Shri Dilip H. Agrawal,, Baroda v. The Dy.CIT, Central Circle-2,, Baroda

ITSSA 183/AHD/2014 | 2009-2010
Pronouncement Date: 18-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 18320516 RSA 2014
Assessee PAN ABMPA5734C
Bench Ahmedabad
Appeal Number ITSSA 183/AHD/2014
Duration Of Justice 2 year(s) 5 month(s) 24 day(s)
Appellant Shri Dilip H. Agrawal,, Baroda
Respondent The Dy.CIT, Central Circle-2,, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 18-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 18-10-2016
Date Of Final Hearing 30-09-2016
Next Hearing Date 30-09-2016
Assessment Year 2009-2010
Appeal Filed On 24-04-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI MANISH BORAD ACCOUNTANT MEMBER IT(SS)A.NO.179 TO 184/AHD/2014 (ASSTT.YEARS : 2005-06 TO 2010-11 SHRI DILIP H. AGRAWAL A/2 SEVASHRAM SOCIETY ELLORAPARK NR.ATMA JYOTI ASHAM BARODA. PAN : ABMPA 5734 C. VS DCIT CENT.CIR.2 BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI MUKUND BAKSHI AR REVENUE BY : SHRI JAMESH KURIAN SR.DR S / DATE OF HEARING : 30/09/2016 / DATE OF PRONOUNCEMENT: /10/2016 / O R D E R PER BENCH : PRESENT SIX APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST ORDERS OF THE LD.COMMISSIONER OF INCOME-TAX (APPEAL S)-IV AHMEDABAD DATED 24.2.2014 FOR THE ASSTT.YEARS 2005-06 TO 2010-11. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A)HAS ERRED IN CONFIRMING PENALTY UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT 1961. 3. FACTS IN ALL THESE ASSESSMENT YEARS ARE COMMON THEREFORE FOR FACILITY OF REFERENCE WE TAKE UP FACTS PRIMARILY FROM THE ASST T.YEAR 2005-06. 4. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZ URE OPERATION WAS CARRIED OUT AT DARSHANAM GROUP CASES UNDER SECTION 132 OF T HE INCOME TAX ACT ON IT(SS)A NO.179 TO 184/AHD/2014 2 25.10.2010. PREMISES OF THE ASSESSEE WAS ALSO COVE RED UNDER SEARCH OPERATION AND CONSEQUENTLY IN ORDER TO GIVE A LOGI CAL END TO THE PROCEEDINGS NOTICE UNDER SECTION 153A WAS ISSUED TO THE ASSESSE E IN ALL THESE ASSESSMENT YEARS REQUIRING HIM TO FURNISH RETURN OF INCOME WIT HIN 45 DAYS FROM THE SERVICE OF NOTICE. IT EMERGES OUT THAT THE ASSESSE E HAS FILED HIS RETURNS OF INCOME ON 24.5.2011 UNDER SECTION 153A OF THE INCOM E TAX ACT. IN HIS RETURN HE HAS DISCLOSED CERTAIN ADDITIONAL INCOME. FOR THE PURPOSE OF THESE PENALTY MATTERS WE WOULD LIKE TO MAKE REFERENCE OF THE DETAILS COMPILED BY THE LD.CIT(A) IN TABULAR FORM ON PAGE NO.3 OF THE I MPUGNED ORDER WHICH WILL EXHIBIT ADDITIONS MADE BY THE AO AS WELL AS ADDITIO NAL INCOME DISCLOSED BY THE ASSESSEE. IT WILL ALSO INDICATE PENALTY IMPOSE D UPON THE ASSESSEE BY THE AO. IT READS AS UNDER: A.Y. PENALTY LEVIED 2005-06 RS.24 100/- 2006-07 RS.63 000/- 2007-08 RS.59 200/- 2008-09 RS.2 68 700/- 2009-10 RS.3 51 400/- 2010-11 RS.3 90 300/- AY ADDITION OF CASH CREDITS U/S68 DISALLOWA NCE OF INTEREST ON CASH CREDITS U/S 68 ADDITIONAL INCOME DISCLOSED IN THE 153A RETURN ADDITION ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL S ADDITION ON UNACCOUNTED SELF ASSESSMENT TAX PAYMENT 2005-06 18 500/- . - 60 000/- 2006-07 1 67 500/ - 2 084/- - 66 000/- 2007-08 38 000/- - 18 840/- 78 000/- 5 000/- 2008-09 22 500/- - 8 00 000/- ~ 2009-10 36 500/- - 9 68 000/- ~ 2010-11 - - 12 63 020 IT(SS)A NO.179 TO 184/AHD/2014 3 5. DISSATISFIED WITH THE LEVY OF ABOVE PENALTY THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE LD.FIRS T APPELLATE AUTHORITY HAS DELETED PENALTY WITH REGARD TO THE ADDITIONS MADE B Y THE AO FOR LOW HOUSEHOLD WITHDRAWALS. AS FAR AS OTHER ADDITIONS A RE CONCERNED PENALTY HAS BEEN CONFIRMED. 6. BEFORE US THE LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT AS FAR AS ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN THE R ETURN FILED UNDER SECTION 153A FOR THE ASSTT.YEARS 2007-08 TO 2010-11 IS CONC ERNED THIS WAS OFFERED BY THE ASSESSEE AT HIS OWN WILL AND NO INCRIMINATIN G MATERIAL WAS FOUND WHICH CAN DEMONSTRATE THAT MONEY BULLION JEWELLERY ETC. WERE DETECTED DURING THE COURSE OF SEARCH. THEREFORE WITH THE H ELP OF EXPLANATION 5A ATTACHED TO SECTION 271(1)(C) OF THE ACT THE LD. R EVENUE AUTHORITIES CANNOT DEEM THIS DISCLOSURE AS CONCEALED INCOME. FOR BUTT RESSING HIS CONTENTIONS HE RELIED UPON THE ORDER OF THE ITAT RAJKOT BENCH IN THE CASE OF SHRI KIRITKUMAR C. THACKER IN IT(SS)A.NO.16 TO 20/RJT/20 13. HE POINTED OUT THAT THE TRIBUNAL HAS CONSIDERED THIS ASPECT ELABOR ATELY IN THE CASE OF MANSUKHBHAI R. SORATHIA VS. JCIT IT(SS) NO.46/RJT/ 2012 AND HAS REPRODUCED THE DISCUSSION MADE THEREIN. 7. WITH REGARD TO THE ADDITION ON ACCOUNT OF UNEXPL AINED CASH CREDIT THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSE SSEE HAS AGREED FOR THE ABOVE ADDITIONS IN ORDER TO AVOID LITIGATION WITH T HE DEPARTMENT. OTHERWISE HE HAS CONFIRMATION AND OTHER SUPPORTING EVIDENCES. THEREFORE PENALTY OUGHT TO HAVE NOT IMPOSED UPON THE ASSESSEE. 8. ON THE OTHER HAND THE LD.DR CONTENDED THAT THE ASSESSEE HAS OFFERED ADDITIONAL INCOME AFTER SEARCH. IT WOULD GIVE AN I NFERENCE THAT SOME INCRIMINATING MATERIAL MUST HAVE BEEN UNEARTHED DUR ING THE COURSE OF SEARCH IT(SS)A NO.179 TO 184/AHD/2014 4 WHICH HAS PERSUADED THE ASSESSEE TO DECLARE ADDITIO NAL INCOME. HE RELIED UPON THE ORDER OF THE LD.CIT(A). 9. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. AS FAR AS PENALTY IMPOSED QUA ADDITIONS MADE ON ACCOUNT OF ADDITIONAL INCOME DECLARED BY THE ASSESSEE IS CONCE RNED WE FIND THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ISCUSSION MADE BY THE TRIBUNAL IN THE CASE OF SHRI KIRITKUMAR C. THACKER (SUPRA). THE DISCUSSION MADE THEREIN READS AS UNDER: 8. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE SOLE ISSUE REQUI RES TO BE ADJUDICATED BY US IS WHETHER THE ADDITIONAL INCOME DISCLOSED IN THE RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTIO N 153A OF THE ACT WAS A VOLUNTARY DISCLOSURE OF INCOME WITH A VIEW TO BUY PEACE AND THEREFORE THE ALLEGED VOLUNTARY DISCLOSURE OF INCO ME DOES NOT FORM WITHIN THE MISCHIEF OF DEEMED CONCEALMENT PROVIDED IN EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT. TH IS IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN THE CASE OF SHRI MANSUKHBHAI R. SORATHIA (SUPRA). THE DISCUSSION MADE BY THE TRIBU NAL FROM PARA 6 TO 17 IS WORTH TO NOTE. IT READS AS UNDER: 6. THE LD.FIRST APPELLATE AUTHORITY HAS MADE A LUC ID ENUNCIATION OF LAW AND FACTS IN THE DETAILED ORDER IMPUGNED BEFORE US. THOUGH EXPLANATION 5 TO SECTION 271(1)( C) OF THE ACT IS NOT APPLICABLE IN THESE ASSESSMENT YEARS BUT IN ORDER TO DEMONSTRATE WHO CAN CLAIM IMMUNITY FROM LEVY OF PE NALTY LD. REPRESENTATIVES HAVE EXPLAINED THE POSITION OF LAW ON THE STRENGTH OF JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAYABHAI (SUPRA). THEY DREW OUR ATTENTION TO EXPLANATION 5 AND THEREAFTER POINT OUT THE DISTINCT ION BETWEEN EXPLANATION 5 AND 5A. THEREFORE WE FIRST TAKE NOT E OF EXPLANATION-5. THE EXPLANATION-5 APPENDED WITH SECT ION 271(1)(C) OF THE ACT. THIS EXPLANATION READS AS UN DER: 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 BULLION JEW ELLERY OR OTHER IT(SS)A NO.179 TO 184/AHD/2014 5 VALUABLE ARTICLE OR THING (HEREAFTER IN THIS EXPLAN ATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASS ETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HI S INCOME (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE T HE 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 AF TER THE DATE OF THE SEARCH THEN NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH HE SHALL FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE (C) OF SUB-SECTION (1) OF THIS SECTION BE DEEMED TO HA VE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS 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 TH E DATE OF THE SEARCH ; AND (II) IN A CASE FALLING UNDER CLAUSE (B) ON OR BE FORE SUCH DATE IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLO SED TO THE 85[PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 85[PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE SAID DATE ; OR (2) HE IN THE COURSE OF THE SEARCH MAKES A STATEM ENT UNDER SUB- SECTION (4) OF SECTION 132 THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING FOUND IN HIS POS SESSION OR UNDER HIS CONTROL HAS BEEN ACQUIRED OUT OF HIS INC OME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCO ME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN SU B-SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN THE STATE MENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PA YS THE TAX TOGETHER WITH INTEREST IF ANY IN RESPECT OF SUCH INCOME. 7. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN INCOME TAX APP EAL IT(SS)A NO.179 TO 184/AHD/2014 6 NO.1181 TO 1185 OF 2010 IN THE CASE OF KIRIT DAYABH AI PATEL VS. ACIT. COPY OF THIS DECISION HAS BEEN PLACED ON THE RECORD. THE HONBLE COURT WHILE CONSTRUING THE MEANING OF EXPLA NATION 5 HAS PUT RELIANCE UPON THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF ACIT VS. GEBILAL KANBHAIALAL (HUF) 348 ITR 561 (SC). ACCORDING TO THIS DECISION THE EXPLANATION 5 IS DEEMING PROVISION. IT PROVIDES WHERE IN THE COURSE OF SEAR CH UNDER SECTION 132 THE ASSESSEE IS FOUND TO BE OWNER OF U NACCOUNTED ASSET AND HE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQU IRED BY HIM BY UTILIZING WHOLE OR PART OF HIS INCOME FROM ANY P REVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH OR WHICH IS TO END ON OR AFTER THE DATE OF SEARCH THEN IN SUCH A SITUATI ON NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS O F HIS INCOME FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER SECT ION 271(1)(C) OF THE ACT. THE HONBLE COURT THEREAFTER PROPOUN DED THAT SUB- CLAUSE (1) AND (2) EXPLANATION 5 PROVIDES EXCEPTION S FOR DEEMING THE CONCEALMENT OF PARTICULARS OF INCOME. IN THAT CASE THE HONBLE COURT WAS DEALING IN SUB-CLAUSE (2) OF EXPLANATION- 5 AND OBSERVED THAT IN ORDER TO CLAIM IMMUNITY AS P ER SUB-CLAUSE (2) THREE CONDITIONS HAVE TO BE SATISFIED BY THE A SSESSEE. THESE THREE CONDITIONS ARE (A) THAT THE ASSESSEE HIMSELF MAKES A STATEMENT UNDER SECTION 132(4) OF THE ACT IN THE CO URSE OF SEARCH STATING THAT THE UNACCOUNTED ASSETS AND INCRIMINATI NG DOCUMENTS FOUND FROM HIS POSSESSION DURING THE SEARCH HAVE BE EN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED IN T HE RETURNS OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SP ECIFIED IN SECTION 139(1); (B) THAT THE ASSESSEE SHOULD SPECIF Y IN HIS STATEMENT UNDER SECTION 132(4) OF THE ACT THE MANN ER IN WHICH THE INCOME STOOD DERIVED AND (C) THE ASSESSEE HAS TO PAY TAX TOGETHER WITH INTEREST IF ANY IN RESPONSE TO SUCH UNDISCLOSED INCOME. ACCORDING TO THE ASSESSEES PRESENT BEFORE US THEY HAVE MADE VOLUNTARY DISCLOSURE FILED RETURNS AND PAID T AXES. THEIR EXPLANATION FOR AVAILING THE BENEFIT OF JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI P ATEL (SUPRA) HAS BEEN REJECTED BY THE LD.FIRST APPELLATE AUTHORI TY ON THE GROUND THAT THE EXPLANATION 5 IS APPLICABLE ON THE CASES WHERE THE SEARCH WAS INITIATED ON OR BEFORE THE 1 ST JUNE 2007. AFTER 1 ST JULY 2007 THE EXPLANATION 5A TO SUB-SECTION (1) O F SECTION 271(1)(C) HAS BEEN INSERTED VIDE FINANCE ACT 2007. ALONG WITH THIS EXPLANATION SECTION 271AAA HAS ALSO BEEN INSE RTED BY IT(SS)A NO.179 TO 184/AHD/2014 7 FINANCE ACT 2007. THE EXPLANATION 5A AND SECTION 271AAA READ AS UNDER: EXPLANATION 5A. WHERE IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE 2007 THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY BULLION JEWELLERY OR OTHER VALUAB LE ARTICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQU IRED BY HIM BY UTILISING (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 TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PA RT) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS Y EAR HAS 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 F OR SUCH 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 THE PURPOSES OF IMPOSITION OF A PENALTY UNDER C LAUSE (C) OF SUB- SECTION (1) OF THIS SECTION BE DEEMED TO HAVE CONC EALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. 271AAA. (1) THE ASSESSING OFFICER MAY NOTWITHSTAND ING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT DIRE CT THAT IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132ON OR AFTER THE 1ST DAY OF JUNE 2007 BUT BEFORE THE 1ST DAY OF JUL Y 2012 THE ASSESSEE SHALL PAY BY WAY OF PENALTY IN ADDITION T O TAX IF ANY PAYABLE BY HIM A SUM COMPUTED AT THE RATE OF TEN P ER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE IT(SS)A NO.179 TO 184/AHD/2014 8 (I) IN THE COURSE OF THE SEARCH IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132 ADMITS THE UNDISCLOSED INCOME A ND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCL OSED INCOME WAS DERIVED; AND (III) PAYS THE TAX TOGETHER WITH INTEREST IF ANY IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE I N RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL S O FAR AS MAY BE APPLY IN RELATION TO THE PENALTY REFERRED TO IN THI S SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION (A) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED 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 (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEAR CH 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 87[PRINCIPA L CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 87[PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED 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 FA LSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH N OT BEEN CONDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS Y EAR IT(SS)A NO.179 TO 184/AHD/2014 9 (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH BU T THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1 ) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED T HE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE S AID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 8. A PERUSAL OF BOTH THESE SECTIONS TOGETHER WOULD INDICATE THAT THE IMMUNITY AKIN TO EXPLANATION 5 IS AVAILABL E TO THE ASSESSEE UNDER EXPLANATION-5A ALSO IF HE FULFILLS THE CONDITIONS NARRATED IN SECTION 271AAA. THE EXPLANATION APPEND ED TO SECTION 271AAA PROVIDES THE DEFINITION OF UNDISCLOS ED INCOME AND SPECIFIED PREVIOUS YEAR. A PERUSAL OF THE EXPR ESSION SPECIFIED PREVIOUS YEAR WOULD INDICATE THAT THE Y EAR OF SEARCH AND IMMEDIATELY EARLIER YEAR IF DUE DATE OF FILING OF THE RETURN HAS NOT EXPIRED AND INCOME-TAX RETURN FOR SU CH YEAR HAS NOT BEEN FILED. SINCE THE ASSESSMENT YEARS INVOLVE D BEFORE US ARE THE ASSTT.YEARS 2008-09 AND 2009-10 THE DUE DA TE FOR FILING OF THE RETURN FOR THE ASSTT.YEAR 2009-10 WAS EXPIRE D BEFORE THE SEARCH ACTION. THUS BOTH THESE YEARS DO NOT FALL WITHIN THE AMBIT OF SPECIFIED YEARS. SINCE THE PERIOD OF TH ESE TWO ASSESSMENT YEARS DOES NOT FALL WITHIN THE EXPRESSIO N SPECIFIED YEAR PROVIDED IN SECTION 271AAA THEREFORE WE DO NOT DEEM IT NECESSARY TO CONSTRUE AND EXPLAIN THE MEANING OF EX PLANATION 5A WITHIN THE SCOPE OF SECTION 271AAA. THE ASSESSE ES AS SUCH CANNOT CLAIM IMMUNITY AKIN TO ONE AVAILABLE IN SUB- CLAUSE (1) AND (2) OF THE EXPLANATION 5 MORE PARTICULARLY ON THE STRENGTH OF THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN TH E CASE OF KIRIT DAHYABHAI PATEL (SUPRA). THE LD.FIRST APPELL ATE AUTHORITY HAS DEALT WITH THESE SITUATION IN AN ANAL YTICAL MANNER AND IN RIGHT PERSPECTIVE. AS FAR AS THE CONSTRUCTI ON OF MEANING OF EXPLANATION 5A TO SECTION 271AAA BY THE LD.FIRST APPELLATE AUTHORITY IS CONCERNED WE DO NOT FIND ANY ERROR. 9. AT THE COST OF REPETITION WE WOULD LIKE TO OBSE RVE THAT AS PER EXPLANATION 5A IF IN THE COURSE OF SEARCH INIT IATED UNDER SECTION 132 ON OR AFTER THE 1 ST JUNE 2007 THE ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY BULLION JEWELLERY OR OTH ER VALUABLE ARTICLE OR THINGS AND THE ASSESSEE CLAIMS SUCH ASSE TS HAVE BEEN ACQUIRED BY HIM BY UTILSING THE WHOLE OR PARTLY OF HIS INCOME FROM ANY PREVIOUS YEAR OR ANY INCOME BASED ON ANY E NTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACT IONS FOUND IT(SS)A NO.179 TO 184/AHD/2014 10 DURING THE COURSE OF SEARCH AND THE ASSESSEE CLAIM S THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME FROM ANY PREVIOU S YEAR WHICH HAS ENDED BEFORE THE DATE OF SEARCH THEN NOTWITHSTANDING SUCH INCOME IS DECLARED BY HIM IN A NY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH HE SHALL FOR THE PURPOSE OF IMPOSITION OF PENALTY UNDER CLAUSE ( C) OF SUB- SECTION (1) OF THIS SECTION BE DEEMED TO HAVE BEEN CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS. THE MOOT QUESTION FOR ATTRACTING THIS EXPLANATION IS TH AT IN THE COURSE OF SEARCH MONEY BULLION JEWELLERY OR INCOM E BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMEN TS OUGHT TO HAVE BEEN FOUND. IN A GIVEN SITUATION NO MONEY OR BULLION OR JEWELLERY OR INCOME MIGHT HAVE FOUND FROM THE ASSES SEES FOR THE ASSESSMENT YEARS WHICH WERE NOT PART OF SPECIFIED PREVIOUS YEAR CONTEMPLATED IN SECTION 271AAA OR IMMUNITY AV AILABLE TO THE ASSESSEES UNDER SUB-CLAUSE (A) AND (B) OF EX PLANATION 5A THEN ALSO IF IN RESPONSE TO THE NOTICE UNDER S ECTION 153A THE ASSESSEE DISCLOSED SOME ADDITIONAL INCOME VOLUN TARILY WOULD HE BE DEEMED TO HAVE CONCEALED THE INCOME FOR VISITING HIM WITH PENALTY UNDER SECTION 271(1)(C) OF THE ACT ? THE LD.REVENUE AUTHORITIES HAD DRAWN INFERENCE THAT SIN CE THE ASSESSEE HAS NOT DISCLOSED ADDITIONAL INCOME IN THE ORIGINAL RETURNS MEANING THEREBY IT IS TO BE ASSUMED THAT THEY HAVE DISCLOSED THIS AMOUNT ONLY WHEN SOME INCRIMINATING MATERIAL WAS FOUND. TO OUR MIND THIS ASSUMPTION OUGHT TO BE SUPPORTED WITH REFERENCE OF THAT INCRIMINATING MATERIAL. LET US SEE THE FINDING IN THE ASSESSMENT ORDER. 10. WE HAVE PERUSED THE ASSESSMENT ORDER OF SHRI MANSUKHBHAI R. SORATHIA IN THE ASSTT.YEAR 2008-09. ALL OTHER ASSESSMENT ORDERS ARE ALSO SIMILARLY WORDED. IT IS A VERY BRIEF ASSESSMENT ORDERS RUNNING ONE-AND-HALF PAGES. IN T HE FIRST PAGE THE LD.AO HAS NARRATED PROCEDURAL ASPECT ABOU T THE SEARCH ACTION ISSUANCE OF NOTICE AND FILING OF THE RETURN SERVICE OF NOTICE UNDER SECTION 143(2) ETC. IN TH E NEXT PAGE FINDING OF THE AO READ AS UNDER: 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FABR ICATION AND ENGINEERING JOB WORK AND ALSO DERIVES INCOME FROM AGRICULTURAL ACTIVITIES REMUNERATION AND INTEREST FROM PARTNERSHIP FIRMS ETC. COPIES OF P&L ACCOUNT CAPIT AL ACCOUNT IT(SS)A NO.179 TO 184/AHD/2014 11 AND BALANCE SHEET WAS FILED WITH THE RETURN. VARIO US ISSUES WERE DISCUSSED AT LENGTH. 2.1 IT IS SEEN THAT THE ASSESSEE HAD MADE DISCLOSU RE UNACCOUNTED INCOME OF RS 22 00 000/- WHICH WAS NOT DISCLOSED IN THE RETURN FILED U/S. 139(1). THIS BEING CONCEAL ED INCOME PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I T ACT I S BEING INITIATED. 3. AFTER VERIFICATION THE TOTAL INCOME IS DE TERMINED AS UNDER:- TOTAL INCOME AS PER RETURN OF INCOME RS 28 45 960/ - TOTAL ASSESSED INCOME RS 28 45 960/- AGRICULTURAL INCOME FOR RATE PURPOSE RS.6 14 131/- 4. ASSESSED U/S. 153A OF THE I T ACT 1961. CHARGE TAX. CHARGE INTEREST U/S. 234A 234B AND 234C OF THE I T ACT I F ANY. GIVE CREDIT FOR PREPAID TAXES AFTER DUE VERIFICATION. DE MAND NOTICE AND CHALLAN ISSUED ACCORDINGLY. ISSUE NOTICE U/S. 2 71(1)(C)OF THE IT ACT. 11. WE HAVE PERUSED THE PENALTY ORDER ALSO. THERE ARE ONLY THREE PARAGRAPHS I.E. PARA-4 6 AND 7 WHERE THE AO HAS MADE SOME OBSERVATION AT HIS OWN OTHERWISE IN REST OF THE PARAGRAPHS HE REPRODUCED THE SUBMISSIONS OR THE HEAD-NOTES OF THE CASE LAWS. THE OBSERVATION OF THE AO IN THESE PARAS REA D AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSES. THE CONTENTION OF THE ASSESSEE IS NOT ACC EPTABLE BECAUSE THE ADDITIONAL INCOME OFFERED BY THE ASSES SES ONLY SURFACED DUE TO THE SEARCH ACTION CARRIED BY THE DE PARTMENT. HAD THERE BEEN NO SEARCH THE PORTION OF ADDITIONAL INC OME WOULD HAVE REMAINED CONCEALED ETERNALLY. IF IN A REGULAR CASE ON DETECTION OF CONCEALMENT PENALTY U/S. 271(1)(C) IS LEVIABLE HOW MUCH MORE PENALTY BECOMES TRUE AND POTENT IN A CASE WHERE THE CONCEALMENT HAS BEEN DETECTED ON ACCOUNT OF PROACTI VE SEARCH ACTION INITIATED BY THE DEPARTMENT. IN THE CASE OF THE ASSESSEE THE ASSESSEE HAS NOT RECORDED DETAILS OF HIS INCOME AND THE SAME WAS WORKED OUT ONLY DURING SEARCH AND THAT TOO ON T HE BASIS OF THE SEIZED MATERIALS. IN FACT IT IS AN ESTABLISHED JUDICIAL DECISION THAT 'DOCUMENTS SEIZED DURING THE SEARCH CANNOT BE SAID THE BOOKS OF ACCOUNTS MAINTAINED FOR ANY SOURCE OF INCO ME FOR THE PURPOSES OF EXPLANATION 5 (CIT VS GLAMOUR RESTAURAN T (2003) IT(SS)A NO.179 TO 184/AHD/2014 12 80 TTJ (MUM) 763. DIARIES FOUND AND SEIZED DURING C OURSE OF SEARCH CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT MAI NTAINED BY THE ASSESSEE FOR THE PURPOSE OF IMMUNITY TO BE GRAN TED TO HIM UNDER THE PROVISIONS OF EXPLANATION 5 TO SECTION 27 1(1)(C) - DR T P KULKARNI VS CIT (2003) 86 ITD 696 (MUM). IT HAS A LSO BEEN HELD THAT ONLY BOOKS OF ACCOUNT MAINTAINED IN THE R EGULAR COURSE CAN MAKE THE ASSESSEE ELIGIBLE FOR GRANT OF IMMUNIT Y FROM PENALTY AND NOT JUST ANY OF SUCH BOOKS WHICH HAVE NOT BEEN MAINTAINED IN REGULAR COURSE OF BUSINESS - BRIJ LAL GOYAL VS CIT (2004) 88 ITD 413 (DELHI). 12. IN THIS BACKGROUND IF WE APPRECIATE THE EVIDEN CES AVAILABLE ON THE RECORD THEN IT WOULD REVEAL THE W HOLE CASE OF THE REVENUE FOR VISITING THE ASSESSEE WITH PENALTY IS BASED ON THE STATEMENT OF SHRI JAYANTILAL R. SORATHIA RECORDED D URING THE COURSE OF SEARCH. WE HAVE EXTRACTED THE RELEVANT P ART OF THE STATEMENT IN THE FOREGOING PARAGRAPHS OF THIS ORDER . THE EVIDENTIARY VALUE OF SUCH STATEMENT HAS BEEN EXPLAI NED IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS. LET US FIRST TAKE NOTE OF SECTION 132(4) OF THE ACT. THE AUTHORISED OFFICER MAY DURING THE COURSE OF TH E SEARCH OR SEIZURE EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT DOCU MENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMI NATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDIN G UNDER THE INDIAN INCOME- TAX ACT 1922 (11 OF 1922 ) OR UNDE R THIS ACT. EXPLANATION.- FOR THE REMOVAL OF DOUBTS IT IS HERE BY DECLARED THAT THE EXAMINATION OF ANY PERSON UNDER THIS SUB- SECTION MAY BE NOT MERELY IN RESPECT OF ANY BOOKS OF ACCOUNT O THER DOCUMENTS OR ASSETS FOUND AS A RESULT OF THE SEARCH BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER T HE INDIAN INCOME- TAX ACT 1922 (11 OF 1922 ) OR UNDER THIS ACT. 13. A BARE PERUSAL OF SECTION WOULD REVEAL THAT IT EMPOWERS THE AUTHORIZED OFFICER TO EXAMINE DURING THE COURSE OF SEARCH OR SEIZURE ANY PERSON ON OATH. THE DISCLOSURE MADE DU RING THE STATEMENT RECORDED UNDER THIS SECTION WILL BE ADMIT TED IN THE EVIDENCE AND CAN BE USED AGAINST THE ASSESSEE IN TH E PROCEEDING. IT(SS)A NO.179 TO 184/AHD/2014 13 14. NO DOUBT THE DISCLOSURE OR ADMISSION MADE UNDE R SECTION 132(4) OF THE ACT DURING THE COURSE OF SEARCH PROCE EDINGS IS AN ADMISSIBLE EVIDENCE BUT NOT CONCLUSIVE ONE. THIS P RESUMPTION OF ADMISSIBILITY OF EVIDENCE IS A REBUTTABLE ONE AND IF AN ASSESSEE IS ABLE TO DEMONSTRATE WITH THE HELP OF SOME MATERIAL THAT SUCH ADMISSION WAS EITHER MISTAKEN UNTRUE OR BASED ON MISCONCEPTION OF FACTS THEN SOLELY ON THE BASIS OF SUCH ADMISSION NO ADDITION IS REQUIRED TO BE MADE. IT IS TRUE THA T ADMISSION BEING DECLARATION AGAINST AN INTEREST ARE GOOD EVID ENCE BUT THEY ARE NOT CONCLUSIVE AND A PARTY IS ALWAYS AT LIBERT Y TO WITHDRAW THE ADMISSION BY DEMONSTRATING THAT THEY ARE EITHER MISTAKEN OR UNTRUE. IN LAW THE RETRACTED CONFESSION EVEN MAY FORM THE LEGAL BASIS OF ADMISSION IF THE AO IS SATISFIED THAT IT WAS TRUE AND WAS VOLUNTARILY MADE. BUT THE BASING THE ADDITION ON A RETRACTED DECLARATION SOLELY WOULD NOT BE SAFE. IT IS NOT A STRICT RULE OF LAW BUT ONLY RULE OF PRUDENCE. AS A GENERAL RULE IT I S UNSAFE TO RELY UPON A RETRACTED CONFESSION WITHOUT CORROBORATIVE E VIDENCE. DUE TO THIS GREY SITUATION CBDT HAS ISSUED CIRCULA R NO.286/2/2003 PROHIBITING THE DEPARTMENTAL OFFICIAL S FROM TAKING CONFESSION IN THE SEARCH. THE BOARD IS OF THE VIEW THAT OFTEN THE OFFICIALS USED TO OBTAIN CONFESSIONS FROM THE ASSES SEE AND STOP FURTHER RECOVERY OF THE MATERIAL. SUCH CONFESSIONS HAVE BEEN RETRACTED AND THEN THE ADDITION COULD NOT WITHSTAND THE SCRUTINY OF THE HIGHER APPELLATE AUTHORITY BECAUSE NO MATER IAL WAS FOUND SUPPORTING SUCH ADDITION. 15. AN ISSUE WHETHER ADDITION SOLELY ON THE BASIS O F STATEMENT U/S.132(4) CAN BE MADE WAS CONSIDERED BY THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF KIALASHBEN MANHARLAL CHOKSHI VS. CIT 220 CTR (GUJ) 138. IN THIS CASE SEARCH WAS CONDUCTED UPON THE ASSESSEE UNDER SECTION 132 OF TH E INCOME TAX ACT ON 4.11.1988. THE STATEMENT OF THE ASSESSE E WAS RECORDED UNDER SECTION 132(4) OF THE ACT. HE MADE DISCLOSURE OF RS.7 LAKHS. LATER ON IN JANUARY 1989 THE ASSESS EE RETRACTED FROM THE DISCLOSURE AND STATED THE DISCLOSURE OF RS .50 000/- WAS ACCEPTABLE TO HIM. THE LD.AO MADE AN ADDITION OF R S.7 LAKHS ON THE BASIS OF HIS STATEMENT AND OBSERVED THAT THE RE TRACTION WAS MADE AFTER A LAPSE OF 2 MONTHS. THE ASSESSEE DID N OT HAVE ANY REASON FOR RETRACTING FROM THE DISCLOSURE. THE LD. FIRST APPELLATE AUTHORITY CONCURRED WITH THE AO AND CONFIRMED THE A DDITION OF RS.7 LAKHS TO HIS INCOME. THE TRIBUNAL HAS ALSO CO NFIRMED THE ADDITION BY OBSERVING THAT THERE WAS NOTHING ON REC ORD WHICH INDICATED THAT THE DISCLOSURE WAS TAKEN FROM THE AS SESSEE UNDER IT(SS)A NO.179 TO 184/AHD/2014 14 DURESS PRESSURE OR COERCION. THE RETRACTION AFTER LAPSE OF TWO MONTHS FROM THE DATE OF DISCLOSURE BY THE ASSESSEE WAS CONSIDERED AS AFTER-THOUGHT. THE ISSUE TRAVELLED BEFORE THE HONBLE HIGH COURT. THE HONBLE HIGH COURT HAS DEL ETED THE ADDITION BY OBSERVING THAT MERELY ON THE BASIS OF D ISCLOSURE ADDITION CANNOT BE MADE. THERE SHOULD BE SOME CORR OBORATIVE MATERIAL. THE FOLLOWING OBSERVATIONS IN PARA-26 O F THE JUDGEMENT OF HONBLE COURT ARE WORTH TO NOTE. IT R EADS AS UNDER: 26. IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE WE ARE OF THE VIEW THAT THIS EXPLANATION SEEMS TO BE MORE CONVINC ING HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AND ADDITI ONS WERE MADE AND/OR CONFIRMED MERELY ON THE BASIS OF STATEM ENT RECORDED UNDER SECTION 132(4) OF THE ACT. DESPITE T HE FACT THAT THE SAID STATEMENT WAS LATER ON RETRACTED NO EVIDEN CE HAS BEEN LED BY THE REVENUE AUTHORITY. WE ARE THEREFORE OF THE VIEW THAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJECTED TO SUCH ADDITIONS UNLESS AND UNTIL SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. WE ARE ALSO OF THE VIEW THAT FROM THE STATEMENT REC ORDED AT SUCH ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY ST ATEMENT IF IT IS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSION. HENCE THERE IS NO REASON NOT TO DISBELIEVE THE RETRACTION MADE BY THE ASSESSING OFFICER AND EXPLAN ATION DULY SUPPORTED BY THE EVIDENCE. WE ARE THEREFORE OF TH E VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN MAKING ADDITION OF RS . 6 LAKHS ON THE BASIS OF STATEMENT RECORDED BY THE ASSESSING OF FICER UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL HAS COMMITT ED AN ERROR IN IGNORING THE RETRACTION MADE BY THE ASSESSEE. 27. IN THE ABOVE VIEW OF THE MATTER ADDITION OF RS . 1 LAKH MADE ON ACCOUNT OF UNACCOUNTED CASH IS CONFIRMED AND THE ADDITION OF RS. 6 LAKHS IS HEREBY DELETED. 16. THIS DECISION HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. CHANDRAKUMAR JETHMAL K OCHAR 55 TAXMANN.COM 292 (GUJ). THE HONBLE HIGH COURT HAS REPRODUCED THE DISCUSSION MADE BY THE TRIBUNAL AND THEREAFTER CONCURRED WITH THE CONCLUSIONS OF THE TRIBUNAL BY O BSERVING AS UNDER: 6. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE PRINCIPAL LAID DOWN IN THE CASE OF KAILASHBEN MANHARLAL IT(SS)A NO.179 TO 184/AHD/2014 15 CHOKSHI (SUPRA) WE ARE OF THE CONSIDERED OPINION TH AT THE VIEW TAKEN BY THE TRIBUNAL IS JUST AND PROPER. WE ARE NO T CONVINCED WITH THE SUBMISSIONS MADE BY MR. MEHTA LEARNED ADV OCATE FOR THE APPELLANT THAT THE TRIBUNAL HAS NOT GIVEN COGEN T REASONS. THEREFORE THE ANSWER TO THE FIRST QUESTION WOULD B E AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE SECOND Q UESTION WILL ALSO ENURE FOR THE BENEFIT OF THE ASSESSEE AS FROM THE RECORD IT IS CLEAR THAT OTHER CONCERNS WERE NOT BENAMI CONCERNS OF THE ASSESSEE. 7. FOR THE FORGING REASONS THE PRESENT APPEAL IS D ISMISSED. ACCORDINGLY BOTH THE QUESTIONS WHICH WERE REFERRED TO THIS COURT ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE. 17. HAD THIS STATEMENT BEEN RETRACTED BY THE ASSESS EE AND THEY HAVE NOT OFFERED THIS UNDISCLOSED INCOME FORG ET TO TAKE ACTION OF LEVYING THE PENALTY EVEN ADDITIONS WOULD NOT HAVE BEEN SUSTAINED. THE INFERENCE OF OWNERSHIP OF ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLES TO OUR MIND OUGHT NOT TO BE BASED ON THIS STATEMENT. WHEN THE ASSESSEES HAVE T AKEN SPECIFIC PLEA THAT NO MONEY BULLION OR JEWELLERY OR INCOME BASED ON ANY ENTRIES FOR THESE TWO ASSESSMENT YEARS WAS FOUND DU RING THE COURSE OF SEARCH THE AO OUGHT TO HAVE IMMEDIATELY REFERRED THE DOCUMENTS ENTRIES OR ANY ASSET FOUND WHICH IS RELE VANT TO THESE ASSESSMENT YEARS IN THE PENALTY PROCEEDINGS. HE SH OULD HAVE REJECTED THE EXPLANATION OF THE ASSESSEE BY DEMONST RATING IT AS FACTUALLY INCORRECT. RATHER THE AUTHORITIES HAVE PROCEEDED ON THE ASSUMPTION THAT HAD THERE BEEN NO MONEY BULLIO N JEWELLERY OR INCOME BASED ON ENTRIES WAS NOT FOUND THE ASSES SEE WOULD HAVE NOT MADE VOLUNTARY DISCLOSURE OF THE INCOME IN THESE RETURNS. THEY FAILED TO NOTE THE QUESTION NO.25 AL SO WHERE THE ASSESSEES CLAIMED IMMUNITY FROM PENALTY AND PEACE FROM LITIGATION. TO OUR MIND INFERENCE OF AVAILABILITY OF MONEY BULLION OR ASSETS EMBEDDED IN THE ENTRIES CANNOT BE DRAWN FROM THE STATEMENT OF THE ASSESSEE (EXTRACTED SUPRA). T HEY SHOULD HAVE BEEN FOUND IN PHYSICAL FORM AND PERTAINING TO THESE YEARS ONLY THEN DEEMING FICTION OF CONCEALMENT WOULD TRI GGER. THUS THE REVENUE AUTHORITIES HAVE NOT REFERRED ANY DOCUM ENTARY EVIDENCES DEMONSTRATING THE FACT THAT VOLUNTARY INC OME OFFERED BY ASSESSEES IN THESE TWO YEARS ACTUALLY UNEARTHED DURING THE COURSE OF SEARCH. THEREFORE TO OUR MIND THE ASSE SSEES DO NOT DESERVE TO BE VISITED WITH PENALTIES. WE ALLOW ALL THE APPEALS OF THE ASSESSEES AND DELETE PENALTIES. IT(SS)A NO.179 TO 184/AHD/2014 16 9. IN THE SUBMISSION MADE BY THE LD.CIT-DR AND EXTR ACTED BY US THE STAND OF THE REVENUE IS THAT HAD THE SEARCH BEEN NOT CARRIED UPON THE ASSESSEE THEN HE WOULD NOT HAVE DISCLOSE D THIS ADDITIONAL INCOME. THEREFORE EXISTENCE OF MONEY BULLION JEWELLERY AND OTHER VALUABLE ARTICLES OUGHT TO BE A SSUMED WHICH HAS PERSUADED THE ASSESSEE TO DISCLOSE ADDITIONAL I NCOME. IN OTHER WORDS THE STAND OF THE REVENUE IS THAT DISCLOSURE OF ADDITIONAL INCOME IS TO BE EQUATED WITH INFERENTIAL VALUABLES MUST HAVE BEEN AVAILABLE AT THE TIME OF SEARCH. THE STAND OF THE LD.CIT(A) IN THE IMPUGNED ORDER WAS ALSO ON THIS LINE. THE LD.DR IN HIS SUBMISSION HAS FURTHER CONTENDED THAT IF CONCEALMENT IS NOT E STABLISHED BY DEEMING FICTION AVAILABLE IN THE EXPLANATION -5A T HEN THE CONCEALMENT OUGHT TO BE CONSTRUED UNDER THE MAIN PR OVISION. AS FAR AS THE FIRST FOLD OF STAND POINT IS CONCERNED THAT HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF SHRI MANS UKHBHAI R. SORATHIA (SUPRA). THE TRIBUNAL HAS HELD THAT DEEME D CONCEALMENT OF INCOME OUGHT TO BE SUPPORTED BY AVAILABILITY OF MONEY BULLION JEWELLERY NOT BY AN INFERENCE OF EXISTENCE OF MONEY BULLION JEWELLERY OR VALUABLE ARTICLES OR ENTRY. AS FAR AS SECOND FOLD OF SUBMISSION RAISED BY THE LD.CIT(DR) IN THE WRITTEN SUBMISSIONS IS CONCERNED WE FIND THAT THE CASE OF THE ASSESSEE DO ES NOT FALL UNDER THE MAIN PROVISION. THERE IS NO ADDITION TO THE IN COME OF THE ASSESSEE. RETURNED INCOME HAS BEEN ACCEPTED AS IT IS. ONLY BY VIRTUE OF EXPLANATION-5 THIS ADDITIONAL INCOME DEC LARED BY THE ASSESSEE CAN BE CATEGORIZED UNDER THE DEEMED CONCEA LMENT. IN THE MAIN PROVISION THE CASE OF THE ASSESSEE CANNOT BE BROUGHT. AS FAR AS FACTS IN THE PRESENT CASE ARE CONCERNED THE Y ARE IDENTICAL TO THE CASE OF SHRI MANSUKHBHAI R. SORATHIA VS. JCIT ( OSD)(SUPRA). THE ASSESSEE HAS PLACED ON RECORD COPY OF THE STAT EMENT RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT . WE HAVE PERUSED THE ASSESSMENT ORDER. THE AO HAS NOWHERE M ADE A MENTION OF ANY SEIZED MATERIAL. THUS ON FACTS THE RE IS NO DISPARITY. THEREFORE RESPECTFULLY FOLLOWING THE O RDER OF THE ITAT IN THE CASE OF SHRI MANSUKHBHAI R. SORATHIA (SUPRA) ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AND DELETE THE IMPUGNED PENALTY FOR THE RESPECTIVE ASSESSMENT YEARS. IT(SS)A NO.179 TO 184/AHD/2014 17 10. IN THE LIGHT OF THE ABOVE DISCUSSION IF WE EXA MINE THE FACTS OF THE PRESENT CASE THEN IT WOULD REVEAL THAT NO INCRIMIN ATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH WHICH COULD AUTHORISE T HE AO TO INFER THAT THE ASSESSEE HAS MONEY BULLION JEWELLERY FOR WHICH TH E DEEMING FICTION PROVIDED IN EXPLANATION 5A CAN BE INVOKED. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES WE HAVE GONE THROUGH ASSESSMENT ORDER. MAJOR DECLARATION WAS MADE BY THE ASSESSEE IN THE ASSTT.YEAR 2008-09 WHERE HE HAS DECLARED A SUM OF RS.8 LAKHS AS ADDITIONAL INCOME. THE DISCUS SION MADE BY THE AO ON THIS ISSUE IN THE ASSESSMENT ORDER READS AS UNDER: 4. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATIO N HAD RECEIVED INCOME FROM BUSINESS SHARE IN PROFIT OF FIRM(S) AN D INCOME FROM OTHER SOURCES. AS MENTIONED EARLIER ASSESSEE FILED REGUL AR RETURN OF INCOME U/S 139(1) ON 30.09.2008 DECLARING INCOME OF RS. 2 27 210/- WHICH WAS PROCESSED U/S 143(1) ON 07.02.2010 DETERMINING REFU ND OF RS.3 030/-. HOWEVER THE ASSESSEE IN THE RETURN OF INCOME FILED U/S 153A HAS DECLARED TOTAL INCOME OF RS.10 27 210/-. IT WON'T B E OUT OF PLACE TO MENTION HERE THAT DURING THE COURSE OF SEARCH AS WE LL AS POST SEARCH INQUIRIES THE ASSESSEE BASED ON SEIZED DOCUMENTS HAD ADMITTED SUPPRESSION OF RECEIPTS TO THE TUNE OF RS.8 00 000/ - AND ALSO DISCLOSED THE SAME AS HIS UNACCOUNTED INCOME FOR THE YEAR UND ER CONSIDERATION. THE INCOME SO DISCLOSED HAS NOW BEEN INCLUDED AND O FFERED FOR TAXATION IN THE RETURN OF INCOME FILED U/S 153A. TH US THE ASSESSEE HAS DECLARED ADDITIONAL INCOME TO THE TUNE OF RS.8 00 0 00/- (RS.10 27 210/- LESS RS.2 27 210/-) IN THE RETURN OF INCOME FILED U /S 153A. ACCORDINGLY I AM SATISFIED THAT THE ADDITIONAL INCOME NOW OFFER ED FOR TAXATION IN THE RETURN OF INCOME FILED U/S 153A REPRESENT THE UNDIS CLOSED INCOME OF THE ASSESSEE. THEREFORE PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT ARE INITIATED SEPARATELY FOR CONCEALMENT OF INCOME OF R S.8 00 000/-. 11. SIMILAR DISCUSSION HAS BEEN MADE IN THE ASSTT.Y EAR 2009-10 EXCEPT VARIATION IN QUANTUM OF AMOUNT THERE IS NO CHANGE EVEN IN THE LANGUAGE OF THE AO. AS OBSERVED IN THE CASE OF SHRI KIRITKUMAR C. THACKER (SUPRA) THE LD.CIT(A) IN THE IMPUGNED ORDER HAD DRAWN INFERENCE THAT SINCE THE ASSESSEE HAS NOT DISCLOSED ADDITIONAL INCOME IN THE ORIGINAL RETURNS MEANING THEREBY IT IS TO BE ASSUMED THAT HE HAS DISCLOSED THESE AMO UNTS ONLY WHEN SOME IT(SS)A NO.179 TO 184/AHD/2014 18 INCRIMINATING MATERIAL WAS FOUND. ON THIS REASON WE HAVE OBSERVED THAT THIS INFERENTIAL ASSUMPTION SHOULD BE SUPPORTED BY INCRI MINATING MATERIAL. ASSUMPTION ABOUT EXISTING OF INCRIMINATING MATERIAL SHOULD NOT BE AN ASSUMPTION ONLY. IT SHOULD BE BACKED BY SOME MATER IAL EXHIBITING FACT THAT THE ASSESSEE WAS POSSESSING EITHER MONEY BULLION JEWELLERY OR ANY ENTRY EXHIBITING POSSESSION OF SUCH ASSETS. IN THE ABSEN CE OF ANYTHING DEEMING PROVISIONS PROVIDED IN EXPLANATION 5 FOR CONSIDERING CONCEALMENT OF INCOME QUA THE ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSE SSEE WOULD NOT TRIGGER. THEREFORE PENALTY AS FAR AS IN THE ASSTT.YEARS 200 7-08 TO 2010-11 QUA ADDITIONS OF RS.18 840/- RS.8 00 000/- RS.9 68 00 0/- AND RS.12 63 020/- CANNOT BE CONFIRMED WE PARTLY ALLOW APPEALS OF THE ASSESSEE IN THESE YEARS. 12. AS FAR AS ADDITIONS OF CASH CREDITS ARE CONCERN ED ASSESSEE FAILED TO PROVE GENUINENESS OF SUCH CREDITS IN HIS BOOKS OF A CCOUNTS. IN OTHER WORDS HE FAILED TO DISCHARGE ONUS PUT UPON HIM BY VIRTUE OF SECTION 68 OF THE INCOME TAX ACT. ACCORDING TO THE LD.CIT(A) THE ASSESSEE DI D NOT FILE CONFIRMATION AND OTHER DETAILS BEFORE THE AO. THE ASSESSEE SOUG HT TO FILE THESE CONFIRMATION AS ADDITIONAL EVIDENCES WITH HELP OF R ULE 46A(1) OF THE INCOME TAX RULES 1962 BUT THE LD.CIT(A) HAS REJECTED THI S PRAYER OF THE ASSESSEE AND DID NOT TAKE THESE DOCUMENTS ON RECORD. IN THE PAPER BOOK THE ASSESSEE HAS SUBMITTED COPIES OF CONFIRMATION AND COPIES OF LEDGER ACCOUNT FROM PAGE NOS.1 TO 26. HE HAS GIVEN A CERTIFICATE THAT THESE PAPERS WERE SUBMITTED BEFORE THE LD.CIT(A). TO OUR MIND THE CERTIFICATE IS FACTUALLY INCORRECT. ONCE THE LD.CIT(A) DECLINED TO TAKE THESE PAPERS ON RECO RD BY REJECTING PRAYER OF THE ASSESSEE MADE UNDER RULE 46A THEN IT WOULD ME AN THAT THESE PAPERS WERE NOT ON THE RECORD. BY MERE SUBMISSION OF PAPE RS BEFORE THE LD.CIT(A) WITH AN APPLICATION UNDER RULE 46A WOULD NOT JUSTIF Y THESE PAPERS ARE ON THE RECORD. THE ASSESSEE OUGHT TO HAVE FILED AN APPLIC ATION UNDER RULE 29 OF THE IT(AT) RULES FOR PERMISSION TO ADDUCE ADDITIONAL EV IDENCE. IN THE ABSENCE OF IT(SS)A NO.179 TO 184/AHD/2014 19 SUCH APPLICATION THIS CANNOT BE TREATED AS PART OF THE RECORD. THESE ADDITIONS ARE MADE BY THE AO AFTER EVALUATING MATERIAL AVAILA BLE ON RECORD. THE ASSESSEE FAILED TO EXPLAIN HIS POSITION WITH REGARD TO THESE ADDITIONS. AT THIS STAGE WE DEEM IT PERTINENT TO TAKE NOTE OF SECTION 271(1)(C) OF THE ACT QUA THESE ADDITIONS. SECTION 271(1)(C) OF THE ACT READ S AS UNDER: '271. FAILURE TO FURNISH RETURNS COMPLY WITH NOTIC ES CONCEALMENT OF INCOME ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER )** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D) IN ADDITION TO TAX IF ANY PAYABLE BY HIM A SUM WHICH SHALL N OT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE CIT TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 13. A BARE PERUSAL OF THIS SECTION WOULD REVEAL TH AT FOR VISITING ANY ASSESSEE WITH THE PENALTY THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED THAT THE IT(SS)A NO.179 TO 184/AHD/2014 20 ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS IN CERT AIN SITUATION EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO STATUTORY DEEM ING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION BY WAY OF EXPLANATION-1 TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF THE ACT THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND (B) WHERE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. UNDER FIRST SITUATION THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE IT(SS)A NO.179 TO 184/AHD/2014 21 ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 14. IN THE LIGHT OF THE ABOVE IF WE EXAMINE THE FA CTS OF THE PRESENT CASE THEN IT WOULD REVEAL THAT THERE IS NO EXPLANATION AT THE END OF THE ASSESSEE ABOUT ALLEGED CASH CREDITS. THE ASSESSEE FAILED TO GIVE SOURCE OF THESE CASH CREDITS AND ALSO FAILED TO GIVE ANY PLAUSIBLE EXPL ANATION. SIMILARLY PENALTY HAS BEEN IMPOSED UPON THE ASSESSEE QUA THE DISALLOWANCE OF INTEREST ON THE CASH CREDITS IN THE ASSTT.YEAR 2006-07 AND ADDITIO N ON ACCOUNT OF SELF- ASSESSMENT TAX PAYMENT OF RS.5 000/- IN THE ASSTT.Y EAR 2007-08 THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF RS.5 000/- IN THE A SSTT.YEAR 2007-08 ALSO. ON AN OVERALL ANALYSIS OF THE RECORD WE ARE OF THE VI EW THAT THE LD.CIT(A) HAS RIGHTLY CONFIRMED LEVY OF PENALTY AS FAR AS ADDITIO NS QUA CASH CREDITS DISALLOWANCE OF INTEREST ON CASH CREDITS AND ADDITI ON ACCOUNT OF SELF- ASSESSMENT TAX PAYMENT OF RS.5 000/- ARE CONCERNED. APPEALS OF THE ASSESSEE TO THIS EXTENT ARE DISMISSED. 15. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18 TH OCTOBER 2016 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANTN MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 18/10/2016