILL NOT BE LIABLE TO ANY PENALTY O R PROSECUTION AND THUS, THE OFFER IS MADE TO BUY PEACE AND AVOID ANY FUTURE LITIGATIONS ARISING ON ACCOUNT OF ANY NOTING OR JOT TING ETC. WHICH WE MAY NOT BE ABLE TO FULLY EXPLAINED TO THE SATISF ACTION OF THE DEPARTMENT. 1 ON MY BEHALF AND THE COMPANIES UNDERT AKE TO PAY THE TAXES DUE ON INCOME OF RS. 21 CRORE BEING DECLA RED AS UNDISCLOSED INCOME. 11. THE LD. COUNSEL HAS THEREFORE, STATED THAT NO S PECIFIC QUESTION AS TO THE SOURCE OF INCOME AND MANNER OF MAKING AND SUBST ANTIATION OF THE MANNER WAS ASKED TO THE ASSESSEE IN THE COURSE OF R ECORDING OF STATEMENT U/S 132(4) OF THE ACT. HE HAS FURTHER STATED THAT T HE ASSESSEE IN HIS LETTER HAS DULY EXPLAINED THAT THE DISCLOSURE WAS MADE TO COVER UP VARIOUS DISCREPANCIES IN THE SEIZED / IMPOUNDED RECORDS AND INVENTORIES MADE AND STATEMENT RECORDED DURING THE COURSE OF SEARCH. HE HAS FURTHER STATED THATSURRENDERED AMOUNT WAS DULY REFLECTED IN THE RE TURN OF INCOME AND THE ASSESSING OFFICER HAS ACCEPTED THE SAID SURRENDERED INCOME AS THE BUSINESS INCOME OF THE ASSESSEE. HE THEREFORE HAS CONTENDED THAT THE SOURCE OF THE MANNER OF DERIVING THE UNDISCLOSED IN COME STOOD EXPLAINED. 12. ON THE OTHER HAND LD. DR HAS INVITED OUR ATTENT ION TO THE ANSWERS OF THE ASSESSEE TO QUESTIONS NOS. 2 & 3 WHEREIN FOLLOW ING HAS BEEN STATED ....SINCE I CANNOT EXPLAIN THE SOURCE OF THESE PAY MENTS, I HEREBY SURRENDERTHESE AMOUNT TO TAX.... 15 THE LD. DR, THEREFORE, HAS SUBMITTED THAT ASSESSEE HIMSELF HAD STATED THAT HE COULD NOT EXPLAIN THE SOURCE OF THOSE PAYMENTS, THEREFORE, THE ASSESSEE IS NOT COVERED BY THE IMMUNITY PROVIDED IN CLAUSE ( I) AND (II) OF SUB SECTION(2) OF SECTION 271AAA OF THE ACT. WE HAVE KE ENLY GONE THROUGH THE ABOVESTATEMENT AND THE SURRENDER LETTER. WE FIND TH AT NO SPECIFIC QUESTION HAS BEEN ASKED BY THE SEARCH PARTY DURING THE COURS E OF SEARCH ACTION AS TO WHAT WAS THE SOURCE AND MANNER OF DERIVING SUCH UND ISCLOSED INCOME. WE FIND THAT THE ASSESSEE HAS SURRENDERED THE ABOVE IN COME AS ADDITIONAL INCOME OVER AND ABOVE ITS NORMAL BUSINESS INCOME FO R THE FINANCIAL YEAR 2011-12. SO FAR AS THE STATEMENT OF THE ASSESSEE T HAT SINCE I CANNOT EXPLAIN THE SOURCE OF THIS PAYMENT AS READ ALONG A ND IN CONTEXT TO THE ENTIRE STATEMENT, THE REASONABLE MEANING OF THESE W ORDS AS COMING OUT FROM THE RECORD IS THAT THE ASSESSEE MEANS TO SAY T HAT HE COULD NOT EXPLAIN THE SOURCE OF THESE PAYMENTS FROM HIS BOOKS OF ACCO UNT; IN OTHER WORDS, THAT THE SAID PAYMENTS HAVE NOT BEEN DISCLOSED BY H IM IN HIS BOOKS OF ACCOUNT AND, HENCE THE SAME IS UNDISCLOSED INCOME. HOWEVER, THE SUBSEQUENTWORDS OF THE STATEMENT OF OFFERING THE SA ID INCOME AS ITS BUSINESS INCOME FOR THE CONCERNED FINANCIAL YEAR FULFILLS THE GAP AND REMOVES THE AMBIGUITY. WHEN WE READ THE ENTIRE CONT EXT IN REFERENCE TO THE QUESTION AND ANSWERS, IT IS CLEAR THAT ASSESSEEHAS OFFERED THE SURRENDERED INCOME AS ITSBUSINESSINCOME INTHE STATEMENT OF SHRI RANJIT SINGH GILL RECORDED U/S 132(4) OF THE ACT. ADMITTEDLY, THE ASS ESSEE FILED ITS RETURN OF INCOME DECLARING THE SAID INCOME AS BUSINESS INCOM E AND EVEN THE ASSESSING OFFICER HAS ACCEPTED THE SAID INCOME AS BUSINESS INCOME OF THE ASSESSEE. IN THESE CIRCUMSTANCES, IN OUR VIEW THE S OURCE AND MANNER OF EARNING OF INCOME STOOD EXPLAINEDDURING THE SEARCH ACTION IN THE 16 STATEMENTRECORDED U/S 132(4) OF THE ACT. HENCE THE CONDITIONS OF CLAUSE (I) OF SECTION 271AAA(2) STOOD COMPLIED WITH. 13. NOW COMING THE CONDITION PROVIDED UNDER CLAUSE( II) OF SECTION 271AAA(2) REQUIRING THE SUBSTANTIATION OF THE EARNI NG OF INCOME, THE ASSESSING OFFICER HAS NEITHER DOUBTEDNOR REJECTED TO THE RETURNING OF THE SAID SURRENDERED INCOME BY THE ASSESSEE UNDER THE H EAD INCOME FROM BUSINESS OR PROFESSION.RATHER, THE AO HAS ACCEPTED THE SAID INCOME AS BUSINESS INCOME OF THE ASSESSEE. UNDER THE CIRCUMST ANCES, THE SUBSTANTIATION OF THE MANNER OF EARNING OF INCOME F ROM THE BUSINESS ACTIVITY OF THE ASSESSEEALSO STOODACCEPTED BY THE ASSESSING OFFICER. WE ARE NOT IN AGREEMENT WITH THE OBSERVATIONS OF THE A SSESSING OFFICER THAT ASSESSEE HAD TO EXPLAIN ALL THE DEPOSITS AND THE WI THDRAWALS ALONGWITHDOCUMENTARY EVIDENCES. IN OUR VIEW, IT IS MANNER WHICH IS TO BE SUBSTANTIATED AND NOT THE EACH AND EVERY PENNY OUT OF THE UNDISCLOSED INCOME EARNED OR EACH OR EVERY TRANSACTION. THE ASS ESSING OFFICER HAS ACCEPTED THAT ASSESSEE HAS MADE THE DISCLOSURE U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH OPERATION, AND AS OBSERVED ABO VE, THE ASSESSEE HAS ALSO SPECIFIED THE MANNER OF EARNING AS ITS BUSINES S ACTIVITY AND FURTHER SINCE THE SAID CONTENTION HAS BEEN ACCEPTEDWHICH MA Y BE FOUND SUBSTANTIATED BY THE ASSESSING OFFICER FROM THE SEI ZED DOCUMENTS AND THAT IS WHY HE HAS ACCEPTED THE SAME AS BUSINESS INCOME OF THE ASSESSEE. MOREOVER, THE SEARCH PARTY HAS ALSO NOT DOUBTED OR POINTED OUT ANY DISCREPANCY OR DEFECT IN THE ABOVE STATEMENT OF THE ASSESSEE OFFERING THE UNDISCLOSED/SURRENDERED INCOME AS BUSINESS INCOME O F THE ASSESSEE. IT IS NEITHER THE CASE OF THE SEARCH PARTY NOR THAT OF TH E ASSESSING OFFICER THAT UNDISCLOSED INCOME IS NOT OUT OF THE UNDISCLOSED BU SINESS INCOME OF THE 17 ASSESSEE. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, T HE FIRST TWO CONDITIONS AS PRESCRIBED INCLAUSE (I) AND CLAUSE (II) OF SECTI ON 271AAA OF THE ACT STOOD COMPLIED WITH. OUR ABOVE VIEW FINDS SUPPORT F ROM THE DECISIONSOF THE TRIBUNAL IN THE CASE OF ACIT VS. MUNISH KR GOY AL ((SUPRA), SUNIL KUMAR BANSAL VS. DCIT (SUPRA), ACIT VS. OM PARKASHS AHNI (SUPRA). 14. EVEN OTHERWISE, NO QUESTION BY THE SEARCH PARTY WAS PUT TO THE ASSESSEE REGARDING THE MANNER OF DERIVING OF SUCH U NDISCLOSED INCOME AND EVEN THE PROVISIONS OF SECTION 271AAA OF THE ACT WE RE NOT EXPLAINED TO HIM. THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESS EEBY THE ABOVE DECISIONS ON THIS ACCOUNT ALSO. RELIANCE CAN BE PLACED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MAHENDRA C SHAH 299 ITR 305(GUJ) WHEREIN THE HONBLE GUJARAT HIGH,WHILE DI SCUSSING THE EXCEPTION PROVISIONS OF EXPLANATION 5 TO SECTION 27 1(1) (C,) HAS MADE THE FOLLOWING OBSERVATIONS,: 15. IN SO FAR AS THE ALLEGED FAILURE ON THE PART O F THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUC H INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT W HEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFIC ER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSE SSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SH ORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO T AKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REA SON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEME NT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND M AKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PRO VISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF CIT V. RADHAKISHANGOEL (SUPRA). SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIB LE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITE RATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIO NS 18 STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMEN T UNDER SECTION 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COURT TO THE EFF ECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MAN NER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLA RED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPLANATION 5 IS COMMENDABLE. IN THE CASE OF CIT V. RADHA KRISHNA GOEL [2005] 278 ITR 454, THE HON'BLE ALLAHABAD HIGH COURT GAVESIMILAR FINDINGS AND LAID DOWN SIMILAR PRINCIPLES AS UNDER:- '...FROM A PERUSAL EXPLANATION 5, IT IS EVIDENT THA T THE CIRCUMSTANCES WHICH OTHERWISE DID NOT ATTRACT THEPE NALTY PROVISIONS OF SECTION 271(1)(C), NOW BY A DEEMING PROVISIONATTRACT PENALTY PROVISIONS. BUT ANEXCEPTIO N IS PROVIDED IN CLAUSE (2) OF EXPLANATION 5 WHERE THE DEEMING PROVISION WILL NOT APPLY IF DURINGTHE COURS E OF SEARCH THE ASSESSEE MAKES THE STATEMENT UNDER SUB- SECTION (4) OF SECTION 132 THAT THEMONEY, BULLION, JEWELLERY ETC. FOUND IN HIS POSSESSION HAS BEEN ACQ UIRED OUT OF HIS INCOME WHICH HAS NOTBEEN DISCLOSED SO FA R IN HIS RETURN OF INCOME AND ALSO SPECIFIES IN THE STAT EMENT THE MANNER IN WHICHSUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RES PECT OF SUCHINCOME....UNDER SECTION 132(4) OF THE ACT, UNLE SS THE AUTHORIZED OFFICER PUTS A SPECIFIC QUESTION WITHREG ARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THI S REGARD AND IN CASE, IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIVED,HAS NOT BEEN STATED BUT HAS BEEN STATED SUBSEQUENTLY, IT AMOUNTS TO COMPLIANCE WITH EXPLANATION 5(2). IF THERE IS NOTHING TO THE CONTRARY IN THE STATEMEN T RECORDED UNDER SECTION 132(4) OF THE ACT, IN THEABS ENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME, HAS BEEN DERIVED, IT CAN BEINFERRED THAT SU CH UNDISCLOSED INCOME WAS DERIVED FROM THE BUSINESS WH ICH HE WAS CARRYING ON. THEOBJECT OF THE PROVISION IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON- 19 DISCLOSURE OF MONEY,BULLION, JEWELLERY, ETC. THUS, MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THEMANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND CIRCUMSTANCES OF THECA SE, IN THE ABSENCE OF ANYTHING TO THE CONTRARY. THEREFORE, MERE NON-STATEMENT OF THE MANNER IN WHICHSUCH INCOME WAS DERIVED WOULD NOT MAKE EXPLANATION 5(2) INAPPLICABL E. 15. THOUGH THE ABOVE DECISIONS OF THE HONOURABLE GU JARAT HIGH COURT AND ALLAHABAD HIGH COURT WERE RENDERED IN REFERENCE TOEXPLANATION 5 OF SECTION 271(1)(C) AND NOT WITH REGARD TO THE SECTIO N 271AAA, HOWEVER THE PRINCIPLE LAID DOWN THAT THE AUTHORIZED OFFICER IS TO EXPLAIN THE PROVISION TO THE ASSESSEE ANDASK THE RELEVANT QUESTIONS ON TH E MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED IS ALSO APPLICABLE TO THE PROVISIONS OF SECTION 271AAA ALSO. RELIANCE IN THIS RESPECT CAN B E PLACED ON VARIOUS DECISIONS OF THE CO-ORDINATE BENCHES OF THIS TRIBUN AL INCLUDING THAT IN THE CASES OF ACIT VS MUNISH KUMAR GOYAL (SUPRA), SUNIL KUMAR BANSAL VS. DCIT (SUPRA), ACIT VS. OM PARKASHSAHNI (SUPRA), DC IT VS. HARMOHINDER SINGH CHADHA IN ITA 188/CHD/2015. THE HONBLE DELHI HIGH COURT IN A VERY RECENT DECIS ION IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME VS M/S EMIRATES T ECHNOLOGIES PVT. LTD. ITA 400/2017 VIDE ORDER DATED 18.7.2017 HAS U PHELD THE FINDINGS OF THE DELHI BENCH OF THE TRIBUNAL GIVEN ON THE SIMILA R LINE IN RELATION TO THE MATTER OF LEVY OF PENALTY U/S 271AAA, OBSERVING AS UNDER: THE CIT(A) IN PARA 4.7 OF THE ORDER DATED 4TH NOVEMBER, 2013 NOTED THATNO SPECIFIC QUERY HAD BEEN PUT TO THE ASSESSEE BY DRAWING HIS ATTENTION TOSECTION 271 AAA OF THE ACT ASKING HIM TO SPECIFY THE MANNER IN WHICH THEUNDISCLOSED INCOME, SURRENDERED DURING THE COURS E OF SEARCH, HAD BEENDERIVED. THE CIT (A), THEREFORE, RE LYING 20 ON THE DECISIONS OF THIS COURT HELDTHAT THE JURISDI CTIONAL REQUIREMENT OF SECTION 271AAA WAS NOT MET. 4. THE ABOVE VIEW HAS BEEN CONCURRED WITH BY THE IT AT. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT IS OF THE VIEW THAT THECONCURRENT DECISION OF THE CIT( A) AND THE ITAT REPRESENT A PLAUSIBLE VIEWWHICH CANNOT BE SAID TO BE PERVERSE. 16. EVEN OTHERWISE, THE LD. CIT(A) HAS NOT CONFIRME D THE PENALTY ONACCOUNT OF NON-COMPLIANCE OF PROVISIONS OF CLAUSE (I) AND (II) TO SUB SECTION (2) TO SECTION 271AAA OF THE ACT. RATHER HE HAS CONFIRMED THE PENALTY ON DIFFERENT ISSUES OF NON-PAYMENT OF ENTIR E TAXES AND INTEREST THERE UPON I.E. NON COMPLIANCE OF THE CONTENTION LA ID DOWN IN CLAUSE (III) OF SUB SECTION (2) OF SECTION 271AAA OF THE ACT.THE RELEVANT PART OF THE ORDER OF THE CIT(A) FOR READY REFERENCE IS REPRODUC ED AS UNDER: IN THE PENALTY ORDER IT HAS BEEN STATED BY THE AO THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S AS WELL AS PENALTY PROCEEDINGS FAILED TO SUBSTANTIATE THE M ANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED. IT W AS FURTHER STATED THAT THE ONUS WAS ON THE ASSESSEE TO PROVE A ND SPECIFY THE MANNER IN WHICH HAD DERIVED THE ADDITIONAL UNDI SCLOSED INCOME AND THE SUBMISSION HAD TO BE CORROBORATED WI TH DOCUMENTARY EVIDENCE. IN THE APPELLATE PROCEEDINGS, THE APPELLANT IN HIS SUBMISSIONS HAS SUBMITTED THAT IT IS EVIDENT FROM THE STATEMENT S OF THE APPELLANT RECORDED AT THE TIME OF SEARCH AND ALSO T HE SURRENDER LETTER OF THE APPELLANT THAT NO QUESTION REQUIRING THE APPELLANT TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED WAS RAISED TO THE APPELLANT AT THE TIM E OF SEARCH OR EVEN IN ANY OF THE SEARCH PROCEEDINGS. IN THE AB SENCE OF ANY QUERY, THERE WAS NO OCCASION FOR THE APPELLANT TO S UBSTANTIATE THE SAME. IN THIS SITUATION, PENALTY U/S 271AAA WAS NOT IMPOSABLE. THE APPELLANT HAS RELIED ON JUDICIAL PRO NOUNCEMENT INCLUDING DECISION OF HON'BLE CHANDIGARH TRIBUNAL I N THE CASE OF AC1T V. MUNISH KUMAR GOYAL AND SUNIL KUMAR BANSA L V. DCIT. 21 DURING THE APPELLATE PROCEEDINGS, THE AR OF THE APP ELLANT VIDE ORDER SHEET DATED 11.08.2016 WAS ASKED TO GIVE DETAILS WITH REGARD TO SECTION 271AAA(2)(III) WITH RESPECT TO PAYMENT OF TAX, TOGETHER WITH INTEREST, IF ANY IN RESPECT O F THE UNDISCLOSED INCOME SO AS TO GET IMMUNITY FROM PENAL TY U/S 271AAA OF THE ACT IN RESPONSE TO THE SAME, THE APPELLANT HAS FILED CO PY OF THE ITR FOR THE YEAR UNDER CONSIDERATION FILED VIA E-FI LING ACKNOWLEDGMENT NO, 5551800021190113 ON 19.01.2013. IN THE RETURN FILED, THE TOTAL TAX AND INTEREST PAYABLE FO R THE YEAR UNDER CONSIDERATION WAS WORKED OUT AT RS. 7,92,15,3 89/- OUT OF WHICH TAXES PAID TILL DATE OF FILING RETURN WERE SH OWN AT RS. 3,10,68,420/- AND THE TAX PAYABLE AS ON DATE ON FIL ING RETURN SHOWN AT RS. 4,81,46,970/-. FORM 26AS OF THE APPELLANT COMPANY FOR THE A.Y. 201 2-13 SHOWS THAT ONLY PART / PAYMENT OF TAXES DUE ALONG W ITH INTEREST WAS PAID TILL EVEN THE DATE OF PENALTY ORDER I.E 28 .,9.2015. THE FOLLOWING TAXES ALONGWITHINTEREST FOR THE YEAR UNDE R CONSIDERATION WERE PAID AFTER THE PENALTY ORDER WAS PASSED BY THE ASSESSING OFFICER. S.NO. DATE AMOUNT 1 04.12.2015 26,00,000 2 04.12.2015 26,00,000 3 07.12.2015 26,00,000 4 20.01.2016 26,00,000 5 01.02.2016 26,00,000 6 05.02.2016 26,00,000 7 30.03.2016 26,00,000 8 04.05.2016 26,00,000 TOTAL 2,08,00,000/ THUS, IT IS APPARENT FROM THE ABOVE THAT THE APPELL ANT HAS NOT FULFILLED THE CONDITION SPECIFIED IN SEC. 271AA A(2)(III) WITH RESPECT TO PAYMENT OF TAXES, TOGETHER WITH INT EREST, IN RESPECT OF THE UNDISCLOSED INCOME FOR THE YEAR UNDE R CONSIDERATION SO AS TO GET IMMUNITY FROM PENALTY AS RS. 2,08,00,000/- WAS PAID AFTER THE DATE OF PENALTY OR DER BY THE APPELLANT. 22 THE APPELLANT WHILE SEEKING IMMUNITY FROM PENALTY CANNOT BE GIVEN UNLIMITED TIME FOR PAYMENT OF TAXES ALONGWITH INTEREST BECAUSE THE SAME WILL NOT IN THE SPIRIT OF LAW, IN THE CONTEXT OF PENALTY UNDER SECTION 271AAA, IT HAS BEEN HELD IN THE CASE OF DCIT VS. PIONEER MARBL ES & INTERIORS (P.) LTD. (2012) 68 DTK 1 (KOI. 'A') / 14 4 TTJ 663 (KOLKATA 'A') WHILE DEALING WITH A CASE OF PENA LTY U/S 271AAA AND THE CONDITIONS PRECEDENT THERETO, THAT N O TIME LIMIT IS SET OUT FOR PAYMENT OF TAXES ALONG WITH IN TEREST BY THE ASSESSEE FOR AVAILING OF THE IMMUNITY U/S 271AA A(2) AND, THEREFORE, ONCE THE ENTIRE TAX AND INTEREST HA S BEEN DULY PAID WELL WITHIN THE TIME LIMIT AS PER THE NOT ICE OF DEMAND U/S 156 AND WELL BEFORE THE CONCLUSION OF TH E IMPUGNED PENALTY PROCEEDINGS, THE ASSESSES CANNOT B E DENIED IMMUNITY U/S 271AAA(2) AND THE PENALTY U/S 271AAA RIGHTLY CANCELLED. IN VIEW OF THE ABOVE DISCUSSION, THE FACT THAT THE TAXES HAVE BEEN PAID MUCH BEYOND THE DATE OF PENALTY ORDE R BY THE APPELLANT AND THE JUDICIAL PRONOUNCEMENT WHICH IS SQUARELY APPLICABLE TO THE CASE OF APPELLANT DISCUS SED ABOVE, THIS GROUND OF APPEAL OF THE APPELLANT IS DI SMISSED AS THE APPELLANT HAS NOT COMPLIED WITH THE PROVISIO N OF 271AAA (2)(III) OF THE ACT TO CLAIM IMMUNITY FROM P ENALTY. 17. ADMITTEDLY, THE REVENUE HAS NOT FILED ANY APPEA L AGAINST THE ORDER OF THE CIT(A). IN THESECIRCUMSTANCES, EVEN OTHERWISE, THE ISSUE OF COMPLIANCEOF THE CONDITIONS LAID DOWN IN CLAUSE (I) AND (II) OF SECTION 271AAA (2) OF THE ACT HAS ATTAINED FINALITY IN FAVO UR OF THE ASSESSEE. 18. NOW COMING TO THE FINDINGS OF THE CIT(A) THAT D UE TO NON-PAYMENT OF ALL THE DUE THE TAXES AND INTEREST THEREUPON, TI LL THE FINALIZATION OF PENALTY PROCEEDINGS, THE ASSESSEE WAS NOT ENTITLED TO GET IMMUNITY UNDER CLAUSE (III) TO SUB SECTION (2) OF SECTION 271AAA O F THE ACT, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE PAPER BOOK PAGE 23 107 WHICH IS A COPY OF THE LETTER DATED 29.7.2015 ADDRESSED TO THE ASSISTANT COMMISSIONER OF INCOME TAX (A.O.), WHEREI N, THE ASSESSEE HAS REQUESTED THE ASSESSING OFFICER THAT DUE TO FINANCI AL CRUNCH, THE ASSESSEE MAY BE GIVEN SOME RELAXATION OF TIME TO DEPOSIT TH E TAX DUES. IT HAS BEEN FURTHER STATED THAT THE ASSESSEE HAS ALREADY DEPOSI TED SOME OF THE TAX AMOUNT AND THE REMAINING AMOUNT MAY BE ALLOWED TO B E DEPOSITED IN MONTHLY INSTALLMENTS. THE ASSESSEE ALSO TENDERED PO ST DATED CHEQUES WITH THE SAID LETTER FOR BALANCE TAX DUES. THE ASSESSEE HAS ALSO FURNISHED THE COPIES OF THE POST DATED CHEQUES BEFORE US. LD. COU NSEL HAS ALSO RELIED UPON THE SHOW CAUSE NOTICE DATED 18.11.2016 ISSUED BY THE ASSESSING OFFICER U/S 221 OF THE INCOME TAX ACT REQUIRING THE ASSESSEE TO PAY THE OUTSTANDING DUES. FROM THE PERUSAL OF THE SAID NOT ICE, IT REVEALS THAT THERE IS NO MENTION OF TAX DUES FOR THE ASSESSMENT YEAR 2 012-13 IN THE SAID LETTER, BUT OF THE IMPUGNED PENALTY LEVIED U/S 271A AA OF THE ACT; WHICH MEANS THAT THE POST DATED CHEQUES TENDERED BY THE A SSESSEE ALONG WITH ITS LETTER DATED 29.7.2015 HAVE BEEN GOT ENCASHED BY TH E ASSESSING OFFICER. THIS LETTER SHOWS THAT THERE WAS NO INTENTION ON TH E PART OF THE ASSESSEE TO AVOID THE PAYMENT OF TAX DUES FOR THE YEAR UNDER CO NSIDERATION; RATHER, IT PROVES THE BONAFIDE INTENTION OF THE ASSESSEE TO PA Y THE TAX DUES. IT IS ALSO A FACT THAT THE DATE OF FILING OF THE SAID LETTER A LONG WITH POST DATED CHEQUES IS 29.7.2015 WHEREAS THE IMPUGNED PENALTY ORDER HAS BEEN PASSED ON 28.9.2015 I.E AFTER THE TENDERING OF POST DATED CHE QUES. THE ASSESSING OFFICER HAS NOT LEVIED THE PENALTY ON ACCOUNT OF NO N COMPLIANCE OF THE CONDITIONS OF CLAUSE (III) OF SECTION 271AAA (2) OF THE ACT, RATHER, FOR NON COMPLIANCE OF THE PROVISIONS OF CLAUSE (I) AND CLAU SE (II) OF SECTION 271AAA(2) OF THE ACT, WHICH MEANS THAT THE ASSESSIN G OFFICER HAD 24 ACCEPTED THE REQUEST OF THE ASSESSEE TO DEPOSIT THE TAX THROUGH INSTALLMENTS CONSIDERING THE BONAFIDE REQUEST OF THE ASSESSEE WH ICH WAS ACCOMPANIED WITH POST-DATED CHEQEUS. THE LD. COUNSEL IN THIS RE SPECT HAS INVITED OUR ATTENTION TO THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF ACIT VS. GEBILAL KANHAIALAL HUF (2012) 348 ITR 56 1 (SC) WHEREIN THE HON'BLE SUPREME COURT WHILE DISCUSSING THE PROVISIO NS OF EXPLANATION 5 OF SECTION 271(1)(C) OF THE ACT HAS OBSERVED THAT UNDE R CLAUSE 2 OF EXPLANATION 5, THREE CONDITIONS HAVE GOT TO BE SATI SFIED BY THE ASSESSEE FOR CLAIMING IMMUNITY FROM THE PAYMENT OF PENALTY. THE FIRST CONDITION WAS THAT THE ASSESSEE MUST MAKE A STATEMENT UNDER SECTI ON 132(4) IN THE COURSE OF SEARCH STATING THAT THE UNACCOUNTED ASSETS AND I NCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION DURING THE SEARCH HAVE BE EN ACQUIRED OUT OF HIS INCOME, WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME TO BE FURNISHED BEFORE EXPIRY OF TIME SPECIFIED IN SECTIO N 139(1) OF THE ACT. THE SECOND CONDITION FOR AVAILING OF THE IMMUNITY FROM PENALTY U/S 271(1)(C) WAS THAT THE ASSESSEE SHOULD SPECIFY IN HIS STATEME NT UNDER SECTION 132(4), THE MANNER IN WHICH SUCH INCOME STOOD DERIVED. THE THIRD CONDITION UNDER CLAUSE (2) WAS THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT TO SUCH UNDISCLOSED INCOME. ADMITTE DLY, THE ASSESSEE (IN THAT CASE) HAD COMPLIED WITH THE CONDITIONS CLAUSE (I) AND CLAUSE (II). THE HONBLE SUPREME COURT OBSERVED THAT NO TIME LIMIT F OR PAYMENT OF SUCH TAX STOOD PRESCRIBED UNDER CLAUSE (2). WHILE DISMISSING THE APPEAL OF THE DEPARTMENT, HON'BLE SUPREME COURT OBSERVED THAT SIN CE THE ASSESSEE HAD PAID TAX WITH INTEREST UP TO THE DATE OF PAYMENT, T HE ASSESSEE WAS ENTITLED TO IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 OF SE CTION 271(1)(C) OF THE ACT. 25 SO FAR AS THE LEVY OF PENALTY U/S 271AAA IS CONCERN ED, NO SUCH TIME LIMIT IS PRESCRIBED FOR PAYMENT OF TAX AND INTEREST THERE UPON EVEN UNDER CLAUSE (III) OF SECTION 271AAA(2) OF THE ACT ALSO. THE CO ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MAHOHAR INFRASTRUCTURE AND CONSTRUCTIONS PVT LTD. VS. DCIT (2016) 48 CCH 0178 CHD TRIB., WHILE RELYIN G UPON THE AFORESAID DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F ACIT VS. GEBILAL KANHAILAL HUF (SUPRA) HAS OBSERVED THAT IF THE ASS ESSEE HAS PAID THE ENTIRE TAX AND INTEREST THEREUPON ON THE UNDISCLOSE D INCOME SURRENDERED IN THE STATEMENT MADE U/S 132(4) OF THE ACT, AND HAS A LSO COMPLIED WITH THE OTHER TWO REQUIREMENTS OF SECTION 271AAA(2) OF THE ACT, THE ASSESSEE IS ENTITLED TO GET IMMUNITY FROM LEVY OF PENALTY. ADMITTEDLY, IN THIS CASE ALSO THE ASSESSEE HAD ALSO DEPOSITED TAX DUE ALONG WITH INTEREST. SINCE NO TIME LIMIT HAS BEEN PRESCRI BED FOR DEPOSIT OF SUCH DUES AND EVEN, AS DISCUSSED ABOVE, THERE WAS NO OVE RT ACT ON THE PART OF THE ASSESSEE TO AVOID TAXES, AS HIS REQUEST FOR DEPOSIT OF TAXES THROUGH INSTALLMENTS HAS BEEN ACCEPTED AND THE ASSESSEE HAS ALREADY TENDERED POST- DATED CHEQEUS BEFORE THE CONCLUSION OF THE PENALTY, HENCE, IN THE LIGHT OF THE OBSERVATIONS OF THE HON'BLE SUPREME COURT IN TH E CASE OF ACIT VS. GEBILAL KANHIALAL HUF (SUPRA), IN OUR VIEW, THE TH IRD CONDITION OF PAYMENT OF TAXES AS PER PROVISIONS OF SECTION 271AA A(2)(III) OF THE ACT STOOD COMPLIED WITH. THE ASSESSEE SUCCEEDS ON THIS ISSUE ALSO. 19. NOW COMING TO THE LEGAL ISSUES RAISED BY THE AS SESSEE, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT EVEN TH E NOTICE SERVED UPON THE ASSESSEE U/S 274 OF THE ACT IS ALSO INVALID. W E HAVE GONE THROUGH THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE. THE LD. C OUNSEL FOR THE ASSESSEE 26 HAS INVITED OUR ATTENTION TO THE LETTER / NOTICE IS SUED U/S 274 READ WITH SECTION 271AAA OF THE ACT DATED 13.1.2014, WHICH FO R THE SAKE OF REFERENCE IS EXTRACTED AS UNDER:- NOTICE U/S 274 READ WITH SECITON 271AAA OF THE INCOME TAX ACT, 1961 OFFICE OF THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1II, AAYAKAR BHAWAN, SECTOR 17-E, CHANDIGARH DATED 13.01.2014 TO M/S GILCO DEVELOPERS AND BUILDERS PVT LTD., SCF 23024, GILCO VALLEY MORINDA ROPAR ROAD, ROPAR, PUNJAB 140001 WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2012-13, IT APPEARS TO ME THAT YOU HAVE NOT RECORDED THE TRUE PARTICULARS OF YOUR INCOME IN THE BOOKS OF ACCOUNTS OR NOT DISCLOSED ACCURATE PARTICULARS OF I NCOME. THEREFORE, YOU ARE REQUIRED TO SHOW CAUSE AS TO WHY PENALTY PROCEEDINGS U/S 274 READ WITH SECTION 271AAA(1) OF THE INCOME TAX ACT MAY NOT BE LEVIED AGAINST YOU. IN THIS REGARD, YOU ARE HEREBY REQUESTED TO APPEAR BEFORE THE UNDERSIGNED AT 11.00A.M . ON 20.02.2014 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON YOU SHOULD NOT B E MADE U/S 271AAA(1) OF THE INCOME-TAX ACT, 1961). IF YOU DO N OT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD I N PERSON OR THOUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CO NSIDERED BEFORE ANY SUCH ORDER IS MADE U/S 271AAA(1). (SEAL) SD/- (LAGANPREET SANDHU). DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, CHANDIGARH 27 20. A PERUSAL OF THE ABOVE NOTICE SHOWS THAT THOUGH THE ASSESSING OFFICER HAS INTENDED TO INITIATE PENALTY PROCEEDINGS U/S 27 1AAA(1) OF THE ACT, HOWEVER, THE WORDING WRITTEN IN THE BODY OF THE LE TTER DOES NOT CONFORM TO THE CHARGES OF THE PROVISIONS OF SECTION 271AAA OF THE ACT, RATHER, THE ASSESSEE HAS BEEN SHOW CAUSED ON THE CHARGE OF FURN ISHING OF INACCURATE PARTICULARS OF INCOME, WHICH FALLS UNDER THE SCOPE AND PURVIEW OF SECTION 271(1)(C) OF THE ACT. THE ASSESSEE, THEREFORE, IS NOT SHOW CAUSED FOR LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271AAA, RATHER FOR DOING AN ACT INVITING PENALTY U/S 271(1)(C) OF THE ACT, WHICH O THERWISE IS NEITHER ARISING OUT OF THE FACTS OF THE CASE NOR ESTABLISHE D AGAINST THE ASSESSEE. THUS, THE PENALTY PROCEEDINGS CONDUCTED AGAINST THE ASSESSEE U/S 271AAA OF THE ACT WERE INVALID AT ITS VERY INCEPTION BECAU SE OF THE DEFECTIVE AND INVALID SHOW CAUSE NOTICE, RENDERING THE ENTIRE PEN ALTY PROCEEDINGS VOID ABNITIO. THE PENALTY LEVIED AGAINST THE ASSESSEE I S THUS NOT SUSTAINABLE ON THIS SCORE ALSO. 21. THE ASSESSEE HAS ALSO RAISED ANOTHER LEGAL ISSU E REGARDING THE LIMITATION POINT. NOW AT THIS STAGE, WE DO NOT DEEM IT NECESSARY TO RESORT TO LENGTHY DELIBERATION ON THIS ISSUE AS WE HAVE NOT O NLY DECIDED THE ISSUE OF LEVY OF PENALTY ON MERITS BUT ALSO THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE. THE LIMITATION ISSUE, HOWEVER, IS LEFT OPEN TO BE A DJUDICATED IN AN APPROPRIATE CASE. 22. IN VIEW OF OUR OBSERVATIONS AND FINDINGS GIVEN ABOVE, THE PENALTY LEVIED BY THE LOWER AUTHORITIES U/S 271AAA OF THE A CT IN THIS CASE IS HELD NOT SUSTAINABLE AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 28 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HE REBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH AUGUST, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR