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

ITSSA 469/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0672 (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: 2002-2003
• Appeal Filed On: 21-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: RAMESH KUMAR MA LPANI
• Keywords: Search and seizure; Benefit of exemption
• Section: 5(2); 153A; 6; 132; 139

Judgement Text

IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR, AM AND S.S. GODARA, JM] IT(SS)A NOS.467, 468 & 469/AHD/2011. ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03 RESPEC TIVELY EHASAN 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: AELPG 7401 A] VS. ASSTT. COMMISSIONER OF INCOME TAX, .RESPONDENT CENTRAL CIRCLE 4, SURAT. APPEARANCES BY: RAMESH KUMAR MALPANI, FOR 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, ARE DIRECTED AGAINST THE ORDER DATED 16 TH AUGUST, 2010 PASSED BY THE CIT(A) IN THE MATTER OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESS MENT YEARS 2000-01, 2001-02 AND 2002-03. 2. LEARNED REPRESENTATIVES FAIRLY AGREE THAT WHATEV ER WE DECIDE IN IT(SS)A NOS.464, 465 & 466/AHD/2011, IN THE CASE OF SMT. MA LEKA HAJI AMIN GADAWALA VS. ACIT WHICH WE HAD HEARD ALONG WITH THESE APPEALS, WILL BE EQUALLY APPLICABLE IN THESE APPEALS AS THE MATERIAL FACTS ARE SIMILAR AND AS TH E RELATED ASSESSMENTS AND PENALTIES ARE RESULT OF THE SAME SEARCH AND SEIZURE OPERATION S CARRIED OUT. IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 2 OF 11 3. VIDE OUR ORDER OF EVEN DATE, WE HAVE DELETED PEN ALTIES IN THE CASE OF SMT. MALEKA HAJI AMIN GADAWALA. WHILE DOING SO, WE HAVE OBSER VED AS FOLLOWS :- 2. GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS THAT T HE CIT(A) ERRED IN CONFIRMING PENALTIES UNDER SECTION 271(1)(C) OF THE ACT IMPOSED 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). 3. THE ISSUE IN APPEAL LIES A VERY NARROW COMPASS OF MATERIAL FACTS. THE ASSESSEE BEFORE US, A LADY IN MID SIXES, IS A PARTN ER IN MALIKA ENTERPRISES. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDEN TIAL PREMISES 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 GA DAWALA ON BEHALF OF THE FAMILY INCLUDING HIS MOTHER I.E. THE ASSESSEE BEFORE U S, WAS DULY RECORDED 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 RESPECT IVELY. THE INCOME SO DISCLOSED WAS DULY SHOWN IN THE RETURNS FILED BY THE A SSESSEE UNDER SECTION 139 READ WITH SECTION 153A OF THE ACT AND TAX DUE, WITH INTERE ST THEREON, WAS DULY PAID BY THE ASSESSEE. 4. IT WAS IN RESPECT OF THESE INCOMES THAT PENALTY PR OCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER. DURING THE PENALTY PROCEEDINGS , IT WAS CONTEND BY THE ASSESSEE THAT SINCE THERE WAS NO CONCEALMENT OF INCOM E QUA THE RETURN FILED BY HER, THERE IS NO OCCASION FOR IMPLOSION OF CONCEALMENT OF PENALTY UNDER SECTION 271(1)(C). IT WAS ALSO CONTENDED THAT THE AMOUNT AD DED TO HER INCOME WAS NOT 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 DISCLOS URE MADE UNDER SECTION 132(4) READ WITH EXPLANATION 5 BELOW SECTION 271(1)( C) OF THE ACT, AND, THEREFORE, NO PENALTY IS LIVEABLE WITH REFERENCE TO THE SAME, IN VIEW OF SAID EXPLANATION 5 TO THE ACT. 5. NONE OF THESE SUBMISSIONS, HOWEVER, IMPRESSED THE A SSESSING OFFICER. THE ASSESSING OFFICER REJECTED ALL THESE SUBMISSIONS AND PROCEEDED TO IMPOSE PENALTY UNDER SECTION 271(1)(C). WHILE DOING SO, AND REJEC TING ASSESSEES RELIANCE ON EXPLANATION 5 TO SECTION 271(1)(C), THE ASSESSING OF FICER, INTER ALIA, OBSERVED AS FOLLOWS :- FINALLY, THE ASSESSEE ARGUED THE FOLLOWING: MOREOVER THE AMOUNT WAS PART OF OUR DISCLOSURE MADE 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 VIE W OF SAID EXPLANATION 5 OF THE ACT. IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 3 OF 11 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 ASSES SEE, 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 BELOW :- ...... WHERE IN THE COURSE OF A SEARCH INITIATED UN DER 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 (HEREINAFTER IN THIS EXPLANATION REFERRED TO ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY U TILISING (WHOLLY OR IN PART) HIS INCOME,- (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DA TE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS N OT BEEN FURNISHED BEFORE THE SAID DATE OR, WHERE SUCH RETURN HAS BEEN FU RNISHED BEFORE THE SAID DATE, SUCH INCOME HAS NOT BEEN DECLARED THERE IN; 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 PARTICULARS 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. E XPLANATION 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 EXPLANATIO N 5 WHEREBY THE RETURN OF INCOME HAS BEEN FURNISHED AFTER THE D ATE OF SEARCH FOR THE A.Y. RELEVANT TO THE INSTANT PENALTY PROCEE DING. THUS, EXPLANATION 5 DEEMS THE ASSESSEE AS AN OFFENDER AND LIABLE TO PENAL ACTION. FURTHER, THE ASSESSEE HAS CLAIMED THE SHELTER UNDER THE EXCEPTION TO EXPLANATION 5 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THE RELEVANT PORTION OF THE CLAUSE IS LAID DOWN BELOW: IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 4 OF 11 [UNLESS- (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED,- (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE D ATE 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 COMMISSIONER 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 D ISCLOSED SO FAR IN HIS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED 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 R ESPECT OF SUCH INCOME .... THE ASSESSEE IS NOT ELIGIBLE FOR THE PROTECTION PROVI DED UNDER THE EXCEPTION TO EXPLANATION 5 BECAUSE OF THE REASONS ME NTIONED 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 TAX 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 DISC LOSED THE ASSET AND THE MANNER OF EARNING OF UNDISCLOSED INCOME IN THE STATEMENT UNDER SECTION 132(4) OF THE INCOME TAX AT, 1961 DURI NG SEARCH OPERATIONS. THE LAW REQUIRES STRICT INTERPRETATION IN CASE OF EX CEPTIONS AND SUCH OMISSIONS AS COMMITTED BY THE ASSESSEE CAN NOT BE OV ER-LOOKED. THE EXTANT POSITION OF LAW AS REGARDS TO STRICT INTERPR ETATION 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 STA TUTES SHOULD BE IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 5 OF 11 CONSTRUED STRICTLY AND THE COURT MUST SEE THAT THE THI NG 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 WHER E A STATUTE IS PENAL IN CHARACTER, IT MUST BE STRICTLY CONSTRUED AND FOLLOWED ..... HENCE, THE LAW IS CRYSTAL CLEAR AND SETTLED THAT IN R ESPECT OF THE PENAL AND EXCEPTION PROVISIONS ABOUT STRICT INTERPRETATIO N, WITHOUT 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 PROV ISION TO EXPLANATION 5 OF SECTION 271(1)(C) OF THE ACT IS UNT ENABLE. 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 SECTIO N 271(1)(C), AND IS DEEMED TO BE LIABLE FOR CONCEALMENT OF INCOM E. 6. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPAL B EFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A), REJECTING THE C ONTENTIONS OF THE ASSESSEE APPELLANT, OBSERVED AS FOLLOWS :- 4. THE APPELLANT HAS SUBMITTED IN THE STATEMENT OF F ACTS THAT HE HAD COMPLIED ALL THE CONDITIONS LAID DOWN UNDER THE PR OVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. THE D ISCLOSURE 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 TA XES WERE PAID. THE AO DID NOT GRANT IMMUNITY TO EXPLANATION 5 TO SE CTION 271(1)(C) OF THE ACT. THE RETURNED 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 ELIGIB LE 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 BENC H 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, 2348 & 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 PRESI DENT AND THIRD MEMBER], HAVE CONSIDERED THE POINT OF APPLICABILITY O F EXPLANATION 5 IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 6 OF 11 TO SECTION 271(1)(C) FOR THE YEARS EARLIER TO THE YE AR OF SEARCH. THE HONBLE MEMBER DID NOT APPROVE THE DECISION OF MADRA S HIGH COURT IN THE CASE OF CIT VS. S.D.V. CHANDRU 266 ITR 175 AND RA JASTHAN 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 BIR I WORKS P. LTD. VS. ACIT 70 TTJ 880. INSTEAD THE MEMBER HAVE FOLLOWE D THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF SHERATON APPARELS VS. ACT 256 ITR 20 AND ITAT AHMEDABAD BENCH IN THE CASE OF RUPESH GODHIDA S PATEL 309 ITR (AT) 271 AND HELD THAT BENEFIT OF EXPLANATION 5(2) TO SECTION 271(1)(C) IS CONFINED TO THE YEAR IN RESPECT OF WHICH THE DUE DATE FOR FILING THE RETURN IS YET TO COME BUT THE BENEFIT IS N OT AVAILABLE TO EARLIER YEARS WHERE DUE DATE TO FILE THE RETURN OF IN COME 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 APPELLANT IS NOT ENTITLED TO THE BENEFIT OF EXEMPTION UNDER EXPLANATI ON 5(2) TO SECTION 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 CO NFIRMED. 7. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER A PPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PURSUED THE MAT ERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE, IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 9. AS LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY POINTS OUT, THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSES, BY HONBLE JURIS DICTIONAL HIGH COURTS JUDGEMENT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT (ITA NO S.1181, 1182 & 1185 OF 2010; JUDGEMENT DATED 03.12.2014), WHEREIN REVERSING THE VE RY THIRD MEMBER DECISION OF THIS TRIBUNAL WHICH WAS RELIED UPON BY THE CIT(A). THE IR LORD SHIPS HAVE 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 TO REPRODUCE EXPLANATION 5 TO SECTION 271 (1) (C) OF T HE 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 IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 7 OF 11 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 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 RECEIPT 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. IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 8 OF 11 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 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 IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 9 OF 11 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. 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 T HAN 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, WE 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 RETUR N 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 IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 10 OF 11 ASSESSEES HEREIN HAVE PAID THE ENTIRE AMOUNT WITH INTEREST, THE ASSESSING OFFICER OUGHT TO HAVE GRANTED THEM IMMUNITY AVAILABLE UNDER S ECTION 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 HON BLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. IN V IEW OF THE FACT THAT THE INCOME IN QUESTION WAS COVERED BY THE DECLARATION MADE IN T HE STATEMENT RECORDED UNDER SECTION 132(4) AND THE TAX THEREON WAS DULY PAID BY T HE ASSESSEE, THE PROVISIONS OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WILL C OME INTO PLAY ON THE FACTS OF THIS CASE. ACCORDINGLY, AS THE ASSESSEE RIGHTLY CONTENDS , PENALTY UNDER SECTION 271(1)(C) CAN NOT BE SUSTAINED IN LAW. IN ANY EVENT, AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT ABOVE, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN ONLY BE IMPOSED IN RESPECT OF AN INCOME OVER AND ABOVE THE I NCOME DISCLOSED IN THE RETURN FILED UNDER SECTION 153A, AND SINCE THE INCOME IN QU ESTION WAS INCLUDED IN THE RETURN FILED BY THE ASSESSEE UNDER SECTION 153A, THE IMPUGNED PENALTY IS UNSUSTAINABLE. FOR THIS REASON ALSO, THE IMPUGNED PE NALTIES OF RS.79,070/- FOR A.Y. 2003-04, RS.82,070/- FOR A.Y. 2004-05 AND RS.65,025 /- FOR THE A.Y. 2005-06 ARE, THEREFORE, DELETED. THE ASSESSEE GETS THE RELIEF ACC ORDINGLY. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN IN THE GROUP CASES. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE GRIEVANCES OF THE ASSESSEE AND DELETE THE IMPUGNED PENALTIES OF RS.1, 33,440/- (A.Y. 2000-01), RS.5,94,965/- (A.Y. 2001-02) AND RS.4,82,885/- (A.Y. 2002-03). THE ASSESSEE GETS THE RELIEF ACCORDINGLY. IT(SS)A NOS.467, 468 & 469/AHD/2011 ASSESSMENT YEARS: 2000-01, 2001-02 & 2002-03. PAGE 11 OF 11 5. IN THE RESULT, THE APPEALS ARE ALLOWED. PRONOU NCED 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