DCIT, Jaipur v. NIRMAL KUMAR AGARWAL, Jaipur

ITA 479/JPR/2014 | 2010-2011
Pronouncement Date: 07-10-2016 | Result: Dismissed

Appeal Details

RSA Number 47923114 RSA 2014
Assessee PAN ABIPA1098B
Bench Jaipur
Appeal Number ITA 479/JPR/2014
Duration Of Justice 2 year(s) 3 month(s) 12 day(s)
Appellant DCIT, Jaipur
Respondent NIRMAL KUMAR AGARWAL, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 07-10-2016
Assessment Year 2010-2011
Appeal Filed On 25-06-2014
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHE S JAIPUR JH HKKXPUN] YS[KK LNL; OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND AM AND SHRI KUL BHARAT JM VK;DJ VIHY LA-@ ITA NO. 479/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 JAIPUR. CUKE VS. SHRI NIRMAL KUMAR AGARWAL 304 3 RD FLOOR RIDHI SIDHI APARTMENT AHINSHA CIRCLE C-SCHEME JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABIPA 1098 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KALIKA SINGH (CIT) & SHRI R.A. VERMA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI O.P. AGARWAL (CA) & SHRI MANISH AGARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.09.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 07/10/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT JM. THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER OF LD. CIT (APPEALS) CENTRAL JAIPUR DATED 08.04.2014 PERTAIN ING TO A.Y. 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT (A) CENTRAL JAIPUR HAS ERRED IN DELETING THE PENALTY OF RS. 1 81 07 047/- LEVIED U/S 271AAA OF THE I.T. ACT; 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) CENTRAL JAIPUR HAS ERRED IN DELETING PENALTY OF RS. 1 81 07 047/- EVEN ON THE ACCOUNT F UNDISCLOSED CAS H FOUND DURING SEARCH FOR WHICH THE ASSESSEE COULD NOT SUBSTANTIAT E THE MANNER OF EARNING SUCH INCOME. 2 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL 2. THE ONLY EFFECTIVE GROUND IN THE APPEAL IS WITH REGARD TO DELETION OF PENALTY OF RS. 1 81 07 047/- LEVIED UNDER SECTION 271AAA OF TH E INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE FACTS AS NARRATED BY THE LD. CIT (A) IN PARA 3 OF HIS ORDER ARE AS UNDER :- 3. THE BRIEF FACTS OF THE CASE ARE THAT SEARCH AN D SEIZURE OPERATIONS WERE CARRIED OUT ON 24.08.2009 AT THE BU SINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE GROUP. INCRIMI NATING EVIDENCE WAS GATHERED DURING THE SEARCH OPERATIONS. A RETURN OF INCOME WAS FILED 12.05.2010 DECLARING INCOME AT RS. 10 16 16 517/-. THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 23.11.2011 AT TOTAL INC OME OF RS. 25 40 53 070/-. THE PENALTY PROCEEDINGS U/S 271AAA WERE INITIATED AT THE TIME OF COMPLETION OF ASSESSMENT PROCEEDINGS FO R LEVY OF PENALTY ON UNDISCLOSED INCOME AND SHOW CAUSE WAS ISSUED ON 23.11.2011 AND THE PENALTY OF RS. 1 81 07 047/- WAS IMPOSED BY THE AO VIDE ORDER DATED 11.12.2013. THE ASSESSEE AGGRIEVED BY THE ORDER OF AO PREFERRE D AN APPEAL BEFORE LD. CIT (A) WHO AFTER CONSIDERING THE SUBMISSIONS DELETED THE P ENALTY. 3. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. D/R VEHEMENTLY ARGUED THAT LD. CIT (A) W AS NOT JUSTIFIED IN DELETING THE PENALTY. HE SUBMITTED THAT THE ASSESSEE HAS FAI LED TO SUBSTANTIATE THE MANNER IN WHICH UNDISCLOSED INCOME WAS EARNED. IN THE ABSENC E OF THE SAME NO IMMUNITY WAS AVAILABLE UNDER SECTION 271AAA OF THE ACT. 4.1. ON THE CONTRARY LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. 4.2. HOWEVER THE LD. D/R IN REJOINDER OPPOSED THE WRITTEN SUBMISSIONS. 3 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL 4.3. WE HAVE HEARD RIVAL CONTENTIONS PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE SUBMISSION OF THE ASSESSEE AS SUBMITTED IN THE WRITTEN SUBMISSION ARE AS UNDER :- SOLE GRIEVANCE OF REVENUE IN THIS APPEAL IS AGAINST THE DELETION OF PENALTY OF RS. 1 81 07 047/- LEVIED BY LD. AO U/S 271AAA OF THE IN COME TAX ACT 1961. AS SUBMITTED ABOVE ENTIRE ADDITIONS OF RS. 8 21 20 759/- [THOUGH THE PENALTY WAS LEVIED ON TOTAL ADDITIONS OF RS. 18 10 70 473/-] MA DE BY LD. AO AND AS UPHELD BY LD. CIT(A) STOOD DELETED BY THIS HONBLE TRIBUNAL THUS THERE REMAINED NO ADDITION ON WHICH THE PENALTY COULD BE LEVIED THEREFORE THERE REMAINS NO DISPUTE REGARDING THE PENALTY LEVIED QUA THE ADDITIONS OF RS. 8 21 20 759/- [BEING THE ADDIT IONS UPHOLD BY LD. CIT(A) AND DELETED BY HONBLE BENCH] HAD NO LEGS TO STAND AND THUS THE P ENALTY U/S 271AAA LEVIED ON THE SAME HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A). REGARDING PENALTY U/S 271AAA LEVIED ON THE ADDITION AL UNDISCLOSED INCOME OF RS. 10 00 35 045/- DECLARED BY ASSESSEE IN HIS RETURN O F INCOME FILED IN DUE COURSE [ON WHICH DUE TAXES WERE PAID] IT IS SUBMITTED AS UNDER: THAT FROM A PERUSAL OF THE STATEMENTS OF THE ASSESS EE RECORDED U/S 132(4) OF INCOME TAX ACT 1961 DURING THE COURSE OF SEARCH IT WOULD TRANSPIRE THAT THE ASSESSEE IN REPLY TO QUESTION NO. 19 (APB 133) HAS ADMITTED THE ADDITIONAL INCOME AND ALSO EXPLAIN ED THE MODE AND MANNER BY STATING THAT THIS INCOME HAS BEEN DER IVED FROM HIS BUSINESS OF FINANCING AND BROKERAGE. THUS THE MANNER IN WHICH THE UNDISCLOSE D INCOME WAS DERIVED HAS DULY BEEN SUBSTANTIATED AND AFTER INCLUDING THE SAME IN THE R ETURN FILED THEREAFTER HAD PAID THE TAX THEREON ALONGWITH INTEREST. THEREFORE PENALTY U/S 271AAA COULD NOT HAVE BEEN LEVIED AT ALL BE IMPOSED IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. THE EXPLANATIONS FURNISHED DURING THE ASSESSMENT PR OCEEDINGS WITH REGARD TO THE MODE AND MANNER OF EARNING THE SAID INCOME HAS BEEN ENDORSED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH JAIPUR VIDE THEIR DECISION IN ITA NO. 829/JP/2013 (ASSESSEES APPEAL) AND 847/JP/2013 (DEPARTMENTAL A PPEAL) DATED 26.02.2014 AT PAGE 34 IN PARA 11.4 BY OBSERVING AS UNDER (APB-111) : 4 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL AFTER CONSIDERING CAREFULLY ABOVE EXPLANATION AND F URTHER CONSIDERING THAT THE ASSESSEE HAS DULY SHOWN THE CASH FOUND AND ADMITTED AS HIS BUSINESS INCOME FROM HIS REGULAR BUSINESS ACTIVITIES AND FURTHER HA VING PAID TAX AND EXPLAINING THE MODE AND MANNER OF ACQUISITION OF SU CH INCOME IN HIS RETURN OF INCOME AND DURING THE ASSESSMENT PROCEEDINGS TH E ENTIRE ADDITION MADE ON THE BASIS OF APPRECIATION OF THESE DOCUMENTS WHI CH ARE MAINLY ON PRESUMPTION AND ASSUMPTIONS WITHOUT THERE BEING ANY CORROBORATIVE MATERIAL ON RECORD DESERVES TO BE DELETED ESPECIAL LY WHEN THE AO HAS NEITHER APPRECIATED THE STATEMENTS OF THE ASSESSEE PROPERLY AS WELL AS ADDITIONAL INCOME OFFERED BY HIM. ACCORDINGLY WE ARE LEFT WITH NO OPTION BUT TO DELETE THIS ENTIRE ADDITION WHICH HAS BEEN FOUND TO HAVE BEEN MADE BASED ON NO CORROBORATIVE MATERIAL THEREBY WE ALLOW GROUN D NO. 2 TO 2.2OF THE ASSESSEE AND DISMISS GROUND NO. 1 OF THE REVENUES APPEAL. BASED ON THESE FACTS THE LD. CIT(A) HAS DELETED THE PENALTY BY HOLDING AS UNDER: 1. THAT THE PENALTY LEVIED ON THE ADDITIONS TO THE TU NE OF RS. 8 21 20 759/- WHICH WERE DELETED BY THIS HONBLE TRIBUNAL THUS HAD NO LEGS TO STAND AND WAS LIABLE TO BE DELETED. 2. THAT NO PENALTY QUA THE UNDISCLOSED INCOME SURREND ERED BY ASSESSEE COULD HAVE BEEN LEVIED IN AS MUCH AS THE PROTECTION PROVIDED FOR UN DER SUB-SECTION (2) OF SECTION 271AAA WAS AVAILABLE TO ASSESSEE AND THEREFORE THE LD. AO WAS NOT JUSTIFIED IN LEVYING THE IMPUGNED PENALTY. 3. THAT THE ASSESSEE HAS MET OUT ALL THE CONDITIONS P RESCRIBED UNDER SUB-SECTION (2) OF SECTION 271AAA. 4. THAT THE ASSESSEE HAD DULY DECLARED THE UNDISCLOSE D INCOME IN THE STATEMENTS RECORDED U/S 132(4) AND HAD SUBSTANTIATED THE MODE AND MANNER OF DERIVING SUCH UNDISCLOSED INCOME AND HAS ALSO PAID THE DUE TAX THEREON AND THE SAME WAS ASSESSED AS SUCH. THUS THERE WAS NO OCCASION FOR THE LD. AO TO LEVY PENALTY U/S 271A AA OF THE ACT. NOW ON MERITS AT THE OUTSET IT IS SUBMITTED THAT THE LD. AO HAD LEVIED THE PENALTY IN A MOST CASUAL MANNER MADE. THE LEVY OF PENALTY B EING AN INDEPENDENT PROCEEDING IN NATURE THE LAW DOES NOT PERMIT THE AO TO ACT IN A PER-FUNCTORY MANNER ON THE OTHER HAND A SERIOUS DUTY IS CASTED UPON THE AO AND IT HAS BEEN MADE INCUMBENT UPON THE AUTHORITY LEVYING PENALTY TO PROPERLY APPRECIATE THE BASIS FO R LEVYING PENALTY AND NEED BE TO CALL AND COLLECT SPECIFIC MATERIAL / INFORMATION FROM THE AS SESSEE BEFORE ARRIVING AT A DECISION TO LEVY THE PENALTY MORE PARTICULARLY WHEN ALLEGATIONS MADE FOR LEVY OF PENALTY HAD ALREADY BEEN 5 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL EXPLAINED DURING THE ASSESSMENT PROCEEDINGS AND WER E ACCEPTED WITHOUT MAKING ANY ADVERSE REMARKS IN ASSESSMENT ORDER WHEN THE PENALT Y PROCEEDINGS WERE INITIATED. IT IS PERTINENT HERE TO MAKE A REFERENCE TO CLAUSE (2) OF SECTION 271AAA FOR WHICH THE PROVISIONS AS CONTAINED IN SECTION 271AAA ARE R EPRODUCED HEREIN BELOW FOR READY REFERENCE: 271AAA. (1) THE ASSESSING OFFICER MAY NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT DIRECT THAT IN A CAS E WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE 2007 43 [BUT BEFORE THE 1ST DAY OF JULY 2012] THE ASSESSEE SHA LL PAY BY WAY OF PENALTY IN ADDITION TO TAX IF ANY PAYABLE BY HIM A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL AP PLY IF THE ASSESSEE (I) IN THE COURSE OF THE SEARCH IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDI SCLOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX TOGETHER WITH INTEREST IF A NY IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF T HE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL SO FAR AS MAY BE APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION . EXPLANATION.FOR THE PURPOSES OF THIS SECTION (A) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR RE PRESENTED EITHER WHOLLY OR PARTLY BY ANY MONEY BULLION JEW ELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132 WHICH HAS 6 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR ; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENTED EITHER WHOLLY OR PARTLY BY ANY ENTRY IN RESPECT OF AN EXPENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEE N CONDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) O F SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF S EARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF IN COME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. MANIFESTLY SUB-SECTION (2) TO SECTION 271AAA LAYS DOWN THE SPECIFIC CONDITIONS WHICH IF FULFILLED CAN ABSOLVE THE ASSESSEE FROM ANY LIABILITY UNDER SECTION 271AAA OF THE INCOME TAX ACT 1961. IT IS SUBMITTED THAT ALL OF T HE THREE CONDITIONS HAVE BEEN SATISFIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WH ICH THOUGH WERE NOT DOUBTED IN ASSESSMENT ORDER WHERE LD. AO AFTER DULY CONSIDERIN G THE STATEMENTS OF THE ASSESSEE RECORDED U/S 132(4) AT THE TIME OF SEARCH AND THE A DDITIONAL INCOME DECLARED CATEGORICALLY ACCEPTED THE CONTENTION OF THE ASSESSEE IN LAST PA RA AT PAGE 2 OF THE ASSESSMENT ORDER AND ASSESSED THE SAME AS BUSINESS INCOME OF THE ASSESSE E HOWEVER IN PENALTY PROCEEDINGS COMPLETELY DIVERGENT VIEW WAS TAKEN AND LEVIED PENA LTY WHICH IS TOTALLY AGAINST THE CLEAR PROVISIONS OF THE SAID SUB-SECTION. FROM THE PERUSAL OF SUB-SECTION (2) OF SECTION 271A AA OF THE INCOME TAX ACT 1961 IT TRANSPIRES THAT PENALTY SHALL NOT BE LEVIED IF: 7 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL A) ASSESSEE ADMITS THE UNDISCLOSED INCOME IN THE ST ATEMENTS RECORDED U/S 132(4) OF THE INCOME TAX ACT 1961 AND SPECIFIES THE MANNER I N WHICH SUCH INCOME IS DERIVED. B) SUBSTANTIATE THE MANNER C) PAYS DUE TAXES ALONGWITH INTEREST AS STATED ABOVE DURING THE COURSE OF SEARCH ON 24. 08.2009 UNEXPLAINED / UNDISCLOSED MONEY FOUND IN THE FORM OF CASH WHICH T HE ASSESSEE OTHERWISE WOULD NOT DECLARE AS INCOME AND THE SAME SINCE WAS FOUND IN T HE YEAR OF SEARCH CONDUCTED THUS IT IS AN UNDISCLOSED INCOME PERTAINING TO THAT SPECIFIED PRE VIOUS YEAR AS PER THE EXPLANATION TO SECTION 271AAA. WITH REGARD TO ABOVE STATED CONDITIONS AS ENUMERATE D IN SUB-SECTION (2) OF SECTION 271AAA THE ASSESSEE HAD FULFILLED THE SAME IN FOLL OWING MANNER THUS THE PENALTY COULD NOT BE LEVIED IN THE PRESENT CASE AS: I) IT HAS NOT BEEN DISPUTED BY THE LD. AO THAT THE ASSESSEE HAS ADMITTED THE CASH FOUND DURING THE COURSE OF SEARCH AS HIS UNDISCLOSE D ADDITIONAL INCOME IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH U/S 132(4) WHI CH IS VERY MUCH EVIDENT FROM THE OBSERVATIONS MADE IN PARA 4.1 TO 4.3 AT PAGE 2 OF T HE ASSESSMENT ORDER. FURTHER IN THE STATEMENTS RECORDED U/S 132(4) THE ASSESSEE HAS CAT EGORICALLY STATED THE MANNER IN WHICH SUCH ADDITIONAL UNDISCLOSED INCOME WAS DERIVED. THE QUESTION NO. 19 AND ITS ANSWER AS APPEARING IN PARA 4.1 OF THE ASSESSMENT ORDER IS RE PRODUCED HEREIN BELOW IN THIS REGARD AND READY REFERENCE (APB 133) :- IZ'U 19% VKIDS D-32] LQHKK'K EKXZ] LH&LDHE] T;IQJ F LFKR FUOKL IJ RYKKH DH DKJZOKGH DS NKSJKU 89]41]545@& :I;S VKIDS VU; FUOKL LFKKU S-11] LSBH DKWYKSUH] T;IQJ DH RYKKH DH DKJZOKGH DS NKSJK U 3]45]500@& :I;S] YKWDJ UA- 871] X.KIFR IYKTK DH RYKKH DS NKSJ KU 1]49]00]000@& :I;S] YKWDJ UA- 925] X.KIFR IYKTK DH RYKKH DS NKSJKU 4]17]98]500@& :I;S OA FCJKUH YKWDLZ] JKE YY K DK JKLRK] TKSGJH CKTKJ] T;IQJ FLFKR YKWDJ LA[;K 1031 DH RYKK H DS NKSJKU 3]63]99]500@& :I;S FEYS GSAA BL IZDKJ DQY 10]23]85] 045@& :I;S UDN IK;S X;S GSA D`I;K MIJKSDR UDN JKFK DK L=KSR L I'V DJSAA 8 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL MKJ 19% ESAUS VIUS IFJOKJ DH FOFHKUU O;KOLKF;D QEK SZ] DEIFU;KSA OA IZKSIJKBVJFKI DULUZ DH CASH BOOKS DKS FNUKAD 24-08 -2009 RD VIMSV DJ FY;K GSA SLS VIMSVSM CASH BALANCES DH VYX LS MHVSY MIYC/K DJOK JGK GWW FTLDS VUQLKJ GEKJS IFJOKJ DS LNL;KSA OA O;KOLK F;D IZFR'BKUKSA DK DQY CASH BALANCE AS ON 24-08-2009 DKS :I;S 23]60]58 4-85 VKRK GSA BLS NKSM+DJ 'KS'K IK;S X;S CASH VFKKZR :I;S 10]00]35]04 5@& DK FEYKU YS[KK IQLRDKS LS DJKUS ES VLEFKZ GWWA OKLRO ES MDR UDN JK FK ESJH LO;A DH OKLRO ES MDR UDN JKFK ESJH LO;A DH OKLRO ES MDR UDN JKFK ESJH LO;A DH OKLRO ES MDR UDN JKFK ESJH LO;A DH FINANCING FINANCING FINANCING FINANCING OA OA OA OA BROKERAGE BROKERAGE BROKERAGE BROKERAGE O;OLK; DH VK; O;OLK; DH VK; O;OLK; DH VK; O;OLK; DH VK; LS VFTZR FD;K X;K GS LS VFTZR FD;K X;K GS LS VFTZR FD;K X;K GS LS VFTZR FD;K X;K GS FTLS FD FU;FER YS[KK IQLRDKS ES NTZ UGHA FD;K GSA V R% MIJKSDR :I;S FTLS FD FU;FER YS[KK IQLRDKS ES NTZ UGHA FD;K GSA V R% MIJKSDR :I;S FTLS FD FU;FER YS[KK IQLRDKS ES NTZ UGHA FD;K GSA V R% MIJKSDR :I;S FTLS FD FU;FER YS[KK IQLRDKS ES NTZ UGHA FD;K GSA V R% MIJKSDR :I;S 10]00]35]045@& DKS ESA VIUH V?KKSF'KR O;KOLKF;D XFR FOF/K LS VFTZR 10]00]35]045@& DKS ESA VIUH V?KKSF'KR O;KOLKF;D XFR FOF/K LS VFTZR 10]00]35]045@& DKS ESA VIUH V?KKSF'KR O;KOLKF;D XFR FOF/K LS VFTZR 10]00]35]045@& DKS ESA VIUH V?KKSF'KR O;KOLKF;D XFR FOF/K LS VFTZR VK; DKS EKUDJ DJKJKSI.K GSRQ LEFIZR DJRK GWWA VK; DKS EKUDJ DJKJKSI.K GSRQ LEFIZR DJRK GWWA VK; DKS EKUDJ DJKJKSI.K GSRQ LEFIZR DJRK GWWA VK; DKS EKUDJ DJKJKSI.K GSRQ LEFIZR DJRK GWWA FROM THE PERUSAL OF THE STATEMENTS IT IS CRYSTAL CLEAR THAT THE FIRST CONDITION GIVEN IN SUB CLAUSE (I) TO SUB SECTION (2) OF SECTION 271AAA HAS DULY BEEN SATISFIED BY THE ASSESSEE. HOWEVER THE LD. AO FAILED TO PROPERLY APPRECIATE THE STATEMENTS OF THE ASSESSEE WHICH HAS BEEN REMARKED EVEN BY THIS HONBLE TRIBUN AL IN ITS ORDER DATED 26.02.2014 WHEREIN THE TRIBUNAL IN PARA 11.4 AT PAGE 34 (APB-111) HAS CATEGORICALLY OBSERVED THAT ASSESSEE HAS DECLARED ADDITIONAL INCOME FROM HIS RE GULAR BUSINESS ACTIVITIES. THUS IT IS SEEN THAT EVEN THE HONBLE TRIBUNAL H AS TAKEN COGNIZANCE OF THE FACT THAT THE LD. AO HAS FAILED TO CONSIDER THE STATEMENTS OF THE ASSESSEE IN AN APPROPRIATE MANNER. HENCE LD. AO HAS GROSSLY ERRED IN ALLEGING THAT TH E ASSESSEE COULD NOT SPECIFY THE MANNER OF DERIVING THE UNDISCLOSED INCOME. II) WITH REGARD TO SUBSTANTIATING THE MANNER OF DER IVING SUCH UNDISCLOSED INCOME ASSESSEE IN CLEAR AND UNAMBIGUOUS LANGUAGE HAS STAT ED THAT THE CASH SO FOUND WAS EARNED FROM HIS FINANCE AND BROKERAGE BUSINESS ACTIVITY WH ICH WAS PART OF REGULAR INCOME THOUGH NOT DISCLOSED IN REGULAR BOOKS TILL THEN. FURTHER ASSESSEE STATED THAT THE NOTINGS AS FOUND NOTED IN THE SEIZED PAPERS PERTAIN TO THE EARNING O F THIS INCOME AND IS DULY ACCEPTED IN THE ASSESSMENT WHERE NOT A SINGLE WORD CONTRARY TO THE SUBMISSION MADE AND CONTENTION RAISED BY THE ASSESSEE WITH REGARD TO THIS ADDITIONAL UNDI SCLOSED INCOME WAS MADE WHICH ITSELF PROVES THAT DEPARTMENT HAS ACCEPTED THE MODE AND MA NNER OF THE ADDITIONAL INCOME AND THE EXPLANATION TO SUBSTANTIATE THE SAME WAS ALSO NOT DOUBTED. FURTHER NO OTHER SO URCE OF 9 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL INCOME EXCEPT FINANCE AND BROKERAGE REGULARLY CARRI ED ON BY ASSESSEE HAS BEEN FOUND OR ALLEGED BY LD. AO. III) ALL THE TAX DUE ON SUCH ADDITIONAL UNDISCLOSED INCOME WAS PAID BY THE ASSESSEE ALONGWITH THE RETURN OF INCOME FILED. SINCE ALL THE THREE CONDITIONS AS ENUMERATED IN SUB SECTION (2) TO SECTION 271AAA WERE FULLY SATISFIED AS THE ASSESSEE HAD OFFERED TH E ADDITIONAL INCOME AND DULY SUBSTANTIATED THE MANNER AS TO HOW IT HAS BEEN WORKED OUT AND THE LD. AO NEITHER DOUBTED THE QUANTUM OF ADDITIONAL INCOME DECLARED NOR MODE AND MANNER O F EARNING OF SUCH INCOME AND DUE TAXES ALONGWITH INTEREST HAS BEEN PAID WHILE FILING THE RETURN OF INCOME. THEREFORE THERE WAS NO BASIS AT ALL FOR WHICH PENALTY U/S 271AAA COULD BE LEVIED BY LD. AO ON THE ADDITIONAL UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER REFERENCE AND THEREFORE THE SAME HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A). FURTHER NO FRESH EVIDENCE OR MATERIAL WAS BROUGHT O N RECORD EITHER IN ASSESSMENT PROCEEDINGS OR IN PENALTY PROCEEDINGS TO PROVE THE ALLEGATION THAT THE MANNER OF EARNING SUCH UNDISCLOSED INCOME AS STATED / DEPOSED BY ASSE SSEE IN THE STATEMENTS RECORDED U/S 132(4) ARE WRONG OR WITHOUT ANY BASIS. FURTHERMORE THE PENALTY U/S 271AAA HAS BEEN IMPOSE D BY THE LD. AO BY MERELY ALLEGING (THOUGH WRONGFULLY) THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE MANNER OF DERIVING THE UNDISCLOSED INCOME AND SUBSTANTIATION THEREOF H AS ALSO NOT BE DONE BY ASSESSEE. IT IS SUBMITTED THAT MERELY BY OBSERVING SO THE PROTECTI ON UNDER CLAUSE (2) OF SECTION 271AAA CANNOT BE DENIED TO THE ASSESSEE GIVEN THAT IN THE CIRCUMSTANCES OF THE PRESENT CASE THE ASSESSEE HAS MADE DUE DISCLOSURE OF UNDISCLOSED INC OME AND EVEN THE MANNER OF DERIVING SUCH INCOME HAS BEEN EXPLAINED BY ASSESSEE IN HIS S TATEMENTS RECORDED U/S 132(4) TO WHICH KIND ATTENTION OF THE HONBLE BENCH HAS ALRE ADY BEEN BROUGHT IN THE PREVIOUS PARAS. IT MAY KINDLY BE NOTED THAT THE HONBLE ITAT MUMBA I BENCH MUMBAI IN THE CASE OF ACIT VS. KANAKIA SPACES PVT. LTD. ITA NO. 6763/MUM/ 2011 IN AN APPEAL FILED BY DEPARTMENT HAS MADE THE FOLLOWING OBSERVATIONS: 3.1 LD. CIT(A) AFTER CONSIDERING THE SUBMISSION DEL ETED THE PENALTY BY STATING AS UNDER: 10 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT IN RESPECT OF THE PENALTY LEVIED BY THE LD.AO. IT IS SEEN THAT TH E LD.AO HAS WRITTEN TWO SENTENCES AT PARA- 8 TO CONCLUDE THAT THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE THE SOURCE OF ACQUISITION OF THE MOVAB LE ASSETS. THE FACT OF THE MATTER IS THAT THE REQUIREMENT ON THE PART OF AN AS SESSEE TO SUBSTANTIATE THE SOURCE OF INCOME CANNOT BE TAKEN TO MEAN THAT ALL E VIDENCES IN THE RESPECT HAS TO BE PRODUCED. THE VERY FACT THAT THE DISCLOSURE I S MADE IN RESPECT OF UNDISCLOSED INCOME ALL THAT CAN BE REQUIRED OF AN ASSESSEE IS THAT THE PROXIMATE NATURE OF ACQUISITION CAN BE MENTIONED BY HIM. IT CANNOT BE THE CASE THAT VERY MINUTE DETAIL THEREOF WOULD BE PRESERVE W ITH EVIDENCE WHICH IS POSSIBLE ONLY FOR THE REGULAR INCOME BEING DISCLOSE D BY HIM. THE REQUIREMENT AS PER SECTION (2) OF SECTION 27IAAA IS ONLY THAT THE MANNER OF EARNING INCOME SHOULD BE SPECIFIED SO THAT UNDUE ADVANTAGE OF TELE SCOPING OR SOME OTHER INCOME BEING BROUGHT WITHIN THE TOTAL AMBIT OF UNDI SCLOSED INCOME SURRENDERED DOES NOT HAPPEN. FROM THE ORDER OF THE LD. A.O ALSO IT IS APPARENT THAT THE PENALTY IS NOT LEVIED BY HIM ON ACCOUNT OF SOME CONVICTION BUT HAS BEEN JUST LEVIED TO COMPLETE THE PROCEEDINGS. IN FA CT THERE ARE NO MATERIAL FACTS WARRANTING THE LEVY OF PENALTY AND ACCORDINGLY THE PENALTY OF RS.55 00 000/- LEVIED UNDER SECTION 271AAA IS DIRECTED TO BE DELET ED. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE DO N OT SEE ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). THE ORDER IS IN TUNE WITH THE PRINCIPLES LAID DOWN BY VARIOUS CO-ORDINATE BENCHES AND HIGH COURTS PARTICULARLY WITH REFERENCE TO DISCLOSURE MADE UNDER SECTION 132(4). IN THE CASE OF CIT V. MAHENDRA C. SHAH (299 ITR 305) THE HONBLE GUJARAT HIGH COURT CONSIDERED A SIMILAR STATEMENT UNDER SECTION 132(4) TO GRANT IMMUNITY UNDER SECTION 132(4) TO GRANT IMMUNITY UNDER SECTION 271(1)(C). THE HON BLE HIGH COURT HELD AS UNDER:- WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHORI ZED OFFICER IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISIONS OF EXPLANATION 5 IN ENTIRETY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULA R STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH A LAPS E IN THE STATEMENT. THE REASON IS NOT FAR TO SEEK. IN THE FI RST INSTANCE THE STATEMENT IS BEING RECORDED IN THE QUESTION AND ANS WER FORM AND THERE WOULD BE NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED BY THE PRO VISIONS CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE WHETHER LITERATE OR ILLITE RATE TO BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATE D IN THE SECOND EXCEPTION WHILE MAKING STATEMENT UNDER SECTION 132( 4). EVEN IF THE STATEMENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS DERIVED IF THE INCOME IS DECLARED AND TAX THEREON PAID THERE WOULD 11 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL BE SUBSTANTIAL COMPLIANCE NOT WARRANTING ANY FURTHE R DENIAL OF THE BENEFIT. 4.1 IN THIS CASE THE ASSESSEE WAS ASKED TO EXPLAIN THE ENTRIES IN THE WORK-IN PROGRESS SHEET AND ASSESSEE IN THE COURSE OF STATEMENT OFFER ED THE INCOME WITH A PLEA NOT TO INITIATE PENALTY PROCEEDINGS. THE ASSESSEE WAS NOT ASKED ABO UT THE MANNER IN WHICH SUCH INCOME WAS EARNED AND ALSO TO SUBSTANTIATE THE MANNER IN W HICH UNDISCLOSED INCOME WAS DERIVED. THE PROVISION OF CLAUSE -2 OF EXPLANATION-V APPENDE D TO SECTION 271(1)(C) ARE SIMILAR TO SECTION 271AAA(2). THE SCOPE AND MEANING HAS BEEN LUCIDLY EXPLAINED B Y THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. RADHA KISHAN GOEL (2005) 278 ITR 454 (ALL) WHICH WAS FOLLOWED BY THE HONBLE GUJARAT HIGH COUR T IN THE ABOVE REFERRED CASE. IN VIEW OF THE ABOVE PRINCIPLES LAID DOWN WE ARE OF THE OPINI ON THAT IMMUNITY PROVIDED UNDER S/S.(2) OF SECTION 271AAA IS APPLICABLE AND ACCORDINGLY TH E ORDER OF CIT(A) DOES NOT REQUIRE ANY MODIFICATION. REVENUES GROUNDS ARE REJECTED. IN THE CASE OF CIT V. RADHA KISHAN GOEL (SUPRA) IT HAS BEEN HELD AS UNDER: PENALTY SEARCH & SEIZURE CONCEALMENT OF INCOME LAW APPLICABLE EFFECT OF EXPLANATION 5 TO SECTION 271(1)(C) ASSETS FOUND DURING SEARCH DEEMED TO BE FROM CONCEALED INCOME PENALTY NOT IMPOSABLE IF ASSESSE E ADMITS THAT ASSETS WERE ACQUIRED WITH UNDISCLOSED INCOME NON DISCLOSURE O F MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED NOT RELEVANT INCOME TAX ACT 1961 SS. 132 271. IT IS NOT EXPECTED FROM THE PERSON TO STATE THINGS WHICH ARE NOT ASKED BY THE AUTHORIZED OFFICER. UNDER SECTION 132(4) OF THE ACT UNLESS THE AUTHORIZED OFFICER PUTS A SPECIFIC QUESTION WITH REGARD TO THE MANNER IN WH ICH INCOME HAS BEEN DERIVED IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CASE IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIV ED HAS NOT BEEN STATED BUT HAS BEEN STATED SUBSEQUENTLY IT AMOUNTS TO COMPLIANCE WITH EXPLANATION 5(2). IF THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED U /S 132(4) OF THE ACT IN THE ABSENCE OF ANY SPECIFIC STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED IT CAN BE INFERRED THAT SUCH UNDISCLOSED I NCOME WAS DERIVED FROM THE BUSINESS WHICH HE WAS CARRYING ON. THE OBJECT OF TH E PROVISION IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON-DISCLOSURE OF MONEY BULLION JEWELLERY ETC. THUS MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATE MENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFER RED ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE ABSENCE OF ANYTHI NG TO THE CONTRARY. THEREFORE MERE NON-STATEMENT OF THE MANNER IN WHICH SUCH INCO ME WAS DERIVED WOULD NOT MAKE EXPLANATION 5(2) INAPPLICABLE. FOR THE SAKE OF CONVENIENCE THE FACTS AND CIRCUMST ANCES OF THE PRESENT CASE ARE SUMMARIZED AS UNDER: 12 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL THE ASSESSEE HAS ADMITTED THE CASH FOUND DURING THE COURSE OF SEARCH AS HIS UNDISCLOSED ADDITIONAL INCOME IN THE STATEMENTS REC ORDED DURING THE COURSE OF SEARCH U/S 132(4). THE MANNER OF DERIVING SUCH INCOME AND SUBSTANTIATI ON THEREOF HAS ALREADY BEEN MADE AS APPARENT FROM THE STATEMENTS OF ASSESS EE ITSELF RECORDED DURING SEARCH U/S 132(4). ALL THE TAX DUE ON SUCH ADDITIONAL UNDISCLOSED INCO ME WAS PAID BY THE ASSESSEE. NO ADVERSE INFERENCE WAS DRAWN AND SUCH ADDITIONAL INCOME WAS ACCEPTED AND ASSESSED AS SUCH. THUS ALL THE THREE CONDITIONS LAID DOWN UNDER SUB- SECTION (2) TO SECTION 271AAA STAND SATISFIED AND THEREFORE THE IMMUNITY UNDER TH E SAID SUB-SECTION IS AVAILABLE TO THE ASSESSEE THUS THE PENALTY ON THE ADDITIONAL INCOM E DECLARED IN THE RETURN OF INCOME FILED CANNOT BE LEVIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE MORE PARTICULARLY IN VIEW OF THE JUDICIAL PRONOUNCEMENTS SET OUT AS ABOV E WHEREIN IT HAS SPECIFICALLY BEEN HELD THAT MERE NON-STATEMENT OF MANNER OF DERIVING UNDIS CLOSED INCOME DOES NOT MAKE ASSESSEE LIABLE FOR PENAL ACTION U/S 271AAA THOUGH IN THE C ASE IN HAND ASSESSEE HAS DULY STATED AND PROVED THE MANNER OF DERIVING SUCH UNDISCLOSED INCO ME. RELIANCE IS ALSO PLACED ON THE FOLLOWING ITAT DECIS IONS: 155 TTJ 98 ASSTT. CIT VS. A.N. ANNAMALAISAMY (HUF) (CHENNAI C) PENALTY U/S 271AAA CONDITIONS PRECEDENT DISCLOS URE OF INCOME IN REVISED RETURN ASSESSEE HAVING OFFERED THE WHOLE OF UNDIS CLOSED INCOME ADMITTED BY HIM AT THE TIME OF SEARCH IN THE REVISED RETURN FILED BY H IM BEFORE THE COMPLETION OF ASSESSMENT AND PAID THE TAX THEREON ALONG WITH INT EREST AND EXPLAINED THAT THE UNDISCLOSED JEWELLERY WAS ACQUIRED OVER A PERIOD OF TIME PENALTY U/S 271AAA WAS NOT LEVIABLE. 14 ITR (TRIB.) 608 DCIT VS. PIONEER MARBLE & INTERI OR PVT. LTD. (KOL.) PENALTY--SEARCH AND SEIZURE--ASSESSEE MAKING PAYMEN T WITHIN PERMISSIBLE TIME UPON RECEIVING NOTICE UNDER SECTION 156--PENAL TY CANNOT BE IMPOSED--INCOME- TAX ACT 1961 S. 271AAA. 13 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL DCIT VS. DR. MUKESH S. SHAH [ITA NO. 1942/AHD./2012] INCOME TAX ACT 1961 - SECTION 271AAA ADMISSION O F INCOME AT THE TIME OF SEARCH AND DISCLOSURE THEREOF IN RETURN U/S 153 F ULL PAYMENT OF TAX AND DISCLOSURE OF THE MANNER OF EARNING INCOME NO ADVERSE MATERI AL TO CONTROVERT THE FINDINGS OF CIT WHETHER CIT WAS JUSTIFIED IN DELETING THE PEN ALTY HELD YES . IN LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS STATED ABOVE AND THE SUBMISSIONS MADE ALONGWITH THE CASE LAWS CITED IT IS HUMBLY PRAYED THAT THE ORDER OF LD. CIT(A) BE UPHELD AND THE APPEAL OF DEPARTMENT BE DI SMISSED. THE ABOVE SUBMISSIONS OF THE ASSESSEE ARE OPPOSED B Y THE LD. D/R. HOWEVER THE FACTS AS NARRATED IN THE SUBMISSIONS ARE NOT CONTRA DICTED BY THE LD. D/R BY PLACING ANY CONTRARY MATERIAL ON RECORD. THE LD. CIT (A) HA S GIVEN THE FINDING OF FACT AT PAGE 15-16 OF HIS ORDER AS UNDER :- THUS IT IS SEEN THAT DURING THE COURSE OF STATEM ENT U/S 132(4) AND SUBSEQUENTLY IN STATEMENTS U/S 131 THE APPELLANT H AS CONFIRMED THE NOTINGS IN SEIZED DOCUMENTS WITH REFERENCE TO HIS U NACCOUNTED INCOME FROM HIS BUSINESS. THE APPELLANT ADMITTED THAT THE TRANSACTIONS AS PER THE SEIZED DOCUMENTS RELATED TO THE UNACCOUNTED CAS H FOUND AND WERE NOT PART OF HIS REGULAR BOOKS OF ACCOUNTS AND THE A MOUNT WAS SURRENDERED BY HIM WHILE FILING HIS RETURN. THUS IT CANNOT BE HELD THAT THE MANNER OF DERIVING THE INCOME WAS NOT SUBSTANTI ATED BY THE APPELLANT BECAUSE HE SUBSTANTIATING EVIDENCE BY WAY OF SEIZED DOCUMENTS WAS WITH THE DEPARTMENT AND WAS CONFRONTE D WITH THE APPELLANT DURING THE COURSE OF HIS STATEMENTS U/S 131 ON THE BASIS OF WHICH HE AFFIRMED THE SURRENDER. IN FACT IT WAS NOTED BY THE AO HIMSELF IN THE ASSES SMENT ORDER AND ALSO IN THE PENALTY ORDER THAT THE SURRENDER MA DE BY THE APPELLANT WAS ON ACCOUNT OF HIS UNDISCLOSED BUSINESS OF FINAN CING AND BROKERAGE. ONCE HE HAS GIVEN A FINDING REGARDING THE SOURCE FR OM WHICH THE UNDISCLOSED INCOME WAS DERIVED AND THE FACT THAT TH E SUBSTANTIATING EVIDENCE OF DERIVING THIS INCOME WAS WITH THE DEPAR TMENT BY WAY OF SEIZED DOCUMENTS HE CANNOT TAKE A CONTRARY STAND W HILE IMPOSING THE PENALTY U/S 271AAA BY DENYING THE IMMUNITY UNDER IT S SUB SEC. 2. DURING THE COURSE OF HIS STATEMENT U/S 132(4) AS NO TED ABOVE THE 14 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL APPELLANT HAS MENTIONED THAT CASH FOUND IN THE LOCK ER WAS RELATED TO DOCUMENTS WHICH COULD BE FOUND AT HIS OFFICE CUM RE SIDENCE WHICH WERE DULY FOUND AND ANNEXURIZED AS AS-1. THESE DOCU MENTS CONTAINED SPECIFIC NOTINGS REGARDING NAMES OR PERSONS AND AMO UNTS ADVANCED OR RECEIVED. GIVEN THIS EVIDENCE FOUND DURING COURSE O F SEARCH AND ADMITTED TO BY THE ASSESSEE U/S 132(4) IT CANNOT B E SAID THAT INFORMATION WAS NOT AVAILABLE WITH THE DEPARTMENT R EGARDING SPECIFIC TRANSACTIONS NAMES OF PERSONS ETC. TO WHOM THE AMO UNTS RELATED. THEREFORE IN ABSENCE OF ANY SPECIFIC FINDING OR EV IDENCE WITH REFERENCE TO THE SEIZED MATERIAL OR LACUNA IN THESE STATEMENT S WITH REFERENCE TO THE SPECIFIC INFORMATION IN THE SEIZED DOCUMENTS IT CANNOT BE SAID THAT THE MANNER OF EARNING THE INCOME WAS NOT SUBSTANTIA TED. THUS THE IMPOSITION OF PENALTY U/S 271AAA APPEARS TO BE ARBI TRARY ON PART OF THE AO. RELIANCE IS PLACED ON THE FINDING OF THE HON. ITAT CUTTACK BENCH IN THE CASE OF PRAMOD KUMAR JAIN VS. DCIT (2 012) 77 DTR 244. THE FACTS OF THE CASE ARE THAT THE AO INITIATED PEN ALTY PROCEEDINGS IN AY 2008-09. THE AO AFTER ISSUING SHOW CAUSE U/S 27 1AAA OBSERVED THAT THE ASSESSEE HAS MADE DISCLOSURE FOR RESPECTIV E AMOUNTS BUT FAILED TO SPECIFY MANNER IN WHICH SUCH INCOME HAD B EEN DERIVED AND THEREFORE IMPOSED PENALTY BEING 10% OF AMOUNT SURRE NDERED U/S 132(4). THE HON. ITAT OBSERVED THAT THERE IS NO PRESCRIBED METHOD TO INDICATE MANNER IN WHICH INCOME WAS GENERATED WH EN DEFINITION OF UNDISCLOSED INCOME HAS BEEN DEFINED IN ACT ITSELF WHEN NO INCOME OF SPECIFIED PREVIOUS YEAR REPRESENTED EITHER WHOLLY OR PARTLY WHICH ONUS LAY UPON ASSESSEE STOOD DISCHARGED. THEREFORE LEVY OF PENALTY U/S 271AAA IS NOT JUSTIFIED AND PENALTY SO LEVIED U /S 271AAA FOR A.YS. UNDER CONSIDERATION IN CASE OF RESPECTIVE ASSESSEE IS CANCELLED. THE OBSERVATIONS OF THE HON. ITAT ARE APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. THERE IS NO DISPUTE WITH REGARD TO THE PROPOSITION THAT PENALTY U/S 271AAA IS NOT LEVIABLE IF THE ASSESSEE IN THE COURSE OF SEARCH I N A STATEMENT UNDER SUB SECTION (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME AND SP ECIFIES THE MANNER IN WHICH THE SAID INCOME HAS BEEN DERIVED SUBSTANTIATED THE MAN NER IN WHICH THE UNDISCLOSED INCOME IS DERIVED AND PAYS THE TAX TOGETHER WITH IN TEREST IN RESPECT OF THE UNDISCLOSED INCOME. THE FIRST REQUIREMENT OF IMMU NITY UNDER SECTION 271AAA IS THAT THE ASSESSEE ADMITS THE UNDISCLOSED INCOME IN A STATEMENT RECORDED U/S 132(4) 15 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL OF THE ACT AND SPECIFIES THE MANNER IN WHICH THE IN COME HAS BEEN DERIVED. WE FIND THAT THE ASSESSEE IN RESPONSE TO QUESTION NO. 19 TO THE STATEMENT RECORDED UNDER SECTION 132(4) HAS ADMITTED THE UNDISCLOSED INCOME AND STATED THAT THE INCOME DERIVED FROM THE BUSINESS OF FINANCING AND BROKERAG E. THEREFORE THE FIRST CONDITION IS SATISFIED. SECOND REQUIREMENT IS TO SUBSTANTIATE THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THE LD. CIT (A) HAS REPORTED THAT THE AO HIMSELF IN THE ASSESSMENT ORDER AND ALSO IN THE PENALTY ORDER REPORTED THAT THE SURRENDER MADE BY THE ASSESSEE WAS ON ACCOUNT OF UNDISCLOSED BUSINESS OF FINANCING AND BROKERAGE. THEREFORE THIS OBSERVATION OF THE LD. C IT (A) IS NOT DISPUTED BY THE REVENUE. THEREFORE THE SECOND REQUIREMENT IS ALSO MET BY THE STATEMENT OF THE ASSESSEE. THE THIRD REQUIREMENT IS OF LAW THAT THE ASSESSEE PAYS TAX ALONG WITH INTEREST ON THE UNDISCLOSED INCOME. THE REVENUE HA S NOT DISPUTED THE PAYMENT OF TAX AND INTEREST THEREON. THEREFORE IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A) SAME IS HEREBY UPHELD. THE GROUND OF THE REVENUE IS DISMISSED. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 07/10/ 2016. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 07/10/2016. DAS/ 16 ITA NO. 479/JP/2014 SHRI NIRMAL KUMAR AGARWAL VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT CENTRAL CIRCLE-1 JAIP UR. 2. THE RESPONDENT SHRI NIRMAL KUMAR AGARWAL JAIP UR. 3. THE CIT(A). 4. THE CIT 5. THE DR ITAT JAIPUR 6. GUARD FILE (ITA NO. 479/JP/2014) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASSISTANT. REGISTRAR