Smt. Tripat Kaur, New Delhi V. ACIT, New Delhi

ITA 2835/DEL/2015

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4232 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VED JAIN ASHISH GOEL; ASHISH CHADHA CAS
• Keywords: Gift; Business income; Income from undisclosed sources; Search and seizure; Document seized; Documents seized
• Section: 133A; 131; 132; 154

Judgement Text

PAGE 1 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR A - 29, FRIENDS COLONY, EAST NEW DELHI PAN: AAAPK8020A VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE ASHISH GOEL & ASHISH CHADHA CAS REVENUE BY: SHRI AMIT JAIN, SR. DR DATE OF HEARING 25/07/2018 DATE OF PRONOUNCEMENT 09 /10/2018 O R D E R PER PRASHANT MAHARISHI, A. M. 01. THIS APPEAL IS FILED BY SMT. TRIPAT KAUR, (ASSESSEE, APPELLANT) AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XXVI , NEW DELHI ( TH E CIT A , COMMISSIONER APPEALS ) DATED 23 MARCH 2015 FOR A.Y . 2012 13 IN NOT ONLY CONFIRMING PENALTY LEVIED U/S 271 AAA OF THE INCOME TAX ACT PAGE 2 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ( THE ACT ) BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 14 ( THE LD AO ) OF RS. 30 LAKHS BUT ALSO FURTHER ENHANCING THE SAME BY RS 23 LAKHS . IN SHORT , ASSESSEE IS CONTESTING TOTAL PENALTY LEVIED OF 53 LAKHS IN THIS APPEAL. 02. THE BRIEF FACTS ARE COVERED IN A NARROW COMPASS. SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON SHRI PARMINDER SINGH KALRA OF M /S CONSORTIUM SECURITIES PRIVATE LIMITED AND OTHER ASSOCIATED CONCERNS ON 28/7/2011. THE SEARCH AT THE PREMISES OF THE ASSESSEE WAS ALSO CARRIED OUT, AS SHE WAS CHIEF EXECUTIVE OFFICER OF CONSORTIUM SECURITIES PRIVATE LIMITED. SHE WAS DERI VING INCOME FROM HOUSE PROPERTY, INCOME FROM BUSINESS OF PROFESSION, CAPITAL GAIN AND INCOME FROM OTHER SOURCES . BESIDES, SHE IS ALSO IN THE BUSINESS OF PURCHASE AND SALE OF PAINTING, ARTWORKS, SCULPTURES ETC. UNDER THE NAME AND STYLE OF M/S GALLERIE NAVYA . 03. IN RETURN OF INCOME FILED FOR THE YEAR ASSESSEE OF RS . 5, 89,56, 260/ , SHE INCLUDED 3 CRORES AS HER BUSINESS INCOME ON ACCOUNT OF VALUATION DIFFERENCES IN THE INVENTORY PAGE 3 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI VALUATION OF ARTWORK , PAINTING AND SCULPTURES. A SSESSMENT PROCEEDINGS RESULTED INTO AN ADDITION OF 3 , 15 , 96 , 224/ ON ACCOUNT OF UNEXPLAINED STOCK WHICH WAS FURTHER REDUCED TO 3 , 12 , 42 , 729/ ON A DJUSTMENT OF VALUATION ON ACCOUNT OF PRICE/ INVOICE . ASSESSMENT U/S 143 ( 3 ) OF THE ACT WAS PASSED ON 31/3/2014 WHEREIN INCOME OF THE ASSESSEE WAS ASSESSED AT 6 , 05 , 5 2, 484/ AGAINST THE RETURN FILED OF 5 , 89 , 56 , 260/ - MAKING AN ADDITION OF UNEXPLAINED STOCK OF RS. 15 , 96 , 224/ - O VER AND ABOVE DISCLOSURE OF 3 CRORES IN THE RETURN OF INCOME. PENALTY NOTICES U/S 271AAA OF THE ACT WAS ISSUED TO THE ASSESSEE AS SHE HAS DISCLOSED A SUM OF 3 CRORES VOLUNTARILY DURING THE COURSE OF SEARCH AND OFFERED THE SAME AS INCOME IN HER RETURN OF INCOME. 04. IN RESPONSE TO NOTICE, ASSESSEE SUBMITTED REPLY ON 9/7/2014 . ASSESSEE ALSO SUBMITTED THAT A FURTHER REDUCTION IN THE GROSS PROFIT BY 39.2% FROM THE TAG PRICE SHOULD BE GRANTED AND THEREFORE APPLICATION U/S 154 OF THE ACT WAS MOVED WHICH WAS SUMMARILY REJE CTED. PAGE 4 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI 05. THE LEARNED ASSESSING OFFICER H ELD THAT ASSESSEE HAS CLEARLY CONCEALED THE PARTICULARS OF HER INCOME AND SHE IS LIABLE TO PAY PENALTY UNDER THE PROVISIONS OF THE INCOME TAX ACT , 1961 . HE FURTHER STATED THAT D URING THE COURSE OF SEARCH, ASSESSEE HAS NOT SUBSTANTIATED MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THEREFORE ASSESSEE IS NOT ELIGIBLE FOR THE BENEFIT CONTAINED IN SUBSECTION (2) OF SECTION 271AAA OF THE ACT. THEREFORE LEARNED ASSESSING OFFICER IMPOSED A PENALTY OF 30 LAKHS VIDE ORDER DATED 29 /9/2014 PASSED U/S 271AAA OF THE ACT. HE FURTHER HELD THAT IS ON THE SAME AMOUNT THE PENALTY IS BELIEVED UNDER SECTION 271 (1) (C ) OF THE INCOME TAX ACT THEREFORE, HE LEVIED PENALTY UNDER SECTION 271AAA OF 30 LAKHS ON PR OTECTIVE BASIS. 06. ASSESSEE , A GGRIEVED W ITH THE ORDER OF THE LEARNED AO, PREFERRED A PPEAL BEFORE THE LD CIT A . HE NOT ONLY CONFIRMED THE PENALTY OF RS 30 LAKHS , BUT H E FURTHER ENHANCED IT BY RS 23 LAKHS. HE HELD THAT THOUGH THE TOTAL DISCLOSURE MADE BY THE ASSESSEE IN THE RELEVANT YEAR WAS 5.30 CRORES COMPRISING OF 3 CRORES BECAUSE OF STOCK DISCREPANCY AND RS. 2 .30 CRORES PAGE 5 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ON ACCOUNT OF UNEXPLAINED CASH AND ON ACCOUNT OF JEWELRY FOUND AT THE TIME OF S EARCH , THE LEARNED ASSESSING OFFICER HAS LEVIED PENALTY ONLY ON 3 CRORES AND FORGOT TO LEVY ON RS 2.30 CRORES . HE FURTHER HELD THAT WHILE PASSING THE ASSESSMENT ORDER ON 29/9/2014 IN RESPECT OF UNDISCLOSED INCOME OFFERED DURING THE COURSE OF SEARCH, THE LEARNED AO INITIATED PENALTY ON TOTAL UNDISCLOSED INCOME INCLUDING RS . 2.30 CRORES OVER AND ABOVE RS. 3 CRORES , HOWEVER , WHILE LEVYING THE PENALTY , SHE HAD ERRONEOUSLY NOT LEVIED PENALTY ON RS. 2 .30 CRORES. T HEREFORE , HE ISSUED A NOTICE FOR ENHANCEMENT U/S 251 ( 2 ) OF THE ACT ON 12/3/2015 GIVING AN OPPORTUNITY TO THE ASSESSEE TO SHOW CAUSE WHY PENALTY ORDER MAY NOT BE FURTHER ENHANCED WITH RESPECT TO ADDITION OF RS. 2 .30 CRORES. THE ASSESSEE DID NOT SUBMIT ANY REPLY AND THEREFORE THE LEARNED COMMISSIONER APPEAL S PROCEEDED TO DECIDE THE ISSUE ON MERITS. HE HELD THAT THE APPELLANT AND HER SPOUSE DECLARED A SUM OF 15.40 CRORES AS THEIR UNDISCLOSED INCOME OF WHICH THE SHARE OF THE APPELLANT WAS STATED TO BE 6 CRORES. THE DISCLOSURE OF 6 CRORES WERE STATED TO C OMPRISE OF PAGE 6 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI A. RS. 1.3 4 CRORES ON ACCOUNT OF UNEXPLAINED CASH, B. 96 LAKHS ON ACCOUNT OF UNACCOUNTED JEWELRY AND C. RS. 3.70 CRORES ON ACCOUNT OF UNEXPLAINED STOCK OF ARTWORKS FOUND AT THE TIME OF SEARCH. OUT OF THE UNDISCLOSED INCOME OF 6 CRORES, THE APPELLANT DECLARED ONLY 5.30 CRORES IN THE RETURN OF INCOME, WHICH IN TURN WAS MADE UP OF 3 CRORES RELATING TO STOCK DISCREPANCY AND RS . 2 .30 CRORES RELATING TO UNACCOUNTED CASH ( RS 1.34 CRORES ) AND UNEXPLAINED JEWELRY ( RS 96 LAKHS ) . HE FURTHER HELD THAT DISCLOSURE OF 3 CRORES IS AN UNDISCLOSED INCOME AND FURTHER SUM OF RS. 2.30 CRORES REPRESENTING CASH AND JEWELRY IS ALSO UNDISCLOSED INCOME NOT RECORDED IN THE BOOKS OF ASSESSEE ON OR BEFORE THE DATE OF SEARCH MAINTAINED IN THE NORMAL COURSE OF BUSINESS AND NOR HAS BEEN DISCLOSED BEFORE THE DATE OF SEARCH. THEREFORE, HE HELD THAT THE CONDITIONS SPECIFIED IN SUBSECTION ( 2 ) OF SECTION 271AAA ARE NOT MET WITH IN RESPECT TO 3 CRORES AS WELL AS WITH RESPECT TO RS. 2.30 CRORES. THEREFORE HE HELD THAT PENALTY AT THE RATE OF 10% IS IMPOSED ON THE UNDISCLOSED INCOME OF RS 2.30 CRS OVER AND PAGE 7 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ABOVE OF 10% ON 3 CRORES IMPOSED BY THE LEARNED AO. HE SUPPORTED HIS DECISION BY THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF MA K DATA PRIVATE LTD VERSUS CIT [ 358 ITR 593 ] RENDERED IN CONTEXT OF SECTION 271 ( 1 ) (C ) OF THE ACT , WHERE THE ASSESSEE SURRENDERED ADDITIONAL INCOME CLAIMING IT IS A VOLUNTARY DISCLOSURE TO AVOID LITIGATION AND BUY PEACE ET C. CONSEQUENTLY, HE PASS ED AN APPELLATE ORDER WHERE HE CONFIRMED THE PENALTY OF 30 LAKHS ON DISCLOSURE OF RS. 3 CRORES AND FURTHER ENHANCE D THE PENALTY BY RS 2 3 LAKHS ON ADDITION OF UNDISCLOSED INCOME NOT CONSIDERED BY AO FOR PENALTY OF RS 2 .30 CRORES U/S 271 AAA OF THE ACT . T HEREFORE , ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSIONER APPEALS HAS PREFERRED AN APPEAL BEFORE US. 07. THE LEARNED AUTHORIZED REPRESENTATIVE (AR) VEHEMENTLY OPPOSED THE PENALTY ORDERS PASSED BY THE LOWER AUTHORITIES. HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE AS ASSESSEE IS COVERED BY PROVISIONS OF SECTION 271 AAA (2) AS SHE HAS SUBSTANTIATE D THE TOTAL DISCLOSURE INCLUDING THE SUM ON WHICH PENALTY IS LEVIED BY THE LD CIT PAGE 8 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI (A). HE FURTHER SUBMITTED THAT ASSESSEE HAS ALSO PAID THE FULL TAX ON THE DISCLOSURE . HE FURTHER SUBMITTED THAT DISCLOSURE WAS MADE IN THE STATEMENT U /S 132 ( 4) OF THE ACT BY THE GROUP AND ON LY THE BIFURCATION OF DISCLOSURE WAS GIVEN LATER ON THAT TOO BEFORE THE SEARCH OFFICERS. HE THEREFORE SUBMITTED THAT ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS OF SUBSECTION 2 AND HENCE NO PENALTY CAN BE LEVIED U/S 271AAA OF THE ACT. HE FURTHER REFERR ED TO THE STATEMENT RECORDED ON 20/9/2011 U/S 132 ( 4 ) OF THE ACT . HE STATED THAT IN Q. NO. 13 SHE HAS OFFERED THE CASH AMOUNT OF 10 LAKHS TO BE SEIZED WHICH MAY BE ADJUSTED AGAINST THE TAX LIABILITY OF THE GROUP AS WELL AS OWNING THE DISCLOSURE OF RS 15.40 CRORES WHICH IS UNDISCLOSED INCOME OF THE ASSESSEE . FURTHER, IT WAS ALSO STATED THAT NO PENALTY PROCEEDINGS COULD BE INITIATED ON THE CONSOLIDATED DISCLOSURE OF THE GROUP/FAMILY OF 15.40 CRORES. HE FURTHER R EFERRED TO THE LETTER DATED 28/11/2011 FILED TO SHOW MANNER OF T HE ENTIRE DISCLOSURE WHICH HAS ALREADY BEEN ACCEPTED BY THE LEARNED AO . THEREFORE, ACCORDING TO HIM ALL THE THREE PAGE 9 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI CONDITIONS HAVE BEEN MET BY THE ASSESSEE. HENCE PENALTY U/S 271 AAA LEVIE D BY THE LD AO IS ERRONEOUS. 08. WITH RESPECT TO THE ORDER OF THE LEARNED CIT (A) , HE SUBMITTED THAT THAT ASSESSEE HAS DISCLOSED THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED AND ASSESSEE HAS SUBSTANTIATED BY THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. HE STATED THAT IT IS EXPLAINED IN STATEMENT RECORDED ON 20/9/2011 AND AS WELL AS LETTER DATED 28 /11/2011. HE FURTHER RELIED UPON THE SEVERAL DECISIONS TO STATE THAT , IF THE SEARCHED PE RSON IS NOT ASKED TO SUBSTANTIATE THE MANNER OF EARNING UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE BURDEN CANNOT LIE UPON ASSESSEE TO DISCLOSE IT SUO MOTTO . HE STATED THAT IF IN THE STATEMENT THE REVENUE CANNOT DEMONSTRATE THAT ASSESSEE WAS ASKED THE MANNER AND REQUIRED TO SUBSTANTIATE THE UNDISCLOSED INCOME , PENALTY U/S 271AAA CANNOT BE LEVIED. HE FURTHER SUBMITTED A PAPER BOOK WHEREIN THE SUBMISSION DATED 9/7/2014 BEFORE THE ASSESSING OFFICER WAS RELIED UPON. HE FURTHER REFERRED TO THE COPY OF STATEMENT - RECORDED U/S 132 PAGE 10 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ( 4 ) OF THE ACT OF ASSESSEE ON 20/9/2011 AS WELL AS THE COPY OF REPLY FILED BEFORE THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) ON 28/11/2011. HE FURTHER REFERRED EXTENSIVELY THE COPY OF STATEMENT RECORDED U/S 131 (1A) OF THE A SSESSEE AND THE DETAILS OF M ODUS OPERANDI OF THE OPERATION OF THE ART GALLERY DISCLOSED BEFORE THE DEPUTY DIRECTOR (INVESTIGATION) . HE EXTENSIVELY READ ALL THESE DOCUMENTS AND FURTHER REFERRED TO THE LETTER DATED 18/10/2011 WRITTEN BY THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) TO SRI PARMINDER SINGH KA LRA REGARDING BIFURCATION OF DISCLOSURE OF 15.40 CRORES. IN VIEW OF THIS , HE SUBMITTED THAT THE PENALTY U/ S 271AAA LEVIED BY THE LEARNED ASSESSING OFFICER ON RS. 3 CRORES , ENHANCED, AND CONFIRMED BY THE LEARNED C IT A ON DISCLOSURE OF RS . 2 .30 CRORES IS NOT SUSTAINABLE. 09. HE FURTHER RELIED UPON THE VARIOUS DECISIONS AS UNDER: - I. SV P BUILDERS INDIA LTD VERSUS DC IT [ ITA 4674/ DEL/ 2014 ] [DT . 19/2/2015 ] II. M OTHERS PRIDE EDUCATION PERSONA PRIVATE LTD VERSUS DC IT CC - 5 NEW DELHI { ITA NO 33 2/DEL/2011 ] PAGE 11 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI III. SUDHA GUPTA VERSUS DEPUTY COMMISSIONER OF INCOME TAX { ITA 5445/ DEL /2012 ] [DT 22 /8/ 2014 ] IV. ACIT VERSUS BRIJ BHUSHAN SINGHAL [ IT A 5276/DEL/2013 ] [DT. 9/3/2015 ] V. CIT VERSUS EMIRATES TECHNOLOGIES PVT LTD [ 2017] [ 399 ITR 189 (DELHI) ] VI. THE PRINCIPAL COMMISSIONER OF INCOME TAX VERSUS SUNDEEP GUPTA AND SAMIR GUPTA ( 2017 ) [ 11) TMI 806 DELHI HIGH COU RT ] VII. ACIT VERSUS SUSHIL GUPTA [ ITA 3856 & 3857/D EL/2013 ] [DT. 14/8/2014 ] VIII. THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS ASOKA NA GRETH [ IT A 2839/DEL/2013 ] [ DT 24/2/2015 ] IX. SHRI PRAMODKUMAR JAIN V DEPUTY COMMISSIONER OF INCOME TAX [ ITA 131 133/CTK/2012 2012 (12) TMI 629 ITAT ] X. THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS SMT SULOCHANAA DEVI A AGARWAL [ ITA 1052/ AHD /2012 ] PAGE 12 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI 10. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT ACCORDING TO THE PROVISIONS OF SECTION 271AAA THE PEN ALTY CANNOT BE LEVIED BY THE LEARNED CIT A. ONLY THE ASSESSING OFFICER IS AUTHORIZED TO LEVY THE PENALTY. HE THEREFORE SUBMITTED THAT WHAT IS REQUIRED TO BE DONE BY A PARTICULAR AUTHORITY , IF IT HAS BEEN DONE BY THE HIGHER AUTHORITY AND NOT BY THAT AUTH ORITY , THE SAME MAKES IT INVALID. THEREFORE, ACCORDING TO HIM THE INITIATION AND LEVY OF PENALTY BY THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ON THE SUM OF RS 2 .30 CRORES OF RS 23 LAKHS IS INVALID . 11. T HE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. HE SUBMITTED THAT ASSESSEE HAS THOUGH DISCLOSED THE ABOVE UNDISCLOSED INCOME IN A STATEMENT U/S 132 ( 4 ) OF THE ACT BUT HAS NEITHER ADMITTED THE UNDISCLOSED INCOME NOR SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. HE FURTHER STATED THAT ASSESSEE HAS FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND FURTHER THE ASSESSEE HAS NOT PAGE 13 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI DEPOSITED THE TAX TOGETHER WITH THE INTEREST IN RESPECT OF THE UNDISCLOSED INCOME IN THE RETURN FILED BY HER. THEREFORE, THE LEARNED LOWER AUTHORITIES HAVE CORRECTLY LEVIED THE PENALTY. HE FURTHER RELIED UPON THE DECISION OF I. T HE ASST COMMISSIONER OF INCOME TAX VERSUS SS A I NTERNATIONAL LTD [ 94 TAXMANN.COM 17 (DELHI) ] II. THE PRINCIPAL COMMISSIONER OF INCOME TAX VERSUS SMT RITU S I NGHAL (2018) [ 92 TAXMAN.COM 224 (DELHI) ] 12. HE SUBMITTED THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN SMT. RITU SINGHAL SQUARELY COVERS THE ISSUE IN FAVOUR OF THE REVENUE. 13. I N REJOINDER, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT IT IS NOT, THE ALLEGATION OF THE REVENUE THAT ASSESSEE HAS NOT PAID TAX THEREON. HE FURTHER SUBMITTED THAT ASSESSEE HAS ALSO DISCLOSED THE MANNER OF EARNING SUCH INCOME AS FAR AS THE DISCREPANCY OF 3 CRORES IN THE VALUATION OF ARTWORK AND SCULPTURE AS WELL AS CASH OF RS 1.34 CRORES IS CONCERNED. HE SUBMITTED THAT THOUGH THESE INCOMES ARE DERIVED FROM THE BUSINESS OF THE ASS ESSEE. HE FURTHER STATED THAT ASSESSEE HAS PAGE 14 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ALSO DISCLOSED THE MANNER AND SUBSTANTIATE THE DISCLOSURE OF CA SH FOUND DURING THE COURSE OF SEARCH . WITH RESPECT TO JEWELRY, HE SUBMITTED THAT THAT ASSESSEE IS A WOMAN HAVING STRONG FAITH IN TRADITIONAL AND INDIAN CULTURAL VALUES. HE FURTHER STATED THAT ACCORDING TO THE COMMON PREVALENT TRADITION IN THE FAMILY SINCE LONG, SHE IS ACCUMULATING JEWELRY AND IT IS A PRACTICE COMMON IN INDIAN FAMILIES THAT SUCH JEWELRY IS PAS SED ON FROM ONE GENERATION TO OTHER; THE JEWELRY FOUND ALSO INCLUDED THE JEWELRY, WHICH IS RECEIVED BY THE FAMILY MEMBERS FROM THEIR ANCESTORS. SHE THEREFORE HAS CLEARLY EXPLAINED THAT THE JEWELRY FOUND IS NOT UNDISCLOSED INCOME OF ASSESSEE BUT IS RECEIVED BY HER FROM THE ANCESTRAL PERSONS AS WELL AS OTHER FAMILY MEMBERS FROM WHO THE JEWELRY RECEIVED. THEREFORE, IT WAS STATED THAT THE MANNER OF OWNERSHIP OF THE JEWELRY HAS ALREADY BEEN DISCLOSED BY THE ASSESSEE. HE THEREFORE SUBMITTED THAT ALL THE CONDI TIONS SPECIFIED UNDER SUBSECTION ( 2 ) OF SECTION 271AAA HAS BEEN SATISFIED BY THE ASSESSEE AND THEREFORE THE PENALTY LEVIED BY THE LEARNED PAGE 15 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ASSESSING OFFICER AND FURTHER ENHANCED BY THE LEARNED COMMISSIONER OF INCOME TAX APPEALS IS NOT SUSTAINABLE. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION , ORDERS PASSED BY THE LOWER AUTHORITIES; VARIOUS JUDICIAL PRECEDENTS RELIED UP ON BY THE PARTIES BEFORE US. THE PROVISION OF SECTION 271AAA OF THE ACT PROVIDES AS UNDER : A. ASSESSING OFFICER IS AUTHORIZED TO LEVY THE PENALTY. B. IT APPLIES TO SEARCH INITIATED ON OR AFTER 1/6/2007 BUT BEFORE 1/7/2012. C. PENALTY IS PAYABLE @ 10 % OF UNDISCLOSED INCOME. D. PENALTY CAN BE AVOIDED IF THE ASSESSEE IN THE STATEMENT U/S 132 (4) ADMITS THE UNDISCLOSED INCOME E. ASSESSEE HAS TO FURTHER SPECIFY THE MANNER IN WHICH IT HAS BEEN EARNED. , SUBSTANTIATE THE MANNER OF EARNING IT AND PAY THE TAX ON SUCH UNDISCLOSED INCOME. F. THE DISCLOSURE OF THE SUM HAS TO BE WITH SOME SPECIFICITY OF FACTS AND BACKED WITH SOME EVIDENCES TO SUPPORT THOSE FACTS . PAGE 16 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI G. DISCLOSURE OF MANNER AND IT SUBSTANTIATION MAY BE AT THE STAGE OF ADMISSION OR ASSESSMENT PROCEEDINGS. H. TAXES ARE ALSO NOT NECESSARILY TO BE PAID AT THE STAGE OF ADMISSION. IT CAN BE ALONG WITH THE RETURN OR EVEN BEFORE COMPLETI ON OF ASSESSMENT. I. THE ONUS IS ON THE ASSESSEE TO ADMIT U/S 132 (4) OF THE ACT AND TO DISCLOSE THE MANNER OF EARNINGS AND ITS SUBSTANTIATION. J. ALL THE CONDITIONS OF SECTION 271 AAA (2) ARE CUMULATIVE AND NON FULFILLMENT OF ONE OF THEM LEADS TO INESCAPAB LE ROUTE OF PENALTY. K. NO PENALTY CAN BE FURTHER IMPOSED ON THE PERSON U/S 271(1) ( C ) OF THE ACT ON UNDISCLOSED INCOME. L. UNDISCLOSED INCOME IS D EFINED IN EXPLANATION (A) TO THAT SECTION . IT MEANS INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED BY ASSETS OR TRANSACTIONS OR DOCUMENTS WHICH IS NOT RECORDED IN THE BOOKS OF THE ASSESSEE PAGE 17 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI 15. HONBLE DELHI HIGH COURT IN CASE OF CIT VERSUS MRS. RITU SINGHAL [2018] 403 ITR 97 (DEL) HAS HELD THAT UNLESS THE ASSESSEE DESCRIBES THE MANNER OF EARNING UNDISCLOSED INCOME AND ALSO SUBSTANTIATE THE SAME, THE ASSESSEE IS NOT ELIGIBLE FOR ESCAPE FROM PENALTY AS PROVIDED UNDER SECTION 271AAA (2) OF THE ACT. THIS DECISION HAS CONSIDERED THE PRIN CIPLES ENUNCIATED BY THE DECISION CITED BY THE PARTIES BEFORE US AND THEREFORE IT WOULD BE A BINDING PRECEDENT BEFORE US TO BE FOLLOWED. THE UNDISCLOSED INCOME EARNED BY THE ASSESSEE IS REQUIRED TO BE TESTED ON THE PRINCIPLES UPHELD BY THE HONBLE DELHI HI GH COURT IN THIS CASE. HONOURABLE HIGH COURT HAS HELD FACTS OF THAT CASE IN PARA NO 13 AND 16 OF THAT DECISION AS UNDER : - 13. IN THE PRESENT CASE, DURING THE COURSE OF THE STATEMENT MADE BY THE ASSESSEE, DURING THE COURSE OF THE SEARCH ON MARCH 4 , 2010, THAT SHE HAD LENT RS. 16 CRORES IN AGGREGATE TO THREE INDIVIDUALS DURING THE FINANCIAL YEAR 2009 - 10. THIS WAS IN RESPONSE TO A QUERY BY THE REVENUE OFFICIALS DURING PAGE 18 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI THE COURSE OF SEARCH WHEN THE BASIS OF PAGE 81 OF EXHIBIT A - 3 WAS SOUGHT TO BE QUES TIONED. TO THE NEXT QUESTION, THE ASSESSEE REPLIED THAT THE SAID AMOUNT OF 'RS. 16 CRORES IS MY UNACCOUNTED INCOME FOR THE FINANCIAL YEAR 2009 - 10 RELEVANT FOR THE ASSESSMENT YEAR 2010 - 11.' HOWEVER, THE REQUIREMENT OF THE ASSESSEE HAVING TO '(II) SUBSTANTIA TES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED' WAS SATISFIED. ALTHOUGH A GENERAL STATEMENT THAT THE UNDISCLOSED INCOME WAS THE SOURCE OF RS. 16 CRORES WAS DISCLOSED, NO 'SUBSTANTIATION' OF THE 'MANNER' OF DERIVING SUCH UNDISCLOSED INCOME WAS R EVEALED. 16. THAT THE INCOME WHICH WAS ULTIMATELY BROUGHT TO TAX PURSUANT TO THE DISCLOSURE MADE, WHICH WAS VOLUNTARY ON THE PART OF THE ASSESSEE IS STATING PAGE NO : 0110 PAGE 19 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI THE OBVIOUS. THE ASSESSEE MERELY STATED THAT THE SUMS ADVANCED WERE UNDISCLOSED I NCOME. HOWEVER, SHE DID NOT SPECIFY HOW SHE DERIVED THAT INCOME AND WHAT HEAD IT FELL IN (RENT, CAPITAL GAIN, PROFESSIONAL OR BUSINESS INCOME OUT OF MONEY LENDING, SOURCE OF THE MONEY, ETC.). UNLESS SUCH FACTS ARE MENTIONED WITH SOME SPECIFICITY, IT CANNOT BE SAID THAT THE ASSESSEE HAS FULFILLED THE REQUIREMENT THAT SHE, IN HER STATEMENT (UNDER SECTION 132(4)) 'SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED'. SUCH BEING THE CASE, THIS COURT IS OF THE OPINION THAT THE LOWER APPELLATE AU THORITIES MISDIRECTED THEMSELVES IN HOLDING THAT THE CONDITIONS IN SECTION 271AAA(2) WERE SATISFIED BY THE ASSESSEE. [ UNDERLINE SUPPLIED BY US] 16. FURTHER IN PARA NO 14 THE HONOURABLE HIGH COURT HAS SHOWN THE ESSENTIAL PURPOSES OF SECTION 271AAA OF THE ACT AS UNDER : - 14. IN CONSTRUING SECTION 271AAA ONE MUST NOT LOSE SIGHT OF ITS ESSENTIAL PURPOSE WHICH RESULTED IN ITS PAGE 20 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ENACTMENT. THERE IS A PENALTY AT THE RATE OF 10 PER CENT. OF THE UNDISCLOSED AMOUNT DECLARED, IF THE CONDITIONS IN SECTION 271AAA(2) ARE NOT MET WITH. THIS IS QUITE DIFFERENT FROM THE PENAL PROVISION UNDER SECTION 271(1)(C) OF THE ACT, WHICH DIRECTS THAT IF INCOME IS CONCEALED OR INACCURATE RETURNS ARE FILED, WHICH ARE DISALLOWED BY THE ASSESSING OFFICER, THE PENALTY SHALL BE 'THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED.' IN THE CASE OF AMOUNTS DISCLOSED DURING THE COURSE OF SEARCH, THE PENALTY AMOUNT IS ONLY TEN PER CENT . OF THE UNDISCLOSED INCOME. PARLIAMENT HAS, THEREFORE, GIVEN A DIFFERENT TREATMENT TO THE LATTER CATEGORY. AT THE SAME TIME, IF AN ASSESSEE WERE TO SUCCESSFULLY URGE THE 'ESCAPE ROUTE' SO TO SAY, OF SECTION 271AAA(2), ALL THREE CONDITIONS MENTIONED IN THE PROVISION, (AS HELD IN GEBILAL KANHAIALAL IN RESPECT OF PARI MATERIA PROVISIONS) HAVE TO NECESSARILY BE FULFILLED. IN THE PRESENT CASE, THE ASSESSEE, WHILE DECLARING THE 'UNDISCLOSED INCOME' ALSO STATED, THAT 'THE PAGE 21 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI SURRENDER IS BEING MADE SUBJECT TO NO PEN AL ACTION OF SECTION 271(1)(C)'. 17. FURTHER, IN PARA NO 15 HON HIGH COURT FOLLOWING THE DECISION OF THE HONOURABLE SUPREME COURT IN CASE OF MAKDATA HAS STATED WHAT AMOUNTS TO SUBSTANTIATION OF THE MANNER OF EARNING INCOME. 15. WHILE DEALING WITH A CASE OF SIMILAR SURRENDER BUT MADE IN THE COURSE OF SURVEY PROCEEDINGS, BY AN ASSESSEE (WHICH LED TO IMPOSITION OF PENALTY), THE SUPREME COURT, IN MAK DATA (P) LTD. V. CIT [2013] 358 ITR 593 (SC) HELD AS FOLLOWS (PAGE 597) : 'THE ASSESSING OFFICER, IN OUR VIEW, SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE 'VOLUNTARY DISCLOSURE', 'BUY PEACE' 'AVOID LITIGATION', 'AMICABLE SETTLEMENT', ETC. TO EXPLAIN AWAY ITS CONDUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO SECTION 271(1) PAGE 22 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI RAISES A PRESUMPTION OF CON CEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE ASSESSING OFFICER, BETWEEN REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE. THE ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDI TIONAL SUM OF RS. 40,74,000 WITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCT IVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME - TAX DEPARTMENT. THE STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENCES UNDER EXPLA NATION 1 TO SECTION 271(1)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE THE APPELLA NT - ASSESSEE FROM THE MISCHIEF OF PENAL PAGE 23 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI PROCEEDINGS. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAD TO BE ABSOLVED FROM PENALTY. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE ASSESSING OFFICER IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING SHARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME - TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PRO CEEDINGS UNDER SECTION 133A PAGE 24 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI CONDUCTED ON DECEMBER 16, 2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE.' 18. THEREFORE IT IS CLEAR THAT IF THE ASSESSEE DOES NOT SPECIFY THE MANNER OF EARNING INCOME AND ALSO FAILS TO SUBSTANTIATE THE SAME , THE ASSESSEE CAN BE SUBJECT TO PENALTY U/S 271 AAA OF THE ACT DESPITE SAME IS DISCLOSED IN STATEMENTS U/S 132 (4) OF THE ACT AND PAYMENT OF DUE TAXES THEREON. 19. FACTS IN THE PRESENT CASE IS THAT ASSESSEE HAS DISCLOSED INCOME IN THE RETURN OF INCOME WHICH WERE DISCLOSED IN STATEMENT U/S 132 ( 4) OF THE ACT . COPIES OF THE STATEMENT ARE SUBMITTED BEFORE US WHERE THE TOTAL DISCLOSURE OF THE FIRM WAS RS 15.40 CRORES, WHICH HAS BEEN BIFURCATED AMONGST THE FAMILY MEMBER, AND ASSESSEE IS ONE OF THEM. THERE IS NO DISPUTE THAT ASSESSEE HAS ALREADY DEPOSITED TAX THEREON. NOW THE ONLY ISSUE REMAINS THAT WHETHER THE ASSESSEE HAS SPECIFIED THE MA NNER AND SUBSTANTIATED IT OR NOT. THE ASSESSEE HAS PAGE 25 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI TO DISCLOSE THE MANNER OF EARNING INCOME I.E. HOW IT HAS BEEN EARNED AND FURTHER TO SUBSTANTIATE IT MEANS TO PROVE IT BY THE PRODUCTION OF NECESSARY EVIDENCE. THE INCOME DISCLOSED ARE TO BE TESTED TO ASCERTAIN WHETHER MANNER IS DISCLOSED AND SUBSTANTIATED OR NOT. WE DEAL WITH EACH OF THEM AS UNDER : - A. DISCLOSURE OF RS 3 CRORES ON ACCOUNT OF UNDERVALUATION OF CLOSING STOCK B. DISCLOSURE OF CASH OF RS. 1.34 CRORES C. DISCLOSURE OF JEWELRY OF RS 96 LAKHS. 20. WITH RESPECT TO DISCLOSURE OF 3 CRORES MADE BY THE ASSESSEE, IT IS PART OF THE COMBINED DISCLOSURE OF RS. 15.40 CRORES MADE BY THE GROUP. THIS FACT IS NARRATED IN THE STATEMENT UNDER SECTION 132 ( 4 ) OF THE INCOME TAX ACT RECORDED ON 20/9/2011 . IN ANSWER TO QUESTION NUMBER 13 , IT HAS BEEN STATED THAT SHE HAS OFFERED RS 15.40 CRORES AS PART OF THE GROUP DISCLOSURE AND REQUESTED TO NOT TO TAKE ANY PANEL ACTION ON THE CONSOLIDATED DISCLOSURE . SUBSEQUENTLY THE DISCLOSURE WAS BIFURC ATED AMONGST THE FAMILY MEMBERS. WITH RESPECT TO THE PAGE 26 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI DISCLOSURE OF RS 3 CRORES ON ACCOUNT OF UNDERVALUATION OF STOCK OF ARTWORK, PAINTING AND SCULPTURES, SHE HAS GIVEN HER REPLY TO THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION ) ON 28/11/2011 AS UNDER: - 5.1.1 BACKGROUND AND HISTORY MRS. TRIPAT KAUR IS PROPRIETOR OF GALLERIE NVYA ,AN ART GALLERY , INCORPORATED AND COMMENCED ITS BUSINESS OPERATIONS OF DEALING IN THE BUSINESS OF PURCHASE, SALE AND MAKING INVESTMENTS IN ALL FORMS OF ART WORKS INCLUDING PAINT INGS, SCULPTURES, PHOTOGRAPHS, PRINTS AND INSTALLATIONS. THE FIRM CAME INTO EXISTENCE AND STARTED ITS BUSINESS MRS. TRIPAT KAUR, BELONGING TO A FAMILY OF INTELLECTUALS IS HERSELF WELL EDUCATED HOLDING POST GRADUATE QUALIFICATIONS IN TEXTILES AND DESIGNING. AS SUCH RIGHT FROM INCEPTION SHE HAD AN APTITUDE AND INTEREST IN ARTISTIC DESIGNING AND DESIGNS. SHE WAS GROWN UP IN A FAMILY HAVING INTEREST IN ART AND COLLECTING PAINTINGS REGULARLY PRIOR TO HER MARRIAGE. DURING THE YEAR 1979, SHE GOT MARRIED TO SH PARA MINDER SINGH KALRA, WHO FORTUNATELY ALSO BELONGED TO WELL PLACED FAMILY OF INTELLECTUALS. SINCE HER MARRIAGE , GOVERNED BY HER APTITUDE AND A FLAIR FOR ART SHE STARTED COLLECTING PAINTINGS PRIMARILY TO DECORATE HER HOUSE AS WELL AS A MARK OF STATUS SYMBOL IN SOCIETY . HOWEVER, LATER SUCH COLLECTION BECAME HOBBY AND AS SUCH SHE HAD BEEN CONSISTENTLY COLLECTING PAINTINGS OUT OF HER HOBBY. 5.1.2 COMMENCEMENT OF BUSINESS ACTIVITIES PAGE 27 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI SUBSEQUENTLY, OVER THE YEARS WHEN THE PRIMARY RESPONSIBILITY TOWARDS EDUCATING AND UPBRINGING HER TWO SONS WAS OVER, SHE CONSIDERED SERIOUSLY TO CONVERT HER AVOCATION INTO VOCATION AND AS SUCH DRIVEN BY FORCE OF HER HOBBY, THE IDEA OF BUSINESS ACTIVITIES OF DEALING IN PAINTINGS AND OTHER ART WORKS GERMINATED AND FINALLY INITIATED DU RING 2004. 5.1.3 BUSINESS PREMISES THE ACTIVITIES WERE INITIALLY STARTED FROM HER RESIDENCE AT A - 29, FRIENDS COLONY EAST, NEW DELHI - 110065, LATER SHIFTED TO 4/6, SIRIFORT INSTITUTIONAL AREA, NEW AND PRESENTLY BEING CONDUCTED AT SHOP NO. 101 - 103, SQUARE ON E MALL, SAKET, NEW DELHI. 5.1.4 PECULIARITIES AND COMPLEXITIES OF BUSINESS HOWEVER, BEING INEXPERIENCED IN BUSINESS AND MATTERS INCIDENTAL THERETO AS THE ACTIVITIES STARTED WITH HONEST INTROSPECTION WITH A HOBBY AND A PASSION, SHE WAS DEPENDENT UPON NUMBE R OF PERSONS LIKE ARTISTS, STAFF AND OTHER SKILLED PERSONS TO HELP HER IN RUNNING THE BUSINESS ACTIVITIES. THUS THE PECULIARITIES OF THE BUSINESS CONDUCTED CAN BE BROADLY CLASSIFIED IN TWO CATEGORIES: (A) PECULIARITIES ATTACHED WITH NATURE OF TRADE , MARKET. (B) OTHER COMPLEXITIES SPECIFICALLY ATTRIBUTED TO BUSINESS CONDUCTED 5.1.5 PECULIARITIES ATTACHED WITH NATURE OF TRADE , MARKET PAGE 28 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI (A) COMPETITION THE ART WORK IS BEING EXHIBITED AND SOLD BY VARIOUS PERS ONS I.E. FROM A STREET VENDOR TO HIGHLY REPUTED INTERNATIONAL COMPETITORS. (B) DEPENDENCE UPON SKILL OF THE ARTISTS THE ART WORK IS NORMALLY SOLD ON THE NAME FAME OF THE ARTIST AT THE SAME TIME SUCH ART WORK OF FAMOUS ARTISTS IS NOT EASY TO OBTAIN. THUS T HE MARKET PRICE WHICH AN ART WORK CAN FETCH IS LARGELY GOVERNED BY THE NAME, FAME AND GOODWILL OF THE ARTIST AS WELL AS THE HISTORICAL, CULTURAL AND SOCIAL IMPORTANCE OF THE PAINTINGS. FOR EXAMPLE THE PAINTINGS OF HISTORICAL OR ARCHEOLOGICAL INTEREST AND I MPORTANCE NORMALLY FETCH EXTRAORDINARY PRICE WHEREAS CORRESPONDING PAINTING OF LESSER KNOWN IMPORTANCE/ARTIST WILL FETCH MANY TIMES LOWER PRICE IRRESPECTIVE ITS QUALITY ETC. THE ART WORK OF OTHER ARTISTS IS DEPENDENT UPON THEIR, IMAGINATION, CREATIVITY AND INNOVATION, WHICH IS AGAIN VERY3 SUBJECTIVE AND RISKY MATTER. (C) THE BUSINESS/TRADE MOSTLY IN UNORGANIZED SECTOR AS THE BUSINESS INVOLVES DEALING WITH INDIVIDUAL ARTISTS , AND THE CUSTOMERS ARE ALSO MOSTLY INDIVIDUALS THE BUSINESS IS MOSTLY WITH THE PER SONS IN UNORGANIZED SECTORS AS SUCH THEY EITHER DO NOT MAINTAIN PROPER RECORDS OR IF THE SAME IS MAINTAINED IT IS IN AN UNORGANIZED MANNER. PAGE 29 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI (D) SALE PURCHASE PRICE SUBJECTED TO BARGAIN THE PRICES AT BOTH LEVELS I.E. ACQUIRING THE ART WORK AND SELLING IT T O CUSTOMERS ARE SUBJECTED TO HUGE BARGAIN AND NEGOTIATION AT ALL LEVELS. (E) NO BENCHMARK/YARDSTICK, CRITERIA, SCIENTIFIC/COMMERCIAL METHOD TO FIX PRICES OF ANY ART WORK EVEN THOSE BELONGING TO SAME ARTISTS. (F) COMPETITIONS FROM PIRATED/DUPLICATE PAINTI NGS AND SIMILAR PARALLEL ACTIVITIES (G) ART WORK PRONE TO DAMAGE AND OXIDATION DUE TO INAPPROPRIATE ENVIRONMENTS. MAJORITY OF SUCH FACTORS ARE NATURAL AND CAN NOT BE AVOIDED. THIS INCLUDES DISPLAY OR STORAGE IN AREAS WHERE THERE IS EXCESSIVE EXPOSURE TO L IGHT, HIGH AND/OR FLUCTUATING TEMPERATURE AND HUMIDITY LEVELS, DIRT OR INSECTS, HANDLING CLEANING ETC WHICH CAN BE CAUSED AT ANY STAGE 5.1.6, OTHER COMPLEXITIES SPECIFICALLY ATTRIBUTED TO BUSINESS CONDUCTED (A) DEALING WITH ARTISTS DEALING WITH ARTISTS IS NOT AN EASY MATTER FOR REASON AS EXPLAINED ABOVE THAT MOST OF THE ARTISTS ARE GOVERNED BY THEIR MOODS AND EMOTIONS OPERATING IN UNORGANIZED MANNER RATHER THAN IN PLANNED MANNER AS SUCH THERE WERE DIFFICULT TO TACKLE. (B) DIFFICULTY IN EXECUTING SALES/P URCHASE ACTIVITIES BEING A NEW ENTRANT WAS THUS IN THE EYES OF ARTISTS SHE WAS THE NEW, UNTRIED, UNTESTED, AND UNPROVEN ORGANIZATION AS SUCH THEY WERE RELUCTANT TO DEAL WITH PAGE 30 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI HER AND THE COMPETITORS IN THE MARKET WERE ALWAYS PREFERRED BY THEM OVER HER. HOWE VER OVER A PERIOD OF TIME AS RELATIONSHIPS IMPROVED ARTISTS STARTED GIVING WORKS ON CONSIGNMENTS GRADUALLY. (C) NATURE OF DEPENDENCY ON OTHER PERSONS THUS ON ACCOUNT OF COMPLEXITIES, PECULIARITIES AND INEXPERIENCE THE PROPRIETOR HAD NO CHOICE BUT TO DEPEN D ON VARIOUS PERSONS LIKE EMPLOYEES, PERSONS HAVING CONTRACT WITH ARTISTS, FOR RECORDING DAY TO DAY BUSINESS ACTIVITIES , TO GET ART WORK ON CONSIGNMENT ETC. DUE TO SUCH PERSISTENT PROBLEMS ACCENTUATED BY HER NON ACCOUNTING BACK GROUND FINALLY CREATED A TO TAL MESS IN BUSINESS AND RECORDS. (D) DIFFICULTY IN LOCATING PERMANENT/TRUSTWORTHY STAFF (E) ARTIST DICTATING TERMS. (F) ARTISTS NOT WILLING OR OPPOSING MAINTENANCE OF SUCH RECORDS AND DOCUMENTS. AS SUCH EITHER SUCH DOCUMENTS NOT FURNISHED BY ARTISTS AND WHEREVER FURNISHED THESE ARE NOT EVEN PROPER CONTAINING ALL PARTICULARS AND DETAILS. (G) FREQUENT VISITS OF THE ARTIST A T BUSINESS PLACE WHICH LEADS TO DEVELOPMENT OF A RELATION BETWEEN THEM AND EMPLOYEES AS SUCH THERE IS ALWAYS A RISK THAT SUCH ARTISTS MAY COLLATE WITH EMPLOYEES IN MANY MANNER INJURIOUS AND PREJUDICIAL TO THE BUSINESS OF PROPRIETOR. (H) THE PROPRIETOR ALS O NOT HAVING ANY ACCOUNTING KNOWLEDGE OR BACKGROUND. AS SUCH NOT ONLY THE BUSINESS BUT THE DOCUMENTS AS REQUIRED WERE ALSO IN PAGE 31 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI TOTAL MESS. SUCH COMPLEXITIES AND MESS WAS EVEN NOTICED BY THE INVESTIGATING AUTHORITIES AS WELL. IT IS A FACT ON RECORD AS BORNE OUT BY RECORD OF SEARCH PROCEEDINGS THAT PROPER RECORDS WERE NOT FOUND TO BE MAINTAINED : * INDICATING THE STOCK WITH SOURCE AND COST WHEREAS THE MAJOR STOCK IS ON CONSIGNMENT. * THE ENTIRE STOCK WAS FOUND WITH GROSSLY EXAGGERATED TAG PRICE WHICH IS ESTIM ATED CONSIDERING COMPETITION, BARGAIN, NEGOTIATION AND OTHER RISK FACTORS AS WELL AS PROFIT MARGIN. * THE IMPROPER RECORDS EVEN LED THE INVESTIGATING AUTHORITIES TO MAKE INADVERTENT ERROR OF SUBSTANTIAL RS. 10 CRORES CAUSED BY CLERICAL MISTAKE IN THE INPUT OF THE PRICE OF ONE OF THE WORKS. * MULTIPLE SETS OF NOTING OF THE PRICES PREPARED BY STAFF ON VARIOUS OCCASIONS I.E. FOR EXHIBITIONS, SALES ETC INDICATING DIFFERENT PRICES. * RECORDS WITH RESPECT TO EXCHANGE OF PAINTINGS WITH THE ARTISTS AND VICE - VERSA WHERE DAMAGED PAINTINGS ARE EITHER EXCHANGED OR REMOVED. 5.1.7 THUS, FORCED BY EXIGENCIES AND THE COMPLEXITIES .PECULIARITIES OF THE BUSINESS , MRS. TRIPAT KAUR OUT OF HER BUSINESS AND OTHER ACTIVITIES EARNED INCOME IN CASH ACCUMULATED TO RS.13,398,500/ - INCLUDING KEPT AT RESIDENTIAL PREMISES, IN THE CUSTODY OF FAMILY MEMBERS AND RELATIVE FOUND/SEIZED DURING OPERATION IS OFFERED TO TAX WITH BILATERAL STIPULATION AS STATED ABOVE TO EXONERATE FROM PENAL PROVISIONS OF THE ACT. PAGE 32 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI 5.1.8 AS A MATTER OF FACT AFTE R SEARCH, THE RECORDS OF THE COMPANY ARE IN TOTAL DISARRAY, THE PROBLEM IS AGGRAVATED BECAUSE CONSEQUENCES OF SEARCH ON THE COMPANY THERE IS A REAL POSSIBILITY THAT SOME OF THE PERSONS MAY NOT COME FORWARD WHICH IS ACCENTUATED BY EMPLOYEES DESERTING THE OR GANISATION. FURTHER CONSIDERING THE NATURE OF COMPLEXITIES AND DEPENDENCY ON EMPLOYEES IT IS NOT POSSIBLE BY THE PROPRIETOR TO KEEP AN EYE OR - 'PERSONALLY LOOK AFTER EVERY TRANSACTION. UNDER THE CIRCUMSTANCES THE OTHER PERSONS EXECUTE THE TRANSACTIONS, THO UGH THE RESPONSIBILITY FOR SUCH EXPENDITURE AND ONUS THEREOF PRIMARILY LIES UPON THE MANAGEMENT. UNDER THE CIRCUMSTANCES CONSIDERING THAT THE PERSONS WE HAVE DEALT ARE MOSTLY OPERATING IN UNORGANISED SECTOR AND AFTER THE SEARCH IT IS QUITE LIKELY THAT CERT AIN PARTIES FROM WHOM PURCHASES/SALES/INVESTMENTS ETC WERE MADE OR OTHER EXPENDITURE WERE INCURRED OR SERVICES OBTAINED MAY NOT COME FORWARD. 5.1.9 THUS THE POSSIBILITY THAT THE ONUS OF EXPENDITURE AND INVESTMENT SO MADE THOUGH GENUINE BUT WILL NOT BE POS SIBLE TO BE DISCHARGED CANNOT BE RULED OUT. IN ADDITION THERE MAY ALSO BE ARISING OUT OF CERTAIN TRANSACTION WHICH UPON OUR INTERPRETS: MAY NOT BE TAXED BUT MAY BE VIEWED OR INTERPRETED DIFFERENT: REVENUE. AS SUCH WE MAY NOT BE IN THE POSITION TO DISCHARGE ONUS IRRESPECTIVE AND NOTWITHSTANDING GENUINENESS OF TRANSACTIONS AND CREDITS INVOLVED. THIS MAY THUS LEAD TO UNNECESSARY LITIGATION IN THE MATTERS. 5.1.10 THUS IN ORDER TO BUY PEACE A SUM OF RS. 370 LAKHS IS BEING ON HIGHER SIDE TOWARDS PAINTINGS, PAGE 33 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI SCULP TURES, OTHER THINGS ETC INVESTMENT IN GALLERIE BUSINESS AND MATTERS INCIDENTAL THERETO FOR THE FINANCIAL YEAR RELEVANT TO THE A.Y. 2012 - 13. THE OFFER AS MADE WITH STIPULATION TO GRANT IMMUNITY FROM PENALTY IS SUFFICIENT TO COVER UP ANY DISCREPANCY OR ANY O THER MATTER OR ANY INFERENCE AS A RESULT /OUTCOME OF SEARCH PERTAINING TO MY BUSINESS ACTIVITIES STATED ABOVE. HOWEVER, THE EXACT DETAILS SHALL BE FILED DUR.NG THE COURSE OF ASSESSMENT PROCEEDINGS. 21. AS PER HER STATEMENT RECORDED UNDER SECT ION 131 (1A) OF T HE ACT ON 5/12/2011 VIDE QUESTION NUMBER 2 ONWARDS , SHE HAS EXPLAINED ABOUT THE SOURCE OF THE INCOME AND THE NATURE OF THE PROFILE OF THE ARTWORK , PAINTING AND SCULPTURE BUSINESS. SHE HAS ALSO EXPLAINED THE MODUS OPERANDI OF THE ART GALLERY BUSINESS. W ITH RESPECT TO THE EVIDENCE IN SUPPORT OF THE MODUS OPERANDI , SHE HA S ALSO REPLIED QUESTION NUMBER 4 ONWARDS TO SUBSTANTIATE THE MODUS OPERANDI OF THE WHOLE BUSINESS. SHE HAS FURTHER REFERRED TO VARIOUS ANNEXURE FOUND DURING SEARCH RELATED TO THE ARTWORK DEALT BY THE GALLERY . I N RESPONSE TO QUESTION NUMBER 5 - 11 , SHE FURTHER ANSWERED THE DIFFERENCE IN THE DOCUMENTS FOUND AS WELL AS THE HARD DISK SEIZED FROM HER RESIDENCE TO SHOW THAT WHAT IS THE STOCK OF PAGE 34 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI PAINTING AND ARTWORK ETC WHICH HAS BEEN V ALUED AS PER THE BOOKS OF ACCOUNTS AND AS PER THE COMPUTER HARD DISK. IT IS EXPLAINED IN ANSWER TO QUESTION NUMBER 12 ABOUT THE DETAILS OF THE INVENTORY SUBMITTED AND THE DIFFERENCE IN THE VALUATION . SHE HAS ALSO REPLIED THE STATEMENT IN RESPONSE TO QUEST ION NUMBER 13 , WHICH HAS ALREADY BEEN DISCUSSED ABOVE ABOUT THE TOTAL DISCLOSURE OF RS 15.40 CRORES . WITH RESPECT TO QUESTION NUMBER, 15 SHE HAS DISCLOSED A SUM OF 3.70 CRORES TOWARDS HER INVESTMENT IN UNDERVALUATION OF STOCK OF ARTWORK ETC IN HER BUSINESS . OUT OF THIS 3.70 CRORES , SHE OWNED THE 3 CRORES IN HER RETURN OF INCOME. FURTHER, S HE HAS ALSO SUBMITTED BY LETTER DATED 10/3/2014 BEFORE THE DEPUTY COMMISSIONER OF INCOME TAX ABOUT THE RECONCILIATION OF THE TOTAL TAG PRICE OF PAINTINGS AN D ARTWORK ALONG WITH THE RELEVANT ANNEXURE FOUND DURING THE COURSE OF SEARCH . SHE HAS EXPLAINED THE FUNCTIONAL PROFILE OF THE BUSINESS , PHYSICAL INVENTORY CARRIED OUT DURING THE COURSE OF THE SEARCH WITH RESPECT TO ITS RECONCILIATION WITH THE EXCEL SHEET S SEIZED FROM THE COMPUTER. SHE HA S FURTHER EXPLAINED THE CONTENTS OF THOSE PAGE 35 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI ELECTRONIC DOCUMENTS AS WELL AS EXPLAINED THE DIFFERENCE ABOUT THE INCORRECT SERIAL NUMBER AND FORMAT PRINT S. IN ANSWER TO Q. NO 14 SHE HAS RECONCILED THE PHYSICAL INVENTORY AND THE INVENTORY RECORDED IN THE SEIZED DOCUMENTS . SHE HAS FURTHER IN ANSWER TO Q. NO 15 EXPLAINED THE STATEMENT MADE BY HER AS WELL AS THE STATEMENT OF THE MANAGER OF THE STORE MS MEHER AN AND. ACCORDING TO THE STATEMENT, IN ANSWER TO Q. NO NUMBER 17 IT H AS FURTHER BEEN SUBSTANTIATED THAT WHAT IS THE MANNER OF THE CARRYING ON OF THE BUSINESS OF THE ASSESSEE. SHE FURTHER STATED THAT CERTAIN PAINTINGS ARE ALSO RECEIVED ON CONSIGNMENT BASIS AND CONSIGNMENT ACCOUNTING IS BEING CARRIED OUT IN ALTOGETHER DIFFERE NT MANNER. IN THEN THE RATIONAL FOR HIGHER PRICE TAG TO THE ACTUAL VALUE OF THE STOCK WAS ALSO EXPLAINED. SHE FURTHER STATED THAT IN LETTER DATED 28 FEBRUARY 2014 SHE HAS ALREADY SUBMITTED WITH RESPECT TO THE ARTWORK OWNED BY THE FAMILY MEMBERS AND THE AS SOCIATED CONCERNS OF THE FAMILY MEMBERS WHOSE NAMES ARE MENTIONED BEFORE THE ASSESSING OFFICER. THE PROOF OF OWNERSHIP OF THAT ARTWORK WAS ALSO GIVEN . IN PARA NO 24 OF THE LETTER , SHE HAS ALSO GIVEN THE PAGE 36 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI BREAKUP OF 3.70 CRORES WITH RESPECT TO THE VARIO US YEARS IN WHICH THE INCOME AS BEEN EARNED. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE OPINION THAT THE ASSESSEE HAS DISCLOSED THE MANNER OF EARNING OF THE INCOME WITH RESPECT TO 3 CRORES ON ACCOUNT OF UNDERVALUATION OF THE CLOSING STOCK FOUND DURING THE COURSE OF SEARCH OF VARIOUS ARTWORKS / SCULPTURES / PAINTINGS. 22. SIMILARLY, THE ASSESSEE HAS ALSO EXPLAINED THE OWNERSHIP OF THE CASH FROM THE BUSINESS OF THE ASSESSEE OF 1.34 CRORES, WHICH IS PART OF THE OVERALL DISCLO SURE MADE BY THE GROUP OF 15.40 CRORES. SHE HAS EXPLAINED IN PARA NUMBER 5.1.7 OF THE LETTER DATED 28/11/2011 THAT THE CASH OF 13398500/ IS ON INCOME IN CASH ACCUMULATED OUT OF HER BUSINESS. SHE HAS ALSO ENUMERATED DETAIL OF HER BUSINESS AND HOW THE INCOME IS EARNED. IN VIEW OF THIS, WE ARE ALSO OF THE OPINION THAT ASSESSEE HAS DISCLOSED THE MANNER OF FUNDING OF THE INCOME FROM SALE OF ARTWORK, PAINTINGS, AND SCULPTURES IN HER BUSINESS AND CASH GENERATED WHEREFROM . IN VIEW OF THIS, IT IS APPARENT THAT ASSESSEE HAS DISCLOSED THE MANNER OF EARNING OF CASH FROM THE PAGE 37 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI BU SINESS OF SALE OF ARTWORK. SHE HAS ALSO GIVEN SOURCE OF CASH GENERATED IN HER HAND THAT IS THE BUSINESS OF PROPRIETARY CONCERN RUN BY HER FORM GALLAERIE NVYA . HENCE, WE ARE OF THE OPINION THAT ASSESSEE HAS GIVEN THE MANNER OF EARNING CASH ON HAND OF 1.34 CRORES AND SUBSTANTIATED TH E SAME. 23. FOR BOTH THE ABOVE - UNDISCLOSED INCOME, ASSESSEE HAS DISCLOSED THE MANNER AND STATED THAT BOTH ARE THE BUSINESS INCOME OF THE ASSESSEE FR OM THE ARTWORK/ PAINTINGS AND SCULPTURE BUSINESS . SHE HAS ALSO SHOWN HOW THE SAME HAS BEEN EARNED . HENCE, IT CANNOT BE SAID THAT DISCLOSURE OF THESE TWO INCOME CAN BE SAID TO BE DISCLOSED WITH SOME SPECIFICITY. THEREFORE ON THIS TWO UNDISCLO SED INCOME THE ASSESSEE IS ELIGIBLE FOR PARDON U/S 271AAA (2) AND HENCE, PENALTY U/S 271AAA CANNOT BE LEVIED. 24. NOW WE COME TO THE THIRD ITEM OF THE UNDISCLOSED INCOME EARNED BY THE ASSESSEE IN THE FORM OF UNDISCLOSED JEWELRY ADDED AS UNEXPLAINED ASSETS OF THE ASSESSEE OF 96 LAKHS. THE ASSESSEE HAS MERELY STATED THAT THIS JEWELRY HAS BEEN RECEIVED BY HER FROM THE VARIOUS FAMILY MEMBERS AND FROM PAGE 38 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI INVESTORS. IT WAS FURTHER STATED THAT THE FAMILY MEMBERS OF THE ASSESSEE WERE ALSO CONTINUOUSLY ACQUIRING JEW ELRY AS PER THEIR FINANCIAL CAPABILITIES. THEREFORE ACCORDING TO THE FAMILY STATUS, AGE , TRADITION IN THE FAMILY , ECONOMIC STATUS OF THE ASSESSEE , JEWELRY HELD SI NCE MARRIAGE, GIFTED TO HER BY OTHER FAMILY MEMBERS AND MARRIED STATUS OF THE ASSESSEE , SHE DISCLOSED THE UNACCOUNTED INCOME TO THE TUNE OF 9555637/ . HOWEVER, ASSESSEE NEITHER GAVE THE NAMES OF THE PERSONS WHO GIFTED HER JEWELRY AND SHE COULD NOT SHOW SOURCES OF SUCH EXCESS JEWELRY FOUND. IN VIEW OF THIS , WE ARE OF THE VIEW THAT ASSESSEE HAS FAILED TO DISCLOSE THE MANNER OF THE EARNING OF UNDISCLOSED INCOME AND FAILED TO SUBSTANTIATE THE SAME FURTHER. HENCE, ON THE UNDISCLOSED INCOME OF 96 LAKHS ON ACCOUNT OF UNEXPLAINED JEWELRY , ASSESSEE IS CORRECTLY HELD TO BE LIABLE FOR PAYMENT OF PENALTY AT THE RATE OF @ 10 PERCENT ON THE UNDISCLOSED INCOME. 25. IN VIEW OF THE ABOVE FACTS , WE UPHOLD LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT ON UNDISCLOSED INCOME FOUND DURING THE COURSE OF SUCH OF 96 LAKHS ON UNEXPLAINED PAGE 39 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI JEWELRY . WE ALSO DI RECT LD AO TO DELETE THE PENALTY WITH RESPECT TO THE DISCLOSURE OF 3 CRORES ON ACCOUNT OF UNDERVALUATION OF THE CLOSING STOCK OF ARTWORK/ PAINTINGS/ SCULPTURES ETC. AND CASH OF 1.34 CRORES FOUND DURING THE SEARCH , FOR WHICH THE MANNER OF EARNING WAS DISCLOSED AND SUBSTANTIATED. 26. FURTHER ON PLAIN LOOK AT PENALTY ORDER , LD AO HAS LEVIED PENALTY OF 30 LAKHS STATING THAT SINCE IN THIS CASE THE PENALTY UNDER SECTION 271 (1 ) (C ) IS BEING IMPOSED ON SUBSTANTIVE BASIS ON THE SAME ISSUE , THEREFORE , HE HELD THAT PENALTY UNDER SECTION 271AAA WOULD BE ON PROTECTIVE BASIS . WE DO NOT FIND ANY PROVISION UNDER THE ACT TO LEVY PENALTY UNDER THIS SECTION IN THE MANNER LD AO HAS ENVISAGED. ACCORDING TO THE PROVISIONS OF SECTION 271AAA (3) OF THE ACT PROV IDES THAT NO PENALTY UNDER THE PROVISIONS OF SECTION 271 ( 1 ) (C ) SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUBSECTION 1 OF THAT SECTION. THEREFORE, IF THE PENALTY HAS ALREADY BEEN LEVIED UNDER SECTION 271AAA OF THE ACT , NO FURTHER PENALTY ON IT CAN BE LEVIED U/S 271 (1) (C) OF THE ACT. PENALTY U/S 271AAA AND 271 (1) (C) ARE MUTUALLY PAGE 40 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI EXCLUSIVE . EVEN ON THIS GROUND, TOO PENALTY OF RS. 30 LAKHS LEVIED BY THE AO ON PROTECTIVE BASIS IS UNSUSTAINABLE. 27. PENALTY OF 23 LAKHS INITIATED AND LEVIED BY THE LEARNED CIT A IS OTHERWISE UNSUSTAINABLE IN LAW AS ONLY THE ASSESSING OFFICER IS AUTHORIZED TO LEVY IT. CIT A IS NOT AN ASSESSING OFFICER AS DEFINED U/S 2 (7A) OF THE ACT. THEREFORE, ACCORDING TO US THE PENALTY INITIATED BY THE LEARNED COMMISSIONER APPEALS AND LEVIED BY HIM OF 23 LAKHS IS NOT SUSTAINABLE, AS HE IS NOT AUTHORIZED TO LEVY THE SAME. I F AUTHORITY IS GIVEN EXPRESSLY BY AFFIRMATIVE WORDS UPON A DEFINED CONDITION, THE EXPR ESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORIZED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO PERFORM AN ACTION ON ANY PARTICULAR ISSUE, T HEN IT IS THAT AUTHORITY ALONE WHO SHOULD DO THAT ACTION. WE DRAW SUPPORT FROM VARIOUS DECISION OF HONORABLE HIGH COURTS IN 346 ITR 343 ( BOM) , 345 ITR 223 ( DEL ) AND ALSO OF THE HONOURABLE SUPREME COURT ANIRUDHSINHJI PAGE 41 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI KARANSINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 WHERE IN HON. SUPREME COURT HELD AS UNDER : - 13. IT HAS BEEN STATED BY WADE AND FORSYTH IN ADMINISTRATIVE LAW, 7TH EDITION AT PAGES 358 AND 359 UNDER THE HEADING SURRENDER, ABDICATION, DICTATION AND SUB - HEADING 'POWER IN THE WRONG HANDS' AS BELOW: - 'CLOSELY AKIN TO DELEGATION, AND SCARCELY DISTINGUSHABLE FROM IT IN SOME CASES, IS ANY ARRANGEMENT BY WHICH A POWER CONFERRED UPON ONE AUTHORITY IS IN SUBSTANCE EXERCISED BY ANOTHER. THE PROPER AUTHORITY MAY SHARE ITS POWER WITH SOME ONE ELSE, OR MA Y ALLOW SOME ONE ELSE TO DICTATE TO IT BY DECLINING TO ACT WITHOUT THEIR CONSENT OR BY SUBMITTING TO THEIR WISHES OR INSTRUCTION S. THE EFFECT THEN IS THAT THE DISCRETION CONFERRED BY PARLIAMENT IS EXERCISED, AT LEAST IN PART, BY THE WRONG AUTHORITY, AND THE RESULTING DECISION IS ULTRA VIRES AND VOID. SO STRICT ARE THE COURTS IN APPLYING THIS PRINCIPLE THAT THEY PAGE 42 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI CONDEMN SOME ADMINISTRATIVE ARRANGEMENTS WHICH MUST SEEM QUITE NATURAL AND PROPER TO THOSE WHO MAKE THEM.....'. 'MINISTERS AND THEIR DEPARTMENTS HAVE SEVERAL TIMES FALLEN FOUL OF THE SAME RUL E, NO DOUBT EQUALLY TO THEIR SURPRISE....' 28. IN VIEW OF THE ABOVE FACTS ON THE MERITS OF THE CASE , WE DELETE THE PENALTY ON THE UNDISCLOSED INCOME OF 3 CRORES ON ACCOUNT OF UNDERVALUATION OF CLOSING STOCK OF ARTWORK, PAINTINGS, AND SCULPTURES, ON CASH FOUND OF RS. 1.34 CRORES, AND UPHOLD PENALTY ON UNEXPLAINED JEWELRY OF RS. 96 LAKHS. 29. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 30. ORDER IS PRONOUNCED IN OPEN COURT ON 0 9 / 1 0 /2018. - S D / - - S D / - (AMIT SHUKLA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 9 / 10/2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) PAGE 43 OF 44 ITA NO. 2835/DEL/2015 (ASSESSMENT YEAR: 2012 - 13) SMT. TRIPAT KAUR VS THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 14 NEW DELHI 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI