Deep Multimedia Ltd.,, Baroda v. The ACIT.,Cent.Circle-2,, Baroda

ITA 2436/AHD/2009 | 2004-2005
Pronouncement Date: 25-02-2011 | Result: Dismissed

Appeal Details

RSA Number 243620514 RSA 2009
Assessee PAN AABCD5038K
Bench Ahmedabad
Appeal Number ITA 2436/AHD/2009
Duration Of Justice 1 year(s) 6 month(s) 7 day(s)
Appellant Deep Multimedia Ltd.,, Baroda
Respondent The ACIT.,Cent.Circle-2,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 25-02-2011
Date Of Final Hearing 23-02-2011
Next Hearing Date 23-02-2011
Assessment Year 2004-2005
Appeal Filed On 18-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' BEFORE SHRI BHAVNESH SAINI JM & SHRI A N PAHUJA AM ITA NOS.2436 & 2437/AHD/2009 (ASSESSMENT YEARS:-2004-05 & 2005-06) DEEP MULTIMEDIA LIMITED KRISHNA COMPOUND NEW KHANDERAO MARKET PRATAPNAGAR BARODA V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX CENTRAL CIRCLE-2 BARODA PAN: AABCD 5038 K [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI MEHUL K PATEL AR REVENUE BY:- SHRI R K DHANESTA DR O R D E R A N PAHUJA: THESE APPEALS BY THE ASSESSEE DIRECTED AGAINST TW O SEPARATE ORDERS DATED 25 TH FEBRUARY 2009 OF THE LD. CIT(APPEALS)- IV AHMEDABAD FOR THE ASSESSMENT YEARS (AY) 2004-0 5 AND 2005- 06 RAISE THE FOLLOWING GROUNDS:- ITA NO.2436/AHD/2009:- 1.01 GENERAL 1.02 THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PR EJUDICE TO ONE ANOTHER. THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS)-IV AHMEDABAD (HEREINAFTER REFERRED TO AS CIT) IS AGAINST LAW AND FACTS. 1.03 IN THESE GROUNDS OF APPEAL THE ASSISTANT COMM ISSIONER OF INCOME- TAX CENTRAL CIRCLE-2 BARODA IS REFERRED TO AS THE ASSESSING OFFICER OR THE AO AND THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS)- IV AHMEDABAD IS REFERRED TO AS CIT(APPEALS) OR CIT (A). 1.04 YOUR APPELLANT CRAVES LEAVE TO ADD TO ALTER AMEND OR WITHDRAW ALL OF ANY OF THE FOLLOWING GROUNDS OF APPEAL. 2.0 LEVY OF PENALTY OF RS.11 435/- U/S 271(1)(C) OF THE ACT. 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE LEVY OF PENALTY OF RS.11 435/- MADE BY THE LEARNED AO UNDER SECTION 27 1(1)(C) OF THE ACT. ITA NOS.2436 & 2437/AHD/09 2 ITA NO.2437/AHD/2009:- 1.01 GENERAL 1.02 THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PR EJUDICE TO ONE ANOTHER. THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS)-IV AHMEDABAD (HEREINAFTER REFERRED TO AS CIT) IS AGAINST LAW AND FACTS. 1.03 IN THESE GROUNDS OF APPEAL THE ASSISTANT COMM ISSIONER OF INCOME- TAX CENTRAL CIRCLE-2 BARODA IS REFERRED TO AS THE ASSESSING OFFICER OR THE AO AND THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS)- IV AHMEDABAD IS REFERRED TO AS CIT(APPEALS) OR CIT (A). 1.04 YOUR APPELLANT CRAVES LEAVE TO ADD TO ALTER AMEND OR WITHDRAW ALL OF ANY OF THE FOLLOWING GROUNDS OF APPEAL. 2.0 LEVY OF PENALTY OF RS.70 200/- U/S 271(1)(C) OF THE ACT. 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE LEVY OF PENALTY OF RS.70 200/- MADE BY THE LEARNED AO UNDER SECTION 27 1(1)(C) OF THE ACT. 2 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED T O AS THE ACT] WAS CONDUCTED ON 24-11-2005 IN THE CASE OF ASHWIN PATEL GROUP INCLUDING THE ASSESSEE CARRYING ON THE BUSINESS OF CONSTRUCTION. CONSEQUENTLY A NOTICE U/S 153A OF THE ACT WAS ISSU ED ON 14-03- 2006 TO THE ASSESSEE FOR THESE TWO ASSESSMENT YEARS . IN RESPONSE THE ASSESSEE FILED A RETURN DECLARING LOSS OF RS.5 82 312/- AS AGAINST LOSS OF RS.6 20 432/- DECLARED IN THE ORIGI NAL RETURN FILED U/S 139(1) OF THE ACT FOR THE AY 2004-05. THE ASSESSMEN T WAS COMPLETED U/S 153A(B) READ WITH SEC. 143(3) OF THE ACT ON 31-12- 2007 ON THE LOSS OF RS.5 82 312/-. SINCE THE ASSES SMENT INCLUDED AN AMOUNT OF RS.37000/- ON ACCOUNT OF ADDITIONAL SA LES CONSIDERATION AND RENT OF RS.1 600/- NOT ACCOUNTED FOR IN THE BOOKS AND ADDED IN THE RETURN FILED IN PURSUANCE TO NOT ICE U/S 153A OF THE ACT VIS--VIS LOSS DECLARED IN THE RETURN FILED U/ S 139(1) OF THE ACT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE A LSO INITIATED. ITA NOS.2436 & 2437/AHD/09 3 3. LIKEWISE THE RETURN DECLARING NIL INCOME WAS FI LED ON 28-06- 2006 IN PURSUANCE TO NOTICE ISSUED U/S 153A OF THE ACT DATED 14-03- 2006 FOR THE ASSESSMENT YEAR 2005-06. THE AMOUNT OF RS.2 34 000/- ON ACCOUNT OF ADDITIONAL SALE CONSIDERATION NOT AC COUNTED FOR IN THE BOOKS AND IN THE RETURN FILED U/S 139(1) OF THE A CT WAS ADDED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. ACCORDINGLY THE ASSESSMENT WAS COMPLETED U/S 153A( B) READ WITH SEC. 143(3) OF THE ACT ON 31-12-2007 ON AN INCOME OF RS.770/-. SINCE THE ASSESSMENT INCLUDED AN AMOUNT OF RS.2 34 000/- ADDED IN THE RETURN FILED IN PURSUANCE TO NOTICE U/S 153A OF THE ACT VIS-- VIS LOSS DECLARED IN THE RETURN FILED U/S 139(1) O F THE ACT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INIT IATED. 4. NO APPEAL IS STATED TO HAVE BEEN FILED AGAINST T HE INCOME DETERMINED IN THE AFORESAID TWO ASSESSMENT ORDERS. SUBSEQUENTLY IN RESPONSE TO SHOW CAUSE NOTICE DATED 12-02-2008 I SSUED BY THE AO THE ASSESSEE PLEADED THAT THE AMOUNT OFFERED TO TAX IN RETURN FILED U/S 153A OF THE ACT BEING PART OF TOTAL DISCL OSURE OF RS.1 CRORE MADE BY SHRI ASHWIN K PATEL THE PROVISIONS OF EXPL ANATION 5 TO SECTION 271(1)(C) OF THE ACT WERE APPLICABLE AND T HEREFORE NO PENALTY SHOULD BE LEVIED. HOWEVER THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE THE ASSESSEE HAVING NO T FULFILLED THE CONDITIONS STIPULATED IN THE SAID EXPLANATION 5. S INCE THE ASSESSEE FAILED TO OFFER ANY COGENT EXPLANATION FOR NOT DISC LOSING THE AMOUNT IN THEIR ORIGINAL RETURNS THE AO IMPOSED A PENALTY OF RS.11 435/- IN AY 2004-05 AND RS.70 200/- IN AY 2005-06 INVOKING CLAUSE (B) TO EXPLANATION 1 BELOW SECTION 271(1)(C) OF THE ACT. 5. ON APPEAL THE LEARNED CIT(A) UPHELD THE LEVY OF PENALTY IN THE FOLLOWING TERMS IN THE AY 2004-05:- 2.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS O F LD. COUNSEL AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF ASS ESSMENT ORDER IT HAS BEEN NOTICED THAT IN THE RETURN FILED U/S 153A THE ASSESSEE HAS DECLARED RS.37 000/- ON ACCOUNT OF ADDITIONAL SALE CONSIDERA TION AS AGAINST LOSS ITA NOS.2436 & 2437/AHD/09 4 SHOWN AT RS.5 82 312/- IN THE ORIGINAL RETURN FILED U/S 139(1). THE CONTENTIONS OF LEARNED COUNSEL THAT THE RS.37 000/- ON ACCOUNT OF ADDITIONAL SALE CONSIDERATION WAS DISCLOSED BY THE ASSESSEE BEFORE THE SAME WAS DISCOVERED BY THE ASSESSING OFFICER AND TH EREFORE IT CANNOT BE SAID TO BE THE AMOUNT OF TAX OUGHT TO BE EVADED CAN NOT BE ACCEDED TO BECAUSE THE AMOUNT OF RS.37 000/- AND RENT OF RS.1 600/- WAS DECLARED ONLY AFTER CONDUCT OF SEARCH U/S 132 I.E. WHEN THE DEPARTMENT HAD IN ITS POSSESSION & COLLECTED EVIDENCE AFTER SEARCH. HENCE IT WAS DECLARED UNDER FORCIBLE CIRCUMSTANCES U/S. 153A WHICH CANNOT BE SAID TO BE VOLUNTARILY AS THE APPELLANT WOULD HAD NOT DECLARED THIS AMOUNT WHEN THE RETURN U/S 139(1) WAS FILED. FURTHER THE DISCLOSUR E MADE BY SHRI ASHWIN K. PATEL U/S. 132(4) OF THE ACT AND IS THEREFORE ENTIT LED TO THE EXCEPTION TO LEVY OF PENALTY CONTAINED IN SECTION 271(1)(C) EXPL ANATION-5 IS NOT APPLICABLE SINCE TAXES ALONG WITH INTEREST WERE NOT PAID ON THE DISCLOSURE MADE BY SHRI ASHWIN K. PATEL. 2.2 HOWEVER THE APPELLANT IS REQUIRED TO FILE RE TURN OF INCOME U/S 139 AS PER THE SPECIFIED TIME LIMIT MENTIONED THEREIN. THE TAXPAYER IS BOUND TO DECLARE CORRECT INCOME AND PAY TAXES THEREON. BUT THE TRUE INCOME WAS NOT DECLARED U/S 139 UNDER NORMAL CIRCUMSTANCES. TH EREAFTER INCOME TAX DEPARTMENT CONDUCT SEARCH U/S 132 ON THE BASIS OF W HICH THE APPELLANT FILED RETURN OF INCOME' U/S 153A AND ASSESSMENT WAS COMPLETED U/S 153A. HENCE RETURN FILED U/S 153A WILL NOT PROTECT THE APPELLANT FROM IMPOSITION OF THE PENALTY U/S 271(1)(C). THE PENALT Y IS EXIGIBLE WHERE THE APPELLANT HAD OFFERED THE ADDITIONAL CONCEALED INCO ME IN THE RETURN FILED 153A. IT IS ALSO EVIDENT AS ALSO ADMITTED BY THE AP PELLANT THAT TRUE AND CORRECT INCOME WAS NOT DISCLOSED IN THE NORMAL RETU RN FILED U/S 139. THEREFORE THE CONTENTIONS OF LD. COUNSEL CANNOT BE ACCEPTED ON THE GROUND THE PENALTY CANNOT BE IMPOSED SINCE CONCEALE D INCOME WAS DECLARED AFTER SEARCH IN THE RETURN FILED U/S 153A. SO THE RETURN FILED U/S 153A OFFERING CONCEALED INCOME AFTER SEARCH CANNOT BE TREATED ON PAR WITH A NORMAL RETURN FILED U/S 139. HOWEVER AS PER THE PROVISIONS CONTAINED IN EXPLANATION-5 ATTACHED TO SECTION 271(1)(C) IT IS M ENTIONED THAT WHERE IN THE COURSE OF SEARCH INITIATED U/S 132 BEFORE THE 1 ST DAY OF JUNE 2007 THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY ETC. SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME UNLESS:- 1. SUCH INCOME IS OR THE TRANSACTIONS ARE RECORDED. 2. HE MAKES THE STATEMENT DURING THE COURSE OF THE SEARCH THAT SUCH INCOME ETC. NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME 3. ALSO SPECIFIED IN THE STATEMENT THE MANNER IN WH ICH SUCH INCOME HAS BEEN DERIVED 4. PAYS TAXES TOGETHER WITH INTEREST IF ANY IN RESPECT OF SUCH INCOME. HENCE BENEFIT OF IMMUNITY FROM IMPOSITION OF PENAL TY CAN BE GRANTED ONLY WHEN EXPLANATION-5 IS APPLICABLE AFTER FULFILLING T HE CONDITIONS MENTIONED ABOVE I.E. TAXES ARE PAID ON THE DECLARED UNDISCLOS ED INCOME ALONG WITH ITA NOS.2436 & 2437/AHD/09 5 INTEREST THEREON. IN THE INSTANT CASE BENEFIT OF I MMUNITY FROM IMPOSITION OF PENALTY U/S 271(1)(C) CANNOT BE GRANTED UNDER EXPLA NATION-5 BECAUSE TAXES WERE NOT PAID ALONG WITH INTEREST ON UNDISCLO SED INCOME OF RS. 1 CRORE DECLARED BY SHRI ASHWIN PATEL DURING THE COUR SE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4). THE CONTENTIONS OF L D. COUNSEL CANNOT BE ACCEDED TO WHICH ARE HEREBY' REJECTED. KEEPING IN V IEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE NO INTERFERENCE IS CALLE D FOR AND THE PENALTY IMPOSED U/S 271(1)(C) IS HEREBY CONFIRMED. HENCE T HE APPEAL IS DISMISSED. 6. LIKEWISE THE LD. CIT(A) UPHELD THE LEVY OF PENA LTY IN THE FOLLOWING TERMS IN THE AY 2005-06:- 2.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF LD. COUNSEL AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF ASSESSME NT ORDER IT HAS BEEN NOTICED THAT IN THE RETURN FILED U/S 153A THE ASSES SEE HAS DECLARED RS.2 34 000/- ON ACCOUNT OF ADDITIONAL SALE CONSIDE RATION AS AGAINST LOSS SHOWN AT RS.1 15 735/- IN THE ORIGINAL RETURN FILED U/S 139(1). THE CONTENTIONS OF LEARNED COUNSEL THAT THE RS.2 34 000 /- ON ACCOUNT OF ADDITIONAL SALE CONSIDERATION WAS DISCLOSED BY THE ASSESSEE BEFORE THE SAME WAS DISCOVERED BY THE ASSESSING OFFICER AND TH EREFORE IT CANNOT BE SAID TO BE THE AMOUNT OF TAX OUGHT TO BE EVADED CAN NOT BE ACCEDED TO BECAUSE THE AMOUNT OF RS.2 34 000/- WAS DECLARED ON LY AFTER CONDUCT OF SEARCH U/S 132 I.E. WHEN THE DEPARTMENT HAD IN ITS POSSESSION & COLLECTED EVIDENCE AFTER SEARCH. HENCE IT WAS DECLARED UNDER FORCIBLE CIRCUMSTANCES U/S. 153A WHICH CANNOT BE SAID TO BE VOLUNTARILY AS THE APPELLANT WOULD HAD DECLARED THIS AMOUNT WHEN THE R ETURN U/S 139(1) WAS FILED. FURTHER THE DISCLOSURE MADE BY SHRI ASHWIN K. PATEL U/S. 132(4) OF THE ACT AND IS THEREFORE ENTITLED TO THE EXCEPTION TO LEVY OF PENALTY CONTAINED IN SECTION 271(1)(C) EXPLANATION-5 IS NOT APPLICABLE SINCE TAXES ALONG WITH INTEREST WERE NOT PAID ON THE DISCLOSURE MADE BY SHRI ASHWIN K. PATEL. 2.2 HOWEVER THE APPELLANT IS REQUIRED TO FILE RETU RN OF INCOME U/S 139 AS PER THE SPECIFIED TIME LIMIT MENTIONED THEREIN. THE TAXPAYER IS BOUND TO DECLARE CORRECT INCOME AND PAY TAXES THEREON. BUT THE TRUE INCOME WAS NOT DECLARED U/S 139 UNDER NORMAL CIRCUMSTANCES. TH EREAFTER INCOME TAX DEPARTMENT CONDUCT SEARCH U/S 132 ON THE BASIS OF W HICH THE APPELLANT FILED RETURN OF INCOME' U/S 153A AND ASSESSMENT WAS COMPLETED U/S 153A. HENCE RETURN FILED U/S 153A WILL NOT PROTECT THE APPELLANT FROM IMPOSITION OF THE PENALTY U/S 271(1)(C). THE PENALT Y IS EXIGIBLE WHERE THE APPELLANT HAD OFFERED THE ADDITIONAL CONCEALED INCO ME IN THE RETURN FILED 153A. IT IS ALSO EVIDENT AS ALSO ADMITTED BY THE AP PELLANT THAT TRUE AND CORRECT INCOME WAS NOT DISCLOSED IN THE NORMAL RETU RN FILED U/S 139. THEREFORE THE CONTENTIONS OF LD. COUNSEL CANNOT BE ACCEPTED ON THE GROUND THE PENALTY CANNOT BE IMPOSED SINCE CONCEALE D INCOME WAS DECLARED AFTER SEARCH IN THE RETURN FILED U/S 153A. SO THE RETURN FILED U/S 153A OFFERING CONCEALED INCOME AFTER SEARCH CANNOT BE TREATED ON PAR WITH ITA NOS.2436 & 2437/AHD/09 6 A NORMAL RETURN FILED U/S 139. HOWEVER AS PER THE PROVISIONS CONTAINED IN EXPLANATION-5 ATTACHED TO SECTION 271(1)(C) IT IS M ENTIONED THAT WHERE IN THE COURSE OF SEARCH INITIATED U/S 132 BEFORE THE 1 ST DAY OF JUNE 2007 THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY ETC. SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME UNLESS:- 1. SUCH INCOME IS OR THE TRANSACTIONS ARE RECORDED. 2. HE MAKES THE STATEMENT DURING THE COURSE OF THE SEARCH THAT SUCH INCOME ETC. NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME 3. ALSO SPECIFIED IN THE STATEMENT THE MANNER IN WH ICH SUCH INCOME HAS BEEN DERIVED 4. PAYS TAXES TOGETHER WITH INTEREST IF ANY IN RESPECT OF SUCH INCOME. HENCE BENEFIT OF IMMUNITY FROM IMPOSITION OF PENAL TY CAN BE GRANTED ONLY WHEN EXPLANATION-5 IS APPLICABLE AFTER FULFILLING T HE CONDITIONS MENTIONED ABOVE I.E. TAXES ARE PAID ON THE DECLARED UNDISCLOS ED INCOME ALONG WITH INTEREST THEREON. IN THE INSTANT CASE BENEFIT OF I MMUNITY FROM IMPOSITION OF PENALTY U/S 271(1)(C) CANNOT BE GRANTED UNDER EXPLA NATION-5 BECAUSE TAXES WERE NOT PAID ALONG WITH INTEREST ON UNDISCLO SED INCOME OF RS. 1 CRORE DECLARED BY SHRI ASHWIN PATEL DURING THE COUR SE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4). THE CONTENTIONS OF L D. COUNSEL CANNOT BE ACCEDED TO WHICH ARE HEREBY' REJECTED. KEEPING IN V IEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE NO INTERFERENCE IS CALLE D FOR AND THE PENALTY IMPOSED U/S 271(1)(C) IS HEREBY CONFIRMED. HENCE T HE APPEAL IS DISMISSED. 7. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A) IN THESE TWO ASSESSM ENT YEARS. THE LEARNED AR ON BEHALF OF THE ASSESSEE MERELY RELIED UPON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KANHAIYALAL [2008] 299 ITR 19 (RAJ). TO A QUERY BY THE BENCH THE LEARNED AR ON BEHALF OF THE ASSESSEE ADMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT THIRD MEMB ER IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL [2009] 121 ITD 15 9 (AHD)(TM). ON THE OTHER HAND THE LEARNED DR WHILE SUPPORTING TH E FINDINGS OF THE LEARNED CIT(A) RELIED UPON THE AFORESAID DECISION OF THE THIRD MEMBER OF THE ITAT AND CONTENDED THAT THE AMOUNT H AVING NOT BEEN DISCLOSED IN THE ORIGINAL RETURNS PENALTY WAS RIGH TLY IMPOSED BY THE AO. ITA NOS.2436 & 2437/AHD/09 7 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET WE FIND THAT THE VIEW TAKE N BY THE HONBLE RAJASTHAN HIGH COURT RELIED UPON BY THE LD. AR IN THE CASE OF KANHAIYALAL(SUPRA) DID NOT FIND FAVOUR WITH THE TH IRD MEMBER IN THE AFORESAID DECISION IN THE CASE OF KIRIT DAHYABHAI PATEL(SUPRA) RELIED UPON BY THE LD. DR. EVEN OTHERWISE THE LD. AR DID NOT ATTEMPT TO DEMONSTRATE BEFORE US AS TO HOW THE SAID DECISION IS APPLICABLE TO THE FACTS IN THE INSTANT CASE BEFORE US ESPECIALLY IN THE LIGHT OF FINDINGS OF THE AO AND THE LD. CIT(A) THAT EXCEPTIO N CONTAINED IN EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE.. THUS RELIANCE ON THE SAID DECISION IS TOTALLY MISPLACED. IN THE INSTANT CASE THE ASSESSEE WAS SUBJECTED TO SEARCH UNDER SECTION 132 OF THE ACT ON 24-11-2005. CONSEQUENTLY PROCEEDINGS U/S 153A OF THE ACT WERE INITIATED . TH EREAFTER THE RETURNS FILED BY THESE ASSESSEES IN TERMS OF PROVISIONS OF SECTION 153A(1)(A) OF THE ACT WERE ACCEPTED BY THE AO . ADMITTEDLY ADDITIONAL AMOUNT OF INCOME WAS DISCLOSED IN THE RETURNS FILED IN PURSUANCE TO NOTICE U/S 153A O F THE ACT. NO REASONS AT ALL HAVE BEEN ADDUCED BEFORE US AS TO WHY SUCH ADDITION AL INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURNS FILED U/S 139(1) OF THE ACT. THE LD. AR APPEARING BEFORE US DID NOT CLARIFY AS TO WHETHER OR NOT THE SAID INCOME WAS DECLARED IN THE STATEMENTS OF THE ASSESSEE RECORDED DURING THE COUR SE OF SEARCH NOR COPIES OF SUCH STATEMENTS HAVE BEEN PLACED BEFORE US. IT IS W ELL SETTLED THAT A PENALTY IS IMPOSED ON ACCOUNT OF THE COMMISSION OF A WRONGFUL ACT AND PLAINLY IT IS THE LAW OPERATING ON THE DATE ON WHICH THE WRONGFUL ACT IS COMMITTED WHICH DETERMINES THE PENALTY. WHERE PENALTY IS IMPOSED FOR CONCEALME NT OF PARTICULARS OF INCOME IT IS THE LAW RULING ON THE DATE WHEN THE ACT OF CONCE ALMENT TAKES PLACE WHICH IS RELEVANT. IN THE CASE UNDER CONSIDERATION THE CONC EALMENT OF THE PARTICULARS OF INCOME WAS EFFECTED BY THE ASSESSEE WHEN THE ASSES SEE FILED HIS ORIGINAL RETURNS OF TOTAL INCOME [ BRIJ MOHAN V. CIT [1979] 120 ITR 1 (SC) CIT V. ONKAR SARAN & SONS [1992] 195 ITR 1 2 (SC) B.N. SHARMA V. CIT [1997] 226 ITR 442 (SC)]. THE ASSESSMENT FRAMED UNDER SECTION 153A(1)( B ) OF THE ACT AFTER THE SEARCH ACCEPTING THE INCOME AS DISCLOSED BY THE A SSESSEE IN THESE RETURNS IS ITA NOS.2436 & 2437/AHD/09 8 OVER AND ABOVE WHAT WAS DISCLOSED IN THE ORIGINAL R ETURNS. SINCE THE ASSESSEE HAD TO DISCLOSE THEIR REAL TOTAL INCOME IN THE ORIG INAL RETURN FILED UNDER SECTION 139 IF THEY HAD FAILED TO DO SO BUT CONCEALED OR F URNISHED INACCURATE PARTICULARS IN THAT RETURN THE OFFENCE BECOMES COMPLETE. THUS THE OFFENCE OF CONCEALMENT IS COMPLETE AND FINAL WHEN THE ASSESSEES DID NOT DISCL OSE THE REAL INCOME IN THEIR ORIGINAL RETURN. IF THE PLEA ON BEHALF OF THE ASSES SEE THAT SINCE THERE WAS NO DIFFERENCE IN THE INCOME RETURNED AFTER THE SEARCH AND THE ASSESSED INCOME IS ACCEPTED AN ANOMALOUS RESULT WILL FOLLOW IN CERTAI N GLARING CASES OF CONCEALMENT. LET US TAKE THE FOLLOWING ILLUSTRATION. AN ASSESSEE CONCEALS INCOME IN HIS ORIGINAL RETURN. HE GETS AWAY WITH IT AND THE ORIGINAL ASSES SMENT IS COMPLETED WITHOUT DETECTING THE CONCEALMENT. SUBSEQUENTLY A NOTICE I S GIVEN FOR ASSESSING THE ESCAPED OR UNDISCLOSED INCOME. IN THESE PROCEEDINGS THE ASSESSEE FILES A RETURN OF INCOME INCLUDING THE ESCAPED OR UNDISCLOSED INCO ME. IN THIS SITUATION THE ARGUMENT ON BEHALF OF THE ASSESSEE IF ACCEPTED WI LL RESULT IN THE CONCLUSION THAT THE DEPARTMENT WILL BE HELPLESS IN IMPOSING A PENAL TY IN SUCH A CASE. THAT CERTAINLY CANNOT BE THE EFFECT OF THE LEGAL PROVISI ONS. AGAIN AN ASSESSEE WOULD COMPLETELY ESCAPE PENALTY IF HE DOES NOT AT ALL FI LE A RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT. THE ARGUMENT COULD BE THAT SINCE A PENALTY CAN BE IMPOSED ONLY WITH REGARD TO THE RETURN FILED IN THE REASSESSMENT PROCEEDINGS AND SINCE HE HAD FILED NO SUCH RETURN HE CANNOT BE PENALISED AT ALL. IF THE ORIGINAL RETURN COULD FORM THE BASIS FOR DET ERMINING THE QUANTUM OF PENALTY IMPOSABLE ON THE REASSESSMENT THERE IS NO REASON W HY THE ORIGINAL RETURN SHOULD ALSO NOT FORM THE BASIS FOR DETERMINING THE DATE ON WHICH THE CONCEALMENT WAS EFFECTED BY THE ASSESSEE. THUS IT IS WELL SETTLED THAT THE CONCEALMENT OF THE PARTICULARS OF INCOME WAS EFFECTED BY THE ASSESSEE WHEN HE FILED THE ORIGINAL RETURNS OF TOTAL INCOME . 8.1. IN THE CASE UNDER CONSIDERATION THE LD. CIT(A) UP HELD THE LEVY OF PENALTY SINCE THE ASSESSEE CONCEALED THE PARTICULAR S OF ADDITIONAL INCOME DISCLOSED IN THE RETURN FILED AFTER THE SEARCH BU T WHICH WAS NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME. NO REASONS AT ALL HAVE BEEN ADDUCED BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US AS TO WHY THE SAID A DDITIONAL INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURNS . AS IS EVIDENT FROM THE CL. (C) OF S. 271(1) OF THE ITA NOS.2436 & 2437/AHD/09 9 ACT THE WORDS USED ARE 'HAS CONCEALED THE PARTICUL ARS OF HIS INCOME' OR FURNISHED 'INACCURATE PARTICULARS OF SUCH INCOME'. THUS BOTH IN CASE OF CONCEALMENT AND INACCURACY THE PHRASE 'PARTICULARS OF INCOME' HAS BEEN USED. THE LEGISLATURE HAS NOT USED THE WORDS 'CONCEALED HIS INCOME'. FROM THI S IT WOULD BE APPARENT THAT PENAL PROVISION WOULD OPERATE WHEN THERE IS A FAILU RE TO DISCLOSE FULLY OR TRULY ALL THE PARTICULARS. THE WORDS 'PARTICULARS OF INCOME' REFER TO THE FACTS WHICH LEAD TO THE CORRECT COMPUTATION OF INCOME IN ACCORDANCE WIT H THE PROVISIONS OF THE ACT. SO WHEN ANY FACT MATERIAL TO THE DETERMINATION OF A N ITEM AS INCOME OR MATERIAL TO THE CORRECT COMPUTATION IS NOT FILED OR THAT WHI CH IS FILED IS NOT ACCURATE THEN THE ASSESSEE WOULD BE LIABLE TO PENALTY UNDER S. 27 1(1)(C) OF THE ACT. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME ' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEF INED EITHER IN SECTION 271 OR ELSEWHERE IN THE ACT. HOWEVER NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY KEEPING OFF A CERTAIN PORTION OF THE INCOME FROM THE RETURN. ACCORDING TO LAW LEXICON THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS C ON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT IS THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT COPY OR TRANSCRIPT.' 8.2 IF THE DISCLOSURE OF FACTS IS INCORRECT OR FA LSE TO THE KNOWLEDGE OF THE ASSESSEE AND IT IS ESTABLISHED THEN SUCH DISCLOSUR E CANNOT TAKE IT OUT FROM THE PURVIEW OF THE ACT OF CONCEALMENT OF PARTICULARS OR FURNISHING INACCURATE PARTICULARS THEREOF FOR THE PURPOSE OF LEVY OF PENA LTY. IN THE INSTANT CASE ADMITTEDLY THE AFORESAID ADDITIONAL INCOME DISCLOS ED AFTER THE SEARCH WAS NEVER DISCLOSED IN THE RETURNS FILED ORIGINALLY. THUS TH E FACTUM OF CONCEALMENT IS ITA NOS.2436 & 2437/AHD/09 10 ESTABLISHED.. THE PENALTY U/S 271(1)(C) OF THE AC T IS LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. WHETHER THI S DISCLOSURE MADE BY THE ASSESSEE CAN BE CONSIDERED VOLUNTARY AND TO PUR CHASE PEACE NEEDS TO BE EXAMINED. IT HAS BEEN HELD IN TRIBHOVANDAS BHIMJI ZAVERI VS. UNION OF INDIA 203 ITR 369 (SC) AND IN NATWARLAL JOITRAM RAVAL VS. CI T 115 CTR (BOM) 518 THAT DISCLOSURE MADE SUBSEQUENT TO SEIZURE OF INCRIMINAT ING MATERIAL WOULD NOT BE VOLUNTARY. AS ALREADY OBSERVED THERE IS NO COGENT EXPLANATION GIVEN WHY THE AFORESAID AMOUNT WAS NOT OFFERED TO TAX AT THE TIME OF FILING ORIGINAL RETURN. IN THE ABSENCE OF ANY BONAFIDE EXPLANATION AS TO WHY THE ADDITIONAL INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURN APPARENTLY THE A SSESSEE HAS FAILED TO REBUT THE ONUS LAID DOWN UPON THESE ASSESSEE IN TERMS OF EXPL ANATION 1 TO SEC. 271(1)(C) OF THE ACT. SINCE THE ASSESSEE DISCLOSED ADDITIONAL INCOME ONLY IN CONSEQUENCE OF THE SEARCH WE ARE OF THE OPINION THAT THE A.O. AND THE CIT(A) ARE CORRECT IN LEVYING PENALTY EVEN THOUGH THEIR REASONS ARE DIFF ERENT.. 8.3. AS REGARDS A FEEBLE PLEA ON BEHALF OF THE ASSESSEE REGARDING APPLICABILITY OF THE EXCEPTION PROVIDED IN E XPLANATION 5 TO SECTION 271(1)( C ) OF THE ACT WE FIND THAT BOTH THE AO AND THE LD. CIT(A) CONCLUDED THAT THE CASE OF THE ASSESSEE DOES NOT FALL IN ANY OF THE EXCEPTION PROVIDED IN EXPLAN ATION 5 TO SEC. 271(1)(C) OF THE ACT. THE LD. AR DID NOT EVEN MAKE A WHISPER NOR PLA CED ANY MATERIAL BEFORE US CONTROVERTING THE AFORESAID FINDINGS OF FACTS RECOR DED BY THE LD. CIT(A) .IT IS NOTICED THAT PRIOR TO THE INSERTION OF E XPLANATION 5 TO SECTION 271 BY THE TAXATION LAWS (AMENDMENT) ACT 1984 WITH EFFECT FROM 1-10-19 84 AN ASSESSEE WHO WAS FOUND TO BE THE OWNER OF ANY MONEY BULLION JEWELL ERY ETC. RECOVERED DURING THE COURSE OF SEARCH WAS ENTITLED TO EXPLAIN THAT SUCH ASSETS WERE ACQUIRED BY HIM BY UTILISING HIS INCOME RELATING TO ANY PREVIOUS YE AR WHETHER IT ENDED BEFORE THE DATE OF THE SEARCH OR IS TO END ON OR AFTER THE DAT E OF THE SEARCH. BY DOING SO THE ASSESSEE COULD ESCAPE THE LIABILITY TO PENALTY UNDE R SECTION 271(1)( C ) OF THE ACT. IN ORDER TO PLUG THE LOOPHOLE E XPLANATION 5 WAS INSERTED WITH EFFECT FROM 1-10- 1984 AND IS APPLICABLE TO A SITUATION WHERE IN THE COURSE OF A SEARCH UNDER SECTION 132 OF THE ACT THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY ITA NOS.2436 & 2437/AHD/09 11 BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING WHOLLY OR IN PART HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFOR E THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH. IN VIEW OF THE EXPLANATION NOTWITHSTANDING THE FACT THAT SUCH INCOME IS DECLAR ED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH HE SHALL FOR THE PURPOSES OF SECTION 271(1)( C ) BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF H IS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME EXC EPT IN CASES WHERE SUCH INCOME IS OR THE TRANSACTIONS RESULTING IN SUCH IN COME ARE RECORDED ON OR BEFORE THE DATE OF THE SEARCH IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLO SED TO THE COMMISSIONER BEFORE THE DATE OF THE SEARCH OR IN THE COURSE OF THE SEARCH THE ASSESSEE 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 SPECIFIED IN SUB- SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN T HE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST IF ANY IN RESPECT OF SUCH INCOME. THUS BY THE DEEMIN G PROVISIONS OF E XPLANATION 5 THE ASSESSEE IS FASTENED WITH THE LIABILITY TO PENA LTY UNDER SECTION 271(1)( C ) IN CASE HE EXPLAINS THE ACQUISITION OF ASSETS RECOVER ED IN THE COURSE OF SEARCH FROM OUT OF INCOME OF A PREVIOUS YEAR WHICH HAS ALR EADY ENDED BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH. 8.4 IN THE PRESENT CASE THE ASSESSEE FILED THEIR ORIG INAL RETURNS OF INCOME AND ADMITTEDLY ADDITIONAL INCOME DISCLOSED IN THE RETURNS FILED IN PURSUANCE TO NOTICE UNDER SECTION 153A OF THE ACT WAS NOT DECLA RED IN THESE RETURNS. THERE IS NOTHING TO SUGGEST THAT ADDITIONAL INCOME DISCLOSED IN THE RETURN FILED AFTER THE SEARCH WAS EVER OFFERED TO TAX IN HIS STATEMENT REC ORDS U/S 132(4) OF THE ACT AND AS ALREADY MENTIONED NO SUCH STATEMENTS HAVE EVEN BEEN PLACED BEFORE US. BOTH THE AO AND THE LD. CIT(A) CONCLUDED THAT THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT PROVIDED IN EXCEPTIONS LAID DOWN IN EXPLANA TION 5 TO SEC. 271(1)(C) OF THE ACT IN THESE CIRCUMSTANCES THE PLEA ON BEHALF OF THE AS SESSEES FOR BENEFIT ITA NOS.2436 & 2437/AHD/09 12 PROVIDED IN THE EXCEPTIONS TO EXPLANATION 5 TO S EC. 271(1)(C) OF THE ACT IS NOT TENABLE SINCE THERE IS NOTHING TO SUGGEST THAT TH E ASSESSEE FULFILLED THE CONDITIONS STIPULATED IN THE SAID EXPLANATION. ADMI TTEDLY AND AS IS EVIDENT FROM THE RELEVANT ASSESSMENT ORDERS THE ASSESSEE HAVE E ARNED UNDISCLOSED INCOME AND WHERE ASSESSEE HAD ADMITTED TO CONCEALMENT DURI NG THE COURSE OF ENQUIRY OR ASSESSMENT PROCEEDINGS AND IN THIS CASE IN THE RETU RN OF INCOME FILED UNDER SECTION 153A( A ) OF THE ACT ITSELF NO INDEPENDENT ENQUIRY TO PROV E CONCEALMENT IS NECESSARY FOR LEVY OF PENALTY UNDER SECTION 271(1)( C ) OF THE ACT. AS ALREADY MENTIONED THE OFFENCE OF CONCEALING THE PARTICULAR S OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IN THE INSTANT CAS E HAS TO BE CONSIDERED IN RELATION TO THE ORIGINAL RETURNS WHICH WERE SUBMITT ED BY THE ASSESSEE AND WHEREIN THIS CONCEALMENT OF PARTICULARS OF INCOME OR FURNIS HING INACCURATE PARTICULARS OF SUCH INCOME HAS OCCURRED. SO IN DETERMINING THE QUA NTUM OF PENALTY THE AMOUNT OF INCOME THE PARTICULARS OF WHICH WERE CONCEALED OR INACCURATE PARTICULARS OF WHICH WERE FURNISHED HAS TO BE TAKEN INTO CONSIDER ATION [ G.C. AGRAWAL V. CIT [1990] 186 ITR 571 (SC)]. 8.5 IN THE CASE OF CIT V. C. ANANTHAN CHETTIAR [2005] 273 ITR 401 THE HONBLE MADRAS HIGH COURT WAS CONSIDERING A SIMILAR ISSUE. IN THAT CASE THE INCOME-TAX DEPARTMENT IN A SEARCH AND SEIZURE OPERA TION CONDUCTED IN THE ASSESSEES SHOP AND RESIDENCE SEIZED CASH JEWELLE RY AND CERTAIN DOCUMENTS. THEREAFTER THE ASSESSEE FILED A REVISED RETURN FOR THE ASSESSMENT YEAR 1986-87 DISCLOSING ADDITIONAL INCOME WHICH WAS ACCEPTED AND ASSESSMENT WAS MADE ON THE BASIS OF REVISED RETURN. THE ASSESSEE TOOK THE STAND THAT THERE WAS NO CONCEALMENT AND IT WAS ONLY FOR THE PURPOSE OF BUYI NG PEACE WITH THE DEPARTMENT THAT THE ADDITIONAL INCOME WAS DISCLOSED AND REVISE D RETURN WAS FILED. THE TRIBUNAL ACCEPTED THIS PLEA OF THE ASSESSEE AND HEL D THAT NO PENALTY IN THE CIRCUMSTANCES WAS LEVIABLE BY RELYING ON THE SUPRE ME COURT DECISION IN SIR SHADILAL SUGAR & GENERAL MILLS LTD. V. CIT [1987] 168 ITR 705. ON REFERENCE THE HONBLE MADRAS HIGH COURT SET ASIDE THE ORDER AND O BSERVED : 'LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT THE ORDER OF THE TRIBUNAL IS NOT IN ACCORDANCE WITH LAW AS IT HAS IGNORED THE EXPLANAT ION TO SECTION 271(1)(C) OF THE ACT. LEARNED COUNSEL ALSO PLACED RELIANCE ON THE DE CISION IN THE CASE OF K.P. MADHUSUDHANAN V. CIT [2001] 251 ITR 99 (SC) WHEREIN IT WAS HELD THAT THE LAW ITA NOS.2436 & 2437/AHD/09 13 DECLARED BY THE COURT IN THE CASE OF SIR SHADILAL S UGAR & GENERAL MILLS LTD. V. CIT [1987] 168 ITR 705 (SC) WAS NO LONGER APPLICABLE BY REASON OF THE ADDITION OF THE EXPLANATION TO SECTION 271. THAT EXPLANATION CA STS A BURDEN ON THE ASSESSEE TO SHOW THAT THE ADDITIONAL INCOME THAT HAD NOT BEE N DISCLOSED WAS NOT DUE TO FRAUD OR NEGLECT. IN THIS CASE THE ASSESSEE OFFERED NO EXPLANATION A T ALL EXCEPT TO ASSERT THAT HE DISCLOSED THE INCOME ONLY TO BUY PEACE WITH THE DEP ARTMENT AND WHAT WAS DISCLOSED IN FACT WAS ADDITIONAL INCOME. THE REAS ON FOR NOT HAVING DISCLOSED THE INCOME EARLIER WAS NOT STATED. IN THESE CIRCUMSTANC ES THE ITAT WAS IN ERROR IN SETTING ASIDE THE PENALTY. THE QUESTION IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE IN THE LIGHT OF THE LATER DEC ISION OF THE THREE JUDGE BENCH OF THE SUPREME COURT IN THE CASE OF K.P. MADHUSUDHANAN V. CIT [2001] 251 ITR 99.' 8.6 THE ISSUE WHETHER IMMUNITY IS AVAILABLE TO THE ASSE SSEE IN TERMS OF EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT WHEN ADD ITIONAL INCOME WAS DISCLOSED IN THE RETURN U/S 153A WAS ALSO CONSIDERED BY A CO- ORDINATE BENCH IN THE CASE OF ACIT VS. KIRIT DAHYABHAI PATEL REPORTED IN 121 ITD 159 (TM) WHEREIN IT WAS HELD THAT THE IMMUNITY IS NOT AVAILABLE TO THE ASSESSEE UNDER EXPLN. 5 TO S. 271(1)(C) OF THE ACT . INTER ALIA IT WAS OBSERVED IN THIS DE CISION THAT 10.11 IN THE CASE UNDER CONSIDERATION AS IS EVIDENT FROM THE RELEVANT ASSESSMENT ORDERS NOT ONLY THAT THE DEPARTMENT HAD INCRIMINATING MATERIAL THE ASSESSEES THEMSELVES ADMITTED TO HAVE EARNED UNDISC LOSED INCOME AND UTILIZED THE SAME IN ACQUIRING VARIOUS ASSETS WHICH FORMED THE BASIS OF INCOME DISCLOSED AND ASSESSED. YET THE COMPULSION OF THE CIRCUMSTAN CES THAT UNFOLDED THEMSELVES CONSEQUENT UPON THE SEARCH AND SEIZURE O PERATIONS WOULD ITSELF CONSTITUTE A CONSTRAINT EFFECTIVE ENOUGH TO RENDER THE FILING OF RETURNS BY THEM 'INVOLUNTARY'. THE DISCLOSURE MADE IN THE RETURNS A CTUALLY TANTAMOUNTS TO AN ADMISSION ON THE PART OF THE ASSESSEES HAVING EARNE D CONCEALED INCOME WHICH ACCORDING TO THE ASSESSMENT ORDERS HAS BEEN ADMITTE D BY THE ASSESSEES. THE DISCLOSURE CANNOT EVEN BE TERMED AS ONE MADE IN GOO D FAITH. THE EXPRESSION 'GOOD FAITH' MEANS AN ACT DONE HONESTLY EVEN IF THE SAME BE TAINTED WITH NEGLIGENCE OR MISTAKE. SECTION 2(22) OF THE GENERAL CLAUSES ACT LENDS A SIMILAR MEANING TO THE SAID EXPRESSION. IN ORDER THAT A DIS CLOSURE IS TERMED AS HAVING BEEN MADE IN GOOD FAITH THE SAME MUST BE DEMONSTRA BLY HONEST. A DISCLOSURE WHICH IS MADE UNDER THE COMPULSION OF A POSSIBLE PE NALTY OR OTHER PROCEEDINGS CANNOT BE TERMED HONEST OR ONE MADE IN GOOD FAITH THE UNDERLYING OBJECT OF ANY SUCH DISCLOSURE BEING NOT TO COME CLEAN ON THE SUBJ ECT BUT TO AVOID THE ADVERSE CONSEQUENCES THAT MAY FOLLOW A NON-DISCLOSURE. BLAM EWORTHINESS ATTACHED TO THE ASSESSEES WITH REFERENCE TO THE ORIGINAL RETURN CAN NOT BE AVOIDED BY FILING A FRESH RETURN AFTER CONCEALMENT WAS DETECTED BY THE ASSESS ING AUTHORITY. WHERE THE SURRENDER OF INCOME MADE IN THE SUBSEQUENT RETURN WAS NOT VOLUNTARY BUT WAS AS A RESULT OF DETECTION BY THE ASSESSING AUTHORITY THE FILING OF THE SUBSEQUENT RETURN WOULD NOT BE A MITIGATING CIRCUMSTANCE. IN T HE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION IT IS CLEAR THAT THE ORIGINAL RETURN FILED BY THE ASSESSEES WHEN COMPARED WITH THE RETURNS FILED PUR SUANT TO THE NOTICE ISSUED ITA NOS.2436 & 2437/AHD/09 14 UNDER SECTION 153A OF THE ACT FORMS THE BASIS FOR T HE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDING S UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER THEREFORE HAS RIGHTLY REACHED THE SATISFACTION THAT THE ASSESSEE HAD CONCEALED INCOME IN THE ORIGINAL RETUR N BY WAY OF INDICATING HIS SATISFACTION THAT THE PENALTY PROCEEDINGS ARE PROPO SED TO BE INITIATED. IN THESE CIRCUMSTANCES OF THE CASE AND THE LAW DISCUSSED HER EINABOVE IN OUR CONSIDERED OPINION THESE ASSESSEES DID NOT ACT VOLUNTARILY AND BONAFIDELY IN FILING THE RETURN OFFERING THE ADDITIONAL INCOME. ADMITTEDLY THE RET URN WAS NOT FILED BEFORE SEARCH AND SEIZURE WAS CONDUCTED AND INCRIMINATING DOCUMEN TS WERE RECOVERED SHOWING UNDISCLOSED INCOME OF THE ASSESSEE. EXPLANA TION 5 HAS BEEN ADDED IN SECTION 271(1)(C) OF THE ACT IN ORDER TO MEET SUCH SITUATIONS. AS REGARDS RELIANCE ON THE DECISION IN THE CASE OF SURESH CHANDRA MITTA L (SUPRA) IN THAT CASE ISSUE WAS AS TO WHETHER THE TRIBUNAL WAS JUSTIFIED IN CO MING TO THE CONCLUSION THAT BURDEN OF PROVING CONCEALMENT NOT DISCHARGED AND PE NALTY CANNOT BE LEVIED? HOW THIS DECISION IS RELEVANT IS NOT UNDERSTOOD ES PECIALLY WHEN ADMITTEDLY THESE ASSESSEES DID NOT REFLECT THEIR INCOME FOUND TO HAV E BEEN EARNED IN TERMS OF THE DOCUMENTS SEIZED DURING THE SEARCH IN THEIR ORIGINA L RETURNS OF INCOME AND EVEN ACCEPTED THAT THEY HAD UTILIZED THEIR UNDISCLOSED I NCOME IN HAVING VALUABLE ARTICLES OR THINGS IN THEIR NAME OR IN THE NAME OF THEIR RELATIONS. THUS RELIANCE ON THE SAID DECISION IS TOTALLY MISPLACED. 8.7 WE MAY ALSO POINT OUT THAT IN TERMS OF PRO VISIONS OF SEC. 271(1)(C) OF THE ACT READ WITH EXPLANATION 1 THERETO AND THE JUDICIA L PRONOUNCEMENTS IN THE CASE OF B.A. BALASUBRAMANIAM & BROS. CO. V. CIT [1999] 157 CTR 556(SC) CIT V. B.A. BALASUBRAMANIAM & BROS. [1984] 40 CTR (MAD.)/[ 1985] 152 ITR 529 (MAD.) CIT V. MUSSADILAL RAM BHAROSE [1987] 60 CTR (SC) 34/[ 1987] 165 ITR 14 (SC); TC 50 R. 474; CIT V. K.R. SADAYAPPAN [1990] 8 6 CTR (SC) 120; [1990] 185 ITR 49 (SC); TC 50 R. 795 ADDL. CIT V. JEEVAN LAL SAH [1 994] 117 CTR (SC) 130; [1994] 205 ITR 244 (SC); TC 50 R. 973 AND K.P.MADHUSUDANAN VS. CIT 251 ITR 99(SC) IT IS WELL ESTABLISHED THAT WHE NEVER THERE IS DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME THERE IS INFERENCE OF CONCEALMENT. THE EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT RAIS ES A PRESUMPTION THAT CAN BE REBUTTED BY THE ASSESSEE WITH REFERENCE TO FACTS OF THE CASE. THUS THE ONUS IS ON THE ASSESSEE TO REBUT THE INFERENCE OF CONCEALMENT. THE ABSENCE OF EXPLANATION ITSELF WOULD ATTRACT PENALTY. THE EXPLANATION OFFER ED BY THE ASSESSEE SHOULD NOT BE FALSE. THE ONUS LAID DOWN UPON THE ASSESSEE TO REBUT THE PRESUMPTION RAISED UNDER EXPLANATION 1 WOULD NOT BE DISCHARGED BY ANY FANTASTIC OR FANCIFUL EXPLANATION. IT IS NOT THE LAW THAT ANY AND EVERY E XPLANATION HAS TO BE ACCEPTED . IN THE INSTANT CASE THERE IS NOTHING TO SUGGEST TH AT THESE ASSESSEE DISCHARGED ITA NOS.2436 & 2437/AHD/09 15 THE ONUS LAID DOWN UPON THEM EVEN IN TERMS OF EXPL ANATION 1 TO SECTION 271(1)(C) OF THE ACT. 8.8 IN THE CASE OF CIT V. PRATHI HARDWARE STORES [1993] 203 ITR 641 (ORI.) HON'BLE ORISSA HIGH COURT HAVE LAID DOWN THE FOLLOW ING PROPOSITION OF LAW: I). EXPLANATION TO SECTION 271(1)(C) IS THE RULE O F EVIDENCE. II) . THE INITIAL BURDEN OF REBUTTAL IS ON THE ASSE SSEE BECAUSE THE BASIC FACTS ARE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. SECTI ON 106 OF THE INDIAN EVIDENCE ACT. 1872 GIVES STATUTORY RECOGNITION TO THIS UNIV ERSALLY ACCEPTED RULE OF EVIDENCE. III) THERE IS NO DISCRETION ON THE ASSESSING OFFICE R AS TO WHETHER HE CAN INVOKE THE EXPLANATION OR NOT. 8.9. IN THE CASE OF USHA FERTILISERS VS. CIT 26 9 ITR 591(GUJ) WHILE UPHOLDING THE LEVY OF PENALTY HONBLE JURISDICTIONAL HIGH CO URT OBSERVED THAT .THE SUPREME COURT IN THE CASE OF MUSSADILAL RAM BHAROSE [1987] 165 ITR 14 HAS SPECIFICALLY LAID DOWN THE SCOPE OF THE EXPLAN ATION IN THE FOLLOWING WORDS: 'THE POSITION THEREFORE IN LAW IS CLEAR. IF THE R ETURNED INCOME IS LESS THAN 80 PER CENT OF THE ASSESSED INCOME THE PRESUMPTION IS RA ISED AGAINST THE ASSESSEE THAT THE ASSESSEE IS GUILTY OF FRAUD OR GROSS OR WI LLFUL NEGLECT AS A RESULT OF WHICH HE HAS CONCEALED THE INCOME BUT THIS PRESUMPTION CA N BE REBUTTED. THE REBUTTAL MUST BE ON MATERIALS RELEVANT AND COGENT.' AS TO WHAT COULD BE THE EXPLANATION BY WHICH THE AS SESSEE CAN REBUT THE PRESUMPTION RAISED AGAINST IT IS STATED BY THE APE X COURT IN THE SAME DECISION IN THE FOLLOWING WORDS WHILE CONFIRMING THE VIEW EXPRE SSED BY THE FULL BENCH OF THE PATNA HIGH COURT IN THE CASE OF CIT V. NATHULAL AGA RWALA AND SONS [1985] 153 ITR 292 : 'THE PATNA HIGH COURT EMPHASISED THAT AS TO THE NAT URE OF THE EXPLANATION TO BE RENDERED BY THE ASSESSEE IT WAS PLAIN ON PRINCIPLE THAT IT WAS NOT THE LAW THAT THE MOMENT ANY FANTASTIC OR UNACCEPTABLE EXPLANATION WA S GIVEN THE BURDEN PLACED UPON HIM WOULD BE DISCHARGED AND THE PRESUMPTION RE BUTTED WE AGREE. WE FURTHER AGREE THAT IT IS NOT THE LAW THAT ANY AND E VERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED. IT MUST BE AN ACCEPTABLE EXPLANAT ION ACCEPTABLE TO A FACT- FINDING BODY. ITA NOS.2436 & 2437/AHD/09 16 WE ARE AWARE THAT IT WOULD NOT BE POSSIBLE FOR THE HIGH COURT TO ENTER INTO A FACT- FINDING EXERCISE OR REAPPRECIATE THE EVIDENCE AND W E DO NOT PROPOSE TO DO SO. HOWEVER AT THE SAME TIME IT IS APPARENT THAT THE BURDEN WHICH IS CAST ON THE ASSESSEE REMAINS UNDISCHARGED WHEN ONE APPLIES THE PRINCIPLES LAID DOWN BY THE APEX COURT. AS OBSERVED THE EXPLANATION HAS TO BE ONE WHICH IS NOT FANTASTIC OR UNACCEPTABLE. IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED. .' 9. IN THE LIGHT OF THE DISCUSSION MADE ABOVE E SPECIALLY WHEN THE ASSESSEE MISERABLY FAILED TO DISCHARGE THE ONUS LAID DOWN U PON THEM IN TERMS OF EXPLANATION 1 AND EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US WE HAVE NO HESITA TION IN UPHOLDING THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE PENALTY IMPOSED BY THE AO UNDER S. 271(1)(C) OF THE ACT IN THESE TWO ASSESSMENT YEARS . 10. NO ADDITIONAL GROUND HAVING BEEN RAISED IN T ERMS OF THE RESIDUARY GROUND IN THESE TWO APPEALS ACCORDINGLY THIS GROUND IS ALSO DISMISSED. 11. IN THE RESULT BOTH THESE APPEALS ARE DISMISSE D. ORDER PRONOUNCED IN THE COURT TODAY ON 25-02-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 25 -02-2011 COPY OF THE ORDER FORWARDED TO: 1. DEEP MULTIMEDIA LIMITED KRISHNA COMPOUND NEW KHANDERAO MARKET PRATAPNAGAR BARODA 2. ACIT CENTRAL CIRCLE-2 BARODA 3. CIT CONCERNED 4. CIT(A)-IV AHMEDABAD 5. DR ITAT AHMEDABAD BENCH-B AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD