Shri Maleka Haji Amin Gadawala, Surat V. The ACIT.Cent.Circle-4, Surat

ITSSA 466/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0675 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 21-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Benefit of exemption
• Section: 5(2); 153A; 132; 15; 139

Judgement Text

IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR, AM AND S.S. GODARA, JM] IT(SS)A NOS.464, 465 & 466/AHD/2011. ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06 RESPEC TIVELY MALEKA HAJI AMIN GADAWALA, .APPELLANT C/O. ALA INTERNATIONAL PVT. LTD., A-501/502, LEO APARTMENT, PLOT NO.479, 24 TH ROAD, KHAR (WEST), MUMBAI 52. [PAN: AERPG 5874 M] VS. ASSTT. COMMISSIONER OF INCOME TAX, .RESPONDENT CENTRAL CIRCLE 4, SURAT. APPEARANCES BY: RAMESH KUMAR MALPANI, F OR THE APPELLANT P.L. KUREEL, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: 20 TH APRIL, 2015 DATE OF PRONOUNCING THE ORDER: 24 TH APRIL, 2015 O R D E R PER PRAMOD KUMAR: 1. THESE THREE APPEALS, FILED BY THE ASSESSEE, CHAL LENGE CORRECTNESS OF CONSOLIDATED ORDER DATED 16 TH AUGUST, 2010 PASSED BY THE CIT(A) IN THE MATTER OF PENALTIES UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06. 2. GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS THAT THE CIT(A) ERRED IN CONFIRMING PENALTIES UNDER SECTION 271(1)(C) OF THE ACT IMPOSE D ON THE ASSESSEE (RS.79,070/- FOR A.Y. 2003-04, RS.82,070/- FOR A.Y. 2004-05 AND RS.65, 025/- FOR A.Y. 2005-06). IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 2 OF 10 3. THE ISSUE IN APPEAL LIES A VERY NARROW COMPASS O F MATERIAL FACTS. THE ASSESSEE BEFORE US, A LADY IN MID SIXES, IS A PARTNER IN MAL IKA ENTERPRISES. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL PREMIS ES OF THE ASSESSEE, AND HER FAMILY MEMBERS, ON 14 TH DECEMBER, 2005. DURING THE COURSE OF THIS SEARCH OPERATION, A STATEMENT GIVEN BY EHASAN HAJI AMIN GADAWALA ON BEH ALF OF THE FAMILY INCLUDING HIS MOTHER I.E. THE ASSESSEE BEFORE US, WAS DULY RECORD ED UNDER SECTION 132(4) OF THE ACT. IN THE STATEMENT SO GIVEN, THE ASSESSEE APPELLANTS SON, INTER ALIA, DISCLOSED INCOME OF RS.3,50,000/-, RS.3,60,000/- AND RS.2,16,750/- FOR ASSESSMENT YEARS 2003-04, 2004-05 & 2005-06 RESPECTIVELY. THE INCOME SO DISCLOSED WA S DULY SHOWN IN THE RETURNS FILED BY THE ASSESSEE UNDER SECTION 139 READ WITH SECTION 15 3A OF THE ACT AND TAX DUE, WITH INTEREST THEREON, WAS DULY PAID BY THE ASSESSEE. 4. IT WAS IN RESPECT OF THESE INCOMES THAT PENALTY PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER. DURING THE PENALTY PROCEEDINGS, IT WAS CONTEND BY THE ASSESSEE THAT SINCE THERE WAS NO CONCEALMENT OF INCOME QUA THE RE TURN FILED BY HER, THERE IS NO OCCASION FOR IMPLOSION OF CONCEALMENT OF PENALTY UN DER SECTION 271(1)(C). IT WAS ALSO CONTENDED THAT THE AMOUNT ADDED TO HER INCOME WAS N OT HER REAL EARNING BUT ADDED TO HER INCOME ON ACCOUNT OF A DEEMING FICTION, AND, AS SUCH, IT WAS NOT A FIT CASE FOR IMPOSITIONS OF PENALTY. FINALLY, IT WAS CONTENDED THAT THE AMOUNT ADDED TO THE INCOME WAS PART OF OUR DISCLOSURE MADE UNDER SECTION 132( 4) READ WITH EXPLANATION 5 BELOW SECTION 271(1)(C) OF THE ACT, AND, THEREFORE, NO PE NALTY IS LIVEABLE WITH REFERENCE TO THE SAME, IN VIEW OF SAID EXPLANATION 5 TO THE ACT. 5. NONE OF THESE SUBMISSIONS, HOWEVER, IMPRESSED TH E ASSESSING OFFICER. THE ASSESSING OFFICER REJECTED ALL THESE SUBMISSIONS AN D PROCEEDED TO IMPOSE PENALTY UNDER SECTION 271(1)(C). WHILE DOING SO, AND REJECTING ASSESSEES RELIANCE ON EXPLANATION 5 TO SECTION 271(1)(C), THE ASSESSING OFFICER, INTER ALI A, OBSERVED AS FOLLOWS :- FINALLY, THE ASSESSEE ARGUED THE FOLLOWING: MOREOVER THE AMOUNT WAS PART OF OUR DISCLOSURE MAD E U/S.132(4) R.W.S. EXPLANATION 5 BELOW SECTION 271(1)(C) OF THE ACT AND THEREFORE, NO PENALTY IS LIVEABLE WITH REFERENCE TO SAME IN VIEW OF SAID EXPL ANATION 5 OF THE ACT. IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 3 OF 10 REBUTTAL: THE CLAIMS OF THE ASSESSEE HAVE BEEN EXAMINED FROM THE PERSPECTIVE OF CONCEALMENT AND HAVE BEEN FOUND TO BE UNACCEPTABLE O N ACCOUNT OF THE FOLLOWING REASONS. FOR PROPER APPRECIATION OF THE CONTENTIONS OF ASSESS EE, THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 AS CLAIMED RELEVANT TO THE INSTANT PROCEEDINGS ARE LAID DOWN BE LOW :- ...... WHERE IN THE COURSE OF A SEARCH INITIATED UND ER SECTION 132 BEFORE THE 1 ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE O WNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREINA FTER IN THIS EXPLANATION REFERRED TO ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS I NCOME,- (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DA TE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FU RNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETURN 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 AFTER 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 CLAUSE (C ) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTI CULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, . ... THUS, PRIMA FACIE, THE EXPLANATION 5 TO SECTION 271(1 )(C) OF THE INCOME TAX ACT, 1961, GOES AGAINST THE ASSESSEE. EXPLANATION 5 HAS PROVIDED FOR A DEEMING PROVISION WHEREBY THE ASSESSEE IS TREATED AS DEFAULTER UNDER SECTION 271(1)(C). THE CASE OF THE ASSESSEE FALLS SQUARELY WITHIN THE DEEMING PROVISION OF EXPLANATION 5 WHEREBY THE RETURN OF IN COME HAS BEEN FURNISHED AFTER THE DATE OF SEARCH FOR THE A.Y. REL EVANT TO THE INSTANT PENALTY PROCEEDING. THUS, EXPLANATION 5 DEEMS THE ASSESSEE AS AN OFFENDE R AND LIABLE TO PENAL ACTION. FURTHER, THE ASSESSEE HAS CLAIMED THE SHELTER UNDER THE E XCEPTION TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THE RELEVANT PORTION OF THE CLAUSE IS LAID DOWN BELOW: [UNLESS- (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED,- IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 4 OF 10 (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE DATE OF THE SEARCH; AND (II) IN A CASE FALLING UNDER CLAUSE (B), ON OR BEFO RE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FO R ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE [CHIEF COMMIS SIONER OR COMMISSIONER] BEFORE THE SAID DATE; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDER SUB- SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPE CIFIED IN SUCH-SECTION(1) OF SECTION 139, AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME .... THE ASSESSEE IS NOT ELIGIBLE FOR THE PROTECTION PROVI DED UNDER THE EXCEPTION TO EXPLANATION 5 BECAUSE OF THE REASONS MENTIONED BELOW : (I) ASSESSEE HAS NOT DISCLOSED ANY TABLE INCOME TO T HE CHIEF COMMISSIONER OR COMMISSIONER AT ANY TIME; (II) ASSESSEE HERSELF HAS MADE NO DISCLOSURE OF THE AS SET IN STATEMENT MADE UNDER SUB-SECTION(4) OF SECTION 132 OF THE INCOME TA X AT, 1961. (III) NOWHERE IN THE STATEMENT HAS THE MANNER OF DERIV ATION OF UNDISCLOSED INCOME BEEN SPECIFIED. THE ASSESSEE CAN NOT BE CONFERRED THE BENEFIT OF EXCE PTION TO EXPLANATION 5 S THE ASSESSEE HAS NOT VOLUNTARILY DISCLOSED THE ASSET A ND THE MANNER OF EARNING OF UNDISCLOSED INCOME IN THE STATEMENT UNDER SECTION 132(4) OF THE INCOME TAX AT, 1961 DURING SEARCH OPERATIONS. THE LAW REQUIRES STRICT INTERPRETATION IN CASE OF EX CEPTIONS AND SUCH OMISSIONS AS COMMITTED BY THE ASSESSEE CAN NOT BE O VER-LOOKED. THE EXTANT POSITION OF LAW AS REGARDS TO STRICT INTERPRETATION OF EXCEPTIONS CLAUSES IS DISCUSSED BELOW : IN THE CASE OF N.K. JAIN VS. C.K. SHAH (SC) [1991 AIR 1 289], THE APEX COURT HAS HELD THAT IT IS TRUE THAT ALL THE PENAL STATUTES SHOU LD BE CONSTRUED STRICTLY AND THE COURT MUST SEE THAT THE THING CHARGED AS AN OFFENCE IS WITHIN THE PLAIN MEANING OF THE WORDS USED ...... FURTHER, THE APEX COURT HAS AGAIN LAID DOWN IN THE CAS E OF STATE OF JHARKHAND AND ORS. VS. AMBAY CEMENTS; APPEAL (CIVIL) 7994 OF 2003, THAT .... IT IS ALSO SETTLED RULE OF INTERPRETATION THAT WHERE A STATUTE IS PENAL IN CHARACTER, IT MUST BE STRICTLY CONSTRUED AND FOLLOWED ..... IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 5 OF 10 HENCE, THE LAW IS CRYSTAL CLEAR AND SETTLED THAT IN R ESPECT OF THE PENAL AND EXCEPTION PROVISIONS ABOUT STRICT INTERPRETATION, W ITHOUT LIBERTY OF INTENDMENT. THUS, ASSESSEE CAN NOT BE GRANTED BENEFIT OF HAVING MADE VOLUNTARY DISCLOSURE STATEMENT UNDER S.132(4) OF I. T. ACT FOR PURPOSE OF EXEMPTION OF PENALTY TO ASSESSEE. THUS, THE ASSESSEES CLAIM OF PROTECTION UNDER EXCEPTION PROVISION TO EXPLANATION 5 OF SECTI ON 271(1)(C) OF THE ACT IS UNTENABLE. THUS, ASSESSEE HAS FAILED TO FULFIL ANY OF THE CONDI TIONS LAID OUT IN THE EXCEPTIONS CLAUSE. HENCE, THE ASSESSEE IS COMPLETEL Y INELIGIBLE FOR THE PROTECTION PROVIDED BY THE CLAUSES. TO THE CONTRARY, ASSESSEE IS HIT BY THE DEEMING PROVISION OF EXPLANATION 5 TO SECTION 271(1 )(C), AND IS DEEMED TO BE LIABLE FOR CONCEALMENT OF INCOME. 6. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A), REJECTING THE CONTENT IONS OF THE ASSESSEE APPELLANT, OBSERVED AS FOLLOWS :- 4. THE APPELLANT HAS SUBMITTED IN THE STATEMENT OF FA CTS THAT HE HAD COMPLIED ALL THE CONDITIONS LAID DOWN UNDER THE PROV ISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE DISCLOSURE WAS MADE IN STATEMENT RECORDED U/S 132(4) OF THE ACT AND ALSO THE SAME WAS OFFERED AS INCOME IN THE RETURNS FILED AND THE TAXES WERE PAID. THE AO DID NO T GRANT IMMUNITY TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE R ETURNED INCOME HAS BEEN ACCEPTED AND NO ADDITION IS MADE. THE APPELLANT HAS MADE DISCLOSURE ONLY TO BUY PEACE OF MIND. FURTHER, EVEN OTHERWISE ALSO, THE APPELLANT IS ELIGIBLE FOR IMMUNITY GRANTED UNDER EXPLANATION 5(2) TO SECTION 271(1)(C) OF THE I.T. ACT. HENCE, THE PENALTY MAY BE DELETED. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS. I DO NOT AGREE WITH THE APPELLANTS VIEW. THE HONBLE ITAT AHMEDABAD BENCH IN THE CASE OF ACIT VS. KIRIT DAYABHAI PATEL, IN ITA NO.2344/AHD/2007 FOR A.Y . 2002-03 AND IN THE CASE OF SHRI RAJESH A. PATEL IN ITA NO.2345, 2346, 23 48 & 2389/AHD/2007 FOR A.YS. 98-99, 99-2000, 2001-02 & 2002-03 DATED 25.06 .2009 [GIVEN BY SHRI R V EASWAR VICE PRESIDENT AND THIRD MEMBER], HAVE CONSIDE RED THE POINT OF APPLICABILITY OF EXPLANATION 5 TO SECTION 271(1)(C) FOR THE YEARS EARLIER TO THE YEAR OF SEARCH. THE HONBLE MEMBER DID NOT APPROVE T HE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. S.D.V. CHANDRU 266 ITR 175 AND RAJASTHAN HIGH COURT DECISION IN THE CASE OF CIT VS. KANHAIYALAL 299 ITR 19 AND ORDER OF THE ALLAHABAD BENCH OF ITAT IN THE CASE OF SHYAM BIRI W ORKS P. LTD. VS. ACIT 70 TTJ 880. INSTEAD THE MEMBER HAVE FOLLOWED THE DECI SION OF BOMBAY HIGH COURT IN THE CASE OF SHERATON APPARELS VS. ACT 256 IT R 20 AND ITAT AHMEDABAD BENCH IN THE CASE OF RUPESH GODHIDAS PATEL 309 ITR (AT) 271 AND HELD THAT BENEFIT OF EXPLANATION 5(2) TO SECTION 271(1)(C) IS CONFINED TO IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 6 OF 10 THE YEAR IN RESPECT OF WHICH THE DUE DATE FOR FILING THE RETURN IS YET TO COME BUT THE BENEFIT IS NOT AVAILABLE TO EARLIER YEARS WHE RE DUE DATE TO FILE THE RETURN OF INCOME U/S. 139(1) HAS EXPIRED. AS THE DECISION OF HONBLE ITAT AHMEDABAD [THIRD MEMBE R] IS BINDING THE SAME IS FOLLOWED. ACCORDINGLY, IT IS HELD THAT THE A PPELLANT IS NOT ENTITLED TO THE BENEFIT OF EXEMPTION UNDER EXPLANATION 5(2) TO S ECTION 271(1)(C) OF THE I.T. ACT AND PENALTY IS LIVEABLE. HENCE, THE ACTION OF THE ASSESSING OFFICER IS UPHELD AND THE PENALTY IS CONFIRMED. 7. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PURSUED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE, IN THE LIGHT OF THE A PPLICABLE LEGAL POSITION. 9. AS LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY POIN TS OUT, THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSES, BY HONBLE JURISDICTIONA L HIGH COURTS JUDGEMENT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT (ITA NOS.1181, 1182 & 1185 OF 2010; JUDGEMENT DATED 03.12.2014), WHEREIN REVERSING THE VERY THIRD MEMBE R DECISION OF THIS TRIBUNAL WHICH WAS RELIED UPON BY THE CIT(A), THEIR LORD SHIPS HAV E OBSERVED AS FOLLOWS :- 8. WE HAVE HEARD LEARNED ADVOCATES FOR THE PARTIES AND PERUSED THE MATERIAL ON RECORD. BEFORE DEALING WITH THE CONTENTIONS, IT WOULD BE RELEVANT T O REPRODUCE EXPLANATION 5 TO SECTION 271 (1) (C) OF THE INCOME TAX ACT, WHICH READS AS UNDER: EXPLANATION 5. WHEREIN IN THE COURSE OF A [SEARCH INITIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE, 2007], THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME - (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR, WHEREIN SUCH RETURN 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 AFTER 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 CLAUSE(C) OF SUBSECTION ( 1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 7 OF 10 PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS 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 DATE OF THE SEARCH; AND (II) IN A CASE FALLING UNDER CLAUSE(B), ON OR BEFORE SUCH DATE; IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OF SUCH INCOME IS OTHERWISE DISCLOSED TO THE [PRINCIPAL CHIEF COMMISSIONER OR COMMISSIONER OR] CHIEF COMMISSIONER OR [PRINCIPAL COMMISSIONER OR] COMMISSIONER] BEFORE THE SAID DATE; OR (2) HE IN THE COURSE OF THE SEARCH, MAKES A STATEMENT UNDER SUBSECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWEL L ERY OR OTHER VALUABLE ARTICLE OF THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE 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, TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. 9. THE HIGH COURT OF MADRAS IN THE CASE OF S.D.V. CHANDRU (SUPRA) HELD THAT IN A CASE WHERE THE ASSESSEE HAD NOT DISCLOSED HIS INCOME IN THE RETURNS FILED FOR THE PREVIOUS YEAR WHICH HAVE ENDED PRIOR TO THE DATE OF THE SEARCH AND, IN THE STATEMENT GIVEN UNDER SECTION 132(4) THE ASSESSEE ADMITTED THE RECEIP T OF UNDISCLOSED INCOME FOR THOSE YEARS AND ALSO SPECIFIED THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED AND THEREAFTER PAYS THE TAX ON THAT UNDISCLOSED INCOME WITH INTEREST, THEN SUCH UNDISCLOSED INCOME WOULD GET IMMUNISED FROM THE LEVY OF PENALTY. 10. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IT WOULD BE RELEVANT TO REFER THE DECISION RELIED UPON BY LEARNED SENIOR ADVOCATE FOR THE APPELLANT IN THE CASE OF GEBILAL KANBHAIALAL (HUF)(SUPRA), WHEREIN THE APEX COURT IN PARAGRAPH NO.6 HAS OBSERVED AS UNDER: 6. EXPLANATION 5 IS A DEEMING PROVISION. IT PROVIDES THAT WHERE, IN THE COURSE OF SEARCH UNDER SECTION 132, THE ASSESSEE IS FOUND TO BE THE OWNER OF UNACCOUNTED ASSETS AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING, WHOLLY OR PARTLY, HIS INCOME FOR ANY 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, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 8 OF 10 ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SECTION 271(1) (C). THE ONLY EXCEPTIONS TO SUCH A DEEMING PROVISION OR TO SUCH A PRESUMPTION OF CONCEALMENT ARE GIVEN IN SUB - CLAUSES (1) AND (2) OF EXPLANATION 5. IN THIS CASE, WE ARE CONCERNED WITH INTERPRETATION OF CLAUSE (2) OF EXPLANATION 5, WHICH HAS QUOTED ABOVE. THREE CONDITIONS HAVE GOT TO BE SATISFIED BY THE ASSESSEE FOR CLAIMING IMMUNITY FROM PAYMENT OF PENALTY UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1(C). THE FIRST CONDITION WAS THAT THE ASSESSEE MUST MAKE A STATEMENT UNDER SECTION 132(4) IN THE COURSE OF SEARCH STATING THAT THE UNACCOUNTED ASSETS AND INCRIMINATING DOCUMENTS FOUND FROM HIS POSSESSION DURING THE SEARCH HAVE BEEN ACQUIRED OUT OF HIS INCOME, WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME TO BE FURNISHED BEFORE EXPIRY OF TIME SPECIFIED IN SECTION 139(1). SUCH STATEMENT WAS MADE BY THE KARTA DURING THE SEARCH WHICH CONCLUDED ON AUGUST 1, 1987. IT IS NOT IN DISPUTE THAT CONDITION NO.1 WAS FULFILLED. THE SECOND CONDITION FOR AVAILING OF THE IMMUNITY FROM PENALTY UNDER SECTION 271(1)(C) WAS THAT THE ASSESSEE SHOULD SPECIFY, IN HIS STATEMENT UNDER SECTION 132(4), THE MANNER IN WHICH INCOME STOOD DERIVED. ADMITTEDLY, THE SECOND CONDITION, IN THE PRESENT CASE ALSO STOOD SATISFIED. ACCORDING TO THE DEPARTMENT, THE ASSESSEE WAS NOT ENTITLED TO IMMUNITY UNDER CLAUSE (2) AS HE DID NOT SATISFY THE CONDITION FOR AVAILING THE BENEFIT OF WAIVER OF PENALTY UNDER SECTION 271(1)(C) AS THE ASSESSEE FAILED TO FILE HIS RETURN OF INCOME ON 31ST JULY, 1987 AND PAY TAX THEREON PARTICULARLY WHEN THE ASSESSEE CONCEALED ON AUGUST 1, 1987 THAT THERE WAS CONCEALMENT OF INCOME. THE THIRD CONDITION UNDER CLAUSE (2) WAS THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH UNDISCLOSED INCOME. HOWEVER, NO TIME LIMIT FOR PAYMENT OF SUCH TAX STOOD PR ESCRIBED UNDER CLAUSE(2). THE ONLY REQUIREMENT STIPULATED IN THE THIRD CONDITION WAS FOR THE ASSESSEE TO PAY TAX TOGETHER WITH INTEREST. IN THE PRESENT CASE, THE THIRD CONDITION ALSO STOOD FULFILLED. THE ASSESSEE HAS PAID TAX WITH INTEREST UPTO THE DATE OF PAYMENT. THE ONLY CONDITION WHICH WAS REQUIRED TO BE FULFILLED FOR GETTING THE IMMUNITY, AFTER THE SEARCH PROCEEDINGS GOT OVER, WAS THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER WITH INTEREST IN RESPECT OF SUCH UNDISCLOSED INCOME UPTO THE DATE OF PAYMENT. CLAUSE(2) DID NOT PRESCRIBE THE TIME LIMIT WITHIN WHICH THE ASSESSEE SHOULD PAY TAX ON INCOME DISCLOSED IN THE STATEMENT UNDER SECTION 132(4). 11. EVEN, THE HIGH COURT OF CHATTISGARH IN THE CASE OF ABDUL RASHID(SUPRA) HAS HELD THAT IN ORDER TO GET THE BENEFIT OF IMMUNITY UNDER CLAUSE(2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, IT IS NOT NECESSARY TO FILE THE RETURN BEFORE THE DUE DATE PROVIDED THAT THE ASSESSEE HAD MADE A STATEMENT, DURING THE SEARCH AND EXPLAINED THE MANNER IN WHICH THE SURRENDERED AMOUNT WAS DERIVED, AND PAID TAX AS WELL AS INTEREST ON THE SURRENDERED AMOUNT. IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 9 OF 10 12. AT THIS STAGE, IT IS REQUIRED TO BE NOTED THAT THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX, WEST BANAGALI VS. VEGETABLE PRODUCTS LTD. (SUPRA), HAS HELD THAT IF THE COURT FINDS THAT THE LANGUAGE OF A TAXING PROVISION IS AMBIGUOUS OR CAPABLE OF MORE MEANING THAN ONE, THEN THE COURT HAS TO ADOPT THE INTERPRETATION WHICH FAVOURS THE ASSESSEE , MORE PARTICULARLY SO WHERE THE PROVISION RELATES TO THE IMPOSITION OF A PENALTY. 13. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE DECISIONS RELIED UPON BY LEARNED SENIOR ADVOCATE FOR THE APPELLANT, W E ARE OF THE CONSIDERED OPINION THAT THE VIEW TAKEN BY THE TRIBUNAL IS ERRONEOUS. THE CIT(A) RIGHTLY HELD THAT IT IS NOT RELEVANT WHETHER ANY RETURN OF INCOME WAS FILED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND WHETHER ANY INCOME WAS UNDISCLOSED IN THAT RETURN OF INCOME. IN VIEW OF SPECIFIC PROVISION OF SECTION 153A OF THE I.T. ACT, THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153(A) OF THE I.T. ACT IS TO BE CONSIDERED AS RETURN FILED UNDER SECTION 139 OF THE ACT, AS THE ASSESSING OFFICER HAS MADE ASSESSMENT ON THE SAID RETURN AND THEREFORE, THE RETURN IS TO BE CONSIDERED FOR THE PURPOSE OF PENALTY UNDER SECTION 271(1)(C ) OF THE I.T. ACT AND THE PENALTY IS TO BE LEVIED ON THE INCOME ASSESSED OVER AND ABOVE THE INCOME RETURNED UNDER SECTION 153A, IF ANY. 14. FURTHER, IN THE PRESENT CASE, IT APPEARS FROM THE RECORD THAT THE ASSESSEES HAD SATISFIED ALL THE CONDITIONS WHICH ARE REQUIRED FOR CLAIMING IMMUNITY FROM PAYMENT OF PENALTY UNDER SECTION 271(1) OF THE ACT. THE PROVISION DOES NOT SPECIFY ANY TIME LIMIT DURING WHICH THE AFORESAID AMOUNT I.E. THE AMOUNT OF PENALTY WITH INTEREST HAS TO BE PAID. ADMITTEDLY WHEN THE ASSESSEES HEREIN HAVE PAID THE ENTIRE AMOUNT WITH INTEREST, THE ASSESSING OFFICER OUGHT TO HAVE GRANTED THEM IMMUNITY AVAILABLE UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT. 15. THE DECISION RELIED UPON BY LEARNED ADVOCATE FOR THE RESPONDENT WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE. 16. IN VIEW OF THE AFORESAID FACTS OF THE CASE AND ALSO THE PRINCIPLE LAID DOWN IN THE DECISIONS RELIED UPON BY THE LEARNED SENIOR COUNSEL FOR THE APPELLANT MORE PARTICULARLY THE PRINCIPLE LAID DOWN IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. GEBILAL KANHAILAL (SUPRA) AND COMMISSIONER OF INCOME TAX VS. ABDUL RASHID (SUPRA), WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT CANNOT BE LEVIED ON THE INCOME SHOWN IN THE RETURN FILED UNDER SECTION 153 OF THE I.T. ACT. 17. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF S.D.V. CHANDRU (SUPRA), WE ARE OF THE OPINION THAT THE APPELLANT IS ENTITLED TO THE BENEFIT OF THE PROVISIONS OF EXPLANATION 5(2) TO SECTION 271(1)(C) OF THE INCOME TAX ACT. 10. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF HO NBLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. IN VIEW O F THE FACT THAT THE INCOME IN QUESTION IT(SS)A NOS.464, 465 & 466/AHD/2011 ASSESSMENT YEARS: 2003-04, 2004-05 & 2005-06. PAGE 10 OF 10 WAS COVERED BY THE DECLARATION MADE IN THE STATEMEN T RECORDED UNDER SECTION 132(4) AND THE TAX THEREON WAS DULY PAID BY THE ASSESSEE, THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WILL COME INTO PLAY ON THE FACTS OF THIS CASE. ACCORDINGLY, AS THE ASSESSEE RIGHTLY CONTENDS, PENALTY UNDER SECTIO N 271(1)(C) CAN NOT BE SUSTAINED IN LAW. IN ANY EVENT, AS HELD BY THE HONBLE JURISDI CTIONAL HIGH COURT ABOVE, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN ONLY BE IMPO SED IN RESPECT OF AN INCOME OVER AND ABOVE THE INCOME DISCLOSED IN THE RETURN FILED UNDE R SECTION 153A, AND SINCE THE INCOME IN QUESTION WAS INCLUDED IN THE RETURN FILED BY THE ASSESSEE UNDER SECTION 153A, THE IMPUGNED PENALTY IS UNSUSTAINABLE. FOR THIS REASON ALSO, THE IMPUGNED PENALTIES OF RS.79,070/- FOR A.Y. 2003-04, RS.82,070/- FOR A.Y. 20 04-05 AND RS.65,025/- FOR THE A.Y. 2005-06 ARE, THEREFORE, DELETED. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 11. IN THE RESULT, THE APPEALS ARE ALLOWED. PRON OUNCED IN THE OPEN COURT TODAY ON 24 TH APRIL, 2015. SD/- SD/- S.S. GODARA PRAMOD KUMA R (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD; DATED THE 24 TH DAY OF APRIL, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CONCERNED CIT (4) THE CIT(A)-II, AHMEDABAD. (5) DEPARTMENTAL REPRESENTATIVE, ITAT, AHMEDABAD (6) GUARD FILE BY ORDER (DY./ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AHMEDABAD