Sh. Chetan Jain, Ludhiana V. DCIT, Ludhiana

ITA 256/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7549 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 24-07-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 08-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Retrospective amendment; Initiation of penalty proceedings; Reasonable cause
• Section: 153A; 27; 132; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.256/CHD/2017 (ASSESSMENT YEAR : 2010-11) SH.CHETAN JAIN, VS. THE D.C.I.T., B-121, PUSHAP VIHAR, CENTRAL CIRCLE-III, CANAL ROAD, LUDHIANA. LUDHIANA. PAN: AAYPJ0618H (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SMT.CHANDERKANTA, ADDL. CIT DATE OF HEARING : 24.04.2018 DATE OF PRONOUNCEMENT : 04.07.2018 ORDER PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 5, LUDHIANA (HEREINAFTER REFERRED TO AS CIT(APPEALS )) DATED 25.11.2016 RELATING TO ASSESSMENT YEAR 2010-11,CHAL LENGING THE CONFIRMATION OF LEVY OF PENALTY U/S 271(1) OF THE INCOME TAX ACT,1961. 2. THE FACTS OF THE CASE ARE THAT RETURN FOR THE IMPUGNED YEAR WAS FILED BY THE ASSESSEE ON 11.12.2010 DECLAR ING INCOME OF RS.11,75,959/-. THEREAFTER SEARCH U/S 13 2 OF THE ACT WAS CONDUCTED AT THE RESIDENCE OF THE ASSESSEE ON 14.3.2012, DURING THE COURSE OF WHICH INCOME OF RS. 41 LACS WAS SURRENDERED. IN RESPONSE TO NOTICE ISSUED U/S 153A, RETURN WAS FILED BY THE ASSESSEE ,DECLARING INCOME OF RS.52,75,959/- WHICH INCLUDED THE SURRENDERED INCOM E OF 2 RS.41 LACS. SUBSEQUENTLY DURING ASSESSMENT PROCEEDI NGS THE AO NOTED THAT DURING THE YEAR UNDER CONSIDERATI ON THE ASSESSEE HAD PURCHASED TWO PLOTS MEASURING 270 SQ .YD. EACH SITUATED AT MOJA BAREWAL AWARIA, ASHAPURI, LUD HIANA. THE SOURCE OF INVESTMENT IN THESE PROPERTIES RS.4 1 LACS WAS STATED BY THE ASSESSEE AS BEING OUT OF THE SURR ENDERED INCOME OF RS.41 LACS. THE ASSESSING OFFICER NOTED THAT THE SURRENDER WAS MADE AFTER DETECTION OF CONCEALMENT B Y THE DEPARTMENT BY WAY OF SEARCH U/S 132 OF THE ACT AND THEREFORE INITIATED PENALTY PROCEEDINGS ON THE SAME U/S 271(1)(C) OF THE ACT. DURING PENALTY PROCEEDINGS TH E ASSESSEE CONTENDED THAT THE SURRENDER HAD BEEN SUO MOTO DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME A ND HAD NOT BEEN ADDED BY THE ASSESSING OFFICER AND FURTHER THAT NO INFIRMITY HAD BEEN FOUND IN THE EXPLANATION OF THE ASSESSEE OR THE DOCUMENTS SUBMITTED IN SUPPORT OF HIS CONTEN TION. IT WAS THEREFORE CONTENDED THAT NO PENALTY U/S 271(1) WAS LEVIABLE IN THE PRESENT CASE. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY U /S 271(1) OF THE ACT, STATING THAT THE SURRENDER WAS COVERED ONLY IN THE YEAR OF SEARCH OR THE PRECEDING YEAR OF WHICH RETURN WAS DUE BUT NOT FILED BY THE ASSESSEE, AND T HE IMPUGNED YEAR BEING NEITHER, THE ASSESSEE WAS NOT E NTITLED TO CLAIM IMMUNITY OF THE SURRENDER GRANTED BY VIRT UE OF THE PROVISIONS OF SECTION 132(4) R.W.S. 271AAA(4)(B) OF THE ACT. THE ASSESSING OFFICER ALSO HELD THAT THE ASSESSEE H AVING NOT DISCLOSED THE SURRENDERED INCOME IN THE ORIGINAL RE TURN OF INCOME FILED, THE DISCLOSURE IN THE RETURN FILED SU BSEQUENT 3 TO SEARCH WAS ONLY AFTER DETECTION OF CONCEALMENT A ND THE ASSESSEES CONTENTION THAT NO PENALTY WAS LEVIABLE S INCE RETURNED INCOME HAD BEEN ACCEPTED ,WAS NOT ACCEPTAB LE. THE AO ACCORDINGLY IMPOSED PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.11,68,020/-,BEING 100% OF THE TAX S OUGHT TO BE EVADED ON THE INCOME CONCEALED. 3. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(A),WHERE THE ASSESSEE REITERATED THE CONTEN TIONS MADE BEFORE THE AO AND FURTHER CONTENDED THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH NO P ENALTY COULD BE IMPOSED EVEN BY INVOKING EXPLANATION 5A T O SECTION 271(1)(C) OF THE ACT. THE LD.CIT(A) REJECTE D THE CONTENTIONS OF THE ASSESSEE HOLDING THAT THE PROVIS IONS OF EXPLANATION-5A TO SECTION 271(1)(C) OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) WERE ATTRACTED IN THE PRE SENT CASE SINCE THE INCOME DECLARED IN THE RETURN FILED IN R ESPONSE TO NOTICE U/S 153A ,HAD NOT BEEN DECLARED IN THE ORIGI NAL RETURN OF INCOME FILED AND THE ADDITIONAL INCOME DE CLARED AFTER SEARCH REPRESENTED CONCEALED INCOME AND HENCE TANTAMOUNTED TO INCRIMINATING MATERIAL FOR ATTRACTI NG EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP I N APPEAL BEFORE US RAISING THE FOLLOWING EFFECTIVE GR OUND: 1. THAT THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT,1961 IMP OSED BY THE ASSESSING OFFICER AGAINST THE FACTS AND CIRC UMSTANCES OF THE CASE. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE D ATE OF HEARING I.E. 24.4.2018. FURTHER IT WAS NOTICED THA T ON 4 EARLIER OCCASIONS ALSO I.E. 22.11.2017 AND 19.2.201 8 THE CASE HAD BEEN ADJOURNED ON THE REQUEST OF THE ASSES SEES COUNSEL THROUGH ADJOURNMENT APPLICATIONS FILED. FUR THER, IT WAS POINTED OUT TO US THAT THE ISSUE IN THE PRESENT CASE WAS IDENTICAL WITH THAT IN THE CASE OF MUNISH JAIN VS. DCIT IN ITA NOS.254 & 255/CHD/2017 THE ORDER IN WHICH CASE HAD BEEN PRONOUNCED BY THE ITAT CHANDIGARH BENCH ON 19.3.2018. COPY OF THE ORDER WAS PLACED BEFORE US. ON PERUSING THE RECORDS OF THE PROCEEDINGS BEFORE US, IT WAS NOTICED THAT THE LD. COUNSEL FOR ASSESSEE ON SEVERA L OCCASIONS HAD SOUGHT ADJOURNMENT STATING THAT THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDENTICAL TO THAT IN THE CASE OF MUNISH JAIN VS. DCIT IN ITA NOS.254 & 255/CHD/2017. THE LD. COUNSEL FOR ASSESSEE VIDE ITS LETTERS DATED 19.9.2017, 22.11.2017 AND 19.2.2018 HAD STATE D SO. IN ALL THE ABOVE LETTERS THE LD. COUNSEL FOR ASSESS EE PLEADED THAT THE AFORESAID CASE HAD BEEN HEARD AND SINCE TH E FACTS WERE IDENTICAL TO THAT IN THE PRESENT CASE THE HEAR ING IN THE PRESENT CASE WAS SOUGHT TO BE ADJOURNED TILL THE OR DER IN THE CASE OF MUNISH JAIN VS. DCIT IN ITA NOS.254 & 255/CHD/2017 WAS PRONOUNCED. SINCE ADMITTEDLY, THE FACTS OF THE PRESENT CASE WERE IDENTICAL TO THAT IN THE C ASE OF MUNISH JAIN VS. DCIT IN ITA NOS.254 & 255/CHD/2017, AND THE ORDER IN THE SAID CASE HAD BEEN PRONOUNCED BY THE TRIBUNAL, THE REASON FOR WHICH ADJOURNMENT WAS SOUG HT BY THE ASSESSEE ON EARLIER OCCASIONS NO LONGER REMAINE D RELEVANT AND FURTHER NO REASON WAS GIVEN FOR SEEKIN G ADJOURNMENT ON THE PRESENT DATE OF HEARING. THE MAT TER WAS 5 THEREFORE PROCEEDED TO BE HEARD WITH SINCE IT AP PEARS THAT THE ASSESSEE IS NOT SERIOUS IN PURSUING THE AP PEAL. 6. ON PERUSAL OF THE RECORD OF HEARING BEFORE US IT WAS FOUND THAT THE ASSESSEE HAD SOUGHT TO ADMIT ADDITIO NAL GROUND BEFORE US VIDE ITS APPLICATION DATED 22.5.20 17 AS UNDER: DATED: 19.05.2017 THE HONORABLE MEMBERS, INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH. SUB: APPLICATION FOR FILING OF ADDITIONAL GROUNDS OF APP EAL IN THE CASE OF CHETAN JAIN, B-121, PUSHAP VIHAR, CA NAL ROAD, LUDHIANA. PAN: AAYPJ0618H, A.Y.2010-11. ITA NO.256/CHANDI-2017. RESPECTED SIR/MADAM, RESPECTFULLY SUBMITTED THAT THE HEARING OF THE ABOV E STATED CASES IS FIXED FOR 22.05.2017. THE APPELLANT HEREBY SEEKS YOUR HONOR'S PERMISSION TO RAISE ADDITIONAL GROUNDS OF APPEAL AS UNDER: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE & IN LAW, THE PENALTY PROCEEDINGS INITIATED VIDE NOTICE U/S 274 READ WITH SECTION 271 OF THE I.T.ACT ,1961., DATED 29.11.2013 ARE INVALID AND BAD IN LAW. 2. ON THE FACTS AND ARE THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY ORDER DATED 30.05.2014 PASSED U/S 271(L)(C) IS INVALID AND BAD IN LAW. THE APPELLANT HEREBY VERY HUMBLY PRAYS YOUR HONOR T O ADMIT THE ADDITIONAL GROUNDS RAISED IN THE INTEREST OF JUSTICE, AS THESE GROUNDS BEING PURELY LEGAL GROUNDS WERE INADVERTENTLY OMITTED TO BE TAKEN EARLIER AND WOULD GO TO THE VERY ROOT OF THE MATTER AND WOULD NOT INVOLVE FURTHER INVESTIGATIONS IN TO THE FACTS. THE APPELLANT SHALL BE HIGHLY THANKFUL FOR YOUR HONORS KINDNESS. THANKING YOU, YOURS SINCERELY SD/- (CHETAN JAIN) APPELLANT 6 DATED: 22.05.2017 THE HONORABLE MEMBERS, INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH. SUB: REQUEST FOR ADMISSION OF ADDITIONAL GROUNDS UN DER RULE 11 OF ITAT, RULES,1963 IN THE CASE OF CHETAN JAIN, B-121, PUSHAP VIHAR, CANAL ROAD, LUDHIANA. PAN: AAYPJ0618H, A.Y.2010-11 ITA NO.256/CHANDI-2017. -REG- FIXED FOR HEARING ON 22.05.2017. RESPECTED SIR/MADAM, IN REFERENCE TO THE ABOVE, KINDLY FIND ENCLOSED REQ UEST LETTER IN TRIPLICATE RECEIVED FROM APPELLANT ADDRESSED TO THE HON'BLE ITAT PRAYIN G FOR ADMISSION OF ADDITIONAL GROUNDS IN THE ABOVE CASE UNDER RULE 11 OF ITAT RUL ES, 1963. KEEPING IN VIEW THE DECISION OF THE HON'BLE APEX CO URT IN THE CASE OF NTPC LTD. VS CIT (229 ITR 383)(SC) COPY ENCLOSED, HON'BLE BEN CH IS HUMBLY REQUESTED THAT THE ADDITIONAL GROUNDS OF APPEAL AS RAISED BY THE APPEL LANT MAY KINDLY BE ADMITTED AS THESE GROUNDS ARE CRUCIAL IN PASSING A JUDICIAL MATTER AN D IN THE INTEREST OF JUSTICE. THANKING YOU, YOURS SINCERELY, (CA RAJEEV K. GUPTA) (COUNSEL) IT WAS ALSO STATED IN THE SAID APPLICATION THAT BE ING A LEGAL GROUND THE SAME BE ADMITTED FOR ADJUDICATION IN VIEW OF THE DECISION OF THE HON'BLE APEX COURT IN THE CA SE OF NTPC LIMITED VS. CIT, 299 ITR 383. 7. THE LD. DR DID NOT OBJECT TO THE SAME. 8. SINCE THE GROUND RAISED BY THE ASSESSEE IS A LEG AL GROUND CHALLENGING THE VALIDITY OF THE ORDER PASSED U/S 271(1)(C) OF THE ACT, WE HEREBY ADMIT THE SAME IN V IEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF NTPC LIMITED (SUPRA). 9. FURTHER IT WAS POINTED OUT, AS STATED EARLIER, T HAT THE FACTS OF THE PRESENT CASE AND THE ISSUE INVOLVED WE RE 7 IDENTICAL TO THAT IN THE CASE OF MUNISH JAIN (SUPRA ) AND THE DECISION RENDERED THEREIN BY THE ITAT, DISMISSING A LL THE GROUNDS RAISED BY THE ASSESSEE ,THEREBY UPHOLDING T HE LEVY OF PENALTY ,THEREFORE SQUARELY APPLIED IN THE PRESE NT CASE. 10. WE HAVE HEARD THE LD.DR AND ALSO GONE THROUGH T HE ORDERS OF THE AUTHORITIES BELOW AND THE ORDER OF TH E ITAT IN THE CASE OF MUNISH JAIN (SUPRA).ON GOING THROUGH TH E ORDER OF THE I.T.A.T. IN THE CASE OF MUNISH JAIN (SUPRA), WE FIND THAT THE FACTS OF THE PRESENT CASE AND THE ISSUE IN VOLVED ARE IDENTICAL TO THAT IN THE CASE OF MUNISH JAIN (SUPRA ), WHEREIN SEARCH WAS CONDUCTED ON THE SAME DATE AS THE ASSESS EE I.E. 14.3.2012, DURING WHICH THE ASSESSEE SURRENDERED RS .28 LACS, DISCLOSED THE SAME IN THE RETURN OF INCOME FI LED IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE ACT AND THEREAFTER, ON INVESTMENT IN LAND BEING DETECTED BY THE ASSESSING OFFICER, ATTRIBUTED THE SOURCE OF THE SA ME TO THE SURRENDERED INCOME. THE ASSESSING OFFICER IN THE SA ID CASE ALSO HAD LEVIED PENALTY ON THE SURRENDERED INCOME, WHICH IN TURN WAS UPHELD BY THE CIT(A) HOLDING THAT PENALTY WAS LEVIABLE AS PER THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C), AS IN THE CASE OF THE ASSESSEE. IN THAT CASE ALSO, WE FIND THE ASSESSEE HAD RAISED ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE SAID ADDITIONAL GROUND WAS DISMISS ED BY THE I.T.A.T. THE I.T.A.T. THEREAFTER ALSO DEALT WI TH THE MERITS OF THE CASE AND HELD THAT THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) WERE APPLICABLE IN THE 8 PRESENT CASE SINCE SEARCH WAS INITIATED AFTER 1 ST JUNE 2007, AS PRESCRIBED FOR THE APPLICABILITY OF THE EXPLANAT ION, AND THE ASSESSEE HAVING NOT DISCLOSED THE SURRENDERED I NCOME IN THE ORIGINAL RETURN OF INCOME FILED, THE ASSESSE E FULFILLED THE CONDITION PRESCRIBED FOR APPLICABILITY OF THE EXPLANATION, THEREBY DEEMING THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF HIS INCOME FOR LEVYING PE NALTY. THE ITAT ALSO REJECTED THE CONTENTION OF THE ASSESSEE T HAT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH SO A S TO ATTRACT EXPLANATION 5A TO SECTION 271(1), HOLDING THAT THE SURRENDER MADE BY THE ASSESSEE WAS SUO MOTO AND REM AINED UNRETRACTED THROUGHOUT AND THE SAME WAS ATTRIBUTED DURING ASSESSMENT PROCEEDINGS AS SOURCE OF INVESTMENT IN PROPERTIES ,WHICH TANTAMOUNTED TO THE ASSESSEE HIMS ELF COMING CLEAN BEFORE THE REVENUE ABOUT THE FACT OF E ARNING SUCH INCOME AND INVESTING IT IN ASSETS, WHICH IN TU RN MET THE REQUIREMENT OF EXPLANATION 5A OF THE ASSESSEE B EING FOUND DURING SEARCH TO BE THE OWNER OF ASSETS ACQUI RED OUT OF EARLIER UNDISCLOSED INCOME. THE RELEVANT FINDING S OF THE ITAT ARE AS UNDER: 13. WE HAVE HEARD THE RIVAL CONTENTIONS. THE GENESIS OF THE ARGUMENTS OF THE LD. COUNSEL FOR ASSESSEE ORIGINATES FROM THE ORDER OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY (SUPRA) WHICH WAS FOLLOWED BY THE HON'BLE KARNATAKA HIGH COURT AGAIN IN SSAS EMERALD MEADOWS (SUPRA) WHEREIN SLP FILED BEFORE THE HON'BLE SUPREME COURT WAS DISMISSED AND THE SAID JUDGMENT WAS ALSO RELIED UPON BY THE TRIBUNAL IN A NUMBER OF DECISIONS RENDERED AND CITED BY THE LD. COUNSEL FOR ASSESSEE BEFORE US. IT IS, THEREFORE, PERTINENT TO UNDERSTA ND 9 THE REASONING LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT IN MANJUNATHA COTTON & GINNING FACTORY (SUPRA) WHILE HOLDING THAT THE NOTICE U/S 274 MUST SPECIFICALLY SPELL OUT THE CHARGE FIXED ON THE ASSESSEE FOR THE PURPOSE OF LEVY OF PENALTY WHETHER CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY STRIKING OUT THE IRRELEVAN T CLAUSE IN THE NOTICE. PARA 59 OF THE ORDER DEALS WITH THE SAME AND IS BEING REPRODUCED HEREUNDER FOR REFERENCE: NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDINGS CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE OR DER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FINDING REGA RDING THE EXISTENCE OF ANY SAID GROUNDS MENTIONED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO T HE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHOR ITY WHICH HAS PASSED THE ORDER. HOWEVER, IF THE EXISTENCE OF T HE CONDITIONS COULD NOT BE DISCERNED FROM THE SAID ORDE R AND IF IT IS A CASE OF RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENAL TY PROCEEDINGS ARE IN THE NATURE OF CIVIL LIABILITY, IN F ACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACC USED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MAD E KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSIN G PENALTY ON HIM AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AN D SHOULD HAVE FULL OPPORTUNITY TO MEET THE CASE OF THE DEPARTME NT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1 )(C) DO NOT EXIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRA CTICE OF THE DEPARTMENT SENDING A PRINTED FORM WHERE ALL THE G ROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SAT ISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASS ESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NA TURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICTL Y CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD SATISFY THE G ROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLE S OF NATURAL JUSTICE IS OFFENDED IF THE SHOW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, THAT I S TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CA SES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE M AY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES T HE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR F INDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SU STAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATISFACTION OF THE EXISTENCE OF 10 THE GROUNDS MENTIONED IN SECTION 271(1)(C) WHEN IT I S A SINE QUA NON FOR INITIATION OR PROCEEDINGS, THE PENALTY PRO CEEDINGS SHOULD BE CONFINED ONLY TO THOSE GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALLY STATED SO THAT THE A SSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTE R, HE PLACES HIS VERSION AND TRIES TO SUBSTANTIATE HIS CLA IM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE IS CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS OTHER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWISE THOUGH THE INITIATION OF PENAL TY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPO SING PENALTY WOULD OFFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAINED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, THE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT V ALID. THE VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMI NED WITH REFERENCE TO THE INFORMATION, FACTS AND MATERIALS IN T HE HANDS OF THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE OR DER WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PE NALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTIC ULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WH ILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHI NG OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PART ICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT H IGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKET ING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENAL TY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND T HE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, W HEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTIC ULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON-AP PLICATION OF MIND. 14. AS IS EVIDENT FROM THE ABOVE THAT THE HON'BLE HIGH COURT HAS VERY LUCIDLY EXPLAINED THAT THE PURPOSE OF ISSUING NOTICE IS TO MAKE THE ACCUSED PERSON AWARE OF THE CHARGE AGAINST HIM FOR WHICH HE IS BEING PENALIZED I.E. FOR CONCEALING PARTICULA RS OF INCOME AND/OR FURNISHING INACCURATE 11 PARTICULARS OF INCOME SO THAT HE CAN ADEQUATELY DEFEND HIMSELF. THE HON'BLE HIGH COURT FURTHER CLARIFIED THAT THE SAME MAY BE CLEAR FROM THE ORDER OF THE AUTHORITIES ITSELF PASSED IN PROCEEDINGS DURING THE COURSE OF WHICH HE WAS SATISFIED OF THE EXISTENCE OF THE IMPUGNED CONDITION, WHICH IS A STATUTORY REQUIREMENT FOR INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. IN SUCH CASES THE HON'BLE HIGH COURT HELD, WHERE GROUND FOR INITIATING PENALTY IS CLEARLY COMING OUT FROM T HE ORDER, REFERENCE TO THE ORDER IN THE NOTICE U/S 274 OF THE ACT WOULD BE SUFFICIENT TO MAKE THE PERSON CHARGED WITH THE SAME, AWARE OF THE CHARGE. AS PER THE HON'BLE HIGH COURT, REFERENCE TO THE ORDER IN THE NOTICE WHICH CONTAINS CLEAR SATISFACTION OF THE AUTHORITY OF THE EXISTENCE OF ANY OF THE GROUNDS WOULD BE SUFFICIENT COMPLIANCE OF THE AFORESAID CONDITION. THE HONBLE HIGH COURT FURTHER HELD THAT IN SITUATION WHERE THE ORDER OF THE AUTHORITY IS NOT CLEAR VIS-A-VIS GROUND FOR WHICH IT IS INITIATED, AS IN CASES WHERE THERE IS DEEMED CONCEALMENT AS PER EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT AND DEEMED SATISFACTION OF THE AUTHORITY OF CONCEALMENT AS PER SECTION 271(1)(B) OF THE ACT, THEN, THE HON'BLE HIG H COURT HAS HELD, THAT THE NOTICE SHOULD CLEARLY REFLECT THE EXACT GROUND FOR WHICH PENALTY IS LEVIED. THE HONBLE HIGH COURT HAS IN VERY CLEAR WORDS EXPLAINED THAT THE PROCEEDINGS BEING PENAL IN NATURE THE ASSESSEE SHOULD BE MADE AWARE OF THE GROUNDS ON WHICH PENALTY IS BEING LEVIED SO THAT HE CAN ADEQUATELY DEFEND HIMSELF. THE CRUX OF THE JUDGMENT THEREFORE IS THAT THE NOTICE U/S 274 SHOULD CLEARLY BRING OUT THE CHARGE AGAINST THE PERSON WHO IS BEING PENALIZED EITHER BY REFERRING TO THE ASSESSMENT ORDER WHERE THE AO HAS CLEARLY RECORDED HIS SATISFACTION OF THE EXISTENCE OF GROUN D WARRANTING LEVY OF PENALTY OR WHERE THE SAME IS ABSENT ,BY WAY OF STRIKING OFF THE IRRELEVANT GROUND WHICH FINDS MENTION IN THE STANDARD PERFORMA USED BY THE REVENUE WHILE ISSUING NOTICE U/S 274 OF THE ACT. AT THIS JUNCTURE, IT IS RELEVAN T TO POINT OUT THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS LEVIED FOR CONCEALING AND/OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HON'BLE HIGH COURT HAS CLARIFIED THAT THERE MAY BE CIRCUMSTANCES WHETHER THE CHARGES ARE OVERLAPPING AND BOTH THE CONDITIONS EXIST. THE FACTS, THEREFOR E, SHOULD CLEARLY POINT OUT THE EXISTENCE ON EITHER OR BOTH THE GROUNDS AS IS APPLICABLE IN EACH CASES. 11. HAVING SAID SO WE SHALL PROCEED TO APPLY THE AFORESAID RATIO TO THE FACTS OF THE PRESENT CASE. THE NOTICE ISSUED TO THE ASSESSEE U/S 274 OF THE ACT STATES THAT DURING THE COURSE OF PROCEEDINGS 12 FOR THE IMPUGNED YEAR IT APPEARED THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF HIS INCOME AND (EMPHASIS SUPPLIED BY US) FURNISHED INACCURATE PARTICULARS OF INCOME. THE RELEVANT NOTICE PRODUCED BEFORE US IS AS UNDER: NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF T HE INCOME TAX ACT, 1961. PAN: ABNPJ4747M OFFICE OF THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-ILL, DANDI SWAMI CHOWK, CIVIL LINES, LUDHIANA. DATED, LUDHIANA THE 29/11/2013. TO SH. MUNISH JAIN, B- 121,PUSHAPVIHAR, CANAL ROAD, LUDHIANA. WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2010-11 IT APPEARS TO ME THAT YOU:- HAVE WITHOUT REASONABLE CAUSE FAILED TO FURNISH ME RETURN OF INCOME WHICH YOU WERE REQUIRED TO FURNISH BY A NOTI CE GIVEN UNDER SECTION OF THE INCOME TAX ACT, 1961, DATED_________________ ___. HAVE WITHOUT REASONABLE CAUSE FAILED TO COMPLY WITH THE NOTICE U/S -------- --------------- ISSUED ON ---------------------- FI XING THE CASE FOR HEARING ON WHICH WAS SERVED ON HAVE CONCEALED THE PARTICULARS OF YOUR INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. 2. YOU ARE HEREBY REQUESTED TO APPEAR BEFORE ME AT 11.30AM ON 26.12.2013 AND SHOW CAUSE WHY AN ORDER IMPOSING A PENALTY ON Y OU SHOULD NOT BE MADE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCO ME TAX ACT, 1961. IF YOU DO NOT WISH TO AVAIL YOURSELF OF THIS OPPORTUNITY OF BEING HEARD I N PERSON OR THROUGH AUTHORIZED REPRESENTATIVE YOU MAY SHOW CAUSE IN WRITING ON OR BEFORE THE SAID DATE WHICH WILL BE CONSIDERED BEFORE ANY SUCH ORDER IS MADE UNDER SECT ION 271(1 )(C) OF THE I.T.ACT,1961. (SUKHJIT SINGH) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-ILL, LUDHIANA. THE CHARGE AGAINST THE ASSESSEE IS THEREFORE ON BOTH COURTS WHICH AS POINTED OUT ABOVE BY US HAS BEEN HELD TO BE PLAUSIBLE AS THE SAME CAN BE OVERLAPPING IN CERTAIN CIRCUMSTANCES. 15. THERE IS, THEREFORE, NO INFIRMITY IN THE NOTICE AND THE GROUND FOR WHICH PENALTY WAS INITIATED ON THE ASSESSEE HAS BEEN CLEARLY AND UNAMBIGUOUSLY BROUGHT OUT IN THE SAID NOTICE. THE ASSESSEE HAS 13 ALSO, WE FIND, RESPONDED TO THE NOTICE AND WAS GIVEN FULL OPPORTUNITY TO DEFEND HIMSELF AGAINST THE SAID CHARGES WHICH WAS DULY AVAILED OF ALSO BY THE ASSESSEE. NECESSARY AND REQUISITE REPLY DEFENDING HIMSELF FROM THE CHARGES WAS FILED BEFORE THE ASSESSING OFFICER. IT IS NOT THE CASE OF THE ASSESSEE THAT DUE OPPORTUNITY WAS NOT GIVEN TO THE ASSESSEE. UNDER THE AFORESAID CIRCUMSTANCES WE FIND THAT THERE IS NO VIOLATION OF THE PRINCIPLE S OF NATURAL JUSTICE IN THE PRESENT CASE WHEN THE ASSESSEE HAVING BEEN AWARE OF THE SPECIFIC CHARGE FOR WHICH PENALTY WAS INITIATED AND ALSO HAVING BEEN GIVEN DUE OPPORTUNITY TO DEFEND HIMSELF FROM THE SAID CHARGE. WE, THEREFORE, CANNOT AGREE WITH THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT THE NOTICE ISSUED TO IT U/S 274 OF THE ACT SUFFERED FROM INFIRMITY. MOREOVER, WE FIND THAT THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR ASSESSEE ARE OF NO ASSISTANCE SINCE THEY ARE ALL DISTINGUISHABLE ON FACTS AS IN ALL THE SAID CASES THE GROUND ON ACCOUNT OF WHICH PENALTY WAS INITIATED WAS NOT CLEAR WITH THE NOTICE BEING IN A STANDARD FORMAT MENTIONING BOTH THE CHARGES ALTERNATIVELY WITHOUT STRIKING OF THE INCORRECT CHARGE WHICH IS DIFFERENT FROM THE FACTS OF THE PRESENT CASE. IN VIEW OF THE ABOVE, WE DISMISS THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE. 16. NOW COMING TO THE GROUND RAISED CHALLENGING THE LEVY OF PENALTY AS PER EXPLANATION 5A TO SECTION 271(1) OF THE ACT, BEFORE US THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD.CIT(APPEALS) REPRODUCED IN THE ORDER OF THE LD.CIT(APPEALS) AT PARA-2 AND WHICH BRIEFLY STATED ARE AS UNDER: 1. SINCE NO INCRIMINATING MATERIAL WAS DISCOVERED AND NO VALUABLE ARTICLE WAS FOUND BY THE REVENUE DURING SEARCH, NO PENALTY WAS LEVIABLE AS PER EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT. 2) WHEN RETURN OF INCOME FILED U/S 153A IS ACCEPTED BY THE ASSESSING OFFICER, THERE WILL BE NO CONCEALMENT OF INCOME AND CONSEQUENTLY PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE IMPOSED. 17. THE LD. COUNSEL FOR ASSESSEE ALSO RELIED UPON THE DECISION OF VARIOUS TRIBUNALS IN THIS CONTEXT WHICH WERE REFERRED BEFORE THE LD.CIT(APPEALS) ALSO. 18. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE LD.CIT(APPEALS). 14 19. WE HAVE HEARD THE RIVAL CONTENTIONS. THE RELEVANT FINDING OF THE LD.CIT(APPEALS) WHILE UPHOLDING THE LEVY OF PENALTY AFTER DEALING WITH THE ABOVE CONTENTIONS OF THE ASSESSEE BEFORE HIM IS AS UNDER: TO DECIDE THE ISSUE, IT IS RELEVANT TO NOTE HERE T HAT THERE WAS AN AMENDMENT IN SECTION 271(1} BY FINANCE ACT 2 007 AND A NEW EXPLANATION 'EXPLANATION 5A' WAS INSERTED W.E.F. 01.06.2007, WHICH IS APPLICABLE TO CASES WHERE SEARCH U/S 132 WAS INITIATED ON OR AFTER 1 ST DAY OF JUNE 2007. FURTHER 'EXPLANATION 5' HAS BEEN MADE APPLICABLE TO CASES WHER E SEARCH WAS INITIATED BEFORE 1 ST DAY OF JUNE 2007. IN THE PRESENT CASE UNDER CONSIDERATION SEARCH ACTION U/S 132 WAS INITIATED ON 30.06.2009, THEREFORE, THIS CASE IS COVERED BY T HE PROVISIONS OF 'EXPLANATION 5A' WHICH IS REPRODUCED A S UNDER: [EXPLANATION 5A- WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007., THE ASSESSEE IS FOUND TO BE THE OWNER OF- (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQ UIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OF OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SU CH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANS ACTIONS 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 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 DAT E 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 THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF SUCH INCOME] A PLAIN READING OF THE ABOVE EXPLANATION SHOWS THA T IF THE INCOME DECLARED BY THE ASSESSEE AFTER SEARCH, IN RE SPONSE TO NOTICE U/S 153A, WHICH WAS NOT DECLARED BY THE ASSES SEE EARLIER FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH, THEN THE ASSESSEE SHALL BE DEEMED TO HA VE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. THE UNDISPUTE D FACT IN 15 THIS CASE ARE THAT THE INCOME DECLARED FOR THE YEAR UNDER CONSIDERATION IN THE RETURN FILED IN RESPONSE TO NOTICE U /S 153A (AFTER THE SEARCH) WAS MORE THAN THE INCOME DECLARE D IN THE RETURN FILED U/S 139 BEFORE THE SEARCH I.E. THE SURRENDERED/EXTRA INCOME WAS NOT FORMING PART OF IN COME IN THE RETURN FILED BEFORE THE DATE F SEARCH). THE CASE OF THE ASSESSEE IS THUS COVERED U/S 271(1)(C) BY THE D EEMING FICTION CREATED BY EXPLANATION 5A WHICH HAS BEEN INSERTED BY FINANCE ACT, 2007 W.E.F. 01.06.2007. FURTH ER, THE CASE LAWS QUOTED BY THE LD. COUNSEL FOR ASSESSEE RE LATES TO CASES WHERE THE SEARCH U/S 132 WAS CONDUCTED BEF ORE 1 ST JUNE 2007 AND IN THOSE CASES 'EXPLANATION 5 WAS APPLICABLE AND HENCE THESE ARE NOT APPLICABLE TO THE PRESENT CASE. THIS VIEW FIND SUPPORT FROM THE J UDGMENT OF THE HON'BLE ITAT CHANDIGARH BENCH IN I TA NO. 516/CHP/2012, SH. RAJNISH VOHRA VS. DCIT, CC-I, CHANDIGARH DATED 31.10.2012. THE RELEVANT PARA OF TH E JUDGMENT DATED 31.10.2012 ARE REPRODUCED BELOW: '29. IN THE PRESENT CASE, THE NORMAL RETURN OF INCO ME FOR THE ASSESSMENT YEAR 2007-08 WAS FILED BY THE ASSESSEE, ON 31.3,2007 I.E. THE DATE OF SEARCH ITSE LF. HOWEVER, THE ASSESSEE FILED HIS RETURN OF INCOME IN RESPONSE TO NOTICE DATED 27.1.2009 ISSUED U/S 153A OF THE ACT, ON 23.7.2009, DECLARING INCOME OF RS.3,27,01,440/-, INCLUDING THE ADDITIONAL AMOUNT OF RS.2,00,60,000/-,DECLARED BY THE ASSESSEE, IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME, IN RESPONSE TO THE SAID NOTICE U/S 153A OF THE ACT, ON 23.7.2009 AND ON THE DATE OF FILING THE RETURN, THE EXPLANATION 5A INSERTED BY THE FINANCE (NO.2)ACT OF 2009, WITH RETROSPECTIVE EFFECT FROM 1.6.2007, WAS ON THE STAT UTE. IN THE PRESENT CASE, RETURN OF INCOME WAS FILED IN R ESPONSE TO NOTICE U/S 153A OF THE ACT, WHICH IS COVERED BY EXPLANATION 5A TO SECTION 271(1) (C) OF THE ACT, INS ERTED BY FINANCE (NO.2) ACT OF 2009. THE FACTS OF PRESENT C ASE, ARE NOT SIMILAR TO THE FACTS, AS OBTAINING, IN THE CASE LAW, RELIED UPON BY THE ASSESSEE, AS DISCUSSED ABOVE. 30. FURTHER, THE PROVISIONS OF SECTION 153A ARE SPE CIFICALLY ARE BROUGHT ON THE STATUTE BOOK, FOR ASSESSMENT, IN CA SE OF SEARCH U/S 132(1) OF REQUISITION OF BOOKS OF ACCOUNT U/S 1 32A OF THE ACT. THE OPENING SENTENCE OF SECTION 153A OF THE ACT, OV ERRIDES THE PROVISIONS OF SECTION 139, 147, 148, 149, 151 AND 153 OF THE ACT. THE ASSESSEE HAS DECLARED UNDISCLOSED INCOME, IN THE RETURN FILED- IN RESPONSE TO NOTICE U/S 153A OF THE ACT AN D THE CIT(APPEALS), HAVING REGARD TO THE FACTS OF THE CASE, INVOKED THE CURRENTLY APPLICABLE EXPLANATION 5A SECTION 271(1 ) (C) OF THE ACT AND UPHELD THE PENALTY, LEVIED BY THE AO. IN SUCH A FACT-SITUATION, THE CIT(APPEALS) HAS ACTE D IN ACCORDANCE WITH THE CURRENTLY OPERATIVE AND RELEVA NT PENAL PROVISIONS, WITH REFERENCE TO THE RETURN OF INCOME, FI LED IN RESPONSE TO SECTION 153A OF THE ACT. 16 31. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSI ONS, AND HAVING REGARD TO THE EXPRESS STATUTORY PROVISIONS OF SECTION 271(1) (C) OF THE ACT READ WITH EXPLANATION 5A THERE UNDER, AS INSE RTED BY THE FINANCE. (NO. 2) ACT, 2009, WITH RETROSPECTIVE EF FECT FROM 01.06.2007, WE DO NOT FIND ANY INFIRMITY, IN THE FINDINGS OF LD CIT(APPEALS). THEREFORE, THE FINDING S OF THE CIT(APPEALS) ARE UPHELD AND, CONSEQUENTLY, THE GROU NDS OF APPEAL OF THE ASSESSES ARE DISMISSED. 32. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. ' IN THE PRESENT CASE THE PROVISIONS OF EXPLANATION-5 A TO SECTION 271(L)(C) ARE ATTRACTED. DURING THE APPELLATE PROCE EDINGS, THE MAIN ARGUMENT OF THE AR WAS THAT NO INCRIMINATING D OCUMENT WAS FOUND AND THE INCOME RETURNED IN RESPONSE TO NO TICE U/S!53A HAS BEEN ACCEPTED. HOWEVER, PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ADDITIONAL INCOME HAS BEEN DEC LARED BY THE ASSESSEE AFTER THE SEARCH. THE EXTRA INCOME OFFER ED/ASSESSED U/S 153A REPRESENT CONCEALED INCOME WHICH WAS NOT D ECLARED IN THE RETURN FILED BEFORE THE SEARCH AND HAD THERE BE EN NO SEARCH THIS EXTRA INCOME WOULD NEVER HAVE BEEN B ROUGHT TO TAX. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANC ES OF THE CASE AND IN THE LIGHT OF THE ABOVE JUDGMENT OF THE HON'B LE ITAT, CHANDIGARH BENCH PASSED IN ITANO.516/CHD/2012 DATED 31.10.2012, THE PENALTY IMPOSED BY THE AO IN THIS IS FOUND AS PER LAW IN VIEW OF EXPLANATION-5A TO SECTION 271(L) (C) AND THEREFORE UPHELD. 20. AS IS EVIDENT FROM THE ABOVE, THE LD.CIT(APPEALS) HAS HELD THAT SINCE SEARCH IN THE PRESENT CASE WAS INITIATED ON OR AFTER 1 ST DAY OF JUNE, 2007, THE PRESENT CASE IS COVERED BY THE PROVISIONS OF EXPLANATION-5A TO SECTION 271(1)(C) O F THE ACT. AT THIS JUNCTURE IT IS RELEVANT TO REPROD UCE THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1) SINCE THE CHALLENGE OF THE ASSESSEE IS TO THE APPLICABILITY OF THE SAID EXPLANATION IN THE FACTS OF THE PRESENT CASE: [EXPLANATION 5A- WHERE, IN THE COURSE OF A SEARCH INI TIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART ) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY 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 ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, 17 (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEA R HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; (B) THE 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 H IM 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 THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.] 21. THERE IS NO DISPUTE VIS--VIS THE FINDING OF THE CIT(A) THAT SINCE SEARCH IN THE PRESENT CASE WAS INITIATED AFTER 1 ST DAY OF JUNE 2007 EXPLANATION 5A TO SECTION 271(1)(C) WAS APPLICABLE. LD.COUNSEL FOR THE ASSESSEE HAS MADE NO ARGUMENTS CHALLENGING THIS FINDING OF THE CIT(A). 22. FURTHER WE FIND NO INFIRMITY IN THE INTERPRETATION OF THE LD.CIT(A) OF EXPLANATION 5A T O SECTION 271(1)(C) SINCE THE LANGUAGE OF EXPLANATION 5A IS VERY CLEAR AND UNAMBIGUOUS, THAT THE ASSESSEE WILL BE DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME VIS A VIS INCOME DECLARED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A AFTER SEARCH, WHICH WAS NOT DECLARED IN THE ORIGINAL RETURN OF INCOME FILED. THEREFORE, WE HOLD, THAT THE LD.CIT(A) HAS RIGHTLY DISMISSED THE CONTENTION OF THE ASSESSEE THAT WHERE INCOME RETURNED U/S 153A IS ACCEPTED NO PENALTY IS LEVIABLE. LD.CIT(A) HAS, WE FIND, DISTINGUISHED THE CASE LAWS RELIED UPON BY THE ASSESSEE IN SUPPORT OF ITS AFORESAID CONTENTION, AS NOT HAVING BEEN RENDERED IN THE CONTEXT OF EXPLANATION 5A TO SECTION 271(1)(C) AND HENCE NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. LD COUNSEL FOR THE ASSESSEE WAS UNABLE TO CONTROVERT THIS. THEREFORE WE FIND NO REASON TO INTERFERE IN THIS FINDING OF THE CIT(A) ALSO. 23. AS FOR THE CONTENTION OF THE ASSESSEE THAT THE EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED ONLY WHEN SOME INCRIMINATING MATERIAL IS FOUND DURING THE COURSE OF SEARCH IN THE FORM OF MONEY, BULLION, JEWELLERY OR ANY INCOME BASED ON AN ENTRY IN THE BOOKS OF ACCOUNT AND SINCE NO SUCH INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN THE PRESENT CASE, NO PENALTY AS PER EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT IS LEVIABLE, WE FIND NO MERIT IN THE SAME. THE FACTS ON RECORD POINT OTHERWISE. UNDOUBTEDLY IT WAS THE ASSESSEE WHO HAD SURRENDERED RS.28 LACS DURING SEARCH. THE SURRENDER WAS NEVER RETRACTED BY 18 THE ASSESSEE. NOTHING TO THIS EFFECT IS RECORDED IN THE ORDERS OF THE AUTHORITIES BELOW NOR HAS BEEN BROUGHT TO OUR NOTICE DURING THE COURSE OF HEARING BEFORE US. THUS AS PER THE ASSESSEES OWN ADMISSION, HE HAD NOT DISCLOSED INCOME TO THE TUNE OF RS.28LACS EARNED DURING THE YEAR. THEN SUBSEQUENTLY DURING ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMS /ADMITS TO HAVE INVESTED THIS INCOME IN TWO PROPERTIES. WHAT THIS TANTAMOUNTS TO IS THAT THE SURRENDER MADE BY THE ASSESSEE WAS ON ACCOUNT OF UNDISCLOSED INCOME FOR THE YEAR, INVESTED IN ASSETS. AND SINCE THE ASSESSEE HAD SUO MOTO MADE THE SURRENDER IT TANTMOUNTED TO THE ASSESSEE HIMSELF COMING CLEAN BEFORE THE REVENUE ABOUT THE FACT OF EARNING SUCH INCOME AND INVESTING IT IN ASSETS. THUS AT THE POINT OF TIME WHEN THE SURRENDER WAS MADE BY THE ASSESSEE DURING SEARCH THE REVENUE FOR ALL PURPOSES HAD FOUND THE ASSESSEE TO BE THE OWNER OF ASSETS ACQUIRED OUT OF EARLIER UNDISCLOSED INCOME DURING SEARCH. AFTER THE SUO MOTO DISCLOSURE BY THE ASSESSEE NO REQUIREMENT REMAINED FOR THE REVENUE TO MAKE ANY FURTHER DISCOVERY AT ALL. THE REQUIREMENT OF EXPLANATION 5A OF THE ASSESSEE BEING FOUND DURING SEARCH TO BE THE OWNER OF ASSETS ACQUIRED OUT OF EARLIER UNDISCLOSED INCOME IS THEREFORE MET. THE CONTENTION OF THE ASSESSEE THAT NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH, WE HOLD, HAS BEEN RIGHTLY DISMISSED BY THE CIT(A). 24. IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF THE CIT(A) ACT, CONFIRMING THE LEVY OF PENALTY OF RS.7,66,320/- U/S 271(1)(C) OF THE ACT. 11. IN THE PRESENT CASE, VIS A VIS THE ADDITIONAL G ROUND RAISED BY THE ASSESSEE THAT THE ORDER PASSED U/S 27 1(1) WAS INVALID AND BAD IN LAW AS ALSO THE PENALTY PRO CEEDINGS INITIATED VIDE NOTICE U/S 274 R.W.S 271(1) OF THE ACT,SINCE NO SUBMISSIONS WERE MADE IN THIS REGARD ,ORAL OR WR ITTEN,BY THE ASSESSEE NOR ANY COPY OF THE NOTICE ISSUED U/S 274 FILED BEFORE US POINTING OUT ANY INFIRMITY IN THE SAME,TH E SAID ADDITIONAL GROUNDS ARE DISMISSED. 19 12. AS FOR THE GROUND RAISED CHALLENGING THE LEVY O F PENALTY ON MERITS ,SINCE ADMITTEDLY THE FACTS IN TH E PRESENT CASE ARE IDENTICAL TO THAT IN THE CASE OF MUNISH JA IN (SUPRA) THE DECISION RENDERED BY THE ITAT IN THE SAID CASE SQUARELY APPLIES TO THE PRESENT CASE FOLLOWING WHICH WE UPHO LD THE LEVY OF PENALTY U/S 271(1) OF THE ACT OF RS. 11,68 ,020/-. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IN THIS REGARD IS ALSO THEREFORE DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 4 TH JULY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH