ACIT, CC-X, Kolkata, Kolkata V. M/s Concast Steel & Power Ltd., Kolkata

ITA 1487/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4534 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 07-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-10-2012
• Court: TRIBUNAL
• Department Lawyers: TANUJ KUMAR NEOGI
• Keywords: Unexplained expenditure; Income from undisclosed sources; Search and seizure; Document seized; Agreed addition; Documents seized
• Section: 69C; 133A; 27; 15

Judgement Text

ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE HONBLE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO.1487/KOL/2012 ASSESSMENT YEAR : 2008-09 A.C.I.T., CENTRAL CIRCLE-X, ROOM NO.9, 4 TH FLOOR, AAYAKAR BHAWAN, PURBA 110, SHANTI PALLY, KOLKATA- 700107. V/S . M/S. CONCAST STEEL & POWER LTD. (FORMERLY M/S. PAWANSUT SPONGE PVT. LTD.) 21, HEMANT BASU SARANI, 5 TH FLOOR, KOLKATA-700001. PAN:AACCP9643B /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI TANUJ KUMAR NEOGI , ADDL. CIT.SR.DR /BY RESPONDENT SHRI RAVI TULSIYAN, FCA /DATE OF HEARING 25-08-2016. /DATE OF PRONOUNCEMENT 16 -09-2016. / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-CENTRAL-II, KOLKATA DATED 10.07.2012. ASSESSMENT WAS FRAMED BY A.C.I.T., CENTRAL CIRCLE-X, KOLKATA U/S 153C/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS OR DER DATED 31.12.2009 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. THAT THE CIT(A) ERRED IN ACCEPTING THE ASSESSEE S CONTENTION THAT, PAGE 12 OF THE BUNCH OF SEIZED DOCUMENT MARKED UKS-1 DID NOT BELONG TO THE ASSESSEE OCMPANY AT ALL AND FIGURES AND CALCULATION S THEREIN DID NOT REFLECT ANY TRANSACTION OF THE ASSESSEE COMPANY AT ALL AND THIS DOCUMENT WAS HAVING NO EVIDENTIARY VALUE. ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 2 2. THAT THE CIT(A) FAILED TO NOTICE THAT OUT OF 4 A MOUNTS IDENTIFIED FROM ABOVE MENTIONED PAGE-12 AS QUANTUM OF SALES BY THE AO TH ERE WAS ONE FIGURE OF RS.67,87,555/- WHICH WAS SAME AS THE GROSS PURCHASE FIGURE OF RS.67,87,555/- APPEARING ON PAGE 13 OF THE SAME SET OF DOCUMENTS WHICH THE ASSESSEE CONFESSED TO AS REFLECTING ITS OWN TR ANSACITON AND ALSO CONFESSED HAVING MADE CASH PAYMENT OUTSIDE BOOKS AG GREGATING RS.21,49,778/- ON THE BASIS OF ENTIRES APPEARING ON THAT SAME PAGE-13, AND APPEARANCE OF TRANSACTION FIGURE OF PAGE 13 IN PAGE 12 ALSO CONCLUSIVELY PROVES THAT FIGURES MENTIONED ON PAGE 12 REFLECTED TRANSACTION DONE BY THE ASSESSEE COMPANY ONLY. 3. THAT THE CIT(A) ERRED IN HOLDING THAT NO PENALTY U/S 271(1)(C) SHOULD HAVE BEEN IMPOSED ON ACOCUNT OF THE ADDITON OF RS.1,17,1 7,644/- DONE U/S 69C BY THE AO RELYING ON UNEXPLAINED TRANSACTION FIGURE S APPEARING ON PAGE 12 OF SEIZED SET DOCUMETNS MARKED UKS-1, IN THE ORDER U/S 143(3)/153C COMPLETED ON 31.12.2009. 4. THAT THE DEPARTMNET CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUND(S) OF APPEAL AND/OR ADDUCE ADDITONAL EVIDENC E AT THE TIME OF HEARING OF THE CASE. 2. THE SOLITARY ISSUE RAISED BY REVENUE IN ALL T HE GROUNDS OF APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE PENALTY IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 3. BEFORE CARVING OUT THE SPECIFIC ISSUE LET US UNDERSTAND THE BRIEF HISTORY OF THE CASE. IN THIS CASE A SEARCH AND SEIZURE OPERATI ON WAS CONDUCTED AT SPS GROUP OF COMPANIES ON DATED 14.2.2008. THE PRESENT ASSESSEE IS A PART OF SPS GROUP OF COMPANIES AND IT WAS COVERED UNDER SURVEY OPERATION UNDER SECTION 133A OF THE ACT. DURING THE SEARCH PROCEEDINGS CER TAIN DOCUMENTS WERE SEIZED AND MARKED AS UKS/1 PERTAINING TO THE ASSESSEE. ACC ORDINGLY THE NOTICE WAS ISSUED TO THE ASSESSEE UNDER SECTION 15 3C OF THE A CT. DURING ASSESSMENT PROCEEDINGS THE PAGE NUMBER 5 AND 13 OF UKS/1 WERE CONFRONTED WITH THE DIRECTOR OF THE ASSESSEE COMPANY. THE ASSESSEE ON T HE BASIS OF SEIZED DOCUMENTS PAGE NUMBER 5 AND 13 ACCEPTED THAT THERE WERE UNACCOUNTED CASH EXPENSES FOR RS. 37,82,356.00 AND ACCORDINGLY MADE DISCLOSURE OF RS.40 LACS ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 3 WHICH WAS SHOWN IN THE INCOME TAX RETURN FOR THE FI NANCIAL YEAR 2007-08 CORRESPONDING TO ASSESSMENT YEAR 2008-09. IN ADDITION TO THE ABOVE THE AO DURING THE ASSESSME NT PROCEEDINGS FOUND SOME NOTING ON PAGE NUMBER 12 OF THE SEIZED DOCUMENTS UK S/1. AS PER THE NOTING THE ASSESSEE WAS TO MAKE A PAYMENT FOR RS. 2,58,32,531. 00 AND OUT OF WHICH THE ASSESSEE MADE THE PAYMENT FOR RS. 2,55,00000.00 LEA VING THE OUTSTANDING BALANCE OF RS. 3,32,531.00. ON QUESTION BY THE AO T HE ASSESSEE WAS ABLE TO EXPLAIN THE EXPENSES FOR RS. 1.00 CRORE ONLY AND TH E BALANCE AMOUNT OF RS. 1.55 CRORES REMAINED UNEXPLAINED. ACCORDINGLY THE AO WAS OF THE OPINION THAT OUT OF THE TOTAL UNEXPLAINED EXPENSES OF RS. 1.55 CRORES, THE ASSESSEE HAS ALREADY OFFERED THE UNEXPLAINED EXPENSES OF RS. 37,82,356.0 0 AND BALANCE OF RS. 1,17,17,644.00 (1,55,00,000-37,82,356.00) ALSO REMA INED UNEXPLAINED. AS THE ASSESSEE HAS ALREADY OFFERED A SUM OF RS. 40.00 LAC S TO TAX AS INCOME FROM OTHER SOURCES, SIMILARLY THE BALANCE AMOUNT OF RS. 1,17,17,644.00 SHOULD BE TREATED AS INCOME FROM UNDISCLOSED SOURCES. FINALLY THE AO MADE THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION UNDER S ECTION 153C/143(3) OF THE ACT AFTER MAKING THE ADDITION OF RS. 1,17,17,644.00 TO THE TOTAL INCOME OF THE ASSESSEE. THE AO INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE ACT. THE AO ACCORDINGLY ISSUED NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT DATED 31.12.2009 FOR LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALING THE PARTICULARS OF INCOME. IN RESPONSE TO THE NOTICE THE ASSESSEE SUBMITTED TH AT THE DISCLOSURE OF RS.40 LACS AS INCOME FROM OTHER SOURCES WAS MADE TO BUY T HE PEACE OF MIND. SIMILARLY THE ASSESSEE DID NOT PREFER APPEAL AGAINST THE ADDI TION MADE BY THE AO FOR RS. 1,17,17,644.00 TO BUY THE PEACE OF MIND. THE ASSESS EE ALSO SUBMITTED THAT PAPERS SEIZED AT THE TIME OF SEARCH AT SPS GROUP OF COMPANIES DO NOT BELONG TO IT. THERE WAS ALSO NO NAME OF THE ASSESSEE MENTIONE D IN THE SEIZED DOCUMENTS. ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 4 THE SEIZED PAPERS WERE FOUND FROM THE RESIDENCE OF THE THEN DIRECTOR OF SPS STEEL & POWER LIMITED, THEREFORE THE PROVISIONS OF SECTION 292C OF THE ACT ARE ALSO NOT APPLIED TO THE ASSESSEE. HOWEVER THE AO DISREGA RDED THE PLEA OF THE ASSESSEE BY OBSERVING THAT : 1) THE SEIZED PAPERS WERE BELONGING TO THE ASSESSEE COMPANY AS IT WAS ACCEPTED BY THE DIRECTOR OF THE ASSESSEE. 2) THE CONCEALMENT WAS DETECTED AFTER CONFRONTING T HE SEIZED DOCUMENTS BEFORE THE ASSESSEE. ON THE CONFRONTATION AND SEEKI NG CLARIFICATION FROM THE ASSESSEE RENDERED NO EXPLANATION. THEREFORE THE RE WAS NO OPTION AVAILABLE TO THE ASSESSEE EXCEPT TO CONFESS CONCEAL MENT. 3) THE UNEXPLAINED EXPENSES OF RS.1,17,17,644.00 WE RE NOT DISCLOSED IN THE INCOME TAX RETURN BY THE ASSESSEE EVEN AFTER THE SE ARCH. THE CONCEALMENT OF SUCH EXPENSES WAS DETECTED BY THE AO AFTER GOING THROUGH THE METICULOUS AND RIGOROUS EXAMINATION OF DOCUMENTS. 4) THE ASSESSEE MADE THE DISCLOSURE OF RS.40 LACS A S INCOME FOR THE ASSESSMENT YEAR 2008-09 AS A RESULT OF SEARCH AND S URVEY OPERATION CARRIED OUT ON THE ASSESSEE HAD THERE BEEN NO SUCH SURVEY OPERATION THE ASSESSEE WOULD NOT HAVE DISCLOSED THE SAME AS ITS I NCOME. THE AFORESAID FACTS CLEARLY PROVE THAT THE ASSESSEE WAS WELL AWARE ABOUT THE UNEXPLAINED EXPENSES AS DISCUSSED ABOVE. IN THE INS TANT CASE THE ASSESSEE MADE CONSCIOUS AND DELIBERATE ATTEMPT TO HIDE THE I NCOME IN ORDER TO AVOID THE TAX. THEREFORE IT IS FIT CASE FOR IMPOSITION OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALING THE PARTICULARS OF INCOME. ACCOR DINGLY THE AO IMPOSED PENALTY ON RS. 1,57,17,644.00 (1,17,17,644+40,00,000.00) AT THE RATE OF 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED I.E. AMOUNTING TO RS. 53,44,427.00 ONLY. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD . CIT(A). THE ASSESSEE BEFORE THE LEARNED CIT(A) SUBMITTED THAT THE DOCUMENTS MAR KED AS UKS/1 WERE SEIZED FROM THE RESIDENCE OF THE DIRECTOR, SHRI UTTAM KUMA R SARAOGI, OF SPS STEEL & ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 5 POWER LTD. WHO WAS NEITHER DIRECTOR NOR EMPLOYEE OF ASSESSEE COMPANY. THE ASSESSEE IN THE INSTANT CASE HAS ADMITTED UNEXPLAIN ED EXPENSES OF RS. 37,82,356.00 ON THE BASIS OF SEIZED DOCUMENTS 5 & 1 3 OF UKS/1 AND ACCORDINGLY MADE A DISCLOSURE OF INCOME FOR RS. 40 LACS IN THE ASSESSMENT YEAR 2008-09 IN ITS INCOME TAX RETURN. THE OTHER PAGES OF SEIZED DO CUMENTS WERE NOT BELONGING TO THE ASSESSEE THEREFORE NO DISCLOSURE WAS MADE BY THE ASSESSEE. THE PAGE NO. 12 OF UKS/1 ON THE BASIS OF WHICH THE AO HAS MA DE THE ADDITION FOR RS. 1,17,17,644.00 DOES NOT BELONG TO THE ASSESSEE. EVE N THE NAME OF THE ASSESSEE IS NOT REFLECTING ON THE PAGE NUMBER 12 OF UKS/1. H OWEVER THE ASSESSEE HAS ACCEPTED THE ADDITION MADE BY THE AO TO AVOID LITIG ATION AND TO BUY THE PEACE OF MIND. IT WAS ALSO SUBMITTED THAT THERE WAS BROUGHT FORWARD LOSS WHICH SET OFF THE ENTIRE ADDITION MADE BY THE AO. THEREFORE AS SUCH T HERE WAS NO IMPACT ON THE INCOME OF THE ASSESSEE EXCEPT REDUCING THE QUANTUM OF BROUGHT FORWARD LOSS. THE ASSESSEE ALSO SUBMITTED THAT THE AO HAS IMPOSED PENALTY EVEN ON THE INCOME OF RS. 40 LACS WHICH WAS DISCLOSED IN THE CO URSE OF SEARCH WITHOUT CONSIDERING THE FACT THAT DUE DATE FOR FILING THE R ETURN OF INCOME UNDER SECTION 139(1) OF THE ACT WAS NOT EXPIRED FOR THE ASSESSMEN T YEAR 2008-09. THE LD. CIT(A) ACCORDINGLY DELETED THE PENALTY IMPOSED BY T HE AO UNDER SECTION 271(1)(C) OF THE ACT BY OBSERVING AS UNDER: 5.5. I AM OF THE OPINION THAT THE AO WAS NOT JUSTI FIED IN TREATING AGREED ADDITION OF RS.1,17,17,644/- AS CONCEALED INCOME OF THE APPELLANT COMPANY. CONSEQUENTLY, HE WAS ALSO NOT JUSTIFIED IN IMPOSING PENALTY U/S 271(1)(C) ON THE SAID AMOUNT. FURTHER, THE AO WAS NOT JUSTIFIED IMPOSING PENALTY ON SUM OF RS.40 LAKHS DISCLOSED BY THE APPELLANT IN THE CO URSE OF SEARCH BECAUSE THE DUE DATE OF FILING OF RETURN WAS NOT EXPIRED AS ON THE DATE OF SEARCH AND THE APPELLANT COMPANY HAD FILED RETURN OF INCOME ON 30.09.2008 U/S 139(1) OF THE ACT INCLUDING THE INCOME DISCLOSED BY HIM. T HUS, IN TOTALITY OF FACTS THE AO WAS NOT JUSTIFIED IMPOSING THE PENALTY AMOUNTING TO RS.53,42,427/- U/S 271(1)(C) OF THE ACT AND THE SAME IS DIRECTED TO BE DELETED. THE GROUND NOS. 1 TO 4 ARE ALLOWED. ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 6 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), TH E ASSESSEE IS IN 2 ND APPEAL BEFORE US. THE LD. DR BEFORE US SUBMITTED THAT THE SEIZED DOCUMENTS WERE BELONGING TO THE ASSESSEE AS THE TRANSACTIONS RECOR DED IN THOSE DOCUMENTS WERE MATCHING WITH THE TRANSACTIONS OF THE ASSESSING. TH E LD. DR ALSO SUBMITTED THAT THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING HAS DULY ADMITTED THE UNEXPLAINED EXPENDITURE. THE LD. DR VEHEMENTLY SUPP ORTED THE ORDER OF AO AND ON THE OTHER HAND THE LD. AR BEFORE US SUBMITTED TH AT THE SEIZED DOCUMENTS DO NOT BELONG TO THE ASSESSEE OTHER THAN 5 & 13 OF UKS /1 THEREFORE THE DISCLOSURE OF RS. 40 LACS WAS MADE IN THE RETURN OF INCOME. TH E OTHER ADDITIONS WERE ACCEPTED TO BUY THE PEACE OF MIND AND TO AVOID LITI GATION. AS SUCH THE ASSESSEE DID NOT CONCEAL ANY INCOME. THE LD. AR SUPPORTED TH E ORDER OF LEARNED CIT(A). WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING D ISCUSSIONS WE FIND THAT CERTAIN DOCUMENTS MARKED AS UKS/1 WERE SEIZED AS A RESULT O F SEARCH ON THE SPS GROUP OF COMPANIES DATED 14.2.2008 PERTAINING TO TH E ASSESSEE COMPANY. ACCORDINGLY THE ASSESSEE OFFERED A SUM OF RS. 40 LA CS TO TAX FOR THE YEAR UNDER CONSIDERATION ON THE BASIS OF SEIZED DOCUMENTS 5 & 13 OF UKS/1 BY DISCLOSING THE SAME IN ITS INCOME TAX RETURN. HOWEVER THE AO H AS MADE ADDITION FOR RS. 1,17,17,644.00 ONLY AS UNEXPLAINED EXPENSES UNDER S ECTION 69C OF THE ACT ON THE BASIS OF SEIZED DOCUMENTS MARKED AS 12 OF UKS/1 . HOWEVER THE ASSESSEE CLAIMED THAT THE SEIZED DOCUMENT 12 OF UKS/1 DOES N OT BELONG TO IT, THEREFORE THE ADDITION MADE ON THIS DOCUMENT WAS NOT WARRANTE D BUT. HOWEVER THE ASSESSEE DID NOT PREFER AN APPEAL AGAINST THE ADDIT ION MADE BY THE AO JUST TO AVOID LITIGATION AND TO BUY THE PEACE OF MIND. HOWE VER THE AO HAS IMPOSED THE PENALTY FOR THE CONCEALMENT OF PARTICULARS OF INCOM E UNDER SECTION 271(1)(C) OF THE ACT AT THE RATE OF 100% ON BOTH THE AFORESAID A MOUNT (40,00,000.00 + 1,17,17,644.00) OF THE TAX SOUGHT TO BE EVADED. ON APPEAL THE LEARNED CIT(A) DELETED THE PENALTY ON BOTH THE ADDITION MADE ON TH E GROUND THAT THERE WAS TIME TO FILE THE INCOME TAX RETURN FOR THE ASSESSMENT YE AR 2008-09 FOR THE ADDITION OF ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 7 RS. 40 LACS WHICH WAS DULY DISCLOSED IN THE INCOME TAX RETURN. FOR THE OTHER ADDITION OF RS. 1,17,17,644.00 THE LD. CIT(A) WAS O F THE OPINION THAT SEIZED DOCUMENT NUMBER 12 ON THE BASIS OF WHICH ADDITION W AS MADE BY THE AO IS A DUMP PAPER AND IT DOES NOT CONTAIN THE NAME OF THE ASSESSEE. NOW THE QUESTION BEFORE US ARISES SO AS TO WHETHER THE PENALTY IMPOS ED BY THE AO IS WITHIN THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. FOR THE ADDITION OF RS. 40 LACS WHICH WAS ACCEPTED BY THE ASSESSEE AT THE TIME OF SEARCH DATED 14.2.2008, WE FIND THAT THE ADDITION PERTAINS TO THE FINANCIAL YEAR 20 07-08 AND THE TIME TO DISCLOSE THE SAME IN THE INCOME TAX RETURN WAS AVAILABLE TO THE ASSESSEE. THEREFORE IN OUR CONSIDERED VIEW THE ADDITION OF RS. 40 LACS CAN NOT BE HELD AS CONCEALMENT OF INCOME. SIMILARLY FOR THE ADDITION OF RS. 1,17,1 7,644.00 MADE BY THE AO ON THE BASIS OF SEIZED DOCUMENTS NO. 12 OF UKS/1, WE FIND THAT EVEN THE NAME OF THE ASSESSEE WAS NOT APPEARING ON SUCH DOCUMENT. THEREF ORE IT CANNOT BE CONCLUDED WITH THE CONCLUSIVE EVIDENCE THAT IT BELO NGS TO THE ASSESSEE. FROM THE FINDING OF THE LD. CIT(A) WE FIND THAT THE ASSESSEE HAS NOT OWNED UP THE RESPONSIBILITY OF THE SUCH DOCUMENTS. THE LD. DR HA S ALSO FAILED TO BRING ANYTHING ON RECORD TO THE ARGUMENT OF THE LD. AR SO AS ASCER TAIN WHETHER THESE PAPERS BELONG TO THE ASSESSEE OR NOT. IN OUR CONSIDERED VI EW THE PENALTY PROVISIONS WILL BE ATTRACTED ONLY WHEN THERE ARE DELIBERATE AND CON SCIOUS ACTS OF THE ASSESSEE TO HIDE THE INCOME TO AVOID THE TAX. SIMPLY THE ASS ESSEE HAS AGREED FOR THE ADDITION DOES NOT AMOUNT TO CONCEALMENT OF INCOME. IN THIS CONNECTION WE ARE PUTTING OUR RELIANCE IN THE ORDER OF HONBLE ITAT N AGPUR BRANCH IN THE CASE OF ACIT VS. MALU ELECTRODES (P) LTD. 127 TTJ 599. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW : MERE FACT OF AGREED ADDITION DOES NOT RESULT INTO A CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED AS INCOME IS CONCEALED INCOME. IN SUCH A CASE, THE AO SHOULD FURTHER BRING SOME MATERIAL ON RECORD SO THAT IT IS CONCLUSIVELY ESTABLISHED THAT SUCH SURRENDER, IN FACT, REPRESENTED THE REAL INCOME OR U NDISCLOSED INCOME OF THE ASSESSEE. GENERALLY, THE ASSESSEE AGREES FOR ADDITI ON TO BUY PEACE AND AVOID LITIGATION AND UNDER BONA FIDE BELIEF THAT THE PENALT Y WOULD NOT BE LEVIED THEREAFTER. IT IS GENERALLY BELIEVED THAT THIS LEGITIMATE EXPEC TATION OF THE ASSESSEE IS NOT BINDING ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 8 ON THE AO BECAUSE THE ASSESSING AUTHORITY CANNOT MAKE A PROMISE AGAINST STATUTE. BUT WHEN THERE IS A DISCRETION WITH THE AO, THEN, SU CH LEGITIMATE EXPECTATION SHOULD BE FULFILLED AS THE PRINCIPLE OF ESTOPPEL CAN BE AP PLIED ONLY WHEN THERE IS NO DISCRETION. TO PUT IT DIFFERENTLY, THE AO BY NOT LEV YING PENALTY UNDER S. 271(1)(C), IN SUCH SITUATION WILL BE JUSTIFIED IN EXERCISING JUDIC IAL DISCRETION GIVEN TO HIM BY THE LEGISLATURE. THIS IS ALSO SO FOR THE REASON THAT ALL T HE OFFICIAL ACTS ARE PRESUMED TO BE DONE BONA FIDELY. FURTHER, IF THE OFFICIAL ACTS ARE PRESUMED TO BE DONE BONA FIDELY, THERE APPEARS TO BE NO REASON TO ASSUME THAT IT IS OTH ERWISE FOR THE TAXPAYER. THUS, IN THIS VIEW OF THE MATTER, IN THE CASE OF AGREED ADD ITIONS, WITHOUT GOING INTO THE TECHNICALITIES OF LEVIABILITY OF PENALTY UNDER S. 27 1(1)(C), PENALTY PROCEEDINGS SHOULD NOT BE INITIATED. IN THIS REGARD, IT IS OFTEN SAID T HAT THE CONCEPT OF PLEA BARGAIN RECOGNIZED IN US JURISPRUDENCE IS UNKNOWN TO INDIAN L AW WHICH IS NOT CORRECT AS THERE ARE SPECIFIC PROVISIONS WHICH PROVIDE FOR NON- LEVY OR WAIVER OF PENALTY. WHEN IN CASE OF A SEARCH, THE ASSESSEE DECLARES CERTAIN UNDI SCLOSED INCOME, THEN, HE IS SAVED FROM LEVY OF PENALTY. UNDISPUTEDLY EXERCISE OF SEARC H AND SEARCH ASSESSMENTS IS MORE RIGOROUS THAN ASSESSMENT PROCEEDINGS UNDER S. 14 3(3) IN NORMAL COURSE AND WHEN AN ASSESSEE, IN THOSE SITUATIONS, CAN BE EXEMPT FROM LEVY OF PENALTY UNDER S. 271(1)(C) THERE IS NO REASON THAT IN CASE OF AGREED A DDITIONS EVEN THOUGH THE SAME MAY BE AFTER SOME EXERCISE BY THE AO, PENALTY UNDER S. 271(1)(C) CANNOT BE WAIVED. CONCEPT OF PLEA BARGAIN IS RECOGNIZED IN THE IT ACT, 1 961, IN SPECIFIC SITUATIONS AS WELL AS BY GIVING DISCRETION TO THE AO TO LEVY OR NOT T O LEVY PENALTY UNDER S. 271(1)(C), HENCE, THE AO, IN CASE OF AGREED ADDITIO NS, SHOULD NOT LEVY PENALTY UNDER S. 271(1)(C). FURTHER, IF IT IS ASSUMED THAT THE ASSESSEE, IN THE PRESENT CASE, INSTEAD OF AGREEING FOR ADDITION WOULD HAVE CONTESTED THE MATTER, THEN, PE RHAPS IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EX PORTS (P) LTD. (2008) 6 DTR (SC) 308, EVEN ADDITION COULD NOT BE MADE OR COULD NOT H AVE BEEN SUSTAINED. FURTHER, SUCH COURSE OF ACTION WOULD HAVE MADE IT PO SSIBLE TO THE ASSESSEE TO PLEAD VARIOUS REASONS WHICH WOULD HAVE ENABLED THE ASSESSE E TO GET THE BENEFIT OF DOUBT. HENCE, WHEN AN ASSESSEE ACTS IN A MANNER WHICH RESU LTS INTO AN ADDITIONAL REVENUE IN A SMOOTH MANNER, THEN, PENALTY UNDER S. 271(1)(C ) SHOULD NOT BE LEVIED WHICH WOULD ENCOURAGE THE ASSESSEE TO COME OUT CLEAN WITHOUT FEAR OF PENALTY OR PROSECUTION AND THAT COULD SERVE THE PURPOSE OF PROVIS IONS OF S. 271(1)(C) MORE EFFECTIVELY. MERE FACT OF AGREED ADDITION DOES NOT RESULT INTO A CO NCLUSION THAT THE AMOUNT AGREED TO BE ADDED AS INCOME IS CONCEALED INCOME; IN SUCH A CASE, THE AO SHOULD FURTHER BRING SOME MATERIAL ON RECORD SO THAT IT IS CONCLUSIVELY ESTABLISHED THAT SUCH SURRENDER, IN FACT, REPRESENTED THE REAL INCOME OR U NDISCLOSED INCOME OF THE ASSESSEE; ON THE FACTS OF THE CASE, PENALTY WAS NOT LEVIABLE IN RESPECT OF SURRENDER OF SHARE CAPITAL AS INCOME. SIMILARLY WE ARE ALSO RELYING IN THE FOLLOWING ORDE R OF VARIOUS HONBLE COURTS AND TRIBUNALS. THE HONBLE ITAT, LUCKNOW IN THE CASE OF SMT. BRIJ BALA CHOUDHRY VS. ITO 82 TTJ 355 HAS HELD AS UNDER. THE ASSESSEE SURRENDERED THE INCOME DURING ASSESSME NT PROCEEDINGS, ONLY WHEN SHE COULD NOT ADDUCE DOCUMENTARY EVIDENCE TO EXPLAIN THE SOURCE ON ACCOUNT OF SALE OF ASSETS AND REALIZATION OF DEBTS. THUS, THE ASSESS EE HAD EXPLAINED THE SOURCE, BUT ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 9 SINCE THE DEPARTMENT WAS NOT SATISFIED AND FURTHER SINCE IT WAS NOT POSSIBLE FOR THE ASSESSEE TO ADDUCE DOCUMENTARY EVIDENCE, SHE SURREND ERED THE AMOUNT OF RS. 35,000 ONLY TO PURCHASE PEACE WITH THE DEPARTMENT. IF THE ASSESSEE HAD GIVEN EXPLANATION AND ON NON-ACCEPTANCE OF SUCH EXPLANATION , THE ASSESSEE HAD AGREED FOR ADDITION JUST TO SATISFY THE IT AUTHORITIES OR AGREED FOR ADDITION UNDER COMPELLING CIRCUMSTANCES, MERELY TO BUY PEACE, THEN ONLY ON THE BASIS OF SUCH AGREED ADDITION OR SURRENDER OF INCOME, IT CANNOT BE HELD THAT THE ASS ESSEE HAD CONCEALED INCOME. UNDER SUCH CIRCUMSTANCES, IT IS FURTHER OBLIGATORY ON THE PART OF THE DEPARTMENT TO SHOW BY SOME OTHER MATERIAL THAT THE ASSESSEE HAD CON CEALED PARTICULARS OF HIS/HER INCOME. THE ASSESSEE HAD MADE SURRENDER ONLY TO PURCH ASE PEACE WITH THE DEPARTMENT AND AFTER BEING COMPELLED BY THE ITO AS A PPEARS FROM THE CIRCUMSTANCES OF THIS CASE. HENCE, IT IS NOT A FIT CASE FOR IMPOSITI ON OF PENALTY, BECAUSE THE CONCEALMENT OF INCOME OR PARTICULARS OF INCOME, IS NOT FOUND TO BE ESTABLISHED FROM THE MATERIAL ON RECORD AND THE DEPARTMENT HAS ALSO FAI LED TO PROVE BY INDEPENDENT MATERIAL THAT THE ASSESSEE HAD CONCEALED HER INCOME OR PARTICULARS THEREOF. SO FAR AS THE ADDITION OF RS. 5,000 IS CONCERNED, ALTHOUGH ABO UT THIS ADDITION, NO EXPLANATION WAS SUBMITTED BY THE ASSESSEE DURING THE PROCEEDING S OF PENALTY, BUT FROM THE ASSESSMENT ORDER, IT IS FOUND THAT THIS ADDITION HAS A LSO BEEN MADE JUST ON ESTIMATE BASIS AND IT CANNOT BE SAID THAT IT REPRESENTS OR DIS CLOSES CONCEALED INCOME; HENCE PENALTY IS NOT LEVIABLE ON THE BASIS OF THIS AGREED ADDITION OF RS. 5,000. IN VIEW OF THE ABOVE, THE VIEW TAKEN BY THE CIT(A) CANNOT BE UPH ELD THUS, THE PENALTY IS CANCELLED CIT VS. S. SANKARAN (2002) 175 CTR (MAD) 62 : (2000) 241 ITR 825 (MAD), CIT VS. JUGAL KISHORE HAR GOPALDAS (2000) 161 CTR (KER) 74 : (2000) 243 ITR 220 (KER) AND CIT VS. SURESH CHANDRA MITTAL (2001) 170 CTR (SC) 182 : (2001) 251 ITR 9 (SC) RELIED ON; INDIA SEA FOODS VS. CIT (1978) 114 ITR 124 (KER), CIT VS. E.V. RAJAN (1987) 61 CTR (MAD) 121 : (1985) 151 ITR 189 (MAD) AND H.V. VENUGOPAL CHETTIAR VS. CIT (1985) 153 ITR 376 (MAD) DISTINGUISHED. ASSESSEE COULD NOT BE SAID TO HAVE CONCEALED HER INC OME MERELY BECAUSE SHE SURRENDERED CERTAIN AMOUNT TO BUY PEACE WITH THE DEP ARTMENT AS SHE COULD NOT ADDUCE DOCUMENTARY EVIDENCE IN SUPPORT OF HER EXPLANA TION REGARDING THE SOURCE OF CAPITAL OR ON THE BASIS OF ANOTHER AGREED ADDITION WH ICH WAS MADE SIMPLY ON ESTIMATE BASIS AND, THEREFORE, PENALTY UNDER S. 271 (1)(C) WAS NOT LEVIABLE. 6. FROM THE ABOVE WE FIND THAT IN THE INSTANT C ASE THE AO HAS MADE ON THE BASIS OF THE ADMISSION MADE BY THE ASSESSEE OF THE UNEXPLAINED EXPENSES DURING THE SEARCH PROCEEDINGS OTHERWISE THERE WAS N OTHING ON RECORD TO PROVE THE SEIZED DOCUMENT PAGE NO. 12 OF UKS/1 BELONGS TO THE ASSESSEE. EVEN THE NAME OF THE ASSESSEE WAS NOT APPEARING IN THOSE DOC UMENTS. THE ABOVE DOCUMENTS WERE SUBMITTED BEFORE US AT THE TIME OF H EARING WHICH ARE PLACED ON RECORD. FROM THE PERUSAL OF THE ABOVE DOCUMENTS IT IS NOT ASCERTAINED WHETHER THE TRANSACTIONS ARE REFLECTING PURCHASE AND SALES FIGURES OF THE ASSESSEE. THE LD. DR HAS ALSO NOT ANYTHING ON RECORD CONTRARY TO THE ARGUMENTS OF THE LD. AR ITA NO.1487/KOL/2012 M/S. CONCAST STEEL & POWER LTD . A.Y.2008-09 10 AND FINDINGS OF THE LD. DR. IN VIEW OF ABOVE WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE THIS GROUND OF AP PEAL OF REVENUE IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 16 /09/2016 SD/- SD/- ( ') ( ') (NARASIMHA CHARY) (WASEEM AHM ED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *RG.PS $- 16/09 //201 6 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / 2 / CONCERNED CIT 4. 2- / CIT (A) 5. 5 /, /, KOLKATA / DR, ITAT, KOLKATA 6. ; / GUARD FILE. BY ORDER/ , / /,