Income Tax Appellate Tribunal - Indore
Lilasons Breweries Ltd. , Bhopal vs Assistant Commissioner Of Income Tax ... on 20 November, 2018
आयकर अपील य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.287/Ind/2017
Assessment Year: 2011-12
Mohan Kumar Lila
64, Malviya Nagar, ACIT, 1(1),
बनाम/
Bhopal Bhopal
Vs.
(Appellant) (Revenue)
P.A. ABCPL 7638 N
ITA No.288/Ind/2017
Assessment Year: 2011-12
Arun Kumar Lila
E-4/132, Arera Colony, ACIT, 1(1),
बनाम/
Bhopal Bhopal
Vs.
(Appellant) (Revenue)
P.A. AARPL 5228N
ITA No.462/Ind/2017
Assessment Year: 2011-12
Lilasons Industries Ltd.
83, Malviya Nagar, ACIT, 1(1),
बनाम/
Bhopal Bhopal
Vs.
(Appellant) (Revenue)
P.A.- AAACL 5311 N
Mohan K. Lila and Others, Bhopal
ITA No.467/Ind/2017
Assessment Year: 2011-12
M/s Lilasons Brewaries Ltd.,
Industrial Area, Govindpura, ACIT, 1(1),
बनाम/
Bhopal Bhopal
Vs.
(Appellant) (Revenue)
P.A. AAACL5312R
Appellant by Shri Ashish Goyal & N.D. Patva Advs,
Respondent by Smt. Ashima Gupta, CIT-DR
Date of Hearing: 31.10.2018
Date of Pronouncement: 20.11.2018
आदे श / O R D E R
PER MANISH BORAD, A.M:
These bunch of four appeals filed at the instance of different assessees relating to penalty levied u/s 271AAA of the Act are directed against the common order of Ld. Commissioner of Income Tax(Appeals)-1, Bhopal, (in short 'CIT(A)'), dated 03.02.2017 & 28.03.2017 which are arising out of the separate orders framed on 18.03.2016 & 22.03.2016 by ACIT, 1(1), Bhopal.
2. As the issue raised in all these appeals are common but pertaining to different assessees, these were heard together and are being disposed of by this common order for the sake of convenience and brevity.
3. The sole grievance commonly raised in all these four appeals by the assessees is against the order of Ld. CIT(A) confirming the levy of penalty imposed u/s 271AAA of the Act for the alleged 2 Mohan K. Lila and Others, Bhopal noncompliance of condition provided in section 271AAA sub-section (2) of the Act regarding substantiating the manner in which the undisclosed income was derived. Following amount of penalties have been levied in the case of four appellants:
S.No. Party Name A.Y. Penalties u/s
271AAA
1 Mohan Kumar Lila 2011-12 10,00,000/-
2 Arun Kumar Lila 2011-12 39,82,554/-
3 M/s Lilasons Industries Ltd. 2011-12 15,00,000/-
4 M/s Lilasons Brewaries Ltd. 2011-12 10,00,000/-
4. Briefly stated facts as culled out from the records are that the search and seizure operation u/s 132(1) of the Act were carried out at the premises of Lilasons group as well as residential premises of the assessees statements u/s 132(4) of the Act were recorded and undisclosed income was admitted. Tax on the surrendered income along with interest was paid and offered in the income tax return. The ld. Assessing Officer while completed the assessment u/s 143(3) of the Act r.w.s. 153A of the Act, initiated penalty proceeding u/s 271AAA of the Act. Subsequently, in the penalty order u/s 271AAA of the Act, Ld. AO levied the penalty @ 10% of the undisclosed income by alleging that the assessee neither specified the manner in which such income was derived nor substantiated the matter in which the undisclosed income was derived.
5. Aggrieved assessee preferred an appeal before the ld. CIT(A) but failed to succeed.
3Mohan K. Lila and Others, Bhopal
6. Now the assessee is in appeal before the Tribunal against the respective order of Ld. CIT(A) confirming the levy of penalty u/s 271AAA of the Act.
7. At the outset, Ld. counsel for the assessee submitted that in the statement recorded u/s 132(4) of the Act respective assessees have admitted that the source of surrendered income is on account of undisclosed business income. He further placed on record, the copies of the statement u/s 132(4) of the Act showing that no specific question was asked in relation to manner of earning of the undisclosed income nor indication was drawn to the provisions contained u/s 271AAA of the Act. Written submission given by the ld. counsel for the assessee reads as follows:
"From the statement of the appellant (PB 81-85) and also quoted above, it is clear that he was never questioned by drawing his attention to the provisions contained in section 271(1)(c) or 271AAA. He tried to give appropriate answers to the best of his ability and knowledge to the questions put to him. Had he been expressly made aware of the provision of section 271AAA, he could have perhaps tried to furnish some more evidence or proper explanation. However, no such attempt seems to have been made during the search or even during assessment proceedings.
a. The issue is squarely covered by decision of Hon'ble ITAT, Indore in Keti Sangam Infrastructure (I) Ltd vs DCIT(Central), Indore ITA No. 516/IND/2017, 1341,602 & 603/IND/2016 and also in Keti - T Construction (India) Ltd, Indore ITA no 1343 &601/IND/2016 where it was held that "the assessees are eligible for getting immunity from paying penalty u/s 271AAA of the Act as the undisclosed income has been admitted during the course of search and the manner of earning income is from business sources, due taxes with interest have been paid, surrendered income has been offered 4 Mohan K. Lila and Others, Bhopal as business income in returns of income filed and they have been accepted and assessed as business income only and in this manner the assessee has successfully fulfilled all the three conditions u/s 271AAA of the Act Even otherwise, if the revenue has not asked specific question relating to the manner of deriving undisclosed income, the assessee while fulfilling the first condition of admitting the undisclosed income has already specified the manner of earning the income i.e. from business sources and the statement u/s 132(4) of the Act was not for individual business concern, but was for the group concerns/companies/business associates/individuals and at the point of time of giving the statement during the course of search, specific details about each business concern and the source of earning such undisclosed income are not practically possible for the person giving the statement on behalf of the group concerns/individuals. Above all, the business income surrendered has been offered and assessed as business income only. We are, therefore, of the view that the learned Commissioner of Income Tax (Appeals) erred in confirming the findings of the Assessing Officer levying penalty u/s 271AAA of the Act. We accordingly set aside the findings of the learned Commissioner of Income Tax (Appeals) and delete the penalty."
b. In the instance case also, the undisclosed income was duly surrendered in the regular return filed under the head "Other Sources"
Further reliance is placed in the judgement in case of ITAT Delhi Bench - ACIT vs. Emirates Technologies (P) Ltd (2017)88 taxmann.com 637 (Delhi- Trib), it was held that "In absence of the query about the manner in which the undisclosed income was derived and about its substantiation, the ld AO was not justified in imposing penalty under section 271AAA specially when he offered undisclosed income was accepted by the assessing officer and the tax due there on has been paid by the assessee."
Similar view was taken in the case of Neerat Singal by hon'ble ITAT Delhi Bench ([2013] 37 taxmann.com 189 (Delhi - Trib.) 5 Mohan K. Lila and Others, Bhopal
1. No Definition of 'Specified Manner' In the case of Pramod Kumar Jain [2012] 149 TTJ 36 (Cuttack - Trib.), the assessee had disclosed the unaccounted income but had failed to specify the manner in which such income had been derived. The department accordingly levied penalty u/s 271AAA of the Act. The same was upheld by the first appellate authority. The Tribunal has however deleted the penalty on the basis that there is no prescribed method to indicate the manner in which income was generated "Held that no definition could be given to the 'specified manner' insofar as the very statement on oath under section 132(4) specifies the manner on which the assessee is prepared to pay tax thereon. The inscribing in the books of account was taken care of by the assessee when he filed the returns in pursuance of notice under section 153A accounting the assets. Therefore, the penalty is not automatic if one of the purported conditions is not fulfilled although all the conditions have been agreed to of having fulfilled by the Assessing Officer insofar as the tax and interest have been recovered. In view of the above the levy of penalty under section 271AAA was not justified.
That being the case, and in view of the admission of the undisclosed income in the returns filed and payment of full tax with penal interest thereon the penalty is unjustified.
2. Explanation 5 to Sec 271(1)(c) and subsection (2) to Sec 271AAA analogous :-
Sec 271(1)(c) Sec 271AAA Explanation 5: Where in course (2)- penalty is not leviable of a search initiated u/s 132 where search has been on or after 1.06.07, if the initiated under section 132 assessee in the course of on or after 1-6-2007 but search makes a statement before 1-7-2012, and the
under sub-section (4) of section assessee in the course of 6 Mohan K. Lila and Others, Bhopal 132 that any money, bullion, search, in a statement under jewellery or other valuable the sub-section (4) of section article or thing found in his 132,(i), admits the possession or under his control undisclosed income (ii) has been acquired out of his specifies and income which has not been substantiates the manner disclosed so far in his return of in which such income has income to be furnished before been derived, and (iii) pays the expiry of time specified in the tax together with sub-section (1) of section 139 interest, if any, in respect of and also specifies in the the undisclosed income. statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income, then the assessee for such income will not be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income to attract the penalty therein Applicability:- Applicability:-
Where search under section Where search under section 132 was initiated before 1-6- 132 has been initiated on or 2007 after 1-6-2007 but before 1-
7-2012.
a. Reading both the penal provisions, one thing is common for non- attraction of penalty under both the sections, is that:-
"if the assessee in his statements recorded under section 132(4) admits the undisclosed income and specifies in the statement the manner in which such income has been derived and pays the tax together with interest, if any, in respect of such income."
b. The only additional condition in case of Sec 271AAA is that:-
7Mohan K. Lila and Others, Bhopal "the assessee will also have to substantiate the manner in which the undisclosed income was derived besides specification of the manner in which such income was derived.
The intention of the legislature is that these provisions are thus not applicable simultaneously but these are period specific. In view of this relative study of both the provisions when we go through the decisions in the case of Radha Kishan Goel [2006] 152 TAXMAN 290 (ALL.) it was held that "In the absence of any specific statement about the manner in which such income has been derived, it can be inferred that such undisclosed income was derived from the business which he was carrying on or from other sources. The object of the provision is achieved by making the statement admitting the non-disclosure of money, bullion, jewellery, etc. Thus, we are of the opinion that much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case, in the absence of anything to the contrary. Therefore, mere non-statement of the manner in which such income was derived would not make Explanation 5(2) inapplicable."
8. Per contra Ld. Departmental Representative (DR) supported the order of the lower authorities but could not controvert the finding that the issue stands squarely covered by the decision of the ITAT, Indore Bench in the case of Keti Snagam Infrastructure(I) Ltd.
(supra) wherein the judgment in favour and against the assessee have duly been dealt with and the one favouring the assessee have been applied in view of the judgment of Hon'ble Apex Court in the case of CIT vs. Vegetable Products Limited 88 ITR 192 (SC).
9. We have heard rival contention and perused the records carefully gone through statements given by each of the assessee u/s 132(4) 8 Mohan K. Lila and Others, Bhopal of the Act and also carefully gone through the judgments referred and relied by both the parties. Common issue raised in all these four appeals is against the order of ld. CIT(A) confirming the levy of penalty u/s 271AAA of the Act in the case of following four assesses:
S.No. Party Name A.Y. Penalties u/s
271AAA
1 Mohan Kumar Lila 2011-12 10,00,000/-
2 Arun Kumar Lila 2011-12 39,82,554/-
3 M/s Lilasons Industries Ltd. 2011-12 15,00,000/-
4 M/s Lilasons Brewaries Ltd. 2011-12 10,00,000/-
10. Penalty u/s 271AAA of the Act is to be levied @ 10% of the undisclosed income unearthed during the course of search u/s 132 of the Act conducted after the first day of June, 2007 but before the first day of July 2012. In the instant appeal search u/s 132 of the Act conducted on 28.10.2010. Income surrendered by each assessee duly admitted during the course of search and has been offered to tax in the income tax return. Immunity from paying penalty u/s 271AAA of the Act is to be provided to the assessee if conditions provided in sub-section(2) of section 271AAA of the Act are fulfilled which are namely:
(i) If the assessee in the course of search in statement under sub-
section (4) of section 132 admits undisclosed income and specified the manner in which such income has been derived.
(ii) Substantiate the manner in which undisclosed income was derived 9 Mohan K. Lila and Others, Bhopal
(iii) Pays the tax, together with interest, if any, in respect of the undisclosed income.
11. In the instant bunch of appeal revenue authorities have accepted that the assessee has duly fulfill the condition no.1 & 3. Bone of contention revolves round the condition no. 2 i.e. substantiate the manner in which undisclosed income was derived.
12. Both the lower authorities have confirmed the penalty observing that the assessee has not given details and the manner in which the undisclosed income has been derived, whereas the Ld. counsel for the assessee pleaded that source of income surrendered has been accepted to be from undisclosed business income. However, there was no specific question raised by the search team drawing attention of the assessee to the provisions contained in section 271AAA of the Act.
From the perusal of the statement recorded u/s 132 sub-section (4) of the Act given by each of the four assessees, we find that reason able efforts were made to given appropriate answers to the best of the ability and knowledge to the questions put to them. For instance in the case of Lilasons Industries Limited, Bhopal the assessee accepted that the surrendered of Rs.1,50,00,000/- is on account of business income. Same is a case for other assessees wherein while giving the statement they gave an indication of the source of income and the same has been disclosed in the income tax return filed subsequent to the search proceedings and the revenue authorities have assessed the respective income tax returns as well as surrendered income in the manner it has been disclosed.
10Mohan K. Lila and Others, Bhopal Now in these given facts whether the assessee is liable to pay the penalty u/s 271AAA of the Act.
13. We find that the similar issue came up before us in the case of Keti Sangam Infrastructure(I) Ltd. (supra) wherein we deleted the impugned penalty u/s 271AAA of the Act observing as follows:
"We have heard both the parties, perused the material available on record and have also gone through the judgments relied upon by both the parties. The common issue relates to penalty levied u/s 271AAA of the Act and confirmed by the learned Commissioner of Income Tax (Appeals). The Assessing Officer has denied the immunity to the assessee provided u/s 271AAA(2) of the Act for the sole reason that the assessee has not substantiated the manner in which the undisclosed income was derived. Before going ahead we would first like to reproduce the provisions of section 271AAA of the Act :-
"Penalty where search has been initiated.
271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year.
(2) Nothing contained in sub-section (1) shall apply if the assessee,--
(i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived;
(ii) substantiates the manner in which the undisclosed 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) of sub-section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1).
(4) The provisions of sections 274 and 275 shall, so far as may be, apply in relation to the penalty referred to in this section. Explanation.--For the purposes of this section,--
(a) "undisclosed income" means--
(i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other 11 Mohan K. Lila and Others, Bhopal 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 search 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 Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or
(ii) any income of the specified previous year represented, 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 false and would not have been found to be so had the search not been conducted;
(b) "specified previous year" means the previous year--
(i) which has ended before the date of search, but 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 the return of income for the previous year before the said date; or
(ii) in which search was conducted."
19. From the perusal of the above section we observe that the penalty cannot be levied if the assessee fulfils three conditions mentioned in sub-section (2) of section 271AAA of the Act. In the instant case there is no dispute at the end of parties that the assessee has fulfilled condition nos. 1 and 3 of sub-section (2) of section 271AAA of the Act and that the assessee has admitted the undisclosed income in the statement recorded u/s 132(4) of the Act during the course of search and has also paid taxes together with interest, if any, in respect of the undisclosed income. The bone of contention revolves round the second condition which says that the assessee should substantiate the manner in which the undisclosed income was derived. The learned counsel for the assessee has contended that during the course of giving the statement, the assessee admitted the undisclosed income and pursuant thereto there was no further question asked by the Assessing Officer to the assessee for substantiating the manner in which the undisclosed income was derived. It was also contended that the undisclosed income was earned out of the business income as accepted by Mr. Tikamchand Garg who gave the statement on behalf of group concern and in the return of income filed after the search the surrendered income has been disclosed as business income in various 12 Mohan K. Lila and Others, Bhopal business concerns/associates and the same has been assessed as business income by the revenue authorities. Further no other addition was made and the return of income including the unaccounted business income was accepted by the revenue authorities. The revenue's contention is that the onus heavily lies on the assessee because the immunity has been sought from paying penalty @ 10% and if this benefit is to be taken then the onus lies heavily on the assessee to fulfill the conditions enumerated u/s 271AAA of the Act.
20. In order to examine the facts we have perused the statement given by Shri Tikamchand Garg during the course of search proceedings. In reply to question no. 3 it was stated that on account of papers and other records seized from the business and residential premises of the group concerns/individuals as well as valuable assets seized by the revenue authorities, an amount of Rs.51 crores is surrendered towards unaccounted income on behalf of the group concerns, companies and related individuals. Along with this reply, the post-dated cheques for tax of Rs. 7.51 crores were also offered to the revenue authorities. Thereafter, in question no. 4 it was simply asked that do you to want to say anything else to which the reply was No. We observe that the revenue authorities have not asked any specific question to the concern person to state the manner in which the undisclosed income was derived.
21. In these given facts where a specific question has not been asked by the search team about the manner in which the undisclosed income was derived, whether the assessee shall still be eligible to the immunity granted in section 271AAA of the Act needs to be examined in the light of the judicial pronouncements. We would first like to go through the findings of the coordinate Bench given in the very same group of cases dealing with the very same issue of 271AAA(2) of the Act relating to fulfilment of second condition and we find that the Tribunal vide its order dated 28.6.2017 in ITA Nos. 1027 & 1028/Ind/2016, relying upon the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. Mahindra C. Shah (supra) as well as other judgments and decisions, held the action of the Assessing Officer imposing penalty u/s 271AAA of the Act as not justified observing as follows :-
"7. We have considered the facts rival submissions and material on record. We find that during the course of search and seizure operation a statement under section 132(4) of the Act was recorded on 13-05-2011 and 27-05-2011, from Shri Tikamchand Garg , head of Garg family, wherein in reply to question No.2 of his statement dtd. 13-05-2011 (Paper Book Page No.2) and again on 27-05-2013 in reply to question no. 2, of his statement dtd. 27-05-2011, he on behalf of all the individuals of Garg family and group of concerns and companies had made a disclosure of additional income of Rs. 70 Crores, by stating that this amount covers and represent any 13 Mohan K. Lila and Others, Bhopal undisclosed income receipts, discrepancy or disallowances or any valuable article or things, money, jewellery, documents or papers found / or seized during the search operation. Such undisclosed income is disclosed on the basis discrepancies found in loose papers and books of accounts etc. during search in the course of our business activity. Thus, apparently the ssessee has made disclosure of undisclosed income, which has been earned from business activity not fully disclosed in the books of accounts. Accordingly, Shri Tikamchnad Garg has also gave postdated cheque against payment of taxes. Accordingly, the family members have shown this undisclosed return of income filed in response to notice u/s 153A. The perusal of statement recorded us 1324 shows that no specific question was put regarding manner in which the undisclosed income was derived. However, impliedly the manner of income earned was from business income only. We are also of the view that the assessee has already disclosed undisclosed income in proceeding and but not clearly specified the manner in which the said income derived as it was not asked for. However, this will not the assessee for the assessee from the immunity provided under section 271AAA(2) of the Act. As held in the faase of CIT vs. Radha Kishan Goel (2005) 278 ITR 454 (Allahabad) (2006) 152 Taxman 290/200 CTR 300(All) where the Hon'ble High Court has accepted that unless the Authorised Officer has been deprived. It is not expected from the person to make a statement in this regard. For the better appreciation of facts the relevant para of the order are reproduced as under :-
10. Under section 132(4) of the Act, it is the authorised officer, who examines on oath any person, who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing, therefore, it is for the authorised officer to record the statement in his own way.
Therefore, it is not expected from the person to state those things, which are not asked by the authorised officer.
11. It is a matter of common knowledge, which cannot be ignored that then search is being conducted with the completed team of the officers consisting of several officers with the police force. Usually telephone and all other connections are disconnected and all ingress and egress are blocked. During the Course of search person is so tortured, harassed and put to a mental agony that he loses his normal mental state of mind and at that stage it cannot be expected from a person to preempt the statement required to be given in law as a part of his defense.
14Mohan K. Lila and Others, Bhopal
12. In these circumstances, we are of the view that under section 132(4) of the Act unless the authorised officer puts a specific question with regard to the manner in which income has been derived, it is not expected from the person to make a statement in this regard and in case in the statement the manner in which income has been derived has not been stated but has been stated subsequently, that amounts to the compliance with Explanation 5(2) of the Act. We are also of the opinion that in case there is nothing to the contrary in the statement recorded under section 132(4) of the Act, in the absence of any specific statement about the manner in which such income has been derived, it can be inferred that such undisclosed income was derived from the business which he was carrying on or from other Sources. The object of the provision is achieved by making the statement admitting the non-disclosure of money, bullion, jewellery, etc. Thus, we are of the opinion that much importance should not be attached to the statement about the manner in which such income has been derived. It can be inferred on the facts and circumstances of the case) in the absence of anything to the contrary. Therefore) mere non-statement of the manner in which such income was derived would not make Explanation 5(2) inapplicable.
7.1. Thus, applying the ratio of above decision, when the assessee has disclosed the income during search and paid the taxes and it has been accepted no penalty under section 271AAA is called for just because the manner in which such income was earned not specified in statement under section 132(4) of the Act. The following the ratio of said decision the coordinated bench of Delhi Tribunal deleted the penalty under section 271AAA in the case of Raj Rani Gupta v. DCIT [ITA. o.3371/Del/2011) (PB-78-88) by relying on the decision of Hon'bl Allahabad High Court in the case of CIT v . Radha Kishan Goel [2005]; 278 lTR 454 (Allahabad)[2006] 152 Taxrrian 290/ 200 CTR 300(All) and Honble Gujarat High Court in the case of Mahendra C Shah CIT v . Mahendra C. Shah [2008] 299 ITR 305(Guj.). In this case, also penalty under section 271AAA was levied on the basis that the assessee did not, substantiate the manner in which the undisclosed income derived. There Tribunal has of observing that the immunity granted under clause 2 of Explanation 5A section 271(1)(c) are similar to immunity granted to the assessee under clause (2) of section 271 AAA, the letter dated the penalty as the assessee was neither asked about the manner in which the income was found not required to substantiate the manner of earning such income. The assessee had disclosed the income under section 15 Mohan K. Lila and Others, Bhopal 132(4) and disclosed the same in their return of income filed in response to notice under section 153A of the Act. We also note that the assessee has paid due taxes with interest thorn. It is also relevant to mention that the income declared by the assessee has been duly accepted by the AO and no addition has been made. In view of such circumstances, we are of the considered opinion that the assessee had duly fulfilled the condition laid down under section 271AAA (2) of the Act. We also find that the assessee made disclosure during search and specified manner in which income was earned in the statement under section 132(4) recorded from Shri Manish Kalani on behalf of the assessee group.
7.2. Similarly in the case of D'Cl'T V. Shree Salasar Properties & Finance Pvt. Ltd. [I.T.A. No. 1081 I Koll 20 13] wherein penalty under section 271 AAA were levied on the ground that the assessee is not entitled immunity, as the conditions stipulated were not fulfilled. It was observed by the A.O. the assessee has not substantiated the manner in which the undisclosed income was derived. Penalty was levied on the ground that but for the search the assessee would not have come forward with the additional income as discussed in paragraph 5 of the order. The ITAT in para 8.3 noted that the additional income of Rs. 1.75 crores was offered voluntarily by the assessee without incriminating material found during the course of search and held that same does not fall within the definition of undisclosed income. In Para 8.4 it has been held that nothing in implementing was found with regard to the aspect of share capital and is loans which were ultimately offered by the assessee, hence it was school proved that the offer of income was without detection of the Department and accordingly the argument that but for the search, this income would not have been offered does not hold any water and deserve to be dismissed. Our view is also supported by decision of coordinated bench in the case of Shri Ashok Kumar Sharma vs. DCIT (2012)31 CCH310 (Cuttack-Trib)/77 DTR241/149 TTJ 33 wherein it was held that (where the assessee has disclosed concealed income while giving statement u/s 132 during the course of search and paid tax thereon and showed said undisclosed income in return filed under head "income fromj business and Department has accepted these returns and accordingly passed assessment orders.
7.3 Further reliance is placed in the case of DCIT vs. Ashok Nagrath [2015J 154 lTD 448/ 57 taxmann.com 15(Delhi-Trib) where assessee agreed for a declaration on account of excess 16 Mohan K. Lila and Others, Bhopal stock-in trade and paid tax together with interest, no penalty under section 271 AM would be levied.
7.4. Our view is also supported with decision in the case of Concrete Developers vs. ACIT [2013] 34 taxrriann.com 62 (Nag- Trib) wherein it was held that where assessee had disclosed certain amount during the course of search, and paid taxes thereon filed return showing said income as business income and same has been accepted by the Assessjng Officer under the head 'business income" penalty under sectiun 271 AAA of Income Tax Act, 1961, was not leviable.
7.5. The Ld. AR relied in the case of Neeraj Singal v. ACIT [2014J 146 lTD 152 (DEL) it was held that it was evident that during the course of search proceedings the authorised officer of Department has not raised any specific quely regarding the manner in which the undisclosed income has been derived and on the contrary assessee has tried to explain the earning of undisclosed income in question in its reply during the course of recording of the statement under section 132(4) and thereafter. In absence of query raised by authorised officer durinq the course of recording of the statement under section 132(4) about the manner in which the undisclosed income has been derived and about its substantiation, the AO was not justified in imposing penalty under section 271AAA especially when offered undisclosed income has been accepted and due taxes thereon has been paid by the assessee. Order of the AO levying penalty was set aside, appeal favour of the assessee. Similarly penalty levied for not specific manner in search was deleted by Hon "ble Gujarat High Court in the case of CIT v. Mahendra C. Shah [2008J 299 ITR 305(Guj.) 7.6. In view of above facts of the present case wherefrom it is evident that during the course of search proceedings, the Authorised Officer of the Department has not raised any specific query regarding manner in Court and coordinated bench various tribunal as discussed above which the undisclosed income has been derived and on the contrary the assessee has explained that undisclosed income is being surrendered on the basis of loose papers, discrepancies found in seized material and valuables found during search.' We thus respectfully following the above decisions of Hon'ble Allahabad High Court and Horible Gujarat High Court and coordinated bench various tribunal as discussed above hold that in absence of query raised by the Authorized Officer during the course of search recording the statement under section 132(4) about the manner 17 Mohan K. Lila and Others, Bhopal in which the undisclosed income has been derived and about its substantiation, the A.O. was not justified in imposing penalty under section 271AAA of the Act specifically when the surrendered undisclosed income has been accepted and due taxes has been paid by the assessee. Hence, we hereby set- aside the impugned orders of the authorities below and cancel the penalty levied u/s. 271AAA of IT Act in the cases of the above 7 appeals by the assessees by allowing by allowing their appeals."
22. We further observe that the Hon'ble High Court of Gujrat in another case of Principal CIT vs. M/s Shahlon Silk Mills Pvt. Ltd.; Tax Appeal No. 824 of 2017 dated 5.2.2018 relying upon the judgment of CIT vs. Mahindra C. Shah which was in connection with penalty u/s 271(1)(c) of the Act, again applied the same findings adjudicating the issue relating to 271AAA of the Act and held as follows :-
18Mohan K. Lila and Others, Bhopal 19 Mohan K. Lila and Others, Bhopal Similarly Hon'ble High Court of Delhi in the case of Principal CIT vs. M/s Emirates Technologies Pvt. Ltd.; ITA No. 400/2017 in its decision dated 18.7.2017 observing that no specific query was put to the assessee by drawing his attention to section 271AAA and asked him to specify the manner in which the undisclosed income was derived, upheld the deletion of penalty by the ITAT and dismissed the appeal filed by the department.
23. So far as the decision referred to and relied upon by the learned DR in the case of Principal CIT vs. Smt. Ritu Singal (supra) is concerned, the Hon'ble Court held in favour of the revenue holding that the assessee did not derive that income and what had it fell in and even if the revenue authority does not raise a specific query, it cannot be said that the assessee has fulfilled the requirements and, therefore, should have substantiated the manner in which the undisclosed income was derived so as to comply with the second condition provided in sub-section (2) of section 271AAA of the Act.
24. We find that where there are two views of the Hon'ble High Courts on the very same issue wherein some judgments are favouring the assessee holding that if the specific query is not asked to the assessee then the assessee should not be treated in default and should be given the immunity from paying the penalty if all the other conditions are fulfilled whereas in the case of CIT vs. Smt. Ritu Singal (supra) the onus is placed on the assessee to substantiate the manner in which the undisclosed income has been earned even if the specific query has not been asked. In such a situation, we are of the view that the judgment of the Hon'ble Apex Court in the case of CIT vs. Vegetable Products Limited; 88 ITR 192 (Supreme Court) needs to be applied wherein after detailed discussion, it was held by the Hon'ble Supreme Court as under :-
"If we find that language to be ambiguous or capable of more meanings than one, then we have to adopt that interpretation which favours the assessee, more particularly so because the provision relates to imposition of penalty."20
Mohan K. Lila and Others, Bhopal We, therefore, respectfully following the above judgment of the Hon'ble Supreme Court and the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. M/s Shahlon Silk Mills Pvt. Ltd. (supra) as well as the decisions of the Tribunal in the cases of the very same group of assessees relating to the instant appeals and in the given facts and circumstances, find that the assessees are eligible for getting immunity from paying penalty u/s 271AAA of the Act as the undisclosed income has been admitted during the course of search and the manner of earning income is from business sources, due taxes with interest have been paid, surrendered income has been offered as business income in returns of income filed and they have been accepted and assessed as business income only and in this manner the assessee has successfully fulfilled all the three conditions u/s 271AAA of the Act. Even otherwise, if the revenue has not asked specific question relating to the manner of deriving undisclosed income, the assessee while fulfilling the first condition of admitting the undisclosed income has already specified the manner of earning the income i.e. from business sources and the statement u/s 132(4) of the Act was not for individual business concern, but was for the group concerns/companies/business associates/individuals and at the point of time of giving the statement during the course of search, specific details about each business concern and the source of earning such undisclosed income are not practically possible for the person giving the statement on behalf of the group concerns/individuals. Above all, the business income surrendered has been offered and assessed as business income only. We are, therefore, of the view that the learned Commissioner of Income Tax (Appeals) erred in confirming the findings of the Assessing Officer levying penalty u/s 271AAA of the Act. We accordingly set aside the findings of the learned Commissioner of Income Tax (Appeals) and delete the penalty of Rs.25,14,100/- in the case of M/s Keti Sangam Infrastructure (I) Limited, Rs.43,94,610/- in the case of Keti-T Construction (India) Limited and Rs. 25,07,250/- in the case of Keti Sangam Infrastructure (I) Limited levied u/s 271AAA of the Act.
25. In the result, all the 12 appeals filed at the instance of different assessees stand allowed.
14. From perusal of the above judgment we find that fact of the instant four appeals are verbatim similar and revenue authorities failed to rebut the submissions made by the assessees and also failed to controvert the fact that the issues raised in the instant four appeals are squarely 21 Mohan K. Lila and Others, Bhopal covered in favour of the assessee by the decision of the ITAT, Indore Bench in the case of Keti Sangam Infrastructure (supra). We, therefore, are of the considered view that both the lower authorities erred in levying the penalty u/s 271AAA of the Act and we accordingly delete the alleged penalty levied at Rs. 10,00,000/-, Rs.15,00,000/- Rs. 39,82,554/- & Rs. 10,00,000/- in the case of Mohan Kumar Lila, M/s. Lila sons Industries Ltd, Arun Kumar Lila & Lilasons Brewaries ltd. respectively.
15. In the result, all the four appeals of the assessee are partly allowed.
Order was pronounced in the open court on 20 .11.2018.
Sd/- Sd/-
(KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore; दनांक Dated : 20/11/2018
ctàxÄ? P.S/. न.स.
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file.
By order Assistant Registrar, Indore 22