Income-tax Officer, Jalgaon V. M/s. akash enterprises, Jalgaon

ITA 1772/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93808 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 24-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Income from undisclosed sources; Document seized; Question of law; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1772/PN/2013 (ASSESSMENT YEAR : 2003-04) ITO, WARD-1(2), JALGAON .. APPELLANT VS. M/S. AKASH ENTERPRISES, 88/1, CHINCHOLI VILLAGE, AJANTHA ROAD, JALGAON, DIST. JALGAON 425 001 PAN NO. AAKFA6905A .. RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI B.C. MALAKAR DATE OF HEARING : 10-06-2015 DATE OF PRONOUNCEMENT : 12-06-2015 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29-07-2013 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A), AURANGABAD HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THE RECE IPTS ARE ADVANCES AND HENCE NOT TAXABLE AS INCOME OF THE ASSESSEE IN SPITE OF THE FACT THAT THESE CASH RECEIPTS HAVE NOT BEE N RECORDED IN THE BOOKS OF ACCOUNTS BY ASSESSEE AND THEREFO RE THESE RECEIPTS ARE UNACCOUNTED INCOME OF THE ASSESSEE. WH EN THE ADVANCES WERE NOT ACCOUNTED IN THE BOOKS, IT BECO MES THE INCOME OF THE ASSESSEE OVER AND ABOVE THE DISCLOSED INCOM E. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A), AURANGABAD HAS ERRED IN HOLDING AS ADVANCES TH AT THE ADVANCES ARE NOT TAXABLE AS INCOME IN THE CURRENT YEA R IN SPITE OF THE FACT THAT THE CIT(A), NAGPUR HAS ALREADY CONFIRMED THE ADDITION FOR THE A.Y. 2003-04. THUS THE DECISION OF CIT(A), AURANGABAD IS AGAINST THE DECISION OF CIT(A), NAGPUR. SINCE 2 THE RECEIPTS WERE RECEIVED IN THE F.Y. 2002-03 IT R EPRESENTS UNACCOUNTED INCOME FOR THE A.Y. 2003-04 ONLY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT THEREFORE, PRAYS THAT THE ORDER OF THE CIT (A), AURANGABAD BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD/AMEND/ALTER A NY GROUNDS OF APPEAL AT THE TIME HEARING. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION. AN ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED ON 23-09-2004 IN THE GROUP OF CASES OF M/S. RAMDEV OIL INDUSTRIES PVT. LTD. OF JALGAON BELONGING TO THE JAGWANI GROUP. A SEARCH ACTION U/S.132 OF THE I.T. ACT WAS ALSO CARRIED OUT AT THE BUSINESS AND RESIDENCE PREMISES LOCATED AT JALGAON AND MUMBAI OF PARTNERS SHRI GURUMUKH M. JAGWANI AND JETHANAND M.JAGWANI. SIMULTANEOUSLY, THE FACTORY PREMISES AND RESIDENCE OF OTHER BUSINESS CONCERNS OF BROTHERS AND THE CLOSE ASSOCIATES WERE COV ERED EITHER IN SEARCH U/S.132 OR SURVEY U/S.133A. IN RESPON SE TO NOTICE U/S.153A THE ASSESSEE FILED THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 15-02-2006 DECLARIN G TOTAL INCOME OF NIL. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT DURING THE SEARCH DOCUMENTARY EVIDENCE OF C ASH RECEIPT OF RS.25 LAKHS WAS FOUND AND SEIZED. THE STATEME NT OF SHRI GURUMUKH JAGWANI, PARTNER OF THE ASSESSEE FIRM WAS RECORDED U/S.132(4) OF I.T. ACT, 1961 ON 24-09-2004. IN THE SAID STATEMENT HE HAD STATED THAT THESE ARE T HE CASH RECEIPTS RELATED TO BOOKING ADVANCE FOR SHOPS OF NATH PLA ZA 3 RECEIVED FROM VARIOUS CUSTOMERS AND HAS AGREED TO OFFER RS.25,00,000/- AS INCOME. 5. HOWEVER, THE ASSESSEE DID NOT OFFER THESE RECEIPTS IN THE INCOME-TAX RETURN FILED IN RESPONSE TO NOTICE U/S.153A . THE AO, THEREFORE, CONFRONTED THE SAME TO THE ASSESSEE. THE AO FURTHER NOTED THAT AT THE TIME OF REVOCATION OF ORDER U/S.132(3) OF FACTORY PREMISES OF M/S. RAMDEV OIL INDUSTRIES LTD. VIDE QUESTION NO.17 OF HIS STATEMENT RECORDED ON 19-11-2004, HE WAS ASKED TO CLARIFY THE INCOMPLETE ANSWER IN RESPECT OF UNACCOUNTED CASH RECEIPT S OF RS.59 LAKHS BELONGING TO SALE OF SHOPS IN NATH PLAZA COMPLEX. IN ANSWER TO THIS QUESTION SHRI GURUMUKH JAGWANI HAD STATED THAT AN AMOUNT OF RS.25 LAKHS ON TH IS ACCOUNT HAD ALREADY BEEN OFFERED AND FURTHER STATED THA T THE RECEIPTS FOR BOOKING OF THE SHOPS WERE DULY REFLECTE D IN THE REGULAR BOOKS OF ACCOUNTS. HOWEVER, HE FAILED TO SHO W ANY ENTRY IN THE REGULAR BOOKS OF ACCOUNT TO SUPPORT H IS CLAIM. SINCE THE ASSESSEE FAILED TO SHOW AND CONFIRM THAT THE RECEIPT OF RS.25 LAKHS IS DULY REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS, THEREFORE, ACCORDING TO THE AO THE ASSESSEE SHOULD HAVE OFFERED/DISCLOSED THE UNDISCLOSED INCOME OF RS.25 LAKHS. SINCE THE ENTIRE AMOUNT OF RS.25 LAKHS WAS RECEIVED ON 21-05-2002, THEREFORE, THE AO HELD THAT THIS UNRECORDED, UNACCOUNTED CASH RECEIPTS AMOUNT ING TO RS.25 LAKHS ARE TAXABLE IN THE F.Y. 2002-03 RELEVANT TO A.Y. 2003-04. HE ACCORDINGLY MADE AN ADDITION OF RS.25 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNACCOUNTED CASH RECEIPTS. 4 6. THE ASSESSEE PREFERRED AN APPEAL BUT WITHOUT SUCCESS. THE AO THEREAFTER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND OBSERVING THAT ASSESSEE HAS NOT REFLECTED RS.25 LAKHS AS INCOME FOR A.Y. 2003-04 EVEN THOUGH HE HAD EARNED THE SAME AND ADMIT TED IN THE STATEMENT RECORDED U/S.132(4) OF THE ACT, THE AO RELYING ON VARIOUS DECISIONS LEVIED PENALTY OF RS.9,18,750/- U/S. 271(1)(C) OF THE I.T. ACT. WHILE DOING SO, HE FURTHER OBSERVED THAT BUT FOR THE SEARCH ACTION AN AMOUNT OF R S.25 LAKHS WOULD HAVE REMAINED UNTAXED. THE ACT OF THE ASSESSEE IS DELIBERATE WITH A VIEW TO EVADE TAX AND HENC E THIS IS A FIT CASE FOR IMPOSITION OF PENALTY. HE ACCORDINGLY LEVIED PENALTY OF RS.9,18,750/- U/S. 271(1)(C) OF THE I.T. ACT. BEING 100% OF THE TAX SOUGHT TO BE EVADED. 7. BEFORE CIT(A) THE ASSESSEE ARGUED THAT AO HAS INITIATED PENALTY PROCEEDINGS FOR FURNISHING THE INACCURATE PARTICULARS AND HAS NOT CHARGED THE ASSESSEE FOR CONCE ALING HIS INCOME. THE ASSESSEE ARGUED THAT ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. THE SHOW CAUSE NOTICE ISSUED BY THE AO DOES NOT GIVE ANY PARTICU LARS OF ALLEGED CONCEALED INCOME NOR ITS ASSESSMENT ORDER ANYWHERE SAYS THAT THE ASSESSEE HAS CONCEALED INCOME OF RS.25 LAKHS. IT WAS SUBMITTED THAT FOR ATTRACTING PENALTY FOR CONCEALING INCOME THERE HAS TO BE GUILTY MIND AND DELIBERATENESS AND THE AO HAS TO PROVE THE SAME. HOWE VER, IN THE INSTANT CASE, THE AO HAS NOT RECORDED SUCH FINDING TO PROVE CONCEALMENT OR HOW THE CASH RECEIPTS WERE CONC EALED 5 INCOME OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT IN VIEW OF CLAUSE 2 OF EXPLANATION 5 TO SECTION 271(1)(C) THE ASSESSEE IS ENTITLED TO IMMUNITY FROM THE PENALTY FOR CONCEALMENT. 8. THE ASSESSEE FURTHER ARGUED THAT THE AMOUNT OF RS.25 LAKHS REPRESENTS BOOKING ADVANCE FOR SHOPS AT NATH PLAZ A RECEIVED FROM VARIOUS CUSTOMERS WHICH HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT. IT WAS ARGUED THAT SUCH CASH ADVANCES RECEIVED FOR PROPOSED SALE FORMS PART O F THE SALE CONSIDERATION AND CANNOT BE REGARDED AS INCOME OF T HE ASSESSEE. IT WAS SUBMITTED THAT ADVANCE RECEIVED IN RE SPECT OF PROPOSED SALE OF SHOPS CANNOT BE TAXED IN THE YEAR OF RECEIPT ITSELF BUT THE INCOME IS TO BE TAXED IN THE YEAR IN WHICH THE SHOPS ARE SOLD. RELYING ON VARIOUS DECISIONS IT WAS ARGUED THAT THE AMOUNT OF RS.25 LAKHS BEING ADVANCE FOR PURCHASE OF SHOPS IS PART OF THE SALE CONSIDERATION A ND CANNOT BE REGARDED AS INCOME OF THE ASSESSEE. IT HAS TO BE TAXED ONLY IN THE YEAR WHEN THE SHOPS ARE SOLD AND TH E PROFIT IS EARNED. 9. THE LD.CIT(A) CANCELLED THE PENALTY ON THE BASIS OF THE ALTERNATE ARGUMENTS ADVANCED BY THE ASSESSEE THA T THE AMOUNT OF RS.25 LAKHS REPRESENTS BOOKING ADVANCE FOR SHOPS AT NATH PLAZA RECEIVED FROM VARIOUS CUSTOMERS WHIC H ARE NOT RECORDED IN THE BOOKS OF ACCOUNT AND THE PROFIT WILL ACCRUE TO THE ASSESSEE ON SUCH ADVANCES ONLY IN THE YEAR OF SALE. HE FURTHER NOTED THAT THE AO HAS NOT BROUGHT AN Y EVIDENCE ON RECORD THAT THE SAID SHOPS IN RESPECT OF WH ICH THE ADVANCE HAS BEEN RECEIVED HAVE BEEN SOLD IN THE YE AR 6 UNDER APPEAL, I.E. IN THE YEAR OF RECEIPT OF ADVANCE. THEREFORE, THE PROFIT ON SALE OF THE SAID SHOPS IS TAXABLE IN THE SUBSEQUENT YEARS AND NOT IN THE YEAR UNDER APPEA L. RELYING ON VARIOUS DECISIONS HE OBSERVED THAT PENALTY U/S.271(1)(C) OF THE I.T. ACT IS NOT LEVIABLE WHERE THE INCOME RELATES TO DIFFERENT YEAR. SINCE THE INCOME IS NOT TAXABLE IN THE IMPUGNED ASSESSMENT YEAR, HE HELD THAT NO PENALTY U/S.271(1)(C) OF THE I.T. ACT CAN BE LEVIED FOR THE YEAR UNDE R APPEAL. HE ACCORDINGLY DELETED THE PENALTY LEVIED BY THE AO. 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 11. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OBJECTED TO THE ORDER OF THE CIT(A). HE SUBMITTED THAT DURING THE SEARCH DOCUMENTARY EVIDENCE OF CASH RECEIPTS HAVE BEEN FOUND. THESE CASH RECEIPTS HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THEREFORE THESE RECEIPTS ARE UNDISCLOSED. THIS FACT IS UNDISPUTED AS THESE RECEIPTS ARE NOT RECORDED IN THE B OOKS OF ACCOUNTS AND CANNOT FORM PART OF THE PROFIT AND LOSS A/C DISCLOSED BY THE ASSESSEE FIRM. IT IS NOT ACCEPTABLE THAT ADVANCES ARE NOT TAXABLE AND ONLY INCOME IS TAXABLE. HOWEVER, THIS APPLIES ONLY TO THE ADVANCES ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. WHEN THE ADVANCES ARE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT, IT BECOMES THE INCOME OF THE ASSESSEE OVER AND ABOVE THE DISCLOSED INCOME. THE RECEIPTS ARE TO BE TAXED IN THE YEAR OF RECEIPT ONLY. FU RTHER, THE CIT(A), NAGPUR HAS ALREADY UPHELD THE ADDITION OF THESE 7 ADVANCES IN THE A.Y. 2003-04. THEREFORE, THERE IS NO DISPU TE THAT THESE RECEIPTS ARE NOT TAXABLE IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE CIT(A)'S DECISION THAT THE ADVANCES ARE NOT TAXABLE AND INCOME IS ALSO NOT TAXABLE IN THE CURRENT YEAR IS CONTRARY TO THE FACTS. THE CIT(A) HA S DECIDED THAT THE ADVANCES ARE NOT TAXABLE IN THE CURRE NT YEAR IN SPITE OF THE FACT THAT THE CIT(A), NAGPUR HAS ALREADY CONFIRMED THE ADDITION. HE ACCORDINGLY SUBMITTED THAT ORDE R OF LD.CIT(A) BE REVERSED AND THAT OF THE AO BE RESTORED. 12. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND STRONGLY SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITT ED THAT THERE IS NO DISPUTE TO THE FACT THAT DURING THE CO URSE OF SEARCH ON THE JAGWANI GROUP ON 23-09-2002 THE STATEM ENT OF THE PARTNER OF THE ASSESSEE FIRM SHRI GURUKUKJ JAGWAN I WAS RECORDED U/S.132(4) WHERE HE HAS ADMITTED THAT AN AMOUNT OF RS.25 LAKHS WAS RECEIVED IN CASH ON ACCOUNT OF SALE OF SHOPS AT NATH PLAZA. THE AO MADE ADDITION OF RS.25 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE WHICH HAS BEEN UPHELD BY THE CIT(A). THEREFORE, THE QUANTUM ADDITION IS CONFIRMED. HOWEVER, THE QUESTION THAT ARISE IS AS TO WHETHER THE AMOUNT OF RS.25 LAKHS IS THE INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR 2003-04. REFERRING TO PAGE 148 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE C HART WHICH SHOWS THAT ONLY 3 SHOPS HAVE BEEN SOLD DURING TH E YEAR FOR A TOTAL CONSIDERATION OF RS.9 LAKHS AND PAYMENT S WERE RECEIVED BY CHEQUE. REFERRING TO PAGE 149 OF THE P APER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTIO N OF 8 THE BENCH TO THE SALE OF SHOPS TO 21 CUSTOMERS FOR A T OTAL CONSIDERATION OF RS.50,98,500/- OUT OF WHICH AN AMOUNT OF RS.21,74,500/- WAS RECEIVED IN CASH AND RS.29,24,000/- WAS RECEIVED BY CHEQUE. REFERRING TO PAGE 150 OF THE P APER BOOK THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTIO N OF THE BENCH TO THE SALE OF 7 SHOPS TO DIFFERENT PERSONS A ND HAS RECEIVED AN AMOUNT OF RS.61,92,000/- OUT OF WHICH AN AMOUNT OF RS.5,07,000/- WAS RECEIVED IN CASH AND RS.56,85,000/- WAS RECEIVED BY CHEQUE. REFERRING TO PAGE 151 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING F.Y. 2005-06 THE ASSESSEE HAS SOLD 5 SHOPS FOR A TOTAL CONSIDERATION OF RS.31,34,000/- OUT OF WHICH AN AMOUNT OF RS.2,64,000/- HAS BEEN RECEIVED BY CASH AND RS.28,70,000/- HAS BEEN RECEIVED BY CHEQUE. H E SUBMITTED THAT THE AMOUNT OF RS.25 LAKHS FOR WHICH THE DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH IN FACT REFERS TO THE ADVANCE RECEIVED FOR SALE OF FLATS WHICH WAS SOLD IN SUBSEQUENT ASSESSMENT YEARS. REFERRING TO THE PROFIT AND LOSS ACCOUNT IN THE SUBSEQUENT ASSESSMENT YE ARS HE TRIED TO EXPLAIN THAT THE SALE PROCEEDS WHICH INCLUDED CASH RECEIPTS AS WELL AS CHEQUE RECEIPTS HAVE BEEN REFLE CTED IN THE RELEVANT PROFIT AND LOSS ACCOUNT. 13. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KARDA CONSTRUCTION PVT. LTD . VIDE ITA NO.1960/2012 ORDER DATED 25-02-2013 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT PROFIT HAS TO BE COMPUTED ONLY IN THE YEAR OF SALE AND NOT ON THE BASIS OF 9 ADVANCE RECEIVED WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. HE SUBMITTED THAT IN THAT CASE DURING THE COU RSE OF SEARCH UNACCOUNTED CASH RECEIPTS OF RS.71,67,000/- WA S FOUND. IT WAS EXPLAINED BY THE ASSESSEE TO THE SEARCH PARTY THAT THESE WERE BOOKING ADVANCES COLLECTED BY THE ASSE SSEE FROM ITS CUSTOMER AND WERE PART OF SALE CONSIDERATION DECLARED BY THE ASSESSEE AT THE TIME OF SALE OF FLATS AFTER THE DATE OF SEARCH. THE TRIBUNAL UPHELD THE ORDER OF THE CIT (A) WHO HAD DELETED THE ADDITION MADE BY THE AO. ON FURTHER APPEAL BY THE REVENUE, THE HONBLE HIGH COURT HELD THAT THE CASH RECEIPTS WERE UNDISPUTEDLY IN RESPECT OF SALE O F FLATS AND THE SAME WERE OFFERED TO TAX IN THE YEARS IN WH ICH FLATS WERE SOLD. THE HONBLE HIGH COURT HAD REJECTED TH E OBJECTION OF THE REVENUE THAT THE AMOUNTS OF RS.71,68,000/- HAVE BEEN IN CASH HAS TO BE TAXED IN THE YEAR IN WHICH CASH WAS RECEIVED BY THE RESPONDENT ASSE SSEE AND NOT IN THE YEAR THE SALE OF THE FLATS TOOK PLACE. 14. REFERRING TO THE RELEVANT SEIZED PAPERS FOUND AND PLACED AT PAGE 42 TO 45 OF THE PAPER BOOK AND THE LIST OF THE BUYERS PLACED AT PAGES 148 TO 151 OF THE PAPER BOOK T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CASH RECEIPTS FR OM DIFFERENT PERSONS ARE IN THE FORM OF BOOKING ADVANCES AND THE SHOPS WERE SOLD IN SUBSEQUENT ASSESSMENT YEARS. THEREFORE, IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT PENALTY U/S.271(1)(C) CANNOT BE LEVIED IN THE IMPUGNED ASSESSMENT YEAR SINCE THE ASSESSEE HAS NOT EARNED ANY INCOME OUT OF SUCH BOOKING ADVANCE RECEIVED FOR SALE OF SHOPS. 10 15. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. VIJAYA BUILDERS VIDE ITA NO S. 1605 AND 1606/PN/2012 HE SUBMITTED THAT UNDER IDENTICA L FACTS AND CIRCUMSTANCES THE PENALTY LEVIED BY THE AO AND DELETED BY THE CIT(A) WAS UPHELD BY THE TRIBUNAL AND TH E APPEAL FILED BY THE REVENUE WAS DISMISSED. HE ACCORDINGLY SUBMITTED THAT THERE IS NO JUSTIFICATION FOR LEVY OF PENALTY ON THE ADVANCES RECEIVED FOR SALE OF FLATS WHICH WERE SOLD IN SUBSEQUENT ASSESSMENT YEARS. HE ACCORDINGLY SUBMITTED THAT THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 16. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICE R AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE DURING THE COURSE OF SEARCH AT THE JAGWANI GROUP OF CASES CERTAIN DOCUMENTA RY EVIDENCE SHOWING CASH RECEIPT OF RS.25 LAKHS WAS FOUND AND SEIZED. THE STATEMENT OF SHRI GURUMUKH SUKHWANI, PARTNER OF THE ASSESSEE FIRM WAS ALSO RECORDED U/S.132(4) OF THE I.T. ACT ON 24-09-2004. IN THE SAID STATEMENT SHR I GURUMUKH SUKHWANI HAD ADMITTED THAT THESE ARE THE CAS H RECEIPTS ON ACCOUNT OF ADVANCES FOR SALE OF IMMOVABLE PROPERTY. SINCE THE ASSESSEE DID NOT OFFER THESE RECEIPT S TO INCOME IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A THE ASSESSING OFFICER MADE ADDITION OF RS.25 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION OF RS.25 LAKHS MADE BY THE ASSESSING 11 OFFICER ON ACCOUNT OF UNACCOUNTED CASH RECEIPTS. THE ASSESSING OFFICER THEREFORE LEVIED PENALTY U/S.271(1)(C) OF THE I.T. ACT. WE FIND THE LD.CIT(A) CANCELLED THE PENALTY ON THE GROUND THAT THE SALE HAS NOT MATERIALISED DURING THE YEAR AND HAS MATERIALISED IN SUBSEQUENT ASSESSMENT YEAR S. THEREFORE, THESE BOOKING ADVANCES CANNOT FORM PART OF T HE TOTAL INCOME OF THE ASSESSEE AND THEREFORE PENALTY IS NOT LEVIABLE U/S.271(1)(C) OF THE I.T. ACT. 17. FROM THE RELEVANT SEIZED PAPERS PLACED AT PAGES 42 TO 45 OF THE PAPER BOOK WE FIND THE SEIZED DOCUMENTS CONTA IN RECEIPTS OF CHEQUE AS WELL AS CASH FROM DIFFERENT PERSONS. FROM PAGE 148 OF THE PAPER BOOK WHICH GIVES THE DETAILS OF SALE OF SHOPS TO DIFFERENT PERSONS AT NATH PLAZA, WE FIND TH E ASSESSEE HAS SOLD ONLY 3 SHOPS DURING THE YEAR FOR A T OTAL CONSIDERATION OF RS.9 LAKHS. THERE IS NO SUCH CASH RECEIPT S FROM THE 3 PERSONS TO WHOM THE SHOPS HAVE BEEN SOLD DURING A.Y. 2003-04. THE CASH RECEIPTS RELATE TO SALE OF SHOPS TO DIFFERENT PERSONS WHERE THE SALE HAS TAKEN PLAC E ONLY IN SUBSEQUENT YEARS, I.E. A.Y. 2004-05 AND ONWARDS. WE THEREFORE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT NO INCOME HAS ACCRUED TO THE ASSESSEE ON ACCOUNT OF SUCH UNACCOUNTED CASH RECEIPTS AND THE ASSESSEE HAS ACCOUNTED FOR THE CASH RECEIPTS IN SUBSEQUENT YEARS WHEN THE SHOPS WERE SOLD. HE ALSO CLARIFIED THAT SINCE THESE ARE UNACCOUNTED RECEIPTS THE S AME HAS NOT ENTERED INTO THE BOOKS OF ACCOUNT BUT THE FAC T REMAINS THAT THE CASH RECEIPTS WERE DISCLOSED IN THE 12 SUBSEQUENT YEARS ALONG WITH CHEQUE RECEIPT AND PROFIT H AS BEEN OFFERED TO TAX. 18. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KARDA CONSTRUCTION PVT. LTD., (SUPRA). IN THAT CASE THE FOLLOWING QUESTION OF LAW WAS FRAMED BEFORE THE HONBLE HIGH COURT FOR CONSIDERATION : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.71,67,000/- BEING UNACCOUNTED CASH RECEIPTS FOUND DURING THE TIME OF SEA RCH ACTION BY ACCEPTING THE EXPLANATION OF THE ASSESSEE TH AT THE UNACCOUNTED CASH RECEIPTS OF RS.71,67,000/- FOUND AT T HE TIME OF SEARCH WERE BOOKING ADVANCES COLLECTED BY THE ASSESSEE FROM ITS CUSTOMERS AND WERE PART OF SALE CONSIDERATION DECLARED BY THE ASSESSEE AT THE TIME OF SALE OF FLATS AF TER THE DATE OF SEARCH? 19. THE HONBLE HIGH COURT DISMISSED THE APPEAL FILED BY THE REVENUE BY OBSERVING AS UNDER : THE TRIBUNAL BY THE IMPUGNED ORDER UPHELD THE FIND ING OF FACT RECORDED BY THE CIT(A) THAT RECEIPT OF RS.71,67 ,000/- WAS PART OF THE SALE CONSIDERATION OF THE FLATS SOLD BY THE RESPONDENT ASSESSEE AND THE SAME HAS TO BE TAXED IN THE YE AR IN WHICH THE ASSESSEE HAS RECORDED THE SALE OF FLATS. THE OBJECTION OF THE REVENUE IS THAT AMOUNT OF RS.71,67,0 00/- FOUND IN CASH HAS TO BE TAXED IN THE YEAR IN WHICH CA SH WAS RECEIVED BY THE RESPONDENT ASSESSEE AND NOT IN THE YEAR THE SALE OF THE FLATS TOOK PLACE. THE TRIBUNAL RECORDS A FACT THAT THERE IS NO DISPUTE THAT UNRECORDED ENTRIES OF CASH FOU ND WITH THE RESPONDENT ASSESSEE WERE IN RESPECT OF SALE OF FLATS AN D FORMING PART OF CONSIDERATION FOR SALE OF FLATS. FURT HER THE NAMES OF THE BUYERS OF THE FLATS AND THE CASH RECEIPTS F ROM THE BUYERS WERE ALSO FOUND DURING THE COURSE OF THE SEARCH. IN THESE CIRCUMSTANCES, ON THE BASIS OF THE FINDING OF FACT THAT CASH RECEIPTS WERE UNDISPUTEDLY IN RESPECT OF SALE OF FL ATS AND THE SAME WERE OFFERED TO TAX IN THE YEAR IN WHICH FL ATS WERE SOLD THAT THE APPEAL OF THE REVENUE BEFORE THE TRIBU NAL WAS DISMISSED. 20. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO TH E CASE DECIDED BY THE HONBLE BOMBAY HIGH COURT, THEREFORE , 13 RESPECTFULLY FOLLOWING THE DECISION CITED (SUPRA) WE ARE OF THE CONSIDERED OPINION THAT THE UNACCOUNTED CASH RECEIP T OF RS.25 LAKHS WILL FORM PART OF THE SALE CONSIDERATION OF THE FLATS SOLD BY THE ASSESSEE IN THE YEAR WHEN THE SALE HAS TAKEN PLACE. THEREFORE, THE INCOME HAS NOT ACCRUED TO THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR AND THEREFORE NO PENALTY U/S.271(1)(C) OF THE I.T. ACT CAN BE LEVIED. ALTHOUGH THE QUANTUM ASSESSMENT HAS BEEN FINALISED, HOWEVER, ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT. THE ASSESSEE CA N MAKE FRESH ARGUMENTS DURING PENALTY PROCEEDINGS. WE THEREFORE REJECT THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE CANNOT MAKE FRESH ARGUMENT. 21. AN IDENTICAL ISSUE HAD ALSO COME UP BEFORE THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S.VIJAYA BUILDERS VIDE ITA NOS.1605 AND 1606/PN/2012 ORDER DATED 25-11-2013 WHERE PENALTY WAS LEVIED U/S.271(1)(C) ON THE BASIS OF ON-MONEY RECEIVED BY THE ASSESSEE FROM VARIOUS CUSTOMERS WHICH WAS SHOWN AS ADVANCE RECEIVED IN THE BALANCE SHEET. IN THAT CASE, THE ASSESSEE WHICH WAS A PARTNERSHIP FIRM WAS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. DURING THE COURSE OF SEARCH AND SEIZUR E ACTION U/S.143(2) OF THE I.T. ACT CERTAIN DOCUMENTS WERE SEIZED ACCORDING TO WHICH THE ASSESSEE HAS RECEIVED ON- MONEY FROM VARIOUS CUSTOMERS WHICH WAS SHOWN AS CASH ADVANCE RECEIVED IN THE BALANCE SHEET. DURING ASSESSMEN T PROCEEDINGS THE ASSESSEE CLAIMED THAT SAID ADVANCE CANN OT 14 BE TREATED AS INCOME OF THE ASSESSEE. SINCE THE ON-MON EY RECEIVED WAS NOT RECORDED IN THE BOOKS OF ACCOUNT PRIOR TO SEARCH ACTION THE ASSESSING OFFICER REJECTED THE CONTENT ION OF THE ASSESSEE AND HELD THAT THE AMOUNTS OF ON-MONEY IS TAXABLE IN THE YEAR OF RECEIPT AND ACCORDINGLY MADE THE ADDITION. SUBSEQUENTLY, THE ASSESSING OFFICER LEVIED PENALTY ON SAID ADDITION. BEFORE CIT(A) THE ASSESSEE PLEADED THAT THE ASSESSEE HAS RECEIVED ADVANCE FROM CUSTOMERS FOR S ALE IN FUTURE. IT WAS ARGUED THAT THE INCOME WILL ACCRUE TO T HE ASSESSEE ONLY WHEN THE ACTUAL COMPLETION OF FLAT TAKES PLA CE AND POSSESSION OF THE SAME IS GIVEN TO THE CUSTOMERS. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE PENALTY U/S.271(1)(C) OF THE I.T. ACT HOLDING THAT THE ON-MONEY RECEIVED BY THE ASSESSEE CAN NOT BE THE INCOME OF THE ASSESSEE OF THE SAID YEAR. THE TRIBUNAL UPHELD THE ORDER OF THE CIT(A) AND DISMISSED THE APPEAL FILED BY THE REVENUE HOLDING THAT ASSESSING OFFICER IS NOT JUSTIFIED IN IMPOSING PENALTY U/S.271(1)(C) OF THE I.T. ACT IN RESPECT OF ON-MONEY RECEIVED IN THE YEAR OF RECEIPT A S SUCH MONEY CANNOT BE TREATED AS THE INCOME OF THE ASSESSEE EVEN THOUGH THE SAME IS BROUGHT TO TAX. 22. IN VIEW OF THE ABOVE DECISIONS AND CONSIDERING THE FACT THAT THE LD.CIT(A) WHILE DELETING THE PENALTY HAS ALSO RELIED ON VARIOUS OTHER DECISIONS WHICH SUPPORT THE CASE OF THE ASSESSEE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF T HE CIT(A) DELETING THE PENALTY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 15 23. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 12-06-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 12 TH JUNE, 2015 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A), AURANGABAD 4. CIT, AURANGABAD 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE