Palace Infratech Pvt Ltd, Ludhiana V. The Dy.Commissioner of Income Tax, Ludhiana

ITA 698/CHANDI/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1314 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 20-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH CIT DR
• Keywords: Business income; Loose papers; Revised return
• Section: 153A; 139(5); 274; 139(1); 132; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH .., ! '# #$ %, & '( BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 698/CHD/ 2017 ASSESSMENT YEAR : 2013-14 PALACE INFRATECH PVT. LTD. B-XIX-546, COLLEGE ROAD CIVIL LINES, LUDHIANA THE DY CIT CENTRAL CIRCLE-III LUDHIANA PAN NO: AAGCP3488G APPELLANT RESPONDENT !' ASSESSEE BY : SHRI TEJ MOHAN SINGH, ADVOCATE #!' REVENUE BY : SHRI MANJIT SINGH, CIT DR $ %! & DATE OF HEARING : 03/12/2019 '()*! & DATE OF PRONOUNCEMENT : 06/12/2019 ')/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT . 14/02/2017 OF LD. CIT(A)-5, LUDHIANA. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE LD. CIT(A) HAS GROSSLY ERRED BOTH IN LAW A ND ON FACTS IN SUSTAINING PENALTY OF RS. 57,00,000/- ( FIFTY SEVEN LACS) UNDER SECTIO N 271AAB WITHOUT APPRECIATING THAT NO PENALTY WAS EXIGIBLE. 2. THAT WHILE UPHOLDING PENALTY OF RS. 57,00,000/- UND ER SECTION 271AAB BOTH THE LD. CIT(A) HAS GROSSLY ERRED IN LAW THAT THE APPELLANT HAD FULFILLED ALL CONDITIONS PRE-REQUISITE AS PRESCRIBED UNDER CLAUSE (A) OF SUB-SECTION (1) OF S ECTION 271AAB OF THE INCOME TAX ACT, 1961 3. THAT WHILE SUSTAINING PENALTY OF RS. 57,00,000/- ( FIFTY SEVEN LACS) THE LD. CIT(A) DID NOT APPRECIATE THAT NEITHER CLAUSE (B) NOR CLAUSE ( C) OF SUB-SECTION (1) OF SECTION 271AAB WAS APPLICABLE AS THE APPELLANT HAD NOT FILED THE R ETURN OF INCOME WITHIN TIME PRESCRIBED BUT HAD PAID TAX AS PAYABLE. 4. THAT THE APPELLANT RESERVES THE RIGHT TO ADD , ALTE R OR TAKE FRESH GROUND EITHER BEFORE OR DURING THE COURSE OF HEARING. 2 3. FROM THE ABOVE GROUNDS IT IS GATHERED THAT ONLY GR IEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF PENALTY OF RS. 57,00,00 0/- LEVIED BY THE A.O. UNDER SECTION 271AAB OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS ACT). 4. FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH AND SUR VEY OPERATION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON 31/10/2012 ON THE BUS INESS AND RESIDENTIAL PREMISES BELONGING TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE AT THE TIME OF SEARCH A DMITTED AN UNDISCLOSED INCOME OF RS. 1.90 CRORES UNDER SECTION 132(4) OF THE ACT, HE THEREFORE INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271AAB OF THE ACT. IN RESPONS E THE ASSESSEE SUBMITTED THAT HE HAD FILED AN APPEAL BEFORE THE LD. CIT(A), THEREFORE THE PENALTY MAY BE KEPT IN ABEYANCE TILL THE DISPOSAL OF THE APPEAL. THE A.O. OBSE RVED THAT THE ASSESSEE HAD NOT SUBSTANTIATED THE MANNER AND MODE OF EARNING THE INCOME N EITHER DURING THE COURSE OF SEARCH CONDUCTED NOR PENALTY PROCEEDINGS AND SIMPLY STATED THAT THE SAME WAS RELATABLE TO UNDISCLOSED FORWARD / SPECULATIVE TRANS ACTIONS. THE A.O. DID NOT FOUND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND LEVIED THE PENALTY OF RS. 57,00,000/- I.E; @ 30% ON THE UNDISCLOSED INCOME OF RS. 1,90 CRORES. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSION WHICH HAS BEEN INCORPORATED IN PARA 2 OF THE IMPUGNED ORDER FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HE REIN. 6. LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE A.O. BY OBSERVING IN PARA 3.2 TO 3.3 OF THE IMPUGNED ORDER AS UNDER: 3.2 THE FACTS OF THE CASE, THE ORDER OF THE AO IMP OSING THE PENALTY AND THE ARGUMENTS OF THE AR HAVE BEEN CONSIDERED. THE AR HAS REPEATED TH E CONTENTIONS WHICH WERE RAISED BEFORE THE AO. THE AR HAS REPRODUCED THE PROVISIONS OF SECTION 271AAB WHICH WAS INTRODUCED BY FINANCE ACT, 2012. IT IS STATED THAT THERE SIMILARITY IN THE PROVISIONS OF SECTION 271AAB WITH EXPLANATION-5 TO SECTION 271(L)(C). THE AR REPEATED THE ARGUMENT THAT THE APPELLATE HAS DULY FULFILLED ALL THE CONDITIONS AS PRESCRIBED U/S 271AAB BY ADMITTING THE UNDISCLOSED INCOME, SUBSTANTIATING THE MANNER IN WH ICH THE UNDISCLOSED INCOME WAS DERIVED AND PAID THE TAX TOGETHER WITH INTEREST IN RESPECT OF UNDISCLOSED INCOME ON THE SPECIFIED DATE. THE AR CONTENDED THAT ON THE ABOVE FACTS OF THE CASE NO PENALTY UNDER SECTION 271AAB IS ATTRACTED IN THIS CASE. THE AR HA S QUOTED CERTAIN CASE LAWS IN SUPPORT OF HIS ARGUMENT. IT IS MENTIONED HERE THAT AS SUBMITTED BY THE AR AL SO THERE WAS AN AMENDMENT INTO THE INCOME TAX ACT, 1961 BY FINANCE ACT, 2012 AND A NEW SECTION 271AAB, APPLICABLE FROM 01.07.2012, HAS BEEN INTRODUCED. THE PROVISIONS OF THIS SECTION ARE APPLICABLE TO THE CASES WHERE SEARCH U/S 132 WAS INITIATED ON OR AFTER 1 ST DAY OF JULY, 2012 AND IN THE PRESENT CASE, 3 THE SEARCH WAS CONDUCTED ON 21.10.2012 AND HENCE GO VERNED BY THE PROVISIONS OF SECTION 271AAB (AND THE PROVISIONS OF SECTION 271AAA ARE NO T APPLICABLE). FOR DECIDING THE ISSUE AND TO HAVE CLARITY IN THE MATTER THE PROVISIONS OF SECTIONS 271AAB ARE REPRODUCED BELOW: '271AAB. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHER E SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY O F PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM,- (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT OF T HE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER 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 UNDISCLO SED INCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE- (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PR EVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT O F THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II) ON OR BEFORE THE SPECIFIED DATE- (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FU RNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER C ENT BUT WHICH SHALL NOT EXCEED NINETY PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PRE VIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLAUSES (A) AND (B). (2) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SU B-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDI SCLOSED INCOME REFERRED TO IN SUB- SECTION (1). (3) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, AS FA R AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION- FOR THE PURPOSES OF THIS SECTION,- (A) 'SPECIFIED DATE' MEANS THE DUE DATE OF FURNISHING O F RETURN OF INCOME UNDER SUB- SECTION(L) OF SECTION 139 OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A FOR FURNISHING OF RETURN OF INCO ME EXPIRES, AS THE CASE MAY BE; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR- (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION(L) OF SECTIO N 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE A SSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEA R BEFORE THE DATE OF SEARCH; OR (II) IN WHICH SEARCH WAS CONDUCTED; (C) 'UNDISCLOSED INCOME' MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLIONS, JEWELLERY OR OTHER VALUABLE ARTICL E OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTIONS FOUND I N THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NOR MAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR 4 (B)OTHERWISE NOT BEEN DISCLOSED TO THE 24 PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR 24 PRINCIPAL COMMISSIONER OR COMMIS SIONER BEFORE THE DATE OF SEARCH; OR (II) INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESEN TED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF A CCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. 3.3 THE LANGUAGE OF THE SECTION IS VERY CLEAR AND U NAMBIGUOUS THAT IN A CASE WHERE THE ASSESSEE ADMITS THE UNDISCLOSED INCOME UNDER SECTIO N 132(4), SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND PAYS T HE TAX TOGETHER WITH INTEREST & FURNISHES THE RETURN OF INCOME DECLARING SUCH UNDIS CLOSED INCOME ON OR BEFORE THE SPECIFIED DATE THEN PENALTY @ 10% OF THE UNDISCLOSE D INCOME WILL BE LEVIED AS PER SECTION 271AAB(L)(A). ALSO IF THE UNDISCLOSED INCOME IS NOT ADMITTED DURING THE SEARCH U/S 132 BUT THE ASSESSEE DECLARES SUCH INCOME IN THE RETURN OF INCOME & PAYS THE TAX TOGETHER WITH INTEREST ON OR BEFORE THE SPECIFIED DATE, THEN PENA LTY @ 20% OF THE UNDISCLOSED INCOME IS LEVIABLE AS PER SECTION 271AAB(L)(B). IN OTHER CASE S, NOT COVERED UNDER CLAUSE (A) AND CLAUSE (B) OF SUB-SECTION (1) OF SECTION 271AAB, PE NALTY @ 30% OF THE UNDISCLOSED INCOME IS ATTRACTED AS PER THE PROVISIONS OF THE SECTION 271A AB(L)(C) IF THE SEARCH UNDER SECTION 132 WAS CONDUCTED AFTER 1 ST JULY, 2012. IT IS ALSO PROVIDED UNDER SECTION 271A AB(2) THAT NO PENALTY UNDER SECTION 271(L)(C) IS LEVIABLE IN RESP ECT OF UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION 271AAB(1). THEREFORE, EXPLANATION-5 TO SECTION 271(L)(C) REFERRED BY THE AR IN HIS SUBMISSION IS NOT APPLICABLE IN THE PRESENT CAS E. AS PER THE EXPLANATION UNDER SECTION 271AAB, THE 'S PECIFIED DATE' APPLICABLE IN THIS CASE, WAS THE DUE DATE OF FURNISHING OF RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 AND FOR THE A. Y. 2013-14 IT WAS 31.10.2013 (AS EXT ENDED BY THE CBDT). THEREFORE, FOR APPLICATION OF LOW RATE OF 10% OR 20% FOR CALCULATI ON OF THE PENALTY, THE ASSESSEE WAS REQUIRED BESIDES FULFILLING OTHER CONDITIONS, TO PA Y TAXES TOGETHER WITH INTEREST BEFORE THIS DATE AND FURNISH THE RETURN DECLARING THE UNDISCLOS ED INCOME BEFORE 31.10.2013. IF EITHER THE TAXES TOGETHER WITH INTEREST WERE NOT PAID OR T HE RETURN DECLARING THE UNDISCLOSED INCOME WAS NOT FILED BEFORE 31.10.2013, THEN PENALT Y @ 30% AS PER 271AAB(L)(C) IS LEVIABLE. THE FACT THAT THE ASSESSEE FAILED TO PAY THE TAXES TOGETHER WITH INTEREST BEFORE THE DUE DATE I.E. 31.10.2013 IS CLEAR FROM THE LETTER DATED 31.03.2014 FILED BY THE ASSESSEE BEFORE THE AO WHICH IS REPRODUCED BELOW:- 'SUB:- INTIMATION OF RECTIFICATION OF RETURN OF INC OME RELATING TO ASSESSMENT YEAR- 2013-14 M/S. PALACE INFRATECH PVT. LTD., B-XIX-546, GOVT. C OLLEGE ROAD, FOUNTAIN CHOWK, CIVIL LINES, LUDHIANA- AAGCP3488G. THIS IS TO INFORM YOU THAT THE TAX PAYABLE ALONG WI TH INTEREST UP TO DATE HAS BEEN DEPOSITED FOR THE ASSTT. YEAR 2013-14. AS A FOLLOW UP THE REVISED RETURN INCORPORATING PAYMENT OF TAXES HAS ALSO BEEN FILED. COPY OF TAX D EPOSITED AND RETURN OF INCOME FILED IS ENCLOSED FOR YOUR RECORDS. KEEPING IN VIEW THE VOLU NTARY COMPLIANCE THE ASSESSEE BE NOT TREATED IN DEFAULT.' THE AR HAS ALSO FILED A COPY OF THE CHALLAN DATED 2 7 MARCH 2014 VIDE WHICH A SUM OF RS.45,09,160/- WAS DEPOSITED FOR A.Y. 2013-14 ALONG WITH THE COPY OF ACKNOWLEDGEMENT OF REVISED RETURN FILED ON 28.03.2014 SHOWING SELF ASS ESSMENT TAX PAYMENT OF RS.45,09,160/-. THE AR HAS ALSO FILED COPY OF ACKNOWLEDGEMENT OF TH E ORIGINAL RETURN FOR A.Y. 2013-14 FILED ON 29.09.2013 WHERE THE TAX PAYABLE IS SHOWN AT RS. 42,42,060/-. FROM THE ABOVE LETTER AND DOCUMENTS, IT IS CLEAR THAT THE TAXES PAYABLE ON TH E RETURNED INCOME AS DECLARED IN THE 'ORIGINAL RETURN OF INCOME' FILED ON 29.09.2013 WER E NOT PAID BEFORE FILING THE RETURN ON 29.09.2013. THE TAX WAS ADMITTEDLY PAID ON 27.03.20 14 (AFTER THE 'SPECIFIED DATE' WHICH IN THIS CASE WAS 31.10.2013). THEREFORE, THE CASE OF T HE ASSESSEE IS NEITHER COVERED UNDER THE PROVISIONS OF SECTION 271AAB (L)(A) NOR UNDER 271AA B (L)(B). THE CASE OF THE ASSESSEE IS ACCORDINGLY, COVERED UNDER THE PROVISIONS OF SECTIO N 271AAB (L)(C) AND THE PENALTY @ MINIMUM 30% OR MAXIMUM 90% IS ATTRACTED. IN VIEW OF THE ABOVE, THE SUBMISSIONS OF THE AR ARE NOT FOUND ACCEPTABLE AND THE CASE LAWS REFERRED /RELIED UPON BY THE AR RELATES TO PENALTY UNDER SECTION 271AAA WHICH, ALREADY MENTION ED, IS NOT APPLICABLE IN THIS CASE. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY IMPOSED BY THE AO IN THIS CASE IS FOUND SUSTAINABLE AS PER LAW AND HE NCE CONFIRMED. 5 7. NOW THE ASSESSEE IS IN APPEAL. 8. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED VIDE ORDER DT. 20/12/2018 IN ITA NO. 697/CHD/2017 FOR THE A.Y. 2013 -14 IN THE CASE OF M/S PALACE JEWELLERS PVT. LTD. LUDHIANA VS. THE DCIT, CC-III, LU DHIANA DECIDED BY THIS BENCH OF THE TRIBUNAL, COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD. 9. IN HIS RIVAL SUBMISSIONS THE LD. CIT(DR) STRONGLY S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT A SIMILAR ISSUE HAVING IDENTICAL FACTS WAS A SUBJECT MATTER OF THE APPEAL IN ITA NO. 697/CHD /2017 IN CASE OF M/S PALACE JEWLLERS PVT. LTD. FOR THE A.Y. 2013-14 WHEREIN VIDE ORDER DT. 20/12/2018 THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 5 TO 10 WHICH READ AS UNDER : 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT NO UNDISCLOSED INCOME OF THE ASSESSEE WAS FOUND DURING THE SEARCH ACTION. THE AF ORESAID SURRENDER OF RS. 4 CRORES OF BUSINESS INCOME WAS TO BUY PEACE ONLY AND TO COVER THE DISCREPANCY, IF ANY, FOUND IN THE ACCOUNT OF THE ASSESSEE. IT HAS BEEN FURTHER PLEADE D THAT THE SURRENDERED INCOME WAS DULY ACCOUNTED FOR IN THE ORIGINAL RETURN OF INCOME FILED ON 30.9.2013 AND FURTHER THAT THE ASSESSING OFFICER WAS REQUESTED TO ADJUST THE TAX L IABILITY RELATING TO SUCH SURRENDER OUT OF THE SEIZED ASSETS. HOWEVER, THE ASSESSEE WAS NOT PO SSESSED OF SUFFICIENT FUNDS TO PAY THE TAX ON THE SURRENDERED INCOME. IT HAS BEEN FURTHER PLEADED THAT THE ASSESSEE, HOWEVER, HAS FIELD REVISED RETURN OF INCOME ON 12.2.2014 I.E . WITHIN THE TIME SPECIFIED U/S 139(5) READ WITH SECTION 139(1) OF THE INCOME TAX ACT AND PAID THE DUE TAXES. IT HAS, THEREFORE, BEEN PLEADED THAT IT IS NOT A CASE OF LEVY OF ANY PENALT Y U/S 271AAB OF THE ACT. FURTHER, AT THE MOST THE PENALTY CAN BE LEVIED U/S 271AAB(1) OF THE ACT @ 10% OF THE UNDISCLOSED INCOME AND NOT U/S 271AAB (3) OF THE ACT @30% 6. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO GONE THROUGH THE RECORDS. ADMITTEDLY, THIS IS NOT A CASE WHERE THE ASSESSEE W AS FOUND TO BE POSSESSED OF CASH AMOUNT OF WHICH THE ASSESSEE COULD NOT DISCLOSE THE SOURCE. IT IS A CASE WHERE THE ASSESSEE DURING THE SEARCH ACTION HAD SURRENDERED A N AMOUNT OF RS. 4 CORES ON ACCOUNT OF DISCREPANCIES IN THE ACCOUNTS / UNACCOUNTED SALE S ETC. THE ASSESSEE EXPLAINED THAT THE AFORESAID SURRENDER OF INCOME WAS ON ACCOUNT OF UNR ECORDED BUSINESS INCOME. THE ASSESSEE HAS ALSO RETURNED THE SAID AMOUNT AS BUSIN ESS INCOME WHICH HAS BEEN ADMITTED BY THE ASSESSING OFFICER AS SUCH EVEN IN THE ASSESS MENT ORDER. IN RESPECT OF UNDISCLOSED INCOME, THE ASSESSEE IS NOT SUPPOSED TO PROVE THE S OURCE OF EACH AND EVERY PENNY OR ONE BY ONE UNACCOUNTED ENTRY, RATHER, WHAT IS REQUIRED IS THAT THE ASSESSEE MUST SPECIFY THE MANNER OF EARNING OF SUCH INCOME AND HAS TO SUBSTAN TIATE THE SAID MANNER. FROM THE FACTS OF THIS CASE, IT IS APPARENT THAT THE ASSESSE E HAD DISCLOSED / SURRENDERED THE AFORESAID AMOUNT OF RS. 4 CRORES ON ACCOUNT OF UNDI SCLOSED BUSINESS INCOME AND HAS ALSO 6 EXPLAINED THAT THE SAME WAS ON ACCOUNT OF CERTAIN D ISCREPANCY / UNRECORDED BUSINESS TRANSACTIONS. FOR THE SAKE OF CONVENIENCE, THE PROV ISIONS OF SECTION 271AAB ARE REPRODUCED AS UNDER:- 271AAB. (1) THE ASSESSING OFFICER MAY, NOTWITHSTAN DING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHER E SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JULY, 2012 [BUT BEFO RE THE DATE ON WHICH THE TAXATION LAWS (SECOND AMENDMENT) BILL, 2016 RECEIVES THE ASSENT O F THE PRESIDENT], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYA BLE BY HIM, (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT OF T HE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UN DER 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 UNDISCLO SED INCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIE D PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT O F THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; AND (II) ON OR BEFORE THE SPECIFIED DATE (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FU RNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME; (C) A SUM [COMPUTED AT THE RATE OF SIXTY PER CENT] OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY TH E PROVISIONS OF CLAUSES (A) AND (B). (2) NO PENALTY UNDER THE PROVISIONS OF [SECTION 270 A OR] CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN R ESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1) [OR SUBSECTION (1A)] . (3) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, A S FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'SPECIFIED DATE' MEANS THE DUE DATE OF FURNISHI NG OF RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139 OR THE DATE ON WHICH THE PERIOD SPECIFIED IN THE NOTICE ISSUED UNDER SECTION 153A FOR FURNISHING OF RETURN OF INCO ME EXPIRES, AS THE CASE MAY BE; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YE AR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 FOR SUC H YEAR HAS NOT EXPIRED BEFORE THE DATE 7 OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RE TURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE DATE OF SEARCH; OR (II) IN WHICH SEARCH WAS CONDUCTED; (C) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE PRINCIPAL C HIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIO NER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOK S OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCTED. 8. THE PROVISIONS OF SECTION 271AAB (1) ARE LITTLE BIT AKIN TO PROVISIONS OF SECTION 271AAA OF THE ACT. HOWEVER, THE DIFFERENCE IS THAT IF THE ASS ESSEE SURRENDERED THE UNDISCLOSED INCOME IN A STATEMENT U/S 132(4) OF THE ACT AND SPE CIFY AND SUBSTANTIATE THE MANNER IN WHICH THE INCOME HAS BEEN DERIVED AND PAYS THE DUE TAXES TOGETHER WITH INTEREST IN RESPECT TO SUCH UNDISCLOSED INCOME BEFORE THE SPECI FIED DATE, THEN, AS PER THE PROVISIONS OF SECTION 271AAB OF THE ACT, THE ASSESSING OFFICER MAY LEVY PENALTY @ 10% OF THE SUCH UNDISCLOSED INCOME, WHEREAS, AS PER THE PROVISIONS OF SECTION 271AAA OF THE ACT, IN THE EVENT OF ASSESSEE COMPLYING THE AFORESAID CONDITION , NO PENALTY IS LEVIABLE. SINCE THE SEARCH IN THE CASE WAS CONDUCTED ON 31.10.2012, HEN CE, THE PROVISIONS OF SECTION 271AAB ARE ATTRACTED IN THIS CASE. 9. SO FAR AS THE NON-DEPOSIT OF TAX BY THE DUE DATE IS CONCERNED, THE ASSESSEE MADE A STATEMENT TO THE ASSESSING OFFICER TO ADJUST THE DU E TAXES AGAINST PD. ACCOUNT / SEIZED ASSETS. HOWEVER, THE ASSESSING OFFICER REJECTED THE ABOVE CONTENTION STATING THAT THE SEIZED ASSETS CAN BE ADJUSTED ONLY AGAINST THE EXIS TING LIABILITY. AS PER THE PROVISIONS OF SECTION 271AAB OF THE ACT, ON SURRENDERING OF THE A FORESAID AMOUNT OF RS. 4 CRORES, THERE WAS A LIABILITY ON THE ASSESSEE TO DEPOSIT THE DUE TAXES BEFORE THE SPECIFIED DATE TO FALL WITHIN IN THE PROVISIONS OF SECTION 271AAB(1) OF TH E ACT WHICH PROVIDES FOR MINIMUM LEVY OF PENALTY @ 10% OF THE UNDECIDED / SURRENDERED INCOME . HENCE, IN THIS CASE THERE WAS AN EXISTING TAX LIABILITY ON THE ASSESSEE TO PAY THE T AXES AND, THEREFORE, THE ASSESSING OFFICER SHOULD HAVE ADJUSTED THE TAX FROM THE SEIZED ASSETS , HENCE, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT COMPLIED THE AFORESAID REQUIREMENT OF PROVISIONS OF SECTION 271AAAB OF THE ACT . EVEN OTHERWISE, THE ASSESSEE HAS ALSO EXP LAINED THAT IT WAS NOT POSSESSED OF SUFFICIENT FUNDS AND THE MOMENT IT GOT POSSESSED OF FUNDS, IT FILED THE REVISED RETURN ON 12.2.2014 AND PAID DUE TAXES. SO FAR AS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AFORESAID SURRENDER CAN NOT / DOES NOT FALL WITHIN THE DEFINITION OF TH E UNDISCLOSED INCOME, AS DEFINED UNDER THE PROVISIONS OF SECTION 271AAB IS CONCERNED, WE D O NOT AGREE WITH THE ABOVE SUBMISSIONS. THE ASSESSEE HAS DULY MADE A STATEMENT THAT THE AFORESAID DISCLOSURE WAS ON ACCOUNT OF UNRECORDED TRANSACTIONS / DISCREPANCIES IN THE ACCOUNTS AND ON ACCOUNT OF CERTAIN LOOSE PAPERS FOUND DURING THE SEARCH ACTION . 10. IN VIEW OF THIS, THE AFORESAID DISCLOSURE, IN O UR VIEW, FALLS WITHIN THE SCOPE OF UNDISCLOSED INCOME AS PROVIDED UNDER EXPLANATION (C) TO SECTION 271AAB OF THE ACT. IN VIEW OF THIS, WE HOLD THAT THE CASE OF THE ASSESSEE DOES NOT FALL UN DER THE PROVISIONS OF SECTION 271AAB(3)OF 8 THE ACT BUT UNDER THE PROVISIONS OF SECTION 271AAB( 1) OF THE ACT AND MINIMUM PENALTY@ 10% OF THE UNDISCLOSED INCOME IS LEVIABLE. WE ORDER ACCORDINGLY. 11. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DT. 20/12/2018 WE MODIFY THE ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO LEVY THE MINIMUM PENALTY @ 10% ON THE UNDISCLOSED INCOME. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 06/12/2019) SD/- SD/- #$ % .., (SANJAY GARG ) ( N.K. SAI NI) & '(/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 06/12/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR