ITO, Ward-4(2)(1), Ahmedabad V. M/s.Rushabh Vatika, Rajkot

ITA 3431/AHD/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6486 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH SINGH
• Assessee Lawyers: DEEPAK RINDANI
• Keywords: Competent authority; Reason to believe
• Section: 271(1)(c); 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 3431/AHD/2015 (ASSESSMENT YEAR: 2010-11) ITO WARD-4(2)(1), AHMEDABAD VS. M/S. RUSHABH VATIKA C-903, IMPERIAL HEIGHTS, 150 FT. RING ROAD, OPP. BIG BAZAR, RAJKOT [PAN NO. AALFR0187L] ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY : SHRI OM PRAKASH SINGH, CIT DR ASSESSEE BY : SHRI DEEPAK RINDANI, AR DATE OF HEARING 03.08.2021 DATE OF PRONOUNCEMENT 09 . 0 9 . 20 2 1 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE REVENUE IS DIRECTE D AGAINST THE ORDER DATED 07.09.2015 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)-1, RAJKOT ARISING OUT OF THE ORDER DATED 31.12.2013 PASSED BY THE ITO, WARD 9(1), AHMEDABAD UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT ) FOR THE ASSESSMENT YEAR (A.Y.) 2010-11. 2. THE FACTS CULLED OUT FROM THE RECORDS IS THIS TH AT THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 21 .02.2012 DETERMINING TOTAL INCOME AT RS. 5,83,25,466/- UPON MAKING ADDITION OF RS. 4,15,88,930/- ON ACCOUNT OF SUPPRESSED PROFIT O N SALE OF PLOTS IN ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 2 - RESPECT OF A PROJECT NAMELY RUSHABH VATIKA. THE SA ID ADDITION WAS MADE BY TAKING THE ENTIRE GROSS AMOUNT OF UNACCOUNTED SA LE CONSIDERATION FOUND AND ADMITTED BY THE APPELLANT DURING THE COUR SE OF ACTION UNDER SECTION 132 OF THE ACT. IN APPEAL THE LD. CIT(A) A PPLIED PROFIT RATIO OF 30% TO GROSS UNACCOUNTED SALES WHICH WAS, IN TURN, CONFIRMED BY EX- PARTE ORDER DATED 30.05.2013 PASSED BY THE LD. TRIB UNAL. THE IMPUGNED PENALTY ORDER HAS BEEN PASSED CONSEQUENT UPON THE S AID ORDER OF THE HONBLE TRIBUNAL. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THOUGH THE PENALTY PROCEEDING WAS INITIATED ON THE COUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE WHILE LEVYING PENALTY NO SUCH ALLEGATION HAS BEEN LEVIED AGAINST THE ASSESSEE BY THE ITO. BEFORE THE FIRST APPELLATE AUTHORITY THE APPELLANT RAISED ITS PRELIMINARY OBJECTION AS THE LEVY ITSELF IS INVALID AND BAD IN LAW INASMUCH AS NO ORDER UNDER SECTION 271(1)(C) COULD HAVE BEEN PASSED IN THE FAC TS OF THE CASE. RATHER THE APPELLANT RELIED UPON THE PROVISION OF SUB-SECT ION (3) OF SECTION 271AAA OF THE ACT WHERE IT SAYS THAT NO PENALTY UND ER THE PROVISION OF CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF UNDISCLOSED INCOME REFER TO IN SUB-SECTION (1). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE RESPECTIVE PARTIES AND WE HAVE ALSO PERUSED THE RELEVANT MATER IALS AVAILABLE ON RECORD. ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 3 - 5. IN FACT, A SEARCH WAS INITIATED ON 15.09.2009 IN THE CASE OF PARTNER OF THE ASSESSEE AND THE GROUP CASES AND DURING WHIC H STATEMENT UNDER SECTION 132(4) WAS RECORDED FROM SEVERAL PERSONS OF THE GROUP ADMITTING UNACCOUNTED SALE ACCOUNT PERTAINING TO PROJECT OF T HE APPELLANT FIRM; IT WAS ACCEPTED TO DECLARE PROFITS ATTRIBUTABLE THERET O AND PAY TAX THEREON. SUBSEQUENT THERETO THE APPELLANT DECLARED UNACCOUNT ED PROFIT @ 20% OF THE UNDISCLOSED SALES SO ADMITTED AND PAID TAX THER EON. 6. IT IS RELEVANT TO MENTION THAT IN THE QUANTUM AP PEAL THE LD. CIT(A) DETERMINED THE ULTIMATE NET PROFIT @ 30% AS OFFERED IN THE RETURN OF INCOME TAKING INTO CONSIDERATION THE ESTIMATED PROF IT IN RESPECT OF THE PROJECT OF KOTHARIYA 172, SILVER STONE AND SILVER S PRINGS, BEING THE NEARLY PROJECTS OF RUSHABH VATIKA SITUATED IN CHEKL A VILLAGE HAVING IDENTICAL BUSINESS OF LAND AS DETERMINED BY THE HON BLE SETTLEMENT COMMISSION. THE RELEVANT OBSERVATION MADE BY THE L D. CIT(A) IN THE QUANTUM APPEAL IS AS FOLLOWS:- 6.6 SO FAR AS THE ESTIMATION OF PROFIT WHICH SHOUL D BE TAXED IN THE HANDS OF THE APPELLANT IS CONCERNED, IT IS POINTED OUT BY THE AP PELLANT THAT THE HONBLE COMMISSION HAS DETERMINED THE NET PROFIT WHICH SHOU LD BE CHARGED IN RESPECT OF THE PROJECTS KOTHARIYA 172, SILVER STONE AND SILVER SPR INGS @30% IN PLACE OF 20% DISCLOSED IN THE RETURNS OF INCOME AS WELL AS IN TH E APPLICATION SUBMITTED BEFORE THE SETTLEMENT COMMISSION. THIS IS ALSO A FACT THAT BO TH SILVER SPRINGS AND RUSHABH VATIKA ARE NEARBY PROJECTS SITUATED IN CHEKHLA VILL AGE HAVING IDENTICAL BUSINESS OF SELLING OF PLOTS OF LAND. THE HON'BLE COMMISSION WH ILE ESTIMATING THE PROFITS OF SILVER SPRINGS @ 30% HAS DULY CONSIDERED THE BUSINE SS ACTIVITIES OF NEARBY RUSHABH VATIKA PROJECT FOR THE PURPOSE. THEREFORE, IT CANNO T BE DISPUTED THAT THE ESTIMATION OF PROFITS OF THE APPELLANT IN RESPECT OF RUSHABH VATI KA PROJECT HAS TO BE IN TUNE WITH THE ESTIMATION OF PROFITS IN THE CASES OF SILVER SP RINGS AS SETTLED BY THE COMMISSION UNLESS ANY DIFFERENTIATING EVIDENCE IN RESPECT OF R USHABH VATIKA PROJECT IS BROUGHT ON RECORD. IT IS FURTHER NOTED THAT SHRI MUKESH M. SHETH, A KEY PERSON OF THE GROUP IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT HAS CL EARLY ADMITTED THE FACT OF UNACCOUNTED SALES AND OFFERED TO TAX THE INCOME OR PROFIT ARISING OUT OF THE SAID UNACCOUNTED SALES. THE ENTIRE UNACCOUNTED SALES HAS NOT BEEN OFFERED / DISCLOSED AS INCOME AS IS EVIDENT FROM THE PERUSAL OF THE STATEM ENT RECORDED. ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 4 - 6.7 IT IS FURTHER NOTED THAT THE APPELLANT HAS SHOW N THE GROSS PROFIT OF RS.67,34,398/- ON ITS ACCOUNTED SALES OF RS.3,69,66 ,577/- IN RESPECT OF RUSHABH VATIKA PROJECT. THUS, THE GROSS PROFIT SHOWN ON THE ACCOUNTED SALES IS 18.22%. THEREFORE, THE CONTENTION OF THE APPELLANT, THAT FO R THE SAME SCHEME OF LAND PLOTS, THE DEPARTMENT HAS TAXED THE INCOME @ 12% FOR BLOCK PER IOD ENDING ON 12-09-2002 WHICH HAS BECOME FINAL, IS NOT JUSTIFIED SO FAR AS THE PRESENT YEAR IS CONCERNED WHEREIN DISCLOSED GROSS PROFIT ON ACCOUNTED SALES I S 18.22%. IT IS ALSO AN ADMITTED FACT THAT IN RESPECT OF UNACCOUNTED SALES, THE MARG IN OF PROFIT IS ALWAYS HIGHER. 6.8 IN VIEW OF THE ABOVE AND CONSIDERING THE ORDER OF THE SETTLEMENT COMMISSION IN RESPECT OF SILVER SPRINGS WHEREIN PROFIT HAS BEE N ESTIMATED @ 30% INSTEAD OF 20% OFFERED IN THE RETURN OF INCOME, IT WOULD BE FAIR A ND REASONABLE TO ADOPT THE SAME RATE OF ESTIMATED PROFIT EVEN IN THE CASE OF RUSHAB H VATIKA PROJECT OF THE APPELLANT. THE TOTAL UNACCOUNTED SALES IN THE PRESENT CASE IS RS. 5,19,86,163/-. THE ESTIMATED PROFITS ON SUCH UNACCOUNTED SALES @ 30% AMOUNTING T O RS. 1,55,95,849/- IS ACCORDINGLY TAXED IN THE CASE OF THE APPELLANT. SIN CE THE APPELLANT HAS ALREADY DISCLOSED PROFIT OF RS.1,03,97,2337- @ 20% ON THE Q UANTUM OF UNACCOUNTED SALES, THE BALANCE AMOUNT OF RS.51,98,616/- IS, THEREFORE , SUSTAINED OUT OF TOTAL ADDITION MADE BY THE AO AT RS.4,15,88,930/- 7. WHILE IMPOSING PENALTY THE LD. AOS OBSERVED IS AS FOLLOWS:- 5. IN COMPLIANCE TO THE SHOW CAUSE NOTICE DATED 19 .08.2013 THE ASSESSEE HAD SUBMITTED LETTER DATED 06.09.2013, REC EIVED IN THIS OFFICE ON 10.09.2013, WHEREBY THE ASSESSEE HAD SOUGHT MORE TI ME TO FILE A DETAILED REPLY. FURTHER, IT WAS MENTIONED BY THE ASSESSEE TH AT IT HAD APPLIED TO THE COMPETENT AUTHORITY FOR SHIFTING THE JURISDICTION O F ITS CASE FROM AHMEDABAD TO RAJKOT AND REQUESTED TO KEEP THE PENALTY PROCEED INGS PENDING. SECTION 271(1)(C) OF THE I.T ACT PROVIDES THAT WHE RE THE ASSESSING OFFICER, IN THE COURSE OF ANY PROCEEDINGS UNDER THE IT ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, IN ADDITION TO ANY TAX PAYAB LE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMEN T OF PARTICULARS OF HIS INCOME OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. PENALTY IS LEVIABLE IN VIEW OF EXPLANATION 1 TO SE CTION 271(1)(C) OF THE ACT ALSO. THE EXPLANATION 1 TO SECTION 271(1)(C ) IS REPRODUCED AS UNDER :- 'EXPLANATION 1 - WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 5 - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FI DE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM,' RELIANCE IN THIS RESPECT IS PLACED ON THE FOLLOWING DECISIONS: (I) A.M. SHAH & CO. V. CIT 238 ITR 415 (GUJ) - WHER EBY THE HON'BLE HIGH COURT HELD THAT 'THE WORD 'INACCURATE PARTICULARS' WOULD COVER BOTH FALSITY IN FINAL FIGURE AS ALSO CONSTITUENT ELEMENTS, WHICH AR E INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT, WHETHER IN CONSTITUEN T OR SUBORDINATE ITEMS OF INCOME OR END RESULT. THEREFORE, ANY CONCEALMENT OR INACCURACY IN PARTICULARS OF INCOME IN RETURN OCCURRING AT ANY ST AGE UP TO AND INCLUSIVE OF ULTIMATE STAGE OR WORKING OUT OF TOTAL INCOME WOULD ATTRACT PENALTY PROVISIONS OF SECTION 271(1)(C).' (II) IN A JUDGMENT IN THE CASE OF UNION OF INDIA VS . DHARMENDRA TEXTILES PROCESSOR &. OTHERS 306 ITR 277 THE HONORABLE SUPRE ME COURT OBSERVED THAT THE OBJECT OF ENACTMENT OF SECTION 271(1)(C) R EAD WITH EXPLANATION INDICATED THAT THE SECTION HAD BEEN ENACTED TO PROV IDE FOR A REMEDY FOR THE LOSS OF REVENUE. THE PENALTY UNDER THIS SECTION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTR ACTING CIVIL LIABILITY AS IS IN THE MATTER OF PROSECUTION U/S. 276C. WHAT IS REQUIR ED IS THAT THERE IS CONCEALMENT/OR FURNISHING INACCURATE PARTICULARS OF INCOME THAT WOULD BE SUFFICIENT TO LEVY PENALTY. 6. EXCEPT THE ABOVE MENTIONED LETTER DATED 06.09.20 13, IN COMPLIANCE TO THE SHOW CAUSE NOTICE DATED 19.08.2013, NEITHER ANYBODY ATTENDED NOR ANY SUBMISSION IN THIS REGARD WAS RECEIVED IN THIS OFFI CE TILL DATE. IT IS THEREFORE, PRESUMED THAT THE ASSESSEE HAS NOTHING TO SAY IN TH E MATTER AND HAS NO OBJECTION TO THE PROPOSED PENALTY. DURING THE COURS E OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FAILED TO EXPLAIN AS T O WHY IT HAS OFFERED ONLY AD-HOC AT 20% OF CASH SALES. THE ONLY ARGUMENT PUT FORWARD DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS THAT 'UNDISCLO SED SALES SHOULD NOT BE TREATED AS INCOME. HOWEVER, SINCE THE ASSESSEE HAS BOOKED ALL THE EXPENSES AND THE CASH SALE WAS REPRESENTING PROFIT ONLY THE ABOVE ARGUMENT WAS NOT ACCEPTED AND WAS REJECTED. THE ARGUMENT PUT FORWARD WIT OUT ANY DOCUMENTARY EVIDENCE CANNOT BE ACCEPTED. ON CAREFUL CONSIDERATION ON THESE FACTS I HAVE REASON TO BELIEVE THAT THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF INCOME. 7. IN VIEW OF THE DISCUSSIONS MADE IN THE PRECEDING PARAGRAPHS, IT IS CLEAR THAT THE ASSESSEE HAD CONSCIOUSLY AND DELIBERATELY CONCEALED INCOME BY WAY OF FURNISHING INACCURATE PARTICULARS OF INCOME TO T HE TUNE OF RS.4,15,88,930/- ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 6 - AND HENCE IT IS LIABLE FOR PENALTY U/S. 271(1)(C) O F THE ACT. FURTHER, THOUGH DELIVERED ON DIFFERENT SET OF FACTS, IT IS PERTINEN T TO REFER TO THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V/ S. SREE VALLIAPPA TEXTILES (2007) 294 ITR 322 WHEREIN IT HAS BEEN HEL D THAT SECTION 271(1)(C) HAS TO BE STRICTLY APPLIED IN THE LARGER INTEREST O F DISCIPLINE IN FILLING CORRECT RETURNS BY THE ASSESSEES. 8. THEREFORE, I AM SATISFIED THAT THIS IS A FIT CAS E FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE MAXIMUM PENALTY LEVIABLE @300% OF THE TAX SOUGHT TO EVADED WORKS OUT TO RS. 3,85,52,980/- AND MINIMUM PENALTY @100% COMES TO RS. 1,28,50,980/-. LOOKING TO THE F ACTS OF THE CASE, I LEVY MINIMUM PENALTY OF RS. 1,28,50,980/- U/S. 271(1)(C) OF THE I.T. ACT. 8. THE LD. CIT(A) WHILE DEALING THIS PARTICULAR ASP ECT OF THE MATTER OBSERVED AS FOLLOWS:- I FIND THAT THE SEARCH WAS CONDUCTED ON 15-9-2009 AND THEREFORE THE SAID DATE CLEARLY FALLS WITHIN THE PERIOD OF 1ST JUNE, 2007 T O 1ST JULY, 2012 MENTIONED IN SUB- SECTION (1) OF SEC. 271AAA. I FURTHER FIND FORCE IN CONTENTIONS OF THE A.R. THAT 'THE INCOME ADMITTED BY THE APPELLANT AND FOUND DURING S EARCH IS ALSO DULY COVERED BY THE DEFINITION OF 'UNDISCLOSED INCOME' GIVEN IN THE EXPLANATION BELOW SEC. 271AAA(4) AND THEREFORE IT BECOMES CONSEQUENTLY APP ARENT THAT IN RESPECT OF SUCH UNDISCLOSED INCOME THE JURISDICTION ITSELF FOR LEVY OF PENALTY U/S 271(1)(C) WOULD CEASE TO APPLY IN VIEW OF THE EXPLICIT PROVISIONS O F SEC. 271AAA(3) OF THE ACT. IN OTHER WORDS AND HAVING DUE REGARD TO THE PURPOSE BE HIND INTRODUCTION OF SEC. 271AAA BY THE FINANCE ACT, 2007 W.E.F. 1-4-2007, T HE CASE OF THE APPELLANT FOR LEVY OF PENALTY WOULD OBVIOUSLY ARISE U/S 271AAA ONLY AN D NOT UNDER ANY OTHER SECTION OF THE ACT IN RESPECT OF THE INCOME SO ASSESSED FOR TH E YEAR UNDER APPEAL. IT IS ALSO PERTINENT TO NOTE THAT SEC. 271AAA APPEARS TO BE A SPECIFIC PROVISION FOR LEVY OF PENALTY IN SEARCH CASES ONLY, MORE SO BECAUSE IT SA YS 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT ..... .' AND ALSO IT IS TITLED AS 'PENALTY WHERE SEARCH HAS BEEN INITIATED.' IT IS ALSO A RECO GNIZED PRINCIPLE IN THE INCOME-TAX ACT THAT SPECIFIC PROVISION PREVAILS OVER A GENERAL PROVISION. IN VIEW OF ABOVE, IT BECOMES CLEAR THAT ONCE A SEARCH HAS BEEN INITIATED WITHIN THE PERIOD SPECIFIED IN SECTION 271AAA, PENALTY IN SUCH CASES COULD BE CONS IDERED ONLY BY PASSING AN APPROPRIATE ORDER UNDER THE SAID SECTION AND NOT UN DER ANY OTHER SECTION OR IN PARTICULAR NOT UNDER SEC. 271(1)(C). THE AFORESAID PROPOSITION HAS ALSO BEEN LAID DOWN AND HAS COME TO BE ELABORATELY DEALT WITH BY V ARIOUS COURTS AND TRIBUNALS IN THE PRECEDENTS CITED BEFORE ME AND RELIED UPON BY T HE APPELLANT (SUPRA). I ALSO FIND FURTHER FORCE IN THE CONTENTION OF THE A.R. THAT A JURISDICTIONAL ERROR BY INVOKING AN INAPPLICABLE PROVISIONS OF LAW IS FATAL AND IT CANN OT BE CURED, PARTICULARLY WHEN READ IN THE CONTEXT OF THE STATEMENT GIVEN U/S 132(4) OF THE ACT WHEREIN THE DEPONENTS HAD CLEARLY REFERRED TO THE BENEFIT OF PENALTY U/S 271A AA OF THE ACT IN RESPECT OF THE UNDISCLOSED INCOME ADMITTED BY THEM. THEREFORE, I F URTHER FIND THAT BASED ON THE ASSESSMENT MATERIAL ON RECORD, THE I.T.O. LEVYING P ENALTY COULD NOT HAVE BEEN UNAWARE OF THE CORRECT PENALTY PROVISIONS APPLICABL E IN THE CASE. IN VIEW OF ABOVE, I ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 7 - HOLD THAT THE ORDER OF LEVYING PENALTY U/S 271(1)(C ) OF THE ACT CANNOT BE SUSTAINED ON THIS GROUND ITSELF AND HENCE THE LEVY OF PENALTY IS DIRECTED TO BE DELETED. IT WOULD ALSO BE NECESSARY TO DEAL WITH THE SECOND ASPECT OF THE CONTENTIONS ADVANCED ON BEHALF OF THE APPELLANT WHICH ARE WITH REGARD TO THE PROVISIONS OF SEC. 271AAA ITSELF. IN THIS REGARD/ THE A.R. SUBMITTED B EFORE ME THAT WHILE SEC. 271AAA PROVIDES FOR PENALTY TO BE COMPUTED @ 10% OF THE UN DISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, SUB-SECTION (2) THEREOF PR OVIDES THAT NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY IF THE ASSESSEE IN A ST ATEMENT U/S 132(4) ADMITS THE UNDISCLOSED INCOME, SPECIFIES THE MANNER IN WHICH I T HAS BEEN DERIVED, SUBSTANTIATES THE MANNER AND PAYS TAX WITH INTEREST THEREON. ON T HIS ASPECT, THE A.R. ARGUED THAT IN THE CASE OF THE APPELLANT ALL THE SAID THREE CONDIT IONS OF SUB-SECTION (2) WERE DULY FULFILLED BECAUSE THE UNDISCLOSED INCOME WAS ADMITT ED U/S 132(4), IT WAS SPECIFIED THAT THE SAME WAS DERIVED UPON SALE OF PLOTS IN A S PECIFIC REAL ESTATE SCHEME NAMED RUSHABH VATIKA OF CHEKHLA, THE MANNER OF DERIVING T HE SAME WAS IN CASH WHICH WAS ALSO SUBSTANTIATED ALONGWITH LAND PLOT NOS. OF THE SAID SCHEME, AS STATED IN THE STATEMENT U/S 132(4) ITSELF, PROFIT THEREON WAS DEC LARED IN THE RETURN OF INCOME BY COMPUTING THE SAME @ 20%. IT WAS FURTHER ARGUED THA T ADOPTION OF PROFIT RATE OF 30% BY THE C.I.T. (APPEALS) WAS FINALLY UPHELD BY T HE TRIBUNAL AND THAT THE SAID RATE ITSELF WAS BY WAY OF AN ESTIMATE BY AN APPELLATE AU THORITY AND IT CANNOT BE SAID THAT THE HIGHER RATE OF 30% THAN THE RATE OF 20% DECLARE D BY THE APPELLANT WAS BASED UPON ANY INCRIMINATING MATERIAL SHOWING SUCH 30% RA TE. BASED ON THE SAME, IT WAS ARGUED THAT EVEN A HIGHER ESTIMATION OF ONLY A PROF IT RATE WAS AN APPLICATION OF A THEORY ACCEPTED BY THE HON'BLE GUJARAT HIGH COURT I N SEVERAL CASES IN SEARCH/ SURVEY MATTERS AS CITED AND ACCEPTED BY THE TRIBUNA L IN THE CASE OF THE APPELLANT ITSELF AND THUS THE SAME CAN BE DULY SAID TO BE COVERED BY THE PROVISIONS OF SUB-SECTION (2) OF SEC. 271AAA. THE SUBMISSIONS ON THIS ASPECT OF THE ARGUMENT ARE DULY CONSIDERED. IT IS SEEN FROM RECORD AND IN PARTICULAR FROM THE STATEME NT U/S 132(4) DATED 23-10-2009 COP OF WHICH IS IN PAPER BOOK THAT THE UNDISCLOSED INCOME WAS ADMITTED U/S 132(4), THAT IT WAS SPECIFIED BY THE DEPONENTS THAT THE SAM E WAS DERIVED FROM SALE OF PLOTS IN A SPECIFIC REAL ESTATE SCHEME NAMED RUSHABH VATIKA OF CHEKHLA, THAT THE MANNER OF DERIVING THE SAME WAS IN CASH WHICH WAS ALSO SUBSTA NTIATED ALONGWITH LAND PLOT NOS. OF THE SAID SCHEME AS STATED IN THE ASSESSMENT ORDE R ITSELF, AS STATED IN THE STATEMENT U/S 132(4) ITSELF, PROFIT THEREON WAS DECLARED IN T HE RETURN OF INCOME BY COMPUTING THE SAME @ 20%. THUS, I FIND THAT EVEN IF THE ENTIR E UNDISCLOSED SALES ARE CONSIDERED AS PROFITS (ALTHOUGH THE SAME ARE FINALLY ESTIMATED AT 30% RATE OF SALES AND NOT AT 100%), THE ENTIRE SUCH SALES/INCOME, FOR REASONS ST ATED ABOVE, GETS COVERED UNDER SUB-SECTION (2) OF SEC. 271AAA. THEREFORE, IN MY CO NSIDERED VIEW, THE SUBSTANTIVE PROVISIONS OF SEC. 271AAA(1) CANNOT APPLY WHEN SUB- SECTION (2) ITSELF STATES THAT 'NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPLY I F ........'. I ALSO FIND FROM THE STATEMENT U/S 132(4) THAT THE INVESTIGATING OFFICER DID NOT PUT ANY QUESTION WITH REGARD TO THE RATE OF PROFIT OR THE EXTENT OF INCOM E ARISING FROM UNDISCLOSED SALES WHEREAS THE DEPONENTS HAD VERY CLEARLY STATED THAT THEY WILL DISCLOSE THE TAXABLE INCOME OR THE AMOUNT OF PROFIT FROM THE SALES IN TH E RETURNS OF RELEVANT YEARS OF RELEVANT CONCERNS AND HAD ALSO CLEARLY DECLARED THE SAME WITH AN UNDERSTANDING THAT IF ON THE SAID INCOME THEY WILL BE ENTITLED TO GET THE BENEFIT OF PENALTY U/S 271AAA, ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 8 - THAN THEY WILL GET THE SAID BENEFIT. THUS, IT CAN B E SEEN ON AN OVERALL PERUSAL OF THE ENTIRE STATEMENT READ WITH SEIZED MATERIAL AND THE ASSESSMENT ORDER IN THE LIGHT OF SUBSEQUENT APPELLATE ORDERS, THAT THE APPELLANT WAS FORTHRIGHT IN MAKING DISCLOSURE IN THE LIGHT OF SPECIFIC PROVISIONS OF THE ACT AND' THUS EVEN THE INVESTIGATING OFFICER CANNOT BE SAID TO BE UNAWARE OF THE SAME. IN VIEW O F ABOVE, IN ADDITION TO MY FINDINGS EARLIER ABOVE WITH REGARD TO VALIDITY OF O RDER U/S 271(1)(C), THE LEVY OF PENALTY IS DELETED EVEN IF THE SAME CAN BE SAID TO HAVE BEEN LEVIED U/S 271AAA OF THE ACT. IN THE RESULT, GROUND NO. 1 IS ALLOWED. 9. THE ARGUMENT ADVANCED BY THE LD. COUNSEL APPEARI NG FOR THE ASSESSEE BY WAY OF A WRITTEN SUBMISSION IS REPRODUC ED HEREINBELOW:- (I) NO PENALTY IS LEVIED BY THE A.O, ON THE AMOUNT OF INCOME ON ADMITTED SALES OFFERED BY THE FIRM IN ROI I.E. RS. 1,03,97,233/- B EING 20% PROFIT OF TOTAL DISCLOSURE OF RS. 5,19,86,163/-; HENCE NO PENALTY CAN BE LEVIE D ON REMAINING 80% ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF I NCOME WHEN NO INACCURATE PARTICULARS ARE SHOWN TO HAVE BEEN FURNISHED IN THE RETURN OF INCOME FILED FOR THE YEAR; ONLY ESTIMATION OF INCOME FROM SAME PARTICULA RS WAS CHANGED BY THE A.O. AND THEN BY CIT(A) AND CONFIRMED BY TRIBUNAL. (II) FURTHER, EXPL. 5A TO SEC. 27L(L)(C) DOES NOT G ET ATTRACTED BECAUSE DUE DATE FOR FILING ROI (30-09-2009) HAD NOT EXPIRED (DT. OF SEA RCH 15-09-2009); INCOME FOUND WAS THUS DECLARED IN REGULAR RETURN, HENCE NO QUEST ION OF PENALTY; MOREOVER THE F.Y. HAD NOT EVEN ENDED ON THE DATE OF SEARCH. (III) WHEN THE INCOME DECLARED IN THE ROI BY ESTIMA TING THE PROFIT RATE @ 20% IS NOT VISITED WITH PENALTY, ANY SUBSEQUENT CHANGE IN INCOME IS AS A RESULT OF CHANGE IN ESTIMATE ONLY BY ASSESSING AND APPELLATE AUTHORITIE S (20% TO 100% TO 30%); ESTIMATED ADDITION DOES NOT LEAD TO PENALTY U/S 271 (L)(C) EVEN IN SEARCH CASES. [BOMBAYWALA READYMADE STORES 230 TAXMAN 0313 (GUJ), LALLUBHAI JOGLBHAI PATEL 261 ITR 216 (GUJ)] (IV) THERE IS NO CASE BY AO AS TO WHICH AND HOW 'IN ACCURATE PARTICULARS OF INCOME' WERE FURNISHED, WHEN ALL FACTS AND FIGURES WERE DISCLOSED AND REASONS FOR ADOPTING 20% PROFIT RATE WERE ELABORATELY EXPLAINED , NONE OF WHICH ARE NEGATIVED BY THE AO [DILIP SHROFF 291 ITR 519 SC] (V) FURTHER, EXPL. 5A TO SEC. 271(L)(C) DOES NOT GE T ATTRACTED SINCE THERE WAS NO SEARCH PROCEEDINGS U/S 132 OF THE ACT IN CASE OF RE SPONDENT. [DECISION OF BOMBAY HC IN CASE OF RAJKUMAR GULAB BADGUJAR IN TAX APPEAL NO. 897-898-901-907- 914/2016 DATED 08-01-2019] 10. IT APPEARS FROM THE ENTIRE SET OF FACTS THAT TH E QUANTUM WAS FINALIZED BY THE LD. CIT(A) ON ESTIMATED BASIS FULLY RELYING UPON THE ORDER PASSED BY THE HONBLE SETTLEMENT COMMISSION. IT WAS ARGUED BY THE ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 9 - LD. AR THAT PRINCIPALLY PENALTY CANNOT BE LEVIED ON ADDITION MADE ON ESTIMATED BASIS AND HENCE THE PENALTY DOES NOT LIE. HOWEVER, THE MAIN ARGUMENT ADVANCED BY THE ASSESSEE IS THIS THAT THE ASSESSMENT YEAR IN APPEAL PERTAINS TO SPECIFIED PREVIOUS YEAR AS DEF INED UNDER EXPLANATION (B)(II) TO SECTION 271AAA AS IT IS THE PREVIOUS YEA R 2009-10 WHERE THE ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 15.09.2009. THE INCOME ASSESSED IS THE UNDISCLOSED INCOME AS DEFI NED UNDER THE EXPLANATION (A)(I) TO SECTION 271AAA WHICH IS REPRE SENTED BY DOCUMENTS AND TRANSACTIONS FOUND IN COURSE OF SEARCH PROCEEDI NG IN RELATION TO UNDISCLOSED SALES AMOUNTS OF REAL ESTATE PLOTS. SU CH UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR IS FOUND, IN THE INS TANT CASE, DURING SEARCH PROCEEDINGS INITIATED UNDER SECTION 132 OF THE ACT ON 15.09.2009 I.E. ON OR AFTER 01.06.2007 BUT BEFORE 01.07.2012. THEREFORE, ADMITTEDLY THE APPELLANTS CASE COMING UNDER THE PURVIEW OF THE ST ATUTORY PROVISION OF SECTION 271AAA OF THE ACT. HOWEVER, SECTION 271AAA (3) SPECIFICALLY PROHIBITS INITIATION OF PENALTY PROCEEDING UNDER SE CTION 271(1)(C) IN RESPECT OF AN UNDISCLOSED INCOME AS REFERRED UNDER SUB-SECT ION 1 OF SECTION 271AAA. HOWEVER, WE FIND THAT THE IMPUGNED PENALTY PROCEEDING HAS BEEN INITIATED AND CULMINATED INTO IMPOSITION OF PE NALTY UNDER SECTION 271(1)(C) BUT THE SAME HAS BEEN EXPLICITLY PROHIBIT ED BY THE PROVISION OF SUB-SECTION 3 OF SECTION 271AAA PARTICULARLY WHERE UNDISCLOSED INCOME HAS BEEN FOUND DURING THE SEARCH PROCEEDING. THIS PROVISION LEFT NO SPACE FOR CONFUSION OR DOUBT IN BARRING THE LD. AO TO ASS UME JURISDICTION TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THUS, IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE THE VERY INITIATION OF PE NALTY PROCEEDING UNDER SECTION 271(1)(C) IS CONTRARY TO THE STATUTORY PROV ISION, PALPABLY BAD AND ITA NO.3431/AHD/2015 ITO VS. M/S. RUSHABH VATIKA ASST.YEAR 2010-11 - 10 - NOT MAINTAINABLE IN THE EYE OF LAW. HOWEVER, TAKIN G INTO CONSIDERATION THE ENTIRE ASPECT OF THE MATTER WE FIND THAT INITIATION OF THE PENALTY PROCEEDING IS ERRONEOUS AND IS NOT SUSTAINABLE. THUS, THE SAME I S HEREBY QUASHED. 11. IN THE RESULT, THE APPEAL PREFERRED BY THE REVE NUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 09/09/2021 SD/- SD/- (WASEEM AHMED) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 09/09/2021 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 03.08.2021&01.09.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03.08.2021&02.09.2021 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 08.09.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .09.2021 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 09.09.2021 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09 .09.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER