Shri Bhupendrabhai Maganlal Ghantiwala, Surat V. The Income tax Officer,Ward-5(1), Surat

ITA 1094/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8940 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 18-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Peak credit
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 142(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO.1094/AHD/2012 & ITA NO.3256/AHD/2015 ASST. YEAR: 2008-09 SHRI BHUPENDRABHAI MAGANLAL GHANTIWALA, 4/307, DUDHARA SHERI, BEGAMPURA, SURAT. VS. ITO, WD-5(1), SURAT. APPELLANT RESPONDENT PAN ACJPG 6610P APPELLANT BY SHRI M. K. PATEL, AR RESPONDENT BY SHRI PARVEEN KUMAR, SR.DR DATE OF HEARING: 14/03/2017 DATE OF PRONOUNCEMENT: 16/03/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE TWO APPEALS OF ASSESSEE FOR ASST. YEAR 2008- 09 ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. COMMISS IONER OF INCOME TAX(A) -1, SURAT DATED 01.04.2012 & 07.10.2015 ARIS ING OUT OF ORDER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT TH E ACT) DATED 10.12.2010 & ORDER U/S 271(1)(C) OF THE ACT PASSED ON 19.03.2014 BY ITO, WD-5(1), SURAT. SINCE THESE TWO APPEALS PERTAI N TO THE SAME ASSESSEE RELATING TO QUANTUM ADDITION AND PENALTY U /S 271(1)(C) OF ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 2 THE ACT, THEY HAVE BEEN HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIRST TAKE UP ASSESSEES APPEAL IN ITA NO.109 4/AHD/2012 RELATING TO QUANTUM OF ADDITIONS. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT-(A)-I SURAT ERRED IN RESTRICTING THE ADDITION TO THE TUNE OF RS.5,85,530 /- AS AGAINST THE ADDITION MADE BY THE A.O. TO THE TUNE O F [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT- (A) -I SURA T ERRED IN MAKING ADDITION OF G.P. OF RS.1,68,605/- @ 10.114 B Y ADOPTING AVERAGE GP RATE OF LAST THREE YEARS AND FURTHER ADD ED RS.4,16,925/- BEING SEED CAPITAL BY TAKING TH REE MONTHS AVERAGE SALES WITHOUT ANY COGENT EVIDENCE. [3]ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT- (A) -I, SUR AT FAILED IN APPRECIATING THE FACTS OF THE CASE AND SUBMISSIO N FILED BEFORE HIM FAVORABLY. YOUR APPELLANT THEREFORE PRAYS THAT LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER AS WELL AS CONFIRMED BY THE CIT(A )-I, SURAT MAY PLEASE BE DELETED. YOUR APPELLANT FURTHER RESERVES HIS RIGHT TO ADD, A LTER OR TO AMEND ANY OF THE AFORESAID GROUNDS AT THE TIME OF H EARING O AN APPEAL. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING JARI. RETURN OF IN COME WAS FILED ON 24.03.2009 SHOWING TOTAL INCOME AT RS.1,35,240/-. O N THE BASIS OF AIR INFORMATION REGARDING CASH DEPOSIT IN SAVING BA NK ACCOUNT, CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT DATED 27.08.2009 FOLLOWED BY NOTICE U/S 142(1) OF T HE ACT WITH ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 3 DETAILED QUESTIONNAIRE CALLING FOR VARIOUS DETAILS WAS ISSUED AND SERVED ON THE ASSESSEE. EXAMINATION BY THE ASSESSIN G OFFICER WAS SOLELY CENTRED AROUND AIR INFORMATION RELATING TO C ASH/CHEQUE DEPOSIT OF RS.16,69,457/- IN ICICI BANK SURAT. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS ASSESSEE STATED THAT THE ALL EGED SAVINGS BANK A/C NO.62460150357 WAS OPENED BY BHUPENDRA MAG ANLAL GANTIWALA (HUF) (KARTA AS ASSESSEE) AND THAT ASSES SEES HUF IS THE SOLE AND REAL OWNER OF THIS ACCOUNT. HOWEVER, UPTIL L THE COMPLETION OF ASSESSMENT PROCEEDINGS ASSESSEE WAS UNABLE TO PLACE ANY DOCUMENTARY EVIDENCE TO PROVE THAT THE A/C WAS HELD BY HIS HUF NOR COULD HE SUBSTANTIATE HIS CONTENTIONS WITH THE COPY OF BALANCE SHEET AND INCOME-TAX RETURN OF THE HUF TO DEPICT THAT THE IMPUGNED BANK ACCOUNT HAS BEEN DULY SHOWN WITH THE SOURCE OF DEPO SITS IN THE ALLEGED BANK ACCOUNT WHEREIN NORMALLY CASH HAS BEEN DEPOSITED OUTSIDE SURAT AND HAS BEEN WITHDRAWN IN SURAT. ACCO RDINGLY AFTER MAKING ADDITION OF RS.16,69,457/- INCOME OF THE ASS ESSEE WAS ASSESSED AT RS.18,04,880/- U/S 143(3) OF THE ACT AN D PENALTY PROCEEDINGS WERE INITIATED. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CO MMISSIONER OF INCOME TAX(A) WHEREIN LD. COMMISSIONER OF INCOME TA X(A) WHILE ADJUDICATING ASSESSEES GROUNDS FOR RESTRICTING THE ADDITION TO THE PEAK AMOUNT ADJUDICATED THE ISSUE BY SUSTAINING THE ADDITION TO RS.5,85,530/- BY OBSERVING AS FOLLOWS :- 12. IT IS CONTENDED BY THE APPELLANT THAT PEAK AMOU NT SHOULD HAVE BEEN ADDED AND NOT THE TOTAL AMOUNT OF DEPOSIT. THE ASSESSING OFFICER WAS SATISFIED THAT THE APPELLANT HAS FAILED TO EXPLAIN THE NATURE AND THE SOURCES THEREOF IN RESPECT OF ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 4 DEPOSITS. HOWEVER, THE ASSESSING OFFICER HAS NOT IN DICATED WHY HE HAS CHOSEN TO ADD ENTIRE DEPOSIT AS ASSESSEE 'S INCOME. . 12.1 A PERUSAL OF THE ENTRIES IN THE BANK ACCOUNT, INDICATES THAT THERE ARE HUNDREDS OF ENTRIES OF SMALL AMOUNTS OF DEPOSITS AN D SIMULTANEOUS WITHDRAWALS. IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER HAS TO GIVE SPECIFIC REASONS AS TO WHY HE HAS ADDED THE ENTIRE DEPOSITS DURING THE YEA R AND HE HAS DISREGARDED SIMULTANEOUS WITHDRAWAL. THE CONCEPT OF PEAK THEORY IS APPLIED ONLY IF DEPOSITS ARE MADE OUT OF WITHDRAWALS. 12.2 IN THIS CASE, DEPOSITS ARE OUTSIDE SURAT WHILE WITHDRAWALS ARE IN SURAT. THEREFORE, PEAK THEORY IS NOT ACCEPTED AND REJECTED . 12.3 HOWEVER, DURING THE HEARING APPLICANT WAS ASKE D WHY THE CASH DEPOSITS SHOULD NOT BE TAKEN AS UNACCOUNTED SALES OF APPELLA NT FOR THE REASON THAT THERE IS NO EVIDENCE OF FUNDS OF HUF OR BUSINESS BY HUF. APPELLANT WAS ALSO ASKED WHY SEED CAPITAL FOR UNACCOUNTED SALES AND GROSS PR OFIT ON UNACCOUNTED SALES SHOULD NOT BE ESTIMATED IN PLACE OF ADDITION OF RS. 16.67.704/- THE ASSESSING OFFICER WAS ALSO ASKED THE SAME QUESTION. 12,4 THE APPELLANT REITERATED ITS SUBMISSION. HOWEV ER, THE ASSESSING OFFICER SAID THAT GP OF 10.11 % ( AVERAGE GP OF THREE YEARS ) AN D SEED CAPITAL OF 4, 16,925/- I.E. TAKING THREE MONTHS AVERAGE SALES (16,67,704/-/4) M AY BE CONSIDERED IN PLACE OF ADDITION OF RS.1J67 J J704MN CASE DEPARTMENTS STAND OF ADDITION OF 16,67, 704/- IS NOT UPHELD. 12.5 CONSIDERING FACTS OF THE CASE , FOLLOWING AD DITION IS SUBSTITUTED IN PLACE OF ADDITION OF RS. 16, 67, 704/- GROSS PROFIT @ 10.11% ON RS.16,67.704/- RS.1,68,605/- SEED CAPITAL 1/4 TH OF RS 16,67,704/- RS 4.16.9 25/- RS. 5, 85,530/- THEREFORE, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ADDITION CONFIRMED BY LD. COMMISSIONER OF INCOME TAX(A) AT RS.5,85,530/-. 6. AT THE OUTSET LD. AUTHORISED REPRESENTATIVE SUBM ITTED THAT ALTHOUGH IN THE GROUND OF APPEAL ASSESSEE HAS AGITA TED THE ADDITION OF RS.5,85,530/- CONFIRMED BY LD. COMMISSIONER OF I NCOME TAX(A) BUT ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 5 AT THE PRESENT STAGE THERE IS NO OBJECTION TO THE G ROSS PROFIT ADDITION CONFIRMED AFTER APPLYING GROSS PROFIT RATE @ 10.11% AT RS.1,68,605/- BUT STRONGLY OBJECTED TO THE CALCULATION OF SEED CA PITAL AT RS.4,16,925/- WHICH IS ALLEGED TO BE ON A HIGHER S IDE. 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF LOWER AU THORITIES AND SUBMITTED THAT LD. COMMISSIONER OF INCOME TAX(A) HA S ALREADY GIVEN SUBSTANTIVE RELIEF BY SUSTAINING RS.5,85,530/- AS A GAINST RS.16,69,457/- EVEN WHEN ASSESSEE COULD HARDLY PROD UCE ANY EVIDENCE TO SUPPORT THE SOURCE OF CASH/CHEQUE DEPOS IT AMOUNT OF RS.16,69,457/- IN THE IMPUGNED BANK ACCOUNT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. ASSESSEE HAS RAISED THREE GROUNDS OF APPEAL OUT OF WHICH GROUND NO.3 IS OF GENERAL NATURE AND AS REGAR DS GROUND NOS. 1 & 2 ASSESSEE IS MAINLY AGGRIEVED WITH THE ADDITION CONFIRMED BY LD. COMMISSIONER OF INCOME TAX(A) ON ACCOUNT OF SEED CA PITAL CALCULATED @ 25% OF THE ALLEGED GROSS RECEIPT IN CA SH/CHEQUE OF RS.16,69,457/- IN THE UNDISCLOSED BANK ACCOUNT HELD WITH ICICI BANK, SURAT. 9. WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON BEING QUESTIONED BY LD. ASSESSING OFFICER ABOUT CASH/CHEQUE DEPOSITS IN THE ICICI S.B. BANK ACCOUNT, ASSESSEE S TRONGLY SUBMITTED THAT THIS ACCOUNT WAS OWNED BY HIS HUF AND, THEREFO RE, NOT SHOWN IN THE REGULAR BOOKS OF ACCOUNT BUT AT A LATER STAGE A SSESSEE COULD NOT ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 6 SUBSTANTIATE HIS SUBMISSION TO PROVE THE OWNERSHIP OF ALLEGED S.B. A/C BY HUF NOR COULD HE PRODUCE ANY DOCUMENT BEFORE THE LOWER AUTHORITIES TO PROVE THAT THE CASH/CHEQUE CREDITS I N THIS BANK ACCOUNT FORM PART OF RETURN OF INCOME AND BALANCE SHEET OF HUF OR IN HIS PERSONAL ACCOUNT. HOWEVER, LD. COMMISSIONER OF INCO ME TAX(A) TAKING OF OPTIMISTIC APPROACH BRUSHED ASIDE ASSESSE ES PLEA OF PEAK CREDIT AND CONFINED THE ADDITION TO RS.5,85,530/- A S AGAINST RS.16,69,457/- MADE BY LD. ASSESSING OFFICER. LD. C OMMISSIONER OF INCOME TAX(A) SUSTAINED THE ADDITION BY BIFURCATING THEM IN TWO PARTS OF WHICH RS.1,68,605/-/- WAS CALCULATED BY APPLYING GROSS PROFIT @ 10.11% BY TREATING IT TO BE A BUSINESS RECEIPT AND SUBSTITUTED THE ADDITION OF RS.4,16,925/- BY TREATING IT TO BE SEED CAPITAL CALCULATED @ 25% OF RS.16,69,457/-. LD. AUTHORISED REPRESENTATIV E DURING THE COURSE OF HEARING BEFORE US CONCEDED TO THE GROSS P ROFIT ADDITION OF RS.1,68,605/- BUT CHALLENGED THE CALCULATION OF SEE D CAPITAL BEING ON A VERY HIGHER SIDE. 10. WE FIND THAT SEED CAPITAL IS THE INITIAL CAPITA L USED WHEN STARTING A BUSINESS AND OFTEN COMING FROM THE FOUNDERS PERS ONAL ASSETS FOR COVERING INITIAL OPERATING EXPENSE AND CAPITAL. TH IS TYPE OF FUNDING IS OFTEN OBTAINED IN EXCHANGE FOR AN EQUITY STAKE IN T HE ENTERPRISE ALTHOUGH WITH LESS FORMAL CONTRACTUAL OVERHEAD THAN STANDARD EQUITY FINANCING. ALSO THE BUSINESS OWNERS SKILL BUSINES S CAPABILITIES AND TRACK RECORD ALONG WITH PRODUCT OR SERVICES HELP T O DETERMINE HOW MUCH SEED CAPITAL SHOULD BE CONTRIBUTED FOR A START ER. IN OUR VIEW THE SEED CAPITAL MAINLY RELATES TO CAPITAL REQUIRED FOR INITIAL START OF THE BUSINESS. IN THE GIVEN CASE ASSESSEE HAS NOT STARTE D ANY NEW ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 7 BUSINESS DURING THE YEAR BUT IS ENGAGED IN THE BUSI NESS ACTIVITIES OF MANUFACTURING JARI SINCE LAST MANY YEARS AND APPARE NTLY IT SEEMS THAT ASSESSEE HAS NOT DISCLOSED THE ALLEGED SALES IN THE REGULAR BOOKS OF ACCOUNT WHICH FURTHER GETS SUPPORT WITH THE ADMISSI ON OF LD. AUTHORISED REPRESENTATIVE TO THE GROSS PROFIT ADDIT ION ON THE UNDISCLOSED CASH/CREDIT. BUT CERTAINLY NO MATTER IT IS NOT AN INITIAL START OF BUSINESS BUT THERE IS CERTAINLY A HIDDEN ELEMENT OF CAPITAL WHICH THE ASSESSEE HAD INVESTED FOR MAKING UNACCOUNTED SA LES. WE ARE, THEREFORE, OF THE VIEW THAT IN THE TOTALITY OF FAC TS IT WOULD BE JUSTIFIED TO ESTIMATE THE SEED CAPITAL AT RS.2,00,000/- WHICH TH E ASSESSEE MIGHT HAVE INVESTED FROM ITS UNDISCLOSED INCOME TO EFFECT UNDISCLOSED SALES. IN THE RESULT, WE SUSTAIN THE ADDITION OF RS .3,68,605/- AS AGAINST RS.5,85,530/- SUSTAINED BY LD. COMMISSIONER OF INCOME TAX(A) OUT OF WHICH RS.1,68,605/- IS ON ACCOUNT OF GROSS PROFIT ADDITION @ 10.11% OF RS.16,69,457/- AND AN APPROX. AMOUNT OF RS.2,00,000/- AS SEED CAPITAL INVESTED BY THE ASSES SEE TO EFFECT THE ROTATION OF THE ALLEGED UNDISCLOSED SALES. ACCORDIN GLY, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. 11. NOW WE TAKE UP ITA NO.3256/AHD/2015 RELATING TO PENALTY U/S 271(1)(C) OF THE ACT IMPOSED ON THE ADDITION SUSTAI NED BY LD. COMMISSIONER OF INCOME TAX(A). ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AS WELL AS LAW ON THE SUBJECT, THE LEARNED ASSESSING OFFICER ERRED IN LEV YING PENALTY U/S.271(L)(C) TO THE TUNE OF RS.1,67,875/- WITHOUT APPRECIATING THE FACT S OF THE CASE. ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 8 [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (A)-I, SURAT ERRED IN CONF IRMING THE PENALTY WITHOUT APPRECIATING THE FACTS OF THE CASE FAVORABLY. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (A)-I, SURAT OUGHT NOT TO HAVE PASSED THE PENALTY ORDER ON THE GROUND THAT THE QUANTUM APPEAL BEFORE THE HO N'BLE ITAT, AHD VIDE APPEAL NO.L094/AHD-2012 WAS STILL PENDING. . YOUR APPELLANT FURTHER RESERVES HIS RIGHT TO ADD, A LTER OR TO AMEND ANY OF THE AFORESAID GROUNDS AT THE TIME OF HEARING OF AN APPE AL. 12. BRIEF FACTS RELATING TO THIS APPEAL ARE FOR ASS T. YEAR 2008-09 THAT ASSESSEE GOT PART RELIEF BY LD. COMMISSIONER OF INC OME TAX(A) WHO SUSTAINED THE ADDITION OF RS.5,85,530/- AS AGAINST RS.16,69,457/-. LD. ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AT THE TIME OF FRAMING ASSESSMENT U/S 143(3) OF THE ACT AND POST LD. COMMI SSIONER OF INCOME TAX(A)S ORDER PASSED THE PENALTY ORDER ON 1 9.3.2014 IMPOSING PENALTY OF RS.1,67,875/- U/S 271(1)(C) OF THE ACT BY OBSERVING THAT ASSESSEE HAS ACTED DELIBERATELY IN D EFIANCE OF LAW WITH GUILTY OF CONDUCT, CONTUMACIOUS AS WELL AS ACTED IN CONSCIOUS DISREGARDS TO ITS OBLIGATION AND CONCEALED THE INCO ME OF RS.5,85,530/- IN THE FORM OF UNDISCLOSED CASH/CHEQU ES DEPOSITS IN UNDISCLOSED BANK ACCOUNT. AGAINST THE IMPUGNED ORDE R U/S 271(1)(C) OF THE ACT ASSESSEE COULD NOT GET ANY RELIEF IN APP EAL BEFORE LD. COMMISSIONER OF INCOME TAX(A). 13. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE LD. COMMISSIONER OF INCOME TAX(A) AND LD. ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 9 DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF BOTH THE LOWER AUTHORITIES. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD BEFORE US. THE ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) CONFIRMING THE PENALT Y U/S 271(1)(C) OF THE ACT AT RS.1,67,875/- IMPOSED BY LD. ASSESSIN G OFFICER ON THE ADDITION SUSTAINED BY LD. COMMISSIONER OF INCOME TA X(A) AT RS.5,85,147/-. WE DO NOT FIND ANY NECESSITY TO DISC USS THE FACTS OF THE CASE AS THEY HAVE BEEN DISCUSSED BY US WHILE AD JUDICATING THE QUANTUM APPEAL WHEREIN WE HAVE SUSTAINED ADDITION O F RS. 3,68,605/-. WE ALSO OBSERVE THAT LD. COMMISSIONER OF INCOME TAX(A) HAS CONFIRMED THE PENALTY U/S 271(1)(C) OF THE ACT BY OBSERVING AS FOLLOWS :- 5. THE SUBMISSION (SOF) IS DULY CONSIDERED INTER ALIA THE FACTS OF THE CASE. THE ID. AR HAS REITERATED THE SAME CONTENTIONS IN SOF WHICH WERE TAKEN BEFORE THE ID. AO. THE CASE LAWS RELIED UPON BY THE APPELLANT HAVE ALS O BEEN CONSIDERED. I HAVE NOTICED THAT FACTS OF THE CASES CITED ARE TOTALLY D ISTINGUISHABLE BECAUSE IN NONE OF THE CASES, THE ISSUE RELATING UNEXPLAINED DEPOSITS IN B ANK A/C WAS INVOLVED. THE RATIO OF ANY DECISION CAN BE APPLIED IF AND ONLY IF THE F ACTS ARE SIMILAR. HENCE, THE CASE LAWS ARE OF NO HELP TO THE CAUSE OF THE ASSESSEE. F URTHER, THE ASSESSEE HAS MISERABLY FAILED TO SUBSTANTIATE THAT FUNDS DEPOSIT ED IN ICICI BANK A/C WERE BELONGING TO HIS HUF. IN ABSENCE OF ANY COGENT MATE RIAL AND EVIDENCE, SUCH PLEA WAS RIGHTLY REJECTED BY ID. AO &.CIT(A). IT IS SEEN THAT THE ASSESSEE COULD NOT EXPLAIN THE NATURE & SOURCE OF DEPOSITS OF RS.16,69,457/- B Y LEADING ANY EVIDENCE. INSPITE OF THAT ID. CIT(A) WAS VERY JUDICIOUS AND LENIENT IN R ESTRICTING THE ADDITION TO RS.5,85,147/- COIRIPRISING OF SEED-CAPITAL & GROSS PROFIT. WHILE DOING SO, HORI'BLE CIT(A) HAS TREATED THE ENTIRE DEPOSITS AS TURNOVER OF HIS JARI BUSINESS. B E THAT AS IT MAY, AT THE END OF THE DAY, THE AMOUNT OF RS.5,85,147/- REPRESENT THE CONCEALED INCOME GENERATED FROM THE UNDISCLOSED BANK A/C AND UNDISCLOSED BUSINESS TRANS ACTIONS. THE ASSESSEE CANNOT ESCAPE FROM THIS BLEMISH OF NOT SHOWING THE CORRECT INCOME IN HIS RETURN AND THEREBY CONCEALING THE SAME. - 5.1 THIS IS AN ADMITTED POSITION AS IT STANDS AS OF NOW -THAT NATURE & SOURCE OF ALL THE DEPOSITS REFLECTED IN THE BANK A/C WERE NOT SATISFA CTORILY EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAS NEITHER FILED CORRECT RETURN OF INCOME NOR ANY SATISFACTORY EXPLANATION DURING ASSESSMENT AS WELL AS PENALTY PROCEEDINGS. N EITHER FHE BANK A/C IS DISCLOSED TO ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 10 THE DEPARTMENT NOR THE DEPOSITS COULD BE EXPLAINED BY FILING COGENT EVIDENCES. THE DEPOSITS WERE MAINLY MADE BY CASH AND ID, CIT(A) BY ADOPTING LENIENT APPROACH SUSTAINED THE ADDITION ONLY FOR SEED CAPITAL AND PR OFIT AMOUNT. THE CONTENTION OF THE ASSESSEE THAT SUCH FUND BELONG TO HUF IS NOT FOUND TENABLE. NEVERTHELESS, THE ONUS OF EXPLAINING THE DEPOSIT IS ON THE ASSESSEE ESPECIALL Y WHEN ASSESSEE WANTS TO CLAIM THE SOURCE BELONG TO SOME OTHER PERSON. THE ASSESSEE FA ILED TO SATISFACTORY EXPLAIN THE SOURCE. IF THE SOURCE OF DEPOSIT WAS FROM DISCLOSED SOURCES THEN THE .ASSESSEE SHOULD HAVE FILED THE EVIDENCES AND ESTABLISHED THE NEXUS. IN APPELLATE PROCEEDINGS AND THAT TOO AGAINST PENALTY ORDER, THE APPELLANT CANNOT BE ALLOWED TO AGITATE THE ISSUE ON ALTOGETHER ON NEW GROUND. IT IS TRUE THAT FEVY OF P ENALTY IS NOT AUTOMATIC AND ASSESSMENT & PENALTY PROCEEDINGS ARE SEPARATE BUT THE FINDINGS OF ASSESSMENT PROCEEDINGS COULD NOT BE BRUSHED ASIDE AND THE SAME COULD VERY WELL B E USED IN PENALTY PROCEEDINGS. IN THIS CASE, THE ADDITION WAS NOT MADE MERELY BECAUSE OF OPERATION OF DEEMING PROVISION BUT FOR THE FACT THAT THE CASH AMOUNT WAS ACTUALLY FOUND DEPOSITED IN THE BANK A/C WHICH BELONGS TO HIM. IN A RECENT DECISION, HON'BLE MADRA S HIGH COURT IN THE CASE OF S. SATYANARAYNAN VS. ACIT (2014) 54 TAXMAN.COM 200 (MA D) HAS UPHELD THE PENALTY ON THE BASIS THAT-THE ASSESSEE HAD NOT OFFERED ANY EXP LANATION EITHER DURING ASSESSMENT PROCEEDINGS OR DURING PENALTY PROCEEDINGS REGARDING UNEXPLAINED CASH DEPOSITS. WITHOUT ANY MATERIAL, THE ASSESSEE HAD MERELY STATE D THAT THE SOURCE OF INCOME WAS FROM THE BUSINESS RUN BY HIS FATHER AND THAT WAS NO T UND BY THE HON'BLE COURT AS BONAFIDE EXPLANATION UNDER EXPLANATION-1 TO SEC. 27 1(L)(C) OF THE ACT. THE FACTS OF THE PRESENT CASE ARE ALSO AKIN TO THE ABOVE CITED DECIS ION BECAUSE IN THIS CASE ALSO THE ASSESSEE HAS TAKEN PLEA THAT MONEY BELONGED TO HUF. THE CONTENTION OF THE APPELLANT THAT PENALTY NOT LE VIABLE WHERE PROFIT WAS ESTIMATED BASED ON THE DECISION RENDERED IN CERTAIN CASES IS DULY CONSIDERED. HERE, THE ID. CIT(A) HAS WORKED OUT THE SUPPRESSED PROFIT ON UNACCOUNTED SUPPRESSED SALES FOUND RECORDED IN THE BANK A/C. IN NUTSHELL, THE ASSESSEE FAILED T O SATISFACTORILY EXPLAIN THE SOURCE OF DEPOSITS IN HIS BANK A/C, THEREBY FAILED TO DISCHAR GE HIS ONUS. AS PER CLAUSE (B) TO EXPLANATION (1) TO SECTION 271(L)(C) OF THE ACT, ON CE THE ASSESSEE FAILED TO SUBSTANTIATE HIS EXPLANATION AND FAILED TO PROVE THAT SUCH EXPLA NATION IS BONA FIDE THEN AMOUNT ADDED IS TO BE TREATED AS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THE ASSESSEE CANNOT BE EXONERATED F ROM THE BLEMISH OF THE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS .OF INCOME. THIS HAS BEEN HELD BY DELHI HIGH COURT IN THE CASE OF CIT VS . GURBACHANLAL 250 ITR 157 (DEL) THAT EXPLANATION OF THE ASSESSEE FOR THE PURPOSE OF AVOIDANCE OF PENALTY MUST BE AN ACCEPTABLE EXPLANATION, IT SHOULD NOT BE A FANTASTI C OR FANCIFUL ONE. 5.2 THE HON'BLE ITAT, AHMEDABAD IN THE CASE OF NARAYANB HAI S. PATE! VS. ITO IN ITA NO.1272 & 1273/AHD/2011 DATED 19.06.2015 NSS UPHELD THE PENALTY LEVIED ON THE AMOUNT OF PEAK CREDIT OF UNEXPLAINED CASH FOUND DEP OSITED IN BANK A/C. HENCE, THE LEVY OF PENALTY IS COVERED BY THE DECISION OF HON'BLE IT AT. 15. WE ARE, THEREFORE, OF THE VIEW IN THE GIVEN FAC TS AND CIRCUMSTANCES OF THE CASE THAT AS THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS ALSO CONCE ALED PARTICULARS OF INCOME, PENALTY U/S 271(1)(C) OF THE ACT HAS RIG HTLY BEEN IMPOSED. ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 11 HOWEVER, WE DIRECT THE LD. ASSESSING OFFICER TO REC OMPUTED THE PENALTY U/S 271(1)(C) OF THE ACT VIS--VIS OUR DECI SION GIVEN IN ADJUDICATING QUANTUM APPEAL OF ASSESSEE WHEREIN WE HAVE SUSTAINED ADDITION OF RS. 3,68,605/-. ACCORDINGLY THE GROUND RAISED BY ASSESSEE IS PARTLY ALLOWED. 16. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 17. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2017 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 16/03/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1094/AHD/2012 & 3256/AHD/2015 ASST. YEAR 2008-09 12 1. DATE OF DICTATION: 15/03/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 16/03/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 17/3/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: