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TMI Blog2019 (4) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... 29/Kol/2017), C.O No.103/Kol/2018 (a/o ITA No152/Kol/2017) Shri J.Sudhakar Reddy, Accountant Member And Shri S.S.Godara, Judicial Member For the Assessee : Shri A.K. Tibrewal, FCA And Shri Amit Agarwal, Advocate For the Respondent : Shri A.K.Singh, CIT-DR And Shri C.J. Singh, JCIT-SR-DR ORDER PER S.S.Godara, Judicial Member:- The instant batch of seventeen cases pertains to eleven assessees. All these Revenue's appeal(s) and assessees' cross objections cases arise from the Commissioner of Income Tax (Appeals)-20, Kolkata's identical order(s) upholding / partly confirming the Assessing Officer's action imposing the penalt(ies) in issue; involving proceedings u//s 271AAB of the Income Tax Act, 1961; in short 'the Act'. Relevant assessment year in all these cases is assessment year 2013-14. 2. It transpires at the outset that some of the cross objections that CO Nos.104- 106/Kol/2018 suffer from identical delay of 548 days' in filing. These assessees have placed on record their respective condonation petition(s) / affidavit(s) stating reasons thereof to various procedural formalities and compilation of necessary records. The Revenue is fair enough in not disputing correctness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer thereafter completed sec. 153A assessment proceedings. He further initiated the impugned penalty proceedings u/s 271AAB of the Act. He concluded in his penalty order dated 29.09.2015 that the assessee's disclosure of Rs.225,00,000/- amounted to "undisclosed income" inviting impugned penal proceedings u/s 271AAB of the Act. He observed in his penalty order that this group's disclosure of Rs.45,03,41,444/- including various entities could be divided into two limbs. Former limb as per the Assessing Officer was on account of unaccounted cash / jewellery totaling to Rs.12,13,41,444/- found during the course of search. He then came to latter limb of additional income including disclosure of Rs.32,90,00,000/- derived their business activities. He then came to assessee's written submissions submitted during disclosure dated 12.11.2012 to hold that the same sufficiently attracted u/s 271AAB penal action in view of the above stated undisclosed income deleted during search. The Assessing Officer held that the assessee's disclosure made during the course of search itself would partake the character of undisclosed income so as to invoke the impugned penal provision. All this resulted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case no evidences regarding concealment/undisclosed income in the form of cash seizure/papers/documents/stock etc were found and seized. Nothing incriminating/.no evidences were found regarding Rs. 225 lakh which was offered for taxation by the assessee suo moto in order to buy peace of mind. I also find that neither the officers in the investigation wing in the post search investigation nor the Assessing Officer during assessment process found any discriminating evidence of undisclosed income other than the statement of the assessee for making the addition of Rs. 225 lakh. 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. 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 Rs. 225 lakh was offered for taxation by the assessee suo moto in the statement recorded at the time of search. From the ratio decided by the Hon'ble Supreme Court co Sudarshan Silk & Saries (supra), it is clear that only the statement of the assessee without any corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 declared their respective additional incomes they filed their respective returns accordingly including said additional incomes therein. The Assessing Officer accepted the same in consequential assessments. The sole dispute between the parties herein is about operation of the impugned penal provision i.e. section 271AAB of the Act. The Revenue's case before us is that it automatic comes into play the moment the searched-assessee makes any disclosure of undisclosed income whereas the assessee pleads that this penal provision applies in case the search itself leads to some specified material indicating undisclosed income defined in Sec. 271AAB Explanation (c) of the Act. The Revenue admittedly raises its arguments as per hon'ble apex court's decision in Sandeep Chandak (supra) declining the taxpayer's Special Leave petition in limine challenging hon'ble Allahabad high court's decision reviving the penalty therein. The Revenue's case appears to be carrying substance ab initio that as per hon'ble apex court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already succeeded on the issue as to whether the impugned penalty is automatically flows than from the additional income declaration made during search; does not find support from the hon'ble high court's discussion. We therefore go by various co-ordinate benches' decisions (supra) in these facts and circumstances to confirm the CIT(A)'s action deleting the impugned penalt(ies) to the extent indicated hereinabove forming part of subject-matter of adjudication of these three Revenue's appeals holding that sec. 271AAB comes into play in case of corresponding material only than automatic in case of a search. We wish to reiterate here in these facts that the tribunal's decisions (supra) have already held that Sec. 271AAB penalty applies in case of additional income defined under Explanation (c) of the Act. We therefore decline Revenue's three appeals. The assessee's cross objections No. 96 & 98/Kol/2017 supporting the CIT(A)'s order to this extent are rendered infructuous. 11. We now advert to second assessee's cross objection No.97/Kol/2017 challenging correctness of the sustained penalty component to the extent Rs.17 lac (supra) based on incriminating material found / seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd different meaning of the same. Different words or phrases used at different places in section 271AAB have been highlighted to explain the meaning of the two phrases used at two places. 4.3 The Appellant refers to the judgement of Hon'ble Andhra Pradesh High Court in the case of Madhucon Projects Ltd. vs. CCE for Settlement Commission [2016] 72 taxmann.com 71 (AP), which provides at para 50 that two different expressions in a statute must be construed to carry different meanings. 4.4 The relevance of the phrase "in which search was conducted" used in definition of "specified previous year" would be found from reading of clause (ii) of Explanation (c) below section 271AAB of the Act. There the words "specified previous year" has been used for the purposes of levy of penalty under section 271AAB of the Act. Thus if it is found that the assessee has made some claim of bogus expenditure in the books of accounts of the year in which search is conducted and/or in the books of accounts of the previous year for which the previous year has ended but the due date of furnishing the return of income has not expired and the assessee has not furnished the return of income, in those cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified previous year" since the due date for filing return u/s. 139(1) of the Act for preceding assessment year 2012-13 had elapsed on 30.09.2012.The above cash sum; coming under the connotation of "any money" u/s.271AAB Explanation (c)(i); stood assessed in the impugned assessment year 2013-14. We observe in these facts and circumstances that the assessee's above extracted argument seeking to take advantage of the "specified previous year" definition vis-a-vis undisclosed income declared does not carry any substance. 14. Lastly comes assessee's reliance of this tribunal co-ordinate bench's decision in Sanjay Dattatray Kakade vs. ACIT ITA No.932/Pun/2013. Learned co-ordinate bench dealt with a search dated 11.02.2009 concluded on 03.04.2009 wherein the Assessing Officer had invoked sec. 271AAA for assessment year 2009-10. The Learned co-ordinate bench held in these facts and circumstances that "specified previous year" could not be taken to be assessment year 2009-10 as follows:- "2. Briefly stated, the facts of the case are that a search and seizure action u/s.132 of the Act was taken upon the assessee on 11-02-2009. Return was filed on 30.09.2010 declaring total income of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he search was concluded. In order to appreciate the rival contentions, it would be apt to note down the definitions contained in Explanation below sub-section (4) of section 271AAA, which read as under :- "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 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 Chief 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; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or completion of search. If we consider the date of initiation as the date of search, which in the instant case is 11-02-2009, then the 'specified previous year' would be the previous year which ended on 31-03-2008 and the relevant assessment year would be 2008-09 and if we go with the Revenue and take the date of conclusion of search as the date of search, which is 3.4.2009, then the 'specified previous year" would be the previous year which ended on 31-03-2009 and the relevant assessment year would be 2009-10. 8. Normally, there are three stages in case of a search. First is the initiation of process of search; second is the initiation of search; and third is conclusion of search. Section 132(1) of the Act provides that where Principal Director General etc., in consequence of the information in his possession, has reason to believe the existence of one of the three conditions, such as, any person is in possession money, bullion, jewellery or other valuable article of thing etc. and such money, bullion, jewellery etc., represents either wholly or partly income which has not been or would not be disclosed, then he may authorize any Additional Director etc., being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e varies with pre-fixing of the words 'initiation of' or 'conclusion of' to the word 'search' as used in the provision. the Whereas the assessee is battling for pre-fixing the words 'initiation of' before the word 'search' in the provision, the Revenue is strongly pitching for using the words 'conclusion of'. In the absence of any express usage of the appropriate pre-fix to the word 'search' in the language of the Explanation (b)(i) to section 271AAA of the Act, we need to discover the same on a harmonious reading of the provision in entirety. When so understood and on taking a holistic view of the mater, it turns out that the legislature intended to mean the 'date of search' in sub-clause (i) of clause (b) of the Explanation to section 271AAA as the 'date of initiation of search' . We fortify our view by simultaneously reading clauses (a) and (b) of the Explanation to section 271AAA defining 'undisclosed income' and 'specified previous year'. Firstly, it is pertinent to note that similar expression, namely, 'before the date of search' has been used in both the clauses, viz., (a) and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'before the date of search'. Here again, if we construe the 'date of search' as the date of conclusion of search, it would mean that any undisclosed income found during the course of search would become a disclosed income, if the assessee discloses it to the competent authority at any time during the continuation of search. Thus, if any income by way of certain money, bullion, jewellery etc. is found during the course of search which has not been recorded in the books of account, the assessee cannot escape the clutches of section 271AAA simply by recording or disclosing the same after the initiation but before the conclusion of search. Obviously, this cannot be the intention of the legislature to construe the expression 'date of search' given in clause (a) of the Explanation to mean the 'date of conclusion of search'. It has to be the 'date of initiation of search' so that any income represented by any money, bullion, jewellery etc. found in the course of search but not recorded in the books is considered as 'undisclosed income'. Thus it becomes crystal clear that the expression 'before the date of search' used in clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice did not specify the specific charge / clause of sec. 271AB of the Act. Mr. Tibrewal contends that the said co-ordinate bench has not taken into account hon'ble jurisdictional high court's decision in Pr.CIT vs. M/s SRMB Srijan Ltd. ITAT 8 of 2019 GA 188-189 of 2019 holding that the penalty in question could not be confirmed unless the Assessing Officer's show-cause notice was very much specific quoting the taxpayer's default regarding undisclosed income u/s. 271AAB of the Act. His further case is that Assessing Officer had also not made it clear as to whether the assessee's default pertained to the specified previous year within the meaning of Explanation (b) to sec. 271AAB of the Act. We are next reminded that hon'ble jurisdictional high court has taken note of hon'ble apex court's decision to this effect in Amrit Foods vs. Commissioner of Central Excise (2005) 13 SSC 419 in the nature of a binding precedent. We find no merit in assessee's arguments. It has come on record that the Revenue has sufficiently proved right from the beginning that the assessee's undisclosed income is based on corroborative material found during the course of search relations to im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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