ACIT, Central Circle-3, Nashik V. M/s. Chhoriya Developers & Construction Co., Jalgaon

ITA 1949/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72484 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 05-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MODI; S P WALIMBE
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Search and seizure; Loose papers
• Section: 143(3); 153A; 132; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 1389 & 1390/PN/2012 (A. YS. : 2006-07 & 2007-08 ) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. CHHORIYA LAND DEVELOPERS AND CONSTRUCTION COMPANY, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AADFC1329B . RESPONDENT ITA NO. 1391/PN/2012 (A. Y. : 2006-07) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. CHHORIYA BUILDERS AND ASSOCIATES, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AADFC9467A . RESPONDENT ITA NOS. 1392 & 1393/PN/2012 (A. YS. : 2003-04 & 2004-05 ) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. SHRI DILIP DEVICHAND JAIN, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AAQPJ5449Q . RESPONDENT ITA NO. 1394/PN/2012 (A. Y. : 2003-04) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. SHRI KANHAILAL D JAIN, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AAOPJ6974A . RESPONDENT ITA NO. 1395/PN/2012 (A. Y. : 2003-04) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. SHRI SHANTILAL DEVICHAND JAIN, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AAYPJ6450D . RESPONDENT ITA NOS. 1922 TO 1925/PN/2012 (A. YS. : 2003-04 TO 2007-08) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. M/S. CHHORIYA BUILDERS & ASSOCIATES, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AADFC9467A . RESPONDENT ITA NOS. 1926 TO 1929/PN/2012 (A. YS. : 2004-05 TO 2007-08) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. SHRI KANHAIYALAL DEVICHAND JAIN, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AAOPJ6974A . RESPONDENT ITA NOS. 1930 TO 1933/PN/2012 (A. YS. : 2004-05 TO 2007-08) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. SHRI SHANTILAL DEVICHAND JAIN, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AAYPJ6450D . RESPONDENT ITA NOS. 1934 TO 1938/PN/2012 (A. YS. : 2004-05 TO 2008-09) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. M/S. CHHORIYA LAND DEVELOPERS & ASSOCIATES, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AADFC6935B . RESPONDENT ITA NOS. 1946 TO 1948/PN/2012 (A. YS. : 2003-04 TO 2005-06) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. M/S. CHHORIYA LAND DEVELOPERS & CONSTRUCTION CO., 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AADFC1329B . RESPONDENT ITA NOS. 1949 & 1950/PN/2012 (A. YS. : 2006-07 & 2008-09) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. M/S. CHHORIYA DEVELOPERS & CONSTRUCTION CO., 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AADFC2486M . RESPONDENT ITA NOS. 1951 TO 1953/PN/2012 (A. YS. : 2003-04, 2004-05 & 2006-07) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. SHRI SHAILAJA SHANTILAL CHHORIYA, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AANPC4485G . RESPONDENT ITA NOS. 1957 & 1958/PN/2012 (A. YS. : 2005-06 & 2006-07) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, NASHIK . APPELLANT VS. SHRI DILIP DEVICHAND JAIN, 4, MAHAVIR HOUSING SOCIETY, MOHADI ROAD, JALGAON 425 002. PAN : AAQPJ5449Q . RESPONDENT DEPARTMENT BY : MR. A. K. MODI & MR. S. P. WALIMBE ASSESSEE BY : MR. SUNIL PATHAK DATE OF HEARING : 13-12-2013 & 16-12-2013 DATE OF PRONOUNCEMENT : 20-12-2013 ORDER PER G. S. PANNU, AM ALL THE CAPTIONED APPEALS PREFERRED BY THE REVENUE RELATE TO DIFFERENT ASSESSEES BELONGING TO ONE GROUP. IN ALL THE APPEA LS, A COMMON ISSUE IS INVOLVED RELATING TO PENALTIES LEVIED BY THE ASSESS ING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) CONSE QUENT TO ASSESSMENTS MADE BY HIM FOR RESPECTIVE ASSESSMENT YEARS U/S 143 (3) R.W.S. 153A OF THE ACT. SINCE THE APPEALS RELATE TO THE ASSESSEES OF THE SAME GROUP INVOLVING A COMMON ISSUE, THEY HAVE BEEN CLUBBED AND A CONSOLID ATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE BACKGROUND OF THE CAPTIONED APPEALS CAN BE B RIEFLY NOTED AS FOLLOWS. THE CAPTIONED ASSESSEES BELONG TO CHHORIY A-JAIN GROUP OF CASES OF JALGAON AND THEY ARE ENGAGED IN THE BUSINESS OF LAN D DEVELOPERS. A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE CHHORIYA-JAIN GROUP OF CASES AT JALGAON ON 22.08.20 08. IT TRANSPIRES THAT DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS AND MATERIAL WAS FOUND AND SEIZED. PERTINENTLY, THE INCRIMINATING M ATERIAL SO FOUND SHOWED EARNING OF SALE CONSIDERATION FOR PLOTS WHICH WAS O VER AND ABOVE THE AMOUNTS STATED IN THE REGULAR BOOKS OF ACCOUNT. THE MATERI AL FOUND DURING THE COURSE OF SEARCH ALSO REVEALED CERTAIN EXPENDITURES ON PUR CHASE OF LAND INCURRED BY THE ASSESSEE GROUP WHICH WAS NOT RECORDED IN THE RE GULAR BOOKS OF ACCOUNT. FURTHER, AT THE TIME OF SEARCH, A STATEMENT U/S 132 (4) OF THE ACT WAS RECORDED WHEREIN MR. KANHAIYALAL D. JAIN, HEAD OF THE FAMILY DECLARED A SUM OF RS.11,44,93,507/- AS AN ADDITIONAL INCOME WHICH WAS HITHERTO NOT DECLARED IN THE REGULAR BOOKS OF ACCOUNT. THE SAID ADDITIONAL INCOME WAS DECLARED FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09 AND INCLUDING T HE ASSESSMENT YEAR 2009-10 WHICH CORRESPONDED TO THE PREVIOUS YEAR DUR ING WHICH THE SEARCH WAS CONDUCTED. IN THE RETURNS OF INCOME FILED BY V ARIOUS GROUPS CONCERNS AFTER THE SEARCH IN RESPONSE TO THE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 153A(1)(A) OF THE ACT, THE TOTAL ADDITIONAL INCOME WAS DECLARED AT RS.13.99 CRORES AS AGAINST THE ORIGINAL DECLARATION OF RS.1 1,44,93,507/- MADE IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. IN THE A SSESSMENTS SUBSEQUENTLY MADE BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 153 A(1)(B) OF THE ACT, THE INCOME RETURNED IN THE RESPECTIVE RETURNS FILED HAV E BEEN ASSESSED AS SUCH AND NO ADDITIONS HAVE BEEN MADE OVER AND ABOVE WHAT WAS DISCLOSED IN THE RETURNS OF INCOME. OSTENSIBLY, IN THE RETURNS FILE D IN PURSUANCE TO THE NOTICES ISSUED U/S 153A(1)(A) OF THE ACT, ASSESSEE DISCLOSE D INCOME WHICH WAS HIGHER THAN THE INCOME THAT WAS DISCLOSED IN THE RETURNS F ILED U/S 139 OF THE ACT, FOR THE RESPECTIVE YEARS. CONSEQUENTLY, THE ASSESSING OFFICER HAS LEVIED PENALTY U/S 271(1)(C) OF THE ACT WITH RESPECT TO THE ADDITI ONAL INCOME DECLARED AND ASSESSED IN THE RETURNS FILED U/S 153A(1)(A) OF THE ACT OVER AND ABOVE THE INCOME DECLARED EARLIER IN THE RETURNS FILED U/S 13 9 OF THE ACT. THE AFORESAID PENALTIES LEVIED BY THE ASSESSING OFFICER ARE THE S UBJECT-MATTER OF DISPUTE IN THE PRESENT APPEALS, BECAUSE SUCH LEVY HAS BEEN SET -ASIDE BY THE CIT(A). 3. IN THE ABOVE BACKGROUND, THE APPEAL IN THE CASE OF M/S. CHHORIYA LAND DEVELOPERS & ASSOCIATES VIDE ITA NO.1934/PN/2012 PE RTAINING TO THE ASSESSMENT YEAR 2004-05 IS TAKEN AS THE LEAD CASE T O APPRECIATE THE RELEVANT FACTS AND CIRCUMSTANCES LEADING UP TO THE PRESENT D ISPUTE. AS NOTED EARLIER, THE ASSESSEE M/S. CHHORIYA LAND DEVELOPERS & ASSOCI ATES IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF LAND DEVELOPERS AND FOR THE ASSESSMENT YEAR 2004-05 IT FILED A RETURN OF INCOME U/S 139 OF THE ACT ON 26.10.2004 DECLARING A LOSS OF RS.1,74,480/-. SUBSEQUENTLY, IN RESPONSE TO A NOTICE U/S 153A(1)(A) OF THE ACT ON 15.07.2009, ASSESSEE FURNISHED A RETU RN OF INCOME ON 16.10.2009 DECLARING A LOWER LOSS OF RS.1,04,668/- AND IN THE ASSESSMENT FINALIZED THEREAFTER U/S 143(3) R.W.S. 153A(1)(B) O F THE ACT DATED 27.12.2010 THE ASSESSING OFFICER DETERMINED THE TOTAL LOSS AT RS.1,04,668/-, AS RETURNED BY THE ASSESSEE. SUBSEQUENTLY BY WAY OF AN ORDER D ATED 26.06.2011, ASSESSEE HAS BEEN HELD GUILTY OF CONCEALMENT OF INC OME IN TERMS OF SECTION 271(1)(C) OF THE ACT WITH RESPECT OF A SUM OF RS.69 ,380/- BEING THE DIFFERENCE BETWEEN THE AMOUNT OF LOSS DECLARED IN THE RETURN F ILED U/S 153A(1)(A) OF THE ACT AND THE LOSS DECLARED IN THE RETURN ORIGINALLY FILED U/S 139 OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT BUT FOR THE ACTION OF THE SEARCH, WHICH REVEALED INCRIMINATING MATERIAL, ASSESSEE WOULD NOT HAVE OFFERED THE REDUCED LOSS IN THE RETURN FILED U/S 153A(1)(A) OF THE ACT AND THEREFORE THE DIFFERENCE IN LOSS DECLARED BETWEEN THE TWO RETURNS I.E. RS.69,38 0/- REFLECTED CONCEALED INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF T HE ACT. IN COMING TO SUCH CONCLUSION, ASSESSING OFFICER ALSO RELIED UPON THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AND ACCORDINGLY, LEVIED PENALTY EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED ON SUCH CONCEAL ED INCOME, THEREBY DETERMINING A PENALTY OF RS.20,810/-. 4. NOW, WE MAY SET-OUT THE MANNER IN WHICH THE CIT( A) HAS DELETED THE PENALTY, WHICH IS THE SUBJECT-MATTER OF THE PRESENT APPEAL. THE CIT(A) HAS DELETED THE PENALTY PRIMARILY DISAGREEING WITH THE STAND OF THE ASSESSING OFFICER THAT EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WAS APPLICABLE. AS PER THE CIT(A), EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT APPLICABLE TO THE PRESENT CASE AND THEREFORE THE DISCLOSURE OF ADDITIONAL INCOME IN THE RETURN FILED U/S 153A(1) OF THE ACT OVER AND ABOVE THE INCOME DECLARED IN THE RETURN FILED U/S 139 OF THE ACT COULD NOT BE DEEMED TO BE A CONCEALED INCOME. 5. IN THIS CONTEXT, WE MAY BRIEFLY REFER TO EXPLANA TION 5A TO SECTION 271(1)(C) OF THE ACT WHICH WAS INITIALLY INSERTED B Y THE FINANCE ACT, 2007 W.E.F. 01.06.2007 AND THE PROVISIONS WHICH HAVE BEEN SUBST ITUTED THEREAFTER BY THE FINANCE (NO.2) ACT, 2009 W.R.E.F. 01.06.2007 READ A S UNDER : - EXPLANATION 5A WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANS ACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY P REVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SEC TION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 6. OSTENSIBLY, THE PROVISIONS OF EXPLANATION 5A GOV ERN THE CASES WHERE SEARCH HAS BEEN INITIATED U/S 132 OF THE ACT ON OR AFTER 01.06.2007. AS PER THE SAID EXPLANATION, WHERE IN THE COURSE OF SEARCH INI TIATED U/S 132 OF THE ACT, ASSESSEE IS FOUND TO BE THE OWNER OF ITEMS SPECIFIE D IN CLAUSES (I) AND (II) THEREOF, FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFO RE THE DATE OF SEARCH AND WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR H AS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED OR THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THA T SUCH INCOME IS DECLARED IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, ASSESSEE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER C LAUSE (C) OF SUB-SECTION (1) TO SECTION 271 BE DEEMED TO HAVE CONCEALED THE PART ICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. O STENSIBLY, IN THE PRESENT CASE, SEARCH HAS BEEN INITIATED AFTER THE 01.06.200 7 AND THEREFORE THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) O F THE ACT GOVERN THE CASE OF THE ASSESSEE. THE ASSESSMENT YEAR BEFORE US IS 200 4-05, WHERE PREVIOUS YEAR HAS ENDED BEFORE THE DATE OF SEARCH AND THE IM PUGNED ADDITIONAL INCOME (OR REDUCED LOSS) IN QUESTION WAS NOT DECLARED IN T HE RETURN OF INCOME FILED U/S 139 OF THE ACT PRIOR TO THE DATE OF SEARCH, THEREFO RE DECLARING OF SUCH ADDITIONAL INCOME (OR REDUCED LOSS) IN THE RETURN FILED IN RES PONSE TO NOTICE U/S 153A(1)(A) OF THE ACT AFTER THE DATE OF SEARCH WOUL D DEFINITELY EMPOWER THE ASSESSING OFFICER TO INVOKE THE PROVISIONS OF EXPLA NATION 5A FOR THE PURPOSES OF CONSIDERING THE IMPOSITION OF PENALTY U/S 271(1) (C) OF THE ACT QUA SUCH AN ADDITIONAL INCOME (OR REDUCED LOSS). 7. THE PRIMARY REASON WHICH WEIGHED WITH THE CIT(A) TO HOLD THAT EXPLANATION 5A DOES NOT COVER THE ASSESSEE CAN BE U NDERSTOOD FROM HIS FOLLOWING DISCUSSION : - IN THE CASE UNDER APPEAL NO MONEY, BULLION, JEWELL ERY OR OTHER VALUABLE ARTICLE IS INVOLVED BUT THE ADDITIONAL SAL ES AS FOUND BY THE SEARCH PARTY DURING THE COURSE OF ACTION WAS OFFERED AS AN ADDITIONAL INCOME. IN THIS CASE, THERE IS NO DIRECT LINKAGE BROUGHT ON RECORD WITH REFERENCE TO ANY OF THE SPECIFIED SEIZED MATERIALS, SO AS TO ESTABLISH THE CHARGE FOR WHICH THE PENALTY HAS BEEN IMPOSED. 8. THE CIT(A) OBSERVED THAT SINCE THE ADDITIONAL IN COME COULD NOT BE LINKED WITH ANY SPECIFIC SEIZED MATERIAL, NAMELY, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, THEREFORE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WAS NOT ATTRACTED AND HENCE, ACCORDING TO HIM, THE DECLARATION OF IMPUGNED ADDITIONAL INCOME COULD NOT BE CONSIDERED AS CONCEA LMENT OF INCOME. TO OUR MIND, THE CONCLUSION OF THE CIT(A) IS QUITE MISPLAC ED SINCE HE HAS REFERRED TO CLAUSE (I) OF EXPLANATION 5A ONLY AND HAS TOTALLY G LOSSED-OVER THE PRESCRIPTION OF CLAUSE (II) OF EXPLANATION 5A, WHICH CLEARLY COV ERS THE CASE OF THE ASSESSEE. IN THE PRESENT CASE, ADDITIONAL INCOME DECLARED BY THE ASSESSEE IS BASED ON INCRIMINATING DOCUMENTS IN THE SHAPE OF DIARIES AND LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH, WHICH INDICATED RECEIPT OF UN RECORDED CONSIDERATION FOR SALE OF PLOTS AND ALSO UNRECORDED EXPENDITURE ON PU RCHASE/OTHER EXPENSES ON ACQUISITION/DEVELOPMENT OF PLOTS. QUITE CLEARLY, A SSESSEE HAS ADMITTED ADDITIONAL INCOME BASED ON THE INCRIMINATING DOCUME NTS AND TRANSACTIONS FOUND IN THE COURSE OF SEARCH, A SITUATION WHICH IS CLEARLY COVERED BY CLAUSE (II) OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. IN OUR VIEW, NON- CONSIDERATION OF CLAUSE (II) OF EXPLANATION 5A TO S ECTION 271(1)(C) OF THE ACT HAS LEAD THE CIT(A) TO WRONGLY INFER THAT EXPLANATI ON 5A IS INAPPLICABLE TO THE ASSESSEE. IN-FACT, THE AFORESAID POSITION IS NOT C ONTROVERTED EVEN BY THE LEARNED COUNSEL APPEARING FOR THE RESPONDENT-ASSESS EE BEFORE US AT THE TIME OF HEARING. 9. HOWEVER, THE LEARNED REPRESENTATIVE FOR THE RESP ONDENT-ASSESSEE HAS SUPPORTED THE CONCLUSION OF THE CIT(A) BY ADVANCING CERTAIN OTHER REASONS, WHICH CAN BE SUMMARIZED AS FOLLOWS. FIRSTLY, IT IS SUBMITTED THAT IN THE PRESENT CASE THE INCOME DECLARED IN THE RETURN FILED IN RES PONSE TO NOTICE ISSUED U/S 153A(1)(A) OF THE ACT HAS BEEN ASSESSED AS SUCH AND THERE IS NO DIFFERENCE BETWEEN THE INCOME RETURNED AND THE INCOME ASSESSED IN THE ASSESSMENT FINALIZED U/S 143(3) R.W.S. 153A(1)(B) OF THE ACT A ND IN SUCH A SITUATION THERE CAN BE NO CONCEALMENT OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT BECAUSE ANY CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS OF INCOME HAS TO BE SEEN IN THE CONTEXT OF THE INCOME DECLARED IN THE RETURN OF INCOME FILED. SECONDLY, IT IS CANVASSED BY THE LEARNED COUNSEL THAT THE PROVISION S OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT ARE NOT APPLICABLE TO THE YEARS FOR WHICH THE RETURNS HAVE BEEN FILED U/S 139 OF THE ACT PRIOR TO 01.06.2007 AND, THE LEVY OF PENALTY FOR SUCH YEARS BE CONSIDERED IN THE LIGHT O F EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, WHICH WAS ON STATUTE PRIOR TO 01.06.2007. ACCORDING TO THE LEARNED COUNSEL, IN THE YEAR FOR WHICH ASSESSEE HAS FILED RETURNS U/S 139 OF THE ACT PRIOR TO THE SEARCH AND BEFORE 01.06.2007, THE DEPARTMENT MAY CONTEND CONCEALMENT AS THE ASSESSEE HAS NOT SHOWN T HE INCOME DETECTED DURING THE SEARCH IN THESE RETURNS. AS PER THE ASS ESSEE, THE HONBLE SUPREME COURT IN THE CASE OF BRIJ MOHAN VS. CIT, 120 ITR 1 (SC) HAS LAID DOWN THE LAW APPLICABLE FOR LEVYING PENALTY FOR CONCEALMENT IS T HE LAW WHICH IS IN FORCE AS ON THE DATE OF FILING OF THE RETURN OF INCOME, IN WHIC H THE CONCEALMENT HAS TAKEN PLACE. AS THE ASSESSEE HAD DISCLOSED THE UNACCOUNT ED INCOME FOUND DURING THE SEARCH AS PER THE SEIZED DIARIES, IN THE RETURN S U/S 153A(1)(A) AND THE SAME HAS BEEN ACCEPTED BY THE A.O. WITHOUT MAKING A NY ADDITION, THEN IN VIEW OF THE HONBLE SUPREME COURT DECISION, AT THE MOST IT CAN BE ARGUED FROM THE DEPARTMENT SIDE THAT THE ASSESSEE HAS CONCEALED THE INCOME IN THE RETURNS FILED U/S 139 OF THE ACT PRIOR TO THE SEARC H. ACCORDINGLY, FOR THE YEARS FOR WHICH THE RETURNS WERE FILED PRIOR TO THE SEARC H AND BEFORE 01.06.2007 I.E. THE DATE ON WHICH EXPLANATION 5A HAS COME INTO FORC E, IT IS CONTENDED ON BEHALF OF THE ASSESSEE THAT EXPLANATION 5 WAS ON TH E STATUTE, AND IN VIEW OF THE EXPLANATION 5, NO PENALTY IS LEVIABLE IF THE AD DITIONAL INCOME IS ACCEPTED DURING THE SEARCH BY WAY OF DECLARATION AND SUCH IN COME IS BASED ON THE DOCUMENTS LIKE DIARIES OR LOOSE PAPERS. IT IS SUBM ITTED THAT CLAUSE (II) IN EXPLANATION 5A WAS NOT PRESENT IN THE ERSTWHILE EXP LANATION 5, AND THUS, ASSESSEE WAS NOT LIABLE FOR PENALTY FOR CONCEALMENT FOR THE YEARS WHICH ENDED BEFORE 01.06.2007 AND FOR WHICH THE RETURNS WERE FI LED BEFORE THAT DATE. 10. IN OUR CONSIDERED OPINION, THE PROVISIONS OF EX PLANATION 5A TO SECTION 271(1)(C) OF THE ACT DO NOT LEAVE ANY DOUBT TOWARDS UNDERSTANDING THAT THE SAME ARE APPLICABLE IN CASES WHERE A SEARCH HAS BEE N INITIATED U/S 132 OF THE ACT ON OR AFTER THE 1 ST DAY OF JUNE, 2007. THE PHRASEOLOGY OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT MAKES IT CLEAR THAT IT COVERS (A) ANY PRECIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BE FORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED; AND, (B) ANY PRE VIOUS YEAR WHOSE DUE DATE OF FILING OF THE RETURN OF INCOME HAS EXPIRED BUT ASSESSEE HAS NOT FILED THE RETURN TILL THE DATE OF SEARCH, AND, THUS AN ASSESS MENT YEAR FOR WHICH ASSESSEE HAS FILED RETURN U/S 139 OF THE ACT PRIOR TO THE SE ARCH AND BEFORE 01.06.2007 WOULD ALSO BE COVERED, IF OTHER CONDITIONS PRESCRIB ED THEREIN ARE SATISFIED. IN OTHER WORDS, EXPLANATION 5A IS AVAILABLE TO THE ASS ESSING OFFICER IN ALL CASES, WHERE A SEARCH HAS BEEN INITIATED U/S 132 OF THE AC T ON OR AFTER THE 1 ST DAY OF JUNE, 2007, AND IT IS WRONG ON THE PART OF THE RESP ONDENT-ASSESSEE TO CANVASS THAT IT IS EXPLANATION 5 AND NOT EXPLANATION 5A WHI CH WOULD APPLY TO YEARS FOR WHICH ASSESSEE HAS FILED RETURNS U/S 139 OF THE ACT PRIOR TO THE SEARCH AND BEFORE 01.06.2007. WE HAVE ALSO PERUSED THE JUDGMEN T OF THE HONBLE SUPREME COURT IN THE CASE OF BRIJ MOHAN (SUPRA) WHI CH HAS BEEN RELIED UPON BY THE ASSESSEE FOR THE PROPOSITION THAT FOR LEVYIN G PENALTY FOR CONCEALMENT, IT IS THE LAW IN FORCE ON THE DATE OF FILING OF RETURN U/S 139 OF THE ACT, WHICH IS RELEVANT AND NOT EXPLANATION 5A, WHICH WAS NOT ON T HE STATUTE AS ON THE DATE OF FILING OF RETURN U/S 139 OF THE ACT BEFORE THE D ATE OF SEARCH. IN THE CASE BEFORE THE HONBLE SUPREME COURT, ASSESSEE WAS A PA RTNER IN TWO FIRMS, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 1964-65 ON 24.04.1968 IN WHICH ASSESSEE DISCLOSED ONLY HIS SHARE IN THE PROFITS OF ONE OF THE FIRMS AND DID NOT INCLUDE HIS SHARE IN THE PROFIT OF THE OTHER. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS UNDER CLAUSE (III) TO SECTION 2 71(1) OF THE ACT AS IT STOOD AMENDED BY THE FINANCE ACT, 1968 W.E.F. 01.04.1968. THE PLEA OF THE ASSESSEE WAS THAT THE PENALTY WAS LIABLE TO BE CONS IDERED ON THE BASIS OF THE LAW AS IT STOOD DURING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE INCOME WAS EARNED, WHICH WAS PRIOR TO COM ING INTO FORCE OF THE AMENDED CLAUSE (III) TO SECTION 271(1) INSERTED BY THE FINANCE ACT, 1968. THE HONBLE SUPREME COURT NEGATED THE PLEA OF THE ASSES SEE AND HELD THAT PENALTY IS IMPOSED ON ACCOUNT OF COMMISSION OF A WR ONGFUL ACT, AND PLAINLY IT IS THE LAW OPERATING ON THE DATE ON WHICH THE WRONG FUL ACT IS COMMITTED WHICH DETERMINES THE PENALTY. ACCORDINGLY, THE HONBLE S UPREME COURT HELD THAT THE CONCEALMENT OF THE PARTICULARS OF INCOME WAS EFFECT ED BY THE ASSESSEE WHILE FILING THE RETURN OF TOTAL INCOME ON 24.04.1968 AND THUS, IT WAS THE AMENDED CLAUSE (III) BROUGHT ON THE STATUTE BY THE FINANCE ACT, 1968 W.E.F. 01.04.1968 WHICH WOULD GOVERN THE CASE. IN OUR CONSIDERED OPI NION, THE AFORESAID JUDGMENT OF THE HONBLE SUPREME COURT CANNOT BE STR AIGHTAWAY APPLIED IN THE PRESENT CASE TO SAY THAT THE LAW AS ON THE DATE OF THE FILING OF RETURN U/S 139 OF THE ACT BEFORE THE DATE OF SEARCH IS TO BE APPLIED. THE UNAMBIGUOUS PHRASEOLOGY OF THE EXPLANATION 5A, WHICH WE HAVE AL READY ELUCIDATED EARLIER, CLEARLY MAKES OUT THAT THE LEGISLATIVE INTENT DEPIC TS THAT EXPLANATION 5A IS APPLICABLE WHERE A SEARCH HAS BEEN INITIATED U/S 13 2 OF THE ACT ON OR AFTER 01.06.2007 AND IT COVERS (A) ANY PRECIOUS YEAR WHIC H HAS ENDED BEFORE THE DATE OF SEARCH AND WHERE THE RETURN OF INCOME FOR S UCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED; AND, (B) ANY PREVIOUS YEAR WHOSE DUE DATE OF FILING OF THE RETURN OF INCOME HAS EXPIRED BUT ASSESSEE HAS NOT FILED THE RETURN TILL THE DATE OF SEARCH, IF OTHER CONDITIONS PRESCRIBED THEREIN ARE SATISFIED. THERE FORE, THE AFORESAID PLEA OF THE ASSESSEE, IN OUR VIEW, DOES NOT MERIT INDULGENC E AND IS REJECTED ACCORDINGLY. 11. FOR ALL THE ABOVE REASONS, WE THEREFORE, FIND N O JUSTIFICATION FOR THE CIT(A) TO HOLD THAT THE PROVISIONS OF EXPLANATION 5 A TO SECTION 271(1)(C) OF THE ACT ARE INAPPLICABLE IN THE PRESENT CASE. ON THE C ONTRARY, AS THE AFORESAID DISCUSSION SHOWS, THE CASE OF THE ASSESSEE IS LIABL E TO BE EXAMINED IN TERMS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT A ND ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ASPECT IS SET-ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 12. AT THIS STAGE, THE LEARNED REPRESENTATIVE FOR T HE RESPONDENT-ASSESSEE ALSO REFERRED TO A PLEA RAISED BEFORE THE CIT(A), W HICH ACCORDING TO HIM HAS NOT BEEN ADJUDICATED BECAUSE THE CIT(A) ALLOWED REL IEF ON THE BASIS OF THE PROPOSITION THAT EXPLANATION 5A TO SECTION 271(1)(C ) OF THE ACT IS INAPPLICABLE. ACCORDING TO THE LEARNED REPRESENTATIVE, ASSESSEE H AS RAISED VARIOUS GROUNDS OF APPEAL BEFORE THE CIT(A) AND WHICH WERE ALSO ARGUED IN EXTENSO, AS CAN BE SEEN FROM COPY OF THE WRITTEN SUBMISSIONS MADE BEFORE THE CIT(A), WHICH HAVE BEEN PLACED IN THE PAPER BOOK AND SUCH G ROUNDS HAVE NOT BEEN CONSIDERED AND DECIDED BY THE CIT(A). 13. ON THIS ASPECT, WE FIND THAT THE ASSESSEE SUBMI TTED BEFORE THE CIT(A) THAT THE ASSESSING OFFICER HAD NOT FOUND ANYTHING A DVERSE IN THE COURSE OF ASSESSMENT PROCEEDINGS WITH REGARD TO THE INCOME AS DECLARED BY THE ASSESSEE WHICH CONFORMED TO THE DECLARATIONS OF ADD ITIONAL INCOME MADE U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH. THE ASSESSEE POINTED OUT BEFORE THE CIT(A) THAT IN THE COURSE OF PENALTY PRO CEEDINGS BEFORE THE ASSESSING OFFICER IT WAS SOUGHT TO BE CONTENDED THA T THE AMOUNTS OF ADDITIONAL INCOME OFFERED U/S 153A DID NOT REPRESENT THE ACTUA L, TRUE AND CORRECT INCOME OF THE APPELLANT WHEREAS THE PENALTY U/S 271(1)(C) OF THE ACT COULD BE LEVIED ONLY ON CONCEALED INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF SUCH INCOME. THE ASSESSEE CLAIMED BEFORE THE CIT(A) THA T IT COULD SUBSTANTIVELY SHOW THAT THE AMOUNTS OF ADDITIONAL INCOME DECLARED DID NOT CONFORM WITH THE AMOUNTS OF ACTUAL INCOME OF THE ASSESSEE AND THE SA ME COULD NOT HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER AS INCOMES, H AD THE ASSESSEE NOT OFFERED THE SAME ON HIS OWN AND THEREFORE, PENALTY COULD NOT BE LEVIED WITH RESPECT TO THE DECLARED ADDITIONAL INCOMES. EXPLAI NING THE AFORESAID POSITION, THE LEARNED COUNSEL POINTED OUT, WITH REFERENCE TO THE WRITTEN SUBMISSIONS MADE TO THE CIT(A), THAT THE PLEA OF THE ASSESSEE W AS THAT THE DISCLOSURE OF ADDITIONAL INCOME WAS BASED ON VARIOUS FACTORS VIZ. THAT THE ASSESSEE WAS NOT HAVING ALL THE RELEVANT ENTRIES OF AMOUNTS REFLECTI NG PURCHASES AND EXPENDITURE AGAINST SALES; THAT THE LOANS RECEIVED AND GIVEN BACK WOULD NOT HAVE BEEN CONFIRMED BY THE PARTIES; THAT TO COVER T HE DECLARATION MADE U/S 132(4) WHICH WERE OTHERWISE NOT BEEN COVERED FROM T HE FIGURES NOTED IN THE SEIZED MATERIAL UP TO THE AMOUNT DECLARED; THAT ON ASSURANCE OFFERED BY SEARCH OFFICERS THAT, IF DECLARATION IS MADE THE AS SESSEE WOULD BE EXEMPT FROM PENALTY U/S 271(1)(C) ON ACCOUNT OF EXPLANATION 5; AND, TO BUY MENTAL PEACE AND TO AVOID LITIGATION. THE LEARNED COUNSEL FURTH ER POINTED OUT THAT WHAT THE ASSESSEE OFFERED AS INCOME FOR TAXATION WAS THE ENT IRE SALE PROCEEDS FOUND NOTED IN THE DIARIES WHICH COULD NOT REPRESENT THE TRUE AND CORRECT INCOME OF SUCH TRANSACTIONS; AND, THEREFORE IN THE PENALTY PR OCEEDINGS, ASSESSEE BE ALLOWED TO DEMONSTRATE AS TO WHAT COULD BE CONSTRUE D AS CONCEALED INCOME FOR THE PURPOSE OF LEVY OF PENALTY. FOR THE SAID R EASON, THE LEARNED COUNSEL SUBMITTED THAT THE MATTER BE RESTORED BACK TO THE F ILE OF THE CIT(A) FOR ALLOWING THE APPROPRIATE OPPORTUNITY TO DEMONSTRATE THE QUAN TUM OF CONCEALED INCOME, IF ANY, ON WHICH THE PENALTY COULD BE LEVIED. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, APPEARING FOR THE REVENUE HAS OPPOSED THE PLEA OF T HE ASSESSEE ON THE GROUND THAT THE INCOME DECLARED IN THE STATEMENT U/ S 132(4) OF THE ACT HAS BEEN DULY DECLARED BY THE ASSESSEE IN THE RETURNS O F INCOME FILED WHICH HAVE BEEN SUBJECTED TO TAX AND THEREFORE, THERE IS NO SC OPE LEFT WITH THE ASSESSEE TO ARGUE THAT THE ENTIRE ADDITIONAL INCOME CANNOT B E TAKEN AS CONCEALED INCOME. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS ON THE SAID ASPECT. AT THE OUTSET, WE MAY STATE THAT WE ARE NOT CONCERN ED WITH THE MERITS OF THE PLEA RAISED BY THE ASSESSEE. THE ONLY POINT RAISED BY THE ASSESSEE IS THAT THE GROUND CANVASSED BEFORE THE CIT(A) TO THE EFFECT TH AT THE QUANTUM OF CONCEALED INCOME FOR THE PURPOSES OF SECTION 271(1) (C) OF THE ACT COULD NOT BE EQUATED TO THE ADDITIONAL INCOME, HAS NOT BEEN AD DRESSED BY THE CIT(A). THIS IS PRIMARILY FOR THE REASON THAT THE CIT(A) HA S ALLOWED RELIEF TO THE ASSESSEE BY SETTING-ASIDE THE PENALTY LEVIED ON A P OINT OF LAW CANVASSED BEFORE HIM, WHICH WE HAVE ALREADY DISCUSSED IN EARL IER PARAGRAPHS, WHEREIN THE STAND OF THE CIT(A) HAS BEEN DISAPPROVED. THER EFORE, UNDER THESE CIRCUMSTANCES IT WOULD BE IN FITNESS OF THINGS THAT THE INSTANT PLEA OF THE ASSESSEE, WHICH WAS RAISED BEFORE THE CIT(A) BUT NO T CONSIDERED BY HIM, BE REMANDED BACK FOR CONSIDERATION AND ADJUDICATION AS PER LAW. THE POINT RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE A GAINST THE PLEA OF THE ASSESSEE ON THIS ASPECT, IN OUR VIEW, TOUCHES UPON THE MERITS OF THE PLEA, WITH WHICH WE ARE NOT PRESENTLY CONCERNED WITH. THEREFO RE, WE UPHOLD THE PLEA OF THE ASSESSEE FOR REMANDING THE MATTER BACK TO THE F ILE OF THE CIT(A) TO ADDRESS THE GROUNDS RAISED BY THE ASSESSEE WITH REGARD TO T HE QUANTIFICATION OF CONCEALED INCOME LIABLE FOR PENALTY OF SECTION 271( 1)(C) OF THE ACT. AT THIS STAGE, WE MAY MAKE IT AMPLY CLEAR THAT OUR ACTION O F REMANDING THE MATTER BACK TO THE FILE OF THE CIT(A) IS NOT TO BE CONSTRU ED AS ANY REFLECTION ON THE MERITS OF THE PLEA(S) RAISED BY ASSESSEE. THEREFOR E, WHILE CONCLUDING THAT PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) O F THE ACT ARE APPLICABLE IN THE PRESENT CASE, THE MATTER IS REMANDED BACK TO TH E FILE OF THE CIT(A) FOR CONSIDERATION OF OTHER PLEA(S) THAT MAY BE RAISED B Y THE ASSESSEE IN SUPPORT OF ITS STAND AGAINST THE LEVY OF PENALTY. NEEDLESS TO SAY, THE CIT(A) SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEAR D AND TO PUT-FORTH MATERIAL AND SUBMISSIONS IN SUPPORT OF ITS STAND AND ONLY TH EREAFTER THE CIT(A) SHALL ADJUDICATE THE MATTER AS PER LAW. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 1934/PN/2012 FOR ASSESSMENT YEAR 2004-05 IS ALLOWED FOR STATISTICAL PURPOSES. 17. IN ALL THE OTHER APPEALS, THE FACTS AND CIRCUMS TANCES ARE IDENTICAL AND THEREFORE OUR DECISION IN ITA NO. 1934/PN/2012 APPL IES MUTATIS-MUTANDIS , AND ACCORDINGLY, ALL THE OTHER CAPTIONED APPEALS ARE SI MILARLY DISPOSED-OFF. 18. RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE R EVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 20 TH DECEMBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE