RAJESH D DEDHIA ( HUF), MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 23, MUMBAI

MA 217/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6936 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: B V JHAVERI
• Keywords: Rectification of order; Search and seizure; Document seized; Opportunity of being heard; Principle of natural justice; Reasonable cause; Documents seized
• Section: 143(3); 133A; 153A; 147; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) MA NO. 217/MUM/2017 (ITA NO. 2617/MUM/2015) ASSESSMENT YEAR: 2010 - 11 M/S. R AJESH D. DEDHIA (HUF) VS. A SST CIT C EN CIR 23 C - 308 SHREENATH DARSHAN ROOM NO. 409, 4 TH FLOOR, OFF. 30 TP ROAD, BORIVALI (WEST) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 092 MUMBAI 400 020 PAN NO. AACHR3840K (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. B.V. JHAVERI, AR REVENUE BY : MS. ARJU GARODIA, DR DATE OF HEARING : 27/04/2018 DATE OF PRONOUNCEMENT: 24/07/2018 ORDER PER N.K. PRADHAN, AM BY THIS MISCELLANEOUS APPLICATION (MA) , THE ASSESSEE SEEKS RECTIFICATION OF THE ORDER DATED 29.03.2017 PASSED BY THE TRIBUNAL IN ITA NO. 2617/MUM/2015. 2. BEFORE US, T HE LD. COUNSEL OF THE ASSESSEE FILES A WRITTEN SUBMISSION SUPPORTING HIS ARGUMENT, MAKING TWO PROPOSITIONS. IN PROPOSITION 1, HE SUBMITS THAT THE BUSINESS PREMISES OF THE ASSESSEE - HUF WERE NOT COVERED UNDER THE SEARCH AND SEIZURE ACTION CARRIED OUT ON 09.10.2010, RATHER THE PREMISES OF THE ASSESSEE - HUF WERE COVERED UNDER SURVEY U/S 133A OF THE ACT. REFERENCE IS MADE BY HIM TO PAGE M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 2 NO. 3, 4 AND 10 O F THE ASSESSMENT ORDER AND PARA 1 OF THE PENALTY ORDER PASSED BY THE AO. THE LD. COUNSEL SUBMITS THAT THE MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL IS THAT IT HAS DECIDED THE APPEAL OF THE ASSESSEE AGAINST LEVY OF PENALTY ON THE PRESUMPTI ON THAT THE PREMISES OF THE ASSESSEE - HUF WERE SEARCHED BY THE OFFICERS OF THE DEPARTMENT U/S 132 OF THE ACT, WHICH IS CONTRARY TO THE FACTS ON RECORD , WHICH CLEARLY SHOW THAT THE PREMISES OF THE ASSESSEE - HUF WERE ONLY COVERED UNDER SURVEY. IF THIS FACT IS CORRECTED, I.E., EVEN IF IT IS HELD THAT THE PREMISES OF THE ASSESSEE HUF WERE NOT SEARCHED BUT WERE ONLY SURVEYED, THE ENTIRE CONCLUSION DRAWN BY THE TRIBUNAL WOULD UNDERGO A CHANGE. THE LD. COUNSEL SUBMITS TH AT THE RATIO OF THE DECISION OF THE TRIBUNAL IN AMIR CHAND V. ITO (1994) 49 ITD 606 (DEL) IS SQUARELY APPLICABLE TO THE PRESENT CASE. THE LD. COUNSEL SUBMITS THAT THE PRESUMPTION OF THE TRIBUNAL IS CONTRARY TO THE FACTS ON RECORD IN AS MUCH AS ON PAGES 3 , 4 AND 10 OF THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 153C OF THE ACT, THE AO HAS OBSERVED AS UNDER: 4.3 THE FOLLOWING PREMISES WERE COVERED U/S 133A OF THE INCOME TAX ACT, 1961 ON 09.10.2009 SIMULTANEOUSLY WITH SEARCH AND SEIZURE OPERATION ON OTHE R PREMISES. SR. NO. ADDRESS OF THE PREMISES NAME OF THE PERSON(S) COVERED 5. SHOP NO. 4, UNAWALA BUILDING, MAULANA, SHAUKAT ALI ROAD, NEAR GRANT ROAD RAILWAY STATION, MUMBAI - 7. PARTY NO. 12. M/S NAVKAAR (APPLE PLUS) [(PROP. RAJESH DEDHIA (HUF)] M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 3 8.6. ACCORDINGLY, A DETAILED SHOW CAUSE NOTICE WAS ISSUED ON 22.10.2013 AND DULY SERVED UPON THE ASSESSEE. THIS SHOW CAUSE COVERED ALL THE ASPECTS ON WHICH THIS OFFICE HAD THE INTENTIONS TO MAKE ADDITIONS AND TO GIVE THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND REPRESENTATION, UNDER THE PRINCIPLES OF NATURAL JUSTICE. THIS SHOW CAUSE IS REPRODUCED BELOW FOR READY REFERENCE: 2.1 FROM THE RETURNS OF INCOME FILED BY YOU, IT IS NOTICED THAT YOU HAVE OFFERED UNDISCLOSED INCOME OF RS.3,14,000/ - ON ACCOUNT OF UNRECORDED SALES AND PURCHASE IN CASH. IN RESPECT OF THIS DISCLOSURE MADE BY YOU U/S 133A OF THE INCOME TAX ACT, 1961, YOU ARE REQUIRED TO ANSWER THE FOLLOWING QUERIES: IT IS ALSO SUBMITTED THAT THE AFORESAID FACT HAS BEEN REITERATED BY THE AO IN HIS ORD ER U/S 271(1)(C) DATED 19.09.2013, WHEREIN THE AO OBSERVED AS UNDER: ....THE BUSINESS PREMISES WAS COVERED U/S 133A. IT IS SUBMITTED BY THE LD. COUNSEL THAT THE ASSESSEE - HUF WAS SERVED WITH A NOTICE U/S 153C AND NOT U/S 153A OF THE ACT BECAUSE THE SE ARCH WAS NOT CONDUCTED AT THE PREMISES OF THE ASSESSEE - HUF. THUS IT IS ARGUED THAT EXPLANATION 5A TO SECTION 271(1)(C) CANNOT BE INVOKED AS THE SAID EXPLANATION CAN BE INVOKED ONLY IN A CASE WHERE A SEARCH IS INITIATED U/S 132 ON OR AFTER 1 ST DAY OF JUNE, 2007. IT IS STATED BY THE LD. COUNSEL THAT THE SEARCH WAS NOT INITIATED U/S 132 IN THE CASE OF THE ASSESSEE - HUF AND THEREFORE, EXPLANATION 5A CANNOT BE INVOKED. THE LD. COUNSEL SUBMITS THAT THE TRIBUNAL FAILED TO CONSIDER THE RATIO OF THE DECISION IN PREM ARORA V. DCIT (2012) 149 TTJ (DEL) 590 TO THE EFFECT THAT CONCEALMENT OF INCOME IS TO BE DETERMINED WITH REFERENCE TO THE RETURN OF INCOME TO BE FILED IN RESPONSE TO NOTICE U/S M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 4 153A OF THE ACT AND ONCE RETURN OF INCOME IS ACCEPTED BY THE AO, IT CAN NE ITHER BE A CASE OF CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. 2.1 IN PROPOSITION 2, THE LD. COUNSEL SUBMITS THAT IN THE RETURN OF THE INCOME U/S 153C OF THE ACT, THE ASSESSEE HAD DISCLOSED INCOME OF RS.3,14,000/ - AND TH EREFORE, IN THIS RESPECT THE ASSESSEE HAS NOT CONCEALED INCOME. IT IS STATED THAT THE ASSESSEE FILED ITS RETURN OF INCOME U/S 139(1) ON 23.09.2010. PURSUANT TO THE SEARCH CARRIED OUT AT THE PREMISES OF THE ZAMKUDI GROUP OF CONCERNS, THE ASSESSEE WAS SERVED WITH A NOTICE DATED 09.01.201 2 U/S 153C AS THE ORIGINAL RETURN OF INCOME FILED ON 2 3.09.2010 HAD ABATED. THEREFORE, THE ASSESSEE FILED A RETURN OF INCOME U/S 153C ON 08.02.2012 DECLARING TOTAL INCOME OF RS.8,96,640/ - (RS.5,82,640/ - AS PER THE ORIGINAL ITR + RS.3,14,000/ - DISCLOSED IN THE ITR U/S 153C). THE SAID RETURN OF INCOME WAS PROCESSED AND THE AO PASSED THE ORDER U/S 143(3) R.W.S. 153C ON 20.03.2013 MAKING AN ADDITION OF RS.58,000/ - TO THE INCOME DECLARED BY THE ASSESSEE - HUF OF RS.8,96,640/ - BY ESTIM ATING THE GP AT 25% BY REJECTING THE GP OF 22% ADOPTED BY THE ASSESSEE - HUF. IT IS STATED IN THE RETURN OF INCOME FILED U/S 153C OF THE ACT, THE ASSESSEE HAD MADE DISCLOSURE OF RS.3,14,000/ - ON THE BASIS OF THE MATERIAL S FOUND AT THE PREMISES OF THE ZAMKUDI GROUP OF CONCERNS AND THEREFORE, THERE IS NO CONCEALMENT OF INCOME AND HENCE THE ASSESSEE IS NOT LIABLE FOR PENALTY IN RESPECT OF THE INCOME DISCLOSED OF RS.3,14,000/ - . THE LD. COUNSEL SUBMITS THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECI SION OF THE DELHI BENCH OF THE TRIBUNAL IN PREM ARORA (SUPRA) AND THEREFORE, THE ORDER PASSED BY THE TRIBUNAL IN THE M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 5 CASE OF THE PRESENT ASSESSEE DATED 29.03.2017 IS REQUIRED TO RECTIFIED AND THE APPEAL OF THE ASSESSEE BE ALLOWED. 3. ON THE OTHER HAND, TH E LD. DR ARGUES THAT THE PROPOSITION S RAISED BY THE ASSESSEE IN THIS MA WERE NOT IN THE GROUNDS OF APPEAL FILED BEFORE THE LD. CIT(A). SHE SUBMITS THAT THERE IS NO MISTAKE APPARENT FROM RECORD IN THE IMPUGNED ORDER PASSED BY THE TRIBUNAL AND THEREFORE, T HE SAME DOES NOT FALL WITHIN THE AMBIT OF SECTION 254(2) OF THE ACT. THUS THE LD. DR ARGUES THAT THE MA FILED BY THE ASSESSEE BE DISMISSED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISION ARE GIVEN BELOW. THERE IS NO DISPUTE ON THE FACTS. TO RECAPITULATE, WE B RIEFLY NARRATE THE FACTS BELOW. THE ASSESSEE - HUF IS PROPRIETOR OF M/S NAVKAAR, WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN SHIRTS. ORIGINALLY, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 23.09.2010 DECLARING TOTAL INCOME OF RS.5,82,640/ - . SUBSEQUENTLY, A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE ACT WAS CARRIED OU T BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT ON ZAMKUDI GROUP ON 09.10.2010. DURING THE COURSE OF SEARCH IN THE CASE OF ZAMKUDI FASHION P. LTD., AMAZON ARCADE BORIVALI (W), MUMBAI, CERTAIN DOCUMENTS IN THE FORM OF STOCK REGISTER WERE FOUND, IND ICATING SOME UNACCOUNTED PURCHASES BY THE ASSESSEE DURING THE PERIOD JANUARY 2010 TO DECEMBER 2010. IN RESPONSE TO THE NOTICE U/S 153C ISSUED BY THE AO ON 09.01.2012, THE ASSESSEE FILED ITS RETURN OF INCOME ON 08.02.2012 DECLARING TOTAL INCOME OF RS.8,96,6 40/ - . THE AO PASSED AN M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 6 ORDER U/S 143(3) R.W.S. 153C OF THE ACT ON 20.03.2013 ASSESSING THE INCOME AT RS.9,54,640/ - , BY MAKING FURTHER ADDITION OF RS.58,000/ - IN RESPECT OF PROFITS ON UNACCOUNTED SALES BY ESTIMATING HIGHER GP RATE THAN WHAT HAD BEEN DISCLOS ED BY THE ASSESSEE. THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) IN RESPECT OF ADDITIONAL INCOME OF RS.3,14,000/ - SURRENDERED BY THE ASSESSEE PLUS RS.58,000/ - ADDED DURING THE COURSE OF ASSESSMENT BY ADOPTING HIGHER GP RATE. THE ASSESSEE DID NOT CONTE S T THE ADDITION MADE BY THE AO IN THE ASSESS MENT AND THEREFORE, THE SAME HAS ATTAINED FINA LITY. THE AO PASSED AN ORDER U/S 271(1)(C) OF THE ACT ON 19.09.2013 AND LEVIED PENALTY OF RS.1,14,948/ - BEING THE MINIMUM PENALTY IN RESPECT OF THE ADDITION O F RS.3,72,000/ - (I.E. RS.3,14,000/ - PLUS RS.58,000/ - ) MAINLY ON THE GROUND THAT INCOME OF RS.3,14,000/ - DECLARED IN THE RETURN OF INCOME PURSUANT TO THE NOTICE U/S 153C OF THE ACT WAS NOT DISCLOSED BY THE ASSESSEE IN ITS ORIGINAL RETURN OF INCOME FILED ON 23.09.2010 AND THE SAID INCOME OF RS.3,14,000/ - WAS ENHANCED TO RS.3,72,000/ - ON COMPLETION OF ASSESSMENT. 4.1 WE MAY REFER HERE TO THE STATEMENT OF FACTS ALONG WITH FORM NO 35 FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) AGAINST THE PENALTY ORDER PASSED B Y THE AO. IN IT AT SERIAL NUMBER 9, THE ASSESSEE HAS SUBMITTED THAT IN THE COURSE OF SEARCH ACTION CONDUCTED AT GROUP CONCERN M/S ZAMKUDI GARMENTS P. LTD., AMAZON ARCADE, BORIVALI (W), MUMBAI, CERTAIN DOCUMENTS AND EVIDENCES IN THE FORM OF STOCK REGISTER W ERE FOUND SHOWING QUANTITATIVE DETAILS OF PURCHASES FOR THE MONTHS OF JANUARY 2010 TO MARCH 2010, AND WHEN COMPARED TO THE REGULAR BOOKS OF ACCOUNT, ONLY PART OF PURCHASES WERE REFLECTED IN THE REGULAR BOOKS OF ACCOUNT AND BALANCE QUANTITY OF PURCHASES WAS FOUND TO BE M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 7 UNACCOUNTED. IT IS STATED THAT THE ASSESSEE AGGREGATED THE TOTAL QUANTITY OF PURCHASES AS PER STOCK REGISTER FOUND FOR THREE MONTHS FALLING IN THE FINANCIAL YEAR ENDING ON 31.03.2010 I.E. JANUARY 2010 TO MARCH 2010 AND ARRIVED AT THE TOTAL QUA NTITY OF 1822 PIECES. ALSO IT IS STATED THEREIN AT SERIAL NUMBER 10, THAT IN ORDER TO AVOID LITIGATION AND BUY PEACE OF MIND, THE ASSESSEE EXTRAPOLATED THE TOTAL QUANTITY FOUND AS PER SEIZED STOCK REGISTER FOR THE REMAINING NINE MONTHS EVEN THOUGH NO EVIDE NCE OR MATERIAL WAS FOUND FOR THE PERIOD FROM APRIL 2009 TO DECEMBER 2009. IT IS THUS STATED AT SERIAL NUMBER 13 THAT THE UNDISCLOSED INCOME OF RS.3,14,000/ - WAS OFFERED IN THE RETURN OF INCOME FILED U/S 153C OF THE ACT AND THIS INCOME IS ON ESTIMATED BASI S AND NO EVIDENCE OR MATERIAL WAS FOUND IN THE COURSE OF SEARCH CORROBORATING TO THE AMOUNT OF ADDITIONAL INCOME OFFERED IN THE RETURN OF INCOME FILED U/S 153C. IT IS FURTHER STATED AT SERIAL NUMBER 14 THAT THE ASSESSEE ADOPTED GP RATE OF 22% WHEREAS THE AO ADOPTED GP RATE OF 25% AND MADE AN ADDITION OF RS.58,000/ - . 4.2 THE ISSUE RAISED IN THIS MA IS WHETHER PENALTY UNDER PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) CAN BE IMPOSED IN THE PRESENT CA SE WHERE THE ASSESSEE - HUF WAS COVERED BY SURVEY U/S 133A AND NOT BY SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT AND CONSEQUENTLY ASSESSMENT WAS MADE U/S 153C AND NOT U/S 153A . FOR CLARITY, THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) ARE EXTRACT ED BELOW. EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF ( I ) ANY MONEY, BULLION, JEWELLERY OR OTHER 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 FOR ANY PREVIOUS YEAR; OR ( II ) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 8 TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, ( A ) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR ( B ) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER 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. 4.3 A SIMILAR ISSUE AROSE BEFORE THE ITAT C BENCH KOLKATA IN THE CASE OF DCIT V. SRI SHYAM SUNDER DHANKA (ITA NO. 1869 - 1870/KOL/2013) FOR AY 2006 - 07 . I N THAT CASE THERE WAS A SEARCH OPERATION CONDUCTED IN THE PREMISES OF SALTEE GROUP AND DURING THE COURSE OF SEARCH CERTAIN DOCUMENTS WERE IMPOUNDED WITH REGARD TO SOME TRANSACTION FOR THE PURCHASE OF LAND. ON QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT THESE ARE THE PAPERS BELONGING TO M/S MAYUR SALES PVT. LTD. AND KAMAL GANDHI. THE TRIBUNAL FOUND THAT, AS SUCH THERE WAS NO ROLE OF THE SEARCH PARTY. ACCORDINGLY, THE AO ISSUED NOTICE TO THE ASSESSEE WHO VOLUNTARILY ADMITTED THE UNDISCLOSED INCOME AND REVISED INCOME TAX RETURN AND PAID TAX THEREON BY FILING REVISE D RETURN WHICH WAS ACCEPTED BY THE AO. THE AO ALSO INITIATED THE PENALTY WHICH WAS SUBSEQUENTLY DELETED BY THE LD. CIT(A) IN APPELLATE STAGE ON THE GROUND THAT THERE WAS NO MISMATCH IN THE INCOME OF THE ASSESSEE WHICH WAS DECLARED U/S 153C AND THE ASSESSEE WAS NOT SEARCH PARTY U/S 132 OF THE ACT. THEREFORE, THE LD. CIT(A) HELD THAT THE UNDISCLOSED INCOME IS OUT OF THE PURVIEW OF THE PROVISIONS UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. A QUESTION WAS RAISED BEFORE THE TRIBUNAL M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 9 BY THE REVENUE TO A DJUDICATE AS TO WHETHER THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN PURSUANCE TO NOTICE U/S 153C OF THE ACT IS SUBJECT TO PENALTY UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IN THE AFORESAID FACTS AND CIRCUMSTANCES. THE TRIBUNAL FOUND THAT THE NAME OF THE ASSESSEE WAS NOWHERE RECORDED IN SEIZED DOCUMENTS BUT ASSESSEE HIMSELF CAME FORWARD AND OFFERED THE UNDISCLOSED INCOME U/S 147 OF THE ACT. THE TRIBUNAL DID NOT AGREE WITH THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE WAS NOT SEARCHED U/S 132 OF THE ACT, THEREFORE, THE PROVISIONS OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT APPLICABLE TO THE ASSESSEE. THE TRIBUNAL VIDE ORDERED 20.07.2016 REFERRING TO THE PROVISION OF EXPLANATION 5A TO SECTION 271(1)(C) HELD AS UNDER: FROM A B ARE READING, WE FIND THAT IT IS CLEAR THAT THERE IS NO REQUIREMENT FOR LEVYING THE PENALTY UNDER EXPLANATION 5A TO SEC. 271(1)(C) THAT THE PARTY TO WHOM THE ASSESSMENT PROCEEDINGS INITIATED U/S 153C OF THE ACT SHOULD BE SEARCHED U/S. 132 OF THE ACT. THEREF ORE, WE REJECT THE FINDING OF LD CIT(A). WE ALSO DO NOT AGREE WITH THE FINDING OF LD CIT(A) THAT THE INCOME FURNISHED IN RESPONSE TO NOTICE U/S. 153C OF THE ACT WAS ACCEPTED BY AO IN ASSESSMENT PROCEEDINGS FRAMED U/S. 153C OF THE ACT WITHOUT MAKING ANY SUC H ADDITION. IN THE INSTANT CASE, IT IS PERTINENT TO NOTE THAT THE ASSESSEE OFFERED ITS UNDISCLOSED INCOME ONLY AFTER INITIATION OF SEARCH U/S 132 OF THE ACT ON M/S SALTEE GROUP AND AFTER ISSUING THE NOTICE U/S 153C OF THE ACT. SO IN OUR VIEW, IT IS NOT THE CASE THAT ASSESSEE HAS VOLUNTARILY OFFERED THE UNDISCLOSED INCOME TO TAX. THEREFORE THE REASONS GIVEN BY THE LD. CIT(A) WITH REGARD TO THE DELETION OF PENALTY ARE NOT TENABLE. 4. 3.1 THUS THE RATIO LAID DOWN IN SRI SHYAM SUNDER DHANKA (SUPRA) SQUARELY APP LIES TO THE PRESENT CASE. M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 10 4.4 IN THE INSTANT CASE , AS MENTIONED AT PARA 4.1 HEREINBEFORE, DURING THE COURSE OF SEARCH ACTION CONDUCTED AT GROUP CONCERN ZAMKUDI GARMENTS P. LTD., CERTAIN DOCUMENTS AND EVIDENCES IN THE FORM OF STOCK REGISTER WERE FOUND SHOWING QUANTITATIVE DETAILS OF PURCHASES FOR THE MONTHS OF JANUARY 2010 TO MARCH 2010 AND WHEN COMPARED ONLY PART OF PURCHASES WERE REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS AND BALANCE QUANTITY OF PURCHASE WAS FOUND TO BE UNACCOUNTED. THIS PERSUA DED THE ASSESSEE TO OFFER UNDISCLOSED INCOME OF RS.3,14,000/ - WHILE FILING RETURN OF INCOME U/S 153C. WE FIND THAT THE AO HAS ADOPTED THE GP RATE OF 25% WHILE CALCULATING THE UNDISCLOSED INCOME CONSIDERING THE GP RATE OF 22% DECLARED BY THE ASSESSEE AND TH E GP RATE OF 27.60% WORKED OUT BY THE SEARCH PARTY UPON THE ACTUAL STOCK INVENTORY OF THE PREMISES OF M/S ULTIMATE. 4.5 IN THE MA, THE LD. COUNSEL HAS RELIED ON THE DECISION IN AMIR CHAND (SUPRA) AND PREM ARORA (SUPRA) WHICH HAVE BEEN DISCUSSED BY THE TR IBUNAL AT PARA 7.3 OF TH E IMPUGNED ORDER. IN AMIR CHAND (SUPRA), THE TRIBUNAL HELD THAT IT WAS NOT PERMISSIBLE TO PRESS INTO SERVICE EXPLANATION 5 TO SECTION 271(1)(C), WHILE DEALING WITH A CASE OF SURVEY U/S 133A. IN THE INSTANT CASE WE CONCERNED WITH EX PLANATION 5A TO SECTION 271(1)(C). THEREFORE, THE CASE OF THE PRESENT ASSESSEE IS DISTINGUISHABLE FROM THE ABOVE DECISION RELIED ON BY THE LD. COUNSEL. IN THE CASE OF PREM ARORA (SUPRA), THE SEARCH WAS CONDUCTED PRIOR TO THE INTRODUCTION OF EXPLANATION 5A W.E.F. 01.06.2007. THEREFORE, THE TRIBUNAL HELD THAT NO PENALTY COULD BE LEVIED UPON THE ASSESSEE U/S 271(1)(C). THE TRIBUNAL CONCLUDED: M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 11 WHERE RETURNED INCOME DISCLOSED IN THE RETURN FILED U/S 153A IS ACCEPTED BY THE AO, THERE IS NO CONCEALMENT AND CONSEQUENTLY PENALTY U/S 271(1)(C) IS NOT LEVIABLE; THERE WAS NO PROVISION RELATING TO ENTRIES IN EXPLANATION 5 PRIOR TO INSERTION OF EXPLANATI ON 5A IN SECTION 271(1) W.E.F. 01.06.2007 AND THEREFORE, PENALTY U/S 271(1)(C) CANNOT BE IMPOSED EVEN BY INVOKING EXPLANATION 5 IN ASSESSMENT YEAR 2004 - 05 IN RESPECT OF THE UNACCOUNTED CASH FOUND DURING THE SEARCH ON 22.11.2006 MERELY ON THE PRESUMPTION TH AT THE ASSESSEE MIGHT HAVE BEEN IN POSSESSION OF SUCH CASH THROUGHOUT THE PERIOD COVERED BY THE SEARCH ASSESSMENTS. IN THE INSTANT CASE, WE ARE CONCERNED WITH EXPLANATION 5A TO SECTION 271(1)(C). THEREFORE, THE CASE OF THE ASSESSEE IS DISTINGUISHABLE FRO M THE ABOVE CASE RELIED ON BY THE LD. COUNSEL. 4.6 THE SCOPE AND AMBIT OF APPLICATION OF SECTION 254(2) IS VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFICATION OF MISTAKE APPARENT FROM THE RECORD. THE ORDER PASSED BY THE TRIBUNAL U/S 254(1) IS THE EFFEC TIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED U/S 254(2) EITHER ALLOWING THE AMENDMENT OR REFUSING TO AMEND GETS MERGED WITH THE ORIGINAL ORDER PASSED. POWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF RULE 24 OF THE ITAT RULES, 1963 AND THAT TOO ONLY IN CASE WHERE THE ASSESSEE SHOWS THAT IT HAD A REASONABLE CAUSE FOR BEING ABSENT AT A TIME WHEN THE APPEAL WAS TAKEN UP AND DECIDED EX - PARTE. THE WORDS USED IN SECTION 254(2) ARE SHALL MAKE SUCH AMENDMENT, IF THE MISTAKE IS BROUGHT TO ITS NOTICE. CLEARLY, IF THERE IS A MISTAKE, THEN AN AMENDMENT IS REQUIRED TO BE CARRIED OUT IN THE ORIGINAL ORDER TO CORRECT THAT PARTICULAR MISTAKE. THE PROVISION DOES NOT INDICATE THAT THE TRIBUNAL CAN RECALL THE ENTIRE ORDER AND PASS A FRESH DECISION. THAT WOULD AMOUNT TO A REVIEW OF THE ENTIRE ORDER AND M/S RAJESH D. DEDHIA (HUF) MA NO. 217/MUM/2017 12 THAT IS NOT PERMISSIBLE UNDER THE I.T. ACT. THE POWER TO RECTIFY A MISTAKE U/S 254(2) CANNOT BE USED FOR RECALLING THE ENTIRE ORDER. 4.7 AS CAN BE SEEN FROM THE FACTUAL SCENARIO IN THE INSTANT CASE, THERE IS NO MISTAKE APPARENT FROM RECORD. 5. IN THE RESULT, THE MA IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 24/07/2018. SD/ - SD/ - (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 24/07/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI