St.Antony's Timber Dep, Thrissur V. The ACIT, Trichur

CO 63/COCH/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6916 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: C B M WARRIER
• Keywords: Income from undisclosed sources; Document seized; Difference of opinion; Corroborative evidences; Retraction; Documents seized; Set aside
• Section: 143(3); 201; 274; 27; 132; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T . A. NO . 294 / COCH/ 2 01 8 ASSESSMENT YEAR : 2 0 08 - 09 THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 2(1), THRISSUR. VS. ST. ANTONYS TIMBER DEPOT, CHEVOOR P.O., THRISSUR - 680 027. [PAN: ( REVENUE - APPELLANT) ( ASSESSEE - RESPONDENT) C.O. NO. 63/COCH/2018 (ARISING OUT OF I .T.A. NO.294/COCH/2018 ASSESSMENT YEAR : 2008 - 09 ST. ANTONYS TIMBER DEPOT, CHEVOOR P.O., THRISSUR - 680 027. [PAN: . VS. THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 2(1), THRISSUR. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SMT. A.S. BINDHU, SR. DR ASSESSEE BY SHRI C.B.M. WARRIER, CA D ATE OF HEARING 26/02/2019 DATE OF PRONOUNCEMENT 01 / 0 3 /201 9 I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 2 O R D E R PER CHANDRA POOJARI, AM: TH IS APPE AL FILED BY THE REVENUE IS DIRECTED AGAINST ORDER OF THE CIT (A) - III , KOCHI DATED 28/03/2018 FOR THE ASSESSMENT YEAR 2008 - 09. THE ASS ESSEE HAS FILED CROSS OBJECTION IN C.O. NO. 63/COCH/2018 AGAINST THE REVENUE APPEAL. 2. THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS A FIRM WITH FOUR PARTNERS AND ENGAGED IN THE BUSINESS OF TIMBER TRADING. IN THIS CASE, A SEARCH U/S. 132 OF THE A C T WA S CONDUCTED ON 23/10/2008. POST SEARCH, A NOTICE DATED 18/02/2010 U/S. 153A(A) WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED ITS RETURN DECLARING A TOTAL INCOME OF RS.1,28,32,920/ - . THE ASSESSMENT WAS COMPLETED U/S.1 43(3) R.W.S 153 A AND THE TOTAL INCOME WAS ASSESSED AT RS.2,15,59,239/ - . THE MAIN ADDITION MADE WAS OF AN AMOUNT OF RS. 81 . 60 LACS ON ACCOUNT OF INVESTMENT IN IMMOVABLE PROPERTY BEING LAND ADMEASURING 30.5 CENTS AT CHEMBUKAVU THRISSUR. THE ASSESSING OFFICER H ELD THIS INVESTMENT AS MADE OUT OF ITS UNDISCLOSED INCOME OF THE ASSESSEE. 2. 1 THE SAID LAND HAD BEEN PURCHASED BY AN AGREEMENT DATED 24/04/2007 FOR A RECORDED CONSIDERATION OF RS.18.30 LACS. HOWEVER, DURING THE SEARCH, ONE OF THE SEIZED DOCUMENTS VIZ. PAGE NO. 10 OF SJ - 3 SEIZED FROM THE RESIDENCE OF SHRI BABU JOHN, MANAGING PARTNER OF THE FIRM, CONTAINED NOTINGS THAT INDICATED THAT THE ACTUAL COST OF PURCHASE OF THE SAID LAND AT CHEMBUKAVU WAS RS. 99.90 LAKHS. IN ADDITION TO I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 3 THIS FACT, SHRI BABU JOHN A DMITT ED IN HIS STATEMENT RECORDED U/ S . 132(4), THAT THE PURCHASE CONSIDERATION OF THE LAND AT CHEMBUKAVU WAS INDEED RS.99.90 LAKHS. THE NOTINGS ON THE SEIZED PAPER WERE ALSO DECIPHERED BY HIM. THE A.O. POINTED THIS TO THE ASSESSEE'S AUTHORISED REPRESENTATI VE BUT AS HE HAD NO CONVINCI NG AND SATISFACTORY EXPLANATION , THE DIFFERENCE BETWEEN 99.90 LAKHS AND 18.30 LAKHS AMOUNTING TO RS.8 1 .60 LAKHS WAS ADDED TO THE TOTAL INCOME AS ASSESSEE'S INVESTMENT OUT OF UNDISCLOSED INCOME. 2.2 PENALTY PROCEEDINGS U/S. 271 (I)(C) WERE INITIATED AND N OTICE DATED 31.12.2010 U/S 274 R.W.S 271(L)(C) WAS DULY ISSUED ALONGWITH THE ASSESSMENT ORDER AND SERVED UPON THE ASSESSEE. THE PENALTY PROCEEDINGS WERE KEPT IN ABEYANCE SINCE APPEAL HAD BEEN FILED BY THE ASSESSE. 3. ON APPEA L, THE CIT(A) CONFIRMED THE ADDITION OF RS.81.60 LAKHS . THEREAFTER, THE ASSESSEE FILED APPEAL TO THE IT AT WHO AGREED WITH THE FINDING OF THE CIT(A) AND CONFIRMED THE EVIDENTIARY VALUE OF THE SEIZED DOCUMENT AND THAT OF THE STATEMENT GIVEN BY THE P ARTNER . HOWEVER , IT WAS OBSERVED THAT ALTHOUGH THE REGISTRATION OF THE PROPERTY HAD BEEN DONE ONLY IN THE FIRM'S NAME, THE ASSESSEE HAD PUT AN ALTERNATIVE CLAIM THAT T W O OTHER PERSONS NAMED SHRI DAVID AND SHRI PAVUNNY WHOSE NAMES ALSO APPEARED ON THE SEIZED DOCUME NT (PAGE 10 OF SJ - 3) CONTRIBUTED EQUALLY WITH THE ASSESSEE IN THE INVESTMENT AND THE SAID CONTENTION HAD NOT BEEN VERIFIED BY LOWER AUTHORITIES - IF IT WAS CORRECT, THE ADDITION IN ASSESSEE'S HANDS WOULD HAVE I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 4 TO BE LIMITED TO 1/3 RD OF THE AMOUNT OF RS. 81.6 0 LAKHS. THE MATTER WAS THEREFORE SET ASIDE BY THE ITAT VIDE IT'S ORDER DATED 05/04/2013 AND RESTORED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE WHETHER THERE WAS INVESTMENT BY TWO PERSONS OTHER THAN THE ASSESSEE IN PURCHASING THE LAND. 4. ACCORDING LY, THE A.O MADE ENQUIRIES WITH SHRI A.A.DAVIS AND SHRL P. T.PAVUNNY WITH REGARD TO THEIR SHARE OF INVESTMENT, IF ANY, IN THE PROPERTY PURCHASED I.E 30 . 5 CENTS OF LAND AT CHEMBUKAVU, WHICH HAD BEEN REGISTERED IN THE NAME OF THE ASSESSEE I.E . M/S. ST. ANT ON Y'S TIMBER DEPOT. IN RESPONSE , BOTH OF THE SAID PERSONS VIDE LETTERS DATED 26/02/2014 DENIED HAVING MADE ANY INVESTMENT IN THE PURCHASE OF PROPERTY MADE BY M/S ST. ANTONY'S TIMBER DEPOT AT CHEMBUKAVU. IN FACT, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAD HIMSELF PRODUCED THE TWO DEPONENTS BEFORE THE ASSESSING OFFICER A ND HE ALSO SIGNED ON THE PROCEEDINGS. 4 .1 CONSEQUENT TO THE DENIAL LETTERS FILED BY SHRI A.A. DAVIS AND SHRI P.T. PAVUNNY, THE A.O ISSUED LETTER DATED 27/02/2014 CONFRONTING THE ASSESSEE WITH THEIR DENIALS AND DIRECTING IT TO FILE ITS EXPLANATIONS / OBJECTIONS IF ANY AGAINST THE CONFIRMATION LETTERS ON OR BEFORE 05 - 03 - 2014. IN RESPONSE, THE A UTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED LETTER DATED 04/03/2014 ON THE LETTER HEAD OF T HE ASSESSEE FIRM . THE SAID LETTER READS AS FOLLOWS: ' WITH REFERENCE TO THE ABOVE, WE MAY BE PERMITTED TO SUBMIT THAT THESE TWO PERSONS NAMELY A.A. DAVIS AND P. T. PAVUNNY HAD ACTUALLY INVESTED 1/3 RD EACH IN THE PROPERTY AT CHEMBUKAVU AND THIS FACT IS AVAI LABLE FROM THE SEIZED RECORDS ITSELF. HOWEVER WE DO NOT HAVE ANY OTHER DOCUMENTARY PROOF TO ESTABLISH THAT I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 5 THESE PERSONS HAD CONTRIBUTED TO THE PURCHASE OF THE SAID PROPERTY. IN VIEW OF THE ABOVE, WE HAVE NO OBJECTION AGAINST THESE CONFIRMATION LETTERS. PL EASE NOTE THAT THE ABOVE ACCEPTANCE DOES NOT MEAN THAT THE ENTIRE INVESTMENT HAD BEEN MET BY US. HOWEVER IN ORDER TO AVOID PROLONGED LITIGATION AND TO PURCHASE PEACE WITH THE DEPARTMENT THE ISSUE IS AGREED TO BE SETTLED AS SUCH. THIS MAY,' KINDLY BE TAKEN INTO ACCOUNT WHILE CONSIDERING THE PENALTY PROCEEDINGS, IF ANY, THAT MAY BE INITIATED AGAINST US. ' 4,2 THEREAFTER, THE A.O PASSED ORDER DATED 25/03/2014 U/S 143(3) R.W.S 254 OF THE INCOME TAX ACT,1961. IN THIS ORDER HE CONSIDERED THE LETTERS FILED BY T HE TWO OTHER PERSONS AND THE SUBMISSION FILED BY THE ASSESSEE AND COMPLETED THE REASSESSMENT BY RETAINING THE ADDITION OF RS.81.60 LAKHS ON ACCOUNT OF UNDISCLOSED INVESTMENT. THE A.O ALSO INITIATED PENALTY U/S 271(L)(C) OF THE ACT AND SERVED THE SHOW CAUSE NOTICE U/S 274 R.W.S 27 1 ( 1 )(C) . IN RESPONSE , THE ASSESSEE NEITHER ATTENDED ON THE APPOINTED DATE NOR FILED ANY WRITTEN SUBMISSION. THEREAFTER, A FRESH OPPORTUNITY OF HEARING WAS GRANTED BY THE ASSESSING OFFICER. I N RESPONSE, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE MADE SUBMISSIONS VIDE HIS LETTER DATED 26/09/2014. THE SUBMISSIONS MADE READS AS FOLLOWS: '1 THE ASSESSMENT FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS COMPLETED BY THE LEARNED ASSESSING OFFICER BY RETAINING THE ADDITION OF RS.81,60 ,000 BEING THE ALLEGED DIFFERENCE IN THE INVESTMENT MADE IN ACQUIRING THE PROPERTY AT CHEMBUKAVU, TRICHUR. 2. WE BEG TO SUBMIT THAT WE HAVE NOT CONCEALED ANY INCOME AND ALL THE RELEVANT INFORMATION WERE FURNISHED AND AVAILABLE IN THE FINANCIAL STATEMENT S FILED AND HAD ALSO FURNISHED ALL DETAILS ASKED DURING THE ASSESSMENT PROCEEDINGS AND HAD FURNISHED ALL INFORMATION ASKED FOR . 3. WE HAVE MADE PAYMENT OF THE TAX AS PER THE RETURN OF INCOME FILED AND THE ADDITION ON ACCOUNT OF DISALLOWANCE (SIC) EXPENSES WERE NOT ANTICIPATED AT THE TIME OF FILING THE ORIGINAL RETURN OF INCOME. I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 6 4. THE ADDITION TOWARDS ALLEGED INVESTMENT IN IMMOVABLE PROPERTY WAS MADE WITHOUT ANY SUPPORTING EVIDENCE AND DISBELIEVING THE EXPLANATIONS OFFERED BY US. THE SEIZED DOCUMENT ON TH E BASIS OF WHICH THE ADDITION WAS MADE CLEARLY SHOWED THAT THE INVESTMENT WAS CONTRIBUTED BY TWO OTHER PERSON ALSO. THE ABOVE ADDITION HAS BEEN MADE OVERLOOKING THE STATUTORY PROVISION CONTAIN ED IN THE SECTION 132 OF THE 1. T. ACT THAT THE CONTEN T S OF THE S EIZED DOCUMENTS SHOULD BE CONSIDERED AS CORRECT. WE HAVE VERY CLEARLY MENTIONED IN OUR LETTER DATED 04.03.2014 THAT THE ADDITIONAL INVESTMENT, THOUGH NOT ACTUALLY MADE BY US, IS ACCEPTED TO AVOID PROLONGED LITIGATION AND IN ORDER TO PURCHASE PEACE WITH THE DEPARTMENT AND ALSO WITH AN UNDERSTANDING THAT THE ABOVE ACCEPTANCE SHOULD BE CONSIDERED POSITIVELY WHILE IMPOSING PENALTIES. A COPY OF THE LETTER IS ENCLOSED AS READY REFERENCE. 5. IT HAS BEEN HELD IN ITO V ROBORANT INVESTMENT PVT. LTD (2006) 7 SOT 181 (MUMBAI) THAT PENALTY CANNOT BE LEVIED IN CASES INVOLVING GENUINE DIFFERENCE OF OPINION ON MATTERS BETWEEN THE ASSESSES AND THE ASSESSING OFFICER. FURTHER, IT HAS BEEN HELD THAT PENALTY CANNOT BE LEVIED WHERE ADDITIONS ARE MADE BY THE ASSESSING OFFICER REJ ECTING THE EXPLANATION OF THE ASSESSEE SINCE IT DOES NOT AMOUNT TO CONCEALMENT OF INCOME WITHIN THE MEANING OF EXPLANATION TO SECTION 27 1 .(DEVKI NANDAN V . ASSESSING OFFICER(2006) 150 TAXMAN 44) 6. CONSIDERING THE ABOVE EXPLANATIONS IT IS HUMBLY REQUESTED THAT THE PROPOSED PENALTY PROCEEDINGS MAY KINDLY BE DROPPED. 5. AFTER CONSIDERING THE SUBMISSIONS, THE ASSESSING OFFICER OBSERVED THAT D URING THE COURSE OF SEARCH, DOCUMENTARY EVIDENCE OF UNACCOUNTED PAYMENT IN CASH TOWARDS PURCHASE OF LAND WAS FOUND AN D SEIZED. THE ASSESSING OFFICER REFERRED TO SECTION 292C OF THE INCOME TAX ACT WHICH PROVIDES FOR INTER ALIA A PRESUMPTION THAT WHERE BOOKS OF ACCOUNTS OR DOCUMENTS ETC ARE FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF SEARCH U/S. 132, IT MAY, IN ANY PROCEEDING UNDER THE INCOME TAX ACT, BE PRESUMED - A) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENT ETC BELONG TO THAT PERSON B) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE AND I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 7 C) THAT IT IS SIGNED / WRITT EN BY SUCH PERSON WHERE IT IS PURPORTED TO BE SO SIGNED AND WRITTEN. 5.1 IN THIS REGARD, THE ASSESSING OFFICER NOTICED THAT THERE HA D NOT BEEN ANY REBUTTAL OF THE PRESUMPTION BY THE ASSESSEE. THE MANAGING PARTNER OF THE FIRM SHRI BABU JOHN DID RETRACT H IS STATEMENT GIVEN DURING SEARCH ADMITTING TO PAYING RS. 99.90 LAKHS FOR THE PURCHASE OF THE IMPUGNED LAND. HOWEVER, THE CI T(A) AND ITAT BOTH HELD T HAT THE RETRACTION MADE AFTER 26 MONTHS IS ONLY AN AFTERTHOUGHT AND CANNOT BE ACCEPTED. NOT W ITHSTANDING THE FACT THAT THE SELLER OF THE LAND SHOWED ONLY THE CONSIDERATION MENTIONED IN THE CONVEYANCE DEED, AND DEPOSED ACCORDINGLY, THE ITAT NOTED THAT THE EVIDENCE FOUND FROM THE ASSESSEE SHOWED THA T THE CONSIDERATION PAID F O R THE IMPUGNED LAND WAS RS.99.90 LAKHS. THUS , ACCORDING TO THE ASSESSING OFFICER, THERE WAS UNANIMITY OF OPINION THAT THE EVIDENCE IN THE FORM OF NOTING ON SEIZED DOCUMENTS IN THIS CASE HA D CLINCHING EVIDENTIARY VALUE. THEREFORE , IT WAS HELD THAT THE CHARGE OF CONCEALMENT OF PARTICULARS OF TAXAB LE INCOME IS ADEQUATELY AND BEYOND DOUBT PROVED BY SUCH EVIDENCE. 5.2 ON THE ONE HAND, THE ASSESSING OFFICER FOUND THAT THE FACTS CONCEALED BY THE ASSESSEE HA D BEEN UNEARTHED BY THE DEPARTMENT DURING THE COURSE OF SEARCH , IN T HE SEARCH ACTION, THE MANAGI NG PARTNER HA D TRUTHFULLY DEPOSED ABOUT THE CONCEALMENT AND UNACCOUNTED TRANSACTION. HOWEVER, ON THE OTHER HAND, IT WAS FOUND THAT IN THE RETURN FILED IN RESPONSE TO THE NOTICE U/S. 153A, THE INCOME ADMITTED DURING THE I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 8 SEARCH HA D NOT BEEN OFFERED. THUS , TH E ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA D AGAIN CONCEALED THE PARTICULARS OF ITS INCOME IN THE RETURN OF INCOME. 5.3 THE A.O CONFRONTED THE ASSESSEE ABOUT THE SEIZED DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE A.O ALSO CONFRONTED T HE ASSESSEE ABOUT THE STATEMENT OF SHRI BABU JOHN, MANAGING PARTNER, STILL THE ASSESSEE HAD NO CONVINCING AND SATISFACTORY EXPLANATION. IT ALSO DID NOT COME OUT WITH ANY TRUE FACTS OR CONFIRM THE STAND TAKEN DURING THE SEARCH. INSTEAD AFTER 26 MONTHS, THER E HAS BEEN RETRACTION. I N THE CIRCUMSTANCES, THE A.O WENT BY THE SEIZED DOCUMENTS AND THE STATEMENT OF SHRI BABU JOHN AND ADDED THE AMOUNT OF RS. 81.60 LACS BEING DIFFERENCE BETWEEN THE ACTUAL AMOUNT PAID I.E RS.99.90 LAKHS AND THE AMOUNT MENTIONED IN THE DEED OF CONVEYANCE I.E. RS. 18.30 LAKHS. 5.4 THE AO OBSERVED THAT THE SUBMISSIONS MADE BY THE ASSESSEE ARE COMPLETELY DEVOID OF ANY MERIT. THOUGH IT HAD BEEN CONTENTED THAT NO INCOME HA D BEEN CONCEALED , THE AO FOUND THAT T HE ASSESSEE NOT ONLY CONCEALED THE PARTICULARS OF IT'S INCOME BUT HAVING ONCE ADMITTED TO CONCEALMENT DURING THE SEARCH ACTION, IT AGAIN CONCEALED THE PARTICULARS OF SUCH INCOME BY NOT OFFERING IT IN THE RETURN FILED BY HIM . THOUGH IT WA S CONTEN D ED THAT THE ASSESSEE HA D CO - OPERATED WIT H THE DEPARTMENT DURING THE ASSESSMENT PROCEEDINGS AND FURNISHED ALL THE INFORMATION ASKED FOR , ACCORDING TO THE ASSESSING OFFICER , THE ASSESSEE RETRACTED THE ADMISSION OF INCOME AND HA D FAILED TO DISCLOSE THE TRUE FACTS RELATING TO THE TRANSACTION. AFTER THE MATTER WAS SET ASIDE BY THE ITAT TO THE FILE OF THE A.O TO EXAMINE WHETHER THERE WAS I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 9 INVESTMENT BY TWO PERSONS OTHER THAN THE ASSESSEE IN PURCHASING THE LAND , THE ASSESSEE'S AUTHORISED REPRESENTATIVE HAD HIMSELF PRODUCED THE TWO OTHER PERSONS VIZ. SHR I A.A. DAVIS AND SHRI P.T. PAVUNNY AND THEY SUBMITTED LETTERS DENYING THEIR ROLE IN THE TRANSACTION. HOWEVER, CONSIDERING THE NOTINGS ON THE SEIZED DOCUMENTS, THE ASSESSING OFFICER OBSERVED THAT ONE OF THE POSSIBILITY IS THAT THESE PERSONS ALSO CONTRIBUTED TO THE PURCHASE AND HAVE BEEN SUBSEQUENTLY REPAID OR AGREED TO BE REPAID IN CASH BY THE ASSESSEE. T HE ASSESSING OFFICER OBSERVED THAT WHEN THE TWO PERSONS INTRODUCED BY THE ASSESSEE'S REPRESENTATIVE HAD SUBMITTED THAT THEY DID NOT MAKE ANY INVESTMENT IN THE PURCHASE OF PROPERTY BY THE F IRM, EFFECTIVELY THE ASSESSEE IS ESTOPPED FROM TAKING A CONTRARY STAND AND WITHOUT PREJUDICE TO THIS, THE ONUS OF REBUTTING THEIR STATEMENT IS T HAT OF THE ASSESSE AND NOT THAT OF THE A.O AND THIS ONUS HAS NOT BEEN DISCHARG ED IN ANY MANNER BY THE ASSESSEE. THUS , IT IS CLEAR THAT THE ASSESSEE WAS NOT CO - OPERATING WITH THE DEPARTMENT . THEREFORE , THE INCLUSION OF THE CONCEALED INCOME AMOUNTING TO RS.81.60 LAKHS IN THE HANDS OF THE ASSESSEE IS CONCLUSIVE. 5.5 THE ASSESSEE RE LIED IN THE CASE OF I.T.O VS.ROBORANT INVESTMENT P VT. LTD . (2006) 7 SOT 181 IN WHICH IT IS HELD THAT PENALTY CANNOT BE LEVIED IN CASES INVOLVING GENUINE DIFFERENCE OF OPINION ON MATTERS BET WE EN THE A.O AND THE ASSESSEE. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF DEVKI NANDAN VS. A.O (2006) 150 TAXMAN 44, IN WHICH IT WAS HELD THAT PENALTY CANNOT BE LEVIED WHERE ADDITIONS ARE MADE BY THE A.O REJECTING THE EXPLANATION OF THE ASSESSEE SINCE IT DOES NOT AMOUNT I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 10 TO CONCEALMENT OF INCOME WITHIN THE MEANING OF EXPLANATION TO SECTION 271. WITH REGARD TO THESE SUBMISSIONS , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE'S CASE IS ONE IN WHICH CONCEALMENT OF THE PARTICULARS OF INCOME WAS PROVED ON THE BASIS OF STRONG DOCUMENTARY EVIDENCE AND STATEMENT ON OATH. THE REFORE, THE ASSESSEE'S CASE WAS TOTALLY DISTINGUISHABLE FROM THE CASES RELIED UPON. IN CONCLUSION , THE ASSESSING OFFICER STATED THAT THE PROVISIONS OF EXPLANATION 1 TO SECTION 271( 1 )(C) IS SQUARELY APPLICABLE TO THIS CASE. THE SAID EXPLANATION PROVIDES TH AT WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE PRINCIPAL C OMMISSIONER OR COMMISSIONER TO BE FALSE, OR (E) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB - SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHIC H PARTICULARS HAVE BEEN CONCEALED. IN THE INSTANT CASE, THE ASSESSING OFFICER CONCLUDED THAT THE CHARGE OF CONCEALMENT OF PARTICULARS OF INCOME IS ALSO PROVED IN TERMS OF THE EXPLANATION 1 TO SECTION 271( 1 )(C) OF THE ACT . 5.6 . IN VIEW OF THE ABOVE DISCUS SION OF THE FACTS AND PROVISIONS OF LAW, THE ASSESSING OFFICER WAS S ATISFIED THAT THIS IS A FIT CASE FOR IMPOSING PENALTY U/S I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 11 271(L)(C) AS THE ASSESSEE HA D CONCEALED THE PARTICULARS OF ITS INCOME. THE MINIMUM PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED W ORKS AT RS.27,73,587/ - AND THE MAXIMUM PENALTY @ 300% WORKS OUT TO RS.83,20,761/ - . CONSIDERING THE ABSENCE OF ANY CLEAR MITIGATING FACTORS, THE ASSESSING OFFICER IMPOED PENALTY U/S.271(L)(C) OF AN AMOUNT OF RS.30,00, 000 / - (RUPEES THIRTY LAKHS ONLY) UPON THE ASSESSEE AND DIRECT THE SAME SHALL BE PAID BY THE ASSESSEE. 6. AFTER GOING THROUGH THE PENALTY ORDER AND FACTS OF THIS CASE , THE CIT(A) OBSERVED THAT I T IS A SETTLED LEGAL POSITION NOW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS. ACCORDING TO THE CIT(A), EVERY ADDITION MADE OR ACCEPTED BY THE ASSESSEE DOES NOT AUTOMATICALLY MEAN THAT THE ASSESSEE HAS CONCEALED HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE INSTANT CASE, THE CIT(A) OBSERVED THAT T HE ADDITION WAS BASED ON A DOCUMENT FOUND AND SEIZED DURING THE COURSE OF SEARCH AND THIS DOCUMENT RELATED TO PURCHASE OF A PROPERTY FOR A CONSIDERATION IN THE NAME OF THE ASSESSEE FIRM. ACCORDING TO THE CIT(A), T HE RECORDED CONSIDERATION FOR THE PURCHAS E OF THE PROPERTY WAS RS.18.3 0 LAKHS AND ANOTHER CONSIDERATION OF RS.81.60 LAKHS WAS PAID WHICH WAS TREATED AS UNACCOUNTED INCOME. SHRI BABU JOHN WAS A PARTNER OF THE FIRM AND HIS STATEMENT WAS RECORDED DURING THE COURSE OF SEARCH, WHEREIN HE ADMITTED THAT ON MONEY PAYMENT WAS MADE FOR THE PURCHASE OF PROPERTY AND HE DECIPHERED THE CONTENTS OF THE SEIZED DOCUMENT. THE CIT(A) REFERRED TO PAGE NO.10 OF THE SEIZED DOCUMENT, ON WHICH IT WAS WRITTEN AS UNDER: I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 12 1/3 C 1/3 D 1/3 P 2 7 CENT @ 3 , 70,000 99,90,000 COMMISSION 1,00,000 1,00,90,000 R EGN. CHARGE 2,96,100 1,03,86,100 AGREEMENT ADVANCE 5,00,000 98,86,100 C 32 95 367 D 32 95 367 P 32 95 367 THE CIT(A) OBSERVED THAT THE CONTENTS OF THE SEIZED DOCUMENT SHOWED THAT MONEY WAS PAID BY THREE PERSONS AND C STOOD FOR THE ASSESSEE, D STOOD FOR DAVIS AND P STOOD FOR PAVUNNY. SINCE SEIZE D DOCUMENT WAS FOUND AT THE PREMISES OF THE ASSESSEE FIRM AND SINCE MR. DAVIS AND MR. PAVUNNY DENIED HAVING MADE ANY PAYMENT, THE ASSESSEE FIRM ACCEPTED THE ADDITION OF ENTIRE AMOUNT IN HIS OWN HANDS AND THEREFORE, THE AO LEVIED PENALTY ON THE ENTIRE AMOUN T IN THE CASE OF THE ASSESSEE. ACCORDING TO THE CIT(A), THE BASIC DOCUMENT ON THE BASIS OF WHICH ADDITION WAS MADE AND PENALTY WAS LEVIED, SHOW ED THAT PAYMENT WAS MADE BY THREE PEOPLE NAMES OF WHICH WERE KNOWN TO THE DEPARTMENT AND THIS DOCUMENT CANNOT BE SAID TO BE AN AFTER THOUGHT AS THE SAME WAS FOUND DURING THE COURSE OF SEARCH AND WAS DEFINITELY WRITTEN MUCH EARLIER. ACCORDING TO THE CIT(A), THE VERACITY OF THE DOCUMENT IS BEYOND DOUBT AND THE ASSESSMENT WAS COMPLETED ON I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 13 THE BASIS OF THE SAME. TH I S D OCUMENT WAS DECIPHERED AT THE TIME OF SEARCH, I.E. MUCH BEFORE THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS WERE COMPLETED. THE ASSESSEE HA D CONSISTENTLY MAINTAINED THE STAND THAT ONLY 1/3 RD OF THE CONSIDERATION WAS PAID BY THE ASSESSEE AND BALANCE 2 /3 RD WAS PAID BY SHRI DAVIS AND SHRI PAVUNNY, WHICH WAS BORNE OUT FROM THE SEIZED DOCUMENT ITSELF. THE CIT(A) WAS OF THE OPINION THAT IT IS A FAILURE ON PART OF THE AO THAT HE COULD NOT GATHER EVIDENCE TO BE ABLE TO MAKE ADDITION IN THE HANDS OF MR. DAVI S AND MR. PAVUNNY, IN SPITE OF SEIZED MATERIAL BEING FOUND . THE ASSESSEE ACCEPTED THE ADDITION, BECAUSE THE DOCUMENT WAS FOUND IN HIS PREMISES AND TO AVOID PROLONGED LITIGATION. IN VIEW OF THESE FACTS AND CLEAR CONTENT OF THE SEIZED MATERIAL, THE CIT(A) LE VIED PENALTY ONLY AT 1/3 RD OF THE TOTAL AMOUNT, AS THAT WAS THE AMOUNT, WHICH WAS CONCLUSIVELY PROVED TO BE ASSESSEE'S CONCEALED INCOME. THUS, OUT OF THE TOTAL PENALTY LEVIED OF RS.30,00,000/ - , PENALTY OF RS.20,00,000/ - WAS DELETED AND PENALTY OF RS.10,0 0, 000 / - WAS CONFIRMED. 7. AGAINST THIS, BOTH ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSING OFFICER MADE THE ADDITION OF RS.81.60 LAKHS ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF PROPERTY ADMEASURING 27 CENTS AT CHEMBUKAVU, THRISSUR. THE PROPERTY WAS PURCHASED IN THE NAME OF THE ASSESSEE AS FOLLOWS: I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 14 1/3 C 1/3 D 1/3 P 27 CENT @ 3 , 70,000 99,90,000 COMMISSION 1,00,000 1,00,90,000 R EGN. CHARGE 2,96,100 1,03,86,100 AGREEMENT ADVANCE 5,00,000 98,86,100 THE CONTENTS OF THE SEIZED DOC UMENT SHOWED THAT MONEY WAS PAID BY THREE PERSONS AND C STOOD FOR THE ASSESSEE, D STOOD FOR DAVIS AND P STOOD FOR PAVUNNY. HOWEVER, THE CIT(A) WAS OF THE OPINION THAT ONLY 1/3 RD OF THE ABOVE UNACCOUNTED COST OF LAND WAS RELATING TO THE ASSESSEE AND ACCO RDINGLY, HE SUSTAINED THE PENALTY AT RS.10 LAKHS AND DELETED THE PENALTY OF RS.20 LAKHS MADE BY THE ASSESSING OFFICER. HOWEVER, IT HAS BEEN SEEN THAT IN THE ASSESSMENT ORDER, UNDISCLOSED INVESTMENT OF RS.81.60 LAKHS WAS CONSIDERED AND IT IS NOT PROPER ON THE PART OF THE CIT(A) TO CONSIDER ONLY 1/3 RD OF THE AMOUNT OF RS.81.60 LAKHS FOR THE LEVY OF PENALTY . ACCORDINGLY, WE VACATE THE FINDINGS OF THE CIT(A) AND RESTORE THE ISSUE BACK TO HIS FILE TO CONSIDER THE ENTIRE UNDISCLOSED AMOUNT OF RS.8 1 .60 LAKHS. I T IS ADMITTED THAT THESE TWO PERSONS, SHRI DAVIS AND SHRI PAVUNNY HAVE NOT MADE ANY PAYMENT TOWARDS THE PURCHASE OF THE SAID PROPERTY AND ALSO IT WAS ON RECORD THAT THE ASSESSEE HAD ACCEPTED THE ADDITION OF THE ENTIRE AMOUNT IN HIS OWN HANDS. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF THE CIT(A) FOR FRESH CONSIDERATION AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF HEARING TO THE I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 15 ASSESSEE . THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. C.O. NO. 63/COCH/2018 : AY 2008 - 09 9. SINCE WE HAVE REMITTE D THE REVENUES APPEAL TO THE FILE OF THE CIT(A) FOR FRESH CONSIDERATION, THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO.63/COCH/2018 HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCT UOUS. 1 0. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION FILED BY THE ASSESSEE S IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01 ST MARCH , 2019 SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 01 ST MARCH , 2019 GJ COPY TO: 1 . ST. ANTONYS TIMBER DEPOT, CHEVOOR P.O., THRISSUR - 680 027. 2 . THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE - 2(1), THRISSUR. 3. THE COMMISSIONER OF INCOME - TAX (AP P EALS) - III, KOCHI. 4 . THE P R. COMMISSIONER OF INCOME - TAX, THRISSUR. 5. D. R., I.T.A.T., COCHIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN I.T.A. NO . 294 /COCH/ 201 8 & CO NO.63/COCH/2018 16