Shri Dinesh S. Patel, Ahmedabad V. The ACIT, Cent. Circle -2(1), Ahmedabad

ITSSA 284/AHD/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3427 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAYANT JAERI
• Assessee Lawyers: DIPAK SHAH
• Keywords: Rejection of books of accounts; Search and seizure; Difference of opinion
• Section: 5(2); 153A; 132

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ IT(SS)A NO.283/AHD/2013 / ASSTT. YEAR: 2009-2010 BHIKHABHAI K. PATEL 16, KHODALDAM SOCIETY BHADRESHWAR AHMEDABAD 380 475 PAN : AGWPP 3929 M VS. ACIT, CENT.CIR.2(1) AHMEDABAD. ./ IT(SS)A NO.284/AHD/2013 / ASSTT. YEAR: 2009-2010 DINESH S. PATEL 7, GANESH ESTATE NARODA ROAD AHMEDABAD 380 025 PAN : AGVPP 0448 A VS. ACIT, CENT.CIR.2(1) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI DIPAK SHAH, AR REVENUE BY : SHRI JAYANT JAERI, SR.DR ! / DATE OF HEARING : 06/09/2017 '#$ ! / DATE OF PRONOUNCEMENT: 15/11/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEES AGAINST ORDERS OF THE LD.CIT(A)-III, AHME DABAD DATED 30.5.2013 AND 31.5.2013 PASSED FOR THE ASSTT.YEAR 2 009-10 ON IT(SS)A NO.283 AND 284 /AHD/2013 2 RESPECTIVE APPEALS OF THE APPELLANTS VIZ. SHRI DINE SH S. PATEL AND SHRI BHIKHABHAI K. PATEL. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.10,15,770/- (IN T HE CASE OF BHIKHABHAI K. PATEL) AND RS.6,94,880/- (IN THE CASE OF DINESH S. PATEL) IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. FACTS ON ALL VITAL POINTS ARE COMMON IN BOTH CAS ES. THEREFORE, FOR THE FACILITY OF REFERENCE, WE TAKE U P FACTS FROM APPEAL OF SHRI BHIKHABHAI K. PATEL (BKP FOR SHORT) . 4. BRIEF FACTS OF THE CASE ARE THAT ON 14.1.2010 BOT H APPELLANTS LANDED AT AHMEDABAD AIRPORT. THEY WERE POSSESSING RS.17,74,500/- IN CASH. SEARCH ACTION UNDER SECTIO N 132 WAS INITIATED AGAINST THEM. THEIR STATEMENT WAS RECORD ED UNDER SECTION 132(4) OF THE INCOME TAX ACT ON 11:30PM. D URING THE COURSE OF THEIR STATEMENT, THEY HAVE DISCLOSED THAT THIS CASH WAS BROUGHT FROM HYDERABAD. IT BELONGS TO M/S.EXCEL PU MP INDUSTRIES. THEY ADMITTED THAT THEY WOULD DISCLOSE THE INCOME AT THE RATE OF 6% ON THEIR UNACCOUNTED SALES. BKP HAS FILED HIS RETURN OF INCOME ON 29.3.2010 WITH ITO, WARD-12(), AHMEDABAD DECLARING TOTAL INCOME AT RS.24,01,550/-. SIMILARL Y IN THE CASE OF SHRI DINESH S. PATEL (DSP FOR SHORT) HAS FILED HI S RETURN ON 29.3.2010 DECLARING TOTAL INCOME AT RS.14,99,810/-. NOTICE UNDER SECTION 153A WAS ISSUED ON 10.1.2011 IN THE CASE OF BKP AND ON 6.9.2011 IN THE CASE OF DSP. BKP HAS FILED HIS RETU RN IN RESPONSE TO THE NOTICE ON 31.1.2011 DECLARING THE SAME INCOM E WHICH WAS SUBMITTED ON 29.3.2010. SIMILARLY DSP HAS FILED HI S RETURN OF IT(SS)A NO.283 AND 284 /AHD/2013 3 INCOME ON 12.9.2011 DECLARING THE SAME INCOME. BOTH ASSESSEES HAVE DECLARED THEIR INCOME AT THE RATE OF 4% OF THE IR NET SALES. THE LD.AO DID NOT ACCEPT THIS STAND OF THE ASSESSEE . HE COMPUTED THE INCOME BY ADOPTING PROFIT RATE AT 6%. THE DIFF ERENCE OF 2% HAS BEEN ADDED IN THE TOTAL INCOME OF THE ASSESSEES . THUS, IN THE CASE OF BKP NET TAXABLE INCOME WAS WORKED AT RS.35, 03,250/- AS AGAINST DECLARED INCOME AT RS.24,24,01,550/-. SIMI LARLY IN THE CASE OF DSP, TOTAL INCOME DETERMINED BY THE AO AT R S.22,86,820/- AS AGAINST RS.14,99,810/- DECLARED BY THE ASSESSEE. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) OF THE ACT. AFTER HEARING THE ASSESSEE HE IMPOSED PENALT Y OF RS.10,15,770/- IN THE CASE BKP AND RS.6,94,880/- IN THE CASE OF DSP. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY REL IEF TO THE ASSESSEE. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE LD. CIT(A)HAS DISCUSSED POSITION OF LAW AS WELL AS FACTS LUCIDLY AND WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE CIT(A)S ORDER WHIC H IS COMMON WITH REGARD TO THE POSITION OF LAW IN BOTH THE CASE S. THEREFORE, WE NOTE FINDINGS OF THE LD.CIT(A) FROM THE APPEAL OF BK P AS UNDER: 7. FACTS OF THE CASE AND ARGUMENTS OF THE APPELLAN T HAVE BEEN CAREFULLY CONSIDERED. THE UNDISPUTED FACTS OF THIS CASE ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE IT ACT WAS CAR RIED OUT IN THE CASE OF THE APPELLANT ON 14/01/2010. NO RETURN WAS FI LED BY THE APPELLANT BEFORE THE DUE DATE FOR FILING RETURN FOR A.Y. 2009 -10 IN HIS CASE. HE FILED THE RETURN ONLY ON 04/01/2010 AND THIS RETURN WAS SUBSEQUENTLY REVISED ON 29/3/2010. IN SUCH A SITUATION, PENALTY U/S. 271(L)(C) IS LEVIABLE IN HIS CASE IN VIEW OF EXPLANATION 5A. 8. IN FACT, PENALTY FOR CONCEALMENT OF INCOME WHICH IS OTHERWISE NOT COVERED BY THE PROVISIONS OF SECTION 271AAA, IS COV ERED AND ATTRACTED IT(SS)A NO.283 AND 284 /AHD/2013 4 AS PER NORMAL PROVISIONS OF SECTION 271(L)(C). PROV ISIONS OF SECTION 271AAA ARE APPLICABLE WITH RESPECT TO THE 'UNDISCLO SED INCOME' OF THE 'SPECIFIED PREVIOUS YEAR'. ANY CONCEALMENT OF INCOM E OTHER THAN THE ONE COVERED WITHIN THE DEFINITION OF 'UNDISCLOSED I NCOME' AS GIVEN UNDER SECTION 271AAA FOR THE 'SPECIFIED PREVIOUS YE AR' AND ANY CONCEALMENT OF ANY INCOME FOR THE YEARS PRIOR TO TH E 'SPECIFIED PREVIOUS YEAR' MAY ATTRACT PENALTY IN ACCORDANCE WI TH THE NORMAL PROVISIONS OF SECTION 271(1 )(C). 9. SINCE THE SEARCH WAS CONDUCTED ON 14/01/2010 AND THE TIME OF FILING THE RETURN OF INCOME U/'S 139 HAD ALREADY EXPIRED, HENCE THE SPECIFIED PREVIOUS YEAR IN THIS CASE IS A.Y. 2010-11. THE A.Y . 2009-10 BEING PRIOR TO THE SPECIFIED PREVIOUS YEAR THE PROVISIONS OF SECTION 271(L)(C) SHALL APPLY IN THIS CASE AND NOT THE PROVISIONS OF SECTION 271AAA OF THE IT ACT, 1961. 10. HOWEVER, EARLIER THERE COULD HAVE BEEN A SITUAT ION WHERE PENALTY PROVISION UNDER SECTION 271 (L)(C) FOR THE YEARS PR IOR TO THE 'SPECIFIED PREVIOUS YEAR', COULD NOT HAVE BEEN ATTRACTED BUT F OR THE EXISTENCE OF THE EXPLANATION 5 A TO SECTION 271(L)(C). FINANCE A CT, 2007 INSERTED EXPLANATION 5A W.E.F. 1/6/2007. SUCH SITUATION COUL D HAVE BEEN LIKE WHERE AFTER SEARCH HAVING TAKEN PLACE, THE RETURN O F INCOME FOR EARLIER YEARS ARE PENDING TO BE FILED BY THE ASSESSEE UP TO THE DATE OF SEARCH EVEN THOUGH THE DUE DATE FOR FILING THE RETURN HAD BEEN EXPIRED AND THE SAME IS FILED BY THE ASSESSEE AFTER THE DATE OF SEA RCH .WITHIN THE TIME LIMIT PRESCRIBED U/S.!39(4) SHOWING SUCH UNDISCLOSE D INCOME FOUND AS A RESULT OF SEARCH PERTAINING TO SUCH YEAR. IN ORDE R TO COVER SUCH A SITUATION, EXPLANATION 5A TO SECTION 271(1 )(C) HAS BEEN ENACTED. 11. IT IS NOW A WELL-SETTLED PRINCIPLE OF LAW THAT THE MORE STRINGENT THE LAW, THE MORE STRICT A CONSTRUCTION THEREOF WOULD B E NECESSARY. EVEN WHEN THE BURDEN IS REQUIRED TO BE DISCHARGED BY AN ASSESSEE, IT WOULD NOT BE AS HEAVY AS THE PROSECUTION. HOWEVER, THE DE EMING PROVISION INSERTED BY THE EXPLANATION 5A TO SECTION 271(L)(C) DOES AWAY WITH THIS REQUIREMENT. NOW THE AO DOES NOT NEED TO ESTABLISH THE FACT THAT THE ASSESSEE HAD CONCEALED THE INCOME IN THE RETURN FIL ED PRIOR TO THE SEARCH, IF IT HAD NOT INCLUDED THE INCOMES DECLARED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICES U/S. 153A, IN T HE RETURN FILED PRIOR TO THE SEARCH. SUCH CONCEALMENT IS TO BE PRESUMED. 12. THE WORD 'CONCEALMENT' INHERENTLY CARRIED WITH IT THE ELEMENT OF MENS REA. THEREFORE, NORMALLY, THE MERE FACT THAT S OME FIGURE OR SOME PARTICULARS HAVE BEEN DISCLOSED BY ITSELF, EVEN IF IT TAKES OUT THE CASE IT(SS)A NO.283 AND 284 /AHD/2013 5 FROM THE PURVIEW OF NON DISCLOSURE, IT CANNOT BY IT SELF TAKE OUT THE CASE FROM THE PURVIEW OF FURNISHING INACCURATE PARTICULA RS. SIMILARLY, MERE OMISSION FROM THE RETURN OF AN ITEM OF RECEIPT DOES NEITHER AMOUNT TO CONCEALMENT NOR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE NORMAL CIRCUMSTANCES UNLESS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUMSTANCES FOUND FROM W HICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN I NTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INC OME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. HOWEVER WHEN THE DEEMING PROVISIONS OF THE EXPLANATION 5A TO SECTION 271(L)(C) IS CONSIDERED T HEN IT BECOMES CLEAR THAT IN CASES WHERE THE SEARCH OPERATIONS HAVE TAKE N PLACE AFTER 1.4.2007 INCOMES DECLARED IN THE RETURN FILED IN RE SPONSE TO NOTICE U/S 153A AND WHICH HAD NOT BEEN DISCLOSED IN THE RETURN S FILED PRIOR, TO THE SEARCH ARE DEEMED TO BE CONCEALMENT WITHIN THE MEANING OF SECTION 271(L)(C). IN FACT EXPLANATION 5A TO SECTIO N 271(L)(C) READS AS UNDER: 'EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSE E IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE 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 UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH E NTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESEN TS HIS INCOME (WHOLLY 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 YE AR 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 INCOME F OR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETU RN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SEC TION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. ' 13. FURTHER, THE HON'BLE ITAT, AHMEDABAD 'B' BENCH IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX CC-1(3), AHMED ABAD VS. KIRIT DAHYABHAI PATEL REPORTED IN (2009) 121 ITD 15 9(AHD)(TM) IT(SS)A NO.283 AND 284 /AHD/2013 6 HAS HELD THAT IMMUNITY FROM P ENALTY U/S 271(L)(C) COULD NOT BE GRANTED TO THE ASSESSEE UNDER EXPLANATION 5(2) OF SECTION 2 71(L)(C) THOUGH THE ASSESSEE HAD CLAIMED THAT THE DISCLOSURE MADE IN TH E RETURN OF INCOME- FILED IN RESPONSE TO NOTICE U/S 153 A WAS VOLUNTARY AND THE AO HAD ACCEPTED THE RETURNS FILED IN RESPONSE TO NOTICE U/ S 153A. WHILE RENDERING THE ABOVE DECISION THE HON'BLE ITAT AHMED ABAD HAS ALREADY CONSIDERED THE DECISIONS OF THE SUPREME COURT IN TH E CASES OF SUDARSHAN SILK SAREES VS. CIT REPORTED IN 300ITR 20 5(SC) AND CIT VS. SURESH CHANDRA MITTAL REPORTED IN 251 ITR 9(SC). 14. WITH REFERENCE TO PENALTY PROCEEDINGS, THE FOLL OWING PROPOSITIONS CAN BE LAID DOWN ON THE BASIS OF LANGUAGE OF RELEVA NT SECTION OF THE IT ACT AND DECISIONS OF VARIOUS JUDICIAL AUTHORITIES: (1) WHEREVER THERE IS A DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME, THERE IS AN INFERENCE OF CONCEALME NT AS A RULE OF LAW. (2) THE RESPONSIBILITY FOR REBUTTING SUCH INFE RENCE IS SQUARELY ON THE TAXPAYER. (3) THE ASSESSEE IS EXPECTED TO OFFER AN EXPLAN ATION FOR THE DIFFERENCE. ABSENCE OF ANY EXPLANATION, BY ITSELF, WILL MERIT PENALTY. (4) THE EXPLANATION WHERE OFFERED, SHOULD NOT B E FOUND TO BE FALSE. (5) MERELY BECAUSE THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE HIS EXPLANATION, PENALTY MAY NOT BE EXIGIBLE, IF SUCH E XPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCL OSED BY HIM. 15. THE ABOVE REQUIREMENTS OF PENALTY ARE REQUIRED TO BE FULFILLED IN THE NORMAL COURSE BUT WITH THE INSERTION OF EXPLANATION 5A TO SECTION 271(L)(C), THE REQUIREMENT OF ESTABLISHING CONCEALM ENT AND THE CONDITIONS RELATED TO THE EXPLANATION OF THE ASSESS EE HAVE BEEN DONE AWAY WITH THE DEEMING FICTION CREATED BY THE EXPLAN ATION. ONCE CONCEALMENT IS TO BE PRESUMED AS PER THE STIPULATIO N IN THE ACT ITSELF THEN THE EXPLANATIONS OFFERED BY THE ASSESSEE TO CL AIM OTHERWISE CANNOT BE ENTERTAINED. 16. IT IS ALSO HELD THAT PENALTY PROCEEDINGS ARE IN DEPENDENT PROCEEDINGS. A PENALTY ORDER SHOULD CONTAIN REASONS FOR ITS CONCLUSION. IT(SS)A NO.283 AND 284 /AHD/2013 7 BUT THIS DOES NOT MEAN THAT THE AO IS REQUIRED TO B RING ON RECORD ADDITIONAL OR NEW EVIDENCE, WHICH WAS NOT PART OF R EGULAR ASSESSMENT. WHERE THE ASSESSMENT ORDER ITSELF CONTAINS FACTS, W HICH JUSTIFY AN INFERENCE OF CONCEALMENT, THE PENALTY ORDER IS SUST AINABLE. THIS VIEW DERIVES SUPPORT FROM THE DECISION OF HON'BLE ALLAHA BAD HIGH COURT IN THE CASE OF RAJ KUMAR CHOURASIYA VS. CIT REPORTED I N 288 ITR 329. 17. ACCORDING TO SECTION 271(L)(C), THERE ARE TWO B ASIS INGREDIENTS FOR LEVY OF PENALTY. (A) SATISFACTION OF AO REGARDING CONCEALMENT ON THE PART OF THE ASSESSEE OR (B) SATISFACTION REGARDING FURNISHING INA CCURATE PARTICULARS BY THE ASSESSEE. 18. WHEN THE FACTS AND THE LEGAL POSITION OF THE PR ESENT CASE IS ANALYSED WITH REFERENCE TO THE ABOVE PROPOSITIONS THEN IT IS SEEN THAT, AS FAR AS THE FIRST CONDITION IS CONCERNED, WITH THE INSERTIO N OF EXPLANATION 5A TO SECTION 271(L)(C), THE CONDITION IS SATISFIED DUE T O THE DEEMING FICTION CREATED BY THE STATUTE ITSELF. AS FAR AS THE SECOND CONDITION IS CONCERNED, IT IS UNDISPUTED THAT THE APPELLANT HAD NOT INCLUDED THE UNDISCLOSED INCOME IN THE RETURN FILED PRIOR TO THE SEARCH. THUS IT IS CLEAR THAT THE APPELLANT HAD NOT FURNISHED THE TRUE AND FULL PARTICULARS IN THE RETURN FILED PRIOR TO THE SEARCH. THUS BOTH THE BASIC INGREDIENTS ARE SATISFIED. 19. APPELLANT HAS PLACED HIS RELIANCE ON VARIOUS JU DGEMENTS, BUT ALL THESE JUDGEMENTS PERTAIN TO PERIOD PRIOR TO INSERTI ON OF EXPLANATION 5A TO SECTION 271(L)(C). THE DECISION OF HON'BLE ITAT, CALCUTTA BENCH IN THE CASE OF AVINASH CHAND GUPTA IS FOR A.Y. 2005-06 AND 2006-07. THE DECISION OF HON'BLE ITAT, RAJKOT BENCH IN THE CASE O:'SHANTILAL JERARNBHAI MAHESHWARI IS FOR A.Y. 2005-06. DECISION OF HON'BLE ITAT DELHI BENCH IN THE CASE OF PREM ARORA IS FOR A.Y. 2 004-05 AND THAT OF NAGPUR BENCH IN THE CASE OF PURTI SAKHAR KARKHANA L TD. IS FOR A.Y. 2001-02 TO 2006-07. FOR ALL THESE YEARS EXPLANATION 5A WAS NOT ON THE STATUTE. THEREFORE, RELIANCE PLACED BY APPELLANT ON THESE JUDGEMENTS IS OF NO HELP. IN FACT, IN THE CASE OF PREM ARORA, HON 'BLE ITAT, DELHI BENCH OBSERVED THAT 'IN CASE OF A SEARCH INITIATED ON OR AFTER 1.6.2007 AS PROVIDED IN EXPLANATION 5A, THE ASSESSEE WILL BE LIABLE FOR PENALTY U/S. 271(1) BO TH IN RESPECT OF ASSETS AS WELL AS ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT O R OTHER DOCUMENTS OR TRANSACTION. BUT NO SUCH PROVISION RELATING TO ENTRIES WAS IN EX ISTENCE IN EXPLANATION J PRIOR TO INSERTION OF EXPLANATION 5A IN SECTION 271(1) OF TH E ACT. HENCE THE SCHEME OF ASSESSMENT TIN INSERTION OF EXPLANATION 5A AND SECT ION 2/1AAA BY THE FINANCE ACT, IT(SS)A NO.283 AND 284 /AHD/2013 8 2007 GAVE IMMUNITY TO THE ASSESSEE IN RESPECT OF UN DISCLOSED INCOME BASED ON ENTRIES RECORDED IN SEIZED MATERIAL. EXPLANATION 5A SUBSTITUTED BY THE FINANCE ACT, 2009 W.R.E.F. 1.6.2007 IS REPRODUCED AS UNDER: 20. IN VIEW OF THIS LEGAL AND FACTUAL POSITION I HO LD THAT AO HAS RIGHTLY LEVIED PENALTY U/S. 271(L)(C) OF THE I.T. ACT. GROU ND NO.L OF THE APPEAL IS THUS DISMISSED. 21. AS MENTIONED EARLIER, IN THIS CASE DUE DATE FOR FILING RETURN FOR A.Y. 2009-10 HAS ALREADY EXPIRED BEFORE THE DATE OF SEAR CH, THEREFORE, PROVISIONS OF SECTION 271(1 )(C) ARE APPLICABLE AND NOT OF SECTION 271AAA. GROUND NO.2 OF THE APPEAL IS DISMISSED. 22. IN VIEW OF DEEMING PROVISION OF EXPLANATION 5A, ARGUMENT OF THE APPELLANT THAT THERE WAS NO SATISFACTION IN THE ASS ESSMENT ORDER AS TO WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS, IS ALSO NOT ACCEPTABLE. GRO UND NO.3 OF THE APPEAL IS THUS DISMISSED. 6. DISSATISFIED WITH THE ABOVE ORDER, THE LD.COUNSE L FOR THE ASSESSEE HAS RAISED MULTIPLE FOLD OF SUBMISSIONS. IN HIS FIRST FOLD OF CONTENTIONS, HE SUBMITTED THAT PENALTY SHOULD HA VE BEEN IMPOSED UNDER SECTION 271AAA AND NOT UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. IN HIS SECOND FOLD OF SU BMISSIONS, HE CONTENDED THAT THE AO HAS IMPOSED PENALTY ON THE AD DITION MADE BY HIM. IN OTHER WORDS, HE HAS COMPUTED PENALTY ON THE INCOME RETURNED BY THE ASSESSEE ALSO. IN OTHER WORDS, HE EXPLAINED THAT 4% OF THE TOTAL TURNOVER WAS ADMITTED BY THE ASSESS EE AS INCOME IN THEIR RETURN OF INCOME. THERE IS NO ADDITION QUA THAT INCOME, AND THEREFORE, NO PENALTY COULD BE IMPOSED ON THE A MOUNT OF 4% OF THE TURNOVER, WHICH WAS DISCLOSED BY BOTH THE AS SESSEES IN THEIR RETURN OF INCOME. ADDITION TO THE INCOME IS BEING MADE AT 2%. AT THE MOST CHARGE OF FURNISHING INACCURATE PA RTICULARS OR CONCEALING INCOME SHOULD BE LEVIED AGAINST THE ASSE SEES FOR REPRESENTING ALLEGED 2% OF THE TURNOVER. HE FURTHE R CONTENDED IT(SS)A NO.283 AND 284 /AHD/2013 9 THAT IT IS AN ESTIMATED ADDITION, AND THEREFORE, NO PENALTY OUGHT TO BE IMPOSED. FOR BUTTRESSING HIS CONTENTIONS, HE RE LIED UPON THE FOLLOWING DECISIONS: I) DCIT VS. AVINASH CHAND GUPTA, 6 ITR (TRIB.) 173; II) ACIT VS. SHANTILAL JERAMBHAI MAHESHWARI; IT(SS)A.NO.69/RJT/2009; III) PREM ARORA VS. DCIT, 24 TAXMANN.COM 260 (DELHI); IV) KIRIT DAHYABHAI PATEL VS. ACIT; TAX APPEAL NO.1181 OF 2010 AND OTHERS ORDER DATED 3.12.2014 OF GUJARAT HI GH COURT. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. A PERUSAL OF PENALTY ORDERS WOULD INDICATE THAT THE LD.AO HAS VISITED THE ASSESSEES WITH PENAL TY AFTER SATISFYING HIMSELF THAT THEY HAVE FURNISHED INACCUR ATE PARTICULARS OF INCOME. THIS OPINION WAS HARBOURED BY THE AO WI TH THE HELP OF DEEMED SITUATION PROVIDED IN EXPLANATION 5A OF THE INCOME TAX ACT, 1961. ADMITTEDLY, SEARCH UPON THE ASSESSEE WA S CONDUCTED ON 14.1.2010 AND EXPLANATION 5A HAS BEEN INSERTED IN THE INCOME TAX ACT, 1961 W.E.F. 1.6.2007. THE LD.FIRST APPELLA TE AUTHORITY HAS REPRODUCED EXPLANATION 5A IN THE FINDING RECORDED BY HIM. WE HAVE TAKEN COGNIZANCE OF THAT FINDING, AND THEREFOR E, IN ORDER TO AVOID REPETITION, WE TAKE COGNIZANCE OF THE EXPLANATION FROM THE FINDINGS EXTRACTED SUPRA. A BARE PERUSAL OF THIS E XPLANATION WOULD INDICATE THAT IF IN THE COURSE OF SEARCH INITIATED UNDER SECTION 132 ON OR AFTER 1.6.2007, IF THE ASSESSEE IS FOUND TO B E OWNER OF MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE S OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQU IRED BY HIM BY UTILIZING THE WHOLE OR IN PART OF HIS INCOME FRO M ANY PREVIOUS YEAR OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTIONS FOUND DURING THE COURSE OF IT(SS)A NO.283 AND 284 /AHD/2013 10 SEARCH AND ASSESSEE CLAIMS THAT SUCH ENTRY IN THE B OOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTIONS REPRESE NTS HIS INCOME FROM ANY PREVIOUS YEAR, WHICH HAS ENDED BEFO RE THE DATE OF SEARCH, THEN, NOTWITHSTANDING SUCH INCOME IS DEC LARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSES OF IMPOSITION OF A PENALTY U NDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HA VE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME. ADMITTEDLY, THE ASSESSES WERE FOUND IN POSSESSION OF MONEY. THEY WERE FOUND POSSESSING UNACCOUNTED S ALES. THEY HAVE ADMITTED TO SUCH UNACCOUNTED SALES IN THEIR ST ATEMENT MADE DURING THE COURSE OF SEARCH. THUS, FIRST CONDITION ENUMERATED IN EXPLANATION 5 STANDS FULFILLED. THE SECOND CONTENTION IS THAT WHETHER RETURN OF INC OME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE DU E DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN. THIS CO NTENTION IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE, BECAUS E BOTH THE ASSESSEE HAVE NOT FILED THEIR RETURN BEFORE THE DAT E OF SEARCH. IN OTHER WORDS, THEY HAVE NOT SUBMITTED THEIR RETURN U NDER SECTION 139(1) OF THE INCOME TAX ACT THOUGH DUE DATE FOR FI LING SUCH RETURN HAS ALREADY EXPIRED. THUS, THE SECOND CONDI TION PROVIDED IN CLAUSE (A) AND (B) IN EXPLANATION 5A STANDS FULFILLED. THEIR FILING OF RETURN SUBSEQUENT TO THE SEARCH AND ADMISSION OF INCOME IN THE RETURN FILED UNDER SECTION 139(4) OF THE INCOME TAX ACT (I.E. BELATED RETURN) HAS NO MEANING AS PER EXPLANATION 5A. CHARGE OF CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME IS TO BE DEEMED AGAINST THEM. THE LD.FIRST APPELLATE AUTHOR ITY HAS CONSTRUED MEANING OF EXPLANATION 5A IN THIS MANNER AND A PERUSAL OF EXPLANATION 5A WITHIN THE GIVEN FACTS, THEN IT IS PROVED THAT IT(SS)A NO.283 AND 284 /AHD/2013 11 BOTH ASSESSES WOULD FALL WITHIN THE AMBIT OF DEEMIN G FICTION CREATED IN EXPLANATION 5A FOR HOLDING THAT THEY HAVE FURNISHED INACCURATE PARTICULAR OF INCOME. 8. LET US CONSIDER SUBMISSIONS OF THE LD.COUNSEL FO R THE ASSESSEE. IN HIS FIRST CONTENTION, HE SUBMITTED TH AT PENALTY COULD BE IMPOSED UNDER SECTION 271AAA AND NOT UNDER SECTI ON 271(1)(C) OF THE ACT. A PERUSAL OF SECTION 271AAA WOULD INDICATE THAT EXPLANATION APPENDED TO SECTION 271AAA PROVIDES DEFINITION OF UNDISCLOSED INCOME AND SPECIFIED PREVIOUS YEA R. IT IS APPLICABLE ONLY FOR THOSE YEARS WHICH WERE SPECIFIE D YEARS. A PERUSAL OF THE EXPRESSION SPECIFIED PREVIOUS YEAR WOULD INDICATE THAT YEAR OF SEARCH AND IMMEDIATELY EARLIER YEAR, I F DUE DATE OF FILING OF THE RETURN HAS NOT EXPIRED AND INCOME-TAX RETURN FOR SUCH YEAR HAS NOT BEEN FILED. THIS YEAR DOES NOT FALL W ITHIN THE AMBIT OF SPECIFIED YEARS IN THE CASE OF BOTH THE ASSESSES. THEREFORE, THERE IS NO MERIT IN THE CONTENTIONS OF THE LD.COUN SEL FOR THE ASSESSEE. THE LD.COUNSEL FOR THE ASSESSEE FURTHER PUT RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT (SUPRA). IN THE PRESENT APPEAL, SUB-CLAUSE (2) PROVIDED IN EXPLANATION 5 HAS NOT BEEN INVOKED. IN THESE APPEALS EXPLANATI ON 5A IS APPLICABLE BECAUSE SEARCH HAS BEEN CONDUCTED AFTER 1.6.2007 AND FOR ABSOLVING ONESELF AN ASSESSEE IS REQUIRED TO FU LFILL CONDITIONS AVAILABLE IN SECTION 271AAA OF THE ACT. THUS, DECI SION OF THE HONBLE GUJARAT HIGH COURT CITED SUPRA IS NOT AT AL L APPLICABLE IN THE PRESENT APPEALS. WE HAVE ALREADY OBSERVED THAT SECTION 271AAA IS APPLICABLE IN THE SPECIFIED YEARS AND T HE ASSTT.YEAR 2009-10 IN THESE APPEALS IS NOT A SPECIFIED YEAR. IT(SS)A NO.283 AND 284 /AHD/2013 12 9. IN THE NEXT FOLD OF CONTENTIONS, IT WAS CONTENDE D BY THE ASSESSEE THAT THE INCOME WAS ESTIMATED, AND THEREFO RE, THERE CANNOT BE ANY PENALTY. WE HAVE DULY CONSIDERED THI S CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE, BUT IT DESERVES TO BE REJECTED, BECAUSE CHARGE AGAINST THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME IS BY WAY OF VIRTUE OF DEEMIN G FICTION CREATED IN EXPLANATION 5A ATTACHED WITH SECTION 271(1)(C) OF THE ACT. TH E INCOME WAS COMPUTED ON ESTIMATE BASIS BECAUSE THERE WAS NO CHOICE EITHER WITH THE ASSESSEE OR WITH THE AO. TH E ASSESSEES HAVE NOT DISCLOSED THEIR TURNOVER IN THE REGULAR RE TURNS. THUS, INCOME HAS TO BE DETERMINED ON THE BASIS OF ESTIMAT ION ONLY. IT IS NOT A CASE WHERE THE ASSESSEES HAVE FILED RETURNS O F INCOME, ON ACCOUNT OF CERTAIN SHORTCOMINGS IN THE BOOKS OF ACC OUNTS, THE AO REJECTED THE BOOKS OF ACCOUNTS AND THEN ESTIMATED T HE GP. IN SUCH CASE, AN ASSESSEE CAN TAKE A PLEA THAT INCOME WAS D ETERMINED ON A DIFFERENCE OF OPINION ABOUT PARTICULAR ITEMS BETW EEN THE AO AND THE ASSESSEE. IN THE PRESENT APPEALS, THE ASSESSEE S HAD NOT DISCLOSED THEIR UNACCOUNTED TURNOVER. THEY WERE CA UGHT DURING THE SEARCH, AND THEREFORE, UNDER COMPELLING CIRCUMS TANCES, THEY HAVE TO COMPUTE ELEMENT OF INCOME ON AN ESTIMATE BA SIS. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY ERROR I N THE ORDERS OF THE LD.CIT(A). BOTH APPEALS ARE DISMISSED. 10. IN THE RESULT, BOTH APPEALS OF THE ASSESSEES AR E DISMISSED ORDER PRONOUNCED IN THE COURT ON 15 TH NOVEMBER, 2017. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 15/11/2017