Chandan K. Shewani, Pune V. DCIT Cent. Cir.-1(1), Pune

ITA 797/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56607 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 06-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAP THAMA
• Assessee Lawyers: SUNIL PATHAK; P D KUDWA
• Keywords: Search and seizure; Reasonable cause
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI .. APPELLANT D-14, PARMAR PARADISE, B.J.ROAD, PUNE -411 001. PAN ABDPS4846G VS. DCIT, CEN.CIR.1(1), PUNE .. RESPONDENT APPELLANT BY: SHRI SUNIL PAT HAK & SHRI P.D.KUDWA RESPONDENT BY: MISS. ANN KAP THAMA, DR DATE OF HEARING: 23.11 .2011 DATE OF PRONOUNCEMENT: 16.12.2011 ORDER PER D.KARUNAKARA RAO, AM : THERE ARE THREE APPEALS OF THE ASSESSEE UNDER CONSIDERATION AND TH EY ARE DIRECTED AGAINST THREE DIFFERENT ORDERS, WHICH ARE COMMONLY DATED 21/04/2009, OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) I, PUNE FOR THE ASSESSMENT YEAR 1999-00 TO 2001-02. LEVY OF PENALTI ES U/S 271(1) OF THE ACT IS THE SUBJECT MATTER IN ALL OF THEM. 2. THE GROUNDS IN ALL THESE APPEALS ARE IDENTICALLY WORDED. THEREFORE, THE GROUNDS FOR THE RELEVANT ASSESSMENT YEAR I.E. 1999- 00, WHICH IS THE FIRST YEAR, ARE REPRODUCED FOR GUIDANCE SAKE AND THEY READ AS U NDER: 1. THE HONBLE CIT(A) ERRED IN CONFIRMING THE ORD ER PASSED BY THE A.O. IMPOSING PENALTY U/S.271(1)(C) BY HOLDING THAT THE ASSESSEE HAD CONCEALED/FURNISHED INACCURATE PARTICULARS OF I NCOME. THE APPELLANT PLEADS THAT THE ORDER IMPOSING PENALTY IS NOT VALID. 2. WITHOUT PREJUDICE THE AO ERRED IN IMPOSING PENAL TY OF RS.30,000. THE ASSESSEE PLEADS FOR RELIEF IN THE Q UANTUM OF PENALTY TO MEET THE INTEREST OF JUSTICE. 3. DURING THE PENALTY PROCEEDINGS, THE AO IMPOSED A RE RS.30,000, RS.50,000/-& RS.1,35,000/- FOR THE ASSESSMENT YEAR 1999-00 , 2000-01 & 2001-02 RESPECTIVELY. BRIEFLY STATED, RELEVANT FACT S OF THE CASE ARE THAT THE ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI ASSESSEE IS AN INDIVIDUAL AND THERE WAS SEARCH AND SEIZURE OPERATION ON THE ASSESSEES HIS PREMISES WHICH RESULTED IN THE SEI ZURE OF CASH AMOUNTING TO RS.35,25,000/-. THE SEARCH ALSO REVEALED THE FACT O F ASSESSEE REGULARLY FILING OF RETURNS OF INCOME FOR ALL THE YEARS UNDER CONSID ERATION. AO ISSUED NOTICE U/S.153A AND IN RESPONSE, THE ASSESSEE FILED BY FIL ING RETURNS OF INCOME. THE DETAILS OF INCOME DECLARED IN THE RETURN FILED U/S 139(1) OF THE ACT IN NORMAL COURSE AND THE INCOME DECLARED IN RESPONSE TO THE N OTICE U/S.153A OF THE ACT IS AS FOLLOWS. A.Y. RETURNED INCOME U/S.139(1) RETURNED INCOME U/S.153A DIFFERENCE COMMON EXPLANATION 1999 - 00 1,23,563 2,16,619 93,057 VOLUNTARY DECLARATION TOWARDS DRAWINGS OF ASSESSEE & WIDOWED SISTER 2000 - 01 2,46,240 3,81,243 1,35,000 2001 - 02 3,04,130 6,84,132 3,80,000 4. DURING THE ASSESSMENT PROCEEDINGS, ON THE ISSUE OF FURNISHING OF ADDITIONAL INCOME IN THE RETURN FILED U/S 153A OF T HE ACT, THE ASSESSEE SUBMITTED THAT THE DURING THE POST SEARCH PROCEEDIN GS, THE ASSESSEE PREPARED A CASH FLOW STATEMENT AND HE MENTIONED CERTAIN CASH CREDITS IN THE ACCOUNTS TO EXPLAIN THE QUIRES IF ANY ON THE ISSUE OF WITHDR AWALS OF SELF AND HIS WIDOWED SISTER. ASSESSEE SUBMITTED THAT HE HAS A SI STER, WHOSE RELATIONS WITH THE HER HUSBAND ARE STRAINED, WHOSE MAINTENANCE IS REQUIRED TO BE TAKEN CARE OF BY THE ASSESSEE. THE ASSESSEE QUANTIFIED THE R ELATABLE EXPENDITURE AND AN EQUALANT OF SUCH EXPENDITURE IS CREDITED IN THE BOO KS. THE SOURCE FOR THE SAME IS HER HUSBAND. BUT THE ASSESSEE COULD NOT SUB STANTIATE THE SAME BY FILING ANY CONFIRMATION LETTER. THE REASONS FOR NON PROCUREMENT OF SUCH LETTERS ARE THE STRAINED RELATIONSHIPS BETWEEN THE WIFE AND THE HUSBAND. TO AVOID LITIGATION ON THIS ISSUE, THE ASSESSEE OFFERED SAID INCOME AS UNDISCLOSED CASH CREDITS AND PAID THE TAXES AS EVIDENT FROM THE RETU RNS FILED IN RESPONSE TO THE NOTICE ISSUED U/S.153A OF THE ACT. DURING THE PRO CEEDINGS, THE ASSESSEE MENTIONED THAT NO INCRIMINATING MATERIAL FOUND IN T HIS REGARD DURING THE SEARCH ACTION. THE AMOUNTS SO DISCLOSED ARE BASED O N THE ESTIMATIONS OF THE ASSESSEE. FURTHER, THE ASSESSEE MENTIONED THAT THE SAID INCOME WAS EARNED DURING THE SHARE TRADING ACTIVITY AND THE SAME AMOU NT WAS AIMED AT EXPLAINING EXPENSES TOWARDS PERSONAL AS WELL AS EXP ENSES OF THE WIDOWED SISTERS. AO HELD THAT THE ASSESSEE FAILED TO PROVE THE GENERATION OF SAID INCOME WITH THE EVIDENCES. THUS, THE ASSESSING OFFI CER RESORTED TO ESTIMATIONS OF SUCH CASH CREDIT. AS PER THE ASSESSING OFFICER S AID INCOME SHOULD BE RS.1,00,000/- (RS.93,057/-) FOR A.Y. 1999-00, RS.1, 50,000 (RS.1,35,000) FOR THE A.Y.2000-01, RS.4,00,000/- (RS.3,80,000/-) FOR A.Y.2001-02. THE FIGURES ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI IN BRACKET INDICATE THE ESTIMATIONS OF THE ASSESSEE . AT THE END, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT SEPARATELY. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE FILED WRITTEN SUBMISSIONS AND SUBMITTED THAT THE ONLY VARIATION IN RETURN FILED I N RESPONSE TO NOTICE U/S.153A IS ON ACCOUNT OF UNDISCLOSED CASH CREDIT. IT IS SU BMITTED THAT ASSESSEE WAS NOT MAINTAINING THE BOOKS OF ACCOUNTS CONSIDERING I NCOME FROM SHARE INCOME AND INTEREST RECEIVED FROM DEPOSITS AND SMALL AMOUN T NEGLIGIBLE SHARE TRANSACTIONS. OTHER SUBMISSIONS OF ASSESSEE ARE AS UNDER. 5. IN THE COURSE OF THE SEARCH THE ASSESSEE VOLU NTEERED IN HIS STATEMENT ON OATH U/S 132(4) TO DECLARE HIS CORRECT INCOME BY UPDATING HIS RECORDS AFTER OBTAINING RELEVANT CLARIFICATIONS FROM PARTIES AND TO PAY DUE TAXES ON THE SAME. THE ASSESSEE HAS COME CLEAN DECLARED CORRECT INCOME WHICH IS HIGHER THAN THAT APPRAISED IN THE S EARCH ACTION AND PAID OFF ALL TAXES. NO VARIATION REMAINS IN THE INCOME DECLARED AFTER GIVING EFFECT TO ORDER OF CIT(A). THE ASSESSEE HAS CO-OPE RATED IN ASSESSMENT PROCEEDINGS AND IN PAYMENT OF TAXES. 6. WE SUBMIT THAT THE ASSESSEE HAS NOT DELIBERATELY CONCEALED OR FURNISHED INCORRECT PARTICULARS OF INCOME. THE ASSE SSEES RECORDS WERE NOT WELL MAINTAINED AND THE ASSESSEE WAS NOT ABLE T O ATTEND TO HIS TAX MATTERS DUE TO PERSONAL DIFFICULTIES IN HIS FAMILY. THE ASSESSEES FATHER IS VIRTUALLY RETIRED FROM ACTIVE BUSINESS. THE ASSESS EES SISTER IS A DIVORCEE, WHOSE FAMILY LIFE IS CONSIDERABLY DISTURBED. THE A SSESSEE WAS PROVIDING ALL HELP AND ASSISTANCE TO HIS SISTER. 7. DUE TO THESE DIFFICULTIES, TAX MATTERS DID NOT R ECEIVE DUE ATTENTION. HOWEVER, IT IS EVIDENT FROM THE ASSESSEE S STATEMENT ON OATH RECORDED AT THE TIME OF THE SEARCH ON 15.06.2004 (A NSWER TO QUESTION NOS.15 TO 18) THAT THE ASSESSEE HAS NOT DELIBERATEL Y ATTEMPTED TO EVADE TAX BUT HAS BEEN OVERTAKEN BY CIRCUMSTANCES AND HAS NOT HAD THE CAPACITY TO DEAL WITH THE CIRCUMSTANCES ADEQUATELY. 8. THE ASSESSEE HAS MET THE REQUIREMENTS OF SUB CLA USE 2 OF EXPLANATION 5 TO SECTION 271(1)(C). 9. CONSIDERING THE ABOVE MENTIONED FACTS AND CIRCUM STANCES, WE SUBMIT THAT THE OMISSION IN THE RETURNS U/S 139 IS OCCASIONED BY REASONABLE CAUSE AND THAT THE PENALTY U/S 271(1)(C) IS NOT JUSTIFIED. THE PENALTY PROCEEDINGS MAY KINDLY BE DROPPED. 5. THUS, THE ASSESSING OFFICER CAME TO AN OPINION T HAT THE SOURCE OF SUCH UNDISCLOSED CASH CREDIT WAS UNEXPLAINED. THEREFORE, THERE IS NO VOLUNTARINESS IN OFFERING THE SAID INCOME AS THE INCOME OF THE AS SESSEE FOR THE AYS UNDER CONSIDERATION AND THE SEARCH IF THE TRIGGER FOR THE SAID DISCLOSURE OF ADDITIONAL INCOME. AO DISTINGUISHED THE INCOME DIFFERENCE BET WEEN INCOME FURNISHED IN THE RETURNS FILED U/S. 139(1) AND U/S 153A OF THE A CT. HE ACCORDINGLY PROCEEDED TO LEVY PENALTY I.E. RS.30,000, RS.50,000 /- & RS.1,35,000/- FOR THE ASSESSMENT YEAR 1999-00, 2000-01 & 2001-02 RESPECTI VELY. THESE MATTERS TRAVELLED TO THE FIRST APPELLATE AUTHORITY BOTH ON QUANTUM OF ADDITIONS AS WELL AS ON PENALTIES. IT IS MENTIONED IN THE IMPUGNED O RDERS THAT ON QUANTUM ADDITIONS, THE CIT(A) GAVE RELIEF TO THE ASSESSEE T O THE EXTENT OF ESTIMATIONS ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT PRO CEEDINGS THUS THE CONFIRMING THE INCOME OFFERED IN THE RETURN OF INCO ME FILED IN RESPONSE TO THE NOTICE U/S.153A OF THE ACT. REGARDING THE PENALTY PROCEEDINGS, THE CIT(A) CONSIDERED THE ASSESSEES EXPLANATION AND DISMISSED THE EXPLANATION OF THE ASSESSEE. EARLIER ASSESSEE SUBMITTED THAT THE SAID CASH CREDIT IS MERE ESTIMATION AND OFFER OF SAID INCOME IS THE OUTCOME OF HIS VOLUNTARY ACT. REVENUE DOES NOT HAVE ANY INCRIMINATING INFORMATION OR EVIDENCES LINKING TO THE IMPUGNED UNDISCLOSED CASH CREDIT ETC AND HE RE LIED ON VARIOUS DECISIONS IN THIS REGARD AS DISCUSSED IN PAGES 1 TO 8 OF HIS ORDER FROM THE CONTENTS OF PARA 5.3 OF THE IMPUGNED ORDER. 6. EVENTUALLY, THE CIT(A) HELD THAT THE DISCLOSED A ND IMPUGNED SAID ADDITIONAL INCOME FOR THE THREE YEARS ARE OUTCOME O F THE SEARCH U/S.132 OF THE ACT AND SOURCE OF INCOME WAS UNEXPLAINED SATISFACTO RILY. IN SUCH FACTUAL MATRIX, THE CIT(A) HELD THAT THE ASSESSEES PLEA OF VOLUNTARY OFFER OF ADDITIONAL INCOME HAS AS NO MERITS. OTHERWISE, THE ASSESSEE E XPLAINED THAT THE SAID CASH CREDITS REPRESENT LIVING EXPENSES OF HIS WIDOW ED SISTER, WHICH WERE MET BY CONTRIBUTIONS FROM HIS ESTRANGED BROTHER ALTHOUG H THE SAME REMAINS UNSUBSTANTIATED. IN RESPONSE TO THE ASSESSEES EXPL ANATION THAT HE IS COVERED BY THE EXCEPTION 2 OF EXPLANATION 5 TO SECTION 271 (1)(C) OF THE ACT, THE CIT(A) VIDE PARA 5.4 MENTIONED THAT THE ASSESSEE FA ILED TO SPECIFY THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED BY BRINGING ON RECORD ANY COGNET EVIDENCE. THEREFORE, CIT(A) REJECTED THE EXPLANAT ION. REGARDING CITATION RELIED BY ASSESSEE ARE DISTINGUISHABLE ON FACTS AND FINALLY THE CIT(A) CONFIRMED THE PENALTIES LEVIED BY THE ASSESSING OFF ICER. PARA 5.6 IS RELEVANT IN THIS REGARD IS AS UNDER. 5.6 IN VIEW OF THE FOREGOING DISCUSSION, IT IS ABSOLUTELY CLEAR THAT THE PRESUMPTION OF CONCEALMENT AS CONTAINED EXPLANATION 1 AND EXPLANATION 5 TO SECTION 271(1)(C) OF THE I.T.ACT ARE CLEARLY A TTRACTED TO THE CASE OF THE APPELLANT AND APPELLANT HAS NOT BEEN ABLE TO RE BUT SUCH PRESUMPTION BY ADDUCING ANY COGNET RELIABLE AND RELEVANT MATERI AL. ON FACTS OF THE CASE, IT IS HELD THAT THE APPELLANT HAS FAILED TO D ISCLOSED ALL THE FACTS RELATING TO THE EXPLANATION FOR THE INCOME IN RESPE CT OF WHICH PENALTY HAS BEEN IMPOSED AND HAS ALSO FAILED TO DISCLOSE ALL TH E FACTS MATERIAL TO COMPUTATION OF TOTAL INCOME AND THE EXPLANATION GIV EN BY THE APPELLANT CANNOT BE SAID TO BE BONAFIDE. ACCORDINGLY, IT IS HELD THAT THE LEARNED ASSESSING OFFICER HAS FULLY JUSTIFIED ON FACTS AND LAW IN CONCLUDING THAT THE CASE OF THE APPELLANT A FIT CASE FOR IMPOSING P ENALTY UNDER SEC. 271(1)(C) OF THE I.T. ACT, 1961 FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. HAVING CONSIDERED THE FACTS AND CIRCUMSTANC ES OF THE CASE, SUCH PENALTY IMPOSED AT RS.30,000/- IS SUSTAINED. 7. AGGRIEVED WITH THE ABOVE FINDINGS OF THE CIT(A), THE ASSESSEE FILED THE PRESENT APPEALS BEFORE US. SRI SUNIL PATHAK, LD COU NSEL FOR THE ASSESSEE MADE ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI VARIOUS ARGUMENTS AND SOME OF THEM ARE: 1. ASSESSEE IS A REGULAR FILER OF THE TAX RETURNS OF INCOME AND FILED FOR ALL THE THREE A YS UNDER CONSIDERATION BEFORE THE EVENT OF SEARCH ACTION U/S 132 OF THE AC T. THE ASSESSEE IS NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNTS CONSIDER ING THE NATURE OF INCOME THE ASSESSEE RETURNED. 2. IN COMPLIANCE OF THE PROVISIONS OF SECTION 153A OF THE ACT, THE ASSESSEE FILED THE RETURNS AND THE ASS ESSEE DISCLOSED THE ADDITIONAL INCOME TO COME CLEAN AS PROMISED DURING THE SEARCH OPERATION SO FAR AS THE INCOME PARTICULARS ARE CONCERNED. THE IM PUGNED ADDITIONAL INCOME RELATES TO THE LIKELY EXPENDITURE IN CONNECTION WIT H THE LIVING EXPENDITURE OF HIS WIDOWED SISTER. THE SAID CREDITS ARE AIMED AT E XPLAINING SUCH EXPENDITURE AND TO AVOID ANY FUTURE LITIGATION ON THIS ISSUE. ASSESSEE COULD NOT PROCURE CONFORMATION LETTERS FROM HER ESTRANGED HUSBAND FOR OBVIOUS REASONS OF NON COOPERATION. DEPARTMENT HAS NOT MANAGED SUMMON HIM FOR EXAMINATION TO VERIFY THE FACT. 3 . DURING THE SEARCH AND SEIZURE OPERATION, THE DEPA RTMENT DID NOT FIND/DISCOVER/SEIZE ANY EVIDENCES WHATSOEVER / INCRIMINATING MATERIAL DURING THE SEARCH ACTION AGAINST THE ASSESSEE ON TH ESE CREDITS AND THERE IS NO QUESTIONING ON THIS ISSUE TOO, WHILE RECODING THE S TATEMENTS ON OATH. THUS, THE LEARNED COUNSEL WANTS TO DEMONSTRATE THAT THE I MPUGNED CASH CREDITS ARE IN THE NATURE OF ESTIMATED AND LUMP SUM CREDITS IN THE PAPERS FILED BEFORE AO. THE CREDITS IN QUESTION DO NOT INDICATE THE REAL CA SH CREDITS THAT TO FOUND CREDITED IN THE BOOKS REGULARLY MAINTAINED BY THE A SSESSEE. THESE CREDITS ARE IN FACT SHOWN IN THE CASH FLOW STATEMENTS SUBMITTED TO THE REVENUE DURING THE POST SEARCH PERIOD. 4 . REFERRING TO THE PROVISIONS OF EXPLANATIONS 1 & 5 TO THE SECTION 271(1)(C) OF THE ACT, LEARNED COUNSEL ARGUE D STATING THAT THE EXPLANATION 5 HAS NO APPLICATION TO THE FACTS OF TH IS CASE, AS THERE IS NO DISCOVERY OF MONEY, BULLION, JEWELLERY ETC LISTED IN THE SAID EXPLANATION. THESE ITEMS ARE NOT THE SUBJECT MATTER OF THE PRESENT PEN ALTY PROCEEDINGS AND THEREFORE, EXPLANATION IS INAPPLICABLE IN THIS CASE . TO SUBSTANTIATE THE SAID ARGUMENT, LD COUNSEL RELIED ON A DECISION OF THE P UNE BENCH IN THE CASE OF SHRI BHAUSAHEB P. SANGLE IN ITA 827 AND 828/PN/2009 , A.Y. 2002-03 DATED 25/05/2011 FOR THE PROPOSITION THAT WHEN THE ASSESS EE IS NOT FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLE OR THING IE ASSETS, THE EXPLANATION 5 HAS NO APPLICATION. THE I MPUGNED CASH CREDITS, WHICH IS MERE ESTIMATIONS/LUMP SUM REFLECTED IN THE CASH FLOW STATEMENTS MADE DURING THE POST SEARCH PERIOD AND NOT IN THE R EGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE, AIMED AT EXPLAINING THE FUTURE QUE STIONS IF ANY FORM THE DEPARTMENT IN CONNECTION WITH THE HIS WIDOWED SISTE R, ARE NOT HE SAID ASSETS. THEREFORE, EXPLANATION 5 TO SECTION 271(1)(C) OF TH E ACT IS INAPPLICABLE. FURTHER, HE EXPLAINED THAT THE CASH SEIZED WAS ALRE ADY OFFERED IN ASSESSMENT ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI YEAR 2003-04. THUS, AS PER THE AR OF THE ASSESSEE, THE SAID NOTIO NAL CREDITS DO NOT AMOUNT TO ANY MONEY, BULLION, JEWELLERY OR O THER VALUABLE ARTICLE OR THING. 5. BRINGING OUT ATTENTION TO THE EXPLANATION 1 OF 271(1)(C) OF THE ACT, THE LEARNED COUNSEL ARGUED STATING THAT THE IT IS S ETTLED LAW THAT THE PENALTY WILL NOT BE LEVIABLE WHEN PURE ESTIMATIONS ARE INVO LVED IN AN ADDITION OFFERED BY THE ASSESSEE AS IN THE CASE OF THE ASSESSEE. TH E FACT THAT THE ASSESSEES EXPLANATION WAS NOT FOUND UNTRUE IS ALSO RELEVANT. THEREFORE, IT CANNOT BE CASE OF FURNISHING OF INCOME INACCURATE PARTICULARS OF INCOME. THE LEARNED COUNSEL RELIED ON VARIOUS DECISIONS TO SUBSTANTIATE HIS ARGUMENTS THAT THE PENALTY IS NOT LEVIABLE WHEN THERE IS MERE ESTIMATI ONS OF INCOME AND WHEN THERE IS NO DISCOVERY OF INCRIMINATING OR ANY POSIT IVE MATERIAL LINKING TO THE ADDITIONAL INCOME. 8. ON THE OTHER HAND, THE LEARNED DR FOR THE REVENU E RELIED ON THE ORDERS OF ASSESSING OFFICER AND CIT(A) AND MENTIONED THAT THE VERY EXISTENCE OF DIFFERENCE IN INCOME FURNISHED IN THE RETURNS OF IN COME FILED PRIOR TO AND ALSO TO LATER IN TIME TO THE SEARCH EVENT U/S 132 OF THE ACT, THE PENALTIES ARE LEVIABLE. THUS, LD DR FOR THE REVENUE PLEADED FOR C ONFIRMING THE PENALTIES CONFIRMED BY THE CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDE RS OF THE REVENUE AND MATERIAL BEFORE US. ON FACT, THIS IS THE CASE OF A N INDIVIDUAL, WHO HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS CONSIDERING THE SO URCE OF INCOME HE DISCLOSED IN THE RETURNS REGULARLY FURNISHED TO THE DEPARTMENT, WAS SEARCHED BY THE REVENUE U/S 132 OF THE ACT. THE SEARCH ACTIO N RESULTED IN THE DISCOVERY OF CASH, WHICH WAS SEIZED AND THE SAID CASH WAS ASS ESSED TO TAX IN THE AY 2003-04. THIS ISSUE IS NOT RELEVANT FOR THIS AYS UN DER CONSIDERATION. 10. POSTERIOR TO SEARCH ACTION U/S 132 OF THE ACT, IN C ONNECTION WITH THE EARLIER AYS, THE ASSESSEE ATTEMPTED TO MAKE A CASH FLOW STATEMENT AND PROVIDED FOR A CASH CREDIT ENTRY ON ESTIMATION BASI S AND IT IS AIMED AT (I) EXPLAINING THE LIKELY EXPENDITURE CONNECTED TO HIS WIDOWED SISTER AND (II) TO AVOID FUTURE LITIGATION IF ANY IN THIS REGARD. IT I S AN UNDISPUTED FACT THAT THE HE HAS A SISTER, WHO HAD STRAINED RELATIONS WITH HER H USBAND. ASSESSEE OFFERED THE SAID CASH CREDITS IN ALL THE THREE AYS UNDER CONSIDERATION AS HIS ADDITIONAL INCOME WHILE RESPONDING TO THE NOTICE U/S 153A OF T HE ACT. THEREFORE, IN THESE FACTS OF THE CASE, THERE IS DIFFERENCE OF INCOME BE TWEEN (I) THE RETURN FILED PRIOR TO THE SEARCH U/S 139(1) IN NORMAL COURSE AND (II) RETURN FILED AFTER THE SEARCH IN RESPONSE TO THE NOTICE U/S.153A OF THE AC T. ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI 11. ON THE AVAILABILITY OF THE INCRIMINATING MATERIAL IF ANY IN SUPPORT OF THE IMPUGNED ADDITIONAL INCOME, IT IS FACT THAT THE REVENUE HAS NOT FOUND/DISCOVERED ANY INFORMATION OR EVIDENCE OR INC RIMINATING DOCUMENTS TO SUGGEST THAT (I) THE ASSESSEE RECEIVED SOME FUNDS F ROM HIS BROTHER IN LAW FOR SUPPORTING THE ASSESSEES SISTER, A WIDOWED SISTER, AS INITIALLY SUBMITTED BY THE ASSESSEE AND (II) THE SAID AMOUNT WAS EXPANDED BY T HE ASSESSEE ON HIS SISTER. THEREFORE THESE CREDITS ARE THE CREATION OF THE ASS ESSEE DURING THE POST SEARCH PROCEEDINGS IN VIEW OF THE PHOBIA TO THE LIK ELY QUESTIONS FROM THE AO ON THE LIVING EXPENDITURE RELATING TO HIS WIDOWED S ISTER. THUS, IN OUR OPINION, THE IMPUGNED CASH CREDITS ARE MERELY UNREAL ENTRIES PERTAINING TO THE POST SEARCH PERIOD AIMED AT PREEMPTING THE FUTURE QUESTI ONNAIRE IF ANY FROM THE DEPARTMENT RELATING TO THE EXPENDITURE ON HIS SISTE R, THE STEP TAKEN BY THE ASSESSEE AS A PRECAUTION. THEREFORE, THE IMPUGNED A DDITIONAL INCOME IS THE CREATION OF THE ASSESSEE IN THE PROCESS OF MAKING O F THE CASH FLOW STATEMENT DURING THE POST SEARCH PROCEEDINGS AND IT IS NOT AT TRIBUTABLE TO ANY INCRIMINATING DOCUMENTS GATHERED EITHER DURING OR D URING THE POST SEARCH PERIODS. THEREFORE, THEY HAVE NOT EMANATED FROM THE SEARCH ACTION PER SE . FURTHER, IN OUR OPINION, THE ARGUMENT OF THE REVENU E THAT THE MERE EXISTENCE OF QUANTITY DIFFERENCE IN INCOMES FURNISHED IN THE BOTH RETURNS IS SUFFICE TO INVOKE THE PROVISIONS OF SECTION 271(1) OF THE ACT , IS NOT CORRECT. IN OUR OPINION, THERE HAS TO BE SOME CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME FOR INVOKING THE SA ID PENAL PROVISIONS. IN THE PRESENT CASE, IN OUR OPINION, THE IMPUGNED CASH CRE DIT, APPEARING TO THE CASH FLOW STATEMENT FOR PROVIDING CUSHION TO EXPLAIN THE FUTURE PROBLEMS LIKELY TO COME UP FROM THE DEPARTMENT, IS OF THAT NATURE, WHI CH IS UNCONNECTED TO THE SEARCH ACTION. YES, ITS CONNECTION STOPS AT OFFERIN G THE ADDITIONAL INCOME IN THE RETURNS FILED U/S 153A, WHICH IS A SEARCH RELAT ED PROVISION OF THE ACT. THEREFORE, IN THE GIVEN FACTS OF THE CASE, IT CANNO T BE HELD THAT THE IMPUGNED ADDITIONAL INCOME IS THE DIRECT OUTCOME OF THE SEAR CH ACTION. IN THAT SENSE, THE EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT H AS NO APPLICABLE TO THE FACTS OF THIS CASE. IT IS ALSO RELEVANT TO MENTION THAT D URING THE PROCEEDINGS BEFORE THE LOWER AUTHORITIES, THE ASSESSEE RELIED ON THE S AID PROVISIONS OF EXPLANATION 5 AND ITS IMMUNITY CLAUSES AND PRAYED FOR IMMUNITY FROM THE PENAL PROVISIONS AND SUBSEQUENTLY, BEFORE US, THE LD COUNSEL ARGUES AGAINST THE INVOKING OF THE SAID EXPLANATION 5 HOLDING THAT IMPUGNED ADDITI ONAL INCOME IS NOT RELATABLE TO ANY OF THE SPECIFIED ASSETS FIGURING I N THE SAID EXPLANATION 5. IN FACT, HE RELIES ON THE JUDGMENT OF THE HONBLE HIGH COURT OF ALLAHABAD FOR THE PROPOSITION THAT THE EXPLANATION 5 IS NOT INVOKED W HEN THE ASSESSEE IS NO ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI FOUND DURING THE SEARCH U/S 132 OF THE ACT THE OWNE R OF CERTAIN ASSETS SPECIFIED IN IT. IN THE INSTANT APPEALS, NO DOCUMEN T OR ASSETS IS RELATABLE TO THE IMPUGNED ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN THE RETURN FILED U/S 153A OF THE ACT. THEREFORE, WE DO NOT WANT GO INTO THIS ISSUE HERE AND PROCEED TO DECIDE THE ISSUE ON OTHER REASONING AS D ISCUSSED IN THE ORDER. 12. OTHER ASPECTS OF THE ISSUE ON HAND RELATES TO I F THE IMPUGNED CASH CREDITS CONSTITUTES CONCEALED INCOME ATTRACTING T HE PENAL PROVISION. IN THIS REGARD, THE ASSESSEES SUBMISSION ARE THAT THE ASSE SSEES BROTHER IN LAW IS THE CREDITOR AND FAILURE TO FILE THE CONFIRMATION IS NO T WITHOUT VALID EXPLANATION. IN THIS REGARD, WE HAVE EXAMINED TO THE END RESULT OF THIS EXPLANATION. WE FIND THAT THE REVENUE HAS NOT MADE OUT THAT THE ASSESSEE RECEIVED THE SAID CASH CREDITS FROM SOURCES OTHER THAN HIS ESTRANGED BROTH ER-IN-LAW. THEY HAVE NOT EVEN EXAMINED THE BROTHER IN LAW, THE CREDITOR, BEF ORE LEVYING THE IMPUGNED PENALTY AFTER PROVING THAT THE EXPLANATION OF THE A SSESSEE WRONG AND THE CREDITOR IS NON-EXISTENT, NOT CREDIT WORTHY ETC. IT IS BORNE ON THE RECORDS THAT THE ASSESSEE EXPLAINED THE SOURCE OF THE SAID CREDI T IE HIS ESTRANGED BROTHER IN LAW AND HOWEVER, THE ASSESSEE COULD NOT PROCURE CON FIRMATION LATTER IN SUPPORT OF THE SAID EXPLANATION. WE FIND THAT THE A SSESSEES INABILITY TO FILE CONFIRMATION LETTER FROM HIS BROTHER-IN-LAW IN SUPP ORT OF THE CLAIM IS NOT WITHOUT REASONABLE CAUSE. THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT REBUTTED BY THE REVENUE. THEREFORE, FROM THIS POINT OF VIEW ALSO, THE LEVY OF PENALTY IS NOT JUSTIFIED. 13. THUS, IT IS OUR OPINION THAT THE SAID FURNISHIN G OF ADDITIONAL INCOME IN THE RETURNS U/S 153A OF THE ACT FOR ALL THREE AYS I S MERELY INCIDENTAL TO THE FEAR OF FACING LIKELY QUESTION FROM THE DEPARTMENT IN CONNECTION WITH THE LIVING EXPENSES OF HIS WIDOWED SISTER AND HIMSELF. THE IMP UGNED CASH CREDITS ARE ONE KIND OF UNREAL ENTRIES PROVIDED IN THE CASH FLO W STATEMENT, WHICH IS EMANATED OUT OF THE FINANCIAL/CASH ANALYSIS, THE AC T DONE DURING THE POST SEARCH PROCEEDINGS. THERE IS ABSOLUTELY NO INCRIMIN ATING EVIDENCE/DOCUMENTS TO BACK THE ADDITIONAL INCOME FURNISHED IN THE RETU RNS FILED U/S 153A OF THE ACT. IN SUMMARY, THE IMPUGNED CASH CREDITS ARE MERE ESTIMATIONS NOT BACKED BY DISCOVERIES OF THE SEARCH. THEREFORE IN OUR CON SIDERED OPINION SUCH CONTROVERSIAL CASH CREDITS, WHICH ARE NOT FREE FROM THE DEBATE, SHOULD NOT ATTRACT PENALTY PROCEEDINGS U/S 271(1) OF THE ACT. THEREFORE, ON THE FACTS MENTIONED ABOVE, THIS IS NOT A FIT CASE FOR LEVY PE NALTY FOR ALL THE THREE AYS IN QUESTION. ACCORDINGLY GROUNDS RAISED BY THE APPE LLANT ARE DISMISSED . ITA NO. 797 TO 799/PN/2009 (ASSESSMENT YEAR: 1999-00 TO 2001-02) SHRI CHANDAN K. SHEWANI 14. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE COURT ON 16-12-2011. SD/- SD/- (I.C.SUDHIR) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 16-12-2011 ASHWINI COPY TO:- 1) ASSESSEE 2) DCIT, CEN.CIR.1(1), PUNE 3) THE CIT(A) I, PUNE 4) THE CIT CONCERNED 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., PUNE