Sh.Shantilal N Lodha (HUF), Pune V. Deputy CIT,Central Circle-1(1), Pune

ITA 1324/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9899 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-08-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 11-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RA J IV HARIT
• Keywords: Unexplained expenditure; Income from undisclosed sources; Search and seizure; Bonafide belief; Revised return; Bonafide mistake
• Section: 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 1324/PN/2010 (ASSESSMENT YEAR 2004-05) SHRI SHANTILAL N. LODHA (HUF), 134/3-4, RAUNAK RESIDENCY, MAYUR COLONY, KOTHRUD, PUNE 411 029. .. APPELLANT PAN NO.AAAHL 9538G VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), PUNE. .. RESPONDENT ASSESSEE BY : SRI SUNIL GANOO DEPARTMENT BY : SRI RAJIV HARIT DATE OF HEARING : 25-09-2012 DATE OF PRONOUNCEMENT : 30-10-2012 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28-01- 2010 OF THE CIT(A)-I, PUNE RELATING TO ASSESSMENT Y EAR 2004-05. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING A S EARCH CONDUCTED U/S.132 OF THE ACT ON 15-06-2001 IN THE CASE OF SRI SHANTILAL N. L ODHA CERTAIN RECORDS PERTAINING TO THE HUF WERE FOUND AND SEIZED. IN RESPONSE TO N OTICE U/S.153C ISSUED BY THE AO ON 05-01-2007 THE ASSESSEE FILED RETURN OF INCOM E OF THE HUF ON 27-02-2007 DISCLOSING TAXABLE INCOME OF RS.10,18,290/-. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT PAGE NOS. 15 AND 16 O F THE SEIZED RECORD CONTAINS EXPENDITURE OF RS.97,198/- PAID TO PMC TOWARDS ROAD DEVELOPMENT AND COMPROMISE EXPENSES. SINCE DURING THE COURSE OF SE ARCH THE ASSESSEE HAD ADMITTED THAT THE PAYMENT HAS BEEN MADE OUT OF THE UNACCOUNT ED INCOME AND OFFERED TO PAY TAX THE AO MADE ADDITION OF RS.97,198/- AND DETERMI NED THE TOTAL INCOME AT RS.11,15,488/-. 2 2.1 SUBSEQUENTLY THE AO INITIATED PENALTY PROCEEDIN GS U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. HE AO NOTED THAT THE ASSESSE E HAD FILED RETURN ON 25-11- 2004 DISCLOSING TAXABLE INCOME OF RS.5,68,287/- AND IN RESPONSE TO THE NOTICE U/S.153C IT HAD FILED THE RETURN DISCLOSING TAXABLE INCOME OF RS.10,18,290/-. AS AGAINST THE RETURNED INCOME OF RS.5,68,287/- THE IN COME WAS ASSESSED AT RS.11,15,488/-. DESPITE REPEATED OPPORTUNITIES GRA NTED THE ASSESSEE NEITHER APPEARED BEFORE THE AO NOR FILED ANY SUBMISSION AGA INST THE NOTICE ISSUED U/S.274 R.W.S.271(1)(C). THE AO THEREFORE LEVIED PENALTY O F RS.1,95,025/- BEING THE MINIMUM PENALTY LEVIABLE @100% OF TAX ON CONCEALED INCOME. 3. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE HAD SUBMITTED HIS ORIGINAL RETURN OF INCOME ON 08-11-2004 DISCLOSING THE NET T AXABLE INCOME OF RS.10,18,290/- VIDE ACK NO. 403 FOR A.Y. 2004-05 WH ICH WAS TREATED AS RETURN FILED U/S.139(4) OF I.T. ACT. SUBSEQUENTLY THE ASS ESSEE FILED A REVISED RETURN OF INCOME ON 12-01-2007 DISCLOSING THE NET TAXABLE INC OME OF RS.10,18,290/- VIDE ACK NO.418 U/S.153C CONSEQUENT TO I.T. SEARCH PROCE EDINGS FOR A.Y. 2004-05. IT WAS CLAIMED THAT IN BETWEEN THE ABOVE SAID TWO RETU RNS THE ASSESSEE THROUGH OVERSIGHT HAD FILED A RETURN DECLARING INCOME OF RS .5,68,290/- VIDE ACK NO.418 DATED 25-11-2004 WHICH WAS LATER WITHDRAWN VIDE ASS ESSEES LETTER DATED 06-12- 2004. IT WAS CONTENDED THAT SINCE THE ORIGINAL RE TURN WAS NOT FILED WITHIN THE STATUTORY TIME U/S.139(1) THE SAID ORIGINAL RETURN CANNOT BE REVISED U/S.139(5) OF I.T. ACT AND THEREFORE, THE RETURN FILED ON 25-11-2 004 WAS AN INVALID AND NON-EST RETURN IN TERMS OF PROVISIONS OF I.T. ACT AND ACCOR DINGLY LIABLE TO BE IGNORED. IT WAS SUBMITTED THAT THE AO HAD MADE SMALL ADDITION O F RS.97,198/- TO THE RETURNED INCOME AND THE INCOME DECLARED IN THE ORIGINAL RETU RN FILED ON 08-11-2004 AND LAST RETURN ON 12-01-2007 IN RESPONSE TO NOTICE U/S.153C IS SAME AT RS.10,18,290/- AND THERE IS NO DIFFERENCE OF INCOME BETWEEN THE FIRST AND LAST RETURN. IT WAS SUBMITTED THAT THE AO HAS PASSED THE IMPUGNED PENALTY ORDER L EVYING PENALTY OF 3 RS.1,96,000/- U/S.271(1)(C) OF I.T. ACT ON THE BASI S OF I.T RETURN FILED ON 25-11- 2004 AND 12-01-2007 BY IGNORING THE ORIGINAL RETURN FILED ON 08-11-2004. IT WAS ARGUED THAT SINCE THE RETURN FILED ON 25-11-2004 WA S NOT VALID AND WAS NON-EST, THEREFORE, THE PENALTY LEVIED ON THE BASIS OF SUCH NON-EST RETURN IS NOT SUSTAINABLE. IN SUPPORT OF THE ABOVE PROPOSITION THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS. SMT. SANTOSH P PIPADA VIDE ITA NO.725/PN/2000 WAS RELIED UPON WHEREIN THE ITAT HAS DELETED THE PENALTY ON THE GROUND OF INVALIDITY OF THE ASSESSMENT. 3.1 SO FAR AS THE PENALTY LEVIED ON THE ADDITION OF RS.97,198/- IS CONCERNED IT WAS SUBMITTED THAT THE SAME WAS WRONGLY ADDED TO TH E RETURNED INCOME EXCLUSIVELY ON ASSUMPTION BASIS WITHOUT VERIFICATION OF THE BOO KS OF ACCOUNTS AND WITHOUT CONSIDERING THE FACT THAT CASH PAYMENT OF RS.97,198 /- TO MUNICIPAL CORPORATION HAS ALREADY BEEN REFLECTED IN THE BOOKS OF ACCOUNT. IT WAS POINTED OUT THAT THE AO HAS ADDED RS.97,198/- BY NOT ACCEPTING THE SUBMISSION O F THE ASSESSEE AND THE ASSESSING OFFICER HAS NOT RECORDED HIS SATISFACTION ON CONCEALMENT OF INCOME OR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE IN ASSESSMENT ORDER. 4. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE E XPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 25-11-2004 VIDE RECEIPT NO. 00418 ADMITTING THE TOTAL INCOME O F RS.5,68,837/- AND CLAIMED REFUND OF RS.1,84,150/-. SUBSEQUENTLY, IN RESPONSE TO NOTICE U/S.153C, ASSESSEE FILED ANOTHER RETURN ON 12-01-2007 DECLARING TOTAL INCOME OF RS.10,18,290/- WHICH INCLUDES THE AFORESAID WIP OF RS.4,50,000/-. SINCE THE WIP OF RS.4,50,000/- WAS NOT CONSIDERED IN THE RETURN OF INCOME FILED ON 25- 11-2004, THE ASSESSING OFFICER LEVIED PENALTY ON THE ADDITIONAL INCOME OF RS.4,50, 000/- ADMITTED IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SEC.153C AND THE UNEXPLAINED EXPENDITURE OF 4 RS.97,198/- CONSIDERED IN THE ASSESSMENT ORDER. BU T DURING THE APPELLATE PROCEEDINGS THE ASSESSEE FILED COPY OF ANOTHER RETU RN CLAIMED TO HAVE BEEN FILED ON 08-11-2004 DECLARING TOTAL INCOME OF RS.10,18,837/- . ACCORDING TO THE ASSESSEE, THIS RETURN WAS NOT TAKEN INTO COGNIZANCE BY THE AS SESSING OFFICER WHILE LEVYING THE IMPUGNED PENALTY AND THE SECOND RETURN FILED ON 25-11-2004 IS AN INVALID RETURN AND NON-EST IN THE EYES OF LAW AS THE ORIGIN AL RETURN WAS FILED BELATEDLY ON 08-11-2004. THE ARGUMENT OF THE ASSESSEE THAT A BE LATED RETURN FILED U/S.139(4) CANNOT BE REVISED U/S.139(5) AND THEREFORE PENALTY LEVIED ON THE BASIS OF INCOME DECLARED IN SUCH INVALID RETURN IS AB-INITIO VOID A ND THAT THE ASSESSEE HAD FILED A LETTER DATED 06-12-2004 BEFORE THE ASSESSING OFFICE R TO IGNORE THE RETURN FILED ON 25-11-2004 WAS NOT ACCEPTED BY HIM. HE OBSERVED TH AT THE RETURN OF INCOME PURPORTED TO HAVE BEEN FILED ON 08-11-2004 AND ALSO THE LETTER DATED 06-12-2004 CAME TO THE FORE FOR THE FIRST TIME DURING THE APPE LLATE PROCEEDINGS. THERE WAS NO REFERENCE OR FINDING IN THE ASSESSMENT ORDER OR PEN ALTY ORDER ABOUT THE FIRST RETURN CLAIMED TO HAVE BEEN FILED BY THE ASSESSEE ON 08-11 -2004. SIMILARLY, THERE WAS NO MENTION OF THE LETTER DATED 06-12-2004 EITHER IN TH E ASSESSMENT ORDER OR PENALTY ORDER OR THE STATEMENT OF FACTS FILED BY THE ASSESS EE ALONG WITH APPEAL. ON THE CONTRARY, IT IS STATED AT COL.NO.12 OF THE RETURN T HAT IT IS THE ORIGINAL RETURN BUT IN THE COPY OF THE RETURN FILED NOW, THE WORD ORIGINA L IS SCORED OUT. 4.1 ACCORDING TO LEARNED CIT(A) IF THE ASSESSEE HAD ALREADY FILED THE RETURN OF INCOME ON 08-11-2004 AS CLAIMED BY HIM ADMITTING TH E INCOME AT RS.10,18,287/- INCLUDING THE SAID WIP OF RS.4,50,000/-, THERE WAS NO NECESSITY FOR THE ASSESSEE TO STATE IN THE COMPUTATION OF TOTAL INCOME FILED WITH THE RETURN FURNISHED ON 12-01- 2007 IN RESPONSE TO NOTICE U/S.153C THAT IT IS THE REVISED COMPUTATION OF TOTAL INCOME AND INCOME OF RS.4,50,000/- WAS DECLARED IN WIP UNDER SEC.153C. ACCORDING TO LD. CIT(A), IF THERE IS NO CHANGE IN T HE INCOME DECLARED AS PER THE RETURN CLAIMED TO HAVE BEEN FILED ON 08-11-2004 AND THE RETURN FILED IN RESPONSE TO 5 NOTICE U/S.153C THIS FACT WOULD HAVE BEEN MENTIONED IN THE RETURN FILED ON 12-01- 2007 AND THE ASSESSEE WOULD NOT HAVE MENTIONED REV ISED IN THE SUBSEQUENT RETURN. THEREFORE, THE RETURN FILED ON 25-11-2004 CLEARLY STATING AS ORIGINAL RETURN IS A VALID RETURN U/S.139(4). IN ANY CASE, THE ASS ESSEE HAS NOT PAID ADVANCE TAX ON THE INCOME ADMITTED PRIOR TO THE SEARCH OPERATION A ND THIS CLEARLY SHOWS THAT THE INTENTION WAS NOT TO DISCLOSE THE INCOME BUT FOR TH E SEARCH AND SEIZURE OPERATION CARRIED OUT IN THE CASE OF THE ASSESSEE. IT APPEAR S THAT THE COMPUTERISED BOOKS OF ACCOUNTS WERE PREPARED AFTER THE SEARCH OPERATIONS AND THE WORK-IN-PROGRESS WAS SHOWN IN THE SAID STATEMENTS. THE FACT THAT A RETU RN WAS FILED ON 25-11-2004 EXCLUDING THE WIP OF RS.4,50,000/- AND CLAIMING REF UND ALSO DEMONSTRATE THAT THE INTENTION OF THE ASSESSEE WAS NOT TO ADMIT THE ADDI TIONAL INCOME AND SUCH FILING OF RETURN CLAIMING REFUND OF CASH SEIZED AND ADJUSTED AGAINST TAX LIABILITY OF THE ASSESSEE CANNOT BE SAID TO BE OF BONAFIDE MISTAKE. IT IS ONLY AFTER THE ISSUE OF NOTICE U/S.153C THAT THE ASSESSEE ADMITTED THE SAID INCOME IN THE RETURN FILED ON 12- 01-2007 CLEARLY STATING INCOME DECLARED IN W.I.P. U/S.153C. BUT FOR THE ISSUE OF NOTICE U/C.153C AND SCRUTINY OF RETURN OF INCOME TH E ADDITIONAL INCOME WOULD HAVE GONE UNNOTICED. 4.2 SO FAR AS THE ADDITION OF RS.97,198/- ON ACCOUN T OF PAYMENT MADE IN CASH TO PMC IS CONCERNED THE CIT(A) NOTED THAT THE ASSESSEE HAS CATEGORICALLY STATED VIDE HIS ANSWER TO QUESTION NO.18 OF THE STATEMENT ON 17 -06-2004 THAT THE EXPENSES WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS AND THE SAME CONSTITUTES UNRECORDED/UNACCOUNTED EXPENDITURE OF THE ASSESSEE. BUT SUBSEQUENTLY THE ASSESSEE INCORPORATED THE SAID CASH ENTRIES IN THE COMPUTERI SED ACCOUNTS PREPARED AFTER THE SEARCH OPERATIONS AND MADE THE CLAIM AS AN AFTERTHO UGHT THAT THE EXPENDITURE WAS RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. SINCE T HE AMOUNTS WERE PAID IN CASH, THE CLAIM OF THE ASSESSEE THAT THESE CASH TRANSACTI ONS WERE INTENDED TO BE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS IS NOT AMENABLE TO INDEPENDENT VERIFICATION. THE 6 VERY FACT THAT THE ASSESSEE HAS NOT PREFERRED APPEA L AGAINST THE QUANTUM ADDITION MADE IN THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE EXPLANATION NOW FURNISHED BY THE ASSESSEE IS ONLY AN AFTERTHOUGHT AND THE ASSESS ING OFFICER IS JUSTIFIED IN DRAWING THE INFERENCE THAT THE ASSESSEE FURNISHED I NACCURATE PARTICULARS OF INCOME. 4.3 HE FURTHER OBSERVED THAT THE DECLARATION OF INC OME MADE U/S.132(4) WAS NOT ADMITTED IN THE RETURN FILED AFTER THE SEARCH AND T HUS THE ASSESSEE HAS NOT ADHERED TO THE DECLARATION MADE U/S.132(4) IN RESPECT OF WORK- IN-PROGRESS AND THE UNEXPLAINED EXPENDITURE. THE ASSESSEE HAS ALSO NOT SPECIFIED T HE MANNER IN WHICH SUCH INCOME REPRESENTING W.I.P AND UNEXPLAINED EXPENDITURE HAS BEEN DERIVED. THEREFORE, ASSESSEE IS NOT ENTITLED TO BENEFIT OF IMMUNITY PRO VIDED UNDER EXPLANATION 5 FOR THE DECLARATION MADE U/S.132(4) FOR THE YEAR UNDER APPE AL. THE SUBSEQUENT ACT OF ADMISSION IN RESPECT OF W.I.P. OF RS.4,50,000/- IN THE RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S.153C IS NOT AT ALL VOLUNTARY HAVI NG REGARD TO RETURN OF INCOME FILED ON 25-11-2004 AND DOES NOT ABSOLVE THE ASSESS EE OF PENAL CONSEQUENCES U/S.271(1)(C). 5. DISTINGUISHING THE VARIOUS DECISIONS RELIED ON B Y THE ASSESSEE AND RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F DHARMENDRA TEXTILE PROCESSORS LTD. REPORTED IN 306 ITR 277 HE UPHELD T HE PENALTY LEVIED BY THE AO U/S.271(1)(C) OF THE INCOME TAX ACT. 5.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.1,96,000/- U/ S.271(1)(C) OF I.T. ACT FOR THE A.Y. 2004-05 WRONGLY LEVIED BY THE LEARNED ASSESSING OFF ICER AND THE SAID PENALTY MAY PLEASE BE DELETED. 2. THE CIT(APPEAL) HAS ERRED BY NOT APPRAISING THE FACT THAT, THE APPELLANT HAS SUBMITTED HIS ORIGINAL RETURN OF INCOME ON 08-11-20 04 DISCLOSING THE NET TAXABLE INCOME OF RS.10,18,290/- VIDE ACK NO.403 FOR A.Y. 2004-05. LATER ON THE APPELLANT HAS FILED HIS REVISED RETURN OF INCOME ON 12-01-2007 DISCLOSING T HE NET TAXABLE INCOME OF 7 RS.10,18,290- VIDE ACK NO. 37 U/S.153C CONSEQUENT T O I.T. SEARCH PROCEEDINGS FOR A.Y.2004-05. 3. THE AO HAS WRONGLY MADE THE SMALL ADDITION OF RS .97,198/- TO THE REVISED RETURN OF INCOME FOR DEVELOPMENT CHARGES PAID TO PMC, INSP IRE OF THE FACT THAT THE SAID AMOUNT/EXPENDITURE HAS ALREADY BEEN REFLECTED IN TH E REGULAR BOOKS OF ACCOUNTS. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE CIT(A). REFERRING TO THE COPY OF T HE LETTER ADDRESSED TO THE AO ON 21-01-2008 (PAPER BOOK PAGE NOS. 36 TO 38) HE SU BMITTED THAT IT WAS CATEGORICALLY WRITTEN TO THE AO THAT THE ORIGINAL R ETURN FILED ON 08-11-2004 WAS NOT WITHIN THE STATUTORY TIME AND THEREFORE THE SUBSEQU ENT RETURN FILED THROUGH OVERSIGHT ON 25-11-2004 IS AN INVALID AND NON-EST F OR INCOME TAX ASSESSMENT. IT WAS ACCORDINGLY REQUESTED THAT THE RETURN FILED THR OUGH OVERSIGHT ON 25-11-2004 BE IGNORED AND MAY NOT BE CONSIDERED FOR THE PURPOSE O F INCOME TAX. 6.1 AS REGARDS THE OBJECTION OF THE LEARNED CIT(A) THAT THE ACKNOWLEDGEMENT NUMBER IN THE RECEIPT IS HAND WRITTEN AS AGAINST PR INTED NUMBER, THEREFORE, THE SAME IS DOUBTFUL, HE SUBMITTED THAT THE ASSESSEE HA D FILED COPIES OF RETURNS IN THE CASE OF VARIOUS FAMILY MEMBERS. SIMILAR HAND WRITT EN NUMBERS ARE THERE IN ALL THESE RETURNS AND ON THE BASIS OF THESE RETURNS ASS ESSMENTS HAVE BEEN COMPLETED BY THE AO U/S.153A(B) R.W.S. 143(3). REFERRING TO PAG E 5 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE LETTER ADDRESSED TO THE CIT CENTRAL ON 08-11-2004 IN WHICH THE ASSESSEE HAD REQUESTED TO ADJUST THE C ASH FOUND AGAINST THE SELF ASSESSMENT TAX FOR VARIOUS ASSESSMENT YEARS. HE SU BMITTED THAT TAX WAS PAID ON THE INCOME OF RS.10,18,290/- AND THE RETURN WAS FILED O N 08-11-2004. THE OBSERVATION OF THE LEARNED CIT(A) THAT NO SELF ASSESSMENT TAX W AS PAID IS ERRONEOUS SINCE THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,00,000/- ON 07- 07-2004, A COPY OF WHICH IS PLACED AT PAPER BOOK PAGE NO.4. 6.2 AS REGARDS THE OBSERVATION OF THE CIT(A) THAT T HERE ARE CERTAIN MISTAKES IN THE RETURN FILED ON 25-11-2004 SINCE THE WORD ORIG INAL WAS NOT STRIKED AND 8 THEREFORE THAT IS THE ORIGINAL RETURN, HE SUBMITTED THAT IT WAS NOT THE CASE OF THE LOWER AUTHORITIES THAT THE ASSESSEE HAS NEVER FILED THE RETURN ON 08-11-2004. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SANTOSH P. PIPADA HE SUBMITTED THAT THE CASE IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE AND AT BEST PENALTY CAN BE LEVIED ON THE ADDITION O F RS.97,198/- AND NOT ON THE WORK IN PROGRESS AMOUNTING TO RS.4,50,000/-. 7. THE LEARNED DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO PAGE NO.1 OF THE PAPER BOOK HE SUBMITT ED THAT THE ASSESSEE ON THE TOP OF THE RETURN HAS MENTIONED RETURN FILED U/S.153A( B). CLAUSE 12 OF THE SAID RETURN SHOWS THAT IT IS A REVISED RETURN. IN THE C OPY OF THE ACKNOWLEDGEMENT PLACED AT PAGE NO.7 THE ENTIRE CLAUSE 12 HAS BEEN CROSSED, THEREFORE, IT RAISES A DOUBT REGARDING THE AUTHENTICITY OF THE RETURN FILED ON 0 8-11-2004. NO PLEA OF FILING OF ORIGINAL RETURN WAS FILED BEFORE THE AO. THERE IS NO SUCH REFERENCE IN THE ASSESSMENT ORDER REGARDING ADJUSTMENT OF TAX. ALL T HESE POINTS SHOW THAT THE CONDUCT OF THE ASSESSEE IS NOT ABOVE BOARD. THEREF ORE, THE CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO. 8. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS REJO INDER SUBMITTED THAT IN CONNECTED CASES THE LEARNED DR WAS DIRECTED TO VERI FY THE RETURN RECEIPT REGISTER TO FIND OUT WHETHER THE RETURNS IN THE CASE OF OTHER F AMILY MEMBERS WERE FILED OR NOT. HOWEVER, DESPITE SUCH OPPORTUNITY GIVEN, THE LEARNE D DR WAS UNABLE TO VERIFY THE SAME. SINCE ASSESSMENTS HAVE BEEN COMPLETED U/S.15 3A(B) R.W.S.143(3) ON THE BASIS OF RETURNS FILED BY VARIOUS FAMILY MEMBERS AN D SINCE RETURN FILED BY THE ASSESSEE ON 08-11-2004 WAS IN BETWEEN, THEREFORE, T HE ASSESSEE HAS CONCLUSIVELY PROVED BEYOND DOUBT THAT THE FIRST RETURN WAS FILED ON 08-11-2004. HE FURTHER SUBMITTED THAT DESPITE A DIRECTION BY THE BENCH THE LEARNED DR WAS UNABLE TO PRODUCE THE ENTIRE CASE RECORDS OF THE DEPARTMENT S INCE THE ORDER SHEET WAS NOT 9 AVAILABLE AND THE VARIOUS CORRESPONDENCES MADE BY T HE ASSESSEE TO THE ASSESSING OFFICER ARE ALSO NOT AVAILABLE IN THE RECORDS FILED BY THE DEPARTMENT. RELYING ON VARIOUS DECISIONS HE SUBMITTED THAT THE PENALTY LEV IED BY THE AO AND UPHELD BY THE CIT(A) SHOULD BE DELETED. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE PENALTY HAS BEEN LEVIED ON ACCO UNT OF 2 ITEMS, I.E. SUPPRESSION OF WORK IN PROGRESS RS.4,50,000/- AND AMOUNT PAID TO P MC TOWARDS ROAD DEVELOPMENT NOT ACCOUNTED IN THE BOOKS OF ACCOUNT O F RS.97.198/-. WE FIND DURING THE PENALTY PROCEEDINGS THE ASSESSEE DID NOT APPEAR BEFORE THE AO NOR FILED ANY SUBMISSION FOR WHICH THE AO LEVIED PENALTY OF R S.1,95,025/-. WE FIND BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE HAD F ILED THE RETURN OF INCOME ON 08- 11-2004 VIDE ACKNOWLEDGEMENT NO.403 DISCLOSING NET TAXABLE INCOME OF RS.10,18,290/- WHICH INCLUDED THE AMOUNT FOR RS.4,5 0,000/-. THE ASSESSEE FILED A REVISED RETURN ON 25-11-2004 DISCLOSING THE RETURNE D INCOME AT RS.5,68,290/- VIDE ACKNOWLEDGEMENT NO.418, DATED 25-11-2004 WHICH WAS LATER WITHDRAWN BY THE ASSESSEE VIDE LETTER DATED 06-12-2004 ON THE GROUND THAT THE FIRST RETURN FILED WAS A BELATED RETURN AND THEREFORE THE SAME IS NON-EST. IN RESPONSE TO NOTICE U/S.153C THE ASSESSEE FILED A RETURN ON 12-01-2007 DISCLOSING RE TURNED INCOME AT RS.10,18,290/-. THERE BEING NO DIFFERENCE BETWEEN THE FIRST RETURN FILED ON 08-11-2004 AND THE RETURN FILED IN RESPONSE TO NOTICE U/S.153C ON 12-0 1-2007, THEREFORE, THERE IS NO CONCEALMENT OF INCOME AND THEREFORE NO PENALTY IS L EVIABLE ON ACCOUNT OF WORK IN PROGRESS OF RS.4,50,000/-. WE FIND THE LEARNED CIT (A) DID NOT AGREE WITH THE ABOVE CONTENTION OF THE ASSESSEE ON THE GROUND THAT NO SUCH PLEA WAS TAKEN BEFORE THE AO AND THIS ARGUMENT HAS COME FOR THE FIRST TIM E BEFORE THE APPEAL PROCEEDINGS. HE FURTHER NOTED THAT IN THE RETURN F ILED ON 25-11-2004 THERE ARE 10 CERTAIN MISTAKES SUCH AS COLUMN NO.12 OF THE RETURN IS CROSSED AND IN THE RETURN FILED ON 08-11-2004 COLUMN NO.12 SHOWS THE SAME TO BE REVISED RETURN. ACCORDING TO THE LEARNED CIT(A) THE ASSESSEE HAS NO T PAID ANY SELF ASSESSMENT TAX ON THE RETURNED INCOME OF RS.10,18,290/- FILED ON 0 8-11-2004, THEREFORE, CONDUCT OF THE ASSESSEE DOES NOT APPEAR TO BE BONAFIDE. SO FAR AS THE ADDITION OF RS.97,198/- IS CONCERNED HE NOTED THAT THE ASSESSEE DURING THE COURSE OF SEARCH HAD HIMSELF ADMITTED THAT PAYMENT HAS BEEN DONE OUT OF UNACCOUNTED INCOME AND OFFERED TO PAY THE TAX. THEREFORE, THE ASSESSEE HA S CONCEALED THE PARTICULARS OF INCOME AND AO WAS JUSTIFIED IN LEVYING PENALTY. 10. WE FIND THE ASSESSEE VIDE LETTER DATED 21-01-20 08 HAD MADE A REQUEST TO THE AO TO DROP THE PENALTY PROCEEDINGS WHEREIN IT WAS C ATEGORICALLY MENTIONED THAT THE ORIGINAL RETURN WAS FILED ON 08-11-2004 WHICH I S NOT WITHIN THE STATUTORY TIME AND THE ASSESSEE SUBSEQUENTLY THROUGH OVERSIGHT HAD FILED ANOTHER RETURN ON 25-11- 2004. FOR THE SAKE OF CONVENIENCE THE LETTER ADDRE SSED BY THE ASSESSEE TO THE AO IS REPRODUCED AS UNDER : SHANTILAL N. LODHA (HUF) 134/B+4, RAUNAK RESIDENCY, MAYUR COLONY, KOTHRUD, PUNE 411 029. DATE : 21-01-2008 TO THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), INCOME TAX OFFICE, PMT BUILDING, SWARGATE, PUNE. SIR, SUBJECT : REQUEST TO DROP THE PENALTY PROCEEDING FO R PENALTY U/S.271(1)(C) OF I.T. ACT, 1961 FOR A.Y. 2004-05. KINDLY REFER YOUR NOTICE FOR PENALTY PROCEEDINGS U/ S.274 RWS 271(1)(C) OF I.T. ACT FOR A.Y. 2004-05 AN D WE WISH TO SUBMIT THE FOLLOWING FACTS IN SUPPORT OF OUR REQUES T TO DROP THE PENALTY PROCEEDING FOR PENALTY INITIA TED U/S.271(1)(C) OF I.T. ACT 1961 FOR A.Y. 2004-05. WE HAVE FILED OUR ORIGINAL RETURN OF INCOME DECLARI NG THE NET TAXABLE INCOME OF RS.10,18,290/- VIDE AC K.NO.403, DATED 08-11-2004. XEROX OF I.T. RETURN ACK, IS ENC LOSED HEREWITH FOR YOUR KIND PERUSAL. LATER ON, AFTER RECEIPT OF NOTICE U/S.153C OF I.T. ACT, WE HAVE SUBMITTED REVISED RETURN DECLARING THE NET TAXABLE INCOME OF RS.10,18,290/- VIDE ACK NO.37 DATED 12-01 -2007 AND THUS THERE IS NO DIFFERENCE BETWEEN THE I NCOME IN ORIGINAL RETURN OF INCOME AND REVISED RETURN OF INC OME. XEROX OF I.T. ACK ARE ENCLOSED HEREWITH FOR Y OUR KIND PERUSAL. 11 IN BETWEEN THE ABOVE SAID TWO RETURNS, THROUGH OVER SIGHT WE HAVE SUBMITTED A RETURN OF INCOME ON 25-11 -2004 DECLARING THE INCOME OF RS.5,68,290/-. HOWEVER, IM MEDIATELY AFTER FILING THIS RETURN, WE HAVE VOLUNTA RILY GIVEN A LETTER DATED 06-12-2004 FOR WITHDRAWAL OF SAID RETURN WRON GLY FILED THROUGH OVERSIGHT. XEROX OF SAID LETTER IS ENCLOSED HEREWITH. IT IS PERTINENT TO NOTE THAT, THE LETTER OF WITHDRAWAL HAS BEEN SUBMITTED VOLUNTARILY AND B EFORE ANY NOTICE AND BEFORE FILING THE REVISED RETURN U/S.153C OF I.T. A CT. WE WISH TO DRAW YOU KIND ATTENTION TO THE FACT THAT , THE ORIGINAL RETURN FILED ON 08-11-2004 IS NOT WI THIN THE STATUTORY TIME AND THEREFORE THE SUBSEQUENT RETURN FILED THRO UGH OVERSIGHT ON 25-11-2004 EVEN IF FOR MOVEMENT AS SUMED AS A REVISED RETURN U/S.139(5) OF I.T. ACT, THE RETURN F ILED SHALL BE INVALID AND NON-EST FOR INCOME TAX AS SESSMENT. THEREFORE THE IT RETURN FILED THROUGH OVERSIGHT ON 25-11-2004 MAY PLEASE BE IGNORED AND MAY NOT BE CON SIDERED FOR THE PURPOSE OF INCOME TAX ASSESSMENT. FURTHER IT IS PERTINENT TO NOTE THAT, THE ASSESSMEN T ORDER FOR A.Y. 2004-05 DID NOT CONTAINED ANY REFE RENCE OF RETURN FILED THROUGH OVERSIGHT ON 25-11-2004 SINCE IT HAS BEEN ENTIRELY IGNORED AS EXPLAINED ABOVE. WE WISH TO DRAW YOUR KIND ATTENTION TO THE FACT, TH AT THE INCOME ASSESSED AS PER AO WAS RS.1,11,54,888 /- AS AGAINST THE INCOME DECLARED RS.10,18,220/- IN ORIGINAL AS W ELL AS REVISED RETURN OF INCOME. THUS YOUR HONOUR SHALL APPRECIATE THAT, THERE IS EXTREMELY SMALL DIFFERENC E OF RS.97,198/- WHICH AS ADDED BY AO IN ASSESSMENT ORDER. FURTHER THE ADDITION OF RS.97,198/- MADE BY THE AO WAS TOWARDS CASH PAYMENT TO MUNICIPAL CORPORATION A S DISCUSSED IN ASSESSMENT ORDER. WE WISH TO DRAW YOU R KIND ATTENTION TO THE FACT THAT, THE PAYMENT OF R S.97,198/- TO MUNICIPAL CORPORATION HAS ALREADY BEEN REFLECTED IN THE REGULAR COMPUTERIZED BOOKS OF ACCOUNTS. IT IS PERTINENT TO NOTE THAT, WE DID NOT ACTED DELI BERATELY IN DEFIANCE OF LAW NEITHER GUILTY OF CONDU CT, CONTUMACIOUS OR DISHONEST NOR ACTED IN CONSCIOUS DISREGARD TO ITS O BLIGATION. WE HAVE COOPERATED TO THE ASSESSMENT PROCEEDING. T HERE IS NO CONSCIOUS BREACH OF LAW. WE DID NOT CON CEAL ANY INCOME OR FACTS AND NEITHER FURNISHED ANY INACCURAT E PARTICULARS OF INCOME. IT IS APPRECIATE TO NOTE THAT, YOUR HONOUR DID NOT FIND ANY CONCEALMENT DURING THE COURSE OF A SSESSMENT PROCEEDING. WE WISH TO DRAW YOUR KIND ATTENTION TO THE FOLLOWIN G VARIOUS JUDGMENTS WHEREIN THE HON. SC/HC/ITAT HAS DEPLETED/DROPPED PENALTY U/S.271(1)(C) OF INCOME TA X ACT. IN CASE OF THE HINDUSTAN STEEL LTD. VS. STATE OF OR ISSA (1972) 63 ITR 26 (SC) WHEREIN HON SC HAS HELD THAT, NO PENALTY SHALL BE LEVIED IN CASE OF TECHNICAL BREACH , WERE THE BREACH FLOWS FROM BONAFIDE BELIEF THAT T HE OFFERED IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATU TE. IT IS PERTINENT TO NOTE THAT, WE HAVE ALREADY PAID THE ENTIRE TAX/ASSESSMENT DUES ALONG WITH INTEREST U/S.234B &C. YOUR HONOUR SHALL APPRECIATE THAT, THE LEVY OF PENA LTY IN ADDITION TO ABOVE SAID TAX/INTEREST WILL CER TAINLY HAVE OVERBURDENED AND GRATE HARDSHIP CAUSE OF NATURAL JU STICE TO AN HONEST TAX PAYERS. LOOKING TO THE ABOVE FACTS AND CIRCUMSTANCES, WE RE QUEST YOUR HONOUR KINDLY DROP THE PENALTY PROCEEDIN G INITIATED FOR PENALTY U/S.271(1)(C) OF THE I.T. ACT 1961 FOR A.Y. 2004-05. KINDLY DO THE NEEDFUL & OBLIGE, THANKING YOU, YOURS FAITHFULLY, SHANTILAL LODHA (HUF) (SHANTILAL LODHA) KARTA/MANAGER ENCL:AS ABOVE 11. WE FIND THE ASSESSEE VIDE LETTER DATED 06-12-20 04 ADDRESSED TO THE AO HAD MADE A REQUEST TO GRANT PERMISSION FOR WITHDRAWAL O F INCOME TAX RETURN FILED THROUGH OVERSIGHT FOR A.Y. 2004-05 VIDE ACKNOWLEDGE MENT NO.418, THE CONTENTS OF THE LETTER ARE REPRODUCED AS UNDER : 12 SHANTILAL N. LODHA (HUF) 134/B+4, RAUNAK RESIDENCY, MAYUR COLONY, KOTHRUD, PUNE 411 029. DATE : 06-12-2004 TO THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), INCOME TAX OFFICE, PMT BUILDING, SWARGATE, PUNE. SIR, SUBJECT : REQUEST TO GRANT THE PERMISSION FOR WITHD RAWAL OF I.T. RETURN FILED THROUGH OVERSIGHT FOR A. Y. 2004/05 VIDE ACK NO. 418 DATED 25/11/2004. KINDLY NOTE THAT, THROUGH OVERSIGHT WE HAVE FILED T HE I.T. RETURN FOR A.Y. 2004/05 VIDE ACK NO. 418 DA TED 25/11/2004. IT IS PERTINENT TO NOTE THAT, THE ABOVE SAID RETURN HAS BEEN FILED THROUGH OVERSIGHT AND INADVERTENTLY AND THEREFORE WE REQUEST YOUR HONOUR KINDLY IGNORE IT AND GRANT US P ERMISSION FOR WITHDRAWAL OF SAID RETURN. WE WISH TO DRAW YOUR KIND ATTENTION TO THE FACT THA T, WE HAVE FILED VOLUNTARILY AND WITHOUT ANY NOTICE THE ORIGINAL RETURN DECLARING THE HIGHER NET TAXABLE INCOME OF RS.10,18 ,290/- FOR A.Y. 2004/05 VIDE ACK NO.403 DATED 08/11 /2004 AND ACCORDINGLY WE WISH TO ASSESS OURSELVES EXCLUSIVELY ON THE BASIS OF RETURN FILED ON 08/11/2004. FURTHER WE WISH TO DRAW YOUR KIND ATTENTION TO THE FACT THAT, THE ORIGINAL RETURN FILED ON 08/11/2004 IS NOT WITHIN THE STATUTORY TIME AND THEREFORE THE SUBSEQUENT RETURN FILED THROUGH OVERSIGHT ON 25/11/2004 EVEN IF FOR M OVEMENT ASSUMED AS A REVISED RETURN U/S.139(5) OF I.T. ACT, THE RETURN FILED SHALL BE INVALID AND NON-EST FOR INCOME TAX ASSESSMENT. THEREFORE THE IT RETURN FILED THROUGH OVERSIGHT ON 25/11/2004 MAY PLEASE BE IGNORED AND MAY PLEASE BE ALLOWED TO WITHDRAW. LOOKING TO THE ABOVE FACTS AND CIRCUMSTANCES, WE RE QUEST YOUR HONOUR KINDLY GRANT US PERMISSION FOR WI THDRAWAL OF I.T. RETURN FILED THROUGH OVERSIGHT FOR A.Y. 2004/0 5 ON 25/11/2004. KINDLY DO THE NEEDFUL & OBLIGE, THANKING YOU, YOURS FAITHFULLY, SHANTILAL LODHA (HUF) SD/- (SHANTILAL LODHA) KARTA/MANAGER 12. DURING THE COURSE OF HEARING BEFORE THE TRIBUNA L, THE LEARNED DR WAS DIRECTED TO PRODUCE THE RECORDS OF THE DEPARTMENT I N THE PENALTY PROCEEDINGS. HOWEVER, THE RECORDS PRODUCED WERE NOT COMPLETE. T HERE WAS NEITHER ANY ORDER SHEET NOR COPIES OF THE LETTERS FILED BY THE ASSESS EE BEFORE THE AO ALTHOUGH THESE LETTERS BEAR THE STAMP OF THE OFFICE OF THE AO. WE FURTHER FIND ALTHOUGH RETURNS OF OTHER FAMILY MEMBERS FILED ON THE SAME DAY BEARING HAND WRITTEN RECEIPT NUMBERS HAVE SUBSEQUENTLY BEEN ASSESSED BY THE AO IN ORDERS PASSED U/S.153A(B) R.W.S. 143(3), HOWEVER, THE RETURN FILED BY THE ASSESSEE O N 08-11-2004 DOES NOT BEAR ANY 13 MENTION IN THE ASSESSMENT ORDER. SIMILARLY WE FIND THE ASSESSEE VIDE LETTER DATED 08-11-2004 ADDRESSED TO THE CIT WITH COPY TO THE AD DITIONAL CIT HAD REQUESTED FOR ADJUSTMENT OF THE SEIZED CASH TOWARDS SELF ASSE SSMENT TAX PAYABLE FOR A.Y. 2000-01 TO 2004-05 IN THE CASE OF THE HUF AND FOR A .Y. 2004-05 IN THE CASE OF THE INDIVIDUAL. THE ASSESSEE HAS ALSO PAID AN AMOUNT O F RS.1,00,000/- AS SELF ASSESSMENT TAX ON 07-07-2004 IN THE CASE OF THE HUF FOR THE A.Y. 2004-05. ALL THESE ABOVE FACTS SHOW THAT A RETURN DECLARING INCO ME OF RS.10,18,290/- WAS FILED ON 08-11-2004 ALTHOUGH THE SAME WAS U/S.139(4). TH E LETTERS FILED BY THE ASSESSEE BEFORE THE AO COULD NOT BE PROVED TO BE FALSE OR UN TRUE BY THE DEPARTMENT. UNDER THESE CIRCUMSTANCES, WE FIND SOME FORCE IN THE SUBM ISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT SINCE THE AMOUNT OF RS.4,50,0 00/- WAS DECLARED IN THE ORIGINAL RETURN FILED, THEREFORE NO PENALTY IS LEVIABLE. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO D ELETE THE PENALTY LEVIED ON THE AMOUNT OF RS.4,50,000/- ON ACCOUNT OF WORK IN PROGR ESS. 13. SO FAR AS THE PENALTY LEVIED ON THE AMOUNT OF R S.97,198/- WE FIND THE ASSESSEE DURING THE COURSE OF SEARCH HAD HIMSELF AD MITTED THAT THE PAYMENT HAS BEEN DONE OUT OF THE UNACCOUNTED INCOME AND OFFERED TO PAY THE TAX. THEREFORE, LEVY OF PENALTY ON THE ABOVE AMOUNT OF RS.97,198/-, IN OUR OPINION, HAS TO BE UPHELD. IN THIS VIEW OF THE MATTER, WE SET ASIDE T HE ORDER OF THE CIT(A) AND DIRECT THE AO TO RESTRICT THE LEVY OF PENALTY ON THE CONCE ALED INCOME OF RS.97,198/- AND NOT ON THE INCOME OF RS.5,47,198/-. WE HOLD AND DI RECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOW ED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF OCTOBER 2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PAND A) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: THE 30 TH OCTOBER 2012 SATISH 14 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4. THE D.R, B PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE