ACIT, Nashik V. Dr NITIN LAXMIKANT LAD, Nashik

ITA 2244/PUN/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0988 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Document seized; Retrospective amendment; Assessment record; Revised return; Documents seized
• Section: 69C; 143(3); 153A; 68; 69; 54; 6; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO S . 2241 TO 2244 /PN/20 1 2 / ASSESSMENT YEAR S : 200 5 - 0 6 TO 20 0 8 - 0 9 THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK . / APPELLANT VS. DR. NITIN LAXMIKANT LAD, C/O DR. LADS NAVJEEVAN HOSP ITAL, P.A. HOLKAR MARG, NEAR TUPSAKHARE LAWNS, TIDKE COLONY, NASHIK 422002 . / RESPONDENT PAN: AANPL3552F / APPELLANT BY : SHRI B.C. MALAKAR / RESPOND ENT BY : SHRI PRAMOD SHINGTE / DATE OF HEARING : 27 .0 8 .2015 / DATE OF PRONOUNCEMENT: 30 . 1 0.2015 / ORDER PER SUSHMA CHOWLA, JM: ALL THE FOUR APPEAL S FILED BY THE REVENUE ARE AGAINST SEPARATE ORDER S OF CIT (A) - I , NASHIK , ALL DATED 07 . 0 8 .201 2 RELATI NG TO ASSESSMENT YEAR S 200 5 - 0 6 TO 20 0 8 - 0 9 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 0 9 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 2 2. ALL THE APPEALS FILED BY THE REVENUE RELATING TO SAME ASSESSEE ON SIMILAR ISSUE S WERE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO. 2241 /PN/201 2 TO ADJUDICATE THE ISSUES. 3. THE REVENUE IN ITA NO. 2241 /PN/201 2 HAS RAISED THE FOLLOWING GROUNDS OF APPE AL : - 1 . ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING PENALTY LEVIED UNDER SECTION 271 ( 1 ) (C) AMOUNTING TO RS 4,24,570 / - WITHOUT APPRECIATING THE SETTLED LEGAL POSITION THAT THE DIFFERENCE BETWEEN THE INCOME DISCLOSED UNDER SECTION 139 AND 153A OF THE ACT PARTICULARLY WHEN SUCH DIFFERENCE IS BASED ON IN INCRIMINATING SEIZED MATERIAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THAT THE ADDITIONAL INCOME OF RS6,61,3441 - & RS 50,0001 - (AGRICULTURE INCOME) WAS OFFERED ONLY N THE RETURN FILED UNDER SECTION 153A OF THE INCOME TAX ACT ON SPECIFIC ISSUE OF SUPPRESSED PROFESSIONAL RECEIPTS ON THE BASIS OF INCRIMINATING MATERIALS FOUND AND SEIZED DURING THE SEARCH ACTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN IGNORING THE DECISION OF JURISDICTIONAL TRIBUNAL IN THE GROUP CASES OF THAKKAR AND KALANTRI GROUP IN APPEAL NOS.911 TO 930 / PN / 2009 AND 1006 TO THAKKAR AND KALANTRI GROUP IN APPEAL NOS.911 TO 930 / PN / 2009 AND 1006 TO 1008 / PN / 2009 DATED 10 - 02 - 20 10 WHICH WAS A DIRECT DECISION. 4. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT BUT FOR THE SEARCH OPERATIONS THE ASSESSEE WOULD NOT HAVE OFFER ED ADDITIONAL INCOME IN THE RETURN FILED UNDER SECTION 153A WHICH IS EVIDENCED BY HIS FAILURE TO OFFER THE SAID ADDITIONAL INCOME IN THE RETURN FILED UNDER SECTION 139. 5. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED C I T (A) ER RED IN NOT APPRECIATING THAT THE UNEXPLAINED LOAN RS . 6,00,000 / - WAS NOT OFFERED IN RETURN FILED UNDER SECTION 153A OF THE ACT AND ALSO THAT RS . 6,00,000 / - ADDED DURING ASSESSMENT UNDER SECTION 143(3) HAD BEEN CONFIRMED BY THE LAST FACT FINDING AUTHORITY, TH E ITAT. 6. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN APPLYING EXPLANATION I TO SECTION 271 ( 1 )(C) INSTEAD OF EXPLANATION 5 A OF THAT SECTION ON THE FACTS OF THE CASE THUS RENDERING HIS DECISION PERVERSE AND BAD IN LAW. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE AMEND ANY OF THE GROUNDS, AS PER THE CIRCUMSTANCES OF THE CASE. 8. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS THE OCCASION MAY DEMAND. 4 . THE ISSUE RAISED IN ALL THE APPEALS RELATING TO ASSESSMENT YEARS 2005 - 06 TO 2008 - 09 IS AGAINST THE DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT . ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 3 5. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE AC T WAS CONDUCTED AT THE RESIDENTIAL PREMISES AND CLINIC OF THE ASSESSEE ON 16.01.2009 . DURING THE COURSE OF SEARCH, CERTAIN BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED FROM THE PREMISES OF THE ASSESSEE. THE ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME UN DER SECTION 139 OF THE ACT ON 18.01.2006 DECLARING TOTAL INCOME OF RS.8,37,090/ - . THE ASSESSEE HAD FURTHER REVISED ITS RETURN OF INCOME ON 30.11.2006 DECLARING TOTAL INCOME OF RS.9,08,700/ - . NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED TO THE ASSESSEE AND IN RESPONSE, THE ASSESSEE FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.15,70,040/ - INCLUDING ADDITIONAL INCOME OF RS. 6,61,344/ - AND AGRICULTURAL INCOME OF RS.50,000/ - . THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH AND SEIZUR E, INCRIMINATING DOCUMENTS MARKED AS A - 1, A - 3, A - 8, A - 9, A - 18 & A - 19 WERE SEIZED, WHIC H CONTAINED UNRECORDED RECEIPTS, EXPENSES AND INVESTMENTS IN VARIOUS FINANCIAL YEARS. ACCORDINGLY, THE ASSESSEE RE - CONSTRUCTED THE ACCOUNTS AND CREDITED THE UNACCOUNTED RECEIPTS TO THE PROFIT & LOSS ACCOUNT AND OFFERED NET SURPLUS OF INCOME OVER EXPENDITURE TO TAX. DURING THE YEAR UNDER CONSIDERATION, ON THE BASIS OF SEIZED MATERIAL, ADDITIONAL PROFESSIONAL FEES OF RS.22,96,542/ - WAS NOTED AND THE ASSESSEE DECLARED GROSS RECEIPTS IN THE RETURN FILED PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT AT RS. 79,39,778/ - AS AGAINST RS.56,43,236/ - SHOWN IN THE ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT. THE ASSESSEE ALSO AMENDED OTHER MISTAKES IN THE ORIGIN AL RETURN FILED UNDER SECTION 139(1) OF THE ACT AND THE TOTAL INCOME FROM HOUSE PROPERTY, PROFESSION AND OTHER SOURCES AFTER DEDUCTION UNDER SECTION VI - A WORKED OUT TO RS.15,70,040/ - I.E. DECLARING ADDITIONAL INCOME OF RS.6,61,344/ - . THE ASSESSING OFFICER NOTED THAT THOUGH THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.6,61,344/ - IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, BUT NO SUCH INCOME WAS DECLARED IN THE ORIGINAL RETURN OF INCOME FILED. THE SAID ADDITIONAL INCOME WAS DETECTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED AT THE RESIDENCE OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID DECLARATION OF INCOME ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 4 WAS NOT VOLUNTARY AND SINCE THE ASSESSEE HAD CONCEALED THE PARTICUL ARS OF SAID INCOME WITHIN THE MEANING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. FURTHER, ON VERIFICATION OF THE ASSESSMENT RECORDS, THE ASSESSING OFFICER NOTED THAT THE ASSESS MENT FOR THIS ASSESSMENT YEAR HAD BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT IN THE PAST VIDE ORDER DATED 26.12.2007 . AS A RESULT OF SCRUTINY LOANS OF RS.6,00,000/ - FROM TWO PERSONS W ERE FOUND TO BE NOT EXPLAINED AND AN ADDITION OF RS.6,00,000/ - WAS M ADE TO THE TOTAL INCOME UNDER SECTION 68 OF THE ACT. THE SAID ADDITION WAS CONFIRMED BY THE CIT(A) AND ALSO BY THE TRIBUNAL VIDE ORDER DATED 31.05.2010. HOWEVER, THE ASSESSEE FAILED TO INCLUDE THE SAID ENHANCED INCOME OF RS.6,00,000/ - IN THE RETURN OF IN COME FILED UNDER SECTION 153A OF THE ACT. THE ASSESSEE WAS ASKED TO EXPLAIN HIS STAND ON THIS ISSUE AND HE IN TURN, FILED EXPLANATION TO SUBSTANTIATE THAT THE SAID LOAN DEPOSITS OF RS.6,00,000/ - WERE GENUINE. THE ASSESSING OFFICER NOTED THAT THE SAID ISS UE HAD BEEN EXAMINED AT LENGTH DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE CLAIM OF THE ASSESSEE WAS FOUND TO BE NON - GENUINE, AND THE ADDITION IN THIS REGARD HAS BEEN CONFIRMED BY PUNE BENCH OF TRIBUNAL, HENCE, THERE WAS NO FORCE IN THE CONTENTION O F THE ASSESSEE. THE SAID LOANS TOTALING RS.6,00,000/ - SINCE WERE SHOWN IN THE BALANCE SHEET FILED ALONG WITH RETURN OF INCOME FILED PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT, THE SAME WAS HELD TO BE UNEXPLAINED AND INCOME FROM UNDISCLOSED SOURCES. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AGAINST SUCH ADDITION OF RS.6,00,000/ - . 6. DURING THE COURSE OF PENALTY PROCEEDINGS, THE CONTENTION OF THE ASSESSEE WAS THAT WITH A VIEW TO SETTLE THE MATTER AND TO AVOID PROTRACTED LITIGATION WITH THE DEPARTMENT AND ALSO WITH A VIEW TO BUY PEACE OF MIND, HE HAD DECLARED ADDITIONAL INCOME OF RS.1.30 CRORES FOR THE PERIODS ENVISAGED UNDER SECTION 153A OF THE ACT AND TILL ASSESSMENT YEAR 2009 - 10 I.E. DATE OF SEARCH, COVERING OF THE GROUP OF ASSESSEES . I N THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT , T HE ASSESSEE FURTHER STATED ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 5 THAT THE MANNER OF EARNING THE SAID ADDITIONAL INCOME WAS ALSO STATED DURING THE COURSE OF STATEMENT RECORD UNDER SECTION 132(4) OF THE ACT. FURTHER, THE CLAIM OF THE ASSESSEE WAS THAT THE ADDITIONAL INCOME OFFERED IN THE RETURN OF INCOME SUBMITTED UNDER SECTION 153A OF THE ACT INCLUDED THE INCOME DECLARED EXCEPT THE ADDITION OF RS.6,00,000/ - AND SINCE THE ASSESSMENT WAS COMPLETED WIT HOUT MAKING ANY FURTHER ADDITION TO THE RETURNED INCOME, THERE WAS NO JUSTIFICATION FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . THE ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT OBSERVED THAT THE ASSESSEES CLAIM COULD N OT BE ACCEPTED AS THE LAW DOES NOT PROVIDE ANY IMMUNITY FROM LEVY OF PENALTY TO THE ASSESSEE, WHO OFFERED INCOME, WHICH WAS NOT DISCLOSED IN THE REGULAR RETURN OF INCOME FILED AND WHICH WAS UNEARTHED DURING THE COURSE OF SEARCH AND WAS DECLARED IN THE RETU RN SUBSEQUENT TO SEARCH. THE ASSESSING OFFICER FURTHER HELD THAT THE DECLARATION MADE UNDER SECTION 132(4) OF THE ACT DOES NOT ENTITLE THE ASSESSEE FROM IMMUNITY FROM PENALTY PROCEEDINGS. WITH REGARD TO THE ADDITION OF RS.6,00,000/ - , WHERE THE ADDITION W AS CONFIRMED BY THE TRIBUNAL IN ASSESSEES HANDS, THE ASSESSING OFFICER HELD THERE WAS NO JUSTIFICATION IN THE EXPLANATION OF THE ASSESSEE. THE ASSESSING OFFICER IN VIEW THEREOF, HELD THAT THE AMOUNT ADDED IN THE HANDS OF THE ASSESSEE REPRESENT CONCEALED INCOME AND THE PENALTY PROCEEDINGS ARE COVERED BY EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. SINCE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME, THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C ) OF THE ACT AT RS. 4,24,570/ - . 7. THE CIT(A) AFTER REFERRING TO THE EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT OBSERVED THAT NO MONEY, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLE S W ERE INVOLVED, BUT THE ADDITIONAL INCOME WAS FOUND BY THE SEARCH PA RTY DURING THE COURSE OF ACTION WAS OFFERED AS ADDITIONAL INCOME, WHERE THERE WAS NO DIRECT LINKAGE BROUGHT ON RECORD WITH ANY OF THE SPECIFIED SEIZED MATERIAL, SO AS TO ESTABLISH THE CHARGE FOR LEVY OF PENALTY IN THE PRESENT CASE. THE CIT(A) FURTHER HELD THAT ON GOING THROUGH THE FACTS OF ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 6 THE CASE, NO DIRECT LINKAGE WITH REGARD TO THE SEIZED MATERIAL AND THE ADDITIONAL INCOME OF RS.6,61,344/ - ON ACCOUNT OF BUSINESS INCOME AND RS.50,000/ - ON ACCOUNT OF AGRICULTURAL INCOME DECLARED, HAD BEEN ESTABLISHED . T HEREFORE, EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WAS NOT APPLICABLE TO THE CASE UNDER APPEAL. THE CIT(A) FURTHER HELD THAT IN CASE EXPLANATION (1) WAS APPLICABLE AND SINCE THE ASSESSEE HAD OFFERED TO TAX THE ADDITIONAL INCOME ON ACCOUNT OF ESTIMAT ED SUPPRESSION OF PROFESSIONAL RECEIPTS AND ALSO ON ACCOUNT OF ERRORS AND OMISSION AND AGRICULTURAL INCOME, DETECTED AS A RESULT OF SEARCH, AS ADDITIONAL INCOME TO TAX, AND WHERE THE ASSESSEE HAD PAID ALL THE TAXES, THE EXPLANATION OF THE ASSESSEE WAS FOUN D TO BE PLAUSIBLE AND HENCE, I N VIEW OF EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT, THE PENALTY IMPOSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR WAS HELD TO BE NOT JUSTIFIED. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIOS LAID DOWN BY THE H ONBLE GUJARAT HIGH COURT IN N ATIONAL TEXTILES VS. CIT [2001] 249 ITR 125 (GUJ ) AND THE HONBLE PUNJAB & HARYANA HIGH COURT IN HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) . THE CIT(A) FURTHER HELD AS UNDER: - 5.6 FURTHER, IN MY CONSIDERED VIEWS THE PE NAL PROVISIONS UNDER THE INCOME TAX ACT ARE DISCRETIONARY IN NATURE AS THE WORD USED IN SECTION 271(1)(C) IS NOT SHALL BUT MAY . FOR THIS PROPOSITION THE DECISION DATED 06.01.2012 OF HONBLE ITAT, HYDERABAD BENCH IN THE CASE OF P.B. RAMANA REDDY VS. IT O IN ITA NO.1852 TO 1857/HYD/2011 IS RELIED ON WHICH IS THE REPRODUCTION OF THE WELL ESTABLISHED POSITION OF LAW AS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA 83 ITR 26 (SC). ON THE GIVEN FACTS IN THIS C ASE IT IS SEEN THAT THE LD. AO HAS NOT APPLIED HIS MIND ON THE FACTS OF THE CASE AND IMPOSED THE IMPUGNED PENALTY IN A MECHANICAL MANNER. IT IS SETTLED POSITION OF LAW THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED MERELY BECAUSE IT IS LAWFULL TO DO SO. USE OF DISCRETION TO LEVY PENALTY IS INDEPENDENT OF THE DECISION AS TO WHETHER CONCEALMENT IS THERE OR NOT. DEEMING PROVISIONS OF EXPLANATION 5A HELPS THE AO IN DECIDING THE CONCEALMENT PART OF THE PENALTY PROVISION. HOWEVER, THE DISCRETION PART IS NOT EXPL AINED BY DEEMING PROVISION. SINCE THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SUPPORT HIS DECISION REGARDING DISCRETION, THE PENALTY IS NOT LEVIABLE ON THE FACTS OF THE CASE. 8. WITH REGARD TO SECOND LIMB OF PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE ACT ON RS.6,00,000/ - , THE CIT(A) HELD THAT WHERE THE ASSESSING OFFICER HAD INCLUDED SUM OF RS.6,00,000/ - ON THE GROUND THAT THE ADDITION WAS MADE ORIGINA LLY AND WAS UPHELD BY THE TRIBUNAL, BUT WAS NOT DECLARED IN THE RETURN OF INCOME FILED PURSUANT T O NOTICE ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 7 ISSUED UNDER SECTION 153A OF THE ACT, CANNOT BE SAID TO BE AN ISSUE ARISING THE PRESENT APPEAL. WHERE THE ASSESSING OFFICER HAD NOT IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN CONSEQUENT TO ORIGINAL ASSESSMENT PROCEEDING S VIS - - VIS TAXA BILITY OF IMPUGNED AMOUNT OF RS.6,00,000/ - , IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND, NO PENALTY COULD BE LEVIED ON THE SAID ADDITION OF RS.6,00,000/ - BY INVOKING THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. THE CIT(A) THUS , DELETED PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 9. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE ASSESSEE IN THE RETURN OF INCOME FILED PURSUANT TO ISSU E OF NOTICE UNDER SECTION 153A OF THE ACT HAD DECLARED INCOME OF RS.15,70,0 4 0/ - AND AGRICULTURAL INCOME OF RS.50,000/ - , WHICH INCLUDED ADDITIONAL INCOME OF RS.6,61,344/ - . HOWEVER, THE ASSESSMENT WAS COMPLETED ON THE INCOME OF RS. 15,70,040/ - AND ADDITION O F RS.6,00,000/ - AND COMPLETED ON THE INCOME OF RS. 15,70,040/ - AND ADDITION O F RS.6,00,000/ - AND AGRICULTURAL INCOME OF RS.50,000/ - . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAD BEEN LEVIED ON AN ADDITION OF RS.6,61,344/ - AND RS.6,00,000/ - . MERELY BECA USE THE INCOME DISCLOSED UNDER SECTION 132(4) OF THE ACT HAS BEEN DECLARED BY THE ASSESSEE, THERE IS NO MERIT IN THE ORDER OF CIT(A) IN DELETING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 11. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE P OINTED OUT THAT ON THE BASIS OF RECEIPTS OF MEDICAL PROFESSION, ENTIRE AMOUNT WAS DECLARED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WAS INTRODUCED W.E.F. 01.06.2007 AND SEARCH WAS CONDUCTED ON 16.01.2009 . HE FURTHER STATED THAT THE FINANCE ACT, 2009 AMENDED THE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. IT WAS EXPLAINED THAT PURSUANT TO SEARCH ON 16.01.2009 , THE ASSESSEE RECEIVED NOTICE UNDER SECTION 153A OF THE A CT ON ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 8 12.05.2009 AND FILED RETURN OF INCOME ON 12.06.2009 . THE FINANCE BILL, 2009 WAS PRESENTED ON 06.07.2009 AND WAS ASSENTED ON 19.08.2009 I.E. ON THE DATE OF FILING THE RETURN OF INCOME , LAW WHICH WAS PREVAILING ON THAT DATE SHOULD BE APPLIED. DUE DAT E FOR FILING T HE RETURN OF INCOME HAD EXPIRED, BUT IT WAS THE CONTENTION OF ASSESSEE THAT PENALTY PROVISIONS COULD NOT BE AMENDED RETROSPECTIVELY. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HYDERABAD BENCH OF TRIBUNAL IN DILIP KEDIA VS. ACIT IN ITA NO.1986/HYD/2011, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 26.07.2013 . IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THOUGH THE CONTRARY VIEW HAS BEEN TAKEN BY CHANDIGARH TRIBUNAL IN SHRI RAJ NISH VOHRA VS. DCIT IN ITA NO.516/CHD/2012, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 31.10.2012, THE PRESENT FACTS OF THE CASE ARE AT VARIANCE. HE FURTHER POINTED OUT THAT WHERE THE ASSESSEE HAD DECLARED ADDITIONAL INCOME ON ESTIMATE BASIS, TH ERE WAS NO BASIS FOR INVOKING EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT . WITH REGARD TO THE SECOND ADDITION OF RS.6,00,000/ - THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SINCE THE APPEAL AGAINST THE ORDER OF CIT(A) WAS PEND ING, SO THERE WAS NO QUESTION OF ADDING RS.6,00,000/ - AS INCOME OF THE ASSESSEE. OUR ATTENTION WAS DRAWN TO CIRCULAR NO.7 OF 2003 , WHEREIN NO APPEAL PROCEEDINGS WERE TO AB A T E . IN THE ABSENCE OF INCRIMINATING DOCUMENTS FOUND, THERE WAS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE SAID SUM OF RS.6,00,000/ - . 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE IN REJOINDER REFERRING TO THE EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT POINTED OUT THAT SEARCH ON PREMISES OF T HE ASSESSEE TOOK PLACE ON 10.10.2007. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN ACIT VS. MULAY CONSTRUCTION P. LTD. & ORS. IN ITA NOS.116 TO 119/PN/2012 & ORS. AND SINCE THE PROVISIONS OF EXPLANATION 5A TO SECTION 27 1(1)(C) OF THE ACT HAD AL READY BEEN AMENDED, SINCE THERE WAS ADDITION OF ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 9 ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE, THERE WAS MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD . THE ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER IN CASES WHERE THE ASSESSEE PURSUANT T O SEARCH AND SEIZURE OPERATION AT HIS PREMISES HAD DECLARED ADDITIONAL INCOME IN THE RETURN OF INCOME , IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, WHETHER IN SUCH CASES, PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE. WE HAVE DELIBERATED ON SIMILAR ISSUE IN MRS.SARITA KAUR MANJEET SINGH CHOPRA VS. ITO IN ITA NO.1562/PN/2013 , RELATING TO ASSESSMENT YEAR 2009 - 10 AND BY ORDER OF EVEN DATE HELD AS UNDER : - 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. SEARCH AND SEIZURE ACTION WAS CARRIED OUT AGAINST THE ASSESSEE ON 09.12.2009. WHILE TRAVELLING FROM PUNE TO DELHI BY AIR, THE ASSESSEE WAS FOUND TO BE IN POSSESSION OF CASH OF RS.1,60,76 ,800/ - . THE ASSESSEE WAS SEARCHED BY THE INVESTIGATION WING UNDER SECTION 132 OF THE ACT ON 09.12.2009 AND RESIDENCE WAS ALSO SEARCHED AND CASH OF RS.1.60 CRORES WAS SEIZED DURING THE SEARCH PROCEEDINGS. IN THE COURSE OF RECORDING OF STATEMENT DURING THE SEARCH PROCEEDINGS, THE ASSESSEE ADMITTED THAT SHE HAD SOLD HER ANCESTRAL PROPERTY AT DELHI FOR RS.3.40 CRORES, FOR WHICH THE AGREEMENT WAS MADE FOR RS.1.70 CRORES AND THE BALANCE CRORES, FOR WHICH THE AGREEMENT WAS MADE FOR RS.1.70 CRORES AND THE BALANCE AMOUNT WAS RECEIVED IN CASH. THE CLAIM OF THE ASSESSEE WAS THAT THOUGH SHE HAD 50% SHARE IN THE IMPUGNED PROPERTY AND THE BALANCE 50% SHARE WAS OWNED BY HER SISTER MRS. TRIPTA KAUR, BUT SHE HAD RECEIVED THE ENTIRE CASH CONSIDERATION AND THE CHEQUE CONSIDERATION WAS DIVIDED 50 : 50. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153 A OF THE ACT, THE ASSESSEE OFFERED 50% OF THE AGREEMENT VALUE I.E. RS.85 LAKHS AND 100% OF THE CASH ELEMENT I.E. RS.1.70 CRORES IN HER HAND AND COMPUTED THE INCOME FROM CAPITAL GAINS AND DECLARED TOTAL INCOME OF RS.2,04,91,850/ - ON 13.09.2010. AGAINST THE INCOME FROM CAPITAL GAINS COMPUTED AT RS.2,41,17,168/ - , THE ASSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT AT RS.38,40,098/ - , ON ACCOUNT OF INVESTMENT IN MEGA POLIS PROPERTY. THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT, NOTED THAT THE ASSESSEE HAD NOT DECLARED THE SALE CONSIDERATION OF RS.2.55 CRORES IN THE ORIGINAL RETURN OF INCOME FILED AND SUBSEQUENTLY AFTER THE SEARCH, THE DECLARATION WAS MADE ON ACCOUNT OF TOTAL AMOUNT OF CAPITAL GAINS. THE ASSESSING OFFICER RECORDED SATISFACTION IN THE BODY OF THE ASSESSMENT ORDER TO THE EXTENT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AND PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. BESIDE THE ABOVE SAID, THERE WAS ANOTHER ASPECT OF SALE OF PROPERTY, WHE REIN THE ASSESSEE HAD CLAIMED THAT IT HAD SOLD FITTINGS AND FIXTURES OF THE SAID BUNGALOW FOR RS.10 LAKHS. HOWEVER, IN THE ABSENCE OF LIST OF FURNITURE OR PERSONAL EFFECTS SOLD, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE FITTINGS AND FIXTURES ATTACHED TO THE PROPERTY WERE INEXTRICABLY LINKED TO THE BUILDING AND CONSIDERATION RECEIVED THEREON, WAS TO BE TREATED AS CAPITAL GAINS. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WITH REGARD TO THE SAID ADDITION. CONSEQUENT THERETO, THE ASSESSING OFFICER REJECTING THE CLAIM OF THE ASSESSEE THAT IT HAD SUO MOTU OFFERED THE INCOME FROM LONG TERM CAPITAL GAINS, AND NO MALAFIDE INTENTION COULD BE ATTRIBUTED TO THE SAID DISCLOSURE, ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 10 HENCE, THERE WAS NO MERIT IN LEVY OF PENALTY, HELD THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.47,11,104/ - . THE CIT(A) ELABORATELY CONSIDERED THE ISSUE AND UPHELD THE LEVY OF PENALTY. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CI T(A) IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 14. THE FIRST ASPECT OF THE ISSUE RAISED BY THE ASSESSEE BEFORE US IS THAT WHERE NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER, SINCE IN THE HANDS OF ASSESSEE, THERE W AS NO ADDITION WHATSOEVER, AS THE INCOME OFFERED BY THE ASSESSEE WAS ACCEPTED IN TOTO, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD BE LEVIED. FROM THE PERUSAL OF ASSESSMENT ORDER, IT IS CLEAR THAT THE ASSESSING OFFICER AFTER CONSIDERING THE FACTS OF THE CASE AND ALSO THE RETURN OF INCOME FILED BY THE ASSESSEE PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT VIDE PARA 3.2 NOTED THAT THE TOTAL SALE CONSIDERATION OF THE ANCESTRAL PROPERTY WAS RS.3.40 CRORES, OUT OF WHICH RS.1.70 CRORES WAS RE CEIVED IN CASH AND RS.1.70 CRORES WAS RECEIVED IN CHEQUE. THE CHEQUE AMOUNT WAS SHARED BY THE CO - OWNER. HOWEVER, THE ENTIRE CASH AMOUNT WAS CLAIMED TO BE RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER FURTHER CONSIDERED THAT THE ASSESSEE HAD OFFERED TH E CHEQUE AMOUNT AND CASH AMOUNT AGGREGATING TO RS.2.55 CRORES FOR TAXATION UNDER THE HEAD LONG TERM CAPITAL GAINS. THE ASSESSING OFFICER FURTHER OBSERVED THAT SINCE THE ASSESSEE HAD NOT DECLARED THIS AMOUNT OF CAPITAL GAINS IN HER ORIGINAL RETURN AND SU BSEQUENTLY, AFTER SEARCH HAS DECLARED THE TOTAL AMOUNT OF CAPITAL GAINS AND THUS, CONCEALED THE PARTICULARS OF INCOME AND CONSEQUENTLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED SEPARATELY BY THE ASSESSING OFFICER. THE ABOVE SA ID FINDING OF THE ASSESSING OFFICER IS THE DEEMED SATISFACTION RECORDED BY THE ASSESSING OFFICER BEFORE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND IN VIEW THEREOF, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD. VIEW THEREOF, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD. 1 5. NOW, COMING TO THE ISSUE THAT WHERE THE ASSESSEE HAD OFFERED THE INCOME IN THE RETURN OF INCOME FILED AFTER SURRENDERING THE ADDITIONAL INCOME, CAN THE ASSESSEE BE HELD TO HAVE CONCEALED ITS INCOME VIS - - VIS ORIGINAL RETURN OF INCOME FILED BY THE ASSESS EE. SECTION 271(1) OF THE ACT MAKES PROVISION FOR LEVYING PENALTIES ON ASSESSEE IN DIFFERENT EVENTUALITIES, ONE SUCH EVENTUALITY IS FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ONLY ON FULFILLMENT OF THE CONDITIONS STIPULA TED IN SECTION 271(1)(C) OF THE ACT, THERE ARISES A QUESTION OF EXERCISING POWER UNDER THE SAID PROVISION TO IMPOSE PENALTY. THE SAID SECTION LAYS DOWN THAT WHERE THE ASSESSING OFFICER OR THE CIT(A) IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT IS SATISF IED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY STIPULATED IN THE AFORESAID PROVISION. THE EXPLANATION/S UNDER SECTION 271( 1)(C) OF THE ACT SET OUT THE CIRCUMSTANCES, WHICH JUSTIFIES THE LEVY OF PENALTY. FOR SEARCHES INITIATED UNDER SECTION 132 OF THE ACT BEFORE FIRST DAY OF JUNE, 2007, EXPLANATION 5 WAS INTRODUCED BY THE FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 01.04 .2003. UNDER THE SAID SECTION, WHERE THE ASSESSEE WAS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR IN PART HIS INCOME, FO R ANY PREVIOUS YEAR, WHICH HAD ENDED BEFORE THE DATE OF SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAD NOT BEEN FURNISHED BEFORE THE SAID DATE, OR WHERE THE RETURN OF INCOME HAD BEEN FURNISHED BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN OR FOR ANY PR EVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH, THEN NOTWITHSTANDING THAT SUCH INCOME WAS DECLARED BY HIM IN THE RETURN OF INCOME, HE WAS DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, UNLESS T HE INCOME OR THE TRANSACTIONS WERE ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 11 RECORDED IN THE BOOKS OF ACCOUNT OR THE PERSON IN THE COURSE OF SEARCH MAKES A STATEMENT UNDER SECTION 132(4) OF THE ACT THAT THE SAID MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS, HAS BEEN ACQUIRED BY HIM OUT O F HIS INCOME, WHICH HAS NOT BEEN SO FAR DISCLOSED, BUT SPECIFIES THE MANNER IN WHICH THE SAID INCOME HAS BEEN DERIVED AND PAYS THE TAXES TOGETHER WITH INTEREST. UNDER EXPLANATION 5, AN EXEMPTION WAS PROVIDED TO THE PERSON WHO WAS SEARCHED AND WAS FOUND IN POSSESSION OF MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS, THEN IN CASE HE DECLARED THE SAME UNDER THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT AND THEREAFTER, PAYS THE TAXES ON THE SAME, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED ON SUCH PERSON. 16. HOWEVER, FOR SEARCHES INITIATED UNDER SECTION 132 OF THE ACT ON OR AFTER FIRST DAY OF JUNE, 2007, ANOTHER EXPLANATION 5A WAS APPLICABLE, WHICH WAS INTRODUCED BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007. THE ORIGINAL EXPLANAT ION 5A PROVIDED THAT WHERE IN THE COURSE OF SEARCH, THE ASSESSEE WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS AND THE ASSESSEE CLAIMS THAT SUCH ASSET HAD BEEN ACQUIRED BY HIM BY UTILIZING WHOLLY OR IN PART HIS INC OME FOR ANY PREVIOUS YEAR OR ANY INCOME IS BASED ON ANY ENTRY IN BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT THE SAME REPRESENTS HIS INCOME FOR ANY PREVIOUS YEAR, THEN WHERE THE PERIOD HAS ENDED BEFORE THE DATE OF SEARCH AND THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH YEAR HAS EXPIRED AND THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME, 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 PURPOSE OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE SAID EXPLANATION 5A WAS SUBSTITUTED BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.06.2007 WITH THE AMENDMENT THAT WHERE 2009 WITH RETROSPECTIVE EFFECT FROM 01.06.2007 WITH THE AMENDMENT THAT WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAD BEEN FURNISHED BEFORE THE DATE OF SEARCH, BUT SUCH INCOME HAD NOT BEEN DECLARED THEREIN OR WHERE THE DUE DATE OF FILING THE RETURN OF INCOME FOR OTHER PREVIOUS YEAR HAS EXPIRED, BUT THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME, THEN NOTWITHSTANDING THE FACT THAT THE SAID INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CON CEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 17. THE DEEMING PROVISIONS OF EXPLANATION 5A UNDER SECTION 271(1)(C) OF THE ACT ARE APPLICABLE TO ALL THE SEARCHES INITIATED UNDER SECTION 132 OF THE ACT ON OR AFTER F IRST DAY OF JUNE, 2007. THE CONDITIONS LAID DOWN IN THE EXPLANATION 5A IS WHERE DURING THE COURSE OF SEARCH, THE ASSESSEE IS FOUND TO BE IN POSSESSION OF ANY MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS H AVE BEEN ACQUIRED BY HIM BY UTILIZING WHOLLY OR IN PART HIS INCOME, FOR ANY PREVIOUS YEAR ON ANY INCOME BASED ON ANY ENTRIES IN BOOKS OF ACCOUNT, OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRIES IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENT HIS INCOME FOR ANY PREVIOUS YEAR, THEN IN CASES WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAD BEEN FURNISHED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH, BUT THE SAID INCOME HAD NOT BEEN DECLARED IN THE SAID RETURN OF INCO ME OR THE DUE DATE FOR FILING THE RETURN OF INCOME HAD EXPIRED FOR SUCH PREVIOUS YEAR AND THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME, IT IS FURTHER LAID DOWN THAT NOTWITHSTANDING THE FACT THAT SUCH INCOME WHICH HAS BEEN DISCOVERED DUE TO THE SEARCH PR OCEEDINGS, IS DECLARED BY HIM IN ANY RETURN FURNISHED ON OR AFTER THE DATE OF SEARCH, BUT IRRESPECTIVE OF THE SAME, HE WOULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. READING THE ABOVE SAID PROVIS IONS OF THE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, IT IS NOTED THAT THE PERSON IS DEEMED TO HAVE CONCEALED ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 12 PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, WHICH IS EQUIVALENT TO THE VALUE OF MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS FROM THE POSSESSION OF THE ASSESSEE DURING THE COURSE OF SEARCH CONDUCTED ON OR AFTER FIRST DAY OF JUNE, 2007. FURTHER, WHERE ANY INCOME IS BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE C LAIMS THAT ALL THE ABOVE SAID REPRESENTS HIS INCOME FOR ANY PREVIOUS YEAR, THEN THE EXPLANATION LAYS DOWN TO THAT EXTENT, THE PERSON WOULD BE DEEMED TO HAVE CONCEALED HIS PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 18. NOW, COMING TO THE MAIN PROVISIONS WHICH CONSTITUTE TWO PORTIONS I.E. WHAT IS CONCEALMENT AND QUANTUM OF PENALTY TO BE LEVIED. THE QUESTION IS QUANTUM OF INCOME ON WHICH PENALTY IS TO BE LEVIED. THE SAID ISSUE WAS BEFORE THE PUNE BENCH OF TRIBUNAL IN ACIT VS. MULAY CONSTRUCTION P. LTD. & ORS. IN ITA NOS.116 TO 119/PN/2012 & ORS. AND IT WAS HELD AS UNDER: - 16. THE NEXT LIMB OF ARGUMENT OF THE LD. COUNSEL IS THAT EXPLANATION 5A(II) CONTEMPLATES INCOME AND NOT THE EXPENDITURE. IN THIS CASE, IT IS UNDISPUTED FACT THAT THE ASSESSEE CAME FORWARD AND DECLARED INCOME WHICH WAS PERTAINING TO THE AMOUNT COVERED BY THE UNRECORDED EXPENDITURE BUT THE FACT REMAINS THAT THE ASSESSEE DID NOT DECLARE ANY EXPENDITURE BUT IT IS ONLY THE INCOME. THE LD. COUNSEL REFERRED TO T HE DEFINITION OF THE INCOME GIVEN IN SEC. 2(24) OF THE ACT. THE SCOPE OF THE SAID DEFINITION HAS BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF EMIL WEBBER (SUPRA) WHICH HAS BEEN RELIED UPON BY THE LD. COUNSEL THE RELEVANT PORTION IS IN PARA NO 7 WHICH READS AS UNDER: 7. THE DEFINITION OF 'INCOME' IN CLAUSE (24) OF SECTION 2 OF THE ACT IS AN INCLUSIVE DEFINITION. IT ADDS SEVERAL ARTIFICIAL CATEGORIES TO THE CONCEPT OF INCOME BUT ON THAT ACCOUNT THE EXPRESSION 'INCOME' DOES NOT LOSE ITS OF INCOME BUT ON THAT ACCOUNT THE EXPRESSION 'INCOME' DOES NOT LOSE ITS NAT URAL CONNOTATION. INDEED, IT IS REPEATEDLY SAID THAT IT IS DIFFICULT TO DEFINE THE EXPRESSION 'INCOME' IN PRECISE TERMS. ANYTHING WHICH CAN PROPERLY BE DESCRIBED AS INCOME IS TAXABLE UNDER THE ACT UNLESS, OF COURSE, IT IS EXEMPTED UNDER ONE OR THE OTHER PR OVISION OF THE ACT. IT IS FROM THE SAID ANGLE THAT WE HAVE TO EXAMINE WHETHER THE AMOUNT PAID BY BALLARPUR BY WAY OF TAX ON THE SALARY AMOUNT RECEIVED BY THE ASSESSEE CAN BE TREATED AS THE INCOME OF THE ASSESSEE. IT CANNOT BE OVERLOOKED THAT THE SAID AMOUN T IS NOTHING BUT A TAX UPON THE SALARY RECEIVED BY THE ASSESSEE. BY VIRTUE OF THE OBLIGATION UNDERTAKEN BY BALLARPUR TO PAY TAX ON THE SALARY RECEIVED BY THE ASSESSEE AMONG OTHERS, IT PAID THE SAID TAX. THE SAID PAYMENT IS, THEREFORE, FOR AND ON BEHALF OF THE ASSESSEE. IT IS NOT A GRATUITOUS PAYMENT. BUT FOR THE SAID AGREEMENT AND BUT FOR THE SAID PAYMENT, THE SAID TAX AMOUNT WOULD HAVE BEEN LIABLE TO BE PAID BY THE ASSESSEE HIMSELF HE COULD NOT HAVE RECEIVED THE SALARY WHICH HE DID BUT FOR THE SAID PAYMENT OF TAX. THE OBLIGATION PLACED UPON BALLARPUR BY VIRTUE OF SECTION 195 OF THE INCOME TAX ACT CANNOT ALSO BE IGNORED IN THIS CONTEXT. IT WOULD BE UNREALISTIC TO SAY THAT THE SAID PAYMENT HAD NO INTEGRAL CONNECTION WITH THE SALARY RECEIVED BY THE ASSESSEE. W E ARE, THEREFORE, OF THE OPINION THAT THE HIGH COURT AND THE AUTHORITIES UNDER THE ACT WERE RIGHT IN HOLDING THAT THE SAID TAX AMOUNT IS LIABLE TO BE INCLUDED IN THE INCOME OF THE ASSESSEE DURING THE SAID TWO ASSESSMENT YEARS. 17. AS PER INTERPRETATION M ADE BY THE HON'BLE SUPREME COURT OF SEC. 2(24) OF THE ACT, IT IS CLEAR THAT IT IS AN INCLUSIVE DEFINITION AND IT COVERS ALL INCOME COME UNDER CHARGING PROVISIONS OF THE ACT. IF THE ARGUMENT OF THE LEARNED COUNSEL IS TO BE ACCEPTED THEN NO INCOME CAN B E TAXED U/S. 68, 69, 69A, 69B, 69C & 69D. 18. IT IS NECESSARY TO REFER TO EXPLANATION 5A WHICH READS AS UNDER: ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 13 EXPLANATION 5A WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR BEFORE THE 1 ST DAY OF JUNE 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF ( I ) ANY MONEY, BULLION, JEWELER OR OTHER VALUABLE ARTICLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR ( II ) ANY OTHER 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 TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR AN Y PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND ( A ) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR 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 FOR S UCH 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 - SECTION (1) OF THIS SECTION, HE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 19. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED, CLAUSE (II) TO EXPLANATION 19. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED, CLAUSE (II) TO EXPLANATION 5A IS APPLICABLE. A DMITTEDLY, THE EXPENDITURE WHICH WAS NOT RECORDED HAS BEEN FOUND BY WAY OF ENTRIES IN THE SEIZED DOCUMENTS. WHILE EXPLAINING THE SCOPE OF EXPLANATION 5A IN THE CASE OF CHANDAN K. SHEWANI (SUPRA) THE TRIBUNAL HAS HELD THAT TO PATCH OUT THE LACUNA DUE TO TH E JUDICIAL INTERPRETATION OF EXPL. 5 OF SEC. 271(1)(C) WHICH WAS ON THE STATUTE BOOK UPTO 31 - 5 - 2007, EXPLANATION 5A HAS BEEN SUBSTITUTED FOR EXPL. 5 BY THE FINANCE ACT, 2007 W.E.F 1 - 6 - 2007. THE SAID EXPLANATION WAS FURTHER AMENDED BY THE FINANCE(NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01 - 07 - 2007 WHICH IS REPRODUCED HEREINABOVE. THE LD. COUNSEL HAS RAISED AN IMPORTANT LEGAL QUESTION WHETHER THE INCOME DECLARED BY THE ASSESSEE WHICH IS PERTAINING TO THE UNRECORDED EXPENDITURE CAN SAID TO BE THE INCOME WHICH IS CONTEMPLATED IN EXPLANATION 5A(II)? THE ANSWER TO THIS QUESTION IS IN SEC. 69 - C WHICH READS AS UNDER: - WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PA RT THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINA NCIAL YEAR; 20. SO FAR AS THE EXPL. - 5 WHICH WAS ON THE STATUTE BOOK, THE COURTS HAVE TAKEN A VIEW THAT IT WAS HAVING A LIMITED APPLICATION ONLY TO THE EXTEND OF THE MONEY, BULLION, JEWELLERY OR ANY VALUABLE ASSETS OR THINGS WHICH WERE FOUND DURING THE C OURSE OF SEACH AND SEIZER OPERATION AND OWNED BY THE ASSESSEE. BUT THE OTHER INCOME WHICH WAS FOUND RECORDED BY ANY ENTRY IN THE DOCUMENT SEIZED OR OTHERWISE WAS NOT COVERED. IT IS PERTINENT TO NOTE THAT SEC. 69C PROVIDES THAT IF ANY UNRECORDED EXPENDITU RE IS FOUND AND THE ASSESSEE FAILS TO EXPLAIN THE SOURCE OF THE SAID EXPENDITURE OR EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY, THEN TO THE EXTENT OF THE AMOUNT COVERED BY SUCH EXPENDITURE IS TREATED AS INCOME. ULTIMATELY WHAT IS TAXED UNDER SEC. 69 C OF THE ACT IS NOT ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 14 THE EXPENDITURE BUT IT IS BASICALLY THE UNDISCLOSED INCOME WHICH HAS BEEN APPLIED FOR INCURRING THE UNRECORDED EXPENDITURE. IN OUR VIEW, THERE IS NO MERIT IN THE ARGUMENT OF THE LD. COUNSEL THAT THE ASSESSEE HAS ONLY DECLARED THE AMOU NT EXPENDITURE. WE THEREFORE, HOLD THAT TO THE EXTENT OF THE INCOME OFFERED BY THE ASSESSEE PERTAINING TO THE EXPENDITURE IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S 153A, EXPLANATION - 5A IS APPLICABLE AND AS THERE IS A LEGAL PRESUMPTION AGAINST THE ASS ESSEE IN RESPECT OF THE SAID INCOME DETECTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, THE ASSESSEE CASE IS SQUARELY COVERED BY EXPLANATION - 5(II) AS THE ASSESSEE HIMSELF HAS ADMITTED THE SAID UNDISCLOSED INCOME. 19. APPLYING THE SAID PROPOSITI ON TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE INCOME OFFERED BY THE ASSESSEE PERTAINING TO THE CASH SEIZED FROM THE ASSESSEE AND THE DECLARATION OF THE ASSESSEE THAT THE SAID CASH RELATES TO THE UNACCOUNTED CASH RECEIVED VIDE THE SALE TRANSACTION E NTERED INTO BY THE ASSESSEE, WHICH IN TURN, WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED PURSUANT TO ISSUE OF NOTICE UNDER SECTION 153A OF THE ACT, IS THE INCOME DETECTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE CASE OF THE ASS ESSEE IS SQUARELY COVERED BY THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AND THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY ON SUCH INCOME WHICH WAS DETECTED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, WHICH IN TURN HAS BEEN OFFERE D BY THE ASSESSEE IN RETURN OF INCOME FILED PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND HAS PLACED RELIANCE ON THE RATIO LAID DOWN IN DCIT VS. PURTI SAKHAR KARKHANA (SUP RA), WHICH IS A DECISION OF NAGPUR BENCH OF TRIBUNAL AND HYDERABAD BENCH OF TRIBUNAL IN SHRI PV RAMANA REDDY VS. ITO (SUPRA). IN VIEW OF BINDING PRECEDENT OF PUNE BENCH ON THE SAID ISSUE, WE FIND NO MERIT IN THE RELIANCES PLACED UPON BY THE LEARNED AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE ON DCIT VS. PURTI SAKHAR LEARNED AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE ON DCIT VS. PURTI SAKHAR KARKHANA (SUPRA) AND SHRI PV RAMANA REDDY VS. ITO (SUPRA). THE OTHER RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN SMT. PRAMILA D. ASHTEKAR VS. ITO (2013) 39 TAXMANN.COM 103 (PUNE TRIB.), IT MAY BE POINTED OUT THAT THE SAID ORDER OF PUNE BENCH OF TRIBUNAL HAS BEEN RECALLED IN MA NO.112/PN/2013, ORDER DATED 21.06.2013 AND HAS NO BINDING EFFECT FOR DECIDING THE PRESENT ISSUE. FURTHER REFERENCE WAS MADE TO THE DECISION OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. & ANR. (SUPRA), WHERE THE HONBLE BOMBAY HIGH COURT HAS DELIBERATED UPON THE SCOPE OF 153A PROVISIONS AND HAS NO RELEVANCE TO THE ISSUE BE FORE US. 14. IN THE FACTS OF THE PRESENT CASE ALSO, THE ASSESSEE HAD FURNISHED ORIGINAL RETURN OF INCOME IN WHICH HE HAD NOT DECLARED ITS RECEIPTS FROM THE PROFESSION, BUT PURSUANT TO THE SEARCH AND SEIZURE OPERATION, CERTAIN INCR IMINATING DOCUMENTS WERE SEIZED, WHICH CONTAINED UNRECORDED RECEIPTS, EXPENSES AND INVESTMENTS IN VARIOUS FINANCIAL YEARS AND THE ASSESSEE IN RESPONSE THERETO, DECLARED THE ADDITIONAL PROFESSIONAL FEES AND PAID TAXES. THE CASE OF THE ASSESSEE BEFORE US WAS THAT SINCE THE ADDITIO NAL TAXES HAVE BEEN PAID THERE IS NO QUESTION OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE FIND NO MERIT IN THE SAID CLAIM OF THE ASSESSEE, IN VIEW OF OUR ORDER OF EVEN ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 15 DATE IN THE CASE OF MRS.SARITA KAUR MANJEET SINGH CHOPRA VS. ITO (SUPRA) . ACCORDINGLY, WE UPHOLD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON UNRECORDED RECEIPTS, EXPENDITURE AND INVESTMENTS DECLARED BY THE ASSESSEE PURSUANT TO SEARCH . 15. THE SECOND ASPECT OF THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE AC T IN ASSESSMENT YEAR 2005 - 06 IS THE ADDITION OF RS.6,00,000/ - , WHICH WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS PURSUANT TO THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. THE CASE OF THE ASSESSING OFFICER WHILE COMPLETING ASSESS MENT UNDER SECTION 153A OF THE ACT WAS THAT THE ASSESSEE HAD NOT DECLARED THE SAID ADDITIONAL INCOME OF RS.6,00,000/ - IN THE REVISED RETURN OF INCOME AND HENCE, THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME AND WAS LIABLE TO LEVY OF PENALTY UNDE R SECTION 271(1)(C) OF THE ACT. FROM THE PERUSAL OF DETAILS, WE FIND THAT THE SAID ADDITION WAS MADE BY THE ASSESSING OFFICER WHILE PASSING THE ORDER UNDER SECTION 143(3) OF THE ACT, WHICH IN TURN, WAS CONFIRMED BY THE CIT(A) AND THE TRIBUNAL. WHILE 143(3) OF THE ACT, WHICH IN TURN, WAS CONFIRMED BY THE CIT(A) AND THE TRIBUNAL. WHILE FILI NG THE RETURN OF INCOME UNDER SECTION 153A OF THE ACT, THE ASSESSEE HAD NOT INCLUDED THE SAID ADDITIONAL INCOME. THE PENALTY PROCEEDINGS, IF ANY HAD TO BE INITIATED AND LEVIED PURSUANT TO PROCEEDINGS UNDER SECTION 143(3) AND NOT PURSUANT TO PROCEEDINGS UN DER SECTION 143(3) R.W.S. 153A OF THE ACT. ACCORDINGLY, WE FIND NO MERIT IN THE SAID OBSERVATIONS OF THE AUTHORITIES BELOW AND WE DIRECT THE ASSESSING OFFICER TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITIONAL INCOME ASSESSED IN THE HAND S OF ASSESSEE PURSUANT TO SEARCH AND DELETE THE PENALTY FOR CONCEALMENT ON THE ALLEGED ADDITION OF RS.6,00,000/ - . 16. THE REVENUE IS ALSO IN APPEAL IN ASSESSMENT YEARS 2006 - 07, 2007 - 08 AND 2008 - 09 AGAINST THE DELETION OF PENALTY LEVIED UNDER SECTION 271 (1)(C) OF THE ACT. THE SAID PENALTY FOR CONCEALMENT WAS LEVIED ON ACCOUNT OF UNRECORDED PROFESSIONAL RECEIPTS, EXPENDITURE, ETC. IN THE RESPECTIVE YEARS. FOLLOWING OUR ORDER IN ASSESSMENT YEAR 2005 - 06 , WE UPH O LD THE LEVY OF PENALTY IN ASSESSMENT YEARS 20 06 - 07, 2007 - 08 ITA NO S. 2241 TO 2244 /PN/201 2 DR. NITIN LAXMIKANT LAD 16 AND 2008 - 09 . IN ALL THE OTHER YEARS, THERE IS NO FURTHER ADDITION MADE UNDER SECTION 68 OF THE ACT, HENCE, OUR ORDER ON THE SAID ISSUE IS ONLY RESTRICTED TO ASSESSMENT YEAR 2005 - 06. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DECIDED A S INDICATED ABOVE. 17. IN THE RESULT, APPEAL OF REVENUE IN ITA NO.2241/PN/2012 IS PARTLY ALLOWED AND OTHER APPEAL S IN ITA NOS.2242, 2243 & 2244/PN/2012 ARE ALLOWED . ORDER PRONOUNCED ON THIS 30 TH DAY OCTOBER , 201 5 . SD/ - SD/ - (PRADIP KUMAR KEDIA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 30 TH OCTOBER , 2015. GCVSR GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , NASHIK ; 4. / THE CIT (CENTRAL), NAGPUR ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE