Shri Pratap B. Thakker, Bhuj V. The Assistant Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITA 284/RJT/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2256 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: MJ RANPURA
• Keywords: Unexplained investment; Income from undisclosed sources; Document seized; Reasonable cause; Retraction; Documents seized
• Section: 143(3); 153A; 234B; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI N.K. BILLAIYA , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] SHRI PRATAP B. THAKKER, NIRMALSINHJI NI WADI, PLOT 37/B, BHUJ, KUTCH PAN: AGJPT 3517 A (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 2, RAJKOT (RESPONDENT) REVENUE BY : S H RI C.S. ANJARIA , D . R. ASSESSEE BY: S H RI M.J. RANPURA , A.R. DATE OF HEARING : 0 2 - 03 - 2 016 DATE OF PRONOUNCEMENT : 09 - 03 - 2 016 / O RDER P ER BENCH : - THESE SEVEN ASSESSEE S APPEALS FOR A.Y S. 2003 - 04 TO 2009 - 10 , AR ISE FROM A COMMON ORDER IN SIX CASES OF THE CIT(A) - IV, AHMEDABAD DATED 2 1 - 03 - 2013, AFFIRMING PENALTIES OF RS. 1,12,350/ - , RS. 1,37,175/ - , RS. 2,26,674/ - , RS. 1,92,818/ - , RS. 2,03,404/ - AND RS. 4,30,862/ - ; RESPECTIVELY, IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . THE LAST ASSESSMENT I T A NO S. 282 TO 288 / RJT /20 1 2 A SSESSMENT YEAR 200 3 - 04 TO 2009 - 10 I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 2 YEAR 2009 - 10 INVOLVES SECTION 271AAA PENALTY OF RS. 27,04,864/ - AFFIRMED BY BOTH THE LOWER AUTHORI TIES. 2. WE COME TO ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 INVOLVING ASSESSEE S SIX APPEALS ITAS 282 TO 287/RJT/2012. BOTH PARTIES INFORM AT THE OUTSET THAT THE RELEVANT FACTS AS WELL AS THE SOLE ISSUE OF VALIDITY OF IMPUGNED PENALTIES ARE IDENTICAL IN A LL CASES. THIS ASSESSEE DEALS IN LAND AS WELL AS DERIVES COMMISSION AND BROKERAGE INCOME. THE DEPARTMENT CARRIED OUT A SEARCH IN HIS ON 15 - 09 - 2008. ALL THIS CULMINATED IN SECTION 153A NOTICES BEING ISSUED ON 29 - 01 - 2009. THE ASSESSEE FILED RETURNS FOR T HE ALL SIX IMPUGNED ASSESSMENT YEARS ON 24 - 12 - 2009 DISCLOSING INCOMES OF RS. 3,72,000/ - , RS. 3,91,500/ - RS. 5,09,960/ - , RS. 4,81,730/ - , RS. 4,62,200/ - AND RS. 7,27,750/ - RESPECTIVELY. THE ASSESSING OFFICER FRAMED ASSESSMENTS ON 30 - 03 - 2010 IN ALL CASES ACC EPTING THE SAME. NO ADDITION WAS MADE IN ANY OF THE ASSESSMENT YEAR IN QUESTIO N. HE INITIATED SECTION 271(1)(C) PROCEEDINGS ALLEGING CONCEALMENT OF INCOME. 3. T HE ASSESSEE APPEARS TO HAVE FILED HIS REPLY INTER ALIA PLEADING THAT HIS RETURNS STOOD ACCEP TED HEREINABOVE WITHOUT ANY ADDITION BEING MADE, HE HAD ALREADY PAID TAXES WITH INTEREST AND THE INSTANT CASE WAS COVERED UNDER THE IMMUNITY PROVIDED U/S. 271(1)(C) EXPLANATION 5. ALL THIS FAILED TO MAKE THE ASSESSING OFFICER AGREE. HE QUOTED EXPLANAT ION 5A OF THE ABOVE STATED STATUTORY PROVISIONS SINCE THE SEARCH IN QUESTION HAPPENED TO HAVE BEEN CONDUCTED AFTER 01 - 06 - 2007. HE WOULD OBSERVE THAT THE ASSESSEE HAD OFFERED HIS I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 3 ADDITIONAL INCOME ONLY DUE TO THE IMPUGNED SEARCH WITHOUT FILING ANY REGULAR RETURN. THE ASSESSING OFFICER QUOTED REFERENCE TO ASSESSEE S DECLARATION DURING SEARCH AND HELD THAT HE HAD CONCEALED HIS SUBSTANTIAL PROFIT IN QUESTION. HE WOULD CONCLUDE THAT THE ASSESSEE S ADDITIONAL INCOME AS DECLARED IN THE RETURNS AMOUNTED TO DISC LOSURE OF UNDISCLOSED INCOME TO BE TREATED AS CONCEALMENT THEREOF U/S. 271(1)(C) OF THE ACT. THIS MADE THE ASSESSING OFFICER TO IMPOSE THE IMPUGNED PENALTIES @ 150% OF THE TAXES SOUGHT TO BE AVOIDED IN PENALTY ORDERS DATED 29 - 09 - 2010 IN ALL CASES. 4. T HE CIT(A) AFFIRMS THE ASSESSING OFFICER S ACTION EXCEPT TO THE FACT THAT THE IMPUGNED PENALTIES HAVE BEEN REDUCED FROM 150% TO 125% OF THE TAXES SOUGHT TO BE AVOIDED. THIS LEAVES THE ASSESSEE AGGRIEVED. 5. WE HAVE HEARD BOTH THE PARTIES . CASE FILE PER USED. RELEVANT FACTS ALREADY STAND NARRATED IN THE PRECEDING PARAGRAPHS. THE ASSESSEE S ONLY ARGUMENT IS THAT THERE IS NEITHER SPECIFIC INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH SO AS TO REVEAL ANY UNDISCLOSED INCOME BEING CONCEALED AT HIS BEH EST NOR ANY ADDITION HAS BEEN MADE IN THE ASSESSMENTS FRAMED THEREAFTER. HE INVITES OUR ATTENTION TO A CO - ORDINATE BENCH DECISION IN IT(SS)A NO. 46/RJT/2012 DECIDED ON 04 - 11 - 2015 DECIDING THE ISSUE IN HIS FAVOUR AS UNDER: - 8. A PERUSAL OF BOTH THESE SECTI ONS TOGETHER WOULD INDICATE THAT THE IMMUNITY AKIN TO EXPLANATION 5 IS AVAILABLE TO THE ASSESSEE UNDER EXPLANATION - 5A ALSO, IF HE FULFILLS THE CONDITIONS NARRATED IN I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 4 SECTION 271AAA. THE EXPLANATION APPENDED TO SECTION 271AAA PROVIDES THE DEFINITION OF UND ISCLOSED INCOME AND SPECIFIED PREVIOUS YEAR. A PERUSAL OF THE EXPRESSION SPECIFIED PREVIOUS YEAR WOULD INDICATE THAT THE YEAR OF SEARCH AND IMMEDIATELY EARLIER YEAR, IF DUE DATE OF FILING OF THE RETURN HAS NOT EXPIRED AND INCOME - TAX RETURN FOR SUCH YEAR HAS NOT BEEN FILED. SINCE THE ASSESSMENT YEARS INVOLVED BEFORE US ARE THE ASSTT.YEARS 2008 - 09 AND 2009 - 10, THE DUE DATE FOR FILING OF THE RETURN FOR THE ASSTT.YEAR 2009 - 10 WAS EXPIRED BEFORE THE SEARCH ACTION. THUS, BOTH THESE YEARS DO NOT FALL WITHIN T HE AMBIT OF SPECIFIED YEARS . SINCE THE PERIOD OF THESE TWO ASSESSMENT YEARS DOES NOT FALL WITHIN THE EXPRESSION SPECIFIED YEAR PROVIDED IN SECTION 271AAA, THEREFORE, WE DO NOT DEEM IT NECESSARY TO CONSTRUE AND EXPLAIN THE MEANING OF EXPLANATION 5A WIT HIN THE SCOPE OF SECTION 271AAA. THE ASSESSEES AS SUCH CANNOT CLAIM IMMUNITY AKIN TO ONE AVAILABLE IN SUB - CLAUSE (1) AND (2) OF THE EXPLANATION 5, MORE PARTICULARLY, ON THE STRENGTH OF THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYAB HAI PATEL (SUPRA). THE LD.FIRST APPELLATE AUTHORITY HAS DEALT WITH THESE SITUATION IN AN ANALYTICAL MANNER AND IN RIGHT PERSPECTIVE. AS FAR AS THE CONSTRUCTION OF MEANING OF EXPLANATION 5A TO SECTION 271AAA BY THE LD.FIRST APPELLATE AUTHORITY IS CONCERNE D, WE DO NOT FIND ANY ERROR. 9. AT THE COST OF REPETITION, WE WOULD LIKE TO OBSERVE THAT AS PER EXPLANATION 5A, IF IN THE COURSE OF SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST JUNE, 2007, THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS AND THE ASSESSEE CLAIMS SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILSING THE WHOLE OR PARTLY OF HIS INCOME FROM ANY PREVIOUS YEAR OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND DURING THE COURSE OF SEARCH, AND THE ASSESSEE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME FROM ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH, THEN, NOTWITHSTANDI NG SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER CLAUSE (C) OF SUB - SECTION (1) OF THIS SECTION BE DEEMED TO HAVE BEEN CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. THE MOOT QUESTION FOR ATTRACTING THIS EXPLANATION IS THAT IN THE COURSE OF SEARCH MONEY, BULLION, JEWELLERY OR INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OUGHT TO HAVE BEEN FOUND. IN A GIVE N SITUATION, NO MONEY OR BULLION OR JEWELLERY OR INCOME MIGHT HAVE I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 5 FOUND FROM THE ASSESSEES FOR THE ASSESSMENT YEARS WHICH WERE NOT PART OF SPECIFIED PREVIOUS YEAR CONTEMPLATED IN SECTION 271AAA OR IMMUNITY AVAILABLE TO THE ASSESSEES UNDER SUB - CLAUSE (A) AND (B) OF EXPLANATION 5A, THEN ALSO, IF IN RESPONSE TO THE NOTICE UNDER SECTION 153A, THE ASSESSEE DISCLOSED SOME ADDITIONAL INCOME VOLUNTARILY, WOULD HE BE DEEMED TO HAVE CONCEALED THE INCOME FOR VISITING HIM WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT ? THE LD.REVENUE AUTHORITIES HAD DRAWN INFERENCE THAT SINCE THE ASSESSEE HAS NOT DISCLOSED ADDITIONAL INCOME IN THE ORIGINAL RETURNS, MEANING THEREBY, IT IS TO BE ASSUMED THAT THEY HAVE DISCLOSED THIS AMOUNT ONLY WHEN SOME INCRIMINATING MATERIAL WAS F OUND. TO OUR MIND THIS ASSUMPTION OUGHT TO BE SUPPORTED WITH REFERENCE OF THAT INCRIMINATING MATERIAL. LET US SEE THE FINDING IN THE ASSESSMENT ORDER. 10. WE HAVE PERUSED THE ASSESSMENT ORDER OF SHRI MANSUKHBHAI R. SORATHIA IN THE ASSTT.YEAR 2008 - 09. A LL OTHER ASSESSMENT ORDERS ARE ALSO SIMILARLY WORDED. IT IS A VERY BRIEF ASSESSMENT ORDERS RUNNING ONE - AND - HALF PAGES. IN THE FIRST PAGE, THE LD.AO HAS NARRATED PROCEDURAL ASPECT ABOUT THE SEARCH ACTION, ISSUANCE OF NOTICE AND FILING OF THE RETURN, SERVI CE OF NOTICE UNDER SECTION 143(2) ETC. IN THE NEXT PAGE FINDING OF THE AO READ AS UNDER: 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION AND ENGINEERING JOB WORK AND ALSO DERIVES INCOME FROM AGRICULTURAL ACTIVITIES, REMUNERATION AND INTEREST F ROM PARTNERSHIP FIRMS ETC. COPIES OF P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET, WAS FILED WITH THE RETURN. VARIOUS ISSUES WERE DISCUSSED AT LENGTH. 2.1 IT IS SEEN THAT THE ASSESSEE HAD MADE DISCLOSURE UNACCOUNTED INCOME OF RS 22,00,000/ - WHICH WAS N OT DISCLOSED IN THE RETURN FILED U/S. 139(1). THIS BEING CONCEALED INCOME, PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I T ACT IS BEING INITIATED. 3. AFTER VERIFICATION, THE TOTAL INCOME IS DETERMINED AS UNDER: - TOTAL INCOME AS PER RETURN OF INCOME R S 28,45,960/ - TOTAL ASSESSED INCOME RS 28,45,960/ - AGRICULTURAL INCOME FOR RATE PURPOSE RS.6,14,131/ - I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 6 4. ASSESSED U/S. 153A OF THE I T ACT, 1961. CHARGE TAX. CHARGE INTEREST U/S. 234A, 234B AND 234C OF THE I T ACT, IF ANY. GIVE CREDIT FOR PREPAID TAXE S AFTER DUE VERIFICATION. DEMAND NOTICE AND CHALLAN ISSUED ACCORDINGLY. ISSUE NOTICE U/S. 271(1)(C)OF THE IT ACT. 11. WE HAVE PERUSED THE PENALTY ORDER ALSO. THERE ARE ONLY THREE PARAGRAPHS I.E. PARA - 4, 6 AND 7, WHERE THE AO HAS MADE SOME OBSERVATION AT HIS OWN, OTHERWISE, IN REST OF THE PARAGRAPHS HE REPRODUCED THE SUBMISSIONS OR THE HEAD - NOTES OF THE CASE LAWS. THE OBSERVATION OF THE AO IN THESE PARAS READ AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSES. THE CONTENTION O F THE ASSESSEE IS NOT ACCEPTABLE BECAUSE, THE ADDITIONAL INCOME OFFERED BY THE ASSESSES ONLY SURFACED DUE TO THE SEARCH ACTION CARRIED BY THE DEPARTMENT. HAD THERE BEEN NO SEARCH, THE PORTION OF ADDITIONAL INCOME WOULD HAVE REMAINED CONCEALED ETERNALLY. IF IN A REGULAR CASE, ON DETECTION OF CONCEALMENT, PENALTY U/S. 271(1)(C) IS LEVIABLE, HOW MUCH MORE PENALTY BECOMES TRUE AND POTENT IN A CASE WHERE THE CONCEALMENT HAS BEEN DETECTED ON ACCOUNT OF PROACTIVE SEARCH ACTION INITIATED BY THE DEPARTMENT. IN THE C ASE OF THE ASSESSEE, THE ASSESSEE HAS NOT RECORDED DETAILS OF HIS INCOME AND THE SAME WAS WORKED OUT ONLY DURING SEARCH AND THAT TOO ON THE BASIS OF THE SEIZED MATERIALS. IN FACT, IT IS AN ESTABLISHED JUDICIAL DECISION THAT 'DOCUMENTS SEIZED DURING THE SEA RCH CANNOT BE SAID THE BOOKS OF ACCOUNTS MAINTAINED FOR ANY SOURCE OF INCOME, FOR THE PURPOSES OF EXPLANATION 5 (CIT VS GLAMOUR RESTAURANT (2003) 80 TTJ (MUM) 763. DIARIES FOUND AND SEIZED DURING COURSE OF SEARCH CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT MA INTAINED BY THE ASSESSEE FOR THE PURPOSE OF IMMUNITY TO BE GRANTED TO HIM UNDER THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) - DR T P KULKARNI VS CIT (2003) 86 ITD 696 (MUM). IT HAS ALSO BEEN HELD THAT ONLY BOOKS OF ACCOUNT MAINTAINED IN THE REGULA R COURSE CAN MAKE THE ASSESSEE ELIGIBLE FOR GRANT OF IMMUNITY FROM PENALTY AND NOT JUST ANY OF SUCH BOOKS, WHICH HAVE NOT BEEN MAINTAINED IN REGULAR COURSE OF BUSINESS - BRIJ LAL GOYAL VS CIT (2004) 88 ITD 413 (DELHI). I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 7 12. IN THIS BACKGROUND, IF WE APPRE CIATE THE EVIDENCES AVAILABLE ON THE RECORD, THEN IT WOULD REVEAL THE WHOLE CASE OF THE REVENUE FOR VISITING THE ASSESSEE WITH PENALTY IS BASED ON THE STATEMENT OF SHRI JAYANTILAL R. SORATHIA RECORDED DURING THE COURSE OF SEARCH. WE HAVE EXTRACTED THE REL EVANT PART OF THE STATEMENT IN THE FOREGOING PARAGRAPHS OF THIS ORDER. THE EVIDENTIARY VALUE OF SUCH STATEMENT HAS BEEN EXPLAINED IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS. LET US FIRST TAKE NOTE OF SECTION 132(4) OF THE ACT. THE AUTHORISED OFFICER MAY, D URING THE COURSE OF THE SEARCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922 ), OR UNDER THIS ACT. EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE EXAMINATION OF ANY PERSON UNDER THIS S UB - SECTION MAY BE NOT MERELY IN RESPECT OF ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS FOUND AS A RESULT OF THE SEARCH, BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER THE INDIAN IN COME - TAX ACT, 1922 (11 OF 1922 ), OR UNDER THIS ACT. 13. A BARE PERUSAL OF SECTION WOULD REVEAL THAT IT EMPOWERS THE AUTHORIZED OFFICER TO EXAMINE DURING THE COURSE OF SEARCH OR SEIZURE ANY PERSON ON OATH. THE DISCLOSURE MADE DURING THE STATEMENT RECOR DED UNDER THIS SECTION WILL BE ADMITTED IN THE EVIDENCE AND CAN BE USED AGAINST THE ASSESSEE IN THE PROCEEDING. 14. NO DOUBT, THE DISCLOSURE OR ADMISSION MADE UNDER SECTION 132(4) OF THE ACT DURING THE COURSE OF SEARCH PROCEEDINGS IS AN ADMISSIBLE EVIDE NCE BUT NOT CONCLUSIVE ONE. THIS PRESUMPTION OF ADMISSIBILITY OF EVIDENCE IS A REBUTTABLE ONE, AND IF AN ASSESSEE IS ABLE TO DEMONSTRATE WITH THE HELP OF SOME MATERIAL THAT SUCH ADMISSION WAS EITHER MISTAKEN, UNTRUE OR BASED ON MISCONCEPTION OF FACTS, THE N SOLELY ON THE BASIS OF SUCH ADMISSION NO ADDITION IS REQUIRED TO BE MADE. IT IS TRUE THAT ADMISSION BEING DECLARATION AGAINST AN INTEREST ARE GOOD EVIDENCE, BUT THEY ARE NOT CONCLUSIVE, AND A PARTY IS ALWAYS AT LIBERTY TO WITHDRAW THE ADMISSION BY I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 8 DEMON STRATING THAT THEY ARE EITHER MISTAKEN OR UNTRUE. IN LAW, THE RETRACTED CONFESSION EVEN MAY FORM THE LEGAL BASIS OF ADMISSION, IF THE AO IS SATISFIED THAT IT WAS TRUE AND WAS VOLUNTARILY MADE. BUT THE BASING THE ADDITION ON A RETRACTED DECLARATION SOLELY WOULD NOT BE SAFE. IT IS NOT A STRICT RULE OF LAW, BUT ONLY RULE OF PRUDENCE. AS A GENERAL RULE, IT IS UNSAFE TO RELY UPON A RETRACTED CONFESSION WITHOUT CORROBORATIVE EVIDENCE. DUE TO THIS GREY SITUATION, CBDT HAS ISSUED CIRCULAR NO.286/2/2003 PROHIBI TING THE DEPARTMENTAL OFFICIALS FROM TAKING CONFESSION IN THE SEARCH. THE BOARD IS OF THE VIEW THAT OFTEN THE OFFICIALS USED TO OBTAIN CONFESSIONS FROM THE ASSESSEE AND STOP FURTHER RECOVERY OF THE MATERIAL. SUCH CONFESSIONS HAVE BEEN RETRACTED AND THEN THE ADDITION COULD NOT WITHSTAND THE SCRUTINY OF THE HIGHER APPELLATE AUTHORITY, BECAUSE NO MATERIAL WAS FOUND SUPPORTING SUCH ADDITION. 15. AN ISSUE WHETHER ADDITION SOLELY ON THE BASIS OF STATEMENT U/S.132(4) CAN BE MADE WAS CONSIDERED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KIALASHBEN MANHARLAL CHOKSHI VS. CIT, 220 CTR (GUJ) 138. IN THIS CASE, SEARCH WAS CONDUCTED UPON THE ASSESSEE UNDER SECTION 132 OF THE INCOME TAX ACT ON 4.11.1988. THE STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132(4) OF THE ACT. HE MADE DISCLOSURE OF RS.7 LAKHS. LATER ON, IN JANUARY, 1989, THE ASSESSEE RETRACTED FROM THE DISCLOSURE AND STATED THE DISCLOSURE OF RS.50,000/ - WAS ACCEPTABLE TO HIM. THE LD.AO MADE AN ADDITION OF RS.7 LAKHS ON THE BASIS OF HIS STATEMENT AND OBSERVED THAT THE RETRACTION WAS MADE AFTER A LAPSE OF 2 MONTHS. THE ASSESSEE DID NOT HAVE ANY REASON FOR RETRACTING FROM THE DISCLOSURE. THE LD.FIRST APPELLATE AUTHORITY CONCURRED WITH THE AO AND CONFIRMED THE ADDITION OF RS.7 LAKHS T O HIS INCOME. THE TRIBUNAL HAS ALSO CONFIRMED THE ADDITION BY OBSERVING THAT THERE WAS NOTHING ON RECORD WHICH INDICATED THAT THE DISCLOSURE WAS TAKEN FROM THE ASSESSEE UNDER DURESS, PRESSURE OR COERCION. THE RETRACTION AFTER LAPSE OF TWO MONTHS FROM THE DATE OF DISCLOSURE BY THE ASSESSEE WAS CONSIDERED AS AFTER - THOUGHT. THE ISSUE TRAVELLED BEFORE THE HON BLE HIGH COURT. THE HON BLE HIGH COURT HAS DELETED THE ADDITION BY OBSERVING THAT MERELY ON THE BASIS OF DISCLOSURE, ADDITION CANNOT BE MADE. THERE SHOULD BE SOME CORROBORATIVE MATERIAL. THE FOLLOWING OBSERVATIONS IN PARA - 26 OF THE JUDGEMENT OF HON BLE COURT ARE WORTH TO NOTE. IT READS AS UNDER: 26. IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE WE ARE OF THE VIEW THAT THIS EXPLANATION SEEMS TO BE M ORE CONVINCING, I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 9 HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AND ADDITIONS WERE MADE AND/OR CONFIRMED MERELY ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. DESPITE THE FACT THAT THE SAID STATEMENT WAS LATER ON RETRACTED NO EVIDENCE HAS BEEN LED BY THE REVENUE AUTHORITY. WE ARE, THEREFORE, OF THE VIEW THAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJECTED TO SUCH ADDITIONS UNLESS AND UNTIL, SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. W E ARE ALSO OF THE VIEW THAT FROM THE STATEMENT RECORDED AT SUCH ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT, IF IT IS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSION. HENCE THERE IS NO REASON NOT TO DISBELIEVE THE RETRACTION MADE BY THE ASSESSING OFFICER AND EXPLANATION DULY SUPPORTED BY THE EVIDENCE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 6 LAKHS ON THE BASIS OF STATEMENT RECORDED BY THE ASSESSING OFFICER U NDER SECTION 132(4) OF THE ACT. THE TRIBUNAL HAS COMMITTED AN ERROR IN IGNORING THE RETRACTION MADE BY THE ASSESSEE. 27. IN THE ABOVE VIEW OF THE MATTER, ADDITION OF RS. 1 LAKH MADE ON ACCOUNT OF UNACCOUNTED CASH IS CONFIRMED AND THE ADDITION OF RS. 6 LAK HS IS HEREBY DELETED. 16. THIS DECISION HAS BEEN FOLLOWED BY THE HON BLE HIGH COURT IN THE CASE OF CIT VS. CHANDRAKUMAR JETHMAL KOCHAR, 55 TAXMANN.COM 292 (GUJ). THE HON BLE HIGH COURT HAS REPRODUCED THE DISCUSSION MADE BY THE TRIBUNAL, AND THEREAFTER, CONCURRED WITH THE CONCLUSIONS OF THE TRIBUNAL BY OBSERVING AS UNDER: 6. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE PRINCIPAL LAID DOWN IN THE CASE OF KAILASHBEN MANHARLAL CHOKSHI (SUPRA),WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY T HE TRIBUNAL IS JUST AND PROPER. WE ARE NOT CONVINCED WITH THE SUBMISSIONS MADE BY MR. MEHTA, LEARNED ADVOCATE FOR THE APPELLANT THAT THE TRIBUNAL HAS NOT GIVEN COGENT REASONS. THEREFORE, THE ANSWER TO THE FIRST QUESTION WOULD BE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE SECOND QUESTION WILL ALSO ENURE FOR THE BENEFIT OF THE ASSESSEE AS FROM THE RECORD IT IS CLEAR THAT OTHER CONCERNS WERE NOT BENAMI CONCERNS OF THE ASSESSEE. I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 10 7. FOR THE FORGING REASONS, THE PRESENT APPEAL IS DISMISSED. ACCORDINGL Y, BOTH THE QUESTIONS WHICH WERE REFERRED TO THIS COURT ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 17. HAD THIS STATEMENT BEEN RETRACTED BY THE ASSESSEE, AND THEY HAVE NOT OFFERED THIS UNDISCLOSED INCOME, FORGET TO TAKE ACTION OF LEV YING THE PENALTY, EVEN ADDITIONS WOULD NOT HAVE BEEN SUSTAINED. THE INFERENCE OF OWNERSHIP OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES, TO OUR MIND, OUGHT NOT TO BE BASED ON THIS STATEMENT. WHEN THE ASSESSEES HAVE TAKEN SPECIFIC PLEA THAT NO MONEY, BULLION OR JEWELLERY OR INCOME BASED ON ANY ENTRIES FOR THESE TWO ASSESSMENT YEARS WAS FOUND DURING THE COURSE OF SEARCH, THE AO OUGHT TO HAVE IMMEDIATELY REFERRED THE DOCUMENTS, ENTRIES OR ANY ASSET FOUND WHICH IS RELEVANT TO THESE ASSESSMENT Y EARS IN THE PENALTY PROCEEDINGS. HE SHOULD HAVE REJECTED THE EXPLANATION OF THE ASSESSEE BY DEMONSTRATING IT AS FACTUALLY INCORRECT. RATHER, THE AUTHORITIES HAVE PROCEEDED ON THE ASSUMPTION THAT HAD THERE BEEN NO MONEY, BULLION, JEWELLERY OR INCOME BASED ON ENTRIES WAS NOT FOUND, THE ASSESSEE WOULD HAVE NOT MADE VOLUNTARY DISCLOSURE OF THE INCOME IN THESE RETURNS. THEY FAILED TO NOTE THE QUESTION NO.25 ALSO, WHERE THE ASSESSEES CLAIMED IMMUNITY FROM PENALTY, AND PEACE FROM LITIGATION. TO OUR MIND INFERE NCE OF AVAILABILITY OF MONEY, BULLION OR ASSETS EMBEDDED IN THE ENTRIES CANNOT BE DRAWN FROM THE STATEMENT OF THE ASSESSEE (EXTRACTED SUPRA). THEY SHOULD HAVE BEEN FOUND IN PHYSICAL FORM AND PERTAINING TO THESE YEARS, ONLY THEN, DEEMING FICTION OF CONCEAL MENT WOULD TRIGGER. THUS, THE REVENUE AUTHORITIES HAVE NOT REFERRED ANY DOCUMENTARY EVIDENCES DEMONSTRATING THE FACT THAT VOLUNTARY INCOME OFFERED BY ASSESSEES IN THESE TWO YEARS ACTUALLY UNEARTHED DURING THE COURSE OF SEARCH. THEREFORE, TO OUR MIND, THE ASSESSEES DO NOT DESERVE TO BE VISITED WITH PENALTIES. WE ALLOW ALL THE APPEALS OF THE ASSESSEES AND DELETE PENALTIES. THE ASSESSEE ACCORDINGLY PRAYS FOR ACCEPTANCE OF THE INSTANT APPEALS. I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 11 6 . THE REVENUE STRONGLY SUPPORT S THE CIT(A) S ORDER S /FINDINGS CONTAINED THEREIN HOLDING THE ASSESSEE TO HAVE CONCEALED HIS INCOME. 7 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS . WE FIND THAT THE ASSESSING OFFICER OR THE CIT(A) NOWHERE HOLD S THAT THERE HAS BEEN ANY MONEY, BULLION, JEWELLE RY O R ANY SUCH OTHER MATERIAL AS PROVIDED U/S. 153A TO HAVE BEEN RECOVERED IN THE COURSE OF SEARCH OR QUOTED IN ASSESSMENT ORDER OR IN THE IMPUGNED PENALTY PROCEEDINGS. THEY MERELY RELY ON ASSESSEE S ADMISSION AND RETURN FILED. WE QUOTE ABOVE EXTRACTED TRIBU NAL S DECISION IN THESE FACTS AND CIRCUMSTANCES AND HOLD THAT THE AUTHORITIES HAVE ERRED IN IMPOSING THE IMPUGNED PENALTIES. COMING TO THEIR OBSERVATION THAT THE ASSESSEE HAD NOT FILED ANY REGULAR RETURN, WE FIND THAT HON BLE JURISDICTIO NAL HIGH COURT IN CASE OF KIRIT DAYABHAI PATEL (SUPRA) HOLDS THAT A RETURN FILED IN FURTHERANCE SECTION 153A NOTICE STANDS ON AN IDENTICAL FOOTING TO THE ONE U/S. 139 AND I F NO ADDITION IS MADE, SECTION 271(1)(C) OF THE ACT DOES NOT APPLY. WE FURTHER NOTICE THAT EXPLANATIO N 5A TO SECTION 271(1)(C) ALSO TREATS A CASE OF NO RETURN FILED BEFORE THE SEARCH IN QUESTION AS WELL AS THE ONE FILED U/S. 139 ON AN IDENTICAL FOOTING. THEREFORE, WE HOLD THAT THIS ASPECT ACCORDINGLY IS TAKEN CARE OF BY THE HON BLE JURISDICTIONAL AS WELL AS THE STATUTORY PROVISIONS ITSELF IN APPLYING DEEMING FICTION OF CONCEALMENT. WE ACCEPT ASSESSEE S ARGUMENTS ON BOTH ASPECTS TO DELETE THE IMPUGNED PENALTIES IN ALL ASSESSMENT YEARS INVOLVED HEREIN. ITAS 282 TO 287/RJT/2012 ARE ACCEPTED. I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 12 8. THIS LEAV ES US WITH ASSESSEE S LAST APPEAL ITA 288/RJT/2012 CHALLENGES SECTION 271AAA PENALTY OF RS. 27,04,864/ - @ 10% OF THE UNDISCLOSED INCOME ASSESSED IN ASSESSEE S HANDS AMOUNTING TO RS. 2,70,48,640/ - . WE FIND THAT THE ASSESSING OFFICER FRAMED SEARCH ASSESSMENT IN THE INSTANT CASE ON 30 - 03 - 2010 U/S. 153A R . W . S . 143(3) OF THE ACT. THE ASSESSEE FILED RETURN ON 24 - 12 - 2009 ADMITTING INCOME OF RS. 2,55,98,640/ - . THE ASSESSING OFFICER NOTICED FROM THE SEIZED DOCUMENTS A LOOSE PAPER ANNEXURE A - 4 REVEALING VADVA LAND RELATED TRANSACTIONS IN THE NATURE OF ADVANCES MADE IN THE MONTH OF JUNE AND AUGUST. HE PUT THE ASSESSEE ON NOTICE. THE ASSESSEE PLEADED THAT HIS BOOKS HAD DULY RECORDED ALL ENTRIES. AN ALTERNATIVE PLEA WAS ALSO TAKEN THAT HIS DISCLOSURE OF RS. 1.5 CROR ES UNDER LAND TRADING PROFIT CATEGORY INCLUDED ALL OF HIS MATERIALIZED TRANSACTIONS. THE ASSESSING OFFICER REFERRED TO ADVANCES ENTRIES TO CONCLUDE THAT ASSESSEE HAD PURCHASED LAND IN QUESTION FOR A SUM OF RS. 9,50,000/ - NOT RECORDED IN THE BOOKS. HE ADD ED THIS SUM AND ASSESSED ASSESSEE S TOTAL TAXABLE INCOME TO BE RS. 2,65,48,640/ - . THE IMPUGNED ASSESSMENT APPEARS TO HAVE ATTAINED FINALITY AT THIS STAGE ITSELF. THIS WAS FOLLOWED BY RECTIFICATION DATED 24 - 09 - 2010 INCREASING ABOVE STATED INCOME TO RS. 2 ,70,48,640/ - IN QUESTION. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS IN QUESTION U/S. 271AAA OF THE ACT. 9. WE PROCEED FURTHER AND FIND THAT THE ASSESSING OFFICER PASSED PENALTY ORDER ON 29 - 09 - 2010. THE ASSESSEE REITERATED HIS PLEA THAT I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 13 HE HAD ALREADY DECLARED THE INCOME IN QUESTION ON ADHOC BASIS SUBJECT TO THE CONDITION THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED. THE ASSESSING OFFICER INTER ALIA OBSERVED THAT FACTS OF THE CASE ATTRACTED SECTION 271AAA PENALTY PROVISION ON THE GROUND THAT THE UNDISCLOSED INCOME WAS OTHER THAN THE AMOUNT COVERED IN SEARCH STATEMENT, ITS MANNER OF HAVING DERIVED THE SAME WAS NOT SPECIFIED FOLLOWED BY FAILURE IN PAYING TAX TOGETHER WITH INTEREST. THE ASSESSING OFFICER THEREAFTER REFERRED TO SEARCH STATEMENT SHOWING UNACCOUNTED INCOME OF RS. 50 LACS FOLLOWED BY ITS DISCLOSURE AS RS. 2.6 CRORES. HE ACCORDINGLY HELD THAT THE ABOVE STATED IMMUNITY HAD NOT BEEN SATISFIED AT ASSESSEE S BEHEST. ALL THIS RESULTED IN IMPOSITION OF THE IMPUGNED PENALTY OF RS. 27,04,8 64/ - . 10. THE CIT(A) CONFIRMS THE IMPUGNED PENALTY SOLELY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO MAKE PAYMENT OF TAX AND INTEREST AS DISCLOSED IN THE RETURN OF INCOME AT THE TIME OF ITS FILING OF APPEAL AS UNDER: - 6. I HAVE CAREFULLY CONSIDERED THE SUBMIS SIONS MADE BY THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS PENALTY ORDER PASSED BY THE ASSESSING OFFICER. 6.1 SECTION 271 AAA PROVIDES THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER 1 ST JUNE, 2007, TH E ASSESSEE SHALL BE LIABLE TO PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. HOWEVER, PROVISIONS OF THIS SECTION SHALL NOT BE APPLICABL E IF THE ASSESSEE - (I) IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132 IN THE COURSE OF THE SEARCH, ADMITS THE UNDISCLOSED INCOME AND SPECIFICS THE MANNER IN WHICH 'SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 14 THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. THEREFORE, IN ORDER TO BE ELIGIBLE FOR IMMUNITY FROM THE PENALTY UNDER' SECTION 271AAA, THE ASSESSEE IS REQUIRED TO FULFILL ALL THE THREE CONDI TIONS CUMULATIVELY AS MENTIONED ABOVE. IT IS FURTHER PROVIDED THAT NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271 SHALL BE LEVIED OR IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN THIS SECTION . IT IS ALSO PROVIDED THAT THE PROVISIONS OF SECTION 274 AND SECTION 275 SHALL, SO FAR AS MAY BE, APPLY IN RE LATION TO THE PENALTY LEVIABLE AND UNDER NEW SECTION. FOR THE PURPOSES OF THIS SECTION, SPECIFIED PREVIOUS YEAR HAS BEEN DEFINED, SO AS TO MEAN TH E PREVIOUS YEAR - (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 'UNDISCLOSED INCOME' HAS ALSO BEEN DEFINED, SO AS TO MEAN ANY INCOME OF THE 'SPECIFIED PREVIOUS YEAR' FOUND DURING THE COURSE OF SEARCH REPRESENTED BY (I ) UNDISCLOSED ASSETS (II) UNDISCLOSED TRANSACTIONS REPRESENTING UNDISCLOSED INCOME (III) FALSE OR BOGUS EXPENSES CLAIMED. FROM THE BARE READING OF PROVISIONS OF S.271AAA, IT IS CLEAR THAT S.271 AAA IS APPLICABLE WITH RESPECT TO 'UNDISCLOSED INCOME' OF T HE 'SPECIFIED PREVIOUS YEAR' IN RESPECT OF AN ASSESSEE WHERE SEARCH HAS BEEN INITIATED U/S. 132 ON OR AFTER 1 ST DAY OF JUNE,2007. PENALTY PROVISIONS IN THE CASE OF SEARCH INITIATED UNDER SECTION 132 ON OR AFTER 1 ST JUNE, 2007, WITH RESPECT TO THE, 'UNDISCL OSED INCOME' OF THE 'SPECIFIED PREVIOUS YEAR' I.E. YEAR OF SEARCH AND IMMEDIATELY EARLIER YEAR IF DUE DATE OF FILING OF RETURN HAS NOT EXPIRED AND INCOME TAX RETURN FOR SUCH YEAR HAS NOT BEEN FILED, ARE CONTAINED AND GOVERNED BY SECTION 271AAA. THUS, PROVI SIONS OF SECTION 271 AAA ARE APPLICABLE WITH RESPECT TO 'UNDISCLOSED INCOME' OF THE 'SPECIFIED PREVIOUS YEAR' ONLY. DEPENDING UPON THE DATE ON WHICH SEARCH IS I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 15 CONDUCTED, 'SPECIFIED PREVIOUS YEAR' SHALL BE THE YEAR OF SEARCH ONLY IN SOME CASES, WHEREAS IN S OME OTHER CASES, ONE MORE YEAR MA Y BE AVAILABLE TO THE ASSESSEE AS 'SPECIFIED PREVIOUS YEAR' WITHIN THE PROVISIONS OF SECTION 271AAA. THE IMPLICATIONS OF PROVISIONS OF SECTION 271AAA ARE BRIEFLY STATED AS UNDER: (I) THERE IS DEEMING FICTION OF 'UNDISCLOS ED INCOME' RELATING TO 'SPECIFIED PREVIOUS YEAR' AS DEFINED UNDER SECTION 271AAA. (II) WITH RESPECT TO 'UNDISCLOSED INCOME' RELATING TO 'SPECIFIED PREVIOUS YEAR', PENALTY IS LEVIABLE AT THE RATE OF TEN PER CENT OF 'UNDISCLOSED INCOME' (III) THERE IS PROV ISION FOR IMMUNITY FROM PENALTY IN CASE DECLARATION OF 'UNDISCLOSED INCOME' IS MADE IN THE STATEMENT RECORDED UNDER SECTION 132(4) DURING THE COURSE OF SEARCH PROVIDED OTHER CONDITIONS MENTIONED IN SECTION 271AAA E.G. SPECIFYING AND SUBSTANTIATING THE MANN ER OF DERIVING SUCH INCOME AND PAYING OF TAXES AND INTEREST THEREON ARE FULFILLED. (IV) WITH RESPECT TO 'UNDISCLOSED INCOME' OF THE 'SPECIFIED PREVIOUS YEAR', PENALTY SHALL BE LEVIED AS PER PROVISION OF SECTION 271 AAA AND THE PROVISION OF SECTION 271(1)( C) WILL NOT BE APPLICABLE. 6.2 (I) AT THE OUTSET, THE CLAIM OF THE APPELLANT IS THAT THE SOURCE OF INCOME IS MAINLY FROM COMMISSION ON LAND DEALINGS WITH THE LIMITED COMPANIES. SINCE THE SOURCE OF INCOME HAS BEEN DU LY EXPLAINED AND IS RECORDED IN THE BOOK S OF ACCOUNT, IT CANNOT BE SAID THAT INCOME RETURNED IN THE RETURN OF INCOME IS UNDISCLOSED INCOME. THEREFORE, THE APPELLANT HAS DENIED THE FACT THAT THERE IS ANY UNDISCLOSED INCOME. (II) IT IS FURTHER CLAIMED IN THE ALTERNATIVE THAT THE APPELLANT HAS DUL Y ADMITTED THE UNDISCLOSED INCOME IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH AS WELL AS DURING POST - SEARCH SUBMISSION MADE BEFORE THE ADDL. DIRECTOR OF INCOME - TAX (INV.), RAJKOT AND HAS ALSO SPECIFIED AND SUBSTANTIATED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAID TAX TOGETHER WITH INTEREST AND, THEREFORE, IS ENTITLED FOR IMMUNITY FROM PENALTY U/S 271AAA OF THE ACT. I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 16 6.3 FROM THE STATEMENT RECORDED U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH AS WELL AS DURI NG POST - SEARCH SUBMISSION MADE BEFORE THE ADDL. DIRECTOR OF INCOME - TAX (INV.), RAJKOT, IT IS QUITE EVIDENT THAT THE APPELLANT HAS ADMITTED THE FACT OF EARNING OF BROKERAGE INCOME IN THE LAND DEALINGS ON THE BASIS OF ENTRIES MADE IN THE SEIZED PAPERS. IT IS ALSO CLEARLY ADMITTED BY THE APPELLANT THAT EARNING OF THE BROKERAGE INCOME OF RS.2,75,00,000/ - IS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE, SUCH INCOME WHICH IS BASED ON THE UNDISCLOSED TRANSACTIONS FOUND AS PER THE INCRIMINATING DOCUMENT S SEIZED DURING THE COURSE OF SEARCH IS UNDOUBTEDLY THE UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE, THE CLAIM OF THE APPELLANT THAT THE INCOME RETURNED IS NOT THE 'UNDISCLOSED INCOME' IS SIMPLY NOT CORRECT SINCE ANY SUCH INCOME FOUND DURING THE COURSE O F SEARCH BASED ON THE UNDISCLOSED TRANSACTIONS IS COVERED AS PER THE DEFINITION OF 'UNDISCLOSED INCOME'. MOREOVER, THE ADDITION MADE IN THE ASSESSMENT ORDER ON ACCOUNT OF SCRUTINY OF SEIZED DOCUMENTS REPRESENTING UNEXPLAINED INVESTMENT IN PURCHASE OF LAND WILL ALSO BE COVERED AS PER THE DEFINITION OF 'UNDISCLOSED INCOME' AND, THEREFORE, THE APPELLANT WILL BE LIA BLE FOR PENALTY U/S 271 AAA IN RESPECT OF SUCH UNDISCLOSED INCOME ALSO. 6.4 SO FAR AS THE ADDITIONAL DISCLOSURE MADE SUBSEQUENT TO THE SEARCH PROCE EDINGS, BY ENHANCING THE DISCLOSURE OF UNACCOUNTED INCOME BASED ON THE SCRUTINY OF SEIZED INCRIMINATING DOCUMENTS, BEFORE THE ADDL. DIRECTOR OF INCOME - TAX (INV.), RAJKOT, IS CONCERNED, THE SAME MAY BE TREATED AS DISCLOSURE MADE AS PER STATEMENT U/S 132(4) OF THE ACT ONLY, MAINLY IN VIEW OF THE FACT THAT PROPER SCRUTINY OF SEIZED MATERIAL IS ALWAYS NOT POSSIBLE FOR MAKING DISCLOSURE DURING THE COURSE OF SEARCH. 6.5 SO FAR AS THE MANNER OF EARNING OF THE SAID UNDISCLOSED IS CONCERNED, I AGREE APPELLANT IN TH E STATEMENT RECORDED U/S 132(4) OF THE ACT AS WELL AS SUBSEQUENT SUBMISSION HAS CLEARLY MENTIONED THE MANNER OF EARNING SUCH INCOME WHICH IS MAINLY ON ACCOUNT OF BROKERAGE INCOME IN RESPECT OF LAND DEALINGS. 6.6 SO FAR AS SUBSTANTIATING THE MANNER IN WHIC H INCOME HAS BEEN EARNED, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY SUCH QUESTION WAS ASKED TO THE APPELLANT EITHER IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT OR EVEN DURING THE ASSESSMENT PROCEEDINGS. IT IS NOTED THAT THE APPELLANT HAS RESPONDED TO ALL THE QUESTIONS ASKED U/S 132(4) OF THE IT ACT RELATING TO HIS FINANCIAL AFFAIRS. UNLESS I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 17 SPECIFIC QUESTION IS ASKED TO THE APPELLANT EITHER IN THE STATEMENT RECORDED U/S 132(4) OR EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT MAY NOT BE PROPER TO ATTRIBUTE THE FAILURE, IF ANY, FOR NOT SUBSTANTIATING THE MANNER IN WHICH INCOME WAS EARNED BY THE APPELLANT. IN THIS REGARD THE DECISION OF THE HON'BLE HIGH. COURT OF GUJARAT IN THE CASE OF MAHENDRA C. SHAH [2008] 299 ITR 305 (GUJ) WHICH IS IN THE CON TEXT OF IMMUNITY FROM PENALTY U/S 271(1)(C) READ WITH EXPLANATION 5 ARE REPRODUCED AS UNDER: '15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INC OME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OF FICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUEST/ON AND ANSWER FORM AND THERE WO ULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA) SECONDL Y, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE A CT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL 'COMPLIANCE N OT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 /N, EXPLANATION 5 IS COMMENDABLE.' 6.7 IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT SO FAR AS THE MANNER OF EARNING THE INCOME AND SUBSTANTIATING THE SAME IS CONCERNED, THE APPELLANT HAS, IN MY VIEW, SPECIFIED THE MANNER OF EARNING THE UNDISCLOSED INCOME AS WELL AS SUBSTANTIATED THE SAME TO THE EXTENT OF QUESTIONS HAVING BEEN ASKED IN THIS REGARD IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE APPELLANT HAS FAILED TO RESPOND TO ANY OF THE QUESTIONS RELATING TO THE MANNER AS WELL AS SUBSTANTIATING THE SAME I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 18 EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF THIS, THE APPELLANT HAS FULFILLED THE FIRST TWO CONDITIONS FOR A VAILING OF IMMUNITY FROM PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. 6.8 SO FAR AS TAX PAYMENT TOGETHER WITH INTEREST IS CONCERNED, IT IS NOTED THAT THE APPELLANT HAS FAILED TO MAKE THE PAYMENT OF TAX AND INTEREST AS DISCLOSED IN THE RETURN OF INCOME WHILE FILING THE RETURN OF INCOME. THE SAID TAX AND INTEREST HAS NOT BEEN PAID EVEN BY THE TIME ASSESSMENT ORDER IS FINALIZED. IN FACT, NO SUCH TAX AND INTEREST HAS BEEN PAID AS NOTED BY THE AO EVEN BY THE DATE BY WHICH THE PENALTY ORDER HAS BEEN PASSED U/S 271 AAA OF THE ACT ON 29 - 09 - 2010. 6.9 IT IS SUBMITTED BY THE APPELLANT THAT THE SAID TAX TOGETHER WITH INTEREST HAS BEEN NOW PAID AND* THE APPELLANT CLAIMS THE IMMUNITY RELYING ON THE DECISION OF HON'BLE ITAT, CALCUTTA BENCH IN THE CASE OF DCIT VS. PIONEER MA RBLES & INTERIORS PVT. LTD. IN ITA NO..1326/KOL./2011. ON VERIFICATION OF THE DETAILS OF SUCH PAYMENT OF TAX AND INTEREST, IT IS NOTED THAT SUCH PAYMENT HAS BEEN MADE ON DIFFERENT DATES STARTING FROM 06 - 08 - 2010 AND THE FINAL PAYMENT HAS BEEN MADE ON 26 - 03 - 2011. 6.10 IT IS TRUE THAT THERE IS NO PRE - CONDITION THAT TAX ALONG WITH INTEREST MUST BE PAID BEFORE FILING OF RETURN OR ANY OTHER SPECIFIED DATE. FURTHER, IT N EEDS TO BE NOTED THAT THERE CANN OT BE AN INDEFINITE PERIOD FOR PAYMENT OF SUCH TAX AND INTERE ST FOR THE PURPOSE OF AVAILING OF IMMUNITY FROM PENALTY U/S 271AAA OF THE ACT. IN RESPECT OF THE SIMILAR PROVISIONS IN THE CONTEXT OF IMMUNITY FROM PENALTY PROCEEDINGS U/S 271(1)(C) R.W. EXPLANATION 5, THE HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF MAHEN DRA C. SHAH [2008] 299 ITR 305 (GUJ) HAS HELD AS UNDER: 'THERE IS NO PRESCRIPTION AS TO THE POINT OF TIME WHEN THE TAX HAS TO BE PAID QUA THE AMOUNT OF INCOME DECLARED IN THE STATEMENT MADE UNDER SECTION 132(4). THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT T HERE WOULD BE SUFFICIENT COMPLIANCE OF THE PROVISION IF TAX IS SHOWN TO HAVE BEEN PAID BEFORE THE ASSESSMENT WAS COMPLETED. HOWEVER, THE OUTER LIMIT HAS TO BE THE POINT OF TIME WHEN THE ASSESSMENT PROCEEDINGS ARE, UNDERTAKEN BY THE ASSESSING OFFICER BECAU SE THE OPENING PORTION OF SECTION 271(1) REQUIRES THE ASSESSING OFFICER TO RECORD SATISFACTION IN THE COURSE OF SUCH PROCEEDINGS, AND THE SATISFACTION HAS TO BE AS REGARDS THE I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 19 CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF - INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, A SATISFACTION' HA S TO CONCEALMENT CAN BE ARRIVED AT THE EARLIEST POINT OF TIME ONLY IN THE COURSE OF ASSESSMENT PROCEEDINGS AND FOR THAT PURPOSE, TH E ASSESSING OFFICER IS REQUIRED TO VERIFY AND ASCERTAIN WHETHER THE INCOME HAS BEE N DECLARED AND TAX HAS BEEN PAID THEREON.' 6.11 THEREFORE, IN VIEW OF THE ABOVE DECISION, IT IS CLEAR THAT FOR THE PURPOSE OF AVAILING OF IMMUNITY UNDER IDENTICAL SITUATION, THE TAX ALONG WITH INTEREST MUST BE PAID BY THE TIME ASSESSMENT ORDER IS PASSED. IT WILL NOT SERVE THE PURPOSE IF THE TIME LIMIT FOR PAYMENT OF TAX AND INTEREST IS STRETCHED TOO FAR BEYOND THE SAID DATE OF PASSING THE ASSESSMENT ORDER. COMING TO THE DECISION IN THE CASE OF PIONEER MARBLES & INTERIORS PVT. LTD. IN ITA NO.1326/KOL./201 1 OF THE HON'BLE ITAT KOLKATA BENCH AS RELIED UPON BY THE APPELLANT, THE FACTS OF THIS CASE ARE THAT WHILE FILING THE INCOME T AX RETURN, DUE TO AN INADVERTENT MISTAKE, THE ASSESSEE DID NOT COMPUTE INTEREST UNDER SECTION 234 C. IT WAS FOR THIS REASON THAT T HE SELF ASSESSMENT TAXES WERE UNDERPAID BY RS 46,132 BUT THE ASSESSEE PAID OVER THE SHORTFALL, WITHIN PERMISSIBLE TIME, UPON RECEIVING THE 1 NOTICE OF DEMAND UNDER SECTION 156 OF THE ACT. THE HON'BLE ITAT, AFTER ANALYZING THE DECISION OF THE GUJARAT HIGH CO URT IN THE CASE OF MAHENDRA C. SHAH [2008] 299 ITR 305 (GUJ), HAS HELD AS UNDER: 'SECTION 271 AAA, AS THE STATUTE UNAMBIGUOUSLY PROVIDES, DOES NOT REQUIRE ANY SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER TO BE ARRIVED AT DURING THE ASSESSMENT PROCEEDI NGS , AND, THEREFORE, THE OUTER LIMIT OF PAYMENT BEFORE THE CONCLUSION OF ASSESSMENT PROCEEDINGS WILL NOT COME INTO PLAY. ' IN OUR CONSIDERED VIEW, THEREFORE, ON THE FACTS OF THE PRESENT CASE WHEREIN ENTIRE TAX AND INTEREST HAS BEEN DULY PAID WELL WITHIN T HE TIME LIMIT FOR PAYMENT OF NOTICE OF DEMAND UNDER SECTION 156 AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED, THE ASSESSEE COULD NOT BE DENIED THE IMMUNITY UNDER SECTION 271AAA(2) ONLY BECAUSE ENTIRE TAX, ALONG WITH 'INTEREST, WAS NOT PAID BEFORE FILING OF INCOME TAX RETURN OR, FOR THAT PURPOSE, BEFORE CONCLUDING THE ASSESSMENT PROCEEDINGS.' 6.12 THEREFORE, EVEN IF THE DECISION GIVEN BY THE HON'BLE ITAT KOLKATA IS FOLLOWED, THE OUTER LIMIT OF PAYMENT OF TAX AND INTEREST HAS BEEN EXTENDED TO THE T IME LIMIT FOR PAYMENT AS PER NOTICE OF DEMAND I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 20 U/S 156 OF THE IT ACT. IN THE PRESENT CASE, ASSESSMENT ORDER HAS BEEN A SSE SSED ON 30 - 03 - 20 10. H OWEVER, THE FINAL PAYMENT OF SUCH TAX AND INTEREST HAS BEEN MADE ONLY ON 26 - 03 - 2011 AFTER ALMOST A YEAR . 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. THERE DOES NOT SEEM TO BE ANY DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAS PAID HIS RELEVANT TAX AND INTEREST ON VARIOUS DATES FROM 06 - 08 - 2010 TO 26 - 03 - 2011 I.E. AFTER THE PASSING OF THE PENALTY ORDER BUT BEFORE THE LOWER APPELLATE ORDER. THE CIT(A) AFFIRMS THE IMPUGNED PENALTY ONLY ON THIS GROUND BY HOLDING THAT THIS PAYMENT SCHEDULE DOES NOT CONFIRM TO THE SETTLED LAW THAT THE SAME HAS TO BE PAID BEFORE COMPLETION OF ASSESSMENT OR WITHIN THE TIME ST IPULATED AS PER THE DEMAND RAISED U/S. 156 OF THE ACT. IT EMERGES THAT A CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 1326/KOL/2011 IN CASE OF DCIT VS. PIONEER MARBLES HOLDS THAT THERE IS NO TIME LIMIT SET OUT IN THE IMMUNITY PROVISION U/S. 271AAA(2) OF T HE ACT. IT IS OF THE VIEW TH AT THERE IS A PARADIGM SHIFT IN PRESCRIPTION OF SUCH TIME LIMIT SO FAR AS PENALTIES PRESCRIBED U/S. 271(1)(C) AND 271AAA ARE CONCERNED. IN OTHER WORDS, THE RELEVANT CONDITIONS IN THE FORMER HAVE BEEN HELD AS NOT TO APPLY IN LA TTER CASE. WE KEEP IN MIND THIS FINE DISTINCTION. WE REVERT BACK TO THIS IMMUNITY CLAUSE AND FIND THAT THE ONLY EXPRESSION USED THEREIN IS PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY IN RESPECT OF THE UNDISCLOSED INCOME . THERE CAN BE HARDLY ANY DISP UTE THAT WE ARE DEALING WITH A PENALTY PROVISION IN A TAX STATUTE TO BE LITERALLY CONSTRUED. WE OPINE IN THIS FACTUAL BACKDROP WHEN THIS PROVISION ITSELF DOES NOT STIPULATE ANY EXPRESSED TIME LIMIT, THE ASSESSEE WHO I.T.A NO. 282 TO 288 /RJT /20 12 A.Y. 2003 - 0 4 TO 2009 - 10 PAGE NO SHRI PRATAP B. THAKKER VS. ACIT 21 HAS PAID THE RELEVANT TAXES AND INTERE ST DESERVES NOT TO BE PENALIZED AS PER THE LD. CO - ORDINATE BENCH DECISION. WE ARE OF THE OPINION THAT WHEN THE LEGISLATURE ITSELF HAS EMPHASIZED ABOUT TAX AND INTEREST ON THE IMPUGNED UNDISCLOSED INCOME WITHOUT EXPRESS STIPULATION OF PAYMENT THEREOF AT T HE TIME OF FILING OF RETURN, COMPLETION OF ASSESSMENT OR PENALTY PROCEEDINGS, EVEN BELATED PAYMENT THEREOF FORMS A REASONABLE CAUSE FOR THE PURPOSE OF CLAIMING THIS IMMUNITY . WE ACCEPT ASSESSEE S ARGUMENTS IN THESE FACTS AND CIRCUMSTANCES CLAIM ING IMMUNIT Y AND REJECT THOSE RAISED AT THE R EVENUE S BEHEST . THE IMPUGNED SECTION 271AAA PENALTY OF RS. 27,04,864/ - IS ACCORDINGLY DELETED. ITA NO. 288/RJT/2012 IS ACCEPTED 12 . ASS ESSEE SUCCEEDS IN ALL OF HIS SEVEN APPEALS. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 09 - 03 - 201 6 SD/ - SD/ - (N.K. BILLAIYA ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 09 /03 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2 . REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT