ACIT CEN CIR 20, MUMBAI V. PURNANDU JAIN, MUMBAI

ITA 1680/MUM/2012

• Counselvise Citation: 168019914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVENDRA A MEHTA
• Assessee Lawyers: T ROUMUAN PAITE; S D SRIVASTAVA
• Section: 5(2); 153A; 132; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , / !' , # $ % BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 1679/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 . / ITA NO. 1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2006-07 THE DCIT, CEN. CIR. 20, ROOM NO.402, 4 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400020 / VS. SHRI PURNANDU JAIN, B-201, MINOO MINAR, VEERA DESAI ROAD, ANDHERI (W), MUMBAI 400053. ( # ./ )* ./ PAN/GIR NO. : AACPJ 7016P ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) APPELLANT BY SHRI DEVENDRA A. MEHTA RESPONDENT BY : S/SHRI T.ROUMUAN PAITE & S.D.SRIVASTAVA, CIT, DR . /# / DATE OF HEARING : 23/09//2013 01' . /# / DATE OF PRONOUNCEMENT : 23/09/2013 2 / O R D E R PER I.P.BANSAL, JM: BOTH THESE APPEALS ARE FILED BY THE REVENUE. THE Y ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LD. CIT(A)-39, MUMBAI DATED 15/12/2011 FOR ASSESSMENT YEARS 2004-05 AND 2006-07. GROUNDS OF APPEAL READ AS UNDER: . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 2 GROUNDS OF APPEAL IN ITANO.1679/MUM/2012,A.Y.2004-0 5: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE IT. ACT WITH REGARDS TO THE AMOUNT OF RS. 56 ,64,430/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSE E IS NOT ENTITLED TO BENEFIT OF EXPLANATION 5(2) TO SECTION 271(1)(C) OF THE I.T. A CT FOR THE EARLIER ASSESSMENT YEARS FOR WHICH THE DUE DATE FOR FILING THE RETURN OF INCOME IS OVER. 3. THE APPELLANT CRAVES TO LEAVE TO ADD, TO AMEND A ND / OR TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 4. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROU NDS STATED ABOVE, THE ORDER OF THE CIT (A)-39, MUMBAI MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. GROUNDS OF APPEAL IN ITANO.1680/MUM/2012, A.Y.2006- 07: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE IT. ACT WITH REGARDS TO THE AMOUNT OF RS.4,1 7,85,000/- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSE E IS NOT ENTITLED TO BENEFIT OF EXPLANATION 5(2) TO SECTION 271 (1 )(C) OF THE I.T. ACT FOR THE EARLIER ASSESSMENT YEARS FOR WHICH THE DUE DATE FOR FILING THE RETURN OF INCOME IS OVER. 3. THE APPELLANT CRAVES TO LEAVE TO ADD, TO AMEND A ND / OR TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 4. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROU NDS STATED ABOVE, THE ORDER OF THE CIT (A)-39, MUMBAI MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. A SEARCH WAS CONDUCTED AT THE PREMISES OF THE AS SESSEE ON 26/4/2007. VIDE STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT,1961(THE ACT) ON 27/4/2007 THE ASSESSEE OFFERED A SUM OF RS .20.00 CRORES AS ADDITIONAL INCOME FOR AND ON BEHALF OF VARIOUS MEMBERS OF HIS FAMILY. THE RELEVANT PORTION OF THE STATEMENT IS AS FOLLOWS: IN TOTAL I AM OFFERING RS.20 CRORES AS ADDITIONAL INCOME OF COMPANIES AS WELL AS MYSELF AND FAMILY MEMBERS. THE ASSESSEE WISE AND R ESPECTIVE ASSESSMENT YEAR WISE BREAK UP OF TOTAL INCOME OF RS.20 CRORES AS OF FERED ABOVE, WILL BE SUBMITTED LATER ON AFTER EXAMINING THE SEIZED MATERIALS, BOOK S OF ACCOUNTS AND RECORDS AND . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 3 THERE MAY BE VARIATION IN THE QUANTUM VIS-A-VIS THE ASSESSEE. THE TOTAL AGGREGATE INCOME AS BEING OFFERED AS ABOVE WILL BE RS.20 CROR ES. THE ABOVE DISCLOSURE WILL COVER ANY DISCREPANCIES I N HANDS OF ANY OF THE COMPANIES/INDIVIDUALS/HUF. I AM MAKING ABOVE DECLARATION ON BEHALF OF COMPANIE S AND ALSO MYSELF AND MY FAMILY MEMBERS AND MY HUF AS THE CASE MAY BE IN ORD ER TO OBVIATE UNDUE LITIGATION AND TO BUY PEACE PROVIDED NO PENALTY AND NO PROSECUTION PROCEEDINGS ARE INITIATED. 2.1 THE AFOREMENTIONED OFFER WAS FURTHER CONFIRMED IN THE STATEMENT RECORDED ON 3/5/2007. THE BREAKUP OF THE AFOREMENT IONED UNDISCLOSED INCOME OF RS.20.00 CRORES WAS REFLECTED IN THE RETU RN AS FOLLOWS: ANKUR DRUGS AND PHARMA LTD. 1,57,38,435/- SHRI PURNANDU JAIN (HUF) 10 ,23,41,819/- M/S. PURNANDU JAIN (HUF) 3,96,13,096/- SMT.ANUPAMA JAIN 5,00,40, 000/- 20,77,33,350/- 2.2 IT IS A SUM OF RS.10,,23,41,819/-, THE PART OF WHICH WAS DECLARED BY THE ASSESSEE IN RESPECT OF ASSESSMENT YEARS 2004-05 AN D 2006-07 AND SUCH RETURN FILED BY THE ASSESSEE INCLUDING AFOREMENTION ED AMOUNT WAS ACCEPTED IN THE ASSESSMENT FRAMED UNDER SECTION 153A R.W.S. 143 (3). FOR THE PURPOSE OF CLARIFICATION WE MAY MENTION HERE THAT ANOTHER AMOU NT OF RS.11,38,050/- WAS ALSO ADDED BY THE AO IN A.Y 2004-05 WHICH WAS OFFER ED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IN THE IMP UGNED GROUNDS DEPARTMENT HAS NOT SHOWN ITS GRIEVANCE REGARDING DE LETION OF PENALTY ON THE AMOUNT OF RS.11,38,050/- 2.3 THE AO LEVIED CONCEALMENT PENALTY ON THE INCOME WHICH WAS DISCLOSED BY THE ASSESSEE IN PURSUANCE TO RETURN FILED UNDER SECTION 153A. THIS IS THE CASE OF THE ASSESSEE THAT CONCEALMENT PENALTY CANNO T BE LEVIED IN VIEW OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AN D SUCH CASE OF THE ASSESSEE HAS BEEN ACCEPTED BY LD. CIT(A). THE DEPARTMENT I S AGGRIEVED AND HAS FIELD . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 4 AFOREMENTIONED GROUNDS. THE ADDITIONS ON WHICH CON CEALMENT PENALTY IS DELETED ARE A SUM OF RS.56,64,430/- AND RS.4,17,85, 000/- FOR A.YS 2004-05 AND 2006-07 RESPECTIVELY. 3. LD. CIT(A) HAS DELETED THE PENALTY FIRSTLY BY DI STINGUISHING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SHERATON APPARELS VS. ACIT, 256 ITR 020, WHICH WAS APPLIED BY THE AO TO LEVY THE PENALTY. LD. CIT(A) AFTER TAKING NOTE OF THE RELEVANT PORTION OF THE DECISIO N OF HONBLE BOMBAY HIGH COURT HAS TO COME TO A CONCLUSION THAT THE SAID DEC ISION WAS TOTALLY ON DIFFERENT ISSUE AS THE ISSUE CONSIDERED THEREIN WAS THAT THE ENTRIES RECORDED IN THE DIARY WAS TO BE CONSIDERED AS ENTRY RECORDED IN THE BOOKS OF ACCOUNT AND SUCH CONTENTION OF THE ASSESSEE WAS TURNED DOWN BY THE HONBLE BOMBAY HIGH COURT AND IT WAS HELD THAT PERSONAL DIARY CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT, THEREFORE, ASSESSEE IS NOT ENTITLED FOR BE NEFIT AVAILABLE UNDER EXPLANATION -5 OF SECTION 271(1)(C). SECONDLY, THE ISSUE RAISED BY THE AO WAS THAT BENEFIT OF EXPLANATION -5 CANNOT BE EXTENDED T O ASSESSEE AS ADDITIONAL INCOME RELATED TO EARLIER YEARS. SUCH CONTENTION O F AO HAS BEEN TURNED DOWN BY LD. CIT(A) ON THE BASIS OF HONBLE MADRAS HIGH C OURT IN THE CASE OF CIT VS. SDV CHANDRU, 266 ITR 175, WHEREIN AFTER CONSIDERING THE PROVISIONS OF EXPLANATION -5 OF SECTION 271 (1)(C) THEIR LORDSHIP S HAVE COME TO A CONCLUSION THAT BENEFIT OF EXPLANATION 5 TO SECTION 271(1)(C ) WILL ALSO BE AVAILABLE IN RESPECT OF EARLIER YEARS PRIOR TO DATE OF SEARCH. THE DEPARTMENT IS AGGRIEVED WITH SUCH FINDING RECORDED BY LD. CIT(A) AND HAS FI LED AFOREMENTIONED GROUNDS OF APPEAL. 4. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY LD . CIT DR THAT CIT(A) HAS ERRED IN COMING TO A CONCLUSION THAT PROVISION S OF EXPLANATION -5 CAN ALSO BE APPLIED TO EARLIER YEARS AS THE SAID INTERPRETAT ION TAKEN BY LD. CIT(A) WILL BE CONTRARY TO THE INSTRUCTION NO.1882 DATED 5/6/1991 ISSUED BY CBDT. HE HAS PLACED BEFORE US A COPY OF THE SAID INSTRUCTION AN D IT WAS PLEADED THAT BENEFIT . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 5 OF EXPLANATION -5 IS AVAILABLE ONLY TO THE YEAR IN WHICH A RETURN HAD NOT BEEN FILED SO FAR SINCE THE PERIOD OF FILING OF THE RET URN UNDER SECTION 139(1) HAD NOT EXPIRED. IT WAS SUBMITTED THAT THE DECISION OF HON BLE MADRAS HIGH COURT RELIED UPON BY LD. CIT(A) IS CONTRARY TO THE AFORE MENTIONED INSTRUCTION. IT WAS FURTHER SUBMITTED THAT THE SAID INSTRUCTION HAVING NOT BEEN BROUGHT TO THE NOTICE OF HONBLE MADRAS HIGH COURT, THE DECISION OF HONBLE MADRAS HIGH COURT SHOULD NOT BE FOLLOWED AS THE INSTRUCTION ISS UED BY CBDT APART FROM BEING BINDING ON THE REVENUE AUTHORITIES ARE CLEARL Y IN THE NATURE OF CONTEMPORANEA EXPOSITIO FURNISHING LEGITIMATE AID IN THE CONSTRUCTION OF SECTION AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P.VARGHESE VS. ITO, 131 ITR 597(SC). IT WAS FURTHER SUBMITTED THAT DECISION OF HONBLE MADRAS HIGH COURT IS A NON-JURISDICTIONAL HIGH COU RT DECISION, THEREFORE, NOT BINDING ON MUMBAI TRIBUNAL AND REFERENCE IN THIS RE GARD WAS MADE TO CIT VS. THANE ELECTRICITY SUPPLY COMPANY, 206 ITR 727, ACCO RDING TO WHICH THE DECISION OF NON JURISDICTIONAL HIGH COURT IS NOT B INDING ON COURTS OR TRIBUNAL OUTSIDE ITS OWN TERRITORIAL JURISDICTION. AT BEST IT MAY HAVE ONLY PURSUING THE EFFECT. LD.CIT DR FURTHER REFERRED TO THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CONSOLIDATED PNEUMATIC TOOL CO MPANY VS. CIT, 209 ITR 277, WHEREIN IT HAS BEEN HELD THAT JUDGMENT OF ONE HIGH COURT IS NOT BINDING ON TRIBUNAL IN ANOTHER STATE. IT WAS FURTHER SUBM ITTED THAT IN VIEW OF INSTRUCTION NO.1882 DATED 5/6/1991, NO TWO VIEWS WE RE POSSIBLE. THERE BEING NO AMBIGUITY IN THE PROVISION, THEREFORE, INTERPRET ATION LAID DOWN IN THE AFOREMENTIONED INSTRUCTION SHOULD HAVE BEEN FOLLOWE D LD. CIT DR SUBMITTED THAT LD. CIT(A) HAS COMMITTED AN ERROR IN GRANTIN G THE RELIEF SIMPLY ON THE BASIS OF DECISION OF HONBLE MADRAS HIGH COURT. 5. ON THE OTHER HAND, LD. AR RELYING UPON THE ORDER PASSED BY LD. CIT(A) PLEADED THAT PENALTY HAS RIGHTLY BEEN DELETED. IT WAS SUBMITTED THAT ON THE INTERPRETATION OF A PROVISION, CBDT VIEW CAN BE AP PLIED ONLY WHEN THERE IS NO AMBIGUITY IN THE LAW. HE SUBMITTED THAT INTERPRET ATION OF THE PROVISION DONE . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 6 BY HONBLE HIGH COURT SHOULD BE GIVEN PREFERENCE OVER THE INTERPRETATION ADOPTED BY CBDT. 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. BEFORE PROCEEDING FURTHER IT WILL BE R ELEVANT TO REPRODUCE THE PROVISION OF EXPLANATION -5 TO SECTION 271(1)(C) OF THE ACT. EXPLANATION 5.WHERE IN THE COURSE OF A [SEARCH INITIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007], THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLAN ATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILISING (WHOLLY OR IN PART) HIS INCOME, (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE T HE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FUR NISHED BEFORE THE SAID DATE OR, WHERE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAI D DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED T O HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, [UNLESS, (1)SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED, (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE DATE OF THE SEARCH ; AND (II) IN A CASE FALLING UNDER CLAUSE (B), ON OR BEF ORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED B Y HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE [CHIEF COMMISSIONER OR COMMISSIONER] BEFORE THE SAID DATE ; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS BEEN ACQUI RED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO B E FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 139 , AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME.] THE ISSUE ARISING IN THE PRESENT APPEAL IS THAT W HERE OR NOT THE BENEFIT OF CLAUSE (2) OF THE AFOREMENTIONED EXPLANATION (HEREI NAFTER REFERRED TO AS EXCEPTION-2 FOR THE SAKE OF CONVENIENCE) CAN BE GIV EN TO THE ASSESSEE IN RESPECT OF THE YEARS IN RESPECT OF WHICH RETURN OF INCOME HAVE ALREADY BEEN FILED UNDER SECTION 139(1) IN ADDITION TO THE ASSESSMENT YEAR F OR WHICH THE PERIOD FOR FILING . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 7 RETURN UNDER SECTION 139(1) HAS NOT BEEN EXPIRED. THIS ISSUE WAS CONSIDERED BY HONBLE MADRAS HIGH COURT OF AFOREMENTIONED D ECISION IN THE CASE OF CIT VS. SDV CHANDRU (SUPRA). IN THE SAID CASE SEARCH W AS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 13/2/1990 AND THE ISSUE WAS INVOLVING IN RESPECT OF ASSESSMENT YEAR 1985-86 AND 1986-87. THE STATEM ENT OF THE ASSESSEE UNDER SECTION 132(4) WAS RECORDED. THEREAFTER THE ASSESSEE FILED HIS RETURN FOR EARLIER ASSESSMENT YEARS I.E. 1985-86 AND 1986-87 A ND ADMITTED LARGER INCOME AND ALSO PAID THE TAX TOGETHER WITH INTEREST. THE AO HAD CONSTRUED THE CLAUSE (2) OF EXPLANATION-5 OF SECTION 271(1)(C) AS BEING LIMITED TO THE YEAR OF SEARCH AND NOT APPLICABLE TO EARLIER YEARS. THE TRIBUNAL GRANTED THE RELIEF TO THE ASSESSEE. THEIR LORDSHIPS AFTER CONSIDERING THE AF OREMENTIONED PROVISIONS HAVE COME TO THE CONCLUSION THAT WHILE CLAUSES (A) AND (B) MAKE A CLEAR DISTINCTION BETWEEN PREVIOUS YEAR WHICH IS ENDED BEFORE THE DATE OF THE SEARCH, AND THE PREVIOUS YEAR WHICH IS TO END ON O R AFTER THE DATE OF SEARCH, PARA-2 IN EXPLANATION-5 DOES NOT MAKE ANY SUCH DIST INCTION. IT REFERS TO THE STATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF THE SEARCH UNDER SECTION 132(4) WITH REGARD TO ASSETS FOUND AT THE TIME OF SEARCH B EING THE STATEMENT TO THE EFFECT THAT SUCH ASSETS HAVE BEEN ACQUIRED OUT HIS UNDISCLOSED INCOME AND SPECIFICATION BY THE ASSESSEE IN SUCH STATEMENT WIT H REGARD TO THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED, AND THE SUBSEQU ENT PAYMENT BY THE ASSESSEE OF THE TAX ON SUCH UNDISCLOSED INCOME TOGE THER WITH INTEREST. IT IS FURTHER OBSERVED THAT THE WORDS IN PARA-2 HAS BEEN ACQUIRED OUT HIS INCOME WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOM E TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB-SECTION(1) OF S ECTION 139 ARE NOT TO BE READ AS REFERRING TO INCOME SO FAR NOT DISCLOSED IN RESP ECT OF THE PREVIOUS YEAR WHICH IS TO END AFTER THE DATE OF SEARCH. THE WORDS USED ARE INCOME WHICH HAS NOT BEEN SO FAR DISCLOSED IN HIS RETURN OF INCOME. TH E ADDITIONAL WORDS ARE REFERRED TO THE TIME SPECIFIED IN SECTION 139(1) AR E ONLY A REITERATION OF THE LEGAL REQUIREMENT REGARDING THE TIME WITHIN WHICH RETURN SHOULD NORMALLY BEEN FILED. IN CASES WHERE THE ASSESSEE HAD NOT DISCLOS ED HIS INCOME IN THE RETURN . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 8 FILED FOR PREVIOUS YEAR WHICH HAVE ENDED PRIOR TO T HE DATE OF SEARCH, AND IN THE STATEMENT GIVEN UNDER SECTION 132(4), THE ASSESSEE ADMIT A RECEIPT OF UNDISCLOSED INCOME FOR THOSE YEARS AND ALSO SPECIFI ES THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED, AND THEREAFTER PAYS THE TAX ON THAT UNDISCLOSED INCOME WITH INTEREST, SUCH UNDISCLOSED INCOME WOULD GET IMMUNIZED FROM THE LEVY OF PENALTY. IT IS IN THIS MANNER HONBLE HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL. THE AFOREMEN TIONED DECISION HAS BEEN FOLLOWED IN A NUMBER OF DECISIONS RENDERED BY THIS TRIBUNAL, COPIES OF WHICH HAVE BEEN FIELD BY LD. AR IN THE PAPER BOOK. THESE ARE DCIT VS. AVINASH CH GUPTA, 44 SOT 85 (KOL), SHYAM BEEDI WORKS PVT. LTD. VS ACIT, 70 TTJ 830, ACIT VS. NEPTUNE CONSTRUCTIONS , ORDER DATED 30/4/2 010 IN ITA NO.3165/MUM/2008 AND 3169/MUM/2008. 6.1 THE CONSTRUCTION OF THE PROVISIONS OF EXPLANATI ON -5 PUT-FORTH BY LD. DR ON THE BASIS OF AFOREMENTIONED INSTRUCTION NO.1882 ARE TOTALLY CONTRARY TO THE AFOREMENTIONED DECISION OF HONBLE MADRAS HIGH COUR T AND THE AFOREMENTIONED DECISIONS OTHER BENCHES OF ITAT. THESE INSTRUCTIO NS ARE ISSUED BY CBDT ON 5/6/1991 WHEN THE DECISION RENDERED BY HONBLE MADR AS HIGH COURT IS DATED 9/12/2003. DURING THE COURSE OF HEARING LD.CIT DR WAS REQUIRED TO PLACE ON RECORD ANY DECISION OF ANY COURT IN WHICH THE VIEW CONVEYED BY THE CBDT IN AFOREMENTIONED INSTRUCTION NO.1882 IS ADOPTED, HE W AS UNABLE TO CITE ANY SUCH DECISION. IT WAS ONLY ARGUED THAT INSTRUCTIONS ISS UED BY CBDT ARE IN THE NATURE OF CONTEMPORANEA EXPOSITIO . AND FOR SUCH PURPOSE RELIANCE WAS MAINLY PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P.VARGHESE (SUPRA). WE HAVE CAREFULLY CONSIDERED SUCH SUBMIS SIONS OF LD. CIT DR AND WE FOUND THAT SUCH CONTENTION OF LD. DR HAS NO FORCE A S THE LAW REGARDING BINDINGNESS OF CIRCULARS ISSUED BY CBDT HAS BEEN L ATER ON EXPLAINED BY LARGER BENCH OF HONBLE SUPREME COURT IN THE CASE O F CIT VS. RATAN MELTING & WIRE INDUSTRIES (THE DECISION RENDERED BY FIVE JUD GES OF HONBLE SUPREME COURT),220 CTR 98 (SC) WHEREIN IT HAS BEEN HELD THA T IT IS FOR THE COURT TO . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 9 DECLARE WHAT THE PARTICULAR PROVISION OF STATUE S TATES AND IT IS NOT FOR EXECUTIVE; A CIRCULAR CANNOT BE GIVEN EFFECT TO IN PREFERENCE TO THE VIEW EXPRESSED IN A DECISION OF THE HONBLE SUPREME COU RT OR THE HIGH COURT; A CIRCULAR WHICH IS CONTRARY TO THE STATUTORY PROVIS IONS HAS REALLY NO EXISTENCE IN LAW. IT HAS BEEN CLARIFIED THAT THE CLARIFICATI ONS/ CIRCULARS ISSUED BY THE CENTRAL GOVERNMENT AND OF THE STATE GOVERNMENT REP RESENT MERELY UNDERSTANDING OF THE STATUTORY PROVISION. THEY AR E NOT BINDING UPON THE COURT. IT IS FOR THE COURT TO DECLARE WHAT THE PAR TICULAR PROVISION OF THE STATUTE SAYS AND IT IS NOT FOR THE EXECUTIVE . THUS THE LA W ON THIS ISSUE IS VERY MUCH CLEAR THAT WHEREVER QUESTION REGARDING INTERPRETATI ON OF A PROVISION IS APPLICABLE THE INTERPRETATION ADOPTED BY THE COURT WILL HAVE A PREFERENCE OVER THE INTERPRETATION GIVEN BY THE CBDT. THEREFORE, THIS CONTENTION OF LD. CIT DR HAS TO BE REJECTED PARTICULARLY IN THE VIEW O F THE FACT THAT LD. CIT DR COULD NOT CITE ANY DECISION OF ANY COURT BY WHICH THE AFOREMENTIONED VIEW OF CBDT IS SUPPORTED. MOREOVER, WE ARE CONSIDERING T HE PROVISION REGARDING LEVY OF PENALTY. WHERE TWO INTERPRETATIONS ARE POSSIBL E, LEVY OF CONCEALMENT PENALTY IS NOT JUSTIFIED. EVEN ACCORDING TO LAW OF PRECEDENCE, THE DECISION RENDERED BY MADRAS HIGH COURT, IN ABSENCE OF DECIS ION OF JURISDICTIONAL HIGH COURT ON THE ISSUE WILL HAVE PERSUASIVE VALUE AND VIEW HAS BEEN TAKEN AFTER CONSIDERING THE RELEVANT PROVISIONS. ACCORDINGLY, WE HOLD THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN DELETING THE PENALTY BY F OLLOWING THE AFOREMENTIONED DECISION OF HONBLE MADRAS HIGH COURT AND PENALTY C ANNOT BE SUSTAINED ON THE INTERPRETATION OF PROVISIONS ADOPTED BY CBDT. 6.2 BEFORE PARTING WITH THE APPEALS OF THE REVENUE, FOR THE SAKE OF COMPLETENESS WE MAY MENTION HERE THAT EVEN THOUGH IT IS NOT THE CASE OF AO THAT ASSESSEE DID NOT SPECIFY IN THE STATEMENT MADE U/S. 132 (4) THE MANNER IN WHICH THE ADDITIONAL INCOME WAS DERIVED, BUT DURING THE COURSE OF HEARING OF THE APPEAL IT WAS CLARIFIED BY LD. AR THAT ASSESSEE WAS NEVER ASKED TO DESCRIBE THE MANNER IN WHICH HE HAS DERIVED SUCH ADDITIONAL INCOME AND IT WAS . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 10 SUBMITTED THAT DURING THE COURSE OF HEARING BEFORE LD. CIT(A) ASSESSEE HAD PLACED RELIANCE ON VARIOUS DECISION IN WHICH IT WAS HELD THAT WHERE ASSESSEE HAS NOT BEEN ASKED WITH SUCH QUESTION THAT IN WHAT MANNER SUCH INCOME HAS BEEN DERIVED AND THE INCOME HAS BEEN OFFERED AND TA XES HAVE BEEN PAID THEN IT WILL BE SUFFICIENT COMPLIANCE OF EXPLANATION -5 TO SECTION 271(1)(C). HE IN THIS REGARD REFERRED TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH, 299 ITR 305 AND THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA. KISHAN GOEL, 278 ITR 454(ALL). THUS IMMUNITY PROVIDED BY EXPLANATION -5 IS AVAILABLE TO THE ASSE SSEE EVEN THOUGH ASSESSEE HAS NOT SPECIFIED THE MANNER IN WHICH THE UNDISCLOS ED INCOME IS EARNED BY HIM. 6.3 IN VIEW OF THE ABOVE DISCUSSION WE DECLINE TO INTERFERE IN THE ORDER PASSED BY LD. CIT(A) AND APPEALS FILED BY THE REVE NUE ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/09/2013 2 . 01' # 3 45 23 /09/2013 1 . 6 % SD/- SD/ - ( !' / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 4 DATED 23 /09/2013 . / ITA NO. 1679 &1680/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2004-05 & 2006-07 11 2 2 2 2 . .. . ,/78 ,/78 ,/78 ,/78 98'/ 98'/ 98'/ 98'/ / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. 8;6 ,/ , , / DR, ITAT, MUMBAI 6. 6< = / GUARD FILE. 2 2 2 2 / BY ORDER, -8/ ,/ //TRUE COPY// > >> > / ? ? ? ? ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS