DYCIT CEN CIR-5, MUMBAI V. ISHWAR PRABHUDAS GANDHI, MUMBAI

ITA 6918/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1358 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 22-06-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 04-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMMET HUMAR
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Gift; Income from undisclosed sources; Revised return; Documents seized
• Section: 153A; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I BEFORE SHRI N.V. VASUDEVAN (JM) & PRAMOD KUMAR (AM) I.T.A.NO. 6918/MUM/2008 (ASSESSMENT YEAR : 2000-01 ) I.T.A.NO. 6919/MUM/2008 (ASSESSMENT YEAR : 2001-02 ) I.T.A.NO. 6920/MUM/2008 (ASSESSMENT YEAR : 2002-03 ) I.T.A.NO. 6921/MUM/2008 (ASSESSMENT YEAR : 2003-04 ) I.T.A.NO. 6922/MUM/2008 (ASSESSMENT YEAR : 2004-05 ) DCIT CENTRAL CIRCLE 5 9 TH FLOOR, OLD CGO BUILDING ANNEXE, M.K. ROAD MUMBAI-400 020. VS. SHRI ISHWAR PRABHUDAS GANDHI B-21, JYOTI SADAN SITLADEVI TEMPLE ROAD MAHIM MUMBAI-400 016. APPELLANT RESPONDENT PAN/GIR NO. : AAKPG2303C ASSESSEE BY : SHRI M. SUBRAMANIAN DEPARTMENT BY : SHRI SUMMET HUMAR ORDER PER BENCH :- THESE ARE APPEALS BY THE REVENUE AGAINST THE COMMO N ORDER DATED 11.9.2008 OF LEARNED CIT(A)-CENTRAL II, MUMBAI RELA TING TO A.Y. 2000-01 TO 2005-06. 2. IN THESE APPEALS, THE REVENUE HAS CHALLENGED THE ORDER OF LEARNED CIT(A), WHEREBY HE CANCELLED THE PENALTY IMPOSED ON THE ASSESSEE BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 3. FACTS AND CIRCUMSTANCES UNDER WHICH, THE PENALTY WAS IMPOSED ON THE ASSESSEE BY THE ASSESSING OFFICER ARE AS FOL LOWS :- THE ASSESSEE IS AN INDIVIDUAL. HE WAS EMPLOYED IN JASLOK HOSPITAL AS A MAINTENANCE ENGINEER. HIS SOURCE OF INCOME IS SALARY FROM HIS EMPLOYMENT WITH JASLOK HOSPITAL. THERE WAS SEARCH A ND SEIZURE OPERATION CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE U/S. 132 SHRI ISHWAR PRABHUDAS GANDHI 2 OF THE ACT. 29.8.2005. IN COURSE OF SEARCH, STATEME NT OF THE ASSESSEE WAS RECORDED U/S. 132(4) OF THE ACT. IN COURSE OF SEARC H, VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED FROM THE ASSESSEE. THESE DOCUMENTS EVIDENCED INVESTMENT IN FDS, KVPS, NSCS A ND DEPOSITS IN BANK ACCOUNTS TOTALING RS. 3,88,84,634/-. THESE INV ESTMENTS WERE IN THE NAMES OF ASSESSEE AS WELL AS FAMILY MEMBERS OF THE ASSESSEE. IN COURSE OF STATEMENT U/S. 132(4) OF THE ACT, THE ASSESSEE A GREED TO DISCLOSE AN ADDITIONAL INCOME OF RS. 3 CRORES. IN REPLY TO QUES TION NO. 16 RECORDED AT THE TIME OF SEARCH AS TO WHETHER HE WISHES TO STATE ANYTHING, THE ASSESSEE ANSWERED AS FOLLOWS :- ANS. : IN VIEW OF VARIOUS DOCUMENTS SEIZED BY YOU DURING THE COURSE OF SEARCH ACTION, I AM READY TO OFFER AN INC OME OF RS. 3 CRORES ON ACCOUNT OF FDS, CASH IN HAND, DEPOSITS MA DE IN POST OFFICES, RELIEF BONDS, MUTUAL FUNDS (PURCHASED RECE NTLY). THE EXACT DETAILS OF UNACCOUNTED INCOME WILL BE SUPPLIED LATE R ON. THIS AMOUNT OF DISCLOSURE ALSO INCLUDES VARIOUS GIFTS RE CEIVED BY ME AND MY FAMILY MEMBERS ON VARIOUS DATES. EVEN THOUGH I AM OF THE OPINION THAT THESE GIFTS ARE GENUINE BUT IT WILL BE VERY DIFFICULT FOR ME TO SUBSTANTIATE THE GENUINENESS OF THESE GIFTS. 4. CONSEQUENT TO SEARCH CARRIED OUT IN THE CASE OF THE ASSESSEE, NOTICE U/S. 153A OF THE ACT WAS ISSUED TO THE ASSESSEE FOR A.Y. 2000-01 TO 2005-06. IN RESPONSE TO THE SAME, THE ASSESSEE FILE D RETURN OF INCOME DISCLOSING AMOUNT SURRENDERED AT THE TIME OF SEARCH IN VARIOUS ASSESSMENT YEARS AS INCOME. THE INCOME SO RETURNED FOR VARIOUS ASSESSMENT YEARS WAS ACCEPTED BY THE ASSESSING OFFI CER AND BROUGHT TO TAX BY THE ASSESSING OFFICER. WHILE DOING SO, THE A SSESSING OFFICER OBSERVED THAT INCOME RETURNED BY THE ASSESSEE IN RE SPONSE TO NOTICE U/S. 153A OF THE ACT OUGHT TO HAVE BEEN DISCLOSED BY HIM IN THE REGULAR RETURN OF INCOME FILED FOR THE CORRESPONDING ASSESS MENT YEARS. ACCORDING TO THE ASSESSING OFFICER, SINCE THE ASSESSEE HAS DI SCLOSED THE INCOME ONLY IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 153A OF THE ACT, THE ASSESSEE HAS CONCEALED INCOME BY NOT DISCLOSING IT IN THE ORIGINAL RETURN OF INCOME, THE ASSESSING OFFICER ACCORDINGLY INITIA TED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. SHRI ISHWAR PRABHUDAS GANDHI 3 5. IN RESPONSE TO SHOW-CAUSE NOTICE BEFORE IMPOSIN G PENALTY, THE ASSESSEE SUBMITTED THAT HE WAS ENTITLED TO IMMUNITY UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. PROVISIONS OF EX PLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS AS FOLLOWS :- 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 THA T SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PAR T) HIS INCOME, ( A ) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FUR NISHED BEFORE 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 SEA RCH, 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 PA RTICULARS 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 HI M 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 STATEMEN T UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER H IS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCL OSED 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 MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME.] THE ASSESSEE ALSO RELIED ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF S.D.V. CHANDRU, 266 ITR 173 (MAD); WHER EIN HON'BLE MADRAS HIGH COURT HELD THAT WHERE THERE IS DISCLOSURE OF I NCOME FOR A PREVIOUS SHRI ISHWAR PRABHUDAS GANDHI 4 YEAR, WHICH HAS NOT ENDED PRIOR TO THE DATE OF SEAR CH AND STATEMENT U/S. 132(4), AND WHERE THE ASSESSEE ADMITS SUCH UNDISCLO SED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAVE BEEN DERIVED AND PAYS TAX ON SUCH UNDISCLOSED INCOME WITH INTEREST, THEN HE WOULD BE ENTITLED TO IMMUNITY FROM LEVY OF PENALTY. 6. THE ASSESSING OFFICER, HOWEVER, HELD THAT THE FOLLOWING CONDITIONS ARE REQUIRED TO BE SATISFIED BEFORE BENEFIT OF IMMU NITY UNDER EXPLANATION 5, WOULD BE GIVEN TO THE ASSESSEE NAMELY :- (I) THE ASSESSEE DISCLOSES INCOME IN THE STATEMENT RECO RDED UNDER SECTION 132(4) OF THE I.T. ACT. (II) THE UNACCOUNTED INCOME HAS NOT BEEN DISCLOSED IN HI S RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB-SECTION (1) TO SECTION 139 OF THE I.T. ACT. (III) THE ASSESSEE SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST. 7. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT FULFILLED TWO OF THE CONDITIONS MENTIONED ABOVE NAMELY CONDITION NO. (II) AND (III). ACCORDING TO THE ASSESSING OFFICER THE DUE DATE FOR FILING THE RETURN OF INCOME FOR ALL THE PREVIOUS YEAR RELEVANT TO ALL TH E ABOVE ASSESSMENT YEARS HAD ENDED BEFORE THE DATE OF SEARCH AND THE A SSESSEE HAD NOT DISCLOSED ALL THESE INCOMES IN RETURN FILED BEFORE THE DATE OF SEARCH. ACCORDING TO THE ASSESSING OFFICER, THESE INCOMES W ERE DISCLOSED ONLY IN RETURN FILED IN RESPONSE TO NOTICE U/S. 153A OF THE ACT; AND THEREFORE CONDITION NO. (II) WAS NOT SATISFIED. THE ASSESSING OFFICER ALSO HELD THAT UNDER CONDITION (III) MENTIONED ABOVE, THE ASSESSEE HAD TO DISCLOSE THE MANNER IN WHICH, INCOME THAT WAS NOT EARLIER DISCLO SED TO THE DEPARTMENT WAS EARNED. IN THIS REGARD, THE ASSESSIN G OFFICER REFERRED TO THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SEARCH, WHICH WE HAVE ALREADY EXTRACTED IN THE EARLIER PART OF THIS ORDER, AND WAS OF THE VIEW THAT THE ASSESSEE HAD CLEARLY ADMITTED THAT HE CANNOT EXPLAIN THE MANNER IN WHICH, THE INCOME WAS EARNED. SINCE, THE AFORESAID CONDITION WAS NOT SATISFIED BY THE ASSESSEE, THE ASSESSING O FFICER HELD THAT THE ASSESSEE NOT ENTITLED TO IMMUNITY UNDER EXPLANATION 5 TO SECTION SHRI ISHWAR PRABHUDAS GANDHI 5 271(1)(C) OF THE ACT. WITH REGARD TO DECISION OF HO N'BLE MADRAS HIGH COURT IN THE CASE OF SDV CHANDRU (SUPRA), THE ASSES SING OFFICER HELD THAT IT WAS THE DECISION OF NON-JURISDICTIONAL HIGH COURT AND FURTHER EVEN IN THE AFORESAID DECISION, HON'BLE COURT HAS HELD T HAT THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED SHOULD BE D ISCLOSED TO AVAIL OF THE IMMUNITY. FOR ALL THE REASONS GIVEN ABOVE, THE ASSESSING OFFICER IMPOSED PENALTY ON THE ASSESSEE U/S. 271(1)(C) OF T HE ACT. DETAILS OF THE INCOME RETURN AND ADDITION IN RESPECT OF THE PENALT Y WAS IMPOSED BY THE ASSESSING OFFICER ARE AS FOLLOWS :- 1 2 3 4 5 6 7 8 A.Y. INCOME RETURNED U/S. 153A INCOME ASSESSED U/S. 153A/143(3) ADDITIONS MADE BY THE ASSESSING OFFICER ADDITIONS DELETED BY LEARNED CIT(A) & DELETION CONFIRMED BY ITAT NET ADDITION ASSESSED AFTER APPEALS INCOME DISCLOSED BY THE ASSESSEE U/S. 153(A) ON WHICH ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) AMOUNT OF PENALTY U/S. 271(1)(C) LEVIED BY ASSESSING OFFICER ADHOC EXPENSES DISALLOWED ON A/C. OF GIFT YEARS RS. RS. RS. RS. RS. RS. RS. RS. 2000-01 38,70,060 39,08,339 38,279 - - 38,279 34,92 ,531 11,82,234 2001-02 29,69,190 32,39,974 70,784 2,00,000 2,00,00 0 70,784 25,20,232 8,84,600 2002-03 48,29,750 79,20,576 90,286 30,00,000 30,00, 000 90,826 37,72,572 11,54,406 2003-04 67,63,880 68,68,684 1,04,223 - - 1,04,223 5 6,87,522 17,91,568 2004-05 81,65,630 82,65,684 1,00,054 - - 1,00,054 6 2,87,522 20,57,247 2005-06 99,64,950 1,13,02,904 1,37,954 12,00,000 12 ,00,000 1,37,954 79,14,701 26,64,088 8. BEFORE LEARNED CIT(A), THE ASSESSEE SUBMITTED TH AT AS FAR AS FULFILLMENT OF CONDITION (II) MENTIONED BY THE ASSE SSING OFFICER, THE SAME WILL NOT ARISE FOR CONSIDERATION AT ALL BECAUSE IF THE INCOME IS DISCLOSED IN THE RETURN FILED PRIOR TO THE DATE OF SEARCH, THERE IS NO QUESTION OF ANY UNDISCLOSED INCOME BEING FOUND AS A RESULT OF SEARC H. IT WAS THEREFORE SUBMITTED THAT THIS WAS NOT A VERY RELEVANT CONDITI ON. WITH REGARD TO FULFILLMENT OF CONDITION (III) REFERRED TO ABOVE BY THE ASSESSING OFFICER, THE SHRI ISHWAR PRABHUDAS GANDHI 6 ASSESSEE SUBMITTED THAT AT THE TIME OF SEARCH, NO Q UESTION WAS PUT TO THE ASSESSEE WITH REGARD TO MANNER IN WHICH INCOME WAS EARNED. SINCE, THE REVENUE HAS NOT QUESTIONED THE ASSESSEE WITH REGARD TO MANNER IN WHICH, INCOME WAS DERIVED AND IT CANNOT DENY THE BE NEFIT OF IMMUNITY FROM IMPOSITION OF PENALTY. IN THIS REGARD, THE ASS ESSEE PLACED RELIANCE ON THE DECISION OF HON'BLE ITAT MUMBAI IN THE CASE OF GULABRAI VS. GANDHI VS. ACIT, 84 ITD 370 (MUM). IT WAS ALSO SUBM ITTED THAT HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RADHA K ISHAN GOEL, 152 TAXMAN 291 (ALL) HAS HELD THAT EVEN IF THE MANNER I N WHICH THE INCOME IS DERIVED, IS STATED SUBSEQUENTLY I.E. AFTER THE STAT EMENT U/S. 132(4), THAT WOULD BE SUFFICIENT TO ALLOW IMMUNITY TO THE ASSESS EE UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. ON CONSIDERATION OF THE ABOVE SUBMISSIONS, LEARNED CIT(A) FIRSTLY HELD THAT PENAL TY COULD NOT BE IMPOSED FOR A.Y. 2005-06 FOR THE FOLLOWING REASONS :- IN SO FAR AS THE INCOME RELATABLE TO THE A.Y. 2006 -07 IS CONCERNED, IT IS STRAIGHTWAY COVERED BY THE EXCEPTI ONS PROVIDED IN THE SAID EXPLANATION SINCE THE DUE DATE FOR FILING THE RETURN FOR A.Y. 2005-06 HAD NOT EXPIRED ON THE DATE OF SEARCH SINCE THE DATE OF SEARCH BEING 29.8.2005. THEREFORE NO PENALTY U/S . 271(1)(C) COULD BE LEVIED IN RESPECTS OF THE INCOME DISCLOSED FOR A.Y. 2005- 06 IN THE RETURN OF INCOME FILED U/S. 153A AFTER TH E SEARCH. THEREFORE THE PENALTY LEVIED AT RS. 26,64,088/- FOR A.Y. 2005-06 IS HEREBY CANCELLED. 9. WITH REGARD TO OTHER ASSESSMENT YEARS, LEARNED C IT(A) REFERRED TO THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KANHAIYALAL,299 ITR 19 (RAJ). FACTS IN THE AFORESAI D DECISION WHERE THAT IN COURSE OF SEARCH, THE ASSESSEE GAVE STATEMENT U/ S. 132(4) MAKING A DISCLOSURE OF RS. 3,50,000/-AS UNDISCLOSED INCOME. THE ASSESSEE FILED RETURN OF INCOME FOR A.Y. 1984-85 TO 1988-89 AND SP READ OVER UNDISCLOSED INCOME OF RS. 3,50,000/- IN DIFFERENT Y EARS. THE REVENUE DENIED BENEFIT OF IMMUNITY UNDER EXPLANATION 5 TO S ECTION 271(1)(C) OF THE ACT ON THE GROUND THAT UNDISCLOSED INCOME DID N OT PERTAIN TO ONE YEAR. IN THE ABOVE CIRCUMSTANCES, HON'BLE RAJASTHAN HIGH COURT HELD THAT BENEFIT OF IMMUNITY CANNOT BE DENIED JUST BECA USE THE DISCLOSURE SHRI ISHWAR PRABHUDAS GANDHI 7 RELATED TO MORE THAN ONE YEAR. THE LEARNED CIT(A) A LSO REFERRED TO THE DECISION OF HON'BLE ITAT ALLAHABAD IN THE CASE OF S HYAM BIRI WORKS PVT. LTD. VS. ACIT, 70 TTJ 880. THIS WAS A CASE WHERE TH E DISPUTE WAS WITH REGARD TO WHETHER THE UNDISCLOSED INCOME WAS ALREAD Y DISCLOSED IN THE RETURN FILED PRIOR TO THE DATE OF SEARCH. THEREAFTE R, LEARNED CIT(A) REFERRED TO THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF SDR CHANDRU (SUPRA). WE HAVE ALREADY DISCUSSED THIS DE CISION IN THE EARLIER PART OF THIS ORDER. IN PARA 3.5, LEARNED CI T(A) HAS GIVEN HIS REASONS FOR CANCELING PENALTY WHICH IS AS FOLLOWS : - THOUGH THE DECISION OF HON'BLE MADRAS HIGH COURT I N THE CASE OF SDV CHANDRU (SUPRA) WAS RELIED UPON BEFORE THE ASSE SSING OFFICER BY THE ASSESSEE, THE ASSESSING OFFICER HAS NOT FOLL OWED THE SAME STATING THAT IT WAS NOT FROM THE BINDING JURISDICTI ONAL HIGH COURT. APART FROM THE MADRAS HIGH COURT, THE ALLAHABAD HIG H COURT IN THE CASE OF CHHABRA EMPORIUM, 264 ITR 249 AND RAJAS THAN HIGH COURT IN THE CASE OF KANHAIYALAL, 2999 ITR 119 HAVE TAKEN THE SIMILAR VIEW. BESIDES THE ALLAHABAD ITAT ALSO HAS H ELD SIMILARLY. TO THE BEST OF MY KNOWLEDGE, I HAVE NOT COME ACROSS ANY OTHER JUDICIAL DECISIONS CONTRARY TO THE EXPLANATION 5 W. E.F. 10.9.1986. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE ALLAHABAD HIGH COURT AND MADRAS HIGH COURT, I CANCEL THE AMOU NTS OF PENALTY LEVIED U/S. 271(1)(C) FOR THE A.YS. 2000-01 TO 2004-05 ALSO. 10. AGGRIEVED BY THE ORDER OF LEARNED CIT(A), THE R EVENUE HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNE D DR BROUGHT TO OUR NOTICE THE DECISION OF HON'BLE BOMBAY HIGH COUR T IN THE CASE OF INDUS ENGINEERING CO. VS. ACIT, 184 TAXMAN 269 (BOM ); WHEREIN HON'BLE BOMBAY HIGH COURT WHILE DEALING WITH EXPLAN ATION 5 TO SECTION 271(1)(C) OF THE ACT HAS LAID DOWN THAT TO AVAIL BE NEFIT OF IMMUNITY UNDER EXPLANATION 5, THE ASSESSEE IS ALSO REQUIRED TO DIS CLOSE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED. FOLLOWING WER E THE RELEVANT OBSERVATIONS OF THE COURT. THE INSTANT CASE WAS NOT A CASE OF WANT OF JURISDI CTION. IT WAS A CASE WHERE THE ASSESSEE WAS UNABLE TO MAKE OUT THAT THE CASE FELL SHRI ISHWAR PRABHUDAS GANDHI 8 WITHIN THE EXPLANATION 5 TO SECTION 271(1)(C). THE REQUIREMENT TO FALL WITHIN THE EXPLANATION IS NOT ONLY ADMISSION B Y THE ASSESSEE IN HIS STATEMENT MADE IN THE COURSE OF SEARCH; THE ASSESSEE IS FURTHER BOUND TO DISCLOSE THE SOURCE OF ITS INCOME. UNDER THOSE CIRCUMSTANCES, THE EXPLANATION WAS NOT ATTRACTED. T HE COMMISSIONER HAD RECORDED A FINDING OF FACT THAT TH E TRANSACTIONS WERE DISCLOSED IN THE COURSE OF SEARCH. THE INCOME WAS IN RESPECT OF THE A.Y. 1985-86. THE SEARCH WAS CONDUCTED ON 30 .6.1987. APART FROM THAT, THE COMMISSIONER NOTED THAT NEITHE R IN THE ORIGINAL RETURN NOR IN THE REVISED RETURN, THE ASSE SSEE HAD DISCLOSED THE INCOME. IT WAS THEREFORE, A CLEAR CAS E OF CONCEALMENT OF INCOME. IN SO FAR AS THE ISSUE PERTAINING TO THE EXPLANATION 5 WAS CONCERNED, THE ASSESSEE DID NOT DISCLOSE THE MA NNER IN WHICH SUCH INCOME HAD BEEN DERIVED. THEREFORE THERE WAS N O MERIT IN THE WRIT PETITION. 12. IT WAS SUBMITTED BY LEARNED DR THAT IN THE PRES ENT CASE, ONE OF THE CONDITIONS TO BE SATISFIED FOR AVAILING IMMUNIT Y UNDER EXPLANATION 5 WAS THAT THE ASSESSEE SHOULD DISCLOSE THE MANNER IN WHICH INCOME WAS DERIVED AND SINCE THERE WAS NO SUCH DISCLOSURE BY T HE ASSESSEE, PENALTY IMPOSED OUGHT TO HAVE BEEN SUSTAINED BY LEARNED CIT (A). IT WAS ALSO SUBMITTED THAT SEARCH IN THE CASE OF THE ASSESSEE T OOK PLACE ON 29.8.2005, AND THE LAST DATE FOR FILING THE RETURN OF INCOME FOR A.Y. 2005- 06 HAD EXPIRED ON 31.7.2005 AND SINCE THE ASSESSEE HAD NOT FILED RETURN OF INCOME BY THAT DATE, PENALTY SHOULD BE LEVIED EV EN FOR A.Y. 2005-06. IT WAS SUBMITTED THAT THE CONCLUSION TO THE CONTRARY B Y THE CIT(A) IS NOT CORRECT. 13. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND RELIED ON THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA KISHAN GOEL, 152 TAXMAN 291 (ALL); WHEREIN HON'BLE ALLAHABAD HIGH COURT HAD TAKEN A VIEW THAT TO CLAIM IMMUNITY UNDER EXPLANATION 5, MANNER IN WHICH THE INCOME WAS EARNED NEED NOT BE M ENTIONED IN THE STATEMENT UNDER SECTION 132(4), BUT IF IT IS NOT ST ATED, SUBSEQUENTLY THAT IT WOULD BE SUFFICIENT COMPLIANCE WITH THE CONDITIO N IN EXPLANATION 5. WITH REGARD TO THE DECISION OF HON'BLE BOMBAY HIGH COURT, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME WA S RENDERED IN THE CONTEXT OF AN APPEAL AGAINST WAIVER OF PENALTY U/S. 264 OF THE ACT, WHICH SHRI ISHWAR PRABHUDAS GANDHI 9 WAS DISMISSED BY LEARNED CIT. IT WAS SUBMITTED THAT PROCEEDINGS U/S. 264 ARE SUMMARY PROCEEDINGS AND THOSE OBSERVATIONS SHOULD BE CONSIDERED ONLY IN THE LIGHT OF QUESTION BEFORE THE COURT AS TO WHETHER WAIVER OF PENALTY OUGHT TO HAVE BEEN ALLOWED OR NOT . IN THIS REGARD, LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERIN G WORKS PVT. LTD., 198 ITR 297 FOR THE PROPOSITION THAT OBSERVATIONS I N A JUDGEMENT HAVE TO BE UNDERSTOOD IN THE LIGHT OF THE QUESTION BEFOR E THE COURT. FOR THE IDENTICAL PROPOSITION HE ALSO RELIED ON THE DECISIO N OF HON'BLE SUPREME COURT IN THE CASE OF BHAVNAGAR UNIVERSITY VS. PALIT ANA SUGAR MILLS PVT. LTD., 2002 AIR SCW 4939. 14. LEARNED DR IN REJOINDER, SUBMITTED THAT THE MAN NER IN WHICH UNDISCLOSED INCOME IS EARNED AND ITS DISCLOSURE IS VERY IMPORTANT BECAUSE THE IMMUNITY FROM IMPOSITION OF PENALTY IS GRANTED BECAUSE THE ASSESSEE NOT ONLY DISCLOSED UNDISCLOSED INCOME; BUT ALSO EXPLAINS MODUS OPERANDI BY WHICH THE SAME WAS EARNED. WHILE DOING SO, THE ASSESSEE HELPS THE DEPARTMENT TO DETECT UNDISCLOSED INCOME I N THE HANDS OF THIRD PARTY ALSO; AND THIS IS THE REASONS WHY IMMUNITY IS GIVEN UNDER EXPLANATION 5 TO THE ASSESSEE. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE AR E OF THE VIEW THAT IN RESPECT OF ALL THE ASSESSMENT YEARS IN QUESTION, THE ASSESSEE HAS NOT DISCLOSED THE MANNER IN WHICH UNDISCLOSED INCOME WA S EARNED. IN THIS REGARD, WE HAVE GONE THROUGH THE STATEMENT UNDER SE CTION 132(4) OF THE ACT AND WE FIND THAT NEITHER ANY QUESTION HAS BEEN PUT TO THE ASSESSEE ON THIS ASPECT NOR HAS THE ASSESSEE ATTEMPTED TO EX PLAIN THE MANNER IN WHICH HE DERIVED UNDISCLOSED INCOME. IN THIS REGARD , WE HAVE ALREADY REFERRED TO ANSWER GIVEN BY THE ASSESSEE IN REPLY T O QUESTION NO. 16 IN THE STATEMENT RECORDED AT THE TIME OF SEARCH. IN TH E LIGHT OF THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INDUS E NGINEERING CO. (SUPRA), WE ARE OF THE VIEW THAT THE ASSESSEE WOULD NOT BE ENTITLED TO BENEFIT OF IMMUNITY UNDER EXPLANATION 5. THE DECISI ONS RELIED UPON BY SHRI ISHWAR PRABHUDAS GANDHI 10 LEARNED COUNSEL FOR THE ASSESSEE WITH REGARD TO THE MANNER IN WHICH THE JUDGEMENTS OF THE COURT HAVE TO BE UNDERSTOOD, ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF INDUS ENGINEERING CO. (SUPRA) IS ALSO A DECISION ON THE INTERPRETATION OF EXPLANATION 5 TO SECTION 271(1)(C ) OF THE ACT. THE FACT THAT IT WAS GIVEN IN AN APPEAL AGAINST THE ORDER OF LEARNED CIT REFUSING WAIVER OF PENALTY IN PROCEEDINGS U/S. 264 OF THE AC T, IN OUR VIEW WILL NOT MAKE ANY DIFFERENCE. THE DECISION OF HON'BLE ALLAHA BAD HIGH COURT IN THE CASE OF RADHA KISHAN GOEL (SUPRA) IS AGAIN NOT USEF UL TO THE PLEA OF THE ASSESSEE BEFORE THE TRIBUNAL. THIS IS BECAUSE EVEN IN THE PENALTY PROCEEDINGS OR ASSESSMENT PROCEEDINGS, ASSESSEE HAS NOT ATTEMPTED TO MAKE ANY DISCLOSURE REGARDING MANNER IN WHICH UNDIS CLOSED INCOME WAS EARNED. IN THIS REGARD, WE FIND THAT THE ASSESSEE I N A LETTER FILED BEFORE THE ASSESSING OFFICER IN COURSE OF ASSESSMENT PROCE EDINGS DATED 2.11.2007 HAS ONLY STATED THAT HE WAS AN ENGINEER S ERVING WITH JASLOK HOSPITAL AND WAS DOING CONSULTANCY WORK AND EARNED UNDISCLOSED INCOME. THIS IS CONTRARY TO THE STATEMENT U/S. 132( 4) OF THE ACT, WHEREIN HE HAS STATED THAT THE AMOUNT DISCLOSED INCLUDES GI FT RECEIVED BY THE ASSESSEE AND HIS FAMILY MEMBERS. AT NO POINT OF TIM E HAS THE ASSESSEE ATTEMPTED TO EXPLAIN THE MANNER IN WHICH UNDISCLOSE D INCOME WAS EARNED. SINCE, THIS CONDITION WAS NOT SATISFIED, WE ARE OF THE VIEW THAT THE ASSESSEE WOULD NOT BE ENTITLED TO IMMUNITY UNDE R EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE DECISION OF HON'B LE MADRAS HIGH COURT IN THE CASE OF SDV CHANDRU (SUPRA) AND HON'BLE RAJASTH AN HIGH COURT IN THE CASE OF KANHAIYALAL (SUPRA) IN OUR VIEW WERE RE NDERED IN TOTALLY DIFFERENT CONTEXT AND NOT RELEVANT TO THE CASE OF T HE ASSESSEE. WE FIND THAT COMMISSIONER HAS NOT GIVEN ANY VALID REASON AS TO HOW THIS CONDITION IS SATISFIED; AND HIS ORDER DELETING PENA LTY HOLDING THAT EXPLANATION 5 WAS APPLICABLE IN THE CASE OF THE ASS ESSEE, CANNOT BE SUSTAINED. IN RESPECT OF IMPOSITION OF PENALTY, WE FIND THAT THE ASSESSEE HAS NOT DISCLOSED INCOME IN QUESTION IN THE ORIGINA L RETURN FILED FOR THE RELEVANT ASSESSMENT YEARS AND TO THE EXTENT THERE H AS BEEN CONCEALMENT OF PARTICULARS OF INCOME; AND THEREFORE, PENALTY WA S RIGHTLY IMPOSED BY SHRI ISHWAR PRABHUDAS GANDHI 11 THE ASSESSING OFFICER. IN THE GIVEN FACTS AND CIRCU MSTANCES OF THE CASE, WE HOLD THAT THE PENALTY IMPOSED BY THE ASSESSING O FFICER WAS JUSTIFIED. CONSEQUENTLY ORDER OF LEARNED CIT(A) IS REVERSED AN D THAT OF THE ASSESSING OFFICER IS RESTORED. 16. ALL THESE APPEALS BY THE REVENUE ARE ALLOWED. ORDER PRONOUNCED ON 30 TH DAY OF JUNE, 2010. SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER DATED : 30 TH JUNE, 2010 COPY TO : 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS