A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ./ I.T.A. NOS. 232 TO 237/ MUM/2012 ( / ASSESSMENT YEARS: 2002-03, 2003-04, 2004-05, 2005-06, 2006-07 & 2007-08 ASSTT. COMMISSIONER OF INCOME TAX CC 22 & 30, ROOM NO. 403, AAYAKAR BHAVAN, MUMBAI -20. / VS. M/S ASHAPURA MINECHEM LTD., JEEVAN UDYOG BLDG., 3 RD FLOOR, 278 D.N. ROAD, FORT, MUMBAI 400 001. ./ PAN : AAACA 0957F ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SMT. S. PADMAJA R E SPONDENT BY : SHRI HARISH N. MOTI WALA / DATE OF HEARING : 17-6-2014 / DATE OF PRONOUNCEMENT : 30-07-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THESE SIX APPEALS ARE PREFERRED BY THE REVENUE AGAI NST SIX SEPERATE ORDERS OF LD. CIT(A) - 39, MUMBAI ALL DATED 4-10-20 11 WHEREBY HE CANCELLED THE FOLLOWING PENALTIES IMPOSED BY THE A.O. U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961:- A.Y. AMOUNT (RS.) 2002-03 7,50,000/- 2003-04 11,50,000/- 2004-05 14,50,000/- 2005-06 29,50,000/- 2006-07 31,00,000/- 2007-08 34,00,000/- ITA 232 TO 237/M/12 2 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE AS FOLLOWS. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MINING AND EXPORT OF MINERAL PRODUCTS. IT BELONGS TO ASHAPURA MINECHEM GROUP. A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CONDUCTED ON 20-2-2008 IN THE CASES BELONGING TO AS HAPURA MINECHEM GROUP INCLUDING THE CASE OF THE ASSESSEE. DURING THE COUR SE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND BESIDES OTHER AS SETS, GOLD, VALUABLES ETC. IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT, TO TAL UNDISCLOSED INCOME OF RS. 20 CRORES WAS OFFERED IN ALL THE GROUP CASES AS A WHOLE. SUBSEQUENTLY, THE YEAR-WISE DETAILS OF THE INCOME SO OFFERED IN THE G ROUP CASES WERE FURNISHED BY THE ASSESSEE. AS PER THE SAID DETAILS, UNDISCLOS ED INCOME OF RS. 6 CRORES WAS OFFERED IN THE CASE OF THE ASSESSEE WHICH COMPR ISED OF THE FOLLOWING AMOUNTS OFFERED BY THE ASSESSEE DURING YEARS UNDER CONSIDERATION:- A.Y. ADDITIONAL INCOME ON ACCOUNT OF ADHOC DISALLOWANCE OUT OF VARIOUS BUSINESS EXPENSES CLAIMED ADDITIONAL INCOME ON ACCOUNT OF COVER UP OF ANY ERRORS OR OMISSION. 2002-03 15 LACS 5 LACS 2003-04 25 LACS 5 LACS 2004-05 35 LACS 5 LACS 2005-06 70 LACS 10 LACS 2006-07 80 LACS 10 LACS 2007-08 85 LACS 15 LACS ACCORDINGLY, IN THE ASSESSMENTS COMPLETED U/S 143( 3) R.W.S. 153A OF THE ACT, ADDITIONS, INTER ALIA, WERE MADE BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE FOR ALL THE YEARS UNDER CONSIDERATION ON A CCOUNT OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE TOWARDS ADHOC DISALL OWANCES OUT OF VARIOUS BUSINESS EXPENDITURE CLAIMED AND ADDITIONAL INCOME OFFERED BY THE ASSESSEE TO COVER UP ANY ERRORS OR OMISSIONS. PROCEEDINGS WE RE ALSO INITIATED BY HIM TO IMPOSE PENALTIES U/S 271(1)(C) OF THE ACT IN RESPEC T OF THE SAID ADDITIONS. ITA 232 TO 237/M/12 3 3. DURING THE COURSE OF PENALTY PROCEEDINGS, THE F OLLOWING EXPLANATION WAS OFFERED BY THE ASSESSEE IN RESPONSE TO THE SHOW CAU SE NOTICES ISSUED BY THE A.O.: A. THERE WAS ACTUALLY NO DISALLOWANCE OF BUSINESS EXPENDITURE AND THE ASSESSEE COULD SUBSTANTIATE ALL EXPENSES INCURR ED. THE AMOUNT OFFERED WAS NOT INTENDED TO BE CAPITALIZED. B. ADHOC AMOUNT OFFERED FOR TAXES ON ACCOUNT OF LIK ELY ERRORS AND OMISSIONS WAS TO BUY PEACE AND AVOID LITIGATION. TH ERE WERE NO ERRORS OR OMISSIONS IN CLAIMING THE EXPENDITURE AS THE ASSESSEE COULD ESTABLISH THE CORRECTNESS AND GENUINENESS OF THE EXPENDITURE. C. THE DISCLOSURE OF RS. 30 LAKHS WAS SPECIFICALLY TO BUY PEACE AND AVOID LITIGATION. D. DECLARATION IN STATEMENT UNDER SECTION 132(4) OF THE ACT CANNOT BE THE BASIS TO CONCLUDE THAT THERE IS A CONCEALMEN T OF INCOME. C. DECLARATION WAS INDUCED BY PROMISE THAT NO PENAL CONSEQUENCES WILL FOLLOW. F. RELIANCE WAS PLACED ON INSTRUCTIONS BY CBDT REGA RDING CONFESSIONAL DECLARATIONS. G. FILING OF REVISED RETURN DOES NOT PROVE THAT TH ERE IS CONCEALMENT OF INCOME. H. THERE IS NO MENS REA AND THERE IS NO CONCEALMENT OF INCOME AS PER EXPLANATION ITO SECTION 271(1)(C) OF THE ACT. I. THERE WAS NO INTENTION TO EVADE THE PAYMENT OF TAX AND CONSEQUENTLY THERE IS NO CONCEALMENT AS CONTEMPLATE D UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED O N THE FOLLOWING: I. HINDUSTAN STEEL LTD V STATE OF ORISSA 83 ITR 26( SC) II. PUNE BENCH OF HONBLE ITAT IN THE CASE OF KANBA Y SOFTWARE INDIA PVT LTD. III. DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. J. THE SCOPE OF EXPLANATION 5A TO SECTION 271(1)(C) IS TO ENSURE THAT REVISED RETURN CANNOT BE THE BASIS FOR DEFENSE THAT INCOME HAS BEEN OFFERED. THE SAME CANNOT BE EXTENDED TO LEVY PENALT Y MERELY ON THE BASIS OF REVISED RETURN FILED POST SEARCH. THE INCO ME OFFERED WAS TO BUY ITA 232 TO 237/M/12 4 PEACE OF MIND AND IT DOESNT REPRESENT INCOME OF TH E ASSESSEE. EXPLANATION 5A IS APPLICABLE ONLY IF INCOME IS REPR ESENTED BY SOME VALUABLE FOUND DURING SEARCH. 4. THE ABOVE EXPLANATION OF THE ASSESSEE WAS NOT F OUND ACCEPTABLE BY THE A.O. ACCORDING TO HIM, THE ADDITIONAL INCOME ON ACC OUNT OF ERRORS/OMISSIONS AND ADHOC DISALLOWANCES OF BUSINESS EXPENDITURE WAS OFFERED BY THE ASSESSEE ON THE BASIS OF SEIZED MATERIAL AND THE CASE OF THE ASSESSEE WAS SQUARELY COVERED BY CLAUSE (II) OF EXPLANATION 5A TO SECTION 271(1) OF THE ACT. HE HELD THAT THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE WAS BASED ON DOCUMENTS AND TRANSACTIONS FOUND DURING THE COURSE OF SEARCH WHICH REPRESENTED THE INCOME OF THE ASSESSEE FOR THE YEARS UNDER CONSIDER ATION FOR WHICH RETURNS HAD BEEN FILED BUT SUCH INCOME WAS NOT DECLARED THE REIN. HE HELD THAT THE CASE OF THE ASSESSEE THUS WAS GOVERNED BY THE DEEMI NG FICTION OF EXPLANATION- 5A TO SECTION 271(1) OF THE ACT AND THE ASSESSEE WA S DEEMED TO HAVE CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISHE D IN-ACCURATE PARTICULARS OF SUCH INCOME ATTRACTING THE PROVISIONS OF SECTION 27 1(1)(C) OF THE ACT. ACCORDINGLY, PENALTIES U/S 271(1)(C) OF THE ACT WER E IMPOSED BY THE A.O. IN RESPECT OF ADDITIONAL INCOME OFFERED BY THE ASSESSE E ON ACCOUNT OF ADHOC DISALLOWANCES OUT OF BUSINESS EXPENDITURE AS WELL A S ADDITIONAL INCOME OFFERED TO COVER UP ANY ERRORS OR OMISSIONS. 5. THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT FOR ALL THE YEARS UNDER CONSIDERATION WERE CHALLENGED BY THE AS SESSEE IN THE APPEALS FILED BEFORE THE LD. CIT(A). DURING THE COURSE OF P ROCEEDINGS BEFORE THE LD. CIT(A), ELABORATE SUBMISSIONS WERE MADE ON BEHALF O F THE ASSESSEE IN SUPPORT OF ITS CASE THAT THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT FOR ALL THE YEARS UNDER CONSIDERATION WERE NOT SUSTAINA BLE. THESE SUBMISSIONS MADE BY THE ASSESSEE WERE DISCUSSED IN DETAIL BY TH E LD. CIT(A) IN HIS IMPUGNED ORDERS IN THE LIGHT OF VARIOUS JUDICIAL PR ONOUNCEMENTS CITED BY THE ASSESSEE. AS ONE OF THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) WAS THAT THERE WAS NO SEIZED MATERIAL AVAILA BLE TO INDICATE ANY ITA 232 TO 237/M/12 5 UNDISCLOSED INCOME IN REGARD TO WHICH ADDITIONAL IN COME WAS OFFERED DURING THE YEARS UNDER CONSIDERATION, THE A.O. WAS DIRECTE D BY THE LD. CIT(A) TO VERIFY THIS CONTENTION FROM THE RELEVANT SEIZED MATERIAL A ND OFFER HIS COMMENTS. THE A.O. WAS CLEARLY APPRISED BY THE LD. CIT(A) OF THE STAND TAKEN BY THE ASSESSEE THAT SINCE THE CORRESPONDING ADDITIONS MADE ON ACCO UNT OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE WERE NOT BASED ON ANY SEIZE D MATERIAL, THE DISCLOSURE OF ADDITIONAL INCOME WAS VOLUNTARY AND NO PENALTIES U/S 271(1)(C) OF THE ACT COULD BE IMPOSED IN RESPECT OF SUCH ADDITIONAL INCO ME VOLUNTARILY OFFERED BY THE ASSESSEE. THE A.O. WAS ALSO DIRECTED BY THE LD. CIT(A) TO SUBMIT HIS REMAND REPORT BY 25 TH JULY, 2011. AS NOTED BY THE LD. CIT(A) IN HIS IMP UGNED ORDERS, THE A.O., HOWEVER, DID NOT SUBMIT ANY REMAN D REPORT EVEN UP TO THE DATE OF PASSING OF THE IMPUGNED ORDERS I.E 4-10-201 1. THE LD. CIT(A), THEREFORE, PROCEEDED TO DISPOSE OF THE MATTERS ON T HE BASIS OF MATERIAL AVAILABLE ON RECORD AND FOUND THAT THE ADDITIONAL I NCOME ON ACCOUNT OF ADHOC DISALLOWANCES OF VARIOUS EXPENSES AS WELL AS ON ACC OUNT OF ERRORS AND OMISSIONS, IN RESPECT OF WHICH PENALTIES U/S 271(1) (C) OF THE ACT WERE IMPOSED BY THE A.O., WAS ACTUALLY OFFERED BY THE ASSESSEE T O HONOUR THE DECLARATION OF TOTAL UNDISCLOSED INCOME OF RS. 20 CRORES IN THE EN TIRE GROUP MADE THE STATEMENTS RECORDED U/S 132(4) OF THE ACT. HE NOTED THAT PART OF THE DISCLOSURE SO MADE WAS FOR UNACCOUNTED ASSETS AND U NACCOUNTED INCOME REFLECTED IN THE SEIZED DOCUMENTS. HE FOUND THAT T HE ADDITIONAL INCOME OFFERED BY THE ASSESSEE ON ACCOUNT OF ADHOC DISALLO WANCES OF VARIOUS EXPENSES AND TO COVER UP THE ERRORS OR OMISSIONS, H OWEVER, WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THE SAME WAS ALSO NOT REPRESENTED BY ANY ASSETS FOUND DURING THE COURSE OF SEARCH. HE NOTED THAT NOTHING WAS ALSO BROUGHT ON RECORD BY TH E A.O. EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR EVEN DURING THE COURSE OF PENALTY AND REMAND PROCEEDINGS TO SHOW THAT THERE IS ANY SEIZED MATERIAL TO SUBSTANTIATE THE INCOME DISCLOSED BY THE ASSESSEE ON ACCOUNT OF ADHOC DISALLOWANCES OF VARIOUS EXPENSES AND ERRORS AND OMISSION. HE HELD T HAT THE ADDITIONAL INCOME ITA 232 TO 237/M/12 6 DECLARED BY THE ASSESSEE DURING THE YEARS UNDER CON SIDERATION THUS DID NOT REPRESENT ANY UNDISCLOSED ASSETS NOR THE SAME WAS R EFLECTED THROUGH ANY ENTRY IN THE SEIZED MATERIAL. HE THEREFORE FOUND M ERIT IN THE STAND OF THE ASSESSEE THAT THIS ADDITIONAL INCOME WAS DECLARED O NLY TO KEEP THE COMMITMENT OF DISCLOSURE OF RS. 20 CRORES IN THE EN TIRE GROUP AS A WHOLE AND TO AVOID ANY LITIGATION. HE HELD THAT THE EXPLANATI ON OFFERED BY THE ASSESSE WITH REGARD TO THE ADDITIONAL INCOME OFFERED THUS W AS BONAFIDE AND GENUINE AND IT WAS NOT A FIT CASE TO IMPOSE PENALTY AS PER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT AS IN THE ABSENCE OF ANY SEIZE D MATERIAL TO SUBSTANTIATE THE UNDISCLOSED INCOME OFFERED BY THE ASSESSEE, THE ASSESSEE COULD NOT BE SAID TO HAVE CONCEALED PARTICULARS OF ITS INCOME OR FURNISHED IN-ACCURATE PARTICULARS OF SUCH INCOME. HE ALSO HELD THAT THE A SSESSEE HAVING ALREADY FILED THE RETURNS OF INCOME FOR ALL THE YEARS UNDER CONSIDERATION PRIOR TO THE DATE OF SEARCH, EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WAS NOT APPLICABLE IN ITS CASE FOR ALL THE SIX YEARS UNDER CONSIDERATION. HE THEREFORE CANCELLED THE PENALTIES IMPOSED BY THE A.O. AGGRIE VED BY THE ORDERS OF THE LD. CIT(A), THE REVENUE HAS PREFERRED THESE APPEALS BEF ORE THE TRIBUNAL. 6. THE LD. D.R. SUBMITTED THAT THE IMPUGNED PENALT IES U/S 271(1)(C) OF THE ACT WERE IMPOSED BY THE A.O. IN RESPECT OF ADDITION AL INCOME OFFERED BY THE ASSESSEE AS A RESULT OF SEARCH ON ACCOUNT OF DISALL OWANCE OF CERTAIN EXPENSES AND ALSO TO COVER UP ANY ERRORS AND OMISSIONS. HE S UBMITTED THAT THIS ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE IN TH E STATEMENTS RECORDED DURING THE COURSE OF SEARCH WHICH BY ITSELF SHOWS T HAT THE SAME WAS BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HE CONTENDED THAT THE DISCLOSURE THUS WAS MADE BY THE ASSESSEE O N PERUSAL OF THE RELEVANT SEIZED DOCUMENTS AND THIS FACT ALONE IS SUFFICIENT TO SHOW THAT THE DISCLOSURE OF ADDITIONAL INCOME BY THE ASSESSEE WAS BASED ON T HE MATERIAL FOUND DURING THE COURSE OF SEARCH. HE CONTENDED THAT THE RELEVA NT ENTRIES AND TRANSACTIONS FOUND RECORDED IN THE SEIZED MATERIAL THUS REPRESEN TED THE ADDITIONAL INCOME ITA 232 TO 237/M/12 7 OF THE ASSESSEE OFFERED IN THE STATEMENTS RECORDED U/S 132(4) OF THE ACT WHICH CLEARLY ATTRACTED PENALTIES U/S 271(1)(C) R.W.S. EX PLANATION 5A THERETO AS RIGHTLY HELD BY THE A.O. HE THEREFORE STRONGLY SUPP ORTED THE PENALTY ORDERS PASSED BY THE A.O. AND ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P.) LTD. VS. CIT [2013] 35 8 ITR 593 (SC) IN SUPPORT OF THE REVENUES CASE. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MA K DATA (P.) LTD. (SUPRA) RELIED UPON BY THE LD. D.R. IS NOT APPLICABLE IN TH E PRESENT CASE AS EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT WAS A PPLIED IN THE SAID CASE BY THE HONBLE SUPREME COURT WHEREAS THE SAID EXPLANAT ION IS NOT EVEN INVOKED IN THE CASE OF THE ASSESSEE. HE ALSO CONTENDED THA T THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN RESPECT OF WHICH THE IMP UGNED PENALTIES WERE IMPOSED BY THE A.O. WAS NOT BASED ON ANY INCRIMINAT ING MATERIAL FOUND DURING THE COURSE OF SEARCH AND THIS POSITION WAS N OT REFUTED OR CONTROVERTED BY THE A.O. WHEN THE SAME WAS CONFRONTED BY THE LD. CIT(A) TO HIM SEEKING HIS COMMENTS. HE CONTENDED THAT THE SAID ADDITIONA L INCOME WAS OFFERED BY THE ASSESSEE VOLUNTARILY TO BUY PEACE OF MIND AND T O FULFILL ITS COMMITMENT OF THE TOTAL DISCLOSURE OF RS. 20 CRORES MADE IN THE G ROUP CASES AND SUCH VOLUNTARY DISCLOSURE MADE BY THE ASSESSEE CANNOT BE EQUATED WITH CONCEALMENT OF PARTICULARS OF ITS INCOME BY THE ASS ESSEE OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME ATTRACTING PE NAL PROVISION OF SECTION 271(1)(C) OF THE ACT AS RIGHTLY HELD BY THE LD. CIT (A). HE THEREFORE STRONGLY SUPPORTED THE IMPUGNED ORDERS OF THE LD. CIT(A) CAN CELING THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT AND UR GED THAT THE SAME MAY BE UPHELD. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT T HE PENALTIES IN QUESTION WERE IMPOSED BY THE A.O. IN RESPECT OF ADDITIONAL INCOME DECLARED BY THE ASSESSEE ITA 232 TO 237/M/12 8 ON ACCOUNT OF ADHOC DISALLOWANCES OF CERTAIN EXPEND ITURE AND ANY OTHER ERRORS OR OMISSION BY INVOKING EXPLANATION 5A TO SE CTION 271(1)(C) OF THE ACT. THE SAID EXPLANATION 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 ASSESSE E IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO A S ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PR EVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS O F ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACT IONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY P REVIOUS 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 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 SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C ) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED TH E PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF S UCH INCOME. 9. IT IS WORTHWHILE TO NOTE IN THIS CONTEXT THAT I N THE STATEMENTS RECORDED U/S 132(4) OF THE ACT AS A RESULT OF SEARCH, TOTAL ADDITIONAL INCOME OF RS. 20 CRORES WAS OFFERED IN THE CASE OF ENTIRE GROUP AS A WHOLE. AS PER THE DETAILS SUBSEQUENTLY FURNISHED BY THE ASSESSEE, THE VALUE O F MONEY, JEWELLERY AND OTHER ASSETS AS WELL AS INCOME REFLECTED IN THE ENT RIES OR TRANSACTIONS FOUND RECORDED IN THE RELEVANT SEIZED DOCUMENTS, HOWEVER, WAS LESS THAN RS. 20 CRORES. IN ORDER TO FULFILL ITS COMMITMENT MADE IN THE STATEMENTS AND TO AVOID ANY LITIGATION, THE ASSESSEE DECLARED THE BALANCE A DDITIONAL INCOME ON ACCOUNT OF ADHOC DISALLOWANCES OF CERTAIN EXPENDITU RE AND ANY OTHER ERRORS OR OMISSION. IN THE ASSESSMENTS COMPLETED U/S 143(3) R.W.S. 153 A OF THE ACT ITA 232 TO 237/M/12 9 FOR ALL THE YEARS UNDER CONSIDERATION, THE A.O. ACC EPTED THIS DECLARATION OF ADDITIONAL INCOME MADE BY THE ASSESSEE. HE, HOWEVE R, IMPOSED PENALTY IN RESPECT OF THE SAID ADDITIONAL INCOME BY INVOKING E XPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AND WHILE CHALLENGING THE APPL ICATION OF THE SAID EXPLANATION, IT WAS CONTENDED ON BEHALF OF THE ASSE SSEE BEFORE THE LD. CIT(A) THAT THE SAID ADDITIONAL INCOME DID NOT REPRESENT A NY MONEY, JEWELLERY OR OTHER ASSETS FOUND TO BE OWNED BY THE ASSESSEE IN T HE COURSE OF THE SEARCH OR ANY INCOME BASED ON ANY ENTRY OR TRANSACTION FOUND RECORDED IN THE SEIZED DOCUMENTS. WHEN THIS SUBMISSION MADE BY THE ASSESS EE WAS FORWARDED BY THE LD. CIT(A) TO THE A.O. SEEKING HIS COMMENTS, TH E A.O. DID NOT OFFER ANY COMMENTS POINTING OUT THAT THE ADDITIONAL INCOME IN QUESTION DECLARED BY THE ASSESSEE WAS ON ACCOUNT OF ANY MONEY, JEWELLERY OR ASSETS FOUND TO BE OWNED BY THE ASSESSEE IN THE COURSE OF SEARCH OR REPRESEN TED ANY ENTRY OR TRANSACTION FOUND RECORDED IN THE SEIZED MATERIAL. THE LD. CIT(A) THEREFORE HELD THAT EXPLANATION 5A TO SECTION 271(1)(C) OF TH E ACT WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AFTER HAVING FOUND THAT TH E ADDITIONAL INCOME DECLARED BY THE ASSESSEE WAS NOT ON ACCOUNT OF ANY MONEY, JEWELLERY OR OTHER ASSETS FOUND DURING THE COURSE OF SEARCH OR ANY INC OME BASED ON ANY ENTRY OR TRANSACTION FOUND RECORDED IN THE SEIZED DOCUMENTS. HE ALSO FOUND THAT THE ADDITIONAL INCOME WAS DECLARED BY THE ASSESSEE ON A CCOUNT OF ADHOC DISALLOWANCES OF CERTAIN EXPENDITURE AND ANY ERRORS OR OMISSION IN ORDER TO FULFILL THE COMMITMENT OF TOTAL ADDITIONAL INCOME O F RS. 20 CRORES OFFERED IN THE STATEMENTS U/S 132(4) OF THE ACT IN GROUP AS A WHOLE AND TO AVOID ANY LITIGATION. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS NOT BEEN ABLE TO REBUT OR CONTROVERT THESE FINDINGS RECORDED BY THE LD. CIT(A) AND THIS BEING SO AND KEEPING IN VIEW ALL THE FACTS OF THE CASE, WE F ULLY AGREE WITH THE CONCLUSION DRAWN BY THE LD. CIT(A) THAT EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT APPLICABLE IN THE CASE OF THE ASSESS EE. ITA 232 TO 237/M/12 10 10. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P .) LTD. (SUPRA) IN SUPPORT OF THE REVENUES CASE. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE PENALTY IN THE SAID CASE, HOWEVER, WA S IMPOSED BY INVOKING EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT WHERE AS THE PENALTIES IN THE PRESENT CASE WERE IMPOSED BY THE A.O. BY INVOKING E XPLANATION 5A TO SECTION 271(1)(C) OF THE ACT WHICH IS APPLICABLE ENTIRELY I N THE DIFFERENT SITUATION. MOREOVER, THE ADDITIONAL INCOME IN THE SAID CASE WA S OFFERED BY THE ASSESSEE ON THE BASIS OF CERTAIN INCRIMINATING DOCUMENTS FOU ND DURING THE COURSE OF SURVEY CARRIED OUT U/S 133A OF THE ACT IN THE CASE OF SISTER CONCERN AND THIS ADDITIONAL INCOME WAS OFFERED ONLY DURING THE COURS E OF ASSESSMENT PROCEEDINGS BY THE ASSESSEE DESPITE THE FACT THAT T HE SURVEY WAS CARRIED OUT MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS R ETURN OF INCOME. IN THESE FACTS AND CIRCUMSTANCES, THE SURRENDER OF ADDITIONA L INCOME BY THE ASSESSEE WAS HELD TO BE NOT VOLUNTARY BY THE HONBLE APEX CO URT AND SINCE THE INTENTION OF THE ASSESSEE WAS FOUND TO BE NOT TO DE CLARE ITS TRUE INCOME IN THE RETURN FILED AFTER THE SURVEY, PENALTY IMPOSED U/S 271(1)(C) READ WITH EXPLANATION 1 THERETO WAS CONFIRMED BY THE HONBLE SUPREME COURT. THE ISSUE INVOLVED IN THE CASE OF MAK DATA (P.) LTD. (S UPRA) AS WELL AS THE MATERIAL FACTS INVOLVED THUS WERE ENTIRELY DIFFERENT FROM TH E FACTS OF THE PRESENT CASE AND THE RATIO OF THE DECISION RENDERED BY THE HONB LE SUPREME COURT IN THAT CASE, IN OUR OPINION, CANNOT BE APPLIED IN THE PRES ENT CASE. 11. AS ALREADY NOTED, THE TOTAL DISCLOSURE OF RS. 20 CRORES MADE IN THE CASE OF A GROUP AS A WHOLE IN THE STATEMENTS RECORDED U/ S 132(4) OF THE ACT AS A RESULT OF SEARCH WAS NOT FULLY REPRESENTED BY ANY M ONEY, VALUABLES AND OTHER ASSETS FOUND DURING THE COURSE OF SEARCH OR ANY ENT RY OR TRANSACTION FOUND RECORDED IN THE SEIZED DOCUMENTS. HOWEVER, IN ORDER TO KEEP THE COMMITMENT OF THE TOTAL DISCLOSURE OF RS. 20 CRORES MADE IN TH E ENTIRE GROUP AS A WHOLE, THE BALANCE AMOUNT WAS OFFERED AS ADDITIONAL INCOME ON ACCOUNT OF ADHOC ITA 232 TO 237/M/12 11 DISALLOWANCES OF CERTAIN EXPENDITURE AND ANY OTHER ERRORS OR OMISSION. THE BASIS FOR DECLARING SUCH ADDITIONAL INCOME THUS WAS DULY EXPLAINED BY THE ASSESSEE AND AFTER HAVING CONSIDERED ALL THE FACTS OF THE CASE AS WELL AS THE MATERIAL FOUND DURING THE COURSE OF SURVEY, THE EXP LANATION OF THE ASSESSEE WAS FOUND TO BE BONAFIDE AND GENUINE BY THE LD. CIT (A). MOREOVER, THE EXPLANATION OFFERED BY THE ASSESSEE IN REGARD TO TH E ADDITIONAL INCOME WAS NOT FOUND TO BE FALSE BY THE A.O. EITHER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS OR THE PENALTY PROCEEDINGS AND EVEN NO ADVERSE COMMENT WAS OFFERED BY THE A.O. BY SUBMITTING THE REMAND REPORT DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) WHEN OP PORTUNITY WAS SPECIFICALLY AFFORDED BY THE LD. CIT(A) IN THIS REGARD. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS ALSO NOT BEEN ABLE TO SHOW THAT THE EX PLANATION OFFERED BY THE ASSESSEE IN RESPECT OF ADDITIONAL INCOME WAS FALSE. WE THEREFORE AGREE WITH THE LD. CIT(A) THAT THE PENALTIES IMPOSED BY THE A. O. IN THE PRESENT CASE ARE NOT SUSTAINABLE EVEN AS PER THE MAIN PROVISIONS OF SECTION 271(1)(C) OF THE ACT. AS SUCH CONSIDERING ALL THE FACTS OF THE CASE, WE F IND NO INFIRMITY IN THE IMPUGNED ORDERS OF THE LD. CIT(A) CANCELLING THE PE NALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT FOR ALL THE YEARS UNDER CO NSIDERATION AND UPHOLDING THE SAME, WE DISMISS THESE APPEALS FILED BY THE REV ENUE. `12. IN THE RESULT, APPEALS OF THE REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2014 . ( ) * 30-7-2014 SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) (- JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; * DATED 301712014 [ ITA 232 TO 237/M/12 12 \ .-../ RK , SR. PS ! '$% &% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 7 () / THE CIT(A)CONCERNED, MUMBAI. 4. 7 / CIT CONCERNED, MUMBAI 5. : --< , < , / DR, ITAT, MUMBAI A BENCH 6. ? / GUARD FILE. / BY ORDER, : - //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI