S.Duraipandi & S.Thalavaipandian (AOP), CHENNAI V. DCIT, CHENNAI

ITA 570/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8132 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Keywords: Unexplained cash credit; Search and seizure; Source of fund; Reasonable cause; Condonation of delay
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 5(2); 153A; 201; 139(1); 73; 13; 22; 153C

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI G. PAVAN KUMAR , JUDICIAL ME MBER I.T.A. NO. 570/MDS/2015[A.Y. 2008 - 09 ] I.T.A.NO S . 1 666 , 1 667 , 1 668 , 1 669, 1670, 1671 & 1672/ MDS/2016 ASSESSMENT YEAR S : 2002 - 03, 03 - 04, 04 - 05, 05 - 06, 06 - 07, 07 - 08 & 08 - 09 S. DURAIPANDI & S. THALAVAIPANDIAN AOP , C/O CNGSN & ASSOCIATES LLP, SWATHI COUR T, FLAT C & D, NEW NO. 43, OLD NO. 22, VIJAYARAGHAVA ROAD, T. NAGAR, CHENNAI 600 017. [PAN: A A AAD4723G ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CO MPANY CIRCLE 3(4) , CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) I.T.A.NOS.1835, 1836, 1837, 1838, 1839, 1840 &1841/MDS/2016 ASSESSMENT YEARS :2002 - 03, 03 - 04, 04 - 05, 05 - 06, 06 - 07, 07 - 08 & 08 - 09 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 3(4), CHENNAI. V S. S. DURAIPANDI & S. THALAVAIPANDIAN AOP , C/O CNGSN & ASSOCIATES LLP, SWATHI COURT, FLAT C & D, NEW NO. 43, OLD NO. 22, VIJAYARAGHAVA ROAD, T. NAGAR, CHENNAI 600 017. ( / APPELLANT ) ( / RESPONDENT ) ASSESSEE BY : SHRI B. RAMAKRISHNAN , C.A. DEPARTMENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 20 . 10 .201 6 / DATE OF P RONOUNCEMENT : 06 . 01 .201 7 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : T HE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO. 570/MDS/2015 IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 2 1 9 , CHENNAI DATED 30 . 12 .201 4 FOR THE ASSESSMENT YEAR 2008 - 09 CHALLENGING THE QUANTUM ADDITION OF .1,65,00,000 . THE CROSS APPEALS FILED BY THE ASSESSE E AS WELL AS REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. CIT(A) 19, CHENNAI DATED 31.03.2015 FOR THE ASSESSMENT YEARS 2002 - 03 TO 2008 - 09, WHEREIN, BOTH THE PARTIES HAVE CHALLENGED THE SUSTENANCE/ DELETION OF PENALTY LEVIED UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. FIRST WE SHALL TAKE UP ASSESSEE S APPEAL. I.T.A. NO. 570/MDS/2015 : [A.Y. 2008 - 09] 2. IN THIS CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 153C OF THE ACT VIDE ASSESSMENT ORDER DATED 31.12.2009 BY ASSESSING INCOME OF THE ASSESSEE AT .9,10,44,388/ - AS AGAINST THE RETURNED INCOME OF .1,64,60,476/ - . LATER ON, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHERE, HE HAS DELETED CERTAIN ADDITIONS. AFTER THIS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT FOR BRINGING THE AMOUNT OF .1.65 CRORES UNACCOUNTED CASH FOUND DURING THE COURSE OF SEARCH ACTION UNDER SECTION 132 OF THE ACT CONDUCTED AT THE PREMISES OF THE ASSESS EE. ACCORDINGLY, THE ASSESSMENT WAS REOPENED AND ADDITION OF .1.65 CRORES WAS MADE. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE THE LD. CIT(A) AND THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS NOT PROPERLY EXPLAINED THE AMOUNT OF .1.65 CRORES FOUND AND SEIZED IN THE COURSE OF SEARCH ACTION. THE ASSESSEE ADMITTED AT I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 3 THE TIME OF SEARCH ACTION THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND THE BOOKS OF ACCOUNTS WERE PREPARED ONLY AFTER COMPLETION OF THE SEARCH AND SEIZURE ACTION. BEING SO, T HE BOOKS OF ACCOUNTS CANNOT BE CONSIDERED AS TRUE AND CORRECT TO ACCEPT THE SAME SINCE THE ASSESSEE HAS NOT FILED ANY SUPPORTING MATERIAL OR EVIDENCE BROUGHT ON RECORD EXPLAINING THE CASH FOUND DURING THE COURSE OF SEARCH, THE ADDITION WAS SUSTAINED BY THE LD. CIT(A). THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE MAIN REASON FOR REJECTION OF CLAIM OF THE ASSESSEE REGARDING THE SOURCE OF CAS H WHICH WAS FOUND DURING THE COURSE OF SEARCH ACTION WAS THAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT AND IT HAS PREPARED THE BOOKS OF ACCOUNTS ONLY AFTER THE SEARCH ACTION WAS OVER. ACCORDING TO THE DEPARTMENT, THE PREPARATION OF BOOKS OF ACCOU NT WAS ONLY AFTER THOUGHT AND NO CREDITS SHOULD BE GIVEN TO SUCH BOOKS OF ACCOUNTS. IN OUR OPINION, THOUGH IT WAS FOUND THAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT AT THE TIME OF SEARCH ACTION, IF THE ASSESSEE IS ABLE TO EXPLAIN THE SOURCE OF C REDIT AND PREPARED THE TRUE ACCOUNTS OF THE ASSESSEE WITH SUPPORTING MATERIALS THAT ITS ACCUMULATED CASH WERE FROM KNOWN SOURCES OF INCOME THEN IT HAS TO BE CONSIDERED. IN OUR OPINION, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE IN - TOTO WITHOUT EXAMINING EACH AND EVERY ENTRIES MADE IN THE I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 4 BOOKS OF ACCOUNT WHETHER THE ENTRIES WERE MADE WITH SUPPORTING MATERIALS OR NOT. ACCORDINGLY, WE REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO EXAMINE THE BOOKS OF ACCOUNTS PROPERLY AND IT IS NEEDLESS TO SO THAT THE ASSESSEE SHALL EXPLAIN EACH AND EVERY ENTRIES MADE IN THE BOOKS OF ACCOUNTS WITH REGARD TO THE CASH AMOUNT OF .1.65 CRORES SEIZED ON THE DAY OF SEARCH AND IF THE ASSESSEE IS ABLE TO EXPLAIN THE SAME WITH SUPPORTING DOCUMENTS, THE ASSESSING OFFICER SHALL CONSIDER THE SAME IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE . WITH THE ABOVE OBSERVATIONS, WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 3.1 ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NOS. 1835 TO 1841/MDS/2015 [ FOR A.Y .2002 - 03 TO 2008 - 09 REVENUE S APPEALS] 4. IN THESE ASSESSMENT YEARS, THE ASSESSEE IS IN APPEAL BEFORE US REGARDING CONFIRMATION OF THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER. THE REVENUE IS ALSO IN APPE AL BEFORE US FOR DELETING CERTAIN PENALTIES BY THE LD. CIT(A) LEVIED BY THE ASSESSING OFFICER. 5. FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN AOP CONSISTING S. DURAIPANDI AND S. THALAVAIPANDIAN WAS ENGAGED IN THE BUSINESS OF MONEY I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 5 LENDING. THERE WAS A SEARCH UNDER SECTION 132 OF THE ACT IN THE RESIDENCES OF BOTH THE PERSONS AND ALSO IN THEIR BUSINESS PREMISES ON 16.05.2007. CONSEQUENTLY, NOTICE UNDER SECTION 1 53C OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED RETU R NS OF INCOME ON 13.0 8 .2009 DECLARING INCOME AS FOLLOWS: A.Y. INCOME RETURNED BY THE ASSESSEE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE INCOME COMPUTED BY THE ASSESSING OFFICER 2002 - 03 NIL .54.95 LAKHS .54,95,000/ - 2003 - 04 .1,16,419/ - .87.15 LAKH S .93,03,149/ - 2004 - 05 .68,93,960/ - .36.05 LAKHS .1,26,93,187/ - 2005 - 06 .1,98,93,840/ - .40.95 LAKHS .3,08,85,386/ - 2006 - 07 .3,10,91,760/ - .43.05 LAKHS .3,88,74,925/ - 2007 - 08 .80,49,150/ - .47.25 LAKHS .9,01,09,981/ - 2008 - 09 .1,64,60,480/ - NIL .9,10,44,388/ - 5.1 ON APPEAL, THE LD. CIT(A) GAVE PARTIAL RELIEF TO THE ASSESSEE. THEREFORE, THE ASSESSEE AS WELL AS REVENUE ARE IN APPEALS BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER IN I.T.A. NOS. 1745 TO 1751/MDS/2010 AND CROSS OBJECTIONS BY T HE ASSESSEE IN C.O. NOS. 138 TO 144/MDS/2010 DATED 29.04.2011 DISMISSED THE REVENUE S APPEALS AS WELL AS CO S FILED BY THE ASSESSEE. IN THE MEANTIME, THE ASSESSING OFFICER LEVIED PENALTY IN EACH ASSESSMENT YEARS IN RESPECT OF THE RETURNS OF INCOME AND ALSO ON THE ADDITIONS, WHICH HAVE BEEN CONCLUDED BY THE LD. CIT(A) AS WELL AS BY THE TRIBUNAL. FOR BETTER UNDERSTANDING, WE MENTION HEREUNDER VARIOUS ADDITIONS, WHICH ARE SUBJECT MATTER OF LEVY OF PENALTY BY THE ASSESSING OFFICER: I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 6 PARTICULARS ADDITIONS ON WHI CH PENALTY LEVIED ASST. YEAR 2002 - 03 AGRI. INCOME ADDED AS INCOME FROM OTHER SOURCES 32,95,000 ASST. YEAR 2003 - 04 RETURNED INCOME 1,16,419 AGRI. INCOME ADDED AS INCOME FROM OTHER SOURCES 65,15,000 UNEXPLAINED CASH CREDIT 4,71,730 ASST. YEAR 2004 - 05 RETURNED INCOME 68,93,960 AGRI. INCOME ADDED AS INCOME FROM OTHER SOURCES 14,05,000 DIVIDEND 2,86,750 UNEXPLAINED CASH CREDIT 11,53,407 UNDISCLOSED RECEIPTS IN BANK ACCOUNT OF EMPLOYEES 7,54,070 ASST. YEAR 2005 - 06 RETURNED INCOME 1,98,93,480 AGRI. INCOME ADDED AS INCOME FROM OTHER SOURCES 18,95,000 DIVIDEND 16,85,400 UNEXPLAINED CASH CREDIT 36,78,846 UNDISCLOSED RECEIPTS IN BANK ACCOUNT OF EMPLOYEES 15,32,000 ASST. YEAR 2006 - 07 RETURNED INCOME 3,10,91,760 AGRI. INCOME ADDED AS INCOME F ROM OTHER SOURCES 21,05,000 DIVIDEND 19,04,665 UNDISCLOSED RECEIPTS IN BANK ACCOUNT OF EMPLOYEES 15,73,500 ASST. YEAR 2007 - 08 RETURNED INCOME 80,49,150 AGRI. INCOME ADDED AS INCOME FROM OTHER SOURCES 25,25,000 DIVIDEND 19,20,993 UNDISCLOSED RECEI PTS IN BANK ACCOUNT OF EMPLOYEES 12,50,000 ASST. YEAR 2008 - 09 RETURNED INCOME 1,64,60,480 DIVIDEND 5,05,412 UNACCOUNTED RECEIPTS 41,28,500 UNDISCLOSED INTEREST 25,00,000 5.2 NOW THE CONTENTION OF THE LD. DR IS THAT IN ANY INCOME DECLARED IN THE RET URN FILED AFTER THE SEARCH COULD NOT ATTRACT THE IMMUNITY PROVIDED BY CLAUSE (2) OF EXPLANATION 5 OF SECTION 271(1)(C) OF THE ACT. HE POINTED OUT THAT THE ADDITIONAL INCOME SO DISCLOSED IN THE STATEMENT OF INCOME RECORDED UNDER I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 7 SECTION 132(4) OF THE ACT, W HICH WAS LATER ON DECLARED IN THE RETURN OF INCOME PROVIDED BY THE ASSESSEE AND IT WOULD BE LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDING TO HIM, THE IMMUNITY AS PER CLAUSE (2) IS AVAILABLE ONLY IF THE INCOME HAS ALREADY BEEN DECL ARED IN THE RETURN, WHICH IS YET TO BE FURNISHED UNDER SECTION 139(1) OF THE ACT. IN OTHER WORDS, IF PERIOD FOR FURNISHING THE RETURN HAS ALREADY EXPIRED, THEN THE IMMUNITY IS NOT AVAILABLE. ACCORDING TO HIM, IF THE DUE DATE OF FILING OF RETURN OF INCOME F OR THESE ASSESSMENT YEARS LAPSES UNDER SECTION 139(1) AND THE RETURN OF INCOME WAS FILED WITHIN THE SPECIFIED TIME IN RESPONSE TO NOTICE UNDER SECTION 153A/153C OF THE ACT, THEN THE ASSESSEE IS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE U NDISCLOSED INCOME OF THE ASSESSEE IF THE RETURN NOT FILED IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT. 5.3 ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS ALREADY DECLARED ADDITIONAL INCOME IN THE STATEMENT RECORDED UNDER SECTION 13 2(4) OF THE ACT AND SUCH INCOME HAS BEEN DULY RETURNED IN THE RETURN FILED UNDER SECTION 153C OF THE ACT, WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT AND THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING SUCH PENALTY. FURTHER, HE SUBMITTED THAT IN SUCH SITUATION, THE IMMUNITY PROVIDED BY CLAUSE (2) TO EXPLANATION 5 OF SECTION 271(1)(C) OF THE ACT WOULD BE APPLICABLE AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD NOT BE LEVIED. FOR THIS PURPOSE, HE RELIED ON THE FOLLOWING JUDGEMENTS: I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 8 ACIT V . GEBILAL KANHAIALAL HUF [2012] 348 ITR 561 (SC) CIT V. S.D.V. CHANDRU [2004] 266 ITR 175 (MAD) ACIT V. V.N. DEVADOSS [2013] 93 DTR 73 (CHENNAI) HE ALSO RELIED ON THE JUDGEMENT OF HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. KANHAIYALAL SARUPAIA [20 08] 299 ITR 19. HE FURTHER SUBMITTED THAT THE LD. CIT(A), AFTER EXAMINING HE SUBMISSIONS OF THE ASSESSEE, AGREED WITH THE ASSESSEE AND DELETED THE PENALTY ON THE ADDITIONAL INCOME DISCLOSED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT. HE SUPPORTED THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 5.4 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE LD. CIT(A) DELETED THE PENALTY ON THE ADDITIONAL IN COME RETURN BY THE ASSESSEE FILED IN RESPONSE TO NOTICE UNDER SECTION 153C OF THE ACT BY CONSIDERING THE RETURN FILED UNDER SECTION 139 OF THE ACT AS ABATED AND NON EST IN THE EYES OF LAW . THE MAIN PLANK OF THE ASSESSEE IS THAT THEY ARE ENTITLED TO THE IMM UNITY PROVIDED BY SUB CLAUSE (2) OF EXPLANATION 5 TO SEC.271(1)(C). EXPLANATION 5 READS AS UNDER: [EXPLANATION 5. WHERE IN THE COURSE OF A [SEARCH INITIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007], THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE 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, (A) FOR ANY PREVIOUS YEA R WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 9 THE SAID DATE OR, WHERE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB - SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, [UNLESS, (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED, (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE DATE OF THE SEARCH ; AND (II) IN A CASE FALLING UNDER CLAUSE (B), ON OR BEFORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED T O THE [CHIEF COMMISSIONER OR COMMISSIONER] BEFORE THE SAID DATE ; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN [***] SUB - SECTION (1) OF SECTION 139, AND ALSO SPECIFIES IN THE STATEMENT THE MANN ER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME.] 5.5 THE HIGHLIGHTED PORTION CLEARLY SHOWS THAT IF INCOME HAS NOT BEEN DECLARED BEFORE THE EXPIRY OF TIME UNDER SUB - SEC.(1) OF SEC. 139, THEN IMMUNITY IS NOT AVAILABLE. THIS ASPECT HAS BEEN CONSIDERED IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [2009] 121 ITD 159 (AHD) (TM) VIDE PARA 7.1 WHICH IS AS UNDER: 7.1 IN THE CASE UNDER CONSIDERATION, THE AO LEVIED THE PENALTY UNDER S. 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. THE CIT(A) CANCELLED I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 10 THE PENALTY ON TWO PREMISES I.E., (I) BY MAKING APPLICABILITY OF CONCESSION IN EXPLN. 5(2) TO S. 271(1)(C) OF THE ACT AND (II) PENALTY ON RETURNED INCOME UNDER S. 153A OF THE ACT BY CONSIDERING THE RETURN FILED UNDER S. 139 OF THE ACT AS ABATED AND NON EST IN THE EYES OF LAW. AS REGARDS CONTENTIONS OF THE TAXPAYER REGARDING APPLICABILITY OF THE AFORESAID EXPLN. 5 TO S. 271(1)(C) OF THE ACT, IT IS NOTICED THAT PRIOR TO THE INSERTION OF EXPLN. 5 TO S. 271(1)(C) BY THE TAXATION LAWS (AMENDMENT) ACT, 1984 W.E.F. 1ST OCT., 1984, ANASSESSEE, WHO WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY ETC., RECOVERED DURING THE COURSE OF SEARCH, WAS ENTITLED TO EXPLAIN THAT SUCH ASSETS WERE ACQUIRED BY H IM BY UTILISING HIS INCOME RELATING TO ANY PREVIOUS YEAR, WHETHER IT ENDED BEFORE THE DATE OF THE SEARCH OR IS TO END ON OR AFTER THE DATE OF THE SEARCH. BY DOING SO, THE ASSESSEE COULD ESCAPE THE LIABILITY TO PENALTY UNDER S. 271(1)(C) OF THE ACT. IN ORDE R TO PLUG THE LOOPHOLE, THE AFORESAID EXPLN. 5 WAS INSERTED W.E.F. 1ST OCT., 1984 AND IS APPLICABLE TO A SITUATION WHERE IN THE COURSE OF A SEARCH UNDER S. 132 OF THE ACT THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING, WHOLLY OR IN PART, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF THE S EARCH. IN VIEW OF THE EXPLANATION, NOTWITHSTANDING THE FACT THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF S. 271(1)(C), BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME EXCEPT IN CASES WHERE SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE, RECORDED ON OR BEFORE THE DATE OF THE SEARCH IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY S OURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE CIT BEFORE THE DATE OF THE SEARCH. THUS, BY THE DEEMING PROVISIONS OF EXPLN. 5, THE ASSESSEE IS FASTENED WITH THE LIABILITY TO PENALTY UNDER S. 271(1)(C) IN CASE HE EXPLAINS THE ACQUISITION OF AS SETS, RECOVERED IN THE COURSE OF SEARCH, FROM OUT OF INCOME OF A PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH. THE ABOVE CLEARLY SHOWS THAT IF HISTORY OF EXPLANATION 5 IS TRACED, TH EN IT BECOMES CLEAR THAT FOR WHAT PURPOSE EXPLANATION 5 WAS INSERTED. I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 11 5.6 T HE LD . COUNSEL FOR THE ASSESSEE HAS NOT DISPUTED THE POSITION THAT SECTION 271[1][C] IS APPLICABLE TO AN ASSESSMENT MADE UNDER SECTION 153A, IT IS NOT NECESSARY FOR US TO EXAMINE THAT POSITION. THE MAIN QUESTION BEFORE US , WHICH WAS DEBATED AT LENGTH, WAS WHETHER THE IMMUNITY GRANTED UNDER EXPLANATION 5(2)TO SECTION 271(1)(C) IS AVAILABLE TO THE ASSESSEE OR NOT . THE MADRAS HIGH COURT IN S.D. V. CHANDRU'S CASE ( 266 ITR175 ) HAS HEL D THAT THE WORDS IN EXPLANATION 5(2)'....HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUBSECTION [1] OF SECTION 139' ARE NOT TO BE READ AS REFERRING TO INCOM E SO FAR NOT DISCLOSED IN RESPECT OF THE PREVIOUS YEAR WHICH IS TO END AFTER THE DATE OF THE SEARCH AND THAT THE WORDS WHICH REFER TO THE TIME LIMIT UNDER SECTION 139(1) ARE 'ONLY A REITERATION OF THE LEGAL REQUIREMENT REGARDING THE TIME WITHIN WHICH RETUR NS SHOULD BE NORMALLY BE FILED'. IN THIS VIEW OF THE MATTER IT WAS HELD THAT NO PENALTY CAN BE IMPOSED ON THE BASIS OF THE RETURNS FILED AFTER THE DATE OF THE SEARCH, PURSUANT TO DECLARATION UNDER SECTION 132(4), IN WHICH ADDITIONAL INCOME WAS SHOWN BY THE ASSESSEE THOUGH SUCH RETURNS RELATED TO EARLIER ASSESSMENT YEARS. TO THE SAME EFFECT IS THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN CIT V. KANHAIYALAL ( 299 ITR 19 ). IN FACT, IN THIS CASE THE HIGH COURT HAS OBSERVED THAT IT IS NOT MERELY THE RIGHT OF THE ASSESSEE TO FILE RETURNS FOR THE EARLIER ASSESSMENT YEARS AFTER THE DATE OF THE SEARCH PURSUANT TO DECLARATIONS MADE UNDER SECTION 132(4) BUT IT IS HIS OBLIGATION TO DO SO AND THE IMMUNITY I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 12 CONFERRED BY EXPLANATION 5(2) CANNOT BE TAKEN AWAY OR WATERED DOWN. THE VIEW TAKEN BY THE MADRAS HIGH COURT IN S.D.V. CHANDRU'S CASE (SUPRA) HAS BEEN NOTICED BY THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE GROUP CASE OF RUPESH BHOLIDAS PATE L [2009] 309 ITR (AT) 217 (AHD) BUT THE BENCH HAS PREFERRED TO FOLLOW THE J UDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF SHERATON APPARELS V. ACIT 256 ITR 20 . SINCE A VIEW HAS ALREADY BEEN TAKEN AS TO THE A VAILABILITY OF THE IMMUNITY UNDER EXPLANATION 5(2) TO SECTION 271(L)(C) BY AN ORDER OF THE AHMEDABAD BENCH, THAT TOO IN A CASE BELONG ING TO THE SAME GROUP AND AFTER REFERRING TO THE JUDGMENT OF THE MADRAS HIGH COURT IN S.D. V. CHANDR U S CASE (SUPRA), JUDICIAL DISCIPLINE REQUIRES THAT WE SHOULD NOT DEVIATE FROM THAT VIEW. 5.7 THE STATEMENT OF OBJECTS AND REASONS TO THE TAXATION LAWS (AM ENDMENT AND MISCELLANEOUS PROVISIONS) BILL, 1986 (161 ITR ST. 63), AND THE CIRCULAR NO. 469 (162 ITR ST. 21) TO WHICH MY ATTENTION WAS DRAWN DO NOT ADVANCE THE CASE OF THE ASSESSEES. THE STATEMENT OF OBJECTS AND REASONS SAYS THAT THE AMENDMENT WAS BEING MA DE 'TO REMOVE AN ANOMALY IN THE EXISTING PROVISIONS IN RESPECT OF CASES WHERE PENALTY IS IMPOSABLE FOR CONCEALMENT OF INCOME EVEN IF THE TAXPAYER HAS NO INTENTION TO FABRICATE EVIDENCE OR TO CONCEAL HIS UNDISCLOSED INCOME AFTER SEARCH AND SEIZURE'. THE ANO MALY AND THE REMEDIAL AMENDMENT MADE ARE EXPLAINED BY THE ABOVE CIRCULAR IN THE FOLLOWING WORDS: 'AS PER THE EXISTING EXPLANATION 5 TO I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 13 SECTION 271(1) OF THE INCOME - TAX ACT, IF AT THE TIME OF SEARCH, ASSETS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT ARE FOUND, A TAXPAYER IS LIABLE TO PENALTY FOR CONCEALMENT EVEN IF HE DECLARES THE FULL VALUE OF THOSE ASSETS AS HIS INCOME IN THE RETURN FILED AFTER THE SEARCH. THIS PROVISION HAS BEEN FOUND TO OPERATE, EVEN IN CASES WHERE THE ASSESSEE HAS NO INTENTION TO FA BRICATE ANY EVIDENCE AND HE INCLUDES IN HIS RETURN THE INCOME OUT OF WHICH SUCH ASSETS HAVE BEEN ACQUIRED. HENCE, BY THE AMENDING ACT, IT HAS BEEN PROVIDED THAT IF AN ASSESSEE IN SUCH CASES MAKES A STATEMENT DURING THE COURSE OF THE SEARCH ADMITTING THAT T HE ASSETS FOUND AT HIS PREMISES OR UNDER HIS CONTROL HAVE BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME PRESCRIBED IN CLAUSE (A) OR (B) OF SECTION 139(1) AND SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE T AXES THAT ARE DUE THEREON, NO PENALTY SHALL BE LEVIABLE.' (PAGES 38 & 39 OF 162 ITR ST.) 5.8 THE ABOVE CIRCULAR EXPLAINING THE AMENDMENT SHOWS THAT 'THE BENEFIT OF IMMUNITY C ONFERRED BY THE EXPLANATION 5(2), AS AMENDED BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986 WITH EFFECT FROM 10 - 9 - 1986, IS CONFINED TO THE RETURN FOR THE YEAR IN RESPECT OF WHICH THE PREVIOUS YEAR IS YET TO END OR EVEN THOUGH ENDED , THE TIME FOR FILING THE RETURN UNDER SECTION 139 (1) IS YET TO EXPIRE. IN THE PRESENT CASE, THE SEARCH I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 14 TOOK PLACE ON 4 - 9 - 2003. IN RESPECT OF THE ASSESSMENT YEAR 2003 - 04, FOR WHICH THE PREVIOUS YEAR WOULD HAVE ENDED ON 31 - 3 - 2003, THE RETURN UNDER SECTION 139(1) WOULD BE DUE LATEST BY 31 - 10 - 2003. IN RESPECT OF ALL THE EARLIER YEARS, NEEDLESS TO ADD, THE DUE DATES FOR FILING RETURNS UNDER SECTION 139(1) WOULD HAVE ENDED MUCH EARLIER. RETURNS WERE FILED BY THE ASSESSEES AFTER THE SEARCH, IN RESPONSE TO NOTICE S ISSUED UNDER SECTION 153A ON 31 - 5 - 2004. THE ADDITIONAL INCOME DECLARED IN THESE RETURNS DO NOT FALL UNDER THE CATEGORY OF THE RETURN MENTIONED IN EXPLANATION 5(2) TO SECTION 271(1 )(C). THEREFORE, THE ASSESSEES ARE NOT ENTITLED TO THE IMMUNITY FROM PENAL TY. 5.9 FROM THE ABOVE IT BECOMES CLEAR THAT IN VIEW OF THE DECISION OF THE C O - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RUPESH BHOLIDAS PATEL ( 309 ITR(AT)217(AHD) , THE STATEMENT OF OBJECTS AND REASONS TO THE TAXATION LAWS (AMENDMENT & MISCELLANEOUS P ROVISION BILLS) 1986 AS WELL AS CIRCULAR NO.469 AND ALSO DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHERATON APPEALERS VS. ACIT [ 256 ITR 20 ] (BOM) , REACHED A CONCLUSION THAT THE IMMUNITY PROVIDED BY EXPLANATION 5 TO SEC.271(1)(C) WOULD BE AVAI LABLE ONLY TO THE RETURN FOR THE YEAR IN RESPECT OF WHICH THE PREVIOUS YEAR IS YET TO END OR EVEN THOUGH ENDED, OR THE TIME FOR FILING THE RETURN U/S.139[1] IS YET TO EXPIRE. 5.10 FROM THE ABOVE, IT IS CLEAR THAT EVEN IF AN INCOME IS DECLARED AFTER THE SE ARCH, THE SAME WAS DEEMED TO HAVE BEEN CONCEALED FOR THE PURPOSE OF I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 15 SEC.271(1)(C). IT CANNOT BE SAID THAT THESE OBSERVATIONS ARE TOTALLY OUT OF CONTEXT BECAUSE THE HON'BLE COURT WAS CONCERNED WITH THE LEVY OF PENALTY AND IMMUNITY UNDER CLAUSE (1) OF EXPLAN ATION 5. THEREFORE, THE ABOVE OBSERVATIONS, IN OUR OPINION, ARE OF BINDING NATURE. WHEN SIMILAR SITUATION AROSE BEFORE THE PUNE BENCH IN THE CASE OF DCIT VS. OMKARESHWAR R. KALANTRI & ORS. [ 2010 ] 42 DTR 489, WHEREIN ASSESSEE RELIED ON THE DECISION OF THE C O - ORDINATE BENCH IN THE CASE OF SARLA M. AHUJA V. DCIT [ I.T.A. NO. 1301(PN)/2007 ] FOR DELETION OF THE PENALTY BUT THE REVENUE PLACED RELIANCE ON THE DECISION OF THE THIRD MEMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [ 121 ITD 159(AHD) ]. THE ISSUE HA S BEEN DISCUSSED AT PARA - 11 WHICH READS AS UNDER: 'CONSIDERING THE ABOVE SUBMISSIONS, WE FIND SUBSTANCE IN THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE DECISION OF THIRD MEMBER BENCH IN THE CASE OF ASSTT. CIT VS. KIRIT DAHYABHAI PATE ! (SUPRA) DT. 25TH JUNE, 2009 ON THE ISSUE WAS NOT BROUGHT TO THE NOTICE OF THE PUNE BENCH DURING THE COURSE OF HEARING OF APPEALS IN THE CASES OF NARAYANDAS MUIJI THAKAR AND KARSANDAS MULJI THAKKAR (SUPRA) ESPECIALLY WHEN THE SAME WAS IN EXISTENCE AT THAT TIME. THE THIRD MEMBER BENCH DECISION IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA) HAD AN OCCASION TO DISCUSS THE ISSUE IN DETAIL IN VIEW OF SEVERAL DEC1SIONS CITED BEFORE IT INDUCING THOSE WHICH HAVE BEEN RELIED UPON BEFORE US BY THE PARTIES. IT IS ALSO ADMITTED FACT THAT THE THIRD MEMBER BENCH DECISION ON THE ISSUE IN THE CASE OF KIRIT DAHYABHAI PATE! (SUPRA) HAS BEEN PASSED AFTER THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SARLA M. AHUJA & ORS. (SUPRA), HENCE BEING A LATER DECISION IT HAS GOT IMPORTANCE. WE ARE THUS OF THE VIEW THAT THIRD MEMBER DECISION COMPRISING OF 4 LEARNED MEMBERS IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA) BROUGHT TO OUR NOTICE CANNOT BE BRUSHED ASIDE ONLY BECAUSE ON EARLIER OCCASION THE PUNE BENCH OF THE TRIBUN AL IN CASES OF NARAYANDAS MULJI THAKKAR AND KARSANDAS MULJI THAKKAR (SUPRA) HAS SIMPLY UPHELD THE FIRST APPELLATE ORDER, AS THE LEARNED CIT(A) WAS OF THE VIEW THAT THE ISSUE IS COVERED BY THE DECISION OF THIS BENCH IN THE CASE OF SMT. SARLA M. AHUJA (SUPRA ) DT. 26TH OCT., 2007. WE THUS CONCUR WITH THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF S. SHANMUGAVEL NACIAR VS. STATE OF TAMIL NADU & ANR. I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 16 (SUPRA) A COURT IS NOT BOUND BY A N EARLIER DECISION IF IT WAS RENDERED WITHOUT ANY ARGUMENT, WITHOUT REFERENCE TO THE CRUCIAL WORDS OF THE RULE AND WITHOUT ANY CITATION OF THE AUTHORITY. IN THE CASE OF B. SHAMA RAO VS. UNION TERRITORY OF PONDICHERRY (1967) 2 SCR 650 IT WAS HELD AS 'IT IS TRITE TO SAY THAT A DECISION IS BINDING NOT BECAUSE OF ITS CONCLUSIONS BUT' IN REGARD TO ITS RATIO AND PRINCIPLE LAID DOWN THEREIN'. THIS DECISION HAS BEEN REFERRED BY HON'BLE SUPREME COURT IN THE CASE OF S. SHANMUGAVEL NADAR (SUPRA) WITH THIS MENTIONING T HAT THEIR LORDSHIPS TENDERED AN ADVICE OF WISDOM RESTRAINT IN DISSENTING OR OVERRULING IS FOR SAKE OF STABILITY AND UNIFORMITY BUT RIGIDITY BEYOND REASONABLE LIMITS IS INIMICAL TO THE GROWTH OF LAW. THE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO FOUND SIGNIFICANT TO THE EFFECT THAT THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. SARLA M. AHUJA (SUPRA) ACTUALLY SUPPORTS THE CASE OF REVENUE IF IT IS READ AND UNDERSTOOD IN PROPER PERSPECTIVE WHICH WE WILL DISCUSS IN DET AIL IN THE SUCCEEDING PARAS. OF COURSE IN ABSENCE OF A DECISION OF A SPECIAL BENCH OF THE TRIBUNAL ON THE ISSUE, THE THIRD MEMBER BENCH DECISION IN THIS REGARD CARRIES WEIGHTAGE. IT IS ALSO BECAUSE IN THE THIRD MEMBER BENCH DECISION, THE ORDER OF AHMEDABAD BENCH IN THE CASE OF ASSTT. CIT VS. RUPESH BHOLIDAS PATEL (SUPRA) HAS BEEN FOLLOWED, WHICH IS BASED UPON THE BINDING DECISION OF (HON'BLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF SHERATON APPARELS (SUPRA). THE THIRD MEMBER BENCH HAS ALSO DISCUSSED THE CBDT CIRCULAR NO. 469, DT. 23RD SEPT., 1986 [(1986) 162 ITR (ST) 21] EXPLAINING THE AMENDMENT SHOWING BENEFIT OF IMMUNITY CONFERRED BY EXPLN. 5(2), AS AMENDED BY TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986, W.E.F. 10 TH SEPT., 1986. HENCE THE SAME CANNOT BE IGNORED. CERTAINLY THERE WOULD HAVE BEEN SUBSTANCE IN THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE FOR SENDING A PROPOSAL BY THIS BENCH FOR CONSTITUTION OF A SPECIAL BENCH TO DECIDE THE ISSUE IF THE PRESENT BENCH WOULD NOT HAVE AGREED WITH THE LATEST ELABORATE DECISION OF THIRD MEMBER BENCH OF THE TRIBUNAL ON THE ISSUE OR THE COORDINATE BENCH WOULD HAVE PASSED A DETAILED ORDER AFTER DISCUSSING THAT THE LEARNED CIT(A) HAD PROPERLY APPLIED THE DECISION OF THE BENCH IN THE CASE OF SMT. SARLA M. AHUJA (SUPRA). BUT IT IS NOT THE CASE OF THE ASSESSEE. THE PRESENT SITUATION HAS ARISEN ONLY BECAUSE THE PARTIES APPEARING IN THE CASES OF NARAYANDAS MULJI THAKKAR AND KARSANDAS MULJI THAKKAR (SUPRA) OF THE GROUP FAILED TO BRING TO TH E NOTICE OF THE CO - ORDINATE BENCH ABOUT THE EXISTENCE OF THIRD MEMBER BENCH ORDER IN THE CASE OF ASSTT. CIT VS. KIRIT DAHYABHAI PATEL (SUPRA) WHICH CANNOT BE TREATED AT PAR WITH A SITUATION FOR REFERRING THE MATTER TO A SPECIAL BENCH. IN FACT NOBODY ATTEND ED ON THE SCHEDULED DATE FOR THE ASSESSEE AND APPEAL WAS DECIDED WITH THE MINIMUM ASSISTANCE OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. THUS WE CANNOT AGREE WITH THE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE MATTER SHOULD BE REFERRED TO THE HON'BLE PRESIDENT, TRIBUNAL FOR FORMATION OF A SPECIAL BENCH TO DECIDE THE ISSUE. SINCE THE PUNE BENCH WAS NOT APPRISED OF THE EXISTENCE OF THIRD MEMBER DECISION OF THE TRIBUNAL ON THE ISSUE IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA) PASSED ON A LAT ER DATE, AT THE TIME OF HEARING OF THE APPEAL IN THE CASES OF NARAYANDAS MULJI THAKKAR AND I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 17 KARSANBHAI MULJI THAKKAR, WE, AS DISCUSSED ABOVE, ARE NOT BOUND TO SIMPLY FOLLOW THE DECISION OF CO - ORDINATE BENCH IN THE SAID CASES OF NARAYANDAS MULJI THAKKAR AND KARSANDAS MULJI THAKKAR OF THE GROUP. IN THIS REGARD WE ALSO GET SUPPORT FROM THE DECISION IN THE CASE OF DISTRIBUTORS (BARODA) (P) LTD. VS. UNION OF INDIA & ORS. (1985) 47 CTR (SC) 349: (1985) 155 ITR 120 (SC), WHEREIN THE HON'BLE SUPREME COURT TAKING S TRENGTH FROM THE WORDS OF HON'BLE JUSTICE BRONSON IN PIERCE VS. DELAMETER HAS BEEN PLEASED TO HOLD THAT TO PERPETUATE AN ERROR IS NO HEROISM, TO RECTIFY IT IS THE COMPULSION OF THE JUDICIAL CONSCIENCE (P.124).' THUS, DESPITE OF CONTRARY DECISION OF THE S AME BENCH, PUNE BENCH HAS ALSO PLACED RELIANCE ON THE DECISION OF THE THIRD MEMBER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL[SUPRA]. SIMILARLY, IN THE DECISION OF ACIT VS. KIRIT DAHYABHAI PATEL [SUPRA] HAS BEEN FOLLOWED IN THE CASE OF MAHENDRA MITTAL V . ACIT [ 2011 ] 132 ITD 80 AND PARA - 9 OF THIS DECISION READS AS UNDER: '9. THE SCOPE OF EXPLANATION 5 HAS BEEN CONSIDERED BY THE ITAT AHMEDABAD IN THE CASE OF ASSTT. CIT V. KIRIT DAHYABHAI PATEL [2009] 121 LTD 159 (AHD.) (TM) AND HAS HELD THAT THE BENEFIT O F THE IMMUNITY WILL ONLY BE AVAILABLE TO THE ASSESSEE IN RESPECT OF THE YEAR WHERE THE DUE DATE OF THE FILING OF THE RETURN HAS NOT EXPIRED UNDER SECTION 139(1) OF THE ACT BEFORE THE DATE OF SEARCH. IF WE ACCEPT THE ARGUMENT THAT IF UNDISCLOSED INCOME IS D ETECTED AND THEN ONLY SAME IS ADMITTED AND OFFERED BY THE ASSESSEE AS HIS UNDISCLOSED INCOME, WHETHER FURTHER SATISFACTION IS REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER? OUR ANSWER WILL BE, NO. SO FAR AS THE UNDISCLOSED INCOME UNEARTHED IN COURSE OF THE SEARCH ACTION, ONLY PROTECTION THE ASSESSEE GETS TO THE EXTENT PROVIDED IN EXPLANATION 5 TO SECTION 271(1)(C) AND OTHERWISE IT IS PRESUMED THAT TO THAT EXTENT THE ASSESSEE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF HIS INCOME. SO FAR AS THE DECISION OF RAMPUR ENGG. CO. LTD'S CASE (SUPRA) IS CONCERNED, THIS IS A CASE WHERE THE NORMAL ASSESSMENT IS MADE. IN THE CASE WHERE ASSESSMENT IS MADE IN CONSEQUENCE OF THE SEARCH AND IF THE ASSESSEE HIMSELF ADMITS A ND OFFERS AN UNDISCLOSED INCOME TO TAX THEN THAT IS COVERED BY EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AND IN OUR OPINION, NO FURTHER SATISFACTION IS REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. WE, THEREFORE, HOLD THE ASSESSEE HAS HIMSELF ADMIT TED THE UNDISCLOSED INCOME TO THE EXTENT OF RS. 6,20,000 IN RESPECT OF THE CASH DEPOSITS IN HIS TWO BANK A/CS AND OFFERED THE SAME AND ALSO PAID THE TAX ON IT, THEN EXPLANATION 5 TO SECTION 271 (1)(C) IS APPLICABLE AND TO THAT EXTENT THE ASSESSEE HAS DEEME D TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FILED THE INACCURATE PARTICULARS OF INCOME. WE, THEREFORE, REJECT THE ARGUMENT OF THE LD. COUNSEL ON THE ISSUE THAT 'NO SPECIFIC RECORDING OF THE SATISFACTION'. I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 18 10. SO FAR AS IMMUNITY FROM THE PENAL TY IS CONCERNED, ADMITTEDLY, THE TIME LIMIT FOR FILING OF THE RETURN FOR THE ASSESSMENT YEAR 2000 - 01 HAS EXPIRED LONG BACK AND HENCE IN VIEW OF THE DECISION IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA), THE ASSESSEE CANNOT GET THE IMMUNITY, AS CONTEMPLATED IN EXPLANATION 5, DISCUSSED SUPRA. IN OUR OPINION, THE ASSESSING OFFICER HAS RIGHTLY LEVIED THE PENALTY AND IT CANNOT BE SAID THAT THE ASSESSING OFFICER WAS UNDER OBLIGATION TO RECORD THE SPECIFIC SATISFACTION; WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) TO THE EXTENT OF THE PENALTY LEVIED ON RS. 6,20,000 WHICH IS UNDISCLOSED INCOME.' FURTHER, THE SAME DECISION HAS BEEN FOLLOWED IN THE CASE OF AJIT B. ZOTA V. ACIT [ 2010 ] 40 SOT 543 . IN VIEW OF THE DECISIONS OF MUMBAI BENCHES, WE ARE OF THE VIEW, T HAT IMMUNITY UNDER CLAUSE (2) OF EXPLANATION 5 TO SEC.271(1)(C) WOULD NOT BE AVAILABLE IF ASSESSEE HAS NOT DISCLOSED THE INCOME BEFORE THE DATE OF THE SEARCH IN THE RETURN TO BE FURNISHED BEFORE THE TIME ALLOWED U/S.139[1]. 5.11 THE LD. COUNSEL OF THE AS SESSEE HAD ALSO EMPHASISED THAT SEC.153A PUTS A NON OBSTANTE CLAUSE AND, THEREFORE, RETURNED ALREADY FILED WOULD ABATE. NOW IF THE ADDITIONAL INCOME DECLARED IN THE FRESH RETURN U/S.153A IS ACCEPTED, THEN THERE WILL NOT BE ANY DIFFERENCE IN THE RETURNED IN COME AND THE ASSESSED INCOME AND, THEREFORE, PENALTY IS NOT LEVIABLE. SEC. 153A READS AS UNDER: 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITH IN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 19 RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH O THER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IM MEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHI N SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS [SUB - SECTION] PENDING ON THE DATE OF INITIATION OF THE SEARCH UND ER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. [(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUBSECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, T HEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB - SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER. 5.12 IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF THE OPINION THAT THOUGH THE ASSESSEE HAS ADMITTED DURING THE COURSE OF SEARCH AND DISCLOSED IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 153C BY OFFERING ADDITIONAL INCOME IS CLEARLY LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE IS REVERSED AND THAT OF THE ASSESSING OFFICER IS RESTORED. ACCORDINGLY, ALL THE APPEALS O F THE REVENUE ARE ALLOWED. I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 20 I.T.A.NOS.1666, 1667, 1668, 1669, 1670, 1671 & 1672/MDS/2016 [ASSESSEE S APPEAL] 6. THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07 AND 2008 - 09 ARE FOUND TO HAVE BEEN FILED LA TE BY SEVEN DAYS IN FILING THE APPEALS BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED AN AFFIDAVIT FOR CONDONATION OF DELAY IN FILING THE APPEAL. BY REFERRING TO THE AFFIDAVIT FOR CONDONATION OF DELAY, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONE O F THE CLOSE RELATIVES OF THE ASSESSEE S AUTHORIZED SIGNATORY EXPIRED RECENTLY AND THEREFORE HE WAS NOT IN STATION TO FILE THE APPEALS IN TIME AND PLEADED THAT THE DELAY IN FILING THE APPEAL MAY KINDLY BE CONDONED AND ADMITTED THE APPEALS FOR HEARING. THE L D. DR HAS NOT OBJECTED TO THE ABOVE SUBMISSIONS OF THE LD. AR. SINCE THERE WAS REASONABLE CAUSE FOR NOT FILING THE APPEALS BEFORE THE TRIBUNAL WITHIN TIME AND THE LD. DR HAS NOT OBJECTED TO THE SUBMISSIONS OF THE LD. AR, WE CONDONE THE DELAY OF SEVEN DAYS IN FILING THE APPEALS BEFORE THE TRIBUNAL AND ADMIT THE APPEALS FOR HEARING. 7. WITH REGARD TO SUSTAINING PENALTY ON ASSESSEE S AGRICULTURAL INCOME , IT IS CLEAR THAT THE AGRICULTURAL INCOME OF THE ASSESSEE HAS BEEN TREATED AS INCOME FROM OTHER SOURCES , WHICH IS UNDISCLOSED INCOME. 7.1 WE FIND THAT THERE IS NO DISPUTE THAT THE ADDITION WAS MADE ON ESTIMATED BASIS WI THOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THAT THERE I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 21 WAS ANY UNDISCLOSED INCOME. THE ASSESSEE HAS FURNISHED AGRICULTURAL INCOME. IN OR DER TO APPLY THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE RECENT JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO P RODUCTS PVT. LTD. 322 ITR 158, THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING THE DECISION IN THE CASE OF DILIP N. SHROFF V. JCIT 291 ITR 519 (SC) AND UOI V. DHARAMENDRA TEXTILE PROCESSORS 306 ITR 277 (SC), OBSERVED AND HELD AS UNDER: A GL ANCE AT THE PROVISIONS OF SECTION 271 (1)(C) OF THE INCOME - TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTIC ULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISH ING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACC URATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE ILL ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCO ME OF THE ASSESSEE. SUCH A CLAIM MADE ILL THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFFIRMED. 7.2 FOLLOWING THE ABOVE JUDGEMENT, WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE TO LEVY OF PENALTY ON TREATING THE AGRICULTURAL INCOME DECLARED BY THE I.T.A. NO S. . 570, 1666 - 1672 & 1835 - 1841 /M/ 1 5 22 ASSESSEE AS INCOME FROM OTHER SOURCES. ACCORDINGLY, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS DELETED FOR ALL THE ASSESSMENT YEARS . 8 . IN THE RESULT, ALL THE APPEAL S FILED BY THE REVENU E ARE ALLOWED . THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 570/MDS/2015 IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEALS OF THE ASSESSEE IN I.T.A.NOS.1666, 1667, 1668, 1669, 1670, 1671 & 1672/MDS/2016 ARE ALLOWED. ORDER PRONOUNCED ON THE 06 TH JANUARY , 201 7 AT CHENNAI. SD/ - SD/ - ( G. PAVAN KUMAR ) JUDICIAL MEMBER ( CHANDRA POOJARI ) ACCOUNTANT MEMBER CHENNAI, DATED, THE 06 . 0 1 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.