Shri Neeraj Singal, New Delhi V. ACIT, New Delhi

ITA 337/DEL/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2642 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 18-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MISHRA
• Keywords: Income from undisclosed sources; Documents seized; Speculative transactions
• Section: 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E: NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JU DICIAL MEMBER ITA NO. 337/DEL/2013 ASSESSMENT YEAR: 2010-11 NEERAJ SINGAL VS. ACIT W-29, CENTRAL CIRCLE-13, GREATER KAILASH PART-II, NEW DELHI. NEW DELHI. (PAN ANRPS7986B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR, CA RESPONDENT BY : SHRI A.K. MISHRA, CIT, DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS IMPUGNED FIRST APPE LLATE ORDER WHEREBY THE LD. CIT(A) HAS UPHELD THE ACTION OF THE LD. ASSTT. COMMISSIONER OF INCOME TAX IN IMPOSING PENALTY OF RS. 12,50,00,000/- U/S 271AAA OF THE INCOME TAX ACT 1961. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMEN TS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE RELEVANT FACTS ARE THAT SEARCH OPERATI ON U/S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 3.3.2010. ON THE BASIS OF CERTAIN DOCUMENTS FOUND AND ITA NO-337/DEL/2013 2 SEIZED, THE ASSESSEE HAD SURRENDERED A SUM OF RS. 1 25 CRORE AS AN UNDISCLOSED INCOME WHICH WAS ALSO DECLARED IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11. DUE TAXES THEREON WAS ALSO PAID BEFORE THE FILING OF TH E RETURN AND THE SAME HAS BEEN ACCEPTED. IN HIS STATEMENT U/S 132 (4) THE ASSESSE E HAD STATED THAT THE SAID INCOME WAS DERIVED FROM FORWARD / SPECULATIVE AND PROPERTY TRA NSACTIONS CARRIED OUT BY HIM DURING THE PERIOD 1.4.2009 TO 4.3.2010 I.E. FINANCIAL YEAR 2009-10. THE AO BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE HAS IMPOSED PE NALTY U/S 271AAA OF THE ACT AT RS. 12,50,00,000/- @ 10% OF THE UNDISCLOSED INCOME OF R S. 125 CRORE. THE SAME HAS BEEN UPHELD BY THE LD. CIT(A) AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. IN SUPPORT OF THE GROUND THE LD. AR SU BMITTED THAT THE ASSESSEE HAD DULY SPECIFIED THE MANNER IN WHICH THE UNDISCLOSED INCOM E HAD BEEN DERIVED WHICH WAS ALSO DULY SUBSTANTIATED BY THE DOCUMENTS SEIZED DURING T HE COURSE OF SEARCH. AS SUCH ALL THE CONDITIONS FOR EXEMPTION FROM LEVY OF PENALTY U/S 2 71AAA OF THE ACT WERE DULY SATISFIED. THE AO HAS HOWEVER INJUDICIOUSLY REJECTE D THE EXPLANATION OF THE ASSESSEE REGARDING THE ACTUAL POSITION. THE AVERMENTS MADE O N BEHALF OF THE ASSESSEE AS WELL AS DULY ACCEPTED LEGAL POSITION HAS BEEN IGNORED BY TH E A.O WHILE PROCEEDING FOR IMPOSING THE PENALTY OF RS. 12,50,00,000/- U/S 271AAA OF THE ACT. THE LD. AR REFERRED PAGE NOS. 1 TO 13 OF THE PAPER BOOK WITH THE SUBMISSION THAT QUERIES RAISED DURING THE RECORDING OF THE STATEMENT U/S 132 (4) OF THE ACT WERE ANSWERED BY THE ASSESSEE. IN THIS REGARD, HE REFERRED ANSWER OF THE ASSESSEE TO RELEVANT QUESTIO N NOS. 4,5,6 & 7. IN THESE REPLY THE ASSESSEE HAS ANSWERED WHAT WAS INQUIRED BY THE OFFI CER WHILE RECORDING THE STATEMENT U/S 132 OF THE ACT. HE SUBMITTED THAT IT IS PREROGATIVE OF THE OFFICER TO RAISE SUCH QUESTIONS WHICH HE DEEMS FIT. THUS WHAT WAS INQUIRED BY THE O FFICER IT WAS REPLIED BY THE ASSESSEE. THE LD. AR SUBMITTED FURTHER THAT THE MATTER RELATI NG TO SPECIFYING THE SOURCE OF SUCH ADDITIONAL INCOME AND THE MANNER IN WHICH IT WAS EA RNED WAS REPLIED VIDE LETTER DATED 03/06/2010 TO THE LD. ASTT. DIRECTOR OF INCOME TAX (INV.) AND VIDE LETTERS DATED ITA NO-337/DEL/2013 3 25/2/2011, 8/6/2012 AND 20/6/2012 TO THE A.O DURING THE ASSESSMENT PROCEEDINGS. IN THESE REPLIES IT WAS FURTHER SPECIFIED AND SUBSTANT IATED THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN EARNED. HE SUBMITTED TH AT THE DOCUMENTS SEIZED AND THE CONSEQUENT SURRENDER WAS DULY ACCEPTED BOTH WITH RE SPECT TO THE QUANTUM AND THE MANNER IN WHICH THE INCOME HAD BEEN EARNED. IN VIEW OF THE ENTIRE SEQUENCE AND RECORD OF PROCEEDINGS WOULD MAKE IT UNDOUBTEDLY AND EMPHATICA LLY CLEAR THAT NO FURTHER DOUBT OR QUESTION AROSE IN THE MINDS OF THE AUTHORITIES AT A NY STAGE TO QUESTION FURTHER THE MANNER IN WHICH THE INCOME HAD BEEN EARNED/DERIVED AND THE NEED FOR ANY FURTHER CLARIFICATION OR ENQUIRES IN THIS REGARD. 5. LD. AR SUBMITTED THAT SECTION 271 AAA INSERTED INTO THE INCOME TAX ACT 1961 BY THE FINANCE ACT, 2007 PROVIDES THAT IN A CA SE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER 1.6.2007, THE ASSESSEE SHALL BE LIA BLE TO PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY PAYABLE BY HIM, A SUM COMPUTED @10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PERIOD. HOWEVER THE SAID PENALTY IS NOT L EVIABLE, IF AN ASSESSEE IN A STATEMENT RECORDED DURING THE COURSE OF SEARCH ADMITS THE UND ISCLOSED INCOME ,SPECIFIED AND SUBSTANTIATED THE MANNER IN WHICH IT HAS BEEN DERIV ED AND PAYS THE TAXES TOGETHER WITH INTEREST THEREON. HE SUBMITTED THAT THE QUESTION OF SPECIFYING THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED IS DULY ANSWERED WHICH REFE RS TO THE FACT THAT THE SAME IS RELATABLE TO UNDISCLOSED FORWARD/SPECULATIVE TRANSA CTIONS AND PROPERTY TRANSACTIONS CARRIED OUT BY HIM. IN SO FAR AS THE QUESTION OF SU BSTANTIATING I.E. PROVIDING FACTS TO SUPPORT THE SURRENDER MADE AND THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED IS CONCERNED THE SAID TEST STANDS DULY PROVE THE FACT OF UNDISCLOSED INCOME HAVING BEEN DERIVED FROM THE FORWARD/SPECULATIVE AND PROPERTY T RANSACTIONS. THE LD. AR SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL WHO TOOK DECISIO NS ON HIS OWN AND WAS, ACCORDINGLY, NEITHER OBLIGED TO NOR HAD THE NECESSARY INFRASTRUC TURE TO MAINTAIN DETAILED RECORDS. THE AMOUNT SURRENDERED REPRESENTED THE UNDISCLOSED INCO ME RELATABLE TO THE ABOVEMENTIONED ITA NO-337/DEL/2013 4 ACTIVITIES AND THE DEPARTMENT WAS ITSELF SUO MOTO CONVINCED AS TO THE QUANTUM OF UNDISCLOSED INCOME ATTRIBUTABLE TO SUCH ACTIVITIES AND THE MANNER OF ITS EARNING AS WOULD BE EVIDENT FROM IT BEING ACCEPTED AS SUCH IN THE AS SESSMENT PROCEEDINGS. LD. AR SUBMITTED FURTHER THAT IN THE ABSENCE OF ANY SPECIF IC FORMAT/PROCEDURE PRESCRIBED IN THE ACT FOR SPECIFYING AND SUBSTANTIATING THE UNDISCLOS ED INCOME, THE FACT THAT THE SAME HAS BEEN ACCEPTED, WITHOUT ANY VARIATION BY THE AO IS B Y ITSELF ENOUGH EVIDENCE OF THE SAID CRITERIA HAVING BEEN MADE AND SATISFIED. THE LD. AR REFERRED PAGE NUMBERS 1 TO 45 OF THE PAPER BOOK I.E. COPIES OF STATEMENT OF SHRI NEERAJ SINGAL RECORDED U/S 132(4) OF THE ACT ON 4.3.2010, LETTER DATED 3.6.1010 FILED BEFORE THE LD. ASSTT. DIRECTOR (INVESTIGATION) LETTERS DATED 25.7.2011, 8.6.2012 AND 20.6.2012 FIL ED BEFORE THE LD. ASSTT. COMMISSIONER, CENTRAL CIRCLE AND WRITTEN SUBMISSION DATED 12.12. 2012 FILED BEFORE THE LD. CIT(A). LD. AR ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS :- I) ACIT VS. GEBILAL KANHIYALAL (HUF) (2012) 252 CT R (SC) 345 II) CIT VS. MAHENDRA C.SHAH (2008) 299 ITR 305 (GUJ ) III) CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 454 (ALL) IV) MOTHERS PRIDE EDUCATION PERSONNA PVT. LTD. VS . DCIT ITA NO. 3372/D/2011 V) SHRI ASHOK KUMAR SHARMA & OTEHRSW VS. DCIT IN ITA NOS. 476 TO 480/CTK/2011 VI) SULOCHANADEVI A. AGARWAL, SURAN VS. ITO ITA NO. 1052/AHMEDABAD/2012 VII) SHRI PRAMOD KUMAR JAIN VS. DCIT AND OTHERS, ITA NO. 131 TO 133/CTK/2012 VIII) DCIT VS. SHRI INDERCHAND SURAJMAL BROTHERS ITA NO. 139/PUNE/2010 6. LD. DR ON THE OTHER HAND TRIED TO JUSTI FY ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT PROVISIONS U/S 271AA AND U/S 271(1) ARE SUBSTANTIALLY DIFFERENT SINCE THE PROVISION LAID DOWN U/S 271AAA ARE APPLICABLE I N THE CASE OF SEARCH ONLY. U/S 271AAA (2) ONUS LIES ON THE ASSESSEE TO SPECIFY AND SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED WHEREAS NO SUCH REQU IREMENT IS THERE UNDER THE PROVISIONS OF SECTION 271(1) OF THE ACT. HE SUBMIT TED THAT DURING THE COURSE OF ITA NO-337/DEL/2013 5 STATEMENT RECORDED U/S 132(4) OF THE ACT THE ASSESS EE ACCEPTED THE UNACCOUNTED INCOME BUT DID NOT REPLY ITS SOURCE. IN THIS REGARD, HE RE FERRED CONTENTS OF QUESTION NOS. 4,5 AND 6 RAISED TO THE ASSESSEE WHILE RECORDING HIS STATEMEN T U/S 132(4) OF THE ACT AND HIS ANSWER THERETO. HE SUBMITTED FURTHER THAT THE DECISIONS RE LIED UPON BY THE LD. AR HAVING DISTINGUISHABLE FACTS AND THESE ARE NOT HELPFUL TO THE ASSESSEE. 7. IN THE REJOINDER LD. AR REFERRED CONTENTS OF PARA NO. 6 OF THE PENALTY ORDER WHEREIN THE SUBMISSION OF THE ASSESSEE SPECIFYING THE MANNE R IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND SUBSTANTIATED HAS NOT BEEN REB UTTED BY THE AO DESPITE THE FACT THAT SUBMISSIONS IN DETAIL HAVING BEEN MADE BY THE ASSES SEE BEFORE HIM. 8. CONSIDERING ABOVE SUBMISSIONS WE FIND THAT THE ONLY ISSUE INVOLVED IN THE PRESENT CASE IS AS TO WHETHER THE MANNER IN WHICH THE UNDIS CLOSED INCOME DERIVED WAS SPECIFIED AND SUBSTANTIATED BY THE ASSESSEE TO AVOID THE APPL ICATION OF PENAL PROVISION U/S 271AAA OF THE ACT. FOR A READY REFERENCE THE PROVISIONS U/ S 271 AAA ARE BEING REPRODUCED HEREIN:- (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDIN G ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CAS E WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007[BUT BEFORE THE 1ST DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITI ON TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PERCENT OF THE UN DISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB- SECTION (1) SHALL APP LY IF THE ASSESSSEE,___ (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCL OSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME. ITA NO-337/DEL/2013 6 (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SU B-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT O F THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FA R AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION . EXPLANATION._______ FOR THE PURPOSES OF THIS SECTIO N,________ (A) UNDISCLOSED INCOME MEANS_________ (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENT ED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHE R VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH U/S 13 2, WHICH HAS_________ (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH I N THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIO NER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENT ED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RE CORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NOR MAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FO UND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH N OT BEEN CONDUCTED; (B) SPECIFIED PREVIOUS YEAR MEANS THE 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 1 39 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE A SSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEA R BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED.] ITA NO-337/DEL/2013 7 9. THUS IT IS CLEAR THAT IN A CASE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER 1.6.2007, THE ASSESSEE SHALL BE LIABLE TO PAY BY WA Y OF PENALTY IN ADDITION TO TAX IF ANY PAYABLE BY HIM THE SUM COMPUTED @10% OF THE UNDISCL OSED INCOME OF THE SPECIFIED PREVIOUS YEAR. HOWEVER THE SAID PENALTY IS NOT LEVI ABLE IF AN ASSESSEE IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S 132 OF THE ACT, I) ADMITS THE UNDISCLOSED INCOME II) SPECIFIES AND SUBSTANTIATES THE MANNER IN WHICH IT HAS BEEN DERIVED ; AND III) PAYS THE TAXES DUE THEREON TOGETHER WITH INTER EST 10. IN THE PRESENT CASE THERE IS NO DISPU TE THAT THE ASSESSEE HAS PAID DUE TAX TOGETHER WITH INTEREST ON THE ADMITTED UNDISCLOSED INCOME. THE ONLY DISPUTE IS AS TO WHETHER WHILE DOING SO THE ASSESSEE HAS SPECIFIED A ND SUBSTANTIATED THE MANNER IN WHICH IT WAS DERIVED . 11. WHEN WE COMPARE EXPLANATION 5 TO SEC TION 271(1) 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 NOT ATTRACTED IN A CASE OF SEARCH ON THE UNDISCLOSED INCOME. AS PER EXPLANATION 5 TO SECTION 271(1) OF THE ACT IF THE ASSESSEE IN THE COURSE OF SEARCH MAKES A STATEMENT UNDER SUB SECTION (4) OF SECTION 132 TH AT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS FOUND IN HIS POSS ESSION OR UNDER HIS CONTROL HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCL OSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS 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 PAR TICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME TO ATTRACT TH E PENALTY THEREIN. SIMILARLY UNDER THE PROVISIONS OF SECTION 271AAA OF THE ACT PENALTY IS NOT LEVIABLE WHERE SEARCH HAS BEEN ITA NO-337/DEL/2013 8 INITIATED 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 O F SECTION 132,(I), ADMITS THE UNDISCLOSED INCOME (II) SPECIFIES AND SUBSTANTIATES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, AND (IIII) PAYS THE TAX TOGETHER WITH INTE REST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. FROM THE READING OF BOTH THESE PENAL PROVIS IONS WE FIND THAT ONE REQUIREMENT IS COMMON FOR NON ATTRACTION OF THE PENAL PROVISIONS U NDER BOTH THE SECTIONS I.E. IF THE ASSESSEE IN HIS STATEMENTS RECORDED U/S 132(4) OF T HE ACT ADMITS THE UNDISCLOSED INCOME AND SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RES PECT OF SUCH INCOME. THE ONLY ADDITIONAL REQUIREMENT IN THE CASE OF SECTION 271AAA IN THIS R EGARD IS THAT THE ASSESSEE WILL ALSO HAVE TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISC LOSED INCOME WAS DERIVED BESIDES SPECIFICATION OF THE MANNER IN WHICH SUCH INCOME WA S DERIVED. THE OTHER DIFFERENCE IS IN THE APPLICATION OF THE PROVISIONS UNDER BOTH THE SE CTIONS. THE PENAL PROVISION U/S 271(1) UNDER EXPLANATION 5 THERETO IS APPLICABLE IN SUCH C ASES WHERE SEARCH U/S 132 WAS INITIATED BEFORE 1.6.2007 WHEREAS U/S 271AAA, THE PROVISIONS THEREIN ARE APPLICABLE IN A CASE WHERE SEARCH 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) WILL BE APPLICABLE AND IN SEARCH INITIATED AFTER 1.6.2007 (BUT BEFORE 1.7.201 2) PROVISIONS U/S 271AAA OF THE ACT WILL BE APPLICABLE. THESE PROVISIONS ARE THUS NOT A PPLICABLE SIMULTANEOUSLY BUT THESE ARE PERIOD SPECIFIC. AS DISCUSSED ABOVE, THE ONLY ADDIT IONAL REQUIREMENT FOR NON ATTRACTION OF PENAL PROVISION U/S 271AAA OF THE ACT IN COMPARISON TO THIS U/S 271(1) IS THAT BESIDES SPECIFYING THE MANNER IN WHICH THE ADMITTED AN UNDI SCLOSED INCOME HAS BEEN DERIVED, THE ASSESSEE WILL ALSO HAVE TO SUBSTANTIATE THIS MANNER . IN VIEW OF THIS RELATIVE STUDY OF BOTH THE PROVISIONS WHEN WE GO THROUGH THE DECISIONS REL IED UPON BY THE LD. AR, WE FIND THAT IN THE CASE OF ACIT VS. GEBILAL KANHIALAL (HUF) (SU PRA) BEFORE THE HONBLE 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 INCOME IN THE COURSE OF SEARCH AND SPECIF IED 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 NEITHER FILED RETURN OF INCOME U/ S 139 (1) ON DUE DATE NOR PAID DUE TAX ON THE SURRENDERED INCOME. LATER ON HE ALSO RETRAC TED FROM HIS STATEMENT RECORDED U/S 132(4) ABOUT SURRENDER. THE HONBLE SUPREME COURT A FTER DELIBERATING IN DETAIL ON DIFFERENT EXPLANATIONS TO SECTION 271(1) HAS BEEN PLEASED TO HOLD THAT THE ASSESSEE WAS ENTITLED TO IMMUNITY UNDER CLAUSE (2) OF EXPLANATIO N 5 TO SECTION 271(1) OF THE ACT. IN THAT 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 DEPARTMENT T O DENY TO THE ASSESSEE THE BENEFIT OF IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTI ON 271(1) OF THE ACT. ACCORDING TO THE DEPARTMENT THE ASSESSEE HAD COMPLIED WITH ALL T HE CONDITIONS OF CLAUSE 2 OF EXPLANATION 5 EXCEPT PAYMENT OF TAX IN TIME. HONBL E SUPREME COURT PLEASED TO HOLD THAT NO TIME LIMIT HAS BEEN PRESCRIBED FOR PAYMENT OF TA X UNDER CLAUSE 2 OF EXPLANATION 5 AND THE ASSESSEE HAVING PAID TAX UPTO THE DATE OF PAYME NT IN RESPECT OF THE UNDISCLOSED INCOME SURRENDERED BY IT IN THE COURSE OF SEARCH, A LL THE THREE CONDITIONS LAID DOWN IN CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1) STOOD FULFILLED AND THEREFORE THE ASSESSEE IS ENTITLED TO IMMUNITY UNDER CLAUSE (2) OF EXPLANATIO N 5 TO SECTION 271(1) OF THE ACT. IN THE CASE OF CIT VS. RADHA KISHAN GOEL (SUPRA) BEFOR E THE HONBLE ALLAHABAD HIGH COURT THE ISSUE RAISED WAS AS TO WHETHER MERE NON-STATEME NT OF MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED WOULD MAKE EXPLANATION 5 (2) TO SECTION 271(1) INAPPLICABLE. THE FURTHER QUESTION RAISED WAS AS TO WHETHER IN A CASE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED IN THE STATEMENT U/S 13 2(4) BUT IS STATED SUBSEQUENTLY, THAT AMOUNTS TO COMPLIANCE WITH EXPLANATION 5 (2) TO SEC TION 271(1) AND NO PENALTY WOULD BE LEVIABLE UNDER SAID SECTION.. BOTH THESE QUESTIO NS HAVE BEEN REPLIED IN AFFIRMATIVE IN THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT. A S PER THE DECISION MERE NON STATEMENT OF MANNER IN WHICH UNDISCLOSED WAS DERIVE D WOULD NOT MAKE EXPLANATION 5 (2) TO SECTION 271(1) INAPPLICABLE. SIMILARLY IN A CAS E MANNER IN WHICH INCOME HAS BEEN ITA NO-337/DEL/2013 10 DERIVED HAS NOT BEEN STATED IN STATEMENT U/S 132(4) BUT IS STATED SUBSEQUENTLY THAT AMOUNTS TO COMPLIANCE WITH EXPLANATION 5 (2) TO SEC TION 271(1) AND NO PENALTY WOULD BE LEVIABLE. SIMILARLY IN THE CASE OF CIT VS. MAHEN DRA G. SHAH BEFORE THE HONBLE GUJARAT HIGH COURT THE BASIC REQUIREMENT FOR IMMUNI TY FORM THE LEVY OF PENALTY UNDER EXPLANATION 5 TO SECTION 271(1) OF THE ACT HAS BE EN DISCUSSED AS PER WHICH THE FIRST REQUIREMENT IS DISCLOSURE IN STATEMENT MADE U/S 132 (4) AND PAYMENT OF TAX BEFORE THE ASSESSMENT WAS COMPLETED. FOLLOWING RATIO LAID DOWN IN THIS DECISION OF HONBLE GUJARAT HIGH COURT, PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SHRI INDERCHAND SURAJMAL BOTHRA (SUPRA) WHEREIN PENALTY U/S 271(1) WAS LEVIED HELD THAT IT IS NOT 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 SEA RCH ACTION BY PAYING TAXES THEREON FOR ADOPTING IMMUNITY FROM PENALTY UNDER EXPLANATION 5 OF SECTION 271(A) (C) OF THE ACT. THE CUTTAK BENCH OF THE TRIBUNAL IN THE CASE OF SHR I ASHOK KUMAR SHARMA (HUF) AND OTHERS VS. DCIT (SUPRA) WHEREIN PENALTY U/S 271 AAA WAS LEVIED THE ASSESEE HAD DISCLOSED CONCEALED INCOME WHILE GIVING STATEMENT U /S 132 OF THE ACT DURING THE COURSE OF SEARCH AND HAD PAID THE TAX THEREON AND SHOWED T HE SAID UNDISCLOSED INCOME FILED UNDER THE HEAD INCOME FROM BUSINESS AND DEPARTMEN T HAD ACCEPTED THESE RETURNS AND ACCORDINGLY PASSED THE ASSESSMENT ORDER. PENALTY U/ S 271AAA WAS LEVIED. IT WAS HELD THAT UNDISPUTEDLY THE ASSESSEE HAD SHOWN THE UNDISC LOSED INCOME UNDER THE HEAD INCOME FROM BUSINESS IN THE RETURNS FILED BY THEM AND THA T WAS ACCEPTED BY THE DEPARTMENT BY PASSING THE ASSESSMENT ORDERS ACCORDINGLY, THEREFOR E THE CASE OF THE ASSESSEE FALLS EXACTLY WITHIN THE PURVIEW OF SUB SECTION 2 OF SECTION 271A AA. THUS THE IMPUGNED PENALTY LEVIED CONTRARY TO THE PROVISIONS CONTAINED IN SECT ION 271AAA (2) IS NOT SUSTAINABLE. THE PENALTY WAS ACCORDINGLY DELETED. IN THE CASE OF SHR I PRAMOD KUMAR JAIN AND ANOTHER VS. JCIT (SUPRA) BEFORE THE CUTTAK BENCH OF THE TRIBUN AL, THE ASSESEE HAD DISCLOSED THE UNACCOUNTED INCOME BUT HAD FAILED TO SPECIFY THE MA NNER IN WHICH SUCH INCOME HAD BEEN DERIVED. THE DEPARTMENT ACCORDINGLY LEVIED PENALTY U/S 271AAA OF THE ACT. THE SAME ITA NO-337/DEL/2013 11 WAS UPHELD BY THE FIRST APPELLATE AUTHORITY. THE TR IBUNAL HAS HOWEVER DELETED THE PENALTY ON THE BASIS THAT THERE IS NO PRESCRIBED METHOD TO INDICATE THE MANNER IN WHICH INCOME WAS GENERATED WHERE THE DEFINITION OF UNDISCLOSED INCOME HAS BEEN DEFINED IN THE ACT ITSELF WHEN NO INCOME OF THE SPECIFIED PREVIOUS YEA R REPRESENTED EITHER WHOLLY OR PARTLY WHICH ONUS LAY UPON THE ASSESSEE STOOD DISCHARGED. THE DELHI BENCH OF THE TRIBUNAL IN ITS RECENT DECISION IN THE CASE OF MOTHER PRIDE EDU CATION PERSONNA PVT. LTD,.VS. DCIT (SUPRA) WHILE PLACING RELIANCE ON ITS EARLIER DECIS ION IN THE CASE OF SMT. RAJ RANI GUPTA (SUPRA) AND FOLLOWING THE RATIO OF THE DECISION OF HONBLE HIGH COURTS IN THE CASE OF CIT VS. RADHI KISHAN GOEL (SUPRA) (ALL) AND CIT VS. MAH ENDRA C. SHAH (SUPRA) (GUJ) HAS DELETED THE PENALTY. THE HONBLE ALLAHABAD HIGH COU RT 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 WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSO N TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IN THE STATEMENT THE MANNER IN WHICH IN COME HAS BEEN DERIVED HAS NOT BEEN STATED BUT HAS BEEN STATED SUBSEQUENTLY, THAT AMOUN TS TO THE COMPLIANCE WITH EXPLANATION 5 (2) TO SECTION 271 (1) (C) OF THE ACT. IT WAS FUR THER HELD THAT IN CASE THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED U/S 132(4) O F THE ACT IN THE ABSENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE INFERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVED FROM THE B USINESS WHICH HE WAS CARRYING ON OR FROM OTHER SOURCES. THE OBJECT OF THE PROVISION IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON-DISCLOSURE OF MONEY, BULLION, JEW ELLERY 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 CIRCUMSTANCES OF THE CASE, IN ABSENCE OF ANYTHING TO THE CONTRARY. THEREFORE, MER E NON STATEMENT OF THE MANNER IN WHICH SUCH INCOME WAS DERIVED WOULD NOT MAKE EXPLAN ATION 5 (2) INAPPLICABLE, HELD THE HONBLE HIGH COURT. ITA NO-337/DEL/2013 12 12. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SHAH HAS BEEN PLEASED TO HELD AS UNDER :- IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT U/S 132(4) OF THE INCOME TAX ACT 1 961 REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFI CE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORI ZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISIONS OF EXPLANATION 5 IN ITS ENTIRETY TO THE ASSESSEE CONCE RNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULA R STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPS E IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTAN CE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION OF AN ASSESSEE TO STAGE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY THE A LLAHABAD HIGH COURT IN HE CASE OF CIT VS. RADHA KISHAN GOEL (2005 ) 278 ITR 454. SECONDLY, CONSIDERING THE ILLITERATE, TO BE SPECIFI C AND TO THE POINT REGARDING THE CONDITIONS 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 D ENIAL OF THE BENEFIT UNDER EXCEPTION NO.2 IN EXPLANATION 5 IS COMMENDABL E. 13. IN THE PRESENT CASE BEFORE US DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 4.3.2010 CE RTAIN DOCUMENTS RELATING TO THE TRANSACTIONS IN PROPERTIES UNDERTAKEN BY THE ASSESS EE WERE FOUND AND SEIZED AS PER PAGE NOS. 4 & 5 OF ANNEXURE A3 IN SR4. AS PER S UCH PAPERS THE ASSESSEE HAD AN OUTSTANDING SUM OF RS. 3 CRORE AND RS. 6 CRORE F ROM VARIOUS PERSON WHICH WAS DULY DISCLOSED AS ADDITIONAL INCOME FOR ASSTT. YEAR 2010-11 WHILE MAKING STATEMENT U/S 132(4) OF THE ACT. IN ADDITION, AS PE R PAGE NO. 6 OF ANNEXURE A3 IN SR4 THE ASSESSEE HAD PAID IN CASH A SUM OF RS. 17,8 6,57,781/- FOR PURCHASE OF LAND BY BHUSHAN STEEL LIMITED (HOWEVER AT THE TIME OF STATEMENT RECORDED IT WAS ITA NO-337/DEL/2013 13 INADVERTENTLY MENTIONED AS BHUSHAN ENERGY LTD.) WHI CH WAS ALSO DECLARED AS ADDITIONAL INCOME FOR THE ASSTT. YEAR 2010-11 WHILE MAKING A STATEMENT U/S 132(4) OF THE ACT. AS PER THE SAID STATEMENT THE ASSESSEE HAD ADMITTED THAT HE HAD ENTERED INTO VARIOUS FORWARD/SPECULATIVE AND PROPER TY TRANSACTION DURING THE PERIOD FROM 1.4.2009 TO 4.3.2010. KEEPING IN VIEW T HE SAME AN INCOME OF RS. 125 CRORES ARISING OUT OF THE SAID TRANSACTIONS WA S DECLARED IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH WHICH INCLUDED THE SAID AMOUNT AS UNDISCLOSED. SUBSEQUENTLY THE TAXES DUE THEREON WER E ALSO PAID AND THE SAME INCOME DECLARED IN THE RETURN OF INCOME FILED FOR T HE ASSESSMENT YEAR 2010-11 WAS ALSO ACCEPTED BY THE DEPARTMENT. 14. ON HAVING GONE THROUGH THE QUERY R AISED WHILE RECORDING THE STATEMENT OF ASSESSEE U/S 132(4) OF THE ACT, WE FIND SUBSTANCE I N THE CONTENTION OF THE LD. AR THAT NOWHERE THE AUTHORIZED OFFICER HAS ASKED A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED. THE RELEVANT QUESTIONS ARE QUESTION NOS. 4,5,6 AND 7. FOR A READY REFERENCE THESE QUESTIONS AND REPLY BY THE ASSESEE THERETO ARE BEING REPRODUCED HEREUNDER:- 4 FOR FACILITY OF REFERENCE AND AS IN AID FOR FURTHER 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 CONTENT THEREOF ? ANS. THIS PAPER DEPICTS DETAILS REGAR DING PURCHASE OF VARIOUS LANDS ON VARIOUS DATES BY M/S BHUSHAN ENERGY LTD IN KOLKA TA. AS MENTIONED IN THIS PAPER IN THE ENTIRE TRANSACTION AN AMOUNT OF R S. 178657781/- WAS PAID IN CASH ON 02/05/2009. THIS CASH WAS PAID OUT OF M Y OWN UNACCOUNTED ITA NO-337/DEL/2013 14 FUNDS WHICH WAS NEVER L DISCLOSED FOR TAXATION PURP OSE. I HEREBY ACCEPT THE ABOVE AMOUNT TO BE MY UNACCOUNTED INCOME IN THE SHA PE OF INVESTMENT IN THE CURRENT FINANCIAL YEAR AND THE SAME IS OFFERED FOR TAXATION. Q5. I AM DRAWING YOUR ATTENTION TOWARDS AN NEXURE 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 FO UND FROM MY BED ROOM AT THIS PREMISE, I OWN THIS PAPER AND ALL THE CONTE NTS OF THIS PAPER ARE WRITTEN BY ME ONLY. THE NOTINGS ON THIS PAPER DEPI CTS THE FACT THAT I HAVE ADVANCED CERTAIN AMOUNTS TO SOME PERSON ON DIFFEREN T DATES. THE DETAILS OF WHICH IS FURNISHED BELOW:- LIST OF ADVANCES OUTSTANDING ON 31.01.2010 ATMA RAM 11.0 CR SHIV 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 CR 69.0 CR 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 RS. 69 CRORES? ANS. THE ABOVE AMOUNT OF RS. 69 CRORES IS MY UNACCOUNTED INCOME FOR THE CURRENT FINANCIAL YEAR GENERATED FROM UNDISCLOS ED SOURCES. BY MEANS OF ITA NO-337/DEL/2013 15 T HIS STATEMENT I HEREBY ACCEPT 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 AN NEUXRE-A-3 AT PAGE NO-4 FOUND FROM YOUR RESIDENCE. PLEASE EXPLAIN TO WHOM THIS PAPER BELONGS AND UNDER WHOSE HAND WRITING THIS HAS BEEN WRITTTEEN. 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 AD VANCED AN AMOUNT OF RS.3.0 CR ON 9.6.2009 FOR THE PURPOSE OF PURCHASE O F PROPERTY AT Q1- A, HAUZ KHIAS ENCLAVE, NEW DELHI. IN RESPECT OF THIS AMOUNT I HEREBY STATE THAT THIS AMOUNT IS MY UNACCOUNTED INCOME NOT OFFER ED FOR TAXATION FOR THE CURRENT FINANCIAL YEAR. ON THE BASIS OF MY REPLY TO QUESTIONS NUMBERS 5, 6 AND 7 I REITERATE 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 03.6.201 0, ADDRESSED TO THE ASSTT. DIRECTOR OF INCOME TAX (INVESTIGATION) AND DATED 25 /7/2011, 8/6/2012 AND 20/6/2012 TO THE ASSTT. COMMISSIONER OF INCOME TAX THE ASSESSEE HAS TRIED TO EXPLAIN THE UNDISCLOSED INCOME OF RS. 125 CRORE SURRENDERED BY THE ASSESEEE IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT. THE CONTENTS OF PARA NO. 1 & 2 OF THE L ETTER DATED 25.7.2011 ARE BEING REPRODUCED HEREUNDER :- ITA NO-337/DEL/2013 16 (1) WITH REGARD TO YOUR HONOURS QUERY REGARDING INCOME OF RS.125 CRORES FOR F.Y 2009-10 DISCLOSED DURING THE COURSE OF SEAR CH U/S 132, IT IS SUBMITTED THAT DURING THE COURSE OF THE SAID SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 04 MARCH 2010 CERTAIN D OCUMENTS RELATING TO TRANSACTIONS IN PROPERTIES UNDERTAKEN BY HIM WERE F OUND AS PER PAGE NOS. 4 & 5 OF ANNEXURE A-3 IN SR- 4. AS PER THE SAID PA PERS THE ASSESSEE HAD AN OUTSTANDING OF A SUM OF RS. 3,00,00,000/- AND RS . 69,00,000/- FROM VARIOUS PERSONS WHICH WERE DECLARED AS ADDITIONAL I NCOME OF A/Y 2010- 1\2011 WHILE MAKING A STATEMENT U/S 132(4) OF THE I NCOME-TAX ACT, 1961. IN ADDITION , AS PER PAGE NO-6 OF ANNEXURE A-3 IN S R-4, THE ASSESSEE HAD PAID IN CASH A SUM OF RS. 17,86,57,781/- FOR PURCHA SE OF LAND BY M/S BHUSHAN STEEL LIMITED HOWEVER, AT THE TIME OF STATE MENT RECORDED IT WAS INADVERTENTLY MENTIONED AS M/S BHUSHAN ENERGY LTD, WHICH WAS ALSO DECLARED AS ADDITIONAL INCOME FOR A.Y 2010-2011 WHI LE 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 INTO VARIO US FORWARD/SPECULATIVE TRANSACTIONS AND ALSO TRANSACTIONS RELATED TO PROPE RTIES DURING THE PERIOD FROM 1/4/2009 TO 4/3/2010 I.E. FINANCIAL YEAR 2009- 2010 RELEVANT TO ASSESSMENT YEAR 2010-2011. THE SAID TRANSACTIONS W ERE CARRIED OUT IN AN UNORGANIZED MANNER AND NEITHER ANY ACCOUNTING RECOR DS NOR ANY DOCUMENTARY EVIDENCE/SUPPORT IN RESPECT OF TRANSACT IONS/ACTIVITIES CARRIED OUT WERE MAINTAINED. THE ONLY DOCUMENTARY EVIDENCE IN RESPECT 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 OF TRANSACTIONS WERE EITHER MAINTAINED OR PRESERVED. KEEPING IN VIEW THE SITUATION MENTIONED ABOVE, THE INCOME OF ITA NO-337/DEL/2013 17 RS.125,00,000/- ARISING OUT OF THE SAID TRANSACTION S WAS DECLARED IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH 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 THEREON WERE ALSO PAID AND THE SAID INCOME DECLARED IN THE RETURN OF INCOME FILED FOR A.Y 2010 -11. 16. IN VIEW OF ABOVE FACTS OF THE PRE SENT CASE WHEREFROM IT IS EVIDENT THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE AUTHORIZED OFF ICER OF THE DEPARTMENT HAD NOT RAISED ANY SPECIFIC QUERY REGARDING THE MANNER IN WHICH TH E UNDISCLOSED INCOME HAS BEEN DERIVED AND ON THE CONTRARY THE ASSESSEE HAS TRIED TO EXPLAIN THE EARNING OF THE UNDISCLOSED INCOME IN QUESTION IN ITS REPLY DURING THE COURSE OF RECORDING OF HIS STATEMENT U/S 132(4) OF THE ACT AND THEREAFTER. WE THUS RESPECTFULLY FOLLOWING THE RATIO OF ABOVE CITED DECISIONS OF HONBLE ALLAHABAD HIGH COU RT AND HONBLE GUJARAT HIGH COURT HOLD THAT IN ABSENCE OF QUERY RAISED BY THE AUTHORI ZED OFFICER DURING THE COURSE OF RECORDING OF STATEMENT U/S 132 (4) ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT ITS SUBSTANTIATION, THE AO WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S 271AAA OF THE ACT SPECIALLY WHEN THE OFFERED UN DISCLOSED INCOME HAS BEEN ACCEPTED AND DUE TAX THEREON HAS BEEN PAID BY THE ASSESSEE. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITI ES BELOW IN THIS REGARD DIRECT THE AO TO DELETE THE PENALTY OF RS. 12,50,00,000/- LEVIED U/S 271AAA OF THE ACT. THE GROUND IS ACCORDINGLY ALLOWED. IN THE RESULT APPEAL IS ALLOWED. ` ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE 2013. SD/- SD/- (G.D. AGRAWAL) ( I.C. SUDHIR ) VICE PRESIDENT JUDICIAL MEMBER ITA NO-337/DEL/2013 18 DATE 24 TH JUNE, 2013 VEENA/ R.N COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT NEW DELHI ITA NO-337/DEL/2013 19 ITA NO-337/DEL/2013 20