The ITO, Ward 3(1), JAMNAGAR V. Shri Salim Abhullah Subhania,

ITSSA 80/RJT/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0646 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: PM MAHARSHI
• Keywords: Search and seizure; Document seized; Question of law; Documents seized
• Section: 153A; 132; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBULAL , RAJKOT BENCH: RAJKOT . . , , BEFORE SHRI N.S.SAINI , A CCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER . / IT (SS) A . NO . 80 TO 82/RJT/2010 ( / ASS TT YEAR : 2003 - 04, 2004 - 05 & 2005 - 06 ) THE ITO, WARD - 3(1) JAMNAGAR. / VS. SHRI SALIM ABHULLAH SUBHANIA L.R. OF LATE SHRI HAJI ABDULLAH ALIAS SUBHANIA NEW VEGITABLE MARKET JAM - SALAYA. ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AVINASH KUMAR, DR / RESPONDENT BY : SHRI P.M. MAHARSHI, CA / DATE OF HEARING 16 - 2 - 2015 / DATE OF PRONOUNCEMENT 18 - 2 - 2015 / O R D E R PER BENCH : THESE APPEAL S BY THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF THE CIT(A) - IV, AHMEDABAD DATED 28.10.2010 PASSED IN THE ASSTT.YEARS 2003 - 04, 2004 - 05 AND 2005 - 06. 2. COMMON GROUND TAKEN BY THE REVENUE IN ALL THESE APPEALS IS THAT THE CIT(A) ERRED IN DELETING THE PENALTY OF RS.3,17,882/ - FOR A.Y.2003 - 04, RS.4,99,097/ - FOR THE ASSTT.YEAR 2004 - 05 AND RS.5,13,341/ - FOR THE ASSTT.YEAR 2005 - 06 LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 3 . BRIEF FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 29.12.2005. IN PURSUANCE TO THE NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME WHEREIN THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.10,35,000/ - , RS.15,00,000/ - AND RS.15,00,000/ - FOR THE ASSTT.YEARS 2003 - 04, 2004 - 05 AND 2005 - 06 RESPECTIVELY. THE AO, T HEREAFTER, LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND OF CONCEALMENT OF INCOME ON THE ADDITION AL INCOME OF RS.10,35,000/ - , RS.15,00,000/ - AND RS.15,00,000/ - FOR THE ASSTT.YEARS 2003 - 04, 2004 - 05 AND 2005 - 06 RESPECTIVELY IN THE RETURN FI LED UNDER SECTION 153A OF THE ACT ON THE GROUND THAT IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL IN ITA NOS. 2344, 2345, 2346, 2348 AND 2389/AHD/2007 TRIBUNAL HAS HELD THAT EXPLANATION 5 (2) TO SECTION 271(1)(C) IS APPLICABLE. THE TRIBUNAL HELD THAT THE RETURN OF INCOME FILED U/S 153A CANNOT BE CONSIDERED AS VOLUNTARY RETURN AS THE SAME HAS BEEN FILED AFTER THE ASSESSEE WAS SUBJECTED TO SEARCH U/S 132 AND IT WAS THIS SEARCH AND THE FACT OF SEIZURE OF INCRIMINATING DOCUMENTS/ASSETS WHICH RESULTED INTO FI LING OF ENHANCED INCOME U/S 153A. THE ACT OF CONCEALMENT WAS DONE WHEN THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME IN WHICH THE INCOME WAS SUPPRESSED. RELIANCE ON SEVERAL HIGH COURT AND SUPREME COURT JUDGMENTS WAS MADE FOR THIS PURPOSE. ENHANCED INCOM E U/S 153A IN ITSELF IS ADMISSION OF CONCEALMENT OF INCOME. IF IT IS INTERPRETED THAT PENALTY CANNOT BE INITIATED, IF THE RETURN OF INCOME IS ENHANCED U/S 153A THEN IT WILL LEAD TO UNACCEPTABLE AND UNDESIRABLE SITUATION AND THE ASSESSEE WILL BE TEMPTED EIT HER NOT TO FILE RETURN OF INCOME OR NOT TO DECLARE CORRECT INCOME IN THE RETURN IN THE NORMAL COURSE. EXPLANATION - 5 IS ATTRACTED IN 153A CASES EVEN IF RETURNED INCOME IS ACCEPTED. SUBSEQUENT INSERTION OF SECTION 271AAA OR EXPLANATION 5A HAS NO BEARING ON T HE CASE. 4 . ON APPEAL, THE CIT(A) DELETED THE PENALTY BY OBSERVING AS UNDER: 3.6 I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE CASES AND AFORESAID FINDING OF THE HON'BLE RAJKOT TRIBUNAL. THE HONBLE RAJ KOT TRIBUNAL, RELYING ON THE DECISION OF HON'BLE CAL CUTTA HIGH COURT IN THE CASE OF CIT VS. SURESH CHAND BANSAL 223 CTR (CAL.) 128, HAS HELD VIDE PARA - 7.1 OF THE ORDER THAT 'IN THE PRESENT CASE TOO, THE OFFER OF ADDITIONAL INCOME WAS HELD TO BE GOOD OFFER. ALL THESE TOGETHER PRESENT THE FACTUAL CONTEXT WHIC H MUST BE CONSIDERED BEFORE TAKING A DECISION ABOUT WHETHER THE APPELLANT SHOULD BE HELD GUILTY OF CONCEALMENT OF INCOME OFFERED IN EACH OF THE ASSESSMENT YEARS. THE CONCLUSION THAT INCOME BELONGED TO THE ASSESSEE, IS BASED ON THE OFFER OF THE ASSESSEE AND NOT ENTIRELY ON THE SEIZED DOCUMENTS. AS THE SAID OFFER IS SAID TO HAVE BEEN MADE TO AVOID LITIGATION AND IS AN ESTIMATE OF INCOME THAT MIGHT NOT HAVE BEEN TAXED AND AS NO ATTEMPT WAS MADE EVEN TO FIND OUT THE LOCUS OF THE EARNING AND THE PERSON WHO CONC EALED SUCH EARNING, PENALTY U/S 271 (1 )(C) FAILS TO STAND.' 3.7 THE HON'BLE TRIBUNAL VIDE PARA - 8 WHILE DISTINGUISHING THE CASE OF THE HON'BLE AHMEDABAD TRIBUNAL HAD OBSERVED THAT IN THE CASE OF KIRIT DAHYABHAI PATEL, SUBSTANTIAL INCRIMINATING DOCUMENTS WERE FOUND WHICH LED TO THE ADVERSE INFERENCE THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME. WHEREAS, IN THE CASE OF THE PRESENT ASSESSEE, THERE IS NO INCRIMINATING MATERIAL WHICH DRAWS ADVERSE IN FERENCE. WHERE THERE IS NO EVIDENCE OF CONCEALMENT, THE VERY LEVIABILITY OF CONCEALMENT PENALTY DOES NOT ARISE. REFERENCE WAS MADE TO THE DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF BHAIRAV LAL VERMA VS. UNION OF INDIA (1998) 146 CTR (ALL) 16 WHER EIN IT WAS HELD THAT 'AS A PRINCIPLE OF LAW IT CANNOT BE HELD THAT THE. DISCLOSURE OF THE CONCEALED INCOME AFTER THE RAID OR SEARCH CANNOT BE VOLUNTARY. IT IS A QUESTION WHICH HAS TO BE DECIDED BY THE DEPARTMENT IN EACH CASE ON THE BASIS OF THE MATERIAL AV AILABLE ON THE RECORD. THE CRITERIA FOR DECIDING THIS QUESTION IS TO FIND OUT AS TO WHETHER THE DEPARTMENT HAS ANY INCRIMINATING MATERIAL WITH REGARD TO THE DISCLOSED INCOME. IF THE ANSWER IS IN THE AFFIRMATIVE, THE DISCLOSURE CANNOT BE SAID TO BE VOLUNTAR Y. BUT IF THE DEPARTMENT HAS NO INCRIMINATING MATERIAL WITH REGARD TO THE INCOME DISCLOSED, THE DISCLOSURE IS LIABLE TO BE TREATED AS VOLUNTARY EVEN IF IT WAS MADE AFTER SEARCH.' 3.8 IT WAS HELD VIDE PARA - 9 OF THE ORDER THAT 'IT IS ALSO PERTINENT TO POIN T OUT THAT THE HON'BLE HIGH COURT OF KOLKATA IN THE CASE OF CIT VS SURESH CHAND BANSAL (SUPRA) HELD THAT, ADDITIONAL INCOME OFFERED BY THE ASSESSEE AFTER THE SEARCH. HAVING BEEN ACCEPTED IN ITS ENTIRETY WITHOUT DETAILED DISCUSSION OF THE SEIZED DOCUMENTS A ND WITHOUT MAKING ANY ATTEMPT TO OBTAIN THE EXPLANATION OF THE ASSESSEE, PENALTY U/S 271(1)(C) IS NOT LEVIABLE.' 3.9 THEREFORE, IN VIEW OF THE FACTS OF THE CASE AND BY FOLLOWING THE BINDING DECISION OF THE HON'BLE RAJKOT TRIBUNAL AS AFORESAID, IT IS HELD THAT THE APPELLANT HAD NOT CONCEALED THE PARTICULARS OF INCOME. THE DISCLOSURE OF ADDITIONAL INCOME IN THE RETURNS FILED IN RESPONSE TO THE NOTICES ISSUED U/S 153A OF THE ACT WAS VOLUNTARY AND THE SAME WAS ACCEPTED BY THE ASSESSING OFFICER IN ITS ENTIRETY WITHOUT LINKING IT TO ANY MATERIAL RECOVERED OR SEIZED DURING THE COURSE OF SEARCH AND WITHOUT MAKING ANY ATTEMPT TO OBTAIN THE EXPLANATION OF THE ASSESSEE. THE EXPLANATION - 5 TO SEC. 271 (1) OF THE ACT CANNOT BE APPLIED IN THE CASE OF THE APPELLANT AS TH E ASSESSING OFFICER HAD NO 'HERE ESTABLISHED THAT THE ASSESSEE WAS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, WHICH HAD NOT BEEN ACCOUNTED FOR. THE ASSESSEE HAD OFFERED THE AMOUNT OF ADDITIONAL INCOME FOR TAX IN THE RESPECTIVE YEARS, WHICH HAD NOT BEEN CHALLENGED BY THE ASSESSING OFFICER. THEREFORE, THE BENEFIT OF EXPLANATION 5 IS AVAILABLE TO THE ASSESSEE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. THIS VIEW IS SUPPORTED BY THE FINDING OF THE HON'BLE TRIBUNAL RECORDED IN PARA - 10 OF THEIR ORDER. IT IS PERTINENT TO MENTION THAT THE APPELLANT HAD SPECIFICALLY MENTIONED IN HIS LETTER DATED 31.01.2006 THAT THE DISCLOSURE OF INCOME WAS SUBJECT TO THE CONDITION THAT NO PENAL ACTION SHALL BE INITIATED. IF, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ADDITIONAL INCOME OF RS. 75,00,000/ - (RS. 10,35,000/ - , RS. 15,00,000/ - AND RS. 15,00,000/ - RESPECTIVELY FOR THE YEARS UNDER CONSIDERATION) SO DISCLOSED IS RELATED TO CERTAIN UNACCOUNTED ASSETS OR ANY SEIZED DOCUM ENTS, HE WAS DUTY BOUND TO LINK THIS ADDITIONAL INCOME TO THE SEIZED MATERIAL OR ATLEAST ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE ADDI TIONAL INCOME WAS EARNED AND WHAT IS THE BASIS OF ITS CALCULATION. THE ASSESSING OFFICER HAD NOT RECOURSED TO SUCH AN ACTION. THE APPELLANT'S STAND IS THUS JUSTIFIED THAT THE ADDITIONAL INCOME WAS DISCLOSED VOLUNTARILY TO BUY MENTAL PEACE AND TO AVOID LONG DRAWN LITIGATION. THE HON'BLE NAGPUR TRIBUNAL H A D RIGHT LY HELD IN THE CASE OF ACIT VS. MALU ELECTRODES (P ) LTD. 27 TT J 599 (NAG.), AS RELIED UPON BY THE LD. COUNSEL, THAT 'IT IS POSSIBLE THAT THE ASSESSEE WOULD HAVE MADE THE SURRENDER DUE TO A NUMBER OF POSSIBLE REASONS AND IN SUE!' A SITUATION, NO PENALTY CAN BE LEVIED.' THE CHARGE AGAINST THE ASSESSEE IS CONCEALMENT OF PARTICULARS OF INCOME. WHERE TILE CHARGE IS OF CONCEALMENT; THE ASSESSING OFFICER HAS TO ESTABLISH THAT THE ASSESSEE H AS NOT DISCLOSED THE PARTICULARS OF INCOME UNDER THE MAIN PROVISIONS OR THE CASE OF THE ASSESSEE FALLS WITHIN THE SCOPE OF THE DEEMING FICTIONS CREATED UNDER THE EXPLANATIONS. THE BURDEN IS UPON THE ASSESSING OFFICER TO ESTABLISH THE EXISTENCE OF THE CHARGE ON THE BASIS OF MATERIAL ON RECORD. REFERENCE MAY BE MADE TO PARA - 11 OF THE ORDER OF THE H O N'B L E TRIBUNAL DATED 10.08.20 10. THOUGH, THE MENS REA OF WILFULL CONCEALMENT IS NOT REQUIRED TO BE PROVED, THE ASSESSING OFFICER IS DEFINITELY REQUIRED PROVE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS AT INCOME OR FURNISHED INACCURA T E PARTICULARS OF INCOME. THE ASS ESSING OFFICER COULD NOT ESTABLISH THE CHARGE OF CONCEA L MENT OF PARTICULARS OF INCOME ON THE APPELLANT. CONSIDERING THESE SPECIFIC FACTS, NO PENALTY WAS LEVIABLE ON THE APPELLANT F OR CONCEALMENT OF PARTICULARS OF INCOME ON THE ADDITIONAL INCOME OF RS. 10,35,000 / - , RS. 15 , 00 000 / - AND RS. 15,00,000/ - DISCLOSED RESPECTIVELY FOR THE YEARS UNDER CONSIDERATION. 3.10 IN VIEW OF THE ABOVE DISCUSSION IN PARA - 3.3 TO PARA 3.9 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HON'BLE RAJKOT TRIBUNAL IN THE CASE OF DY.CIT VS. M/S BALAJI MULTIFLEX P. LTD. (SUPRA) AND THE OTHER DECISIONS RELIED UPON BY THE LD. COUNSEL, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN I M POSINQ THE PENALTY U/S 271 (1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF ADDITIONAL INCOME OF RS.75,00,000/ - IN THESE THREE YEARS UNDER CONSIDERATION IN THE CASE OF THE APPELLANT. THE PENALTIES SO LEVIED FOR RS. 3,17,882/ - , RS. 4,99,097/ - AND R S. 5,13,341/ - ON THE ADDITIONAL INCOME DISCLOSED RESPECTIVELY FOR THE YEARS UNDER CONSIDERATION ARE HEREBY DELETED. THE SECOND AND THIRD GROUNDS OF ALL THESE THREE APPEALS ARE ACCORDINGLY ALLOWED. - 5 . DR SUPPORTED THE ORDERS OF THE AO . 6 . AR OF THE ASSESSEE FILED BEFORE US COPY OF THE ORDER OF THE HON BLE GUJARAT HIGH COURT DATE D 3.12.2014 PASSED IN TAX APPEAL NO S .1131, 1182 AND 1185 OF 2010 IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT AND SUBMITTED THAT THE HON BLE GUJARAT HIGH COURT HAS REVERSED T HE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL (SUPRA). HENCE, HE SUBMITTED THAT THE APPEAL OF THE REVENUE SHOULD BE DISMISSED. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL A VAILABLE ON RECORD. IN THE INSTANT CASE, A SEARCH OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 29.12.2005 AND IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME WHER EIN THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS.10,35,000/ - , RS.15,00,000/ - AND RS.15,00,000/ - FOR THE ASSTT.YEARS 2003 - 04, 2004 - 05 AND 2005 - 06 RESPECTIVELY. THE SAME WAS ASSESSED TO TAX BY THE AO. THEREAFTER, THE AO LEVIED PENALTY UNDER SECTION 271(1 )(C) OF THE ACT ON THE ABOVE ADDITIONAL INCOME DISCLOSED IN THE RETURN FILED BY THE ASSESSEE , PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT ON THE GROUND OF CONCEALMENT OF INCOME BY THE ASSESSEE, BY FOLLOWING THE DECISION OF THIRD MEMBER AHM EDABAD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. KIRIT DAHYABHJAI PATEL (SUPRA) . 8 . ON APPEAL, THE CIT(A)DELETED THE LEVY OF PENALTY FOR THE REASONS QUOTED ABOVE IN THIS ORDER. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT(A), THE REVENUE IS IN APP EAL BEFORE US. 9 . WE FIND THAT THE HON BLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT, IN TAX APPEAL NO.1181, 1182 AND 1185 OF 2010 HAS REVERSED THE ORDER OF THE THIRD MEMBER TRIBUNAL , AND WHILE DOING SO , HELD AS UNDER: 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 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 ASSE TS) 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 IMP OSITION 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, 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 F I LLING 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 SUB - SECTION (4) OF SECTION 132 THAT ANY MONEY, BULLION, JEWELERY 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 CA SE OF S.D.V.CHANDRU (SUPRA) HELD THAT IN A CASE WHERE THE ASSEESSEE 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 ADMI TTED 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. 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 COU R T 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 H AVE 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 DECL ARED 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 IMPOSI TION 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 SATISF IED 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 UNACCO UNTED 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 ASSESSE E 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 UND ER 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 CONCEALE D 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 LIMI T FOR PAYMENT OF SUCH TAX STOOD PRESCRIBED 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 UNDISCL OSED 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 CASE OF ABDUL RASHID(STATEMENT UNDER SECTION 132(4).' 11. EVEN, THE HIGH COURT OF CHATTISGARH IN THE SUPR A) 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 SEA RCH 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 BANAG AL - I VS. VEGETABLE PRODUCTS LTD. (SUPRA), HAS HELD THAT IF THE COU R T 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 ASSESSE E , MORE PARTICULARL Y 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 THA T 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 FIL ED 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, APPEARS FRO THE RECORD THAT THE ASSESSEE HAD SATISFIED ALL THE CONDITIONS WHICH ARE REQUIRED FOR CLAIMING IMMUNITY FROM PAYMENT OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE PROVISION DOES NOT SPECIFY ANY TIME LIMIT DURING WHICH THE AFORESAID AMOUNT I.E. THE AMO UNT 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 UNDE R 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. CHANDU (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. 18. FOR THE FOREGOING REASONS, THE PRESENT APPEALS STAND ALLOWE D. THE ORDER OF THE TRIBUNAL IS QUASHED AND SET ASIDE. CONSEQUENTLY THE ORDER OF THE CIT(A) IS RESTORED. THE QUESTION OF LAW INVOLVED IN THIS APPEALS IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. RESPECTFULLY FOLLOWING THE ABOVE DEC ISION OF THE HON BLE GUJARAT HIGH COURT, WE CONFIRM THE ORDER OF THE CIT(A) DELETING THE PENALTY OF RS.3,17,882/ - FOR A.Y.2003 - 04, RS.4,99,097/ - FOR THE ASSTT.YEAR 2004 - 05 AND RS.5,13,341/ - FOR THE ASSTT.YEAR 2005 - 06 AND DISMISS THE APPEALS OF REVENUE FOR ALL THREE YEARS UNDER APPEAL S . 11 . IN THE RESULT, ALL THE APPEAL S OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY THE 18 TH DAY OF FEBRUARY, 2015 AT RAJKOT. SD/ - SD/ - ( ) / ( KUL BHARAT ) / JUDICIAL MEMBER ( . . ) ( N.S. SAINI ) / ACCOUNTANT MEMBER RAJKOT; DATED 18 / 0 2 /20 1 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - 5. , , /DR,ITAT, RAJKOT 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, RAJKOT