PRAKASH STEELAGE LTD, MUMBAI v. ASST CEN CIR 13, MUMBAI

ITA 5257/MUM/2012 | 2008-2009
Pronouncement Date: 26-11-2014 | Result: Dismissed

Appeal Details

RSA Number 525719914 RSA 2012
Assessee PAN AAACP6673K
Bench Mumbai
Appeal Number ITA 5257/MUM/2012
Duration Of Justice 2 year(s) 3 month(s) 4 day(s)
Appellant PRAKASH STEELAGE LTD, MUMBAI
Respondent ASST CEN CIR 13, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-11-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 26-11-2014
Date Of Final Hearing 12-11-2014
Next Hearing Date 12-11-2014
Assessment Year 2008-2009
Appeal Filed On 21-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI SANJAY ARORA ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMBER ITA NO. 5256 & 5257/MUM/2012 ASSESSMENT YEAR: 2004-05 & 2008-09 M/S. PRAKASH STEELAGE LTD. 101 1 ST FLOOR SHATRUNJAY APARTMENT 28 SINDHI LANE N.D. ROAD MUMBAI 400 004 PAN:AAACP 6673 K VS. ASST. CENTRAL CIRCLE 13 OLD CGO BLDG. 11 TH FLOOR M.K. ROAD MUMBAI 400 020 (APPELLANT) (RESPON DENT) ASSESSEE BY : DR. K. SHIVRAM & NEELAM JADHAV REVENUE BY : SHRI PARMANAND J. DATE OF HEARING : 1 3 . 11 . 2014 DATE OF ORDER : 26 . 1 1 .2014 O R D E R PER AMIT SHUKLA JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSES SEE AGAINST THE ORDER DATED 31.05.2012 PASSED BY LD.CIT(A)-37 MUM BAI WHICH IS A CONSOLIDATED ORDER FOR THE A.YS. 2004-05 & 2008-09 IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C). 2. WE SHALL FIRST TAKE UP APPEAL FOR THE A.Y. 2004- 05 BEING ITA NO. 5256/MUM/2012 VIDE WHICH FOLLOWING GROUND HAS BEEN RAISED:- THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) ( HEREIN REFERRED AS CIT(A)) HAS ERRED IN CONFIRMING ORDER OF THE LEARNED ASSESSING OFFICER LEVYING THE PENALTY OF RS.2 70 89 8/- U/S 271(1)(C) OF INCOME TAX ACT 1961 WITHOUT CONSIDERI NG THE FACTS AND SUBMISSIONS MADE DURING THE PENALTY PROCEEDINGS . THE ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 2 PENALTY OF RS.2 70 898/- HAS BEEN LEVIED ON DISALLO WANCE OF DEDUCTION OF RS.7 73 993/- CLAIMED BY YOUR APPELLAN T U/S 80IB OF INCOME TAX ACT 1961 ON ACCOUNT OF DUTY DRAWBACK. I T IS PRAYED THAT THERE HAS BEEN NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREFORE PENALTY U/S 271 (1)(C) OF INCOME TAX ACT 1961 AS LEVIED SHOULD BE DELETED. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND S EIZURE ACTION U/S 132(1) AND SURVEY ACTION U/S 133A WAS CARRIED OUT I N THE CASE OF ASSESSEE AND OTHER CONCERNED GROUP ON 09.02.2009 A T THE BUSINESS PREMISES AND ALSO THE RESIDENTIAL PREMISES OF THE D IRECTORS. THE ASSESSEE IS MAINLY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF STAINLESS STEEL PIPES AND TUBES. FOR THE A.Y. 2004- 05 THE ASSESSEE HAS FILED ITS RETURN INCOME U/S 139(1) ON 31.10.2004 D ECLARING TOTAL INCOME OF RS.24 99 253/- IN THE RETURN OF INCOME THE ASSES SEE HAD CLAIMED DEDUCTION U/S 80IB OF RS.7 73 993/- WHICH WAS 30% OF THE PROFIT OF THE INDUSTRIAL UNDERTAKING. THE SAID CLAIM AT THAT TIME STOOD ACCEPTED. THIS WAS THE 3 RD YEAR FOR THE ASSESSEE FOR WHICH ASSESSEE HAD CLAIM ED THE DEDUCTION U/S 80IB. IN PURSUANCE TO THE SEARCH ACTI ON U/S 132(1) ON 09.02.2009 NOTICE U/S 153A WAS ISSUED AND SERVED U PON THE ASSESSEE. IN RESPONSE TO SAID NOTICE THE ASSESSEE FILED ITS RETURN OF INCOME ON 17.08.2009 DECLARING THE SAME INCOME WHICH WAS FIL ED ON 31.10.2004 INCLUDING THE CLAIM U/S 80IB DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT ASSES SEE HAS CLAIMED THE DEDUCTION U/S 80IB ON ACCOUNT OF DUTY DRAW BACK (EX PORT INCENTIVE) OF RS.84 94 114/-. IN RESPONSE TO THE SHOW CAUSE NOTIC E THE ASSESSEE SUBMITTED THAT IT HAS NO OBJECTION FOR SUCH A DISAL LOWANCE AS IN THE EARLIER ASSESSMENT YEAR THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN THE SECOND APPELLATE PROCEEDINGS. ACCORDINGLY THE ASSESSING OFFICER DISALLOWED THE CLAIM OF RS.7 73 993/- U/S 80IB. NOW ON SUCH A ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 3 DISALLOWANCE PENALTY HAS BEEN INITIATED. IN RESPON SE TO THE PENALTY SHOW CAUSE NOTICE THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE FOR DEDUCTION U/S 80IB WAS ACCEPTED IN VIEW OF CERTAIN JUDICIAL PRONOUNCEMENTS WHICH HAD COME AFTER THE FILING OF R ETURN INCOME. MOREOVER THE ASSESSEES CLAIM AT THE TIME OF FILIN G OF RETURN INCOME WAS MADE ON THE BASIS OF AUDIT REPORT AND CERTIFICATE I SSUED BY THE AUDITORS IN FORM NO. 10CCB. THUS THE CLAIM WAS BASED ON BONA FIDE BELIEF. THE LD. ASSESSING OFFICER HOWEVER REJECTED THE ASSESSEE S CLAIM ON THE GROUND THAT THE ASSESSEE IN THE A.Y. 2003-04 HAS L OST ITS APPEAL ON THIS ISSUE FROM THE STAGE OF ITAT THEREFORE THE ASSESS EE SHOULD HAVE REVISED ITS RETURN OF INCOME IN THE WAKE FOR A TRIB UNAL ORDER FOR THE EARLIER ORDER AND SHOULD HAVE WITHDRAWN THE CLAIM. ACCORDINGLY HE LEVIED THE PENALTY OF RS.2 73 898/-. 4. BEFORE THE LD.CIT(A) THE ASSESSEE RELIED UPON C ATENA OF CASE LAWS THAT UNDER SUCH CIRCUMSTANCES NO PENALTY SHOULD BE LEVIED. HOWEVER THE LD.CIT(A) CONFIRMED THE PENALTY ON THE GROUND T HAT THE APPELLANT HAS MADE THE OFFER OF UNDISCLOSED INCOME ONLY ON TH E BASIS OF SEARCH AND SURVEY AND THEREFORE EXPLANATION-5A TO SECTION 271(1)(C) IS ATTRACTED. ACCORDINGLY HE CONFIRMED THE PENALTY MA INLY ON THE GROUND THAT IT IS A CASE OF DEEMED PENALTY UNDER EXPLANATI ON 5A. 5. BEFORE US THE LEARNED SENIOR COUNSEL SHRI K. SH IVRAM SUBMITTED THAT THERE IS NO QUESTION OF DISCLOSURE MADE FOR U NDISCLOSED INCOME AFTER THE SEARCH IN THIS CASE AS THE ASSESSEES CLA IM U/S 80IB WAS THERE IN THE ORIGINAL RETURN OF INCOME AND ALSO IN THE RE TURN FILED IN RESPONSE TO NOTICE U/S 153A. AT THE TIME OF THE FILING OF TH E RETURN OF INCOME THE ASSESSEES CLAIM WAS BASED ON AUDITORS REPORT AND CERTIFICATE AND THEREFORE SUCH A CLAIM WAS BONA FIDE. HE FURTHER S UBMITTED THAT PRIOR ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 4 TO SUPREME COURT DECISION IN THE CASE OF LIBERTY IN DIA VS. CIT REPORTED IN (2009) 317 ITR 218 THERE WERE DECISIONS IN FAVO UR OF THE ASSESSEE ALSO. THE DECISION OF LIBERTY INDIA CAME MUCH AFTER THE FILING OF RETURN OF INCOME. LASTLY HE RELIED UPON THE DECISION OF CIT VS. ARVIND FOOTWEAR PVT. LTD. REPORTED IN (2012) 72 DTR 294 WHEREIN H ONBLE ALLAHABAD HIGH COURT ON SIMILAR CLAIM OF DEDUCTION U/S 80IB O N EXPORT INCENTIVE BY WAY OF DUTY DRAWBACK HAVE CONFIRMED THE DELETION OF THE PENALTY. THUS THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECI SION OF THE HONBLE ALLAHABAD HIGH COURT. 6. ON THE OTHER HAND LD. DR STRONGLY RELIED UPON TH E ORDER OF THE AO AND SUBMITTED THAT ONCE THE HONBLE SUPREME COURT HAS HELD THAT SUCH A CLAIM FOR DEDUCTION U/S 80IB ON EXPORT INCENTIVE BY WAY OF DUTY DRAWBACK IS NOT ALLOWABLE THEN THE CLAIM MADE BY T HE ASSESSEE ITSELF WAS NOT LEGALLY SUSTAINABLE AND THEREFORE SUCH A C LAIM AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT MATERIAL PLACED ON RECORD. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB IN RESPECT OF PROFIT DERIVED FROM ITS INDUSTRIAL UN DERTAKING WHICH INCLUDED DEDUCTION ON ACCOUNT OF EXPORT INCENTIVE A LSO IN THE FORM OF DUTY DRAWBACK IN THE ORIGINAL RETURN OF INCOME FIL ED ON 31.10.2004. SUCH A CLAIM WAS REITERATED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A ON 17.08.2009. ONCE THE ASSESSEE HAS NOT OFFER ED ANY INCOME IN CONSEQUENCE OF SEARCH IN THE RETURN OF INCOME NOR ANY SUCH INCOME WAS FOUND AS A RESULT OF SEARCH THERE IS NO QUESTI ON OF APPLICATION OF EXPLANATION-5A AS HELD BY THE LD.CIT(A). HE HAS DE CIDED THE ISSUE ENTIRELY ON WRONG FOOTING. IN ANY CASE AT THE TIME OF FILING OF RETURN OF INCOME THE ASSESSEES CLAIM WAS BASED ON AUDITORS REPORT AND ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 5 CERTIFICATE IN FORM NO. 10CCB. SUCH A CLAIM WAS THU S NON ONLY BASED ON BONA FIDE BELIEF BUT ALSO PRIOR TO DECISION OF LIBE RTY INDIA WHICH WAS RENDERED ONLY ON 31.08.2009. EARLIER THERE WERE CER TAIN DECISIONS WHICH WERE IN FAVOUR OF THE ASSESSEE. EVEN THE TRIBUNALS DECISION IN ASSESSEES CASE FOR THE A.Y. 2003-04 CAME AFTER TH E DATE OF FILING OF RETURN OF INCOME FOR THE A.Y. 2004-05. THUS IT CAN NOT BE HELD THAT ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULAR OF INCOME AT THE TIME OF FILING OF RETURN OF INCOME. MOREOVER THE HONBL E ALLAHABAD HIGH COURT IN THE CASE OF ARVIND FOOTWEAR (SUPRA) ON SIMILAR FACTS HAVE DELETED THE PENALTY. THE RELEVANT PORTION OF THE HEAD NOTED ARE AS UNDER: IT HAS BEEN NOTED IN THE ORDER OF THE TRIBUNAL THA T THERE WAS A DIFFERENCE OF OPINION AT THE TIME WHEN RETURN WAS FILED BY THE ASSESSEE. THE MERE FACT THAT CLAIM OF DEDUCT ION UNDER SECTION 80IB OF THE ACT COULD NOT HAVE BEEN M ADE A BASIS FOR IMPOSING PENALTY IS NOT CORRECT. IT IS N OT DENIED THAT THE APEX COURT CLARIFIED THE LAW IN LIBERTY IN DIA VERSUS COMMISSIONER OF INCOME TAX CAME SUBSEQUENT TO THE F ILING OF THE RETURN. THE APEX COURT IN COMMISSIONER OF I NCOME TAX VERSUS RELIANCE PETRO PRODUCTS PVT. LTD. HAS LA ID DOWN THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINA BLE IN LAW BY ITSELF WILL NOT AMOUNT OT FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. NO ERROR FOUND IN THE ORDER OF THE TRI BUNAL DISMISSING THE APPEAL OF THE DEPARTMENT. PENALTY CANNOT BE IMPOSED UNDER S. 271(1)(C) MERELY BECAUSE ASSESSEE HAS CLAIMED DEDUCTION UNDER S.S. 8 0IB ON THE AMOUNTS OF INCENTIVES BY WAY OF DUTY DRAWBACK W HEN THERE WAS DIFFERENCE OF OPINION PREVALENT AT THE RE LEVANT TIME. THUS ON THE PRESENT FACTS ALSO THE PENALTY LEVIED ON CLAIM OF DEDUCTION U/S 80IB IS DELETED AND ACCORDINGLY ASSESSEES APP EAL FOR THE A.Y. 2004- 05 IS ALLOWED. ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 6 8. NOW WE WILL TAKE UP APPEAL FOR A.Y. 2008-09 BE ING ITA NO. 5257/MUM/2012 VIDE WHICH FOLLOWING GROUND HAS BEEN RAISED: THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) (H EREIN REFERRED AS CIT(A)) HAS ERRED IN CONFIRMING ORDER OF THE LEARNED ASSESSING OFFICER LEVYING THE PENALTY OF RS.15 20 795/- U/S 271(1)(C) OF INCOME TAX ACT 196 1 WITHOUT CONSIDERING THE FACTS AND SUBMISSIONS MADE DURING THE PENALTY PROCEEDINGS. THE PENALTY OF RS.15 20 79 5/- HAS BEEN LEVIED ON THE AMOUNT OF RS.49 21 666/- DECLARE D AS UNDISCLOSED INCOME BY THE ASSESSEE. IT IS SUBMITTED THAT YOUR APPELLANT HAS DULY INCLUDED SUCH UNDISCLOSED I NCOME IN ITS RETURN FILED U/S 153A OF INCOME TAX ACT 1961 A ND HAS DULY PAID TAX ON SUCH INCOME. IT IS PRAYED THAT THE RE HAS BEEN NO CONCEALMENT OR FURNISHING OF INACCURATE PAR TICULARS OF INCOME AND THEREFORE PENALTY U/S 271(1)(C) OF IN COME TAX ACT 1961 AS LEVIED SHOULD BE DELETED. 9. BRIEF FACTS ARE THAT IN THE WAKE OF SEARCH AND SEIZURE ACTION U/S 132(1) CARRIED IN THE CASE OF THE ASSESSEE AND OTHE R GROUP CONCERNS ON 09.02.2009 THE ASSESSEE ALONG WITH OTHER GROUP HA D MADE TOTAL DECLARATION OF UNDISCLOSED INCOME OF RS.15 00 21 00 0/- ON 30.03.2009 COVERING THE ENTIRE GROUP FOR THE VARIOUS ASSESSMEN T YEARS INCLUDING THE ASSESSEE. THIS DECLARATION WAS MADE IN THE FORM OF LETTER FILED BEFORE THAT DDIT (INVESTIGATION AND ADDITIONAL DIT INVESTI GATION). THE ORIGINAL RETURN OF INCOME FOR THE A.Y. 2008-09 WAS FILED ON 03.09.2008 AT AN INCOME OF RS.5 71 84 099/-. IN PURSUANCE OF NOTICE U/S 153A THE ASSESSEE FILED ITS RETURN OF INCOME ON 17.08.2009 DECLARING TOTAL INCOME OF RS.6 21 05 565/- WHICH INCLUDED INTEREST INCOME BASED ON CERTAIN SEIZED DOCUMENTS. THIS ADDITIONAL AMOUNT OF RS.49 2 1 666/- WAS INCLUDED IN PURSUANCE OF THE OFFER LETTER OFFERING THE ADDITIONAL/UNDISCLOSED INCOME. THE SEIZED DOCUMENTS PRIMA FACIE REFLECTED THAT GROUP CONCERNS WERE INVOLVED IN R ECEIPT AND PAYMENT OF EXCESS INTEREST IN CASH OVER AND ABOVE THE RECEIPTS AND PAYMENT OF ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 7 INTEREST ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSING OFFICER ACCEPTED THE ADDITIONAL INCOME OF RS.49 21 666/- OF FERED BY THE ASSESSEE IN THE RETURN OF INCOME U/S 153A. HOWEVER HE REQUIRED THE ASSESSEE TO SUBSTANTIATE THE DECLARATION AND TO GIV E THE JUSTIFICATION FOR SUCH AN INCOME. IN RESPONSE THE ASSESSEE SUBMITTED THAT IT REPRESENTS ONE TIME INCENTIVE RECEIVED IN CASH ON ACCOUNT OF I NTEREST AND MOREOVER IT HAS BEEN ALREADY INCLUDED IN THE RETURN INCOME T O BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AND NO FURTHER AD DITION SHOULD BE MADE. ACCORDINGLY THE ASSESSEES RETURN INCOME FILE D U/S 153A WAS ACCEPTED BY THE AO IN THE ORDER PASSED U/S 143(3) R .W.S. 153A. 10. DURING THE COURSE OF THE PENALTY PROCEEDINGS I N RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE SUBMITTED THAT VIDE LETTER DATED 22.12.2010 THE ASSESSEE HAS GIVEN DETAIL REPLY WIT H REGARD TO AMOUNT DECLARED TOWARDS INCENTIVE AGAINST THE INTEREST EXP ENDING OUTSIDE THE BOOKS OF ACCOUNT. SINCE THE INCOME HAS ALREADY BEEN INCLUDED IN THE RETURN OF INCOME NO PENALTY SHOULD BE LEVIED. HOWE VER THE ASSESSING OFFICER REJECTED THE ASSESSEES SUBMISSION AND HELD THAT IN VIEW OF EXPLANATION-5A TO SECTION 271(1)(C) THE ASSESSEE I S DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME ON THE AMOUNT O F RS.49 21 666/- AS THE ASSESSEE HAD NOT SHOWN THIS AMOUNT IN THE ORIGI NAL RETURN OF INCOME FILED ON 30.09.2008. ACCORDINGLY HE LEVIED PENALTY OF RS.15 20 795/-. SUCH A PENALTY HAS ALSO BEEN CONFIRMED BY THE LD.CI T(A) RELYING ON CERTAIN DECISIONS WHICH HAS BEEN DEALT BY THE LD.CI T(A) AT PAGES 31 TO 33 OF THE APPELLATE ORDER. THE SUM AND SUBSTANCE O F HIS REASONING IS THAT IN VIEW OF EXPLANATION 5A TO SECTION 271(1)(C ) IMMUNITY IS NOT AVAILABLE TO THE ASSESSEE FOR UNDISCLOSED INCOME FO UND IN RESPECT OF ANY ASSESSMENT YEAR IN THE COURSE OF SEARCH FOR WHICH THE TIME LIMIT FOR ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 8 FILING OF RETURN OF INCOME HAD ELAPSED. THUS HE CON FIRMED THE PENALTY ON THE INCOME DISCLOSED IN THE RETURN OF INCOME FILED U/S 153A OF RS.49 21 666/- 11. BEFORE US LD. SENIOR COUNSEL SHRI K. SHIVRAM S UBMITTED THAT SECTION 153A USES THE WORD NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 WHICH INTER ALIA MEANS THAT WHEN THE NOTICE U/S 153A IS ISSUED THE EARLIER RETURN OF INCOME FILED BECOMES NONEST AND ONLY RETURN OF INCOME WHICH IS RELEVANT FOR THE ASSESSME NT IS RETURN OF INCOME FILED U/S 153A. SINCE THE ASSESSEE HAS DISCL OSED THE CORRECT INCOME IN PURSUANCE OF NOTICE U/S 153A THEREFORE IT CANNOT BE HELD THAT PENALTY IS LEVIABLE IN RESPECT OF THE AMOUNT D ISCLOSED IN THE SAID RETURN OF INCOME. HE FURTHER SUBMITTED THAT EXPLANA TION-5 AND 5A ARE IDENTICAL AND WHILE INTERPRETING EXPLANATION 5 THE COURTS HAVE HELD THAT IF THE INCOME HAS BEEN DISCLOSED AND THE ASSESSEE A ND HAS ALSO SPECIFIED THE MANNER IN WHICH INCOME HAS BEEN DERIVED THEN N O PENALTY IS LEVIABLE. IN SUPPORT OF HIS CONTENTION HE RELIED UP ON ON THE DECISION OF RAJASTHAN HIGH COURT IN THE CASES OF CIT VS. KANHAIYA LAL (2008) 299 ITR 19 (RAJ) CIT VS. S.D.V. CHANDRU (2004) 266 ITR 175 (MADRAS). 12. ON THE OTHER HAND LD. DR SUBMITTED THAT EXPLA NATION 5A DEALS WITH THE CASES WHERE THE SEARCH HAS BEEN INITIATED U/S 132 AFTER 1 ST JUNE 2007. THE SAID EXPLANATION DOES NOT CONTAIN AN Y EXCEPTIONS WHICH WAS SPECIFICALLY PROVIDED IN CLAUSE (1) AND (2) OF EXPLANATION 5 APPLICABLE TO SEARCHES INITIATED BEFORE 1 ST JUNE 2007. HERE IN THIS CASE THE ASSESSEE HAS ADMITTEDLY NOT SHOWN ADDITIONAL I NTEREST INCOME PRIOR TO THE DATE OF SEARCH AND ASSESSEE HAS BEEN FOUND T O EARNING THIS INCOME DURING THE COURSE OF SEARCH THEREFORE THER E IS A DEEMED CONCEALMENT OF INCOME UNDER EXPLANATION 5A. THUS TH E REASONING GIVEN ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 9 BY AO AS WELL AS LD.CIT(A) IS LEGALLY CORRECT WHIC H SHOULD BE UPHELD. THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL WE RE ON EXPLANATION 5 WHICH ARE NOT APPLICABLE FOR EXPLANATION 5A. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT FINDINGS OF THE AO AS WELL AS LD.CIT(A) AND MATERIA L PLACED ON RECORD. THE SEARCH AND SEIZURE ACTION U/S 132(1) HAD TAKEN PLACE IN THE CASE OF THE ASSESSEE ON 09.02.2009. PRIOR TO THE COMMENCEME NT OF SEARCH DUE DATE OF RETURN OF INCOME HAD ALREADY EXPIRED FOR TH E A.Y. 2008-09. HERE IN THIS CASE ORIGINAL RETURN OF INCOME U/S 139(1) W AS FILED ON 30.09.2008 DECLARING TOTAL INCOME OF RS.5 71 84 099/-. IN THE WAKE OF SEARCH AND SEIZURE ACTION THE ASSESSEE HAD MADE DECLARATION F OR OFFERING ADDITIONAL INCOME WHICH WAS BASED ON DOCUMENTS FOUND AT THE T IME OF SEARCH. THE DOCUMENTS SEIZED REVEALED THAT THE GROUP CONCE RNS INCLUDING ASSESSEE WERE INDULGED IN RECEIVING AND PAYING OF E XCESS INTEREST IN CASH OVER AND ABOVE THE RECEIPT AND PAYMENT OF INTE REST ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSEE HAS ALSO INCURRED CERTAIN EXPENSES WHICH WERE TOWARDS PROCESS OF LOANS PAID B Y THE ASSESSEE IN CASH OR CHEQUES UNDER THE HEAD BROKERAGE/COMMISSION . STATEMENT OF SHRI ASHOK M. SETH EXECUTIVE DIRECTOR OF THE COMPA NY WAS ALSO RECORDED U/S 131 DURING THE COURSE OF SURVEY U/S 13 3A WHICH WAS CARRIED OUT SIMULTANEOUSLY AND EXPLAINED THE CONTEN TS OF IMPOUNDED MATERIAL AND ITS IMPLICATION IN THE BOOKS OF ACCOUN T. BASE ON THE SEIZED DOCUMENTS AN INCOME OF RS.49 21 666/- WAS OFFERED AS UNDISCLOSED INCOME. THIS AMOUNT WAS INCLUDED IN THE RETURN OF I NCOME FILED ON 17.08.2009 IN RESPONSE TO NOTICE U/S 153A DATED 06 .07.2009. AFTER INCLUDING THIS INCOME THE TOTAL INCOME WAS SHOWN AT RS.6 21 05 765/-. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAD DISCUSSED SPECIFICALLY ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 10 THE RELATED SEIZED DOCUMENTS AND THE AMOUNT OF INTE REST/INCENTIVES WHICH WAS RECEIVED IN CASH AND FOUND TO BE NOT REC ORDED IN THE BOOKS OF ACCOUNT. THE DECLARATION MADE BY THE ASSESSEE HA D BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S 143(3 ) R.W.S. 153A DATED 31.12.2010. IN THE COURSE OF THE PENALTY PROCEEDING S THE ASSESSEES SUBMISSION BEFORE THE AO WAS AS UNDER: 1. ASSESSEE COMPANY HAS FILED RETURN OF INCOME ON 30.9.2008 U/S. 139 DECLARING TOTAL INCOME AT RS.5 71 84 099/- AND CONSEQUENT TO SEARCH ACTION ASSESSEE 'COMPANY HAS F ILED RETURN OF INCOME ON 17.08.2009 IN RESPONSE TO NOTICE U/S. 153A OF THE 'INCOME TAX ACT 1961 DECLARING INCOME OF RS.6 21 0 5 765/ INCLUDING UNDISCLOSED INCOME OF RS.49 21 666/-. THE ASSESSMENT HAS BEEN COMPLETED U/S 143 (3) R.W.S. 153A OF INCOM E TAX ACT 1961 ASSESSING TOTAL INCOME AT RS.6 21 05 765/-. 2. IT IS SUBMITTED THAT RETURNED FILED BY THE ASSES SEE COMPANY HAS BEEN ACCEPTED IN THE ASSESSMENT COMPLETED U/S. 143 (3) OF INCOME TAX ACT 1961. IT IS HOWEVER SUBMITTED THAT PENALTY U/S 271 (1) (C) HAS BEEN INITIATED FOR THE UNDISCLOSED INCOME' DECLARED BY THE ASSESSEE COMPANY. 3. IT IS SUBMITTED THAT ABOVE DECLARATION INCLUDES AN AMOUNT OF RS. 49 21 &66/- ON ACCOUNT OF INTEREST/INCENTIVES I N CASH AND THE SAME HAS BEEN DULY OFFERED FOR TAX RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S 153A OF INCOME TAX ACT 1961. 4. FURTHER WITH REGARD TO THE DECLARATION MADE IN R ESPECT OF UNDISCLOSED INCOME' ON THE BASIS OF SEIZED DOCUMENT S WE WOULD LIKE TO STATE THAT THE EXPLAINED TO YOUR HONOUR DUR ING THE ASSESSMENT PROCEEDINGS VIDE OUR SUBMISSION' DATED 2 0.12.2010 AND THE RELEVANT PARA OF THE SAME IS REPRODUCED HER E BELOW: '2. . WITH REGARD TO PAGE NO.39 OF FILE NO. A - 3 OF 701 MAHALAXMI CHAMBERS BHULABHAI DESAI ROAD MUMBAI - 400 026 WE WOULD LIKE TO STATE THAT ASSESSEE HAS DECLARED A N AMOUNT OF RS.47 75 000/- TOWARDS INCENTIVES AGAINST THE INTER EST EXPENDED IN BOOKS OF ACCOUNT. SUCH INCENTIVE OF RS.47 75 000 /- HAS BEEN REED. IN CASH AND HAS BEEN DECLARED AS UNDISCLOSED INCOME. 3. WITH REGARD TO PAGE NO.27 28 AND 31 OF FILE NO.A - 3 OF 701 MAHALAXML CHAMBERS BHULABHAI DESAI ROAD MUMBAI 40 0 026 ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 11 WE WOULD .LIKE TO STATE THAT ASSESSEE HAS DECLARED AN AMOUNT OF RS.1 46 666/- TOWARDS INCENTIVES AGAINST THE INTERE ST EXPENDED IN BOOKS OF ACCOUNT. SUCH INCENTIVE OF RS.1 46 666/ - HAS BEEN REED. IN CASH AND HAS BEEN DECLARED AS UNDISCLOSED INCOME. ' . 5. IT IS THEREFORE CLEAR FROM THE ABOVE FACTS YOUR HONOUR HAS WRONGLY INITIATED PENALTY PROCEEDINGS IN ASSESSEE'S CASE EVEN AFTER VOLUNTARY DISCLOSURE BY THE ASSESSEE AND THER EFORE THE PENALTY PROCEEDING INITIATED BY YOUR HONOUR SHOULD BE DROPPED. 6. IT IS THEREFORE SUBMITTED THAT YOUR ASSESSEE HAS NOT DELIBERATELY CONCEALED ANY FACT OR CONCEALED ANY PA RTICULARS OF INCOME AT' THE 'TIME OF FILING OF THE RETURN HENCE NO PENALTY SHOULD BE LEVIED. 7. IN VIEW OF THE ABOVE FACTS AND ABOVE. LEGAL CASE LAWS IT IS PRAYED THAT PENALTY PROCEEDINGS IN THE CASE OF THE ASSESSEE SHOULD BE DROPPED. HOWEVER THE ASSESSING OFFICER HAS LEVIED THE PENAL TY AFTER INVOKING EXPLANATION 5A TO SECTION 271(1)(C). THE MAIN ISSUE BEFORE US IS WHETHER UNDER THE AFORESAID FACTS PENALTY CAN BE S AID TO BE LEVIABLE UNDER EXPLANATION 5A TO SECTION 271(1)(C). FOR SAKE OF READY REFERENCE EXPLANATION 5A WHICH HAS BEEN BROUGHT IN THE STATUT E W.E.F. 01.06.2007 READS AS UNDER: [EXPLANATION 5A- WHERE IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE 2007 THE ASSESSEE IS FOUND TO BE THE OWNER OF- (I) ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUI RED BY HIM UTILIZING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACT ION REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY P REVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND - ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 12 (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR H AS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SU CH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH HE SHALL FOR HE PURPOSES OF IMPOSITION OF A PENALTY U NDER CLAUSE (C) OF SUB-SECTION(1) OF THIS SECTION BE DEEMED TO HAV E CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME.] 14. THE AFORESAID EXPLANATION MAKES IT CLEAR THAT FIRSTLY IT IS APPLICABLE IN THE CASES WHERE THE SEARCH HAS BEEN I NITIATED U/S 132 AFTER 01.06.2007 AND DURING THE COURSE OF SEARCH THE ASS ESSEE IS FOUND TO BE THE OWNER OF ANY OF THE ASSET OR INCOME AS SPEC IFIED IN CLAUSE (I) AND (II) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE T HE DAY OF SEARCH AND; SECONDLY IF SUCH AN ASSET OR INCOME HAS NOT BEEN D ECLARED IN THE RETURN OF INCOME BEFORE THE DATE OF SEARCH OR THE DUE DATE OF RETURN OF INCOME FOR SUCH PREVIOUS YEAR HAS EXPIRED AND THE ASSESSEE HAS NOT FILED THE RETURN THEN ANY INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AFTER THE DATE OF SEARCH HE SHALL BE DEEMED TO HAVE CONCEALED PARTICULARS OF HIS INCOME OR HAS A FURNISHED INACCU RATE PARTICULARS OF SUCH INCOME. THERE ARE NO EXCEPTION CLAUSES FOR IMM UNITY FROM PENALTY U/S 271(1)(C) AND TO THIS EXTENT EXPLANATION 5A I S IN CONTRADISTINCTION WITH EXPLANATION 5 WHICH WAS APPLICABLE FOR SEARCH ES PRIOR TO 01.06.2007. IN EXPLANATION 5 THERE WERE TWO EXCEPT IONS PROVIDED IN CLAUSE (I) AND (II). IF THE CASES FELL WITHIN THE S AID EXCEPTIONS THEN NO PENALTY IS LEVIABLE. SUCH EXCEPTIONS HAVE NOT BEEN PROVIDED IN EXPLANATION 5A. ALL THE CASE LAWS WHICH HAVE BEEN R EFERRED BY THE ASSESSEE PERTAIN TO EXCEPTION CLAUSES PROVIDED IN EXPLANATION-5. HERE IN ITA NO. 5256 & 5257/MUM/2012 M/S. PRAKASH STEELAGE LTD. ASSESSMENT YEAR: 2004-05 & 2008-09 13 THIS CASE ADMITTEDLY THE SEARCH HAS TAKEN PLACE AFT ER 01.06.2007 AND THE RETURN OF INCOME FOR THE A.Y. 2008-09 HAD FALLEN DU E MUCH BEFORE THE DATE OF SEARCH. IN THE RETURN OF INCOME FILED PRIOR TO THE DATE OF SEARCH THE INCOME OF RS.49 21 666/- WAS NOT INCLUDED BY TH E ASSESSEE. THE ADDITIONAL INCOME WHICH HAS BEEN DECLARED AFTER THE DATE OF SEARCH WAS IN THE RETURN OF INCOME FILED U/S 153A AND NOT EARL IER. THUS IN OUR VIEW EXPLANATION-5A IS CLEARLY ATTRACTED AND THE PENALTY LEVIED BY THE AO U/S 271(1)(C) HAS RIGHTLY BEEN CONFIRMED BY THE LD.CIT( A). ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE IS DISMISSED AND THE ASSESSEES APPEAL FOR A.Y. 2008-09 IS DISMISSED. 15. IN THE RESULT THE APPEAL FILED FOR A.Y. 2004-05 IS ALLOWED WHEREAS THE APPEAL FILED FOR A.Y. 2008-09 IS DISMI SSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF NOVEMBER 2014. SD/- SD/- (SANJAY ARORA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 26.11.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.