The ACIT, Central Circle-1, RAJKOT-GUJARAT V. Smt. Jayaben R. Sorathia, GANDHIDHAM

ITSSA 68/RJT/2010

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3308 (ITAT-RAJKOT)
• Duration Of Justice: 6 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 23-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: M J RANPURA A R
• Keywords: Document seized; Question of law; Onus to prove; Documents seized

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER (SS) ./ I.T(SS).A. NO.68/RJT/2010 ( / ASSESSMENT YEAR : 2006-07) ASSTT.CIT CENTRAL CIRCLE-1 RAJKOT / VS. SMT.JAYABEN R.SORATHIA WARD NO.54/55, SECTOR-2 GANDHIDHAM ./ ./ PAN/GIR NO. AGNPS 9810 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI YOGESH PANDEY,CIT-DR ! / RESPONDENT BY : SHRI M.J. RANPURA, AR ' #$% ! & / DATE OF HEARING 15/03/2007 '( ! & / DATE OF PRONOUNCEMENT 17/ 04 /2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IV , AHMEDABAD [CIT(A) IN SHORT] DATED 14/09/2010 FOR THE ASSESSMENT YEAR (AY) 2006-07. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE R EAD AS UNDER:- IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 2 - (1) THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS I N DELETING PENALTY RS.21,16,092/- LEVIED BY THE ASSESSING OFFI CER BY HOLDING THAT THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE U/S.153C OF THE ACT HAVING BEEN ACCEPTED IN ITS ENTIRETY WITHOUT DE TAILED DISCUSSION OF THE SEIZED DOCUMENTS. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER PASSED U/S.271(1)(C) OF THE ACT IMPOSING THE PENALTY OF RS .21,16,092/- ON THE ABOVE POINT. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) FOLLOWING THE DECISION OF THE ITAT RAJKOT BRANCH IN THE CASE OF M/S.BALAJI MALTIPLEX PVT.LTD. AND NOT OF IT AT AHMEDABAD BRANCH IN THE CASE OF KIRIT DAHYABHAI PATEL, IGNORI NG THAT THE FACTS OF THE ASSESSEES CASE ARE DISTINGUISHABLE FR OM THE FACTS IN THE FORMER CASE AND ARE MORE AKIN TO THE FACTS OF L ATTER CASE. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) ERRED IN CANCELLING THE ORDER OF PENALTY HOLDING THAT THE ASSESSING OFFICER HAD NOT DISCHARGED HIS BURDEN TO PROVE THE CONCEALMENT OF INCOME IGNORING THAT SUCH A FINDING IS CONTRARY TO THE PROVISIONS OF LAW AS LAID DOWN IN THE CASE OF U NION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS 306-ITR-277(SC). (5) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD.CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED IN TOTO. 3. IN ESSENCE, THE REVENUE HAS CHALLENGED THE DELET ION OF PENALTY OF RS.21,16,092/- LEVIED BY THE AO PURSUANT TO ASSESSM ENT UNDER S.153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S 'THE ACT'). IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 3 - 4. BRIEFLY STATED, SEARCH ACTION UNDER S.132 OF THE ACT WAS CARRIED OUT ON 11/10/2006 AT THE PREMISES OF THE SON OF THE ASS ESSEE MR.SANJAY R.SORATHIA. IN THE COURSE OF SEARCH, VARIOUS DOCUM ENTS PERTAINING TO ASSESSEE WERE FOUND. CONSEQUENTLY, NOTICE UNDER S .153C DATED 14/10/2008 WAS ISSUED AND ASSESSMENT WAS FRAMED UND ER S.153A RWS 153-C OF THE ACT. THE ASSESSEE FILED ORIGINAL RETU RN OF INCOME SHOWING TOTAL INCOME AT RS.NIL AFTER THE SEARCH ON 31/03/20 07, WHEREIN THE ASSESSEE HAD SHOWN BUSINESS LOSS OF RS.2,30,089/-. THEREAFTER, PURSUANT TO NOTICE UNDER S.153C, THE RETURN OF INCOME WAS RE VISED AND DECLARED AT RS.64,28,970/-. DURING THE COURSE OF SEARCH, THE S ON OF THE ASSESSEE IN HIS STATEMENT RECORDED UNDER S.132(4) OF THE ACT AD MITTED ASSESSEES ADDITIONAL INCOME TO THE TUNE OF RS.65 LAKHS. IN R ESPONSE TO NOTICE UNDER S.153C OF THE ACT, RETURN OF INCOME FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION WAS FILED AT RS.64,28,970/- INCLUDING THE INCOME ADMITTED IN THE COURSE OF SEARCH. THE AO VIDE ORDER UNDER S.153C OF THE ACT ACCEPTED THE RETURNED INCOME AS SUCH AND THUS ASSE SSED THE TOTAL INCOME OF THE ASSESSEE AT RS.64,28,970/-. HOWEVER, PENALT Y UNDER S.271(1)(C) OF THE ACT WAS IMPOSED TREATING THIS ADDITIONAL INCOME AS UNDISCLOSED INCOME OF THE ASSESSEE. THE CIT(A) HOWEVER, IN FI RST APPEAL REVERSED THE ACTION OF THE AO AND DELETED THE PENALTY. 5. THE REVENUE IS IN RECORD APPEAL BEFORE THE TRIB UNAL AGAINST THE AFORESAID ORDER OF THE CIT(A). IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 4 - 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE LOWER AUTHORITIES BOTH CONCERNING QUANTUM PR OCEEDINGS AS WELL AS PENALTY PROCEEDINGS. THE SHORT QUESTION IN DISPUT E IS WHETHER IN GIVEN FACTS, PENALTY UNDER S.271(1)(C) CAN BE IMPOSED ON INCOME DECLARED IN THE RETURN FILED UNDER S.153C OF THE ACT PURSUANT T O SEARCH PROCEEDINGS OR NOT. DURING THE COURSE OF SEARCH UNDER S.132 OF TH E ACT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE, CERTAIN INCRIMINATING DOC UMENTS WERE FOUND WHEREIN DETAILS OF SALE OF PLOT OF LAND WAS FOUND T O BE RECORDED. THE SON OF THE ASSESSEE BASED ON THE INCRIMINATING DOCUMENT MADE A DISCLOSURE OF UNDISCLOSED INCOME OF RS.65 LAKHS DURING THE COURSE OF SEARCH. HOWEVER, IN SPITE OF DISCLOSURE, THE RETURN FILED U NDER S.139(1) AFTER SEARCH DID NOT INCLUDE THE ADMITTED UNDISCLOSED IN COME OF RS.65 LAKHS AND IN ORIGINAL RETURN SO FILED (AFTER SEARCH), A B USINESS LOSS OF RS.2,30,089/- WAS DECLARED IN TOTAL DISREGARD OF T HE INCOME DISCLOSED AT THE TIME OF SEARCH. IT IS ONLY AFTER PROCEEDINGS U NDER S.153C WERE INITIATED, THE UNDISCLOSED INCOME IN THE FORM OF EX TRA SALE PROCEEDS TO THE TUNE OF RS.64,54,000/- WAS CREDITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE AND BROUGHT TO TAX. THE AO DID NOT CONSIDER THE AF ORESAID ACTION OF DECLARING THE ADDITIONAL INCOME AFTER ISSUANCE OF N OTICE UNDER S.153C OF THE ACT IN THE REALM OF BONAFIDE. IT IS THE CASE OF THE ASSESSEE THAT EXPLANATION-5 TO SECTION 271(1)(C) IS NOT APPLICAB LE IN THE FACTS OF THE PRESENT CASE IN VIEW OF THE ESCAPE ROUTE PROVIDED I N CLAUSE(2) TO IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 5 - EXPLANATION-5. IN CONFIRMITY THERETO, THE CIT(A) O BSERVED THAT EXPLANATION-5 TO SECTION 271(1)(C) CANNOT BE APPLIE D AGAINST THE ASSESSEE AS THE AO HAS NOT ESTABLISHED THAT THE ASSESSEE WAS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE AR TICLE OR THING IN WHICH HAS NOT BEEN ACCOUNTED FOR. THE CIT(A) ALSO OBSERV ED THAT THE DEFAULT COMMITTED BY ASSESSEE, IF ANY, TOWARDS CONCEALMENT HAD COME TO AN END WHEN THE CORRESPONDING AMOUNT WAS OFFERED FOR TAXAT ION AND THE SOURCE OF INVESTMENT WAS ALSO EXPLAINED. THE CIT(A) NOTED THAT THE ASSESSEE HAS OFFERED THE ADDITIONAL INCOME FOR TAX IN RESPEC TIVE WHICH HAS NOT BEEN CHALLENGED BY THE AO. THEREFORE, THE BENEFIT OF EXCEPTION PROVIDED FOR INAPPLICABILITY OF EXPLAANATION-5 IS AVAILABLE TO THE ASSESSEE. 7. WE FAIL TO COMPREHEND THE RATIONALE FOR GRANT O F RELIEF BY CIT(A). WE OBSERVE THAT THE AO HAS CLEARLY RECORDED A FINDING OF FACT THAT CERTAIN INCRIMINATING DOCUMENTS WERE FOUND FROM THE PREMISE S OF THE ASSESSEE WHEREFROM THE DETAILS OF TRANSACTION CARRYING SPECI FIC IDENTIFICATION [RS NO.107 OF MADHUBEN GREEN VILLAS PROJECT] OF ASSET W AS UNEARTHED. THE DISCLOSURE OF THE AFORESAID AMOUNT WAS ALSO ADMITT ED ON BEHALF OF THE ASSESSEE. IN SPITE OF THIS, THE RETURN FILED AFTE R THE SEARCH IN THE REGULAR COURSE UNDER S.139(1) OF THE ACT (AND MORE PERTINEN TLY AFTER SEARCH) WAS WITHOUT THE INCLUSION OF THE AFORESAID UNDISCLOSED INCOME. IT WAS ONLY AFTER THE CASE OF THE ASSESSEE WAS CLUBBED WITH OTH ER SEARCH MATTER, AND PROCEEDINGS UNDER S.153C WERE INITIATED, THE UNDISC LOSED INCOME IN THE IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 6 - FORM OF EXTRA SALE PROCEEDS (EQUIVALENT TO MONEY) W AS DECLARED BY WAY OF TWO RETURNS FILED ON THE SAME DATE, ONE AS REVIS ED RETURN UNDER S.139(4) AND OTHER UNDER S.153C OF THE ACT. THEREF ORE, THE SEQUENCE OF EVENT WOULD SHOW THAT THE ASSESSEE HAS NOT READILY OFFERED THE INCOME IN THE RETURN FILED AFTER THE SEARCH. IT WAS ONLY AFT ER PURSUANCE BY WAY OF NOTICE ISSUED UNDER S.153C THAT THE RETURN FILED AF TER SEARCH WAS GRUDGINGLY REVISED TO INCLUDE THE AFORESAID INCOME. THUS, IT IS DIFFICULT TO HOLD THAT ASSESSEE HAS SATISFIED THE CUMULATIVE CONDITIONS PROVIDED IN SUB-CLAUSE(2) TO EXPLANATION-5 TO ESCAPE THE CLUTCH ES OF PENALTY. WE ALSO DO NOT FIND MERIT IN THE ARGUMENT ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE WAS NOT FOUND TO BE THE OWNER OF ANY MONEY , BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AS A CONDITION P RECEDENT FOR INVOCATION OF EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT. THE INCRIMINATING DOCUMENTS FOUND CLEARLY DEMONSTRATED THE UNACCOUNTE D SALE PROCEEDS ON SALE OF PLOT WHICH IS NOTHING BUT UNACCOUNTED MONEY IN THE CONTROL OF ASSESSEE AS HIDDEN FROM THE INCOME TAX DEPARTMENT. THE OPPORTUNITY WAS AVAILABLE TO THE ASSESSEE TO COME OUT CLEAN ON SUCH DISCLOSURE WHICH WAS NOT INITIALLY AVAILED. THE INCOME WAS ULTIMA TELY DECLARED WHEN THE ASSESSEE WAS LEFT WITH NO CHOICE AND TAXES WERE ALS O PAID BELATEDLY ALBEIT BEFORE THE COMPLETION OF THE ASSESSMENT. 8. THE ASSESSEE HAS SOUGHT TO TAKE REFUGE OF THE DE CISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAH YABHAI PATEL VS. IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 7 - ACIT (2015) 280 CTR 0216. HOWEVER, SUCH RELIANCE I S TOTALLY MISPLACED. 8.1. THE AFORESAID DECISION CANNOT BE READ IN A MAN NER THAT NO PENALTY CAN BE IMPOSED ON ADDITIONAL INCOME INCLUDED IN THE RETURN PURSUANT TO SEARCH PROCEEDINGS REGARDLESS OF THE FACTS OF THE C ASE. THE ISSUE HAS BEEN DEALT WITH IN GREAT LENGTH BY US IN THE CASE OF VI JAY K.SHAH VS. ITO IN IT(SS)A NO.54/AHD/2014 FOR AY 2003-04, ORDER DATED 13/04/2017. THE RELEVANT PARA DEALING WITH CONTENTION OF THE AS SESSEE IS SELF- EXPLANATORY AND THEREFORE REPRODUCED. 9. NOTWITHSTANDING THAT THE ISSUE IS AFFIRMED IN FAVOUR OF THE ASSESSEE IN THE GIVEN FACTS OF THE CASE, WE ARE EQUALLY INCLINE D TO DWELL UPON THE CARDINAL PLEA RAISED ON BEHALF OF THE ASSESSEE FOR THE PROPO SITION THAT AS SOON AS RETURN IS FILED UNDER S.153A, THE IMPOSITION OF PENALTY OR OTHERWISE HAS TO BE SEEN ONLY WITH REFERENCE TO THE RETURN FILED UNDER S.153 A AND RETURN FILED EARLIER UNDER S.139 PRIOR TO SEARCH SHOWING LESSER QUANTUM OF INCOME FADES INTO INSIGNIFICANCE IN ALL CIRCUMSTANCES. FOR THIS PROPO SITION, THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN KIRIT DAHYABHAI PATE L VS. ACIT (2015) 280 CTR 216 (GUJ.) WAS HEAVILY RELIED UPON IN THE COURS E OF HEARING. IN ESSENCE THUS, IT IS THE CASE OF THE ASSESSEE THAT INCOME DI SCOVERED AS A RESULT OF SEARCH AND INCLUDED IN THE RETURN FILED UNDER S.153A IN PO ST SEARCH PROCEEDINGS ARE NOT SUSCEPTIBLE TO PENALTY UNDER S.271(1)(C) OF THE ACT AT ALL NOTWITHSTANDING EXPLANATION-5 SUBSISTING IN STATUTE AT THE RELEVANT TIME. 9.1. WE STRAIGHT AWAY RECKON THAT SUCH SWEEPING PROPOSITION DOES NOT FIND ANY SEMBLANCE OF ACCEPTABILITY. AS NOTED EARLIER, EXPLANATION-5 TO SECTION 271(1)(C) SPECIFICALLY ADDRESSES THE AFORESAID SIT UATION WHERE IT IS SPECIFICALLY PROVIDED THAT NOTWITHSTANDING THE FACT THAT UNDISCL OSED INCOME FOUND AS A RESULT OF SEARCH WAS DECLARED IN THE RETURN OF INCO ME FURNISHED AFTER THE DATE OF SEARCH, THE ASSESSEE SHALL BE DEEMED TO FALL WIT HIN THE SWEEP OF SECTION 271(1)(C) UNLESS THE ASSESSEE IS COVERED BY EXIT ROUTE PROVIDED IN THE IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 8 - EXPLANATION-5 ITSELF. THUS, THE AFORESAID PROPOSIT ION CANVASSED BY THE ASSESSEE THAT ONCE THE RETURN IS FILED BY THE ASSES SEE AFTER THE SEARCH IN RESPONSE TO NOTICE ISSUED UNDER S.153A INCLUDING UN DISCLOSED INCOME DISCOVERED IN THE COURSE OF SEARCH, THE ASSESSEE GE TS INDEFEASIBLE RIGHT TO SHUN AWAY PENALTY PROCEEDINGS ON SUCH UNDISCLOSED INCOME IS SQUARELY AT LOGGERHEADS WITH DEEMING FICTION CREATED UNDER EXPL ANATION-5 FOR THIS PURPOSE. NEEDLESS TO SAY, THIS GENERIC PROPOSITION TOWARDS NON-APPLICABILITY OF PENALTY ON UNDISCLOSED INCOME, IF SEEN IN AFFIRMATI VE, WILL RENDER THE LEGISLATIVE FIAT UNDER EXPLANATION-5 RELATABLE TO SEARCH CASES AS OTIOSE AND INFRUCTUOUS. AS CAN BE SEEN, THE BENEFIT OF IMMUNITY PROVIDED UN DER EXPLANATION-5 IS WELL DEFINED AND STRUCTURED. AS PROVIDED, IT IS AVAILAB LE ONLY IN RESPECT OF SUCH YEAR WHERE THE DUE DATE OF FILING OF THE RETURN HAS NOT EXPIRED BEFORE THE DATE OF SEARCH SUBJECT TO FULFILLMENT OF CONDITIONS AS C ONTEMPLATED IN THE SAID EXPLANATION. 9.2. WE SHALL NOW ADVERT TO THE DECISION IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA) REFERRED TO AND EXTENSIVELY RELIED UPON ON BEHALF OF THE ASSESSEE. WE NOTICE THAT IN THAT CASE, THE SUBSTANTIAL QUESTION OF LAW FRAMED FOR DECISION BEFORE THE HONBLE GUJARAT HIGH COURT WAS CONFINED TO AVAILABILITY OF IMMUNITY UNDER CLAUSE(2) TO EXPLANATION-5 OF SECTIO N 271(1)(C) IN THE FACTS OF THE CASE. FOR READY REFERENCE, IT IS REPRODUCED HE REUNDER:- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN LAW IN RESTORING TH E PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT HOLDING THAT BEN EFIT UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WOULD BE AVAILABLE ONLY FOR PERIOD WHERE DUE DATE FOR FILING THE RETURN UND ER SECTION 139(1) OF THE ACT HAD NOT EXPIRED? IN THE CONTEXT OF ABOVE QUESTION POSED, THE HONBLE GUJARAT HIGH COURT AFTER REFERRING TO SERIES OF DECISIONS OF VARIOUS COURTS FOUND THAT THE ASSESSEE HAS BROADLY SATISFIED ALL THE CONDITIONS REQUIRED FOR CLAIMING IMMUNITY FROM PAYMENT OF PENALTY UNDER S.271(1)(C) OF THE ACT. 9.3. SIGNIFICANTLY, THE ASSESSEE HIMSELF AFTER HAVI NG RAISED THE GENERAL PROPOSITION TOWARDS CLAIMING IMMUNITY TOWARDS UNDIS CLOSED INCOME INCLUDED IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 9 - IN S.153A RETURN, IN EXERCISE OF ITS WISDOM, PAUSED AND WENT ON TO WITHDRAW THE SAME AT A LATER STAGE BEFORE THE LD.THIRD MEMBE R IN THE ITAT PROCEEDINGS IN KIRIT DAHYABHAI PATEL VS. ACIT REPORTED IN (2009 ) 121 ITD 159 (TM) WHICH DECISION WAS SUBJECT MATTER OF APPEAL BEFORE THE HONBLE GUJARAT HIGH COURT. THUS, APPARENTLY, THE ASSESSEE HIMSELF WHI LE IN APPEAL BEFORE HONBLE HIGH COURT, WAS NO LONGER AGGRIEVED BY THE PROPOSIT ION THAT RETURN UNDER S.153A IS AMENABLE TO PENALTY PROVISIONS UNDER S.27 1(1)(C) OF THE ACT. TO ELABORATE, THE LD.THIRD MEMBER CLEARLY RECORDED A F INDING THAT THE ASSESSEE HAS NOT DISPUTED THE POSITION THAT SECTION 271(1)(C ) IS APPLICABLE TO AN ASSESSMENT MADE UNDER S.153A. THE SUBSTANTIVE QUEST ION THAT EMERGED BEFORE THE LD.THIRD MEMBER OF ITAT ON ACCOUNT OF DIFFERENC E OF OPINION WAS WHETHER IMMUNITY GRANTED UNDER EXPLANATION-5(2) TO SECTION 271(1)(C) IS AVAILABLE TO THE ASSESSEE. THUS, ON NUANCED AND CONTEXTUAL ANAL YSIS OF THE JUDGEMENT RENDERED BY THE HONBLE GUJARAT HIGH COURT IN APPEA L UNDER S.260A OF THE ACT, IT IS DIFFICULT TO RECKON THE CASE MADE OUT BY THE ASSESSEE THAT ADDITIONAL INCOME DECLARED IN THE POST SEARCH RETURNS WOULD BE ENTITLED TO IMMUNITY FROM PENALTY IN A SWEEPING MANNER REGARDLESS OF THE SATI SFACTION OF CONDITIONS AS PROVIDED FOR ITS NON-APPLICABILITY AS ENUMERATED UN DER CLAUSE(2) OF EXPLANATION-5. 9.4. NEEDLESS TO SAY, SENTENCES USED WHILE RENDE RING A JUDGMENT CANNOT BE READ IN ISOLATION AND THEIR PURPORT AND CONTENTS AR E DERIVED FROM THEIR CONTEXT. AS NOTED, THE LAW IS CODIFIED FOR APPLICABILITY OF PENALTY IN SEARCH CASES. THE LEGISLATURE HAS MADE CONSCIOUS DISTINCTION BETWEEN THE CASES WHERE THE RETURN OF INCOME HAS ALREADY BEEN FILED PRIOR TO SEARCH QU A THE CASES WHERE THE RETURN IS YET TO BE FILED AND HAS PUT THEM ON A DIF FERENT PEDESTAL. IT IS TRITE LAW THAT A JUDGEMENT CANNOT BE READ OUT OF CONTEXT IN W HICH THE QUESTION AROSE FOR DECISION IN THAT CASE. IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WORD OR A SENTENCE FROM THE JUDGMENT OF A COURT DIVORCED FROM THE CONTEXT OF THE QUESTION IN CONSIDERATION AND TO TREAT IT TO BE THE COMPLETE LAW DECLARED BY THE COURT. A JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF QUES TIONS WHICH WERE PRESENTED BEFORE THE COURT. A DECISION OF THE COURT TAKES IT S COLOUR FROM ITS QUESTION IN WHICH IT IS RENDERED AS ENUMERATED IN CIT VS. SUN E NGINEERING WORKS PVT.LTD. (1992) 198 ITR 297 (SC). THUS, CONTEXT HOLDS THE K EY AND THE DECISION OF THE COURT HAS TO BE READ IN THE CONTEXT OF THE FACTS IN VOLVED THEREIN AND NOT ON THE BASIS OF WHAT LOGICALLY FLOWS THERE FROM. A STRAY SENTENCE CANNOT BE ALLOWED TO IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 10 - BE PUT INTO SERVICE TO DRAW A MEANING WHICH WAS NEV ER PROBABLY MEANT BY THE AUTHOR HIMSELF. A JUDGMENT IS NOT TO BE READ AS ST ATUTE. THUS, IN THE LIGHT OF QUESTION FRAMED FOR DECISION BY HONBLE GUJARAT HIG H COURT, WE ARE INCLINED TO HOLD THAT THE ABSTRACT PROPOSITION OF NON-APPLI CABILITY OF PENALTY PROCEEDINGS IN ALL CIRCUMSTANCES (WHEREVER UNDISCLO SED INCOME HAS BEEN INCLUDED IN THE RETURN FILED POST-SEARCH) IS SINGUL ARLY MISPLACED AND IS NOT SUPPORTED BY THE FACTUAL CONTEXT IN WHICH THE DECIS ION IN KIRIT DAHYABHAI PATEL(SUPRA) WAS RENDERED. 9. IN THE PRESENT CASE AS NOTED ABOVE, THE FACTS AR E GROSS AND PECULIAR. THE ASSESSEE WAS FOUND TO BE A RELUCTANT TAX COMPL IANT WHO IN SPITE OF HAVING THE OPPORTUNITY TO COME WITH CLEAN HANDS DID NOT CHOOSE TO DO SO AND CONTINUED TO DEFY HIS OWN ADMISSION OF UNDISCLO SED INCOME UNEARTHED BACKED BY SPECIFIC DETAILS. THUS, THE DE CISION OF THE HONBLE JURISDICTIONAL GUJARAT HIGH COURT RENDERED IN THE C ASE OF KIRIT DAHYABHAI PATEL (SUPRA) IS OF NO ASSISTANCE TO THE ASSESSEE. THE ORDER OF THE CIT(A) IN GRANTING RELIEF IS DICTATED BY MISAPPRECIATION O F FACTS AND LAW. ACCORDINGLY, THE ORDER OF THE CIT(A) IS QUASHED AND THE ORDER OF THE AO IMPOSING THE PENALTY IS RESTORED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 17 /04/2 017 AT AHMEDABAD. SD/- SD/- ( MAHAVIR PRASAD) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 17/04/2017 ..#, $.,#../ T.C. NAIR, SR. PS IT(SS)A NO.68 / RJT/2010 ACIT VS. SMT JAYABEN R.SORATHIA ASST.YEAR 2006-07 - 11 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-IV, AHMEDABAD 5. 2$34 ,&,# , , /DR,ITAT, RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT 1. DATE OF DICTATION .. 7.4.17 (DICTATION-PAD 18- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 7.4.17 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 17.4.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.4.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER