Prithi Paul Singh Sethi, Kolkata V. DCIT, Central Circle - XXII, Kolkata

ITA 1825/KOL/2009

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5059 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TIBREWAL
• Keywords: Search and seizure; Retrospective amendment; Initiation of penalty proceedings
• Section: 133A; 153A; 132; 15

Judgement Text

I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NOS. 1825 & 1826/KOL/2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PRITHI PAUL SINGH SETHI,........................... .................................APPELLANT 12A, AMRIT BANERJEE LANE, KOLKATA-700 026 [PAN : AOAPS 8866 A] -VS.- DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL),....... .............RESPONDENT CIRCLE-XXII, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 APPEARANCES BY: SHRI A.K. TIBREWAL, FCA AND SHRI AMIT AGARWAL, ADVO CATE, FOR THE ASSESSEE SHRI DAVID Z. CHAWNGTHU, ACIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JANUARY 12, 2016 DATE OF PRONOUNCING THE ORDER : FEBRUARY 24, 2016 O R D E R PER SHRI P.M. JAGTAP :- THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL- III, KOLKATA DATED 28.08.2009, WHEREBY HE CONFIRMED THE PENALTIES OF RS.7,23,020/- AND RS.10,95,440/- IMPOSED BY THE ASS ESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT FOR ASSESSMENT YEARS 2 005-06 AND 2006-07 RESPECTIVELY. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO BELONGS TO BASIL/ APPELLINE GROUP BEING THE CEO AND DIRECTOR O F M/S. VAMSHI CHEMICALS LIMITED. A SEARCH AND SEIZURE ACTION UNDE R SECTION 132 WAS CONDUCTED IN THE CASES BELONGING TO THE SAID GROUP ON 27.12.2006 INCLUDING THE CASE OF THE ASSESSEE. PURSUANT TO THE SAID SEARCH, NOTICES UNDER SECTION 153A WERE ISSUED BY THE ASSESSING OFF ICER TO THE ASSESSEE. I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 2 OF 8 DURING THE COURSE OF SEARCH, ADDITIONAL INCOME OF R S.10,00,00,000/- WAS OFFERED ON BEHALF OF THE ENTIRE GROUP AND IN THE RE TURNS OF INCOME FILED IN RESPONSE TO THE NOTICES ISSUED UNDER SECTION 153A, AN AMOUNT OF RS.9,36,62,582/- WAS OFFERED IN THE HANDS OF THE VA RIOUS ASSESSEES BELONGING TO THE GROUP. OUT OF THE SAID AMOUNT, A S UM OF RS.21,48,000/-, RS.32,54,418/- AND RS.9,35,000/- WAS OFFERED IN THE HANDS OF THE ASSESSEE FOR A.Y. 2005-06, 2006-07 AND 2007-08 RESPECTIVELY AND ACCORDINGLY THE RETURNS IN RESPONSE TO NOTICES UNDER SECTION 153A W ERE FILED BY THE ASSESSEE DECLARING TOTAL INCOME OF RS.37,64,840/- A ND RS.70,77,980/- FOR THE A.Y. 2005-06 AND 2006-07 RESPECTIVELY. IN THE A SSESSMENTS COMPLETED UNDER SECTION 153A/143(3) OF THE ACT, THE INCOME DE CLARED BY THE ASSESSEE IN THE RETURNS OF INCOME FOR A.Y. 2005-06 AND 2006-07 WAS ACCEPTED BY THE ASSESSING OFFICER. 3. SUBSEQUENTLY PENALTY PROCEEDINGS UNDER SECTION 2 71(1)(C) WERE INITIATED BY THE ASSESSING OFFICER IN RESPECT OF AD DITIONAL INCOME OFFERED BY THE ASSESSEE IN THE RETURNS OF INCOME FILED IN R ESPONSE TO NOTICES UNDER SECTION 153A FOR BOTH THE YEARS UNDER CONSIDE RATION. THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO THE PENALTY NOTICES ISSUED BY THE ASSESSING OFFICER MAINLY WAS THAT THE ADDITIONAL INCOME HAD BEEN OFFERED VOLUNTARILY AND THE SAME HAVING BEEN A CCEPTED IN THE ASSESSMENTS, THERE WAS NO CASE OF ANY CONCEALMENT O F PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME WARRANTING LEVY OF PENALTY UNDER SECTION 271(1)(C). THIS EXPLANATIO N OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCO RDING TO HIM, THE ADDITIONAL INCOME WAS DISCLOSED BY THE ASSESSEE ONL Y AS A RESULT OF SEARCH AND SO THE DISCLOSURE MADE BY THE ASSESSEE COULD NO T BE CONSIDERED AS VOLUNTARY. HE, THEREFORE, PROCEEDED TO IMPOSE PENAL TIES OF RS.7,23,020/- AND RS.10,95,440/- UNDER SECTION 271(1)(C) FOR A.Y. 2005-06 AND 2006-07 RESPECTIVELY BEING 100% OF THE TAX SOUGHT TO BE EVA DED BY THE ASSESESE IN RESPECT OF ADDITIONAL INCOME OFFERED AS A RESULT OF SEARCH. I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 3 OF 8 4. THE PENALTIES IMPOSED BY THE ASSESSING OFFICER U NDER SECTION 271(1)(C) FOR BOTH THE YEARS UNDER CONSIDERATION WE RE CHALLENGED BY THE ASSESSEE IN THE APPEALS FILED BEFORE THE LD. CIT(AP PEALS). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT( APPEALS), THE ASSESSEE MAINLY CLAIMED THE IMMUNITY AVAILABLE UNDER CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C) BY CONTENDING THAT THE INCOME OFF ERED DURING THE COURSE OF SEARCH HAVING BEEN DULY DECLARED IN THE R ETURNS OF INCOME AND TAX THEREON HAVING BEEN PAID, NO PENALTY UNDER SECT ION 271(1)(C) WAS LEVIABLE AS PER CLAUSE 2 OF EXPLANATION 5 TO SECTIO N 271(1)(C). THIS STAND OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT(APPEALS). ACCORDING TO HIM, THE INCOME DISCLOSED BY THE ASSES SEE WAS ON ACCOUNT OF PERSONAL EXPENDITURE AND NOT ON ACCOUNT OF ANY INCO ME UTILIZED FOR ACQUIRING MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THINGS FOUND DURING THE COURSE OF SEARCH. HE ALSO NOTED TH AT THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF INCOME FROM WHICH THE PERSO NAL EXPENDITURE WAS MADE. HE, THEREFORE, HELD THAT THE CONDITIONS STIPU LATED UNDER CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C) WAS NOT SATISFIE D AND THE ASSESSEE WAS NOT ENTITLED OR ELIGIBLE TO CLAIM THE IMMUNITY PROV IDED THEREIN. ACCORDINGLY, THE PENALTIES IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) FOR BOTH THE YEARS UNDER CONSIDERATION WE RE CONFIRMED BY THE LD. CIT(APPEALS). AGGRIEVED BY THE ORDERS OF THE LD . CIT(APPEALS), THE ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRI BUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE MAINLY RAISED T HREE CONTENTIONS IN SUPPORT OF THE ASSESSEES CASE THAT THE PENALTIES I MPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) AND CONFIRMED BY TH E LD. CIT(APPEALS) FOR BOTH THE YEARS UNDER CONSIDERATION ARE NOT SUSTAINA BLE. FIRSTLY, HE TOOK US THROUGH THE ASSESSMENT ORDERS PASSED BY THE ASSE SSING OFFICER TO SHOW THAT THE SATISFACTION REQUIRED FOR INITIATING THE P ENALTY PROCEEDINGS WAS NEITHER SPECIFICALLY RECORDED BY THE ASSESSING OFFI CER NOR THE SAME WAS DISCERNABLE FROM THE ASSESSMENT ORDERS PASSED BY HI M. RELYING ON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF SUVAPRASANNA BHATTACHARYA VS.- ACIT RENDERED VIDE ITS ORDER DATED I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 4 OF 8 06.11.2015 IN ITA NO. 1303/KOL/2010, HE CONTENDED T HAT IN THE ABSENCE OF THIS BASIC REQUIREMENT INITIATION OF PENALTY PRO CEEDINGS ITSELF WAS BAD IN LAW AND THE PENALTIES IMPOSED IN PURSUANCE THERE OF ARE LIABLE TO BE CANCELLED. SECONDLY, HE CONTENDED THAT THE INCOME D ECLARED BY THE ASSESSEE IN RESPONSE TO THE NOTICES ISSUED BY THE A SSESSING OFFICER UNDER SECTION 153A HAVING BEEN ACCEPTED IN THE ASSESSMENT S BY THE ASSESSING OFFICER WITHOUT MAKING ANY FURTHER ADDITION, THERE WAS NO CASE OF ANY CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASS ESEE OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME WARRANTING LE VY OF PENALTY AS HELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KI RIT DAYABHAI PATEL VS.- ACIT (INCOME TAX APPEAL NOS. 1181, 1182 & 1185 OF 2 010 DATED 03.12.2014). HE CONTENDED THAT THE CONDITIONS STIPU LATED IN CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C) WERE ALSO DULY S ATISFIED BY THE ASSESSEE AND THE IMMUNITY AVAILABLE THEREIN WAS WRO NGLY DENIED BY THE LD. CIT(APPEALS) TO THE ASSESSEE ON THE BASIS OF A LL IRRELEVANT GROUNDS, WHICH ARE NOT GERMANE TO THE ISSUE. 6. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE THAT THE CASE OF THE ASSESESE IS A FIT CASE TO IMPOSE PENALTIES UNDER S ECTION 271(1)(C). HE CONTENDED THAT THE ADDITIONAL INCOME WAS SURRENDERE D AND OFFERED BY THE ASSESESE TO TAX IN THE RETURNS OF INCOME FILED IN R ESPONSE TO NOTICES UNDER SECTION 153A ONLY AS A RESULT OF ADVERSE FINDINGS O F THE SEARCH AND SEIZURE ACTION AND THE SAME, THEREFORE, CANNOT BE CONSIDERE D AS VOLUNTARY DISCLOSURE MADE BY THE ASSESSEE TO EXONERATE HIM FR OM THE LEVY OF PENALTY UNDER SECTION 271(1)(C). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE FIRST CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE REGARDIN G THE LACK OF SATISFACTION ARRIVED AT BY THE ASSESSING OFFICER FO R INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C), IT IS OBSERVED THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHARYA (SUPRA) I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 5 OF 8 HAS CONSIDERED THIS ASPECT IN DETAIL IN THE LIGHT O F THE PROVISIONS OF SECTION 271(1B) OF THE ACT AS WELL AS THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MS. MADHUSHREE GUPTA VS. - UNION OF INDIA REPORTED LIN 317 ITR 107 (DEL.) AND THAT OF THE HON BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LIMITED VS.- CIT REPORTE D IN 358 ITR 593 (SC) AND IT IS WORTHWHILE TO REFER TO THE OBSERVATIONS R ECORDED BY THE TRIBUNAL IN THIS CONTEXT IN PARAGRAPHS NO. 6 & 7 OF ITS ORDE R, WHICH ARE EXTRACTED BELOW:- 6. WE SHALL NOW DEAL WITH THE QUESTION WHETHER PRO PER SATISFACTION WAS ARRIVED AT BY THE AO FOR INITIATING PENALTY PROCEEDINGS U/S.271(1 )(C), IN THE COURSE OF CONCLUDING THE ASSESSMENT PROCEEDINGS, WHEREIN THE ADDITIONS IN RE SPECT OF WHICH PENALTY WAS IMPOSED WERE MADE. ON THE ABOVE ISSUE, THE FIRST ASPECT WH ICH, WE NOTICE IS THAT IN THE ORDER OF ASSESSMENT, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER, NOWHERE SPELLS OUT OR INDICATES THAT THE AO WAS OF THE VIEW THAT THE ASSE SSEE WAS GUILTY OF EITHER CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THE OFFER TO TAX OF INCOME BY THE ASSESSEE HAS JUST BEEN ACCEPTED. IT IS NO DOUBT TRUE THAT IT IS NOT THE REQUIREMENT OF THE LAW THAT THE SATISFACTION HAS TO BE RECORDED IN A PARTICULAR MANNER, ESPECIALLY AFTER THE INTRODUCTION OF THE PROVISIONS OF SEC.271(1B) OF THE ACT WITH RETROSPECTIVE EFFECT FROM 1.4.1989. NEVERTHELESS, AS LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF MS.MADHUSHREE GUPTA (SUPRA), T HE POSITION OF LAW BOTH PRE AND POST SEC.271(1B) OF THE ACT IS SIMILAR, INASMUCH, THE AO WILL HAVE TO ARRIVE AT A PRIMA FACIE SATISFACTION DURING THE COURSE OF PROCEEDINGS WITH REGARD TO THE ASSESSEE HAVING CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS, BEFORE HE INITIATES PENALTY PROCEEDINGS PRIMA FACIE SATISFACTION OF THE AO THAT THE CASE MAY DESERVE THE IMPOSITION OF PENALTY SHOULD BE DISCERNIBLE FROM THE ORDER PAS SED DURING THE COURSE OF THE PROCEEDINGS. AT THE STAGE OF INITIATION OF PENALTY PROCEEDING, THE ORDER PASSED BY THE AO NEED NOT REFLECT SATISFACTION VIS-A-VIS EACH AND EV ERY ITEM OF ADDITION OR DISALLOWANCE, IF OVERALL SENSE GATHERED FROM THE ORDER IS THAT A FUR THER PROGNOSIS IS CALLED FOR. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DAT A (P) LTD. (SUPRA) HAS TO BE UNDERSTOOD IN THE CONTEXT OF THE FACTS OF THE SAID CASE. THE RELEVANT PORTION OF THE JUDGMENT IN THE AFORESAID CASE, READS THUS: 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE I N VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCER N OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOT ICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BA NK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANS FER 8 DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEED INGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CO NCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSE E TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE R ETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR T HAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STA TUTORY DUTY OF THE ASSESSEE TO I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 6 OF 8 RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT , TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UND ER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCE EDINGS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR R EDUCE IT INTO WRITING. 7. THE REVENUE PLACES RELIANCE ONLY ON THE SENTENCE APPEARING IN PARA-10 OF THE JUDGMENT WITHOUT READING IT IN THE CONTEXT OF THE O BSERVATIONS IN THE LAST PORTION OF PARA-9 OF THE SAID JUDGMENT. THEREFORE EVEN THE HONBLE SU PREME COURTS DECISION SUGGESTS THAT THE SATISFACTION NEED NOT BE RECORDED IN A PARTICULAR M ANNER BUT FROM A READING OF THE ASSESSMENT ORDER AS A WHOLE SUCH SATISFACTION SHOUL D BE CLEARLY DISCERNIBLE. IF THE AO ACCEPTS ALL THE CONTENTIONS OF THE ASSESSEE AND THE OFFER OF INCOME THAT HAS NOT BEEN DECLARED IN THE RETURN OF INCOME TO TAX WITHOUT IND ICATING EITHER DIRECTLY OR INDIRECTLY THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, IT CANNOT BE SAID THAT SATISFACTION FOR INI TIATION OF PENALTY PROCEEDINGS IS DISCERNIBLE FROM THE ORDER OF ASSESSMENT. IF THE AS SESSEE IN GOOD FAITH OFFERS INCOME TO TAX VOLUNTARILY PRIOR TO ANY POSITIVE DETECTION BY THE AO, SUCH VOLUNTARY OFFER CANNOT BE TAKEN ADVANTAGE OF BY THE AO TO INITIATE PENALTY PROCEEDI NGS AGAINST THE ASSESSEE WITHOUT SPECIFYING THE REASONS WHY PENALTY PROCEEDINGS ARE INITIATED U/S.271(1)(C) OF THE ACT. IN THE PRESENT CASE, WE HAVE READ THE ORDER OF ASSESSM ENT AS A WHOLE AND ARE SATISFIED THAT SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS IS NOT DISCERNIBLE FROM THE ORDER OF ASSESSMENT. WE THEREFORE CONCUR WITH THE ARGUMENT O F THE LEARNED COUNSEL FOR THE ASSESSEE THAT INITIATION OF PENALTY PROCEEDINGS WAS NOT PROP ER IN THE PRESENT CASE AND ON THAT GROUND THE IMPOSITION OF PENALTY U/S.271(1)( C) OF THE ACT IS UNSUSTAINABLE. 8. KEEPING IN VIEW THE DECISION OF THE TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTACHARYA (SUPRA), THE LD. D.R. WAS REQUIRED BY US TO POINT OUT ANY OBSERVATION OR FINDING RECORDED BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDERS FOR BOTH THE YEARS UNDER CONS IDERATION, FROM WHICH THE SATISFACTION AS REQUIRED TO BE ARRIVED AT BY HI M TO INITIATE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IS DISCERNABLE. HOWEVER, HE HAS NOT BEEN ABLE TO PINPOINT ANY SUCH OBSERVATION OR FINDI NG RECORDED BY THE ASSESSING OFFICER IN THIS CONTEXT. A PERUSAL OF THE ASSESSMENT ORDER ALSO SHOWS THAT THERE IS NO SUCH OBSERVATION OR FINDING GIVEN BY THE LD. CIT(APPEALS) FROM WHICH THE SATISFACTION AS REQUIRE D TO BE ARRIVED AT BY THE ASSESSING OFFICER IS DISCERNABLE. THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUVAPRASANNA BHATTA CHARYA (SUPRA) THUS IS I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 7 OF 8 CLEARLY APPLICABLE IN THE PRESENT CASE AND RESPECTF ULLY FOLLOWING THE SAME, WE HOLD THAT IN THE ABSENCE OF THE REQUISITE SATISF ACTION RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, THE INIT IATION OF PENALTY PROCEEDINGS ITSELF WAS BAD IN LAW AND THE PENALTIES IMPOSED IN PURSUANCE OF SUCH INITIATION ARE NOT SUSTAINABLE. 9. IT IS ALSO OBSERVED THAT THE INCOME SURRENDERED DURING THE COURSE OF SEARCH WAS DECLARED BY THE ASSESSEE IN THE RETUR NS OF INCOME FILED FOR BOTH THE YEARS UNDER CONSIDERATION IN RESPONSE TO T HE NOTICES ISSUED BY THE ASSESSING OFFICER UNDER SECTION 153A AND THE IN COME SO DECLARED WAS ACCEPTED BY THE ASSESSEE WITHOUT MAKING ANY FURTHER ADDITION. IN THE CASE OF CIT VS.- KIRIT DAYABHAI PATEL VS- ACIT (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, IT WAS HELD BY THE HONBLE GUJARA T HIGH COURT THAT THE PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE ONLY ON THE INCOME ASSESSED OVER AND ABOVE THE INCOME RETURNED UNDER SECTION 15 3A. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS NOT BROUGHT TO OUR NOTICE ANY DECISION OF THE HONBLE HIGH COURT OR HONBLE SUPREME COURT TAKING A DIFFERENT VIEW ON THIS ASPECT. WE, THEREFORE, RESPECTFULLY FO LLOW THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAY ABHAI PATEL (SUPRA) TO HOLD THAT PENALTIES IMPOSED BY THE ASSESSING OFFICE R UNDER SECTION 271(1)(C) ARE NOT SUSTAINABLE ON THIS GROUND ALSO. ACCORDINGLY, WE CANCEL THE PENALTIES IMPOSED BY THE ASSESSING OFFICER UNDE R SECTION 271(1)(C) AND CONFIRMED BY THE LD. CIT(APPEALS) FOR BOTH THE YEARS UNDER CONSIDERATION AND ALLOW THESE APPEALS OF THE ASSESS EE. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 24, 2016. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 24 TH DAY OF FEBRUARY, 2016 COPIES TO : (1) PRITHI PAUL SINGH SETHI, 12A, AMRIT BANERJEE LANE, KOLKATA-700 026 I.T.A. NO. 1825 & 1826/KOL./2009 ASSESSMENT YEARS: 2005-2006 & 2006-2007 PAGE 8 OF 8 (2) DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL), CIRCLE-XXII, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 (3) COMMISSIONER OF INCOME-TAX (APPEALS), CENTRAL- III, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.