The ITO, Ward-2(2), Baroda V. M/s. Madhuri Developers, Baroda

ITA 1509/AHD/2005

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67913 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-09-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 30-05-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: MK PATELAR
• Keywords: Opportunity of being heard; Corroborative evidences; Reassessment proceedings
• Section: 37(1); 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD , , , , BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND .., SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , ! ! ! ! ITA NOS. 1509, 1510 & 1511/AHD/2005 ASSESSMENT YEARS :1997-98, 98-99 & 99- 2000 RESP. THE INCOME TAX OFFICER, WARD-2(2), 2 ND FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA V/S . M/S. MADHURI DEVELOPERS C/O. HOTEL PANCHSHEEL, 5-SAMPATRAO COLONY, R.C.DUTT ROAD, BARODA PAN NO. AAHFM7684F (APPELLANT) .. (RESPONDENT) '# $ % BY REVENUE SHRI J. P. JHANGID, SR. D.R. # $ % /BY ASSESSEE SHRI M. K. PATEL, A.R. &'#( $ ) /DATE OF HEARING 23.09.2013 *+, $ ) /DATE OF PRONOUNCEMENT 01.11.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THESE ARE THREE APPEALS AT THE BEHEST OF THE REVENU E WHICH HAVE EMANATED FROM THE ORDERS OF CIT(A)-II, BARODA, DATE D 14 TH MARCH, 2005 FOR ALL ASSESSMENT YEARS. THE SOLE GROUND OF APPEAL IS AGA INST DELETING THE PENALTY OF RS.1,99,780/- IN A.Y. 1997-98, RS.8,48,859/- IN A.Y. 1998-99 & RS.7,15418/- IN 1999-2000 U/S.271(1)(C) BY THE CIT( A)-II, BARODA. 2. THE A.O. OBSERVED AS UNDER: ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 2 IN THIS CASE, THE RETURN OF INCOME WAS FILED ON 31 .03.1999 DECLARING TOTAL INCOME AT RS.2,10,304/-. SCRUTINY ASSESSMENT WAS FINALIZED ON 31.03.2000 AND TOTAL INCOME WAS ASSESS ED AT RS.6,09,850/- BY DISALLOWING OF RS.3,99,555/- CLAIMED AS LAND DEV ELOPMENT EXPENSES BY THE ASSESSEE. THE LD. CIT(A) DISMISSED THE APPE AL OF THE ASSESSEE AGAINST THIS ORDER VIDE APPEAL NO.CAB/III-129/2000- 01 DATED 08.12.2000. THE ASSESSMENT WAS REOPENED ON THE BASIS OF INFORMA TION RECEIVED FROM THE THEN CIT, BARODA, THAT THE ASSESS EE HAS MADE VDIS DECLARATION FOR RS.68,58,000/- FOR THE A.Y. 1997-98 SHOWING NET PROFIT AS PER THE P&L A/C. THE ASSESSEE HAS FAILED TO PAY DU E TAXES AND THEREFORE LOST THE IMMUNITY GRANTED UNDER VDIS 1997 . ON THE BASIS OF DIRECTIONS CONTAINED IN THIS LETTER TO REOPEN THE A SSESSMENT THE CASE WAS REOPENED AND ORDER U/S.143(3) R.W.S. 147 WAS PA SSED ON 07.03.2003 AND TOTAL INCOME WAS ASSESSED AT RS.68,5 8,000/-. OUT OF THIS ASSESSED INCOME RS.62,48,150/- WAS ADDED ON PR OTECTIVE BASIS AND RS.6,09,850/- WAS ASSESSED ON SUBSTANTIVE BASIS . THE INCOME ASSESSED ON PROTECTIVE BASIS WAS ASSESSED SUBSTANTI VELY IN THE ASSESSEES CASE FOR A.Y. 1998-99 AND 1999-2000. THE ASSESSEE AGAIN WENT TO THE APPEAL AND LD. CIT(A ) VIDE HIS ORDER NO.CAB/VI-256/03-04 DATED 09.02.2004 DELETED THE ADDITION MADE ON PROTECTIVE BASIS AND INCOME ASSESSED ON SUB STANTIVE BASIS WAS CONFIRMED. THE PROTECTIVE ADDITION WAS DELETED AS THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AND SUBSTANTIV E ASSESSMENT OF THE ABOVE REFERRED INCOME IN A.Y.1998-99 AND 1999-2 000 WERE CONFIRMED. IN OTHER WORDS THE FINDINGS OF THE ASSE SSING OFFICER THAT THE INCOME OF RS.68,58,000/- IS TO BE ASSESSED IN THREE YEARS I.E. A.Y. 1997-98, 1998-99 AND 1999-2000 WAS CONFIRMED BY THE LD. CIT(A). ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 3 THE PENALTY PROCEEDING U/S. 271(1)(C) WAS INITIATED ON THE ADDITION MADE IN ALL THE THREE YEARS FOR CONCEALING THE INCOME AND FURNI SHING INACCURATE PARTICULARS OF INCOME. THE BRIEF FACTS OF THE CASE ARE AS UNDE R: THE ASSESSES DECLARED RS.68,58,000/- UNDER VD1S 19 97 AS INCOME FOR A.Y.1997-98 ON SALE OF LAND BUT THE ASSE SSEE FAILED TO PAY DUE TAXES AND AFTER THAT ASSESSEE FILED RETURNS OF INCOME FOR A.Y.1997-98,1998-99 AND 1999-2000 AND PROFIT EARNED ON THAT LAND DEAL WAS OFFERED FOR TAXATION IN THESE YEARS. THE R ETURNED INCOME OF THESE YEARS ARE AS UNDER : A.Y.1997-98 - RS.2,10,304/- A.Y.1998-99 - RS.12,31,220/- A.Y.1999-2000 - RS.12,06,220/- AT THE SAME TIME THE ASSESSES CLAIMED LAND DEVELOPM ENT EXPENSES IN THIS THREE YEARS WHICH ARE AS UNDER : A.Y.1997-98 - RS.3,99,555/- A.Y.1998-99 - RS.19,40,248/- A.Y.1999-2000 - RS.16,35,241/- THESE LAND DEVELOPMENT EXPENSES IS THE DIFFERENCE W HICH HAS ESCAPED ASSESSMENT IF INCOME IS CONSIDERED AS PER V DIS DECLARATION. THE DETAILS OF THESE EXPENSES WERE CAL LED FOR AT THE TIME OF SCRUTINY ASSESSMENT AND ASSESSES SHOWN INABILITY TO FURNISH ANY VOUCHERS, BILLS, ETC., IN SUPPORT OF HIS CLAIM FOR THESE LAND DEVELOPMENT EXPENSES. IT WAS SUBMITTED BY THE ASSE SSEE AT THAT TIME OUT OF RS.39,75,044/- RS.18,00,000/- WERE PAID TO VARIOUS AUTHORITIES FOR OBTAINING ULC PERMISSION AND CLEARI NG OF LAND FROM LITIGATION, ETC. FOR REMAINING EXPENSES IT WAS SUBM ITTED BY THE ASSESSEE THAT THESE EXPENSES ARE INCURRED AS MISC. EXPENSES AND ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 4 FOR PAYMENT TO SHRI S K PATHAN AND HIS FAMILY. AS THE ASSESSEE HAS FAILED TO SUBMIT ANY VOUCHERS, BILLS, ETC., ANY EVI DENCE IN SUPPORT OF HIS CLAIM OF EXPENSES AND THE FACT THAT CERTAIN AMO UNT HAS BEEN UTILIZED FOR ILLEGAL PAYMENT WHICH ARE NOT ALLOWABL E AS PER EXPLANATION 1 OF SECTION 37(1) OF THE IT ACT, THERE FORE, THE SAME WERE DISALLOWED AT THE TIME OF ASSESSMENT. THE ASS ESSEE HAS FAILED TO SUBMIT ANY EVIDENCES DURING THE COURSE OF APPELL ATE PROCEEDINGS ALSO. NOW, AT THE TIME OF PENALTY PROCEEDINGS ALSO . THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS OF THESE EXPENSES. THE ONUS OF PROVING THE GENUINENESS OF EXPENSES BY PUTTING FORTH REQUIRED EVIDENCES IS SOLELY REST WIT H THE ASSESSEE. ASSESSED NOT ONLY FAILED TO DISCHARGE THE ONUS CAST E UPON IT DID IT WITH THE INTENTION OF DOING IT. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD BEFORE IMPOSING PENALTY U/S. 271(1)(C) IN ALL THE YEARS, WHICH WAS CONSIDER ED BY THE A.O. AND HE HAS HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF EXPENSES CLAIMED OF RS.39,75,044/- WITHOUT ANY DOCUMENTARY E VIDENCE. THE ASSESSEES CONTENTION WAS THAT RS.18 LACS HAD BEEN PAID TO VARIOUS ULC AUTHORITY ILLEGAL EXPENDITURE NOT ALLOWED UNDER EXP LANATION 1 OF SECTION 37(1) OF THE IT ACT. THE ASSESSEE WAS AWARE THAT THESE E XPENSES ARE NOT LIABLE EVEN THEN HE HAD CLAIMED THE EXPENSES WITHOUT ANY S UPPORTING EVIDENCE. THE LD. A.O. RELIED UPON IN CASE OF B.A. BALASUBRAM ANIYAM BROS. & CO. VS. CIT 1999 (236) ITR 997 SC, WHEREIN IT WAS HELD THAT THERE IS DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME THERE IS I NFERENCE OF CONEALMENT AS A RULE OF LAW. THE RESPONSIBILITIES FOR REBUTTI NG SUCH INFERENCE IS SQUARELY ON THE ASSESSEE. IN ABSENCE OF ANY EXPLANATION BY ITSELF WILL MERIT PENALTY. ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 5 THE ASSESSEE DID NOT HAVE ANY SUPPORTING EVIDENCE F OR CLAIMING OF THOSE EXPENSES. THEREFORE, ON VERIFICATION OF EXPLANATIO N OFFERED WAS FOUND FALSE. HE FURTHER RELIED IN CASE OF K. P. MADHUSUDANAN VS. CIT 251 ITR 1991 (SC), SIR SAHADILAL SUGAR AND GENERAL MILLS LTD. 168 ITR 705 (SC), CIT VS. ANWAR ALI 76 ITR 696 (SC). IT WAS OBSERVED THAT DELIBER ATELY WORD IN EXPLANATION 1 BELOW SECTION 271(1) WAS OMITTED BY THE FINANCE ACT , W.E.F. 01.04.1964 ADDED WITH EFFECT FROM THE SAME DATE PROVIDING FOR DEEMED CONCEALMENT IN CASE THE RETURNED INCOME WAS LESS THAN 80% OF THE A SSESSED INCOME THUS SHIFTING THE BURDEN ON THE ASSESSEE TO PROVE THAT T HERE WAS NO CONCEALMENT IN SUCH CASES. HE FURTHER RELIED ON FOLLOWING CASES: I. CIT VS MUSADILAL RAM BHAROSE 165 ITR 14, 20 (SC) II. CIT VS K R SADYAPPAN 185 ITR 49 (SC) III. CIT (ADDL) VS JEEVAN LAL SHAH 205 ITR 244 (SC) IV. B A BALASUBRAMANIAM & BROS. CO., VS CIT 236 ITR 977, 978 (SC) V. K P MADHUSUDANAN VS CIT 251 ITR 99 (SC). SINCE THE ASSESSEE HAD FAILED TO SUBSTANTIATE ITS E XPLANATION IN REGARD TO BOOKS OF ACCOUNT BEING CORRECT AND COMPLETE AND HEL D FAILED THROUGH ITS BONAFIDE AND HAD ALSO FAILED TO PROVE THAT ALL MATE RIAL FACTS WERE DISCLOSED. HE IMPOSED PENALTY @ 125% OF TAX SOUGH TO BE EVADED AT RS.1,99,780/- FOR A.Y. 1997-98, RS.8,48,859/- FOR A.Y. 1998-99 & RS.7 ,15418/- FOR 1999-2000. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD DELETED THE PENALT Y BY OBSERVING AS UNDER: ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 6 3.43 RELYING ON THE LEGAL PRONOUNCEMENTS AND CONSI DERING THE FACT OF THE APPELLANTS CASE, I HOLD THAT THERE IS NO JU STIFICATION TO IMPOSE PENALTY INFERRING THAT APPELLANT HAD CONCEALED INCO ME OR FILED INACCURATE PARTICULARS OF INCOME INVOKING EXPLANATI ON-1 AND MORE PARTICULARLY WHEN (I) THE APPELLANT HAS FILED RETURNS VOLUNTARILY SHO WING PROFIT FROM SALE OF LAND AFTER CLAIMING EXPENSES AND AT AL L STAGE OF ASSESSMENT AND RE-ASSESSMENT HAS FURNISHED THE EXPLANATION FOR CLAIM OF LAND DEVELOPMENT EXPEN SES AND OTHER EXPENSES. (II) THE ADDITION MADE BASED ON INFORMATION RECEIVE D TO RE- OPEN THE ASSESSMENT FOR ASST. YEAR 97-98 HAS BEEN DELETED AND INCOME OF ORIGINAL ASSESSMENT IS DIRECT ED TO BE TAXED BY CIT(A) SINCE THERE IS NO CHANGE IN ASSESSED INCOME FOR ASST YEAR 1997-98 AS PER ORIGIN AL PROCEEDINGS AND AS PER REASSESSMENT PROCEEDINGS AFTER GIVING EFFECT TO CIT(A)S ORDER. THE CIT(A) IN ASST YEAR 1997-98 VIDE ORDER NO. /VI-256/03-04 DATED 9.2.2004, IN PARA 3 DELETING THE PROTECTIVE ADDITIO N MADE OF RS.62,48,150, HAS HELD THAT THE ORIGINAL IN COME ASSESSED VIDE ORDER DATED 31.3.2000 WILL REMAIN UNCHANGED. (III) THE QUANTUM APPEALS HAVE BEEN DECIDED BY THE CIT(A) BARODA WHEREIN DISALLOWANCE OF CLAIM HAS BEEN UPHEL D ON THE FINDING THAT SUCH CLAIM WAS NOT ALLOWABLE U/ S.37 AS WELL AS LIABILITY OF INCURRING SUCH EXPENSES WAS NOT OF APPELLANT. THE EXPENSES INCURRED WERE PRIOR TO INSERTION OF EXPLANATION TO SECTION 37 ON THE ASSES SEE WHILE THE ONUS TO DISPROVE WHAT IS CLIMED BY THE ASSESSEE IS ON THE REVENUE AND MERELY BY REJECTING THE ASSESSEES EXPLANATION AND WITHOUT DISCHARGING THE ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 7 ONUS OF THE REVENUE, PENALTY CANNOT BE LEVIED OR SUSTAINED. IN THE CASE OF CIT VS VED PRAKASH (2004 ) 141 TAXMAN 377 (P & H) HAS OBSERVED THAT ONCE ENTIR E AMOUNT STOOD ASSESSED, THERE WAS NO SCOPE FOR ISSUE OF A FRESH NOTICE U/S 148 TO ASSESS THE SAME INCOME ONCE AGAIN. PENALTY PROCEEDINGS DURING THE COURSE OF SUBSEQUENT REASSESSMENT PROCEEDINGS COULD ONLY BE INITIATED IF THE AO HAD DISCOVERED ANY UNDISCLOSED INCOME OVER AND ABOVE THE INCOME WHICH HAD ALREADY BEEN ASSESSED IN ORIGINAL ASSESSMENT PROCEEDINGS. THE LEVY OF PENALTY UNDER SECTION 271(1)(C) HAS BEE N CANCELLED. 5. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHEME NTLY RELIED THAT ASSESSEE MADE VDIS BUT NO TAX HAD BEEN PAID BY THE ASSESSEE. THEREFORE, THIS INFORMATION WAS FORWARDED BY THE CIT TO THE A. O. TO ASSESS THE INCOME FOR RESPECTIVE YEARS AS PER LAW. THE ASSESSEE HAD SOLD LAND AND CLAIMING VARIOUS ILLEGAL EXPENSES WITHOUT ANY EVIDENCE IN TH E GUISE OF DEVELOPMENT EXPENSES TO THE TUNE OF RS.42,59,531/- IN ALL THREE YEARS. THE ASSESSEE HAS RECOVERED RS.2,96,996/- FROM M/S. BHAGYALAXMI CORPO RATION AND ASSESSEE CLAIMED NET TOTAL EXPENSES OF RS.39,53,004/- THE BI FURCATION OF EXPENSES IS AS UNDER: A.Y. AMOUNT 1997-98 RS. 3,99,555/- 1998-99 RS.19,40,248/- 1999-00 RS.16,35,241/- THE ASSESSEE ADMITTED BEFORE THE LOWER AUTHORITIES THAT AS ILLEGAL EXPENSES CLAIMED BY THE APPELLANT WHICH WAS NOT ALLOWABLE FO R EXPLANATION-1 TO SECTION ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 8 37(1) OF THE IT ACT. FURTHER, THERE IS NO OTHER EV IDENCES WERE PRODUCED THAT THESE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE HONBLE ITAT HAD CONFIRMED THE ADDIT ION IN A.Y. 97-98, LAND EXPENSES ARE PAID TO THE GOVERNMENT AUTHORITY FOR G ETTING CLEARANCE FROM AND EVEN ASSESSEE COULD NOT PRODUCE ANY DETAIL IN REGAR D TO THESE EXPENSES. THE A.O. HAD RIGHTLY INVOKED EXPLANATION 1 TO SECTION 3 7(1) OF THE ACT BEING ILLEGAL EXPENDITURE BUT SAME CANNOT BE ALLOWED. THE LOWER AUTHORITIES HAVE RIGHTLY DISALLOWED THIS EXPENDITURE AND THEY CONFIRMED THE SAME IN ITA NO.48/AHD/2005 FOR A.Y. 1997-98. THE APPELLANT ALS O FILED THE APPEAL AGAINST THE BIFURCATION OF INCOME IN ITA NOS. 1305, 1306 & 1307/AHD/2011 FOR A.YS. 97-98, 98-99 & 99-00, WHICH WAS DISMISSED BY THE CO -ORDINATE D BENCH, AHMEDABAD, VIDE ORDER DATED 26.06.2009. THEREFORE, HE PRAYED TO CONFIRM PENALTY IN ALL THREE YEARS. AT THE OUTSET, LD. COU NSEL ARGUED THAT THESE EXPENSES WERE INCURRED EXPENDITURE TO THE TUNE OF R S.39.53 LACS WHICH WAS RELATED TO YEAR 1994. THERE WAS A SEARCH IN PLACE OF AT THE RESIDENCE PREMISES OF KISHOREBHAI ON 16.12.1995 AS PER ANNEXU RE A TO PAGE 3 & 4. THE LAND SALE TRANSACTION MUJMAHUDA LAND WAS RECORD ED ON WHICH STATEMENT OF SHRI KISHOREBHAI PARIKH WAS RECORDED U/S. 131 ON 20.11.1995. HE HAS DRAWN OUR ATTENTION ON PAGE NO.7 OF PAPER BOOK. HE ALSO HAS DRAWN OUR ATTENTION ON PAGE NOS. 17 & 18 WHEREIN IT WAS SUBMI TTED BEFORE THE CIT(A) WHICH ARE THE COPIES OF THE ORDER OF CIT(A) FOR A.Y . 97-98 AND ARGUED THAT THERE WAS A DISPUTE BETWEEN THE LAND OWNER AND ASSE SSEE AND WITHOUT INCURRING THIS EXPENDITURE, THIS TRANSACTION CAN NO T BE MATERIALIZED. HE FURTHER ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 9 HAS DRAWN OUR ATTENTION ON PAGE NOS. 85, 88, 90 & 9 1 AND ARGUED THAT THE STATEMENT OF SHRI KISHANLAL M. PARIKEH RECORDED U/S . 131 OF THE IT ACT ON 20.11.1995 AND ALL THE DETAILS OF CASH AS WELL AS C HEQUES PAYMENTS HAD BEEN MENTIONED IN STATEMENT AND IT IS ADMITTED THAT RS.1 8 LACS WERE INCURRED IN THE NAME OF GANDIHNAGAR EXPENSES. RS.14 LACS CASH WAS GIVEN TO LAND OWNERS AND OTHER BROTHERS AND RS.7 LACS TO THAKKAR BROTHER S FOR SETTLEMENT AGAINST THE SALE OF MUJMAHUDA FOR SALE CONSIDERATION OF RS. 90 LACS. THE ASSESSEE HAD PAID RS. 47.5 LACS TO PATHAN FAMILY OUT OF RS.9 0 LACS. THE LD. COUNSEL ARGUED THAT THESE ARE EXPENSES INCURRED IN BUSINESS EXPEDIENCY. THEREFORE, PENALTY IMPOSES U/S. 271(1)(C) MAY BE DELETED. ALTE RNATIVELY HE HAS ALSO ARGUED THAT PENALTY IMPOSED @ 125% SHOULD BE RESTRI CTED TO 100%. IN REJOINDER, LD. SR. D.R. AGAIN OBJECTED ON THE GROUN D THAT EXPENSES WERE INCURRED IN THE YEAR 1994 IT SHOULD BE CLAIMED ON T HE BASIS OF MERCANTILE SYSTEM OF ACCOUNTING IN THE RELEVANT YEAR NOT THE Y EAR UNDER CONSIDERATION. THE LD. COUNSEL FURTHER RELIED IN CASE OF RAJMAL LAKHICHAND VS. ACIT, ITAT B BENCH, PUNE, [2013] 32 TAXMANN.COM 248 (PUNE TRIB .), WHEREIN CERTAIN SILVER WAS CONFISCATED BY CUSTOM OFFICERS AND WAS A LLOWED AS BUSINESS LOSS IN THE RELEVANT ASSESSMENT YEAR. WHEREAS, LD. SR. D.R. REQUESTED TO CONSIDER THE WRITTEN REPLY SUBMITTED BY HIM VIDE LETTER DATE D 22.02.2013, WHEREIN IT WAS SUMMARIZED BY THE SR. D.R. THAT : I. ASSESSED HAD MADE A CLAIM FOR DEDUCTION OF DEVE LOPMENT EXPENSES. II. THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE G ENUINENESS OR ADMINISSIBILITY OF THESE EXPENSES. ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 10 III. ON THE CONTRARY AO FOUND FROM ASSESSEES EXPLA NATION THAT THESE EXPENSES WERE NOT ADMISSIBLE BY VIRTUE OF EXPLANATI ON TO SECTION 37(1). (IV) THE DISALLOWANCE WAS CONFIRMED BY CIT(A) AS WE LL AS BY HONBLE ITAT. (V) AO CALLED FOR EXPLANATION FROM ASSESSEE AGAINST LEVY OF PENALTY U/S.271(1)(C). (VI) ASSESSED FILED EXPLANATION BUT WAS (A) NOT ABLVE TO SUBSTANTIATE IT. (B) NOT ABLE TO PROVE IT BONAFIDE. (C) FROM THE RECORD IT CANNOT BE SAID THAT ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO HIS EXPLANATION AND MATERIAL TO COMPUTATION OF HIS TOTAL INCOME (DETAIL S OF PAYMENT MADE OF DEVELOPMENT CHARGES WERE INFACT WIT H HELD BY ASSESSEE). (VII) AO IMPOSED PENALTY U/S.271(1)(C) AND EXPLANAT ION 1 THERETO (VIII) LD. CIT(A) DELETED THE PENALTY ON THE BASIS OF INCORRECT AND IRRELEVANT FACTS AN OBSERVATIONS, DESPITE THE FACT THAT PRESUMPTION RAISED AGAINST ASSESSEE BY CLAUSE (A) & (B) OF EXPLANATION 1 TO SECTION 271(1)(C) WAS NOT REBUTTED BY ASSESSEE BY VIRTUE OF HIS FAILURE AS MENTIONED IN ( A) (B) & (C) IN (6) ABOVE. HE FURTHER RELIED IN ITAT A BENCH, PUNE DECISION IN KANBAY SOFTWARE INDIA (P.) LTD. VS. DCIT [2009] 31 SOT 153 (PUNE), WHEREIN IT WAS HELD THAT WHETHER JUDGMENT IN THE UNION OF INDIA VS. DHARMENDRA TEXTILE LPROCESSORS [ 2008] 306 ITR 277, DOES NOT MAKE A RADICAL CHANGE IN SCHEME OF SECTION 271(1)(C) BUT IT RE-EMPHASIZES PARADIGM SHIFT ON BURDEN OF PR OOF AS BROUGHT ABOUT BY EXPLANATION TO SECTION 271(1)(C) HELD, YES. THUS , HE PRAYED TO CONFIRM THE PENALTY. ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 11 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. SHRI GOPAL G. PAIRKH INTERROGATED U/S. 131 ON 20.11.1995 AND WHO IS THE PARTNER OF M/S. MADHURI DEVELOPERS AND ADMITTED THIS TRANSACTION UNRECORDED. HE ALSO OFFERED FOR TAXATION RS.28 LAC S AS UNACCOUNTED OWN MONEY TAKEN IN VARIOUS LAND TRANSACTION. EVEN HE DI D NOT DISCLOSE AFTER ADMISSION OF ADDITIONAL INCOME BEFORE THE A.O. IN R EGULAR RETURN WHICH WAS RELEVANT TO A.Y. 96-97 BUT FILED VDIS BEFORE THE CO MMISSIONER, WHICH WAS REJECTED ON THE BASIS OF NOT PAYING TAX. THE ASSES SEE FILED REGULAR RETURN ON 31.03.1999 FOR A.Y. 97-98, 31.03.2000 FOR 98-99 & 3 1.03.2001 FOR A.Y 99-00 AND CLAIMED THESE EXPENSES AGAINST THE INCOME WITHO UT ANY SUPPORTING EVIDENCE BEFORE THE A.O., WHICH WAS REJECTED AND DI SALLOWED BY THE A.O. AND FOUND INADMISSIBLE EXPENDITURE ILLEGAL AS PER EXPLA NATION 1 TO SECTION 37(1) OF THE IT ACT, WHICH HAS BEEN CONFIRMED BY THE CO-ORDI NATE BENCH. THE LD. CIT(A)S FINDINGS WERE NOT FOUND JUSTIFIED THAT THI S PROFIT FROM THE SALE OF LAND IS VOLUNTARY, ITAT HAS REVERSED THE ORDER OF THE CIT(A ). THE ASSESSEE DID NOT DISCHARGE ITS ONUS TO SUBSTANTIATE HIS CLAIM BONAFI DE. THE A.O. ACCEPTED THE INCOME AND ALSO DISALLOWED THE EXPENSES AS PER SECT ION 37, WHICH WAS CLAIMED BY THE APPELLANT ILLEGALLY AS WELL AS WITHO UT SUPPORT OF EVIDENCE. RECENTLY, HONBLE MADRAS HIGH COURT IN CASE OF SHAR MA ALLOYS (INDIA) LTD. VS. ITO (OSD) [2013] 357 ITR 379 (MAD), HELD AS UNDER: THE DECISION OF THE APEX COURT IN THE CASE OF UNIO N OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 ( SC) WHICH IS REFERRED TO BY THE INCOME-TAX APPELLATE TRIBUNAL AN D THE SUBSEQUENT DECISION IN THE UNION OF INDIA V. RAJASTHAN SPG. AN D WVG. MILLS ITA NOS. 1509-1511/AHD/05, A.YS. 1997-98, 98-99 & 99-00. PAGE 12 REPORTED IN [2009] 180 TAXMAN 609 (SC); [2010] 1 GS TR 66 9SC) CLEARLY POINT OUT THAT THE PENALTY IS LEVIABLE FOR DELIBERATE DECEPTION OF THE CLAIM. THUS, THE LEVY OF PENALTY WOULD DEPEND ON THE EXISTENCE OR OTHERWISE OF THE CONDITIONS CALLING FOR LEVY OF PEN ALTY. THE OBJECT BEHIND THE ENACTMENT OF SECTION 271(1)(C), READ WIT H THE EXPLANATIONS, INDICATES THAT THE SECTION HAS BEEN ENACTED TO PROV IDE FOR A REMEDY FOR LOSS OF REVENUE, BY REASON OF CONCEALMENT OF PARTIC ULARS OF INCOME. THUS, BEING A CIVIL LIABILITY AND THAT THE EXPLANAT ION OFFERED BY THE ASSESSEE NOT BEING A BONAFIDE ONE, PARTICULARLY ON THE FACTS OF THE CASE, WE HAVE NO HESITATION IN CONFIRMING HE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL. THUS, THE ASSESSEE FILED INACCURATE PARTICULARS OF INCOME AND CONCEALED INCOME. THEREFORE, WE REVERSE THE ORDER OF THE CIT (A). HOWEVER, THE PENALTY IMPOSED @ 125% WHICH IS REDUCED TO 100% OF TAX SOUG HT TO BE EVADED. THEREFORE, A.O. IS DIRECTED TO RE-CALCULATE THE PEN ALTY @ 100%. 7. IN THE RESULT, THE REVENUES APPEALS IN ALL THRE E YEARS ARE PARTLY ALLOWED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 01.11.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA - - - - $ $$ $ .)/ .)/ .)/ .)/ 0/,) 0/,) 0/,) 0/,) / COPY OF ORDER FORWARDED TO:- 1. '# / REVENUE 2. # / ASSESSEE 3. 44 ) &5 / CONCERNED CIT 4. &5- / CIT (A) 5. /#9 .)' , , / DR, ITAT, AHMEDABAD 6. ; <= / GUARD FILE. BY ORDER/ - , >/ 4'