The Asstt. Commissioner of Income Tax, Surat V. M/s Radhakrishna& Co, Surat

ITA 962/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5968 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: S KABRA
• Keywords: Principle of natural justice; Reasonable cause
• Section: 153A; 148; 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM ITA NO.962/AHD/2009 (ASSESSMENT YEAR:-2005-06) ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 2, SURAT V/S M/S RADHAKRISHNA & CO., 4019, JASH TEXTILE MARKET, RING ROAD, SURAT PAN: AABTR 0308 R [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI S K MEENA, DR ASSESSEE BY:- SHRI S KABRA, AR O R D E R A N PAHUJA: THIS APPEAL BY REVENUE AGAINST AN ORDER DATED 09-0 1- 2009 OF THE LD. CIT(APPEALS)-II, AHMEDABAD, FOR THE ASSESSMENT YEAR 2005-06, RAISES THE FOLLOWING GROUNDS:- [1] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE IT AC T WHEN THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS O F EXPLANATION 5 TO SECTION 271(1)(C) OF THE IT ACT. [2] THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE PENALTY WHEN THE DECISION OF THE HONBLE HIGH COURT OF PUNJAB & HARYANA REPORTED IN 287 ITR 376 IS SQUAREL Y APPLICABLE IN THE CASE OF THE ASSESSEE. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF T HE AO. [4] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE E XTEN T. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT A SEARCH UNDER SECTION 132 OF THE INCOME-TAX ACT, 1961 [HEREINAFTE R REFERRED TO AS THE ACT] WAS CONDUCTED IN THE CASE OF THE ASSESSE E ON 24-08-2005. CONSEQUENTLY, A NOTICE U/S 153A OF THE ACT WAS ISSU ED ON 08-10- 2007. IN RESPONSE, THE ASSESSEE FILED RETURN DECLAR ING INCOME OF RS.10,00,000/- ON 07-12-2007. TO A QUERY BY THE AS SESSING OFFICER [AO IN SHORT] DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSEE EXPLAINED THAT THE SAID INCOME WAS EARNED OUT OF BUSINESS OF PURCHASE AND SALE OF LAND PROPERTIES AND THE ASS ESSEE DID NOT 2 ITA NO.962/AHD/2009 MAINTAIN ANY BOOKS OF ACCOUNT. ACCORDINGLY, ASSESS MENT WAS COMPLETED ON THE INCOME OF RS.10,00,000/-.INTER ALI A, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED . 3. SUBSEQUENTLY, IN RESPONSE TO A SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, THE ASSESSEE R EPLIED THAT NO ADDITION WAS MADE NOR ANY CONCEALMENT WAS FOUND DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS AND DECLARED AMOUN T WAS ASSESSED AS ITS INCOME. SINCE THE DISCLOSURE WAS MA DE TO BUY PEACE AND THE ASSESSEE CO-OPERATED WITH THE DEPART MENT, IT WAS PLEADED THAT NO PENALTY SHOULD BE LEVIED. INTER ALI A, THE ASSESSEE PLEADED THAT DECLARATION OF INCOME WAS MADE IN TERM S OF EXCEPTION PROVIDED IN EXPLANATION TO 5 TO SECTION 271(1)(C) O F THE ACT AND THEREFORE NO PENALTY COULD BE LEVIED. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUN D THAT THE IMMUNITY UNDER EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE. ACCORDINGLY, PENALTY OF RS.3,53,430/- @ 100% OF THE TAX SOUGHT TO BE EVADED, WAS LEVIED ON THE AFORESAID INCOME OF RS.10,00,000/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME.. 4 ON APPEAL, THE LEARNED CIT(A) CANCELLED THE PENAL TY IN THE FOLLOWING TERMS:- 3. THE APPELLANT SUBMITTED THAT DURING THE COURSE OF SEARCH NO CASH, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLES WERE F OUND PERTAINING TO THE YEAR. THE CASH OF RS.33.16 LACS FOUND WAS COVERED UNDER THE DISCLOSURE OF RS.2 CRORES PERTAINING TO A.Y.2006-07. THE EXPLANATI ON 5 TO SECTION 271(1)(C) IS APPLICABLE ONLY AND ONLY IF SOME ASSET IS FOUND IN THE FORM OF CASH, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSET HAS BEEN ACQUIRED OUT OF INCOM E NOT DISCLOSED SO FAR. THE APPELLANT FURTHER SUBMITTED THAT IT WAS VERY CLEAR FROM THE ASSESSMENT ORDER THAT NOTHING WAS FOUND AND THE INCOME WAS RETU RNED IN ACCORDANCE WITH THE STATEMENT RECORDED U/S. 132(4) TO BUY PEACE OF MIND. THE APPELLANT RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEM ENTS; 1 SHYAM BIRI WORKS. P. LTD. VS. ACIT 70 TTJ 880 (ALL) 2 SOUTH INDIA FINANCE VS. ITO 42 TTJ 347 (COCHIN) 3 BHAGWANDAS NARAYANDAS VS. CIT 98 ITR 194 (GUJ.) 3 ITA NO.962/AHD/2009 4 ACIT VS. RASILA S.MEHTA 82 ITD 27 (MUM.) 4. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS. I AGREE WITH THE APPELLANT'S VIEW. IN THE CASE, OF ACIT VS. RASILA S. MEHTA 82 ITD 27 THE HON'BLE ITAT, MUMBAI BENCH HELD THAT 'IN VIEW OF STATEMENT U/S. 132(4) ADMITTING UNDISCLOSED INCOME THE ASSESSEE ARE TO BE DEEMED TO HAVE CONCEALED PARTICULARS OF THEIR INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME DISCOVERED DURING THE SEARCH IN VIEW OF EXPLN. 5 TO SECTION 271(1)(C) BECAUSE AS ON THE DATE OF SEARCH, THE TIME LIMIT UNDER SECTION 139 (1) OF FILING THE RETURN OF INCOME FOR THE RELEVANT YEAR HAD ALREADY EXPIRED AN D RETURNS WERE NOT FILED. HOWEVER, EXPLN. 5 COULD NOT BE APPLIED TO THE ENTIRE INCOME AS ASSESSED BY THE A.O. BUT ONLY TO SUCH INCOME WHICH COULD BE ASCRIBE D TO ANY MONEY, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLE OR THING OF WHICH THE ASSESSES WERE FOUND TO BE THE OWNERS DURING THE COURSE OF SEARCH PROCEE DINGS.' FOLLOWING THIS DECISION OF ITAT, MUMBAI BENCH AND ALSO RATIO OF JUDGMENT IN THE CASES OF SHYAM BIRI WORKS P. LTD. VS. ACIT 70 TTJ 88 0 (ALL), SOUTH INDIA FINANCE VS. ITO 42 TTJ 347 (COCHIN) & BHAGWANDAS NA RAYANDAS VS. CIT 98 ITR 194 (GUJ.) AND THE FACT THAT NO ASSETS WE RE FOUND DURING THE SEARCH RELATING TO THIS ASSESSMENT YEAR, IT IS HELD THA T THE PENALTY IS NOT LEVIABLE AND THE APPELLANT IS ALLOWED RELIEF. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR RELI ED UPON THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASS ESSEE SUPPORTED THE FINDINGS OF THE LEARNED CIT(A) ON THE GROUND TH AT NO ASSET WAS SEIZED DURING THE COURSE OF SEARCH. INTER ALIA, THE LEARNED AR RELIED UPON THE DECISION DATED 30-04-2010 OF THE ITAT, AHM EDABAD BENCH- D IN THE CASE OF KAUSHAL M KHANNA AND SANGEETABEN K KHANNA IN ITA NOS.2883, 2885 & 2848/AHD/2009. TO A QUERY BY T HE BENCH, THE LD. AR ADMITTED THAT THE ASSESSEE DID NOT FILE ANY RETURN FOR THE YEAR UNDER CONSIDERATION PRIOR TO SEARCH NOR WAS EVER AS SESSED TO TAX. TO A FURTHER QUERY, THE LD. AR SUBMITTED THAT EXPLANAT ION 3 TO SEC. 271(1)(C) OF THE ACT WAS NOT APPLICABLE IN THEIR CA SE. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION DATED 30-04 -2010 OF THE ITAT IN THE CASE OF KAUSHAL M KHANNA AND SANGEETABE N K KHANNA(SUPRA). ADMITTEDLY, THE ASSESSEE WAS NOT ASS ESSED TO TAX PRIOR TO SEARCH NOR FILED ANY RETURN OF INCOME. FO R THE FIRST TIME, THE ASSESSEE FILED RETURN DECLARING INCOME OF RS. 10 LA CS FROM HIS 4 ITA NO.962/AHD/2009 BUSINESS OF PURCHASE AND SALE OF LAND PROPERTIES ON 7.12.2007 IN PURSUANCE TO A NOTICE ISSUED UNDER SEC. 153A OF THE ACT. THUS, PRIMA FACIE THE CASE OF THE ASSESSEE FALLS WITHIN E XPLANATION 3 TO SEC. 271(1)(C) OF THE ACT, WHICH READS AS UNDER: EXPLANATION 3.-WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTI ON (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMME NCING ON OR AFTER THE 1ST DAY OF APRIL, 1989, AND UNTIL THE EXP IRY OF THE PERIOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER C LAUSE (I) OF SUB- SECTION (1) OF SECTION 142 OR SECTION 148 AND THE A SSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THE N, SUCH PERSON SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-S ECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON F URNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY O F THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 14 8. 6.1 WITH REGARD TO INVOCATION OF EXPLANATION TO SEC. 271(1)(C) OF THE ACT, HONBLE SUPREME COURT IN THE CASE OF K.P. MADHUSUDANAN VS. CIT,251 ITR 99(SC) HELD AS UNDER: .THE EXPLANATION TO SECTION 271(1)(C) IS A PAR T OF SECTION 271. WHEN THE INCOME-TAX OFFICER OR THE APPELLATE ASSIST ANT COMMISSIONER ISSUES TO AN ASSESSEE A NOTICE UNDER S ECTION 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREO F ARE TO BE USED AGAINST HIM. THESE PROVISIONS INCLUDE THE EXPL ANATION. BY REASON OF THE EXPLANATION, WHERE THE TOTAL INCOME R ETURNED BY THE ASSESSEE IS LESS THAN 80 PER CENT. OF THE TOTAL INC OME ASSESSED UNDER SECTION 143 OR 144 OR 147, REDUCED TO THE EXT ENT THEREIN PROVIDED, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS T HEREOF, UNLESS HE PROVES THAT THE FAILURE TO RETURN THE CORRECT INCOM E DID NOT ARISE FROM ANY FRAUD OR NEGLECT ON HIS PART. THE ASSESSEE IS, THEREFORE, BY VIRTUE OF THE NOTICE UNDER SECTION 271 PUT TO NOTIC E THAT IF HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED IN THE EXPLA NATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF AND, CO NSEQUENTLY, BE LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. NO EXPRESS INVOCATION OF THE EXPLANATION TO SECTION 271 IN THE NOTICE UND ER SECTION 271 IS, IN OUR VIEW, NECESSARY BEFORE THE PROVISIONS OF THE EXPLANATION THEREIN ARE APPLIED.. 6.2 WE FIND THAT WHILE IMPOSING PENALTY UNDER S ECTION 271(1)(C), THE ASSESSING OFFICER HAS NOT INVOKED EXPLANATION 3 TO SECTION 5 ITA NO.962/AHD/2009 271(1)(C) OF THE ACT. BUT THEIR LORDSHIPS OF HON'BL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. RAJESHWAR SINGH [1986] 162 ITR 173, HAVE HELD THAT EXPLANATION TO SECTION 271(1)(C) CAN BE INVOKED FOR THE FIRST TIME BY THE ITAT. BY FOLLOWIN G THE AFORESAID JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF RAJESHWAR SINGH THE ITAT, CHANDIGARH BENCH IN THE CASE OF ROS HAN LAL MADAN VS. ASSTT. CIT (1998) 62 TTJ (CHD)(TM) 1 : (2000) 2 45 ITR 36 (AT)(CHD)., HAS TAKEN THE SAME VIEW THAT EXPLANATIO N TO SECTION 271(1)(C) CAN BE INVOKED FOR THE FIRST TIME BY THE TRIBUNAL. 6.3 ADMITTEDLY, THIS IS THE CASE OF A NEW ASSESS EE , NO RETURN HAVING BEEN FILED PRIOR TO SEARCH. IN THE INSTANT C ASE , THE LD. CIT(A) CANCELLED THE PENALTY ONLY ON THE GROUND THAT NO A SSETS WERE SEIZED DURING THE SEARCH WHILE RELYING ON THE DECISION IN THE CASE OF ACIT VS. RASILA S MEHTA,82 ITD 27(MUM.). THE SAID DECIS ION FOR THE AY 1988-89 DID NOT RELATE TO A NEW ASSESSEE. IN FACT I N THE SAID DECISION, THE ITAT, INTER ALIA, CONCLUDED AS UNDER : AS A MATTER OF FACT, EXPLANATION 3 WAS INSERTED AND APPENDED TO THE MAIN PROVISION OF SECTION 271(1)(C) BY TAXATION LAWS (AMENDMENT) ACT, 1975 TO PROMULGATE A DEEMING PROVI SION THAT NON- FILING OF RETURNS OF INCOME WITHIN THE PERIOD DURIN G WHICH THE ASSESSEE COULD FILE THE RETURN OF INCOME BY NEW ASS ESSEE SHALL BE DEEMED TO BE CONCEALMENT OF INCOME. HOWEVER, THE SC OPE AND AMBIT OF EXPLANATION 3 HAS BEEN CONFINED TO THE NEW ASSES SEES ONLY AND EXPLANATION 3 HAS NO APPLICATION IN RELATION TO THE ASSESSEES WHO HAVE FILED RETURNS OF INCOME IN PAST. WE THEREFORE ACCEPT THE CONTENTIONS OF THE ASSESSEES IN THIS RESPECT AND DO NOT AGREE WITH THE AUTHORITIES BELOW THAT THE ENTIRE RETURNED INCO ME SHOULD BE TREATED AS INCOME CONCEALED BY THE ASSESSEE OR IN R ESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED BY THE A SSESSEES FOR THE REASON THAT THESE ASSESSEES HAD NOT FURNISHED THE R ETURNS OF INCOME WITHIN THE NORMAL PERIOD ALLOWED TO THEM FOR HAVING FILED THEIR RETURNS OF INCOME ON THEIR OWN. 6.4 THUS, RELIANCE ON THE AFORESAID DECISIO N IN RASILA S MEHTA(SUPRA), BEING NOT OF A NEW ASSESSEE, IS TOTAL LY MISPLACED. AS REGARDS OTHER THREE DECISIONS RELIED UPON BY THE A SSESSEE BEFORE HIM, THE LD. CIT(A) DID NOT EVEN CARE TO ANALYSE T HE FACTS AND CIRCUMSTANCES OF THE SAID CASES NOR ASCERTAINED AS TO WHETHER THE SAID CASES WERE OF NEW ASSESSEES .WE FIND THAT IN N ONE OF THESE 6 ITA NO.962/AHD/2009 DECISIONS, EXPLANATION 3 TO SEC. 271(1)(C) OF THE A CT WAS CONSIDERED. 6.5 AS ALREADY POINTED OUT, THE LD. CIT(A) CANCEL LED THE PENALTY, RELYING UPON THE AFORESAID DECISIONS, WITHOUT EVEN CARING TO ASCERTAIN AS TO WHETHER OR NOT FACTS AND CIRCUMSTAN CES IN THE INSTANT CASE WERE SIMILAR TO FACTS AND CIRCUMSTANCES IN THE AFORECITED DECISIONS. EVEN BEFORE US, THE LD. AR DID NOT DEMO NSTRATE SO NOR EVEN EXPLAINED AS TO WHETHER OR NOT ANY MONEY, BULL ION, JEWELLERY AND OTHER VALUABLE ARTICLE OR THING WAS FOUND DURI NG THE SEARCH. THERE IS NOT EVEN A WHISPER IN THE IMPUGNED ORDER A S TO WHETHER OR NOT THE AMOUNT OF RS. 10 LACS REPRESENTED THE VALU E OF ANY MONEY, BULLION, JEWELLERY AND OTHER VALUABLE ARTICLE OR T HING WAS FOUND DURING THE SEARCH IN TERMS OF EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT NOR THE LD. AR OR DR THREW ANY LIGHT ON THIS AS PECT. BEFORE PROCEEDING FURTHER, WE MAY HAVE A LOOK AT THE RELEV ANT EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT, WHICH READS AS UNDER: EXPLANATION 5.-WHERE IN THE COURSE OF A SEARCH UNDE R SECTION 132 , THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREA FTER 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) HIS INCOME,- (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE TH E 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 AFT ER 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 HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME, UNLESS,- (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING I N 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 BEFO RE SUCH DATE, 7 ITA NO.962/AHD/2009 IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE SAID DATE; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEM ENT UNDER SUB- SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION O R UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT B EEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFO RE THE EXPIRY OF TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 139, A ND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF SUCH INCOME. 6.6 A MERE GLANCE AT THE AFORESAID EXPLANATION R EVEALS THAT IN ORDER TO APPLY AFORESAID EXPLANATION OR BENEFIT OF EXCEPTIONS PROVIDED THEREIN, IN THE COURSE OF A SEARCH UNDER S ECTION 132 OF THE ACT , THE ASSESSEE HAS TO BE THE OWNER OF ANY MONE Y, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND TH E ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILI SING (WHOLLY OR IN PART) HIS INCOME. IN THE INSTANT CASE, NO SUCH FIND ING OF OWNERSHIP OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING, HAS BEEN RECORDED BY THE LD. CIT(A), WHO MECHANICALLY A PPLIED THE AFORECITED DECISIONS. THE LD. AR APPEARING BEFORE US ALSO DID NOT ATTEMPT TO DEMONSTRATE AS TO HOW THE AFORESAID DECI SIONS ARE APPLICABLE IN THE INSTANT CASE. WE MAY POINT OUT THAT IN THE DECISION DATED 30-04-2010 OF THE ITAT IN THE CASE O F KAUSHAL M KHANNA AND SANGEETABEN K KHANNA(SUPRA), ALSO RELIE D UPON BY LD. AR, THE ITAT CONCLUDED THAT EXPLANATION 5 TO SEC. 2 71(1)(C) OF THE ACT IS NOT APPLICABLE IN A CASE WHERE NO MONEY, BU LLION, JEWELLERY AND OTHER VALUABLE ARTICLE OR THING IS FOUND DURIN G THE SEARCH. THE LD. AR HAS ALSO NOT EXPLAINED AS TO HOW THIS DECISI ON IS OF ANY ASSISTANCE. 6.7 IN THE LIGHT OF AFORESAID DISCUSSION, IT IS AMPLY CLEAR THAT THE LD. CIT(A) DID NOT EXAMINE THE APPLICABILITY EITHER OF EXPLANATIONS 3 & 5 TO SEC. 271(1)(C) OF THE ACT OR OF THE DECISION S CITED BY THE ASSESSEE BEFORE HIM. APPARENTLY, THE AFORESAID ORDE R OF THE LD. CIT(A) IS NOT A SPEAKING ORDER . A MERE GLANCE AT T HE IMPUGNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT( A) IS CRYPTIC AND 8 ITA NO.962/AHD/2009 GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI-JUDICIAL BODY/AUT HORITY MUST PASS REASONED ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEF ORE IT. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE A RGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF T HE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPE AL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATIO N, THE DECISION THEREON AND THE REASON FOR THE DECISION. AS IS APPA RENT, THE IMPUGNED ORDER SUFFERS FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER ON THE ISSUE OF LEVY O F PENALTY RAISED IN GROUND NOS. 1 & 2 IN THE APPEAL BEFORE US NOR EX AMINED THE APPLICABILITY OF EXPLANATIONS 3 AND 5 TO SEC. 271(1 )(C) OF THE ACT AND NOR EVEN ANALYSED THE FACTS AND CIRCUMSTANCES OF VA RIOUS DECISIONS RELIED UPON BEFORE HIM BY THE ASSESSEE VIS-A-VIS FA CTS AND CIRCUMSTANCES IN THE INSTANT CASE , WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A ) AND RESTORE THE MATTER TO HIS FILE FOR DECIDING THE ISSUE OF LEVY OF PENALTY AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT OPPO RTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF T HE ACT, BRINGING OUT CLEARLY AS TO WHETHER OR NOT THE EXPLANATIONS 3 & 5 TO SEC. 271(1)(C) OF THE ACT OR EXCEPTIONS PROVIDED IN EXPL ANATION 5 AND DECISIONS RELIED UPON BY THE ASSESSEE BEFORE HIM AR E APPLICABLE IN THE FACT SITUATION OF THE INSTANT CASE. WITH THESE DIRECTIONS, GROUND NOS. 1 & 2 IN THE APPEAL ARE DISPOSED OF. 7. GROUND NOS.2 AND 3 IN THE APPEAL BEING MERE PRAYE R NOR ANY SUBMISSIONS HAVING BEEN MADE ON THESE GROUNDS, DO NOT REQUIRE AN Y SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED. 9 ITA NO.962/AHD/2009 8. IN THE RESULT, APPEAL IS ALLOWED BUT FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 29-07-2011 SD/- SD/- ( BHAVNESH SAINI ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 29 -07-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S RADHAKRISHNA & CO., 4019, JASH TEXTILE MARKE T, RING ROAD, SURAT 2. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCL E-2, SURAT 3. CIT CONCERNED 4. CIT(A)-II, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD