Smt. Lajwantiben M. Manglani, Godhra V. The Deputy Commissioner of Income Tax, Central Circle-1, Baroda

ITSSA 260/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4122 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-11-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 02-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: AMAN SHAH
• Keywords: Initiation of penalty proceedings; Set aside
• Section: 143(3); 142(1); 133A; 153A; 143(2); 22; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) IT(SS)A. NO: 260/AHD/2017 (ASSESSMENT YEAR: 2012-13) LAJWANTIBEN M MANGLANI 1215/1, OPPOSITE SWAMINARAYAN COMPLEX BANROLI ROAD, ROAD, GODHRA-389001 V/S THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, BARODA (APPELLANT) (RESPONDENT) PAN: ADFPM4822J APPELLANT BY: SHRI KETAN SHAH AND AMAN SHAH, AR RESPONDENT BY : SHRI L. P. JAIN, SR. D.R. ( )/ ORDER DATE OF HEARING : 22 -11-201 9 DATE OF PRONOUNCEMENT : 18 -02-2020 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-12, AHMEDABAD DATED 28.02.2017 PERTAINING TO A.Y. 2012-13 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 2 1.0 ORDER PASSED UNDER SECTION 271 (1) (C) IS BAD IN LAW. 1.01 ON THE FACTS AND CIRCUMSTANCES OF APPELLANT 'S CASE AND IN LAW, THE ID. CIT (APPEAL) HAS ERRED TO APPRECIATE THE INITIATION OF PENALTY PROCEEDINGS IS BAD IN LAW AS IT WAS SILENT ON WHETHER IT IS CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS BOTH CAN NOT EX IST AT THE SAME TIME. 1.02 YOUR APPELLANT THEREFORE PRAYS YOUR HONOUR TO HOLD SO NOW AND TREAT THE PENALTY PROCEEDINGS AS BAD IN LAW. 2.00 IMPOSITION OF PENLATY TO THE TUNE OF RS. 2, 70,377 /- ON ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME. 2.01 ON THE FACTS AND CIRCUMSTANCES OF APPELLANT 'S CASE AND IN LAW, THE ID. CIT (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF PENAL TY TO THE TUNE OF RS. 2,70,377 /- UNDER SECTION 271AAB OF THE ACT BY THE ID. AO ON DI SCLOSURE OF ADDITIONAL INCOME IN THE RETURN OF INCOME FILED UNDER SECTION 153A OF THE INCOME TAX ACT, 1961 . WHILE DOING SO, THE ID. CIT (APPEALS) FAILED TO APP RECIATE THAT THE ADDITIONAL INCOME DID NOT HAVE THE CHARACTER OF UNDISCLOSED IN COME ADMITTED DURING THE COURSE OF SEARCH PROCEEDINGS. ADDITIONAL INCOME DEC LARED IN THE RETURNED INCOME IS A VOLUNTARY ACT AND THEREFORE APPELLANT CANNOT B E HELD GUILTY FOR LEVYING PENALTY UNDER SECTION 271AAB OF THEACT. 2.02 YOUR APPELLANT PRAYS TO HOLD SO NOW AND DELE TE THE IMPUGNED PENALTY. 3.00 YOUR APPELLANY CRAVES LEAVE TO ADD, AMEND A ND /OR DELETE ALL OR ANY GROUND(S) TAKE HEREINABOVE. 2. FACTS OF THE CASE AS EMANATED FROM THE PENALTY ORDE R: A SEARCH U/S 132 OF THE INCOME TAX ACT WAS CONDUCTE D IN THE DHANJIMAMA GROUP OF CASES INCLUDING THE CASE OF THE ASSESSEE ON 03.0 7.2012. IN THE SEARCH PROCEEDINGS, BASED ON DOCUMENTS FOUND, THE ASSESSEE 'S PART OF DISCLOSURE WAS AMOUNTING TO RS.27,03,770/-. CONSEQUENT TO THE SEAR CH ACTION AND BASED UPON MATERIAL FOUND DURING THE COURSE OF SEARCH, THE PRO CEEDINGS U/S.!53A OF THE ACT WERE INITIATED. ACCORDINGLY, NOTICE U/S 153A WAS IS SUED ON 18.03.2014 AND IN COMPLIANCE THERETO THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.07.2014 DECLARING TOTAL INCOME AT RS.27,01,730/-. THE ASSES SEE HAS MADE A DISCLOSURE OF RS. 27,03,770/-IN THE RETURN OF INCOME FILED IN RES PONSE TO NOTICE U/S 153A OF THE I. T. ACT. THEREAFTER, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED TO THE ASSESSEE. SUBSEQUENTLY, THE ORDER U/S 153A I. W. S. 143(3) OF THE ACT WAS PASSED ON 30.01.2015 AT THE ASSESSED INCOME OF RS. 27,01,730 /-. 2.1 IN THIS CASE, THE DISCLOSURE OF RS. 27,03,770/- WAS MADE DUE TO SEARCH AND THUS THIS AMOUNT WAS UNDISCLOSED INCOME OF THE ASSE SSEE FOR THE SPECIFIED YEAR ON WHICH PENALTY PROCEEDINGS U/S 271AAB OF THE ACT WERE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME. A NOTICE U/S 271AAB DATED 30.01.2015 WAS ISSUED AND DULY SERVED UPON THE ASSESSEE TO SHOW CA USE AS TO WHY PENALTY U/S 271AAB OF THE IT ACT SHOULD NOT BE IMPOSED. IN RESP ONSE, THE ASSESSEE DID NOT IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 3 SUBMIT ANY REPLY. SUBSEQUENTLY, THE ASSESSEE WAS, I N THE INTEREST OF JUSTICE, GIVEN A FINAL OPPORTUNITY VIDE THIS OFFICE LETTER DATED 1 4.05.2015 AND WAS REQUESTED TO EITHER SUBMIT HER EXPLANATION ON OR BEFORE 30.05.20 15 AS TO WHY PENALTY SHOULD NOT BE IMPOSED OR IF SHE WISHES TO BE HEARD IN PERS ON, EITHER SHE OR HER AUTHORISED REPRESENTATIVE MAY APPEAR ON OR BEFORE T HAT DATE. IN RESPONSE, THE ASSESSEE FILED HER REPLY IN THIS OFFICE AS PER LETT ER DATED 16.06.2015. THE ASSESSEE, IN THIS SUBMISSION, HAS MAINLY CONTENDED THAT THE S EARCH IN HER CASE WAS NOT CARRIED OUT. THEREFORE, PROVISIONS OF SECTION 271AA B OF THE ACT ARE NOT ATTRACTED IN HER CASE. THE ASSESSEE FURTHER CONTENDED THAT TH E ASSESSEE'S CASE, AT THE MOST, COVERED BY THE PROVISIONS OF SECTION 271AAA AND NOT 271AAB OF THE ACT. THE CONTENTIONS OF THE ASSESSEE IN THE SUBMISSION ARE R EPRODUCED AS UNDER:- 'I HAVE RECEIVED CAPTIONED LETTER DATED 14/05/2015 W ITH REGARDS TO PENALTY PROCEEDINGS U/S 271AAB OF THE INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT) FOR A. Y.2012-13. IN THAT RESPECT I WISH TO SUBMIT AS UNDE R: 1. I HAD FILED RETURN OF INCOME FOR A.Y.2012-13 A ND ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT WITHOUT MAKING AN Y ADDITION TO MY RETURNED INCOME. HOWEVER, WHILE PASSING ASSESSMENT ORDER FOR SAID ASSESSMENT YEAR, YOU HAVE MENTIONED AS UNDER: 'THE ASSESSEE IN HIS RETURN OF INCOME HAS OFFERED AD DITIONAL INCOME OF RS.27,03,770/- WHICH IS AS PER THE DISCLOSURE OF AD DITIONAL INCOME MADE DURING THE COURSE OF SEARCH PROCEEDINGS. THIS ADDITION INC OME HAS BEEN OFFERED DUE TO SEARCH ACTION AND THE FINDINGS THEREOF, THUS THE AM OUNT OF RS.27,03,770/- IS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE SPECIFIE D YEAR AS PER SECTION 271AAB OF THE IT ACT, THEREFORE, PENALTY PROCEEDINGS U/S 2 71AAB ARE INITIATED FOR THIS DEFAULT.' THE SAID ADDITIONAL INCOME OF RS.27,03,770/- WAS EA RNED FROM PROFIT ON SALE OF /AND OR BUILDING. 2. I FURTHER WISH TO INFORM YOU THAT THOUGH I HA VE FILED RETURN U/S 153A OF THE ACT AND CERTAIN AMOUNT WAS DECLARED AS ADDITIONAL I NCOME IN THE RETURN, THE SAME DOES NOT AMOUNT TO INCOME BEING DECLARED UNDER SEARCH PROCEEDINGS. THE DECLARATION OF ADDITIONAL INCOME IN THE RETURN WAS A VOLUNTARY ACT AND THERE IS NO CORONARY TO ANY SPECIFIC DOCUMENT FOUND DURING SEAR CH. THEREFORE SAID ADDITIONAL INCOME DOES NOT HAVE A CHARACTER OF UNDISCLOSED FOU ND IN SEARCH PROCEEDINGS. IN VIEW THEREOF NO PENALTY IS LIVEABLE U/S 271AAB OF T HE ACT. 3. I FURTHER WISH TO INFORM YOU THAT, NEW SECTION 271AAB OF THE ACT RELATING TO PENALTY WHERE SEARCH HAS BEEN INITIATED ON OR AFTER 01.07.2012 IS INSERTED BY THE FINANCE ACT, 2012 AND THE SAME HAS BEEN HAS ALSO BE EN MADE EFFECTIVE FROM 01.07.2012. PRIOR TO THAT, PENALTY ON SEARCH INITIA TED CASES WERE BEING DEALT WITH BY SECTION 271AAA OF THE ACT. 4. IT MAY BE NOTED THAT CLAUSE (A) OF SUB-SECTION (1) OF SECTION 271AAB PROVIDES THAT IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDE R SECTION 132 ON OR AFTER 1-7- 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 4 (I)IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDE R SUB-SECTION (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MAN NER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE, (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPEC IFIED PREVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN. AS MENTIONED HEREIN ABOVE, I HAD NOT DECLARED ANY I NCOME IN A STATEMENT U/S 132(4) OF THE ACT DURING SEARCH THEREFORE THE QUEST ION OF LEVY OF PENALTY U/S 271AAB DOES NOT ARISE. HOWEVER, ON THE ADDITIONAL I NCOME DECLARED IN THE RETURN OF INCOME FILED U/S 153A DUE TAXES WERE PAID WITH I NTEREST WITHIN SPECIFIED DATE. ACCORDINGLY I HAVE COMPLIED SUB-CLAUSES (II) AND (I II) OF CLAUSE (A) OF SUB SECTION (1) OF SECTION 271AAB OF THE ACT. SINCE I DO NOT FA LL UNDER SUB-CLAUSE (I) HEREIN ABOVE, NO PENALTY IS LEVIABLE U/S 271AAB OF THE ACT 5. THE CLAUSE (B) OF SUB-SECTION (1) OF SECTION 271 AAB PROVIDES THAT THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TWENTY PER CENT OF THE UNDI SCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCOME; (II) ON OR BEFORE THE SPECIFIED DATE, (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FU RNISHED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, I N RESPECT OF THE UNDISCLOSED INCOME. AS MENTIONED HEREIN ABOVE, I HAD NEITHER DECLARED A NY INCOME IN A STATEMENT U/S 132(4) OF THE ACT DURING SEARCH NOR WAS I HAVE ASKE D TO ADMIT ANY UNDISCLOSED INCOME DURING SEARCH THEREFORE THE QUESTION OF LEVY OF PENALTY U/S 271AAB DOES NOT ARISE. 6. THE CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 AAB PROVIDES THAT THE ASSESSES SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER CENT BUT WHICH SH ALL NOT EXCEED NINETY PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YE AR, IF IT IS NOT COVERED BY CLAUSES (A} AND (B). ON READING OF ABOVE CLAUSE PRIMA FACIE THE LEGISLAT IVE INTENTION BEHIND INSERTING ABOVE CLAUSE THAT IN CASE THERE IS A SEARCH AND THE ASSESSEE HAS MADE DISCLOSURE UNDER STATEMENT RECORDED U/S 132(4) OF THE ACT AND SAID DISCLOSURE IS NOT PART OF INCOME DISCLOSED IN THE RETURN FILED U/S 153A OR WH EN NO ADMISSION OF INCOME IS MADE DURING SEARCH THOUGH RELATED DOCUMENTS OF UNDI SCLOSED INCOME ARE FOUND AND NO ADDITIONAL INCOME IS DISCLOSED AS PART OF RE TURN U/S 153A OF THE ACT, IN SUCH A SITUATION PENALTY CAN BE LEVIED UNDER CLAUSE (C). HOWEVER IN MY CASE, I HAD IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 5 NEITHER DECLARED ANY INCOME IN A STATEMENT U/S 132( 4) OF THE ACT DURING SEARCH NOR WAS I HAVE ASKED TO ADMIT ANY UNDISCLOSED INCOM E DURING SEARCH NOR ANY DOCUMENT WAS FOUND WHICH SUGGESTED ANY UNDISCLOSED INCOME NOR ANY ADDITION IS DONE TO MY RETURNED INCOME, THEREFORE THE QUESTI ON OF LEVY OF PENALTY U/S 271AAB DOES NOT ARISE. 7. IT MAY FOE NOTED THAT SINCE NOTICE U/S 271AAB IS ALREADY ISSUED NO PENALTY CAN BE LEVIED UNDER ANY OTHER SECTION UNDER THE ACT. IT MAY BE NOTED THAT SUB-SECTION (2) OF NEW SECTION PROVIDES THAT NO PENALTY UNDER T HE PROVISIONS OF CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPO N THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION ( 1). 8. FROM READING OF SECTION 271AAB AS A WHOLE, IT CAN VERY WELL BE INTERPRETED THAT PENALTY MAY BE IMPOSED BY A.O. ON SEARCH INITI ATED CASES. HERE, I WOULD LIKE TO BRING TO YOUR KIND NOTICE THAT FIRST OF ALL, NO SEARCH HAS BEEN INITIATED ON ME. IN FACT, SEARCH WAS INITIATED ON DHANRAJMANGLANI AND O THERS OF GODHARA. THEREFORE, I SHOULD NOT BE MADE PARTY FOR IMPOSITION OF PENAL TY U/S 271AAB OF THE ACT. 3. BUT LD. A.O. DID NOT AGREE WITH THE CONTENTION OF T HE ASSESSEE AND LEVIED THE PENALTY OF RS. 2,70,377/-. 4. AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRST ST ATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE PENALTY: I FIND NO INFIRMITY IN THE ACTION OF THE AO IN LEV YING PENALTY. I, HOWEVER, ALSO FIND THAT THE APPELLANT'S CATEGORICAL CONTENTION THAT TH E DISCLOSURE U/S 132(4) IS NOT MADE BY THE APPELLANT HERSELF BUT IS MADE BY SHRI D HANRAJ MANGLANI AND THEREFORE, PENALTY IS NOT LEVIABLE HAS NOT BEEN SPE CIFICALLY AND EXPRESSLY DEALT WITH BY THE LD. AO. IN THIS BEHALF, I MAY OBSERVE T HAT IF THIS ARGUMENT OF THE APPELLANT IS TAKEN TO THE LOGICAL END, THE PENALTY AT 20%, IN PLACE OF 10% LEVIED BY THE AO, WOULD BECOME PAYABLE BY THE APPELLANT UNDER CLAUSE (B) OF SECTION 271AAB BECAUSE IT REMAINS INDISPUTABLE THAT THE 'SUB JECT MATTER OF DISCLOSURE' IS INDEED THE INCRIMINATING DOCUMENTS/UNACCOUNTED ASSE TS WHICH HAVE NOT FOUND ANY REFERENCE OR ENTRY IN THE REGULAR BOOKS OF ACCO UNTS MAINTAINED BY THE APPELLANT. HOWEVER, I AM ALSO AWARE OF JURISDICTION AL TRIBUNAL DECISION IN THE CASE OF BALAJI FORMALIN PUT. LTD. DATED 8/8/2013 OF HON'BLE AHMEDABAD TRIBUNAL VIDE ITA NO: 1274/AHD/2012 HAS HELD THAT THE DISCLO SURE MADE BY THE DIRECTOR OF THE APPELLANT COMPANY WILL ENTITLE THE ASSESSEE COM PANY TO GET IMMUNITY FROM PROVISION OF SECTION 271AAA. IN OTHER WORDS, THE DI SCLOSURE MADE ON BEHALF OF AN ASSESSEE, IF FINALLY 'HONOURED' BY THAT ASSESSEE, IS EQUIVALENT IN LAW TO THE DISCLOSURE U/S 132(4) MADE BY THE ASSESSEE FOR THE BENEFIT OF IMMUNITY U/S IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 6 271AAA. IN THE ABSENCE OF SUCH BENEFIT, THE PENALTY WOULD BECOME PAYABLE. THE RELEVANT PART OF THE SAME IS REPRODUCED AS UNDER: 9 FROM THE FACTS AND CIRCUMSTANCES OF THE CASE BEFO RE US, WE ARE OF THE CONSIDERED VIEW THAT THE DISCLOSURE MADE BY THE DIR ECTOR OF THE APPELLANT COMPANY DURING THE SEARCH PROCEEDINGS ON BEHALF OF HIMSELF, SISTER CONCERNS AND GROUP CONCERNS WILL ENTITLE THE APPELL ANT COMPANY WHO IS ONE AMONGST THE GROUP CONCERNS, TO CLAIM BENEFIT U/ S 271AAA OF THE ACT THOUGH ITS PROCEEDINGS WERE COMPLETED U/S 133A READ WITH SECTION 143(3) OF THE ACT. THEREFORE, WE HEREBY DELETE THE PENALTY LEVIED BY THE LEARNED AO WHICH WAS FURTHER CONFIRMED BY THE LEARNED CIT(A ). IT IS THUS CLEAR THAT IN LAW THE 'DISCLOSURE' MADE ON BEHALF OF THE APPELLANT ONLY HELPS THE APPELLANT IN NOT FALLING UNDER CLAUSE (B) REQUIRING LEVY OF PENALTY @ 20% AND THUS PAY ONLY 10% OF THE PENALTY UNDER CLAUSE ( A) OF S. 271AAB(1). THUS, I HOLD THAT APPELLANT HERSELF SHOULD BE DEEMED TO HAV E MADE THE DISCLOSURE U/S 132(4). THE INCOME OFFERED IN THE RETURN OF INCOME IS UNDOUBTEDLY 'UNDISCLOSED INCOME' FOR THE 'SPECIFIED PREVIOUS YEAR' ATTRACTING S . 271AAB. THUS, THERE IS NO INFIRMITY IN THE ACTION OF THE LD. AO IN INITIATING AND LEVYING PENALTY U/S 271AAB(L)(A) AND THEREFORE, THE ORDER OF THE LD. AO IS CONFIRMED. PENALTY OF RS.2,70,377/- IS SUSTAINED. 9. IN THE RESULT, THE APPEAL IS DISMISSED. 10. IN SUM TOTAL, BOTH THE APPEALS ARE DISMIS SED. 5. NOW ASSESSEE HAS COME BEFORE US BY WAY OF SECOND ST ATUTORY APPEAL. 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. THE CO- ORDINATE BENCH IN SIMILAR FACTS AND CIRCUMSTANCES D ECIDED IN FAVOUR OF ASSESSEE AND ORDER ARISING FROM THE SAME SEARCH IN ITA NO. 5 86/AHD/2018 FOR THE ASSESSMENT YEAR 2012-13 WHEREIN CO-ORDINATE BENCH H AS GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING OBSERVATION: 16. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT T HE LD. CIT-A ERRED IN CONFIRMING THE PENALTY IMPOSED BY THE AO FOR RS. 63,417.00 UND ER SECTION 271AAB OF THE ACT. 17. THE ASSESSEE HAS DISCLOSED ADDITIONAL INCOME OF 6,34,172.00 IN PURSUANCE TO THE RETURN FILED UNDER SECTION 153A OF THE ACT. THE AO ACCORDINGLY ON SUCH ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE LEVIED THE PENALTY AT THE RATE OF 10% OF ADDITIONAL INCOME BEING 63,417.00 UNDER THE PROV ISIONS OF SECTION 271AAB OF THE ACT. THE LEARNED CIT (A) ALSO CONFIRMED THE ORD ER OF THE AO. IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 7 BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) , THE ASSESSEE IS IN APPEAL BEFORE US. 18. THE LEARNED AR BEFORE US SUBMITTED THAT THERE W AS NO UNDISCLOSED INCOME AVAILABLE TO THE ASSESSEE WITHIN THE MEANING OF EXP LANATION (C) TO SECTION 271 AAB OF THE ACT. THEREFORE, THERE CANNOT BE ANY PENA LTY. 19. ON THE OTHER HAND, THE LEARNED DR VEHEMENTLY SU PPORTED THE ORDER OF THE AUTHORITIES BELOW. 20. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE NOT E THAT THE EXPLANATION TO SECTION 271AAB OF THE ACT HAS A DIRECT BEARING ON T HE ON THE ISSUE ON HAND WHICH READS AS UNDER: '48[PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAB. (1) THE ASSESSING OFFICER MAY, NOTWITHSTAND ING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR A FTER THE 1ST DAY OF JULY, 2012 49[BUT BEFORE THE DATE ON WHICH THE TAXATION L AWS (SECOND AMENDMENT) BILL, 2016 RECEIVES THE ASSENT OF THE PR ESIDENT50], THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION T O TAX, IF ANY, PAYABLE BY HIM,-- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (C) 'UNDISCLOSED INCOME' MEANS-- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRE SENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER V ALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUM ENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS-- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCL OSED TO THE 54[PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 54[PRI NCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXPENSE RECOR DED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FA LSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCT ED.]' FROM THE ABOVE PROVISION, IT IS CLEAR THAT THE PENA LTY SHALL BE IMPOSED UNDER SECTION 271AAB OF THE ACT WHERE THERE IS UNDISCLOSE D INCOME WITHIN THE MEANING IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 8 OF THE EXPLANATION TO 271AAB OF THE ACT. HOWEVER, WE NOTE THAT THERE WAS NO DOCUMENTARY EVIDENCE FOUND BY THE SEARCH TEAM SUGGE STING THAT THERE WAS ANY UNDISCLOSED INCOME OF THE ASSESSEE. AS SUCH THE INC OME DISCLOSED BY THE ASSESSEE WAS VOLUNTARILY WITHOUT HAVING FOUND ANY DOCUMENT I N THE COURSE OF SEARCH. WE ALSO NOTE THAT THERE NO REFERENCE MADE BY THE AUTHO RITIES BELOW TO THE DOCUMENTS OF INCRIMINATING NATURE HAVING BEARING ON THE INCOME OF THE ASSESSEE IN THEIR RESPECTIVE ORDERS. THE LD. DR HAS NOT ADVA NCED ANY ARGUMENTS AGAINST THE CONTENTIONS RAISED BY THE LD. AR FOR THE ASSESS EE. IN HOLDING SO WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. MARVEL ASSOCIATES REPORTED IN 170 ITD 353 WHEREIN I T WAS HELD AS UNDER: '9. PENALTY U/S 271AAB ATTRACTS ON UNDISCLOSED INCOM E BUT NOT ON ADMISSION MADE BY THE ASSESSEE U/S 132(4). THE AO MUST ESTABL ISH THAT THERE IS UNDISCLOSED INCOME ON THE BASIS OF INCRIMINATING MATERIAL. IN T HE INSTANT CASE A LOOSE SHEET WAS FOUND ACCORDING TO THE A.O., IT WAS INCRIMINATI NG MATERIAL EVIDENCING THE UNDISCLOSED INCOME. IN THE PENALTY ORDER THE AO OBS ERVED THAT LOOSE SHEET SHOWS THE COST PER SQUARE FEET IS RS.3571/- PER SFT. AND ASSESSEE STATED TO HAVE SUBMITTED IN SWORN STATEMENT COST PER SQ. FEET AT R S.2200/- TO RS.2300/- PER SQ. FEET. HOWEVER NEITHER THE AO NOR THE LD.CIT(A) HAS VERIFIED THE COST OF CONSTRUCTION WITH THE BOOKS AND PROJECTIONS FOUND A T THE TIME OF SEARCH. THE COUNSEL ARGUED THAT IT WAS MERE PROJECTION BUT NOT THE ACTUALS. THE WRITE UP HEADING ALSO MENTIONED THAT SUMMARY OF THE PROJECTE D PROFITABILITY STATEMENT. THERE IS NO EVIDENCE TO ESTABLISH THAT PROJECTIONS REFLECTED IN THE LOOSE SHEET IS REAL. NO OTHER MATERIAL WAS FOUND DURING THE COURSE OF SEARCH INDICATING THE UNDISCLOSED INCOME. THERE WAS NO MONEY, BULLION, JE WELLERY OR VALUABLE ARTICLE OR THING OR ENTRY IN THE BOOKS OF ACCOUNTS OR DOCUMENT S TRANSACTIONS WERE FOUND DURING THE COURSE OF SEARCH INDICATING THE ASSETS N OT RECORDED IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN THE NORMA L COURSE, WHOLLY OR PARTLY. THE REVENUE DID NOT FIND ANY UNDISCLOSED ASSET, ANY OTHER UNDISCLOSED INCOME OR THE INFLATION OF EXPENDITURE DURING THE SEARCH/ ASS ESSMENT PROCEEDINGS. THOUGH A LOOSE SHEET OF PAGE NO.107 OF ANNEXURE A/GS/MA/1 WAS FOUND THAT DOES NOT INDICATE ANY SUPPRESSION OF INCOME BUT IT IS ONLY P ROJECTION OF PROFIT STATEMENT. THE AMOUNT OF RS.3571/- MENTIONED IN THE PROJECTION S REFERS TO COST AND PROFIT WHICH IS APPROXIMATE SALE PRICE BUT NOT THE COST AS STATED BY THE AO IN THE PENALTY ORDER. THE COST OF CONSTRUCTION IN THE PROJ ECTIONS PROJECTED AT RS.2177/- WHICH IS IN SYNCH WITH THE STATEMENT GIVEN BY THE A SSESSEE. THE AO WAS HAPPY WITH THE DISCLOSURE GIVEN BY THE ASSESSEE AND DID N OT VERIFY THE FACTUAL POSITION WITH THE BOOKS OF ACCOUNTS AND PROJECTIONS AND BRIN G THE EVIDENCE TO UNEARTH THE UNDISCLOSED INCOME. NEITHER THE A.O. NOR THE INVEST IGATION WING LINKED THE COST OF PROFIT OR COST OF ASSET TO THE ENTRIES IN THE BOOKS OF ACCOUNTS OR TO THE SALES CONDUCTED BY THE ASSESSEE TO THE SALE DEEDS. THEREF ORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE LOOSE SHEET FOUND DURING THE COURSE OF SEARCH INDICATES ANY UNDISCLOSED INCOME OR ASSET OR INFLATION OF EXPENDITURE. THE HON'BLE ITAT DELHI BENCH IN THE CASE OF AJAY SHARMA V. DY. IT(SS)A NO. 260/AHD/2017 . A.Y. 2012-13 9 CIT [2013] 30 TAXMANN.COM 109 HELD THAT WITH RESPEC T TO THE ADDITION ON ACCOUNT OF ALLEGED RECEIVABLES AS PER SEIZED PAPER, THERE I S NO DIRECT MATERIAL WHICH LEADS AND ESTABLISHES THAT ANY INCOME RECEIVED BY THE ASS ESSEE HAS NOT BEEN DECLARED BY THE ASSESSEE. AN ADDITION HAS BEEN MADE ON THE B ASIS OF LOOSE DOCUMENT, WHICH DID NOT CLOSELY PROVE ANY CONCEALMENT OR FURN ISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. HENCE PENALTY U/S 158B FA (2) OF THE ACT IS NOT LEVIABLE. THE FACTS OF THE ASSESSEE'S CASE SHOWS TH AT THERE WAS NO UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARCH AND NO INC RIMINATING MATERIAL WAS FOUND, HENCE WE HOLD THAT THERE IS NO CASE FOR IMPO SING PENALTY U/S 271AAB OF THE ACT, ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND CANCEL THE PENALTY U/S 271AAB OF THE ACT.' IN VIEW OF THE ABOVE, WE ARE NOT CONVINCED WITH THE PENALTY LEVIED BY THE AUTHORITIES BELOW. HENCE WE REVERSE THE ORDER OF TH E AUTHORITIES BELOW AND DIRECT THE AO TO DELETE THE PENALTY LEVIED BY HIM UNDER SE CTION 271 AAB OF THE ACT. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED. 21. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. 22. IN THE COMBINED RESULT, ALL THE SIX APPEALS FIL ED BY THE ASSESSEE ARE ALLOWED. 7. IN PARITY WITH THE AFORESAID CO-ORDINATE BENCH DECI SION, WE DELETE PENALTY IMPOSED AND CONFIRMED BY THE LOWER AUTHORITY AND DI RECT ASSESSING OFFICER TO DELETE THE PENALTY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 18 - 02- 2020 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 18/02/2020 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)