M/s. Sarvoday Engineering Works, JAMNAGAR V. The Deputy Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITA 216/RJT/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2321 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: HARISH RANPURA
• Keywords: Income from undisclosed sources; Retraction; Revised return; Documents seized
• Section: 5(2); 153A; 234B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - C OURT AT AHMEDABAD] M/S. SARVODAY ENGINEERING WORKS, 10, PATEL COLONY , IND. AREA, JAMNAGAR PAN: AAHFS 7329 M (APPELLANT) VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RAJ KOT (RESPONDENT) M/S. SWASTIK ENGINEERS, 10, PATEL COLONY IND. AREA, JAMNAGAR PAN: AAHFS 2672 M (APPELLANT) VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, RAJKOT (RESPO NDENT) REVENUE BY : S H RI C.S. ANJARIA , D . R. ASSESSEE BY: S H RI HARISH RANPURA , A.R. DATE OF HEARING : 2 2 - 01 - 2 016 DATE OF PRONOUNCEMENT : 03 - 02 - 2 016 I T A NO S . 211 TO 216 / RJT /20 12 A Y 200 2 - 03 TO 2007 - 08 ITA NO S . 220 TO 225 / RJT /20 12 A Y 200 2 - 03 TO 2007 - 08 I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 2 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THI S BATCH OF TWELVE APPEALS FILED BY THE TWO ASSESSEES NAMELY; M/S. SARVODAY ENGINEERING WORKS AND M/S SWASTIK ENGINEERS, FOR ASSESSMENT YEARS 2002 - 03 TO 2007 - 08, CHALLENGES TWO COMMON OR DERS IN RESPECTIVE BATCH OF CASES PASSED BY THE CIT(A) - IV, AHMEDABAD, DATED 23 - 02 - 2012 IN BOTH SETS OF APPEALS, UPHOLDING PENALTIES IMPOSED BY THE ASSESSING OFFICER, IN PROCEEDINGS UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. A COMBINED PERUSAL OF THESE TWELVE CASE FILES REVEALS THAT BOTH THESE ASSESSEES ARE A GGRIEVED AGAINST SECTION 271(1)(C) PENALTIES OF RS. 17,850/ - , RS. 18,375/ - , RS. 26 ,908 / - , RS. 2 , 44 , 398/ - , RS. 41,250/ - AND RS. 82,500/ - IN EACH CASE, ASSESSMENT YEAR - WISE AS INDICATED HEREINABOVE, IMPOSED BY THE ASSESSING OFFICER AND UPHELD IN THE LOWER APPELLATE PROCEEDINGS. THE ASSESSEES AS WELL AS THE REVENUE ARE IN AGREEMENT THAT THIS ENTIRE BATCH OF APPEALS INVOLVE S IDENTICAL FACTS ARISING OUT OF THE VERY SEARCH CONDU CTED ON 21 - 02 - 2008. WE TREAT ITA 211/RJT/2012 IN CASE OF M/S SARVODAY ENGINEERING WORKS FOR ASSESSMENT YEAR 2002 - 03 AS THE LEAD CASE. 3. THE ASSESSEE - FIRM M/S. SARVODAY ENGINEERING WORKS IS ENGAGED IN FABRICATION WORK BUSINESS. IF FILED ITS REGULAR R ETURN OF I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 3 INCOME ADMITTING INCOME OF RS. 9,920/ - . THE DEPARTMENT CARRIED OUT A SEARCH IN CASES OF ITS GROUP CONCERNS ON 21 - 02 - 2008. ONE OF THE PARTNER SHRI SANJAY ISHWARBHAI MASURIA APPEARS TO HAVE DISCLOSED UNACCOUNTED INCOME OF RS. 75 LACS IN CASE OF TH E ENTIRE GROUP. THE SAME CAME FROM A LETTER DATED 17 - 03 - 2008 ADDRESSED TO INCOME T AX AUTHORITIES. ITS CONTENTS F O R M PART OF THE CIT(A) S ORDER AT PAGE 2. HE STATED THAT THIS DISCLOSURE WAS IN ORDER TO AVAIL IMMUNITY U/S. 271(1)(C) EXPLANATION 5(A), 271 AAA R . W.S. 132(4). THIS C ULMINATED IN INITIATION OF SECTION 153C NOTICE DATED 25 - 06 - 2008. THE ASSESSEE FILED ITS POST SEARCH RETURN ON 29 - 09 - 2009 SHOWING ADDITIONAL INCOME OF RS. 50,000/ - . THE ASSESSING OFFICER THEREAFTER COMPLETED SEARCH ASSESSMENT ON 30 - 11 - 2009 ACCEPTING THE ENHANCED INCOME. WE NOTICE AT THIS STAGE THAT THE CIT(A) RECORDS IN HIS ORDER THAT ASSESSEE S GROSS DISCLOSURE OF ADDITIONAL INCOME FOR ALL ASSESSMENT YEAR S HEREINABOVE WAS RS. 12,31,250/ - . THE ASSESSING OFFICER AT THE TIME OF FR AMING ASSESSMENT INITIATED THE IMPUGNED PENALTY PROCEEDINGS OF CONCEALMENT OF INCOME. QUANTUM PROCEEDINGS SEEM TO HAVE ATTAINED FINALITY AT THIS STAGE. 4. WE COME TO THE IMPUGNED PENALTY PROCEEDINGS. THE ASSESSEE PLEADED THAT HIS ADDITIONAL INCOME OFFE RED WAS IN FURTHERANCE TO SECTION 132(4) STATEMENT (SUPRA) AND IT HAD ALREADY PAID DUE TAX AND INTEREST. IT SOUGHT TO COVER ITS CASE UNDER EXPLANATION 5 TO 271(1) (C). THE ASSESSING OFFICER DISAGREED WITH THE SAME. HE WAS OF THE VIEW THAT THIS ADDITIONAL INCOME CAME FORWARD TO BE DECLARED ONLY DUE TO THE ABOVE STATED SEARCH ACTION. HE REFERRED TO SEIZURE OF HUGE CASH I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 4 AMOUNT FROM ASSESSEE S PREMISES. HE OPINED THAT IT WAS NOT ELIGIBLE FOR IMMUNITY AS PROVIDED U/S. 271(1)(C). SINCE THE ESSENTIAL CONDITIO N OF EXPLAINING MANNER OF EARNING OF THE INCOME, RECORDING OF THE SAME IN BOOKS ETC HAD NOT BEEN FULFILLED. HE QUOTED A CATENA OF CASE LAW T O OBSERVE THAT THIS EXPLANATION WAS NOT ATTRACTED IN FACTS OF THE INSTANT CASE. IT EMERGES THAT THE ASSESSING OFFI CER FURTHER WAS OF THE VIEW THAT WHERE AN UNDISCLOSED INCOME IS DISCOVERED DURING SEARCH, CONSEQUENTIAL PENALTY CANNOT BE AVOIDED MERELY BECAUSE HE IS AGREED TO THE SAID UNDISCLOSED INCOME. NOR SUCH A PENALTY COULD BE MITIGATED MERELY BECAUSE OF FILING OF A REVISED RETURN. ALL THIS DISCUSSION LED THE ASSESSING OFFICER TO OBSERVE THAT THE ASSESSEE HAD CONCEALED HIS UNDISCLOSED INCOME WHICH COULD BE UNEARTHED ONLY BECAUSE OF THE SEARCH. WE FIND THAT HE ALSO TOOK INTO ACCOUNT TRIBUNAL S ORDER IN CASE OF ACI T VS. KRIT DAYABHAI PATEL ITAS 2344 T O 2346, 2348 AND 2389/AHD/2007 ELUCIDATING AMBIT OF EXPLANATION 5(2) TO SECTION 271(1) (C) TO CONCLUDE THAT THE SAME IS CONFINED TO THE RETURN FOR THE YEAR IN RESPECT OF WHICH THE PREVIOUS YEAR IS YET TO END OR EVEN THOU GH ENDED, THE TIME FOR FILING RETURN U/S. 139(1) IS YET TO EXPIRE. HE CONSTRUED THE SAME TO BE AVAILABLE ONLY QUA THE PREVIOUS YEAR RELEVANT TO SEARCH. HE PROCEEDED ON THIS ANALOGY AND IMPOSED THE IMPUNGED PENALTY OFRS. 17,850/ - U/S. 271(1) OF THE ACT I N ORDER DAED 12 - 05 - 2010. THE CIT(A) CONFIRMS STHE SAME IN THE LOWER APPELLATE ORDER UNDER CHALLENGE. THIS LEAVES THE ASSESSEE AGGRIEVED. I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 5 5. WE HAVE HEARD BOTH THE PARTIES . RELEVANT FACTS ALREADY STAND NARRATED IN THE PRECEDING PARAGRAPHS. THERE IS NO DISPUTE THAT THE ASSESSEE S PARTNER MADE A DISCLOSURE STATEMENT ADMITTING ITS UNDISCLOSED INCOME TO THE TUNE OF RS. 50,000/ - IN THE IMPUGNED ASSESSMENT YEAR AND OTHER SUCH SUMS IN THE REMAINING ASSESSMENT YEAR . THE ASSESSEE HAD NOT DECLARED THE SAME I N ITS ORIGINAL RETURN (SUPRA). BOTH THE AUTHORITIES BELOW INVOKE PENALTY PROVISION U/S. 271(1) (C) OF THE ACT TO HOLD THAT THE ABOVE STATED ADDITIONAL INCOME OF RS. 50,000/ - DECLARED IN POST SEARCH RETURN AMOUNTS TO CONCEALED INCOME. THE ASSESSEE S SOLE A RGUMENT RAISED BEFORE US THAT THERE IS NO SPECIFIC INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH BASED ON WHICH ANY INFERENCE OF UNDISCLOSED WOULD BE DRAWN. IT ARGUES THAT THE MERE FACT THAT ITS PARTNERS ADMITTED ADDITIONAL INCOME WITHOUT SPECIFICA LLY REFERRING TO ANY EVIDENCE IN THE FORM OF MONEY, BULLION, OR JEWELERY ETC DOES NOT ATTRACT THE IMPUGNED PENALTY SECTION. THE REVENUE STRONGLY SUPPORTS THE LOWER APPELLATE ORDER. W E FIND IN THIS BACKDROP OF FACTS THAT A CO - ORDINATE BENCH OF THE TRIBUNA L IN IT(SS)A 46/RJT/2012 SHRI MANSUKHBHAI R. SORATHIA VS. JCIT DECIDED ON 04 - 11 - 2015 DELETES AN IDENTICAL PENALTY FOR LACK OF SPECIFIC INCRIMINATING EVIDENCE AS UNDER: - 8. A PERUSAL OF BOTH THESE SECTIONS TOGETHER WOULD INDICATE THAT THE IMMUNITY AKIN TO EXPLANATION 5 IS AVAILABLE TO THE ASSESSEE UNDER EXPLANATION - 5A ALSO, IF HE FULFILLS THE CONDITIONS NARRATED IN SECTION 271AAA. THE EXPLANATION APPENDED TO SECTION 271AAA PROVIDES THE DEFINITION OF UNDISCLOSED INCOME AND SPECIFIED PREVIOUS YEAR. A PERUSA L OF THE EXPRESSION SPECIFIED PREVIOUS YEAR WOULD INDICATE THAT THE YEAR OF SEARCH AND IMMEDIATELY EARLIER YEAR, IF DUE DATE OF FILING OF THE RETURN HAS NOT EXPIRED AND INCOME - TAX RETURN FOR SUCH YEAR HAS NOT BEEN FILED. SINCE THE ASSESSMENT YEARS INVOL VED I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 6 BEFORE US ARE THE ASSTT.YEARS 2008 - 09 AND 2009 - 10, THE DUE DATE FOR FILING OF THE RETURN FOR THE ASSTT.YEAR 2009 - 10 WAS EXPIRED BEFORE THE SEARCH ACTION. THUS, BOTH THESE YEARS DO NOT FALL WITHIN THE AMBIT OF SPECIFIED YEARS . SINCE THE PERIOD OF TH ESE TWO ASSESSMENT YEARS DOES NOT FALL WITHIN THE EXPRESSION SPECIFIED YEAR PROVIDED IN SECTION 271AAA, THEREFORE, WE DO NOT DEEM IT NECESSARY TO CONSTRUE AND EXPLAIN THE MEANING OF EXPLANATION 5A WITHIN THE SCOPE OF SECTION 271AAA. THE ASSESSEES AS SUC H CANNOT CLAIM IMMUNITY AKIN TO ONE AVAILABLE IN SUB - CLAUSE (1) AND (2) OF THE EXPLANATION 5, MORE PARTICULARLY, ON THE STRENGTH OF THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA). THE LD.FIRST APPELLATE AUTHORITY H AS DEALT WITH THESE SITUATION IN AN ANALYTICAL MANNER AND IN RIGHT PERSPECTIVE. AS FAR AS THE CONSTRUCTION OF MEANING OF EXPLANATION 5A TO SECTION 271AAA BY THE LD.FIRST APPELLATE AUTHORITY IS CONCERNED, WE DO NOT FIND ANY ERROR. 9. AT THE COST OF REPETI TION, WE WOULD LIKE TO OBSERVE THAT AS PER EXPLANATION 5A, IF IN THE COURSE OF SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST JUNE, 2007, THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS AND THE ASSESSEE CLAIMS SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILSING THE WHOLE OR PARTLY OF HIS INCOME FROM ANY PREVIOUS YEAR OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND DURING THE COURSE OF SEARCH, AND T HE ASSESSEE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME FROM ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH, THEN, NOTWITHSTANDING SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INC OME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER CLAUSE (C) OF SUB - SECTION (1) OF THIS SECTION BE DEEMED TO HAVE BEEN CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. THE MOOT QUESTI ON FOR ATTRACTING THIS EXPLANATION IS THAT IN THE COURSE OF SEARCH MONEY, BULLION, JEWELLERY OR INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OUGHT TO HAVE BEEN FOUND. IN A GIVEN SITUATION, NO MONEY OR BULLION OR JEWELLERY OR INCOM E MIGHT HAVE FOUND FROM THE ASSESSEES FOR THE ASSESSMENT YEARS WHICH WERE NOT PART OF SPECIFIED PREVIOUS YEAR CONTEMPLATED IN SECTION 271AAA OR IMMUNITY AVAILABLE TO THE ASSESSEES UNDER SUB - CLAUSE (A) AND (B) OF EXPLANATION 5A, THEN ALSO, IF IN RESPONSE TO THE NOTICE UNDER SECTION 153A, THE ASSESSEE DISCLOSED SOME ADDITIONAL INCOME VOLUNTARILY, WOULD HE BE DEEMED TO HAVE CONCEALED THE INCOME FOR VISITING HIM I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 7 WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT ? THE LD.REVENUE AUTHORITIES HAD DRAWN INFERENCE THAT SINCE THE ASSESSEE HAS NOT DISCLOSED ADDITIONAL INCOME IN THE ORIGINAL RETURNS, MEANING THEREBY, IT IS TO BE ASSUMED THAT THEY HAVE DISCLOSED THIS AMOUNT ONLY WHEN SOME INCRIMINATING MATERIAL WAS FOUND. TO OUR MIND THIS ASSUMPTION OUGHT TO BE SUPPORT ED WITH REFERENCE OF THAT INCRIMINATING MATERIAL. LET US SEE THE FINDING IN THE ASSESSMENT ORDER. 10. WE HAVE PERUSED THE ASSESSMENT ORDER OF SHRI MANSUKHBHAI R. SORATHIA IN THE ASSTT.YEAR 2008 - 09. ALL OTHER ASSESSMENT ORDERS ARE ALSO SIMILARLY WORDED. IT IS A VERY BRIEF ASSESSMENT ORDERS RUNNING ONE - AND - HALF PAGES. IN THE FIRST PAGE, THE LD.AO HAS NARRATED PROCEDURAL ASPECT ABOUT THE SEARCH ACTION, ISSUANCE OF NOTICE AND FILING OF THE RETURN, SERVICE OF NOTICE UNDER SECTION 143(2) ETC. IN THE NEXT P AGE FINDING OF THE AO READ AS UNDER: 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION AND ENGINEERING JOB WORK AND ALSO DERIVES INCOME FROM AGRICULTURAL ACTIVITIES, REMUNERATION AND INTEREST FROM PARTNERSHIP FIRMS ETC. COPIES OF P&L ACCOUNT, CAPI TAL ACCOUNT AND BALANCE SHEET, WAS FILED WITH THE RETURN. VARIOUS ISSUES WERE DISCUSSED AT LENGTH. 2.1 IT IS SEEN THAT THE ASSESSEE HAD MADE DISCLOSURE UNACCOUNTED INCOME OF RS 22,00,000/ - WHICH WAS NOT DISCLOSED IN THE RETURN FILED U/S. 139(1). THIS BEI NG CONCEALED INCOME, PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I T ACT IS BEING INITIATED. 3. AFTER VERIFICATION, THE TOTAL INCOME IS DETERMINED AS UNDER: - TOTAL INCOME AS PER RETURN OF INCOME RS 28,45,960/ - TOTAL ASSESSED INCOME RS 28,45,960/ - AGRICULTURAL INCOME FOR RATE PURPOSE RS.6,14,131/ - 4. ASSESSED U/S. 153A OF THE I T ACT, 1961. CHARGE TAX. CHARGE INTEREST U/S. 234A, 234B AND 234C OF THE I T ACT, IF ANY. GIVE CREDIT FOR PREPAID TAXES AFTER DUE VERIFICATION. DEMAND NOTICE AND CHALLAN IS SUED ACCORDINGLY. ISSUE NOTICE U/S. 271(1)(C)OF THE IT ACT. I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 8 11. WE HAVE PERUSED THE PENALTY ORDER ALSO. THERE ARE ONLY THREE PARAGRAPHS I.E. PARA - 4, 6 AND 7, WHERE THE AO HAS MADE SOME OBSERVATION AT HIS OWN, OTHERWISE, IN REST OF THE PARAGRAPHS HE REPR ODUCED THE SUBMISSIONS OR THE HEAD - NOTES OF THE CASE LAWS. THE OBSERVATION OF THE AO IN THESE PARAS READ AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSES. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE BECAUSE, THE ADDITION AL INCOME OFFERED BY THE ASSESSES ONLY SURFACED DUE TO THE SEARCH ACTION CARRIED BY THE DEPARTMENT. HAD THERE BEEN NO SEARCH, THE PORTION OF ADDITIONAL INCOME WOULD HAVE REMAINED CONCEALED ETERNALLY. IF IN A REGULAR CASE, ON DETECTION OF CONCEALMENT, PENAL TY U/S. 271(1)(C) IS LEVIABLE, HOW MUCH MORE PENALTY BECOMES TRUE AND POTENT IN A CASE WHERE THE CONCEALMENT HAS BEEN DETECTED ON ACCOUNT OF PROACTIVE SEARCH ACTION INITIATED BY THE DEPARTMENT. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS NOT RECORDED DET AILS OF HIS INCOME AND THE SAME WAS WORKED OUT ONLY DURING SEARCH AND THAT TOO ON THE BASIS OF THE SEIZED MATERIALS. IN FACT, IT IS AN ESTABLISHED JUDICIAL DECISION THAT 'DOCUMENTS SEIZED DURING THE SEARCH CANNOT BE SAID THE BOOKS OF ACCOUNTS MAINTAINED FO R ANY SOURCE OF INCOME, FOR THE PURPOSES OF EXPLANATION 5 (CIT VS GLAMOUR RESTAURANT (2003) 80 TTJ (MUM) 763. DIARIES FOUND AND SEIZED DURING COURSE OF SEARCH CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE PURPOSE OF IMMUNITY T O BE GRANTED TO HIM UNDER THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) - DR T P KULKARNI VS CIT (2003) 86 ITD 696 (MUM). IT HAS ALSO BEEN HELD THAT ONLY BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE CAN MAKE THE ASSESSEE ELIGIBLE FOR GRANT OF I MMUNITY FROM PENALTY AND NOT JUST ANY OF SUCH BOOKS, WHICH HAVE NOT BEEN MAINTAINED IN REGULAR COURSE OF BUSINESS - BRIJ LAL GOYAL VS CIT (2004) 88 ITD 413 (DELHI). 12. IN THIS BACKGROUND, IF WE APPRECIATE THE EVIDENCES AVAILABLE ON THE RECORD, THEN IT W OULD REVEAL THE WHOLE CASE OF THE REVENUE FOR VISITING THE ASSESSEE WITH PENALTY IS BASED ON THE STATEMENT OF SHRI JAYANTILAL R. SORATHIA RECORDED DURING THE COURSE OF SEARCH. WE HAVE EXTRACTED THE RELEVANT PART OF THE STATEMENT IN THE FOREGOING PARAGRAPH S OF THIS ORDER. THE EVIDENTIARY VALUE OF SUCH STATEMENT HAS BEEN EXPLAINED IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS. LET US FIRST TAKE NOTE OF SECTION 132(4) OF THE ACT. I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 9 THE AUTHORISED OFFICER MAY, DURING THE COURSE OF THE SEARCH OR 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 SUCH PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME - 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 BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS FOUND AS A RESULT OF THE SEARCH, BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922 ), OR UNDER THIS ACT. 13. A BARE PERUSAL OF SECTION WOULD REVEAL THAT IT EMPOWERS THE AUTHORIZED OFFICER TO EXAMINE DURING THE COURSE OF SEARCH OR SEIZURE ANY PERSON ON OATH. THE DISCLOSURE MADE DURING THE STATEMENT RECORDED UNDER THIS SECTION WILL BE ADMITTED IN THE EVIDENC E AND CAN BE USED AGAINST THE ASSESSEE IN THE PROCEEDING. 14. NO DOUBT, THE DISCLOSURE OR ADMISSION MADE UNDER SECTION 132(4) OF THE ACT DURING THE COURSE OF SEARCH PROCEEDINGS IS AN ADMISSIBLE EVIDENCE BUT NOT CONCLUSIVE ONE. THIS PRESUMPTION OF ADMIS SIBILITY OF EVIDENCE IS A REBUTTABLE ONE, AND IF AN ASSESSEE IS ABLE TO DEMONSTRATE WITH THE HELP OF SOME MATERIAL THAT SUCH ADMISSION WAS EITHER MISTAKEN, UNTRUE OR BASED ON MISCONCEPTION OF FACTS, THEN SOLELY ON THE BASIS OF SUCH ADMISSION NO ADDITION IS REQUIRED TO BE MADE. IT IS TRUE THAT ADMISSION BEING DECLARATION AGAINST AN INTEREST ARE GOOD EVIDENCE, BUT THEY ARE NOT CONCLUSIVE, AND A PARTY IS ALWAYS AT LIBERTY TO WITHDRAW THE ADMISSION BY DEMONSTRATING THAT THEY ARE EITHER MISTAKEN OR UNTRUE. IN LAW, THE RETRACTED CONFESSION EVEN MAY FORM THE LEGAL BASIS OF ADMISSION, IF THE AO IS SATISFIED THAT IT WAS TRUE AND WAS VOLUNTARILY MADE. BUT THE BASING THE ADDITION ON A RETRACTED DECLARATION SOLELY WOULD NOT BE SAFE. IT IS NOT A STRICT RULE OF LAW, B UT ONLY RULE OF PRUDENCE. AS A GENERAL RULE, IT IS UNSAFE TO RELY UPON A RETRACTED CONFESSION WITHOUT CORROBORATIVE EVIDENCE. DUE TO THIS GREY SITUATION, CBDT HAS ISSUED CIRCULAR NO.286/2/2003 PROHIBITING THE DEPARTMENTAL OFFICIALS FROM I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 10 TAKING CONFESSION IN THE SEARCH. THE BOARD IS OF THE VIEW THAT OFTEN THE OFFICIALS USED TO OBTAIN CONFESSIONS FROM THE ASSESSEE AND STOP FURTHER RECOVERY OF THE MATERIAL. SUCH CONFESSIONS HAVE BEEN RETRACTED AND THEN THE ADDITION COULD NOT WITHSTAND THE SCRUTINY OF THE H IGHER APPELLATE AUTHORITY, BECAUSE NO MATERIAL WAS FOUND SUPPORTING SUCH ADDITION. 15. AN ISSUE WHETHER ADDITION SOLELY ON THE BASIS OF STATEMENT U/S.132(4) CAN BE MADE WAS CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KIALASHBEN MANHARLAL CHOKSHI VS. CIT, 220 CTR (GUJ) 138. IN THIS CASE, SEARCH WAS CONDUCTED UPON THE ASSESSEE UNDER SECTION 132 OF THE INCOME TAX ACT ON 4.11.1988. THE STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132(4) OF THE ACT. HE MADE DISCLOSURE OF RS .7 LAKHS. LATER ON, IN JANUARY, 1989, THE ASSESSEE RETRACTED FROM THE DISCLOSURE AND STATED THE DISCLOSURE OF RS.50,000/ - WAS ACCEPTABLE TO HIM. THE LD.AO MADE AN ADDITION OF RS.7 LAKHS ON THE BASIS OF HIS STATEMENT AND OBSERVED THAT THE RETRACTION WAS M ADE AFTER A LAPSE OF 2 MONTHS. THE ASSESSEE DID NOT HAVE ANY REASON FOR RETRACTING FROM THE DISCLOSURE. THE LD.FIRST APPELLATE AUTHORITY CONCURRED WITH THE AO AND CONFIRMED THE ADDITION OF RS.7 LAKHS TO HIS INCOME. THE TRIBUNAL HAS ALSO CONFIRMED THE AD DITION BY OBSERVING THAT THERE WAS NOTHING ON RECORD WHICH INDICATED THAT THE DISCLOSURE WAS TAKEN FROM THE ASSESSEE UNDER DURESS, PRESSURE OR COERCION. THE RETRACTION AFTER LAPSE OF TWO MONTHS FROM THE DATE OF DISCLOSURE BY THE ASSESSEE WAS CONSIDERED AS AFTER - THOUGHT. THE ISSUE TRAVELLED BEFORE THE HON BLE HIGH COURT. THE HON BLE HIGH COURT HAS DELETED THE ADDITION BY OBSERVING THAT MERELY ON THE BASIS OF DISCLOSURE, ADDITION CANNOT BE MADE. THERE SHOULD BE SOME CORROBORATIVE MATERIAL. THE FOLLOWIN G OBSERVATIONS IN PARA - 26 OF THE JUDGEMENT OF HON BLE COURT ARE WORTH TO NOTE. IT READS AS UNDER: 26. IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE WE ARE OF THE VIEW THAT THIS EXPLANATION SEEMS TO BE MORE CONVINCING, HAS NOT BEEN CONSIDERED BY THE AUTHOR ITIES BELOW AND ADDITIONS WERE MADE AND/OR CONFIRMED MERELY ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. DESPITE THE FACT THAT THE SAID STATEMENT WAS LATER ON RETRACTED NO EVIDENCE HAS BEEN LED BY THE REVENUE AUTHORITY. WE ARE, THERE FORE, OF THE VIEW THAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJECTED TO SUCH ADDITIONS I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 11 UNLESS AND UNTIL, SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. WE ARE ALSO OF THE VIEW THAT FROM THE STATEMENT RECORD ED AT SUCH ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT, IF IT IS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSION. HENCE THERE IS NO REASON NOT TO DISBELIEVE THE RETRACTION MADE BY THE ASSESSING OFFICER AND EXP LANATION DULY SUPPORTED BY THE EVIDENCE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 6 LAKHS ON THE BASIS OF STATEMENT RECORDED BY THE ASSESSING OFFICER UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL HAS COMM ITTED AN ERROR IN IGNORING THE RETRACTION MADE BY THE ASSESSEE. 27. IN THE ABOVE VIEW OF THE MATTER, ADDITION OF RS. 1 LAKH MADE ON ACCOUNT OF UNACCOUNTED CASH IS CONFIRMED AND THE ADDITION OF RS. 6 LAKHS IS HEREBY DELETED. 16. THIS DECISION HAS BEEN FO LLOWED BY THE HON BLE HIGH COURT IN THE CASE OF CIT VS. CHANDRAKUMAR JETHMAL KOCHAR, 55 TAXMANN.COM 292 (GUJ). THE HON BLE HIGH COURT HAS REPRODUCED THE DISCUSSION MADE BY THE TRIBUNAL, AND THEREAFTER, CONCURRED WITH THE CONCLUSIONS OF THE TRIBUNAL BY OBS ERVING AS UNDER: 6. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE PRINCIPAL LAID DOWN IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI (SUPRA),WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS JUST AND PROPER. WE ARE NOT CONVINCED WITH THE SUBMISSIONS MADE BY MR. MEHTA, LEARNED ADVOCATE FOR THE APPELLANT THAT THE TRIBUNAL HAS NOT GIVEN COGENT REASONS. THEREFORE, THE ANSWER TO THE FIRST QUESTION WOULD BE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE SECOND QUESTION WILL ALSO ENURE FOR THE BENEFIT OF THE ASSESSEE AS FROM THE RECORD IT IS CLEAR THAT OTHER CONCERNS WERE NOT BENAMI CONCERNS OF THE ASSESSEE. 7. FOR THE FORGING REASONS, THE PRESENT APPEAL IS DISMISSED. ACCORDINGLY, BOTH THE QUESTIONS WHICH WERE REFERRED TO THIS COU RT ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 12 17. HAD THIS STATEMENT BEEN RETRACTED BY THE ASSESSEE, AND THEY HAVE NOT OFFERED THIS UNDISCLOSED INCOME, FORGET TO TAKE ACTION OF LEVYING THE PENALTY, EVEN ADDITIONS WOULD NOT HAVE BEEN SUSTAINED. THE INFERENCE OF OWNERSHIP OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES, TO OUR MIND, OUGHT NOT TO BE BASED ON THIS STATEMENT. WHEN THE ASSESSEES HAVE TAKEN SPECIFIC PLEA THAT NO MONEY, BULLION OR JEWELLERY OR INCOME BASED ON AN Y ENTRIES FOR THESE TWO ASSESSMENT YEARS WAS FOUND DURING THE COURSE OF SEARCH, THE AO OUGHT TO HAVE IMMEDIATELY REFERRED THE DOCUMENTS, ENTRIES OR ANY ASSET FOUND WHICH IS RELEVANT TO THESE ASSESSMENT YEARS IN THE PENALTY PROCEEDINGS. HE SHOULD HAVE REJE CTED THE EXPLANATION OF THE ASSESSEE BY DEMONSTRATING IT AS FACTUALLY INCORRECT. RATHER, THE AUTHORITIES HAVE PROCEEDED ON THE ASSUMPTION THAT HAD THERE BEEN NO MONEY, BULLION, JEWELLERY OR INCOME BASED ON ENTRIES WAS NOT FOUND, THE ASSESSEE WOULD HAVE NO T MADE VOLUNTARY DISCLOSURE OF THE INCOME IN THESE RETURNS. THEY FAILED TO NOTE THE QUESTION NO.25 ALSO, WHERE THE ASSESSEES CLAIMED IMMUNITY FROM PENALTY, AND PEACE FROM LITIGATION. TO OUR MIND INFERENCE OF AVAILABILITY OF MONEY, BULLION OR ASSETS EMBED DED IN THE ENTRIES CANNOT BE DRAWN FROM THE STATEMENT OF THE ASSESSEE (EXTRACTED SUPRA). THEY SHOULD HAVE BEEN FOUND IN PHYSICAL FORM AND PERTAINING TO THESE YEARS, ONLY THEN, DEEMING FICTION OF CONCEALMENT WOULD TRIGGER. THUS, THE REVENUE AUTHORITIES HAV E NOT REFERRED ANY DOCUMENTARY EVIDENCES DEMONSTRATING THE FACT THAT VOLUNTARY INCOME OFFERED BY ASSESSEES IN THESE TWO YEARS ACTUALLY UNEARTHED DURING THE COURSE OF SEARCH. THEREFORE, TO OUR MIND, THE ASSESSEES DO NOT DESERVE TO BE VISITED WITH PENALTIES . WE ALLOW ALL THE APPEALS OF THE ASSESSEES AND DELETE PENALTIES. THE LEARNED CO - ORDINATE BENCH IN ITS ABOVE EXTRACTED PORTION OF THE ORDER CONCLUDES THAT INFERENCE OF ANY UNDISCLOSED MONEY, BULLION OR ASSETS CANNOT BE DRAWN MERELY ON THE BASIS OF A S EARCH STATEMENT IN ABSENCE OF SPECIFIC MATERIAL AS PER BOARD S CIRCULAR NO. 286/02/2003 AS WELL AS HON BLE JURISDICTIONAL HIGH COURT DECISION IN KAILASHBEN MANHARLAL CHOCKSHI VS. CIT 220 CTR (GUJ) 138. THE REVENUE IS UNABLE TO POINT OUT ANY DISTINCTION ON FACTS OR LAW SO IN I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 13 THE ABOVE EXTRACTED DECISION VIS - - VIS IN THE INSTANT CASE. WE ACCEPT ASSESSEE S CORRESPONDING ARGUMENT AND HOLD THAT THE AUTHORITIES BELOW HAVE WRONGLY IMPOSED PENALTY OF RS. 17,850/ - . THE SAME STANDS DELETED. ITA 221/RJT/2012 IS AL LOWED. 6 . BOTH PARTIES HAVE ALREADY INDICATED VERY FAIRLY THAT FACTS AND ISSUE S INVOLVED IN ALL OTHER ELEVEN APPEALS ARE IDENTICAL. WE CONCLUDE THAT OUR FINDINGS IN ASSESSEE S FAVOUR IN PRECEDING PARAGRAPHS SHALL APPLY HEREIN AS WELL. ALL OTHER APPEAL S ITA NOS. 212 TO 216 /RJT/2012 AND ITA NOS. 220 TO 225 /RJT/2012 ALSO SUCCEED. 7 . ALL THESE TWELVE APPEALS FILED AT THE BEHEST OF TWO DIFFERENT AS SESSEES ARE ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 03 - 02 - 201 6 SD/ - SD/ - (PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 03 /02 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, I.T.A NO S . 211 TO 216 & 220 TO 225 /RJT /20 12 A.Y. 2002 - 03 TO 2007 - 08 PAGE NO SARVODAY ENGINEERING WORKS VS. DCIT & SWASTIK ENGINEERS VS. DCIT 14 ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT