ACIT, CHENNAI V. Smt. S.Kavithaa, CHENNAI

ITA 2282/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4640 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 21-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Source of fund
• Section: 143(3); 142(1); 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NOS.1975 TO 1977/MDS/2012 & 2289/MDS/2012 ASSESSMENT YEARS : 2003-04, 2006-07, 2008-09 & 2009-10 THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI VS SMT. S. GOWRI NO.5/15 BLUE BEACH ROAD NEELANGARAI CHENNAI 600 041 [PAN AAIPG 6701 G] (APPELLANT) (RESPONDENT) I.T.A.NOS.1978 TO 1983/MDS/2012 ASSESSMENT YEARS : 2003-04 TO 2008-09 THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI VS SMT. S. GOWRI WIFE & L/H TO LATE SHRI S. SHANMUGAM NO.5/15 BLUE BEACH ROAD NEELANGARAI CHENNAI 600 041 [PAN AANPS 0684 B] (APPELLANT) (RESPONDENT) I.T.A.NOS.1984 TO 1989/MDS/2012 & 2282/MDS/2012 ASSESSMENT YEARS : 2003-04 TO 2009-10 THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI VS SMT. S. KAVITHAA NO.113 DR. ALAGAPPA ROAD PURASAWALKAM CHENNAI 600 084 [PAN AACPK 5957A] (APPELLANT) (RESPONDENT) I.T.A.NOS.1975 TO 1977/12 ETC. :- 2 -: I.T.A.NOS.1990 TO 1994/MDS/2012 ASSESSMENT YEARS : 2003-04 TO 2005-06, 2007-08 & 2008-09 THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI VS SMT. S. KALYANKUMAR FLAT NO.3C & 3D, YESES SQUARE NO.84 GREENWAYS ROAD R.A PURAM CHENNAI 600 028 [PAN AAKPK 6295K] (APPELLANT) (RESPONDENT) I.T.A.NOS.1998 TO 1999/MDS/2012 ASSESSMENT YEARS : 2004-05 & 2008-09 THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI VS SMT. K. PADMA FLAT NO.3C & 3D, YESES SQUARE NO.84 GREENWAYS ROAD R.A PURAM CHENNAI 600 028 [PAN AACPP 2749R] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 04-12-2013 DATE OF PRONOUNCEMENT : 12-12-2013 O R D E R PER BENCH: THIS IS A BATCH OF 24 APPEALS FILED BY THE REVENU E FOR ASSESSMENT YEARS FROM 2003-04 TO 2009-10 AGAINST SE PARATE ORDERS OF THE CIT(A)-I CHENNAI DATED 14.8.2012, 10.8.2012 AND 10. 9.2012 DELETING I.T.A.NOS.1975 TO 1977/12 ETC. :- 3 -: PENALTIES U/S 271(1)(C)OF THE INCOME-TAX ACT, 1961 [IN SHORT THE ACT] IN ALL CASES EXCEPT I.T.A.NOS.2289 AND 2282/MDS/201 2 WHEREIN THE PENALTIES DELETED ARE U/S 271AAA OF THE ACT. 2. AT THE OUTSET, THE PARTIES ARE AD-IDEM BEFORE US T HAT THE ISSUE INVOLVED IS IDENTICAL IN ALL THE APPEALS EXCEPT I. T.A.NOS.2289 & 2282/MDS/2012. ON THEIR ASKING, WE TAKE UP I.T.A.NO .1975/MDS/2012 AS THE LEAD CASE. 3. DRAWING OUR ATTENTION TO THE GROUNDS RAISED, THE RE VENUE STRONGLY ARGUES THAT THE CIT(A) HAS ERRED IN DELETI NG THE IMPUGNED PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271( 1)(C) OF THE ACT. IT SUBMITS THAT BEFORE DELETING PENALTY, THE CIT(A) DI D NOT CONSIDER THE RELEVANT STATUTORY PROVISION I.E SECTION 271(1)(C) EXPLANATION 5A AS WELL AS THE SETTLED LAW THAT IN CASE THE UNDISCLOSED INC OME IS DETECTED AFTER THE DATE OF SEARCH, INVESTIGATION AND ENQUIRY, CO NCERNED ASSESSEE IS LIABLE TO BE PENALIZED UNDER THE AFORESAID PROVISIO N. THE REVENUE ALSO REFERS TO CASE LAW OF CIT VS SANGMESHWARA ASSOCIATE S [2005] 345 ITR 397(KAR), SANJAY AGARWAL VS CIT [2012] 211 TAXMAN 1 78(PUNJ. & HAR.), N. RANJIT VS CIT - TAX CASE APPEAL NO.298 OF 2010 D ATED 18.6.2013 AND IN MAK DATA P. LTD VS CIT-SLP(CIVIL)NO.18389 OF 20 13(SC), AND PRAYS FOR RESTORATION OF THE IMPUGNED PENALTY OF ` 2,26,230/-. I.T.A.NOS.1975 TO 1977/12 ETC. :- 4 -: 4. IN REPLY, THE ASSESSEE JUSTIFIES THE ORDER OF THE C IT(A) DELETING PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271( 1)(C) OF THE ACT BY REFERRING TO THE REASONS CONTAINED THEREIN. THE A. R ALSO SUBMITS THAT IN I.T.A.NOS.1978 TO 1983/MDS/2012, SINCE THE ASSESSE E, SHRI S.SHANMUGAM HAD EXPIRED ON 23.1.2011 BEFORE IMPOSITION OF PENAL TY VIDE ORDER DATED 30.6.2011, THE IMPUGNED PENALTIES COULD NOT HAVE BE EN LEVIED ON HIS LEGAL HEIRS. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE F ILE AS WELL AS THE JUDICIAL PRECEDENTS QUOTED HEREINABOVE. 5. THE ASSESSEE IS AN INDIVIDUAL. SHE IS A BUILDER . ON 5.8.2003, THE ASSESSEE HAD FILED HER RETURN DISCLOSING INCOM E OF ` 2,57,350/- WHICH WAS SUMMARILY PROCESSED RESULTING IN DEMAND OF ` 3,237/-. 6. THE ASSESSEE AND HER FAMILY MEMBERS I.E HER HUSBAN D SHRI S.SHANMUGAM(SUPRA) AND OTHERS WERE CARRYING ON BUSI NESS OF PETROLEUM PRODUCTS THROUGH A CONCERN BY THE NAME M/S YESES IN TERNATIONAL LTD. THEY WERE ALSO IN REAL ESTATE BUSINESS THROUGH ANOT HER CONCERN M/S YESES PROMOTERS PVT. LTD. ON 13.2.2009, THE DEPARTMENT HA D CONDUCTED A SEARCH IN CASES OF ALL HER FAMILY MEMBERS LEADI NG TO ALLEGED SEIZURE OF INCRIMINATING DOCUMENTS PERTAINING TO REAL ESTATE F IRM AFORESAID. IN ALL I.T.A.NOS.1975 TO 1977/12 ETC. :- 5 -: CASES, THE PANCHNAMAS WERE DRAWN ON VARIOUS DATES L AST BY 13.4.2009. THEREAFTER, ON 29.6.2009, THE ASSESSEES HUSBAND F ILED A STATEMENT OF ASSETS AND LIABILITIES BEFORE THE ADIT(INV.) DECLAR ING TOTAL AMOUNT OF NET OF ASSETS AND LIABILITIES OF ` 29,25,48,420/-. A NOTICE U/S 153A SEEKING ASSESSEES RETURN STOOD ISSUED TO HER ON 10.3.2010 . IN CONSEQUENCE THERETO, SHE HAD FILED HER RETURN DATED 30.7.2010 D ISCLOSING INCOME OF ` 2,44,550/- I.E LESS THAN ALREADY DECLARED ON 5.8.2 003. THE ASSESSING OFFICER FRAMED ASSESSMENT U/S 153A R.W.S 143(3) BY EMPLOYING NET ASSET METHOD FOR ALL ASSESSMENT YEARS I.E 2003-04 TO 200 9-10 BY TAKING ALL IMMOVABLE AND MOVABLE ASSETS AGAINST LIABILITIES AN D COMPUTED TOTAL INCOME OF IMPUGNED ASSESSMENT YEAR AS ` 9,75,544/-. SINCE THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT AND UNDISC LOSED INCOME HAD ARISEN, THE ASSESSING OFFICER INITIATED PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE ACT R.W.S 271A AGAINST THE ASSESSEE FOR HA VING CONCEALED AND FURNISHED INACCURATE PARTICULARS OF INCOME AS WELL AS IN FAILING TO MAINTAIN BOOKS OF ACCOUNT. UNDISPUTEDLY, THE ASSESSEE DID NOT CARRY THE MATTER IN APPEAL AND THE ASSESSMENTS AFORESAID ATTAINED FINAL ITY. 7. COMING TO THE PENALTY PROCEEDINGS, THE ASSESSEE VEH EMENTLY CONTESTED THE PENALTY NOTICE AND DENIED TO HAVE EIT HER FURNISHED INACCURATE PARTICULARS OR HAVING CONCEALED HER INCO ME FROM BEING I.T.A.NOS.1975 TO 1977/12 ETC. :- 6 -: ASSESSED. WE DEEM IT APPROPRIATE TO REPRODUCE THE ASSESSEES PLEAS IN THE PENALTY PROCEEDINGS IN VERBATIM WHICH READ A S FOLLOWS: 1. 'A SEARCH U/S 132 OF THE I T ACT WAS CONDUCTED AT MY RESIDENCE, THAT OF MY FAMILY MEMBERS AND BUSINESS C ONCERNS ON 13-02-2009, WHICH REVEALED INVESTMENTS IN MOVABLE A ND IMMOVABLE PROPERTIES IN MY NAME AND IN NAMES OF MY FAMILY MEM BERS. AFTER THE CLOSURE OF BUSINESS IN IMPORT AND DISTRIBUTION OF K EROSENE SOMETIME IN THE YEAR 2000, MYSELF AND MY FAMILY MEMBERS WERE DE ALING IN PURCHASE AND SALE IMMOVABLE PROPERTIES MOSTLY OUT T HE INCOME SAVED FROM OUR EARLIER BUSINESS AND ALSO OUT ADVANCES REC EIVED FROM THOSE WHO APPROACHED US TO PROCURE LAND/BUILDING FOR THEM . MOST OF THE TRANSACTIONS WERE THROUGH BANK. HOWEVER, IN RESPECT OF THESE TRANSACTIONS OF PURCHASE AND SALE, NO ACCOUNTS HAVE BEEN MAINTAINED SO AS TO LINK SOURCE OF FUNDS WITH PARTICULAR INVES TMENT. IT IS PRECISELY FOR THIS REASON THAT DURING THE. COURSE OF THE SEAR CH AS WELL IN SUBSEQUENT INVESTIGATIONS BY ASSISTANT DIRECTOR OF INCOME- TAX (INV) THAT, HE WAS INFORMED ABOUT OUR INABILITY TO CORREL ATE THE INVESTMENT AND SOURCES OF FUNDS AND OF OUR WILLINGNESS TO OFFE R THE EXCESS OF ASSETS OVER LIABILITIES ON THE DATE SEARCH AS INCOM E OF THAT PREVIOUS YEAR AND PAY TAXES. IT MAY STATED THAT, THE FACT OF NOT HAVING KEPT ANY ACCOUNTS, ALBEIT, BANK STATEMENTS FOR THE PURCHASE AND SALE OF IMMOVABLE PROPERTIES WAS VERY MUCH EVIDENT DURING T HE SEARCH AND HAS VINDICATED OUR STAND. IN THE ABSENCE OF PROPER RECORDS AND ACCOUNTS IT WAS NOT POSSIBLE FOR US TO ARRIVE AT TH E YEAR WISE INCOME IN RESPECT OF THE AYS 2003-04 TO 2009-10 AND IT WAS SU BMITTED THAT SPREADING OVER THE EXCESS OF ASSETS OVER LIABILITI ES ON THE DATE OF SEARCH ON ANY BASIS WHATSOEVER IN RESPECT OF THE AF ORESAID A YS WILL BE ONLY BE A ROUGH ESTIMATE AND WILL NOT REFLECT TH E TRUE AND CORRECT STATE OF AFFAIRS. 2. THOUGH WE WERE REPEATEDLY REQUIRED TO SUBMIT COM PLETE ACCOUNTS RELATING TO OUR DEALING IN IMMOVABLE PROPERTIES AND OTHER ASSETS FOUND DURING THE SEARCH AND LINK THE SOURCE OF FUNDS AND INVESTMENTS, THE ASSISTANT DIRECTOR OF INCOME-TAX (INV) FINALLY ACCE PTED OUR SUBMISSIONS TO OFFER INCOME ON THE BASIS OF THE NET ACCRETION TO ASSETS AS ON THE DATE OF SEARCH / WITH THE RIDE, THAT THE EXCESS OF ASSETS OVER LIABILITIES AS ON THE DATE OF SEARCH BE SPREAD OVER ASSESSMENT YEARS 2003-04 TO 2009-10, IN THE NAMES OF VARIOUS FAMILY MEMBERS, ON THE BASIS OF INVESTMENTS MADE BY EACH. ACCORDINGLY WE H AVE, AS PER LETTER DATED 29.06.2009 FROM SRI S SHANMUGAM, HEAD OF OUR FAMILY HAS OFFERED AN INCOME OF RS 29,25,48,420/- AS INCOM E BY ALL THE FAMILY MEMBERS FOR THE ABOVE A YS. THIS OFFER OF IN COME WAS MADE WELL BEFORE THE ISSUE OF NOTICE U/S 153A/U/S 142(1) CALLING FOR THE I.T.A.NOS.1975 TO 1977/12 ETC. :- 7 -: SUBMISSION OF RETURNS FOR THE ABOVE A YS. SINCE THE ADDITIONAL INCOME WAS OFFERED IN PURSUANCE TO SUMMONS ISSUED U/S 131 OF THE I T ACT BY THE ADIT (INV) IN THE COURSE OF THE CONTINUATION OF SEARCH PROCEEDINGS, THE LETTER REFERRED ABOVE TANTAMOUNT TO ADMISSION O F INCOME U/S 132(4) OF THE I T ACT WITHIN MEANING OF THE EXCEPTION PROV IDED UNDER SUB SECTION 2 TO SECTION 271MA. 3. IN RESPONSE TO THE NOTICE U/S 153 A, THE INCOME HAS BEEN OFFERED IN RESPECT OF VARIOUS A YS BASED ON THE LETTER DATE D 29-06-2009, ALTHOUGH , IN THE ASSESSMENT YOU HAVE CHOSEN TO VARY THE INCOM E BASED ON THE EXTENT OF INVESTMENT MADE IN THAT PART ICULAR P Y RELEVANT TO THE AY. HOWEVER, THE FACT REMAINS THAT THE AGGREGATE OF THE INCOME ASSESSED IN RESPECT OF ALL FAMILY MEMBERS FO R THE ABOVE A YS DOES NOT EXCEED THE INCOME OFFERED IN LETTER DATED 29 . 06.2009 . SUCH BEING THE CASE THE QUESTION OF CONCEALMENT OF INCOM E OR FURNISHING OF INACCURATE PARTICULARS AS ALLEGED IN YOUR SHOW-CAUS E NOTICE DOES NOT ARISE AT ALL. UNDER SECTION 271(1) (C), THE CONCEALMENT OF INCOME HAS TO BE INFERRED FROM THE RETURN OF INCOME. THE SUPRE ME COURT IN THE CASE OF BRIJMOHAN V C IT 120 ITR 1 SC HAS HELD THAT CONCEALMENT TAKES PLACE ON THE DATE OF RETURN WHEN RETURN IS FI LED WITHOUT DISCLOSING THE PARTICULARS OF INCOME OF THAT YEAR. IMPLIEDLY IT WOULD MEAN THAT THE OFFENCE OF CONCEALMENT CANNOT BE SAID TO HAVE COMMITTED BEFORE FILING THE RETURN. AS ALREADY STAT ED THE AGGREGATE OF THE TOTAL INCOME ASSESSED IN THE GROUP AS A WHOLE F OR ALL THE ABOVE A YS, IS VERY MUCH THE SAME AS THE INCOME OFFERED IN THE RETURNS BY THE GROUP IN RESPONSE TO NOTICE U/S 153A. IT WAS POINTE D OUT EARLIER HERE, THAT IN THE ABSENCE OF ANY PROPER ACCOUNTS, THE ENT IRE EXCESS OF ASSETS OVER LIABILITIES AS ON THE DATE OF SEARCH SH OULD HAVE BEEN ASSESSED IN THE A.Y 2009-10 AND ANY ATTEMPT TO SPRE AD OVER THE ACCRETION TO ASSETS OVER A PERIOD OF EARLIER A YS W OULD BE IMPROPER AND DIVORCED TO THE REAL STATE OF AFFAIRS AND THAT SUCH ALLOCATION WOULD BE ONLY A MERE ESTIMATE. IN SUCH SITUATION YOU ARE NOT JUSTIFIED IN ASSUMING THAT I HAVE CONCEALED PARTICULARS OF INCOM E OR FURNISHED INACCURATE PARTICULARS. 4. IN COMPLETING THE ASSESSMENT ON INVESTMENT BASIS , NO SET OFF HAS BEEN GIVEN IN RESPECT OF THE INCOME ALREADY OFF ERED FOR ASSESSMENT AND THE AVAILABILITY OF FUNDS ON THE SAL E OF PROPERTIES ACQUIRED PRIOR TO 01.04.2002. FOR INSTANCE, SALE PR OCEEDS OF RS.17,44,000 IN A Y 2006 -07 IN THE CASE SRI SHANMU GAM, WHO HAD PURCHASED THE PROPERTY IN 1992. ALTHOUGH, THE FAMIL Y IN THE GROUP, INCLUDING MYSELF HAS ADMITTED INCOME UNDER VARIOUS HEADS OF INCOME, THE INCOME HAS BEEN ASSESSED WITHOUT SPECIFYING ANY PARTICULAR HEAD, THERE BY INDICATING THAT THE SAME HAS BEEN ASSESSED UNDER THE RESIDUARY HEAD U/S 14 VIZ. INCOME FROM OTHER SOURCES. FURTHER, THE ASSESSMENT HAS ALSO RESULTED IN INCOME GETTING ASSE SSED AT A LOWER I.T.A.NOS.1975 TO 1977/12 ETC. :- 8 -: LEVEL THAN ADMITTED INCOME IN SOME CASES. THESE ASP ECTS HAVE BEEN STRESSED HERE, ONLY TO AMPLIFY THE POINT STRESSED I N THE EARLIER PARA, ABOUT FALLACY IN ALLOCATING THE EXCESS OF ASSETS OV ER LIABILITIES TO THE EARLIER YEARS. IT THEREFORE REMAINS THAT THE INCOME HAS BEEN ASSESSED ON AN ESTIMATED BASIS AND IN SUCH CIRCUMSTANCES, CO NCEALMENT OF INCOME CANNOT BE INFERRED. 5. FOR THIS AY THE INCOME ASSESSED IS RS.9,75,544 AS AGAINST THE ADMITTED INCOME OF RS.2,57,350 IN THE ORIGINAL RETU RN. SINCE THE ACCRETION TO THE ASSETS AS ON THE DATE OF SEARCH HA S BEEN ASSESSED AS INCOME IN VARIOUS YEARS IN HANDS OF THE MEMBERS OF MY FAMILY, INCLUDING MYSELF, ONLY ON THE BASIS OF INVESTMENT, WITHOUT GIVING ANY CONSIDERATION TO THE INCOME ALREADY ADMITTED AND AV AILABILITY OR OTHER FUNDS, IT CANNOT BE STATED THAT THE WHOLE OF THE IN VESTMENT OF A PARTICULAR YEAR REPRESENTS THE INCOME OF THAT YEAR. IT CAN BE SEEN FROM THE ENCLOSURE TO THE LETTER DT 29.6.2009, THAT THE FAMILY MEMBERS AS A WHOLE HAD AN OPENING CAPITAL OF RS 3,31, 91,205 AS ON 1.4.2002. FURTHER ALL THE MEMBERS OF MY FAMILY HAD FILED RETURNS FOR THIS A. Y ADMITTING SUBSTANTIAL INCOME. THEREFORE THERE IS SU FFICIENT EXPLAINABLE SOURCE TO MEET THE INVESTMENT. HENCE ON THIS SCORE ALSO, NO CONCEALMENT OF INCOME CAN BE ATTRIBUTED TO ME IN RESPECT OF THIS A. Y. IT IS THEREFORE REQUESTED THAT THE PENALTY PROCEEDI NGS INITIATED U/S 271(1)(C) BE DROPPED'. HOWEVER, THE ASSESSING OFFICER WAS NOT IMPRESSED BY THE ASSESSEES EXPLANATION AFORESAID. IN THE PENALTY ORDER DATED 30.6.2011, HE HELD THAT THE ASSESSEES PLEA FOR DROPPING PENALTY IN VIEW O F ESTIMATION OF INCOME BY FOLLOWING NET ASSET METHOD HAD TO BE REJECTED SINCE THE UNDISCLOSED INCOME HAD BEEN COMPUTED IN VIEW OF NET ASSET MET HOD INSTEAD OF MERE ESTIMATION. THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEES ACT AND CONDUCT IN NOT MAINTAINING BOOKS AND STILL DECLARIN G INCOME BY FOLLOWING NET ASSETS OVER LIABILITIES METHOD WAS A WILLFUL AT TEMPT TO EVADE TAX. HE ALSO TOOK NOTICE OF THE FACT THAT THE ASSESSEE HAD NOT FILED ANY APPEAL IN QUANTUM PROCEEDINGS. REGARDING SUBMISSION OF THE ASSESSEE TO HAVE I.T.A.NOS.1975 TO 1977/12 ETC. :- 9 -: OFFERED UNDISCLOSED INCOME IN THE COURSE OF SEARC H U/S 132(4) OF THE ACT, THE ASSESSING OFFICER HELD THAT THE SAME WAS ONLY I N 131 PROCEEDINGS AND NOT IN THE COURSE OF SEARCH U/S 132(4). PER ASSESS ING OFFICER, THE ASSESSEES DISCLOSURE OF INCOME WAS ONLY IN FURTHER ANCE TO IMPUGNED SEARCH, INVESTIGATION AND NOT OTHERWISE. FINALLY , HE HELD THAT SINCE IT WAS A CASE OF SEARCH ON OR AFTER 2007 I.E ON 13.2.2009, PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT, WE RE CLEARLY ATTRACTED WHICH PRESCRIBED THAT IF THE RETURN OF INCOME OF AN Y PREVIOUS YEAR IS FILED BEFORE THE SEARCH WITHOUT DECLARING UNDISCLOSED I NCOME OR INVESTMENT, THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED I N ANY RETURN ON OR AFTER THE DATE OF SEARCH, THE CONCERNED ASSESSEE WOULD BE DEEMED TO HAVE CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, THE ASSESSING OFFICER IMPOSED MINIMUM PENALTY TO THE TUNE OF ` 2,26,230/-. 8. AGGRIEVED THE ASSESSEE PREFERRED APPEAL. IN LOWER APPELLATE PROCEEDINGS, THE CIT(A) HAS DELETED THE IMPUGNED PE NALTY BY HOLDING THAT THE NET ASSET METHOD FOLLOWED BY THE ASSESSEE I N OFFERING INCOME IN QUESTION STOOD ACCEPTED BY THE ASSESSING OFFICER. HE OBSERVES THAT THE ASSESSEE HAS BEEN FILING REGULAR RETURNS OF INCOME EVEN PRIOR TO THE SEARCH. PER CIT(A) SECTION 271(1)(C) OF THE ACT NOWHERE INSISTS ON I.T.A.NOS.1975 TO 1977/12 ETC. :- 10 -: QUANTIFICATION OF THE UNDISCLOSED INCOME. THE CIT(A )S FINDINGS READ THAT BEFORE THE ADIT(INV.), THE ASSESSEE HAD DECLARED IN COME OF ` 23.27 CRORES WHICH WAS INCREASED TO ` 29.25 CRORES AND THE SAME STOOD RETURNED AS ` 30.73 CRORES. IN VIEW THEREOF, HE HOLDS THAT THERE WERE ONLY MINOR ADJUSTMENTS IN THE INCOME DECLARED AND IN SUCH A CA SE, DISCRETION TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT HAS TO BE EXERCISED JUDICIOUSLY. FINALLY, THE CIT(A) ABSOLVES THE ASSESSEE OF HAVIN G CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME AND HOL DS HER ENTITLED FOR IMMUNITY. SO, ARGUMENTS OF THE ASSESSEE STAND A CCEPTED BY THE CIT(A) WHICH LEAVES THE REVENUE AGGRIEVED. 9. IN THIS BACKDROP OF FACTS, THE QUESTION WHICH ARIS ES FOR OUR ADJUDICATION IS AS TO WHETHER THE CIT(A) HAS RIGHTL Y DELETED THE IMPUGNED PENALTY OR NOT. WE DEEM IT APPROPRIATE TO RE-NARRATE THE FACTS IN BRIEF. ON 5.8.2003, THE ASSESSEE HAD FILED HER RETURN DISCLOSING INCOME OF ` 2,57,350/-. ON 13.2.2009, THE SEARCH WAS CONDU CTED IN CASES OF ALL OF HER FAMILY MEMBERS AND LAST PANCHNAMA WAS DRAWN ON 13.4.2009. IN OTHER WORDS, THE SEARCH STOOD CONCLUDED IN APRIL 2009. THEREAFTER, ON 29.6.2009,THE ASSESSEES HUSBAND HAD DECLARED INCOM E OF ` 29,25,48,420/- (SUPRA). IN FURTHERANCE TO SECTION 153A NOTICE DAT ED 10.3.2010, THE ASSESSEE RETURNED HER INCOME AS ` 2,44,550/- I.E LESS THAN THE AMOUNT I.T.A.NOS.1975 TO 1977/12 ETC. :- 11 -: ALREADY DISCLOSED. THEREAFTER, THE ASSESSING OFFIC ER, BY ADOPTING NET ASSET METHOD COMPUTED INCOME AS ` 9,75,544/- ALONGWITH SIMILAR INCOMES PERTAINING TO ALL RELEVANT ASSESSMENT YEARS. SINCE THE DATE OF SEARCH FALLS ON 13.2.2009, SECTION 271(1)(C) EXPLANATION 5A IS APPLICABLE WITH EFFECT FROM 1.6.2007, READS AS UNDER: EXPLANATION 5A. WHERE IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE A SSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR I N PART) HIS INCOME, FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NT 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 ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND - ( A ) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEA R HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCO ME HAS NOT BEEN DECLARED THEREIN ; OR ( B ) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE ( C ) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HA VE CONCEALED I.T.A.NOS.1975 TO 1977/12 ETC. :- 12 -: THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME. A BARE PERUSAL OF THE SAME MAKES IT CLEAR THAT IN C ASE THE UNDISCLOSED INCOME IS NOT DECLARED IN THE RETURN OF INCOME FURN ISHED ON OR AFTER THE DATE OF SEARCH, THEN NOTWITHSTANDING THE FACT THAT SAME IS DISCLOSED ON OR AFTER THE DATE OF SEARCH, IT AMOUNTS TO A DEEMED AC T OF CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF SUC H UNDISCLOSED INCOME. IN OUR VIEW, THIS SPECIFIC EXPLANATION OVERRIDES TH E GENERAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT. IF WE APPLY THE RI GOR OF THE PROVISION VIS-- VIS THE FACTS OF THE CASE, UNDISPUTEDLY, THE ASSES SEE HAD NOT DISCLOSED INCOME OF ` 9,45,544/- BEFORE THE RETURN FILED ON 5.8.2003 (SUP RA). EVEN BEFORE THE DATE OF SEARCH, THIS UNDISCLOSED IN COME HAD NOT SEEN LIGHT OF THE DAY. THE ARGUMENT OF THE ASSESSEE THAT SHE HA D DECLARED THE UNDISCLOSED INCOME IN THE COURSE OF SEARCH ON 29. 6.2009(SUPRA) DOES NOT MERIT ACCEPTANCE. THE REASON BEING THAT LAST PANCH NAMA WAS DRAWN ON 13.4.2009 I.E WELL BEFORE THE DISCLOSURE IN JUNE 20 09. THE SAID DISCLOSURE APPEARS TO BE IN SECTION 131 PROCEEDINGS ONLY. THE QUESTION AS TO WHETHER IN SUCH CIRCUMSTANCES, STATEMENT RECORDED U/S 131 AMOUNTS TO THAT RECORDED U/S 132(4) IN THE COURSE OF SEARCH OR NO T HAS BEEN DECIDED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT (SUPRA) IN FAVOUR OF THE I.T.A.NOS.1975 TO 1977/12 ETC. :- 13 -: REVENUE WHEREIN THEIR LORDSHIPS HAVE HELD THAT SUC H A STATEMENT CANNOT BE CONSTRUED TO HAVE BEEN MADE IN THE COURSE OF SE ARCH. SO, THE RELEVANT ARGUMENT OF THE ASSESSEE AND CORRESPONDING FINDIN GS OF THE CIT(A) TO THIS EFFECT ARE NOT SUSTAINABLE IN VIEW OF DEEMING FICTION INSERTED IN THE ACT BY THE LEGISLATURE. EVEN OTHERWISE, THE ASSESSEE HAD NOT DECLARED HER UNDISCLOSED INCOME AT THE FIRST INSTANCE(SUPRA). IT WAS ONLY A FTER SEARCH AND INVESTIGATION THAT INCOME OF ` 29,25,48,420/- STOOD DECLARED. IN THESE CIRCUMSTANCES, WE REFER TO THE CASE LAW OF JURISDIC TIONAL HIGH COURT AS WELL AS THAT OF HON'BLE KARNATAKA HIGH COURT(SUPRA) WHER EIN IT HAS BEEN HELD THAT IF AN INCOME IS UNEARTHED IN THE COURSE OF IN VESTIGATION OR ENQUIRY CONDUCTED IN THE COURSE OF ASSESSMENT, ACT OF AN A SSESSEE AMOUNTS TO CONCEALMENT AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME. THEREFORE, THE CORRESPONDING FINDINGS IN THE ORDER OF THE CIT(A) GO AGAINST THE SETTLED LAW U/S 271(1)(C) AS WELL AS 2 71(1)(C) EXPLANATION 5A OF THE ACT AND NOT LIABLE TO BE AFFIRMED. HENCE, T HE IMPUGNED PENALTY IMPOSED BY THE ASSESSING OFFICER STANDS REVIVED. ACCORDINGLY, REVENUES APPEAL IN I.T.A.NO. 1975/ MDS/2012 STANDS ALLOWED. I.T.A.NOS.1975 TO 1977/12 ETC. :- 14 -: SAME ORDER TO FOLLOW IN APPEALS IN I.T.A.NOS.1976 , 1977, 1984 TO 1994 AND 1998 & 1999/MDS/2012. 10. IN I.T.A.NOS.1978 TO 1983/MDS/2012,THOUGH THE FACT S ARE IDENTICAL AS IN OTHER CASES, BUT IT IS AN ADMITTED POSITION EVIDENCED FROM PENALTY ORDER THAT THE ASSESSEE SHRI S.SHANMUGAM H AD EXPIRED ON 23.1.2011 WELL BEFORE IMPOSITION OF PENALTY VIDE ORDER DATED 30.6.2011(SUPRA). IN THESE CIRCUMSTANCES, BY QUOTI NG THE CASE LAW OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF ACIT VS LATE SHRIMANT F.P.GAEKWAD [2009] 313 ITR 192, WE HOLD THAT PENALT Y U/S 271(1)(C) OF THE HAD BEEN WRONGLY IMPOSED BY THE ASSESSING OFFIC ER ON THE LEGAL HEIRS OF DECEASED ASSESSEE. ON THIS SOLE GROUND, WE DIS MISS ALL THESE APPEALS. I.T.A.NOS.2289 AND 2282/MDS/2012 11. IN THESE CASES, THE CONTENTION OF THE REVENUE IS TH AT THE CIT(A) HAS WRONGLY DELETED THE IMPUGNED PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271AAA OF THE ACT. 12. THE REVENUE ARGUES THAT THOUGH THE WARRANT OF AUTHO RIZATION OF SEARCH U/S 132 OF THE ACT IN FORM NO.45 IN BO TH CASES SPECIFICALLY PROVES THAT THEY HAD BEEN SUBJECTED TO SEARCH. STI LL, WHILE DELETING THE PENALTIES, THE CIT(A) HAS WRONGLY HELD THAT NO SEA RCH HAD BEEN I.T.A.NOS.1975 TO 1977/12 ETC. :- 15 -: CONDUCTED IN THE INSTANT CASES. ACCORDINGLY, IT PR AYS FOR ACCEPTANCE OF BOTH APPEALS. 13. THE ASSESSEE JUSTIFIES THE CIT(A)S ORDER DELETIN G IMPUGNED PENALTIES. IN VIEW OF THE FACT THAT IDENTICAL ISSUE IS INVOLV ED IN BOTH CASES I.E PENALTY U/S 271AAA OF THE ACT IN CASE OF A SE ARCH, WE TAKE UP I.T.A.NO. 2282/MDS/2012 AS THE MAIN CASE. 14. IT IS TO BE SEEN FROM THE CASE FILE THAT THE ASSES SEE SMT. S.KAVITHAA WAS ALSO SUBJECT TO THE SEARCH DATED 13.2.2009(SUPRA) ALONGWITH ALL HER FAMILY MEMBERS IN THE APPEALS DEC IDED HEREINABOVE. THEREAFTER, THE ASSESSING OFFICER FRAMED ASSESSMENT VIDE ORDER DATED 31.12.2010 BRINGING TO TAX INCOME OF ` 53,88,850/- BY FOLLOWING NET ASSET METHOD. ALONGWITH THE SAME, HE ADDED DRAWINGS OF ` 6 LAKHS. SINCE IT WAS A SEARCHCASE AND THE ASSESSEE HAD NOT MAINTAI NED BOOKS OF ACCOUNT, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271A R.W.S 271AAA OF THE ACT. THEREAFTER, HE IMPOSED PENALT Y VIDE ORDER DATED 30.6.2011 OF ` 5,88,885/- @ 10% OF THE UNDISCLOSED INCOME IN TH E RELEVANT PREVIOUS YEAR. I.T.A.NOS.1975 TO 1977/12 ETC. :- 16 -: 15. IN LOWER APPELLATE PROCEEDINGS, THE CIT(A) HOLDS TH AT THE PENALTY UNDER THE RELEVANT PROVISIONS CAN ONLY BE I NITIATED AGAINST THE PERSON SEARCHED. FURTHER, HE OBSERVES THAT IT IS NOT A CASE OF AUTOMATIC LEVY OF PENALTY. THE RELEVANT FINDINGS READ AS FOL LOWS: 6. I HAVE CONSIDERED THE FACTS OF THE CASE, THE BASIS FOR LEVY AS PER THE ASSESSING OFFICER AND THE CONTENTIONS OF T HE LEARNED AR. AT THE OUTSET, 271AAA CAN ONLY BE AGAINST THE PERSO N SEARCHED. IT IS AN AUTOMATIC LEVY OF PENALTY AT 10% OF THE UNDIS CLOSED INCOME DETERMINED. IN THIS CASE, THE SEARCH HAS NOT BEEN AGAINST THE APPELLANT. THIS APART, EVEN ON MERITS, THE APPELLA NT HAS BEEN FILING RETURNS REGULARLY, NO UNDISCLOSED INCOME WAS ARRIVE D AT ON THE BASIS OF MATERIAL SEIZED AND THE INCOMES RETURNED W ERE ON ESTIMATES WHICH HAVE ALSO BEEN ACCEPTED DURING THE COURSE OF ASSESSMENT. CONSIDERING THE FACTS AND CIRCUMSTANCE S, THE PENALTY LEVIED U/S. 271AAA IS HEREBY DIRECTED TO TH E DELETED. THEREFORE, THE REVENUE IS IN APPEAL. 16. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CAS E FILE. THE ONLY REASON GIVEN BY THE CIT(A) FOR DELETING P ENALTY IS THAT THE RELEVANT PROVISION COULD BE INVOKED ONLY IN A CASE OF THE PERSON SEARCHED. UNDISPUTEDLY, THE WARRANT OF AUTHORIZA TION PRODUCED BY THE REVENUE BEFORE US PROVES THAT THE NAME OF THE ASSES SEE WAS ALSO INCLUDED IN THE ARRAY OF SEARCHED PERSONS AND ASSESSMENTS HAVE BEEN FRAMED U/S 153A OF THE ACT. THAT BEING THE CASE, THIS FINDING OF THE CIT(A) PROVES TO BE CONTRARY TO THE RECORD AVAILABLE IN THE CASE FIL E. I.T.A.NOS.1975 TO 1977/12 ETC. :- 17 -: 17. SO FAR AS THE OTHER FINDINGS OF THE CIT(A) ON MERIT S ARE CONCERNED, THERE IS NO DISTINCTION REGARDING FACTS RECORDED IN I.T.A.NO. 1975/MDS/2012 DECIDED HEREINABOVE. IT IS AN ASSESS MENT FRAMED AFTER IMPUGNED SEARCH WHEREIN UNDISCLOSED INCOME HAS BEEN ASSESSED. BEFORE US, THE ASSESSEE HAS NOT BEEN ABLE TO DRAW ANY DISTINCTION QUA FINDINGS ARRIVED AT IN THE CONNECTED CASES RESTORIN G THE PENALTIES AGAINST THE ASSESSEES. THEREFORE, WE ACCEPT THE REVENUES GROUNDS HEREIN AS WELL. SAME ORDER TO FOLLOW IN I.T.A.NO.2289/MDS/2012. 18. TO SUMMARIZE, REVENUES APPEALS IN I.T.A.NOS.1975 T O 1977/MDS/2012, 1984 TO 1994/MDS/2012, 1998 & 1999/M DS/2012, AND 2282 & 2289/MDS/2012 ARE ALLOWED; WHEREAS I.T.A.NOS.1978 TO 1983/MDS/2012 ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 12 TH OF DECEMBER, 2013, AT CHENNAI SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 12 TH DECEMBER, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR