MURARILAL MITTAL, Jaipur V. ACIT, Jaipur

ITA 773/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2116 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 25-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Section: 143(3); 153A; 27; 132; 2; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JHEKRH FNOK LG ] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SMT. DIVA SINGH, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 773/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 MURARILAL MITTAL, B-18, SARDAR PATEL MARG, CHOMU HOUSE, JAIPUR. CUKE VS. A.C.I.T., CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACCPM 1182 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/03/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/05/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A)-4, JAIPUR DATED 15/6/2016 FOR THE AS SESSMENT YEAR 2008- 09. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AGAINS T CONFIRMING THE PENALTY U/S 271AAA OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED AS THE ACT) AMOUNTING TO RS. 4,05,000/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE BE LONGS TO MITTAL GROUP, WHOSE PREMISES WERE SEARCHED ON 27/8/2008. IN RESPONSE TO ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 2 NOTICE U/S 153A OF THE ACT, THE ASSESSEE FILED RETU RN OF INCOME DECLARING TOTAL INCOME OF RS. 55,44,392/- FOR THE ASSESSMENT YEAR 2008-09 ON 31/3/2009. THE ASSESSMENT WAS COMPLETED U/S 143(3) RE AD WITH SECTION 153A OF THE ACT AT AN INCOME OF RS. 70,92,010/-. TH E ASSESSING OFFICER MADE ADDITION OF RS. 14,29,652/- BY NOT ALLOWING THE BENEFIT OF TELESCOPING/REALIZATION FROM DEBTORS/ADVANCES STATI NG THAT NO NEXUS HAS BEEN ESTABLISHED, RS. 1,15,765/- BY MAKING DISALLOWA NCE PART OF EXPENSES DEBITED UNDER VARIOUS HEADS STATING THAT T HE EXPENSES HAVE NOT BEEN WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF B USINESS AND RS. 2,199/- ON ACCOUNT OF DIFFERENCE IN ACCOUNT OF PHAR MACEUTICAL COMPANIES. 3. THE LD CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE . THE ASSESSEE PREFERRED APPEAL BEFORE THE ITAT, JAIPUR BENCHES, JA IPUR AND AFTER THE ORDER OF THE ITAT, THE ADDITION OF RS. 1,17,964/- (1 ,15,765 + 2199) MADE BY MAKING DISALLOWANCE OUT OF VARIOUS EXPENSES AND DIFFERENCE IN ACCOUNT OF PHARMACEUTICAL COMPANIES WAS REMAINED AN D THE BALANCE ADDITION OF RS. 14,29,652/- WAS DELETED. THE ASSESSIN G OFFICER IMPOSED THE PENALTY OF RS. 4,05,000/- BEING 10% OF ADDITION AL INCOME OF RS. 40,47,535/- DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. 4. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER:- ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 3 THE LD CIT(A) CONFIRMED THE PENALTY U/S 271AAA OF I .TAX BY HOLDING THAT THE ASSESSEE HAS NOT CLARIFIED AND THUS HAS NOT SUBSTAN TIATED THE MANNER IN WHICH ASSESSEE DERIVED UNDISCLOSED INCOME. THE LOWER AUTH ORITIES FAILED TO APPRECIATE THE STATEMENT OF THE ASSESSEE UNDER SECTION 132(4) OF INCOME TAX ACT, WHEREIN HE CATEGORICALLY STATED THAT HE DERIVED UNDISCLOSED INCOME BY INFLATING THE EXPENSES RECORDED IN BOOKS. THE ASSESSEE HAS SPECIF IED THE MANNER AND SUBSTANTIATED THE SOURCE OF UNDISCLOSED INCOME. THE ASSESSEE HAS STATED THAT HE DERIVED UNDISCLOSED INCOME BY INFLATING THE EXPENSE S AND THIS INCOME IS REPRESENTED BY INVESTMENT IN HOUSE, JEWELRY, AND EX PENSES IN MARRIAGE. THE LD AO HAS ACCEPTED THIS IN ASSESSMENT WHICH MEANS THAT THE ASSESSEE HAS SUBSTANTIATED THE MANNER ALSO. THUS, THE ASSESSEES CASE IS FULLY COVERED BY SUB- SECTION (2) OF SECTION 271AAA OF INCOME TAX ACT. THE FINANCE ACT, 2007, INSERTED S. 271AAA W.E.F. 1S T APRIL, 2007, READS AS UNDER: 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.-( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HA S BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYA BLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCL OSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE,- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN R ESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 4 (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECT ION. EXPLANATION.-FOR THE PURPOSES OF THIS SECTION,- (A) 'UNDISCLOSED INCOME' MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHE R VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMI SSIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RE CORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FA LSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CO NDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YE AR- (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 1 39 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSES SEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE T HE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED.. SINCE IN THE CASE OF THE ASSESSEE: - A) THE ADDITIONAL INCOME WAS DULY SURRENDERED AT TH E TIME OF SEARCH, (THE COPY OF STATEMENTS IS ENCLOSED HEREWITH) B) THE MANNER IN WHICH THE ADDITIONAL INCOME WAS EA RNED WAS ALSO SUBSTANTIATE (AS EXPLAINED IN STATEMENTS THAT THE S AME WAS EARNED BY INFLATING THE EXPENSES RECORDED IN BOOKS OF ACCO UNTS. IN THIS REGARD KINDLY REFER Q. NO. 5 AND 8 OF THE STATEMENT OF THE ASSESSEE AND C) THE ADDITIONAL INCOME WAS INCLUDED IN RETURN FIL ED AND DUE TAXES WERE PAID THEREON, ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 5 THEREFORE BY VIRTUE OF PROVISIONS OF SUB- SECTION ( 2) OF SECTION 271AAA NO PENALTY CAN BE IMPOSED ON ADDITIONAL INCOME OF R S. 40,47,535/- DISCLOSED IN RETURN FILED FOR THIS YEAR. AS REGARD TO ADDITION OF RS. 2,199/- MADE IN ASSESSMENT ORDER THIS IS TO SUBMIT THAT THE SAME INCOME WAS NOT SHOWN IN RETURN FOR THE BONAFIDE REASONS WHICH HAS BEEN EXPLAINED DURING ASSESSMENT PROCEEDINGS. HE FURTHER SUBMITTED THAT, EVEN IF IT IS TAKEN THA T THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER OF UNDISCLOSED INCOME, WE SUBMIT THAT THE NEITHER SEARCH PARTY NOR ASSESSING OFFICER ASKED THE ASSESS EE TO SUBSTANTIATE THE MANNER OF UNDISCLOSED INCOME. THEREFORE, THE PENALTY U/S 2 71AAA CANNOT BE LEVIED. SECTION 271AAA OF INCOME TAX ACT, 1961 HAS BEEN IN SERTED BY FINANCE BILL 2007 AND IS APPLICABLE IN A CASE WHERE SEARCH HAS B EEN INITIATED ON OR AFTER 1.6.2007 BUT BEFORE 1.7.2012. EXPL 5 TO SECTION 27 1(1)(C) WAS ALSO AMENDED BY THE FINANCE BILL 2007 AND STOOD APPLICABLE ON SEARC H INITIATED BEFORE 1.6.2007. IN MEMORANDUM EXPLAINING THE PROVISIONS, IT IS MADE CLEAR THAT BY IN INTRODUCTION OF SECTION 271AAA, EXPL 5 IS NOT RELEV ANT. BOTH SECTIONS GRANTED IMMUNITY FROM CONCEALMENT PROCEEDINGS IN CASE CERTA IN CONDITIONS ARE SATISFIED. CONDITIONS ARE ALSO SIMILAR IF CONDITIONS ARE NOT S ATISFIED THEN PENALTY U/S 271AAA IS 10% OF UNDISCLOSED INCOME WHILE PENALTY U /S 271(1)(C) IS TO BE QUANTIFIED AS PER 271(1)(III) IN CASE CONDITIONS AR E NOT SATISFIED. HENCE CASE LAWS DECIDED IN RESPECT OF EXPL 5 TO 271 (1)(C) ARE RELE VANT FOR SUB-SECTION 2 OF SECTION 271AAA. WHILE RECORDING STATEMENT U/S 132(4 ), IT IS THE DUTY OF THE AUTHORIZED OFFICER TO APPRISE THE ASSESSEE ABOUT PR OVISIONS OF LAW AND IF NO QUESTION ASKED ABOUT THE MANNER IN WHICH INCOME HAS BEEN DERIVED, THEN ON THIS GROUND, IMMUNITY CANNOT BE DENIED. HE RELIED ON THE FOLLOWING DECISIONS:- (I) GUJARAT HIGH COURT IN THE CASE OF CIT V MAHENDE R C. SHAH 299 ITR 305 (II) SIMILAR FINDING HAS BEEN RECORDED BY HONBLE A LL. HIGH COURT IN THE CASE OF CIT V RADHA KISHAN GOEL 278 ITR 454. ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 6 (III) GUJARAT HIGH COURT PR COMMISSIONER OF INCOME TAX-1 VERSUS M/S GEETA PRINTS PVT. LTD. TAX APPEAL NO. 565 OF 20 15 DATED: - 14 SEPTEMBER 2015. HE FURTHER RELIED ON THE FOLLOWING DECISIONS: (I) ITAT JAIPUR BENCH IN CASE OF LATE SMT SUDHA PAT NI VS ACIT ITA NO 963/JP/2015 ORDER DATED 09/08/2016. (II) SPS STEEL & POWER LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX ITAT, KOLKATA TRIBUNAL (B) (2015) 44 CCH 0286 KOL TRIB. (III) 2016 (7) TMI 506 - ITAT DELHI IN CASE OF SH. VINOD CHANDER SINHA VERSUS ACIT, CIRCLE-2, NEW DELHI ITA NO.3699/ DEL/2014 DATED: - 13 JUNE 2016 (IV) 2016 (4) TMI 949 - ITAT VISAKHAPATNAM IN CASE OF ACIT, CIRCLE-1 (1) , VISAKHAPATNAM VERSUS M/S. SAI RAM BU ILDERS AND VICA-VERSA I.T.A.NO.738/VIZAG/2013, C.O. NO.12/VIZA G/2014 DATED: - 18 MARCH 2016 (V) SUNIL KUMAR BANSAL VS. DEPUTY COMMISSIONER OF I NCOME TAX ITAT, CHANDIGARH TRIBUNAL (A) (2015) 37 ITR (TRIB) 0576 (CHANDIGARH). 5. ON THE CONTRARY, THE LD SR. DR HAS VEHEMENTLY SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE L D. CIT(A) HAS CONFIRMED THE PENALTY BY HOLDING THAT THE ASSESSEE HAS NOT CLARIFIED AND NOT SUBSTANTIATED THE MANNER IN WHICH THE ASSESSEE DERIVED UNDISCLOSED INCOME. IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT WHEN THE ASSESSEE CATEGORICALLY STATED THAT HE HAS DERIVED U NDISCLOSED INCOME BY WAY OF INFLATING EXPENSES RECORDED IN THE BOOKS OF A CCOUNT. IN VIEW OF THIS, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING TH AT THE ASSESSEE HAS NOT ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 7 CLARIFIED AND NOT SUBSTANTIATED THE MANNER IN WHICH THE ASSESSEE DERIVED UNDISCLOSED INCOME. THE ASSESSEE HAS CATEGORICALLY S TATED IN ANSWER TO QUESTIONS NO. 5 TO 7 IN THE STATEMENT RECORDED U/S 132(5) OF THE ACT, WHICH IS PLACED AT PAGE NOS. 2 AND 3 OF THE PAPER BO OK. THE COORDINATE BENCH IN THE CASE OF LATE SMT SUDHA PATNI VS ACIT, WH ILE DECIDING ITA NO 963/JP/2015 ORDER DATED 09/08/2016 HELD AS UNDER :- 4.6. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS OFFERED IN HIS RETURN OF INCOME TH E UNDISCLOSED INCOME OF RS. 2,71,91,880/-. THE SAME ARE DULY RECO RDED BY THE AO AT PARA 4 OF THE ASSESSMENT ORDER. NOWHERE IN TH E ASSESSMENT ORDER, THE AO RECORDED THAT THE ASSESSEE WAS ASKED TO SPECIFY OR SUBSTANTIATE THE MANNER IN WHICH THE INCOME HAS BEE N DERIVED AND THE ASSESSEE HAS FAILED TO DO SO. THE AO HAS ME RELY RECORDED THAT THE TOTAL INCOME DECLARED IN THE RETURN OF INC OME FOR THE SPECIFIED YEAR INCLUDED THE UNDISCLOSED INCOME OF R S. 2,71,91,880/- WHICH REPRESENTED THE UNEXPLAINED MON EY. IN ACCORDANCE WITH SUB SECTION (2) OF SECTION 271AAA O F THE ACT, THE PENALTY PROVISIONS UNDER SUB-SECTION (1) OF SEC TION 271AAA WILL NOT APPLY IF THE ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED ; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. IN THIS REGARD, AR HAS SUBMITTED THAT THE ASSESSEE SATISFIES ALL THE ABOVE THREE CONDITIONS AS IS EVIDENT FROM FACTS OF THE CASE AND ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 8 DOCUMENTS SUBMITTED. FURTHER, THE ASSESSEE, IN COUR SE OF SEARCH IN THE SWORN STATEMENT RECORDED UNDER SECTION 132(4 ) OF THE ACT, HAS ADMITTED THE UNDISCLOSED INCOME, AND CLEARLY ST ATED THE MANNER IN WHICH THE UNDISCLOSED INCOME (WITHIN THE MEANING OF EXPLANATION (A)(I) OF SECTION 271AAA) WAS DERIVED A ND SUBSTANTIATED IN STATEMENT RECORDED IN COURSE OF SE ARCH. SUBSEQUENTLY, THE ASSESSEE PAID TAX, TOGETHER WITH INTEREST IN RESPECT OF THE UNDISCLOSED INCOME AND FILED RETURN OF INCOME, WHICH STAND ACCEPTED IN ASSESSMENT U/S 143(3) OF TH E ACT. ON PERUSAL OF THE ABOVE, IT IS SEEN THAT ASSESSEE HAS OFFERED FOR TAX HIS UNDISCLOSED INCOME (RS. 2,71,91,880/-) INCLUDIN G JEWELLERY AS UNDER :- JEWELLERY RS. 2,25,69,380/- CASH RS. 46,22,500/- ---------------------- RS. 2,71,91,880/- WE FIND THAT THE CASE OF THE ASSESSEE IS SQUARELY C OVERED BY THE DECISION OF THE COORDINATE BENCH OF THE JAIPUR TRIB UNAL RENDERED IN THE CASE OF DCIT VS. SHRI RAHUL MANGAL & OTHERS IN ITA NO. 1026/JP/2015 & ORS. WHEREIN ON SIMILAR FACTS THE CL AIM OF THE ASSESSEE WAS ALLOWED BY DELETING THE ADDITIO N MADE BY THE AO, THEREBY DISMISSED THE APPEALS OF THE OF THE REV ENUE. WE ALSO FIND SUPPORT FROM THE DECISION OF THE COORDINATE BE NCH RENDERED IN THE CASE OF ACIT (OSD) VS. M/S. KANAKIA SPACES P VT. LTD. ITA NO. 6763/MUM/2011 A.Y. 2007-08, WHEREIN THE HONBLE TRIBUNAL HAS HELD AS UNDER :- 3.1. LD. CIT (A) AFTER CONSIDERING THE SUBMISSION DELETED THE PENALTY BY STATING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE B Y 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 PARA-8 TO CONCLUDE THAT THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIAT E THE SOURCE OF ACQUISITION OF THE MOVABLE ASSETS. THE FACT OF THE MATTER IS THAT THE REQUIREMENT ON THE PART OF AN ASSESSEE TO SUBST ANTIATE THE SOURCE OF INCOME CANNOT BE TAKEN TO MEAN THAT ALL E VIDENCES IN THE RESPECT HAS TO BE PRODUCED. THE VERY FACT THAT THE DISCLOSURE IS MADE IN RESPECT OF UNDISCLOSED INCOME, ALL THAT CAN BE REQUIRED OF AN ASSESSEE IS THAT THE PROXIMATE NATUR E OF ACQUISITION CAN BE MENTIONED BY HIM. IT CANNOT BE T HE CASE THAT ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 9 VERY MINUTE DETAIL THEREOF WOULD BE PRESERVE WITH E VIDENCE WHICH IS POSSIBLE ONLY FOR THE REGULAR INCOME BEING DISCL OSED BY HIM. THE REQUIREMENT AS PER SECTION (2) OF SECTION 271AA A IS ONLY THAT THE MANNER OF EARNING INCOME SHOULD BE SPECIFI ED SO THAT UNDUE ADVANTAGE OF TELESCOPING OR SOME OTHER INCOME BEING BROUGHT WITHIN THE TOTAL AMBIT OF UNDISCLOSED INCOM E SURRENDERED DOES NOT HAPPEN. FROM THE ORDER OF THE LD. A.O ALSO, IT IS APPARENT THAT THE PENALTY IS NOT LEVIED BY HIM ON ACCOUNT OF SOME CONVICTION BUT HAS BEEN JUST LEVIED TO COMPLETE THE PROCEEDINGS. IN FACT THERE ARE NO MATERIAL FACT S WARRANTING THE LEVY OF PENALTY AND, ACCORDINGLY, THE PENALTY O F RS.55,00,000/- LEVIED UNDER SECTION 271AAA IS DIREC TED TO BE DELETED. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO N OT SEE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). THE O RDER IS IN TUNE WITH THE PRINCIPLES LAID DOWN BY VARIOUS CO-ORDINAT E BENCHES AND HIGH COURTS PARTICULARLY WITH REFERENCE TO DISC LOSURE MADE UNDER SECTION 132(4). IN THE CASE OF CIT VS. MAHEND RA C. SHAH (299 ITR 305) THE HONBLE GUJARAT HIGH COURT CONSID ERED SIMILAR STATEMENT UNDER SECTION 132(4) TO GRANT IMM UNITY UNDER SECTION 271(1)(C). THE HONBLE HIGH COURT HELD AS U NDER:- WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHOR IZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPL AIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSE SSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A P ARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SU CH A LAPSE IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECOR DED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCA SION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT F ORMAT STIPULATED BY THE PROVISIONS CONSIDERING THE SETTIN G IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN AS SESSEE, WHETHER LITERATE OR ILLITERATE, TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED IN THE SECOND E XCEPTION WHILE MAKING STATEMENT UNDER SECTION 132(4). EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOUL D BE ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 10 SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER D ENIAL OF THE BENEFIT. 4.1 IN THIS CASE, THE ASSESSEE WAS ASKED TO EXPLAIN THE ENTRIES IN THE WORK-IN-PROGRESS SHEET AND ASSESSEE IN THE CO URSE OF STATEMENT OFFERED THE INCOME WITH A PLEA NOT TO INI TIATE PENALTY PROCEEDINGS. THE ASSESSEE WAS NOT ASKED ABOUT THE M ANNER IN WHICH SUCH INCOME WAS EARNED AND ALSO TO SUBSTANTIA TE THE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED. THE PROVISION OF CLAUSE-2 OF EXPLANATION-V APPENDED TO SECTION 27 1(1)(C) ARE SIMILAR TO SECTION 271AAA(2). THE SCOPE AND MEANING HAS BEEN LUCIDLY EXPLAINED BY THE HONBLE ALLAHABAD HIGH COU RT IN THE CASE OF CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 45 4 (ALL.), WHICH WAS FOLLOWED BY THE HONBLE GUJARAT HIGH COUR T IN THE ABOVE REFERRED CASE. IN VIEW OF THE ABOVE PRINCIPLE S LAID DOWN, WE ARE OF THE OPINION THAT IMMUNITY PROVIDED UNDER S/S. (2) OF SECTION 271AAA IS APPLICABLE AND ACCORDINGLY, THE O RDER OF CIT(A) DOES NOT REQUIRE ANY MODIFICATION. REVENUES GROUNDS ARE REJECTED. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCHES, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW. THE AO IS DIRECTED TO DELETE THE ADDITION. THE APPEAL OF THE ASSESSEE IS ALLOWED. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MAHENDER C. SHAH (SUPRA) HAS HELD AS UNDER: WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORI SED OFFICER IT IS INCUMBENT UPON THE AUTHORISED OFFICER TO EXPLAIN THE PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORISED OFFICER CANNOT STOP SH ORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAK E ADVANTAGE OF SUCH A LAPSE IN THE STATEMENT. THE REA SON IS NOT FAR TO SEEK. IN THE FIRST INSTANCE, THE STATEMENT I S BEING RECORDED IN THE QUESTION AND ANSWER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERM ENTS IN THE EXACT FORMAT STIPULATED BY THE PROVISIONS CONSI DERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIB LE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, T O BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATE D BY THE SECOND EXCEPTION WHILE MAKING STATEMENT UNDER SECTI ON 132(4). EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN ITA 773/JP/2016_ MURARILAL MITTAL VS ACIT 11 WHICH THE INCOME IS DERIVED, IF THE INCOME IS DECLA RED AND TAX THEREON PAID, THERE WOULD BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHER DENIAL OF THE BENEFIT. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES OF TH E CASE AND THE CASE LAWS RELIED UPON, WE ARE HEREBY DIRECT TO DELETE THE PENALTY MADE U/S 271AAA OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/05/2017. SD/- SD/- FNOK LG HKKXPAN (DIVA SINGH) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12 TH MAY, 2017. *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI MURARILAL MITTAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CENTRAL CIRCLE-3, JAIPU R. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 773/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR