Income-tax Officer, V. Shri Dilip M. Kothari, Raigad

ITA 2169/PUN/2013

• Counselvise Citation: 216924514 RSA 2013
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 13-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Unexplained investment; Search and seizure; Reasonable cause; Corroborative evidences
• Section: 69C; 143(3); 153A; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 2169 /PN/20 1 3 ASSESSMENT YEAR : 200 6 - 07 INCOME TAX OFFICER , WARD - 1, PANVEL, INCOME TAX OFFICE, 3 RD FLOOR, TRIFED TOWER, SECTOR - 17, OPP. - KHANDA COLONY, NEW PANVEL, DISTT. - RAIGAD VS. SHRI DILIP M. KOTHARI, KOTHARI SADAN, OPP. - JAIN MANDIR, KAPAD BAZAR, TILAK ROAD, PANVEL, DISTT. - RAIGAD (APPELLANT) (RESPONDENT) PAN NO. ACLPK5 555D REVENUE BY: SHRI RAJESH DAMOR ASSESSEE BY: SHRI SUBODH RATNAPARKHI DATE OF HEARING : 2 9 - 10 - 2014 DATE OF PRONOUNCEMENT : 26 - 11 - 2014 ORDER PER R.S . PADVEKAR , JM : - TH IS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE L D. CIT(A) - II, THANE FOR THE A.Y. 2006 - 07. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND IN THE APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) - II, THANE HAS ERRED IN CANCELLING THE PENALTY U/S. 271(1)(C) OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE CONDITIONS AS LAID DOWN IN EXPLANATION 5 TO SECTION 271(1)(C) HAVE NOT BEEN MET IN AS MUCH AS THE ASSESSEE HAS NOT SPECIFIED IN HIS STATEMENT THE MANNER IN WHICH THE INCOME DISCLOSED HAS BEEN DERIVED AT AND ALSO HAS NOT FURNISHED ANY SATISFACTORY EXPLANATION REGARDING THE SOURCE OF INVESTMENT MADE IN KOTHARI BHAVAN. 2. THE FACTS WHICH REVEALED FROM THE RECORDS ARE AS UNDER. THE SEARCH AND SEIZURE ACTION U/S. 132 OF THE INCOME - TAX ACT WAS CARRIED OUT ON 04 - 10 - 2006 AGAINST THE ASSESSEE ALONG WITH OTHER PERSONS OF THE GROUP. THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE A.Y. 2006 - 07 2 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D ON 31 - 07 - 2007 DECLARING TOTAL INCOME OF RS.12,11,280/ - . THE ASSESSMENT OF THE ASSESSEE HAS BEEN COMPLETED BY THE ASSESSI NG OFFICER U/S. 153A R.W.S. 143(3) OF THE ACT DETERMINING TOTAL INCOME OF RS.15,79,189/ - . IN THE RETURN OF INCOME, THE ASSESSEE DISCLOSED INCOME WHICH WAS OFFERED U/S. 132(4) OF THE ACT AS DETAILED BELOW: - (I) UNDISCLOSED INCOME ON ACCOUNT OF PAWNING ADVA NCES OF RS.3,00,000/ - . (II) UNDISCLOSED INCOME ON ACCOUNT OF EXPENDITURE ON INTERIOR DECORATION OF RS.7,00,000/ - . 2.1 ON EXAMINATION OF THE DETAILS OF INVESTMENT MADE ON INTERIOR DECORATION OF KOTHARI BHAWAN , IT WAS NOTICED THAT THE A SSESSEE ALONG WITH HIS WIFE HAS DISCLOSED TOTAL INVESTMENT AT RS.14,32,088/ - WHICH INCLUDED THE UNDISCLOSED INCOME OF RS.7,00,000/ - DECLARED BY THE ASSESSEE AS MENTIONED ABOVE. IT WAS FURTHER OBSERVED THAT OVER AND ABOVE RS.7,00,000/ - THE ASSESSEE HAD MAD E FURTHER UNACCOUNTED INVESTMENT OF RS.3,67,912/ - AND ACCORDINGLY HE MADE THE ADDITION OF SAID AMOUNT U/S. 69C OF THE ACT. THE PENALTY PROCEEDINGS U/S. 271 (1)(C) WERE ALSO INITIATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE WAS ISSUED SH OW CAUSE NOTICE AS TO WHY PENALTY SHOULD BE NOT IMPOSED U/S. 271(1)(C) R.W.S. 274 OF THE ACT. 2.2 IN RESPONSE TO THE SHOW CAUSE NOTICES, THE ASSESSEE FURNISHED A WRITTEN SUBMISSION DATED 17 - 06 - 2009 WHICH HAS BEEN REPRODUCED AT PAGE S 2 AND 3 OF THE PENALTY ORDER. THE ASSESSEE MAINLY SUBMITTED THAT THE INCOME OF RS.10,00,000/ - WAS OFFERED IN THE RETURN OF INCOME FILED U/S. 153A OF THE ACT ON THE BASIS OF INVESTMENT DISCLOSED DURING THE COURSE OF SEARCH ACTION U/S. 132( 1 ) OF THE ACT. IT WAS ALSO STATED THAT THE DATE OF SEARCH I.E. 05 - 10 - 2006 ; WAS PRIOR TO THE DUE DATE OF FILING OF RETURN U/S. 139(1) AND ACCORDINGLY ALL THE CONDITIONS OF EXPLANATION - 5 TO SECTION 271( 1 )(C) HAVE BEEN COMPLIED WITH AND HENCE , 3 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D NO PENALTY WOULD BE IMPOSABLE ON THE INCOME DISCLOSED IN THE RETURN OF INCOME AMOUNTING TO RS.10,00, 000/ - . IN RESPECT OF THE FURTHER ADDITION OF RS.3,67,912/ - , IT WAS STATED THAT THE TOTAL OF EXPENSES ON THE BASIS OF SEIZED MATERIAL WORKED OUT TO RS.14,32,088/ - ONLY AND ACCORDINGLY THE DISCLOSURE WAS MADE BY THE ASSESSEE AND HIS WIFE. THE FIGURE OF EXPENDITURE OF RS.18,00,000 / - WAS ONLY THE APPROXIMATE COST OF WORK AND NOT THE ACTUAL EXPENDITURE. THUS, IT WA S STATED THAT NO ELEMENT OF UNDISCLOSED INVESTMENT EXISTED IN THE INTERIOR DECORATION WORK OF THE KOTH ARI BHAWAN AND HENCE , NO PENALTY COULD BE IMPOSED. 3. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND FAVOUR BY THE ASSESSING OFFICER AND HE LEVIED THE PENALTY ON ABOVE BOTH THE AMOUNTS BY HOLDING THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME WITHIN THE MEANING OF SEC. 271(1)(C) OF THE ACT. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A). IN RESPECT OF THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THE ADDITIONAL INCOME OF RS.10,00,000/ - OFFERED BY THE ASSESSEE A S PER T HE STATEMENT U/S. 132(4) , THE ASSESSEE SUBMITTED THAT PENALTY U/S. 271(1)(C) IS NOT ATTRACTED ON THE DECLARATION MADE BY HIM AS IT WAS COVERED BY CLAUSE (2) TO E XPLANATION - 5 TO SEC. 271(1)(C) OF THE ACT. HE FURTHER SUBMITTED THAT NOW THE ASSESSEE DECLARED THE INCOME AND PA ID THE TAX ON IT THEN ASSESSING OFFICER CANNOT LEVY THE PENALTY BY INVOKING THE PROVISIONS OF EXPLANATION - 5 TO SEC. 271(1)(C) OF THE ACT. HE FURTHER SUBMITTED THAT THERE WAS A STILL TIME TO FILE THE RETURN OF INCOME AND HENCE, OTHERWISE ALSO THERE WAS NO JUSTIFICATION TO LEVY THE PENALTY. HE FURTHER SUBMITTED THAT THERE WAS NO JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER TO LEVY THE PENALTY. IN RESPECT OF ADDITION OF RS.3,67,912/ - THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICE R AS UNDER: 9.1 AS FAR AS THE ISSUE OF ADDITION OF RS.3,67,912/ - ON ACCOUNT OF ALLEGED EXPENSES ON INTERIOR DECORATION OF RESIDENTIAL PREMISES KOTHARI BHUWAN IS CONCERNED, THE ID A.O. IN THE COURSE OF ASST. PROCEEDINGS HAD TABULATED THE TOTAL OF SUCH EXPEN SES AS PER SEIZED 4 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D RECORDS AND DETERMINED THE EXPENDITURE AT RS.14,32,088/ - . THE ASSESSEE WAS ASKED ON 24.12.2008 BY THE LD. D A.O. TO EXPLAIN AS TO HOW SUCH EXPENSES WERE RECORDED IN THE BOOKS OF THE APPELLANT/HIS WIFE. THE SAID ISSUE WAS EXPLAINED BY THE APPELLANT IN THE COURSE OF ASST. PROCEEDINGS VIDE LETTER DT. 26.12.08. (KINDLY REFER TO COPY OF LETTER ENCLOSED AT PG NOS. 21 & 22). IT IS THUS THE CASE THAT SEIZED RECORDS REFLECT EXPENDITURE TO THE TUNE OF RS.14,32,088/ - WHEREAS THE ACTUAL EXPENSES DEBI TED IN THE BOOKS OF THE APPELLANT/ HIS WIFE WAS TO THE EXTENT OFRS.14,47,488/ - . AS FAR AS THE ISSUE OF APPELLANTS STATEMENTS IN THE COURSE OF SEARCH ACTION U/S 132 ON 4.10.06 IS CONCERNED, THE APPELLANT HAD EXPLAINED THAT THE APPROXIMATE COST OF INTERIOR D ECORATION WORK WAS TO THE TUNE OF RS.18 LAKHS. IT MAY PLEASE BE APPRECIATED THAT THE WORD EXPRESSLY USED IN THE ANSWER WAS 'APPROX' AND 'COST' OF SUCH WORK. THOUGH, THE TOTAL 'COST' OF WORK WAS APPROX RS.18 LAKHS, THE ACTUAL EXPENDITURE INCURRED TILL THE D ATE OF SEARCH WAS TO THE TUNE OF RS.14,47,488/ - ONLY. FURTHER, THE APPELLANT HAD KEPT DETAILS OF ACTIVITY WISE EXPENDITURE ON INTERIOR DECORATION IN THE CLASSIC JUMBO NOTE BOOK SEIZED IN THE COURSE OF SEARCH ACTION AND LISTED AT SR. NO. 6 OF ANNEXURE A ON 05.10.06. . AS STATED ABOVE, THE ACTUAL EXPENSES AS PER THE SAID NOTE BOOK AS WORKED OUT BY THE ID A.O. IN THE COURSE OF ASST. PROCEEDINGS WAS RS.14,32,088/ - ONLY. IT IS ACCORDINGLY SUBMITTED THAT NO ELEMENT OF UNDISCLOSED INVESTMENT EXISTED IN THE WORK OF INTERIOR DECORATION AT KOTHARI NIWAS, PANVEL. 9.2 THE ID A.O. WHILE DISCUSSING THIS ISSUE IN THE PENALTY ORDER HAS STATED THAT THE APPELLANT HAS NOT GIVEN ANY SATISFACTORY EXPLANATION ON THIS ISSUE. THIS IS IN SPITE OF THE FACT THAT THE ABOVE GIVEN EXP LANATION IS REPRODUCED IN THE BODY OF THE PENALTY ORDER ITSELF THE ID A.O. HAS ERRED IN HOLDING THE SUM OF RS.3,67,912/ - TO BE THE CONCEALED INCOME OF THE APPELLANT. 4. THE LD. CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE PENALTY. THE REASONS GIVEN BY THE LD. CIT(A) FOR DELETING THE PENALTY ARE AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD AND SUBMISSION OF LD. A.R. I FIND THAT A SEARCH ACTION WAS CARRIED OUT IN THE CASE OF APPELLANT ON 04/10/2006, ALTHOUGH THE DUE DATE OF FILING 5 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D OF RETURN WAS 31/10/2006 AS MENTIONED BY THE A.O. IN PARA 5 OF THE PENALTY ORDER. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, THE STATEMENT OF THE APPELLANT WAS RECORDED U/S. 132(4) OF THE ACT ON 04/10/2006. ON PERUSAL OF THE COPY OF STAT EMENT RECORDED U/S. 132(4) AVAILABLE ON RECORD, IT IS NOTICED THAT THE APPELLANT VIDE QUESTION NO. 12 WAS ASKED TO STATE THE OWNER OF RESIDENTIAL PREMISES KNOWN AS 'KOTHARI BHAWAN'. FURTHER, VIDE QUESTION NO. 13, HE WAS REQUIRED TO GIVE FULL DETAILS OF REN OVATION / INTERIOR DECORATION MADE TO THE HOUSE PROPERTY AT 484/1, KOTHARI BHAWAN, KAPAD BAZAR, PANVEL. IN RESPONSE TO THIS QUESTION, THE ASSESSEE GAVE THE ANSWER WHICH IS AS UNDER: - 'INTERIOR WORK WAS INTERESTED TO SHRI ANIL KAUR, NEW PANVEL AND THE WORK WAS STARTED IN DECEMBER, 20O4 AND COMPLETED IN MARCH, 2009. THE COST OF REPAIRING WORK IS RS.5 TO 6 LACS APPROXIMATELY AND COST OF INTERIOR WORK IS 10 TO 12 LACS APPROXIMATELY.' FURTHER, VIDE QUESTION NO. 15, THE APPELLANT WAS REQUIRED TO GIVE SOURCE OF IN VESTMENT OF RS.18 LACS MADE IN THE REPAIR WORK AND INTERIOR WORK OF THE HOUSE PROPERTY. THE ANSWER TO THIS QUESTION WAS AS UNDER: - 'THE SOURCE OF INCOME IN THE ABOVE INVESTMENT IS THE INTEREST INCOME BY ME FROM MONEY IDVANCE TO SOME OTHER PARTIES/PERSONS E TC. FINALLY, VIDE QUESTION NO. 32, THE APPELLANT WAS REQUIRED TO SAY ANYTHING ELSE IF HE SO WANTS. IN RESPONSE TO THIS QUESTION, THE APPELLANT REPLIED THAT HE WANTED TO VOLUNTARILY DISCLOSE A SUM OF RS.10 LACS AS INCOME FOR THE PREVIOUS YEAR RELEVANT TO CURRENT FINANCIAL YEAR. FROM THE ABOVE, IT IS CLEAR THAT THE APPELLANT HAD DISCLOSED ONLY RS.10 LACS ON ACCOUNT OF REPAIRING WORK AND INTERIOR WORK OF THE RESIDENTIAL HOUSE VOLUNTARILY AND SUCH DISCLOSURE WAS NOT BASED ON ANY SEIZED MATERIAL AND IF ANY SEI ZED MATERIAL WAS THERE, THE APPELLANT WAS NOT SPECIFICALLY CONFRONTED. FURTHER, THE APPELLANT HAS ALSO DISCLOSED THE SOURCE OF INVESTMENT FROM THE INTEREST INCOME FROM MONEY LENDING BUSINESS. 4.1. ON PERUSAL OF THE DETAILS AVAILABLE ON RECORD, IT IS NOTICE D THAT THE EXPENDITURE ON RENOVATION AND REPAIRING OF THE RESIDENTIAL HOUSE 6 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D WAS RECORDED IN A NOTE BOOK CEASED AT SERIAL NO. 6 OF THE ANNEXURE A AND THE ACTUAL EXPENDITURE ON THE BASIS OF DAIRY WORKED OUT TO RS.14,47,488/ - ONLY. THE ASSESSING OFFICER HAS N OT POINTED OUT ANY OTHER MATERIAL TO PROVE THE INVESTMENT AT RS.18 LACS. THE STATEMENT RECORDED U/S. 132(4), IN FACT, CLEARLY PROVES THAT THE APPELLANT HAD MENTIONED ONLY THE APPROXIMATE COST ON REPAIRING AND INTERIOR WORK OF THE HOUSE RANGING FROM RS.15 L ACS TO RS.18 LACS. THUS, IT WAS CRYSTAL CLEAR THAT THE DISCLOSURE MADE DURING THE COURSE OF SEARCH AMOUNTING TO RS.10 LACS WAS A VOLUNTARY DISCLOSURE. FURTHER, THERE WAS NO CONCRETE EVIDENCE TO PROVE THAT THE ACTUAL EXPENDITURE IN REPAIR AND RENOVATION OF THE HOUSE WAS MORE THAN WHAT WAS RECORDED IN THE NOTE BOOK AT RS.14,47,488/ - . THUS, IN MY CONSIDERED VIEW THE FURTHER ADDITION OF RS.3,67,912/ - ON THIS ACCOUNT WAS ONLY AN ESTIMATED EXPENDITURE WHICH CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF SUCH INCOME. 4.2. ANOTHER IMPORTANT ASPECT WHICH EMERGES FROM THE FACTS OF THE CASE IS THAT THE DUE DATE OF FILING OF RETURN HAS NOT EXPIRED IN THE CASE OF APPELLANT AS ON THE DATE OF SEARCH AND NO RETURN OF INCOME WAS ALS O FILED BEFORE SUCH DATE AND HENCE IT CANNOT BE SAID THAT THE APPELLANT HAS COMMITTED ANY DEFAULT ON THIS ACCOUNT BECAUSE THE DEFAULT LIABLE FOR PENALTY IS COMMITTED ONLY ON THE FILING OF RETURN OF INCOME. THIS VIEW ALSO GETS SUPPORT FROM THE DECISION OF H ON. ITAT, DELHI IN THE CASE OF A.P. SAHGAL V. AMIT (SUPRA) RELIED UPON BY THE A.O. 4.3. THE ASSESSING OFFICER HAS IMPOSED PENALTY U/S. 271 (1)(C) BY INVOKING THE PROVISIONS OF EXPLANATION 5 TO SEC. 271(1)(C) ON FOLLOWING THREE GROUNDS: - (A) THAT THE UNDIS CLOSED INCOME OF RS. 10 LACS HAD BEEN DISCLOSED ONLY AFTER SEARCH ACTION AND HAD THERE BEEN NO SEARCH, THE ASSESSEE WOULD NOT HAVE DISCLOSED SUCH INCOME. (B) THE APPELLANT HAS NOT EXPLAINED THE MANNER IN WHICH SUCH INCOME WAS DERIVED IN HIS STATEMENT U/S. 132(4). 7 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D (C) THAT THE TAX AND INTEREST PAYABLE ON THE DISCLOSED INCOME WERE PAID ON 31/ - 7/2007 ONLY AFTER THE DUE DATE OF FILING OF RETURN U/S. 139(1). THE GROUND (A) AS MENTIONED ABOVE HAS BEEN ALREADY DEALT WITH IN THE ABOVE DISCUSSION HOLDING THAT THE D ISCLOSURE WAS VOLUNTARILY MADE BY THE APPELLANT DURING THE COURSE OF SEARCH ON THE BASIS OF ESTIMATED EXPENDITURE INCURRED IN RENOVATION/INTERIOR DECORATION OF THE RESIDENTIAL PREMISES. NO SPECIFIC CONCEALMENT WAS DETECTED DURING THE COURSE OF SEARCH ACTIO N. AS REGARDS THE MANNER IN WHICH SUCH INCOME WAS DERIVED, I FIND THAT THE APPELLANT HAD VERY CLEARLY STATED IN ANSWER TO QUESTION NO. 15 I.E. INCOME WAS EARNED FROM INTEREST ON MONEY ADVANCED TO VARIOUS PARTIES. THUS IN MY CONSIDERED VIEW, THIS CONDITION WAS ALSO DULY SATISFIED BY THE APPELLANT. AS REGARDS THE PAYMENT OF TAX AND INTEREST ON THE INCOME DISCLOSED U/S. 132(4), I FIND THAT THE SAME WERE PAID BEFORE THE FILING OF RETURN OF INCOME U/S. 153A ON 30/07/2007. FURTHER, THE APPELLANT'S CASE IS COVERED IN HIS FAVOUR BY THE DECISION OF HON. SUPREME COURT IN THE CASE OF ACIT VS. GEBILAL KANHAIALAL HUF(2012) 348 ITR 561 (SC) WHEREIN IT HAS BEEN MENTIONED THAT THERE 7 IS NO TIME, LIMIT FOR PAYMENT OF TAXES AND INTEREST PRESCRIBED UNDER CLAUSE (2) OF EXPLANAT ION 5. THEREFORE, IF THE ASSESSEE HAS PAID THE TAXES ALONGWITH INTEREST, THEN HE IS ENTITLED TO IMMUNITY FROM PENALTY. 4.4. FURTHER UNDER THE SIMILAR FACTS AND CIRCUMSTANCES IN THE CASE OF SHRI VILAS M KATHORI, A PERSON OF APPELLANT'S GROUP, THE CIT (A) - I , THANE CANCELLED THE PENALTY VIDE HIS ORDER DATED 26/02/2010 AND HIS ORDER HAS BEEN CONFIRMED BY THE HON. ITAT MUMBAI VIDE AN ORDER DATED 05/10/2011 CONTAINED IN ITA NO. 5395/MUM/2010 (ASSESSMENT YEAR 2007 - 08). SIMILARLY IN ANOTHER CASE OF THIS GROUP, PEN ALTY IMPOSED BY THE AO WAS CANCELLED BY CIT(A) - I, THANE VIDE HIS ORDER DATED 15/03/2010 AND HIS ORDER HAS BEEN CONFIRMED CANCELLING THE PENALTY BY HON. ITAT MUMBAI VIDE AN ORDER DATED 25/07/2012 CONTAINED IN ITA NO. 6145/MUM/2010 (1999 - 2000). BOTH THESE OR DERS ARE ENCLOSED ALONG WITH THE WRITTEN SUBMISSION BY THE LD. A.R. 4.5. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE LEGAL POSITION, I RESPECTIVELY FOLLOWING THE DECISION OF HON. SUPREME COURT AND HON. ITAT MUMBAI AS DISCUSSED AB OVE, HOLD 8 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D THAT IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY U/S. 271(L)(C) AND ACCORDINGLY THE PENALTY IMPOSED BY THE A.O. AT RS.4,57,855/ - IS CANCELLED. ALL THE GROUNDS OF APPEAL RAISED BY APPELLANT ARE ALSO DISPOSED OFF ACCORDINGLY. NOW, THE REVENUE I S IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE ASSESSING OFFICER LEVIED THE PENALTY ON THE AMOUNT OF RS.10 LACS WHICH WAS DECLARED BY THE ASSESSEE IN THE STATEMENT RECORDED U/S. 132(4) OF THE ACT. DURING THE COURSE OF STATEMENT U/S. 132(4) OF THE ACT THE ASSESSEE STATED THAT THE COST OF REPAIRING WORK IS RS.5 TO 6 LACS APPROXIMATELY AND COST OF INTERIOR WORK IS RS.10 TO 12 LACS APPROXIMATELY. THE ASSESSEE ALSO EXPLAINED THE SOURCE OF THE SAID EXP ENDITURE STATING THAT IT IS OUT OF THE INTEREST INCOME ON THE M ONEY ADVANCED TO SOME OTHER PARTIES. IT APPEARS THAT THERE WAS NO SEIZED MATERIAL AND IT WAS THE ORAL STATEMENT OF THE ASSESSEE FOR THE SAID EXPENDITURE WHICH WAS STATED IN THE STATEMENT RECOR DED U/S. 132(4). DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE STATED THAT THE TOTAL EXPENDITURE OF RS. 14,47,488/ - AND THE ASSESSING OFFICER, THEREFORE, MADE THE ADDITION OF RS.3,67,912/ - TAKING THE TOTAL EXPENDITURE ON THE INTERIOR DECORATION OF RS.18 LACS AS STATED BY THE ASSESSEE IN STATEMENT U/S. 132(4) OF THE ACT . WE FIND THAT THERE WAS NO SUPPORTING EVIDENCE EXCEPT THE ORAL STATEMENT OF THE ASSESSEE BUT AS PER THE BOOKS OF ACCOUNT THE TOTAL EXPENDITURE WAS SHOWN AT RS.14,47,488/ - . THE AS SESSEE ALSO OFFERED RS.10 LACS WHICH WAS ALSO SUBJECTED TO THE PANEL CONSEQUENCES. THE QUESTION IS WHETHER EXPLANATION - 5 TO SEC. 271(1)(C) OF THE ACT CAN BE APPLIED TO THE ASSESSEE. AS INTERPRETED BY OTHER CO - ORDINATE BENCHES OF THE ITAT EXPLANATION - 5 TO SEC. 271(1)(C) IS APPLICABLE WHEN ANY MONEY, BILLION, CASH OR OTHER VALUABLE ARTICLE IS FOUND DURING THE COURSE OF SEARCH. IN THE PRESENT CASE THE ASSESSEE MADE THE DECLARATION OF RS.3 LACS TOWARDS PAWNING ADVANCES AND RS.7 9 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D LACS TOWARDS INTERIOR DECORATI ON. IN OUR OPINION AS HELD BY THE OTHER CO - ORDINATE BENCHES EXPLANATION - 5 TO SEC. 271(1)(C) IS NOT APPLICABLE TO THE ASSESSEES CASE. SO FAR AS EXPLANATION 5A IS CONCERNED THAT IS BROUGHT ON THE STATUTE BOOK W.E.F. 01 - 06 - 2007 AND ONLY APPLICABLE TO THE S EARCH CONDUCTED ON OR AFTER 01 - 06 - 2007 HENCE, EXPLANATION - 5A IS ALSO NOT APPLICABLE AS ADMITTED THE SEARCH ACTION AGAINST THE ASSESSEE WAS ON 04 - 10 - 2006. 6. AN IDENTICAL ISSUE CAME BEFORE THE ITAT, PUNE WHETHER PENALTY CAN BE LEVIED ON THE INCOME ADMITTE D BY THE ASSESSEE AND DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A , PRIOR TO INSERTION OF EXPLANATION - 5 TO SEC. 271(1)(C) IN THE CASE OF SMT. PRAMILA D. AS H TEKAR & ORS. VS. ITO, CENTRAL - II, PUNE BEING ITA NOS. 354 TO 3 67 /PN/ 2010 ORDER DATED 14 - 09 - 2012 A ND IT IS HELD AS UNDER: 5. WE HAVE ALSO HEARD THE LD. D.R., WHO SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ON THE PERUSAL OF THE ASSESSMENT ORDERS IN ALL THESE APPEALS, IT IS ADMITTED FACT THAT THERE IS NO ADDITION OVER AND ABOVE THE INCO ME DECLARED BY THESE ASSESSEES IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTICES U/S. 153A OF THE ACT. IT IS ALSO ADMITTED FACT THAT NO DECLARATION IS BASED ON ANY MONEY, JEWELLERY, BULLION OR ANY OTHER VALUATION ARTICLES DETECTED OR SEIZED IN THE CO URSE OF THE SEARCH OPERATION. AT THE FIRST INSTANCE, THE LD. COUNSEL PLEADED THAT THESE ASSESSEES ARE ENTITLED FOR THE IMMUNITY IN VIEW OF EXPL. - SEC. 5 TO SEC. 271(1)(C ) OF THE ACT BECAUSE THE INCOME ADMITTED DURING THE COURSE OF THE SEARCH HAS BEEN D ECLARED IN THE RETURN OF INCOME AS WELL AS THE TAX ON THE ADMITTED INCOME HAS ALSO BEEN PAID. THE SCOPE OF EXPLANATION - 5 HAS BEEN CONSIDERED BY THE ITAT, AHAMEDABAD BENCH IN THE CASE OF ACIT VS. KIRIB DAYABHAI PATEL, 121 ITD 159 (TM ) WITH SPECIFIC REFER ENCE WHETHER THE IMMUNITY IS AVAILABLE FOR ALL THE ASSESSMENT YEARS OR ONLY FOR THE ASSESSMENT YEAR IN WHICH THE DATE OF FILING OF THE RETURN HAS BEEN EXPIRED AT THE TIME OF SEARCH OR FOR THE ASSESSMENT YEAR IN RESPECT OF WHICH, THE PREVIOUS YEAR WAS YET TO END ON THE DATE OF SEARCH. IN THIS CASE, SEARCH WAS CONDUCTED ON 26 OCTOBER, 2005, HENCE, AT THE MOST, THE BENEFIT OF THE IMMUNITY CAN BE GIVEN FOR THE ASSESSMENT YEAR 2006 - 07. 10 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D 6. WE FIND THAT THE ASSESSEES CASE IS OTHERWISE SQUARELY COVERED VIDE THE DECISION OF ITAT,PUNE IN THE CASE OF CHANDAN K. SHEWANI VS. DCIT, ITA NOS. 235 & 236/PN/2010. IN THE SAID CASE, THE ADDITIONAL INCOME WAS DECLARED DURING THE COURSE OF SEARCH TO COVER UP THE EXPENDITURE AS WELL AS DEPOSIT IN BANK A/CS. THE TRIBUNAL CONS IDERED THE EXPLANATIONS - 3, 5 & 5A TO SEC. 271(1)(C ) OF THE ACT AND HELD AS UNDER : 8. WHILE DECIDING ASSESSEES APPEAL FOR A.YS. 1999 - 2000 AND 2001 - 02, THE PENALTY LEVIED ON THE INCOME OFFERED TOWARDS THE PERSONAL EXPENDITURE OF THE ASSESSEE AND HIS DIVORCEE SISTER HAS BEEN DELETED. EVEN THOUGH THE PARLIAMENT HAS INSERTED EXPLANATION 5A TO SEC. 271(1)( C ), SAID EXPLANATION IS APPLICABLE IN RESPECT OF THE SEARCH INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007. SECTION 5A IS INTRODUCED TO PATCH OUT THE LACUNAE IN THE EXISTING PROVISIONS MORE PARTICULARLY TO OVERCOME THE JUDICIAL INTERPRETATION OF EXPLANATION - 5. IF THE SEARCH IS INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007 THEN THERE IS A LEGAL PRESUMPTION THAT ANY INCOME BASED ON ANY ENTRY IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHICH IS CLAIMED AS INCOME BY THE ASSESSEE, THE SAME WOULD BE TREATED AS DEEMED CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. SO FAR AS THE PRESENT ASSESSEE IS CO NCERNED, THE DATE OF SEARCH IS 15.6.2004 AND HENCE, EXPLANATION 5A TO SEC. 271(1)((C ) IS NOT APPLICABLE. IT IS WELL SETTLED RULE OF INTERPRETATION OF THE PENALTY PROVISIONS THAT THE SAME SHOULD BE STRICTLY INTERPRETED AND THERE IS NO SCOPE FOR ANY PRESU MPTION FOR LEVY OF THE PENALTY UNLESS STATUTE SPECIFICALLY PROVIDES SAME. 9. SO FAR AS THE EXPLANATION - 3 TO SEC. 271(1)(C) IS CONCERNED, WHICH READS AS UNDER : EXPLANATION 3. - WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PE RIOD SPECIFIED IN SUB - SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB - SECTION (1) OF SECTION 142 OR 11 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PERSON AL SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB - SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF T HE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148. THE SAID EXPLANATION PRESUMES THAT THERE IS A CONCEALMENT OF PARTICULARS OF INCOME OR FILING OF THE INACCURATE PARTICULARS OF INCOME IN THE SITUATION WHERE THE ASSESSEE DID NOT FILE RETU RN OF INCOME U/S. 139 OR WITHIN THE TIME LIMIT PRESCRIBED U/S. 153(1) OF THE ACT BUT FILES THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148. THE SAID EXPLANATION IS ALSO SILENT IN THE SITUATION IF THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR AN Y PARTICULAR A.Y. BUT FILED THE RETURN OF INCOME FOR THE FIRST TIME IN RESPONSE TO NOTICE U/S. 153A, THEN WHAT WOULD BE THE LEGAL PRESUMPTION ? IN OUR OPINION, EXPLANATION - 3 HAS NO APPLICATION, WHEN THE RETURN IS FILED IN RESPONSE TO NOTICE U/S. 153A. WE, THEREFORE, HOLD THAT AS PER THE FACTS OF THIS CASE AND LAW APPLICABLE, THERE IS NO JUSTIFICATION TO LEVY THE PENALTY FOR THE A.Y. 2002 - 03 IN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A EVEN FOR THE SAID INCOME IS BASED ON SOME ENTRIES FOUND IN THE DIARIES OR OTHER DOCUMENTS OR EVEN BANK ACCOUNT DURING THE COURSE OF SEARCH. WE, ACCORDINGLY DELETE THE PENALTY SUSTAINED BY THE LD CIT(A). 7. IN ALL THE APPEALS BEFORE US, EXPLANATION - 3 CANNOT BE APPLIED, AS HELD IN THE CASE OF CHANDAN K. SHEWANI (SUPRA). SO FAR AS EXPLANATION 5A IS CONCERNED, IT IS BROUGHT ON THE STATUTE BOOK AND IS APPLICABLE IF THE SEARCH IS INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007. SO FAR AS THE ASSESSMENTS IN ALL THESE CASES ARE CON CERNED, NO ADDITION IS MADE BY THE ASSESSING OFFICER OVER AND ABOVE THE INCOME DECLARED IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTICE U/S. 153A AS THE EXPRESSION TAX SOUGHT TO BE EVADED APPEARING IN CLAUSE (C) TO SEC. 271(1) IS TO BE UNDERSTOOD AS A DIFFERENCE BETWEEN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF 12 ITA NO . 2169/PN/2013, SHRI DILIP M. KOTHARI, RAIGA D INCOME AND THE INCOME FINALLY ASSESSED. AFTER INTRODUCTION OF SEC. 153A W.E.F. 1.6.2003, THERE IS NO SPECIFIC PENALTY PROVISION TO DEAL WITH THE ASSESSMENTS FRAMED IN CONSEQUENC E OF SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT. IN THE PRESENT CASE, AS THE RETURNED INCOME AND INCOME ASSESSED ARE THE SAME, OTHERWISE ALSO, NO PENALTY CAN BE LEVIED. WE, THEREFORE, HOLD THAT IN ALL THE APPEALS BEFORE US, THE ASSESSING OFFICER WAS N OT JUSTIFIED IN LEVYING THE PENALTY U/S. 271(1)(C ) OF THE ACT. WE, ACCORDINGLY, DELETE THE PENALTIES LEVIED BY THE ASSESSING OFFICER IN ALL THE APPEALS FOR THE ABOVE MENTIONED REASONS. 7. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) FOLLOWING T HE DECISION OF THIS TRIBUNAL IN THE CASE OF SMT. PRAMILA D. ASHTEKAR & ORS. (SUPRA). ACCORDINGLY, GROUND TAKEN BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 - 11 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED : 26 TH NOVEMBER, 201 4 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II , THANE 4 THE CIT - CEN. CIRCLE, PUNE 5 6 THE DR , ITAT, A BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE