LALLUBHAI AMICHAND LTD, MUMBAI v. DCIT CC-I, MUMBAI

ITA 494/MUM/2010 | 2004-2005
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 49419914 RSA 2010
Assessee PAN AAACL0829R
Bench Mumbai
Appeal Number ITA 494/MUM/2010
Duration Of Justice 1 year(s) 6 month(s) 8 day(s)
Appellant LALLUBHAI AMICHAND LTD, MUMBAI
Respondent DCIT CC-I, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-07-2011
Assessment Year 2004-2005
Appeal Filed On 20-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NOS.492 TO 495/MUM/2010 (ASSESSMENT YEARS: 2002-03 TO 2005-06) M/S. LALLUBHAI AMICHAND LIMITED 225-227 J. DADAJI ROAD TARDEO MUMBAI -400 034 ....... APPELLANT VS DCIT CC 1 AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 ..... RESPONDENT PAN: AAACL 0829 R APPELLANT BY: SHRI VI JAY MEHTA RESPONDENT BY: SHRI D. SONGATE O R D E R PER R.S. PADVEKAR JM: THIS BATCH OF FOUR APPEALS ARE FILED BY THE ASSESSE E CHALLENGING THE IMPUGNED ORDERS OF THE LD. CIT (A) -36 MUMBAI D ATED 9.12.2009 CONFIRMING THE PENALTY LEVIED BY THE A.O. U/S.271(1 )(C) OF THE ACT FOR THE A.YS. 2002-03 2003-04 2004-05 AND 2005-06. A S THE FACTS AS WELL AS THE ISSUE ARE COMMON IN ALL THESE APPEALS H ENCE THEY ARE DISPOSED OFF BY THIS COMMON ORDER. THE SOLITARY IS SUE FOR OUR CONSIDERATION IN ALL THESE APPEALS IS WHETHER THE L D. CIT (A) IS JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE A.O. U/S.27 1(1)(C) OF THE ACT. 2. BRIEFLY STATED THE FACTS WHICH REVEALED FROM THE RECORDS ARE AS UNDER. THERE WAS A SEARCH AND SEIZURE OPERATION AG AINST THE ASSESSEE U/S.132 OF THE ACT ON 12.9.2006. DURING THE COURSE OF SEARCH THE ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 2 ASSESSEE OFFERED THE UNDISCLOSED INCOME ON ACCOUNT OF SALE OF SCRAP IN THE STATEMENT RECORDED U/S.132(4) OF THE I.T. ACT. THE A.O. ISSUED THE NOTICES TO THE ASSESSEE U/S.153A AND IN RESPONSE TO THE NOTICES U/S.153A THE ASSESSEE FURNISHED THE RETURN OF INCOME DECLARING THE LOSS AS UNDER:- AMT. IN RUPEES SR. NO. A.YS. DT. OF RETURN U/S.153A LOSS DECLARED IN THE RETURNS FILED TO NOTICES U/S.153A LOSS DETERMINED BY A.O. IN ASSESSMENT ORDERS 1 2002-03 14.09.2007 ` ( -)7 79 84 630 ` ( -)7 79 84 630 2 2003-04 14.09.2007 ` ( -)6 39 19 031 ` ( -)6 39 19 031 3 2004-05 14.09.2007 ` (-) 42 87 787 ` ( -) 42 87 787 4 2005-06 14.09.2007 ` ( -)2 96 22 831 ` ( -)2 96 22 831 3. DURING THE COURSE OF THE SEARCH THE ASSESSEE OF FERED THE FOLLOWING INCOME IN RESPECT OF THE SALE OF SCRAP AS UNDER:- AMT. IN RUPEES A.YRS. 2002-03 2003-04 2004-05 2005-06 AMT IN RUPEES 5 41 732 50 130 1 30 99 890 9 20 324 THE A.O. INITIATED THE PENALTY PROCEEDINGS U/S.271( 1)(C) OF THE I.T. ACT ON THE REASON THAT THE INCOME DISCLOSED BY THE ASSE SSEE DURING THE COURSE OF THE SEARCH OPERATION ON ACCOUNT OF SALE O F THE SCRAP WAS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. THE ASSESSEE SE RIOUSLY RESISTED THE ACTION OF THE A.O. THE ASSESSEE CONTENDED THAT THE INCOME FROM SALE OF THE SCRAP WAS PERTAINING TO THE DEMOLITION OF THE FACTORY PREMISES AND SAME COULD NOT BE ACCOUNTED DUE TO VAR IOUS REASONS LIKE LABOUR PROBLEM RETRENCHMENT OF ACCOUNTING STA FF ETC. THE ASSESSEE HAS RECORDED THE INCOME OF THE SALE OF THE SCRAP IN THE BOOKS OF ACCOUNT. THE ASSESSEE ALSO CONTENDED THAT NO PE NALTY CAN BE LEVIED BY INVOKING THE EXPLANATION-5 TO SEC. 271(1)(C) AS NOTHING WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE SUCH AS MON EY BULLION JEWELLERY ANY VALUABLE ARTICLE OR THING AND OFFER OF THE INCOME WAS BASED ONLY ON JOTTINGS ON CERTAIN LOOSE PAPERS. TH E ASSESSEE ALSO CONTENDED THAT THE ASSESSEE IS ALSO ENTITLED FOR TH E IMMUNITY FROM THE LEVY OF THE PENALTY. THE A.O. REJECTED ALL THE CON TENTIONS OF THE ASSESSEE AND LEVIED THE PENALTY AS UNDER:- ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 3 ASSESSMENT YEAR AMT OF PENALTY LEVIED 2002-03 ` 1 93 398 2003-04 ` 50 130 2004-05 ` 46 99 585 2005-06 ` 9 20 324 4. THE ASSESSEE CHALLENGED THE PENALTY ORDERS BEFO RE THE LD. CIT (A) BUT WITHOUT SUCCESS. NOW THE ASSESSEE IS IN A PPEAL BEFORE US IN ALL THE FOUR ASSESSMENT YEARS. 5. THE LD. COUNSEL SUBMITS THAT ADMITTEDLY THE IN COME WAS DISCLOSED ON THE BASIS OF SOME JOTTINGS ON LOOSE PA PERS FOUND DURING THE COURSE OF THE SEARCH. HE ARGUES THAT NO MONEY BULLION JEWELLERY OR ANY VALUABLE ARTICLE OR ASSET WAS NOT FOUND HEN CE EXPLANATION-5 TO SECTION 271(1)(C) IS NOT APPLICABLE TO THE ASSES SEES CASE. HE FURTHER ARGUES THAT IN RESPECT OF THE ASSESSMENT YEARS 2003 -04 2004-05 AND 2005-06 NO REGULAR RETURNS WERE FILED BY THE ASSES SE UNDER SEC. 139 NOR NOTICES WERE ISSUED BY THE A.O. UNDER SEC. 142( 1) AND FOR THE FIRST TIME THE RETURNS WERE FILED FOR ABOVE 3 YEARS IN R ESPONSE TO NOTICE U/S.153A DECLARING ONLY LOSS. SO FAR AS A.Y. 2002- 03 IS CONCERNED THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 22.1 2.2004 WHICH WAS BEYOND THE TIME LIMIT PRESCRIBED U/S.139(4) OF THE ACT AND HENCE THE RETURN FILED FOR THE A.Y. 2002-03 WAS NON EST RETURN. 5.1 THE LD. COUNSEL TOOK US THROUGH EXPLANATION-3 T O SEC. 271(1)(C) AND SUBMITS THAT AS THE ASSESSEE FILED THE RETURNS OF INCOME FOR ALL THESE FOUR YEARS FOR THE FIRST TIME NO PENALTY CAN BE LEVIED BY INVOKING EXPLANATION 3 TO SECTION 271(1)(C) OF THE ACT. HE FURTHER ARGUES THAT THE LOSS DECLARED BY THE ASSESSEE IN THE RETURNS FI LED IN RESPONSE TO NOTICES U/S.153A HAVE BEEN ACCEPTED BY THE A.O. WIT HOUT A SINGLE RUPEE REDUCTION IN ALL THE YEARS. HE SUBMITS THAT AS THERE WAS NO ADDITION OR REDUCTION IN THE LOSS DECLARED BY THE A SSESSE NO PENALTY CAN BE LEVIED. HE FURTHER SUBMITS THAT AS UNDISCLO SED INCOME ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 4 DECLARED BY THE ASSESSEE IS BASED ON SOME DOCUMENTS /PAPERS FOUND DURING THE COURSE OF THE SEARCH AND SAID DOCUMENTS/ PAPERS CANNOT BE TREATED AS A MONEY BULLION JEWELLERY OR ANY VALUA BLE ARTICLE OR THING WHICH ARE CONTEMPLATED IN EXPLANATION 5 TO SECTION 271(1)(C). THE LD. COUNSEL RELIED ON THE FOLLOWING DECISIONS:- I) SOUTH INDIAN FINANCE VS. ITO - 39 ITD 370 (COCH) II) T. KODEESWARAN L/H OF LATE A. THANGAM VS. ITO - 123 TTJ (CHENNAI) 230 III) CIT CENT. II VS. M/S. GROWMORE RESEARCH & ASSET MANAGEMENT LTD. - ITA 675 OF 2008 DT.10.02.2009 IV) SHRI AMIT N. SHAH VS. DY. CIT - ITA 908/MUM/2009 DT. 24.11.2010 6. PER CONTRA THE LD. D.R. RELIED ON AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE FACTS ARE IN VERY NARROW COMPASS WHICH ARE REPRODUCED HEREINABOVE. DURING THE COURSE OF THE S EARCH SOME INCRIMINATING DOCUMENTS/PAPERS WERE FOUND AND THE A SSESSEE OFFERED THE UNDISCLOSED INCOME AS NOTED ABOVE. THERE IS N O DISPUTE ON THE FACT THAT NO MONEY JEWELLERY GOLD OR ANY VALUABLE ARTICLE OR ASSET WERE FOUND. THE ASSESSEE FILED THE RETURNS OF INCO ME IN RESPONSE TO NOTICES U/S.153A FOR ALL THE ASSESSMENT YEARS ON 14 .9.2007 FOR FIRST TIME AND AS NOTED ABOVE THE LOSS WAS DECLARED IN AL L THE RETURNS. WE FIND THAT IN THE ASSESSMENTS FRAMED BY THE A.O. FOR ALL THE ASSESSMENT YEARS BEFORE US THE LOSS DECLARED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY REDUCTION OF RUPEE ONE. 7.1 THE FIRST ARGUMENT OF THE LD. COUNSEL IS THAT T HE ASSESSEE HAS NOT FILED THE RETURNS IN RESPECT OF THOSE FOUR ASSE SSMENT YEARS UNDER SEC. 139 OR SEC. 142(1) IN RESPONSE TO ANY NOTICE I SSUED BY THE A.O. ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 5 AND A RETURN FILED FOR THE A.Y. 2002-03 WAS NON EST AS IT WAS FILED BEYOND TIME LIMIT PRESCRIBED UNDER SEC. 139(4) OF T HE ACT AND HENCE EXPLANATION 3 TO SECTION 271(1)(C) IS NOT APPLICABL E. THE RELEVANT EXPLANATION 3 TO SECTION 271(1)(C) READS AS UNDER:- 271(1)(C). EXPLANATION 3.WHERE ANY PERSON FAILS WITHOUT REA SONABLE CAUSE TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQU IRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL 1989 AND UNTIL T HE EXPIRY OF THE PERIOD AFORESAID NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB-SECTION (1) OF SECTION 142 OR SECTION 148 AN D THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME THEN SUCH PERSON SHALL FOR THE PURPOSES OF CLAUSE (C) OF THI S SUB-SECTION BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME IN RESPECT OF SUCH ASSESSMENT YEAR NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SEC TION 148. 8. ADMITTEDLY IN THE PRESENT CASE IN ALL THE ASSE SSMENT YEARS THE A.O. HAS FINALLY DETERMINED THE LOSS AS DECLARED BY THE ASSESSEE AND THE RETURNS WERE FILED FOR THE FIRST TIME. EVEN IF THE ASSESSEE HAD FILED THE RETURN OF INCOME FOR A.Y. 2002-03 THAT WAS BEYO ND THE TIME LIMIT PERMISSIBLE U/S.139(4) WHICH IS IN THE NORMAL PARLA NCE CALLED BELATED RETURN. AS THE SAID RETURN WAS NOT FILED WITHIN TH E PERMISSIBLE LIMIT PRESCRIBED UNDER SEC. 139(4) IT IS AS GOOD AS NO N-FILING OF THE RETURN AND SAME IS NONEST AS RIGHTLY ARGUED BY THE LD. COUNSEL. THE ASSESSMENT FRAMED BY THE A.O. PROVED THAT THE ASSES SEE HAS NO TAXABLE INCOME AND HENCE THERE WAS NO STATUTORY DU TY TO FILE THE RETURNS OF INCOME U/S.139 FOR RELEVANT YEARS. THE ASSESSEE WAS ALSO NEVER ISSUED ANY NOTICE UNDER CLAUSE (I) TO SECTION 142(1) OR SECTION ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 6 148. NOW WE HAVE TO EXAMINE THE APPLICABILITY OF EXPLANATION 5 BELOW SECTION 271(1)(C). THE RELEVANT EXPLANATION 5 READS AS UNDER:- EXPLANATION 5.WHERE IN THE COURSE OF A SEARCH INI TIATED UNDER SECTION 132 BEFORE THE 1ST DAY OF JUNE 2007 THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY BUL LION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREA FTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISHED BEFORE THE SAID DATE OR WHERE SUCH RETUR N HAS BEEN FURNISHED BEFORE THE SAID DATE SUCH INCOME HAS NOT BEEN DECLARED THEREIN ; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR A FTER THE DATE OF THE SEARCH THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTE R THE DATE OF THE SEARCH HE SHALL FOR THE PURPOSES OF IMPOSITIO N OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION 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 RESULTING IN SUCH INCOME ARE RECORDED (I) IN A CASE FALLING UNDER CLAUSE (A) BEFORE THE DATE OF THE SEARCH ; AND (II) IN A CASE FALLING UNDER CLAUSE (B) ON OR BEF ORE SUCH DATE IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HI M FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLO SED TO THE CHIEF COMMISSIONER OR COMMISSIONER] BEFORE THE SAID DATE ; OR (2) HE IN THE COURSE OF THE SEARCH MAKES A STAT EMENT UNDER SUB-SECTION (4) OF SECTION 132 THAT ANY MONEY BULL ION ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 7 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 SP ECIFIED IN SUB-SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST IF ANY I N RESPECT OF SUCH INCOME. 9. THE SITUATION IN WHICH THE EXPLANATION- 5 WILL B E APPLICABLE HAS BEEN EXPLAINED BY THE ITAT COCHIN BENCH IN THE CASE OF SOUTH INDIAN FINANCE (SUPRA) AND IDENTICAL VIEW HAS BEEN TAKEN B Y THE ITAT CHENNAI BENCH IN THE CASE OF T. KODEESWARAN L/H OF LATE A. THANGAM (SUPRA):- 20. IN THE PRESENT CASE THE MAIN ITEM OF ADDITION OF ` 15 15 284 REPRESENTING INCOME FROM ARRACK SHOPS W AS WORKED OUT BY THE A.O ON THE BASIS OF PURE ESTIMATI ON. THE INCOME FROM OTHER BUSINESS ACTIVITIES WAS ALSO ESTI MATED IN A SIMILAR MANNER. 20.1 ONE CAN SEE FROM A PLAIN READING OF EXPLN. 5 T HAT IT IS APPLICABLE TO A SITUATION WHERE IN THE COURSE OF A SEARCH UNDER S. 132 OF THE ACT THE ASSESSEE IS FOUND TO B E THE OWNER OF ANY MONEY BULLION JEWELLERY OR OTHER VAL UABLE ARTICLE OR THING AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAD BEEN ACQUIRED BY HIM BY UTILISING WHOLLY OR IN PART HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAD ALREADY ENDE D BEFORE THE DATE OF THE SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF THE SEARCH. 20.2 MANIFESTLY THE AFORESAID ADDITIONS TO WHICH THE PROVISIONS OF EXPLN. 5 HAVE BEEN APPLIED BY THE CIT (A) DO NO T REPRESENT MONEY BULLION JEWELLERY OR OTHER VALUAB LE ARTICLE ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 8 OR THING OF WHICH THE ASSESSEE WAS FOUND TO BE THE OWNER IN THE COURSE OF SEARCH. THEREFORE IN OUR CONSIDE RED OPINION THE CIT (A) ERRED IN APPLYING THE PROVISIO NS OF EXPLN. 5 TO THE ADDITION MADE BY THE AO ON ACCOUNT OF ESTIMATED INCOME FROM VARIOUS SOURCES. 21. THE EXPLN. 5 ENACTS A DEEMING PROVISION HAVING APPLICATION TO A PARTICULAR SITUATION. A DEEMING PROVISION IS A LEGAL FICTION WHICH ASSUMES THE EXISTENCE OF A FACT WHICH DOES NOT REALLY EXIST. A DEEMING PROVISION MAY BE INTEN DED TO ENLARGE THE MEANING OF A PARTICULAR WORD OR TO INCL UDE MATTERS WHICH OTHERWISE MAY OR MAY NOT FALL WITHIN THE MAIN PROVISION. IN CONSTRUING A LEGAL FICTION IT I S NECESSARY TO ASSUME ALL THOSE FACTS ON WHICH ALONE THE FICTIO N CAN OPERATE. BUT IT CANNOT BE EXTENDED BEYOND THE PUR POSE FOR WHICH IT IS CREATED OR BEYOND THE LANGUAGE OF THE S ECTION BY WHICH IT IS CREATED. IT CANNOT BE EXTENDED BY IMPO RTING ANOTHER FICTION. 21.1 A LEGAL FICTION CANNOT BE EXTENDED FURTHER BY SO INTERPRETING IT AS TO GO BEYOND THE LEGISLATURES I NTENTION IN CREATING THE FICTION. THIS IS BECAUSE LEGAL FICTIO NS ARE CREATED ONLY FOR A DEFINITE PURPOSE AND THEY ARE LI MITED TO THE PURPOSE FOR WHICH THEY ARE CREATED AND SHOULD N OT BE EXTENDED BEYOND THEIR LEGITIMATE FIELD. A LEGAL FI CTION NO DOUBT HAS TO BE CARRIED TO ITS LOGICAL CONCLUSION BUT THAT MUST BE WITHIN THE FRAMEWORK OF THE PURPOSE FOR WHI CH IT IS CREATED. A LEGAL FICTION HAS TO BE CARRIED TO ITS LOGICAL CONCLUSION AND NOT TO AN ILLOGICAL LENGTH. ONE SHO ULD NOT ALLOW ONESELF TO BE SO CARRIED AWAY BY A LEGAL FICT ION AS TO IGNORE THE WORDS OF THE VERY SECTION WHICH INTRODUC ES IT OR ITS CONTENT OR SETTING IN THE STATUTE WHICH CONTAIN S THAT ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 9 SECTION. ALSO ONE SHOULD NOT LOSE SIGHT OF THE PUR POSE FOR WHICH THE LEGAL FICTION WAS INTRODUCED. 10. IN THE PRESENT CASE AS PER THE FACTS ON RECORD EXCEPT SOME LOOSE PAPERS WERE FOUND DURING SEARCH OPERATION HAV ING JOTTINGS AND OTHER THAN SAID LOOSE PAPERS NO OTHER VALUABLE ASSE TS LIKE MONEY JEWELLERY ETC. WERE FOUND . IN OUR HUMBLE OPINION THE PRINCIPLES LAID DOWN IN THE CASE OF SOUTH INDIAN FINANCE (SUPRA) AS WELL AS T. KODEESWARAN L/H OF LATE A. THANGAM (SUPRA) ARE SQUA RELY APPLICABLE TO THE ASSESSEES CASE AND HENCE EXPLANATION- 5 CA NNOT BE APPLIED. WE FIND THAT THE LD. CIT (A) HAS PLACED HIS RELIANC E ON THE DECISION OF THE ITAT AHMEDABAD (TM) IN THE CASE OF ACIT VS. KIR IT DAYABHAI PATEL- 121 ITD 159 (AHD)(TM). IN THE CASE OF KIRIT DAYAB HAI PATEL (SUPRA) AN IMMUNITY WAS CLAIMED BY THE ASSESSEE BY TAKING T HE CONTENTION THAT THE ASSESSEE DECLARED THE ADDITIONAL INCOME U/ S.131(4) IN THE CASE OF THE SEARCH AND ALSO PAID THE TAXES AND INTE REST THERE ON AND OFFERED THE SAID INCOME FOR TAXATION IN THE RETURNS IN RESPONSE TO NOTICES U/S.153A AND SINCE THE RETURNS HAD BEEN AC CEPTED BY THE A.O. IN THE ASSESSMENTS MADE U/S.153A THE ASSESSEE WAS ENTITLED FOR THE IMMUNITY IN VIEW OF THE EXPLANATION 5(2) TO SEC TION 271(1)(C) OF THE ACT. EVEN IN REFERENCE MADE TO THE THIRD MEMBER T HE ISSUE OF THE APPLICABILITY OF EXPLANATION-5 WHEN ANY MONEY BULL ION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE NOT FOUND WHETH ER IN SUCH SITUATION COULD EXPL.-5 BE APPLIED WAS NOT THE ISSUE. IN OUR HUMBLE UNDERSTANDING THE DECISION IN THE CASE OF KIRIT DA YABHAI PATEL (SUPRA) IS ON THE INTERPRETATION OF CLAUSE-(2) TO EXPLANATI ON 5 OF SEC. 271(1)(C) OF THE ACT AND HENCE THE RELIANCE PLACED BY THE LD . CIT (A) IS MISPLACED. 11. ONE OF THE IMPORTANT MANDATES OF SEC 271(1)(C) IS THAT IN CONSEQUENCE OF CONCEALING PARTICULARS OF INCOME O R FURNISHING INACCURATE PARTICULARS OF INCOME TAX MUST BE SOU GHT TO BE EVADED. A TAX LIABILITY IS THERE IF ASSESSMENT RESULT IN TO POSITIVE INCOME. EVEN ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 10 IN CASES WHERE A LOSS DECLARED BY THE ASSESSEE IS R EDUCED IN ASSESSMENT THEN IN PURSUANCE OF EXPLN.-4 TO SEC. 2 71(1)(C) ON ELEMENT OF AMOUNT OF LOSS REDUCED; TAX IS TREATED A S DEEMED TO HAVE BEEN EVADED THOUGH IN FACT THERE IS NO ACTUAL TAX LIABILITY ON THE ASSESSEE. ADMITTEDLY IN THE PRESENT CASE THE A.O. FINALLY ASSESSED THE LOSS ACCEPTING AS DECLARED BY THE ASSESSEE AND HENC E THE FICTION CREATED BY EXPL.-4 (AS AMENDED) IS ALSO NOT APPLICA BLE TO THESE CASES AS THE LOSSES DECLARED BY THE ASSESSEE ARE ACCEPTED BY THE A.O. 12. IN THE LIGHT OF OUR ABOVE DISCUSSION WE ARE OF THE OPINION THAT NO PENALTY IS LEVIABLE AS ADMITTEDLY THERE IS NO T AX LIABILITY ON THE ASSESSEE IN ALL THE FOUR YEARS. WE THEREFORE CAN CEL ALL THE PENALTY ORDERS FOR THE ASSESSMENT YEARS BEFORE US AND ALLOW THE GROUNDS TAKEN BY THE ASSESSEE. 13. IN THE RESULT ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9TH JULY 2011. SD/- SD/- ( J. SUDHAKAR REDDY ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE : 29TH JULY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)39 MUMBAI. 4) THE CIT-CENTRAL-II MUMBAI. 5) THE D.R. A BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 492 TO 495/MUM/2010 M/S. LALLUBHAI AMICHAND LIMITED 11 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 19.07.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 20.07.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER