KAILASH CHANDRA KABRA, BHILWARA V. ACIT, Ajmer

ITA 90/JPR/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6306 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA JCIT DHK
• Keywords: Search and seizure; Retrospective amendment; Initiation of penalty proceedings; Reasonable cause; Revised return; Documents seized
• Section: 143(3); 153A; 132; 12; 15; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH HKKXPUN ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NOS. 89 & 90/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2004-05 & 08-09. SHRI KAILASH CHANDRA KABRA PROP. M/S. KRISHNA HOSPITAL, DEVRIYA BALAJI ROAD, NEAR PRIVATE BUS STAND, BHILWARA. CUKE VS. THE ACIT, CENTRAL CIRCLE, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABZPK 1513 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDDHARTH RANKA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19.04.2018. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 09/07/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS OF LD. CIT (A), JAIPUR ARISING FROM PENALTY ORDERS PASSED UNDER SECTION 271(1)(C) OF THE I.T. ACT FOR THE ASSESSMENT YEARS 2004-05 AND 2 008-09 RESPECTIVELY. THE ASSESSEE HAS RAISED COMMON GROUNDS IN THESE APPEALS EXCEPT THE QUANTUM OF PENALTY. THE ASSESSEE HAS ALSO RAISED REVISED GROU NDS WHEREIN AN ADDITIONAL GROUND WAS RAISED. THE REVISED GROUNDS FOR THE ASSESSMENT YEAR 2004-05 ARE REPRODUCED AS UNDER :- 2 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. (A) THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEAL), C ENTRAL, JAIPUR GROSSLY ERRED IN CONFIRMING THE ACTION OF TH E LD. ASSESSING OFFICER IN IMPOSING PENALTY OF RS. 2,67,030/- U/S 2 71(1)(C) OF THE ACT. (B) THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ORDER PASSED U/S 271(1)(C) READ WITH EXPLA NATION 5A THEREOF BY THE LEARNED COMMISSIONER OF INCOME TAX ( APPEAL), CENTRAL, JAIPUR CONFIRMING THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER U/S 271(1)(C) READ WITH EXPLANATI ON 5 THEREOF IS BAD IN LAW AND DESERVES TO BE QUASHED. (C) THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEAL), C ENTRAL, JAIPUR GROSSLY ERRED IN CONFIRMING THE ACTION OF TH E LD. ASSESSING OFFICER IN IMPOSING PENALTY U/S 271(1)(C) IN WHEN T HE ASSESSEE APPELLANT HAS ADMITTED THE UNDISCLOSED INCOME IN TH E STATEMENT U/S 132(4) DURING THE COURSE OF SEARCH, EXPLAINED A ND SUBSTANTIATED THE MANNER IN WHICH THIS INCOME HAD B EEN DERIVED AND ALSO PAID THE DUE TAX AND INTEREST THER EUPON. THE LD. ASSESSING OFFICER OUGHT TO HAVE NOT IMPOSED THE PENALTY ON THE INCOME OFFERED FOR TAX U/S 132(4) WHEN NO ADDIT IONAL INCOME HAS BEEN SUBJECTED TO TAX BY THE LD. ASSESSI NG OFFICER. (D) THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEAL), C ENTRAL, JAIPUR GROSSLY ERRED IN CONFIRMING THE ACTION OF TH E LD. ASSESSING OFFICER FOR IMPOSING PENALTY U/S 271(1)(C) OF THE A CT WHEN THE LD. ASSESSING OFFICER WAS HIMSELF NOT SURE AS TO WH ETHER NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FILING INACC URATE PARTICULARS OF SUCH INCOME. 2. SINCE THE GROUND NO. (D) IS RAISED BY THE ASSESS EE FIRST TIME BEFORE THIS TRIBUNAL AND IT WAS NOT RAISED BEFORE THE AUTHORITI ES BELOW, THEREFORE, TREATING THE SAID GROUND AS AN ADDITIONAL GROUND FILED BY THE AS SESSEE, WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R ON THE ADMISSION OF THE ADDI TIONAL GROUND. 3 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. 3. THE LD. A/R HAS SUBMITTED THAT THIS GROUND IS PU RELY LEGAL IN NATURE AND DOES NOT REQUIRE ANY VERIFICATION OF FACTS BUT CAN BE AD JUDICATED ON THE BASIS OF THE FACTS AVAILABLE ON RECORD. HE HAS RELIED UPON THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. NATIONAL THERMAL POWER CORPORATION LTD. VS. CIT, 229 ITR 383 (SC). 4. ON THE OTHER HAND, THE LD. D/R HAS VEHEMENTLY O PPOSED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND SUBMITTED THAT TH E ASSESSEE NEVER RAISED THIS OBJECTION BEFORE THE AO AS WELL AS BEFORE THE LD. C IT (A) AND, THEREFORE, IN THE ABSENCE OF ANY REASONABLE CAUSE OR CIRCUMSTANCES WH ICH HAS PREVENTED THE ASSESSEE TO RAISE THIS GROUND BEFORE THE AUTHORITIE S BELOW, THE SAME CANNOT BE ADMITTED AT THIS STAGE. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, AT THE OUTSET, WE NOTE THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS CHALLENGING THE VALIDITY OF NOTICE ISSUED BY THE AO FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 2712(1)(C) WITHOUT SPECIF YING THE SPECIFIC GROUND WHETHER IT WAS FOR CONCEALMENT OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. THUS THE ISSUE RAISED IN THE ADDITIONAL GROUND IS P URELY LEGAL IN NATURE AND FOR ADJUDICATION OF THE SAME, IT DOES NOT REQUIRE INVES TIGATION OF ANY FACTS BUT THE FACTS ALREADY AVAILABLE ON RECORD CAN BE CONSIDERED FOR A DJUDICATION OF THE ISSUE RAISED BY THE ASSESSEE. ACCORDINGLY, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC VS. CIT (SUPRA), WE ADMIT THE ADDITION AL GROUND FOR ADJUDICATION ON MERITS. 4 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. ON MERITS : 6. THE LD. A/R HAS SUBMITTED THAT IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE IT ACT THE A O HAS NOT SPECIFIED THE GROUND FOR INITIATION OF PENALTY PROCEEDINGS WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE L D. A/R HAS REFERRED TO THE NOTICE AT PAGE 11 OF THE PAPER BOOK AND SUBMITTED THAT THE AO HAS NOT DELETED THE IRRELEVANT PORTION IN THE SHOW CAUSE NOTICE AND, THEREFORE, IN VIEW OF THE VARIOUS DECISIONS ON THIS POINT, THE SHOW CAUSE NOTICE ISSUED BY THE AO IS ILLEGAL AND CONSEQUENTIAL ORDER PASSED UNDER SECTION 271(1)(C) IS ALSO NOT SUSTAINA BLE IN LAW. HE HAS REFERRED TO THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, 359 ITR 565 (KAR.) AS WELL AS THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHEVETA CONSTRUCTION COMP ANY PVT. LTD. VS. ITO DATED 6 TH DECEMBER, 2016 IN ITA NO. 534 OF 2008 AND SUBMITTED THAT WHEN THE AO HAS NOT RECORDED THE SPECIFIC GROUND FOR INITIATING THE PEN ALTY PROCEEDINGS THEN THE ASSESSEE WAS NOT GIVEN THE PROPER OPPORTUNITY TO MEET THIS S PECIFIC GROUND FOR LEVY OF PENALTY. THEREFORE, IN THE ABSENCE OF SPECIFYING TH E GROUND ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED, THE PENALTY IMPOSED ON T HE BASIS OF SUCH PROCEEDING IS NOT SUSTAINABLE. THE LD. A/R HAS ALSO RELIED UPON A SUBSEQUENT DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SHRI MUNINAGA R EDDY VS. ACIT, 396 ITR 398 (KAR.) AND SUBMITTED THAT THE HONBLE HIGH COURT HA S REITERATED ITS VIEW AS TAKEN IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FAC TORY (SUPRA). HE HAS ALSO RELIED UPON A SERIES OF OTHER DECISIONS ON THE POINT THAT IN THE ABSENCE OF SPECIFYING THE GROUND IN THE SHOW CAUSE NOTICE, THE PROCEEDINGS IN ITIATED BY THE AO FOR LEVY OF 5 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. PENALTY ARE NOT VALID AND CONSEQUENTLY THE ORDER PA SSED BY THE AO UNDER SECTION 271(1)(C) IS ALSO NOT SUSTAINABLE IN LAW. HENCE TH E LD. A/R HAS PLEADED THAT THE PENALTY ORDER PASSED BY THE AO IS LIABLE TO BE QUAS HED. 7. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T IT IS NOT THE CASE OF AN ADDITION MADE BY THE AO BY DISALLOWING ANY CLAIM OF THE ASSESSEE OR BRINGING ANY INCOME TO TAX BUT THE ASSESSEE HIMSELF HAS DECLARED UNDISCLOSED INCOME DURING THE SEARCH AND IN THE STATEMENT UNDER SECTION 132(4) OF THE ACT WHICH WAS NOT OFFERED TO TAX IN THE RETURN FILED IN RESPONSE TO NOTICE UN DER SECTION 153A. THEREFORE, WHEN THE AO ISSUED A SHOW CAUSE NOTICE OF MAKING THE ADD ITION OF UNDISCLOSED INCOME, THEN THE ASSESSEE FILED A REVISED RETURN OF INCOME AND OFFERED THE SAID INCOME TO TAX FOR BOTH THE ASSESSMENT YEARS. THE LD. D/R HAS F URTHER SUBMITTED THAT EVEN OTHERWISE WHEN THE ASSESSEE HIMSELF HAS OFFERED THI S INCOME TO TAX AS UNDISCLOSED INCOME, THEN THERE WAS NO REQUIREMENT OF SPECIFYING THE GROUND FOR IMPOSING THE PENALTY UNDER SECTION 271(1)(C). HE HAS RELIED UPO N THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT DURING THE SEAR CH AND SEIZURE ACTION UNDER SECTION 132 CARRIED ON 16.09.2009 THE ASSESSEE DISCLOSED TH E INCOME OF RS. 7,72,265/- FOR THE ASSESSMENT YEAR 2004-05 AND RS. 30,20,703/- FOR THE ASSESSMENT YEAR 2008-09. HOWEVER, IN THE RETURN OF INCOME IN RESPONSE TO NOT ICE UNDER SECTION 153A THE ASSESSEE DID NOT OFFER THE SAID UNDISCLOSED INCOME TO TAX. THEREFORE, THE AO ISSUED SHOW CAUSE NOTICE FOR MAKING THE ADDITION OF THE SA ID AMOUNT WHICH WAS DISCLOSED DURING THE SEARCH AND SEIZURE ACTION BUT WAS NOT OF FERED TO TAX IN THE RETURN OF 6 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. INCOME AND CONSEQUENTLY THE ASSESSEE OFFERED THE SA ID UNDISCLOSED INCOME TO TAX IN THE REVISED RETURN OF INCOME. THE AO ACCEPTED THE INCOME OFFERED IN THE REVISED RETURN WITH THE OBSERVATION THAT THE REVISED RETURN FILED BY THE ASSESSEE IS NOT VOLUNTARY BUT ON THE BASIS OF VARIOUS INCRIMINATING DOCUMENTS SEIZED DURING THE SEARCH AND SEIZURE OPERATION. ACCORDINGLY, THE AO INITIATED THE PENALTY PROCEEDINGS BY ISSUING THE SHOW CAUSE NOTICE UNDER SECTION 274. THE ASSESSEE HAS RAISED THE OBJECTION OF VALIDITY OF SHOW CAUSE NOTICE AS IT HA S NOT SPECIFIED THE GROUND FOR WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. ONCE THE ASSESSEE HAS DISCLOSED AND SURRENDERED THE UNDISCLOSED INCOME DURING THE SEARC H AND SEIZURE OPERATION AS WELL AS IN THE STATEMENT MADE UNDER SECTION 132(4), THEN THE NATURE OF THE SAID INCOME WAS NOT REQUIRED TO BE FURTHER DETERMINED BY THE AO EITHER IN THE ASSESSMENT PROCEEDINGS OR IN THE PENALTY PROCEEDINGS AS IT WAS ACCEPTED BY THE ASSESSEE AS UNDISCLOSED INCOME. THE ASSESSEE EVEN IN THE REVISE D RETURN OF INCOME FILED DURING THE ASSESSMENT PROCEEDINGS HAS OFFERED THE SAID INC OME AS UNDISCLOSED INCOME AND, THEREFORE, THE AO HAS MADE NO ADDITION TO THE RETUR NED INCOME BUT RECORDED ITS SATISFACTION FOR INITIATING THE PENALTY PROCEEDINGS IN RESPECT OF THE SURRENDERED INCOME FOR BOTH THE ASSESSMENT YEARS. AS IT IS THE CASE OF SURRENDER OF UNDISCLOSED INCOME DETECTED DURING THE SEARCH AND SEIZURE ACTIO N, THEREFORE, THERE WAS NO DOUBT OR CONFUSION IN THE MIND OF THE ASSESSEE OR THE AO THAT THE INCOME SURRENDERED AND OFFERED TO TAX BY THE ASSESSEE IS UNDISCLOSED INCOM E. EVEN OTHERWISE, AS PER EXPLANATION 5A TO SECTION 271(1)(C), WHEN THE INCOM E WHICH IS DETECTED DURING THE SEARCH AND SEIZURE ACTION WAS NOT OFFERED TO TAX IN THE RETURN OF INCOME TO BE FILED UNDER SECTION 139 OF THE ACT AND THE DUE DATE OF SU CH RETURN OF INCOME WAS ALREADY 7 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. EXPIRED ON THE DATE OF SEARCH, THEN EVEN IF THE ASS ESSEE OFFERED THE SAID INCOME TO TAX IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 153A, THE SAME SHALL BE DEEMED TO BE UNDISCLOSED INCOME FOR THE PURPOSE OF SECTION 271(1)(C) OF THE ACT. AT THE OUTSET, WE FORTIFY OUR VIEW BY THE DECISION OF THIS TRIBUNAL AND PARTICULARLY BY THIS BENCH IN CASE OF SHRI SATYA NARAIN GUPTA VS. D CIT VIDE ORDER DATED 2 ND JANUARY, 2018 IN ITA NO. 823/JP/2016 IN PARA 7 TO 7.3 AS UND ER :- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. BRIEF FACTS THE RELEVANT TO THE ISSUE HA VE EMERGED FROM THE RECORD THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 20.10.2009. DURING THE COURSE OF SEARCH THE ASSESSEE SURRENDERED INCOME OF RS. 10,000,00/- ON ACCOUNT OF INVESTMENT/CASH TRANSACTIONS IN THE PROPERTY. IN RESPONSE TO NOTICE U/S 153(A) THE ASSESSEE FILED HIS RETURN OF INCOME AND OFFERED AN AMOUNT OF RS. 10,000,00/- TO TAX UNDER THE HEAD INCOME FROM THE OTHER SOURCES. AS AS SESSEE SURRENDERED BY HIM FROM THE COURSE OF SEARCH. THE ASSESSING OFFICE R FRAMED AY U/S 143(3) READ WITH SECTION 153(A) ON THE RETURN INCOME ON 29 .12.2011. THUS, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT H AS MADE NO ADDITION TO THE RETURN INCOME BUT RECORDED ITS SATISFACTION FOR INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) IN RESPECT OF SURRENDERED AMOUNT OF RS. 10,000,00/-. ACCORDINGLY, AO ISSUED THE NOTICE DATE D 29.12.2011 U/S 274 READ WITH SECTION 271 OF INCOME TAX ACT. 7.1. THE LD. AR OF THE ASSESSEE HAS CHALLENGED THE VALIDITY OF SHOW CAUSE NOTICE U/S 274 ON THE GROUND THAT THE AO HAS NOT SP ECIFIED THE GROUNDS ON WHICH THE PENALTY PROCEEDINGS WERE INITIATED AND TH E PENALTY WAS PROPOSED TO BE LEVIED. AS IT IS CLEAR FROM THE FACTS AS NARRATE D ABOVE THAT IT IS A CASE OF SURRENDER OF UNDISCLOSED INCOME DEDECTED. DURING TH E COURSE OF SEARCH. SINCE ASSESSEE OFFERED THE SAID SURRENDER INCOME OF RS. 1 0,000,00/- TO TAX IN THE 8 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 15 3A OF THE ACT THEREFORE, IT IS NOTE A CASE OF ANY ADDITION MADE BY THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. THERE IS NO QUARREL THAT IT IS INCUMBE NT UPON THE AO TO SPECIFY THE GROUND AND DEFAULT COMMITTED BY THE ASSESSEE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED U/S 271(1)(C). AS PER SECTION 271(1)(C) A PENALTY CAN BE LEVIED EITHER ON THE GROUND OF CONCEALMENT OF PA RTICULARS OF INCOME OR ON THE GROUND OF FURNISHING INACCURATE PARTICULARS OF INCOME. 7.2. IF AN ADDITION IS MADE BY THE AO THEN SAID ACT ION OF THE AO MAY LEAD TO EITHER FURNISHING OF INACCURATE PARTICULARS OF I NCOME BY THE ASSESSEE OR CONCEALMENT OF THE PARTICULARS OF INCOME AND THEREF ORE IN SUCH A SITUATION IF THE AO PROPOSED TO INITIATE THE PROCEEDINGS U/S 271 (1)(C) THEN HE IS REQUIRED TO SPECIFY WHETHER THE ASSESSEE HAS COMMITTED THE D EFAULT OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. WE FIND THAT THE ASSESSING OFFICER HAS NOT SPECIFICALLY STA TED IN THE SHOW CAUSE NOTICE AS WHAT DEFAULT WAS COMMITTED BY THE ASSESSEE. HOWE VER, THE QUESTION OF THE SPECIFYING THE DEFAULT ARISES ONLY WHEN THE ADDITIO N IN THE INCOME OF THE ASSESSEE IS MADE BY THE AO AND CONSEQUENTLY THE AO PROPOSED TO INITIATE THE PROCEEDINGS FOR LEVY OF PENALTY U/S 271(1)(C) IN RE SPECT OF SUCH AN ADDITION MADE TO THE INCOME OF THE ASSESSEE. THEREFORE, IF T HE INCOME OF THE ASSESSEE IS ASSESSED AT HIGHER AMOUNT THAN THE RETURN INCOME THEN IT IS THE DUTY OF THE AO TO SPECIFY SUCH ADDITION/DISALLOWANCE RESULTING INCREASE OF TOTAL INCOME WAS ON ACCOUNT OF CONCEALMENT OF PARTICULARS OF INC OME OR DUE TO FURNISHING INACCURATE PARTICULARS OF INCOME. THE AO HAS TO SPE CIFY THE DEFAULT FOR WHICH IT PROPOSED TO INITIATE THE PROCEEDINGS FOR LEVY OF PENALTY U/S 271(1)(C). IT IS PERTAIN TO NOTE THAT THE ADDITION MADE BY THE AO DU RING THE ASSESSMENT PROCEEDINGS MAY BE EITHER DUE TO CONCEALMENT OF PAR TICULARS OF INCOME OR DUE TO FURNISHING OF INACCURATE PARTICULARS OF INCO ME. SINCE IT IS THE ACTION OF THE AO RESULTED ADDITION IN THE TOTAL INCOME THEREF ORE, IT IS DUTY OF THE AO TO SPECIFY THE DEFAULT OF THE ASSESSEE FOR WHICH SUCH ADDITION IN THE TOTAL INCOME IS MADE AND CONSEQUENTLY THE LEVY OF PENALTY IS PRO POSED. THIS REQUIREMENT 9 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. OF SPECIFYING THE DEFAULT OR GROUND TO INITIATE THE PROCEEDINGS FOR LEVY OF PENALTY IS NOT IN DISPUTE AS HELD BY THE HONBLE HI GH COURTS IN THE DECISIONS RELIED UPON BY THE LD. AR OF THE ASSESSEE. THE VERY OBJECT AND PURPOSE FOR SPECIFYING THE DEFAULT IS TO MAKE THE ASSESSEE KNOW N ABOUT THE GROUND ON WHICH THE PENALTY IS INTENDED TO BE IMPOSED AND TO MEET THE CASE OF THE DEPARTMENT THAT THE CONDITIONS STIPULATED U/S 271(1 )(C) DO NOT EXIST. 7.3. THEREFORE, SPECIFYING THE DEFAULT IN THE SHOW CAUSE NOTICE IS MANDATORY IN THE SENSE THAT THE ASSESSEE MUST KNOW WHICH DEFAULT HE HAS COMMITTED AND SHOULD HAVE FULLY OPPORTUNITY TO MEET THE CASE OF THE DEPARTMENT. THUS THERE IS NO QUARREL ON THE PROCEDE NCE AS CITED AND RELIED UPON BY THE LD. AR HOWEVER IN THE CASE OF THE ASSES SEE IT IS NOT AN ADDITION MADE BY THE AO BUT THE ASSESSEE SURRENDERED THE INC OME TO TAX AND THEREFORE THE SAID SURRENDER OF INCOME WOULD NOT FA LL IN THE CATEGORY OF FURNISHING INACCURATE PARTICULARS OF INCOME MORE SO WHEN THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME PRIOR TO THE DATE OF SEARCH. THE ASSESSEE OFFERED THIS AMOUNT TO TAX IN THE RETURN OF INCOME AND NO F URTHER ADDITION WAS MADE BY THE AO. THEREFORE THE DEFAULT IN THE NATURE OF F URNISHING INACCURATE PARTICULARS OF INCOME IS RULED OUT. HENCE IT CAN ON LY BE IN THE CATEGORY OF CONCEALMENT OF PARTICULARS OF INCOME AS THE ASSESSE E DID NOT FILE ANY RETURN OF INCOME PRIOR TO THE DATE OF SEARCH AND TIME LIMIT F OR FILING THE RETURN OF INCOME U/S 139(1) WAS ALREADY EXPIRED ON 31 ST JULY, 2009 MUCH PRIOR DATE OF SEARCH. ACCORDINGLY, THE AMOUNT SURRENDERED DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND SUBSEQUENTLY OFFERED TO TAX IN T HE RETURN OF INCOME FILED POST SEARCH WOULD FALL IN THE CATEGORY OF CONCEALME NT OF PARTICULARS OF INCOME. WHEN THERE IS ONLY ONE POSSIBILITY OF DEFAU LT AND NOT THE POSSIBILITY OF EITHER OF TWO DEFAULTS THEN THE REQUIREMENT OF SPEC IFYING THE DEFAULT DOES NOT ARISE. THE ASSESSEE HIMSELF SURRENDERED AND OFFERED THE SAID AMOUNT TO TAX. THEREFORE, IT IS BEST KNOWN TO ASSESSEE WHAT DEFAUL T HE HAD COMMITTED SUCH DEFAULT. ACCORDINGLY IN THE PECULIAR FACTS OF THE C ASE THE DECISION RELIED UPON BY THE LD. AR ARE NOT APPLICABLE. HENCE THE INCOME SURRENDERED BY THE 10 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. ASSESSEE ON ACCOUNT OF INVESTMENT IN PROPERTIES IN NOTHING BUT UNDISCLOSED INCOME AND THEREFORE, THE QUESTION OF SPECIFYING TH E DEFAULT BY THE AO WOULD NOT ARISE AS IT WAS VERY WELL TO NONE TO THE ASSESS EE THAT IT IS CONCEALMENT OF PARTICULARS OF INCOME. ACCORDINGLY THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS DISMISSED. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION AND FA CTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE DISCLOSED THE UNDISCLOSED INCOME AND OFFERED THE SAME TO TAX, THEN THE AO WAS NOT REQUIRED TO SPECIFY THE GROUND OR DEFAULT FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). GROUND NO. (A) TO (C) REGARDING THE LEVY OF PENALT Y U/S 271(1)(C) OF THE ACT. 9. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT O NCE THE ASSESSEE HAS DECLARED THIS INCOME IN THE REVISED RETURN OF INCOM E THEN THE QUESTION OF LEVYING THE PENALTY UNDER SECTION 271(1)(C) DOES NOT ARISE. HE HAS FURTHER CONTENDED THAT WHEN THE EXPLANATION 5A WAS NOT ON THE STATUTE AT THE TI ME OF FILING THE ORIGINAL RETURN, THEN THE SAME CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL DAT ED 23 RD SEPTEMBER, 2016 IN CASE OF KRISHNAKANTH AGARWAL VS. DCIT IN ITA NOS. 976 TO 978/HYD/2015. THE LD. A/R HAS SUBMITTED THAT EVEN OTHERWISE FOR INVOKING THE EXPLANATION 5A THERE MUST BE SOME INCRIMINATING DOCUMENTS AND THE DISCLOSURE SHO ULD BE BASED ON THE INCRIMINATING MATERIAL. IN THE ABSENCE OF ANY INCR IMINATING MATERIAL, THE PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED BY APPLYIN G THE EXPLANATION 5A ONLY ON THE 11 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. BASIS OF STATEMENT RECORDED DURING THE COURSE OF SE ARCH. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF THE C OORDINATE BENCH OF THE TRIBUNAL DATED 06.05.2016 IN CASE OF M/S. AJAY TRADERS VS. D CIT IN ITA NO. 296/JP/2014. THUS THE LD. A/R HAS SUBMITTED THAT THE PENALTY LEV IED BY THE AO IS NOT SUSTAINABLE AND LIABLE TO BE CANCELLED. 10. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED TH AT THE LD. CIT (A) HAS RIGHTLY APPLIED THE EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AS THERE WAS INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SEIZ URE ACTION AND ON THE BASIS OF THE SAID MATERIAL THE ASSESSEE HAS DISCLOSED THE SA ID INCOME. EXPLANATION 5 DOES NOT HAVE ANY PROVISION FOR IMMUNITY OR MITIGATING C IRCUMSTANCES WITH REFERENCE TO INCOME FOUND DURING THE COURSE OF SEARCH FOR ANY PR EVIOUS YEAR WHICH ENDED BEFORE THE DATE OF SEARCH. THEREFORE, THE INCOME DISCLOSE D BY THE ASSESSEE AND OFFERED TO TAX WILL BE DEEMED TO BE CONCEALMENT OF INCOME AS P ER EXPLANATION 5A TO SECTION 271(1)(C). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THE FIRST OBJECTION RAISED BY THE LD. A/R O F THE ASSESSEE IS THAT THE EXPLANATION 5A WAS NOT ON THE STATUTE WHEN THE RETU RN OF INCOME WAS FILED BY THE ASSESSEE. WE NOTE THAT ONLY FOR THE ASSESSMENT YEA R 2004-05 THIS CONTENTION OF THE LD. A/R CAN BE CONSIDERED AND NOT FOR THE ASSESSMEN T YEAR 2008-09 AS THE EXPLANATION 5A WAS BROUGHT INTO STATUTE BY FINANCE ACT, 2007 WITH EFFECT FROM 01.06.2007 WHICH WAS SUBSEQUENTLY AMENDED BY FINANC E ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01.06.2007. THEREFORE, S O FAR AS THE ASSESSMENT YEAR 2008-09 IS CONCERNED, THE CONTENTIONS OF THE LD. A/ R ARE NOT APPLICABLE. SECONDLY, 12 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. THE DECISION RELIED UPON BY THE LD. A/R OF THE ASSE SSEE ON THIS POINT TALKS ABOUT NON EXISTENCE OF THIS PROVISION EITHER AT THE TIME OF F ILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR NOR THE SUBSEQUENT AMENDMENT WAS MA DE PRIOR TO THE DATE OF SEARCH. BOTH THESE CONDITIONS ARE ABSENT IN THE CA SE OF THE ASSESSEE AS THE PROVISION WAS VERY MUCH INSERTED IN THE STATUTE PRI OR TO FILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 AND EVEN THE SUBSEQ UENT AMENDMENT WAS MADE PRIOR TO THE SEARCH IN THE CASE OF THE ASSESSEE CAR RIED ON 16.09.2009. THEREFORE, WE DO NOT FIND ANY MERIT OR SUBSTANCE IN THE CONTENTIO N OF THE LD. A/R OF THE ASSESSEE THAT THE EXPLANATION 5A TO SECTION 271(1)(C) ARE NO T APPLICABLE IN THE CASE OF THE ASSESSEE. THE SECOND CONTENTION OF THE LD. A/R IS REGARDING THE DISCLOSURE OF INCOME WITHOUT ANY INCRIMINATING MATERIAL. WE NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION, CERTAIN INCRIMINATING MA TERIAL WERE FOUND AND SEIZED WHICH WERE SUPPLIED TO THE ASSESSEE BY THE AO AS RE QUESTED. THEREFORE, IT IS EVIDENT FROM THE RECORD THAT THE DISCLOSURE WAS MADE BY THE AO BASED ON THE VARIOUS INCRIMINATING DOCUMENTS. THE AO HAS RECORDED THIS F ACT IN PARA 9 AS UNDER :- 9. IT IS NOTICED THAT THERE IS DISCLOSURE AND SUR RENDER OF ADDITIONAL INCOME OF RS. 772265/- (ON ACCOUNT OF UNDISCLOSED R ECEIPT INCOME) IN THE REVISED RETURN OF INCOME U/S 153A FILED BY THE ASSESSEE, WHICH IS NOT VOLUNTARY BUT ON THE BASIS OF VARIOUS INCRIMINA TING DOCUMENTS SEIZED DURING THE SEARCH OPERATION AND SURVEY OPERA TION. PENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME ARE INITIATED ON T HIS POINT. ACCORDINGLY, IT IS EVIDENT FROM THE RECORD THAT THE ADDITIONAL INCOME WHICH WAS DISCLOSED AND SURRENDERED BY THE ASSESSEE ON ACCOUN T OF VARIOUS INCRIMINATING DOCUMENTS SEIZED DURING THE SEARCH OPERATION. 13 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. 11.1. THE ASSESSEE HAS NOT RAISED ANY SUCH ISSUE IN THE ASSESSMENT PROCEEDINGS AND HIMSELF HAS OFFERED THE SAID INCOME WHICH WAS D ISCLOSED IN THE STATEMENT MADE UNDER SECTION 132(4) AND, THEREFORE, ONCE THE INCOM E WAS OFFERED IN THE STATEMENT UNDER SECTION 132(4) WHICH IS BASED ON THE INCRIMIN ATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH, THEN IN THE ABS ENCE OF ANY SUCH FACT BROUGHT ON RECORD THAT THE ENTIRE INCOME DISCLOSED AND OFFERED TO TAX IS NOT BASED ON THE INCRIMINATING MATERIAL, THE CONTENTION RAISED BY TH E ASSESSEE IS DEVOID OF MERITS. AS PER THE EXPLANATION 5 TO SECTION 271(1)(C) WHERE IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR INC OME BASED ON THE ENTRIES IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT WHICH WAS NOT OF FERED TO TAX IN THE RETURN OF INCOME FILED PRIOR TO THE DATE OF SEARCH THEN EVEN IF THE SAID INCOME IS OFFERED TO TAX IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SEC TION 153A, IT WILL BE DEEMED AS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME, AS THE CASE MAY BE. IN THE CASE IN HAND, THE ASSES SEE HAS NOT DISPUTED THE FACT THAT THE DISCLOSURE WAS MADE REGARDING UNDISCLOSED INCOME WHICH WAS NOT OFFERED TO TAX PRIOR TO THE DATE OF SEARCH AND, THEREFORE, THE CONDITIONS SPECIFIED UNDER THE EXPLANATION 5A TO SECTION 271(1)(C) ARE SATISFIED. FOR READY REFERENCE, EXPLANATION 5A TO SECTION 271(1)(C) IS REPRODUCED AS UNDER :- EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FO UND TO BE THE OWNER OF ( I ) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PAR T) HIS INCOME FOR ANY PREVIOUS YEAR; OR 14 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. ( II ) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE B OOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, ( A ) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SA ID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR ( B ) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS Y EAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTE R THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUS E (C) OF SUB- SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.] THUS IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES A S DISCUSSED IN THE FOREGOING PART OF THIS ORDER, WE FIND THAT THE PROVISIONS OF EXPLA NATION 5A ARE APPLICABLE IN THE CASE OF THE ASSESSEE AND ACCORDINGLY THE PENALTY LEVIED UNDER SECTION 271(1)(C) IS PROPER AND JUSTIFIED. 12. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/07/2018 . SD/- SD/- HKKXPUN FOT; IKY JKWO (BHAGCHAND) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09/07/2018. DAS/ 15 ITA NOS. 89 & 90/JP/2014 SHRI KAILASH CHANDRA KABRA, BHILWARA. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-SHRI KAILASH CHANDRA KABRA, BHILWARA. 2. IZR;FKHZ@ THE RESPONDENT-THE ACIT, CENTRAL CIRCLE, AJMER. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 89 & 90/JP/2014} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR