SHRI RAJENDRA KUMAR JAIN, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, JAIPUR

ITA 708/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6750 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 15-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K GUPTA CIT DR DHK
• Assessee Lawyers: S L PODDARADVOCAWTE
• Keywords: Search and seizure; Loose papers; Document seized; Cost of acquisition; Documents seized
• Section: 69B; 292BB; 274; 69A; 13; 22; 69; 27; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,B JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; ,O LAANHI XKSLKBZ] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI SANDEEP GOS AIN, JM VK;DJ VIHY LA-@ ITA NO.708/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15 SHRI RAJENDRA KUMAR JAIN D-23-25, PRAM BHAWAN, LAL BAHADUR NAGAR, JLN MARG, JAIPUR CUKE VS. THE ACIT CENTRAL CIRCLE-1 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AATPJ 5294 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO.881/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15 THE DCIT CENTRAL CIRCLE-1 JAIPUR CUKE VS. SHRI RAJENDRA KUMAR JAIN D-23-25, PRAM BHAWAN, LAL BAHADUR NAGAR, JLN MARG, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AATPJ 5294 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR,ADVOCAWTE JKTLO DH VKSJ LS@ REVENUE BY: SHRI B.K. GUPTA, CIT DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/09/2020 MN?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT: 14 /09/2020 VKNS'K@ ORDER PER SANDEEP GOSAIN, J.M. BOTH THESE APPEALS ARE THE CROSS APPEALS FILED BY T HE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF LD.CIT (A)-4, JA IPUR DATED 25.04.2019 ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 2 FOR THE ASSESSMENT YEAR 2014-15 PASSED UNDER SECTIO N 271AAB OF THE INCOME TAX ACT, 1961 ON THE GROUNDS MENTIONED HEREI NBELOW. ITA NO. 708/JP/2019 ASSESSEE 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN PASSING THE ORDER U/S 271AAB OF THE ACT WHICH VOID AB INITO DESERVES TO BE QUASHED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY @ 30% ON SURRENDER OF CASH AMOUNTING TO RS. 1.7 CRORES AND O N JEWELLERY AMOUNTING TO RS. 1.5 CRORES, THEREBY SUST AINING THE PENALTY OF RS. 96,00,000/- AGAINST PENALTY OF RS. 2,41,50,000/- LEVIED BY THE AO ON TOTAL SURRENDER. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY ON INCOM E OF RS. 3.2 CRORES WHICH WAS NOT UNDISCLOSED INCOME OF THE SPECIFIED YEAR OF THE ASSESSEE. ITA NO. 881/JP/2019 REVENUE 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DELETIN G THE PENALTY OF RS. 1,45,50,000/- IMPOSED BY THE AO U/S 271AAB OF THE I.T. ACT, 1961 IGNORING THE FACT THAT HAD TH E SEARCH NOT BEEN CONDUCTED, THE ASSESSEE WOULD NOT HAVE SHOWN T HIS INCOME OF RS. 4.85 CRORES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DELETIN G THE PENALTY ON UNDISCLOSED INCOME OF RS. 4.85 CRORES ON AMOUNT OF ADVANCES. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN HOLD ING THAT ALLEGED INCOME WAS FOUND RECORDED IS OTHER DOCUMENT S ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 3 MAINTAINED BY THE ASSESSEE IN NORMAL COURSE AS PER CLAUSE (C) OF SUB-SECTION (1) TO EXPLANATION OF SECTION 271AAB OF THE I.T. ACT, 1961. 2.1 DUE TO PREVAILING COVID-19 PANDEMIC CONDITION, THE HEARING OF THE APPEAL IS CONCLUDED THROUGH VIDEO CONFERENCE. F IRST OF ALL, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ADJUDICATION AS PER THE GROUNDS OF APPEAL RAISED HEREINABOVE. 3.1 BRIEF FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS TOOK PLACE ON 23-05-2013 AT THE PREMISES OF THE ASSESSEE AND CERTAIN DOCUMENTS WERE SEIZED. THE ASS ESSEE FURNISHED THE RETURN OF INCOME ON 13-09-2014 DECLARING INCOME OF RS. 9,11,26,750/-. OUT OF THE ABOVE INCOME, THE ASSESSEE DECLARED RS. 8,05,00,000/-AS UNDISCLOSED INCOME WHICH WAS ACCEPTED BY THE DEPART MENT ON THE BASIS OF THE STATEMENT RECORDED DURING THE COURSE OF SEAR CH U/S 132(4) OF THE ACT. 3.2 SUBSEQUENTLY, THE AO INITIATED THE PENALTY PROC EEDINGS AND IMPOSED PENALTY OF RS. 2,41,50,000/- @ 30% ON TOTAL UNDISCLOSED INCOME U/S 271AAB(1)( C) OF THE ACT ON THE FOLLOWING SURRE NDERS:- (I) ADVANCE AGAINST LAND RS. 4.85 CRORES (II) CASH FOUND RS. 1.7 CRORES (III) UNEXPLAINED JEWELLERY RS. 1.50 CRORES TOTAL PENALTY LEVIED ON RS. 8.05 CRORES @ 30% ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 4 3.4 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE PENALTY IMPOS ED ON RS. 4.85 CRORES BY HOLDING THAT SURRENDER OF RS. 4.85 CRORES DO NOT FALL IN THE DEFINITION OF UNDISCLOSED INCOME AND CONFIRMED THE PENALTY ON OTHER TWO COUNTS. 3.5 NOW AGGRIEVED BY THE ORDER OF THE LD. CIT(A), B OTH I.E. ASSESSEE AS WELL AS REVENUE PREFERRED RESPECTIVE APPEALS. AT PR ESENT, WE ARE FIRSTLY DECIDING THE APPEAL OF THE ASSESSEE ON THE GROUNDS MENTIONED HEREINABOVE. 3.6 THE GROUND NO. 1 TO 3 RAISED BY THE ASSESSEE RE LATES TO CHALLENGING THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE PENALT Y IMPOSED BY THE AO U/S 271AAB OF THE ACT. 3.7 THE LD.AR OF THE ASSESSEE APPEARING ON BEHALF O F THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE THE LD. CIT(A) AND HE ALSO RELIED ON THE WRITTEN SUBMISSIO N. THE RELEVANT PORTION OF THE SAME IS REPRODUCED BELOW. PENALTY ON CASH OF RS.1.7 CRORES FOR CASH FOUND:- IN THIS REGARD THE SUBMISSION OF THE ASSESSEE IS TH AT THE CASH FOUND WAS SAVING OF ALL THE FAMILY MEMBERS AND LAST SEVERAL YEARS SAVING AND WAS ALSO DISCLOSED BY THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF T HE ACT. IT WAS SUBMITTED THAT THE CASH FOUND AT THE RESIDENCE OF THE ASSESSEE BELONG TO ENTIRE FAMILY MEMBERS OF THE ASS ESSEE BECAUSE IT WAS FOUND AND SEIZED FROM THE INDIVIDUAL ROOMS OF INDIVIDUAL MEMBERS AND THEREFORE, WITHOUT CONSID ERING THE ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 5 AVAILABILITY OF THE CASH AS PER THE DRAWINGS OF ALL THE MEMBERS OF THE FAMILY OF MORE THAN 20 PERSONS, THE SAME CANNOT BE CONSIDERED AS UNDISCLOSED INCOME OF THE A SSESSEE. THE DETAILED DRAWINGS OF THE VARIOUS MEMBERS OF THE ASSESSEES FAMILY ARE ENCLOSED HEREWITH AND IT IS C LEAR THAT FOR THE LAST 5-6 YEARS I.E. FINANCIAL YEARS 2009-10 TO 2014-15, 6 MEMBERS OF THE ASSESSEE HAVE DECLARED THE INCOME OF SEVERAL CRORES IN EACH HAND. EVEN THE WITHDRAWALS A S PER THEIR BALANCE SHEETS ARE ALSO IN CRORES OF RUPEES D URING LAST FIVE YEARS AND IT WAS 9.27 CRORE RUPEES. (DETAILS ENCLOSED) THEREFORE, THE CASH OF RS. 1,50,00,000/- FOUND AT T HE RESIDENCE OF A FAMILY OF ABOUT 20 MEMBERS, OUT OF W HICH 13 MEMBERS ARE TAX PAYERS AND DECLARED INCOME OF CRORE S OF RUPEES, THEN THE SAID AMOUNT OF CASH CANNOT BE TREA TED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ISSUE IS SQUARELY COVERED BY THE DECISION OF SH RI GOPAL DAS SOKHIYA IN ITA NO. 306/JP/2018 DATED 11.04.2019 WHEREIN IT HAS BEEN HELD THAT THE PAST SAVINGS OF THE FAMILY MEMBERS CANNOT BE IGNORED WHILE CONSIDER ING SAID AMOUNT OF RS. 12 LACS AS UNDISCLOSED INCOME OF THE ASSESSEE. ACCORDINGLY, IN THE ABSENCE OF ANY CLEAR CUT FINDING ABOUT THE CASH NOT REPRESENTING AND BELONGI NG TO THE OTHER FAMILY MEMBERS AS THEIR PAST SAVINGS, THE SAM E CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FO R THE YEAR UNDER CONSIDERATION. HENCE THE PENALTY LEVIED BY TH E AO IN RESPECT OF THE CASH FOUND DURING THE SEARCH IS DELE TED. (PAGE NO. 34 OF ORDER) THEREFORE THE ISSUE IS SQUARELY COVERED BY THE ABOVE FINDINGS OF HONBLE ITAT AND DESERVES TO BE DELETED. PENALTY OF RS. 1.5 CRORES FOR JEWELLERY FOUND WITH REGARD TO THE JEWELLERY FOUND DURING THE COURS E OF SEARCH NO INCRIMINATING MATERIAL WAS FOUND DURIN G THE COURSE OF SEARCH. NO ANY EVIDENCE WAS FOUND WHICH S UGGESTS THAT JEWELLERY FOUND WAS PURCHASED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION OUT OF UNDISCLOSED INC OME. THE DISCLOSURE WAS TAKEN ONLY ON THE BASIS OF THE VALUA TION OF ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 6 JEWELLERY AT CURRENT MARKET PRICE INSTEAD OF THE AC TUAL COST OF ACQUISITION OF THE JEWELLERY BECAUSE THE JEWELLERY WAS VERY OLD AND SOME OF THE JEWELLERY WAS ACQUIRED AT THE T IME OF MARRIAGE OF THE VARIOUS FAMILY MEMBERS AND SOME JEW ELLERY WAS INHERITED. CONSIDERING THE OVER ALL FACTS INCLU DING STATUS OF THE ASSESSEES FAMILY AND THE NUMBER OF FAMILY M EMBERS, THE JWELLERY FOUND DURING THE COURSE OF SEARCH IS N OT ABNORMAL AND IT WAS ACQUIRED IN THE LONG BACK AND I N DURATION OF LAST 10-15 YEARS. THE JEWELLERY WAS EVE N NOT PURCHASED BUT INHERITED FROM THE FOREFATHERS AND IN -LAWS OF VARIOUS FAMILY MEMBERS. HENCE THE DISCLOSURE OBTAIN ED ON ACCOUNT OF THE JEWELLERY WOULD NOT CONSTITUTE UNDIS CLOSED INCOME OF THE ASSESSEE FOR THE PURPOSE OF LEVY OF P ENALTY AND PENALTY LEVIED ON RS. 1.50 CRORE ON UNEXPLAINED JEW ELLERY DESERVES TO BE DELETED. THIS ISSUE IS ALSO COVERED BY THE DECISION OF SHRI GOPAL DAS SOKHIYA IN ITA NO. 306/JP/2018 DATED 11.04.2019 WHEREIN IT HAS BEEN HELD THAT WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE REL EVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT WHAT I S FOUND IS THE JEWELLERY BELONG TO THE FAMILY MEMBERS OF THE A SSESSEE AND IT IS NOT DISPUTED BY THE DEPARTMENT THAT THE J EWELLERY DO NOT BELONG TO ASSESSEE ALONE. THEREFORE, MERELY BEC AUSE THE ASSESSEE HAS DECLARED THE INCOME IN THE STATEMENT R ECORDED UNDER SECTION 132(4), IT WOULD NOT IPSO FACTO BE RE GARDED AS UNDISCLOSED INCOME OF THE ASSESSEE IN THE ABSENCE O F THE FACT OR ANY OTHER MATERIAL TO ESTABLISH THAT THE ENTIRE JEWELLERY FOUND AT THE TIME OF SEARCH AND SEIZURE ACTION WAS ONLY ACQUIRED BY THE ASSESSEE AND BELONG TO THE ASSESSEE ALONE. WE FIND THAT IN THE INDIAN FAMILY MOST OF THE JEWEL LERY BELONG TO THE WOMEN OF THE FAMILY. IT IS ALSO CUSTOMARY IN INDIAN SOCIETY THAT THE WOMEN AND PARTICULARLY THE MARRIED WOMEN USED TO RECEIVE THE JEWELLERY FROM THE RELATIVES AN D FRIENDS ON VARIOUS OCCASIONS INCLUDING MARRIAGE, BIRTH OF C HILD AS WELL AS OTHER AUSPICIOUS OCCASIONS LIKE ANNIVERSARI ES ETC. THE DEPARTMENT HAS NOT MADE ANY EFFORT TO FIND OUT THE FACT WHETHER THE JEWELLERY WAS ACQUIRED DURING THE YEAR UNDER CONSIDERATION OR IT IS OLD JEWELLERY. THEREFORE, ON CE THE ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 7 JEWELLERY WAS NOT FOUND TO BE PURCHASED DURING THE YEAR UNDER CONSIDERATION, THEN THE SAME CANNOT BE TREATE D AS AN UNDISCLOSED INCOME FOR THE YEAR UNDER CONSIDERATION WHICH IS SPECIFIED PREVIOUS YEAR. THE JEWELLERY BELONG TO THE FAMILY MEMBERS OF THE ASSESSEE AND FOUND AT THE RESIDENCE WAS OLD JEWELLERY AND, THEREFORE, THE VALUATION OF THE JEWE LLERY FOR THE PURPOSE OF COMPUTING THE UNDISCLOSED INCOME BY APPLYING THE CURRENT RATES ON THE GROSS WEIGHT IS N OT PERMISSIBLE. HENCE WHEN THE DEPARTMENT HAS NOT MADE ANY EFFORTS TO ASCERTAIN THE YEAR OF ACQUISITION OF THE JEWELLERY AND THEN TO APPLY THE RATES AS PREVAILING IN THE YE AR OF ACQUISITION AND SOME OF THE JEWELLERY EVEN NOT ACQU IRED BY THE ASSESSEE OR THE FAMILY MEMBERS BUT IS INHERITED , THEN THE MANNER IN WHICH THE DISCLOSURE IS OBTAINED ON ACCOU NT OF THE JEWELLERY WOULD NOT REPRESENT THE UNDISCLOSED INCOM E AS DEFINED IN THE EXPLANATION TO SECTION 271AAB OF THE ACT. WE FIND THAT THE ORDER PASSED BY THE AO UNDER SECTION 271AAB AS WELL AS THE ORDER OF THE LD. CIT (A) ARE SILENT ON THE ISSUE OF INCORRECT VALUATION AS WELL AS THE TIMING OF ACQ UIRING OF THE PERSONAL JEWELLERY OF THE ASSESSEE AND THE FAMI LY MEMBERS. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PERSONAL JEWELLERY OF THE ASSESSEE AND FA MILY MEMBERS ACQUIRED IN THE PAST AND SOME PART OF WHICH WAS ALSO INHERITED WILL NOT FALL IN THE AMBIT OF UNDISC LOSED INCOME. HENCE THE PENALTY LEVIED BY THE AO AGAINST SUCH DISCLOSURE IS NOT SUSTAINABLE. IT MAY BE PERTINENT TO MENTION THAT THE STATEMENT RECORDED UNDER SECTION 132(4) IT SELF WOULD NOT EITHER CONSTITUTE AN INCRIMINATING MATERIAL OR UNDISCLOSED INCOME IN THE ABSENCE OF ANY CORRESPOND ING ASSET OR ENTRY IN THE SEIZED DOCUMENT REPRESENTING THE UNDISCLOSED INCOME. ACCORDINGLY, THE PENALTY LEVIED BY THE AO UNDER SECTION 271AAB OF THE ACT IS DELETED. (PAGE NO. 35 TO 37 OF ORDER) THE FACTS OF THE ASSESSEES CASE SHOWS THAT THERE W AS NO UNDISCLOSED INCOME FOUND DURING THE COURSE OF SE ARCH AND NO INCRIMINATING MATERIAL WAS FOUND, THEREFORE THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER DESERVES T O BE DELETED. ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 8 3.8 THE LD. DR RELIED ON THE ORDER PASSED BY THE LD . CIT(A) ON THESE GROUNDS AND ALSO RELIED ON THE WRITTEN SUBMISSION F ILED BY HIM DATED 28-8-2020. IT WAS SUBMITTED BY THE LD. DR THAT THE PENALTY WAS RIGHTLY LEVIED ON ACCOUNT OF UNEXPLAINED CASH, UNEXPLAINED JEWELLERY AND UNEXPLAINED ADVANCES FOUND AT THE PREMISES OF THE A SSESSEE. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSEE HAS NOT B EEN ABLE TO SUBSTANTIATE THE GROUNDS TAKEN BY HIM AND SINCE THE ASSESSEE COU LD NOT EXPLAIN THE SOURCE OF CASH OF RS. 1.70 CRORES FOUND DURING THE COURSE OF SEARCH, THEREFORE, THE SAME WAS RIGHTLY TREATED AS INCOME O F THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND IT WAS ALSO SUBMITTED BY THE LD. DR THAT SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF JEWELLERY FOUND DURING THE COURSE OF SEARCH, THEREFORE, IN VIEW OF THE PRO VISIONS OF SECTION 69A OF THE ACT, THE SAME WAS RIGHTLY TREATED AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 3.9 WE HAVE HEARD THE LD. COUNSELS FOR BOTH THE PAR TIES AND WE HAVE ALSO PERUSED THE MATERIALS PLACED ON RECORD, DELIBE RATED UPON THE JUDGEMENTS CITED BY THE PARTIES AS WELL AS THE ORDE RS OF THE REVENUE AUTHORITIES. FROM THE RECORDS, WE NOTICED THAT THE CASH FOUND DURING THE COURSE OF SEARCH, ACCORDING TO THE ASSESSEE WAS SAV INGS OF ALL THE FAMILY ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 9 MEMBERS FOR THE LAST SEVERAL YEARS. THE SAID FACT WAS ALSO DISCLOSED BY THE ASSESSEE IN THE STATEMENT RECORDED U/S 132(4) O F THE ACT. IT WAS CATEGORICALLY SUBMITTED BY THE ASSESSEE THAT CASH F OUND AT THE RESIDENCE BELONGS TO THE ENTIRE FAMILY MEMBERS AND IT WAS FOU ND AND SEIZED FROM THE INDIVIDUAL ROOMS OF THE INDIVIDUAL MEMBERS. IN THIS RESPECT, THE ASSESSEE ALSO PLACED ON RECORD THE DRAWINGS OF ALL THE MEMBERS OF THE FAMILY OF 20 PERSONS. FROM THE RECORDS, WE ALSO NOT ICED THAT FOR THE LAST 5/6 YEARS I.E. F.Y. 2009-10 TO 2014-15, 06 MEMBERS OF THE ASSESSEE HAD DECLARED THE INCOME OF SEVERALCRORES IN EACH HAND. EVEN THE WITHDRAWAL AS PER BALANCE SHEET ARE ALSO IN CRORES OF RUPEES D URING THE LAST FIVE YEARS REGARDING WHICH THE ASSESSEE HAD ALREADY PLACED ON RECORDS THE DOCUMENTS WHICH CONTAINS IN THE PAPER BOOK PAGES 1 TO 70. OUT OF THE 20 FAMILY MEMBERS, 13 MEMBERS ARE TAXPAYERS AND HAS D ECLARED INCOME OF CRORES OF RUPEES. THE LD.AR OF THE ASSESSEE HAD ALS O RELIED ON THE DECISION IN THE CASE OF SHRI GOPAL DAS SOKHIYA IN ITA NO. 306/JP/2018 DATED 11.04.2019 WHEREIN IT HAS BEEN HELD THAT THE PAST SAVINGS OF THE FAMILY MEMBERS CANNOT BE IGNORED WHILE CONSIDERING SAID AM OUNT OF RS. 12 LACS AS UNDISCLOSED INCOME OF THE ASSESSEE. ACCORDINGLY, IN THE ABSENCE OF ANY CLEAR CUT FINDING ABOUT THE CASH NOT REPRESENTING A ND BELONGING TO THE OTHER FAMILY MEMBERS AS THEIR PAST SAVINGS, THE SAM E CANNOT BE TREATED AS ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 10 UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UND ER CONSIDERATION. HENCE THE PENALTY LEVIED BY THE AO IN RESPECT OF TH E CASH FOUND DURING THE SEARCH IS DELETED. (PAGE NO. 34 OF ORDER) AND SUBMITTED THAT THE ISSU E IS SQUARELY COVERED BY THE ABOVE FINDINGS OF HONBL E ITAT AND DESERVES TO BE DELETED.. 3.10 AS FAR AS THE JEWELLERY FOUND DURING THE COURS E OF SEARCH IS CONCERNED, WE FOUND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THERE WAS NO EVIDENCE WHICH SU GGEST THAT JEWELLERY FOUND WAS PURCHASED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION OUT OF UNDISCLOSED INCOME. ALTHOUGH DISCLOSURE WAS TAKEN ON THE BASIS OF THE VALUATION OF JEWELLERY AT CURRENT MARKET PRICE INSTEAD OF ACTUAL COST OF ACQUISITION OF THE JEWELLERY AND AS PER THE ASSESSE E JEWELLERY WAS VERY OLD AND SOME OF THE JEWELLERY WAS ACQUIRED AT THE T IME OF MARRIAGE OF VARIOUS FAMILY MEMBERS AND SOME OF THE JEWELLERY WA S INHERITED. THE LD.AR OF THE ASSESSEE RELIED ON THE DECISION OF ITA T JAIPUR BENCH IN THE CASE OF SHRI GOPAL DAS SOKHIYA (ITA NO. 306/JP/2018 DATED 1 1-04- 2019) WHEREIN THE BENCH HAS OBSERVED AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUT E THAT WHAT IS FOUND IS THE JEWELLERY BELONG TO THE FAMILY MEMBERS OF THE ASSESSEE AND IT IS NOT DISPUTED BY THE DEPAR TMENT THAT THE JEWELLERY DO NOT BELONG TO ASSESSEE ALONE. THER EFORE, ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 11 MERELY BECAUSE THE ASSESSEE HAS DECLARED THE INCOME IN THE STATEMENT RECORDED UNDER SECTION 132(4), IT WOULD N OT IPSO FACTO BE REGARDED AS UNDISCLOSED INCOME OF THE ASSE SSEE IN THE ABSENCE OF THE FACT OR ANY OTHER MATERIAL TO ES TABLISH THAT THE ENTIRE JEWELLERY FOUND AT THE TIME OF SEARCH AN D SEIZURE ACTION WAS ONLY ACQUIRED BY THE ASSESSEE AND BELONG TO THE ASSESSEE ALONE. WE FIND THAT IN THE INDIAN FAMILY M OST OF THE JEWELLERY BELONG TO THE WOMEN OF THE FAMILY. IT IS ALSO CUSTOMARY IN INDIAN SOCIETY THAT THE WOMEN AND PART ICULARLY THE MARRIED WOMEN USED TO RECEIVE THE JEWELLERY FRO M THE RELATIVES AND FRIENDS ON VARIOUS OCCASIONS INCLUDIN G MARRIAGE, BIRTH OF CHILD AS WELL AS OTHER AUSPICIOU S OCCASIONS LIKE ANNIVERSARIES ETC. THE DEPARTMENT HA S NOT MADE ANY EFFORT TO FIND OUT THE FACT WHETHER THE JE WELLERY WAS ACQUIRED DURING THE YEAR UNDER CONSIDERATION OR IT IS OLD JEWELLERY. THEREFORE, ONCE THE JEWELLERY WAS NOT FO UND TO BE PURCHASED DURING THE YEAR UNDER CONSIDERATION, THEN THE SAME CANNOT BE TREATED AS AN UNDISCLOSED INCOME FOR THE YEAR UNDER CONSIDERATION WHICH IS SPECIFIED PREVIOU S YEAR. THE JEWELLERY BELONG TO THE FAMILY MEMBERS OF THE A SSESSEE AND FOUND AT THE RESIDENCE WAS OLD JEWELLERY AND, T HEREFORE, THE VALUATION OF THE JEWELLERY FOR THE PURPOSE OF C OMPUTING THE UNDISCLOSED INCOME BY APPLYING THE CURRENT RATE S ON THE GROSS WEIGHT IS NOT PERMISSIBLE. HENCE WHEN THE DEP ARTMENT HAS NOT MADE ANY EFFORTS TO ASCERTAIN THE YEAR OF A CQUISITION OF THE JEWELLERY AND THEN TO APPLY THE RATES AS PRE VAILING IN THE YEAR OF ACQUISITION AND SOME OF THE JEWELLERY E VEN NOT ACQUIRED BY THE ASSESSEE OR THE FAMILY MEMBERS BUT IS INHERITED, THEN THE MANNER IN WHICH THE DISCLOSURE IS OBTAINED ON ACCOUNT OF THE JEWELLERY WOULD NOT REPR ESENT THE UNDISCLOSED INCOME AS DEFINED IN THE EXPLANATION TO SECTION 271AAB OF THE ACT. WE FIND THAT THE ORDER PASSED BY THE AO UNDER SECTION 271AAB AS WELL AS THE ORDER OF THE LD . CIT (A) ARE SILENT ON THE ISSUE OF INCORRECT VALUATION AS W ELL AS THE TIMING OF ACQUIRING OF THE PERSONAL JEWELLERY OF TH E ASSESSEE AND THE FAMILY MEMBERS. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PERSONAL JEWELLERY O F THE ASSESSEE AND FAMILY MEMBERS ACQUIRED IN THE PAST AN D SOME PART OF WHICH WAS ALSO INHERITED WILL NOT FALL IN T HE AMBIT OF ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 12 UNDISCLOSED INCOME. HENCE THE PENALTY LEVIED BY THE AO AGAINST SUCH DISCLOSURE IS NOT SUSTAINABLE. IT MAY BE PERTINENT TO MENTION THAT THE STATEMENT RECORDED UN DER SECTION 132(4) ITSELF WOULD NOT EITHER CONSTITUTE A N INCRIMINATING MATERIAL OR UNDISCLOSED INCOME IN THE ABSENCE OF ANY CORRESPONDING ASSET OR ENTRY IN THE SEIZED D OCUMENT REPRESENTING THE UNDISCLOSED INCOME. ACCORDINGLY, T HE PENALTY LEVIED BY THE AO UNDER SECTION 271AAB OF TH E ACT IS DELETED. 3.11 AFTER METICULOUSLY GOING THROUGH THE FACTS OF THE CASE AND WHILE APPLYING THE PRINCIPLES LAID DOWN BY THE COORDINATE BENCH OF ITAT IN THE CASE OF SHRI GOPAL DAS SOKHIYA (SUPRA), WE ARE ALSO OF THE OPINION THAT PAST SAVINGS OF THE FAMILY MEMBERS CANNOT BE I GNORED WHILE CONSIDERING THE SAID AMOUNT OF RS. 1.70 CRORES AS UNDISCLOSED INCOME OF THE ASSESSEE AND IN THE ABSENCE OF ANY CLEAR CUT FINDINGS ABOUT THE CASH NOT REPRESENTING AND BELONGING TO OTHER FAMILY MEMB ERS AS THEIR PAST SAVINGS, THE SAME CANNOT BE TREATED AS UNDISCLOSE D INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 3.12 THERE IS NO DISPUTE THAT WHAT IS FOUND DURING THE COURSE OF SEARCH, IS THE JEWELLERY BELONG TO THE FAMILY MEMBERS OF TH E ASSESSEE AND IT IS NOT DISPUTED BY THE DEPARTMENT THAT THE JEWELLERY DO NO T BELONG TO THE ASSESSEE ALONE. THEREFORE, MERELY BECAUSE THE ASSES SEE HAS DECLARED THE INCOME IN THE STATEMENT RECORDED U/S 132(4), IT WOU LD NOT IPSO FACTO BE ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 13 REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE IN T HE ABSENCE OF THE FACTS OR ANY OTHER MATERIAL TO ESTABLISH THAT ENTIRE JEWE LLERY FOUND AT THE TIME OF SEARCH AND SEIZURE ACTION WAS ONLY ACQUIRED BY THE ASSESSEE AND BELONGS TO THE ASSESSEE ALONE. WE ARE ALSO OF THE VIEW THAT IN INDIAN IN FAMILY MOST OF THE JEWELLERY BELONG TO THE WOMEN OF THE FA MILY AND IT IS ALSO CUSTOMARY IN THE INDIAN SOCIETY THAT WOMEN AND PART ICULARLY THE MARRIED WOMEN USED TO RECEIVE THE JEWELLERY FROM THE RELATI VES AND FRIENDS ON VARIOUS OCCASIONS INCLUDING MARRIAGE, BIRTH OF CHIL D AS WELL AS OTHER AUSPICIOUS OCCASIONS LIKE ANNIVERSARIES ETC. THE D EPARTMENT HAS NOT MADE ANY EFFORTS TO FIND OUT THE FACT WHETHER THE J EWELLERY WAS ACQUIRED DURING THE YEAR UNDER CONSIDERATION OR IT IS OLD JE WELLERY. THEREFORE, ONCE THE JEWELLERY WAS NOT FOUND TO BE PURCHASED DURING THE YEAR UNDER CONSIDERATION THEN THE SAME CANNOT BE TREATED AS UN DISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WHICH IS SPECIFIED PREVIOUS YEAR. THE JEWELLERY BELONG TO THE FAMILY MEMBERS OF THE ASSESSEE AND FOUND AT THE RESIDENCE WAS OLD JEWELLERY AND THEREF ORE, THE VALUATION OF THE JEWELLERY FOR THE PURPOSE OF COMPUTING THE UNDI SCLOSED INCOME BY APPLYING THE CURRENT RATES ON THE GROSS WEIGHT IS N OT PERMISSIBLE. THEREFORE, WHEN THE DEPARTMENT HAS NOT MADE ANY EFF ORTS TO ASCERTAIN THE YEAR OF ACQUISITION OF THE JEWELLERY AND THEN TO AP PLY THE RATES AS ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 14 PREVAILING IN THE YEAR OF ACQUISITION AND SOME OF T HE JEWELLERY EVEN NOT ACQUIRED BY THE ASSESSEE OR THE FAMILY MEMBERS BUT IS INHERITED, THEN THE MANNER IN WHICH THE DISCLOSURE IS OBTAINED ON ACCOU NT OF THE JEWELLERY WOULD NOT REPRESENT THE UNDISCLOSED INCOME AS D EFINED IN EXPLANATION TO SECTION 271AAB OF THE ACT. WE FIND THAT THE ORDE R OF THE AO U/S 271AAB OF THE ACT. WE FIND THAT THE ORDER OF THE AO U/S 271AAB AS WELL AS THE ORDER OF THE LD. CIT(A) ARE SILENT ON T HE ISSUE OF INCORRECT VALUATION AS WELL AS THE TIMING OF ACQUIRING OF THE PERSONAL JEWELLERY OF THE ASSESSEE AND THE FAMILY MEMBERS. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PERSONAL JEWELLERY O F THE ASSESSEE AND THE FAMILY MEMBERS ACQUIRED IN THE PAST AND SOME PART O F WHICH WAS ALSO INHERITED, WILL NOT FALL IN THE AMBIT OF UNDISCLO SED INCOME. THEREFORE, WHILE APPLYING THE PRINCIPLES AS LAID DOWN BY THE C OORDINATE BENCH OF ITAT IN THE CASE OF SHRI GOPAL DAS SOKHIYA (SUPRA), WHEREIN THE FACTS WERE SIMILAR, WE ARE OF THE CONSIDERED VIEW THAT PE NALTY LEVIED BY THE AO AGAINST SUCH DISCLOSURE IS NOT SUSTAINABLE. IT MAY BE PERTINENT TO MENTION THAT THE STATEMENT RECORDED U/S 132(4) OF THE ACT ITSELF WOULD NOT EITHER CONSTITUTE AN INCRIMINATING MATERIAL OR UNDISCLOS ED INCOME IN THE ABSENCE OF ANY CORRESPONDING ASSET OR ENTRY IN THE SEIZED DOCUMENTS REPRESENTING THE UNDISCLOSED INCOME . ACCORDING LY, THE PENALTY LEVIED ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 15 BY THE AO ON ACCOUNT OF CASH FOUND AND ON ACCOUNT O F UNEXPLAINED JEWELLERY STAND DELETED. THUS THE APPEAL OF THE ASS ESSEE IS ALLOWED. 4.1 NOW WE PROCEED TO DECIDE THE APPEAL FILED BY TH E REVENUE IN ITA NO.881/JP/2019. THE GROUND NOS. 1 TO 3 RAISED BY TH E REVENUE ARE INTER- RELATED AND INTER-CONNECTED AND RELATES TO CHALLENG ING THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY IMPOSED BY THE AO U/ S 271AAB(1)(C) OF THE ACT ON ACCOUNT OF ADVANCES PAID BY THE ASSESSEE . THEREFORE, WE THOUGHT IT FIT TO DISPOSE OFF THESE GROUNDS THROUG H A CONSOLIDATED ORDER. 4.2 WE HAVE HEARD LD. COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO DELIBERATED UPON THE JUDGEMENTS CITED BY THE PARTIE S AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. BEFORE, WE DECID E THE MERIT OF THESE GROUNDS RAISED BY THE REVENUE, IT IS NECESSARY TO E VALUATE THE ORDER PASSED BY THE LD. CIT(A). WHILE DECIDING THESE GROU NDS, THE LD. CIT(A) HAS DEALT WITH THESE GROUNDS IN PARA 3 TO 6 OF HIS ORDER. HOWEVER, THE RELEVANT PORTION IS CONTAINED IN PARA NO 5.5 TO 6.3 WHICH IS REPRODUCED BELOW. 5.5 THE APPELLANT WAS SUBJECTED TO SEARCH AND SEI ZURE ON 23-05-2013. DURING THE COURSE OF SEARCH CERTAIN LOO SE PAPER WERE FOUND AND SEIZED MARKED ANNEXURE AS 1, EXHIBIT 1 & 2, WHICH CONTAINED LIST OF ADVANCES GIVEN FOR LAND PURCHASED TOTALING TO 4.85 CRORES. THESE PAGES ARE FILED BEFORE ME IN PAP ER BOOK PAGER 43-46. THE APPELLANT OWNED THESE ADVANCE GIVEN AS H IS UNDISCLOSED INCOME U/S 132(4) OF THE ACT AND PAID TAXED THERE I N THE RETURNED FILED ON 31-01-2015. THE NATURE OF THESE TRANSACTIO NS WAS DESCRIBED ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 16 BY THE APPELLANT IN THE STATEMENT U/S 132(4) OF THE ACT AS ADVANCE GIVEN FOR THE PURCHASE OF LAND IN Q/A 21 & 22 OF TH E STATEMENT. SAME WAS ACCEPTED AS SUCH BY THE AO IN THE ASSESSME NT ORDER. THE AO IMPOSED PENALTY ON 8.05 CRORES. 5.6 I HAVE CAREFULLY PERUSED THE ORDER RELIED UPON . THE RELEVANT PARA 21 OF RAJENDRA KUMAR GUPTA VS. DCIT ITA 359/JP /2017 READS AS UNDER 21. DURING THE COURSE OF SEARCH, A NOTE BOOK (DIARY) HAS BEEN FOUND REFERRED TO AS ANN. AS WHERE IN THERE ARE CERTAIN NOTINGS RELATING TO CASH ADVANCES GIVEN TO VARIOUS PERSONS TOTALING TO RS 82,80,000. REFERRING TO THE STATEMENT OF THE ASSESSEE IN RESPE CT OF THESE NOTINGS RECORDED U/S 132(4), LD CIT(A) HAS GI VEN A FINDING THAT THE ASSESSEE HAS GIVEN A GENERALIZED STATEMENT WITHOUT SPECIFYING THE COMPLETE PARTICULA RS OF PERSONS TO WHOM LOANS WERE GIVEN AND ALSO FAILED TO SUBSTANTIATE THE SAME. THE SAID FINDINGS HAVE NOT BEEN DISPUTED BY THE REVENUE AND THEREFORE, MERELY BASED ON SURRENDER AND GENERALIZED STATEMENT OF THE ASSES SEE, IN ABSENCE OF ANYTHING SPECIFIC TO CORROBORATE SUCH ENTRIES, CAN IT BE SAID THAT SUCH ENTRIES/NOTINGS REPRESENT UNDISCLOSED INCOME OF THE ASSESSEE. AS P ER THE DEFINITION OF UNDISCLOSED INCOME U/S 271AAB, TH E SAID CASH ADVANCES CANNOT BE STATED TO BE INCOME WH ICH IS REPRESENTED BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING. WHETHER IT CAN THEN BE SAID THAT SUCH UNDISCLOSED CASH ADVANCES REPRESENTS INCOME BY WAY OF ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT S OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132. A CASH ADVANCE PER SE REPRESENTS AN OUTFLOW O F FUNDS FROM THE ASSESSEES HAND AND AN INCOME PER SE REPRE SENTS AN INFLOW OF FUNDS IN THE HANDS OF THE ASSESSEE. THER EFORE, ONCE THERE IS AN INFLOW OF FUNDS BY WAY OF INCOME, THERE CAN BE SUBSEQUENT OUTFLOW BY WAY OF AN ADVANCE TO ANY THIR D PARTY. GIVING AN ADVANCE AND INCOME THUS CONNOTES DIFFEREN T MEANING AND CONNOTATION AND THUS CANNOT BE USED INT ER- CHANGEABLY. IN THE DEFINITION OF UNDISCLOSED INCOM E, WHERE IT TALKS ABOUT INCOME BY WAY OF ANY ENTRY IN THE B OOKS OF ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 17 ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHAT PERHAPS HAS BEEN ENVISAGED BY THE LEGISLATURE IS AN INFLOW OF FUNDS IN THE HANDS OF THE ASSESSEE WHICH HAS BEEN FOUND BY WAY O F ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS, AND WHICH HAS NOT BEEN RECORDED BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED BY THE ASSESSEE IN THE NORMAL COURSE AND NOT VICE-VERSA. W E ARE ALSO CONSCIOUS OF THE FACT THAT THERE ARE DEEMING P ROVISIONS IN TERMS OF SECTION 69 AND 69B WHEREIN SUCH AMOUNTS MAY BE DEEMED AS INCOME IN ABSENCE OF SATISFACTORY EXPL ANATION. IN OUR VIEW, THE DEEMING FICTION SO ENVISAGED UNDER SECTION 69 AND SECTION 69B CANNOT BE EXTENDED AND APPLIED AUTOMATICALLY IN CONTEXT OF SECTION 271AAB. IT IS A WELL- SETTLED LEGAL PROPOSITION THAT THE DEEMING PROVISIO NS ARE LIMITED FOR THE PURPOSES THAT HAVE BEEN BROUGHT ON THE STATUTE BOOK AND HAVE THEREFORE TO BE APPLIED IN THE CONTEX T OF PROVISIONS WHEREIN THEY HAVE BEEN BROUGHT ON THE ST ATUE BOOK AND NOT OTHERWISE. IN THE INSTANT CASE, THE D EEMING PROVISIONS CONTAINED IN SECTION 69 AND SECTION 69B COULD HAVE BEEN APPLIED IN THE CONTEXT OF BRINGING TO TAX SUCH INVESTMENTS TO TAX IN THE QUANTUM PROCEEDINGS, THOU GH THE FACT OF THE MATTER IS THAT THE AO HAS NOT EVEN INVO KED THE SAID DEEMING PROVISIONS IN THE QUANTUM PROCEEDINGS. THEREFORE, EVEN ON THIS ACCOUNT, THE DEEMING FICTIO N CANNOT BE EXTENDED TO THE PENALTY PROCEEDINGS WHICH ARE SE PARATE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS AND MO RE SO, WHERE THE PROVISIONS OF SECTION 271AAB PROVIDE FOR A SPECIFIC DEFINITION OF UNDISCLOSED INCOME. WHERE A SPECIFIC DEFINITION OF UNDISCLOSED INCOME HAS BEEN PROVIDED IN SECTION 271AAB, BEING A PENAL PROVISION, THE SAME M UST BE STRICTLY CONSTRUED AND IN LIGHT OF SATISFACTION OF CONDITIONS SPECIFIED THEREIN AND IT IS NOT EXPECTED TO EXAMINE OTHER PROVISIONS WHERE THE SAME HAS BEEN DEFINED OR DEEME D FOR THE PURPOSES OF BRINGING THE AMOUNT TO TAX. IN LIG HT OF THE SAME, THE UNDISCLOSED INVESTMENT BY WAY OF ADVANCES CAN BE SUBJECT MATTER OF ADDITION IN THE QUANTUM PROCEEDIN GS, AS THE SAME HAS BEEN SURRENDERED DURING THE COURSE OF SEAR CH IN THE STATEMENT RECORDED U/S 132(4) AND OFFERED IN THE RE TURN OF ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 18 INCOME, HOWEVER THE SAME CANNOT BE SAID TO QUALIFY AS AN UNDISCLOSED INCOME IN THE CONTEXT OF SECTION 271AAB READ WITH THE EXPLANATION THERETO AND PENALTY SO LEVIED THEREON DESERVED TO BE SET-ASIDE. CAREFUL PERUSAL OF THE ORDER SHOWS THAT SO FAR AS ADVANCES ARE CONCERNED THE APPELLANT CASE IS COVERE D BY THE SAID DECISION OF HON'BLE ITAT JAIPUR ORDER. 5.7 FURTHER DURING THE COURSE OF APPELLATE PROCEEDI NGS THE LD A/R WAS SPECIFICALLY ASKED ABOUT APPLICABILI TY OF THE DECISION IN THE CASE OF SANDEEP CHANDAK VS. CIT 93 TAXMANN.COM 405, IN WHICH CASE THE SLP FILED BY THE APPELLANT IN THAT CASE WAS DISMISSED BY HON'BLE SUP REME COURT. THE LD. A/R SUBMITTED AS UNDER: 1. THAT THE CASE SHRI SANDEEP CHANDAK IN ITA NO. 12 2 OF 2017 DECIDED BY HON'BLE ALLAHABAD HIGH COURT IS TOT ALLY DIFFERENT FROM THE FACTS OF THE FACTS OF THE ASSESS EE'S CASE. IN THE CASE OF SHRI SANDEEP CHANDAK THE ISSUE OF IN ITIATION OF PENALTY AND SATISFACTION OF THE AO WAS PRIMARY I SSUE WHICH HAS BEEN CHALLENGED BY THE ASSESSEE. THE HON' BLE ITAT LUCKNOW BENCH HAS GIVEN RELIEF TO THE ASSESSEE . AT THE END THE TRIBUNAL HAS HELD THAT SINCE THE PRO VISIONS OF SECTION 271AAB ARE NOT ANDATORY THEREFORE, LEVY OF PENALTY IN EACH AND EVERY CASE WHERE EVER THE ASSESSEE HAS MAD E DEFAULT IS UNJUSTIFIED.' 6. I HAVE CAREFULLY PERUSED THE SUBMISSIONS MADE AN D THE JUDGMENT TOO. I AM IN AGREEMENT WITH THE LD. A/ R THAT IN SANDEEP CHANDAK CASE THE ADJUDICATION WAS MADE IN R EFERENCE TO THE NOTICE ISSUED U/S 274 R.W.S. 271 BY THE DEPARTM ENT. THE GROUNDS IN THE CASE OF SANDEEP CHANDAK ARE AS UNDER:- ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 19 2. FOLLOWING QUESTIONS OF LAW HAVE BEEN FRAMED BY T HE ASSESSEE: '(A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ITAT HAS ERRED IN NOT APPR ECIATING THE FACTS THAT THE NOTICE WAS ISSUED FOR IMPOSITION OF PENALTY U/S 271AAB AND NOT FOR IMPOSITION OF PENALTY U/S 27 1(1)(C) OF THE ACT ? (B) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ITAT HAS ERRED IN NOT APPRECIATING THE FACTS THAT THE SPECIFIC CHARGE 'HA VE IN A STATEMENT UNDER SUB SECTION 4 OF SECTION 132 DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ADMITTED UNDISCLOSED INCOME' WAS MENTIONED IN THE NOTICE ? WHETHER THE BENEFIT OF SECTION 292BB WAS CORRECTLY DENIED TO THE AO/APPELLANT BY THE ITAT?' 6.2 CLEARLY THE ISSUE OF WHAT CONSTITUTE THE 'UNDIS CLOSED INCOME WITHIN THE DEFINITION PROVIDED IN THE SECTIO N U/S 271AAB WAS NEVER A SUBJECT MATTER BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD. EVEN OTHERWISE THIS ASPECT IS DISCUSSED ELABORATELY IN THE ORDER OF NIRAJ MATHUR DELIVERED BY HON'BLE ITAT JAIPUR. THUS, FOLLOWING THE DECISION OF THE HON'BLE ITAT JA IPUR BENCH DISCUSSED SUPRA, THE PENALTY LEVIED BY THE AO ON THE ADVANCES OF 4.85 CRORES IS UNTENABLE. THE VARIOUS O THER CASES OF ITAT JAIPUR BENCH REFERRED BY THE LD. AR ALSO SUPPO RT HIS CASE. 6.3 THUS FOLLOWING THE DECISION OF THE HONBLE ITAT JAIPUR BENCH DISCUSSED SUPRA, THE PENALTY LEVIED BY THE AO ON THE ADVANCES OF RS. 4.85 CRORES IS UNTENABLE. THE VARIO US OTHER CASES OF ITAT JAIPUR BENCH REFERRED BY THE LD. AR ALSO SU PPORT HIS CASE. ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 20 AFTER HAVING GONE THROUGH THE SUBMISSIONS MADE BY B OTH THE PARTIES AND FACTS OF THE PRESENT CASE, WE NOTICED THAT THE LD. CIT(A) HAS DECIDED THESE GROUNDS BY RELYING UPON THE DECISION OF COORDINATE BENCH OF ITAT JAIPUR IN THE CASE OF RAJENDER KUMAR GUPTA VS DCIT (ITA NO. 359/JP/2017 AND IN THE CASE OF RAJA RAM MAHESHWARI VS DCIT (ITA NO.992/JP/2017 DATED 10-01-2019). AS PER THE FACTS, ASSESSEE WAS SUBJECTED TO SEARCH AND SEIZURE ON 23-05-2013. DURI NG THE COURSE OF SEARCH, CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED MARKED ANNEXURE AS- 1, EXHIBIT 1 &2 WHICH CONTAINED LIST OF ADVANCES GI VEN FOR LAND PURCHASED TOTALING TO RS. 4.85 CRORES . COPIES OF THESE PAPER S HAVE ALSO BEEN FILED BEFORE THE LD. CIT(A) AND ALSO BEFORE US IN THE PAP ER BOOK. ALTHOUGH, THE ASSESSEE OWNED THESE ADVANCES GIVEN AS HIS UNDISCLO SED INCOME U/S 132(4) OF THE ACT AND PAID TAX THERE, IN THE RETURN FILED ON 31-01-2015 AND THE NATURE OF THESE TRANSACTIONS WAS DESCRIBED BY T HE ASSESSEE IN THE STATEMENT U/S 132(4) OF THE ACT AS ACCORDING TO THE ASSESSEE, THE ADVANCES WERE GIVEN FOR PURCHASE OF LAND. THE SAID STATEMENT WAS ACCEPTED BY THE AO IN THE ORDER OF ASSESSMENT AND CONSEQUENTLY PENA LTY WAS IMPOSED. WE HAVE ALSO CONSIDERED THE DECISION IN THE CASE OF RAJENDER KUMAR GUPTA VS DCIT (SUPRA) WHICH READS AS UNDER:- ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 21 21. DURING THE COURSE OF SEARCH, A NOTE BOOK (DI ARY) HAS BEEN FOUND REFERRED TO AS ANN. AS WHEREIN THERE ARE CERTAIN NOTINGS RELATING TO CASH ADVANCES GIVEN TO VARIOUS PERSONS TOTALING TO RS 82,80,000. REFERRING TO THE STATEMENT OF THE ASSESS EE IN RESPECT OF THESE NOTINGS RECORDED U/S 132(4), LD CIT(A) HAS GI VEN A FINDING THAT THE ASSESSEE HAS GIVEN A GENERALIZED STATEMENT WITH OUT SPECIFYING THE COMPLETE PARTICULARS OF PERSONS TO WHOM LOANS WERE GIVEN AND ALSO FAILED TO SUBSTANTIATE THE SAME. THE SAID FINDINGS HAVE NOT BEEN DISPUTED BY THE REVENUE AND THEREFORE, MERELY BASED ON SURRENDER AND GENERALIZED STATEMENT OF THE ASSESSEE, IN ABSENCE O F ANYTHING SPECIFIC TO CORROBORATE SUCH ENTRIES, CAN IT BE SAID THAT SU CH ENTRIES/NOTINGS REPRESENT UNDISCLOSED INCOME OF THE ASSESSEE. AS P ER THE DEFINITION OF UNDISCLOSED INCOME U/S 271AAB, THE SAID CASH ADVANC ES CANNOT BE STATED TO BE INCOME WHICH IS REPRESENTED BY ANY MON EY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING. WHETHER IT CAN THEN BE SAID THAT SUCH UNDISCLOSED CASH ADVANCES REPRESENTS INCOME BY WAY OF ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132. A CASH ADVANCE PER SE REPRESENTS AN OUTFLOW OF FUNDS FROM THE ASSESSEES HAND AND AN INCOME PER SE REPRESENTS AN INFLOW OF FUNDS IN THE HANDS OF THE ASSESSEE. THEREFORE, ONCE THERE IS AN INFLOW OF FUNDS BY WAY OF INCOME, THERE CAN BE SUBSEQUENT OUTFLOW BY WAY OF A N ADVANCE TO ANY THIRD PARTY. GIVING AN ADVANCE AND INCOME THUS CONNOTES DIFFERENT MEANING AND CONNOTATION AND THUS CANNOT BE USED INTER-CHANGEABL Y. IN THE DEFINITION OF UNDISCLOSED INCOME, WHERE IT TALKS ABOUT INCOME BY WAY OF ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHAT PERHAPS HAS BEEN EN VISAGED BY THE LEGISLATURE IS AN INFLOW OF FUNDS IN THE HANDS OF THE ASSESSEE WHICH HAS BEEN FOUND BY WAY OF ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS, AND WHICH HAS NOT BEEN RECORDED BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED BY THE ASSESSEE IN THE NORMAL COURSE AND NOT VICE-VERSA. WE ARE ALSO CONSCIOUS OF THE FACT THAT THERE ARE DE EMING PROVISIONS IN TERMS OF SECTION 69 AND 69B WHEREIN SUCH AMOUNTS MAY BE DEEM ED AS INCOME IN ABSENCE OF SATISFACTORY EXPLANATION. IN OUR VIEW, THE DEEMING FICTION SO ENVISAGED UNDER SECTION 69 AND SECTION 69B CANNOT B E EXTENDED AND APPLIED AUTOMATICALLY IN CONTEXT OF SECTION 271AAB. IT IS A WELL-SETTLED LEGAL PROPOSITION THAT THE DEEMING PROVISIONS ARE LIMITED FOR THE PURPOSES THAT HAVE BEEN BROUGHT ON THE STATUTE BOOK AND HAVE THEREFORE TO BE APPLIED IN THE CONTEXT OF PROVISIONS WHEREIN THEY HAVE BEEN BROUGH T ON THE STATUE BOOK AND NOT OTHERWISE. IN THE INSTANT CASE, THE DEEMING PR OVISIONS CONTAINED IN SECTION 69 AND SECTION 69B COULD HAVE BEEN APPLIED IN THE C ONTEXT OF BRINGING TO TAX SUCH INVESTMENTS TO TAX IN THE QUANTUM PROCEEDINGS, THOUGH THE FACT OF THE MATTER IS THAT THE AO HAS NOT EVEN INVOKED THE SAID DEEMING PROVISIONS IN THE QUANTUM PROCEEDINGS. THEREFORE, EVEN ON THIS ACCOUN T, THE DEEMING FICTION CANNOT BE EXTENDED TO THE PENALTY PROCEEDINGS WHICH ARE SEPARATE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS AND MORE SO, WHERE THE PROVISIONS OF SECTION 271AAB PROVIDE FOR A SPECIFIC DEFINITION OF UNDISCL OSED INCOME. WHERE A ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 22 SPECIFIC DEFINITION OF UNDISCLOSED INCOME HAS BEEN PROVIDED IN SECTION 271AAB, BEING A PENAL PROVISION, THE SAME MUST BE S TRICTLY CONSTRUED AND IN LIGHT OF SATISFACTION OF CONDITIONS SPECIFIED THERE IN AND IT IS NOT EXPECTED TO EXAMINE OTHER PROVISIONS WHERE THE SAME HAS BEEN DE FINED OR DEEMED FOR THE PURPOSES OF BRINGING THE AMOUNT TO TAX. IN LIGHT O F THE SAME, THE UNDISCLOSED INVESTMENT BY WAY OF ADVANCES CAN BE SUBJECT MATTER OF ADDITION IN THE QUANTUM PROCEEDINGS, AS THE SAME HAS BEEN SURRENDER ED DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) AND OFF ERED IN THE RETURN OF INCOME, HOWEVER THE SAME CANNOT BE SAID TO QUALIFY AS AN UNDISCLOSED INCOME IN THE CONTEXT OF SECTION 271AAB READ WITH THE EXPL ANATION THERETO AND PENALTY SO LEVIED THEREON DESERVED TO BE SET-ASIDE. IN THE DEFINITION OF UNDISCLOSED INCOME WHERE IT TA LKS ABOUT INCOME BY WAY OF ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER D OCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHAT PERHAPS HAS BEEN ENVISAGED BY THE LEGISLATURE IS AN INFLOW OF FUNDS IN THE HANDS OF THE ASSESSEE WHICH HAS BEEN FOUND BY WAY O F ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS, AND WHICH HAS NOT BEEN RECORDED BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED BY THE ASSESSEE IN THE NORMAL COURSE AND NOT VICE-VERSA. WE ARE ALSO CONSCIOUS OF THE FACT THAT THERE ARE DEEMI NG PROVISIONS IN TERMS OF SECTION 69 AND 69B WHEREIN SUCH AMOUNTS MAY BE D EEMED AS INCOME IN ABSENCE OF SATISFACTORY EXPLANATION. NO NEW FACT S OR CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US BY THE REVENUE IN ORDER TO CONTROVERT OR REBUT THE LAWFUL FINDINGS SO RECORDED BY THE LD. CI T(A). THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE L D. CIT(A). THUS THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 708/JP/2019 SHRI RAJENDER KUMAR JAIN VS ACIT, CENTRAL CIRCLE-1, JAIPUR 23 5.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /09/2 020. SD/- SD/- JESK LH-'KEKZ LANHI XKSLKBZ (RAMESH C. SHARMA) (SANDEEP GOSAI N) YS[KKLNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14/09/2020. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - SHRI RAJENDRA KUMAR JAIN, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT, CENTRAL CIRCLE-1 ,JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR . 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 708& 881/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR