ASST CIT CC 47, MUMBAI V. PHOENIX MILLS LTD, MUMBAI

ITA 6190/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100553 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 22-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Business income
• Section: 139; 143(3); 5(2); 133A; 153A

Judgement Text

M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI . . , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. : 6190 /MUM/20 1 3 (ASSESSMENT YEAR S : 200 8 - 09 ) AC CC 47, R. NO. 658, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI 400 020 VS M/S PHOENIX MILLS LTD , 462, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI - 400 013 .: PAN : AA ACP 3325 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PREMANAND J RESPONDENT BY : SHRI VIJAY MEHTA /DATE OF HEARING : 1 5 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 07 - 0 8 - 2015 ORDER PER AMIT SHUKLA , J.M. : TH E AFORESAID APPEAL HA S BEEN FILED BY THE R E V E NUE AGAINST IMPUGNED ORDER DA T ED 2 3 . 0 8 .2013 , PASSED BY CIT(A) - 3 7 , MUMBAI IN RELATION TO THE PENALTY PROCEEDINGS U/S 271AAA FOR THE ASSESSMENT YEAR 2008 - 09 , ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271AAA WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT FULFILLED THE PRE - REQUISITE CONDITIONS FOR CLAIMING IMMUNIT Y FROM LEVY OF PENALTY U/S 271AAA. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271AAA WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT SUBSTANTIATED WITH DOCUMENTARY EVIDENCE AS TO HOW THE SUM OF RS. 3.85 CRORES HAS BEEN DERIVED. M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271AAA BY ACCEPTING THE CONTENTION OF THE ASSESSEE THAT, IF THE DISCLOSURE HAS BEEN MADE T O BUY PEACE OF MIND, I.E. UNDER PROTEST, THEN SPECIFYING THE MANNER OR SUBSTANTIATING THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED, IS NOT APPLICABLE. 2. THE BRIEF FACTS ARE THAT, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND DISTRIBUTION OF COTTON TEXTILES AND REAL ESTATE DEVELOPERS. A SEARCH & SEIZURE ACTION U/S 132 WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE PHOENIX GROUP ON 20.02.2008. DURING THE COURSE OF SEARCH PROCEEDINGS, DIRECTOR OF THE ASSESSEE COMPANY HAD DI SCLOSED AN AMOUNT OF RS. 3,85,00,000/ - IN THE STATEMENT RECORDED ON OATH U/S 132(4) ON ACCOUNT OF TRANSACTIONS WITH RUNIT CREATIONS AND PARIDHI UDYOG FOR PURCHASE OF TENANCY RIGHTS. THE DISCLOSURE MADE AT THE TIME OF STATEMENT U/S 132(4), WAS OFFERED IN TH E RETURN OF INCOME FILED U/S 153A , U NDER THE HEAD BUSINESS INCOME. SUCH A DISCLOSURE UNDER THE HEAD BUSINESS INCOME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 29.12.2010. IN THE IMPUGNED PENALTY ORDER, T HE ASSESSING OFFICER HAS FURTHER OBSERVED THAT A SURVEY ACTION U/S 133A ON 12.05.2008 WAS ALSO CARRIED OUT IN THE CASE OF RUNIT CREATION AND PARIDHI UDYOG, WHICH WERE CONCERNS OPERATED BY MR. SOHANLAL JAIN. IN THE STATEMENT U/S 131, MR. SOHANLAL JAIN HAD A CCEPTED THAT THESE CONCERNS HAVE ACCEPT ED CASH OF RS. 3.85 CRORES FROM M/S PHOENIX MILLS LTD ON ACCOUNT OF TERMINATION OF TENANCY RIGHTS AND THIS HAS BEEN DISCLOSED AS THEIR UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 2008 - 09 BY THESE CONCERNS. HENCE, THE A MOUNT OF RS. 3.85 CRORES HAVE BEEN TAXED IN THE HANDS OF THE RUNIT CREATION AND PARIDHI UDYOG ALSO . THESE FACTS HAVE BEEN NOTED BY THE ASSESSING OFFICER FROM PAGES 2 TO 4 OF THE PENALTY ORDER. M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 3 3. IN RESPONSE TO THE SHOW CAUSE NOTICE FOR THE LEVY OF PENALT Y U/S 271AAA, THE ASSESSEE GAVE VERY DETAILED SUBMISSIONS WHEREIN IT WAS CONTENDED THAT FIRSTLY, THE ASSES S EE COMPANY HAD ADMITTED THE PAYMENT OF CASH TO AVOID PRO TRACTED LITIGATION; AND SECONDLY, IT WAS DISCLOSED AS A PART OF THE INCOME OF THE YEAR, THERE FORE, THERE WAS NO QUESTION OF SPECIFYING THE MANNER. R EGARDING THE SPECIFICATION OF MANNERS IN WHICH INC O ME WAS EARNED R ELIANCE WAS PLACED ON THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT V RADHA KISHAN GOEL , REPORTED IN 278 ITR 45 4 AND CIT V NE M K UMAR JAIN, REPORTED IN 202 CTR 328. HOWEVER, THE LD. ASSESSING OFFICER LEVIED THE PENALTY ON THE GROUND THAT THE PROVISION OF SECTION 271AAA CLEARLY PROVIDES THAT THE ASSESSEE NOT ONLY HAS TO SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED BUT ALSO TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVE AND PAY THE TAXES. HERE IN THIS CASE, THE ASSESSEE HAS NOT SPECIFIED THE MANNER AND ALSO COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED . S ECONDLY, THE ASS ES S EE HAS ADMITTED OR DISCLOSED THE INCOME OF RS. 3.85 CRORES NOT ON ITS OWN , BUT ONLY AFTER DETAILED ENQUIRIES AND INVESTIGATION WAS DONE BY THE DEPARTMENT. THE PARTY WHO HAS RECEIVED THE CASH HAS ALSO ADMITTED TO HAVE RECEIVED THE CASH AND HAS ALSO PAID THE TAXES ON THE SAME AMOUNT. THUS, THE ASSESSEE WAS LIABLE FOR PENALTY U/S 271AAA AND THE EXCLUSION PROVIDED IN SUB - SECTION (2) IS NOT AVAILABLE TO THE ASSESSEE. H E ALSO DISTINGUISHED THE DECISIONS RELIED UPON BY THE ASSESSEE ON THE GROUND THAT THESE DECI SIONS WERE ON THE PROVISION OF SECTION 271(1)(C). LASTLY, THE LD. ASSESSING OFFICER JUSTIFIED THE LEVY OF PENALTY RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS DHARMENDRA TEXTILES PROCESSORS, REPORTED IN 174 TAXMAN 574 A ND DELHI HIGH COURT DECISION IN THE CASE OF ZOOM COMMUNICATION P LTD, REPORTED IN 191 TAXMAN 179. 4. BEFORE THE CIT(A), THE MAIN PLANK OF THE ARGUMENT OF THE ASSESSEE WAS THAT , THE ASSESSEE WAS IN THE BUSINESS OF REAL ESTATE M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 4 AND THE UNDISCLOSED INCOME OFF ERED BY THE ASSESSEE RELATED TO ITS BUSINESS ONLY AS THE SAME WAS DISCLOSED UNDER THE HEAD BUSINESS INCOME AND TAXES WERE PAID THEREON. THE SAID RETURN OF INCOME HAS BEEN ACCEPTED IN SO FAR AS THE INCOME OF RS. 3.85 CRORES WHICH HAS BEEN DISCLOSED AND HA VE BEEN ACCEPTED TO BE BUSINESS INCOME. THUS, THE REQUIREMENT OF SPECIFYING THE MANNER IN WHICH INC O ME WAS EARNED GETS SATISFIED. RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT MUMBAI, CIRCUIT BENCH AT NAGPUR IN THE CASE OF CONCRETE DEVELOPERS IN ITA NO. 381/NAG/2012, ORDER DATED 20.03.2013. 5. THE LD. CIT(A) DELETED THE PENALTY AFTER FOLLOWING THE SAID DECISION OF THE TRIBUNAL AND ON THE GROUND THAT THE ASSESSING OFFICER HAS H I M SELF ACCEPTED THE UNDISCLOSED INCOME EARNED BY THE ASSESSEE TAXABLE UNDER T HE HEAD BUSINESS AND, THEREFORE, MANNER STOOD EXPLAINED. THE RELEVANT OBSERVATION AND FINDING OF THE CIT(A) IS AS UNDER: THE FACTS OF THE CASE IS THAT THERE WAS A SEARCH ACTION U/S 132 OF THE ACT IN THE CASE OF THE APPELLANT ON 20.02.2008. DURING THE CO URSE OF SEARCH, THE APPELLANT ADMITTED UNDISCLOSED INCOME OF RS. 3.85 CRORES U/S 132(4) OF THE ACT. THE APPELLANT FILED THE RETURN OF INCOME OFFERING THE UNDISCLOSED INCOME UNDER THE HEAD INCOME FROM BUSINESS AND THE TAXES PAID HAVE BEEN ADJUSTED AGAINST THE TOTAL INCOME RESULTING IN REFUND. THE ASSESSING OFFICER ACCEPTED THE HEAD OF INCOME I.E., THE BUSINESS HEAD UNDER WHICH THE UNDISCLOSED INCOME WAS SHOWN. THE FACTS OF THE CASE OF THE APPELLANT ARE SIMILAR TO THE FACTS IN THE CASE OF CONCRETE DEVELOPER S VS ACIT DECIDED BY ITAT, MUMBAI, CIRCUIT BENCH AT NAGPUR VIDE ITA NO. 381/NAG/2012 DATED 20.03.2013. IT WAS HELD IN THE CASE OF CONCRETE DEVELOPERS THAT: - WHERE DURING THE COURSE OF SEARCH, ASSESSEE ADMITTED UNDISCLOSED INCOME PAID TOGETHER WITH INTERE ST, FILED RETURN SHOWING SAID INCOME AS BUSINESS INCOME AND ASSESSING OFFICER HAD ACCEPTED SAME, IT COULD NOT BE SAID THAT ASSESSEE HAD NOT SPECIFIED MANNER OR COULD NOT SUBSTANTIATE MANNER IN WHICH INCOME WAS DERIVED AND THEREFORE, PENALTY UNDER SECTION 2 71AAA WAS NOT LEVIED AS ASSESSEES CASE FELL UNDER SUB - SECTION (2) OF SECTION 271AAA. M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 5 6 . BEFORE US, THE LD. DR STRONGLY RELYING UPON THE ORDER OF THE ASSESSING OFFICER SUBMITTED THAT , HERE IN THIS CASE, NOT ONLY THE UNDISCLOSED INCOME WAS UNEARTHED DURIN G THE COURSE OF THE SEARCH BASED ON MATERIAL FOUND AND ENQUIR Y BY THE INVESTIGATION WING , BUT ALSO SAME HAS BEEN ADMITTED BY THE ASSESSEE U/S 132(4). ONCE THAT IS SO, THEN ASSESSEE CANNOT BE ABSOLVED FROM THE RIGO U RS OF PENALTY U/S 271AAA . MORE SO THE ASSE SSEE COULD NOT SPECIFY THE MANNER IN WHICH SUCH INCOME WAS DERIVED AND ALSO COULD NOT SUBSTANTIATE THE MANNER. ALL THE DECISIONS RELIED UPON BY THE ASSESSEE BEFORE THE CIT(A) ARE NOT APPLICABLE, BECAUSE THEY ARE BASED ON THE DECISION RENDERED IN THE CONTEX T OF EXPLANATION 5 TO SECTION 271(1)(C). IN SUPPORT OF HIS CONTENTION HE RELIED UPON THE DECISION OF ITAT MUMBAI BENCH IN PRAKASH STEELAGE. ITA NO. 5221/MUM/2012, ORDER DATED 28.01.2015. 7. BEFORE US, THE LD. COUNSEL , SHRI VIJAY MEHTA, AFTER REITERATING THE SUBMISSION MADE BEFORE THE CIT(A), SUBMITTED THAT IF AT THE TIME OF RECORDING THE STATEMENT U/S 132(4), AUTHORI S ED OFFICER HAS NOT ASKED A SPECIFIC QUESTION WITH REGARD TO SPECIFYING THE MANNER , THEN IT CANNOT BE EXP ECT ED FROM THE ASSESSEE TO SPECIFY T HE MANNER , BECAUSE THE ASSESSEE ONLY ANSWERS THE QUESTIONS PUT FORTH BY THE AUTHORI S ED OFFICERS. IN SUPPORT OF HIS CONTENTION, HE STRONGLY RELIED UPON THE DECISION OF RADHA KISHAN GOEL ( SUPRA ) CIT VS. MAHENDRA C SHAH , REPORTED IN 299 ITR 305 (GUJ). CATENA OF OTHER CASE LAWS ON THIS POINT HAVE ALSO BEEN FILED BEFORE US . OTHER LIMB OF HIS ARGUMENT WAS THAT , HERE IN THIS CA S E, THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF INVESTMENT MADE OUTSIDE THE BOOKS OF ACCOUNTS, BECAUSE THE PAYMENT WAS MADE FOR PURCHASE OF T ENANCY RIGHTS. SUCH AN ADDITION IF AT ALL CAN BE MADE , WOULD BE U/S 69. THIS INTER ALIA MEANS TO GIVE THE MANNER OF DERIVING THE INCOME , EVEN WHEN THE ASSESSEE HAS MADE ONLY INVESTMENT AND NOT EARNED ANY INCOME. IT WOULD AMOUNT TO CAUSING IMPOSSIBLE BURDEN ON THE ASSESSEE TO SPECIFY THE MANNER OF DERIVING THE INCOME WHEN ASSESSEE HAS MERELY INVESTED THE MONEY AND NOT DERIVED ANY INCOME . IN SUPPORT, HE RELIED UPON THE M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 6 JUDGMENT OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS W. S. (INDIA) LTD., REPORTED IN 246 ITR 278. L ASTLY, HE STRONGLY RELIED UPON THE FINDING OF THE CIT(A) THAT REQUIREMENT OF SPECIFYING THE MANNER AND SUBSTANTIATION THEREOF ALREADY STOOD SATISFIED WHEN THE ASSESSING OFFICER HAS ACCEPTED THE INCOME DISCLOSED BY THE ASSESSEE UNDER THE HEAD BUSINESS INCOME. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER. THE ASSESSEE, IN THE COURSE OF S E ARCH HAS DISCLOSED AN AMOUNT OF RS. 3,85,00,000/ - IN THE STATEMENT RECORDED U/S 132(4) ON ACCOUNT OF TRANSACTIONS WITH RUNIT CREATION AND PARIDHI UDYOG FOR THE PURCHASE OF TENANCY RIGHTS. THE ASSESSEE WAS INTO THE BUSINESS OF REAL ESTATE, THEREFORE, SUCH TRANSACTION RELATED TO ITS BUSINESS OF REAL ESTATE AND SAME WAS ALSO DISCLOSED IN THE RETURN OF INCOM E UN DER THE HEAD BUSINESS INCOME AND THE SAME HAS BEEN ASSESSED AS BUSINESS INCOME ONLY. THE PENALTY U/S 271AAA OF RS. 38,50,000/ - HAS BEEN LEVIED BY THE ASSESSING OFFICER ON THE GROUND THAT THOUGH THE ASSESSEE HAD MADE THE DISCLOSURE OF THE INCOME BUT H AS FAILED TO SPECIFY THE MANNER IN WHICH INC O ME WAS EARNED AND SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED. SECTION 271AAA PROVIDES THAT IN CASE OF SEARCH CARRIED OUT AFTER 1 ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY IN ADDITION TO TAX @ 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. SUB - SECTION (2) PROVIDES THE EXCEPTION AND CIRCUMSTANCES IN WHICH PENALTY UNDER THIS SECTION SHALL NOT BE LEVIED, WHICH ARE: (2) NOTHING CONTAINED IN SUB - SECTION (1) SHALL APPLY IF THE ASSESSEE, - (I) IN COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB - SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME W AS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 7 THUS, THREE CONDITIONS HAVE BEEN LAID DOWN TO GET ABSOLVED FROM THE LEVY OF PENALTY UNDER THIS SECTION; FIRSTLY THE ASSES S EE MUST ADMIT THE UNDISCLOSED IN COME IN THE COURSE OF SEARCH IN A STATEMENT RECORDED U/S 132(4) AND SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; SECONDLY, SUBSTANTIA TE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED ; AND LASTLY, PA Y THE TAXES ALONG WITH THE INTEREST I N RESPECT OF UNDISCLOSED INCOME. 9. THOUGH THERE IS A PARADIGM SHIFT IN THE PENALTY PROVISIONS IN RESPECT OF UNAC COUNTED INCOME UNEARTHED AS A R ESULT OF SEARCH OPERATION CARRIED OUT ON OR BEFORE 1 ST JUNE, 200 7 IN AS MUCH AS PROVIS I ON OF EXPLANATION 5A, A ND SECTION 271AAA HAVE BEEN BROUGHT IN THE STATUTE, WHICH ARE MOSTLY DEEMING IN NATURE AND STRICT CONDITIONS HAVE BEEN PUT FORTH. HOWEVER, SO FAR AS CLAUSE OF SPECIFYING THE MANNER IN WHICH INCOME HAS BEEN DERIVED , WAS ALSO ENSHRINED IN SUB - CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) , THE RELEVANT PROVISION READS AS UNDER: (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 PO SSESSION 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 MA NNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. WHILE INTERPRETING THE AFORESAID PROVISIONS OF CLAUSE 2 OF EXPLANATION 5, VARIOUS HIGH COURTS HAVE HELD THAT WHILE RECORDING THE STATE MENT AT THE TIME OF SEARCH U/S 132(4), IT IS THE AUTHORI S ED OFFICER WHO EXAMINES ON OATH THE PERSON ( WHO IS FOUND TO BE IN POSSESSION OF MONEY, BULLION, JEWELLERY, BOOKS OF ACCOUNTS OR OTHER VALUABLE ARTICLES OR THING ETC. ) , THEREFORE, IT IS FOR THE AUTHOR I S ED OFFICER THAT HE SHOULD ASK SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HA S BEEN DERIVED. THE REASON BEING THAT THE PERSON WHOSE STATEMENT IS RECORDED U /S 132(4) IS ONLY REPLYING M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 8 TO THE QUESTIONS PUT FORTH BY THE AUTHORI S ED OFFICER. UNL ESS A SPECIFIC QUESTION IS ASKED WITH REGARD TO THE MANNER, IT IS NOT EXPECTED FROM A PERSON TO MAKE THE STATEMENT IN THIS REGARD. THE RELEVANT OBSERVATION AND RATIO OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA KI SHAN GO E L ( SUPRA ) NEEDS TO BE T AKEN NOTE OF: 11. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT UNDER SECTION 132(4) OF THE ACT UNLESS AUTHORISED OFFICER PUTS A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DE RIVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IF IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEEN STATED BUT HAS BEEN STATED SUBSEQUENTLY, AMOUNTS TO THE COMPLIANCE OF EXPLANATION 5(2) OF THE ACT. WE ARE ALSO OF THE OPINION THAT IN CASE IF THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, IN THE ABSENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER I N WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE INFERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVED FROM THE BUSINESS, WHICH HE WAS CARRYING ON OR FROM OTHER SOURCE. THE OBJECT OF THE PROVISION IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON - DISCLOSURE OF MONEY BULLION, JEWELLERY ETC. THUS, WE ARE OF THE OPINION THAT MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN THE ABSENCE OF ANYTHING TO THE CONTRARY. THEREFORE, MERE NON - STATEMENT OF MANNER IN WHICH SUCH INCOME WAS DERIVED WOULD NOT MAKE THE EXPLANATION 5 (2) INAPPLICABLE. THIS RATIO AND PRINCIPLES HAVE BEEN UPHELD IN THE SUBSEQUENT DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS NEM KUMAR JAIN ( SUPRA ) AND ALSO BY THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C SHAH ( SUPRA ) , WHEREIN THE HONBLE COURT OBSERVED AND HELD AS UNDER: M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 9 15. IN SO FAR AS THE ALLEGED FAILURE ON THE PART OF THE ASSESSEE TO SPECIF Y IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFICE IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORIZED OFFICER IT I S INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CO NSIDERING 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 ENVIRONMENT IT IS NOT POSSI BLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE A CT. 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 NO T 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 CONCERNED, THE ASSESSEE HAVING MADE A DECLAR ATION UNDER SECTION 132(4) OF THE ACT AND PAID TAXES THEREON, HAD FULFILLED ALL THE CONDITIONS FOR AVAILING THE BENEFIT OF IMMUNITY FROM LEVY OF PENALTY AS PROVIDED UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT . M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 10 THESE DECISIONS HAVE BEEN FOLLOWED IN THE CATENA OF CASES BY VARIOUS TRIBUNALS ALSO, SOME OF WHICH HAS ALSO BEEN FILED BEFORE US IN THE COMPILATION. 10. N O W SIMILAR REQUIREMENT OF SPECI FYING THE MANNER FINDS PLACE IN CLAUSE (I) OF SUB - SECTION (2) OF SECTION 271AAA ALSO , WHICH EMBODIES THE SAME LANGUAGE , THAT IS, IN THE COURSE OF SEARCH IF THE ASSES S EE ADMITS UNDISCLOSED INCOME IN THE STATEMENT RECORDED U/S 132(4) AND SPECIFY THE MANNERS IN WHICH SUCH INCOME HAS BEEN DERIVED . TH US, THE SAME RATIO AND PRINCIPLES LAID DOWN BY THE HONBLE HIGH COURTS WILL ALSO APPLY HERE, BECAUSE THE REQUIREMENT OF SPECIFYING THE MANNER IS IN THE COURSE OF STATEMENT RECORDED U/S 132(4) AT THE TIME OF SEARC H AND AT THIS JUNCTURE ONLY , UNLESS THE AUTHORISED OFFICER POSE A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, THEN ASSESSEE WHILE RESPONDING TO SUC H QUESTION CANNOT BE EX P EC TED TO SPECIFY THE MANNER IN WHICH SUCH INCOME HA S BEEN DERIVED. IN FACT, WHEN THE ASSESSEE ADMITS ANY UNDISCLOSED INCOME, THE AUTHORISED OFFICER SHOULD IMMEDIATELY PUT FORTH SPECIFIC QUESTION FOR SPECIFYING THE MANNER IN WHICH THE ASSESSEE HAS DERIVED SUCH INCOME OR ELSE THE PRESUMPTION IS IN FAVOUR OF THE ASSESSEE. THUS, HERE IN THIS CASE ALSO, WHEN THE AUTHORISED OFFICER HAS NOT ASKED THE ASSESSEE DURING THE STATEMENT RECORDED U/S 132(4) , THEN THE REQUIREMENT OF SPECIFYING THE MANNER IN WHICH INCOME HAS BEEN EARNED IS DISPENSED WITH. REGARDING SECOND R EQUIREMENT, OF SUBSTANTIATION, IT CAN BE EITHER AT STAGE OF RECORDING THE STATEMENT OR COULD BE THE LATER STAGE. NOW, WHETHER IN THIS CASE THE REQUIREMENT OF SUBSTANTIATION HAS BEEN DONE OR NO T HAS TO BE SEEN. 1 1 . I N THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS DISCLOSED THE AMOUNT OF RS. 3,85,00,000/ - UNDER THE HEAD BUSINESS INCOME , I.E. INCOME DERIVED FROM BUSINESS OF REAL ESTATE AND OTHER BUSINESS ACTIVITIES , WHICH HAS BEEN ASSESSED AS SUCH BY THE ASSESSING OFFICER. IF THAT IS SO, THEN IT CAN BE TAKEN AS IMPLIED SUBSTANTIATION OF THE MANNER OF DERIVING OF THE INCOME, WHICH STANDS ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 11 PROCEEDINGS. AT THE STATE OF PENALTY PROCEEDINGS, THE ASSESSING OFFICER CANNOT TURN AROUND AND SAY THA T THE MANNER OF DERIVING OF INCOME HAS NOT BEEN SUBSTANTIATED. REGARDING PAYMENT OF TAXED ON SUCH INCOME THERE IS NO DISPUTE. IF THAT IS SO, THEN IT CAN BE TAKEN AS IMPLIED SPECIFICATION OF THE MANNER OF EARNING OF INCOME AND ALSO THE SUBSTANTIATION OF TH E SAME . THIS OFFER OF BUSINESS INCOME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER ALSO . A T THE STAGE OF RECORDING OF STATEMENT U/S 132(4) AND ASSESSMENT STAGE, NOWHERE THE REVENUE OFFICIALS HAVE HELD THAT IT IS NOT FROM BUSINESS INCOME OR NOT DERIVED FROM B USINESS. HENCE, IT CANNOT BE HELD THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S 271AAA ON THE FACTS OF THE PRESENT CASE AND T HE REASON S GIVEN BY THE CIT(A) FOR DELETING THE PENALTY CANNOT BE FOUND TO BE FAULTED WITH. ACCORDINGLY, WE HOLD THAT PENALTY HAS RIG HTLY BEEN DELETED. 1 2 . BEFORE US THE LD. DR, HAS HEAVILY RELIED UPON THE ITAT MUMBAI BENCH IN THE CASE OF ACIT VS PRAKASH STEEL AGE LTD, IN ITA NO. 5221/MUM/2012 , ORDER DATED 28.01.2015. INTERPRETING S UB - SECTION (2) OF SECTION 271AAA, THE TRIBUNAL HAS OPI NED THAT THE CONDITIONS , SPECIFIED IN SUB - SECTION (2) OF SECTION 271AAA ARE MANDATORY AND SHOULD BE S AT I SFI ED SIMULTANEOUSLY. ULTIMATELY, THE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) TO DECIDE ACCORDINGLY . THE PROPOSITION LAID DOWN BY THE TRIBUNAL CANNOT BE QUARREL WITH , AS THE CONDITIONS LAID DOWN IN SUB - SECTION (2) HAVE TO BE S ATISFIED FOR DECIDING , WHETHER THE PENALTY U/S 271AAA ARE TO BE LEVIED OR NOT. THUS, THE AFORESAID DECISION DOES NOT IN ANY WAY PUT ANY HINDRANCE ON OUR DECISION T AKEN ABOVE, WHICH IS BASED ON THE FACTS OF THE PRESENT CASE. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE ARE DISMISSED. M/S PHOENIX M ILLS LTD ITA 6190 /M/20 1 3 12 1 3 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST , 2015. [[ SD/ - SD/ - ( . . ) ( ) ( G S PANU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 7 TH AUGUST , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 3 8 , MUMBAI , 4) THE CIT CENTRAL - IV , MUMBAI . 5) , , / THE D.R. C BENCH , MUMBAI. 6) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR. PS