SHREEJI TRADERS, MUMBAI V. DCIT CEN CIR I, THANE

ITA 281/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59687 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 22-12-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 12-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Search and seizure; Loose papers; Question of law
• Section: 5(2); 153A; 147; 27; 148; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER. I.T.A.NO.281, 282, 283, 284 & 285/MUM/2010 A.YRS.2002-03, 2003-04, 2004-05,2005-06 & 2006-07 M/S. SHREEJI TRADERS, BELOW LIC, KARNIK ROAD, KALYAN (W) 421 301 PAN: AAEFS 4020 J VS. DY. COMMISSIONER OF I.T., CENTRAL CIRCLE-1, THANE. AND I.T.A.NOS.709, 710 & 711/MUM/2010 A.YRS . 2004-05,2005-06 & 2006-07 DY. COMMISSIONER OF I.T., CENTRAL CIRCLE-1, THANE. VS. M/S. SHREEJI TRADERS, KALYAN (W) 421 301 (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. K. SHIVRAM. REVENUE BY : MR. SANJIV DUTT. DATE OF HEARING: 22-12-2011. DATE OF PRONOUNCEMENT: 13-01-2012. O R D E R PER BENCH: THESE CROSS APPEALS ARE HEARD TOGETHER AND ARE BEI NG DISPOSED OF BY THIS COMMON ORDER. 3. I.T.A.NOS.281 TO 285-M-10 [ASSESSEES APPEALS] : IN ALL THESE APPEALS COMMON GROUND HAS BEEN RAISED REGARDING CON FIRMATION OF LEVY OF PENALTY U/S.271(1). 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH WAS CO NDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE WHEREIN CERTAIN I NCRIMINATING ITA NOS.281 TO 285 & 709 TO 711 OF 2010 2 DOCUMENTS WERE FOUND AND SEIZED. DURING THE SEARCH SOME ADDITIONAL INCOME WAS DECLARED IN VARIOUS YEARS U/S.132[4] AND WHEN NOTICE U/S.153[A][A] WAS ISSUED RETURNS WERE FILED INCORPO RATING ADDITIONAL INCOME DECLARED DURING THE SEARCH. DURING THE COURS E OF SEARCH IT WAS NOTICED THAT ASSESSEE WAS INDULGING IN SUPPRESSION OF SALES AND MATERIAL EVIDENCING SUCH SUPPRESSION WAS DETECTED A ND SEIZED. ACCORDINGLY, DURING THE ASSESSMENT PROCEEDINGS A NO TICE WAS GIVEN TO THE ASSESSEE TO GIVE YEAR-WISE BREAK UP OF SUCH SUP PRESSION OF SALES AND ACCORDINGLY AO WORKED OUT FURTHER ADDITIONAL IN COME DURING THE ASSESSMENT PROCEEDINGS U/S.153A WHICH HAS BEEN WORK ED OUT AT PAGES 4 TO 7 OF THE ASSESSMENT ORDER. THE WORKING FOR THE CURRENT YEAR IS AS UNDER: A.Y 2002-03 1. UNRECORDED SALES AS PER SEIZED MATERIALS 7,22,7 74 2. CORRESPONDING UNRECORDED PURCHASES WITH UNDISCLOSED SOURCES OF FUNDS (AFTER REDUCING 10% FOR G.P AND 10% TOWARDS RECORDED SALES) 5,78,21 9 3. ADD: INVESTMENT MADE DURING THE YEAR 3,48,434 BY APPLICATION OF FUNDS TOTAL (2+3) 9 ,26,653 9,26,653 4. LESS: A. AVAILABLE FUND B/F FROM A.Y. 01-02 1,87 ,128 B. ADDITIONAL INCOME DECLARED TOTAL (A+B) 2,49,493 (-) 4,36,621 5. SHORTFALL OF UNDISCLOSED INCOME PROPOSED TO BE INCLUDED IN THE TOTAL INCOME RS. 4,90,032 SIMILAR WORKINGS HAVE BEEN GIVEN FOR OTHER YEARS AL SO. AFTER WORKING OUT THE ABOVE SHORT FALL, AO CONFRONTED THE ASSESSE E THAT WHY THIS ADDITION COULD NOT BE MADE. IN RESPONSE TO THIS, IT WAS STATED THAT THERE WERE VARIOUS MISTAKES IN THE SEIZED MATERIAL ON ACCOUNT OF ITA NOS.281 TO 285 & 709 TO 711 OF 2010 3 DUPLICATION OF SOME LOOSE PAPERS, TOTALLING MISTAKE S, MEASUREMENT SHEETS TREATED AS SALES, SOME EXPENSES LIKE VEHICLE EXPENSES - PETROL BILLS TREATED AS SALES, DELIVERY CHALLANS TREATED A S SALES AND TRANSFER OF GOODS FROM GODOWN TO THE SHOP TREATED AS SALES. HOW EVER, ASSESSEE COULD NOT FILE THE CORRECT RECONCILIATION AND STATE D THAT THE SALES [TURNOVER] TO THE TUNE OF RS.29,48,564/- AND RS.72, 45,318/- CAN BE ACHIEVED BY INVESTMENT OF PEAK AMOUNT INVOLVED PER DAY OF SALES OF RS.1,28,061/- AND RS.1,67,585/- RESPECTIVELY AND TH E SAID PEAK AMOUNT IS ROLLED FOR ALL THE YEARS TO DECIDE ANNUAL SALES. THEREAFTER, ASSESSEE FILED CERTAIN CHARTS WHICH HAVE BEEN EXTRACTED BY T HE AO AT PARA-10 WHICH ARE AS UNDER: SIR, WE WOULD LIKE TO SUBMIT HERE DATE WISE SORTI NG OF LOOSE PAPERS REPORTS FROM PAGE NO. 1 TO 18 AS GIVEN BY YOU WITHO UT ANY ADJUSTMENT OR CORRECTION IN SAME. FROM WHICH FOLLOWING FACTS CAN BE VERIFIED. [ ACCOUNTING YEAR ASSESSMENT YEAR SALES PER DAY PEAK AMOUNT (RS.) DATE ANNUAL TURNOVER (RS.) 1999-2000 2000-2001 0 0 0 2000-2001 2001-2002 28,467 26-2-2001 175,545 2001-2002 2002-2003 94,902 25-9-04 722,774 2002-2003 2003-2004 52,616 3-7-2002 811,190 2003-2004 2004-2005 82,466 30-02-2004 1,570,341 2004-2005 2005-2006 128,061 18-01-06 2,948,564 2005-2006 2006-2007 167,585 PG 80 NO DATE 7,245,318 FROM THE SAID REPORT YOUR HONOUR WILL OBSERVE THAT SALES (TURNOVER) TO THE TUNE OF RS. 175545, RS. 722774, RS. 811190, RS. 1570342, RS. 2948564, RS. 7245318 RESPECTIVELY CAN BE ACHIEVED BY INVESTMENT OF PEAK AMOUNT INVOLVED PER DAY OF SALES, THE SAID PEAK AMOUNT IS ROLLED FO R ALL THE YEAR TO ACHIEVE DESIRED ANNUAL SALES AS THE SAME IS DAY TO DAY SALE S CARRIED OUT AS MENTIONED AS ABOVE AS NO STOCK IS PILED UP IN OUR NATURE OF BUSI NESS. ALSO NET PEAK AMOUNT THAN CAN BE TAKEN AS INCOME/IN VESTMENT FOR PARTICULAR YEAR IS GIVEN HEREWITH. ITA NOS.281 TO 285 & 709 TO 711 OF 2010 4 ACCOUNTING YEAR ASSESSMENT YEAR SALES PER DAY PEAK AMOUNT (RS .) LESS: OPENING BALANCE OF PEAK NET PEAK AMOUNT RS. 1999-2000 2000-2001 0 0 0 2000-2001 2001-2002 28,467 0 28,467 2001-2002 2002-2003 94,902 28,467 66,435 2002-2003 2003-2004 52,616 94,902 0 2003-2004 2004-2005 82,466 94,902 0 2004-2005 2005-2006 128,061 94,902 33,159 2005-2006 2006-2007 167,585 128,061 39,524 THE ABOVE PEAK AMOUNT WE HAVE WORKED OUT AND REQUES T YOU THAT THE SAME MAY BE TAKEN FOR THE PURPOSE OF UNEXPLAINED INVESTM ENT IN PLACE OF PROPOSAL MADE IN YOUR SHOW CAUSE NOTICE, WE ALSO PROPOSE THI S BECAUSE IT IS VERY DIFFICULT TO ASCERTAIN THE DATE WISE SUPPRESSED SAL ES BECAUSE PAPERS SEIZED ARE MIXED UP AND IT IS NOT PROPERLY SORTED OUT YEAR WIS E. IF WE TRY TO PROPERLY ADJUST YEAR WISE IT WILL VERY TROUBLESOME AND TEDIO US JOB, WHICH WILL CONSUME MORE TIME AND LABOUR ON OUR PART AS WELL AS IT WILL CONSUME YOUR TIME TOO. AND HENCE JUST TO COOPERATE WITH THE DEPARTMENT AND TO COME OUT PEACEFULLY FROM THIS LITIGATION, WE HAVE MAKE THE ABOVE PROPOS AL AND REQUEST AGAIN WE DO HEREBY SUBMIT THAT ALL INVESTMENTS IN IMMOVABLE PRO PERTY ARE DULY RECORDED IN BOOKS OF ACCOUNTS AND NOT A SINGLE INVESTMENT IN IM MOVABLE IS OUT OF BOOKS. SO FAR AS CERTAIN SUPPRESSED INVESTMENT OF MOVABLE PROPERTY I.E., SMALL CASH IN SAVINGS ACCOUNT OR THE PAYMENT TO LIC, PPF SHARES A RE CONCERNED, WE HAVE ALREADY DISCLOSE IN WHILE FILING EITHER THE FIRM RE TURN OF PARTIES RETURN. THE AO AFTER EXAMINING THE ABOVE NOTICED THAT ASSES SEES PURCHASES ARE NOT AUTHENTICATED AND SUPPRESSION OF SALES IS A LREADY DETECTED. ACCORDINGLY, HE ESTIMATED THE PROFIT @ 10% IN RESPE CT OF THE SHORT FALL AND ADDED A SUM OF RS.49,003/- AS UNDISCLOSED INCOM E ON THIS ACCOUNT IN A.Y 2002-03. SIMILARLY, A SUM OF RS.74,086/-, RS .1,11,L849/-, RS.1,83,886/- AND RS.4,33,355/- WAS ADDED IN A.YRS. 2003-04 TO 2006- 07, RESPECTIVELY. PENALTY PROCEEDINGS IN RESPECT OF THE TOTAL UNDISCLOSED INCOME U/S.271(1) WERE INITIATED. IN RESPONSE TO A NOTICE IT WAS MAINLY STATED THAT CERTAIN INCOMES WERE ALREADY DEC LARED DURING THE SEARCH AND THE RETURNED INCOME HAS BEEN ENHANCED U/ S.153A, THEREFORE, PENALTY COULD NOT BE LEVIED. RELIANCE WA S ALSO PLACED ON ITA NOS.281 TO 285 & 709 TO 711 OF 2010 5 CERTAIN CASE LAWS. THE AO AFTER EXAMINING THE SUBMI SSIONS, REFERRED TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF K.P.MADHUSUDAN VS. CIT [251 ITR 99] AND ACCORDINGLY LEVIED THE MINIMUM PENALTY @ 100% IN VARIOUS YEARS UNDER APPEA L. 5. ON APPEAL, THE PENALTY IN RESPECT OF INCOME WHIC H HAS BEEN ALREADY DECLARED BY THE ASSESSEE U/S.153A HAS BEEN DELETED BY THE CIT(A) AND THIS ASPECT OF THE ISSUE SHALL BE CONSID ERED WHILE DEALING WITH THE REVENUES APPEALS. AS FAR AS THE PENALTY L EVIED ON ADDITIONAL INCOME IS CONCERNED, THE PENALTY WAS CONFIRMED BY T HE LD. CIT(A) VIDE PARAS 12 AND 13 OF HIS ORDER WHICH ARE AS UNDER: 12. HOWEVER, AS REGARDS THE PENALTY ON THE ADDITION MADE IN ASSESSMENT, IT IS SEEN THAT THE AC , DURING THE ASSESSMENT PROCEEDING S WORKED OUT THE CASH SHORTAGE AFTER TAKING INTO ACCOUNT UNRECORDED SALES PURCHASE, INCOME DISCLOSED U/S 132(4) AND INVESTMENTS MADE DURING THE YEAR. TH E AC WORKED OUT SUCH SHORTAGE AT RS 29,06,340/- AND ESTIMATED THE INCOME AT 10 H THEREON AND MADE AN ADDITION OF RS 2,90,634/-. THE WORKING OF T HE AC IS FURNISHED HEREUNDER. 1. UNRECORDED SALES AS PER SEIZED MATERIALS 2. CORRESPONDING UNRECORDED PURCHASES WITH UNDISCLOSED SOURCES OF FUNDS (AFTER REDUCING 10% FOR GP AND 10 % TOWARDS RECORDED SALES) 3. ADD: INVESTMENT MADE DURING THE YEAR BY APPLICATION OF FUNDS (2+3) 4. LESS: A AVAILABLE FUND B/F B ADDITIONAL INCOME DECLARED 5. SHORTFALL OF UNDISCLOSED INCOME PROPOSED TO 7,22,774 578219 384434 926653 NIL 249493 926653 249493 490032 ITA NOS.281 TO 285 & 709 TO 711 OF 2010 6 13. EVEN THOUGH THE INCOME IS QUANTIFIED ON THE BAS IS OF ESTIMATE AT 10 % , IT IS NOT BASED ON ANY PRESUMPTION , RATHER IT IS BASE D ON ACTUAL WORKING. DURING THIS YEAR, THE APPELLANT HAS EFFECTED AN UNRECORDED SALES OF RS 7,22,774/- AND MADE AN INVESTMENT OF RS 2,10,000/- IN CASH DEPOSIT S INTO SB A/C IN THE NAME OF MINOR CHILDREN , WHICH ARE UNEXPLAINED. IN FACT, IN THE SUBMISSION DATED 15/11/07, THE APPELLANT HAS AGREED FOR AN ADDITION OF RS 66,435/- ON ACCOUNT OF NET PEAK AMOUNT ARISING OUT OF UNRECORDED SALES. IN OTHER WORDS, THE APPELLANT HAS ON HIS OWN ADMITTED THE ELEMENT OF CONCEALMENT IN THIS REGARD. IT IS, THEREFORE, ESTABLISHED THAT THERE IS A CLEAR CASE O F CONCEALMENT OF PARTICULARS ON PART OF THE APPELLANT LEADING TO CONCEALMENT OF INC OME, ACCORDINGLY, I HOLD THAT THE ACTION OF THE AC IN IMPOSING PENALTY ON TH E ADDITION OF RS 49,003/- MADE TO THE RETURNED INCOME U/S 153A IS WITHIN LAW AND THE SAME IS CONFIRMED. IN OTHER YEARS ALSO, PENALTY ON ACCOUNT OF UNDISCLO SED INCOME WHICH WAS ASSESSED AS ADDITIONAL INCOME HAS BEEN CONFIRME D ON THE ABOVE BASIS. 6. BEFORE US, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT SIMILAR SEARCH WAS CONDUCTED IN ANOTHER GROUP CONCERN KNOWN AS GOPAL SHYAM & BROTHERS WHEREIN SIMILAR ADDITIONAL INCOME WAS ASSESSED AND PENALTY WHICH WAS LEVIED WAS DELETED BY THE TRIBUNA L AND IN THIS REGARD HE FILED A FULL SET OF PAPERS CONTAINING THE ASSESSMENT ORDER, PENALTY ORDER AND THE ORDER OF THE TRIBUNAL IN I.T. A.NOS.707 & 708, 278 TO 280/M/10. HE ALSO RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. [322 ITR 158]. HE CONTENDED THAT THIS ADDITION IS M ADE ON THE ESTIMATED BASIS, THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY PARTICULARS AND, ACCORDINGLY, LEVY OF PENALTY IS NOT JUSTIFIED. 7. ON THE OTHER HAND, LD. DR SUBMITTED THAT IT IS WRONG TO STATE THAT PROFIT HAS BEEN ESTIMATED. IN FACT, PROFIT HAS BEEN ESTIMATED ON ITA NOS.281 TO 285 & 709 TO 711 OF 2010 7 SAME PERCENTAGE WHICH WAS DISCLOSED DURING THE SEAR CH BY THE ASSESSEE ITSELF. HE THEN CARRIED US THROUGH THE ASS ESSMENT ORDER AND POINTED OUT THAT THERE WAS A CLEAR SHORT FALL EVEN AFTER THE DISCLOSURE AND THAT IS WHY ADDITIONAL INCOME WAS ASSESSED. HE ALSO REFERRED TO THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN TH E CASE OF SHERATON APPEALERS VS. ACIT [256 ITR 20]. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL. IT CAN NOT BE DENIED THAT ULTIMATELY ADDITION HAS BEEN ESTIMATED BY AO BY EST IMATING THE PROFITS AT 10% AS IT BECOMES CLEAR FROM PARA-14 OF THE ASSE SSMENT ORDER. IN IDENTICAL CIRCUMSTANCES IN THE CASE OF DY. CIT VS. GOPAL SHYAM BROS. [SUPRA], PENALTY IN RESPECT OF ADDITION ON ACCOUNT OF 10% OF UNACCOUNTED PURCHASES HAS BEEN DELETED VIDE PARAS 9 TO 11 WHICH ARE AS UNDER: 9. WITH REGARD TO THE PENALTY ON ADDITION OF RS.59 ,456 BEING 10% ON ACCOUNT OF UNRECORDED PURCHASES LEADING TO SUPPRESSION OF S ALES, WE FIND THAT THERE S NO DISPUTE THAT THE ABOVE ADDITION WAS MADE ON ESTI MATE BASIS WITHOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THAT THERE WAS ANY UNRECORDED PURCHASES. 10. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271 (L)(C), THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSE E. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOM E. 11. IN RECENT JUDGMENT OF THE HON'BLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2910) 322 ITR 158, THEIR L ORDSHIPS AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF VS. JCI T (2007) 291 ITR 519 (S.C) AND UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSOR S 306 ITR 177 (SC) HAVE OBSERVED AND HELD [PAGE 158 HEADNOTES] AS UNDE R: A GLANCE AT THE PROVISION OF S. 271(1)(C) WOULD SU GGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE P ARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING O F THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETUR N IS FOUND TO BE ITA NOS.281 TO 285 & 709 TO 711 OF 2010 8 INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE THE PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCUR ATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOC UMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN , MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN, FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY I TSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AM OUNT TO FURNISHING INACCURATE PARTICULARS. RESPECTFULLY FOLLOWING THE ABOVE DECISION AND KEEPI NG IN VIEW THAT IT IS NOT THE CASE OF REVENUE THAT UNRECORDED PURCHASES WERE FOUND DURING THE COURSE OF SEARCH OR THE ASSESSEE HAS RECORDED SUCH PURCHA SES NOT DISCLOSED TO THE DEPARTMENT, WE ARE OF THE VIEW THAT THERE IS NO CON CEALMENT ON THE PART OF THE ASSESSEE WHICH MAY CALL FOR LEVY OF PENALTY UNDER S ECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY IMPOSED BY THE ASSESSING O FFICER AND CONFIRMED BY THE LEARNED CIT(A) IS DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. FOLLOWING THE ABOVE ORDER, WE DELETE THE PENALTY CO NFIRMED BY THE LD. CIT(A) ON ACCOUNT OF ADDITIONAL INCOME ESTIMATED BY THE AO. 9. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. 10. I.T.A.NOS.709 TO 711-M-10 [REVENUES APPEALS] : IN ALL THESE APPEALS BY THE REVENUE THE ORDER OF THE CIT(A) HAS BEEN CHALLENGED FOR DELETING THE PENALTY LEVIED ON THE UNDISCLOSED INCOME WHICH WAS DECLARED IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S.153A. 11. AFTER HEARING BOTH THE PARTIES WE FIND THAT AS DISCUSSED ABOVE, A SEARCH WAS CONDUCTED IN THE PREMISES OF THE ASSESSE E ON 22-2-2006 WHEREIN CERTAIN INCRIMINATING DOCUMENTS SHOWING SUP PRESSED SALES AND ITA NOS.281 TO 285 & 709 TO 711 OF 2010 9 PURCHASES WERE FOUND. DURING THE COURSE OF SEARCH S OME INCOMES WERE DECLARED FOR VARIOUS YEARS AND SUCH INCOMES WE RE ULTIMATELY RETURNED IN THE RETURNS FILED U/S.153A. THE AO INIT IATED THE PENALTY PROCEEDINGS EVEN ON SUCH DECLARED INCOMES. DURING T HE PENALTY PROCEEDINGS, IN RESPONSE TO A SHOW CAUSE NOTICE IT WAS MAINLY CONTENDED THAT ASSESSEE HAS ALREADY ENHANCED THE IN COME DECLARED WHICH WAS DISCLOSED DURING THE SEARCH TO PURCHASE P EACE OF MIND AND AVOID LITIGATION. IT WAS ALSO CONTENDED THAT SINCE RETURNED INCOME HAD BEEN ACCEPTED, THEREFORE, NO PENALTY IS LEVIABLE. R ELIANCE WAS ALSO PLACED ON SOME CASE LAWS. AFTER EXAMINATION AO DID NOT FIND FORCE IN THE SUBMISSIONS AND HE REFERRED TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF K. P. MADHUSUDAN VS. C IT [SUPRA] AND LEVIED THE PENALTY EVEN IN RESPECT OF INCOMES WHICH HAVE ALREADY BEEN DISCLOSED IN THE RETURNS FILED U/S.153A. 12. ON APPEAL, IT WAS MAINLY CONTENDED THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE ASSESSEE HAD ALREADY DECLARE D ADDITIONAL INCOME IN THE STATEMENT RECORDED U/S.132[4] AND SUC H INCOME HAS BEEN DULY RETURNED IN THE RETURNS FILED U/S.153A WH ICH HAVE BEEN ACCEPTED BY THE DEPARTMENT AND, THEREFORE, AO WAS N OT JUSTIFIED IN LEVYING THE PENALTY. IT WAS FURTHER CONTENDED THAT IN SUCH SITUATION IMMUNITY PROVIDED BY CLAUSE (2) OF EXPLANATION 5 OF SEC.271(1) WOULD BE APPLICABLE AND PENALTY COULD NOT BE LEVIED AND RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON'BLE RAJASTHA N HIGH COURT IN THE CASE OF CIT VS. KANHAIYALAL SARUPAIA [299 ITR 19]. THE LD. CIT(A) AFTER ITA NOS.281 TO 285 & 709 TO 711 OF 2010 10 EXAMINING THE SUBMISSIONS AGREED WITH THE CONTENTIO NS RAISED BY THE ASSESSEE AND DELETED THE PENALTY ON THE ADDITIONAL INCOME DISCLOSED IN THE RETURNS FILED U/S.153A ON THE BASIS OF THE DECI SION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KANHAIY ALAL SARUPAIA [SUPRA]. 13. BEFORE US LD. DR SUBMITTED THAT THE CIT(A) HAS WRONGLY RELIED ON THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KANHAIYALAL SARUPAIA [SUPRA]. HE CARRIED US THR OUGH EXPLANATION 5 OF SEC.271(1) AND POINTED OUT THAT IMMUNITY GRANT ED UNDER THIS EXPLANATION BY CLAUSE (2) WOULD BE APPLICABLE IF IN COME COULD NOT BE DECLARED IN THE RETURN OF INCOME TO BE FURNISHED BE FORE THE EXPIRY OF TIME SPECIFIED THEREIN. THIS CLEARLY MEANS THAT ANY INCOME DECLARED IN THE RETURN FILED AFTER THE SEARCH WOULD NOT ATTRACT THE IMMUNITY PROVIDED BY CLAUSE (2) OF EXPLANATION 5. IN THIS RE GARD HE STRONGLY RELIED ON THE DECISION OF THE ITAT AHMEDABAD BENCH BY THE THIRD MEMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATE L [121 ITD 159]. HE CARRIED US THROUGH THE FACTS OF THE CASE AND POI NTED OUT THAT IN THAT CASE ALSO THE ADDITIONAL INCOME WAS DISCLOSED IN TH E STATEMENT RECORDED U/S.132[4] WHICH WAS LATER ON DECLARED IN THE RETURN FILED U/S.153A AND IT WAS ARGUED THAT IMMUNITY BY CLAUSE (2) WOULD BE APPLICABLE. IN THAT CASE THE ACCOUNTANT MEMBER REFE RRED TO THE DETAILED ARGUMENTS AND NOTED THAT PRIOR TO INSERTIO N OF EXPLANATION 5 TO SEC.271(1) BY TAXATION LAWS (AMENDMENT) ACT 1984 W .E.F. 1-10- 1984 AN ASSESSEE WHO WAS FOUND TO BE THE OWNER OF A NY MONEY, ITA NOS.281 TO 285 & 709 TO 711 OF 2010 11 BULLION, JEWELLERY ETC. WAS ENTITLED TO EXPLAIN THA T SUCH ASSETS WERE ACQUIRED BY HIM BY UTILISING HIS INCOME RELATING TO ANY PREVIOUS YEAR WHETHER IT ENDED BEFORE THE DATE OF SEARCH OR IS TO END ON OR AFTER THE DATE OF SEARCH. BY DOING SO, THE ASSESSEE COULD ESC APE THE LIABILITY TO PENALTY U/S.271(1). IN ORDER TO PLUG THIS LOOPHOLE EXPLANATION 5 WAS INSERTED W.E.F. 1-10-1984. BY THIS EXPLANATION IT I S MADE CLEAR THAT IMMUNITY AS PER CLAUSE (2) IS AVAILABLE ONLY IF INC OME HAS ALREADY BEEN DECLARED IN THE RETURN WHICH IS YET TO BE FURNISHED U/S.139[1]. IN OTHER WORDS, IF PERIOD FOR FURNISHING THE RETURN HAS ALRE ADY EXPIRED, THEN IMMUNITY IS NOT AVAILABLE. THE JUDICIAL MEMBER DIFF ERED ON THIS AND WHEN THE MATTER TRAVELLED TO THE THIRD MEMBER HE AF FIRMED THE VIEW OF THE ACCOUNTANT MEMBER BY DISTINGUISHING THE DECISIO N NOT ONLY OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KANHAIYALAL SARUPAIA [SUPRA] BUT ALSO THE DECISION OF THE HON'B LE MADRAS HIGH COURT IN THE CASE OF CIT VS. CDV CHANDRU [266 ITR 1 75] BY RELYING ON THE OBJECTS AND REASONS TO TAXATION LAWS (AMENDMENT & MISCELLANEOUS PROVISIONS) BILL 1986, 161 (ST.) 63 A ND CIRCULAR NO.469 162 ITR (ST.) 221, AS WELL AS THE DECISION OF THE H ON'BLE BOMBAY HIGH COURT IN THE CASE OF SHERATON APPEALERS VS. ACIT [S UPRA]. HE FURTHER SUBMITTED THAT THIS DECISION HAS BEEN FOLLOWED BY T HE CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE CASES OF AJIT B. ZOT A VS. ACIT [40 SOT 543], MAHENDRA MITTAL VS. ACIT [132 ITD L80] AND DC IT VS. SHRI SUNIL V. SANGOI IN I.T.A.NOS.615 TO 619-M-10. ITA NOS.281 TO 285 & 709 TO 711 OF 2010 12 14. HE FILED A CHART SHOWING THE DUE DATES OF FILIN G OF THE RETURNS WHICH IS AS UNDER: ITA NO. A.Y DATE OF FILING ORIGINAL RETURN RETURNED INCOME (RS.) DATE OF FILING RETURN IN RESPONSE TO NOTICE U/S.153A INCOME RETURNED U/S.153A (RS.) DATE OF ASSESSMENT U/S 153A ASSESSED INCOME (RS)/ 709/M/10 2004- 05 30.10.2004 39,513 12.04.2007 6,65,083 31.12.2007 7,76,932 710/M/10 2005- 06 31.10.2005 25,637 12.04.2007 10,68,629 31.12.2007 12,52,515 711/M/10 2006- 07 30.10.2006 64,766 05.07.2007 19,86,266 31.12.2007 24,19,721 HE POINTED OUT THAT FOR A.YRS. 2004-05 AND 2005-06 THE DATE OF FILING OF RETURNS HAD ALREADY BEEN EXPIRED. AS FAR AS A.Y 2006-07 IS CONCERNED, THOUGH ON THE DATE OF SEARCH THERE WAS S TILL TIME TO FURNISH THE RETURN BUT ACTUALLY THE RETURN WAS FILED ON 30- 10-2006 IN WHICH INCOME OF ONLY RS.64,766/- WAS DECLARED, WHICH MEAN S EVEN AFTER THE SEARCH AND AFTER DECLARING THE INCOMES DURING THE S EARCH, ASSESSEE DID NOT CHOSE TO DISCLOSE THE FULL INCOME. 15. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE MAINLY RELIED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. GOPAL SHYAM BROS. [SUPRA] WHEREIN IN IDENTICAL CIRC UMSTANCES PENALTY HAS BEEN DELETED BY THE TRIBUNAL. HE FURTHER SUBMIT TED THAT THE DECISION OF THE THIRD MEMBER IN THE CASE OF ACIT VS . KIRIT DAHYABHAI PATEL [SUPRA] HAS BEEN MERELY RENDERED BY FOLLOWING THE DECISION THE CO-ORDINATE BENCH OF THE AHMEDABAD TRIBUNAL IN THE CASE OF RUPESH BHOLIDAS PATEL 309 ITR (AT) 217. THE THIRD MEMBER H AS CLEARLY OBSERVED THAT HE IS NOT DEVIATING FROM THE EARLIER VIEW ON ACCOUNT OF ITA NOS.281 TO 285 & 709 TO 711 OF 2010 1 3 JUDICIAL DISCIPLINE, THEREFORE, SAME CANNOT BE TAKE N AS A PRECEDENT. THOUGH REFERENCE HAS BEEN MADE IN THAT DECISION TO THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHERAT ON APPEALERS VS. ACIT [SUPRA], BUT IN THE CASE OF SHERATON APPEALERS VS. ACIT [SUPRA] THE ISSUE OF IMMUNITY WAS NOT DECIDED AND IN THIS R EGARD HE REFERRED TO THE DECISION OF THE HON'BLE BOMBAY HIGH COURT AND P OINTED OUT TO THE QUESTION REFERRED BEFORE THE HON'BLE HIGH COURT WHE REIN THE ISSUE WAS ONLY WHETHER THE DIARY ON THE BASIS OF WHICH ADDITI ONS WERE MADE COULD BE REGARDED AS BOOKS OF ACCOUNTS FOR CLAUSE ( 1) OF EXPLANATION 5. THE JUDGMENT CANNOT BE READ OUT OF CONTEXT AND IN T HIS REGARD HE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING [198 ITR 297]. HE ALSO REFERRED TO THE DECISION OF THE KOLKATTA BENCH OF THE TRIBUNAL IN THE CASE OF D CIT VS. AVINASH CH. GUPTA I.T.A.NOS.414 TO 415/KOL/09 WHEREIN THE DECIS ION OF THE THIRD MEMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATE L [SUPRA] HAS BEEN CONSIDERED. ULTIMATELY THIS DECISION HAS BEEN DISTI NGUISHED BY OBSERVING THAT THE DECISION OF THE HON'BLE BOMBAY H IGH COURT WAS ON A DIFFERENT ISSUE AND THE KOLKATTA BENCH ULTIMATELY F OLLOWED THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SVD CHANDRU [SUPRA] AND DECISION OF THE RAJASTHAN HIGH COURT IN THE CAS E OF CIT VS. KANHAIYALAL [SUPRA], AND DELETED THE PENALTY IN SIM ILAR CIRCUMSTANCES. 16. AS FAR AS THE CONTENTION OF THE LD. DR THAT EVE N IN THE RETURN FILED FOR THE A.Y 2006-07 ON 30-10-06 SURRENDERED I NCOME WAS NOT DECLARED IS CONCERNED, IT WAS CONTENDED THAT ASSESS EE HAD NOT BEEN ITA NOS.281 TO 285 & 709 TO 711 OF 2010 14 ABLE TO PROCURE COPIES OF VARIOUS DOCUMENTS FROM TH E DEPARTMENT AND THAT IS WHY IN THE RETURN FILED U/S.139(1) INCOME C OULD NOT BE DECLARED. IN THIS REGARD HE FILED A COPY OF THE LETTER ADDRES SED TO THE DEPARTMENT FOR SUPPLY OF THE DOCUMENTS. HE ALSO ARGUED THAT IN SEC.153A IT IS CLEARLY MENTIONED THAT EARLIER RETURNS FILED WOULD ABATE, THEREFORE, THESE RETURNS ARE NOT IN EXISTENCE. THE ASSESSEE HA S FILED FRESH RETURNS IN RESPONSE TO NOTICE U/S.153A AND ASSESSED INCOME AND RETURNED INCOME BEING SAME, NO PENALTY WAS LEVIABLE. 17. IN THE REJOINDER, LD. DR AGAIN REFERRED TO SEC. 153A AND POINTED OUT THAT AS PER 2 ND PROVISO TO SEC.153A WHAT WOULD ABATE IS ONLY PENDING ASSESSMENT. THIS MEANS THE RETURN FILED ITS ELF IS NOT ABATED IF THE ASSESSMENT HAS BEEN COMPLETED, THEREFORE, IT CA NNOT BE CONTENDED THAT RETURNED INCOME AND ASSESSED INCOME U/S.153A B EING SAME, PENALTY CANNOT BE LEVIED. HE ARGUED THAT AS POINTED OUT EARLIER ALL BENCHES OF THE MUMBAI TRIBUNAL HAVE FOLLOWED THE DE CISION OF THE THIRD MEMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHA I PATEL [SUPRA] AND SHOULD HAVE FORCE OF A DECISION OF THE SPECIAL BENC H AND, THEREFORE, SAME SHOULD BE FOLLOWED. IN ANY CASE THIS AROSE IN THE CASE OF DCIT VS. OMKARESHWAR R. KALANTRI & ORS. 42 DTR (PN) 489, WHE REIN THE ISSUE REGARDING LEVY OF PENALTY WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF PUNE BENCH ITSELF IN THE CASE OF SARLA M. AHUJA I.T.A.NO.1301/PN/07. THE PUNE BENCH IGNORED THIS DE CISION OF THE CO- ORDINATE BENCH AND FOLLOWED THE DECISION OF THE THI RD MEMBER IN THE ITA NOS.281 TO 285 & 709 TO 711 OF 2010 15 CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [SUPRA] AND CONFIRMED THE PENALTY. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AS WELL AS THE JUDGMENTS CITED BY THE PARTIES. THE MAIN PLANK OF THE ASSESSEE IS THAT THEY ARE ENTITLED TO THE IMMUNITY PROVIDED BY SUB-CLAUSE (2) OF EXPLANATION 5 TO SEC.271(1). EXPLANATION 5 READS A S UNDER: [ EXPLANATION 5. WHERE IN THE COURSE OF A [SEARCH INITIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007], THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THA T SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PAR T) HIS INCOME, ( A ) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETURN HAS BEEN FURNIS HED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREI N ; OR ( B ) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH , HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE ( C ) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, 41 [UNLESS, ( 1 ) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED, ( I ) IN A CASE FALLING UNDER CLAUSE ( A ), BEFORE THE DATE OF THE SEARCH ; AND ( II ) IN A CASE FALLING UNDER CLAUSE ( B ), ON OR BEFORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HI M FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE [CHIEF COMMISSIONER OR COMMISSIONER] BEFORE THE SAID DATE ; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION O R UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT B EEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN [* * *] SUB-SECTION (1) OF SECTION 139 , AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HA S BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF SUCH INCOME.] ITA NOS.281 TO 285 & 709 TO 711 OF 2010 16 THE HIGHLIGHTED PORTION CLEARLY SHOWS THAT IF INCOM E HAS NOT BEEN DECLARED BEFORE THE EXPIRY OF TIME UNDER SUB-SEC.(1 ) OF SEC.139, THEN IMMUNITY IS NOT AVAILABLE. THIS ASPECT HAS BEEN CON SIDERED BY THE LEARNED ACCOUNTANT MEMBER IN THE CASE OF ACIT VS. K IRIT DAHYABHAI PATEL [SUPRA] VIDE PARA 7.1 WHICH IS AS UNDER: 7.1 IN THE CASE UNDER CONSIDERATION, THE AO LEVIED THE PENALTY UNDER S. 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. THE CIT(A) CANCELLED THE PENALTY ON TWO PREMISES I.E, (I) BY MAKING APPLICAB ILITY OF CONCESSION IN EXPLN. 5(2) TO S. 271(1)(C) OF THE ACT AND (II) PEN ALTY ON RETURNED INCOME UNDER S. 153A OF THE ACT BY CONSIDERING THE RETURN FILED UNDER S. 139 OF THE ACT AS ABATED AND NON EST IN THE EYES OF LAW. AS RE GARDS CONTENTIONS OF THE TAXPAYER REGARDING APPLICABILITY OF THE AFORESAID E XPLN. 5 TO S. 271(1)(C) OF THE ACT, IT IS NOTICED THAT PRIOR TO THE INSERTION OF E XPLN. 5 TO S. 271(1)(C) BY THE TAXATION LAWS (AMENDMENT) ACT, 1984 W.E.F. 1ST OCT. , 1984, AN ASSESSEE, WHO WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION , JEWELLERY ETC., RECOVERED DURING THE COURSE OF SEARCH, WAS ENTITLED TO EXPLAIN THAT SUCH ASSETS WERE ACQUIRED BY HIM BY UTILISING HIS INCOME RELATI NG TO ANY PREVIOUS YEAR, WHETHER IT ENDED BEFORE THE DATE OF THE SEARCH OR I S TO END ON OR AFTER THE DATE OF THE SEARCH. BY DOING SO, THE ASSESSEE COULD ESCA PE THE LIABILITY TO PENALTY UNDER S. 271(1)(C) OF THE ACT. IN ORDER TO PLUG THE LOOPHOLE, THE AFORESAID EXPLN. 5 WAS INSERTED W.E.F. 1ST OCT., 1984 AND IS APPLICABLE TO A SITUATION WHERE IN THE COURSE OF A SEARCH UNDER S. 132 OF THE ACT THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OT HER VALUABLE ARTICLE OR THING 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 WHICH HAS ALREADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH. IN VIEW OF THE EXPLANATION, NOTWITHSTAN DING THE FACT THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME F URNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF S . 271(1)(C), BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME EXCEPT IN CASES WHERE SUCH INCOME IS, O R THE TRANSACTIONS RESULTING IN SUCH INCOME ARE, RECORDED ON OR BEFORE THE DATE OF THE SEARCH IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE CIT BEFOR E THE DATE OF THE SEARCH. THUS, BY THE DEEMING PROVISIONS OF EXPLN. 5, THE AS SESSEE IS FASTENED WITH THE LIABILITY TO PENALTY UNDER S. 271(1)(C) IN CASE HE EXPLAINS THE ACQUISITION OF ASSETS, RECOVERED IN THE COURSE OF SEARCH, FROM OUT OF INCOME OF A PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH. THE ABOVE CLEARLY SHOWS THAT IF HISTORY OF EXPLANAT ION 5 IS TRACED, THEN IT BECOMES CLEAR THAT FOR WHAT PURPOSE EXPLANATION 5 WAS INSERTED. ITA NOS.281 TO 285 & 709 TO 711 OF 2010 17 WHEN LEARNED JUDICIAL MEMBER HAD DIFFERENCE OF OPIN ION IN THIS CASE, THE MATTER WAS REFERRED TO THE THIRD MEMBER. THE HO N'BLE VICE PRESIDENT OF THE TRIBUNAL (AS HE THEN WAS) WHO DECI DED THE ISSUE AS A THIRD MEMBER, AFTER CONSIDERING THE SUBMISSIONS AND ALSO THE DECISIONS OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KANHAIYALAL [SUPRA] AS WELL AS THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF S.D.V. CHANDRU [SUPRA] OBSERVED VIDE PARAS 11 TO 13 AS UNDER: 11. I HAVE CONSIDERED THE ARGUMENTS. SINCE THE LEA RNED COUNSEL FOR THE ASSESSEE HAS NOT DISPUTED THE POSITION THAT SECTION 271 [1][C] IS APPLICABLE TO AN ASSESSMENT MADE UNDER SECTION 153A, IT IS NOT NE CESSARY FOR ME TO EXAMINE THAT POSITION. THE MAIN QUESTION BEFORE ME, WHICH W AS DEBATED AT LENGTH, WAS WHETHER THE IMMUNITY GRANTED UNDER EXPLANATION 5(2) TO SECTION 271(1)(C) IS AVAILABLE TO THE ASSESSEES. NO JUDGMENT OF THE HON BLE GUJARAT HIGH COURT ON THIS QUESTION WAS BROUGHT TO MY NOTICE BY EITHER SI DE. THE MADRAS HIGH COURT IN S.D. V. CHANDRUS CASE (SUPRA) HAS HELD THAT THE WORDS IN EXPLANATION 5(2)....HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXP IRY OF TIME SPECIFIED IN SUB- SECTION [1] OF SECTION 139 ARE NOT TO BE READ AS R EFERRING TO INCOME SO FAR NOT DISCLOSED IN RESPECT OF THE PREVIOUS YEAR WHICH IS TO END AFTER THE DATE OF THE SEARCH AND THAT THE WORDS WHICH REFER TO THE TIME L IMIT UNDER SECTION 139(1) ARE ONLY A REITERATION OF THE LEGAL REQUIREMENT RE GARDING THE TIME WITHIN WHICH RETURNS SHOULD BE NORMALLY BE FILED. IN THIS VIEW OF THE MATTER IT WAS HELD THAT NO PENALTY CAN BE IMPOSED ON THE BASIS OF THE RETURNS FILED AFTER THE DATE OF THE SEARCH, PURSUANT TO DECLARATION UNDER S ECTION 132(4), IN WHICH ADDITIONAL INCOME WAS SHOWN BY THE ASSESSEE THOUGH SUCH RETURNS RELATED TO EARLIER ASSESSMENT YEARS. TO THE SAME EFFECT IS THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN KANHAIYALAL (SUPRA). IN FACT, IN THIS CASE THE HIGH COURT HAS OBSERVED THAT IT IS NOT MERELY THE RIGHT OF THE ASS ESSEE TO FILE RETURNS FOR THE EARLIER ASSESSMENT YEARS AFTER THE DATE OF THE SEAR CH PURSUANT TO DECLARATIONS MADE UNDER SECTION 132(4) BUT IT IS HIS OBLIGATION TO DO SO AND THE IMMUNITY CONFERRED BY EXPLANATION 5(2) CANNOT BE TAKEN AWAY OR WATERED DOWN. THE VIEW TAKEN BY THE MADRAS HIGH COURT IN S.D. V. CHAN DRUS CASE (SUPRA) HAS BEEN NOTICED BY THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE GROUP CASE OF RUPESH BHOLIDAS PATE! (SUPRA) BUT THE BENCH HAS PRE FERRED TO FOLLOW THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF SH ERATON APPARELS (SUPRA), A DECISION WHICH HAS ALSO BEEN FOLLOWED BY THE LEAR NED AM IN THE PRESENT APPEALS. THE LEARNED AM HAS ALSO REFERRED TO THE OR DER OF THE TRIBUNAL IN THE GROUP CASE OF RUPESH BHOLIDAS PATE! (SUPRA) AND IN PARAGRAPH 13 OF HIS ORDER HAS HELD THAT SINCE IT IS A CASE OF THE SAME GROUP AND THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASES ARE SIMILAR T O THOSE IN THE CASE BEFORE THE TRIBUNAL, HE WOULD DRAW SUPPORT FOR HIS VIEW FROM T HE SAID ORDER. THE LEARNED JM DOES NOT APPEAR TO HAVE REFERRED TO THE ORDER OF THE TRIBUNAL IN THE CASE OF ITA NOS.281 TO 285 & 709 TO 711 OF 2010 18 RUPESH BHOLIDAS PATE! (SUPRA). SINCE A VIEW HAS ALR EADY BEEN TAKEN AS TO THE AVAILABILITY OF THE IMMUNITY UNDER EXPLANATION 5(2) TO SECTION 271(L)(C) BY AN ORDER OF THE AHMEDABAD BENCH, THAT TOO IN A CASE BE LONGING TO THE SAME GROUP AND AFTER REFERRING TO THE JUDGMENT OF THE MADRAS H IGH COURT IN S.D. V. CHANDRU S CASE (SUPRA), JUDICIAL DISCIPLINE REQUIRE S THAT I SHOULD NOT DEVIATE FROM THAT VIEW. I ACCORDINGLY, UPHOLD THE VIEW OF T HE LEARNED AM THAT THE IMMUNITY UNDER THE ABOVE EXPLANATION IS NOT AVAILAB LE TO THE PRESENT ASSESSEES. 12. THE STATEMENT OF OBJECTS AND REASONS TO THE TAX ATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) BILL, 1986 (161 ITR S T. 63), AND THE CIRCULAR NO. 469 (162 ITR ST. 21) TO WHICH MY ATTENTION WAS DRAWN DO NOT ADVANCE THE CASE OF THE ASSESSEES. THE STATEMENT OF OBJECTS AND REASONS SAYS THAT THE AMENDMENT WAS BEING MADE TO REMOVE AN ANOMALY IN T HE EXISTING PROVISIONS IN RESPECT OF CASES WHERE PENALTY IS IMPOSABLE FOR CONCEALMENT OF INCOME EVEN IF THE TAXPAYER HAS NO INTENTION TO FABRICATE EVIDE NCE OR TO CONCEAL HIS UNDISCLOSED INCOME AFTER SEARCH AND SEIZURE. THE A NOMALY AND THE REMEDIAL AMENDMENT MADE ARE EXPLAINED BY THE ABOVE CIRCULAR IN THE FOLLOWING WORDS: AS PER THE EXISTING EXPLANATION 5 TO SECTION 271(1 ) OF THE INCOME- TAX ACT, IF AT THE TIME OF SEARCH, ASSETS WHICH ARE NOT RECORDE D IN THE BOOKS OF ACCOUNT ARE FOUND, A TAXPAYER IS LIABLE TO PENALTY FOR CONCEALM ENT EVEN IF HE DECLARES THE FULL VALUE OF THOSE ASSETS AS HIS INCOME IN THE RET URN FILED AFTER THE SEARCH. THIS PROVISION HAS BEEN FOUND TO OPERATE, EVEN IN CASES WHERE THE ASSESSEE HAS NO INTENTION TO FABRICATE ANY EVIDENCE AND HE INCLUDES IN HIS RETURN THE INCOME OUT OF WHICH SUCH ASSETS HAVE BEEN ACQUIRED. HENCE, BY THE AMENDING ACT, IT HAS BEEN PROVIDED THAT IF AN ASSESSEE IN SUCH CASES MAK ES A STATEMENT DURING THE COURSE OF THE SEARCH ADMITTING THAT THE ASSETS FOUN D AT HIS PREMISES OR UNDER HIS CONTROL HAVE BEEN ACQUIRED OUT OF HIS INCOME WH ICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFO RE THE EXPIRY OF TIME PRESCRIBED IN CLAUSE (A) OR (B) OF SECTION 139(1) A ND SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AN D PAYS THE (AXES THAT ARE DUE THEREON, NO PENALTY SHALL BE LEVIABLE. (PAGES 38 & 39 OF 162 ITR ST.) THE ABOVE CIRCULAR EXPLAINING THE AMENDMENT SHOWS T HAT THE BENEFIT OF IMMUNITY CONFERRED BY THE EXPLANATION 5(2), AS AMEN DED BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986 WITH EFFECT FROM 10-9-1986, IS CONFINED TO THE RETURN FOR THE YEAR I N RESPECT OF WHICH THE PREVIOUS YEAR IS YET TO END OR EVEN THOUGH ENDED, T HE TIME FOR FILING THE RETURN UNDER SECTION 139(1) IS YET TO EXPIRE. IN THE PRESE NT CASE, THE SEARCH TOOK PLACE ON 4-9-2003. IN RESPECT OF THE ASSESSMENT YEAR 2003 -04, FOR WHICH THE PREVIOUS YEAR WOULD HAVE ENDED ON 31-3-2003, THE RE TURN UNDER SECTION 139(1) WOULD BE DUE LATEST BY 31-10-2003. IN RESPECT OF AL L THE EARLIER YEARS, NEEDLESS TO ADD, THE DUE DATES FOR FILING RETURNS UNDER SECT ION 139(1) WOULD HAVE ENDED MUCH EARLIER. RETURNS WERE FILED BY THE ASSESSEES A FTER THE SEARCH, IN RESPONSE TO NOTICES ISSUED UNDER SECTION 153A ON 31-5-2004. THE ADDITIONAL INCOME DECLARED IN THESE RETURNS DO NOT FALL UNDER THE CAT EGORY OF THE RETURN MENTIONED IN EXPLANATION 5(2) TO SECTION 271(1 )(C). THEREFOR E, THE ASSESSEES ARE NOT ENTITLED TO THE IMMUNITY FROM PENALTY. 13.1 ACCORDINGLY, AGREE WITH THE VIEW TAKEN BY THE LEARNED AM ON THIS ASPECT OF THE MATTER AND HOLD THAT THE IMMUNITY IS NOT AVA ILABLE TD THE ASSESSEES UNDER EXPLANATION 5(2) TO SECTION 271(1)(C). ITA NOS.281 TO 285 & 709 TO 711 OF 2010 19 FROM THE ABOVE IT BECOMES CLEAR THAT HE HAS NOT MER ELY FOLLOWED THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF RUPESH BHOLIDAS PATEL [SUPRA], BUT HAS MADE ELABORATE DISC USSIONS AND ALSO REFERRED TO THE STATEMENT OF OBJECTS AND REASONS TO THE TAXATION LAWS (AMENDMENT & MISCELLANEOUS PROVISION BILLS) 1986 AS WELL AS CIRCULAR NO.469 AND ALSO DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHERATON APPEALERS VS. ACIT [SUPRA], AND REACHED A CONCLUSION THAT THE IMMUNITY PROVIDED BY EXPLANATION 5 TO SEC.271(1 ) WOULD BE AVAILABLE ONLY TO THE RETURN FOR THE YEAR IN RESPEC T OF WHICH THE PREVIOUS YEAR IS YET TO END OR EVEN THOUGH ENDED, O R THE TIME FOR FILING THE RETURN U/S.139[1] IS YET TO EXPIRE. 19. THE LD. COUNSEL OF THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THIS DECISION HAS ALREADY BEEN DISTINGUISHED BY THE KOLKATTA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. AVINASH CH. GU PTA [SUPRA] AND THAT THE ISSUE BEFORE THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHERATON APPEALERS VS. ACIT [SUPRA] WAS NOT IN RESP ECT OF IMMUNITY UNDER EXPLANATION 5 TO SEC.271(1). IN THE CASE OF SHERATON APPEALERS VS. ACIT [SUPRA] A QUESTION OF LAW RAISED BEFORE TH E HON'BLE HIGH COURT WAS AS UNDER: 'WHETHER, ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND LAW, THE DIARIES, ON THE BASIS OF WHICH THE ADDITIONS WERE MADE COULD BE REGARDED AS BOOKS OF ACCOUNT FOR THE PURPOSES OF CLAUSE (1) OF EXPLANATI ON 5 TO SECTION 271(1)(C) OF THE ACT, SO AS TO PROVIDE IMMUNITY TO THE APPELLANT S ?' ITA NOS.281 TO 285 & 709 TO 711 OF 2010 20 NO DOUBT, THE QUESTION WAS NOT EXACTLY ON CLAUSE (2 ) OF EXPLANATION 5, BUT THE HIGH COURT HAS CONSIDERED THE WHOLE EXPLANA TION UNDER THE HEADING LEGISLATIVE INTENTIONS AT PAGES 28 & 29 WHI CH READS AS UNDER: PRIOR TO THE INSERTION OF EXPLANATION 5 TO SECTION 271 BY THE TAXATION LAWS (AMENDMENT) ACT, 1984, WITH EFFECT FROM OCTOBER 1, 1984, AN ASSESSEE, WHO IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEW ELLERY, ETC., RECOVERED DURING THE COURSE OF SEARCH, WAS ENTITLED TO EXPLAI N THAT SUCH ASSETS WERE ACQUIRED BY HIM BY UTILISING HIS INCOME RELATING TO ANY PREVIOUS YEAR, WHETHER IT ENDED BEFORE THE DATE OF THE SEARCH OR IS TO END ON OR BEFORE THE DATE OF THE SEARCH. BY DOING SO, THE ASSESSEE COULD HAVE ESCAPE D THE LIABILITY OF PENALTY UNDER SECTION 271(1)(C). IN ORDER TO PLUG THE AFORESAID LOOP HOLE, EXPLANATI ON 5 HAS BEEN INSERTED BY THE TAXATION LAWS (AMENDMENT) ACT, 1984, WITH EFFECT FR OM OCTOBER 1, 1984. THE NEWLY INSERTED EXPLANATION 5 ENACTS A DEEMING P ROVISION AND HAS APPLICATION TO A SITUATION WHERE IN THE COURSE OF A SEARCH UNDER SECTION 132, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BUL LION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS ('ASSETS' FOR SHORT) AN D THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING WHOLL Y OR IN PART, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE TH E DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH. IN SUCH A SITUATION, NOTWITHSTANDING THE FACT THAT SUCH INCOME IS DECLAR ED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH , HE, FOR THE PURPOSES OF SECTION 271(1)(C), IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME EXC EPT IN CASE WHERE SUCH INCOME, OR THE TRANSACTION RESULTING IN SUCH INCOME IS RECORDED ON OR BEFORE THE DATE OF THE SEARCH IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DI SCLOSED TO THE COMMISSIONER BEFORE THE DATE OF THE SEARCH. FROM THE ABOVE, IT IS CLEAR THAT EVEN IF AN INCOME IS DECLARED AFTER THE SEARCH, THE SAME WAS DEEMED TO HAVE BEEN CONCEALED FOR THE PURPOSE OF SEC.271(1). IT CANNOT BE SAID THAT THESE OBSERV ATIONS ARE TOTALLY OUT OF CONTEXT BECAUSE THE HON'BLE COURT WAS CONCER NED WITH THE LEVY OF PENALTY AND IMMUNITY UNDER CLAUSE (1) OF EXPLANA TION 5. THEREFORE, THE ABOVE OBSERVATIONS, IN OUR OPINION, ARE OF BIND ING NATURE. WE FURTHER FIND THAT IT IS NOT ALWAYS NECESSARY TO FOL LOW THE DECISION OF THE CO-ORDINATE BENCH. THE LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE ITA NOS.281 TO 285 & 709 TO 711 OF 2010 21 DECISION IN THE CASE OF GOPAL SHYAM BROS. [SUPRA] O F THE CO-ORDINATE BENCH WHEREIN IN IDENTICAL CIRCUMSTANCES THE PENALT Y WAS DELETED. IT IS IMPORTANT TO NOTE THAT IN THAT CASE THE DECISION OF THE THIRD MEMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [SUPRA] HAS NOT BEEN NOTED. WHEN SIMILAR SITUATION AROSE BEFORE THE PUNE BENCH IN THE CASE OF DCIT VS. OMKARESHWAR R. KALANTRI & ORS. [SUPRA] WHE REIN ASSESSEE RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF SARLA M. AHUJA [SUPRA] FOR DELETION OF THE PENALTY BUT THE R EVENUE PLACED RELIANCE ON THE DECISION OF THE THIRD MEMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [SUPRA]. THE ISSUE HAS BEEN D ISCUSSED AT PARA-11 WHICH READS AS UNDER: CONSIDERING THE ABOVE SUBMISSIONS, WE FIND SUBSTAN CE IN THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE DE CISION OF THIRD MEMBER BENCH IN THE CASE OF ASSTT. CIT VS. KIRIT DAHYABHAI PATE! (SUPRA) DT. 25TH JUNE, 2009 ON THE ISSUE WAS NOT BROUGHT TO THE NOTI CE OF THE PUNE BENCH DURING THE COURSE OF HEARING OF APPEALS IN THE CASE S OF NARAYANDAS MUIJI THAKAR AND KARSANDAS MULJI THAKKAR (SUPRA) ESPECIAL LY WHEN THE SAME WAS IN EXISTENCE AT THAT TIME. THE THIRD MEMBER BENCH DECI SION IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA) HAD AN OCCASION TO DISCUSS THE ISSUE IN DETAIL IN VIEW OF SEVERAL DEC1SIONS CITED BEFORE IT INDUCING THOSE WHICH HAVE BEEN RELIED UPON BEFORE US BY THE PARTIES. IT IS ALSO ADMITTED FACT THAT THE THIRD MEMBER BENCH DECISION ON THE ISSUE IN THE CASE OF KIRIT DA HYABHAI PATE! (SUPRA) HAS BEEN PASSED AFTER THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SARLA M. AHUJA & ORS. (SUPRA), HENCE BEING A L ATER DECISION IT HAS GOT IMPORTANCE. WE ARE THUS OF THE VIEW THAT THIRD MEMB ER DECISION COMPRISING OF 4 LEARNED MEMBERS IN THE CASE OF KIRIT DAHYABHAI PATE! (SUPRA) BROUGHT TO OUR NOTICE CANNOT BE BRUSHED ASIDE ONLY BECAUSE ON EARLIER OCCASION THE PUNE BENCH OF THE TRIBUNAL IN CASES OF NARAYANDAS MULJI THAKKAR AND KARSANDAS MULJI THAKKAR (SUPRA) HAS SIMPLY UPHELD THE FIRST A PPELLATE ORDER, AS THE LEARNED CIT(A) WAS OF THE VIEW THAT THE ISSUE IS CO VERED BY THE DECISION OF THIS BENCH IN THE CASE OF SMT. SARLA M. AHUJA (SUPR A) DT. 26TH OCT., 2007. WE THUS CONCUR WITH THE CONTENTION OF THE LEARNED DEPA RTMENTAL REPRESENTATIVE THAT IN VIEW OF THE DECISION OF HONBLE SUPREME COU RT IN THE CASE OF S. SHANMUGAVEL NACIAR VS. STATE OF TAMIL NADU & ANR. ( SUPRA) A COURT IS NOT BOUND BY AN EARLIER DECISION IF IT WAS RENDERED WIT HOUT ANY ARGUMENT, WITHOUT REFERENCE TO THE CRUCIAL WORDS OF THE RULE AND WITH OUT ANY CITATION OF THE AUTHORITY. IN THE CASE OF B. SHAMA RAO VS. UNION TE RRITORY OF PONDICHERRY ITA NOS.281 TO 285 & 709 TO 711 OF 2010 22 (1967) 2 SCR 650 IT WAS HELD AS IT IS TRITE TO SAY THAT A DECISION IS BINDING NOT BECAUSE OF ITS CONCLUSIONS BUT IN REGARD TO ITS RA TIO AND PRINCIPLE LAID DOWN THEREIN. THIS DECISION HAS BEEN REFERRED BY HONBL E SUPREME COURT IN THE CASE OF S. SHANMUGAVEL NADAR (SUPRA) WITH THIS MENT IONING THAT THEIR LORDSHIPS TENDERED AN ADVICE OF WISDOMRESTRAINT IN DISSENTING OR OVERRULING IS FOR SAKE OF STABILITY AND UNIFORMITY BUT RIGIDIT Y BEYOND REASONABLE LIMITS IS INIMICAL TO THE GROWTH OF LAW. THE CONTENTION OF TH E LEARNED DEPARTMENTAL REPRESENTATIVE ALSO FOUND SIGNIFICANT TO THE EFFECT THAT THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SMT . SARLA M. AHUJA (SUPRA) ACTUALLY SUPPORTS THE CASE OF REVENUE IF IT IS READ AND UNDERSTOOD IN PROPER PERSPECTIVE WHICH WE WILL DISCUSS IN DETAIL IN THE SUCCEEDING PARAS. OF COURSE IN ABSENCE OF A DECISION OF A SPECIAL BENCH OF THE TRIBUNAL ON THE ISSUE, THE THIRD MEMBER BENCH DECISION IN THIS REGARD CARRIES WEIGHTAGE. IT IS ALSO BECAUSE IN THE THIRD MEMBER BENCH DECISION, THE ORD ER OF AHMEDABAD BENCH IN THE CASE OF ASSTT. CIT VS. RUPESH BHOLIDAS PATEL (SUPRA) HAS BEEN FOLLOWED, WHICH IS BASED UPON THE BINDING DECISION OF (HONBL E JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF SHERATON APPARELS (SUPRA) . THE THIRD MEMBER BENCH HAS ALSO DISCUSSED THE CBDT CIRCULAR NO. 469, DT. 23RD SEPT., 1986 [(1986) 162 ITR (ST) 21] EXPLAINING THE AMENDMENT S HOWING BENEFIT OF IMMUNITY CONFERRED BY EXPLN. 5(2), AS AMENDED BY TA XATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986, W.E.F. 10TH SEPT., 1986. HENCE THE SAME CANNOT BE IGNORED. CERTAINLY T HERE WOULD HAVE BEEN SUBSTANCE IN THE CONTENTION OF THE LEARNED AUTHORIS ED REPRESENTATIVE FOR SENDING A PROPOSAL BY THIS BENCH FOR CONSTITUTION O F A SPECIAL BENCH TO DECIDE THE ISSUE IF THE PRESENT BENCH WOULD NOT HAVE AGREE D WITH THE LATEST ELABORATE DECISION OF THIRD MEMBER BENCH OF THE TRIBUNAL ON T HE ISSUE OR THE CO- ORDINATE BENCH WOULD HAVE PASSED A DETAILED ORDER A FTER DISCUSSING THAT THE LEARNED CIT(A) HAD PROPERLY APPLIED THE DECISION OF THE BENCH IN THE CASE OF SMT. SARLA M. AHUJA (SUPRA). BUT IT IS NOT THE CASE OF THE ASSESSEE. THE PRESENT SITUATION HAS ARISEN ONLY BECAUSE THE PARTIES APPEA RING IN THE CASES OF NARAYANDAS MULJI THAKKAR AND KARSANDAS MULJI THAKKA R (SUPRA) OF THE GROUP FAILED TO BRING TO THE NOTICE OF THE CO-ORDINATE BE NCH ABOUT THE EXISTENCE OF THIRD MEMBER BENCH ORDER IN THE CASE OF ASSTT. CIT VS. KIRIT DAHYABHAI PATEL (SUPRA) WHICH CANNOT BE TREATED AT PAR WITH A SITUA TION FOR REFERRING THE MATTER TO A SPECIAL BENCH. IN FACT NOBODY ATTENDED ON THE SCHEDULED DATE FOR THE ASSESSEE AND APPEAL WAS DECIDED WITH THE MINIMUM AS SISTANCE OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. THUS WE CANNOT AGREE W ITH THE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE MATT ER SHOULD BE REFERRED TO THE HONBLE PRESIDENT, TRIBUNAL FOR FORMATION OF A SPEC IAL BENCH TO DECIDE THE ISSUE. SINCE THE PUNE BENCH WAS NOT APPRISED OF THE EXISTENCE OF THIRD MEMBER DECISION OF THE TRIBUNAL ON THE ISSUE IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA) PASSED ON A LATER DATE, AT THE TIME O F HEARING OF THE APPEAL IN THE CASES OF NARAYANDAS MULJI THAKKAR AND KARSANBHAI MU LJI THAKKAR, WE, AS DISCUSSED ABOVE, ARE NOT BOUND TO SIMPLY FOLLOW THE DECISION OF CO-ORDINATE BENCH IN THE SAID CASES OF NARAYANDAS MULJI THAKKAR AND KARSANDAS MULJI THAKKAR OF THE GROUP. IN THIS REGARD WE ALSO GET SUPPORT FROM THE DECISIO N IN THE CASE OF DISTRIBUTORS (BARODA) (P) LTD. VS. UNION OF INDIA & ORS. (1985) 47 CTR (SC) 349: (1985) 155 ITR 120 (SC), WHEREIN THE HONBLE SUPREME COURT TAKING STRENGTH FROM THE WORDS OF HONBLE JUSTICE BRONSON IN PIERCE VS. DELAMETER HAS BEEN ITA NOS.281 TO 285 & 709 TO 711 OF 2010 23 PLEASED TO HOLD THAT TO PERPETUATE AN ERROR IS NO H EROISM, TO RECTIFY IT IS THE COMPULSION OF THE JUDICIAL CONSCIENCE (P.124). THUS, DESPITE OF CONTRARY DECISION OF THE SAME BENC H, PUNE BENCH HAS ALSO PLACED RELIANCE ON THE DECISION OF THE THIRD M EMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [SUPRA]. SIMILARLY, AS POINTED OUT BY THE LD. DR THE DECISION OF ACIT VS. KIRIT DAHYABHAI PAT EL [SUPRA] HAS BEEN FOLLOWED IN THE CASE OF MAHENDRA MITTAL [SUPRA] AND PARA-9 OF THIS DECISION READS AS UNDER: 9. THE SCOPE OF EXPLANATION 5 HAS BEEN CONSIDERED BY THE ITAT AHMEDABAD IN THE CASE OF ASSTT. CIT V. KIRIT DAHYABHAI PATEL [2009] 121 LTD 159 (AHD.) (TM) AND HAS HELD THAT THE BENEFIT OF THE IMMUNITY WILL ONLY BE AVAILABLE TO THE ASSESSEE IN RESPECT OF THE YEAR WHERE THE DUE D ATE OF THE FILING OF THE RETURN HAS NOT EXPIRED UNDER SECTION 139(1) OF THE ACT BEF ORE THE DATE OF SEARCH. IF WE ACCEPT THE ARGUMENT THAT IF UNDISCLOSED INCOME IS D ETECTED AND THEN ONLY SAME IS ADMITTED AND OFFERED BY THE ASSESSEE AS HIS UNDI SCLOSED INCOME, WHETHER FURTHER SATISFACTION IS REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER? OUR ANSWER WILL BE, NO. SO FAR AS THE UNDISCLOSED INCOM E UNEARTHED IN COURSE OF THE SEARCH ACTION, ONLY PROTECTION THE ASSESSEE GET S TO THE EXTENT PROVIDED IN EXPLANATION 5 TO SECTION 27 1(L)(C) AND OTHERWISE I T IS PRESUMED THAT TO THAT EXTENT THE ASSESSEE DEEMED TO HAVE CONCEALED THE PA RTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. SO FAR AS THE DECISION OF RAMPUR ENGG. CO. LTDS CASE (SUPRA) IS CONCERNED, T HIS IS A CASE WHERE THE NORMAL ASSESSMENT IS MADE. IN THE CASE WHERE ASSESS MENT IS MADE IN CONSEQUENCE OF THE SEARCH AND IF THE ASSESSEE HIMSE LF ADMITS AND OFFERS AN UNDISCLOSED INCOME TO TAX THEN THAT IS COVERED BY E XPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AND IN OUR OPINION, NO FURTHER SATISFACTION IS REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. WE, THEREFORE , HOLD THE ASSESSEE HAS HIMSELF ADMITTED THE UNDISCLOSED INCOME TO THE EXTE NT OF RS. 6,20,000 IN RESPECT OF THE CASH DEPOSITS IN HIS TWO BANK A/CS A ND OFFERED THE SAME AND ALSO PAID THE TAX ON IT, THEN EXPLANATION 5 TO SECTION 2 71(L)(C) IS APPLICABLE AND TO THAT EXTENT THE ASSESSEE HAS DEEMED TO HAVE CONCEAL ED THE PARTICULARS OF HIS INCOME OR HAS FILED THE INACCURATE PARTICULARS OF I NCOME. WE, THEREFORE, REJECT THE ARGUMENT OF THE LD. COUNSEL ON THE ISSUE THAT NO SPECIFIC RECORDING OF THE SATISFACTION. 10. SO FAR AS IMMUNITY FROM THE PENALTY IS CONCERNE D, ADMITTEDLY, THE TIME LIMIT FOR FILING OF THE RETURN FOR THE ASSESSMENT Y EAR 2000-01 HAS EXPIRED LONG BACK AND HENCE IN VIEW OF THE DECISION IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA), THE ASSESSEE CANNOT GET THE IMMUNITY, AS C ONTEMPLATED IN EXPLANATION 5, DISCUSSED SUPRA. IN OUR OPINION, THE ASSESSING O FFICER HAS RIGHTLY LEVIED THE PENALTY AND IT CANNOT BE SAID THAT THE ASSESSING OF FICER WAS UNDER OBLIGATION TO RECORD THE SPECIFIC SATISFACTION; WE, THEREFORE, CONFIRM THE ORDER OF THE LD. ITA NOS.281 TO 285 & 709 TO 711 OF 2010 24 CIT(A) TO THE EXTENT OF THE PENALTY LEVIED ON RS. 6 ,20,000 WHICH IS UNDISCLOSED INCOME. FURTHER, THE SAME DECISION HAS BEEN FOLLOWED IN THE CASE OF AJIT B. ZOTA [SUPRA]. IN VIEW OF THE DECISIONS OF MUMBAI BENCHES , WE ARE OF THE VIEW, THAT IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 TO SEC.271(1) WOULD NOT BE AVAILABLE IF ASSESSEE HAS NOT DISCLOSE D THE INCOME BEFORE THE DATE OF THE SEARCH IN THE RETURN TO BE FURNISHE D BEFORE THE TIME ALLOWED U/S.139[1]. 20. THE LD. COUNSEL OF THE ASSESSEE HAD ALSO EMPHAS ISED THAT SEC.153A PUTS A NON OBSTANTE CLAUSE AND, THEREFORE, RETURNED ALREADY FILED WOULD ABATE. NOW IF THE ADDITIONAL INCOME DEC LARED IN THE FRESH RETURN U/S.153A IS ACCEPTED, THEN THERE WILL NOT BE ANY DIFFERENCE IN THE RETURNED INCOME AND THE ASSESSED INCOME AND, TH EREFORE, PENALTY IS NOT LEVIABLE. SEC.153A READS AS UNDER: 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 , SECTION 147 , SECTION 148 , SECTION 149 , SECTION 151 AND SECTION 153 , IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL ( A ) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURN ISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETU RN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B ), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQUIRED TO BE FURNISHED UNDER SECTION 139 ; ( B ) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESS MENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITI ON IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING T O ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN ITA NOS.281 TO 285 & 709 TO 711 OF 2010 25 THIS [SUB-SECTION] PENDING ON THE DATE OF INITIATIO N OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A , AS THE CASE MAY BE, SHALL ABATE. [(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF A SSESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APP EAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINE D IN SUB-SECTION (1) OR SECTION 153 , THE ASSESSMENT OR REASSESSMENT RELATING TO ANY AS SESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SE CTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER: THE HIGHLIGHTED PORTION OF THE PROVISIONS CLEARLY S HOW THAT RULE OF ABATMENT APPLIES TO AN ASSESSMENT OR RE-ASSESSMENT WHICH IS PENDING ON THE DATE OF INITIATION OF THE SEARCH. THIS MEANS ALL THE RETURNS FILED EARLIER WILL NOT ABATE BUT ONLY IN CASES WHERE ASSE SSMENTS ARE STILL PENDING WOULD ABATE. IT IS NOT THE CASE OF THE ASSE SSEE BEFORE US THAT ASSESSMENTS FOR A.YRS. 2004-05 TO 2006-07 WERE PEND ING ON THE DATE OF SEARCH. THIS ASPECT OTHERWISE HAS TO BE CONSIDER ED IN THE LIGHT OF THE FACT THAT RETURN FOR A.Y 2006-07 COULD STILL BE FILED BEFORE 30-10-06 I.E. SAME WAS PENDING ON THE DATE OF SEARCH. BUT AS POINTED OUT BY THE LD. DR THE RETURN WAS FILED ON 30-10-06 U/S.139[1] BUT INCOME DISCLOSED WAS ONLY RS.64,766/-. THIS MAKES IT CLEAR THAT DESPITE SEARCH, ASSESSEE DID NOT WANTED TO DISCLOSE THE CONCEALED I NCOME WHICH WAS FOUND DURING THE COURSE OF SEARCH. 21. THE ABOVE LEGAL PRINCIPLES ARE CLEARLY APPLICAB LE TO THE FACTS OF THE CASE BEFORE US BECAUSE DURING THE SEARCH 50 BUN DLES OF BILLS WERE FOUND WHICH PERTAINED TO UNDISCLOSED SALES WHICH WE RE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THIS FACT WAS ADMITTED DU RING THE SEARCH AND THEREFORE OFFENCE OF CONCEALMENT WAS COMPLETE. THEREFORE, WE ARE ITA NOS.281 TO 285 & 709 TO 711 OF 2010 26 OF THE VIEW THAT PENALTY ON ADDITIONAL INCOMES DECL ARED IN THE RETURNS IS CLEARLY LEVIABLE. IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORDERS OF THE LD. CIT(A) AND CONFIRM THE PENALTIES LEVIED BY THE AO. 22. IN THE RESULT, REVENUES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 3/1/2012. SD/- SD/- (VIJAY PAL RAO) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 13/1/2012. P/-*