ASST CIT CEN CIR 4(1), MUMBAI V. CENTAUR MERCANTILE P.LTD, MUMBAI

ITA 1701/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1788 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2016
• Appeal Filed By: Department
• Bench Allotted: I
• Next Hearing Date: 09-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2015
• Court: TRIBUNAL
• Department Lawyers: B D NIKE
• Keywords: Bogus purchase; Search and seizure; Competent authority
• Section: 5(2); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMIT SHUKLA , JM ITA NO.1701/MUM/2015 ( ASSESSMENT YEAR : 2011 - 2012 ) ACIT, CENTRAL CIRCLE 4 (1), MUMBAI VS. M/S. CENTAUR MERCANTILE PVT. LTD., ATTRIUM 21 5, 10 TH FLOOR, ANDHERI KURLA ROAD, NEXT TO COURTYARD MARIOFF HOTEL ANDHERI (E), MUMBAI - 400059 PAN/GIR NO. AACCC4199F APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA REVENUE BY SHRI B.D. NIKE DATE OF HEARING 01/09 /201 6 DATE OF PRONOUNCEMENT 02 / 12 /2016 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER O F CIT(A) FOR THE ASSESSMENT YEAR 2011 - 2012 IN THE MATTER OF IMPOSITION OF PENALTY OF RS.20,98,992/ - U/S . 271AAA OF THE I.T. ACT. 2 . WE HAVE HEARD RIVAL CONTENTIONS . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY BELONGS TO KANAKIA GROUP OF CASES, WHERE A SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WAS CARRIED OUT ON 29/3/2011. DURI NG THE COURSE OF SEARCH, IT WAS GATHERED THAT THE ASSESSEE GROUP WAS DEBITING BOGUS PURCHASES TO THE BOOKS OF ACCOUNTS. THIS FACT WAS ACCEPTED BY SHRI RASESH KANAKIA, MANAGING DIRECTOR OF THE CENTAUR MERCANTILE PVT. LTD., 2 ASSESSEE - COMPANY AND THE MAIN PERSON OF THE GROUP, IN HIS STATEM ENT ON OATH U/S. 132(4) ON 30/3/2011. SHRI RASESH KANAKIA FURTHER SURRENDERED A N AMOUNT OF RS. 1.84 CRORES , ON ACCOUNT OF SUCH BOGUS PURCHASES DEBITED TO THE BOOKS OF ACCOUNTS IN THE ASSESSMENT YEAR 2011 - 12. WE FOUND THAT PENALTY U/S. 271AAA(1) WAS LEVIED B Y THE AO IN RESPECT OF CLAIM OF BOGUS PURCHASES OF RS.1,84,48,431/ - AND SALE OF SCRAP OF RS.25,41,487/ - IN CASH, NOT RECORDED IN THE BOOKS. WHILE LEVYING THE PENALTY, THE LEARNED AO HAS MENTIONED IN PARA 7 OF THE PENALTY ORDER THAT THE ASSESSEE HAS NOT BEE N ABLE TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME OF RS.2,09,89,918/ - HAD BEEN DERIVED. HE, THEREFORE, LEVIED PENALTY @10% ON THIS AMOUNT, WHICH WORKS OUT TO RS.20,98,992/ - . 3 . BY THE IMPUGNED ORDER CIT(A) DELETED THE PENALTY AFTER OBSERVING AS UNDER: - 5. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE, AS ALSO ORDER OF THE AO. AS REGARDS BOGUS PURCHASES OF RS.1,84,48,431/ - , THE LEARNED AR HAS ARGUED THAT THIS AMOUNT HAD BEEN SURRENDERED BY SHRI RASESH KANAKI A, DIRECTOR, IN HIS STATEMENT U/S. 132(4) THE ACT, AS UNDER: Q.2 YOUR ATTENTION IS INVITED TO YOUR STATEMENT THAT WAS RECORCED U/S.132 4) ON 30.03.2011 IN THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS U/S 132 AT THIS PREMISE. IN THE SAID STATEMENT YOU HAD OFFERED RS. 41 C TO TAX FOR YOUR GROUP AND ASSOCIATES. PLEASE CONFIRM THE SAME AND CLARIFY ENTITY WISE INCOME AND THE SOURCE AND MANNER OF EARNING THE SAME. ANS. I HEREBY CONFIRM THAT I HOD OFFERED RS. 41 CR TO TAX FOR OUR GROUP AND ITS ASSOCIATES. THE A MOUNT IS ARRIVED AT BY AGGREGATING VARIOUS PURCHASES MADE FROM THOSE PARTIES WHO ARE KNOWN TO BE PAPER ENTITY ISSUING ACCOMMODATION BILLS WHOSE CREDENTIALS ARE IN DOUBT. HOWEVER, THE EXACT ENTITY WISE & YEAR WISE BIFURCATION OF THE SAID PURCHASES IS AS UND ER: ....' CENTAUR MERCANTILE PVT. LTD., 3 6. IT HAS ALSO BEEN MENTIONED THAT IN THE SAID STATEMENT, THE MANNER OF EARNING OF THE SAID UNDISCLOSED INCOME HAD ALSO BEEN EXPLAINED BY THE ASSESSEE, AS UNDER : - 'AS REGARDS THE SOURCE AND MANNER OF EARNING OF THE SAID INCOME, I HAVE TO SUB MIT THAT THE ABOVE INCOME IS OFFERED AGAINST THE PURCHASES THAT WERE MODE FROM VARIOUS PARTIES WHO ARE KNOWN TO BE PAPER ENTITIES ISSUING ACCOMMODATION BILLS. AFORE STATED ENTITIES HAVE MADE PURCHASES FROM THOSE PARTIES AND DEBITED THE AMOUNT TO PURCHASES IN RESPECTIVE YEARS IN VARIOUS PROJECTS UNDERTAKEN BY THEM AND INCOME IS OFFERED AS PER THE RECOGNIZED METHOD OF ACCOUNTING REGULARLY FOLLOWED.' . 7. FURTHER, IN RESPONSE TO QUESTION NO.6, SHRI RASESH KANAKIA EXPLAINED THE MODUS OPERANDI OF THE BUSINESS AS UNDER : - 'Q.6 AS STATED BY YOU IN YOUR STATEMENT U/S.132(4) RECODED ON 30/3/2011 AND TODAY, IT IS SEEN THAT YOU HAVE SHOWN VARIOUS PURCHASES FROM PAPER ENTITIES WHICH HAVE ONLY ISSUED YOU ACCOMMODATION BILLS. THE SPECIFIC YEAR WISE AND COMPANY WISE B REAK UP FOR THESE ENTITI ES HA VE BEEN PROVIDED BY YOU. PLEASE SPECIFY THE MODUS OPERANDI OF DEBITING YOUR BOOKS WITH SUCH BOGUS PURCHASES FROM THESE PAPER ENTITIES AS LISTED BY YOU IN THE ANSWER TO Q.2. ANS. TO THE BEST OF MY INFORMATION AND KNOWLEDGE THE MODUS OPERANDI IS AS FOLLOWS. WE USED TO GET THESE VARIOUS ACCOMMODATION BILLS FROM VARIOUS BROKERS WHEREIN THERE WAS NO ACTUAL SUPPLY OF ANY GOODS/MATERIAL/SERVICE. AFTER RECEIVING THE BILLS THE SAME WAS ENTERED IN OUR BOOKS OF ACCOUNTS. THE SAME THEN WE NT TO OUR BANKING UNIT FOR PROCESSING OF PAYMENT THROUGH CROSSED ACCOUNT PAYEE CHEQUES. THE BROKERS COLLECT THE SAID CHEQUES FROM OUR OFFICE AND AFTER CLEARANCE OF THE SAID CHEQUES, THEY RETURN THE AMOUNT IN CASH TO US AFTER DEDUCTING COMMISSION WHICH WAS IN THE RANGE OF 3 - 3.5%.' 8. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAD EXPLAINED AS TO HOW THIS INCOME WAS DERIVED FROM BOGUS PARTIES. IT IS NOTICED THAT THE ASSESSEE WILL ISSUE CHEQUES TO THESE BOGUS PARTIES, IN LIEU OF PAPER PURCHASES, WHICH WIL L RETAIN ABOUT 3% - 3.5% OF SUCH AMOUNT TOWARDS THEIR COMMISSION AND RETURN THE BALANCE AMOUNT IN CASH TO' THE ASSESSEE GROUP. THEREFORE, THE ENTIRE PROCESS HAS BEEN EXPLAINED BY THE ASSESSEE TO THE AUTHORIZED OFFICER. THE LEARNED AR IN THIS REGARD RELIED UPON THE PROVISIONS OF SUB - SECTION (2) OF SEC.271 AAA, WHICH GRANT CERTAIN IMMUNITY TO THE ASSESSEE FROM PENALTY, SUBJECT TO CERTAIN CONDITIONS. BEFORE PROCEEDING FURTHER, I WOULD LIKE TO REPRODUCE THE PROVISIONS OF SEC.271 AAA, AS UNDER : - CENTAUR MERCANTILE PVT. LTD., 4 '271AAA (1) T HE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 [BUT BEFORE THE 1ST DAY OF JULY, 2012], THE ASS ESSEE SHALL PAY BY WAY OF PENALTY IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, (2) NOTHING CONTAINED IN SUB - SECTION (1) SHALL APPLY IF THE ASSESSEE - (I) IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE, MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REF ERRED TO IN SUB - SECTION ( 1). (4) THE PROVISIONS OF SECTION 274 AND 275 SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION - FOR THE PURPOSES OF THIS SECTION, - . (A) 'UNDISCLOSED INCOME' MEANS - (I) AN Y INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY 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 DATE 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 OF COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED ILL THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE CENTAUR MERCANTILE PVT. LTD., 5 NORMAL COURSE REL ATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED; 9. FROM THE ABOVE PROVISIONS, IT IS VERY CLEAR THAT PENALTY U/S..271 AAA IS NOT LEVIABLE IF THE ASSESSEE DURING THE COURSE OF SEARCH, ADMITTED THE UNDISCLOSED INCOME IN HIS STATEMENT U/S.132(4) AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND ALSO SUBSTANTIATE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED AND PAYS THE DUE TAXES TOGETHER WITH INTEREST, IF ANY IN RESPECT OF SUCH INCOME. THESE PROVISIONS ARE APPLICABLE FOR SEARCH AND SEIZURE CASES, ESPECIALLY IN THE YEARS IN WHICH SEARCH HAS BEEN CARRIED OUT AND THE YEAR FOR WHICH THE RETURNS OF INCOME HAD NOT BECOME DUE AS ON THE DATE OF THE SEARCH. I HA VE CONSIDERED THE ARGUMENTS MADE BY THE LEARNED AR AND AM INCLINED TO AGREE WITH THE SAME. THE BOGUS PURCHASES HAS BEEN SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SEARCH, ITS EFFECT HAS BEEN GIVEN IN THE RETURN FILED SUBSEQUENT TO SEARCH AND MANNER OF EARNING UNDISCLOSED INCOME HAS ALSO BEEN EXPLAINED TO A LARGE EXTENT. THEREFORE, IN MY OPINION, NO PENALTY IS LEVIABLE UPON THE ASSESSEE U/S.271 AAA OF THE ACT. 10. THE LEARNED AR FURTHER SUBMITTED THAT DURING THE YEAR, THERE WAS SALE OF SCRAP TO THE TUNE OF RS.25,41,487/ - , DETAILS OF WHICH WERE FOUND DUING THE COURSE OF SEARCH PROCEEDINGS, IN THE FORM OF A DIARY, WHICH WAS SEIZED AS ANNEXURE A1. IT WAS SUBMITTED THAT THE SALE OF THIS SCRAP WAS DISCLOSED BY THE DIRECTOR OF THE COMPANY, SHRI ROSESH KANA KIA, IN HIS STATEMENT U/S.132(4), DETAILS OF WHICH ARE REPRODUCED AS UNDER : - ' Q .7 DURING THE COURSE OF SEARCH PROCEEDINGS ON 29.03.2011 AT THE OFFICE PREMISES AT ATRIUM - 215. IN THE PAGE NUMBER L0 OF THE DICRY FOUND AND SEIZED AS ANNXURE A I. CERTAIN ACC OUNTS OF CASH TRANSACTIONS ARE RECORDED. SHRI KUMAR SHAH AND BHADRESH JOSHI IN THEIR STATEMENT RECORDED DURING THE COURSE OF SEARCH STATED THAT SEIZED PAPER RELATES TO PROJECT CARRIED OUT AT LUCKNOW AND NOTING ON THE SAME IS ON ACCOUNT OF AMOUNT RECEIVED I N CASH ON SALE OF SCRAP. THE TOTAL AMOUNT AGGREGATES TO RS.45 LACS. PLEASE GO THROUGH THE SEIZED PAPER AND EXPLAIN ITS CONTENTS. ANS. I HAVE GONE THROUGH THE SEIZED PAPER, THE NOTINGS ON THIS PAPER RELATES TO CASH RECEIVED ON SALE SCRAP AT THE LUCKNOW SI TE, WHERE WE ARE DEVELOPING THE PROJECT ETERNITY MALL AT LUCKNOW. THESE WERE RECENT SALES AND THE SAME REMAINED TO BE ACCOUNTED IN OUR REGULAR BOOKS OF ACCOUNTS. CASH AMOUNTING TO RSA.13 CRORES FOUND DURING THE DAY OF SEARCH PROCEEDINGS ON 29.3.2011, IN TH E CUSTODY OF SHRI BHADRESH JOHSI AND SHRI KUMAR SHAH IS THE SAME AS NOTED IN THE SEIZED PAPER. THE PROJECT AT LUCKNOW IS BEING CARRIED OUT BY OUR GROUP COMPANY M/S. CENTAUR MERCANTILE PVT. LTD., 6 SUPREME REAL ESTATE DEVELOPERS PVT. LTD. THE SAME WAS STARTED IN AY. 20C8 - 09, BUT STOPPED D UE TO SLOW DOWN OF REAL ESTATE SECTOR. MOREOVER, THERE HAVE BEEN SOME CHANGES IN THE PLANNING OF THE PROJECT ALSO. ALL THE EXPENDITURE INCURRED TILL DATE IN THE PROJECT HAS BEEN ADDED TO WORK IN PROGRESS. THE TREATMENT OF THE SALE OF SCRAP WILL BE GIVEN IN THE ACCOUNTS AS ON 31ST OF MARCH 2011 AS PER THE ACCOUNTING STANDARD PRESCRIBED BY THE ICAI. I AM OFFERING SUM OF RS.45,00,000/ - U/S.132(4) IN THE CASE OF M/S. SUPREME REA/ESTATE DEVELOPERS PVT. LTD. WITH THE UNDERSTANDING THAT NO PENALTY PROCEEDINGS SHAL L BE INITIATED.' ' Q .13 DO YOU WANT TO SAY ANYTHING ELSE? ANS. I WOULD LIKE TO BRING TO YOUR NOTICE THE NOTING ON SEIZED PAPER NO. 1 TO 7 OF DIARY AS ANNEXURE A 1 SEIZED DURING THE COURSE OF SEARCH ON 29.03.2011 AT THIS OFFICE PREMISES RELATES TO CASH R ECEIVED AMOUNTING TO RS.53.17,289/ - ON SALE OF SCRAP GENERATED AT VARIOUS SITES. THIS WAS REPORTED FROM RESPECTIVE SITE AND THE SAME IS VERY RECENT SOLES. DUE TO THIS, THE SAME REMAINED TO BE ACCOUNTED IN REGULAR BOOKS OF ACCOUNT OF GROUP ENTITY WHO HAS UN DERTAKEN THE PROJECT. I SUBMIT THE CHART AS ANNEXURE 4 TO THIS STATEMENT, REFLECTING PROJECT WISE DETAILS ABOUT SALE OF SCRAP, ALL THE EXPENDITURE INCURRED TILL DATE IN THE RESPECTIVE PROJECT HAS BEEN ADDED TO WORK IN PROGRESS, THE TREATMENT OF THE SALE O F SCRAP WILL BE GIVEN IN THE ACCOUNTS AS ON 31ST MARCH, 2011 AS PER THE ACCOUNTING STANDARD PRESCRIBED BY THE ICAI. I AM OFFERING THE SAME U/S132(4) IN THE HANDS OF GROUP ENTITY MENTIONED IN THE SAID CHART WITH THE UNDERSTANDING THAT NO PENALTY SHALL BE IN ITIATED AGAINST THE SAID GROUP ENTITY.' 11. THE LEARNED AR HAS SUBMITTED THAT THE APPELLANT WAS NOT ASKED ABOUT THE MANNER IN WHICH SUCH SALE OF SCRAP WAS EARNED AND ALSO TO SUBSTANTIATE THE MANNER IN WHICH SUCH SALE OF SCRAP WAS DERIVED. THE ASSESSEE HA D DURING THE COURSE OF STATEMENT OFFERED THE ABOVE U/S 132(4) WITH THE PLEA NOT TO INITIATE THE PENALTY PROCEEDINGS. HENCE, PENALTY ON THIS COUNT IS ALSO NOT LEVIABLE. WE RELY ON THE DECISION OF THE HON'BLE ITAT IN THE CASE OF ACIT (OSD), CENLRAL RANGE 7 V . M/S KANAKIA SPACES PVT LTD (ITA NO. 6763/MUM/2011), A GROUP COMPANY WHEREIN THE HON'BLE IT AT HAD DISMISSED THE REVENUE APPEAL FILED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, APPEAL - 40 DELETING THE PENALTY LEVIED U/S.271AAA BY A CIT(OSD), CENTRAL RANGE 7 IN A Y 2007 - 08. WITHOUT PREJUDICE, THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE DID NOT MAKE ANY ENTRIES IN THE BOOKS OF ACCOUNTS REGARDING SALE OF SCRAP. IN THIS REGARD, I HAVE EXAMINED THIS ISSUE AND FEEL THAT THE GAP BETW EEN SALE OF SCRAP AND DALE OF SEARCH IS ABOUT ONE MONTH, AND MONEY WAS BEING GIVEN ON PIECEMEAL BASIS, AND THEREFORE, THE ASSESSEE THOUGHT IT APPROPRIATE TO MAKE ENTRY WHEN ENTIRE AMOUNT IS CENTAUR MERCANTILE PVT. LTD., 7 RECEIVED.'. IN ANY CASE, IT COULD NOT BE THE BASIS FOR REJECTION O F THE CLAIM OF THE ASSESSEE, SPECIALLY WHEN THE BUYER, SHRI NOOR MOHAMMAD, HAS CONFIRMED THIS FACT THROUGH A CONFIRMATION AND ALSO BECAUSE RELEVANT DETAILS OF SALE OF SCRAP WERE AVAILABLE IN THE SEIZED DIARY AND WERE CONFIRMED THE DIRECTORS IN THEIR STATEM ENTS DURING THE COURSE OF SEARCH. 12. I HAVE CONSIDERED THE FACTS OF THE CASE, THERE IS NO DISPUTE TO THE FACT THAT THIS AMOUNT WAS SURRENDERED BY THE ASSESSEE IN HIS STATEMENT DURING THE COURSE OF SEARCH U./S.132(4), THE ASSESSEE HAD ALSO STATED AT THE TIME OF STATEMENT THAT HE WILL GIVE EFFECT OF THIS AMOUNT ON THE BASIS OF ACCOUNTING PRINCIPLES. IT IS FURTHER GATHERED THAT THIS AMOUNT HAS BEEN REDUCED BY THE ASSESSEE OUT OF THE CLOSING WORK - IN - PROGRESS, WHICH HAS BEEN ACCEPTED BY THE AO, THE ASSESSEE H AD ALSO EXPLAINED TO THE AO THAT THIS SALE OF SCRAP WAS MADE TO ONE SHRI NOOR MOHAMMED, WHO PAID SALE CONSIDERATION IN CASH TO THE ASSESSEE, WHICH WAS LYING WITH THE OGM (ACCOUNTS), AS ON THE DATE OF THE SEARCH, AND HAS BEEN STATED SO BY HIM IN HIS STATEME NT, DURING THE COURSE OF SEARCH. THE ASSESSEE HAD ALSO EXPLAINED THAT SINCE SALE OF SCRAP HAD HAPPENED ONLY A FEW DAY BEFORE .THE DATE OF SEARCH, THIS AMOUNT COULD NO' BE ENTERED IN THE BOOKS OF ACCOUNT. 13. IN VIEW OF THE ABOVE FACTS, IT MAY BE CONCLUDE D THAT THE ASSESSEE EXPLAINED THE MANNER OF EARNING UNDISCLOSED INCOME IN NATURE OF SALE OF SCRAP AND ALSO SUBSTANTIATED SUCH SALE OF SCRAP, BY RELEVANT ENTRIES APPEARING IN THE SEIZED DIARY, AS ALSO BY MENTIONING THE NAME OF THE PERSON WHO PURCHASED THE S CRAP. THEREFORE, IN MY OPINION, THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN UNDER SUB - SECTION (2) TO SEC.271 AAA, WHICH PROVIDE THE ASSESSEE IMMUNITY FROM LEVY OF PENALTY U/S.271 AAA. THEREFORE, IN MY OPINION, THE ASSESSEE HAS SUBSTANTIALLY' COMPLI ED WITH THE PROVISIONS OF SUB SECTION 2 TO SECTION 271 AAA OF THE ACT. 14. IN VIEW OF THESE FACTS, I AM NOT IN A POSITION TO ACCEPT THE CONTENTION OF THE LD. AO, THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE MANNER IN WHICH SUCH INCOME WAS EARNED. THE LD. AR, IN THIS REGARD ALSO RELIED UPON HON'BLE GUJRAT HIGH COURT JUDGEMENT IN THE CASE OF CIT VS. MAHENDRA C SHAH (299 ITR 305) AND ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA KISHAN GOEL (278 ITR 454) AND ALSO HON'BLE ITAT'S DECISION IN THE CASE OF M/ S. KANAKIA SPACES PVT. LTD. (ITA NO. 6763/MUM/2011), WHEREIN HON'BLE ITAT HAD DISMISSED THE REVENUE'S APPEAL AGAINST THE ORDER OF THE CIT(A) - 40 DELETING THE PENALTY LEVIED U,'S.271 AAA. IN FACT MY LD. PREDECESSOR IN CASE OF KANAKIA SPACES PVT. LTD. FOR, Y 2011 - 12 HAD DELETED THE PENALTY U/S. 271 AAA UNDER IDENTICAL CIRCUMSTANCES, AGAINST WHICH THE DEPARTMENT WENT INTO APPEAL BEFORE THE ITAT. BUT HON'BLE ITAT CENTAUR MERCANTILE PVT. LTD., 8 DISMISSED THE REVENUE'S APPEAL AGAINST THE ORDER OF MY LD. PREDECESSOR BY OBSERVING AS UNDER: - 'AF TER CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF EH CLT(A). THE ORDER IS IN THE LINE TUNE WITH THE PRINCIPLES LAID DOWN BY THE VARIOUS CO - ORDINATE BENCHES AND HIGH COURTS PARTICULARLY WITH REFERENCE TO DISCLOSU RE MADE U/S.132(4). IN THE CASE OF CLT V. MAHENDRA C SHAH (299 ITR 305), THE HON'BLE GUJARAT HIGH COURT CONSIDERED SIMILAR STATEMENT U/S. 132(4} TO GRANT IMMUNITY U/S. 271 (1 )(C). THE SCOPE & MEANING HAS BEEN LUCIDLY EXPLAINED BY THE HON'BLE ALLAHABAD HI GH COURT IN THE CASE OF CLT V. RADHA KISHAN GOEL (273 ITR 454), WHICH WAS FOLLOWED BY THE GUJARAT HIGH COURT IN THE ABOVE REFERRED CASE. IN VIEW OF THE ABOVE PRINCIPLES LAID DOWN. WE ARE OF THE OPINION THAT IMMUNITY PROVIDED ULS. 271 AAA(2) IS APPLICABLE A ND ACCORDINGLY ORDER OF CLT( A) DOES NOT REQUIRE ANY MODIFICATION.' 15. THE HONBLE . GUJARAT HIGH COURT IN ITS JUDGEMENT IN THE CASE OF CIT VS. - MAHENDRA C SHAH - 299 ITR 305 UNDER SIMILAR CIRCUMSTANCES, OBSERVED THAT WHEN THE STATEMENT IS BEING RECORDE D BY THE AUTHORIZED OFFICER, IT IS INCUMBENT UPON HIM TO EXPLAIN THE PROVISION OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STATE SO AS TO PERMIT THE REVENUE TAKE ADVANTAGE OF SUCH A LA PSE IN THE STATEMENT. THE HON'BLE COURT FURTHER OBSERVED THAT THE REASON IS NOT FAR TO SEE. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN A QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN T HE EXACT FORMAT STIPULATED BY THE PROVISIONS, CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHAKISHAN GOEL. THE HON'BLE COURT ALSO SAID THAT CONSIDERING THE SOCIAL ENVIRONME NT, IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO.2 WHILE MAKING STATEMENT U/S.132(4) OF THE ACT. FOR CLARITY, THE RELEVANT PORTION OF HON 'BLE COURT'S ORDER IS REPRODUCED AS UNDER : - 14. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSMENT YEAR BEING 1988 - 89 AND THE SEARCH HAVING TAKEN PLACE ON 03.07.1987 THE RETURN OF INCOME WAS NOT DUE BEFORE 31.07.1988. THEREFORE, WHETHER THE INCOME REPRESENTED BY THE VALUE OF THE ASSET WAS SHOWN IN THE RETURN OF INCOME OR NOT BECAME IRRELEVANT ONCE A DECLARATION HAD BEEN MADE ABOUT SUCH INCOME HAVING NOT BEEN DISCLOSED TILL THE DATE OF SEARCH IN THE RETURN OF INCOME TO BE FURNISHED BEFORE THE TIME S PECIFIED IN SECTION 139(1) OF THE ACT AS REQUIRED BY THE EARLIER PART OF EXCEPTION NO.2. IN FACT, AT THE CENTAUR MERCANTILE PVT. LTD., 9 COST OF REPETITION, IT IS REQUIRED TO BE STATED THAT HE LEGISLATIVE INTENT AND THE SCHEME THAT FLOWS FROM A PLAIN READING OF THE PROVISION MAKES IT CLE AR THAT IN RELATION TO SEARCH AND SEIZURE PROCEEDINGS, FOR BECOMING ENTITLED TO IMMUNITY FROM LEVY OF PENALTY THE BASIC REQUIREMENT IS IN CASE OF EXCEPTION NO. 1 RELEVANT ENTRY IN THE BOOKS OF ACCOUNT OR DISCLOSURE BEFORE THE COMPETENT AUTHORITY, AND IN RE LATION TO EXCEPTION NO.2 DISCLOSURE IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. DISCLOSURE OR OTHERWISE IN THE RETURN OF INCOME POST THE DATE OF SEARCH WOULD NOT ABSOLVE AN ASSESSEE FROM THE DEEMING PROVISION, NAMELY,' DEEMED CONCEALMENT' ONCE A N ASSESSEE IS FOUND IN POSSESSION OF A VALUABLE ASSET AT THE TIME OF SEARCH. HENCE, THE CONTENTION RAISED ON BEHALF OF THE REVENUE THAT PENALTY IS LEVIABLE UNDER THE MAIN PROVISION FOR CONCEALMENT VIS - A - VIS THE RETURN OF INCOME DOES NOT MERIT ACCEPTANCE.' 15. IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORISED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRELY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STATE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT, THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MADE AVERMENTS IN THE EXACT FORMAT STIPULAT ED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF CLT V. RADHA KISHAN GAEL (SUPRA). SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FORM AN ASSESSEE , WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO.2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OR THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COURT TO THE EFFECT THA T EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED 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. 16. HENCE, THE TRIBUNAL WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT IN SO FAR AS THE VALUE OF DIAMONDS WAS CONCERNED, THE ASSESSEE HAVING MADE A DECLARATION UNDER SECTION 132{4} OF THE ACT AND PAID TAXES THEREON HAD FULFILLED ALL THE CONDITIONS FOR AVAILING THE BENEFIT OF IMMUNITY FROM LEVY OF PENALTY AS PROVIDED UNDER EXPLANATION 5 TO SECTION 271 {I} (C) OF THE ACT. IN ABSENCE OF ANY INFIRMITY IN THE ORDER OF TRIBUNAL ON THIS COURT THE QUESTION CENTAUR MERCANTILE PVT. LTD., 10 REFERRED IS ANSWERED IN THE AFFIRMATIVE I.E. IN FAVOUR OF EH ASSESSEE AND AGAINST THE REVENUE.' THE RATIO OF ABOVE JUDGEMENT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 16. SIMILARLY, HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA KISHAN GOEL - 278 ITR 454, OBSERVED T HAT U/S.132(4) OF THE ACT, UNLESS AUTHORIZED OFFICER PUTS A SPECIFIC QUERY WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IF IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED, BUT HAS BEEN STATED SUBSEQUENTLY AMOUNTS TO COMPLIANCE OF EXPLANATION 5(2) OF THE ACT. THE HONBLE COURT FURTHER MENTIONED THAT IF THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED U/S,132(4) OF THE ACT, IN THE ABSENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE INFERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVED FROM THE BUSINESS WHICH HE WAS CARRYING ON OR FROM OTHER SOURCES. THE OBJECT OF THE PROVISIO N IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON - DISCLOSURE OF MONEY, BULLION, JEWELLERY ETC. THE HON'BLE COURT ALSO SAID THAT MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. FOR CLARIT Y, THE RELEVANT PORTION OF THE ABOVE JUDGEMENT IS REPRODUCED AS URDER : - '8. FROM THE PERUSAL OF THE EXPLANATION 5, IT IS EVIDENT THAT TH~ CIRCUMSTANCES, WHICH OTHERWISE DID NOT ATTRACT THE PENALTY PROVISIONS OF SECTION 271 (1) (C) OF THE ACT, NOW A DEEM ING PROVISION WAS INTRODUCED AS TO ATTRACT THE PENALTY PROVISIONS TO THOSE CASES AS WELL. BUT TO AN EXCEPTION IS PROVIDED IN SUB - 3ECTION (2) OF THE EXPLANATION WHERE DEEMING PROVISION WILL NOT APPLY IF DURING THE COURSE OF SEARCH ASSESSEE MAKES THE STATEME NT UNDER SUB - SECTION (4) OF SECTION 132 OF THE ACT THAT THE MONEY, BULLION, JEWELLERY ETC. FOUND IN HIS POSSESSION HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPE CIFIED IN SECTION 132 OF THE ACT AND ALSO SPECIFIED IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH THE INTEREST, IF ANY IN RESPECT OF SUCH INCOME. THE EXCEPTION APPEARS TO BE TO PROVIDE AN OPPORTUNITY TO TH E ASSESSEE TO MAKE A CLEAN AND FAIR CONFESSION AND TO SURRENDER HIS INCOME AND ALSO TO DEPOSIT THE TAX AND INTEREST THEREON WHICH MAY RESULT TO A AGREED ASSESSMENT. THE PARAMOUNT INTENTION APPEARS TO BE THAT IN CASE OF FAIR AND CLEAN CONFESSION AND SURREND ER OF HIS INCOME DURING THE COURSE OF SEARCH FURTHER LITIGATION MAY BE AVOIDED AND THE REVENUE MAY GET THE TAX AND INTEREST ETC. AT AN EARLIER AND THE ASSESSEE MAY BE CENTAUR MERCANTILE PVT. LTD., 11 SAVED FROM FURTHER LITIGATION. 9. UNDER SECTION 132(4) OF THE ACT, IT IS THE AUTHORIZE D OFFICER, WHO EXAMINE ON OATH ANY PERSON, WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENT, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, THEREFORE, IT IS ON THE AUTHORIZED OFFICER TO RECORD THE STATEMENT IN HI S OWN WAY. THEREFORE, IT IS NOT EXPECTED FROM THE PERSON TO STATE THOSE THINGS, WHICH ARE NOT ASKED BY THE AUTHORIZED OFFICER. 10. IT IS A MATTER OF COMMON KNOWLEDGE, WHICH CANNOT BE IGNORED THAT THE SEARCH IS BEING CONDUCTED WITH THE COMPLETE TEAM OF TH E OFFICERS CONSISTING OF SEVERAL OFFICERS WITH THE POLICE FORCE. USUALLY TELEPHONE CAN ALL OTHER CONNECTION ARE DISCONNECTED AND ALL INGRACE AND OUTGRACE ARE BLOCKED. DURING THE COURSE OF SEARCH PERSON IS SO TORTURED, HARASSED AND PUT TO A MENTAL AGONY THA T HE LOOSES ITS NORMAL MENTAL STATE OF MIND AND AT THAT STAGE IT CAN NOT BE EXPECTED FROM A PERSON PRE - EMPT THE STATEMENT REQUIRED TO BE GIVEN IN LAW AS A PART OR HIS DEFENCE. 11. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT UNDER SECTION 132(4) OF TH E ACT UNLESS AUTHORIZED OFFICER PUTS A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IF IN THE STATEMENT THE MANNER IN' WHICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED BUT HAS BEEN STATED SUBSEQUENTLY, AMOUNTS TO THE COMPLIANCE OF EXPLANATION 5(2) OF THE ACT. WE ARE ALSO OF THE OPINION THAT IN CASE IF THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, I N THE ABSENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE INFERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVED FROM THE BUSINESS, WHICH HE WAS CARRYING ON OR FROM OTHER SOURCE. THE OBJECT OF THE PROVISION IS ACH IEVED BY MAKING THE STATEMENT ADMITTING THE NON - DISCLOSURE OF MONEY BULLION, JEWELLERY ETC. THUS, WE ARE OF THE OPINION THAT MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE 'MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN THE ABSENCE OF ANYTHING TO THE CONTRARY. THEREFORE, MERE NON - STATEMENT OF MANNER IN WHICH SUCH INCOME WAS DERIVED WOULD NOT MAKE THE EXPLANATION 5(2) INAPPLICABLE.' IN MY OPINION, THE RATIO OF THE ABOVE JUD GEMENT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 17. RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE JUDGEMENTS, I HOLD THAT THE ASSESSEE IS ELIGIBLE FOR IMMUNITY FROM PENALTY GRANTED UNDER SUB SECTION 2 OF SECTION 271 AAA AND THEREFORE CENTAUR MERCANTILE PVT. LTD., 12 PENA LTY U/S.271 AAA IS NOT LEVIABLE IN THE INSTANT CASE. I, THEREFORE, DIRECT THE LD. AO TO DELETE THE PENALTY. 4 . WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT DELETION OF SIMILAR PENALTY IMPOSED U/S.271AAA WAS CONFIRMED BY TRIBUNAL VIDE ITS ORDER DATED 10/07/2013 IN I.T.A.NO.6763/MUM/2011 FOR THE ASSESSMENT YEAR 2007 - 2008 IN CASE OF GROUP CONCERN OF ASSESSEE M/S. KANAKIA SPACES PVT. LTD., AFTER HAVING THE FOLLOWING OBSERVATION. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT S EE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). THE ORDER IS IN TUNE WITH THE PRINCIPLES LAID DOWN BY VARIOUS CO - ORDINATE BENCHES AND HIGH COURTS PARTICULARLY WITH REFERENCE TO DISCLOSURE MADE UNDER SECTION 132(4) . IN THE CASE OF CIT VS. MAHENDRA C. SHAH (299 ITR 305) THE HON'BLE GUJARAT 4 ITA NO6763/M/11 A.Y.07 - 08 M/S. KANAKIA SPACES PVT. LTD. HIGH COURT CONSIDERED SIMILAR STATEMENT UNDER SECTION 132(4) TO GRANT IMMUNITY UNDER SECTION 271(1)(C) . THE HON'BLE HIGH COURT HELD AS UNDER: - 'WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OF FICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LA PSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PRO VISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED IN THE SECOND EXCEPTION WHILE MAKING STATEMENT UNDER SECTION 132(4) . EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREO N PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT.' 4.1 IN THIS CASE, THE ASSESSEE WAS ASKED TO EXPLAIN THE ENTRIES IN THE 'WORK - IN - PROGRESS SHEET' AND ASSESSEE IN THE COURSE OF STATEMENT OFFERED THE INCOME WITH A PLEA NOT TO INITIATE PENALTY PROCEEDINGS. THE ASSESSEE WAS NOT ASKED ABOUT THE MANNER IN WHICH SUCH INCOME WAS EARNED AND ALSO TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED. THE PROVISION OF CLAUSE - 2 OF EXPLANATION - V APPENDED TO SECTION 271(1)(C) ARE SIMILAR TO SECTION 271AAA(2) . THE SCOPE AND MEANING HAS BEEN LUCIDLY EXPLAINED BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA KISHAN CENTAUR MERCANTILE PVT. LTD., 13 GOEL (2005) 278 ITR 454 (ALL.), WHICH WAS FOLLOWED BY THE HON'BLE GUJARAT HIGH COURT IN THE ABOVE REFERRED CASE. IN VIEW OF THE ABOVE PRINCIPLES LAID DOWN, WE ARE OF THE OPINION THAT IMMUNITY PROVIDED UNDER S/S.(2) OF SECTION 271AAA IS APPLICABLE AND 5 ITA NO6763/M/11 A.Y.07 - 08 M/S. KANAKIA SPACES PVT. LTD. ACCORDINGLY, THE ORDER OF CIT(A) DOES NOT REQUIRE ANY MODIFICATION. REVENUE' S GROUNDS ARE REJECTED. 5. IN THE RESULT, REVENUE APPEAL IS DISMISSED. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ODERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT WITH RESPECT TO THE DISCLOSURE MADE DURING COURSE OF SE ARCH, U/S.132(4) THE ASSESSEE HAS EXPLAINED THE SOURCE OF INCOME AND ALSO PAID TAXES AND INTEREST THEREON AS PER THE FINDING RECORDED BY THE CIT(A) IN HIS ORDER. WHILE DELETING PENALTY , CIT(A) HAS APPLIED PROPOSITION OF LAW LAID DOWN BY VARIOUS HIGH COURT S AS WELL AS TRIBUNAL AND REACHED TO THE CONCLUSION THAT NON - STATEMENT OF MANNER IN WHICH SUCH INCOME WAS DERIVED WOULD NOT MAKE THE EXPLANATION 5(2) INAPPLICABLE.' WE ALSO FOUND THAT IN THE GROUP CONCERN, SIMILAR PENALTY LEVIED IN THE YEAR OF SEARCH WAS D ELETED BY CIT(A) AND THE ORDER OF THE CIT(A) WAS CONFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 10/07/2013 AS REPRODUCED HEREINABOVE. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, WE CONFIRM THE ORDER OF CIT(A). HOWEVER, AO I S AT A LIBERTY TO VERIFY ACTUAL PAYMENT OF TAX AND INTEREST THEREON WITH RESPECT TO THE DISCLOSED INCOME AS PER PROVISIONS OF THE ACT. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02 / 12 /2016 S D/ - ( AMIT SHUKLA ) S D/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 02 / 12 /201 6 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT CENTAUR MERCANTILE PVT. LTD., 14 BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//