INDUSTRIAL METAL CORPORATION, MUMBAI V. ACIT CIR 15(3), MUMBAI

ITA 1845/MUM/2009

• Counselvise Citation: 184519914 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 01-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Assessee Lawyers: SANJEEV M SHAH
• Keywords: Income from undisclosed sources; Opportunity of cross examination; Peak credit; Question of law; Third party statement; Accommodation entries; Bogus loan; Revised return; Bonafide mistake
• Section: 139; 143(3); 133A; 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) ITA NO. 1845/MUM/2009 ASSESSMENT YEAR-2005-06 M/S. INDUSTRIAL METAL CORPN., 315, SVP ROAD, KANJI MANSION, OPP. 6 TH KAHETWADI LANE, MUMBAI-400 004 PAN-AAAF10572P VS. THE ACIT, CIR 15(3), MATRU MANDIR, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SANJEEV M. SHAH RESPONDENT BY: SHRI O.A. MAO DATE OF HEARING :1.12.2011 DATE OF PRONOUNCEMENT: 30.12.2011 O R D E R PER B.R. MITTAL, JM : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2005-06 DISPUTING ORDER OF LD. CIT(A) DT. 12.1.2009 TO CON FIRM LEVY OF PENALTY OF RS. 29,42,227/- U/S. 271(1)(C) OF I.T. ACT. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF FERROUS AND N ON-FERROUS METALS. THE ASSESSEE FILED RETURN FOR ASSESSMENT YEAR UNDER CON SIDERATION ON 29.10.2005 DECLARING TOTAL INCOME AT RS.44,92,065/-. THE SAID RETURN WAS PROCESSED U/S. 143(1) ON 6.4.2006. 3. A SURVEY WAS CONDUCTED U/S. 133A OF I.T.ACT ON T HE PREMISES OF ASSESSEE AS WELL PREMISES BELONGING TO M/S. AVI EXP ORTS, M/S. SUN DIAM & M/S. MOULIMANI IMPACT P. LTD. ON 16 TH AUGUST, 2007 BY ADIT (INV.). DURING ITA NO. 1845/M/09 2 THE COURSE OF SURVEY, STATEMENT OF SHRI RAJENDRA SO HANLAL JAIN DIRECTOR OF M/S. MOULIMANI IMPACT P. LTD. & PARTNER IN M/S. SUN DIAM AND PROPRIETOR OF M/S. AVI EXPORTS WAS RECORDED U/S. 131. IN RESPONS E TO QUESTION NO. 33 OF HIS STATEMENT, HE STATED AS UNDER: 33. I HAVE GIVEN ACCOMMODATION ENTRIES AGAINST RECEIPT OF CASH TO M/S. INDUSTRIAL METAL CORPN. THRO UGH MY FIRMS/CONCERNS VIZ. (1) SPARSH EXPORTS PVT. LTD ., (2) MOULIMANI IMPEX PVT. LTD., (3) AVI EXPORTS (4) S UN DIAM IN WHICH I AM INTERESTED AS WELL AS MY OTHER GROUP/ASSOCIATE CONCERNS VIZ. (1) ARYAN EXPORTS, (2 ) SARANSH GEMS (3) SHEETAL EXPORTS (4) SHREE OM EXPOR TS (5) PINKY GEMS (6) MARUTI GEMS (7) BEAUTIFUL DIAM ( 8) MAYANK IMPEX (9) NAZAR IMPEX PVT. LTD (10) SIA GEMS (11) AMARNATH DIAMOND PVT. LTD (12) SEVEN STAR (13) JEWEL STAR (14) MANI IMPEX (15) SUPER JEWELS (16) V ITRAG JEWELS (17) REGENT ENTERPRISES (18) MATUNG SHREE IMP EX (19) SEEMA IMPEX, EXCEPT ABOVE ALL OTHER BUSINESS TRANSACTION INCLUDING PURCHASE AND SALE OF DIAMONDS AND LONS AND ADVANCES TO OTHER PARTIES IN ABOVE SAID FI RMS ARE GENUINE AND CARRIED OUT DURING THE ORDINARY COURSE OF BUSINESS. IN RESPECT OF ABOVE ACCOMMODATION ENTRIES GIVEN TO M/S. INDUSTRIAL METAL CORPN. I USUALLY RECE IVE 0.50% AS COMMISSION ON LOAN AMOUNT. I FURTHER STATE THAT I USED TO RECEIVE COMMISSION AMOUNT AT THE TIME OF SQUARING UP THE LOAN AMOUNT WHICH WAS DONE IN THE F .Y. 2006-07. 4. ON THE SAME DAY STATEMENT OF SHRI SURENDRA KUMAR JAIN, ANOTHER DIRECTOR OF M/S. MOULIMANI IMPEX PVT. LTD WAS RECORD ED U/S. 131 AND IN RESPONSE TO QUESTION NO. 26, HE STATED AS UNDER: I HAVE GIVEN ACCOMMODATION ENTRIES AGAINST RECEIPT OF CASH TO M/S. INDUSTRIAL METAL CORPN. THROUGH MY FIRM S/CONCERNS I.E. M/S. MOULIMANI IMPEX PVT. LTD. IN WHICH I AM IN TERESTED AS WELL AS MY OTHER GROUP/ASSOCIATE CONCERNS VIZ (M/S. SPARSH EXPORTS PVT. LTD. (2) M/S. AVI EXPORTS (3) M/S. SUN DIAM (4) ARYAN EXPORTS (5) SARANSH GEMS (6) SHREE OM EXPORTS (7) SHEETAL EXPORTS (8) PINKY GEMS (9) MARUTI GEMS (10) MAXI IMPEX (11) JEWEL STAR (12) REGENT ENTERPRISE (13) BE AUTIFUL DIAM (14) MAYANK IMPEX (15) NAZAR IMPEX PVT. LTD. (16 ) SAI GEMS (17) AMARNATH DIAMONDS PVT. LTD. (18) SEVEN ST AR (19) MATUNGSHREE IMPEX (20) VITRAG JEWELS (21) M/S. SUPER JEWELS ITA NO. 1845/M/09 3 (22) SEEMA IMPEX. EXCEPT ABOVE ALL OTHER BUSINESS TRANSACTIONS INCLUDING PURCHASE AND SALE OF DIAMOND S AND LONGS AND ADVANCES TO OTHER PARTIES IN THE ABOVE SAID FIR MS ARE GENUINE AND CARRIED OUT DURING THE ORDINARY COURSE OF BUSINESS. IN RESPECT OF ABOVE ACCOMMODATION ENTRIES GIVEN TO M /S. INDUSTRIAL METAL CORPORATION, I USUALLY RECEIVE 0.05 % AS COMMISSION ON LOAN AMOUNT. I FURTHER STATE THAT I U SED TO RECEIVE THE COMMISSION AMOUNT AT THE TIME OF SQUARI NG UP THE LOAN AMOUNT WHICH WAS DONE IN THE FINANCIAL YEAR 20 06-07. 5. STATEMENT OF PARTNER OF ASSESSEE SHRI SANJAY SHA NTILAL SANGHVI WAS ALSO RECORDED U/S. 131 AND WE CONSIDER IT RELEVANT TO REPRODUCE QUESTION NOS. 12,13,14,15,16 & 18 AND THEIR ANSWERS WHICH AR E AS UNDER: Q.12. FROM THE BOOKS OF ACCOUNTS IT WAS SEEN THAT FOR THE YEAR ENDING 31.3.2006 AND F.Y. 2006-07, YOU HAV E SHOWN UNSECURED LOANS FROM THE FOLLOWING ENTITIES. PLEAS E CONFIRM THE SAME. S. NO. NAME OF PARTY AMOUNT RS. 1. AVI EXPORTS 1,52,48,638 2. MANTUNG SHREE IMPEX PVT.LTD 86,73,050 3. MOULIMANI IMPEX PVT.LTD 1,11,13,680 4. SUN DIAM 1,85,93,997 5. SUPER JEWELS 1,54,42.927 6. VITRAG JEWELS 1,80,76,827 7. BEAUTIFUL DIAM 52,03,809 8. NAZAR IMPEX PVT. LTD. 96,44,485 9. SPARSH EXPORT PVT. LTD. 1,81,26,662 TOTAL 12,01,24,075 ANS. UPTO 31.3.2006, THE LOAN TAKEN FROM THE ABOVE SAID NINE PARTIES AMOUNTED TO RS. 8,67,00,105/-. THEREAFTER, DURING THE F.Y. 2006-07, WE HAVE TAKEN THE ADDITIONAL LOANS FR OM SOME OF THE PARTIES AND SOME AMOUNT WE HAVE ALSO RETURNED B ACK TO SOME OF THE PARTIES. WE HAVE WORKED OUT THE PEAK O F THESE LOANS WHICH COMES TO RS. 10,77,12,646/- AS ON 31.3. 2007. IN SUPPORT OF THIS PEAK WORKING I AM FURNISHING YOU TH E PEAK STATEMENT OF LOANS OBTAINED FROM THE ABOVE SAID NIN E PARTIES RIGHT FROM THE BEGINNING TO TILL DATE. Q.13. PLEASE GIVE THE NAME AND ADDRESSES OF THE PE RSONS BELONGING TO THE ABOVE NINE PARTIES, FROM WHOM YOU HAVE TAKEN THE LOAN? ITA NO. 1845/M/09 4 ANS. WE KNOW SHRI RAJENDRA JAIN, 219, PARAS CENTRE , OPERA HOUSE, MUMBAI WHO HAVE ARRANGED THE ABOVE SAID LOAN S. Q.14. DO YOU KNOW ANYTHING ABOUT THE FINANCIAL STA NDING OF SHRI RAJENDRA JAIN OR THE FINANCIAL STATUS OF THE A BOVE SAID NINE CONCERNS. ANS. I AM NOT AWARE OF ANYTHING ABOUT THE FINANCIAL STANDING OF SHRI RAJENDRA JAIN AND THE ABOVE SAID NINE CONCE RNS. Q.15. ARE YOU AWARE TO PROVE THE GENUINENESS OF TH E LOAN ONE OF THE MAIN CONDITIONS IS THAT YOU HAVE TO PROVE TH E CREDITWORTHINESS OF THE LENDER? YOU HAVE STATED TH AT YOU DO NOT KNOW THE FINANCIAL STANDING/STATUS OF SHRI RAJENDRA JAIN AND THE SAID NINE CONCERNS. HOW YOU WILL PROVE THE CREDITWORTHINESS O F THE ABOVE SAID NINE CONCERNS AND ALSO THE GENUINENE SS OF THE LOANS OBTAINED FROM THE ABOVE SAID NINE CONCERNS. ANS. I HAVE ALREADY STATED ABOVE, THAT I DO NOT KNOW THE FINANCIAL STATUS OF THE ABOVE SAID CONCERNS AND I AM NOT AWARE TO PROVE THE GENUINENESS OF THE LOAN I HAVE TO PROVE THE CREDITWORTHINESS OF THE ABOVE NINE CONCERNS FROM WH OM I HAVE OBTAINED LOAN. Q.16. DURING THE COURSE OF SURVEY ACTION U/S. 133A OF THE I.T. ACT, 1961 ON 16.8.2007 (TODAY) AT THE BUSINESS PREM ISES AT 404, THE JEWEL, M.P. MARG, OPERA HOUSE AND 206, ATHAVLE BHAVAN, DD.SATHE ROAD, OPERA HOUSE, MUMBAI, THE STATEMENTS OF PROPRIETORS/PARTNER/DIRECTORS OF THE ABOVE ENTITIES NAMELY SHRI RAJENDRA JAIN, AND SHRI MUDIT KARNAVAT, OPERATING F ROM THE ABOVE PREMISES, HAVE BEEN RECORDED. IN THE SWORN S TATEMENTS, THEY HAVE STATED ON OATH THAT THEY HAVE GIVEN ACCO MMODATION ENTRY ON ACCOUNT OF LOANS AGAINST RECEIPT OF MONE Y FROM YOU FOR A CERTAIN COMMISSION. PLEASE COMMENT? ANS. I HAVE CAREFULLY GONE THROUGH THE SWORN STATEM ENTS OF SHRI RAJENDRA JAIN, AND SHRI MUDIT KARNAVAT PROPRIETORS/PARTNERS/DIRECTORS OF THE ABOVE ENTITIE S. IN THIS CONNECTION, I HAVE TO STATE THAT IT MIGHT BE DIFFICU LT FOR ME TO PROVE THE GENUINENESS OF THE LOANS OBTAINED FROM TH E ABOVE SAID NINE PARTIES AS I DO NOT KNOW MUCH ABOUT THE D EALINGS OF THESE CONCERNS. UNDER THE CIRCUMSTANCES, I HAVE NO ALTERNATIVE BUT TO ACCEPT THAT THE LOANS OBTAINED FROM THESE NI NE CONCERNS VIZ., AVI EXPORTS, MANTUNG SHREE IMPEX PVT.LTD., MOU LIMANI IMPEX PVT.LTD., SUN DIAM, SUPER JEWELS, VITRAG JEWEL S, BEAUTIFUL DIAM, NAZAR IMPEX PVT. LTD. SPARSH EXPORT PVT. LTD. ARE BEYOND MY CAPACITY TO PROVE THE GENUINENESS OF THESE ENTIT IES. HENCE, I OFFER THE PEAK OF THE LOANS STATING IN THE NAMES O F THE ABOVE ITA NO. 1845/M/09 5 CONCERNS AMOUNTING TO RS. 10,77,12,646/- AS MY ADDI TIONAL INCOME FOR THE F.Y. 2005-06 AND F.Y. 2006-07 OVER A ND ABOVE MY REGULAR INCOME. FOR THE F.Y.2005-06, WE WILL BE REVISING OUR RETURN OF INCOME WITHIN A PERIOD OF 30 DAYS AND PAY THE TAXES ACCORDINGLY. AS REGARDS THE RETURN OF INCOME FOR F. Y.2006-07, THE SAME HAS NOT BEEN FILED SO FAR AS IT IS NOT DUE TILL DATE. THE ADDITIONAL INCOME FOR THE F.Y.2006-07 ON THE BASIS OF UNPROVED LOANS FROM THESE NINE PARTIES WILL BE OFFERED FOR T AXATION AT THE TIME OF FILING THE RETURN. Q18. DO YOU WANT TO SAY ANYTHING ELSE? ANS. WE HAVE OFFERED THE ADDITIONAL INCOME OF RS.L0,77,12,646/- FOR THE F.YS.2005-06 AND 2006-07 BEING MY INABILITY TO PROVE THE GENUINENESS OF THE LOANS OBT AINED FROM THE ABOVE SAID NINE PARTIES. HOWEVER, I WILL TRY TO FIND OUT IF THERE IS ANY OTHER DISCREPANCY THE SAME WILL ALSO B E COVERED WHILE FILING THE RETURNS OF INCOME. BUT, THIS ADDIT IONAL AMOUNT OFFERED FOR TAXATION AMOUNTING TO RS.10,77,12,646/- WILL NOT BE REDUCED. FURTHER, IT IS REQUESTED THAT NO PENALTY P ROCEEDINGS SHOULD BE INITIATED AS MY ASSESSMENT RELEVANT TO F. Y.2005-06 HAS NOT BEEN COMPLETED SO FAR AND I AM REVISING MY R ETURN OF INCOME BEFORE FINALIZATION OF THE ASSESSMENT. SIMIL ARLY AS THE DUE DATE FOR FILING OF THE RETURN FOR THE F.Y.2006- 07 HAS NOT FALLEN DUE THE ADDITIONAL INCOME OFFERED FOR TAXATI ON WILL BE DULY CONSIDERED IN THAT AND NO PENALTY PROCEEDINGS SHOUL D BE INITIATED. 6. IN VIEW OF ABOVE AND DURING POST SURVEY PROCEEDIN GS, ASSESSEE VIDE ITS LETTER DT. 27 TH AUGUST, 2007 (AS MENTIONED BY AO IN ASSESSMENT ORD ER IN PARA 4.5) AS UNDER: .. WE ENCLOSE HEREWITH COPY OF REVISE RETURNS FOR A. Y. 2005- 06 AND 2006-07 FILED VOLUNTARILY WITH THE ACIT, CIR CLE 15(3), MUMBAI ON 24.8.2007 DECLARING LOANS U/S. 68 AS PER THE PEAK STATEMENT VOLUNTARILY SUBMITTED. THERE WAS TYPING ERROR IN THE PEAK STATEMENT IN R ESPECT OF INTEREST PAID TO SUPER JEWELS ON 31.3.2006. INT EREST WAS ENTERED AS RS. 49,890/- IN PLACE OF RS. 4,98,904/- COPY OF REVISED PEAK IS ENCLOSED HEREWITH. AS A RESULT OF THE ABOVE RECTIFICATION THE PEAK WILL BE INCREASED TO RS. 10, 79,78,147/- AS ON 31.3.2007. THE SAID PEAK IS OFFERED IN THREE AS SESSMENT ITA NO. 1845/M/09 6 YEARS I.E. A.Y. 2005-06 RS. 80.40,520, A.Y. 2006- 07 RS. 7,91,08,599/- AND A.Y. 2007-08 RS. 2,08,29,028/-. ADDITIONAL INCOME FOR A.Y. 2007-08 WILL BE SHOWN IN THE RETURN YET TO BE FILED, DUE DATE BEING 31.10.2007. 7. THE ASSESSEE FILED REVISED RETURN ON 24.8.2007 DECLARING TOTAL INCOME AT RS. 1,25,32,585/-. THE ASSESSEE STATED INTER ALIA THAT RETURN IS REVISED IN ORDER TO VOLUNTARILY DECLARE LOAN U/S. 68 AS PER PE AK STATEMENT FILED HEREWITH. THE ASSESSING OFFICER COMPLETED ASSESSM ENT BY TREATING INCOME TO THE EXTENT OF RS.80,40,520/- AS CONCEALED INCOME OF ASSESSEE. HE STATED THAT REVISED RETURN WAS FILED BY ASSESSEE NOT VOLUN TARILY BUT BECAUSE OF FORCED CIRCUMSTANCES WHERE ASSESSEE HAD NO OPTION E XCEPT TO SURRENDER BOGUS LOANS. THE AO ALSO INITIATED PENALTY PROCEED INGS U/S. 271(1)(C) OF I.T. ACT. 8. THE AO HAS STATED THAT ON THE APPOINTED DATE I.E . 15.1.2008 NEITHER ASSESSEES REPRESENTATIVES APPEARED NOR SUBMITTED A NY REPLY TO SHOWCAUSE NOTICE ISSUED. HOWEVER, ASSESSEE VIDE LETTER DT. 2 ND MAY, 2008 REQUESTED FOR COPIES OF STATEMENTS RECORDED AT THE TIME OF SURVEY PROCEEDINGS. THE AO HAS STATED THAT COPIES OF STATEMENTS RECORDED DURIN G SURVEY PROCEEDINGS WERE PROVIDED TO ASSESSEE VIDE LETTER DT. 13.6.2008 . THE ASSESSEE STATED THAT LOANS TAKEN FROM SHRI RAJENDRA S. JAIN AND SHR I SURENDRA KUMAR JAIN THROUGH THEIR CONCERNS WERE DULY RECORDED IN THE BO OKS AND SAME WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES, TAX WAS DED UCTED AT SOURCE FROM THE INTEREST PAYABLE. THEREFORE, ASSESSEE HAS PRO VED IDENTITY AND CREDIT WORTHINESS OF LOAN CREDITORS. THAT ASSESSEE OFFERE D SAID LOANS FOR TAXATION DURING THE COURSE OF SURVEY ACTION TO BUY PEACE AND TO AVOID VEXED LITIGATION. THAT THERE IS NO CASE FOR CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS RETURN DECL ARING ADDITIONAL INCOME WAS VOLUNTARILY REVISED BEFORE COMPLETING ASSESSME NT U/S. 143(3) OF THE ACT. HOWEVER, AO DID NOT ACCEPT SAID CONTENTION OF ASSES SEE. IT IS RELEVANT TO STATE THAT ASSESSEE DURING THE COURSE OF PENALTY PR OCEEDINGS REQUESTED TO SUMMON SHRI RAJENDRA S. JAIN AND SHRI SURENDRA KUM AR JAIN AS ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THEM. THE AO IS SUED SUMMONS TO SAID ITA NO. 1845/M/09 7 WITNESSES TO ENABLE ASSESSEE TO EXAMINE THEM BUT TH EY HAD SHOWN THEIR INABILITY TO ATTEND ON THE DATE FIXED FOR. SINCE, MATTER WAS BECOMING BARRED BY LIMITATION, AO STATED THAT PRIOR TO SURVEY ACTIO N U/S. 133A CARRIED OUT ON 16 TH AUGUST, 2007 VARIOUS SUMS WERE SHOWN AS LOANS BY ASSESSEE IN THE BOOKS OF ACCOUNTS. HOWEVER, DURING THE COURSE OF S URVEY ACTION, CLAIM OF ASSESSEE WAS FOUND TO BE FALSE AS SAID ENTRIES OF LOANS WERE PROVED BEYOND DOUBT AS ACCOMMODATION ENTRIES TAKEN FROM DIFFERENT PARTIES. TILL THE DETECTION OF FALSE ENTRIES IN THE BOOKS OF ACCOUNTS , ASSESSEE HAD BEEN CLAIMING SAID SUMS TO BE GENUINE LOANS AND THEREAFT ER, ON BEING CORNERED WITH THE FACTS AND EVIDENCES, IT OFFERED THE PEAK C REDITS IN RESPECT OF PARTIES FROM WHOM THE ACCOMMODATION ENTRIES WERE TAKEN, AS ITS ADDITIONAL INCOME AMOUNTING TO RS. 80,40,520/- FOR THE ASSESSMENT YEA R UNDER CONSIDERATION. THE AO FURTHER STATED THAT REVISED RETURN FILED BY ASSESSEE COULD NOT BE CONSIDERED U/S. 139(5) OF THE ACT AS ASSESSEE COULD FILE REVISED RETURN ONLY IF ASSESSEE AFTER FURNISHING A RETURN U/S. 139(1) OR U /S. 142(1), DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT THEREIN BONAFIDE, H E MAY FURNISH A REVISED RETURN ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR OR BEFORE COMPLETION OF THE ASSESSE E, WHICHEVER IS EARLIER. HOWEVER, ASSESSEE HAS NOT DISCOVERED ANY OMISSION OR WRONG STATEMENT IN THE ORIGINAL RETURN FILED ON 29.10.2005 BUT WAS VER Y MUCH AWARE OF THE ACCOMMODATION ENTRIES OF LOANS. IT WAS ONLY AFTER THE DETECTION, BY THE DEPARTMENT, OF SUCH CONCEALMENT AND FURNISHING OF I NACCURATE PARTICULARS IN RESPECT OF CERTAIN LOANS THAT ASSESSEE DECIDED TO D ISCLOSE SUCH SUM AS ITS ADDITIONAL INCOME BY WAY OF FILING ANOTHER RETURN. SINCE RETURN HAS BEEN FILED ONLY AFTER DETECTION OF BOGUS LOANS DURING THE SURV EY AND THEREFORE ASSESSEE HAD NO OPTION EXCEPT TO SURRENDER THESE BOGUS LOANS , SAID RETURN CANNOT BE TREATED AS REVISED RETURN IN TERMS OF SEC. 139(5) O F THE I.T. ACT. 9. THE AO HAS STATED THAT STATEMENT OF SHRI RAJENDR A S. JAIN AND SHRI SURENDRA KUMAR JAIN DISCLOSED THE FACT THAT THEY H AD GIVEN ACCOMMODATION ENTRIES AGAINST RECEIPT OF CASH TO ASSESSEE ARE CON CLUSIVE PROOF OF BOGUS AND INCORRECT CLAIM MADE BY ASSESSEE IN ITS ORIGINAL RE TURN. MOREOVER THE FACT ITA NO. 1845/M/09 8 THAT SHRI SANJAY SANGHVI, PARTNER OF ASSESSEE FIRM HAD ACCEPTED THAT IT WAS NOT POSSIBLE FOR HIM TO PROVE THE GENUINENESS OF LO AN UNDER CONSIDERATION AND HAD OFFERED PEAK CREDIT OF SUCH LOANS FOR TAXAT ION, ALSO SHOWS THAT ASSESSEE HAD ACCEPTED THAT SUCH LOANS WERE NOTHING BUT ACCOMMODATION ENTRIES, WHICH WERE CONCEALED BY IT AND SUPPRESSED BY FURNISHING INACCURATE PARTICULARS OF THE SAME. THE AO HAS STATED THAT CO NTENTION OF THE ASSESSEE THAT SAID LOANS WERE RECORDED IN THE BOOKS OF THE L ENDERS AND THE SAME WERE PAID/REPAID BY ACCOUNT PAYEE CHEQUES AFTER DEDUCTIO N OF TAX AT SOURCE DOES NOT CHANGE THE NATURE OF AMOUNTS INVOLVED, ESPECIAL LY IN THE LIGHT OF THE FACT THAT PERSONS GIVING THE ACCOMMODATION ENTRIES HAVE THEMSELVES CONFIRMED THAT THESE CHEQUES WERE GIVEN/TAKEN IN LIEU OF CAS H. THE AO HAS FURTHER STATED THAT ASSESSEE EXPRESSED ITS INABILITY TO PRO DUCE THE SAID PERSONS FOR EXAMINATION AND EVEN AFTER ISSUE OF SUMMONS ON THE REQUEST OF ASSESSEE, SAID PERSONS HAVE NOT TURNED UP; ESTABLISHING THAT SHRI RAJENDRA S. JAIN AND SHRI SURENDRA KUMAR JAIN HAVE NOTHING NEW TO ADD T O THE FACTS STATED BY THEM DURING THE COURSE OF SURVEY ACTION. THE AO ST ATES THAT DISCLOSURE OF ADDITIONAL INCOME BY ASSESSEE ON ACCOUNT OF PEAK CR EDIT OF BOGUS LOANS AFTER SUCH CONCEALMENT AND FURNISHING OF INACCURATE PARTI CULARS WERE DETECTED THROUGH SURVEY ACTION, CANNOT BE TERMED AS VOLUNTAR Y DISCLOSURE BY ASSESSEE. THE AO AFTER CONSIDERING THE DECISIONS C ITED BY ASSESSEE IN THE CASES OF CIT VS SURAJBHAN 294 ITR 481, K.P. MADHUSU DHAN VS CIT 251 ITR 99 AND ALSO DISCUSSING OTHER DECISIONS AS MENTIONED IN PARA-7 HELD THAT ASSESSEE CONCEALED ITS INCOME AND FURNISHED INACCUR ATE PARTICULARS OF INCOME BY FILING ITS RETURN OF INCOME ON 29.10.2005 BY TAK ING ACCOMMODATION ENTRIES IN LIEU OF CASH AND SHOWING THE SAME AS LOANS IN IT S BOOK. THEREFORE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) AND LEV IED MINIMUM PENALTY AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EVADED IN RESP ECT OF INCOME AT RS. 80,40,520/- WHICH COMES TO RS. 29,42,227/-. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE LD. CIT(A). ITA NO. 1845/M/09 9 10. LD. CIT(A) AFTER CONSIDERING SUBMISSIONS OF ASS ESSEE AND FACTS OF THE CASE HAS CONFIRMED ACTION OF AO VIDE PARA 2.4 OF IM PUGNED ORDER WHICH IS AS UNDER: 2.4. I HAVE CONSIDERED THE FULL FACTS AND CIRCUMST ANCES OF THE CASE, PERUSED THE ORIGINAL ASSESSMENT ORDER, PENALT Y ORDER AND HAS ALSO CONSIDERED THE REPRESENTATION OF LD. AR. ALSO CONSIDERED THE PAPER BOOK SUBMITTED ON 23.12.2008. IN THE CONTENTI ON OF THE APPELLANT THE IMPORTANT POINT, RATHER CENTRAL POINT IS THAT THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. BEFORE THE FINALISATION OF ASSESSMENT, INCOME WAS O FFERED AND DUE TAX WAS PAID, THEREFORE, ACCORDING TO THE APPELLANT , PENALTY CANNOT BE LEVIED. THIS ARGUMENT AND CONTENTION IS NOT FOUN D TENABLE BECAUSE OF THE FACT THAT ON 29.10.2005 RETURN OF IN COME WAS FILED DECLARING TOTAL INCOME OF RS.44,92,065/-. AFTER FIL ING THE RETURN OF INCOME APPELLANT WAS KEEPING MUM KNOWING VERY WELL ABOUT THE ACCOMMODATION ENTRY OF LOAN. IN FACT, APPELLANT WAS VERY MUCH AWARE THAT LOAN WAS NOT A CORRECT LOAN BUT WAS A AC COMMODATION ENTRY WHICH IS OBVIOUSLY OBTAINED BY GIVING CASH OR CHEQUE TO THIRD/FOURTH PARTY AND THEREAFTER CHANNELISING THE ENTRIES IN BANK, SUCH LOANS ARE OBTAINED WHICH IS AN UNACCOUNTED INC OME OF THE APPELLANT. WHEN ORIGINAL RETURN OF INCOME WAS FILED ON 29.10.2005, IN NORMAL COURSE IT WOULD HAVE BEEN REVISED WELL BE FORE MARCH 2006. IF IT HAS NOTICED ANY OMISSION OR ANY WRONG ST ATEMENT FURNISHED EARLIER, THEN IT WOULD HAVE FURNISHED A R EVISED RETURN AS PER THE PROVISION OF LAW UNDER SUB-SECTION 5 OF SEC . 139 OF THE I.T. ACT. BUT HERE APPELLANT WAS WILLFULLY CONCEALING TH E FACTS, PARTICULARS AND INCOME CHARGEABLE TO TAX AND DUE TO THAT IT HAD NOT PAID ANY ADVANCE TAX AS PER THE SCHEME OF I.T. ACT. HAD SURVEY U/S. 133 NOT BEEN CONDUCTED ON 16/17.8.2007, APPELL ANT COULD HAVE NEVER REVISED ITS RETURN OF INCOME ON 24.8.200 7. NOT ONLY THAT ONE IMPORTANT POINT IS ALSO THERE THAT THERE W AS NOT A SIMPLE OMISSION OF A PARTICULAR OR A SLIP OF NOTICE REGAR DING ISSUE UNDER CONSIDERATION. ON THE CONTRARY, IT TRANSPIRES FROM THE SURVEY PROCEEDINGS THAT AFTER DUE DILIGENCE AND EFFECTIVE INVESTIGATION AND INQUISITION, UNACCOUNTED INCOME IN FORM OF BOGUS LO AN WAS UNEARTHED BY THE SURVEY PARTY WHICH PROVE THE FACT THAT THERE WAS A CONCEALMENT OF INCOME WHICH WAS NOT OFFERED AND W AS NOT TO BE OFFERED IF SURVEY WOULD NOT HAVE TAKEN PLACE. THERE FORE, IT IS NOT AS SIMPLE AS THE CASE WHERE ANY OMISSION IS FOUND B Y SOME ASSESSEE AND THEREAFTER HE FILES REVISED RETURN. LD , AR HAS TRIED TO EXPLAIN THE CONCEALMENT OF INCOME OF THE APPELLANT ON THE GROUND THAT BEFORE COMPLETION OF ASSESSMENT RETURN OF INCO ME WAS REVISED, HENCE, ASSESSEE WAS NOT IN FAULT OF CONCEA LMENT OF PARTICULARS. THIS APPROACH AND ARGUMENT IS NOT FOUN D CONVINCING ONE BECAUSE OF THE REASON THAT CONCEALMENT OF INCOM E AND ITA NO. 1845/M/09 10 FURNISHING OF INACCURATE PARTICULARS WAS UNEARTHED BY THE DEPARTMENT AND SURVEY AUTHORITIES HAVE COLLECTED TH E MATERIAL EVIDENCES WHICH WAS ADMITTED BY THE APPELLANT THROU GH ITS PARTNERS AND ULTIMATELY THE CONCEALED FACT EMERGED AS INTRODUCTION OF UNACCOUNTED INCOME INTO THE FORM OF LOAN TAKEN T HROUGH ACCOMMODATION ENTRIES SHOWN IN THE NAME OF TWO PERS ONS VIZ. SHRI RAJENDRA S. JAIN & SHRI S.K. JAIN. THEREFORE, FROM THIS OBVIOUS FACT I DO NOT FIND ANY MERIT IN THE APPEAL AND IN THE ARG UMENTS OF THE ID. AR. FURTHER ARGUMENTS THAT SHRI RAJENDRA JAIN & SHRI S.K. JAINS STATEMENT WERE ON ACCOUNT OF THEIR INABILITY TO PRO DUCE THE BOOKS OF ACCOUNT, IS NOT FOUND SATISFACTORY. WHEN THE FAC TS WERE BROUGHT TO THE NOTICE OF THE APPELLANT, THEN ONLY UNACCOUNT ED INCOME WAS ADMITTED, HENCE, THERE WAS NO POINT OF PRESUMING TH E INABILITY OF PRODUCTION OF BOOKS OF ACCOUNT BY THE NAME LENDOR O R ACCOMMODATION ENTRY GIVER. FURTHER, I FIND NO MERIT IN THE ARGUMENTS OF THE LD. AR THAT UNACCOUNTED INCOME WAS MERELY ON THE BASIS OF THIRD PARTY STATEMENT. THIS IS NOT THE TRUE BACKGROUND OF THE CASE. APPELLANT HAS ADMITTED THRO UGH ITS PARTNERS THE FACT OF CONCEALMENT OF INCOME INTE NDED TO BE CONCEALED FROM THE TAXATION, WHICH WAS DETECTED ONLY DURING THE COURSE OF SURVEY PROCEEDINGS. THE FURTHE R CONTENTION THAT PENALTY PROCEEDING WAS COMPLETED WITHOUT GIVIN G PROPER OPPORTUNITY OF EXAMINATION OF SHRI RAJENDRA JAIN & SHRI S.K. JAIN, IS ALSO NOT FOUND TENABLE BECAUSE OF THE REASON THA T ASSESSMENT AS WELL AS PENALTY PROCEEDINGS HAS NOT BEEN COMPLETED MERELY ON THE BASIS OF STRANGE WITNESSES BUT FACT OF BOGUS LOAN W AS VERY MUCH BROUGHT TO THE NOTICE OF THE APPELLANT DURING THE C OURSE OF SURVEY PROCEEDING ITSELF AND HAVING FOUND THEMSELVES UNABL E TO EXPLAIN THE LOAN SHOWN BY THE APPELLANT, PARTNERS HAVE ADMI TTED THE LOAN AS UNDISCLOSED INCOME, THEREFORE, THERE IS NO PROPR IETORY AT ALL ON THE PART OF THE APPELLANT TO EXPECT OR DEMAND ANY C ROSS EXAMINATION OF THEIR WITNESS AS FACT HAS ALREADY BEEN ADMITTED BY THE APPELLANT BY FILIN G THE REVISED RETURN OF INCOME OR BY ADMITTING THE BOGUS LOAN DURING THE COURSE OF SURVEY PROCEEDING. IT IS ALSO IMPORTANT POINT TO BE HIGHLIGHTED THAT REVISED RETURN WAS FILED ONLY ON 2 4.08.2007 WHEREAS REGULAR SCRUTINY PROCEEDING WAS STARTED ON 02.01.2006 BY ISSUING THE NOTICE U/S.143(2) WHICH WAS DULY SERVED UPON THE APPELLANT ON 07.01.2006. THEREFORE, IT IS VERY OBVI OUS FROM THE RECORDS OF THE AO THAT APPELLANT DID NOT DISCLOSE T HE INCOME BEFORE THE DETECTION. THUS, IT IS EVIDENT FROM THE CONDUCT OF THE APPELLANT THAT THERE WAS A DISHONEST INTENTION TO SUPPRESS TH E TAXABLE INCOME. ONLY BECAUSE OF THIS REASON, PROPER ORIGINA L RETURN OF INCOME WAS NOT FILED NOR WAS REVISED BY THE APPELLA NT ON THE BASIS OF ITS OWN DETECTION OF THE INFORMATION OR AN ESCAP ED INCOME. ON THE CONTRARY, APPELLANT HAS INTENTIONALLY INVOLVED IN ARRANGEMENT OF BOGUS LOAN WHICH WAS UNEARTHED BY CONDUCTING DIRECT ACTION OF ITA NO. 1845/M/09 11 INVESTIGATION KNOWN AS SURVEY PROCEEDING. THE CON TENTION THAT SHRI RAJENDRA JAIN & SHRI S.K. JAIN WERE NOT PRODUC ED DURING THE PENALTY PROCEEDING FOR EXAMINATION IS MEANINGLESS B ECAUSE OF THE FACT THAT WHATEVER REVELATION WAS MADE BY THESE TWO PERSONS WERE DULY ADMITTED BY THE APPELLANT THROUGH ITS PARTNER AND ALSO BY FILING REVISED RETURN OF INCOME ON 24.8.2007. THERE FORE, IT IS BASELESS TO DEMAND SUCH OPPORTUNITY OF CROSS EXAMIN ATION OF THESE TWO PERSONS. THE FURTHER ARGUMENT REGARDING C ONTRAVENTION OF THE STATEMENT OF THESE TWO PERSONS, IS HAVING NO FORCE OR CONVINCING REASON BECAUSE OF THE FACT THAT WHEN STA TEMENT IS RECORDED EVERY PERSON OR SUCH PERSONS, NORMALLY SPE AKS IN A DIFFERENT WAY AND ONLY SUCH PERSONS GET GRILLED OR CONFINED TO THE TRUTHFULNESS OF THE FACTS, THEN THEY USE TO COME UP NEARER TO THE REAL FACT UNDER REFERENCE. IN THIS SCENARIO AND STEP -BY-STEP QUESTIONING THERE MAY BE VARIATION OF STATEMENTS. T HAT VARIATION DOES NOT MAR THE VERACITY OF THE FINAL OUTCOME OF T HE STATEMENT OR ADMISSION OF UNEARTHED-FACTS. HOWEVER, THEIR STATEM ENT ITSELF IS NOT THE ONLY BASIS FOR INITIATING THE PROCEEDING BY THE AO, INSTEAD, THERE IS ADMISSION ITSELF BY THE APPELLANT, HENCE, THIS ARGUMENT OF THE APPELLANT IS ALSO FOUND BASELESS. THE FURTHER C ONTENTION THAT THEIR STATEMENT REGARDING ACCOMMODATING ENTRIES IS AN AFTER THOUGHT AND APPEARS TO HAVING MADE TO ESCAPE ALL TH E ENQUIRIES PERTAINING TO THE APPELLANT, IS ALSO UNTENABLE BECA USE OF THE REASON THAT STATEMENT WAS GIVEN DURING THE COURSE O F ACTION ITSELF AND NOT THEREAFTER. THERE IS NO MERIT IN THE ARGUME NTS THAT SHRI RAJENDRA JAIN & SHRI S.K. JAIN HAVE NOT PROVED THE RECEIPT OF CASH AGAINST THE ACCOMMODATING ENTRIES. IT IS NOT REQUIRE D FOR THEM TO CREATE OR ADDUCE ANY SUCH EVIDENCE WHICH HAS NOT BE EN MAINTAINED, RETAINED OR CREATED TO BE PRODUCED FOR ADMISSION OF ANY SUCH FACT. HOWEVER, THERE IS NO SUCH REQUIREMEN T OF LAW, THE NEXT ARGUMENT OF THE LD. AR THAT BECAUSE OF LOAN WA S OFFERED FOR TAXATION TO BUY PEACE TO COOPERATE WITH DEPARTMENT AND TO AVOID LITIGATION, THE APPELLANT SHOULD BE GIVEN IMMUNITY FROM THE PENALTY, IS NOT CONVINCING ARGUMENT AS THERE IS NO OBLIGATION UPON THE AO TO GIVE SUCH IMMUNITY THAT TOO FOR DELIBERAT E CONCEALMENT OF INCOME FROM THE TAXATION WHICH COULD BE UNEARTHE D BY RESORTING THE ACTION U/S. 133A OF I.T, ACT. FURTHER, THE CASE LAWS CITED BY THE LD. AR ARE NOT APPLICABLE TO THE FACTS OF THE APPEL LANT, AS ELABORATED ABOVE. LD. AO HAS ALSO CLARIFIED IN PENA LTY ORDER AS TO HOW SUCH CASES ARE NOT APPLICABLE TO THE FACTS OF C ASE OF THE APPELLANT. HENCE, ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 11. LD. AR SUBMITTED THAT DEPARTMENT HAS TAKEN IN C ONSISTENT STAND TO LEVY PENALTY FOR ASSESSMENT YEAR 2005-06 I.E. ASSESSMENT YEAR UNDER ITA NO. 1845/M/09 12 CONSIDERATION BUT ON SIMILAR FACTS AND CIRCUMSTANCE S WHEN ASSESSEE DECLARED PEAK CREDITS IN TWO OTHER ASSESSMENT YEARS VIZ., A SSESSMENT YEARS 2006-07 AND 2007-08, NO PENALTY HAS BEEN IMPOSED U/S. 271(1 )(C) OF THE ACT. HE SUBMITTED THAT EVEN IN RESPECT OF ASSESSMENT YEAR 2 006-07, PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED BUT SAME WERE DROPPED AND FURNISHED A LETTER OF DY.CIT CIR 15(3), MUMBAI TO SUBSTANTIATE HIS SUBMISSION WHICH IS AN ORDER DT. 29.12.2008 STATING THAT PENALTY PROCEEDINGS INITIATED IN THIS CASE ARE HEREBY DROPP ED. LD. AR SUBMITTED THAT ITAT MUMBAI BENCH IN THE CASE OF ORIENT PRESS LTD. VS JCIT 99 TTJ 1091 (MUM) CONSIDERED A SIMILAR SITUATION WHERE P ENALTY WAS IMPOSED FOR ASSESSMENT YEARS 1993-94 AND 1994-95 BUT NO PENALTY WAS IMPOSED FOR SUBSEQUENT ASSESSMENT YEAR ON MATERIALLY SIMILAR SE T OF FACTS AND IT WAS HELD THAT PENALTIES ARE NOT SUSTAINABLE FOR THAT REASON ALONE, BECAUSE SPECIFIC ORDER WAS PASSED FOR DROPPING PENALTY FOR ASSESSMEN T YEAR 1995-96. HE FURTHER SUBMITTED THAT ASSESSEE ACCEPTED LOANS IN T HE ASSESSMENT PROCEEDINGS IN VIEW OF SUBMISSIONS OF SHRI RAJENDRA S. JAIN AND SHRI SURENDRA KUMAR JAIN WHO ARE PARTNERS/DIRECTORS OF L OAN CREDITORS WHEN THEY STATED IN THEIR STATEMENTS THAT LOAN GIVEN TO ASSES SEE WERE ACCOMMODATION ENTRIES BECAUSE IT WAS DIFFICULT FOR ASSESSEE TO PR OVE THEM WRONG. LD. AR SUBMITTED THAT PENALTY PROCEEDINGS ARE DIFFERENT AN D DISTINCT AND MERELY BECAUSE AMOUNT WAS SURRENDERED IN THE ASSESSMENT PR OCEEDINGS FOR MAKING ADDITIONS COULD NOT BE A SUFFICIENT GROUND FOR PENA LTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. HE SUBMITTED THAT PENALTY PR OCEEDINGS AND QUANTUM PROCEEDINGS ARE DISTINCT. LD. AR FURTHER REFERRED TO PARA-6 OF PENALTY ORDER AND SUBMITTED THAT ASSESSEE WANTED TO CROSS EXAMINE SHRI RAJENDRA S. JAIN AND SHRI SURENDRA KUMAR JAIN AND AO ALSO ISSUED S UMMONS TO THEM BUT THEY DID NOT APPEAR. THEREFORE NO ADVERSE INFERENCE SHOULD BE DRAWN AS ASSESSEE DID NOT GET OPPORTUNITY TO CROSS EXAMINE T HEM. HE SUBMITTED THAT LOANS WERE TAKEN THROUGH ACCOUNT PAYEE CHEQUES AND SAME WERE ALSO RETURNED BY ACCOUNT PAYEE CHEQUES AND ON THE INTERE ST PAID ASSESSEE DEDUCTED TDS. LD. AR SUBMITTED THAT ASSESSEE PROVED NOT ONLY IDENTITY OF LOAN CREDITORS BUT ALSO PROVED GENUINENESS OF TRANS ACTIONS. HE SUBMITTED ITA NO. 1845/M/09 13 THAT ASSESSEE DISCHARGED ITS PRIMARY ONUS. THAT REL YING ON DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF MATHER & PLATT (INDIA) LTD. VS CIT 168 ITR 493 HE SUBMITTED THAT IN THE ABSENCE OF ANY OTHER EVIDENCE BROUGHT ON RECORD BY DEPARTMENT, SAID LOANS COULD NOT BE CO NSIDERED BOGUS. LD. AR FURTHER REFERRED STATEMENTS MADE BY SHRI RAJENDRA S . JAIN AND SHRI SURENDRA KUMAR JAIN WHICH ARE PLACED AT PAGES 30 TO 38 AND 3 9 TO 43 OF PAPER BOOK RESPECTIVELY AND SUBMITTED THAT SAID STATEMENTS WER E MADE BY THEM IN UNUSUAL CIRCUMSTANCES. LD. AR SUBMITTED THAT SAID PERSONS ALSO STATED IN THEIR STATEMENTS THAT ALL TRANSACTIONS IN THE BOOKS ARE GENUINE AND ENTERED IN THE ORDINARY COURSE OF BUSINESS EXCEPT LOANS GIVEN TO ASSESSEE. HE SUBMITTED THAT DEPARTMENT IS NOT JUSTIFIED TO ISOLA TE TRANSACTION WITH RESPECT TO LOAN CREDITORS WITHOUT ANY BASIS. THEREFORE, ST ATEMENTS MADE BY SHRI RAJENDRA S. JAIN AND SHRI SURENDRA KUMAR JAIN CREAT ES DOUBTS. HE SUBMITTED THAT SHRI RAJENDRA S. JAIN AND SHRI SUREN DRA KUMAR JAIN HAVE NOT PROVED RECEIPT OF CASH FROM ASSESSEE AGAINST SO CAL LED ACCOMMODATING ENTRIES AS STATED BY THEM AT THE TIME OF SURVEY. L D. AR FURTHER SUBMITTED THAT ASSESSEE RETURNED LOAN AMOUNTS IN SUBSEQUENT Y EARS BY ACCOUNT PAYEE CHEQUES AND DEPARTMENT HAS NOT MADE ANY DISALLOWANC E. THEREFORE IT AMOUNTS TO ACCEPTANCE OF PART OF TRANSACTION BY DEP ARTMENT BUT NOT TO BELIEVE A PART OF TRANSACTION OF TAKING LOANS, WHIC H CANNOT BE LEGAL AND JUSTIFIABLE. LD. AR RELYING ON THE DECISION IN TH E CASE OF KAMAL KUMAR SAHARIA VS COMMISSIONER OF INCOME-TAX (GAU) 216 ITR 217 SUBMITTED THAT HONBLE GAUHATI HIGH COURT HAS HELD THAT TAX AUTHOR ITIES COULD NOT RELY ON ONE PART OF TRANSACTION AND REJECT OTHER PART OF SA ME TRANSACTION. THEREFORE ADDITION MADE BY REJECTING A PART OF EVIDENCE IS NO T JUSTIFIED. LD. AR SUBMITTED THAT THERE IS NO OTHER EVIDENCE ON RECORD BROUGHT BY DEPARTMENT TO HOLD THAT LOANS TAKEN BY ASSESSEE WERE NOT GENUI NE BUT WERE ONLY ACCOMMODATION ENTRIES SAVE AND ACCEPT STATEMENTS OF SHRI RAJENDRA S. JAIN AND SHRI SURENDRA KUMAR JAIN. LD. AR PLACED RELIAN CE ON DECISIONS OF DELHI HIGH COURT IN THE CASE OF CIT VS DHINGRA METAL WORK S 328 ITR 384 R.W. CBDT LETTER F. NO. 286/2/2003-IT(INV) DT. 10 TH MARCH, 2003 AND SUBMITTED THAT ADDITION MERELY ON THE BASIS OF STATEMENTS MAD E DURING SURVEY U/S. ITA NO. 1845/M/09 14 133A COULD NOT BE SAID TO BE CONCLUSIVE PROOF TO MA KE ADDITION. HE SUBMITTED THAT PENALTY LEVIED BECAUSE OF MAKING ADD ITION IN QUANTUM PROCEEDINGS IN THE ABSENCE OF ANY OTHER EVIDENCE BR OUGHT ON RECORD BY DEPARTMENT IS NOT JUSTIFIED. 11.1. LD. AR FURTHER SUBMITTED THAT ASSESSEE SURREN DERED SAID LOAN BY ARRIVING AT A PEAK CREDIT JUST TO BUY PEACE AND TO AVOID VEXED LITIGATION. LD. AR SUBMITTED THAT IF ADDITIONAL INCOME IS OFFERED T O BUY PEACE OF MIND AND TO AVOID VEXATIOUS LITIGATION, PENALTY COULD NOT BE IM POSED AS IT IS AN ACT OF VOLUNTARY SURRENDERED BY ASSESSEE IN GOOD FAITH AND PLACED RELIANCE ON THE DECISION OF CIT VS SURESH CHANDRA MITTAL 251 ITR 09 (SC). LD. AR FURTHER SUBMITTED THAT ASSESSEE FILED REVISED RETURN VOLUNT ARILY AFTER SURVEY PROCEEDINGS AND TO SURRENDERED LOANS AS ASSESSEE DI D NOT WANT TO ENTER INTO A LITIGATION. LD. AR REFERRED PAGE 20 TO 23 OF PAP ER BOOK WHICH IS COPY OF LETTER DT. 6.6.2008 ADDRESSED TO AO WHICH WAS FILED DURING PENALTY PROCEEDINGS AND SUBMITTED THAT ASSESSEE STATED THAT LOANS WERE GENUINE AND THEY WERE OFFERED FOR TAXATION TO BUY PEACE AND TO CO-OPERATE WITH DEPARTMENT, TO AVOID VEXED LITIGATION. LD. AR SUBM ITTED THAT IN SUCH CIRCUMSTANCES, LEVY OF PENALTY WAS NOT JUSTIFIED AN D REFERRED DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS KIRAN & CO. 217 ITR 326. LD. AR FURTHER SUBMITTED THAT HONBLE APEX COURT HAS ALSO HELD IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 THAT MERELY BECAUSE SOME ADDITIONS HAVE BEEN MADE, IT DOES NOT AMOUNT TO CON CEALMENT OF ANY INCOME AND THEREFORE LEVY OF PENALTY IS NOT JUSTIFIABLE. LD. AR ALSO FILED PHOTOCOPIES OF FOLLOWING CASES AND SUBMITTED THAT HE ALSO PLACE RELIANCE ON THE SAID CASES, THAT LEVY OF PENALTY IS NOT JUSTIFIED. 1) CIT VS M.K. BROTHERS 163 ITR 249 (GUJ) 2) DCIT VS ADINATH INDUSTRIES 252 ITR 476 (GUJ) 3) T. ASHOK PAI VS CIT 292 ITR 11(SC) 4) SUDARSHAN SILKS & SAREES VS. CIT 300 ITR 205 (SC) 5) CIT VS RAJIV GARG & ORS 313 ITR 256 (P&H) ITA NO. 1845/M/09 15 6) CIT VS SAD PHARMACEUTICALS 60 DTR 258 (DEL) 11.2 LD. AR ALSO RELIED ON DECISION OF HONBLE COMM ISSIONER OF INCOME-TAX VS DHARAMCHAND L. SHAH 204 ITR 462 (BOM) AND ALSO D ECISION OF HONBLE APEX COURT IN THE CASE OF UNION OF INDIA V. DHARAME NDRA TEXTILE PROCESSORS 306 ITR 277 (174 TAXMAN 571) AND SUBMITTED THAT LE VY OF PENALTY IS NOT JUSTIFIED SAME SHOULD BE DELETED. 12. ON THE OTHER HAND LD. DR SUPPORTED ORDERS OF AU THORITIES BELOW AND SUBMITTED THAT ASSESSEE SURRENDERED LOANS ONLY AFTE R SURVEY HAD TAKEN PLACE AND ASSESSEE WAS CONFRONTED WITH STATEMENTS OF PART NERS/DIRECTORS OF LOAN CREDITORS WHEN THEY ADMITTED THAT THEY HAD GIVEN ON LY ACCOMMODATION ENTRIES AGAINST RECEIPT OF CASH TO ASSESSEE AND REC EIVED 0.50% AS COMMISSION ON LOAN AMOUNTS. LD. DR REFERRED PAGES 24 TO 29 OF PAPER BOOK AND SUBMITTED THAT ASSESSEE IN REPLY TO QUESTION NO . 16 STATED THAT HE HAD GONE THROUGH STATEMENTS OF SHRI RAJENDRA JAIN AND S HRI MUDIT KARNAVAT PROPRIETORS/PARTNERS/DIRECTORS OF LOAN CREDITORS EN TITIES AND STATED THAT IT WAS DIFFICULT FOR HIM TO PROVE GENUINENESS OF LOANS OBT AINED FROM SAID 9 ENTITIES AND OFFERED SAME FOR TAXATION AS ADDITIONAL INCOME. LD. DR SUBMITTED THAT ASSESSEE FILED REVISED RETURN NOT VOLUNTARILY BUT O NLY WHEN HE WAS CORNERED ON THE BASIS OF STATEMENTS OF DIRECTORS/PARTNERS OF LOAN CREDITORS. LD. DR FURTHER SUBMITTED THAT SAID REVISED RETURN FILED BY ASSESSEE COULD NOT BE CONSIDERED A RETURN FILED U/S. 139(5) OF THE ACT AS IT WAS FILED AFTER EXPIRY OF DATE PRESCRIBED THEREIN. LD. DR FURTHER SUBMITTED THAT PENALTY PROCEEDINGS FOR ASSESSMENT YEARS 2006-07 WAS DROPPED BECAUSE AS SESSEE FILED REVISED RETURN OFFERING ADDITIONAL INCOME BEFORE EXPIRY OF DUE DATE AS PRESCRIBED U/S. 139(5) OF THE ACT. LD. DR RELYING ON DECISION OF H ONBLE BOMBAY HIGH COURT IN THE CASE OF JYOTI LAXMAN KONKAR V. COMMISSIONER OF INCOME-TAX 292 ITR 163 SUBMITTED THAT IF ASSESSEE FILE REVISED RETURN DISCLOSING THE INCOME DISCOVERED BY INCOME-TAX SURVEY ON BEING POINTED OU T DISCREPANCY IN ACCOUNT OF STOCKS, LEVY OF PENALTY U/S. 271(1)(C) O F THE ACT IS JUSTIFIED. LD. DR FURTHER SUBMITTED THAT IT IS NOT A CASE OF OMISS ION OR A BONAFIDE MISTAKE ITA NO. 1845/M/09 16 ON THE PART OF ASSESSEE TO CURE THE MISTAKE WHICH A SSESSEE DISCOVERED LATER ON BUT THE REVISED RETURN WAS FILED ONLY WHEN IT WA S FOUND THAT LOANS SHOWN BY ASSESSEE WERE NOT GENUINE BUT WERE ONLY ACCOMMOD ATION ENTRIES AGAINST CASH RECEIVED BY LOAN CREDITORS. LD. DR FURTHER SU BMITTED THAT BY NOT IMPOSING PENALTY FOR SOME YEARS COULD NOT BE HELD T O BE JUSTIFIED NOT TO LEVY PENALTY FOR ANY OTHER ASSESSMENT YEAR, IF SAME IS L EVIED AS PER PROVISIONS OF ACT. HE SUBMITTED THAT ORDER OF LD. CIT(A) IS IN A CCORDANCE WITH LAW AND PENALTY SHOULD BE CONFIRMED. 13. WE HAVE CAREFULLY CONSIDERED ORDERS OF AUTHORIT IES BELOW, SUBMISSIONS OF LD. REPRESENTATIVES OF PARTIES AND CASES CITED B Y LD. REPRESENTATIVES OF BOTH PARTIES (SUPRA) IN SUPPORT OF THEIR SUBMISSION S. WE HAVE ALSO CAREFULLY GONE THROUGH STATEMENTS RECORDED U/S. 131 OF I.T. AC T. DURING THE COURSE OF SURVEY ACTION U/S. 133A OF I.T. ACT ON 16/17 TH AUGUST,2007 THE PARTNER OF ASSESSEE NAMELY SHRI SANJAYSHANTILAL SANGHVI, COPY PLACED AT PAGES 24 TO 29 OF PAPER BOOK, STATEMENT OF SHRI RAJENDRA SOHANLAL JAIN AND SHRI SURENDER KUMAR JAIN, COPIES PLACED AT PAGES 30-38 AND 39 TO 43 OF PAPER BOOK RESPECTIVELY WHO ARE PARTNERS/DIRECTORS OF LOAN CRE DITORS FROM WHOM ASSESSEE HAD TAKEN LOANS AS SHOWN IN ITS BOOKS OF A CCOUNT. AT THE OUTSET, WE MAY STATE THAT ON GOING THROUGH THE CASES CITED BEF ORE US, WE OBSERVE THAT SOME OF THE CASES REFERRED TO BY ARE NOT RELEVANT T O THE FACTS OF THE CASE AND ISSUE UNDER CONSIDERATION. THEREFORE, WE CONSIDER I T PRUDENT NOT TO DISCUSS THOSE CASES SPECIFICALLY WHILE CONSIDERING THE ISSU E UNDER CONSIDERATION. 14. WE OBSERVE THAT ASSESSEE ORIGINALLY FILED RETUR N DECLARING TOTAL INCOME AT RS. 44,92,065/- AND SAID RETURN WAS PROCESSED U/ S. 143(1) ON 6.4.2006. THEREAFTER, THERE WAS A SURVEY OPERATION U/S. 133A OF THE ACT ON THE PREMISES OF ASSESSEE AS WELL AS PREMISES BELONGING TO M/S. AVI EXPORT, M/S. SUN DIAM & M/S. MOULIMANI IMPACT P. LTD. ON 16 TH AUGUST, 2007 BY ADIT (INV.). DURING THE COURSE OF SURVEY, STATEMENTS OF P ARTNERS OF ASSESSEE FIRM SHRI SANJAY SHANTILAL SANGHAVI, STATEMENT OF RAJEND RA SOHANLAL JAIN, DIRECTOR OF M/S. MOULIMANI IMPACT P. LTD., AND PARTNER OF M /S. SUN DIAM AND ITA NO. 1845/M/09 17 PROPRIETOR OF M/S. AVI EXPORTS AS ALSO STATEMENT OF RAJENDRA S. JAIN & SHRI SURENDRA KUMAR JAIN WHO IS ALSO DIRECTOR M/S. MOUL IMANI IMPACT P. LTD AND PROPRIETOR/PARTNER OF OTHER CONCERNS, DETAILS HAVE ALSO BEEN MENTIONED HEREIN ABOVE WERE RECORDED U/S. 131 OF I.T. ACT ON 16/17.8 .2007. WE OBSERVE THAT SHRI RAJENDRA S. JAIN & SHRI SURENDRA KUMAR JAIN ST ATED ON OATH THAT THEY HAD GIVEN ACCOMMODATION ENTRIES TO ASSESSEE AGAINST RECEIPT OF CASH THROUGH THEIR FIRMS/CONCERNS AGAINST RECEIPT OF COMMISSION @ 0.50% ON LOAN AMOUNT. THE SAID QUESTION AND ANSWERS HAVE ALREADY BEEN MEN TIONED IN VERBATIM HEREIN ABOVE AND WE DO NOT CONSIDER IT NECESSARY TO PRODUCE THE SAME. WE OBSERVE THAT SURVEY PARTY CONFRONTED PARTNER OF ASS ESSEE SHRI SANJAY SHANTILAL SANGHAVI, AND STATED THAT HE HAD GONE THROUGH THE S TATEMENTS OF SHRI RAJENDRA JAIN AND SHRI MUDIT KARNAVAT PROPRIETORS/P ARTNERS/DIRECTORS OF LOAN CREDITORS ENTITIES TO WHOM ASSESSEE IS STATED TO HA VE TAKEN LOANS AND IN VIEW OF THEIR STATEMENTS, IT IS BEYOND HIS CAPACITY TO P ROVE GENUINENESS OF LOANS OBTAINED FROM SAID 9 PARTIES. HE FURTHER STATED TH AT HE DOES NOT KNOW MUCH ABOUT DEALINGS OF THESE CONCERNS AND IT IS BEYOND H IS CAPACITY TO PROVE GENUINENESS OF THESE ENTITIES. WE OBSERVE THAT PUR SUANT THERETO, ASSESSEE FILED REVISED RETURN ON 24 TH AUGUST, 2007 DECLARING TOTAL INCOME AT RS.1,25,32,585/- AFTER INCLUDING PEAK CREDIT U/S. 6 8 OF I.T. ACT AS AGAINST ORIGINAL RETURN FILED ON 29.10.2005 DECLARING TOTAL INCOME AT RS.44,92,065/-. 15. THE FIRST QUESTION ARISES AS TO WHETHER SAID RE TURN FILED BY ASSESSEE ON 24 TH AUGUST, 2007 COULD BE A REVISED RETURN U/S. 139(5) OF THE ACT AND A VOLUNTARY RETURN. WE ARE OF THE CONSIDERED VIEW THA T SAID RETURN IS NEITHER A REVISED RETURN AS PER SEC. 139(5) OF THE ACT NOR IT IS A VOLUNTARY RETURN. THE FILING OF REVISED RETURN AFTER THE SURVEY PROCEEDIN GS AND PARTICULARLY WHEN ASSESSEE WAS CORNERED WITH FACTS FOR WHICH ASSESSEE HAD NO EXPLANATION, IT COULD NOT BE SAID THAT SAID RETURN FILED BY ASSESSE E IS A VOLUNTARY RETURN. FURTHER IT IS A FACT THAT SAID REVISED RETURN WAS F ILED AFTER EXPIRY OF ONE YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR AND THEREF ORE THIS RETURN IS NOT THE RETURN FILED AS PER SEC. 139(5) OF THE ACT. A SIMI LAR ISSUE WAS CONSIDERED BY HONBLE APEX COURT IN THE CASE OF KUMAR JAGDISH CHA NDRA SINHA V. ITA NO. 1845/M/09 18 COMMISSIONER OF INCOME-TAX 220 ITR 67 WHEREIN IT WA S HELD THAT RETURNS FILED BEYOND TIME PRESCRIBED U/S. 139(5) CANNOT BE TREATED VALID IN LAW AND CANNOT BE ACTED UPON REVISED RETURN AS CONTEMPLATED BY SUB-SECTION (5) OF SEC. 139 OF I.T. ACT. NOT ONLY THIS, WE ALSO AGREE WITH LD. CIT(A) THAT IT IS A RETURN NOT FILED BY ASSESSEE JUST TO SET RIGHT AN O MISSION OF WRONG STATEMENT MADE BY ASSESSEE BONAFIDE IN THE ORIGINAL RETURN FI LED. THE HONBLE KERALA HIGH COURT HELD IN THE CASE OF COMMISSIONER OF INC OME-TAX V. A. SREENIVASA PAI 242 ITR 29 THAT IF REVISED RETURN WAS FILED A FTER BOOKS OF ACCOUNT HAD BEEN IMPOUNDED FOR SCRUTINY AND OMISSION OR WRONG S TATEMENT IS DISCOVERED BY DEPARTMENT AS A RESULT OF ENQUIRY, THAT WILL NOT AMOUNT TO REVISED RETURN AS CONTEMPLATED U/S. 139(5) OF THE ACT. IT IS RELE VANT TO STATE THAT SLP FILED AGAINST SAID DECISION BY ASSESSEE WAS DISMISSED BY HONBLE SUPREME COURT IN THE CASE OF A. SREENIVASA PAI VS CIT (SLP) C. NO. 5 462 OF 2000. THE HONBLE ALLAHABAD HIGH COURT HAS ALSO HELD IN THE CASE OF BILAND RAM HARGAN DASS VS COMMISSIONER OF INCOME-TAX (ALL) 171 ITR 390 THAT REVISED RETURN FILED AFTER DETECTION OF CONCEALED INCOME IN THE SEARCH AND TH EN TO SURRENDER OF INCOME IN THE REVISED RETURN WOULD NOT BE A VOLUNTARY RETU RN. THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X VS MAHABIT PRASAD BAJAJ (JHAR) 298 ITR 109 HELD THAT IF INCRIMINATIN G DOCUMENTS WERE FOUND IN THE SEARCH AND THEREAFTER REVISED RETURN IS FILED D ISCLOSING HIGHER INCOME, IT CANNOT BE SAID THAT ASSESSEE ACTED VOLUNTARILY AND BONAFIDE IN FILING REVISED RETURN AND OFFERING ADDITIONAL INCOME. A SIMILAR I SSUE WAS ALSO CONSIDERED BY HONBLE GAUHATI HIGH COURT IN THE CASE OF AGARWAL (F.C.) VS COMMISSIONER OF INCOME-TAX (GAU) 102 ITR 408 WHEREIN IT WAS OBSERVE D THAT AS A PROPOSITION OF LAW IT MAY BE CORRECT THAT WHERE REVISED RETURN AS CONTEMPLATED U/S. 139(5) IS SUBMITTED BEFORE ASSESSMENT IS MADE AFTE R ASSESSEE HAD DISCOVERED SOME OMISSION OR SOME WRONG STATEMENT IN THE ORIGINAL RETURN, PENALTY PROCEEDINGS FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME AS CONTEMPLAT ED U/S. 271(1)(C) OF THE ACT MAY NOT BE ATTRACTED. BUT, FOR THAT PURPOSE, R EVISED RETURN ITSELF MUST BE WITHIN THE CORRECT AMBIT AND SCOPE OF SEC. 139(5). IN THE PRESENT CASE, NO DOUBT THE DISCOVERY OF OMISSION OR WRONG STATEMENT WAS MADE BY ASSESSEE ITA NO. 1845/M/09 19 THAT BY ITSELF IS NOT SUFFICIENT TO BRING REVISED R ETURN WITHIN THE AMBIT OF SEC. 139(5). FURTHER, REQUIREMENT IS THAT THIS OMISSION AND WRONG STATEMENT IN THE ORIGINAL RETURN MUST BE DUE TO BONAFIDE INADVER TENT AND MISTAKE ON THE PART OF ASSESSEE. THE ASSESSEE IN THIS CASE SHOULD NOT GIVE ANY PARTICULAR BASIS FOR ORIGINAL RETURNS. THE CONTENTION OF ASSE SSEE IS THAT IT HAD NO ACCOUNTS NOTWITHSTANDING THE ADMITTED FACT THAT HE HAD INCOMES IN LAKHS OF RUPEES WAS RIGHTLY REJECTED BY TRIBUNAL. IN THE CIR CUMSTANCES, OMISSIONS OR WRONG STATEMENTS IN THE ORIGINAL RETURNS, AS ADMITT ED BY ASSESSEE, COULD NOT BE STATED TO BE, BY ANY STANDING OF VALUATION OF EV IDENCE OR MATERIAL RECORD IS INADVERTENT OR BONAFIDE OMISSION OR MISTAKE. THAT BEING SO, REVISED RETURNS WERE NOT REALLY WITHIN THE CORRECT AMBIT AND SCOPE OF SEC. 139(5) OF THE ACT SO AS TO ALLOW IMMUNITY TO ASSESSEE FROM THE MISCHI EF OF ACTION U/S 271(1)(C) OF THE ACT. 16. IN VIEW OF THE FACTS OF THE CASE BEFORE US AND T HE CASES REFERRED TO HEREINABOVE, WE AGREE WITH LD. CIT(A) AS WELL AS AO THAT RETURN FILED BY ASSESSEE ON 24 TH AUGUST, 2007 DECLARING PEAK CREDIT U/S. 68 OF THE ACT OF RS. 80,40,520/- HAS NOT BEEN DISCLOSED BY ASSESSEE VOLU NTARILY AS ADDITIONAL INCOME AND SAID RETURN FILED BY ASSESSEE ALSO COULD NOT BE SAID TO BE A REVISED RETURN WITHIN THE MEANING OF SEC. 139(5) OF THE ACT. THE RELIANCE PLACED BY LD. AR ON THE DECISION OF HONBLE APEX CO URT IN THE CASE OF CIT VS SURESH CHANDRA MITTAL (SUPRA) THAT REVISED RETURN W AS FILED BY ASSESSEE VOLUNTARILY TO BUY PEACE AND TO AVOID VEXED LITIGAT ION AND THEREFORE PENALTY SHOULD NOT BE IMPOSED, IS NOT APPLICABLE TO THE FAC TS OF THE CASE BEFORE US AS IN THAT CASE IT WAS HELD THAT ASSESSEE FILED REVISE D RETURN, OFFERING AN ADDITIONAL INCOME TO BUY PEACE OF MIND IN GOOD FAIT H AND TO AVOID LITIGATION. IT IS RELEVANT TO STATE THAT SAID DECISION IS AGAINS T THE DECISION OF HONBLE M.P. HIGH COURT REPORTED IN COMMISSIONER OF INCOME-TAX V S SURESH CHANDRA MITTAL (MP) 241 ITR 124. WE FIND THAT IN THE SAID CASE, H ONBLE M.P. HIGH COURT OBSERVED THAT ASSESSING AUTHORITY FAILED TO TAKE AN Y OBJECTION IN REGARD TO DECLARATION OF ADDITIONAL INCOME MADE BY ASSESSEE I N THE REVISED RETURN AND THE EXPLANATION THAT HE MADE THAT ASSESSEE HAD DONE SO BONAFIDE TO BUY ITA NO. 1845/M/09 20 PEACE WITH DEPARTMENT AND TO COME OUT OF VEXED LITI GATION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HOWEVER, IN THE CASE BEF ORE US, DEPARTMENT HAS NOT ACCEPTED THE CONTENTION OF ASSESSEE THAT ASSESS EE HAS OFFERED THIS ADDITIONAL INCOME VOLUNTARILY AND TO BUY PEACE. ON THE OTHER HAND, ASSESSEE WAS CONFRONTED WITH STATEMENTS OF PARTNERS/DIRECTOR S OF LOAN CREDITORS, AND WHEN HE WAS CORNERED AND HAVING NO ALTERNATIVE ACCE PTED THAT LOANS WERE NOT GENUINE. ACCORDINGLY, ASSESSEE OFFERED THE SAME FOR TAXATION. THEREFORE RELIANCE PLACED BY LD. AR ON DECISION OF BOMBAY HI GH COURT IN THE CASE OF CIT VS KIRAN & CO.(SUPRA) IS ALSO NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. 17. ONE OF THE PLEA TAKEN BY ASSESSEE IS THAT PENAL TY HAS BEEN IMPOSED ONLY FOR ASSESSMENT YEAR 2005-06 I.E. ASSESSMENT YE AR UNDER CONSIDERATION AND NO PENALTY HAS BEEN IMPOSED FOR ASSESSMENT YEAR 2007-08 AND THE PENALTY PROCEEDINGS INITIATED FOR ASSESSMENT YEAR 2 006-07 HAS BEEN DROPPED ON SIMILAR SET OF FACTS. WE OBSERVE THAT FOR ASSES SMENT YEAR 2006-07, ASSESSEE FILED REVISED RETURN WHICH WAS WITHIN TIME AS PRESCRIBED U/S. 139(5) OF THE I.T. ACT AND FOR ASSESSMENT YEAR 2007-08, AS SESSEE FILED RETURN DECLARING ADDITIONAL INCOME IN THE ORIGINAL RETURN ITSELF. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT FACTS IN RESPECT OF THOSE ASSESSMENT YEARS ARE DIFFERENT VIS--VIS ASSESSMENT YEAR UNDER CONSIDERA TION. LD. AR HAS PLACED RELIANCE ON DECISION OF ITAT MUMBAI BENCH IN THE CA SE OF ORIENT PRESS LTD. (SUPRA). WE ARE OF THE CONSIDERED VIEW THAT IN VIE W OF THE FACTS STATED HEREINABOVE THAT DEPARTMENT MIGHT HAVE CONSIDERED T O DROP THE PROCEEDINGS FOR ASSESSMENT YEAR 2006-07 THAT REVISED RETURN FIL ED WAS AS PER SEC. 139(5) OF THE ACT AND RETURN FOR ASSESSMENT YEAR 2007-08, ASSESSEE DECLARED SAID LOANS AS ITS INCOME IN THE ORIGINAL RETURN ITSELF; THEREFORE THE SAID CASE OF ITAT MUMBAI BENCH (SUPRA) IS NOT APPLICABLE TO THE FACTS OF CASE OF ASSESSEE BEFORE US. WE ALSO OBSERVE THAT IN THE SAID CASE, PENALTY WAS ALSO DELETED CONSIDERING THE FACT THAT SURRENDER OF INCOME PER-SE BY ASSESSEE DID NOT ESTABLISH THAT THERE WAS CONCEALMENT OF INCOME. IT WAS ALSO OBSERVED THAT ASSESSEE HAD TAKEN STAND EVEN AT THE TIME OF SURVEY , THAT RELEVANT RECORDS ITA NO. 1845/M/09 21 COULD NOT BE LOCATED AND ASSESSEE THEREFORE SURREND ERED THE INCOME AT THE TIME OF SURVEY. WE OBSERVE THAT THE DEPARTMENT WEN T IN APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AGAINST THE SAID ORDER OF THE TRIBUNAL I.E., IN THE CASE OF ORIENT PRESS LTD; AND THE HONBLE HIGH COURT VIDE ITS ORDER DATED 24.2.2009 WHILE DISMISSING THE APPEAL OF THE DEPART MENT AND CONFIRMING THE ABOVE ORDER OF THE TRIBUNAL DATED 30.6.2005 IN ORIE NT PRESS LTD (SUPRA) STATED THAT THE TRIBUNAL NOTED THAT THE ASSESSEE AL L ALONG HAD TAKEN A STAND THAT DUE TO PAUCITY OF TIME, CERTAIN RELEVANT RECOR DS COULD NOT BE LOCATED. IN VIEW OF ABOVE FACTS, WE ARE OF CONSIDERED VIEW THAT RELIANCE PLACED BY THE ASSESSEE ON THE DECISION IN THE CASE OF ORIENT PRES S LTD (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE BEFORE US. HOWEVER, IN THE CASE BEFORE US, ASSESSEE ON THE BASIS OF STATEMENTS OF DIRECTORS/PARTNERS OF LOAN CREDITORS CONCERNED ADMITTED THAT LOANS TAKEN BY ASSESSEE WAS NOT GENUINE AND SURRENDERED THE PEAK CREDIT IN THE ASSE SSMENT YEAR UNDER CONSIDERATION OF RS. 80,40,520/-. 18. THE OTHER PLEA TAKEN BY ASSESSEE IS THAT EXCEPT STATEMENT OF LOAN CREDITORS, DIRECTORS/PARTNERS THERE IS NO OTHER MA TERIAL TO SUBSTANTIATE THAT LOANS WERE NOT GENUINE AND MERELY ON THE BASIS OF S TATEMENT, LEVY OF PENALTY IS NOT JUSTIFIED. CONSIDERING THE FACTS OF THE CAS E IN TOTALITY, WE DO NOT FIND SUBSTANCE IN THE ABOVE CONTENTION OF LD. AR. WE OB SERVE THAT LOAN CREDITORS ADMITTED THAT THEY HAD GIVEN ONLY ACCOMMODATION ENT RIES TO ASSESSEE AGAINST RECEIPT OF COMMISSION. NATURALLY, ASSESSEE MUST HA VE OBTAINED CHEQUE FROM LOAN CREDITORS AGAINST CASH AND WHEN HE RETURNED TH E SAID LOANS TO CONCERNED LOAN CREDITORS, LOANS ARE TO BE RETURNED BY CHEQUE TO SQUARE OF THE TRANSACTION. SUCH TRANSACTIONS NATURALLY WILL BE R EFLECTED IN THE BOOKS OF ACCOUNTS AND MERELY REFLECTION OF THOSE ENTRIES IN THE BOOKS OF ACCOUNTS CANNOT BE SAID THAT INGREDIENTS TO THE EFFECT THAT ASSESSEE PROVED IDENTITY OF LOAN CREDITS, GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF LOAN CREDITORS HAVE BEEN SATISFIED. IN THE CASE BEFORE U S, WE ARE OF THE CONSIDERED VIEW THAT WHEN AT THE TIME OF SURVEY, ASSESSEE WAS CONFRONTED WITH STATEMENTS OF PARTNERS/DIRECTORS OF LOAN CREDITORS CONCERNED; THAT THEY WERE ITA NO. 1845/M/09 22 PROVIDING ACCOMMODATION ENTRIES TO ASSESSEE AND ASS ESSEE ALSO ACCEPTED THAT HE COULD NOT PROVE GENUINENESS OF LOAN IN VIEW OF S TATEMENTS OF LOAN CREDITORS CONCERNED PERSONS, IT PROVES THAT ASSESSE E ACCEPTED THAT LOANS WERE NOT GENUINE BUT WERE MERELY ACCOMMODATION ENTRIES T AKEN BY ASSESSEE. THE ASSESSEE HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO CONTROVERT SAID FINDINGS AND/OR STATEMENTS MADE AT THE TIME OF SURVEY. IT IS NOT THE ALLEGATION OF ASSESSEE THAT ABOVE STATEMENTS WERE EXTRACTED BY DE PARTMENT UNDER DURESS AND/OR BY COERCIVE MEASURES. ON THE OTHER HAND, AS SESSEE SILENTLY SURRENDERED THE PEAK CREDIT OF LOAN AMOUNT IN ASSES SMENT YEAR UNDER CONSIDERATION OF RS. 80,40,520/-. WE ARE OF THE CO NSIDERED VIEW THAT MERELY BECAUSE AT THE TIME OF PENALTY PROCEEDINGS, WHEN AS SESSEE WANTED TO EXAMINE SAID PERSONS WHO MADE THEIR STATEMENTS, AT THE TIME OF SURVEY AND WERE ALSO ACCEPTED BY ASSESSEE, DO NOT DILUTE VALID ITY OF STATEMENTS BECAUSE ASSESSEE COULD NOT GET OPPORTUNITY TO CROSS EXAMINE THEM AS THEY FAILED TO APPEAR ON THE DATE FIXED FOR AND NO FURTHER TIME CO ULD BE GRANTED BECAUSE THE PROCEEDINGS WERE BECOMING BARRED BY LIMITATION. WE ARE OF THE CONSIDERED VIEW THAT IT COULD NOT BE SAID THAT THER E WAS DENIAL OF PROPER OPPORTUNITY OF HEARING TO ASSESSEE DURING THE COURS E OF PENALTY PROCEEDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREF ORE, CASES CITED BY LD. AR (SUPRA) IN REGARD TO ABOVE SUBMISSIONS ARE NOT OF A NY ASSISTANCE TO ASSESSEE. ON THE OTHER HAND, CASES CITED BY LD. DR IN THE CAS E OF JYOTI LAXMAN KONKAR V. COMMISSIONER OF INCOME-TAX (SUPRA) SQUARELY APPL Y TO THE CASE BEFORE US. IN THE SAID CASE, ASSESSEE FILED RETURN DECLARING IN COME OF RS.7,40,510/-. THE AO WAS NOT SATISFIED, CARRIED OUT SURVEY AND DURING THE SURVEY FOUND THAT THERE WAS A DISCREPANCY IN STOCK TO THE TUNE OF RS. 80,28,706/- WHICH WAS BROUGHT TO THE NOTICE OF ASSESSEE. THE ASSESSEE FI LED REVISED RETURN DISCLOSING ADDITIONAL INCOME OF RS. 18,28,706/-. TH E ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THOSE FACTS, HONBLE BOMBAY HIGH COURT HELD THAT THE QUESTION WHETHER TH ERE IS CONCEALMENT OF INCOME OR NOT HAS TO BE DECIDED WITH REFERENCE TO T HE FACTS OF A GIVEN CASE AND THE FACT FINDING AUTHORITIES UNDER THE ACT HAVI NG COME TO THE CONCLUSION THAT IN THE FACTS OF THE CASE, ASSESSEE HAD CONCEAL ED THE INCOME INITIALLY WITH ITA NO. 1845/M/09 23 A VIEW TO AVOID THE PAYMENT OF TAX, THE IMPOSITION OF PENALTY WAS VALID. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PREMPAL GANDHI VS COMMISSIONER OF INCOME-TAX (P&H) 335 ITR 23 HAS HE LD ON THE FACTS THAT IF ASSESSEE FILED REVISED RETURN SHOWING HIGHER INCOME AFTER BEING DETECTED BY DEPARTMENT, LEVY OF PENALTY U/S. 271(1)(C) OF THE A CT IS JUSTIFIED. IT WAS ALSO HELD THAT ASSESSEE DECLARED ADDITIONAL INCOME ONLY WHEN NOTICE OF REASSESSMENT WAS ISSUED AND FINDING NO OTHER WAY OU T ASSESSEE SURRENDERED INCOME. IT COULD NOT BE SAID THAT ASSESSEE WANTED P EACE OF MIND AND THERE WAS NO EVIDENCE OF CONCEALMENT, WHICH CALLED FOR PE NALTY. IT WAS HELD THAT ON THE FACTS IT WAS NOT A CASE WHERE PENALTY HAD BE EN IMPOSED ONLY BECAUSE ASSESSEE DISCLOSED HIGHER INCOME VOLUNTARILY BUT IT IS A CASE OF CLEAR CUT CONCEALMENT WHERE ASSESSEE HAVING FOUND NO OTHER WA Y OUT SURRENDERED UNDISCLOSED INCOME. 19. ON PERUSAL OF THE CASES CITED BY LD. AR, WE OBS ERVE THAT MOST OF THE CASES ARE IN RESPECT OF DELETION OF ADDITIONS WHICH WERE MADE AT THE TIME OF SURVEY PROCEEDINGS OR FOR THE REASONS THAT ASSESSEE COULD NOT FURNISH ADEQUATE EVIDENCES. IN THE CASE OF M.K. BROTHERS ( SUPRA) ADDITIONS WERE MADE CONSIDERING THAT ORDERS OF SALES TAX AUTHORITI ES THAT SELLERS WERE BOGUS AND CONSEQUENTLY IT WAS ALSO INFERRED THAT ENTRIES FOR PURCHASES OF GOODS WERE BOGUS ENTRIES. IT WAS HELD THAT THERE WAS NO EVIDENCE TO PROVE THAT TRANSACTIONS WERE BOGUS PARTICULARLY WHEN PAYMENTS WERE GIVEN BY CHEQUES. HENCE, ABOVE CASE IS NOT RELEVANT TO THE FACTS AS W ELL AS ISSUE BEFORE US. SIMILARLY, IN THE CASE OF DCIT VS ADINATH INDUSTRIES (SUPRA), QUESTION OF GENUINENESS OF PURCHASES WERE UNDER CONSIDERATION. THE ASSESSEE FURNISHED DETAILS ABOUT PURCHASE AND ALL RELEVANT MATERIALS. IT WAS ALSO FOUND THAT AO ACCEPTED THE EXISTENCE OF SELLER IN THE CASE OF ANO THER PARTY AND ON THAT BASIS TRIBUNAL ACCEPTED GENUINENESS OF PURCHASES AF TER APPRECIATION OF EVIDENCE AND IN THOSE CIRCUMSTANCES HONBLE HIGH CO URT HELD THAT THERE WAS NO SUBSTANTIAL QUESTION OF LAW INVOLVED AND DISMISS ED APPEAL OF DEPARTMENT. HENCE, THIS CASE IS ALSO NOT RELEVANT TO THE FACTS AS WELL AS ISSUE INVOLVED IN THE APPEAL BEFORE US. WE STATE DECISION OF HONBLE CALCUTTA HIGH COURT IN ITA NO. 1845/M/09 24 THE CASE OF MATHER & PLATT (INDIA) LTD (SUPRA) IS A LSO NOT RELEVANT BECAUSE IN THAT CASE SUMMONS ISSUED TO COMMISSION AGENT AFTE R 4 YEARS WHEN CAME BACK WITH REMARK NOT KNOWN AND OBSERVED THAT PAY MENTS WERE MADE BY BANK DRAFT AND ACCOUNT PAYEE CHEQUES, IN THOSE FACT S, IT WAS HELD THAT ASSESSEE DISCHARGED ITS PRIMARY ONUS BY ESTABLISHIN G THE IDENTITIES OF AGENTS AND THEREFORE COMMISSION PAYMENT WAS ALLOWAB LE DEDUCTION. FURTHER IN THE CASE OF CIT VS DHINGRA METAL WORKS (SUPRA), ADDITION WAS MADE ON THE BASIS OF STATEMENT RECORDED DURING SURVEY BUT L ATER ON ASSESSEE WAS ABLE TO EXPLAIN DISCREPANCY IN THE STOCK FOUND DURING TH E COURSE OF SURVEY BY PRODUCING RELEVANT RECORD. THEREFORE, IT WAS HELD THAT TRIBUNAL WAS JUSTIFIED TO HOLD THAT AO COULD NOT MADE ADDITION SOLELY ON T HE BASIS OF STATEMENT MADE AT THE TIME OF SURVEY. WE ARE OF THE CONSIDER ED VIEW THAT SAID CASE IS ALSO NOT RELEVANT TO THE FACTS OF THE CASE BEFORE U S. IN THE CASE BEFORE US, ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO CONTROVERT THE STATEMENTS RECORDED DURING THE SURVEY THAT LOANS WE RE NOT GENUINE AND THEY WERE MERELY ACCOMMODATION ENTRIES. 20. IN VIEW OF ABOVE CASES AND CONSIDERING FACTS OF THE CASE BEFORE US, WE HOLD THAT ASSESSEE FILED REVISED RETURN ON 24 TH AUGUST, 2007 DISCLOSING PEAK CREDIT U/S. 68 OF I.T. ACT OF RS. 80,40,520/- WHEN HE FOUND NO OTHER WAY BUT WAS FORCED TO SURRENDER THE SAME. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT LD. CIT(A) IN THE FACTS AND CIRCUMSTANCES OF T HE CASE HAS RIGHTLY CONFIRMED ACTION OF AO TO LEVY PENALTY U/S. 271(1)( C) OF THE ACT. HENCE, WE REJECT GROUND OF APPEAL TAKEN BY ASSESSEE BY UPHOLD ING ORDER OF LD. CIT(A). 21. IN THE RESULT, APPEAL FILED BY ASSESSEE IS DISMI SSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF DECEMBER, 2011 SD/- SD/- ( PRAMOD KUMAR) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO. 1845/M/09 25 MUMBAI, DATED 30 TH DECEMBER,2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR I BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI