M/s Fuel Corporation of India, Nagpur V. Commissioner of Income Tax Central Circle-1(1), Nagpur

ITA 33/NAG/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9674 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 143(3); 5(2); 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 33/NAG./2013 ( ASSESSMENT YEAR : 200910 ) M/S. FUEL CORPORATION OF INDIA C/O M/S. DEWANI BROS., ADVOCATES 1AJANTA, CHHINDWARA ROAD NAGPUR 440 013 PAN AAAFF1815G APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE1(1), NAGPUR .... RESPONDENT ASSESSEE BY : SHRI K.P. DEWANI REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 21.06.2017 DATE OF ORDER 23.06 .2017 O R D E R PER AMARJIT SINGH, J.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER DATED 15 TH OCTOBER 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS)I, NAGPUR, FOR THE ASSESSMENT YEAR 20091 0, IN WHICH THE PENALTY LEVIED UNDER SECTION 271AAA OF THE INCOME T AX ACT, 1961 (FOR SHORT THE ACT ) BY THE ASSESSING OFFICER TO THE TUNE OF ` 12.50 LAKH HAS BEEN CONFIRMED. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER IMPOSING PENALTY UNDER SECTION 271AAA OF THE ACT IS ILLEGAL, INVALID AND BADINLAW; 2 M/S. FUEL CORPORATION OF INDIA 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING PENALTY IMPOSED UNDER SE CTION 271AAA OF THE ACT BY ACIT, CENTRAL CIRCLE1(1), NAGPUR; AN D 3. THE PENALTY IMPOSED UNDER SECTION 271AAA IS UNJU STIFIED, UNWARRANTED AND EXCESSIVE. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZUR E OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 28 TH JANUARY 2009, AT THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSME NT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 24 TH DECEMBER 2010 ON THE BASIS OF SEIZED MATERIAL AND PENALTY WAS INITIATED UNDER SECTION 271AAA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE IN ITS COMPUTATION OF IN COME INCLUDED ` 1.25 LAKH AS SURRENDERED INCOME DECLARED UNDER SECT ION 134(4) OF THE ACT ON ACCOUNT OF NONVERIFIABLE UNSECURED LOAN. NO TICE UNDER SECTION 271AAA WAS ISSUED ON 24 TH DECEMBER 2010 AND THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY @ 10% OF THE UNDIS CLOSED INCOME TO THE TUNE OF ` 12.50 LAKH. THEREAFTER, THE ASSESSEE FILED AN APPE AL BEFORE THE LEARNED COMMISSIONER (APPEALS), WHO CONF IRMED THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER, THER EFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 4. UNDER THE ABOVE SAID ISSUE, THE ASSESSEE HAS CHALLEN GED THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) CONFIRMING THE 3 M/S. FUEL CORPORATION OF INDIA PENALTY LEVIED UNDER SECTION 271AAA TO THE TUNE OF ` 12.50 LAKH BY THE ASSESSING OFFICER. AT THE VERY OUTSET, THE LEARNED COUNSEL FOR ASSESSEE HAS ARGUED THAT THE CASE OF THE ASSESSEE HAS DULY B EEN FULLY COVERED BY THE DECISION OF THE TRIBUNAL IN M/S. NAVAL KISHO RE AGARWAL V/S ACIT, ITA NO.32/NAG./2013, ORDER DATED 29 TH MARCH 2017, THEREFORE, IN THE SAID CIRCUMSTANCES, THE ORDER OF THE LEARNED COMMIS SIONER (APPEALS) IS WRONG AND AGAINST LAW AND FACTS, THEREFORE, LIAB LE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND, THE LEARNED DEPARTMENTA L REPRESENTATIVE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE LE ARNED COMMISSIONER (APPEALS) IN QUESTION. KEEPING IN VIEW THE ARGUMENTS ADVANCED BY THE LEARNED REPRESENTATIVES OF THE PART IES AND PERUSING THE RECORD CAREFULLY, IT CAME INTO THE NOTICE THAT THE SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) WAS CARRIED OUT AT T HE BUSINESS PREMISES OF THE ASSESSEE ON 28 TH JANUARY 2009. THEREAFTER, THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 24 TH FEBRUARY 2010 ON THE BASIS OF SEIZED MATERIAL. DURING THE CO URSE OF ASSESSMENT, THE ASSESSEE DECLARED THE ADDITIONAL INCOME UNDER S ECTION 133(4) OF THE ACT BY VIRTUE OF LETTER DATED 27 TH FEBRUARY 2009. THEREAFTER, CONSIDERING THE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED BY ASSESSING THE INCOME TO THE TUNE OF ` 2,20,01,849. NO DOUBT, THE SHOW CAUSE NOTICE WAS IS SUED TO THE ASSESSEE BY VIRTUE OF LETTER DATED 27 TH FEBRUARY 2009. THE SAID DISCLOSURE WAS MADE IN VIEW OF THE PROVISIONS MADE UNDER SECTION 4 M/S. FUEL CORPORATION OF INDIA 132(4). THE ABOVE SAID POSITION IS NOT IN DISPUTE. NOW, IT IS TO BE SEEN, WHETHER THE FINDING OF THE TRIBUNAL IN ITA NO.32/NA G./2013, IS QUITE APPLICABLE TO THE FACTS OF THE CASE OR NOT. BEFORE G OING FURTHER, WE FIND IT NECESSARY TO ADVERT THE FINDING OF THE ORDER PAS SED BY THE TRIBUNAL IN M/S. NAVAL KISHORE AGARWAL V/S ACIT, ITA NO.32/N AG./2013, ORDER DATED 29 TH MARCH 2017, WHICH IS REPRODUCED BELOW: 7. UPON CAREFUL CONSIDERATION WE FIND THAT WE MAY GAINFULLY REFER TO THE PROVISIONS OF SECTION 271AAA : 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CON TAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CAS E WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1S T DAY OF JUNE, 2007, THE ASSESSEE SHALL 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 YE AR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A ST ATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH TH E UNDISCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST , IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE I N RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THI S SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEW ELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DA TE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; O R 5 M/S. FUEL CORPORATION OF INDIA (B) OTHERWISE NOT BEEN DISCLOSED TO THE C HIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEE N CONDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE P REVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARC H, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1 ) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE TH E DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETU RN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED.. A READING OF THE ABOVE MAKES IT CLEAR THAT PENALTY U/S 271AAA WOULD NOT BE ATTRACTED IF THE ASSESSEE IN THE COURS E OF SEARCH MAKES A STATEMENT REGARDING THE ADMISSION OF UNDISC LOSED INCOME, SPECIFIES AND SUBSTANTIATE THE MANNER IN WH ICH THE INCOME HAS BEEN EARNED AND HAS PAID TAX ALONG WITH THE INTEREST THEREON. IN THE PRESENT CASE WE FIND THAT THE SEARC H COMMENCED ON 28-01-2009 AND THE DATE OF CONCLUSION OF THE SEA RCH HAS BEEN MENTIONED AS 26-03-2009. THE ASSESSEE VIDE LETTER D ATED 27-02- 2009 HAS GIVEN THE ADMISSION AND GIVEN DETAILS OF U NDISCLOSED INCOME TO THE ADDL. DIRECTOR OF INCOME-TAX. IN OUR CONSIDERED OPINION THIS FACTUAL ASPECT CLEARLY BRINGS OUT THE FACT THAT DURING THE COURSE OF PERIOD OF SEARCH WHEN THE SEARCH WAS SUBSISTING, THE ASSESSEE VIDE LETTER TO THE ADDL. DIRECTOR OF I NVESTIGATION HAS GIVEN THE DETAILS OF UNDISCLOSED INCOME. HENCE IN V IEW OF THE AFORESAID FACTS, INFERENCE BY THE AUTHORITIES BELOW THAT THE ASSESSEE HAS NOT DISCLOSED THE IMPUGNED INCOME AT T HE TIME OF SEARCH IS NOT SUSTAINABLE. IT IS ALSO NOTED THAT TH ERE IS NO DISPUTE THAT THE ASSESSEE HAS DULY PAID THE TAXES THEREON. FURTHER THE LEARNED CIT(APPEALS) HAS DRAWN ADVERSE INFERENCE TH AT THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. IN THIS REGARD WE NO TE THAT THE ASSESSEE HAS DULY DISCLOSED IN THE LETTER REGARDING THE INCOME BEING OFFERED FOR TAXATION AS UNDISCLOSED INCOME WH ICH IS AS UNDER: I) SHARE APPLICATION IN FUELCO FOR FY 2008-09 RS. 74,50,000 6 M/S. FUEL CORPORATION OF INDIA II) CASH SALES NOT RECORDED IN NAWALKISHOR AGRAQWAL FY 2008-09 RS. 20,00,000 III) ASSETS MORE THAN LIABILITIES & CAPITAL OF SHRI NAWAL KISHOR AGRAWAL FY 2008-09 RS. 30,00,000 IV) SUNDRY CREDITORS NOT VERIFIABLE IN SHRI SHYAM COAL SERVICES RS.1,21,00,000 8. FROM THE ABOVE WE FIND THAT THE NATURE AND MANNE R IN WHICH THE UNDISCLOSED INCOME IS EARNED IS AMPLY EXH IBITED. FURTHER WE NOTE THAT THERE IS NO QUERY WHATSOEVER H AVING BEEN ASKED BY THE REVENUE AUTHORITIES AT ANY STAGE OF TH E SEARCH OR ASSESSMENT TO FURTHER SPECIFY THE MANNER OF EARNING THE UNDISCLOSED INCOME OR SUBSTANTIATION THEREOF. IN TH IS REGARD WE NOTE THAT THE PROVISIONS OF SECTION 271AAA HAS ENOR MOUS SIMILARITIES TO SECTION 271(1)(C) READ WITH EXPLANA TION 5. IN THIS CONNECTION WE MAY GAINFULLY REFER TO DECISION OF IT AT DELHI E BENCH IN ITA NO. 337/DEL/20013 IN THE CASE OF NEER AT SINGAL VS. ACIT ORDER DATED 24-06-2013 WHEREIN IT WAS HELD AS UNDER : THE RELEVANT OPERATIVE PART OF THIS ORDER READS THU S:- '11. WHEN WE COMPARE EXPLANATION 5 TO SECTION 271(L )(C) OF THE ACT WITH THE PROVISIONS LAID DOWN U/S 271AAA OF THE ACT WE FIND A LOT OF SIMILARITY THEREIN UNDER WHICH PENALTY IS NO T ATTRACTED IN A CASE OF SEARCH ON THE UNDISCLOSED INCOME. AS PER EX PLANATION 5 TO SECTION 271(L)(C) OF THE ACT IF HE ASSESSEE IN THE COURSE OF SEARCH MAKES A STATEMENT UNDER SUB SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, IEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS FOUND IN HIS POSSESSION OR UNDER HIS CONTROL HAS BEEN ACQ UIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS R ETURN OF . ICOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPE CIFIED IN SUB SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN TH E STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME, THEN THE ASSESSEE FOR SUCH INCOME WILL NOT BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME TO ATTRACT THE PENALTY THEREIN. SIMILAR LY UNDER THE PROVISIONS OF SECTION 271AAA OF THE ACT PENALTY IS NOT LEVIABLE WHERE SEARCH HAS BEEN ITA NO-3371DEL/2013 8 INITIA TED U/S 132 ON OR AFTER 1.6.2007 BUT BEFORE 1.7.2012, AND THE ASSESSEE IN THE COURSE OF SEARCH, IN A STATEMENT UNDER THE SUB SECTION 4 OF SECTION 132,(I), ADMITS THE UNDISCLOSED INCOME (II) SPECIFIES AND SUBSTANTIATES THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED, AND (III) PAYS THE TAX TOGETHER WITH INTEREST, IF A NY, IN RESPECT OF THE UNDISCLOSED INCOME. FROM THE READING OF BOTH TH ESE PENAL PROVISIONS WE FIND THAT ONE REQUIREMENT IS COMMON O R NON ATTRACTION OF THE PENAL PROVISIONS' UNDER BOTH THE SECTIONS I.E. IF 7 M/S. FUEL CORPORATION OF INDIA THE ASSESSEE IN HIS STATEMENTS RECORDED U/S 132(4) OF THE ACT ADMITS THE UNDISCLOSED INCOME AND SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. THE ONLY ADDITIONAL REQUIREMENT IN THE EA E OF SECTION 271AA A IN THIS REGARD IS THAT THE ASSESSEE WILL ALSO HAVE TO SUBST ANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BESIDES SPECIFICATION OF THE MANNER IN WHICH SUCH INCOME WA S DERIVED. THE OTHER DIFFERENCE IS IN THE APPLICATION OF THE P ROVISIONS UNDER BOTH THE SECTIONS. THE PENAL PROVISION U/S 271(1)(C ) UNDER EXPLANATION 5 THERETO IS APPLICABLE IN SUCH CASES W HERE SEARCH U/S 132 WAS INITIATED BEFORE 1.6.2007 WHEREAS U/S 271AA A, THE PROVISIONS THEREIN ARE APPLICABLE IN A CASE WHERE S EARCH U/S 132 OF THE ACT HAS BEEN INITIATED ON OR AFTER 1.6.2007 BUT BEFORE 1.7.2012. THUS THE INTENTION OF THE LEGISLATURE IS CLEAR TO THIS EXTENT THAT IN A CASE WHEREIN SEARCH WAS INITIATED BEFORE 1.6.2007, PROVISIONS U/S 271(1)(C) WILL BE APPLICAB LE AND IN SEARCH INITIATED AFTER 1.6.2007 (BUT BEFORE 1.7.2012) PROV ISIONS U/S 271AAA OF THE ACT WILL BE APPLICABLE. THESE PROVISI ONS ARE THUS NOT APPLICABLE SIMULTANEOUSLY BUT THESE ARE PERIOD SPECIFIC. AS DISCUSSED ABOVE, THE ONLY ADDITIONAL REQUIREMENT FO R NON [FRACTION OF PENAL PROVISION U/S '271AAA OF THE ACT IN COMPAR ISON TO THIS U/S 271(1)(C) IS THAT BESIDES SPECIFYING THE MANNER IN WHICH THE ADMITTED AN UNDISCLOSED INCOME HAS BEEN DERIVED, TH E ASSESSEE WILL ALSO HAVE TO SUBSTANTIATE THIS MANNER. IN VIEW OF THIS RELATIVE STUDY OF BOTH THE PROVISIONS HEN WE GO THROUGH THE DECISIONS RELIED UPON BY THE LD. AR, WE FIND THAT IN THE CASE OF ACIT VS. GEBILAL KANHIALAL (HUF) (SUPRA) BEFORE THE HON'BLE SUPREME COURT THE KARTA OF THE ASSESEEE HUF HAD MADE A STAT EMENT U/S 132 (4) ADMITTING ITA NO.337/DEL/2013 9 CONCEALED I NCOME IN THE COURSE OF SEARCH AND SPECIFIED THE MANNER IN WHICH SUCH INCOME STOOD DERIVED. IN THIS STATEMENT THE KARTA ALSO SUR RENDERED AN AMOUNT OF RS. 42,32,000/-. THE KARTA HOWEVER NEITHE R FILED RETURN OF INCOME ULS 139 (1) ON DUE DATE NOR PAID DUE TAX ON THE SURRENDERED INCOME. LATER ON HE ALSO RETRACTED FROM HIS STATEMENT RECORDED ULS 132(4) ABOUT SURRENDER. THE HON' BLE SUPREME COURT AFTER DELIBERATING IN DETAIL ON DIFFE RENT EXPLANATIONS TO SECTION 271(1)(C) HAS BEEN PLEASED TO HOLD THAT THE ASSESSEE WAS ENTITLED TO IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IN T HAT CASE FAILURE TO FILE RETURN OF INCOME ON 31 ST JULY 1987 AND FAILURE TO PAY TAX THEREON WAS THE MERE REASON RELIED UPON BY THE DEPA RTMENT TO DENY TO THE ASSESSEE THE BENEFIT OF IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. ACCO RDING TO THE DEPARTMENT THE ASSESSEE HAD COMPLIED WITH ALL THE C ONDITIONS OF CLAUSE 2 OF EXPLANATION 5 EXCEPT PAYMENT OF TAX IN TIME. HON'BLE SUPREME COURT PLEASED TO HOLD THAT NO TIME LIMIT HA S BEEN PRESCRIBED FOR PAYMENT OF TAX UNDER CLAUSE 2 OF EXP LANATION 5 AND THE ASSESSEE HAVING PAID TAX UPTO THE DATE OF PAYME NT IN RESPECT 8 M/S. FUEL CORPORATION OF INDIA OF THE UNDISCLOSED INCOME SURRENDERED BY IT IN THE COURSE OF SEARCH, ALL THE THREE CONDITIONS LAID DOWN IN CLAUS E 2 OF EXPLANATION 5 TO SECTION 271(L)(C) STOOD FULFILLED AND THEREFORE THE ASSESSEE IS ENTITLED TO IMMUNITY UNDER CLAUSE (2) O F EXPLANATION 5 TO SECTION 271(L)(C) OF THE ACT. IN THE CASE OF CIT VS. RADHA KISHAN GOEL (SUPRA) BEFORE THE HON 'BLE ALLAHABAD H IGH COURT THE ISSUE RAISED WAS AS TO WHETHER MERE NON-STATEMENT O F MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED WOULD MAKE EXP LANATION 5 (2) OF SECTION 271(L)(C) INAPPLICABLE. THE FURTHER QUESTION RAISED A AS TO WHETHER IN A CASE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED IN THE STATEMENT U/S 132(4) BUT IS ACTED SUBSEQUENTLY, THAT AMOUNTS TO COMPLIANCE WITH EXPLA NATION 5 (2) TO SECTION 271(L)(C)AND NO PENALTY WOULD BE LEVIABL E UNDER SAID SECTION. BOTH THESE QUESTIONS HAVE BEEN REPLIED IN AFFIRMATIVE IN THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT. A S PER THE DECISION MERE NON STATEMENT OF MANNER WHICH UNDISCL OSED WAS DERIVED WOULD NOT MAKE EXPLANATION TO SECTION 271(L )(C) INAPPLICABLE. SIMILARLY IN A CASE MANNER IN WHICH I NCOME HAS BEEN ITA NO-3371DEL/2013 10 DERIVED HAS NOT BEEN STATED IN STATEMENT ULS 132(4) BUT IS STATED SUBSEQUENTLY THA T AMOUNTS TO COMPLIANCE WITH EXPLANATION 5(2) TO SECTION 271(L)( C) AND NO PENALTY WOULD BE LEVIABLE. SIMILARLY IN THE CASE OF CIT VS. MAHENDRA G. SHAH BEFORE THE HON'BLE GUJARAT HIGH CO URT THE BASIC REQUIREMENT FOR IMMUNITY FORM THE LEVY OF PEN ALTY UNDER EXPLANATION 5 TO SECTION 271(L)(C) OF THE ACT HAS B EEN DISCUSSED AS PER WHICH THE FIRST REQUIREMENT IS DISCLOSURE I N STATEMENT MADE U/S 132(4) AND PAYMENT OF TAX BEFORE THE ASSES SMENT WAS COMPLETED. FOLLOWING RATIO LAID DOWN IN THIS DECISI ON OF HON'BLE GUJARAT HIGH COURT, PUNE BENCH OF THE TRIBUNAL IN T HE CASE OF DCIT VS. SHRI INDERCHAND SURAJMAL BOTHRA (SUPRA) WH EREIN PENALTY U/S 271(L)(C) WAS LEVIED HELD THAT IT IS NO T REQUIRED TO SPECIFY THE MANNER IN WHICH THE INCOME WAS EARNED IN RESPECT OF THE AMOUNT OFFERED TO TAX IN THE RETURN OF INCOME FILED TO SEARCH ACTION BY PAYING TAXES THEREON FOR ADOPTI NG IMMUNITY FROM PENALTY UNDER EXPLANATION 5 OF SECTION 271(1)( C) OF THE ACT. THE CUTTACK BENCH OF THE TRIBUNAL IN THE CASE OF SH RI ASHOK KUMAR SHARMA (HUF) AND OTHERS VS. DCIT (SUPRA) WHER EIN PENALTY U/S 271AAA WAS LEVIED THE ASESSEE HAD DISCL OSED CONCEALED INCOME WHILE GIVING STATEMENT U/S 132 OF THE ACT DURING THE COURSE OF SEARCH AND HAD PAID THE TAX TH EREON AND SHOWED THE SAID UNDISCLOSED INCOME FILED UNDER THE HEAD 'INCOME FROM BUSINESS' AND DEPARTMENT HAD ACCEPTED THESE RE TURNS AND ACCORDINGLY PASSED THE ASSESSMENT ORDER. PENALTY U/ S 271AAA WAS LEVIED. IT WAS HELD THAT UNDISPUTEDLY THE ASSES SEE HAD SHOWN THE UNDISCLOSED INCOME UNDER THE HEAD 'INCOME FROM BUSINESS' IN THE RETURNS FILED BY THEM AND THAT WAS ACCEPTED BY THE DEPARTMENT BY PASSING THE ASSESSMENT ORDERS ACCORDI NGLY, THEREFORE THE CASE OF THE ASSESSEE FALLS EXACTLY WI THIN THE PURVIEW OF SUB SECTION 2 OF SECTION 271AAA. THUS THE IMPUGN ED PENALTY 9 M/S. FUEL CORPORATION OF INDIA LEVIED CONTRARY TO THE PROVISIONS CONTAINED IN SECT ION 271AAA (2) IS NOT SUSTAINABLE. THE PENALTY WAS ACCORDINGLY DEL ETED. IN THE CASE OF SHRI PRAMOD KUMAR LAIN AND ANOTHER VS. ACIT (SUPRA) BEFORE THE CUTTACK BENCH OF THE TRIBUNAL, THE ASSES EE HAD DISCLOSED THE UNACCOUNTED INCOME BUT HAD FAILED TO SPECIFY THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED. THE D EPARTMENT ACCORDINGLY LEVIED PENALTY U/S 271AAA OF THE ACT. T HE SAME ITA NO-337/DEL/2013 11 WAS UPHELD BY THE FIRST APPELLAT E AUTHORITY. THE TRIBUNAL HAS HOWEVER DELETED THE PENALTY ON THE BASIS THAT THERE IS NO PRESCRIBED METHOD TO INDICATE THE MANNE R IN WHICH INCOME WAS GENERATED WHERE THE DEFINITION OF 'UNDIS CLOSED INCOME' HAS BEEN DEFINED IN THE ACT IT ELF WHEN NO INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED 'EITHER WHOLLY OR PARTLY' WHICH ONUS LAY UPON THE ASSESSEE STOOD DISCHARGED. THE DE LHI BENCH OF THE TRIBUNAL IN THE RECENT DECISION IN THE CASE OF MOTHER PRIDE EDUCATION PERSONNA PVT. LTD,. VS. DCIT (SUPRA) WHIL E PLACING RELIANCE ON , EARLIER DECISION IN THE CASE OF SMT. RAJ RANI GUPTA (SUPRA) AND FOLLOWING THE RATIO OF THE DECISION OF HON'BLE HIGH COURTS IN THE CASE OF CIT VS. RADHI KISHAN GOEL (SU PRA) (ALL) AND CIT VS. MAHENDRA C. SHAH (SUPRA) (GUJ) HAS DELETED THE PENALTY. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA KISHAN GOEL (SUPRA) HAS BEEN PLEASED TO HOLD THAT U/S 132(4) OF THE I. T. ACT 1961 UNLESS THE AUTHORIZED OFFICER PUTS SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHIC H INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSO N TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IN THE STATEME NT THE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEE N STATED BUT HAS BEEN STATED SUBSEQUENTLY, THAT AMOUNTS TO T HE COMPLIANCE WITH EXPLANATION 5 (2) TO SECTION 271(1) (C) OF THE ACT. IT WAS FURTHER HELD THAT IN CASE THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED U/S 132(4) OF TH E ACT IN THE ABSENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE INFERRED TH AT SUCH UNDISCLOSED INCOME WAS DERIVED FROM THE BUSINESS WH ICH HE WAS CARRYING ON OR FROM OTHER SOURCES. THE OBJECT O F THE PROVISION IS ACHIEVED BY MAKING THE STATEMENT ADMIT TING THE NON-DISCLOSURE OF MONEY, BULLION, JEWELLERY ETC. IT WAS THUS HELD THAT MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND CIRCUM STANCES OF THE CASE, IN ABSENCE OF ANYTHING TO THE CONTRARY. T HEREFORE, MERE NON STATEMENT OF THE MANNER IN WHICH SUCH INCO ME WAS DERIVED WOULD NOT MAKE EXPLANATION 5 (2) INAPPLICAB LE, HELD THE HON' BLE HIGH COURT. 12. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF C IT VS. MAHENDRA C. SHAH HAS BEEN PLEASED TO HELD AS UNDER: - IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF TH E ASSESSEE TO 10 M/S. FUEL CORPORATION OF INDIA SPECIFY IN THE STATEMENT U/S 132(4) OF THE INCOME T AX ACT 1961 REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEIN G RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUT HORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ITS ENTIRETY OF THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER C ANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT TH E REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. TH E REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEME NT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION OF AN ASSESSEE TO STAGE AND MAKE AVERME NTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERI NG THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAD HA KISHAN GOEL (2005) 278 ITR 454. SECONDLY, CONSIDERING THE ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDI TIONS STIPULATED BY EXCEPTION NO.2 WHILE MAKING STATEMENT U/S 132(4) OF THE INCOME TAX ACT, 1961. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS THE 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 NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLA NATION 5 IS COMMENDABLE.' 13. IN THE PRESENT CASE BEFORE US DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 4.3.201 0 CERTAIN DOCUMENTS RELATING TO THE TRANSACTIONS IN PROPERTIE S UNDERTAKEN BY THE ASSESSEE WERE FOUND AND SEIZED AS PER PAGE N OS. 4 & 5 OF ANNEXURE A3 IN SR4. AS PER SUCH PAPERS THE ASSESSEE HAD AN OUTSTANDING SUM OF RS. 3 CRORE AND RS. 6 CRORE FROM VARIOUS PERSON WHICH WAS DULY DISCLOSED AS ADDITIONAL INCOM E FOR ASSTT. YEAR 2010-11 WHILE MAKING STATEMENT U/S 132(4) OF T HE ACT. IN ADDITION, AS PER PAGE NO. 6 OF ANNEXURE A3 IN SR4 T HE ASSESSEE HAD PAID IN CASH A SUM OF RS. 17,86,57,781/- FOR PU RCHASE OF LAND BY BHUSHAN STEEL LIMITED (HOWEVER AT THE TIME OF ST ATEMENT RECORDED IT WAS ITA NO-337/DEL/2013 13 INADVERTENTL Y MENTIONED AS BHUSHAN ENERGY LTD.) WHICH WAS ALSO DECLARED AS ADDITIONAL INCOME FOR THE ASSTT. YEAR 2010-11 WHILE MAKING A S TATEMENT U/S 132(4) OF THE ACT. AS PER THE SAID STATEMENT THE AS SESSEE HAD ADMITTED THAT HE HAD ENTERED INTO VARIOUS FORWARD/S PECULATIVE AND PROPERTY TRANSACTION DURING THE PERIOD FROM 1.4.200 9 TO 4.3.2010. 2010. KEEPING IN VIEW THE SAME AN INCOME OF RS. 125 CRORES ARISING OUT OF THE SAID TRANSACTIONS WAS DECLARED I N THE STATEMENT RECORDED DURING THE COURSE OF SEARCH WHIC H INCLUDED THE SAID AMOUNT AS UNDISCLOSED. SUBSEQUENTLY THE T AXES DUE THEREON WERE ALSO PAID AND THE SAME INCOME DECLARED IN THE RETURN1 OF INCOME FILED FOR THE ASSESSMENT YEAR 201 0-11 WAS ALSO ACCEPTED BY THE DEPARTMENT. 11 M/S. FUEL CORPORATION OF INDIA 14. ON HAVING GONE THROUGH THE QUERY RAISED WHILE R ECORDING STATEMENT OF ASSESSEE U/S 132(4) OF THE ACT, WE FIN D SUBSTANCE IN THE CONTENTION OF THE LD. AR THAT NOWHERE THE AUTHO RIZEDED OFFICER HAS ASKED A SPECIFIC QUESTION WITH REGARD TO THE MA NNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED. THE RELEVA NT QUESTIONS ARE QUESTION NOS. 4,5,6 AND 7. FOR A READY REFERENC E THESE QUESTIONS AND REPLY BY THE ASSESEE THERETO ARE BEIN G REPRODUCED HEREUNDER:- 4 FOR FACILITY OF REFERENCE AND AS IN AID FOR FURTH ER ANALYSIS AND DISCUSSION THE RELEVANT PART OF THE STATEMENT RECOR DED DURING THE COURSE OF SEARCH IS AS FOLLOWS:- Q 4. I AM DRAWING YOUR ATTENTION TO ANNEXURE A-3 AT PAGE NO- 6. PLEASE GO THROUGH THE SAME AND EXPLAIN THE CONTE NT THEREOF? ANS. THIS PAPER DEPICTS DETAILS REGARDING PURCHASE OF VARIOUS LANDS ON VARIOUS DATES BY MLS BHUSHAN ENERGY LTD IN KOLKATA. AS MENTIONED IN THIS PAPER IN THE ENTIRE TRANSACTION A N AMOUNT OF RS. 178657781/- WAS PAID IN CASH ON 02/05/2009. THIS CA SH WAS PAID OUT OF MY OWN UNACCOUNTED ITA NO-3371DE112013 14 FU NDS WHICH WAS NEVER I DISCLOSED FOR TAXATION PURPOSE. I HEREBY ACCEPT THE ABOVE AMOUNT TO BE MY UNACCOUNTED INCOME IN THE SHAPE OF INVESTMENT IN THE CURRENT FINANCIAL YEAR AND THE SA ME IS OFFERED FOR TAXATION. Q5. I AM DRAWING YOUR ATTENTION TOWARDS ANNEXURE A- 3 AT PAGE NO-5 FOUND FROM YOUR RESIDENCE, PLEASE EXPLAIN TO W HOM THIS PAPER BELONGS AND UNDER WHOSE HAND WRITING THIS HAS BEEN WRITTEN. PLEASE GO THROUGH THE SAME AND EXPLAIN THE CONTENT THEREOF? ANS. YES, I ACCEPT THAT THIS SHEET OF PAPER WAS FOU ND FROM MY BED ROOM AT THIS PREMISE, I OWN THIS PAPER AND ALL THE CONTENTS OF THIS PAPER ARE WRITTEN BY ME ONLY. THE NOTINGS ON THIS P APER DEPICTS THE FACT THAT I HAVE ADVANCED CERTAIN AMOUNTS TO SO ME PERSON ON DIFFERENT DATES. THE DETAILS OF WHICH IS FURNISHED BELOW:- LIST OF ADVANCES OUTSTANDING ON 31.01.2010 ATMA RAM 11.0 CR SHHIV PRAKASH 15.0 CR DEVENDER KUMAR 17.0 CR PREM SINGH 6.0 CR KUNDAN SINGH NEGI 9.5 CR PREMBIR SINGH 5.5 CR SUREINDER SINGH 5.0 CR ------------ 69.0 CR 12 M/S. FUEL CORPORATION OF INDIA THIS IS THE AMOUNT GIVEN BY ME TO THE ABOVE PERSONS DURING THE CURRENT FINANCIAL YEAR OUTSTANDING AS ON 31.01.2010 . Q.6 WHAT IS THE SOURCE OF THIS AMOUNT OF R. 69 CROR ES? ANS. THE ABOVE AMOUNT OF RS.69 CRORES IS MY UNACCO UNTED INCOME FOR THE CURRENT FINANCIAL YEAR GENERATED FRO M UNDISCLOSED SOURCES. BY MEANS OF ITA NO.337/DEL/2013 15 T HIS S TATEMENT I HEREBY ACCEPTED THE ABOVE AMOUNT OF RS. 69 CR TO BE MY UNACCOUNTED INCOME FROM THE CURRENT F Y AND OFFER I T FOR TAXATION. Q.7. I AM DRAWING YOUR ATTENTION TOWARDS ANNEXURE-A -3 AT PAGE NO-4 FOUND FROM YOUR RESIDENCE. PLEASE EXPLAIN TO W HOM THIS PAPER BELONGS AND UNDER WHOSE HAND WRITING THIS HAS BEEN WRITTEN. PLEASE GO THROUGH THE SAME AND EXPLAIN THE CONTENT THEREOF? ANS. YES, I ACCEPT THAT THIS SHEET OF PAPER BELONGS TO ME, I OWN THIS PAPER AND ALL THE CONTENTS OF THIS PAPER HAVE BEEN WRITTEN BY ME ONLY. THE NOTINGS ON THE PAPER DEPICTS THE FACT THAT I HAD ADVANCED AN AMOUNT OF RS.3.0 CR ON 9.6.2009 FOR THE PURPOSE OF PURCHASE OF PROPERTY AT Q1- A, HAUZ KHIAS ENCLAVE, NEW DELHI. IN RESPECT OF THIS AMOUNT I HEREBY STATE THAT THIS AMO UNT IS MY UNACCOUNTED INCOME NOT OFFERED FOR TAXATION FOR THE CURRENT FINANCIAL YEAR. ON THE BASIS OF MY REPLY TO QUESTIONS 5,6 AND 7 I R EITERATE TO HAVE ACCEPTED A TOTAL AMOUNT OF RS. 90CR (RUPEES NINETY CRORES ONLY TO BE MY UNACCOUNTED INCOME FOR THE CURRENT FINANCIAL YEAR, WHICH I HEREBY OFFER FOR TAXATION. 15. WE FIND FURTHER THAT VIDE ITS REPLY DATED 03.6. 2010, ADDRESSED TO THE ASSTT. DIRECTOR OF INCOME TAX (INV ESTIGATION) AND DATED 25/7/2011 AND 20/6/2012 TO THE ASSTT. COM MISSIONER OF INCOME TAX THE ASSESSEE HAS TRIED TO EXPLAIN THE UNDISCLOSED INCOME OF RS. 125 CRORES SURRENDERED BY THE ASSESSE E IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT. THE CONTE NTS OF PARA NO.1 & 2 OF THE LETTER DATED 25.7.2011 ARE BEING RE PRODUCED HEREUNDER:- (1) WITH REGARD TO YOUR HONOURS QUERY REGARDING IN COME OF RS.125 CRORES FOR F.Y. 2009-10 DISCLOSED DURING T C OURSE OF SEARCH U/S 132, IT IS SUBMITTED THAT DURING THE COURSE OF THE SAID SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 04 M ARCH 2010 CERTAIN DOCUMENTS RELATING TO TRANSACTIONS IN PROPE RTIES UNDERTAKEN BY HIM WERE FOUND AS PER PAGE NOS. 4 & O F ANNEXURE A-3 IN SR-4. AS PER THE SAID PAPERS THE ASSESSEE HA D AN OUTSTANDING OF A SUM OF RS. 3,00,00,000/- AND RS.69 ,00,000/- FROM VARIOUS PERSONS WHICH WERE DECLARED AS ADDITIO NAL INCOME OF 13 M/S. FUEL CORPORATION OF INDIA AIY 2010- 1\2011 WHILE MAKING A STATEMENT U/S 132(4 ) OF THE INCOME-TAX ACT, 1961. IN ADDITION, A PER PAGE NO-6 OF ANNEXURE A-3 IN SR-4, THE ASSESSEE HAD PAID IN CASH A SUM OF RS. 17,86,57,781/- FOR PURCHASE OF LAND BY M/S BHUSHAN STEEL LIMITED HOWEVER, AT THE TIME OF STATEMENT RECORDED IT WAS I NADVERTENTLY MENTIONED AS M/S BHUSHAN ENERGY LTD, WHICH WAS ALSO DECLARED AS ADDITIONAL INCOME FOR A.Y 2010-2011 WHILE MAKING A STATEMENT U/S 132(4) OF THE INCOME-TAX-ACT, 1961. (2) AS PER THE STATEMENT RECORDED DURING THE COURSE OF SEARCH THE ASSESSEE HIMSELF HAD ADMITTED THAT HE HAD ENTERED I NTO VARIOUS FORWARD/SPECULATIVE TRANSACTIONS AND ALSO TRANSACTI ONS RELATED TO PROPERTIES DURING THE PERIOD FROM 1/4/2009 TO 4/3/2 010 I.E. FINANCIAL YEAR 2009-2010 RELEVANT TO ASSESSMENT YEA R 2010- 2011. THE SAID TRANSACTIONS WERE CARRIED OUT IN AN UNORGANIZED MANNER AND NEITHER ANY ACCOUNTING RECORDS NOR ANY D OCUMENTARY EVIDENCE/SUPPORT IN RESPECT OF TRANSACTIONS/ACTIVIT IES CARRIED OUT WERE MAINTAINED. THE ONLY DOCUMENTARY EVIDENCE IN R ESPECT OF THE SAID TRANSACTION WAS AS PER THE PAGE NOS. 4, 5 & 6 OF ANNEXURE-A-3 IN SR-4 AND NO OTHER DETAILED RECORD O F TRANSACTIONS WERE EITHER MAINTAINED OR PRESERVED. KEEPING IN VIE W THE SITUATION MENTIONED ABOVE, THE INCOME OF ITA NO-337 /DEL/2013 AT RS.125,00,000/- ARISING OUT OF THE SAID TRANSACTIO NS WAS DECLARED IN THE STATEMENT RECORDED DURING THE COURSE OF SEAR CH U/S 132 WHICH INCLUDED THE SAID AMOUNT AS PER PAGE NOS. 4, 5 & 6 OF ANNEXURE A-3 IN SR-4. SUBSEQUENTLY, THE TAXES DUE T HEREON WERE ALSO PAID AND THE SAID INCOME DECLARED IN THE RETUR N OF INCOME FILED FOR A.Y 2010-11. 16. IN VIEW OF ABOVE FACTS OF THE PRESENT CASE WHER EFROM IT IS EVIDENT THAT DURING THE COURSE OF SEARCH PROCEEDING S THE AUTHORIZED OFFICER OF THE DEPARTMENT HAD NOT RAISED ANY SPECIFIC QUERY REGARDING THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ON THE CONTRARY THE ASSESSEE HAS T RIED TO EXPLAIN THE EARNING OF THE UNDISCLOSED INCOME IN QU ESTION IN ITS REPLY DURING THE COURSE OF RECORDING OF HIS STATEME NT U/S 132(4) OF THE ACT AND THEREAFTER. WE THUS RESPECTFULLY FOL LOWING THE RATIO OF ABOVE CITED DECISIONS OF HON'BLE ALLAHABAD HIGH COURT AND HON'BLE GUJARAT HIGH COURT HOLD THAT IN ABSENCE OF QUERY RAISED BY THE AUTHORIZED OFFICER DURING THE COURSE OF RECO RDING OF STATEMENT ULS 132 (4) ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT ITS SUBSTANTIATIO N, THE AO WAS NOT JUSTIFIED IN IMPOSING PENALTY ULS 271AAA OF THE ACT SPECIALLY WHEN THE OFFERED UNDISCLOSED INCOME HAS BEEN ACCEPT ED AND DUE TAX THEREON HAS BEEN PAID BY THE ASSESSEE. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW IN THIS REGAR D DIRECT THE AO TO DELETE THE PENALTY OF RS. 12,50,00,000/- LEVIED ULS 271AAA OF THE ACT. THE GROUND IS ACCORDINGLY ALLOWED. ' 14 M/S. FUEL CORPORATION OF INDIA 9. FURTHER MORE WE MAY ALSO REFER TO THE DECISION O F HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA KISHAN GO EL 278 ITR 454 AS UNDER : UNDER SECTION 132(4) OF THE INCOME TAX ACT, 1961, IT IS THE AUTHORIZED OFFICER, WHO EXAMINES ON OATH ANY PERSON , WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS O F ACCOUNTS, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING, THEREFORE, IT IS FOR THE AUTHORIZED OFFICER TO RECORD THE STATEMENT IN HIS OWN WAY. THEREFORE, IT IS NOT EXPE CTED FROM THE PERSON TO STATE THOSE THINGS, WHICH ARE NOT ASKED B Y THE AUTHORIZED OFFICER. IT IS A MATTER OF COMMON KNOWLEDGE, WHICH CANNOT BE IGNORED THAT THE SEARCH IS BEING CONDUCTED WITH THE COMPLET E TEAM OF THE OFFICERS CONSISTING OF SEVERAL OFFICERS WITH THE PO LICE FORCE. USUALLY TELEPHONE AND ALL OTHER CONNECTIONS ARE DIS CONNECTED AND ALL INGRESS AND EGRESS ARE BLOCKED. DURING THE COUR SE OF SEARCH PERSON IS SO TORTURED HARASSED AND PUT TO A MENTAL AGONY THAT HE LOSES HIS NORMAL MENTAL STATE OF MIND AND AT THAT S TAGE IT CANNOT BE EXPECTED FROM A PERSON TO PRE-EMPT THE STATEMENT REQUIRED TO BE GIVEN IN LAW AS A PART OF HIS DEFENCE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT UND ER SECTION 132(4) OF THE INCOME TAX ACT, 1961 UNLESS THE AUTHO RIZED OFFICER PUTS A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM TH E PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEE N STATED BUT HAS BEEN STATED SUBSEQUENTLY, THAT AMOUNTS TO T HE COMPLIANCE WITH EXPLANATION 5(2) OF THE INCOME TAX ACT, 1961. WE ARE ALSO OF THE OPINION THAT IN CASE E THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED UNDER SECTION 13 2(4) OF THE INCOME TAX ACT, 1961, IN THE ABSENCE OF ANY SPECIFI C STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERI VED, IT CAN BE INFERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVE D FROM THE BUSINESS WHICH HE WAS CARRYING ON OR FROM OTHER SOU RCES. THE OBJECT OF THE PROVISION IS ACHIEVED BY MAKING THE S TATEMENT ADMITTING THE NON DISCLOSURE OF MONEY, BULLION, JEW ELLERY ETC. THUS, WE ARE OF THE OPINION THAT MUCH IMPORTANCE SH OULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN THE ABSENCE OF ANYTHI NG TO THE CONTRARY. THEREFORE, MERE NON STATEMENT OF THE MANN ER IN WHICH SUCH INCOME WAS DERIVED WOULD NOT MAKE EXPLANATION 5(2) INAPPLICABLE. 15 M/S. FUEL CORPORATION OF INDIA 10. AGAIN HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH 298 ITR 305 HAS HELD AS UNDER:- 'IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF TH E ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF TH E INCOME TAX ACT, 1961 REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMEN T IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXP LANATION 5 IN ITS ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZ ED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PE RMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE ST ATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, T HE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STAGE AND MAKE AV ERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSI DERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAD HA KISHAN GOEL (2005) 278 ITR 454. SECONDLY, CONSIDERING THE ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIO NS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SEC TION 132(4) OF THE INCOME TAX ACT, 1961. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS THE 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 NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPL ANATION 5 IS COMMENDABLE. 11. WE MAY ALSO REFER TO THE DECISION OF ITAT, NAGP UR BENCH IN THE CASE OF M/S NANDINI REALITORS PVT. LTD. IN IT A NO. 415/NAG/ 2014 WHEREIN VIDE ORDER DATED 05-052016 IT WAS HEL D AS UNDER: 'WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH THE F ACTS NARRATED HEREIN ABOVE ARE NOT IN DISPUTE THAT A SEARCH ULS 1 32 WAS CONDUCTED AND THEREUPON IT WAS FOUND THAT THE ASSES SEE HAS PURCHASED A LAND AS PER THE REGISTERED DEED WHEREIN THE CONSIDERATION MONEY WAS RS.2,75,65,000/-. A STATEME NT ULS 132(4) WAS RECORDED AND AFTER CONFRONTING WITH THE EVIDENCES AN AMOUNT OF RS.2 CRORES WAS OFFERED BEIN G CASH CONSIDERATION OVER AND ABOVE THE SALE CONSIDERATION MENTIONED IN THE REGISTERED DEED. AS A CONSEQUENCE A REVISED RET URN WAS FILED. THE ASSESSMENT WAS COMPLETED U/S 143(3) AND THE INC OME WAS ASSESSED AT RS.2,15,60,6201-. WE HAVE BEEN INFORMED THAT THE SURRENDERED AMOUNT U/S 132(4) WAS ACCEPTED AS SUCH BY THE AO. THERE IS NO DISPUTE THAT THE TAX ON THE AMOUNT OFFE RED HAD ALSO BEEN PAID BY THE ASSESSEE. IN THE LIGHT OF THE ABOV E MENTIONED ADMITTED FACTS WE HAVE PERUSED THE PROVISIONS OF SE CTION 271AAA WHICH HAS PROVIDED THAT A PENALTY AT THE RATE OF 10 % IS 16 M/S. FUEL CORPORATION OF INDIA TO BE LEVIED ON THE AMOUNT OF UNDISCLOSED INCOME FO UND AS A CONSEQUENCE OF SEARCH ULS 132 OF LT. ACT. HOWEVER, VIDE SUB- SECTION (2) AN EXCEPTION IS ALSO PROVIDED THAT IN A SITUATION WHEN THE OFFER IS MADE OF THE UNDISCLOSED INCOME ULS 132 (4) OF LT. ACT AND IT IS SPECIFIED THE MANNER IN WHICH THE INCOME WAS EARNED AND DULY SUBSTANTIATED THE MANNER IN WHICH THE UNDI SCLOSED INCOME WAS DERIVED AND THAT THE TAX WITH INTEREST W AS PAID THEN OUT OF THE AMBITS OF PENALTY PROVISIONS. FURTHER IT HAS ALSO -BEEN BROUGHT ON RECORD THAT THE INCOME OFFERED WAS DULY DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE MANNE R IN WHICH THE INVESTMENT WAS MADE HAS ALSO BEEN DULY INCORPOR ATED IN THE ACCOUNTS, MOREOVER THE TAX WAS PAID HENCE WE HEREBY HOLD THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THE' QUESTION OF LEVY OF PENALTY U/S 271AAA WAS OUT OF THE SCOPE OF SUB-SECTION (1) BUT WITHIN THE AMBITS OF THE EXCEPTION PRESCRI BED UNDER SUB- SECTION (2) OF THE SAID SECTION. RESULTANTLY THE VI EW TAKEN BY THE LEARNED CIT(APPEALS) IS HEREBY CONFIRMED. 5. ON APPRAISAL OF THE ABOVE SAID FINDINGS OF THE TRIB UNAL IN M/S. NAVAL KISHORE AGARWAL V/S ACIT, ITA NO.32/NAG./2013 , ORDER DATED 29 TH MARCH 2017, WE FIND THAT THE FACTUAL FACTS OF THE SAID CASE ARE QUITE SIMILAR TO THE FACTS OF THE PRESENT CASE. IN THE INSTANT CASE ALSO, THE SEARCH AND SEIZURE OPERATION WAS CONDUCTED UNDE R SECTION 132(1) ON 28 TH JANUARY 2009. THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 24 TH DECEMBER 2010. BEFORE COMPLETION OF THE ASSESSMENT, THE ASSESSEE VOLUNTARILY SURRENDERED TH E INCOME TO THE TUNE OF ` 1.25 CRORE UNDER SECTION 132(4) OF THE ACT. THE FA CTUAL POSITION OF THE PRESENT CASE IS QUITE SIMILAR TO TH E FACTS OF THE CASE RELIED UPON BY THE LEARNED COUNSEL FOR ASSESSEE. TH E ISSUE IS DULY COVERED BY THE SAID ORDER PASSED BY THE TRIBUNAL CI TED SUPRA. HONOURING THE ORDER PASSED BY THE TRIBUNAL IN THE A BOVE MENTIONED CASE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DELET ING THE PENALTY. 17 M/S. FUEL CORPORATION OF INDIA ACCORDINGLY, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 6. IN THE RESULT, ASSESSEES APPEAL IS ORDERED TO BE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.06.2017 SD/ - P.K. BANSAL VICE PRESIDENT SD/ - AMARJIT SINGH JUDICIAL MEMBER NAGPUR, DATED: 23.06.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR