SHRI DIPAK KALANI, Indore V. THE JCIT,OSD, (CENTRAL)-1, Indore

ITA 700/Ind/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7779 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-08-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 10-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNEET KUMAR
• Assessee Lawyers: S N AGRAWAL
• Keywords: Income from undisclosed sources; Search and seizure; Loose papers; Opportunity of being heard; Principle of natural justice; Question of law; Set aside
• Section: 271(1)(c); 153A; 250; 201; 292BB; 274; 139(1); 73; 13; 22; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.700/IND/2019 ASSESSMENT YEAR:2012-13 SHRI DIPAK KUMAR KAL ANI 41-42, SAMPAT AVENUE, NEAR MAYANK BLUE WATER PARK, BICHOLI MARDANA INDORE / VS. JCIT (OSD) - CENTRAL-1 INDORE (APPELLANT) (REVENUE ) P.A. NO. ADUPK6102A ITA NO.701/IND/2019 ASSESSMENT YEAR:2012-13 SHRI PANKAJ KALANI 41-42, SAMPAT AVENUE, NEAR MAYANK BLUE WATER PARK, BICHOLI MARDANA INDORE / VS. J CIT ( OSD ) - CENTRAL-1 INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. ADUPK610 3 A APPELLANT BY SHRI S.N. AGRAWAL , C A REVENUE BY SHRI PUNEET KUMAR, SR. DR DATE OF HEARING: 24.08.2020 DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 2 DATE OF PRONOUNCEMENT: 27.08.2020 / O R D E R PER KUL BHARAT, J.M: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST ORDER OF THE CIT(A)-3, INDORE DATED 23.04.2019 PERTAINING TO THE ASSESSMENT YEAR 2012-13. SINCE THE ISSUES ARE COMMO N BOTH APPEALS ARE TAKEN UP TOGETHER AND ARE BEING DISPOSE D BY WAY OF CONSOLIDATED ORDER. 2. FIRST WE TAKE UP THE ASSESSEES APPEAL IN ITANO. 700/IND/2019. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN MAINTAINING THE LEVY O F PENALTY UNDER SECTION 271AAA OF THE ACT WITHOUT PROPERLY AP PRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE H IM EVEN WHEN THE ADDITIONAL INCOME WAS DECLARED IN THE STAT EMENT AS RECORDED UNDER SECTION 132(4) OF THE ACT AND TAX DU E ON THE ADDITIONAL INCOME WAS ALSO PAID BY THE APPELLANT. RS.6,25,000/- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN MAINTAINING THE LEVY O F PENALTY UNDER SECTION 271AAA OF THE ACT EVEN WHEN THE SHOW CAUSE NOTICE AS ISSUED FOR LEVY OF PENALTY WAS DEFECTIVE WHEREIN NO SPECIFIC CHARGE WAS FRAMED AGAINST THE APPELLANT AN D THEREFORE PENALTY IMPOSED ON THE BASIS OF SUCH DEFECTIVE NOTI CE IS NOT MAINTAINABLE IN LAW. 3. THE APPELLANT RESERVES HIS RIGHT TO ADD, ALTER A ND MODIFY THE GROUNDS OF APPEAL AS TAKEN BY HIM. DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 3 3. THE FACTS GIVING RIGHT TO THE PRESENT APPEAL ARE THAT SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT 196 1(HEREINAFTER REFERRED AS THE ACT) WAS CARRIED OUT ON THE BUSIN ESS AS WELL AS RESIDENTIAL PREMISES OF THE KALANI GROUP SUB-GROUP OF SIGNET INCLUDING THE ASSESSEE ALONG WITH OTHER CONCERNS/BU SINESS ASSOCIATE ON 03.11.2011. THE ASSESSEE HAD FILED RET URN OF INCOME OF THE ASSESSMENT YEAR 2012-13 U/S 139(1) OF THE ACT O N 30.09.2012 DECLARING TOTAL INCOME OF RS.69,56,681/- INCLUDING THE VOLUNTARILY DISCLOSED INCOME U/S 132(4) AMOUNTING TO RS.62,50,0 00/- ASSESSMENT ORDER WAS PASSED ON 12.03.2014. A NOTICE U/S 274 R.W.S 271AAA OF THE ACT WAS ISSUED ON 12.03.2014 IN ITIATING PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. IN RESPONSE THE RETO, THE ASSESSEE STATED THAT LD. CIT(A) HAS ALREADY DELETED THE ADDITION ON WHICH PENALTY SOUGHT TO BE IMPOSED. HOWEVER, THE AS SESSING OFFICER PROCEEDED TO IMPOSE PENALTY OF RS.6,25,000/-. 3. AGGRIEVED AGAINST THIS ORDER ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALSO SUSTAINED THE PENALTY. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUN AL. THE ASSESSEE HAS RAISED GROUND NO.2 WHICH IS AGAINST THE LEGALIT Y OF THE NOTICE READS AS UNDER: DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 4 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN MAINTAINING THE LEV Y OF PENALTY UNDER SECTION 271AAA OF THE ACT EVEN WHEN THE SHOW CAUSE NOTICE AS ISSUED FOR LEVY OF PENALTY WAS DEFECTIVE WHEREIN NO SPECIFIC CHARGE WAS FRAMED AGAINST THE APPELLANT AN D THEREFORE PENALTY IMPOSED ON THE BASIS OF SUCH DEFECTIVE NOTI CE IS NOT MAINTAINABLE IN LAW. 5. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS AS MADE IN THE WRITTEN SYNOPSIS. LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER : A.1] THE PRESENT APPEAL IS FILED BY THE ASSESSEE AG AINST THE ORDER OF THE LD CIT (A)-3, BHOPAL DATED 23-04-2019. A.2] THE SEARCH AND SEIZURE OPERATIONS UNDER SECTIO N 132 OF THE INCOME- TAX ACT,1961 WERE CARRIED OUT AT THE BUSINESS AS WE LL AS RESIDENTIAL PREMISES OF THE KALANI GROUP OF INDORE INCLUDING TH E APPELLANT AND OTHER CONCERNS/ BUSINESS ASSOCIATES ON 03-11-2011. A.3] THE APPELLANT ACCEPTED ADDITIONAL INCOME TO TH E TUNE OF RS. 5,00,00,000/- DURING THE COURSE OF SEARCH IN HIS ST ATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961. HOWEVER , IT LATER ON CAME TO THE NOTICE OF THE APPELLANT ON PERUSAL OF THE SEIZE D MATERIAL THAT MOST OF THE ASSETS WERE PROPERLY ACCOUNTED FOR AND HENCEFOR TH, THE APPELLANT ALONG WITH HIS BROTHER, SHRI PANKAJ KALANI DULY OFFERED A DDITIONAL INCOME TO THE TUNE OF RS. 1,25,00,000/- FOR TAX IN THEIR INCOME-T AX RETURNS FOR THE ASSESSMENT YEAR 2012-13 AND PAID LEGITIMATE AMOUNT OF TAX DUE ON SUCH ADDITIONAL INCOME. A.4] THE INCOME-TAX RETURN OF THE APPELLANT FOR THE ASSESSMENT YEAR 2012- 13 WAS THEREAFTER FILED ON 30-09-2012 WHEREIN TOTAL INCOME WAS DECLARED AT RS. 69,56,681/- INCLUDING ADDITIONAL INCOME OF R S. 62,50,000/- AS ACCEPTED DURING THE COURSE OF SEARCH. A.5] THE ASSESSING OFFICER HOWEVER INITIATED PENALT Y PROCEEDINGS UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 IN RESPE CT OF SUCH ADDITIONAL DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 5 INCOME OF RS. 62,50,000/- AND SUBSEQUENTLY LEVIED P ENALTY OF RS. 6,25,000/- BEING 10% OF SUCH INCOME OF RS. 62,50,00 0/- STATING THAT THE APPELLANT COULD NOT SUBSTANTIATE THE MANNER IN WHIC H THE UNDISCLOSED INCOME WAS DERIVED. A.6] THE APPELLANT THEREAFTER PREFERRED AN APPEAL B EFORE THE LD CIT (A)-3, BHOPAL AGAINST THE PENALTY ORDER AS PASSED UNDER SE CTION 271AAA OF THE INCOME-TAX ACT, 1961 AND TOOK THE FOLLOWING GROUNDS OF APPEAL: 1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD ASSESSING OFFICER ERRED IN LEVYING PENALTY U/S 271A AA OF THE ACT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUB MISSION MADE BEFORE HIM. 2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD ASSESSING OFFICER ERRED IN LEVYING PENALTY U/S 271A AA OF THE ACT EVEN WHEN THE ADDITIONAL INCOME WAS DECLARED IN THE STAT EMENT AS RECORDED U/S 132(4) OF THE ACT AND TAX DUE ON THE ADDITIONAL INCOME WAS ALSO PAID BY THE APPELLANT WITH THE RETURN OF TOTAL INCOME. 3] THE APPELLANT RESERVES HIS RIGHT TO ADD, ALTER A ND MODIFY THE GROUND OF APPEAL TAKEN BEFORE THE FIRST APPELLATE AUTHORITY. A.7] HOWEVER, THE LD CIT (A)-3, BHOPAL VIDE ORDER D ATED 23-04-2019 CONFIRMED THE PENALTY OF RS. 6,25,000/- AS LEVIED B Y THE ASSESSING OFFICER UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 BY OBSERVING THAT THE IMPUGNED AMOUNT WOULD NOT HAVE BEEN OFFERED FOR TAX ATION HAD THERE BEEN NO SEARCH AND SEIZURE OPERATION. THE LD CIT (A) CON FIRMED THE LEVY OF PENALTY UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 WITHOUT DEALING WITH EACH GROUND OF APPEAL RAISED BEFORE HI M WHICH IS NEITHER LEGAL NOR PROPER. A.8] THE APPELLANT HAS THEREFORE PREFERRED AN APPEA L BEFORE THE HONBLE BENCH AGAINST THE ORDER OF THE LD CIT (A)-3, BHOPAL AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT (A) ERRED IN MAINTAINING THE LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM EVEN WHEN THE ADDITIONA L INCOME WAS DECLARED IN THE STATEMENT AS RECORDED UNDER SECTION 132(4) OF THE ACT AND TAX DUE ON THE ADDITIONAL INCOME WAS ALSO PAID BY T HE APPELLANT. 2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT (A) ERRED IN MAINTAINING THE LEVY OF PENALTY UNDER SECTION 271AAA DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 6 OF THE ACT EVEN WHEN THE SHOW CAUSE NOTICE AS ISSUE D FOR LEVY OF PENALTY WAS DEFECTIVE WHEREIN NO SPECIFIC CHARGE WAS FRAMED AGAINST THE APPELLANT AND THEREFORE PENALTY IMPOSED ON THE BASI S OF SUCH DEFECTIVE NOTICE IS NOT MAINTAINABLE IN LAW. 3] THE APPELLANT RESERVES HIS RIGHT TO ADD, ALTER A ND MODIFY THE GROUNDS OF APPEAL AS TAKEN BY HIM. 1] GROUND NO. 2 CHALLENGING THE LEVY OF PENALTY O F RS. 6,25,000/- UNDER SECTION 271AAA OF THE INCOME-TAX A CT, 1961 SINCE THE SHOW CAUSE NOTICE ISSUED PRIOR TO THE LEV Y OF PENALTY WAS DEFECTIVE WHEREIN NO SPECIFIC CHARGE WA S FRAMED 1.1] THE APPELLANT IN THIS GROUND OF APPEAL HAS CHA LLENGED THE LEVY OF PENALTY OF RS. 6,25,000/- UNDER SECTION 271AAA OF T HE INCOME-TAX ACT, 1961 SINCE THE SHOW CAUSE NOTICE ISSUED PRIOR TO TH E LEVY OF PENALTY WAS DEFECTIVE WHEREIN NO SPECIFIC CHARGE WAS FRAMED AGA INST THE APPELLANT. 1.2.1] THE PROVISION OF SUB-SECTION (4) OF SECTION 271AAA OF THE INCOME-TAX ACT, 1961 PROVIDES THAT PROVISIONS OF SECTION 274 A ND 275 SHALL APPLY IN RELATION TO PENALTY REFERRED TO IN THIS SECTION WHI CH IMPLIES THAT THE ASSESSING OFFICER IS BOUND TO ISSUE A NOTICE UNDER SECTION 274 OF THE INCOME-TAX ACT, 1961 AND PROVIDE A REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING ANY ORDER IMPOSING P ENALTY. 1.2.2] THE OPPORTUNITY OF BEING HEARD THAT OUGHT TO BE GIVEN TO THE ASSESSEE SHOULD BE A MEANINGFUL ONE AND NOT FARCE. 1.3.1] THE PROVISIONS OF SECTION 271AAA OF THE INCO ME-TAX ACT, 1961 PROVIDE THAT PENALTY MAY BE LEVIED AT THE RATE OF 1 0% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. THE SHOW CAU SE NOTICE AS ISSUED PRIOR TO THE LEVY OF PENALTY MUST SPECIFICALLY POIN T OUT THAT THE ASSESSEE HAS UNDISCLOSED INCOME ON WHICH PENALTY AT THE RATE OF 10% OF THE UNDISCLOSED INCOME MAY BE LEVIED UNDER SECTION 271A AA OF THE INCOME- TAX ACT, 1961. FURTHER, THE SHOW CAUSE NOTICE SHALL ALSO POINT OUT AS TO WHY THE ASSESSEE IS BEING DENIED IMMUNITY AS PER TH E PROVISIONS OF SUB- SECTION (2) OF SECTION 271AAA OF THE INCOME-TAX ACT , 1961. 1.3.2] COPY OF SHOW CAUSE NOTICES DATED 12-03-2014 AND 20-02-2018 AS ISSUED UNDER SECTION 274 READ WITH SECTION 271AAA O F THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2012-13 ARE ALSO REPRO DUCED HEREUNDER FOR YOUR READY REFERENCE: DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 7 DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 8 DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 9 1.3.3] ON PERUSAL OF THESE SHOW CAUSE NOTICES, IT I S QUITE EVIDENT THAT THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 BUT THE APPELLAN T WAS SHOW CAUSED ON THE CHARGE OF CONCEALMENT OF PARTICULARS O F INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WHICH F ALLS UNDER THE SCOPE AND PURVIEW OF SECTION 271(1)(C) OF THE INCOM E-TAX ACT, 1961 AND NOT UNDER THE PURVIEW OF SECTION 271AAA OF THE I NCOME-TAX ACT, 1961. 1.3.4] THE ASSESSING OFFICER IN THE SHOW CAUSE NOTI CE DID NOT SPECIFY THE DEFAULT AND CHARGE AGAINST THE APPELLANT WHICH NE CESSITATED LEVY OF PENALTY UNDER SECTION 271AAA OF THE INCOME-TAX A CT, 1961. THE SHOW CAUSE NOTICE AS ISSUED PRIOR TO THE LEVY OF PEN ALTY UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 WAS VAGU E AND ISSUED IN A CASUAL FASHION WHICH MAKES THE ALLEGED SHOW CAU SE NOTICE DEFECTIVE AND INVALID AND CONSEQUENTLY, ORDER IMPOSING PENALTY OF RS. 6,25,000/- UNDER SECTION 271AAA OF THE INCOME-TA X ACT, 1961 DESERVES TO BE QUASHED. 1.4.1] THE AFORESAID ISSUE IS SQUARELY COVERED IN FAV OUR OF THE APPELLANT BY THE DECISION OF THE HONBLE ITAT CHAND IGARH BENCH IN THE CASE OF GILLCO DEVELOPERS AND BUILDERS (P.) LTD. V . DCIT, CENTRAL CIRCLE-II, CHANDIGARH AS REPORTED IN [2017] 85 TAXMA NN.COM 339 (CHANDIGARH - TRIB.) WHEREIN IT HAS BEEN CATEGORICA LLY HELD THAT: 20. A PERUSAL OF THE ABOVE NOTICE SHOWS THAT THOUG H THE ASSESSING OFFICER HAS INTENDED TO INITIATE PENALTY PROCEEDINGS U/S 271AAA(1) OF THE ACT, HOWEVER, THE WORDING WRITTEN IN THE BODY OF THE LETTER DOES NOT CONFORM TO THE CHARGES OF THE PROVISIONS OF SEC TION 271AAA OF THE ACT, RATHER, THE ASSESSEE HAS BEEN SHOW CAUSED ON T HE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, WHI CH FALLS UNDER THE SCOPE AND PURVIEW OF SECTION 271(1)(C) OF THE ACT. THE ASSESSEE, THEREFORE, IS NOT SHOW CAUSED FOR LEVY OF PENALTY UN DER THE PROVISIONS OF SECTION 271AAA, RATHER FOR DOING AN ACT INVITING PENALTY U/S 271(1)(C) OF THE ACT, WHICH OTHERWISE IS NEITHER AR ISING OUT OF THE FACTS OF THE CASE NOR ESTABLISHED AGAINST THE ASSESSEE. T HUS, THE PENALTY PROCEEDINGS CONDUCTED AGAINST THE ASSESSEE U/S 271AAA OF THE ACT WERE INVALID AT ITS VERY INCEPTION BECAUSE OF THE DE FECTIVE AND INVALID SHOW CAUSE NOTICE, RENDERING THE ENTIRE PENALTY PROC EEDINGS VOID AB INITIO. THE PENALTY LEVIED AGAINST THE ASSESSEE IS T HUS NOT SUSTAINABLE ON THIS SCORE ALSO. [EMPHASIS SUPPLIED] DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 10 1.4.2] THE AFORESAID ISSUE IS ALSO COVERED IN FAVOUR OF THE APPELLANT BY THE RECENT JUDGMENTS OF THE HONBLE ITAT, INDORE BENCH WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT THE SHOW CAUSE NOTI CE WHICH IS NOT IN ACCORDANCE WITH THE MANDATES OF LAW AND WHEREIN THE MATTER WRITTEN IN THE BODY OF THE NOTICE ISSUED UNDER SECTIO N 274 OF THE INCOME-TAX ACT, 1961 DOES NOT REFER TO THE CHARGES O F PROVISION OF SECTION 271AAB OF THE INCOME-TAX ACT, 1961, MAKES T HE ALLEGED NOTICE DEFECTIVE AND INVALID AND THUS, PENALTY ORDER P ASSED CONSEQUENTIALLY DESERVES TO BE SET-ASIDE. THE DECISI ON RENDERED IN THE BELOW CITED JUDGMENTS IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE BOTH THE PENALTIES I.E. PENALTY UNDER SECTION 271AAA AND SECTION 271AAB OF THE INCOME-TAX ACT, 19 61 ARE LEVIED AS A SPECIFIED PERCENTAGE OF THE UNDISCLOSED INCOME . RELEVANT EXTRACTS FROM FEW OF THESE JUDICIAL PRECEDE NTS WHICH HAVE ENUNCIATED THE ABOVE-MENTIONED PRINCIPLES ARE REPRODUC ED HEREUNDER FOR YOUR READY REFERENCE: 1.4.3] THE HONBLE ITAT INDORE BENCH IN THE CASE OF DR. RAJESH JAIN VS. DCIT (CENTRAL)-1, INDORE [ITA NO. 905/IND/2018] VIDE ORDER DATED 19-02-2020 HAS CATEGORICALLY HELD THAT: 11. FROM GOING THROUGH THE ABOVE NOTICE ISSUED TO T HE ASSESSEE, WE FIND THAT THERE IS NO MENTION ABOUT VARIOUS CONDITIO NS PROVIDED U/S 271 AAB OF THE ACT. IN THE NOTICE DATED 22.03.2016 T HE LD. A.O HAS VERY CASUALLY USED THE PROFORMA USED FOR ISSUING NOTI CE BEFORE LEVYING PENALTY U/S 271(1)(C) OF THE ACT FOR THE CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT DOES NOT TALK ANYTHING ABOUT VARIOUS CLAUSES OF SECTION 271AAB OF THE ACT FOR LEVYING PENALTY @10%/20%/30%. CERTAINLY SUCH NOTICE HAS A FATAL ERROR AND TECHNICALLY IS NOT A CORRECT NOTICE IN THE EYES OF LAW BECAUSE IT INTENDS TO PENALIZE AN ASSESSEE WITHOUT SPELLING ABOUT THE SPECIFIC CHARGE AGAINST THE ASSESSEE. 12. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F PCIT V/S KULWANT SINGH BHATIA (SUPRA) DEALT THE ISSUE OF DEFEC TIVE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE ACT AND HON'BL E COURT AFTER RELYING JUDGMENT OF HON'BLE SUPREME COURT IN THE CAS E OF CIT V/S MANJUNATHA COTTON GINNING FACTORY AND CIT V/S SSAS EMERALD MEADOWS (SUPRA) HELD THAT SUCH SHOW CAUSE NOTICES W OULD NOT SATISFY THE REQUIREMENT OF LAW AS NOTICE WAS NOT SP ECIFIC. MERELY DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 11 ISSUING NOTICE IN GENERAL PROFORMA WILL NEGATE THE VERY PURPOSE OF NATURAL JUSTICE. HON'BLE APEX COURT IN THE CASE OF DILIP N SHRAF 161 TAXMANN 218 HELD THAT THE QUASI CRIMINAL PROCEEDING S U/S 271(1)(C) OF THE ACT OUGHT TO COMPLY WITH THE PRINCIPLES OF N ATURAL JUSTICE. 16. WE, THEREFORE RESPECTFULLY FOLLOWING THE JUDGMEN T/DECISION REFERRED ABOVE AND IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE WHEREIN THE MATTER WRITTEN IN THE BODY OF THE NOTIC E ISSUED U/S 274 OF THE ACT DOES NOT REFER TO THE CHARGES OF PROVISIO N OF SECTION 271AAB OF THE ACT MAKES THE ALLEGED NOTICE DEFECTIVE AND INVALID AND THUS DESERVES TO BE QUASHED. SINCE THE PENALTY PROCEEDINGS ITSELF HAS BEEN QUASHED THE IMPUGNED PENALTY OF RS. 2 ,04,900/- STANDS DELETED. WE ACCORDINGLY ALLOW THE LEGAL GROU ND RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF NOTICE ISSUED U /S 274 R.W.S. 271AAB OF THE ACT AND QUASH THE PENALTY PROCEEDING A S VOID AB INTIO. IN THE RESULT APPEALS OF THE ASSESSEE(S) FOR ASSESSMENT YEARS 2014-15 IS ALLOWED ON LEGAL GROUND. [EMPHASIS SUPPLIED] 1.4.4] THE HONBLE ITAT CHENNAI BENCH A IN THE CA SE OF DCIT VS. SHRI R. ELANGOVAN [ITA NO. 1199/CHNY/2017] HAS CATEG ORICALLY HELD THAT: 5..IT IS CLEAR FROM THE SUB SECTION (3) OF SECTI ON 271 AAB THAT SECTIONS 274 AND SECTION 275 OF THE ACT SHALL, S O FAR AS MAY BE, APPLY. SUB SECTION (1) OF SECTION 274 OF THE ACT MAND ATES THAT ORDER IMPOSING PENALTY HAS TO BE IMPOSED ONLY AFTER HEARIN G THE ASSESSEE OR GIVING A ASSESSEE OPPORTUNITY OF HEARING. OPPORT UNITY THAT IS TO BE GIVEN TO THE ASSESSEE SHOULD BE A MEANINGFUL ONE AND NOT A FARCE. NOTICE ISSUED TO THE ASSESSEE REPRODUCED (SUPRA), DOES NOT SHOW WHETHER PENALTY PROCEEDINGS WERE INITIATED FOR CONC EALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR FOR HAVING UNDISCLOSED INCOME WITHIN THE MEANING OF SECT ION 271AAB OF THE ACT. NOTICE IN OUR OPINION WAS VAGUE. HONBLE K ARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) REL YING IN ITS OWN JUDGMENT IN THE CASE OF MANJUNATHA COTTON AND GIN NING FACTORY (SUPRA) HAD HELD AS UNDER:- 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWI NG SUBSTANTIAL QUESTIONS OF LAW: (1) WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLI CITLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATED FOR FURNISHI NG OF INACCURATE PARTICULARS OR THAT FOR CONCEALMENT OF INCOME MAKES THE PENALTY DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 12 ORDER LIABLE FOR CANCELLATION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THAT THE ASSESSEE HAD CONCEALED INCOM E IN THE FACTS AND CIRCUMSTANCES OF THE CASE? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PE NALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) IS BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 271(1B) WITH RETROSPECTIVE EFFE CT AND BY VIRTUE OF THE AMENDMENT, THE ASSESSING OFFICER HAS INITIAT ED THE PENALTY BY PROPERLY RECORDING THE SATISFACTION FOR THE SAME? (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE APPEALS AGAINS T THE REVENUE ON THE BASIS OF NOTICE ISSUED UNDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE ASS ESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE AS SESSEE HAS CONCEALED PARTICULARS OF INCOME? 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE A SSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SEC TION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIAT ED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF CIT VS. MANJUNATHA COT TON AND GINNING FACTORY (2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGM ENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. IN THE EARLIER CASE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) THEIR LORDSHIP HAD OBSERVED AS UNDER:- NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPECIFI CALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) , I.E., WHETH ER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORREC T PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE ALL THE GROUNDS ME NTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQU IREMENT OF LAW; THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE ARE OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD B E IMPOSED ON THE ASSESSEE;) TAKING UP OF PENALTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW; PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEE DINGS: THOUGH DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 13 PROCEEDINGS FOR IMPOSITION OF PENALTY EMANATE FROM PROCEEDINGS OF ASSESSMENT, THEY ARE INDEPENDENT AND A SEPARATE ASPEC T OF THE PROCEEDINGS; THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS I N SO FAR AS CONCEALMENT OF INCOME AND FURNISHING OF INCORRECT PARTICULARS WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PRO CEEDINGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE PROCEEDINGS ON THE MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESS MENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED INVALID IN THE PENALTY PROCEEDINGS. VIEW TAKEN BY THE HONBLE KARNATAKA HIGH COURT IN T HE ABOVE JUDGMENT WAS INDIRECTLY AFFIRMED BY THE HONBLE APEX COURT, WHEN IT DISMISSED AN SLP FILED BY THE REVENUE AGAINST THE JUDG MENT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA), SPECIFICALLY O BSERVING THAT THERE WAS NO MERITS IN THE PETITION FILED BY THE REV ENUE. CONSIDERING THE ABOVE CITED JUDGMENTS, WE HOLD THAT THE NOTICE ISS UED U/S.274 R.W.S. 271AAB OF THE ACT, REPRODUCED BY US AT PARA 5 ABOVE WAS NOT VALID. EX-CONSEQUENTI, THE PENALTY ORDER IS SET ASID E. [EMPHASIS SUPPLIED] 1.4.5] THE HONBLE APEX COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS AS REPORTED IN [2016] 73 TAXMANN.COM 248 (SC) DISMISSED THE SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT A GAINST THE ORDER OF THE HONBLE KARNATAKA HIGH COURT. THE HON'BLE KA RNATAKA HIGH COURT IN THE CASE OF CIT VS SSA'S EMERALD MEADOWS AS REPORTED IN [2016] 73 TAXMANN.COM 241 (KARNATAKA) FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING F ACTORY AS REPORTED IN [2013] 35 TAXMANN.COM 250/218 TAXMAN 423/359 ITR 565 DISMISSED THE APPEAL OF REVENUE BY OBSERVING AS UND ER: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER U NDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1 961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LI MB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHI LE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION O F THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE OF CIT V. M ANJUNATHA COTTON DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 14 & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.) . 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGM ENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINA TION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. [EMPHASIS SUPPLIED] 1.4.6] THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF PR CIT VS KULWANT SINGH BHATIA [ITA NO. 9 TO 14 OF 2018] H ELD THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIA BLE WHEN THERE IS NO SPECIFIC CHARGE MENTIONED IN THE SHOW CAUSE NOTICE [R EFER PARA 11 OF THE DECISION]: 11. ON DUE CONSIDERATION OF THE ARGUMENTS OF THE LEA RNED COUNSEL FOR THE APPELLANT, SO ALSO CONSIDERING THE FACT THA T THE GROUND MENTIONED IN SHOW-CAUSE NOTICE WOULD NOT SATISFY THE REQUIREMENT OF LAW, AS NOTICE WAS NOT SPECIFIC, WE ARE OF THE VIEW THAT THE LEARNED TRIBUNAL HAS RIGHTLY RELYING ON THE DECISION OF CIT V/S. MANJUNATHA COTTON GINNING FACTORY (SUPRA) AND CIT V/S. SSA'S EMER ALD MEADOWS(SUPRA) RIGHTLY ALLOWED THE APPEAL OF THE ASS ESSEE AND SET ASIDE THE ORDER OF PENALTY IMPOSED BY THE AUTHORITIE S. NO SUBSTANTIAL QUESTION OF LAW IS ARISING IN THESE APPEALS. ITA.NO (S).9/2018, 10/2018, 11/2018, 12/2018, 13/2018 AND 14/2018, FILE D BY THE APPELLANT HAVE NO MERIT AND ARE HEREBY DISMISSED. [EMPHASIS SUPPLIED] 1.5] IN VIEW OF THE ABOVE DISCUSSION AND JUDICIAL P RECEDENTS CITED SUPRA, IT IS QUITE CLEAR THAT THE ASSESSING OFFICER MECHANICALLY ISSUED THE SHOW CAUSE NOTICE IN A GENERAL PROFORMA WITHOUT APPLYING HIS MIND AND WITHOUT MENTIONING ANY SPECIFIC CHARGE FOR WHICH THE APPELLANT WAS REQUIRED TO BE SHOW CAUSED THEREBY NEGA TING THE PRINCIPLES OF NATURAL JUSTICE. IT IS ALSO PERTINENT TO MENTION THAT THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 BUT THE APPELLANT WAS S HOW CAUSED ON THE DUAL CHARGE OF CONCEALMENT OF PARTICULARS OF INC OME OR FURNISHING INACCURATE PARTICULARS OF INCOME WHICH FALLS UNDER THE SCOPE AND PURVIEW OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 AND NOT UNDER THE PURVIEW OF SECTION 271AAA OF THE INCOME-TA X ACT, 1961. THE SHOW CAUSE NOTICE THUS SUFFERS FROM A FATAL ERR OR WHICH IS NOT CURABLE UNDER SECTION 292BB OF THE INCOME-TAX ACT, 1961 AND HENCEFORTH, PENALTY OF RS. 6,25,000/- AS LEVIED UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 ON THE BASIS OF SUCH DEFECTIVE DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 15 AND INVALID SHOW CAUSE NOTICE IS NOT SUSTAINABLE ON THIS GROUND ITSELF AND DESERVES TO BE DELETED IN ENTIRETY. 2] GROUND NO. 1 CHALLENGING THE LEVY OF PENALTY O F RS. 6,25,000/- UNDER SECTION 271AAA OF THE INCOME-TAX AC T, 1961 SINCE THE AMOUNT OF ADDITIONAL INCOME WAS DECLARED IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 AND TAX DUE ON SU CH ADDITIONAL INCOME WAS ALSO PAID 2.1] THE APPELLANT IN THIS GROUND OF APPEAL HAS CHAL LENGED THE LEVY OF PENALTY OF RS. 6,25,000/- UNDER SECTION 271AAA OF TH E INCOME-TAX ACT, 1961 SINCE THE AMOUNT OF ADDITIONAL INCOME WAS DECLARED IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOM E-TAX ACT, 1961 AND TAX DUE ON SUCH ADDITIONAL INCOME WAS PAID AND MORE SO WHEN NO QUESTION WAS ASKED DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF MANNER OF EARNING SUCH ADDITIONAL INCOME. 2.2] IN THE FACTS OF THE PRESENT CASE, THE AMOUNT O F ADDITIONAL INCOME OF RS. 62,50,000/- WAS ACCEPTED BY THE APPELLANT IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 AND SUCH AMOUNT OF ADDITIONAL INCOME WAS DULY INCORPORATED IN THE INCOME-TAX RETURN OF THE APPELLANT FOR THE ASSESSMENT YEAR 201 2-13 AND LEGITIMATE AMOUNT OF TAX DUE ON SUCH ADDITIONAL INCO ME WAS DULY PAID. 2.3] IT HAS BEEN HELD IN VARIOUS JUDICIAL PRECEDENTS THAT THE ASSESSEE IS ENTITLED FOR THE IMMUNITY PROVIDED IN SECTION 271AA A OF THE INCOME-TAX ACT, 1961 IN CASES WHERE ADDITIONAL INCO ME IS DECLARED IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 AND THE AMOUNT OF TAX DUE ON SUCH ADDITIONAL INC OME IS ALSO PAID BY THE ASSESSEE. RELEVANT EXTRACTS FROM FEW OF THE JUDICIAL PRECEDENT S THAT HAVE ENUNCIATED THE ABOVE PRINCIPLE ARE REPRODUCED HEREUNDER FOR YOUR READY REFERENCE: 2.4.1] THE HONBLE ITAT CHANDIGARH BENCH A IN THE CASE OF ACIT, CENTRAL CIRCLE, PATIALA V. MUNISH KUMAR GOYAL AS RE PORTED IN [2014] 45 TAXMANN.COM 563 (CHANDIGARH - TRIB.) HAS HELD TH AT: DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 16 10. PLAIN READING OF SUB-SECTION WOULD SHOW THAT IF THE ASSESSEE DURING THE COURSE OF SEARCH IN A STATEMENT ADMITS TO SOME UNDISCLOSED INCOME AND PAY TAXES ON THE SAME THEN PEN ALTY CANNOT BE LEVIED IN TERMS OF SUB-SEC (1) OF THIS SECTION. IN THE CASE BEFORE US, THE AMOUNT OF RS. 4 CRORE WHICH WAS SURRENDERED DURING SEARCH, HAS BEEN DECLARED BY THE ASSESSEE IN THE RETURN AND TAXES HAVE BEEN PAID ACCORDINGLY. THEREFORE THE ASSESSEE IS NORMALLY ENTITLED FOR THE IMMUNITY PROVIDED IN SEC 271AAA ITSELF. HOWEVER, THE REVENUE HAS RAISED FURTHER DISPUTE THAT WHETHER THE ASSESSEE HAS DISCLOSED THE MANNER IN WHICH INCOME HAS BEEN EARNED. IN THE PENA LTY ORDER PASSED BY THE ASSESSING OFFICER FOLLOWING QUESTIONS AND ANSWERS HAVE BEEN EXTRACTED: 'Q. DO YOU WANT TO SAY ANYTHING MORE ? ANS. I VOLUNTARILY SURRENDER A SUM OF RS. 4.00 CRORE (RS. FOUR CRORE) FOR CURRENT FINANCIAL YEAR I.E. 2009-10 RELEVANT TO A.Y. 2010-11 IN ANY (SHOULD BE 'MY') INDIVIDUAL CAPACITY. THEY COVER ALL THE DISCREPANCIES IN THE SEIZED PAPERS DURING THE COURSE OF SEARCH PROCEEDINGS.' 11. THEREFORE CLEARLY THE REVENUE HAS NOT ASKED THE ASSESSEE TO DISCLOSE THE MANNER IN WHICH SUCH INCOME WAS EARNED. IN ANY CASE ONCE THE INCOME IS SURRENDERED DURING THE COURSE OF SEARCH U/S 132(4) IT CAN BE SAFELY ASSUMED THAT DURING DISCUSSI ON THE ASSESSEE MUST HAVE DISCLOSED THE MANNER. IN ANY CASE WE FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE EXPLANATION OF THE ASSESSEE HAS BEEN ACCEPTED FOR A SUM OF RS. 1987500 OUT OF TOTAL SURRENDER OF RS. 4 CRORE THEN S AME MANNER SHOULD HAVE BEEN ACCEPTED FOR THE WHOLE OF THE AMOUNT . IT IS NOT CLEAR FROM THE PENALTY ORDER HOW EXPLANATION FOR RS . 1987500 WAS ACCEPTED. IN ANY CASE THE LD. CIT(A) HAS CONSIDERED A LL THESE ISSUES IN DETAIL AND THE D.R. FOR THE REVENUE HAS NOT REFERR ED TO ANY MATERIAL OR DECISION WHICH CAN CONTROVERT THE FINDI NGS OF THE CIT(A). IN THE FOLLOWING CASES WHICH HAVE BEEN RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH WAS CLEARLY HELD THAT PENALTY IS NOT LEVIABLE. [EMPHASIS SUPPLIED] 2.4.2] THE HONBLE ITAT CUTTACK BENCH IN THE CASE O F PRAMOD KUMAR JAIN V. DCIT AS REPORTED IN [2013] 33 TAXMANN.COM 651 (CUTTACK - TRIB.) HAS HELD THAT: 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT NO DEFINITIO N COULD BE GIVEN DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 17 TO THE 'SPECIFIED MANNER' INSOFAR AS THE VERY STATEM ENT ON OATH U/S. 132(4) SPECIFIES THE MANNER ON WHICH THE ASSESSEE I S PREPARED TO PAY TAX THEREON. THE INSCRIBING IN THE BOOKS OF ACC OUNT WAS TAKEN CARE OF BY THE ASSESSEE WHEN HE FILED THE RETURNS IN PURSUANCE TO NOTICE U/S. 153A ACCOUNTING THE ASSETS. THEREFORE, THE CASE LAWS CITED AT THE BAR CLEARLY INDICATE THAT THE PENALTY I S NOT AUTOMATIC IF ONE OF THE PURPORTED CONDITION IS NOT FULFILLED ALTHO UGH ALL THE CONDITIONS HAVE BEEN AGREED TO OF HAVING FULFILLED BY THE ASSESSING OFFICER INSOFAR AS THE TAX AND INTEREST HAS BEEN REC OVERED. PENALTY HAS BEEN LEVIED AFTER THE TAX HAS BEEN RECOVERED THER EFORE ANSWERS THE QUERIES RAISED BY THE LEARNED DR FOR THAT THE SA ID PROVISIONS BECOME REDUNDANT WAS NOT THE INTENTION OF THE LEGISL ATION. THE MANNER, DURING THE SEARCH OPERATION, IS NOTED BY THE SEARCH PARTY WHICH THE ASSESSING OFFICER HAS ACCEDED TO. THEREFOR E, FOLLOWING THE DECISIONS AS RELIED UPON BY THE LEARNED COUNSEL FOR T HE ASSESSEE, WHEREIN THE TRIBUNAL WAS PLEASED TO CONSIDER CANCELLI NG THE PENALTY SO LEVIED ARE ALSO APPLICABLE TO THE ASSESSEES' CASE S BEFORE US INSOFAR AS THERE IS NO PRESCRIBED METHOD TO INDICATE THE MANNER IN WHICH INCOME WAS GENERATED WHEN THE DEFINITION OF 'UN DISCLOSED INCOME' HAS BEEN DEFINED IN THE ACT ITSELF WHEN NO IN COME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED 'EITHER WHOLLY OR PARTLY' WHICH ONUS LAY UPON THE ASSESSEE STOOD DISCHARGED. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE LEVY OF PENALT Y U/S. 271AAA IN THE INSTANT CASES ARE NOT JUSTIFIED AND AS SUCH, WE CANCEL THE PENALTY SO LEVIED U/S. 271AAA FOR THE AYS UNDER CONSI DERATION IN THE CASE OF RESPECTIVE ASSESSEES. [EMPHASIS SUPPLIED] 2.5.1] FURTHER, IN THE FACTS OF THE PRESENT CASE, L EGITIMATE AMOUNT OF TAX DUE ON ADDITIONAL INCOME HAD BEEN PAID WELL BEFO RE THE CONCLUSION OF THE ASSESSMENT AS WELL AS PENALTY PRO CEEDINGS. 2.5.2] THE PROVISION OF SUB-SECTION (2) OF SECTION 271AAA OF THE INCOME-TAX ACT, 1961 WHICH SPECIFIES ONE OF THE CON DITIONS FOR GRANTING IMMUNITY AS PAYMENT OF TAX, TOGETHER WITH INTEREST, IN RESPECT OF UNDISCLOSED INCOME CORRESPONDS TO ERSTWHIL E EXPLANATION 5 OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. IT IS PERTINENT TO MENTION THAT NO TIME LIMIT HAS BEEN PRESCRIBED IN SU B-SECTION (2) OF SECTION 271AAA OF THE INCOME-TAX ACT, 1961 FOR PAYM ENT OF TAX, TOGETHER WITH INTEREST, IN RESPECT OF SUCH UNDISCLO SED INCOME. DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 18 2.5.3] IT HAS BEEN CATEGORICALLY HELD IN VARIOUS JU DICIAL PRECEDENTS THAT ONCE A TIME LIMIT FOR PAYMENT OF TAX AND INTERE ST HAS NOT BEEN SET OUT BY THE STATUTE, IT CANNOT INDEED BE OPEN TO THE ASSESSING OFFICER TO READ SUCH A TIME LIMIT INTO THE SCHEME OF THE SECTION OR TO INFER ONE. HENCE, THE JUDICIAL PRECEDENTS HAVE LAID DOWN THAT IT WOULD BE SUFFICIENT COMPLIANCE OF THE PROVISIONS OF SUB-SECTION (2) OF SECTION 271AAA OF THE INCOME-TAX ACT, 1961 IF THE A SSESSEE PAYS THE AMOUNT OF TAX DUE ON THE ADDITIONAL INCOME BEFORE TH E CONCLUSION OF ASSESSMENT PROCEEDINGS OR EVEN BEFORE THE CONCLUSIO N OF PENALTY PROCEEDINGS. RELEVANT EXTRACTS FROM FEW OF THE JUDICIAL PRECEDENT S THAT HAVE ENUNCIATED THE ABOVE PRINCIPLE ARE REPRODUCED HEREUNDER FOR YOUR READY REFERENCE: 2.6.1] THE HONBLE ITAT KOLKATA BENCH A IN THE CA SE OF DCIT, CENTRAL CIRCLE III, KOLKATA V. PIONEER MARBLES & IN TERIORS (P.) LTD. AS REPORTED IN [2012] 19 TAXMANN.COM 301 (KOL.) HAS HEL D THAT: 7. WE FIND THAT UNDER THE SCHEME OF SECTION 271 AAA, THERE IS A COMPLETE PARADIGM SHIFT SO FAR AS PENALTY IN RESP ECT OF UNACCOUNTED INCOME UNEARTHED AS A RESULT OF SEARCH OP ERATION CARRIED OUT ON OR AFTER 1ST JUNE 2007 IS CONCERNED. UNLIKE IN THE CASE OF PENALTY UNDER SECTION 271(1)(C), SECTION 271 AAA, WITHOUT ANY REFERENCE TO FINDINGS OR PRESUMPTIONS OF CONCEALMEN T OF INCOME OR THE FINDINGS OR PRESUMPTIONS OF FURNISHING OF INACCURATE PARTICULARS, PROVIDES THAT IN RESPECT OF UNACCOUNTED INCOME IN TH E CASES WHERE SEARCH INITIATED AFTER 1ST JUNE 2007, THE ASSESSEE I S TO PAY A PENALTY @ 10% OF UNACCOUNTED INCOME. SUB SECTION 2 OF SECTION 271 AAA, HOWEVER, RELAXES THE RIGOUR OF THIS PENALTY PR OVISION IN A SITUATION IN WHICH (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SECTION 132(4), ADMITS THE UNDISCLOSED INCOME AND SP ECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) S UBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED; A ND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. WHILE PAYMENT OF TAXES, ALONG WITH INTEREST , BY THE ASSESSEE IS ONE OF THE CONDITIONS PRECEDENT FOR AVAILING THE IMMUNITY UNDER SECTION 271AAA(2), THERE IS NO TIME LIMIT SET OUT F OR SUCH PAYMENTS BY THE ASSESSEE. ONCE A TIME LIMIT FOR PAYMENT OF T AX AND INTEREST HAS NOT BEEN SET OUT BY THE STATUTE, IT CANNOT INDE ED BE OPEN TO THE DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 19 ASSESSING OFFICER TO READ SUCH A TIME LIMIT INTO TH E SCHEME OF THE SECTION OR TO INFER ONE. THERE IS THUS NO LEGALLY SU STAINABLE BASIS FOR THE STAND OF THE ASSESSING OFFICER THAT IN A SITUATI ON IN WHICH DUE TAX AND INTEREST HAS NOT BEEN PAID IN FULL BEFORE FIL ING OF THE RELEVANT INCOME TAX RETURN, THE ASSESSEE WILL NOT BE ELIGIBL E FOR IMMUNITY UNDER SECTION 271 AAA(2). 8. WHILE DEALING WITH EXPLANATION 5 TO SECTION 271(1 )(C), WHICH IS BROADLY ON THE SAME LINES, HON'BLE GUJARAT HIGH COU RT, IN THE CASE OF CIT V. MAHENDRA C. SHAH [2008] 299 ITR 305 / 172 TAXMAN 58 HAS OBSERVED THAT, 'THERE IS NO PRESCRIPTION ABOU T THE POINT OF TIME WHEN THE TAX HAD TO BE PAID QUA THE AMOUNT OF INCOME DECLARED IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT'. WE MUST, HOWEVER, POINT OUT THAT EVEN AFTER MAKING THESE SPECIFIC OBS ERVATIONS THEIR LORDSHIPS HAD TO TREAT THE CONCLUSION OF ASSESSMENT PROCEEDINGS AS OUTER LIMIT FOR MAKING PAYMENT OF TAX AND INTEREST B UT THAT WAS BECAUSE OF THE PECULIAR NATURE OF PENALTY PROVISION S UNDER SECTION 271(1)(C) WHEREIN ASSESSING OFFICER HAS TO RECORD T HE SATISFACTION IN THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF - SOMET HING WHICH IS NOT A CONDITION PRECEDENT FOR IMPOSITION OF PENALTY UNDE R SECTION 271 AAA. THEIR LORDSHIPS HAD HELD THAT 'HOWEVER, THE O UTER LIMIT HAS TO BE THE POINT OF TIME WHEN THE ASSESSMENT PROCEED INGS ARE UNDERTAKEN BY THE ASSESSING OFFICER BECAUSE THE OPEN ING PORTION OF SECTION 271(1) OF THE ACT REQUIRES THE ASSESSING OF FICER TO RECORD SATISFACTION IN THE COURSE OF SUCH PROCEEDINGS, AND THE SATISFACTION HAS TO BE AS REGARDS THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME.' SECTI ON 271 AAA, AS THE STATUTE UNAMBIGUOUSLY PROVIDES, DOES NOT REQUIRE ANY SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER TO BE ARRIVED AT DURING THE ASSESSMENT PROCEEDINGS, AND, THEREFORE, THE OUTER LI MIT OF PAYMENT BEFORE THE CONCLUSION OF ASSESSMENT PROCEEDINGS WIL L NOT COME INTO PLAY. 9. IN OUR CONSIDERED VIEW, THEREFORE, ON THE FACTS OF THE PRESENT CASE WHEREIN ENTIRE TAX AND INTEREST HAS BEEN DULY PAID W ELL WITHIN THE TIME LIMIT FOR PAYMENT OF NOTICE OF DEMAND UNDER SECT ION 156 AND WELL BEFORE THE PENALTY PROCEEDINGS WERE CONCLUDED, THE ASSESSEE COULD NOT BE DENIED THE IMMUNITY UNDER SECTION 271AAA( 2) ONLY BECAUSE ENTIRE TAX, ALONG WITH INTEREST, WAS NOT PA ID BEFORE FILING OF INCOME TAX RETURN OR, FOR THAT PURPOSE, BEFORE CONC LUDING THE ASSESSMENT PROCEEDINGS. 10. FOR THE REASONS SET OUT ABOVE, WE APPROVE THE C ONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN T HE MATTER. DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 20 [EMPHASIS SUPPLIED] 2.6.2] THE HONBLE GUJARAT HIGH COURT IN THE CASE O F CIT V. MAHENDRA C. SHAH AS REPORTED IN [2008] 172 TAXMAN 58 (GUJARAT) HAS CATEGORICALLY HELD THAT: 12. THE CONTENTIONS RAISED ON BEHALF OF THE REVEN UE 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 DECLARED IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THERE WOULD BE SUFFICIENT COMPLIANCE OF THE PROVISION IF TAX IS SHOWN TO HAVE BEEN PAID BEFORE THE ASSESSMEN T WAS COMPLETED. THE REASONING WHICH HAS WEIGHED WITH THE TRIBUNAL IS THAT THE SEARCH PROCEEDINGS WERE CONDUCTED ON 3-7-19 87 WHEN THE STATEMENT UNDER SECTION 132(4) OF THE ACT WAS MADE. THE LAST DATE FOR PAYMENT OF ADVANCE TAX QUA THE LAST INSTALMENT OF ADVANCE TAX WAS 15-12-1987 IN SUCH A CASE, ACCORDING TO THE TRI BUNAL, AND IN THE EVENT, THE ASSESSEE DID NOT PAY TAX QUA THE INCOME D ECLARED IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE BECAME LIABLE TO PAY INTEREST IN ACCORDANCE WITH TH E RELEVANT PROVISIONS OF THE ACT BECAUSE EXCEPTION NO. 2 ITSEL F SPECIFIES PAYMENT OF TAX, TOGETHER WITH INTEREST, IF ANY, INDICATING THAT LEGISLATURE DID NOT STIPULATE ANY SPECIFIED TIME LIMIT FOR PAYMENT O F TAX. THERE IS NO INFIRMITY IN THIS REASONING. 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 TH E ACT REQUIRES THE ASSESSING OFFICER TO RECORD SATISFACTION IN THE COUR SE 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 PURPOS E THE ASSESSING OFFICER IS REQUIRED TO VERIFY AND ASCERTAIN WHETHER THE INCOME HAS BEEN DECLARED AND TAX PAID THEREON. FOR THE PURPOSES OF EXPLANATION 5, WHICH COMES INTO PLAY ONLY IN CASE O F SEARCH AND SEIZURE PROCEEDINGS, RETURN OF INCOME PER SE WOULD 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 DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 21 CONCEALMENT IN RELATION TO THE PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF SEARCH BUT RETURN OF INCOME FOR SUCH YEAR HAD NOT BEEN FURNISHED, OR WHERE RETURN HAS BEEN FIL ED SUCH INCOME HAS NOT BEEN DISCLOSED. INSOFAR AS A PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH RETURN OF INCOME WOULD H AVE HARDLY ANY RELEVANCE BECAUSE THE EXPLANATION ITSELF STIPULATES THAT REGARDLESS OF SUCH INCOME HAVING BEEN DECLARED IN ANY RETURN OF IN COME FURNISHED ON OR AFTER THE DATE OF SEARCH THE ASSESSEE WOULD B ECOME LIABLE TO IMPOSITION OF PENALTY, THE ONLY EXCEPTION BEING A D ECLARATION AT THE TIME OF SEARCH. AS TO WHAT THAT DECLARATION HAS TO BE HAS ALREADY BEEN EXAMINED HEREINBEFORE AND IT IS NOT NECESSARY T O REPEAT THE SAME. 14. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSMENT Y EAR BEING 1988- 89 AND THE SEARCH HAVING TAKEN PLACE ON 3-7-1987 THE RETURN OF INCOME WAS NOT DUE BEFORE 31-7-1988. THEREFORE, WHET HER THE INCOME REPRESENTED BY THE VALUE OF THE ASSET WAS SHOWN IN T HE RETURN OF INCOME OR NOT BECAME IRRELEVANT 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 T IME SPECIFIED IN SECTION 139(1) OF THE ACT AS REQUIRED BY THE EARLIE R PART OF EXCEPTION NO. 2. IN FACT, AT THE COST OF REPETITION, IT IS RE QUIRED TO BE STATED THAT THE LEGISLATIVE INTENT AND THE SCHEME THAT FLOWS FRO M A PLAIN READING OF THE PROVISION MAKES IT CLEAR THAT IN RELATION TO SEARCH AND SEIZURE PROCEEDINGS, FOR BECOMING ENTITLED TO IMMUNITY FROM LEVY OF PENALTY THE BASIC REQUIREMENT IS IN CASE OF EXCEPTION NO. 1 RELEVANT ENTRY IN THE BOOKS OF ACCOUNT OR DISCLOSURE BEFORE THE COMPE TENT AUTHORITY, AND IN RELATION TO EXCEPTION NO. 2 DISCLOSURE IN TH E STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. DISCLOSURE OR OTHER WISE IN THE RETURN OF INCOME POST THE DATE OF SEARCH WOULD NOT ABSOLVE AN ASSESSEE FROM THE DEEMING PROVISION, NAMELY, 'DEEMED CONCEALM ENT' ONCE AN ASSESSEE IS FOUND IN POSSESSION OF A VALUABLE ASSET AT THE TIME OF SEARCH. HENCE, THE CONTENTION RAISED ON BEHALF OF T HE REVENUE THAT PENALTY IS LEVIABLE UNDER THE MAIN PROVISION FOR CON CEALMENT VIS-A-VIS THE RETURN OF INCOME DOES NOT MERIT ACCEPTANCE. 15. INSOFAR AS THE ALLEGED FAILURE ON THE PART OF TH E ASSESSEE TO SPECIFY IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT REGARDING THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, SUFFIC E IT TO STATE THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTH ORIZED OFFICER IT IS 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 DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 22 PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPS E IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FI RST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWE R FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PROV ISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS B EING RECORDED, AS NOTED BY ALLAHABAD HIGH COURT IN CASE OF RADHA KISHAN GOEL (SUPRA). SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERA TE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITION S STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE ACT. THE VIEW TAKEN BY THE TRIBUNAL AS WELL AS ALLA HABAD HIGH COURT TO THE EFFECT THAT EVEN IF THE STATEMENT DOES NOT SP ECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLAR ED 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 T HE CONCLUSION THAT INSOFAR AS THE VALUE OF DIAMONDS WAS CONCERNED, THE A SSESSEE HAVING MADE A DECLARATION UNDER SECTION 132(4) OF T HE ACT AND PAID TAXES THEREON, HAD FULFILLED ALL THE CONDITIONS FOR AVAILING THE BENEFIT OF IMMUNITY FROM LEVY OF PENALTY AS PROVIDED UNDER EX PLANATION 5 TO SECTION 271(1)(C) OF THE ACT. IN ABSENCE OF ANY INF IRMITY IN THE ORDER OF TRIBUNAL ON THIS COUNT THE QUESTION REFERRED IS ANSW ERED IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE. [EMPHASIS SUPPLIED] 2.7] IN VIEW OF THE ABOVE DISCUSSION AND JUDICIAL P RECEDENTS CITED SUPRA, IT IS CLEARLY EVIDENT THAT LEVY OF PENALTY UN DER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 IS NOT JUSTIFIABLE IN T HE FACTS OF THE PRESENT CASE SINCE ADDITIONAL INCOME WAS DECLARED BY THE APPELLANT IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 AND LEGITIMATE AMOUNT OF TAX DUE ON THE AMOUNT O F ADDITIONAL DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 23 INCOME WAS ALSO PAID IN DUE COURSE OF TIME. THE APPEL LANT WAS THEREFORE ELIGIBLE TO CLAIM IMMUNITY AGAINST THE PE NAL PROVISIONS OF SECTION 271AAA OF THE INCOME-TAX ACT, 1961 AND HENCE FORTH, PENALTY OF RS. 6,25,000/- AS LEVIED BY THE ASSESSING OFFICER IS NEITHER LEGAL NOR PROPER AND DESERVES TO BE DELETED IN ENTIRETY. 3.1] IT IS WORTH MENTIONING THAT LEVY OF PENALTY UN DER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 IS NOT JUSTIFIABLE WHER E THE AMOUNT OF ADDITIONAL INCOME IS DECLARED IN THE STATEMENT RECO RDED UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 AND TAX D UE ON SUCH ADDITIONAL INCOME IS PAID AND MORE SO WHEN NO QUESTIO N IS ASKED DURING THE COURSE OF RECORDING OF STATEMENT UNDER SE CTION 132(4) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF MANNER OF EA RNING SUCH ADDITIONAL INCOME. 3.2.1] THE APPELLANT IN HIS STATEMENT AS RECORDED UNDE R SECTION 132(4) OF THE INCOME-TAX ACT, 1961 DURING THE COURSE OF SEARCH AGREED TO SURRENDER AN AMOUNT OF RS. 5 CRORES MERELY ON THE BASIS OF SUGGESTION OF THE AUTHORIZED OFFICER WITHOUT EXAMINI NG THE DETAILS AND LOOSE PAPERS AS FOUND AND SEIZED FROM THE RESIDENTI AL AND BUSINESS PREMISES. 3.2.2] THE APPELLANT SUBSEQUENTLY ALONG-WITH HIS BR OTHER, SHRI PANKAJ KALANI DECLARED ADDITIONAL INCOME OF RS. 1,2 5,00,000/- WHILE FILING THEIR INCOME-TAX RETURNS AND THAT TOO ON A PR ECAUTIONARY BASIS AFTER EXAMINING THE LOOSE PAPERS AND AFTER CONSIDER ING THE EFFECT OF EXCESS JEWELLERY AND CASH FOUND FROM THE PREMISES OF THE APPELLANT. 3.3.1] COPY OF STATEMENT OF THE APPELLANT AS RECORD ED UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 HAS BEEN FILED ON PAGE NO. 21-45 OF THE PAPER BOOK. 3.3.2] ON PERUSAL OF THE STATEMENT OF THE APPELLANT AS RECORDED DURING THE COURSE OF SEARCH, IT IS QUITE EVIDENT THA T THE APPELLANT IN RESPONSE TO THE LAST QUESTION AGREED TO SURRENDER A N AMOUNT OF RS. 5 CRORES ON HIS BEHALF AND ON BEHALF OF HIS OTHER FAMI LY MEMBERS AND THEREAFTER THE AUTHORIZED OFFICER DID NOT ASK ANY F URTHER QUESTIONS TO THE APPELLANT IN RESPECT OF THE MANNER OF EARNING O F SUCH ADDITIONAL INCOME. DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 24 3.3.3] IT HAS BEEN CATEGORICALLY HELD IN VARIOUS JU DICIAL PRECEDENTS THAT WHEN THE STATEMENT IS BEING RECORDED BY THE AUTH ORIZED OFFICER, IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLA IN THE PROVISIONS OF THE INCOME-TAX ACT, 1961 IN ENTIRETY TO THE ASSE SSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PA RTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCC ASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FO RMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTING IN WHICH S UCH STATEMENT IS BEING RECORDED. SECONDLY, CONSIDERING THE SOCIAL ENVIRON MENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERA TE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITION S STIPULATED BY SUB-SECTION (2) WHILE MAKING STATEMENT UNDER SECTIO N 132(4) OF THE INCOME-TAX ACT, 1961. 3.3.4] FURTHER, IT HAS ALSO BEEN HELD THAT LEVY OF P ENALTY UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 IS NOT J USTIFIABLE IF NO QUESTION IS ASKED DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961 IN RESPE CT OF THE MANNER OF EARNING SUCH ADDITIONAL INCOME. RELEVANT EXTRACTS FROM FEW OF THE JUDICIAL PRECEDENT S THAT HAVE ENUNCIATED THE ABOVE PRINCIPLES ARE REPRODUCED HEREU NDER FOR YOUR READY REFERENCE: 3.4.1] THE HONBLE GUJARAT HIGH COURT IN THE CASE O F PR. CIT V. MUKESHBHAI RAMANLAL PRAJAPATI AS REPORTED IN [2017] 3 98 ITR 170 (GUJARAT) HAS CATEGORICALLY HELD THAT: 10. IT CAN THUS BE SEEN THAT THIS COURT IN THE CAS E OF MAHENDRA C. SHAH AND THE ALLAHABAD HIGH COURT IN THE CASE OF RADH A KISHAN GOEL (SUPRA) HAVE PUT CONSIDERABLE STRESS ON THE REC ORDING OF THE STATEMENT UNDER SECTION 132(4) OF THE ACT IN THE CO NTEXT OF THE REQUIREMENT OF THE ASSESSEE TO DISCLOSE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED IN ORDER TO AVOID PENALT Y. THE HIGH COURT IN THE CASE OF MAHENDRA C. SHAH, IN PARTICULAR, OBSERVED THAT CONSIDERING THE SOCIAL ENVIRONMENT, IT IS NOT POSSIB LE TO EXPECT FROM AN ASSESSEE TO BE SPECIFIC AND TO THE POINT REGARDI NG THE CONDITIONS STIPULATED BY EXCEPTION NO. 2 WHILE MAKING STATEMENT UNDER SECTION 132(4) OF THE ACT. THE COURT WENT ON TO OBSERVE THA T IF THE INCOME IS DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 25 DECLARED AND TAX IS PAID THEREON, THERE WOULD BE SUBST ANTIAL COMPLIANCE. 11. IT IS THIS PRINCIPLE WHICH THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL HAVE APPLIED IN THE PRESEN T CASE. AS NOTED, THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS SPECIFIC THAT NO QUESTION WAS PUT TO THE ASSESSEE WHILE RECORDING ST ATEMENT UNDER SECTION 132 REGARDING THE MANNER OF DERIVING THE UND ISCLOSED INCOME. COUNSEL FOR THE REVENUE, HOWEVER, VEHEMENTL Y CONTENDED THAT IN THE PRESENT CASE, THE PENALTY WAS BEING IMP OSED UNDER SECTION 271AAA OF THE ACT AND THE STATUTORY PROVISI ONS ENABLING THE ASSESSEE TO AVOID SUCH A PENALTY ARE ENTIRELY DIFFER ENT AS COMPARED TO EXPLANATION 5 TO SECTION 271. 13. SUB-SECTION (2) OF SECTION 271AAA THUS WHILE RE TAINING THE OTHER REQUIREMENTS OF AVOIDING PENALTY AS PROVIDED IN CLAUS E (II) OF EXPLANATION 5 HAS NOW INTRODUCED AN ADDITIONAL REQUIR EMENT OF THE ASSESSEE HAVING TO SUBSTANTIATE THE MANNER IN WHICH , THE UNDISCLOSED INCOME WAS DERIVED. IT IS THIS REQUIREMEN T WHICH THE COUNSEL FOR THE REVENUE WOULD PLACE GREAT EMPHASIS O N. ACCORDING TO HER, ONUS IS NOW ENTIRELY SHIFTED ON THE ASSESSEE NO T ONLY TO MAKE A DISCLOSURE OF THE UNDISCLOSED INCOME BUT ALSO TO SPE CIFY THE MANNER, IN WHICH, THE INCOME HAS BEEN DERIVED AND TO SUBSTANT IATE THE SAME. IT WAS THEREFORE, CONTENDED THAT THE EARLIER DECISIO NS OF THIS COURT IN THE CASE OF MAHENDRA C. SHAH AND THE DECISION OF THE A LLAHABAD HIGH COURT IN THE CASE OF RADHA KISHAN GOEL RENDERED IN THE BACK DROP OF DIFFERENT STATUTORY PROVISIONS WOULD NOT AUTOM ATICALLY APPLY. 14. WE DO NOT REJECT THIS CONTENTION TOTALLY. HOWEVE R, IN SO FAR AS THE FACTS OF THE PRESENT CASE ARE CONCERNED, THE FIELD WO ULD STILL BE HELD BY THE DECISION OF THIS COURT IN THE CASE OF MAHENDR A C. SHAH (SUPRA). SUB-SECTION (2) OF SECTION 271AAA IMPOSES AN ADDITIO NAL CONDITION OF THE ASSESSEE HAVING TO SUBSTANTIATE THE MANNER IN W HICH, THE UNDISCLOSED INCOME WAS DERIVED. THIS REQUIREMENT, HOW EVER, MUST BE SEEN AS CONSEQUENTIAL TO OR COROLLARY TO THE BAS E REQUIREMENT OF SPECIFYING THE MANNER, IN WHICH, THE UNDISCLOSED INC OME WAS DERIVED. IT IS ONLY WHEN SUCH DECLARATION IS MADE, THE QUESTION OF SUBSTANTIATING SUCH DISCLOSURE OR CLAIM WOULD ARISE. IF, AS IN THE PRESENT CASE, THE REVENUE FAILED TO QUESTION THE ASS ESSEE WHILE RECORDING HIS STATEMENT UNDER SECTION 132(4) OF THE ACT AS REGARDS THE MANNER OF DERIVING SUCH INCOME, THE REVENUE CANN OT JUMP TO THE CONSEQUENTIAL OR LATER REQUIREMENT OF SUBSTANTIATIN G THE MANNER OF DERIVING THE INCOME. IN THE CONTEXT OF THE REQUIREME NT OF THE ASSESSEE SPECIFYING THE MANNER OF DERIVING THE INCOME THE DECI SION OF THIS COURT IN THE CASE OF MAHENDRA C. SHAH (SUPRA) WOULD H OLD THE FIELD DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 26 EVEN IN THE CONTEXT OF SUB-SECTION (2) OF SECTION 2 71AAA OF THE ACT. IT IS ONLY WHEN THE OFFICER OF THE RAIDING PARTY RECOR DING THE STATEMENT OF THE ASSESSEE UNDER SECTION 132(4) OF THE ACT ELIC ITS A RESPONSE FROM THE ASSESSEE'S THIS REQUIREMENT, THE ASSESSEE' S RESPONSIBILITY TO SUBSTANTIATE THE MANNER OF DERIVING SUCH INCOME WOUL D COMMENCE. WHEN THE BASE REQUIREMENT ITSELF FAILS, THE QUESTIO N OF DENYING THE BENEFIT OF NO PENALTY WOULD NOT ARISE. [EMPHASIS SUPPLIED] 3.4.2] THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. EMIRATES TECHNOLOGIES (P.) LTD. AS REPORTED IN [2017] 399 ITR 189 (DELHI) HAS HELD THAT: 3.THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARA 4.7 OF THE ORDER DATED NOVEMBER 4, 2013 NOTED THAT NO SPECIFIC QUERY H AD BEEN PUT TO THE ASSESSEE BY DRAWING HIS ATTENTION TO SECTION 271 AAA OF THE ACT ASKING HIM TO SPECIFY THE MANNER IN WHICH THE UNDIS CLOSED INCOME, SURRENDERED DURING THE COURSE OF SEARCH, HAD BEEN DERI VED. THE COMMISSIONER OF INCOME-TAX (APPEALS), THEREFORE, RE LYING ON THE DECISIONS OF THIS COURT HELD THAT THE JURISDICTIONAL REQUIREMENT OF SECTION 271AAA WAS NOT MET. 4.THE ABOVE VIEW HAS BEEN CONCURRED WITH BY THE INCO ME-TAX APPELLATE TRIBUNAL. 5.IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CO URT IS OF THE VIEW THAT THE CONCURRENT DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE INCOME-TAX APPELLATE TRIBUNAL REP RESENT A PLAUSIBLE VIEW WHICH CANNOT BE SAID TO BE PERVERSE. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. THE APPEA L IS ACCORDINGLY DISMISSED. [EMPHASIS SUPPLIED] 3.4.3] THE HONBLE ITAT CHANDIGARH BENCH A IN THE CASE OF SUNIL KUMAR BANSAL V. DCIT AS REPORTED IN [2015] 62 TAXMANN .COM 78 (CHANDIGARH - TRIB.) HAS HELD THAT: 10. FROM THE ABOVE IT AS WELL AS THE OBSERVATION O F THE HON'BLE GUJARAT HIGH COURT IN CASE OF MAHENDRA C. SHAH (SUPR A) IT BECOMES CLEAR THAT IF NO QUESTION IS ASKED DURING THE STATEM ENT RECORDED UNDER SECTION 132(4) THE ASSESSEE CANNOT BE EXPECTED TO FURTHER SUBSTANTIATE THE MANNER OF EARNING OF INCOME. SINCE TAXES HAVE ALREADY BEEN PAID, THEREFORE IN OUR OPINION, PENALT Y COULD NOT HAVE DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 27 BEEN LEVIED. ACCORDINGLY WE SET ASIDE THE ORDER OF TH E LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND DELETE THE PENALTY. [EMPHASIS SUPPLIED] 3.4.4] THE HONBLE ITAT AHMEDABAD BENCH D IN THE CASE OF ACIT, CENTRAL CIRCLE-2, SURAT V. SHREENARAYAN SITARAM MUNDRA AS REPORTED IN [2017] 83 TAXMANN.COM 231 (AHMEDABAD - TRIB.) HAS HELD THAT: 9.3 AS OBSERVED EARLIER, THE REVENUE IS AGGRIEVED B Y NON- COMPLIANCE OF THE SECTION 271AAA(2)(I) OF THE ACT. AS PER SECTION 271AAA(2)(I), ONE OF THE CONDITIONS FOR OBTAINING R ELIEF FROM THE IMPOSITION OF PENALTY UNDER S.271AAA IS THAT THE AS SESSEE IN THE STATEMENT RECORDED UNDER S.132(4) OF THE ACT ADMITS T HE UNDISCLOSED INCOME AND 'SPECIFIES THE MANNER' IN WHICH SUCH INCO ME HAS BEEN DERIVED. SECTION 271AAA(2)(II) CASTS OBLIGATION ON THE PART OF THE ASSESSEE TO 'SUBSTANTIATE THE MANNER' IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THUS, SUB-SECTION (2)(II) FINDS IT S GENESIS FROM SUB-SECTION 2(I) OF THE ACT. ADMITTEDLY, THE REVENUE IS NOT AGGRIEVED BY THE CONDITION STIPULATED IN SUB-SECTION 2(II) OF THE ACT. IMPLIEDLY, THE REVENUE ADMITS THAT THE ASSESSEE HAS NOT FAILED TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME DERIVED. THIS BEING SO, IT FOLLOWS BY NECESSARY IMPLICATION THAT THE ASSESS EE HAS NOT FAILED TO SPECIFY THE MANNER AT THE FIRST PLACE WHEN SUBST ANTIATION THEREOF HAS NOT BEEN CALLED INTO QUESTION BY THE REVENUE. TH US, THE CASE OF THE REVENUE REQUIRES TO BE SUMMARILY DISMISSED ON TH IS GROUND ALONE. NOTWITHSTANDING, WE FURTHER NOTE THAT THE AS SESSEE HAS REPLIED TO THE QUERY RAISED WHILE RECORDING THE STATE MENT AS CALLED FOR. THE REVENUE DOES NOT APPEAR TO HAVE QUIZZED THE ASSESSEE FOR SATISFYING THE MANNER IN WHICH THE PURPORTED UNDISCL OSED INCOME HAS BEEN DERIVED. THE INCOME CONSIDERED AS AN UNDISCL OSED INCOME IN THE STATEMENT UNDER S.132(4) HAS BEEN DULY INCORPO RATED IN THE RETURN FILED PURSUANT TO SEARCH. THEREFORE, THE REVE NUE IN OUR VIEW NOW CANNOT PLEAD DEFICIENCY ON THE PART OF THE ASSESS EE TO SPECIFY THE MANNER WHICH HAS NOT BEEN CALLED INTO QUESTION A T THE TIME OF SEARCH. WE SIMULTANEOUSLY NOTE THAT NOWHERE IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER, THE REVENUE HAS MADE OUT A CASE THAT THE MANNER OF EARNING UNDISCLOSED INCOME WAS ENQUIR ED INTO POST SEARCH STAGE EITHER. THE REVENUE HAS NOT POINTED OUT ANY QUERY WHICH REMAINED UNREPLIED OR EVADED IN THE COURSE OF S EARCH OR POST SEARCH INVESTIGATION. THEREFORE LOOKING FROM ANY AN GLE, IT IS DIFFICULT TO HOLD IN FAVOUR OF THE REVENUE. ACCORDINGLY, WE DEC LINE TO INTERFERE IN THE ORDER OF THE CIT (A).[EMPHASIS SUPPLIED] DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 28 3.4.5] THE HONBLE ITAT DELHI BENCH E IN THE CASE OF NEERAT SINGAL V. ACIT, CENTRAL CIRCLE-13, NEW DELHI AS REPORTED IN [2013] 37 TAXMANN.COM 189 (DELHI - TRIB.) HAS CATEGORICALLY H ELD THAT: 16. IN VIEW OF ABOVE FACTS OF THE PRESENT CASE WHER EFROM IT IS EVIDENT THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE AU THORIZED OFFICER OF THE DEPARTMENT HAD NOT RAISED ANY SPECIFIC QUERY REG ARDING THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERI VED AND ON THE CONTRARY THE ASSESSEE HAS TRIED TO EXPLAIN THE E ARNING OF THE UNDISCLOSED INCOME IN QUESTION IN ITS REPLY DURING TH E COURSE OF RECORDING OF HIS STATEMENT U/S 132(4) OF THE ACT AN D THEREAFTER. WE THUS RESPECTFULLY FOLLOWING THE RATIO OF ABOVE CITE D DECISIONS OF HON'BLE ALLAHABAD HIGH COURT AND HON'BLE GUJARAT HIG H COURT HOLD THAT IN ABSENCE OF QUERY RAISED BY THE AUTHORIZED OF FICER DURING THE COURSE OF RECORDING OF STATEMENT U/S 132 (4) ABOUT THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED AND ABOUT ITS SUBSTANTIATION, THE AO WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S 271AAA OF THE ACT SPECIALLY WHEN THE OFFERED UNDISCL OSED INCOME HAS BEEN ACCEPTED AND DUE TAX THEREON HAS BEEN PAID B Y THE ASSESSEE. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD DIRECT THE AO TO DELETE THE PENALTY OF RS. 12,50,00,000/- LEVIED U/S 271AAA OF THE ACT. THE GRO UND IS ACCORDINGLY ALLOWED. [EMPHASIS SUPPLIED] 3.5] IN VIEW OF THE ABOVE DISCUSSION AND JUDICIAL P RECEDENTS CITED SUPRA, IT IS QUITE CLEAR THAT LEVY OF PENALTY OF RS . 6,25,000/- UNDER SECTION 271AAA OF THE INCOME-TAX ACT, 1961 IS GROSS LY UNJUSTIFIABLE IN THE FACTS OF THE PRESENT CASE SINCE NO QUESTION WAS ASKED DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 1 32(4) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF MANNER OF EARNIN G OF SUCH ADDITIONAL INCOME AND IN THE ABSENCE OF SUCH QUERY B EING RAISED BY THE AUTHORIZED OFFICER DURING THE COURSE OF RECORDING OF STATEMENT UNDER SECTION 132(4) OF THE INCOME-TAX ACT, 1961, NO PENALTY COULD HAVE BEEN LEVIED UNDER SECTION 271AAA OF THE INCOME-T AX ACT, 1961 FOR THE WANT OF SUBSTANTIATING THE MANNER OF EARNIN G SUCH ADDITIONAL INCOME MORE SO WHEN THE AMOUNT OF ADDITIONAL INCOME WAS INCLUDED IN THE INCOME-TAX RETURN AND THE AMOUNT OF TAX DUE O N SUCH ADDITIONAL INCOME WAS ALSO PAID. HENCE, PENALTY OF RS. 6,25,000/- AS LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271A AA OF THE INCOME-TAX ACT, 1961 IS NEITHER LEGAL NOR PROPER AN D DESERVES TO BE DELETED IN ENTIRETY. DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 29 5. LD. DEPARTMENTAL REPRESENTATIVE (DR) OPPOSED THE SUBMISSIONS AND SUBMITTED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION BEFORE THE AUTHORITIES BELOW. HE FURTHER CONTENDED THAT ME RELY A DEFECTIVE NOTICE SHOULD NOT BE THE REASON OF QUASHING THE PEN ALTY PROCEEDINGS WHEN THE ASSESSEE HIMSELF HAS PARTICIPA TED INTO THE PROCEEDINGS. IN SUPPORT OF LD. DR RELIED UPON THE J UDGMENT OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF SUNDARAM FINANCE LTD. VS. ACIT. 6. IN REJOINDER LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 35 TAXMA NN.COM 250/218 TAXMAN 423/359 ITR 565 AND ALSO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248(SC) . WE FIND THAT THE ASSESSING OFFICER IMPOSED PENALTY BY OBSERVING AS U NDER: 7. THE ASSESSEE HAS DISCLOSED THE ADDITIONAL INCOM E ONLY AS A RESULT OF SEARCH AND SEIZURE OPERATION AND THE ASSE SSEE COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSE D INCOME HAS BEEN DERIVED. THEREFORE, IT IS EVIDENT THAT THE IMPUGNED AMOUNT WOULD NOT HAVE BEEN OFFERED FOR TAXATION HAD THERE BEEN NO SEARCH AND SEIZURE OPERATION IN THIS CASE. THE P ROVISION OF SECTION 271AAA SAYS AS UNDER: THE ASSESSING OFFICER MAY NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 30 CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007 BUT BEFORE THE 1 ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY PAYABLE BY HIM A SUM COMPUTED AT THE RA TE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. 8. FURTHER THE ASSESSEE COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDIN GS. THEREFORE, IT IS EVIDENT THAT THE IMPUGNED AMOUNT S URRENDERED BY THE ASSESSEE DURING THE SEARCH IS NOTHING BUT CO NCEALED INCOME OF THE ASSESSEE. THEREFORE, PENALTY U/S 271A AA IS LEVIABLE ON THE ADMITTED UNDISCLOSED INCOME OF RS.6 2,50,000/- FOR THE A.Y. 2012-13. 9. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, I AM S ATISFIED THAT THE ASSESSEE IS LIABLE TO PENALTY UNDER SECTION 271 AAA OF THE INCOME TAX ACT ON THE ADMITTED UNDISCLOSED INCOME O F RS.62,50,000/- FOR THE A.Y.2012-13 AS THE ASSESSEE COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED IN COME HAS BEEN DERIVED. 7. THE ABOVE FINDING OF THE ASSESSING OFFICER CANNO T BE SUSTAINED IN VIEW OF THE BINDING PRECEDENCE COUPLED WITH THE FAC TS THAT THE NOTICE INITIATING PENALTY U/S 271AAA IS NOT IN ACCO RDANCE WITH LAW. MOREOVER, THE ASSESSING OFFICER HAS NOT CONFRONTED THE ASSESSEE TO SUBSTANTIATE THE MANNER IN WHICH THE ADDITIONAL INC OME WAS EARNED IN THE ABSENCE OF SUCH QUERY. IT CANNOT BE INFERRED THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE MANNER WHICH AD DITIONAL INCOME WAS EARNED. WE, THEREFORE, DIRECT THE ASSESSING OF FICER TO DELETE THE PENALTY. DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 31 8. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 9. NOW COMING TO THE ITANO.701/IND/2019 IN THE CASE OF PANKAJ KALANI THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN MAINTAINING THE LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT WITHOUT PRO PERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM EVEN WHEN THE ADDITIONAL INCOME WAS DECL ARED IN THE STATEMENT AS RECORDED UNDER SECTION 132(4) O F THE ACT AND TAX DUE ON THE ADDITIONAL INCOME WAS ALSO PAID BY THE APPELLANT. RS.6,25,000/- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN MAINTAINING THE LEVY OF PENALTY UNDER SECTION 271AAA OF THE ACT EVEN WHEN T HE SHOW CAUSE NOTICE AS ISSUED FOR LEVY OF PENALTY WAS DEFECTIVE WHEREIN NO SPECIFIC CHARGE WAS FRAMED AGA INST THE APPELLANT AND THEREFORE PENALTY IMPOSED ON THE BASIS OF SUCH DEFECTIVE NOTICE IS NOT MAINTAINABLE IN LAW. 3. THE APPELLANT RESERVES HIS RIGHT TO ADD, ALTER A ND MODIFY THE GROUNDS OF APPEAL AS TAKEN BY HIM. 10. THE FACTS ARE IDENTICAL AS WERE IN ITANO.700/I ND/2019. THE PARTIES HAVE ADOPTED SAME ARGUMENTS. WE HAVE DECIDE D THE ITANO.700/IND/2019 BY OBSERVING AS UNDER: 7. THE ABOVE FINDING OF THE ASSESSING OFFICER CANNO T BE SUSTAINED IN VIEW OF THE BINDING PRECEDENCE COUPLED WITH THE FACTS THAT THE NOTICE INITIATING PENALTY U/S 271AAA IS NOT IN ACCORDANCE WITH LAW. MOREOVER, THE ASSESSING OFFICE R HAS NOT CONFRONTED THE ASSESSEE TO SUBSTANTIATE THE MANNER IN WHICH THE ADDITIONAL INCOME WAS EARNED IN THE ABSENCE OF SUCH QUERY. DEEPAK AND PANKAJ KALANI /ITANOS.700 & 701/IND/2019 32 IT CANNOT BE INFERRED THAT THE ASSESSEE FAILED TO S UBSTANTIATE THE MANNER WHICH ADDITIONAL INCOME WAS EARNED. WE, THE REFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. THEREFORE, TAKING A CONSISTENT VIEW THE ASSESSING O FFICER IS HEREBY DIRECTED TO DELETE THE PENALTY. 11. IN RESULT, BOTH APPEALS FILED BY THE ASSESSEE A RE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27.08.2 020. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 27/08/2020 PATEL/PS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE