ACIT CEN CIR 11, MUMBAI V. PRAKASH C. KANUGO, MUMBAI

ITA 5223/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3312 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANANDI VERMA
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Search and seizure; Document seized; Opportunity of being heard; Documents seized
• Section: 143(3); 133A; 132; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV (JM) AND SHRI JA SON P.BOAZ (AM) ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 THE ACIT. CENTRAL CIRCLE - 13, ROOM NO. 1006, 10 TH FLOOR, OLD CGO ANNEXE BLDG., MUMBAI- 400 020. VS. SHRI. PRAKASH C. KANUGO. 101, 1 ST FLOOR, SHANTRUNJAY APTS, 28, SINDHI LANE, N.D. ROAD, MUMBAI- 400 004. PAN : AFKPK2696F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. ANANDI VERMA RESPONDENT BY : DR. K. SHIVRAM & MS. NEELAM JADHAV DATE OF HEARING: 31 /08 /2016 DATE OF PRONOUNCEMENT: 02/09/201 6 O R D E R PER JASON P. BOAZ, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT (APPEALS)- 37, MUMBAI DT. 31/05/2012 FOR ASST. YEAR 2009-10, C HALLENGING THE CANCELLATION OF THE PENALTY OF RS. 12,96,600/- LEVIED U/S 271AAA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1 A SEARCH AND SEIZURE ACTION U/S 132 AND SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE PRAKASH STEELAGE GROUP ON 09/02/2009. FOR ASST. YEAR 2009-10, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING INCOME OF RS. 2,24,29,560/-. THE ASSESSME NT WAS CONCLUDED U/S 143(3) 2 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 OF THE ACT VIDE ORDER DT. 3/12/2010, WHEREIN THE AS SESSEES INCOME WAS DETERMINED AT RS. 2,30,47,690/-. 2.2 AMONG OTHER THINGS, PENALTY PROCEEDINGS U/S 271 AAA OF THE ACT WERE INITIATED. IN THE COURSE OF SEARCH PROCEEDINGS, CASH AMOUNTING TO RS. 30,95,970/- WAS FOUND OUT OF WHICH RS.30,00,000/- WAS SEIZED, WHICH WAS OFFERED TO TAX. SINCE THE SOURCE OF THE CASH AND THE MANNER IN WHICH SUCH INC OME WAS DERIVED COULD NOT BE EXPLAINED BY THE ASSESSEE, THE ASSESSING OFFICER (AO) PROCEEDED TO LEVY PENALTY U/S 271AAA OF THE ACT THEREON. IN THE COURSE OF THE SAME SEARCH, MATERIAL WAS SEIZED INDICATING CASH EXPENSES INCURRED TOWARDS CO NSTRUCTION OF FARM HOUSE, AND EXPENSES INCURRED ON MARRIAGE AND ORNAMENTS IN RESP ECT OF WHICH THE ASSESSEE OFFERED RS. 99,66,000/-TO TAX AND DISCLOSED THE SA ME IN HIS RETURN OF INCOME. IN RESPECT OF THIS ALSO THE A.O LEVIED PENALTY U/S 271 AAA OF THE ACT. 2.3 ON APPEAL, THE CIT(APPEALS)-37, MUMBAI VIDE ORD ER DT. 31/05/2012 FOR ASST. YEAR 2009-10, CANCELLED THE PENALTY LEVIED U/S 271A AA OF THE ACT BY THE A.O. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CI T(APPEALS)-37, MUMBAI HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY ORDER U/S 271AAA RELYING ON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA SHAH 299 ITR 205 (GUJ) WITHOUT APPRECIATIN G THE FACT THAT THE DECISION RELIED UPON WAS NOT SQUARELY APPL ICABLE IN THE INSTANT CASE AS IT RELATED TO EXPLANATION 5A OF SEC TION 271(1)(C) AND NOT U/S 271AAA. 3 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO F ULFILL THE PRECONDITIONS STIPULATED IN SECTION 271AAA PARTICUL ARLY THE CONDITION U/S 271AAA(2)(II) OF THE I.T. ACT. 3.2 AT THE OUTSET OF THE HEARING, BOTH THE COUNSELS FOR THE ASSESSEE AS WELL AS REVENUE BROUGHT TO THE NOTICE OF THE BENCH, THAT A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEES GROUP CONCER N I.E. PRAKASH STEELAGE LTD., IN RESPECT OF CANCELLATION OF PENALTY LEVIED BY THE A. O U/S 271AAA OF THE ACT BY THE VERY SAME CIT(A)-37, MUMBAI ALSO FOR A.Y 2009-10 IN ITS ORDER IN ITA NO. 5221/MUM/2012 DT. 28/01/2015, SET ASIDE THAT ORDER OF THE LD. CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE CIT(A) FOR C ONSIDERATION AFRESH I.E. THE ISSUE ON MERITS ON THE APPLICABILITY OF SEC. 271AAA IN T HE FACTS OF THAT CASE. IT WAS PRAYED THE FACTS ISSUES, AND GROUNDS OF APPEAL BEIN G IDENTICAL, THE IMPUGNED ORDER MAY BE SET ASIDE AND THE MATTER OF PENALTY U/ S 271AAA OF THE ACT BE RESTORED TO THE FILE OF THE CIT(A) FOR FRESH CONSI DERATION ON MERITS. 3.3 WE HAVE CAREFULLY PERUSED THE DECISIONS OF THE CO-ORDINATE BENCH IN THE CASE OF PRAKASH STEELAGE LTD. IN ITA NO. 5221/MUM/2012 DT. 28/01/2015 FOR ASST. YEAR 2009-10 IN RESPECT OF THE DECISION THEREIN ON THE I SSUE OF LEVY OF PENALTY U/S 271AAA OF THE ACT. THE RELEVANT PORTION OF THE DECI SION DT. PARAS 4.1 TO 4.4 OF THAT ORDER ARE EXACTED HAVE FOR THE SAKE OF CLARITY:- 4.1 AT THE OUTSET, WE OBSERVE, EVEN AS WOULD BE APP ARENT FROM THE FOREGOING NARRATION OF EVENTS, AND AS ALSO SOUGHT T O BE BROUGHT FORTH BY THE REVENUE PER ITS FIRST GROUND OF APPEAL, THAT THE LD. CIT(A) HAS GROSSLY MISAPPLIED HIMSELF IN THE MATTER; EXAMINING THE LEVY OF PENALTY UNDER A PROVISION (SECTION 271(1)(C)) WHICH WAS NEITHER INVOKED BY THE ASSESSING OFFICER (A.O.) NOR COULD I N FACT BE IN THE 4 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 FACTS AND CIRCUMSTANCES OF THE CASE. PENALTY IN THE INSTANT CASE STANDS LEVIED U/S.271AAA, WHICH READS AS UNDER: PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANY THING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, I N A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR A FTER THE 1ST DAY OF JUNE, 2007 BUT BEFORE THE 1ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY , IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN R ESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THI S SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR 5 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE PRINCIPAL C HIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COM MISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXP ENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAIN ED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YE AR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED; (B) 'SPECIFIED PREVI OUS YEAR' MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) O F SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 4.2 THE MATTER STANDS DEALT WITH BY THE LD. CIT(A) VIDE SUB-PARA 6 OF HIS ORDER, WHICH STANDS PERUSED BY US. PARA 6.1.1 R ECORDS THE ASSESSEES GROUNDS BEFORE HIM. SUB-PARA 6.2 NOTES B RIEFLY THE FACTS OF THE CASE AND THE BASIS OF THE LEVY OF PENALTY AS RECORDED BY THE A.O. SUB-PARA 6.3 REPRODUCES THE ASSESSEES SUBMISS IONS BEFORE THE LD. CIT(A). VIDE SUB-PARA 6.4.1, THE LD. CIT(A) REC ORDS HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIALS ON 6 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 RECORD. SUB-PARA 6.5 DETAILS HIS DECISION, WHICH WE MAY REPRODUCE AS UNDER: 6.5.1 PENALTY U/S.271AAA HAS BEEN LEVIED BY THE LD . A.O. ON THE FOLLOWING UNDISCLOSED INCOME /ADDITIONS:- A. UNDISCLOSED INTEREST INCOME DECLARED BY THE ASS ESSEE OF RS.99,13,210/- B. UNDISCLOSED INCOME RELATING TO STOCK OF RS.5,62 ,62,475/- DECLARED BY THE ASSESSEE AND ADDITION DUE TO DISCRE PANCY IN STOCK OF RS.3,46,632/-. 6.5.2 LD. A.O. HAS INITIATED PENALTY U/S.271AAA ON LY BECAUSE THE APPELLANT COULD NOT SPECIFY THE MANNER IN WHICH SUC H INCOME HAD BEEN DERIVED AND FAILED TO SUBSTANTIATE THE SAME. I N THIS REGARD, IT IS PERTINENT TO LOOK INTO THE PROVISIONS OF SEC.271AAA , RELEVANT PART OF WHICH ARE AS UNDER:- (I) IN THE COURSE OF THE SEARCH IN A STATEMENT UN DER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND S PECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND . 6.5.3 IT MAY ALSO BE PROFITABLE TO REFER TO EXPLANA TION 5A SUBSTITUTED BY THE FINANCE ACT, 2009 W.R.E.F. 01.06.2007 WHICH IS AS UNDER:- WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER S ECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF- (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEA R; OR 7 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH E NTRY 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) WHETHER THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME F OR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER C LAUSE (C) OF SUB- SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONC EALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. 6.5.4 ON PERUSAL OF THE SAME IT IS TO BE SEEN THAT AN EXPLANATION HAS BEEN PROVIDED IN THE AFORESAID PROVISIONS ON FU LFILLMENT OF WHICH PENALTY IS NOT TO BE LEVIED. THE SAME BEING: 1. A STATEMENT IS MADE U/S. 132(4) ADMITTING THE UN DISCLOSED INCOME, 2. SPECIFYING THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED AND 3. THE ASSESSEE PAYS THE TAX TOGETHER WITH INTERES T, IF ANY, ON THE SAME. 6.5.5 I FIND THAT THE APPELLANT HAS ALREADY MADE A STATEMENT ADMITTING THE UNDISCLOSED INCOME AND ALSO STATED TH AT IT HAS PAID ALL 8 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 THE TAXES TOGETHER WITH INTEREST ON THE SUM OFFERED FOR TAXATION IN THE STATEMENT U/S.132(4) AS REFLECTED IN THE RETURN OF INCOME FILED FOR THE YEAR. THE APPELLANT GROUP HAS ALSO STATED DURING AN D IMMEDIATELY AFTER THE SEARCH THAT THE INCOME OF THE GROUP WAS E ARNED FROM UNDISCLOSED BUSINESS BASED ON THE ENTRIES FOUND IN THE SEIZED DOCUMENTS. WHILE DEALING WITH SIMILAR CIRCUMSTANCES , IN RESPECT OF EXPLANATION-5 TO SEC. 271(1)(C) WHICH ALSO CONTAINE D SIMILAR REQUIREMENTS OF DISCLOSING THE MANNER IN WHICH THE INCOME WAS EARNED AND SUBSTANTIATING THE SAME HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA SHAH 299 ITR 305 (GUJ. ) HAS HELD AS UNDER: (PARAS 7 TO 15 OF THE DECISION STAND REPRODUCED) 6.5.6 IN VIEW OF THE ABOVE, IT IS CLEAR THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH INCOME IS DERIVED B UT THE INCOME IS DECLARED AND TAX THEREON IS PAID, THERE WOULD BE SU BSTANTIAL COMPLIANCE NOT WARRANTING ON FURTHER DENIAL OF THE BENEFIT UNDER EXPLANATION 5A TO SEC. 271(1)(C) WHICH IS SIMILARLY WORDED AS EXPL. 5. IN VIEW OF THE SAME, I AM OF THE CONSIDERED OPIN ION THAT PENALTY IMPOSED U/S.271AAA IS NOT WARRANTED IN THE FACTS OF THE CASE. ACCORDINGLY, THE SAME IS DIRECTED TO BE CANCELLED. 4.3 THE INGREDIENTS OF SECTION 271AAA, FOR WHICH R EFERENCE MAY BE MADE TO SUBSECTIONS (1) AND (2) THEREOF, AND WHICH PROVISION ONLY IS APPLICABLE FOR THE CURRENT YEAR THE YEAR OF SEARCH (S. 271AAA(1) R/W EXPLANATION THERETO), AND IN FACT APPLIED BY THE A. O., VARY SUBSTANTIALLY FROM THAT OF SECTION 271(1)(C) (EXPLA NATION 5), NOTED AT PARA 6.5.4 OF THE IMPUGNED ORDER, INASMUCH AS THE F ORMER PROVIDES FOR SUBSTANTIATION OF THE MANNER IN WHICH THE UNDIS CLOSED INCOME, AS DISCLOSED PER S. 132(4), IS DERIVED BY THE ASSES SEE. IN FACT, THE LD. 9 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 CIT(A) RECORDS THE INGREDIENTS OF EXPLANATION 5 TO SECTION 271(1)(C) AT PARA 6.5.4 OF HIS ORDER, WHILE EXPLANATION 5A TO S. 271(1)(C) ALONE IS RELEVANT FOR A SEARCH INITIATED U/S.132 ON AND AFTE R 01.06.2007, AS IN THE INSTANT CASE; THE FORMER APPLYING ONLY IN CA SE OF A SEARCH INITIATED BEFORE 01.06.2007. EVEN THE DECISION RELI ED UPON BY HIM (AT PARA 6.5.5), I.E., MAHENDRA C. SHAH (SUPRA), IS ONL Y IN THE CONTEXT OF SECTION 271(1)(C). THE TWO SECTIONS, I.E., S. 271(1 )( C) AND S. 271AAA, ARE NOT ONLY WORDED DIFFERENTLY, WITH THUS DIFFEREN T CONCOMITANT SCOPES, ARE RATHER MANDATED TO OPERATE EXCLUSIVELY (REFER SECTION 271AAA(3)). THE FOREGOING, WE BELIEVE, WOULD BRING FORTH THE BASIS AS WELL AS THE VALIDITY OF OUR INITIAL OBSERVATION AT PARA 4.1 OF THIS ORDER, I.E., OF THE LD. CIT(A) HAVING GROSSLY MISAP PLIED HIMSELF IN THE MATTER. WE, THEREFORE, ACCEPTING THE REVENUES GROU ND # 1, VACATE THE FINDINGS BY THE LD. CIT(A) AS WELL AS HIS CONSE QUENT DECISION AS RECORDED IN THE CONCLUDING SUB-PARA (# 6.5.6) OF HI S ORDER. THE SAME, HOWEVER, WOULD NOT BY ITSELF I MPLY A POSITIVE SATISFACTION OF THE CONDITIONS OF SECTION 271AAA, O NLY ON THE BASIS OF WHICH THE PENALTY AS LEVIED COULD BE SUSTAINED. THE MATTER WOULD THEREFORE; THE LD. CIT(A) HAVING EXAMINED THE LEVY ON THE BASIS AND ANVIL OF A DIFFERENT PROVISION, REQUIRE BEING RESTO RED BACK TO HIM FOR A CONSIDERATION AFRESH, I.E., THE ISSUE ON MERITS, AN D TOWARD WHICH THE REVENUE HAS RAISED ITS GROUND NO. 2 BEFORE US. WE, ACCORDINGLY, RESTORE THE MATTER BACK TO THE FILE OF THE LD. CIT( A) TO ADJUDICATE THE ISSUE ARISING, I.E., THE APPLICABILITY OF S. 271AAA IN THE FACTS OF THE CASE, AND AFTER ALLOWING THE ASSSESSEE AN OPPORTUNI TY TO STATE ITS CASE BEFORE HIM. 4.4 IN THIS REGARD, WE ALSO CONSIDER IT RELEVANT TO STATE OUR PRIMA FACIE OBSERVATIONS, SO THAT THE SAME ARE KEPT IN VI EW BY THE LD. 10 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 CIT(A) WHILE DECIDING THE ASSESSEES CASE BEFORE HI M. FIRSTLY, ANY INCOME TO BE SUBJECT TO PENALTY U/S.271AAA SHOULD B E AN UNDISCLOSED INCOME, AS DEFINED VIDE EXPLANATION B ELOW SUB- SUBSECTION (4) THE SAID SECTION. THE PENALTY IN THE INSTANT CASE, HOWEVER, HAS BEEN LEVIED ON THE INCOME OF RS.3,46,6 32/-, WHICH, AS IT WOULD APPEAR TO US ON A READING OF THE ASSESSMEN T AND PENALTY ORDER, IS ONLY ON ACCOUNT OF A DIFFERENCE IN THE VA LUATION OF STOCK. THUS A FINDING AS TO THE IMPUGNED INCOMES BEING UND ISCLOSED INCOMES IS A PRE-REQUISITE FOR THE APPLICATION OF T HE PROVISION. FURTHER, EACH OF THE THREE INGREDIENTS AS SPECIFIED U/S. 271AAA(2) WOULD NEED TO BE SEPARATELY EXAMINED FOR THEIR SATISFACTION BY THE ASSESSEE IF THE PENALTY THERE-U NDER IS NOT TO BE LEVIED AND, THUS, SUSTAINED. WHILE THIS MAY SEEM AX IOMATIC AND, THEREFORE, SUPERFLUOUS FOR US TO BE STATING SO, LIA BLE TO BE CONSTRUED AS AN EXPRESSION OF OVER ANXIETY, WE DO SO AS WE OB SERVE A GROSS OVERLOOKING OF THIS VITAL ASPECT OF THE MATTER. AS WE OBSERVE, THE UNDISCLOSED INCOME OF RS.562.62 LACS RELATING TO ST OCK WAS DECLARED BY THE ASSESSEE, I.E., FOR THE FIRST TIME, ONLY PER ITS RETURN OF INCOME FILED ON 29.11.2009, AND NOT PER THE DECLARATION VI DE A STATEMENT/DEPOSITION U/S.132(4) OF THE ACT; THE DIS CLOSURE FOLLOWING SEARCH EXTENDING ONLY TO AN INCOME OF RS.99.13 LACS , I.E., BY WAY OF INTEREST. THE ONLY FINDING BY THE LD. CIT(A) IN THE MATTER IS THAT VIDE PARA 6.5.5 OF HIS ORDER, WHICH STATES OF TAX AND IN TEREST HAVING BEEN PAID ON THE INCOMES OFFERED U/S. 132(4), AND WHICH FIND DUE REFLECTION IN THE RETURN OF INCOME. THE ONLY INCOME , OF THE THREE INCOMES UNDER REFERENCE, WHICH SATISFIES THIS REQUI REMENT, IS THE INTEREST INCOME, I.E., PRESUMING THAT THE MANNER OF ITS DERIVATION STANDS ALSO SPECIFIED. THE ADMISSION U/S.132(4) IS TO SPECIFY THE UNDISCLOSED INCOME, OR AT LEAST THE MANNER IN WHICH IT IS TO BE ARRIVED AT; THE WHOLE PREMISE FOR EXTENDING IMMUNIT Y FROM THE 11 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 PENALTY, STATUTORILY MANDATED, BEING THAT THE ASSES SEE COMMITS HIMSELF, PROVIDING THE NECESSARY DETAILS UNDER A CO NDITION OF OATH. FURTHER, SURPRISINGLY AGAIN, WE OBSE RVE NO FINDING BY THE LD. CIT(A) IN RESPECT OF SUBSTANTIATION OF THE MANN ER OF DERIVING THE UNDISCLOSED INCOME, WHICH STIPULATION, WHILE MISSIN G IN SECTION 271(1)(C), STANDS INCORPORATED IN SECTION 271AAA. T HE A.O. CLEARLY RECORDS A FINDING, BOTH IN RESPECT OF THE ASSESSEE HAVING FAILED TO SPECIFY THE MANNER IN WHICH THE UNDISCLOSED INCOME IS DERIVED AS WELL AS OF THE ASSESSEE HAVING FAILED TO SUBSTANTIA TE THE SAME, AND WHICH IN FACT THE LD. CIT(A) NOTES VIDE PARA 6.5.2 OF HIS ORDER. CLEARLY, THESE FINDINGS OF FACT WOULD NEED TO BE AD DRESSED BY THE LD. CIT(A), EITHER ENDORSING OR REVERSING OR OTHERWISE MODIFYING THE SAME, I.E., BASED ON HIS REAPPRAISAL OF THE MATERIA LS FOUND FROM THE POSSESSION OF, OR OTHERWISE FURNISHED BY, THE ASSES SEE, OR EVEN THE EVIDENCES LED BY IT BEFORE HIM FOR THE FIRST TIME, OF-COURSE BY AND UPON OBSERVING THE DUE PROCESS OF LAW (REFER R. 46A ). THE ONUS TO SATISFY THE CONDITIONS OF THE PROVISION THOUGH, WOU LD ONLY BE ON THE ASSESSEE. IN FACT, ALL THIS WOULD PRECISELY BE THE PURVIEW OF THE FIRST APPELLATE AUTHORITY IN THE SET ASIDE PROCEEDINGS. COMING TO THE DECISION IN THE CASE OF MAHENDRA C. SHAH (SUPRA), RELIED UPON BY THE LD. CIT(A), THE SAME, A S AFORE-STATED, IS FIRSTLY IN RESPECT OF SECTION 271(1)(C), THE PARAME TERS AS WELL AS INGREDIENTS OF WHICH ARE DIFFERENT FROM THAT OF SEC TION 271AAA. WHILE THE FORMER PROVISION IS APPLICABLE IN THE CASE OF C ONCEALMENT OF OR FURNISHING INACCURATE, PARTICULARS OF INCOME, CONSI DERING THE DEEMING PROVISIONS IN ITS RESPECT UNDER THE SECTION , S. 271AAA PROVIDES FOR A MANDATORY LEVY OF PENALTY EXCEPT WHE RE THE ASSESSEE SATISFIES THE CONDITIONS OF SECTION 271AAA(2). EVEN THE SAVING UPON PROVING A REASONABLE CLAUSE, AS PROVIDED UNDER SECT ION 273B, IS NOT APPLICABLE FOR A PENALTY IMPOSABLE U/S.271AAA, WHIC H IS ONLY IN 12 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 RESPECT OF UNDISCLOSED INCOME, SO THAT WHAT ALONE I S RELEVANT IS THE APPLICABILITY OF THE PROVISION IN THE FACTS OF THE CASE. IT IS APPARENT FROM THE READING OF THE SAID DECISION THAT THE ENVI RONMENTAL CONDITIONS EXISTING AT THE TIME OF THE SEARCH, INCL UDING THE MANNER IN WHICH THE STATEMENT U/S.132(4) IS GENERALLY RECORDE D, PREVAILED WITH THE HONBLE COURT IN HOLDING OF A SUBSTANTIAL COMPL IANCE IN THE FACTS OF THE CASE, I.E., QUA THE CONDITION OF ADMISSION O F UNDISCLOSED INCOME AND THE STATEMENT OF THE MANNER IN WHICH IT IS DERIVED, ALSO PROVIDED U/EXPL.5 TO S. 271(1)(C), SAVING PENALTY. AS EXPLAINED BY IT, THIS IS AS THE ASSESSEE HAD NO OCCASION TO STATE OR MAKE AVERMENTS IN THE MANNER AS REQUIRED BY OR UNDER THE LAW. ITS PRESCRIPTION IS THEREFORE TO BE READ CONTEXTUALLY. THE LEGAL PROPOS ITION THAT THUS ARISES FROM THE SAID JUDGMENT IS THAT THE SATISFACT ION OF THE CONDITIONS MUST BE CONSIDERED IN THE BACKGROUND AND THE CONTEXT OF THE OBTAINING FACTS AND CIRCUMSTANCES OF THE CASE. IN THE INSTANT CASE, THE STATEMENT U/S.132(4), WHICH IS BY SHRI PR AKASH C. KANUGO, A DIRECTOR OF THE ASSESSEE-COMPANY, WAS RECORDED ON LY ON 06.03.2009 (COPY ON RECORD), I.E., NEARLY A MONTH A FTER THE SEARCH. THE ASSESSEE CANNOT BE SAID TO BE CONSTRAINED FOR W ANT OF TIME - WHICH WAS AMPLE, TO DELIBERATE IN THE MATTER, AS WE LL AS SEEK LEGAL ADVICE. IN FACT, THE STATEMENT WAS MADE ONLY IN THE PRESENCE OF ITS COUNSEL, SHRI VINAY DOSHI, CA, AND ITSELF MAKES A P LEA FOR GRANT OF CONDONATION FROM THE LEVY OF PENALTY (IN ANSWER TO Q.11). COULD IT BE THEREFORE BE SAID THAT THE ASSESSEE HAD NO OCCASION TO AVER WITH REGARD TO THE MANNER OF DERIVING THE INCOME BEING D ISCLOSED? A COMPANY ACTS THROUGH THE HUMAN AGENCY OF ITS MANAGE MENT, WHICH ALONE COULD DEPOSE QUA THE MANNER IN WHICH ITS UNDI SCLOSED INCOME STOOD EARNED/ DERIVED, BEING RATHER IN ITS EXCLUSIV E KNOWLEDGE? ALL THAT THE LAW POSTULATES IS A HONEST DISCLOSURE QUA THE SAID INCOME. A FINDING AS TO THE SATISFACTION OR OTHERWISE OF THE SAID CONDITION, OR FOR 13 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 THAT MATTER ITS SUBSTANTIATION, I.E., OF THE MANNE R IN WHICH THE UNDISCLOSED INCOME WAS DERIVED, IT NEEDS TO BE APPR ECIATED, ARE PURE FINDINGS OF FACT. THE HONBLE HIGH COURTS CAN INTERFERE WITH SUCH A FINDING/S ONLY WHERE IT IS IN ITS VIEW EITHER PER VERSE OR WITHOUT EVIDENCE OR BASED ON IRRELEVANT MATERIAL, OR WHICH IS PARTLY RELEVANT AND PARTLY IRRELEVANT (REFER, INTER ALIA, CIT V. DA ULAT RAM RAWATMULL [1973] 87 ITR 349 (SC)). FURTHER, EVEN WHERE SO, TH E PROVINCE OF THE HONBLE COURT IS TO RESTORE THE MATTER BACK TO THE TRIBUNAL, STATING ITS REASONS, AS CLARIFIED BY THE HONBLE COURT IN JANAT HA CONTRACT CO. V. CIT [1976] 105 ITR 627 (KER), FOLLOWING THE BINDING DECISIONS BY THE APEX COURT IN CIT V. GREAVES COTTON & CO. LTD. [196 8] 68 ITR 200 (SC) AND CIT V. INDIAN MOLLASSES & CO. (P.) LTD. [1 970] 78 ITR 474 (SC). THE AUTHORITIES ON THE LAW IN THE MATTER COUL D IN FACT BE MULTIPLIED. THEN, AGAIN, WE WONDER, RATHER THAN REA DING DOWN THE PROVISION, SO AS TO OPERATE TO NEGATE THE MANDATORY REQUIREMENT OF THE SECTION, DEFEATING THE LEGISLATIVE INTENT, WHIC H, AS EXPLAINED BY THE HONBLE COURTS AS WELL AS THE OFFICIAL PRONOUNC EMENTS EXPLAINING THE PROVISION, IS OF PLUGGING THE GENERATION OF UND ISCLOSED INCOME AND THE CONSEQUENT LEAKAGE OF REVENUE FOR FUTURE, W HY COULD THE SAME BE NOT READ SO AS TO ALLOW THE ASSESSEE THE LA TITUDE FOR PROVIDING THE NECESSARY DETAILS SUBSEQUENTLY, I.E., WHERE THE DISCLOSURE U/S.132(4) IS MADE UNDER EXCRUCIATING OR DIFFICULT CIRCUMSTANCES. THE SAME OF COURSE WOULD BE UNDER OA TH, MAKING IT A PART OF AND REFER TO THE EARLIER STATEMENT U/S. 132 (4), COMPLYING THUS SUBSTANTIALLY AND EFFECTIVELY, WITH THE SUBSTANTIVE PROVISION OF LAW. FURTHER, THE FURTHER CONDITION OF SUBSTANTIATION, AS PROVIDED U/S. 271AAA(2)(II), WHICH WAS NOT THERE IN THE CASE, BEI NG U/S. 271(1)(C), BEFORE THE HONBLE COURT IN MAHENDRA C. SHAH (SUPRA ), COULD ONLY BE INTERPRETED TO MEAN OF THE LAW CASTING A FURTHER OB LIGATION ON THE ASSESSEE TO DEMONSTRATE THE MANNER OF DERIVING THE UNDISCLOSED 14 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 INCOME, AS SPECIFIED PER THE STATEMENT U/S.132(4), AS VALID AND TRUE, I.E., STANDS VALIDATED AND IS ON A FIRM BASIS; THE PRESUMPTION AS TO THE TRUTH OF THE MATERIALS FOUND BEING ALREADY PROV IDED FOR U/S. 292C. THE SAID DECISION WOULD THUS BE OF LITTLE ASS ISTANCE TO THE ASSESSEE. 3.4 ON AN APPRECIATION OF THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF PRAKASH STEELAGE LTD FOR A. Y. 2009-10(SUPRA), WE FIND THAT THE GROUNDS RAISED BY REVENUE BEFORE THE SAME CIT(A )-37, MUMBAI, THE ISSUE INVOLVED BEING THE LEVY OF PENALTY U/S 271AAA OF TH E ACT, ON SIMILAR SET OF FACTS, FOR A.Y. 2009-10, IN THE CASE OF ASSESSEES GROUP C ONCERN, WE ARE OF THE VIEW IT WOULD ONLY BE IN THE FITNESS OF THINGS FOR US TO F OLLOW THE AFORESAID DECISION OF THE CO-ORDINATE BENCH WITH WHICH WE HAVE NO QUARREL. WE , THEREFORE FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF PR AKASH STEELAGE LTD. (SUPRA) SET ASIDE THE DECISION OF THE LD. CIT(A) IN THE IMPUGNE D ORDER CANCELLING THE PENALTY LEVIED BY THE A.O. U/S 271AAA OF THE ACT FOR ASST. YEAR 2009-10 AND RESTORE THIS ISSUE OF LEVY OF PENALTY U/S 271AAA OF THE ACT TO T HE FILE OF THE LD. CIT(A) FOR FRESH CONSIDERATION OF THIS ISSUE ON MERITS IN ACCORDANCE WITH THE GROUNDS RAISED BY REVENUE IN THIS APPEAL (SUPRA), AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS /SUBMISSIONS RE QUIRED. THE LD. CIT(A) IS FURTHER ADVISED TO NOTE THE OBSERVATIONS AND FOLLOW THE DIR ECTIONS AND GUIDELINES LAID DOWN IN THE DECISION OF THE CO-ORDINATE BENCH IN T HE CASE OF PRAKASH STEELAGE LTD. (EXTRACTED SUPRA) WHILE ADJUDICATING THE MATTER. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, REVENUES GROUNDS ARE TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, REVENUES APPEAL FOR ASST YEAR. 2 009-10 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND SEPTEMBER, 2016 15 ITA NO. 5223/MUM/2012 ASSESSMENT YEAR: 2009-10 SD/- SD/- ( SHAILENDRA KUMAR YADAV ) (JASON P.BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 02/09/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA