Shri Bhupendra R. Patel, Bharuch V. The Income Tax Officer, Ward-1, Bharuch

ITSSA 270/AHD/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3117 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 23-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 143(3); 153A; 27; 132; 15; 139

Judgement Text

, *CH* *CH**CH* *CH* IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.(SS)A. NO.270/AHD/2014 ( / ASSESSMENT YEAR :2005-06) SHRI BHUPENDRA R. PATEL PROP. MUKTANAND REAL ESTATE CO. NYALKARAN VILLA, BEHIND VRUNDAVAN SOCIETY, BHARUCH / VS. THE INCOME TAX OFFICER, WARD-1 BHARUCH. ./ ./ PAN/GIR NO. : AEUPP 6881 L ( ! ' / APPELLANT ) .. ( #' / RESPONDENT ) ! ' $ / APPELLANT BY : SHRI MUKUND BAKSHI, A.R. #' % $ / RESPONDENT BY : SHRI JAMES KURIAN, SR. D.R. & ' ( % ) * / DATE OF HEARING 26/04/2017 +,-. % ) * / DATE OF PRONOUNCEMENT 28/04/2017 / / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, BARODA, DATE D 18/03/2014 FOR THE ASSESSMENT YEAR (AY) 2005-06. 2. ASSESSEE HAS BEEN TAKEN FOLLOWING GROUNDS OF APP EALS: (I) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, BA RODA HAS ERRED IN FACTS AND IN LAW IN HOLDING THAT THE ADDIT IONAL INCOME ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 2 - OFFERED IN THE RETURN FILED IN RESPONSE TO SEC. 153 A REPRESENTS CONCEALED INCOME SO AS TO BE LIABLE TO PENALTY U/S. 271(1)(C). (II) THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT ACCEPTING THAT PENALTY U/S 271(1)(C) DO NOT APPLY TO A CASE W HERE THE ADDITIONAL INCOME IS FOUND DURING THE COURSE OF SEA RCH CONDUCTED BETWEEN THE PERIOD 01.06.2003 TO 31.05.20 07 AS HELD BY THE HON'BLE DELHI TRIBUNAL IN THE CASE OF PREM ARORA VS. DCIT [2012] 24 TAXMANN.COM 260 (DELHI) AND RELIED U PON. (III). THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD. A.O. IN THE LEVY OF PENALTY U/S 2 71(L)(C) ON THE ADDITIONAL INCOME OF RS.27,44,646/- OFFERED VOLUNTA RILY IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 15 3A OF THE I.T. ACT. (IV). THE LD. CIT (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LD. AO IN LEVY OF PENA LTY ON THE ADDITION OF RS.90,000/- AS MADE TO THE RETURNED INC OME HELD AS REPRESENTING THE ALLEGED UNACCOUNTED MONEY DEPOSITE D IN THE BANK ACCOUNT. (V). THE LD. CIT(APPEALS) HAS ERRED IN LAW AND IN F ACTS IN CONFIRMING THE LEVY OF PENALTY OF RS.9,60,000/- U/S. 271(1)(C) OF THE IT ACT AND IS PRAYED TO BE DELETED. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- A SEARCH ACTION U/S. 132 OF THE IT ACT WAS CARRIED OUT IN THE CASE OF ASSESSEE ON 17/01/2007. CONSEQUENTIAL PROCEEDINGS U /S. 153 A WERE INITIATED. 4. THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9,83,814/- AND AGRICULTURAL INCOME AT RS.1,86,750/- ON ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 3 - 5/08/2005. SUBSEQUENTLY, IN RESPONSE TO THE NOTICE U/S. 153 A OF THE IT ACT, THE ASSESSEE FILED HIS RETURN OF INCOME ON 10/ 12/2007 DISCLOSING THE TOTAL INCOME AT RS.37,28,460/- AND AGRICULTURAL INC OME AT RS.1,86,750/-. THE ASSESSMENT IN THIS CASE WAS FINALIZED ON 31/12/ 2008 COMPUTING ASSESSED INCOME AT RS.64,33,110/- AND INITIATED ON ADDITIONAL INCOME DISCLOSED TO THE TUNE OF RS.27,44,646/-, ON MONEY U TILIZED IN THE DIFFERENT MEANS VIZ. INVESTMENTS, CASH DEPOSITION IN BANKS ET C., AMOUNTING TO RS.14,01,650/-, & UNACCOUNTED INVESTMENT ON GOLD TO THE TUNE OF RS.13,00,000/-. ORDER GIVING EFFECT TO THE CIT(A)-I V AHMEDABAD WAS GIVEN ON 22/02/2010 REVISING TOTAL INCOME AT RS.38, 21,460/- AND AGRICULTURAL INCOME AT RS. 4,86,240/-. 5. WHILE PASSING THE ORDER THE CIT(A) HAD GRANTED T HE RELIEF ON UNACCOUNTED INVESTMENT ON GOLD TO THE TUNE OF RS. 1 3,00,000/- AND UNEXPLAINED CASH DEPOSIT OF RS.13,11,650/-. PENALTY PROCEEDINGS WERE INITIATED U/S. 271(L)(C) ON 31/12/2008. FRESH OPPOR TUNITY IN THIS CASE WAS GIVEN ON 28/02/2011 WHICH WAS DULY SERVED UPON THE ASSESSEE ON 08/03/2011. 6. IN RESPONSE TO THE NOTICE, ASSESSEE HAS FILED HI S SUBMISSION ON 16/03/2011 WHICH IS AS UNDER: THIS REFERS TO THE PENALTY PROCEEDINGS, INITIATED B Y YOUR GOOD SELF WHILE FINALIZING THE ASSESSMENT U/S 153A(B) R.W.S. 143(3) OF THE ACT FOR THE ABOVE ASSESSMENT YEAR BY ORDERS DATED 31/12/2008 IN RESPECT OF THE FOLLOWING ADDITIONS: ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 4 - A. ADDITION INCOME OFFERED IN THE RETURN AS DECLARED IN THE SEARCH PROCEEDINGS. RS.27,44,646/ - B. ADDITION ON ACCOUNT OF INVESTMENT IN FDRS WITH ICICI BANK RS.13,00,000/- C. UNEXPLAINED CASH DEPOSITION IN NOMINEES BANK ACCOUNTS RS.14,01,650/- THE ASSESSEE SUBMITS THAT THERE IS NO CONCEALMENT A S ADDITIONAL INCOME WAS OFFERED TO BUY PEACE AND TO AVOID LITIGATION WI TH AN UNDERSTANDING THAT NO PENALTY WOULD BE LEVIED IN RESPECT OF THE A DDITIONAL INCOME DISCLOSED IN THE SEARCH PROCEEDINGS AND ACCORDINGLY , THE ADDITIONAL INCOME OFFERED VOLUNTARILY IN SUCH RETURNS AS MENTI ONED ABOVE. THE ADDITIONAL INCOME REPRESENTS THE INCOME NOT DECLARE D IN THE RETURNS FILED U/S. 139. THE ASSESSMENT HAS BEEN COMPLETED U /S 153A(B) R.W.S. 143(3) ON 31/12/2008 WHEREBY THE INCOME RETURNED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A IS ACCEPTED WITHOUT ANY FURTHER FINDINGS EXCEPT ADDITION OF ON-MONEY AS WELL AS CASH DEPOSIT ION MADE IN THE BANK ACCOUNT OF NOMINEES AS MENTIONED ABOVE AND SAM E IS DELETED BY THE HON'BLE CIT (A)-IV, AHMEDABAD VIDE HIS ORDER DA TED 07/01/2010 IN APPEAL NO.CIT(A)-IV/438.B/CC-2/2008-09 FOR THE A.Y. 2005-06. THE ASSESSMENT IS MADE ON THE BASIS OF THE RETURNS FILED IN RESPON SE TO NOTICE U/S.153A. IN THE ASSESSMENTS MADE, THE PENAL TY WAS INITIATED IN RESPECT OF FOLLOWING ADDITIONS MADE: A. ADDITION INCOME OFFERED IN THE RETURN AS DECLARED IN THE SEARCH PROCEEDINGS. RS.27,44,646/ - B. ADDITION ON ACCOUNT OF INVESTMENT IN FDRS WITH ICICI BANK RS.13,00,000/- C. UNEXPLAINED CASH DEPOSITION IN NOMINEES BANK ACCOUNTS RS.14,01,650/- REGARDING THE LEVY OF PENALTY IN RESPECT OF ADDITIO NAL INCOME OFFERED FOR THE YEAR UNDER CONSIDERATION OF RS.27,44,646/- IS C ONCERNED, IT IS SUBMITTED THAT, THE ASSESSEE HAD FILED RETURN OF IN COME U/S. 139 BY DECLARING AN INCOME AT RS.37,28,460/-. ADDITIONAL INCOME OF RS.27,44,646/- ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 5 - SUBSEQUENTLY, ON 05-11-2007, THE ASSESSEE FILED A R ETURN IN RESPONSE TO NOTICE U/S. 153A DECLARING AN INCOME AT RS.37,28,46 0/- BY OFFERING ADDITIONAL INCOME OF RS.27,44,646/- AS MENTIONED AB OVE. IT IS RESPECTFULLY SUBMITTED THAT WHERE THE INCOME IS ASSESSED ON THE BASIS OF RETURN OF INCOME AND INCOME SO OFFERED IN THE RETURN FILED U/S. 153A OF THE ACT, NO PENALTY COULD BE LEVIED U/S. 27 1(1)(C) OF THE ACT AS THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IS AC CEPTED IN ENTIRETY WITHOUT MAKING ANY FURTHER ENQUIRY OR ITS RELATION TO SEIZED MATERIAL OR FINDING OF SEARCH. THE ADDITIONAL INCOME, IN FACT, IS OFFERED VOLUNTARILY AND WHERE THE RETURNED INCOME IS ACCEPTED WITHOUT A NY FURTHER VERIFICATION OR ENQUIRY, THE PENALTY U/S. 271(1)(C) IS NOT LEVIABLE EVEN IN A CASE WHERE THE ADDITIONAL INCOME IS OFFERED IN TH E RETURN FILED IN RESPONSE TO NOTICE U/S. 153A. THE ASSESSEE'S ABOVE VIEW IS SUPPORTED BY THE DECIS ION OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. SURESH CHAND BANSAL (2009) 223 CTR (CAT) 128/22 DTR (CAL) 1, WHEREIN THE HON'BLE HIGH COURT IN DEALING WITH THE PENALTY LEVIED U/S. 271(1)(C) IN RELATION TO THE ADDITIONAL INCOME OFFERED AFTER SEARCH IN THE RETURNS FILED IN RESPONSE TO NOTICE U/S. 153A HELD THAT THE ADDITIONAL INCOME FOR THE ASSESS MENT YEAR WERE ACCEPTED IN ENTIRETY BY THE ASSESSING OFFICER. THER E WAS NO ATTEMPT BY THE ASSESSING OFFICER TO FIND THE CONTENTS OF THE D OCUMENT FOUND AND SEIZED. THE BASIS OF ADDITION IS NOT EVEN DISCUSSED . IT IS THEREFORE CLEAR THAT THE ADDITIONAL INCOME WAS OFFERED FOR TAXATION IN A SPIRIT OF SETTLEMENT. THE HON'BLE HIGH COURT FURTHER WENT ON TO HOLD THAT NO ATTEMPT IS EVEN MADE TO FIND WHETHER THE INCOME ACTUALLY BELONGED T O THE ASSESSEE AND THAT SUCH CONCLUSION IS DRAWN MERELY ON THE BASIS O F OFFER BY THE ASSESSEE IN THE RETURN AND, THEREFORE, THE CONCLUSI ON OF CONCEALMENT IN SUCH CIRCUMSTANCES IS NOT VALID. HON'BLE HIGH COURT HAS HELD THAT THE PENALTY IS NOT AUTOMATIC AND THE RELEVANCE OF SUCH CIRCUMSTANCES HAS TO BE TAKEN INT O ACCOUNT AND WHERE THE LEVY OF PENALTY IS MERELY ON THE BASIS OF OFFER MADE IN THE RETURN WITHOUT DETAILED DISCUSSION OF THE DOCUMENTS AND NE EXPLANATION WHICH COMPELLED THE OFFER OF ADDITIONAL INCOME, THE PENAL TY LEVIED WAS ABLE TO BE CANCELLED. IN COMING TO THE ABOVE CONCLUSION, TH E HON'BLE HIGH ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 6 - COURT RELIED ON THE VARIOUS DECISIONS WHICH INCLUDE S THE DECISION OF DILIP N. SHROFF VS. JCIT (2007) 291 ITR (SC) 519, C IT VS. SURESH KUMAR BANSAL & ANR. (2002) 254 ITR 130 (P & H), HAR IGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P & H). IN THE CASE OF THE ASSESSEE, SIMILAR FACTS EXIST AS CAN BE SEEN FROM THE ASSESSMENT ORDER ITSELF WHERE THE TOTAL INCOME AS P ER RETURN FILED U/S. 153A IS ACCEPTED WITHOUT ANY DISCUSSION OR FINDING AND, THEREFORE, FOLLOWING THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT, THE PENALTY LEVIED U/S. 271(1)(C) IS TO BE CANCELLED. FURTHER TO THIS, THE ASSESSEE IS AWARE OF RECENT JU RISDICT/ONAL TRIBUNAL DECISION IN THE CASE OF KI RIT DAHYABHAI PATEL AND RAJESH A. PATEL REPORTED IN 125 TTJ (AHD) 145 (2009) (TM). IT IS RESPECTFULLY SUBMITTED THAT THE FACTS OF THIS CASES ARE ALSO DIFFERENT THAN THE FACTS OF THE ASSESSEE'S CASE. IN THE CASE BEFORE THE HON'BLE TRIBUNAL, THE FINDING IN RESPECT OF ADDITIONAL INCO ME OFFERED WAS LINKED TO THE VARIOUS INVESTMENTS / EXPENDITURE MADE WHICH WAS DETECTED IN THE COURSE OF SEARCH AND THAT SUCH INCOME WAS NOT EVEN DISCLOSED IN THE STATEMENT RECORDED U/S. 132(4). THE HON'BLE TRIBUNAL IN PARA 10.11 HAS CATEGORICALL Y GIVEN A FINDING THAT THE DEPARTMENT HAD INCRIMINATING MATERIAL WHIC H FORMS THE BASIS FOR INCOME DISCLOSED AND ASSESSED. EVEN THE HON'BLE THIRD MEMBER IN PARA 14 CONFIRMED THE FINDING TO THE EFFECT THAT TH E ASSESSEES WERE FOUND TO BE OWNERS OF CASH, JEWELLERY ETC. WHICH IS ADMIT TED TO HAVE BEEN ACQUIRED OUT OF UNDISCLOSED INCOME AND ACCEPTED IN THE ASSESSMENTS. YOUR ASSESSEE INVITES YOUR GOOD SELFS KIND ATTENTI ON TO THE UNREPORTED DECISION OF THE RAJKOT TRIBUNAL IN THE CASE OF DCIT VS. BALAJI MULTIFLEX PVT. LTD. IN IT(SS) 64 & 65/RJT/09 FOR A. Y. 2004-05 AND 2005-06 WHEREIN THE REASONS STATED IN THE ABOVE PARAS, THE HON'BLE RAJKOT TRIBUNAL HELD THAT THE CASE OF THE KIRIT DAH YABHAI WAS DISTINGUISHABLE. THE HON'BLE RAJKOT TRIBUNAL ALSO R ELIED ON THE DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KANNAIYALAL 214 CTR 611 AND HELD THAT THE PENALTY ON THE ADDITIONAL INCOME OFFERED COULD NOT BE SADDLED WITH PENALTY U/S. 271(1)(C) WH ERE THE OFFER OF ADDITIONAL INCOME IN THE RETURN IS ACCEPTED AS SUCH . ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 7 - IN THE CASE OF SHRI KIRAN MAJMUDAR, ON SIMILAR FACT S, THE LD. CIT (A)- IV, AHMEDABAD, HAS DELETED THE PENALTY LEVIED IN RE SPECT OF ADDITIONAL INCOME FOR THE A. Y. 2003-04, 2004-05 AND 2006-07 V IDE ORDERS DATED 8/11/2010 IN APPEAL NOS. CIT(A)-IV/81 B, 82B AND 83 B/CC-2/09-10. COPY OF THE APPELLATE ORDER IS ENCLOSED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, YOUR GOOD SELF IS REQUESTED TO DROP THE PENALTY PROCEEDINGS IN RESPEC T OF ADDITIONAL INCOME OFFERED IN THE RETURN OF INCOME FILED IN RES PONSE TO NOTICE U/S 153A. ADDITION ON ACCOUNT OF INVESTMENT IN FDRS WITH ICIC I BANK- RS.13,00,000/- THE ADDITION OF RS.13,00,000/- WAS APPEALED AND THE HON'BLE CIT(A)- IV, AHMEDABAD HAS DELETED THE SAID ADDITION VIDE HI S ORDER DATED 07/01/2010 IN APPEAL NO.CIT(A)-IV/438.B/CC-2/2008-0 9 FOR THE YEAR UNDER CONSIDERATION. HENCE, LEVY OF PENALTY U/S 271 (1)(C) DOES NOT ARIS E. ADDITION ON ACCOUNT OF CASH DEPOSITS IN BENAMI'S BANK ACCOUNT - RS.14,01,650/- CONSIDERING THE SUBMISSION MADE BEFORE THE APPELLAT E AUTHORITY, THE ADDITION OF RS.13,11,650/- WAS DELETED BY THE H ON'BLE CIT(A)- IV, AHMEDABAD VIDE HIS ORDER DATED 07/01/2010 IN AP PEAL NO. CIT(A)-IV/438.B/CC-2/2008-09 FOR THE YEAR UNDER CON SIDERATION AND BALANCE AMOUNT OF RS.90,000/- WAS CONFIRMED DUE TO CASH WAS DEPOSITED IN THE BANK ACCOUNT AFTER A PERIOD OF TWO MONTHS AS THE ASSESSEE HAS MADE WITHDRAWAL OF RS.10.50 LAKHS ON 3 0 TH AND 31 ST MARCH, 2004 AND ACCORDINGLY, MERE REJECTION OF DETA ILED ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 8 - EXPLANATION OF THE ASSESSEE IS NOT AMOUNT TO CONCEA LMENT OF INCOME OR FURNISHING OF IN INACCURATE PARTICULARS O F INCOME. THEREFORE, NO PENALTY SHOULD BE LEVIED IN THIS REGA RD. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, YOUR GOOD SELF IS REQUESTED TO DROP THE PENALTY PROCEEDINGS. REPLY OF THE ASSESSEE WAS CONSIDERED. HOWEVER, THE ASSESSEE WAS NOT GIVEN IMMUNITY U/S. 139(1) WITHOUT DISCLOSING A MOUNT OF RS. 27,44,646/- AND THE DUE DATE OF FILING OF RETURN OF INCOME U/S. 139(1) FOR THIS ASSESSMENT YEAR HAD EXPIRED LONG BE FORE THE DATE OF SEARCH. FINALLY PENALTY OF RS.9,55,149/- WAS CONFIR MED BY THE LEARNED CIT. 7. AGAINST THE SAID ORDER ASSESSEE PREFERRED SECOND APPEAL BEFORE US. 8. WE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER PASSED BY THE AUTHORITIES BELOW. IN THIS CASE LEARNED AR C ITED A JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE MATTER OF PR. COMM ISSIONER OF INCOME TAX, VADODARA VS. SHRI JIGESH VENILAL KORALWALA IN TAX APPEAL NO.976 OF 2015: IN THIS CASE, HONBLE HIGH COURT HAS HELD THAT IN S UCH CASE WHERE ASSESSEE WAS FOUND ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY UTILIZING HIS INCOME, FOR THE PREVIOUS YEAR ENDED BEFORE THE ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 9 - DATE OF THE SEARCH BUT THE RETURN OF INCOME HAS NOT BEEN FILED BEFORE THE SAID DATE OR, IF FILED, SUCH INCOME HAS NOT BEEN DI SCLOSED, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN THE RETURN OF INCOME FURNISHED AFTER THE DATE OF THE SEARCH, THE ASSESSEE WOULD BE LIABLE TO PENALTY, UNLESS UPON FULFILLMENT OF CONDI TIONS CONTAINED IN CLAUSES (1) AND (2) OF THE SAID EXPLANATION, THE AS SESSEE CAN CLAIM IMMUNITY. THIS EXPLANATION NOWHERE REFERS TO ANY IN COME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS. IN OTHER WORDS, THEREFORE, UNLESS DURING THE SEARCH TH E ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, EXPLANATION 5 WOULD NOT APPLY. THIS BECOMES CLEAR WHEN THE LEGISLATURE FOR THE PERIOD POST 1 ST JUNE, 2007 HAS ENACTED EXPLANATION 5A WHICH READS AS UNDER: [EXPLANATION 5A. WHERE IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (A) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM B Y UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (B) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NTS OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WH OLLY 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 YEAR H AS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN D ECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SU CH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT 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 SEA RCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C ) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PA RTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 10 - IN TERMS OF EXPLANATION 5A, THUS EVEN IN A CASE WHE RE DURING THE SEARCH, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANS ACTIONS, THE PENALTY WOULD ATTACH, PROVIDED OTHER REQUIREMENTS ARE FULFI LLED. THIS CLAUSE WAS NOT THERE IN ORIGINAL EXPLANATION 5 WHICH APPLIED T ILL 1 ST JUNE 2007 AND HAS THEREFORE, TO BE APPLIED IN THE PRESENT CASE. WE HAVE PERUSED THE ORDER OF ASSESSMENT AND FOUND T HAT ENTIRE AMOUNT OF RS.2.06 CRORES PERTAINED TO ON-MONEY RECEIPTS BY THE ASSESSEE. THERE WAS NO MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OF SUCH VALUE FOUND DURING THE SEARCH AND THE ADDITION AL INCOME WAS BASED ON MATERIALS COLLECTED DURING THE SEARCH. PRIOR TO 1 ST JUNE 2007, THEREFORE, BY APPLYING EXPLANATION 5, PENALTY COULD NOT HAVE BEEN LEVIED. LOOKED FROM THIS ANGLE, WE DO NOT FIND ANY ERRED IN THE VIEW OF THE TRIBUNAL. FOR THE REASONS SOMEWHAT DIFFERENT FR OM THOSE RECORDED BY THE TRIBUNAL, THEREFORE, THIS TAX APPEAL IS DISM ISSED. 9. APART FROM THE ABOVE SAID JUDGMENT ASSESSEE ALSO CITED AN ORDER OF CO-ORDINATING BENCH IN IT(SS) NO.197/AHD/2014, IN W HICH SIMILAR CIRCUMSTANCES ARE AS UNDER: A PERUSAL OF THE ABOVE JUDGMENT WOULD INDICATE THAT IT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE IN COME OF THE ASSESSEE HAS BEEN DETERMINED ON THE BASIS OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THESE ENTRIES WERE FOU ND IN KATCCHA BOOK. HONBLE HIGH COURT HAS HELD THAT EXPLANATION 5 WOULD NOT BE APPLICABLE UNLESS DURING SEARCH, THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VAL UABLE ARTICLE OR THING IS FOUND. NO SUCH THINGS WERE FOUND DURING TH E COURSE OF SEARCH AND ADDITION WAS MADE ON THE BASIS OF NARRAT IONS IN THE DIARY. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT, I ALLOW ALL THESE APPEAL S AND DELETED PENALTY. ITA NO.270/AHD/ 2014 SHRI BHUPENDRA R. PATEL VS. ITO ASST.YEAR 2005-06 - 11 - 10. RESPECTFULLY FOLLOWING THE JURISDICTIONAL HIGH COURT JUDGMENT AND ORDER OF CO-ORDINATING BENCH, WE SET ASIDE THE ORDE R OF THE CIT(A) AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28/04/2017 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ EGKOHJ EGKOHJ EGKOHJ IZLKN IZLKN IZLKN IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR ) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/04/2017 PRITI YADAV, SR. PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. ! ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) ( !) / THE CIT(A)-I, BARODA. 5. 67 8 )'12 , !* 12. , 0 / DR, ITAT, AHMEDABAD 6. 8 9 : ( / GUARD FILE. % & / BY ORDER, # 6!) ) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY