MANORAMA V. RATHI, MUMBAI V. ASST CIT CIR 21(1), MUMBAI

ITA 6063/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9834 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 17-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: G P MEHTA LD
• Keywords: Search and seizure; Loose papers; Revised return
• Section: 142(1); 153A; 139(5); 132; 139

Judgement Text

ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 6063/MUM/2013 ( / ASSESSMENT YEAR: 2006-07) MANORAMA V.RATHI C/O G.P.MEHTA & CO. CHARTERED ACCOUNTANTS 807, TULSIANI CHAMBERS 212, NARIMAN POINT MUMBAI 400 021 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 21(1) ROOM NO.601, C-11, B.K.C BANDRA (E) MUMBAI -400 051 ! ./ ./PAN/GIR NO. AABPR-3678-Q ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : G.P.MEHTA, LD. AR REVENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 29/06/2017 / DATE OF PRONOUNCEMENT : 12/07/2017 ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2006-07 ASSAILS THE ORDER OF LD. COMMISSIONER OF IN COME TAX (APPEALS)-32 [CIT(A)], MUMBAI DATED 05/08/2013 QUA CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 F OR RS.8,07,840/-. 2. FACTS LEADING TO IMPOSITION OF PENALTY ARE THAT PURSUANT TO SEARCH OPERATIONS ON EURO GROUP OF COMPANIES ON 03/08/2006, THE HUSBAND OF THE ASSESSEE NAMELY VIMAL K. RATHI, BEING ASSOCIATED PERSON WAS ALSO COVERED UNDER SEARCH OPERATIONS. DURING THE SEARCH OPERATIONS, FOUR BLANK PROMISSORY NOTES FOR RS.6 LACS EACH DATED 06/ 01/2006 WERE SEIZED FROM THE RESIDENCE OF HUSBAND OF THE ASSESSE E. IT WAS GATHERED THAT THE ASSESSEE HAD BOOKED FOUR FLATS WITH VIJAY GRAHNIRMAN LTD, THANE AND IN TERMS OF CASH PAYMENT, 4 PROMISSORY NOTES EA CH OF RS.6 LACS WERE ISSUED BY VIJAY GRAHNIRMAN LTD. WHICH WERE OWNED BY THE ASSESSEE. THEREFORE, TO VERIFY THE SAID TRANSACTION S, THE CASE OF THE ASSESSEE WAS COVERED U/S 153C BY ISSUANCE OF NOTICE DATED 16/11/2009 WHERE THE ASSESSEE WAS DIRECTED TO FILE THE RETURN OF INCOME FOR FINANCIAL YEARS 2001-02 TO 2006-07. IN RESPONSE TO THE SAME T HE ASSESSEE, VIDE HIS LETTER DATED 04/12/2009 SUBMITTED AS UNDER: I SUBMIT THAT THE REVISED RETURN OF INCOME FILED B Y ME ON 31-12-2008 VIDE R NO. 2113003269 WITH ITO, 21(1)(3), MUMBAI MA Y ALSO PLEASE BE TREATED AS RETURN OF INCOME FILED IN COMPLIANCE TO THE SUBJECT NOTICE ISSUED. ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 3 CONSIDERING THE SAME AS RETURN FILED IN RESPONSE TO NOTICE U/S 153C, FURTHER NOTICE U/S 142(1) WAS ISSUED FOR FURTHER CO MPLIANCE AGAINST WHICH THE ASSESSEE VIDE ITS LETTER DATED 17/12/2009 SUBMI TTED AS UNDER:- DURING THE COURSE OF SEARCH ON 03-08-2006 IN THE CA SE OF SHRI VIMALKUMAR RATHI, ASSESSEES HUSBAND, CERTAIN LOOSE PAPERS S.NO. 05 TO 08 WERE SEIZED VIDE ANNEXURE A-2 OF THE PANCHNAM A. AT THE TIME OF SEARCH IN THE STATEMENT OF SHRI VIMALKUMAR RATHI, I T WAS STATED THAT THESE PAPERS WERE BELONGING TO THE ASSESSEE. THE AFORESAID SEIZED PAPERS S.NO.: 05 TO 08 WERE BL ANK PROMISSORY NOTE DATED 06-01-06 OF RS.6,00,000/- EACH I.E. OF T OTAL AMOUNT OF RS.24,00,000/-. THOUGH NO CASH TRANSACTION OF WHATS OEVER NATURE HAD TAKEN PLACE, BUT WITH A VIEW TO BUY PEACE AND GOOD FAITH, SAME HAS BEEN ACCEPTED AS INCOME FOR THE YEAR UNDER REFERENC E AND REVISED RETURN SHOWING ADDITIONAL INCOME OF RS.24,00,000/- HAS BEEN FILED ON 31-12-2008 AND TAX DUE THEREON HAS ALSO BEEN PAID. WE REQUEST YOU TO TREAT THIS AS TRUE AND FULL DISCL OSURE OF ALL MATERIAL FACTS. 2.1 THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 02/06/2006 AT RS.2,92,366/- WHICH WAS LATER REVISED TO RS.26,94,198/- ON 31/12/2008 I.E. POST SEARCH OPERATIONS. THE DUE TAXES ON THE REVISED RETURN WERE ALSO PAID BY THE ASSESSEE. AS STATED AB OVE, IN RESPONSE TO NOTICE U/S 153C DATED 16/11/2009, THE ASSESSEE OFFE RED THE SAME REVISED RETURN OF INCOME AND POINTED OUT THAT LOOSE PAPER SEIZED DURING SEARCH OPERATIONS CONTAINED FOUR BLANK PROMISSORY N OTES, DATED 06/01/2006, FOR RS. 6 LACS EACH AGGREGATING TO RS. 24 LACS WITH RESPECT TO CASH PAYMENT TOWARDS PURCHASE OF CERTAIN FLAT AN D THE SAME HAS ALREADY BEEN OFFERED BY WAY OF ADDITIONAL INCOME IN THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE ON 31/12/2008. ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 4 2.2 AFTER CONSIDERING THE SAME, THE ASSESSMENT WAS COMPLETED ON 24/12/2009 AT RS.26,94,200/- AS DISCLOSED IN THE RE VISED RETURN OF INCOME. 2.3 CONSEQUENTLY, THE PENALTY PROCEEDINGS U/S 271(1 )(C) WERE INITIATED IN THE QUANTUM ASSESSMENT AND ACCORDINGLY A SHOW CAUSE NOTICE DATED 24/12/2009 PURSUANT TO SECTION 274 READ WITH SECTION 271(1)(C) WAS ISSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY ANOTHE R NOTICE DATED 17/02/2012. 2.4 DURING PENALTY PROCEEDINGS, THE ASSESSEE CONTEN DED THAT THERE WAS NO DIFFERENCE IN RETURNED INCOME AND ASSESSED I NCOME AND THEREFORE, THE PENALTY WAS NOT WARRANTED FOR. HOWEV ER, LD. AO NOTED THAT ADDITIONAL INCOME WAS OFFERED ONLY AFTER THE S EARCH OPERATIONS WERE CONDUCTED AND THE SAME WAS NOT VOLUNTARY AND THEREF ORE, IMPOSED IMPUGNED PENALTY U/S 271(1)(C) OF THE ACT READ WITH EXPLANATION 1. 2.5 THE ASSESSEE CONTESTED THE SAME ON VARIOUS LEGA L GROUNDS AS WELL AS ON MERITS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 05/08/2013 AND RAISED SIMILAR CONTENTIONS BUT COULD NOT FIND F AVOR OF LD. CIT(A) WHO DISMISSED THE ASSESSEES APPEAL. AGGRIEVED, THE ASS ESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR ASSESSEE [AR] HAS ASSAILED T HE IMPOSITION OF PENALTY ON LEGAL GROUNDS AS WELL AS ON MERITS BY CO NTENDING THAT THE PENALTY HAS BEEN IMPOSED WITHOUT DUE APPLICATION OF MIND WITHOUT SPECIFYING THE EXACT CHARGE FOR WHICH PENALTY WAS B EING LEVIED. OUR ATTENTION HAS BEEN DRAWN TO THE QUANTUM ASSESSMENT ORDER, SHOW CAUSE NOTICES ISSUED AND PENALTY ORDER PASSED BY LD . AO. ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 5 3.1 ON MERITS, IT WAS CONTENDED THAT THE ASSESSEE F ILED REVISED RETURN OF INCOME WELL BEFORE ISSUANCE OF NOTICE U/S 153C A ND OFFERED THE ADDITIONAL INCOME AND PAID DUE TAXES AND HENCE NO P ROCEEDINGS WERE PENDING ON THE DATE OF FILING OF REVISED RETURN OF INCOME. FURTHER, THE REVISED RETURNED INCOME HAS BEEN ACCEPTED BY THE RE VENUE AS SUCH WITHOUT ANY FURTHER ADDITIONS AND THEREFORE, THERE BEING NO DIFFERENCE IN THE RETURNED INCOME VIS--VIS ASSESSED INCOME, PENA LTY WAS NOT WARRANTED FOR. RELIANCE HAS BEEN PLACED ON MANY JUD ICIAL PRONOUNCEMENTS FOR VARIOUS CONTENTIONS. 3.2 PER CONTRA, LD. DR CONTENDED THAT THE ASSESSEE IS DEBARRED FROM RAISING LEGAL GROUND SINCE HE FILED THE REVISED RET URN OF INCOME ON THE BASIS OF SEIZED MATERIAL AND THEREFORE, QUITE AWARE OF THE GROUNDS FOR WHICH PENALTY WAS BEING LEVIED. FURTHER, THE ASSESS EE ACTIVELY CONTESTED THE PENALTY PROCEEDINGS AND MADE DUE SUBMISSIONS AN D MERE NON- TICKING OF THE RELEVANT CLAUSE / LIMB IN THE SHOW C AUSE NOTICE HAS NOT CAUSED ANY PREJUDICE TO THE ASSESSEE PARTICULARLY I N VIEW OF THE PROVISIONS OF SECTION 292B. 3.3 ON MERITS, IT WAS CONTENDED THAT THE ASSESSEE F ILED THE REVISED RETURN OF INCOME ON 31/12/2008 WHICH WAS BEYOND STA TUTORY LIMIT AS PROVIDED IN SECTION 139(5) AND THEREFORE, THE REVIS ED RETURN, BEING NON- EST AMOUNTS TO NULLITY AND THEREFORE, IT WAS NOT CORRECT TO SAY THAT THER E WAS NO DIFFERENCE IN THE RETURNED INCOME AND REVISE D INCOME AND HENCE, PENALTY WAS JUSTIFIED. MOREOVER, THE ADDITIO NAL INCOME OFFERED WAS NOT VOLUNTARY BUT DISCLOSED BY THE ASSESSEE ONL Y AFTER THE SEARCH OPERATIONS CARRIED OUT BY THE REVENUE. ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 6 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS THE LEGAL GROUNDS RAISED BY TH E LD. AR ARE CONCERNED, WE FIND THAT THE ASSESSEE HAS HIMSELF OF FERED ADDITIONAL INCOME ON THE BASIS OF SEIZED MATERIAL IN THE REVIS ED RETURN OF INCOME WHICH HAS BEEN ACCEPTED AS SUCH BY THE REVENUE AND AGAINST THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, PENALTY PROCEEDINGS HAVE BEEN INITIATED U/S 271(1)(C) IN THE QUANTUM ASSESSM ENT ON THE UNDISCLOSED INCOME. FURTHER, THE ASSESSEE HAS BEEN ISSUED TWO SHOW CAUSE NOTICES AND PURSUANT TO THE SAME PENALTY HAS FINALLY BEEN IMPOSED FOR CONCEALMENT OF INCOME . IN OUR OPINION, THE ASSESSEE WAS WELL AWARE OF THE GROUNDS FOR WHICH THE PENALTY WAS BEING INITIATED / LEVIED AND IN FACT , THE ASSESSEE ACTIVELY CONTESTED THE SAME BY MAKIN G VARIOUS SUBMISSIONS AS EVIDENT FROM THE RECORD. THE REFORE, WE ARE NOT CONVINCED WITH THE LEGAL GROUNDS RAISED BY LD. AR A ND HENCE, INCLINED TO DISMISS THE SAME. 5. ON MERITS, IT IS AN ADMITTED FACT THAT THE ASSES SEE HAS FILED REVISED RETURN OF INCOME FOR IMPUGNED AY ON 31/12/2008 AFTE R DISCLOSING ADDITIONAL INCOME OF RS.24 LACS THEREIN TO MAKE UP FOR THE BLANK PROMISSORY NOTES FOUND DURING THE COURSE OF SEARCH OPERATIONS. THE RETURN, BEING FILED BEYOND STATUTORY PERIOD AS PRES CRIBED U/S 139(5) I.E. ONE YEAR FROM END OF RELEVANT ASSESSMENT YEAR, IS C LEARLY NON-EST AND NULLITY. HOWEVER, IT IS NOTED THAT THE ASSESSEE HAS OFFERED THE SAME RETURN OF INCOME PURSUANT TO NOTICE U/S 153C AND TH E REVENUE HAS ACCEPTED THE SAME AND THEREFORE, THE REVISED RETURN NO LONGER REMAINED A BELATED RETURN U/S 139(5) BUT, IN FACT , CHANGED ITS COLOR TO A RETURN FILED ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 7 IN RESPONSE TO NOTICE U/S 153C. WE NOTE THAT THE P ROVISION OF SECTION 153C STARTS WITH NON-OBSTANTE CLAUSE AND OVERRIDES THE PROVISIONS OF SECTION 139 AND VARIOUS OTHER SECTIONS. FURTHER, AS PER THE PROVISIONS OF SECTION 153C, THE AO IS REQUIRED TO PROCEED AGAINST SUCH PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. 5.1 WITH THIS BACKGROUND, WE FIND THAT HONBLE DELH I HIGH COURT IN THE RECENT JUDGMENT OF PCIT VS. NEERAJ JINDAL ITA NO. 463/2016 & CM NO. 26604/2016 ORDER DATED 09/02/2017 HAS EXHAUSTIVELY DISCUSSED THE IDENTICAL ISSUE IN THE FOLLOWING WORDS:- 13. AT THE OUTSET, IT MUST BE NOTED THAT PURSUANT T O THE SEARCH AND SEIZURE OPERATION CONDUCTED UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE WAS GIVEN NOTICE UNDER SECTION 153A TO FIL E FRESH RETURN OF HIS INCOME. THEREAFTER, THE ASSESSEE FILED REVISED RETU RNS AND THE RETURN FILED BY THE ASSESSEE UNDER SECTION 153A WAS ACCEPT ED AS SUCH BY THE A.O. HOWEVER, THE A.O. WAS OF THE OPINION THAT INAS MUCH THAT THE INCOME DISCLOSED BY THE ASSESSEE UNDER SECTION 153A WAS HIGHER THAN THE INCOME IN THE ORIGINAL RETURN FILED UNDER SECTI ON 139(1) AND SINCE IN HIS VIEW, SUCH DISCLOSURE OF INCOME WAS A CONSEQUEN CE OF THE SEARCH CONDUCTED ON THE ASSESSEE, THERE WAS CONCEALMENT OF INCOME WHICH ATTRACTED SECTION 271(1)(C) OF THE ACT. THEREFORE, THE QUESTION THAT NEEDS TO BE ANSWERED IS WHETHER PENALTY IS TO BE LE VIED AUTOMATICALLY WHENEVER THE ASSESSEE DECLARES A HIGHER INCOME IN H IS RETURN FILED UNDER SECTION 153A IN COMPARISON TO THE ORIGINAL RE TURN FILED UNDER SECTION 139(1). 14. THE SUPREME COURT HELD, IN SHRI T. ASHOK PAI V. COMMISSIONER OF INCOME TAX, BANGALORE (2007) 7 SCC 162 , THAT PENALTY UNDER SECTION 271(1)(C) IS NOT TO BE MANDATORILY IMPOSED. IN OTHE R WORDS, THE LEVY OF PENALTY UNDER THIS PROVISION IS NOT AUTOMATIC. THIS VIEW HAS BEEN REITERATED IN UNION OF INDIA V. RAJASTHAN SPINNING AND WEAVING MILLS, (2009) 13 SCC 448 TO SAY THAT FOR THERE TO BE A LEVY OF PENALTY UNDER SECTION 271(1)(C), THE CONDITIONS LAID OUT TH EREIN HAVE TO BE SPECIFICALLY FULFILLED. SECTION 271(1)(C) OF THE AC T, BEING IN THE NATURE OF A PENAL PROVISION, REQUIRES A STRICT CONSTRUCTION. WH ILE CONSIDERING THE INTERPRETATION OF THIS PROVISION, THIS COURT IN COMMISSIONER OF INCOME TAX V. SAS PHARMACEUTICALS (2011) 335 ITR 259 (DEL) , STATED THAT: ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 8 IT IS TO BE KEPT IN MIND THAT SECTION 271(1)(C) OF THE ACT IS A PENAL PROVISION AND SUCH A PROVISION HAS TO BE STRICTLY C ONSTRUED. UNLESS THE CASE FALLS WITHIN THE FOUR-CORNERS OF THE SAID PROVISION, PENALTY CANNOT BE IMPOSED. SUBSECTION (1) OF SECTION 271 ST IPULATES CERTAIN CONTINGENCIES ON THE HAPPENING WHEREOF THE AO OR THE COMMISSIONER (APPEALS) MAY DIRECT PAYMENT OF PENALT Y BY THE ASSESSEE. THUS, WHAT IS REQUIRED TO BE JUDGED IS WHETHER THER E HAS BEEN A CONCEALMENT OF INCOME IN THE RETURN FILED BY THE ASSESSEE. 15. EARLIER DECISIONS INDICATED A CONFLICT OF OPINI ON AS TO WHETHER SECTION 271(1)(C) REQUIRED THE REVENUE TO SPECIFICALLY PROV E MENS REA ON THE PART OF THE ASSESSEE TO CONCEAL HIS INCOME. IN ORDE R TO REMOVE THE ELEMENT OF MENS REA, THE FINANCE ACT, 1964 DELETED THE WORD DELIBERATELY THAT PRECEDED THE WORDS CONCEALED T HE PARTICULARS OF HIS INCOME IN SECTION 271(1)(C). NONETHELESS, EVEN POS T THE AMENDMENT, THE APEX COURT IN K.C. BUILDERS V. ASSISTANT COMMISSIONER OF INCOME TAX, 265 ITR 562 (SC) HELD THAT: THE WORD CONCEALMENT INHERENTLY CARRIED WITH IT THE ELEMENT OF MENS REA. THEREFORE, THE MERE FACT THAT SOME FIGURE OR SOME PARTICULARS HAVE BEEN DISCLOSED BY ITSELF, EVEN IF TAKES OUT THE CASE FROM THE PURVIEW OF NON-DISCLOSURE, CANNOT BY ITSELF TAKE OUT THE CASE FROM THE PURVIEW OF FURNISHING INACCURATE PARTICULARS. MERE OMISSION FROM THE RETURN OF AN ITEM OF RECEIPT DOES NEITHER AMOUNT TO CONCEALMENT NOR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS AND UNTIL THERE IS SOM E EVIDENCE TO SHOW OR SOME CIRCUMSTANCES FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. IN ORDER THAT A PENA LTY UNDER SECTION 271(1)(C) MAY BE IMPOSED, IT HAS TO BE PROVED THAT THE ASSESSEE HAS CONSCIOUSLY MADE THE CONCEALMENT OR FURNISHED I NACCURATE PARTICULARS OF HIS INCOME. 16. THUS, DESPITE THE FACT THAT THERE IS NO REQUIRE MENT OF PROVING MENS REA SPECIFICALLY, IT IS CLEAR THAT THE WORD CONCEA L INHERENTLY CARRIES WITH IT THE REQUIREMENT OF ESTABLISHING THAT THERE WAS A CONSCIOUS ACT OR OMISSION ON THE PART OF THE ASSESSEE TO HIDE HIS TR UE INCOME. THIS WAS ALSO THE CONCLUSION OF THE SUPREME COURT IN THE CAS E OF DILIP N. SHROFF KARTA OF N.D. SHROFF V. JOINT COMMISSIONER OF INCOM E TAX, SPECIAL RANGE MUMBAI AND ANR., (2007) 291 ITR 519 (SC) . IN A LATER DECISION IN UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS, (2 008) 13 SCC ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 9 369 , THE SUPREME COURT OVERRULED ITS DECISION IN DILIP N. SHROFF (SUPRA) . THEREAFTER, IN COMMISSIONER OF INCOME TAX V. RELIANCE PETROPRODUCTS PVT. LTD. , (2010) 11 SCC 762 THE COURT CLARIFIED THAT DILIP N. SHROFF (SUPRA) STOOD OVERRULED ONLY TO THE EXTENT THAT IT IMPOSED THE REQUIREMENT OF MENS REA IN SECTION 271( 1)(C); HOWEVER, NO FAULT WAS FOUND WITH THE MEANING OF CONCEAL LAID DOWN IN DILIP N. SHROFFS CASE. THUS, AS THE LAW STANDS, THE WORD CONCEAL I N SECTION 271(1)(C), WOULD REQUIRE THE A.O. TO PROVE THAT SPE CIFICALLY THERE WAS SOME CONDUCT ON PART OF THE ASSESSEE WHICH WOULD SH OW THAT THE ASSESSEE CONSCIOUSLY INTENDED TO HIDE HIS INCOME. 17. IN THIS CASE, THE A.O. IN HIS ORDER NOTED THAT THE DISCLOSURE OF HIGHER INCOME IN THE RETURN FILED BY THE ASSESSEE WAS A CO NSEQUENCE OF THE SEARCH CONDUCTED AND HENCE, SUCH DISCLOSURE CANNOT BE SAID TO BE VOLUNTARY. HENCE, IN THE A.O.S OPINION, THE ASSE SSEE HAD CONCEALED HIS INCOME. HOWEVER, THE MERE FACT THAT THE ASSESSE E HAS FILED REVISED RETURNS DISCLOSING HIGHER INCOME THAN IN THE ORIGIN AL RETURN, IN THE ABSENCE OF ANY OTHER INCRIMINATING EVIDENCE, DOES N OT SHOW THAT THE ASSESSEE HAS CONCEALED HIS INCOME FOR THE RELEVAN T ASSESSMENT YEARS. ON THIS POINT, SEVERAL HIGH COURTS HAVE ALSO OPINED THAT THE MERE INCREASE IN THE AMOUNT OF INCOME SHOWN IN THE REVIS ED RETURN IS NOT SUFFICIENT TO JUSTIFY A LEVY OF PENALTY. 18. THE PUNJAB & HARYANA HIGH COURT IN COMMISSIONER OF INCOME TAX V. SURAJ BHAN, (2007) 294 ITR 481 (P & H), HELD THAT WHEN AN ASSESSEE FILES A REVISED RETURN SHOWING HIGHER INCO ME, PENALTY CANNOT BE IMPOSED MERELY ON ACCOUNT OF SUCH HIGHER INCOME FILED IN THE REVISED RETURN. SIMILARLY, THE KARNATAKA HIGH COURT IN THE CASE OF BHADRA ADVANCING PVT LIMITED V. ASSISTANT COMMISSIONER OF INCOME TAX, (2008) 219 CTR 447 , HELD THAT MERELY BECAUSE THE ASSESSEE HAS FILED A REVISED RETURN AND WITHDRAWN SOME CLAIM OF DEPRECIA TION PENALTY IS NOT LEVIABLE. THE ADDITIONS IN ASSESSMENT PROCEEDINGS W ILL NOT AUTOMATICALLY LEAD TO INFERENCE OF LEVYING PENALTY. THE CALCUTTA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. SURESH CHAND BANSAL, (2010) 329 ITR 330 (CAL) HELD THAT WHERE THERE WAS AN OFFER OF ADDITIONAL INCOME IN THE REVISED RETURN FILED BY THE ASSESSEE AND SUCH OFFER IS IN CONSEQUENCE OF A SEARCH ACTION, THEN IF THE ASSESSM ENT ORDER ACCEPTS THE OFFER OF THE ASSESSEE, LEVY OF PENALTY ON SUCH OFFER IS NOT JUSTIFIED WITHOUT DETAILED DISCUSSION OF THE DOCUMENTS AND TH EIR EXPLANATION WHICH COMPELLED THE OFFER OF ADDITIONAL INCOME. THE MADRAS HIGH COURT IN THE CASE OF S.M.J. HOUSING V. COMMISSIONER OF INCOME TAX, (2013) 357 ITR 698 HELD THAT WHERE AFTER A SEARCH WAS CONDUCTED, THE ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 10 ASSESSEE FILED THE RETURN OF HIS INCOME AND THE DEP ARTMENT HAD ACCEPTED SUCH RETURN, THEN LEVY OF PENALTY UNDER SE CTION 271(1)(C) WAS NOT JUSTIFIED. FROM THE ABOVE CASES IT WOULD BE CLE AR THAT WHEN AN ASSESSEE HAS FILED REVISED RETURNS AFTER SEARCH HAS BEEN CONDUCTED, AND SUCH REVISED RETURN HAS BEEN ACCEPTED BY THE A. O., THEN MERELY BY VIRTUE OF THE FACT THAT SUCH RETURN SHOWED A HIGHER INCOME, PENALTY UNDER SECTION 271(1)(C) CANNOT BE AUTOMATICALLY IMP OSED. 19. THE WHOLE MATTER CAN BE EXAMINED FROM A DIFFERE NT PERSPECTIVE AS WELL. SECTION 153A PROVIDES THE PROCEDURE FOR COMPL ETION OF ASSESSMENT WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BO OKS OF ACCOUNT, OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UND ER SECTION 132A AFTER 31.05.2003. IN SUCH CASES, THE ASSESSING OFFI CER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH, WITHIN SUC H PERIOD AS MAY BE SPECIFIED IN THE NOTICE, RETURN OF INCOME IN RESPEC T OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UND ER SECTION 132 OR REQUISITION WAS MADE UNDER SECTION 132A. THE ASSESS ING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THES E SIX ASSESSMENT YEARS. ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YE ARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. [REF TO MEMORANDUM ACCOMPANYING THE FINANCE BILL, 2003] SECTION 153A O PENS WITH A NON- OBSTANTE CLAUSE RELATING TO NORMAL ASSESSMENT PROCE DURE COVERED BY SECTIONS 139, 147, 148, 149, 151 AND 153 IN RESPECT OF SEARCHES MADE AFTER MAY 31, 2003. THE SECTIONS, SO EXCLUDED, RELA TE TO RETURNS, ASSESSMENT AND REASSESSMENT PROVISIONS. HOWEVER, TH E PROVISIONS THAT ARE SAVED ARE THOSE UNDER SECTION 153B AND 153C, SO THAT THESE THREE SECTIONS 153A, 153B AND 153C ARE INTENDED TO BE A C OMPLETE CODE FOR POST-SEARCH ASSESSMENTS. CONSIDERING THAT THE NON-O BSTANTE CLAUSE UNDER SECTION 153A EXCLUDES THE APPLICATION OF, INT ER ALIA, SECTION 139, IT IS CLEAR THAT THE REVISED RETURN FILED UNDER SEC TION 153A TAKES THE PLACE OF THE ORIGINAL RETURN UNDER SECTION 139, FOR THE PURPOSES OF ALL OTHER PROVISIONS OF THE ACT. THIS IS FURTHER BUTTRE SSED BY SECTION 153A (1)(A) WHICH READS: NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTI ON 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUI SITIONED UNDER ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 11 SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE A SSESSING OFFICER SHALL- A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FUR NISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETU RN OF INCOME IN 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 OTH ER 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 . 20. THEREFORE, THE POSITION THAT EMERGES FROM THE A BOVE-MENTIONED PROVISION IS THAT ONCE THE ASSESSEE FILES A REVISED RETURN UNDER SECTION 153A, FOR ALL OTHER PROVISIONS OF THE ACT, THE REVI SED RETURN WILL BE TREATED AS THE ORIGINAL RETURN FILED UNDER SECTION 139. ON SIMILAR LINES, THE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL V. ASSISTANT COMMISSIONER OF INCOME TAX, (2015) 280 CTR (GUJ) 21 6 , HELD THAT: IN VIEW OF SPECIFIC PROVISION OF S. 153A OF THE I. T. ACT. THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER S. 153A OF THE I.T. ACT IS TO BE CONSIDERED AS RETURN FILED UNDER S. 139 OF THE ACT, AS THE AO HAS MADE ASSESSMENT ON THE SAID RETURN AND THEREFORE, THE RE TURN IS TO BE CONSIDERED FOR THE PURPOSE OF PENALTY UNDER S.271(1 )(C) OF THE I.T. ACT AND THE PENALTY IS TO BE LEVIED ON THE INCOME ASSES SED OVER AND ABOVE THE INCOME RETURNED UNDER S. 153A, IF ANY. 21. THUS, IT IS CLEAR THAT WHEN THE A.O. HAS ACCEPT ED THE REVISED RETURN FILED BY THE ASSESSEE UNDER SECTION 153A, NO OCCASI ON ARISES TO REFER TO THE PREVIOUS RETURN FILED UNDER SECTION 139 OF THE ACT. FOR ALL PURPOSES, INCLUDING FOR THE PURPOSE OF LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE RETURN THAT HAS TO BE LOOKED AT IS THE ONE FILED UNDER SECTION 153A. IN FACT, THE SECOND PROVISO TO SECTION 153A(1 ) PROVIDES THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO AN Y ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS R EFERRED TO IN THIS SUB- SECTION PENDING ON THE DATE OF INITIATION OF THE SE ARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. WHAT IS CLEAR FROM THIS IS THAT SECTION 153 A IS IN THE NATURE OF A SECOND CHANCE GIVEN TO THE ASSESSEE, WHICH INCIDENT ALLY GIVES HIM AN OPPORTUNITY TO MAKE GOOD OMISSION, IF ANY, IN THE O RIGINAL RETURN. ONCE THE A.O. ACCEPTS THE REVISED RETURN FILED UNDER SEC TION 153A, THE ORIGINAL RETURN UNDER SECTION 139 ABATES AND BECOME S NON-EST. NOW, IT IS TRITE TO SAY THAT THE CONCEALMENT HAS TO BE SE EN WITH REFERENCE TO THE RETURN THAT IT IS FILED BY THE ASSESSEE. THUS, FOR THE PURPOSE OF ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 12 LEVYING PENALTY UNDER SECTION 271(1)(C), WHAT HAS T O BE SEEN IS WHETHER THERE IS ANY CONCEALMENT IN THE RETURN FILED BY THE ASSESSEE UNDER SECTION 153A, AND NOT VIS-A VIS THE ORIGINAL RETURN UNDER SECTION 139. UPON PERUSAL OF THE RATIO OF THE SAME, WE FIND THAT IMPOSITION OF PENALTY IS NOT AUTOMATIC AND THE SAME BEING PENAL IN NATURE HAS TO BE CONSTRUED STRICTLY AND SHOULD FALL WITHIN THE FOUR CORNERS OF THE STATUTORY PROVISIONS. THE CONCEALMENT HAS TO BE IN THE RETURN OF INCOME FILED BY THE ASSESSEE. FURTHER, THE PROVISIONS OF SECTIONS 153A , 153B AND 153C ARE INTENDED TO BE A COMPLETE CODE FOR POST-SEARCH ASSE SSMENTS. CONSIDERING THAT THE NON-OBSTANTE CLAUSE UNDER SECT ION 153A & 153C EXCLUDES THE APPLICATION OF, INTER ALIA , SECTION 139, IT IS CLEAR THAT THE REVISED RETURN FILED UNDER SECTION 153A & 153C TAKE S THE PLACE OF THE ORIGINAL RETURN UNDER SECTION 139, FOR THE PURPOSES OF ALL OTHER PROVISIONS OF THE ACT AND ACCORDINGLY, IF THE SAME HAS BEEN AC CEPTED AS SUCH BY THE REVENUE, THE PENALTY WAS NOT JUSTIFIED IN VIEW OF THE FACT THAT RETURN FILED PURSUANT TO SECTION 153C HAS TO BE LOOKED AT AS A SECOND CHANCE TO ASSESSEE TO MAKE GOOD OMISSION, IF ANY, IN THE O RIGINAL RETURN. ONCE AO ACCEPTS THE REVISED RETURN FILED UNDER SECTION 1 53C, THE ORIGINAL RETURN FILED U/S 139 ABATES AND BECOME NON-EST. FURTHER, IT IS TRITE TO SAY THAT CONCEALMENT HAS TO BE SEEN WITH REFERENCE TO THE RETURN THAT IT IS FILED BY THE ASSESSEE. THUS, FOR THE PURPOSE OF LEV YING PENALTY UNDER SECTION 271(1)(C), WHAT HAS TO BE SEEN IS WHETHER T HERE IS ANY CONCEALMENT IN THE RETURN FILED BY THE ASSESSEE UND ER SECTION 153C, AND NOT VIS-A-VIS THE ORIGINAL RETURN UNDER SECTION 139. THEREFORE, ITA NO.6063/MUM/2013 MANORAMA V.RATHI ASSESSMENT YEAR 2006-07 13 RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DECIS ION, WE DELETE THE IMPUGNED PENALTY AND ALLOW ASSESSEES APPEAL ON MER ITS. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JULY, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 12 .07.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. $'. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI