ASHOK VIJAYKUMAR KOTECHA,,JALGAON vs. ASSISTANT COMMISSIONER OF INCOME-TAX,,

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER Sl. ITA No. Name of Appellant Name of Respondent Asst. No. Year 1-3 1492/PUN/2015 Ashok Vijaykumar ACIT, Central Circle- 2006-07 1493/PUN/2015 Kotecha, 1, Nashik. 2007-08 1494/PUN/2015 4, Teacher’s Colony, 2012-13 Ring Road, Opp. JDDC Bank, Jalgaon- 425001. PAN : ABMPK4173D Assessee by : Shri Bhupendra Shah Revenue by : Shri M. G. Jasnani Date of hearing : 17.03.2022 Date of pronouncement : 27.04.2022 आदेश / ORDER PER INTURI RAMA RAO, AM: These are the appeals filed by the assessee directed against the different orders of ld. Commissioner of Income Tax (Appeals)- 12, Pune [‘CIT(A)’ for short] dated 24.07.2015 and 20.08.2015 for the assessment years 2006-07, 2007-08 and 2012-13 respectively. 2. Since the identical facts and issues are involved in the above captioned two appeals i.e. ITA No.1492 & 1493/PUN/2015 for A.Y. 2006-07 & 2007-08 except the difference in the amount in another

2 ITA Nos.1492, 1493 & 1494/PUN/2015 appeal i.e. ITA No.1493/PUN/2015 for A.Y. 2012-13, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.1492/PUN/2015 for the assessment year 2006-07 are stated herein. ITA No.1492/PUN/2015, A.Y. 2006-07 : 4. The appellant raised the following grounds of appeal :- “[A] Grounds of Appeal Before the Honourable ITAT Pune. 1) In the facts and circumstances of the case and in law, the learned Assessing Officer erred in passing the assessment order without having jurisdiction because, no opportunity of being heard was granted to the Appellant u/s 127 and also disregarding the objections raised u/s 292BB in this regard. Without prejudice to the above and alternatively under protest: 2) On facts and circumstance of the case and in law, the learned Assessing Officer erred in making routine additions / disallowances in assessment u/s 153A in the absence of any incriminating material and without appreciating the fact that original assessment made u/s 143(1)(a) which is completed on the date of initiation of search get abated. 3) In the facts and circumstances of the case and in law. the learned Assessing Officer erred in adding Rs. 10,00,000/- under the head Income from Other Sources in respect of page no. 98 of Annexure A1 impounded from the office of M/S Mahavir Civil Engineering Pvt. Ltd. during the course of their survey, even though : a) Document impounded from third party cannot be used in the case of Appellant u/s 153A. b) Document impounded during survey of the third party cannot be used in search assessment of the Appellant u/s 153A. c) Document impounded during survey of third party cannot be used otherwise than satisfaction recorded u/s 153C.

3 ITA Nos.1492, 1493 & 1494/PUN/2015 d) The Appellant is not required to maintain books of accounts and therefore alternatively even section 68 does not apply. e) No sum is credited or no proof is found by the Assessing Officer of payment of Rs. 10,00,000/- and made the addition only on the basis of document impounded which is nothing but a dumb document. 4) In the facts and circumstances of the case and in law, the learned Assessing Officer erred in adding Rs. 10,00,000/- without issuing any show cause notice and thereby not affording any opportunity of rebuttal. 5) The Assessing Officer wrongly charged interest u/s 234 and initiated penalty u/s 271(1)(c). 6) In the facts and the circumstances of law, the Ld Commissioner of Income Tax(A) erred in confirming all the mentioned grounds. [B] Relief Prayed: The appellant therefore prays as follows, 1. To quash the assessment order passed u/s 143(3) r.w.s 153A only on the basis of order passed u/s 127 which itself is bad in law. 2. To delete the addition of Rs.10,00,000/- which is not based on any incriminating document seized from the Appellant. 3. To delete the addition wrongly made on the basis of document impounded in the case of third party during their survey and wrongly assessed u/s 153A. 4. To quash the assessment passed without issuing show cause notice of proposed addition/disallowance. 5. To delete the interest charged u/s 234 and initiation of penalty u/s 271 (1)(c) . [C] General: • The appellant reserve rights to add alter or delete any portion of this appeal before its conclusion. • This appeal is filed in time and may please be allowed in full. • A Detailed paper book along with case laws will be submitted at the time of hearing:.” 5. Briefly, the facts of the case are that the appellant is an individual engaged in the business of execution of civil contracts.

4 ITA Nos.1492, 1493 & 1494/PUN/2015 The original return of income for the assessment year 2006-07 was filed on 31.10.2006 disclosing income of Rs.9,57,815/-. Subsequently, the search and seizure operations were conducted in the residential premises of the appellant on 09.08.2011 by the DDIT (Inv.), Jalgaon. The jurisdiction of the appellant’s case had been transferred from Jalgaon to Nashik by the Commissioner of Income Tax-II, Nashik vide order dated 02.12.2011 u/s 127 of the Act. During the course of search and seizure operations, certain incriminating material was stated to have been impounded. Subsequently, notice u/s 153A of the Income Tax Act, 1961 (‘the Act’) was issued to the appellant on 18.05.2012 calling upon the appellant to file the return of income. The appellant filed a letter stating that the return of income filed u/s 139 be treated as return of income in response to notice u/s 153A of the Act. Thereafter, the assessment was taken up for scrutiny assessment. During the course of assessment proceedings, the assessee had objected the transfer of jurisdiction of the Assessing Officer by stating that while passing the order u/s 127, no opportunity was given to the assessee. The Assessing Officer had rejected the above objection placing reliance on the provisions of section 292BB of the Act. The Assessing

5 ITA Nos.1492, 1493 & 1494/PUN/2015 Officer confronted page no.98 of Annexure A-1 impounded from the office premises of M/s. Mahavir Civil Engineering & Services Pvt. Ltd. which is a copy of letter sent by fax by N.V. Kharote Construction Pvt. Ltd. to the assessee regarding commission charges on plates payable to M/s. Amruta Associates. As per this letter, amount of Rs.55,96,928/- is shown as the commission payment. Out of which Rs.36,00,000/- had been mentioned as paid by cash on various dates from 06.03.2006 to 15.01.20007. The Assessing Officer vide letter dated 04.12.2013 requested the appellant to explain the transactions and furnish the complete address of the said N.V. Kharote Construction Pvt. Ltd. and also prove that the said sum of Rs.36,00,000/- had been offered to tax. The appellant vide letter dated 07.01.2014 submitted that this letter was received for arbitration and guidance from N.V. Kharote which is under dispute and denied having received any payment in cash. However, the Assessing Officer had not believed the statement of the appellant and proceeded to make addition of Rs.10,00,000/- for assessment year 2006-07 and Rs.26,00,000/- for assessment year 2007-08. Even on appeal before the ld. CIT(A), the ld. CIT(A) after analyzing the contents of the impounded paper concluded that because of

6 ITA Nos.1492, 1493 & 1494/PUN/2015 failure of the assessee to explain the document, Assessing Officer had inferred that the assessee had received unaccounted commission of Rs.10,00,000/- for assessment year 2006-07, and Rs.26,00,000/- for assessment year 2007-08, upheld the addition made by the Assessing Officer. 6. Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us. 7. As regard to the contention of the appellant that the Assessing Officer had no jurisdiction to pass the assessment order, as no opportunity was offered by the Commissioner of Income Tax-II, Nashik while passing the order u/s 127 of the Act, we are of the considered opinion that this issue cannot be agitated in the assessment proceedings, as assessment proceedings are independent of proceedings u/s 127 of the Act. The proceedings u/s 127 are independent of the assessment proceedings, in the event an assessee is aggrieved by an order u/s 127, necessary remedy lies elsewhere as held by the Hon’ble Punjab & Haryana High Court in the case of Jaswinder Kaur Koover vs. CIT, 295 ITR 80. 8. It is trite law that an assessee is barred from raising contention that no opportunity was given to the assessee while transferring the

7 ITA Nos.1492, 1493 & 1494/PUN/2015 jurisdiction of the case u/s 127 from Jalgaon to Nashik as the order of the transfer of case u/s 127 was within the knowledge of the assessee during the course of assessment proceedings and still the assessee had not chosen to participate in the matter of jurisdiction of the Assessing Officer to whom the case has been transferred. The assessee cannot be allowed latter to challenge the jurisdiction of the Assessing Officer as held by the Hon’ble Supreme Court in the case of Pannalal Binjraj vs. Union of India, 31 ITR 565 (SC) and the Hon’ble Gujarat High Court in the case of Shivabhai Khodabhai Patel vs. CIT, 244 ITR 457 (Guj.-HC). The Hon’ble Patna High Court in the case of Steel Engg. & Processing Works vs. Union of India, 243 ITR 721 (Pat.-HC) after referring to the judgement of the Hon’ble Supreme Court in the case of Pannalal Binjraj (supra) held to the same effect by holding as under :- “19. But this is not all. The facts as are emerging from the records of this case cannot be lost sight of, which have been elaborately pleaded and described by the respondent-revenue in its counter-affidavit and also in the reply affidavit to the rejoinder affidavit stating that the proceeding for transfer of the case from Patna to Ranchi was initiated at the instance of the petitioner-assessee himself and it was he, who suggested that the entire records and books of account are at Ranchi and so it will be convenient for him to co-operate with the assessment at Ranchi. Besides laches in approaching the Writ Court, the assessee- petitioner also submitted to the jurisdiction of the transferee authority at Ranchi. 20. This being so, the party once acquiesced to the jurisdiction of the transferee Court, all statutory rights which the assessee gets by virtue

8 ITA Nos.1492, 1493 & 1494/PUN/2015 of section 127 vanish and, therefore, the assessee cannot assert that without affording opportunity as required under section 127, the case has been transferred. In this regard see Halsbury’s Laws of England, Vol. II, 3rd Ed., page 140, Pr. 265 and also the case in O.A.O.K. Lakshmanan Chettiar v. Commissioner, Corporation of Madras AIR 1927 Mad. 130, which are referred to in the decision in the case of Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC). 21. In the case of Pannalal Binjraj (supra), which is a Constitution Bench decision, the Supreme Court lays down the law to the effect that, "if an assessee has acquiesced in the jurisdiction of the Income-tax Officer to whom a case has been transferred, he cannot subsequently object to the jurisdiction of the officer and seek to get the order of transfer quashed by invoking the jurisdiction of the Court under article 226 of the Constitution". 22. This being the law in respect of cases where the assessee has acquiesced to the jurisdiction of the transferee Court, the submissions made by Shri Bajla have no application in this case. The writ petition is, therefore, dismissed.” 9. In the light of above legal position, the objection raised by the assessee challenging the transfer of jurisdiction of the case does not stand the test of the law. Thus, this contention is devoid of any merit and, accordingly, we dismiss the same. 10. Ground of appeal no.2, 3 and 4 challenges the action of the lower authorities in bringing to tax the sum of Rs.10,00,000/- based on the information contained in the document impounded from the office premises of M/s. Mahavir Civil Engineering & Services Pvt. Ltd. It is contended that the impounded document from the premises of the third party cannot be used as incriminating material for the purpose of making addition in the assessment made pursuant

9 ITA Nos.1492, 1493 & 1494/PUN/2015 to notice u/s 153A of the Act. In the absence of any evidence suggesting the payment of money to the appellant, no addition can be made. 11. On the other hand, ld. CIT-DR relying on the orders of the lower authorities submitted that the impounded papers was found in the business premises of the appellant and it cannot be said that the impounded document was found in the third party’s premises. As regards to the evidentiary value of the impounded document, he submitted that the document was found in the possession of the appellant and, therefore, the lower authorities are justified in making the addition based on the impounded documents. 12. We heard the rival submissions and perused the material on record. The present issue relates to whether or not in the facts and circumstances of the case, the addition of Rs.10,00,000/- made by the Assessing Officer based on the impounded documents is sustainable? No doubt the impounded document no.98 of Annexure A-1 was impounded from the office premises of M/s. Mahavir Civil Engineering & Services Pvt. Ltd. The business premises of the appellant is also same. Therefore, there is no merit in the contention of the appellant that the document was impounded from the

10 ITA Nos.1492, 1493 & 1494/PUN/2015 premises of the third party. When the document was in the name of the appellant and found in the business premises of the appellant, even loose sheets is a document as mentioned u/s 132(4) r.w.s. 292C of the Act. The contention of the appellant that the documents found in possession and control of third person in the course of search, is not correct. This presumption raised u/s 132(4A) remains uncontroverted by the appellant by leading necessary evidence. It would clear that it is a document showing the receipt of commission income, the onus lies upon the assessee to show that the said transaction was reflected in the regular books of account maintained and offered to tax. In the circumstances, Assessing Officer would be justified in drawing adverse inference on failure of the assessee to explain the contents of the document. Therefore, the Assessing Officer is justified in drawing an adverse inference that the appellant is in receipt of unaccounted income of Rs.10,00,000/- for the year under consideration and Rs.26,00,000/- for the assessment year 2007-08. 13. In the light of the above discussion, we confirm the finding of the lower authorities. Accordingly, the ground of appeal no.2, 3 and 4 raised by the assessee stands dismissed.

11 ITA Nos.1492, 1493 & 1494/PUN/2015 14. In the result, the appeal of the assessee in ITA No.1492/PUN/2015 for the assessment year 2006-07 stands dismissed. ITA No.1493/PUN/2015, A.Y. 2007-08 : 15. Since the facts and issues involved in appeal of the assessee in ITA No.1493/PUN/2015 for A.Y. 2007-08 are identical, therefore, our decision in ITA No.1492/PUN/2015 for A.Y. 2006-07 shall apply mutatis mutandis to the appeal of the assessee in ITA Nos.1493/PUN/2015 for A.Y. 2007-08. Accordingly, the appeal of the assessee in ITA No.1493/PUN/2015 for A.Y. 2007-08 stands dismissed. ITA No.1494/PUN/2015, A.Y. 2012-13 : 16. Briefly the facts of the case are that the appellant is an individual engaged in the business of execution of civil contracts. A search and seizure operations were conducted by the DDIT (Inv.), Jalgaon in the business premises of the appellant on 09.08.2011. During the course of search and seizure proceedings, the statement was recorded u/s 132(4), wherein, the appellant had offered a sum of Rs.1 crore as additional income and the assessment was

12 ITA Nos.1492, 1493 & 1494/PUN/2015 completed by the Assistant Commissioner of Income Tax, Central Circle-1, Nashik (‘the Assessing Officer’) vide order dated 29.03.2014 passed u/s 143(3) r.w.s. 153B at a total income of Rs.1,46,94,826/-. Subsequently, the Assessing Officer issued a penalty notice for levy of penalty u/s 271(1)(c) r.w.s. 271AAA of the Act, wherein, the assessee submitted that no penalty should be levied for the reason that disclosure of amount of Rs.1 crore was made only with the intention to buy mental peace and the appellant had made voluntarily disclosure u/s 132(4) and the tax due on the returned income had been paid. The appellant also relied on the decision of the Hon’ble Allahabad High Court in the case of CIT vs. Radha Kishan Goel, 278 ITR 454 (All.). However, the Assessing Officer considering the explanation of the appellant noted that the appellant had failed to satisfy and substantiate the manner in which the undisclosed income has been derived, had proceeded wtih levy penalty of Rs.10,00,000/- vide order dated 19.09.2014. 17. Being aggrieved by the penalty order dated 19.09.2014, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the action of the Assessing Officer.

13 ITA Nos.1492, 1493 & 1494/PUN/2015 18. Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us. 19. The ld. AR taking us through the statement recorded u/s 132(4) from the assessee filed in the Paper Book submitted that during the course of proceedings u/s 132(4), no query was asked by the Assessing Officer as to the manner in which the undisclosed income was earned by the assessee. In such fact situation, no penalty can be levied u/s 271AAA of the Act placing reliance on the decision of the Hon’ble Allahabad High Court in the case of Radha Kishan Goel (supra). 20. On the other hand, ld. CIT-DR submitted that when the assessee did not satisfy during course of the statement recorded u/s 132(4) as to how the undisclosed income was derived on such failure, it could not be concluded that the assessee had fulfilled the requirements of sub-section (2) of section 271AAA of the Act. The ld. CIT-DR also placed reliance on the decision of the Hon’ble Delhi High Court in the case of PCIT vs. Smt. Ritu Singal, 403 ITR 97 (Delhi). 21. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the levy of penalty

14 ITA Nos.1492, 1493 & 1494/PUN/2015 u/s 271AAA of the Act. The provisions of section 271AAA provides that in a case where the search has been initiated u/s 132 on or after first day of June, 2007 but before the first day of July, 2007, the Assessing Officer shall levy the penalty, in addition of tax at the rate of 10% of the undisclosed income. Sub-section (2) of section 271AAA provides that no penalty shall be levied u/s 271AAA in a case where the assessee, during the course of statement recorded under sub-section (4) of section 132 admits undisclosed income, substantiate manner in which the undisclosed income was derived, the tax together with interest on such undisclosed income was paid. We have carefully gone through the statement recorded during the course of search and seizure operations u/s 132(4), wherein, in reply to question no.3 recorded u/s 132(4) the appellant had agreed to disclose a sum of Rs.1 crore voluntarily in the name of all family members and business concern of family members for the assessment year under consideration. There was no query posed by the Investigation Officer as to the manner in which the undisclosed income offered by the assessee. Reference can be made on the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah, 299 ITR 305 (Guj.)

15 ITA Nos.1492, 1493 & 1494/PUN/2015 and the decision of the Hon’ble Allahabad High Court in the case of CIT v. Radha Kishan Goel, 278 ITR 454 (All.). 22. In such circumstances, the Hon’ble Gujarat High Court and the Hon’ble Allahabad High Court took a view that conditions stipulated u/s 271AAA stands satisfied and question of levy of penalty u/s 271AAA does not arise. When there is no specific query was raised to the assessee during the course of statement recorded u/s 132(4), as to the manner in which the undisclosed income was derived, the Assessing Officer is not justified in imposing the penalty u/s 271AAA of the Act. However, the Hon’ble Delhi High Court in the case of Smt. Ritu Singal (supra) considering the above two decisions of the Hon’ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah, 299 ITR 305 (Guj.) and the decision of the Hon’ble Allahabad High Court in the case of CIT v. Radha Kishan Goel, 278 ITR 454 (All.) and the decision of the Hon’ble Supreme Court in the case of (i) ACIT vs. Gebilal Kanhaialal HUF, 348 ITR 561 (SC) and (ii) MAK Data P. Ltd. vs. CIT, 358 ITR 593 (SC) held that since the assessee did not satisfy in such proceedings as to how an assessee derived undisclosed income and under what head it fell

16 ITA Nos.1492, 1493 & 1494/PUN/2015 in, it cannot be said that the he had fulfilled requirements of section 271AA of the Act vide para 14, 15 and 16 held as under :- “14. In construing Section 271AAA one must not lose sight of its essential purpose which resulted in its enactment. There is a penalty at the rate of 10% of the undisclosed amount declared, if the conditions in Section 271AAA (2) are not met with. This is quite different from the penal provision under Section 271 (1) (c) of the Act, which directs that if income is concealed or inaccurate returns are filed, which are disallowed by the AO, the penalty shall be "three times the amount of tax sought to be evaded". In the case of amounts disclosed during the course of search, the penalty amount is only ten percent of the undisclosed income. Parliament has, therefore, given a different treatment to the latter category. At the same time, if an assessee were to successfully urge the "escape route" so to say, of Section 271AAA (2), all three conditions mentioned in the provision, (as held in Gebilal Kanhaialal's case (supra) in respect of pari material provisions) have to necessarily be fulfilled. In the preset case, the assessee, while declaring the "undisclosed income" also stated, that "the surrender is being made subject to no penal action of Section 271 (1) (c)". 15. While dealing with a case of similar surrender- but made in the course of survey proceedings, by an assessee (which led to imposition of penalty), the Supreme Court, in Mak Data (P) Ltd. v CIT [2013] 38 taxmann.com 448/358 ITR 539 held as follows: '7. The AO, in our view, shall not be carried away by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to 271 raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. 8. Assessee has only stated that he had surrendered the additional sum of Rs.40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. Statute does not recognize those types of defences under the explanation 1 to 271 (1) (c) of the Act. It is

17 ITA Nos.1492, 1493 & 1494/PUN/2015 trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16-12-2003, in the case of a sister concern of the assessee.' 16. That the income which was ultimately brought to tax pursuant to the disclosure made, which was voluntary on the part of the assessee is stating the obvious. The assessee merely stated that the sums advanced were undisclosed income. However, she did not specify how she derived that income and what head it fell in (rent, capital gain, professional or business income out of money lending, source of the money etc). Unless such facts are mentioned with some specificity, it cannot be said that the assessee has fulfilled the requirement that she, in her statement (under Section 132 (4)) "substantiates the manner in which the undisclosed income was derived". Such being the case, this court is of opinion that the lower appellate authorities misdirected themselves in holding that the conditions in Section 271AAA (2) were satisfied by the assessee.” 23. Thus, we find that there is a clear cleavage of judicial opinion among above three High Courts. In the circumstances, the Hon’ble Jurisdictional High Court in the case of CIT vs. Thana Electricity Supply Ltd., 206 ITR 727 held that it is satisfaction of the Court interpreting the law, language of the taxing provisions ambiguous or capable of more meaning than once which is material. If the court

18 ITA Nos.1492, 1493 & 1494/PUN/2015 does not think so, the fact that two different opinions have been expressed by the parties or accepted by some Tribunal or High Court by itself not been sufficient to attract the principle of beneficiary interpretation. The relevant para of the Hon’ble Bombay High Court’s decision in the case of CIT vs. Thana Electricity Supply Ltd., 206 ITR 727 is reproduced hereunder :- “Before we proceed to decide the question of law referred to us on the merits, it is necessary also to decide the second submission of learned counsel for the assessee that on interpretation of section 33(6) of the Act, even if this court takes a view which is against the assessee, in view of the fact that the Tribunal has taken a view in favour of the assessee and the Calcutta High Court has also taken a view in its favour we should adopt a view beneficial to the assessee following the decisions of the Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 and CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 . We have considered the submission. We have also carefully considered the decisions of the Supreme Court. We, however, find it difficult to accept this submission, as in our opinion, the observations of the Supreme Court in those decisions have been stretched too far. The Supreme Court in CIT v. Vegetable Products Ltd, [1973] 88 ITR 192 (at page 195), merely observed : "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." Similarly, in CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 , at page 240, the Supreme Court had observed as follows : "If a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well-accepted view of law." The above observations will be applicable only if the court which is called upon to decide the issue is satisfied that two views are reasonably possible, one of them being favourable to the assessee. As observed by the Supreme Court in Escorts Ltd. v. Union of India [1993] 199 ITR 43 (at page 60) :

19 ITA Nos.1492, 1493 & 1494/PUN/2015 "In our view, there was no difficulty at all in the interpretation of the provisions. The mere fact that a baseless claim was raised by some over-enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provision. ..." It is, therefore, clear that it is the satisfaction of the court interpreting the law that the language of the taxing provision is ambiguous or reasonably capable of more meanings than one, which is material. If the court does not think so, the fact that two different views have been advanced by parties and argued forcefully, or that one such view which is favourable to the assessee has been accepted by some Tribunal or High Court, by itself will not be sufficient to attract the principle of beneficial interpretation. In the instant case, as we are not satisfied with the interpretation given by the Tribunal or the Calcutta High Court to section 33(6) of the Act, in our opinion, accepting those decisions by applying the test of beneficial interpretation does not arise.” 24. We now turn to the facts of the present case. It is admitted position that the appellant during the course of giving statement u/s 132(4) had not disclosed the manner in which the undisclosed income had been derived and its substantiation nor was there any query posed by the Investigating Officer of the Department during recording of such statement. We have carefully gone through the provisions of section 271AAA which clearly stipulates that in case search had been initiated u/s 132 on or after 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. Sub-section (2) of the said provisions carves out the exceptions to

20 ITA Nos.1492, 1493 & 1494/PUN/2015 the said provisions of section 271AAA in the following circumstances :- “(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.” 25. Admittedly, in view of the fact that the assessee had failed to disclose the manner in which the undisclosed income has derived and its substantiation, the requirements stipulated in sub-section (2) of section 271AAA does not stand specified. There is nothing in the provisions of section 271AAA to say that an assessee is required to disclose the manner in which the undisclosed income is derived and its substantiation only on a query posed to him by the Investigation Officer. Such construction only amount to adding words to the statute which is not a permissible rule of interpretation. In view of this, we find it difficult to agree with the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Mahendra C. Shah, 299 ITR 305 (Guj.) and the decision of the Hon’ble Allahabad High Court in the case of CIT v. Radha Kishan Goel, 278 ITR 454 (All.). In our considered opinion, the decision of the

21 ITA Nos.1492, 1493 & 1494/PUN/2015 Hon’ble Delhi High Court in the case of Smt. Ritu Singal (supra) is more reasoned and considered decision and, therefore, we prefer to follow the view of the Hon’ble Delhi High Court in the case of Smt. Ritu Singal (supra) and, accordingly, uphold the levy of penalty u/s 271AAA of the Act. 26. In the result, the appeal filed by the assessee in ITA No.1494/PUN/2015 for A.Y. 2012-13 stands dismissed. 27. To sum up, all the above three appeals of the assessee stands dismissed. Order pronounced on this 27th day of April, 2022. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 27th April, 2022. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-12, Pune. 4. The CIT, Central, Nagpur. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल/ Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.