S.K. Impex, Delhi V. DCIT, New Delhi

ITA 5674/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7302 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 31-05-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 07-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL CHANDRA SHARMA
• Section: 133A; 27; 132; 12; 10; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI , JM IT A NO. 5674/DEL/2015 : ASSTT. YEAR : 2012 - 13 S. K. IMPEX, C/O - KAPIL GOEL ADV., F - 26/124, SECTOR - 7, ROHINI, DELHI - 110085 VS DCIT, CIRCLE - 29(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A OFS4219B ASSESSEE BY : SH. KAPIL GOEL, ADV. REVENUE BY : SH. SUNIL CHANDRA SHARMA , CIT DR DATE OF HEARING : 01.0 6 .201 6 DATE OF PRONOUNCE MENT : 28 .06 .201 6 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 07.08.2015 OF LD. CIT(A) - X VI , NEW DELHI. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELAT ES TO THE CONFIRMATION OF PENALTY LEVIED BY THE AO U/S 271AAA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WITH TWO PARTNERS AND A SURVEY U/S 133A OF THE ACT WA S CONDUCTED AT THE BUSINESS PREMISES OF THE ITA NO. 5674/DEL/2015 S. K. IMPEX 2 ASSESSEE ON 20.07.2011 WHICH WAS LATER ON CONVERTED INTO SEARCH OPERATION U/S 132 OF THE ACT. DURING THE COURSE OF SEARCH , EXCESS CASH OF RS.54,81,173/ - WAS SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE. SIMI LARLY, EXCESS STOCK OF GOLD VALUING RS.45,52,548/ - AND OF DIAMONDS VALUING RS.78,88,380/ - WAS FOUND. DURING THE COURSE OF SEARCH, THE ASSESSEE OFFERED EXCESS CASH, GOLD AND DIAMOND FOR TAXATION. ACCORDINGLY, A SUM OF RS.1,79,22,101/ - (RS.54,81,173/ - + RS.4 5,52,548/ - + RS.78,88,380/ - ) WAS OFFERED FOR TAXATION. THE AO HOWEVER, INITIATED THE PENALTY PROCEEDINGS U/S 271AAA OF THE ACT ON THE GROUND THAT HAD THE SEARCH WAS NOT CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE, THE DIFFERENCE IN CASH AND STOCK WO ULD NOT HAVE BEEN DETECTED. 4. THE SUBMISSION OF THE ASSESSEE BEFORE THE AO WAS AS UNDER: WITH RESPECT TO YOUR ABOVE SAID NOTICE FOR THE CAPTIONED ASSESSEE WE HEREBY SUBMIT AS UNDER: 1. THE ASSESSEE HAD DECLARED A SUM OF RS. 1.79 CR. D URING COURSE OF SEARCH. THE ASSESSEE HAS NO OTHER SOURCE OF INCOME THAN WHAT WAS DISCLOSED TO THE DEPARTMENT. THE ASSESSEE IS IN THE BUSINESS OF JEWELRY AND B ULLION AN D THE INCOME THAT WAS OFFERED WAS GENERATED IN THE CO URSE OF THE BUSINESS ACTIVITY. ITA NO. 5674/DEL/2015 S. K. IMPEX 3 2. THE SAME HAS BEE N DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS BY PASSING THE RESPECTIVE JOURNAL ENTRIES, THE SURRENDER ON ACCOUNT OF CASH FOR RS. 54,81,173/ - HAS BEEN SHOWN AS 'MISCELLANEOUS INCOME (AMOUNT OFFERED VOLUNTARILY FOR TAXATION)' IN THE PROFIT AND LOSS ACCOUNT. THE SALE OF SURRENDERED STOCK IS INCLUDED IN THE SALES TURNOVER OF THE ASSESSEE AND HAS BEEN HIGHLIGHTED AS 'SALES INCLUDES AMOUNT OFFERED V OLUNTARILY FOR TAXATION FOR RS.1,24,40,928/ - )'. T HE SAME FACTS WERE ALSO MENTIONED IN THE NOTES TO ACCOUNTS WITH F I NANCIAL STATEMENTS, ALREADY FILED WITH YOUR HONOR. MOREOVER, THE ASSESSEE HAS ALSO FILED THE RETURN OF INCO ME INCLUDING THE UNDISCLOSED INCOME OF RS, 1.79 CR. F ILED FOR A .Y . 2012 - 13 . 3. 'SEC TION 271 AAA READS AS UNDER. A. T HE ASSESSING OFFICER MAY NOTWI THSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED U/S 132 ON OR AFTER THE 1 ST DAY OF JUNE 2 007, THE ASSESSEE SHALL PAY BY WAY O F PENALTY, IN ADDITION T O TAX, IF ANY PAYABLE BY HIM A SU M COMPUTED AT THE RATE OF 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. B. NOTHING CONTAINED IN SUB SECTION (1) SHALL APPLY TH E ASSESSEE. I) IN THE COURSE O F SEARCH IN A STATEMENT U/S (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME AND S PECIFICS THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. ITA NO. 5674/DEL/2015 S. K. IMPEX 4 II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISC LOSED INCOME WAS DERIVED, AND PA YS THE TAX, TOGETHER WITH INTEREST IF ANY IN RESPECT OF THE UNDISCLOSED INCOME. III) NO PENALTY UNDER THE PROVISION S OF CLAUSE (C) OF SUB SECTION (I) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB SECTION (1). IV) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FAR AS MAY BE , APPLY IN RELATION TO THE PENALTY REFERRED TO IN THE SECTION.' 4. F ROM REA DING THE ABOVE PROVISION, IT IS A PPARENT THAT PENALTY U/S CANNOT BE IMPOSED IF IN THE COURSE OF SEARCH IN A STATEMENT RECORDED UNDER SUB SECTION 4 OF SECTION 132, THE ASSESSEE ADMITS THE UNDISCLOSED INCOME AND SPECI FIES AND SUBSTANTIATES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND ALSO HAS PAID THE TAX TOGETHER WITH INTEREST IN RESPECT OF UNDISCLOSED INCOME. 5. DETAILS OF NATURE OF UNDISCLOSED INCOME AND MANNER OF EARNING WAS RECORDED IN THE STATEMENT OF SH . SURENDER KUMAR JAIN AT THE TIME OF SEARCH. ASSESSES HAS ADMITTED THE UNDISCLOSED INCOME IN THE STATEMENT U/S 132(4) AND ALSO SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED IN THE SAME. 6. TAXES AND APPLICABLE INTEREST HAVE ALREADY BEEN PAID ON THE UNDISCLOSED INCOME BY THE ASSESSEE AND DULY REFLECTED IN THE RETURN OF INCOME. 7. IT WAS STATED THAT THE INCOME WA S DERIVE D FROM TRADING TRANSACTIONS NOT RECORDED IN T HE BOOKS. ITA NO. 5674/DEL/2015 S. K. IMPEX 5 8. ON PERUSAL OF STATEMENT DT. 30.08.20 11 FILED BY THE ASSESSE S BEFORE THE ADIT (INV) UNIT II (3) IT IS OBSERVED THAT THE ASSESSES HAD CLEARLY STATED THAT DURING THE COURSE OF PROCEEDING ON 20.07.2011, HE HAD VOLUNTARILY MADE A DISCLOSURE U/S L32 (4) TO AVAIL IMMUNITY FRO M THE PENALTY AS PER SUCTION 271 AAA OF THE IT ACT. ' I H AVE SURRENDERED A SUM OF 1.79 CR. ON BEHALF OF M /S. S.K. IMPEX VIDE STATEMENT U/S 132 AT THE TIME OF SEARCH TO COVER ALL LEAKAGES IN REVENUE ON ACCOUNT OF CASH AND STOCK FOR FINANCIAL YEAR 2011 - 12. THE INCOME HAS BEEN EARNED FORM OUT OF BOOKS TRANSACTIONS OF SALES AND PUR CHASE OF BULLION/JEWELRY. THE CASH AMOUNTING TO RS.55 LAKHS SEIZED DURING THE SEARCH OPERATIONS MAY KINDLY BE USE D TO MEET THE TAX LIABILITIES. THE SURRENDER HAS BEEN MADE WITH THE CLEAR UNDERSTAND ING THAT NO PENALTY AND INTEREST WILL BE IM POSED EITHER U/S 271(1)(C) OR U/S 271AAA AND NEITHER ANY PROSECUTI ON WOULD BE LAUNCHED AGAINST ME OR ANY OF MY FAMILY MEMBERS OR ANY OF THE FIRM IN WHICH I A M A PARTNER ON ACCOUNT OF THE ABOVE SAID SURRENDER. ALL THE DOCUMENTS (PAGE - WISE) FOUND AND SEIZED DURING THE SEARCH PROCEEDINGS HAS BEEN EXPLAINED DURING TH E ASSESSMENT PROCEEDINGS THE MANNER OF EARNING OF UNDISCLOSED INCOME, AS STATED BY ASSESSEE IN THE STATEMENT U/S 132 (4) HAS BEEN ACCEPTED IN THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2012 - 13. 9. IT IS FURTHER STATED THAT IN THE COURSE OF SEARCH NO INCRIMINATING DOCUMENTS WERE FOUND WHICH COULD LEAD TO THE CONCLUSION THAT THE APPELLANT HAD EA RNED THE UNDISCLOSED INCOME. ITA NO. 5674/DEL/2015 S. K. IMPEX 6 10. THE ASSESSEE HAD SUBSTANTIATED THE DISCLOSURE BY FURNISHING ALL THE RELATED AND MATCHING DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 11. THAT THE ASSESSMENT U/S 143/153A HAS BEEN COMPLETED AT THE RETURNED INCOME VIDE ORDER DTD. 28.02.2014 AND ALL TH E FACTS PROVIDED BY THE ASSESSEE HAVE BEEN ACCEPTED. 12. TO S UBSTANTIATE THE ABOVE, RELIANCE IS PLACED ON PRADIP KUMAR SONTHLIA, KOLKATA VS DEPARTMENT OF INCOME TAX, INCOME TAX APPELLATE TRIBUNAL - KOLKATA DECIDED ON 13 TH JANUARY 2014. ITA NOS. 1289 - 1290/KOL/2012. THE TRIBUNAL HELD AS UNDER...... 'THE LD. DR EVEN THO UGH RELIED ON THE ORDER OF THE AO BUT COULD NOT CONVINCE US HOW THE ASSESSEE FAILS TO GET I MMUNITY FROM THE PENALTY U/S 271 AAA OF THE ACT. THE ASSESSES HAS DECLAR ED UNDISCLOSED I NCOME IN THE RETURN FILED U/S 15 3A AND PAID TAX ALONG WITH THE INTEREST AND TH E PROVISION OF SECTION 271AAA(1) WILL NOT B E APPLICABLE AS THE ASSESSES COMPLIED WITH THE CONDITIONS MENTIONED U/S 271AAA(2) OF THE ACT. THE ASSE SSEE ADMITTED THE UNDISCLOSED INCOME IN THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT AN D ALSO SPECIFIC MANNER IN WHICH THE I NCOME HAS BEEN DERIVED BY HIM. T HE MANNER DISCLOSED BY THE ASSESSEE HAD BEEN ACCEPTED BY THE AO. THE ASSESSEE HAS ALSO PAID THE TAX AND INTEREST IN RESPECT OF UNDISCLOSED INCOME. THE UNDISCLOSED INCOME AS WELL AS THE SP ECIFIED YEAR ARE DEFINED IN THE EXPLANATION 2 TO SECTION 271 AAA OF THE ACT. THUS IN OUR OPINION THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS AS GIVEN U/S 271AAA (2 ).....' ITA NO. 5674/DEL/2015 S. K. IMPEX 7 OUR AFORESAID VIE W IS DULY SUPPORTED BY THE FOLLOWING DIVISIONS: - I. PRAMOD KUMAR JAIN VS DCIT (2012) 149 TTJ 36 (CUTTACK - TRI B) II. CONCRETE DEVELOPERS VS ACIT (2013) 34 TAXMAN.COM 62 (NAGPUR - TRI B) III. ASHOK KUMAR SHARMA VS DC1T (2012 ) 149 TTJ 33 (CUTTACK - TRIB) . IV . SULOCHNA DE VI AGARWAL VS DEPA RTMENT OF INCOME TAX (ITA NO. 1052/AHD/2 01 2). V. SHILPA M. GUPTA VS. DEPARTMENT OF INCOME TAX (ITA NO. 17 84/AH D/2012 ). 13. RELIANCE IS PLACED UPON ORDER OF ITAT DELHI IN THE CASE OF SH. VIRENDARA KUMAR GUPTA, VS ACIT, CC - 9, ITA NO. 552/DEL/2013. WHEREIN IT WAS DECIDED AS: .. THE TAXES HAD BEEN PAID ALONG WITH THE INTEREST IN ALL THESE INDIVIDUAL HANDS. SINCE A STATEMENT WAS GIVEN DURING THE COURSE OF SEARCH U/S 132 INCOME TAX ACT, 1961 ADMITTING THE UNDISCLOSED INCOME OF RS. 20 CR. OF THE GROUP, THE QUANTUM OF DISCLOSURE ON INCOME WAS AFFIR MED BY AN AFFIDAVIT BY OTHER PERSON OF THE GROUP. THE MANNER WAS ALSO SLATED IN THE STATEMENT BY WHICH SUN INCOME WA S EARNED. IN OUR CONSIDERED ITA NOS. 551, 552 & 553/DEL./201 3 VIEW, THE CROUP HAS ALSO SUBSTANTIATED THE MANNER IN WHICH THIS UNDISCLOSED I NCOME WAS DERIVED. IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND IN AN AFFIDAVIT DT. 15.05.2009, THE DISCLOSUR E WAS MAINTAINED. THE ASSESSEE OF THE G ROUP S HAVE ALSO PAID THE TAXES APPLICABLE ALONG WITH INTEREST. IN SUCH A SITUATION, ITA NO. 5674/DEL/2015 S. K. IMPEX 8 THE CIT (A) WAS N OT JUSTIFIED IN SUSTAINING THE PENALTY U/S 271(1) (C) OF THE ACT LEVIED BY THE ASSESSING OFFICER. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW THE AND DIREC T TO DELETE THE PENALTY U/S 271 AAA.' WHICH HAS BE EN UPHELD BY THE HONORABLE DELHI HIGH COURT VIDE INCOME TAX APPEAL NOS. 563/2013, 564/2013, DECIDED ON NOVEMBER 22, 2013 STANDING THAT T HE TRIBUNAL HAS TAKEN THE REALISTIC ARID PRAGMATIC VIEW AND ACCORDINGLY DELETED THE PENALTY UNDER SECTION 271 AAA OF THE ACT. 14. RELIANCE IS ALSO PLACED UPON THE DERISION OF HON'BL E APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26 (SC) . HE PARTICULARLY MADE REFERENCE TO THE FOLLOWING OBSERVATION OF HON'BLE SUPREME COURT: - 'AN ORDER IMPOSI NG PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI CRIMINAL PROCEE DINGS AND PENALTY WILL NOT ORDI NARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO B E IMPOSE D MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD HE IMPOSED FOR FAILURE TO PERFORM A STA TUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXORCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES . E VEN IF A MINIMUM PENALTY IS PRESCRIBES, THE AUTHORIT Y COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY 6 ITA NO. 3371/DEL/11 ITA NO. 5674/DEL/2015 S. K. IMPEX 9 WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISION OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA F IDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE.' 15. THEREFORE, THE CONDITION FOR EXONERATION FROM PENALTY U/S 27 1AAA (2) WERE SATISFIED BY THE ASSESSEE. IN VIEW OF THE ABOVE, I T IS THEREFORE HUMBLY REQUESTED TO DROP THE PENALTY PROCEE DINGS AGAINST THE ASSESSEE AND OBLIGE.' 5 . THE AO HOWEVER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND LEVIED THE PENALT Y OF RS.17,92,210/ - BY OBSERVING AS UNDER: THE ASSESSE E'S ABOVE NOTED REPLY HAS BEE N CONSIDERED BY THE UNDERSIGNED VERY CAREFULLY. THE EXPLA NATION PUT FORTH BY THE ASSESSEE IS NOT CORRECT AND IS THEREFORE, NOT ACCEPTABLE. P ROVISIONS OF THE SECTION 271AAA (2) CLEARLY STIPULATE THAT: - NOTHING CONTAINED IN SUB SECTION (1) SHALL APPLY IF THE ASSESSEE, - I) IN THE COURSE OF SEARCH IN A STATEMENT U/S (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. II) SUBSTA NTIATES THE MANNER IN WHICH THE UN DISCLOSED INCOME WAS DERIVED, AND PAYS THE TAX, TOGETHER WITH INTEREST IF ANY IN RESPECT OF THE UNDISCLOSED INCOME. ITA NO. 5674/DEL/2015 S. K. IMPEX 10 III) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB SECTION (1) OF SECTION 271 SHALL B E IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB SECTION (1). THUS IN ORDER TO ABSOLVE HIMSELF FROM THE IMPOSITIO N OF PENALTY U/S 271AAA OF THE I.T. AC T, 1961 , THE ASSESSEE HAS NOT ONLY TO ADMIT THE UNDISCLOSED INCOME IN A STATEMENT U/S 132(4) OF THE I.T. ACT, 1961 BUT ALSO HE HAS TO SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND HE HA S TO SU BSTANTIATE THE MANNER IN WHICH T HE UNDISCLOSED INCOME WAS DERIVED AND HE HAS TO PAY THE TAX, TOGETHER WITH INTEREST, I F ANY, IN RESPECT OF UNDISCLOSED INCOME. IN THE INSTANT CASE, ASSESSEE NEITHER DURING THE RECORDING OF STATEMENT U/S 132(4) OF THE I.T . ACT NOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS HA S BEEN ABLE TO SPECIFY THE MANNER OF DERIVING THIS UNDISCLOSE D IN COME. MERE VAGUE SUBMISSION DURING T HE RECORDING OF STATEMENT U/S 132(4) OF THE I.T . ACT THAT THE INCOME HAS BEEN EARNED FROM OUT OF BOOKS TRANSACTIONS OF SALES A ND PURCHASE OF BULLION/JEWELRY DO NOT SUFFICE TO BE PROPER COMPLIANCE OF THE MANDATE OF L AW AS STIPULATED IN SECTION 271 AAA(2) OF THE I .T. ACT AS DISCUSSED ABOVE. IT IS NOTED THAT THE ASSESSES, INFA CT, HAS SIMPLY SUBMIT TED THAT 'I HAVE SURRENDERED A SUM OF 1.79 CR. ON BEHA LF OF M/S. S.K. IRNPEX (VIDE STATEMENT U/S 132) AT THE TIME OF SEARCH TO COV ER ALL LEAKAGES IN REVENUE ON ACCOUNT OF CASH AND S T OCK FOR FINANCIAL YEAR 2011 - 12. THE INCOME HAS BEEN ITA NO. 5674/DEL/2015 S. K. IMPEX 11 EARNED FORM OUT OF BOOKS TRANSACTIONS OF SALES AND PURCHASE OF BULLION/JEWELRY.' THIS SUBMISSION CANNOT BE HELD TO TANTAMOUNT TO SPECIFY TH E MANNER IN WHICH SUCH UNDISCLOSED INCOME HAS BEEN DERIVED NOT TO SPEAK OF SUBSTANTIATING THE SAME. T HE LEAST THAT IS REQUIRED OF THE ASSESSEE TO TANTAMOUNT TO SPECIFYING THE MANNER OF DERIVING THE UNDISCLOSED INCOME IS THAT PROXIMATE NATURE OF ACQUISITIO N IS MENTIONED BY THE ASSESSES. TO BRING ON RECORD THE PROXIMATE NATURE OF ACQUISITION, THE ASSESSEE MUST AT LEAST STATE THE IMMEDIATE SOURCE AND TRANSACTIONS THAT HAVE BROUGHT HI M THE UNDISCLOSED INCOME. THE A SSESSEE'S SUBMISSION, REPRODUCED SUPRA, DOES N OT, BY ANY STRETCH OF LOGIC, TANTAMOUNT TO SPECIFYING THE MANNER & OBVIOUSLY THE ASSESSEE HAS NOT SUBSTANTIATED SUCH MANNER. IT IS ALSO NOTED THAT THE COND ITIONS ENVISAGED IN SECTION 271AAA (2) OF THE I . T . ACT, 1961 ARE CUMULATIVE AND HAVE TO BE FULFILLED S IMULTANEOUSLY. THUS, MERE PAYMENT OF TAX TOGETHER WITH INTEREST IN RESPECT OF THE UNDISCLOSED INCOME WITHOUT FULFILLING OTHER TWO CONDITIONS AT THE SAME TIME CANNOT CONFER UPON THE ASSESSEE THE IMPUNITY FORM IMPOSIT ION OF PENALTY ENVISAGED U/S 271AAA(1 ) OF THE I.T. ACT . ACCORDINGLY, PENALTY U/S 271AAA OF THE I .T. ACT, 1961 IS HEREBY LEVIED AS PER CALCULATION BELOW: - AMOUNT OF UN - DISCLOSED INCOME RS.1,79,22,101/ - PENALTY LEVIABLE @ 10% OF THE UNDISCLOSED INCOME RS.17,92,210/ - 6 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE ITA NO. 5674/DEL/2015 S. K. IMPEX 12 AO. THE RELIANCE WAS PLACED ON THE FOLLOWING DECISION OF THE VARIOUS BENCHES OF THE ITAT: SHRI GOPAL SHETTY IN ITA NO. 221/MUM/2012 ORDER DATED 06.05.2015 PRAMOD KUMAR JAIN VS DCIT (2013) 33 TAXMANN.COM 651 (CUTTACK - TRIB) SPS STEEL & POWER LTD. IN ITA NO. 1391 & 1414/KOL/2011 ORDER DATED 30.06.2015 ASHOK KUMAR SHARMA VS DCIT 149 TTJ 33 (CUTTACK) SVP BUILDERS (INDIA) LTD. VS DCIT IN ITA NO. 4674/DEL/2014 ORDER DATED 19.02.2015 7 . THE LD. CIT(A) HOWEVER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE BY OBSERVING AS UNDER: 5) WHETHER THE PLEA OF THE ASSESSEE LIKE VOLUNTARY DISCLOSURE , BUY PEACE , AVOID LITIGATION ETC. HAVE ANY MEANI NG OR DO THEY SHOW THE ESCAPE ROUTE RESORTED TO BY THE ASSESSEE. THE HON BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS CIT - II IN CIVIL APPEAL NO. 772 OF 2013 HAVE OBSERVED. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLU NTARY 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. THE HON BLE SUPREM E COURT HAS FURTHER OBSERVED THAT THE AO HAS TO SATISFY WHETHER THE PENALTY ITA NO. 5674/DEL/2015 S. K. IMPEX 13 PROCEEDINGS BE INITIATED OR NOT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCED IT INTO WRITING . THE SCOPE OF SECTION 271(1)(C) HAS ALSO BEEN ELABORATED AND DISCUSSED BY THIS COURT IN UNION OF INDIA VS DHARMENDRA TEXTILES PROCESSORS (2008) 13 SCC 369 AND CIT VS ATUL MOHAN BINDAL (2009) SCC 589. IN VIEW OF THE PRINCIPLES LAID DOWN BY THE APEX COURT I DO NOT FIND ANY ILLEGALITY IN THE ACTION OF THE AO. I FULLY AGREE WITH THE IMPOSITION OF PENALTY BY THE ASSESSING OFFICER. HENCE THE APPEAL OF THE ASSESSEE IS DISMISSED. 8 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE IN HIS STATEMENT RECORDED IN SECTION 132(4) OF THE ACT SURRENDERED THE AMOUNT DURING THE COURSE OF SEARCH. THEREFORE, THE PENALTY U/S 271AAA OF THE ACT WAS NOT LEVIABLE. IT WAS FURTHER SUBMITTED THAT THE AO NEVER ASKED THE MANNER OF DERIVING THE INCOME DURING THE COURSE OF SEARCH OR IN THE ASSESSMENT PROCEEDINGS AND THE PARTNER OF THE ASSESSEE IN REPLY TO THE QUESTION NO. 11 CLEARLY STATED THE HE OFFERED THE AMOUNT OF RS. 1,24,40,928/ - FOR TAXATION ON ACCOUNT OF EXCESS STOCK FOUND DURING THE SEARCH OPERATION. A REFERENCE WAS MADE TO PAGE NO. 7 OF THE ASSESSEE S PAPER BOOK WHICH IS THE COPY OF THE STATEMENT OF ITA NO. 5674/DEL/2015 S. K. IMPEX 14 THE PARTNER OF THE ASSESSEE FIRM RECORDED ON 21.07.2011. THE RELI ANCE WAS PLACED ON THE DECISION OF THE ITAT DELHI BENCH G , NEW DELHI IN THE CASE OF SV P BUILDERS (INDIA) PVT. LTD. VS DCIT, CIRCLE 7(1), NEW DELHI IN ITA NO. 4674/DEL/2014 FOR THE ASSESSMENT YEAR 2009 - 10 VIDE ORDER DATED 19.02.2015. 9 . IN HIS RIVAL SUBM ISSIONS , THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT DESCRIBED THE MANNER IN WHICH INCOME WAS DERIVED. THEREFORE, THE IMMUNITY ON THE BASIS OF STATEMENT U/S 132(4) OF THE ACT FOR NOT LEV YING THE PENALTY WAS NOT AVAILABLE TO THE ASSESSEE AND THE PENALTY U/S 271AAA OF THE ACT WAS RIGHTLY LEVIED BY THE AO AND THE LD. CIT(A) WAS FULLY JUSTIFIED IN CONFIRMING THE PENALTY. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULL Y GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT EXCESS STOCK OF GOLD & DIAMOND AMOUNTING TO RS.1,24,40,928/ - AND EXCESS CASH OF RS.54,81,173/ - WERE FOUND WHICH THE ASSESSEE OFFERED FOR TAXATION DURING T HE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT . THE AO LEVIED THE PENALTY U/S 271AAA OF THE ACT FOR THE REASON THAT THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED WAS ITA NO. 5674/DEL/2015 S. K. IMPEX 15 NOT SUBSTANTIATED. IN THE PRESENT CASE, IT IS NOTICED FRO M T HE STATEMENTS OF THE PARTNER OF THE ASSESSEE FIRM RECORDED U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH THAT NO SPECIFIC QUERY WAS RAISED RELATING TO THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY THE ASSESSEE. ON THE CONTRARY, THE ASSESSEE EXPLAINED THAT THE EARNING OF UNDISCLOSED INCOME HAD BEEN GENERATED FROM THE SALE OF UNACCOUNTED/UNDISCLOSED JEWELLERY. THE ASSESSEE WAS ENGAGED IN BULLION TRADING AND GOLD & DIAMOND JEWELLERY, THEREFORE, THE SOURCE OF THE UNACCOUNTED EXCESS CASH , GOLD & DIAMOND JEWELLERY WAS THE BUSINESS ACTIVITY OF THE ASSESSEE. IN THE PRESENT CASE, NO SPECIFIC QUERY WAS RAISED BY THE AUTHORIZED OFFICERS DURING THE COURSE O F RECORDING OF STATEMENT U/S 132 (4) OF THE ACT ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HAD BEEN D ERIVED AND ABOUT ITS SUBSTANTIATION . ON THE CONTRARY, THE ASSESSEE IN REPLY TO THE QUESTION NO. 11 RELATING TO THE DISCREPANCY IN GOLD & DIAMOND JEWELLERY TOTALING TO RS.1,24,40,928/ - CATEGORICALLY STATED AS UNDER: I AM NOT IN A POSITION TO EXPLAI N THE DISCREPANCY. THEREFORE, I OFFER OF RS.1,24,40,928/ - FOR TAXATION ON ACCOUNT OF EXCESS STOCK FOUND DURING THE SEARCH OPERATION. ITA NO. 5674/DEL/2015 S. K. IMPEX 16 11 . THE SAID QUERY WAS RAISED DURING THE COURSE OF RECORDING THE STATEMENT OF SH. SURENDER KUMAR JAIN SON OF LATE SH. SUR AJ PARKASH JAIN PARTNER OF THE ASSESSEE ON 21.07.2011, COPY OF THE SAID STATEMENT IS PLACED AT PAGE NOS. 5 TO 7 OF THE ASSESSEE S PAPER BOOK. IN THAT STATEMENT NO QUERY WAS RAISED RELATING TO THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED. THEREFORE , IN THE ABSENCE OF ANY SUCH QUERY RAISED BY THE AUTHORIZED PERSON, T HE AO WAS NOT JUSTIFIED IN TAKING THE ADVERSE VIEW AND IMPOSING THE PENALTY U/S 271AAA OF THE ACT. IN THE AFORESAID VIEW WE ARE ALSO FORTIFIED BY THE DECISION OF THE CO - ORDINATE BENCH AT DELHI IN THE CASE OF SVP BUILDERS (INDIA) LTD., NOIDA VS D CIT , CIRCLE - 7(1), NEW DELHI (SUPRA) . 12 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 28 /06 / 2016 ) SD/ - SD/ - ( BEENA PILLAI ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 /06 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR