Late Manohar Singh through Legal heir Sh. Tarninder Singh, Chandigarh V. DCIT, Chandigarh

ITA 731/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6888 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 13-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 07-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: N K SAINI
• Keywords: Loose papers
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.730/CHD/2016 ASSESSMENT YEAR: 2012-13 M/S MANOHAR INFRASTRUCTURE AND VS. DY. CIT CONSTRUCTION PVT. LTD. CENTRAL CIRCLE-1 CHANDIGARH CHANDIGARH PAN NO. AAECM8616P ITA NO.731/CHD/2016 ASSESSMENT YEAR: 2012-13 LATE MANOHAR SINGH THROUGH VS. DY. CIT LEGAL HEIR SH. TARNINDER SINGH CENTRAL CIRCLE-1 CHANDIGARH PAN NO. ABZPS6104P (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. N.K. SAINI REVENUE BY : SH. MANJIT SINGH DATE OF HEARING : 06/07/2017 DATE OF PRONOUNCEMENT : 07/09/2017 ORDER PER B.R.R. KUMAR A.M. THESE APPEALS HAS BEEN FILED BY THE ASSSSEE AGAINST THE ORDER OF LD. CIT(A)-3, GURGAON DT. 23/02/2016. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER PASSED BY THE LEARNED CIT (A) IS CONT RARY TO LAW & FACTS OF THE CASE. 2. THE LEARNED CIT (APPEAL) HAS ERRED IN LAW IN CON FIRMING THE PENALTY OF RS.40,94,808/- LEVIED U/S 271 AAA OF IT ACT 1961 ON THE GROUND THAT TAXES AND INTEREST IN RESPECT OF UNDISCLOSED INCOME WERE NOT PAID IN THIS CASE IN DUE TIME, THE THIRD CONDITION FOR NON LEVY OF PENALTY U/S 271 AAA OF IT ACT. THE VIEW TAKEN BY LEARNED CIT(A) IS CONTRARY TO THE PROVISIONS OF SECTION 271 AAA(2)(III) WHICH DO NOT STIPULATE ANY TIME FRAME FOR PAYMENT OF TAXES A ND INTEREST THEREON ON UNDISCLOSED INCOME. 2 3. THE APPELLANT CRAVES LEAVE TO ADD TO OR AMEND AN Y GROUND OF APPEAL BEFORE THE DISPOSAL OF APPEAL. THE EFFECTIVE GROUNDS IN ITA NO. 731CHD/2016 ARE AS UNDER: 2. THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E PENALTY U/271AAA OF IT ACT 1961 ON THE GROUND THAT TAXES AND INTEREST IN R ESPECT OF UNDISCLOSED INCOME WAS PAID BEYOND THE DUE DATE OF FILING OF RETURN AL THOUGH ASSESSEE AT THE TIME OF FILING OF RETURN HAS SPECIFICALLY SUBMITTED BEFORE ASSESSING OFFICER THAT THE AMOUNT OF TAX PAYABLE IN THE CASE OF ASSESSEE IS RS. 37,64 ,850/- AND REQUESTED FOR ADJUSTMENT OF SUM OF RS. 55,70,400/- BEING THE AMOU NT SEIZED FROM THE RESIDENCE OF SH. MANOHAR SINGH AGAINST THE SELF ASSESSMENT TA X. 3. THE LD. CIT(A) HAS ERRED IN LAW IN CONFIRMING TH E PENALTY LEVIED UNDER SECTION 271AAA IN THE CASE OF A DEAD PERSON. THE RE PLY SUBMITTED ON 25/09/2014 WITH REGARD TO PENALTY PROCEEDINGS WAS SUBMITTED BY SHRI. TARNINDER SINGH AS LEGAL HEIR OF LATE SHRI. MANOHAR SINGH AND IT WAS A LSO MENTIONED THAT SH. MANOHAR SINGH HAS EXPIRED ON 06/04/2014. EARLIER APPEALS WE RE FILED IN THE CASE OF LATE SHRI. MANOHAR SINGH FOR AY 2010-11, 2011-12 & 2012- 13 BEFORE CIT(A) BY SH. TARNINDER SINGH AS HIS LEGAL HEIR AND THE LEARNED A SSESSING OFFICER STILL CHOOSE TO LEVY PENALTY IN THE NAME OF MANOHAR SINGH. 4. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENAL TY UNDER SECTION 271AAA ON ADDITION MADE OF RS. 9,74,822/- & RS. 2371/- WHE REAS THE ADDITION MADE DURING ASSESSMENT PROCEEDINGS WAS DELETED BY LD. CIT(A). A PPROPRIATE RELIEF MAY KINDLY BE ALLOWED. 3. THE ISSUES INVOLVED IN THE PRESENT APPEALS RELA TES TO THE LEVY OF PENALTY UNDER SECTION 271AAA OF THE INCOME TAX ACT ,1961 (I N SHORT THE ACT)AND LEVY OF PENALTY ON A DEAD PERSON. THE LEVY OF PENALTY WAS E XTENSIVELY DEALT BY THE ORDER OF THE COORDINATE BENCH , CHANDIGARH IN THE I TA NO.729/CHD/2016 FOR THE A.Y.2011-12 IN THE CASE OF THE ASSESSEE AT ITA /73 0 IN THEIR OWN CASE. HENCE , THE FACTS AND RATIO REMAINS SAME. 4. BRIEF FACTS RELATING TO THE CASE ARE THAT A SEA RCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL/BUSINESS PREMISE S OF MANOHAR SINGH GROUP OF CASES ON 8.9.2011. THE ASSESSEE M/S MANOHAR INFRAST RUCTURE & CONSTRUCTION PVT. LTD. WAS ONE OF THE CONCERNS COVERED UNDER SECTION 132 OF THE ACT. DURING SEARCH OPERATION, VARIOUS DOCUMENTS WERE FOUND AND DISCREPANCIES WERE DETECTED, WHICH WHEN CONFRONTED TO SHRI TARANINDER SINGH, DIRECTOR OF MANOHAR SINGH GROUP OF CASES, HE VOLUNTARILY DISCLOSED RS.1 3 CRORES UNDER SECT ION 132(4) OF THE ACT . ON BEING ASKED TO FILE BREAK-UP OF THE DISCLOSURE OF RS.13 CRORES, ASSESSEE WISE BREAK-UP WAS GIVEN WHICH SHOWED AN AM OUNT OF RS.6.5 CRORES 3 SURRENDERED IN THE NAME OF THE ASSESSEE I.E. M/S MA NOHAR INFRASTRUCTURE & CONSTRUCTION PVT. LTD. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF DISCLO SURE MADE, CLAIM-WISE, ASSET WISE, INVESTMENT WISE AND SUBSTANTIATE THE MANNER I N WHICH THE ADDITIONAL INCOME WAS EARNED AND MENTION THE AMOUNT OF TAXES P AID ON THE ADDITIONAL UNDISCLOSED INCOME. THE ASSESSEE SUBMITTED THAT IT HAD SURRENDERED AN AMOUNT OF RS.2,40,51,920/- FOR ASSESSMENT YEAR 2011-12 AND RS.4,09,48,080/- FOR ASSESSMENT YEAR 2012-13 AND RUPEES 1,87,05,500 IN T HE CASE OF THE ASSESSEE AT ITA/731/CHD MENTIONED ABOVE (THE ASSESSED INCOME B EING 1,97,25,322) AGAINST THE LOOSE PAPERS AND DISCREPANCIES FOUND DU RING THE SEARCH AND TOTAL TAXES PAID AS MENTIONED IN THE TABLES BELOW. THE AS SESSEE HAS ALSO REQUESTED THE ASSESSING OFFICER FOR ADJUSTMENT OF CASH RS.55 ,70,400 SEIZED FROM THE RESIDENCE OF SHRI.MANOHAR SINGH. THE ASSESSEE STATE D THAT REST OF THE AMOUNT WOULD BE PAID DURING THE FINANCIAL YEAR. THE ASSESS ING OFFICER AFTER CONSIDERING THE ASSESSEES REPLY HELD THAT SINCE ONLY THE QUANT UM OF THE UNDISCLOSED INCOME HAD BEEN SPECIFIED AND ITS BREAK-UP OR BASIS AS ALS O THE MANNER OF EARNING THE SAME HAD NOT BEEN SPECIFIED, PENALTY PROCEEDINGS UN DER SECT ION 271AAA OF THE ACT WERE INITIATED. 5. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE SU BMITTED THAT IT HAD COMPLIED WITH ALL THE CONDITIONS OUT LINED UNDER SE CT ION 271AA OF THE ACT IN CLAIMING THE IMMUNITY FROM LEVY OF PENALTY SINCE IT HAD DISCLOSED THE UNDISCLOSED INCOME IN THE STATEMENT MADE UNDER SECT ION 132(4) AT THE TIME OF SEARCH, HAD SPECIFIED THE MANNER IN WHICH THE INCOM E HAD BEEN EARNED AND HAD ALSO PAID TAXES ON THE SAME. THE ASSESSEE, THER EFORE, STATED THAT THE PENALTY UNDER SECTION 271AA OF THE ACT COULD NOT BE LEVIED. THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION AND STAT ED THAT THE ASSESSEE HAD 4 ONLY SPECIFIED THE QUANTUM OF UNDISCLOSED INCOME BU T NEITHER SPECIFIED ITS BASIS NOR SUBSTANTIATED THE MANNER OF EARNING THE SAME. F URTHER, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT PAID FULL TAXES ON T HE SURRENDERED INCOME AT THE TIME OF FILING OF THE RETURN OF INCOME. THE ASSESSI NG OFFICER THEREFORE, LEVIED PENALTY UNDER SECTION 271AA OF THE ACT ON THE SURRE NDERED INCOME OF RS.40,94,808./-AND RS.19,72,532 @ 10% OF THE SURREN DERED INCOME. 6. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) WHERE THE ASSESSEE REITERATED THE CONTENTIONS MADE BEFORE THE ASSESSING OFFICER AND STATED THAT IT HAD COMPLIED WITH ALL THE CONDITIONS SPECIFIED IN THE SECTION FOR CLAIMING IMMUNITY FROM PENALTY INCLUDING PAYMENT OF ALL TAXES DUE ON THE INCOME SURRENDERED. THE LD. CIT (APPEALS) AFTER GOI NG THROUGH THE DETAILED SUBMISSIONS OF THE ASSESSEE, HELD THAT THE ASSESSEE HAD SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BUT AT THE SAME TIME HELD THAT SINCE THE TAXES ON THE SAME HAD NOT BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, PENALTY UNDER SECT ION 271AAA OF THE ACT WAS LEVIABLE. THE LD. CIT (APPEALS) PLACED RELIANCE ON THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ASHOK KU MAR GUPTA VS. CIT (2006) 287 ITR 376 (P&H) IN SUPPORT OF THE PROPOSITION THA T IMMUNITY FROM PENAL TY CAN BE AVAILED BY THE ASSESSEE INVOKING THE PROVISIONS OF EXPLANATION-5 OF SECT ION 271(1) (C) OF THE ACT IF TAX ON THE SURRENDERED INC OME ALONGWITH INTEREST PAID IMMEDIATELY AND IN ANY CASE BEFORE DUE DATE OF RETU RN. IN VIEW OF THE SAME, THE LD. CIT (APPEALS) UPHELD THE PENAL TY LEVIED UNDER SECT ION 271AAA OF THE ACT . 7. AGGRIEVED BY THE SAME, THE ASSESSEE FILED THE P RESENT APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT TH E ONLY REASON FOR UPHOLDING THE PENALTY WAS THAT THE ASSESSEE HAD FAILED TO PAY THE DUE TAXES BEFORE FILING OF THE RETURN OF INCOME AND IN VIEW OF THE FACT THA T ALL TAXES HAD BEEN BEEN 5 PAID AND THE HON'BLE SUPREME COURT IN THE CASE OF A CIT, UDAIPUR VS. M/S GEBILAL KANHAIYALAL HUF, THROUGH KARTA, UDAIPUR , ( 2012) 348 ITR 561 (SC) HAS HELD THAT THERE IS NO TIME LIMIT PRESCRIBED WITHIN WHICH THE ASSESSEE SHOULD PAY TAX ON THE INCOME DISCLOSED IN THE STATEMENT UNDER SECT ION 132(4) OF THE ACT FOR THE PURPOSE OF CLAIMING IMMUNITY FROM PENALTY AS PE R EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT, THE PENALTY OUGHT TO BE DELET ED. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD. CIT (APPEALS). THE LD.DR VEHEMENTLY ARGUED THAT THE ASS ESSEE OUGHT TO HAVE PAID THE TAXES BEFORE FILING OF THE RETURN. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS AS ALSO THE DOCUMENTS PLACED BEFORE US. UNDOUBTEDLY, THE ONLY R EASON FOR UPHOLDING THE LEVY OF PENALTY IN THE PRESENT CASE IS THAT THE TAX ES DUE ON THE SURRENDERED/UNDISCLOSED INCOME HAD NOT BEEN PAID BE FORE THE DATE OF FILING OF THE RETURN OF INCOME. THE FACT THAT THE TAXES HAD BEEN PAID AS PER THE FO LLOWING DETAILS IS NOT DISPUTED: M/S MANOHAR INFRASTRUCTURE AND CONSTRUCTION PVT. LT D PAID TAXES AS UNDER: SL. NO. DATE AMOUNT 1 02.01.2014 500000 2 04.01.2014 2500000 3 24.04.2014 2575000 4 24.04.2014 1976480 5 13.06.2014 (ADJUSTMENT BY WAY OF REFUND) 2182734 6 25.08.2014 300000 7 30.09.2014 500000 8 30.09.2014 500000 6 9 25.08.2015 2087666 TOTAL 13121880 SHRI. MANOHAR SINGH PAID TAXES AS UNDER: SL. NO. DATE AMOUNT 1 24.12.2013 500000 2 24.06.2014 127330 3 24.06.2014 33024 4 25.06.2014 278884 5 14.07.2014 5000000 6 TDS 464674 7 TOTAL 6403912 EXCESS DEPOSITED 2174392 10. FURTHER, WE FIND THAT ASSESSMENT, UNDER SECTIO N 153A R.W.S. 143(3) OF THE ACT, WAS FRAMED ON THE ASSESSEE VIDE ORDER DATED 30 .3.2014 AND PENALTY INITIATED UNDER SECT ION 271AAA ON THE SAME DATE I. E. 30.3.2014. THUS CLEARLY ALL DUE TAXES ON THE UNDISCLOSED INCOME HAD BEEN PAID B EFORE FRAMING OF ASSESSMENT AND THE INITIATION OF PENALTY PROCEEDING S UNDER SECTION 271AA OF THE ACT. MOREOVER, THE HON'BLE APEX COURT IN THE CASE O F M/S GEBILAL KANHAIYALAL HUF, THROUGH KARTA, UDAIPUR (SUPRA) HAS CATEGORICAL LY HELD THAT THE ONLY CONDITION REQUIRED FOR GETTING IMMUNITY FROM PENALT Y, AS PER EXPLANATION-5 TO SECT ION 271(1)(C) OF THE ACT, IS THAT THE ASSESSEE HAS TO PAY TAXES TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDISCLOSED INCOME UP T O THE DATE OF PAYMENT AND THAT NO TIME LIMIT WAS PRESCRIBED UNDER THE SECTION WITHIN WHICH THE ASSESSEE OUGHT TO PAY THE TAXES ON THE INCOME DISCLOSED IN T HE STATEMENT UNDER SECTION 132(4) OF THE ACT. IN VIEW OF THE SAME, SINCE THE A SSESSEE HAS PAID ALL DUE TAXES ON THE INCOME DISCLOSED IN THE STATEMENT UNDER SECT ION 132(4) OF THE ACT , THE ASSESSEE IS ENTITLED TO IMMUNITY FROM THE PAYMENT O F TAXES SINCE THE OTHER TWO 7 CONDITIONS PRESCRIBED FOR CLAIMING IMMUNITY HAVE BE EN ACCEPTED BY THE CIT (APPEALS) HIMSELF AS BEING FULFILLED BY THE ASSESSE E. THE HON'BLE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF SHRI SATISH GOYAL V S. DCIT IN ITA NO.635/CHD/2016 HAS IN IDENTICAL CIRCUMSTANCES DELE TED THE LEVY OF PENALTY UNDER SECT ION 271AA OF THE ACT LEVIED FOR NON-PAYM ENT OF TAXES BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME BY HOLDING AS FO LLOWS : 8. WE HAVE HEARD THE RIVAL CONTENT IONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS ALSO THE DOCUMENTS PLACED BEFORE US. THE S OLE ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER FOR CLAIMING IMMUNITY FRO M THE LEVY OF PENALTY UNDER SECTION 271AAA, THE ASSESSEE IS REQUIRED TO PAY THE DUE TAXES ON THE UNDISCLOSED INCOME BEFORE THE DUE DATE OF FILING OF RETURN OF I NCOME. THE LD. CIT(A), WE FIND RELIED UPON THE ORDER OF PUNJAB AND HARYANA HIGH CO URT IN THE CASE OF ASHOK KUMAR GUPTA VS CIT (2006) 287 ITR 376 F OR UPHOLDIN G THE LEVY OF PENALTY. THE HONBLE HIGH COURT IN THE IMPUGNED CASE HELD AS UND ER : IT WAS NOT IN DISPUTE THAT CERTAIN UNDISCLOSED ASS ETS WERE FOUND FROM THE PREMISES OF THE ASSESSEE AT THE TIME OF SEARCH AND BESIDES THAT CERTAIN BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE ALSO FOUND FROM WH ICH IT WAS EVIDENT THAT THE ASSESSEE HAD EARNED UNDISCLOSED INCOME AS WELL. IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT ON THE DATE OF SEAR CH, THE ASSESSEE SURRENDERED A SUM OF RS. 10 LAKHS AS CONCEALED INCOME FOR THE YEA R IN QUESTION. THE DATE FOR FILING OF RETURN FOR THE ASSESSMENT YEAR IN QUESTIO N HAD NOT YET EXPIRED. THE ASSESSEE DID NOT EVEN FILE THE RETURN ON OR BEFORE THE DUE DATE. HE FILED THE SAME ON 19.1.1995. WHAT TO TALK OF PAYMENT OF TAX AND IN TEREST, IF ANY, DUE FROM THE UNDISCLOSED INCOME, SO SURRENDERED BY THE ASSESSEE ON THE DUE DATE, THE ASSESSEE DID NOT EVEN PAY THE AMOUNT ALONG WITH THE BELATED RETURN FILED ON 19.1.1995. FROM A READING OF EXPLANATION 5 TO SECTI ON 271(1)(C) OF THE ACT, IT IS EVIDENT THAT THIS CONCESSION IS MEANT FOR PERSONS W HO AFTER SURRENDERING THE UNDISCLOSED INCOME FOR THE CURRENT YEAR, PAY THE AM OUNT OF TAX ALONG WITH INTEREST, IF ANY, ON SUCH INCOME BEFORE THE DUE DAT E. THIS DOES NOT GIVE LIBERTY TO THE ASSESSEE TO PLEAD THAT NO PENALTY SHOULD BELEVI ED ON HIM FOR CONCEALMENT OF INCOME MERELY FOR THE REASON THAT HAVING FAILED TO PAY THE DUE TAX AND THE INTEREST ON THE DUE DATE, THE ASSESSEE PAID THE STA TUTORY INTEREST THEREON. IN OUR VIEW, THE CONCESSION, AS PROVIDED IN EXPLANATION 5, REFERRED TO ABOVE, CAN BE AVAILED OF ONLY BY AN ASSESSEE WHO AFTER SURRENDERI NG THE INCOME, PAYS THE TAX IMMEDIATELY AND NOT BELATEDLY. [PARA 2] 9. IT IS CLEAR FROM THE ABOVE THAT THE HONBLE HIGH COURT HAD HELD THAT IMMUNITY FROM PENALTY IS TO BE AVAILED BY THE ASSESSEE INVOK ING THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, ONLY IF TAX ON THE SUR RENDERED INCOME ALONG WITH THE INTEREST IS PAID IMMEDIATELY AND IN ANY CASE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. 10. WE FIND THAT THE HONBLE SUPREME COURT HAS REVE RSED THE ABOVE PROPOSITION IN THE CASE OF ACIT, UDAIPUR VS M/S GEBILAL KANHAIY ALAL HUF, THROUGH KARTA, UDAIPUR, (2012) 348 ITR 561 (SC) AND CATEGORICALLY HELD THAT FOR THE PURPOSE OF CLAIMING IMMUNITY FROM THE RIGOURS OF PENALTY UNDER CLAUSE 2 OF EXPLANATION 5 TO SEC T ION 271(1)(C), NO TIME LIMIT IS PRESCRIBED WI THIN WHICH THE ASSESSEE SHOULD PAY TAX ON THE INCOME DISCLOSED IN THE STATEMENT UNDER SECTION 132(4). THE HONBLE APEX COURT DEAL T WITH THE IMPUGNED ISSUE AS FOLLOW S : EXPLANATION 5 IS A DEEMING PROVISION. IT PROVIDES T HAT WHERE, IN THE COURSE OF SEARCH UNDER SECTION 132, THE ASSESSEE IS FOUND TO BE THE OWNER OF UNACCOUNTED ASSETS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAV E BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR PARTLY, HIS INCOME FOR ANY PRE VIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH, THEN, 8 IN SUCH A SITUATION, NOTWITHSTANDING THAT SUCH INCO ME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME FOR TH E PURPOSES OF IMPOSITION OF PENALTY UNDER SECTION 27L(1)(C). THE ONLY EXCEPTION S TO SUCH A DEEMING PROVISION OR TO SUCH A PRESUMPTION OF CONCEALMENT ARE GIVEN I N SUB-CLAUSES (1) AND (2) OF EXPLANATION 5. IN THIS CASE, WE ARE CONCERNED WITH INTERPRETATION OF CLAUSE (2) OF EXPLANATION 5, WHICH HAS BEEN QUOTED ABOVE. THREE C ONDITIONS HAVE GOT TO BE SATISFIED BY THE ASSESSEE FOR CLAIMING IMMUNITY FRO M PAYMENT OF - PENALTY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(L)(C). T HE FIRST CONDITION WAS THAT THE ASSESSEE MUST MAKE A STATEMENT UNDER SECTION 132(4) IN THE COURSE OF SEARCH STATING THAT THE UNACCOUNTED ASSETS AND INCRIMINATI NG DOCUMENTS FOUND FROM HIS POSSESSION DURING THE SEARCH HAVE BEEN ACQUIRED OUT OF HIS INCOME, WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME TO BE FU RNISHED BEFORE EXPIRY OF TIME SPECIFIED IN SECTION 139(1). SUCH STATEMENT WAS MAD E BY THE K.ARTA DURING THE SEARCH WHICH CONCLUDED ON AUGUST 1, 1987. IT IS NOT IN DISPUTE THAT CONDITION NO.1 WAS FULFILLED. THE SECOND CONDITION FOR AVAILING OF THE IMMUNITY FROM PENALTY UNDER SECTION 271(1)(C) WAS THAT THE ASSESSEE SHOULD SPEC IFY, IN HIS STATEMENT UNDER SECTION 132(4), THE MANNER IN WHICH SUCH INCOME STO OD DERIVED. ADMITTEDLY, THE SECOND CONDITION, IN THE PRESENT CASE ALSO STOOD SA TISFIED. ACCORDING TO THE DEPARTMENT, THE ASSESSEE WAS NOT ENTITLED TO IMMUNI TY UNDER CLAUSE (2) AS HE DID NOT SATISFY THE THIRD CONDITION FOR AVAILING THE BE NEFIT OF WAIVER OF PENALTY UNDER SECTION 271(L)(C) AS THE ASSESSEE FAILED TO FILE HI S RETURN OF INCOME ON 31ST JULY, 1987 AND PAY TAX THEREON PARTICULARLY WHEN THE ASSE SSEE CONCEDED ON AUGUST 1, 1987 THAT THERE WAS CONCEALMENT OF INCOME. THE THIR D CONDITION UNDER CLAUSE (2) WAS THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER W ITH INTEREST, IF ANY, IN RESPECT OF SUCH UNDISCLOSED INCOME. HOWEVER, NO TIME LIMIT FOR PAYMENT OF SUCH TAX STOOD PRESCRIBED UNDER CLAUSE (2). THE ONLY REQUIREMENT STIPULATED IN THE THIRD CONDIT ION WAS FOR THE ASSESSEE TO 'PAY TAX TOGETHER WITH INTEREST'. IN THE PRESENT CASE, T HE THIRD CONDITION ALSO STOOD FULFILLED. THE ASSESSEE HAS PAID TAX WITH INTEREST UPTO THE DATE OF PAYMENT. THE ONLY CONDITION WHICH WAS REQUIRED TO BE FULFILLED F OR GETTING THE IMMUNITY, AFTER THE SEARCH PROCEEDINGS GOT OVER, WAS THAT THE ASSES SEE HAD TO PAY THE TAX TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDISCLOS ED INCOME UPTO THE DATE OF PAYMENT. CLAUSE (2) DID NOT PRESCRIBE THE TIME LIMI T WITHIN WHICH THE ASSESSEE SHOULD PAY TAX ON INCOME DISCLOSED IN THE STATEMENT UNDER SECTION 132(4). 11. IT IS CLEAR FROM THE ABOVE THAT THE DECISION RE LIED UPON BY THE LD.CIT(A) IN UPHOLDING THE LEVY OF PENAL TY, HAS BEEN OVER RULED BY THE SUPREME COURT AND THEREFORE IT IS SETTLED THAT FOR THE PURPOSE OF CLA IMING IMMUNITY FROM PENALTY THERE IS NO REQUIREMENT OF PAYING TAXES ON THE UNDISCLOSE D INCOME BEFORE THE DUE DATE OF RETURN OF INCOME UNDER SECTION 139(1) OF TH E ACT. FURTHER IT IS NOT DISPUTED THAT THE ASSESSEE HAD PAID TAXES ON THE UNDISCLOSED INCOME SURRENDERED IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. THE MANNER OF EARNING THE INCOME AND ITS SUBSTANTIATION THEREOF HAS ALSO BEEN ACCEPTED BY THE LD. CIT(A) AND IS NOT THE MATTER OF DISPUTE. THE ASSESSEE THER EFORE HAS FULFILLED ALL THE CONDITIONS REQUIRED FOR CLAIMING IMMUNITY FROM THE LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271AAA OF THE ACT. MOREOVER W E FIND THAT IN THE CASE OF OTHER ASSESSEES BELONGING TO THE SAME GROUP, THE LD CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE, WHEREIN BESIDES OTHER PLEADINGS MADE, THE ASSESSEE RELIED UPON THE AFORESTATED APEX COURT DECISION IN THE CASE OF GEBILAL KANHAIYALAL (SUPRA) ON THE IMPUGNED ISSUE, AND DELE TED THE PENAL TY LEVIED. FURTHER, ADMITTEDLY, NO APPEAL HAS BEEN FILED BY TH E REVENUE AGAINST THE SAID ORDERS OF THE CIT(A) . 11. IN VIEW OF THE ABOVE WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE PENALTY LEVIED UNDER SECTION 271AAA OF THE ACT OF RS.40,94,808/- AND RS. 19,72,532/- . 9 12. SINCE THE PENALTY IS DELETED ON MERITS, ANY A DJUDICATION ON THE TECHNICAL GROUND NO.3 & 4 BECOMES ONLY ACADEMIC IN INTEREST. HENCE NO FINDING IS REQUIRED ON THIS GROUND. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R.KUM AR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07/09/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR