The Dy. CIT, Central Circle-2, Surat V. M/s. Sangini Corporation, Surat

ITA 3540/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2098 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS T BIDARI
• Assessee Lawyers: M K PATEL
• Keywords: Document seized; Additional evidence; Documents seized
• Section: 131; 27; 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.3540/AHD/2015/SRT / ASSESSMENT YEAR: 2012-13 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, SURAT. VS. M/S. SANGINI CORPORATION, 606, LALBHAI CONTRACTOR COMPLEX, OPP: PARSI LIBRARY, NANPURA, SURAT -395 002. [PAN: AARFM 8823G] ( / APPELLANT) ( !' /RESPONDENT) . / ITA NO.3541/AHD/2015/SRT / ASSESSMENT YEAR: 2012-13 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, SURAT. VS. M/S. VEE AAR ASSOCIATES, 606, LALBHAI CONTRACTOR COMPLEX, OPP: PARSI LIBRARY, NANPURA, SURAT 395 001. [PAN: AARFV 5117J] ( / APPELLANT) ( !' /RESPONDENT) . / ITA NO.3543/AHD/2015/SRT / ASSESSMENT YEAR: 2012-13 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, SURAT. VS. M/S. SHYAM ASSOCIATES, T.P. NO.2, F.P NO.179, SHYAM SANGINI, CANAL ROAD, CITY LIGHT, SURAT -395 007. [PAN: ABRFS 1556M] ( / APPELLANT) ( !' /RESPONDENT) / ASSESSEE BY : SHRI M.K. PATEL, A.R /REVENUE BY : SHRI SRINIVAS T. BIDARI, CIT-DR /DATE OF HEARING : 18-04-2018 /DATE OF PRONOUNCEMENT : 25-04-2018 2 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES / ORDER PER C.M.GARG, JUDICIAL MEMBER: THESE THREE APPEALS HAVE BEEN FILED BY THE REVENUE CHALLENGING THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS )-4, SURAT (CIT(A) FOR SHORT) DATED 26.10.2015 PERTAINING TO ASSESSMEN T YEAR (A.Y) 2012-13 PASSED UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 354 0/AHD/2015/SRT READ AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 45,00,000/-, IN SPITE OF THE FACT THAT THE ASSESSEE HAS NOT FULFILL ED THE CONDITION (II) LAY DOWN IN PENALTY U/S 271AAA, IN RESPECT TO SUBSTANTI ATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED DURING THE COURSE OF ASSESSMENT & PENALTY PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 45,00,000/- BY ADMITTING THE ADDITIONAL EVIDENCES WITHOUT GIVING A NY OPPORTUNITY TO THE AO UNDER RULE 46A OF THE ACT. HENCE THE ORDER PASSE D BY THE LD.CIT(A) IS PERVERSE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 45,00,000/- IN SPITE OF THE FACTS THAT THE ASSESSEE HAS FAILED TO FURNIS H HIS REPLY ON A SPECIFIC QUESTION RAISED BY THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS, TO SUBMIT THE DETAILS OF ALL THE PARTIES FROM WHOM REC EIVABLES WERE DUE, IN ORDER TO CHECK HIS CLAIM OF RECEIVABLE FROM THIRD P ARTIES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT (A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE AB OVE EXTENT. 3. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 354 1/AHD/2015/SRT READ AS FOLLOWS: 3 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 70,50,000/-, IN SPITE OF THE FACT THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION (II) LAY DOWN IN PENALTY U/S 271AAA, IN RESPECT TO SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED DURING THE COURSE OF ASSESSMENT & PENALTY PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 70,50,000/- BY ADMITTING THE ADDITIONAL EVIDENCES WITHOUT GIVING A NY OPPORTUNITY TO THE AO UNDER RULE 46A OF THE ACT. HENCE THE ORDER PASSE D BY THE LD.CIT(A) IS PERVERSE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 70,50,000/- IN SPITE OF THE FACTS THAT THE ASSESSEE HAS FAILED TO FURNIS H HIS REPLY ON A SPECIFIC QUESTION RAISED BY THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS, TO SUBMIT THE DETAILS OF ALL THE PARTIES FROM WHOM REC EIVABLES WERE DUE, IN ORDER TO CHECK HIS CLAIM OF RECEIVABLE FROM THIRD P ARTIES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT (A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE AB OVE EXTENT. 4. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 354 3/AHD/2015/SRT READ AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 23,00,000/-, IN SPITE OF THE FACT THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION (II) LAY DOWN IN PENALTY U/S 271AAA, IN RESPECT TO SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED DURING THE COURSE OF ASSESSMENT & PENALTY PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 23,00,000/- BY ADMITTING THE ADDITIONAL EVIDENCES WITHOUT GIVING A NY OPPORTUNITY TO THE AO UNDER RULE 46A OF THE ACT. HENCE THE ORDER PASSE D BY THE LD.CIT(A) IS PERVERSE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE BY DELETING THE PENALTY U/S 271AAA BY AMOUNTING TO RS. 23,00,000/- IN SPITE OF THE FACTS THAT THE ASSESSEE HAS FAILED TO FURNIS H HIS REPLY ON A SPECIFIC QUESTION RAISED BY THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS, TO SUBMIT THE DETAILS OF ALL THE PARTIES FROM WHOM REC EIVABLES WERE DUE, IN ORDER TO CHECK HIS CLAIM OF RECEIVABLE FROM THIRD P ARTIES. 4 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT (A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE AB OVE EXTENT. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL. THE LD. CIT- DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT NEI THER THE INCOME DISCLOSED WAS RECORDED IN THE BOOKS OF ACCOUNT OF A SSESSEE FIRM ON OR BEFORE THE DATE OF THE SEARCH, NOR HE HAS DISCLOSED TO THE CHIEF COMMISSIONER AND COMMISSIONER BEFORE THE DATE OF TH E SEARCH. THIS MEANS THAT THE INCOME IS SQUARELY COVERED BY THE DEFINITI ON OF UNDISCLOSED INCOME AS GIVEN EXPLANATION (A) OF THE S. 271AAA(4) OF THE ACT. THE LD. DR FURTH ER SUBMITTED THAT IT IS CLEAR THAT AT THE TIME OF SEAR CH PROCEEDINGS EVEN THOUGH ASSESSEE HAD DECLARED AS SUM OF RS. 4,50,00,000/- B UT DID NOT DISCLOSE THE MANNER IN WHICH IT HAS BEEN EARNED. HE MERELY GAVE DISCLOSURE AGAINST SO CALLED RECEIVABLES ON THE BASIS OF FIGURES MENTIONE D ON A PAPER. NO WAY CAN IT SAID TO BE DISCLOSING MANNER OF EARNING I.E., TH E DETAILS OF PARTIES FROM WHOM RECEIVABLES WAS NOT PROVIDED. THE ONUS OF PROO F WAS ON THE ASSESSEE TO ESTABLISH THE MANNER OF EARNING SUCH INCOME FROM RECEIVABLES IN WHICH HE FAILED MISERABLY. HENCE, ASSESSEE FAILED TO SATISF Y THE CONDITIONS LAID DOWN BY THE FIRST EXCEPTION. 6. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE I N THE FIRST PLACE FAILED TO SATISFY THE MANNER OF EARNING THE UNDISCLOSED IN COME HENCE THERE IS NO QUESTION OF SUBSTANTIATING THE SAME. THE PAPER SEIZ ED MERELY TALKS OF 5 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES BALANCE RECEIVABLES, BUT NO WAY CAN IT BE SAID TO S UBSTANTIATING THE MANNER IN WHICH IT HAS BEEN EARNED. THE LD. DR VEHEMENTLY POINTED OUT THAT IT WAS FOUND THAT THERE IS NO EVIDENCE WHATSOEVER TO AT LE AST INDICATE THAT THE AMOUNTS, ADMITTEDLY RECEIVED BY THE ASSESSEE, ARE R ECEIVED FROM THE FLAT OWNERS IN LIEU OF THE PURCHASE OF FLATS. THE ONLY E XPLANATION OF THE ASSESSEE IS THE IMPOUNDED DOCUMENT WHICH STANDS REBUTTED IN THE LIGHT OF THE DETAILED DISCUSSION IN THE FOREGOING. IN VIEW OF THE SAME, I T WAS RIGHTLY HELD BY THE LD. AO THAT THE ASSESSEE HAS FAILED TO OFFER A SATISFAC TORY EXPLANATION ABOUT THE MANNER AND SOURCE OF THE UNDISCLOSED INCOMES. IN LI GHT OF THE FAILURE TO SATISFY THE TWO OF THE EXCEPTIONS GIVEN IN S. 271AA A(2), THE ASSESSEES PLEA FOR NOT LEVYING PENALTY U/S. 271AAA FOR THE AMOUNT OF RS. 1.5 CRORE DISCLOSED DURING THE COURSES OF SEARCH PROCEEDINGS WAS RIGHTL Y REJECTED BY THE AO. THE LD. CIT-DR SUBMITTED THE AO IMPOSED PENALTY U/S . 271AAA OF THE ACT BY CONSIDERING ENTIRE FACTS AND CIRCUMSTANCES OF THE C ASE, WHEREAS THE LD. CIT(A) HAS DELETED THE SAME WITHOUT ANY JUSTIFIED R EASON AND BASIS. THEREFORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE B Y RESTORING THE PENALTY ORDER. THE LD. CIT-DR HAS PLACED RELIANCE ON THE O RDER OF ITAT, PUNE B- BENCH DATED 27.09.2017 IN THE CASE OF ACIT V. SHAILESH GOPAL MHASKE IN ITA NO.2242/PUN/2014 AND SUBMITTED THAT WHERE THE ASSESSEE HAS FAILED TO SPECIFY MANNER IN WHICH UNDISCLOSED INCOME WAS DERI VED AND ALSO FAILED TO DEPOSIT DUE TAXES THEN THE ASSESSEE FAILED TO SATIS FY THE CONDITIONS SPECIFIED U/S. 271AAA(2) AND HENCE, IMMUNITY FROM PENALTY WAS NOT AVAILABLE TO ASSESSEE. 6 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES 7. REPLYING TO THE ABOVE, THE LD. ASSESSEES REPRES ENTATIVE (AR) TOOK US THROUGH RELEVANT PARA 8 TO 8.2 OF THE FIRST APPELLA TE ORDER AND SUBMITTED THAT RELYING ON THE DECISION OF HON'BLE GUJARAT HIGH COU RT IN THE CASE OF MAHENDRA C. SHAH 299 ITR 305 (GUJ), THE LD. FIRST APPELLATE AUTHORITY RIGHTLY DIRECTED THE AO TO DELETE THE PENALTY. THE LD. AR S UBMITTED THAT THE ASSESSEE IN HIS STATEMENT RECORDED U/S. 132(4) OF T HE ACT ACCEPTED AND SURRENDERED UNDISCLOSED INCOME AND NO FURTHER QUEST IONS WERE ASKED IN THE SAID STATEMENTS TO SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND ASKING THE ASSESSEE TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THE LD. AR SUBMITTE D THAT THE ASSESSEE HAS SHOWN UNDISCLOSED INCOME IN HIS RETURN FILED U/ S. 153A OF THE ACT AND DUE TAXES ETC. HAS BEEN PAID THEREON. IT IS CLEAR FROM THE OBSERVATIONS OF THE AO IN PARA (III) AT PG. 6 OF THE PENALTY ORDER. TH EREFORE, IN VIEW OF DECISION OF HON'BLE GUJARAT HIGH COURT, THE LD. CIT(A) WAS RIGH T IN DELETING THE PENALTY AS THE ASSESSEE WAS ENTITLED FOR IMMUNITY GRANTED TO I T UNDER SUB SECTION (2) OF S. 271AAA OF THE ACT. THE LD. AR SUBMITTED THAT THE IMPUGNED ORDER CARRIES NO MISTAKE OR PERVERSITY. THEREFORE, THE SAME MAY K INDLY BE UPHELD BY DISMISSING APPEAL OF THE REVENUE. 8. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE ARE OF THE VIEW THAT AS PER PROVISION OF S. 271AAA OF THE ACT, THE AO MAY DIRECT THE ASSESSEE TO PAY 10% UNDISCLOSED INCOME OF THE SPECI FIED PREVIOUS YEAR, IN ADDITION TO THE TAX PAYABLE BY HIM. HOWEVER, THE L EGISLATION HAS GRANTED 7 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES IMMUNITY FROM THE SAID PENALTY SUBJECT TO CUMULATIV ELY FULFILLING THREE CONDITIONS AS SPECIFIED IN SUB SECTION (2) OF S. 27 1AAA OF THE ACT. 9. NOW LET US EXAMINE THE PRESENT CASE AS TO WHETHE R THE ASSESSEE IS ENTITLED TO IMMUNITY FROM IMPOSING OF PENALTY U/S. 271AAA OF THE ACT. FROM SUB PARA (III) AT PG. 6 OF THE PENALTY ORDER, IT IS CLEAR THAT THE AO HIMSELF NOTED THAT THE ASSESSEE HAS PAID TAX TOGETHER WITH INTERE ST IN RESPECT OF UNDISCLOSED INCOME. THEREFORE, UNDISPUTEDLY CONDIT ION OF CLAUSE (III) OF SUB SECTION (2) OF S. 271AAA OF THE ACT HAS BEEN COMPLI ED WITH BY THE ASSESSEE. IN THIS SITUATION, WE HOLD THAT BENEFIT OF THE RATI O OF THE ORDER OF ITAT, PUNE IN THE CASE OF SHAILESH GOPAL MHASKE (SUPRA) IS NOT AVAILABLE FOR THE REVENUE AS IN THAT CASE ASSESSEE HAS NOT PAID TAX ON THE UN DISCLOSED INCOME. THEREFORE, THE TRIBUNAL DECLINED TO GRANT IMMUNITY FROM THE PENALTY U/S. 271AAA OF THE ACT. 10. FURTHER, WE PROCEED TO ADJUDICATE AS TO WHETHER THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS AS PROVIDED IN CLAUSES (I) & (II) OF SUB SECTION (2) OF S. 271AAA OF THE ACT, AND IT IS ENTITLED FOR IMM UNITY FROM IMPOSING OF PENALTY U/S. 271AAA OF THE ACT. FIRST OF ALL, WE FI ND IT APPROPRIATE TO REPRODUCE THE RELEVANT PART OF FIRST APPELLATE ORDE R, WHEREIN THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE AND DIRECTED THE AO TO DELETE THE PENALTY, WHICH READS AS FOLLOWS: DECISION:- 8. I HAVE GONE THROUGH THE FACTS OF THE CASE, THE O BSERVATION OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. THERE IS NO DISPUTE THAT 8 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES THE INCOME IN QUESTION WAS DECLARED DURING THE STAT EMENT U/S. 132(4) AND WAS OFFERED TO TAX AND ASSESSEE PAID TAXES THER E ON. THE AO HAS ALSO ACCEPTED THE SAME. HOWEVER THE LD. A.O REFERRED TO THE PROVISIONS OF S ECTION 271 AAA AND HELD THAT THE FOLLOWING TWO CONDITIONS REQUIRED FOR IMMUNITY FROM PENALTY UNDER SUBSECTION 2 OF SECTIGN 271 AAA HAVE NOT BEEN FULFILLED:- (I) IF THE ASSESSEE SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DISCLOSED U/S. 132(4) OF THE IT ACT, 1961. (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED. BEFORE PROCEEDING FURTHER, THE PRINCIPLES LAID DOWN BY VARIOUS ITAT BENCHES AND HIGH COURTS PARTICULARLY WITH REFE RENCE TO DISCLOSURE MADE UNDER SECTION 132(4) IS REQUIRED TO BE DISCUSS ED. IN THE CASE OF CIT VS. MAHENDRA C. SHAH (299 ITR 305) THE HON'BLE GUJARAT HIGH COURT CONSIDERED SIMILAR STATEMENT UNDER SECTION 13 2(4) TO GRANT IMMUNITY UNDER SECTION 271 (1 )(C). THE HON'BLE HIGH COURT HELD AS UNDER:- 'WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHOR IZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPL AIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT 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 STATE AND MAKE AVERMENT S IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN AS SESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE P OINT REGARDING THE CONDITIONS STIPULATED IN THE SECOND EXCEPTION WHILE MAKING STATEMENT UNDER SECTION 132(4). EVEN IF THE STATEMENT DOES NO T SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOM E IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLI ANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT.' THE SCOPE AND MEANING HAS BEEN LUCIDLY EXPLAINED BY THE HON'BLE ALLAHABAD HIGH COURT IN.THE CASE OF CIT VS. RADHA K ISHAN GOEL (2005) 278 ITR 454 (ALL.), WHICH WAS FOLLOWED BY THE HON'B LE GUJARAT HIGH COURT IN THE ABOVE REFERRED CASE, 8.1 NOW, LOOKING TO THE FACTS OF THE CASE THE FOLLOWIN G PERTINENT OBSERVATIONS ARE MADE: I. THE DISCLOSURE WAS MADE IN THE STATEMENT OF MR. RAV JIBHAI P PATEL, PROMINENT PERSON IN THE GROUP INCLUDING THE ASSESSEE FIRM, U/S. 9 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES 132(4) ITSELF AND IS BASED ON THE DOCUMENT SEIZED D URING THE COURSE OF SEARCH. II. IN THE STATEMENT IN REPLY TO QUESTION NO. 9 THERE W AS PROJECT WISE BREAK UP GIVEN FOR INCOME EARNED FROM THEM IN DIFFE RENT FIRMS. HE HAD COOPERATED AND GIVEN THE DETAILS OF ABOVE WHOSE HAN DWRITING IS THERE ON DIFFERENT LOOSE DOCUMENTS. HE FURTHER STATED THA T THIS INCOME IS IN THE FORM OF RECEIVABLE (CLEARLY MEANING THAT IT IS WITH THIRD PARTIES AND NOT AS CASH OR OTHER ASSETS). III. CLEARLY NO FURTHER RELATED QUESTION WAS ASKED DURIN G THE 132(4) STATEMENT. IV. ONE VERY MATERIAL AND PERTINENT POINT IS THAT THE D ISCLOSURE IS MAINLY ON THE BASIS OF DOCUMENT SEIZED FROM THE RES IDENCE OF RAVJIBHAI P PATEL. HOWEVER, RAVJIBHAI PATEL HAS GOT NO LEGAL STATUS IN THE ASSESSEE FIRM. HE IS NOT A PARTNER. THE QUESTIONS W ERE ASKED ONLY TO RAVJIBHAI PATEL. THE ONLY QUESTION ASKED TO SHRI AD ARSH R PATEL, PARTNER IN HIS STATEMENT DT. 19.10.2011 WAS SHOWING THE DOCUMENT, ASKING ABOUT HANDWRITING ON PAGE 2 AND ASKING EXPLA NATION REGARDING THE DOCUMENT. HE JUST ACCEPTED THAT THE DOCUMENT PA GE WAS IN HIS HANDWRITING AND AFFIRMED THE DISCLOSURE MADE BY HIS FATHER RAVJIBHAI PATEL. INTERESTING HE WAS NOT EVEN ASKED TO CONFIRM THE BREAKUP OF THIS DISCLOSURE; NOT EVEN THE DISCLOSURE RELATED TO THE FIRMS IN WHICH HE WAS PARTNER. NO FURTHER DETAILS WERE ASKED. V. IN THE POST SEARCH INQUIRIES, EVEN THE CAREFUL READ ING OF QUESTION NO A AND ANSWER OF STATEMENT DT. 25.01.2012, OF SHR I RAVJIBHAI PATEL, DISCUSSED BY AO AT PAGE 4 OF THE PENALTY ORDER; MAK ES IT VERY CLEAR THAT THE OFFICER WAS ALREADY REFERRING THE INCOME DISCLO SED TO BE RELATED TO THE SALE OF THE UNITS AND THE APPELLANT HAS CLEARLY STATED THAT IT IS OVER AND ABOVE THE QUANTUM REFLECTED/INTENDED TO BE REFL ECTED IN THE REGISTERED SALE DEEDS OF THE UNITS. HE FURTHER ELAB ORATED THAT THIS IS INCOME ABOVE THE REGULAR INCOME FROM THE SALE/BOOKI NG OF THE PROJECTS, WHICH WOULD NOT BE/HAS NOT BEEN REFLECTED IN THE RE GULAR BOOKS. CLEARLY IT HAS BEEN ACCEPTED AND DECLARED THAT THIS IS THE 'ON MONEY' ON SALE OF FLATS/UNITS AND IS NET INCOME ON WHICH NO E XPENSE IS FURTHER DEDUCTABLE OR TO BE DEBITED. VI. THE APPELLANT WAS ASKED TO SHOW THE TREATMENT OF TH IS INCOME IN THE SERVICE TAX RETURN (REFER PARA 7.2 OF THIS O RDER). THE APPELLANT HAS SHOWN IN RESPONSE THAT THE DECLARATION (NO. 2013105 ) HAS BEEN MADE BEFORE THE SERVICE TAX DEPARTMENT ON 23.10.2013 TO DECLARE SERVICE TAX ON THIS UNDISCLOSED INCOME BEING THE UNDISCLOSED RE VENUE EARNED AND SUBSEQUENTLY TAXES HAVE BEEN PAID AND THE DECLARATI ON ACCEPTED UNDER THE VOLUNTARY DISCLOSURE SCHEME. 10 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES WITHOUT ANY DOUBT THE NATURE OF INCOME HAS BEEN IN WORDS AND ACTION HAS BEEN SHOWN TO BE REVENUE INCOME EARNED AS ON MO NEY ON THE SALE/BOOKING OF FLATS, EARNED OUTSIDE THE BOOKS OF ACCOUNT AS ON MONEY ON WHICH NO EXPENSES REMAINED TO BE DEBITED. THE AP PELLANT ADHERED TO THE STATEMENT AND DISCLOSED THE INCOME IN RETURN AND PAID TAXES THEREON. THE INCOME WAS ALSO SHOWN TO THE SERVICE T AX DEPARTMENT BEFORE THE INCOME TAX ASSESSMENT WAS COMPLETED. IN NUTSHELL, THE APPELLANT HAS IN HIS STATEMENT U/S . 132(4) ACCEPTED THE UNDISCLOSED INCOME, THE PARTNER AGREED WITH SHRI RA VJIBHAI PATEL WHO HAD SUBMITTED THAT IT IS IN THE FORM OF RECEIVABLE (CLEARLY MEANING THAT IT IS WITH THIRD PARTIES AND NOT AS CASH OR OTHER ASSE TS), NO FURTHER QUESTION WAS ASKED IN 132(4) STATEMENT, IN POST SEARCH STATE MENTS THE NATURE OF INCOME WAS EXPLAINED AND INCOME DISCLOSED AND TAXES PAID. LOOKING TO THE ENTIRETY OF ABOVE FACTS AND FOLLOWING THE JUDGM ENTS OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C SHAH ( SUPRA) AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA K ISHAN GOEL (SUPRA); I HOLD THAT THE CONDITIONS FOR EXEMPTION O F PENALTY AS STIPULATED IN SUB SECTION (2) TO SECTION 271 AAA OF THE I.T. A CT HAVE BEEN MET AND NO CASE IS MADE OUT FOR IMPOSITION OF PENALTY. I HA VE ALSO TAKEN NOTE OF THE FOLLOWING DECISIONS OF AHMEDABAD BENCH OF THE I TAT, WHICH SUPPORT THE APPELLANT'S CASE: (A) DY. CIT VS. M/S. ASHIRWAD CORPORATION - ITA NO. 161 5/AHD/2011 (B) DY. CIT VS. DR. MUKESH S SHAH - ITA NO. 1942/AHD/20 12 (C) DY. CIT VS. JAIPRAKASH ASWANI - ITA NO. 2090/AHD/20 11 (D) DY. CIT VS. SURYA ENCLAVE - ITA NO. 2092/AHD/2011. 8.2 I, THEREFORE, HOLD THAT PENALTY LEVIED BY THE A.O. TO THE TUNE OF RS. 45,00,000/- IS UNJUSTIFIED AND IT IS DIRECTED TO BE DELETED. 11. IN VIEW OF ABOVE CONCLUSION DRAWN BY THE LD. FI RST APPELLATE AUTHORITY, WE OBSERVE THAT THE LD. CIT(A) HAS FOLLOWED RATIO O F THE DECISION OF THE DECISION HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF MAHENDRA C. SHAH (SUPRA), WHEREIN FOLLOWING THE RATIO OF THE DECISIO N OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. RADHAKISHAN GOEL 278 ITR 454 (ALL), IT WAS HELD THAT THE STATEMENT IS BEING RECORDED IN THE QUESTIO N AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISION OF SUB SECTION (2) OF S. 271AAA OF 11 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES THE ACT. IN THE PRESENT CASE, THE DISCLOSURE WAS M ADE IN THE STATEMENT OF SHRI RAVJIBHAI P. PATEL, PROMINENT PERSON IN THE GR OUP INCLUDING PRESENT ASSESSEE FIRM, U/S. 132(4) OF THE ACT WHICH WAS BAS ED ON THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH OPERATION. COPY OF THE RELEVANT PART OF SAID STATEMENT HAS BEEN PLACED AT PGS. 1-4 OF THE A SSESSEE PAPER BOOK, WHEREIN REPLY TO Q. NO.9 SHRI RAVJIBHAI P. PATEL ST ATED THAT THERE WAS PROJECT WISE BREAKUP GIVEN FOR THE INCOME BY THEM IN THE DI FFERENT FIRMS AND HE ALSO COOPERATED AND GAVE THE DETAILS OF THE PERSONS WHOS E HAND WRITING WAS THERE ON THE LOOSE DOCUMENTS SHOWING SAID UNDISCLOSED INC OME. THE LD. CIT(A) ALSO NOTED THAT NO FURTHER RELATED QUESTION WAS ASK ED FROM SHRI RAVJIBHAI P. PATEL DURING HIS STATEMENT U/S. 132(4) OF THE ACT W HICH ALLOW THE BENEFIT OF THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF MAHENDRA C. SHAH IN FAVOUR OF ASSESSEE. 12. SUBSEQUENTLY, DURING STATEMENT U/S. 131 OF THE ACT RECORDED ON 25..01.2005 SHRI RAVJIBHAI P. PATEL AGAIN MADE IT C LEAR THAT THE INCOME DISCLOSED IS TO BE RELATED TO THE SALE OF THE UNITS AND HE STATED THAT IT WAS OVER AND ABOVE THE PAYMENT OF QUANTUM TO BE REFLECT ED IN THE REGISTERED SALE DEED OF THE RESPECTIVE UNITS, THEREFORE, SAID INCOM E WAS ABOUT THE REGULAR INCOME FROM SALE AND BOOKING OF THE PROJECTS. NO O THER QUESTION WAS ASKED FROM SHRI RAVJIBHAI P. PATEL IN THE POST SEARCH STA TEMENTS OR IN THE STATEMENT RECORDED U/S. 132(4) OF THE ACT ASKING HIM TO SPECI FY THE MANNER IN WHICH UNDISCLOSED INCOME WAS EARNED AND TO SUBSTANTIATE T HE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED. AT THIS JUNCTURE, FROM CAREFUL READING OF 12 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES STATEMENT OF SHRI RAVJIBHAI P. PATEL RECORDED U/S. 132(4) OF THE ACT DURING THE COURSE OF SEARCH ON 18.02.2011 AND HIS SUBSEQUENT S TATEMENT U/S. 131 OF THE ACT RECORDED ON 25.01.2012 IT IS CLEAR THAT THE SUM AND SUBSTANCE OF HIS STATEMENT IS THAT HE DISCLOSED AND SURRENDERED INCO ME DURING HIS STATEMENTS BY GIVING BREAKUP OF THE INCOME AND ALSO STATED THA T IT WAS OVER AND ABOVE PAYMENT WHICH WAS INTENDED TO BE SHOWN IN THE REGIS TERED SALE DEED OF THE RESPECTIVE UNITS WHICH IMPLIEDLY SPECIFIES THE MANN ER IN WHICH UNDISCLOSED INCOME HAS BEEN EARNED BY THE ASSESSEE AND THERE WA S NO OTHER QUESTION FROM THE OFFICER RECORDING THE STATEMENT ASKING THE ASSESSEE TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERI VED. THEREFORE, THERE WAS NO OCCASION FOR SHRI RAVJIBHAI P. PATEL TO STA TE AND MAKE AVERMENTS IN THE EXACT FORMAT AS STIPULATED AND REQUIRED UNDER C LAUSES (I) & (II) OF SUB S. (2) OF S. 271AAA OF THE ACT AND IN THIS SCENARIO AN D CONSIDERING THE ENVIRONMENT IN WHICH STATEMENT U/S. 132(4) OF THE A CT IS RECORDED IT IS NOT PRACTICALLY POSSIBLE AND CORRECT TO EXPECT FROM THE ASSESSEE, WHETHER EDUCATED OR UNEDUCATED, TO SPECIFY AND TO POINT OUT THE FACTS COMPLYING WITH THE REQUIREMENT OF CONDITIONS STIPULATED IN THE CLA USES (I) & (II) OF SUB S. (2) OF S. 271AAA OF THE ACT. IN THIS SITUATION, AND ON TH E BASIS OF FOREGOING DISCUSSION, WE REACH TO A LOGICAL CONCLUSION THAT T HE LD. CIT(A) WAS RIGHT IN GRANTING RELIEF TO THE ASSESSEE BY FOLLOWING RATIO OF THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF MAHENDRA C. SHAH (SUPRA). WE ARE UNABLE TO SEE ANY AMBIGUITY PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME. HENCE, WE UPHOLD THE SAME. ACCORDINGLY, GR OUNDS OF APPEAL OF 13 ITA NO.3540, 3541 & 3543/AHD/2015/SRT (A.Y: 2012-13 ) M/S. SANGANI CORPORATION, M/S. VEE AAR ASSOCIATES & M/S. SHYAM ASSOCIATES REVENUE BEING DEVOID OF MERITS ARE DISMISSED UPHOLD ING THE ORDER OF LD. CIT(A). ITA NO.3541 & 3543/AHD/2015/SRT FOR AY 2012-13 : 13. SINCE, IN THE VERY BEGINNING OF HEARING BOT H THE PARTIES AGREED TO THE FACT THAT THE FACTS AND CIRCUMSTANCES OF ALL THREE APPEALS ARE QUITE SIMILAR AND IDENTICAL AS DISCLOSURE WAS MADE IN ALL THREE A PPEALS BY SHRI RAVJIBHAI P. PATEL IN HIS STATEMENT RECORDED U/S. 132(4) OF T HE ACT ON 18.10.2011 AND THEREFORE, OUR CONCLUSION DRAWN IN THE EARLIER PART OF THIS ORDER FOR ITA NO.3540/AHD/2015/SRT WOULD APPLY MUTATIS MUTANDIS TO OTHER TWO APPEALS I.E., IN ITA NO.3541 & 3543/AHD/2015/SRT FOR AY 201 2-13 AND GROUNDS OF APPEAL OF REVENUE IN THESE APPEALS ARE ALSO STAND D ISMISSED. 14. IN THE RESULT, ALL THE THREE APPEALS OF THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5 TH APRIL, 2018. / SURAT ; DATED : 25 TH APRIL, 2018 EDN ! $ / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. # ( ) / THE CIT (A) - 4, SURAT; 4. PRL. CIT (CENTRAL), SURAT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE. / BY ORDER, ) / ASSISTANT REGISTRAR , / ITAT, SURAT SD/ - SD/ - ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER