S.Prabakar, CHENNAI V. ACIT, CHENNAI

CO 94/CHNY/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2326 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 05-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: G BASKAR
• Keywords: Reopening of assessment; Unexplained investment; Tangible material; Difference of opinion; Change of opinion
• Section: 40A(3); 143(3); 153A; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.170, 171 & 173/MDS/2014 ( / ASSESSMENT YEARS: 2002-03, 2004-05 & 2005-06) MR. S.PRABHAKAR, 10(OLD NO.28), ASHOK AVENUE, DIRECTORS COLONY, KODAMBAKKAM, CHENNAI-600 024. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-I(2 ), CHENNAI-600 034. PAN:AHJPP0120C ( /APPELLANT) ( /RESPONDENT) & ./ ITA NO.1007/MDS/2014 & C.O.NO. 94/MDS/2014 (IN ITA NO.1007/MDS/2014) ( / ASSESSMENT YEAR: 2005-06) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-I(2 ), CHENNAI-600 034. VS MR. S.PRABHAKAR, 10(OLD NO.28), ASHOK AVENUE, DIRECTORS COLONY, KODAMBAKKAM, CHENNAI-600 024. PAN:AHJPP0120C ( /APPELLANT) ( /RESPONDENT/CROSS OBJECTOR) ASSESSEE BY : MR. G.BASKAR, ADVOCATE REVENUE BY : DR.B.NISCHAL, JCIT /DATE OF HEARING : 7 TH MARCH, 2016 /DATE OF PRONOUNCEMENT : 19 TH MAY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE THREE APPEALS ARE FILED BY THE ASSESSEE IN IT A NO. 170,171,&173/2014, AGGRIEVED BY THE SEPARATE OR DERS OF THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS (CE NTRAL)- I, CHENNAI, DATED 31.10.2013, 31.10.2013 & 28.11.20 13 IN ITA NOS.87, 88, 90/10-11 PASSED UNDER SECTION 271(1 )(C) 2 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 R.W.S. 250(6) OF THE ACT FOR THE ASSESSMENT YEAR 2 002-03, 2004-5 & 2005-06 RESPECTIVELY. ITA NO.1007/MDS/201 4 & C.O. NO.94/MDS/2014 ARE FILED BY THE REVENUE & ASSE SSEE RESPECTIVELY AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS (CENTRAL)-I, CH ENNAI DATED 28.11.2013 IN ITA NO.147/12-13 PASSED UNDER S ECTION 153C RWS 153A / 143(3) / 147 & 250(6) OF THE ACT FO R THE ASSESSMENT YEAR 2005-06. SINCE THE ISSUES ARE COMM ON IN THESE APPEALS, THEY ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ASSESSEES APPEAL - ITA NO.170/MDS/2014 (ASSESSMENT YEAR: 2002-03): 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ASS ESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT FOR CON CEALMENT OF INCOME. 3 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 ASSESSEES APPEAL IN 171/MDS/2014 (ASSESSMENT YEAR : 2004-05): 3. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ASS ESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT FOR CON CEALMENT OF INCOME ON ACCOUNT OF ON-MONEY TRANSACTION AMOUNTING TO RS.5,60,000/-. ASSESSEES APPEAL IN 173/MDS/2014 (ASSESSMENT YEAR: 2005-06): 4. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ASS ESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT FOR CON CEALMENT OF INCOME ON ACCOUNT OF ON-MONEY TRANSACTION AMOUNTING TO RS.7,00,000/- AND DISALLOWANCE OF RS. 4,56,720/- TO WARDS DISALLOWANCE U/S. 40A(3) OF THE ACT AGGREGATING TO RS.11,56,720/-. REVENUES APPEAL : ITA NO.1007/MDS/2014 (ASSESSMENT YEAR: 2005-06): 5. THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) WHO HAS DELETE D THE ADDITION OF RS.16,22,000/- MADE BY THE LEARNED ASSE SSING 4 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 OFFICER BY TREATING THE PURCHASE OF PROPERTY AT NED UNKUNDRAM VILLAGE AS UNEXPLAINED INVESTMENT. CROSS OBJECTION NO.94/MDS/2014 (BY THE ASSESSEE): 6. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS C ROSS OBJECTION, HOWEVER THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- (I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED BY NOT CANCELLING THE ASSESSMENT MADE UNDER SECTION 153A AND 153C OF THE ACT BECAUSE NOTI CE UNDER SECTION 148 IS NOT VALID; THE ASSESSMENT IS M ADE BASED ON CHANGE OF OPINION AND SAME SEIZED MATERIAL S. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED BY NOT DELETING THE ADDITION OF RS.9,75,2 00/- BECAUSE THE SOURCE FOR ACQUIRING THE PROPERTY AT NEDUNKUNDRAM FOR RS.9,75,200/- WAS DISCLOSED IN THE BOOKS OF ACCOUNT AND RETURNS OF INCOME FOR THE SUBSEQUENT YEARS. 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF REAL ESTATE B ROKER AND DEVELOPER. A SEARCH WAS CONDUCTED IN THE CASE OF S & P FOUNDATION GROUP, SHRI S.V.SREERAMALU ON 10.01.2008 . DURING THE COURSE OF SEARCH CERTAIN BOOKS OF ACCOUN TS AND DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED. THEREAFTER ASSESSMENT WERE COMPLETE WITH VA RIOUS ADDITIONS AND PENALTY WAS ALSO LEVIED FOR THE RELEV ANT 5 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 ASSESSMENT YEARS WHICH WAS FURTHER CONFIRMED BY THE LEARNED CIT(A) AGGRIEVED BY WHICH THE ASSESSEE IS I N APPEAL BEFORE US. ASSESSEES APPEAL- ITA NO.170/MDS/2014 FOR THE ASSESSMENT YEAR 2002-03 LEVY OF PENALTY UNDER SEC TION 271(1)(C) OF THE ACT FOR RS.1,34,753/- 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDE R SECTION 153C R.W.S 153A & 144 OF THE ACT, IT WAS OB SERVED BY THE LEARNWED A.O., THAT THE ASSESSEE HAD NOT DISCLO SED INCOME OF RS.5,27,037/-. OUT OF RS.5,27,037/- THE A MOUNT OF RS.4,28,733/- WAS ARISING OUT OF SALE OF LAND AT AYANAMBAKKAM, AISHWARYA NAGAR, WHICH WAS NOT DISCLO SED IN HIS RETURN OF INCOME AND PURCHASE OF 48 CENTS OF LAND FOR RS.98,304/- FROM SHRI MAYAVANNAN.V. ACCORDINGLY, AD DITIONS WERE MADE. THE LEARNED ASSESSING OFFICER FURTHER OB SERVED IN HIS PENALTY ORDER THAT THE ASSESSEE HAD FURNISHE D TWO CONTRADICTORY STATEMENTS IN REGARD TO THESE ADDITIO NS AND HAS NOT EXPLAINED AS TO WHY THE SALE OF PROPERTY AND PU RCHASE OF PROPERTY WAS NOT DISCLOSED IN THE RETURN OF INCOME. IT WAS STATED BY THE ASSESSEE INITIALLY THAT HE DID NOT HA VE SUFFICIENT INCOME MAKING IT MANDATORY TO FILE THE RETURN OF IN COME BUT 6 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 SUBSEQUENTLY CHANGED HIS STAND STATING THAT HE DID NOT POSSESS ANY RECORDS RELATING TO THE ASSESSMENT YEAR 2002-03 WHICH INCAPACITATED HIM TO FILE HIS RETURN OF INCOM E. THE LEARNED ASSESSING OFFICER DID NOT FIND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE AND THEREFORE LEVIED PEN ALTY OF RS.1,34,753/- BEING 100% OF TAX SOUGHT TO BE EVADED . 9. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 7.1 AS PER EXPLANATION 1 CONTAINED IN SECTION 271 (1)(C) WHICH IS SELF-CONTAINED IN THE SENSE THAT IT TREATS EVERY DIFFERENCE BETWEEN THE REPORTED AND THE ASSESSED INCOME AS CONCEALED INCOME. BUT AT THE SAME TIME, I T PROVIDES THE CRITERIA WHERE PENALTY WOULD BE WARRA NTED. PENALTY IS LEVIABE FOR CONCEALMENT, WHERE AN ASSESS EE FAILS TO OFFER ANY EXPLANATION FOR THE DIFFERENCE O R OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE . IN THES E CASES, PENALTY CAN BE TREATED AS MANDATORY. THUS, I T IS CLEAR FROM THE ABOVE THE ADDITIONS MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.5,27,037/- ON THE BASIS OF MATERIALS SEIZED. IT IS ALSO TO BE SEEN TH AT THE APPELLANT MADE A WRONG STATEMENT THAT HE HAS NOT GO T ANY TAXABLE INCOME FOR THE ASSESSMENT YEAR 2002-03. BUT THE SEARCH ACTION REVEALED THE OPPOSITE. IN VIE W OF THE ABOVE, THE APPELLANTS SUBMISSION S ARE NOT ACC EPTED AS THE ASSESSING OFFICER HAD THE RECORD WHICH CAN SUSTAIN THE FINDING THAT THERE HAD BEEN CONCEALMENT , THAT WOULD BE SUFFICIENT TO SUSTAIN THE PENALTY. THEREFO RE, THE CONTENTIONS OF THE APPELLANT ARE NOT ACCEPTED. FURT HER, DURING APPEAL PROCEEDINGS ALSO, THE AR OF THE APPE LLANT HAS NOT SUBSTANTIATED THE CONTENTIONS RAISED IN THE APPEAL WITH ANY COGENT EVIDENCE.THEREFORE, THE 7 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 CONCEALMENT OF RS.5,27,037/- HAS BEEN POSITIVELY ESTABLISHED BY THE ASSESSING OFFICER WARRANTING LEV Y OF PENALTY UNDER SECTION 271(1)(C). HENCE, LEVY OF PEN ALTY ON THIS ADDITION OF RS.5,27,037/- IS IN ORDER. THE REFORE, PENALTY OF RS.1,34,753/- UNDER SECTION 271(1)(C) LE VIED BY THE ASSESSING OFFICER IS HEREBY CONFIRMED AND TH E GROUNDS RAISED ARE DISMISSED. 10. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIV E COULD NOT CONTROVERT TO THE ORDERS OF THE REVENUE AND AT THE SAME TIME, THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUE D IN SUPPORT OF THE ORDERS OF THE REVENUE. 11. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS O F THE CASE, IT IS APPARENT THAT THE ASSESSEE HAS CONCEALED HIS INCOME BECAUSE HE HAS NOT DISCLOSED THE INCOME ARISING OUT OF SALE OF PROPERTY OF RS.4,28,733/- AND THE SOURCE FOR PUR CHASE OF HIS PROPERTY AMOUNTING TO RS.98,304/-. NO OTHER MA TERIAL OR EXPLANATION IS ADVANCED BEFORE US FOR JUSTIFYING TH E DELETION OF PENALTY LEVIED BY THE REVENUE. THEREFORE, WE DO NOT HAVE ANY OTHER OPTION, BUT TO CONFIRM THE ORDER OF THE R EVENUE. ACCORDINGLY, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONFIRMED ON THIS ISSUE. 8 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 ASSESSEES APPEAL - ITA NO.171/MDS/2014 (A.Y.2004-05) LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 12. FROM THE SEIZED MATERIALS NO.33 IN ANNEXURE JP/ B & D/S DATED 06.03.2008, IT WAS OBSERVED THAT THE ASSE SSEE HAD PAID ON-MONEY FOR RS.5,60,000/- TO SHRI KKAM MOHAM MED MUSTAFA SAYED FOR PURCHASE OF 60 CENTS OF LAND AT N AVALUR VILLAGE. FURTHER IT APPEARS THAT THE ASSESSEE HAD A DMITTED IN HIS WRITTEN SUBMISSION DATED 20.05.2010 THAT HE DID NOT DECLARE THIS AMOUNT BECAUSE HE DID NOT HAVE DOCUMEN TS PERTAINING TO THE SAME DUE TO WHICH THE OMISSION HA S OCCURRED. THEREFORE, THE LEARNED ASSESSING OFFICER OPINED THAT BUT FOR THE SEARCH THE CONCEALMENT OF RS.5,60, 000/- WOULD NOT HAVE BEEN REVEALED AND THEREFORE LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 13. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED BEFORE US THAT ADDITION FOR RS.5,60,000/- WAS MADE BASED ON SOME NOTING IN LOOSE SHEET BASED ON WHICH IT WAS P RESUMED THAT ON-MONEY WAS PAID FOR THE PURCHASE OF THE LAND . THERE WAS NO OTHER TANGIBLE MATERIAL TO PROVE THAT THE AS SESSEE HAD 9 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 PAID ON-MONEY. IT WAS FURTHER SUBMITTED THAT THE SE LLER OF THE LAND WAS ALSO NOT EXAMINED. HENCE IT WAS PLEADED TH AT THOUGH THE ADDITION WAS CONFIRMED, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. 14. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ENTIRE ADDITIONS HAVE BEEN MADE ONLY BASED ON CERTAIN SEIZ ED MATERIAL WHICH HAS A REFERENCE OF RS.5,60,000/- BEI NG PAID AS ON-MONEY. NO OTHER MATERIALS ARE FOUND TO NAIL THE ASSESSEE FOR HAVING PAID ON MONEY OF RS.5,60,000/-. IT APPEA RS THAT THE SELLER OF THE LAND IS ALSO NOT EXAMINED. NO FURTHER ENQUIRY ON THE VALUE OF THE LAND IS ALSO CONDUCTED. IN THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT, T HE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT CANNOT B E INVOKED BECAUSE THE ADDITIONS ARE MADE BY BASED ON CERTAIN NOTING IN LOOSE SHEET AND PRESUMPTIONS. THUS, THIS ISSUE IS D ECIDED IN FAVOUR OF THE ASSESSEE AND WE HEREBY DIRECT THE LEA RNED A.O., TO DELETE THE PENALTY LEVIED. 10 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 ITA NO.1007/MDS/2014 ( REVENUES APPEAL - A.Y. 2005 -06) DELETION OF THE ADDITION MADE TOWARDS PURCHASE OF PROPERTY FOR RS.16,22,000/- : 15. IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICE R THAT THE ASSESSEE HAD PURCHASED 2.88 ACRES OF LAND AT NEDUNKUNDRAM VILLAGE FOR RS.16,22,000/- AND 2120 S. FT LAND AT NOBUR FOR RS.9,75,000/- . THESE PROPERTIES WERE NOT DISCLOSED IN THE BALANCE SHEET OF THE ASSESSEE. TH EREFORE THE LEARNED ASSESSING OFFICER MADE ADDITION OF RS.25,97,000/- (16,22,000 + 9,75,000). 16. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) DELETED THE ADDITION MADE FOR RS.16,22,00 0/- BECAUSE IN THE FINANCIAL STATEMENT OF THE ASSESSEE FOR THE SUBSEQUENT ASSESSMENT YEAR 2006-07, THE LAND PURCHA SED AT NEDUNKUNDRAM VILLAGE FOR RS.16,22,000/- WAS SHOWN A S CLOSING STOCK. FURTHER, THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) ALSO WAS CONVINCED AFTER VERIFICATION THAT THE AFORESAID AMOUNT WAS ACCOUNTED IN THE BOOKS OF ACCO UNTS OF THE ASSESSEE AND THE SOURCE WAS EXPLAINED AND GENUI NE. BASED ON THESE FINDINGS, HE HAS DIRECTED THE LEARNE D ASSESSING OFFICER TO DELETE THE ADDITION OF RS.16,2 2,000/-. IN THESE CIRCUMSTANCES, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDERS OF THE LEARNED COMMISSIONER OF INCO ME TAX 11 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 (APPEALS). ACCORDINGLY WE HEREBY CONFIRM THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. CROSS OBJECTION NO.94/MDS/2014 (BY THE ASSESSEE A.Y.2005-06 ): GROUND (I) VALIDITY OF NOTICE U/S. 148 OF THE ACT:- 17. IN THE C.O. THE ASSESSEE HAS CHALLENGED THE V ALIDITY OF NOTICE U/S.148 OF THE ACT BECAUSE EARLIER ASSESSMEN T WAS COMPLETED U/S. 153A/153C OF THE ACT. FURTHER THE NO TICE U/S 148 WAS ISSUED BASED ON THE SAME SEARCH MATERIALS W HICH WERE BEFORE THE REVENUE DURING THE EARLIER ASSESSME NT PROCEEDINGS U/S. 153A/153C OF THE ACT. THE LEARNED CIT(A) HAD UPHELD THE ORDER OF THE LEARNED A.O., BECAUSE I T HAD CAME TO THE KNOWLEDGE OF THE LEARNED ASSESSING OFFI CER THAT THE ASSESSEE HAD NOT REFLECTED THE PROPERTY OF 2120 SQ.FT PURCHASED AT NOLAMBUR FOR RS.2,75,600/- IN THE BAL ANCE SHEET OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005- 06. THE EXPLANATION OFFERED BY THE ASSESSEE WAS THAT SINCE FUNDS FOR THE INVESTMENT WAS PROVIDED BY THE APPELLANTS FATH ER SHRI S.V.SREERAMULU, THE PURCHASE TRANSACTION WAS NOT RE CORDED 12 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 THOUGH SHRI S.V.SREERAMULU WAS SHOWN AS THE CREDITO R IN THE BALANCE SHEET. IN THE SUBSEQUENT YEAR, THE ASSESSEE HAD REPAID THE LOAN OBTAINED FROM HIS FATHER SHRI S.V.S REERAMULU AND ACCORDINGLY THE PROPERTY WAS DISCLOSED IN HIS B ALANCE SHEET FOR THE ASSESSMENT YEAR 2006-07. THE LEARNED ASSESSING OFFICER REJECTED THE CONTENTION OF THE AS SESSEE BECAUSE THE PROPERTY WAS REGISTERED ON 3.6.2004 I.E . DURING THE ASSESSMENT YEAR 2005-06. FROM THE ABOVE, IT IS CLEAR THAT THE REVENUE HAD NOTICED THE OMISSION ON THE PA RT OF THE ASSESSEE TO DISCLOSE THE ASSETS PURCHASED BY HIM BA SED ON SOME TANGIBLE MATERIALS. THERE CAN BE NO DIFFERENCE OF OPINION ON THIS ISSUE FROM THE MATERIALS AVAILABLE BEFORE THE REVENUE. FURTHER, THE ACT DOES NOT PROHIBIT TO RE-A SSESSING ANY INCOME WHICH HAS ESCAPED TAX EVEN AFTER THE COM PLETION OF ASSESSMENT UNDER SECTION 153A AND 153C OF THE AC T. THEREFORE, WE DO NOT FIND ANY MERIT IN THE CONTENTI ON OF THE LEARNED AUTHORIZED REPRESENTATIVE. THEREFORE, WE HE REBY CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) ON THIS ISSUE OF REOPENING OF ASSESSMENT UNDER SECTION 147 & 148 OF THE ACT. 13 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 GROUND (II) A DDITION OF RS.9,75,200/- SIC RS.9,75,600/- MADE ON ACCOUNT OF PURCHASE OF PROPERTY. 18. AS DISCUSSED HEREINABOVE, SINCE THE ASSESSEE HA D NOT DISCLOSED THE PURCHASE OF THE PROPERTY OF 2,120 SQ. FT AT NOLAMBUR FOR RS.2,75,600/-, THE LEARNED ASSESSING O FFICER DECIDED TO MAKE THE ADDITION. THE LEARNED ASSESSING OFFICER HAS FURTHER STATED IN HIS ORDER THAT THE ASSESSEE H AD AGREED FOR AN AGGREGATE ADDITION OF RS.9,75,600/- IN REGAR D TO THE ABOVE PROPERTY PURCHASED. ACCORDINGLY, HE HAD MADE AN ADDITION OF RS.9,75,600/-. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO SIMPLY CONFIRMED THE ORDER OF THE LEARNED ASSESSING OFFICER WITHOUT ANY FURTHER D ISCUSSION. 19. BEFORE US, THE REVENUE HAS NOT PRODUCED ANY VAL ID REASON FOR MAKING THE ADDITION OF RS.7,00,000/- OVE R AND ABOVE RS. 2,75,600/-, OTHER THAN THE RELYING ON THE ORDERS OF THE REVENUE AUTHORITIES. WE ARE UNABLE TO UNDERSTA ND AS TO FOR WHAT REASON THE ADDITION OF RS.7,00,000/- OVER AND ABOVE RS. 2,75,600/- IS MADE WHEN THE DOCUMENTARY EVIDEN CE SHOW THAT THE PROPERTY PURCHASED BY THE ASSESSEE IS ONLY FOR 14 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 RS.2,75,600/-. EVEN IF IT IS THE CLAIM OF THE REVEN UE THAT ON- MONEY IS PAID FOR THE PURCHASE TRANSACTION, SOME CO GENT MATERIALS COUPLED WITH SOME INDEPENDENT INVESTIGATI ON IS REQUIRE TO BE BROUGHT OUT BEFORE MAKING SUCH ADDITI ON. THE REVENUE HAS FAILED TO DO SO IN THE CASE OF THE ASSE SSEE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A DDITION CAN BE SUSTAINED ONLY TO THE EXTENT OF RS.2,75,600/ - BEING THE REGISTERED VALUE OF THE PROPERTY PURCHASED WHICH IS NOT DISCLOSED IN THE RETURN OF INCOME. ACCORDINGLY, THE BALANCE AMOUNT OF ADDITION OF RS. 7,00,000/- IS HEREBY DELE TED. THUS, THE ASSESSEE PARTIALLY SUCCEEDS ON THIS ISSUE. ASSESSEES APPEAL- ITA NO.173/MDS/2014 (A.Y. 2005- 06) LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE AC T. 20. THE LEARNED ASSESSING OFFICER HAD MADE DISALLOW ANCE UNDER SECTION 40A(3)OF THE ACT FOR RS. 4,56,720/- FOR CASH PAYMENTS MADE TO SHRI BALRAM, KALAISELVI, GOVINDAN AND HARI KRISHNAN TOWARDS PURCHASE OF LAND. SIMILARLY, AS DISCUSSED HEREIN ABOVE, THE LEARNED ASSESSING OFFIC ER HAD DISALLOWED RS.7,00,000/- ON ACCOUNT OF SITE DEVELOP MENT EXPENSES / ON-MONEY INCURRED FOR THE PURCHASE OF 21 20 SQ.FT. LAND AT NOLAMBUR VILLAGE. THE LEARNED COMMISSIONER OF 15 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 INCOME TAX (APPEALS) HAD ALSO CONFIRMED THE ADDITIO N. BASED ON THESE ADDITIONS, THE LEARNED ASSESSING OFFICER L EVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE A GGREGATE UNDISCLOSED INCOME OF RS.11,56,720/- (RS.4,56,720 + 7,00,000) AT 100% OF TAX SOUGHT TO BE EVADED AMOUNT ING TO RS.3,89,351/- STATING THAT THE ASSESSEE HAD CONCEAL ED HIS INCOME. 21. AT THE OUTSET, WE FIND THAT PENALTY FOR RS.7,00 ,000/- CANNOT BE LEVIED BECAUSE IN THE CROSS OBJECTION OF THE ASSESSEE WE HAVE DELETED THE ADDITION OF RS.7,00,00 0/-. WE ALSO FIND THAT THE ADDITION OF RS.4,56,720/- MADE U NDER SECTION 40A(3) OF THE ACT IS ALSO BASED ON CERTAIN PRESUMPTIONS. THE LEARNED ASSESSING OFFICER HAS MAD E IT CLEAR IN HIS PENALTY ORDER THAT THE ADDITION IS MAD E BECAUSE THE ASSESSEE WAS UNABLE TO GIVE PROPER EXPLANATION TO SUBSTANTIATE THE REASONS FOR VIOLATING THE PROVISIO NS OF SECTION 40A(3) OF THE ACT. IN THIS SITUATION, SINCE ADDITI ON IS MADE BASED ON PRESUMPTIONS, WE ARE OF THE CONSIDERED VIE W THAT PENALTY CANNOT BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 16 ITA NOS. 170, 171, 173 & 1007/MDS/2014 & CO NO.94/MDS/2014 ACCORDINGLY, WE HEREBY DELETE THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER ON THIS COUNT. 22. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.170/MDS/2014 IS DISMISSED AND THAT OF ITA NOS.17 1 & 173/MDS/2014 ARE ALLOWED. THE APPEAL OF THE REVENUE IN ITA NO.1007/MDS/2014 IS DISMISSED AND THE CROSS OBJECTI ON FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 19 TH MAY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) ! # / JUDICIAL MEMBER # / ACCOUNTANT MEMBER ! /CHENNAI, ' /DATED 19 TH MAY, 2016 SOMU )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 0 /DR 6. /