Marvel Associates, Visakhapatnam V. ACIT, Central Circle-2, Visakhapatnam

CO 44/VIZ/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3634 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 30-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T SATYANANDAM
• Keywords: Opportunity of being heard; Principle of natural justice; Block assessment
• Section: 132

Judgement Text

ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.147/VIZAG/2017 ( / ASSESSMENT YEAR: 2013-14) ACIT, CENTRAL CIRCLE - 2, VISAKHAPATNAM M/S. MARVEL ASSOCIATES VISAKHAPATNAM [PAN NO. AASFM1917A ] ( ' / APPELLANT) ( ()' / RESPONDENT) C.O. NO.44/VIZAG/2017 (ARISING OUT OF I.T.A.NO.147/VIZAG/2017) ( / ASSESSMENT YEAR: 2013-14) M/S. MARVEL ASSOCIATES VISAKHAPATNAM ACIT, CENTRAL CIRCLE - 2, VISAKHAPATNAM ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI T.SATYANANDAM, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 08.03.2018 / DATE OF PRONOUNCEMENT : 1 6.03.2018 ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 2 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3 {CIT(A)} , VISAKHAPATNAM VIDE ITA NO.70/2015-16/CIT(A)/VSP/2016-17 DATED 6.1 .2017 FOR THE ASSESSMENT YEAR 2013-14. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE IMP OSITION OF PENALTY U/S 271AAB OF THE ACT. IN THIS CASE, A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE ASSESSEES CASE ON 20.12.2012. DURING THE COURSE OF SEARCH, THE ASSESSEE HAD ADMITTED THE ADDITIONAL IN COME OF RS.4.80 CRORES AS ADDITIONAL SALES FOR THE FINANCIAL YEAR 2 012-13 ONWARDS AND THE ADDITIONAL INCOME ADMITTED FOR THE ASSESSMENT Y EAR 2013-14 WAS RS.1,48,84,142/-. ACCORDINGLY, THE ASSESSEE FILED THE RETURN OF INCOME AND THE ASSESSMENT WAS COMPLETED MAKING THE DISALLO WANCE U/S 40(A)(IA) OF THE ACT FOR AN AMOUNT OF RS.3,35,000/- AND PENALTY U/S 271AAB OF THE ACT WERE INITIATED SEPARATELY. DURING THE PENALTY PROCEEDINGS, THE A.O. ISS UED SHOW CAUSE NOTICE AS TO WHY THE PENALTY SHOULD NOT BE LEVIED U/S 271A AB OF THE ACT. IN REPLY, THE ASSESSEE SUBMITTED THAT THE ASSESSEE FIL ED RETURN OF INCOME ON THE BASIS OF TURNOVER AND THE BOOKS OF ACCOUNTS WERE REGULARLY MAINTAINED. THE SAID TURNOVER WAS DISCLOSED IN THE PROFIT & LOSS ACCOUNT ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 3 AND INCLUDED THE SUM OF RS.1,48,84,142/- TOWARDS AD DITIONAL SALE PRICE OFFERED SOLD/BOOKED FOR SALE ON THE DATE OF SEARCH. THE ADDITIONAL INCOME WAS PART OF RS.4.80 CRORES ADMITTED BY THE A SSESSEE AT THE TIME OF SEARCH. THE ABOVE ADDITIONAL ADMISSION WAS GIVE N ON THE BASIS OF ADDITIONAL SALE PRICE WORKED OUT AT RS.500/- PER SQ .FT. FOR 96000 SQ.FT. SOLD/BOOKED UP TO THE DATE OF SEARCH. THE ASSESSEE SUBMITTED BEFORE THE A.O. THAT NO INCRIMINATING MATERIAL WAS FOUND S UGGESTING RECEIPT OF ANY ADDITIONAL SALE PRICE BY THE FIRM. THE ADMISSI ON OF ADDITIONAL INCOME WAS ONLY TO BUY PEACE AND TO AVOID PROTRACTE D LITIGATION AS STATED BY THE ASSESSEE. THE ASSESSEE HAD FILED THE RETURN OF INCOME AND PAID THE TAXES. SINCE THERE WAS NO INCRIMINAT ING MATERIAL AND THERE WAS NO EVIDENCE FOUND DURING THE COURSE OF SEARCH R ELATING TO THE UNDISCLOSED INCOME OR UNDISCLOSED EXPENDITURE, THE ASSESSEE REQUESTED TO DROP THE PENALTY PROCEEDINGS INITIATED U/S 271AA B OF THE ACT. NOT BEING CONVINCED WITH THE EXPLANATION OFFERED BY THE ASSESSEE, THE A.O. IMPOSED PENALTY @ 30% OF THE UNDISCLOSED INCOME AMO UNTED TO RS.44,65,543/-. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) SCALED DOWN TH E PENALTY TO 10% INSTEAD OF THE PENALTY LEVIED BY THE A.O. AT 30%. THE LD.CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT THERE W AS NO INCRIMINATING ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 4 MATERIAL AND OBSERVED THAT PAGE NO.107 OF ANNEXURE A/GS/MA/1 SHOWED THAT THE COST PER SQ.FT. AT RS.3571/- AS AGA INST RS.2200/- TO RS.2300/- PER SQ.FT. STATED TO HAVE BEEN INCURRED B Y THE ASSESSEE. ONLY WHEN THE A.O. HAS POINTED OUT THE DIFFERENCE IN COS T PER SQ.FT., THE ASSESSEE FIRM HAD ADMITTED THE ADDITIONAL INCOME. CIT(A) FURTHER OPINED THAT HAD THE AO DID NOT RAISE THIS ISSUE, TH E ASSESSEE WOULD NOT HAVE OFFERED THE ADDITIONAL INCOME. THE LD CIT(A) O BSERVED THAT THE DEPARTMENT HAS FOUND LOOSE SHEET BEARING PAGE NO.10 7 OF ANNEXURE A/GS/MA/1, WHICH IS AN INCRIMINATING MATERIAL, HEN CE, HELD THAT THIS IS A CLEAR CASE OF CONCEALMENT OF INCOME. SINCE THE ASS ESSEE HAS EXPLAINED THE MODUS OPERANDI, CIT(A) HELD THAT THE PENALTY FA LLS UNDER 10% CATEGORY, ACCORDINGLY CONFIRMED THE PENALTY AT 10% INSTEAD OF 30%. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. DURING THE APPEAL HEARING, THE LD. A.R. VEHEMENTLY ARGUED THAT THE A.O. HAS LEVIED THE PENALTY UNDER THE IMPRESSION THAT THE LE VY OF PENALTY IN THE CASE OF ADMISSION OF INCOME U/S 132(4) IS MANDATORY . THE LD. A.R. FURTHER STATED THAT PENALTY U/S 271AAB OF THE ACT I S NOT MANDATORY BUT DISCRETIONARY. THE PROVISIONS OF SECTION 271AAB OF THE ACT IS PARIMATERIA ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 5 WITH THAT OF SECTION 158BFA OF THE ACT RELATING TO BLOCK ASSESSMENT AND ACCORDINGLY ARGUED THAT THE LEVY OF PENALTY UNDER S ECTION 271AAB IS NOT MANDATORY BUT DISCRETIONARY. WHEN THERE IS REASONAB LE CAUSE, THE PENALTY IS NOT EXIGIBLE. THE LD. A.R. TAKEN US TO THE SECTION 271AAB OF THE ACT AND ALSO SECTION 158BFA(2) OF THE ACT AND A RGUED THAT THE WORDS USED IN SECTION 271AAB OF THE ACT AND THE WORDS USE D IN SECTION 158BFA(2) OF THE ACT ARE IDENTICAL. HENCE, ARGUED THAT THE PENALTY SECTION 271AAB OF THE ACT PENALTY IS NOT AUTOMATIC AND IT IS ON THE MERITS OF EACH CASE. FOR READY REFERENCE, WE REPRO DUCE HEREUNDER SECTION 158BFA (2) OF THE ACT AND SECTION 271AAB OF THE ACT WHICH READS AS UNDER; 271AAB [PENALTY WHERE SEARCH HAS BEEN INITIATED]: (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 1 ST DAY OF JULY, 2012, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM-- (A) A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE U NDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSESSEE (I) IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SUB-S ECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) ON OR BEFORE THE SPECIFIED DATE (A) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME; AND (B) FURNISHES THE RETURN OF INCOME FOR THE SPECIFIED PR EVIOUS YEAR DECLARING SUCH UNDISCLOSED INCOME THEREIN; (B) A SUM COMPUTED AT THE RATE OF TWENTY PER CENT OF TH E UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF SUCH ASSE SSEE-- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UND ER SUB-SECTION (4_) OF SECTION 132, DOES NOT ADMIT THE UNDISCLOSED INCO ME; AND ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 6 (II) ON OR BEFORE THE SPECIFIED DATE (A) DECLARES SUCH INCOME IN THE RETURN OF INCOME FURNIS HED FOR THE SPECIFIED PREVIOUS YEAR; AND (B) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME; (C) A SUM WHICH SHALL NOT BE LESS THAN THIRTY PER C ENT BUT WHICH SHALL NOT EXCEED NINETY PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR, IF IT IS NOT COVERED BY THE PROVISIONS OF CLA USES (A) AND (B). (2) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT O F THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). SECTION 158BFA(2): (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APP EALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOU NT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABL E IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER UNDER CL AUSE (C) OF SECTION 158BC: PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MADE IN RES PECT OF A PERSON IF (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SECTION 158BC; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS BEE N PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE. (III) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RE TURN; AND (IV) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF TH AT PART OF INCOME WHICH IS SHOWN IN THE RETURN: PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDING PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY THE ASSE SSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUC H CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DE TERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. 6. CAREFUL READING OF SECTION 271AAB OF THE ACT, TH E WORDS USED ARE AO MAY DIRECT AND THE ASSESSEE SHALL PAY BY WAY OF PENALTY. SIMILAR WORDS ARE USED SECTION 158BFA(2) OF THE ACT. THE W ORD MAY DIRECT INDICATES THE DISCRETION TO THE AO. FURTHER, SUB SE CTION (3) OF SECTION 271AAB OF THE ACT, FORTIFIES THIS VIEW. ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 7 SUB SECTION (3) OF SECTION 271AAB: THE PROVISIONS OF SECTION 274 AND 275 SHALL, AS FA R AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECTION . 7. THE LEGISLATURE HAS INCLUDED THE PROVISIONS OF S ECTION 274 AND SECTION 275 OF THE ACT IN 271AAB OF THE ACT WITH CL EAR INTENTION TO CONSIDER THE IMPOSITION OF PENALTY JUDICIALLY. SEC TION 274 DEALS WITH THE PROCEDURE FOR LEVY OF PENALTY, WHEREIN, IT DIRECTS THAT NO ORDER IMPOSING PENALTY SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THE REFORE, FROM PLAIN READING OF SECTION 271AAB OF THE ACT, IT IS EVIDENT THAT THE PENALTY CANNOT BE IMPOSED UNLESS THE ASSESSEE IS GIVEN A RE ASONABLE OPPORTUNITY AND ASSESSEE IS BEING HEARD. ONCE THE OPPORTUNITY IS GIVEN TO THE ASSESSEE, THE PENALTY CANNOT BE MANDATORY AN D IT IS ON THE BASIS OF THE FACTS AND MERITS PLACED BEFORE THE A.O. ONC E THE A.O. IS BOUND BY THE ACT TO HEAR THE ASSESSEE AND TO GIVE REASONA BLE OPPORTUNITY TO EXPLAIN HIS CASE, THERE IS NO MANDATORY REQUIREMENT OF IMPOSING PENALTY, BECAUSE THE OPPORTUNITY OF BEING HEARD AND REASONABLE OPPORTUNITY IS NOT A MERE FORMALITY BUT IT IS TO AD HERE TO THE PRINCIPLES OF NATURAL JUSTICE. HONBLE A.P. HIGH COURT IN THE C ASE OF RADHAKRISHNA VIHAR IN ITTA NO.740/2011 WHILE DEALING WITH THE PE NALTY U/S 158BFA HELD THAT WE ARE OF THE OPINION THAT WHILE THE WOR DS SHALL BE LIABLE ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 8 UNDER SUB SECTION (1) OF SECTION 158BFA OF THE ACT THAT ARE ENTITLED TO BE MANDATORY, THE WORDS MAY DIRECT IN SUB SECTION 2 THERE OF INTENDED TO DIRECTORY. IN OTHER WORDS, WHILE PAYMENT OF IN TEREST IS MANDATORY LEVY OF PENALTY IS DISCRETIONARY. IT IS TRITE POSI TION OF LAW THAT DISCRETION IS VESTED AND AUTHORITY HAS TO BE EXERCISED IN A RE ASONABLE AND RATIONAL MANNER DEPENDING UPON THE FACTS AND CIRCUMSTANCES O F THE EACH CASE. PLAIN READING OF SECTION 271AAB AND 274 OF THE ACT INDICATES THAT THE IMPOSITION OF PENALTY U/S 271AAB OF THE ACT IS NOT MANDATORY BUT DIRECTORY. ACCORDINGLY WE HOLD THAT THE PENALTY U/ S 271AAB IS NOT MANDATORY BUT TO BE IMPOSED ON MERITS OF THE EACH C ASE. 8. IN THIS CASE, A SEARCH U/S 132 OF THE ACT WAS CA RRIED OUT IN THE ASSESSEES PREMISES BUT NO EVIDENCE WAS FOUND DURIN G THE COURSE OF SEARCH EXCEPT A LOOSE SHEET WHICH WAS MARKED AS PAG E NO.107 OF ANNEXURE A/GS/MA/1. CAREFUL VERIFICATION OF THE LO OSE SHEET FOUND DURING THE COURSE OF SEARCH SHOWS THE PROJECTIONS A ND PROFITABILITY BUT NOT THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE . AS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. AS WELL AS LD. CIT(A), NO OTHER MATERIAL WAS FOUND DURING THE SEARCH PROCEEDINGS. SECTION 2 71AAB SUB CLAUSE (C) OF THE ACT DEFINES UNDISCLOSED INCOME AS UNDER: (C) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENT ED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOUNT ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 9 OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COU RSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH I N THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; O R (B) OTHERWISE NOT BEEN DISCLOSED TO THE [PRINCIPAL CHIE F COMMISSIONER OR] CHIEF COMMISSIONER OR [PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENT ED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXP ENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPE CIFIED PREVIOUS YEAR WHICH IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH NOT BEEN CONDUCT ED] 9. PENALTY U/S 271AAB ATTRACTS ON UNDISCLOSED INCOM E BUT NOT ON ADMISSION MADE BY THE ASSESSEE U/S 132(4). THE AO M UST ESTABLISH THAT THERE IS UNDISCLOSED INCOME ON THE BASIS OF INCRIMI NATING MATERIAL. IN THE INSTANT CASE A LOOSE SHEET WAS FOUND ACCORDING TO T HE A.O., IT WAS INCRIMINATING MATERIAL EVIDENCING THE UNDISCLOSED I NCOME. IN THE PENALTY ORDER THE AO OBSERVED THAT LOOSE SHEET SHOW S THE COST PER SQUARE FEET IS RS.3571/- PER SFT AND ASSESSEE STATE D TO HAVE SUBMITTED IN SWORN STATEMENT COST PER SQ.FEET AT RS.2200/- TO RS.2300/- PER SQ.FEET. HOWEVER NEITHER THE AO NOR THE LD.CIT(A) H AS VERIFIED THE COST OF CONSTRUCTION WITH THE BOOKS AND PROJECTIONS FOUN D AT THE TIME OF SEARCH. THE COUNSEL ARGUED THAT IT WAS MERE PROJECT ION BUT NOT THE ACTUALS. THE WRITE UP HEADING ALSO MENTIONED THAT S UMMARY OF THE PROJECTED PROFITABILITY STATEMENT. THERE IS NO EVID ENCE TO ESTABLISH THAT PROJECTIONS REFLECTED IN THE LOOSE SHEET IS REAL. N O OTHER MATERIAL WAS ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 10 FOUND DURING THE COURSE OF SEARCH INDICATING THE UN DISCLOSED INCOME. THERE WAS NO MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE OR THING OR ENTRY IN THE BOOKS OF ACCOUNTS OR DOCUMENTS TRANSAC TIONS WERE FOUND DURING THE COURSE OF SEARCH INDICATING THE ASSETS N OT RECORDED IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE, WHOLLY OR PARTLY. THE REVENUE DID NOT FIND ANY UND ISCLOSED ASSET, ANY OTHER UNDISCLOSED INCOME OR THE INFLATION OF EXPEND ITURE DURING THE SEARCH/ ASSESSMENT PROCEEDINGS. THOUGH A LOOSE SHE ET OF PAGE NO.107 OF ANNEXURE A/GS/MA/1 WAS FOUND THAT DOES NOT INDIC ATE ANY SUPPRESSION OF INCOME BUT IT IS ONLY PROJECTION OF PROFIT STATEMENT. THE AMOUNT OF RS.3571/- MENTIONED IN THE PROJECTIONS RE FERS TO COST AND PROFIT WHICH IS APPROXIMATE SALE PRICE BUT NOT THE COST AS STATED BY THE AO IN THE PENALTY ORDER. THE COST OF CONSTRUCTION I N THE PROJECTIONS PROJECTED AT RS.2177/- WHICH IS IN SYNCH WITH THE S TATEMENT GIVEN BY THE ASSESSEE. THE AO WAS HAPPY WITH THE DISCLOSURE GIVE N BY THE ASSESSEE AND DID NOT VERIFY THE FACTUAL POSITION WITH THE BO OKS OF ACCOUNTS AND PROJECTIONS AND BRING THE EVIDENCE TO UNEARTH THE U NDISCLOSED INCOME. NEITHER THE A.O. NOR THE INVESTIGATION WING LINKED THE COST OF PROFIT OR COST OF ASSET TO THE ENTRIES IN THE BOOKS OF ACCOUN TS OR TO THE SALES CONDUCTED BY THE ASSESSEE TO THE SALE DEEDS. THERE FORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE LO OSE SHEET FOUND ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 11 DURING THE COURSE OF SEARCH INDICATES ANY UNDISCLOS ED INCOME OR ASSET OR INFLATION OF EXPENDITURE. THE HONBLE ITAT DELHI B ENCH IN THE CASE OF AJAY SHARMA VS. DCIT (2012) 32 CCH 334 HELD THAT WI TH RESPECT TO THE ADDITION ON ACCOUNT OF ALLEGED RECEIVABLES AS PER S EIZED PAPER, THERE IS NO DIRECT MATERIAL WHICH LEADS AND ESTABLISHES THAT ANY INCOME RECEIVED BY THE ASSESSEE HAS NOT BEEN DECLARED BY THE ASSESS EE. AN ADDITION HAS BEEN MADE ON THE BASIS OF LOOSE DOCUMENT, WHICH DID NOT CLOSELY PROVE ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICU LARS BY THE ASSESSEE. HENCE PENALTY U/S 158BFA (2) OF THE ACT IS NOT LEVI ABLE. THE FACTS OF THE ASSESSEES CASE SHOWS THAT THERE WAS NO UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARC H AND NO INCRIMINATING MATERIAL WAS FOUND, HENCE WE HOLD THA T THERE IS NO CASE FOR IMPOSING PENALTY U/S 271AAB OF THE ACT, ACCORDI NGLY, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND CANCEL THE P ENALTY U/S 271AAB OF THE ACT. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. CROSS OBJECTION NO.44/VIZAG/2017: 11. THE ASSESSEE FILED C.O. AGAINST THE ORDER PASSE D BY THE LD. CIT(A) BY PARTLY SUSTAINING THE PENALTY LEVIED BY THE A.O. U/S 271AAB OF THE ACT AND REQUESTED TO CANCEL THE ENTIRE PENALTY OF ` 44,65,543/- LEVIED U/S 271AAB OF THE ACT. ITA NO.147/VIZAG/2017 M/S. MARVEL ASSOCIATES, VISAKHAPATNAM 12 12. IN VIEW OF OUR FINDINGS IN THE PRECEDING PARAGR APHS, THE PENALTY LEVIED BY THE LOWER AUTHORITIES U/S 271AAB OF THE A CT ON BANK DEPOSIT AS WELL AS THE GOLD AND JEWELLERY WAS SET ASIDE AND DI SMISSED THE APPEAL OF THE REVENUE, HENCE, THE CROSS OBJECTION FILED BY TH E ASSESSEE IS ALLOWED. 13. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED AND THE C.O. FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 16 TH MAR18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 16.03.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CENTRAL CIRCLE-2, VISA KHAPATNAM 2. / THE RESPONDENT M/S. MARVEL ASSOCIATES, FLAT NO .201, SARADA TOWERS, FACOR LAYOUT, RAMNAGAR, VISAKHAPATNAM 3. + / THE PR. CIT (CENTRAL), VISAKHAPATNAM 4. + ( ) / THE CIT (A)-3, VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM