The ACIT-CC-1, Baroda v. M/s. J.K. Securities Pvt. Ltd., Anand

ITA 2679/AHD/2009 | 2003-2004
Pronouncement Date: 04-11-2011 | Result: Allowed

Appeal Details

RSA Number 267920514 RSA 2009
Assessee PAN AAACJ4979J
Bench Ahmedabad
Appeal Number ITA 2679/AHD/2009
Duration Of Justice 2 year(s) 1 month(s) 5 day(s)
Appellant The ACIT-CC-1, Baroda
Respondent M/s. J.K. Securities Pvt. Ltd., Anand
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 04-11-2011
Date Of Final Hearing 02-11-2011
Next Hearing Date 02-11-2011
Assessment Year 2003-2004
Appeal Filed On 29-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. K. GARODIA AM) ITA NO.2679/AHD/2009 A. Y.: 2003-04 THE A. C. I. T. CENT. CIRCLE I BARODA VS M/S. J. K. SECURITIES PVT. LTD. SARDARGUNJ ANAND PA NO. AAACJ 4979 J (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. MADHUSUDAN SR. DR RESPONDENT BY SHRI ASHEEM THAKKAR AR DATE OF HEARING: 02-11-2011 DATE OF PRONOUNCEMENT: 4-11-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV AHMEDABAD DATED 18-03-2009 FOR ASSESSMENT YEAR 2003-04 ON T HE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS AN D CIRCUMSTANCES OF THE CASE IN DELETING THE PENALTY O F RS.15 31 670/- LEVIED U/S 271 (1) ( C ) OF THE I. T . ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER ON THE ABOVE POINTS. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD . C. I. T. (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES PERUSED AND FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 3. IN THIS CASE PENALTY WAS IMPOSED ON THE BASIS OF RS.41 67 800/- DECLARED AS UNEXPLAINED EXPENDITURE/ INVESTMENT IN THE RETURN OF INCOME FILED AFTER SEARCH U/S 132 OF THE IT ACT CONDUCTED ON 19-01-2006. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT WHERE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE IT ACT HAS BEEN ACCEPTED AND ASSESSED AS SUCH NO PENA LTY CAN BE IMPOSED. THE LEARNED CIT(A) CONSIDERING THE SUBMISS ION OF THE ASSESSEE CANCELLED THE PENALTY AND ALLOWED THE APPE AL OF THE ASSESSEE. THE FINDINGS OF THE LEARNED CIT(A) IN THE APPELLATE ORDER ARE REPRODUCED AS UNDER: 2.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF LD. COUNSEL AS WELL AS GONE THROUGH THE RECORDS. ON PER USAL OF ASSESSMENT ORDER IT HAS BEEN NOTICED THAT IN THE RETURN FILED U/S. 153A THE ASSESSEE HAS DECLARED RS.41 67 800/- AS UNEXPLAINED EXPENDITURE/INVESTMENT IN THE RETURN OF INCOME FILED AFTER SEARCH U/S 132 CONDUCTED ON 19.01.2006 AS AGAINST INCOME SHOWN IN THE ORIGINAL RETURN FILED U/S 139(1). BASED ON SUCH RETURNS THE ASSESS MENT WAS ALSO COMPLETED U/S. 153A (A) R .W. S. 143(3) ACCEPTING THE INCOME RETURNED. THE HONBLE SUPREME COURT IN CASE OF CIT VS. SURESHCHANDRA MITTAL (251 ITR 009) HAS HELD THAT IN THIS CASE REVISED RETURN SHO WING HIGHER INCOME AFTER SEARCH WAS FILED TO PURCHASE PE ACE AND AVOID LITIGATION. THE TRIBUNAL HELD THAT BURDEN OF PROVING CONCEALMENT IS NOT DISCHARGED AND PENALTY CANNOT BE LEVIED. THE APEX COURT UPHELD ABOVE FINDI NGS OF ITAT. HOWEVER THE HONBLE SUPREME COURT IN UNIO N OF INDIA V/S. DHARMENDRA TEXTILES PROCESSORS (2008) HA S ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 3 HELD THAT THE PENALTY U/S 271(1) ( C ) IS CIVIL LIA BILITY AND THE WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDI ENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MA TTER OF PROSECUTION U/S 276C. IT HAS FURTHER BEEN HELD THAT THE MENS REA IS NOT AN ESSENTIAL INGREDIENT FOR IMPOSIN G PENALTY UNDER THIS SECTION. HOWEVER HONBLE SUPREM E COURT HAS NOT HELD THAT IN ALL CASES WHERE ADDITION IS CONFIRMED THE PENALTY SHALL MECHANICALLY FOLLOW. T HE RATIO DECIDENDI OF THE JUDGMENT IS CONFINED TO TREATING T HE WILLFUL CONCEALMENT AS NOT VITAL FOR IMPOSING PENALTY U/S 2 71 (1) ( C ). HOWEVER IT MAY NOT BE CORRECT TO INFER THAT BECAUSE THE LIABILITY IS CIVIL LIABILITY AND SAME LIABILITY BEING A PENAL LIABILITY THOUGH A CIVIL LIABILITY CANNOT CERTAINLY BE A CRIMINAL LIABILITY AS WELL. 2.1 THE ADDITIONAL INCOME OFFERED BY ASSESSEE U/S 153A AFTER THE SEARCH HAVING BEEN ACCEPTED IN ITS E NTIRETY WITHOUT DETAILED DISCUSSION OF THE SEIZED DOCUMENTS . AN ASSESSEES STATUTORY OBLIGATION U/S 139(1) IS TO GI VE CORRECT AND COMPLETE INFORMATION WITH THE RETURN OF INCOME COMPLIED WITH THEN THERE IS NO CONTRAVENTIO N WHICH CAN ATTRACT PENALTY. IN OTHER WORDS THE ASSE SSEE CONCEALED THE INCOME COMES TO AN END WHEN THE CORRESPONDING AMOUNT WAS OFFERED FOR TAXATION WHEN ALL THE NECESSARY PARTICULARS ARE DECLARED BY THE ASSES SEE IN THE RETURN OF INCOME FILED U/S 153A. IN A CASE WHER E ALL THE NECESSARY PARTICULARS ARE DECLARED BY THE ASSES SEE IN THE RETURN OF INCOME IT CANNOT BE SAID THAT THE AS SESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE UNDISCLOSED INCOME. THE A. O. HAS NOT DISCHARGED THE BURDEN TO PROVE THE CONCEALMENT OF INCOME WHICH WAS LEVIED PURELY ON THE BASIS OF ADDITIONAL INCOME DISCLOSED IN THE RETURN FILED U/S 153A BY THE ASSESSEE IN GOOD FAITH . THEREFORE THE APPELLANT HAD MADE DISCLOSURE AFTER THE SEARCH CANNOT BE TREATED AS CONCEALMENT. IT CANNOT BE SAID TO BE THE AMOUNT OF TAX SOUGHT TO BE EVADED BECAUSE THE UNDISCLOSED INCOME WAS DECLARED IN THE RETURN FILED U/S 153A ONLY. KEEPING IN VIEW OF ABOV E FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE CASES ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 4 (SUPRA) THE PENALTY IMPOSED U/S 271 (1) ( C) IS DE LETED. HENCE THE APPEAL IS ALLOWED. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE LEARNED CIT(A) HAS NOT APPRECIATED THE REL EVANT FACTS AND THE LAW WHILE CANCELING THE PENALTY IN THE MATTER. TH E LEARNED DR SUBMITTED THAT ORIGINAL RETURN OF INCOME WAS FILED FOR THE ASSESSMENT YEAR UNDER APPEAL U/S 139(1) OF THE IT ACT ON 27-11 -2003 DECLARING INCOME OF RS.21 83 000/-. SEARCH WAS CONDUCTED IN T HE CASE OF THE ASSESSEE ON 19-01-2006 AND IN RESPONSE THE ASSESSE E FILED RETURN OF INCOME U/S 153A OF THE IT ACT ON 28-07-2006 DECL ARING HIGHER INCOME AT RS.63 50 800/-. THUS THE ASSESSEE HAS DI SCLOSED UNEXPLAINED EXPENDITURE/INVESTMENT OF RS.41 67 800/ - IN THE RETURN FILED U/S 153A OF THE IT ACT. THE LEARNED DR SUBMIT TED THAT IMMUNITY PROVIDED IN EXPLANATION 5 TO SECTION 271 (1) ( C ) OF THE IT ACT IS NOT AVAILABLE TO THE ASSESSEE BECAUSE THE ASSESSEE HAS PAID TAXES AND INTEREST ON UNDISCLOSED INCOME AFTER 7 MONTHS AFTER RECORDING HIS STATEMENT ON 01-08-2006. THE LEARNED DR SUBMITTED T HAT IF NO SEARCH WOULD HAVE BEEN CONDUCTED THE ASSESSEE WOULD NEVER COME FORWARD TO DISCLOSE ADDITIONAL INCOME. THE LEARNED DR SUBMI TTED THAT THE CONCEALMENT HAS TO BE CONSIDERED ON THE DAY OF FILI NG OF THE ORIGINAL RETURN OF INCOME. SINCE THE ASSESSEE HAD NOT DISCLO SED REAL INCOME IN THE ORIGINAL RETURN FILED U/S 139 (1) OF THE IT ACT OFFENCE OF CONCEALMENT IS COMPLETE AGAINST THE ASSESSEE AND SU BMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE BY THE ORDER OF THE ITAT AHMEDABAD B THIRD MEMBER BENCH IN THE CASE O F ACIT VS KIRIT DAHYABHAI PATEL 121 ITD 159 IN WHICH ON IDEN TICAL FACTS ISSUE WAS DECIDED IN FAVOUR OF THE REVENUE. ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 5 5. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSION MADE BEFORE THE LEARNED C IT(A) AND REFERRED TO PB-6 WHICH IS THE LETTER TO THE ACIT A NAND CIRCLE ANAND IN THE SURVEY PROCEEDINGS WHICH WAS CONDUCTED ON 23 -08-2005 WHEREBY THE ASSESSEE WAS REQUIRED TO SUBMIT THE DET AILS OF THE PARTIES WHO HAVE MADE PAYMENT IN CASH TO THE ASSESS EE COMPANY. HE HAS SUBMITTED THAT SINCE THE ASSESSEE COULD NOT LOCATE THOSE PARTIES THEREFORE THE ASSESSEE IN ORDER TO AVOID LONG RUN LITIGATION AND TO BUY PEACE OFFERED THE TOTAL CREDITS OF RS.41 56 021/- FOR ASSESSMENT YEAR 2003-04 FOR TAXATION. HE HAS SUBMI TTED THAT THESE WERE UNEXPLAINED CASH CREDITS AND THE SAME WERE SUR RENDERED FOR TAXATION FOR WANT OF PROOF. HE HAS SUBMITTED THAT S AME IS ALSO REFERRED TO BY THE LEARNED CIT(A) IN HIS LETTER DAT ED 23-11-2005 (PB- 3). HE HAS SUBMITTED THAT THE AO HAS NOT DISCUSSED ANY SEIZED MATERIAL IN THE ASSESSMENT ORDER. THEREFORE PROCEE DINGS U/S 153A OF THE IT ACT COULD NOT BE CONDUCTED AGAINST THE ASSES SEE. HE HAS SUBMITTED THAT EXPLANATION 5 TO SECTION 271(1) (C) OF THE IT ACT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE BECAUSE THE C ONDITIONS OF THAT SECTION ARE NOT SATISFIED. HE HAS RELIED UPON THE O RDERS OF ITAT NAGPUR BENCH IN CASE OF VINOD GOYAL VS ACIT 115 TTJ 559 AND CALCUTA H. C. IN THE CASE OF CIT VS SURESH CHAND BANSAL 329 ITR 330 AN D THE ORDER OF ITAT KOLKATA BENCH IN THE CASE OF DIT VS AVINASH CH. GUPTA 44 SOT 85. HE HAS SUBMITTED THAT NO TIME LIM IT IS PROVIDED FOR PAYMENT OF TAXES IN RESPONSE TO THE OFFER MADE U/S 132 (4) OF THE IT ACT AND SINCE TAXES HAVE BEEN PAID THEREFORE IMMU NITY IS AVAILABLE TO THE ASSESSEE AND RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MAHENDRA C SHAH 2 99 ITR 305 IN WHICH IT WAS HELD THAT WHEN TAX IS PAID BEFORE COMP LETION OF ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 6 ASSESSMENT WOULD BE SUFFICIENT COMPLIANCE. THE LEAR NED COUNSEL FOR THE ASSESSEE THEREFORE SUBMITTED THAT PENALTY WAS RIGHTLY CANCELED BY THE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. IT IS ADMITTED FACT THAT ORIGINAL RETURN O F INCOME WAS FILED U/S 139(1) OF THE IT ACT ON 27-11-2003 FOR THE ASSESSME NT YEAR UNDER APPEAL DECLARING TOTAL INCOME OF RS.21 83 000/-. SE ARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE U/S 132 OF TH E IT ACT ON 19-01-2006 ACCORDINGLY NOTICES U/S 153A OF THE IT ACT WAS ISSUED TO THE ASSESSEE AND THE ASSESSEE IN RESPONSE THERETO F ILED RETURN OF INCOME U/S 153A OF THE IT ACT ON 28-07-2006 DECLARI NG TOTAL INCOME OF RS.63 50 800/-. THUS THE ASSESSEE HAS DISCLOSED UNEXPLAINED EXPENDITURE/INVESTMENT OF RS.41 67 800/- IN THE RET URN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 153A OF THE IT ACT . THE ABOVE FACTS WOULD SHOW THAT IF NO SEARCH WOULD HAVE BEEN TAKEN PLACE THE ASSESSEE WOULD HAVE NEVER DISCLOSED ADDITIONAL INCO ME IN THE RETURN FILED U/S 153A OF THE IT ACT. THE LEARNED DR RELIED UPON THE DECISION OF ITAT AHMEDABAD THIRD MEMBER BENCH IN THE CASE OF KIRIT DAHYABHAI PATEL (SUPRA) IN WHICH IDENTICAL ISSUE WA S DECIDED IN FAVOUR OF THE REVENUE BY HOLDING THAT IMMUNITY U/S 271 (1) ( C ) BELOW EXPLANATION 5 WOULD NOT BE AVAILABLE TO THE ASSESSE E BECAUSE THE BENEFIT IS CONFINED TO THE RETURN FOR THE YEAR IN R ESPECT OF WHICH THE PREVIOUS YEAR IS YET TO END OR EVEN THOUGH ENDED T HE TIME FOR FILING THE RETURN U/S 139(1) OF THE IT ACT IS YET TO EXPIR E. THE AFORESAID DECISION OF THE THIRD MEMBER BENCH IN THE CASE OF K IRIT DAHYABHAI PATEL (SUPRA) WAS FURTHER REFERRED TO AND RELIED UP ON BY SUBSEQUENT ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 7 BENCH OF ITAT AHMEDABAD IN THE GROUP CASES OF SMT. RASHMIBEN N. SHAH VS ACIT ETC. IN IT(SS)A NO.619/AHD/2010 ETC. A ND THE ISSUE WAS DECIDED IN FAVOUR OF THE REVENUE VIDE ORDER DAT ED 19-11-2010. THE FINDINGS IN THIS CASE IN PARA 7 TO 8 ARE REPROD UCED AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS OF THE CASE THESE ASSESSEES WERE SUBJECTED TO SEARCH UNDER SECTION 132 OF THE ACT ON 19-9-2006 AFTER FILING OR IGINAL RETURNS OF THEIR INCOME AS DETAILED IN CHART ABOVE. IN CONSEQUENCE OF SEARCH PROCEEDINGS U/S 153A OF THE ACT WERE INITIATED. THEREAFTER THE RETURNS FILED BY THESE ASSESSEES IN TERMS OF PROVISIONS OF SECTION 153A(1)(A) OF THE ACT WERE ACCEPTED BY THE AO EXCEPT IN THE CASE OF SMT. RASHMIBEN N SHAH WHEREIN AN AMOUNT OF RS.5 630/- WAS ALSO ADDED ON ACCOUNT OF UNEXPLAINED GIFTS. BEFORE THE OFFICER AND THE ID. CIT(A) AND EVEN BEFORE US THESE ASSESSEES PLEADED THAT THE RETURNS U/S 153A WERE FILED ON THE BASIS OF ADVISE OF A CA AND A MISTAKE CREPT IN THE ORIGINAL RETURN ON ACCOUNT OF INCOME FROM TAX SAVINGS BONDS AND KVP AND THUS NO PENALTY COULD BE LEVIED ON SUCH AMOUNTS OFFERED TO TAX. THE LD. AR APPEARING BEFORE US DID NOT CLARIFY AS TO WHETHE R OR NOT THE SAID INCOME WAS DECLARED IN THE STATEMEN TS OF THE ASSESSEES RECORDED DURING THE COURSE OF SEARCH NOR COPIES OF SUCH STATEMENTS HAVE BEEN PLACED BEFORE U S. IT HAS ALSO NOT BEEN CLARIFIED AS TO WHY THE SAID INCO ME WAS NOT REFLECTED IN THEIR ORIGINAL RETURNS. IT IS WELL SETTLED THAT A PENALTY IS IMPOSED ON ACCOUNT OF THE - COMMISSION OF A WRONGFUL ACT AND PLAINLY IT IS THE LAW OPERATING O N THE DATE ON WHICH THE WRONGFUL ACT IS COMMITTED WHICH DETERM INES 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 CONCEALMENT TAKES PLACE WHICH IS RELEVAN T. IN THE CASE UNDER CONSIDERATION THE CONCEALMENT OF TH E PARTICULARS OF INCOME WAS EFFECTED BY THE ASSESSEES WHEN THESE ASSESSEES FILED THEIR ORIGINAL RETURNS O F TOTAL INCOME MENTIONED IN CHART ABOVE [BRIJ MOHAN V. CIT ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 8 [1979] 120 ITR 1 (SC) CIT V. OMKAR SARAN & SONS [1992] 195 ITR 12 (SC) B.N. SHARMA V. CIT [1997] 2 26 ITR 442 (SC)]. THE ASSESSMENT FRAMED UNDER SECTION 153A(1)(B) OF THE ACT AFTER THE SEARCH ACCEPTING T HE INCOME AS DISCLOSED BY THE ASSESSEE IN THESE RETURN S IS OVER AND ABOVE WHAT WAS DISCLOSED IN THE ORIGINAL R ETURN. SINCE THE ASSESSEES HAD TO DISCLOSE THEIR INCOME IN THE ORIGINAL RETURN FILED UNDER SECTION 139 IF THEY HA D FAILED TO DO SO BUT CONCEALED OR FURNISHED INACCURATE PARTICU LARS IN THAT RETURN THE OFFENCE BECOMES COMPLETE. THUS THE OFFENCE OF CONCEALMENT IS COMPLETE AND FINAL WHEN T HE ASSESSEES DID NOT DISCLOSE THE REAL INCOME IN THEIR ORIGINAL RETURN. IF THE PLEA ON BEHALF OF THE ASSES SEES THAT SINCE THERE WAS NO DIFFERENCE IN THE INCOME RETURNE D AFTER THE SEARCH AND THE ASSESSED INCOME IS ACCEPTED AN ANOMALOUS RESULT WILL FOLLOW IN CERTAIN GLARING CAS ES OF CONCEALMENT. LET US TAKE THE FOLLOWING ILLUSTRATION . AN ASSESSEE CONCEALS INCOME IN HIS ORIGINAL RETURN. HE GETS AWAY WITH IT AND THE ORIGINAL ASSESSMENT IS COMPLET ED WITHOUT DETECTING THE CONCEALMENT. SUBSEQUENTLY A NOTICE IS GIVEN FOR ASSESSING THE ESCAPED OR UNDISC LOSED INCOME. IN THESE PROCEEDINGS THE ASSESSEE FILES RE TURN OF INCOME INCLUDING THE ESCAPED OR UNDISCLOSED INCOME. IN THIS SITUATION THE ARGUMENT ON BEHALF OF THE ASSES SEE IF ACCEPTED WILL RESULT IN THE CONCLUSION THAT THE DE PARTMENT WILL BE HELPLESS IN IMPOSING A PENALTY IN SUCH A CA SE. THAT CERTAINLY CANNOT BE THE EFFECT OF THE LEGAL PROVISI ONS. AGAIN AN ASSESSEE WOULD COMPLETELY ESCAPE PENALTY IF HE DOES NOT AT ALL FILE A RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT. THE ARGUMENT COULD B E THAT SINCE A PENALTY PROPOSED ONLY WITH REGARD TO THE RETURN FILED IN THE REASSESSMENT PROCEEDINGS A ND 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 REASSESSMEN T THERE IS NO REASON WHY THE ORIGINAL RETURN SHOULD A LSO NOT FORM THE BASIS FOR DETERMINING THE DATE ON WHICH TH E CONCEALMENT WAS EFFECTED BY THE ASSESSEE. THUS IT IS WELL SETTLED THAT THE CONCEALMENT OF PARTICULARS OF INCOME WAS EFFECTED BY THESE ASSESSEES WHEN THESE ASSESSEE S ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 9 FILED THEIR ORIGINAL RETURNS OF TOTAL INCOME MENTIO NED IN CHART ABOVE. 7.1 IN THE CASE UNDER CONSIDERATION THE ID. CIT(A) UPHELD THE LEVY OF PENALTY SINCE THESE ASSESSEES CONCEALED THE PARTICULARS OF ADDITIONAL INCOME DISC LOSED IN THE RETURN FILED AFTER THE SEARCH BUT WHICH WA S NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME. THE PLE A OF THE ASSESSEES THAT THE SAID ADDITIONAL INCOME WAS NOT DISCLOSED IN THE ORIGINAL RETURN DUE TO INADVERTENT MISTAKE AND SUBSEQUENT ADVISE OF THE CA IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD. AS IS EVIDENT FROM THE CL. (C) OF S. 271(1) OF THE ACT THE WORDS USED ARE 'HAS CONCEALE D THE PARTICULARS 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 THIS IT WOULD BE APPARENT THAT PENAL PROVISION WOULD OPERATE WHEN TH ERE IS A FAILURE TO DISCLOSE FULLY OR TRULY ALL THE PARTIC ULARS. THE WORDS 'PARTICULARS OF INCOME' REFER TO THE FACTS WH ICH LEAD TO THE CORRECT COMPUTATION OF INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. SO WHEN ANY FACT MATER IAL DETERMINATION OF AN ITEM AS INCOME OR MATERIAL TO T HE CORRECT COMPUTATION IS NOT FILED OR THAT WHICH IS F ILED IS NOT ACCURATE THEN THE ASSESSEE WOULD BE LIABLE TO PENA LTY UNDER S. 271(1)(C) OF THE ACT. THE EXPRESSION HA S CONCEALED THE PARTICULARS OF INCOME' AND 'HAS FURNI SHED 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 CIRCUMSTA NCES 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 'CON CEAL' MEANS: TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS CON+ CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVEN T DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF. THE OFFENCE OF ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 10 CONCEALMENT IS 'THUS A DIRECT ATTEMPT TO HIDE AN I TEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF T HE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY 'INACCURATE' HAS BEEN DEFI NED AS: 'NOT ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; INACCURATE STATEMENT COPY OR TRANSCRIP T.' 7.2 IF THE DISCLOSURE OF FACTS IS INCORRECT OR FALSE TO THE KNOWLEDGE OF THE ASSESSEE AND IT IS ESTABLISHED TH EN SUCH DISCLOSURE CANNOT TAKE IT OUT FROM THE PURVIEW OF THE ACT OF CONCEALMENT OF PARTICULARS OR FURNISHING INA CCURATE PARTICULARS THEREOF FOR THE PURPOSE OF LEVY OF PENA LTY. IN THE INSTANT CASE ADMITTEDLY THE AFORESAID ADDITIO NAL INCOME DISCLOSED AFTER THE SEARCH WAS NEVER DISCLOS ED IN THE RETURN FILED ORIGINALLY. THUS THE FACTUM OF CO NCEALMENT IS ESTABLISHED. EVEN THE SUBSEQUENT EXPLANATION OF THESE ASSESSEES THAT INCOME WAS NOT RETURNED ORIGINALLY INADVERTENTLY OR WAS BASED ON SOME BANK CERTIFICATE S IS NOT SUPPORTED BY ANY EVIDENCE WHAT SO EVER. THE PEN ALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IF THE AO IS S ATISFIED IN THE COURSE OF PROCEEDINGS UNDER THIS ACT THAT ANY P ERSON HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. THE ASSESSEE HAD INTER ALIA PLEADED BEFORE THE AO THAT ADDITIONAL INCOME OF RS.6 000/- IN THE CASE OF SMT. RASHMIBEN N SHAH ONLY TO BUY PEACE AND TO AVOID LITIGATION. WHETHER THIS DISCLOSURE CAN BE CONSIDERED VOLUNTARY AND TO PURCH ASE PEACE HAS TO BE EXAMINED. IT HAS BEEN HELD IN TRIBHOVANDAS BHIMJI ZAVERI VS. UNION OF INDIA 203 I TR 363 (SC) AND IN NATWARLAL JOITRAM RAVAI VS. CIT 115 CTR (BOM) 518 THAT DISCLOSURE MADE SUBSEQUENT TO SEIZUR E OF INCRIMINATING MATERIAL WOULD NOT BE VOLUNTARY. THER E IS NO COGENT EXPLANATION GIVEN WHY THE AFORESAID AMOUNT W AS 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 ASSESSEE HAS FAILED TO REBUT THE ON US LAID ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 11 DOWN UPON THESE ASSESSEES IN TERMS OF EXPLANATION 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 AO AND THE CIT(A) ARE CORRECT IN LEVYING PENALTY EVEN THOUGH THEIR R EASONS ARE DIFFERENT. 7.3. AS REGARDS A FEEBLE PLEA ON BEHALF OF THES E ASSESSEES REGARDING APPLICABILITY OF THE EXPLANATIO N 5 TO SECTION 271(1 )(C) OF THE ACT IT IS NOTICED THAT PRIOR TO THE INSERTION OF EXPLANATION 5 TO SECTION 271 BY THE T AXATION LAWS (AMENDMENT) ACT 1984 WITH EFFECT FROM 1-10-19 84 AN ASSESSEE WHO WAS FOUND TO BE THE OWNER OF ANY MONEY BULLION JEWELLERY ETC. RECOVERED DURING TH E COURSE OF SEARCH WAS ENTITLED TO EXPLAIN THAT SUCH ASSETS WERE ACQUIRED BY HIM BY UTILISING HIS INCOME RELATI NG TO ANY PREVIOUS YEAR WHETHER IT ENDED BEFORE THE DATE OF THE SEARCH OR IS TO END ON OR AFTER THE DATE OF THE SEA RCH. BY DOING SO THE ASSESSEE COULD ESCAPE THE LIABILITY TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN ORDER TO PLU G THE LOOPHOLE EXPLANATION 5 WAS INSERTED WITH EFFECT FR OM 1984 AND IS APPLICABLE TO A SITUATION WHERE IN TH E COURSE OF A SEARCH SECTION 132 OF THE ACT THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS T HAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING WHOLLY OR IN PART HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE 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 INC OME IS DECLARED 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 HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME EXCEPT IN CASES WHERE SUCH INCOME IS OR THE TRANSACTIONS RESULTING IN SUCH INCOME 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 DISCLOSED TO THE COMMISSIONER BEFORE THE DATE OF THE SEARCH. THU S ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 12 BY THE DEEMING PROVISIONS OF EXPLANATION 5 THE ASS ESSEE IS FASTENED WITH THE LIABILITY TO PENALTY UNDER SEC TION 271 (1)(C) IN CASE HE EXPLAIN THE ACQUISITION OF ASSETS RECOVERED IN THE COURSE OF SEARCH FROM OUT OF INCO ME OF A PREVIOUS YEAR WHICH HAS ALREADY ENDED BEFORE THE DA TE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH. 7.4 IN THE PRESENT CASE THE RESPECTIVE ASSESS EES FILED THEIR ORIGINAL RETURNS OF INCOME AS INDICATED IN CHART ABOVE BEFORE THE DATE OF SEARCH. ADMITTEDLY INCOME DISCLOSED 'IN THE RETURNS FILED IN PURSUANCE TO NOTICE UNDER SECTION 153A OF THE ACT WAS HOT DECLARED IN THESE RETURNS. THEREAFTER SEARCH UNDER SECTION 132 TOOK PLACE ON 19-9-2006. THERE IS NOTHING TO SUGGEST THAT ADDITIO NAL INCOME DISCLOSED IN THE RETURN FILED AFTER THE SEARCH WAS EVER OFFERED TO TAX IN THEIR -STATEMENTS RECORDS U/S 132(4) OF THE ACT AND AS ALREADY MENTIONED NO SUCH STATEMENTS HAVE EVEN BEEN PLACED BEFORE US. IN THESE CIRCUMSTA NCES THE PLEA ON BEHALF OF THE ASSESSEES FOR BENEFIT PROVIDED IN THE EXCEPTIONS TO EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT IS NOT TENABLE SINCE THERE IS NOTHING TO SUGGE ST THAT THESE ASSESSEES FULFILLED THE CONDITIONS STIPULATED IN THE SAID EXPLANATION. ADMITTEDLY AND AS IS EVIDENT FROM THE RELEVANT ASSESSMENT ORDERS THE ASSESSEES HAVE EARN ED UNDISCLOSED INCOME AND WHERE ASSESSEE HAD ADMITTED TO CONCEALMENT DURING THE COURSE OF ENQUIRY OR ASSESSM ENT PROCEEDINGS AND IN THIS CASE IN THE RETURN OF INCOM E FILED UNDER SECTION 153A(A) OF THE ACT ITSELF NO INDEPEN DENT ENQUIRY TO PROVE CONCEALMENT IS NECESSARY FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS ALRE ADY MENTIONED THE OFFENCE OF CONCEALING THE PARTICULAR S OF INCOME OR FURNISHING IN THE INSTANT CASE HAS TO BE CONSIDERED IN RELATION TO THE ORIGINAL RETURNS WHIC H WERE SUBMITTED BY THESE ASSESSEES AND WHEREIN THIS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME HAS OCCURRED. SO IN DETERMINING THE QUANTUM OF PENALTY THE AMOUNT OF INCOME THE PARTICULARS OF WHICH WERE CONCEALED OR INACCURATE PARTICULARS OF WHICH WERE FURNISHED HAS TO BE ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 13 TAKEN INTO CONSIDERATION [G.C. AGRAWAL V. C/7TJ990] 186 ITR 571 (SC)]. 7.5 IN THE CASE OF CIT V. C. ANANTHAN CHETTIAR [200 5] 273 ITR 401 THE HON'BLE MADRAS HIGH COURT WAS CONSIDERING A SIMILAR ISSUE. IN THAT CASE THE INCO ME-TAX DEPARTMENT IN A SEARCH AND SEIZURE OPERATION CONDUC TED IN THE ASSESSEE'S SHOP AND RESIDENCE SEIZED CASH JEWELLERY AND CERTAIN DOCUMENTS. THEREAFTER THE ASSESSEE FILED A REVISED RETURN FOR THE ASSESSMENT YEAR 1986-87 DISCLOSING ADDITIONAL INCOME WHICH WAS ACCE PTED AND ASSESSMENT WAS MADE ON THE BASIS OF REVISED RET URN. 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 INCOM E WAS DISCLOSED AND REVISED RETURN WAS FILED. THE TRIBUNA L ACCEPTED THIS PLEA OF THE ASSESSEE AND HELD THAT NO PENALTY IN THE CIRCUMSTANCES WAS LEVIABLE BY RELY ING ON THE SUPREME COURT DECISION IN SIR SHADILAL SUGAR & GENERAL MILLS LTD. V. CIT [1987] 168 ITR 705. ON TH E REFERENCE THE MADRAS HIGH COURT SET ASIDE THE ORDE R AND OBSERVED: 'LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT THE ORDER OF THE TRIBUNAL IS NOT IN ACCORDANCE WITH LAW AS I T HAS IGNORED THE EXPLANATION TO SECTION 271(1)(C) OF THE ACT. LEARNED COUNSEL ALSO PLACED RELIANCE ON THE DECISIO N IN THE CASE] OF K.P. MADHUSUDHANAN V. CIT [2001] 251 I TR 99 (SC) WHEREIN IT WAS HELD THAT THE LAW DECLARED BY THE COURT IN THE CASE OF SIR SHADILAL SUGAR & GENERAL M ILLS LTD. V. CIT [1987] 168 ITR 705 (SC) WAS NO LONGER APPLICABLE BY REASON OF THE ADDITION OF THE EXPLANA TION TO SECTION 271. THAT EXPLANATION CASTS A BURDEN ON THE ASSESSEE TO SHOW THAT THE ADDITIONAL INCOME THAT HA D NOT BEEN 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 DEPARTMENT AND WHAT WAS DISCLOSED I N ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 14 FACT WAS ADDITIONAL INCOME. THE REASON FOR NOT HAV ING DISCLOSED THE INCOME EARLIER WAS NOT STATED. IN THE SE CIRCUMSTANCES THE ITAT WAS IN ERROR IN SETTING ASI DE THE PENALTY. THE QUESTION IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE IN THE LIGHT OF T HE LATER DECISION OF THE THREE JUDGE BENCH OF THE SUPR EME COURT IN THE CASE OF K.P. MADHUSUDHANAN V. CIT [200 1] 251 ITR 99.' 7.6 THE ISSUE WHETHER IMMUNITY IS AVAILABLE TO THE ASSESSEE IN (TERMS' OF EXPLANATION 5 TO SEC. 271(1) (C) OF THE ACT WHEN ADDITIONAL INCOME WAS DISCLOSED IN THE RETURN U/S 153A WAS ALSO CONSIDERED BY A CO-ORDINAT E 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 ASSESSEES UNDE R EXPLN. 5(2) TO S. 271 (1)(C) OF THE ACT. INTER ALIA IT WAS OBSERVED IN THE SAID DECISION 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 ASSESSEE S THEMSELVES ADMITTED TO HAVE EARNED UNDISCLOSED INCO ME AND UTILIZED THE SAME IN ACQUIRING VARIOUS ASSETS WHICH FORMED THE BASIS OF INCOME DISCLOSED AND ASSESSED. YET THE COMPULSION OF THE CIRCUMSTANCES THAT UNFOLDED THEMSELVES CONSEQUENT UPON THE SEARCH AND SEIZURE OPERATIONS WOULD ITSELF CONSTITUTE A CONSTRAINT EFF ECTIVE 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 ASSE SSEES HAVING EARNED CONCEALED INCOME WHICH ACCORDING TO THE ASSESSMENT ORDERS HAS BEEN ADMITTED BY THE ASSESSEE S. THE DISCLOSURE CANNOT EVEN BE TERMED AS ONE MADE IN GOOD FAITH. THE EXPRESSION 'GOOD FAITH' MEANS AN ACT DONE HONESTLY EVEN IF THE SAME BE TAINTED WITH NEGL IGENCE OR MISTAKE. SECTION 2(22) OF THE GENERAL CLAUSES AC T LENDS A SIMILAR MEANING TO THE SAID EXPRESSION. IN ORDER THAT A DISCLOSURE IS TERMED AS HAVING BEEN MADE IN GOOD FAITH THE SAME MUST BE DEMONSTRABLY HONEST. A ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 15 DISCLOSURE WHICH IS MADE UNDER CONVULSION OF A POSS IBLE PENALTY OR OTHER PROCEEDINGS CANNOT BE TERMED HONES T OR ONE MADE IN GOOD FAITH THE UNDERLYING OBJECT OF AN Y SUCH DISCLOSURE BEING NOT TO COME CLEAN ON THE SUBJECT B UT TO AVOID THE ADVERSE CONSEQUENCES THAT MAY FOLLOW A NO N- DISCLOSURE. BLAMEWORTHINESS ATTACHED TO THE ASSESSE ES WITH REFERENCE TO THE ORIGINAL RETURN CANNOT BE AVO IDED BY FILING A FRESH RETURN AFTER CONCEALMENT WAS DETECTE D BY THE ASSESSING 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 THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION IT IS CLEAR THAT THE ORIGINAL RETURN FILED BY THE ASSESSEES WHEN COMPARED WITH THE RETURNS FI LED PURSUANT TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT FORMS THE BASIS FOR THE SATISFACTION OF THE ASS ESSING OFFICER INITIATING PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C) OF THE ACT. THE ASSESSING OFFICER THEREF ORE HAS RIGHTLY REACHED THE SATISFACTION THAT THE ASSESSEE HAD CONCEALED INCOME IN THE ORIGINAL RETURN BY WAY OF INDICATING HIS SATISFACTION THAT THE PENALTY PROCEE DINGS ARE PROPOSED TO BE INITIATED. IN THESE CIRCUMSTANCES OF THE CASE AND THE LAW DISCUSSED HEREINABOVE IN OUR CONSIDERED OPINION THESE ASSESSEES DID NOT ACT VOLUNTARILY AND BONAFIDELY IN FILING THE RETURN OF FERING THE ADDITIONAL INCOME. ADMITTEDLY THE RETURN WAS NOT F ILED BEFORE SEARCH AND SEIZURE WAS CONDUCTED AND INCRIMINATING DOCUMENTS WERE RECOVERED SHOWING UNDISCLOSED INCOME OF THE ASSESSEE. EXPLANATION 5 H AS BEEN ADDLED IN SECTION 271(1)(C) OF THE ACT IN ORDE R TO MEET SUCH SITUATIONS. AS REGARDS RELIANCE ON THE DECISION IN THE CASE OF SURESH CHANDRA MITTAL (SUPRA) IN TH AT CASE ISSUE WAS AS TO WHETHER THE TRIBUNAL WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT BURDEN OF PROVING CONCEALMENT NOT DISCHARGED AND PENALTY CANNOT BE LEVIED? HOW THIS DECISION IS RELEVANT IS NOT UNDERS TOOD ESPECIALLY WHEN ADMITTEDLY THESE ASSESSEES DID NOT REFLECT THEIR INCOME FOUND TO HAVE BEEN EARNED IN T ERMS OF THE DOCUMENTS SEIZED DURING THE SEARCH IN THEIR ORI GINAL ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 16 RETURNS OF INCOME AND EVEN ACCEPTED THAT THEY HAD UTILIZED THEIR UNDISCLOSED INCOME IN HAVING VALUABL E ARTICLES OR THINGS IN THEIR NAME OR IN THE NAME OF THEIR RELATIONS. THUS RELIANCE ON THE SAID DECISION IS T OTALLY MISPLACED.' 7.7 EVEN THE DECISION DATED 23-09- 2010 OF THE ITAT RAJKOT DIVISION BENCH IN THE CASE OF SHABBIR ALLAUDDIN LATIWALA VS DCIT IN ITA NOS.1054 TO 1056/RJT/2010 FOR AYS 2001-02 2004-05 AND 2 005- 06 RELIED UPON BY THE LEARNED AR ON BEHALF OF THE ASSESSEE FOLLOWS THE VIEW OF TM IN THE AFORESAID DECISION IN THE FOLLOWING TERMS: '7(B) REGARDING THE FIRST ISSUE OF ELIGIBILITY OR OTHERWISE OF THE BUILT-IN IMMUNITY AS PRESCRIBED IN EXPLANATION-5(2) U/S 271(1)(C) THERE IS CLEARLY NO DOUBT THAT THE TERMS AND CONDITIONS PRESCRIBED IN THE EXPLANATION HAVE NOT BEEN FULFILLED AND THE ASSESSEE CAN NEVER CLAIM SUCH IMMUNITY FROM PENALTY IN SO FAR AS THE COMPLETED YEARS ARE CONCERNED IF EITHER THE RETURNS THEREOF WERE ALREA DY FURNISHED OR THE TIME LIMIT PRESCRIBED U/S 139(1) H AS ALREADY EXPIRED. IT IS NOTICED FROM THE RECORD THAT IN EACH OF THE EIGHT YEARS SUBJECT MATTER OF THIS COMMON ORDER THE ASSESSEES FAILED IN COMPLYING WITH THIS BASIC REQUIREMENT. THEY ARE THUS CLEARLY NOT ELIGIBLE FOR CLAIMING ANY IMMUNITY FROM LEVY OF PENALTY. THE RATIO OF THE JUDGMENT OF HONBLE AHMEDABAD TRIBUNAL IN A THIRD MEMBER CASE OF KIRIT DAHYABHAI PATEL (SUPRA) CLEARLY APPLY IN THIS SITUATION AND RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT THE ASSESSEES ARE NOT COVERED UNDER THE BUILT-IN IMMUNITY FROM LEVY OF PENALTY. ' 7.71 THE CONCLUSIONS DRAWN IN THE OTHER DECISI ON DATED 4.11.2010 IN THE CASE OF BANKIM CHA NDULAL MODI IN ITA NO.3431/AHDF2007RELIED UPON ON BE HALF OF THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE DESPITE SPECIFIC REQUEST MADE T HE ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 17 LEARNED AR DID NOT DEMONSTRATE BEFORE US AS TO HOW THE DECISION IS RELEVANT TO THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE. 7.8 WE MAY ALSO POINT OUT THAT IN TERMS OF PROVIS IONS OF SEC. 271 (1)(C) OF THE ACT READ WITH EXPLANATION 1 THERETO AND THE JUDICIAL 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] 86 CTR (SC) 120; [1990] 185 ITR 49 (SC); TC 50 R. 795 ADDL. CIT V. JEEVAN LAL SAH [1994] 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 WHENEVER THERE IS DIFFERENCE BETWE EN THE RETURNED AND ASSESSED INCOME THERE IS INFERENCE OF CONCEALMENT. THE EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT RAISES A PRESUMPTION THAT CAN BE REBUTTED BY TH E 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 WOUL D ATTRACT PENALTY. THE EXPLANATION OFFERED BY THE ASS ESSEE 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 FANTAS TIC OR FANCIFUL EXPLANATION. IT IS NOT THE LAW THAT ANY AN D EVERY EXPLANATION HAS TO BE ACCEPTED. IN THE INSTANT CASE THERE IS NOTHING TO SUGGEST THAT THESE ASSESSEE DISCHARGE D THE ONUS LAID DOWN UPON THEM EVEN IN TERMS OF EXPLANATI ON 1 TO SECTION 271(1)(C) OF THE ACT. 7.9 IN THE CASE OF CIT V. PRATHI HARDWARE STOR ES [1993] 203 ITR 641 (ORI.) HON'B1E ORRISSA HIGH COURT HAVE LAID DOWN THE FOLLOWING PROPOSITION OF LAW: I). EXPLANATION TO SECTION 271(1)(C) IS THE RULE OF EVIDENCE. ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 18 II). THE INITIAL BURDEN OF REBUTTAL IS ON THE ASSES SEE BECAUSE THE BASIC FACTS ARE WITHIN THE SPECIAL KNOW LEDGE OF THE ASSESSEE. SECTION 106 OF THE INDIAN EVIDENCE ACT 1872 GIVES STATUTORY RECOGNITION TO THIS UNIVERSALL Y ACCEPTED RULE OF EVIDENCE. III) THERE IS NO DISCRETION ON THE ASSESSING OFFIC ER AS TO WHETHER HE CAN INVOKE THE EXPLANATION OR NOT. 7.10 IN THE CASE OF USHA FERTILISERS VS. CIT 269 ITR 591 (GUJ) WHILE UPHOLDING THE LEVY OF PENALTY HON'BLE JURISDICTIONAL HIGH COURT OBSERVED THAT '.......THE SUPREME COURT IN THE CASE OF MUSSADILAL RAM BHAROSE [1987] 165 ITR 14 HAS SPECIFICALLY LAID DOWN THE SCOPE OF THE EXPLANATION 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 IN COME THE PRESUMPTION IS RAISED AGAINST THE ASSESSEE THAT THE ASSESSEE IS GUILTY OF FRAUD OR GROSS OR WILLFUL NEG LECT AS A RESULT OF WHICH HE HAS CONCEALED THE INCOME BUT THI S PRESUMPTION CAN BE REBUTTED. THE REBUTTAL MUST BE O N MATERIALS RELEVANT AND COGENT.' AS TO WHAT COULD BE THE EXPLANATION BY WHICH THE ASSESSEE CAN REBUT THE PRESUMPTION RAISED AGAINST I T IS STATED BY THE APEX COURT IN THE SAME DECISION IN TH E FOLLOWING WORDS WHILE CONFIRMING THE VIEW EXPRESSED BY THE FULL BENCH OF THE PATNA HIGH COURT IN THE CASE OF CIT V. NATHULAL AGARWALA 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 WAS GIVEN THE BURDEN PLACED UPON HIM WOULD BE DISCHARGED AND THE PRESUMPTION REBUTTED WE AGREE. WE FURTHER AGREE THA T IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION BY THE ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 19 ASSESSEE MUST BE ACCEPTED. IT MUST BE AN ACCEPTABLE EXPLANATION ACCEPTABLE TO A FACT-FINDING BODY. WE ARE AWARE THAT IT WOULD NOT BE POSSIBLE FOR THE HIGH COURT TO ENTER INTO A FACT-FINDING EXERCISE OR REA PPRECIATE THE EVIDENCE AND WE DO NOT PROPOSE TO DO SO. HOWEVE R AT THE SAME TIME IT IS APPARENT THAT THE BURDEN WH ICH IS CAST ON THE ASSESSEE RERNAINS UNDISCHARGED WHEN ONE APPLIES THE PRINCIPLES LAID DOWN BY THE APEX COURT. AS OBSERVED THE EXPLANATION HAS TO BE ONE WHICH IS NO T FANTASTIC OR UNACCEPTABLE. IT IS NOT THE LAW THAT A NY AND EVERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED. ......................' 8. IN THE LIGHT OF THE DISCUSSION MADE ABOVE ESPEC IALLY WHEN THE ASSESSEE MISERABLY FAILED TO DISCHARGE THE ONUS LAID DOWN UPON THEM IN TERMS OF EXPLANATION 1 AND EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT BEFORE T HE LOWER AUTHORITIES AND EVEN BEFORE US WE HAVE NO HESITAT ION IN UPHOLDING THE ORDER OF THE ID. CIT(A) IN CONFIRMING THE PENALTY IMPOSED BY THE AO UNDER S. 271(1)(C) OF THE ACT. 7. AS IS APPARENT FROM THE FACTS OF THE CASE THE A SSESSEE WAS SUBJECTED TO SEARCH U/S 132 OF THE IT ACT ON 19-01- 2006 AFTER FILING OF THE ORIGINAL RETURN OF INCOME AS NOTED ABOVE. THE A SSESSEE FILED RETURN OF INCOME IN TERMS OF PROVISIONS OF SECTION 153A OF THE IT ACT WHICH WAS ACCEPTED BY THE AO AS IT IS. THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT CLARIFY AS TO WHETHER OR NOT THE SAID INCOME WAS DECLARED IN THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH NOR THE COPIES OF SUCH STATEMENT HAVE BEE N PLACED BEFORE US. IT HAS ALSO NOT BEEN CLARIFIED AS TO WHY THE SA ID INCOME WAS NOT REFLECTED IN THE ORIGINAL RETURN OF INCOME FILED PR IOR TO THE SEARCH. IT IS WELL SETTLED THAT IF PENALTY IS IMPOSED ON ACCOUNT OF COMMISSION OF WRONGFUL ACT AND PLAINLY IT IS THE LAW OPERATING ON THE DATE ON WHICH ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 20 THE WRONGFUL ACT IS COMMITTED WHICH DETERMINES THE PENALTY. IN THE CASE OF PENALTY THE CONCEALMENT OF INCOME WAS EFFE CTED BY THE ASSESSEE WHEN THE ASSESSEE FILED THEIR ORIGINAL RET URN OF INCOME MENTIONED ABOVE. THE ASSESSMENT FRAMED U/S 153A OF THE IT ACT AFTER THE SEARCH ACCEPTING THE INCOME AS DISCLOSED BY THE ASSESSEE IN THE RETURN WAS OVER AND ABOVE WHAT WAS DISCLOSED IN THE ORIGINAL RETURN OF INCOME. SINCE THE ASSESSEE HAD TO DISCLOS E ITS REAL TOTAL INCOME IN THE ORIGINAL RETURN FILED U/S 139 OF THE IT ACT IF IT HAD FAILED TO DO SO BUT CONCEALED OR FURNISHED INACCURATE PAR TICULARS OF INCOME IN THAT RETURN THE OFFENCE BECOMES COMPLETE. THUS THE OFFENCE OF CONCEALMENT IS COMPLETE AND FINAL WHEN THE ASSESSEE DID NOT DISCLOSE REAL INCOME IN THEIR ORIGINAL RETURN. IN T HE CASE OF THE ASSESSEE THE ADDITIONAL INCOME OFFERED IN RESPONSE TO THE NOTICE U/S 153A OF THE IT ACT IN A SUM OF RS.41 67 800/- IS AD MITTEDLY NOT DISCLOSED IN THE RETURN OF INCOME ORIGINALLY FILED U/S 139(1) OF THE IT ACT. EVEN THE LETTER OF THE ASSESSEE (PB-6) REGAR DING SOME SURVEY PROCEEDINGS U/S 133A INITIATED ON 23-08-2005 WOULD NOT BE RELEVANT TO MAKE A CASE FOR THE ASSESSEE BECAUSE WHAT WAS FO UND DURING THE COURSE OF SURVEY AFTER FILING OF THE ORIGINAL RETUR N OF INCOME WAS ALSO INCRIMINATING IN NATURE AGAINST THE ASSESSEE AND WO ULD PROVE THE CASE OF THE REVENUE THAT THE ASSESSEE CONCEALED PAR TICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. WE RELY UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF LMP PRECISION ENGG. CO. LTD. VS DCIT 330 ITR 93 IN WHI CH IT WAS HELD AS UNDER: ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 21 HELD THAT IT WAS ONLY AFTER THE STATEMENT OF THE CHAIRMAN AND MANAGING DIRECTOR WAS RECORDED BY THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION) MUMBAI THAT THE FIRST DISCLOSURE DATED OCTOBER 20 1988 RS.54 71 463 WAS MADE ACCOMPANIED BY ANOTHER DISCLOSURE OF RS.54 LAKHS IN A ROUND FIGURE BEING DIVIDED INTO THREE SEGMENTS OF RS.18 LAKHS EACH FOR ASSESSMENT YEARS 1986-87 1987-88 AND 19880-89. THE REVISED RETURN DECLARING A SUM OF RS.78 56 613 CAME ABOUOT AS A CONSEQUENCE OF FOLLOW-UP PROCEEDINGS UNDERTAKEN BY THE DEPUTY DIRECTOR OF INCOME-TAX IN RELATION TO THE OTHER THR EE SUPPLIERS VIZ. SC NB AND NPST. THEREFORE THE ASSESSEE COULD NOT BE STATED TO HAVE VOLUNTARILY COME FORWARD TO DISCLOSE INCOME WHICH HAD UNINTENTIONALLY BEEN OMITTED FROM THE ORIGINAL RETU RN OF INCOME. THE IMPOSITION OF PENALTY WAS VALID. IN THIS CASE ASSESSMENT PROCEEDINGS U/S 153A OF TH E IT ACT HAVE REACHED FINALITY WITHOUT FURTHER CHALLENGE ABOUT AP PLICABILITY OF THE PROVISIONS OF SECTION 153A OF THE IT ACT. THEREFORE SUBMISSION OF THE ASSESSEE THAT ORIGINALLY UNDISCLOSED INCOME WAS DET ECTED IN SURVEY WOULD NOT BE RELEVANT AND THE ASSESSEE CANNOT BE PE RMITTED TO ASSAIL THE VALIDITY OF THE ASSESSMENT ORDER U/S 153A OF TH E IT ACT IN THE PENALTY PROCEEDINGS. THE FINDINGS RECORDED IN THE A SSESSMENT ORDER ARE RELEVANT AND HAVE A PROBATIVE VALUE. 7.1 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS HARPRASAD AND COMPANY LTD. 328 ITR 53 HELD AS UNDER: HELD THAT THE REASONS GIVEN BY THE TRIBUNAL FOR QUASHING THE PENALTY PROCEEDINGS WERE IRRELEVANT N OT GERMANE TO THE ISSUE AND THE TRIBUNAL HAD LOST SIGH T OF ASPECTS WHICH HAD BEEN CONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNAL HAD FAILED ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 22 TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COMMISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE OF R HAD RENDERED ANY SERVICES BUT BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER CENT OF THE COMMISSION BY R OUT OF THE 3 PER CENT. RECEIVED BY HER. AS FAR AS COMMISSION TO R WAS CONCERNED IT WAS ACCEPT BY THE TRIBUNAL IN QUANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICES AT ALL. THE ASSESSEE HAD FAILED TO OFFER ANY EXPLANATI ON IN RESPECT OF THE ADDITION OF RS.1 83 078 AND IT CO ULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF BY VIRTUE OF EXPLANATION. THE TRIBUNAL WAS NOT JUSTIFI ED IN DELETING THE PENALTY IMPOSED BY THE INCOME-TAX OFFICER UNDER SECTION 271 (1) ( C ) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES IN THE PENALT Y PROCEEDINGS HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BUT ON THE BA SIS THEREOF THE CLAIM WHICH IS MADE IS EX FACIE BOGUS IT MAY STILL ATTRACT PENALTY PROVISION. THE EXPLANATIONS APPENDED TO SECTION 271 (1) (C) OF THE ACT ENTIRELY INDICATE THE ELEMENT OF STR ICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GI VING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJ ECT BEHIND ENACTMENT OF SECTION 271 (1) (C) READ WITH T HE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE . THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILI TY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MA TTER OF PROSECUTION UNDER SECTION 276C OF THE ACT. ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 23 7.2 THE HONBLE JAMMU & KASHMIR HIGH COURT IN THE C ASE OF CWT VS JAWAHAR LAL MEHRA 246 ITR 603 HELD THAT THE VALIDITY OF THE ASSESSMENT ORDER WHICH HAD ATTAINED FINALITY CANNOT BE CHALLENGED IN APPEAL AGAINST THE ORDER OF PENALTY. 8. EXPLANATION 5 TO SECTION 271 (1) (C) OF THE IT A CT REFERRED TO SEVERAL ITEMS FOUND DURING THE COURSE OF SEARCH WHI CH INCLUDE OTHER VALUABLE ARTICLES OR THINGS. FOR CLAIMING IMMUNITY UNDER PROVISO TO EXPLANATION 5 TO SECTION 271 (1) ( C ) OF THE IT AC T THE ASSESSEE SHALL HAVE TO PROVE ITS CONDITIONS AND THAT SUCH INCOME O R TRANSACTIONS RESULTING IN SUCH INCOME ARE RECORDED IN THE BOOKS OF ACCOUNTS IF MAINTAINED BY THE ASSESSEE BEFORE THE DATE OF SEARC H. HOWEVER THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE OR MATERIAL TO SHOW IF SAME ADDITIONAL INCOME WAS RECORDED IN THE BOOKS OF ACCO UNTS MAINTAINED IN THE REGULAR COURSE OF BUSINESS PRIOR TO THE SEAR CH. IN THESE CIRCUMSTANCES THE PLEA ON BEHALF OF THE ASSESSEE F OR BENEFIT PROVIDED IN EXCEPTION TO EXPLANATION 5 TO SECTION 2 71 (1) ( C ) IS NOT TENABLE SINCE THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE FULFILLED THE CONDITIONS STIPULATED IN EXPLANATION 5 TO SECTI ON 271 (1) ( C ) OF THE IT ACT. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS EARNED UNDISCLOSED INCOME AND THE ASSESSEE ADMITTED THE SA ME DURING THE COURSE OF THE ENQUIRY OR THE ASSESSMENT PROCEEDINGS AND NOTHING WAS BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE DI D NOT CONCEAL PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. SINCE UNDISCLOSED INCOME OFFERED IN THE RETURN U/S 153A O F THE IT ACT WAS NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME THE REFORE THE OFFENCE OF CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 24 PARTICULARS OF INCOME SHALL HAVE TO BE CONSIDERED A GAINST THE ASSESSEE IN RELATION TO THE ORIGINAL RETURN OF INCO ME. THE LEARNED CIT(A) WHILE CANCELING THE PENALTY RELIED UPON THE DECISION IN THE CASE OF SURESH CHANDRA MITTAL (SUPRA) WHICH WAS ALS O CONSIDERED BY THE TRIBUNAL IN THE CASE OF KIRIT DAHYABHAI PATEL ( SUPRA) AND CAME TO THE FINDING THAT RELIANCE ON THE SAID DECISION IS T OTALLY MISPLACED. THE ASSESSEE HAS ALSO NOT FURNISHED ANY EVIDENCE THAT H IS PLEA TO SURRENDER ADDITIONAL INCOME WAS ACCEPTED BY THE AO FOR BUYING PEACE. MERE STATEMENT BY THE ASSESSEE WHICH IS NOT CONSIDERED OR ACCEPTED BY THE REVENUE AUTHORITIES WOULD NOT BE BI NDING UPON THE REVENUE DEPARTMENT. THE LEARNED COUNSEL FOR THE AS SESSEE RELIED UPON THE DECISION OF ITAT NAGPUR BENCH IN THE CASE OF VINOD GOYAL (SUPRA) IN WHICH IT WAS HELD THAT EXPLANATION 5 TO SECTION 271 (1) (C) OF THE IT ACT CANNOT BE EXTENDED WHERE THE ASSE SSEE IS FOUND TO BE OWNER OF ANY MONEY OR VALUABLES AS A RESULT O F REQUISITION MADE U/S 132A OF THE IT ACT.. IN THIS CASE NO SEARCH U/S 132 OF THE IT ACT HAS BEEN CONDUCTED IN THE CASE OF THE ASSESS EE. IN THE CASE OF SURESH CHAND BANSAL (SUPRA) DISCLOSURE OF ADDITIONA L INCOME WAS MADE AFTER SEARCH IN REVISED RETURN U/S 153A OF THE IT ACT AND NO ATTEMPT WAS MADE TO OBTAIN EXPLANATION OF THE ASSES SEE. IN THE CASE OF DCIT VS AVINASH CH. GUPTA (SUPRA) THE RELEVANT D ECISIONS CONSIDERED IN THE CASE OF SMT. RASHMIBEN N. SHAH (S UPRA) HAVE NOT BEEN TAKEN INTO CONSIDERATION. IN THE CASE OF MAHEN DRA CH. SHAH (SUPRA) THE RETURN OF INCOME WAS NOT DUE FOR THE AS SESSMENT YEAR UNDER APPEAL WHEN SEARCH TOOK PLACE AND THE ASSESSE E FULFILLED THE CONDITIONS OF EXPLANATION 5 TO SECTION 271 (1) ( C ) OF THE IT ACT. THEREFORE THIS CASE IS CLEARLY DISTINGUISHABLE FRO M THE FACTS OF THE ITA NO.2679/AHD/2009 ACIT CENTRAL CIRCLE-2 BARODA VS M/S. J. K. SECURI TIES PVT. LTD. 25 CASE OF THE ASSESSEE. THUS THE DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE. CONSIDERING THE FACTS AND CIRCUMSTANCES A ND DISCUSSIONS NOTED ABOVE WE ARE OF THE VIEW THAT LEARNED CIT(A) WAS NOT JUSTIFIED IN CANCELING THE PENALTY. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE ORDER OF THE AO. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD