ACIT, New Delhi V. Sh. Amul Gabrani, New Delhi

ITA 6168/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5386 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Loose papers; Competent authority; Revised return
• Section: 143(3); 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBE R & SHRI P. MAHARISHI, ACCOUNTANT MEMBER ITA NO.-6168/DEL/2015 ( ASSESSMENT YEAR: 2012-13) ACIT CENT. CIRCLE 4, NEW DELHI. VS AMUL GABRANI 106, VISHWADEEP TOWER, PLOT NO. 4, DISTRICT CENTRE, JANAKPURI, NEW DELHI. PAN NO. ADKPG6795M ASSESSEE BY NONE REVENUE BY SH. ATIQ AHMAD, SR. DR ORDER PER JOGINDER SINGH, J.M. THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 18.09.2015 OF THE LD. FIRST APPELLATE AUTHORITY, NE W DELHI, DELETING THE PENALTY AMOUNTING TO RS. 1,96,70,670/- U/S 271A AA, OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . 2. DURING HEARING, NONE WAS PRESENT FOR THE ASSESSE E INSPITE OF ISSUANCE OF REGISTERED AD NOTICE. THE ASSESSEE NEI THER PRESENTED HIMSELF NOR MOVED ANY ADJOURNMENT PETITION, THEREFO RE, WE HAVE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE, A ND TEND TO DATE OF HEARING 03.04.2018 DATE OF PRONOUNCEMENT 03.04.2018 ITA NO. 616 8 /DEL/2015 AMUL GABRANI 2 DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVA ILABLE ON RECORD. SHRI ATIQ AHMAD, LD. SR. DR DEFENDED THE LEVY OF PE NALTY BY INVITING OUR ATTENTION TO THE OBSERVATION MADE IN THE PENALT Y ORDER. 2.1 WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRI EF ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIE D OUT IN THE CASE OF SHRI AMUL GABRANI BELONGING TO M/S TECHPRO GROUP ON 06.03.2012. THE ASSESSMENT WAS COMPLETED ON 29.03.2014 U/S 143( 3) OF THE ACT AT AN INCOME OF RS. 26,87,91,820/-. THE ASSESSEE F ILED RETURN OF INCOME DECLARING INCOME AT RS. 26,87,91,820/- ON 31 .07.2012 WHICH INCLUDES SURRENDERED AMOUNT OF RS. 19,77,06,696/-, SHOWN IN THE RETURN, AS ADDITIONAL INCOME DECLARED. THE LD. A O INITIATED PENALTY PROCEEDINGS U/S 271AAA ON ACCOUNT OF SURRENDERED/OF FERED INCOME AMOUNTING TO RS. 19,77,06,696/-. THE LD. AO IMPOSE D PENALTY OF RS. 1,97,70,670/- U/S 271AAA OF THE ACT @10% OF THE UND ISCLOSED INCOME OF RS. 19,77,06,696/-. 2.2 ON APPEAL BEFORE THE LD. CIT (A) THE FACTUAL MA TRIX WAS CONSIDERED ALONG WITH THE STATEMENT TENDERED BY THE ASSESSEE, DURING SEARCH OPERATION AND FOLLOWING VARIOUS CASE LAWS AS MENTIONED IN PARA 4.2.5 ONWARDS AND THEREAFTER DELE TED THE PENALTY. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE TH IS TRIBUNAL. ITA NO. 616 8 /DEL/2015 AMUL GABRANI 3 2.3 IF THE OBSERVATION MADE IN THE PENALTY ORDER, I MPUGNED ORDER, ASSERTIONS MADE BY THE LD. DR, MATERIAL AVAILABLE O N RECORD, IF KEPT IN JUXTAPOSITION AND ANALYZED IT IS NOTICED THAT THE L D. FIRST APPELLATE AUTHORITY WHILE COMING TO A PARTICULAR CONCLUSION, RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF BRIJ BHUSHA N SINGHAL VS. ACIT, (ITA NO. 5261/DEL/2013), NEERAJ SINGHAL VS. ACIT (2 013) 37 TAXMANN.COM 189 (DEL. TRIB.), WHEREIN IT WAS HELD THAT IN THE ABSENCE OF SPECIFIC QUERY RAISED BY THE AUTHORIZED OFFICER, WHILE RECORDING THE STATEMENT U/S 132(4) OF THE ACT ABOUT THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED, THE LD. AO WA S NOT JUSTIFIED IN IMPOSING PENALTY U/S 271AAA OF THE ACT, IT IS PE RTINENT TO MENTION HERE THAT IN THE CASE OF NEERAJ SINGHAL (SUPRA) THE BENCH DULY CONSIDERED THE DECISION IN ACIT VS. GEBILAL KANHAIA LAL (HUF) (2012) 210 TAXMAN 244 (SC), CIT VS. MAHENDER SINGH SHAH (2 008) 299 ITR 305 (GUJ.), CIT VS. RADHA KRISHAN GOEL (2005) 278 I TR 454 (ALL.) ALONGWITH OTHER CASES LIKE SITA RAM GUPTA VS. ACIT (2014) 48 TAXMANN.COM 327 (DEL.- TRIB.), WHERE THE STATEMENT RECORDED U/S 132(4) AND THE ASSESSEE ADMITTED THAT THE SAID CASH REPRESENTS UNDISCLOSED INCOME, THE AO HAVING COMPLETED ASSESSM ENT, PASSED A PENALTY ORDER U/S 271AAA FOR DEFAULT OF NOT SUBSTAN TIATING MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED, THE PENALTY O RDER WAS SET ASIDE. IDENTICALLY IN CROSSINGS INFRASTRUCTURE P. LTD. VS. CIT (2014) 41 ITA NO. 616 8 /DEL/2015 AMUL GABRANI 4 TAXMANN.COM 474 (ALL.), WHERE REVENUE AUTHORITIES, PASSED PENALTY ORDER WITHOUT SHOWING AS TO HOW AND IN NOT MANNER C ONDITIONS OF SECTION 271AAA(2) HAD NOT BEEN COMPLIED WITH, IMPOS ED PENALTY. THE PENALTY ORDER WAS SET ASIDE. THE HONBLE GUJAR AT HIGH COURT IN CIT VS. MAHENDRA C. SHAH (SUPRA) HELD AS UNDER: 1. THE INCOME-TAX APPELLATE TRIBUNAL, AHMEDABAD BE NCH 'A' HAS REFERRED THE FOLLOWING QUESTION UNDER SECTION 256(1) OF THE INCOME-TAX ACT, 1961 (THE ACT), AT THE INSTANCE OF THE COMMISSIONER OF INCOME-TAX: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E ASSESSEE'S CASE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT ASSESS EE HAS FULFILLED ALL THE CONDITIONS FOR AVAILING OF THE BENEFIT OF I MMUNITY FROM LEVY OF PENALTY PROVIDED IN EXPLANATION 5 TO SECTION 271(1)(C) IN RELATION TO THE INCLUSION OF INCOME OF RS. 5,06,712 /- REPRESENTING THE VALUE OF DIAMONDS AND WHETHER SUCH CANCELLATION OF PENALTY IS BASED ON TRUE AND CORRECT INTERPRETATION OF THE REL EVANT PROVISIONS OF LAW? 2. THE ASSESSMENT YEAR IS 1988-89. SEARCH OPERATION S TOOK PLACE AT THE PREMISES OF ONE M/S. DINAL GEMS, 303, PANCHRATNA, OPERA HOUSE, BOMBAY UNDER SECTION 132 OF THE ACT ON 03.07.1987. ADMITTEDLY, THE RESPONDENT-ASSESSEE WAS ALSO PRESENT AT THAT POINT OF TIME AT THE SAID PREMISES. A PERSONAL SEARCH OF THE ASSESSEE WAS UNDERTAKEN AND DIAMONDS WORTH RS. 5,06,712/- WERE FOUND FROM THE PERSON OF THE ASSESS EE AND SEIZED. ON 25.02.1991 ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON A TOTAL INCOME OF RS. 5,77,600 /-. THE RECORD REVEALS THAT A RETURN OF INCOME DECLARING TO TAL INCOME OF RS. 20,880/- WAS FILED ON 17.10.1989. THIS WAS FOLL OWED BY A REVISED RETURN FILED ON 27.09.1990 DECLARING TOTAL INCOME OF RS. 5,27,600/-, INCLUDING THE VALUE OF DIAMONDS FOUND F ROM THE POSSESSION OF THE ASSESSEE I.E. WORTH RS. 5,06,712/ -. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UND ER SECTION 271(1)(C) OF THE ACT AND LEVIED A PENALTY OF RS. 5,61,464/-. THE PENALTY LEVIED BY THE ASSESSING OFFICER WAS CONFIRM ED IN FIRST APPEAL BY THE COMMISSIONER (APPEALS). THE ASSESSEE CARRIED THE MATTER IN SECOND APPEAL BEFORE THE TRIBUNAL, WHO HA S DELETED THE PENALTY FOR THE REASONS RECORDED IN ORDER DATED 24. 05.1994. THE TRIBUNAL HAS REFERRED TO PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AND COME TO THE CONCLUSION THAT THE CAS E OF THE ASSESSEE WAS COVERED BY THE EXCEPTION PROVIDED IN EXPLANATION 5 AND, THEREFORE, IN LIGHT OF THE STATE MENT RECORDED AT ITA NO. 616 8 /DEL/2015 AMUL GABRANI 5 THE TIME OF SEARCH UNDER SECTION 132(4) OF THE ACT, NO PENALTY WAS LEVIABLE FOR CONCEALMENT. 3. MR. B.B. NAIK, LEARNED STANDING COUNSEL FOR THE APPLICANT- REVENUE, ASSAILED THE IMPUGNED ORDER OF THE TRIBUNA L PRIMARILY ON THE GROUND THAT THE TRIBUNAL HAD WRONGLY GRANTED IM MUNITY TO THE ASSESSEE CONSIDERING THE PECULIAR FACTS OF THE CASE AND THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IT WAS SUBMITTED THAT BY MERE DECLARATION IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT THE ASSESSEE DID NOT DERIVE ANY IMMUNITY IF THE ASSESSEE FAILED TO COMPLY WITH THE FURTHER REQUIREMENT OF THE PROVISIONS, NAMELY, PAYMENT OF T AX AND INTEREST AT THE TIME OF FILING OF THE RETURN OF INC OME. THAT IN FACT THE ASSESSEE HAD NOT EVEN DISCLOSED THE AMOUNT DECLARED IN THE STATEMENT IN THE ORIGINAL RETURN OF INCOME FILED ON 17.10.1989 AND HAD NOT EVEN PAID TAX. THE VALUE OF THE DIAMONDS SE IZED AT THE TIME OF SEARCH HAD BEEN INCLUDED IN REVISED RETURN OF INCOME FOR THE FIRST TIME ON 27.09.1990 AND TAX HAD BEEN PAID ONLY AT THAT POINT OF TIME. IN THE CIRCUMSTANCES, IT WAS CONTEND ED THAT A DEFAULT HAD ALREADY TAKEN PLACE VIS-A-VIS THE ORIGI NAL RETURN OF INCOME AND ONCE INCOME HAD BEEN CONCEALED AT THE TI ME OF FILING OF THE ORIGINAL RETURN OF INCOME, FILING OF REVISED INCOME WOULD NOT ABSOLVE THE ASSESSEE FROM PENAL CONSEQUENCE. IT WAS FURTHER SUBMITTED THAT ONCE THE DECLARED AMOUNT HAD NOT BEE N DISCLOSED IN THE RETURN OF INCOME ORIGINALLY FILED AND EVEN P AYMENT OF TAX HAVING NOT BEEN MADE THE ASSESSEE WAS NOT ENTITLED TO IMMUNITY PROVIDED BY EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IT WAS URGED THAT THIS WAS A CASE WHERE TILL THE POINT OF TIME THE SEARCH TOOK PLACE THE ASSESSEE HAD NOT VOLUNTARILY COME FO RWARD TO DECLARE THE INCOME AND IN FACT AS PER EARLIER PORTI ON OF EXPLANATION 5 THERE WAS A DEEMED CONCEALMENT. THERE FORE, THE CASE OF THE ASSESSEE CANNOT BE TREATED AS CASE OF A NY OTHER ASSESSEE WHO HAD NOT BEEN SUBJECTED TO SEARCH AND S EIZURE PROCEEDINGS AND A STRICT VIEW OF THE MATTER WAS REQ UIRED TO BE TAKEN; THAT THERE COULD NOT BE SAME TREATMENT OF PE RSONS I.E. THE ASSESSEES, WHO WERE NOT SIMILARLY SITUATED. IN SUPP ORT OF THE SUBMISSIONS MADE RELIANCE HAS BEEN PLACED ON THE AP EX COURT ORDER IN CASE OF G.C. AGARWAL V. COMMISSIONER OF INCOME-TAX, ASSAM, NAGALAND, ETC . . 4. MR. M.J. SHAH, LEARNED ADVOCATE APPEARING ON BEH ALF OF THE RESPONDENT-ASSESSEE, HEAVILY RELIED ON THE IMPUGNED ORDER OF THE TRIBUNAL AND ADOPTED THE REASONINGS AS PART OF HIS SUBMISSIONS. IT WAS SUBMITTED THAT IN SO FAR AS THE FULFILLMENT OF CONDITIONS STIPULATED BY EXCEPTION NO. 2 OF EXPLANATION 5 THOU GH THE LAW REQUIRES THE ASSESSEE TO SPECIFY IN THE STATEMENT R ECORDED UNDER SECTION 132(4) OF THE ACT THE MANNER IN WHICH THE DECLARED INCOME HAS BEEN DERIVED, AN ASSESSEE CANNOT BE DENI ED IMMUNITY ONLY BECAUSE SUCH AVERMENT IS NOT FOUND IN THE STATEMENT MADE IF NO QUESTION TO THAT EFFECT IS PUT TO THE ASSESSEE BY THE AUTHORIZED OFFICER. IN SUPPORT OF THE SUBMIS SION RELIANCE ITA NO. 616 8 /DEL/2015 AMUL GABRANI 6 HAS BEEN PLACED ON DECISION OF ALLAHABAD HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX V. RADHA KISHAN GOEL . RESPONDING TO THE SUBMISSION OF THE REVENUE THAT TA X HAS TO BE PAID ALONG WITH THE RETURN OF INCOME AND NOT THEREA FTER, MR. SHAH SUBMITTED THAT THE PROVISIONS NOWHERE STIPULATE ANY SPECIFIC POINT OF TIME NOR DO THE PROVISIONS STIPULATE ANY OUTER L IMIT FOR PAYMENT OF TAX AND, THEREFORE, THE ASSESSMENT IS THE STAGE BEFORE WHICH THE RECORD MUST REVEAL PAYMENT OF TAX ALONG WITH IN TEREST, IF ANY, CONSIDERING THE FACT THAT, THAT IS THE POINT OF TIM E WHEN THE ASSESSING OFFICER IS REQUIRED TO RECORD SATISFACTIO N AS TO CONCEALMENT OR OTHERWISE. HENCE, ACCORDING TO MR. S HAH, EVEN IF THE LANGUAGE OF EXCEPTION NO. 2 OF EXPLANATION 5 DO ES NOT PROVIDE FOR SUCH OUTER LIMIT IT IS NECESSARY TO REA D THE SAID REQUIREMENT TO MAKE THE PROVISIONS WORKABLE. IT WAS , THEREFORE, URGED THAT NO INTERFERENCE WAS WARRANTED IN THE ORD ER OF THE TRIBUNAL. 5. IN REJOINDER MR. NAIK, APART FROM REITERATING TH E EARLIER SUBMISSIONS, STATED THAT PAYMENT OF TAX AND INTERES T HAS TO BE UNDERSTOOD LATEST AT THE POINT OF TIME OF FILING OF RETURN OF INCOME CONSIDERING THE SCHEME OF THE ACT AS OTHERWISE THE ASSESSING OFFICER IS ENTITLED TO COME TO THE CONCLUSION THAT NOT ONLY WAS THERE CONCEALMENT OF INCOME BUT THE DECLARATION MAD E IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT WAS NOT BONA FIDE AS NO TAX HAD BEEN PAID AT THE TIME OF FILING OF THE RETURN OF INCOME QUA SUCH DECLARATION. 6. EXPLANATION 5 OPERATES IN RELATION TO THE PENALT Y LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT AND HENCE, THE RELEVANT EXTRACT OF THE PROVISIONS MAY BE USEFULLY REPRODUCED: FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CO NCEALMENT OF INCOME, ETC. 271.(1) IF THE [ASSESSING] OFFICER OR THE [DEPUTY C OMMISSIONER (APPEALS)] [OR THE COMMISSIONER (APPEALS)] IN THE C OURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON- X X X X X X X X X X X X X X X (C) HAS CONCEALED THE PARTICULARS OR HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,- X X X X X X X X X X [(III)] IN THE CASES REFERRED T O IN CLAUSE (C), IN ADDITION TO ANY TAX PAYABLE BY HIM, A SUM WHICH SHA LL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED TWICE, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTIC ULARS OF HIS INCOME OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME: ITA NO. 616 8 /DEL/2015 AMUL GABRANI 7 PROVIDED THAT, IF IN A CASE FALLING UNDER CLAUSE (C ), THE AMOUNT OF INCOME (AS DETERMINED BY THE [ASSESSING] OFFICER ON ASSESSMENT) IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCE ALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED EXCEEDS A SUM OF TWENTY-FIVE THOUSAND RUPEES, THE [ASSESSING] OFFICE R SHALL NOT ISSUE ANY DIRECTION FOR PAYMENT BY WAY OF PENALTY W ITHOUT THE PREVIOUS APPROVAL OF THE [DEPUTY] COMMISSIONER.] X X X X X X X X X X X X X X X EXPLANATION 5: WHERE IN THE COURSE OF A SEARCH UNDER SECTION 132 , 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 ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME,- (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE TH E DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETUR N 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 AFT ER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS D ECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE D ATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE D EEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME, [UNLESS,- (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING I N 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 BEFO RE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE [CHIEF COMMISSIONER OR COMMISSIONER] BEFORE THE SAID DATE; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDE R SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION O R UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURN ISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN CLAUSE (A) OR CLAUSE (B ) OF SUB-SECTION (1) OF SECTION 139 , AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. 7. ON A PLAIN READING OF THE PROVISION IT BECOMES A PPARENT THAT PENALTY FOR CONCEALMENT OF INCOME IS LEVIABLE IF TH E ASSESSING OFFICER, IN THE COURSE OF ANY PROCEEDINGS UNDER THI S ACT, IS ITA NO. 616 8 /DEL/2015 AMUL GABRANI 8 SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICU LARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. THE COMPUTATION OF PENALTY HAS BEEN PROVIDED IN CLAUSE (III) WHICH FOLLOWS SECTION 271(1)(C) OF THE ACT WHEREIN ONE FINDS REFERENCE TO THE TAX PAYABLE BY THE ASSESSEE. THUS, THE PROVISIO NS STIPULATE THAT IN THE FIRST INSTANCE THE ASSESSING OFFICER HA S TO RECORD HIS SATISFACTION AS REGARDS CONCEALMENT OF INCOME IN TH E COURSE OF A PROCEEDING UNDER THE ACT WHICH IS BEFORE THE ASSESS ING OFFICER I.E. ASSESSMENT PROCEEDINGS AND THEN COMPUTE THE AM OUNT OF PENALTY LEVIABLE ON THE BASIS OF THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT, WHICH AMOUNT IS IN ADDITION TO THE TAX PAYABLE BY THE ASSESSEE ON ASSE SSMENT. IT IS AT THAT STAGE THAT AN ASSESSING OFFICER IS REQUIRED TO DETERMINE THE CONCEALED INCOME, THE TAX SOUGHT TO BE EVADED A ND DETERMINE WHETHER PENALTY HIS LEVIABLE. 8. EXPLANATION 5 DEALS WITH A PARTICULAR SITUATION, NAMELY, A CASE INVOLVING SEARCH AND SEIZURE PROCEEDINGS. WHERE DUR ING COURSE OF A SEARCH THE ASSESSEE IS FOUND TO BE OWNER OF AN Y VALUABLE ASSET, REFERRED TO IN THE SAID PROVISION, AND THE A SSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY THE ASSESSEE BY UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEA R WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT FOR SUCH YEAR RETURN OF INCOME HAS NOT BEEN FURNISHED BEFORE THE DATE OF SE ARCH, OR, WHERE SUCH RETURN OF INCOME HAS BEEN FURNISHED BEFO RE THE DATE OF SEARCH, AND SUCH INCOME REPRESENTED BY SUCH ASSE T HAS NOT BEEN DECLARED IN THE RETURN OF INCOME; OR FOR ANY P REVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH, THEN, SUCH INCOME SHALL BE DEEMED TO HAVE BEEN CONCEALED FOR T HE PURPOSES OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT REGARDLESS OF THE FACT THAT THE ASSESSEE DECLARES S UCH INCOME IN THE RETURN OF INCOME FILED AFTER THE DATE OF SEARCH . HOWEVER, THERE ARE TWO EXCEPTIONS CARVED OUT IN SUCH A SITUATION. THE FIRST EXCEPTION, BROADLY SPEAKING, RELATES TO THE INCOME BEING REFLECTED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE OR HAVING BEEN DISCLOSED BEFORE CHIEF COMMISSIONER OF INCOME- TAX BEFORE THE DATE OF FILING THE RETURN, BUT FOR THE PRESENT IT IS NOT NECESSARY TO DEAL WITH THE REQUIREMENTS OF THE SAID EXCEPTION AS THE CASE OF THE ASSESSEE FALLS WITHIN THE SECOND EXCEPTION. 9. THE SECOND EXCEPTION STIPULATES THAT WHERE AN AS SESSEE MAKES A STATEMENT UNDER SECTION 132(4) OF THE ACT THAT A VALUABLE ASSET FOUND IN POSSESSION OF THE ASSESSEE HAS BEEN ACQUIRED BY THE ASSESSEE OUT OF HIS INCOME WHICH HA S NOT BEEN DISCLOSED TILL THE DATE OF SEARCH IN THE RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SECTION 139(1) OF THE ACT, AND ALSO SPECIFIES THE MANNER IN WHICH SUC H INCOME HAS BEEN DERIVED, THE ASSESSEE WILL GET IMMUNITY FROM L EVY OF PENALTY FOR CONCEALMENT PROVIDED TAX TOGETHER WITH INTEREST , IF ANY, IS PAID IN RESPECT OF SUCH INCOME WHICH IS DEEMED TO HAVE B EEN CONCEALED. THEREFORE, AN ASSESSEE WHO SEEKS BENEFIT OF ITA NO. 616 8 /DEL/2015 AMUL GABRANI 9 IMMUNITY UNDER EXCEPTION NO. 2, IS PRIMARILY REQUIR ED TO SHOW THAT THERE IS A DECLARATION AS REGARDS INCOME (REPRESENT ED BY THE ASSET FOUND FROM POSSESSION OF THE ASSESSEE) AND SU CH INCOME HAS NOT BEEN DISCLOSED TILL THE DATE OF SEARCH IN T HE RETURN OF INCOME WHICH HAS TO BE FURNISHED BEFORE THE DUE DAT E ALONGWITH A FURTHER STATEMENT AS TO THE MANNER IN WHICH SUCH UN DISCLOSED INCOME HAS BEEN DERIVED, COUPLED WITH PAYMENT OF TA X AND INTEREST. 10. THE DISPUTE BETWEEN THE PARTIES IN THE PRESENT CASE CENTRES ROUND THE FACT THAT AS TO WHETHER THE ASSESSEE IS E NTITLED TO IMMUNITY BY VIRTUE OF EXCEPTION NO. 2 IN EXPLANATIO N 5 TO SECTION 271(1)(C) OF THE ACT. ACCORDING TO THE REVENUE, ALL THE COND ITIONS STIPULATED BY THE SECOND EXCEPTION HAVE NOT BEEN CO MPLIED WITH BY THE ASSESSEE FOR BECOMING ENTITLED TO THE IMMUNI TY WHEREAS THE CASE OF THE ASSESSEE, AS ACCEPTED BY THE TRIBUN AL, IS THAT ALL THE CONDITIONS HAVE BEEN FULFILLED AND THE ASSESSEE IS ENTITLED TO IMMUNITY. 11. ACCORDING TO THE REVENUE, THE STATEMENT MADE UN DER SECTION 132(4) OF THE ACT BY THE ASSESSEE, AT THE TIME OF SEARCH, DOES NOT CONTAIN ANY AVERMENT AS TO THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED BY THE ASSESSEE. FURTHERMORE, THERE IS NO PAYMENT OF TAX ALONG WITH THE RETURN OF INCOME WHICH WAS OR IGINALLY FILED AND PAYMENT OF LAST TAX HAS BEEN MADE ONLY SUBSEQUE NTLY AFTER DISCLOSING SUCH INCOME IN THE REVISED RETURN OF INC OME WHICH IS NOT WARRANTED BY THE LANGUAGE EMPLOYED IN EXCEPTION NO. 2 SO AS TO BE ENTITLED TO IMMUNITY FROM PENALTY FOR CONCEAL MENT. 12. THE CONTENTIONS RAISED ON BEHALF OF THE REVENUE ARE NOT REQUIRED TO BE ACCEPTED FOR THE SIMPLE REASON THAT IN THE FIRST INSTANCE, THERE IS NO PRESCRIPTION AS TO THE POINT OF TIME WHEN THE TAX HAS TO BE PAID QUA THE AMOUNT OF INCOME DECLARE D IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THERE WOULD BE SUFFIC IENT COMPLIANCE OF THE PROVISION IF TAX IS SHOWN TO HAVE BEEN PAID BEFORE THE ASSESSMENT WAS COMPLETED. THE REASONING WHICH HAS W EIGHED WITH THE TRIBUNAL IS THAT THE SEARCH PROCEEDINGS WE RE CONDUCTED ON 03.07.1987 WHEN THE STATEMENT UNDER SECTION 132(4) OF THE ACT WAS MADE. THE LAST DATE FOR PAYMENT OF ADVANCE TAX QUA THE LAST INSTALLMENT OF ADVANCE TAX WAS 15.12.1987 IN S UCH A CASE, ACCORDING TO THE TRIBUNAL, AND IN THE EVENT, THE AS SESSEE DID NOT PAY TAX QUA THE INCOME DECLARED IN THE STATEMENT MA DE UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE BECAME LIABLE TO PAY INTEREST IN ACCORDANCE WITH THE RELEVANT PROVIS IONS OF THE ACT BECAUSE EXCEPTION NO. 2 ITSELF SPECIFIES PAYMENT OF TAX, TOGETHER WITH INTEREST, IF ANY, INDICATING THAT LEGISLATURE DID NOT STIPULATE ANY SPECIFIED TIME LIMIT FOR PAYMENT OF TAX. THERE IS N O INFIRMITY IN THIS REASONING. ITA NO. 616 8 /DEL/2015 AMUL GABRANI 10 13. HOWEVER, THE OUTER LIMIT HAS TO BE THE POINT OF TIME WHEN THE ASSESSMENT PROCEEDINGS ARE UNDERTAKEN BY THE ASSESS ING OFFICER BECAUSE THE OPENING PORTION OF SECTION 271(1) OF THE ACT REQUIRES THE ASSESSING OFFICER TO RECORD SATISFACTION IN THE COURSE OF SUCH PROCEEDINGS, AND THE SATISFACTION HAS TO BE AS REGA RDS THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN OTHER WORDS, A SATISFACTI ON AS TO CONCEALMENT CAN BE ARRIVED AT THE EARLIEST POINT OF TIME ONLY IN THE COURSE OF ASSESSMENT PROCEEDINGS AND FOR THAT PURPO SE THE ASSESSING OFFICER IS REQUIRED TO VERIFY AND ASCERTA IN WHETHER THE INCOME HAS BEEN DECLARED AND TAX PAID THEREON. FOR THE PURPOSES OF EXPLANATION 5, WHICH COMES INTO PLAY ONLY IN CAS E OF SEARCH AND SEIZURE PROCEEDINGS, RETURN OF INCOME PER SE WO ULD HAVE NO RELEVANCE IF ONE READS ENTIRE EXPLANATION 5, INCLUD ING THE TWO EXCEPTIONS. THE EMPHASIS ON DISCLOSURE IN THE RETUR N OF INCOME IS RELEVANT ONLY FOR THE PURPOSES OF AVOIDING THE DEEM ING FICTION OF CONCEALMENT IN RELATION TO THE PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF SEARCH BUT RETURN OF INCOM E FOR SUCH YEAR HAD NOT BEEN FURNISHED, OR WHERE RETURN HAS BE EN FILED SUCH INCOME HAS NOT BEEN DISCLOSED. IN SO FAR AS A PREVI OUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH RETURN OF INCOME WOULD HAVE HARDLY ANY RELEVANCE BECAUSE THE EXPLANATION I TSELF STIPULATES THAT REGARDLESS OF SUCH INCOME HAVING BE EN DECLARED IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH THE ASSESSEE WOULD BECOME LIABLE TO IMPOSITION OF PENAL TY, THE ONLY EXCEPTION BEING A DECLARATION AT THE TIME OF SEARCH . AS TO WHAT THAT DECLARATION HAS TO BE HAS ALREADY BEEN EXAMINE D HEREINBEFORE AND IT IS NOT NECESSARY TO REPEAT THE SAME. 14. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSMENT YEAR BEING 1988-89 AND THE SEARCH HAVING TAKEN PLACE ON 03.07. 1987 THE RETURN OF INCOME WAS NOT DUE BEFORE 31.07.1988. THE REFORE, WHETHER THE INCOME REPRESENTED BY THE VALUE OF THE ASSET WAS SHOWN IN THE RETURN OF INCOME OR NOT BECAME IRRELEV ANT ONCE A DECLARATION HAD BEEN MADE ABOUT SUCH INCOME HAVING NOT BEEN DISCLOSED TILL THE DATE OF SEARCH IN THE RETURN OF INCOME TO BE FURNISHED BEFORE THE TIME SPECIFIED IN SECTION 139(1) OF THE ACT AS REQUIRED BY THE EARLIER PART OF EXCEPTION NO. 2. IN FACT, AT THE COST OF REPETITION, IT IS REQUIRED TO BE STATED THAT THE LEGISLATIVE INTENT AND THE SCHEME THAT FLOWS FROM A PLAIN READING OF T HE PROVISION MAKES IT CLEAR THAT IN RELATION TO SEARCH AND SEIZU RE PROCEEDINGS, FOR BECOMING ENTITLED TO IMMUNITY FROM LEVY OF PENA LTY THE BASIC REQUIREMENT IS IN CASE OF EXCEPTION NO. 1 RELEVANT ENTRY IN THE BOOKS OF ACCOUNT OR DISCLOSURE BEFORE THE COMPETENT AUTHORITY, AND IN RELATION TO EXCEPTION NO. 2 DISCLOSURE IN TH E STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. DISCLOSURE OR OTHERWISE IN THE RETURN OF INCOME POST THE DATE OF SEARCH WOULD NOT ABSOLVE AN ASSESSEE FROM THE DEEMING PROVISION, NAMELY, 'DEEME D CONCEALMENT' ONCE AN ASSESSEE IS FOUND IN POSSESSIO N OF A VALUABLE ASSET AT THE TIME OF SEARCH. HENCE, THE CO NTENTION RAISED ON BEHALF OF THE REVENUE THAT PENALTY IS LEVIABLE U NDER THE MAIN ITA NO. 616 8 /DEL/2015 AMUL GABRANI 11 PROVISION FOR CONCEALMENT VIS-A-VIS THE RETURN OF I NCOME DOES NOT MERIT ACCEPTANCE. 15. IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, S UFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSE SSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A P ARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SU CH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN TH E FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO S TATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY TH E PROVISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF CIT V. RADHA KISHAN GOEL (SUPRA). SECONDLY, CONSIDERING THE SOCIAL ENVIRONM ENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LI TERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDI NG THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMEN T UNDER SECTION 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLAHABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT UNDER EXCEPTION NO. 2 IN EXPLANATION 5 IS COMMENDABLE. 16. HENCE, THE TRIBUNAL WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT IN SO FAR AS THE VALUE OF DIAMONDS WAS CONCERN ED, THE ASSESSEE HAVING MADE A DECLARATION UNDER SECTION 132(4) OF THE ACT AND PAID TAXES THEREON, HAD FULFILLED ALL THE C ONDITIONS FOR AVAILING THE BENEFIT OF IMMUNITY FROM LEVY OF PENAL TY AS PROVIDED UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IN ABSENCE OF ANY INFIRMITY IN THE ORDER OF TRIBUNAL ON THIS COUN T THE QUESTION REFERRED IS ANSWERED IN THE AFFIRMATIVE I.E. IN FAV OUR OF THE ASSESSEE AND AGAINST THE REVENUE. 17. THE REFERENCE STANDS DISPOSED OF ACCORDINGLY. T HERE SHALL BE NO ORDER AS TO COSTS. 2.4 IF THE AFORESAID JUDICIAL PRONOUNCEMENTS ARE A NALYZED WITH THE FACTS OF THE PRESENT APPEAL THERE IS UNCONTROVERTED FINDING IN THE IMPUGNED ORDER AND ALSO IN THE ASSESSMENT ORDER THA T IN COMPUTATION OF INCOME, ATTACHED WITH THE RETURN, THE ASSESSEE D ECLARED THE ITA NO. 616 8 /DEL/2015 AMUL GABRANI 12 SURRENDERED AMOUNT OF RS. 19,77,06,696/- UNDER THE HEAD ADDITIONAL INCOME WHICH WAS ACCEPTED BY THE REVENUE. IT IS F URTHER NOTED THAT WHILE INITIATING THE PENALTY PROCEEDINGS THE LD. AO NOWHERE STATED AS TO WHY THE PENALTY PROCEEDINGS WERE INITIATED AND W HETHER THE CONDITIONS LAID DOWN IN THE SECTION WERE SATISFIED OR NOT. THE LD. AO WITHOUT ASSIGNING ANY REASON AND MERELY ON THE BASI S OF SURRENDER MADE BY THE ASSESSEE INITIATED PENALTY PROCEEDINGS. THE AMOUNT OF SURRENDER WAS MADE BY THE ASSESSEE ON THE BASIS OF CERTAIN LOOSE PAPERS FOUND AND SEIZED DURING SEARCH OPERATION UPO N TECPRO GROUP AT GURGAON. THERE IS A FURTHER OBSERVATION THAT TH ESE PAPERS WERE DICTATED BY THE SEARCH TEAM AND FURTHER FROM THE ST ATEMENT TENDERED BY THE ASSESSEE THERE IS A CONDITION THAT THE SURRE NDER MADE BY THE ASSESSEE SHALL BE WITHOUT PENAL ACTION BY THE DEPAR TMENT WHATSOEVER AND THE SURRENDER WAS MADE TO BUY PEACE AND TO AVOID LITIGATION WITH THE DEPARTMENT IN THE SPIRIT OF COO PERATION. CONSIDERING THE TOTALITY OF FACTS AND THE DECISION IN CIT VS. S URESH CHANDER MITTAL (251 ITR 9) (MP), WE FIND MERIT IN THE CONCLUSION D RAWN BY THE LD. CIT (A) AND CONFIRM THE SAME, RESULTANTLY THE APPEA L OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 616 8 /DEL/2015 AMUL GABRANI 13 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT, AT THE CONCLUSION OF THE HEARING, IN THE PRESENCE OF LD. DR ON 03.04. 2018. SD/- SD/- (P. MAHARISHI) (JOGINDER S INGH) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 03.04.2018 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI THIS ORDER WAS DIRECTLY DICTATED ON COMPUTER TO THE P.S. 03.04.2018 DRAFT DICTATED ON 03.04.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 03.04.2018 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 03.04.18 APPROVED DRAFT COMES TO THE SR.PS/PS 03.14.18 KEPT FOR PRONOUNCEMENT ON 03.04.18 FILE SENT TO THE BENCH CLERK 03.04.18 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.