Shri Abbas Fidahussain Hazariwala, Baroda V. The Income tax Officer,Ward-5(1), Baroda

ITA 1288/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0319 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-08-2010
• Assessment Year: 1994-1995
• Appeal Filed On: 10-04-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Income from undisclosed sources; Loose papers; Question of law; Revised return
• Section: 142(1); 133A; 147; 148; 132; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C. AGRAWAL, AM) ITA NO.1744/AHD/2008 A. Y.: 1994-95 M/S. CHEMPHO CHEM INDUSTRIES, D-1, PATEL INDUSTRIAL ESTATE, YAMUNA MILL ROAD, BARODA VS THE INCOME TAX OFFICER, WARD-5(1), AAYAKAR BHAVAN, RACE COURSE, BARODA PA NO. -- (APPELLANT) (RESPONDENT) ITA NO.1288/AHD/2008 A.Y.: 1994-95 SHRI ABBAS FIDAHUSEN HAZARIWALA, C/O. CHEMPHO CHEM INDUSTRIES, D-1, PATEL INDUSTRIAL ESTATE, YAMUNA MILL ROAD, BARODA VS THE INCOME TAX OFFICER, WARD-5(1), AAYAKAR BHAVAN, RACE COURSE, BARODA PA NO. -- (APPELLANT) (RESPONDENT) ITA NO.1290/AHD/2008 A.Y.: 1994-95 SHRI FIDAHUSEN NAZAFALI HAZARIWALA, C/O. CHEMPHO CHEM INDUSTRIES, D-1, PATEL INDUSTRIAL ESTATE, YAMUNA MILL ROAD, BARODA VS THE INCOME TAX OFFICER, WARD-5(1), AAYAKAR BHAVAN, RACE COURSE, BARODA PA NO. -- (APPELLANT) (RESPONDENT) APPELLANT BY MS. URVASHI SHODHAN, AR RESPONDENT BY SHRI R. K. DHANESTA, DR O R D E R PER BHAVNESH SAINI: THIS ORDER SHALL DISPOSE OF ALL THE APPEALS FILED BY THE DIFFERENT ASSESSEES. ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND T HE MATERIALS AVAILABLE ON RECORD. ITA NO.1744/AHD/2008 3. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-V, BARODA DATED 18 TH MARCH, 2008 FOR ASSESSMENT YEAR 1994-95, CHALLENGING THE LEVY OF PENALTY U/S 271(1) ( C ) OF THE IT ACT. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THERE WA S A SURVEY ACTION U/S 133A OF THE ACT IN THE CASE OF THE ASSESSEE ON 20-1 0-1994. THE ASSESSEE DID NOT FILE RETURN OF INCOME FOR THE ASSESSMENT YE AR UNDER APPEAL I.E. 1994-95 AND THE AO COMPLETED THE ASSESSMENT U/S 144 OF THE IT ACT FOR THIS YEAR AT THE TOTAL INCOME OF RS.29,12,668/- ON 27-03-1997. THEREAFTER, THE ASSESSEE FILED RETURN OF INCOME ON 31-03-1997 WHICH WAS BELATED AND BEYOND THE TIME. THE AO FOUND THAT CERT AIN ADDITIONAL PARTICULARS OF INCOME WERE SHOWN IN THE RETURN OF I NCOME AND ISSUED NOTICE U/S 148 OF THE IT ACT ON 25-01-1999. THE ASS ESSEE DID NOT APPEAR AND THE AO FINALIZED THE ASSESSMENT U/S 147 READ WI TH SECTION 144 OF THE IT ACT ON 31-01-2001 DETERMINING TOTAL INCOME O F RS.16,67,069/-. THE LEARNED CIT(A) DISPOSED OF THE APPEAL AGAINST FIRST ORDER ON 18-11-1997. THE LEARNED CIT(A) ALSO DISPOSED OF THE APPEAL AGAINST REOPENED ASSESSMENT BY ORDER DATED 13-03-2002. THE ITAT HAS PASSED A COMBINED ORDER DATED 28-02-2005 (PB-42) WHICH HAS B ROUGHT DOWN THE ASSESSED INCOME TO RS.6,11,355/- AND THE AO IMPOSED PENALTY ON THIS INCOME WHICH CONSISTS OF THE FOLLOWING: (1) ASSESSMENT OF NET PROFIT @20% ON UNACCOUNTED SALES RS.3,00,000/- (2) ASSESSMENT OF NET PROFIT @4% ON ACCOUNTED SALES RS.3,11,350/- TOTAL RS.6,11,350/- ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 3 THE AO HAD ARGUED THAT THE ORDER U/S 144 OF THE IT ACT PASSED BY THE AO ON 27-03-1997 INCLUDED THE PROFIT OF UNDISCLOSED SA LES MADE BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LEARNED CIT(A) AND IT WAS ARGUED THAT UNDISCLOSED SALES HAS BEEN ESTIMATED BY THE AO ON THE BASIS OF THE STATEMENT MADE BY A PART NER. THE PROFIT ON THIS HAS BEEN REDUCED BY THE HIGHER APPELLATE AUTHO RITIES; THEREFORE, THERE IS NO CONCEALMENT OF INCOME OR FILING OF INAC CURATE PARTICULARS OF INCOME. IT WAS ALSO POINTED OUT THAT PENALTY CANNOT BE IMPOSED ON THE INCOME OF RS.3,11,350/- DISCLOSED BY THE ASSESSEE H IMSELF. 5. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE NOTICED THAT IT IS A FACT THAT ASSESSMENT HAS BEEN MADE ON THE BASIS OF PARTICULARS OF UNDISCLOSED SALES FOUND DURING THE C OURSE OF SURVEY CONDUCTED U/S 133 OF THE IT ACT. HE HAS FURTHER NOT ED THAT EVEN THOUGH THE QUANTUM OF PROFIT HAS BEEN REDUCED BY THE LEARN ED CIT(A) AND ITAT BUT THE BASIC FACT THAT THE SALES WERE NOT DISCLOSE D REMAINED UNALTERED. THE LEARNED CIT(A), THEREFORE, NOTED THAT ON THE AB OVE FACTS, THE CONCLUSION OF THE AO THAT INACCURATE PARTICULARS OF INCOME WERE FURNISHED REMAINED JUSTIFIED. THE LEARNED CIT(A) AL SO NOTED THAT SUBMISSIONS OF THE ASSESSEE THAT RS.3,11,350/- WAS DISCLOSED IN THE BOOKS OF ACCOUNTS IS NOT TENABLE BECAUSE THE RETUR N OF INCOME FILED BY THE ASSESSEE WAS BEYOND THE TIME LIMIT AFTER THE CO MPLETION OF THE ASSESSMENT U/S 144 OF THE IT ACT. IT WAS NON-EST RE TURN UNDER THE LAW. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS DISCLOSED PARTICULARS OF INCOME. THE LEARNED CIT(A) ACCORDINGLY CONFIRMED TH E PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND A LSO FILED BRIEF NOTES ON THE PENALTY GIVING HISTORY OF THE ASSESSEE AND A LL ASSESSMENT ORDERS ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 4 AS TO HOW ULTIMATELY ADDITION OF RS.6,11,350/- HAS BEEN CONFIRMED AS PER ORDER OF THE TRIBUNAL DATED 28-02-2005. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RETURN FOR ASSESSMENT Y EAR UNDER APPEAL COULD NOT BE FILED ON TIME U/S 139 OF THE IT ACT DU E TO THE BOOKS OF ACCOUNTS IMPOUNDED DURING THE COURSE OF SURVEY AND SEARCH OPERATION CARRIED OUT SIMULTANEOUSLY. THEREFORE, THE ASSESSEE WAS PREVENTED DUE TO THE ABOVE CAUSE FROM FILING THE RETURN ON TIME. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ESTIMATION OF U NACCOUNTED SALES WAS MADE ON THE BASIS OF STATEMENT OF THE PARTNER RECOR DED U/S 132(4) OF THE IT ACT AND THE SAID ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL ON ESTIMATE BASIS ON THE STATEMENT OF THE PARTNER. THE LEARNED COUNSEL FOR THE ASSESSEE , THEREFORE, SUBMITTED THAT SINCE RS. 3,11,350/- HAS BEEN DISCLOSED IN THE BOOKS OF ACCOUNT IMPOUNDED BY THE DEPARTMENT AND THAT RS.3,00,000/- HAS BEEN ADDED ON ACCOUNT OF ESTIMATE DIRECTED BY THE TRIBUNAL, THEREFORE, IT IS NOT A CASE OF CONCEALMEN T OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. THE LEARNED COUNS EL FOR THE ASSESSEE REFERRED TO THE NOTE FILED WITH THE RETURN OF INCOM E DATED 31-03-1997 (PB-3) IN WHICH IT IS MENTIONED THAT BOOKS OF ACCOU NT WERE IMPOUNDED BY THE DEPARTMENT ON 24-10-1992. THE LEARNED COUNSEL F OR THE ASSESSEE ALSO REFERRED TO THE NOTES GIVEN IN THE RETURN FILE D U/S 148 OF THE IT ACT ON 17-02-2000 (PB - 14) AND ALSO REFERRED TO THE OR IGINAL ASSESSMENT ORDER DATED 27-03-1997 (PAGE 6) TO SHOW THAT UNAC COUNTED SALES WERE FOUND IN A SUM OF RS.7,09,722/- AND THE ESTIMATE IS ON HIGHER SIDE AT RS.15,00,000/- BEING UNACCOUNTED SALES WHICH IS CLE ARLY UNJUSTIFIED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EST IMATION ON THE BASIS OF LOOSE PAPER ON THE HIGHER AMOUNT IS UNJUSTIFIED. THEREFORE, NO PRESUMPTION COULD ARISE FOR CONCEALMENT OF INCOME O R FILING OF INACCURATE PARTICULARS OF INCOME. SHE HAS REFERRED TO THE VARI OUS STATEMENTS AND EXPLANATIONS FILED BEFORE THE AUTHORITIES BELOW. TH E LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT PENALTY CANNOT BE SUSTAINED MERELY ON ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 5 THE GROUND THAT ADDITIONS ARE SUSTAINED ON QUANTUM APPEAL AND ON ESTIMATE BASIS NO PENALTY CAN BE IMPOSED. SHE HAS R ELIED UPON THE ORDER OF THE ITAT CHENNAI BENCH IN THE CASE OF T. KODEESW ARAN (L/H OF LATE A. THANGAM) VS ITO 123 TTJ 230. THE GIST OF SOME OTHER DECISIONS WAS ALSO GIVEN IN THE NOTES BUT THE SAME WERE NOT REFERRED T O DURING THE COURSE OF ARGUMENTS. 7. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT UNACCOUNTED SA LES WERE FOUND DURING THE COURSE OF SEARCH AND THE ULTIMATE FINDIN G OF THE LEARNED CIT(A) NOTING UNACCOUNTED SALES MADE OUTSIDE THE BOOKS OF ACCOUNT IN A SUM OF RS.15,00,000/- HAS BEEN CONFIRMED BY THE TRIBUNAL. THE LEARNED DR ALSO SUBMITTED THAT THE ASSESSEE WAS NOT FILING RETURN O F INCOME FROM THE ASSESSMENT YEAR 1992-93 ONWARDS AND DESPITE GIVING NOTICE BY THE AO TO FILE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL I.E. 1994-95, THE ASSESSEE DELIBERATELY DID NOT FILE RETURN OF IN COME. THE LEARNED DR SUBMITTED THAT SINCE THE ASSESSEE WAS NOT FILING RE TURN OF INCOME AND EVEN THE PERIOD FOR FILING OF THE RETURN U/S 139 (1 ) OF THE IT ACT IS EXPIRED ON THE DATE OF SEARCH, THEREFORE, THE ASSESSEE DELI BERATELY CONCEALED THE PARTICULARS OF INCOME WHICH WERE EVEN NOTED IN THE IMPOUNDED BOOKS OF ACCOUNT. THEREFORE, IT CANNOT BE PROVED THAT THE AS SESSEE BONA FIDE MADE THE STATEMENT BEFORE THE AUTHORITIES BELOW. THE LEA RNED DR SUBMITTED THAT THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. SECTION 271 (1) (C) OF THE IT ACT PROVIDES THAT IF THE AO OR THE LEARNED CIT(A) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PE RSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY THE ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 6 SUM REFERRED TO IN THE ACT. EXPLANATION (1) TO SECT ION 271 (1) ( C ) READS AS UNDER: [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [C OMMISSIONER (APPEALS)][OR THE COMMISSIONER] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANAT ION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE P URPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 9. IT IS WELL SETTLED LAW THAT EXPLANATION (1) IS P ART OF THE MAIN SECTION AND PROVIDES THE DEEMED CONCEALMENT ON THE PART OF THE ASSESSEE. THE BURDEN WOULD THUS BE UPON THE ASSESSEE TO SHOW THAT THE ASSESSEE HAS NOT CONCEALED PARTICULARS OF INCOME OR FILED INACCU RATE PARTICULARS OF INCOME. HOWEVER, CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT REBUTTED THE FINDINGS OF THE AUTHORITIES BELOW OF DEEMED CONCEALMENT AGAINST HIM IN ANY MANNER. IT IS NOT IN DISPUTE THAT SURVEY U/S 133A OF THE IT ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 20-10-1994 AND ON THE SAME DAY SEARCH A CTION U/S 132 OF THE IT ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMI SES OF THE PARTNERS OF THE ASSESSEE FIRM, NAMELY FIDAHUSSAIN NAZAFALI HAZA RIWALA AND SHRI ABBAS FIDAHUSSAIN HAZARIWALA. IN THE STATEMENT U/S 132(4) OF THE IT ACT 21-10-1994, SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA MA DE A DISCLOSURE OF ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 7 INCOME OF RS.53,19,639/- FOR THE ASSESSMENT YEAR 19 95-96. THIS INCOME WAS EARNED FROM THE UNACCOUNTED SALES OF OPTICAL GO ODS. BIFURCATION OF THE SAME WAS ALSO GIVEN WHICH IS NOTED AT PAGE 2 OF THE ASSESSMENT ORDER DATED 27-03-1997 WHICH INCLUDES UNACCOUNTED CASH SA LES OF RS.9,00,000/- IN THE ASSESSMENT YEAR 1994-95. APART FROM IT, UNEXPLAINED INVESTMENT OF STOCK, VALUABLE ITEMS AND ON MONEY ETC. WERE ALSO DECLARED. THE AO FOUND THAT THE ASSESSEE FIRM HAS NOT FILED ANY RETURN OF INCOME AFTER ASSESSMENT YEAR 1992-93. THE NOTICE U/S 142(1) OF THE IT ACT WAS ISSUED ON 29-12-1995 CALLING UPON TH E ASSESSEE TO FILE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPE AL I.E. 1994-95 BUT THE ASSESSEE DID NOT COMPLY WITH THE SAME AND NO RE TURN OF INCOME WAS FILED. THE AO ALSO BROUGHT TO THE NOTICE OF THE ASSESSEE T HAT BOOKS OF ACCOUNT HAS BEEN IMPOUNDED; THEREFORE, THE ASSESSEE IS REQUIRED TO EXPLAIN VARIOUS ENTRY THEREOF. THE ASSESSEE DID NOT APPEAR BEFORE THE AO AND DID NOT EXPLAIN THE ENTRIES CONTAINED IN THE IMPOUNDED BOOKS OF ACC OUNT RELEVANT TO TH0E ASSESSMENT YEAR UNDER. THE STATUTORY NOTICE REMAINE D UNEXPLAINED THROUGHOUT. THE AO, THEREFORE, PROCEEDED TO PASS EX -PARTE ASSESSMENT ORDER U/S 144 OF THE IT ACT. THE ASSESSEE PREPARED A TRADING ACCOUNT FOR FINANCIAL YEAR 1993-94 IN WHICH SALES WERE SHOWN AT RS.39,05,367/- WHICH WERE RECORDED IN THE IMPOUNDED BOOKS. HOWEVER , THERE WAS NO OTHER ENTRY IN THE BOOKS OF ACCOUNT. THE AO CONSIDE RING THE MATERIAL BEFORE HIM REJECTED THE BOOK RESULTS OF THE ASSESSE E BECAUSE THE SAME WERE INCOMPLETE. THE AO ADOPTED NET RATE PROFIT OF 5% ON THE SALES AND ESTIMATED THE NET PROFIT AT RS.1,95,268/-. FURTHER, STATEMENT OF THE PARTNER WAS CONSIDERED FOR THE PURPOSE OF ESTIMATIN G UNACCOUNTED SALES AND IT WAS FOUND THAT PROPER SALES HAVE NOT BEEN RE CORDED IN THE BOOKS OF ACCOUNT AND THE PARTNER ADMITTED UNACCOUNTED SAL ES. THE AO ALSO NOTED THAT IT IS SO STATED IN THE SEIZED CASH SALES BILLS AT ANNEXURE A/2 TO THE PANCHNAMA DATED 20-10-1994 WHICH WAS FOUND FROM THE PERSONAL BRIEFCASE OF SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA A T HIS RESIDENCE IN ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 8 WHICH TOTAL CASH SALES OF RS.76,00,000/- PERTAINING TO THE ASSESSMENT YEAR UNDER APPEAL WAS FILED AND IN THE ANNEXURE A /2 UNACCOUNTED SALES BILLS WERE FOUND IN A SUM OF RS.7,09,722/-. T HE AO FURTHER NOTED IN THE ASSESSMENT ORDER THAT IT STANDS TO REASON THAT OTHER CASH SALES BETWEEN DECEMBER, 1993 TO MARCH, 1994 WOULD HAVE BE EN MADE ON WHICH PAYMENT IS RECEIVED. THE AO ACCORDINGLY NOTED THAT FOR THAT PERIOD NO CASH BILLS HAVE BEEN FOUND. THE AO CONSIDERING T HE SEIZED MATERIAL, INCOMPLETE BOOKS OF ACCOUNT AND STATEMENT OF THE PA RTNER ESTIMATED THE UNACCOUNTED PROFIT AT RS.27,17,400/- AND ULTIMATELY COMPUTED THE BUSINESS INCOME AT RS.29,12,668/-. THE LEARNED CIT( A) GAVE PART RELIEF TO THE ASSESSEE. THE ASSESSEE AND THE REVENUE PREFERRE D APPEAL BEFORE THE LEARNED TRIBUNAL AND THE TRIBUNAL CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE AS NOTED ABOVE UPHELD THE ESTIMATED PROFIT CONFIRMED BY THE LEARNED CIT(A) AT RS.15,00,000/- T OWARDS UNACCOUNTED SALES BUT DIRECTED THE AO TO APPLY PROFIT RATE OF 2 0% AND ACCORDINGLY ADDITION OF RS.3,00,000/- WAS SUSTAINED. AS REGARDS ADDITION OF RS.3,11,350/- ON ACCOUNTED SALES, THE FINDING OF T HE LEARNED CIT(A) WERE MAINTAINED. IT RESULTED INTO THE ULTIMATE ADDITION SUSTAINED ON MERIT WAS RS.6,11,350/- WHICH IS ALSO NOT DISPUTED BY THE LEA RNED COUNSEL FOR THE ASSESSEE. IN THE BACKGROUND OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS CLEAR THAT THE ASSESSEE HAS CONCEALED THE PARTICULA RS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS NOTE D ABOVE, IT IS ADMITTED FACT THAT THE ASSESSEE DID NOT FILE ANY RE TURN OF INCOME AFTER ASSESSMENT YEAR 1992-93 AND LARGER SCALE OF UNACCOU NTED SALES WAS FOUND DURING THE COURSE OF SEARCH OPERATION WHICH W ERE BASED UPON THE SEIZED MATERIALS AND THE STATEMENT OF THE PARTNER O F THE ASSESSEE FIRM. THE SEARCH WAS CONDUCTED ON 20-10-1994 AND PRIOR TO THAT THE ASSESSEE ALSO DID NOT FILE ANY RETURN OF INCOME FOR ASSESSME NT YEAR UNDER APPEAL I.E. 1994-95 DESPITE IT WAS DUE U/S 139(1) OF THE I T ACT ON THE DATE OF SEARCH. THE BACKGROUND OF THE ASSESSEE SHOWS THAT T HE ASSESSEE NEVER ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 9 INTENDED TO FILE ANY RETURN OF INCOME FOR ASSESSMEN T YEAR UNDER APPEAL OR TO DISCLOSE THE PARTICULARS OF INCOME TO THE REVENU E DEPARTMENT. IT IS ONLY WHEN SEARCH WAS CONDUCTED IN THE PREMISES OF THE AS SESSEE, THE REVENUE DETECTED ACCOUNTED AND UNACCOUNTED SALES MADE BY TH E ASSESSEE. THE AO GAVE A SPECIFIC NOTICE TO THE ASSESSEE TO FILE R ETURN OF INCOME EVEN AFTER SEARCH BUT THE ASSESSEE DID NOT COMPLY WITH T HE SAID NOTICE AND DID NOT FILE RETURN OF INCOME UNTIL ASSESSMENT WAS COMP LETED U/S 144 OF THE IT ACT ON 27-03-1997. IT WOULD SHOW THAT THE ASSESS EE NEVER WANTED TO DISCLOSE CORRECT TAXABLE INCOME TO THE REVENUE DEPA RTMENT. PB-1 IS THE RETURN OF INCOME FILED BY THE ASSESSEE FOR ASSESSME NT YEAR UNDER APPEAL ONLY ON 31-03-1997 WHICH WAS NON-EST IN THE EYES OF LAW AND HAVE RIGHTLY NOT BEEN TAKEN INTO CONSIDERATION BY THE AU THORITIES BELOW. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BILLAND RAM HARGAN DASS VS CIT 171 ITR 390 HELD AS UNDER: FOR THE ASSESSMENT YEAR 1978-79, THE ASSESSEE FILED RETURN ON JULY 28, 1978, SHOWING AN INCOME OF RS.66,787. A REVISED RETURN WAS FILED BY THE ASSESS EE ON SEPTEMBER 28, 1979, SHOWING AN INCOME OF RS.2,18,81 0, THEREBY INCLUDING AN EXTRA INCOME OF RS.1,52,027, WHICH WAS SURRENDERED BY THE ASSESSEE IN CONSEQUENC E OF A SEARCH CONDUCTED IN THE BUSINESS PREMISES OF T HE ASSESSEE ON OCTOBER 25, 1978, I.E. AFTER THE FILING OF THE ORIGINAL RETURN. THE TOTAL INCOME OF THE ASSESSEE W AS ULTIMATELY DETERMINED AT RS.2,59,315/- BY THE TRIBU NAL. THE INCOME-TAX OFFICER INITIATED PENALTY PROCEEDING S UNDER SECTION 271(1) ( C ) OF THE INCOME-TAX ACT, 1 961, FOR CONCEALMENT OF INCOME AND LEVIED A PENALTY OF RS.1,04,300/-, ON THE GROUND THAT IT WAS ONLY AFTER THE SEARCH WAS CONDUCTED AND THE INCOME-TAX OFFICER FOU ND THAT THE ASSESSEE HAD CONSIDERABLE BUSINESS OUTSIDE HIS BOOKS AND CALLED UPON THE ASSESSEE TO EXPLAIN THE NATURE OF THE ENTRIES IN THE SEIZED PAPERS, THAT TH E ASSESSEE WAS FORCED TO FILE A REVISED RETURN. THE I NCOME- TAX OFFICER AND THE TRIBUNAL FOUND THAT THE REVISED RETURN WAS NOT FILED ON ACCOUNT OF ANY BONA FIDE INADVERTENCE OR OMISSION IN THE ORIGINAL RETURN. TH E ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 10 TRIBUNAL ALSO FOUND THAT THE SURRENDER OF INCOME WA S NOT VOLUNTARY BUT WAS AS A RESULT OF DETECTION MADE BY THE INCOME-TAX OFFICER, THAT THE REVISED RETURN WAS FILED BY TH80E ASSESSEE TO ESCAPE PENALTY BY MAKING AVERMENTS IN THE COVERING LETTER DATED SEPTEMBER 28 , 1979, IN ITS OWN FAVOUR TO THE EFFECT THAT IT WAS W ITH A VIEW TO PURCHASE PEACE WITH THE DEPARTMENT AND TO CLOSE LITIGATION, THAT THE SURRENDER WAS NOT MADE O N THE CONDITION THAT NO PENALTY WOULD BE LEVIED, THAT, THEREFORE, THE SUM OF RS.1,52,027 REPRESENTED THE CONCEALED INCOME OF THE ASSESSEE AND HENCE THE LEVY OF PENALTY UNDER CLAUSE (B) OF EXPLANATION 1 TO SECTIO N 271 (1) ( C ) WAS VALID. THE TRIBUNAL, THEREFORE, DISMI SSED THE APPEAL FILED BY THE ASSESSEE. ON A REFERENCE APPLIC ATION FILED BY TH8E ASSESSEE UNDER SECTION 256(2), THE AS SESSEE CONTENDED THAT THE QUESTION INVOLVED WAS THE CONSTRUCTION OF THE LETTER DATED SEPTEMBER 28, 1979 , WHICH WAS FILED BY THE ASSESSEE ALONG WITH THE RETU RN AND AS SUCH A QUESTION OF LAW AROSE FOR REFERENCE: HELD, AFFIRMING THE FINDINGS OF THE TRIBUNAL, THAT THE LEVY OF PENALTY WAS VALID AND NO QUESTION OF LA W AROSE OUT OF THE ORDER OF THE TRIBUNAL. HONBLE BOMBAY HIGH COURT IN THE CASE OF VADILAL IC HHACHAND VS CIT 32 ITR 569 HELD AS UNDER: ON SEPTEMBER 28, 1953, THE ASSESSEE FILED HIS RETURN FOR AN ASSESSMENT YEAR SHOWING A TOTAL INCOM E OF RS.7,038. ON OCTOBER 19, THE INCOME-TAX OFFICER ON EXAMINATION OF THE BOOKS OF THE ASSESSEE, DISCOVERE D THAT THE ASSESSEE HAD NOT DISCLOSED AN INCOME OF RS.17,548. THE ASSESSEE FILED ON THE SAME DAY A REV ISED RETURN DATED OCTOBER 18 DECLARING HIS TOTAL INCOME TO BE RES. 24,528 WHICH INCLUDED THE SUM OF RS.17,548. TH E INCOME-TAX AUTHORITIES CAME TO THE CONCLUSION THAT INCOME HAD BEEN DELIBERATELY CONCEALED BY THE ASSES SEE IN HIS RETURN DATED SEPTEMBER 28 AND IMPOSED A PENALTY ON HIM. ON APPEAL, THE APPELLATE TRIBUNAL H ELD THAT THE PENALTY SHOULD BE CALCULATED ON THE BASIS OF THE REVISED RETURN AND THE PENALTY8 WAS, THEREFORE, NIL. ON A REFERENCE: ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 11 HELD, (I) THAT T HE RETURN THAT HAD TO BE TAKEN INT O ACCOUNT UNDER SECTION 28(1) (C ) OF THE INDIAN INCO ME-TAX ACT, 1922, WAS THE RETURN WHICH IF ACCEPTED WOULD H AVE AVOIDED TAX AND WHICH WAS NOT ACCEPTED; THEREFORE, THE PENALTY HAD TO BE CALCULATED ON THE BASIS OF THE ORIGINAL RETURN AND THE TRIBUNAL ERRED IN HOLDING T HAT THE REVISED RETURN OF OCTOBER 18 HAD TO BE TAKEN IN TO ACCOUNT AND THAT THE ASSESSEE WAS NOT LIABLE TO A PENALTY. 10. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE, IT IS CLEAR THAT IT NOT A CASE OF ESTIMATED ADDITION. IT IS A CASE WHERE THE REVENUE AUTHORITIES DETECTED UNACCOUNTED SALES MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT WHICH WERE FOUND ON TH E BASIS OF THE SEIZED MATERIAL. FURTHER, THE ACCOUNTED SALES WERE ALSO FO UND FROM THE BOOKS OF ACCOUNT IMPOUNDED DURING THE COURSE OF SEARCH ON 20 -10-1994. THE ASSESSEE FAILED TO EXPLAIN THE ENTRIES CONTAINED IN THE IMPOUNDED BOOKS OF ACCOUNT AND THE IMPOUNDED BOOKS OF ACCOUNT WERE ALSO INCOMPLETE AS PER OBSERVATION OF THE AO. THE ASSESSEE ALSO DELIBE RATELY DID NOT FILE ANY RETURN OF INCOME DESPITE IT WAS DUE FOR THE ASSESSM ENT YEAR UNDER APPEAL ON THE DATE OF SEARCH. EVEN, THE ASSESSEE DID NOT F ILE RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED BY THE AO AT THE ASSE SSMENT STAGE CALLING THE RETURN OF THE ASSESSEE. THEREFORE, IT IS CLEAR THAT THE ASSESSEE NEVER WANTED TO DISCLOSE EVEN THE ACCOUNTED SALES TO THE REVENUE DEPARTMENT BECAUSE IT WAS NOT FILING RETURN OF INCOME FROM THE ASSESSMENT YEAR 1992-93. THE ASSESSEE HAS NOT OFFERED ANY EXPLANATI ON AS TO WHY THE RETURN OF INCOME WAS NOT FILED DESPITE IT WAS DUE U /S 139 (1) OF THE IT ACT AND DESPITE GIVING STATUTORY NOTICE BY THE AO. THUS , THE ASSESSEE FAILED TO OFFER ANY EXPLANATION REGARDING ACCOUNTED AND UN ACCOUNTED SALES. THE ASSESSEE ALSO FAILED TO PROVE THAT ITS EXPLANATION WAS BONA FIDE AND THAT THE INCOME HAS BEEN DISCLOSED ACCORDING TO LAW. CON SIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE, WE ARE OF THE VIEW T HAT EXPLANATION (1) TO SECTION 271 (1) (C) OF THE IT ACT CLEARLY APPLIE S IN THE CASE OF THE ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 12 ASSESSEE. IT WOULD ALSO PROVE THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME. THEREFORE, THE LEARNED CIT(A) WAS JU STIFIED IN HOLDING THAT LEVY OF PENALTY IN THE MATTER IS JUSTIFIED. THE LEA RNED COUNSEL FOR THE ASSESSEE HAS REFERRED TO THE DECISION IN THE CASE O F T. KODEESWARAN (L/H OF LATE A. THANGAM) (SUPRA) IN WHICH THE ASSESSMENT YEAR UNDER APPEAL WAS 1986-87 FOR LEVY OF PENALTY AND THE ARGUMENTS O F THE ASSESSEE WAS THAT SINCE THE ASSESSEE HAD NOT FILED RETURN OF INC OME FOR ASSESSMENT YEAR 1986-87 IT COULD NOT BE SAID THAT THERE WAS CO NCEALMENT OF INCOME. IT WAS POINTED OUT THAT EXPLANATION (3) IN THE PRES ENT FORM WHICH WAS INSERTED TO COVER SUCH SITUATION WAS APPLICABLE WIT H EFFECT FROM 01-04-1989. THE TRIBUNAL ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT IF NO RETURN IS FILED THERE IS NO CONCEALMENT OF IN COME. THE SUBMISSION OF THE ASSESSEE ITSELF IN THAT CASE SHOWS THAT EXPLANA TION (3) TO SECTION 271 (1) (C) OF THE IT ACT APPLIES TO SUCH A SITUATION W HERE NO RETURN IS FILED WITHIN PRESCRIBED TIME WHICH IS APPLICABLE FROM 01- 04-1989. EXPLANATION (3) TO SECTION 271 ( 1) ( C ) OF THE IT ACT READS A S UNDER: [EXPLANATION 3.WHERE ANY PERSON FAILS, WITHOUT RE ASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SU B-SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTICE HAS B EEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB-SECTION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSE SSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PERSON S HALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RES PECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON F URNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148 .] THUS, EXPLANATION (3) IS APPLICABLE TO THE ASSESSME NT YEAR UNDER APPEAL I.E. 1994-95. THEREFORE, THE DECISION RELIED UPON B Y THE LEARNED COUNSEL ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 13 FOR THE ASSESSEE WOULD NOT APPLY TO THE PRESENT CAS E. RESULTANTLY, EXPLANATION (3) TO SECTION 271 (1) (C) OF THE IT AC T WOULD SUPPORT THE CASE OF THE REVENUE. THE LEARNED COUNSEL FOR THE ASSESSE E DID NOT REFER TO ANY OTHER DECISION DURING THE COURSE OF ARGUMENT. 11. NO OTHER POINT IS ARGUED OR PRESSED AND CONSIDE RING THE FACTS OF THE CASE, THE APPEAL OF THE ASSESSEE IN ITA NO.1744/AHD /2008 IS DISMISSED. ITA NO.1288/AHD/2008 12. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-V, BARODA DATED 20-02-2008 FOR ASSES SMENT YEAR 1994- 95, CHALLENGING LEVY OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT ON THE ADDITION OF RS.2,52,500/- MADE ON ACCOUNT OF UNEXPL AINED CASH CREDIT. 13. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO MADE ADDITION OF RS.2,52,500/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE IS A PARTNER IN M/S. CHAMPHO CHEM INDUSTRIES WHOSE APPEAL IS DECIDED IN PENALTY IN ITA NO. 1744/AHD/2008 ABOVE. THE LEARNED CIT(A) NOTED THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31-3-1997 WHICH WAS LATE AND THE INCOME WAS NOT SHOWN ON ACCOUNT OF UNACCOUNTED CASH CREDIT IN THE BANK ACCOUNT. THEREFORE, THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. THE LEARNED CIT(A) NOTED THAT CASH CREDIT A MOUNT WAS NOT SHOWN AND DISCLOSED TO THE REVENUE DEPARTMENT AND T HE AO PASSED THE ORDER BRINGING OUT THE FACTS OF CONCEALMENT. PENALT Y WAS ACCORDINGLY CONFIRMED. THE LEARNED COUNSEL FOR THE ASSESSEE REF ERRED TO THE ORDER OF THE TRIBUNAL DATED 28-02-2005 IN WHICH THE TRIBUNAL CONFIRMED THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN T HE BANK OF ACCOUNT OF --------------------------------------------------- -----------------------THE ASSESSEE BECAUSE IT WAS NOT EXPLAINED. THE LEARNED COUNSEL F OR THE ASSESSEE ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 14 SUBMITTED THAT IN THE COURSE OF THE SEARCH IN THE R ESIDENTIAL PREMISES OF THE PARTNER SEIZED PAPERS WERE RECOVERED TO SHOW UN ACCOUNTED SALES MADE BY THE FIRM IN CASH AND ACCOUNTED SALES WERE A LSO DISCLOSED LATER ON. THE ASSESSEE BEING PARTNER HAS ONLY SOURCE OF I NCOME OUT OF THE INCOME EARNED BY THE FIRM. THEREFORE, AS THE LOOSE PAPERS BELONGED TO THE FIRM AND ASSESSEE IN THE ASSESSMENT YEAR UNDER APPE AL AND SUBSEQUENT ASSESSMENT YEAR 1995-96, THEREFORE, THE PROCEEDS OF CASH SALES WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT EVEN IF THE ADDITION IS CONFIRMED ON MERIT IN THE CASE OF THE ASSESSEE, BUT THE ABOVE FACTS WOULD SHOW THAT THE ASSESSEE HAS EXPLAINED THE ISSUE. THEREFORE, ON THE SEIZED MATERIAL THE EXPLANATIONS OF THE ASSESSEE ARE BONA FIDE. THE REFORE, PENALTY SHOULD NOT BE IMPOSED ON ACCOUNT OF UNEXPLAINED CASH CREDI T IN THE BANK ACCOUNT OF THE ASSESSEE. ON THE OTHER HAND, THE LEA RNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED T HAT NO NEXUS OF THE UNACCOUNTED SALES OF THE FIRM HAS BEEN PROVED WITH THE BANK DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE BEING PARTNER OF T HE FIRM. THE LEARNED DR SUBMITTED THAT REVENUE DEPARTMENT DETECTED THE U NEXPLAINED CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE AND, THEREFORE, THE ASSESSEE WAS COMPELLED TO FILE THE RETURN OF INCOME LATER ON WOU LD SHOW THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME. THERE FORE, PENALTY MAY BE CONFIRMED. 14. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT PENALTY IN THE CASE OF THIS PARTNER IS LIABLE TO BE CANCELED. IT IS UNDISPUTED FACT THAT THE PRESENT ASSESSEE IS A PART NER IN THE FIRM M/S. CHAMPHO CHEM INDUSTRIES IN WHOSE CASE DURING THE CO URSE OF SEARCH SEIZED MATERIAL WAS RECOVERED FROM THE RESIDENCE OF THE PARTNER TO SHOW THAT FIRM HAS MADE UNACCOUNTED SALES. IT WAS ALSO A DMITTED BY THE PARTNER IN HIS STATEMENT. ULTIMATELY, ADDITION WAS MADE BY APPLYING ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 15 PROFIT RATE OF 20% ON THE UNACCOUNTED SALES COMPUTE D BY THE LEARNED CIT(A) IN A SUM OF RS.15,00,000/-. ADDITION OF RS.3 ,00,000/- WAS MADE ON ACCOUNT OF NET PROFIT ON UNACCOUNTED SALES AND FURTHER ADDITION OF RS.3,11,350/- WAS MADE ON ACCOUNT OF NET PROFIT ON ACCOUNTED SALES. THE UNACCOUNTED INCOME EARNED BY THE FIRM WAS THUS AVAI LABLE TO THE PARTNER BEING A PROFIT IN SHARES. THE EXPLANATION O F THE ASSESSEE IS THUS ACCEPTABLE THAT THE AMOUNT OF RS.2,52,500/- WAS AVA ILABLE TO THE ASSESSEE FOR THE PURPOSE OF MAKING DEPOSIT IN HIS B ANK ACCOUNT. IT IS, THEREFORE, A CASE WHERE THE ASSESSEE HAS OFFERED EX PLANATION WHICH WAS NOT FOUND TO BE FALSE. THE EXPLANATION OF THE ASSES SEE APPEARS TO BE BONA FIDE AND WAS BASED UPON THE SEIZED MATERIAL ITSELF. THEREFORE, EVEN IF, ADDITION IS CONFIRMED IN THE CASE OF THE ASSESSEE, WE ARE OF THE VIEW THAT IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF THE ABOVE AM OUNT. THEREFORE, BENEFIT COULD BE EXTENDED TO THE ASSESSEE IN RESPEC T OF THE AMOUNT EARNED BY THE FIRM ON ACCOUNT OF UNACCOUNTED SALES. WE, THEREFORE, ARE OF THE VIEW THAT PENALTY IS NOT LEVIABLE IN THE CASE O F THE PARTNER AS ABOVE. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND CANCEL THE PENALTY U/S 271(1) ( C ) OF THE IT ACT ON THE A DDITION OF RS.2,52,500/- ON ACCOUNT OF UNEXPLAINED CREDIT IN THE BANK ACCOUN T. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1288/AHD/2008 IS ALLOWED. ITA NO.1290/AHD/2008 16. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-V, BARODA DATED 18-02-2008 FOR ASSE SSMENT YEAR 1994- 95, CHALLENGING LEVY OF PENALTY U/S 271 (1) ( C ) O F THE IT ACT ON THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN A SUM OF RS.1,97,000/-. ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 16 17. THE BRIEF FACTS OF THE CASE ARE SAME THAT SEARC H WAS CONDUCTED ON 20-10-1994. THE ASSESSEE DID NOT FILE RETURN OF INC OME FOR THE ASSESSMENT YEAR UNDER APPEAL I.E. 1994-95. THE NOTI CE U/S 142(1) OF THE IT ACT WAS ISSUED FOR FILING OF RETURN BY THE ASSES SEE, BUT THE ASSESSEE DID NOT FILE RETURN OF INCOME. THE AO COMPLETED THE ASSESSMENT U/S 144 OF THE IT ACT DETERMINING THE TOTAL INCOME AT RS.1, 66,999/- ON 27-03- 1997. LATER ON, THE ASSESSEE FILED BELATED RETURN O F INCOME ON 31-03- 1997 DECLARING TOTAL INCOME AT RS.4,02,390/-. SINCE THE RETURN WAS BEYOND THE PRESCRIBED TIME, THE AO ISSUED NOTICE U/ S 148 OF THE IT ACT AND THE ASSESSEE FILED ANOTHER RETURN OF INCOME IN RESPONSE TO THIS NOTICE DECLARING FURTHER INCOME OF RS.1,97,000/- BEING CAS H CREDIT IN THE BANK ACCOUNT OF MINOR SON OF THE ASSESSEE. THE AO COMPLE TED THE ASSESSMENT ADDING THIS AMOUNT OTHER THE INCOME DECLARED IN THE RETURN OF INCOME FILED ON 31-03-1997 AND COMPUTED INCOME AT RS.5,69, 384/- WHICH INCLUDES SALARY FROM THE FIRM, INTEREST ON CAPITAL WITH THE FIRM AND CASH CREDIT IN THE BANK ACCOUNT OF MINOR SON TOTALING TO RS.5,69,384/-. PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF T HE THREE ADDITIONS AND PENALTY OF RS.2,01,100/- WAS IMPOSED. THE SAME SUBM ISSIONS HAVE BEEN REITERATED BEFORE THE LEARNED CIT(A) AS HAVE BEEN R EITERATED IN THE CASE OF THE FIRM AND ANOTHER PARTNER REFERRED TO ABOVE. THE LEARNED CIT(A) NOTED THAT CASH CREDIT OF RS.1,97,000/- WAS NOT DECLARED IN THE RETURN OF INCOME AND ORIGINAL RETURN WAS BELATED AND ASSESSME NT IS COMPLETED EX- PARTE. THEREFORE, THE ASSESSEE CONCEALED PARTICULAR S OF INCOME AND ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. 18. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS WERE MADE IN THE CASE OF ANOTHER PAR TNER SHRI ABBAS FIDAHUSSAIN HAZARIWALA IN ITA NO.1288/AHD/2008. THE LEARNED DR ALSO ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 17 REPEATED THE SAME SUBMISSIONS AS WERE MADE IN THE C ASE OF ANOTHER PARTNER. 19. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE. IN THE CASE OF THE PRESE NT ASSESSEE THE CASH CREDIT WAS FOUND IN THE BANK ACCOUNT OF MINOR SON O F THE ASSESSEE. THE ASSESSEE HAS NOT EXPLAINED ANYTHING ON THE ISSUE AS TO HOW THE AMOUNT IN THE NAME OF THE MINOR SON OF THE ASSESSEE WAS DE POSITED. THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT EXPLAIN AS TO HO W THE ABOVE AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT OF MINOR SON OF T HE ASSESSEE. THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT SINCE THE ASSESSEE HAS SHARE INCOME FROM THE FIRM, THEREFORE, PROFIT OF UNACCOUNTED SALES WAS AVAILABLE FOR MAKING DEPOSIT IN THE BANK ACCOUNT OF HIS MINOR SON. HOWEVER, WE MAY NOTE HERE THAT UL TIMATELY THE ADDITION ON ACCOUNT OF UNACCOUNTED SALES IN THE FIRM OF THE ASSESSEE WAS SAME IN A SUM OF RS.3,00,000/- IN THE ASSESSMENT YEAR UNDER APPEAL I.E. 1994- 95 IN WHICH SUFFICIENT BENEFIT HAS ALREADY BEEN EX TENDED IN THE CASE OF ANOTHER PARTNER SHRI ABBAS FIDAHUSSAIN HAZARIWALA. THEREFORE, NOTHING WOULD BE LEFT FOR GIVING FURTHER BENEFIT TO THE ASS ESSEE. THE AMOUNT OF PROFIT OF RS.3,00,000/- WAS NOT SUFFICIENT TO EXTEN D FURTHER BENEFIT IN THE CASE OF THE ANOTHER PARTNER AND THAT TOO WHEN THE D EPOSIT WAS NOT MADE IN THE ACCOUNT OF THE PARTNER BUT UNACCOUNTED DEPOS IT WAS MADE IN THE CASE OF THE MINOR SON OF THE PARTNER. IN THE ABSENC E OF ANY FURTHER EXPLANATION FROM THE SIDE OF THE ASSESSEE, WE ARE O F THE VIEW THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN LEVYING THE PEN ALTY U/S 271 (1) (C) OF THE IT ACT. WE MAY ALSO POINT OUT HERE THAT THE ASS ESSEE DID NOT FILE ORIGINAL RETURN OF INCOME AND DESPITE THE SEARCH CO NDUCTED ON 20-10- 1994, THE ASSESSEE EVEN THEREAFTER DID NOT DISCLOSE D THE UNDISCLOSED DEPOSIT IN THE BANK ACCOUNT OF THE MINOR SON. DESPI TE ISSUANCE OF STATUTORY NOTICE ALSO NO AMOUNT WAS DISCLOSED ON TH IS ACCOUNT. IT WAS ITA NOS. 1744, 1288 AND 1290/AHD/2008 M/S. CHEMPHO CHEM INDUSTRIES, SHRI ABBAS FIDAHUSEN HAZARIWALA AND SHRI FIDAHUSSAIN NAZAFALI HAZARIWALA 18 ONLY LATER ON THE INCOME WAS SHOWN IN THE NON-EST R ETURN ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNT OF MINO R SON OF THE ASSESSEE. THEREFORE, THE ABOVE FACTS WOULD PROVE TH AT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND AS SUCH PENALTY HAS BEEN IMPOSED RIGHTLY IN THIS CASE. WE ACCORDINGLY, CONFIRM THE F INDINGS OF THE AUTHORITIES BELOW. WE MAY ALSO CLARIFY HERE THAT TH E LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE ON ANY OTHER POINT. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.1290/AHD/2008 IS DISMISSED. 21. AS A RESULT, THE APPEALS OF THE ASSESSEES IN IT A NO.1744/AHD/2008 AND 1290/AHD/2008 ARE DISMISSED. THE APPEAL OF THE ASSESSEE IN ITA NO.1288/AHD/208 IS ALLOWED. ORDER PRONOUNCED ON 13-08-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-08-2010 LAKSHMIKANT/- 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 D Y. REGISTRAR, ITAT, AHMEDABAD