TMI Blog2019 (3) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (a) refers to the undisclosed income etc. which has not been recorded in the books of account before the date of search. It necessarily has to be an income which is not found to be recorded at the time of initiation of search and it cannot be an income which is not found to be recorded at the time of conclusion of search. “Specified previous year” in this case u/s. 271AAB Explanation (b)(ii) squarely applies in given facts and circumstances of the case. We wish to repeat here at the cost of brevity that impugned search is dated 20.12.2012. The assessee’s last date of filing return u/s 139(1) was upto on 30.09.2012. The ‘specified previous year” therefore has been rightly taken in the instant case to be financial year 2012-13 under the above statutory provision. We conclude in these facts that CIT(A) has rightly sustained the impugned penalty of ₹17 lac qua the impugned cash sum declared during the course of search as undisclosed income under Explanation (c) of the Act. - ITA No.1604/Kol/2017 And C.O. No.96/Kol/2017, ITA No.1607/Kol/2017 And C.O. No.97/Kol/2017, ITA No.1610/Kol/2017 And C.O. No.98/Kol/2017 - - - Dated:- 27-2-2019 - Shri J.Sudhakar Reddy, Accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir search statement(s) u/s 132(4) of the Act admitting additional incomes of ₹4.5 crores, ₹4.02 crores and ₹3.55 crores; respectively. There is no dispute that all these three assessees duly included the said additional income in their respective returns filed post search. The Assessing Officer assessed the same without making any addition in consequential assessment framed on 06.06.2014. He further initiated the impugned sec. 271AAB penal proceedings in all three assessees cases Quantum proceedings in all cases attained finality at this stage itself. 5. We now advert to impugned penalt(ies) proceedings. These three assessees pleaded before the Assessing Officer that they had declared their respective additional incomes suo motu and substantiated the manner of having derived the same from various business such as mining, civil construction, transportation and other activities followed by due payments of tax thereupon. They claimed to have complied with all requisites conditions on the premise that no penalty would be levied post the impugned search. We find from the Assessing Officer s identical penalty orders forming subject-matter of the instant lis th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was selected for scrutiny assessment. Compliance to notices u/s 143(2) and 142(1) were duly made. Assessment Order for AY 2013-14 was passed u/s 143(3) on 06-06-2014 at a total income of ₹ 6,75,85,990/- i.e. on returned income. e) Penalty proceedings was initiated separately on the disclosure amount of ₹ 4,02,00,000/- u/s 271AAB of the Income Tax Act, 1961. f) During the course of penalty proceeding, it had been stated that out of such offering of ₹ 4,02,00,000/-, an amount of ₹ 3,85,00,000/- was not backed by any evidence of undisclosed income or any undisclosed assets / items that had been found / inventorised by the Department. Hence, such suo moto offering of ₹ 3,85,00,000/- does not come under the purview of undisclosed income as explained in Explanation (c) of Section 271AAB and hence the penalty provision cannot be invoked on such figure of ₹ 3,85,00,000/-. Further, such suo moto offering of ₹ 3,85,00,000/- has been made in order to buy peace, to avoid unnecessary long drawn litigations with the department and to demonstrate utmost cooperative attitude with the department. g) However, the Assessing Officer did not pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Punjab Tyres [1986] 162 ITR 517 (Madhya Pradesh), the Hon'ble High Court of Madhya Pradesh also held that when surrender is made to purchase peace or for other similar reason, surrender cannot amount to admission, constituting evidence of concealment in penalty proceedings. We also rely on the judgement of the Supreme Court of India in the case of Dilip N. Shroff v. Jt. CIT (2007) 291 ITR 519 (SC) wherein it was held that Imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature, but such discretion is required to be exercised on the part of the Assessing Officer, keeping the relevant factors in mind. In this regard, we would like to state that assessment has been completed based on the explanations given and documents produced during the course of assessment without making any further addition on the ground of disclosure. We had been a co-operative assessee during the course of assessment proceeding. 7. I have considered the findings given by the AO in the penalty order submissions made by the AR during the appellate proceeding. I find that the AO has taken the undisclosed income of the assessee found during the search operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process found any discriminating evidence of undisciosed income other than the statement of the assessee for making the addition of ₹ 3,85,00,000/-. Further I find that the AO has levied penalty u/s 271AAB (1)(a). This section reads like sum computed at the rate of ten per cent of the undisclosed income of the specified previous year . 8. Thus, it is clear that in order to levy penalty two things are essential (1) undisclosed income and (2) specified previous year. Here in this case ₹ 3,85,000/- was offered for taxation by the assessee suo moto in the statement recorded at the time of search. From the the ratio decided by the Hon'ble Supreme Court in the case of Sudarshan Silk Saries (supra), it is clear that only the statement of the assessee without any corroborating evidence cannot be the only basis for levying penalty. Here it is also clear that from the statement of the assessee one cannot point out which amount of undisclosed income pertains to which specified previous year. In this situation, where nothing is clear from assessee's statement recorded at the lime of search, the action of the AO to levy penalty u/s 271AAB(1)(a) on the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various co-ordinate benches decisions in ACIT vs. Kanwar Sain Gupta ITA No.538/Kol/2017 decided on 29.06.2018, DCIT vs. Liladhar Agarwala ITA No.1605/Kol/2017 CO 99/Kol/2017 decided on 26.12.2018, PCIT vs. Smt Ritu Singal 92 taxmann.com 224 (Del) (2018) ACIT vs. Marvel Associates [2018] 92 taxmann.com 109 (Vizag ITAT) DCIT Vs. Subhas Chandra Agarwala Sons (HUF) ITA No.1470/Kol/2015 and many other similar decisions echoing the very principal. The assessee further pleaded that we are dealing with a penalty provision in the fiscal statute which can never be taken as automatic. Mr. Tibrewal s next argument seeks to distinguish hon'ble Apex Court s (supra) that their lordships have nowhere held imposition the impugned penalty to be automatic following the corresponding assessment(s). He therefore urges us to confirm the CIT(A) s findings deleting the impugned penalt(ies) forming subject-matter all three Revenue s appeals. 9. We have given our thoughtful consideration to rival contentions. There is hardly any dispute between the parties about the basic facts inter alia that the department had conducted the impugned search in these three assessees cases wherein they dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the specific charge have in a statement under sub section 4 of section 132 during the course of search and seizure operation admitted undisclosed income was mentioned in the notice? (c) Whether the benefit of Section 292BB was correctly denied to the AO/appellant by the ITIAT? 10. It is in this factual backdrop that hon'ble high court had held that the Assessing Officer had issued the relevant notice u/s 271(1)(c) r.w.s. 274 containing all particulars and section 292B of the Act would apply since the assessee had never objected correctness thereof before the Assessing Officer in corresponding proceedings and had in fact respond to the notice in writing with an undertaking that this was the notice issued by the Assessing Officer u/s 271AAB of the Act. In other words, the assessee had not contended that the impugned notice was issued u/s 271(1)(c) r.w.s. 274 in its reply and was clear that the notice was issued to levy penalty u/s 271AAB of the Act. It is thus clear that the CIT-DR s argument that the Revenue has already succeeded on the issue as to whether the impugned penalty is automatically flows than from the additional income declaration made during search; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond clause (ii) refers to income of the specified previous year represented, either wholly or partly, by an entry in respect of an expenses recorded in the books of accounts 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 been conducted. 4.2 It is also submitted that in the first clause the undisclosed income is represented by an asset or an entry in the books of accounts or documents maintained for such previous year, whereas in the second clause the undisclosed income is represented by some false entry of expenses recorded in the books of accounts or documents of the Specified previous year. Thus in clause (i) and clause (ii) of Explanation (c) to section 271AAB two different words being previous year and specified previous year have been used. It is submitted that when different words or phrases are used at different places more particularly in the same section of the statute, it carries different interpretation and different meaning of the same. Different words or phrases used at different places in section 271AAB have been highlighted to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income has not been expired. If the Statute intended to levy penalty under section 271AAB of the Act in respect of money, bullion, jewellery or other valuable article or thing or any entry in the books of accounts or other document recorded in the books of accounts in respect of the previous year in which search was conducted then in clause (i) of Explanation (b) of section 271MB the words specified previous year would have been used which words have been used in clause (ii) of Explanation (b) of section 271AAB of the Act. 13. We have given our thoughtful consideration to rival contentions. It transpires from the case file first of all that the assessee s authorized signatory, Shri Narayaan Prasad Agarwala had made the impugned additional income disclosure to the ADIT(Inv) that the said income was in the nature of cash to the tune of ₹17 lac in relation to financial year 2012-13 corresponding to the impugned assessment year 2013-14. We reiterate that search in issue is dated 20.12.2012. The assessee s case admittedly does not come under the former definition of the specified previous year since the due date for filing return u/s. 139(1) of the Act for preced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act and further that sub-clause (ii) of the Explanation (b) was not attracted in the present case. This contention was strongly countered by the Id. DR. 5. It is seen from the assessment order that the search in this case was initiated on 11- 02-2009. The Id. AR has invited our attention towards the last panchnama, a copy of which has been placed on page 19 onwards of the paper book, which is dated 03-04- 2009. The dates of initiation and conclusion of search have not been denied on behalf of the Revenue. It is thus palpable that the search in this case commenced on 11-02- 2009, which is prior to the closure of the financial year ending 31-03-2009 and completed on 03-04-2009, which is after the closure of the financial year ending 31- 03-2009. The question which looms large before us is to determine ' specified previous year ' in terms of Expl. (b)(i) to section 271 AAA of the Act, which in the opinion of the Id. AR should be reckoned from the date of commencement of search, i.e. 11-02- 2009, whereas the Revenue is contending that the same should be considered from 03- 04-2009, being the date on which the search was concluded. In order to appreciate the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alls within the period stipulated in sub-section (1) of section 271 AAA. In such a scenario, penalty is liable to be imposed on undisclosed income of the 'specified previous year' u/s 271 AAA alone. The AO has treated assessment year 2009-10 as the 'specified previous year' and imposed the instant penalty. 7. Now the question arises about the determination of the 'specified previous year' as per sub-clause (i) of the Explanation (b) to section 271AAA, which provides that a 'specified previous year' means a 'previous year' which has ended before the date of search, but the date of filing the return of income u/s.139(l) for such year has not expired before the date of search and the assessee has not furnished his return of income for that previous year before the said date. The controversy in this regard is to find out the meaning of the terms ' date of search '. Whereas the case of the assessee is that the expression ' date of search ' as employed in Expl. (b) (i) means the date of initiation or commencement of search, the Revenue has canvassed a view that it refers to the date of conclusion or completion of search. If w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch' in second proviso to sub-section (1). Similarly, section 153C dealing with the assessment of income of any other person uses the expression ' initiation of search ' in first proviso to sub-section (1). On the contrary, section 153B(2) provides that the authorization shall be deemed to have been executed in the case of search, on the 'conclusion of search' as recorded in the last panchnama. Section 158BE setting out time limit for completion of block assessment also provides under sub-section (2) that the authorization shall be deemed to have been executed in the case of search on the ' conclusion of search '. Thus, it is overt that the Parliament has recognized the expression 'initiation of search' as distinct from ' conclusion of search ' and used such expressions at the appropriate places as deemed necessary. 10. Reverting to the Explanation to clause (b)(i) to section 271AAA, we find that the legislature has simply used the expression ' date of search ' and the same is not qualified by the words 'initiation of' or ' conclusion of '. The 'specified previous year' in the extant case varies with pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) refers to the undisclosed income etc. which has not been recorded in the books of account before the date of search. It necessarily has to be an income which is not found to be recorded at the time of initiation of search and it cannot be an income which is not found to be recorded at the time of conclusion of search. Once an item of income not recorded is found at the time of initiation of search, it will remain undisclosed even if the assessee during the course of search records it in its books of account. If we interpret it as referring to the date of conclusion of search, then anyone can easily go scot free by recording in his books of account the undisclosed income found during the course of search, before the conclusion, thereby making it as disclosed income, which proposition is patently incorrect. Once an item of income is found, which is not recorded in the books of account up to the date of initiation of search, the same has to be obviously characterized as undisclosed income. Similar position follows by reading part (B) in clause (i) of the Explanation (a), which also refers to the undisclosed item of income which has otherwise been not disclosed to the Principal Cf. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icability of assessment year 2009-10 in a search conducted on 11.02.2009 whereas the instant taxpayer s case makes it clear that specified previous year in its case u/s. 271AAB Explanation (b)(ii) squarely applies in given facts and circumstances of the case. We wish to repeat here at the cost of brevity that impugned search is dated 20.12.2012. The assessee s last date of filing return u/s 139(1) was upto on 30.09.2012. The specified previous year therefore has been rightly taken in the instant case to be financial year 2012-13 under the above statutory provision. We conclude in these facts that CIT(A) has rightly sustained the impugned penalty of ₹17 lac qua the impugned cash sum declared during the course of search as undisclosed income under Explanation (c) of the Act. The second assessee s instant Cross Objection 97/Kol/2017 challenging correctness of CIT(A) s action sustaining penalty of ₹17 lac fails therefore. 16. These three Revenue s appeals ITA No.1604, 1607 1610/Kol/2017 are dismissed. The first and last assessee s two Cross Objection Nos. 96 98/Kol/2017 are dismissed as rendered infructuous and second assessee s Cross Objection No.97/Kol/2017 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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