Mohinder Kumar Gupta, New Delhi V. ACIT, Faridabad

ITA 1836/DEL/2013

• Counselvise Citation: 183620114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M B REDDY
• Keywords: Search and seizure; Application of stay
• Section: 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER ITA NO.1835/DEL/2013 ASSESSMENT YEAR : 2009-10 STAY APPLICATION NO.433/DEL/2013 (ITA NO.1835/DEL/2013) ASSESSMENT YEAR : 2009-10 SITA RAM GUPTA, 35 LINK ROAD, 2 ND FLOOR, LAJPAT NAGAR III, NEW DELHI. PAN : ABOPG7349F VS. ACIT, CENTRAL CIRCLE-I, FARIDABAD. ITA NO.1836/DEL/2013 ASSESSMENT YEAR : 2009-10 MOHINDER KUMAR GUPTA, 35 LINK ROAD, 2 ND FLOOR, LAJPAT NAGAR III, NEW DELHI. PAN : AAXPG8999B VS. ACIT, CENTRAL CIRCLE-I, FARIDABAD. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ASHWANI KUMAR, CA DEPARTMENT BY : SHRI M.B. REDDY, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THESE ARE ASSESSEES APPEALS FOR ASSESSMENT YEAR 2009-10, AGA INST THE ORDERS DATED 22.1.2013 AND 21.1.2013, PASSED BY TH E LD. CIT (CENTRAL), ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 2 GURGAON. THE ISSUE INVOLVED BEING SIMILAR IN BOTH THE CASES, THEY ARE BEING DISPOSED OF BY THIS COMPOSITE ORDER. THE FACTS ARE BEIN G TAKEN FROM ITA NO.1835/DEL/2013 WITH REFERENCE TO WHICH THE MATTER WAS ARGUED. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THAT THE LEARNED ASSESSING OFFICER AS WELL AS LEA RNED COMMISSIONER OF INCOME TAX (APPEAL) HAVE ERRED WHIL E IMPOSING/UPHOLING THE IMPOSITION OF PENALTY OF RS.64,2 7,700/- (RS.55,61,700/- IN ITA NO.1836/DEL/2013) U/S 271AAA OF THE INCOME TAX ACT, 1961, IN SPITE OF THE FACT THAT THE ASSESSEE HAS ADMITTED THE UNDISCLOSED INCOME IN THE STATEMENT RECORDED U/S 132 (4 ) (II). THE ASSESSEE HAS ALSO SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED (III) THE ASSESSEE HAS ALSO SUBSTANTIATES THE M ANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY WAY OF FURNISH ING CASH BOOK, LEDGER, PROFIT & LOSS ACCOUNT, BALANCE SHEET, TAX AUDI T REPORT ETC (IV) AND PAYS THE TAX/DUES. 2. THAT THE LEARNED ASSESSING OFFICER AS WELL AS LEAR NED COMMISSIONER OF INCOME TAX (APPEAL) HAVE ERRED WHIL E HOLDING THAT THE PARTICULARS OF TRANSACTIONS, I.E., NAMES OF THE PAR TIES IS REQUIRED TO BE DISCLOSED TO COMPLY WITH THE CONDITIONS OF SUBSTANTIAT ES THE MANNER. 3. THAT THE LEARNED ASSESSING OFFICER AS WELL AS LEAR NED COMMISSIONER OF INCOME TAX (APPEAL) ARE ALSO WRONG ARITHMETICALLY. THE TOTAL INCOME DISCLOSED IN THIS CASE WAS RS.640.00 LAKHS AND THE MAXIMUM PENALTY IMPOSABLE U/S 271AAA COMES TO RS.64.0 0 LAKHS. 4. THAT THE LEARNED ASSESSING OFFICER AS WELL AS LEAR NED COMMISSIONER OF INCOME TAX (APPEAL) HAVE FAILED TO A PPRECIATE THE FACTS OF THE CASE, THE EVIDENCES PRODUCED IN SUPPORT OF THESE FACTS. THE LEARNED ASSESSING OFFICER HAS MISINTERPRETED THE PROVI SION OF THE SECTION 271AAA. THE SECTION REQUIRES THE SPECIFICATION OF THE MANNER AND NOT THE PARTICULARS OF THE PARTIES OF THE TRANSACTIO NS. FURTHER THE LEARNED ASSESSING OFFICER HAS ALSO FAILED TO APPRECI ATE THAT THE ASSESSEE HAS CATEGORICALLY SUBSTANTIATED THE MANNER BY WAY OF PREPARING THE BOOKS OF ACCOUNTS AND OBTAINING THE TAX A UDIT REPORT. 2. THE FACTS ARE THAT IN THIS CASE, A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 29.1.2009 COVERING THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE RETURN FILED FOR THE INSTANT ASSESSMENT YEAR U/S 139(1) OF THE ACT ON 30.6.2009 DECLARING TOTAL INCO ME OF ` 6,46,60,107/- BE CONSIDERED AS RETURN FILED IN RESPONSE TO SECTION 153A. ASSESSMENT WAS COMPLETED U/S 153B R.W.S. 143 (3) OF THE INCOME TAX ACT AT A TOTAL INCOME OF ` 6,49,36,707/- ON 31.12.2010. WHILE COMPLETING THE A SSESSMENT, PENALTY ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 3 PROCEEDINGS U/S 271AAA OF THE ACT WAS INITIATED IN RESP ECT OF SURRENDER OF ` 6,40,00,000/- MADE BY THE ASSESSEE ON ACCOUNT OF CASH F OUND AT DIFFERENT PLACES BELONGING TO THE ASSESSEE. THE PENALTY WAS LEVIED U/S 271AAA AT ` 64,00,000/-. 3. WHILE LEVYING THE PENALTY, THE AO OBSERVED, INTER ALIA, THAT IN THE PRESENT CASE, PENALTY U/S 271AAA OF THE IT ACT CAN BE AVOIDED, IF ALL THE FOLLOWING CONDITIONS ARE SATISFIED:- A) IF THE ASSESSEE IN A STATEMENT U/S 132 (4) IN THE COURSE O F THE SEARCH ADMITS THE UNDISCLOSED INCOME; B) FURTHER, HE SPECIFIES THE MANNER, IN WHICH SUCH INCOME HAS BEEN DERIVED; C) HE SUBSTANTIATES THE MANNER, IN WHICH THE UNDISCLOSED IN COME WAS DERIVED; D) HE PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN R ESPECT OF THE UNDISCLOSED INCOME. 4. THE AO FURTHER OBSERVED THAT IN THE PRESENT CASE, THE ASSESSEE DID NOT SATISFY ALL OF THE ABOVE CONDITIONS OF SECTION 271AAA (2) OF THE ACT; THAT IN HIS REPLY, THE ASSESSEE HAD ADMITTED THAT IN HIS STATEMEN T RECORDED U/S 132 (4) OF THE ACT, THE INCOME, AS HAD BEEN DECLARED IN THE RETURN FILED; THAT HE STATED THAT HE HAD SUBSTANTIATED THE MANNER IN WHICH T HE UNDISCLOSED INCOME WAS DERIVED; THAT THIS STATEMENT WAS TOTALLY WRO NG, SINCE DURING THE ASSESSMENT PROCEEDINGS, VIDE LETTER DATED 28.10.10 THE A SSESSEE HAD BEEN ASKED TO GIVE THE DETAILS OF LAND TRANSACTIONS WITH NA MES AND ADDRESSES OF THE PERSONS FROM WHOM THE LAND HAD BEEN PURCHASED AND TO WHOM THE LAND HAD BEEN SOLD; THAT THE ASSESSEE DID NOT FILE ANY DETAIL IN RESPONSE; THAT FURTHER, FROM THE VERIFICATION OF THE BANK ACCOUNT OF THE ASSESSEE, IT HAD BEEN FOUND THAT DURING THE FINANCIAL YEAR, THE ASSESSEE HAD MADE CASH DEPOSITS OF ` 2.45 CRORES IN SBI, NIZAMUDDIN, NEW DELHI AND OF ` 1.75 CRORE IN J&K BANK, MANDI GOVINDGARH, BUT NO SOURCE WITH EVIDE NCE HAD BEEN FILED DURING THE ASSESSMENT PROCEEDINGS; THAT THE ASSESSEE HAD EXP LAINED THAT ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 4 THE SOURCE OF THE CASH DEPOSITED IN THE BANKS WAS FROM L AND DEALS, BUT NO DETAILS OF LAND TRANSACTIONS HAD BEEN FILED; THAT FROM THE VERIFICATION OF THE ENTRIES RECORDED IN THE DIARIES SEIZED DURING THE SEARC H, THE LOCATION AND OWNERSHIP OF THE LAND WAS NOT ASCERTAINED, NOR THE NA MES AND ADDRESSES OF THE SELLERS AND PURCHASERS HAD BEEN DISCLOSED BY THE ASSESSEE FOR CROSS VERIFICATION; THAT THUS, THE ASSESSEE HAD NEITHER SPECIF IED THE MANNER, NOR SUBSTANTIATED THE MANNER, IN WHICH SUCH INCOME HAD BEE N DERIVED; AND THAT THEREFORE, THE PROVISIONS OF SECTION 271AAA OF THE AC T WERE CLEARLY ATTRACTED. 5. VIDE THE IMPUGNED ORDER, THE LD. CIT (A) DISMISSED TH E APPEAL OF THE ASSESSEE, CONFIRMING THE LEVY OF PENALTY. IT WAS OBSERVED THAT THOUGH IN HIS STATEMENT RECORDED U/S 132 (4) OF THE ACT, THE ASSESSEE H AD ADMITTED THE UNDISCLOSED INCOME, HE HAD NOT STATED AS TO HOW THIS UND ISCLOSED INCOME HAD BEEN DERIVED; THAT THE DETAILS OF EACH TRANSACTI ON, AND ALL THE PERSONS INVOLVED HAD NOT BEEN DISCLOSED; THAT THE MANNER IN W HICH THE UNDISCLOSED INCOME HAD BEEN DERIVED, HAD ALSO NOT BEEN SUBSTANTIA TED; THAT WHEN HE WAS ASKED TO FURNISH THE EVIDENCE REGARDING THESE ADMIT TED TRANSACTIONS, THE ASSESSEE HAD STATED THAT THE DEALINGS WERE IN CASH AND THE TRANSACTIONS STOOD COMPLETED; THAT THIS STATEMENT WAS NOT SUFFICIENT; THAT CASH OF ` 7,20,90,395/- HAD BEEN FOUND AT THE PREMISES OF THE A SSESSEE, APART FROM INCRIMINATING DOCUMENTS CONTAINING TRANSACTIONS AND SAL E/PURCHASE OF LAND; THAT THEREFORE, SOMETHING MORE WAS REQUIRED ON THE PA RT OF THE ASSESSEE TO ELUCIDATE THE MANNER OF EARNING SUCH A LARGE INCOME NOT DISCLOSED IN HIS RETURN OF INCOME; AND THAT THEREFORE, THE PROVISIONS OF SECTION 271AAA OF THE ACT STOOD CORRECTLY APPLIED. APPLYING DY. CIT VS. PI ONEER MARBLES & INTERIORS (P) LTD. (2012) 144 TTJ (KOL) 663, THE LD. CIT (A) HELD THAT THE ASSESSEE HAD NOT DISCHARGED THE ONUS OF SUBSTANTIATING THE MANNER IN WHICH THE INCOME HAD BEEN DERIVED, DUE TO WHICH THE CONDITION LAID D OWN IN SECTION 271AAA (2) (II) REMAINED UNFULFILLED. ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 5 6. THE LD. COUNSEL FOR THE ASSESSEE, CHALLENGING THE IMPUGN ED ORDER, HAS CONTENDED THAT THE LD. CIT (A) HAS ERRED IN UPHOLDIN G THE IMPOSITION OF PENALTY LEVIED ON THE ASSESSEES U/S 271AAA OF THE ACT; TH AT THIS DESPITE THE FACT THAT THE ASSESSEE HAD ADMITTED THE UNDISCLOSED INCO ME IN THE STATEMENT RECORDED U/S 132 (4) OF THE ACT; THAT THE ASSESSEE HAD A LSO SPECIFIED THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED; THAT T HE ASSESSEE HAD ALSO SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOM E HAD BEEN DERIVED, BY WAY OF FURNISHING THE CASH BOOK, LEDGER, PROFIT & LOSS ACCOUNT, BALANCE SHEET, TAX AUDIT REPORT, ETC.; THAT THE ASSE SSEE HAD ALSO PAID THE DUE TAXES; THAT THE LD. CIT (A) HAS ERRED IN CONFIRM ING THAT THE PARTICULARS OF THE TRANSACTIONS, I.E., THE NAMES OF THE PARTIES IS TO B E DISCLOSED IN ORDER TO COMPLY WITH THE CONDITIONS QUA THE SUBSTANTIATION OF THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; THAT THE PROVISIONS OF S ECTION 271AAA OF THE ACT HAS BEEN MISINTERPRETED BY THE LD. CIT (A); T HAT IT HAS NOT BEEN CONSIDERED THAT SECTION 271AAA REQUIRES THE SPECIFICAT ION OF THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND NOT THE P ARTICULARS OF THE PARTIES TO THE TRANSACTIONS; THAT IT HAS NOT BEEN TAKE N INTO CONSIDERATION THAT BY PREPARING THE BOOKS OF ACCOUNT AND OBTAINING THE TAX AUDIT REPORT, AND FILING THE SAME, THE ASSESSEE HAD FULLY SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THE LD. COUSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING CASE LAWS:- 1. DCIT VS. SHRI INDERCHAND SURAJMAL BOTHRA, ITA NO.1 39/PN/2010 2. SHRI PRAMOD KUMAR JAIN & M/S JRC RESOURCES (P) LTD. V S. DCIT, (2013) 33 TAXMANN.COM 651 (CUTTACK TRIB.) 3. SHRI ASHOK KUMAR SHAR & ORS VS. DCIT (2013) 33 TAXM ANN.COM 652 (CUTTACK TRIB.) 4. MOTHERS PRIDE EDUCATION PERSONNA PVT. LTD. VS. DCIT, (ITA NO.3372/DEL/2011) 5. SULOCHANADEVI A. AGARWAL VS. DCIT (ITA NO.1052/AHD /2012. 6. CIT VS. MAHENDRA C. SHAH, (2008) 299 ITR 305 (GUJ) 7. CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 454 (ALL) ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 6 8. SMT. RAJ RANI GUPTA VS. DCIT, (ITA NO.3371/DEL/201 1) 9. CONCRETE DEVELOPERS VS. ACIT, (2013) 34 TAXMANN.COM 62 (NAGPUR TRIB.) 10. NEERAT SINGAL VS. ACIT (ITA NO.337/DEL/2013. 7. PER CONTRA, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDERS. IT HAS BEEN POINTED OUT THAT DURING THE SEARCH , CASH AMOUNTING TO ` 7,20,90,395/- WAS FOUND FROM THE RESIDENCE AND LOCKER S OF THE ASSESSEE AND THAT ON QUERY, THE ASSESSEE HAD SUBMITTED THAT HE HAD SU RRENDERED ` 640 LACS AS AGAINST AN AMOUNT OF ` 540 LACS EARNED AS PROFIT FROM LAND TRANSACTIONS. IT HAS BEEN SUBMITTED THAT THE STATEMENT R ECORDED U/S 132 (4) OF THE ACT WAS NOT THAT OF THE ASSESSEE BUT OF HIS SON. DR AWING ATTENTION TO PAGE 57 OF THE ASSESSEES PAPER BOOK (APB FOR SHORT), THE LD. DR HAS POINTED OUT THAT IN THE CHART SHOWING THE BIFURCATI ON OF THE AMOUNT OF INCOME SURRENDERED, AS FILED BEFORE THE AO IN THE ASSESSM ENT PROCEEDINGS, IN THE COLUMN PARTICULAR SOURCE OF INCOME, IF ANY, THE ASSESSEE HAD MERELY STATED THAT HE HAD EARNED THIS MONEY BY WAY OF UNDE RTAKING TRANSACTIONS OF PURCHASE & SALES OF LAND/AGRICULTURAL LANDS. IN ALL SUCH CASES WRITTEN DOCUMENTS ARE NOT AVAILABLE. FURTHERMORE, THE ENTIRE TRANSACTIONS WAS IN CASH. THE MODUS OPERANDI NORMALLY EMPLOYED WAS TO ENT ER INTO AN AGREEMENT FOR PURCHASE AND EVEN BEFORE THE FINAL EXE CUTION OF THE DOCUMENT TRANSFERRED THE AMOUNT BY WAY OF DIRECT AGREEMENT BE TWEEN THE ORIGINAL SELLER AND THE PURCHASER. AND THE DIFFERENCE ON THESE FACTS IS TAKEN AS INCOME. IT HAS BEEN THUS CONTENDED BY THE LD. DR THA T SO, NOWHERE WAS THE MANNER OF DERIVING THE UNDISCLOSED INCOME EXPLAINED B Y THE ASSESSEE; THAT NO DETAILS WERE GIVEN; THAT WHEREAS U/S 271C OF THE AC T THE RIGOR OF PENALTY IS 300%, QUA SECTION 271AAA, SUCH RIGOR IS ONLY OF 10%; THAT THEREFORE, WHAT IS APPLICABLE FOR SECTION 271 (1)(C) OF THE ACT CANNOT BE HELD APPLICABLE FOR CASES FALLING U/S 271AAA THEREOF. IN THIS MANNER, ACCOR DING TO THE LD. DR, THE LEVY OF PENALTY IN THESE CASES HAS CORRECTLY BEEN UPHEL D BY THE LD. CIT (A). THE LD. DR, HAS ACCORDINGLY, PRAYED FOR DISMISSAL OF BO TH THE APPEALS. ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 7 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE RECORD . THE ISSUE BEFORE US IS AS TO WHETHER INDEED, AS HELD BY THE AUTHO RITIES BELOW AND AS CANVASSED BEFORE US BY THE LD. DR ALSO, PENALTY U/S 271 AAA OF THE ACT IS LEVIABLE ON THE ASSESSEE AND HAS BEEN CORRECTLY IMPOSED, FOR THE DEFAULT OF NOT SUBSTANTIATING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY THE ASSESSEE, THE CONDITION MANDATED BY THE PROVISION S OF SECTION 271AAA (2) (II). 9. AS AVAILABLE FROM THE PENALTY ORDER AS WELL AS THE ORD ER UNDER APPEAL, THE RELEVANT PORTION OF THE STATEMENT OF SHRI MOHIND ER KUMAR GUPTA, THE ASSESSEE IN ITA NO.1836/DEL/2013 AND SON OF SHRI SITA R AM GUPTA, THE ASSESSEE IN ITA NO.1835/DEL/2013, AS RECORDED ON 20.02.2 009 IS AS FOLLOWS:- QUES2. WHILE LIFTING THE RESTRAINT ORDER U/S 132 (3) P UT ON ALMIRAH ON 30.01.2009 BESIDES THREE BOXES OF JEWELLERY, SOME CLOTHES AND A DIARY (VARINDAVAN 1994), NOTEBOOK (NEELGAGAN) HAS BE EN FOUND IN THE PRESENCE OF TWO WITNESSES. WHILE RECORDING THE STATEMEN T, SMT. MAHIMA GUPTA HAS EXPRESSED HER IGNORANCE ABOUT THE CON TENTS OF THE DIARY/NOTEBOOK AND THENATURE OF ENTRIES RECORDED THERE IN THE SAME HAVE BEEN SEIZED ANDMARKED AS ANNEXURE A-1 & A-2. I AM SHOWING YOU THE SAME. PLEASE STATE AS TO WHOM THIS DIARY AND NOTE BO OK BELONG TO? ANS: I HAVE SEEN BOTH THE DIARY AND THE NOTEBOOK. THEY ARE ROUGH RECORDS AS IT APPEARS. THE NOTE BOOK, I.E., ANNEXURE A-1 CONTAINS TRANSACTIONS IN THE HANDWRITING OF MY FATHER, SH. SITA RA M GUPTA AND THE ANNEXURE A-2, I.E., DIARY VARNDAVAN 1994. CONTAIN S CERTAIN NOTING UNDER MY HAND. I CONFIRM THAT THESE BELONG TO MY FATHER AND MY SELF RESPECTIVELY. QUES.3: PLEASE EXPLAIN THE NATURE OF ENTRIES RECORDED IN DIARY AND NOTE BOOK WHEREIN ENTRIES RUNNING INTO LACS OF RUPEES AS CASH RECEIVED PAYMENT HAVE BEEN RECORDED? ANS: THE NOTING RELATE TO THE TRANSACTIONS OF SALE AND PURCHASE OF LAND/AGRICULTURAL LAND/FARMHOUSE, ETC. IN THE BOTH AN NEXURES. IN FACT, THE TRANSACTION IN THE ANNEXURE A-2, AT PAGE-5 SHOWS THAT STAR WIRE HAS PAID RS.200 LAKHS FOR THE PURCHASE OF 25 ACRES A GRICULTURAL LAND AT VILLAGE PRITHLA THE. PALWAL DISTT. FARIDABAD. THE RAT E AGREED UPON IS RS.56 LAKHS PER ACRE. THE SAID LAND HAS BEEN SOLD I N TWO PARTS, FIVE ACRES ALDN @ RS.75 LACS PER ACRE AND 20 ACRE LAND W AS SOLD @ RS.70 LALCS PER ACRE. THE TRANSACTION WAS COMPLETED. THE PR OFIT EARNED AT RS.375 LACS ONLY IN CASH. THE OTHER TRANSACTIONS ARE A LSO OF THE SAME NATURE. ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 8 QUES.4 DO YOU HAVE ANY EVIDENCE THAT THESE TRANSACTION RELATE TO SALE/PURCHASE OF LAND I.E. IF ANY AGREEMENT TO SALE, SALE/PURCHASE DEED AVAILABLE WITH YOU? ANS: NO. THE DEALINGS WERE IN CASH AND THE TRANSACTION S STANDS COMPLETED. 10. IT IS EVIDENT ON RECORD THAT IN THE RETURN FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED INCOME OF ` 6,46,60,000/-. AN AMOUNT OF ` 6.40 CRORES WAS SURRENDERED. THE INCOME WAS ASSESSED AT ` 6,49,39,700/-, OR, SAY, AT AROUND THE INCOME DECLARE D. 11. IT IS CORRECT, AS, AGAIN, PATENT ON RECORD THAT THE P ARTICULARS OF THE TRANSACTIONS, I.E., THE NAMES AND ADDRESSES OF THE PARTIE S TO THE TRANSACTIONS AND THE DETAILS OF THE LAND/S TRANSACTED IN WERE NOT D ISCLOSED BY THE ASSESSEE. THE QUESTION IS AS TO WHETHER STILL THE ASSESSEE CAN BE SAID TO HAVE SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. 12. IN CIT VS. RADHA KISHAN GOEL (SUPRA) (CLPB 41-47), I T HAS BEEN, INTER ALIA, HELD AS FOLLOWS:- 8. SECTION 132 (4) OF THE ACT READS AS FOLLOWS: (4) THE AUTHORIZED OFFICER MAY, DURING THE COURSE OF THE SEARCH OF SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUC H PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDINGS UNDER THE INDIAN INCO ME- TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE EXAMINATION OF ANY PERSON, UNDER THIS SUB-SECTION MAY BE NOT MERELY IN RESPECT OF ANY BOOK S OF ACCOUNT, OTHER DOCUMENTS OR ASSETS FOUND AS A RESULT O F THE SEARCH, BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDINGS UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 9 9. FROM A PERUSAL OF EXPLANATION 5 IT IS EVIDENT THAT I N CIRCUMSTANCES WHICH OTHERWISE DID NOT ATTRACT THE PENALTY P ROVISIONS OF SECTION 271 (1)(C) OF THE ACT, NOW A DEEMING PROVISIO N WAS INTRODUCED AS TO ATTRACT THE PENALTY PROVISIONS TO THOSE CASES AS WEL L. BUT AN EXCEPTION IS PROVIDED IN CLAUSE (2) OF EXPLANATION 5 WHERE THE DEEMING PROVISION WILL NOT APPLY IF DURING THE COURSE OF SEAR CH THE ASSESSEE MAKES THE STATEMENT UNDER SUB-SECTION (4) OF SECTION 13 2 OF THE ACT THAT THE MONEY, BULLION, JEWELLERY, ETC., FOUND IN HIS POSSESSION HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DI SCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIR Y OF TIME SPECIFIED IN SECTION 139 OF THE ACT AND ALSO SPECIFIES IN THE STATE MENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCO ME. THE EXCEPTION APPEARS TO BE TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO MAKE A CLEAN AND FAIR CONFESSION AND TO SURRENDER HIS INCOM E AND ALSO TO DEPOSIT THE TAX AND INTEREST THEREON WHICH MAY RESULT IN A N AGREED ASSESSMENT. THE PARAMOUNT INTENTION APPEARS TO BE THAT IN THE CASE OF FAIR AND CLEAN CONFESSION AND SURRENDER OF HIS INCO ME, DURING THE COURSE OF SEARCH FURTHER LITIGATION MAY BE AVOIDED A ND THE REVENUE MAY GET THE TAX AND INTEREST, ETC., AT AN EARLIEST AND THE ASSESSEE MAY BE SAVED FROM FURTHER LITIGATION. 10. UNDER SECTION 132 (4) OF THE ACT, IT IS THE AUTHORIZE D OFFICER, WHO EXAMINES ON OATH ANY PERSON, WHO IS FOUND TO BE IN PO SSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BU LLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, THEREFORE, IT IS FO R THE AUTHORIZED OFFICER TO RECORD THE STATEMENT IN HIS OWN WAY. THEREFO RE, IT IS NOT EXPECTED FROM THE PERSON TO STATE THOSE THINGS, WHICH ARE NOT ASKED BY THE AUTHORIZED OFFICER. 11. IT IS A MATTER OF COMMON KNOWLEDGE, WHICH CANNOT B E IGNORED THAT THE SEARCH IS BEING CONDUCTED WITH THE COMPLETED TEAM OF THE OFFICERS CONSISTING OF SEVERAL OFFICERS WITH THE POLI CE FORCE. USUALLY TELEPHONE AND ALL OTHER CONNECTIONS ARE DISCONNECTED A ND ALL INGRESS AND EGRESS ARE BLOCKED. DURING THE COURSE OF SEARCH PERSON IS SO TORTURED, HARASSED AND PUT TO A MENTAL AGONY THAT HE LOSES HIS NORMAL MENTAL STATE OF MIND AND AT THAT STAGE IT CANNOT BE EXPECTED FROM A PERSON TO PREEMPT THE STATEMENT REQUIRED TO BE GIVEN IN LA W AS A PART OF HIS DEFENCE. 12.1 IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT UND ER SECTION 132 (4) OF THE ACT UNLESS THE AUTHORIZED OFFICER PUTS A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DER IVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REG ARD AND IN CASE IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEE N DERIVED HAS NOT BEEN STATED BUT HAS BEEN STATED SUBSEQUENTLY, THAT AMOUNTS TO E COMPLIANCE WITH EXPLANATION 5 (2) OF THE ACT. WE AR E ALSO OF THE OPINION THAT IN CASE THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED UNDER SECTION 132 (4) OF THE ACT, IN THE ABSE NCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE INFERRED THAT SUCH UNDISCLOSED INC OME WAS DERIVED ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 10 FROM THE BUSINESS WHICH HE WAS CARRYING ON OR FROM OTHER SOURCES. THE OBJECT OF THE PROVISION IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON-DISCLOSURE OF MONEY, BULLION, JEWEL LERY, ETC. THUS, WE ARE OF THE OPINION THAT MUCH IMPORTANCE SHOULD NOT BE ATTA CHED 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 N ON-STATEMENT OF THE MANNER IN WHICH SUCH INCOME WAS DERIVED WOULD NO T MAKE EXPLANATION 5 (2) INAPPLICABLE. 13. THE ABOVE OBSERVATIONS OF THEIR LORDSHIPS WERE MADE WITH REFERENCE TO PENALTY U/S 271(1)(C) OF THE IT ACT. 14. IN CIT VS. MAHENDRA C. SHAH, (2008) 299 ITR 30 5 (GUJ) (CLPB 30-40), AGAIN, CONSIDERING THE PENALTY U/S 271 (1)(C) OF THE ACT, FOLLOWING RADHA KISHAN GOEL (SUPRA), IT WAS HELD:- 15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132 (4) OF THE AC T REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFI CE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OF FICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PR OVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO P ERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMEN T. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATE MENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOU LD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE S ETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHAB AD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA). SECONDLY, CONSID ERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESS EE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POIN T REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO.2 WHILE MAKING S TATEMENT UNDER SECTION 132 (4) OF THE ACT. THE VIEW TAKEN BY THE TRIBU NAL AS WELL AS ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEME NT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIA L COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER E XCEPTION NO.2 IN EXPLANATION 5 IS COMMENDABLE. 15. IN NEERAT SINGAL (SUPRA) (CLPB 60-77), FOLLOWI NG RADHA KISHAN GOEL (SUPRA) AND MAHENDRA C. SHAH (SUPRA), PENALTY LEVI ED U/S 271AAA OF THE ACT WAS DELETED. WHILE DOING SO, IT WAS HELD, INTER ALIA, THAT: ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 11 16. IN VIEW OF ABOVE FACTS OF THE PRESENT CASE WHEREF ROM IT IS EVIDENT THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE AUTHORI ZED OFFICER OF THE DEPARTMENT HAD NOT RAISED ANY SPECIFIC QUERY REGAR DING THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERI VED AND ON THE CONTRARY THE ASSESSEE HAS TRIED TO EXPLAIN THE EARNING O F THE UNDISCLOSED INCOME IN QUESTION IN ITS REPLY DURING TH E COURSE OF RECORDING OF HIS STATEMENT U/S 132(4) OF THE ACT AND THE REAFTER. WE THUS RESPECTFULLY FOLLOWING THE RATIO OF ABOVE CITED DE CISIONS OF HONBLE ALLAHABAD HIGH COURT AND HONBLE GUJARAT HIGH COURT H OLD THAT IN ABSENCE OF QUERY RAISED BY THE AUTHORIZED OFFICER DUR ING THE COURSE OF RECORDING OF STATEMENT U/S 132 (4) ABOUT THE MANNER IN W HICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT ITS SUB STANTIATION, THE AO WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S 271AAA OF THE ACT SPECIALLY WHEN THE OFFERED UNDISCLOSED INCOME HAS BE EN ACCEPTED AND DUE TAX THEREON HAS BEEN PAID BY THE ASSESSEE. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW IN THIS REG ARD DIRECT THE AO TO DELETE THE PENALTY OF RS. 12,50,00,000/- LEVIED U/S 271AAA OF THE ACT. THE GROUND IS ACCORDINGLY ALLOWED. 16. IN NEERAT SINGAL, (SUPRA) (CLPB 60-77), IN THE SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE, CERTAIN DOCUMENTS RELATING TO TR ANSACTIONS IN PROPERTIES UNDERTAKEN BY THE ASSESSEE WERE FOUND AND SEIZ ED. AS PER THESE DOCUMENTS, THE ASSESSEE HAD AN OUTSTANDING SUM OF ` 3 CRORE AND ` 6 CRORES FROM VARIOUS PERSONS, WHICH WAS DULY DISCLOSED AS ADDITION AL INCOME FOR AY 2010-11, WHILE MAKING STATEMENT U/S 132 (4) OF THE A CT. ADDITIONALLY, THE ASSESSEE HAD PAID IN CASH A SUM OF ` 17,86,57,781/-, FOR PURCHASE OF LAND, WHICH WAS ALSO DECLARED AS ADDITIONAL INCOME FOR AY 20 10-11, WHILE MAKING STATEMENT U/S 132 (4) OF THE ACT. IN THE SAID STATEMENT THE ASSESSEE HAD ADMITTED THAT HE HAD ENTERED INTO VARIOUS FORWARD/SPE CULATIVE AND PROPERTY TRANSACTIONS DURING THE CONCERNED PERIOD. IN VIEW OF THIS, AN INCOME OF ` 125 CRORES ARISING OUT OF THE SAID TRANSACTIONS WAS DECLARED IN THE STATEMENT RECORDED AT THE TIME OF THE SEARCH. THIS INCLUDED THE SAID AMOUNT AS UNDISCLOSED. SUBSEQUENTLY, THE TAXES DUE THEREON WERE A LSO PAID AND THE SAME INCOME AS THAT DECLARED IN THE RETURN OF INCOME FILED WAS ALSO ACCEPTED BY THE DEPARTMENT. 17. THE FACTS IN NEERAT SINGAL (SUPRA) ARE, MUTATIS MUTANDIS, UNDISPUTEDLY, EXACTLY SIMILAR TO THOSE PRESENT IN THE APPEALS BEFORE US NOW. ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 12 THEREIN ALSO, THE MANNER OF DERIVING THE UNDISCLOSED I NCOME WAS SUBSTANTIATED WITHOUT GIVING THE DETAILS OF THE TRANSA CTIONS AND THE NAMES AND ADDRESSES OF THE PARTIES TO THE TRANSACTIONS. IN BOTH THE MATTERS, THE DECLARED INCOME WAS ACCEPTED AS SUCH BY THE DEPARTMENT ITSELF. IN BOTH THE MATTERS, DUE TAXES WERE PAID. IN BOTH THE MATTERS, SURR ENDERS WERE MADE. IN BOTH THE MATTERS, WHAT WAS INQUIRED OF THE ASSESSEES WAS DU LY REPLIED TO BY THEM. THE ANSWER TO THE QUESTION OF SPECIFYING THE MA NNER IN WHICH THE UNDISCLOSED INCOME HAD BEEN DERIVED AND SUBSTANTIATED, WAS NOT REJECTED BY THE AO. IN BOTH THE MATTERS THE AUTHORIZED OFFICER D ID NOT ASK ANY OTHER SPECIFIC QUESTION OF THE ASSESSEES. NO DECISION CONTRARY TO THE ABOVE DECISIONS HAS BEEN CITED BEFORE US. 18. SECTIONS 271AAA (1) AND (2) OF THE ACT READS AS FO LLOWS:- (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CON TAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CA SE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007 BUT BEFORE THE 1 ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PERCENT OF THE UNDISCLOSED INCOME OF TH E SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SEC. (1) SHALL APPLY IF THE A SSESSEE, - (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB- SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INC OME AND SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN D ERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT O F THE UNDISCLOSED INCOME. 19. THUS, EVIDENTLY, PENALTY U/S 271AAA IS NOT LEVIABL E IF AN ASSESSEE, IN HIS STATEMENT RECORDED DURING THE SEARCH U/S 132 OF THE ACT, ADMITS THE UNDISCLOSED INCOME, SPECIFIES AND SUBSTANTIATES THE MANNE R IN WHICH IT HAS BEEN DERIVED AND PAYS THE TAXES DUE THEREON, TOGETHE R WITH INTEREST. HERE, UNDISPUTEDLY, THE ASSESSEE HAS PAID DUE TAX ON THE ADMIT TED UNDISCLOSED INCOME. THE QUESTION OF SPECIFYING THE MANNER IN WHIC H THE UNDISCLOSED ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 13 INCOME WAS DERIVED, STOOD DULY ANSWERED BY THE ASSESSEE BEFORE THE AUTHORITIES. THE SAME WAS ACCEPTED BY THE AO, WITHOUT VARIATION, THIS FACT ITSELF EVIDENCING THE ASSESSEE HAVING PASSED THE TEST OF SE CTION 271AAA OF THE ACT. THEN, THERE IS NO SPECIFIC FORMAT/PROCEDURE PRESCRIBED IN THE ACT FOR SPECIFYING AND SUBSTANTIATING AN UNDISCLOSED INCOME. T HE STATEMENT OF THE ASSESSEE, SPECIFYING THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED AND SUBSTANTIATED, DID NOT FACE ANY REBUTTAL OR REJECTION AT THE HANDS OF THE AO. AS PER THE STATEMENT RECORDED (WHICH STATEM ENT, THOUGH NOT OF THE ASSESSEE IN ITA NO.1835/DEL/2013, WAS OF HIS SON, I.E. , THE ASSESSEE IN ITA NO.1836/DEL/2013 AND WAS RATIFIED BY HIM, AS POIN TED OUT BY THE LD. COUNSEL FOR THE ASSESSEES BEFORE US), IT HAD BEEN ADMITTE D THAT THE ASSESSEE HAD ENTERED INTO VARIOUS TRANSACTIONS OF SALE/PURCHASE OF LAND DURING THE CONCERNED PERIOD. THE INCOME ARISING OUT OF THE SAID TRANSACTIONS WAS DECLARED. THIS INCLUDED THE UNDISCLOSED AMOUNT. LATER, DUE TAXES THEREON WERE ALSO PAID. 20. BESIDES, IN MOTHERS PRIDE EDUCATION PERSONNA PVT. LTD. (SUPRA) (AUTHORED BY ONE OF US THE LD. AM) (CLPB 16-21), A GAIN, RADHA KISHAN GOEL (SUPRA) AND MAHENDRA C. SHAH (SUPRA) HAVE BEEN FOL LOWED TO DELETE THE PENALTY LEVIED U/S 271AAA OF THE ACT. 21. RADHA KISHAN GOEL (SUPRA) AND MAHENDRA C. SHAH (SUPRA) HAVE ALSO BEEN FOLLOWED IN SMT. RAJ RANI GUPTA (CLPB 48-53) , CONCRETE DEVELOPERS (SUPRA) (CLPB 54-59) AND SMT. SULOCHANADEVI A. AGAR WAL (SUPRA) (CLPB 23- 29). 22. FOR THE ABOVE DISCUSSION, WE HOLD THAT THE ASSESSEE HAS SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THAT BEING SO, THE CONDITION LAID DOWN BY SECTION 271AAA (2) (II) HAS BEEN DULY MET. WE HOLD THAT THEREFORE, THE LD. CIT (A) ERRED IN DECID ING THIS ISSUE AGAINST THE ASSESSEE. ITA NOS.1835 & 1836/DEL/2013 STAY NO.433/DEL/2013 14 23. CONSEQUENTLY, THE GRIEVANCE OF THE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. 24. AS STATED AT THE BEGINNING OF THIS ORDER, THE FACT S IN ITA NO.1836/DEL/2013 ARE, MUTATIS MUTANDIS, EXACTLY SIMIL AR TO THOSE IN ITA NO.1835/DEL/2013. HENCE, OUR DISCUSSION ON THE MATTER SHALL APPLY EQUALLY FOR ITA NO.1836/DEL/2013 ALSO. 25. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THE STAY APPLICATION NO.433/DEL/2013 IN ITA NO.1835/DEL /2013 IS DISMISSED AS HAVING BECOME INFRUCTUOUS. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2 014. SD/- SD/- [ J.S. REDDY ] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30 TH JUNE, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.