RAVI KIRAN AGGARWAL, MUMBAI V. ASST CIT CEN CIR 47, MUMBAI

ITA 1967/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1036 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 19-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN SHENOY
• Assessee Lawyers: RISHABH S HAH
• Keywords: Business income; Income from undisclosed sources; Search and seizure
• Section: 143(3); 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1967/MUM/2014 ASSESSMENT YEAR: 2010-11 MR. RAVI KIRAN AGGARWAL VS. ACIT CENTRAL CIRCLE 4 7 901, THE ANGEL, 2 KRISHNA SANGHI MUMBAI PATH, GAMDEVI MUMBAI 400 007 PAN NO. AABPA7797H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RISHABH SHAH, AR REVENUE BY: SHRI ARUN SHENOY, DR DATE OF HEARING : 06/0 2/2017 DATE OF PRONOUNCEMENT: 05/05/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 38, MUMBAI AND ARISES OUT OF THE ORDER U/S 271AAA OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN LEVYING A PENALTY OF RS. 2,20, 00,000/- U/S 271AAA OF THE INCOME TAX ACT, 1961 BEING 10% OF THE ADDITI ONAL INCOME OF RS. 22,00,00,000/- WITHOUT CONSIDERING THE FACTS & CIRC UMSTANCES OF THE CASE. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F LEARNED ASSESSING OFFICER IN LEVYING A PENALTY ON THE ADDIT IONAL INCOME OF RS. 22,00,00,000/- WITHOUT APPRECIATING THE FACT THAT T HE APPELLANT HAD ITA NO. 1967/MUM/2014 2 ADMITTED THE ADDITIONAL INCOME DURING THE SEARCH PR OCEEDINGS AND OFFERED THE SAID INCOME IN THE RETURN OF INCOME AND PAID TAXES ALONG WITH INTEREST ONLY TO BUY PEACE OF MIND AND AVOID P ROTECTED LITIGATION. 3. IN A NUTSHELL, THE FACTS OF THE CASE ARE THAT A SEARCH U/S 132 OF THE ACT WAS CONDUCTED ON 11.02.2010 AT THE PREMISES OF M/S. ORBIT CORPORATION LTD. (OCL) AND ITS GROUP CONCERNS. THE RESIDENCE AND BUSINESS PREMISES OF THE ASSESSEE WERE ALSO COVERED DURING THE COURSE OF SEARCH OPERATION. THE ASSESSING OFFICER ( A.O.) ISSUED NOTICE U/S 153A TO THE ASSESSEE. IN RESPONSE TO IT, THE AS SESSEE FILED HIS RETURN OF INCOME ON 31.07.2010 DECLARING TOTAL INCO ME OF RS. 22,70,21,590/- WHICH INCLUDED A SUM OF RS. 22,00,00 ,000/- DECLARED AS UNDISCLOSED INCOME. THE A.O. COMPLETED THE ASSES SMENT U/S 143(3) OF THE ACT ON 27.12.2011 BY ACCEPTING THE RE TURNED OF INCOME AT RS. 22,70,21,590/-. THEN THE A.O. LEVIED PENALTY OF RS. 2,20,00,000/- BEING 10% OF ADDITIONAL INCOME OF RS. 22,00,00,000/- ON THE GROUND THAT THE ASSESSEE HAD CONCEALED INCOM E OF RS. 22,00,00,000/-. THE REASON GIVEN BY THE A.O. ARE ( I) THE SEARCH TOOK PLACE ON 11.02.2010 AND THE ASSESSEE FAILED TO SPEC IFY THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED, THE ASSES SEE ALSO FAILED TO SUBSTANTIATE THE SAME, (II) THE PROFIT ON SALE OF F LAT AT ASHOK TOWER AMOUNTING TO RS. 98,00,000/- HAS BEEN OFFERED IN TH E HANDS OF SHRI DINESH AGARWAL ON THE DATE OF SEARCH, WHICH IS BASE D ON THE SEIZED MATERIAL FOUND FROM THE RESIDENCE OF SHRI DINESH AG ARWAL, (III) THE ASSESSEE HAS OFFERED RS. 22,00,00,000/- OVER AND AB OVE HIS INCOME PURSUANT TO THE INCRIMINATING DOCUMENTS / CASH SEIZ ED DURING SEARCH ON 11.02.2010 AND HAD NO ACTION TAKEN PLACE, THE IN COME OF RS. 22,00,00,000/- WOULD HAVE BEEN CONCEALED, (IV) ONLY ON 29.03.2010 IN THE STATEMENT RECORDED U/S 131 THE ASSESSEE HAS STATED THAT THE UNDISCLOSED INCOME IS OUT OF HIS BETTING INCOME AND SALE OF FLAT OF ITA NO. 1967/MUM/2014 3 ASHOK TOWER, THIS STATEMENT IS GIVING U/S 131 AND N OT U/S 132(4) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) HELD THAT (I) THE ADMISSION OF UNDISCLOSED INCOME OF RS. 22,00,00,000 /- WAS ON ACCOUNT OF UNEXPLAINED CASH OF RS. 12,48,85,000/- F OUND AT THE TIME OF SEARCH AND BALANCE ADDITIONAL INCOME WAS ON ACCOUNT OF INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF S EARCH ; THE ADMISSION OF ADDITIONAL INCOME BASED ON THE EVIDENC E UNEARTHED DURING THE COURSE OF SEARCH CANNOT BE SAID TO BE A VOLUNTARY COMPLIANCE (II) SINCE THE ASSESSEE HIMSELF OFFERED THE ADDITIONAL INCOME OF RS. 22,00,00,000/- ON ACCOUNT OF UNEXPLAI NED CASH OF RS. 12,48,85,000/- AND ALSO ON ACCOUNT OF INCRIMINATING DOCUMENT FOUND DURING THE SEARCH, IT IS EVIDENT THAT HE HAD CONCEA LED THE PARTICULARS OF INCOME. THEREFORE, THE LEARNED CIT(A) CONFIRMED THE PENALTY OF RS. 2,20,00,000/- LEVIED BY THE A.O. 5. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE R ELIED ON THE DECISION IN THE CASE OF CIT VS. MAHENDRA C. SHAH (2008) 299 ITR 305 (GUJ), SITA RAM GUPTA VS. ACIT (2014) 151 ITD 449 (DEL), DCIT VS. RAJENDRA PRASAD DOKANIA (2012) 32 CCH 260 (AHD-TRIB), DCIT VS. TAPADIA & KASLIWAL ASSOCIATES (2015) 44 CCH 518 (PUNE-TRIB), CONCRETE DEVELOPERS VS. ACIT (2013) 34 TAXMAN.COM 62 (NAGPUR-TRIB), AC CC VS. M/S. PHOENIX MILLS LTD . (ITA NO. 6190/MUM/2013 (MUM- TRIB) AND ACIT VS. GEBILAL KANHAIALAL HUF (2012) 348 ITR 561 (SC). ITA NO. 1967/MUM/2014 4 THE LEARNED COUNSEL ALSO RELIED ON THE ORDER OF THE ITAT D BENCH, MUMBAI IN THE CASE OF SHRI DINESH KIRAN AGGA RWAL FOR THE A.Y. 2010-11 (ITA NO. 2634/MUM/2013). 6. THE LEARNED DR RELIED ON THE ORDER OF THE LEARNE D CIT(A) CONFIRMING THE PENALTY OF RS. 2,20,00,000/- IMPOSED BY THE A.O. U/S 271AAA. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. NOW WE DISCUSS THE DECISIONS RE LIED ON BY THE LEARNED COUNSEL OF THE ASSESSEE. IN THE CASE OF MAHENDRA C. SHAH (SUPRA), SEARCH OPERATION TOOK PLACE AT THE PREMISES OF ONE M/S. DINAL GEMS, BOMBA Y U/S 132 OF THE ACT ON 3 RD JULY, 1987. ADMITTEDLY, THE RESPONDENT ASSESSEE I. E. MAHENDRA C. SHAH (MCS) WAS ALSO PRESENT AT THAT POI NT OF TIME AT THE SAID PREMISES. A PERSONAL SEARCH OF THE ASSESSEE WA S UNDERTAKEN AND DIAMONDS WORTH RS. 5,06,712/- WERE FOUND FROM THE P ERSON OF THE ASSESSEE AND SEIZED. ON 25.02.1991 THE A.O. COMPLET ED THE ASSESSMENT U/S 143(3) ON A TOTAL INCOME OF RS. 5,77 ,600/-, INCLUDING THE VALUE OF DIAMONDS FOUND FROM THE POSSESSION OF THE ASSESSEE I.E. WORTH RS. 5,06,712/-. THE A.O. INITIATED PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED A PENALTY OF RS. 5, 61,464/-. THE PENALTY LEVIED BY THE A.O. WAS CONFIRMED IN FIRST A PPEAL BY THE LEARNED CIT(A). THE ASSESSEE CARRIED THE MATTER IN SECOND A PPEAL BEFORE THE TRIBUNAL, WHO DELETED THE PENALTY. THE HON'BLE HIGH COURT HELD THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TA X THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTIN G ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPLANATION 5 . ITA NO. 1967/MUM/2014 5 IN SITA RAM GUPTA (SUPRA), THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2009-10 DECLARING INCOME OF RS. 6,46,60,000/-. AN AMOUNT OF RS. 6.40 CRORE WAS SURRENDERED. THE INCOM E WAS ASSESSED AT RS. 6,49,39,700/-. THE TRIBUNAL ALLOWED THE APPE AL OF THE ASSESSEE STATING THAT HERE UNDISPUTEDLY, THE ASSESSEE HAS PAID DUE TAX ON THE ADMITTED UNDISCLOSED INCOME. THE QUESTION OF SPECI FYING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED, STOOD DULY ANSWERED BY THE ASSESSEE BEFORE THE AUTHORITIES. THE SAME WA S ACCEPTED BY THE A.O., WITHOUT VARIATION, THIS FACT ITSELF EVIDENCIN G THE ASSESSEE HAVING PASSED THE TEST OF SECTION 271AAA OF THE ACT. THEN, THERE IS NO SPECIFIC FORMAT/PROCEDURE PRESCRIBED IN THE ACT FOR SPECIFYI NG AND SUBSTANTIATING AN UNDISCLOSED INCOME. IN RAJENDRA PRASAD DOKANIA (SUPRA), DURING THE COURSE OF SEARCH THE ASSESSEE HAD DISCLOSED RS. 50,00,000/- ON UNACCOUNTED INCOME. THE ASSESSEE FILED RETURN OF INCOME OF RS. 62,80,280/- WHICH INCLUDED RS. 50,00,000/- DISCLOSED DURING THE COURS E OF SEARCH. THIS WAS ACCEPTED BY THE A.O. IN ASSESSMENT ORDER PASSED U/S 143(3). THE A.O. THEN INITIATED PENALTY PROCEEDINGS U/S 271AAA AND IMPOSED A PENALTY OF RS. 5,00,000/-. THE TRIBUNAL HELD THAT N O PENALTY U/S 271AAA CAN BE IMPOSED WHERE ASSESSEE HAS FULFILLED ALL THE CONDITIONS AS LAID DOWN THEREIN. IN TAPADIA & KASLIWAL ASSOCIATES (SUPRA), IT IS HELD THAT WHILE PAYMENT OF TAXES, ALONG WITH INTEREST, BY ASSESSEE IS ONE OF CONDITIONS PRECEDENT FOR AVAILING IMMUNITY U/S 271AAA(2) , THE RE IS NO TIME LIMIT SET OUT FOR SUCH PAYMENTS BY ASSESSEE. IN CONCRETE DEVELOPERS (SUPRA), A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT BY THE DEPARTMEN T IN THE BUSINESS PREMISES OF THE ASSESSEE-FIRM AND RESIDENTIAL PREMI SES OF THE ITA NO. 1967/MUM/2014 6 PARTNERS OF THE FIRM. A STATEMENT U/S 132(4) OF N , PARTNER OF THE ASSESSEE-FIRM WAS RECORDED BY WHICH THE ASSESSEE OF FERED FOR TAXATION AN AMOUNT OF RS. 67 LAKHS AS UNEXPLAINED C ASH AND ADDITIONAL INCOME OF RS. 1.53 CRORE IN THE HANDS OF THE FIRM. THE A.O. COMPLETED THE ASSESSMENT U/S 143(3) AND INITIATED PENALTY U/S 271AAA. THE A.O. HELD THAT THE ASSESSEE COULD NOT SPECIFY THE M ANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND THEREFORE, LEVIED A PENALTY OF RS. 22,10,000/- U/S 271AAA BEING 10% OF THE UNDI SCLOSED INCOME OF RS. 2,21,00,000/-. THE TRIBUNAL HELD THAT WHERE ASSESSEE HAD DISCLOSED CERTAIN AMOUNT DURING COURSE OF SEARCH AN D HAD PAID TAX THEREON, FILED RETURN SHOWING SAID INCOME AS BUSINE SS INCOME AND SAME HAD BEEN ACCEPTED BY A.O. UNDER HEAD BUSINESS INCOME, PENALTY UNDER SECTION 271AAA WAS NOT LEVIABLE. IN M/S. PHOENIX MILLS LTD . (SUPRA), A SEARCH AND SEIZURE ACTION U/S 132 WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE PHOENIX GROUP ON 20.02.2008. DURING THE COURSE OF SEARCH, T HE DIRECTOR OF ASSESSEE-COMPANY DISCLOSED AN AMOUNT OF RS. 3,85,00 ,000/- IN THE STATEMENT RECORDED ON OATH U/S 132(4) ON ACCOUNT OF TRANSACTIONS WITH RUNIT CREATIONS & PARIDHI UDYOG FOR PURCHASE O F TENANCY RIGHTS. THE A.O. IMPOSED A PENALTY OF RS. 38,50,000/- U/S 2 71AAA ON THE GROUND THAT THOUGH THE ASSESSEE HAD MADE THE DISCLO SURE OF INCOME BUT IT FAILED TO SPECIFY THE MANNER IN WHICH THE IN COME WAS EARNED AND SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED IN COME WAS DERIVED. IN APPEAL THE LEARNED CIT(A) DELETED THE P ENALTY WHICH WAS UPHELD BY THE ITAT. IN GEBILAL KANHAIALAL HUF (SUPRA), THE HON'BLE SUPREME COURT HELD AS UNDER: ITA NO. 1967/MUM/2014 7 6. EXPLANATION 5 IS A DEEMING PROVISION. IT PROVIDES THAT WHERE, IN THE COURSE OF SEARCH UNDER SECTION 132, THE ASSESSEE IS FOUND TO BE THE OWNER OF UNACCOUNTED ASSETS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR PARTLY, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH OR W HICH IS TO END ON OR AFTER THE DATE OF SEARCH, THEN, IN SUCH A SITUATION , NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INC OME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAV E CONCEALED THE PARTICULARS OF HIS INCOME FOR THE PURPOSES OF IMPOS ITION OF PENALTY UNDER SECTION 271(1)(C). THE ONLY EXCEPTIONS TO SUCH A DE EMING PROVISION OR TO SUCH A PRESUMPTION OF CONCEALMENT ARE GIVEN IN SUB- CLAUSES (1) AND (2) OF EXPLANATION 5. IN THIS CASE, WE ARE CONCERNED WITH INTERPRETATION OF CLAUSE (2) OF EXPLANATION 5, WHICH HAS BEEN QUOTED ABOVE. THREE CONDITIONS HAVE GOT TO BE SATISFIED BY THE ASSESSEE FOR CLAIMING IM MUNITY FROM PAYMENT OF PENALTY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTIO N 271(1)(C). THE FIRST CONDITION WAS THAT THE ASSESSEE MUST MAKE A STATEME NT UNDER SECTION 132(4) IN THE COURSE OF SEARCH STATING THAT THE UNA CCOUNTED ASSETS AND INCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION D URING THE SEARCH HAVE BEEN ACQUIRED OUT OF HIS INCOME, WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME TO BE FURNISHED BEFORE EXPIRY OF T IME SPECIFIED IN SECTION 139(1). SUCH STATEMENT WAS MADE BY THE KARTA DURING THE SEARCH WHICH CONCLUDED ON AUGUST 1, 1987. IT IS NOT IN DISPUTE T HAT CONDITION NO.1 WAS FULFILLED. THE SECOND CONDITION FOR AVAILING OF THE IMMUNITY FROM PENALTY UNDER SECTION 271(1)(C) WAS THAT THE ASSESSEE SHOUL D SPECIFY, IN HIS STATEMENT UNDER SECTION 132(4), THE MANNER IN WHICH SUCH INCOME STOOD DERIVED. ADMITTEDLY, THE SECOND CONDITION, IN THE P RESENT CASE ALSO STOOD SATISFIED. ACCORDING TO THE DEPARTMENT, THE ASSESSE E WAS NOT ENTITLED TO IMMUNITY UNDER CLAUSE (2) AS HE DID NOT SATISFY THE THIRD CONDITION FOR AVAILING THE BENEFIT OF WAIVER OF PENALTY UNDER SEC TION 271(1)(C) AS THE ASSESSEE FAILED TO FILE HIS RETURN OF INCOME ON 31S T JULY, 1987 AND PAY TAX THEREON PARTICULARLY WHEN THE ASSESSEE CONCEDED ON AUGUST 1, 1987 THAT THERE WAS CONCEALMENT OF INCOME. THE THIRD CONDITIO N UNDER CLAUSE (2) WAS THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH UNDISCLOSED INCOME. HOWEVER, NO TIM E LIMIT FOR PAYMENT OF SUCH TAX STOOD PRESCRIBED UNDER CLAUSE (2). THE ONL Y REQUIREMENT STIPULATED IN THE THIRD CONDITION WAS FOR THE ASSES SEE TO 'PAY TAX TOGETHER WITH INTEREST'. IN THE PRESENT CASE, THE THIRD COND ITION ALSO STOOD FULFILLED. THE ASSESSEE HAS PAID TAX WITH INTEREST UPTO THE DA TE OF PAYMENT. THE ONLY CONDITION WHICH WAS REQUIRED TO BE FULFILLED FOR GE TTING THE IMMUNITY, AFTER THE SEARCH PROCEEDINGS GOT OVER, WAS THAT THE ASSES SEE HAD TO PAY THE TAX TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDISCLOS ED INCOME UPTO THE DATE OF PAYMENT. CLAUSE (2) DID NOT PRESCRIBE THE TIME L IMIT WITHIN WHICH THE ITA NO. 1967/MUM/2014 8 ASSESSEE SHOULD PAY TAX ON INCOME DISCLOSED IN THE STATEMENT UNDER SECTION 132(4). 7.1 WE MAY CLARIFY THAT THE ORDER OF THE TRIBUNAL I N THE CASE OF SHRI DINESH KIRAN AGGARWAL FOR THE A.Y. 2010-11 HAS NO I MPLICATION IN THE CONTEXT OF PENALTY U/S 271AAA IN THE CASE OF THE PR ESENT ASSESSEE AS THE ONLY DISPUTE THEREIN IS WHETHER THE ADDITION OF RS. 98,36,000/- AS INCOME ON ACCOUNT OF PROFIT EARNED ON SALE OF FLAT AT ASHOK TOWER OUGHT TO BE IN THE HANDS OF SHRI RAVI KIRAN AGGARWA L (THE ASSESSEE) OR SHRI DINESH KIRAN AGGARWAL AND THE TRIBUNAL HAS RES TORED THE ISSUE TO THE FILE OF THE A.O. TO EXAMINE THE SAME. 7.2 AT THIS JUNCTURE LET US REFER TO THE RELEVANT S TATUTORY PROVISIONS. WE FIND THAT SECTION 271AAA IS APPLICABLE IF (A) A SEARCH IS INITIATED U/S 132 ON OR AFTER JUNE1, 2007, BUT BEFORE JULY 1, 2012 (B) THERE IS SOME UNDISCLOSED INCOME AND (C) UNDISCLOSED INCOM E PERTAINS TO A SPECIFIED PREVIOUS YEAR. WHAT IS THE QUANTUM OF C ONCEALMENT PENALTY? IF THE ABOVE CONDITIONS ARE SATISFIED, 10% OF UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR IS CONCEAL MENT PENALTY WHICH CAN BE IMPOSED BY THE A.O. IN ADDITION TO TAX . THE AFORESAID PENALTY OF 10% OF UNDISCLOSED INCOME OF THE SPEC IFIED PREVIOUS YEAR CAN BE AVOIDED IF THE FOLLOWING CONDITIONS AR E SATISFIED: (I) IF THE ASSESSEE IN A STATEMENT U/S 132(4) IN T HE COURSE OF THE SEARCH, ADMITS THE UNDISCLOSED INCOME. FURTHER, HE SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. (II) HE SUBSTANTIATES THE MANNER IN WHICH THE UNDIS CLOSED INCOME WAS DERIVED. (III) HE PAYS THE TAX, TOGETHER WITH INTEREST, IF A NY, IN RESPECT OF THE UNDISCLOSED INCOME. ITA NO. 1967/MUM/2014 9 IF THE ABOVE THREE CONDITIONS ARE SATISFIED PENALTY U/S 271AAA (I.E. 10% OF UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR) CAN BE AVOIDED. FOR THE PURPOSES OF SECTION 271AAA, UNDISCLOSED IN COME HAS BEEN DEFINED SO AS TO MEAN- A. ANY INCOME OF THE SPECIFIED PREVIOUS YEARS REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEW ELLERY 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 NOT BEEN RECORDED ON OR BEFO RE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS M AINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR, OR WH ICH HAS OTHERWISE NOT BEEN DISCLOSED TO THE COMMISSIONER BEFORE THE D ATE OF THE SEARCH. B. ANY INCOME OF THE SPECIFIED PREVIOUS YEARS REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOU S YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. SPECIFIED PREVIOUS YEAR MEANS THE PREVIOUS YEAR (I ) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FI LING THE RETURN OF INCOME U/S 139(1) FOR SUCH YEAR HAS NOT EXPIRED BEF ORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETUR N OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 7.3 NOW WE DISCUSS THE STATEMENT ON OATH OF THE ASS ESSEE RECORDED BY THE DY. DIRECTOR OF INCOME TAX (INV.), UNIT VIII (3), MUMBAI U/S ITA NO. 1967/MUM/2014 10 132 OF THE ACT DURING THE COURSE OF SEARCH ON 11.02 .2010. THE RELEVANT QUESTION AND ANSWER ARE EXTRACTED BELOW. Q. 16 DURING THE COURSE OF SEARCH ACTION THE SEARC H PARTY FOUND CASH OF RS. 12,69,85,000/-, KINDLY EXPLAIN THE SOURCE FOR THE S AME. ANS. I AM NOT IN A POSITION TO EXPLAIN THE SOURCE OF SAID CASH OF RS. 12,69,85,000/-. MY CASH BALANCE AS PER MY BOOKS OF ACCOUNT IS AROUND 21 LACS. THUS, I ACCEPT THAT THE AMOUNT FOUND IN MY HO USE IS IN EXCESS OF MY CASH BALANCE AND HAS NOT BEEN PROPERLY REFLECTED IN THE BOOKS OF ACCOUNTS. THUS I OFFER THE ABOVE INCOME OF RS. 12,48,85,000/- FOR ADDING UP TO MY TOTAL INCOME FOR THE CURRENT FINANCIAL YEAR. 7.4 THE ABOVE STATEMENT IS SUBSTANTIATED BY SHRI PU JIT AGGARWAL, MANAGING DIRECTOR OF M/S. OCL AND ALSO THE SON OF T HE ASSESSEE. SHRI AGGARWAL IN HIS STATEMENT RECORDED ON 12.02.2010 OF FERED THE CASH OF RS. 12,48,00,000/- FOR TAXATION IN THE HANDS OF HIS FATHER I.E. SHRI RAVI KIRAN AGGARWAL (THE ASSESSEE). THE RELEVANT QUESTIO N AND ANSWER OF THE STATEMENT ARE EXTRACTED BELOW: Q. 10 DURING THE COURSE OF SEARCH AND SEIZURE ACTION U/S 132 AT THE RESIDENCE OF SHRI RAVI KIRAN AGARWAL RESIDENT OF VILLA ORB 18 TH FLOOR, NAPEANSEA ROAD, MUMBAI TOTAL CASH AMOUNTING TO RS. 12,69,85,000/- W AS FOUND FROM HIS PREMISES, AS PER THE BOOK BALANCE AS ON DATE IN HIS INDIVIDUAL CAPACITY THE CASH BALANCE REFLECTS RS. 23,16,000/-. YOU ARE REQUE STED TO KINDLY RECONCILE THE DIFFERENCE? ANS. I WOULD LIKE TO STATE THAT AS A DAY TO DAY PRA CTISE THE CASH IS HANDLED/KEPT/UTILISED FROM EITHER FROM MY RESIDENCE 9 TH FLOOR, THE ANGEL, 2 KRISHNA SANGHI PATH, GAMDEVI, MUMBAI 400 007 OR IN MY OFFICE 101, 1 ST FLOOR, THE VIEW, A.B. ROAD, WORLI, MUMBAI. APART FR OM THESE TWO ADDRESSES, I DONT KEEP/STORE/UTILISE/CASH FROM ANY OTHER PREMISE. AS FOR THE AMOUNT OF RS. 12,69,85,000/- FOUND FROM THE PRE MISE OF MY FATHER, MR. RAVI KIRAN AGARWAL I STATE WITH ASSURANCE THAT THE ENTIRE SUM FOUND (RS. 12,69,85,000/-)/SEIZED (RS. 12,45,00,000/-) FROM HI S PREMISE DURING THE COURSE OF ACTION U/S 132 BELONGS TO HIM AND ONLY HI M IN HIS PERSONAL CAPACITY. NOT A SINGLE RUPEE FOUND DURING THE ACTIO N, FROM MY FATHERS PREMISE BELONGS TO ANY OF MY OTHER COMPANIES OR ME OR TO ANY OF MY OTHER FAMILY MEMBERS. Q 12 DO YOU WANT TO SAY ANYTHING MORE? ANS. YES. AS MENTIONED IN THE ANSWERS OF THE ABOVE R EFERRED QUESTIONS, I HEREBY SUMMARISE AND STATE/CONFIRM TO DECLARE A TOT AL AMOUNT TO THE TUNE OF RS. 58,35,05,065/- IN THE HANDS OF THE COMPANY M /S. ORBIT CORPORATION ITA NO. 1967/MUM/2014 11 LTD. I WOULD BE PAYING DUE TAXES ON THE ABOVE MENTI ONED ADDITIONAL INCOME DECLARED ON OR BEFORE 28 TH FEBRUARY, 2010. FURTHER MY FATHER HAS ALSO DECLARED AN ADDITIONAL INCOME TO THE TUNE OF R S. 12.48 CRORES OVER AND ABOVE HIS REGULAR INCOME. THE CASH SEIZED MAY BE AD JUSTED AGAINST THE DEMAND OF SHRI RAVI KIRAN AGGARWAL AS WELL AS M/S. ORBIT CORPORATION LTD. 7.5 THUS THE ASSESSEE HAS ADMITTED UNDISCLOSED INCO ME OF RS. 12,48,85,000/- IN HIS STATEMENT RECORDED U/S 132(4 ) OF THE ACT ON 12.02.2010. THIS IS ALSO SUBSTANTIATED BY SHRI PUJI T AGGARWAL, MANAGING DIRECTOR OF M/S. OCL. AND THE SON OF THE A SSESSEE IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S 132(4) ON 12.02.2010. A PERUSAL OF THE STATEMENT EXTRACTED AB OVE INDICATES THAT THE ASSESSEE HAS SPECIFIED AND SUBSTANTIATED THE MA NNER IN WHICH THE ABOVE INCOME WAS DERIVED. AS PER THE RETURN OF INCO ME FILED ON 31.07.2010, THE ASSESSEE HAS PAID ADVANCE TAX OF RS . 4,00,00,000/- AND TDS OF RS. 24,52,871/- 7.6 ON A SCRUTINY OF THE FACTUAL SCORE, IT IS NOTIC EABLE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNE D ASSESSMENT YEARS ON 31.07.2010 AND OFFERED RS. 22,00,00,000/- OVER AND ABOVE HIS INCOME PURSUANT TO THE SEARCH DATED 11.02.2010. THE DISTILLATION OF THE DECISIONS AT PARA 7 HERE-IN-ABOVE MUST NOW B E APPLIED TO THE FACTS OF THE CASE. THE DISPUTE THEN BOILS DOWN TO R S. 9,51,15,000/- (RS. 22,00,00,000/- MINUS RS. 12,48,85,000/-). 7.7 IN STC VS. MODI SUGAR MILLS , AIR 1961 SC 1047, P. 1051, HIS LORDSHIP SHAH, J. HAS SAID THUS : IN INTERPRETING A TAXING STATUTE, EQUITABLE CONSIDERATIONS ARE ENTIRELY OUT OF PLACE. NOR CAN TAXING STATUTES BE INTERPRETED ON ANY PRESUMPTIONS OR ASSU MPTIONS. THE COURT MUST LOOK SQUARELY AT THE WORDS OF THE STATUT E AND INTERPRET THEM. IT MUST INTERPRET A TAXING STATUTE IN THE LIG HT OF WHAT IS CLEARLY ITA NO. 1967/MUM/2014 12 EXPRESSED; IT CANNOT IMPLY ANYTHING WHICH IS NOT EX PRESSED; IT CANNOT IMPORT PROVISIONS IN THE STATUTE SO AS TO SUPPLY AN Y ASSUMED DEFICIENCY. 7.8 THE RATIO LAID DOWN IN THE DECISIONS RELIED ON BY THE LEARNED COUNSEL OF THE ASSESSEE MENTIONED AT PARA 7 HERE-IN -ABOVE IS THAT PENALTY U/S 271AAA IS NOT LEVIABLE IF AN ASSESSEE, IN HIS STATEMENT RECORDED DURING THE SEARCH U/S 132 OF THE ACT, ADMI TS THE UNDISCLOSED INCOME, SPECIFIES AND SUBSTANTIATES THE MANNER IN W HICH IT HAS BEEN DERIVED AND PAYS THE TAXES DUE THEREON, TOGETHER WI TH INTEREST. WE ARE GUIDED BY THE RATIO LAID DOWN IN THE ABOVE DECI SIONS. THE SEARCH TOOK PLACE ON 11.02.2010. THE ASSESSEE OFFERED INCO ME OF RS. 12,48,85,000/- IN HIS STATEMENT RECORDED U/S 132(4) DURING THE COURSE OF SEARCH ON 12.02.2010. THE ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME FOR THE A.Y. 2010-11 ON 31.07.2010 OFFERI NG INCOME OF RS. 22,00,00,000/- FOR TAXATION. THE BREAK- UP OF IT IS AS UNDER: AY 2010-11 OTHER INCOME RS.105,886,680 AY 2010-11 ASHOK TOWER FLAT INCOME RS.14,113,320 AY 2010-11 INCOME FROM HORSE RACING RS.100,000,000 RS.220000,000 7.9 IN THE UPSHOT, AS THE ASSESSEE ADMITTED THE UND ISCLOSED INCOME OF RS. 12,48,85,000/- DURING THE COURSE OF SEARCH O N 12.02.2010, HE IS LIABLE TO PENALTY U/S 271AAA @ 10% ON THE BALANCE A MOUNT OF RS. RS. 9,51,15,000/- ONLY (RS. 22,00,00,000/- MINUS RS. 12,48,85,000/-). THE A.O. IS DIRECTED TO IMPOSE PENALTY U/S 271AAA @ 10% ON THE BALANCE AMOUNT OF RS. 9,51,15,000/- IN PLACE OF RS. 2,20,00 ,000/- COMPUTED BY HIM. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITA NO. 1967/MUM/2014 13 ORDER PRONOUNCED IN THE OPEN COURT ON 05/05/2017 SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI: DATED: 05/05/2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI