KAILASH PRASAD JHALANI, Jaipur V. ITO, Dausa

ITA 135/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5023 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Keywords: Loose papers; Additional evidence; Difference of opinion; Condonation of delay; Revised return
• Section: 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 135/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 SHRI KAILASH PRASAD JHALANI PROP. M/S. JHALANI SAREE EMPORIUM BASWA ROAD, BANDIKUI, DAUSA CUKE VS. THE ITO WARD- DAUSA DAUSA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAJ MEHRA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/10/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13 /10/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 26-07-2013 FOR THE ASSESSMENT YEAR 20 06-07 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY OF RS. 1,43,338/- LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, A RBITRARILY. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED SUSTAINI NG THE PENALTY U/S 271(1)(C) ON ADDITION OF RS. 3,00,000/- ON ACCO UNT OF ALLEGED ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 2 INVESTMENT IN EXCESS STOCK WITHOUT APPRECIATING THE FACT THAT ADDITION WAS SUSTAINED ON ESTIMATE BASIS AND THE ASSESSEE HA S FURNISHED ALL THE REQUIRED DETAILS AND EXPLANATIONS REGARDING IR REGULARITIES IN QUANTIFICATIONS AND VALUATION OF STOCK FOUND DURING THE COURSE OF SURVEY AND FURTHER EXPLAINED EXCESS STOCK SO FOUND RELATED TO DEAD STOCK HAVING NEGLIGIBLE VALUE HENCE THE PENALTY SO LEVIED DESERVES TO BE DELETED. 1.2 THAT THE LD. AO AS WELL AS LD. CIT(A) HAS FURT HER ERRED IN MISINTERPRETING THE FACTS / EVIDENCES AVAILABLE BEF ORE THEM AND FURTHER IGNORED THE FACT THAT THE ADDITIONS SUSTAIN ED BY LD. CIT(A) ON ACCOUNT OF EXCESS CASH ARE PART OF THE INCOME ALREA DY OFFERED BY ASSESSEE IN PRECEDING ASSESSMENT YEAR ON ACCOUNT OF MONEY LENDING BUSINESS, THUS NEITHER ANY INACCURATE PARTICULARS W ERE FILED NOR ANY INCOME WAS CONCEALED THEREFORE, THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 DESERVES TO BE DELETED. 1.3 THAT THE LD. CIT(A) HAS FURTHER ERRED IN SUSTA INING THE PENALTY ON ADDITION OF RS. 69,115/- ON ACCOUNT OF I NTEREST INCOME WITHOUT APPRECIATING THE FACT THAT ADDITION MADE BY THE LD. AO ON ESTIMATE BASIS ON MERE ASSUMPTION AND PRESUMPTION W ITHOUT PROPERLY APPRECIATING THE EXPLANATION FILED BY THE ASSESSEE THUS THE ASSESSEE HAS NEITHER FURNISHED ANY INACCURATE PARTI CULARS OF INCOME NOR CONCEALED ANY INCOME THEREFORE, THE PENALTY LEV IED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 DESERVES TO BE DELETED. 1.4 THAT THE LD.CIT (A) HAS FURTHER ERRED IN SUSTA INING PENALTY WITHOUT APPRECIATING THE FACT THAT NO ENQUIRY WAS M ADE IN PENALTY PROCEEDINGS SO AS TO HOLD THE ASSESSEE AS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING ANY INCOME WHEN THE PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT PR OCEEDINGS AND ALSO WITHOUT EVEN STATING ANY REASON AS WHY THE SUB MISSION MADE BY THE ASSESSEE IS NOT SATISFACTORY, THUS THE PENALTY SO LEVIED DESERVES TO BE DELETED. 2.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASS ESSEE SUBMITTED THAT THE ASSESSEE HAS FILED THE APPEAL LATE BY 136 DAYS FOR WHICH AN ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 3 APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED BY THE ASSESSEE WITH FOLLOWING PRAYER. THE ORDER OF THE LD. CIT(A), ALWAR WAS DELIVERED/ SERVED ON ME ON 12-08-2013 AND THE SAME WAS HANDED OVER BY ME TO THE OFFICE STAFF TO PREPARE AN APPEAL WITH CONSULTA TION OF THE COUNSEL AND TO BE FILED BEFORE THE HON'BLE BENCH. HOWEVER, THE CONCERNED OFFICE STAFF COULD NOT PROPERLY ATTEND TO THE INSTR UCTIONS AND THE SUBJECT ORDER WITH THE PASSAGE OF TIME GOT DUMPED W ITH THE OFFICE AND THE APPEAL IS BEING FILED ON 24-02-2014 I.E. AF TER THE DELAY OF 136 DAYS . THE DELAY CAUSED IN FILING OF THE APPEAL IS PRIMARILY ATTRIBUTABLE TO THE MISTAKE OF THE OFFICE STAFF OF THE ASSESSEE AND THE ASSESSEE ALWAYS HAD ACTED BONA FIDE AND HAD DEPENDE D UPON THE HUMAN RESOURCE TO ATTEND TO THE LEGAL FORMALITIES A ND THE DELAY IS OF FEW DAYS. TO THIS EFFECT, THE LD. AR OF THE ASSESSEE RELIED O N THE DECISION OF HON'BLE APEX COURT IN THE CASE OF VEDABAI ALIAS VAIJAYANATA BI BABU RAO PATIL VS. SHANTA RAM BABU RAO PATIL AND OTHERS , 254 ITR 798 (SC) AND COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTHERS, 167 IT R 471 (SC) 2.2 THE LD. DR IS HEARD WHO OPPOSED THE CONDONATION APPLICATION OF THE ASSESSEE. 2.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I AM OF THE CONSIDERED VIEW TH AT IN THE GIVEN FACTS AND CIRCUMSTANCES, THE ASSESSEE WAS PREVENTED BY SU FFICIENT CAUSE WHICH WAS BEYOND HIS CONTROL. THEREFORE, THE DELAY IS CON DONED. ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 4 3.1 APROPOS GROUND NO. 1 TO 1.4 OF THE ASSESSEE, BR IEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETO R OF TWO FIRMS I.E. M/S. JHALNI SAREE EMPORIUM AND M/S JHALANI CLOTH STORES. A SURVEY OPERATION WAS CONDUCTED U/S 133A OF THE I.T. ACT ON 30.1.200 6 AT THE BUSINESS PREMISES OF THE ASSESSEE FIRMS. DURING THE COURSE O F SURVEY, VARIOUS DISCREPANCIES WERE NOTED BY THE SURVEY TEAM. THE SU RVEY TEAM HAD CARRIED OUT COMPLETE PHYSICAL VERIFICATION OF CASH AND STOCK AVAILABLE IN BOTH THE BUSINESS PREMISES OF THE ASSESSEE. ON VERI FICATION OF THE STOCK ON 30-01-2006 BY THE AO, IT WAS WORKED OUT AT RS. 12,8 3,870/- AFTER ALLOWING GROSS PROFIT @ 14% AND THUS ACTUAL VALUAT ION AT COST OF STOCK WAS WORKED OUT AT RS. 11,04,128/- AS AGAINST THE ST OCK AS PER BOOKS OF ACCOUNTS AT RS. 7,93,304/- AND ACCORDINGLY THE EXCE SS STOCK WAS WORKED OUT AT RS. 3,10,824/-. IT IS ALSO NOTICED BY THE AO THAT THE CASH WAS PHYSICALLY FOUND AT RS. 2,79,000/- AS AGAINST RS. 1 ,03,065/- AS PER BOOKS OF ACCOUNTS IN BOTH THE FIRMS AND HENCE, THE EXCES S CASH OF RS. 1,75,935/- WAS FOUND. THE AO ALSO FOUND CERTAIN LOOSE PAPERS A ND DIARIES RELATING TO MONEY LENDING BUSINESS. HOWEVER, AS PER THE AO, THE ASSESSEE FAILED TO JUSTIFY THE EXCESS CASH, EXCESS STOCK AND THE ENTRI ES CONTAINING IN DIARIES. IT IS ALSO NOTED THAT THE ASSESSEE BEFORE THE AO C ONTENDED THAT THE STOCK WAS QUANTIFIED WITHOUT PROPERLY DOING THE MEASUREME NTS ETC. AND FURTHER ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 5 THE VALUATION HAS BEEN DONE ON ESTIMATE BASIS. THE VALUE OF STOCK WAS TAKEN ON THE BASIS OF THE PRICE MENTIONED ON THE TA GS ANNEXED TO THE CLUSTERS OF CLOTH AND FULL VALUE WAS WORKED OUT ON THE BASIS OF THE STANDARD LENGTH OF THE CLUSTER BY IGNORING THE FACT THAT PART OF CLOTH WAS SOLD AND NO CREDIT WAS GIVEN FOR IT. THE ASSESSEE A LSO CONTENDED THAT THE ASSESSEE WAS DEALING IN CLOTHS, READYMADE GARMENT S AND SAREES WHERE THE DEAD AND PILED UP STOCK WAS A REGULAR FEATURE. IN ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAD EAR NED INTEREST INCOME OF RS.69,115/- ( I.E. RS. 54,059 + RS. 15,066). CONCLU SIVELY THE AO MADE ADDITION FOLLOWING ADDITION. 1. ADDITION ON ACCOUNT OF EXCESS STOCK RS. 2,10, 824/- 2. ADDITION ON ACCOUNT OF EXCESS CASH RS. 1,75,93 5/- 3. ADDITION ON ACCOUNT OF INTEREST INCOME (A-3)RS. 69,115/- THE AO INITIATED THE PENALTY PROCEEDINGS U/S 271(1) ( C) OF THE ACT AGAINST THE ASSESSEE FOR CONCEALMENT OF INCOME. HOWEVER, TH E AO VIDE HIS ORDER DATED 07-03-2012 IMPOSED THE PENALTY OF RS. 1,43,33 8/- U/S 271(1) OF THE ACT. 3.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CITA) WHO HAD CONFIRMED THE ACTION OF THE AO BY OBS ERVING AS UNDER:- 4.3 I HAVE CONSIDERED THE DETAILED SUBMISSION MAD E BY THE A.R. AND FIND THAT THE CASE LAWS CITED BY TH E A.R. ARE NOT ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 6 APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THIS C ASE. AO HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 271(1) O F THE I.T. ACT AND LEVIED A PENALTY ON ACCOUNT OF ACCOUNTED STOCK OF RS. 3 LAC, CASH OF RS. 1,21,866/- AND INTEREST INCOME OF RS. 6 9,115/-FOUND DURING THE COURSE OF SURVEY OPERATION U/S 133A OF I .T. ACT AND WHICH HAS BEEN SURRENDERED BY THE ASSESSEE. THE ADD ITION MADE ON ACCOUNT OF THESE UNDISCLOSED SOURCE HAS ALREADY BE EN CONFIRMED BY MY PREDECESSOR IN THE QUANTUM APPEAL AND THE SAI D DECISION HAS BECOME FINAL AS NO APPEAL HAS BEEN FILED AGAINST TH E SAME BY THE ASSESSEE. 4.4 IT HAS BEEN HELD BY VARIOUS COURTS THAT PENALTY U/S 271(1) WAS RIGHTLY LEVIED BY THE AO EVEN IN CASES WHERE THE ADDITION HAS BEEN MADE AND INCOME HAS BEEN ASSESSED ON ESTIMATE BASIS AFTER REJECTING THE EXPLANATION OF THE ASSESS EE CIT VS. HOSHIARPUR EXPRESS TRANSPORT CO. LTD. 162 ITR 393 ( P&H), CIT VS. FAZILA DBWALI TRANSPORT CO. (P) LTD. , 178 ITR 656 (P&H),CIT VS. SMT. CHANDRAKANTA 205 ITR 607 (MP), C IT VS. KRISHNASWAMY & SONS 219 ITR 157 (MAD.). FURTHER IN A RECENT DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT HA S HELD IN THE CASE OF PREM PAL GANDHI VS. CIT, 335 ITR 23, THAT L EVY OF PENALTY IS JUSTIFIED, EVEN IF REVISED RETURN SHOWING HIGHER INCOME HAS BEEN FILED, AFTER DETECTION OF THE SAME BY THE INCOME-TA X DEPARTMENT. ALSO, HON'BLE DELHI HIGH COURT IN ITS ORDER DATED 2 2 ND JANUARY 2013, IN THE CASE OF CIT VS. MAK DATA LTD. REPORTED IN87 DTR 172 HAS UPHELD LEVY OF PENALTY IN A CASE WHERE INCOME H AS BEEN SURRENDERED BY THE ASSESSEE WITH VIEW TO AVID LITIG ATION AND BUY PEACE. 4.5 IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN MIND THE FACTS AND CIRCUMSTANCES OF THE CASE AND MATERIA L AVAILABLE ON RECORD, I CONFIRM THE LEVY OF PENALTY OF RS. 1,43,3 38/- IMPOSED BY THE AO U/S 271(1) OF THE I.T. ACT. ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 7 3.3 DURING THE COURSE OF HEARING, THE ASSESSEE PRAY ED FOR DELETION OF PENALTY CONFIRMED BY THE LD. CIT(A). THE LD. AR OF THE ASSESSEE FILED THE WRITTEN SUBMISSION TO THIS EFFECT AS UNDER:- GROUNDS OF APPEAL NOS. 01 TO 1.1: UNDER THESE GROUNDS OF APPEAL, THE ASSESSEE HAS CHA LLENGED THE ACTION OF LD. CIT(A) IN UPHOLDING THE PENALTY IMPOSED BY LD. AO ON ACCOU NT OF ALLEGED EXCESS INVESTMENT IN STOCK. BRIEF FACTS PERTAINING TO THESE GROUNDS OF APPEAL A RE THAT, A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED AT THE BUSINESS PREMISES OF ASSESSEE WHEREIN, THE STOCK FOUND WAS VALUED BY THE SURVEYING OFFICIA LS AT RS. 12,83,870/- ON THE BASIS OF SALE PRICE MENTIONED ON THE STOCK ITEMS. ON BEIN G POINTED OUT TO THE LD. AO, HE ALLOWED A DEDUCTION OF RS. 1,79,742/- BEING GROSS P ROFIT @ 14% AND THE RESULTANT AMOUNT OF RS. 11,04,128/- WAS ALLEGED BY LD. AO TO BE THE VALUE OF STOCK AND THE VALUE OF STOCK DECLARED BY ASSESSEE OF RS. 7,93,304 /- (AGGREGATE OF BOTH THE FIRMS) WAS NOT ACCEPTED AND THE DIFFERENCE OF RS. 3,10,824/- W AS ADDED BY THE LD. AO TO THE INCOME OF ASSESSEE. SUBSEQUENTLY, PENALTY U/S 271(1 )(C) OF THE INCOME TAX ACT, 1961 WAS IMPOSED ON ACCOUNT OF THE DIFFERENCE SO APPEARI NG OF RS. 3,10,824/- BY HOLDING THE SAME AS INCOME CONCEALED BY ASSESSEE. IN THIS REGARD IT IS SUBMITTED THAT, THE ADDITION O N WHICH PENALTY HAS BEEN LEVIED WAS MADE MERELY ON ACCOUNT OF DIFFERENCE CALCULATED BY ESTIMATING THE ACTUAL VALUE OF STOCK FOUND DURING THE COURSE OF SURVEY AND AS PER BOOKS OF ACCOUNTS WHICH WAS ALSO WORKED OUT ON ESTIMATE BASIS.THE ASSESSEE HAS DECLA RED THE VALUE OF STOCK ON THE BASIS OF COST PRICE. WHEREAS, THE SURVEYING OFFICIALS VAL UED THE STOCK ON THE BASIS OF SALE PRICE MENTIONED ON THE TAGS ANNEXED TO THE CLUSTERS (FKKU) OF CLOTH. FURTHER, FULL VALUE AS MENTIONED ON THE TAGS WAS TAKEN INTO CONSIDERATI ON EVEN OF THOSE CLUSTERS PART OF WHICH WAS ALREADY SOLD AND WAS HALF FILLED. THEREFO RE, IT IS CLEAR THAT THE VALUATION TAKEN BY THE SURVEYING AUTHORITIES WAS NOT ACCURATE . IT IS FURTHER SUBMITTED THAT, THE DIFFERENCE BETWEEN VALUATION DONE BY SURVEYING AUTH ORITIES AND THE VALUE DECLARED BY ASSESSEE CANNOT BE ALLEGED AS THE CONCEALED INCOME OF ASSESSEE. THE VALUATION WAS DONE MERELY ON ESTIMATE BASIS AND THE DIFFERENCE IN VALUATION IS APPEARING MERELY ON ACCOUNT OF DIFFERENT APPROACHES ADOPTED BY ASSESSEE AND SURVEYING AUTHORITIES IN VALUING THE STOCK WHICH AMOUNTS TO MERE DIFFERENCE OF OPINION AND IT IS TRITE LAW THAT NO PENALTY CAN BE LEVIED U/S 271(1)(C) OF THE ACT M ERELY ON ACCOUNT OF DIFFERENCE OF OPINION. ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 8 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS POINTED OUT ABOVE, THERE IS NO CONCEALMENT OF INCOME NOR ANY INACCURAT E PARTICULARS OF INCOME HAVE BEEN FURNISHED. THE ADDITION HAS BEEN MADE SOLELY ON ACC OUNT OF DIFFERENCE IN STOCK VALUATION HAVING OCCURRED DUE TO DIFFERENCE OF OPIN ION AND ESTIMATION BASIS. THEREFORE, NO ALLEGATION OF CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME IS SUSTAINABLE IN THE FACTS A ND CIRCUMSTANCES OF THE CASE. IN SUPPORT OF THE ABOVE CONTENTIONS, RELIANCE IS PL ACED ON THE FOLLOWING CASE LAWS: (I) [2014] 360 ITR 580CIT VS. KRISHI TYRE RETREADIN G AND RUBBER INDUSTRIES (RAJ HC) (II) 258 ITR 494 (MADRAS HIGH COURT) CIT V/S SMT. K . MEENAKSHIKUTTY (III) 254 TR 191 CIT VS. RAVAIL SINGH AND CO. (P. & H.) (IV) 258 ITR 85 (P&H) HARIGOPAL SINGH VS. CIT (V) 254 ITR 130 (P&H) CIT VS. SURESH KUMAR BANSAL IT IS FURTHER SUBMITTED THAT, EVEN THOUGH THE ADDIT ION ON THIS COUNT HAS BEEN SUSTAINED IN THE QUANTUM PROCEEDINGS, NEVERTHELESS, THIS FACT CANNOT BE IGNORED THAT THE VALUATION DONE BY THE SURVEYING AUTHORITIES WAS NOT ACCURATE AND WAS MERELY AN ESTIMATE WHICH IS FURTHER PROVED FROM THE FACT THAT THE LD. CIT(A) ALSO ALLOWED THE CREDIT FOR THE DEAD STOCK. PENALTY U/S 271(1)(C) WA S LEVIED MERELY BY BORROWING THE OBSERVATIONS MADE IN THE QUANTUM ASSESSMENT PROCEED INGS AND NO INDEPENDENT SATISFACTION ON THE BASIS OF SEPARATE INQUIRIES WAS RECORDED SO AS TO ESTABLISH THAT THE INCOME WAS CONCEALED BY ASSESSEE OR THAT, INACCURAT E PARTICULARS OF INCOME WERE FURNISHED. IT IS WELL ESTABLISHED LAW THAT THE QUAN TUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO DISTINCT AND SEPARATE PROCEEDIN GS AND THE OBSERVATIONS MADE IN QUANTUM PROCEEDINGS CANNOT BE BORROWED AND PENALTY CANNOT BE IMPOSED MERELY ON THE BASIS OF ADDITIONS MADE IN THE QUANTUM PROCEEDI NGS. HONBLE APEX COURT IN THE CASE OF EILLY LILLY & COM PANY REPORTED IN 312 ITR 225 HAS HELD THAT THE PENALTY PROCEEDINGS IS NOT AN AUT OMATIC OR MANDATORY FALLOUT OF THE ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS, TH EREFORE, THE SAME SHOULD NOT BE LEVIED IN ROUTINE MANNER. GROUND OF APPEAL NO. 1.2: IN THIS GROUND THE LEVY OF PENALTY ON THE ADDITION MADE ON ACCOUNT OF ALLEGED EXCESS CASH OF RS. 1,21,866/- FOUND DURING THE COURSE OF S URVEY. ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 9 IN THIS REGARD IT IS SUBMITTED THAT IN THE IMMEDIAT ELY PRECEDING ASSESSMENT YEAR ASSESSEE HAS OFFERED AN ADDITIONAL INCOME OF RS. 2, 44,400/- ON ACCOUNT OF MONEY LENDING BUSINESS FOUND NOTED IN THE LOOSE PAPERS IM POUNDED DURING THE COURSE OF SURVEY AND FURTHER A SUM OF RS. 50,992/- WAS OFFERE D FOR TAXATION IN THE YEAR UNDER APPEAL ON ACCOUNT OF INTEREST ON SUCH LOANS ON WHIC H NO PENALTY WAS INITIATED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE H AS CLAIMED SET OFF / TELESCOPING OF THE INCOME SO OFFERED HOWEVER THE SAME WAS NOT GIVE N EXCEPT A SUM OF RS. 54,049/- PERTAINING TO THE INTEREST ON OTHER DIARY ADDED AS ADDITIONAL INCOME IS ALLOWED BY LD. CIT(A). SINCE THE ASSESSEE HAS PROPER EXPLANATION WITH REGA RD TO THE EXCESS CASH FOUND DURING THE COURSE OF SURVEY IN THE SHAPE OF ADDITIONAL INC OME OFFERED DURING THE PREVIOUS ASSESSMENT YEAR AND ACCEPTED BY THE DEPARTMENT THER EFORE NO PENALTY SHOULD HAVE BEEN LEVIED ON SUCH ALLEGED EXCESS CASH OF RS. 1,21 ,866/-. GROUND OF APPEAL NO. 1.3: PENALTY U/S 271(1)(C) WAS ALSO LEVIED ON THE ADDITI ON OF RS. 69,115/-MADE ON ACCOUNT OF ALLEGED INTEREST INCOME RECEIVED DURING THE COUR SE OF SURVEY. IN THIS REGARD IT IS SUBMITTED THAT THE LD. AO HAS MADE THE ADDITION BY ALLEGING THAT ASSESSEE HAS FAILED TO DISCLOSE THE AMOUNT OF INTER EST IN ANOTHER DIARY FOR WHICH IT WAS EXPLAINED THAT THE SAME BELONGED TO OTHER FAMILY ME MBERS AND THUS NO ADDITION SHOULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, THIS EXPLANATION WAS NOT ACCEPTED BY LD. AO AND NOT ONLY THE ADDITION WA S MADE BUT THE PENALTY U/S 271(1)(C) WAS ALSO LEVIED. SINCE THE ASSESSEES SUBMISSION IS BONAFIDE AND WAS NOT ACCEPTED BY THE LD. AO WITHOUT BRINGING ON RECORD ANY CONTRARY MATERIAL ON MERELY ASSUMPTIONS AND PRESUMPTIONS THEREFORE NO PENALTY SHOULD HAVE BEEN MADE. FURTHER AS HAS BEEN SUBMITTED ABOVE THE PENALTY PROCEEDINGS ARE SEPARAT E AND DISTINCT PROCEEDINGS THEREFORE BEFORE ARRIVING AT A CONCLUSION OF ANY CO NCEALMENT, THE AO SHOULD HAVE MADE FRESH INQUIRIES AND CONSIDERED THE MATERIAL AN D EXPLANATION GIVEN BY THE ASSESSEE WHICH IN THE CASE HAS NOT BEEN DONE. IN THE CIRCUMSTANCES IT IS HUMBLY PRAYED THAT THE P ENALTY LEVIED OF RS. 1,43,338/- ON THE ADDITIONS FOR WHICH PROPER AND REASONABLE EXPLA NATION WAS GIVEN DURING THE ASSESSMENT AND PENALTY PROCEEDINGS DESERVES TO BE D ELETED. 3.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 10 3.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE SURVEY WAS CONDUCTED ON 30 .01.2006 AND DURING THE COURSE OF SURVEY EXCESS CASH, EXCESS STOCK AND PAPERS RELATING TO MONEY LENDING BUSINESS WERE FOUND WHICH HAD BEEN AD MITTED BY THE ASSESSEE. THE ASSESSEE BEFORE THE LOWER AUTHORITIES HAS MADE EXPLANATION FOR THE EXCESS STOCK AND CASH FOUND DURING SURVEY B UT THE AO BASED ON THE FINDINGS IN THE QUANTUM PROCEEDINGS HAD IMPOSED THE PENALTY WITHOUT GOING INTO THE MERITS OF THE SUBMISSIONS MADE BY TH E ASSESSEE BEFORE HIM. IT IS NOTED THAT WHEN THE INCOME DECLARED IN PREVIO US YEAR WAS ACCEPTED BY THE DEPARTMENT AND AS PER THE LD. AR NO PENALTY PROCEEDINGS WERE INITIATED IN THAT YEAR THEN IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED THE INCOME TO THE EXTENT OF SUCH ADDITIONAL INCOME DECLARED IN EARLIER YEARS FOR WHICH THE NECESSARY BENEFIT OF TELESCOPIN G SHOULD HAVE BEEN ALLOWED. IT IS FURTHER NOTED THAT THE STOCK WAS VA LUED ON THE TAG PRICE AND CERTAIN DEFICIENCIES WERE ALSO POINTED OUT REGARDIN G THE QUANTIFICATION AND MEASUREMENTS WHICH HAVE NOT BEEN CONSIDERED BY THE LOWER AUTHORITIES. IT IS NOTED THAT THE GROSS PROFIT RATE WAS TAKEN BY TH E LOWER AUTHORITIES AT 14% WHICH IS AN ESTIMATION TO WORK OUT THE COST O F STOCK AND IT CANNOT BE SAID THAT THE STOCK SO FOUND IN EXCESS IS THE AC TUAL AMOUNT. DURING THE COURSE OF HEARING, THE AR PLACED RELIANCE ON THE DE CISION OF ITAT ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 11 COORDINATE BENCH IN THE CASE OF SITA DEVI JAIN IN ITA NO. 664/JP/2013 (ORDER DATED 30-05-2016 FOR THE ASSESSMENT YEAR 200 9-10) WHEREIN UNDER SIMILAR CIRCUMSTANCES, THE PENALTY LEVIED AT RS. 14 ,28,950/- WAS DELETED BY OBSERVING AS UNDER:- 4.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SURV EY WAS CONDUCTED ON 10-7-2008, MORE THAN 3 MONTHS HAVE BEE N COMPLETED FOR THE FINANCIAL YEAR 2008-09 RELEVANT T O ASSESSMENT YEAR 2009-10.DURING THE COURSE OF SURVEY , EXCESS CASH, EXCESS STOCK ADD LIST OF OUTSTANDING DEBTORS WERE FOUND WHICH HAS BEEN ADMITTED BY THE ASSESSEE, BUT PREVIO US YEAR HAS NOT ENDED SO FAR. THE ASSESSEE FILED RETURN ON 30 TH SEPT. 209 WITHIN TIME AT RS. 2,42,212/- AND PAID THE TAX ON ALL THE DISCLOSURES MADE, BUT IN COMPUTATION THIS DISCLOSUR E HAS NOT BEEN TAKEN & IT IS DIRECTLY CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS CO-OPERATED DURING T HE SURVEY PROCEEDINGS AS WELL AS IN ASSESSMENT PROCEEDINGS. T HE LD. AO HAS IMPOSED PENALTY ON THE BASIS OF FINDING GIVE N FOR THE QUANTUM PROCEEDING IN ASSESSMENT. HOWEVER, QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE. N O INVESTIGATION OR ADDITIONAL EVIDENCE HAD BEEN BROUG HT ON RECORD TO SHOW THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND CONCEALED THE INCOME. THE AO ONLY IMPOSED THE PENALTY ON THE BASIS OF RETURNED I NCOME. IN THE CASE OF SURESH MITTAL, HON'BLE SUPREME COURT H ELD THAT NO PENALTY CAN BE IMPOSED IF THE REVISED RETURN ACC EPTED BY THE AO AS SUCH. A NUMBER OF DECISION ALSO ON THIS I SSUE HAS BEEN CONFIRMED THAT FOR THE ASSESSMENT MADE ON RETU RNED INCOME, NO PENALTY CAN BE IMPOSED U/S 271(1) OF TH E ACT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT PENAL TY CONFIRMED BY THE LD. CIT(A) DESERVES TO BE DELETED. ACCORDINGLY WE DELETE THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A). ITA NO. 135/JP/2014 SHRI KAILASH PRASAD JHALANI VS. ITO, WARD- DAUSA, D AUSA . 12 THEREFORE BY CONSIDERING THE ENTIRETY OF FACTS, CI RCUMSTANCES OF THE CASE , CASE LAWS CITED (SUPRA) AND ORDER OF THE COORDINATE BENCH (SUPRA), THE PENALTY LEVIED AT RS. 1,43,338/- IS DIRECTED TO BE DELETED. THUS THE GROUND NOS. 1 TO 1.4 ARE ALLOWED. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/10/2 016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-SHRI KAILASH PRASAD JHALANI, DAUSA 2. IZR;FKHZ@ THE RESPONDENT- THE ITO,WARD-DAUSA 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 135/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR