DCIT, CHENNAI V. Surendra Kumar Galada, CHENNAI

ITA 1857/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8004 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-11-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 27-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH JT
• Assessee Lawyers: G BASKAR
• Keywords: Documents seized
• Section: 143(3); 133A; 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI , . , ! ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ITA NO. 1857/MDS/2014 ! # $# / ASSESSMENT YEAR : 2004-05 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III (2), 3 RD FLOOR, UTHAMAR GANDHI SALAI, NUNGAMBAKKAM, CHENNAI 600 034. ( %& /APPELLANT) VS. SURENDRA KUMAR GALADA, NO.10, NAGESWARAN ROAD, T.NAGAR, CHENNAI 600 017. [PAN: AASPS 3816Q] ( '(%& /RESPONDENT) %& ) * /APPELLANT BY : SHRI A.V.SREEKANTH , JT. CI T '(%& ) * /RESPONDENT BY : SHRI G.BASKAR, ADVOCATE ) + /DATE OF HEARING : 24.11.2016 ,$ ) + /DATE OF PRONOUNCEMENT : 23.01.2017 /O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE REVENUE AGITATING THE ORDE R BY THE COMMISSIONER OF INCOME TAX(APPEALS)(CENTRAL)-II, CHENNAI (CIT(A) FO R SHORT) DATED 31.03.2014, DELETING THE PENALTY U/S. 271(1)(C) OF THE INCOME TA X ACT, 1961 (THE ACT HEREINAFTER) LEVIED BY THE ASSESSING OFFICER (AO) V IDE HIS ORDER DATED 19.06.2012 FOR ASSESSMENT YEAR (AY) 2004-05. 2. THE ISSUE ARISING IN THIS APPEAL IS THE MAINTAINA BILITY IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE PENALTY LEVIED IN THE SUM OF RS.13,52,746/- U/S. 271(1)(C) OF THE ACT, SINCE DELETED BY THE LD. CIT(A). 2 ITA NO.1857 /MDS/2014 (AY 2004-05) DY. CIT V. SURENDRA KUMAR GALADA 3.1 THE FACTS OF THE CASE IN SYNOPSIS ARE THAT THE B ASIS OF THE IMPUGNED PENALTY IS THE NON-EXPLANATION BY THE ASSESSEE OF THE INCOME A S FINALLY ASSESSED FOR THE CURRENT YEAR, I.E., AT RS. 34.86 LACS; THE ASSESSMENT HAVING TRAVELLED TO THE TRIBU NAL EARLIER, WHICH (VIDE ITS ORDER DATED 05.05.2011 IN ITA NO.1483 & 1484/MDS/2008) SET ASIDE THE SAME BACK TO THE ASSESSING AUTHORITY FOR CONSIDERING THE ASSESSEES EXPLANATION FOR A PART OF THE INCOME ASSESSED, I.E. , RS.57.52 LACS, THE BALANCE RS.84.44 LACS HAVING BEEN FOUND BY IT AS EXPLAINED. THE LD. CIT(A), ON THE OTHER HAND, HAS ALLOWED THE ASSESSEE RELIEF ON THE GROUND THAT THE SAME DOES NOT SURVIVE THE TRIBUNALS ORDER SUPRA IN-AS-MUCH AS IT HAS ALR EADY INDICATED THE MANNER IN WHICH THE ASSESSEES EXPLANATION IS TO BE CONSIDERE D, I.E., BY ALLOWING IT CREDIT FOR THE AMOUNT EXPLAINED BY WAY OF SALE OF GOLD, DIAMON D AND SILVER IN THE EARLIER YEARS. NOT ACCEPTING THE ASSESSEES EXPLANATION AS REGARDS THE OPENING CASH BALANCE (AS PER THE DOCUMENTS SEIZED DURING SEARCH) AS AVAI LABLE FOR INVESTMENT, DOES NOT IPSO FACTO BECOME A GROUND FOR CONCEALMENT, OR FURNISHING INA CCURATE, PARTICULARS OF INCOME, LIABLE FOR PENALTY U/S. 271(1)(C) OF THE ACT, FURTHER RELYING ON THE DECISION IN CIT V. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC). 3.2 THE BACKGROUND OF THE FACTS OF THE CASE ARE THAT THERE WAS A SURVEY U/S. 133A ON 19.05.2005 AT THE BUSINESS PREMISES OF FOUR FIRM S, OF WHICH TWO WERE THE PROPRIETARY FIRMS OF THE ASSESSEE, FOLLOWED BY A SE ARCH AT THE ASSESSEES BUSINESS AND RESIDENTIAL PREMISES ON 20.05.2005. THE SAME YI ELDED THE FOLLOWING ASSETS: GOLD : 10,956 GMS. SILVER : 255.446 KGS. DIAMONDS : 15 CTS. CASH : RS.1,23,585/- THE ASSESSEE ADMITTING TO THE SAID ASSETS AS WELL A S OF THE SAME BEING UNACCOUNTED, THE SAME WERE SOUGHT TO BE ASSESSED AS HIS UNDISCLOSED INCOME, I.E., BESIDES THE RETURNED INCOME (ON 21.09.2007) OF RS. 2,72,813/- (AFTER ADJUSTING THE LOSS OF RS. 7,51,545/-), I.E., AS ORIGINALLY RETURN ED U/S. 139(1) ON 29.10.2004. THAT APART, ANOTHER SECRET FILE DOCUMENT CODENAMED DHAN RAJ (BEING THE ASSESSEES NICK 3 ITA NO.1857 /MDS/2014 (AY 2004-05) DY. CIT V. SURENDRA KUMAR GALADA NAME) WAS FOUND ON A COMPUTER SYSTEM, WHICH REVEALE D LOANS AND ADVANCES TO VARIOUS PERSONS AT AN AMOUNT OF RS. 2,14,21,150/- AND CASH-IN-HAND AT RS. 34,17,850/- I.E., AT A TOTAL OF RS. 248.39 LACS, FO R WHICH ADDITION WAS MADE (VIDE ORDER U/S. 153A R/W S. 143(3) DATED 26/12/2007), TH E DETAILS ARE AS UNDER: (AMOUNT IN RS. ) LOANS FORWARDED - 1,07,78,150 AMOUNTS DUE ON SALE OF GOLD JEWELLERY - 1,06,43 ,000 CASH BALANCE AVAILABLE - 34,17,850 2,48,39,000 IN APPEAL, THE ASSESSEE EXPLAINED THE LOANS AND REC EIVABLES IN TERMS OF THE AMOUNT REALIZED ON THE SALE OF JEWELLERY BELONGING TO SELF AND FAMILY MEMBERS DURING THE EARLIER YEARS. THE ADDITION, IN VIEW OF THE SAID E XPLANATION, WAS RESTRICTED TO RS. 141.96 LACS, AS UNDER: AMOUNTS RECEIVED ON SALE OF JEWELLERY - RS.1,06,43 ,000 UNACCOUNTED AMOUNT - RS. 35,53,000 RS.1,41,96,000 IT IS THIS ADDITION WHICH THE TRIBUNAL IN FURTHER A PPEAL (IN QUANTUM ASSESSMENT) DELETED TO THE EXTENT OF RS. 84.44 LACS, WHILE RESTORING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER (AO) FOR THE BALANCE RS. 57.52 LACS. THE ASSESSEE BEFORE THE ASSESSING AUTHORITY IN THE SECOND ROUND FURNISHED H IS EXPLANATION VIDE LETTER DATED 15.12.2011, STATING AS UNDER: A PERUSAL OF THE SAID DOCUMENT WILL REVEAL THAT TH E TOTAL FUNDS RECEIVABLE WAS RS.1,41,96,000/- IN JANUARY 2004 . THE COMMISSIONER (APPEALS) HAS GIVEN CREDIT ONLY FOR RS. 84,43,7471-. THE RESIDUAL FUND OF RS. 57,52,451/- IS ALSO FROM THE SAME KITTY AND THE SAME PIECE OF EVID ENCE / DOCUMENT. CONSIDERING THE SAME THE AO ALLOWED FURTHER RELIEF OF RS.25.39 LACS, ASSESSING THE INCOME AT RS.34,85,857/- (VIDE HIS OR DER DATED 23.12.2011) AS AGAINST THE EARLIER ASSESSMENT AT RS.60,25,054/-. NO FURTHE R APPEAL WAS PREFERRED BY THE ASSESSEE AGAINST THIS ASSESSMENT, WHEREBY THE PENAL TY PROCEEDINGS WERE ALSO INITIATED SEPARATELY, AND LEVIED AT 100 PERCENT OF THE TAX ON THE ASSESSED INCOME, 4 ITA NO.1857 /MDS/2014 (AY 2004-05) DY. CIT V. SURENDRA KUMAR GALADA I.E., RS.13,52,746/-. HIS REASON FOR THE SAME IS TH E CLEAR INDICTMENT OF HIS CASE BY THE ASSESSEE AS WELL AS BY THE TRIBUNAL, RELYING FO R THE PURPOSE ON THE TRIBUNALS ORDER SUPRA AS WELL AS THE ASSESSEES STATEMENT AND THE NOTES TO THE RETURN OF INCOME FOR A.Y 2003-04, WHICH WE REPRODUCE FOR READY REFER ENCE AS WELL AS BETTER COMPREHENSION OF THE REVENUES CASE: I HAVE GONE THROUGH THE PRINTOUTS TAKEN FROM THE S YSTEM AND EXAMINED THE SAME .... THESE TRANSACTIONS ARE PERTAINING TO MY GOLD JEWELLERY BUSINESS AND FINANCE BUSINESS WHICH ARE NOT REFLECT ED IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY ME. (EXTRACT OF THE ASSESSEES STATEMENT DATED 26/05/20 06 ON THE PRINT OUT TAKEN FROM FILE OF DHANRAJ, REPRODUCED AT PG. 4 OF THE PENAL TY ORDER) 'I HAVE NOT MAINTAINED ANY DETAILED RECORD OF THE JEWELLERIES DISPOSED OFF OR PURCHASES MADE THEREUPON. THE SURPLUSES ARIS ING OUT OF JEWELLERY BUSINESS WERE BEING CIRCULATED IN THE FINANCE BUSIN ESS AND THE RECEIPTS AND THE INCOME ACCRETIONS WERE AGAIN BEING UTILIZED FOR BEING REINVESTED IN GOLD, SILVER, DIAMOND, ETC. AT VARIOU S POINTS OF TIME. (NOTE FORMING PART OF THE ASSESSEES RETURN FOR A.Y 2003-04) 'WE HAVE NOTICED THAT FROM THE LOOSE SHEETS FOUND D URING SEARCH/SURVEY, VARIOUS PURCHASES/SALES WERE DETECTE D TO HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS. THIS FACT C LEARLY ESTABLISHES THAT THE ASSESSEE WAS PURCHASING AND SELLING JEWELLERY O UTSIDE THE BOOKS OF ACCOUNTS.' (EXTRACT FROM PARA 36 (PG. 66) OF THE TRIBUNALS OR DER DATED 05.05.2011) IN SUM, THE BASIS OF THE LEVY OF PENALTY IS THAT TH E ASSESSEE HAS NOT BEEN ABLE TO EFFECT ANY IMPROVEMENT IN HIS CASE IN THE SECOND ROUND, WITH THE ASSETS UNDER REFERENCE BEING ADMITTED. THE SAME HOWEVER DID NOT F IND APPROVAL OF THE LD. CIT(A), IN WHOSE VIEW THE NON-CONTESTING OF THE ASSE SSMENT BY THE ASSESSEE COULD NOT ITSELF BE A GROUND FOR THE LEVY OF PENALTY FOR CONCEALMENT, OR FURNISHING INACCURATE, PARTICULARS OF INCOME. THERE WAS IN FAC T A SHORTAGE OF CASH ON ITS PHYSICAL TAKING, SO THAT THE SAME HAD IN FACT, EVEN AS OBSERVED BY THE TRIBUNAL, BEEN CIRCULATED AS ADVANCES OR AVAILABLE IN THE FORM OF JEWELLERY. AGGRIEVED, THE REVENUE IS IN APPEAL. 4. WE HAVE HEARD THE BOTH THE PARTIES, AND PERUSED THE MATERIAL ON RECORD, BEING THE ASSESSMENT ORDER IN THE FIRST AND THE SEC OND ROUND; THE PENALTY ORDER AND 5 ITA NO.1857 /MDS/2014 (AY 2004-05) DY. CIT V. SURENDRA KUMAR GALADA THE IMPUGNED ORDER. THE TRIBUNALS ORDER SUPRA, THO UGH NOT FORMING PART OF THE RECORD, HAS BEEN EXTENSIVELY REPRODUCED IN THE IMPU GNED ORDER. IT WOULD BE RELEVANT TO BEGIN BY REPRODUCING THE AO 'S FINDINGS IN ASSESSMENT (VIDE ORDER DATED 23/12/2011) MADE PURSU ANT TO THE TRIBUNALS ORDER SUPRA AFTER CONSIDERING THE ASSESSEES SUBMISSIONS REPRODUCED SUPRA, AND WHICH WE EXTRACT VERBATIM SO AS TO HIGHLIGHT THE REASONS AS WELL AS THE BASIS FOR THE RELIEF IN THE SECOND ROUND, AS UNDER: (REFER PAGE 3 OF THE AS SESSMENT ORDER) THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN CONSIDER ED. THE ASSESSEE SUBMITTED THAT THE FOLLOWING AMOUNTS ARE TO BE GIVEN CREDIT: A. THE CASH OF RS. 34,17,850/- FOUND AS THE VERY FIRST ENTRY ON ANNEXURE 2 B. THE INCOME DECLARED FOR THE ASSESSMENT YEARS 2003-0 4, 2004-05 AND 2005-06 OF RS.21,39,157/- (RS.29,589 + RS.7,74,568 + RS. 13,35 ,000) AS PER THE CASH FLOW STATEMENT C. THE PROFIT OFFERED FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 (RS 1,50,000/- AND RS.2,50,000/- RESPECTIVELY) D. THE CASH OF RS.2,09,035/- AVAILABLE AS PER THE CASH FLOW STATEMENT. IN MY VIEW, THE CASH BALANCE OF RS. 34,17,850/- CAN NOT BE GIVEN CREDIT BECAUSE, THE CASH SHOWN IN 'DHANRAJ' FILE IS CASH AVAILABLE WITH THE ASSESSEE AND WHEREAS WHAT WAS FOUND DURING THE COURSE OF SEARCH IS A SHORTAGE OF CASH. SIMILAR LY, THE CASH OF RS. 2,09,035/- IS ALSO CASH AVAILABLE WITH THE ASSESEE AND BY THE SAME LOGIC, C ANNOT BE GIVEN CREDIT. HOWEVER, CREDIT FOR THE INCOME DECLARED BY THE ASSE SSEE (RS.21, 39,157/-) AND THE PROFIT OFFERED FOR THE ASSESSMENT YEARS 2003-04 AND 2004-0 5 (RS 1,50,000/- AND RS.2,50,000/- RESPECTIVELY) CAN BE AVAILABLE FOR INVESTMENT AND T HEREFORE GIVEN CREDIT. SUBJECT TO THE ABOVE, THE ASSESSMENT IS COMPLETED A S UNDER : TOTAL INCOME AS PER ORDER DATED 23.05.2008 RS. 60,25,054 LESS: INCOME OFFERED BY THE ASSESSEE AVAILABLE FOR INVESTMENT RS. 25,39,157 TOTAL INCOME RS. 34,85,857 ( * ) ( * ) (EXACT AMOUNT WORKS TO RS. 34,85,897/-) WE ARE UNABLE TO SEE AS TO HOW THE UNDISCLOSED ASS ETS OF RS. 35.53 LACS (REFER PARA 3.2) ARE EXPLAINED IN ANY MANNER EXC EPT THAT OFFERED AS INCOME FOR THE YEARS PRIOR TO THE CURRENT YEAR, BEING RS.29,589/- BY WAY OF INTEREST ON LOAN (FOR A.Y 2003-04). THE ESTIMATED INCOME OF RS.1.50 LACS ON TH E SALE OF JEWELLERY FOR THAT YEAR (RS. 17.75 LACS ) IS INCLUDED IN THE SALE VALUE, CREDIT FOR THE ENTIRE O F WHICH STANDS ALREADY ALLOWED TO THE ASSESSEE (AS PART OF RS. 84.44 LACS). THE INTEREST INCOME (ON LOANS) OF RS. 7,74,568/- AND THE ADMITTED INCOME OF RS. 2.50 LACS (ON 6 ITA NO.1857 /MDS/2014 (AY 2004-05) DY. CIT V. SURENDRA KUMAR GALADA JEWELLERY SALE OF RS. 66.69 LACS) ARE TO BE OFFERED TO TAX ONLY FOR THE C URRENT YEAR. IN-AS-MUCH AS THE ASSESSEE HAS BEEN ALLOWED CREDIT FOR THE ENTIRE SUM OF RS. 66.69 LACS (AS PART OF RS. 84.44 LACS), IT HAS ALREADY BEEN ALLOWED EXCESS CRE DIT TO THAT EXTENT (RS. 2.50 LACS). NO CREDIT FOR THE INCOME FO R AY 2005-06, ALLOWED AT RS. 13.35 LACS, COULD BE ALLOWED AS THE SAME ARISES ONL Y SUBSEQUENT TO THE DATE TO WHICH THE ASSETS, EXPLANATION FOR WHICH IS SOUGHT, RELATE TO. THE AO IN THE SECOND ROUND HAS THUS ALLOWED THE ASSESSEE A FURTHER UNMER ITED CREDIT OF RS. 24.66 LACS, I.E., RS.25.39 LACS LESS INCOME OF RS.1.79 LACS (FO R AY 2003-04). THE REDUCTION FOR THE INCOME FOR AY 2003-04 IS IN FACT SUBJECT TO THE SAID INCOME TRANSLATING INTO ASSETS AND NOT CONSUMED. IF THE INCOME STANDS EXPEN DED (FOR PERSONAL OR BUSINESS PURPOSES), WHICH CAN BE ASCERTAINED WITH REFERENCE TO THE ASSESSEES ACCOUNTS AND CASH FLOW STATEMENT, NO CREDIT FOR THE SAME, OR TO THAT EXTENT, COULD ALSO BE ALLOWED. THE ASSESSEE IN THE SECOND ROUND HAS NOT FURNISHED E ITHER ANY MATERIAL OR EXPLANATION FOR THE BALANCE ASSETS OF RS.57.52 LACS . ALL THAT THE TRIBUNAL HAD SAID (IN THE QUANTUM PROCEEDINGS) IS THAT THE ASSESSEES EXP LANATION THAT HE HAD SOLD JEWELLERY BELONGING TO SELF AND FAMILY, WHICH STAND S ALSO REFLECTED IN THEIR (WEALTH- TAX) RETURNS, BEING ALSO BORNE OUT BY LOOSE SHEETS FOUND, CANNOT BE DISCOUNTED. FURTHER, THE FACT THAT THE JEWELLERY FOUND IN SEARC H WAS LESS THAN THAT RECORDED - WHICH WAS IN FACT FOR ALL THE THREE CATEGORIES THER EOF, I.E., GOLD, SILVER AND DIAMOND, ENDORSED THE ASSESSEES STAND OF THE MONEY BEING EI THER DUE AGAINST THE SAID SALE, OR OTHERWISE, ON COLLECTION, HAVING BEEN LENT, I.E. , INVESTED IN HIS OTHER (FINANCING) BUSINESS. RATHER, THE INCOME OF RS. 21.39 LACS, CREDIT FOR WH ICH STANDS ALLOWED BY THE AO IN THE SECOND ROUND IS ONLY INTEREST INCOME, SO THAT IT IS CLEAR THAT THE SALE AMOUNTS HAD SINCE BEEN REALIZED AND DIVERTED TO THE LENDING (FINANCING) BUSINESS. THIS INCOME, BEING AN ACCRETION TO THE EXISTING STOC K OF ASSETS (I.E., JEWELLERY), DOES NOT EXPLAIN THE DEFICIT IN THE ASSETS, VIZ. CASH, F OUND IN SEARCH, THOUGH EXPLAINS THE ASSETS IN THE FORM OF AMOUNTS DUE FROM DIFFERENT BU YERS OR, AS THE CASE MAY BE, BORROWERS. A PEAK VALUE OUGHT TO THEREFORE HAVE BEE N GENERATED ON A TIME SCALE, TAKING INTO ACCOUNT THE ASSETS FOUND AND THAT ADMIT TED (RECORDED). BE THAT AS IT MAY, 7 ITA NO.1857 /MDS/2014 (AY 2004-05) DY. CIT V. SURENDRA KUMAR GALADA THE ASSESSEE STANDS ALREADY ALLOWED CREDIT FOR THE ENTIRE JEWELLERY SOLD DURING THE PREVIOUS YEARS RELEVANT TO AYS 2003-04 AND 2004-05, WHICH ITSELF IMPLIES THAT NO PART OF THE SALE HAS BEEN REALIZED, IN WHICH CASE O NLY IT WOULD OUTSTAND, WHILE ITS RECEIPT TO WHATEVER EXTENT, IMPLIES IT NO LONGER OUTSTANDS AND IS EITHER LENT OR RECYCLED, CONVERTING INTO SALE AGAIN, SWELLING THE SALE ( QUA THE SAME AMOUNT), FOR THE ENTIRE OF WHICH (SALE) CREDIT STANDS ALLOWED. A ND FURTHER, THAT THE SALE DOES NOT INCLUDE ANY SALE AFTER JANUARY, 2004, AS THE EXPLAN ATION IS ONLY FOR THE ASSETS AS IN JANUARY, 2004, SO THAT SALES AFTER THAT DATE CANNOT EXPLAIN THE SAME. THE POINT IS THAT CREDIT IN RESPECT OF AND IN TERMS OF ITS EXPLA NATION ADVANCED, IF NOT AT A HIGHER AMOUNT, STANDS ALREADY ALLOWED TO THE ASSESSEE. NO IMPROVEMENT WHATSOEVER IN HIS CASE STANDS MADE SUBSEQUENTLY, WHEREAT AN EXCESS CR EDIT HAS BEEN ALLOWED BY THE REVENUE TO AN EXTENT OF AT LEAST RS.24.60 LACS. THER E IS, AS RIGHTLY POINTED BY THE AO, NO QUESTION OF ALLOWING ANY CREDIT FOR CASH REC ORDED OR PHYSICALLY FOUND. THE CASH FOUND IS IN FACT FROM THE BUSINESS PREMISES OF THE FOUR FIRMS, ONLY TWO OF WHICH BELONG TO THE ASSESSEE. TWO, IT IS THE SOURC E OF THE ASSETS FOUND OR ADMITTED (REFER S. 292C), FOR WHICH EXPLANATION, SUPPORTED B Y MATERIAL, IS TO BE FURNISHED, AND DO NOT THEMSELVES EXPLAIN THE ASSETS. IN FACT, ONCE THE AMOUNT OF UNDISCLOSED ASSETS HAS BEEN ARRIVED AT (RS.141.96 LACS), ITS CO NFIGURATION LOSES SIGNIFICANCE, AND IT IS THIS AMOUNT WHICH HAD TO BE EXPLAINED, WHICH COULD BE EITHER IN TERMS OF ASSETS ALREADY DISCLOSED (AND ACCEPTED) AND/OR THE INCOME DISCLOSED SINCE. THE ASSESSEE HAD NO CASE EITHER IN THE QUANTUM PROCEEDINGS (IN T HE SECOND ROUND) NOR HAS ANY IN THE PENALTY PROCEEDINGS, PROCEEDED WITH ON THE CONC LUSION OF THE FORMER. WE, ACCORDINGLY, FIND NO MERIT IN THE ASSESSEES CASE I N THE INSTANT PROCEEDINGS. THE LD. CIT(A) HAS CLEARLY MISLED HIMSELF IN STATING THAT THE ASSESSEE HAS EXPLAINED THE RESIDUAL ASSETS OF RS. 57.52 LACS, WITH WE RATHER FINDING THE ASSESSEE TO HAVE BEEN ALLOWED UNMERITED RELIEF IN ASSESSMEN T. THE VERY FACT THAT THE TRIBUNAL RESTORED THE MATTER BACK QUA THE SAID AMOUNT IMPLIES THAT IT DID NOT CONSIDER THE SAME AS EXPLAINED. THE QUANTUM PROCEED INGS STAND SINCE FINALIZED. THE PENALTY CAN THEREFORE ONLY BE LEVIED WITH REFERE NCE TO THE INCOME ASSESSED. THE INCOME RETURNED PURSUANT TO THE SEARCH IS THE SA ME AS ORIGINALLY DISCLOSED. 8 ITA NO.1857 /MDS/2014 (AY 2004-05) DY. CIT V. SURENDRA KUMAR GALADA THERE IS NO QUESTION OF THE ASSESSEE HAVING AGREED T O AN AMOUNT, DISCLOSING INCOME TO THAT EXTENT, WHICH HE CONTINUES TO CONTEST EVEN IN THE SECOND ROUND. THE CITED CASE LAW WOULD ON FACTS BE OF LITTLE ASSISTANCE UND ER THE GIVEN FACTS AND CIRCUMSTANCES. THAT PENALTY U/S. 271(1)(C) SHALL B E LEVIABLE WHERE THE ASSESSEE IS UNABLE TO FURNISH AN EXPLANATION, SUBSTANTIATING IT , IS TRITE LAW, AND TOWARD WHICH WE MAY CITE THE FOLLOWING DECISIONS: MAK DATA (P.) LTD. VS. CIT [2013] 358 ITR 593 (SC); CIT V. ATUL MOHAN BINDAL [2009] 317 ITR 1 (SC) ; UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 (SC); K.P. MADHUSUDHANAN VS. CIT [2001] 251 ITR 99 (SC); B.A. BALASUBRAMANIAM AND BROS V. CIT [1999] 236 ITR 977 (SC); ADDL. CIT VS. JEEVAN LAL SHAH [1994] 205 ITR 244 (SC); CIT VS. K. R. SADAYAPPAN [1990] 185 ITR 49 (SC); CIT VS. MUSSADILAL RAM BHAROSE [1987] 165 ITR 14 (SC); AND SHARMA ALLOYS (INDIA) LTD. VS. ITO [2013] 357 ITR 379 (MAD). THE AO, HOWEVER, HAS LEVIED PENALTY ON THE ENTIRE IN COME ASSESSED (RS. 34.86 LACS), WHICH INCLUDES RS. 2.73 LACS RETURNED BY THE ASSESSEE. THE SAME CAN ONLY BE LEVIED WITH REFERENCE TO THE TAX SOUGHT TO BE EVADED AS DEFINED IN EXPLANATION 4 TO S. 271(1)(C). THE AO SHALL RECOMPUTE THE PENA LTY AMOUNT, AND THE ASSESSEE GETS PART RELIEF. WE DECIDE ACCORDING LY. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON JANUARY 23, 2017 AT CHENNAI . SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) ! /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, . /DATED, JANUARY 23, 2017. EDN / ) '!+01 21$+ /COPY TO: 1. %& /APPELLANT, 2. '(%& /RESPONDENT, 3. 3+ ( )/CIT(A) 4. 3+ /CIT, 5. 145 '!+! /DR & 6. 56# 7 /GF