ACIT, Jaipur V. AJIT SINGH, Jaipur

ITA 714/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5052 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 21-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S DAGUR CIT DHK
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Valuation report; Documents seized
• Section: 143(3); 27; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPU R BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;K NO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SIN GH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 714/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ACIT CENTRAL CIRCLE-2, JAIPUR CUKE VS. SHRI AJIT SINGH, 24, GANGA PATH, SURAJ NAGAR, (WEST), CIVIL LINES, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AGCPS 5660 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.S. DAGUR.(ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.07.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 26/09/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), CENTRAL, JAIPUR DATED 14.08.2014 WHEREIN THE REVEN UE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A)(CENTRAL), JAIPUR IS NOT JUSTIFIED IN DELETING PENALTY OF RS. 11,93,110 U/S 271AAA OF THE IT ACT, 1961 IGNORING THE FACT THE ASSESSEE FA ILED TO SPECIFY THE MANNER IN WHICH UNDISCLOSED INCOME OF RS.1,19,31,10 2/- HAD BEEN DERIVED BY IT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A)(CENTRAL), JAIPUR IS NOT JUSTIFIED IGNORING THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME HAD BEEN DERIVED. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AC TION U/S 132 OF THE INCOME-TAX ACT, 1961 WAS CARRIED OUT ON THE UDB GRO UP ON 28.01.2009 AND ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 2 CASH, JEWELLERY, BOOKS OF ACCOUNT AND CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED FROM THE RESIDENTIAL AND BUSINESS PREMISES O F THE ASSESSEE AND THE GROUPS CONCERNS. DURING THE COURSE OF SEARCH, STATE MENTS OF THE ASSESSEE AND HIS FAMILY MEMBERS WERE RECORDED, WHEREIN CERTAIN U NDISCLOSED INCOME WAS ADMITTED. THE RETURN OF INCOME FOR THE YEAR UNDER A PPEAL WAS FILED U/S 139(1) DECLARING TOTAL INCOME OF RS. 1,28,55,850/- ON 20.0 9.2010 WHICH INCLUDED A SUM OF RS. 1,16,31,103/- OFFERED BY ASSESSEE AS ADD ITIONAL INCOME AS A RESULT OF SEARCH PERTAINING TO THE YEAR UNDER APPEAL. ASSESSM ENT WAS COMPLETED U/S 143(3) OF INCOME-TAX ACT, 1961 AT A TOTAL INCOME OF RS. 2,71,20,669/- BY MAKING VARIOUS ADDITIONS TO THE TUNE OF RS. 1,42,64 ,819/-. THE ASSESSEE HAD PREFERRED APPEAL BEFORE THE LD. CIT(A), CENTRAL, AN D THEREAFTER, BEFORE THE TRIBUNAL WHEREBY ALL THE ADDITIONS WERE DELETED EXC EPTING FOR AN AMOUNT OF RS. 50,000/- IN RESPECT OF UNEXPLAINED INVESTMENT IN FURNITURE AND FIXTURE. THE AO THEREAFTER PROCEEDED TO LEVY PENALTY U/S 27 1AAA ON THE INCOME REMAINED ASSESSED AFTER ALLOWING THE NECESSARY APPE AL EFFECT AND ACCORDINGLY LEVIED PENALTY OF RS. 11,93,110/-. AGAINST THE SAID PENALTY ORDER OF THE AO, THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE LD. CIT (A), CENTRAL WHO VIDE HER IMPUGNED ORDER DATED 14.08.2014 IN ITA NO. 91/13-14 ALLOWED THE APPEAL OF ASSESSEE AND DELETED THE PENALTY IMPOSED BY LD. AO U/S 271AAA OF THE ACT AT RS. 11,93,110/-. AGAINST THE SAID ORDER, THE REVENU E HAS PREFERRED THIS APPEAL BEFORE US. 2.1 THE LD. AR SUBMITTED THAT OUT OF THE ENTIRE AD DITIONS OF RS. 1,42,64,819/- MADE BY LD. AO, MERELY AN AMOUNT OF RS. 3,00,000/- WAS SUSTAINED BY THE LD. CIT(A) AND FURTHER, THE ENTIRE ADDITIONS SUSTAINED BY LD. CIT(A) STOOD DELETED BY THE HONBLE ITAT, EXCEPT A SMALL AMOUNT OF RS. 50,000/-. THUS, EXCEPT THE MEAGRE AMOUNT SUSTAINED BY HONBLE ITAT, THERE ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 3 REMAINED NO ADDITION ON WHICH THE PENALTY COULD BE LEVIED, THEREFORE, THERE REMAINED NO DISCRETION WITH THE LD. CIT(A) IN THE I MPUGNED APPELLATE PROCEEDINGS TO UPHOLD THE PENALTY PERTAINING TO THE ADDITION OF RS. 2,50,000/- WHICH THOUGH SUSTAINED BY LD. CIT(A), BUT DELETED B Y HONBLE ITAT. THUS, THE APPEAL OF REVENUE IN SO FAR AS IT RELATES TO PENALT Y IMPOSED QUA THE ADDITION OF RS. 2,50,000/- SO DELETED DESERVES NO CONSIDERATION AT ALL. 2.2 THE LD AR FURTHER SUBMITTED THAT BESIDES THIS, THE PENALTY WAS ALSO LEVIED ON THE ADDITIONAL UNDISCLOSED INCOME OF RS.1,16,31, 103/- DECLARED BY ASSESSEE IN HIS RETURN OF INCOME ON WHICH DUE TAXES WERE PAI D. IN THIS REGARD IT IS SUBMITTED AS UNDER: THAT, FROM A PERUSAL OF THE STATEMENTS OF THE ASSES SEE RECORDED U/S 132(4) OF INCOME TAX ACT, 1961, DURING THE COURSE OF SEARCH, IT WOULD TRANSPIRE THAT THE ASSESSEE HAS DULY ADMITTED THE ADDITIONAL INCOME AN D EXPLAINED THE MODE AND MANNER IN WHICH THE SAID INCOME HAS BEEN DERIVED. F URTHER, THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED HAS ALSO B EEN SUBSTANTIATED AND THE TAX THEREON ALONGWITH INTEREST ALSO STANDS PAID . THEREFORE, PENALTY U/S 271AAA COULD NOT AT ALL HAVE BEEN IMPOSED IN THE FA CTS AND CIRCUMSTANCES OF THE CASE. IT IS PERTINENT HERE TO MAKE A REFERENCE TO CLAUSE (2) OF SECTION 271AAA FOR WHICH THE PROVISIONS AS CONTAINED IN SECTION 271AAA ARE REPRODUCED HEREIN BELOW FOR READY REFERENCE: 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007 43 [BUT BEFORE THE 1ST DAY OF JULY, 2012], THE ASSESSEE SHALL PAY BY WAY ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 4 OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132 , ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDI SCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF A NY, IN RESPECT OF THE UNDISCLOSED INCOME. MANIFESTLY, THIS SUB-SECTION LAYS DOWN THE CERTAIN CIRCUMSTANCES WHICH, IF FULFILLED, CAN ABSOLVE THE ASSESSEE FROM ANY LIABIL ITY UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961. IT IS SUBMITTED THAT ALL OF THE THREE CONDITIONS HAVE BEEN SATISFIED IN THE FACTS AND CIRCUMSTANCES OF TH E PRESENT CASE. HOWEVER, THE LD. AO HAS PROCEEDED TO PASS THE PENAL TY ORDER ON THE BASIS OF WRONG FACTUAL CONSIDERATIONS AND MISUNDERSTANDING O F THE PROVISIONS OF LAW. THE LD. AO HAS WRONGFULLY OBSERVED THAT THE ASSESSE E HAS FAILED TO ESTABLISH THE MODE AND MANNER OF ACQUISITION OF UNDISCLOSED I NCOME SO DECLARED, AND SUCH OBSERVATION OF LD. AO IS BASED ON FOLLOWING R EASONS AS CITED BY LD. AO ON PAGE NO 5, IN PARA 15 OF THE PENALTY ORDER WHICH AR E QUOTED AS UNDER AS APPEARING: THOUGH THE ASSESSEE HAS ADMITTED AND SURRENDERED U NDISCLOSED INCOME OF RS. 1,16,31,103/- RELATING TO THE SPECIFI ED PREVIOUS YEAR AND DECLARED THE SAME IN THE RETURN OF INCOME BUT A T THE SAME TIME HE DID NOT SPECIFY THE MANNER IN WHICH SUCH IN COME HAS BEEN EARNED AND ALSO DID NOT SUBSTANTIATE THE MANNE R IN WHICH THE UNDISCLOSED INCOME WAS EARNED. THIS FACT IS EVI DENCED FROM THE FIGURES MENTIONED IN THE RETURN FILED BY THE AS SESSEE ON 20.09.2010. THE ASSESSEE HAS SHOWN IN THAT RETURN I NCOME FROM BUSINESS AND PROFESSION AT RS. 1,16,31,103/-. HOWEV ER, NO ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 5 CORRESPONDING AND CORROBORATIVE FIGURE ARE AVAILABL E IN THE RETURN E.G. THE ASSESSEE HAS SHOWN INCOME FROM BUSINESS & PROFESSION AT RS. 1,16,31,103/- IN THE COMPUTATION OF PROFIT AS P ER P & L ACCOUNT BUT NO PROFIT AND LOSS ACCOUNT HAS BEEN ATTACHED WI TH THE RETURN FILED. PART A-P&L OF ITR 4 IS ALSO BLANK. FURTHER, IN COLUMN 51 OF PART A-P&L NO SUCH FIGURE IS REFLECTED SO THATIT CA N BE SAID THAT ANY BUSINESS INCOME HAS BEEN DERIVED BY THE ASSESSEE WH ICH HAS BEEN SURRENDERED AND STATED TO BE EARNED FROM BUSINESS. EVEN THOUGH, FIGURE MENTIONED IN SCHEDULE BP IS ALSO NOT SUPPORT ED AND HAVE NO CORROBORATIVE FIGURES FROM ITEM 43 OF ITEM 51D O F PART A-P&L. AS SUCH UNDER THESE FACTS AND CIRCUMSTANCES, IT IS VERY MUCH CLEARLY ESTABLISHED THAT THOUGH THE ASSESSEE SURREN DERED UNDISCLOSED INCOME OF RS. 1,16,81,103/- BUT FAILED TO SPECIFY THE MANNER OF EARNING AND TO SUBSTANTIATE THE SAME FROM ANY DOCUMENTARY CORROBORATIVE EVIDENCE. THEREFORE, THE CASE OF ASSESSEE CLEARLY COMES UNDER THE AMBIT OF SECTION 2 71AAA OF THE IT ACT, 1961 FOR THE UNDISCLOSED INCOME REFERRED. FROM A PERUSAL OF AFOREMENTIONED OBSERVATIONS OF TH E LD AO IN THE PENALTY ORDER, TWO THINGS ARE NOTED WHICH ARE AS UNDER: 1. THAT, THE LD. AO ACCEPTS IN THE PENALTY ORDER ITSEL F THAT THE ASSESSEE HAD ADMITTED AND SURRENDERED THE UNDISCLOSED INCOME AND ALSO DECLARED THE SAME IN RETURN OF INCOME AND PAID TAXES THEREON. 2. BUT, HE HAS WRONGFULLY MENTIONED THAT THE ASSESSEE FAILED TO SPECIFY THE MANNER OF EARNING THE UNDISCLOSED INCOME AND TO SUB STANTIATE THE SAME FROM ANY DOCUMENTARY CORROBORATIVE EVIDENCE. IN THIS REGARD, IT IS SUBMITTED THAT, FIRSTLY, THE LD. AO FAILED TO APPRECIATE THE STATEMENTS RENDERED BY ASSESSEE AS WELL AS OF FAMIL Y MEMBERS OF ASSESSEE. MORE PARTICULARLY, THE STATEMENTS OF SON OF ASSESSE E SH. RAVINDER SINGH HAVE SPECIFICALLY BEEN RELIED UPON BY THE ASSESSEE AND S H. RAVINDER SINGH HAS RENDERED HIS STATEMENT ON BEHALF OF ALL HIS FAMILY MEMBERS, WHEREIN, HE HAS ADMITTED AND SURRENDERED THE UNDISCLOSED INCOME FOR TAXATION AND HAS ALSO EXPLAINED THE MODE AND MANNER OF ACQUISITION OF THE SAID UNDISCLOSED INCOME WHICH STOOD ADMITTED BY ASSESSEE AND DECLARED IN HI S RETURN OF INCOME. IN VIEW OF THE STATEMENTS OF SH. RAVINDER SINGH, IT IS ABSO LUTELY CLEAR THAT WHILE ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 6 ADMITTING THE UNDISCLOSED INCOME, HE HAS VERY WELL EXPLAINED THE MODE AND MANNER OF ACQUISITION OF THIS INCOME. IT IS PERTINE NT TO MENTION THAT SUCH DECLARATION OF ADDITIONAL INCOME BY SHRI RAVINDER S INGH WAS DULY HONORED BY ASSESSEE WHO OWNED ENTIRE TRANSACTIONS FOUND RECORD ED IN LOOSE PAPERS / DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND AL SO ACCEPTED BY LD. AO WHILE COMPLETING THE ASSESSMENT AND NO ADVERSE INFE RENCE WHATSOEVER WAS TAKEN IN THE CASE OF SHRI RAVINDER SINGH. SECONDLY, THE LD. AO HAS NOT ALLOWED ASSESSEE THE P ROTECTION OF SUB-SECTION (2) TO SECTION 271AAA WITHOUT CONSIDERING THE STATEMENT S OF ASSESSEE AND HIS SON SH. RAVINDER SINGH, AND MERELY BY OBSERVING IN THE LAST LINES OF ABOVE QUOTED PARA THAT THE ASSESSEE HAD NOT CORROBORATED THE FIG URE SO DECLARED BY HIM WITH THE P&L ACCOUNT OR ANY OTHER DOCUMENTARY EVIDENCE. MERELY BY OBSERVING THIS, THE LD. AO HOLD THE ASSESSEE LIABLE FOR PENAL TY U/S 271AAA BY GROSSLY IGNORING THE STATEMENTS RECORDED U/S 132(4) DURING SEARCH. IT MUST BE NOTED THAT THESE OBSERVATIONS OF LD. AO CLEARLY RUN CONTR ARY TO THE PROVISIONS OF SUB- SECTION (2) TO SECTION 271AAA. THE SAID SUB-SECTION PROVIDES ONLY THIS MUCH THAT, IF THE ASSESSEE HAS ADMITTED UNDISCLOSED INCO ME IN HIS STATEMENTS U/S 132(4) AND SPECIFIED MODE AND MANNER OF ACQUISITION ALONGWITH SUBSTANTIATION THEREOF AND HAS PAID TAXES THEREON ALONG WITH INTER EST THEN PENALTY CANNOT BE LEVIED. THIS SUB SECTION NOWHERE REQUIRES THE ASSES SEE TO FURNISH ANY DOCUMENTARY EVIDENCE TO CORROBORATE THE AMOUNT OF U NDISCLOSED INCOME, ON THE OTHER HAND, IT MERELY REQUIRES THE ASSESSEE TO ADMIT THE INCOME AND EXPLAIN MODE AND MANNER OF ACQUISITION ALONGWITH SU BSTANTIATION THEREOF IN THE STATEMENTS RECORDED U/S 132(4). AND THUS, THE S ECTION NOWHERE REQUIRES THE ASSESSEE TO PROVIDE ANY CORROBORATIVE DOCUMENTA RY EVIDENCE REFLECTING THE UNDISCLOSED INCOME SO ADMITTED BY HIM IN STATEMENTS RECORDED U/S 132(4). THEREFORE, LD. AO HAD COMMITTED A GROSS ERROR IN IM POSING PENALTY ON THE BASIS OF THESE WRONG OBSERVATIONS AND WHICH FACT WA S POINTED OUT BEFORE THE LD. CIT(A) WHO WAS WELL JUSTIFIED IN DELETING THE P ENALTY IMPOSED BY LD. AO. ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 7 IT IS SUBMITTED THAT IN THE PRESENT CASE, ALL OF TH E ABOVEMENTIONED THREE CONDITIONS STAND FULFILLED AND THEREFORE, NO PENALT Y U/S 271AAA IS LEVIABLE. IT MAY BE NOTED THAT IN THE STATEMENTS RECORDED U/S 13 2(4) OF THE ASSESSEE AS WELL AS OF HIS FAMILY MEMBERS, THE UNDISCLOSED INCO ME HAS DULY BEEN ADMITTED AND ALSO THE MODE AND MANNER OF ACQUIRING THE SAID INCOME ALONGWITH SUBSTANTIATION THEREOF HAS BEEN EXPLAINED. THE LD. AO HAS GROSSLY ERRED IN OBSERVING THAT THE ASSESSEE HAS NOT DECLARED THE UN DISCLOSED INCOME IN HIS STATEMENTS. WHILE, THE ACTUAL FACT IS THAT THE ASSE SSEE HAS ADMITTED THE UNDISCLOSED INCOME AND HAS EXPLAINED / SUBSTANTIATE D THE MODE AND MANNER OF ACQUISITION OF THE SAID INCOME WHICH IS CLEARLY REFLECTED IN THE STATEMENTS OF SH. RAVINDER SINGH RECORDED U/S 132(4) DURING SEARC H, ON WHICH, THE ASSESSEE HAS RELIED. THUS, SINCE THE MODE AND MANNER OF ACQU ISITION OF UNDISCLOSED INCOME STANDS EXPLAINED, NO PENALTY WAS LEVIABLE IN VIEW OF SUB-SECTION(2) TO SECTION 271AAA OF INCOME TAX ACT, 1961. FURTHER, THE UNDISCLOSED INCOME AS REPRESENTED BY T HE SEIZED PAPERS WAS DULY ADMITTED IN THE STATEMENTS RECORDED U/S 132(4) AND THE ASSESSEE HAD AGREED TO PAY TAX ON THE INCOME WHICH WILL BE ARRIVED AT A FTER DERIVING THE EXACT AMOUNT OF INCOME REPRESENTED BY SEIZED PAPERS. THUS , THE INCOME ON THE BASIS OF SEIZED PAPERS WAS CALCULATED VIDE A FUND FLOW ST ATEMENT AND WAS DULY SUBMITTED BEFORE THE LD. AO DURING ASSESSMENT PROCE EDINGS, AND TAX THEREON WAS PAID ACCORDINGLY. A COPY OF THE SAID FUND FLOW STATEMENT HAS BEEN PLACED AT PAPER BOOK PAGE NO. 98. SINCE ALL THE THREE CONDITIONS AS ENUMERATED IN SUB SECTION (2) TO SECTION 271AAA HAVE BEEN FULLY SATISFIED AS THE ASSESSEE HA S OFFERED THE ADDITIONAL INCOME AND DULY SUBSTANTIATED THE MANNER AS TO HOW IT HAS BEEN WORKED OUT, ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 8 THE LD. AO HAS NOT DOUBTED THE ADDITIONAL INCOME DE CLARED AND MODE AND MANNER OF SUCH INCOME AND DUE TAXES ALONGWITH INTER EST HAS BEEN PAID WHILE FILING THE RETURN OF INCOME. THEREFORE THERE WAS NO BASIS AT ALL ON WHICH PENALTY U/S 271AAA COULD HAVE BEEN LEVIED BY LD. AO ON THE ADDITIONAL UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER REFERENCE AND THUS, NO PENALTY COULD HAVE BEEN LEVIED BY THE LD. AO U/S 271AAA OF THE ACT. FURTHERMORE, THE PENALTY U/S 271AAA HAS BEEN IMPOSE D BY THE LD. AO BY MERELY OBSERVING (THOUGH WRONGFULLY) THAT THE ASSES SEE HAS FAILED TO EXPLAIN THE MANNER OF DERIVING THE UNDISCLOSED INCOME AND S UBSTANTIATION THEREOF HAS ALSO NOT BE DONE BY ASSESSEE. IT IS SUBMITTED THAT MERELY BY OBSERVING SO, THE PROTECTION UNDER CLAUSE (2) OF SECTION 271AAA CANNO T BE DENIED TO THE ASSESSEE, GIVEN THAT IN THE CIRCUMSTANCES OF THE PR ESENT CASE, THE ASSESSEE HAS DULY MADE DISCLOSURE OF UNDISCLOSED INCOME AND EVEN THE MANNER OF DERIVING SUCH INCOME HAS BEEN EXPLAINED BY ASSESSEE IN HIS S TATEMENTS RECORDED U/S 132(4). REFERENCE IS DRAWN TO THE DECISION OF THE HONBLE I TAT, MUMBAI BENCH, MUMBAI IN THE CASE OF ACIT VS. KANAKIA SPACES PVT. LTD. ITA NO. 6763/MUM/2011 , IN AN APPEAL FILED BY DEPARTMENT, HAS MADE THE FOLL OWING OBSERVATIONS: 3.1 LD. CIT(A) AFTER CONSIDERING THE SUBMISSION DEL ETED THE PENALTY BY STATING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT IN RESPECT OF THE PENALTY LEVIED BY THE L D.AO. IT IS SEEN THAT THE LD.AO HAS WRITTEN TWO SENTENCES AT PA RA- 8 TO CONCLUDE THAT THE APPELLANT HAS NOT BEEN ABLE TO SU BSTANTIATE THE SOURCE OF ACQUISITION OF THE MOVABLE ASSETS. TH E FACT OF THE MATTER IS THAT THE REQUIREMENT ON THE PART OF AN AS SESSEE TO ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 9 SUBSTANTIATE THE SOURCE OF INCOME CANNOT BE TAKEN T O MEAN THAT ALL EVIDENCES IN THE RESPECT HAS TO BE PRODUCE D. THE VERY FACT THAT THE DISCLOSURE IS MADE IN RESPECT OF UNDI SCLOSED INCOME, ALL THAT CAN BE REQUIRED OF AN ASSESSEE IS THAT THE PROXIMATE NATURE OF ACQUISITION CAN BE MENTIONED BY HIM. IT CANNOT BE THE CASE THAT VERY MINUTE DETAIL THEREOF WOULD BE PRESERVE WITH EVIDENCE WHICH IS POSSIBLE ONLY FOR T HE REGULAR INCOME BEING DISCLOSED BY HIM. THE REQUIREMENT AS P ER SECTION (2) OF SECTION 27IAAA IS ONLY THAT THE MANNER OF EA RNING INCOME SHOULD BE SPECIFIED SO THAT UNDUE ADVANTAGE OF TELESCOPING OR SOME OTHER INCOME BEING BROUGHT WITH IN THE TOTAL AMBIT OF UNDISCLOSED INCOME SURRENDERED DOES NOT HAPPEN. FROM THE ORDER OF THE LD. A.O ALSO, IT IS A PPARENT THAT THE PENALTY IS NOT LEVIED BY HIM ON ACCOUNT OF SOME CONVICTION BUT HAS BEEN JUST LEVIED TO COMPLETE THE PROCEEDING S. IN FACT THERE ARE NO MATERIAL FACTS WARRANTING THE LEVY OF PENALTY AND, ACCORDINGLY, THE PENALTY OF ` 55,00,000/- LEVIED UN DER SECTION 271AAA IS DIRECTED TO BE DELETED. HE RE, THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE THUS TO BE READ IN LIGHT OF THE LEGAL POSITION AS ENUMERATED ABOVE: 1. THE ASSESSEE HAS ADMITTED THE UNDISCLOSED INCOME ON THE BASIS OF PAPERS FOUND AND SEIZED DURING THE COURSE OF SEARCH AS HIS UNDISCLOSED ADDITIONAL INCOME IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH U/S 132(4). 2. THE MANNER OF DERIVING SUCH INCOME AND SUBSTANTIATI ON THEREOF HAS ALREADY BEEN MADE AS APPARENT FROM THE STATEMENTS O F ASSESSEE RECORDED DURING SEARCH U/S 132(4). 3. ALL THE TAX DUE ON SUCH ADDITIONAL UNDISCLOSED INCO ME WAS PAID BY THE ASSESSEE. THUS, ALL THE THREE CONDITIONS LAID DOWN UNDER SUB- SECTION (2) TO SECTION 271AAA STAND SATISFIED AND THEREFORE THE IMMUNITY U NDER THE SAID SUB-SECTION ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 10 IS AVAILABLE TO THE ASSESSEE, THUS, THE PENALTY CAN NOT BE LEVIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WITH REGARD TO THE ADDITION SUSTAINED BY HONBLE IT AT TO THE TUNE OF RS. 50,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FU RNITURE AND FIXTURES, IT IS SUBMITTED THAT DURING THE COURSE OF SEARCH, A LIST OF FURNITURE AND FIXTURES, ELECTRONIC CONSUMER DURABLES AND GADGETS AVAILABLE AT THE RESIDENCE OF THE ASSESSEE AND HIS SONS WERE PREPARED BY THE SEARCH T EAM AND ON THE BASIS OF THE LIST SO PREPARED BY THE SEARCH PARTY, THE LD. A O HAD MADE A LUMP SUM ADDITION OF RS. 5,00,000/- TO THE TOTAL INCOME OF T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION BY ALLEGING THAT THE ASSESSEE H AS MADE UNEXPLAINED INVESTMENT IN THE ACQUISITION OF THESE ITEMS THOUGH NO VALUATION WHATSOEVER WAS MADE AT THE TIME OF PREPARATION OF LIST DURING THE COURSE OF SEARCH. WHILE DOING SO THE FACT THAT SOME OF THE ITEMS APPEARING IN THE LIST WERE PURCHASED BEFORE THE BLOCK PERIOD AND ASSESSEES FAMILY HAS M ADE SUFFICIENT AMOUNT WITHDRAWALS TO MEET OUT SUCH EXPENSES WAS NOT CONSI DERED BY THE AO AND ALSO THE FACT THAT IN THE LIST ITSELF SOME ITEMS WERE SH OWN AS NON-WORKING HOWEVER ADDITION FOR THOSE ITEMS WERE ALSO MADE. THIS FACT IS CLEARLY EVIDENT FROM THE LIST APPEARING AT PAGE 5 OF THE ASSESSMENT ORDER WH EREIN ITEM NO. 20 AND 21 ARE BEING LISTED AS OUT OF PRESSURE. IN ADDITION TO THIS ASSESSEE HAS INCLUDED A SUM OF RS. 1.00 CRORE AS INVESTMENT IN VARIOUS ITEM S IN THE FUND FLOW STATEMENT PREPARED TO COMPUTE THE ADDITIONAL INCOME AS A RESU LT OF SEARCH AND AFTER INCLUDING THE SAID AMOUNT OF RS. 1.00 CRORE A SUM O F RS. 1,16,31,103/- WAS COMPUTED AS INCOME FOR THE YEAR UNDER CONSIDERATION WHICH FACT WAS ACCEPTED THE AO IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961. AFTER CONSIDERING THESE FACTS THIS HONBLE TRIBUNAL WAS OF THE OPINION THAT THE ASSESSEE HAS NOT MADE ANY UNDISCLOSED INVESTMENT IN THE AFTER MAKING ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 11 DISCLOSURE OF RS. 1.16 CRORES, THE RELEVANT OBSERVA TIONS IN PARA 4.7 AT PAGE 7 ARE REPRODUCED HEREIN BELOW FOR READY REFERENCE : WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF TH E LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. WE OBSERVED THAT THE ASSESSEE HAS MADE SUFFICIENT WITHDRAWALS IN THE PRECEDING AS SESSMENT YEARS, THE DETAILS OF WHICH ARE MENTIONED BY THE LD. CIT(A) IN THE IMP UGNED ORDER. HOWEVER, IT IS A FACT THAT AT THE TIME OF PREPARING INVENTORY NO V ALUATION REPORT WAS OBTAINED BY THE DEPARTMENT AND ONLY AN ESTIMATED ADDITION HA S BEEN MADE FOR RS. 5.00 LACS BY THE AO WHICH HAS BEEN REDUCED TO RS. 3.00 L ACS BY THE LD. CIT(A). THE SAID ADDITION HAS BEEN MADE ON AN ADHOC BASIS. IT I S ALSO OBSERVED THAT THE ASSESSEE HAS MADE DISCLOSURE OF ` 1.16 CRORES TOWAR DS UNDISCLOSED INVESTMENT INTER ALIA IN FURNITURE(S) AND FIXTURE(S). AFTER CO NSIDERING THE OTHER ADDITIONS MADE, WE ARE OF THE CONSIDERED VIEW THAT ELECTRONIC S ITEMS AND / OR FIXTURES FOUND AT THE PREMISES OF THE ASSESSEE COULD BE SAID TO HAVE BEEN PROCURED FROM THE SAID UNDISCLOSED INCOME DECLARED AND / OR WITHD RAWAL MADE IN THE PRECEDING ASSESSMENT YEARS. SINCE ASSESSEE COULD NO T FURNISH DETAILS AS TO WHEN THOSE ITEMS WERE PURCHASED AND VALUED THEREOF, WE A RE OF THE CONSIDERED VIEW THAT IT WILL BE FAIR AND REASONABLE TO SUSTAIN THE ADDITION TO ` 50,000/- AS AGAINST ` 3.00 LACS SUSTAINED BY THE LD. CIT(A). HE NCE, GROUND NO. 2 OF THE APPEAL TAKEN BY THE DEPARTMENT IS REJECTED AND C.O. OF THE ASSESSEE IS ALLOWED IN PART. FROM THE PERUSAL OF THE OBSERVATIONS OF THIS HONBL E TRIBUNAL AS NARRATED ABOVE, IT IS EVIDENT THAT THE HONBLE BENCH HAS SUS TAINED THE ADDITIONS SOLELY FOR THE REASON THAT THE ASSESSEE COULD NOT FURNISH DETAILS AS TO WHEN THOSE ITEMS WERE PURCHASED AND VALUE THEREOF AND FURTHER ACCEPTED THE INVESTMENT MADE IN FURNITURE ETC. FROM ADDITIONAL INCOME OFFER ED BY THE ASSESSEE WHICH CANNOT TANTAMOUNT TO THE CONCEALMENT OF INCOME BY T HE ASSESSEE. IT IS THE SETTLED PROPOSITION OF LAW THAT MERELY BECAUSE SOME ADDITION IS SUSTAINED IN APPELLATE PROCEEDINGS DOES NOT LEAD TO BELIEF THAT ASSESSEE HAS CONCEALED INCOME BY NOT DISCLOSING THE MODE AND MANNER IN WHI CH THE SAME IS EARNED AND THUS LIABLE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME MORE PARTICULARLY WHEN THE LD. AO HAS NOT INITIATED THE PENALTY PROCE EDINGS IN RESPECT OF ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 12 ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN FURNITURE & FIXTURE IN HIS ASSESSMENT ORDER ITSELF. FURTHER RELIANCE IS PLACED ON THE FOLLOWING DECISIO NS: ASSTT. CIT VS. A.N. ANNAMALAISAMY (HUF) (CHENNAI C ) (155 TTJ 98) DCIT VS. PIONEER MARBLE & INTERIOR PVT. LTD. (KOL.) 14 ITR (TRIB.) 608 DCIT VS. DR. MUKESH S. SHAH[ITA NO. 1942/AHD./2012] ALL THE ABOVE MENTIONED FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS CONTENTIONS OF THE ASSESSEE WERE DULY TAKEN INTO CO NSIDERATION BY THE LD. CIT(A) AFTER WHICH HE PASSED THE IMPUGNED APPELLATE ORDER AND THEREBY DELETED THE PENALTY LEVIED BY THE LD. AO. 3. HAVING CONSIDERED THE SUBMISSIONS OF THE LD AR, WE NOW REFER TO THE ORDER OF THE LD. CIT(A) WHOSE FINDINGS ARE REPRODUC ED AS UNDER: I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND SU BMISSIONS OF THE APPELLANT ALONGWITH THE ASSESSMENT ORDER, STATEMENT OF THE APPELLANT AND HIS SON SHRI RAVINDRA SINGH TAKEN U/S 132(4). ON PERU SAL OF THE FACTS ON RECORD, I CONSIDER WITH THE SUBMISSIONS OF THE APPELLANT ON T HE FOLLOWING GROUNDS: (I) SEARCH/SURVEY AND SEIZURE OPERATION WERE CARRIE D OUT AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE APPELLANT ON 28.01.2009 . IT IS SEEN THAT THE APPELLANT FILED HIS RETURN OF INCOME OF 20.9.2010 D ECLARING TOTAL INCOME AT RS. 1,28,55,850/- PRIOR TO ISSUE OF NOTICE U/S 143(2) D ATED 13.10.2010. (II) WHILE FILING THIS RETURN THE ASSESSEE DISCLOSE D AN AMOUNT OF RS. 1,16,31,103/- AS THE UNDISCLOSED INCOME COMPONENT O F HIS INCOME FROM BUSINESS. (III) THE RETURNED INCOME WAS ACCEPTED IN THE ASSES SMENT ORDER PASSED ON 29.12.2001. ON PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE AO HADS NOT GIVEN ANY ADVERSE REMARKS WITH RESPECT TO THE INCOM E DISCLOSED BY THE ASSESEE ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 13 UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION, IN FACT, THE INCOME DECLARED IN THE RETURN OF RS.1,28,55,850/- HAS BEEN TAKEN AS THE BASIS FOR COMPUTATION AND DETERMINATION OF THE FINAL INCOME B Y THE AO IN HIS ORDER U/S 143(3). (IV) THE AO MADE ADDITIONS TO THE EXTENT OF RS.1,42 ,64,819/- UNDER VARIOUS HEADS. THE QUANTUM ORDER WENT UP FOR ADJUDICATION BEFORE HON. ITAT WHO VIDE ITS ORDER ITA NO.453/JP/2012 DATED 23.02.2013 DELET ED THE ENTIRE ADDITIONS MADE BY THE AO AND THOSE CONFIRMED BY THE CIT(A) EX CEPT FOR AN AMOUNT OF RS. 50,000/-. WHILE CONFIRMING THIS ADDITION IS OBSERVE D AS FOLLOWS: HOWEVER IT IS A FACT THAT AT THE TIME OF PREPARING INVENTORY NO VALUATION REPORT WAS OBTAINED BY THE DEPARTMENT AND ONLY AN E STIMATED ADDITION HAS BEEN MADE FOR RS. 5 LAKH BY THE AO WHICH HAS BE EN REDUCED TO RS. 3 LAKH BY THE CIT(A). THE SAID ADDITION HAS BEEN MAD E ON AN ADHOC BASIS. IT IS ALSO OBSERVED THAT THE ASSESSEE HAS MADE DISC LOSURE OF RS. 1.16 CRORES TOWARDS UNDISCLOSED INVESTMENT INTER ALIA IN FURNITURE(S) AND FIXTURE(S). AFTER CONSIDERING THE OTHER ADDITIONS MADE, WE ARE OF THE CONSIDERED VIEW THAT ELECTRONIC ITEMS AND /OR FIXT URES FOUND AT THE PREMISES OF THE ASSESSEE COULD BE SAID TO HAVE BEEN PROCURED FROM THE SAID UNDISCLOSED INCOME DECLARED AND/OR WITHDRAW AL MADE IN PRECEDING ASSESSMENT YEARS. SINCE ASSESSEE COULD NO T FURNISH DETAILS AS TO WHEN THOSE ITEMS WERE PURCHASED AND VALUED THERE OF, WE ARE OF THE CONSIDERED VIEW THAT IT WILL BE FAIR AND REASONABLE TO SUSTAIN THE ADDITION TO RS. 50,000/- AS AGAINST RS. 3 LAKH SUSTAINABLE B Y THE L. CIT(A). (V) WHILE PASSING THE PENALTY ORDER U/S 271AAA THE AO HAS OBSERVED THAT THE ASSESSEE HAS NOT SHOWN ANY CORROBORATIVE FIGURE S IN THE RETURN WITH REFERENCE TO THE AMOUNT SURRENDERED OF RS. 1,16,30, 103/- AND NO P&L ACCOUNT WAS PREPARED WITH REFERENCE TO THIS INCOME OR ATTAC HED WITH THE RETURN FILED. ON THE BASIS OF THIS OBSERVATION IT HAS BEEN HELD T HAT THE ASSESSEE FAILED TO SPECIFY THE MANNER OF EARNING THIS INCOME AND TO SU BSTANTIATE THE SAME, WITH ANY DOCUMENTARY OR CORROBORATIVE EVIDENCE., IT HAS ALREADY BEEN OBSERVED ABOVE THAT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE AO ACCEPTED THIS UNDISCLOSED INCOME PER-SE AND DID NOT RAISE ANY QUE RY FROM THE APPELLANT TO PREPARE AT P&L ACCOUNT WITH REFERENCE TO THIS BUSIN ESS INCOME SURRENDERED NOR WAS HE ASKED TO SUBSTANTIATE THE SAME WITH ANY DOCU MENTARY EVIDENCE. (VI) MOREOVER, ON PERUSAL OF THE STATEMENT OF SHRI RAVINDRA SINGH, THE MAIN MANAGER OF ALL THE BUSINESS ACTIVITIES OF THE GROUP , AND THE SON OF THE APPELLANT IT IS SEEN THAT DOCUMENTARY EVIDENCE WERE FOUND DURING THE COURSE OF ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 14 SEARCH AND HE WAS CONFRONTED WITH THE SAME DURING T HE COURSE OF TAKING THE STATEMENT U/S 132(4). ON PERUSAL OF THE STATEMENT IT IS SEEN THAT EACH AND EVERY PAPER WAS CONFRONTED AND HE EITHER GOT THESE DOCUMENTS VERIFIED FROM THE REGULAR BOOKS OF ACCOUNTS OR SURRENDERED THE AM OUNT DURING THE COURSE OF STATEMENT TAKEN DURING SEARCH ON 28.1.2009 OR SUBSE QUENTLY ON 9.2.2009 IN THE POST SEARCH INQUIRIES. THE RELEVANT EXCERPTS O F THE STATEMENT IS BEING PRODUCED HEREWITH FOR REFERENCE: IZ'U +19 ESAA VKIDKS ANNEXURE A-11 DS IZ'B LA[;K 1 LS 123 FN[KK JGK GWQAA D`I;K NS[KD J BUGSA FYF[KR ENTRIES DKS LI'V DJSAA MRRJ +19ESAUS MDR ANNEXURE NS[K FY;K GS] BLDS PAGE NO.1 LS 27 ESA UNIQUE BUILDERS (AJIT) RFKK EGSUNZ UKJK;.K 'KEKZ DS CHP FD, DEVELOPMENT AGREEMENT DH DKWIH GSA RFKK 28 LS 40 RD HKH MLH LS LACAF/KR DEVELOPMENT AGREEMENT DS NLRKOST GSAA IZ'B 41 LS 46 RD MDR QEZ DH PARTNERSHIP DH DEED DH DKWIH GSA 47 LS 52 RD MLH AGREEMENT LS RELATED GENERAL POWER OF ATTORNEY GSAA 53 LS YSDJ 81 RD MLH PROJECT LS RELATED, UDKK] CSAD XKJUVH BR;KNH DKXTKR GSAA 82 ESA WORLD CITY ,OA 83 ESA SOUTHERN HEIGHTS DH RATE LIST GSAA PAGE NO. 84 FDLH LQJHUNZ UKE DS INVESTOR LS IZKIR JDE DK C;KSJK GSAA ;G JDE GESA FLATS ESA INVESTMENT DS FY, PSD RFKK CASH ESA FEYH FKHA BLESA LS 32]8]4-3]3]3]3] DQY 53-3 YKK[K :I;S GESA UDN ESA IKZKIR GQ, FTUDK BUNZK T GEKJH BOOKS OF ACCOUNT ESA UGHA GSAA ;GKWA IJ CRKUK PKGRK GWQA FD BL DKXT IJ FY[KSA FIGURES LAKS ESA GSAA ;S 53-3 YK[K :I, ESA VIUH V?KKSF'KR VK; EKURS GQ, LOSPNK LS VK;DJ DS FY, LEFI ZR DJRK GWAQA PAGE NO. 85 IJ GEKJS SOUTHERN HEIGHTS PROJECT DS FLAT NO. 2801 ESA JH LQJSK XKSNKJK FUOSKD DH DETAILS GSAA ;GKWA ;G CRKUK PKGRK GQW FD ;G JKFK GEKJS AGREEMENT RFKK BOOKS OF ACCOUNTS LS VERIFY FD;K TK LDRK GSAA TGKWA RD EXTRA AMOUNT DK LOKY GS ;G JDE GE DKJ IKFDZXA 1]50]000@& DYC HOUSE FACILITY 75]000@& RFKK POWER BREAKS UP CHARGES 50]000@& DS :I ESA FLAT [KJHNUS OKYS LS OLWYRS GSAA BUDK TEK [KPZ DHKH REGULAR BOOKS ESA DHKH GKSRK GS DHKH UGHA GKSRK GSAA PAGE NO. 86 ,OA 87 IJ HARMONEY PROJECT DS FLAT NO. G-501, G-502, G-802 DH PAYMENT DH DETAILS GSAA BUESA CASH COMPONENT DK LI'VHDJ.K ESA VKXS NS NQWAXKA PAGE NO. 88 IJ SOUTHERN HIGHTS-1 PROJECT DS FLAT NO. 1106 DH BOOKING IJ IZKIR GQ, AMOUNT DH DETAILS GSAA BLESA ISAU LS FY[SK GQ, 3]15]000@ - :I, GESA CASH ESA IZKIR GQ, FKSA FTUDH ENTRY GEKJS BOOKS OF ACCOUNTS ESA UGHA GSAA BLS ESA VIUH V?KKSF'KR VK; EKURS GQ, VK;DJ DS FY, LEFIZR DJRK GWQAA PAGE NO. 89 IJ LQJSK XKSNKJK ,D YK[K :I, FLAT BOOKING DS FY, IZKIR GQ, JLHN DH DKWIH GSAA BLS BOOKS OF ACCOUNTS ESA FY[KK X;K GSAA PAGE NO. 95 ,OA 96 IJ UNIQUE HARMONEY PROJECT TKS FD AJMER ROAD IJ M/S UNIQUE BUILDERS (REALTY) DK PROJECT GSA] MLLS LACAF/KR SALE CONSIDERATION ,OA MLDH IZKFIR LS LACAF/KR DETAILS DK COMPUTERISED STATEMENT GSAA BU IZUKSA IJ FYF[KR FOOJ.K DS VUQLKJ DQY 7 DJKSM 59 Y K[K 49 GTKJ 501 :I,] 103 FLATS DK DQY SALE CONSIDERATION GSAA BLESA LS :I, 5]73]48]146@& PSD }KJK ,OA :I, 1]86]01]355@& B ESA IZKIR GQ, GSAA B DK RKRI;Z FLATS DH FCH IJ IZKIR UNRECORDED ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 15 RECEIPTS LS GS FTUDK BUNZKT [KKRK CFG;KSA ESA UGHA FD;K X;K GSAA BLS ES :I, 1]86]01]355@& DKS GEKJH V?KKSF'KR VK; EKURS GQ, VK;DJ DS FY, LEFIZR D JRK GQWAA ;GKWA ESA ;G HKH LI'V DJUK PKGRK GWQA FD PAGE NO. 86 DS FRONT SIDE ESA TKS CASH RECEIPTS GSA OKS BLH ANNEXURE DS IZ'B LA[;K 95]96 ESA CUH LIST ESA COVER GKS PQDH GSAA LKFK GH BL PAGE DS BACK SIDE ESA HKH BLH IZDKJ DH ,D LIST GS] BLESA TKS ENTRIES GSA] OKS ESJH TKUDKJH DS VUQLKJ PAGE NO. 95, 96 LS OVERLAPING GSAA IZ'B LA[;K 115 ,OA 116 IJ JH DKSAKY DQEKJ UKXJ DKS SOUTHERN HEIGHTS DS FLAT NO. 1201 DH FCDZH LS LCAF/KR GS] FTLDK DQY FO- EWY; 21]50]00 0@& :I, GSA BLESA LS 5]50]000@& :I, CASH ESA IZKIR GQ, GSA TKS FD GEKJH QEZ M/S UNIQUE BUILDERS & DEVELOPERS (AJIT) DH UNRECORDED SALE EKURS GQ, VK;DJ DS FY, V?KKSF'KR VK; EKURS GQ, LEF IZR DJRK GQWAA IZ'B LA[;K 119 IJ M/S UNIQUE BUILDERS ,OA MAHINDRA AJIT BUILDERS ,OA DEVELOPERS }KJK FOFRR; O'KZ 2004&05 ,OA 2005&06 DS NKSJKU CSPS X, EKY ,OA IZKIR HKQXRKUKSA LS LACAF/KR IZRHR GKSRK GSA IZ'B LA[;K 121 ,OA 122 GEKJH XZQI CONCERNS M/S R & V INVESTMENT }KJK VYKSFDD GKBV~L ESA OFFICE NO. 605] 606 ,OA 607 ESA FD, X, FUOSK LS LACAF/KR GSA A BL PROJECT ESA 3500@& PER SQ. FEET ESA EKY [KFJNDJ MLS CKN ESA 4300@& :I, PER SQ FEET ESA CSPK X;K GS RFKK BL IZDKJ 21]88]000@& :I, DK YKHK DEK;K GSAA MDR 21]88] 000@& :I, GEKJH FDLH HKH XZQI CONCERN VFKOK O;FDR }KJK CFG;KSA ESA RECORD UGHA FN[KK;K GS ,OA INCOME TAX RETURN ESA UGH FN[KK;K GSAA BLS ESA M/S R & V INVESTMENT DH V?KKSF'KR VK; EKURS GQ, VK;DJ DKS LEFIZR DJRK GWQAA ON PERUSAL OF THE STATEMENT IT IS SEEN THAT SPECIF IC DOCUMENTS WERE FOUND AND ANNEXURISED AS A-11 DURING THE COURSE OF SEARCH AND SEIZURE. THE SON OF THE ASSESSEE WAS CONFRONTED WITH THESE DOCUMENTS WHO HAVE GAVE SPECIFIC ANSWER REGARDING THE DETAILS OF ACCOUNTED AND NON A CCOUNTED TRANSACTIONS WITH REFERENCE TO THE PROJECTS SOUTHERN HEIGHTS, UN IQUE HARMONY, UNIQUE BUILDERS (REALITY) AND UNIQUE BUILDERS AND DEVELOPE RS (AJIT) AND RNB INVESTMENT. GIVEN THE ABOVE FACT, I AM NOT INCLINE D TO AGREE WITH THE OBSERVATIONS OF THE AO THAT THE APPELLANT DID NOT S UBSTANTIATE OR DESCRIBE THE MANNER IN WHICH THE UNACCOUNTED INCOME WAS EARNED. (VII) UNDER THE SCHEME OF SECTION 271AAA THERE IS A COMPLETE PARADIGM SHIFT AS FAR AS PENALTY IN RESPECT OF UNACCOUNTED I NCOME UNEARTHED AS A RESULT OF SEARCH OPERATIONS CARRIED OUT ON OR AFTER 1.07.2 007 IS CONCERNED. UNLIKE IN THE CASE OF PENALTY U/S 271(1)(C) SEC. 271AAA WITH OUT ANY REFERENCE TO FINDINGS OF PRESUMPTIONS OF CONCEALMENT OF INCOME OF THE FI NDINGS OR PRESUMPTIONS OF FURNISHING OF INACCURATE PARTICULARS, PROVIDES THAT IN RESPECT OF UNACCOUNTED INCOME IN THE CASES WHERE SEARCH INITIATED AFTER 1. 7.2007, THE ASSESSEE IS TO ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 16 PAY A PENALTY @ 10% OF UNACCOUNTED INCOME. SUB SEC . 2 TO SEC.271AAA HOWEVER, RELAXES THE RIGOUR OF THIS PENALTY PROVISI ONS IN A SITUATION IN WHICH (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT U/S 132 (4), ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOM E HAS BEEN DERIVED : (II) SUBSTANTIATES THE MANNER IN WHICH SUCH INCOME WAS DERIVED; AND(III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY IN RESPECT OF T HE UNDISCLOSED INCOME. THEREFORE EVEN THOUGH THE ASSESSEE DECLARED THE UND ISCLOSED INCOME IN THE SPECIFIED YEAR PURSUANT TO SEARCH HE WOULD STILL BE ENTITLED TO IMMUNITY UNDER SEC. 2 OF SEC.271AAA IF HE FULFILS THE CONDITIONS. VIII) FROM THE ABOVE STATEMENT IT IS CLEAR THAT THE MAIN SOURCE OF HIS UNDISCLOSED INCOME WAS ADMITTED AS BEING FROM THE R EAL ESTATE BUSINESS IN WHICH THERE WERE UNACCOUNTED RECEIPTS ON SALE OF PR OPERTY. THIS WAS ADMITTED AND EXPLAINED BY IN DETAIL BY SHRI RAVINDRA SI NGH DURING THE COURSE OF SEARCH AND POST SEARCH ENQUIRIES WHEN CONFRONTED WITH THE INCRIMINATING DOCUMENTS. DURING THE COURSE OF THESE STATEMENTS OF THE MANNER OF EARNING OF THIS INCOME WAS ALSO EXPLAINED AND SPECIFIC NAMES WERE ALSO MEN TIONED. THUS IT IS SEEN THAT DURING THE COURSE OF STATEMENTS U/S 132(4) AND SUBS EQUENTLY IN STATEMENT U/S 131, THE APPELLANT WAS CONFRONTED WITH SPECIFIC DO CUMENTS WITH REFERENCE TO INCOME FROM HIS PROFESSION, SHARE TRANSACTIONS AND INVESTMENTS IN THE LAND AND OTHER EXPENDITURE. THE TRANSACTIONS AS PER THESE DOCUMENTS WHICH COULD NOT BE VERIFIED FROM THE REGULAR BOOKS OF ACCOUNTS WER E SURRENDERED BY HIM. THUS IT CANNOT BE HELD THAT THE MANNER OF DERIVING THE I NCOME WAS NOT SUBSTANTIATED BY THE APPELLANT BECAUSE THE SUBSTANTIATING EVIDENC E BY WAY OF SEIZED DOCUMENTS WAS WITH THE DEPARTMENT AND WAS CONFRONTE D WITH THE APPELLANT, DURING THE COURSE OF STATEMENTS ON THE BASIS OF WHI CH HE MADE THE SURRENDER. IX) RELIANCE IS PLACED ON THE FINDING OF THE HON. I TAT, CUTTACK BENCH, IN THE CASE OF PRAMOD KUMAR JAIN VS. DCIT (2012)77 DT R 244. THE FACTS OF THE CASE ARE THAT THE AO INITIATED PENALTY PROCEEDINGS IN A.Y. 2008-09 . THE AO AFTER ISSUING SHOW CAUSE U/S 271AAA OBSERVED THAT T HE ASSESSEE HAS MADE DISCLOSURE FOR RESPECTIVE AMOUNTS BUT FAILED TO SPE CIFY MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED AND THEREFORE IMPOSED PENAL TY BEING 10% OF AMOUNT SURRENDERED U/S 132(4). THE HONBLE ITAT OBSERVED THAT THERE IS NO PRESCRIBED METHOD TO INDICATE MANNER IN WHICH INCOM E WAS GENERATED WHEN DEFINITION OF UNDISCLOSED INCOME HAS BEEN DEFI NED IN ACT ITSELF WHEN NO INCOME OF SPECIFIED PREVIOUS YEAR REPRESENTED EI THER WHOLLY OR PARTLY WHICH ONUS LAY DOWN ASSESSEE STOOD DISCHARGED . THEREFOR E, LEVY OF PENALTY U/.S 271AAA IS NOT JUSTIFIED AND PENALTY SO LEVIED U/S 271AAA FOR A.YS UNDER ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 17 CONSIDERATION IN CASE OF RESPECTIVE ASSESSEE IS CAN CELLED . THE OBSERVATIONS OF THE HONBLE ITAT ARE APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. REGARDING THE ADDITION OF RS. 50,000/- CONFIRMED BY HONBLE ITAT IN THE QUANTUM APPEAL IT IS SEEN THAT THE AO MADE AN ESTIM ATED ADDITION OF RS. 5 LAKH ON ACCOUNT OF FURNITURE AND FIXTURES. THE MATTER W ENT UP FOR ADJUDICATION BEFORE HON. ITAT WHO SUSTAINED THE ADDITION OF RS.5 0,000/- WITH THE FOLLOWING OBSERVATIONS: HOWEVER IT IS A FACT THAT AT THE TIME OF PREPAR ING INVENTORY NO VALUATION REPORT WAS OBTAINED BY THE DEPARTMENT AND ONLY AN ESTIMATED ADDITION HAS BEEN MADE FOR RS. 5 LAKH BY THE AO WHI CH HAS BEEN REDUCED TO RS. 3 LAKH BY THE LD. CIT(A). THE SAID ADDITION HAS BE EN MADE ON AN ADHOC BASIS. IT IS ALSO OBSERVED THAT THE ASSESSEE HAS MADE DISCLO SURE OF RS. 1.16 CR. TOWARDS UNDISCLOSED INVESTMENT INTER ALIA IN FURNITURE(S) A ND FIXTURE(S). AFTER CONSIDERING THE OTHER ADDITIONS MADE, WE ARE OF THE CONSIDERED VIEW AND ELECTRONICS ITEMS AND/OR FIXTURES FOUND AT THE PR EMISES OF THE ASSESSEE COULD BE SAID TO HAVE BEEN PROCURED FROM THE AID UNDISCL OSED INCOME DECLARED AND/OR WITHDRAWAL MADE IN THE PRECEDING ASSESSMENT YEARS. SINCE ASSESSEE COULD NOT FURNISH DETAILS AS TO WHEN THOSE ITEMS WE RE PURCHASED AND VALUED THEREOF , WE ARE OF THE CONSIDERED VIEW THAT IT WIL L BE FAIR AND REASONABLE TO SUSTAIN THE ADDITION OF RS. 50,000/- AS AGAINST RS. 3 LAKHS SUSTAINED BY THE LD. CIT(A). HENCE GROUND NO.2 OF THE APPEAL TAKEN BY THE DEPARTMENT IS REJECTED AND CO OF THE ASSESSEE IS ALLOWED IN PART. SINCE THE ENTIRE ADDITION WAS MADE ON ESTIMATE B ASIS AND THE HONBLE ITAT HAS GIVEN A FINDING THAT PART ADDITION WAS BEING CONFIRMED BECAUSE OF THE ASSESSEES FAILURE TO FURNISH DETAIL S AS TO WHEN THESE ITEMS WAS PURCHASED THE PENALTY U/S 271AAA CANNOT BE IMPOSED ON THIS ADDITION. THE OBSERVATION OF THE HON. ITAT IMPLIES THAT THE INVES TMENT IN THE HOUSEHOLD FURNITURE AND FIXTURE COULD HAVE BEEN MADE IN THE P REVIOUS A.YS IN WHICH CASE THE ADDITION WOULD NOT COME WITHIN THE PURVIEW OF S EC. 271AAA. MOREOVER, THE ADDITION HAS BEEN MADE ON ADHOC ESTIMATED BASIS., T HE HON. JURISDICTIONAL HIGH COURT HAS RECENTLY DELETED, PENALTY U/S 271(1)(C) O N ADDITIONS MADE ON ESTIMATED BASIS, IN THE CASE OF CIT VS. KRISH TYRE RETRADING & RUBBER INDUSTRIES (ITA NO. 542/2008). THEREFORE NO PENALTY U/S 271AA A IS MERITED ON THE ADHOC ADDITION OF RS. 50,000/-.GIVEN THE ABOVE FACTS OF T HE CASE IT IS HELD THAT THE APPELLANT IS ENTITLED FOR CLAIMING IMMUNITY U/S 271 AAAAND THEREFORE THE PENALTY OF RS. 11,93,110/- LAKH IS DELETED. ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 18 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISSUE UNDER CONSIDERATION RE LATES TO WHETHER THE APPELLANT IS ELIGIBLE FOR IMMUNITY FROM PENALTY IN TERMS OF SECTION 271AAA(2) OF THE ACT. IN PARTICULAR, HAVING SATISFIED REST AL L CONDITIONS, WHETHER THE APPELLANT HAS SPECIFIED THE MANNER IN WHICH SUCH UN DISLOSED INCOME HAS BEEN DERIVED AND SUBSTANTIATES THE MANNER IN WHICH SUCH INCOME WAS DERIVED. IN THIS REGARD, THE LD AR HAS SUBMITTED THAT IT SATIS FIES THE SAID CONDITION AS THE UNDISCLOSED INCOME AS REPRESENTED BY THE SEIZED PAP ERS WAS DULY ADMITTED IN THE STATEMENTS RECORDED U/S 132(4) AND THE ASSESSEE HAD AGREED TO PAY TAX ON THE INCOME WHICH WILL BE ARRIVED AT AFTER DERIVING THE EXACT AMOUNT OF INCOME REPRESENTED BY SEIZED PAPERS. THUS, THE INCOME ON T HE BASIS OF SEIZED PAPERS WAS CALCULATED VIDE A FUND FLOW STATEMENT AND WAS D ULY SUBMITTED BEFORE THE LD. AO DURING ASSESSMENT PROCEEDINGS, AND TAX THERE ON WAS PAID ACCORDINGLY AND A COPY OF THE SAID FUND FLOW STATEMENT HAS BEEN PLACED AT APB 98. FURTHER, WE REFER TO FOLLOWING FINDINGS OF FACT BY LD CIT(A) WHICH REMAIN UNCONTROVERTED BEFORE US: ON PERUSAL OF THE STATEMENT IT IS SEEN THAT SPECI FIC DOCUMENTS WERE FOUND AND ANNEXURISED AS A-11 DURING THE COURSE OF SEARCH AND SEIZURE. THE SON OF THE ASSESSEE WAS CONFRONTED WITH THESE DOCUMENTS WHO HA VE GAVE SPECIFIC ANSWER REGARDING THE DETAILS OF ACCOUNTED AND NON ACCOUNTE D TRANSACTIONS WITH REFERENCE TO THE PROJECTS SOUTHERN HEIGHTS, UNIQUE HARMONY, UNIQUE BUILDERS (REALITY) AND UNIQUE BUILDERS AND DEVELOPERS (AJIT) AND RNB INVESTMENT. GIVEN THE ABOVE FACT, I AM NOT INCLINED TO AGREE WITH THE OBSERVATIONS OF THE AO THAT THE APPELLANT DID NOT SUBSTANTIATE OR DESCRIBE THE MANNER IN WHICH THE UNACCOUNTED INCOME WAS EARNED. FROM THE ABOVE STATEMENT IT IS CLEAR THAT THE MAIN SOURCE OF HIS UNDISCLOSED INCOME WAS ADMITTED AS BEING FROM THE REAL ESTATE B USINESS IN WHICH THERE WERE UNACCOUNTED RECEIPTS ON SALE OF PROPERTY. THI S WAS ADMITTED AND EXPLAINED BY IN DETAIL BY SHRI RAVINDRA SINGH D URING THE COURSE OF SEARCH AND POST SEARCH ENQUIRIES WHEN CONFRONTED WITH THE INCR IMINATING DOCUMENTS. DURING THE COURSE OF THESE STATEMENTS OF THE MANNER OF EARNING OF THIS INCOME WAS ALSO EXPLAINED AND SPECIFIC NAMES WERE ALSO MEN TIONED. THUS IT IS SEEN THAT DURING THE COURSE OF STATEMENTS U/S 132(4) AND SUBS EQUENTLY IN STATEMENT U/S 131, THE APPELLANT WAS CONFRONTED WITH SPECIFIC DO CUMENTS WITH REFERENCE TO INCOME FROM HIS PROFESSION, SHARE TRANSACTIONS AND INVESTMENTS IN THE LAND AND OTHER EXPENDITURE. THE TRANSACTIONS AS PER THESE DOCUMENTS WHICH COULD NOT BE VERIFIED FROM THE REGULAR BOOKS OF ACCOUNTS WER E SURRENDERED BY HIM. THUS ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 19 IT CANNOT BE HELD THAT THE MANNER OF DERIVING THE I NCOME WAS NOT SUBSTANTIATED BY THE APPELLANT BECAUSE THE SUBSTANTIATING EVIDENC E BY WAY OF SEIZED DOCUMENTS WAS WITH THE DEPARTMENT AND WAS CONFRONTE D WITH THE APPELLANT, DURING THE COURSE OF STATEMENTS ON THE BASIS OF WHI CH HE MADE THE SURRENDER. IN LIGHT OF ABOVE, IN RESPECT OF UNDISCLOSED INCOME OF RS. 1,16,30,103/- ADMITTED BY THE APPELLANT AND OFFERED TO TAX IN THE RETURN OF INCOME, THE APPELLANT IS ELIGIBLE FOR IMMUNITY FROM PENALTY IN TERMS OF SECTION 271AAA(2) OF THE ACT AS HE HAS FULFILLED ALL THE CONDITIONS S TATED THEREIN. IN RESPECT OF PENALTY IMPOSED QUA THE ADDITION OF RS. 3,00,000/-, THE SAID ADDITION HAS BEEN DELETED EXCEPT FOR AN AMOUNT OF RS 50,000 ON AN EST IMATED BASIS BY THE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS. THE P ENALTY WHICH THUS SURVIVES RELATES TO ESTIMATED ADDITION OF RS 50,000 WHICH HAS RIGHTLY BEEN DELETED BY THE LD CIT(A). WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A), WHICH IS HEREBY UPHELD. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 26/ 09/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CEN. CIR.-2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SHRI AJIT SINGH, JAIPUR 3. VK;DJ VK;QDR@ CIT (CENTRAL), JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)(CENTRAL), JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 714/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO. 714/JP/14 THE ACIT, CENTRAL CIRCLE-2, JAIPUR VS. SHRI AJIT S INGH 20