ITO 22(1)(3), NAVI MUMBAI V. MUKESH MOHAN PATEL, MUMBAI

ITA 4506/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9445 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Capital asset; Gift; Search and seizure; Salary income; Bonafide belief; Deemed to accrue or arise in india; Initiation of penalty proceedings; Wrong claim; Revised return; Reassessment proceedings
• Section: 143(3); 54F; 142(1); 133A; 153A; 234B; 139(5); 54; 132; 139

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 4506 / MUM/201 4 ( / ASSESSMENT YEAR : 20 0 5 - 0 6 ) INCOME TAX OFFICER 22(1)(3), R NO. 406, 4 TH FLOOR, TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI 400 703. / V. MR. MUKESH MOHAN PATEL, C/O ASHIT MEHTA, FLAT NO. 11A, 5 TH FLOOR, KEVAL MAHAL, NETAJI SUBHASH ROAD, MARINE DRIVE, MUMBAI 400 020. ./ PAN : AAAPP9128J ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY : SHRI SUMAN KUMAR, D.R. ASSESSEE BY : SHRI NITESH JOSHI / DATE OF HEARING : 28 .0 7 .2017 / DATE OF PRONOUNCEMENT : 18.09.2017 / O R D E R PER RAMIT KOCHAR, A CCOUNTANT MEMBER THIS APPEAL, FILED BY THE REVENUE , BEING ITA NO. 4506 /MUM/201 4 , IS DIRECTED AGAINST THE APPELLATE ORDER DATED 27.03.2014 PASSED BY LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) - 1 , THANE (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2005 - 06 , APPELLATE PROCEEDINGS HAD ARISEN BEFORE L EARNED CIT(A) FROM THE PENALTY ORDER DATED 30 . 03 . 2012 PASSED BY LEARNED ASSESSING OFFICER ( HEREINAFTER CALLED THE AO) U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER C ALLED THE ACT). ITA 4506/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THERE WAS A WILLFUL EVASION OF TAX BY THE ASSESSEE, BY NOT FURNISHING ACCURATE PARTICULARS OF INCOME. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 3. THE B RIEF FACTS OF THE CASE ARE THAT A S EARC H & S EIZURE ACTION U/S 132(1) IN THE CASE OF PATEL GROUP OF CASES WAS CARRIED OUT BY THE REVENUE ON 17 TH JANUARY, 2008 IN WHICH THE ASSESSEE WAS ALSO COVERED . SURVEY PROCEEDINGS U/S 133A OF THE ACT WAS ALSO CARRIED OUT SIMULTANEOUSLY IN THE BUSINESS PREMISES OF PATEL GROUP OF CASES. DURING THE COURSE OF SEARCH/SURVEY ACTION BY REVENUE ON 17 - 01 - 2008 , NUMBER OF INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED/IMPOUNDED BY REVENUE . THE ASSESSEE HAS ORIGINALLY FILED RETURN OF INCOME U/S 139 (1) ON 25 - 08 - 200 5 DECLARING TOTAL INCOME OF RS. 15,90,638/ - . THERE WAS NO SCRUTINY ASSESSMENT ORIGINALLY FRAMED BY THE REVENUE U/S 143(3) AND RETURN OF INCOME WAS PROCESSED U/S 143(1) . THE ASSE SSEE DERIVE D INCOME FROM SALARY, S HARE OF PROFIT FROM PARTNERSHIP FIRM, DERIVAT IVE INCOME, CAPITAL GAIN, INTEREST INCOME AND DIVIDEND INCOME. PURSUANT TO SEARCH U/S 132(1) ON 17 - 01 - 2008, N OTICE U/S 153A(A) OF THE ACT WAS ISSUED BY THE AO TO THE ASSESSEE ON 5 TH SEPTEMBER, 2008 WHICH WAS ITA 4506/MUM/2014 3 SERVED AND IN RESPONSE THE REOF ASSESSEE FILED RETURN OF INCOME U/S 153A(A) FOR A.Y. 2005 - 06 ON 10 TH OCTOBER, 2008 , DECLARING TOTAL INCOME OF RS.15,90,638/ . THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153A , SUBMITTED LETTER DATED 03 - 12 - 2009 WHICH WAS F ILED ON 11 - 12 - 2009 , EXPLAINING AS UNDER : - PLEASE REFER TO YOUR NOTICE U/S 142(1) DATED 27 - 11 - 09 RECEIVED BY ME ON 1 - 12 - 09. AS REQUESTED BY YOU , PLEASE FIND ENCLOSED HEREWITH THE FOLLOWING DETAILS AND PARTICULARS. *** *** E) BANK BOOK IN RESPECT OF ALL BANK ACCOUNTS HELD BY ME WITH COMPLETE NARRATION OF EVERY DEBIT AND CREDIT IN THE SAID BANK BOOK IS ENCLOSED HEREWITH. BANK PASS BOOK/ STATEMENT IS PRODUCED HEREWITH FOR YOUR VERIFICATION. *** G) DETAILS OF CAPITAL GAINS HA VE BEEN ENCLOSED IN THE BOX FILE HANDED OVER TO YOU ON 31 - 7 - 09 . EVIDENCE IN THE FORM OF XEROX COPY OF CONTRACT NOTES ARE ENCLOSED HEREWITH. *** *** 2. I HAVE SUBMITTED TO YOU ALL THE DETAILS SOUGHT BY YOU IN TERMS OF YOUR NOTICE U/S 142(1) . IT IS EVI DENT FROM THE ABOVE THAT SUBSTANTIAL DETAILS WERE ALREADY SUBMITTED BY ME ON 31 - 7 - 09 AND BALANCE DETAILS SOUGHT BY YOU FOR THE FIRST TIME ON 1 - 12 - 09 IT SUBMITTED HEREWITH . I WILL SUBMIT TO YOU AND ADDITIONAL DETAILS AND PARTICULARS THAT YOU MAY DESIRE FRO M MY END. I ASSURE YOU OF MY FULL CO - OPERATION IN THE ASSESSMENT PROCEEDINGS. *** THE ASSESSEE THEN FILED A LETTER ON 22 - 12 - 2009 ALONG WITH REVISED RETURN OF INCOME WHICH WAS FILED WITH REVENUE ON 22 - 12 - 2009, DECLARING , ITA 4506/MUM/2014 4 INTER - ALIA, DEEMED CAPITAL GAIN OF RS.1,03,44,000/ - U/S 54F(3) AND SUCH DEEMED CAPITAL GAINS WERE DECLARED FOR THE FIRST TIME BEFORE THE REVENUE ON 22 - 12 - 2009. THE ASSESSEE CLAIMED THAT DEEMED CAPITAL GAINS HAD ARISEN TO THE ASSESSEE U/S 54F(3) ON CANCELLATION OF AL LOTMENT OF FLAT DURING FY 2004 - 05 WHICH WAS EARLIER ALLOTTED IN THE AY 2002 - 03 , AND THE SAID DEEMED CAPITAL GAINS U/S 54F(3) WAS OMITTED TO BE DECLARED AND DISCLOSED TO REVENUE EARLIER FOR THE PURPOSES OF TAXATION , THE EXTRACTS OF LETTER DATED 22 - 12 - 2009 ARE REPRODUCED HEREUNDER : 'I HAD CLAIMED DEDUCTION U/S.54F(1) IN A.Y. 2002 - 03 IN RELATION TO MY PURCHASE OF RESIDENTIAL HOUSE (NEW ASSET) VIDE ALLOTMENT LETTER DATED 15 - 10 - 2001. I HAD MADE FULL PAYMENT TOWARDS THE PURCHASE OF THE SAID RESIDENTIAL HOUSE AND THE RECEIPT IN RESPECT OF THE SAID PURCHASE ENCLOSED WITH THE ORIGINAL RETURN OF INCOME FOR A. Y.2002 - 03 FILED BY ME ON 31 - 07 - 2002. I HAVE FILED WITH MY ORIGINAL RETURN OF INCOME U/S. 153A FOR A.Y. 2005 - 06 IDENTICAL TO THE ORIGINAL RETURN OF INCOME F ILED FOR A.Y. 2005 - 06. DURING THE COURSE OF MY CHECKING OF THE COMPUTATION OF INCOME FILED WITH THE RETURN OF INCOME FOR A.Y. 2005 - 06, I REALIZED ON MY OWN THAT I SHOULD HAVE DECLARED DEEMED CAPITAL GAIN U/S.54F(3) IN ASST. YEAR 2005 - 06, SINCE THE ALLOTMEN T LETTER WAS CANCELLED IN FINANCIAL YEAR 2004 - 05 RELEVANT TO ASST. YEAR 2005 - 06 I.E. THE NEW ASSET WAS TRANSFERRED IN ASST. Y EAR 2005 - 06. I T IS HOWEVER PERTINENT TO NOTE HERE THAT THE AMOUNT PAID TOWARDS PURCHASE OF THE RESIDENTIAL HOUSE WAS KEPT WITH THE B UI LDER FOR MORE THAN THREE YEARS. CONSEQUENTLY, I AM FILING HEREWITH VOLUNTARILY REVISED RETURN OF INCOME U / S.153A AND I REQUEST YOU TO CONSIDER THE SAME AT THE TIME OF COMPLETION OF THE ASSESSMENT. IN VIEW OF MY VOLUNTARILY REVISING THE RETURN OF INCO ME CONSEQUENT UPON THE GENUINE MISTAKE OF NOT CONSIDERING THE PROVISIONS OF SECTION 54F(3) AND THERE BEING NO INTENTION OF MAKING ANY WRONG CLAIM IN THE RETURN OF INCOME, I MOST EARNESTLY REQUEST YOU NOT TO INITIATE ANY PENALTY PROCEEDINGS IN RELATION TO THE SAID REVISED RETURN. I SHALL BE GRATEFUL TO YOU FOR GRANTING MY LEGITIMATE REQUEST.' ITA 4506/MUM/2014 5 THE AO , THEREAFTER, FRAMED ASSESSMENT U/S 143(3) R.W.S. 153A VIDE ASSESSMENT ORDERS DATED 24 - 12 - 2009 ASSESSING INCOME OF THE ASSESSEE AT RS.1,20,08,286/ - WHICH WAS R ETURNED INCOME AS PER REVISED RETURN OF INCOME FILED BY THE ASSESSEE ON 22 - 12 - 2009. IN THE OPINION OF THE AO , THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE INCOME IN THE ORIGINAL RETURN OF INCOME FILED U/S 139 (1) AS ALSO IN THE RETURN OF INCOME FILED U/S 153A(A) , THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) SEPARATELY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALING OF THE INCOME . THE PENALTY PROCEEDINGS WERE INITIATED BY THE AO BY ISSUANCE OF NO TICE DATED 24 - 12 - 2009 U/S 274 R.W.S. 271(1)(C) OF THE ACT . THE ASSESSEE S FIRST APPEAL WITH LEARNED CIT(A) AGAINST QUANTUM ASSESSMENT, STOOD DISMISSED BY LEARNED CIT(A) VIDE APPELLATE ORDER IN APPEAL NO. THN/DCIT CC - 1/THN/537/09 - 10 DATED 31 - 08 - 2010, KEEPING IN VIEW PROVISIONS OF SECTION 249(4)(A) WHEREIN ONE OF THE CONDITION S TO BE FULFILLED BEFORE ADMITTING AN APPEAL BEFORE LEARNED CIT(A) IS THAT ADMITTED TAX HAS TO BE PAID BEFORE FILING OF THE APPEAL BEFORE LEARNED CIT(A) , WHICH IN THE INSTANT CASE ASSESSEE FAILED TO DO SO , AS THE ADMITTED TAX WAS ADMITTEDLY NOT PAID BY THE ASSESSEE BEFORE FILING OF APPEAL WITH THE LEARNED CIT(A) AND HENCE THE APPEAL DID NOT QUALIFY TO BE ADMITTED AS PER PROVISIONS OF SECTION 249(4)(A) AS HELD BY LEARNED CIT(A) . THE ASSESEEE DID NOT FILE AN SECOND APPEAL BEFORE THE TRIBUNAL CHALLENGING THE APPELLATE ORDER DATED 31 - 08 - 2010 PASSED BY LEARNED CIT(A) DISMISSING THE APPEAL OF THE ASSESSEE AGAINST QUANTUM ASSESSMENT ON GROUNDS OF NON PAYMENT OF ADMITTED TAX BEFORE FILING O F THE APPEAL. IT IS PERTINENT TO MENTION HERE THAT THE LEARNED CIT(A) MADE THE FOLLOWING OBSERVATIONS WHILE PASSING APPELLATE ORDER DATED 31 - 08 - 2010 AGAINST QUANTUM ASSESSMENT , WHICH IS REPRODUCED HEREUNDER : ITA 4506/MUM/2014 6 3.1 FURTHER FACTS ARE THAT, THE APPELLANT WAS FOUND TO HAVE CLAIMED DEDUCTION U/S 54F IN RESPECT OF A FLAT PURCHASED DURING THE AY 02 - 03 AND THE DEDUCTION CLAIMED WAS OF THE ORDER OF RS.1,03,44,000/ - . SINCE THE PURCHASE WAS CANCELLED WITHIN 3 YEARS FROM THE DATE OF PURCHASE, THE APPELLANT WAS REQ UIRED TO SURRENDER THE DEDUCTION ALREADY CLAIMED AS DEEMED CAPITAL GAINS WITHIN THE MEANING OF SECTION 54F(3) BUT HE OMITTED TO DO SO. HENCE, THE APPELLANT HAS FILED REVISED RETURN SURRENDERING THE DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - . THE AO ACCEPTED THE RETURNED INCOME AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). THE AO ALSO CHARGED INTEREST U/S 234B AND 234C OF THE ACT. INITIATION OF PENALTY PROCEEDINGS AND CHARGING OF INTEREST U/S 234B AND 234C ARE CONTESTED IN THE APPEAL. 3.2 I FIND THAT THE T AXES DUE ON THE INCOME ESTIMATED IN THE REVISED RETURN IS NOT PAID BEFORE FILING THE APPEAL . RS. 33,74,206/ - OF TAXES ON ADMITTED INCOME HAS BEEN PAID ON 17/02/2010, THAT IS MUCH AFTER FILING OF APPEAL ON 29/01/2010. 3.3 ACCORDING TO THE PROVISIONS OF S ECTION 249(4)(A) , FOR AN APPEAL TO BE ADMITTED, ONE OF THE PRE REQUISITE IS THAT, THE ADMITTED TAX IS PAID BEFORE FILING OF APPEAL. HERE, IN THE INSTANT CASE, THE APPELLANT HAS FAILED TO PAY THE TAXES AND, THEREFORE , THE APPEAL DOES NOT QUALIFY TO BE ADM ITTED. ACCORDINGLY, I DISMISS THE APPEAL. THE A.O. OBSERVED IN PENALTY PROCEEDINGS U/S 271(1)(C) THAT THE ASSESSEE HAD FILED RETURN OF INCOME U/S 139(1) OF THE ACT ON 25.08.2005 DECLARING TOTAL INCOME OF RS.15,90,638/ - FOR THE A.Y. 2005 - 06 . THE SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE WAS CARRIED OUT BY REVENUE U/S 132(1) ON 17 - 01 - 2008. S UBSEQUENTLY IN RESPONSE T O NOTICE DATED 05 - 09 - 2008 U/S.153A OF THE ACT ISSUED BY THE AO , THE ASSESSEE FILED ITS RETURN OF INCOME ON 10 - 10 - 2008 ADMITTING TOTAL INCOME OF R S .15,90,638/ - . THEREAFTER , A REVISED RETURN OF INCOME WAS FILED ON 22 - 12 - 2009 ADMITTING TOTAL INCOME OF R S .1,20,08,286/ - WHEREIN THE ASSESSEE SURRENDERED DEEMED CAPITAL GAIN OF RS.1,03,44,000/ - U/S 54F(3) OF THE 1961 ACT WITH RESPECT TO FLAT CA NCELLED IN FY 2004 - 05 WHICH WAS EARLIER ALLOTTED IN A Y 2002 - 03 I.E. WITHIN THREE YEARS OF ALLOTMENT . IT WAS OBSERVED BY THE AO THAT SINCE BOOKING OF FLAT WAS CANCELLED BY THE ASSESSEE WITHIN THREE YEARS , THE DEDUCTION CLAIMED U/S 54F WAS REQUIRED TO BE OFF ERED ITA 4506/MUM/2014 7 FOR TAXATION, BUT THE ASSESSEE OMITTED TO DO SO. THE AO ACCEPTED THE REVISED RETURN OF INCOME AND HAD INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). THE A.O. OBSERVED THAT THE ACT OF THE ASSESSEE IN OMITTING TO DECLARE DEEMED CAPITAL GAIN CHARGEABLE TO TAX U/S 54F(3) WAS DELIBERATE AND INTENTIONAL ACT OF THE ASSESSEE BECAUSE THE ASSESSEE CANCELLED THE BOOKING OF FLAT DURING F.Y.2004 - 05 RELEVANT TO A.Y.2005 - 06 WHICH WAS EARLIER BOOKED IN AY 2002 - 03 AGAINST WHICH DEDUCTION U/S 54 F WAS CLAIMED , THEREFORE, THE ASSESSEE AT THE TIME OF FILING OF ORIGINAL RETURN OF INCOME U/S.139(1) OF THE ACT ON 25 - 08 - 2005 OR AT THE TIME OF FILING OF RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A OF THE ACT ON 10 - 10 - 2008 SHOULD HAVE WITHDRAWN THE SAID CLAIM VIDE DEEMED CAPITA L GAINS CHARGEABLE TO TAX U/S 54F(3) . THE AO OBSERVED THAT THE ASSESSEE REVISED RETURN OF INCOME ONLY DURING THE COURSE OF SCRUTINY PROCEEDINGS U/S 153A R.W.S. 143(2) AND THAT TOO AT THE FAG END OF THE ASSESSMENT PROCEEDINGS BY DECLARING TOTAL INCOME OF R S .1,20,08,286/ - , WHICH INCLUDED THE AMOUNT OF R S .1,03,44,000/ - BEING DEEMED CAPITAL GAIN S U/S.54F(3) OF THE ACT WHICH WAS NOT EARLIER DISCLOSED BY THE ASSESSEE TO THE REVENUE . IT WAS OBSERVED BY THE A.O. THAT IF THE SAID CAPITAL GAIN DID NOT HAVE COME TO THE NOTICE OF THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A R.W.S. 143(3 ) , THE ENTIRE AMOUNT WOULD HAVE GONE TAX FREE. IT WAS OBSERVED BY THE AO THAT THE SAID OMISSION TO HIDE INCOME WAS DELIBERATE AND INTENTIONAL ACT ON THE PART OF THE AS SESSEE AND HENCE REVISED RETURN OF INCOME COULD NOT ABSOLVE AN ASSESSEE FROM PRESUMPTION AS TO CONCEALMENT OF INCOME IN ORIGINAL RETURN OF INCOME . THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD MADE A BONAFIDE CLAIM OF DEDUCTION U/S 54F OF THE ACT FOR A.Y. 2 002 - 03. IT WAS SUBMITTED THAT THE ASSESSEE HAD INVESTED NET CONSIDERATION I.E. WITH RESPECT OF THE CAPITAL ASSET SOLD IN THE NEW ASSET WITHIN THE SPECIFIED TIME LAID DOWN UNDER THE RELEVANT SECTION U/S 54F AND THE AMOUNT PAID TOWARDS PURCHASE OF THE NEW A SSET WAS KEPT WITH THE BUILDER FOR MORE THAN THREE YEARS. THE PURCHASE WAS NOT COMPLETED BY WAY OF A REGISTERED AGREEMENT AND THE ALLOTMENT WAS CANCELLED. IT WAS SUBMITTED THAT THE ASSESSEE DID NOT OWN MORE THAN ONE RESIDENTIAL ITA 4506/MUM/2014 8 HOUSE OTHER THAN THE NEW A SSET ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET , HENCE, ASSESSEE WAS ENTITLED FOR DEDUCTION U/S 54F OF THE ACT IN ASSESSMENT YEAR 2002 - 03. THERE WAS A CONDITION THAT THE NEW ASSET COULD NOT BE TRANSFERRED WITHIN A PERIOD OF THREE YEARS FROM THE DATE O F PURCHASE IN FINANCIAL YEAR 2001 - 02 WHICH CONDITION COULD NOT BE COMPLIED WITH AS THE SAID ALLOTMENT WAS CANCELLED IN AY 2005 - 06 . THE ASSESSEE SUBMITTED THAT HE SHOULD HAVE DECLARED THE DEEMED CAPITAL GAIN U/S 54F(3) OF THE ACT IN A.Y. 2005 - 06. IT WAS SU BMITTED THAT T HE ASSESSEE, ON REALIZING THE GENUINE MISTAKE IN NOT RETURNING THE DEEMED CAPITAL GAIN U/S 54F (3) OF THE ACT, VOLUNTARILY FILED THE REVISED RETURN OF INCOME RETURNING THE DEEMED CAPITAL GAIN U/S 54F(3) OF THE ACT WHICH WAS BROUGHT TO THE NOTI CE OF THE A.O. , VIDE LETTER DATED 22.12.2009. THUS, THE ASSESSEE SUBMITTED THAT THE CONDUCT AND THE INTENTION OF THE ASSESSEE WAS BONAFIDE AND PROPER EXPLANATION WAS GIVEN BY THE ASSESSEE BEFORE THE A.O. . IN SUPPORT OF HIS CONTENTION, THE ASSESSEE RE LIED UPON THE RELEVANT PROVISIONS OF SECTION 139(5) OF THE ACT. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE LAWS WHEREIN IT IS HELD THAT NO PENALTY IS EXIGIBLE IF AN ASSESSEE HAD COMMITTED DEFAULT UNDER A BONAFIDE BELIEF WHICH WAS RECTIFIED BY FILING A REV ISED RETURN OF INCOME WITHDRAWING THE CLAIM AND ALSO THERE WAS NO CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE CASE LAWS RELIED UPON BY THE ASSESSEE WERE CIT V. SURESH CHANDRA MITTAL , (2011) 119 TAXMAN 433(SC) AND CIT V. SURESH CHANDRA MITTAL, (2002) 123 TAXMAN 1052(MP). THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE HAD REVISED HIS RETURN OF INCOME ADMITTING TOTAL REVISED INCOME AT RS. 1,20,08,286/ - ONLY AT THE FAG END OF SCRUTINY PROCEE DINGS U/S 153A R.W.S. 143(3) THAT TOO ONLY AFTER REALIZING THAT THE A.O. IS GOING ON RIGHT TRACK ABOUT FINDING THAT DEDUCTION CLAIMED BY THE ASSESSEE U/S 54F WAS WRONG AND TO BE WITHDRAWN IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR BY ITA 4506/MUM/2014 9 OFF ERING THE SAME AS DEEMED CAPITAL GAIN U/S 54F(3). THE AO OBSERVED THAT IT IS BEST KNOWN TO THE ASSESSEE AS TO HOW HE DID NOT REALIZED THE MISTAKE OF CLAIMING WRONG EXEMPTION U/S 54F FROM THE DATE OF CANCELLATION OF BOOKING IN FY 2004 - 05 TO FILING OF REVISE D RETURN OF INCOME I.E. 22 - 12 - 2009 , WHICH ESTABLISHED THE CASE OF THE REVENUE THAT THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE AO OBSERVED THAT MISTAKE CAN HAPPEN ONE TIME BUT NOT TWICE AS THE ASSESSEE FILED R ETURN OF INCOME FIRSTLY U/S 139(1) ON 25 - 08 - 2005 AND SECONDLY FILED RETURN OF INCOME IN PURSUANCE OF NOTICE U/S 153A ON 10 - 10 - 2008 . THE AO DISTINGUISHED THE DECISIONS CITED BY THE ASSESSEE AND HELD THAT IT IS ONLY WHEN THE ASSESSEE WAS CORNERED BY THE AO A S THE AO NOTICED THAT DEEMED CAPITAL GAINS WERE NOT OFFERED FOR TAXATION THAT THE ASSESSEE CAME FORWARD TO DECLARE THE DEEMED CAPITAL GAINS U/S 54F(3) AS INCOME IN REVISED RETURN OF INCOME FILED ON 22 - 12 - 2009 AND THAT TOO AT FAG END OF SCRUTINY PROCEEDINGS . IT WAS HELD THAT IF THE AO WOULD NOT HAVE NOTICED THIS WRONG CLAIM OF THE ASSESSEE, THE ENTIRE DEEMED CAPITAL GAIN OF RS.1,03,44,000/ - WOULD HAVE GONE TAX - FREE. THUS, IT WAS HELD BY THE AO THAT THE SAID OMISSION WAS DELIBERATE AND INTENTIONAL AND THUS FI LING OF REVISED RETURN OF INCOME CANNOT ABSOLVE AN ASSESSEE FROM PRESUMPTION AS TO THE CONCEALMENT OF INCOME IN ORIGINAL RETURN OF INCOME. FURTHER, IT WAS ALSO OBSERVED BY THE A.O. THAT ASSESSEE HAS LONG TERM CAPITAL GAIN OF RS. 3,54,77,653/ - FROM THE SA LE OF SHARES AND OUT OF THE SAID AMOUNT THE ASSESSEE HAD SUBMITTED THREE RECEIPTS TOWARDS BOOKING OF FLAT BEARING NO. 1301, 1302, 1401 AND 1402 AT DHAWALGIRI BUILDING FROM NEELKANTH MANSION PRIVATE LIMITED AND CLAIMED EXEMPTION U/S 54F OF THE ACT OF RS. 1, 03,44,000/ - . THE A.O. OBSERVED THAT THE SAID AMOUNT WAS NOT REFLECTED IN THE ASSET SIDE OF THE BALANCE SHEET OF THE ASSESSEE EITHER UNDER THE HEAD FIXED ASSET, INVESTMENT OR ADVANCE WHEREAS THE SAME WAS APPEARING AS ADVANCES UNDER NARRATION ADVANCES - FLAT A DVANCES - DHAWALGIRI OF RS. 17,50,000/ - , WHEREAS THE ASSESSEE HAS CLAIMED EXEMPTION OF RS. 1,03,44,000/ - . IT WAS ITA 4506/MUM/2014 10 OBSERVED BY THE AO THAT T HE ASS ESSEE HAD SHOWN UNDER THE HEAD LOANS TO C OMPANIES I . E. M/S NEELKANTH MANSION P. LTD. O F RS. 1,39,41,366/ - . THE AO OBSERVED THAT M/S NEELKANTH MANSION P. LTD. IS A BUILDER AND DEVELOPER WHICH IS A FAMILY CONCERN OF THE ASSESSEE . THE AO OBSERVED THAT THE ASSESSEE IS TRYING TO GIVE COLOUR TO THIS LOAN TRANSACTION AS AN EXEMPTION UNDER SECTION 54F IN HIS OWN HANDS , S O THAT THE FAMILY CONCERN M/S NEELKANTH MANSION P. LTD. WOULD UTILIZE INTEREST FREE FUNDS AND AFTER CANCELLATION OF BOOKING , THE SAID AMOUNT CAN BE TAXED . THE A.O. OBSERVED THAT THE SEARCH AND SEIZURE ACTION U/S 132(1) LED TO THE SCRUTINY PROCEEDINGS AFRESH FOR THE YEAR UNDER CONSIDERATION OTHERWISE THE ASSESSEE WOULD NOT HAVE OFFERED THE SAID AMOUNT FOR TAXATION. THE AO OBSERVED THAT THE ASSESSEE HAD ADMITTED WHEN THE CONCEALME NT HAS BEEN DETECTED BY THE REVENUE AND SU CH CONCEALMENT WOULD NOT ABSOLVE THE ASSESSEE FROM THE DEFAULT OF CONCEALMENT COMMITTED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139(1) ON 25 - 08 - 2005 AND RETURN OF INCOME FILED IN PURSUANT TO NOTICE U/S 153A(A) ON 10 - 10 - 2008. THUS, THE AO HELD THAT MERE LY BECAUSE ASSESSEE ADMITTED CONCEALMENT OF INCOME AND FILED A REVISED RETURN OF INCOME ON 22.12.2009 JUST TWO DAYS BEFORE THE DATE OF PASSING OF THE ASSESSMENT ORDER ON 24 - 12 - 2009 U/S 153A R.W.S. 143(3) WOULD NOT ABSOLVE THE ASSESSEE FROM THE PENALTY PR OVISIONS OF SECTION 271(1)(C) . THUS, IT WAS OBSERVED BY THE AO THAT THE INTENTION OF THE ASSESSEE WAS TO HIDE THE INCOME AND TO AVOID PAYING CORRECT TAX LIABILITY. THE AO HELD THAT HAD THIS NOT BEEN DETECTED BY THE AO , THE SAID INCOME WOULD HAVE GONE T AX FREE AND THE SAID OMISSION BY THE ASSESSEE WAS INTENTIONAL AND MERE FILING OF REVISED RETURN OF INCOME WOULD NOT ABSOLVE ASSESSEE FROM PRESUMPTION AS TO CONCEALMENT OF INCOME IN ORIGINAL RETURN OF INCOME AND HENCE THE ASSESSEE WAS GUILTY OF FURNISHING O F INACCURATE PARTICULARS OF INCOME AS PER PROVISIONS OF SECTION 271(1)(C) OF THE ACT , THE AO IMPOSED PENALTY OF RS.23,21,194/ - BEING 100% ITA 4506/MUM/2014 11 TAX SOUGHT TO BE AVOIDED VIDE PENALTY ORDER DATED 30 - 03 - 2012 PASSED U/S 271(1)(C) OF THE 1961 ACT . 4. AGGRIEVED BY T HE PENALTY ORDER DATED 30 - 3 - 2012 PASSED BY THE A.O. U/S 271(1)(C) OF THE 1961 ACT LEVYING PENALTY OF RS. 23,21,194/ - , THE ASSESSEE CARRIED THE MATTER IN APPE AL BEFORE THE LD. CIT(A) WHEREIN THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE A. O.. THE ASSESSEE SUBMITTED BEFORE LEARNED CIT(A) THAT THERE WAS NO DETECTION BY THE A.O. WHICH IS EVIDENT FROM THE ASSESSMENT ORDER AND THE SAID INCOME HAS BEEN DECLARED BEFORE IT HAS BEEN POINTED OUT BY THE A.O. THE ASSESSEE REFERRED THE ORDER SHEET ENTR Y WHICH IS REPRODUCED BELOW: ORDER SHEET ENTRY RECORDED BY ASSESSING OFFICER ON 22.12.2009. IN RESPONSE TO NOTICE U/S. 142 (1) SHRI GYANESHWAR KATARAM ATTENDED ON BEHALF OF THE ASSESSEE. IT IS STATED THAT THE ASSESSEE HAS ALREADY FILED DETAILS IN RESPONSE TO NOTICE U/S. 142(1) ON 11 .12.2009 IN TAPAL. IN REGARD TO THE ASSESSMENT YEAR 2005 - 06, THE ASSESSEE SATED THAT THROUGH OVERSIGHT THE ASSESSEE HAS NOT DECLARED THE DEEMED CAPITAL GAIN U/S. 54F(3) AS THE FLAT WHICH WAS PURCHASED DURING THE ASSESSMENT YEAR 2002 - 03 WAS SURRENDERED BY THE ASSESSEE WITHIN 3 YEARS FROM PURCHASE. HE NCE THE ASSESSEE HAS FILED REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 ADMITTING THEREON THE DEEMED CAPITAL GAIN U/S. 54F(3). IT IS FURTHER STATED THAT THE ASSESSEE WILL PAY THE ADDITIONAL TAX DUE THEREON. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAD NOT DETECTED THE ERROR OF THE DEEMED CAPITAL GAINS U/S 54F(3) NOT BEEN OFFERED FOR TAX ON 22 ND DECEMBER, 2009 ALTHOUGH ALL THE MATERIAL WAS BEFORE HIM MUCH BEFORE 22 ND DECEMBER, 2009 AND NOTHING WAS LACKING IN HIS RECORD TO DETECT THE DEEMED INCOME. IT WAS SUBMITTED THAT THERE IS NO MENTION IN ORDER SHEET ENTRY AS TO THE NON DECLARING THE SAID DEEMED CAPITAL GAINS U/S 54F(3) AND ALSO NO SHOW CAUSE NOTICE WAS ISSUED BY THE AO TO THE ASSESSEE FOR THE SAME. IT WAS SUBMITTED ITA 4506/MUM/2014 12 THAT THE CONDUCT AND EXPLANATION S FURNISHED BY THE ASSESSE E WAS BONA FIDE AND THAT THERE WAS NO DETECTION OF ANY CONCEALMENT OF INCOME BY THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ASSESSEE HAD FILED VOLUNTARY REVISED RETURN OF INCOME ON 22 - 12 - 2009 DECLARING SAID DEEMED CAPITAL GAINS U/S 54F(3) WHICH REVISE D RETURN OF INCOME HAS BEEN ACCEPTED BY THE A.O. . THUS, IT WAS SUBMITTED THAT THE A.O. HAD NOT DETECTED THE MISTAKE IN SPITE OF HAVING ALL THE DOCUMENTARY EVIDENCE LIKE THE RETURNS FOR A. Y. 2002 - 03 TO 2005 - 06 FILED BEFORE HIM. THE ASSESSEE SUBMITTED THE HE DETECTED THE MISTAKE AND HAD VOLUNTARILY FILED THE REVISED RETURN OF INCOME. WITHOUT PREJUDICE, D URING THE COURSE OF APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) , THE ASSESSEE RAISED AN ADDITIONAL GROUND WHICH READS AS UNDER: - 'IN THE FACTS AND CIRCUMSTANCES OF MY CASE, THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYING PENALTY U/S. 271(1) (C) OF RS. 23,21,194 / - , SINCE THE PENALTY HAS BEEN LEVIED IN RESPECT OF A QUANTUM ASSESSMENT MADE U/S. 153A NOT ARISING OUT OF THE I N CRIMINAT ING MATERIAL FOUND IN THE COURSE OF THE SEARCH AND THEREFORE THE PENALTY LEVIED ON SUCH QUANTUM ASSESSMENT IS ERRONEOUS AND UNLAWFUL. ' THE ASSESSEE CONTENDED THAT THE ASSESSMENT HAD BEEN COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT AND THE RETURN OF INCO ME FOR THE YEAR UNDER CONSIDERATION WAS ORIGINALLY FILED IN TIME ON 25 - 08 - 2005 AND WAS PROCESSED U/S143( 1) OF THE ACT. THE TIME LIMIT FOR ISSUE OF NOTICE U / S. 143(2) OF THE ACT HAD EXPIRED ON THE DATE OF INITIATION OF SEATRCH ON 17 - 01 - 2008 . THUS, THE RET URN OF INCOME OF THE ASSESSEE WAS ACCEPTED AND ATTAINED FINALITY. IT WAS SUBMITTED THAT SINCE NO ASSESSMENT IS PENDIN G ON THE DATE OF INITIATION OF SEARCH ON 17 - 01 - 2008 , THERE WOULD BE NO ABATEMENT OF ANY ASSESSMENT . THUS, THE SCOPE OF THE ASSESSMENT U / S. 153A OF THE ACT WAS RESTRICTED ONLY TO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH . IT WAS SUBMITTED THAT IT IS EVIDENT FROM THE ASSESSMENT ORDER FRAMED U/S 153A R.W.S. 143(3) ITA 4506/MUM/2014 13 THAT NO ADDITION HAS BEEN MADE ON THE BASIS OF ANY INCRIMINATING SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH . IT WAS SUBMITTED THAT THE SAID DEEMED INCOME WAS NOT ARISING OUT OF ANY INCRIMINATING SEIZED MATERIALS AND SUCH DEEMED INCOME WAS VOLUNTARILY OFFERED BY THE ASSESSEE BEFORE ANY DETECTION BY THE REVENUE , H ENCE, NO PENALTY U/S. 271(L)(C) OF THE ACT CAN BE LEVIED. THE ASSESSEE RELIED UPON THE DECISION OF MUMBAI ITAT, SPECIAL BENCH IN THE CASE OF ALL CARGO LOGISTICS LIMITED V. DCIT 137 ITD 278 AND DECISION OF DELHI ITAT IN THE CASE OF MGF AUTOMOBILES LIMITED V . ACIT IN ITA NO. 4212 & 4213/DEL/2011 DATED 28 - 06 - 2013 . THE ASSESSEE CONTENDED THAT THE ABOVE SAID CONTENTION IS NOW ACCEPTED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V MURLI AGRO PRODUCTS LIMITED (2014) 49 TAXMANN.COM 172(BOM) . IT WAS PRAYED THAT THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE 1961 ACT BASED ON DEEMED CAPITAL GAINS U/S 54F(3) WHICH IS NOT COVERED UNDER THE SCOPE OF SECTION 153A OF THE 1961 ACT BE DELETED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERV ED THAT THE ASSESSEE HAD CLAIMED D EDUCTION U / S. 54F OF THE ACT AMOUNTING TO RS. 1,03,44,000 / - IN RESPECT OF LONG TERM CAPITAL GAIN IN A.Y. 2002 - 03 AS HE HAD BOOKED A FLAT FOR THIS AMOUNT WHICH WAS CANCELLED IN F.Y. 2004 - 05 I . E. YEAR UNDER CONSIDERATION. IT WAS OBSERVED THAT THE ASSESSEE HAS NOT WITHDRAWN THE CLAIM OF DEDUCTION U / S. 54F OF THE ACT AND DID NOT OFFER THE AMOUNT OF RS. 1,03,44,000/ - FOR TAXATION IN HIS RETURN OF INCOME FILED FOR THE IMPUGNED AY 2005 - 06. THIS AMOUNT HAS BEEN OFFERED FOR TAXATION IN THE REVISED RETURN OF INCOME FILED ON 22 ND DECEMBER, 2009 DURING THE COURSE OF ASSESSMENT PROCEEDINGS U / S. 143(3) R.W.S. 153A OF THE ACT. THE A.O. HAD LEVIED PENALTY U / S. 271(1)(C) OF THE ACT ON THE GROUND THAT THE INCOME OFFERED BY THE A SSESSEE IN HIS REVISED RETURN OF INCOME FILED ON 22 ND DECEMBER, 2009 WAS NOT A VOLUNTARY DECLARATION. THE A.O. HAD DETECTED TH IS MISTAKE OF THE A SSESSEE HENCE THE ASSESSEE HAD NO CHOICE BUT TO OFFER THIS INCOME FOR TAXATION AS THE ASSESSEE WAS CORNERED BY THE AO . HOWEVER, THE LEARNED CIT(A) OBSERVED THAT ITA 4506/MUM/2014 14 THE ASSESSEE CONTENDED THAT THAT HE HAD REALIZED HIS MISTAKE ON HIS OWN AND HAD VOLUNTARILY OFFERED THIS INCOME FOR TAXATION. THE LD. CIT(A) REFERRED TO THE ORDER SHEET ENTRY DATED 22 - 12 - 2009 WHICH WAS PRODUCED BY THE ASSESSEE IN HIS AFFIDAVIT FILED WITH THE ADDITIONAL GROUND OF APPEAL WHICH IS REPRODUCED BELOW: - ORDER SHEET ENTRY RECORDED BY ASSESSING OFFICER ON 22.12.2009. IN RESPONSE TO NOTICE U/S. 142 (1) SHRI GYANESHWAR KATARAM ATTENDED ON BEHALF OF THE ASSESSEE. IT IS STATED THAT THE ASSESSEE HAS ALREADY FILED DETAILS IN RESPONSE TO NOTICE U/S. 142(1) ON 11 .12.2009 IN TAPAL. IN REGARD TO THE ASSESSMENT YEAR 2005 - 06, THE ASSESSEE SATED THAT THROUGH OVERSIGHT THE ASSESSEE HAS N OT DECLARED THE DEEMED CAPITAL GAIN U/S. 54F(3) AS THE FLAT WHICH WAS PURCHASED DURING THE ASSESSMENT YEAR 2002 - 03 WAS SURRENDERED BY THE ASSESSEE WITHIN 3 YEARS FROM PURCHASE. HE NCE THE ASSESSEE HAS FILED REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2 005 - 06 ADMITTING THEREON THE DEEMED CAPITAL GAIN U/S. 54F(3). IT IS FURTHER STATED THAT THE ASSESSEE WILL PAY THE ADDITIONAL TAX DUE THEREON. ACCORDING TO THE LD. CIT(A), THE CONTENTION OF THE ASSESSEE THAT HE HAD SURRENDERED THE ADDITIONAL INCOME VOLUNT ARILY APPEARS TO BE CORRECT. IT WAS OBSERVED THAT THE A . O WHILE FRAMING THE ASSESSMENT ORDER U / S 153A R.W. S 143(3) OF THE ACT HA D NOT REFERRED TO ANY INCRIMINATING DOCUMENT / MATERIAL FOUND DURING THE COURSE OF SEARCH U/S 132(1) AT THE ASSESSEES PREMISES. IT WAS OBSERVED BY THE LD. CIT(A) THAT THE SCOPE OF SECTION 153A OF THE ACT IS LIMITED TO MAKING ADDITION ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH . THIS CASE, THUS IS AN UNABATED ASSESSMENT AND THERE WAS NO PENDING ASSESSMENT ON THE DATE OF INITIATION OF SEARCH U/S 132(1) . IT WAS OBSERVED BY THE LD. CIT(A) THAT THE SEARCH U/S 132(1) HAD BEEN INITIATED ON 17 TH JANUARY, 2008 AND THE RETURN OF INCOME U/S 139 (1) OF THE ACT WAS ORIGINALLY FILED ON 25 TH AUGUST, 2005 HENCE THE TIME LIM IT FOR COMPLETING THE PROCESSING HAD ALREADY EXPIRED ON 31 ST MARCH, 2007 I .E. ONE YEAR FROM THE END ITA 4506/MUM/2014 15 OF THE FINANCIAL YEAR. THE LEARNED CIT(A) OBSERVED THAT THE N OTICE U/S 143(2) COULD HAVE BEEN ISSUED BY THE AO BY 31 ST AUGUST, 2006 I.E. 12 MONTHS AFTER TH E END OF THE MONTH IN WHICH THE RETURN OF INCOME WAS FILED, HENCE, THE ASSESSMENT STOOD COMPLETED AND WAS NOT PENDING ON THE DATE OF INITIATION OF SEARCH I.E. 17 - 01 - 2008 . THUS, THE LD. CIT(A) CONCLUDED THAT THE ADDITION WAS MADE ON THE BASIS OF VOLUNTARY D ECLARATION MADE BY THE ASSESSEE IN THE REVISED RETURN OF INCOME FILED ON 22 ND DECEMBER, 2009, THEREFORE, THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WAS N OT JUSTIFIABLE AND ACCORDINGLY LEARNED CIT(A) DIRECTED THE A.O. TO DELETE THE SAME , VIDE APPELL ATE ORDER DATED 27 - 03 - 2014 PASSED BY LEARNED CIT(A) . 5. AGGRIEVED BY THE APPELLATE ORDER DATED 27 - 03 - 2014 PASSED BY THE LD. CIT(A), THE R EVENUE IS IN APPEAL BEFORE THE T RIBUNAL. 6 . THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAD FILED RETURN OF INCOME U/S 139 (1) OF THE ACT ON 25 TH AUGUST, 2005 DECLARING INCOME AT RS. 15,90,638/ - . THERE WAS A SEARCH OPERATION CONDUCTED BY REVENUE U/S 132(1) ON 17 TH JANUARY, 2008 IN PATEL GROUP OF CASES AND ASSESSEE WAS ALSO COVERED UNDER THE SAID SEARCH CONDUCTED BY REVENU E U/S 132(1) . NOTICE U/S 153A(A) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 05.09.2008 AND IN RESPONSE THE ASSESSEE HAD FILED HIS RETURN OF INCOME U/S 153A ON 10.10.2008 DECLARING INCOME OF RS. 15,90,638/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A R.W.S. 143(2) , A T THE FAG END OF THE PROCEEDING S , THE ASSESSEE STATED ON 22 - 12 - 2009 THAT THE ASSESSEE HAS NOT DECLARED THE DEEMED CAPITAL GAIN U/S 54F(3) OF THE ACT AMOUNTING TO RS.1,03,44,000/ - AS THE ALLOTMENT OF FLAT WHICH WAS PURCHASED DURING TH E A.Y. 2002 - 03 WAS CANCELLED BY THE ASSESSEE WITHIN THREE YEARS FROM THE DATE OF PURCHASE AND HENCE THE ASSESSEE HAD FILED REVISED RETURN OF INCO ME FOR A.Y. 2005 - 06 ON 22 - 12 - 2009 WHEREIN HE ADMITTED THEREIN AN AMOUNT OF RS. 1,03,44,000/ - AS DEEMED CAPITAL GAIN U/S 54F(3) OF THE ACT. THE LD. D.R. SUBMITTED THAT ALTHOUGH THE ASSESSEE HAS OFFERED FOR TAX ITA 4506/MUM/2014 16 AN AMOUNT OF RS. 1,03,44,000/ - U/S 54F(3) OF THE ACT, BUT THE SAME WAS DONE ONLY AT THE FAG END OF THE ASSESSMENT PROCEEDINGS ON 22 - 12 - 2009 WHILE THE ASSESSME NT ORDER U/S 143(3) R.W.S. 153A IS DATED 24 - 12 - 2009 . IT IS SUBMITTED THAT THE ASSESSEE WAS CORNERED BY THE AO WHICH LED ASSESSEE TO SURRENDER THE SAID AMOUNT BY FILING REVISED RETURN OF INCOME ON 22 - 12 - 2009. THE ASSESSEE HAD FIRST FILED HIS RETURN OF INCOME U/S 139(1) OF THE ACT ON 25 - 08 - 2005 WHEREIN THE ASSESSEE DID NOT DECLARED THE SAID DEEMED CAPITAL GAINS U/S 54F(3) . IT WAS SUBMITTED THAT T HE N THE ASSESSEE COULD HAVE DECLARED THE SAID DEEMED CAPITAL GAI N INCOME U/S 54F(3) OF RS.1,03,44,000/ - EVEN AT THE TIME OF SEARCH CONDUCTED BY REVENUE U/S 132(1) ON 17.01.2008 BUT THE ASSESSEE DID NOT DECLARE THE SAID DEEMED CAPITAL GAINS INCOME U/S 54F(3) . IT WAS SUBMITTED THAT EVEN AT THE TIME OF FILING OF RETURN O F INCOME U/S 153A ON 10 - 10 - 2008 , AGAIN THE ASSESSEE CHOSE NOT TO DECLARE THE DEEMED CAPITAL GAIN INCOME U/S 54F(3) . IT WAS SUBMITTED THAT NOTICE DATED 27 - 11 - 2009 WAS ISSUED BY THE AO U/S 142(1) AND EVEN IN REPLY DATED 03 - 12 - 2009 ( FILED ON 11 - 12 - 2009 ) FIL ED BY THE ASSESSE WITH THE AO , SAID DEEMED CAPITAL GAIN U/S 54F(3) WAS NOT OFFERED FOR TAXATION WHILE DETAILS OF CAPITAL GAINS EARNED BY THE ASSESSEE WERE , INTER - ALIA, SPECIFICALLY CALLED FOR BY THE AO . IN THE SAID REPLY DATED 3 - 12 - 2009 , THE ASSESSEE F URNISHED BANK STATEMENTS AND IT WAS EVIDENT FROM THE BANK STATEMENT THAT HUGE AMOUNT WAS RECEIVED BY THE ASSESSEE ON CANCELLATION OF THE ALLOTMENT OF FLATS BOOKED WITH NEELKANTH MANSION PRIVATE LIMITED IN AY 2002 - 03 INCLUDING AN AMOUNT OF RS.1,0,3,44,000/ - BEING DEEMED CAPITAL GAINS U/S 54F(3) . IT IS SUBMITTED THAT ONLY WHEN THE ASSESSEE WAS CORNERED AND CONFRONTED BY THE A.O. , THE ASSESSEE HAD NO CHOICE BUT TO OFFER DEEMED CAPITAL GAIN U/S 54F(3) AS INCOME FOR TAXATION WHICH WAS DONE BY FILING REVISED RET URN OF INCOME ON 22 - 12 - 2009 AND LETTER DATED 22 - 12 - 2009 WAS FILED WITH THE AO SURRENDERING SAID INCOME . IT WAS SUBMITTED THAT THE BOOKING OF THE FLAT WAS MADE IN A .Y. 2002 - 03 , WHICH WAS CANCELLED IN F.Y. 2004 - 05 . THE LD. D.R. SUBMITTED THAT IN THE QUANTUM ASSESSMENT, THE ASSESSEE ITSELF REVISED THE RETURN OF INCOME ON 22 - 12 - 2009 , THE ASSESSEE FILED ITA 4506/MUM/2014 17 AN A PPEAL AGAINST QUANTUM ASSESSMENT WHICH WAS DISMISSED BY LEARNED CIT(A) AS TAX ON ADMITTED INCOME WAS NOT PAID BY THE ASS ESSEE ON SAID DEEMED CAPITAL GAINS BEFORE FILING OF APPEAL . IT IS SUBMITTED THAT SUFFICIENT OPPORTUNITY WAS PROVIDED TO THE ASSESSEE FROM TIME TO TIME BUT THE ASSESSEE NEVER C A ME FORWARD TO DECLARE THE INCOME BUT ONLY AT THE FAG END, THE ASSESSEE DECLARED THE SAID DEEMED CAPITAL GAIN U/S 54F(3) TO THE TUNE OF RS.1,03,44,000/ - IN THE REVISED RETURN OF INCOME FILED ON 22 ND DECEMBER, 2009 AND EVEN THEN TAXES ON SAID DEEMED CAPITAL GAINS WAS NOT PAID . IT IS SUBMITTED THAT IN RESPONSE TO NOTICE DATED 27 - 11 - 2009 ISSUED BY THE AO U/S 142(1) OF THE ACT, THE ASSESSEE HAD FILED HIS REPLY VIDE LETTER DATED 3.12.2009 ( FILED ON 11 - 12 - 2009) , WHEREBY THE ASSESSEE HAS DECLARED THE CONFIRMATION ON LOAN TAKEN AND GIVE N AS ALSO BANK STATEMENT S WERE ENCLOSED. THE OTHER CAPI TAL GAIN S EARNED BY THE ASSESSEE WERE DECLARED TO THE REVENUE BY THE ASSESSEE BUT THIS DEEMED CAPITAL GAIN U/S 54F(3) WAS NOT DECLARED . THUS, IT IS SUBMITTED THAT THE ASSESSEE DOES NOT COME FORWARD AND DECLARE THE CAPITAL GAIN TO THE REVENUE. THE LEARNED DR SUBMITTED THAT THE ASSESSEE DID NOT FILED PAPER BOOK BUT THE FILE HAS BEEN SUMMONED FROM THE OFFICE OF THE AO AND THE SAID LETTER DATED 3 - 12 - 2009 FILED ON 11 - 12 - 2009 IS PLACED ON RECORD IN THE FILE OF REVENUE, WHICH WAS PRODUCED BEFORE THE BENCH DURING HEARING . THE BENCH DIRECTED LEARNED DR TO DEPOSIT THE SAID FILE WITH THE TRIBUNAL AS TO GO THROUGH THE CASE RECORDS AS THE ASSESSEE DID NOT COME FORWARD TO FILE PAPER BOOK. COMING BACK, IT WAS SUBMITTED BY LEARNED DR THAT T HE REVISED RETURN OF INCOME WAS FILED ONLY ON 22.12.2009 VIDE ACKNOWLEDGMENT NO. 00817. THE LD. D.R. SUBMITTED THAT THE A.O. HAD ASKED FOR THE BANK STATEMENT VIDE NOTICE U/S 142(1) OF THE ACT AND FROM THE BANK STATEMENT, HUGE AMOUNT OF MONEY RECEIVED BY THE ASSESSEE IS CLEARLY REFLECTED WHICH HAS NOT BEEN OFFERED FOR TAXATION BY THE ASSESSEE VOLUNTARILY IN THE RETURN OF INCOME FILED U/S 139(1) ON 25 - 08 - 2005 AND ALSO FILED U/S 153A ON 10 - 10 - 2008 . THUS, IT IS ONLY WHEN THE ASSESSEE WAS CORNERED BY THE REVENUE THAT THE SAID DEEMED CAPITAL GAINS U/S 54F(3) WAS DECLARED AND OFFERED FOR TAXATION BY THE ASSESSEE. THUS, THE ITA 4506/MUM/2014 18 LD. D.R. SUBMITTED THAT THE ASSESSEE HAS NOT DECLARED DEEMED CAPITAL GAIN S WHILE FILING RETURN OF INCOME U/S 139 (1) NOR THE SAID INCOME WAS DECLARED AT THE TIME OF SEARCH U/S 132(1) AND ALSO SAID INCOME WAS NOT DECLARED AT THE TIME OF FILING OF RETURN U/S 153A . FURTHER, THE NOTICE WAS ISSUED U/S 142(1) OF THE ACT ON 27 - 11 - 2009 , BUT ST ILL THE ASSESSE E CHOSE NOT TO OFFER THE SAID DEEMED CAPITAL GAIN INCOME U/S 54F(3) FOR TAXATION AND ONLY AT THE FAG END WHEN THE ASSESSMENT WAS ABOUT TO BE CONCLUDED, THE SAID INCOME WAS OFFERED FOR TAXATION ON 22 - 12 - 2009 . IN SUPPORT, LD. D.R. RELIED UP ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK D ATA PRIVATE LIMITED V. CIT (2013) 358 ITR 593(SC). 7 . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME U/S 139 OF THE ACT WAS FILED BY THE ASSESSEE ON 25 TH AUGUST, 2005 DE CLARING TOTAL INCOME AT R S. 15,90,638/ - . THE LAST DATE FOR ISSUING OF NOTICE U/S 143( 2) OF THE ACT FOR FRAMING SCRUTINY ASSESSMENT WAS 31.0 8.2006 AND N O NOTICE WAS ISSUED U/S 143(2) BY THAT DATE AND HENCE ASSESSMENT STOOD COMPLETED AND IS AN UNABATED ASSESSMENT ON THE DATE OF INITIATION OF SEARCH ON 17 - 01 - 2008 , THUS, NO ASSESSMENT WAS PENDING ON THE DATE OF SEARCH I . E. 17.1.2008 . IT IS SUBMITTED THAT ON 10 TH OCTOBER , 2008, THE RETURN OF INCOME WAS FILED AGAINST THE NOT ICE DATED 05 - 09 - 2008 ISSUED BY THE AO U/S 153A(A) OF THE ACT. IT IS SUBMITTED THAT THE ASSESSEE EARNED LONG TERM CAPITAL GAIN ON SALE OF SHARES WHICH WAS INVESTED IN THE PROPERTY BY BOOKING OF FLAT S IN NEELKANTH MANSION PVT. LTD. AND DEDUCTION WAS CLAIMED IN THE YEAR AY 2002 - 03 U/S 54F OF THE ACT ON AMOUNT INVESTED OF RS. 1,03,44,000/ - . THE FLAT WERE UNDER CONSTRUCTION BUT IN A.Y. 2005 - 06 , THE BOOKING WAS CANCELLED AND THERE WAS WITHDRAWAL OF CAPITAL GAIN EARLIER GRANTED U/S 54F OF THE ACT BY VIRTUE OF DEE MING PROVISIONS OF SECTION 54F(3) AND THE ASSESSEE HAD OFFERED THE SAID AMOUNT AS INCOME IN REVISED RETURN OF INCOME FILED ON 22 - 12 - 2009 . IT IS SUBMITTED THAT THE ASSESSMENT ORDER WAS FRAMED U/S 143(3 ) R.W.S. 153A OF THE ACT ON 24 TH DECEMBER, 2009. IT IS SUBMITTED THAT THE LD. CIT(A) HAS ITA 4506/MUM/2014 19 GRANTED RELIEF TO THE ASSES S EE BY HOLDING THAT THE VOLUNTARY DECLARATION MADE BY THE ASSESSEE IN THE REVISED RETURN OF INCOME WHICH ESTABLISHES THE ASSESSEES BONA FIDE IN OFFERING THE ADDITIONAL INCOME, HENCE, NO PENA LTY IS EXIGIBLE AS THE AMOUNT HAS BEEN OFFERED FOR TAXATION VOLUNTARILY BY THE ASSESSEE AND THE ADDITIONS WERE NOT MADE BASED ON ANY INCRIMINATING MATERIAL . ON THE DATE OF INITIATION OF SEARCH ON 17 - 01 - 2008, THERE WAS NO ASSESSMENT PENDING AND THE ASSESSM ENT FOR THIS YEAR IS AN UNABATED ASSESSMEN T WHICH HAS ATTAINED FINALITY. IT WAS SUBMITTED THAT N O INCRIMINATING MATERIAL WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH U/S 132(1) AND HENCE ADDITION OF DEEMED CAPITAL GAIN U/S 54F(3) MADE IN ASSESSMENT FRAMED VIDE ORDERS DATED 24 - 12 - 2009 U/S 153A R.W.S. 143(3) ITSELF WAS NOT SUSTAINABLE . IT IS SUBMITTED THAT , HENCE, THE PENALTY LEVIED BY THE A.O. IS NOT SUSTAINABLE IN THE EYES OF LAW . THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE APPELLATE ORDER OF THE LD. CIT(A) WHEREBY THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. IT IS SUBMITTED THAT THE FINDINGS OF THE LD. CIT(A) THAT NO ADDITION COULD HAVE BEEN MADE U/S 54 F(3) TOWARDS DEEMED CAPITAL GAINS AND HENCE NO PENALTY IS EXIGIBLE HAS BECOME FINAL AS THE REVENUE HAS NOT CHALLENGED THIS FINDING OF THE AO . THE LD. COUNSEL RELIED ON THE DECISION OF THE T RIBUNAL IN THE CASE OF M/S KAKADE CONSTRUCTION COMPANY V. ACIT IN ITA NO. 97 AND 98/PN/2013 FOR ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 , VIDE ORDERS DATED 30.04.2013 AND ALSO DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. KAKADE CONSTRUCTION COMPANY IN IT APPEAL NO. 2095 OF 2013 DATED 23 RD APRIL, 2015 , AN D IT WAS SUBMITTED THAT THE PENALTY IS NOT LEVIABLE. IT WAS SUBMITTED THAT THE PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND RELIANCE WAS PLACED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF JAIDYALA PYARELALA V. CIT REPORTED IN 1973 TAX L.R.880. THE RELIANCE WAS ALSO PLACED ON THE DECISION IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LIMITED V. DCIT (2012) 137 ITD 287(MUM) AND CIT V MURLI AGRO PRODUCTS LIMITED (2014) 49 TAXMANN.COM 172(BOM) . THE LD. COUNSEL ALSO RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE ITA 4506/MUM/2014 20 CASE OF CIT V. GURINDER SINGH BAWA IN IT APPEAL NO. 1839 OF 2013 DATED 5 TH OCTOBER, 2015 . IT WAS SUBMITTED THAT THE ASSESSEE HAD MADE INVESTMENT IN NEELKANTH MANSON PRIVATE LIMITED WHICH IS A FAMILY CONCERN OF THE A SSESSEE FOR BOOKING OF THE APARTMENT. IT WAS SUBMITTED THAT THE AO TREATED THE SAID AMOUNT PAID TO NEELKANTH MANSION PRIVATE LIMITED AS LOANS AND ADVANCES AND HENCE NO DEEMED CAPITAL GAINS U/S 54F(3) HAS ARISEN TO THE ASSESSEE. THUS , NO PENALTY IS EXIGIBL E IN THIS CASE. 6. IN REJOINDER, THE LD. D.R. BROUGHT TO THE NOTICE OF THE BENCH TO PA RA 6 IN THE CASE OF JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GURINDER SINGH BAWA (SUPRA) WHEREBY IT HAS BEEN HELD AS UNDER: - MR. KOTANGALE , THE LEARNED COUNSEL FOR THE REVENUE VERY FAIRLY STATES THAT THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN AL - CARGO GLOBAL LOGISTICS LTD. WAS A SUBJECT MATTER OF CHALLENGE BEFORE THIS COURT AS A PART OF THE GROUP OF APPEALS DISPOSED OF AS CIT VS. C ONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. UPHOLDING THE VIEW OF THE SPECIAL BENCH OF THE TRIBUNAL IN AL-CARGO GLOBAL LOGISTICS LTD. CONSEQUENTLY, ONCE AN ASSESSMENT HAS ATTAINED FINALITY FOR A PARTICULAR YEAR I.E. IT IS NOT PENDING THEN THE SAM E CANNOT BE SUBJECT TO TAX IN PROCEEDINGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SECTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DIS CLOSED DURING REGULAR ASSESSMENT PROCEEDINGS. OUR ATTENTION WAS DRAWN BY LEARNED TO PARA 9 OF DECISION IN THE CASE OF MAK DATA PRIVATE LIMITED(SUPRA), WHEREIN HONBLE SUPREME COURT HELD AS UNDER: 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION ITA 4506/MUM/2014 21 FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INC OME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED L ATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE S OURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. THE LEARNED DR SUBMITTED THAT IT IS ONLY AFTER DETECTION BY REVENUE THAT THE ASSESSEE SUBMITTED REVISED RETURN OF INCOME FOLLOWED BY LETTER DATED 22 - 12 - 2009 WHEREIN THE SAID DEEMED CAPITAL GAIN U/S 54F(3) WAS DECLARED. IT WAS SUBMITTED THAT NO C ROSS O BJECTIONS WERE FILED BY THE ASSESSEE AFTER ADMISSION BY THE ASSESSEE AFTER CONCEALMENT OF INCOME WAS DETECTED BY REVENUE. IT WAS SUBMITTED THAT ABSOLUT ELY NEW PLEA HAS BEEN RAISED BY THE ASSESSEE ABOUT NON APPLICABILITY OF SECTION 54F(3) BEFORE THE TRIBUNAL FOR THE FIRST TIME WHICH WAS NOT RAISED UP - TO THE STAGE OF FIRST APPEAL. IT WAS SUBMITTED THAT THERE WERE BANK ENTRIES WHEREIN THE MONEY HAS BEEN RE CEIVED BACK FROM NEELKANTH MANSION PRIVATE LIMITED WHICH FOUND CREDITED IN BANK STATEMENT ITSELF AND HENCE NO INCRIMINATING MATERIAL WAS REQUIRED. IT WAS SUBMITTED THAT ORIGINALLY RETURN OF INCOME WAS PROCESSED U/S 143(1) AND BANK ACCOUNT WAS NOT SCRUTINIS ED BY THE AO . 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON BY RIVAL PARTIES . WE HAVE OB SERVED THAT A S EARCH & S EIZURE ACTION U/S 132(1) IN THE CASE OF PATEL GROUP ITA 4506/MUM/2014 22 OF CASES WAS C ARRIED OUT BY THE REVENUE ON 17 TH JANUARY, 2008 , IN WHICH ASSESSEE WAS ALSO COVERED. SURVEY PROCEEDINGS U/S 133A OF THE ACT WAS ALSO CARRIED OUT SIMULTANEOUSLY IN THE BUSINESS PREMISES OF PATEL GROUP OF CASES. THE ASSESSEE DERIVED INCOME FROM SALARY, SHARE OF PROFIT FROM PARTNERSHIP FIRM, DERIVATIVE INCOME, CAPITAL GAIN, INTEREST INCOME AND DIVIDEND INCOME. THE ASSESSEE HAS ORIGINALLY FILED RETURN OF INCOME U/S 139(1) ON 25 - 08 - 2005 DECLARING TOTAL INCOME OF RS. 15,90,638/ - . THERE WAS NO SCRUTINY ASSESSMENT FRAMED BY THE REVENUE ORIGINALLY U/S 143(3) R.W.S. 143(2) AND RETURN OF INCOME WAS PROCESSED BY REVENUE U/S 143(1). PERSUANT TO SEARCH U/S 132(1) ON 17 - 01 - 2008, NOTICE U/S 153A(A) OF THE ACT WAS ISSUED BY TH E AO TO THE ASSESSEE ON 5 TH SEPTEMBER, 2008 AND IN RESPONSE THEREOF ASSESSEE FILED RETURN OF INCOME U/S 153A(A) FOR A.Y. 2005 - 06 ON 10 TH OCTOBER, 2008 , ADMITTING TOTAL INCOME OF RS.15,90,638/ - . THE WHOLE DISPUTE IS WITH RESPECT TO LEVYING OF PENALTY U/S 271(1)(C) OF THE 1961 ACT BY AO ON NON DECLARATION OF DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - U/S 54F(3) OF THE 1961 ACT ARISING OUT OF CANCELLATION OF ALLOTMENT OF FLAT WITHIN THREE YEARS IN FY 2004 - 05 WHICH WAS EARLIER BOOKED IN AY 2002 - 03 AND ON WHICH THE ASSESSEE EARLIER CLAIMED DEDUCTION U/S 54F IN AY 2002 - 03 WHICH WAS ALLOWED BY REVENUE IN AY 2002 - 03 . THE SAID AMOUNT OF RS.1,03,44,000/ - BEING PART OF THE ALLOTMENT AMOUNT RECEIVED BACK ON CANCELLATION OF BOOKING OF FLAT FROM THE BUILDER NEELKANTH MANS ION PRIVATE LIMITED DURING RELEVANT PREVIOUS YEAR AND IS REFLECTED AS PART OF CREDITS IN BANK STATEMENT S OF THE ASSESSEE . THIS BANK ACCOUNT WAS DULY DECLARED BY THE ASSESSEE TO REVENUE EVEN IN ORIGINAL RETURN OF INCOME FILED U/S 139(1) BUT THE DEEMED CAPI TAL GAINS U/S 54F(3) WAS NOT DECLARED AND DISCLOSED BY THE ASSESSEE FOR TAXATION PURPOSES AND NO TAXES WAS PAID BY THE ASSESSEE ON THIS DEEMED CAPITAL GAINS U/S 54F(3) . THE SAID NEELKANTH MANSION PRIVATE LIMITED IS ADMITTEDLY AN ASSESSEES FAMILY CONCERN. THE ASSESSEE DID NOT DECLARE THIS DEEMED CAPITAL GAINS OF ITA 4506/MUM/2014 23 RS.1,03,44,000 / - U/S 54F(3) WHILE FILING RETURN OF INCOME U/S 139(1) ON 25 - 08 - 2005. THE ASSESSEE DID NOT DEPOSITED ANY ADVANCE TAX ON THIS DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - EARNED BY THE A SSESSEE U/S 54F(3) AS IS REQUIRED TO BE DEPOSITED UNDER CHAPTER XVII - C . THE ASSESSEE WAS SEARCHED U/S 132(1) ON 17 - 01 - 2008 AND THE ASSESSEE DID NOT DECLARE THE SAID INCOME OF RS.1,03,44,000/ - ARISING OUT OF DEEMED CAPITAL GAINS U/S 54F(3) ON THE DATE OF SEARCH ALSO BEFORE THE SEARCH PARTY . THE ASSESSEE WAS ISSUED NOTICE BY THE AO ON 05 - 09 - 2008 U/S 153A TO FILE RETURN OF INCOME IN PURSUANT TO SEARCH U/S 132(1) , WHICH RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 10 - 10 - 2008 BUT THE ASSESSEE AGAIN DID NOT DISCLOSE AND DECLARE SAID DEEMED CAPITAL GAINS IN THE RETURN OF INCOME FILED IN PURSUANT TO NOTICE U/S 153A . THUS, T HE ASSESSEE DID NOT DECLARE THIS DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - EARNED BY THE ASSESSEE U/S 54F(3) EVEN IN THE RETURN OF INCOME FILED IN PURSUANCE TO NOTICE U/S 153A . IT IS PERTINENT TO MENTION THAT RETURN OF INCOME CONTAINS VERIFICATION WHICH IS TO BE SIGNED BY PERSONS STIPULATED U/S 140. THE VERIFICATION AS MADE BY THE ASSESSEE U/S 140 WHILE FILING RETURN OF INCOME ON 25 - 08 - 2005 READ AS UNDER : VERIFICATION I, MUKESH MOHAN PATEL(NAME IN FULL AND IN BLOCK LETTERS) , SON/DAUGHTER OF MOHAN VELTI PATEL SOLEMNLY DECLARE THAT TO THE BEST OF MY KNOWLEDGE AND BELIEF , THE INFORMATION GIVEN IN THIS RETURN AND THE ANNEXURES AND STATEMENTS ACCOMPANYING IT ARE BEST OF MY KNOWLEDGE AND BELIEF, THE INFORMATION GIVEN IN THIS RETURN AND THE ANNEXURES AND STATEMENTS ACCOMPANYING IT ARE CORRECT, COMPLETE AND TRULY STATED AND IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME - TAX ACT,1961 , IN RESPECT OF INCOME CHARGEABLE TO INCOME TAX FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2005 - 06. SD/ - DATE 12/08/2005 PLACE: MUMBAI ITA 4506/MUM/2014 24 SIMILAR VERIFICATION DATED 06 - 10 - 2008 WAS SIGNED BY THE ASSESSEE U/S 140 WHILE FILING RETURN OF INCOME ON 10 - 10 - 2008 IN PURSUANT TO NOTICE U/S 153A. THUS , THESE TWO VERIFICATIONS SIGNED BY THE ASSESSEE U/S 140 WHILE FILING RETURN S OF INCOME U/S 139(1) AN D 153A WERE NOT TRUE AND CORRECT VERIFICATIONS , AS DEEMED CAPITAL GAINS U/S 54F(3) TO THE TUNE OF RS.1,03,44,000/ - WERE NOT DECLARED IN THE SAID RETURN S OF INCOME FILED WITH THE REVENUE , WHICH IS AN ADMITTED INCOME BY THE ASSESSEE . IT IS ACCEPTED AND ADMITTED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW THAT THE ASSESSEE IS LIABLE TO TAX FOR THIS DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03,44,000/ - DURING THE IMPUGNED ASSESSMENT YE A R UNDER CONSIDERATION BEFORE US BUT STILL THE SAME WAS NOT DECLARED AND OFFERED FOR TAX BY THE ASSESSEE IN RETURN OF INCOME FILED U/S 139(1) AND LATER U/S 153A , WHEREIN NO CHALLENGE HAS BEEN RAISED BY THE ASSESSEE BEFORE AUTHORITIES BELOW AS TO THE TAXABILITY OF THE SAID DEEMED CAPITAL GAINS U/S 54F(3) IN THE HANDS OF THE ASSE SSEE . IT IS PERTINENT TO MENTION THAT THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE U/S 139(1) ON 25 - 08 - 2005 WHICH WAS PROCESSED BY REVENUE U/S 143(1) AND NO SCRUTINY ASSESSMENT WAS ORIGINALLY FRAMED BY REVENUE U/S 143(3) R.W.S. 143(2). IT IS P ERTINENT TO MENTION THAT THE ASSESSEE S OTHER INCOME ARE TO THE TUNE OF ONLY RS.15,90,638/ - WHICH STOOD DECLARED IN RETURN OF INCOME FILED WITH REVENUE AND DUE TAXES PAID , WHILE DEEMED CAPITAL GAINS EARNED BY THE ASSESSEE U/S 54F(3) WAS WHOPPING TO THE TU NE OF RS.1,03,44,000/ - WHICH WAS NOT DECLARED BY THE ASSESSEE TO THE REVENUE IN RETURN OF INCOME FILED U /S 139(1) ON 25 - 08 - 2005 AND ALSO FILED U/S 153A ON 10 - 10 - 2008. THIS DISCLOSURE OF THE DEEMED CAPITAL GAINS U/S 54F(3) WAS FINALLY MADE BY THE ASSESSEE B Y FILING REVISED RETURN OF INCOME ON 22 - 12 - 2009 WHICH WAS CLAIMED BY THE ASSESSEE TO BE VOL UNTARY AND BONAFIDE DISCLOSURE OF INCOME WITHOUT DETECTION BY THE REVENUE AND PRAYER IS MADE BEFORE THE BENCH BY THE ASSESSEES COUNSEL TO UPHOLD THE APPELLATE ORDER OF LEARNED CIT(A) DELETING THE PENALTY LEVIED U/S 271(1)(C) , WHILE REVENUE IS CONTENDING THAT WHEN THE ASSESSEE WAS CORNERED BY THE AO , THE ASSESSEE HAD NO CHOICE BUT TO SURRENDER THE SAID ITA 4506/MUM/2014 25 DEEMED CAPITAL GAINS U/S 54F(3) WHICH WAS AN INVOLUNTARY ACTION OF THE ASSESSEE UNDER COMPULSION AS THE AO DETECTED THE SAID NON DISCLOSURE OF DEEMED CAPITAL GAINS U/S 54F(3) AND THE CONDUCT OF THE ASSESSEE IS NOT VOLUNTARY AND BONAFIDE THROUGH OUT AS IT IS DELIBERATE ACTION ON THE PART OF THE ASSESSEE IN NON DECLARATI ON OF SAID INCOME IN THE RETURN OF INCOME FILED TWICE ONCE U/S 139(1) AND SECONDLY PURSUANT TO NOTICE ISSUED U/S 153A PURSUANT TO SEARCH CONDUCTED U/S 132(1) BY THE REVENUE AND HENCE PENALTY IS EXIGIBLE AS IT IS HIT BY EXPLANATION 1 TO SECTION 271(1)(C) . I T IS ALSO PERTINENT TO MENTION HERE THAT THE TAX AND INTEREST DUE TO BE PAID EVEN ON DECLARATION OF SAID INCOME ARISING FROM DEEMED CAPITAL GAINS U/S 54F(3) WHILE FILING REVISED RETURN OF INCOME ON 22 - 12 - 2009 WAS NOT PAID BY THE ASSESSEE WHILE FILING REVI SED RETURN OF INCOME ON 22 - 12 - 2009 , WHICH TAX AND INTEREST WAS FINALLY PAID BY THE ASSESSEE ON 17 - 02 - 2010. WITH THE ABOVE BACKGROUND DISCUSSED IN BRIEF , NOW LET US SEE THE ENTIRE SPECTRUM OF EVENTS HAPPENED IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREAFTER . IT IS UNDISPUTED THAT THE ASSESSEE DID NOT DECLARE THE AFORESAID DEEMED CAPITAL GAINS EARNED BY THE ASSESSEE U/S 54F(3) OF RS.1,03,44,000/ - IN T HE RETURN OF INCOME FILED ORIGINALLY U/S 139(1) ON 25 - 08 - 2005 AND SUBSEQUENTLY ALSO IN THE RETURN OF INCOME FILED ON 10 - 10 - 2008 IN PURSUANCE TO NOTICE U/S 153A . IT IS ALSO UNDISPUTED THAT ORIGINALLY NO SCRUTINY ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 143( 2) AND RETURN OF INCOME WAS ORIGINALLY PROCESSED U/S 143(1). THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS U/S 143(3) R.W.S. 153A , SUBMITTED LETTER DATED 03 - 12 - 2009 WHICH WAS FILED ON 11 - 12 - 2009 IN PURSUANCE TO NOTICE DATED 27 - 11 - 2009 ISSUED BY THE AO U/S 142(1) CALLING FOR THE REQUISITE INFORMATION , WHEREIN THE ASSESSEE , INTER - ALIA, EXPLAINED AS UNDER : - ITA 4506/MUM/2014 26 PLEASE REFER TO YOUR NOTICE U/S 142(1) DATED 27 - 11 - 09 RECEIVED BY ME ON 1 - 12 - 09. AS REQUESTED BY YOU , PLEASE FIND ENCLOSED HER EWITH THE FOLLOWING DETAILS AND PARTICULARS. *** *** E) BANK BOOK IN RESPECT OF ALL BANK ACCOUNTS HELD BY ME WITH COMPLETE NARRATION OF EVERY DEBIT AND CREDIT IN THE SAID BANK BOOK IS ENCLOSED HEREWITH. BANK PASS BOOK/ STATEMENT IS PRODUCED HE REWITH FOR YOUR VERIFICATION. *** G) DETAILS OF CAPITAL GAINS HAVE BEEN ENCLOSED IN THE BOX FILE HANDED OVER TO YOU ON 31 - 7 - 09 . EVIDENCE IN THE FORM OF XEROX COPY OF CONTRACT NOTES ARE ENCLOSED HEREWITH. *** *** 2. I HAVE SUBMITTED TO YOU ALL THE DE TAILS SOUGHT BY YOU IN TERMS OF YOUR NOTICE U/S 142(1) . IT IS EVIDENT FROM THE ABOVE THAT SUBSTANTIAL DETAILS WERE ALREADY SUBMITTED BY ME ON 31 - 7 - 09 AND BALANCE DETAILS SOUGHT BY YOU FOR THE FIRST TIME ON 1 - 12 - 09 IT SUBMITTED HEREWITH . I WILL SUBMIT TO YOU AND ADDITIONAL DETAILS AND PARTICULARS THAT YOU MAY DESIRE FROM MY END. I ASSURE YOU OF MY FULL CO - OPERATION IN THE ASSESSMENT PROCEEDINGS. *** IT IS PERTINENT TO MENTION AT THIS STAGE THAT WHEN THE ASSESSEE FILED LETTER DATED 03 - 12 - 2009 ON 11 - 12 - 2009 BEFORE THE AO IN PURSUANCE TO NOTICE U/S 142(1) REQUISITIONING THE DETAILS OF CAPITAL GAINS , THE ASSESSEE DID NOT DISCLOSED AND OFFER FOR TAX DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - EARNED BY THE ASSESSEE U/S 54F(3) ARISING ON CANCELLATION OF ALLOTMENT OF FLAT DURING FINANCIAL YEAR 2004 - 05 WITHIN THREE YEARS OF ALLOTMENT . THE ASSESSEE EARLIER ALSO FILED DETAILS OF CAPITAL GAINS BEFORE AO ON 31 - 07 - 2009 BUT AGAIN DEEMED CAPITAL GAINS U/S 54F(3) WERE NOT DECLARED AND DISCLOSED . THUS, THE ASSESSE E SUBMITTED WRONG DECLARATION OF CAPITAL GAINS EARNED BY THE ASSESSEE BEFORE ITA 4506/MUM/2014 27 THE AO ON 31 - 07 - 2009 AND 11 - 12 - 2009 WHEREIN DEEMED CAPITAL GAINS U/S 54F(3) WERE NOT INCLUDED IN TOTAL CAPITAL GAINS EARNED BY THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 03 - 12 - 2009 IN RESPONSE TO NOTICE OF THE AO U/S 142(1) ALSO SUBMITTED BANK STATEMENTS WHICH WERE FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 142(1) CALLING FOR REQUISITE INFORMATION . THUS, AT THIS STAGE THE ASSESSEE HAD FURNISHED BANK STATEMENT FOR THE FIR ST TIME WHICH CAPTURED THE REFUND FROM THE BUILDER NEELKANTH MANSION PRIVATE LIMITED ON ACCOUNT OF CANCELLATION OF ALLOTMENT OF FLAT IN FY 2004 - 05 WITHIN THREE YEARS OF ALLOTMENT WHICH INCLUDED AN AMOUNT OF RS.1,03,44,000/ - BEING DEEMED CAPITAL GAINS U/S 5 4F(3) EARNED IN FY 2004 - 05 , WHICH FLAT WAS EARLIER ALLOTTED TO THE ASSESSEE IN AY 2002 - 03. IT IS ALSO PERTINENT TO MENTION THAT THE SAID CONCERN NEELKANTH MANSION PRIVATE LIMITED IS A SSESSEES FAMILY OWNED CONCERN. THUS, AT THIS STAGE ON 11 - 12 - 2009 , THE AO CAME INTO POSSESSION OF THE BANK STATEMENTS WHICH CONTAINED RECEIPTS OF PROCEEDS ON ACCOUNT OF REFUND FROM BUILDER NEELKANTH MANSION PRIVATE LIMITED ARISING FROM CANCELLATION OF FLAT IN FY 2004 - 05 AND PERUSAL OF THE SAID BANK STATEMENTS CLEARLY WOULD A TTRACT THE DETECTION AS TO WHOPPING AMOUNT IS CREDITED IN THESE BANK STATEMENTS ON ACCOUNT OF THIS CANCELLATION OF FLAT WHICH INCLUDED CAPITAL GAINS OF RS.1,03,44,000/ - EARNED BY ASSESSEE U/S 54F(3) . INCIDENTALLY THE OTHER INCOME DECLARED BY THE ASSESSEE I N HIS RETURN OF INCOME WAS ONLY RS.15,90,638/ - WHILE DEEMED CAPITAL GAINS U/S 54F(3) EARNED BY THE ASSESSEE WERE WHOPPING RS.1,03,44,000/ - . THE REVENUE IS CONTENDING THAT IT IS ONLY WHEN ASSESSEE IS CORNERED BY REVENUE AND THE ASSESSEE HAD NO OTHER CHOICE , THE ASSESSEE CAME FORWARD TO OFFER THE SAID DEEMED CAPITAL GAINS U/S 54F(3) FOR TAXATION BY FILING REVISED RETURN OF INCOME ON 22 - 12 - 2009 AT THE VERY FAG END OF THE ASSESSMENT . THE ASSESSEE FILED LETTER ON 22 - 12 - 2009 ALONG WITH REVISED RETURN OF INCO ME DECLARING DEEMED CAPITAL GAIN OF RS.1,03,44,000/ - U/S 54F(3) WHEREIN THE ASSESSEE CLAIMED THAT SAID DEEMED CAPITAL GAINS U/S 54F(3) WAS OMITTED TO ITA 4506/MUM/2014 28 BE DECLARED AND DISCLOSED EARLIER FOR THE PURPOSES OF TAXATION, OF WHICH EXTRACTS OF LETTER DATED 22 - 12 - 2 009 ARE REPRODUCED HEREUNDER : 'I HAD CLAIMED DEDUCTION U/S.54F(1) IN A.Y. 2002 - 03 IN RELATION TO MY PURCHASE OF RESIDENTIAL HOUSE (NEW ASSET) VIDE ALLOTMENT LETTER DATED 15 - 10 - 2001. I HAD MADE FULL PAYMENT TOWARDS THE PURCHASE OF THE SAID RESIDENTIAL HOUSE AND THE RECEIPT IN RESPECT OF THE SAID PURCHASE ENCLOSED WITH THE ORIGINAL RETURN OF INCOME FOR A. Y.2002 - 03 FILED BY ME ON 31 - 07 - 2002. I HAVE FILED WITH MY ORIGINAL RETURN OF INCOME U/S. 153A FOR A.Y. 2005 - 06 IDENTICAL TO THE ORIGINAL RETURN OF INCOME FILED FOR A.Y. 2005 - 06. DURING THE COURSE OF MY CHECKING OF THE COMPUTATION OF INCOME FILED WITH THE RETURN OF INCOME FOR A.Y. 200 5 - 06, I REALIZED ON MY OWN THAT I SHOULD HAVE DECLARED DEEMED CAPITAL GAIN U/S.54F(3) IN ASST. YEAR 2005 - 06, SINCE THE ALLOTMENT LETTER WAS CANCELLED IN FINANCIAL YEAR 2004 - 05 RELEVANT TO ASST. YEAR 2005 - 06 I.E. THE NEW ASSET WAS TRANSFERRED IN ASST. Y EAR 2005 - 06. I T IS HOWEVER PERTINENT TO NOTE HERE THAT THE AMOUNT PAID TOWARDS PURCHASE OF THE RESIDENTIAL HOUSE WAS KEPT WITH THE BUI LDER FOR MORE THAN THREE YEARS. CONSEQUENTLY, I AM FILING HEREWITH VOLUNTARILY REVISED RETURN OF INCOME U / S.153A AND I REQUES T YOU TO CONSIDER THE SAME AT THE TIME OF COMPLETION OF THE ASSESSMENT. IN VIEW OF MY VOLUNTARILY REVISING THE RETURN OF INCOME CONSEQUENT UPON THE GENUINE MISTAKE OF NOT CONSIDERING THE PROVISIONS OF SECTION 54F(3) AND THERE BEING NO INTENTION OF MAKING ANY WRONG CLAIM IN THE RETURN OF INCOME, I MOST EARNESTLY REQUEST YOU NOT TO INITIATE ANY PENALTY PROCEEDINGS IN RELATION TO THE SAID REVISED RETURN. I SHALL BE GRATEFUL TO YOU FOR GRANTING MY LEGITIMATE REQUEST.' THE AO, THEREAFTER, FRAMED ASSESSMENT U/S 143(3) R.W.S. 153A VIDE ASSESSMENT ORDERS DATED 24 - 12 - 2009 ASSESSING INCOME OF THE ASSESSEE AT INCOME OF RS.1,20,08,286/ - , WHEREIN THE INCOME RETURNED IN THE SAID REVISED RETURN OF INCOME WAS ACCEPTED BY THE AO WHICH INCLUDED DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03,44,000/ - . T HE A.O. INITIATED PENALTY ITA 4506/MUM/2014 29 PROCEEDINGS U/S 271(1)(C) OF THE ACT SEPARATELY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALING OF THE INCOME AND NOTICE DATED 24 - 12 - 2009 U/S 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE . THE ASSESSEE FIRST APPEAL AGAINST QUANTUM ASSESSMENT WITH LEARNED CIT(A) STOOD DISMISSED BY LEARNED CIT(A) VIDE APPELLA TE ORDER IN APPEAL NO. THN/DCIT CC - 1/THN/537/09 - 10 DATED 31 - 08 - 2010, KEEPING IN VIEW PROVISIONS OF SECTION 249(4)(A) OF THE ACT WHEREIN ONE OF THE CONDITION S TO BE FULFILLED BEFORE ADMITTING AN APPEAL BEFORE LEARNED CIT(A) IS THAT ADMITTED TAX HAS TO BE PAID BEFORE FILING OF THE APPEAL BEFORE LEARNED CIT(A) , WHICH IN THE INSTANT CASE ASSESSEE FAILED TO DO SO , AS THE ADMITTED TAX WAS NOT PAID BY THE ASSESSEE BEFORE FILING OF APPEAL WITH THE LEARNED CIT(A) AND HENCE AS PER LEARNED CIT(A) THE APPEAL DID NOT QUALIFY TO BE ADMITTED AS PER PROVISIONS OF SECTION 249(4)(A) AND THE APPEAL STOOD DISMISSED . THE ASSESEEE DID NOT FILE AN APPEAL BEFORE THE TRIBUNAL CHALLENGING THE APPELLATE ORDER DATED 31 - 08 - 2010 PASSED BY LEARNED CIT(A) DISMISSING APPEAL AGAINST QUANTUM ASSESSMENT AND THE SAID APPELLATE ORDER DATED 31 - 08 - 2010 PASSED BY LEARNED CIT(A) HAD ATTAINED FINALITY. T HE LEARNED CIT(A) MADE THE FOLLOWING OBSERVATIONS WHILE PASSING APPELLATE ORDER DATED 31 - 08 - 2010 AGAINST QUANTUM ASSESSMENT , WHICH IS REPRODUCED HEREUNDER : 3.1 FURTHER FACTS ARE THAT, THE APPELLANT WAS FOUND TO HAVE CLAIMED DEDUCTION U/S 54F IN RES PECT OF A FLAT PURCHASED DURING THE AY 02 - 03 AND THE DEDUCTION CLAIMED WAS OF THE ORDER OF RS.1,03,44,000/ - . SINCE THE PURCHASE WAS CANCELLED WITHIN 3 YEARS FROM THE DATE OF PURCHASE, THE APPELLANT WAS REQUIRED TO SURRENDER THE DEDUCTION ALREADY CLAIMED A S DEEMED CAPITAL GAINS WITHIN THE MEANING OF SECTION 54F(3) BUT HE OMITTED TO DO SO. HENCE, THE APPELLANT HAS FILED REVISED RETURN SURRENDERING THE DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - . THE AO ACCEPTED THE RETURNED INCOME AND INITIATED PENALTY PROCEEDI NGS U/S 271(1)(C). THE AO ALSO CHARGED INTEREST U/S 234B AND 234C OF THE ACT. INITIATION OF PENALTY PROCEEDINGS AND CHARGING OF INTEREST U/S 234B AND 234C ARE CONTESTED IN THE APPEAL. ITA 4506/MUM/2014 30 3.2 I FIND THAT THE TAXES DUE ON THE INCOME ESTIMATED IN THE REVISED RE TURN IS NOT PAID BEFORE FILING THE APPEAL . RS. 33,74,206/ - OF TAXES ON ADMITTED INCOME HAS BEEN PAID ON 17/02/2010, THAT IS MUCH AFTER FILING OF APPEAL ON 29/01/2010. 3.3 ACCORDING TO THE PROVISIONS OF SECTION 249(4)(A) , FOR AN APPEAL TO BE ADMITTED, O NE OF THE PRE REQUISITE IS THAT, THE ADMITTED TAX IS PAID BEFORE FILING OF APPEAL. HERE, IN THE INSTANT CASE, THE APPELLANT HAS FAILED TO PAY THE TAXES AND, THEREFORE , THE APPEAL DOES NOT QUALIFY TO BE ADMITTED. ACCORDINGLY, I DISMISS THE APPEAL. THE A .O. HAD OBSERVED DURING PENALTY PROCEEDINGS U/S 271(1)(C) THAT THE ACT OF THE ASSESSEE IN OMITTING TO DECLARE DEEMED CAPITAL GAIN CHARGEABLE TO TAX U/S 54F(3) WAS DELIBERATE AND INTENTIONAL ACT OF THE ASSESSEE BECAUSE THE ASSESSEE CANCELLED THE BOOKING OF FLAT DURING F.Y.2004 - 05 WITHIN THREE YEARS OF ALLOTMENT WHICH WAS EARLIER ALLOTTED IN AY 2002 - 03 AGAINST WHICH DEDUCTION U/S 54F WAS CLAIMED IN AY 2002 - 03 , THEREFORE, THE ASSESSEE AT THE TIME OF FILING OF ORIGINAL RETURN OF INCOME U/S.139(1) OF THE ACT ON 25 - 08 - 2005 OR AT THE TIME OF FILING OF RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A OF THE ACT SHOULD HAVE WITHDRAWN THE SAID CLAIM BY OFFERING TO TAX SAID DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - CHARGEABLE TO TAX U/S 54F(3) . THE AO HAD OBSERVED THAT THE ASSESSEE REVISED RETURN OF INCOME ONLY DURING THE COURSE OF SCRUTINY PROCEEDINGS U/S 153A R.W.S. 143(2) AND THAT TOO AT THE FAG END OF THE ASSESSMENT PROCEEDINGS ON 22 - 12 - 2009 BY DECLARING TOTAL INCOME OF R S .1,20,08,286/ - WHICH INCLUDED AN AMOUNT OF R S .1,03,44,000/ - BEING DEEMED CAPITAL GAIN S U/S.54F(3) OF THE ACT. THE AO FRAMED ASSESSMENT ORDER U/S 153A R.W.S. 143(3) ON 24 - 12 - 2009 I.E WITHIN 2 DAYS OF ASSESSEES FILING REVISED RETURN OF INCOME ON 22 - 12 - 2009 . IT WAS OBSERVED BY THE A.O. THAT IF THE SAID DEEMED CAPITAL GAIN U/S 54F(3) DID NOT HAVE COME TO THE NOTICE OF THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A R.W.S. 143(2), THE ENTIRE AMOUNT WOULD HAVE ESCAPED ASSESSMENT AND WOULD HAVE GONE TAX - FREE . IT WAS OBSERVED BY THE AO THAT TH E SAID OMISSION TO HIDE INCOME BY THE ASSESSEE WAS DELIBERATE AND INTENTIONAL ACT ON THE PART OF THE ASSESSEE AND ITA 4506/MUM/2014 31 HENCE REVISED RETURN OF INCOME FILED AT THE FAG END OF THE ASSESSMENT ON 22 - 12 - 2009 COULD NOT ABSOLVE ASSESSEE FROM PRESUMPTION AS TO CONCEAL MENT OF INCOME IN ORIGINAL RETURN OF INCOME . THE ASSESSEE HAD SUBMITTED BEFORE LEARNED AO THAT THE ASSESSEE HAD MADE A BONAFIDE CLAIM OF DEDUCTION U/S 54F OF THE ACT FOR A.Y. 2002 - 03. IT WAS SUBMITTED THAT THE ASSESSEE HAD INVESTED NET CONSIDERATION I.E. WITH RESPECT OF THE CAPITAL ASSET SOLD IN THE NEW ASSET WITHIN THE SPECIFIED TIME LAID DOWN UNDER THE RELEVANT SECTION U/S 54F AND THE AMOUNT PAID TOWARDS PURCHASE OF THE NEW ASSET WAS KEPT WITH THE BUILDER FOR MORE THAN THREE YEARS. THE PURCHASE WAS NOT COMPLETED BY WAY OF A REGISTERED AGREEMENT AND THE ALLOTMENT WAS CANCELLED. IT WAS SUBMITTED THAT THE ASSESSEE DID NOT OWN MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET , HENCE, ASSESSEE WAS ENTITLE D FOR DEDUCTION U/S 54F OF THE ACT IN ASSESSMENT YEAR 2002 - 03. THERE WAS A CONDITION THAT THE NEW ASSET COULD NOT BE TRANSFERRED WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF PURCHASE IN FINANCIAL YEAR 2001 - 02 WHICH CONDITION COULD NOT BE COMPLIED WITH AS THE SAID ALLOTMENT WAS CANCELLED IN AY 2005 - 06. THE ASSESSEE SUBMITTED THAT HE SHOULD HAVE DECLARED THE DEEMED CAPITAL GAIN U/S 54F(3) OF THE ACT IN A.Y. 2005 - 06 AS INCOME IN THE RETURN OF INCOME . IT WAS SUBMITTED THAT THE ASSESSEE, ON REALIZING THE GE NUINE MISTAKE IN NOT RETURNING THE DEEMED CAPITAL GAIN U/S 54F(3) OF THE ACT, VOLUNTARILY FILED THE REVISED RETURN OF INCOME RETURNING THE DEEMED CAPITAL GAIN U/S 54F(3) OF THE ACT WHICH WAS BROUGHT TO THE NOTICE OF THE A.O. , VIDE LETTER DATED 22.12.2009. THUS, THE ASSESSEE SUBMITTED THAT THE CONDUCT AND THE INTENTION OF THE ASSESSEE WAS BONAFIDE AND PROPER EXPLANATION WAS GIVEN BY THE ASSESSEE BEFORE THE A.O. IN SUPPORT OF HIS CONTENTION, THE ASSESSEE RELIED UPON THE RELEVANT PROVISIONS OF SECTION 139 (5) OF THE ACT. THE ASSESSEE ALSO RELIED UPON VARIOUS CASE LAWS WHEREIN IT IS HELD THAT NO PENALTY IS EXIGIBLE IF AN ASSESSEE HAD COMMITTED DEFAULT UNDER A BONAFIDE BELIEF WHICH WAS RECTIFIED BY FILING A REVISED RETURN OF ITA 4506/MUM/2014 32 INCOME WITHDRAWING THE CLAIM AND ALSO THERE WAS NO CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE CASE LAWS RELIED UPON BY THE ASSESSEE WERE CIT V. SURESH CHANDRA MITTAL , (2011) 119 TAXMAN 433(SC) AND CIT V. SURESH CHANDRA MITTAL, (2002) 123 TAXMAN 1052(MP). THE A.O. R EJECTED THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE HAD REVISED HIS RETURN OF INCOME ADMITTING TOTAL REVISED INCOME AT RS. 1,20,08,286/ - ONLY AT THE FAG END OF SCRUTINY PROCEEDINGS THAT TOO ONLY AFTER REALIZING THAT A.O. IS GOING ON RIGHT TRACK ABO UT FINDING THAT DEDUCTION CLAIMED BY THE ASSESSEE U/S 54F WAS WRONG AND TO BE WITHDRAWN IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR BY OFFERING THE SAME AS DEEMED CAPITAL GAIN U/S 54F(3). THE AO OBSERVED THAT IT IS BEST KNOWN TO THE ASSES SEE AS TO HOW HE DID NOT REALIZED THE MISTAKE OF CLAIMING WRONG EXEMPTION U/S 54F FROM THE DATE OF CANCELLATION OF BOOKING IN FY 2004 - 05 TO FILING OF REVISED RETURN OF INCOME I.E. 22 - 12 - 2009 , WHICH ESTABLISHED THE CASE OF THE REVENUE THAT THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE AO OBSERVED THAT MISTAKE CAN HAPPEN ONE TIME BUT NOT TWICE AS THE ASSESSEE FILED RETURN OF INCOME FIRSTLY U/S 139(1) ON 25 - 08 - 2005 AND SECONDLY FILED RETURN OF INCOME IN PURSUANCE OF NOTICE U/S 153A ON 10 - 10 - 2008. THE AO DISTINGUISHED THE DECISIONS CITED BY THE ASSESSEE AND HELD THAT IT IS ONLY WHEN THE ASSESSEE WAS CORNERED BY THE AO AS THE AO NOTICED THAT DEEMED CAPITAL GAINS WERE NOT OFFERED FOR TAXATION THAT THE ASSESSEE CAME FORW ARD TO DECLARE THE DEEMED CAPITAL GAINS U/S 54F(3) AS INCOME IN REVISED RETURN OF INCOME FILED ON 22 - 12 - 2009 AND THAT TOO AT FAG END OF SCRUTINY PROCEEDINGS. IT WAS HELD THAT IF THE AO WOULD NOT HAVE NOTICED THIS WRONG CLAIM OF THE ASSESSEE, THE ENTIRE DEE MED CAPITAL GAIN OF RS.1,03,44,000/ - WOULD HAVE GONE TAX - FREE. THUS, IT WAS HELD BY THE AO THAT THE SAID OMISSION WAS DELIBERATE AND INTENTIONAL AND THUS FILING OF REVISED RETURN OF INCOME CANNOT ABSOLVE AN ASSESSEE FROM PRESUMPTION AS TO THE CONCEALMENT O F INCOME IN ORIGINAL RETURN OF INCOME. ITA 4506/MUM/2014 33 THE A.O. HAD OBSERVED THAT THE SEARCH AND SEIZURE ACTION U/S 132(1) LED TO THE SCRUTINY PROCEEDINGS AFRESH FOR THE YEAR UNDER CONSIDERATION OTHERWISE THE ASSESSEE WOULD NOT HAVE OFFERED THE SAID AMOUNT FOR TAXATION. THE AO HAD OBSERVED THAT THE ASSESSEE HAD ADMITTED WHEN THE CONCEALMENT HAS BEEN DETECTED BY THE REVENUE AND SUCH CONCEALMENT WOULD NOT ABSOLVE THE ASSESSEE FROM THE DEFAULT OF CONCEALMENT COMMITTED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139(1) ON 25 - 08 - 2005 AND RETURN OF INCOME FILED IN PURSUANT TO NOTICE U/S 153A(A) ON 10 - 10 - 2008. THUS, THE AO HAD HELD THAT MERELY BECAUSE ASSESSEE ADMITTED CONCEALMENT OF INCOME AND FILED A REVISED RETURN OF INCOME ON 22.12.2009 JUST TWO DAYS BEFORE THE DATE OF PA SSING OF THE ASSESSMENT ORDER ON 24 - 12 - 2009 U/S 153A R.W.S. 143(3) WOULD NOT ABSOLVE THE ASSESSEE FROM THE PENALTY PROVISIONS OF SECTION 271(1)(C) . THUS, IT WAS OBSERVED BY THE AO THAT THE INTENTION OF THE ASSESSEE WAS TO HIDE THE INCOME AND TO AVOID PAY ING CORRECT TAX LIABILITY. THE AO HELD THAT HAD THIS NOT BEEN DETECTED BY THE AO , THE SAID INCOME WOULD HAVE GONE TAX FREE AND THE SAID OMISSION BY THE ASSESSEE WAS INTENTIONAL AND MERE FILING OF REVISED RETURN OF INCOME WOULD NOT ABSOLVE ASSESSEE FROM P RESUMPTION AS TO CONCEALMENT OF INCOME IN ORIGINAL RETURN OF INCOME AND HENCE THE ASSESSEE WAS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AS PER PROVISIONS OF SECTION 271(1)(C) OF THE ACT, THE AO IMPOSED PENALTY OF RS.23,21,194/ - BEING 100% T AX SOUGHT TO BE AVOIDED VIDE PENALTY ORDER DATED 30 - 03 - 2012 PASSED U/S 271(1)(C) OF THE 1961 ACT. THE LD. CIT(A) IN FIRST APPEAL AGAINST PENALTY ORDER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD CLAIMED D EDUCTION U / S. 54F OF THE ACT AMOUNTING TO RS. 1,03,44,000 / - IN RESPECT OF LONG TERM CAPITAL GAIN IN A.Y. 2002 - 03 AS HE HAD BOOKED A FLAT FOR THIS AMOUNT WHICH WAS CANCELLED IN F.Y. 2004 - 05 I.E. YEAR UNDER CONSIDERATION. IT WAS OBSERVED BY LEARNED CIT(A) THAT THE ASSESS EE HAS NOT WITHDRAWN THE ITA 4506/MUM/2014 34 CLAIM OF DEDUCTION U / S. 54F OF THE ACT AND DID NOT OFFER THE AMOUNT OF RS. 1,03,44,000/ - FOR TAXATION IN HIS RETURN OF INCOME FILED FOR THE IMPUGNED AY 2005 - 06. THIS AMOUNT HAS BEEN OFFERED FOR TAXATION IN THE REVISED RETURN OF INC OME FILED ON 22 ND DECEMBER, 2009 DURING THE COURSE OF ASSESSMENT PROCEEDINGS U / S. 143(3) R.W.S. 153A OF THE ACT. THE A.O. HAD LEVIED PENALTY U / S. 271(1)(C) OF THE ACT ON THE GROUND THAT THE INCOME OFFERED BY THE A SSESSEE IN HIS REVISED RETURN OF INCOME FILED ON 22 ND DECEMBER, 2009 WAS NOT A VOLUNTARY DECLARATION. THE A.O. HAD DETECTED TH IS MISTAKE OF THE A SSESSEE HENCE THE ASSESSEE HAD NO CHOICE BUT TO OFFER THIS INCOME FOR TAXATION AS THE ASSESSEE WAS CORNERED BY THE AO . HOWEVER, THE LEARNED CIT(A) OBSE RVED THAT THE ASSESSEE CONTENDED THAT THAT HE HAD REALIZED HIS MISTAKE ON HIS OWN AND HAD VOLUNTARILY OFFERED THIS INCOME FOR TAXATION. THE LD. CIT(A) REFERRED TO THE ORDER SHEET ENTRY DATED 22 - 12 - 2009 WHICH WAS PRODUCED BY THE ASSESSEE IN HIS AFFIDAVIT FI LED WITH THE ADDITIONAL GROUND OF APPEAL WHICH IS REPRODUCED BELOW: - ORDER SHEET ENTRY RECORDED BY ASSESSING OFFICER ON 22.12.2009. IN RESPONSE TO NOTICE U/S. 142 (1) SHRI GYANESHWAR KATARAM ATTENDED ON BEHALF OF THE ASSESSEE. IT IS STATED THAT THE ASSESSEE HAS ALREADY FILED DETAILS IN RESPONSE TO NOTICE U/S. 142(1) ON 11 .12.2009 IN TAPAL. IN REGARD TO THE ASSESSMENT YEAR 2005 - 06, THE ASSESSEE SATED THAT THROUGH OVERSIGHT THE ASSESSEE HAS N OT DECLARED THE DEEMED CAPITAL GAIN U/S. 54F(3) AS THE FLAT WHICH WAS PURCHASED DURING THE ASSESSMENT YEAR 2002 - 03 WAS SURRENDERED BY THE ASSESSEE WITHIN 3 YEARS FROM PURCHASE. HE NCE THE ASSESSEE HAS FILED REVISED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2 005 - 06 ADMITTING THEREON THE DEEMED CAPITAL GAIN U/S. 54F(3). IT IS FURTHER STATED THAT THE ASSESSEE WILL PAY THE ADDITIONAL TAX DUE THEREON. ACCORDING TO THE LD. CIT(A), THE CONTENTION OF THE ASSESSEE THAT HE HAD SURRENDERED THE ADDITIONAL INCOME VOLUNT ARILY APPEARS TO BE CORRECT. IT WAS OBSERVED THAT THE A . O WHILE FRAMING THE ASSESSMENT ORDER U / S 153A R.W. S ITA 4506/MUM/2014 35 143(3) OF THE ACT HA D NOT REFERRED TO ANY INCRIMINATING DOCUMENT / MATERIAL FOUND DURING THE COURSE OF SEARCH U/S 132(1) AT THE ASSESSEES PREMISES. I T WAS OBSERVED BY THE LD. CIT(A) THAT THE SCOPE OF SECTION 153A OF THE ACT IS LIMITED TO MAKING ADDITION ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH. THIS CASE IN THE OPINION OF LEAR N ED CIT(A) THUS IS AN UNABATED ASSESSMENT AND THERE WAS NO PENDING ASSESSMENT ON THE DATE OF INITIATION OF SEARCH U/S 132(1). IT WAS OBSERVED BY THE LD. CIT(A) THAT THE SEARCH U/S 132(1) HAD BEEN INITIATED ON 17 TH JANUARY, 2008 AND THE RETURN OF INCOME U/S 139(1) OF THE ACT WAS ORIGINALLY FILED ON 25 TH AUGUST, 2005 HENCE THE TIME LIMIT FOR COMPLETING THE PROCESSING HAD ALREADY EXPIRED ON 31 ST MARCH, 2007 I.E. ONE YEAR FROM THE END OF THE FINANCIAL YEAR. THE LEARNED CIT(A) OBSERVED THAT THE NOTICE U/S 143(2) COULD HA VE BEEN ISSUED BY THE AO BY 31 ST AUGUST, 2006 I.E. 12 MONTHS AFTER THE END OF THE MONTH IN WHICH THE RETURN OF INCOME WAS FILED, HENCE, THE ASSESSMENT STOOD COMPLETED AND WAS NOT PENDING ON THE DATE OF INITIATION OF SEARCH I.E. 17 - 01 - 2008. THUS, THE LD. CI T(A) CONCLUDED THAT THE ADDITION WAS MADE ON THE BASIS OF VOLUNTARY DECLARATION MADE BY THE ASSESSEE IN THE REVISED RETURN OF INCOME FILED ON 22 ND DECEMBER, 2009, THEREFORE, THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WAS NOT JUSTIFIABLE AND ACCORDI NGLY LEARNED CIT(A) DIRECTED THE A.O. TO DELETE THE SAME, VIDE APPELLATE ORDER DATED 27 - 03 - 2014 PASSED BY LEARNED CIT(A). AFTER CAREFULLY CONSIDERING ALL THE RELEVANT MATERIAL ON RECORD INCLUDING ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAWS CITED BY BOTH THE RIVAL PARTIES WE HAVE OBSERVED THAT THE APPELLATE ORDER OF LEARNED CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAWS FOR THE FOLLOWING REASONS : A . ) THE ASSESSEE MADE DECLARATION OF DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03,44,000/ - ON 22 - 12 - 2009 I.E. AT THE FAG END WHEN THE ASSESSMENT WAS ABOUT TO CONCLUDE. THE ASSESSEE HAD OTHER INCOMES TO THE TUNE OF RS.15,90,638/ - WHILE THE ASSESSEE HAS WHOPPING ITA 4506/MUM/2014 36 INCOME OF RS.1,03,44,000/ - FROM DEEMED CAPITAL GAINS U/S 54F(3) AND POSSIBILITY OF OMITTING SUCH INCOME BONAFIDELY IS EXTREMELY REMOTE RATHER IT CLEARLY INDICATES AN CONSCIOUS OMIT TO NOT DECLARE AND DISCLOSE SAID INCOME TO EVADE TAXES . THE SAID AMOUNT WAS RECEIVED AND CREDITED IN BANK STATEMENT BEING PART OF THE REFUND ON ACCOUNT OF CANCELLATION OF FLAT IN FY 2004 - 05 WHICH WAS BOOKED IN AY 2002 - 03. THE ASSESSEE DID NOT PAID THE ADVANCE TAX ON THE SAID INCOME . THE ASSESSEE DID NOT DECLARE THE SAID DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03,44,000/ - IN THE RETURN OF INCOME FILED U/S 139(1) ON 25 - 08 - 2005. THE ASSESSEE DID NOT DECLARE THE SAID INCOME AT THE TIME OF SEARCH U/S 132(1) ON 17 - 01 - 2008. THE ASSESSEE ALSO DID NOT DECLARE THE SAID INCOME IN THE RETURN OF INCOME FILED U/S 153A ON 10 - 10 - 2008. THE REVENUE DID NOT UNDERTOOK SCRUTINY PROCEEDINGS WHILE PROCE SSING RETURN ORIGINALLY FILED U/S 139(1) WHICH WAS PROCESSED U/S 143(1) , WHILE SCRUTINY ASSESSMENT WAS FRAMED W.R.T. RETURN OF INCOME U/S 153A FILED ON 10 - 10 - 2008 IN PURSUANCE TO NOTICE DATED 05 - 09 - 2008 U/S 153A WHICH WAS FILED PURSUANT TO SEARCH U/S 132(1 ) . THE ASSESSEE WAS ISSUED NOTICES U/S 143(2)/142(1) BY THE AO FROM TIME TO TIME , AND IT IS ONLY IN REPLY TO NOTICE DATED 27 - 11 - 2009 ISSUED BY THE AO U/S 142(1) , THE ASSESSEE FILED, INTER - ALIA BANK STATEMENTS AND DETAILS OF CAPITAL GAINS VIDE REPLY DATED 03 - 12 - 2009 FILED ON 11 - 12 - 2009 . IN THE SAID REPLY FILED ON 11 - 12 - 2009 THE ASSESSEE CHOSE NOT TO DECLARE SAID DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03,44,000/ - WHILE OTHER CAPITAL GAINS EARNED BY THE ASSESSEE WERE DECLARED . THE ASSESSEE ALSO FILED DETAIL S OF CAPITAL GAINS ON 31 - 07 - 2009 BEFORE THE AO IN PROCEEDINGS U/S 153A BUT THE ASSESSEE DID NOT DECLARE DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03,44,000/ - ON 31 - 07 - 2009 . AT THIS STAGE VIDE REPLY FILED BY THE ASSESSEE ON 11 - 12 - 2009 , THE AO CAME INTO POSS ESSION OF BANK STATEMENTS WHEREIN THE SAID AMOUNT OF REFUND RECEIVED FROM ITA 4506/MUM/2014 37 BUILDER ON CANCELLATION OF FLAT WAS CREDITED WHICH INCLUDED DEEMED CAPITAL GAINS EARNED BY THE ASSESSEE U/S 54F(3) . THE DEEMED CAPITAL GAINS EARNED BY THE ASSESSEE U/S 54F(3) WAS WHO PPING TO THE TUNE OF RS.1,03,44,000/ - WHILE THE OTHER INCOME EARNED BY THE ASSESSEE IN AGGREGATE WAS ONLY RS.15,90,638/ - . THEN ON 22 - 12 - 2009 , THE ASSESS E E FILED REVISED RETURN OF INCOME DECLARING SAID INCOME FROM DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03 ,44,000/ - AND ALSO FILED LETTER DATED 22 - 12 - 2009 INTIMATING ABOUT THE DISCLOSURE OF THE SAID DEEMED CAPITAL GAIN INCOME IN THE REVISED RETURN OF INCOME FILED WITH THE REVENUE ON 22 - 12 - 2009. INCIDENTALLY THE ASSESSEE DID NOT PAY TAXES AND INTEREST AT THIS S TAGE ALSO ON 22 - 12 - 2009 WHICH HE WAS REQUIRED TO PAY ALONG WITH REVISED RETURN OF INCOME DECLA RING AND DISCLOSING SAID INCOME OF DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - . THE DISCLOSURE WAS MADE AT THE STAGE WHE N THE ASSESSMENT PROCEEDINGS WERE AT FAG END , WHICH ASSESSMENT PROCEEDINGS CULMINATED INTO AN ASSESSMENT ORDER DATED 24 - 12 - 2009 U/S 153A R.W.S. 143(3). IT IS PERTINENT TO MENTION THAT THIS INCOME IS AN ADMITTED INCOME WHICH WAS NOT EARLIER DISCLOSED BY THE ASSESSEE TO REVENUE . ON CONSIDERATION OF O VERALL FACTUAL MA TRIX OF THE CASE, WE ARE OF CON SID E RED VIEW THAT THE CONDUCT OF THE ASSESSEE IS NOT AT ALL BONAFIDE AND EXPLANATION S OFFERED BY HIM IS NOT CORRECT THAT THE SAID REVISED RETURN OF INCOME WAS FILED VOLUNTARILY. IT WAS IN FACT WHEN ASSESSEE W AS COM PLETELY CORNERED BY THE REVENUE AND NO OPTION WAS LEFT WITH THE ASSESSEE BUT TO OFFER THE SAID INCOME FOR TAXATION, THE ASSESSEE CAME FORWARD BY DISCLOSING THE SAID INCOME IN THE REVISED RETURN OF INCOME FILED ON 22 - 12 - 2009. THUS, THE CONDUCT AND EXPL ANATION OF THE ASSESSEE W.R.T. OFFERING THIS INCOME IN THE REVISED RETURN OF INCOME ON 22 - 12 - 2009, WAS NEITHER BONAFIDE NOR VOLUNTARY BUT WAS RATHER UNDER COMPULSION AS THE ASSESSEE WAS CORNERED BY REVENUE AND IS HIT BY EXPLANATION 1 TO SECTION 271(1)(C). REFERENCE IS ITA 4506/MUM/2014 38 DRAWN TO THE DECISION IN THE CASE OF MAK DATA PRIVATE LIMITED(SUPRA), WHEREIN HONBLE SUPREME COURT HELD AS UNDER: 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAI N DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURV EY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLA RE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. IN THE INSTANT CA SE , SEVERAL SUCCESSIVE STAGES HAVE PASSED WHEREIN THE ASSESSEE CONTINUED WITH NON DISCLOSURE OF SAID INCOME TO THE REVENUE AS WE HAVE SEEN IN PRECEDING PARAS AND IT IS ONLY AT THE FAG END WHEN ASSESSMENTS WERE ABOUT TO BE CONCLUDED, AT THE REQUISITION OF INFORMATION BY THE AO U/S 142(1) VIDE NOTICE DATED 27 - 11 - 2009, THE ASSESSEE WAS COMPELLED TO FILE BANK STATEMENTS AND DETAILS OF CAPITAL GAINS VIDE REPLY DATED 03 - 12 - 2009 FILED ON 11 - 12 - 2009 . INCIDENTALLY EVEN WHILE FILING REPLY ON 11 - 12 - 2009 , STILL THE ASSESSEE CHOSE NOT TO DISCLOSE DEEMED CAPITAL GAINS U/S 54F(3) TO THE TUNE OF ITA 4506/MUM/2014 39 RS.1,03,44,000/ - AND RATHER WRONG DECLARATION OF CAPITAL GAINS WERE MADE WHICH DID NOT INCLUDED DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - EARNED BY THE ASSESSEE U/S 54F(3) . IT IS THE COMING OF BANK STATEMENTS OF THE ASSESSEE IN POSSESSION OF THE AO VIDE REPLY FILED ON 11 - 12 - 2009 ( REPLY DATED 03 - 12 - 2009) , WHEREIN SAID AMOUNTS OF REFUND OF RS.1,03,44,000/ - ON CANCELLATION OF BOOKING OF FLAT STOOD CREDITED ALONG WITH THE DETAILS OF CAPITAL GAINS SUBMITTE D BY THE ASSESSEE BEFORE THE AO WHERE IN DEEMED CAPITAL GAINS U/S 54F(3) WERE NOT REFLECTED SUBMITTED BY THE ASSESSEE VIDE LETTER FILED ON 11 - 12 - 2009 , THE ASSESSEE AT LAST GOT CORNERED BY THE AO WHICH TRIGGERED THE ASSESSEE TO FILE REVISED RETURN OF INCOME ON 22 - 12 - 2009 AT THE FAG END OF ASSESSMENT WHICH CANNOT COME TO RESCUE OF THE ASSESSEE FROM THE CLUTCHES OF PENALTY PROVISIONS U/S 271(1)(C) MORE SO WHEN SEVERAL STAGES PASSED WHEREIN THE ASSESSEE COULD HAVE DECLARED THE SAID DEEMED CAPITAL GAINS U/S 54F(3) BUT THE ASSESSEE CHOSE NOT TO DECLARE SAID DEEMED CAPITAL GAINS U/S 54F(3) AND THE OBSERVATIONS OF THE LORDSHIPS IN MAK DATA PRIVATE LIMI TED(SUPRA) ASSUMED SIGNIFICANCE, WHICH ARE REPRODUCED HEREUNDER : HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSE E TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. ITA 4506/MUM/2014 40 THE ASSESSEE WAS SEARCHED ON 17 - 01 - 2008 WHILE RETURN OF INCOME U/S 153A WAS FILED ON 10 - 10 - 2008 I.E. MORE THAN EIGHT MONTHS AFTER THE SEARCH AND THE ASSESSEE HAD NO INTENTION OF DECLARING THE SAID DEEMED CAPITAL GAINS U/S 54F(3) OF RS.1,03,44,000/ - EVEN IN THE RETURN OF INCOME FILED ON 10 - 10 - 2008 IN PURSUANCE TO SEA RCH AND WRONG DECLARATION U/S 140 WAS EXECUTED BY THE ASSESSEE. THE SAID INCOME OF DEEMED CAPITAL GAINS U/S 54F WAS ONLY SURRENDERED ON 22 - 12 - 2009 I.E AT THE FAG END OF ASSESSMENT PROCEEDINGS U/S 153A WHEN THE ASSESSEE WAS CORNERED BY THE AO AND HENCE THIS DISCLOSURE WAS NOT A VOLUNTARY DISCLOSURE MADE BY THE ASSESSEE AS THE ASSESSEE NEVER HAD THE INTENTION OF DISCLOSING THIS INCOME TO THE REVENUE. TWICE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A ON 31 - 07 - 2009 AND 11 - 12 - 2009 , WRONG DECLARATION O F CAPITAL GAINS EARNED BY THE ASSESSE WHICH EXCLUDED THIS DEEMED CAPITAL GAINS U/S 54F(3) WAS FILED BY THE ASSESSEE. B . ) THE ASSESSEE HAS TAKEN A PLEA THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH U/S 132(1) ON 17 - 01 - 2008 AND HENCE NO ADDITIONS COULD HAVE BEEN MADE BY THE AO IN QUANTUM ASSESSMENT WHEREIN RELIANCE IS PLACED ON THE DECISION OF ALL CARGO GLOBAL LOGISTICS LIMITED V. DCIT (2012) 137 ITD 287(MUM) AND CIT V MURLI AGRO PRODUCTS LIMITED (2014) 49 TAXMANN.COM 172(BOM) , THE PLEA HAS BEEN TAKEN BY THE ASSESSEE THAT THE LEVIABILITY OF PENALTY IS NOT JUSTIFIABLE AS QUANTUM ITSELF IS NOT SUSTAINABLE AS THE ASSESSMENT WAS AN UNABATED ASSESSMENT FOR AY 2005 - 06. THE FACTUAL MATRIX OF THE CASE BEFORE US IS CLEARLY DISTINGUISHABL E , IT IS A CASE BEFORE US WHEREIN THE ASSESSEE HAS EARNED UNDISPUTEDLY AND ADMITTEDLY AN DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - U/S 54F(3) WHICH WAS ALWAYS TAXABLE AS ADMITTED BY THE ASSESSEE AND WAS ALSO REFLECTED IN THE BANK STATEMENTS OF THE ASSESSEE WHICH BANK ACCOUNTS WERE DECLARED TO THE REVENUE AS THE SAID DEEMED CAPITAL GAIN EARNED BY THE ASSESSEE BEING PART OF REFUND ON CANCELLATION OF BOOKING OF FLAT STOOD CREDITED IN THE SAID ITA 4506/MUM/2014 41 DECLARED BANK ACCOUNTS BUT THE ASSESSEE DID NOT DISCLOSE THE SAID IN COME ARISING FROM DEEMED CAPITAL GAINS U/S 54F(3) TO REVENUE DESPITE BEING UNDISPUTEDLY AND ADMITTEDLY LIABLE TO TAXATION AND THE ASSESSEE EXECUTED WRONG VERIFICATIONS U/S 140 OF HAVING DECLARED TRUE AND CORRECT DISCLOSURE OF TOTAL INCOME WHILE FILING RETU RN OF INCOME U/S 139(1) ON 25 - 08 - 2005 AND U/S 153A ON 10 - 10 - 2008 AS THE ADMITTED DEEMED CAPITAL GAINS WERE NOT DECLARED TO REVENUE IN RETURN OF INCOME FILED WITH THE REVENUE AND WHEN THE ASSESSEE WAS FINALLY CORNERED AFTER THE AO CAME INTO POSSESSION OF BANK STATEMENTS ON 11 - 12 - 2009 , THE ASSESSEE CAME FORWARD TO DISCLOSE THE SAID INCOME OF RS.1,03,44,000/ - BY WAY OF DEEMED CAPITAL GAINS U/S 54F(3) IN REVISED RETURN OF INCOME FILED WITH THE REVENUE ON 22 - 12 - 2009 . THERE WAS A DELIBERATE AND CONSCIOUS ATTEMP T BY THE ASSESSEE TO CONCEAL THE SAID INCOME FROM REVENUE WHICH WAS ADMITTEDLY LIABLE TO TAX UNDER THE PROVISIONS OF THE ACT AND IN - FACT IT WAS INCUMBENT ON THE ASSESSEE TO HAVE OFFERED THE SAME TO TAX OF HIS OWN WHILE FILING RETURN OF INCOME WITH THE REVE NUE AT THE FIRST INSTANCE WHICH THE ASSESSEE FAILED TO DO SO AND EXECUTED WRONG VERIFICATION U/S 140 TWICE , FIRSTLY WHILE FILING RETURN OF INCOME U/S 139(1) ON 25 - 08 - 2005 AND SECONDLY WHILE FILING RETURN OF INCOME ON 10 - 10 - 2008 U/S 153A IN PURSUANT TO SEARCH U/S 132(1) . THE ASSESSEE ALSO FILED WRONG DETAILS OF CAPITAL GAINS ON 31 - 07 - 2009 AND 11 - 12 - 2009 WHEREIN THE SAID DEEMED CAPITAL GAINS U/S 54F(3) WERE NOT DISCLOSED IN THE DETAILS OF CAPITAL GAINS FILED WITH THE REVENUE. THE ASSESSEE IS NOT DISPUTING THAT THE ASSESSEE IS NOT LIABLE TO TAX ON THESE DEEMED CAPITAL GAIN CHARGEABLE TO TAX U/S 54F(3), WHICH IS ADMITTED AND ACKNOWLEDGED BY THE ASSESSEE TO BE TAXABLE BY FILING REVISED RETURN OF INCOME ON 22 - 12 - 2009 WHEREIN SAID DEEMED CAPITAL GAINS WERE OFFE RED FOR TAXATION. THE AO ACC EPTED REVISED RETURN OF INCOME AND FRAMED ASSESSMENT U/S 143(3) R.W.S 153A ON 24 - 12 - 2009. ARTICLE 265 OF THE CONSTITUTION OF INDIA STIPULATES THAT N O TAX SHALL BE LEVIED OR COLLECTED EXCEPT BY AUTHORITY OF LAW . THE INCOME - TAX A CT,1961 PROVIDES AND MANDATES FOR LEVYING AND COLLECTION OF ITA 4506/MUM/2014 42 INCOME - TAX. THE ASSESSEES ARE REQUIRED TO DISCLOSE THEIR TRUE AND CORRECT INCOME AND PAY TAXES IN ACCORDANCE WITH PROVISIONS OF THE 1961 ACT BY FIL ING THEIR TRUE AND CORRECT RETURN OF INCOME. TO SAY BY CONCEALING THE SAID ADMITTED INCOME FROM REVENUE , ASSESSEE GOT IMMUNITY WILL BE INFRINGEMENT OF ARTICLE 14 OF THE CONSTITUTION OF INDIA VIS - - VIS HONEST TAX - PAYER WHEREIN THERE WILL BE PREMIUM ON DISHONESTY WHICH CANNOT BE PERMITTED AS THE COURTS W ILL NOT PERPETUATE DISHONESTY. IT IS NOT THE CLAIM OF THE ASSESSEE THAT THE REVENUE IS TRYING TO BRING THE SAID INCOME WITHIN AMBIT OF TAX LAWS BY DISTURBING CONCLUDED ASSESSMENT IN THE ABSENCE OF INCRIMINATING MATERIAL AS OTHERWISE THIS INCOME WAS CLAIMED BY THE ASSESSEE AS AN INCOME NOT CHARGEABLE TO TAX AS PER PROVISIONS OF THE 1961 ACT BUT FOR REVENUE BRINGING TO TAX THE SAME UNDER 153A ASSESSMENT WITHOUT ANY INCRIMINATING MATERIAL , NOR IS THE CLAIM OF THE ASSESSEE THAT REVENUE IS TAKING A DIFFERENT VI EW ON THE SAME RECEIPTS WHICH WERE EARLIER HELD TO BE EXEMPT BY REVENUE BY DISTURBING CONCLUDED ASSESSMENT IN THE ABSENCE OF INCRIMINATING MATERIAL AND IS NOW BEEN BROUGHT TO TAX BY REVENUE POST SEARCH AND THAT TOO WITHOUT ANY INCRIMINATING MATERIAL. IT I S RATHER INCOME SIMPLICITOR CHARGEABLE TO TAX WHICH ASSESSEE WAS CONCEALING FROM REVENUE AND WHICH GOT DETECTED DURING ASSESSMENT PROCEEDINGS U/S 153A. IT IS CLAIMED THAT IN THE INSTANT CASE NO ADDITION IS MADE BASED ON THE INCRIMINATING MATERIAL FOUND DUR ING THE COURSE OF SEARCH U/S 132(1) BUT IN OUR CONSIDERED VIEW BANK STATEMENTS OF THE BANK ACCOUNTS HELD BY THE ASSESSEE WHICH BANK ACCOUNTS WERE DECLARED BUT INCOME WAS NOT DECLARED , WHEREIN THE SAID REFUND ON CANCE LLATION OF ALLOTMENT OF FLAT WERE CREDITED WERE IN ITSELF INCRIMINATING MATERIAL AND THE SAID BANK ACCOUNTS WHICH WERE PART OF ACCOUNTS DECLARED TO REVENUE ARE IN ITSELF INCRIMINATING MATERIAL WARRANTING AND JUSTIFYING THE ADDITIONS IN QUANTUM . REFERENCE IS DRAWN TO THE CASE OF GURINDER SINGH BAWA(SUPRA) DECIDED BY HONBLE BOMBAY HIGH COURT , WHEREIN LORDSHIPS HELD AS UNDER IN PARA 6: ITA 4506/MUM/2014 43 6. CONSEQUENTLY, ONCE AN ASSESSMENT HAS ATTAINED FINALITY FOR A PARTICULAR YEAR I.E. IT IS NOT PENDING THEN THE SAME CANNOT BE SUBJECT TO TAX IN PROCEED INGS UNDER SECTION 153A OF THE ACT. THIS OF COURSE WOULD NOT APPLY IF INCRIMINATING MATERIALS ARE GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDINGS UNDER SECTION 153A OF THE ACT WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING REGULAR ASSESSMENT PROC EEDINGS. THUS, THE LORDSHIPS HELD IN GURINDER SINGH BAWA(SUPRA) CASE THAT A DIFFERENT VIEW CANNOT BE TAKEN ON MERITS QUA GIFTS DISCLOSED IN THE REGULAR ASSESSMENTS UNLESS THERE IS AN INCRIMINATING MATERIAL GATHERED IN THE COURSE OF SEARCH OR DURING PROCEEDINGS U/S 153A WHICH ARE CONTRARY TO AND/OR NOT DISCLOSED DURING ASSE SSMENT PROCEEDINGS. IN THE INSTANT CASE , THE AO DETECTED THE SAID DEEMED CAPITAL GAINS U/S 54F(3) AFTER COMING INTO POSSESSION OF BANK STATEMENTS AND DETAILS OF CAPITAL GAINS WHEREIN SAID DEEMED CAPITAL GAINS U/S 54F(3) WAS NOT DECLARED. SIMILAR VIEW HAS BEEN TAKEN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LIMITED REPORTED IN (2015) 374 ITR 645(BOM.) , WHEREIN LORDSHIPS HELD AS UNDER: 28. IN DEALING WITH THOSE ARGUMENTS, THE DIVISION BENCH OUTL INED THE AMBIT AND SCOPE OF THE POWERS CONFERRED BY SECTION 153A AND OBSERVED THUS : '(8) WE FIND IT DIFFICULT TO ACCEPT THE ABOVE CONTENTION RAISED ON BEHALF OF THE REVENUE. THE OBJECT OF INSERTING SECTIONS 153A, 153B AND 153C BY FINANCE ACT, 2003 BY DISC ARDING THE EXISTING PROVISIONS RELATING TO SEARCH CASES CONTAINED IN CHAPTER XIV B OF THE INCOME - TAX ACT, AS STATED IN THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL 2003 (SEE 260 ITR (ST) 191 AT 219) WAS THAT UNDER THE EXISTING PROVISIONS RE LATING TO SEARCH CASES, OFTEN DISPUTES WERE RAISED ON THE QUESTION, AS TO WHETHER A PARTICULAR INCOME COULD BE TREATED AS `UNDISCLOSED INCOME' OR WHETHER A PARTICULAR INCOME COULD BE SAID TO BE RELATABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH, E TC. WHICH LED TO PROLONGED LITIGATION. TO OVERCOME THAT DIFFICULTY, THE LEGISLATURE BY FINANCE ACT 2003, DECIDED TO DISCARD CHAPTER XIV B PROVISIONS AND INTRODUCE SECTIONS 153A, 153B AND 153C IN THE IT ACT. (9) WHAT SECTION 153A CONTEMPLATES IS THAT, NOTWITHSTANDING THE REGULAR PROVISIONS FOR ASSESSMENT/REASSESSMENT CONTAINED IN THE IT ACT, WHERE SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A ON OR AFTER 31/5/2003 ITA 4506/MUM/2014 44 IN THE CASE OF ANY PERSON, THE ASSESSING OFFICER SHALL I SSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME WITHIN THE TIME STIPULATED THEREIN, IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS CONDUCTED OR REQUISIT ION IS MADE AND THEREAFTER ASSESS OR REASSESS THE TOTAL INCOME FOR THOSE ASSESSMENT YEARS. THE SECOND PROVISO TO SECTION 153A PROVIDES FOR ABATEMENT OF ASSESSMENT/REASSESSMENT PROCEEDINGS WHICH ARE PENDING ON THE DATE OF SEARCH/REQUISITION. SECTION 153A (2 ) PROVIDES THAT WHEN THE ASSESSMENT MADE UNDER SECTION 153(A)(1)IS ANNULLED, THE ASSESSMENT OR REASSESSMENT THAT STOOD ABATED SHALL STAND REVIVED. (10) THUS ON A PLAIN READING OF SECTION 153A OF THE INCOME - TAX ACT, IT BECOMES CLEAR THAT ON INITIATION OF TH E PROCEEDINGS UNDER SECTION 153A, IT IS ONLY THE ASSESSMENT/REASSESSMENT PROCEEDINGS THAT ARE PENDING ON THE DATE OF CONDUCTING SEARCH UNDER SECTION 132 OR MAKING REQUISITION UNDER SECTION 132A OF THE ACT STAND ABATED AND NOT THE ASSESSMENTS/REASSESSMENTS ALREADY FINALISED FOR THOSE ASSESSMENT YEARS COVERED UNDER SECTION 153A OF THE ACT. BY A CIRCULAR NO. 8 OF 2003 DATED 18 - 9 - 2003 (SEE 263 ITR (ST) 61 AT 107) THE CBDT HAS CLARIFIED THAT ON INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE PROCEEDINGS PENDIN G IN APPEAL, REVISION OR RECTIFICATION PROCEEDINGS AGAINST FINALISED ASSESSMENT/REASSESSMENT SHALL NOT ABATE. IT IS ONLY BECAUSE, THE FINALISED ASSESSMENTS/REASSESSMENTS DO NOT ABATE, THE APPEAL REVISION OR RECTIFICATION PENDING AGAINST FINALISED ASSESSMEN T/REASSESSMENTS WOULD NOT ABATE. THEREFORE, THE ARGUMENT OF THE REVENUE, THAT ON INITIATION OF PROCEEDINGS UNDER SECTION 153A, THE ASSESSMENTS/REASSESSMENTS FINALISED FOR THE ASSESSMENT YEARS COVERED UNDER SECTION 153A OF THE INCOME - TAX ACT STAND ABATED CA NNOT BE ACCEPTED. SIMILARLY ON ANNULMENT OF ASSESSMENT MADE UNDER SECTION 153A (1) WHAT STANDS REVIVED IS THE PENDING ASSESSMENT/REASSESSMENT PROCEEDINGS WHICH STOOD ABATED AS PER SECTION 153A(1). (11) IN THE PRESENT CASE, AS CONTENDED BY SHRI MANI, LEARNE D COUNSEL FOR THE ASSESSEE, THE ASSESSMENT FOR ASSESSMENT YEAR 1998 - 99 WAS FINALISED ON THE 29 - 12 - 2000 AND SEARCH WAS CONDUCTED THEREAFTER ON 3 - 12 - 2003. THEREFORE, IN THE FACTS OF THE PRESENT CASE, INITIATION OF PROCEEDINGS UNDER SECTION 153A WOULD NOT AFF ECT THE ASSESSMENT FINALISED ON 29 - 12 - 2000. (12) ONCE IT IS HELD THAT THE ASSESSMENT FINALISED ON 29.12.2000 HAS ATTAINED FINALITY, THEN THE DEDUCTION ALLOWED UNDER SECTION 80 HHC OF THE INCOME - TAX ACT AS WELL AS THE LOSS COMPUTED UNDER THE ASSESSMENT DATE D 29 - 12 - 2000 WOULD ATTAIN FINALITY. IN SUCH A CASE, THE A.O. WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 143 (3) OF THE I.T. ACT COULD NOT HAVE DISTURBED THE ASSESSMENT/REASSESSMENT ORDER WHICH HAS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERED IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 153A OF THE INCOME - TAX ACT ESTABLISH THAT THE RELIEFS GRANTED UNDER THE FINALISED ASSESSMENT/REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153 A PROCEEDI NGS. ITA 4506/MUM/2014 45 (13) IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH OR DURING THE 153A PROCEEDINGS WHICH WOULD SHOW THAT THE RELIEF UNDER SECTION 80 HHC WAS ERRONEOUS. IN SUCH A CASE, THE A.O. WHILE PASSIN G ORDER UNDER SECTION 153A READ WITH SECTION 143(3) COULD NOT HAVE DISTURBED THE ASSESSMENT ORDER FINALISED ON 29.12.2000 RELATING TO SECTION 80 HHC DEDUCTION AND CONSEQUENTLY THE C.I.T. COULD NOT HAVE INVOKED JURISDICTION UNDER SECTION 263 OF THE ACT.' 29 . WE ARE NOT IN AGREEMENT WITH MR. PINTO THAT THESE OBSERVATIONS ARE MADE IN PASSING OR THAT THEY ARE NOT BINDING ON US BECAUSE THE ESSENTIAL CONTROVERSY BEFORE THE BENCH WAS SOMEWHAT DIFFERENT. HE URGES THAT WAS ONLY IN RELATION TO THE LEGALITY AND VALIDI TY OF THE ORDER OF THE COMMISSIONER UNDER SECTION 263 OF THE IT ACT. HAD THAT BEEN THE CASE, THE DIVISION BENCH WAS NOT REQUIRED TO TRACE OUT THE HISTORY OF SECTION 153A OF THE IT ACT AND THE POWER THAT IS CONFERRED THEREUNDER. WHEN THE REVENUE ARGUED BEFO RE THE DIVISION BENCH THAT THE POWER UNDER SECTION 153A CAN BE INVOKED AND EXERCISED EVEN IN CASES WHERE THE SECOND PROVISO TO SUB - SECTION (1) IS NOT APPLICABLE THAT THE DIVISION BENCH WAS REQUIRED TO EXPRESS A SPECIFIC OPINION. THE PROVISION DEALS WITH TH OSE CASES WHERE ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO THE ASSESSMENT YEARS FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION 153A WERE PENDING. IF THEY WERE PENDING ON THE DATE OF THE INITIATION OF THE SE ARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, THEY ABATE. IT IS ONLY PENDING PROCEEDINGS THAT WOULD ABATE AND NOT WHERE THERE ARE ORDERS MADE OF ASSESSMENT OR REASSESSMENT AND WHICH ARE IN FORCE ON THE DATE OF INIT IATION OF THE SEARCH OR MAKING OF THE REQUISITION. AS THAT SPECIFIC ARGUMENT WAS CANVASSED AND DEALT WITH BY THE DIVISION BENCH AND THAT IS HOW IT WAS CALLED UPON TO INTERPRET SECTION 153A OF THE IT ACT, THEN, EACH OF THE ABOVE CONCLUSIONS RENDERED BY THE DIVISION BENCH WOULD BIND US. 30. EVEN OTHERWISE, WE AGREE WITH THE DIVISION BENCH WHEN IT OBSERVES AS ABOVE WITH REGARD TO THE AMBIT AND SCOPE OF THE POWERS CONFERRED UNDER SECTION 153A OF THE ACT. SINCE WE ARE NOT REQUIRED TO TRACE OUT THE HISTORY AND WE CAN DO NOTHING BETTER THAN TO REPRODUCE THE OBSERVATIONS AND CONCLUSIONS AS ABOVE THAT WE ARE NOT REPEATING THE SAME. EVEN IF THE EXERCISE OF POWER UNDER SECTION 153A IS PERMISSIBLE STILL THE PROVISION CANNOT BE READ IN THE MANNER SUGGESTED BY MR. PINTO. NOT ONLY THE FINALISED ASSESSMENT CANNOT BE TOUCHED BY RESORTING TO THOSE PROVISIONS, BUT EVEN WHILE EXERCISING THE POWER CAN BE EXERCISED WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UN DER SECTION 132A AFTER 31ST MARCH, 2003. THERE IS A MANDATE TO ISSUE NOTICES UNDER SECTION 153(1)(A) AND ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARC H IS CONDUCTED OR REQUISITION IS MADE. THUS, THE CRUCIAL WORDS 'SEARCH' AND 'REQUISITION' APPEAR IN THE SUBSTANTIVE PROVISION AND THE PROVISOS. THAT WOULD THROW LIGHT ON THE ISSUE OF APPLICABILITY OF THE PROVISION. IT BEING ENACTED TO A SEARCH OR REQUISITI ON THAT ITS CONSTRUCTION WOULD HAVE TO BE ACCORDINGLY. THAT IS THE CONCLUSION REACHED BY THE DIVISION BENCH IN MURLI AGRO PRODUCTS LTD. ( SUPRA ) WITH WHICH WE RESPECTFULLY AGREE. THESE ARE THE CONCLUSIONS WHICH CAN BE REACHED AND UPON READING OF THE LEGAL P ROVISIONS IN QUESTION. ITA 4506/MUM/2014 46 31. WE, THEREFORE, HOLD THAT THE SPECIAL BENCH'S UNDERSTANDING OF THE LEGAL PROVISION IS NOT PERVERSE NOR DOES IT SUFFER FROM ANY ERROR OF LAW APPARENT ON THE FACE OF THE RECORD. THE SPECIAL BENCH IN THAT REGARD HELD AS UNDER : '48. THE PROVISION UNDER SECTION 153A IS APPLICABLE WHERE A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. IN SUCH A CASE THE AO IS OBLIGED TO ISSUE NOTICE U/S 153A IN RESPECT OF 6 PRECEDING YEARS, PRECEDING THE YEAR IN WHICH SEARCH ETC. HAS BEEN INIT IATED. THEREAFTER HE HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. IT IS OBLIGATORY ON THE PART OF THE AO TO ASSESS OR REASSESS TOTAL INCOME OF THE SIX YEARS AS PROVIDED IN SECTION 153A(1)(B) AND REITERATED IN THE 1ST PROVISO TO THIS SECTI ON. THE SECOND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR REQUISITION SHALL ABATE. WE FIND THAT THERE IS NO DIVERGENCE OF VIEWS IN SO FAR AS THE PROVISION CONTAINED IN SECTION 153A TILL THE 1ST PRO VISO. THE DIVERGENCE STARTS FROM THE SECOND PROVISO WHICH STATES THAT PENDING ASSESSMENT OR REASSESSMENT ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THIS MEANS THAT AN ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION OF SEARCH SHALL CEASE TO EXIST AND NO FURTHER ACTION SHALL BE TAKEN THEREON. THE ASSESSMENT SHALL NOW BE MADE U/S 153A. THE CASE OF LD. COUNSEL FOR THE ASSESSEE IS THAT NECESSARY COROLLARY TO THIS PROVISION IS THAT COMPLETED ASSESSMENT SHALL NOT ABATE. THESE ASSESSMENTS BECOME FINAL EXCEPT IN SO FAR AND TO THE EXTENT AS UNDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH. ON THE OTHER HAND, IT HAS BEEN ARGUED BY THE LD. STANDING COUNSEL THAT ABATEMENT OF PENDING ASSESSMENT IS ONLY FOR THE PURPOSE OF AVOIDING TWO ASSESSMENTS FOR THE SAME YEAR, ONE BEING REGULAR ASSESSMENT AND THE OTHER BEING ASSESSMENT U/S 153A. IN OTHER WORDS THESE TWO ASSESSMENTS COALESCE INTO ONE ASSESSMENT. THE SECOND PROVISO DOES NOT CONTAIN ANY WORD OR WORDS TO THE EFFECT THAT NO REASSESSMENT SHALL BE MADE I N RESPECT OF A COMPLETED ASSESSMENT. THE LANGUAGE IS CLEAR IN THIS BEHALF AND THEREFORE LITERAL INTERPRETATION SHOULD BE FOLLOWED. SUCH INTERPRETATION DOES NOT PRODUCE MANIFESTLY ABSURD OR UNJUST RESULTS AS SECTION 153A (I)(B) AND THE FIRST PROVISO CLEARLY PROVIDE FOR ASSESSMENT OR REASSESSMENT OF ALL SIX YEARS. IT MAY CAUSE HARDSHIP TO SOME ASSESSES WHERE ONE OR MORE OF SUCH ASSESSMENTS HAS OR HAVE BEEN COMPLETED BEFORE THE DATE OF INITIATION OF SEARCH. THIS IS HARDLY OF ANY RELEVANCE IN VIEW OF CLEAR AND UNAMBIGUOUS WORDS USED BY THE LEGISLATURE. THIS INTERPRETATION DOES NOT CAUSE ANY ABSURD ETC. RESULTS. THERE IS NO CASUS OMISSUS AND SUPPLYING ANY WOULD BE AGAINST THE LEGISLATIVE INTENT AND AGAINST THE VERY RULE IN THIS BEHALF THAT IT SHOULD BE SUPPLIED F OR THE PURPOSE OF ACHIEVING LEGISLATIVE INTENT. THE SUBMISSIONS OF THE LD. COUNSELS ARE MANIFOLD, THE FOREMOST BEING THAT THE PROVISION U/S 153A SHOULD BE READ IN CONJUNCTION WITH THE PROVISION CONTAINED IN SECTION 132(1), THE REASON BEING THAT THE LATTER DEALS WITH SEARCH AND SEIZURE AND THE FORMER DEALS WITH ASSESSMENT IN CASE OF SEARCH ETC, THUS, THE TWO ARE INEXTRICABLY LINKED WITH EACH OTHER. 49. BEFORE PROCEEDING FURTHER, WE MAY NOW EXAMINE THE PROVISION CONTAINED IN SUB - SECTION (2) OF SECTION 153, WH ICH HAS BEEN DEALT WITH BY LD. COUNSEL. IT PROVIDES THAT IF ANY ASSESSMENT MADE UNDER SUB - SECTION (1) IS ANNULLED IN APPEAL ETC., THEN THE ABATED ASSESSMENT REVIVES. HOWEVER, IF SUCH ANNULMENT IS FURTHER ITA 4506/MUM/2014 47 NULLIFIED, THE ASSESSMENT AGAIN ABATES. THE CASE OF THE LD. COUNSEL IS THAT THIS PROVISION FURTHER SHOWS THAT COMPLETED ASSESSMENTS STAND ON A DIFFERENT FOOTING FROM THE PENDING ASSESSMENTS BECAUSE APPEALS ETC. PROCEEDINGS CONTINUE TO REMAIN IN FORCE IN CASE OF COMPLETED ASSESSMENTS AND THEIR FATE DEPENDS U PON SUBSEQUENT ORDERS IN APPEAL. ON CONSIDERATION OF THE PROVISION AND THE SUBMISSIONS, WE FIND THAT THIS PROVISION ALSO MAKES IT CLEAR THAT THE ABATEMENT OF PENDING PROCEEDINGS IS NOT OF SUCH PERMANENT NATURE THAT THEY CEASE TO EXIST FOR ALL TIMES TO COME . THE INTERPRETATION OF THE LD. COUNSEL, THOUGH NOT SPECIFICALLY STATED, WOULD BE THAT ON ANNULMENT OF THE ASSESSMENT MADE U/S 153(1), THE AO GETS THE JURISDICTION TO ASSESS THE TOTAL INCOME WHICH WAS VESTED IN HIM EARLIER INDEPENDENT OF THE SEARCH AND WHI CH CAME TO AN END DUE TO INITIATION OF THE SEARCH. 50. THE PROVISION CONTAINED IN SECTION 132 (1) EMPOWERS THE OFFICER TO ISSUE A WARRANT OF SEARCH OF THE PREMISES OF A PERSON WHERE ANY ONE OR MORE OF CONDITIONS MENTIONED THEREIN IS OR ARE SATISFIED, I.E. - (A) SUMMONS OR NOTICE HAS BEEN ISSUED TO PRODUCE BOOKS OF ACCOUNT OR OTHER DOCUMENTS BUT SUCH BOOKS OF ACCOUNT OR DOCUMENTS HAVE NOT BEEN PRODUCED, (B) SUMMONS OR NOTICE HAS BEEN OR MIGHT BE ISSUED, HE WILL NOT PRODUCE THE BOOKS OF ACCOUNT OR OTHER DOCUM ENTS MENTIONED THEREIN, OR (C) HE IS IN POSSESSION OF ANY MONEY OR BULLION ETC. WHICH REPRESENTS WHOLLY OR PARTLY THE INCOME OR PROPERTY WHICH HAS NOT BEEN AND WHICH WOULD NOT BE DISCLOSED FOR THE PURPOSE OF ASSESSMENT, CALLED AS UNDISCLOSED INCOME OR PROP ERTY. WE FIND THAT THE PROVISION IN SECTION 132 (1) DOES NOT USE THE WORD 'INCRIMINATING DOCUMENT'. CLAUSES (A) AND (B) OF SECTION 132(1) EMPLOY THE WORDS 'BOOKS OF ACCOUNT OR OTHER DOCUMENTS'. FOR HARMONIOUS INTERPRETATION OF THIS PROVISION WITH PROVISION CONTAINED IN SECTION 153A, ALL THE THREE CONDITIONS ON SATISFACTION OF WHICH A WARRANT OF SEARCH CAN BE ISSUED WILL HAVE TO BE TAKEN INTO ACCOUNT. 51. HAVING HELD SO, AN ASSESSMENT OR REASSESSMENT U/S 153A ARISES ONLY WHEN A SEARCH HAS BEEN INITIATED AND CONDUCTED. THEREFORE, SUCH AN ASSESSMENT HAS A VITAL LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH. WE HAVE MENTIONED THAT A SEARCH CAN BE AUTHORISED ON SATISFACTION OF ONE OF THE THREE CONDITIONS ENUMERATED EARLIER. THEREFORE, WHILE INTERPRETING THE PROVISION CONTAINED IN SECTION 153A, ALL THESE CONDITIONS WILL HAVE TO BE TAKEN INTO ACCOUNT. WITH THIS, WE PROCEED TO LITERALLY INTERPRET TO PROVISION IN 153A AS IT EXISTS AND READ IT ALONGSIDE THE PROVISION CONTAINED IN SECTION 132(1). 52. THE PROVISION COMES INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE Y EAR OF SEARCH. THE WORD USED IS 'SHALL' AND, THUS, THERE IS NO OPTION BUT TO ISSUE SUCH A NOTICE. THEREAFTER HE HAS TO ASSESS OR REASSESS TOTAL INCOME OF THESE SIX YEARS. IN THIS RESPECT ALSO, THE WORD USED IS 'SHALL' AND, THEREFORE, THE AO HAS NO OPTION B UT TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. THE PENDING PROCEEDINGS SHALL ABATE. THIS MEANS THAT OUT OF SIX YEARS, IF ANY ASSESSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, IT ITA 4506/MUM/2014 48 SHALL ABATE. IN OTHER WORDS PENDIN G PROCEEDINGS WILL NOT BE PROCEEDED WITH THEREAFTER. THE ASSESSMENT HAS NOW TO BE MADE U/S 153A (1)(B) AND THE FIRST PROVISO. IT ALSO MEANS THAT ONLY ONE ASSESSMENT WILL BE MADE UNDER THE AFORESAID PROVISIONS AS THE TWO PROCEEDINGS I.E. ASSESSMENT OR REASS ESSMENT PROCEEDINGS AND PROCEEDINGS UNDER THIS PROVISION MERGE INTO ONE. IF ASSESSMENT MADE UNDER SUB - SECTION (1) IS ANNULLED IN APPEAL OR OTHER LEGAL PROCEEDINGS, THEN THE ABATED ASSESSMENT OR REASSESSMENT SHALL REVIVE. THIS MEANS THAT THE ASSESSMENT OR R EASSESSMENT, WHICH HAD ABATED, SHALL BE MADE, FOR WHICH EXTENSION OF TIME HAS BEEN PROVIDED UNDER SECTION 153B. 53. THE QUESTION NOW IS - WHAT IS THE SCOPE OF ASSESSMENT OR REASSESSMENT OF TOTAL INCOME U/S 153A (1) (B) AND THE FIRST PROVISO ? WE ARE OF THE VIEW THAT FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1). IF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH IN OUR HUMBLE OPINION SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO ACCOUNT WHILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER THE AFORESAID PROVISION. SIMILAR POSITION WILL OBTAIN IN A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOS ED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH. IN OTHER WORDS, HARMONIOUS INTERPRETATION WILL PRODUCE THE FOLLOWING RESULTS : - ( A ) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT U/S 153 A MERGE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEAR SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO, ( B ) IN RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WILL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 54. IT MAY BE MENTIONED HERE THAT LD. COUNSEL FOR ALL CARGO GLOBAL LOGISTICS LTD. WAS QUESTIONED ABOUT THE SCOPE OF PENDING ASSESSMENTS AS IT WAS HIS CONTENTION THAT ALL SIX ASSESSMENTS ARE TO BE MADE, IF NECESSARY, ON THE BASIS OF UNDISCLOSED INCOME DISCOVERED IN TH E COURSE OF SEARCH. HE WAS SPECIFICALLY QUESTIONED ABOUT THE JURISDICTION OF THE AO TO MAKE ORIGINAL ASSESSMENT ALONG WITH ASSESSMENT U/S 153A, MERGING INTO ONE. HOWEVER HE TOOK AN EVASIVE VIEW SUBMITTING THAT THIS QUESTION NEED NOT BE DECIDED IN HIS CASE ALTHOUGH THE QUESTION OF JURISDICTION U/S 153A WAS VEHEMENTLY PRESSED ON ACCOUNT OF WHICH GROUND NO.1 IN THE APPEAL FOR ASSESSMENT YEAR 2004 - 05 WAS ADMITTED AS ADDITIONAL GROUND. HE ALSO WANTED THE ADDITIONAL GROUND TO BE RETAINED IN CASE OF ANY FUTURE CON TINGENCY.' HERE IS A CASE BEFORE US IN THE INSTANT APPEAL , THAT THE AO IS NOT DISTURBING THE REGULAR ASSESSMENT BY TAKING A CONTRARY OR A DIFFERENT VIEW IN 153A ASSESSMENT WHICH IS NOT SUPPORTED BY INCRIMINATING MATERIAL ITA 4506/MUM/2014 49 FOUND DURING SEARCH OR GATHERED DURING PROCEEDINGS U/S 153 A OF THE 1961 ACT BUT RATHER THIS IS A CASE WHERE THE INCOME IS REFLECTED IN THE BANK STATEMENTS OF THE ASSESSEE DECLARED TO REVENUE BUT THE SAID IN COME WAS NOT DECLARED IN RETURN OF INCOME FILED WITH REVENUE U/S 139(1) NOR IT WAS DECLARED IN RETURN OF INCOME FILED U/S 153A.THE BANK STATEMENT WAS GATHERED BY THE AO DURING ASSESSMENT PROCEEDINGS U/S 153A WHICH COMPEL THE ASSESSEE TO SURRENDER SAID DEE MED CAPITAL GAINS U/S 54F(3) BY FILING REVISED RETURN OF INCOME ON 22 - 12 - 2009 , WHICH WAS ACCEPTED BY REVENUE . THE ASSESSEE HAD FILED REVISED RETURN OF INCOME ON 22 - 12 - 2009 WHEREIN DECLARATION OF SAID DEEMED CAPITAL GAINS U/S 54F(3) TO THE TUNE OF RS.1,03, 44,000/ - WAS MADE AND THE AO THEREAFTER FRAMED AN ASSESSMENT BRINGING TO TAX INCOME DECLARED IN THE REVISED RETURN OF INCOME. IT IS NOT THE CASE , WHERE THE AO HAS MADE ANY ADDITIONS WHICH IS NOT QUA INCRIMINATING MATERIAL BUT IT IS THE ASSESSEE WHICH WHEN CORNERED BY REVENUE FILED REVISED RETURN OF INCOME DECLARED AND OFFERED FOR TAX DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - U/S 54F(3). THE BANK STATEMENTS WHEREIN THE SAID DEEMED CAPITAL GAINS OF RS.1,03,44,000/ - WAS FOUND CREDITED IS ITSELF AN INCRIMINAT ING MATERIAL WHICH JUSTIFIES THE CHARGEABILITY TO TAX OF THE SAID INCOME WHICH WAS NOT EARLIER DISCLOSED TO THE REVENUE. THIS CONTENTION OF THE ASSESSEE IS , THEREFORE, REJECTED. C. ) A FEEBLE ATTEMPT IS MADE TO CONTEND THAT THE SAID AMOUNT WHICH WAS ADVAN CED TO NEELKANTH MANSION PRIVATE LIMITED WAS IN THE NATURE OF LOAN AND ADVANCES AND HENCE SECTION 54F(3) IS NOT APPLICABLE IS A SELF DESTRUCTIBLE CONTENTION AND IS NOT ACCEPTABLE. THE ASSESSEE HAS MADE BOOKING OF FLATS BEARING NO. 1301, 1302, 1401 AND 1402 AT DHAWALGIRI BUILDING FROM NEELKANTH MANSION PRIVATE LIMITED AND CLAIMED EXEMPTION U/S 54F OF THE ACT OF RS. 1,03,44,000/ - FOR AY 2002 - 03. THE ASSESSEE RELIED UPON OBSERVATIONS OF THE AO WHEREIN IT WAS OBSERVED BY THE AO THAT THE SAID AMOUNT WAS NOT REF LECTED IN THE ASSET SIDE OF THE BALANCE SHEET OF ITA 4506/MUM/2014 50 THE ASSESSEE EITHER UNDER THE HEAD FIXED ASSET, INVESTMENT OR ADVANCE WHEREAS THE SAME WAS APPEARING AS ADVANCES UNDER NARRATION ADVANCES - FLAT ADVANCES - DHAWALGIRI OF RS.17,50,000/ - , WHEREAS THE ASSESSEE HA S CLAIMED EXEMPTION OF RS.1,03,44,000/ - . IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAD SHOWN UNDER THE HEAD LOANS TO COMPANIES I.E. M/S NEELKANTH MANSION P. LTD. OF RS. 1,39,41,366/ - . THE AO OBSERVED THAT M/S NEELKANTH MANSION P. LTD. IS A BUILDER AND DEVELOPER WHICH IS A FAMILY CONCERN OF THE ASSESSEE . THE AO HAD OBSERVED THAT THE ASSESSEE IS TRYING TO GIVE COLOUR TO THIS LOAN TRANSACTION AS AN EXEMPTION UNDER SECTION 54F IN HIS OWN HANDS , SO THAT THE FAMILY CONCERN M/S NEELKANTH MANSION P. LTD. WOUL D UTILIZE INTEREST FREE FUNDS AND AFTER CANCELLATION OF BOOKING, THE SAID AMOUNT CAN BE TAXED. THE ASSESSEE IS AWARE OF ITS STATE OF AFFAIRS AS THEY ARE ESPECIALLY IN THE KNOWLEDGE OF THE ASSESSEE AND ONUS IS ON THE ASSESSEE TO BRING ON RECORD TRUE AND CO RRECT FACTS . THE ASSESSEE HAD IN AY 2002 - 03 CLAIMED EXEMPTION OF RS.1,03,44,000/ - U/S 54F ON ACCOUNT OF INVESTMENTS MADE IN THE BOOKING OF FLATS BEARING NO. 1301, 1302, 1401 AND 1402 AT DHAWALGIRI BUILDING FROM NEELKANTH MANSION PRIVATE LIMITED AND CLAIMED EXEMPTION U/S 54F OF THE ACT OF RS. 1,03,44,000/ - FOR AY 2002 - 03 WHICH WAS ALLOWED BY REVENUE AND NOW TO CONTEND THAT THE SAID EXEMPTION WAS FALSELY AND INCORRECTLY CLAIMED BY FILING INCORRECT RETURN OF INCOME AND FRAUD WAS PERPETUATED ON REVENUE BY THE A SSESSEE CANNOT BE ACCEPTED. THE ASSESSEE CANNOT BE ALLOWED TO BLOW HOT AND COLD. IT IS WELL SETTLED THAT MERE REFLECTION IN THE ACCOUNT BOOKS OF CERTAIN AMOUNTS IN A PARTICULAR MANNER IS NOT DECISIVE OF THE CHARACTER OF INCOME OF THE ASSESSEE WHICH IS TO BE BROUGH T TO TAX IN ACCORDANCE WITH THE PROVISIONS AND MANDATE OF THE 1961 ACT. THUS, MERE REFLECTION OF THE AMOUNT AS LOANS AND ADVANCES IN THE BOOKS WILL NOT CHANGE THE CHARACTER OF BOOKING OF FLAT MADE BY THE ASSESSEE WHICH WAS EARLIER ACCEPTED BY REVENUE ALSO TO BE INVESTMENT MADE IN BOOKING OF FLATS BEARING NO. 1301, 1302, 1401 AND 1402 AT ITA 4506/MUM/2014 51 DHAWALGIRI BUILDING FROM NEELKANTH MANSION PRIVATE LIMITED . THIS CONTENTION OF THE ASSESSEE STOOD REJECTED. THE ASSESSEE HAS R ELIED UPON DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. KAKDE CONSTRUCTION COMPANY(SUPRA) AND ALSO HONBLE ALLAHABAD HIGH COURT DECISION IN THE CASE OF JAIDAYAL PYARELAL V. CIT(SUPRA) , THERE IS NO DISPUTE TO THIS CONTENTION THAT THE ASSESSE E CAN ALWAYS CONTEST THE PENALTY LEVIED U/S 271(1)(C) DESPITE THAT IT HAS NOT CHALLENGED THE ADDITIONS MADE IN THE QUANTUM ASSESSMENT PROCEEDINGS , AND IN THE INSTANT CASE BEFORE US THE ASSESSEE HAS BEEN ALLOWED TO THE CONTEST THE SAME AND ALL THE PLEAS R AISED BY THE ASSESSEE ARE ADMITTED AND DEALT WITH IN THIS ORDER IN PRECEDING PARAS. THUS, FOR DETAILED REASONS AND DISCUSSIONS AS ENUMERATED BY US IN PRECEDING PARAS OF THIS ORDER, WE SET ASIDE THE APPELLATE ORDER OF LEARNED CIT(A) AND UPH LD THE ORDER O F THE AO LEVYING PENALTY U/S 271(1)(C) OF THE 1961 ACT FOR THE DETAILS REASONS AND DISCUSSIONS ABOVE . WE ORDER ACCORDINGLY. 10 . IN THE RESULT, APPEAL OF THE REVENUE I N ITA NO. 4506 /MUM/20 1 4 FOR A.Y. 200 5 - 0 6 IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18.09.2017 SEPTEMBER, 2017 . 18.09.2017 SD/ - SD/ - ( JOGINDER SINGH ) ( RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 18.09.2017 [ ITA 4506/MUM/2014 52 . . ./ R.K. , EX. SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED , MUMBAI 4. / CIT - CONCERNED , MUMBAI 5. , , / DR, ITAT, MUMBAI B BENCH 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI