M/s. M.B. Bakers Pvt. Ltd., Indore V. The ACIT., Indore

ITA 91/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47779 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Income from undisclosed sources; Search and seizure; Documents seized
• Section: 153A; 132; 12; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS.89 TO 91/IND/2010 A.YS.2004-05 TO 2006-07 M.B. BAKERS PRIVATE LIMITED INDORE PAN AADCM-2663D APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 3(1), INDORE RESPONDENT ITA NOS. 91 TO 94/IND/2010 2002-03, 2004-05 & 2006-07 M/S M.B. FOODS PRIVATE LIMITED INDORE PAN- AABCM 1735G APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 3(1), INDORE RESPONDENT APPELLANTS BY : SHRI ANIL KAMAL GARG RESPONDENT BY : SHRI P.K. MITRA 2 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THESE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE CONSOLIDATED ORDER DATED 19.10.2009 OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE IMPOSITION OF PENALTY LEVIED BY THE ASSESSING OFFIC ER U/S 71(1) OF THE ACT FOR THE ASSESSMENT YEARS MENTIONED ABOV E. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON THE FIL E. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE FACTS IN THE IMPUGNED APPEALS ARE IDENTICAL, THEREFORE, THESE CA N BE HEARD AND DISPOSED OF TOGETHER. THE LD. COUNSEL FOR THE ASSESSEE, SHRI ANIL GARG, SUBMITTED THAT THE PENALTY WAS CONF IRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WITHOU T APPRECIATING THE FACTS AVAILABLE ON RECORD AS THE U NACCOUNTED INCOME WAS DULY DISCLOSED UNDER SECTION 132(4) OF T HE ACT BY THE ASSESSEE AND FURTHER EXPLAINED THE MANNER AS TO HOW THE INCOME WAS GENERATED AND DUE TAXES WERE DEPOSITED. IT WAS STRONGLY CONTENDED THAT IN VIEW OF EXPLANATION 5 TO SECTION 3 271(1) OF THE ACT, NO PENALTY IS IMPOSABLE. IT WAS ALSO PLEADED THAT DECLARATION OF UNACCOUNTED INCOME WAS DULY MADE BY THE ASSESSEE IN HIS STATEMENT RECORDED BY T HE DEPARTMENT, THUS, THE ASSESSEE DESERVES IMMUNITY FR OM PENALTY. OUR ATTENTION WAS INVITED TO CLAUSE (2) TO THE EXPLANATION MENTIONING NO TIME LIMIT FOR PAYMENT OF TAXES PAYABLE ON ACCOUNT OF DECLARATION OF INCOME WHILE M AKING A STATEMENT UNDER SECTION 132(4) OF THE ACT. IT WAS PLEADED THAT THE ASSESSEE NEITHER CONCEALED ITS INCOME NOR FURNI SHED INACCURATE PARTICULARS OF SUCH INCOME. A PLEA WAS RAISED THAT THE ASSESSEE WAS GIVEN ASSURANCE BY THE DEPARTMENT THAT IN CASE THE ASSESSEE PAYS THE TAX ON THE UNACCOUNTED I NCOME, AS DISCLOSED IN THE STATEMENT, NO PENALTY SHALL BE IMP OSED AND THE ASSESSEE IN GOOD FAITH, MADE THE PAYMENT OF TAX AND EVEN DID NOT FILE APPEAL AGAINST THE ASSESSMENT ORDER. HOWE VER, THE STAND OF THE REVENUE IS THAT IT IS A FIT CASE FOR I MPOSITION OF PENALTY AS THE ASSESSEE DELIBERATELY FURNISHED INAC CURATE PARTICULARS IN THE FORM OF MANIPULATION OF ACCOUNTS IN A SYSTEMATIC MANNER BY OBTAINING AND DEBITING BOGUS B ILLS FOR 4 PURCHASE OF FUEL SO AS TO INFLATE THE EXPENSES AND TO REDUCE THE TAXABLE INCOME, THEREFORE, PENALTY IS CLEARLY ATTRA CTED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE M/S. M.B. BAKERS PRIVATE LIMITED AND M.B. FOODS PRIVATE LIMITED ARE BOTH SISTER CONCERNS AND SHRI PRAKASH BADLANI WAS THE DIRECTOR. THERE WAS SEARCH U/S 132 OF THE ACT IN THE PREMISES AND F ACTORY OF THESE ASSESSEES. DURING SEARCH IT WAS FOUND THAT T HE ASSESSEE WAS BOOKING EXPENSES ON ACCOUNT OF DIESEL WHICH WAS NOT FOUND GENUINE. THE STATEMENT OF DIRECTOR P RAKASH BADLANI WAS RECORDED U/S 132(4) OF THE ACT WHEREIN HE DECLARED UNDISCLOSED INCOME OF RS.85 LACS WITH THE CONDITION THAT DETAILS OF SUCH INCOME SHALL BE PROVIDED LATER. DURING SEA RCH, ALL THE BOOKS OF ACCOUNTS AND COMPUTERS WERE SEIZED AND TAK EN INTO POSSESSION OF THE SEARCH PARTY. ON 30.9.2005 THE A SSESSEE VIDE LETTER DATED 27.9.2005 DEMANDED THE COPIES OF THE ACCOUNTS AND DOCUMENTS SEIZED DURING SEARCH. ONCE AGAIN A REQUEST WAS MADE ON 4.10.2005 AND REMINDER ON 20.10 .2005. 5 HOWEVER, THE DEPARTMENT DID NOT FURNISH COPIES OF S EIZED DOCUMENTS, THEREFORE, REQUEST WAS AGAIN MADE ON 26. 3.2006 TO PROVIDE COPIES OF THE DOCUMENTS SEIZED. THE ASSESS ING OFFICER ISSUED NOTICE DATED 8.8.2006 U/S 153A OF THE ACT ON 14.8.2006 TO FILE RETURN WITHIN THE PERIOD OF 30 DAYS. HOWEV ER, DUE TO DEATH OF FAMILY MEMBER, THE ASSESSEE SOUGHT FOR ADJ OURNMENT VIDE LETTER DATED 10.6.2006 REQUESTING THE ASSESSIN G OFFICER TO GIVE FURTHER PERIOD OF 30 DAYS FOR FILING THE RETUR N. THE REQUEST OF THE ASSESSEE WAS ACCEPTED AND THE ASSESSEE VIDE LETTER DATED 12.10.2006 FILED ALL THE RETURNS IN COMPLIANC E WITH THE NOTICE DATED 8.8.2006 WITHIN THE EXTENDED TIME, THU S THERE WAS NO DELAY IN FILING THE RETURN. ALONG WITH THESE RE TURNS, THE ASSESSEE ALSO REQUESTED THE ASSESSING OFFICER TO AL LOW SOME TIME TO VERIFY AND RECONCILE ALL THE DETAILS OF THE INCOME DECLARED DURING SEARCH U/S 132(4) AND IT WAS CLEARL Y STATED THAT THIS LETTER SHOULD BE TREATED AS A PART OF THE RETU RN FILED. THE ASSESSING OFFICER ACCEPTED THE REQUEST AND GRANTED TIME TO THE ASSESSEE TO FILE SUCH DETAILS UPTO 31ST MARCH, 2007 . VIDE LETTER DATED 26.3.2007 I.E. WITHIN THE EXTENDED TIME ALLOW ED BY THE 6 ASSESSING OFFICER, THE ASSESSEE FILED YEARWISE DETA ILS OF INCOME OF RS. 85 LACS AS SURRENDERED DURING SEARCH AS TO HOW IT WAS GENERATED AND UTILISED. THE TAX ON SUCH INC OME WAS ALSO DEPOSITED ON 29.12.2007 ALONG WITH INTEREST UP TO THE DATE ON WHICH TAX WAS DEPOSITED. THEREAFTER, THE ASSESSM ENT WAS FRAMED ON 31 ST MARCH, 2007 RECORDING ACCEPTANCE OF ALL THE AFORESAID CONTENTIONS, DOCUMENTS AND ALSO DECLARED INCOME. THERE IS NO DISPUTE TO THE FACTUAL POSITION AS NARR ATED ABOVE. AFTER FRAMING THE ASSESSMENT U/S 158BC, THE ASSESSI NG OFFICER ALSO LEVIED PENALTY U/S 271(1) OF THE ACT IN RESPE CT OF ALL THE YEARS UNDER CONSIDERATION. THIS PENALTY WAS LEVIED WITH RESPECT TO THE INCOME SURRENDERED DURING THE COURSE OF SEAR CH AMOUNTING TO RS. 85 LACS. THE CONTENTION OF THE AS SESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAS MADE DISCLOSURE OF UNACCOUNTED INCOME U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH OPERATION CONDUCTED U/S 132 OF THE ACT. IN THE STATEMENT SO RECORDED U/S 132(4), THE ASSESSEE HAD DULY EXPLAINED THE MANNER HOW THE INCOME WAS GENERATED A ND HAD FURTHER STATED THAT THE UNACCOUNTED INCOME SHALL BE ASSESSED 7 LATER AND DUE TAX SHALL ALSO BE DEPOSITED THEREON. THE ASSESSEE IN THE STATEMENT HAS ALSO STATED THAT THIS INCOME HAS BEEN UTILISED IN CONSTRUCTION OF FACTORY BUILDING. IN VIEW OF THIS FACTUAL POSITION, THE ASSESSEE SOUGHT IMMUNITY FROM LEVY OF PENALTY UNDER EXPLANATION 5 TO SECTION 271(1) OF TH E ACT WHICH PROVIDES THAT WHERE IN THE COURSE OF SEARCH INITIAT ED U/S 132 BEFORE IST JUNE, 2007, THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S OR THINGS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQU IRED BY HIM BY UTILIZING SUCH INCOME, NO PENALTY CAN BE IMP OSED IF IN THE COURSE OF SEARCH, THE ASSESSEE MAKES A STATEMEN T UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY INCOME, BUL LION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINGS FOUN D IN HIS POSSESSION HAS BEEN ACQUIRED OUT OF HIS INCOME WHIC H HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME AND A LSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HA S BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. AS PER THE LD. COUNSEL FO R THE ASSESSEE, THE ASSESSEE HAD MADE A DECLARATION OF 8 UNACCOUNTED INCOME IN THE STATEMENT RECORDED U/S 13 2(4) OF THE ACT. THUS, UNDER SUB-CLAUSE (2) OF EXPLANATION 5, NO PENALTY CAN BE IMPOSED. WE REPRODUCE HEREUNDER THE RELEVANT PROVISION OF EXPLANATION 5 TO SECTION 271 OF THE AC T :- [ EXPLANATION 5. WHERE IN THE COURSE OF A 40 [SEARCH INITIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007], THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELL ERY OR OTHER VALUABLE ARTICLE 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 PART) HI S INCOME, ( A ) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETUR N HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR ( B ) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE ( C ) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HA VE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME, 41 [UNLESS, ( 1 ) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED, ( I ) IN A CASE FALLING UNDER CLAUSE ( A ), BEFORE THE DATE OF THE SEARCH ; AND ( II ) IN A CASE FALLING UNDER CLAUSE ( B ), ON OR BEFORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY H IM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE 42 [CHIEF COMMISSIONER OR COMMISSIONER] BEFORE THE SAID DATE ; OR ( 2 ) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEMEN T UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POS SESSION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INC OME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INC OME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN 43 [* * *] SUB- SECTION (1) OF SECTION 139 , AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME.] 9 IT IS CLEAR FROM THE ABOVE THAT UNDER SUB-CLAUSE (2 ) OF THE EXPLANATION, FOLLOWING CONDITIONS ARE REQUIRED TO BE FULFILLED FOR GRANTING IMMUNITY FROM PENALTY :- (I) THERE SHOULD BE STATEMENT OF UNACCOUNTED INCOME U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH. (II) THE UNACCOUNTED INCOME HAS NOT BEEN DECLARED/DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 139(1) FOR ANY PREVIOUS YEARS. (III) THE ASSESSEE HAS SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED IN HIS STATEMENT AND FURTHER PROVIDED ALL THE DETAILS RELATING TO SUCH INCOME. (IV) THE ASSESSEE HAD ALSO PAID TAX AND INTEREST THEREON. 4. APPLYING THESE CONDITIONS TO THE FACTS OF THE C ASE, WE FIND THAT THE ASSESSEE HAS DULY DISCLOSED AND SURRE NDERED 10 INCOME OF RS.85 LACS IN THE STATEMENT RECORDED DURI NG THE COURSE OF SEARCH U/S 132(4) OF THE ACT. VIDE LETTER DATED 26.3.2007 WHICH WAS FILED AS A PART OF THE RETURN, THE ASSESSEE FILED YEARWISE DETAILS OF INCOME GENERATED AND ITS UTILIZATION. THIS FACT HAS BEEN DULY RECORDED BY THE ASSESSING O FFICER AND ALSO BY THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS). THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSES SEE HAS ALSO PAID TAX ON SUCH INCOME ALONG WITH INTEREST DUE THE REON UPTILL THE DEPOSIT OF TAX ON 29.12.2007 BEFORE FRAMING OF ASSESSMENT. THEREAFTER, THE ASSESSMENT WAS FRAMED U/S 158BC OF THE ACT ON 31.3.2007 WHEREIN THE ASSESSING OFFICER HAS ACCE PTED THE PAYMENT OF TAX BY THE ASSESSEE. 5. IT IS ALSO CRYSTAL CLEAR FROM SUB-CLAUSE (2) TH AT NO CONDITION HAS BEEN IMPOSED FOR FILING OF RETURN WIT H RESPECT TO SUCH INCOME SURRENDERED DURING THE COURSE OF SEARCH BY WAY OF STATEMENT U/S 132(4) OF THE ACT. SUB-CLAUSE (2) ONLY REQUIRES DISCLOSURE OF UNACCOUNTED INCOME, ITS SOURCE AND PA YMENT OF TAX THEREON. IN THE PRESENT CASE, THE ASSESSEE HAD DONE ALL THE THREE THINGS I.E. (I) MADE STATEMENT U/S 132(4) OF THE ACT FOR 11 UNACCOUNTED INCOME (II) DISCLOSED THE MANNER IN WHI CH SUCH UNACCOUNTED INCOME WAS DERIVED/GENERATED AND (III) HAS ALSO PAID THE ENTIRE TAX ALONG WITH INTEREST PRIOR TO TH E COMPLETION OF ASSESSMENT. 6. THE CONTENTION OF THE DEPARTMENTAL AUTHORITIES THAT SINCE THE ASSESSEE HAS NOT FILE RETURN OF INCOME WITH RES PECT TO SUCH UNDISCLOSED INCOME, HE IS NOT ENTITLED TO ANY IMMUN ITY UNDER EXPLANATION 5 TO SECTION 271(1), IS NOT TENABLE INS OFAR AS THE ASSESSEE HAD SOUGHT EXTENSION OF TIME TO PROVIDE TH E YEARWISE DETAILS OF UNDISCLOSED INCOME AS PER THE STATEMENT MADE TO THE ASSESSING OFFICER VIDE ITS LETTER DATED 30 TH OCTOBER, 2006 ALONG WITH FILING OF RETURN OF INCOME PURSUANT TO NOTICE U/S 153A OF THE ACT. THIS REQUEST OF THE ASSESSEE WAS ALSO SPECIFI CALLY ACCEPTED BY THE ASSESSING OFFICER AND WHICH HAS BEE N ADMITTED BY THE ASSESSING OFFICER IN PARA 4.3.3.3.1 OF HIS PENALTY ORDER DATED 30 TH JUNE, 2008. FROM RECORD WE FIND THAT THE ASSESSEE WAS ALL THE TIMES GIVEN AN ASSURANCE B Y THE DEPARTMENT THAT IN CASE THE ASSESSEE PAYS THE TAX O N UNACCOUNTED INCOME AS DISCLOSED IN THE STATEMENT RE CORDED 12 U/S 132(4), AS PER CLAUSE 2 OF EXPLANATION 5, NO PE NALTY SHALL BE IMPOSED. THE ASSESSEE IN ALL GOOD FAITH RELYING UPON THE OFFICERS OF THE DEPARTMENT, MADE PAYMENT OF TAX ALO NG WITH INTEREST DUE THEREON AND EVEN DID NOT FILE ANY APPE AL AGAINST THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS DU LY REPRODUCED THE ASSURANCE AND REQUEST MADE BY THE AS SESSEE IN THIS REGARD IN SUB-PARAS 3 AND 4 OF PARA 4.3.3.1 OF HIS ORDER DATED 30 TH JUNE, 2008. THE OBSERVATION OF THE ASSESSING OFFICER TO THE EFFECT THAT THE ASSESSEE HAD MADE A CONDITIONAL DISCLOSURE OR FILE THE RETURN WITH CONDITION OR RID ER, IS NOT TANABLE INSOFAR AS PLAIN READING OF STATEMENT MADE U/S 132( 4) OF THE ACT INDICATE THAT THE ASSESSEE HAD NOT PUT ANY COND ITION OR RIDER. FURTHERMORE, AS PER CLAUSE (2) OF EXPLANATI ON 5, THE STATEMENT MADE U/S 132(4) IS THE IMPORTANT AND BASI C DOCUMENT AND THERE IS NO WHISPER ABOUT FILING THE R ETURN U/S 153A OF THE ACT. THUS, THERE IS NO SUBSTANCE IN TH E OBSERVATION OF THE ASSESSING OFFICER TO THE EFFECT THAT THE ASSESSEE HAS FILED THE RETURN WITH RIDER AND ACCORD INGLY NO IMMUNITY CAN BE GRANTED UNDER CLAUSE (2) OF EXPLANA TION 5. 13 THERE IS ALSO NO SUBSTANCE IN THE OBJECTION OF THE ASSESSING OFFICER TO THE EFFECT THAT IT WAS OBLIGATORY ON THE PART OF THE ASSESSEE TO PAY TAX U/S 140A ON THE UNACCOUNTED INC OME ADMITTED DURING THE COURSE OF SEARCH IN THE STATEME NT RECORDED U/S 132(4) ON OR BEFORE 14.9.2006 I.E. THE DATE OF FILING THE RETURN AS PER NOTICE U/S 153A OF THE ACT. IT IS CL EARLY SPECIFIED IN EXPLANATION THAT PENALTY CANNOT BE LEVIED IF THE ASSESSEE PAYS THE TAX TOGETHER WITH INTEREST. IT IS PERTINE NT TO MENTION HERE THAT NO TIME LIMIT FOR PAYMENT OF TAX AND INTE REST THEREON HAS BEEN STIPULATED UNDER SUB-CLAUSE (2) OF EXPLANA TION 5. THERE IS A DIRECT DECISION OF THE HONBLE GUJARAT H IGH COURT IN THE CASE OF MAHENDRA C. SHAH; 299 ITR 305. IN THIS CASE, THE HONBLE HIGH COURT HAS HELD THAT THERE IS NO PRESUM PTION AS TO THE POINT OF TIME WHEN THE TAX HAS TO BE PAID QUA T HE AMOUNT OF INCOME DECLARED IN THE STATEMENT MADE UNDER SECTION 132(4) OF THE ACT. IT WAS HELD THAT THE TRIBUNAL WAS JUSTIFI ED IN HOLDING THAT THERE WOULD BE SUFFICIENT COMPLIANCE WITH THE PROVISIONS IF TAX IS SHOWN TO HAVE BEEN PAID BEFORE THE ASSESSMEN T WAS COMPLETED. APPLYING THE PROPOSITION OF LAW LAID DO WN BY THE 14 HONBLE HIGH COURT TO THE FACTS OF THE PRESENT CASE , WE HAVE NO HESITATION TO SAY THAT THE ASSESSEE HAS UNDISPUTEDL Y PAID ALL THE TAXES ALONG WITH INTEREST THEREON UPTILL THE DA TE OF PAYMENT, PRIOR TO COMPLETION OF ASSESSMENT. 7. AS PER OUR CONSIDERED VIEW, THE OPENING PORTION OF SECTION 271(1) REQUIRES THE ASSESSING OFFICER TO RE CORD SATISFACTION IN THE COURSE OF SUCH PROCEEDINGS AND THE SATISFACTION HAS TO BE AS REGARDS THE CONCEALMENT O F PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME. IN OTHER WORDS, THE SATISFACTION AS TO CONCEALMENT CAN BE ARRIVED AT THE EARLIEST POINT OF TIME ONLY IN THE COURSE OF ASSESSMENT PROCEEDINGS AND FOR THAT PURPOSE THE ASSESSING OFFI CER IS REQUIRED TO VERIFY AND ASCERTAIN WHETHER THE INCOME HAS BEEN DECLARED AND TAX PAID THEREON. FOR THE PURPOSE OF EXPLANATION 5 WHICH COMES INTO PLAY ONLY IN CASE OF SEARCH AND SEIZURE PROCEEDINGS U/S 132, THE RETURN OF INCOME PER SE WO ULD HAVE NO RELEVANCE IF ONE READS THE ENTIRE EXPLANATION 5 INCLUDING THE TWO EXCEPTIONS. THE EMPHASIS OF DISCLOSURE ON THE RETURN OF INCOME IS RELEVANT ONLY FOR THE PURPOSE OF AVOIDING THE DEEMING 15 FICTION OF CONCEALMENT IN RELATION TO PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF SEARCH BUT THE RET URN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED OR WHER E THE RETURN HAS BEEN FILED, SUCH INCOME HAS NOT BEEN DIS CLOSED. INSOFAR AS PREVIOUS YEAR, WHICH IS TO END ON OR AFT ER THE END OF THE SEARCH, THE RETURN OF INCOME WOULD HAVE HARDLY ANY RELEVANCE BECAUSE THE EXPLANATION ITSELF STIPULATES THAT REGARDLESS OF SUCH INCOME HAVING BEEN DECLARED IN A NY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH. THE ASSESSEE WOULD BECOME LIABLE TO IMPOSITION OF PENAL TY, THE ONLY EXCEPTION BEING A DECLARATION AT THE TIME OF S EARCH. IN THE INSTANT CASE, THE ASSESSEE HAD ALREADY GIVEN STATEM ENT U/S 132(4) DECLARING THE UNACCOUNTED INCOME AND THE MAN NER IN WHICH IT WAS UTILISED. THE ITAT, INDORE BENCH, IN THE CASE OF ANIL P. RATHI; 8 ITJ 641 HAS HELD THAT WHERE THE AS SESSEE HAS EXPLAINED THE REASONS AND MANNER IN WHICH SUCH UNDI SCLOSED INCOME WAS DERIVED AND HAD ALSO PAID TAXES THEREON, THE IMMUNITY FROM PENALY U/S 271(1) IS AVAILABLE TO TH E ASSESSEE. SIMILARLY, HONBLE RAJASTHAN HIGH COURT IN THE CASE OF GABILAL 16 KANHAIYALAL HUF; 270 ITR 523 OBSERVED THAT WHEN THE ASSESSEE DISCLOSED CONCEALED INCOME AND SURRENDERED IT FOR TAX AND TAX HAS BEEN PAID ALONG WITH INTEREST, NO P ENALTY COULD BE IMPOSED INSOFAR AS SUB-CLAUSAE (2) OF EXPLANATIO N 5 PROVIDES THAT DURING THE COURSE OF SEARCH IN THE ST ATEMENT U/S 132(4) IF THE ASSESSEE HAS DISCLOSED CONCEALED INCO ME AND THE MANNER IN WHICH IT HAS BEEN DERIVED AND IF THE TAX IS ALSO PAID ON THAT INCOME ALONG WITH INTEREST THEN THERE WILL BE NO PENALTY U/S 271(1) OF THE ACT. APPLYING THESE PRO POSITIONS OF LAW AS LAID DOWN BY THE HONBLE HIGH COURT AND BY T HE COORDINATE BENCH TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE HAS MADE THE STATEMENT U/S 132(4), SPE CIFIED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND ALSO PAID THE TAX ALONG WITH INTEREST THEREON. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF SDV CHANDRU; 266 ITR 175. THE HONBLE HIGHCOURT OF DEL HI IN THE CASE OF CHHABRA EMPORIUM; 264 ITR 249 OBSERVED THA T SUB- CLAUSAE (2) TO EXPLANATION 5 MAKES IT CLEAR THAT IF DURING THE COURSE OF SEARCH A STATEMENT OF THE ASSESSEE IS REC ORDED U/S 17 132(4) IN RESPECT OF ANY AMOUNT, CASH, STOCK, JEWE LLERY OR OTHER VALUABLE ARTICLES OR THINGS, WHICH IS FOUND IN HIS POSSESSION OR CONTROL AND THE ASSESSEE ADMITS IN HIS STATEMENT TH AT SUCH INCOME WAS ACQUIRED INCOME OR WAS ACQUIRED WITH THE UNDISCLOSED INCOME AND PAYS THE TAX TOGETHER WITH I NTEREST, IF ANY, ON THE SAID AMOUNT, HE IS GRANTED IMMUNITY FRO M LEVY OF PENALTY U/S 271(1) OF THE ACT. 8. NOW WE SHALL DEAL WITH THE DECISIONS RELIED UPO N BY THE LOWER AUTHORITIES FOR NOT GIVING IMMUNITY TO THE AS SESSEE UNDER EXPLANATION 5 TO SECTION 271. THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) HAS RELIED UPON THE DECISION O F THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SURENDRA PAUL (2006) 204 CTR 218. THIS CASE IS DISTINGUISHA BLE INSOFAR AS THE JUDGMENT OF HONBLE GUJARAT HIGH COURT REPOR TED AT (2008) 299 ITR 305 IN THE CASE OF MAHENDRA C. SHAH (SUPRA), WHICH HAS BEEN DEALT WITH HEREINABOVE, WAS DELIVERE D IN THE YEAR 2008 WHICH SHALL HAVE PRECEDENCE OVER THE EARL IER JUDGMENT IN CASE OF INCONSISTENCY. FURTHERMORE, TH E HONBLE PUNJAB & HARYANA HIGH COURT WAS DEALING WITH FILING OF RETURN 18 U/S 139(1) OF THE ACT WHICH WAS NOT FILED WHEREAS I N THE INSTANT CASE BEFORE US, ALL THE RETURNS U/S 139(1) HAVE BEE N FILED IN TIME AND ALSO U/S 153A WITHIN THE EXTENDED TIME AS ALLOWED BY THE ASSESSING OFFICER. THE SUB-CLAUSE (A) OF SECTI ON 153A READS AS A.O. SHALL ISSUE NOTICE TO SUCH PERSON RE QUIRING HIM TO FURNISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED I N THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR. SINCE IN THIS CASE, THE ASSESSEE HAD SOUGHT FURTHER TIME TO FILE THE RETURN VIDE LETTER DATED 10.9.2006 AND THE ASSE SSING OFFICER HAS GRANTED FURTHER TIME OF 30 DAYS, THERE IS NO DE LAY IN FILING OF ANY RETURN, HENCE, THE JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT HAS NO APPLICATION TO THE FACTS OF THE I NSTANT CASE. SIMILARLY, THE DECISION OF THE COORDINATE PUNE BENC H IN THE CASE OF SHANTILAL LALWANI; 82 ITD 59 ALSO DEALS WIT H THE SITUATION OF NON-FILING OF RETURN U/S 139(1), THERE FORE, NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE AL SO FIND THAT IN THE ASSESSEES CASE THE ASSESSING OFFICER VIDE ORDE R DATED 21 ST MARCH, 2009 HAS ACCEPTED THE DETAILS FILED BY THE ASSESSEE VIDE LETTER DATED 26.3.2007 BEFORE THE EX TENDED TIME 19 GRANTED BY THE ASSESSING OFFICER. THEREFORE, IT CA NNOT BE SAID THAT THE ASSESSEE HAS NOT PROVIDED THE DETAILS OR INFORMATION WITH REGARD TO THE INCOME SURRENDERED DURING THE CO URSE OF SEARCH U/S 132(4) OF THE ACT. 9. IN VIEW OF THE ABOVE DISCUSSION, WE CAN SAFELY CONCLUDE THAT THE ASSESSEE HAD DULY DISCLOSED ITS INCOME BY WAY OF STATEMENT U/S 132(4) OF THE ACT. THE STATEMENT WAS RECORDED BY THE DIRECTOR, SHRI PRADEEP BADLANI IN THE CASE O F M/S B.K. BAKERS PRIVATE LIMITED AND B.K. FOODS PRIVATE LIMIT ED. AFTER THE SEARCH WAS OVER, THE ASSESSEE HAS FILED ITS RET URN IN COMPLIANCE WITH NOTICE U/S 153A WITHIN THE EXTENDED TIME ALLOWED BY THE ASSESSING OFFICER. THE DETAILS OF I NCOME WERE DECLARED IN THE RETURNS FILED U/S 153A FOR VARIOUS ASSESSMENT YEARS BY BOTH THE COMPANIES, THE ASSESSEE HAD ALSO FILED LETTER DATED 30 TH OCTOBER, 2006 ALONG WITH RETURN OF INCOME REQUESTING FOR GRANT OF TIME TO SUBMIT THE YEAR WIS E DETAILS OF UNDISCLOSED INCOME DECLARED DURING THE COURSE OF SE ARCH. THE ASSESSING OFFICER HAS GRANTED TIME UPTILL 31 ST MARCH, 2007. THEREAFTER, THE ASSESSEE VIDE LETTER DATED 26.3.200 7 HAS FILED 20 YEARWISE DETAILS OF INCOME ALONG WITH COMPANYWISE B REAK UP OF INCOME AS SURRENDERED U/S 132(4) VIDE LETTER DAT ED 26.3.2007. THE ASSESSEE HAS ALSO PAID DUE TAXES ON THE INCOME SURRENDERED U/S 132(4) ALONG WITH INTEREST T HEREON UPTILL THE DATE OF ACTUAL PAYMENT WHICH IS 29.12.2007 WHIC H WAS PRIOR TO FRAMING OF ASSESSMENT BY THE ASSESSING OFFICER U /S 153A. THEREAFTER, THE ASSESSMENT WAS FRAMED U/S 153A ON 31.12.2007 WHEREIN THE ASSESSING OFFICER HAS DISCUS SED IN DETAIL THE INCOME SURRENDERED BY THE ASSESSEE AND T HE DUE TAX AND INTEREST THEREON PAID BY HIM. THEREAFTER, PENA LTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER U/S 271(1) IN RES PECT OF ONLY THAT INCOME WHICH WAS DISCLOSED THROUGH LETTER DATED 26.3.2007. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CONTENTION WITH REGARD TO IMMUNITY AVAIL ABLE UNDER EXPLANATION 5 TO SECTION 271(1) OF THE ACT. 10. WE ALSO FIND THAT PENALTY PROCEEDINGS HAVE BEE N INITIATED IN VIEW OF THE EXAMINATION OF THE SEIZED MATERIAL AND THE ASSESSEES OWN SUBMISSIONS WHICH HAVE BEEN DULY INCORPORATED BY THE ASSESSING OFFICER IN PARA 4.3.2 BY 21 OBSERVING THAT BY TAKING INTO ACCOUNT THE FACTS EM ERGING FROM THE SEIZED MATERIAL AND ASSESSEES OWN ADMISSION OF SUPPRESSION OF INCOME BY CLAIMING BOGUS EXPENDITURE ON ACCOUNT OF CONSUMPTION OF DIESEL; AS WORKED OUT BY THE ASSESSEE ITSELF, ADDITION ON THIS ACCOUNT WAS MADE TO THE TOTAL INCOME. THE PENALTY PROCEEDINGS U/S 271(1) WERE AL SO INITIATED ON THIS ISSUE. 11. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS ELIGIBLE FOR IMMUNITY GRANTED UNDER EXPLANATION 5 TO SECTION 271(1) OF TH E ACT. THEREFORE, THE LEVY OF PENALTY U/S 271(1) OF THE A CT WAS NOT JUSTIFIED. 12. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 27 TH APRIL, 2011. (R.C.SHARMA) (JOGIND ER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH APRIL, 2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE DN/- 22