Mr. Sushil Kumar Trehan, New Delhi V. DCIT, New Delhi

ITA 5193/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74322 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-02-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Keywords: Search and seizure; Loose papers
• Section: 153A; 132; 15; 139

Judgement Text

ITA NOS.5193 TO 5195/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NOS.5193, 5194 & 5195/DEL/2011 ASSESSMENT YEAR : 2001-02, 2003-04 & 2004-05 SUSHIL KUMAR TREHAN, C/O VINOD KUMAR BINDAL & CO., CA, SHIV SUSHIL BHAWAN, D-219, VIVEK VIHAR PHASE I, NEW DELHI. PAN : ACGPT8017J VS. DCIT, CENTRAL CIRCLE-25, NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI VINOD KUMAR BINDAL, CA DEPARTMENT BY : S HRI RAMESH CHANDRA, CIT, DR ORDER PER BENCH: THESE ARE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2001-02 & 20 03- 04 AGAINST THE ORDERS DATED 20.09.2011, PASSED BY THE L D. CIT(A)-I, NEW DELHI RAISING THE FOLLOWING SIMILAR GROUNDS:- 1. THE LD. APPELLATE AUTHORITY ERRED IN LAW AND ON FA CTS IN CONFIRMING THE PENALTY OF RS.57,52,554/- (FOR ASSES SMENT YEAR 2001- 02, RS.23,82,950/- FOR ASSESSMENT YEAR 2003-04 & RS. 38,16,840 FOR ASSESSMENT YEAR 2004-05) LEVIED U/S 271 (1)(C) ON AD DITIONAL INCOME OFFERED IN THE RETURN OF INCOME FILED BY THE APPELLANT IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT, WHILE IGNORING THAT SUCH PEN ALTY CANNOT BE IMPOSED ON THE BASIS OF ENTRIES IN THE BOOKS OF ACCOUN T OR ITA NOS.5193 TO 5195/DEL/2011 2 DOCUMENTS/LOOSE PAPERS SEIZED IN A SEARCH CARRIED BE TWEEN 1/6/03 TO 31/5/07 NEITHER WITHIN THE GENERAL PROVISION OF SECTION 271 (1)(C) NOR IN TERMS OF EXPLANATION 5. THUS, THE PENALTY SO LEVIED SHO ULD BE CANCELLED. 2. THE LD. APPELLATE AUTHORITY ERRED IN LAW AND ON FA CTS IN CONFIRMING LEVY OF PENALTY OF RS.57,52,554/- (FOR AS SESSMENT YEAR 2001-02, RS.23,82,950/- FOR ASSESSMENT YEAR 2003-04 & RS.38,16,840 FOR ASSESSMENT YEAR 2004-05)U/S 271 (1)(C) ON THE ADD ITIONAL INCOME OFFERED BY THE APPELLANT, WHICH WAS ASSESSED IN THE HA NDS OF THE APPELLANT ON PROTECTIVE BASIS. THUS, THE PENALTY SO LEVI ED SHOULD BE CANCELLED. 2. THE FACTS ARE THAT THERE WAS AN INCOME-TAX SEARCH O N THE ASSESSEE AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 22.11.2006 WHE N CERTAIN DOCUMENTS WERE FOUND FROM HIS POSSESSION AND SEIZED. IN R ESPONSE TO THE NOTICE ISSUED U/S 153A, ON THE BASIS OF THE DOCUMENTS FOU ND, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001- 02 DECLARING A TOTAL INCOME OF ` 1,66,31,414/- INCLUDING ADDITIONAL INCO ME FROM TRADING AND COMMISSION ON SPICES OF ` 1,63,89,047/- WHICH WAS NOT DI SCLOSED IN THE ORIGINAL RETURN FILED U/S 139 OF THE ACT. THE ASSESSMENT OF THE SAID INCOME WAS FINALLY COMPLETED U/S 153A ON 31.12.2008 FOR THE SAID ASSESSMENT YEAR ACCEPTING THE TOTAL INCOME OF RS.1,66,31,414/- AS DEC LARED BY THE ASSESSEE WITHOUT MAKING ANY ALTERATION IN THE SAME. HOWEVER, THEREAFTER, A PENALTY WAS IMPOSED U/S 271 (1 ) (C) BEING EQUIVALENT TO 100% OF THE INCOME-TAX DUE ON THE SAID ADDITIONAL INCOME OF ` 1,63,89,047/- DE CLARED IN THE RETURN OF INCOME FILED U/S 153A DEEMING THE SAME AS CONCEALED IN COME OF THE ASSESSEE. 3. THE ASSESSING OFFICER HAS LEVIED THE PENALTY ON THE F OLLOWING GROUNDS: (A) THAT EXPLANATION 5 TO THE SECTION 271 (1)(C) INTRODU CES A FICTION OF DEEMED CONCEALMENT OF INCOME IN RESPECT OF UNDISCLOSED ASSETS FOUND IN A SEARCH INITIATED BEFORE 01.06.2007 AND WH EREAS THE FACTS OF THE ASSESSEE ARE COVERED BY THE SAID DEEMING PROVISION BUT THE SAME ARE NOT COVERED BY ANY EXCEPTIONS CONTAINED THER EIN. ITA NOS.5193 TO 5195/DEL/2011 3 (B) THAT THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 153A CANNOT BE SAID TO BE VOLUNTARY SINCE IT WAS ONLY WHEN THE ASSESSEE R EALIZED THAT THE EVIDENCE OF CONCEALMENT OF UNDISCLOSED INCOM E WAS AVAILABLE WITH THE INCOME TAX DEPARTMENT AFTER THE SEARCH, THE SAME WAS DECLARED IN THE SAID RETURN U/S 153A BY THE ASSE SSEE ESPECIALLY SINCE THE SAME HAD NOT BEEN DECLARED IN THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR FILED U/S 139 (1 ) ORIGINALLY. (C) THAT CBDT VIDE ITS CIRCULAR DATED 30.09.1969 EXPLAI NED THE WORD VOLUNTARY BY STATING THAT IF THERE IS SEIZURE OF IN CRIMINATING MATERIAL IN THE COURSE OF A SEARCH THE PENALTIES AND P ROSECUTIONS ARE IMMINENT AND THE DISCLOSURE IS A SEQUEL TO SUCH A SEA RCH, IT WOULD NOT BE POSSIBLE TO TREAT THE DISCLOSURE AS A VOLUN TARY ONE. (D) THAT THE BOARDS INSTRUCTION NO.1142 DATED 25.01.197 8 WHILE CONFIRMING THE SAME POSITION STATED THAT A DISCLOSURE F OLLOWING A SEARCH IN WHICH UNACCOUNTED CASH OR INCRIMINATING DO CUMENTS WERE DISCOVERED CANNOT BE TERMED AS VOLUNTARY. (E) THAT IN THE FOLLOWING JUDICIAL AUTHORITIES THE ABOVE VIEW GETS RATIFIED THAT INCOME DECLARED AFTER SEARCH CANNOT BE CALLED V OLUNTARY SO AS TO AVOID THE PENAL CONSEQUENCES: I. ACIT VS. SMT. RASILA S. MEHTA, (2002) 82 ITD 27 (MU M) II. SHANTILAL M. LALWANI VS. ACIT, (2002) 82 ITD 59 (P UNE) III. HUKUM SINGH VS. CIT, (1980) 124 ITR 228 (ALL) IV. INDIAN CLOTH DEPOT VS. CIT, (1988) 173 ITR 330 (KE R.) (F) THAT THERE IS NO PROVISION IN THE INCOME-TAX ACT, 196 1 RENDERING THE RETURN OF INCOME FILED U/S 139 (1) AS VOID AS ARGUED B Y THE ASSESSEE. MOREOVER, THE ASSESSEE HAS HIMSELF REFERRED TO THE RETURN ORIGINALLY FILED BY APPENDING A NOTE IN THE COMPUTATION OF INC OME OF THE RETURN U/S 153A AS UNDER:- ALL STATUTORY ENCLOSURES AND ORIGINAL CHALLANS/TDS AND OTHER CERTIFICATES IN RESPECT OF THIS RETURN OF INCOME ARE O N THE RECORD OF IT DEPARTMENT IN THE ASSESSMENT FOLDER OF THE ORIGINAL RET URN OF ITA NOS.5193 TO 5195/DEL/2011 4 INCOME FILED AS PER THE PHOTOCOPY OF THE ACKNOWLEDGE MENT ENCLOSED, WHICH MAY BE REFERRED TO FOR THE PURPOSE OF RETURN FILED U/S 153A OF THE ACT NOW, AND TO GIVE CREDIT FOR TAXE S PAID AND TO ALLOW DEDUCTIONS. IN CASE OF ANY FURTHER REQUIREMENT THE SAME MAY BE CALLED FOR FROM THE ASSESSEE. (G) THAT THE ARGUMENT OF THE ASSESSEE THAT THE INTRODUCTIO N OF THE PROVISIONS LIKE EXPLANATION 5A TO SECTION 271 (1)(C) AND 271AAA W.E.F. 1.6.2007 WAS TO CURE THE DEFECT IN EARLIER PR OVISIONS DUE TO WHICH CONCEALMENT PENALTY IMPOSED STOOD ON A WEAK FOU NDATION, IS NOT ACCEPTABLE SINCE THE SAID AMENDMENTS IN THE PROVISI ONS GOVERNING SEARCH AND SEIZURE WERE MADE AS PART OF CHAN GES BEING MADE FROM TIME TO TIME TO KEEP PACE WITH THE INCOME -TAX POLICY CHANGES AND THEY DO NOT RENDER THE OLD PROVISIONS FOR LEVY OF PENALTY TOOTHLESS. 4. THE LD. CIT (A) DISMISSED THE APPEALS OF THE ASSESSEE, HOLDING, INTER ALIA, THAT CONSEQUENT TO THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S MDH LTD., ALL ADDITIONS STOOD DELETED, INCLUDING THE A MOUNT PROTECTIVELY ASSESSED IN THE HANDS OF THE ASSESSEE AND SUBSTANTIVELY IN THE HAND S OF M/S MDH LTD.; THAT THEREFORE, THE UNDISCLOSED INCOME, WHICH WAS PROTECTIVELY ASSESSED IN THE HANDS OF THE ASSESSEE, BECAME A SUBSTANTIVE AD DITION IN HIS HANDS; THAT SINCE THE ASSESSEE HAD HIMSELF DECLARED THIS UN DISCLOSED INCOME, IT OUGHT TO BE ASSESSED IN HIS HANDS ON A SUBSTANTIVE BASIS ; THAT THE CASE OF THE ASSESSEE FELL WITHIN THE GENERAL PROVISIONS OF SECTIO N 271 (1)(C) AS WELL AS EXPLANATION 5 THERETO OF THE ACT AND, THEREFORE, TH E ASSESSEE WAS WRONG IN CONTENDING THAT EXPLANATION 5 TO SECTION 271 (1)(C) HAD NO APPLICATION FOR THE PERIOD FROM 01.06.2003 TO 31.05.2007; THAT UNDI SPUTEDLY, THE INCOME SURRENDERED BY THE ASSESSEE WAS ON THE BASIS OF DOCUMENTS/PA PERS FOUND DURING THE SEARCH; THAT THEREFORE, THE ASSESSEE WAS DEEME D TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME, OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME; THAT THE ASSESSEE DID NOT STAND ABSOLVED OF C ONCEALMENT OF ITA NOS.5193 TO 5195/DEL/2011 5 INCOME AND FURNISHING INACCURATE PARTICULARS THEREOF, ON THE BASIS OF HIS SUBMISSION THAT HE HAD FURNISHED NEW RETURNS AND THE OLD ASSESSMENTS STOOD CANCELLED AND BECAUSE FILING OF DUE RETURNS IS MANDATO RY, THE INCOME SHOWN IN SUCH RETURNS FILED U/S 153A COULD NOT BE REGARDED A S AN ADMISSION ON BEHALF OF THE ASSESSEE; THAT IN THE RETURN FILED U/S 15 3A, THE INCOME SHOWN WAS AS A RESULT OF SEARCH, WHICH THE ASSESSEE SHOWED ON THE BASIS OF THE DOCUMENTS FOUND DURING THE SEARCH; THAT THEREFORE, TH E DISCLOSURE COULD NOT BE REGARDED AS A VOLUNTARY OR SUO MOTU DISCLOSURE; THAT THE CONCEALED INCOME WAS DETECTED BY THE DEPARTMENT AS A CONSEQUENCE OF THE SEARCH; THAT THE ASSESSEE HAD FILED THE RETURN U/S 153A OF THE A CT ONLY AFTER THE DEPARTMENT HAS DISCOVERED THE CONCEALED INCOME AFTER THE SEARCH; AND THAT THEREFORE, THE PENALTY AS IMPOSED BY THE ASSESSING OFFICE R WERE BEING UPHELD. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTEND ED THAT IN THE CASE OF THE ASSESSEE HIMSELF, FOR ASSESSMENT YEAR 2006-07 AN D 2006-07, UNDER EXACTLY SIMILAR CIRCUMSTANCES, VIDE ORDER DATED 24.01.2013, PASSED IN ITA NOS.5658 AND 5659/DEL/2012, THE TRIBUNAL, FOLLOW ING THE TRIBUNAL ORDER DATED 09.03.2012, IN PREM ARORA VS. ACIT, IN ITA N O.4702/DEL/2010 FOR ASSESSMENT YEAR 2004-05 AND THE TRIBUNAL ORDER DATED 31 .07.2012, IN KIRAN GROVER VS. DCIT IN ITA NOS.4413/DEL/2011 TO 4418/DEL /2011, FOR ASSESSMENT YEARS 2001-02 TO 2006-07, WHICH CASES WERE ALSO COVERED BY THE SAME SEARCH AS THAT CONDUCTED ON THE ASSESSEE ON 22.11.2006, D ELETED THE PENALTY. THE LD. COUNSEL HAS CONTENDED THAT AS SUCH, F OLLOWING THE SAID TRIBUNAL ORDER/S, THE PENALTY IN THE PRESENT CASES MAY ALSO BE ORDERED TO BE DELETED. 6. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDERS. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. WE FIND THAT INDEED, THE ISSUE AT HAND IS COVERED BY T HE ORDER DATED ITA NOS.5193 TO 5195/DEL/2011 6 24.01.2003, PASSED IN THE CASE OF THE ASSESSEE HIMSELF FOR ASSESSMENT YEARS 2005-06 AND 2006-07, FOLLOWING THE CO-ORDINATE BENC H ORDERS IN THE CASES OF PREM ARORA VS. DCIT (SUPRA) AND KIRAN GROVER VS. DC IT (SUPRA). IN THAT ORDER, WE HAVE HELD AS FOLLOWS:- 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT THE MATTER IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER DATED 09.03.2012 (COPY AT PAGES 1-43 OF THE CASE LAWS PAPER BOOK FILED BY THE ASSESSEE, CLPB FOR SHORT) IN PRE M ARORA VS. DCIT IN ITA NO.4702/DEL/2010 FOR ASSESSMENT YEAR 2004-05 AN D BY THE TRIBUNAL DECISION DATED 31.07.2012 (COPY AT CLPB PAGE S 44-53) IN THE CASE OF KIRAN GROVER VS. DCIT IN ITA NO.4413/DEL/2 011 TO 4418/DEL/2011 FOR ASSESSMENT YEARS 2001-02 TO 2006-07 . 6. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG R ELIANCE ON THE IMPUGNED ORDER. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MA TERIAL ON RECORD. IN PREM ARORA (SUPRA), IT HAS BEEN HELD, INTER ALIA, THAT FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT, AS A RESULT OF SEARCH ASSESSMENTS MADE U/S 153A, THE ORIGIN AL RETURN OF INCOME FILED U/S 139 OF THE ACT CANNOT BE CONSIDERED A ND THAT WHERE THE RETURN OF INCOME FILED U/S 153A OF THE ACT IS ACCEP TED BY THE ASSESSING OFFICER, THERE WILL BE NO CONCEALMENT OF IN COME AND, CONSEQUENTLY, PENALTY U/S 271 (1)(C) CANNOT BE IMPOSE D. IN KIRAN GROVER (SUPRA), PREM ARORA (SUPRA) WAS FOLLOWED. 8. IT IS SEEN THAT THE PRESENT CASES ARE ALSO COVERED BY THE SAME SEARCH AS IN THE CASES OF PREM ARORA (SUPRA) AND KIRAN GROVER (SUPRA). IN THE PRESENT CASE TOO, THE SEARCH WAS CARRI ED OUT ON 22.11.2006, AS IN THE SAID TWO CASES. CERTAIN DOCUME NTS WERE FOUND AND WERE SEIZED. IN THE RETURN OF INCOME FILED U/S 15 3A OF THE ACT, ADDITIONAL INCOME FROM TRADING AND COMMISSION WAS DI SCLOSED. CONCEALMENT PENALTY WAS LEVIED ON THIS ADDITIONAL INCOM E. IN PREM ARORA (SUPRA) AND KIRAN GROVER (SUPRA) ALSO, THE FACTS WERE ENTIRELY SIMILAR. IN PREM ARORA (SUPRA), THE PENALTY WAS D ELETED BY THE TRIBUNAL HOLDING AS FOLLOWS:- 29. WE ALSO FIND THAT THE FINANCE ACT, 2007 HAS INSE RTED WORDS SEARCH INITIATED UNDER SEC. 132 BEFORE THE FIR ST DAY OF JUNE, 2007 IN EXPLANATION 5 OF SEC. 271(1) OF THE ACT. FURTHER EXPLANATION 5A WAS INSERTED IN THE STATUTE BY THE FINANCE ACT, 2007 IN RESPECT OF A SEARCH INITIATED UN DER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007. T HUS ITA NOS.5193 TO 5195/DEL/2011 7 EXPLANATION 5 WILL NOT BE APPLICABLE IN RESPECT OF A SEARCH INITIATED ON OR AFTER 1.6.2007. FURTHER THE WORDS SEAR CH INITIATED UNDER SEC. 132 BEFORE THE FIRST DAY OF JUNE, 2007 HAVE BEEN INSERTED BY THE FINANCE ACT, 2007 W.E.F. 1.6.2007. IN OUR CONSIDERED OPINION THE AMENDED PROVISIONS OF EXPLANATION 5 WILL BE APPLICABLE ONLY FOR ASSESSMENT YEAR 2008-09 IF ANY MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLE OR THING IS FOUND FROM THE POSSESSION OF THE SEARCHED PERSON IN RESPECT WHOM SEARCHES ARE INITIATED ON OR AFTER 1.4.2007 TO 31.05. 2007. 30. IN CASE OF A SEARCH INITIATED ON OR AFTER 1.6.200 7 AS PROVIDED IN EXPLANATION 5A, THE ASSESSEE WILL BE LIAB LE FOR PENALTY/S 271(1)(C) BOTH IN RESPECT OF ASSETS AS WELL A S ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUN T OR OTHER DOCUMENTS OR TRANSACTIONS. BUT NO SUCH PROVISION RELATING TO ENTRIES WAS IN EXISTENCE IN EXPLANATION 5 PRIOR TO INSERTION OF EXPLANATION 5A IN SECTION 271(1) OF THE ACT. HENCE THE SCHEME OF ASSESSMENT TILL INSERTION OF EXPLANATION 5A AND SECTION 271AAA BY THE FINANCE AC T, 2007 GAVE IMMUNITY TO THE ASSESSEES IN RESPECT OF UNDISCLOSED INCOME BASED ON ENTRIES RECORDED IN SEI ZED MATERIAL. EXPLANATION 5A SUBSTITUTED BY THE FINANCE ACT, 2009 W..E.F. 1.6.2007 IS REPRODUCED AS UNDER: EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAI MS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HA S NOT BEEN DECLARED THEREIN; OR ITA NOS.5193 TO 5195/DEL/2011 8 (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR S UCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FIL ED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS S ECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 31. FROM ABOVE DISCUSSION IT IS CLEAR THAT THE PROVISI ONS OF EXPLANATION 5 ARE APPLICABLE IN THE CASES WHERE DURIN G THE COURSE OF SEARCH INITIATED ON OR BEFORE 1.6.2007 ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING IS FOUND IN THE POSSESSION OR UNDER CONTROL OF THE ASSESSEE. IN THE CASE OF THE ASSESSEE THE SEARCH WAS CONDUCTED ON 22.11.2006 AN D CASH OF RS. 1,11,45,350/- WAS FOUND FROM THE POSSES SION OF THE ASSESSEE. THE ASSESSEE HAD UNDISCLOSED COMMISSION I NCOME AS WELL AS PURCHASES AND SALES AS SEEN FROM THE STATEMEN T OF AFFAIRS MADE BY THE ASSESSEE BASED ON SEIZED MATERIAL . THE ASSESSEE HAD DRAWN CASH FLOW STATEMENT FOR THE ENTIRE PERIOD OF SIX YEARS IN ORDER TO DETERMINE UNDISCLOSED INCOM E BASED ON SEIZED MATERIAL FOR EACH OF SIX ASSESSMENT YEARS. E XPLANATION 5 TO SECTION 271(1) OF THE ACT CANNOT BE INVOKED IN ASSE SSMENT YEAR 2004-05 MERELY ON PRESUMPTION THAT THE ASSESSEE MIGHT HAVE BEEN IN POSSESSION OF CASH THROUGHOUT THE PERIOD COVERED BY SEARCH ASSESSMENTS. THE INCOME OFFERED TO TAX U/S 1 53A FOR ASSESSMENT YEAR 2004-05 IS BASED ON ENTRIES RECORDE D IN THE SEIZED MATERIAL. UNLIKE PROVISIONS OF EXPLANATION 5A , THE PROVISIONS OF EXPLANATION 5 CANNOT BE INVOKED IN ASS ESSMENT YEAR 2004-05 IN RESPECT OF ENTRIES RECORDED IN SEIZED MATERIAL. THUS INVOKING OF EXPLANATION 5 IN ASSESSMENT YEAR 200 4-05 IS BASED ON PRESUMPTIONS, SURMISES AND CONJECTURES. IT IS SETTLED LAW THAT SUSPICION HOWSOEVER STRONG, IT CANNOT TAKE PLACE OF ACTUAL EVIDENCE AND HENCE THE CONTENTION OF THE REVENUE THAT ASSESSEE WAS IN POSSESSION OF CASH THROUGHOUT THE PERI OD OF SIX ASSESSMENT YEARS HAS TO BE REJECTED. IN VIEW OF ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT EVEN THE AMENDED PROVISIONS OF EXPLANATION 5 CANNOT BE APPLIED IN ASSESSMENT YEAR 2004-05. CONSEQUENTLY PENALTY U/S 271 (C) CANNOT BE IMPOSED BY INVOKING EXPLANATION 5 OF THE ACT IN ITA NOS.5193 TO 5195/DEL/2011 9 ASSESSMENT YEAR 2004-05 IN RESPECT OF CASH FOUND IN PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007-08. 32. NOW COMING TO THE DECISIONS RELIED BY LD CIT (DR ) IN THE CASE OF AJIT B ZOTA (SUPRA) AND IN KIRIT DAHYABHAI P ATEL (AHD)(SUPRA) WE FIND THAT THESE DECISIONS ARE DISTING UISHABLE ON FACTS AND HENCE NOT APPLICABLE. 33. IN VIEW OF ABOVE DISCUSSIONS IT IS HELD THAT PENAL TY U/S SECTION 271(1)(C) IS NOT IMPOSABLE ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE DISCUSSED IN DETAIL AS ABOVE. E XPLANATION 5 IS NOT APPLICABLE FOR THE REASONS MENTIONED ABOVE I N OUR DECISION. THEREFORE, LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICE R IS, THEREFORE, DIRECTED TO DELETE THE PENALTY. 9. THIS ORDER IN PREM ARORA (SUPRA) WAS FOLLOWED IN KIRAN GROVER (SUPRA). 10. IT REMAINS UNDISPUTED THAT THE FACTS IN THE PRESENT APP EALS ARE THE SAME AS IN PREM ARORA (SUPRA) AND KIRAN GROVER (SUPRA). THEREFORE, FOLLOWING THESE DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL, THE ORDERS UNDER APPEAL ARE SET ASIDE AND THE PENALTY I S DELETED. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESS EE ARE ALLOWED. 8. IT AGAIN REMAINS UNDISPUTED THAT THE FACTS IN THE P RESENT APPEALS ARE THE SAME AS IN PREM ARORA (SUPRA), KIRAN GROVER ( SUPRA) AND THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2005-06 AND 2006-07 . THEREFORE, FOLLOWING THE SAID DECISIONS OF THE TRIBUNAL, THE ORD ERS UNDER APPEAL ARE SET ASIDE AND THE PENALTIES ARE DELETED. 9. IN THE RESULT, ALL THE THREE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.03.201 4. SD/- SD/- [S HAMIM YAHYA ] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED,14 TH MARCH, 2014. ITA NOS.5193 TO 5195/DEL/2011 10 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.