The ACIT, Central Circle-1(1), Ahmedabad V. Shri Rakesh Ramniklal Sheth, Ahmedabad

ITSSA 148/AHD/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2290 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-08-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIBHA BHALLA
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Additional evidence
• Section: 143(3); 133A; 153A; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, CENTRAL CIRCLE 1(1), ROOM NO. 305, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD (APPELLANT) VS SHRI RAKESH RAMNIKLAL SHETH, 16, ASHWAMEG BUNGLOWS - 2, 13 2 RING ROAD, AHMEDABAD - 382715 PAN: AFGPS4063Q (RESPONDENT) REVENUE BY : M R S. VIBHA BHALLA , SR. D . R. ASSESSEE BY: S H RI M.K. PATEL , A.R. DATE OF HEARING : 01 - 08 - 2 016 DATE OF PRONOUNCEMENT : 16 - 09 - 2 016 / ORDER P ER BENCH : - THIS IS A SET OF FIVE APPEALS FILED BY REVENUE. IT(SSA)A NO. 148/AHD/2012 AND ITA 688AHD/2013 FOR A Y 2003 - 04 ARISE FROM THE I T (SS) A NO . 148 / A HD/20 12 & ITA 68 8 TO 690 & 998/AHD/2013 A SSESSMENT YEAR 200 3 - 04, 04 - 05, 06 - 07 & 2008 - 09 I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 2 ORDER OF CIT (A) - I, AHMEDABAD DATED 06 - 01 - 2012 IN APPEAL NO. CIT(A) - I/CC - 1(1)/90/2010 - 11, IN PROCEEDINGS U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 IN SHORT THE ACT . ITA NOS. 688 TO 690/AHD/2012 FOR A.YS. 2003 - 04, 04 - 05 AND 20 06 - 07 ARE FILED AGAINST THE ORDER OF CIT(A) - I, AHMEDABAD DATED 06 - 12 - 2013, IN APPEAL NOS. CIT(A) - I/CC - 1(1)/40, 41 & 42 /20 10 - 11 IN PROCEEDINGS U/S. 271(1)(C) AND ITA NO. 998/AHD/2013 FOR A.Y. 2008 - 09 IS AGAINST THE ORDER OF THE CIT(A) - I, AHMEDABAD DATED 06 - 12 - 2012 IN APPEAL NO. CIT(A) - I/CC - 1(1)/50/2010 - 11, IN PROCEEDINGS U/S. 271AAA OF THE ACT. WE PROCEED ASSESSMENT YEAR - WI SE FOR THE SAKE OF CONVENIENCE AND BREVITY WITH THE CONSENT OF BOTH THE PARTIES. ASSESSMENT YEAR 2003 - 04 REVENUE S APPEAL IT(SS)A 148/AHD/2012 AND 688/AHD/2013 2. WE NOTICE AT THE OUTSET THAT THE REVENUE S FORMER APPEAL PERTAINS TO QUANTUM AND THE LATT ER ONE ARISES FROM CONSEQUENTIAL PENALTY PROCEEDINGS. ITS SOLE SUBSTANTIVE GROUND IN FORMER QUANTUM APPEAL IT(SS)A 148/AHD/2012 IS THAT THE CIT(A) HAS ERRED IN DELETING UNEXPLAINED CASH CREDIT ADDITION OF RS. 34,11,155/ - AFTER ADMITTING ADDITIONAL EVIDENC E IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES. LATTER APPEAL ITA 688/AHD/2013 SEEKS TO REVIVE SECTION 271(1)(C) PENALTY OF RS. 33,73,346/ - QUA THE QUANTUM ADDITION HEREINABOVE. I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 3 3. THE ASSESSEE IS A SHARE TRADER AS WELL AS A DEVELOPER. THE DEPARTM ENT CONDUCTED A SEARCH IN HIS CASE AND THAT OF OTHER PERSONS IN THE GROUP ON 22 - 04 - 2011. THE ASSESSEE DISCLOSED INCOME OF RS. 75 LACS IN COURSE THEREOF. THE ASSESSING OFFICER ISSUED SECTION U/S. 153A NOTICE ON 04 - 03 - 2009. THE ASSESSEE FILED RETURN ON 09 - 10 - 2009 STATING INCOME OF RS. 2,28,210/ - . THE ASSESSING OFFICER TOOK UP SCRUTINY. HE CAME ACROSS ASSESSEE S CASH BALANCES DEPOSITED IN BANK ACCOUNT. THE ASSESSEE APPEARS TO HAVE DECLARED CASH DEPOSITS; INCLUDING ALL THOSE IN THE NAMES OF HIS FAMILY MEM BERS, TO BE HIS INCOME. THIS INCLUDED THE IMPUGNED CASH BALANCE OF RS. 34,11,155/ - PERTAINING TO THE RELEVANT PREVIOUS YEAR. THE ASSESSING OFFICER ASKED FOR SOURCE THEREOF ALONG WITH RELEVANT DETAILS SUCH AS BANK ACCOUNTS, WITHDRAWALS ETC. HE QUOTED ASS ESSEE S FAILURE IN EXPLAINING THE SAME TO MAKE THE IMPUGNED ADDITION OF RS. 34,11,155/ - . 4. THE CIT(A) DELETES THE IMPUGNED ADDITION AS FOLLOWS: - 5. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS AND FINDINGS OF THE AO IN SUPPORT OF .THE IMPUGNED ADDIT ION AS WELL AS SUBMISSIONS AND ARGUMENTS OF THE APPELLANT. ON PERUSAL OF THE SAME, I FIND THAT THE APPELLANT HAS SHOWN THE OPENING CASH ON HAND BALANCE AGGREGATING TO RS.34,11.555/ - CLAIMED TO HAVE BEEN AVAILABLE WITH HIM AS ON 01/04/2002 IN THE NAME OF 4 PERSONS AS MENTIONED IN THE WRITTEN SUBMISSIONS. IT IS SEEN THAT THE TOTAL OPENING CAPITAL SHOWN BY THE APPELLANT IS RS.9.41 CRORES, WHICH IS THE NE T POSITION OF VARIOUS ASSETS AND LIABILITIES AS ON 31/03/2002 AND IS INCLUSIVE OF - CASH ON HAND BALANCE O F RS .34,11.555/ - WHICH IS IN DISPUTE. IT IS A MATTER OF FACT THAT EXCEPT THE SAID - CASH ON - HAND BALANCE, THE E NTIRE OPENING CAPITAL OF RS.9.41 CR ORES HAS BEEN - ACCEPTED VERBATIM BY THE AO WITHOUT ANY ADVERSE FINDING. IN AS MUCH AS CASH ON HAND BALANCE IS I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 4 CONCERN ED, THE AO HAS NOT ACCEPTED THE EXPLANATION OF THE APPELLANT ABOUT THE SOURCE OF THE SAME STATED TO HAVE BEEN GENERATED FROM BUSINESS ACTIVITIES CARRIED OUT IN EARLIER YEARS AS WELL AS CASH WITHDRAWALS MADE IN EARLIER YEARS FROM BANK ACCOUNTS OPERATED FOR HIS BUSINESS AND WHICH HAVE BEEN DISCLOSED FOR THE YEAR IN QUESTION WHILE FILING THE RETURN U/S. 153A OF THE ACT. THE ARGUMENT OF THE ID. AR THAT THE SAID FACT BEING ON RECORD AND VERIFIABLE TOO AND THAT IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECOR D BY THE AO, THE SOURCE OF OPENING CASH ON HAND BALANCE OUT OF SUCH WITHDRAWALS COULD NOT HAVE BEEN DOUBTED BY THE ASSESSING OFFICER HAS SUFFICIENT FORCE. I ALSO FIND THAT THE APPELLANT HAS OFFERED THE CASH DEPOSITED IN VARIOUS BANK ACCOUNTS AGGREGATING TO RS.11.59 CRORES IN 6 YEARS AS HIS INCOME. THE ARGUMENT OF THE ID. AR THAT KEEPING IN VIEW THE SAID FACT THERE WAS NO REASON ON PART OF THE APPELLANT NOT TO OFFER THE SAID - CASH ON HAND BALANCE AS INCOME INSTEAD OF SHOWING THE SAME AS OPENING BALANCE AND TH AT SINCE THE APPELLANT WAS WELL AWARE OF HIS FINANCIAL AFFAIRS AND REQUIREMENT OF HUGE CASH ON HAND BALANCE IN NORMAL COURSE OF HIS BUSINESS SHOWED THE SAME AS OPENING CASH ON HAND BALANCE AFTER DUE VERIFICATION OF THE RECORDS ALSO APPEARS TO BE PLAUSIBLE. IT IS ALSO A MATTER OF FACT THAT NO ATTEMPT HAS BEEN MADE TO VERIFY THE CONTENTIONS AND EXPLANATION FURNISHED BY THE APPELLANT IN SUPPORT OF SOURCE OF OPENING CASH ON HAND BALANCE AS BEIN G OUT OF WITHDRAWALS FROM BAN ACCOUNTS. ON PERUSAL OF THE EVIDENCES IN FORM OF BANK STATEMENTS AND CASH FLOW IT IS SEEN THAT THE APPELLANT WAS HAVING CASH ON HAND OF RS.50,86,000/ - AS ON 31/03/2002 AGAINST WHICH HE HAS CLAIMED RS.34,11,155/ - AS AN OPENING CASH ON HAND BALANCE. IN MY OPINION, THE FACT THAT THE APPELLANT HAS SHOWN OPENING CASH ON HAND BALANCE OF RS.34,11,555/ - AS AGAINST AVAILABLE AMOUNT OF RS.50,86,000/ - LENDS SOME CREDENCE TO THE GENUINENESS OF THE SAME. THAT APART, THE ARGUMENT OF THE ID. AR THAT THE DEGREE OF EVIDENCE FOR THE ENTIRE OPENING CAPITAL OF RS .9.41 CRORES INCLUSIVE OF OPENING CASH ON HAND BALANCE OF RS.34,1 1,155/ - IS THE SAME AND THE A.O. HAVING ACCEPTED THE FACTS/EXPLANATION IN RESPECT OF THE ENTIRE CAPITAL EXCEPT OPENING CASH ON HAND BALANCE, HE WAS NOT JUSTIFIED IN REJECTING THE EXPLANATION ONLY IN RESPECT OF OPENING CASH ON HAND BALANCE WITHOUT ANY OSTENSIBLE REASON ALSO HAS SUFFICIENT FORCE. ON PERUSAL OF THE RECORDS AND SUBMISSIONS OF THE APPELLANT, IT ALSO APPEARS THAT MAINTAINING HUGE CASH ON HAND BALANCE ON A YEAR TO YEAR BASIS IS ALSO IN THE NORMAL COURSE OF BUSINESS OF THE APPELLANT AND DOES NOT APPEAR TO BE AN AFTERTHOUGHT KEEPING IN VIEW THE FACT I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 5 THAT CASH OF RS.34,15,100/ - WAS FOUND DURING THE SEARCH FROM THE POSSESSION OF THE APPELLANT, OUT OF WHICH CASH OF RS.33,50,000/ - WAS SEIZE D. FURTHER, THE BALANCE SHEET OF THE APPELLANT AND OTHER PERSONS ATTACHED WITH THE RETURNS OF INCOME FILED IN PURSUANCE TO NOTICES ISSUED U/S 153A OF THE ACT ALSO SHOWS THE AVERAGE CASH ON HAND BALANCE MORE THAN RS. 33.00 LAKH ON YEAR TO YEAR BASIS. THUS, IN MY CONSIDERED OPINION THERE IS NO REASON TO DOUBT THE AVAILABILITY OF OPENING CASH ON HAND OF RS.34,11,555/ - SINCE IT IS ALSO ESTABLISHED FROM THE CASH FLOW STATEMENT BY WAY OF WITHDRAWAL FROM BANK ACCOUNTS AND CIRCUMSTANTIAL EVIDENCES THAT KEEPING HUGE CASH ON HAND BALANCE IS IN THE NORMAL COURSE OF BUSINESS OF THE APPELLANT. KEEPING IN VIEW THE ABOVE FACTS AND FINDINGS, THE ADDITION OF RS .34,11,555/ - IS HEREBY DELETED. 5. THE REVENUE S ONLY ARGUMENT BEFORE US THAT THE CIT(A) HAS DELETED THE IMPUGNED ADDITION AFTER ADMITTING ADDITIONAL EVIDENCE BY VIOLATING RULE 46A OF THE INCOME TAX RULES. WE PUT UP A SPECIFIC QUESTION ABOUT THIS ADDITIONAL EVIDENCE ADMITTED IN COURSE OF THE LOWER APPELLATE PROCEEDINGS. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE SAME IS IN THE NATURE OF ASSESSEE S BANK STATEMENT DEMONSTRATING THE IMPUGNED OPENING BALANCE TO BE LESS THAN THE CASH IN HAND OF RS. 50.86 LACS. WE FIND THAT THESE BANK STATEMENTS ALREADY FORM PART OF THE ASSESSMENT DULY REFLECTED IN ASSESSMENT ORDE R. THE REVENUE FAILS TO REBUT THIS FACTUAL POSITION. WE ACCORDINGLY FIND NO IRREGULARITY OR INFIRMITY IN THE LOWER APPELLATE FINDING EXTRACTED HEREINABOVE DELETING THE IMPUGNED ADDITION OF RS. 34,11,155/ - IN QUESTION. THE REVENUE S APPEAL IT(SS)A 148/AHD /2012 IS DECLINED. 6. WE COME TO THE REVENUE S LATTER APPEAL ITA 688/AHD/2013 SEEKING TO REVIVE SECTION 271(1)(C) PENALTY OF RS. 52,73,346/ - . WE I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 6 DEEM IT TO REFER BACK TO REVENUE S QUANTUM APPEAL HEREINABOVE. THE ASSESSEE HAD DECLARED A SUM OF RS. 75 L ACS DURING SEARCH. HE FILED RETURN ON 09 - 10 - 2009 STATING INCOME OF RS. 2,28,210/ - . THE ASSESSING OFFICER FRAMED ASSESSMENT U/S. 143(3) R.W.S. 153A OF THE ACT ADDING UNEXPLAINED CASH SUM OF RS. 34,11,155/ - (SUPRA). HE INITIATED THE IMPUGNED PENALTY PROCE EDINGS ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME QUA ABOVE GROSS INCOME OF RS. 1,09,11,155/ - I.E. RS. 75 LACS AND RS. 34, 11,155/ - . HE THEREAFTER LEVIED THE IMPUGNED PENALTY OF RS. 32,73,346/ - VIDE ORDER DATED 30 - 03 - 2011 AFT ER INVOKING SECTION 271(1)(C) EXPLANATION 5A OF THE ACT. 7. THE CIT(A) REVERSES ASSESSING OFFICER S ACTION BY OBSERVING THAT THE IMPUGNED PENALTY IS LEVIABLE QUA DIFFERENCE IN RETURNED AND ASSESSED INCOME ONLY WHICH IN THE INSTANT CASE IS ALREADY DELET ED IN QUANTUM PROCEEDINGS. HE FURTHER OBSERVES THAT THERE IS NO FINDING IN THE IMPUGNED PENALTY ORDER AS TO HOW THE ASSESSEE HAS CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME. 8. THE REVENUE STRONGLY ARGUES IN SUPPORT OF THE IMPUGNED PENALTY BY STATING THAT SECTION 271(1)(C) EXPLANATION 5A IS VERY MUCH APPLICABLE SINCE THE SEARCH IN QUESTION IS AFTER 01 - 06 - 2007 I.E. 22 - 04 - 2008. WE FIND NO REASON TO ACCEPT THE SAME. IT HAS COME ON RECORD THAT ASSESSEE S RETURN FILED IN SECTION 153A(1)(A) IS TO BE TREATED AS THE ONE U/S. 139 OF THE ACT. THE ASSESSING OFFICER HIMSELF ACCEPTED ASSESSEE S STAND IN ASSESSMENT ORDER EXCEPT TO THE TUNE I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 7 OF RS. 34,11,155/ - ADDED AS UNEXPLAINED CASH. THIS ADDITION STANDS DELETED HEREINABOVE IN QUANTUM PROCEEDINGS. THE NET EFFECT IS THAT THERE IS NO DIFFERENCE NOW BETWEEN RETURNED AND ASSESSED INCOME. WE QUOTE HON BLE JURISDICTIONAL HIGH COURT S DECISION KIRIT DAYABHAI PATEL VS. ACIT TAX APPEAL NOS. 1181, 1182 AND 1185/AHD/2010 DECIDED ON 03 - 12 - 2014 TO CONCLUDE THAT THE IMPUGNED PENALTY IS NOT LEVIABLE IN ABSENCE OF ANY DIFFERENCE BETWEEN RETURNED AND ASSESSED INCOME. THE REVENUE FAILS TO POINT OUT ANY EXCEPTION THEREIN. ITS LATTER APPEAL ITA 688/AHD/2013 ALSO MEETS THE SAME FATE. ASSESSMENT YEAR 2004 - 05 REVENUE S APPEA L 689/AHD/2013 9. THE REVENUE S SOLE SUBSTANTIVE GROUND IN THE INSTANT APPEAL CHALLENGES THE CIT(A) S ORDER DELETING SECTION 271(1)(C) PENALTY OF RS. 21,07,919/ - AS IMPOSED BY THE ASSESSING OFFICER BY QUOTING EXPLANATION 5A THERETO QUA ASSESSEE S DISCLO SURE OF RS. 70,26,398/ - DURING SEARCH. THERE IS NO DISPUTE THAT ASSESSEE S RETURNED INCOME OF R S. 1,31,030/ - STOOD ACCEPTED IN THE CONSEQUENTIAL ASSESSMENT. WE ACCORDINGLY FOLLOW OUR REASONING HEREINABOVE IN PRECEDING ASSESSMENT YEAR TO REJECT THIS SOLE SUBSTANTIVE GROUND IN ABSENCE OF ANY DISTINCTION ON FACTS OR LAW BEING POINTED OUT. ITA 689/AHD/2013 IS REJECTED. ASSESSMENT YEAR 2006 - 07 REVENUE S APPEAL ITA 690/AHD/2013 I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 8 10. THE REVENUE S SOLE SUBSTANT IVE GROUND PLEADS THAT THE CIT(A ) HAS ERRED IN DEL ETING SECTION 271(1)(C) OF RS. 3,00,46,530/ - AS IMPOSED BY THE ASSESSING OFFICER BY INVOKING EXPLANATION 5A IN RESPECT OF SEARCH DISCLOSURE OF RS. 10,01,55,110/ - . WE FIND HEREIN AS WELL THAT THE ASSESSEE FILED RETURNED ON 08 - 12 - 2006 I.E. BEFORE THE IMPUGN ED SEARCH STATING INCOME OF RS. 3,08,530/ - . HIS POST SEARCH RETURN U/S. 153A PROCEEDING CAME ON 09 - 10 - 2009 DECLARING INCOME OF RS. 36,55,450/ - . LEARNED DEPARTMENTAL REPRESENTATIVE BEFORE US SEEKS TO APPLY THE ABOVE STATED EXPLANATION STIPULATING A DEEMIN G FICTION OF CONCEALMENT. WE FIND THAT HON BLE JURISDICTIONAL HIGH COURT IN KIRIT DAYABHAI PATEL S CASE (SUPRA) HAS ALREADY REVERSED THIS TRIBUNAL S ORDER THEREBY RESTORING THAT OF THE CIT(A) HOLDING THAT A RETURN FILED PRIOR TO SEARCH IS AN IRRELEVANT ON E SINCE SECTION 153A(1)(A) ITSELF CONSIDERS A POST SEARCH RETURN TO BE FILED U/S. 139 OF THE ACT. THERE IS NO DISPUTE THAT ASSESSEE S POST SEARCH RETURN STANDS ACCEPTED IN POST SEARCH ASSESSMENT. WE ACCORDINGLY FIND NO REASON TO INTERFERE WITH THE CIT(A) S WELL REASONED ORDER. REVENUE S APPEAL ITA 690/AHD/2013 IS ACCORDINGLY DECLINED. ASSESSMENT YEAR 2008 - 09 REVENUE S APPEAL ITA 998/AHD/2013 11 . THIS REVENUE S APPEAL SEEKS TO REVIVE SECTION 271AAA PENALTY OF RS. 50,7 8, 988/ - . WE FIND THAT THE CIT(A) DISCUSSES ALL THE RELEVANT FACTS RIGHT FROM ASSESSMENT UP TO THE IMPUGNED PENALTY PROCEEDINGS AS UNDER: - I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 9 6. I HAVE GONE THROUGH THE PENALTY ORDER, IT IS SEEN THAT THE ASSESSING OFFICER HAS LEVIED PENALTY U/S.271AAA OF THE I.T. ACT, BASED ON CA SH DEPOSITS MADE IN THE ACCOUNTS OF VARIOUS PERSONS CONSISTING OF FAMILY MEMBERS AND EMPLOYEES AND ON ACCOUNT OF SHARE TRADING DONE IN THE NAME OF FAMILY MEMBERS 7 EMPLOY EES AMOUNTING TO RS.5,07,89,889/ - - . HE HAS LEVIED PENALTY @10% AMOUNTING TO RS.50,78,9 88/ - . IT IS SEEN IN THE ASSESSMENT ORDER DATED 30.09.2010, THE ASSESSING OFFICER HAD COMPUTED THE TOTAL INCOME OF THE APPELLANT AT ,RS,80,96,430/ - . THE RETURNED INCOME IN T HIS CASE WAS ALSO RS. 80,96,430/ - ONLY. THE ASSESSING OFFICER HAS OBSERVED THAT THE ITEMS OF INCOME WHICH WERE NOT DISCLOSED IN THE BOOKS OF ACCOUNTS EMERGED FROM THE DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS. THE AO HENCE HELD THAT THE INCOME OF RS. 5,07,89,889/ - FELL WITHIN THE MEANING OF 'UNDISCLOSED INCOME' AS PER THE PROVISIONS OF SECTION 271 AAA OF THE ACT. THE AO HAS ALSO OBSERVED THAT THE ASSESSEE HAD NOT ADMITTED THE UNDISCLOSED INCOME IN HIS STATEMENT U/S 132(4) NOR DID THE APPELLANT SPECIFY THE MANNER IN WHICH THIS INCOME WAS DERIVED. THIS FAC T IS MENTIONED BY THE AO IN THE ASSESSMENT ORDER WHERE THE AO HAS OBSERVED AS UNDER: 'IN THIS CASE AN INCOME OF RS.5,07,89,889/ - WAS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNTS AND SHARE TRADING DONE IN THE NAMES OF FAMILY MEMBERS/EMPLOYEES. THESE ITEMS OF INCOME WERE EMERGED FROM THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH. THEREFORE, TH E DISCLOSURE OF RS. 5,07,89,889/ - FALLS WITHIN THE MEANING OF 'UNDISCLOSED INCOME' AS PER THE PROVISIONS OF SECT ION 271 AAA. FURTHER, THE ASSESSEE DID NOT ADMIT THIS UNDISCLOSED INCOME IN ANY STATEMENTS U/S 132(4) NOR DID HE SPECIFY - THE MANNER IN WHICH THIS INCOME WAS DERIVED. THEREFORE, THE CASE OF THE ASSESSEE IS NOT COVERED BY THE EXCEPTION PROVIDED IN SUB - SECTIO N 2 OF SECTION 271 AAA. ACCORDINGLY, PENALTY U/S 271AAA(1) IS LEVIABLE. ' 6.1 PENALTY U/S.271 AAA OF THE LT. ACT IS LEVIABLE ONLY ON THE UNDISCLOSED INCOME WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND WHICH HAS NOT BEEN ADMITTED IN T HE STATEMENT U/S 134(4) AND THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS EARNED IS NOT SPECIFIED AND THE RETURN FILED SUBSEQUENTLY D OES NOT INCLUDE THE SAID INCOME AND THE TAXES ON THIS INCOME HAS NOT BEEN PAID. IN THIS CASE IT IS SEEN THAT THE APPELLANT HAD MADE A DISCLOSURE I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 10 OF THE INCOME NOT ACCOUNTED IN THE BOOKS O F ACCOUNTS DURING THE COURSE OF SEARCH OPERATIONS IN THE STATEMENT U/S 132(4) ON 22/04/2004. THIS FACT WAS REITERATED BY THE APPELLANT IN T HE STATEMENT RECORDED U/S 131(1 A) OF THE IT ACT ON 1 /5/2008 BY THE ADIT(INV) UNIT 1(2) AHMEDABAD. IN FACT THE ADLT(INV) HAS ASKED THE FOLLOWING QUESTION TO THE APPELLANT: 'Q3 IT IS KNOWN TO YOU THAT SEARCH AND SURVEY U/S 132 & 133A OF THE IT ACT WAS CARRIED OUT IN YOUR RESIDENTIAL AS WELL AS BUSINESS PRE MISES. DURING TH E COURSE OF SEARCH PROCEEDINGS YOU 'VE ADMITTED UNACCOUNTED INCOME OF RS. 5.20CR. DO YOU KNOW THIS & PLEASE CONFIRM. ' IN THE ANSWER TO THE ABOVE QUESTION, THE APPELLANT REPLIED AS UNDER : 'AS I CONFIRM THE DISCLOSURE MADE ON THE DAY OF S EARCH PROCEEDINGS, I.E. 22.04.2008' THE ABOVE QUESTION AND REPLY CLEARLY SHOWS THAT THE APPELLANT HAD MADE A DISCLOSURE OF THE INCOME IN THE STATEMENT RECORDED U/S 132(4) OF THE IT ACT 1961. THE CONTENTION OF THE AO TO THE CONTRARY IS NOT CORRECT. FURTHE R IN THE STATEMENT RECORDED U/S 131(1 A) OF THE IT ACT ON 1/5/2008 BY THE ADIT(INV) UNIT 1(2) AHMEDABAD THE FOLLOWING QUESTIONS WERE ALSO PUT TO THE APPELLANT: 'Q. 4 YOU HAVE SUBMITTED LETTER DATED 30.04.2008 WHEREIN YOU HAVE AGREED TO PAY TAXES ON THE PR OFIT EARNED BY THREE OF YOUR EMPLOYEES I.E. ASHWIN SHETH, RAJESH VASANI AND UPENDRASINH CHAVDAFROM THE SHARES TRADING ACTIVITY. PLEASE CONFIRM. A.4 YES, I HAVE SUBMITTED ABOVE MENTIONED LETTER. ALL THREE ARE MY EMPLOYEES. ENTIRE TRANSACTIONS IN SHARES EAR NED BY THEM ARE MANAGED AND FUNDED BY ME ONLY. THEY HAVE NO SOURCE OF INCOME EXCEPT SALARY. Q.5 YOU HAVE ADMITTED ON MONEY RECEIVED OF RS. 1.52 CRORES (ONE CRORE FIFTY TWO LAKHS) ON UNACCOUNTED INCOME. PLEASE CONFIRM. A. 5 YES, I CONFIRM ON MONEY RECEIVED FROM LAND DEVELOPMENT ACTIVITY TO THE TUNE OF RS. 1,52 CRORES AS MY UNACCOUNTED INCOME. I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 11 Q.6 YOU HAVE DISCLOSED UNACCOUNTED INCOME OF RS. 1.68 CRORES WHICH IS DEPOSITED IN THE BANK ACCOUNT OF SHRI ASHWIN SHETH, SHRI RAJESH VASANI AND SHRI UPE NDRA CHAVDA IN 'CASH'. PLEASE CONFIRM THE DISCLOSURE MADE BY YOU AND ALSO OWNERSHIP OF THE CASH DEPOSITED. A.6 YES, I CONFIRM ITS DISCLOSURE OF UNACCOUNTED INCOME OF RS. 1,68 CRORE DEPOSITED IN CASH BY THE ABOVE NAMED THREE PERSONS IN THEIR BANK ACCOU NTS. I AM THE OWNER OF CASH DEPOSITED IN THE BANK ACCOUNT. Q. 7 YOU HAVE ADMITTED UNACCOUNTED INCOME OF RS.2 CRORE WHICH IS SHOWN ON UNSECURED LOANS IN THE NAMES OF THREE PERSONS AS LISTED IN Q. 6. PLEASE CONFIRM. A. 7 YES, I HAVE SHOWN UNSECURED LOANS F ROM ABOVE THREE PERSONS IN MY BOOKS OF ACCOUNT OF MY BROTHER MR. KALPESH R. SHETH. I CONFIRM UNSECURED LOAN IS NOTHING BUT MY OWN UNACCOUNTED INCOME BROUGHT INTO MY BOOKS AND MY BROTHER'S BOOK. ' IN VIEW OF THE ABOVE QUESTIONS IT BECOMES ABUNDANTLY CLEAR THAT THE APPELLANT HAD VERY CLEARLY STATED THE MANNER IN WHICH SUCH UNACCOUNTED INCOME WAS EARNED. IT IS ALSO CLEAR THAT THE ENTIRE SHARE TRADING DONE IN THE NAMES OF THE FAMILY MEMBERS AND EMPLOYEES AS WELL AS THE CASH DEPOSITED IN THE ACCOUNTS IN THE NA MES OF THE FAMILY MEMBERS AND EMPLOYEES WERE ALSO OWNED UP BY THE APPELLANT. IT IS ALSO SEEN THAT THE APPELLANT HAD FILED A RETURN OF INCOME INCORPORATING THE ABOVE DISCLOSURES BECAUSE THE AO HAS NOT MADE ANY ADDITION WHATSOEVER TO THE RETURNED INCOME OF T HE APPELLANT. THIS FACT IS OBVIOUS BECAUSE THE ASSESSING OFFICER HAD COMPUTED THE TOTAL I NCOME OF THE APPELLANT AT RS.80,96, 430/ - AND THE RETURNED INCOME IN T HIS CASE WAS ALSO RS. 80,96,430/ - ONLY. 5.2 THUS, IT IS NOT CLEAR HOW OR WHY THE AO HAS TREA TED AN AMOUNT OF RS.5,07,89,889/ - AS CONCEALED INCOME OF THE APPELLANT. NO MENTION ABOUT HOW THE CONCEALMENT HAS OCCURRED IS MENTIONED IN THE PENALTY ORDER. IN FACT THE AO HAS MENTIONED FACTS REGARDING THE APPELLANT NOT MAKING A DISCLOSURE OF THE UNACCOUNTED I NCOME IN THE STATEMENT U/S 132(4) AND THE APPELLANT DID NOT SPECIFY THE MANNER IN I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 12 WHICH THIS INCOME WAS' DERIVED IS NOT CORRECT. AS NARRATED IN THE PARA ABOVE, NOT ONLY THE APPELLANT HAD MADE THE DISCLOSURE OF THE INCOME BUT HAD ALSO SPECIFIED TH E MANNER I N WHICH THE SAME WAS EARNED. THE APPELLANT HAD ALSO FILED A RETURN OF INCOME INCORPORATING THE ABOVE DISCLOSURE BECAUSE THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF THE UNDISCLOSED INCOME. THE APPELLANT HAD ALSO PAID THE SELF ASSESSMENT TAX ON THE RETUR NED INCOME. THUS THE APPELLANT HAD PAID T AXES ON THE AMOUNTS DISCLOSED. 6. PENALTY U/S. 271AAA OF THE I.T. ACT IS LEVIABLE ONLY IF IT IS NOT COVERED BY THE EXCEPTION PROVIDED IN SUB - SECTION 2 OF SECTION 271AAA. IN THIS CASE IT IS SEEN THAT THE APPELLANT HAD FULFILLED ALL THE CONDITIONS REQUIRED AS PER THE EXCEPTION PROVIDED IN SUB SECTION 2 OF SECTION 271AAA. IN VIEW OF THE ABOVE, NO PENALTY U/S.271AAA OF THE I.T. ACT IS LEVIABLE IN THIS CASE. PENALTY LEVIED AT RS.50,78,988/ - IS HENCE CANCELLED. 12 . T HE REVENUE STRONGLY ARGUES IN SUPPORT OF THE IMPUGNED PENALTY. LD. DEPARTMENTAL REPRESENTATIVE HOWEVER FAILS TO REBUT THE CIT(A) S FINDINGS ELABORATELY DISCUSSING THE ENTIRE EVIDENCE ON RECORD IN CONCLUDING THAT THE ASSESSEE SATISFIES ALL THE THREE NECESS ARY CONDITIONS OF SECTION 271AAA(2)(I TO III) IMMUNITY OF ADMISSION OF UNDISCLOSED INCOME FOLLOWED BY SPECIFYING THE MANNER OF DERIVING THE SAME ALONG WITH SUBSTANTIATION AND PAYMENT OF TAXES TOGETHER WITH INTEREST THEREUPON. WE HAVE ALREADY EXTRACTED THE LOWER APPELLATE FINDINGS IN PRECEDING PARA QUOTING THE RELEVANT EVIDENCE TO THIS EFFECT. THE SAME GO UN - REBUTTED DURING THE COURSE OF HEARING. WE ACCORDINGLY CONCLUDE THAT THE CIT(A) HAS RIGHTLY DELETED THE IMPUGNED SECTION 271AAA PENALTY UNDER CHALLENG E. REVENUE S APPEAL ITA 998/AHD/2013 F AILS. I .T(SS) A NO. 148 /AHD/20 12 & ITA 688 TO690 & 998/AHD/2013 PAGE NO ACIT VS. SHRI RAKESH RAMNIKLAL SHETH 13 13 . THESE FIVE REVENUE S APPEALS ARE ACCORDINGLY DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 16 - 09 - 201 6 SD/ - SD/ - ( AMARJIT SINGH ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 16 /09 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,