Vascroft Design Pvt. Ltd., Ahmedabad V. The ACIT, Central Circle-2(4), Ahmedabad

ITSSA 129/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4131 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SINGH SHARMA
• Keywords: Tangible material; Revised return
• Section: 271(1)(c); 143(3); 153A

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T(SS).A. NOS. 129 & 130/AHD/2015 ( ASSESSMENT YEARS : 2007-08 & 2008-09) VASCROFT DESIGN PVT. LTD. MEHTA LODHA & CO. CHARTERED ACCOUNTANS 105, SAKAR-1, NR. GANDHIGRAM RAILWAY STATION, ASHRAM ROAD, AHMEDABAD / VS. ACIT CENTRAL CIRCLE-2(4), 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD-380009 / / PAN/GIR NO. : AABCV9121B ( APPELLANT ) .. ( / RESPONDENT ) & I.T(SS).A. NOS. 131, 132 & 133/AHD/2015 ( ASSESSMENT YEARS : 2006-07, 2007-08 & 2008-09) TELECON INFOTECH PVT. LTD. MEHTA LODHA & CO. CHARTERED ACCOUNTANS 105, SAKAR-1, NR. GANDHIGRAM RAILWAY STATION, ASHRAM ROAD, AHMEDABAD / VS. ACIT CENTRAL CIRCLE-2(4), 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD-380009 / / PAN/GIR NO. : AACCT3773G ( APPELLANT ) .. ( / RESPONDENT ) & IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 2 - I.T(SS).A. NOS. 134, 135 & 136/AHD/2015 ( ASSESSMENT YEARS : 2006-07, 2007-08 & 2008-09) SAFARI BIOTECH PRIVATE LIMITED 1-B, NATRAJ SOCIETY, GULBAI TEKRA, AMBAWADI, AHMEDABAD - 380015 / VS. ACIT CENTRAL CIRCLE-2(4), 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD-380009 / / PAN/GIR NO. : AAJCS5842C ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DHINAL SHAH, A.R. / RESPONDENT BY : SHRI VIKRAM SINGH SHARMA, SR.D.R. DATE OF HEARING 24/01/2019 !'# / DATE OF PRONOUNCEMENT 15/02/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS AT THE INSTANCE OF ASSESSEE A RISE FROM THE RESPECTIVE ORDERS OF THE CIT(A) AGAINST RESPECT IVE PENALTY ORDERS FOR DIFFERENT ASSESSMENT YEARS AS TABULATED BELOW: IT(SS)A NOS. NAME OF ASSESSEE AY CIT(A)S ORDER DATED AOS PENALTY ORDER DATED AOS ORDER UNDER SECTION 129/AHD/15 VASCROFT DESIGN PVT. LTD. 2007-08 27.02.2015 25.02.2014 271(1)(C) OF THE INCOME TAX ACT, 1961 130/AHD/15 -DO- 2008-09 -DO- -DO- -DO- 131/AHD/15 TELECON INFOTECH PVT. LTD. 2006-07 -DO- 10.02.2014 -DO- 132/AHD/15 -DO- 2007-08 -DO- -DO- -DO- 133/AHD/15 -DO- 2008-09 -DO- -DO- -DO- 134/AHD/15 SAFARI BIOTECH PVT. LTD. 2006-07 -DO- 11.02.2014 -DO- IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 3 - 135/AHD/15 -DO- 2007-08 -DO- -DO- -DO- 136/AHD/15 -DO- 2008-09 -DO- -DO- -DO- 2. THE FACTS AND THE ISSUE INVOLVED ARE SIMILAR IN ALL THE APPEALS. ACCORDINGLY, WE SHALL FIRST TAKE UP THE APPEAL FILE D BY THE ASSESSEE IN SAFARI BIOTECH PRIVATE LIMITED CONCERNING AY 200 6-07 FOR ADJUDICATION PURPOSES. IT(SS)A NO. 134/AHD/2015 (SAFARI BIOTECH PRIVATE LI MITED) - AY 2006-07 3. BRIEFLY STATED, A SEARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE AND OTHER ENTITIES OF RIDDHI SIDDHI GROUP ON 22.09.2011. CONSEQUENTLY, NOTICE WAS ISSUED UNDER S.153A OF THE ACT ON THE ASSESSEE. PURSUANT THERETO, THE ASSESSEE FILED RET URN UNDER S.153A OF THE ACT DECLARING TOTAL INCOME OF RS.13,25,00,000/- . THE ASSESSMENT WAS ALSO FRAMED AT THE SAME FIGURE UNDER S.153A R.W.S. 143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 12.12 .2013. WHILE FRAMING THE ASSESSMENT ADMITTING THE INCOME RETURNE D AS FILED UNDER S.153A OF THE ACT, THE AO INTER ALIA OBSERVED THAT AN ORIGINAL RETURN OF INCOME WAS FILED UNDER S.139 OF THE ACT PRIOR TO SEARCH DECLARING NIL INCOME AND THE INCOME DECLARED IN THE RETURN FI LED UNDER S.153A OF THE ACT REPRESENTS THE INCOME DISCLOSED BY THE A SSESSEE UNDER S.132(4) OF THE ACT PURSUANT TO SEARCH ACTION UNDER S.132(1) OF THE ACT. THE AO ACCORDINGLY IMPOSED PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME INCLUDED IN THE 1 53A RETURN AS A CONSEQUENCE OF SEARCH. THE PENALTY WAS ACCORDINGLY COMPUTED AT RS.44,59,950/- ON THE INCOME DISCLOSED OF RS.1,32,5 0,000/- PURSUANT TO SEARCH. IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 4 - 4. AGGRIEVED BY THE IMPOSITION OF PENALTY AFORESTAT ED UNDER S. 271(1)(C) OF THE ACT, THE ASSESSEE PREFERRED THE AP PEAL BEFORE THE CIT(A). 5. THE CIT(A) PASSED A CONSOLIDATED ORDER ON ALL TH E CAPTIONED APPEALS WHEREBY THE ACTION OF THE AO TOWARDS IMPOSI TION OF PENALTY WAS CONFIRMED. WHILE DOING SO, THE CIT(A) TOOK NOT E OF THE STATEMENT OF SHRI SHANKARLAL CHOWDHARY MADE UNDER S .132(4) OF THE ACT WHO IS A KEY PERSON OF THE GROUP. THE DEPONENT OF THE STATEMENT (SHRI SHANKARLAL CHOWDHARY) ADMITTED ADDI TIONAL INCOME REPRESENTING SHARE/SHARE PREMIUM AMOUNT APPEARING I N THE BOOKS AS INCOME OF THE RESPECTIVE ASSESSEE COMPANY. THE ASS ESSEE (SAFARI BIOTECH PRIVATE LIMITED) DECLARED RS.3,12,50,000/- IN THE RETURN FILED UNDER S.153A OF THE ACT AND HONOURED THE ADMI SSION OF ADDITIONAL INCOME DECLARED IN THE STATEMENT RECORDE D UNDER S.132(4) OF THE ACT AND CONSEQUENTLY, FILED TOTAL INCOME OF RS.1,32,50,000/- IN ITS RETURN OF INCOME FILED UNDER S.153A OF THE A CT ON 18.01.2012 AS AGAINST NIL INCOME DECLARED IN THE ORIGINAL RETU RN OF INCOME FILED UNDER S.139 OF THE ACT ON 07.09.2006 PRIOR TO SEARC H. THE CIT(A) TOOK NOTE OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT AS APPLICABLE TO THE ASSESSEE AND CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT THE INCOME DISCLOSED BY THE ASSESSEE IN THE REVISED RETURN FILED UNDER S.153A OF THE ACT WAS DETECTED B Y THE DEPARTMENT AND WAS BASED ON THE INCRIMINATING DOCUMENTS IN THE FORM OF STATEMENT RECORDED UNDER S.132(4) OF THE ACT IN THE COURSE OF SEARCH. IT WAS REITERATED BY THE CIT(A) THAT THE DEPONENT ( SHRI SHANKARLAL CHOWDHARY) HAS ADMITTED ADDITIONAL INCOME INTRODUCE D IN THE FORM OF SHARE CAPITAL/SHARE PREMIUM IN THE HANDS OF THE ASSESSEE COMPANY WHICH ADMISSION HAS, IN TURN, BEEN INCLUDED IN THE RETURN OF INCOME FILED UNDER S.153A OF THE ACT. CONSEQUENTLY, THE C IT(A) DECLINED IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 5 - TO INTERFERE WITH THE ORDER OF THE AO AND THUS PENA LTY IMPOSED BY THE AO STOOD CONFIRMED. 6. FURTHER AGGRIEVED, THE ASSESSEE KNOCKED THE DOOR OF THE TRIBUNAL. 6.1 WHEN THE MATTER WAS CALLED FOR HEARING, THE LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT THE I NCOME RETURNED UNDER S.153A OF THE ACT HAS BEEN ACCEPTED AS IT IS, WITHOUT ANY MODIFICATION AND THEREFORE WHEN SEEN WITH REFERENCE TO RETURN OF INCOME FILED UNDER S. 153A, THERE WAS NO WARRANT FO R THE AO TO INVOKE THE PROVISIONS OF SECTION 271(1)(C) OF THE A CT IN THE CIRCUMSTANCES. THE LEARNED AR FOR THE ASSESSEE STR AIGHTWAY MADE SEVERAL PROPOSITIONS TO SUPPORT ITS CASE FOR NON IM POSITION OF PENALTY. 6.2 THE FIRST PLANK OF CONTENTION PROPOUNDED IN THI S REGARD WAS THAT NO INCRIMINATING DOCUMENT PER SE HAS BEEN FOUND IN THE COURSE OF SEARCH. THE SHARE CAPITAL/SHARE PREMIUM WERE AL READY RECORDED IN THE BOOKS OF ACCOUNTS. THE BASIS FOR ADDITION I S A CONDITIONAL STATEMENT RECORDED UNDER S.132(4) OF THE ACT ON 19T H NOVEMBER, 2011 OF SHRI SHANKARLAL CHOWDHARY WHEREIN THE ENTRI ES IN RESPECT OF SHARE CAPITAL/SHARE PREMIUM WERE ACCEPTED AS INCOME NOTWITHSTANDING THE ASSERTION (AS NOTED IN THE STAT EMENT) THAT THE CAPITAL WAS SUBSCRIBED BY GENUINE SHARE HOLDERS BY ACCOUNT PAYEE CHEQUES/DRAFTS AND THE SAID SUBSCRIBERS ARE ASSESSE D TO TAX. THE LEARNED AR FOR THE ASSESSEE EXTENSIVELY REFERRED TO THE AFORESAID STATEMENT TO PROP UP ITS CASE. CONSIDERING ITS OVE RWHELMING SIGNIFICANCE IN THE CONTEXT OF THE CASE, IT WILL AP T TO REPRODUCE THE SAME IN VERBATIM. IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 6 - IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 7 - IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 8 - IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 9 - IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 10 - IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 11 - IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 12 - 6.3 WITH REFERENCE TO THE AFORESAID STATEMENT, THE LEARNED AR FURTHER SUBMITTED WITH VEHEMENCE THAT IT WAS EQUALL Y STATED BY THE IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 13 - DEPONENT THAT THE SOURCE OF SUCH CAPITAL IS SACROSA NCT AND BEYOND ANY APPREHENSION. THE ONLY CONSIDERATION FOR SUCH DECLARATION WAS THAT THE SOURCE OF THE SOURCE OR EVEN FURTHER SOURC E MAY BE A MATTER OF DISPUTE WHICH FACT IS ALSO MADE CLEAR IN THE STA TEMENT ITSELF. DESPITE THE FACT (AS FURTHER RECORDED IN THE STATEM ENT) THAT TO THE UNDERSTANDING OF THE DEPONENT IT IS NOT AN OBLIGATI ON TO PROVE ANY SUCH DETAILS BUT ONLY IN ORDER TO BUY PEACE AND SUB JECT TO THE UNDERSTANDING THAT NO PENAL CONSEQUENCES SHALL FOLL OW, THE DEPONENT AGREED TO PAY TAX WITH INTEREST ON THE SHARE CAPITA L WITHOUT PREJUDICE TO THE ASSERTION OF SIGNIFICANT NATURE THAT SHARE C APITAL RAISED IS DULY EXPLAINED IN LAW. ADVERTING FURTHER IN THIS REGARD , THE LEARNED AR FOR THE ASSESSEE POINTED OUT THAT AS AGREED IN THE COURSE OF SEARCH, THE ASSESSEE DECLARED THE AFORESAID AMOUNT IN THE R ETURN OF INCOME FILED UNDER S.153A OF THE ACT UNDER THE BONAFIDE BE LIEF (AS POINTED OUT IN THE STATEMENT ITSELF) THAT NO PENAL CONSEQUE NCE WOULD PRESUMABLY FOLLOW ON DECLARATION OF SUCH AMOUNT AND PAYMENT OF TAX ETC. THEREON. THE LEARNED AR STRONGLY HARPED T HAT EXCEPT FOR THE AFORESAID STATEMENT IN ISOLATION, NO DOCUMENTARY EV IDENCE OF INCRIMINATING NATURE WERE FOUND OR REPORTED AGAINST THE ASSESSEE. THE LEARNED AR NEXT STRIVED TO EXPLAIN ANOTHER NOTE WORTHY POINT OF IMMENSE SIGNIFICANCE THAT THE DEPONENT OF THE STATE MENT HAS NOT ADMITTED SUCH SHARE CAPITAL/PREMIUM TO BE IRREGULAR OR INGENUINE BUT AFTER HAVING ELABORATED THAT THE CAPITAL WAS SUBSCR IBED BY GENUINE SHAREHOLDERS THROUGH BANKING CHANNELS AND THE SOURC E THEREOF IS IMPECCABLE, THE ASSESSEE, WITHOUT ADMITTING ANY INC OME OF UNDISCLOSED NATURE, CAME FORWARD TO PAY TAX WITH IN TEREST ON SUCH SHARE CAPITAL. IT WAS THUS CONTENDED THAT IN THE C IRCUMSTANCES WHERE THE DEPONENT ON BEHALF OF THE ASSESSEE HAS NOT ADMI TTED EXISTENCE OF ANY UNDISCLOSED INCOME NOR SUCH UNDISCLOSED INCOME IS SUPPORTED BY ANY DOCUMENTARY EVIDENCE, THE CONDITIONAL STATEM ENT OF WILLING IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 14 - TO PAY TAX ETC. WITH A CAVEAT OF NO PENAL CONSEQUEN CE; SUCH ACT OF ASSESSEE CANNOT BE SEEN IN ISOLATION AND CANNOT FAL L WITHIN THE MISCHIEF OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. THE LEARNED AR ACCORDINGLY SUBMITTED THAT IN THE ABSENC E OF ANY TANGIBLE EVIDENCE OF INCRIMINATING NATURE EXCEPT AN UNSUPPORTED AND CONDITIONAL STATEMENT RECORDED UNDER S.132(4) OF TH E ACT FOR ACQUIESCENCE OF INCOME, THE STRICT CONDITIONS FOR I MPOSITION OF PENALTY ARE NOT SATISFIED AT ALL. 6.4 THE LEARNED AR THEREAFTER NEXT ADVERTED TO SECO ND PROPOSITION THAT INCOME RETURNED IN RESPONSE TO NOTICE UNDER S. 153A OF THE ACT ALONE IS REQUIRED TO BE CONSIDERED FOR THE PURPOSES OF PENALTY UNDER S.271(1)(C) OF THE ACT AND PENALTY CAN POSSIBLY BE LEVIED ONLY ON THE INCOME ASSESSED OVER AND ABOVE THE INCOME RETURNED UNDER S.153A OF THE ACT, IF ANY. FOR THIS PROPOSITION, THE LEAR NED AR FOR THE ASSESSEE REFERRED TO THE JUDGMENT OF THE HONLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT [2017] 80 TAXMANN.COM 162 (GUJ) TO SUBMIT THAT THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER S.153A OF THE ACT TO BE CO NSIDERED AS RETURN FILED UNDER S.139 OF THE ACT. AS THE AO HAS MADE ASSESSMENTS ON THE SAID RETURN, THE AFORESAID RETUR N UNDER S.153A IS TO BE CONSIDERED ON STANDALONE BASIS TO TEST THE AP PLICABILITY OF PENALTY UNDER S.271(1)(C) OF THE ACT. THE LEARNED AR THUS SUBMITTED THAT ANY ADDITION TO THE INCOME RETURNED UNDER S.153A ALONE IS SUSCEPTIBLE TO THE PENALTY PROVISIONS IN V IEW OF THE EXPRESS JUDICIAL FIAT. THE LEARNED AR THEREAFTER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS. NEERAJ J INDAL (2017) 79 TAXMANN.COM 96 (DEL) HAS ALSO EXPRESSED THE SIMILAR VIEW IN THE CONTEXT OF EXPLANATION 5 OF THE ACT. THE LEARNED A R FOR THE ASSESSEE ACCORDINGLY EMPHASIZED THAT THE IMPOSITION OF PENALTY IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 15 - UNDER S.271(1)(C) OF THE ACT TOWARDS ADDITIONAL INC OME OFFERED IN THE RETURN FILED UNDER S.153A IS NOT SUSTAINABLE HA VING REGARD TO THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT A ND DELHI HIGH COURT. THE LEARNED AR THEREAFTER REFERRED TO THE D ECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN RAJESH D. DEDHIA VS. ACIT (ITA NO. 2711/MUM/2015) WHEREIN THE PENALTY LEVIED UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WAS DELETED APPLY ING THE RATIO OF THE HONBLE DELHI HIGH COURT IN NEERAJ JINDAL (SUPR A). THE LEARNED AR THUS SUBMITTED THAT THE ORIGINAL RETURN UNDER S. 139(1) OF THE ACT HAS BEEN RENDERED NONEST AND STOOD SUBSTITUTED BY THE SUBSEQUENT RETURN FILED UNDER S.153A OF THE ACT IN PURSUANCE O F STATUTORY NOTICE AS PER THE SCHEME OF THE ACT. THE LEARNED AR THUS SUBMITTED THAT WHEN SEEN QUA THE RETURN FILED IN RESPONSE TO NOTICE UNDER S.153 A OF THE ACT, NO PENALTY CAN BE IMPOSED IN THE ABSENCE O F ANY ADDITIONS IN THE RETURN SO FILED. 6.5 CONTINUING FURTHER, THE LEARNED AR FOR THE ASSE SSEE REFERRED TO THE ASSESSMENT ORDER PASSED UNDER S.153A OF THE ACT AND SUBMITTED THAT THE SATISFACTION WAS FORMED BY THE AO AGAINST THE ASSESSEE TOWARDS FURNISHING INACCURATE PARTICULARS OF INCOME AS WELL AS TOWARDS CONCEALMENT OF INCOME. THE LEARNED AR SUBM ITTED THAT SUCH A COURSE IS NOT OPEN TO THE REVENUE IN VIEW OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY [2013] 35 TAXMA NN.COM 250 (KARNATAKA HC). THE LEARNED AR ALSO REFERRED TO TH E NOTICE ISSUED UNDER S.271(1)(C) OF THE ACT TO SHOW THAT THE AO HA S NEITHER STRUCK OF NOR DELETED THE INAPPROPRIATE WORDS AND PARAGRAP HS WHILE ISSUING NOTICE AND THEREFORE, THE CHARGE AGAINST THE ASSESS EE IS CLEARLY UNKNOWN AND VAGUE. THE ACTION OF AO IS THUS ALSO WI THOUT APPLICATION OF MIND. IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 16 - 6.6 ADVERTING FURTHER, THE LEARNED AR FOR THE ASSES SEE SUBMITTED THAT WHILE ALLEGING INACCURATE PARTICULARS OF INCOM E, THE AO HAS NOT POINTED OUT ANY INACCURACY IN RETURN OF INCOME FILE D UNDER S.153A AND ACCEPTED THE INCOME OFFERED FOR TAX IN THE RETU RN OF INCOME WITHOUT ANY FURTHER ADDITION. IN THIS REGARD, THE LEARNED AR REFERRED TO AND RELIED UPON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD. [2 010] 189 TAXMAN 322 (SC) AND CONTENDED THAT IN THE ABSENCE OF ANY I NACCURACY IN THE PARTICULARS OF INCOME FILED UNDER S.153A OF THE ACT AND ASSESSED, THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS A NON-STARTER. THE LEARNED AR ACCORDINGLY URGED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THE ACTION OF THE AO TOWARDS IMPOSITION O F PENALTY BE QUASHED ON ALL THESE COUNTS. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE PRESENT SET OF APPEALS, THE CONTROVERSY REVOLVES AR OUND IMPOSITION OF PENALTY BROADLY ON FOUR COUNTS AS SUMMARIZED BEL OW: (I) WHETHER WHEN NO INCRIMINATING DOCUMENT OR MATER IAL WAS FOUND DURING THE COURSE OF SEARCH, EXPLANATION 5A T O SECTION 271(1)(C) OF THE ACT IS APPLICABLE IN THE LIGHT OF STANDALONE ORAL EVIDENCE IN THE FORM OF STATEMENT UNDER S.132(4) O F THE ACT? (II) WHETHER WHEN THERE WAS NO ADDITION OVER AND AB OVE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FI LED UNDER S.153A OF THE ACT, PENALTY UNDER S. 271(1)(C) OF THE ACT I S TO BE IMPOSED? (III) WHETHER THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME AS THE ADDITIONAL INCOME DISCLOSED IN THE RE TURN OF INCOME FILED UNDER S.153A OF THE ACT HAS BEEN ACCEPTED AND ASSESSED WITHOUT DEMUR? IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 17 - (IV) WHETHER WHEN THE AO HAS FAILED TO SPECIFY AS T O FOR WHICH LIMB OF DEFAULT UNDER SECTION 271(1)(C) OF THE ACT, PENALTY PROCEEDINGS ARE INITIATED, WAS THE AO JUSTIFIED IN IMPOSING PENALTY AND WHETHER THE PENALTY CAN BE LEVIED WHEN THE CHAR GE AGAINST THE ASSESSEE IN ITSELF IS ALLEGEDLY VAGUE AND NON-DESCR IPT AND THE ACTION OF AO SUFFERS FROM ALLEGED NON-APPLICATION OF MIND. 8. IN TERMS OF FIRST CONTENTION RAISED AS NOTED ABO VE, THE PRIMARY QUESTION THAT EMERGES FOR DETERMINATION IS WHETHER PENALTY UNDER S.271(1)(C) OF THE ACT CAN BE IMPOSED QUA THE RETURN FILED BY THE ASSESSEE DISCLOSING HIGHER INCOME UNDER S.153A OF T HE ACT (VIS-- VIS EARLIER RETURN FILED UNDER S.139 OF THE ACT) SO LELY ON THE BASIS OF CERTAIN STATEMENT RECORDED UNDER S.139(4) OF THE AC T WITHOUT ANY REFERENCE TO AND WITHOUT CORROBORATION OF ANY INCRI MINATING MATERIAL TO SUPPORT SUCH DECLARATION. 8.1 THE ANSWER TO THE PRIMARY QUESTION HAS TO BE DE DUCED IN TERMS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT I N VOGUE AT THE RELEVANT TIME OF SEARCH. EXPLANATION 5A IS A DEEMI NG PROVISION. WITH REFERENCE TO SEARCH ASSESSMENTS, THE AFORESAID EXPLANATION HAS BEEN SPECIFICALLY INSERTED TO SECTION 271(1)(C) OF THE ACT. THE PERTINENT QUESTION IS WHETHER EXPLANATION 5A TO SEC TION 271(1)(C) OF THE ACT IS ATTRACTED IN THE PECULIAR FACTS OF TH E CASE. EXPLANATION 5A IS APPLICABLE TO CASES WHERE IN THE COURSE OF A SEARCH UNDER S.132 OF THE ACT, THE ASSESSEE IS FOUND TO BE THE OWNER O F ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR TH INGS OR ANY INCOME BASED ON ENTRY IN BOOKS OF ACCOUNTS OR OTHER DOCUME NTS OR TRANSACTIONS AND SUCH ENTRIES REPRESENT INCOME OF T HE ASSESSEE. OSTENSIBLY, THIS EXPLANATION HAS BEEN ADDED TO SPEC IFICALLY ADDRESS THE SITUATIONS WHERE CONSEQUENT TO A SEARCH, ASSETS AND VALUABLES OR IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 18 - BOOK ENTRIES ETC. ARE DISCOVERED TO BE IN CONTROL O R POSSESSION OF THE ASSESSEE AND THEREAFTER THE ASSESSEE FILES THE RETU RN OF INCOME AFTER THE DATE OF SEARCH. 8.2 IN THE BACKDROP OF THIS POSITION, WE NOW TURN T O TAKE COGNIZANCE OF RELEVANT FACTS GERMANE TO THE ISSUE. A PERUSAL OF THE ORDER OF THE LOWER AUTHORITIES IN QUANTUM PROCEEDIN GS AND THE PENALTY PROCEEDINGS GIVES THE UNMISTAKABLE IMPRESSI ON THAT ADDITIONAL INCOME OFFERED IN A STATEMENT RECORDED U NDER S.132(4) OF THE ACT IN SOME GROUP DISCLOSURE AT THE TIME OF SEA RCH HAS BEEN ACCEPTED BY THE REVENUE SIMPLICITOR. HENCE, THE AD DITIONAL INCOME DECLARED IN THE RETURN FILED UNDER S.153A IS BASED SOLELY ON CERTAIN ADMISSIONS MADE BY THE ASSESSEE AT THE TIME OF SEAR CH. SIGNIFICANTLY, IT IS NOTICED IN THE SAME VAIN THAT THE AFORESAID ADDITIONAL INCOME IS NOT BACKED BY ANY DOCUMENT OF INCRIMINATING NATURE IN CORROBORATION PER SE . IN ACCORD WITH EXPLANATION 5A, IT IS NECESSARY THAT THERE MUST BE CERTAIN ASSETS (MONEY OR BULLION) UNEARTHED IN THE POSSESSION OF THE ASSESSEE DURING THE SEARCH AND/OR ENTRIES ARE RECORDED IN THE ANY BOOKS/DOCUMENTS AND THE ASSESSEE MUST CLAIM THAT SUCH ASSETS/ENTRIES REPRESENT UNACC OUNTED INCOME. OSTENSIBLY, EXPLANATION 5A WOULD COME INTO PLAY ONL Y WHEN UNACCOUNTED ASSETS OF THE NATURE AS MENTIONED IN TH E SAID EXPLANATION ARE FOUND DURING THE SEARCH OR INCOME B ASED ON ENTRIES IN THE BOOKS OF ACCOUNTS IS CLAIMED BY THE ASSESSEE TO BE HIS INCOME FALLING IN ANY PREVIOUS YEAR. 8.3 IN THE INSTANT CASE, THE FACTS ARE QUITE DISTIN CT AND PECULIAR. WHILE NO INCRIMINATING DOCUMENTS WERE RECORDED TO H AVE BEEN FOUND TO SUPPORT THE UNDISCLOSED INCOME EXCEPT AN E LABORATE AND CONDITIONAL STATEMENT OF ONE OF THE KEY PERSON OF T HE GROUP, THE IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 19 - DEPONENT OF THE STATEMENT HAS NEVER CLAIMED THE ENT RIES IN DISPUTE TO BE INCOME OF THE ASSESSEE PER SE. A BARE READING OF THE AFORESAID STATEMENT (SUPRA) REVEALS SEVERAL PECULIAR FEATURES ; (I) THE ASSESSEE MERELY AGREES TO PAY TAX ON THE SHARE CAPITAL WITHO UT ADMITTING THE SAME TO BE BESET WITH INGENUITY OF ANY SORT; (II) I N CONTRAST, THE ASSESSEE ASSERTS BEFORE THE AUTHORIZED OFFICER THAT THE SHARE CAPITAL WAS SUBSCRIBED BY THE GENUINE SHAREHOLDERS THROUGH BANKING CHANNELS AND THE SOURCE OF SUBSCRIPTION IS IMPECCAB LE AND BEYOND ANY DOUBT; (III) WHILE THE SHARE CAPITAL RAISED IS DULY EXPLAINED AND RECORDED IN BOOKS, THE ASSESSEE AGREED TO PAY TAX T HEREON WITH AN UNDERSTANDING THAT THERE WOULD BE NO PENAL CONSEQUE NCES ON PAYMENT OF TAX WITH INTEREST; (IV) THE STATEMENT WA S CLAIMED TO BE MADE TO BUY PEACE WITH RESPECT TO THE SOURCE OF SOU RCE THE SUBSCRIPTION WHICH MAY BE A MATTER OF DISPUTE; (V) THE DEPONENT OF THE STATEMENT NOWHERE ADMITTED ANY DISCLOSURE OF IN COME PER SE BUT SHOWED HIS WILLINGNESS TO PAY TAXES. IN SUBSTANCE, THE ASSESSEE EXPRESSED HIS WILLINGNESS TO PAY TAXES OUT OF GENUI NE CONSTRAINTS WITHOUT ADMITTING THE SHARE CAPITALS/ENTRIES TO BE EXPROPRIATORY. 8.4 IN THE CIRCUMSTANCES, WHERE THE STATEMENT UNDER S.132(4) OF THE ACT IS CLAIMED TO BE ABSTRACT AND DEVOID OF BEI NG INCULPATORY AND DOES NOT SUGGEST ANY APPARENT SUPPRESSION OF U NDISCLOSED INCOME, THE QUESTION ARISES AS TO WHETHER FIRSTLY, THE EXPLANATION 5A IS ATTRACTED IN THE ABSENCE OF ANY CLAIM FROM THE A SSESSEE THAT ENTRIES IN BOOKS REPRESENTS INCOME AND SECONDLY WHE THER THE AO, IN THE CIRCUMSTANCES, IS UNDER DUTY TO USE STATUTORY D ISCRETION IN FAVOUR OF THE ASSESSEE. AS NOTICED FROM THE SOLITARY MATE RIAL IN THE FORM OF STATEMENT, THE DEPONENT HAS NOWHERE CLAIMED THE EX ISTENCE OF UNDISCLOSED INCOME PER SE BUT HAS MERELY AGREED TO PAY TAX ETC. AND THUS EXPLANATION 5A, IN OUR VIEW, COULD NOT BE APPLIED. AT THIS IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 20 - JUNCTURE, WE SIMULTANEOUSLY NOTICE THE PHRASEOLOGY OF THE SECTION 271(1)(C) OF THE ACT WHEREBY THE AO MAY DIRECT TO THE ASSESSEE TO PAY BY WAY OF PENALTY SPECIFIED SUM IN THE CASE OF CERTAIN DEFAULTS INCLUDING CONCEALMENT OF INCOME ETC. OSTENSIBLY, T HE IMPOSITION OF PENALTY UNDER S.271(1)(C) OF THE ACT IS NOT AUTOMAT IC. IN THE CIRCUMSTANCES NARRATED ABOVE, THERE CAN BE NO MANNE R OF DOUBT THAT STATUTORY DISCRETION VESTED WITH THE AO OUGHT TO HA VE BEEN EXERCISED IN FAVOUR OF THE ASSESSEE AND NOT AGAINST THE ASSESSEE FOR SUCH UNPROVED INCOME. THE REVENUE COULD NOT LAY HA NDS ON ANY TANGIBLE MATERIAL EXCEPT CONDITIONAL AND TACIT AVER MENTS, WHICH CONFESSION IN ITSELF IS SEEN TO BE NON-ADMISSION OF ANY INGENUITY. IN THE CIRCUMSTANCES, WE HAVE NO HESITATION TO HOLD TH AT SUCH CONFESSION CANNOT BE THE BASIS FOR IMPOSITION OF ON EROUS PENALTY. 8.5 AN INCIDENTAL BUT A PERTINENT QUESTION WOULD AR ISE ALSO AS TO WHETHER A STATEMENT RECORDED UNDER S.132(4) OF THE ACT CAN BE TREATED AS EVIDENCE FOUND IN THE COURSE OF SEARCH PER SE. AS NOTED, EXCEPT FOR AN ORAL EVIDENCE UNDER S.132(4) OF THE A CT OF ABSTRACT NATURE WITH DISTINGUISHING FEATURES, NO INCRIMINATI NG MATERIAL HAS BEEN FOUND TO SUPPORT THE ASSERTIONS MADE THEREIN. TO REITERATE, THE ASSERTIONS MADE ARE HIGHLY QUALIFIED AND WITHOUT AN Y ADMISSIONS OF UNDISCLOSED INCOME PER SE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HARJEEV AGRAWAL [2016] 229 DLT 33 O RDER DATED 10/03/2016 HAS RULED THAT ORAL STATEMENTS ON A STA NDALONE BASIS WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCOVERED DURING SEARCH WOULD NOT EMPOWER THE AO TO MAKE ADDITIONS IN A BLO CK ASSESSMENT (WHICH IS PERI MATERIA WITH THE PRESENT SCHEME OF SEARCH ASSESSMENT UNDER S.153A OF THE ACT ). THE HONBLE DELHI HIGH COURT IN CIT VS. RAJPAL BHATIA (2011) 333 ITR 315 (DEL) HAS ALSO ECH OED THAT AN ORAL EVIDENCE IS NEITHER BOOKS OF ACCOUNTS ETC. OR AS SETS. IT WAS A IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 21 - DOCUMENT WHICH CAME TO BE CREATED OWING TO SEARCH A ND NOT FOUND IN THE COURSE OF SEARCH. IN THE CIRCUMSTANCES, WHE RE A JUDICIAL VIEW HAS BEEN TAKEN THAT ADDITION ITSELF ON SUCH STATEME NT IS WITHOUT AUTHORITY OF LAW, IT IS RATHER DIFFICULT TO APPRECI ATE THE ACTION OF THE REVENUE TOWARDS IMPOSITION OF PENALTY ON SUCH ADDIT IONS IN AFFIRMATIVE. NEEDLESS TO SAY, THE PENALTY PROVISIO N STANDS ON A VERY STRINGENT PEDESTAL QUA THE QUANTUM PROCEEDINGS. 8.6 HAVING REGARD TO PECULIAR FACTS OF THE CASE, TH E ACTION OF REVENUE IS CLEARLY BEREFT OF MERITS. CONSEQUENTLY, WE HOLD THE FIRST PROPOSITION FRAMED ABOVE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8.7 WE DO NOT CONSIDER IT EXPEDIENT TO ADDRESS OURS ELVES ON PROPOSITIONS (II) TO (IV) RAISED ON BEHALF OF THE A SSESSEE AT THIS STAGE IN THE LIGHT OF OUR OBSERVATIONS ON FIRST PROPOSITI ON ITSELF. 9. WE ARE THUS OF THE FIRM OPINION THAT ACTION OF T HE AO IN IMPOSING THE PENALTY IS NOT SUSTAINABLE IN LAW. TH E ORDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE AND THE AO IS DIREC TED TO DELETE THE PENALTY IMPOSED UNDER S.271(1)(C) OF THE ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 11. OTHER APPEALS IN IT(SS)A NOS. 129 TO 133, 135 & 136/AHD/2015 ALSO RESTS ON SIMILAR FACTS AND INVOLV ES IDENTICAL ISSUE TOWARDS IMPOSITION OF VARIED PENALTIES. IN PARITY WITH THE REASONINGS IN IT(SS)A NO. 134/AHD/2015 (SUPRA), ALL OTHER CAPTIONED APPEALS OF THE ASSESSEES CONCERNING AYS. 2006-07, 2007- IT(SS)A NOS.129 TO 136/AHD/15 [VASCROFT DESIGN PVT. LTD. & ORS.] - 22 - 08 AND 2008-09 ARE ALLOWED WITH CONSEQUENTIAL DIREC TIONS TO AO TO DELETE RESPECTIVE PENALTIES. 12. IN THE COMBINED RESULT, ALL APPEALS FILED BY CA PTIONED ASSESSEES ARE ALLOWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 15/02/2019 S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- & / REVENUE 2 / ASSESSEE ( ) *+ , / CONCERNED CIT 4 ,- / CIT (A) / 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7 289 : / GUARD FILE. BY ORDER / 4 / 5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 15/02/2 019