M/S BIG DIGS RESORTS LTD.,LUDHIANA vs DCIT, CC-1, LUDHIANA

Income Tax Appellate Tribunal, CHANDIGARH BENCH ‘A’, CHANDIGARH

Before: SMT.DIVA SINGH & SMT.ANNAPURNA GUPTA

For Appellant: Shri Ashwani Kumar, CA

Hearing: 30.07.2019Pronounced: 26.08.2019

आदेश/ORDER PER BENCH: All the above appeals have been preferred by different assessees against the separate orders of the Commissioner of Income Tax (Appeals), Patiala [(in short ‘CIT(A)’] dated 28.5.2018, 28.5.2018,10.8.2018 and 28.5.2018, passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), relating to assessment years 2016-17, 2016-17, 2015-16 and 2016-17 respectively.

It was the common ground that the issue involved in all the appeals was identical, arising from identical facts and circumstances. Therefore, these were heard together and are being disposed off by this common consolidated order. It was pointed out that the issue involved in all the appeals related to levy of penalty u/s 271AAB of the Act on the income surrendered consequent to search action carried out on Maharaja Group of cases to which all the above assessees belonged. It was stated that consequent to search and seizure operations conducted on the assessees u/s 132(1) of

3 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

the Act on 27.8.2015,the following incomes had been

surrendered by the assessees in the statement recorded u/s

132(4) of the Act as under:

1) Gaurav Jain, ITA No.921/Chd/2018 = Rs.80 lacs 2) Deepak Kumar, ITA No.923/Chd/2018 = Rs.75 lacs 3) M/s Big Digs Resorts Ltd., ITA No.1237 & 916/Chd/2018 (A.Y. 2015-16 & 2016-17) = Rs.150 lacs

Penalty proceedings u/s 271AAB of the Act were

thereafter initiated, in response to which the assessee

submitted that firstly the levy was not mandatory and the

assessee having included the surrendered income in its

return of income, substantiated the manner of earning such

undisclosed income, due taxes alongwith interest having

been paid and return filed on time as per the provisions of

section 139(1) of the Act, no penalty was leviable. The AO

considered the reply of the assessee but did not find it

tenable. He noted that the surrender was offered as

business income to cover up discrepancies found in the

seized documents during search and any discrepancy in the

books of account and related to income yet to be recorded in

the books of account. He, therefore, held that the

surrendered income qualified as undisclosed income as per

the provisions of section 271AAB(3)(c)(ii) of the Act.

Accordingly he levied penalty @ 10% of the undisclosed

4 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

income in all the impugned cases. The Ld.CIT(A) upheld the

order of the AO.

Aggrieved by the same, the impugned appeals have

been filed before us, raising common grounds in all the

appeals. For the sake of convenience, we are reproducing

the grounds raised in the appeal of Sh.Gaurav Jain in ITA

No.921/Chd/2018 as under:

“That the order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax(Appeals)-5, Ludhiana is against law and facts on the file in as much as he was not justified to arbitrary uphold the penalty levied u/s 271AAB at Rs.8,00,000/-.” 5. At the outset itself, the Ld.Counsel for the assessee

pointed out that the matter relating to levy of penalty u/s

271AAB of the Act in the case of other assessees of the

group, had travelled to the I.T.A.T., who had deleted the

same vide their order in ITA No.1238 to 1242/Chd/2018

dated 12.7.2019. It was pointed out that the I.T.A.T. had

adjudicated the issue in the case of other assessees in the

group, being Smt.Rama Rani, Smt.Veena Rani, Shri

Sukhdarshan Kumar and M/s R.D.Palace Pvt. Ltd. vide the

aforesaid order. Copy of the order was placed before us and

our attention was drawn to the findings of the I.T.A.T. at

pages 23 to 26 of the order as under:

5 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

From the perusal of the above decision, it can be noticed that the Tribunal has categorically held that if no incriminating material is found during the search action and the surrendered income does not fall in the definition of undisclosed income as defined u/s 271AAB of the Act, the penalty is not warranted. The Coordinate Bench of the Tribunal has also discussed the proposition of law laid down by the Hon'ble Allahabad High Court in the ‘Principal CIT vs Sandeep Chandak and Ors.’ (supra) and has held that the facts of the said case are distinguishable and do not apply to the facts of the case in which no incriminating material is found during the search action. 10. However,, Ld. Counsel for the assessee has been fair enough to admit that it is not in all the cases that no incriminating material was found. That certain items of jewellery of silver were found / noticed during the search action, the source of income from which as held by the Assessing Officer also stood explained and also the manner of earning of the income was also substantiated. He, therefore, has been fair enough to admit that penalty under the provisions of section 271AAB (1)(a) of the Act was liable to be confirmed to the extent of the property / material found during search action. He, in this respect has given a chart, which for the sake of ready reference, is reproduced as under:-

S.No. Particulars Sukhdarshan Rama Venna R.D. Kumar Rani Rani Place Private Limited 1 Jewellery 0 133 54.23 0

2 Silver 0 0 8.40 0

3 Income 230 67 27.37 300 Declared

Total 230 200 190 300

11.

In the case of Mrs. Rama Rani, (ITA No. 1240/Chd/2018) for assessment year 2016-17, as noted from the above chart, jewellery worth Rs. 1.33 crores was found, whereas, income surrendered by

6 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

her during the search action was of Rs. 2 crores. In view of the discussion made above, the penalty us 271AAB(1)(a) of the Act is restricted to the value of the jewellery found during search action i.e. Rs. 1.33 crores, the 10% of which comes to Rs. 13.30 lacs, hence, the penalty in the case of Mrs. Rama Rani is restricted to Rs. 13.30 lacs as against Rs. 20 lacs imposed by the Assessing Officer. 12. Similarly, in the case of Mrs. Veena Rani (ITA No. 1238/Chd/2018) for assessment year 2016-17, the total income surrendered was of Rs. 1.90 crores, whereas, the jewellery found during search action was of the value of Rs. 54.23 lacs and silver found of Rs. 8.40 lac. Hence, the penalty leviable on the aforesaid gross amount of 6.263 lacs ( Rs. 54.23 lcs + Rs. 8.40 lacs), which is calculated @ 10% at Rs. 6.263 lacs. Hence, the penalty is calculated and restricted to Rs. 6.263 lacs in this case. 13. In the case of Sudkharan Kumar in ITA No. 1239/Chd/2018 for the assessment year 2016-17, neither any incriminating material nor valued property was found, hence, no penalty in this case under the provisions of section 271AAB (1)(a) of the Act is exigible. The penalty in this case is ordered to be deleted. 14. Now coming to the cases of M/s R.D. Palace Pvt. Ltd, Ludhiana in ITA Nos.1241 & 1242/Chd/2018 for the assessment years 2015-16 and 2016-17, since, no incriminating material or valued property was found in these cases and further no unaccounted property was found during the search action, hence, the penalty is not leviable in these cases and the same is accordingly ordered to be deleted.” 6. Referring to the same it was pointed out that the I.T.A.T.

had held that no penalty u/s 271AAB of the Act was

leviable, if no incriminating material was found during the

search action since the surrendered income would not fall in

the definition of ‘undisclosed income’ as defined u/s 271AAB

7 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

of the Act. Thereafter, drawing our attention to paras 10 to

14 of the order as reproduced above, it was pointed out that

in each case before the I.T.A.T., on the basis of a chart

produced by the assessee before it disclosing the nature of

surrender made being on account of jewellery or silver found

or income declared, the I.T.A.T. confirmed the levy of

penalty on the income surrendered relating to jewellery and

silver found holding that the same being incriminating

material constituted undisclosed income for the purpose of

levy of penalty u/s 271AAB of the Act. While the surrender

made on account of “Income declared”, in the absence of any

incriminating material to support it, was held not to be in

the nature of undisclosed income and hence not liable to

penalty and, therefore, accordingly penalty on the surrender

made on account of Income declared in all the cases was

deleted by the I.T.A.T. The Ld.Counsel for the assessee

thereafter pointed out that the impugned cases related to

rest of the assessees/persons belonging to the group

searched and the facts were identical with the surrender in

the impugned cases also, being made on account of

incriminating material found being wrist watches and also

on account of income declared. A chart bifurcating the

income surrendered as above in each case was filed before

us as under:

8 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

S.No. Particulars Deepak Gaurav Jain Big Digs Resorts Kumar Private Limited 1 Jewellery 0 0 0 2 Silver 0 0 0 3 Wrist 3.42 1.75 0 Watches 4 Income 71.58 78.25 150 declared Total 75 80 150

7 . T h e L d . C o u n s e l f o r t h e a s s e s s e e c o n t e n d e d ,

t h e r e f o r e , t h a t t h e i s s u e b e i n g i d e n t i c a l t o t h a t i n t h e

a p p e a l s d e c i d e d b y t h e I . T. A . T . a s a f o r e s t a t e d . I t w a s

s q u a r e l y c o v e r e d b y t h e s a i d d e c i s i o n .

8 . T h e L d . D R a t t h i s j u n c t u r e r e b u t t e d b y p o i n t i n g

t h a t t h e c o n t e n t i o n o f t h e L d . C o u n s e l f o r t h e a s s e s s e e

t h a t n o i n c r i m i n a t i n g m a t e r i a l w a s f o u n d f o r t h e

s u r r e n d e r m a d e o n a c c o u n t o f “ I n c o m e d e c l a r e d ” w a s

i n c o r r e c t . H e d r e w o u r a t t e n t i o n t o t h e s t a t e m e n t

a d m i n i s t e r e d o n o a t h b y S h r i S u k h d a r s h a n K u m a r

d u r i n g s e a r c h o n t h e g r o u p , a s u n d e r :

Q . 1 3 . P l e a s e e x p l a i n t h e c o n te n t s o f p a g e 1 to 4 9 o f A n n e x u r e A A - 5 s e i z e d f r o m H o te l M a h a r a j a R e g e n c y to d a y o n 2 4 . 0 9 . 2 0 1 5 d u r i n g th e o p e r a t i o n o f P . O . ( p r o h i b i t o r y o r d e r ) a t th i s p r e m i s e s o f M / s R . D . P a l a c e P v t ( H o te l M a h a r a j a R e g e n c y ) . A n s . T h i s d i a r y c o n t a i n s s o m e c o m m o d i t y tr a n s a c t i o n s a n d p r o p e r ty r e l a t e d tr a n s a c t i o n s r e l a te d to m y f a m i l y m e m b e r s a s I a m l o o k i n g a f te r th e f in a n c i a l m a t te r s o f m y f a m i l y a n d

9 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

m y y o u n g e r b r o th e r S h . D e e p a k K u m a r ’ s f a m i l y . Q . 1 4 . P l e a s e te l l a b o u t t h e e x a c t n a t u r e o f c o n t e n ts wr i t t e n i n th i s d i a r y ? A n s . T h e p a g e s o f th i s d i a r y c o n ta i n d e t a i l s o f s o m e t r a n s a c t i o n s f r o m s a u d a r e l a te d to g o l d / s i l v e r , p r o p e r ti e s a n d s o m e o th e r c o m m o d i t i e s . I t a l s o i n c l u d e s th e g if ts r e c e i v e d b y v a r i o u s f a m i l y m e m b e r s . Q . 1 5 . P l e a s e te l l wh e th e r t h e s e tr a n s a c t i o n s a r e i n v e s t m e n t s o r p r o f i t / l o s s f r o m s a u d a a s s t a te d b y y o u wh i l e r e p l y i n g to Q . 1 4 . A n s . A s p e r m y m e m o r y m o s t o f th e tr a n s a c t i o n s a r e r e l a te d to p r o f i t / l o s s . H o we v e r , th e r e m a y b e c h a n c e s o f i n v e s tm e n t i n j e we l l e r y a l s o . Q . 1 6 . W h i l e r e p l y t o Q . 1 ` 5 y o u h a v e s t a t e d th a t m o s t o f th e tr a n s a c t i o n s a r e r e l a t e d to p r o f it / l o s s . P l e a s e e x p l a i n th e n a tu r e o f s u c h tr a n s a c t i o n s a n d a l s o th a t w i t h wh o m th e s e we r e m a d e . A n s . M o s t o f th e s e tr a n s a c t i o n s a r e p r o f i t / l o s s e a r n e d f r o m c o m m o d i ti e s , p r o p e r ti e s a n d g if ts r e c e i v e d . I d o n ’ t r e m e m b e r th e n a m e s o f th e p e r s o n s w i t h wh o m th e s e tr a n s a c t i o n s we r e m a d e . Q . 1 7 . M r . S u k h d a r s h a n K u m a r i t a p p e a r s th a t y o u h a v e m a i n t a i n e d th e d e ta i l o f th e s e tr a n s a c t i o n s s y s te m a t i c a l l y a n d p e r s o n wi s e . H o we v e r , s t i l l y o u a r e s a y i n g th a t y o u a r e n o t r e m e m b e r i n g t h e n a m e s wi t h wh o m y o u h a d m a d e t h e s e tr a n s a c t i o n s . A n s . I d o n o t r e m e m b e r th e n a m e s o f th e p e r s o n wi t h wh o m th e s e t r a n s a c t i o n s h a v e b e e n m a d e .

10 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

Q . 1 8 . A r e th e s e tr a n s a c t i o n s r o u te d t h r o u g h th e n o r m a l b o o k s o f a c c o u n ts o f a l l th e f a m i l y m e m b e r s ? A n s . Y e s , I th i n k s o . Q . 1 9 . P l e a s e e x p l a i n wh a t d o y o u m e a n b y “ I th i n k s o ” ? A n s . S i r , th e s e tr a n s a c t i o n s a r e n o t r e c o r d e d i n t h e r e g u l a r b o o k s o f a c c o u n ts . Q . 2 0 . A r e th e s e tr a n s a c t i o n s r o u te d t h r o u g h th e b a n k i n g c h a n n e l ? A n s . N o s i r , l I t h i n k th e s e a r e th e tr a n s a c t i o n s r e l a te d to p r o f i ts e a r n e d i n c a s h f r o m s a l e a n d p u r c h a s e o f p r o p e r ti e s , c o m m o d i t i e s , b u l l i o n e tc . Q . 2 1 . D o y o u m e a n to s a y th a t th e tr a n s a c t i o n s r e c o r d e d i n th e d i a r y a n n e x e d a s a n n e x u r e A A - 5 a r e u n r e c o r d e d tr a n s a c t i o n s a n d i s th e u n d i s c l o s e d i n c o m e o f y o u r ’ s a n d y o u r f a m i l y m e m b e r s ? A n s . Y e s S i r . Q . 2 2 . P l e a s e e x p l a i n th e m o d u s o p e r a n d i o f h o w y o u a n d y o u r f a m i l y m e m b e r s h a v e e a r n e d th e s e p r o f i ts ? A n s . S i r , g e n e r a l l y th e r e i s n o t a s e t p a t te r n a s s u c h . S o m e ti m e s w i t h th e h e l p o f s o m e k n o wn p e r s o n s , f r i e n d s we g e t to k n o w o f s o m e g o o d p r o p e r t y d e a l s wh e r e i n th e s e l l e r o f th e p r o p e r ti e s a r e i n d i r e n e e d o f f u n d s a n d a r e r e a d y t o s e l l th e p r o p e r t y a t m u c h b e l o w th e r e a l m a r k e t p r i c e . In th o s e c a s e s w i t h o u t g e t t i n g th e p r o p e r ti e s a c tu a l l y r e g i s te r e d i n o u r n a m e s , we d o m a k e f u r th e r s a l e s b y g e t t i n g c a s h p r o f i t s o n t h e s e tr a n s a c t i o n s w i t h o u t r o u ti n g th e m th r o u g h o u r r e g u l a r b o o k s o f a c c o u n ts . T h e s e p r o f i t s a r e f u r th e r r e i n v e s te d to e a r n p r o f i t s o n o t h e r p r o p e r ty t r a n s a c t i o n s , c o m m o d i t y tr a n s a c t i o n s a n d o n tr a d i n g i n b u l l i o n .

11 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

Q . 2 3 . P l e a s e te l l t h e n a m e s o f p e r s o n s wi t h wh o m y o u a n d y o u r f a m i l y m e m b e r s h a v e e n te r e d i n to th e s e tr a n s a c t i o n s . A n s . I d o n o t r e m e m b e r th e n a m e s o f th e p e r s o n s . Q . 2 4 . P l e a s e d o c o n s u l t wi th o u r f a m i l y m e m b e r s wh o h a v e a l s o e n te r e d i n to s u c h tr a n s a c t i o n s . T h e y m i g h t b e r e m e m b e r i n g th e n a m e s o f th e p e r s o n s wi th w h o m s u c h tr a n s a c t i o n s h a v e b e e n m a d e . A n s . I wo u l d l i k e t o s u b m i t h e r e t h a t t h e s e k i n d o f tr a n s a c t i o n s we r e d o n e b y m y f a m i l y m e m b e r s a f t e r c o n s u l t i n g m e a n d t h r o u g h m e o n l y . Q . 2 5 . H o w i s i t p o s s i b l e th a t y o u a n d y o u r f a m i l y m e m b e r s h a v e e a r n e d h u g e p r o f i t s d u r i n g e h c u r r e n t f i n a n c i a l y e a r ? A n s . W e h a v e a l s o i n c u r r e d c e r ta i n l o s s e s o n s u c h tr a n s a c t i o n s . Q . 2 6 . T h e a n n e x u r e A A - 5 , a s m e n t i o n e d a b o v e , s h o ws o n l y th e p r o f i ts e a r n e d f r o m s u c h tr a n s a c t i o n s . H o w c a n y o u s a y th a t th e r e w e r e l o s s e s a l s o ? A n s . I t a p p e a r s th a t th e l o s s e s i n c u r r e d h a v e n o t b e e n n o te d . Q . 2 7 . P l e a s e e x p l a i n wh e th e r y o u h a v e e a r n e d c a s h p r o f i t s f r o m y o u r b u s i n e s s c o n c e r n s a l s o . A n s . T h e r e we r e c e r t a i n f u n c ti o n s wh i c h we r e o r g a n i z e d d u r i n g th e F Y 2 0 1 4 - 1 5 . T h e s e r e l a te s t o t r a n s a c t i o n s m e n ti o n e d o n th e d o c u m e n t s i m p o u n d e d f r o m th e p r e m i s e s o f M / s K o th a r i R e s o r t s o n 2 8 . 0 8 . 2 0 1 5 a s a n n e x u r e A - 1 0 & A - 1 1 . T h e s e a p p e a r to b e th e tr a n s a c t i o n s wh e r e th e c u s t o m e r s d i d n o t t a k e th e b i l l s . Q . 2 8 . P l e a s e s u b s t a n t i a t e t h e s e tr a n s a c t i o n s wi th y o u r r e g u l a r b o o k s o f a c c o u n ts .

12 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

A n s . S i r , I a m n o t i n a p o s i t i o n to s u b s t a n t i a t e th e s a m e a t th i s m o m e n t. Q . 2 9 . P l e a s e e x p l a i n wh y n o t t h e s e tr a n s a c t i o n s b e t r e a t e d a s u n d i s c l o s e d a s y o u a r e n o t a b l e to s u b s t a n t i a t e t h e s a m e wi t h y o u r r e g u l a r b o o k s o f a c c o u n ts ? A n s . S i r , I a m n o t i n a p o s i t i o n to s u b s t a n t i a t e th e s a m e a t th i s m o m e n t. Q . 3 0 . A s p e r t h e A n n e x u r e A A - 5 , a s m e n ti o n e d a b o v e , th e p r o f i ts e a r n e d b y y o u a n d y o u r f a m i l y m e m b e r s a r e a s u n d e r : -

S.No. Name Amount (in Rs. lacs) 1 Sukhdarshan Kumar 267.69 2 Rama Rani 190.16 3 Rajat Jain 71.62 4 Vani Jain 81.24 5 Deepak Kumar 70.42 6 Veena Rani 176.84 7 Gaurav Jain 7 6.17 8 Shweta Jain 84.40 9 Saurav Jain 75.35 10 Niti Jain 78.50 F u r t h e r , y o u r c o m p a n i e s / f i r m s h a v e n o t r e c o r d e d c e r t a i n t r a n s a c t i o n s i n i t s r e g u l a r b o o k s o f a c c o u n ts a s h a s b e e n p o i n te d a b o v e . I a m e x p l a i n i n g to y o u th e p r o v i s i o n s o f s e c t i o n 1 3 2 ( 4 ) o f th e A c t a n d r e l e v a n t p r o v i s i o n s o f pe n a l t y u / s 2 7 1 A A B o f th e A c t. D o y o u wa n t t o s a y a n y t h i n g i n th i s r e g a r d ? A n s . A s s u b m i t te d e a r l i e r , th e p r o f i ts e a r n e d b y th e i n d i v i d u a l s a r e t h o s e d e r i v e d f r o m th e u n a c c o u n t e d a n d u n d i s c l o s e d tr a n s a c t i o n s f r o m s a l e a n d p u r c h a s e o f p r o p e r ti e s , b u l l i o n a n d c o m m o d i t y tr a d i n g e tc . d u r i n g th e c u r r e n t f i n a n c i a l y e a r i . e . F Y 2 0 1 5 - 1 6 . T h e s e a l s o i n c l u d e c e r ta i n r e c e i v a b l e s o n a c c o u n t o f p r o f i t s

13 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

e a r n e d f r o m t h e s a l e o f p r o p e r t i e s e tc . S o m e o f t h e s e p r o f i ts h a v e b e e n u t i l i z e d to p u r c h a s e g o l d j e we l l e r y a n d k e p t a s c a s h e tc . wh i c h h a s b e e n s e i z e d e a r l i e r b y t h e In c o m e t a x d e p a r t m e n t d u r i n g th e c o u r s e o f s e a r c h f r o m o u r r e s i d e n t i a l p r e m i s e s a n d f r o m th e l o c k e r s . S o m e p r o f i t s h a v e b e e n u t i l i z e d f o r h o u s e h o l d e x p e n d i tu r e e t c . a n d a l s o a s te m p o r a r y a d v a n c e s , th e d e t a i l s o f wh i c h a r e n o t a v a i l a b l e a t t h i s m o m e n t. H o we v e r , i n o r d e r t o a v o i d a n y p r o l o n g e d l i t i g a t i o n a n d to b u y p e a c e o f m i n d , I o n b e h a lf o f m y f a m i l y m e m b e r s o f f e r to d i s c l o s e a d d i t i o n a l i n c o m e o f R s . 1 7 . 0 0 c r . T h e d e t a i l s o f wh i c h a r e a s u n d e r : -

S.No. Name Amount (in Amount (in Lacs) Lacs) FY 2014-15 FY 2015-16 1 M/s R.D.Palace Pvt. 200 100 Ltd. 2 M/s Big Digs Resorts 100 50 Ltd. 3 M/s Maharaja Light - 50 & Tent Service 4 Sukhdarshan Kumar - 230 5 Rama Rani - 80 6 Rajat Jain - 200 7 Vani Jain - 90 8 Deepak Kumar - 75 9 Veena Rani - 190 10 Gaurav Jain - 80 11 Shweta Jain - 90 12 Saurav Jain - 80 13 Niti Jain 85 Total 300 1400

T h e a d d i ti o n a l i n c o m e i n th e h a n d s o f th e e n t i t i e s m e n t i o n e d a t “ S r . N o . 1 to 3 a b o v e i s a s a r e s u l t o f c e r t a i n u n a c c o u n te d b u s i n e s s tr a n s a c t i o n s s u c h a s u n a c c o u n te d r e c e i p ts , i n f l a t i o n of e x p e n d i t u r e e tc . A s r e g a r d p e r s o n s / i n d i v i d u a l s m e n ti o n e d a t S r . N o . 4 to 1 3 , th e a d d i t i o n a l i n c o m e i s a s a r e s u l t o f u n a c c o u n t e d tr a n s a c t i o n s o f

14 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

p u r c h a s e / s a l e o f p r o p e r t i e s , s h a r e s / c o m m o d i t i e s , g o l d / s i l v e r / b u l l i o n a n d r e c e i p t o f g if ts . It i s f u r th e r s u b m i t t e d t h e a d d i t i o n a l i n c o m e s o o f f e r e d f o r t h e r e s p e c ti v e a s s e s s m e n t y e a r s a s m e n t i o n e d a b o v e i s o v e r a n d a b o v e th e n o r m a l i n c o m e o f th e a b o v e m e n t i o n e d e n t i t i e s / i n d i v i d u a l s . ” 9 . R e f e r r i n g t o t h e s a m e t h e L d . D R f i r s t l y

c o n c e d e d t h a t h e w a s n o t i n p o s s e s s i o n o f t h e o r i g i n a l

s t a t e me n t a n d h a d m a n a g e d t o p r o c u r e o n l y a c o p y o f

t h e s a m e o n w h a t s a p p . H e f u r t h e r s t a t e d t h a t i t w a s

e v i d e n t f r o m t h e a b o v e t h a t t h e s u r r e n d e r w a s s p e c i f i c

o n a c c o u n t o f u n a c c o u n t e d t r a n s a c t i o n s o f p r o p e r t i e s

a n d c o m m o d i t i e s w h i c h w e r e r e v e a l e d b y w a y o f

e n t r i e s n o t e d i n a d i a r y s e i z e d d u r i n g s e a r c h b e i n g

A n n e x u r e A A - 5 . L d . D R t h e r e f o r e c o n t e n d e d t h a t t h e r e

w a s n o d o u b t t h a t t h e s u r r e n d e r w a s i n t h e n a t u r e o f

u n d i s c l o s e d i n c o m e a n d p e n a l t y t h e r e f o r e h a d b e e n

r i g h t l y l e v i e d o n t h e s a m e . Th e L d . D R f u r t h e r p o i n t e d

o u t t h a t i n t h e f a c t s , a s n o t e d i n t h e c a s e o f o t h e r

a s s e s s e e s o r d e r w h e r e i n p e n a l t y o n I n c o m e d e c l a r e d

h a d b e e n d e l e t e d b y t h e I TA T a s p o i n t e d o u t b y t h e

L d . C o u n s e l f o r t h e a s s e s s e e , i t w a s n o t e d t h a t t h e L d .

D R c o u l d n o t c o n t r o v e r t t h e c o n t e n t i o n o f t h e a s s e s s e e

t h a t o t h e r t h a n j e w e l l e r y a n d s i l v e r , e t c . n o o t h e r

i n c r i m i n a t i n g m a t e r i a l w a s f o u n d d u r i n g s e a r c h

15 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

a c t i o n . I t w a s c o n t e n d e d t h a t f o r t h i s r e a s o n t h e

I . T. A . T. h a d h e l d t h a t n o p e n a l t y w a s l e v i a b l e o n t h e

i n c o me d e c l a r e d i n t h o s e c a s e s u / s 2 7 1 A A B o f t h e A c t .

1 0 . T h e L d . C o u n s e l f o r t h e a s s e s s e e , a t t h i s j u n c t u r e

r e b u t t e d b y s t a t i n g t h a t s i n c e n o b o o k s o f a c c o u n t

w e r e m a i n t a i n e d b y t h e i m p u g n e d a s s e s s e e s , t h e r e w a s

n o q u e s t i o n o f a n y i n c o m e n o t r e c o r d e d i n i t s b o o k s

a n d , t h e r e f o r e , n o q u e s t i o n o f a n y u n d i s c l o s e d i n c o m e

f o r t h e p u r p o s e o f l e v y o f p e n a l t y u / s 2 7 1 A A B o f t h e

A c t . H e f u r t h e r e m p h a s i z e d h i s r e l i a n c e o n t h e

d e c i s i o n o f t h e I . T. A . T. i n t h e c a s e o f o t h e r a s s e s s e e s

r e l a t i n g t o t h e g r o u p .

1 1 . W e h a v e h e a r d t h e r i v a l c o n t e n t i o n s , c a r e f u l l y

p e r u s e d t h e o r d e r s o f t h e a u t h o r i t i e s b e l o w a n d a l s o

c o n s i d e r e d t h e v a r i o u s d o c u m e n t s r e f e r r e d t o b e f o r e

u s . Th e i s s u e b e f o r e u s r e l a t e s t o l e v y o f p e n a l t y u / s

2 7 1 A A B o f t h e A c t .

1 2 . A s p e r s e c t i o n 2 7 1 A A B , p e n a l t y i s l e v i e d o n t h e

u n d i s c l o s e d i n c o m e f o u n d d u r i n g s e a r c h a n d t h e

q u a n t u m o f p e n a l t y v a r i e s f r o m 1 0 % t o 3 0 % o f t h e

u n d i s c l o s e d i n c o m e , d e p e n d i n g u p o n f u l f i l l m e n t o f

c e r t a i n c o n d i t i o n s b y t h e a s s e s s e e a s s p e c i f i e d i n t h e

s e c t i o n . Th e t e r m “ u n d i s c l o s e d i n c o m e ” h a s b e e n

16 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

d e f i n e d i n t h e E x p l a n a t i o n t o s e c t i o n 2 7 1 A A B o f t h e

A c t , a s u n d e r :

“ 2 7 1 A A B “ ( c ) “ u n d i s c l o s e d i n c o m e ” m e a n s - - - - ( i ) A n y i n c o m e o f th e s p e c if i e d p r e v i o u s y e a r r e p r e s e n te d e i t h e r wh o l l y o r p a r tl y , b y a n y m o n e y , b u l l i o n , j e we l l e r y o r o th e r v a l u a b l e a r t i c l e o r th i n g o r a n y e n tr y i n th e b o o k s o f a c c o u n t o r o th e r d o c u m e n ts o r tr a n s a c t i o n s f o u n d i n t h e c o u r s e o f s e a r c h u n d e r s e c t i o n 1 3 2 , wh i c h h a s - - - - - - ( A ) N o t b e e n r e c o r d e d o n o r b e f o r e th e d a te o f s e a r c h i n th e b o o k s o f a c c o u n t o r o th e r d o c u m e n t s m a i n t a i n e d i n th e n o r m a l c o u r s e r e l a t i n g to s u c h p r e v i o u s y e a r ; o r ( B ) o th e r wi s e n o t b e e n d i s c l o s e d to th e [ P r i n c i p a l C h i e f C o m m i s s i o n e r o r ] C h i e f C o m m i s s i o n e r o r [ P r i n c i p a l C o m m i s s i o n e r o r ] C o m m i s s i o n e r b e f o r e th e d a te o f s e a r c h ; o r ( i i ) a n y i n c o m e o f th e s p e c if i e d p r e v i o u s y e a r r e p r e s e n te d , e i th e r wh o l l y o r p a r tl y , b y a n y e n tr y i n r e s p e c t o f a n e x p e n s e r e c o r d e d i n h e b o o k s o f a c c o u n t o r o th e r d o c u m e n t s m a i n t a i n e d i n t h e n o r m a l c o u r s e r e l a t i n g to th e s p e c i f i e d p r e v i o u s y e a r wh i c h i s f o u n d to b e f a l s e a n d wo u l d n o t h a v e b e e n f o u n d to b e s o h a d th e s e a r c h n o t b e e n c o n d u c te d . ” 1 3 . L d . C o u n s e l f o r t h e a s s e s s e e h a s c o n t e n d e d t h a t i n

t h e c a s e o f o t h e r a s s e s s e s b e l o n g i n g t o t h e s a m e

g r o u p s e a r c h e d a n d w h e r e i d e n t i c a l p e n a l t y u / s

2 7 1 A A B o f t h e A c t h a d b e e n l e v i e d , t h e I TA T h a d

d e l e t e d t h e p e n a l t y l e v i e d o n i n t e r p r e t i n g t h e

d e f i n i t i o n o f u n d i s c l o s e d i n c o m e a s m e a n i n g

17 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

u n a c c o u n t e d i n c o m e r e p r e s e n t e d b y i n c r i m i n a t i n g

m a t e r i a l b e i n g f o u n d d u r i n g s e a r c h w h i c h w a s a b s e n t

i n t h e s a i d c a s e s . Th e L d . C o u n s e l h a s c o n t e n d e d t h a t

t h e i s s u e i n t h e p r e s e n t c a s e s i s c o v e r e d b y t h e s a i d

d e c i s i o n o f t h e I TA T. T h e L d . D R , o n t h e o t h e r h a n d ,

h a s s t a t e d t h a t t h e r e w a s i n c r i m i n a t i n g m a t e r i a l

r e l a t i n g t o “ i n c o m e d e c l a r e d “ d u r i n g s e a r c h a n d h a s

r e f e r r e d t o t h e s t a t e me n t r e c o r d e d o f o n e S h .

S u k h d a r s h a n K u m a r d u r i n g s e a r c h w h e r e i n , h e h a s

p o i n t e d o u t , t h a t t h e i n c o m e r e l a t i n g t o w h i c h

s u r r e n d e r h a s b e e n m a d e h a s b e e n f o u n d r e c o r d e d i n

a d i a r y s e i z e d d u r i n g s e a r c h a n d i t s n a t u r e h a s b e e n

s p e c i f i c a l l y s t a t e d i n t h e s t a t e me n t r e c o r d e d .

1 4 . C o n s i d e r i n g t h e a b o v e f a c t s a n d c i r c u m s t a n c e s o f

t h e c a s e a n d t h e f a c t t h a t t h e s t a t e m e n t r e f e r r e d t o

b y t h e L d . D R o f S h . S u k h d a r s h a n K u m a r w a s n o t

a v a i l a b l e i n o r i g i n a l , W e c o n s i d e r i t f i t t o r e s t o r e t h e

i s s u e b a c k t o t h e L d . C I T( A ) w i t h t h e d i r e c t i o n t o

o b t a i n t h e o r i g i n a l c o p y o f t h e s t a t e m e n t r e c o r d e d o f

S h . S u k h d a r s h a n K u m a r a n d t h e r e a f t e r a d j u d i c a t e t h e

i s s u e a f r e s h . Th e L d . C I T( A ) m a y c o n s i d e r a l l o t h e r

a s p e c t s a s h e d e e m s f i t a n d t h e r e a f t e r d e c i d e t h e

i s s u e i n a c c o r d a n c e w i t h l a w . N e e d l e s s t o a d d t h e

a s s e s s e e b e g r a n t e d a d e q u a t e o p p o r t u n i t y o f h e a r i n g .

18 ITA No.921,923,1237 & 916/Chd/2018 A.Y.2015-16 & 2016-17

1 5 . In the result, all the appeals of the assessee are allowed for statistical purposes.

Order pronounced in the Open Court.

Sd/- Sd/- �दवा �संह अ�नपूणा� गु�ता (ANNAPURNA GUPTA) (DIVA SINGH ) �याय�क सद�य/Judicial Member लेखा सद�य/Accountant Member �दनांक /Dated: 26th August, 2019 *रती* आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

M/S BIG DIGS RESORTS LTD.,LUDHIANA vs. DCIT, CC-1, LUDHIANA