Shri Narendra N. Pala, RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITSSA 39/RJT/2012

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3598 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 5 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: MJ RANPURA
• Keywords: Income from undisclosed sources; Retraction; Documents seized
• Section: 153A; 234B; 27; 132; 139

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER SN IT(SS)A NO. AY APPELLANT RESPONDENT 1 36/RJT/2012 2003-04 SHRI NARENDRA N. PALA SHREENATHJI, 1/4 NALANDA SOCIETY, KOTECHA NAGAR, RAJKOT PAN : ACGPP 7914 A DCIT, CENTRAL CIRCLE-2, RAJKOT 2 37/RJT/2012 2004-05 SHRI NARENDRA N. PALA KOTECHA NAGAR, RAJKOT PAN : ACGPP 7914 A DCIT, CENTRAL CIRCLE-2, RAJKOT 3 38/RJT/2012 2006-07 SHRI NARENDRA N. PALA KOTECHA NAGAR, RAJKOT PAN : ACGPP 7914 A DCIT, CENTRAL CIRCLE-2, RAJKOT 4 39/RJT/2012 2007-08 SHRI NARENDRA N. PALA KOTECHA NAGAR, RAJKOT PAN : ACGPP 7914 A DCIT, CENTRAL CIRCLE-2, RAJKOT 5 40/RJT/2012 2008-09 SHRI NARENDRA N. PALA KOTECHA NAGAR, RAJKOT PAN : ACGPP 7914 A DCIT, CENTRAL CIRCLE-2, RAJKOT 6 41/RJT/2012 2007-08 SHRI JAGDISH PALA SHREENATHJI, MAHAVIR SOCIETY, NIRMALA CONVENT SCHOOL ROAD, RAJKOT PAN : ACGPP 7911 F DCIT, CENTRAL CIRCLE-2, RAJKOT 7 42/RJT/2012 2007-08 SHRI JAGDISH PALA (HUF) SHREENATHJI, MAHAVIR SOCIETY, RAJKOT PAN : AACHP 0861 Q DCIT, CENTRAL CIRCLE-2, RAJKOT 8 43/RJT/2012 2008-09 SHRI JAGDISH PALA SHREENATHJI, MAHAVIR SOCIETY, RAJKOT PAN : ACGPP 7911 F DCIT, CENTRAL CIRCLE-2, RAJKOT 9 44/RJT/2012 2008-09 SHRI JAGDISH PALA (HUF) SHREENATHJI, MAHAVIR SOCIETY, RAJKOT PAN : AACHP 0861 Q DCIT, CENTRAL CIRCLE-2, RAJKOT IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 2 - 10 45/RJT/2012 2008-09 SMT. DEEPA N. PALA C/O. J.N. JEWELLERS, MANDVI CHOWK, SONI BAZAR, RAJKOT PAN : ACGPP 7917 D DCIT, CENTRAL CIRCLE-2, RAJKOT ASSESSEE BY : SHRI M.J. RANPURA, CA REVENUE BY : SHRI C.S. ANJARIA, DR / DATE OF HEARING : 02/11/2017 / DATE OF PRONOUNCEMENT: 31/01/2018 / O R D E R PER BENCH : THE PRESENT SET OF APPEALS ARE DIRECTED AT THE INST ANCE OF THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LEARNED CI T(A), ALL DATED 29 TH JUNE 2012. THE ASSESSEE(S) BELONG(S) TO A COMMON F AMILY VIZ. (1) SHRI NARENDRA N. PALA, (2) SHRI JAGDISH NATVARLAL PALA, (3) SHRI JAGDISH N. PALA HUF AND (4) SMT. DEEPA NARENDRA PALA. A SEARCH UNDER SECTION 132 OF THE INCOME-TAX ACT WAS CARRIED OUT AT THEIR RESIDENTIAL PREMISES ON 12.01.2009. SIMULTANEOUSLY, A SURVEY WAS CARRIE D OUT AT THE BUSINESS PREMISES OF THE APPELLANT(S). ACCORDING T O THE ASSESSEE(S), AFTER THE SEARCH/SURVEY AND BEFORE THE AVAILING THE COPIES OF THE MATERIALS SEIZED AND IMPOUNDED, THE ASSESSEE SHRI J AGDISH N. PALA HAD VIDE LETTER DATED 12.02.2009 VOLUNTARILY ADMITT ED AN INCOME OF RS.5 CRORES ON AD-HOC BASIS IN THE CASE OF WHOLE GR OUP SUBJECT TO CONDITION THAT NO PENALTY WOULD BE LEVIED UPON THEM . THEREAFTER, IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE AC T, RETURNS HAVE BEEN FILED. THE ASSESSING OFFICER HAS ACCEPTED THO SE RETURNS WITHOUT MAKING ANY ADDITIONS; HOWEVER, HE INITIATED THE PEN ALTY PROCEEDINGS IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 3 - UNDER SECTION 271(1)(C) READ WITH EXPLANATION 5A OF THE INCOME-TAX ACT. THE LEARNED ASSESSING OFFICER HAS SUBSEQUENTL Y IMPOSED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. DISSATI SFIED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE(S) CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED FIRST APPEL LATE AUTHORITY HAS DECIDED THE APPEAL(S) OF SHRI JAGDISH N. PALA AND S HRI JAGDISH N. PALA HUF FOR ASSESSMENT YEARS 2007-08 & 2008-09 VIDE COM MON ORDER DATED 29 TH JUNE 2012, WHICH IS IMPUGNED IN IT(SS)A NOS. 41 & 43/RJT/2012 IN THE CASE OF SHRI JAGDISH NATVARLAL P ALA AND IT(SS)A NOS. 42 & 44/RJT/2012 IN THE CASE OF SHRI JAGDISH N . PALA HUF. 2. SIMILARLY, THE APPEAL OF SHRI NARENDRA N. PALA F OR ASSESSMENT YEARS 2003-04, 2004-05, 2006-07 TO 2008-09 WERE DIS POSED OF BY THE LEARNED CIT(A) VIDE ORDER DATED 29 TH JUNE, 2012 AND THIS ORDER IS BEING IMPUGNED IN IT(SS)A NOS. 36 TO 40/RJT/2012. 3. THE APPEAL IN THE CASE OF SMT. DEEPA N. PALA FOR ASSESSMENT YEAR 2008-09 WAS DECIDED BY THE LEARNED CIT(A) ON 29 TH JUNE, 2012 AND THIS ORDER OF THE LEARNED CIT(A) IS BEING IMPUGNED IN IT (SS)A NO.45/RJT/2012. 4. THE SOLE QUESTION BEFORE US FOR ADJUDICATION IN ALL THESE APPEALS IS WHETHER THE ASSESSEE(S) COULD BE VISITED WITH PE NALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT ON VOLUNTARILY DISC LOSED INCOME IN THE RETURN(S) FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE INCOME- TAX ACT. IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 4 - 5. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. IN ORDER TO APPRECIA TE THE FACTS IN MORE SCIENTIFIC WAY, WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE INCOME DECLARED BY EACH ASSESSEE IN THE RETURN FILED UNDER SECTION 139(1), AD- HOC INCOME DISCLOSED, INCOME AS PER RETURN FILED UN DER SECTION 153A, INCOME ULTIMATELY ASSESSED BY THE ASSESSING OFFICER AND THE QUANTUM OF PENALTY DETERMINED BY THE ASSESSING OFFICER. TH EY READ AS UNDER:- ASSESSEE SHRI NARENDRA N. PALA AYS INCOME AS PER RETURN FILED U/S 139(1) AD-HOC INCOME DISCLOSED INCOME AS PER RETURN FILED U/S 153A INCOME ASSESSED PENALTY U/S 271(1)(C) 2003-04 NIL 3,00,000 2,82,400 2,82,400 62,000 2004-05 1,41,260 3,00,000 4,41,260 4,41,260 89,500 2006-07 1,69,510 3,00,000 4,69,510 4,69,510 84,000 2007-08 3,92,390 5,00,000 8,92,390 8,92,390 1,53,000 2008-09 -- 5,00,000 9,62,300 9,62,300 2,38,000 ASSESSEE SHRI JAGDISH NATVARLAL PALA AYS INCOME AS PER RETURN FILED U/S 139(1) AD-HOC INCOME DISCLOSED INCOME AS PER RETURN FILED U/S 153A INCOME ASSESSED PENALTY U/S 271(1)(C) 2007-08 7,29,954 7,50,000 14,80,410 14,80,410 2,55,000 2008-09 - 10,00,000 10,00,000 10,00,000 2,55,000 ASSESSEE SHRI JAGDISH N. PALA HUF AYS INCOME AS PER RETURN FILED U/S 139(1) AD-HOC INCOME DISCLOSED INCOME AS PER RETURN FILED U/S 153A INCOME ASSESSED PENALTY U/S 271(1)(C) 2007-08 1,79,680 22,50,000 24,29,680 24,29,680 7,51,000 2008-09 - 30,00,000 30,00,000 30,00,000 9,62,000 IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 5 - ASSESSEE SMT. DEEPA N. PALA AYS INCOME AS PER RETURN FILED U/S 139(1) AD-HOC INCOME DISCLOSED INCOME AS PER RETURN FILED U/S 153A INCOME ASSESSED PENALTY U/S 271(1)(C) 2008-09 - - 10,41,850 10,41,850 2,92,500 6. LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY TH E ORDER OF THE ITAT, RAJKOT BENCH, IN THE CASE OF SHRI MANSUKHBHAI R. SO RATHIA VS. JCIT, RENDERED IN IT(SS)A NOS. 46 TO 47/RJT/2012. HE FUR THER CONTENDED THAT THE HONBLE DELHI HIGH COURT HAS ALSO CONSIDER ED THIS ISSUE IN THE CASE OF PCIT VS. NEERAJ JINDAL, REPORTED IN 393 ITR 1. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, A BARE READING OF EXPLANATION 5A APPENDED TO SECTION 271(1)(C) WOULD SUGGEST THAT CH ARGE AGAINST AN ASSESSEE FOR CONCEALMENT OF INCOME COULD BE ASSUMED IF DURING THE COURSE OF SEARCH ANY MONEY, BULLION, JEWELLARY OR O THER VALUABLE ARTICLES WERE FOUND REPRESENTING SUCH INCOME. SIMI LARLY, ANY BOOKS OF ACCOUNTS OR DIARY DISCLOSING SOME CONCEALED INCOME WAS FOUND AND IF ASSESSEE ADMITS SUCH INCOME IN THE RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 153A OR 153C, THEN THE ASSESSI NG OFFICER WOULD DEEM THAT THE ASSESSEE HAS CONCEALED THE INCOME WHI CH CAN EXPOSE THE ASSESSEE FOR PENALTY. IN THE PRESENT CASE, NO INCR IMINATING MATERIAL WAS FOUND. THE ASSESSEE HAS DECLARED ADDITIONAL IN COME VOLUNTARILY. THUS, THE EXPLANATION 5A WOULD NOT TRIGGER IN THIS CASE. 7. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, WAS UNABLE TO CONTROVERT THESE CONTENTIONS. HE RELIED U PON THE ORDERS OF THE REVENUE AUTHORITIES. IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 6 - 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT, IN THE CASE OF SHRI MANSUKHBHAI R. SORATHIA (SUPRA), IDENTICAL QUESTION WAS CONSIDERED BY THE TRIBUNAL. THE DISCUSSIONS MADE BY THE TRIBU NAL READ AS UNDER:- 6. THE LD. FIRST APPELLATE AUTHORITY HAS MADE A L UCID ENUNCIATION OF LAW AND FACTS IN THE DETAILED ORDER IMPUGNED BEFORE US. THOUGH EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS NO T APPLICABLE IN THESE ASSESSMENT YEARS, BUT IN ORDER TO DEMONSTRATE, WHO CAN CLAIM IMMUNITY FROM LEVY OF PENALTY, LD. REPRESENTATIVES HAVE EXPL AINED THE POSITION OF LAW ON THE STRENGTH OF JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAYABHAI (SUPRA). THEY DREW OUR ATTE NTION TO EXPLANATION 5 AND THEREAFTER POINT OUT THE DISTINCTION BETWEEN EXPLANATION 5 AND 5A. THEREFORE, WE FIRST TAKE NOTE OF EXPLANATION-5 . THE EXPLANATION-5 APPENDED WITH SECTION 271(1)(C) OF THE ACT. THIS E XPLANATION READS AS UNDER: EXPLANATION 5.WHERE IN THE COURSE OF A SEARCH INI TIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELL ERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLAN ATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HI S INCOME, (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE T HE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETUR N HAS BEEN FURNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AF TER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER C LAUSE (C) OF SUB- SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONC EALED THE IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 7 - PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME, UNLESS, (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED, (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE TH E DATE OF THE SEARCH ; AND (II) IN A CASE FALLING UNDER CLAUSE (B), ON OR BE FORE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLO SED TO THE 85[PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMI SSIONER OR 85[PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFOR E THE SAID DATE ; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEM ENT UNDER SUB- SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSES SION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WH ICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 139, AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGE THER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. 7. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN INCOME TAX APPEAL NO. 1181 TO 1185 OF 2010 IN THE CASE OF KIRIT DAYABHAI PATEL VS. ACIT. COPY OF THIS DECISION HAS BEEN PLACED ON THE RECORD. THE HONBL E COURT WHILE CONSTRUING THE MEANING OF EXPLANATION 5 HAS PUT REL IANCE UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F ACIT VS. GEBILAL KANBHAIALAL (HUF), 348 ITR 561 (SC). ACCORDING TO THIS DECISION, THE EXPLANATION 5 IS DEEMING PROVISION. IT PROVIDES WH ERE IN THE COURSE OF SEARCH UNDER SECTION 132, THE ASSESSEE IS FOUND TO BE OWNER OF UNACCOUNTED ASSET AND HE CLAIMS THAT SUCH ASSETS HA VE BEEN ACQUIRED BY HIM BY UTILIZING WHOLE OR PART OF HIS INCOME FROM A NY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH, THEN IN SUCH A SITUATION, NOTWI THSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME F URNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CONC EALED THE PARTICULARS OF HIS INCOME FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SECTION IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 8 - 271(1)(C) OF THE ACT. THE HONBLE COURT, THEREAFTE R, PROPOUNDED THAT SUB-CLAUSE (1) AND (2) EXPLANATION 5 PROVIDES EXCEP TIONS FOR DEEMING THE CONCEALMENT OF PARTICULARS OF INCOME. IN THAT CASE, THE HONBLE COURT WAS DEALING IN SUB-CLAUSE (2) OF EXPLANATION- 5 AND OBSERVED THAT IN ORDER TO CLAIM IMMUNITY AS PER SUB-CLAUSE (2), T HREE CONDITIONS HAVE TO BE SATISFIED BY THE ASSESSEE. THESE THREE CONDIT IONS ARE (A) THAT THE ASSESSEE HIMSELF MAKES A STATEMENT UNDER SECTION 13 2(4) OF THE ACT IN THE COURSE OF SEARCH STATING THAT THE UNACCOUNTED A SSETS AND INCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION D URING THE SEARCH HAVE BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED IN THE RETURNS OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SECTION 139(1); (B) THAT THE ASSESSEE SHOULD SPECIF Y IN HIS STATEMENT UNDER SECTION 132(4) OF THE ACT, THE MANNER IN WHIC H THE INCOME STOOD DERIVED, AND (C) THE ASSESSEE HAS TO PAY TAX TOGETH ER WITH INTEREST, IF ANY, IN RESPONSE TO SUCH UNDISCLOSED INCOME. ACCORDING TO THE ASSESSEES PRESENT BEFORE US, THEY HAVE MADE VOLUNTARY DISCLOS URE, FILED RETURNS AND PAID TAXES. THEIR EXPLANATION FOR AVAILING THE BEN EFIT OF JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAH YABHAI PATEL (SUPRA) HAS BEEN REJECTED BY THE LD.FIRST APPELLATE AUTHORITY ON THE GROUND THAT THE EXPLANATION 5 IS APPLICABLE ON THE CASES WHERE THE SEARCH WAS INITIATED ON OR BEFORE THE 1 ST JUNE, 2007. AFTER 1 ST JULY, 2007, THE EXPLANATION 5A TO SUB-SECTION (1) OF SECTION 27 1(1)(C) HAS BEEN INSERTED VIDE FINANCE ACT, 2007. ALONG WITH THIS E XPLANATION, SECTION 271AAA HAS ALSO BEEN INSERTED BY FINANCE ACT, 2007. THE EXPLANATION 5A AND SECTION 271AAA READ 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 ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSET S) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PR EVIOUS 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 REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEA R, IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 9 - WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS Y EAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF 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 CLAUS E (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED TH E PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 271AAA. (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 132ON OR AF TER THE 1ST DAY OF JUNE, 2007 BUT BEFORE THE 1ST DAY OF JULY, 2012, TH E 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 UNDISCL OSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND S PECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCL OSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE I N RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECT ION. IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 10 - EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COU RSE 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 T HE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE 87[PRINCIPA L CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 87[PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXP ENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCT ED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS Y EAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BU T THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) O F SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE O F SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF IN COME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 8. A PERUSAL OF BOTH THESE SECTIONS TOGETHER WOULD INDICATE THAT THE IMMUNITY AKIN TO EXPLANATION 5 IS AVAILABLE TO THE ASSESSEE UNDER EXPLANATION-5A ALSO, IF HE FULFILLS THE CONDITIONS NARRATED IN SECTION 271AAA. THE EXPLANATION APPENDED TO SECTION 271AAA PROVIDES THE DEFINITION OF UNDISCLOSED INCOME AND SPECIFIED PREV IOUS YEAR. A PERUSAL OF THE EXPRESSION SPECIFIED PREVIOUS YEAR WOULD I NDICATE THAT THE YEAR OF SEARCH AND IMMEDIATELY EARLIER YEAR, IF DUE DATE OF FILING OF THE RETURN HAS NOT EXPIRED AND INCOME-TAX RETURN FOR SUCH YEAR HAS NOT BEEN FILED. SINCE THE ASSESSMENT YEARS INVOLVED BEFORE US ARE T HE ASSTT.YEARS 2008- IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 11 - 09 AND 2009-10, THE DUE DATE FOR FILING OF THE RETU RN FOR THE ASSTT.YEAR 2009-10 WAS EXPIRED BEFORE THE SEARCH ACTION. THUS , BOTH THESE YEARS DO NOT FALL WITHIN THE AMBIT OF SPECIFIED YEARS. SI NCE THE PERIOD OF THESE TWO ASSESSMENT YEARS DOES NOT FALL WITHIN THE EXPRE SSION SPECIFIED YEAR PROVIDED IN SECTION 271AAA, THEREFORE, WE DO NOT DE EM IT NECESSARY TO CONSTRUE AND EXPLAIN THE MEANING OF EXPLANATION 5A WITHIN THE SCOPE OF SECTION 271AAA. THE ASSESSEES AS SUCH CANNOT CLAIM IMMUNITY AKIN TO ONE AVAILABLE IN SUB-CLAUSE (1) AND (2) OF THE EXPL ANATION 5, MORE PARTICULARLY, ON THE STRENGTH OF THE JUDGMENT OF HO NBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA). THE LD.FIRST APPELLATE AUTHORITY HAS DEALT WITH THESE SITUATION IN AN ANALYTICAL MANNER AND IN RIGHT PERSPECTIVE. AS FAR AS THE CON STRUCTION OF MEANING OF EXPLANATION 5A TO SECTION 271AAA BY THE LD.FIRST APPELLATE AUTHORITY IS CONCERNED, WE DO NOT FIND ANY ERROR. 9. AT THE COST OF REPETITION, WE WOULD LIKE TO OBSE RVE THAT AS PER EXPLANATION 5A, IF IN THE COURSE OF SEARCH INITIATE D UNDER SECTION 132 ON OR AFTER THE 1 ST JUNE, 2007, THE ASSESSEE IS FOUND TO BE OWNER OF A NY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS AND THE ASSESSEE CLAIMS SUCH ASSETS HAVE BEEN ACQUIRED BY H IM BY UTILSING THE WHOLE OR PARTLY OF HIS INCOME FROM ANY PREVIOUS YEA R OR ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND DURING THE COURSE OF SEARCH, AND THE ASSESSEE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME FROM ANY PREVIOU S YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH, THEN, NOTWITHSTAND ING SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED O N OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSE OF IMPOSITION OF P ENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION BE DEEMED TO HAV E BEEN CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS. THE MOOT QUESTION FOR ATTRACTING THIS EXPLANATION IS THAT IN THE COURSE OF SEARCH MONEY, BULLION, JEWELLERY OR INCOME BASED ON ANY EN TRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OUGHT TO HAVE BEEN FOUN D. IN A GIVEN SITUATION, NO MONEY OR BULLION OR JEWELLERY OR INCO ME MIGHT HAVE FOUND FROM THE ASSESSEES FOR THE ASSESSMENT YEARS WHICH W ERE NOT PART OF SPECIFIED PREVIOUS YEAR CONTEMPLATED IN SECTION 2 71AAA OR IMMUNITY AVAILABLE TO THE ASSESSEES UNDER SUB-CLAUSE (A) AND (B) OF EXPLANATION 5A, THEN ALSO, IF IN RESPONSE TO THE NOTICE UNDER S ECTION 153A, THE ASSESSEE DISCLOSED SOME ADDITIONAL INCOME VOLUNTARI LY, WOULD HE BE IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 12 - DEEMED TO HAVE CONCEALED THE INCOME FOR VISITING HI M WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT ? THE LD.REVENU E AUTHORITIES HAD DRAWN INFERENCE THAT SINCE THE ASSESSEE HAS NOT DIS CLOSED ADDITIONAL INCOME IN THE ORIGINAL RETURNS, MEANING THEREBY, IT IS TO BE ASSUMED THAT THEY HAVE DISCLOSED THIS AMOUNT ONLY WHEN SOME INCR IMINATING MATERIAL WAS FOUND. TO OUR MIND THIS ASSUMPTION OUGHT TO BE SUPPORTED WITH REFERENCE OF THAT INCRIMINATING MATERIAL. LET US S EE THE FINDING IN THE ASSESSMENT ORDER. 10. WE HAVE PERUSED THE ASSESSMENT ORDER OF SHRI MA NSUKHBHAI R. SORATHIA IN THE ASSTT.YEAR 2008-09. ALL OTHER ASSE SSMENT ORDERS ARE ALSO SIMILARLY WORDED. IT IS A VERY BRIEF ASSESSMENT OR DERS RUNNING ONE-AND- HALF PAGES. IN THE FIRST PAGE, THE LD.AO HAS NARRA TED PROCEDURAL ASPECT ABOUT THE SEARCH ACTION, ISSUANCE OF NOTICE AND FIL ING OF THE RETURN, SERVICE OF NOTICE UNDER SECTION 143(2) ETC. IN TH E NEXT PAGE FINDING OF THE AO READ AS UNDER: 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FABR ICATION AND ENGINEERING JOB WORK AND ALSO DERIVES INCOME FROM A GRICULTURAL ACTIVITIES, REMUNERATION AND INTEREST FROM PARTNERS HIP FIRMS ETC. COPIES OF P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET, WAS FILED WITH THE RETURN. VARIOUS ISSUES WERE DISCUSSE D AT LENGTH. 2.1 IT IS SEEN THAT THE ASSESSEE HAD MADE DISCLOSU RE UNACCOUNTED INCOME OF RS 22,00,000/- WHICH WAS NOT DISCLOSED IN THE RETURN FILED U/S. 139(1). THIS BEING CONCEALED INCOME, PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I T ACT IS BEING INITIATED. 3. AFTER VERIFICATION, THE TOTAL INCOME IS DE TERMINED AS UNDER:- TOTAL INCOME AS PER RETURN OF INCOME RS 28,45,960/ - TOTAL ASSESSED INCOME RS 28,45,960/- AGRICULTURAL INCOME FOR RATE PURPOSE RS.6,14,131/- 4. ASSESSED U/S. 153A OF THE I T ACT, 1961. CHARGE TAX. CHARGE INTEREST U/S. 234A, 234B AND 234C OF THE I T ACT, I F ANY. GIVE CREDIT FOR PREPAID TAXES AFTER DUE VERIFICATION. DE MAND NOTICE AND CHALLAN ISSUED ACCORDINGLY. ISSUE NOTICE U/S. 271(1 )(C)OF THE IT ACT. IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 13 - 11. WE HAVE PERUSED THE PENALTY ORDER ALSO. THERE ARE ONLY THREE PARAGRAPHS I.E. PARA-4, 6 AND 7, WHERE THE AO HAS M ADE SOME OBSERVATION AT HIS OWN, OTHERWISE, IN REST OF THE P ARAGRAPHS HE REPRODUCED THE SUBMISSIONS OR THE HEAD-NOTES OF THE CASE LAWS. THE OBSERVATION OF THE AO IN THESE PARAS READ AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE ASSESSES. THE CONTENTION OF THE ASSESSEE IS NOT ACC EPTABLE BECAUSE, THE ADDITIONAL INCOME OFFERED BY THE ASSESSES ONLY SURFACED DUE TO THE SEARCH ACTION CARRIED BY THE DEPARTMENT. HAD TH ERE BEEN NO SEARCH, THE PORTION OF ADDITIONAL INCOME WOULD HAVE REMAINED CONCEALED ETERNALLY. IF IN A REGULAR CASE, ON DETEC TION OF CONCEALMENT, PENALTY U/S. 271(1)(C) IS LEVIABLE, HO W MUCH MORE PENALTY BECOMES TRUE AND POTENT IN A CASE WHERE THE CONCEALMENT HAS BEEN DETECTED ON ACCOUNT OF PROACTIVE SEARCH AC TION INITIATED BY THE DEPARTMENT. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS NOT RECORDED DETAILS OF HIS INCOME AND THE SAME WAS WOR KED OUT ONLY DURING SEARCH AND THAT TOO ON THE BASIS OF THE SEIZ ED MATERIALS. IN FACT, IT IS AN ESTABLISHED JUDICIAL DECISION THAT ' DOCUMENTS SEIZED DURING THE SEARCH CANNOT BE SAID THE BOOKS OF ACCOU NTS MAINTAINED FOR ANY SOURCE OF INCOME, FOR THE PURPOSES OF EXPLA NATION 5 (CIT VS GLAMOUR RESTAURANT (2003) 80 TTJ (MUM) 763. DIAR IES FOUND AND SEIZED DURING COURSE OF SEARCH CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR THE PURPOSE OF IMMUNITY TO BE GRANTED TO HIM UNDER THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) - DR T P KULKARN I VS CIT (2003) 86 ITD 696 (MUM). IT HAS ALSO BEEN HELD THAT ONLY BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE CAN MAK E THE ASSESSEE ELIGIBLE FOR GRANT OF IMMUNITY FROM PENALTY AND NOT JUST ANY OF SUCH BOOKS, WHICH HAVE NOT BEEN MAINTAINED IN REGUL AR COURSE OF BUSINESS - BRIJ LAL GOYAL VS CIT (2004) 88 ITD 413 (DELHI). 12. IN THIS BACKGROUND, IF WE APPRECIATE THE EVIDEN CES AVAILABLE ON THE RECORD, THEN IT WOULD REVEAL THE WHOLE CASE OF THE REVENUE FOR VISITING THE ASSESSEE WITH PENALTY IS BASED ON THE STATEMENT OF SHRI JAYANTILAL R. SORATHIA RECORDED DURING THE COURSE O F SEARCH. WE HAVE EXTRACTED THE RELEVANT PART OF THE STATEMENT IN THE FOREGOING PARAGRAPHS OF THIS ORDER. THE EVIDENTIARY VALUE OF SUCH STATE MENT HAS BEEN IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 14 - EXPLAINED IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS. LET US FIRST TAKE NOTE OF SECTION 132(4) OF THE ACT. THE AUTHORISED OFFICER MAY, DURING THE COURSE OF T HE SEARCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCU MENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATI ON MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UN DER THE INDIAN INCOME- TAX ACT, 1922 (11 OF 1922 ), OR UNDER THIS ACT. EXPLANATION.- FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE EXAMINATION OF ANY PERSON UNDER THIS SUB- SECTI ON MAY BE NOT MERELY IN RESPECT OF ANY BOOKS OF ACCOUNT, OTHER DO CUMENTS OR ASSETS FOUND AS A RESULT OF THE SEARCH, BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGAT ION CONNECTED WITH ANY PROCEEDING UNDER THE INDIAN INCOME- TAX AC T, 1922 (11 OF 1922 ), OR UNDER THIS ACT. 13. A BARE PERUSAL OF SECTION WOULD REVEAL THAT IT EMPOWERS THE AUTHORIZED OFFICER TO EXAMINE DURING THE COURSE OF SEARCH OR SEIZURE ANY PERSON ON OATH. THE DISCLOSURE MADE DURING THE STA TEMENT RECORDED UNDER THIS SECTION WILL BE ADMITTED IN THE EVIDENCE AND CAN BE USED AGAINST THE ASSESSEE IN THE PROCEEDING. 14. NO DOUBT, THE DISCLOSURE OR ADMISSION MADE UNDE R SECTION 132(4) OF THE ACT DURING THE COURSE OF SEARCH PROCE EDINGS IS AN ADMISSIBLE EVIDENCE BUT NOT CONCLUSIVE ONE. THIS P RESUMPTION OF ADMISSIBILITY OF EVIDENCE IS A REBUTTABLE ONE, AND IF AN ASSESSEE IS ABLE TO DEMONSTRATE WITH THE HELP OF SOME MATERIAL THAT SUC H ADMISSION WAS EITHER MISTAKEN, UNTRUE OR BASED ON MISCONCEPTION O F FACTS, THEN SOLELY ON THE BASIS OF SUCH ADMISSION NO ADDITION IS REQUI RED TO BE MADE. IT IS TRUE THAT ADMISSION BEING DECLARATION AGAINST AN IN TEREST ARE GOOD EVIDENCE, BUT THEY ARE NOT CONCLUSIVE, AND A PARTY IS ALWAYS AT LIBERTY TO WITHDRAW THE ADMISSION BY DEMONSTRATING THAT THEY A RE EITHER MISTAKEN OR UNTRUE. IN LAW, THE RETRACTED CONFESSION EVEN M AY FORM THE LEGAL BASIS OF ADMISSION, IF THE AO IS SATISFIED THAT IT WAS TR UE AND WAS VOLUNTARILY MADE. BUT THE BASING THE ADDITION ON A RETRACTED D ECLARATION SOLELY WOULD NOT BE SAFE. IT IS NOT A STRICT RULE OF LAW, BUT ONLY RULE OF IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 15 - PRUDENCE. AS A GENERAL RULE, IT IS UNSAFE TO RELY UPON A RETRACTED CONFESSION WITHOUT CORROBORATIVE EVIDENCE. DUE TO THIS GREY SITUATION, CBDT HAS ISSUED CIRCULAR NO.286/2/2003 PROHIBITING THE DEPARTMENTAL OFFICIALS FROM TAKING CONFESSION IN THE SEARCH. TH E BOARD IS OF THE VIEW THAT OFTEN THE OFFICIALS USED TO OBTAIN CONFESSIONS FROM THE ASSESSEE AND STOP FURTHER RECOVERY OF THE MATERIAL. SUCH CONFES SIONS HAVE BEEN RETRACTED AND THEN THE ADDITION COULD NOT WITHSTAND THE SCRUTINY OF THE HIGHER APPELLATE AUTHORITY, BECAUSE NO MATERIAL WAS FOUND SUPPORTING SUCH ADDITION. 15. AN ISSUE WHETHER ADDITION SOLELY ON THE BASIS O F STATEMENT U/S.132(4) CAN BE MADE WAS CONSIDERED BY THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF KIALASHBEN MANHARLAL CHOK SHI VS. CIT, 220 CTR (GUJ) 138. IN THIS CASE, SEARCH WAS CONDUCTED UPON THE ASSESSEE UNDER SECTION 132 OF THE INCOME TAX ACT ON 4.11.198 8. THE STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132(4) O F THE ACT. HE MADE DISCLOSURE OF RS.7 LAKHS. LATER ON, IN JANUARY, 19 89, THE ASSESSEE RETRACTED FROM THE DISCLOSURE AND STATED THE DISCLO SURE OF RS.50,000/- WAS ACCEPTABLE TO HIM. THE LD.AO MADE AN ADDITION OF RS.7 LAKHS ON THE BASIS OF HIS STATEMENT AND OBSERVED THAT THE RETRAC TION WAS MADE AFTER A LAPSE OF 2 MONTHS. THE ASSESSEE DID NOT HAVE ANY R EASON FOR RETRACTING FROM THE DISCLOSURE. THE LD.FIRST APPELLATE AUTHOR ITY CONCURRED WITH THE AO AND CONFIRMED THE ADDITION OF RS.7 LAKHS TO HIS INCOME. THE TRIBUNAL HAS ALSO CONFIRMED THE ADDITION BY OBSERVI NG THAT THERE WAS NOTHING ON RECORD WHICH INDICATED THAT THE DISCLOSU RE WAS TAKEN FROM THE ASSESSEE UNDER DURESS, PRESSURE OR COERCION. T HE RETRACTION AFTER LAPSE OF TWO MONTHS FROM THE DATE OF DISCLOSURE BY THE ASSESSEE WAS CONSIDERED AS AFTER-THOUGHT. THE ISSUE TRAVELLED BEFORE THE HONBLE HIGH COURT. THE HONBLE HIGH COURT HAS DELETED THE ADDITION BY OBSERVING THAT MERELY ON THE BASIS OF DISCLOSURE, A DDITION CANNOT BE MADE. THERE SHOULD BE SOME CORROBORATIVE MATERIAL. THE FOLLOWING OBSERVATIONS IN PARA-26 OF THE JUDGEMENT OF HONBLE COURT ARE WORTH TO NOTE. IT READS AS UNDER: 26. IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE WE ARE OF THE VIEW THAT THIS EXPLANATION SEEMS TO BE MORE CONVINC ING, HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AND ADDITI ONS WERE MADE AND/OR CONFIRMED MERELY ON THE BASIS OF STATEMENT R ECORDED UNDER SECTION 132(4) OF THE ACT. DESPITE THE FACT THAT TH E SAID STATEMENT IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 16 - WAS LATER ON RETRACTED NO EVIDENCE HAS BEEN LED BY THE REVENUE AUTHORITY. WE ARE, THEREFORE, OF THE VIEW THAT MERE LY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJE CTED TO SUCH ADDITIONS UNLESS AND UNTIL, SOME CORROBORATIVE EVID ENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. WE ARE ALSO OF THE VI EW THAT FROM THE STATEMENT RECORDED AT SUCH ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT, IF IT IS SUBSEQUENTLY RET RACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSIO N. HENCE THERE IS NO REASON NOT TO DISBELIEVE THE RETRACTION MADE BY THE ASSESSING OFFICER AND EXPLANATION DULY SUPPORTED BY THE EVIDE NCE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL WAS NOT JU STIFIED IN MAKING ADDITION OF RS. 6 LAKHS ON THE BASIS OF STAT EMENT RECORDED BY THE ASSESSING OFFICER UNDER SECTION 132(4) OF TH E ACT. THE TRIBUNAL HAS COMMITTED AN ERROR IN IGNORING THE RET RACTION MADE BY THE ASSESSEE. 27. IN THE ABOVE VIEW OF THE MATTER, ADDITION OF RS . 1 LAKH MADE ON ACCOUNT OF UNACCOUNTED CASH IS CONFIRMED AND THE AD DITION OF RS. 6 LAKHS IS HEREBY DELETED. 16. THIS DECISION HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. CHANDRAKUMAR JETHMAL KOCHAR, 55 TAXMANN.COM 292 (GUJ). THE HONBLE HIGH COURT HAS REPRODUCED T HE DISCUSSION MADE BY THE TRIBUNAL, AND THEREAFTER, CONCURRED WITH THE CONCLUSIONS OF THE TRIBUNAL BY OBSERVING AS UNDER: 6. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE PRINCIPAL LAID DOWN IN THE CASE OF KAILASHBEN MANHARLAL CHOKS HI (SUPRA),WE ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN B Y THE TRIBUNAL IS JUST AND PROPER. WE ARE NOT CONVINCED WITH THE S UBMISSIONS MADE BY MR. MEHTA, LEARNED ADVOCATE FOR THE APPELLA NT THAT THE TRIBUNAL HAS NOT GIVEN COGENT REASONS. THEREFORE, T HE ANSWER TO THE FIRST QUESTION WOULD BE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE SECOND QUESTION WILL ALSO ENURE F OR THE BENEFIT OF THE ASSESSEE AS FROM THE RECORD IT IS CLEAR THAT OT HER CONCERNS WERE NOT BENAMI CONCERNS OF THE ASSESSEE. IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 17 - 7. FOR THE FORGING REASONS, THE PRESENT APPEAL IS D ISMISSED. ACCORDINGLY, BOTH THE QUESTIONS WHICH WERE REFERRED TO THIS COURT ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 17. HAD THIS STATEMENT BEEN RETRACTED BY THE ASSESS EE, AND THEY HAVE NOT OFFERED THIS UNDISCLOSED INCOME, FORGET TO TAKE ACTION OF LEVYING THE PENALTY, EVEN ADDITIONS WOULD NOT HAVE BEEN SUSTAIN ED. THE INFERENCE OF OWNERSHIP OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES, TO OUR MIND, OUGHT NOT TO BE BASED ON THIS STATEMENT. WHEN THE ASSESSEES HAVE TAKEN SPECIFIC PLEA THAT NO MONEY, BULLION OR JEWELLERY OR INCOME BASED ON ANY ENTRIES FOR THESE TWO ASSESSMENT YEARS WAS FOUND DURING THE COURSE OF SEARCH, THE AO OUGHT TO HAVE IMMEDIAT ELY REFERRED THE DOCUMENTS, ENTRIES OR ANY ASSET FOUND WHICH IS RELE VANT TO THESE ASSESSMENT YEARS IN THE PENALTY PROCEEDINGS. HE SH OULD HAVE REJECTED THE EXPLANATION OF THE ASSESSEE BY DEMONSTRATING IT AS FACTUALLY INCORRECT. RATHER, THE AUTHORITIES HAVE PROCEEDED ON THE ASSUMPTION THAT HAD THERE BEEN NO MONEY, BULLION, JEWELLERY OR INCO ME BASED ON ENTRIES WAS NOT FOUND, THE ASSESSEE WOULD HAVE NOT MADE VOL UNTARY DISCLOSURE OF THE INCOME IN THESE RETURNS. THEY FAILED TO NOTE T HE QUESTION NO.25 ALSO, WHERE THE ASSESSEES CLAIMED IMMUNITY FROM PENALTY, AND PEACE FROM LITIGATION. TO OUR MIND INFERENCE OF AVAILABILITY OF MONEY, BULLION OR ASSETS EMBEDDED IN THE ENTRIES CANNOT BE DRAWN FROM THE STATEMENT OF THE ASSESSEE (EXTRACTED SUPRA). THEY SHOULD HAVE B EEN FOUND IN PHYSICAL FORM AND PERTAINING TO THESE YEARS, ONLY THEN, DEEM ING FICTION OF CONCEALMENT WOULD TRIGGER. THUS, THE REVENUE AUTHOR ITIES HAVE NOT REFERRED ANY DOCUMENTARY EVIDENCES DEMONSTRATING TH E FACT THAT VOLUNTARY INCOME OFFERED BY ASSESSEES IN THESE TWO YEARS ACTUALLY UNEARTHED DURING THE COURSE OF SEARCH. THEREFORE, TO OUR MIND, THE ASSESSEES DO NOT DESERVE TO BE VISITED WITH PENALTI ES. WE ALLOW ALL THE APPEALS OF THE ASSESSEES AND DELETE PENALTIES. 9. HONBLE DELHI HIGH COURT IN THE CASE OF NIRAJ JI NDAL (SUPRA) HAS ALSO CONSIDERED THIS ISSUE AND OBSERVED THAT, IN OR DER TO INVOKE EXPLANATION 5 OR 5A, REVENUE HAD TO PROVE THAT ITS REQUIREMENTS ARE CLEARLY FULFILLED. THE FOLLOWING OBSERVATIONS OF TH E HONBLE DELHI HIGH COURT ARE ALSO WORTH TO NOTE THOUGH THESE ARE IN CO NNECTION WITH IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 18 - EXPLANATION 5, BUT THE REASONING FOR INVOKING EXPLA NATION 5 OR 5A ARE THE SAME. WHETHER EXPLANATION 5 TO SECTION 271(1)(C) COULD B E INVOKED FOR ASSESSMENT YEARS 2005-06 TO 2006-07 ? EXPLANATION 5 WAS SPECIFICALLY INSERTED TO DEAL WITH THE SITUATION WHERE HIGHER INCOME WAS DISCLOSED IN THE RETURN FIL ED CONSEQUENT TO A SEARCH OPERATION, AND THE ASSESSEE CLAIMED THAT SUC H ADDITION OF INCOME DID NOT IMPLY THAT THERE WAS CONCEALMENT. IN OTHER WORDS, BUT FOR THE INSERTION OF EXPLANATION 5, IT WOULD BE OPEN TO THE ASSESSEE TO CONTEND THAT ADDITIONS MADE TO HIS INCOME IN THE RETURN FIL ED AFTER THE SEARCH OPERATIONS, WERE ONLY TO BUY PEACE AND DID NOT TANT AMOUNT TO CONCEALMENT. THIS ALSO FLOWS FROM THE LANGUAGE OF E XPLANATION 5 ITSELF, WHEREIN THE WORDS USED BY THE LEGISLATURE ARE 'BE D EEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME', WHICH SHO WS THAT THERE IS A DEEMING FICTION BY VIRTUE OF WHICH SUCH ADDITIONAL INCOME IS CONSIDERED AS CONCEALMENT. IF SUCH ADDITIONS IN THE INCOME IN THE RETURN FILED CONSEQUENT TO A SEARCH, WERE TO AUTOMA TICALLY EVIDENCE CONCEALMENT UNDER SECTION 271(1)(C), THERE WOULD BE NO NEED FOR PARLIAMENT TO ENACT A DEEMING FICTION IN THE FORM O F EXPLANATION 5; SUCH A READING WOULD RENDER EXPLANATION 5 OTIOSE AN D WITHOUT ANY PURPOSE. THIS IS ALSO CONSONANT WITH THE VIEW ARRIV ED AT IN THE EARLIER PART OF THIS DECISION, I.E., MERE INCREASE OF INCOM E IN THE RETURN FILED PURSUANT TO SECTION 153A WOULD NOT BE SUFFICIENT TO JUSTIFY CONCEALMENT UNDER SECTION 271(1)(C).. [PARA 25] 10. RESPECTIVELY FOLLOWING THE ABOVE ORDERS, WE ARE OF THE VIEW THAT IN ORDER TO INVOKE THE DEEMING PROVISION FOR VISITI NG THE ASSESSEE WITH PENALTY FOR CONCEALMENT, THE REVENUE HAS TO PROVE T HAT THE INFERENCE OF OWNERSHIP OF ANY MONEY, BULLION, JEWELLERY OR OT HER VALUABLE ARTICLES OUGHT TO BE BASED ON CONCRETE EVIDENCE FOU ND DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, NOTHING WAS FOUND AND, THEREFORE, NO INFERENCE COULD BE DRAWN. THEREFORE, RESPECTFULLY IT(SS)A NOS. 36 TO 41 AND 43 & 45/RJT/ 2012 ASSESSEE : NARENDRA N. PALA & ORS AYS : 2003-04 , 2014-05, 2006-07 TO 2008-09 - 19 - FOLLOWING THE ABOVE ORDERS, WE ALLOW THESE APPEALS AND DELETE THE IMPUGNED PENALTIES LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. ORDER PRONOUNCED IN THE COURT ON 31 ST JANUARY, 2018 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD, DATED 31/01/2018 *BIJU T. / COPY OF ORDER FORWARDED TO:- 1. ! / APPELLANT- 2. #$! / RESPONDENT 3. ( / CONCERNED CIT/DIT 4. (- / CIT (A) 5 . + #.. , , / DR, ITAT, RAJKOT 6 . 1 / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) / ITAT, RAJKOT