M/s. Black Diamond Trading Co., Ahmedabad V. The ACIT, Circle-11, Ahmedabad

ITSSA 246/AHD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2859 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-11-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 06-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Keywords: Difference of opinion
• Section: 143(3); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ IT(SS)A.NO.197/AHD/2014 / ASSTT. YEAR: 2002-2003 ITA NO.1751/AHD/2014 ASSTT.YEAR : 2007-08 IT(SS)A.NO.246 TO 250/AHD/2014 ASSTT.YEARS : 2001-02, 2001-02, 2004-05 TO 2005-06 M/S.BLACK DIAMOND TRADING CO. 403, MAHARANA PRATAP BUILDING OPP: MAHAKANT ELLISBRIDGE AHMEDABAD 380 006. PAN : AABFB 5940 P VS ACIT, CIR.11 AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI TUSHAR P. HEMANI, AR REVENUE BY : SHRI ANTONY PARIATH, SR.DR / DATE OF HEARING : 10/11/2016 / DATE OF PRONOUNCEMENT: 16/01/2017 $%/ O R D E R PRESENT SEVEN APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SEPARATE ORDERS OF THE LD.CIT(A)-XVI, AHMED ABAD PASSED IN THE ASSTT.YEARS 2001-02 TO 2007-08. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE FOLLOWING PENALTY UNDER SECTION 271( 1)(C) OF THE INCOME TAX ACT, 1961. ASSTT.YEAR AMOUNT (RS.) ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 2 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CARRIED OUT ALONG WITH GROUP CASES OF DOSANI ON 4 .8.2006. IN ORDER TO GIVE LOGICAL END TO THE PROCEEDINGS, NOTICE UNDER SECTIO N 153A WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTIC E, RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 7.8.2008 DECLARING UNDISCL OSED INCOME. AN ASSESSMENT ORDER WAS PASSED ON 29.2.008 UNDER SECTI ON 153A R.W.S. 143(3) OF THE INCOME TAX ACT. DURING THE COURSE OF SEARCH, F OUR KACCHA BOOKS INVENTORISED AS ANNEXURE A/2, A/3, A/5 AND A/8 FOUN D AND SEIZED. IN THESE NOTE BOOKS ASSESSEE HAS RECORDED CASH TRANSACTION O N DAY-TO-DAY BASIS. ON THE BASIS OF SEIZED MATERIAL, ASSESSEE HAS COMPUTED ITS UNACCOUNTED SALES, AND OFFERED THE INCOME AT 5% OF THE UNACCOUNTED SALES I N ALL THESE ASSESSMENT YEARS. DURING THE QUANTUM PROCEEDINGS, CERTAIN DET AILS EXHIBITING INCOME OFFERED BY THE ASSESSEE, INCOME DETERMINED BY THE A O HAVE BEEN SUBMITTED IN TABULAR FORM. THESE WERE NOTICED BY THE ITAT WHILE DECIDING QUANTUM APPEALS OF THE ASSESSEE. COPY OF THE TRIBUNALS OR DER IS PLACED AT PAGE NO.63 OF THE PAPER BOOK. IN ORDER TO APPRECIATE CONTROVE RSY IN MORE SCIENTIFIC MANNER, I DEEM IT APPROPRIATE TO TAKE NOTE OF THESE DETAILS: 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST A PPELLATE AUTHORITY, SINCE HE WAS DECIDING THE APPEALS OF ALL THE YEARS, THEREFORE, A CONSOLIDATED CHART OF THE PROFIT RATIO AS CALCULA TED BY THE AO, VIZ-A- 2001-02 6,30,000/- 2002-03 11,40,000/- 2003-04 9,21,000/- 2004-05 5,97,000/- 2005-06 5,97,000/- 2006-07 5,23,000/- 2007-08 12,200/- ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 3 VIZ, 5% PROFIT SHOWN BY THE ASSESSEE, WAS COMPARED IN THE FOLLOWING MANNER: A. YS. INCOME OFFERED BY ASSESSEE I.E. @ 5% OF THE TOTAL OF RECEIPTS IN SEIZED DIARIES (RS.) INCOME DETERMINED BY AO AS PER SEIZED RECORDS / DIARIES RS. PROFIT RATIO AS PERAO'S CALCULATION 2001-02 14,85,000 16.15.803 5.44% 2002-03 17,86,000 -10,25,499 -2.87% 2003-04 14,58,000 21,67,076 7.43% 2004-05 16,63,554 26,54,974 10.51% 2005-06 16,63,554 5,19,318 7.90% 2006-07 15,53,775 25,01,070 70.25% 2007-08 0 -21,12,276 -2.41% 96,09,883 63,20,466 AVERAGE PROFIT RATIO 5. 17% 3.1 IN ADDITION TO THE ABOVE CHART, LEARNED CIT(A) HAS ALSO COMPARED THE INCOME DISCLOSED BY THE ASSESSEE WITH THE INCOM E DECLARED AS PER THE ORIGINAL RETURN. A.Y. ORIGINAL RETURNED INCOME 5% INCOME ON CREDIT ENTRIES IN SEIZED RECORDS DECLARED BY APPELLANT OTHER UN- ACCOUNTE D INCOMES DISCLOSED IN RETURNS INCOME RETURNED U/S. 153 A ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 4 2001 -02 2,97,090 14,85,000 1.00,000 18,82,090 2002-03 2,83,264 17,86.000 1,25,000 21,94,264 2003-04 3,29,700 14,58,000 4,50,000 22,37,700 2004-05 6,27,513 16,63,554 1,50,000 24,41,067 2005-06 7,48,977 16,63,553 1,50,000 25,62,530 2006-07 13,52,179 15,53,775 1,50,000 30,55,954 2007 -08 0 0 0 0 TOTAL 36,38,723 96,09,882 11,25,000 1,43,73,605 4. IN OTHER WORDS, THE ASSESSEE HAS OFFERED INCOME AT 5% OF THE TOTAL RECEIPTS COMPUTED ON THE BASIS OF ALLEGED SEIZED NO TE BOOKS. THE AO HAS ESTIMATED INCOME AT 5.17%. WHEN THE DISPUTE TRAVEL LED UPTO THE TRIBUNAL, INCOME ULTIMATELY SCALED DOWN TO 5.2% OF THE TOTAL RECEIPTS IN THE ASSTT.YEARS 2001-02 TO 2003-04. IN OTHER YEARS, NO APPEAL WAS PREFERRED BY THE ASSESSEE. ACCORDINGLY, INCOME OF THE ASSESSEE HAS BEEN DETERM INED. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY F OR THE RESPECTIVE ASSESSMENT YEARS. 5. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IN THE FIRST FOLD OF SUBMISSIONS , THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT INCOME OF THE ASSESSEE HAS BEEN ESTIMATED, AND THEREFORE, NO PENALTY OUGHT TO BE IMPOSED ON THE AD DITIONS WHICH WERE MADE ON AN ESTIMATE BASIS. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDERS OF THE LD.AO. ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 5 7. ON DUE CONSIDERATION OF THE FIRST FOLD OF SUBMIS SION, I DO NOT FIND ANY MERIT IN THIS CONTENTION, BECAUSE HERE THE INCOME W AS NOT ESTIMATED AFTER REJECTING BOOKS OF ACCOUNTS OR AFTER REJECTING STAN D OF THE ASSESSEE. THE ASSESSEE WAS INDULGING IN CASH TRANSACTION AND WAS NOT RECORDING ITS BUSINESS TRANSACTION IN THE BOOKS OF ACCOUNTS, WHICH WERE CO NSIDERED FOR COMPUTING TOTAL INCOME FOR THE CONCERNED YEARS. THIS TYPE OF AFFAIRS WERE UNEARTHED BY THE DEPARTMENT ON THE BASIS OF A SEARCH ACTION. TH E COMPUTATION OF INCOME BY ESTIMATION IN SUCH CASE IS A COMPULSION FOR DETERMI NING TAXABLE INCOME. IT IS NOT ON THE BASIS OF SOME DIFFERENCE OF OPINION BETW EEN THE ASSESSEE AND THE DEPARTMENT. IF THIS TYPE OF ARGUMENT IS BEING ACCE PTED, THEN IT WILL BE A PREMIUM TO AN ASSESSEE WHO WAS INDULGING IN CARRYIN G OUT ITS BUSINESS OUT OF BOOKS. IN OTHER WORDS, BY NOT RECORDING ANY TRANS ACTION IN THE BOOKS OF ACCOUNTS, THE ASSESSEE COULD ASSUME THAT ATLEAST IT COULD ABSOLVE ITSELF FROM LEVY OF PENALTY BECAUSE ITS INCOME WOULD BE ESTIMAT ED IF IT WILL BE CAUGHT IN THESE ACTIVITIES. THIS IS NOT A CASE WHERE THE AO HAS REJECTED BOOK RESULT ON ANY DIFFERENCE OF OPINION BETWEEN HIM AND THE ASSES SEE. THEREFORE, THIS FOLD OF CONTENTION IS REJECTED. 8. IN THE NEXT FOLD OF SUBMISSION, IT WAS PLEADED T HAT PENALTY HAS BEEN IMPOSED WITH HELP OF EXPLANATION -5 OF SECTION 271(1)(C) OF THE ACT. THIS EXPLANATION DOES NOT COVER THE INCOME UNEARTHED ON THE BASIS O F ENTRIES FOUND IN SOME DIARY OR NOTE BOOK. ACCORDING TO THE LD.CO UNSEL FOR THE ASSESSEE THIS EXPLANATION IS APPLICABLE, IF DURING THE COURSE OF SEARCH ANY MONEY, BULLION, JEWELLERY OR ASSET WAS FOUND. FOR BUTTRESSING HIS CONTENTION, HE RELIED UPON JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT R ENDERED IN THE CASE OF PR.CIT VS. SHRI JIGNESH VENILLA KORALWALA, TAX APPE AL NO.976 OF 2015. HE PLACED ON RECORD COPY OF THE JUDGMENT. THE LD.DR W AS UNABLE TO CONTROVERT THIS CONTENTION. ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 6 9. ON DUE CONSIDERATION OF THE ABOVE CONTENTIONS AN D THE JUDGMENT OF THE HONBLE HIGH COURT, I AM OF THE VIEW THAT SUB-CLAUS E (III) OF SECTION 271(1)(C) PROVIDES PROCEDURE/MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEMPLATES THAT THE ASSESSEE WOULD BE DIRECTED TO PAY A SUM IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, WHICH WAS NOT LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REAS ONS OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. IN THE PRESENT APPEALS, CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME IS BEING CONCEIVED ON THE BASIS OF NOTING FOUND IN THE KACCHA BOOKS FOUND DURING THE COURSE OF SEARCH EXHIBITING THAT THE ASSESSEE HAD M ADE UNACCOUNTED PURCHASES, UNACCOUNTED SALES. EXPLANATION 5 APPENDED TO SECTION 271(1)(C) IS BEING USED BY THE REVENUE AUTHORITIES FOR HABOURING A BELIEF OF EVASION OF TAX ON THE BASIS OF CONCEALMENT. HONBLE HIGH COURT IN THE CASE OF PR.CIT VS. SHRI JIGNESH VENILAL KORALWALA (SUPRA) HAS PROPOUND ED THAT THIS EXPLANATION NOWHERE REFERS TO ANY INCOME BASED ON AN ENTRY IN A NY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTION. IN OTHER WORDS, UN LESS DURING THE COURSE OF SEARCH, THE ASSESSEE WAS FOUND TO BE OWNER OF ANY M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE THINGS OR ARTICLES, EXPLANATION 5 WOULD NOT APPLY. THUS, IT EMERGES OUT THAT CONCEPT OF CONCEALMENT IN THE PRES ENT APPEALS IS BEING CONCEIVED ON THE BASIS OF ENTRIES FOUND IN KACCHA BOOKS. THIS INFERENCE HAS BEEN DRAWN ON THE BASIS OF EXPLANATION 5. IF THE EXPLANATION 5 IS TAKEN OUT AND HELD AS NOT APPLICABLE, THEN IT WOULD REVEAL TH AT THE DEPARTMENT DOES NOT HAVE ANY MATERIAL HARBOR A BELIEF THAT INCOME HAS B EEN CONCEALED. THIS WAS A LACUNAE IN EXPLANATION 5 AND THAT IS THE REASON THAT AFTER 1.6.2007 A NEW EXPLANATION I.E. EXPLANATION -5A HAS BEEN APPENDED WHICH INFERS THE INCOME EMBEDDED IN THE ENTRIES FOUND IN THE NOTE BOOKS DUR ING THE COURSE OF SEARCH. ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 7 IT IS IMPORTANT TO NOTE THE DISCUSSION MADE BY THE HONBLE COURT ON THIS ISSUE. IT READS AS UNDER: 4.ON THE OTHER HAND, LEARNED COUNSEL SHRI HIMANI OP POSED THE APPEAL CONTENDING THAT THE TRIBUNAL HAS RELIED ON THE DECI SION OF GUJARAT HIGH COURT IN CASE OF KIRIT DAHYABHAI PATEL V. ASSIST ANT COMMISSIONER OF INCOME TAX [TAX APPEAL NO.1181/2010 DECIDED ON 3 .12.2014].HE FURTHER SUBMITTED THAT IN ANY CASE THE ADDITIONAL I NCOME PERTAINED TO THE ASSESSEE'S ON MONEY RECEIPTS AND WOULD NO T BE COVERED BY EXPLANATION 5. WHEN EXPLANATION 5 ITSELF DID NOT APPLY, THE QUESTION OF GRANTING IMMUNITY UPON FULFILMENT OF CONDITIONS CONTAINED THEREIN WOULD NOT ARISE. 5. EXPLANATION 5 TO SECTION 271(1)(C) READS AS UNDE R : '[EXPLANATION 5. WHERE IN THE COURSE OF A SEARCH UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007, THE A SSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFE RRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAV E BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INC OME, (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 RE TURN HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) FOR ANY PREVIOUS YEAR WHICH IS 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 SUBSECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, [ UNLESS, (1) SUCH INCOME IS, OR THE TRANSACTIONS RESU LTING IN SUCH INCOME ARE RECORDED, (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE DATE OF THE SEARCH; AND ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 8 (II) IN A CASE FALLING UNDER CLAUSE ( B), ON OF BEFORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INC OME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE P RINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COM MISSIONER OR COMMISSIONER BEFORE THE SAID DATE; OR (2)HE, IN THE COURSE OF THE SEARCH, MAKES A STATEME NT UNDER SUBSECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER H IS CONTROL HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NO T BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BE FORE THE EXPIRY OF TIME SPECIFIED IN SUBSECTION (1) OF SECTION 139, AND ALS O SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCO ME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTER EST, IF ANY, IN RESPECT OF SUCH INCOME.] 6. THIS SECTION APPLIES TO SEARCH CARRIED OUT BEFOR E 1 JUNE, ST 2007. IN SUCH A CASE, IF THE ASSESSEE WAS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSET S HAVE BEEN ACQUIRED BY UTILISING HIS INCOME, FOR T HE PREVIOUS YEAR ENDED BEFORE THE DATE OF THE SEARCH B UT THE RETURN OF INCOME HAS NOT BEEN FILED BEFORE THE SAID DATE OR, IF FILED, SUCH INCOME HAS NOT BEEN DISCLOSED, THEN, NOTWI THSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN THE RETUR N OF INCOME FURNISHED AFTER THE DATE OF THE SEARCH, THE ASSESSEE WOULD BE LIABLE TO PENALTY, UNLESS UPON FULFILLMENT OF CONDITIONS CONTAINED IN CLAUSES (1) AND (2) OF THE SAID EXPLANATION , THE ASSESSEE CAN CLAIM IMMUNITY. THIS EXPLANATION NOWHERE REFE RS TO ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR O THER DOCUMENTS OR TRANSACTIONS. IN OTHER WORDS, THEREFORE, UNLESS DUR ING THE SEARCH, THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, EXPLANATI ON 5 WOULD NOT APPLY. THIS BECOMES CLEAR WHEN THE LEGISLATURE FOR THE PERIOD POST 1ST JUNE, 2007 HAS ENACTED EXPLANATION 5A WHI CH READS AS UNDER : '[EXPLANATION 5A. WHERE IN THE COURSE OF A SEARCH I NITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE , 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 9 (A) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE B EEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HI S INCOME FOR ANY PREVIOUS YEAR; OR (B) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (W HOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS Y EAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF I NCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS N OT FILED THE RETURN, 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 SUBSECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' 7. IN TERMS OF EXPLANATION 5A, THUS EVE N IN A CASE WHERE DURING THE SEARCH, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHE R DOCUMENTS OR TRANSACTIONS, THE PENALTY WOULD ATTACH, PROVIDE D OTHER REQUIREMENTS ARE FULFILLED. THIS CLAUSE WAS NOT THERE IN ORIGINAL EXPLANATION 5 WHICH APPLIED TILL 1ST JUNE 2007 AND HAS THE REFORE, TO BE APPLIED IN THE PRESENT CASE. 8. WE HAVE PERUSED THE ORDER OF ASSESSMENT AND FOUN D THAT ENTIRE AMOUNT OF RS.2.06 CRORES PERTAINED TO ONM ONEY RECEIPTS BY THE ASSESSEE. THERE WAS NO MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OF SUCH VALUE FOUND DURING THE SEARCH AND THE ADDITIONAL INCOME WA S BASED ON MATERIALS COLLECTED DURING THE SEARCH. PRIOR TO 1ST JUNE 2 007, THEREFORE, BY APPLYING EXPLANATION 5, PENALTY COULD NOT HA VE BEEN LEVIED. LOOKED FROM THIS ANGLE, WE DO NOT FIND ANY ERROR IN THE VIEW OF THE TRIBUNAL. FOR THE REASONS SOMEWHAT DIFFERE NT FROM THOSE RECORDED BY THE TRIBUNAL, THEREFORE, THIS TAX APPEAL IS DISMISSED. ACIT VS. BLACK DIAMOND TRADING CO., (7 APPEALS) 10 9.WE SHALL ADDRESS TO THE REVENUE'S ANXIETY ABOUT T HE RATIO OF THIS COURT IN CASE OF KIRIT DAHYABHAI PATEL (SUPRA), I N AN APPROPRIATE CASE, IF THE SITUATION SO ARISES. 10. A PERUSAL OF THE ABOVE JUDGMENT WOULD INDICATE THAT IT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE I NCOME OF THE ASSESSEE HAS BEEN DETERMINED ON THE BASIS OF SEIZED MATERIAL FOU ND DURING THE COURSE OF SEARCH. THESE ENTRIES WERE FOUND IN K ATCHHA BOOK. HONBLE HIGH COURT HAS HELD THAT EXPLANATION 5 WOULD NOT BE APPLICABLE UNLESS DURING SEARCH, TH E ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION , JEWELLERY OR OTHER VALUABLE ARTICLE OR THING IS FOUND. NO SUCH THINGS WERE FOUND DURING THE COURSE OF SEARCH AND ADDITION WAS MADE ON THE BASIS OF NARRATIONS IN THE DIARY. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT, I ALLOW ALL THESE APPEALS AND DELETE PENALTI ES. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE COURT ON 16 TH JANUARY, 2017 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER