Bhagirath Aggarwal, New Delhi V. ACIT, New Delhi

ITA 2516/DEL/2013

• Counselvise Citation: 251620114 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MISRA
• Assessee Lawyers: SAURABH GOEL
• Keywords: Gift; Income from undisclosed sources; Search and seizure; Document seized; Principle of natural justice; Bonafide belief; Source of fund; Corroborative evidences; Retraction; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO. - 2516 /DEL/201 3 (ASSESSMENT YEAR - 2 006 - 07 ) BHAGIRATH AGGARWAL, 47/1, EAST PATEL NAGAR, NEW DELHI - 110008. P AN - AAFPA1690K (APPELLANT) VS ACIT, CIRCLE - 33(1), NEW DELHI. (RESPONDENT) APPELLANT BY SH. RAJ KUMAR GUPTA, CA & SAURABH GOEL, CA RESPONDENT BY SMT. A.MISRA, CIT DR ORDER PER DIVA SINGH, JM TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15.03 .201 3 OF THE CIT(A) - XXVI, NEW DELHI PERTAINING TO 2007 - 08 ASSESSMENT YEAR. ALTHOUGH VARIOUS GROUNDS HAVE BEEN RAISED BY THE ASSESSEE IN THE PRESENT APPEAL ASSAILING THE CORRECTNESS OF THE ORDERS ON THE GROUNDS OF VIOLATION OF NATURAL JUSTICE AND ALSO ON THE LEGAL GROUND THAT THE ACTION IS TIME BARRED, HOWEVER AT THE TIME OF ARGUMENT LD. AR CHOSE TO CONFINE HIS ARGUMENTS ONLY TO THE GROUND NO. - 3 WHICH READS AS UNDER: - 3. THE LD. CIT(A) HAS GROSS LY ERRED ON FACTS AS WELL AS IN LAW IN CONFIRMING THE PENALTY U/S271(1)(C) AMOUNTING TO RS.52,50,000/ - . 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE WAS SUBJECTED TO SEARCH U/S 132 AT ITS RESIDENTIAL PREMISES ON 10.11.2005. AS PER THE ASSESSMENT ORDER THE ASSESSEE IS STATED TO BELONGING TO KALEVA SWEETS GROUP OF CASES. HOWEVER THE RECORD SHOWS T HAT INCOME IS DERIVED FROM THE SOURCES OF INCOME FROM HOUSE 2 I.T.A .NO. - 2516 /DEL/201 3 PROPERTY AND INCOME FROM OTHER SOURCES . RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 19.03.2007 DECLARING AN INCOME OF RS.2,89,966/ - . IN VIEW OF THE FACT THAT SURRENDERED INCOME WAS NOT OFFERED IN RESPONSE TO THE NOTICE U/S 153A THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE SAME. THE RECORD SHOWS THAT IN THE COURSE OF SEARCH THE STATEMENT OF THE ASSESSEE WAS RECORDED ON OATH U/S 132(4) ON 10.11.2005/11.11.2005 WHEREIN A DISCLOSURE OF RS.1.00 CRORE AS ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION ON VARIOUS ACCOUNTS HAD BEEN MADE. THIS WAS SUBSEQUENTLY FURTHER ENHANCED BY OFFERING RS.75.00 LACS AS PER STATEMENT OF THE ASSESSEE RECORDED ON 21.11.2005. THE ASSESSEE IN RESPONSE T O THE NOTICE DURING THE ASSESSMENT PROCEEDINGS IS FOUND TO HAVE STATED THAT THE STATEMENTS WERE GIVEN UNDER MENTAL STRAIN AND DURESS IN ORDER TO BUY PEACE OF MIND/SUBJECT TO VERIFICATION OF SEIZED MATERIAL AND CASH AVAILABLE IF ANY AT THE PREMISES AS BEL ONGING TO VARIOUS FAMILY MEMBERS AND THE GROUP. IT WAS SUBMITTED THAT SINCE THE COPIES OF ACCOUNTS MADE AVAILABLE ON 22.12.2005 SHOWED THAT THERE WAS NO INCRIMINATION MATERIAL TO SUGGEST ANY UNDISCLOSED INCOME THE AMOUNT WAS NOT OFFERED. IT HAS BEEN ARG UED THAT THE AMOUNT OFFERED WAS ON THE CONDITION OF VERIFICATION OF THE DOCUMENTS AS WELL AS BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND THE FAMILY MEMBERS. THUS, IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH OR SUBSEQUENT INQUIRY, NO ADVERSE INFERENCE AGAINST THE ASSESSEE CAN BE DRAWN IN RESPECT OF THE SO CALLED VOLUNTARILY DISCLOSURE MADE AT THE TIME OF SEARCH. THE RECORD SHOWS THAT THE SAID EXPLANATION WAS NOT ACCEPTED BY THE AO DURING THE ASSESSMENT PROCEEDIN GS WHO CONSIDERING THE DETAILED REPLY OF THE ASSESSEE REJECTED THE SUBMISSIONS HOLDING THAT THE STATEMENT AND SURRENDER WAS VOLUNTARY AND THERE WAS NO FORCE, THREAT OR COERCION REPORTED BY THE ASSESSEE EVEN AFTER THE CONCLUSION OF THE SEARCH TO ANY AUTHORI TY AND EVEN THE SUBSEQUENT ENHANCEMENT WAS UNDER OATH AND MADE VOLUNTARILY. THE AO AS PER RECORD WAS FURTHER OF THE VIEW THAT THE USAGE OF WORDS IN THE SURRENDER MADE PENDING VERIFICATION OF THE SEIZED DOCUMENTS DID NOT HAVE ANY RELEVANCE. 3 I.T.A .NO. - 2516 /DEL/201 3 ACCORDINGLY THE AO PROCEEDED TO MAKE THE ADDITION OF THE SAID AMOUNT. THE AO FURTHER MADE AN ADDITION OF RS.2,50,000/ - SHOWN AS GIFTS RECEIVED FROM SH. SHIV NARAIN AGGARWAL, HUF. 2.1. THE RECORD SHOWS THAT THE ASSESSEE ASSAILED THE ADDITION IN THE QUANTUM PROCEEDIN GS BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION OF RS.1.75 CRORE TO RS.13,20,950/ - HOLDING THAT THE AO HAS NOT MADE REFERENCE TO ANY SEIZED MATERIAL FOR SUBSTANTIATING THE ADDITIONS. THE CIT(A) FURTHER DIRECTED THE AO TO TREAT THE ADDITION OF RS.2,50,000 / - AS PART OF CASH AMOUNTING TO RS.13,20,950/ - AS CASH FROM HUF FOUND DURING THE SEARCH. 2.2. THE ISSUE WAS BROUGHT IN APPEAL BEFORE THE TRIBUNAL BY THE REVENUE AND THE ITAT UPHELD THE ADDITION OF RS.1.75 CRORE MADE BY THE AO AND DIRECTED THE AO TO GRANT TELESCOPING BENEFIT OF RS.2,50,000/ - RECEIVED AS GIFTS FROM HUFS AGAINST THE SURRENDER OF RS.1.75 CRORE. 3. IT IS SEEN THAT ALTHOUGH THE AO HAD INITIATED PROCEEDINGS U/S 271(1)(C) WITH THE ISSUE OF NOTICE U/S 274 R.W.S 271 OF THE INCOME TAX ACT, 1961 HOW EVER THE PENALTY PROCEEDINGS WERE KEPT IN ABEYANCE TILL THE RECEIPT OF THE ORDER OF THE TRIBUNAL IN THE QUANTUM PROCEEDINGS. ON THE RECEIPT OF THE ORDER CONFIRMING THE ADDITION MADE IN THE ASSESSMENT PROCEEDINGS THE AO ISSUED A FRESH SHOW - CAUSE NOTICE TO THE ASSESSEE ON 16.02.2012 FIXING THE DATE OF HEARING ON 24.02.2012. IN VIEW OF THE FACT THAT THE ASSESSEE DID NOT APPEAR IN RESPONSE THERETO THE AO CONCLUDED THAT THE ASSESSEE HAS NOTHING TO SAY IN THIS REGARD. ACCORDINGLY HE HELD THAT SINCE THE ASSESSE E HAS NOTHING FURTHER TO STATE IT WAS CONCLUDED THAT THE ASSESSEE HAD CONCEALED HIS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. IN VIEW THERETO PENALTY WAS IMPOSED EQUAL TO 100% OF TAX SOUGHT TO BE EVADED. 4. AGGRIEVED BY THE ORDER THE ASSESS EE CAME IN APPEAL BEFORE THE CIT(A) WHO CONSIDERING THE ARGUMENTS ON FACTS AND LAW CONFIRMED THE ACTION OF THE AO. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4 I.T.A .NO. - 2516 /DEL/201 3 5. THE LD. AR INVITING ATTENTION TO THE MATERIAL AVAILABLE ON RECORD SUBMITTE D THAT NO DOUBT IN THE FACTS OF THE CASE SURRENDER OF RS.ONE CRORE DURING THE SEARCH WAS MADE ON OATH AND IT WAS ENHANCED BY AN AMOUNT OF RS.75 LACS. REFERRING TO THE ENGLISH TRANSLATED VERSION REPRODUCED IN INTERNAL PAGE NO. - 10 & 11 (PAPER BOOK PAGE 47 T O 48) IT WAS SUBMITTED THAT THE ASSESSEE HAS REPEATEDLY MADE REFERENCE TO THE FACT THAT SURRENDER IS BEING MADE FOR DOCUMENTS SHOWING JEWELLERY, CASH ETC FOUND DURING THE SEARCH THESE STATEMENTS ARE DATED 10/11 NOVEMBER 2005 AND 21 ST NOV. 2005. ADMITTEDL Y THE SEIZED MATERIAL IT WAS SUBMITTED WAS PROVIDED IN THE LAST WEEK OF DECEMBER 2005 ACCORDINGLY WHEN IT WAS CONSIDERED IT SHOWED THAT THE SURRENDER WAS MADE ON MISTAKEN FACTS AND WAS NOT WARRANTED. THIS EXPLANATION IT WAS SUBMITTED HAS BEEN CONSISTENTL Y OFFERED BY THE ASSESSEE AND THE BOANFIDES CANNOT BE ASSAILED AS NO INCRIMINATING MATERIAL TILL DATE HAS BEEN REFERRED TO BY THE REVENUE. THE FACT THAT THE CIT(A) DELETED THE ADDITION IN THE QUANTUM PROCEEDINGS IT WAS SUBMITTED SHOWS THAT AN AUTHORITY S UPERIOR TO THE AO IN HIERARCHY ON FACTS WAS CONVINCED WITH THE CORRECTNESS OF THE ASSESSEE S CLAIM. THE ISSUE ACCORDINGLY IT WAS SUBMITTED CANNOT BE SAID TO BE FREE FROM DEBATE EVEN IF SUBSEQUENTLY THE ISSUE WAS DECIDED AGAINST THE ASSESSEE. IT WAS SUBM ITTED THAT THE PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINCT AND LEVY OF PENALTY IT WAS SUBMITTED IS A SETTLED POSITION IS NOT AUTOMATIC. IT WAS HIS SUBMISSION THAT THE RECORD SHOWS THAT THE ASSESSEE BONAFIDE MADE A SURRENDER WHE N HE WAS LED TO BELIEVE THAT THERE ARE INCRIMINATING MATERIALS AGAINST HIM, THE ASSESSEE ALSO BONAFIDE ENHANCES THE SURRENDER HOWEVER WHEN THE SEIZED MATERIAL WHICH IS PROVIDED TO HIM SHOWS THAT THERE WAS NO INCRIMINATING MATERIAL THE OCCASION TO OFFER THE SAME TO TAX DOES NOT ARISE. THIS BONAFIDE BELIEF OF THE ASSESSEE CANNOT BE FAULTED WITH ESPECIALLY SINCE NO INCRIMINATING MATERIAL HAS BEEN REFERRED TO BY THE REVENUE TILL DATE. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: - 5 I.T.A .NO. - 2516 /DEL/201 3 1. CIT VS ASHOK TAKER 170 TAXMAN 471 (DEL.); 2. CIT VS GANESH TRADING CO. (ITA NO.10/99) (JHARKHAND HIGH COURT ORDER DTD.20.09.2012) [45. TAXMAN.COM 209]; 3. SEASONS CATERING (P.) LTD. VS DCIT ITA NO.788/DEL/2012 (DELHI ITAT ORDER DTD. 31.12.2013); 4. ACIT VS ASHOK KUMAR JAIN ITA NO.830/JP/2011 ORDER DATED 18.12.2012; 5. CHETAN DASS LACHMAN DASS 214 ITR 726 (DEL.) 6. VIJAY POWER GENERATORS LTD. 180 TAXMAN 102 (DEL.) (MAG.) 7. CIT VS ASHOK TAKER 170 TAXMAN 471 (DEL.) 8. CIT VS GANESH TRADING CO. (ITA NO.10/990 (JHARKHAND HIGH COURT ORDER DATED 20.09.2012) [45.TAXMAN.COM.209] 9. SEASONS CATERING (P.) LTD. VS DCIT ITA NO. - 788/DEL/2012 (DELHI ITAT ORDER DATED 31.12.2013) 10. ACIT VS ASHOK KUMAR JAIN ITA NO.830/JP/2011 ORDER DATED 18.10.2012 11. CIT VS AGARWAL PIPE CO. 240 ITR 880 (DEL .) 12. CIT VS NAVNITLAL POCHALAL 213 ITR 69 (GUJ.) 13. CIT VS SURESH CHAND BANSAL 22 DTR (CAL.) 14. SHABBIR ALLAUDDIN LATTIWALA VS DCIT 138 TTJ (RAJKOT) 104 15. ACIT VS PREM CHAND GARG 123 TTJ (DEL.) (TM) 433 16. SH. P.V.RAMANA REDDY VS ITO - ITA NO. - 1857/HYD/2011 ORDER DTD. 06.01.2012 17. CIT VS DEVSONS LOGISTICS (P.) LTD. 329 ITR 483 (DEL.) 18. CIT VS PRADEEP AGENCIES JOINT VENTURE 349 ITR 477 (DEL.) 19. H.M.A. UDYOG P. LTD. 211 CTR (DEL.) 543 20. DCIT VS SHIVALIK GLOBAL LTD. (2012) 49 SOT 145 (D EL.) (URO) 21. MAYOR OVERSEAS VS ACIT 920090 24 DTR (DEL.) (TRIB) 269 22. CIT VS LOTUS TRANS TRAVELS P. LTD. 177 TAXMAN 37 (DEL.) 5.1. SPECIFIC ATTENTION WAS INVITED TO DILIP N SHROFF VS JT.CIT 291 ITR 519 (SC) IN PARA 54 AND HOLLAND TRACTORS INDIA (P.) L TD VS CIT (ITA NO. - 182/2002) IN PARA 26. 6. THE LD. CIT DR, SMT. A.MISRA HEAVILY RELYING UPON THE QUANTUM ORDER PASSED BY THE ITAT AND THE HON BLE HIGH COURT WHEREIN THE RELIEF GRANTED BY THE CIT(A) WAS REVERSED AND THE FINDING OF THE ITAT WAS UPHELD SUBMI TTED THAT ON FACTS THE IMPUGNED ORDER DESERVES TO BE UPHELD. RELIANCE WAS PLACED UPON THE JUDGEMENT OF THE HON BLE SUPREME HIGH COURT IN THE CASE OF MAK DATA PVT. LTD. VS CIT IN CIVIL APPEAL NO.9772 OF 2013 ARISING OUT OF SLP (CIVIL) NO. - 18389 OF 2013 AND DREW SPECIFIC ATTENTION TO PARA 7 TO 9 OF THE SAID DECISION SO AS TO SUBMIT THAT THE EXPLANATIONS OFFERED TO AVOID LITIGATION, TO BUY PEACE ETC ARE NOT THE TYPES OF DEFENCES RECOGNIZED BY THE STATUTE. ACCORDINGLY IT WAS SUBMITTED THE LAW DOES 6 I.T.A .NO. - 2516 /DEL/201 3 NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME HE HAD TO BE ABSOLVED FROM PENALTY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE FACTS ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED HAVE ALREADY BEEN REFERRED TO IN THE PENALTY ORDER AND THE ORDER UNDER CHALLENGE HOWEVER FOR THE SAKE OF COMPLETENESS, WE DEEM IT APPROPRIATE TO EXTRACT THE RELEVANT ENGLISH TRANSLATION FROM THE ORDER OF THE TRIBUNAL IN THE QUANTUM PROCEEDINGS FRO M INTERNAL PAGES 10 & 11 OF THE ORDER (AT PAGES 47 & 48 OF THE PAPER BOOK): - EXTRACT OF STATEMENT RECORDED ON 10/11/2005 S.13. DO YOU WANT TO SAY ANYTHING ELSE ANS: - I, BHATIRATH, S/O - SHRI SHIV NARAIN HEREBY DECLARE ADDITIONAL INCOME OF RS.1 CRORE FOR CURRENT FINANCIAL YEAR 05 - 06 ON ACCOUNT OF DOCUMENTS, JEWELLERY, CASH PROPERTY FOUND DURING ACTION U/S 132 FOR BUYING PEACE OF MIND AND TO AVOID LITIGATION. I REQUEST THE INCOME - TAX DEPARTMENT THAT NO PENALTY PROCEEDINGS BE INITIATED AG AINST ME. EXTRACT OF STATEMENT RECORDED ON 21.11.2005 Q.4. DO YOU WANT TO SAY ANYTHING ELSE. ANS: - YES, MY STATEMENT WAS RECORDED UNDER SEC. 132(4) OF THE INCOME TAX ACT, 1961 ON 11.11.2005 WHEREIN I HAD VOLUNTARILY DECLARED A SUM OF RS.1 CRORE AS MY ADDITIONAL INCOME. THIS VOLUNTARILY DISCLOSURE WAS GIVEN FOR PEACE OF MIND AND TO AVOID LITIGATION AND ON ACCOUNT OF ALL SEIZED DOCUMENTS, JEWELLERY, CASH AND PROPERTY WHICH ALL FAMILY MEMBERS, FAMILY FIRMS AND COMPANIES HAVE ACQUIRED AT DIFFERENT TIMES. I VOLUNTARILY, KEEPING IN CONSIDERATION OR ISSUES, INCREASE THE TOTAL AMOUNT OF DISCLOSURE OF ADDITIONA L INCOME TO RS.1.75 CRORES ON BEHALF OF ALL FAMILY MEMBERS, FAMILY FIRMS AND COMPANY. I REQUEST YOU THAT NO PENAL MEASURES LIKE PENALTY AND PROSECUTION BE INITIATED AGAINST MYSELF AND MY FAMILY MEMBERS, FAMILY CONCERNS, COMPANY IN LIEU OF THIS VOLUNTARY DI SCLOSURE OF ADDITIONAL INCOME. I PROMISE THAT AFTER RECEIVING ALL THE SEIZED DOCUMENTS FROM INCOME TAX DEPARTMENT I WILL PROVIDE BREAK UP OF THIS VOLUNTARY DISCLOSURE OF RS.1.75 CRORE IN VARIOUS HANDS. I ALSO PROMISE TO PAY THE DUE TAX AS SOON AS POSSIBL E. 7.1. IT IS SEEN FROM THE RECORD THAT THE PENALTY HAS BEEN IMPOSED BY THE AO HOLDING THAT THE ASSESSEE HAD NOTHING TO SAY AS IN RESPONSE TO NOTICE ISSUED ON 16.02.2005 FIXING THE DATE OF HEARING ON 29.02.2012 NO ONE APPEARED ON BEHALF OF 7 I.T.A .NO. - 2516 /DEL/201 3 THE ASSESSEE. THE AO APART FROM THIS 8 DAYS TIME GIVEN PASSED THE ORDER ON 27.02.2012 HOLDING THAT THE ASSESSEE WAS LIABLE FOR CONCEALMENT AND FOR FILING INCORRECT PARTICULARS. BEFORE THE CIT(A) IT IS SEEN THAT ASSESSEE S WRITTEN SUBMISSIONS ARE FOUND EXTRACTED IN PA GES 3 TO 7 OF HIS ORDER HOWEVER VIDE PARA 7 TO 7.4 HE CONFIRMED THE IMPOSITION OF PENALTY. A PERUSAL OF THE SAID PARAS SHOWS THAT WHILE IN PARA 7 HE DISMISSED THE ASSESSEE S GROUND POSING CHALLENGE TO THE ACTION OF THE AO AS BEING BEYOND LIMITATION. TH IS FINDING IS NOT ASSAILED IN THE PRESENT PROCEEDINGS BEFORE US. VIDE PARA 7.1 THE CIT(A) AFTER EXTRACTING THE FINDING OF THE ITAT IN THE QUANTUM PROCEEDINGS UPHOLDS THE PENALTY ORDER OBSERVING AS UNDER: - 7.2. IN THIS CASE, I FIND THAT SUBSEQUENT TO TH E SEARCH AND SEIZURE OPERATION AGAINST THE APPELLANT AND HIS STATEMENTS RECORDED U/S 132(4) THE APPELLANT HAD MADE A DISCLOSURE OF RS. 1 CRORE WHICH WAS ALTER ON ENHANCED TO RS.1.75 CRORES, THE APPELLANT WHILE RESPONDING TO THE NOTICE IS ISSUED U/S 153A RE TRACTED AND FILE HIS RETURNS SHOWING AN INCOME OF RS.2,89,966/ - WITHOUT THE DISCLOSURE OF RS.1.75 CRORES U/S 132(4) OF THE INCOME TAX ACT, 1961. THE APPELLANT HAD MADE THIS UN - SUCCESSFUL ATTEMPT AND THE ASSESSMENT WAS COMPLETED AT A HIGHER FIGURE INCLUDI NG THE AMOUNT OF DISCLOSURE OF RS.1.75 CRORES MADE U/S 132(4) OF THE INCOME TAX ACT, 1961, WHICH WAS CONFIRMED BY THE HON BLE ITAT. 7.3. FROM THE FACTS OF THE CASE, IT IS CLEAR THAT ADDITIONAL INCOME OFFERED BY THE APPELLANT U/S 132(4) OF THE INCOME TAX A CT, 1961 WAS ONLY AFTER THE DEPARTMENT COLLECTED EVIDENCE AND ALMOST DETERMINED THE MAGNITUDE OF EVASION. THE INCOME ADDITIONALLY OFFERED WAS, THEREFORE, RIGHTLY TREATED BY THE ASSESSING OFFICER AS CONCEALED INCOME IN RESPECT OF WHICH PENALTY WAS LEVIED B Y THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. ALTHOUGH, THE APPELLANT HAD MADE AN ATTEMPT TO RETRACT FROM THE DISCLOSURE MADE U/S 132(4), BUT THE ASSESSING OFFICER HAD SUCCESSFULLY MADE OUT A CASE OF CONCEALMENT OF INCOME IN RESPECT O F WHICH PENALTY U/S 271(1)(C) WAS LEVIABLE. THE ASSESSING OFFICER ON FACTS AND CIRCUMSTANCES OF THE INSTANT CASE HAD CLEARLY PROVED THAT THE DEPARTMENT HAD DETECTED THE CONCEALMENT OF INCOME TO THE TUNE OF RS.1.75 CRORES FOR WHICH HE HAD NO EXPLANATION TO OFFER. 7.2. CONSIDERING THE FACT THAT IN THE ASSESSMENT PROCEEDINGS THE AIM AND FOCUS IS ON ASSESSMENT OF INCOME I.E. QUANTIFICATION AND COMPUTATION OF THE INCOME OF THE ASSESSEE IN A SPECIFIC YEAR IT IS WELL - SETTLED THAT PENALTY IS LEVIED NOT BECAUS E ADDITION HAS BEEN MADE IN THE CASE OF THE ASSESSEE BUT IS LEVIED BECAUSE THERE IS 8 I.T.A .NO. - 2516 /DEL/201 3 CONCEALMENT OR FILING OF INACCURATE PARTICULARS INCOME. BEFORE WE DWELL ON THE REQUIREMENTS UNDER LAW WE FIRST SET OUT THE RELEVANT PROVISION UNDER CONSIDERATION : - 271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CONCEALMENT OF INCOME, ETC. -- (1) IF THE ASSESSING OFFICER OR THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (APPEALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON XXXXXXXXXXX (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, XXXXXXXXXXXXXX EXPLANATION 1. -- WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, -- ( A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (APPEALS) TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOM E OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB - SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 7. 3 . A PERUSAL OF THE ABOVE MANDATES THAT PENALTY CAN BE IMPOSED AS PER CLAUSE (A) TO EXPLANATION 1 TO SECTION 271(1)(C) IF AN ASSESSEE FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER TO BE FALSE. IT IS SEEN THAT CLAUSE (B) TO EXPLANATION 1 PROVIDES THAT WHERE THE ASSESSEE OFFER S AN EXPLANATION IT IS REQUIRED TO BE SUBSTANTIATED AND THE SAME HAS TO BE BONAFIDE. HOWEVER INCASE THE EXPLANATION REMAINS UNSUBSTANTIATED AND IT IS NOT BONAFIDE PENALTY CAN BE IMPOSED. EXPLANATION 1 IS AN IMPORTANT ADJUNCT AND SUPPLEMENT TO SECTION 271 (1)(C) OF THE ACT. IT NOT ONLY ENACTS AND GIVES DEEMING EFFECT WHEN AN 9 I.T.A .NO. - 2516 /DEL/201 3 ADDITION OR DISALLOWANCE IS MADE IN THE ASSESSMENT/QUANTUM PROCEEDINGS, BUT ALSO CARVES OUT AN EXCEPTION IN CLAUSE (B) AS TO WHEN PENALTY SHOULD NOT BE LEVIED. ONUS UNDER CLAUSE (B) TO EXPLANATION 1 IS ON THE ASSESSEE. 7.4. IN THE FACTS OF THE PRESENT CASE IT IS SEEN THAT THE EXPLANATION IS OFFERED. IT IS WELL SETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT . I T IS EQUALLY WELL SETTLED THAT EVEN IF THE EXPLANATION OFFERED IN THE ASSESSMENT PROCEEDINGS HAS NOT BEEN ACCEPTED THE FACT REMAINS THAT IN THE PENALTY PROCEEDINGS IT HAS TO BE CONSIDERED INDEPENDENTLY KEEPING THE REQUIREMENTS OF THE STATUTE IN MIND . FOR THE SAID PUR POSE WE HAVE ALREADY EXTRACTED FROM THE TRIBUNAL S ORDER THE ENGLISH TRANSLATION OF THE RELEVANT STATEMENT S OF THE ASSESSEE. BEFORE WE PROCEED TO ADDRESS THAT IT IS ALSO CONSIDERED NECESSARY TO TAKE INTO CONSIDERATION CERTAIN OTHER RELEVANT FACTS. 7.5. FOR THE SAID PURPOSE WE FIRST TAKE INTO CONSIDERATION THE CIT(A) S ORDER IN THE QUANTUM PROCEEDINGS. IT IS SEEN THAT THE ADDITIONS WERE LARGELY DELETED AND WAS SUSTAINED ONLY TO THE EXTENT OF RS.13 LACS ODD. A PERUSAL OF THE CIT S ORDER DATED 10.03.2008 T O CIT - 2, NEW DELHI AVAILABLE AT PAGES 25 TO 37 OF THE PAPER BOOK FILED AT SPECIFIC PAGE 31 TO 33 DEMONSTRATES THAT THE FOLLOWING FINDING ON FACTS H AS BEEN ARRIVED BY THE ASSESSEE: - THE DETAILED SUBMISSIONS OF THE APPELLANT WERE CONSIDERED ALONG WITH FACT S ARID CIRCUMSTANCES OF THE CASE. NO DOUBT THE STATEMENT MADE IN THE COURSE OF SEARCH PROCEEDINGS CARRIES SUFFICIENT WEIGHT TO FORM UN OPINION TO ASSESS INCOME OF SUCH PERSON, HOWEVER SUCH STATEMENT SHOULD BE BACKED BY SOME MATERIAL AND EVIDENCES. THE CON TENTS OF SUCH STATEMENT ALONE CANNOT BE BASE FOR ADDITIONS. THOSE CONTENTS HAVE NECESSARILY TO BE CORROBORATED WITH SOME RECORD OF DOCUMENTS, VALUABLES ETC. IF ANY ASSESSMENT IS MADE PURELY ON THE BASIS OF STATEMENT WITHOUT BACKING OF ANY RECORD DOES NOT STAND. IN THE INSTANT CASE THE APPELLANT HAS GIVEN A STATEMENT ON THE DATE OF SEARCH DISCLOSING ADDITIONAL INCOME. THIS SURRENDER IS VERY GENERAL IN NATURE. IT DOES NOT SPECIFY ANY DOCUMENT OR ASSETS FOR SURRENDERING SUCH HUGE SUM AS ADDITIONAL INCOME. NO DOCUMENT OR BOOK WAS REFERRED INDICATING UNACCOUNTED INCOME OF APPELLANT. SUCH SURRENDER WAS NOT CORROBORATED BY ANY INDEPENDENT EVIDENCES OR INCRIMINATING PAPERS. FURTHER THE SURRENDER IS IN RESPECT OF ALL FAMILY MEMBERS, THEIR FIRMS AND COMPANIES BUT NOT CONFINED TO ASSESSEE ALONE. THE ADDITIONAL INCOME HAS TO BE ASSESSEE WISE AND YEAR WISE. OVERALL STATEMENT COVERING ALL FAMILY 10 I.T.A .NO. - 2516 /DEL/201 3 RELATES AND FOR ALL YEARS CANNOT BE BASED FOR ONLY ONE ASSESSEE AND FOR ONE YEAR. SUCH ADDITION MADE BASING ON SUCH G ENERAL NATURE OF ADMISSION WITHOUT ANY SPECIFIC ITEMS CANNOT STAND BEFORE LAW. IT HAS TO BE LINKED TO SPECIFIC ITEMS OF DISCREPANCIES NOTICED EITHER IN SEARCH OR IN THE ASSESSMENT PROCEEDINGS. WHEN COMES TO SPECIFICS IT IS CLEAR THAT THE AO HAS NOT BROUGHT ANY DOCUMENT ON RECORD TO SUGGEST UNACCOUNTED INCOME NOR DISCUSSED ANYTHING TO THAT EXTENT TO CONCLUDE THAT THERE IS EXISTENCE OF UNACCOUNTED INCOME OF THE ASSESSEE. SIMILARLY NO PROPERTY HA S BEEN SPECIFIED AS ACQUIRED BY ASSESSEE BUT NOT DISCLOSED IN THE - BOOKS OF ACCOUNTS OR IN THE RETURNS. IN FACT, AS ADMITTED BY ASSESSEE, THERE IS NO PROPERTY ACQUIRED BY ANY OF THE FAMILY MEMBERS, DURING THE PERIOD UNDER REFERENCE . HENCE INVESTMENT IN PROPERTIES CANNOT FORM PART OF BASIS FOR COMPUTING UNACCOUNTED INCOME OF THE ASSESSEE DURING THE YEAR UNDER REFERENCE. THE AO HAS ALREADY SUBJECTED INVESTMENTS IN PROPERTIES SEPARATELY IN INDIVIDUAL CASES ASSESSMENT YEAR WISE. HENC E SUCH INVESTMENT AGAIN CANNOT BE TAKEN INTO ACCOUNT IN APPELLANT S HANDS THIS YEAR. THAT LEAVE JEWELLERY AND CASH ITEMS FOUND DURING SEARCH. 7.6. I T IS FURTHER NECESSARY TO CONSIDER THE CONDUCT OF THE ASSESSEE AND WHETHER EXPLANATION OFFERED IN THE PEN ALTY PROCEEDINGS IS BONAFIDE ACCEPTABLE OR NOT FOR THE SAID PURPOSE IT IS NECESSARY TO CONSIDER THE EXPLANATION OFFERED BEFORE THE ITAT IN THE QUANTUM PROCEEDINGS. A PERUSAL OF THE ORDER OF THE TRIBUNAL DATED 06.05.2011 IN ITA NO. - 1790/DEL/2008 ALONGW ITH ITA NO. - 2118/DEL/2008 COPY OF WHICH IS PLACED AT PAGES 38 - 55 OF THE PAPER BOOK WOULD SHOW THAT THE ASSESSEE HAD OFFERED THE FOLLOWING EXPLANATION BEFORE THE ITAT IN THE QUANTUM PROCEEDINGS: - 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO AD DITION ON THE BASIS OF ALLEGED DISCLOSURE STATEMENT MADE UNDER SEC. 132(4) OF THE ACT CAN BE MADE. HE POINTED OUT THAT IT IS NOT ASCERTAINABLE WHETHER AUTHORIZED OFFICER HAD SIGNED THE STATEMENT AT THE END, THE STATEMENT DOES NOT INDICATE THE NAMES AND DES IGNATION OF THE OFFICER WHO RECORDED THE STATEMENT. WHEN ASSESSEE MADE THE STATEMENT HE WAS NOT HAVING OLD INCOME - TAX RETURNS, RELEVANT DETAILS, DOCUMENTS AND BOOKS OF ACCOUNTS. THE ASSESSEE IS AN OLD ILLITERATE HALWAI AND DOES NOT UNDERSTAND THE INTRICACI ES OF THE TAX MATTERS. THE STATEMENT DOES NOT BEAR THE SIGNATURES OF THE WITNESSES. ON THE STRENGTH OF HON'BLE GUJARAT HIGH COURT S DECISION IN THE CASE OF KAILASH BEN MANHARLAL CHOKSHI VS. CIT REPORTED IN 328 ITR 411, HE CONTENDED THAT THE STATEMENTS RECO RDED AT THE ODD HOURS CANNOT BE CONSIDERED AS VOLUNTARY STATEMENTS UNDER SEC. 132(4) OF THE ACT. HE FURTHER CONTENDED THAT NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT ONLY WITHOUT ANY CORROBORATIVE MATERIAL. FOR BUTTRESSING HIS CONTENTIONS, HE RELIED UPON THE FOLLOWING DECISIONS: 11 I.T.A .NO. - 2516 /DEL/201 3 SL. NO. CASE LAW 1. GYAN CHAND JAIN VS. ITO 73 TTJ (JD) 859 2. ACIT VS. MRS. SUSHILA DEVI S. AGGARWAL, 49 TTJ (AHD.) 663 3. ACIT VS. ANOOP KUMAR, 94 TTJ (ASR) 288 4. ACIT VS. JORAWAR SINGH M. RATHOD 94 TTJ (AHD) 867 5. S. CHANDRESH KUMAR MAHESHWARI VS. ACIT, IT(S.S)A. NO. 18/JP/1997 (JPR) 6. AMAR SINGH VS. ITO, (1995), 53 TTJ 692 (DEL.) 7. AMAR NATWARLAL VS. ACIT, 60 ITD 560 (AHD.) 9. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER DREW OUR ATTENTION TOWARDS THE CBDT INSTRUCTIONS BEARING NO.286/2/2003 - IT - (INV) ISSUED ON 10.3.2003. IN THESE INSTRUCTIONS, CBDT HAS APPRAISED ITS OFFICERS THAT INSTANCES WERE REPORTED TO THE CBDT ALLEGING THAT ASSESSEES HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEE WHILE FILING RETURN OF INCOME. IN THESE CIRCUMSTANCES, CONFESSION TAKEN DURING THE COURSE OF SEARCH AND SURVEYS DO NOT SERVE ANY USEFUL PURPOSE, THEREFORE, OFFICERS SHOULD FOCUS ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO AN INFORMATION ETC. INSTEAD OF TAKING THE CONFESSIONAL STATEMENTS. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THIS CIRCULAR A ND SUBMITTED THAT CONFESSION WITHOUT ANY SUPPORTING EVIDENCE CANNOT BE MADE THE BASIS FOR ANY ADDITION. 10. WITH REGARD TO THE CASH FOUND, HE SUBMITTED THAT CASH BELONGS TO THE BUSINESS CONCERN. LEARNED CIT(APPEALS) HAS REJECTED THE CONTENTION OF ASSESSEE ON THE GROUND THAT BUSINESS CASH CANNOT BE FOUND AT THE RESIDENCE. THE BUSINESS CONCERNS ARE OWNED BY THE FAMILY MEMBERS. THE SEARCH WARRANT WAS ISSUED FOR THE RESIDENCE IN THE NAME OF INDIVIDUALS AS WELL AS THREE BUSINESS CONCERNS. THEREFORE, POSSIBILITY OF CASH BELONGING TO THE BUSINESS CONCERN, AVAILABLE AT THE RESIDENCE CANNOT BE RULED OUT. THE CASH FOUND AT THE RESIDENCE WAS NOT MORE THAN RECORDED IN THE BOOKS OF BUSINESS CONCERNS. NO ADDITION OUGHT TO HAVE BEEN CONFIRMED BY THE LEARNED CIT(APPEALS). SIMILARLY, HE POINTED OUT THAT JEWELLERY NOT FOUND IN THE POSSESSION OF EACH INDIVIDUALS OUGHT TO HAVE NOT BEEN CONSIDERED AS SOLD. THE JEWELLERY IN THE BOOKS OF ACCOUNT WAS MORE THAN THE ONE FOUND AT THE TIME OF SEARCH. (EMPHASIS PROVIDED IN THE PRESENT PROCEEDINGS) 7.7. IT IS A MATTER OF RECORD THAT TILL DATE NO EVIDENCE OR MATERIAL HAS BEEN PLACED BY THE REVENUE BEFORE US TO SUPPORT ITS CASE THAT THERE WAS SOME INCRIMINATING MATERIAL FOUND DURING THE SEARCH. ON THE OTHER HAND THERE IS A FINDING OF FACT RECORDED BY THE CIT(A) IN THE QUANTUM PROCEEDINGS THAT NO PROPERTY WAS PURCHASED IN THE RELEVANT PERIOD BY ANY FAMILY MEMBER AND THE JEWELLERY FOUND 12 I.T.A .NO. - 2516 /DEL/201 3 WAS LESS THAN WHAT WAS DISCLOSED OVER THE YEARS. THE CASH FOUND AT THE RESIDENTIAL PREMISES WAS STATED TO BE FROM THE BUS INESS OF THE ASSESSEE GROUP AND EXPLAINABLE FROM THE RECORDED BOOKS OF ACCOUNTS. HOWEVER FOR THE PURPOSES OF THE QUANTUM PROCEEDINGS THESE EXPLANATIONS WERE NOT ACCEPTED IN VIEW OF THE FACT THAT IT WAS CONCLUDED THAT THE ASSESSEE HAS FAILED TO REPORT ANY STRESS DURING OR AFTER THE SEARCH ; THE SURRENDER THUS COULD NOT BE RETRACTED ; AND MOREOVER BECAUSE OF THE SURRENDER HAVING BEEN MADE THE ASSESSEE REFRAINED THE REVENUE FROM MAKING FURTHER ENQUIRIES ; AND THE ASSESSEE HAS BEEN FAULTED FOR NOT HAVING PRODUCE D ANY MATERIAL TO SHOW THAT THE SURRENDER MADE BY HIM ON THE BASIS OF SEIZED MATERIAL ON FACTS WAS NOT WARRANTED. ON A CONSIDERATION OF THE IMPUGNED ORDER WE FIND THAT PENALTY HAS BEEN CONFIRMED SOLELY ON THE FACT THAT THE ADDITION STOOD CONFIRMED NO IN DEPENDENT REASONING ON FACTS OR EVIDENCES HA S B EEN ADDRESSED SO AS TO CONSIDER ON WHAT GROUNDS THE EXPLANATION OFFERED ON FACTS IN THE PENALTY PROCEEDINGS WAS NOT BONAFIDE OR ACCEPTABLE. THOUGH THE ISSUE IS P URELY FACTUAL AND REQUIRES NO CASE LAW AS WHETH ER THE EXPLANATION ON FACTS IS BONAFIDE AND CAN BE ACCEPTED IT HAS TO BE DECIDED ON THE FACTS OF A CASE. HOWEVER , WE DEEM IT APPROPRIATE TO REFER TO THE JUDGEMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HOLLAND TRACTORS ON WHICH HEAVY RELI ANCE HAS BEEN PLACED BY THE ASSESSEE AS THEIR LORDSHIPS IN PARA 30 AND 31 , W HILE TAKING NOTE OF THE FACT THAT DESPITE THE STRONG OBSERVATIONS AND THE ADJECTIVE USED BY THEM WHILE WRITING THE QUANTUM APPEAL WHERE SUCH STRONG WORDS LIKE ERRONEOUS, FALLACIO US AND UNTENABLE WITH REFERENCE TO VARIOUS CONTENTIONS AND SUBMISSIONS MADE BY THE ASSESSEE IN THE QUANTUM APPEAL HAS BEEN USED THEY HELD THAT THEY WOULD NOT BE CONTRADICTING THEMSELVES WHEN THEY WOULD HOLD ON FACTS THAT THE CONDUCT OF THE ASSESSEE WAS BO NAFIDE. A PERUSAL OF THE ABOVE JUDGEMENT SHOWS THAT VIDE PARAS 30 ONWARDS, THE HON BLE HIGH COURT CONSIDERING THE FACTS OF THE ASSESSEE ON THAT CASE HAVE PROCEEDED TO EXAMINE THE EXPLANATION OF THE ASSESSEE IN TERMS OF CLAUSE (B) 13 I.T.A .NO. - 2516 /DEL/201 3 OF EXPLANATION - 1 SO AS TO CONSIDER WHETHER THE EXPLANATION OFFERED WAS BONAFIDE OR NOT. 7.8. RELEVANT EXTRACTS ADDRESSING THE SETTLED LEGAL POSITION ARE REPRODUCED HEREUNDER WHEREIN PARA 26 WAS SPECIFICALLY RELIED UPON BY THE LD. AR.: - 25. WE HAVE HAD THE ADVANTAGE OF PENNING THE JUDGMENT IN THE APPEAL PREFERRED IN RELATION TO THE QUANTUM PROCEEDINGS AND HAVE HELD THAT THE ASSESSEE WAS WRONG IN NOT OFFERING THE WHOLE OR ENTIRE AMOUNT OF THE TECHNICAL FEE FOR TAX IN THE YEAR OF RECEIPT. BUT, IT DOES NOT FOLLOW THAT PENALTY FOR C ONCEALMENT MUST BE IMPOSED AS THE QUANTUM APPEAL IS DECIDED AGAINST THE ASSESSEE. THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE CONSIDERED AS CONCLUSIVE AND FINAL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS PER OP INION EXPRESSED BY THE SUPREME COURT IN COMMISSIONER OF INCOME TAX, WEST BENGAL I, AND ANR. VS. ANWAR ALI [1970] 76 ITR 696 (SC) SUCH FINDINGS MAY CONSTITUTE GOOD EVIDENCE IN THE PENALTY PROCEEDINGS BUT IT DOES NOT FOLLOW THAT PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) IS MANDATORY WHENEVER AN ADDITION OR DISALLOWANCE IS MADE. THE LANGUAGE OF SECTION 271(1)(C) HAS UNDERGONE SUBSTANTIAL CHANGES SINCE THE PRONOUNCEMENT OF THE AFOREMENTIONED JUDGMENT, BUT THE SAID LEGAL POSITION, STILL HOLD GOOD. IN ASSES SMENT PROCEEDINGS, WE ARE PRIMARILY CONCERNED WITH THE ASSESSMENT OF INCOME I.E. QUANTIFICATION AND COMPUTATION OF TOTAL INCOME AS PER THE PROVISIONS OF THE ACT, WHEREAS IN PENALTY PROCEEDINGS WE ARE PRIMARILY CONCERNED WITH THE CONDUCT OF THE ASSESSEE. PE NALTY IS IMPOSED NOT BECAUSE ADDITION IS MADE BUT BECAUSE THERE IS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. THIS IS APPARENT FROM LANGUAGE OF SECTION 271(1)(C) AND EXPLANATION 1 WHICH ARE REPRODUCED BELOW: - 271. FAILURE TO FURN ISH RETURNS, COMPLY WITH NOTICES, CONCEALMENT OF INCOME, ETC. -- (1) IF THE ASSESSING OFFICER OR THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (APPEALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON XXXXXXXXXXX (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, XXXXXXXXXXXXXX EXPLANATION 1. -- WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, -- (A) SUCH PERSON FA ILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (APPEALS) TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND F AILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, 14 I.T.A .NO. - 2516 /DEL/201 3 THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON A S A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB - SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 26. THE WORD CONCEAL INHERENTLY AND PER - SE REFERS TO AN ELEMENT OF MENS REA, ALBEIT THE EXPRESSION FURNISHING OF INACCURATE PARTICULARS IS MUCH WIDER IN SCOPE. THE WORD CONCEAL IMPLIES INTENTION TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF. IT AMOUNTS TO SUPPRESSION OF TRUTH OR A FACTUM SO AS TO CAUSE INJURY TO THE OTHER . (SEE CIT VS. A. SUBRAMANIA PILLAI [1997] 226 ITR 403 (MAD). THE WORD 'CONCEAL' MEANS TO HIDE OR TO KEEP SECRET. AS HELD IN LAW LEXICON, THE SAID WORD IS DERIVED FROM THE LATIN WORD 'CONCELARE' WHICH IMPLIES 'CON' & 'CELARE' TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OB SERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVENT DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF. THE WORD 'INACCURATE' IN WEBSTER'S DICTIONARY HAS BEEN DEFINED AS 'NOT ACCURATE; NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS INACCURATE STATEMENT, CO PY OR TRANSCRIPT'. THE WORD 'PARTICULAR' MEANS DETAIL OR DETAILS OF A CLAIM OR SEPARATE ITEMS OF AN ACCOUNT [SEE COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158(SC)]. THUS THE WORDS FURNISHED INACCURATE PARTICULARS IS B ROADER AND WOULD REFER TO INACCURACY WHICH WOULD CAUSE UNDER - DECLARATION OR ESCAPEMENT OF INCOME. IT MAY REFER TO PARTICULARS WHICH SHOULD HAVE BEEN FURNISHED OR WERE REQUIRED TO BE FURNISHED OR RECORDED IN THE BOOKS OF ACCOUNTS ETC. [SEE CIT VS. RAJ TRADI NG CO. (1996) 217 ITR 208 (RAJ.)] INACCURACY OR WRONG FURNISHING OF INCOME WOULD BE COVERED BY THE SAID EXPRESSION, THOUGH THERE ARE DECISIONS THAT ADHOC ADDITION PER SE WITHOUT OTHER OR CORROBORATING CIRCUMSTANCES MAY NOT REFLECT FURNISHED INACCURATE PAR TICULARS . LASTLY, AT TIMES AND IT IS FAIRLY COMMON, THE CHARGE OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS MAY OVERLAP. 7.9. IN THE FACTS OF THE PRESENT CASE IT STANDS FULLY ADDRESSED THAT THE ASSESSEE HAS OFFERED AN EXPLANATION CONSISTENTLY IN TERMS OF CLAUSE (A) OF EXPLANATION - 1 TO SECTION 271(1)(C) AND CONSIDERING THE OVERALL CONDUCT OF THE ASSESSEE AS IS DISCERNABLE FORM TH E RECORD, WE ARE OF THE VIEW THAT THE BONAFIDES CONTEMPLATE D IN CLAUSE B OF THE SAID EXPLANATION CANNOT BE DOUB T ED AS I N THE FACTS OF THE PRESENT CASE THE OCCASION TO CONCEAL AND FILING OF INACCURATE PARTICULARS DOES NOT ARISE AS THE ASSESSEE WHO IS DESCRIBED AS AN ILLITERATE OLD HALWAI WHO ADMITTEDLY OFFERED TO SURRENDER INCOME FOR TAX WHICH WAS RETRACTED ON THE GROUNDS THAT OFFER WAS MADE ON THE BELIEF THAT INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH WHERE ADMITTEDLY THE SEIZ ED DOCUMENTS WHEN MADE AVAILABLE SHOWED THAT NOTHING 15 I.T.A .NO. - 2516 /DEL/201 3 INCRIMINATING WAS FOUND. WHERE ADMITTEDLY THE JEWELLERY FOUND WAS LESS THAN THE DISCLOSED JEWELLERY AND IN THE SAID PERIOD NO PROPERTY EITHER BY THE ASSESSEE OR THE FAMILY HAD BEEN PURCHASED AND CASH FO UND WAS CLAIMED CONSISTENTLY BELONGING TO THE VARIOUS FIRMS AND EXPLAINABLE FROM THAT RECORDED BOOKS OF ACCOUNTS AND N ONE OF THESE FINDINGS AND CLAIMS HAVE BEEN SHOWN TO BE INCORRECT. THE ADDITION IN THE QUANTUM HAS BEEN SUSTAINED ON THE REASONING THAT NO THREAT OR STRESS WAS REPORTED BY THE ASSESSEE DURING OR AFTER THE SEARCH ; RETRACTION WAS NOT ALLOWED ; SURRENDER REFRAINED THE REVENUE FROM ACTING FURTHER AND NO EVIDENCE WAS LED BY THE ASSESSEE TO SHOW THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE S EARCH . THE SAID REASONING IN THE QUANTUM PROCEEDINGS DOES NOT LEAD TO THE CONCLUSION THAT EITHER THERE WAS ANY CONCEALMENT OR FILING OF INACCURATE PARTICULARS. THE ARGUMENT TAKEN BEFORE THE ITAT IN THE QUANTUM PROCEEDINGS THAT THE ASSESSEE IS AN OLD ILLI TERATE HALWAI NOT UNDERSTANDING THE INTRICACIES OF THE TAX MATTER WHO EVIDENTLY DID NOT READILY HAVE OLD INCOME TAX RETURNS AND DOCUMENTS ETC. AVAILABLE TO HIM AND WHO DID NOT UNDERSTAND THE INTRICACIES OF TAX LAWS CANNOT BE DISREGARDED AND THE PLEA THAT H E WAS LED TO FORM THE BELIEF THAT THE RE WERE INCRIMINATING MATERIAL AVAILABLE AGAINST HIM ALSO CANNOT BE OUTRIGHTLY DISREGARDED. THE BONAFIDE PLEA OF THE ASSESSEE THAT SUCH A BELIEF COULD HAVE BEEN FORMED BY AN ILLITERATE HALWAI IS NOT BEYOND THE REALMS O F REALITY AS THE INTRICACIES OF FINANCE AND FINANCIAL MATTERS CAN CONFUSE THE EXPERTS ALSO AS IS EVIDENT FROM THE JUDGEMENT OF THE APEX COURT IN THE CASE OF PRICE WATER COOPER PVT. LTD. VS. CIT [2012] 348 ITR 306 (SC). 8. ACCORDINGLY IN VIEW OF THE ABOVE REASONING ON FACTS AND LAW INCLUDING THE DECISION RELIED UPON BY THE ASSESSEE AND THE REVENUE WHICH HAVE BEEN CONSIDERED EVEN THOUGH NOT SPECIFICALLY REFERRED TO, W E SET ASIDE THE IMPUGNED ORDER AND QUASH THE PENALTY HOLDING THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS A BONAFIDE EXPLANATION ON FACTS WHICH DESERVES TO BE ACCEPTED. 9. I N THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH OF JANUARY 201 5 . 16 I.T.A .NO. - 2516 /DEL/201 3 SD/ - SD/ - ( T.S.KAPOOR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09 / 0 1 /2015 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI