Shri Pankaj A.Shah, Baroda V. The ACIT.,Cent.Circle-2, Baroda

ITSSA 257/AHD/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8323 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-06-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 07-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Assessee Lawyers: BHAVIN MARFATIAAR
• Keywords: Search and seizure; Document seized; Initiation of penalty proceedings; Revised return; Documents seized; Reassessment proceedings
• Section: 80HHC; 153A; 27; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM IT(SS)A NOS.257 & 258/AHD/2011 (ASSESSMENT YEARS:-2003-04 & 2004-05) SHRI PANKAJ A SHAH, 8, ANAND SOCIETY, 103/104, OPAL SQUARE, ALKAPURI, BARODA V/S THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 2, AAYAKAR BHAVAN, RACE COURSE, BARODA PAN: ALNPS 3416 Q [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI BHAVIN MARFATIA,AR REVENUE BY:- SHRI A K PATEL, DR O R D E R A N PAHUJA: THESE TWO APPEALS BY THE ASSESSEE AGAINST A COMMO N ORDER DATED 19 TH JANUARY, 2011 OF THE LD. CIT(APPEALS)-IV, AHMEDABAD, FOR THE ASSESSMENT YEARS (AYS) 2003-04 & 2004-05, RAISE THE FOLLOWING GROUNDS :- [1] THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN FACT AND IN LAW IN PASSING THE ORDER EXPARTE. [2] THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN PASSING THE ORDER WITHOUT GIVING PROPER OPPO RTUNITY OF BEING HEARD. [3] THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFIC ER IN LEVYING PENALTY OF RS.1,50,000/- FOR AY 2003-04 & RS.3,05,000/- FOR A Y 2004-05 U/S 271(1)(C) OF THE ACT. [4] YOUR APPELLANT CRAVES A RIGHT TO ADD OR TO AMEN D, ALTER, SUBSTITUTE, DELETE OR WITHDRAW ALL OR ANY OF THE GROUNDS OF APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS. 18,24,350/- FOR THE AY 2003-04 WAS FI LED ON 28.11.2003 U/S 139 OF THE INCOME-TAX ACT, 1961 [HER EINAFTER REFERRED TO AS THE ACT] BY THE ASSESSEE, MANUFACTURING CHE MICALS IN THE NAME OF M/S STERLING CHEMICALS. FOR THE AY 2004-05, THE ASSESSEE FILED RETURN U/S 139 OF THE ACT DECLARING INCOME OF RS.20,27,080/-. SUBSEQUENTLY, A SEARCH U/S 132 OF THE ACT WAS CONDU CTED ON 30-08- 2 IT(SS)A NOS.257 & 258/AHD/2011 2005 IN THE PREMISES OF NITROCHEM GROUP, INCLUDING THE ASSESSEE. CONSEQUENTLY, A NOTICE U/S 153A WAS ISSUED TO THE A SSESSEE ON 31.7.2006.IN RESPONSE, THE ASSESSEE FILED RETURN DE CLARING INCOME OF RS.22,93,500/- FOR THE AY 2003-04 AND RS.29,34,660/ - FOR THE AY 2004-05 ON 5.2.2007. THE ASSESSMENT WAS COMPLETED U/S 153A(B) OF THE ACT ON AN INCOME OF RS.23,58,378/- FOR THE A Y 2003-04 AND RS.29,83,293/- FOR THE AY 2004-05 VIDE ORDERS DATED 31.12.2007.IN THE COMPUTATION OF INCOME ATTACHED WITH THE RETURN FILED ON 5.2.2007 FOR THE AY 2003-04 , THE ASSESSEE OFFERED ADDITIONA L INCOME UNDER THE FOLLOWING HEADS :- [IN RS.] EXPENSES ADDED BACK 3,61,000/- PROCESSING CHARGES ADDED BACK 3,08,213/- ---------------- TOTAL 6,69,213/- LIKEWISE IN THE RETURN FOR THE AY 2004-05, THE ASSE SSEE OFFERED FOLLOWING ADDITIONAL INCOME: [IN RS.] EXPENSES ADDED BACK 3,80,000/- STOCK VARIATION ADDED BACK 2,42,99 8/- BORIC ACID CONSUMPTION 4,05,000/- ---------------- TOTAL RS.10,27,998/- HOWEVER, THE EFFECTIVE DIFFERENCE BETWEEN THE INCO ME DECLARED IN THE RETURN FILED U/S 139(1) AND THAT FILED IN RESPO NSE TO THE NOTICE U/S 153A OF THE ACT FOR THE AY 2003-04 WAS RS.4,69,150/ -AND FOR THE AY 2004-05-RS.9,07,580/- DUE TO CLAIM OF DEDUCTION U/S 80HHC OF THE ACT BY THE ASSESSEE. SINCE THE ASSESSEE DISCLOSED A DDITIONAL INCOME ONLY IN CONSEQUENCE OF SEARCH ,THE ASSESSING OFFICER[AO IN SHORT] INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE ASSESSEE HAVING NOT DISCLOSED THE AFORESAID AMOUNT OF RS.4,69,150/- IN THE ORIGINAL RETURN FILED FOR THE AY 2003-04 AND RS.9,07,580/- IN THE RETURN FOR THE AY 2004-05. IN RESPONSE TO A SHOWCAUSE NOTICE DATED 27-08-2009 ISSUED U/S 274 RE AD WITH 3 IT(SS)A NOS.257 & 258/AHD/2011 SECTION 271(1)(C) OF THE ACT, THE ASSESSEE REPLIED THAT WAS NO CONCEALMENT AS ADDITIONAL INCOME WAS OFFERED TO BUY PEACE AND TO AVOID LITIGATION WITH AN UNDERSTANDING THAT NO PENALTY WO ULD BE LEVIED IN RESPECT OF THE ADDITIONAL INCOME OFFERED IN THE SEARCH PROCEEDINGS . SINCE THE ADDITIONAL INCOME HAD BEEN ACCEPTED WITHOUT MAKING ANY FURTHER INQUIR Y , PENALTY U/S. 271(1(C) COULD NOT BE LEVIED , THE ASSESSEE PLEADED IN THE LIGHT OF DECISION IN THE CASE OF CIT VS. SURESH CHAND BANSAL (2000) 22 DTR 1 (CAL). HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND IMPOSED A PENALTY OF RS.1,50,000/- U/S 271(1)(C) OF THE ACT IN THE AY 2003-04 ON ACCO UNT OF TAX SOUGHT TO BE EVADED ON THE AFORESAID AMOUNT OF RS.4,69,150/- AND RS.3,05,000/- IN THE AY 2004-05 ON ACCOUNT OF TAX SOUGHT TO BE EVADED ON T HE AFORESAID AMOUNT OF RS.9,07,580/- FOR CONCEALING THE PARTICULARS OF INC OME & FURNISHING INACCURATE PARTICULARS THEREOF, RELYING ,INTER ALIA , ON THE DECISIONS IN THE CASE(S) OF KIRIT DAHYABHAI PATEL &RAJESH A PATE L, 121 ITD 159(AHD.), UNION OF INDIA V/S DHARMENDRA TEXTILE PROCESSORS & ORS, 306 ITR 277 (SC) ; CIT V/S MUSSADILAL RAMBHAROSE 165ITR 142(SC); CIT V/S K . R. SADAYAPPAN, 185 ITR 49(SC) AND K. P. MADHUSUDANAN V/S CIT 251 ITR 99(SC). 3. ON APPEAL, THE LEARNED CIT(A), VIDE HIS COMMON O RDER DATED 19.1.20011 UPHELD THE LEVY OF PENALTY FOR BOTH THES E YEARS IN THE FOLLOWING MANNER:- 2.0 THE GROUNDS OF APPEALS TAKEN IN BOTH THE APPEA L MEMOS ARE RELATING TO CHALLENGING THE LEVY OF PENALTIES OF RS .1,50.000/- AND RS.3.05.000/- RESPECTIVELY FOR THE AY 2003-04 AND A Y 2004-05. AS PER FACTS OF THE CASE, A SEARCH WAS CARRIED OUT IN THE CASE ON 30.08.2005. THE APPELLANT HAD FILED RETURNS IN RESPONSE TO NOTICES U/S 153A OF THE ACT. CERTAIN ADDITIONAL INCOME WAS DISCLOSED BY THE APPE LLANT IN THE SAID RETURNS FILED IN RESPONSE TO SUCH NOTICES U/S 153A OF THE ACT. THE PENALTIES WERE LEVIED BY THE ASSESSING OFFICER BY TREATING TH E ADDITIONAL INCOME AS CONCEALED INCOME DISCLOSED IN THE 153A RETURNS FOR RS.4,69,150/- AND RS.9,07,580/- RESPECTIVELY FOR BOTH THE YEARS UNDER CONSIDERATION. 2.1 I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASES AS MENTIONED IN THE PENALTY ORDERS. I HAD DELETED PENALTIES LEVIED BY THE ASSESSING OFFICERS OF CENTRAL CIRCLES RAJKOT AND BARODA ON ADDITIONAL INCOME VOLUNTARILY DISCLOSED IN THE RETURNS FILED AFTER SEARCH BY FOLL OWING THE DECISION OF THE HON'BLE RAJKOT TRIBUNAL, IN THE CASE OF DY. CIT VS. M/S BALAJI MULTIFLEX P. 4 IT(SS)A NOS.257 & 258/AHD/2011 LTD. HOWEVER, THE DECISION OF THE HON'BLE RAJKOT TR IBUNAL IS APPLICABLE IN A CASE WHERE THE DECISION OF THE HON'BLE AHMEDABAD TR IBUNAL IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [2009] 121 ITD I59 ( AHD.)(TM) IS DISTINGUISHABLE OP FACTS. SINCE, THE APPELLANT HAD NOT TURN UP NOR SOUGHT AN ADJOURNMENT, IT COULD NOT BE CONFIRMED WHETHER T HE DISCLOSURE OF ADDITIONAL INCOME-WAS VOLUNTARY OR NOT. THE HON'BLE RAJKOT TRIBUNAL HAD REFERRED TO THE DECISION OF THE HON'BLE ALLAHABAD H IGH COURT IN THE CASE OF BHAIRAV LAL VERMA VS. UNION OF INDIA (1998) 146 CTR (ALL) 16 FOR THE PREPOSITION THAT IF THE DEPARTMENT HAS ANY INCRIMIN ATING MATERIAL WITH REGARD TO THE DISCLOSED INCOME, THE DISCLOSURE CANN OT BE SAID TO BE VOLUNTARY. THIS MATERIAL FACT OF INCRIMINATING DOCU MENTS WITH THE DEPARTMENT COULD NOT BE ASCERTAINED IN ABSENCE OF T HE EXPLANATION OF THE APPELLANT DURING THE APPELLATE PROCEEDINGS. IN VIEW THEREOF, THE THE DECISION OF THE HON'BLE RAJKOT TRIBUNAL IN THE CASE OF DY. CIT VS. M/S BALAJI MULTIFLEX P. LTD. CANNOT BE BLINDLY APPLIED IN THE CASES OF THE APPELLANT. THE APPELLANT HAD THUS FAILED TO PROVE T HAT THE DISCLOSURE ADDITIONAL INCOME WAS VOLUNTARY AND NOT SUPPORTED B Y THE SEIZED DOCUMENTS. IN VIEW OF THE ABOVE DISCUSSION, IT IS H ELD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN IMPOSING THE PENALTIES U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF ADDITIONAL INCOME OF RS.4,69,150/-FOR THE A.Y. 2003-04 AND RS.9,07,580/- FOR THE A.Y. 2004-05 . THE PENALTY SO LEVIED RESPECTIVELY FOR RS.1,50,000/-AND RS.3,05,00 0/- FOR BOTH THE YEARS ARE HEREBY CONFIRMED. ALL THE GROUNDS OF BOTH THE A PPEALS ARE ACCORDINGLY DISMISSED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN PASSING EXPARTE ORDER WITHOUT GIVING PROPER OPPORTU NITY OF BEING HEARD. INTER ALIA, THE LD. AR RELIED UPON DECISIONS IN CIT VS. MANU ENGINEERING WORKS (1980) 122 ITR 306 (GUJ) AND NEW SORATHIA ENGINEERING CO. VS. CIT (2006) 282 ITR 642 (GUJ) / (2006) 155 TAXMAN 513 (GUJ). THE LD. DR, ON THE OTHER HAND, SU PPORTED THE FINDINGS OF THE LD. CIT(A) WHILE RELYING UPON DECI SIONS IN JYOTI LAXMAN KONKAR VS. CIT,292 ITR 163(BOM.) M. SHAHUL HAMEED BATCHA VS. ITO,,292 ITR 585(MAD.) & MAN MOHAN GUPTA VS. AC IT (2005) 274 ITR 179 (RAJ) / (2004) 189 CTR (RAJ) 331.TO A QUERY BY THE BENCH, THE LD. DR SUBMITTED THAT THE ISSUE IS SQUARELY COV ERED BY THE DECISION OF ITAT IN THE CASE OF ACIT VS. KIRIT DAHY ABHAI PATEL [2009] 121 ITD 159 (AHD)(TM),THE AMOUNT OF ADDITIONAL INCO ME HAVING NOT 5 IT(SS)A NOS.257 & 258/AHD/2011 BEEN DISCLOSED IN THE ORIGINAL RETURNS NOR ANY REAS ONS HAVING BEEN ADDUCED FOR DOING SO. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET, WE FIND THAT THOUGH THE LD . AR RELIED UPON DECISIONS IN CIT VS. MANU ENGINEERING WORKS (SUPRA) AND NEW SORATHIA ENGINEERING CO.(SUPRA) , THE LD. AR DID N OT EVEN ATTEMPT TO DEMONSTRATE BEFORE US AS TO HOW THESE DECISIONS AR E APPLICABLE TO THE FACTS IN THE INSTANT CASE BEFORE US. IF THE DIS CLOSURE OF FACTS IS INCORRECT OR FALSE TO THE KNOWLEDGE OF THE ASSESSEE AND IT IS ESTABLISHED, THEN SUCH DISCLOSURE CANNOT TAKE IT OUT FROM THE PURVIEW OF THE ACT OF CONCEALMENT OF PARTICULARS OR FURNISHING INACCURATE PARTICULARS TH EREOF FOR THE PURPOSE OF LEVY OF PENALTY. THE PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER TH IS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN THIS CONT EXT, HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AM SHAH & CO. VS. CIT,238 ITR 415(GUJ) OBSERVED THAT THERE CANNOT BE A STRAIGHT JACKET FORMULA FOR DET ECTION OF THESE DEFAULTS OF CONCEALMENT OR OF FURNISHING INACCURATE PARTICULARS OF INCOME AND INDEED CONCEALMENT OF PARTICULARS OF INCOME AND INACCURATE PARTICULARS OF INCOME MAY AT TIMES OVERLAP, AS FOR EXAMPLE WHEN HALF OF THE INCO ME UNDER A PARTICULAR HEAD IS NOT AT ALL DISCLOSED, THAT WOULD BE CONCEALED TO TH AT EXTENT WHILE THE REMAINING HALF WHICH IS IN FACT DISCLOSED WOULD, NOT BEING HI S COMPLETE DISCLOSURE AMOUNT TO INACCURATE PARTICULARS OF INCOME AS REGARDS THAT CO NSTITUENT ITEM OF THE RETURN. BY THE VERY NATURE OF THE ASSESSMENT PROCEEDINGS THE I TO WHILE ASCERTAINING THE TOTAL INCOME CHARGEABLE TO TAX WOULD BE IN A POSITI ON TO DETECT THE SPECIFIC OR DEFINITE PARTICULARS OF INCOME CONCEALED OR OF WHIC H FALSE PARTICULARS ARE FURNISHED. WHERE IN THE CONSTITUENTS OF INCOME RETU RNED, SUCH SPECIFIC OR DEFINITE PARTICULARS OF INCOME ARE DETECTED AS CONCEALED, TH EN EVEN IN THE TOTAL INCOME FIGURE TO THAT EXTENT THEY REFLECT, IT WOULD AMOUNT TO CONCEALMENT TO THAT EXTENT. IN THE SAME WAY WHERE SPECIFIC AND DEFINITE PARTICULAR S OF INCOME ARE DETECTED AS INACCURATE, THEN SUCH FIGURE WILL ALSO MAKE THE TOT AL INCOME INACCURATE IN PARTICULARS TO THE EXTENT IT DOES NOT INCLUDE SUCH INCOME. WHETHER IT BE A CASE OF ONLY CONCEALMENT OR OF ONLY INACCURACY OR BOTH, THE PARTICULARS OF INCOME SO VITIATED WOULD BE SPECIFIC AND DEFINITE AND BE KNOW N IN THE ASSESSMENT PROCEEDINGS BY THE ITO, WHO ON BEING SATISFIED ABOU T EACH CONCEALMENT OR INACCURACY OF PARTICULARS OF INCOME WOULD BE IN A P OSITION TO INITIATE THE PENALTY PROCEEDINGS ON ONE OR BOTH OF THE GROUNDS OF DEFAUL T AS MAY HAVE BEEN SPECIFICALLY AND DIRECTLY DETECTED. THE OPPORTUNITY OF HEARING GIVEN BY THE NOTICE 6 IT(SS)A NOS.257 & 258/AHD/2011 UNDER SECTION 271(1)(C), OBVIOUSLY IS AGAINST SUCH CONCEALMENT AND INACCURACY AS IS DETECTED IN THE ASSESSMENT PROCEEDINGS. 5.1. INDISPUTABLY, THE ASSESSEE DID NOT SUBMIT THE DETAILS AND DOCUMENTS IN RELATION TO INCOME WHICH WAS ATTRIBUTABLE TO EXPEN SES ADDED BACK, STOCK VARIATION ADDED BACK AND BORIC ACID CONSUMPTION NOR DISCLOSED ANY SUCH INCOME WHILE FILING ORIGINAL RETURNS OF IN COME FOR THESE TWO ASSESSMENT YEARS. IN THE RETURNS FILED IN CONSEQUEN CE OF SEARCH ALONE, THE ASSESSEE DISCLOSED THE AFORESAID AMOUN T OF ADDITIONAL INCOME WITH THE NARRATIONS AS AFORESAID. THE HONBL E JURISDICTIONAL HIGH COURT WHILE CONSIDERING THE AFORESAID DECISIO N IN MANU ENGINEERING WORKS(SUPRA) OBSERVED IN THEIR DECISION IN AM SHAH & CO.(SUPRA) THAT IF A PERSON OBLIGED TO FURNISH THE PARTICULARS OF HIS INCOME, OMITS TO FURNISH THEM, HE THEREBY CONCEALS THE PARTICULARS. THIS CON CEALMENT MAY TAKE VARIOUS FORMS. A GLARING ILLUSTRATION OF CONCEALMENT WOULD BE WHERE THE ASSESSEE DOES NOT DISCLOSE OR FULLY DISCLOSE IN THE RETURN, THE I NCOME DERIVED BY HIM WHICH WOULD FALL IN A PARTICULAR HEAD, E.G., 'INCOME FROM OTHER SOURCES' WHILE DISCLOSING HIS INCOME FALLING UNDER OTHER HEADS OF INCOME PRESCRIB ED BY SECTION 14. TO THE EXTENT HE DOES NOT DISCLOSE THAT INCOME, HE CONCEAL S THE PARTICULARS OF INCOME. THE OBLIGATION IS NOT ONLY TO DISCLOSE PARTICULARS OF INCOME BUT TO DISCLOSE THEM CORRECTLY AND COMPLETELY. IF WHILE DISCLOSING THE P ARTICULARS OF INCOME IN THE RETURN HE PUTS THEM UNDER A WRONG HEAD, HE CAN BE SAID TO BE FURNISHING INACCURATE PARTICULARS OF INCOME. THE PARTICULARS OF INCOME CA N BE MADE INACCURATE IN VARIETY OF WAYS, A GLARING ILLUSTRATION OF WHICH WO ULD BE WHERE THE ASSESSEE WHILE STATING THE INCOME UNDER A PARTICULAR HEAD, WORKS O UT THE INCOME CHARGEABLE TO TAX AFTER MAKING DEDUCTIONS WHICH ARE FALSELY MADE. SUCH A PROCESS WOULD MAKE THE PARTICULARS OF INCOME INACCURATE. IN ALL SUCH C ASES WHETHER THE INCOME IS NOT DISCLOSED AGAINST THE CONSTITUENT ITEM OF THE RETUR N IN WHICH IT FALLS OR IS PARTLY NOT DISCLOSED, OR THE PARTICULARS OF INCOME GIVEN IN TH E RETURN ARE INCORRECTLY STATED BY ANY MACHINATION, THE IMPACT IS BOUND TO BE ON THE F IGURE OF GROSS TOTAL INCOME TO BE MENTIONED UNDER VARIOUS HEADS OF INCOME AND ALSO ON THE TOTAL INCOME CHARGEABLE TO TAX. IN FACT, REDUCING THE FIGURE OF INCOME THAT WOULD BE CHARGEABLE TO TAX WOULD BE THE PURPOSE OF CONCEALMENT OF PARTI CULARS OF INCOME OR GIVING INACCURATE PARTICULARS OF INCOME. THE EXPRESSION 'P ARTICULARS OF INCOME' WOULD HAVE RELEVANCE TO ALL THE PARTICULARS OF INCOME WHI CH THE ASSESSEE IS REQUIRED TO GIVE IN HIS RETURN FULLY AND TRULY INCLUDING THE PA RTICULARS OF INCOME CHARGEABLE TO TAX UNDER VARIOUS HEADS AND THE TOTAL INCOME. THERE FORE, ANY CONCEALMENT OR INACCURACY IN THE PARTICULARS OF INCOME IN THE RETU RN OCCURRING AT ANY STAGE UPTO AND INCLUSIVE OF THE ULTIMATE STAGE OF WORKING OUT OF TOTAL INCOME WOULD ATTRACT THE PENALTY PROVISION OF SECTION 271(1)(C). EVERY FIGUR E IN THE RETURN WHICH IS SET OPPOSITE TO THE ITEM OF INCOME IS A PARTICULAR OF I NCOME, WHETHER THE FIGURE IS ONE WHICH IS STATED INDEPENDENTLY OF ANYTHING ELSE THAT APPEARS IN THE RETURN OR THE DOCUMENTS ACCOMPANYING IT OR WHETHER IT IS SOMETHIN G DERIVED FROM OTHER FIGURES 7 IT(SS)A NOS.257 & 258/AHD/2011 ELSEWHERE STATED IN SUCH RETURN OR DOCUMENTS. FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORDS 'INACCURATE PARTICULARS' WOULD COVER FALSITY IN THE FINAL FIGURE AS ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD ME AN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT WHETHER IN THE CONSTIT UENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT. 5.2 IN THE CASE BEFORE US, THE AO IMPOSED PENALTY AND THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO ON THE GROUND THAT THE ASSES SEE CONCEALED THE PARTICULARS OF INCOME IN THEIR RESPECTIVE ORIGINAL RETURNS FILE D FOR THESE TWO ASSESSMENT YEARS. WE ARE OF THE OPINION THAT THE DECISIONS RELIED UPO N BY THE LD. AR ARE NO LONGER RELEVANT IN VIEW OF SUB-SECTION 1B INSERTED IN SECTION 271 OF THE ACT BY FINANCE ACT, 2008 AND IN THE LIGHT OF V IEW TAKEN DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN AM SHAH & CO.( SUPRA) AND OF THE HON. SUPREME COURT IN THE CASE OF K.P. MADHUSUDAN VS. CI T (2001) 251 ITR 99 (SC). THE SAID PROVISION UNDER SEC.271(1B) PURPORTS TO CR EATE A FICTION BY WHICH SATISFACTION OF THE AO IS DEEMED TO HAVE BEEN RECOR DED IN CASES WHERE AN ADDITION OR DISALLOWANCE IS MADE BY THE ASSESSING O FFICER AND A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS IS ISSUED. THE SA ID PROVISION IS MADE EFFECTIVE RETROSPECTIVELY WITH EFFECT FROM 1ST APRIL, 1989. T HE LD. AR ON BEHALF OF THE ASSESSEE HAS NOT EXPLAINED AS TO HOW THE DECISIONS RELIED UPON BY HIM WERE RELEVANT IN VIEW OF THE SAID PROVISIONS OF SEC. 271 (1B) OF THE ACT. THUS, RELIANCE ON THE SAID DECISIONS IS TOTALLY MISPLACED . IN THE INSTANT CASE, THE ASSESSEE WAS SUBJECTED TO SEARCH UNDER SECTION 132 OF THE ACT ON 30-8- 2005. CONSEQUENTLY, PROCEEDINGS U/S 153A OF THE ACT WERE INITIATED . THEREAFTER, THE RETURNS FILED BY THE ASSESSEE IN TERMS OF PROVI SIONS OF SECTION 153A(1)(A) OF THE ACT WERE ACCEPTED BY THE AO WITH CERTAIN DISALL OWANCES. ADMITTEDLY, ADDITIONAL AMOUNT OF INCOME WAS DISCLOSED ONLY IN THE RETURNS FILED IN PURSUANCE TO NOTICE U/S 153A OF THE ACT. NO REASONS AT ALL H AVE BEEN ADDUCED BEFORE US AS TO WHY SUCH ADDITIONAL INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURNS FILED U/S 139(1) OF THE ACT. THE LD. AR APPEARING BEFORE US DID NOT CLARIFY AS TO WHETHER OR NOT THE SAID INCOME WAS DECLARED IN THE STATEMENTS OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH NOR COPIES OF SUCH STA TEMENTS HAVE BEEN PLACED BEFORE US. IT IS WELL SETTLED THAT A PENALTY IS IMP OSED ON ACCOUNT OF THE 8 IT(SS)A NOS.257 & 258/AHD/2011 COMMISSION OF A WRONGFUL ACT, AND PLAINLY IT IS THE LAW OPERATING ON THE DATE ON WHICH THE WRONGFUL ACT IS COMMITTED WHICH DETERMINE S THE PENALTY. WHERE PENALTY IS IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME , IT IS THE LAW RULING ON THE DATE WHEN THE ACT OF CONCEALMENT TAKES PLACE WHICH IS RELEVANT. IN THE CASE UNDER CONSIDERATION, THE CONCEALMENT OF THE PARTICU LARS OF INCOME WAS EFFECTED BY THE ASSESSEE, WHEN THE ASSESSEE FILED HIS ORIGIN AL RETURNS OF TOTAL INCOME [ BRIJ MOHAN V. CIT [1979] 120 ITR 1 (SC), CIT V. ONKAR SARAN & SONS [1992] 195 ITR 1 2 (SC), B.N. SHARMA V. CIT [1997] 226 ITR 442 (SC)]. THE ASSESSMENT FRAMED UNDER SECTION 153A(1)( B ) OF THE ACT AFTER THE SEARCH, ACCEPTING THE INCOM E AS DISCLOSED BY THE ASSESSEE IN THESE RETURNS IS OVER AND ABOVE WHAT WAS DISCLOSED IN THE ORIGINAL RETURNS. SINCE THE ASSESS EE HAD TO DISCLOSE THEIR REAL TOTAL INCOME IN THE RESPECTIVE ORIGINAL RETURNS FIL ED UNDER SECTION 139 OF THE ACT, IF THEY HAD FAILED TO DO SO BUT CONCEALED OR FURNISHED INACCURATE PARTICULARS IN THAT RETURN, THE OFFENCE BECOMES COMPLETE. THUS, THE OFF ENCE OF CONCEALMENT IS COMPLETE AND FINAL WHEN THE ASSESSEES DID NOT DISCL OSE THE REAL INCOME IN THE ORIGINAL RETURNS. HONBLE APEX COURT IN CIT VS. ONK AR SARAN & SONS (1992) 103 CTR (SC) 293 : (1992) 195 ITR 1 (SC) CLEARLY HELD T HAT OFFENCE OF CONCEALMENT IS COMMITTED ON THE DATE ON WHICH THE ORIGINAL RETURN IS FILED. IN THE INSTANT CASE, THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REC ORDED HIS SATISFACTION WHEN HE INITIATED PROCEEDINGS U/S 271(1)(C) OF THE ACT A ND SUCH SATISFACTION BY VIRTUE OF PROVISIONS OF SEC. 271(1B) OF THE ACT IS DEEMED FOR THE PURPOSE OF SEC. PROCEEDINGS U/S 271(1)(C) OF THE ACT. THIS VIEW OF OURS IS SUPPORTED BY THE DECISION IN MS. MADHUSHREE GUPTA VS. UNION OF INDIA & OTHERS,183 TAXMAN 100(DELHI). IF THE PLEA ON BEHALF OF THE ASSESSEE T HAT SINCE THERE WAS NO DIFFERENCE IN THE INCOME RETURNED AFTER THE SEARCH AND THE ASSESSED INCOME, IS ACCEPTED, AN ANOMALOUS RESULT WILL FOLLOW IN CERTAI N GLARING CASES OF CONCEALMENT. LET US TAKE THE FOLLOWING ILLUSTRATION. AN ASSESSEE CONCEALS INCOME IN HIS ORIGINAL RETURN. HE GETS AWAY WITH IT AND THE ORIGINAL ASSES SMENT IS COMPLETED WITHOUT DETECTING THE CONCEALMENT. SUBSEQUENTLY, A NOTICE I S GIVEN FOR ASSESSING THE ESCAPED OR UNDISCLOSED INCOME. IN THESE PROCEEDINGS , THE ASSESSEE FILES A RETURN OF INCOME INCLUDING THE ESCAPED OR UNDISCLOSED INCO ME. IN THIS SITUATION, THE ARGUMENT ON BEHALF OF THE ASSESSEE, IF ACCEPTED, WI LL RESULT IN THE CONCLUSION THAT THE DEPARTMENT WILL BE HELPLESS IN IMPOSING A PENAL TY IN SUCH A CASE. THAT 9 IT(SS)A NOS.257 & 258/AHD/2011 CERTAINLY CANNOT BE THE EFFECT OF THE LEGAL PROVISI ONS. AGAIN, AN ASSESSEE WOULD COMPLETELY ESCAPE PENALTY, IF HE DOES NOT AT ALL FI LE A RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT. THE ARGUMENT COULD BE THAT SINCE A PENALTY CAN BE IMPOSED ONLY WITH REGARD TO THE RETURN FILED IN THE REASSESSMENT PROCEEDINGS AND SINCE HE HAD FILED NO SUCH RETURN, HE CANNOT BE PENALISED AT ALL. IF THE ORIGINAL RETURN COULD FORM THE BASIS FOR DET ERMINING THE QUANTUM OF PENALTY IMPOSABLE ON THE REASSESSMENT, THERE IS NO REASON W HY THE ORIGINAL RETURN SHOULD ALSO NOT FORM THE BASIS FOR DETERMINING THE DATE ON WHICH THE CONCEALMENT WAS EFFECTED BY THE ASSESSEE. THUS, IT IS WELL SETTLED THAT THE CONCEALMENT OF THE PARTICULARS OF INCOME WAS EFFECTED BY THE ASSESSEE WHEN HE FILED THE ORIGINAL RETURNS OF TOTAL INCOME . 5.3. IN THE CASE UNDER CONSIDERATION, THE LD. CIT(A) UP HELD THE LEVY OF PENALTY SINCE THE ASSESSEE CONCEALED THE PARTICULAR S OF ADDITIONAL INCOME DISCLOSED IN THE RETURNS FILED AFTER THE SEARCH, B UT WHICH INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURNS OF INCOME. NO RE ASONS AT ALL HAVE BEEN ADDUCED BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US AS TO WHY THE SAID ADDITIONAL INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURNS. D ESPITE SUFFICIENT OPPORTUNITY ALLOWED BY THE LD. CIT(A), THE ASSESSEE DID NOT EVE N CARE TO APPEAR BEFORE HIM NOR ADDUCED ANY REASONS AT ALL BEFORE US AS TO WHY HE COULD NOT APPEAR AND CONTEST THE PENALTY LEVIED BY THE AO. IN THE ABSENC E OF ANY BASIS, WE ARE NOT PREPARED TO ACCEPT THE PLEA OF THE LD. AR THAT PROP ER OPPORTUNITY WAS NOT ALLOWED TO HIM BY THE LD. CIT(A).AS IS EVIDENT FROM THE CL . (C) OF S. 271(1) OF THE ACT, THE WORDS USED ARE 'HAS CONCEALED THE PARTICULARS OF HI S INCOME' OR FURNISHED 'INACCURATE PARTICULARS OF SUCH INCOME'. THUS, BOTH IN CASE OF CONCEALMENT AND INACCURACY, THE PHRASE 'PARTICULARS OF INCOME' HAS BEEN USED. THE LEGISLATURE HAS NOT USED THE WORDS 'CONCEALED HIS INCOME'. FROM THI S IT WOULD BE APPARENT THAT PENAL PROVISION WOULD OPERATE WHEN THERE IS A FAILU RE TO DISCLOSE FULLY OR TRULY ALL THE PARTICULARS. THE WORDS 'PARTICULARS OF INCOME' REFER TO THE FACTS WHICH LEAD TO THE CORRECT COMPUTATION OF INCOME IN ACCORDANCE WIT H THE PROVISIONS OF THE ACT. SO WHEN ANY FACT MATERIAL TO THE DETERMINATION OF A N ITEM AS INCOME OR MATERIAL TO THE CORRECT COMPUTATION IS NOT FILED OR THAT WHI CH IS FILED IS NOT ACCURATE, THEN THE ASSESSEE WOULD BE LIABLE TO PENALTY UNDER S. 27 1(1)(C) OF THE ACT. THE 10 IT(SS)A NOS.257 & 258/AHD/2011 EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME ' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEF INED EITHER IN SECTION 271 OR ELSEWHERE IN THE ACT. HOWEVER, NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES, IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY, KEEPING OFF A CERTAIN PORTION OF THE INCOME FROM THE RETURN. ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS C ON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT IS, THUS, A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' 5.4 IF THE DISCLOSURE OF FACTS IS INCORRECT OR FA LSE TO THE KNOWLEDGE OF THE ASSESSEE AND IT IS ESTABLISHED, THEN SUCH DISCLOSUR E CANNOT TAKE IT OUT FROM THE PURVIEW OF THE ACT OF CONCEALMENT OF PARTICULARS OR FURNISHING INACCURATE PARTICULARS THEREOF FOR THE PURPOSE OF LEVY OF PENA LTY. IN THE INSTANT CASE, ADMITTEDLY, THE AFORESAID ADDITIONAL INCOME DISCLOS ED AFTER THE SEARCH WAS NEVER DISCLOSED IN THE RETURNS FILED ORIGINALLY. THUS, TH E FACTUM OF CONCEALMENT IS ESTABLISHED.. THE PENALTY U/S 271(1)(C) OF THE AC T IS LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. WHETHER THI S DISCLOSURE MADE BY THE ASSESSEE CAN BE CONSIDERED VOLUNTARY AND TO PUR CHASE PEACE NEEDS TO BE EXAMINED. IT HAS BEEN HELD IN TRIBHOVANDAS BHIMJI ZAVERI VS. UNION OF INDIA 203 ITR 369 (SC) AND IN NATWARLAL JOITRAM RAVAL VS. CI T 115 CTR (BOM) 518 THAT DISCLOSURE MADE SUBSEQUENT TO SEIZURE OF INCRIMINAT ING MATERIAL WOULD NOT BE VOLUNTARY. AS ALREADY OBSERVED, THERE IS NO COGENT EXPLANATION GIVEN WHY THE AFORESAID AMOUNT WAS NOT OFFERED TO TAX AT THE TIME OF FILING ORIGINAL RETURN. IN THE 11 IT(SS)A NOS.257 & 258/AHD/2011 ABSENCE OF ANY BONAFIDE EXPLANATION AS TO WHY THE ADDITIONAL INCOME WAS NOT DISCLOSED IN THE RESPECTIVE ORIGINAL RETURNS, APPAR ENTLY, THE ASSESSEE HAS FAILED TO REBUT THE ONUS LAID DOWN UPON THE ASSESSEE IN TERMS OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. SINCE THE ASSESSEE DISCLOSED ADDITIONAL INCOME ONLY IN CONSEQUENCE OF THE SEARCH , WE ARE OF THE OPINION T HAT THE A.O. AND THE CIT(A) ARE CORRECT IN LEVYING PENALTY. 5.5. IT IS NOTICED THAT PRIOR TO THE INSERTION OF E XPLANATION 5 TO SECTION 271 BY THE TAXATION LAWS (AMENDMENT) ACT, 1984 WITH EFFECT FROM 1-10-1984, AN ASSESSEE, WHO WAS FOUND TO BE THE OWNER OF ANY MONE Y, BULLION, JEWELLERY ETC., RECOVERED DURING THE COURSE OF SEARCH, WAS ENTITLED TO EXPLAIN THAT SUCH ASSETS WERE ACQUIRED BY HIM BY UTILISING HIS INCOME RELATI NG TO ANY PREVIOUS YEAR, WHETHER IT ENDED BEFORE THE DATE OF THE SEARCH OR I S TO END ON OR AFTER THE DATE OF THE SEARCH. BY DOING SO THE ASSESSEE COULD ESCAPE T HE LIABILITY TO PENALTY UNDER SECTION 271(1)( C ) OF THE ACT. IN ORDER TO PLUG THE LOOPHOLE, E XPLANATION 5 WAS INSERTED WITH EFFECT FROM 1-10-1984 AND IS APPLICAB LE TO A SITUATION WHERE IN THE COURSE OF A SEARCH UNDER SECTION 132 OF THE ACT THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING, WHOLLY OR IN PART, HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER T HE DATE OF THE SEARCH. IN VIEW OF THE EXPLANATION, NOTWITHSTANDING THE FACT 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 SECTION 271(1)( C ), BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME EXCEPT IN CASES WHERE SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE, RECORDED ON OR BEFORE THE DATE OF THE SEARCH IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHE RWISE DISCLOSED TO THE COMMISSIONER BEFORE THE DATE OF THE SEARCH OR IN T HE COURSE OF THE SEARCH, THE ASSESSEE MAKES A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURN ISHED BEFORE THE EXPIRY OF TIME 12 IT(SS)A NOS.257 & 258/AHD/2011 SPECIFIED IN SUB-SECTION (1) OF SECTION 139, AND AL SO 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. THUS, BY THE DEEMING PROVISIONS OF E XPLANATION 5, THE ASSESSEE IS FASTENED WITH THE LIABILITY TO PENA LTY UNDER SECTION 271(1)( C ) IN CASE HE EXPLAINS THE ACQUISITION OF ASSETS, RE COVERED IN THE COURSE OF SEARCH, FROM OUT OF INCOME OF A PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFT ER THE DATE OF SEARCH. 5.6 IN THE PRESENT CASE, THE ASSESSEE FILED HIS ORIGIN AL RETURNS OF INCOME AND ADMITTEDLY, ADDITIONAL INCOME DISCLOSED IN THE RETU RNS FILED IN PURSUANCE TO NOTICE UNDER SECTION 153A OF THE ACT, WAS NOT DECLARED IN THESE RETURNS. THERE IS NOTHING TO SUGGEST THAT ADDITIONAL INCOME DISCLOSED IN THE RETURN FILED AFTER THE SEARCH WAS EVER OFFERED TO TAX IN HIS STATEMENT REC ORDS U/S 132(4) OF THE ACT AND NO SUCH STATEMENTS HAVE EVEN BEEN PLACED BEFORE US . THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT PROVIDED IN EXCEPTIONS LAID DOWN IN EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT , SINCE THERE IS NOTHING TO SUGGEST THAT THE ASSES SEE FULFILLED THE CONDITIONS STIPULATED IN THE SAID EXPLANATION. ADMITTEDLY AND AS IS EVIDENT FROM THE RELEVANT ASSESSMENT ORDERS, THE ASSESSEE H AVE EARNED UNDISCLOSED INCOME AND WHERE ASSESSEE HAD ADMITTED TO CONCEALME NT DURING THE COURSE OF ENQUIRY OR ASSESSMENT PROCEEDINGS AND IN THIS CASE IN THE RETURNS OF INCOME FILED UNDER SECTION 153A( A ) OF THE ACT ITSELF, NO INDEPENDENT ENQUIRY TO PROV E CONCEALMENT IS NECESSARY FOR LEVY OF PENALTY UNDER SECTION 271(1)( C ) OF THE ACT. AS ALREADY MENTIONED, THE OFFENCE OF CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IN THE INSTANT CASE HAS TO BE CONSIDERED IN RELATION TO THE ORIGINAL RETURNS WHIC H WERE SUBMITTED BY THE ASSESSEE AND WHEREIN THIS CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME HAS OCCURRED. SO IN DETERMINING THE QUANTUM OF PENALTY THE AMOUNT OF INCOME, THE PARTIC ULARS OF WHICH WERE CONCEALED OR INACCURATE PARTICULARS OF WHICH WERE F URNISHED, HAS TO BE TAKEN INTO CONSIDERATION [ G.C. AGRAWAL V. CIT [1990] 186 ITR 571 (SC)]. 5.7 IN THE CASE OF CIT V. C. ANANTHAN CHETTIAR [2005] 273 ITR 401 , THE HONBLE MADRAS HIGH COURT WAS CONSIDERING A SIMILAR ISSUE. IN THAT CASE, THE 13 IT(SS)A NOS.257 & 258/AHD/2011 INCOME-TAX DEPARTMENT IN A SEARCH AND SEIZURE OPERA TION CONDUCTED IN THE ASSESSEES SHOP AND RESIDENCE, SEIZED CASH, JEWELLE RY AND CERTAIN DOCUMENTS. THEREAFTER, THE ASSESSEE FILED A REVISED RETURN FOR THE ASSESSMENT YEAR 1986-87 DISCLOSING ADDITIONAL INCOME WHICH WAS ACCEPTED AND ASSESSMENT WAS MADE ON THE BASIS OF REVISED RETURN. THE ASSESSEE TOOK THE STAND THAT THERE WAS NO CONCEALMENT AND IT WAS ONLY FOR THE PURPOSE OF BUYI NG PEACE WITH THE DEPARTMENT THAT THE ADDITIONAL INCOME WAS DISCLOSED AND REVISED RETURN WAS FILED. THE TRIBUNAL ACCEPTED THIS PLEA OF THE ASSES SEE AND HELD THAT NO PENALTY, IN THE CIRCUMSTANCES, WAS LEVIABLE BY RELYING ON THE S UPREME COURT DECISION IN SIR SHADILAL SUGAR & GENERAL MILLS LTD. V. CIT [1987] 168 ITR 705. ON REFERENCE, THE HONBLE MADRAS HIGH COURT SET ASIDE THE ORDER AND O BSERVED : 'LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT THE ORDER OF THE TRIBUNAL IS NOT IN ACCORDANCE WITH LAW, AS IT HAS IGNORED THE EXPLANAT ION TO SECTION 271(1)(C) OF THE ACT. LEARNED COUNSEL ALSO PLACED RELIANCE ON THE DE CISION IN THE CASE OF K.P. MADHUSUDHANAN V. CIT [2001] 251 ITR 99 (SC), WHEREIN IT WAS HELD THAT THE LAW DECLARED BY THE COURT IN THE CASE OF SIR SHADILAL S UGAR & GENERAL MILLS LTD. V. CIT [1987] 168 ITR 705 (SC) WAS NO LONGER APPLICABLE BY REASON OF THE ADDITION OF THE EXPLANATION TO SECTION 271. THAT EXPLANATION CA STS A BURDEN ON THE ASSESSEE TO SHOW THAT THE ADDITIONAL INCOME THAT HAD NOT BEE N DISCLOSED WAS NOT DUE TO FRAUD OR NEGLECT. IN THIS CASE, THE ASSESSEE OFFERED NO EXPLANATION A T ALL EXCEPT TO ASSERT THAT HE DISCLOSED THE INCOME ONLY TO BUY PEACE WITH THE DEP ARTMENT AND WHAT WAS DISCLOSED, IN FACT, WAS ADDITIONAL INCOME. THE REAS ON FOR NOT HAVING DISCLOSED THE INCOME EARLIER WAS NOT STATED. IN THESE CIRCUMSTANC ES, THE ITAT WAS IN ERROR IN SETTING ASIDE THE PENALTY. THE QUESTION IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE, IN THE LIGHT OF THE LATER DEC ISION OF THE THREE JUDGE BENCH OF THE SUPREME COURT IN THE CASE OF K.P. MADHUSUDHANAN V. CIT [2001] 251 ITR 99.' 5.8. THE ISSUE WHETHER IMMUNITY IS AVAILABLE TO THE ASSE SSEE IN TERMS OF EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT WHEN ADD ITIONAL INCOME WAS DISCLOSED IN THE RETURN U/S 153A WAS ALSO CONSIDERED BY A CO- ORDINATE BENCH IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL REPORTED IN 121 ITD 159 (TM), WHEREIN IT WAS HELD THAT THE IMMUNITY IS NOT AVAILABLE TO THE ASSESSEE UNDER EXPLN. 5 TO S. 271(1)(C) OF THE ACT . INTER ALIA, IT WAS OBSERVED IN THIS DE CISION THAT 10.11 IN THE CASE UNDER CONSIDERATION, AS IS EVIDENT FROM THE RELEVANT ASSESSMENT ORDERS, NOT ONLY THAT THE DEPARTMENT HAD INCRIMINATING MATERIAL, THE ASSESSEES THEMSELVES ADMITTED TO HAVE EARNED UNDISC LOSED INCOME AND UTILIZED THE SAME IN ACQUIRING VARIOUS ASSETS, WHICH FORMED THE BASIS OF INCOME DISCLOSED AND ASSESSED. YET, THE COMPULSION OF THE CIRCUMSTAN CES THAT UNFOLDED 14 IT(SS)A NOS.257 & 258/AHD/2011 THEMSELVES CONSEQUENT UPON THE SEARCH AND SEIZURE O PERATIONS WOULD ITSELF CONSTITUTE A CONSTRAINT EFFECTIVE ENOUGH TO RENDER THE FILING OF RETURNS BY THEM 'INVOLUNTARY'. THE DISCLOSURE MADE IN THE RETURNS A CTUALLY TANTAMOUNTS TO AN ADMISSION ON THE PART OF THE ASSESSEES HAVING EARNE D CONCEALED INCOME, WHICH ACCORDING TO THE ASSESSMENT ORDERS HAS BEEN ADMITTE D BY THE ASSESSEES. THE DISCLOSURE CANNOT EVEN BE TERMED AS ONE MADE IN GOO D FAITH. THE EXPRESSION 'GOOD FAITH' MEANS AN ACT DONE HONESTLY EVEN IF THE SAME BE TAINTED WITH NEGLIGENCE OR MISTAKE. SECTION 2(22) OF THE GENERAL CLAUSES ACT, LENDS A SIMILAR MEANING TO THE SAID EXPRESSION. IN ORDER THAT A DIS CLOSURE IS TERMED AS HAVING BEEN MADE IN GOOD FAITH, THE SAME MUST BE DEMONSTRA BLY HONEST. A DISCLOSURE WHICH IS MADE UNDER THE COMPULSION OF A POSSIBLE PE NALTY OR OTHER PROCEEDINGS CANNOT BE TERMED HONEST OR ONE MADE IN GOOD FAITH, THE UNDERLYING OBJECT OF ANY SUCH DISCLOSURE BEING NOT TO COME CLEAN ON THE SUBJ ECT BUT TO AVOID THE ADVERSE CONSEQUENCES THAT MAY FOLLOW A NON-DISCLOSURE. BLAM EWORTHINESS ATTACHED TO THE ASSESSEES WITH REFERENCE TO THE ORIGINAL RETURN CAN NOT BE AVOIDED BY FILING A FRESH RETURN AFTER CONCEALMENT WAS DETECTED BY THE ASSESS ING AUTHORITY. WHERE THE SURRENDER OF INCOME MADE IN THE SUBSEQUENT RETURN WAS NOT VOLUNTARY, BUT WAS AS A RESULT OF DETECTION BY THE ASSESSING AUTHORITY , THE FILING OF THE SUBSEQUENT RETURN WOULD NOT BE A MITIGATING CIRCUMSTANCE. IN T HE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, IT IS CLEAR THAT THE ORIGINAL RETURN FILED BY THE ASSESSEES, WHEN COMPARED WITH THE RETURNS FILED PUR SUANT TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT FORMS THE BASIS FOR T HE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDING S UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER, THEREFORE, HAS RIGHTLY REACHED THE SATISFACTION THAT THE ASSESSEE HAD CONCEALED INCOME IN THE ORIGINAL RETUR N BY WAY OF INDICATING HIS SATISFACTION THAT THE PENALTY PROCEEDINGS ARE PROPO SED TO BE INITIATED. IN THESE CIRCUMSTANCES OF THE CASE AND THE LAW DISCUSSED HER EINABOVE, IN OUR CONSIDERED OPINION THESE ASSESSEES DID NOT ACT VOLUNTARILY AND BONAFIDELY IN FILING THE RETURN, OFFERING THE ADDITIONAL INCOME. ADMITTEDLY, THE RET URN WAS NOT FILED BEFORE SEARCH AND SEIZURE WAS CONDUCTED AND INCRIMINATING DOCUMEN TS WERE RECOVERED SHOWING UNDISCLOSED INCOME OF THE ASSESSEE. EXPLANA TION 5 HAS BEEN ADDED IN SECTION 271(1)(C) OF THE ACT IN ORDER TO MEET SUCH SITUATIONS. AS REGARDS RELIANCE ON THE DECISION IN THE CASE OF SURESH CHANDRA MITTA L (SUPRA), IN THAT CASE ISSUE WAS AS TO WHETHER, THE TRIBUNAL WAS JUSTIFIED IN CO MING TO THE CONCLUSION THAT BURDEN OF PROVING CONCEALMENT NOT DISCHARGED AND PE NALTY CANNOT BE LEVIED? HOW THIS DECISION IS RELEVANT IS NOT UNDERSTOOD, ES PECIALLY WHEN ADMITTEDLY, THESE ASSESSEES DID NOT REFLECT THEIR INCOME FOUND TO HAV E BEEN EARNED IN TERMS OF THE DOCUMENTS SEIZED DURING THE SEARCH IN THEIR ORIGINA L RETURNS OF INCOME AND EVEN ACCEPTED THAT THEY HAD UTILIZED THEIR UNDISCLOSED I NCOME IN HAVING VALUABLE ARTICLES OR THINGS IN THEIR NAME OR IN THE NAME OF THEIR RELATIONS. THUS, RELIANCE ON THE SAID DECISION IS TOTALLY MISPLACED. 5.9 WE MAY ALSO POINT OUT THAT IN TERMS OF PRO VISIONS OF SEC. 271(1)(C) OF THE ACT READ WITH EXPLANATION 1 THERETO AND THE JUDICIA L PRONOUNCEMENTS IN THE CASE OF B.A. BALASUBRAMANIAM & BROS. CO. V. CIT [1999] 157 CTR 556(SC), CIT V. B.A. BALASUBRAMANIAM & BROS. [1984] 40 CTR (MAD.)/[ 1985] 152 ITR 529 (MAD.) 15 IT(SS)A NOS.257 & 258/AHD/2011 , CIT V. MUSSADILAL RAM BHAROSE [1987] 60 CTR (SC) 34/[ 1987] 165 ITR 14 (SC); TC 50 R. 474; CIT V. K.R. SADAYAPPAN [1990] 8 6 CTR (SC) 120; [1990] 185 ITR 49 (SC); TC 50 R. 795, ADDL. CIT V. JEEVAN LAL SAH [1 994] 117 CTR (SC) 130; [1994] 205 ITR 244 (SC); TC 50 R. 973 AND K.P.MADHUSUDANAN VS. CIT,251 ITR 99(SC), IT IS WELL ESTABLISHED THAT WHE NEVER THERE IS DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME, THERE IS INFERENCE OF CONCEALMENT. THE EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT RAIS ES A PRESUMPTION THAT CAN BE REBUTTED BY THE ASSESSEE WITH REFERENCE TO FACTS OF THE CASE. THUS, THE ONUS IS ON THE ASSESSEE TO REBUT THE INFERENCE OF CONCEALMENT. THE ABSENCE OF EXPLANATION ITSELF WOULD ATTRACT PENALTY. THE EXPLANATION OFFER ED BY THE ASSESSEE SHOULD NOT BE FALSE. THE ONUS LAID DOWN UPON THE ASSESSEE TO REBUT THE PRESUMPTION RAISED UNDER EXPLANATION 1 WOULD NOT BE DISCHARGED BY ANY FANTASTIC OR FANCIFUL EXPLANATION. IT IS NOT THE LAW THAT ANY AND EVERY E XPLANATION HAS TO BE ACCEPTED . IN THE INSTANT CASE, THERE IS NOTHING TO SUGGEST TH AT THESE ASSESSEE DISCHARGED THE ONUS LAID DOWN UPON THEM EVEN IN TERMS OF EXPL ANATION 1 TO SECTION 271(1)(C) OF THE ACT. 5.10. IN THE CASE OF CIT V. PRATHI HARDWARE STOR ES [1993] 203 ITR 641 (ORI.), HON'BLE ORISSA HIGH COURT HAVE LAID DOWN THE FOLLOW ING PROPOSITION OF LAW: I). EXPLANATION TO SECTION 271(1)(C) IS THE RULE O F EVIDENCE. II) . THE INITIAL BURDEN OF REBUTTAL IS ON THE ASSE SSEE BECAUSE THE BASIC FACTS ARE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. SECTI ON 106 OF THE INDIAN EVIDENCE ACT., 1872 GIVES STATUTORY RECOGNITION TO THIS UNIV ERSALLY ACCEPTED RULE OF EVIDENCE. III) THERE IS NO DISCRETION ON THE ASSESSING OFFICE R AS TO WHETHER HE CAN INVOKE THE EXPLANATION OR NOT. 5.11 IN THE DECISIONS RELIED UPON BY THE LD. DR IN JYOTI LAXMAN KONKAR VS. CIT,292 ITR 163(BOM.) AND M. SHAHUL HAMEED BATCHA VS. ITO,,292 ITR 585(MAD.) AND MAN MOHAN GUPTA VS. ACIT (2005) 274 ITR 179 (RAJ) / (2004) 189 CTR (RAJ) 331,LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT ON THE AMOUNT DISCLOSED IN THE REVISED RETURNS FILED IN CONSEQUENCE OF 16 IT(SS)A NOS.257 & 258/AHD/2011 SURVEY/SEARCH WAS UPHELD SINCE THERE WAS NOTHING TO SUGGEST THAT THE OMISSION OR WRONG STATEMENT BY THE ASSESSEE IN THE ORIGINAL RETURN WAS DUE TO ANY BONA FIDE OR INADVERTENCE OR MISTAKE ON HIS PART AND THAT THERE WAS NO MATERIAL WITH THE ASSESSEE TO SHOW THA T THE MISTAKE HAD CREPT IN THE ORIGINAL RETURN ACCIDENTALLY WITHOUT A NY INTENTION WARRANTING DELETION OF PENALTY. IT IS A SETTLED LAW THAT ONCE THE AUTHORITIES HAVE ARRIVED AT A SUBJECTIVE SATISFACTION UNDER THE FACTS AND CIRCUMS TANCES OF THE CASE, IT MAY NOT BE PROPER FOR US TO INTERFERE UNLESS IT IS DEMONST RATED THAT THE INDICATION MADE BY THE ASSESSING OFFICER TO INITIATE PENALTY PROCEEDIN GS IS MALA FIDE, PERVERSE, BASED ON NO EVIDENCE, MISREADING OF EVIDENCE OR WHICH A R EASONABLE MAN COULD NOT FORM OR THAT THE PERSON CONCERNED WAS NOT GIVEN DUE OPPO RTUNITY RESULTING IN PREJUDICE (M. SAJJANRAJ NAHAR V. CIT [2006] 283 ITR 230 (MAD)). 6. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, E SPECIALLY WHEN THE ASSESSEE MISERABLY FAILED TO DISCHARGE THE ONUS LAID DOWN U PON THEM IN TERMS OF EXPLANATION 1 AND EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US , WE HAVE NO HESITA TION IN UPHOLDING THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE PENALTY IMPOSED BY THE AO UNDER S. 271(1)(C) OF THE ACT IN THESE TWO ASSESSMENT YEARS . THEREFORE, GROUND NOS.1 TO 3 IN THESE TWO APPEALS ARE DISMISSED. 7. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TE RMS OF THE RESIDUARY GROUND NO.4 IN THESE TWO APPEALS, ACCORDINGLY, THIS GROUND IS ALSO DISMISSED. 8. IN THE RESULT, BOTH THESE APPEALS ARE DISMISSED . ORDER PRONOUNCED IN THE COURT TODAY ON 24 -06-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 24-06-2011 COPY OF THE ORDER FORWARDED TO: 17 IT(SS)A NOS.257 & 258/AHD/2011 1. SHRI PANKAJ A SHAH, 8, ANAND SOCIETY, 103/104, O PAL SQUARE, ALKAPURI, BARODA 2. THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CI RCLE-2, AAYAKAR BHAVAN, RACE COURSE, BARODA 3. CIT CONCERNED 4. CIT(A)-IV, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD