Income Tax Appellate Tribunal - Pune
Tarachand Bachumal Dalwani, Nashik vs Department Of Income Tax on 9 May, 2016
आयकर अपील य अ धकरण, पुणे यायपीठ "बी" पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
ी आर. के. पांडा, लेखा सद य एवं
ी !वकास अव थी, या#यक सद य के सम$
BEFORE SHRI R.K. PANDA, AM AND
SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.1550/PN/2013
#नधा&रण वष& / Assessment Year : 2008-09
ACIT, Central Circle-1, Nashik ..........
अपीलाथ /
Appellant
बनाम v/s
Shri Tarachand Bachumal Dalwani,
Prop. of Rajan Bachumal & Co., .......... यथ /
Dr.B.A. Road, Nashik Road, Respondent
Nashik.
PAN No.AANPD2375G
अपीलाथ क ओर से / Assessee by : Shri Pramod Shingte
यथ क ओर से / Revenue by : Shri Hitendra Ninawe
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing :10.03.2016 Date of Pronouncement:09.05.2016
आदे श / ORDER
PER R.K.PANDA, AM :
This appeal filed by the Revenue is directed against the order dated 01-05-2013 of the CIT(A)-I, Nashik relating to Assessment Year 2008-09.
2. Deletion of penalty of Rs.12,30,220/- levied u/s.271(1)(c) by the CIT(A) is the only issue raised by the Revenue in the various grounds of appeal.
3. Facts of the case, in brief, are that the assessee is an individual engaged in the business of wholesale trading in food 2 ITA No.1550/PN/2013 grain, pulses etc. He filed his original return of income on 10-10- 2008 showing total income of Rs.16,38,890/-. A search and seizure action u/s.132 of the I.T. Act was conducted by the investigation Wing on 06-01-2010 at the residential premises of the assessee during which certain books of account and documents were seized. In response to notice u/s.153A the assessee furnished the return of income on 11-11-2011 declaring total income of Rs.57,39,630/-. The above income included additional income of Rs.41 lakhs, the details of which are as under :
(a) On account of land -Mr.Vardhaman Jain - 14 Lakhs
(b) profit of unrecorded transactions in Kirana - 10 Lakhs
(c) Land - Mr.Dilip Phadol - 17 Lakhs
4. The AO completed the assessment u/s.153A r.w.s.143(3) determining the total income at Rs.57,39,630/- which was the income declared in the return filed in response to notice u/s.153A.
5. Subsequently, the AO initiated penalty proceedings and asked the assessee to explain as to why penalty should not be levied. The assessee explained that the assessee while preparing the return of income has offered additional income of Rs.41 lakhs on account of estimated GP/brokerage voluntarily in consonance with the statement recorded. The same income has been accepted. The assessee made the voluntary declaration to buy peace. Since the additional income offered for taxation is on account of estimation which has been accepted by the AO, therefore, no penalty should be levied.
3 ITA No.1550/PN/20136. However, the AO was not satisfied with the explanation given by the assessee. According to him, had there been no search the income would not have been unearthed. Therefore, it was not a voluntary disclosure and the assessee has concealed the particulars of such income within the meaning of Explanation 1 and 5A to section 271(1)(c) of the I.T. Act. The AO further noted that the income of Rs.41 lakhs disclosed u/s.132(4) and offered in the return u/s.153A is based on entries in books of account and other documents and transactions, therefore, clause (ii) of Explanation 5A to section 271(1)(c) is squarely applicable in the instant case and the assessee is liable for penalty for concealing the income of Rs.41,00,470/-. Rejecting the arguments advanced by the assessee the AO levied penalty of Rs.12,30,220/- being the minimum penalty leviable at 100% of the tax sought to be evaded.
7. In appeal the Ld.CIT(A) deleted the penalty by observing as under:
"7. I have carefully considered the facts of the case, the assessment order, the impugned penalty order and the submissions of the appellant. The additional income of Rs.41,00,000/- consists of the following amounts:-
Estimated Gross Profit - Rs.10,00,000/-
1) Brokerage income and commission
Received from Mr.Vardhaman Jain by
Cheque dt. 26-02-208 - Rs.14,00,000/-
From Mr. Dilip Phadol 15,00,000/-
Received by cheque dt.26-02-2008
And Rs.2,00,000/- by cash - Rs.17,00,000/-
---------------------
Rs.41,00,000/-
----------------------
The A.O. has imposed the impugned penalty by invoking Explanation-5A to section 271(1)(c) of the Act, relevant portion of which reads as under:
"Explanation 5A- Where in the course of search initiated u/s.132 on or after Ist day of June, 2007, the assessee is found to be the owner of-4 ITA No.1550/PN/2013
(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 has been acquired by him by utilizing (wholly or in part) his income for any previous year.
(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 part) for any previous year;
In the case under appeal no money, bullion, jewellery or other valuable article is involved with regard to the estimated gross profit of Rs.10,00,000/- and Rs.14,00,000/- and Rs.17,00,000/- on a/c of brokerage income received from Mr. Vardhaman Jain and Shri Dilip Phadol respectively was offered as an additional income. Out of the brokerage income of Rs.31,00,000/-, Rs.14,00,000/- and Rs.17,00,000/- = Rs.31,00,000/- were received from Shri Vardhaman Jain and Shri Dilip Jain respectively. The commission of Rs.14,00,000/- was received from Shri Vardhaman Jain by cheque on 26/02/2008 on which TDS of Rs.1,40,000/- was also made, which is recorded in the regular books of a/c of the assessee for that assessment year. Rs.2,00,000/- in cash was received from Shri Dilip Phadol on a/c of undated chit. This commission income of Rs.31,00,000/- was not offered to tax in the regular return of income filed u/s 139 for A.Y. 2008-09 on the ground that the same was an advance because the transaction relating to that was not finalized during F.Y. 2007-08. The assessee demonstrated that the property transaction on which the impugned commission/brokerage was received got finalized during the F.Y. 2009-10, when the search took place for which the return of income was not due. However, the assessee has offered the said receipt as additional income of A.Y. 2008-09 during the search.
7.1 While initiating penalty proceedings u/s 271(1)(c), the Assessing Officer in the assessment order u/s 143(3) r.w.s. 153A dated 30/12/2011 for the year has recorded the following identical findings:
"Though the assessee has declared additional income of Rs.41,00,000/- in the return filed u/s lS3A which was not shown in the return filed u/s 139. It was detected during search and seizure operation conducted at his residence. Had the search not been conducted, this income would not have been unearthed. It is, therefore, not a voluntary disclosure and the assessee has concealed the particulars of such income within the meaning of Explanation 5A to section 271(1)(c) of the LT. Act".
Therefore, penalty proceeding were initiated. However, on going through the facts of the case reproduced above, it is seen that there is no money, bullion, jewellery or other valuable article, therefore, this Explanation 5A is not applicable to the case under appeal. This proposition of law is supported by the ratio laid down in the following decisions:
1. CIT Vs. Mohanlal Sharma 281 ITR 384 (Alla).
2. T. Kodeeswaran L/H of late A. Thangam Vs. ITO 123 TTJ 230.5 ITA No.1550/PN/2013
7.2 In fact Explanation-I is applicable to the case under appeal, the relevant portion of which is reproduced below:
"Explanation-I - Where in respect of any facts material to the computation of the total income of any person under this Act -
(A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner Appeals or Commissioner to be false or;
(B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him;
then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section be deemed to represent, the income in respect of which particulars have been concealed."
7.3 The appellant has offered to tax the additional income of Rs.10,00,000/- as estimated gross profit and Rs.31,00,000/- on a/c of brokerage income to tax to buy peace of mind. The appellant has also paid all the taxes. The above explanation of the appellant is found to be plausible and hence bonafide. Further, the explanation is not found to be false. In view of the above facts and in view of Explanation-I to section 271(1)(c) the penalty imposed by the A.O. for these assessment years is not justified. This proposition of law is supported by the following decisions :
1) National Textiles Vs. CIT 249 ITR 125 (Guj.)
2) Hergopalsingh Vs. CIT 258 ITR 85 (P&H) In the case of CIT Vs. Bhimji Bhamji & Co. 146 ITR 145 (Bom.) it has been held that just because the assessee has agreed to an addition does not imply that he agrees that the income was concealed.
The Hon'ble ITAT, Pune in the case of Chandan K. Shewani Vs. DCIT, Pune I.T.A. No.235 and 236/PN/2010 order dated 29/08/2012 has held that a penalty u/s 271(1)(c) cannot be levied on the additional income declared by the assessee in returns filed u/s 153A of the Act. This decision has been followed by Hon'ble ITAT Pune in the case of ITO Central-3 Vs, Prakash Champalal Kankaria, I.T.A. No.1465 to 1467/PN/2011 dated 22/03/2013. The facts of the assessee's case are identical with these decisions. The assessee's case therefore, is covered by these decisions of the jurisdictional Tribunal and fortify my decision.
In view of the above facts and provisions of Explanation-I to section 271(1)(c), the appellant is not liable to penalty u/s. 271(1)(c). In view of the above facts and discussion, I am of the considered view that on the given facts and the position of law on the subject, there is no concealment of income or furnishing inaccurate particulars of income, therefore, the A.O. is not justified in imposing penalty of Rs.12,30,220/- u/s 271(1)(c) of the Act. The impugned penalty order u/s, 271(1)(c) dated 22/06/2012 imposing penalty of Rs.12,30,220/- is, therefore, cancelled.
6 ITA No.1550/PN/20138. In the result, the appeal is allowed."
8. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us.
9. The Ld. Departmental Representative strongly opposed the order of the CIT(A). He submitted that the Ld CIT(A) has deleted the penalty by holding that neither Explanation 1 nor Explanation 5A to section 271 (1)(c) is applicable to the assessee's case.
However, the same is not correct. He has accepted the contention of the assessee that the amount of commission/brokerage of Rs.31 lakhs was not offered in the regular return of income filed u/s.139 as these amounts were in the form of advances for which the property transaction was not finalized in the financial year relevant to A.Y. 2008-09. He submitted that the above plea was never raised before the AO either during the course of assessment proceedings or during the course of penalty proceedings. Even the CIT(A) has not given any opportunity to the AO on the additional ground raised before him during the appeal proceedings. The Ld. Departmental Representative submitted that during the course of search the assessee in his statement recorded u/s.132(4) has declared additional income of Rs.41 lakhs and offered the same in the return of income filed in response to notice u/s.153A. The declaration made by the assessee was on the basis of entries found in the books of account, other documents and transactions, seized/impounded during the search action. Therefore, the assessee has committed default under the provisions of Clause (ii) of Explanation 5A to section 271(1)(c) of the Act. He submitted that the CIT(A) has 7 ITA No.1550/PN/2013 deleted the penalty by holding that the explanation of the assessee is bonafide because he has offered the additional income to buy peace of mind. However, the same is contrary to provisions of the Act. Relying on the decision of the Pune Bench of the Tribunal in the case of Mrs. SaritaKaur Manjeet Singh Chopra vide ITA No.1562/PN/2013 order dated 30-10-2015 for A.Y. 2009-10 he submitted that the issue has been decided against the assessee.
10. The Ld. counsel for the assessee on the other hand heavily relied on the order of the CIT(A). Referring to the copy of the assessment order, the Ld. Counsel for the assessee submitted that the AO has not mentioned as to what are the papers found or the nature of such document. Referring to pages 100 and 101 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the notings made thereon and submitted that those papers do not bear any date. Further, the cheques were received in the year 2010 and the party has deducted TDS, therefore, the assessee could have declared the income in the year 2010-11. If the assessee would have declared such income in A.Y. 2010-11, the immunity provided u/s.271AAA could have been available to the assessee. However, due to some confusion the assessee has declared the same in A.Y. 2008-09. Merely because the assessee has offered the additional income in A.Y. 2008-09 due to wrong appreciation of facts whereas the income should have been declared in A.Y. 2010-11, therefore, under the facts and circumstances of the case, the penalty levied by the AO was not correct and the CIT(A) was fully justified in deleting the same. He submitted that the assessee can always advance new arguments 8 ITA No.1550/PN/2013 during penalty proceedings since the assessment proceedings and penalty proceedings are different.
11. So far as the decision relied on by the Ld. Departmental Representative in the case of Mrs. Sarita Kaur Manjeet Singh Chopra is concerned he submitted that the said decision is not applicable to the facts of the present case. He further submitted that the amount of Rs.10 lakhs has been declared on estimate basis on account of unrecorded transactions in Kirana. He submitted that various courts have held that penalty cannot be levied on estimated additions. He accordingly submitted that levy of penalty by the AO was unjustified under the facts and circumstances of the case and the CIT(A) was fully justified in deleting the penalty. He also relied on the following decisions :
"1. ITO Vs. Prakash Champalal Kankaria and others - ITA Nos. 1465 to 1467/PN/2011, ITA Nos. 1468 to 1470/PN/2011 and ITA Nos. 1471 to 1473/PN/2011 order dated 22-03-2013.
2. Chandan K. Shewani Vs. DCIT - ITA No.235 & 236/PN/2010 order dated 29-08-2012.
3. Dilip Yeshwant Oak Vs. ACIT reported in (2011) 10 taxmann.com 264 (Pune).
4. Rajan H. Shinde Vs. DCIT reported in (2006) 104 TTJ 445 TM (Pune).
5. Harigopal Singh Vs. CIT reported in (2002( 125 Taxman 242 ( Punj. & Har.).
6. CIT Vs. Bhimji Bhanjee & Co. reported in (1985) 21 Taxman 290 (Bom.).
7. T. Kodeeswaran Vs. ITO reported in (2009) 33 SOT 3 (Chennai) (URO).
8. National Textiles Vs. CIT reported in 249 ITR 125 (Guj.)."
9 ITA No.1550/PN/201312. We have considered the rival arguments made by both the sides, perused the orders of the AO and the Ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee in the instant case has declared additional income of Rs.41 lakhs in the return filed in response to notice u/s.153A which has been accepted by the AO in the order dated 30-12-2011 passed u/s.143(3)/153A. We find the AO levied penalty u/s.271(1)(c) amounting to Rs.12,30,220/- on account of undisclosed income of Rs.41,00,470/- on the ground that the assessee has concealed the particulars of income to the extent of Rs.41,00,470/-. Had there been no search the assessee would not have declared such additional income of Rs.41 lakhs.
Therefore, the disclosure is not voluntary for which the assessee is liable for penalty within the meaning of section Explanation 1 and 5A to section 271(1)(c) of the I.T. Act. It is the submission of the Ld. Counsel for the assessee that the commission income which was declared in the assessment year A.Y. 2008-09 infact belongs to A.Y. 2010-11. M/s.Vardhaman Trading Company has deducted tax at source, copy of which is placed at page 98 of the paper book. Similarly, the amount of Rs.17,00,000/- received from Mr. Dilip Phadol also relates to A.Y. 2010-11. Merely because the assessee on wrong assumption of facts has declared the income in A.Y. 2008-09 whereas the income relates to A.Y. 2010-11, therefore, penalty should not be levied on account of land transactions. So far as the additional income declared on account of Kirana Store is concerned, it is the submission of the Ld. Counsel for the assessee that penalty should not be levied on estimated additions.
10 ITA No.1550/PN/201313. We find some force in the above arguments of the Ld. Counsel for the assessee. Copy of the seized document giving the details of transaction with Mr. Vardhaman Jain is placed at page 100 of the paper book and the same does not contain any date.
The assessee has declared additional income from land transaction in respect of Mr. Vardhaman Jain to the tune of Rs.14 lakhs, which is one of the entries out of the 5 entries mentioned on the said seized document. From the confirmation of account of Mr. Vardhaman Jain, copy of which is placed at paper book page 97, we find the amounts of Rs.14 lakhs has been paid by Mr. Vardhaman Jain on 30-03-2010 and 31-03-2010 by cheques on which TDS of Rs.1,40,000/- has also been deducted.
The TDS Certificate copy is placed at page 98 of the paper book.
Therefore, whether the amount of Rs.14 lakhs relate to A.Y. 2008- 09 or A.Y. 2010-11 has not been examined for the purpose of levy of penalty. The TDS certificate filed at page 98 of the paper book also shows that the amount of Rs.14 lakhs relates to the period from 01-04-2009 to 31-03-2010 relating to A.Y. 2010-11. We therefore find force in the submission of the Ld. Counsel for the assessee that levy of penalty on this Rs.14 lakhs is unjustified since the assessee could have availed immunity as per the provisions of section 271AAA had he declared the same in A.Y. 2010-11. It is the settled position of law that penalty proceedings and assessment proceedings are separate and distinct. The assessee can advance new arguments during penalty proceedings. We find although the above documents were filed before the lower authorities as certified in the paper book, however, the lower authorities have not commented upon this issue either in the assessment order or penalty order or in the 11 ITA No.1550/PN/2013 order of CIT(A). We therefore are of the opinion that levy of penalty u/s.271(1)(c) on the amount of Rs.14 lakhs is not warranted under the facts and circumstances of the case if the cheques are received in A.Y. 2010-11. However, the same needs verification at the level of the AO. The AO shall verify the TDS Certificate and bank statement of the assessee regarding the receipt of the same in A.Y. 2010-11 and if found correct to delete the penalty on the amount of Rs.14,00,000/-.
14. So far as the other amounts are concerned, i.e Rs.17 lakhs from land transaction with Mr. Dilip Phadol and unaccounted profit from Kirana business at Rs.10 lakhs is concerned, the same were declared in the statement recorded u/s.132(4) on the basis of the various discrepancies found by the search party.
There is no proof that the same were received in A.Y. 2010-11 like in the case of Mr. Vardhaman Jain. Therefore, the question that arises is as to whether penalty can be levied on the above amounts within the meaning of Explanation 5A to section 271(1)(c) of the Act. We find a somewhat identical issue had come up before the Pune Bench of the Tribunal in the case of Mrs. Sarita Kaur Manjeet Singh Chopra (Supra). We find the Tribunal after considering various decisions has upheld the penalty levied under the provisions of Explanation 5A to section 271(1)(c) of the Act by observing as under :
"15. Now, coming to the issue that where the assessee had offered the income in the return of income filed after surrendering the additional income, can the assessee be held to have concealed its income vis-à-vis original return of income filed by the assessee. Section 271(1) of the Act makes provision for levying penalties on assessee in different eventualities, one such eventuality is for concealment of income or furnishing of inaccurate particulars of income. Only on fulfillment of the conditions stipulated in section 12 ITA No.1550/PN/2013 271(1)(c) of the Act, there arises a question of exercising power under the said provision to impose penalty. The said section lays down that where the Assessing Officer or t he CIT(A) in the course of any proceedings under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, then he may direct that such person shall pay by way of penalty stipulated in the aforesaid provision. The Explanation/s under section 271(1)(c) of the Act set out the circumstances, which justifies the levy of penalty. For searches initiated under section 132 of the Act before first day of June, 2007, Explanation 5 was introduced by the Finance Act, 2007 with retrospective effect from 01.04.2003. Under the said section, where the assessee was found to be owner of any money, bullion, jewellery or other valuable articles or things and the assessee claims that such assets have been acquired by him by utilizing, wholly or in part his income, for any previous year, which had ended before the date of search, but the return of income for such year had not been furnished before the said date, or where the return of income had been furnished but such income had not been declared therein or for any previous year which is to end on or after the date of search, then notwithstanding that such income was declared by him in the return of income, he was deemed to have concealed particulars of his income or furnished inaccurate particulars of income, unless the income or the transactions were recorded in the books of account or the person in the course of search makes a statement under section 132(4) of the Act that the said money, bullion, jewellery, valuable articles or things, has been acquired by him out of his income, which has not been so far disclosed, but specifies the manner in which the said income has been derived and pays the taxes together with interest. Under Explanation 5, an exemption was provided to the person who was searched and was found in possession of money, bullion, jewellery, valuable articles or things, then in case he declared the same under the statement recorded under section 132(4) of the Act and thereafter, pays the taxes on the same, no penalty under section 271(1)(c) of the Act was levied on such person.
16. However, for searches initiated under section 132 of the Act on or after first day of June, 2007, another Explanation 5A was applicable, which was introduced by the Finance Act, 2007 w.e.f. 01.06.2007. The original Explanation 5A provided that where in the course of search, the assessee was found to be the owner of any money, bullion, jewellery, valuable articles or things and the assessee claims that such asset had been acquired by him by utilizing wholly or in part his income for any previous year or any income is based on any entry in books of account or other documents or transactions and he claims that the same represents his income for any previous year, then where the period has ended before the date of search and the due date for filing the return of income for such year has expired and the assessee has not filed the return of income, 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 purpose of imposition of penalty under section 271(1)(c) of the Act, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of income. The said Explanation 5A was substituted by the Finance (No.2) Act, 2009 with retrospective effect from 01.06.2007 with the 13 ITA No.1550/PN/2013 amendment that where the return of income for such previous year had been furnished before the date of search, but such income had not been declared therein or where the due date of filing the return of income for other previous year has expired, but the assessee had not filed the return of income, then notwithstanding the fact that the said 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 of his income or furnished inaccurate particulars of his income.
17. The deeming provisions of Explanation 5A under section 271(1)(c) of the Act are applicable to all the searches initiated under section 132 of the Act on or after first day of June, 2007. The conditions laid down in the Explanation 5A is where during the course of search, the assessee is found to be in possession of any money, bullion, jewellery, valu able articles or things and the assessee claims that such assets have been acquired by him by utilizing wholly or in part his income, for any previous year on any income based on any entries in books of account, or other documents or transactions and he claims that such entries in the books of account or other documents or transactions represent his income for any previous year, then in cases where the return of income for such previous year had been furnished by the assessee prior to the date of search, but the said income had not been declared in the said return of income or the due date for filing the return of income had expired for such previous year and the assessee had not filed the return of income, it is further laid down that notwithstanding the fact that such income which has been discovered due to the search proceedings, is declared by him in any return furnished on or after the date of search, but irrespective of the same, he would be deemed to have concealed the particulars of income or furnished inaccurate particulars of income. Reading the above said provisions of the Explanation 5A to section 271(1)(c) of the Act, it is noted that the person is deemed to have concealed particulars of his income or furnished inaccurate particulars of such income, which is equivalent to the value of money, bullion, jewellery, valuable articles or things from the possession of the assessee during the course of search conducted on or after first day of June, 2007. Further, where any income is based on any entry in any books of account or other documents or transactions and he claims that all the above said represents his income for any previous year, then the Explanation lays down to that extent, the person would be deemed to have concealed his particulars of income or furnished inaccurate particulars of income.
18. Now, coming to the main provisions which constitute two portions i.e. what is concealment and quantum of penalty to be levied. The question is quantum of income on which penalty is to be levied. The said issue was before the Pune Bench of Tribunal in ACIT Vs. Mulay Construction P. Ltd. & Ors. in ITA Nos.116 to 119/PN/2012 & Ors. and it was held as under:-
"16. The next limb of argument of the Ld. counsel is that Explanation 5A(ii) contemplates "income" and not the "expenditure". In this case, it is undisputed fact that the assessee came forward and declared "income" which was 14 ITA No.1550/PN/2013 pertaining to the amount covered by the unrecorded expenditure but the fact remains that the assessee did not declare any 'expenditure' but it is only the income. The Ld. Counsel referred to the definition of the income given in sec. 2(24) of the Act. The scope of the said definition has been explained by the Hon'ble Supreme Court in the case of EMIL Webber (supra) which has been relied upon by the Ld. Counsel The relevant portion is in para no 7 which reads as under:
"7. The definition of 'income' in clause (24) of Section 2 of the Act is an inclusive definition. It adds several artificial categories to the concept of income but on that account the expression 'income' does not lose its natural connotation. Indeed, it is repeatedly said that it is difficult to define the expression 'income' in precise terms. Anything which can properly be described as income is taxable under the Act unless, of course, it is exempted under one or the other provision of the Act. It is from the said angle that we have to examine whether the amount paid by Ballarpur by way of tax on the salary amount received by the assessee can be treated as the income of the assessee. It cannot be overlooked that the said amount is nothing but a tax upon the salary received by the assessee. By virtue of the obligation undertaken by Ballarpur to pay tax on the salary received by the assessee among others, it paid the said tax. The said payment is, therefore, for and on behalf of the assessee. It is not a gratuitous payment. But for the said agreement and but for the said payment, the said tax amount would have been liable to be paid by the assessee himself He could not have received the salary which he did but for the said payment of tax. The obligation placed upon Ballarpur by virtue of Section 195 of the Income Tax Act cannot also be ignored in this context. It would be unrealistic to say that the said payment had no integral connection with the salary received by the assessee. We are, therefore, of the opinion that the High Court and the authorities under the Act were right in holding that the said tax amount is liable to be included in the income of the assessee during the said two assessment years."
17. As per interpretation made by the Hon'ble' Supreme Court of sec. 2(24) of the Act, it is clear that it is an 'inclusive' definition and it covers all income come under charging provisions of the Act. If the argument of the learned counsel is to be accepted then no income can be taxed u/s. 68, 69, 69A, 69B, 69C & 69D.
18. It is necessary to refer to Explanation 5A which reads as under:
"Explanation 5A - Where, in the course of a search initiated under section 132 on or before the 1st day of 15 ITA No.1550/PN/2013 June 2007, the assessee is found to be the owner of
(i) Any money, bullion, jeweler or other valuable article or thing (hereinafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income for any previous year;
or
(ii) Any other 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 part) for any previous year, which has ended before the date of search and
(a) where the return of income for such previous year 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 for 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 clause (c) of sub-section (1) of this section, he deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income."
19. So far as the present assessee is concerned, clause (ii) to Explanation 5A is applicable. Admittedly, the expenditure which was not recorded has been found by way of entries in the seized documents. While explaining the scope of Explanation 5A in the case of Chandan K. Shewani (supra) the Tribunal has held that to patch out the lacuna due to the judicial interpretation of Expl. 5 of Sec. 271(1)(c) which was on the statute book upto 31-5-2007, Explanation 5A has been substituted for Expl. 5 by the Finance Act, 2007 w.e.f 1-6- 2007. The said explanation was further amended by the Finance(No.2) Act, 2009 with retrospective effect from 01- 07-2007 which is reproduced hereinabove. The Ld. Counsel has raised an important legal question whether the income declared by the assessee which is pertaining to the unrecorded expenditure can said to be the income which is contemplated in Explanation 5A(ii)? The answer to this question is in sec. 69-C which reads as under:-
"Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the 16 ITA No.1550/PN/2013 explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year;"
20. So far as the Expl.- 5 which was on the statute book, the Courts have taken a view that it was having a limited application only to the extend of the money, bullion, jewellery or any valuable assets or things which were found during the course of search and seizer operation and owned by the assessee. But the other income which was found recorded by any entry in the document seized or otherwise was not covered. It is pertinent to note that sec. 69C provides that if any unrecorded expenditure is found and the assessee fails to explain the source of the said expenditure or explanation of the assessee is not satisfactory, then to the extent of the amount covered by such expenditure is treated as income. Ultimately what is taxed under Sec. 69 C of the Act is not the expenditure but it is basically the undisclosed income which has been applied for incurring the unrecorded expenditure. In our view, there is no merit in the argument of the Ld. Counsel that the assessee has only declared the amount expenditure. We therefore, hold that to the extent of the income offered by the assessee pertaining to the expenditure in the returns filed in response to notice u/s 153A, Explanation-5A is applicable and as there is a legal presumption against the assessee in respect of the said income detected during the course of search and seizure operation, the assessee case is squarely covered by Explanation- 5(ii) as the assessee himself has admitted the said undisclosed income."
19. Applying the said proposition to the facts of the present case, we hold that the income offered by the assessee pertaining to the cash seized from the assessee and the declaration of the assessee that the said cash relates to the unaccounted cash received vide the sale transaction entered into by the assessee, which in turn, was declared by the assessee in the return of income filed pursuant to issue of notice under section 153A of the Act, is the income detected during the course of search and seizure operation. The case of the assessee is squarely covered by the provisions of Explanation 5A to section 271(1)(c) of the Act and the assessee is exigible to levy of penalty on such income which was detected during the course of search and seizure operation, which in turn has been offered by the assessee in return of income filed pursuant to notice issued under section 153A of the Act. The learned Authorized Representative for the assessee on the other hand has placed reliance on the ratio laid down in DCIT Vs. Purti Sakhar Karkhana (supra), which is a decision of Nagpur Bench of Tribunal and Hyderabad Bench of Tribunal in Shri PV Ramana Reddy Vs. ITO (supra). In view of binding precedent of Pune Bench on the said issue, we find no merit in the reliances placed upon by the learned Authorized Representative for the assessee on DCIT Vs. Purti Sakhar Karkhana (supra) and Shri PV Ramana Reddy Vs. ITO (supra). The other reliance placed upon by the learned Authorized Representative for the assessee on the decision of Pune 17 ITA No.1550/PN/2013 Bench of Tribunal in Smt. Pramila D. Ashtekar Vs. ITO (2013) 39 taxmann.com 103 (Pune - Trib.), it may be pointed out that the said order of Pune Bench of Tribunal has been recalled in MA No.112/PN/2013, order dated 21.06.2013 and has no binding effect for deciding the present issue. Further reference was made to the decision of CIT Vs. Continental Warehousing Corporation (NHAVA Sheva) Ltd. & Anr. (supra), where the Hon'ble Bombay High Court has deliberated upon the scope of 153A provisions and has no relevance to the issue before us."
15. Since the assessee in the instant case has declared the amount of Rs.17,00,000/- and Rs.10,00,000/- respectively on the basis of various discrepancies found in the seized documents during the course of search and the assessee has declared the same in the statement recorded u/s.132(4), therefore, respectfully following the decision of the Coordinate Bench of the Tribunal cited (Supra) we hold that the assessee is liable to penalty u/s.271(1)(c) of the Act for concealing the particulars of his income to the extent of income arising from land business with Mr. Dilip Phadol - Rs.17 lakhs and profit of unrecorded transaction in Kirana - Rs.10 lakhs. The argument of Ld. Counsel for the assessee that penalty cannot be levied on estimated addition of income on Kirana is not applicable under the facts and circumstances of the case. The AO is directed to recompute the penalty accordingly. The appeal filed by the Revenue is partly allowed in the terms indicated above.
16. In the result, the appeal filed by the revenue is partly allowed.
Order pronounced in the open court on 09-05-2016.
Sd/- Sd/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे Pune; दनांक Dated : 09th May, 2016. सतीश 18 ITA No.1550/PN/2013
आदे श क) *#त,ल!प अ-े!षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. The CIT(A)-I, Nashik
4. The CIT-I, Nashik
5.
$वभागीय 'त'न(ध, आयकर अपील य अ(धकरण, "बी" पुणे / DR, ITAT, "B" Pune;
6. गाड- फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, // True Copy // // True Copy // //स या$पत 'त //True व/र0ठ 'नजी स(चव / Sr. Private Secretary आयकर अपील य अ(धकरण, पुणे / ITAT, Pune