ITO, New Delhi V. Sh. Ankur Aggarwal, Delhi

ITA 4398/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97018 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 14-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUJIT KUMAR SENIOR
• Keywords: Income from undisclosed sources; Search and seizure; Block assessment; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 5(2); 153A; 32; 147; 27; 148; 263; 132; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NOS.4398 & 4399/DEL./2012 (ASSESSMENT YEARS : 2005-06 & 2006-07) ITO, WARD 35 (4), VS. SHRI ANKUR AGGARWAL, NEW DELHI. 150, SAVITA VIHAR, DELHI 110 092. (PAN : AFTPA7234G) ITA NO.4400 & 4401/DEL./2012 (ASSESSMENT YEARS : 2005-06 & 2006-07) ITO, WARD 35 (4), VS. SHRI NEERAJ JINDAL, NEW DELHI. D-334, VIVEK VIHAR, DELHI 110 095. (PAN : AALPJ1305J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT GARG, ADVOCATE REVENUE BY : SHRI SUJIT KUMAR, SENIOR DR DATE OF HEARING : 03.08.2015 DATE OF PRONOUNCEMENT : 19.08.2015 O R D E R PER BENCH : THESE FOUR APPEALS FILED BY THE REVENUE ARE DIRECTE D AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX ( APPEALS)-XXVII, NEW DELHI ALL DATED 16.05.2012 FOR THE ASSESSMENT Y EARS 2005-06 AND ITA NOS.4398 TO 4401/DEL./2009 2 2006-07. AS THE ISSUE IS COMMON IN ALL THE FOUR AP PEALS, THE SAME ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BR EVITY. 2. FIRST, WE TAKE UP ITA NO.4398/DEL/2012 FOR THE A SSESSMENT YEAR 2005-06. 3. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS UNDER :- 1. THE ORDER OF THE CIT(A) IS BAD IN LAW AND IS AG AINST THE FACTS OF THE CASE. 2. THE CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY AMOUNTING TO RS.7,29,100/- MADE BY THE A.O. UNDER S ECTION 271(1)(C) OF THE ACT BY NOT APPRECIATING THE FACT THAT THE DISCL OSURE OF INCOME WAS THE RESULT OF SEARCH OPERATION ON THE ASSESSEE AND NOT VOLUNTARY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE I .D. CIT(A) HAS ERRED IN IGNORING THE FACT THAT PROVISION OF EXPLAN ATION 5(1) & EXPLANATION 5(2) OF THE SECTION 271 (1)(C) OF THE ACT ARE NOT A PPLICABLE IN THIS CASE. 4. WHETHER THE DISCLOSURE MADE IN RESPONSE OF THE N OTICE U/S 153A(1)(A) IN RESPECT OF EARLIER ASSESSMENT YEAR I. E. A.Y. 2005-06 OVER AND ABOVE ALREADY RETURNED INCOME AFTER THE SEARCH OPERATION HELD ON 11.01.2007 CAN BE SAID VOLUNTARY IN NATURE. 5. THE CIT(A) ERRED IN LAW AND ON FACTS BY IGNORING THAT IF IN PURSUANT TO SEARCH OPERATION, PENALTY IS NOT LEVIED FOR UNEARTHING OF ADDITIONAL INCOME DETECTED DURING A SEARCH, IT WOUL D BE AN OPEN INCENTIVE TO ALL TO CONCEAL THEIR INCOME TILL SUCH TIME IT IS DETECTED BY THE DEPARTMENT. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL.' 4. FOR THE RELEVANT ASSESSMENT YEAR I.E. AY-2005-06 , THE RETURN DECLARING AN INCOME OF RS.1,72,799/- WAS FILED UND ER SECTION 139 (1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT) ON 30.12.2005. 5. THE ASSESSEE BELONGED TO M/S J.M. ESTATE DEVELOP ERS PVT. LTD. GROUP OF CASES. SEARCH AND SEIZURE OPERATION U/S 13 2(4) OF THE ACT WAS ITA NOS.4398 TO 4401/DEL./2009 3 CARRIED OUT ON 11.01.2007 ON THE GROUP AND DIRECTOR S OF THE AFORESAID COMPANY. A DISCLOSURE OF RS.16.00 CRORES WAS MADE B Y THE GROUP U/S 132(4) OF THE ACT ON BEHALF OF DIFFERENT DIRECTORS AND RELATIVES OF THE DIRECTORS. DURING THE SEARCH, CASH AMOUNTING TO RS. 5,26,530/- AND JEWELLERY WORTH RS.17,85,785/- WERE FOUND FROM THE PREMISES AND LOCKERS OF THE ASSESSEE. OUT OF THESE ASSETS, CASH AMOUNTIN G TO RS.4,06,930/- WAS SEIZED, WHEREAS NO JEWELLERY WAS SEIZED. NOTICE U/S 153A OF THE ACT WAS ISSUED ON 26.02.2008, IN RESPONSE TO WHICH THE ASSE SSEE FILED HIS RETURN OF INCOME ON 23.10.2008 DECLARING AN INCOME OF RS.23,3 8,731/-, THUS SHOWING ADDITIONAL INCOME OF RS.21,65,932/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 153A READ WITH SECTION 143 (3) OF THE ACT ON 31.12.2008 AFTER ACCEPTING THE DECLARED INCOME BY O BSERVING THAT, AFTER EXAMINATION OF THE DETAILS FILED AND DISCUSSION WIT H AR OF THE ASSESSEE THE INCOME OF THE ASSESSEE IS ACCEPTED AND ASSESSED AT RS.23,38,731/-. ' 6. THE A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) IN THE ASSESSMENT ORDER BY OBSERVING AS UNDER : 'FROM THE SEIZED RECORDS IT IS NOTICED THAT THE ASS ESSEE GROUP HAD OFFERED A SUM OF RS.16 CRORES AS UNACCOUNTED. I NCOME. HOWEVER, AS THE DISCLOSURE IS CONSEQUENCE OF THE SE ARCH, I AM OF THE VIEW THAT THE ASSESSEE HAS CONCEALED THE INC OME. THUS, PENALTY PROCEEDINGS U/S 271 (1)(C) IS BEING INITIAT ED SEPARATELY. ' 7. THEREAFTER, THE AO PASSED THE PENALTY ORDER U/S 271(1)(C) OF THE ACT ON 26.06.2009 BY IMPOSING PENALTY AMOUNTING TO RS.1 ,34,640/- BEING ITA NOS.4398 TO 4401/DEL./2009 4 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED ON TH E CONCEALED INCOME OF RS.4 LAKHS. 8. THE ASSESSEE FILED A REVISION PETITION U/S 264 O F THE ACT DATED 06.08.2009 BEFORE THE CIT (CENTRAL-II), NEW DELHI A GAINST THE ORDER PASSED BY THE A.O. THE CIT (CENTRAL-II), NEW DELHI VIDE HIS ORDER DATED 10.03.2011, HAS HELD AS UNDER :- HOWEVER, SINCE THE PENALTY ORDER IN QUESTION HAD A LREADY BEEN SET ASIDE BY THE UNDERSIGNED AND THE PROCEEDIN GS HAD BEEN RESTORED BACK TO THE FILE OF THE A.O. U/S 263 OF THE ACT, THE PRESENT PROCEEDINGS U/S 264 BEFORE ME BECOMES INFRUCTUOUS AND IS ACCORDINGLY DISPOSED OFF. ' 9. WITH RESPECT TO PROCEEDINGS U/S 263 OF THE ACT R EFERRED TO BY THE CIT(CENTRAL-II) AS ABOVE, CIT OBSERVED THAT THE A. O. HAD IMPOSED PENALTY ON THE CONCEALED INCOME OF ONLY RS.4,00,000/-, WHER EAS IN THE RETURN OF INCOME FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.21,65,932/-. T HEREFORE, THE CIT (CENTRAL-II) PASSED ORDER U/S 263 OF THE ACT ON 10. 3.2011 BY HOLDING THAT THE ORDER PASSED BY THE A.O. WAS ERRONEOUS AND PREJ UDICIAL TO THE INTERESTS OF THE REVENUE BECAUSE THE A.O. HAD PASSED THE PENA LTY ORDER BY ERRONEOUSLY TAKING THE FIGURE OF CONCEALED INCOME A T RS.4,00,000/- AS AGAINST THE ADDITIONAL INCOME OF RS.21,65,932/- DEC LARED BY THE ASSEESSEE. THE CIT(CENTRAL-II), THEREFORE, SET ASIDE THE PENAL TY ORDER AND PROCEEDINGS WERE RESTORED BACK TO THE FILE OF THE A.O. WITH THE DIRECTIONS TO DISPOSE OF THE MATTER IN ACCORDANCE WITH PROVISIONS WITH THE I NCOME-TAX ACT VIS-A-VIS ITA NOS.4398 TO 4401/DEL./2009 5 JUDICIAL PRONOUNCEMENTS ON THE ISSUE, AFTER AFFORDI NG PROPER OPPORTUNITY TO THE ASSESSEE. 10. IN PURSUANCE OF THESE DIRECTIONS OF THE CIT (CE NTRAL-II), THE A.O. PASSED PENALTY ORDER U/S 271(1)(C) OF THE ACT DATED 29.09.2011 LEVYING PENALTY OF RS.7,29,100/- BEING 100% OF THE AMOUNT O F TAX SOUGHT TO BE EVADED ON THE CONCEALED INCOME OF RS.21,65,932/-. 11. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND THE CIT (A) DELETED THE PENALTY BY OB SERVING AS UNDER :- 22. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE APPELLANT, THE OBSERVATIONS MADE BY THE A.O. IN THE PENALTY ORDER AND THE FACTS OF THE CASE. PENALTY U/S 271 (1)(C) HAS BEEN IMPOSED IN TH IS CASE ON THE GROUND THAT THE ADDITIONAL INCOME SHOWN BY THE APPELLANT I N THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT WAS NOT A VOLUNTARILY DISCLOSURE. IT HAS FURTHER BEEN HELD BY THE A.O. TH AT INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF THE SEARC H AND SEIZURE OPERATIONS AND DISCLOSURE MADE BY THE APPELLANT U/S 132(4) OF THE ACT WAS AS CONSEQUENCE OF THE SEARCH OPERATIONS. HAD THERE BEEN NO SEARCH AT THE PREMISES OF M/S J M ESTATE DEVELOPERS PVT. LTD. GRO UP INCLUDING THE APPELLANT, THE APPELLANT WOULD NOT HAVE DISCLOSED T HE ADDITIONAL INCOME NOR WOULD HE HAVE OFFERED THE SAME FOR TAXATION. TH E APPELLANT ON THE OTHER HAND SUBMITTED THAT HE HAD SHOWN THE ADDITION AL INCOME OF RS.21 ,65,932/- VOLUNTARILY IN HIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 153A ON THE BASIS OF DISCLOSURE MADE BY HIM U/A 132(4) OF THE ACT DURING THE COURSE OF SEARCH. SUCH DISCLOSURE WA S MADE BY THE APPELLANT VOLUNTARILY TO BUY PEACE OF MIND, TO COOP ERATE WITH THE DEPARTMENT AND TO AVOID PROTRACTED LITIGATION. IT H AS BEEN CONTENDED BY THE APPELLANT THAT NO INCRIMINATING DOCUMENTS / MATERIA L WERE FOUND DURING THE COURSE OF SEARCH AND NO REFERENCE HAS BEEN MADE BY THE A.O. TO ANY INCRIMINATING DOCUMENTS EITHER IN THE ASSESSMENT OR DER OR IN THE PENALTY ORDER. THE INCOME DECLARED BY THE APPELLANT IN RETU RN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A HAS BEEN ACCEPTED AS SU CH. THEREFORE, THERE WAS NO CONCEALMENT OF INCOME WITH REFERENCE TO THE RETURN OF INCOME AND IN VIEW OF THE PROVISIONS OF SECTION 153A, THE RETU RN FILED IN RESPONSE TO NOTICE U/S 153A(L )(A) IS TREATED AS RETURN FILED U /S 139 OF THE ACT. THEREFORE, THERE WAS NO CONCEALMENT OF ANY INCOME A ND PENALTY U/S 271(1)(C) WAS NOT IMPOSABLE IN THIS CASE. 23. WITH REGARD TO THE CASE LAWS RELIED UPON BY TH E A.O., IT IS SEEN THAT NONE OF THESE CASE LAWS BELONGED IN A SITUATION WHE RE THE INCOME DECLARED ITA NOS.4398 TO 4401/DEL./2009 6 IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NO TICE U/S 153A OF THE ACT WAS ACCEPTED AS SUCH. FURTHER, IN THE APPELLANT'S C ASE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF THE SEARCH AND NONE WAS POINTED OUT OR BROUGHT ON RECORD BY THE A.O. EITHER IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER. IN THE CASE OF BILAND RAN HARGYA N DASS (SUPRA), THE MATTER BEFORE THE HON'BLE ALLAHABAD HIGH COURT RELA TED TO THE A.Y. 1978- 79 MUCH BEFORE EXPLANATION-5 TO SECTION 271(1)(C) A ND SECTION 153A WERE BROUGHT ON THE STATUTE. IN THE CASE OF K P SAMPATH REDDY (SUPRA), ON THE BASIS OF DOCUMENTARY EVIDENCE FOUND DURING THE COUR SE OF SURVEY, THE ASSESSEE HAD AGREED TO BE ASSESSED AT A HIGHER INCO ME THAN THE RETURNED INCOME WHEREAS IN THE APPELLANT'S CASE THE RETURNED INCOME HAS BEEN ACCEPTED. MOREOVER, OFFER FOR SURRENDER IN THAT CAS E WAS MADE BECAUSE OF SEVERAL ERRONEOUS ENTRIES DETECTED IN THE BOOKS OF ACCOUNT WHEREAS IN THE APPELLANT'S CASE NO SUCH DISCREPANCIES HAVE BEEN PO INTED OUT BY THE A.O. AT ANY STAGE. IN THE CASE OF MOHD. M FAROOQI (SUPRA ), THE EXPLANATION OFFERED BY THE ASSESSEE WITH REGARD TO CASH IMPOUND ED BY THE POLICE AUTHORITIES WAS NOT FOUND TO BE SATISFACTORY IN AS MUCH AS THE ASSESSEE WAS NOT ABLE TO POINT OUT HOW MUCH CASH BELONGED TO HIM AND HOW MUCH BELONGED TO HIS BROTHER AND BROTHER-IN-LAW. THE FAC TS OF THE CASE OF SH. NITHYA KALAYANI TEXTILE LTD. (SUPRA) ARE NOT APPLIC ABLE TO THE APPELLANT'S CASE, AS IN THAT CASE THE ISSUE INVOLVED WAS VALUAT ION OF CLOSING STOCK ON THE BASIS OF TWO VARIETIES OF COTTON. SIMILARLY, IN THE CASE OF MR. SUNIL R KALRO (SUPRA), THE ISSUE INVOLVED WAS WHETHER THE P ENALTY WAS LEVIABLE ON A REPRESENTATIVE ASSESSEE. IN THE CASE OF JASUBHAI BUSINESS P. LTD.(SUPRA), THE ISSUE INVOLVED WAS THE REJECTION OF THE ASSESSE E'S CLAIM WITH REGARD TO THE CERTAIN EXPENDITURE AS REVENUE EXPENDITURE AND THE TREATMENT OF THE SAME BY THE AO AS CAPITAL EXPENDITURE. IN THE CASE OF K R MALAIMATHI (SUPRA), THE ISSUE INVOLVED WAS EXPLANATION OF CASH CREDIT ENTRIES. THUS, THE CASE LAWS RELIED UPON BY THE A.O. IN THE ASSESS MENT ORDER HAD FACTS WHICH WERE NOT APPLICABLE TO THE FACTS OF THE APPEL LANT'S CASE. 24. THE APPELLANT HAS RELIED ON A NUMBER OF CASE L AWS WHICH HAVE BEEN REPRODUCED ABOVE. IN THE CASE OF CIT VS SHYAMLAL M SONI (SUPRA), THE HON'BLE M.P. HIGH COURT HELD THAT WHERE THE INCOME RETURNED IN THE REVISED RETURN WAS ACCEPTED AND ASSESSED IN THE HAN DS OF THE ASSESSEE EVEN IF THAT REVISED RETURN WAS FILED AFTER SEARCH U/S 1 32 AND AFTER NOTICE ISSUED U/S 148 OF THE ACT AND SUBSEQUENT TO ENQUIRIES MADE BY THE DEPARTMENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO PEN ALTY U/S 271(1)(C) COULD BE LEVIED IN THAT CASE. IN THE CASE OF P V RA MANA REDDY (SUPRA), ITA T HYDERABAD IN ITS ORDER DATED 6.01.2012 HELD T HAT WHERE THE ADDITION WAS MADE ON THE BASIS OF MORE OR LESS ON THE OFFER MADE BY THE ASSESSEE AND THE A.O. HAD NOT BROUGHT ANY INCRIMINATING MATE RIAL FOR CONCEALMENT ON RECORD AND THERE WAS NO MATERIAL FOR ESTABLISHIN G CONCEALMENT INDEPENDENTLY PENALTY U/S 271(1)(C) IS NOT LEVIABLE . IN THE CASE OF JOYEO INDIA PVT. LTD., ITAT DELHI HELD THAT ONCE INCOME I S DECLARED IN THE RETURN FILED IN PURSUANCE TO NOTICE U/S 148 OF THE ACT WHI CH IS TREATED AS RETURN FILED U/S 139, NO PENALTY U/S 271(1)(C) COULD BE LE VIED. IN THE CASE OF DCIT VS. GOPICHAND ROOPCHAND RAJANI (SUPRA), ITAT MUMBAI HELD THAT WHERE NO INCRIMINATING MATERIAL WAS FOUND DURING TH E COURSE OF SURVEY AND SEARCH FOR THE RELEVANT A. Y. AND SURRENDER MAD E BY THE ASSESSEE ITA NOS.4398 TO 4401/DEL./2009 7 DURING THE COURSE OF SURVEY WAS DISCLOSED IN THE RE TURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A(1)(A) AND THE SAME WAS ACCEPTED BY THE A.O. WITHOUT POINTING OUT ANY INCRIMINATING MATERIAL, DI SCREPANCY AND DEFICIENCY, THEN THE ASSESSEE HAD NEITHER FURNISHED ANY INACCURATE PARTICULAR OF HIS INCOME NOR HAD HE CONCEALED HIS I NCOME. 25. THIS ISSUE I.E. WHETHER THE PENALTY U/S 271(1) (C) CAN BE IMPOSED IN A CASE WHEN THE RETURNED INCOME DECLARED IN A RETUR N OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT HAS BEEN ACC EPTED AS SUCH, HAS BEEN DISCUSSED IN DETAIL IN A RECENT JUDGMENT OF JURISDI CTIONAL ITAT IN THE CASE SH. PREM ARORA VS. DCIT, CENTRAL CIRCEL-25, NEW DEL HI, 2012-TIOI-262- ITAT-DEL, THE FACTS OF THIS CASE ARE AS UNDER- ASSESSEE IN THIS CASE WAS SEARCHED BY THE DEPARTMEN T. DURING THE COURSE OF SEARCH CERTAIN INCRIMINATING DOCUMENTS WE RE FOUND. ON THE BASIS OF THESE DOCUMENTS IT WAS FOUND THAT ASSE SSEE HAD BEEN CARRYING ON UNACCOUNTED BUSINESS ACTIVITIES. ACCORD INGLY, THE AO ISSUED NOTICE OF SEE 153A FOR SIX ASSESSMENT YEARS. ASSESSEE FILED HIS RETURN DISCLOSING SUBSTANTIAL INCOME. AO FRAMED THE ASSESSMENT AFTER ESTIMATING THE INCOME OF THE ASSES SEE. THE AO HOWEVER, COULD NOT ADD BEYOND THE DISCLOSURE. IN TH IS BACKDROP THE AO LEVIED PENALTY UNDER SECTION 271 (1)(C) ON THE G ROUND THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF HIS INCOME. C IT(A) AFFIRMED THE ORDER OF THE AO. AFTER HEARING THE PARTIES THE ITA T HELD THAT, ++ ON BARE READING OF SEE 153A IT IS SEEN THAT THIS SECTION STARTS WITH A NON-OBSTANTE CLAUSE RELATING TO NORMAL ASSES SMENT PROCEDURE COVERED BY SECTIONS 139, 147, 148, 149, 151 AND 153 IN RESPECT OF SEARCHES MADE AFTER 31ST MAY, 2003. THE SECTIONS, S O EXCLUDED, RELATE TO FILING OF RETURN, ASSESSMENT AND RE-ASSES SMENT PROCEEDINGS. FURTHER SECTION 153A INTENDS TO ASSESS OR REASSESS TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PR ECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THUS THE LEGIS LATIVE INTENTION IS NOT TO ASSESS ESCAPED INCOME AS IN SECTION 147 O R UNDISCLOSED INCOME AS WAS ASSESSED U/S 158BC OF THE ACT. THE FI RST PROVISO TO SEC. 153A MAKES IT CLEAR, THAT NOTICE UNDER SEC. 153A WILL BE FOR EACH SUCH SIX ASSESSMENT YEARS FOR ASSESSMENT OR RE -ASSESSMENT OF TOTAL INCOME. SECOND PROVISO TO SECTION 153A PROVID ES THAT SUCH NOTICE WILL HAVE THE EFFECT OF ABATING ALL THE PEND ING ASSESSMENT OR RE-ASSESSMENT PROCEEDINGS, SO AS TO AVOID MULTIPLIC ITY OF PROCEEDINGS, WHICH WAS A FEATURE OF BLOCK ASSESSMEN T; ++ WHEN NORMAL ASSESSMENT PROCEDURE COVERED BY SECT IONS 139, 147, 148, 149, 151 AND 153 HAS BEEN COMPLETELY EXCL UDED BY OPERATION OF NON-OBSTANTE CLAUSE 'NOTWITHSTANDING A NYTHING CONTAINED' THE SEARCH ASSESSMENTS MADE U/S SECTION 153A OF THE ACT CANNOT BE TREATED AS CONTINUANCE OF NORMAL ASSE SSMENT ITA NOS.4398 TO 4401/DEL./2009 8 PROCEEDINGS WHETHER ABATED OR NOT. THUS THERE IS CO MPLETE DETACHMENT OF ASSESSMENT PROCEEDINGS U/S 143 OR 147 FROM SEARCH PROCEEDINGS U/S 153A OF THE ACT. WHEN SCHEME OF SEA RCH ASSESSMENT AS DESIGNED BY THE LEGISLATURE DOES NOT PRESCRIBE TO TAKE INTO-ACCOUNT THE EARLIER ASSESSMENT PROCEEDING S WHETHER ABATED OR NOT, IT WILL NOT BE PROPER OR JUSTIFIED T O REFER TO RETURNED INCOME U/S 139 FOR THE PURPOSE IMPOSITION OF PENALT Y U/S 271 (L)(C) OF THE ACT; ++ IT FOLLOWS THAT THE CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO ADDITIONAL INCOME BROUGHT TO TAX OVER AND ABOVE RETURNED BY THE ASSESSEE IN RESPONSE TO NOTICE ISSU ED U/S 153A OF THE ACT. ACCORDINGLY IN OUR CONSIDERED OPINION FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271 (L)(C) RESULTING AS A RESULT OF SEARCH ASSESSMENTS MADE ULS153A, THE ORIGINAL RETURN OF IN COME FILED U/S 139 CANNOT BE CONSIDERED; ++ AS HELD ABOVE THE PENALTY U/S 271 (L)(C) IS IMPO SABLE WHEN THERE IS VARIATION IN ASSESSED AND RETURNED INCOME. IF TH ERE IS NO VARIATION, THERE WILL BE NO CONCEALMENT. WHEN THERE IS NO CONCEALMENT, QUESTION LEVY OF PENALTY U/S 271 (1)(C ) OF THE ACT WILL NOT ARISE. THIS IS SETTLED POSITION OF LAW. THE CON CEPT OF VOLUNTARY RETURN OF INCOME MAY BE IMPORTANT IN PENALTY PROCEE DINGS INITIATED IN COURSE OF NORMAL ASSESSMENT PROCEEDINGS MADE U/S 143(3) OR 147 BUT NOT U/S 153A. FROM ABOVE DISCUSSION IT FOLL OWS THAT WHERE RETUNED INCOME FILED U/S 153A IS ACCEPTED BY THE AS SESSING OFFICER, THERE WILL BE NO CONCEALMENT OF INCOME AND CONSEQUE NTLY PENALTY U/S 271 (1 ) (C) CANNOT BE IMPOSED; ++ THE SUPREME COURT IN VARKEY CHACKO V. CIT HAS HE LD THAT A PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME CAN BE IMPOSED ONL Y WHEN THE ASSESSING AUTHORITY IS SATISFIED THAT THERE HAS BEE N SUCH CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS . A PENALTY PROCEEDING, THEREFORE, CAN BE INITIATED ONLY AFTER AN ASSESSMENT ORDER HAS BEEN MADE WHICH FINDS SUCH CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. THE PENALTY WAS PERMISSI BLE UNDER THE LAW ON THE DATE ON WHICH THE OFFENCE OF CONCEALMENT OF INCOME WAS COMMITTED, THAT IS TO SAY, ON THE DATE OF THE O FFENDING RETURN; ++ IF THE FACTS OF THE CASE ARE EXAMINED IN THE LIG HT OF DECISION OF DELHI HIGH COURT IN SAS PHARMACEUTICALS PENALTY U/S 271 (L)(C) IS NOT IMPOSABLE WHERE THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN R ETURN FILED U/S 153A OF THE ACT. IN EARLIER PARAGRAPHS WE HAVE HELD THAT THE CONCEALMENT OF INCOME IS TO BE DETERMINED WITH REFE RENCE TO THE RETURN OF INCOME TO BE FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. ONCE RETURNED INCOME FILED U/S 153A IS ACCEPTE D BY THE ASSESSING OFFICER IT CAN NEITHER BE A CASE OF CONCE ALMENT OF INCOME NOR FURNISHING OF INACCURATE OF PARTICULARS OF SUCH INCOME. HENCE, ITA NOS.4398 TO 4401/DEL./2009 9 THE ASSESSEE'S CASE IS SQUARELY COVERED BY THE DECI SION OF HON'BLE DELHI HIGH COURT IN THE CASE SAS PHARMACEUTICALS (S UPRA). HENCE, PENALTY U/S 271 (L)(C) IS NOT EXIGIBLE. 26. THUS IN THE CASE OF PREM ARORA (SUPRA), THE HO N'BLE ITA T DELHI HAS HELD THAT THE CONCEPT OF VOLUNTARY RETURN OF IN COME MAY BE IMPORTANT IN PENALTY PROCEEDINGS INITIATED IN COURSE OF NORMA L ASSESSMENT PROCEEDINGS MADE U/S 143(3) OR 147 BUT NOT U/S L53A . FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271 (1)( C) RESULTING AS A RESULT OF SEARCH ASSESSMENTS MADE U/S 153A, THE ORIGINAL RETURN OF I NCOME FILED U/S 139 CANNOT BE CONSIDERED. PENALTY U/S 271(1)(C) IS IMPO SABLE WHEN THERE IS VARIATION IN ASSESSED AND RETURNED INCOME. IF THERE IS NO VARIATION, THERE WILL BE NO CONCEALMENT. WHEN THERE IS NO CONCEALMEN T, QUESTION LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WILL NOT ARISE. TH EREFORE, WHERE RETUNED INCOME FILED U/S 153A IS ACCEPTED BY THE ASSESSING OFFICER, THERE WILL BE NO CONCEALMENT OF INCOME AND CONSEQUENTLY PENALTY U/S 27 1(1)( C) CANNOT BE IMPOSED. 27. IN THE APPELLANT'S CASE THE INCOME DECLARED BY THE APPELLANT U/S 132(4) WAS DULY OFFERED IN THE RETURN OF INCOME FIL ED IN RESPONSE TO THE NOTICE U/S 153A(1)(A) OF THE ACT WHICH WAS ACCEPTED AS SUCH WITHOUT ANY ALTERATION IN THE INCOME. THUS THE INCOME HAS BEEN ASSESSED ON THE BASIS OF INCOME DECLARED IN THE RETURN WITHOUT POINTING O UT EITHER IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER, ANY INCRI MINATING MATERIAL TO SHOW THAT THE APPELLANT HAD EITHER FURNISHED INACCU RATE PARTICULARS OF HIS INCOME OR HAD CONCEALED HIS INCOME. KEEPING IN VIEW THE CASE LAWS DISCUSSED ABOVE ESPECIALLY THE DECISION IN THE CASE OF PREM ARORA BY THE HON'BLE ITAT DELHI, IT IS HELD THAT PENALTY U/S 271 (1)(C) WAS NOT LEVIABLE IN THE APPELLANT'S CASE AND THE SAME IS THEREFORE, DELETED. 28. IN THE RESULT, THE APPEAL IS ALLOWED. 12. THE REVENUE, BEING AGGRIEVED, HAS FILED THE APP EAL BEFORE US. 13. THE LD. DR SUBMITTED THAT THE EXPLANATION 5 OF SECTION 271(1)(C) HAS NOT BEEN DEALT WITH BY THE LD CIT(A) AND WHEN T HE SAID EXPLANATION IS APPLIED THEN PENALTY WILL BE ATTRACTED AND THE AO R IGHTLY LEVIED THE PENALTY. SO HE PLEADED THAT THE ORDER OF THE LD. C IT(A) BE REVERSED AND THE ORDER OF AO RESTORED. ITA NOS.4398 TO 4401/DEL./2009 10 14. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE SUBM ITTED THAT THIS ISSUE IS COVERED AGAINST THE REVENUE BY THE DECISION OF T HE CO-ORDINATE BENCH OF ITAT IN THE CASE OF SHRI PREM ARORA VS. DCIT, CENTR AL CIRCLE 25, NEW DELHI IN ITA NO.4702/DEL/2010 ORDER DATED 9 TH MARCH, 2012 WHICH HAS BEEN RELIED ON BY THE CIT (A) FOR DELETING THE PENA LTY AND THEREFORE, HE DOES NOT WANT US TO INTERFERE IN THE ORDER. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE FIND THAT THE ASSESSEE IS AN INDIVIDUAL AND BELO NGS TO M/S. J.M. ESTATE DEVELOPERS LTD. GROUP. SEARCH AND SEIZURE OPERATIO N U/S 132 OF THE ACT WAS CARRIED OUT ON 11.01.2007 (AY 2007-08) ON THE S AID GROUP AND DIRECTORS OF THE SAID GROUP OF COMPANIES. DURING T HE SEARCH, DISCLOSURE OF RS.16 CRORES HAS MADE U/S 132 (4) OF THE ACT ON BEH ALF OF DIFFERENT DIRECTORS AND RELATIVES OF THE DIRECTORS. DURING T HE SEARCH, CASH AMOUNTING TO RS.4,06,930/- WAS SEIZED THOUGH THERE WERE JEWELLERY WORTH RS.17,85,785/- WAS FOUND BUT THE SAME WAS NOT SEIZE D. LATER ON, WE FIND THAT NOTICE U/S 153A WAS ISSUED AND ASSESSEE FILED RETURN OF INCOME IN RESPONSE THERETO AND DECLARED AN INCOME OF RS.23,38 ,731/-, THUS THERE WAS AN INCREASE OF ADDITIONAL INCOME OF RS.21,65,932/- (THE ORIGINAL RETURN FOR THE RELEVANT ASSESSMENT YEAR WAS FILED ON 30.12.200 5 DECLARING AN INCOME OF RS.1,72,799/-, THEREFORE, RS.23,38,731/- - RS. 1,72,799/- COMES TO RS.21,65,932/-). THEREAFTER, WE FIND THAT THE AO C OMPLETED THE ASSESSMENT U/S 153A READ WITH SECTION 143(3) ON 31. 12.2008 AFTER ITA NOS.4398 TO 4401/DEL./2009 11 ACCEPTING THE DECLARED INCOME RETURNED BY THE ASSES SEE PURSUANT TO SECTION 153A AND ASSESSED AT RS.23,38,731/-. THEREAFTER, W E FIND THAT THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) IN THE ASSESSMENT ORDER BY OBSERVING THAT FROM A PERUSAL OF THE RECORDS, IT HA S COME TO HIS NOTICE THAT ASSESSEES GROUP HAS OFFERED A SUM OF RS.16 CRORES AS UNACCOUNTED INCOME AND SINCE THE DISCLOSURE IS IN CONSEQUENCE TO THE S EARCH, HE IS OF THE OPINION THAT THE ASSESSEE HAS CONCEALED INCOME AND SO, ON THE SAID REASON, PENALTY PROCEEDINGS WERE INITIATED. THEREAFTER, WE FIND THAT THE AO PASSED THE PENALTY ORDER U/S 271(1)(C) ON 26.06.2009 BY IM POSING A PENALTY AMOUNTING TO RS.1,34,640/- TAKING THE CONCEALED INC OME OF ASSESSEE AS RS.4 LAKHS. THEREAFTER, WE FIND THAT THE ASSESSEE HAD FILED REVISION PETITION U/S 264 OF THE ACT BEFORE THE CIT (CENTRAL II), N EW DELHI WHO DISMISSED THE SAID PETITION OF THE ASSESSEE, HOWEVER, TOOK SU O-MOTU COGNIZANCE U/S 263 OF THE ACT AND POINTED OUT THAT THE ASSESSEE HA D DECLARED ADDITIONAL INCOME OF RS.21,65,932/- AND THE PENALTY IMPOSED BY THE AO VIDE ORDER DATED 26.06.2009 IS ERRONEOUS BECAUSE AO HAD ONLY T AKEN INTO ACCOUNT RS.4 LAKHS AS THE CONCEALED INCOME. PURSUANT TO TH E SAID ORDER, THE AO VIDE ORDER DATED 29.09.2011, LEVIED A PENALTY OF RS .7,29,100/- BEING 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED ON THE CON CEALED INCOME OF RS.21,65,932/-. SIMILAR IS THE CASE IN ASSESSMENT YEAR 2006-07 ALSO, ONLY THE FIGURES CHANGE. ON APPEAL BY THE ASSESSEE AGAI NST THE PENALTY ORDER IMPOSED UPON THEM, THE LD. CIT (A) WAS PLEASED TO A LLOW THE APPEAL AND ITA NOS.4398 TO 4401/DEL./2009 12 DELETED THE PENALTY. THE ISSUE BEFORE US IS THAT W HETHER EXPLANATION 5 TO SECTION 271(1)(C) HAS BEEN RIGHTLY CONSIDERED BY TH E LD. CIT (A) WHILE GIVING RELIEF TO THE ASSESSEE. 16. SIMILAR ISSUE WAS DEALT BY THE CO-ORDINATE BENC H OF THIS TRIBUNAL IN PREM ARORA VS. DCIT (149 TTJ 590) WHICH THE LD. CIT (A) HAS RELIED ON TO ALLOW THE APPEAL. THE RELEVANT PARAGRAPH WHICH ARE DEALING WITH THE ISSUE IS AS UNDER :- 11. THUS WHILE SECTION 153A PRESCRIBES FOR ASSESSM ENT OR REASSESSMENT OF TOTAL INCOME IN SEARCH CASES, SECTI ON 153B PRESCRIBES THE TIME LIMIT FOR COMPLETION OF ASSESSM ENT UNDER SEC. 153A. SECTION 153C RELATES TO THE CASES WHERE BOOKS OF ACCOUNTS OR DOCUMENTS OR ASSETS SEIZED UNDER SEC. 1 32 OR REQUISITION MADE UNDER SEC. 132A BELONG TO A PERSON OTHER THAN A PERSON IN WHOSE CASE SEARCH UNDER SEC. 132 OR REQ UISITION UNDER SEC. 132A WAS MADE. THUS PROVISIONS OF SECTIO NS 153A, 153B AND 153C ARE COMPLETE CODE FOR SEARCH ASSESSME NTS WHEREIN SEARCH HAS BEEN INITIATED AFTER 31ST MAY, 2 003. THE EXISTENCE OF THE WORDS ALL OTHER PROVISIONS OF THI S ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION IN EXPLANATION (I) OF SECTION 153A MAKES IT CLEAR THAT IN SEARCH A SSESSMENTS, AMONGST OTHERS THE PROVISIONS RELATING TO PENALTY A ND PROSECUTION WILL ALSO BE APPLICABLE. HOWEVER, WHEN NORMAL ASSESSMENT PROCEDURE COVERED BY SECTIONS 139, 147, 148, 149, 151 AND 153 HAS BEEN COMPLETELY EXCLUDED BY OPERATI ON OF NON- OBSTANTE CLAUSE NOTWITHSTANDING ANYTHING CONTAINED THE SEARCH ASSESSMENTS MADE U/S SECTION 153A OF THE ACT CANNOT BE TREATED AS CONTINUANCE OF NORMAL ASSESSMENT PROCEED INGS WHETHER ABATED OR NOT. THUS THERE IS COMPLETE DETAC HMENT OF ASSESSMENT PROCEEDINGS U/S 143 OR 147 FROM SEARCH P ROCEEDINGS U/S 153A OF THE ACT. WHEN SCHEME OF SEARCH ASSESSME NT AS DESIGNED BY THE LEGISLATURE DOES NOT PRESCRIBE TO T AKE INTO ACCOUNT THE EARLIER ASSESSMENT PROCEEDINGS WHETHER ABATED OR NOT, IT WILL NOT BE PROPER OR JUSTIFIED TO REFER TO RETURNED INCOME U/S 139 FOR THE PURPOSE IMPOSITION OF PENALTY U/S 2 71(1)(C) OF THE ACT. IT FOLLOWS THAT THE CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO ADDITIONAL INCOME BROUGHT TO TAX OVER ITA NOS.4398 TO 4401/DEL./2009 13 AND ABOVE RETURNED BY THE ASSESSEE IN RESPONSE TO N OTICE ISSUED U/S 153A OF THE ACT. ACCORDINGLY IN OUR CONSIDERED OPINION FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271(1)(C) RESULTING AS A RESULT OF SEARCH ASSESSMENTS MADE U/S153A, THE ORIG INAL RETURN OF INCOME FILED U/S 139 CANNOT BE CONSIDERED. 12. FURTHER IN CASE OF SEARCH INITIATED AFTER 1.6.2 003 A RETURN OF INCOME IS ALWAYS FILED ON ISSUE OF NOTICE U/S 15 3A. AS HELD ABOVE THE PENALTY U/S 271(1)(C) IS IMPOSABLE WHEN T HERE IS VARIATION IN ASSESSED AND RETURNED INCOME. IF THERE IS NO VARIATION, THERE WILL BE NO CONCEALMENT. WHEN THERE IS NO CONCEALMENT, QUESTION LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WILL NOT ARISE. THIS IS SETTLED POSITION OF LAW. TH E CONCEPT OF VOLUNTARY RETURN OF INCOME MAY BE IMPORTANT IN PENA LTY PROCEEDINGS INITIATED IN COURSE OF NORMAL ASSESSMEN T PROCEEDINGS MADE U/S 143(3) OR 147 BUT NOT U/S 153A . FROM ABOVE DISCUSSION IT FOLLOWS THAT WHERE RETUNED INCO ME FILED U/S 153A IS ACCEPTED BY THE ASSESSING OFFICER, THERE WI LL BE NO CONCEALMENT OF INCOME AND CONSEQUENTLY PENALTY U/S 171(1)(C) CANNOT BE IMPOSED. 24. THE ASSESSING OFFICER HAS INVOKED PROVISIONS OF EXPLANATION 5 TO SEC. 271(1)(C ) WHILE IMPOSING PEN ALTY IN ASSESSMENT YEAR 2004-05. IT IS ALSO IMPORTANT TO NO TE THAT CHAPTER XIVB WAS INSERTED IN THE STATUTE BY THE FIN ANCE ACT, 1995 W.E.F. 1.7.1995 WHICH PRESCRIBED SPECIAL PROCE DURE FOR SEARCH ASSESSMENTS. NO PENALTY U/S 271 OR 271A OR 2 71B, OR INTEREST U/S 234A/234B/234C WAS LEVIABLE IN RESPECT OF UNDISCLOSED INCOME DETERMINED IN BLOCK ASSESSMENT I N VIEW OF SPECIFIC PROVISIONS OF SECTION 158BF OF THE ACT. SE CTION 158BFA WAS INSERTED BY THE INCOME -TAX (AMENDMENT), ACT , 1997 W.E.F. 1.1.1997 PRESCRIBING BOTH INTEREST AND PENALTY FOR CONCEALMENT OF INCOME IN RESPECT OF UNDISCLOSED INC OME DETERMINED U/S 158BC(C). THUS THE PROVISIONS OF EXP LANATION 5 TO SECTION 271(1) REMAINED INOPERATIVE DURING THE P ERIOD FROM 1.7.1995 TO 31.05.2003. 25. SECTION 153A WAS INSERTED INTO STATUTE W.E.F 1. 6.2003. CLAUSE (I) OF EXPLANATION TO SECTION 153A CLARIFY T HAT SUBJECT TO SECTIONS 153A, 153B AND 153C, ALL OTHER PROVISIONS OF THIS ACT ITA NOS.4398 TO 4401/DEL./2009 14 SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTI ON MEANING THEREBY THAT PROVISIONS RELATING TO PENALTY AND PRO SECUTION WILL ALSO APPLY. IT MEANS THAT THE EXPLANATION 5 OF SECT ION 271(1) WILL ALSO APPLY IN SEARCH ASSESSMENT MADE U/S 153A OF THE ACT PROVIDED THAT THE CONDITIONS RELATING THERETO ARE S ATISFIED. 26. IN THE CASE BEFORE US THE ASSESSEE HAS DISCLOSE D UNDISCLOSED INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. WE HAVE HELD IN EARLIER PARAGRAP HS THAT UNDER THE SCHEME OF SEARCH ASSESSMENT U/S 153A, THE TOTAL INCOME OF THE ASSESSEE IS TO BE DETERMINED FOR EACH OF SIX AS SESSMENT YEARS. THE ASSESSMENT OR RE-ASSESSMENT PROCEEDING U /S 153A IS NOT IN CONTINUATION OF ASSESSMENT PROCEEDINGS U/S 1 43 OR SEC. 147 OF THE ACT. SINCE THERE IS COMPLETE DETACHMENT OF 153A PROCEEDINGS FROM REGULAR ASSESSMENT PROCEEDINGS U/S 143 OR 147 AND HENCE CONCEALMENT OF INCOME IS TO BE DETERM INED WITH REFERENCE TO THE RETURN OF INCOME TO BE FILED IN RE SPONSE TO NOTICE U/S 153A OF THE ACT. ONCE RETURNED INCOME IS ACCEPTED BY THE ASSESSING OFFICER IT CAN NEITHER BE A CASE O F CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE OF PARTICULA RS OF SUCH INCOME. THE ASSESSEE HAD DISCLOSED INCOME IN THE RE TURN OF INCOME FILED DETERMINED ON THE BASIS OF ENTRIES REC ORDED IN SEIZED MATERIAL. 27. HONBLE DELHI HIGH COURT IN THE CASE OF M/S S.A .S. PHARMACEUTICALS (SUPRA) WHILE DECIDING THE ISSUE LE VY OF PENALTY U/S 271(1)(C) IN PARAGRAPH 15 & 16 HAS HELD AS UNDER: 15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE HAS TO BE IN THE INCOME TAX RETURN FILED BY IT. THERE IS SUFFICIENT INDICATION OF THIS COURT IN THE JUDGMENT IN THE CAS E OF COMMISSIONER OF INCOME TAX, DELHI-I VS MOHAN DAS HASSA NAND 141 ITR 203 AND IN RELIANCE PETRO PRODUC TS PVT. LTD (SUPRA), THE SUPREME COURT HAS CLINCHED TH IS ASPECT, VIZ., THE ASSESSEE CAN FURNISH THE PARTICUL ARS OF INCOME IN HIS RETURN AND EVERYTHING WOULD DEPEND UP ON THE INCOME TAX RETURN FILED BY THE ASSESSEE. THIS V IEW GETS SUPPORTED BY EXPLANATION 4 AS WELL AS 5 AND 5A OF SECTION 271 OF THE ACT AS CONTENDED BY THE LEARNED COUNSEL FOR THE RESPONDENT. ITA NOS.4398 TO 4401/DEL./2009 15 16. NO DOUBT, THE DISCREPANCIES WERE FOUND DURING T HE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE I N THE FORM OF AMOUNT SURRENDERED BY THE ASSESSEE. PRESENT LY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION IS TO WHETHER THIS WOULD ATTRACT PENALTY UPON THE ASSESSEE UNDER PROVISIONS OF SECTION 271(1 )(C) OF THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UN LESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS AR E DULY AND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEV ER, THERE CANNOT BE ANY PENALTY ON SURMISES, ON CONJECT URES AND POSSIBILITIES. SECTION 271(1)(C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND THAT THERE I S ACTUALLY A CONCEALMENT OR NON-DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON-DISCLOSURE AS THE ASSESSEE HAD M ADE A COMPLETE DISCLOSURE IN THE INCOME TAX RETURN AND OFFERED THE SURRENDERED AMOUNT FOR THE PURPOSE OF T AX. IF THE FACTS OF THE CASE ARE EXAMINED IN THE LIGHT OF DECISION OF HONBLE DELHI HIGH COURT IN SAS PHARMACEUTICALS (SU PRA) PENALTY U/S 271(1)(C) IS NOT IMPOSABLE WHERE THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RETURN FILED U/S 153A OF THE ACT. IN E ARLIER PARAGRAPHS WE HAVE HELD THAT THE CONCEALMENT OF INC OME IS TO BE DETERMINED WITH REFERENCE TO THE RETURN OF INCOM E TO BE FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. ONCE RET URNED INCOME FILED U/S 153A IS ACCEPTED BY THE ASSESSING OFFICER IT CAN NEITHER BE A CASE OF CONCEALMENT OF INCOME NOR FURN ISHING OF INACCURATE OF PARTICULARS OF SUCH INCOME. HENCE, TH E ASSESSEES CASE IS SQUARELY COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE SAS PHARMACEUTICALS (SUPRA). HENC E, PENALTY U/S 271(1)(C) IS NOT EXIGIBLE. 28. THE NEXT CONTENTION OF LD AR OF THE ASSESSEE IS THAT IF THE PROVISIONS OF EXPLANATION 5 OF SECTION 271(1) IN RE SPECT OF SEARCHES INITIATED ON OR BEFORE 1.6. 2007 WERE SUFF ICIENT ENOUGH FOR IMPOSITION OF PENALTY U/S 271(1)(C), THERE WAS NO NEED FOR INSERTING OF EXPLANATION 5A AND SECTION 271AAA INTO THE STATUTE BY THE FINANCE ACT, 2007. ON THE CONTRARY L D CIT(DR) HAS CONTENDED THAT THE AMENDED PROVISIONS OF EXPLAN ATION 5 ITA NOS.4398 TO 4401/DEL./2009 16 WILL APPLY TO THE FACT OF THE ASSESSEES CASE. PROV ISIONS OF EXPLANATION 5 OF SECTION 271(1) COMES INTO OPERATIO N IN THE CASES WHERE IN THE COURSE OF A SEARCH THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PAR T) HIS INCOME (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH BUT THE RETURN OF INCOME FOR SUCH YEAR HAS N OT BEEN FURNISHED BEFORE THE SAID DATE OR WHERE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) FOR ANY PREVIOUS YEAR WHIC H IS TO END ON OR AFTER THE DATE OF THE SEARCH, THEN, NOTWITHSTAND ING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME F URNISHED ON OR BEFORE THE DATE OF SEARCH, HE SHALL, FOR THE PUR POSES OF IMPOSITION OF A PENALTY UNDER SECTION 271(1)(C ) BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME UNLESS THE CA SE FALLS IN EXCEPTIONS PROVIDED EITHER UNDER CLAUSE (1) OR CLAU SE (2) OF THE EXPLANATION 5. CLAUSE (1) COVERS THE CASES WHERE SU CH INCOME OR TRANSACTIONS RESULTING IN SUCH INCOME IS/ARE REC ORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY HIM FOR ANY SOURCE OF INCOME BEFORE THE DATE OF SEARCH OR SUCH INCOME IS OTHERWI SE DISCLOSED TO CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DA TE OF SEARCH. ON THE OTHER HAND CLAUSE (2) IS APPLICABLE WHERE THE ASSESSEE MAKES A STATEMENT UNDER SECTION 132(4) THA T ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL HAS BE EN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED IN H IS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SP ECIFIED IN SUB-SEC. (1) OF SEC. 139 AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. 29. WE ALSO FIND THAT THE FINANCE ACT, 2007 HAS INS ERTED WORDS SEARCH INITIATED UNDER SEC. 132 BEFORE THE F IRST DAY OF JUNE, 2007 IN EXPLANATION 5 OF SEC. 271(1) OF THE ACT. FURTHER EXPLANATION 5A WAS INSERTED IN THE STATUTE BY THE F INANCE ACT, 2007 IN RESPECT OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007. THUS EXPLANATION 5 WILL NOT BE APPLICABLE IN RESPECT OF A SEARCH INITIATED ON OR A FTER 1.6.2007. FURTHER THE WORDS SEARCH INITIATED UNDER SEC. 132 BEFORE THE FIRST DAY OF JUNE, 2007 HAVE BEEN INSERTED BY THE FINANCE ACT, 2007 W.E.F. 1.6.2007. IN OUR CONSIDERED OPINION THE AMENDED ITA NOS.4398 TO 4401/DEL./2009 17 PROVISIONS OF EXPLANATION 5 WILL BE APPLICABLE ONLY FOR ASSESSMENT YEAR 2008-09 IF ANY MONEY, BULLION, JEWE LLERY OR OTHER VALUABLE ARTICLE OR THING IS FOUND FROM THE P OSSESSION OF THE SEARCHED PERSON IN RESPECT WHOM SEARCHES ARE IN ITIATED ON OR AFTER 1.4.2007 TO 31.05.2007. 30. IN CASE OF A SEARCH INITIATED ON OR AFTER 1.6.2 007 AS PROVIDED IN EXPLANATION 5A, THE ASSESSEE WILL BE LI ABLE FOR PENALTY/S 271(1)(C) BOTH IN RESPECT OF ASSETS AS WE LL AS ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT O R OTHER DOCUMENTS OR TRANSACTIONS. BUT NO SUCH PROVISION RE LATING TO ENTRIES WAS IN EXISTENCE IN EXPLANATION 5 PRIOR TO INSERTION OF EXPLANATION 5A IN SECTION 271(1) OF THE ACT. HENCE THE SCHEME OF ASSESSMENT TILL INSERTION OF EXPLANATION 5A AND SECTION 271AAA BY THE FINANCE ACT, 2007 GAVE IMMUNITY TO TH E ASSESSEES IN RESPECT OF UNDISCLOSED INCOME BASED ON ENTRIES RECORDED IN SEIZED MATERIAL. EXPLANATION 5A SUBSTIT UTED BY THE FINANCE ACT, 2009 W.R.E.F. 1.6.2007 IS REPRODUCED A S UNDER: EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HA VE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PAR T) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR O THER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YE AR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR ITA NOS.4398 TO 4401/DEL./2009 18 (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FO R SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED T O HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. 17. A READING OF THE ABOVE ORDER MAKES IT CLEAR THA T THE PROVISIONS OF EXPLANATION 5 ARE APPLICABLE IN THE CASES WHERE DUR ING THE COURSE OF SEARCH INITIATED ON OR BEFORE 1.6.2007 ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING IS FOUND IN THE POSSESSIO N OR UNDER CONTROL OF THE ASSESSEE ; AND IN THE INSTANT CASE OF THE ASSESSEE , THE SEARCH WAS CONDUCTED ON 11.01.2007 AND CASH OF RS.5,26,530/- WAS FOUND F ROM THE POSSESSION OF THE ASSESSEE ; AND SO THE CASH WAS ADMITTEDLY, NOT SEIZED DURING THE RELEVANT ASSESSMENT YEARS BEFORE US. IN OTHER WORDS , THE ASSESSEE HAD SURRENDERED UNDISCLOSED INCOME AND CASH WAS SEIZED DURING SEARCH IN A.Y 2007-2008, AND NOT IN THE RELEVANT ASSESSMENT YEARS . HOWEVER, IN THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION BEFORE US, THE ASSESSEE HAS MADE AN ADDITION OF RS.21,65,932/- IN THE RETURN FI LED PURSUANT TO SECTION 153A NOTICE. EXPLANATION 5 TO SECTION 271(1) OF TH E ACT CANNOT BE INVOKED IN ASSESSMENT YEARS 2005-06 & 2006-07, WHICH ARE BE FORE US, MERELY ON PRESUMPTION THAT THE ASSESSEE MIGHT HAVE BEEN IN PO SSESSION OF THE SEIZED CASH THROUGHOUT THE PERIOD COVERED BY SEARCH ASSESS MENTS. THE INCOME ITA NOS.4398 TO 4401/DEL./2009 19 OFFERED TO TAX U/S 153A FOR ASSESSMENT YEARS 2005-0 6 AND 2006-07 CANNOT BE SAID TO BE BASED ON ASSETS SEIZED, BECAUSE FROM THE ASSESSMENT ORDER, IT IS CLEAR THAT SEARCH WAS ON 11.01.2007 (I.E AY 2007 -08), THE CASH SEIZED DURING SEARCH WAS ONLY TO THE TUNE OF RS.5,26,530/- AND IT IS NOT EMERGING FROM THE RECORDS THAT THE ASSESSEE HAS CLAIMED DURI NG SEARCH THAT THE CASH SEIZED (ON 11.01.2007), BELONGED TO HIM AND THAT WA S OWNED BY HIM IN THE RELEVANT ASSESSMENT YEARS I.E. AYS 2005-06 AND 2006 -07. UNLESS THERE IS A CLEAR FINDING IN THIS RESPECT, EXPLANATION 5 OF SEC TION 271(1)(C) CANNOT BE OF ANY HELP TO THE DEPARTMENT. AS RIGHTLY POINTED O UT BY THE COORDINATE BENCH IN PREM ARORA (SUPRA), THE PROVISIONS OF EXPLANATION 5 CANNOT BE INVOKED IN ASSESSMENT YEARS 2005-06 AND 2006-07 IN RESPECT OF ENTRIES RECORDED IN SEIZED MATERIAL . THUS INVOKING OF EXPLANATION 5 IN ASSESSMENT YEAR 2005-06 & 2006-07 IS BASED ON ASSUMPTIONS AND PRESUMPTIONS. IT IS SETTLED LAW THAT SUSPICION HOWSOEVER STRONG, CANNOT TAKE THE PLACE OF EVIDENCE AND HENCE THE CONTENTION OF THE REVENUE TH AT ASSESSEE WAS IN POSSESSION OF CASH THROUGHOUT THE PERIOD OF ASSESSM ENT YEARS UNDER CONSIDERATION HAS TO BE REJECTED. IN VIEW OF ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT EVEN THE AMENDED PROVISIONS OF EXPLANATION 5 CANNOT BE APPLIED IN ASSESSMENT YEARS 2005-06 & 200 6-07. CONSEQUENTLY PENALTY U/S 271(C) CANNOT BE IMPOSED BY INVOKING EX PLANATION 5 OF THE ACT IN ASSESSMENT YEARS 2005-06 & 2006-07 IN RESPECT OF CASH FOUND IN PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007-08. ITA NOS.4398 TO 4401/DEL./2009 20 18. IN THE LIGHT OF THE ABOVE DISCUSSION AND THE AF ORESAID ORDER OF THE COORDINATE BENCH, WE DO NOT FIND ANY MERIT IN THE S UBMISSIONS OF THE LD. DR AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) DELETING THE PENALTY LEVIED BY THE AO. THEREFORE, WE UPHOLD THE IMPUGNED ORDER OF THE CIT (A) AND DISMISS BOTH THE APPEALS O F THE DEPARTMENT IN THE CASE OF SHRI ANKUR AGGARWAL. 19. COMING TO THE APPEALS FILED BY THE DEPARTMENT ( ITA NOS.4400 & 4401/DEL/2012) FOR AY 2005-06 & 2006-07 IN THE CASE OF SHRI NEERAJ JINDAL, WE FIND THE FACTS TO BE SIMILAR AND THE LD. DR COULD NOT POINT ANY DIFFERENCE IN THE FACTS WHICH COULD PERSUADE US TO TAKE A DIFFERENT VIEW FROM THE CASE DECIDED ABOVE. SO, WE ARE INCLINED T O UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (A) AND DISMISS BOTH THE APPEA LS OF THE DEPARTMENT. 20. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF AUGUST, 2015. SD/- SD/- (N.K. SAINI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 19 TH DAY OF AUGUST, 2015 TS ITA NOS.4398 TO 4401/DEL./2009 21 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.