Ms. Ravina Khurana, New Delhi V. DCIT, New Delhi

ITA 1879/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3078 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-07-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Business income; Depreciation; Business expenditure; Residential status; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Period of limitation; Retrospective amendment; Additional evidence; Question of law; Reasonable cause; Revised return; Reason to believe; Bonafide mistake; Ignorance of law
• Section: 143(3); 244A; 234B; 14A; 133(6); 139(5); 147; 68; 69; 148; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1004/DEL /2011 ASSESSMENT YEAR: 2004-05 RAVINA & ASSOCIATES PVT. LTD., 201, MOHADEO BUILDING, TOLSTOY MARG, NEW DELHI. (PAN: AAACR4696N) VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE-15, NEW DELHI. (APPELLANT) (RESPONDENT) ITA 1005/DEL/2011, 4388/D/2014, 4389/D/2014, ASSESSMENT YEAR 2005-06, 2004-05, 2005-06, 2000-01 RAVINA & ASSOCIATES PVT. LTD., 201, MOHADEO BUILDING, TOLSTOY MARG, NEW DELHI. (PAN: AAACR4696N) VS. DCIT, CIRCLE 15(1), NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 1877/DEL /2013, 1878/DEL /2013, 1879/DEL /2 013, 1880/DEL /2013, 1881/DEL /2013 ASSESSMENT YEAR: 2000-01, 2001-02, 2002-03, 2003-04 , 2004-05 RAVINA KHURANA, 189, GOLF LINKS, NEW DELHI. VS. DCIT, CIRCLE 15(1), NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ITA NO. 3173/D/2010 ASSESSMENT YEAR: 2000-01 DCIT, CIRCLE 15(1), NEW DELHI. VS. RAVINA KHURANA, 189, GOLF LINKS, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 1946/D/2010, 1948/D/2010, 1949/D/2010 ASSESSMENT YEAR: 2000-01, 2002-03, 2003-04 RAVINA KHURANA, 189, GOLF LINK, NEW DELHI. (PAN: AAJPK6331P) VS. DCIT, COY.CIRCLE-15(1), NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO.1947/DEL /2010, 1950/D/2010 ASSESSMENT YEAR 2001-02, 2004-05 RAVINA KHURANA, 189, GOLF LINK, NEW DELHI. (PAN: AAJPK6331P) VS. ACIT, RANGE 15, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI SALIL AGGARWAL,GAUTAM JAIN, ADVOCATES SHRI SHAILESH GUPTA, CA RESPONDENT BY: SMT. PARAMITA TRIPA THY, CIT DR DATE OF HEARING: 16.01.2018 DATE OF PRONOUNCEMENT : 26.03.2018 ORDER PER BENCH: THESE ARE FIFTEEN APPEALS OUT OF WHICH FOURT EEN APPEALS HAVE BEEN PREFERRED BY THE TWO ASSESSEES NAMELY RA VINA ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS KHURANA AND M/S. RAVINA & ASSOCIATES (P) LTD. AND O NE APPEAL HAS BEEN PREFERRED BY THE REVENUE. SINCE THESE APPE ALS INVOLVE CONSIDERATION OF COMMON ISSUES, THEY WERE HEARD TOG ETHER AND ARE THUS BEING DISPOSED OF BY THIS CONSOLIDATED ORD ER FOR THE SAKE OF CONVENIENCE. 2. AT THE OUTSET, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE APPEALS FOR ASSESSMENT YEARS 2004-05 AND 2 005-06 IN ITA NOS. 1004/DEL/2011 AND ITA NO. 1005/DEL/2011 RESPECTIVELY IN THE CASE OF M/S. RAVINA & ASSOCIATE S (P) LTD (HEREINAFTER REFERRED TO AS RAPL) MAY BE TAKEN AS THE LEAD MATTERS IN THIS BATCH OF APPEALS. THE LEARNED CIT D R DID NOT OBJECT TO THE AFORESAID PRAYER OF THE LEARNED COUNS EL. AS SUCH, WE TAKE UP THE APPEALS FILED BY RAPL FOR ASSESSMENT YE ARS 2004-05 AND 2005-06. 3. IN ITA NO. 1004/DEL/2011 FOR ASSESSMENT YEAR 2004-0 5, THE APPELLANT/ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT INCOME DECLARED BY THE APPELLANT COMPANY RELATING TO RECEI PTS FROM M/S TPE, A SEMI-GOVERNMENT COMPANY INCORPORATED IN RUSSIA AND, CREDITED IN NATWEST BANK ACCOUNT, LONDON IS NO T VOLUNTARY. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 1.1 THAT IN ARRIVING AT THE AFORESAID CONCLUSION, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS OVERLOOKED THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS UNDE R SECTION 147 OF THE ACT WHEREIN IT HAS BEEN STATED THAT PROC EEDINGS UNDER SECTION 147 OF THE ACT HAD BEEN INITIATED ON THE BASIS OF INCOME DECLARED BY THE APPELLANT-COMPANY IN LETT ER DATED 11.4.2006 AND THEREFORE, CONCLUSION THAT RETURN OF INCOME WAS NOT VOLUNTARY IS WHOLLY MISCONCEIVED, MISPLACED AND UNTENABLE. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IN ARRIVING AT THE AFORESAID CONCLUSION, HAS FAILED TO APPRECIATE THAT A CRIMINAL CASE WAS REGISTERED UNDE R THE INDIAN PENAL CODE AND PREVENTION OF CORRUPTION ACT AGAINST THE UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHERS O N 6.3.2006 AND NOT AGAINST THE APPELLANT AND THEREFOR E, THE SAME NEITHER IN LAW AND NOR ON FACT COULD HAVE BEEN MADE A BASIS TO ASSUME MUCH LESS CONCLUDE THAT INCOME DECL ARED BY THE APPELLANT COMPANY IN LETTERS DATED 1.4.2006, 11 .4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.20 06 AND, SUBSEQUENTLY IN RETURNS OF INCOME DATED 21.6.2006 A ND, 12.2.2007 WAS NOT VOLUNTARY. 1.3 THAT THE ADVERSE FINDINGS RECORDED BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) ARE NOT ONLY F ACTUALLY MISCONCEIVED BUT ALSO LEGALLY UNSUSTAINABLE AND INF ACT, OVERLOOK THE SUBMISSIONS MADE BY THE APPELLANT COMP ANY AND JUDICIAL PRONOUNCEMENTS TO ESTABLISH THAT INCOM E DECLARED BY THE APPELLANT COMPANY WAS NOT VOLUNTARY IN AS MUCH AS NO MATERIAL HAS BEEN GATHERED OR OBTAINED B Y THE DEPARTMENT PRIOR TO FURNISHING OF DECLARATION OF IN COME BY THE APPELLANT TO SUGGEST OR EVEN HOLD THAT INCOME DECLA RED RELATING TO SUMS CREDITED IN THE NATWEST BANK ACCOU NT AT LONDON WAS NOT VOLUNTARY. 1.4 THAT THE ENTIRE BASIS ADOPTED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BASED ON ASSUMPTIONS AND PRESUMPTIONS, UNSUPPORTED BY ANY MA TERIAL AND HENCE NOT TENABLE. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED BOTH IN LAW AND ON FACTS IN HOLDING T HAT THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE ON 1 2.2.2007 DECLARING AN INCOME OF RS. 10,80,57,290/- AND, REVI SING THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 14 8 OF THE ACT ON 22.5.2006 WAS NONEST AND INVALID RETURN. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE WRITTEN SUBMISSIONS DULY SUPPORT ED BY JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS ESTABLISHED THAT, A RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 14 8 OF THE ACT CAN ALSO BE REVISED UNDER SECTION 139(5) OF THE ACT AND AS SUCH, THE REVISED RETURN FILED ON 12.2.2007 WAS A V ALID RETURN. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND, ON FACTS IN HOLD ING THAT, AGGREGATE SUM OF RS. 10,48,44,798/- DISCLOSED BY TH E ASSESSEE IN THE REVISED RETURN FILED ON 12.2.2007 R EPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. 3.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT, SUM OF RS. 10,48,44, 798.60 REPRESENTED SUMS RECEIVED BY THE APPELLANT COMPANY UNDER AN AGREEMENT DATED 23.7.2003 WITH M/S TPE FOR PROVI DING SUPPORT SERVICES DURING IMPLEMENTATION OF THEIR CON TRACT DATED 29.7.2003 WITH M/S UTTAR PRADESH RAJKIYA VIDY UT UTPADAN NIGAM LIMITED FOR REFURBISHMENT OF OBRA THE RMAL POWER STATION, UTTAR PRADESH AND, AS SUCH, THE AFOR ESAID SUMS COULD NOT BE HELD TO BE UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND, INFACT, WERE SUMS RECEIV ED IN THE COURSE OF BUSINESS OF APPELLANT COMPANY AND, THUS ASSESSABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OF PROFESSION. 3.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE DOCUMENTARY EVIDENCE FURNISHED B Y THE APPELLANT TO DEMONSTRATE THE NATURE OF THE INCOME R ECEIVED BY THE ASSESSEE AND, AS SUCH, THE CONCLUSION SO ARRIVE D IS WHOLLY MISCONCEIVED, UNSUSTAINABLE AND UNWARRANTED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 3.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT, MERE FACT THAT ORIGI NAL AGREEMENT WAS NOT FILED BY THE ASSESSEE WITH M/S TP E COULD NOT BE MADE A BASIS TO HOLD THAT, RECEIPTS OF RS. 10,48,44,798.60 DID NOT REPRESENT THE INCOME RECEIV ED BY THE APPELLANT FROM M/S TPE PARTICULARLY, WHEN PHOTOCOPY OF THE AGREEMENT AND, ALSO ILLUSTRATIVE CORRESPONDENCE REG ARDING SUPPORT SERVICES PROVIDED BY THE APPELLANT TO M/S T PE HAD BEEN PLACED ON RECORD DURING THE COURSE OF BOTH ASS ESSMENT AND, APPELLATE PROCEEDINGS. 3.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT, AO HAS RAISED A NUMBER OF OBJECTIONS AND POINTED OUT A NUMBER OF ANOMALIES IN THE APPELLANTS SUBMISSIONS BOTH IN THE ASSESSMENT ORDER AND IN THE REMAND REPORT AND, THE APPELLANT HAD NOT BEEN ABLE TO COUNTER THE ABOVE OB JECTIONS OR EXPLAIN THE ANOMALIES BY ANY DOCUMENTARY EVIDENC E OR CLARIFICATION. THE OBSERVATIONS SO MADE IS FACTUALL Y MISPLACED AND HAS BEEN RECORDED BY OVERLOOKING WRITTEN SUBMIS SIONS, DOCUMENTARY EVIDENCE AND, IS THUS INVALID. 3.5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT ADVERSE OBSERVAT IONS RECORDED IN THE ORDER OF ASSESSMENT ON THE BASIS OF INFORMATION OBTAINED UNDER SECTION 133(6) OF THE AC T FROM M/S UTTAR PRADESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED FOR REFURBISHMENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH WAS MISCONCEIVED AND WITHOUT CONFRONTING THE SAME T O THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS. 3.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT FINDING OF THE L EARNED ASSESSING OFFICER THE ADVANCE PAID BY M/S UTTAR PRA DESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED FOR REFURBISHM ENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH TO M/S TP E DID NOT CORRELATE WITH THE SUMS RECEIVED BY THE APPELLA NT COMPANY FROM M/S TPE WAS FACTUALLY INCORRECT AND EN TIRELY MISPLACED. IN FACT, THE SUMS RECEIVED BY THE APPELL ANT ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS COMPANY HAVE FULL CORRELATION WITH THE ADVANCES REC EIVED BY M/S TPE FROM M/S UTTAR PRADESH RAJKIYA VIDYUT UTPAD AN NIGAM LIMITED. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN NOT A LLOWING THE CLAIM OF DEDUCTION OF 15% OF TOTAL RECEIPTS IN VIEW OF THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF CALCUTTA COMPANY LTD. REPORTED IN 37 ITR 1. 4.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT CLAUSE 2 OF THE AGREE MENT DATED 23.7.2003 CLEARLY PROVIDED THAT THE ASSESSEE COMPAN Y HAS TO DISCHARGE SEVERAL OBLIGATIONS AND IN VIEW THEREOF, IT WAS HIGHLY UNJUSTIFIED AND UNREASONABLE TO TAX THE ENTI RE RECEIPT AS INCOME OF THE APPELLANT COMPANY IN THE INSTANT ASSESSMENT YEAR. 5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT THE BANK INTEREST OF RS. 37,866.73 REPRESENTED UNEXPLAINED I NVESTMENT U/S 69 OF THE ACT. 6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND, ON FACTS IN CONF IRMING THE ADHOC DISALLOWANCE OF RS. 1,00,000/- OUT OF EXPENDI TURE INCURRED AND, CLAIMED BY THE APPELLANT COMPANY. 7. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED BOTH IN LAW AND, ON FACTS IN UPHO LDING DISALLOWANCE OF RS. 10,000/- U/S 14A OF THE ACT. 8. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN UPHOL DING THE LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT, WHICH ON THE FACTS OF THE CASE WAS NOT LEVIABLE. 8.1 THAT WHILE UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE SUBMI SSIONS MADE BY THE APPELLANT TO ESTABLISH THAT NO INTEREST IS LIABLE ON THE FACTS OF THE CASE OF THE APPELLANT AND THUS INTEREST CONFIRMED WAS NOT IN ACCORDANCE WITH LAW. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 8.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FURTHER FAILED TO APPRECIATE THAT EVEN OTHERWIS E, NO INTEREST WAS LEVIABLE AFTER SUCH SUM HAD BEEN DULY OFFERED TO TAX VIDE LETTER DATED 01.04.2006 AND THUS INTEREST LEVIED AND, SUSTAINED MECHANICALLY IS ILLEGAL, INVALID AND, NOT SUSTAINABLE. IT IS, THEREFORE, PRAYED THAT, IT BE HELD THAT INCO ME DECLARED BY THE ASSESSEE OF RS. 10,48,44,798.60 REPRESENTED SUMS RECEIVED BY THE APPELLANT COMPANY UNDER AN AGREEMEN T WITH M/S TPE FOR PROVIDING SUPPORT SERVICES DURING IMPLEMENTATION OF THEIR CONTRACT DATED 29.7.2003 WI TH M/S UTTAR PRADESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED FOR REFURBISHMENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH AND, AS SUCH, THE AFORESAID SUMS COULD NOT BE HELD TO BE UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. IT BE FURTHER HELD THAT, OTHER DISALLOWANCES TOGETHER WIT H INTEREST LEVIED ARE UNSUSTAINABLE AND, THEREFORE BE DIRECTED TO BE DELETED. IT BE ALSO HELD THAT THE INCOME DECLARED B Y THE APPELLANT IN THE RETURNS OF INCOME FILED ON 21.06.2 006 AND, 12.2.2007 WAS VOLUNTARY AND APPEAL OF THE APPELLANT - COMPANY BE ALLOWED. 4. IDENTICAL GROUNDS HAVE ALSO BEEN RAISED IN THE APPE AL FOR ASSESSMENT YEAR 2005-06 IN ITA NO. 1005/DEL/2011 WH ICH READ AS UNDER: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT INCOME DECLARED BY THE APPELLANT COMPANY RELATING TO RECEI PTS FROM M/S TPE A SEMI-GOVERNMENT COMPANY INCORPORATED IN R USSIA AND, CREDITED IN NATWEST BANK ACCOUNT, LONDON IS NO T VOLUNTARY. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IN ARRIVING AT THE AFORESAID CONCLUSION, HAS FAILED TO ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS APPRECIATE THAT A CRIMINAL CASE WAS REGISTERED UNDE R THE INDIAN PENAL CODE AND PREVENTION OF CORRUPTION ACT AGAINST THE UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHERS O N 6.3.2006 AND NOT AGAINST THE APPELLANT AND THEREFOR E, THE SAME NEITHER IN LAW AND NOR ON FACT COULD HAVE BEEN MADE A BASIS TO ASSUME MUCH LESS CONCLUDE THAT INCOME DECL ARED BY THE APPELLANT IN LETTERS DATED 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.20 06 AND, SUBSEQUENTLY IN RETURN OF INCOME DATED 21.6.2006 AN D, 12.2.2007 WAS NOT VOLUNTARY. 1.2 THAT THE ADVERSE FINDINGS RECORDED BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) ARE NOT ONLY F ACTUALLY MISCONCEIVED BUT ALSO LEGALLY UNSUSTAINABLE AND INF ACT, OVERLOOK THE SUBMISSIONS MADE BY THE APPELLANT AND JUDICIAL PRONOUNCEMENTS TO ESTABLISH THAT INCOME DECLARED BY THE APPELLANT WAS NOT VOLUNTARY IN AS MUCH AS NO MATERI AL HAS BEEN GATHERED OR OBTAINED BY THE DEPARTMENT PRIOR T O FURNISHING OF DECLARATION OF INCOME BY THE APPELLAN T TO SUGGEST OR EVEN HOLD THAT INCOME DECLARED BY THE AP PELLANT RELATING TO SUMS CREDITED IN THE NATWEST BANK ACCOU NT AT LONDON WAS NOT VOLUNTARY. 1.4 THAT THE ENTIRE BASIS ADOPTED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BASED ON ASSUMPTIONS AND PRESUMPTIONS, UNSUPPORTED BY ANY MA TERIAL AND HENCE NOT TENABLE. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED BOTH IN LAW AND ON FACTS IN HOLDING T HAT THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE ON 1 2.2.2007 DECLARING AN INCOME OF RS. 4,60,13,040/- WAS NONEST AND INVALID RETURN. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE WRITTEN SUBMISSIONS DULY SUPPORT ED BY JUDICIAL PRONOUNCEMENTS WHEREIN IT WAS ESTABLISHED THAT, REVISED UNDER SECTION 139(5) OF THE ACT WAS A VALID RETURN. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND, ON FACTS IN HOLD ING THAT, ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS AGGREGATE SUM OF RS. 4,10,20,996.81/- DISCLOSED BY THE ASSESSEE IN THE REVISED RETURN FILED ON 12.2.2007 R EPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. 3.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT, SUM OF RS. 4,10,20,9 96.81 REPRESENTED SUMS RECEIVED BY THE APPELLANT COMPANY UNDER AN AGREEMENT DATED 23.7.2003 WITH M/S TPE FOR PROVI DING SUPPORT SERVICES DURING IMPLEMENTATION OF THEIR CON TRACT DATED 29.7.2003 WITH M/S UTTAR PRADESH RAJKIYA VIDY UT UTPADAN NIGAM LIMITED FOR REFURBISHMENT OF OBRA THE RMAL POWER STATION, UTTAR PRADESH AND, AS SUCH, THE AFOR ESAID SUMS COULD NOT BE HELD TO BE UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND, INFACT, WERE SUMS RECEIV ED IN THE COURSE OF BUSINESS OF APPELLANT COMPANY AND, THUS ASSESSABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OF PROFESSION. 3.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE DOCUMENTARY EVIDENCE FURNISHED B Y THE APPELLANT TO DEMONSTRATE THE NATURE OF THE INCOME R ECEIVED BY THE ASSESSEE AND, AS SUCH, THE CONCLUSION SO ARRIVE D IS WHOLLY MISCONCEIVED, UNSUSTAINABLE AND UNWARRANTED. 3.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT, MERE FACT THAT ORIGI NAL AGREEMENT WAS NOT FILED BY THE ASSESSEE WITH M/S TP E COULD NOT BE MADE A BASIS TO HOLD THAT, RECEIPTS OF RS. 4,10,20,996.81 DID NOT REPRESENT THE INCOME RECEIVE D BY THE APPELLANT FROM M/S TPE PARTICULARLY, WHEN PHOTOCOPY OF THE AGREEMENT AND, ALSO ILLUSTRATIVE CORRESPONDENCE REG ARDING SUPPORT SERVICES PROVIDED BY THE APPELLANT TO M/S T PE HAD BEEN PLACED ON RECORD DURING THE COURSE OF BOTH ASS ESSMENT AND, APELLATE PROCEEDINGS. 3.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT, AO HAS RAISED A NUMBER OF OBJECTIONS AND POINTED OUT A NUMBER OF ANOMALIES IN THE APPELLANTS SUBMISSIONS BOTH IN THE ASSESSMENT ORDER AND IN THE REMAND REPORT AND, THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS APPELLANT HAD NOT BEEN ABLE TO COUNTER THE ABOVE OB JECTIONS OR EXPLAIN THE ANOMALIES BY ANY DOCUMENTARY EVIDENC E OR CLARIFICATION. THE OBSERVATIONS SO MADE IS FACTUALL Y MISPLACED AND HAS BEEN RECORDED BY OVERLOOKING WRITTEN SUBMIS SIONS, DOCUMENTARY EVIDENCE AND, IS THUS INVALID. 3.5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT FINDINGS OF THE LEARNED ASSESSING OFFICER THE ADVANCE PAID BY M/S UTTAR PRA DESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED FOR REFURBISHM ENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH TO M/S TP E DID NOT CORRELATE WITH THE SUMS RECEIVED BY THE APPELLA NT COMPANY FROM M/S TPE WAS FACTUALLY INCORRECT, WHOLL Y MISCONCEIVED AND ENTIRELY MISPLACED. INFACT, THE SU MS RECEIVED BY THE APPELLANT COMPANY HAVE FULL CORRELA TION WITH THE ADVANCES RECEIVED BY M/S TPE FROM M/S UTTAR PRA DESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN NOT A LLOWING THE CLAIM OF DEDUCTION OF 15% OF TOTAL RECEIPTS IN VIEW OF THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF CALCUTTA COMPANY LTD. REPORTED IN 37 ITR 1. 4.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT CLAUSE 2 OF THE AGREE MENT DATED 23.7.2003 CLEARLY PROVIDED THAT THE ASSESSEE COMPAN Y HAS TO DISCHARGE SEVERAL OBLIGATIONS AND IN VIEW THEREOF, IT WAS HIGHLY UNJUSTIFIED AND UNREASONABLE TO TAX THE ENTI RE RECEIPT AS INCOME OF THE APPELLANT COMPANY IN THE INSTANT ASSESSMENT YEAR. 5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) IN LAW AND ON FACTS IN HOLDING THAT THE BANK INTERE ST OF RS. 611.08 REPRESENTED UNEXPLAINED INVESTMENT UNDER SEC TION 69 OF THE ACT. 6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND, ON FACTS IN CONF IRMING THE ADHOC DISALLOWANCE OF RS. 2,30,882.05/- OUT OF EXPE NDITURE INCURRED AND, CLAIMED BY THE APPELLANT COMPANY. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 7 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN UPHOL DING THE LEVY OF INTEREST UNDER SECTION 234B, 234C, 234D AND 244A OF THE ACT WHICH ON THE FACTS OF THE CASE WAS NOT LEVI ABLE. 7.1 THAT WHILE UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234B, 234C, 234D AND 244A OF THE ACT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE SUBMISSIONS MADE BY THE APPELLANT TO EST ABLISH THAT NO INTEREST IS LIABLE ON THE FACTS OF THE CASE OF THE APPELLANT AND THUS INTEREST CONFIRMED WAS NOT IN AC CORDANCE WITH LAW. 7.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FURTHER FAILED TO APPRECIATE THAT EVEN OTHERWIS E, NO INTEREST WAS LEVIABLE AFTER SUCH SUM HAD BEEN DULY OFFERED TO TAX VIDE LETTER DATED 01.04.2006 AND THUS INTEREST LEVIED AND, SUSTAINED MECHANICALLY IS ILLEGAL, INVALID AND, NOT SUSTAINABLE. IT IS, THEREFORE, PRAYED THAT, IT BE HELD THAT INC OME DECLARED BY THE ASSESSEE OF RS. 4,10,20,996.81 REPR ESENTED SUMS RECEIVED BY THE APPELLANT COMPANY UNDER AN AGR EEMENT WITH M/S TPE FOR PROVIDING SUPPORT SERVICES DURING IMPLEMENTATION OF THEIR CONTRACT DATED 29.7.2003 WI TH M/S UTTAR PRADESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED FOR REFURBISHMENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH AND, AS SUCH, THE AFORESAID SUMS COULD NOT BE HELD TO BE UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. IT BE FURTHER HELD THAT, OTHER DISALLOWANCES/ADDITIONS MA DE TOGETHER WITH INTEREST LEVIED ARE UNSUSTAINABLE AND , THEREFORE BE DIRECTED TO BE DELETED. IT BE ALSO HELD THAT THE INCOME DECLARED BY THE APPELLANT IN THE RETURNS OF INCOME FILED ON 21.08.2006 AND, 12.2.2007 WAS VOLUNTARY AND APPEAL OF THE APPELLANT-COMPANY BE ALLOWED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 5. THE BRIEF FACTS ARE THAT THE ASSESSEE COMPANY HAD F ILED ORIGINAL RETURNS OF INCOME FOR AYS 2004-05 AND 2005 -06 AS UNDER: ASSESSMENT YEAR DATE OF FILING OF RETURN OF INCOME TOTAL INCOME DECLARED (RS.) 2004 - 05 31.10.2004 31,77,400/ - 2005 - 06 30.10.2005 49,97,160/ - 5.1 THEREAFTER, PROCEEDINGS WERE INITIATED BY THE AO U/ S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE A CT) FOR A.Y. 2004-05 AND NOTICE U/S 148 WAS SERVED UPON THE ASSE SSEE ON 22.05.2006. IN RESPONSE TO THE SAME, THE ASSESSEE F ILED RETURN OF INCOME ON 21.06.2006 DECLARING INCOME AT RS. 1,86,2 8,990/- BY INCLUDING INCOME STATED TO HAVE BEEN EARNED FROM PR OVIDING SUPPORT SERVICES TO M/S. TPE, A COMPANY INCORPORATE D IN RUSSIA (HEREINAFTER REFERRED TO AS TPE) UNDER AN AGREEME NT DATED 23.07.2003 DURING IMPLEMENTATION OF THEIR CONTRACT DATED 5.02.2003 WITH M/S. UTTAR PRADESH RAJKIYA VIDYUT UT PADAN NIGAM LTD. (HEREINAFTER REFERRED TO AS UPRVUNL) F OR THE LATTERS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OBRA PROJECT. IN THE NOTE TO THE RETURN OF INCOME, IT WAS STATED AS UNDER: WE, VIDE OUR LETTER DATED 1.4.2006, ADDRESSED TO T HE ASSESSING OFFICER, SUPPLEMENTED BY OUR SUBSEQUENT L ETTERS ADDRESSED TO HIM, HAVE DISCLOSED HAVING RECEIVED PA YMENT OF U.S. DOLLARS 23,08,797.84 FROM TPE (HEREINAFTER TPE ), DURING THE PREVIOUS YEAR ENDING ON 31.3.2004 AS ADVANCE RE VENUE UNDER OUR AGREEMENT DATED 23.7.2003 WITH THEM, FOR PROVIDING SUPPORT SERVICES TO TPE DURING IMPLEMENTA TION OF THEIR CONTRACT DATED 5.2.2003 WITH UTTAR PRADESH RA JKIYA VIDYUT UTPADAN NIGAM LTD. (HEREINAFTER UPRVUNL) FOR LETTERS OBRA PROJECT. THE IMPLEMENTATION OF THE SAID PROJECT WAS ORIGINAL LY SCHEDULED TO LAST FOR 30 MONTHS FROM 5.2.2003 I.E. UP TILL 4.8.2005 (PAGE 74 OF THE PAPER BOOK SUBMITTED UNDER OUR LETTER DATED 27.4.2006). HOWEVER, DUE TO CERTAIN IM PEDIMENTS ITS IMPLEMENTATION WAS DELAYED AND THE TIME FOR COM PLETION OF PHASE I, INITIALLY SCHEDULED TO BE COMPLETED IN 18 MONTHS (SUPRA) UP TILL 4.8.2004, HAS BEEN EXTENDED VIDE MO U BETWEEN UPRVUNL SAID TPE DATED 20.4.2006 (PAGE 72 O F THE AFORESAID PAPER BOOK), BY 27 MONTHS UP TILL 4.11.20 06. THE PHASES II AND III OF THE PROJECT ORIGINALLY SCHEDUL ED TO BE COMPLETED IN 30 MONTHS, AND SINCE PLACED UNDER SUSP ENSION VIE MOU DATED 20.4.2006, WHENEVER RESUMED, CANNOT B E EXPECTED TO BE COMPLETED EARLIER THAN 27 MONTHS BEH IND THE ORIGINAL SCHEDULE I.E. BEFORE 4.11.2007. THE IMPLEM ENTATION OF THE PROJECT IS THUS EXPECTED TO LAST AT LEAST TILL 1.11.2007, FOR A PERIOD 57 MONTHS. OUR OWN OBLIGATION IN THE PROJE CT HOWEVER COMMENCED FROM 23.7.2003 ONLY AND IS THEREF ORE, EXPECTED TO LAST FOR A TOTAL PERIOD OF 52 MONTHS ON LY. OUT OF THESE 52 MONTHS 8, 12, 12, 12 AND 8 MONTHS FALL IN THE PREVIOUS YEARS 2003-04, 2004-05, 2005-06, 200-07 AN D 2007-08 RESPECTIVELY. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS THE ADVANCE REVENUE RECEIVED DURING THE CURRENT PRE VIOUS YEAR 2003-04, WITH IMPLEMENTATIONS MAY BE RECEIVED IN FUTURE, WILL HAVE TO PROVIDE FOR EXPENSES TO BE INC URRED DURING ALL THE PREVIOUS YEARS 2003-04 TO 2008, TILL 4.11.2 007, A TOTAL PERIOD OF 52 MONTHS. ACCORDINGLY, AS SUGGESTED IN OUR LETTER DATED 19.4. 2006, OUT OF THE ADVANCE REVENUES RECEIVED DURING THE PREVIOU S YEAR RELEVANT TO THE ASSESSMENT YEAR 2004-05 AMOUNTING T O US DOLLARS 23,08,797.84 CONVERTED TO INDIAN RUPEES @ R S. 43.39 TO A US DOLLAR AT RS. 10,01,78,738/-, 8/52 PARTS TH EREOF AMOUNTING TO RS. 1,54,12,114/- IS ALLOCATED FOR APP ROPRIATION OF PROFITS OF THE CURRENT PREVIOUS YEAR RELEVANT TO THE ASSESSMENT 2004-05. TO IT IS BEING ADDED THE RUPEE EQUIVALENT OF ANOTHER BUSINESS RECEIPT OF GB POUNDS 502/- CONVERTED @ RS. 78.65 TO A GB POUND, WHICH WORKS OU T TO RS. 39,482/-. AGAINST THESE REVENUES, NO EXPENSES ARE C LAIMED. THE SINCE DISCLOSED INCOME, WHICH WAS OMITTED BE IN CLUDED IN THE ORIGINAL RETURN OF OUR INCOME DUE TO A MISCONCE PTION ALREADY EXPLAINED ON RECORD, ACCORDINGLY WORKS OUT AS UNDER: ADVANCE REVENUES RECEIVED DURING THE CURRENT YEAR 10,01,7 8,738 ALLOCATED TO CURRENT YEAR & APPROPRIATED TO ITS PROFIT (8/52 PARTS) 1,54,12,114 ADD: OTHER UNACCOUNTED RECEIPTS 39,482 TOTAL CURRENT REVENUES 15,54,51,596 LESS DEDUCTION ON ACCOUNT OF EXPENSES NIL NET INCOME SINCE DISCLOSED IN THIS RETURN OF INCOME 1,54,51,596 UN-APPROPRIATED ADVANCE REVENUES RECEIVED IN PREVIO US YEARS 2003-04, WHICH IS CARRIED OVER FOR ALLOCATION AND APPROPRIATION TO COMPUTE THE PROFITS OF SUBSEQUENT PREVIOUS YEAR WORKS OUT AS UNDER: ADVANCE REVENUES RECEIVED DURING THE CURRENT YEAR 10,01,78,738 LESS: ALLOCATED TO CURRENT YEAR & APPROPRIA TED ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS TO ITS PROFIT (8/52 PARTS) 1,54,12,114 UN-APPROPRIATED ADVANCE REVENUE C/F TO A.Y.2005-06 8,47,66,624 RESERVATION: THE INCLUSION OF SINCE DISCLOSED INCOME IN THIS COM PUTATION OF OUR TOTAL INCOME ON THE BASIS INDICATED HEREINABOVE IS WITHOUT PREJUDICE TO ANY OTHER GAD AVAILABLE TO US, OR, AS MAY BE NECESSITATED BY THE CIRCUMSTANCES DEVELOPING DUR ING THE PERIOD THE ASSESSMENT/APPELLATE PROCEEDINGS MAY CON TINUE. 5.2 THEREAFTER, ON 12.02.2007 THE ASSESSEE FILED ANOTHE R REVISED RETURN OF INCOME SHOWING TOTAL INCOME OF RS. 10,80, 57,290/- BY INCLUDING ADDITIONAL INCOME REPRESENTED BY THE DEPO SITS IN THEIR BANK ACCOUNTS MAINTAINED WITH THE NATWEST BANK AT L ONDON. AN EXPLANATORY NOTE WAS ALSO ATTACHED WITH THE SAID RE TURN FILED ON 12.02.2007 WHICH READ AS UNDER: THE ASSESSEE NAMED ABOVE HAD FURNISHED A INCOME TA X ORIGINAL RETURN ON 31.10.04 DISCLOSING AN INCOME OF RS. 31,77,400/-. HOWEVER THE SAID RETURN OF INCOME WAS REVISED ON 21.06.06, WHEREIN INCOME WAS DECLARED AT RS. 1,86,28,990/- IN RESPECT TO NOTICE DATED 22.05.06 U /S 148 OF THE ACT, 1961. THE AFORESAID RETURN WAS FILED ALONG WITH AN EXPLANATORY NOTE, WHICH READS AS UNDER:- NOT REPEATED AS THE SAME IS EXTRACTED IN PARA 7.1. 2. IT WILL BE SEEN THAT, IN THE AFORESAID EXPLANATO RY NOTE, THE ASSESSEE COMPANY ON BASIS OF THE INTERPRETATION OF THE AGREEMENT DATED 23.07.2003 AND, THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF OTIS ELEVATOR S V DCIT REPORTED IN 99 ITD 135, WAS ADVISED BY SH. GIRISH S HUKLA, ADVOCATE THAT THE ENTIRE SUM RECEIVED IN THE INSTAN T ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ASSESSMENT YEAR, CANNOT BE SAID TO HAVE ACCRUED IN THE INSTANT YEAR AND, WOULD ONLY ACCURE, IN THE PREVIOU S YEARS RELATING IN THE ASSTT. YEARS 2004-05, 2005-06, 2006 -07, 2007-08 AND 2008-09 ON PROPORTIONATE BASIS AND HENC E THE RECEIPT BY ITSELF IS NOT IN THE NATURE OF INCOME FO R THE ASSTT. YEARS 2004-05, 2005-06, 2006-07, 2007-08 AND 2008-0 9. HOWEVER, THE ASSESSEE COMPANY WOULD HAVE NO OBJECTI ON, IF THE AFORESAID SUM IS BROUGHT TO TAX IN THE INSTANT YEAR. 3. THEREFORE ENTIRE RECEIPT RECEIVED DURING THE YEA R OF RS. 10,48,44,798.60 UNDER THE AGREEMENT DATED 23.07.03 WITH M/S T P E, RUSSIA (COPY OF WHICH IS ENCLOSED AS ANN EXURE-I) MAY CONSIDERED TO BE TAXED AS INCOME OF THE INSTANT ASSESSMENT YEAR, DESPITE THE FACT THAT SH. GIRISH S HUKLA IN HIS OPINION, WHILE FILING RETURN OF INCOME, ON HIS INTERPRETATION WAS OF THE OPINION THAT SINE THE ENTIRE RECEIPT HAD NOT YET ACCRUED AND HAS NOT YET ATTAINED THE CHARACTER OF I NCOME AND, IS THUS NOT INCOME FOR THE INSTANT ASSTT. YEAR . SINCE THE ASSESSEE COMPANY MAY HAVE NO OBJECTION OF INCLUDING THE ENTIRE RECEIPT AS INCOME, IT ONLY SEEKS TO PRAY A D EDUCTION OF 15% OF TOTAL RECEIPTS TO BE ALLOWED AS DEDUCTION, K EEPING IN VIEW OF THE PRINCIPLE LAID DOWN BY THE APEX COURT I N THE CASE OF CALCUTTA CO. LTD. VS CIT, 37 ITR 1. PERUSAL OF C LAUSE 2 OF THE AGREEMENT SHOWS THAT THE ASSESSEE COMPANY HAS T O DISCHARGE SEVERAL OBLIGATIONS WHICH HAS BEEN SPECIF IED THEREIN. IT IS THEREFORE, NOT JUSTIFIABLE TO TAX TH E ENTIRE RECEIPT AS INCOME IN THE INSTANT YEAR AND NOT TO ALLOW ANY DEDUCTION WHATSOEVER FROM GROSS RECEIPTS. THE ASSESSEE HOWEVE R, IS WILLING TO PAY TAX ON THE ENTIRE RECEIPTS, SUBJECT TO AFORESAID CLAIM. DETAILS OF THE INCOME RECEIVED BY THE ASSESS EE UNDER THE AGREEMENT DATED 23.07.03 WITH M/S T P E, RUSSIA ARE ENCLOSED AS ANNEXURE II TO THIS RETURN OF INCOME. IT MAY BE CLARIFIED HERE THAT ASSESSEE COMPANY HAD EARLIER CO MPUTED THE REVENUES RECEIVED DURING THE YEAR AT RS. 10,01, 78,738/- ON THE BASIS OF EXCHANGE RATE PREVAILING AT THE END OF THE YEAR ON THE BASIS OF RULE 115A OF THE INCOME TAX ACT. TH E AFORESAID SUM HAS HOWEVER NOW BEEN ADOPTED, WHICH A RE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS NOW COMPUTED AT RS. 10,48,44,798.60. THIS DIFFERENC E IS ON ACCOUNT OF THE FACT THAT THE ASSESSEE COMPANY HAD E ARLIER ADOPTED THE EXCHANGE RATES PREVAILING AT THE END OF THE YEAR I.E. 31.03.04 INSTEAD OF EXCHANGE RATE ON THE DATE OF CREDIT IN THE ACCOUNT. IT WOULD BE SEEN THAT THE TOTAL CREDIT IN THE BANK AT LONDON IS IN DOLLARS/STERLING POUNDS & SINCE THE AMOUNT HAVE ACTUALLY BEEN RECEIVED, ITIS THE EXCHANGE RATE OF THE DATE OF RECEIPT WHICH IS TO BE ADOPTED FOR DECLARING THE TOTAL INCOME. SINCE NATWEST BANK STATEMENTS HAVE NOT BEEN RECEIVED IN SPITE OF REPEATED REQUESTS AS MUCH THE AMOUNT ARE APPROXIMATE ACCORDING TO TPE REMITTANCE MADE FR OM MOSCOW (RUSSIA). THUS, AS A RESULT, THE INCOME OFFE RED UNDER TPE AGREEMENT EARLIER AT AN INCOME OF RS. 1,54,51,5 96/- NOW STANDS ENHANCED TO RS. 10,48,44,798.60. APART THERE FROM THE ASSESSEE COMPANY IS OFFERING INCOME OF RS. 37,8 66.73 REPRESENTING THE BANK INTEREST/OTHER RECEIPTS CREDI TED IN THE ACCOUNT MAINTAINED BY THE ASSESSEE COMPANY AT LONDO N. THE DETAILS OF SUCH INCOME ARE PLACED AS ANNEXURE-III ACCORDINGLY, TOTAL INCOME OFFERED BY ASSESSEE COMPA NY AS A RESULT OF AN AGREEMENT WITH TPE, RUSSIA AND OTHER R ECEIPTS IS RS. 10,48,82,665.33 AS WOULD BE SEEN FROM REVISED P ROFIT AND LOSS ACCOUNT ENCLOSED AS ANNEXURE-IV. 4. FROM THE AFORESAID INCOME, THE ASSESSEE COMPANY HAS CLAIMED A DEDUCTION OF RS. 2,776.07 REPRESENTING TH E BANK CHARGES DEBITED BY THE BANK. THE DETAILS OF SUCH CH ARGES ARE ENCLOSED AS ANNEXURE-V. 5. ACCORDINGLY THE NET INCOME OF RS. 10,48,79,889.2 6 IS BEING OFFERED IN THE INSTANT REVISED RETURN OF INCO ME. THE REVISED PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL Y EAR 2003-04 IS ALSO ENCLOSED AS ANNEXURE-IV. 6. APART FROM ABOVE, FOLLOWING DOCUMENTS ARE ENCLOS ED WITH THIS RETURN OF INCOME:- A. COPY OF ORIGINAL RETURN OF INCOME (ANNEXURE-VI) B. COPY OF ORIGINAL BALANCE SHEET, ORIGINAL PROFIT & L OSS ACCOUNT AND AUDITORS REPORT ALONGWITH ALL THE ANNEXURE (ANNEXURE-VII) ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS C. COPY OF TAX AUDIT REPORT (ANNEXURE-VIII) D. COPY OF RETURN OF INCOME FILED IN LIEU OF NOTICE U/ S 148 OF INCOME TAX ACT, 1961 (ANNEXURE-IX) E. COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT AS ON 31.03.06 ALONGWITH NOTES OF ACCOUNTS (ANNEXURE-X) 7. DETAILS OF TRAVELING AND LODGING OF ONE OF DIREC TOR OF THE ASSESSEE COMPANY, WHICH ARE SELF EXPLANATORY AR E ENCLOSED (ANNEXURE-XI) 8. IT IS PRAYED THAT TAX ON THE AFORESAID SUM MAY K INDLY BE COLLECTED FROM BANK ACCOUNT NO. 140-00-21000697 (CU RRENCY U. S. DOLLARS), 18009336 (CURRENCY G.B. POUNDS) WIT H NATWEST BANK, LONDON AND 1096-247000 DEUTSCHE BANK, ECE HOUSE, 28, KASTURBA GANDHI MARG, NEW DELHI-1100 01 OF THE ASSESSEE COMPANY, WHICH HAS BEEN PLACED UNDER ATTACHMENT, AT THE INSTANCE OF THE ORDER OF SPECIAL JUDE, CBI COURT, BEFORE WHOM, THE ASSESSEE IS ALSO MAKING A S EPARATE REQUEST. A COPY OF ORDER OF SPECIAL JUDGE, CBI COUR T IS ENCLOSED AS ANNEXURE XII) AND, INTIMATION THEREOF TO US BY THE BANK IS ENCLOSED AS ANNEXURE XIII. 9. THE INTEREST OF 234B AND 234C OF THE ACT HAS BEE N COMPUTED BY THE ASSESSEE WITH A RIGHT OF WAIVER AVA ILABLE TO ASSESSEE UNDER THE ACT. 5.3 LIKEWISE, ASSESSMENT PROCEEDINGS WERE ALSO COMMENC ED FOR AY 2005-06 BY ISSUE OF A NOTICE U/S 143(2) OF THE A CT DATED 25.07.2006. THE ASSESSEE FURNISHED A REVISED RETURN OF INCOME ON 21.08.2006 DECLARING TOTAL INCOME AT RS. 3,90,10 ,580/- INCLUDING INCOME STATED TO HAVE BEEN EARNED FROM PR OVIDING SUPPORT SERVICES TO M/S. TPE. THE SAID RETURN OF IN COME WAS AGAIN REVISED ON 12.02.2007 DECLARING TOTAL INCOME OF RS. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 4,60,13,040/-. BOTH THE ABOVE RETURNS OF INCOME WER E APPENDED WITH EXPLANATORY NOTES WHICH ARE ALMOST IDENTICAL T O THE EXPLANATORY NOTES APPENDED WITH THE RETURNS FOR AY 2004-05. 5.4 IN A NUTSHELL THE UNDISPUTED POSITION IS AS UNDER: SR. NO. PARTICULARS ASSESSMENT YEAR 2004 - 05 2005 - 06 1 INCOME ORIGINALLY DECLARED (A) 31,77,400/ - 49,97,160/ - 2 INCOME DECLARED IN RETURN FILED ON 21.06.2006 IN RESPONSE TO NOTICE U/S 148 OF THE ACT DATED 22.05.2006 FOR AY 2004-05 AND, RETURN FILED ON 21.08.2006 FOR AY 2005-06 (B) 1,86,28,990/ - 3,90,10,580/ - 3 ADDITIONAL INCOME DECLARED INCLUDING INCOME STATED TO BE FROM PROVIDING SUPPORT SERVICES TO TPE (C)=(B) - (A) 1,54,51,590/ - 3,40,13,420/ - 4 INCOME DECLARED IN RETURN OF INCOME FILED ON 12.02.2007 (D) 10,80,57,290/ - 4,60,13,040/ - 5 NET ADDITIONAL INCOME (E)=(D) - (A) 1048,79,890/ - 4,10,15,880/ - 6 NATURE OF INCOME I) REVENUE RECEIVED FROM M/S TPE 10,48,44,798/ - 4,10,20,997/ - II) INDIAN INTEREST INCOME 37,867/ - 611/ - A) LESS: BANK CHARGES 2,776/ - 5,726/ - III) TOTAL 10,48,79,889/ - 4,10,15,882/ - ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 5.5 IN THE IMPUGNED ASSESSMENT ORDERS U/S 143(3)/147 FO R AY 2004-05 AND, U/S 143(3) OF THE ACT FOR AY 2005-06 T HE AO DETERMINED TOTAL INCOME OF THE ASSESSEE FOR THE YEA RS UNDER CONSIDERATION AS UNDER: SR.NO. PARTICULARS ASSESSMENT YEAR 2004 - 05 2005 - 06 1 TOTAL INCOME ASSESSED 10,81,70,065/ - 4,62,49,650/ - 2 TOTAL ADDITION MADE 1,12,775/ - 2,36,610/ - 3 NATURE OF ADDITIONS I) DISALLOWANCE OUT OF EXPENDITURE INCURRED 1,00,000/ - 2,30,882.05/ - II) DISALLOWANCE OUT OF BUSINESS EXPENDITURE U/S 14A 10,000/ - ------ III) DISALLOWANCE OF BANK CHARGES 2,776/ - 5,726.12 5.6 DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE, VI DE LETTER DATED 28.05.2008, FILED APPLICATION FOR ADMISSION O F ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME TAX RULE, 19 62 AND ALSO FILED WRITTEN SUBMISSIONS VIDE LETTER DATED 03.06.2 008. THE AO, (ACIT, CIRCLE 15(1)/ADDL. CIT) SUBMITTED THE REMAND REPORT ON THE WRITTEN SUBMISSIONS VIDE LETTER DATED ADDL. CIT /R-15/2008- 09/1319 DATED 15.10.2008. THE ASSESSEE FILED THE RE PLY TO THE ABOVE REPORT OF THE AO VIDE TWO SEPARATE LETTERS DA TED 15.02.2010. THE LEARNED CIT (APPEALS), ALTHOUGH ADM ITTED THE ADDITIONAL EVIDENCE; HOWEVER ON MERITS OF THE ISSUE HE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS SUBSTANTIALLY DISMISSED THE APPEALS AND NOW THE ASS ESSEE HAS APPROACHED THE ITAT AGAINST THE DISMISSAL OF THE AP PEALS BY THE LD. CIT (A). 6. THE LD. AR SUBMITTED THAT GROUND NOS. 1 TO 1.4 FOR AY 2004-05 AND 2005-06 PERTAIN TO CLAIM OF THE ASSESSE E THAT THE INCOME DECLARED BY THE ASSESSEE COMPANY RELATING TO THE RECEIPTS FROM M/S. TPE, A SEMI-GOVERNMENT COMPANY INCORPORAT ED IN RUSSIA AND, CREDITED IN NATWEST BANK ACCOUNT, LONDO N WAS VOLUNTARY. THE LD. AR SUBMITTED THAT THE ASSESSE E HAD MAINTAINED TWO ACCOUNTS WITH THE NATWEST BANK, LOND ON BEARING ACCOUNT NOS. 140-00-21000697 (US DOLLAR ACCOUNT) AN D 18009336 (POUND STERLING ACCOUNT). THE ASSESSEE DID NOT DISCLOSE THE ABOVE BANK ACCOUNT AND ANY INCOME IN RESPECT OF THE RECEIPTS IN THE SAID ACCOUNTS IN THE ORIGINAL RETURNS OF INC OME FILED FOR BOTH THE ASSESSMENT YEARS. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE SUO MOTO AND VOLUNTARILY FILED A LETTER DATED 1.4.2006 BEFORE THE AO INDICATING ITS WILLINGNESS TO DISCHAR GE THE TAX LIABILITY IN RESPECT OF THE CREDITS IN THE AFORESAI D BANK ACCOUNTS. 6.1 THE LD. AR FURTHER SUBMITTED THAT, VIDE LETTERS DAT ED 11.04.2006, 19.04.2006, 21.04.2006, 22.04.2006, 27. 04.2006 AND 20.05.2006, THE ASSESSEE FURNISHED SUMMARIES OF ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS TRANSACTIONS IN THE ABOVE TWO BANK ACCOUNTS INDICAT ING THE TOTAL AMOUNTS RECEIVED THEREIN AND THE INTEREST ACCRUING IN THE SAID BANK ACCOUNTS AS WELL AS THE OUTGOINGS FROM THE ABO VE BANK ACCOUNTS INCLUDING THE BANK CHARGES. THE ASSESSEE A LSO COMPUTED THE RESULTANT SURPLUS/DEFICIT IN RESPECT O F BOTH THE FINANCIAL YEARS 2003-04 AND 2004-05. IT WAS SUBMITT ED THAT THE DETAILS, AS FURNISHED TO THE AO, WERE BASED ON THE ENTRIES IN THE JOURNAL MAINTAINED BY THE ASSESSEE AND THE FIGURES REPORTED WERE SUBJECT TO CORRECTION WITH REFERENCE TO THE BANK AC COUNT STATEMENTS WHICH THE ASSESSEE WAS STILL IN THE PROC ESS OF OBTAINING FROM THE BANK. THE LD. AR VEHEMENTLY SUBM ITTED THAT UNDER THE CIRCUMSTANCES, THE INCOME DECLARED IN TH E RETURNS FILED BY THE ASSESSEE FIRSTLY ON 21.06.2006 FOR AY 2004-05 AND 21.08.2006 FOR AY 2005-06 AND THEREAFTER ON 12.02.2 007 IN RESPECT OF THE DEPOSITS IN THE BANK ACCOUNTS ARE PR IOR TO DETECTION BY THE REVENUE AND ARE VOLUNTARY IN NATUR E. 6.2 THE LD. AR FURTHER SUBMITTED THAT THE AO DID NOT A CCEPT THE CLAIM ESSENTIALLY ON THE GROUND THAT A CRIMINAL CAS E, VIDE FIR RC- DAI/2006-A-0006 DATED 6.3.2006, WAS REGISTERED UNDE R THE INDIAN PENAL CODE AND UNDER PREVENTION OF CORRUPTIO N ACT, 1988 AGAINST UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHE RS WHICH WAS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS PRIOR TO THE LETTERS DATED 1.4.2006 TO 11.4.2006 FI LED BY THE ASSESSEE COMPANY. THE LD. CIT (A) ALSO REJECTED THE CLAIM OF THE ASSESSEE. 7. THE LD. AR ALSO FILED WRITTEN SUBMISSIONS WHICH AR E BEING REPRODUCED FOR A READY REFERENCE: 1. IT IS SUBMITTED THAT INITIATION OF THE PROCEED INGS UNDER SECTION 147 OF THE ACT ON 22.5.2006 (KINDLY SEE REA SONS RECORDED AT PAGE 43 TO 44 OF PB I) WERE ITSELF BA SED ON THE DISCLOSURE MADE BY THE APPELLANT IN THE LETTERS DAT ED 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.200 6, 27.4.2006, 23.5.2006 (KINDLY SEE PAGES 26 TO 41A OF PB I) AND THEREFORE, THE CONCLUSION THAT, THE INCOME DECL ARED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT AND, IN THE REVISED RETURN FILED ON 12. 2.2007 (KINDLY SEE PAGES 52 TO 66 OF PB I) WAS NOT VOLUN TARY, IS WHOLLY MISCONCEIVED AND MISPLACED AND CONTRARY TO T HE FACTS AND CIRCUMSTANCES OF THE CASE AND SETTLED INTERPRET ATION OF LAW AND, THEREFORE, UNSUSTAINABLE. 2. IT IS SUBMITTED THAT, LEARNED ADDITIONAL COMMISS IONER OF INCOME TAX HAS FAILED TO APPRECIATE THAT, SIX LETTE RS DECLARING THE RECEIPTS FROM M/S TPE IN NATWEST BANK ACCOUNT A S INCOME OF THE APPELLANT COMPANY WERE FILED VOLUNTAR ILY BY THE APPELLANT AND, WITHOUT ANY DETECTION OF INCOME BY T HE INCOME TAX DEPARTMENT. 3. IT IS FURTHER SUBMITTED THAT, THE FACT THAT A CR IMINAL CASE WAS REGISTERED UNDER INDIAN PENAL CODE AND PREVENTI ON OF CORRUPTION ACT AGAINST UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHERS ON 6.3.2006 (KINDLY SEE PAGES PG 160 TO 166 OF PB I) WAS NOT IN RESPECT OF THE CONTRACT ENTERED BY THE APPELLANT COMPANY WITH M/S TPE OR THE CONTRACT ENTE RED BY M/S TPE WITH M/S UTTAR PRADESH RAJIYA VIDYUT UTPADA N NIGAM LTD. AND THUS, THE SAME COULD NOT BE MADE A B ASIS TO ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS HOLD THAT, INCOME DECLARED BY THE ASSESSEE VIDE LET TERS DATED 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.200 6, 27.4.2006, 23.5.2006 AND, SUBSEQUENTLY IN RETURN OF INCOME DATED 21.6.2006 AND, 12.2.2007 WAS NOT VOLUNTARY. IT MAY BE STATED HERE THAT, ENTIRE INCOME AS ACCRUING TO M /S RAPL ON THE BASIS OF ITS CONTRACT WITH M/S TPE AND, CONT RACT OF M/S TPE WITH M/S NTPC HAS BEEN DECLARED BY M/S RAPL IN A.Y. 2006-2007. INFACT, THIS SUBMISSION HAS ALSO NOT EVE N BEEN SPECIFICALLY DISPUTED BY THE LEARNED AO (SEE REPLY DATED 12.7.2007 (PAGES 201 TO 219 OF PB-I AT PAGE 206 TO 213)) 4. LASTLY, THE AFORESAID INCOME WAS NOT DECLARED BY THE APPELLANT IN THE ORIGINAL RETURN OF INCOME ONLY BEC AUSE IT WAS OF THE OPINION THAT INCOME WAS NOT TAXABLE UNDER TH E ACT AND SOON IT CAME TO KNOW OF HER OBLIGATION, THE APPELLA NT HAD DULY DECLARED SUCH INCOME IN THE SEVEN LETTERS DATED 1.4 .2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.20 06, 23.5.2006 SEE JUDGMENT OF THE APEX COURT IN THE CAS E OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD. REPORTED IN 1 18 ITR 326.THIS IS ALSO EVIDENT FROM THE LETTERS DATED 27. 02.2006 AND, 6.03.2006 WRITTEN BY ASSESSEE-COMPANY TO SHRI GIRISH SHUKLA, ADVOCATE, COPIES OF WHICH ARE ENCLOSED AT P AGES 745 AND 746 OF PAPER BOOK-III. 5. EVEN OTHERWISE, AND WITHOUT PREJUDICE, ASSUMING FOR THE SAKE OF AN ARGUMENT AS HAS BEEN (ERRONEOUSLY) ASSUM ED BY THE LEARNED ASSESSING OFFICER THAT, THERE WAS DETEC TION OF INCOME BY THE CBI AND IT WAS ONLY ON ACCOUNT OF DET ECTION BY CBI THAT APPELLANT HAD DECLARED SUCH INCOME FIRSTLY IN THE LETTER DATED 1.4.2006 AND THEREAFTER, IN THE SEVEN LETTERS DATED 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 RETURN OF INCOME FI LED ON 12.02.2007, IT IS SUBMITTED THAT, THE SAME IS TOO M ISPLACED SINCE VIZ-A-VIZ THE DEPARTMENT, INCOME IN ANY CASE WAS DECLARED VOLUNTARILY BY THE ASSESSEE. RELIANCE IS P LACED ON THE FOLLOWING: A) BHAIRAV LAL VERMA VS. UNION OF INDIA REPORTED IN 230 ITR 855 (ALLAHABAD) ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS B) K.L. SWAMY V. CIT REPORTED IN 239 ITR 386 (MAD) C) SMT. SHANTHA DEVI V. WTO, (1980) 121 ITR 703 (KA RN) D) A.N. SARVARIA V. CWT (1986) 158 ITR 803 (DEL) 6. THE LEARNED CIT (A) HAS FAILED TO APPRECIATE T HAT, THE FACT THAT A CRIMINAL CASE WAS REGISTERED UNDER INDI AN PENAL CODE AND PREVENTION OF CORRUPTION ACT AGAINST UNKNO WN OFFICIALS OF NTPC OF INDIA AND OTHERS ON 6.3.2006 W AS NOT IN RESPECT OF THE CONTRACT ENTERED BY THE APPELLANT CO MPANY WITH M/S TPE OR THE CONTRACT ENTERED BY M/S TPE WITH M/S UTTAR PRADESH RAJIYA VIDYUT UTPADAN NIGAM LTD. AND THUS, THE SAME COULD NOT BE MADE A BASIS TO HOLD THAT, INCOME DECLARED BY THE ASSESSEE VIDE LETTERS DATED 1.4.2006, 11.4.2 006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.20 06 AND, SUBSEQUENTLY IN RETURN OF INCOME DATED 21.6.2006 AN D, 12.2.2007 WAS NOT VOLUNTARY. 7. IT WILL BE SEEN FROM THE READING OF THE AFORESAI D, THAT THE SAID FIR WAS IN RESPECT OF A CONTRACT BETWEEN M/S N ATIONAL THERMAL POWER CORPORATION (HEREINAFTER REFERRED TO AS NTPC) AND M/S TPE (HEREINAFTER REFERED TO AS TPE) MOSCO W AND HAS NOTHING TO DO WITH THE APPELLANT COMPANY. IT I S SUBMITTED THAT, ALLEGATIONS IN THE AFORESAID LETTER OF ROGATORY ARE NOT IN RESPECT OF ANY CONTRACT OF THE APPELLANT EITHER WITH M/S TPE OR CONTRACT OF M/S TPE WITH M/S UTTAR PRADE SH RAJIYA VIDYUT UTPADAN NIGAM LTD. (HEREINAFTER REFER RED TO AS UPRVUNL). IT MAY BE PERTINENT TO STATE HERE THAT APPELLANT COMPANY HAS A CONTRACT WITH M/S TPE IN RESPECT OF AGREEMENT OF TPE WITH NTPC. NO RECEIPTS HAVE BEEN R ECEIVED IN THE INSTANT YEAR IN RESPECT OF SUCH CONTRACTS. I N FACT, THE ENTIRE INCOME DECLARED BY THE ASSESSEE IN THE INSTA NT YEAR IS IN RESPECT OF AGREEMENT WITH M/S TPE FOR SERVICES T O BE PROVIDED IN RESPECT OF CONTRACT OF M/S TPE WITH M/S UPRVUNL. IT IS THUS SUBMITTED THAT, THE AFORESAID A LLEGATIONS HAVE NOTHING TO DO WITH THE INCOME RECEIVED BY THE APPELLANT IN THE INSTANT YEAR. IT MAY BE STATED HERE THAT, EN TIRE INCOME AS ACCRUING TO M/S RAPL ON THE BASIS OF ITS CONTRAC T WITH M/S TPE AND, CONTRACT OF M/S TPE WITH M/S NTPC HAS BEEN ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS DECLARED BY M/S RAPL IN A.Y. 2006-2007. A COPY OF T HE RETURN OF INCOME FILED BY M/S RAPL FOR A.Y. 2006-20 07 IS PLACED AT PAGES 644 TO 752 OF PB-III. INFACT, THIS SUBMISSION HAS ALSO NOT EVEN BEEN SPECIFICALLY DISPUTED BY THE LEARNED AO. IT IS SUBMITTED THAT, APPELLANT IN THE COURSE O F ASSESSMENT PROCEEDINGS HAD SUBMITTED THE SAME, IN I TS REPLY DATED 12.2.2007 (PAGES 51 TO 66 OF PB-I). 8. THE APPELLANT EVEN OTHERWISE, AND WITHOUT PREJUD ICE FURTHER SUBMITS THAT, ASSUMING FOR THE SAKE OF AN A RGUMENT AS HAS BEEN (ERRONEOUSLY) ASSUMED BY THE LEARNED AS SESSING OFFICER THAT, THERE WAS DETECTION OF INCOME BY THE CBI AND IT WAS ONLY ON ACCOUNT OF DETECTION BY CBI THAT APPELL ANT HAD DECLARED SUCH INCOME FIRSTLY IN THE LETTER DATED 1. 4.2006 AND THEREAFTER, IN THE SEVEN LETTERS DATED 1.4.2006, 11 .4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.20 06 RETURN OF INCOME FILED ON 2.8.2007. IT IS SUBMITTED THAT, EVEN THIS HIGHLY ARBITRARY HYPOTHESIS OF THE LEARNED ASS ESSING OFFICER IS LEGALLY UNSUSTAINABLE. IT IS SUBMITTED T HAT, TO DETERMINE AS TO WHETHER INCOME DECLARED BY THE ASSE SSEE IN THE RETURN OF INCOME WAS NOT VOLUNTARY OR NOT, WHAT HAS TO BE SEEN IS, WHETHER THE INCOME WAS DETECTED BY THE LEA RNED AO OR WHETHER THE SAME WAS VOLUNTARILY OFFERED BY THE APPELLANT AND, NOT THAT, IT WAS ALLEGEDLY DETECTED BY CBI. I N THE INSTANT CASE, IT IS NOT IN DISPUTE THAT, LEARNED OFFICER HA D NOT DETECTED SUCH INCOME BUT IT IS A CASE, WHERE INCOME WAS VOLU NTARILY OFFERED BY THE APPELLANT. IT IS SUBMITTED THAT, MER E FACT THAT CBI HAD ALLEGEDLY DETECTED SUCH INCOME THOUGH THERE IS NO EVIDENCE TO THAT EFFECT TOO, YET THE SAME CANNOT IN LAW STILL BE MADE A BASIS TO HOLD THAT, RETURN OF INCOME FILED B Y THE ASSESSEE WAS NOT VOLUNTARY. 9. THAT FURTHER, IN REBUTTAL TO THE COMMENTS SO MAD E BY THE LEARNED AO IN ITS REMAND REPORT DATED 15.10.2008 (A T PAGES 25 TO 27 OF CIT (A)S ORDER AND SO RELIED ON BY LEA RNED CIT (A) (AT PAGE 31 OF CIT (A)S ORDER), IT IS SUBMITTED AS FOLLOWS: 9.1 THAT BARE PERUSAL OF COMMENTS OF LEARNED AO IN THE REMAND REPORT WOULD SHOW THAT, REVENUE IN NO MANNER HAS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ESTABLISHED THAT, DECLARATION OF INCOME BY THE ASSE SSEE IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 WAS NO T VOLUNTARY. IN FACT, A CURSORY LOOK OF THE COMMENTS WOULD ALSO SHOW THAT, THE LEARNED OFFICER AND CIT (A), THOUGH HAS DEVOTED AS MANY AS 8 PAGES, BUT IN DOING SO, IN THE RESPECTFUL SUBMISSION OF APPELLANT THE LEARNED OFFI CER APPEARS TO HAVE MISDIRECTED HIMSELF AND, OVERLOOKED THE FAC TUAL SUBSTRATUM OF THE CASE. 9.2 IT IS SUBMITTED THAT, THE AFORESAID CONCLUSION OF THE REVENUE IS ESSENTIALLY BASED ON THE ERRONEOUS ASSUM PTION THAT, THE RETURN OF INCOME WAS FILED AFTER THE ACTI ON WAS TAKEN BY CBI. IT IS SUBMITTED THAT, IT IS A MATTER OF REC ORD THAT, NO ACTION WHATSOEVER HAD BEEN TAKEN BY CBI IN RESPECT OF THE SUM RECEIVED AND, CREDITED TO BANK ACCOUNT IN THE I NSTANT ASSESSMENT YEAR. IN FACT, IT IS SUBMITTED THAT, A C RIMINAL CASE REGISTERED UNDER THE INDIAN PENAL CODE AND THE PREV ENTION OF CORRUPTION ACT AGAINST UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHERS. 9.3 IT WILL BE THEREFORE SEEN FROM THE READING OF T HE AFORESAID FIR/ LETTER OF ROGATORY THAT THIS WAS IN RESPECT OF A CONTRACT BETWEEN M/S NATIONAL THERMAL POWER CORPORA TION (HEREINAFTER REFERRED TO AS NTPC) AND M/S TPE (HE REINAFTER REFERED TO AS TPE) MOSCOW AND HAS NOTHING TO DO W ITH THE APPELLANT COMPANY. IT IS SUBMITTED THAT, ALLEGATIO NS IN THE AFORESAID LETTER OF ROGATORY ARE NOT IN RESPECT OF ANY CONTRACT OF THE APPELLANT EITHER WITH M/S TPE OR CONTRACT OF M/S TPE WITH M/S UTTAR PRADESH RAJIYA VIDYUT UTPADAN NIGAM LTD. (HEREINAFTER REFERRED TO AS UPRVUNL). IT MAY BE P ERTINENT TO STATE HERE THAT APPELLANT COMPANY HAS A CONTRACT WI TH M/S TPE IN RESPECT OF AGREEMENT OF TPE WITH NTPC. NO RE CEIPTS HAVE BEEN RECEIVED IN THE INSTANT YEAR IN RESPECT O F SUCH CONTRACTS. IN FACT, THE ENTIRE INCOME DECLARED BY T HE ASSESSEE IN THE INSTANT YEAR IS IN RESPECT OF AGREEMENT WITH M/S TPE FOR SERVICES TO BE PROVIDED IN RESPECT OF CONTRACT OF M/S TPE WITH M/S UPRVUNL. IT IS THUS SUBMITTED THAT, THE AF ORESAID ALLEGATIONS HAVE NOTHING TO DO WITH THE INCOME RECE IVED BY ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS THE APPELLANT IN THE INSTANT YEAR. IT MAY BE STATED HERE THAT, ENTIRE INCOME AS ACCRUING TO M/S RAPL ON THE BASIS OF ITS CONTRACT WITH M/S TPE AND, CONTRACT OF M/S TPE WITH M/S NTPC HAS BEEN DECLARED BY M/S RAPL IN A.Y. 2006-200 7. IN FACT, THIS SUBMISSION HAS ALSO NOT EVEN BEEN SPECIF ICALLY DISPUTED BY THE LEARNED AO. IT IS SUBMITTED THAT, A PPELLANT IN THE COURSE OF ASSESSMENT PROCEEDINGS HAD STATED THE ABOVE SUBMISSIONS EVEN IN REPLY DATED 12.7.2007 (PAGES 20 1 TO 219 OF PB-I AT PAGE 206 TO 213), WHICH HAVE NOT BEE N SHOWN TO BE INCORRECT IN ANY MANNER. IN FACT, THE LEARNE D ASSESSING OFFICER HAS NOT EVEN MADE ANY COMMENTS IN THIS REGA RD. 9.4. THE LEARNED OFFICER IN THIS CONTEXT HAS HELD T HAT APPELLANT CANNOT TAKE THE PLEA OF IGNORANCE OF LAW BECAUSE THE APPELLANT COMPANY FILING ITS REGULAR RETURN OF INCOME AND ALSO DERIVING INCOME FROM CONSULTANCY. IT IS SUBMIT TED THAT, SUCH AN OBSERVATION IS CONTRARY TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS C O. LTD. REPORTED IN 118 ITR 326, WHEREIN IT WAS HELD AS UND ER: . 9.5 IT IS FURTHER SUBMITTED THAT, THE LEARNED AO IS FAC TUALLY INCORRECT TO SUGGEST THAT, APPELLANT CAME TO KNOW O F THE TAX LIABILITY IN MAY2003. IN FACT, THE APPELLANT HAS C ONSISTENTLY STATED THAT, SHE BECAME AWARE OF THE TAX LIABILITIE S ONLY IN FEBRUARY2006. THIS WOULD BE EVIDENT FROM THE FIRST LETTER WRITTEN ON 1.04.2006 AND, THEREAFTER IN VARIOUS REP LIES FURNISHED TO THE LEARNED AO. IT IS FURTHER SUBMITTE D THAT, MERE MIS-INTERPRETATION OF THE STATUTORY PROVISIONS CANN OT LEAD TO AN ASSUMPTION ABOVE LACK OF BONAFIDES OF THE ASSESS EE. THE ASSESSEE SEEKS TO FURTHER CLARIFY HERE THAT, IN THE PRECEDING YEARS, THE ASSESSEE DID NOT INCLUDE ANY INCOME CRED ITED IN THE BANK ACCOUNT AT LONDON, AS ACCORDING TO THE OPI NION OF THE ASSESSEE, THE SAME WAS EARNED OUTSIDE INDIA AND , THEREFORE NOT TAXABLE IN INDIA. THIS IS ALSO EVIDEN T FROM THE LETTERS DATED 27.02.2006 AND, 6.03.2006 WRITTEN BY ASSESSEE-COMPANY TO SHRI GIRISH SHUKLA, ADVOCATE, C OPIES OF WHICH ARE ENCLOSED AT PAGES 745 AND 746 OF THE PAPE R BOOK- ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS III. IN FACT, IN THE LETTER DATED 27.2.2006 WRITT EN BY THE ASSESSEE TO MR. GIRISH SHUKLA, IT HAS BEEN STATED A S UNDER: 9.6 IT IS FURTHER MOST RESPECTFULLY SUBMITTED THAT, THE OBSERVATION THAT THE ASSESSEE HAD BEEN PROVIDING SE RVICES SINCE 1995 AND, THE ASSESSEE HAD NOT OFFERED ANY IN COME AS AND WHEN IT ACCRUE TILL 1.4.2006 GOES TO SUPPORT TH E CONTENTION THAT IT WAS ONLY ON DISCUSSION WITH SH. RAM JETHMALANI, SENIOR ADVOCATE, THE ASSESSEE CAME TO K NOW OF HER OBLIGATION UNDER THE STATUTORY PROVISIONS OF TH E ACT AND, TAX LIABILITY ON SUCH INCOME. IT IS SUBMITTED THAT, THE SITUATION WOULD HAVE BEEN ENTIRELY DIFFERENT HAD ASSESSEE OFF ERED ANY SUCH INCOME PRIOR TO 1.4.2006 AND, THE INCOME DECLA RED BY THE ASSESSEE IN THE INSTANT YEAR WOULD NOT HAVE BEE N OFFERED. IT IS THUS A CLEAR CASE OF IGNORANCE OF LAW TILL 1. 4.2006, AS WOULD BE EVIDENT FROM DETAILED SUBMISSIONS MADE SEPARATELY. IT IS THUS SUBMITTED THAT, ONCE THE ASS ESSEE CAME TO KNOW OF HIS LIABILITY TO TAX, THE ASSESSEE VOLUN TARILY AND, OF ITS OWN FURNISHED THE RETURN OF INCOME. 9.7 IT IS FURTHER SUBMITTED THAT, VARIOUS OTHER REA SONS STATED IN PARAS (V) TO (XI) OF THE REMAND REPORT ARE WHOLL Y IRRELEVANT CONSIDERATION AND, IN NO MANNER SUGGEST OR ESTABLIS H FOR THAT MATTER THAT, INCOME DECLARED BY THE APPELLANT WAS N OT VOLUNTARY. IN FACT, IN MAKING THE ABOVE COMMENTS, T HE LEARNED OFFICER HAS FURTHER FAILED TO APPRECIATE THAT, TO D ETERMINE AS TO WHETHER INCOME DECLARED BY THE ASSESSEE IN THE RETU RN OF INCOME WAS NOT VOLUNTARY OR NOT, WHAT HAS TO BE SEE N IS, WHETHER THE INCOME WAS DETECTED BY THE LEARNED AO O R WHETHER THE SAME WAS VOLUNTARILY OFFERED BY THE APP ELLANT AND, NOT THAT, IT WAS ALLEGEDLY DETECTED BY CBI. I N THE INSTANT CASE, IT IS NOT IN DISPUTE THAT, LEARNED OFFICER HA D NOT DETECTED SUCH INCOME BUT IT IS A CASE, WHERE INCOME WAS VOLU NTARILY OFFERED BY THE APPELLANT, AS WOULD BE ALSO SEEN FRO M THE REASONS RECORDED AT PAGE 12 OF WRITTEN SUBMISSIONS. IT IS SUBMITTED THAT, MERE FACT THAT CBI HAD ALLEGEDLY DE TECTED SUCH INCOME THOUGH THERE IS NO EVIDENCES TO THAT EF FECT TOO, ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS YET THE SAME CANNOT IN LAW STILL BE MADE A BASIS TO HOLD THAT, RETURN OF INCOME FILED BY THE ASSESSEE WAS NOT VOLU NTARY. IN FACT, IF THE REASONS RECORDED ARE PERUSED, IT WILL BE SELF EVIDENT THAT, INITIATION OF PROCEEDINGS U/S 147 OF THE ACT AND, ASSESSMENT FRAMED ARE ONLY BASED ON THE LETTER OF T HE ASSESSEE FILED ON 11.04.2006 AND AS SUCH, BOTH LEGA LLY AND, LOGICALLY, IT OUGHT TO BE HELD THAT, DECLARATION OF INCOME WAS VOLUNTARY. THIS SUBMISSION IS ALSO SUPPORTED FROM ADMISSION MADE BY THE ASSESSING OFFICER WHEN HE STATES AT PAG ES 753 OF PAPER BOOK-III AS UNDER: THAT ON THE BASIS OF INFORMATION FURNISHED BY THE ASSESSEE THROUGH THESE LETTERS, THE AO ISSUED NOTICE U/S 148 ON 22.05.2006 DIRECTING THE ASSESSEE TO FURNISH A RETU RN OF INCOME AS IT WAS STATED THAT, INCOME OF THE ASSESSE E HAD ESCAPED ASSESSMENT. IN COMPLIANCE TO THIS NOTICE U /S 148, THE ASSESSEE FURNISHED RETURN ON INCOME ON 21.06.20 06 DECLARING AN INCOME OF RS. 1,86,28,990/- WHICH WAS DULY ACCOMPANIED BY COMPUTATION OF INCOME. THEREAFTER A GAIN, THE ASSESSEE REVISED ITS RETURN OF INCOME, WHICH WA S FILED ON 21.06.2006. IN RESPONSE TO SECTION 147/148 ON 12.0 2.2007 U/S 139(5) OF THE ACT. 10 IN VIEW OF THE REASONS STATED ABOVE, IT IS SUBM ITTED THAT, IT BE HELD THAT, INCOME DECLARED BY THE ASSESSEE RE LATING TO RECEIPTS FROM M/S TPE AND, CREDITED IN NATWEST BANK ACCOUNT AT LONDON IN THE ASSESSMENT YEARS 2004-05 A ND 2005-06 ARE VOLUNTARY. 8. ON THE OTHER HAND, THE LD. CIT DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND REQUESTED THAT THE CLAIM OF THE ASSESSEE BE REJECTED. IN THE WRITTEN SUBMISSIONS FI LED BY THE DEPARTMENT, IT WAS STATED AS UNDER: DURING THE HEARING PROCEEDINGS BEFORE HONBLE F-BE NCH, ITAT, DELHI ON 08.01.2008, THE LD. COUNSEL OF THE A SSESSEE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ARGUED THAT THE RETURN OF INCOME FILED BY THE APPEL LANT ON 12.02.2007 SHOULD BE ACCEPTED AS VALID, AND VOLUNTA RY RETURN OF INCOME. THE LD. COUNSEL OF APPELLANT FUR THER ARGUED THAT THE AO ISSUED NOTICE U/S 148 OF THE ACT BECAUS E OF THE LETTERS FILED BY THE ASSESSEE SHOWING ITS CREDIT EN TRIES IN THE NAT WEST BANK, LONDON. THAT THE APPELLANT HAD SUO- MOTTO COME FORWARD TO REVEAL ITS INCOME AND OFFERED THE S AME FOR TAXATION. IN THIS REGARDS, IT MAY BE MENTIONED THAT A CRIMINA L CASE VIDE FIR RC-DA/2006-A-2006, DT. 06.03.2006 WAS REGISTERE D UNDER IPC AND PREVENTION OF CORRUPTION ACT, 1988 AG AINST UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHERS. IN THE SAID FIR, IT HAS BEEN OBSERVED IT IS ALSO LEARNT THAT I N CONSIDERATION OF THE AWARD OF CONTRACT OF M/S FGUP VO TECHNOPROMEXPORT CERTAIN OFFICIALS OF NTPC BY ABUSI NG THE OFFICIAL POSITION RECEIVED ILLEGAL GRATIFICATIO N KICKBACKS IN EXCESS OF IS $20 MILLION FROM M/S FGUP VOTECHNOPROMEXPORT WHICH HAVE BEEN PAID INTO THE BANK ACCOUNT OF RAVINA & ASSOCIATES IN UNITED KINGD OM IN 2005. A LETTER ROGATORY/LETTER OF REQUEST FOR ASSISTANCE FOR INVESTIGATION IN UK WAS ISSUED BY THE COURT OF SPEC IAL JUDGE, TIS HAARI COURT, DELHI IN THE ABOVE SAID CBI CASE O N 22.3.2006. A RESTRAINT ORDER WAS SERVED ON THE NAT WEST BANK ON 20.4.2006 BY THE CROWN PROSECUTION, LONDON. THE ACCOUNT RESTRAINED WAS IN THE NAME OF RAVINA & ASSO CAITES HELD WITH NATWEST BANK, A/C NO. NXNBCSL-USD-00, SOR T CODE 60-18-20. THE SIGNATORIES TO THE BANK ACCOUNT ARE RAVINA KHURANA AND MRS. GOVINDA KHURANA. IT MAY ALSO BE NOTED THAT ALL THE EARLIER RETURNS O F INCOME I.E. FOR THE ASSESSMENT YEAR 2005-06 WERE REVISED AFTER 01.04.2006 I.E. AFTER A SEARCH WAS CONDUCTED BY THE CBI IN THE CASE OF ASSESSEE ON 28.3.2006 (REFERENCE ASSESS MENT ORDER OF THE A FOR AY 2006-07-ANNEXURE-1). A LETTE R ROGATORY/LETTER OF REQUEST FOR ASSISTANCE FOR INVES TIGATION IN UK WAS ISSUED BY THE COURT OF SPECIAL JUDGE, TIS HA ZARI ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS COURTS, DELHI IN THE ABOVE SAID CBI CASE ON 22.03.2 006. A RESTRAIN OF ORDER WAS SERVED ON THE NATWEST BANK ON 20.04.2006 BY THE CROWN PROSECUTION, LONDON. THE A CCOUNT RESTRAINED WAS IN THE NAME OF RAVINA AND ASSOCIATES , HELD WITH THE NATWEST BANK ST. JOHNS WOOD BRANCH LONDON, A/C NO. NXNBCSL-USD-00 SORT CODE 60-18-20. THE SIGNATO RIES TO THE BANK ACCOUNT ARE RAVINA KHURANA AND MRS. GOVIND A KHURANA. IN THE ORIGINAL RETURN OF THE ASSESSEE, IT ENCLOSED AUDITORS REPORT DATED 02.08.2004 IN FORM 3CA AND 3CD WHERE T HE AUDITORS HAD CERTIFIED THAT THE BALANCE SHEET AND P ROFIT AND LOSS ACCOUNT DEALT WITH IN THEIR REPORT WERE IN AGR EEMENT WITH THE BOOKS OF ACCOUNTS. THE AUDITORS FURTHER OPINED THAT PROPER BOOKS OF ACCOUNTS AS REQUIRED BY LAW HAVE BE EN KEPT BY THE COMPANY SO FAR AS APPEARED FROM THERE EXAMIN ATION OF THE BOOKS. IN 3CD REPORTS, THE NATURE OF BUSINESS OR PROFESSION HAS BEEN STATED TO BE TRAVEL AGENT. THE INCOME DECLARED IN THE ORIGINAL RETURN IS THAT OF AIR TICK ETING BUSINESS FOR AEROFLOAT (RUSSIAN AIR LINES). IN FACT, IN THE TAX AUDIT REPORTS, THE AUDITORS HAD MENTIONED THAT THESE RECEIPTS FROM M/S TECHNOPROMEXPORT AND EXPENDITURE IN FOREIGN CURRENCY WERE NEVER RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS FOR THE ASSESSMEN T YEAR 2004-05 AND 2005-06. THESE TRANSACTIONS IN FOREIGN EXCHANGE WERE ONLY OBSERVED AT THE TIME OF AUDIT FO R THE ASSESSMENT YEAR 2006-07 FROM THE LETTER, DT. APRIL 01, 2006 BY THE ASSESSEE COMPANY THROUGH ITS DIRECTORS. THE ASSESSEE COMPANY HAS CLAIMED THE RECEIPTS FROM TPE AND OTHER RECEIPTS IN ITS NAT WEST BANK A/C IN LOND ON, AS BUSINESS RECEIPT. THE ASSESSEE DID NOT DISCLOSE TH E BANK ACCOUNTS AND THE RECEIPTS OF MONEY IN THE ORIGINAL RETURN OR IN THE BOOKS OF ACCOUNT MAINTAINED BY IT. IT IS APPAR ENT THAT AFTER THE ABOVE BANK ACCOUNTS OF THE ASSESSEE GOT D ETECTED BY THE CBI THROUGH AN FIR AND SUBSEQUENT SEARCH, TH E ASSESSEE FURNISHED THOSE BANK ACCOUNTS TO THE AO. THE AO HAD ANALYSED IN THE ASSESSMENT ORDER WHY RECEIPTS I N NAT ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS WEST BANK OF ASSESSEE IN LONDON SHOULD BE CONSIDERE D AS THE ASSESSEES ITS UNEXPLAINED MONEY U/S 69A OF THE ACT AND WHY THE SAME SHOULD NOT BE TREATED AS VOLUNTARY DIS CLOSURE OF THE INCOME. THE ASSESSEE FAILED TO EXPLAIN THE REASON FOR RECEIPT OF SUCH HUGE AMOUNT IN ITS FOREIGN BANK ACC OUNTS. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE TH AT IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE FOR THE INSTANT YEARS, THE INCOME REPRESENTING THE DEPOSITS IN THE BANK ACCOUNT WITH NATWEST BANK, LONDON WAS NOT DECLARED BY THE A SSESSEE. IT IS ALSO UNDISPUTED THAT THE SAID INCOME WAS SUBSEQU ENTLY DECLARED IN THE RETURNS OF INCOME FURNISHED DURING THE RE- ASSESSMENT PROCEEDINGS AND ALSO ASSESSED IN THE IMP UGNED ORDERS OF ASSESSMENT. THERE IS NO DISPUTE AS TO TAX ABILITY OF INCOME. THE CLAIM OF THE ASSESSEE IS THAT THE SAID INCOME WAS DULY DISCLOSED VOLUNTARILY BY LETTER DATED 1.4.2006 ADDRESSED TO DCIT, COMPANY CIRCLE-15(1), NEW DELHI. IN THE SAID LETTER, IT WAS STATED AS UNDER: 1. WE ARE A COMPANY ENGAGED IN PROVIDING TECHNICAL AND SUPPORT SERVICES TO ALL SORTS OF BUSINESS ENTERPRIS ES IN GLOBAL MARKET AND ARE ASSESSED TO INCOME TAX WITHIN YOUR JURISDICTION, OUR PAN IS AAACR4696N. 2. WE ENTERED INTO AN UNDERSTANDING WITH M/S. TPE MOSCAW FOR PROVIDING THEM TECHNICAL SERVICES PREPAR ATORY TO THEIR BID FOR THE UPRVUNI, OBRA, R & M, TPS AND BAR H, ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS NTPC PROJECTS AND SUPPORT BOTH THERMAL POWER PLANTS PROJECTS AND SUPPORT SERVICES DURING IMPLEMENTATION OF THEIR CONTRACTS IN INDIA IN CULMINATION THERETO. 3. ALL THE SERVICES AT THE PREPARATORY STAGES, WHIC H ARE SINCE OVER, WERE RENDERED BY US OUT OF INDIA. WE HA VE RECEIVED ON ACCOUNT PAYMENTS FROM OUR CLIENTS NAMEL Y TPE, MOSCOW, WHICH COMPRISES APART FROM OUR DUES FOR OUR INVOLVEMENT AT THE PREPARATORY STAGE, ADVANCES TOWA RDS SERVICES TO BE RENDERED DURING IMPLEMENTATION STAGE OF THE ABOVE SAID PROJECTS. WE HAVE RECEIVED ALL THESE PAY MENTS BY BANK TRANSACTIONS IN FOREIGN EXCHANGE OUTSIDE INDIA IN OUR ACCOUNTS WITH NAT WEST BANK AT LONDON IN ACCOUNT NO S. 140-00-21000697, SORT CODE 60-18-20 AND CURRENT ACC OUNT NO. 18009336, SORT CODE NO. 60-18-20. WE HAD OPENED THIS ACCOUNT ONLY TO FACILITATE AND ENSURE SPEEDY COLLEC TION OF REMITTANCES FROM OUR CLIENTS AND REMITTANCES OF PAY MENT TO OUR SUPPLIERS. 4. WE HAD ALWAYS IN THE PAST CARRIED AN IMPRESSION THAT INCOME ARISING FROM PROVIDING TECHNICAL AND SUPPORT SERVICES TO THE FOREIGN ENTERPRISES IN FOREIGN EXCHANGE IS N OT LIABLE TO BE INCLUDED IN OUR INCOME FOR TAXATION IN INDIA. WE HAD, THEREFORE, NEVER IN THE PAST INCLUDED THE STILL UNA SCERTAINED PROFITS ACCRUING TO US FROM SUCH OPERATIONS IN OUR INCOME RETURNED FOR TAXATION IN INDIA. THESE PROFITS HAVE NOT YET BEEN DISTRIBUTED EITHER. WE NEVERTHELESS HAVE REGUL ARLY MAINTAINED ACCOUNTS OF THESE TRANSACTIONS SEPARATEL Y. 5. HOWEVER, WHILE WE WERE DISCUSSING OUR RUSSIAN BUSINESS WITH A WELL-WISHER MR. RAM JETHMALANI AT T HE FAG END OF FEBRUARY, 2006, WE WERE SHOCKED TO LEARN THA T INCOME ARISING FROM PROVIDING TECHNICAL AND SUPPORT SERVICES IN FOREIGN EXCHANGE WAS LIABLE TO BE INCLUDED IN OU R INCOME FOR TAXATION IN INDIA. WE HAVE BEEN ADVISED THAT AS A RESIDENT OF INDIA, WE ARE LIABLE TO TAX IN INDIA ON OUR GLOBAL INCOME SUBJECT TO EXCEPTIONS AND CONCESSIONS PROVID ED BY THE VARIOUS DOUBLE TAXATION AVOIDANCE AGREEMENTS IN DIA ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS HAS VARIOUS COUNTRIES/STATES. WE HAVE ALSO BEEN ADV ISED TO TAKE IMMEDIATE STEPS TO INFORM THE RBI. 6. IMMEDIATELY ON BEING ADVISED OF THE CORRECT POSI TION OF LAW IN THIS REGARD, WE HAVE INSTRUCTED NAT WEST BAN K, LONDON TO CLOSE DOWN OUR ACCOUNTS WITH THEM AND REM IT THE MONEY HELD IN BALANCE WITH THEM TO OUR ACCOUNTS IN INDIA. WE HAVE ALREADY INITIATED STEPS TO ASCERTAIN OUR TR UE PROFITS FROM THESE FOREIGN OPERATIONS. WE ARE FIRMLY RESOLV ED TO DISCHARGE OUR LIABILITY TO TAX IN FULL IN RESPECT OF OUR INCOME IN ALL THE YEARS WE HAVE BEEN OPERATING OUTSIDE IND IA, WHICH, ALTHOUGH INADVERTENTLY, HAS REMAINED UNDISCHARGED D UE TO OUR UNFORTUNATE IGNORANCE OF CORRECT POSITION OF LA W IN THESE REGARDS. 7. WE HAVE BEEN WAITING ALL THESE DAYS FOR THE MONE Y TO BE CREDITED IN OUR ACCOUNT IN INDIA TO ENABLE US TO PAY ADVANCE TAX IN RESPECT OF OUR INCOME FOR THE FISCAL YEAR 2005- 06 AND ALSO TO PAY UP OUR TAX LIABILITY IN RESPECT OF THE EARLIER YEARS TOGETHER WITH INTEREST DUE FOR THE DELAYED PA YMENT OF TAXES. EVEN AFTER WAITING FOR ALL THESE DAYS SINCE 6 TH MARCH, 06 WHEN INSTRUCTIONS WERE FIRST ISSUE TO NAT WEST B ANK, LONDON TO REMIT OUR MONIES HELD IN BALANCE WITH THE M TO OUR ACCOUNT IN INDIA WE HAVE NOT RECEIVED ANY INTIMATIO N OF REMITTANCE FROM THEM (COPIES ENCLOSED) 8. ACCORDINGLY, WE HAVE TO REQUEST YOU TO INTERCEDE IN THE MATTER AND ARRANGE FOR THE COLLECTION OF TAXES, WHI CH MAY BE DETERMINED AS DUE FROM US, FROM NAT WEST BANK, LOND ON IN SATISFACTION OF OUR TAX LIABILITY PROVISIONALLY. WE ARE READY AND WILLING TO EXECUTE THE REQUISITE AUTHORITY IN A NY FORM ADVISED BY YOU AS MAY SERVE ALL DESIRED END. 9. I HEREBY DECLARE THAT ALL THE MONIES IN THE SAID BANK STAND ASSIGNED TO THE GOVERNMENT OF INDIA IN TRUST FOR PAYING AWAY MY TAX LIABILITIES WHEN PRECISELY DETERMINED. 10. TO DISCUSS OUR TAX LIABILITY AND WORK OUT THE M ODALITIES FOR ITS PROMPT, EFFECTIVE AND FULL DISCHARGE, WE WI LL BE OBLIGED TO HAVE AN AUDIENCE WITH YOU, WHICH MAY KINDLY BE G RANTED ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS AND INTIMATED TO ME AT MY ADDRESS INDICATED ABOVE A T YOUR EARLIEST. WE WILL ALSO APPRECIATE IF A LENIENT VIEW MAY BE TA KEN OF THE INCIDENTAL INADVERTENT LAPSE ON OUR PART IN THE MAT TER. 9.1 FURTHERMORE, IN ANOTHER LETTER DATED 11.4.2006, IT WAS SUBMITTED AS UNDER: KINDLY REFER TO OUR LETTER DATED 1ST APRIL, 2006 O N THE ABOVE SUBJECT AND THE AUDIENCE OUR AUTHORIZED REPRESENTAT IVE HAD WITH YOU ON 5.4.2006. 2. IN FURTHERANCE THERETO WE ARE SUBMITTING HEREWIT H, AS ANNEXURE A-1 & A-II*, SUMMARIES OF TRANSACTIONS IN OUR TWO BANK ACCOUNTS MAINTAINED BY US WITH NAT WEST BANK, LONDON, SEPARATELY INDICATING THE TOTAL AMOUNTS REC EIVED THEREIN FROM OUR CLIENTS AND THE INTEREST ACCRUING IN THE BANK ACCOUNT, TOTAL OUTGOINGS THERE FROM ON ACCOUNT OF V ARIOUS EXPENDITURE INCURRED IN CONNECTION WITH OUR BUSINES S, INCLUDING BANK CHARGES AND THE RESULTANT SURPLUS IN RESPECT OF ALL THE FISCAL YEARS FROM 2003-04 TO 2005-06, IN DICATED IN THE CURRENCY IN WHICH THESE ACCOUNTS ARE MAINTAINED . ANNEXURE A-III BEING SUBMITTED IS A CONSOLIDATED SUMMARY OF ANNEXURES A-I & A-II INDICATING THE AGGREGATE SURPLUS IN INDIAN RUPEES. ( COPIES ENCLOSED AT PAGES 137 TO 1 39 OF ATR) 3. ANNEXURE A-1 & A-II HAVE BEEN PREPARED BY US B ASED ON THE ENTRIES IN THE JOURNAL MAINTAINED BY US FOR OUR FOREIGN VENTURES AND THE FIGURES REPORTED ARE SUBJECT TO CO RRECTION WITH REFERENCE TO THE BANK ACCOUNT STATEMENTS WE AR E TRYING TO ARRANGE FROM THE BANK. IN THE MEANWHILE, RELEVAN T EXTRACTS FROM THE SAID JOURNAL ARE BEING SUBMITTED HEREWITH IN ITS ENTIRETY. 4. THE SURPLUSES SO INDICATED INDICATE THE MAXIMUM QUANTUM OF OUR INCOME IN THE RELEVANT YEARS FROM OU R HITHERTO UNREPORTED FOREIGN VENTURES THAT CAN BE ASSESSED TO TAX. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 5. NEEDLESS TO MENTION HERE THAT THE RECEIPTS IN OU R BANK ACCOUNTS LARGELY COMPRISE ADVANCES ON OUR CLIENTS A CCOUNT PROVIDED TO US FOR MEETING EXPENDITURE NECESSARY TO BE INCURRED BY US IN FUTURE IN SEVERAL YEARS DURING WH ICH THE IMPLEMENTATION AND EXECUTION OF OUR CLIENTS CONTRA CT IN INDIA MAY CONTINUE AND WE ARE IN LAW AND EQUITY ENTITLED TO PROVIDE FOR THESE. 6. WE HOPE THAT THE INFORMATION PROVIDED HEREIN WIL L ENABLE YOU TO PROCEED WITH THE DETERMINATION OF OUR TAX LIABILITY IN RESPECT OF OUR INCOME FROM HITHERTO UN REPORTED FOREIGN VENTURES. 7. ACCORDINGLY, WE HAVE TO REQUEST YOU TO KINDLY AS SESS OUR INCOME FROM THESE FOREIGN VENTURES ON SOME JUST AND REASONABLE BASIS AND DETERMINE THE TAX WE ARE LIABL E TO AY IN RESPECT THEREOF. IN YOU NEED FURTHER DETAILS, THE SAME WILL BE PROVI DED ON HEARING FROM YOU 9.2 SUBSEQUENTLY, IN LETTERS DATED 19.4.2006, 21.4.200 6, 22.4.2006, 27.4.2006 AND 23.5.2006, FURTHER INFORMA TION WAS FILED TO SUPPORT THE CLAIM OF THE ASSESSEE. IT HAS BEEN CONTENDED THAT INITIALLY THE INCOME WAS OFFERED ON THE ADVICE OF SHRI GIRISH SHUKLA THAT ON INTERPRETATION OF THE AGREEMENT DATE D 23.7.2003 AND DECISION OF THE ITAT IN THE CASE OF OTIS ELEVAT ORS VS. DCIT REPORTED IN 99 ITD 132, HE WAS OF THE OPINION THAT ENTIRE SUM COULD NOT BE SAID TO HAVE ACCRUED IN THE INSTANT YE ARS BUT WOULD ACCRUE FROM AY 2004-05 TO 2008-09. HOWEVER, LATER T HE ENTIRE SUM WAS OFFERED FOR TAX. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 9.3 IN THE REASONS RECORDED, THE ASSESSING OFFICER, WH ILE ASSUMING JURISDICTION, FOR ISSUE OF NOTICE UNDER SE CTION 148 OF THE ACT, STATED AS UNDER: 22/5/06- RETURN SHOWING TOTAL INCOME OF RS. 31,77, 400 HAS BEEN FILED ON 31/12/04 WHICH HAS BEEN PROCESSED U/S 143(1) ON 31/3/05. TOTAL INCOME IS COMPUTED AS UNDE R:- 1. INCOME FROM BUSINESS & PROFESSION . RS. 22,17,179 2. SHORT TERM CAPITAL GAIN RS. 9,60,218 DIVIDEND INCOME OF RS. 1,97,361 HAS BEEN CLAIMED EX EMPT U/S 10 OF THE ACT. PERUSAL OF FORM 3CD FILED WITH THE RETURN OF INCOME SHOWS THAT THE ASSESSEE CARRIED ON BUSINESS & PROFESSION OF TRAVEL AGENT ONLY. DETAILS OF RECEIPTS SHOWN AS ASSESSABL E UNDER BUSINESS HEAD ARE AS UNDER:- 1. INTEREST INCOME RS. 14,40,204 ON DEPOSITS WITH SYNDICATE BANK, F-40, CONNAUGHT PLACE, NEW DELHI. 2. PROFESSIONAL TAX RS. 12,50,000 RECEIVED FROM SO HAIL KHAN (SERVICES TICKET ) PRODUCTION CORAL REAF, BANDRA, MUMBAI 3. COMMISSION - FROM AEROFLOT NEW DELHI - FROM AEROFLOT MUMBAI - FROM BANDHU TRAVELS (P) LTD. - FROM ISI TRAVEL SERVICES PRIVATE LTD. - NEW AIRWAYS TRAVELS (DELHI) DUF LTD. PERUSAL OF LETTER DATED 11/4/06 FILED IN THIS OFFIC E ON 13/4/06 SHOWS THAT THESE ARE CREDIT ENTRIES (DEPOSI TS) OF RS. 10,49,03,405/- IN A/C NO. 140-00-21000697 WITH NAT WEST BANK LONDON (CURRENCY US $) AND IN A/C NO. 18009336 WITH NAT WEST BANK LONDON (CURRENCY GB POUNDS) PERUSAL OF EXTRACTS FROM JOURNAL REGISTER FROM 1.4. 03 TO 31.3.04 FILED WITH THE SHOWS THAT THE SUM OF RS. 10,49,03,405/- HAS BEEN RECEIVED FROM TPE, RUSSIA. THIS RECEIPT HAS NOT BEEN INCLUDED IN ITS RECEIPTS AS SH OWN IN RETURN OF INCOME AND THUS NOT OFFERED FOR TAX. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ON THE FACTS AND IN THE CIRCUMSTANCES OF THIS CASE AS DISCUSSED ABOVE, I HAVE REASON TO BELIEVE THAT INCO ME OF RS. 10,49,03,405/- CHARGEABLE TO TAX PRECEDING ASSESSME NT YEAR 2004-05 HAS ESCAPED ASSESSMENT WITHIN THE MEAN ING OF SECTION 147 OF I.T. ACT 1961. ISSUE NOTICE U/S 148 FOR ASSESSMENT YEAR 2004-05 IMMEDIATELY. 9.4 THE ABOVE REASONS RECORDED ESTABLISH THAT THE ASSES SING OFFICER DID NOT HAVE ANY OTHER INFORMATION EXCEPT D ISCLOSURE MADE BY THE ASSESSEE IN COMMUNICATION DATED 1.4.200 6 AND 11.4.2006. IN FACT, IN THE REASONS RECORDED AS EXTR ACTED ABOVE, IT IS THE ADMITTED POSITION THAT ACTION UNDER SECTION 148 OF THE ACT WAS TAKEN ON THE BASIS OF LETTER DATED 11.4.2006 FU RNISHED BY THE ASSESSEE WHICH ALSO REFERS TO THE EARLIER LETTER DA TED 1.4.2006 FURNISHED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, O NCE THE ASSESSING OFFICER HIMSELF ADMITS THAT THE INITIATIO N OF PROCEEDINGS WAS BASED ON THE LETTER FURNISHED BY THE ASSESSEE, IT CANNOT BE VALIDLY SUGGESTED THAT THE DECLARATION OF INCOME BY THE ASSESSEE VIS-A-VIS THE INCOME TAX DEPARTMENT WAS NOT VOLUNTARY. THE C ASE MADE OUT BY THE REVENUE AGAINST THE ASSESSEE WAS TH AT A CRIMINAL CASE WAS REGISTERED, VIDE FIR NO. FIR RC-DAI/2006-A -0006 DATED 6.3.2006, UNDER THE INDIAN PENAL CODE AND THE PREVE NTION OF CORRUPTION ACT AGAINST UNKNOWN OFFICIALS OF NTPC OF INDIA AND ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OTHERS. IT IS SEEN THAT FIR FILED ON 6.03.2006 HAS ABSOLUTELY NO CONNECTION WITH RECEIPTS RECEIVED BY THE ASSESSEE C OMPANY IN THE YEAR UNDER CONSIDERATION BUT TO RECEIPTS FOR THE AS SESSMENT YEAR 2006-07 WHICH WERE DULY DECLARED IN THE ORIGINAL RE TURN FOR ASSESSMENT YEAR 2006-07. THIS ASPECT HAS NOT BEEN D ISPUTED BY THE REVENUE IN THESE APPEALS. PARA 2.7 AND 2.8 OF T HE AFORESAID FIR STATE AS UNDER: 2.7 THAT IT IS FURTHER ALLEGED THAT THERE WERE TEC HNICAL OBJECTIONS IN RESPECT OF THE BID OF M/S. FGUP VO TPE BUT THE CONTRACT WAS STILL AWARDED TO M/S FGUP VO TPE. IT IS ALSO RELIABLY LEARNT THAT IN CONSIDERATION OF THE AWARD OF CONTRACT TO M/S FGUP VO TPE, CERTAIN OFFICIALS OF NTPC BY ABUSING THEIR OFFICIAL POSITION RECEIVED ILLEGAL GRATIFICAT ION/KICKBACKS IN EXCESS OF US$ 20 MILLION FROM M/S FGUP VO TPE WHICH HAVE BEEN PAID INTO THE BANK ACCOUNT OF RAVINA ASSO CIATES IN UNITED KINGDOM IN 2005. RELIABLE INFORMATION EXISTS THAT THE SAID BANK ACCOUNT IS BEING MAINTAINED AND OPERATED IN UNITED KINGDOM DIRECTLY/INDIRECTLY BY CERTAIN PERSO NS FOR THE BENEFIT OF ACCUSED PUBLIC SERVANTS IN INDIA/OTHERS. 2.8 THAT INTERPOL-LONDON VIDE THEIR MESSAGE DATED 1 -2-05 INFORMED INTERPOL-NEW DELHI THAT IN MAY, 2005 ON AC COUNT HELD BY RAVINA ASSOCIATES RECEIVED A DEPOSIT IN EXC ESS OF US$ 20 MILLION FROM A RUSSIAN ENTITY TPE. THE DEPOS IT WAS PAYMENT FOR ASSISTING TPE IN OBTAINING A CONTRACT W ITH INDIAN NATIONAL THERMAL POWER CORPORATION FOR A SUPER THER MAL POWER PROJECT IN BARH REGION AND THAT THE DETAILS C OULD BE MADE AVAILABLE SUBJECT TO A FORMAL REQUEST. IT WAS FURTHER INFORMED THAT THE FUNDS WERE AVAILABLE FOR RESTRAIN T IF SOUGHT AND THE ACCOUNT DETAILS WOULD BE PROVIDED TO THE RE LEVANT UNITED KINGDOM AUTHORITY UPON RECEIPT OF A FORMAL R EQUEST. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 9.5 A PERUSAL OF THE ABOVE SHOWS THAT THIS FIR WAS IN RESPECT OF A CONTRACT BETWEEN M/S NATIONAL THERMAL POWER CORPO RATION (HEREINAFTER REFERRED TO AS NTPC) AND M/S TPE, MO SCOW AND HAD NOTHING TO DO WITH THE RECEIPTS RECEIVED BY THE ASS ESSEE AND DECLARED AS INCOME IN THE RETURNS OF INCOME FOR THE INSTANT YEAR. 9.6 IT HAS BEEN SUBMITTED BY THE LD. AR THAT THOUGH TH E FIR WAS FILED ON 6.3.2006, THE ASSESSEE BECAME AWARE OF THE SAME ONLY ON 2.5.2006, ON RECEIPT OF A FAX FROM CENTRAL CONFISCATION BRANCH, CROWN PROSECUTION SERVICE, LONDON. IT HAS A LSO BEEN SUBMITTED THAT, PRIOR THERETO, THE ASSESSEE HAD ONL Y RECEIVED ON 29.04.2006, A LETTER FROM THE NATWEST BANK DATED 25 .04.06 IN THE CASE OF M/S RAVINA & ASSOCIATES P. LTD., WHEREIN TH EY HAD INTIMATED THAT OPERATIONS IN THE BANK ACCOUNTS OF T HE ASSESSEE AND M/S RAVINA & ASSOCIATES P. LTD. HAD BEEN TEMPOR ARILY SUSPENDED ON ACCOUNT OF RESTRAINT ORDER SERVED ON THE BANK ON 20.04.2006. IT HAS BEEN FURTHER CONTENDED THAT IT W AS ONLY AFTER DISCUSSION WITH SH. RAM JETHMALANI, SENIOR ADVOCATE IN FEBRUARY 2006, THAT THE ASSESSEE CAME TO KNOW OF IT S OBLIGATION UNDER THE STATUTORY PROVISIONS OF THE ACT AND, TAX LIABILITY ON SUCH INCOME. THE LEARNED COUNSEL OF THE APPELLANT H AS ALSO VEHEMENTLY SUBMITTED THAT, ONCE THE ASSESSEE CAME T O KNOW OF ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ITS LIABILITY TO TAX, IT VOLUNTARILY APPROACHED THE REVENUE AUTHORITIES. LETTERS DATED 27.02.2006 AND 6.03.200 6 WRITTEN BY ASSESSEE TO SHRI GIRISH SHUKLA, ADVOCATE, WERE ALSO HIGHLIGHTED. IN THE LETTER DATED 27.2.2006, IT HAS BEEN STATED A S UNDER: DEAR MR. SHUKLA, AS EXPLAINED TO YOU ON THE PHONE I AM SENDING ALL T HE RELEVANT PAPERS RELATING TO MY COMPANYS TAX ASSESS MENT. WHEN I DISCUSSED MY RUSSIAN BUSINESS WITH OUR FAMIL Y FRIEND MR. RAM JETHMALANI I WAS QUITE SHOCKED TO LE ARN THAT MY FOREIGN EXCHANGE EARNINGS ARE ALSO LIABLE TO TAX ATION IN INDIA. HE HAS ADVISED ME TO SEE YOU AND ADVICE A PROPER RE TURN AND DISCUSS MY TAX LIABILITIES. MOST OF THE INCOME IS DERIVED IN THE CURRENT YEAR THAT SHOULD PRESENT NO PROBLEM AS FAR AS I UNDERSTAND. THE MUCH SMALLER AMOUNT IS EARLIER AND KINDLY DO WHATSOEVER IS REQUIRED TO BE DONE UNDER THE LAW TO REGULARIZE THE INCOME. KINDLY LOOK INTO ALL ASPECTS OF THE MATER AND SEE T HAT ALL RELEVANT LAW IS COMPLIED WITH... 9.7 IT HAS ALSO BEEN SUBMITTED THAT THE ASSESSEE HAD APPROACHED THE BANK SEVERAL TIMES SINCE MARCH 2006 I.E. ON 6.03.2006 28.03.2006, 30.03.2006 12.04.2006, 13.04. 2006, 19.04.2006, 22.04.2006 AND 25.04.2006 FOR THE CLOSU RE OF THE BANK ACCOUNTS, OBTAINING THE BANK STATEMENTS AND RE MITTING THE FUNDS TO INDIA. THE SUBMISSION WAS THAT LETTERS AD DRESSED TO THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS BANK IN MARCH 2006 WERE ONLY AS A RESULT OF THE DIS CUSSIONS HELD BY THE ASSESSEE WITH THE ADVOCATE IN FEBRUARY 2 006 WHO APPRISED THEM OF THE LIABILITY TO PAY TAX IN RE SPECT OF THE SUMS CREDITED IN THE NATWEST BANK ACCOUNT AT LONDON . IN LIGHT OF THE AFORESAID, IT HAS BEEN ARGUED THAT THE INCOME W AS VOLUNTARILY OFFERED FIRSTLY VIDE LETTERS DATED 01.04.2006 AND 1 1.04.2006 AND THEREAFTER IN THE RETURNS OF INCOME. THE LD. COUNS EL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT THE BELIEF OF T HE ASSESSEE WAS BONA FIDE IS EVIDENT FROM THE FACT THAT SUMS RECEIVED OUTSID E INDIA FROM THE FOREIGN ENTITIES WERE NOT DISCLOSED IN PRECEDING ASSESSMENT YEARS AND SUCH RECEIPTS HAVE NOT BEEN DI SCLOSED AS INCOME IN THE INSTANT YEAR. IT HAS, THUS, BEEN CLAI MED THAT IT IS A CASE OF IGNORANCE OF LAW TILL 1.4.2006 AND, ONCE TH E ASSESSEE CAME TO KNOW OF ITS LIABILITY TO TAX, THE ASSESSEE VOLUNTARILY AND, ON ITS OWN PROVIDED THE PARTICULARS OF INCOME. 9.8 IT HAS ALSO BEEN ARGUED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE, VIDE REPLY DATED 12.07.2 007, HAD SPECIFICALLY REQUESTED THE ASSESSING OFFICER THAT V OLUNTARY DISCLOSURE WAS NOT IN CONSEQUENCE OF ACTION TAKEN B Y THE CBI BUT ON ACCOUNT OF LEGAL OPINION OBTAINED FROM SHRI GIRI SH SHUKLA AND SH. RAM JETHMALANI WHICH FACT WAS ALSO STATED IN TH E LETTER ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS DATED 1.4.2006 AND IT WAS CONTENDED THAT NO MATERIA L REBUTTING THE ABOVE EXPLANATION HAS BEEN PLACED ON RECORD BY THE REVENUE. THE REVENUE, IN THE APPELLATE PROCEEDINGS EITHER BE FORE THE LD. CIT (A) OR BEFORE US, HAS NOT PLACED ON RECORD ANY MATERIAL TO REBUT THE AFORESAID SPECIFIC EVIDENCES PLACED ON RE CORD TO SUPPORT THE CLAIM THAT THE DISCLOSURE WAS VOLUNTARY IN AS M UCH AS IT WAS ON ACCOUNT OF THE LETTERS DATED 1.4.2006 AND 11.4.2 006 THAT THE ACTION HAD BEEN TAKEN AGAINST THE ASSESSEE TO ASSES S THE INCOME DISCLOSED IN THE SAID LETTERS BY THE ASSESSING OFFI CER. THE FACT OF THE FIR FILED ON 6.3.2006 HAS NOT BEEN SHOWN IN ANY MANNER TO BE IN THE KNOWLEDGE OF THE ASSESSEE BY ANY EVIDENCE S PLACED ON RECORD. IT IS OUR CONSIDERED OPINION THAT A MERE HY POTHETICAL ASSUMPTION, THAT SINCE THE DATE OF FIR IS 6.3.2006 AND LETTERS WERE FURNISHED BY THE ASSESSEE ON 1.4.2006 AND 11.4 .2006, CANNOT BE A GROUND TO ASSUME TO THE CONTRARY. IT IS WELL SETTLED POSITION OF LAW THAT SUSPICION, HOWSOEVER STRONG, C ANNOT PARTAKE THE CHARACTER OF EVIDENCE. THE HONBLE SUPREME COUR T IN THE CASE OF UMA CHARAN SHAW & BROS. CO. V. CIT REPORTED IN 3 7 ITR 271 (SC) HAS HELD AS UNDER: TAKING INTO CONSIDERATION THE ENTIRE CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THAT THERE WAS NO MATERIAL O N WHICH THE INCOME-TAX OFFICER COULD COME TO THE CONCLUSION THAT THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS FIRM WAS NOT GENUINE. THERE ARE MANY SURMISES AND CONJECTURES, AND THE CONCLUSION IS THE RESULT OF SU SPICION WHICH CANNOT TAKE THE PLACE OF PROOF IN THESE MATTE RS. IT WAS CONTENDED THAT THERE WERE THREE ORDERS, VIZ. , THE ORDER OF ASSESSMENT, THE ORDER UNDER SECTION 25A AN D THE ONE UNDER SECTION 26A, AND MERELY REVERSING THE ORDER U NDER SECTION 26A CANNOT BE OF ANY CONSEQUENCE PARTICULAR LY AS THE ORDER UNDER SECTION 25A STANDS. WE ARE NOT CONCERNE D IN THESE APPEALS IN DECIDING WHAT ADVANTAGE WILL ACCRU E TO THE APPELLANT FIRM. THAT IS ITS LOOK-OUT, AND WE DO NOT , THEREFORE, ACCEPT THE ARGUMENT. THE RESULT IS THAT THE ORDER OF THE APPELLATE TRIBU NAL IS REVERSED. THE FIRM SHALL BE REGISTERED UNDER SECTIO N 26A OF THE ACT FOR THE ASSESSMENT YEAR 1948-49. THE APPEAL AGAINST THE ORDER OF THE HIGH COURT NEED NOT BE CONSIDERED, SINCE IT IS NOT NECESSARY TO PASS ANY ORDERS THEREON. THERE WIL L BE NO ORDER IN THAT APPEAL. 9.9 MOREOVER, IT IS ALSO PERTINENT TO NOTE THAT ONCE TH ERE IS NO DISPUTE AS TO THE TAXABILITY OF INCOME, THE ISSUE B ECOMES ACADEMIC. HOWEVER, SINCE THE SAME HAS BEEN RAISED, THE ISSUE HAS BEEN EXAMINED AND IS FOUND AS A MATTER OF FACT THAT THE EDIFICE OF THE PRESENT PROCEEDINGS WAS COMMUNICATED BY THE ASSESSEE AND NOT BY ANY OTHER AUTHORITY. IN ABSENCE OF ANY OTHER COMMUNICATION HAVING BEEN PLACED ON RECORD, THE REA SONS RECORDED CLEARLY POINT OUT THAT ACTION UNDER SECTIO N 148 OF THE ACT WAS BASED ON THE COMMUNICATION BY THE ASSESSEE AND CLAIM OF THE ASSESSEE IS TENABLE AND HAS MERIT AND, THERE FORE, ACCEPTED ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS AS SUCH. HAVING REGARD TO THE ABOVE, THE GROUNDS RA ISED BY THE ASSESSEE ARE ALLOWED. 9.10 ACCORDINGLY GROUNDS NOS. 1 TO 1.4 RAISED IN ITA NO. 1004/DEL/2011 FOR ASSESSMENT YEAR 2004-05 AND ITA N O. 1005/DEL/2011 FOR ASSESSMENT YEAR 2005-06 ARE ALLOW ED. 10. GROUNDS NOS. 2 TO 2.1 OF GROUNDS OF APPEAL FOR AY 2 004-05 AND AY 2005-06 RELATE TO THE CLAIM OF THE ASSESSEE THAT THE REVISED RETURNS FURNISHED DURING THE ASSESSMENT PRO CEEDINGS WERE VALID RETURNS. 10.1 THE RELEVANT FACTS ARE THAT RETURN WAS FILED IN RES PONSE TO NOTICE UNDER SECTION 148 OF THE ACT ON 21.06.2006 D ECLARING AN INCOME OF RS. 1,86,28,990/-. THIS RETURN OF INCOME FILED WAS REVISED ON 12.02.2007 DECLARING AN INCOME OF RS. 10 ,80,57,290/- THE ASSESSING OFFICER HAS HELD THAT SINCE THE REVIS ED RETURN, FILED ON 12.2.2007, WAS AFTER THE EXPIRY OF PERIOD OF ONE YEAR FROM THE END OF THE ASSESSMENT YEAR I.E. 31.3.2006 THE SAME WAS NON EST IN TERMS OF THE PROVISIONS OF SECTION 139(5) OF THE ACT. AS REGARDS AY 2005-06, THE REVISED RETURN OF INCOME FILED BY T HE ASSESSEE ON 12.02.2007 HAS BEEN HELD TO BE NON EST BY THE AO ON THE GROUND THAT REVISED RETURN CAN BE FILED ONLY TO CURE AN OM ISSION OR WRONG STATEMENT I.E. WHEN IT WAS INADVERTENT OR ACCIDENTA L AND, NOT ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS DELIBERATE. THE LD. CIT (A) REJECTED THE CLAIM BY OBSERVING AS UNDER: 7.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ERS AND THE SUBMISSIONS MADE BY THE LD. AR ON THE ABOVE ISS UE. IT NEEDS TO BE EMPHASIZED HERE THAT SUBSECTION (5) OF SECTION 139 OF THE ACT RELATING TO FILING OF REVISED RETU RNS READS AS UNDER: IF ANY PERSON, HAVING FURNISHED A RETURN UNDER SUB -SECTION (1), OR IN PURSUANCE OF A NOTICE ISSUED UNDER SUB-S ECTION (1) OF SECTION 142, DISCOVERS ANY OMISSION OR ANY WRONG ST ATEMENT THEREIN, HE MAY FURNISH A REVISED RETURN AT ANY TIM E BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASS ESSMENT YEAR, WHICHEVER IS EARLIER. THUS ANY RETURN TO QUALIFY AS A REVISED RETURN UN DER THE ACT, MUST SATISFY TWO CONDITIONS, VIZ (I) IT SHOULD BE ON ACCOUNT OF DISCOVERY OF ANY OMISSION OR WRONG ST ATEMENT IN THE ORIGINAL RETURN, WHICH PRESUPPOSES A VOLUNTA RY ACT ON THE PART OF THE ASSESSEEE TO REMEDY ANY BONAFIDE MI STKE IN THE ORIGINAL RETURN AFTER DISCOVERING THE SAME; AND (II) IT MUST BE FILED WITHIN THE TIME LIMIT OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION O F THE ASSESSMENT, WHICHEVER IS EARLIER. IN THE INSTANT CA SE, THE APPELLANTS CLAIM OF FILING REVISED RETURN IS NOT AT ALL ACCEPTABLE AS THE SAME, AS DISCUSSED ABOVE, HAS NOT BEEN DONE VOLUNTARILY TO CORRECT ANY BONAFIDE MISTAKE AN D FOR AY 2004-05 HAS ALSO BEEN FILED MUCH AFTER THE EXPIRY O F THE PRESCRIBED TIME LIMIT. CONSIDERING THE ABOVE, THE A BOVE ISSUE OF THE APPELLANT IS REJECTED. 10.2 IN THE WRITTEN SUBMISSIONS DATED 16.1.2018, BEFORE US, THE ASSESSEE HAS CONTENDED AS UNDER: ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10. IT IS SUBMITTED THAT, THE BASIS FOR HOLDING T HE REVISED RETURN OF INCOME FILED BY THE APPELLANT ON 12.2.200 7 IS NON EST IS THAT REVISED RETURN FILED ON 12.2.2007 WAS A FTER THE EXPIRY OF PERIOD OF ONE YEAR FROM THE END OF THE AS SESSMENT YEAR I.E. 31.3.2006 AS HAS BEEN PROVIDED UNDER SECT ION 139(5) OF THE ACT. IT IS SUBMITTED THAT, WHILE ARRI VING AT THE AFORESAID CONCLUSION, THE LEARNED OFFICER HAS OVERL OOKED THE DETAILED REPLY FILED BY THE APPELLANT ON 28.2.2007 (PAGES 191 TO 197 OF PAPER BOOK-I). THE RELEVANT PORTION OF TH E AFORESAID REPLY ARE EXTRACTED HEREUNDER: 3. IT IS EVIDENT FROM THE AFORESAID STATUTORY PROVISIONS THAT, RETURN OF INCOME FILED BY THE ASSE SSEE IN RESPONSE TO NOTICE U/S 148 OF THE ACT IS TO BE T REATED AS IF SUCH RETURN WERE REQUIRED TO BE FURNISHED U/S 139 OF THE ACT AND, THE PROVISIONS OF THE ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY. IT IS FURTHER SUBMITTED THAT, PERUSAL OF THE PROVISIONS CONTAINED IN SECTION 139 OF THE ACT WOULD SHOW THAT, THE ASSESSEE IS REQUIRED TO FURNISH RETURN ONLY IN SECTION 139(1) OF THE ACT; O THER PROVISIONS CONTAINED IN SECTION 139 OF THE ACT ARE VOLUNTARY AND, NOT OBLIGATORY I.E. THEY DO NOT REQU IRE THE ASSESSEE TO FURNISH A RETURN U/S 139 OF THE ACT. IT MAY BE ADDED HERE THAT, PRIOR TO 1-4-1989, THE ONLY DIFFERENCE IN THE PROVISIONS WAS THAT, A NOTICE CAL LING FOR THE RETURN WAS TO BE ISSUED CONTAINING ALL OR A NY OF THE REQUIREMENTS WHICH MAY BE INCLUDED IN A NOTICE UNDER SECTION 139(2) OF THE ACT DEEMING IT A NOTICE UNDER THAT SECTION, WHILE PRESENT PROVISION MANDATE S ISSUANCE OF NOTICE UNDER SECTION 148 AND REFERS TO 'AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139'. 3.1 THEREFORE, ONCE THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT IS A RETURN U/S 139(1) OF THE ACT, IT CANNOT VALIDLY BE HELD THAT, SUCH A RETURN CANNOT BE REVISED U/S 139(5) OF THE ACT, AS HAS ALSO BEEN CORRECTLY NOTED BY YOUR GOODSELF IN THE CAPTIONED L ETTER. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10.3 ON THE OTHER HAND, THE LD. CIT DR HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND REQUESTED THAT T HE CLAIM OF THE ASSESSEE BE REJECTED. 10.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND THE CONTENTIONS RAISED BY BO TH THE SIDES. SECTION 139(5) OF THE ACT STATES AS UNDER: IF ANY PERSON, HAVING FURNISHED A RETURN UNDER SUB -SECTION (1), OR IN PURSUANCE OF A NOTICE ISSUED UNDER SUB-S ECTION (1) OF SECTION 142, DISCOVERS ANY OMISSION OR ANY WRONG ST ATEMENT THEREIN, HE MAY FURNISH A REVISED RETURN AT ANY TIM E BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASS ESSMENT YEAR, WHICHEVER IS EARLIER. 10.5 ON A PERUSAL OF THE AFORESAID PROVISIONS, IT IS NO TED THAT IF ANY PERSON, HAVING FURNISHED A RETURN UNDER SUB-SEC TION (1) OR IN PURSUANCE OF A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142, DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT THEREIN, HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR O R BEFORE THE COMPLETION OF THE ASSESSMENT YEAR, WHICHEVER IS EAR LIER. THE PRIMARY CASE OF THE REVENUE IS THAT THE REVISED RET URN POSTULATES DISCOVERY OF ANY OMISSION OR ANY WRONG STATEMENT IN THE ORIGINAL RETURN OF INCOME WHICH PRESUPPOSES A VOLUNTARY ACT ON THE PART ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OF THE ASSESSEE TO REMEDY ANY BONA FIDE MISTAKE IN THE ORIGINAL RETURN AFTER DISCOVERING THE SAME. IT WAS THUS HELD BY THE LD. CIT (A) THAT SINCE THE RETURNS WERE NOT FILED VOLUNTARI LY AND WERE NOT TO CORRECT ANY BONA FIDE MISTAKE, THEREFORE, THE CLAIM OF REVISED RETURN IS NOT MAINTAINABLE. WE HAVE ALREADY HELD, WHILE DECIDING GROUNDS 1 TO 1.4 THAT RETURNS FILED BY THE ASSESSEE WERE VOLUNTARY AND THEREFORE, TO THAT EXTENT TO THE BASI S ADOPTED BY THE REVENUE IS HELD AS INCORRECT AND IS REJECTED. 10.6 AS REGARDS THE PERIOD OF LIMITATION, IT IS NOTED TH AT THE ORIGINAL RETURN FOR ASSESSMENT YEAR 2005-06 WAS FUR NISHED ON 30.10.2005 AND THE REVISED RETURN WAS FURNISHED ON 21.8.2006 WHICH WAS FURTHER REVISED ON 12.2.2007. THE LIMITAT ION PROVIDED UNDER SECTION 139(5) OF THE ACT IS ONE YEAR FROM TH E END OF THE RELEVANT ASSESSMENT YEAR. THIS MEANS THAT THE REVIS ED RETURN COULD BE FILED UP TO 31.3.2007 AND SINCE THE LAST R EVISED RETURN WAS FILED ON 12.2.2007, THEREFORE, SUCH REVISED RET URN FILED ON 12.2.2007 IS HELD TO BE VALID. FURTHER, FOR ASSESSM ENT YEAR 2004- 05, THE CLAIM OF THE ASSESSEE IS THAT A RETURN OF I NCOME HAD BEEN FURNISHED ON 21.6.2006 IN RESPONSE TO THE NOTICE DA TED 22.5.2006 UNDER SECTION 148 OF THE ACT AND THE REVI SED RETURN FILED ON 12.2.2007 WAS IN RESPECT OF RETURN FURNISH ED IN RESPONSE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS TO NOTICE UNDER SECTION 148 OF THE ACT. IT HAS BEEN CONTENDED THAT THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTIO N 148 OF THE ACT WAS A RETURN UNDER SECTION 139(1) OF THE ACT AND, T HEREFORE, REVISED IN TERMS OF SECTION 139(5) OF THE ACT. HAVI NG CONSIDERED THE ABOVE ARGUMENT, WE FIND SUBSTANTIAL FORCE IN TH E SAME. SECTION 148(1) OF THE ACT STIPULATES THAT SECTION 1 39, SO FAR AS IS APPLICABLE, SHALL APPLY IN RESPECT OF A RETURN FURN ISHED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT AND , THEREFORE, A RETURN VOLUNTARILY FILED ON 21.6.2006 CAN BE REVISE D IN TERMS OF SECTION 139(5) OF THE ACT IN RESPONSE TO NOTICE UND ER SECTION 148 OF THE ACT. THE HONBLE APEX COURT IN THE CASE OF R. DALMIA V. CIT REPORTED IN 236 ITR 480 (SC) HAS HELD AS UNDER: WE DO NOT DOUBT THAT ASSESSMENT UNDER SECTION 143 AND ASSESSMENTS AND REASSESSMENTS UNDER SECTION 147 ARE DIFFERENT, BUT IN MAKING ASSESSMENT AND RE-ASSESSME NTS UNDER SECTION 147 THE PROCEDURE LAID DOWN IN SECTIO NS SUBSEQUENT TO SECTION 139, INCLUDING THAT LAID DOWN BY SECTION 144B HAS TO BE FOLLOWED' 10.7 MOREOVER, IT IS ALSO PERTINENT TO NOTE THAT ONCE T HERE IS NO DISPUTE AS TO THE TAXABILITY OF INCOME, THE ISSUE B ECOMES ACADEMIC. HOWEVER, SINCE THE SAME HAS BEEN RAISED, THE ISSUE HAS BEEN EXAMINED AND IS FOUND AS A MATTER OF FACT THAT THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS EDIFICE OF THE PRESENT PROCEEDINGS WAS COMMUNICATED BY THE ALSO, THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF MRS. RAMA SINHA VS. CIT REPORTED IN 256 ITR 481 (P&H) HA S HELD AS UNDER: ONCE A RETURN IN PURSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT' 1961 IS FILED THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTIO N 139. THE POSITION WAS THE SAME EVEN PRIOR TO THE AMENDMENT O F SECTION 148 WITH EFFECT FROM APRIL 1, 1989. THE UNAMENDED P ROVISION ALSO PROVIDED THAT ON ISSUE OF A NOTICE UNDER SECTI ON 148, THE PROVISIONS OF THE IS ACT SHALL SO FAR AS MAY BE APP LY ACCORDINGLY AS IF A NOTICE WERE A NOTICE ISSUED UND ER SUB SECTION (2) OF SECTION 148 HAS TO BE TREATED AS IF IT HAS BEEN FILED UNDER SECTION 139. THAT BEING SO, THE PROCEDU RAL PROVISIONS FOR MAKING AN ASSESSMENT UNDER SECTION 1 43(3) OF THE ACT ALSO COME INTO PLAY. 10.8 HAVING REGARD TO THE AFORESAID FINDINGS, GROUNDS RA ISED IN GROUND NOS. 2 TO 2.1 IN ITA NO. 1004/DEL/2011 FOR A SSESSMENT YEAR 2004-05 AND GROUNDS NOS. 2 TO 2.1 IN ITA NO. 1005/DEL/2011 FOR ASSESSMENT YEAR 2005-06 BY THE A SSESSEE ARE ALLOWED. 10.9 GROUND NOS. 3 TO 3.5 ARE REGARDING THE TREATMENT OF RECEIPTS OF RS. 10,48,44,798/- IN AY 2004-05 AND RS . 4,10,20,996.81 IN AY 2005-06 AS UNEXPLAINED INVESTM ENT UNDER ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS SECTION 69 OF THE ACT. THE ASSESSING OFFICER, IN TH E ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2004-05, HAS HELD TH E ABOVE ADDITIONAL INCOME TO BE UNEXPLAINED MONEY UNDER SEC TION 69A OF THE ACT FOR THE FOLLOWING REASONS: 10. RECEIPTS IN NATWEST BANK UNEXPLAINED MONEY U/S 69A THE ASSESSEE COMPANY HAS CLAIMED THE RECEIPTS FROM TPE AND OTHER RECEIPTS IN NATWEST BANK A/C IN LONDON, A S BUSINESS RECEIPT. THE ASSESSEE DID NOT DISCLOSE THE BANK ACCOUNTS AND THE RECEIPTS OF MONEY IN THE ORIGINAL RETURN OR IN THE BOOKS OF ACCOUNT MAINTAINED BY IT. THESE RECEIP TS HAVE BEEN INCORPORATED IN ITS PROFIT AND LOSS ACCOUNT FI LED WITH THE RETURN OF INCOME ON 12.2.07. THE ASSESSEE HAS NOT B EEN ABLE TO FURNISH COPY OF INVOICE RAISED AS PER TERMS OF A GREEMENT WITH TPE, REGARDING THE RECEIPTS IN ITS LONDON ACCO UNT. THE AGREEMENT DID NOT PROVIDE FOR PAYMENT OF ANY ADVANC E. ASSESSEE HAS NOT EXPLAINED THE SOURCE OF RECEIPTS I N GB POUNDS. THE ASSESSEE HAS NOT FURNISHED ANY CONFIRMA TION FROM TPE THAT THE PAYMENTS MADE IN THE NATWST ACCOU NT WAS ON ACCOUNT OF OBRA PROJECT. MERELY FILING OF CO PY OF AGREEMENT BETWEEN TPE AND RAPL AND A FEW CORRESPOND ENCE IN THIS REGARD CANNOT LEAD TO THE CONCLUSION THAT T HE RECEIPTS WERE COMMISSION ON ACCOUNT OF THE OBRA PROJECT. IN FACT, IT HAS BEEN ADMITTED THAT THE OBRA PROJECT DID NOT TAK E OFF AND ON MOU HAD TO BE SIGNED ON 20.4.06 BETWEEN TPE AND UPRVUNL WHEREBY TIME FOR COMPLETING PHASE I OF THE PROJECT WAS EXTENDED UP TILL 4.11.06. INFORMATION WAS RECEIVED U/S 133(6) OF THE I.T. ACT ON 28.12.07 FROM UPRVUNL OBRA REGARDING AMOUNT PAID BY UPRVUNL TO TPE RUSSIA DURING THE PERIOD 2003-04. TH E AMOUNT PAID DURING THE PERIOD IN RUPEES IS AS UNDER :- DATE AMOUNT (RS.) REMARKS 17.7.03 67,484,970 INVOICE NO. 1 ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS DT. 18.7.03 25.7.03 118,795,933 AS 10% ADVANCE 186,280,903 29.03.04 21 816,915 INVOICE NO. 2 DT. 23.3.04 29.03.04 28,588,217 TOTAL 504,05,132 TOTAL FOR FY 2003-04 RS. 236,686,035/- THE ASSESSEE COMPANY HAS CLAIMED TO HAVE RECEIVED T OTAL OF RS. 104,844,798/- IN OCT. 2003, WHICH COMES TO 56.2 8% OF THE AMOUNT PAID BY UPRVUNL TO TPE RUSSIA TILL OCTOB ER 2003. THIS IS NO WAY CORRELATES WITH THE SUPPOSED P AYMENT BY TPE TO THE AGENT (RAPL) AT THE RATE OF 12.25% OF THE PRICE OF THE CONTRACT. THUS, IT CANNOT BE SAID THAT THE A MOUNTS RECEIVED FROM TPE/OTHERS IN ITS NATWEST BANK ACCOUN T IS ON ACCOUNT OF THE AGREEMENT OF ASSESSEE WITH TPE RELAT ING TO OBRA PROJECT. ASSESSEE HAS FILED COPIES OF CORRESPONDENCE WITH D. M. KRASSTOV, RESIDENT REPRESENTATIVE OF TPE IN INDIA, REGARDING VISA SUPPORT FOR RUSSIAN EXPORTS FOR EXECUTION OF T HE CONTRACT OF OBRA A TPS PACKAGE I (5X50 MW), REFURBISHMENT OF OBRA A & B TPS-PACKAGE III (5X200 MW) REVISED PRIC E BIDS BY UPRVUNL ETC. BUT, SUCH CORRESPONDENCE DO NOT SEEM T O JUSTIFY, SUCH HUGE PAYMENTS IN THE ACCOUNT OF THE A SSESSEE COMPANY, DURING THE YEAR. IN SUCH CIRCUMSTANCES, TH E RECEIPTS IN THE NATWEST BANK ACCOUNT OF RS. 104,882,665/- IS TREATED AS UNEXPLAINED MONEY U/S 69A AND INCOME FRO M OTHER SOURCES. AS THESE RECEIPTS WERE NOT DISCLOSED IN THE ORIGINAL RETURN IT IS TREATED AS UNDISCLOSED INCOME FROM OTHER SOURCES AND IS ADDED TO ASSESSEES COMPANY 10.10 FURTHER IN ORDER FOR ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER HAS HELD AS UNDER: ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS AS PER PARA 2.6 OF THE AGREEMENT WITH TPE, ASSESSE E COMPANY WAS REQUIRED TO SUBMIT QUARTERLY REPORTS IN WRITING ABOUT THE PERFORMANCE OF ITS OBLIGATIONS. ASSESSEE WAS ASKED TO PRODUCE THESE REPORTS. ASSESSEE COULD SUBMIT ONL Y ONE LETTER DATED 16.7.2004, STATED TO BE FAXED TO THE T PE ON 16.7.04 DETAILING MEETING HELD WITH OFFICIALS OF EN ERGY, UPRVUNL AND TPS OBRA ON 13-14 JULY, 2004. THIS LETT ER DOES NOT TALK ABOUT AS TO WHICH QUARTER IT PERTAINS TO AND WITH NO DETAILS OF JOB CARRIED OUT BY THE ASSESSEE COMPANY FOR TPE. ASSESSEE COULD NOT SUBMIT PROOF OF DELIVER Y OF THIS LETTER TO TPE OR ANY REVERSE CORRESPONDENCE FROM TP E IN THIS REGARD. IN VIEW OF THE SAME, THE GENUINENESS OF THI S LETTER BEING QUARTERLY REPORT AS MENTIONED IN THE AGREEMEN T WITH TPE IS REJECTED. THE ASSESSEE HAS ALSO NOT FURNISHE D ANY CONFIRMATION FROM TPE THAT THE PAYMENTS MADE IN NAT WEST ACCOUNT IS IN ACCOUNT OF OBRA PROJECT NOR PRODUCED ORIGINAL AGREEMENT WITH TPE. THE ASSESSEE FURTHER SUBMITTED THAT NO INVOICES WERE RAISED BY THE ASSESSEE TO THE TPE. FU RTHER, THE COUNSEL STATED THAT THE RECEIPTS FROM TPE COULD NOT BE CORRELATED EXACTLY WITH THE TERMS AND CONDITIONS OF THE AGREEMENT. MERELY FILING A COPY OF AGREEMENT BETWEE N TPE AND ASSESSEE AND A FEW CORRESPONDENCES IN THIS REGA RD CANNOT ESTABLISH THAT RECEIPTS WERE COMMISSION ON A CCOUNT OF THE OBRA PROJECT. IN FACT IT HAS BEEN SUBMITTED THA T OBRA PROJECT DID NOT TAKE OFF AND AN MOU HAD TO BE SIGNE D ON 20.4.06 BETWEEN TPE AND UPRVUNL WHEREBY TIME FOR COMPLETING PHASE I OF THE PROJECT WAS EXTENDED TILL 4.11.2006. THE CORRESPONDENCES FILED BY THE ASSESSEE DOES NOT EXPLAIN THE NATURE OF WORK CARRIED OUT BY THE ASSESSEE COMP ANY FOR TPE WHICH WOULD JUSTIFY HUGE PAYMENTS IN THE ACCOUN T OF THE ASSESSEE COMPANY. IN THE ABOVE FACTS AND CIRCUMSTAN CES, THE EXPLANATION GIVEN BY THE ASSESSEE IS FOUND TO BE UNSATISFACTORY AND HENCE THE DEPOSITS IN THE NATWES T BANK LONDON TO THE TUNE OF RS. 4,10,21,607.89 (INCLUDING BANK INTEREST OF RS. 611.08) IS TREATED AS UNEXPLAINED I NVESTMENT U/S 69 OF THE ACT AND DEEMED TO BE INCOME OF THE AS SESSEE. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, I AM SATISFIED THAT ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCO ME AND THEREFORE PENALTY PROCEEDINGS U/S 271(1)(C) IS INIT IATED. 10.11 THE LD. CIT (A), AFTER CONSIDERING THE SUBMISSIONS AND ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE AND CALLING FOR A REMAND REPORT AND REJOINDER SUBMISSIONS OF THE ASSE SSEE, HELD THAT INCOME DECLARED REPRESENTED UNDISCLOSED INCOME UNDER SECTION 69 OF THE ACT. HE HAS HELD AS UNDER: PARA 8.9 COMING TO THE MERIT OF THE CASE REGARDING THE NATURE AND SOURCE OF INCOME ON CAREFUL CONSIDERATIO N OF THE MATTER I FIND THAT THE APPELLANT COMPANY HAS CLEARL Y FAILED TO EXPLAIN THE NATURE AND SOURCE OF THE CREDITS OF RS. 10,48,44,798/- IN A.Y. 2004-05 AND RS. 4,10,20,996. 81 IN A.Y. 2005-06. THE DOCUMENTS PRODUCED BY THE APPELLA NT COMPANY IN THE COURSE OF ASSESSMENT PROCEEDINGS N AMELY PHOTOCOPY OF AGREEMENTS WITH M/S TPE CONFIRMATION F ROM M/S TPE AND COPY OF SOME CORRESPONDENCE DO NOT IN A NY WAY THROW SUFFICIENT LIGHT ON THE NATURE AND SOURCE OF THE HUGE DEPOSITS MADE IN THE ACCOUNTS MAINTAINED BY THE ASS ESSEE COMPANY. THE AO HAS ALSO RAISED A NUMBER OF OBJECTI ONS AND POINTED OUT A NUMBER OF ANOMALIES IN THE APPELLANTS SUBMISSIONS BOTH IN THE ASSESSMENT ORDER AND IN REM AND REPORT I FIND THAT THE APPELLANT HAS NOT BEEN ABLE TO COUNTER THE ABOVE OBJECTIONS OR EXPLAIN THE ANOMALIES BY AN Y DOCUMENTARY EVIDENCE OR CLARIFICATION. EVEN THE ORI GINAL COPY OF THE AGREEMENT WITH M/S TPE IS NOT PRODUCED BY TH E ASSESSEE COMPANY FOR REASONS BEST KNOWN TO IT. I FI ND THAT THE ASSESSEE COMPANY HAS NOT BEEN ABLE TO PROVE THE NATURE OF DETAILS OF SERVICE CLAIMED TO HAVE BEEN RENDERED BY IT BY WAY OF ANY BOOKS OF ACCOUNT, RECORDS, BILLS RAISED OR ANY ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OTHER DOCUMENTARY EVIDENCES, OTHER THAN MERE COPY O F AGREEMENT/CONFIRMATION AS STATED ABOVE OR TO GIVEN ANY CORRELATION BETWEEN THE SERVICE RENDERED AND AMOUNT S RECEIVED. PARA 8.10 FROM THE ABOVE, IT IS CLEAR THAT THE ASSE SSEE COMPANY, OTHER THAN OWING UP THE CREDITS IN THE BAN K ACCOUNTS AS ITS INCOME FOR BOTH THE YEAR UNDER APPE AL HAS NOT BEEN ABLE TO ESTABLISH THE NATURE AND SOURCE OF SUC H RECEIPTS BY ANY SATISFACTORY DOCUMENTARY EVIDENCE OR BOOKS O F ACCOUNTS. IN THE EVENT THE APPELLANTS CLAIM THAT T HE SAID INCOME REPRESENTS ITS INCOME FROM THE BUSINESS OF CONSULTANCY IS REJECTED. CONSIDERING THE ABOVE SINC E THE SAID INVESTMENTS ARE NOT RECORDED IN THE BOOKS OF ACCOUN T OF THE ASSESSEE COMPANY AND , THE ASSESSEE COMPANY HAS NOT BEEN ABLE TO OFFER ANY SATISFACTORY EXPLANATION ABOUT TH E NATURE AND SOURCE OF TH ABOVE INVESTMENTS IN HER BANK ACCO UNT FIND THAT THE VALUE OF THE INVESTMENTS IS TO BE RIGHTFUL LY TREATED AS UNEXPLAINED INVESTMENT OF THE APPELLANT U/S 69 OF T HE ACT. THIS ISSUE OF THE APPELLANT IS THEREFORE REJECTED. 10.12 IN THE WRITTEN SUBMISSIONS BEFORE US THE ASSESSEE H AS CONTENDED AS UNDER: 11. THAT APPELLANT COMPANY HAD RECEIVED SUMS UNDER THE AGREEMENT DATED 23 RD OF JULY, 2003 WITH M/S TECHNOPROMEXPORT, 18/1, OVCHINNIKOVSKAYA NAB., MOSC OW, 115324, RUSSIA. (HEREINAFTER REFERRED TO AS TPE). THE SUMS WERE RECEIVED BY THE ASSESSEE COMPANY UNDER THE AFO RESAID AGREEMENT WAS FOR PROVIDING SUPPORT SERVICES TO M/S TPE DURING IMPLEMENTATION OF THEIR CONTRACT DATED 5 TH OF FEBRUARY, 2003 WITH M/S UTTAR PRADESH RAJYA VIDYUT UTPADAN NI GAM LTD (HEREIN AFTER REFERRED TO AS UPRVUNL). FOR RE FURBISHMENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH STATE, INDIA. THE NATURE OF THE SUPPORT SERVICES SO PROVIDED TO M /S TPE IS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS VERY ILLUSTRATED IN THE CORRESPONDENCES EXCHANGED B ETWEEN M/S TPE AND APPELLANT AND, IS DULY SUPPORTED BY FOL LOWING EVIDENCES: S.NO. PARTICULARS PAGE OF PAPER BOOK 1. COPY OF AGREEMENT BETWEEN M/S TPE AND APPELLANT DATED 23.07.2003 67 TO 70 OF PAPER BOOK-I 2. COPY OF ADDENDUM NO. 1 DATED 23.7.2003 TO THE AGREEMENT DATED 23.7.2001 71 OF PAPER BOOK-I 3. COPY OF ADDENDUM NO. 2 DATED 24.9.2003 72-73 OF PAPER BOOK-I 4. COPY OF ADDENDUM NO. 3 DATED 30.4.2004 74 TO 75 OF PAPER BOOK-I 5. COPY OF REMITTANCES CERTIFICATE ISSUED BY BANK CERTIFYING THE SUMS RECEIVED BY ASSESSEE COMPANY FROM M/S TPE 76 TO 77 OF PAPER BOOK-I. 6. COPY OF DETAILS OF VARIOUS EXPENDITURES INCURRED BY ASSESSEE COMPANY 264 TO 372 OF PAPER BOOK-II 7. COPY OF ILLUSTRATED CORRESPONDENCE OF M/S TPE ` 483 TO 670 OF PAPER BOOK-II 8. COPY OF AGREEMENT OF M/S TPE WITH M/S UPRVUNL 915 TO 934 OF PAPER BOOK-III 9. COPY OF BROCHURE OF TPE 798 TO 823 OF PAPER BOOK-III 10. COPY OF MOU DATED 20.4.2006 BETWEEN M/S TPE AND M/S UPRVUNL 872 TO 874 OF PAPER BOOK-III 11. COPY OF LETTER FROM M/S TPE DATED 26.4.2006 875 OF PAPER BOOK-III 12. THAT DIRECTOR OF THE APPELLANT COMPANY NAMELY M ISS RAVINA KHURANA HAD ALSO BEEN EXAMINED ON OATH BY LE ARNED A.O. AND, SHE HAD DULY STATED THAT, SHE WAS PROVIDI NG SERVICES AND, HAD ALSO FURNISHED SUPPORTED EVIDENCE S AND, STOOD THE TASK OF CROSS-EXAMINATION. 13. THAT NO SUMMONS WERE ISSUED TO M/S TPE DESPITE SPECIFIC REQUEST OF THE ASSESSEE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 14. THAT MERE FACT THAT THE AFORESAID SUM WAS NOT D ISCLOSED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME CO ULD NOT BE MADE A BASIS TO HOLD THAT, SUCH SUM WAS REPRESENTED UNEXPLAINED MONEY UNDER SECTION 69A OF THE ACT, PAR TICULARLY, IN LIGHT OF THE EVIDENCES FURNISHED BY THE APPELLAN T. 15. THAT SO FAR AS THE RECORDING OF SUCH INCOME IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT, APPELLANT HAD STATED IN ITS LETTER DATED 11.4.2006 THAT, SUMS REC EIVED HAD BEEN RECORDED IN JOURNALS MAINTAINED BY THE APPELLA NT COMPANY IN RESPECT OF FOREIGN VENTURES. A COPY OF T HE JOURNALS SO MAINTAINED HAD ALSO BEEN PLACED ON RECORD AND, A RE PLACED AT PAGE 759 TO 768 OF PAPER BOOK-III. 16. THAT AFORESAID SUM WAS ONLY NOT DISCLOSED IN TH E ORIGINAL RETURN FOR THE FACT THAT, APPELLANT COMPAN Y WAS OF THE OPINION THAT, ENTIRE SUM RECEIVED WAS NOT LIABLE TO TAX IN INDIA AND IT WAS ONLY AT THE FAG END OF FEBRUARY, 2006 TH AT, APPELLANT HAD MADE AWARE IN THE COURSE OF DISCUSSIO NS WITH MR. RAM JETH MALANI, SENIOR ADVOCATE THAT ALL SUCH INCOME ARISING FROM PROVIDING TECHNICAL AND SUPPORT SERVIC ES WERE LIABLE TO BE INCLUDED IN INCOME FOR TAXATION IN IND IA. 17. THAT OBSERVATION THAT AGREEMENT DID NOT PROVIDE PAYMENT OF ANY ADVANCE AND, ASSESSEE HAS NOT EXPLAI NED THE SOURCE OF RECEIPTS IN GP POUNDS ARE FACTUALLY M ISPLACED. INFACT, PERUSAL OF THE DETAILS OF REMITTANCES RECEI VED WOULD SHOW THAT, NO SUM WAS RECEIVED IN GP POUNDS AND ENT IRE SUMS HAVE BEEN RECEIVED IN US DOLLARS (PAGE 76 OF P APER BOOK-I). IT IS ALSO SUBMITTED THAT, EACH OF THE SUM S RECEIVED ARE DULY SUPPORTED BY CERTIFICATE FROM BANK WHICH H AS BEEN PLACED IN THE PAPER BOOK-I AND PAGE 262 AND 263 OF PAPER BOOK-II. THE ALLEGATION THAT, AGREEMENT DID NOT PR OVIDE FOR ANY PAYMENT OF ADVANCE, IS ALSO MISPLACED AS WOULD BE SEEN FROM THE ANNEXURE A TO THIS SUBMISSION AND, THEREFO RE, NO ADVERSE INFERENCE BE DRAWN. 18. THAT HE HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN RECORDING ADVERSE OBSERVATIONS ON THE BASIS OF INFO RMATION OBTAINED UNDER SECTION 133(6) OF THE ACT FROM M/S U TTAR ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS PRADESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED FOR REFURBISHMENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH AND THAT TOO, WITHOUT CONFRONTING THE SAME TO THE A SSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS AND, IN ANY CA SE, THE SUMS RECEIVED BY THE APPELLANT COMPANY HAVE FULL CO RRELATION WITH THE ADVANCES RECEIVED BY M/S TPE FROM M/S UTTA R PRADESH RAJKIYA VIDYUT UTPADAN NIGAM LIMITED AND, A S WOULD BE SEEN FROM ANNEXURE-1 TO THIS SUBMISSION. 19. IT IS FURTHER SUBMITTED THAT, THE FACT THAT A C RIMINAL CASE WAS REGISTERED UNDER INDIAN PENAL CODE AND PREVENTI ON OF CORRUPTION ACT AGAINST UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHERS ON 6.3.2006 WAS NOT IN RESPECT OF THE CO NTRACT ENTERED BY THE APPELLANT COMPANY WITH M/S TPE OR TH E CONTRACT ENTERED BY M/S TPE WITH M/S UTTAR PRADESH RAJIYA VIDYUT UTPADAN NIGAM LTD. AND THUS, THE SAME COULD NOT BE MADE A BASIS TO HOLD THAT, INCOME DECLARED BY THE A SSESSEE VIDE LETTERS DATED 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 AND, SUBSEQUENTLY IN RETURN OF INCOME DATED 21.6.2006 AN D, 12.2.2007 WAS NOT VOLUNTARY. IT MAY BE STATED HERE THAT, ENTIRE INCOME AS ACCRUING TO M/S RAPL ON THE BASIS OF ITS CONTRACT WITH M/S TPE AND, CONTRACT OF M/S TPE WITH M/S NTPC HAS BEEN DECLARED BY M/S RAPL IN A.Y. 2006-200 7. A COPY OF THE RETURN OF INCOME FILED BY M/S RAPL FOR A.Y. 2006- 2007 IS PLACED AT PAGES 644 TO 752 OF PB-III. INFA CT, THIS SUBMISSION HAS ALSO NOT EVEN BEEN SPECIFICALLY DISP UTED BY THE LEARNED AO (SEE REPLY DATED 12.2.2007 (PAGES 51 TO 66 OF PB-I). 20. THAT CONCLUSION THAT, QUARTERLY REPORT FURNISHE D BY THE APPELLANT VIDE LETTER DATED 16.07.04 WAS NOT A QUAR TERLY REPORT FURNISED IN TERMS OF THE AGREEMENT DATED 23. 07.03 TO M/S TPE IS FACTUALLY INCORRECT AS WOULD BE SEEN FRO M LETTER DATED 16.07.2004. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10.13 ON THE OTHER HAND, THE LD. CIT DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND REQUESTED THAT THE CLA IM OF THE ASSESSEE BE REJECTED. 10.14 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE AS SESSEE COMPANY HAD ENTERED INTO TWO AGREEMENTS WITH M/S. TPE, A GO VERNMENT COMPANY INCORPORATED IN RUSSIA FOR PROVIDING SUPPOR T SERVICES DURING IMPLEMENTATION OF THEIR CONTRACTS IN INDIA. THE DETAILS OF AGREEMENTS ARE AS UNDER: (A) 23.07.2003: UPRVUNL AGREEMENT FOR IMPLEMENTATIO N OF CONTRACT OF TPE DATED 5 TH OF FEBRUARY, 2003 WITH M/S UTTAR PRADESH RAJYA VIDYUT UTPADAN NIGAM LTD (HEREIN AFTER REFERRED TO AS UPRVUNL). FOR REFURBISHMENT OF OBRA THERMAL POWER STATION, UTTAR PRADESH STATE, INDIA (B) 25.10.2004 : NTPC AGREEMENT FOR IMPLEMENTATION OF CONTRACT OF TPE DATED 25 TH OF MARCH2005 WITH NTPC FOR DESIGN, MANUFACTURING, DELIVERY, TRANSPORTATION TO THE SITE, UNLOADING, STORING, ERECTION, TESTING, ST ART-UP, ADJUSTMENT AND COMMISSIONING OF BOILER ISLANDS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS EQUIPMENT AT BARH SUPER THERMAL POWER PROJECT (3X660 MW), BIHAR, INDIA 10.15 UNDER THE AFORESAID TWO AGREEMENTS, ACCORDING TO T HE ASSESSEE, FOLLOWING SUMS WERE RECEIVED BY THE ASSES SEE COMPANY: A) IN RESPECT OF UPRVUNL AGREEMENT: RS. 14,58,65,7 94/- B) IN RESPECT OF NTPC AGREEMENT RS. 97,13,86,901/ - -------- -------------- RS. 111,72,52,695/- 10.16 IT HAS BEEN STATED THAT THE SAID SUMS WERE RECEIVE D IN THREE ASSESSMENT YEARS IN THE FOLLOWING MANNER: SR. NO A.Y. TOTAL INCOME RECEIVED FROM TPE AND, CREDITED IN NATWEST BANK ACCOUNT IN UK TOTAL INCOME RECEIVED FROM TPE AND, CREDITED IN DEUTSCHE BANK ACCOUNT IN INDIA TOTAL 1. 04-05 10,48,44,798 ---- 10,48,44,798 2 05-06 4,10,20,996 ---- 4,10,20,996 3 06-07 93,80,80,778 3,33,06,123 97,13,86,901 TOTAL 108,39,46,572 3,33,06,123 111,72,52,695 10.17 IT HAS BEEN SUBMITTED BY THE LD. AR THAT AS FAR AS THE INCOME OF RS. 97,13,86,901/- UNDER THE NTPC AGREEM ENT IS CONCERNED, THE SAME WAS DECLARED IN THE ORIGINAL RE TURN OF INCOME FILED ON 12.02.2007 FOR A.Y. 06-07; AND FURT HER, SUM OF ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS RS. 10,48,44,798/- HAS BEEN OFFERED FOR TAX AS INC OME IN ASSESSMENT YEAR 2004-05 AND RS. 4,10,20,996.81 IN A SSESSMENT YEAR 2005-06. 10.18 IT IS FURTHER SEEN THAT ARTICLE 2 OF THE AGREEMENT DATED 23.7.2003 PROVIDES AS UNDER: 2.1.1 RAVINA & ASSOCIATE PVT. LTD. (RAPL) SHALL RE NDER COMPREHENSIVE ASSISTANCE TO TECHNOPROMEXPORT IN ARRANGING TALKS AND MEETINGS WITH THE INDIAN PURCHA SER, LOCAL SUB-CONTRACTORS AND ENTERPRISES. 2.1.2 RAPL SHALL ACT ONLY IN THE INTERESTS OF TECHNOPROMEXPORT WHILE DEALING WITH THE PURCHASER, OFFICIALS OF THE INDIAN GOVERNMENT AND OTHER COMPAN IES. 2.1.3 RAPL SHALL RENDER ASSISTANCE TO REPRESENTATIV ES OF TECHNOPROMEXPORT IN SETTING OF ADMINISTRATIVE MATTE RS WITHIN THE PERIOD OF EXECUTION OF THE SIGNED CONTRA CT. 2.1.4 RAPL SHALL RENDER ASSISTANCE TO TECHNOPROMEXP ORT IN SETTING MATTERS CONNECTED WITH DUE EXECUTION OF THE CONTRACT, SUCH AS: MAKING PAYMENTS, ARRANGING PAYME NTS OF LOCAL TAXES AND DUTIES, CUSTOMS CLEARANCE, OBTAININ G REQUIRED PERMISSIONS, LICENCES, VISAS FROM THE INDIAN GOVERN MENT OFFICIALS, SETTLEMENT OF DISPUTES AS WELL AS RENT O F ACCOMMODATION, MEETING OF THE SPECIALISTS OF TECHNOPROMEXPORT ETC. 2.1.5 RAPL SHALL RENDER ASSISTANT TO TECHNOPROMEXPO RT IN SETTLEMENT OF CURRENCY AND FINANCIAL MATTERS UND ER THE CONTRACT, INCLUDING ENSURING OF TIMELY RECEIPT OF P AYMENTS DUE TO TECHNOPROMEXPORT BY THE PURCHASER AND RELEASING OF THE BANK GUARANTEES ISSUED IN FAVOUR O F THE PURCHASER. 2.3 RAPL SHALL STRICTLY WATCH OVER ALL INDUSTRIAL A ND COMMERCIAL INTERESTS OF TECHNOPROMEXPORT AND KEEP ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS CONFIDENTIAL ALL THE INFORMATION BECAME KNOWN TO HI M IN THE COURSE OF IMPLEMENTATION OF THIS AGREEMENT. 2.4 AGENT AND TECHNOPROMEXPORT CONSIDER ALL THE INFORMATION AND DATA THE PARTIES EXCHANGED IN THE C OURSE OF IMPLEMENTATION HEREOF TO BE CONFIDENTIAL. 2.5 AGENT SHALL NOT HAVE THE RIGHT TO CREATE OR UND ERTAKE ANY OBLIGATIONS ON BEHALF OF TECHNOPROMEXPORT WITHO UT PRIOR WRITTEN INSTRUCTIONS OF TECHNOPROMEXPORT. 2.6 RAPL SHALL SUBMIT TO TECHNOPROMEXPORT QUARTERLY REPORTS IN WRITING ABOUT PERFORMANCE OF HIS OBLIGAT IONS UNDER THIS AGREEMENT WITHOUT ANY SUPPLEMENTARY REMINDING OF TECHNOPROMEXPORT. IN CASE OF NON-PRESENTATION OF TH ESE REPORTS TECHNOPROMEXPORT SHALL HAVE THE RIGHT TO SUSPEND PAYMENT OF CURRENT INVOICE OF THE AGENT SUB MITTED IN CONFORMITY WITH ARTICLE 4 HEREOF. 10.19 THE ASSESSEE HAS PLACED ON RECORD INVOICES ISSUED BY THE APPELLANT TO TPE, REMITTANCE CERTIFICATES ISSUED BY THE NATWEST BANK CERTIFYING THAT THE SUMS RECEIVED BY THE ASSES SEE COMPANY WERE FROM TPE, CORRESPONDENCE OF ASSESSEE WITH TPE AND UPRVUNL AND, A LETTER FROM TPE DATED 19.5.2016 WHIC H READS AS UNDER: DEAR SIR, PLEASE BE INFORMED HEREBY THAT THE RUSSIAN GOVERNME NT OWNED JSC TECHNOPROMEXPORT (TPE) IS A WELL ESTABL ISHED COMPANY IN THE POWER SECTOR WHICH CELEBRATED IN 200 5 HALF A CENTURY JUBILEE FROM THE DAY OF ITS FOUNDATION. IN THE YEARS OF THE PLANNED ECONOMY IN THE USSR TPE WAS ENGAGED IN REALIZATION OF THE INTER GOVERNMENTAL AGREEMENTS AN D CONTRACTS FOR POWER PROJECTS CONSTRUCTION ABROAD, P ARTICULARLY IN INDIA. SINCE THE 1960S, AT LEAST 400 POWER PROJE CTS HAVE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS BEEN CONSTRUCTED BY TPE ALL OVER THE WORLD, INCLUDI NG 11 PROJECTS IN INDIA. DURING THESE TIMES THE USSR REND ERED WIDE- SCALE TECHNICAL AND ECONOMIC ASSISTANCE TO FRIENDLY COUNTRIES. SOME OF THE FIRST POWER PROJECTS CONSTRUCTED BY TPE IN INDIA WERE HPP BHAKRA TPS NEYVELI, TPS OBRA AND HPP LOWER SILERU, WHICH TOTAL CAPACITY EXCEEDS 1600 MW . MANY OF THEM WERE AWARDED WITH SPECIAL PRIZES FOR THE HI GH EFFICIENCY AND TPS NEYVELI (600 MW) WAS MARKED WI TH GOVERNMENT REWARDS. BUILT BY NTPC WITH ASSISTANCE O F TPE SPECIALISTS, SRTPP VINDHYACHAL TILL NOW KEEPS OCC UPYING ONE OF THE FIRST PLACES FOR A NUMBER OF ITS ECONOMI C PARAMETERS AMONG THE THERMAL POWER STATIONS IN INDI A. SINCE THEN TPE HAS PUT INTO OPERATIONS 11 POWER PROJECTS IN INDIA OF TOTAL CAPACITY OVER 3000 MW TPE CATALOGUE IS ENCLOS ED HEREWITH FOR YOUR REFERENCE). TAKING INTO ACCOUNT SUCH PLANS OF INDIA IN THE POWE R SECTOR OF THE COUNTRY, TPE HAS TAKEN THE ACTIVE POSITION IN A DVANCING ITS SERVICES AND RENDERING ASSISTANCE TO INDIAN ASS OCIATES IN REALIZATION OF THE STATED PROJECTS. AMONG THE PROJE CTS, WHICH TPE REALIZES AT PRESENT IS RECONSTRUCTION OF TPS OBRA FOR UPRVUNL AND DELIVERY INSTALLATION AND BRINGING INTO SERVICE OF THE HYDRO-MECHANICAL EQUIPMENT AT THE HYDROELECT RIC POWER PLANT INDIRA SAGAR FOR NHSDC. BUT THE MOST SIGNIF ICANT EVENT IS THE SIGNING DURING MARCH 2005 OF THE CONT RACT WITH NTPC FOR CONSTRUCTION OF THE BOILER ISLAND OF B ARH STPP OF 1980 MW CAPACITY WITHIN THE FRAMEWORK THE MEGA-PR OJECT PROGRAM FOR THE SUM OF APPROXIMATELY 20 BILLION IND IAN RUPEES. THIS POWER PLANT WILL CONSIDER OF 3 UNITS OF 660 MW EACH, DESIGNED FOR THE SUPERCRITICAL PARAMETERS OF STEAM ON THE SLIDING PRESSURE. TRADITIONALLY, THE EFFICIENCY OF UNIT DIRECTLY DEPENDS ON THE MODE UNDER WHICH THE POWER UNIT IS OPERATED. THE HIGHER THE CAPACITY, THE HIGHER IS TH E EFFICIENCY AND, ON THE CONTRARY, THE LOWER THE CAPACITY, THE L OWER IS THE EFFICIENCY. THE EQUIPMENT, WHICH WILL BE INSTALLED AT BARH TPP, IS DESIGNED FOR THE WORK ON THE SLIDING PARAME TERS. THIS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS WILL MAKE IT POSSIBLE TO REACH HIGH EFFICIENCY, EVE N WITH OPERATION OF THE POWER PLANT AT LOW CAPACITY TPE PO SSESSES WIDE EXPERIENCE IN REALIZATION OF SUCH PROJECTS. FO R EXAMPLE, TPS SUYCHZHUM IN CHINA OF 1600 MW (2X800MW) CAPACITY BUILT WITH THE ASSISTANCE OF TPE SPECIALIS TS. TODAY THE STATION RUNS SUCCESSFULLY WITH BY THE DECLARED PARAMETERS. THE REPUTATION OF TPE IN INTERNATIONAL CIRCLES IS W ELL KNOWN AS A CLEAN, LAW ABIDING AND PIONEERING COMPANY IN T HE POWER SECTOR. THE INTERNATIONAL TENDER BIDDING THE BARH STPP WAS STARTED IN 2002, AND BIDS WERE FINALLY OPENED IN TH E PREMISES OF NNTPC, NOIDA, ON 05.11.2005 IN PRESENCE OF THE PARTICIPANTS: M/S. TPE (RUSSIA), M/S. DOOSAN (KOREA ), M/S.BHEL (INDIA), TPES BID WAS THE LOWEST ONE. NEVERTHELESS, WE BELIEVE THAT THE TEAM OF NTPC EXPE RTS (INCLUDING TECHNICAL, COMMERCIAL, LEGAL, ETC STAFF) HAS DONE VERY CAREFUL INVESTIGATION OF THE SUBMITTED BIDS, V ERIFICATION OF THE DECLARED PARAMETERS. MOREOVER, THE ABOVE TEAM V ISITED MANUFACTURING PLANTS DESIGNING INSTITUTES AND THE S IMILAR TPS SUYCHZHUN IN CHINA. UPON COMPLETION OF THE ABOVE JOB, THE TENDER COMMIT TEE OF NTPC APPROVED TYPE PROPOSAL ISSUED NOTIFICATION OF AWARD IN THE FAVOUR OF TPE ON 14.03.2005 AND INVITED FOR THE CONTRACT NEGOTIATIONS WHICH RESULTED IN THE SIGNING OF THE CONTRACT AGREEMENT BETWEEN NTPV AND TPE ON 25.03.20 05. SAO, THE DECISION TO AWARD THE CONTRACT WAS TAKEN S TRICTLY IN ACCORDANCE WITH THE GOVERNMENT OF INDIA POLICY TO A WARD CONTRACTS TO THE LOWEST BIDDER. SUMMING UP THE ABOVE MENTIONED, WE WOULD LIKE TO DR AW YOUR ATTENTION TO THE FACT THAT THE FIR IS BASELESS AND HAS BEEN REGISTERED AT THE INSTANCE OF BUSINESS. AS REGARDS M/S. RAVINA & ASSOCIATES PVT.LTD, PLEA SE BE INFORMED THAT TPE HAS A GOOD BUSINESS ASSOCIATION W ITH THIS COMPANY ON THE BASIS OF OFFICIAL AGREEMENT SIGNED B Y THE BOTH PARTIES FOR BARH STPP. ALL PAYMENTS MADE TO M/S. RAVINA & ASSOCIATES PVT.LTD. BY TPE WERE THE AMOUNTS PAI D FOR ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS RENDERING SERVICES TO TPE BOTH IN PREPARATION OF TH E BID DOCUMENTS AND IN IMPLEMENTATION OF THE CONTRACT WHI CH DURATION WILL BE AT LEAST 6 YEARS. WE DO BELIEVE THAT OUR EXPLANATION WILL SUFFER YOU TO BE SURE THAT TPE IS AN HONEST COMPANY, WORKING IN ACCORDANC E WITH THE WORLD RULES AND REGULATIONS OF TENDERING AS WEL L AS CARING FOR ITS REPUTATION IN THE WORLD POWER MARKET. YOURS FAITHFULLY, SERGEY V.MOLOZHAVY GENERAL DIRECTOR ENCL: 1 CATALOGUE 10.20 HAVING REGARD TO THESE EVIDENCES, THE QUESTION, THE REFORE, ARISES AS TO WHETHER THE RECEIPTS FROM TPE, CAN BE HELD TO BE UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. SECTION 69 OF THE ACT PROVIDES AS UNDER: 69 WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDI NG THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS W HICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, M AINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OF FERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVE STMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE O PINION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE I NVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF S UCH FINANCIAL YEAR. 10.21 THUS, ACCORDING TO SECTION 69, WHERE IN THE FINANC IAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSES SEE HAS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOK S OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE O F INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM I S NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE A SSESSEE OF SUCH FINANCIAL YEAR. THUS, THE PRECONDITION FOR BRI NGING TO TAX ANY SUM AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT IS THAT THERE MUST BE INVESTMENT FOR WHICH, EITHER NO EXPLANATION HAS BEEN FURNISHED BY THE ASSESSEE OR EXPLANATION F URNISHED ABOUT THE NATURE AND SOURCE OF THE INVESTMENT IS NO T SATISFACTORY. HERE IS NOT A CASE OF NO EXPLANATION BUT IT IS A CASE WHERE THE AUTHORITIES BELOW HAVE HELD THAT EXPLANATION ABOUT THE NATURE AND SOURCE IS NOT SATISFACTORY. TO ARRIVE AT THE AB OVE CONCLUSION, THE REASONING ADOPTED BY THE LD. CIT (A) IS THAT TH E DOCUMENTS PRODUCED BY THE ASSESSEE COMPANY IN THE COURSE OF A SSESSMENT PROCEEDINGS NAMELY PHOTOCOPY OF AGREEMENTS WITH M/S TPE CONFIRMATION FROM M/S. TPE AND COPY OF SOME CORRESP ONDENCE DO NOT IN ANY WAY THROW SUFFICIENT LIGHT ON THE NATURE AND SOURCE OF THE HUGE DEPOSITS MADE IN THE ACCOUNTS MAINTAINED B Y THE ASSESSEE COMPANY. TO OUR MIND, THE CONFIRMATION FRO M TPE IS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS QUITE SPECIFIC AND UNAMBIGUOUS AND IN ANY CASE, THE REAFTER DESPITE SPECIFIC REQUEST BY THE ASSESSEE IN THE ASS ESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS, NO FURTHER E NQUIRIES WERE MADE BY THE ASSESSING OFFICER FROM TPE OR ANY OTHER AUTHORITIES TO REJECT THE CLAIM OF THE ASSESSEE. THE HONBLE DE LHI HIGH COURT IN THE CASE OF CIT VS. GENESIS COMNET (P) LTD REPOR TED IN 163 TAXMAN 482 (DEL) HAS HELD AS UNDER: 9. THE TRIBUNAL TOOK A VIEW THAT THE FACT THAT THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE TWO COMMISSION AGENTS IS NOT ITS FAULT AND THE ASSESSING OFFICER COULD HA VE EXERCISED POWERS AVAILABLE TO HIM TO SUMMON AND CROSS-EXAMINE THESE TWO PARTIES IF, FOR SOME REASON, HE DID NOT ACCEPT THE STATEMENT FURNISHED BY THESE TWO PARTIES. THE ASSES SING OFFICER COULD ALSO HAVE MADE INDEPENDENT ENQUIRIES FROM THE CUSTOMERS OF THE ASSESSEE. HOWEVER, NONE OF THIS WA S DONE. 10. THEREFORE, WE ARE OF THE OPINION THAT THE TRIBU NAL HAS NOT COMMITTED ANY ERROR IN THE VIEW THAT IT HAS TAKEN. THE ASSESSEE PRODUCED ALL THE MATERIAL THAT IT COULD PO SSIBLY PRODUCE AND IF THE ASSESSING OFFICER WAS NOT INCLIN ED TO BELIEVE THE MATERIAL PRODUCED, HE COULD HAVE USED T HE COERCIVE POWERS AVAILABLE TO HIM, WHICH HE FAILED T O EXERCISE. 11. THEREFORE, WE ARE OF THE VIEW THAT IN THIS CASE , NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDER ATION. 10.22 ALSO IN THE CASE OF CIT VS. M/S KAMDHENU STEEL AND ALLOYS LTD. REPORTED IN 361 ITR 220, IT HAS BEEN HE LD HAS UNDER: 16. THE COURT THUS CLEARLY HELD THAT ONCE DOCUMENT S LIKE PAN CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANKERS WERE GIVEN BY THE ASSESSEE, ONUS SHIFTS UPON THE AS SESSING ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OFFICER AND IT IS ON HIM TO REACH THE SHAREHOLDERS AND THE ASSESSING OFFICER CANNOT BURDEN THE ASSESSEE MERELY ON THE GROUND THAT SUMMONS ISSUES TO THE INVESTORS WERE RE TURNED BACK WITH THE ENDORSEMENT 'NOT TRACEABLE'. SAME VIE W IS TAKEN BY THE KARNATAKA HIGH COURT IN MADHURI INVEST MENTS PVT. LTD. V. ACIT (IN ITA NO. 110 OF 2004, DECIDED ON 18.02.2006). IN THIS CASE ALSO, SOME OF SHARE APPLI CANTS DID NOT APPEAR AND NOTICES SENT TO THEM WERE RETURNED W ITH REMARKS 'WITH NO SUCH PERSON'. ADDITION WAS MADE ON THAT BASIS WHICH WAS TURNED DOWN BY THE HIGH COURT IN TH E FOLLOWING WORDS: '6. HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIE S, WE NOTICE THAT WHENEVER A COMPANY INVITES APPLICATIONS FOR ALLOTMENT OF SHARES FROM DIFFERENT APPLICANTS, THER E IS NO PROCEDURE CONTEMPLATED TO FIND OUT THE GENUINENESS OF THE ADDRESS OR THE GENUINENITY OF THE APPLICANTS BEFORE ALLOTTING THE SHARES. IF FOR ANY REASON THE ADDRESS GIVEN IN THE APPLICATION WERE TO BE INCORRECT OR FOR ANY REASON IF THE SAID APPLICANTS HAVE CHANGES THEIR RESIDENCE OR THE NOTI CES SENT BY THE ASSESSING OFFICER HAS NOT BEEN RECEIVED BY S UCH APPLICANTS, THE ASSESSEE COMPANY CANNOT BE BLAMED. THEREFORE, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN ALLOWING THE APPEAL OF THE REVENUE ONL Y RELYING UPON THE STATEMENT OF SRI ANIL RAJ MEHTA, A CHARTER ED ACCOUNTANT.' 10.23 THEREFORE, HAVING REGARD TO THE AFORESAID JUDICIAL PRONOUNCEMENTS, SINCE THE EVIDENCE FURNISHED BY THE ASSESSEE HAS NOT BEEN SHOWN TO BE OTHERWISE BY ANY OTHER LEA DING EVIDENCE SO AS TO REJECT THE SAID CLAIM, THE CLAIM OF THE ASSESSEE MUST BE HELD TO BE MAINTAINABLE FOR THE REASON THAT IT WOULD BE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS FALL IN THE REALM OF ARBITRARINESS TO REJECT A CLAI M WHICH IS SUPPORTED BY AN EVIDENCE AND ACCEPT A CONCLUSION WH ICH IS BASED ON PRESUMPTIONS AND ASSUMPTIONS AND THEREFORE, UNTE NABLE. THE AGREEMENT, INVOICES AND REMITTANCES CERTIFICATES AR E A CLEAR POINTER TO THE CLAIM AS TO THE ORIGINATION OF MONEY FROM TPE AND ALSO THE PURPOSE FOR WHICH SUCH SUM OF MONEY WAS RE MITTED TO THE APPELLANT. THE AGREEMENT OF THE ASSESSEE WITH T PE AND AGREEMENT OF TPE WITH UPRVUNL LEAVE NO IOTA OF DOUB T AND ESTABLISH THAT REMITTANCES FOR THE INSTANT YEAR REP RESENTS INCOME OF THE ASSESSEE RECEIVED FROM THE TPE UNDER THE AFO RESAID AGREEMENTS. IT HAS BEEN HELD BY THE LD. CIT (A) THA T THE ASSESSEE HAS BEEN UNABLE TO COUNTER THE OBJECTIONS OR EXPLAI N THE ANOMALIES BY THE DOCUMENTARY EVIDENCE OR CLARIFICAT IONS AND EVEN THE ORIGINAL COPY OF THE AGREEMENT HAS NOT BEEN PLA CED ON RECORD. AS REGARDS THE ORIGINAL AGREEMENT, THE ASSESSEE, IN ONE OF THE REPLIES DATED 6.11.2007, HAD STATED AS UNDER: 1 KINDLY REFER TO ORDER-SHEET ENTRY DATED 11.10.20 07, WHEREIN THE ASSESSEE COMPANY HAS BEEN DIRECTED TO F URNISH A COPY OF THE ORIGINAL AGREEMENT DATED 23.07.2003 E NTERED BETWEEN M/S TECHNOPROMEXPORT AND THE ASSESSEE COMPANY. THE ASSESSEE COMPANY IN REPLY, RESPECTFUL LY SUBMITS THAT, IT HAS ALREADY FURNISHED BEFORE YOU A PHOTOCOPY OF THE ORIGINAL AGREEMENT. THE ORIGINAL COPY OF TH E AGREEMENT IS NOT TO BE RETAINED BY M/S TECHNOPROMEXPORT AND T HE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ASSESSEE IS BEING SUPPLIED WITH ONLY PHOTOCOPY THER EOF. IN SUCH CIRCUMSTANCES, IT IS SUBMITTED THAT THE PHOTOC OPY OF THE AGREEMENT AS FURNISHED IS THAT OF THE ORIGINAL AGRE EMENT. 10.24 FURTHERMORE, THE OBJECTION THAT AGREEMENT DID NOT PROVIDE PAYMENT OF ANY ADVANCE AND THE ASSESSEE HAD NOT EXPLAINED THE SOURCE OF RECEIPTS IN GP POUNDS IS FA CTUALLY MISPLACED. THE PERUSAL OF THE DETAILS OF REMITTANCE S RECEIVED WOULD SHOW THAT NO SUM WAS RECEIVED IN GP POUNDS AN D THE ENTIRE SUM HAD BEEN RECEIVED IN US DOLLARS. EACH OF THE AMOUNTS RECEIVED ARE DULY SUPPORTED BY A CERTIFICATE FROM B ANK WHICH HAVE BEEN PLACED ON RECORD. MOREOVER, FROM PAGE 112 9 OF PAPER BOOK-4 FOR ASSESSMENT YEAR 2005-06, IT IS NOTED THA T THE ASSESSEE HAD DULY FURNISHED THE RECOGNITION TOWARDS ADVANCES RECEIVED BY TPE FROM UPRVUNL AND THE PAYMENTS MADE TO ASSESSEE BY TPE HAS NOT BEEN ADVERSELY COMMENTED EI THER IN THE APPELLATE ORDER OR EVEN BY THE LD. CIT DR IN THE CO URSE OF HEARING AND, THEREFORE, THE SAME TOO CANNOT BE MADE A GROUN D TO DRAW ADVERSE INFERENCE. 10.25 FURTHER, ADVERSE OBSERVATIONS ON THE BASIS OF INFO RMATION OBTAINED U/S 133(6) OF THE ACT CANNOT BE RELIED UPO N AS THE SAME HAVE NOT BEEN CONFRONTED TO THE ASSESSEE. THE DELH I BENCH OF ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS THE ITAT IN THE CASE OF G.R. KALRA HUF V. ITO IN IT A NO. 6564/DEL/2013 FOR ASSESSMENT YEAR 1999-00 DATED 12. 4.2017 HAS HELD AS UNDER: 20. EVEN OTHERWISE ALSO THE ENTIRE ORDER IS BASED ON THE BASIS OF ASSESSMENT ORDER IN THE CASE OF BISHAN CHA ND MUKESH KUMAR WHICH WAS BEEN UPHELD BY THE CIT (A). ON PERUSAL OF THE ASSESSMENT ORDER WE FIND THE ASSESST ING OFFICER NOWHERE HAS CONFRONTED THE SAME TO THE ASSE SSEE. AS REGARDS THE OBSERVATION OF THE LD. CIT (A) THAT THE ASSESSEE HAS NOT PRESSED THE GROUND RELATING TO CROSS EXAMIN ATION IS CONCERNED, THE SAME IN OUR OPINION IS INCORRECT IN VIEW OF THE SPECIFIC GROUND TAKEN BEFORE THE LD. CIT (A) AND I N ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE HA S NOT PRESSED THE GROUND BEFORE HIM. 21. WE FIND THE HONBLE SUPREME COURT IN THE CASE O F ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTR AL EXCISE (SUPRA) WHILE DECING AN ISSUE REGARDING NOT ALLOWING THE CROSS EXAMINATION HAS HELD THAT NOT ALLOWING TH E ASSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDI CATING AUTHORITY THOUGH STATEMENT OF THOSE WITNESSES WERE MADE AS BASIC OF THE IMPUGNED ORDER AMOUNTED TO A SERIOUS F LAW MAKES THE ORDER A NULLITY AS IT AMOUNTED TO VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE. 22. SO FAR AS THE RELIANCE OF THE LD. DR IN THE CA SE OF INCOME TAX OFFICER VS. PIRAI GHOODI (SUPRA) IS CONCERNED W E FIND THE SAME WAS PRIOR TO THE DECISION OF HONBLE SUPREME C OURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIO NER OF CENTRAL EXCISE (SUPRA). IT IS THE SETTLED PROPOSI TION OF LAW THAT WHEN TWO DECISIONS OF THE HONBLE SUPREME COUR T ARE AVAILABLE ON THE SAME ISSUE THE LATER DECISION SHAL L PREVAIL. SINCE IN THE INSTANT CASE THE ENTIRE ADDITION IS BA SED ON THE OUTCOME OF THE ASSESSMENT ORDER IN THE CASE OF M/S BISHAN CHAND MUKESH KUMAR WHICH WAS NEVER CONFRONTED TO TH E ASSESSEE, THEREFORE IN VIEW THE DECISION OF THE HON BLE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDIA ( SUPRA) WE HOLD THAT THE ASSESSMENT ORDER IS NULL AND VOID AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE. THUS THE ASSESSEE SUCCEEDS ON BOTH THE LEGAL GROUNDS. S INCE THE ASSESSEE SUCCEEDS ON BOTH THE LEGAL GROUNDS, THE GR OUND RELATING TO THE MERIT OF THE CASE BECOMES ACADEMIC IN NATURE AND THEREFORE THE SAME IS NOT BEING ADJUDICATED. 10.26 ALSO, THE HONBLE DELHI HIGH COURT IN THE CASE OF SABH INFRASTRUCTURE LTD. V. ACIT REPORTED IN 398 ITR 198 (DEL) HAS HELD AS UNDER: ... (III) WHERE THE REASONS MAKE A REFERENCE TO AN OTHER DOCUMENT, WHETHER AS A LETTER OR REPORT, SUCH DOCUM ENT AND/ OR RELEVANT PORTIONS OF SUCH REPORT SHOULD BE ENCLO SED ALONG WITH THE REASONS; (IV) THE EXERCISE OF CONSIDERING THE ASSESSEES OBJECTIONS TO THE REOPENING OF ASSESSMEN T IS NOT A MECHANICAL RITUAL. IT IS A QUASI JUDICIAL FUNCTION. THE ORDER DISPOSING OF THE OBJECTIONS SHOULD DEAL WITH EACH O BJECTION AND GIVE PROPER REASONS FOR THE CONCLUSION. NO ATTE MPT SHOULD BE MADE TO ADD TO THE REASONS FOR REOPENING OF THE ASSESSMENT BEYOND WHAT HAS ALREADY BEEN DISCLOSED. 10.27 IT HAS BEEN THE CONTENTION OF THE ASSESSEE THAT TH E IMPUGNED INCOME IS IN THE NATURE OF CONSULTANCY INC OME BY PROVIDING SUPPORT SERVICES TO TPE AND VOLUMINOUS DO CUMENTARY EVIDENCE/S HAVE BEEN PLACED ON RECORD TO SUPPORT TH E SAME AND THE REVENUE HAS NOT LED A SHRED OF EVIDENCE TO REJE CT THE ABOVE DOCUMENTARY EVIDENCES TENDERED BY THE ASSESSEE BOTH IN THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ASSESSMENT PROCEEDINGS AS WELL AS THE APPELLATE PRO CEEDINGS. THUS, THE INVESTIGATION MADE AT THE ASSESSMENT STAG E OR AT THE REMAND STAGE OR EVEN BEFORE US HAS NOT BROUGHT ANY MATERIAL TO CONCLUDE THAT THE CLAIM MADE BY THE ASSESSEE IS NOT A TENABLE CLAIM. IN FACT, THE ORIGINATION OF RECEIPTS FROM TH E TPE CANNOT BE DISPUTED HAVING REGARD TO THE CERTIFICATES FROM THE BANK. THUS, THE NATURE OF RECEIPTS HAS BEEN SUPPORTED FROM THE AGREEMENTS, INVOICES AND CORRESPONDENCE ALONG WITH THE CONFIRMA TIONS PLACED ON RECORD. THE ESSENCE OF THE CASE OF THE REVENUE I S THAT FIR WAS FILED BY THE CBI WHICH APPARENTLY DOES NOT PERTAIN TO THE INSTANT CONTRACT. MOREOVER, THE ASPECT THAT THIS INCOME WAS NOT DECLARED IN THE ORIGINAL RETURN OF INCOME CANNOT BE A GROUND TO AUTOMATICALLY CONCLUDE THAT IT IS UNEXPLAINED INVES TMENT PARTICULARLY HAVING REGARD TO THE AFORESAID EVIDENC ES AND FACTUAL POSITION PLACED ON RECORD WHICH REMAINS UN-ASSAILED DESPITE EXAMINATION AT VARIOUS LEVELS. HAVING REGARD TO THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE INCOME DECLARED DOE S NOT WARRANT ASSESSMENT UNDER SECTION 69 OF THE ACT. WITH THESE FINDINGS, WE ALLOW THE GROUNDS RAISED BY THE ASSESSEE FOR BOTH T HE ASSESSMENT YEARS. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10.28 GROUND NOS. 4 TO 4.1 FOR ASSESSMENT YEARS 2004-05 AND 2005-06 ARE REGARDING DISALLOWANCE OF CLAIM OF DEDU CTION OF 15% OF THE TOTAL RECEIPTS IN VIEW OF THE PRINCIPLES LAI D DOWN IN THE CASE OF CALCUTTA COMPANY LTD REPORTED IN 37 ITR 1 (SC). THE ASESSEE HAS RAISED A CLAIM THAT IT OUGHT TO HAVE BEEN ALLOW ED 15% OF THE TOTAL RECEIPTS AS DEDUCTION SO AS TO ENABLE THE ASS ESSEE TO DISCHARGE SEVERAL OBLIGATIONS. THE ASSESSING OFFICE R IN THE REMAND REPORT TO THE LD. CIT (A) HELD THAT THERE WA S NO BASIS TO SUPPORT THE AFORESAID CLAIM MADE BY THE ASSESSEE. R ELEVANT PORTION OF THE REMAND REPORT IS AS UNDER: FURTHER, THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CALCUTTA COMPA NY LTD. V. CIT WEST BENGAL (37 ITR 1) IN SUPPORT OF ITS CON TENTION OF ALLOWANCE OF DEDUCTION OF 15% OF THE TOTAL RECEIPTS FROM M/S TECHNOPROMEXPORT. IT IS STATED THAT THE RATIO OF T HE JUDGMENT IS NOT APPLICABLE IN THE CASE OF ASSESSEE. THE FAC TS AND CIRCUMSTANCES FOR THIS CASE ARE DIFFERENT FROM THE FACT AND CIRCUMSTANCES OF THE AFORESAID MENTIONED CASE. IN THE CASE OF CALCUTTA COMPANY LTD. THE ASSESSEE WAS DEALING I N LAND AND PROPERTY AND WAS CARRYING ON THE LAND DEVELOPIN G BUSINESS IT SO AS TO MAKE IT FIT FOR BUILDING PURPO SES AND SALE IT AT A PROFIT IN PLOTS. THE DEVELOPMENTS UNDER TA KEN WERE IN THE MAIN, LAY ROADS, TO PROVIDE DRAINAGE SYSTEMS, T O INTAL STREET LIGHTS AND THEY WERE TO BE MAINTAINED TILL T HE SAME WERE TAKEN OVER BY THE MUNICIPALITY. THE PROCEDURE TO BE FOLLOWED WAS THAT WHEN THE PLOT WAS SOLD, THE BUYER WAS TO PAY ABOUT 25% OF THE PURCHASE PRICE IN CASH AND THE BALANCE AMOUNT INSTALLMENTS WITH INTEREST. THE ASSESSEE I. E. THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS CALCUTTA COMPANY LTD. CLAIMED RS. 24,809/- AS THE EXPENDITURE FOR THE DEVELOPMENTS TO BE CARRIED OUT WHICH WAS DISALLOWED BY THE AO ON THE GROUND THAT THE EXPENSE S WERE NOT ACTUALLY INCURRED IN THE YEAR OF ACCOUNT AND AL SO ON THE GROUND THAT THE ESTIMATE HAD NOT BEEN PROVED TO BE BASED ON A CONSIDERATION OF REAL EXPENSES WHICH THE COMPANY WOULD HAVE TO INCUR FOR THE PURPOSE. SO THE QUESTION BEFO RE THE HONBLE COURT WAS TO DETERMINE WHAT WAS THE NATURE OF LIABILITY WHICH WAS UNDERTAKEN BY THE ASSESSEE IN R EGARD TO THE DEVELOPMENTS OF LAND IN QUESTION, WHETHER IT WA S AN ACCRUED LIABILITY OR WAS ONE WHICH WAS CONTINGENT O N THE HAPPENING OF A CERTAIN EVEN IN FUTURE. IN THIS CON TEXT THE HONBLE COURT OBSERVED THAT THERE IS NO DOUBT THAT THE UNDERTAKING TO CARRY OUT DEVELOPMENTS WITHIN SIX MO NTHS FROM THE DATES OF THE DEEDS OF SALE WAS INCORPORATE D THEREIN AND THAT THE UNDERTAKING WAS UNCONDITIONAL, THE APP ELLANT BINDING ITSELF ABSOLUTELY TO CARRY OUT THE SAME, IT WAS NOT DEPENDENT ON ANY CONDITION BEING FULFILLED OR THE H APPENING OF ANY EVENT, THE ONLY CONDITION BEING THAT IT WAS TO BE CARRIED OUT WITHIN SIX MONTHS WHICH IN THE VIEW OF FACT THA T THE TIME WAS NOT THE ESSENCE OF THE CONTRACT MEANT THE REASO NABLE TIME.. IT WAS THUS ACCRUED LIABILITY AND ESTIMATED EXPENDITURE WHICH WOULD BE INCURRED IN DISCHARGING THE SAME COULD VERY WELL BE DEDUCTED FROM THE PROFITS AND GA INS OF THE BUSINESS. IN THE PRESENT CASE, THE RECEIPTS FROM M/S TECHNOPR OMEXPORT HAS NOT BEEN CONSIDERED AS INCOME FROM PROFIT AND GAINS OF BUSINESS OF PROFESSION. RATHER, THE AO HAS TREATE D THESE RECEIPTS AS UNEXPLAINED MONEY U/S 69A OF THE I.T. A CT. SO THE DEDUCTION WAS NOT ALLOWED TO THE ASSESSEE. IN THIS CASE EVEN THE AGREEMENT WITH TECHNOPROMEXPORT DID NOT PROVIDE FOR ANY EXPENDITURE TO BE INCURRED BY THE ASSESSEE. SO THE QUESTION OF ANY FUTURE LIABILITY DID NOT ARISE IN THE CASE O F ASSESSEE. HENCE THERE WAS NOT QUESTION OF IT BEING A CONTINGE NT LIABILITY OR ACCRUED LIABILITY. SO, THE CLAIM OF THE ASSESSEE OF ALLOWING ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 15% OF THE RECEIPTS FROM M/S TECHNOPROMEXPORT AS EXPENDITURE WAS DISALLOWED BY THE AO. 10.29 THE LD. CIT (A), HAVING REGARD TO THE AFORESAID RE MAND REPORT, CONFIRMED THE ACTION OF THE ASSESSING OFFIC ER. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL ON RECORD. DURING THE APPELLATE PROCEEDINGS, THE LEARN ED COUNSEL WAS SPECIFICALLY DIRECTED TO SUPPORT ITS CLAIM BY A NY EVIDENCE REPRESENTING THE EXPENDITURE INCURRED AND NOT ALLOW ED. HOWEVER, NO EVIDENCE WAS PLACED BEFORE US; THEREFORE, WE FIN D MERIT IN THE CONCLUSION ARRIVED BY THE AUTHORITIES BELOW. IN VIE W OF THE ABOVE, CLAIM RAISED BY THE ASSESSEE IS HELD TO BE NOT MAIN TAINABLE AND THE GROUNDS RAISED ARE REJECTED. 10.30 GROUND 5 IS REGARDING THE CONCLUSION THAT THE BANK INTEREST OF RS. 37,866.73 IN AY 2004-05 AND RS. 611 .08 IN AY 2005-06 HAS BEEN ERRONEOUSLY HELD AS UNEXPLAINED IN VESTMENT UNDER SECTION 69 OF THE ACT. 10.31 HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD, IT IS NOTED THAT THE EDIFICE FO R TREATING THE AFORESAID SUMS AS UNEXPLAINED INVESTMENT IS THAT TH E SUMS WERE NOT DULY DISCLOSED IN THE ORIGINAL RETURN OF INCOME BY THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ASSESSEE. TO OUR MIND, THE TREATMENT OF RECEIPTS AS UNEXPLAINED INVESTMENT IS NOT DEPENDENT ON THE DECLARATION IN T HE RETURN OF INCOME. ON THE CONTRARY, IF THE SOURCE OF INVESTMEN T IS DULY DISCLOSED THEN SUCH INVESTMENT CANNOT BE REGARDED A S UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. IN THE INSTANT CASE, THE NATURE OF INVESTMENT IS IN RESPEC T OF INTEREST WHICH ACCRUED TO THE ASSESSEE ON THE DEPOSITS IN TH E NATWEST BANK, LONDON. WE HAVE ALREADY HELD ABOVE THAT THE ASSESSEE HAS DULY EXPLAINED EVEN THE NATURE AND SOURCE OF THE DE POSITS IN THE NATWEST BANK ACCOUNTS AND THUS, SAID THE DEPOSITS C ANNOT BE REGARDED AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. THE DEPOSITS REPRESENT INCOME FROM SUPPORT SERVICES PROVIDED BY THE ASSESSEE TO TPE AND THEREFORE, THE CONCLUSION O F THE REVENUE TO REGARD THE SUM OFFERED AS INCOME AND ASSESS UNDE R SECTION 69 OF THE ACT HAS NO VALIDITY IN LAW. IN VIEW OF THE A BOVE, WE DO NOT FIND MERIT IN THE CLAIM OF THE REVENUE TO TREAT THE INTEREST AND INCOME FROM DEPOSITS AS UNEXPLAINED INVESTMENT UNDE R SECTION 69 OF THE ACT. 10.32 HAVING REGARD TO THE ABOVE, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR BOTH THE ASSESSMENT YEARS. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10.33 GROUND 6 IS REGARDING DISALLOWANCE OF RS. 1,00,000/ - FOR ASSESSMENT YEAR 2004-05 AND RS. 2,30,882/- FOR ASSE SSMENT YEAR 2005-06 OUT OF EXPENDITURE INCURRED AND, CLAIM ED BY THE ASSESSEE COMPANY. 10.34 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. THE LD. CIT (A) HAS SUSTAIN ED THE DISALLOWANCES BY CONCLUDING AS UNDER: 11.5 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT O RDER, REMAND REPORT AND THE SUBMISSIONS MADE BY THE LD. A R. I FIND THAT THE APPELLANT HAS NOT PRODUCED ANY EVIDE NCE TO JUSTIFY ITS CLAIM OF EXPENDITURE EITHER DURING ASSE SSMENT OR THE APPELLATE PROCEEDING, OTHER THAN MERELY ARGUING THAT THE DISALLOWANCE IS ADHOC IN NATURE AND HENCE UNTENABLE . I FIND THAT THE AO HAS RELIED ON THE AUDITORS REPORT EXPE NSES VOUCHERS WERE NOT SUPPORTED BY DOCUMENTARY EVIDENCE S. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE DISALL OWANCE MADE BY THE AO ON THE BASIS OF REASONABLE ESTIMATE CANNOT BE FOUND DEFAULT WITH. THE SAID DISALLOWANCES ARE, THEREFORE, CONFIRMED AND THIS ISSUE IS DECIDED AGAINST THE AP PELLANT. 10.35 FROM THE AFORESAID, IT IS APPARENT THAT THE LD. CI T (A) HAS NOTED THAT THE ASSESSING OFFICER HAD MADE THE DISAL LOWANCE SINCE THIS AUDIT REPORT MENTIONS THAT THE EXPENSES VOUCHE RS WERE NOT SUPPORTED BY DOCUMENTARY EVIDENCE. IT HAS BEEN ALSO NOTED THAT DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO JUSTIFY THE CLAIM OF EXPENDITURE. I T HAS BEEN HELD ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS THAT MERE CONTENTION THAT DISALLOWANCE IS AD HOC WAS NOT A VALID BASIS. THUS, HAVING REGARD TO THE REASONABLE ESTIMA TE MADE BY THE LEARNED ASSESSING OFFICER, THE AFORESAID DISALL OWANCES WERE DELETED. WE DO NOT FIND ANY REASON TO DEVIATE FROM THE AFORESAID FINDINGS RECORDED BY THE LD. CIT (A). THE LEARNED C OUNSEL FOR THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL SO AS TO WARR ANT A VIEW DIFFERENT FROM THE AFORESAID CONCLUSION. IN VIEW OF THE AFORESAID REASONS, CLAIM RAISED BY THE ASSESSEE IS REJECTED. 10.36 GROUNDS RAISED BY THE ASSESSEE ARE THUS REJECTED F OR BOTH THE ASSESSMENT YEARS. 10.37 GROUND NO. 7 FOR AY 2004-05 IS REGARDING DISALLOWA NCE OF RS. 10,000/- U/S 14A OF THE ACT. 10.38 HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD, WE NOTICE THAT THE LD. CIT (A) HAS REJECTED THE AFORESAID CLAIM BY HOLDING AS UNDER: 12.2 ON CAREFUL EXAMINATION OF THE MATTER, I FIND THAT NO INCOME, WHETHER EXEMPT OR NOT, CAN BE EARNED WITHOU T MAKING SOME EXPENDITURE. OFTEN TIMES SUCH EXPENDITU RE ARE NOT SEGREGATED IN THE ACCOUNTS OF THE ASSESSEE AND REMAIN CLUBBED WITH OVERALL ADMINISTRATIVE/FINANCIAL AND O THER EXPENSES FOR THE BUSINESS AS A WHOLE. IT, THUS, BEC OMES THE DUTY OF THE AO TO REASONABLY ALLOCATE EXPENSES RELA TABLE TO SUCH INCOME AND DISALLOW THE SAME. I FIND THAT SECT ION 14A OF THE ACT (INSERTED BY THE FINANCE ACT, 2001 WITH RET ROSPECTIVE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS EFFECT FROM 01.04.1962) SPECIFICALLY ADDRESSES THIS ISSUE BY PROVIDING THAT NO DEDUCTION SHALL BE ALLOWED IN R ESPECT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHI CH DOES NOT FORM PART OF TOTAL INCOME UNDER THE ACT. FURT HER, SUB- SECTION (2) OF SECTION 14A EMPOWERS THE AO TO DETER MINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO EXEMP T INCOME IN ACCORDANCE WITH THE METHOD AS MAY BE PRESCRIBED. SUB- SECTION (3) OF SECTION 14A MANDATES THAT THE ABOVE PROVISIONS OF SUB-SECTION (2) SHALL ALSO APPLY TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURR ED BY HIM IN RELATION TO EXEMPT INCOME. IN THIS CONNECTIO N, I FIND THAT THE CONSTITUTIONAL VALIDITY OF SECTION 14A REA D WITH SUB- SECTIONS (1), (2) & (3) THEREOF HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT VIDE ITS RECENT ORDER DATED 12.08 .2010 IN THE CASE OF GODREJ & BOYCE MFG. CO .LTD. VS. DCIT I N ITA NO. 626 OF 2010 AND WRIT PETITION NO. 758 OF 2010 PUBLI SHED IN HTTP://WWW.ITATONLINE.ORG. CONSIDERING THE ABOVE, T HE DISALLOWANCE OF RS. 10,000/- MADE BY THE AO IS UPHE LD AND THIS ISSUE OF THE APPELLANT IS REJECTED. 10.39 THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BROUG HT ANY MATERIAL ON RECORD TO REBUT THE AFORESAID COGENT FI NDINGS RECORDED BY THE LD. CIT (A). IN VIEW OF THE AFORESAID, THE C LAIM OF THE APPELLANT LACKS SUBSTANCE AND IS THEREFORE, REJECTE D. EVEN OTHERWISE, IT IS NOTED THAT THE DISALLOWANCE MADE I S REASONABLE AND AS SUCH, IT DOES NOT CALL FOR ANY INTERFERENCE. 10.40 GROUND RAISED BY THE ASSESSEE IS, THEREFORE, REJEC TED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10.41 GROUND NOS. 8 TO 8.2 FOR ASSESSMENT YEAR 2004-05 A ND GROUND NOS. 7 TO 7.2 FOR ASSESSMENT YEAR 2005-06 AR E REGARDING LEVY OF INTEREST U/S 234B, 234C, 234, 244A AND 220( 1) OF THE ACT. 10.42 IN THE WRITTEN SUBMISSIONS BEFORE US THE ASSESSEE HAS CONTENDED AS UNDER: .25. AT THE OUTSET, IT IS SUBMITTED THAT, NO INTE REST IS LEVIABLE ON THE FACTS OF THE INSTANT CASE, SINCE I T CANNOT BE VALIDLY HELD THAT, ASSESSEE WAS IN A POSITION TO ES TIMATE THE ADVANCE TAX ON THE INCOME ASSESSED BY THE LEARNED A O IN THE ORDER OF ASSESSMENT. IT IS SUBMITTED THAT, APPELLAN T HAS CONSISTENTLY CONTENDED THAT, AS IN PAST, IT ALWAYS HAD A BONA FIDE BELIEF THAT, INCOME ARISING FROM SERVICES AND, CREDITED IN BANK ACCOUNTS OUTSIDE INDIA WAS NOT LIABLE TO BE IN CLUDED AS INCOME FOR TAXATION IN INDIA. IN VIEW THEREOF, NEVE R IN THE PAST, APPELLANT HAD INCLUDED PROFITS ACCRUING TO IT FROM SUCH ENDEAVORS IN THE RETURN OF INCOME FOR THE TAXATION IN INDIA. INFACT, IN VIEW OF AFORESAID BELIEF, IT CANNOT BE V ALIDLY SAID THAT APPELLANT WAS IN A POSITION TO ESTIMATE THE AD VANCE TAX AND, THEREFORE, LEARNED OFFICER HAS INCORRECTLY LEV IED INTEREST UNDER SECTION 234B OF THE ACT. 25.1 IT IS RESPECTFULLY SUBMITTED THAT, IN ANY CASE , NO INTEREST COULD BE LEVIED UNDER 234B AND, 234C OR EVEN UNDER SECTION 220(1) OF THE ACT AFTER 1.04.2006 I.E. AFTER THE IN COME HAD BEEN DECLARED BY THE APPELLANT VOLUNTARILY AS WOULD BE EVIDENT FROM LETTER DATED 01.04.2006 (PAGES 26 TO 2 8 OF PB-I) AS UNDER: 7. WE HAVE BEEN WAITING ALL THESE DAYS FOR THE MONE Y TO BE CREDITED IN OUR ACCOUNT IN INDIA TO ENABLE US TO PAY ADVANCE TAX IN RESPECT OF OUR INCOME FOR THE FISCAL YEAR 2005- 06 AND ALSO TO PAY UP OUR TAX LIABILITY IN RESPECT OF THE EARLIER YEARS TOGETHER WITH INTEREST DUE FOR THE DELAYED PA YMENT OF TAXES. EVEN AFTER WAITING FOR ALL THESE DAYS SINCE 6 TH MARCH, ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 06 WHEN INSTRUCTIONS WERE FIRST ISSUE TO NAT WEST B ANK, LONDON TO REMIT OUR MONIES HELD IN BALANCE WITH THE M TO OUR ACCOUNT IN INDIA WE HAVE NOT RECEIVED ANY INTIMATIO N OF REMITTANCE FROM THEM (COPIES ENCLOSED) (PAGE 756 OF PAPER BOOK-III). 8. ACCORDINGLY, WE HAVE TO REQUEST YOU TO INTERCEDE IN THE MATTER AND ARRANGE FOR THE COLLECTION OF TAXES, WHI CH MAY BE DETERMINED AS DUE FROM US, FROM NAT WEST BANK, LOND ON IN SATISFACTION OF OUR TAX LIABILITY PROVISIONALLY. WE ARE READY AND WILLING TO EXECUTE THE REQUISITE AUTHORITY IN A NY FORM ADVISED BY YOU AS MAY SERVE ALL DESIRED END. 9. I HEREBY DECLARE THAT ALL THE MONIES IN THE SAID BANK STAND ASSIGNED TO THE GOVERNMENT OF INDIA IN TRUST FOR PAYING AWAY MY TAX LIABILITIES WHEN PRECISELY DETERMINED. 10. TO DISCUSS OUR TAX LIABILITY AND WORK OUT THE M ODALITIES FOR ITS PROMPT, EFFECTIVE AND FULL DISCHARGE, WE WI LL BE OBLIGED TO HAVE AN AUDIENCE WITH YOU, WHICH MAY KINDLY BE G RANTED AND INTIMATED TO ME AT MY ADDRESS INDICATED ABOVE A T YOUR EARLIEST. WE WILL ALSO APPRECIATE IF A LENIENT VIEW MAY BE TA KEN OF THE INCIDENTAL INADVERTENT LAPSE ON OUR PART IN THE MAT TER. 25.2 IT IS FURTHER, SUBMITTED THAT HONBLE HIGH COU RT OF DELHI VIDE ITS ORDER DATED 06.08.2012 (AT PAGES 14 TO 17 OF PB IV), HAD ALSO DIRECTED THE SPECIAL JUDGE, TO BRING BACK THE MONEY APPROPRIATED IN NATWEST BANK IN INDIA AND ALSO DIRE CTED TO REMIT THE MONEY TO SBI BRANCH OF TIS HAZARI COURT. THAT A BARE PERUSAL OF THE SAID ORDER OF HONBLE HIGH COUR T WILL FORTIFY THE SUBMISSION OF ASSESSEE APPELLANT THAT THE MONEY WAS LYING AND WAS FROZEN AT THE BEHEST OF GOVERNMEN T OF INDIA IN NATWEST BANK, UK AND DIRECTION WAS GIVEN B Y THE COURT TO BRING BACK THE SAID MONEY AND APPROPRIATE THE SAME TO PAY OFF VARIOUS GOVERNMENT DUES. THUS, IN VIEW O F THE ABOVE, NO INTEREST COULD BE LEVIED UNDER 234B AND, 234C OR EVEN UNDER SECTION 220(1) OF THE ACT AFTER 1.04.200 6 I.E. AFTER THE INCOME HAD BEEN DECLARED BY THE APPELLANT VOLUN TARILY AS WOULD BE EVIDENT FROM LETTER DATED 01.04.2006. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 25.3 RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: A) CIT V. RAINBOW INDUSTRIES (P.) LTD. (GUJ.) 148 T AXMAN 267 B) HARYANA WAREHOUSING CORPN. V. DCIT (DEL.)(TM) 75 ITD 155 C) JANAK RAJ CHAUHAN & ORS. VS. ACIT (ASR.) 75 TTJ 260 D) INCOME TAX OFFICER VS. DR. MANJIT SINGH SEKHON ( CHD.) 91 TTJ 393 E) 67 ITD 407 DEVINDER KAUR SEKHON V ACIT (CHD) F) 96 TAXMAN 188 VIKSHARA TRADING AND INVESTMENT (P ) LTD V DCIT (AHD) G) 107 TAXMAN 121 LAKSHMI NARAYAN TULSI DASS THAKKA R V ACIT (AHD) H) 247 ITR 701 BULUND MOTOR AND LAND FINANCE (P) LTD. V ACIT (ALL) I) DATAMATICS LTD. VS. ACIT REPORTED IN 111 TTJ 55 (MU M) 21.2 IT IS THUS RESPECTFULLY SUBMITTED THAT, THE AP PELLANT CANNOT BE FASTENED WITH THE LIABILITY TO PAY INTERE ST UNDER SECTION 234B, 234C, 220(1) OF THE ACT. 10.43 ON THE OTHER HAND, THE LD. CIT DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND REQUESTED THAT THE CLA IM OF THE ASSESSEE BE REJECTED. 10.44 HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD, WE NOTICE THE LEARNED LD. CIT ( A) HAS UPHELD LEVY OF INTEREST BY HOLDING AS UNDER: 14.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER, REMAND REPORT OF THE AO AND THE SUBMISSIONS MADE BY THE LD. AR ON THE ABOVE. THE APPELLANTS ARGUMENT REGARDING NOT ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS BEING AWARE OF ITS TAX LIABILITY IN RESPECT OF CRED ITS IN THE BANK ACCOUNTS MAINTAINED OUTSIDE INDIA HAS BEEN RE JECTED BY ME AS PER DETAILED REASONS RECORDED IN THE DISCU SSION RELATING TO ISSUE NO. 1EARLIER IN THIS ORDER. FURTH ER, THE APPELLANTS ARGUMENT REGARDING NON-APPLICABILITY OF SECTION 234B IS ALSO NOT ACCEPTABLE DUE TO DETAILED REASONS CITED BY THE AO IN HIS REMAND REPORT REPRODUCED ABOVE WHICH I AGREE. I FIND THAT IT IS SETTLED POSITION OF LAW THAT LEVY OF INTEREST U/S 234B, 234C AND 234D IS MANDATORY. IT HAS BEEN HELD SO BY THE APEX COURT IN THE CASE OF ANJUM M. H. GHASWALA AND OTHERS REPORTED IN 252 ITR 1 AS UNDER: SIMILAR VIEW HAS ALSO BEEN EXPRESSED IN THE FOLLOWI NG CASES: RANCHI CLUB LIMITED VS. COMMISSIONER OF INCOME TAX (1996) 217 ITR 72 ON PAGED 74 INTEREST LEVIED UNDER SECTIO N 234A, 234B AND 234C ARE COMPENSATORY IN NATURE. CIT VS. R.RAMALINGAIR, (2000) 241 ITR 753 (KER) ON 756. DR. S. RODAPPA & OTHERS VS. UOI (1198) 232 ITR 62 ( KAR) MRS. PRABHU LAL VS. CIT 269 ITR 212 (PAT) ON PAGE 2 16 BALKRISHNA BREADING FARMS PVT. LTD. VS. CCIT (2004) 266 ITR 15 (KER). SECTION 234B AS WELL AS THE DICTUM OF SUPREME COURT IN CIT VS. ANJUM M. H. GHASWALA (2000) 252 ITR HAD CATEGOR ICALLY PROVIDED FOR LEVY OF INTEREST. ERNAKULAM DISTRICT CO-OPERATIVE BANK LTD. VS. ACIT 272 ITF 95 (KER) AFTER REFERRING CERTAIN EARLIER DECISION, INCLUDING THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. PREM NAT H MOTORS PVT. LTD. (2002) 253 ITR 705 (DEL) IT WAS HELD THAT LEVY OF INTEREST U/S 201 (1A) IS COMPENSATORY MEASURE FOR WITHHOLDING TAX WHICH OUGHT TO HAVE BEEN GIVEN TO T HE EXCHEQUER. THE PROVISIONS MAKES IT CLEAR THAT LEVY IS MANDATORY AND THERE IS NO PRE-CONDITION OF CONSIDER ED OF `REASONABLE CAUSE FOR NON-PAYMENT IN TIME OF TAX D EDUCTED U/S 192 OF THE ACT. THEREFORE, THE ITO WAS NOT REQU IRED TO TAKE INTO CONSIDERATION THE REASONABLE CAUSE. FURTH ER THE USE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OF WORD `SHALL CAUSE PRESUMPTION THAT THE PARTICUL AR PROVISION IS IMPERATIVE. UPPER DOAB SUGAR MILLS VS. CIT 263 ITR 97 (ALL). IN THE FACTS OF ABOVE CASE THOUGH THE ASSESSING OFF ICER SPECIFICALLY MENTIONED IN THE ORDER FOR CHARGE OF I NTEREST U/S 215 THERE WAS NO SPECIFIC MENTION FOR CHARGING INTE REST U/S 216. THERE WAS GENERAL MENTION TO THE EFFECT THAT CHARGE INTEREST AS PER LAW. THE HIGH COURT THOUGH PRINCIP ALLY OBSERVED THAT UNDER ESTIMATION ITSELF MAY NOT BE SU FFICIENT TO ATTRACT THE PROVISION OF SECTION 216 OF THE ACT FOR LEVY OF INTEREST IF THERE HAD BEEN BONAFIDE MISTAKE ON HIS PART WHILE MAKING THE UNDER ESTIMATION. ON THE FACTS OF THE CA SE, HOWEVER, IT WAS HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO FURNISH ANY EXPLANATION FOR THE DIFFERENCE OF RS. 4 8 LAC IN THE FIRST RETURN AND IN REVISED RETURN AND THEREFORE, S USTAINED LEVY OF INTEREST U/S 216 OF THE ACT. )PRINCIPALLY O BSERVED THAT UNDER ESTIMATION ITSELF MAY NOT BE SUFFICIENT TO AT TRACT THE PROVISIONS OF SECTION 216 OF THE ACT FOR LEVY OF IN TEREST IF THERE HAD BEEN BONAFIDE MISTAKE ON HIS PART WHILE MAKING THE UNDER ESTIMATION. ON THE FACTS OF THE CASE, HOWEVER IT WAS HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO FURNISH ED ANY EXPLANATION FOR THE DIFFERENCE OF RS. 48 LACS IN TH E FIRST RETURN AND IN REVISED RETURN AND THEREFORE, SUSTAINED LEVY OF INTEREST U/S 216 OF THE ACT). IT IS TO BE NOTED THAT IN THIS CASE INSPITE OF THE FACT THAT THERE WAS NO SPECIFIC MENTION OF SECT ION 216 OF THE ACT IN THE ASSESSMENT ORDER THE HIGH COURT HAS UPHELD THE LEVY CONSIDERING THE FACTS OF THE CASE SITA HOL IDAY REPORTS LTD. VS. CCIT (2002) 258 ITR 751 (DEL) IN THE FACTS OF THE CASE THE ASSESSEE HAD NOT INCLU DED INTEREST EARNED ON INVESTMENT OF BORROWED FUNDS PRIOR TO COMMENCEMENT OF BUSINESS FOR THE REASONS THAT THERE WAS LEGAL CONTROVERSY. SUBSEQUENTLY, BY VIRTUE OF DECIS ION OF SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMI CALS AND FERTILIZERS LTD. VS.CIT (1197) 227 ITR 172, THE SUP REME COURT HAS HELD THAT SUCH INTEREST IS CHARGEABLE TO INTERE ST. THE ASSESSEE COMPANY FILED AN APPLICATION BEFORE THE CH IEF ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS COMMISSIONER OF INCOME TAX OF WAIVER OF INTEREST LE VIED UNDER SECTION 2364B OF THE INCOME TAX ACT CCIT WAIV ED 75% OF INTEREST. HE HOWEVER, UPHELD LEVY OF THE EXTENT OF 25% OF INTEREST STATING THAT SAME IS JUSTIFIED AS THE DEPA RTMENTAL HAS BEEN DEPRIVED OF ITS TAXES. THE HIGH COURT MADE REFERENCE TO THE DECISION OF SUPREME COURT IN THE C ASE OF CIT VS. ANJUM M. H. GHASWALA (2001) 252 ITR 1 (SC) WHER EIN IT HAS BEEN HELD BY THE SUPREME COURT HAT INTEREST CONTEMPLATED UNDER SECTION 234B OF THE ACT FOR DEFI CIENCY OR DEFAULT IN PAYMENT OF ADVANCE TAX IS MANDATORY IN N ATURE AND SAME CANNOT BE REDUCED OR WAIVED BY THE SETTLEM ENT COMMISSION. THE HIGH COURT, HOWEVER, REFUSED TO INT ERFERE IN THE MATTER FOR THE REASONS THAT WAIVER IS WITHIN TH E DISCRETIONARY POWERS OF CCIT. CONSIDERING THE ABOVE CLEAR STATUTORY AND JUDICIAL POSITIONS, THE LEVY OF INTEREST U/S 234B, 234C AND 234D IS CON FIRMED. THE ISSUE OF THE APPELLANT IS, ACCORDINGLY, REJECTE D. 10.45 BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MADE TWO FOLD SUBMISSIONS THAT HAVING REGARD TO THE FACT THAT THE ASSESSEE HAD BONA FIDE BELIEF AND, THEREFORE, THE I NCOME ARISING FROM SERVICES WAS NOT INCLUDED AS INCOME IN THE ORI GINAL RETURN OF INCOME AND, THEREFORE, THE ASSESSEE IS NOT LIABLE F OR INTEREST UNDER SECTION 234B AND 234C OF THE ACT. IT WAS ALTE RNATIVELY CONTENDED THAT ONCE THE ASSESSEE HAD FILED A LETTER VOLUNTARILY ON 1.4.2006, NO INTEREST OUGHT TO HAVE LEVIED SUBSEQUE NT TO THE SAID LETTER. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10.46 AS FAR AS THE PRIMARY CLAIM OF THE ASSESSEE THAT T HERE IS BONA FIDE BELIEF IS CONCERNED, IT PROCEEDS ON THE B ASIS THAT THE ASSESSEE HAD RECEIPTS FROM A NON-RESIDENT COMPANY W HICH HAD BEEN CREDITED IN A BANK ACCOUNT MAINTAINED OUTSIDE INDIA AND THUS, THE ASSESSEE WAS OF THE BONA FIDE BELIEF THAT SUCH SUM WAS NOT TAXABLE IN INDIA. IT HAS BEEN CONTENDED THAT TH E ASSESSEE HAD BEEN MAINTAINING MEMORANDA ACCOUNTS FOR SUCH SUMS R ECEIVED OUTSIDE INDIA BUT WERE NOT DECLARED AS INCOME IN TH E ORIGINAL RETURNS OF INCOME FURNISHED BY THE ASSESSEE COMPANY . IT HAS BEEN CONTENDED THAT SUCH INCOME WAS DECLARED ONLY O NCE THE ADVICE RECEIVED IN FEBRUARY, 2006. IT HAS, THUS, B EEN CONTENDED THAT SINCE THE ASSESSEE WAS UNDER A BONA FIDE BELIE F, THEREFORE, ASSESSEE WAS NOT LIABLE TO PAY ANY ADVANCE TAX AND SINCE ASSESSEE WAS NOT LIABLE TO PAY ADVANCE TAX, INTERES T LEVIED UNDER SECTION 234B AND 234C OF THE ACT WAS NOT LEVIABLE. WE, HOWEVER, FIND NO MERIT IN THE SAID CLAIM. THE HONBLE APEX C OURT IN THE CASE OF ANJUM M.H. GHASWALA AND OTHERS REPORTED IN 252 ITR 1 (SC) HAS HELD AS UNDER: IF THE SCHEME OF LEVY OF INTEREST IS THUS TO BE AN ALYSED ON THE ANVIL OF THE PROVISIONS REFERRED TO HEREINABOVE, IT SHOWS THAT THE INTEREST CONTEMPLATED UNDER SECTIONS 234A, 234B AND 234C IS MANDATORY IN NATURE AND THE POWER OF WAIVER OR REDUCTION HAVING NOT BEEN EXPRES SLY ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS CONFERRED ON THE COMMISSION, THE SAME INDICATES THA T SO FAR AS THE PAYMENT OF STATUTORY INTEREST IS CONCERNED, THE SAME IS OUTSIDE THE PURVIEW OF THE SETTLEMENT CONTEMPLATED IN CHAPTER XIX-A OF THE ACT. 10.47 IN VIEW OF THE ABOVE BINDING DICTA, WE HOLD THAT LE VY OF INTEREST IS MANDATORY AND WE REJECT THE CLAIM RAISE D BY THE APPELLANT. 10.48 THE ALTERNATIVE CLAIM MADE BY THE ASSESSEE BEFORE US IS THAT SINCE THE ASSESSEE HAD FILED A LETTER DATED 1. 4.2006 BEFORE THE ASSESSING OFFICER AND HAD REQUESTED THAT THE DE POSITS IN BANK ACCOUNT BE ADJUSTED TOWARDS THE TAX LIABILITY, NO INTEREST IS LEVIABLE AFTER 1.4.2006. THE RELEVANT PORTION OF TH E LETTER DATED 1.4.2006 READS AS UNDER: 7. WE HAVE BEEN WAITING ALL THESE DAYS FOR THE MON EY TO BE CREDITED IN OUR ACCOUNT IN INDIA TO ENABLE US TO PAY ADVANCE TAX IN RESPECT OF OUR INCOME FOR THE FISCAL YEAR 2005- 06 AND ALSO TO PAY UP OUR TAX LIABILITY IN RESPECT OF THE EARLIER YEARS TOGETHER WITH INTEREST DUE FOR THE DELAYED PA YMENT OF TAXES. EVEN AFTER WAITING FOR ALL THESE DAYS SINCE 6 TH MARCH, 06 WHEN INSTRUCTIONS WERE FIRST ISSUE TO NAT WEST B ANK, LONDON TO REMIT OUR MONIES HELD IN BALANCE WITH THE M TO OUR ACCOUNT IN INDIA WE HAVE NOT RECEIVED ANY INTIMATIO N OF REMITTANCE FROM THEM (COPIES ENCLOSED) (PAGE 756 OF PAPER BOOK-III). 8. ACCORDINGLY, WE HAVE TO REQUEST YOU TO INTERCEDE IN THE MATTER AND ARRANGE FOR THE COLLECTION OF TAXES, WHI CH MAY BE DETERMINED AS DUE FROM US, FROM NAT WEST BANK, LOND ON IN ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS SATISFACTION OF OUR TAX LIABILITY PROVISIONALLY. WE ARE READY AND WILLING TO EXECUTE THE REQUISITE AUTHORITY IN A NY FORM ADVISED BY YOU AS MAY SERVE ALL DESIRED END. 9. I HEREBY DECLARE THAT ALL THE MONIES IN THE SAID BANK STAND ASSIGNED TO THE GOVERNMENT OF INDIA IN TRUST FOR PAYING AWAY MY TAX LIABILITIES WHEN PRECISELY DETERMINED. 10. TO DISCUSS OUR TAX LIABILITY AND WORK OUT THE M ODALITIES FOR ITS PROMPT, EFFECTIVE AND FULL DISCHARGE, WE WI LL BE OBLIGED TO HAVE AN AUDIENCE WITH YOU, WHICH MAY KINDLY BE G RANTED AND INTIMATED TO ME AT MY ADDRESS INDICATED ABOVE A T YOUR EARLIEST. 10.49 HAVING CONSIDERED THE SAME, WE FIND MERIT IN THE S AME IN AS MUCH AS ASSESSEE HAD INTIMATED THE REVENUE AUTHO RITIES ON 1.4.2016 AND HAD ALSO REQUESTED SPECIFICALLY THAT A LL THE MONIES IN THE SAID BANK BE ADJUSTED AGAINST THE TAX LIABIL ITIES. THEREFORE, NO INTEREST COULD BE LEVIED UNDER ANY PROVISIONS OF THE ACT AFTER 1.4.2006 I.E. AFTER THE INCOME HAD BEEN DECLARED BY THE ASSESSEE VOLUNTARILY AND, DEPOSITS STOOD ASSIGNED FOR PAYMEN T OF TAX. THIS ASPECT HAS NOT BEEN DISPUTED BY THE LEARNED CIT DR DURING THE COURSE OF HEARING. THE ASSESSING OFFICER IS ACCORDI NGLY DIRECTED TO COMPUTE THE INTEREST IN TERMS OF THE DIRECTIONS HER EINABOVE AND THEREFORE, GROUNDS RAISED BY THE ASSESSEE ARE PARTL Y ALLOWED FOR BOTH THE ASSESSMENT YEARS. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 10.50 IN THE RESULT, BOTH THE APPEALS VIZ. ITA 1004/DEL/2 011 AND ITA 1005/DEL/2011, FILED BY THE ASSESSEE ARE PA RTLY ALLOWED. 11. NOW WE TAKE UP THE TWO APPEALS PREFERRED BY RAPL ( THE ASSESSEE) IN ITA NO. 4388/DEL/2014 AND 4389/DEL/201 4 FOR ASSESSMENT YEARS 2004-05 AND 2005-06 WHICH ARE APPE ALS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ARISING FROM THE ORDERS DATED 30.3.2012 MADE BY DEPUTY COMM ISSIONER OF INCOME TAX, CIRCLE-15(1), NEW DELHI AND CONFIRME D IN APPEAL BY ORDERS DATED 30.6.2014 OF LD. CIT(A) -XVIII, NEW DELHI. 11.1 IN ITA NO. 4388/DEL/2014 FOR ASSESSMENT YEAR 2004- 05, THE ASSESSEE HAS RAISED GROUNDS OF APPEAL WHICH REA D AS UNDER: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) XVIII NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING PENALTY LEVIED OF RS. 3,76,26,700/- UNDER SECTION 271(1)(C) OF THE ACT. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHILE UPHOLDING THE PENALTY HAS FAILED TO APPRECIAT E THAT INCOME IN RESPECT OF WHICH PENALTY HAVE BEEN LEVIED WAS THE INCOME DECLARED VOLUNTARILY BY THE APPELLANT FIRSTL Y BY LETTERS DATED 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006 AND 23.5.2006 AND THEREAFTER I N RETURN FILED ON 21.6.2006 AND, 12.2.2007 AND ALSO IN RETUR N FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND AS SUCH, IT CANNOT BE VALIDLY HELD THAT ASSESSEE HAS EITHER CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME MERELY O N THE GROUND THAT, SUCH RECEIPTS WERE NOT DISCLOSED IN TH E ORIGINAL RETURN OF INCOME. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE FACT THAT INCOME ASSESSED WAS NO T BASED ON THE REVISED RETURN BUT ON THE BASIS OF RETURN FI LED IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND THE REASO NS RECORDED FOR INITIATION U/S 147 OF THE ACT ESTABLIS HED THAT PROCEEDINGS HAD BEEN INITIATED ON THE BASIS OF INFO RMATION CONTAINED IN THE REVISED RETURN AND NOT BY WAY OF A NY DETECTION AND HENCE THE FINDING THAT THERE WAS INTE NTIONAL ATTEMPT TO EVADE TAX OVERLOOKS THIS FACTUAL FUNDAME NTAL ASPECT AND MATERIAL ON RECORD AND AS SUCH ORDER UPH OLDING THE LEVY OF PENALTY IS VITIATED AND UNTENABLE. 1.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT TILL THE DATE OF FILING OF RETURN ON 12.2.2007 WHEN ASSESSEE HAD REVISED RETUR N OF INCOME BY INCLUDING AN AMOUNT OF RS. 4.10 CRORES, N O ENQUIRY WAS EITHER INITIATED OR LAUNCHED AND THUS, INCOME O FFERED IN THE SAID RETURN REPRESENTED THE INCOME WHICH HAD BE EN SHOWN TO BE ASSESSED AND AS SUCH NO PART OF INCOME ASSESSED COULD REPRESENT AN INCOME WHICH CAN BE SAI D TO HAVE BEEN CONCEALED BY THE APPELLANT. 1.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT FILING OF FIR ON 6.3. 2006 WAS IN RESPECT OF THE AMOUNT OF RS. 97,13,86,901/- RECEIVE D IN NATWEST BANK PERTAINING TO APPELLANT COMPANY FOR ASSESSMENT YEAR 2006-07 WHICH WAS DECLARED IN THE O RIGINAL RETURN OF INCOME AND, NOT FOR THE SUM DECLARED AND, ASSESSED IN THE INSTANT ASSESSMENT YEAR AND AS SUCH, THE SAM E COULD NOT BE GROUND TO HOLD THAT APPELLANT HAD NOT DECLAR ED THE INCOME VOLUNTARILY. 1.5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT ASSUMING FOR THE SAKE OF AN ARGUMENT (THOUGH THE SAME IS SERIOUSLY DISPUTED) T HAT THERE WAS DETECTION OF INCOME BY THE CBI AND IT WAS ONLY ON ACCOUNT OF DETECTION BY CBI THAT ASSESSEE HAD DECLA RED SUCH INCOME THEN TOO TO DETERMINE AS TO WHETHER INCOME D ECLARED BY THE ASSESSEE IN THE RETURN OF INCOME WAS NOT VOL UNTARY OR ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS NOT, WHAT HAS TO BE SEEN IS, WHETHER THE INCOME WAS DETECTED BY THE LEARNED AO OR WHETHER THE SAME WAS VOLUNTARI LY OFFERED BY THE APPELLANT AND, NOT THAT, IT WAS ALLE GEDLY DETECTED BY CBI AND AS SUCH THE CONCLUSION OF THE L EARNED OFFICER IS BASED ON MISINTERPRETATION OF PROVISIONS OF LAW 1.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS SUSTAINED THE PENALTY MECHANICALLY, ARBITRARILY AND IN COMPLETE DISREGARD OF THE WRITTEN SUBMISSION AND EV IDENCE FURNISHED ON RECORD BY THE APPELLANT COMPANY AND TH EREFORE, PENALTY SO SUSTAINED IS WHOLLY MISCONCEIVED AND UNT ENABLE. 1.7 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHILE FRAMING THE PENALTY, HAS ALSO OVERLOOKED THE FACT THAT THE VARIOUS FINDINGS RECORDED IN THE ORDER IMPOSING PENALTY HAD BEEN MECHANICALLY AND BODILY LIFTED FROM THE OR DER OF ASSESSMENT FRAMED UNDER SECTION 147/143(3) OF THE A CT AND THEREFORE, THE SAID PENALTY LEVIED AND SUSTAINED IS INVALID AND UNWARRANTED. 1.8 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT THE OBSERVATION OF THE LEARNED ASSESSING OFFICER IN THE ORDER OF PENALTY T HAT EITHER THE APPELLANT COMPANY WAS MAINTAINING ACCOUNT WITH NATWEST BANK, LONDON SINCE 1992 OR HAD NOT FURNISHI NG DOCUMENTARY EVIDENCE IN SUPPORT OF EXISTENCE OF BUS INESS IS FACTUALLY INCORRECT AND CONTRARY TO THE EVIDENCE ON RECORD. 1.9 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHILE UPHOLDING LEVY OF PENALTY, HAS FAILED TO APPR ECIATE THAT AS REGARDS RECEIPT OF RS. 14.58 CRORES IN ASSESSMEN T YEAR 2004-05 AND 2005-06, THESE RECEIPTS PERTAIN TO OBAR A PROJECT OF UPRUVNL FOR WHICH, THERE IS NO REGISTRATION OF C ASE BY CBI OR ANY OTHER INVESTIGATION AGENCY AND AS SUCH, DECL ARATION OF SAID INCOME BY THE APPELLANT COMPANY COULD NOT OTHE RWISE BE A BASIS TO IMPOSE PENALTY UNDER SECTION 271(1)(C) O F THE ACT. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FAILED TO APPRECIATE THAT NOTICE ISSUED FOR LEV YING THE PENALTY WAS VAGUE, NON-SPECIFIC AND AS SUCH PENALTY LEVIED ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ON THE BASIS OF THE SAID NOTICE WAS INVALID AND NOT IN ACCORDANCE WITH LAW. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ALSO FAILED TO APPRECIATE THAT IN ABSENCE OF AN Y VALID SATISFACTION HAVING BEEN RECORDED IN THE ORDER OF A SSESSMENT THE PENALTY LEVIED WAS OTHERWISE NOT SUSTAINABLE. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT PENALT Y SO LEVIED AND SUSTAINED IS ILLEGAL, INVALID AND THEREFORE, MA Y KINDLY BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED. 11.2 IDENTICAL GROUNDS HAVE BEEN RAISED BY THE ASSESSE IN THE APPEAL FOR ASSESSMENT YEAR 2005-06 IN ITA NO. 4389/ DEL/2014 WHICH READ AS UNDER: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) XVIII NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING PENALTY LEVIED OF RS. 1,50,95,320/- UNDER SECTION 271(1)(C) OF THE ACT. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHILE UPHOLDING THE PENALTY HAS FAILED TO APPRECIAT E THAT INCOME IN RESPECT OF WHICH PENALTY HAVE BEEN LEVIED WAS THE INCOME DECLARED VOLUNTARILY BY THE APPELLANT FIRSTL Y BY LETTERS DATED 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006 AND 23.5.2006 AND THEREAFTER I N RETURN FILED ON 21.6.2006 AND, 12.2.2007 AND ALSO IN RETUR N FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND AS SUCH, IT CANNOT BE VALIDLY HELD THAT ASSESSEE HAS EITHER CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME MERELY O N THE GROUND THAT, SUCH RECEIPTS WERE NOT DISCLOSED IN TH E ORIGINAL RETURN OF INCOME. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE FACT THAT INCOME ASSESSED WAS NO T BASED ON THE REVISED RETURN BUT ON THE BASIS OF RETURN FI LED IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND THE REASO NS ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS RECORDED FOR INITIATION U/S 147 OF THE ACT ESTABLIS HED THAT PROCEEDINGS HAD BEEN INITIATED ON THE BASIS OF INFO RMATION CONTAINED IN THE REVISED RETURN AND NOT BY WAY OF A NY DETECTION AND HENCE THE FINDING THAT THERE WAS INTE NTIONAL ATTEMPT TO EVADE TAX OVERLOOKS THIS FACTUAL FUNDAME NTAL ASPECT AND MATERIAL ON RECORD AND AS SUCH ORDER UPH OLDING THE LEVY OF PENALTY IS VITIATED AND UNTENABLE. 1.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT TILL THE DATE OF FILING OF RETURN ON 12.2.2007 WHEN ASSESSEE HAD REVISED RETUR N OF INCOME BY INCLUDING AN AMOUNT OF RS. 10.48 CRORES, NO ENQUIRY WAS EITHER INITIATED OR LAUNCHED AND THUS, INCOME OFFERED IN THE SAID RETURN REPRESENTED THE INCOME W HICH HAD BEEN SHOWN TO BE ASSESSED AND AS SUCH NO PART OF IN COME ASSESSED COULD REPRESENT AN INCOME WHICH CAN BE SAI D TO HAVE BEEN CONCEALED BY THE APPELLANT. 1.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT FILING OF FIR ON 6.3. 2006 WAS IN RESPECT OF THE AMOUNT OF RS. 97,13,86,901/- RECEIVE D IN NATWEST BANK PERTAINING TO APPELLANT COMPANY FOR ASSESSMENT YEAR 2006-07 WHICH WAS DECLARED IN THE O RIGINAL RETURN OF INCOME AND, NOT FOR THE SUM DECLARED AND, ASSESSED IN THE INSTANT ASSESSMENT YEAR AND AS SUCH, THE SAM E COULD NOT BE GROUND TO HOLD THAT APPELLANT HAD NOT DECLAR ED THE INCOME VOLUNTARILY. 1.5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT ASSUMING FOR THE SAKE OF AN ARGUMENT (THOUGH THE SAME IS SERIOUSLY DISPUTED) TH AT THERE WAS DETECTION OF INCOME BY THE CBI AND IT WAS ONLY ON ACCOUNT OF DETECTION BY CBI THAT ASSESSEE HAD DECLA RED SUCH INCOME THEN TOO TO DETERMINE AS TO WHETHER INCOME D ECLARED BY THE ASSESSEE IN THE RETURN OF INCOME WAS NOT VOL UNTARY OR NOT, WHAT HAS TO BE SEEN IS, WHETHER THE INCOME WAS DETECTED BY THE LEARNED AO OR WHETHER THE SAME WAS VOLUNTARI LY OFFERED BY THE APPELLANT AND, NOT THAT, IT WAS ALLE GEDLY ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS DETECTED BY CBI AND AS SUCH THE CONCLUSION OF THE L EARNED OFFICER IS BASED ON MISINTERPRETATION OF PROVISIONS OF LAW 1.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS SUSTAINED THE PENALTY MECHANICALLY, ARBITRARILY AND IN COMPLETE DISREGARD OF THE WRITTEN SUBMISSION AND EV IDENCE FURNISHED ON RECORD BY THE APPELLANT COMPANY AND TH EREFORE, PENALTY SO SUSTAINED IS WHOLLY MISCONCEIVED AND UNT ENABLE. 1.7 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHILE FRAMING THE PENALTY, HAS ALSO OVERLOOKED THE FACT THAT THE VARIOUS FINDINGS RECORDED IN THE ORDER IMPOSING PENALTY HAD BEEN MECHANICALLY AND BODILY LIFTED FROM THE OR DER OF ASSESSMENT FRAMED UNDER SECTION 147/143(3) OF THE A CT AND THEREFORE, THE SAID PENALTY LEVIED AND SUSTAINED IS INVALID AND UNWARRANTED. 1.8 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT THE OBSERVATION OF THE LEARNED ASSESSING OFFICER IN THE ORDER OF PENALTY T HAT EITHER THE APPELLANT COMPANY WAS MAINTAINING ACCOUNT WITH NATWEST BANK, LONDON SINCE 1992 OR HAD NOT FURNISHI NG DOCUMENTARY EVIDENCE IN SUPPORT OF EXISTENCE OF BUS INESS IS FACTUALLY INCORRECT AND CONTRARY TO THE EVIDENCE ON RECORD. 1.9 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHILE UPHOLDING LEVY OF PENALTY, HAS FAILED TO APPR ECIATE THAT AS REGARDS RECEIPT OF RS. 14.58 CRORES IN ASSESSMEN T YEAR 2004-05 AND 2005-06, THESE RECEIPTS PERTAIN TO OBAR A PROJECT OF UPRUVNL FOR WHICH, THERE IS NO REGISTRATION OF C ASE BY CBI OR ANY OTHER INVESTIGATION AGENCY AND AS SUCH, DECL ARATION OF SAID INCOME BY THE APPELLANT COMPANY COULD NOT OTHE RWISE BE A BASIS TO IMPOSE PENALTY UNDER SECTION 271(1)(C) O F THE ACT. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FAILED TO APPRECIATE THAT NOTICE ISSUED FOR LEV YING THE PENALTY WAS VAGUE, NON-SPECIFIC AND AS SUCH PENALTY LEVIED ON THE BASIS OF THE SAID NOTICE WAS INVALID AND NOT IN ACCORDANCE WITH LAW. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ALSO FAILED TO APPRECIATE THAT IN ABSENCE OF AN Y VALID ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS SATISFACTION HAVING BEEN RECORDED IN THE ORDER OF A SSESSMENT THE PENALTY LEVIED WAS OTHERWISE NOT SUSTAINABLE. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT PENALT Y SO LEVIED AND SUSTAINED IS ILLEGAL, INVALID AND THEREFORE, MA Y KINDLY BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED. 11.3 ALL THE AFORESAID GROUNDS AS STATED ABOVE RELATE T O LEVY OF PENALTY OF RS. 3,76,26,700/- AND RS. 1,50,95,320/- IN ASSESSMENT YEARS 2004-05 AND 2005-06 RESPECTIVELY UNDER SECTION 271(1)(C) OF THE ACT. FROM THE PERUSAL OF O RDERS DATED 30.3.2012 PASSED BY THE DCIT, CIRCLE 15(1), NEW DEL HI, IT IS NOTED THAT THE PENALTY HAS BEEN LEVIED ON THE BASIS THAT THE RETURNS OF INCOME HAVE BEEN FILED AFTER THE FACT OF HAVING INC OME ABROAD HAD ALREADY BECOME KNOWN TO THE DEPARTMENT. IT HAS BEEN NOTED THAT FIR WAS FILED ON 6.3.2006 AND ASSESSEE HAD WAITED F OR A PERIOD OF MORE THAN 10 MONTHS FOR FILING REVISED RETURN AND A FTER REALIZING THAT THERE IS NO EXIT ROUTE AVAILABLE, IT HAD FURNI SHED THE REVISED RETURNS ON 12.2.2007. IT WAS HELD THAT THE CLAIM O F THE ASSESSEE AS TO THE DECLARATION OF INCOME VOLUNTARILY HAD REM AINED UN- SUBSTANTIATED AND THAT THE ASSESSEE HAD FAILED TO F URNISH DOCUMENTARY EVIDENCE TO SUPPORT EXPENSES OF BUSINES S AND HAD FAILED TO SUCCESSFULLY CONTRADICT THE FINDINGS THAT THE MONEY LYING IN THE BANK ACCOUNT WAS NOT UNEXPLAINED INVESTMENT. IT WAS HELD ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS THAT THE RECEIPTS DECLARED BY THE ASSESSEE IN BOTH THE ASSESSMENT YEARS WAS NOT A VOLUNTARY DECLARATION BUT WAS A CAS E OF INTENTIONAL ATTEMPT TO CONCEAL THE PARTICULARS OF I NCOME BY THE ASSESSEE COMPANY. 11.4 ON APPEAL, THE LD. CIT (A) UPHELD THE CONCLUSION OF THE ASSESSING OFFICER AND CONFIRMED THE LEVY OF PENALT Y UNDER SECTION 271(1)(C) OF THE ACT FOR BOTH THE YEARS. 11.5 BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HA S CONTENDED AS UNDER: 1 IT IS SUBMITTED THAT, IT IS UNDISPUTED THAT, INC OME ASSESSED BY LEARNED AO IS ON THE BASIS OF INCOME DE CLARED BY THE ASSESSEE IN LETTERS DATED 1.04.2006, 11.4.20 06, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 20.5.20 06 AND, THEREAFTER IN THE RETURNS FURNISHED BY THE APPELLAN T ON 21.06.2006 AND 12.02.2007 FILED BY THE ASSESSEE COM PANY. 2 THUS, ONCE INCOME DECLARED VOLUNTARILY HAS BEEN ASSESSED AS SUCH, IT CANNOT BE ALLEGED THAT, THERE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN FACT, THE AFORESAID LETTERS/RETURN OF INCOME WOULD SHOW THAT NO ENQUIRY WAS EITHER INITIATED OR LAUNCHED BY THE LEA RNED ASSESSING OFFICER BEFORE DISCLOSURE OF INCOME AND T HUS, INCOME VOLUNTARILY OFFERED HAS BEEN ASSESSED AS SUC H. IT IS THUS, SUBMITTED THAT THERE IS NO CONCEALMENT OF ANY INCOME. ALL WHAT COULD BE ALLEGED IS THAT, IN THE RETURN FI LED ON 31.10.2005, THE ASSESSEE OMITTED TO INCLUDE A SUM O F RS. 10.48 CRORES, HOWEVER, BONAFIDE OF ASSESSEE IS ESTA BLISHED WHEN ASSESSEE ITSELF ON 12.02.2007 INCLUDED THE ENT IRE SUM RECEIVED EVEN THOUGH IT DID NOT PERTAIN TO THE INST ANT ASSESSMENT YEAR BUT WAS RELATABLE TO THE SUCCEEDING YEARS. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS IT IS THUS SUBMITTED THAT, NO PART OF INCOME ASSESS ED COULD REPRESENT AN INCOME WHICH CAN BE SAID TO HAVE BEEN CONCEALED. IN FACT, IT IS ON THE BASIS OF INCOME SH OWN BY ASSESSEE THE LEARNED ASSESSING OFFICER HAD MADE DET AILED EXAMINATION AND, IN ABSENCE THEREOF HE HAD NO SOURC E WHICH COULD MAKE HIM BELIEVE THAT THERE WAS EVEN AN ATTEM PT TO CONCEAL INCOME. 3 THIS IS EVIDENT FROM THE REASONS RECORDED FOR IN ITIATING PROCEEDINGS U/S 147 OF THE ACT. THE EXPRESSION CON CEALMENT OF INCOME HAS BEEN ELABORATELY DISCUSSED IN THE JU DGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF LR GUPTA V UOI REPORTED IN 194 ITR 32 AND, IF THE SAID LAW IS APPL IED, IT CANNOT BE REMOTELY ALLEGED THAT, THERE IS CONCEALME NT OF INCOME. THE EXPRESSION CONCEALMENT OF INCOME AND, O MISSION ARE NOT AKIN. THE APPELLANT, AT THIS JUNCTURE ALON E, ALSO SEEKS TO REFER TO DECISION OF THIRD MEMBER IN THE CASE OF ADDL. CIT VS. PREMCHAND GARG REPORTED IN 123 TTJ 433. 4 AS REGARDS THE FILING OF FIR ON 6.03.2006, IT IS SUBMITTED THAT, FIR FILED ON 6.03.2006 HAS ABSOLUTELY NO CONN ECTION WITH RECEIPTS RECEIVED BY THE APPELLANT COMPANY IN THE YEAR UNDER CONSIDERATION BUT TO RECEIPTS FOR THE ASSESSM ENT YEAR 2006-07 WHICH WERE DULY DECLARED IN THE ORIGINAL RE TURN FOR ASSESSMENT YEAR 2006-07. IT IS ALSO STATED HERE T HAT A CRIMINAL CASE WAS REGISTERED UNDER INDIAN PENAL COD E AND PREVENTION OF CORRUPTION ACT AGAINST UNKNOWN OFFICI ALS OF NTPC OF INDIA AND OTHERS ON 6.3.2006 AND, NOT AGAIN ST THE APPELLANT COMPANY; THUS THE SAME COULD NOT BE MADE ANY BASIS TO ASSUME THAT, INCOME DECLARED BY THE ASSESS EE VIDE LETTERS DATED 1.4.06, 11.04.2006 AND, SUBSEQUENTLY IN THE RETURN OF INCOME WAS NOT VOLUNTARY. 5 IT IS FURTHER ADDED THAT, THE FILING OF FIR ON 6. 03.2006 (WHICH THE ASSESSEE WAS NOT EVEN AWARE AND WAS NOT KNOWN TILL 02.05.2006) WHEN A COPY OF FAX WAS RECEIVED BY HER FROM CENTRAL CONFISCATION BRANCH, CROWN PROSECUTION SERV ICE, LONDON. HOWEVER, IT WAS SUBMITTED THAT, PRIOR THERE TO, THE ASSESSEE HAD ONLY RECEIVED ON 29.04.2006, A LETTER FROM THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS NATWEST BANK DATED 25.04.06 IN THE CASE OF M/S RAVI NA & ASSOCIATES P. LTD., WHEREIN THEY HAD INTIMATED THAT OPERATIONS IN THE BANK ACCOUNTS OF THE ASSESSEE AND M/S RAVINA & ASSOCIATES P. LTD. HAD BEEN TEMPORARILY SUSPENDED ON ACCOUNT OF RESTRAINT ORDER SERVED ON THE BANK ON 20.04.2006. IT MAY KINDLY BE NOTED THESE ARE AL L SUBSEQUENT DEVELOPMENTS AND ARE OF A DATE LATER THA N APPELLANT ON ITS OWN ADDRESSING A COMMUNICATION TO THE TAX AUTHORITIES. IT MAY ALSO BE STATED HERE THAT THIS L ETTER WAS ISSUED SINCE APPELLANT HAD APPROACHED THE BANK SEVE RAL TIMES SINCE MARCH 2006 [6.03.2006) 28.03.2006, 30.03.2006, 12.04.2006, 13.04.2006, 19.04.2006, 22.04.2006 AND 25.04.2006, FOR CLOSURE OF THE BAN K ACCOUNTS, OBTAINING THE BANK STATEMENTS AND REMITTI NG THE FUNDS TO INDIA. INFACT, LETTERS ADDRESSED TO THE BANK IN MARCH 2006 WERE ONLY AS A RESULT OF DISCUSSIONS HE LD BY THE ASSESSEES WITH THE ADVOCATE IN FEBRUARY 2006 WHO APPRISED THEM OF THE LIABILITY TO PAY TAX IN RESPEC T OF THE SUMS CREDITED IN THE NATWEST BANK ACCOUNT AT LONDON WRIT TEN BY THE ASSESSEE TO THE ADVOCATE IN THE RESPECTIVE YEAR S. HENCE, IN LIGHT OF THE AFORESAID, IT IS RESPECTFULLY SUBMI TTED THAT, THE INCOME WAS VOLUNTARILY OFFERED FIRSTLY VIDE LETTERS DATED 01.04.2006 & 11.04.2006 AND THEREAFTER IN THE RETUR NS OF INCOME DATED 21.08.2006 AND 12.02.2007. THE ASSESS EE FURTHER SUBMITS THAT THE BELIEF OF THE ASSESSEE WAS BONAFIDE IS EVIDENT FROM THE FACT THAT SUMS RECEIVED OUTSIDE INDIA FROM FOREIGN ENTITIES WERE NOT DISCLOSED IN PRECEDING AS SESSMENT YEARS AND SUCH RECEIPTS HAVE NOT BEEN DISCLOSED AS INCOME IN THE INSTANT YEAR. IT IS SUBMITTED THAT IT IS A MAT TER OF RECORD, THE ASSESSING OFFICER WHO WAS ASSESSING THE ASSESSE E WAS WELL AWARE, AS COULD BE EVIDENT FROM RECORD OF ASSE SSMENT FOR SUCH OF THE YEARS. IT IS THUS A CLEAR CASE OF I GNORANCE OF LAW TILL 1.4.2006 AND, ONCE THE ASSESSEE CAME TO KN OW OF ITS LIABILITY TO TAX, THE ASSESSEE VOLUNTARILY AND, OF ITS OWN FURNISHED THE RETURN OF INCOME. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 6 IT IS ALSO SUBMITTED THAT, THE NOTICE DATED 31.12 .2007 AND 6.3.2012 WAS HIGHLY VAGUE, NON-SPECIFIC AND, HE NCE UNSUSTAINABLE. INFACT, IT WILL BE SEEN FROM THE NOT ICE THAT NEITHER THE ITEMS FOR WHICH PROCEEDINGS HAD BEEN IN ITIATED HAD BEEN SPECIFIED AND NOR THE CHARGE AGAINST THE A SSESSEE IN RESPECT OF WHICH PURPORTED ITEMS HAD BEEN SPECIF IED. IT IS THUS RESPECTFULLY SUBMITTED THAT SINCE NOTICE ITSEL F ISSUED WAS HIGHLY VAGUE, THEREFORE, THE SAME CANNOT BE A GROUN D TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. RELIANC E IS PLACED ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V AJAY HARI DALMIA 157 ITR 145 WHEREIN IT HA S BEEN HELD AS UNDER: IN PENALTY PROCEEDINGS, IT WAS NOT ONLY NECESSARY TO INFORM THE ASSESSEE OF THE PARTICULAR CONCEALMENT BUT ALSO NECESSARY FOR THE DEPARTMENT TO PROVE POSITIVELY TH AT THERE WAS SUCH A CONCEALMENT. IN SUCH A CASE, IT BECOMES THE DUTY OF THE DEPARTMENT TO INFORM THE ASSESSEE OF THE PAR TICULAR CONCEALMENT THAT HAD TAKEN PLACE SO THAT HE COULD D EFEND THE CASE. THIS HAS LED TO THE CANCELLATION OF THE PENAL TY ORDER BOTH BY THE COMMISSIONER AS WELL AS THE TRIBUNAL WH ICH HAS MERELY AFFIRMED THE COMMISSIONER'S ORDER. [EMPHASI S SUPPLIED] 7 IT IS ALSO RESPECTFULLY SUBMITTED THAT, NO PENALT Y IS LEVIABLE ON THE FACTS OF THE INSTANT CASE IN AS MUC H AS THERE IS NO SATISFACTION RECORDED IN THE ORDER OF THE ASSESS MENT U/S 147/143(3) OF THE ACT FOR THE LEVY OF PENALTY. THE MERE GENERAL AND VAGUE OBSERVATIONS IN THE ORDER OF ASSE SSMENT CANNOT IN LAW OR ON FACTS AS BE HELD TO BE A SATISF ACTION RECORDED IN CONFORMITY WITH THE PROVISIONS CONTAINE D IN SECTION 271(1)(C) OF THE ACT. INFACT NO SATISFACTIO N HAS BEEN REACHED BY THE LEARNED ASSESSING OFFICER AND, PROCE EDINGS HAVE BEEN INITIATED IN A MECHANICAL MANNER WHEN ALO NG WITH THE NOTICE OF DEMAND A PRINTED NOTICE U/S 271 (1)(C ) WAS ALSO FORWARDED TO THE ASSESSEE. IT IS SUBMITTED THAT, SA TISFACTION OF THE LEARNED OFFICER IS NOT A CAUSE FOR INFERENCE BUT MUST BE CLEARLY DISCERNIBLE FROM THE ORDER OF ASSESSMENT. THIS VIEW ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS HAS BEEN EXPRESSED BY HONBLE DELHI COURT IN THE CA SE OF CIT VS. MADHU SHRI GUPTA REPORTED IN 317 ITR 107. IN T HIS CONTEXT, RELIANCE IS ALSO PLACED ON THE OBSERVATION S OF THEIR LORDSHIP OF THE JURISDICTIONAL HIGH COURT, WHICH IS BINDING IN NATURE, IN THE CASE OF CIT V. AUTO LAMP REPORTED IN 278 ITR 32. 8 IN LIGHT OF THE ABOVE SUBMISSIONS, IT BE HELD THA T THE ASSESSEE HAS NOT CONCEALED ANY INCOME AND THE PENAL TY IMPOSED U/S 271(1)(C) MAY BE CANCELLED CONSIDERING THE BONAFIDE EXPLANATION OF THE ASSESSEE. IT IS AGAIN R EITERATED THAT, THERE WAS NO ATTEMPT TO INTENTIONALLY EVIDENC E TAXES BY CONCEALING PARTICULARS OF INCOME WHICH WOULD WARRAN T IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. 11.6 IT HAS THUS BEEN CONTENDED INTER-ALIA THAT THE RET URNS OF INCOME WERE FILED BY THE ASSESSEE VOLUNTARILY AND I T WAS ONLY ON ACCOUNT OF LETTERS FILED BY THE ASSESSEE THAT IT BE CAME KNOWN TO THE DEPARTMENT AND THERE WAS NO INDEPENDENT ENQUIRY OR INFORMATION AVAILABLE WITH THE DEPARTMENT SO AS TO HOLD THAT THERE WAS DETECTION ON THE PART OF THE REVENUE PRIO R TO THE DECLARATION OF INCOME BY THE ASSESSEE. APART FROM T HE ABOVE, IT HAS BEEN CONTENDED THAT THE NOTICES ISSUED WERE NON -SPECIFIC AND VAGUE AND, THEREFORE, NO PENALTY WAS LEVIABLE. THE LEARNED COUNSEL FOR THE ASSESSEE SOUGHT TO RELY UPON VARIOU S JUDICIAL PRONOUNCEMENTS TO CONTEND THAT NO PENALTY WAS LEVIA BLE. THE LIST ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OF SUCH JUDGMENTS AS RELIED UPON IN THE COURSE OF H EARING ARE AS UNDER: I) ADITYA CHEMICALS V. ITO IN ITA NO. 5006/DEL/201 3 DATED 21.11.2017 II) META GUTGUTIA ITA NO. 327/DEL/2014 DATED 31.3. 2016 III) MOHD. IRSHAD V. ITO IN ITA NO. 4994/DEL/2013 DATED 22.6.2015 IV) VAISH DEGREE COLLEGE TRUST V. ACIT IN ITA NO. 4538/DEL/2011 DATED 28.9.2012 V) MRS. ARCHANA D. TALATI IN ITA NO. 2696/DEL/2016 DATED 5.6.2017 VI) MRS. PREMILA BHATIA V. DCIT IN ITA NO. 1929/DE L/2011 DATED 3.2.2012 VII) ACIT V. TRN ENERGY (P) LTD. IN ITA NO. 453/DE L/2016 VIII) CIT V. SMT. VINAY SHARMA IN ITA NO. 187/2014 DATED 2.5.2014 (DEL) IX) CIT V. CONTROL & SWITCHGEAR CONTRACTORS LTD. IN ITA NO. 290/2015 DATED 24.8.2015 X) CIT V. PRASHANT SHRIVASTAVA IN ITA NO. 393/2015 (DEL) XI) R. UMEDBHAI JEWELLERS (P) LTD. V. CIT IN ITA N O. 221/DEL/2015 ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS XII) CIT V. M/S PREET LAND PROMOTERS & DEVELOPERS ( P) LTD. IN ITA NO. 518/CHD/2012 11.7 ON THE OTHER HAND, THE LEARNED CIT DR SUPPORTED TH E ACTION OF THE AUTHORITIES BELOW AND FILED WRITTEN S UBMISSION WHEREIN IT WAS SUBMITTED AS UNDER: IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISION S MAY KINDLY BE CONSIDERED WITH REGARD TO LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT. 1 MAK DATA (P) LTD. V. CIT [358 ITR 593 (SC) (2013(CO PY ENCLOSED) WHERE HONBLE SUPREME COURT HELD THAT UNDER EXPLANA TION 1 TO S. 271(1)(C), VOLUNTARY DISCLOSURE OF CONCEALED INCOME DOES NOT ABSOLVE ASSESSEE OF S. 271(1)(C) PENALTY IF THE ASSESSEE FAILS TO OFFER AN EXPLANATION WHICH IS BONAFIDE AND PROVES THAT ALL THE MATERIAL FACTS HAVE BEEN DISCLOSED. 2 S. RUDRAMUNIYAPPA V. CIT (75 TAXMANN.COM 241) (COPY ENCLOSED) WHERE HONBLE SUPREME COURT HELD THAT UNDER EXPLANA TION 1 TO S. 271(1)(C), VOLUNTARY DISCLOSURE OF CONCEALED INCOME DOES NOT ABSOLVE ASSESSEE OF S. 271(1)(C) PENALTY IF THE ASSESSEE FAILS TO OFFER AN EXPLANATION WHICH IS BONAFIDE AND PROVES THAT ALL THE MATERIAL FACTS HAVE BEEN DISCLOSED. 3 CIT V. ESCORTS FINANCE LTD. [2010) 328 ITR 44 (DEL) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT IF CLAIM M ADE IN RETURN OF INCOME APPEARS TO BE EX FACIE BOGUS, IT W OULD BE TREATED AS A CASE OF CONCEALMENT OR FURNISHING OF I NACCURATE PARTICULARS AND PENALTY PROCEEDING WOULD BE JUSTIFI ED. 4 CIT V. ZOOM COMMUNICATION (P) LTD. (2010) 327 ITR 5 10 (DEL) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT IF ASSESSE E MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW, BUT IS ALSO WHOLLY ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS WITHOUT ANY BASIS AND EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONA FIDE, E XPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND ASS ESSEE WILL BE LIABLE TO PENALTY 5 CIT V. USHA INTERNATIONAL LTD. (DELHI HIGH COURT) (COPY ENCLOSED AS ANNEXURE-6) THE MERE FACT THAT REVISED RETURN WAS FILED WITHDRA WING A CLAIM OR OFFERING ADDITIONAL INCOME BEFORE ISSUE OF A FORMAL NOTICE BY THE AO DOES NOT NECESSARILY MEAN THAT THE RETURN IS VOLUNTARY. THE FILING OF A REVISED RETURN DOES NOT EXPATIATE THE CONTUMACIOUS CONDUCT, IF ANY, ON THE PART OF TH E ASSESSEE IN NOT HAVING DISCLOSED HE TRUE INCOME IN THE ORIGI NAL RETURN. IN VIEW OF THE ABOVE DECISIONS, IT IS HUMBLY REQUES TED THAT APPEALS OF THE ASSESSEE MAY BE DISMISSED. 11.8 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. IT IS EVIDENT FROM THE NOTICES U/S 274 R.W.S. 271 OF THE ACT DATED 27.12.2007 AND 6.3.2012 THAT T HE AO HAS NOT SPECIFICALLY SPECIFIED UNDER WHICH LIMB OF SECT ION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED BY HIM, I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565 (KAR) HAS INTER-ALI A HELD AS UNDER: (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPE CIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) I. E., WHETHER ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING O F INACCURATE PARTICULARS OF INCOME (Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW. 11.9 THE ABOVE SAID DECISION OF HONBLE HIGH COURT OF KA RNATAKA IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING F ACTORY (SUPRA) HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. SSAS EMERALD MEADOWS 73 TAXM ANN.COM 241 AND THE RELEVANT PORTION IS AS UNDER: 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWIN G SUBSTANTIAL QUESTIONS OF LAW: 1 WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICI TLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CO NCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLAT ION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THA T THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? 2 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) I S BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 27 1(1B) WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMEN DMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROP ERLY RECORDING THE SATISFACTION FOR THE SAME? 3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE AP PEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED U NDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE A SSESSMENT ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME?' 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCO ME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT D ID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PEN ALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF CIT V. MANJUNATH A COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.). 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDIN GLY DISMISSED. 11.10 THE SLP FILED BY THE REVENUE AGAINST THE ABOVE JUD GMENT HAS BEEN DISMISSED BY HONBLE SUPREME COURT OF INDI A AND THE DECISION OF HONBLE SUPREME COURT IS REPRODUCED HER E IN BELOW: 1 DELAY CONDONED 2 WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS ACCORDINGLY DISMISSED. 3 PENDING APPLICATION, IF ANY STANDS DISPOSED OFF. 11.11 THEREFORE, IN THE CIRCUMSTANCES AND ON THE FACTS O F THE PRESENT CASE AND IN LIGHT OF THE JUDGMENTS OF THE H ONBLE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS KARNATAKA HIGH COURT AND THE HONBLE SUPREME COURT REPRODUCED HEREINABOVE, WE ARE OF THE CONSIDERED VI EW THAT THE ASSESSING OFFICER IS REQUIRED TO SPECIFY AS TO UNDE R WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED, I.E. WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FR OM THE PERUSAL OF THE NOTICE U/S 274 R.W.S. 271 OF THE ACT, ASSESS ING OFFICER HAS NOT SPECIFIED AS TO UNDER WHICH OF THE TWO LIMBS TH E PENALTY IS IMPOSABLE. IN THE CIRCUMSTANCES AND FACTS OF THE CA SE, THE PENALTY PROCEEDINGS SO INITIATED BY THE AO ARE BAD IN LAW AND ACCORDINGLY THE PENALTIES SO INITIATED ARE ORDERED TO BE CANCELLED AND THE ORDER/S OF THE LEARNED CIT (A) ARE REVERSED . THUS, THE LEGAL GROUND RAISED IS DECIDED IN FAVOUR OF THE ASS ESSEE AND IS ALLOWED. 11.12 MOREOVER, EVEN ON MERITS, THE REASON WHICH LED THE AUTHORITIES BELOW TO LEVY THE IMPUGNED PENALTY IS T HAT THERE WAS NO VOLUNTARY DECLARATION BY THE ASSESSEE. WE HAVE A LREADY HELD, WHILE DISPOSING OFF GROUNDS 1 TO 1.4 AND GROUNDS 3 TO 3.6 IN ITA NOS. 1004/DEL/2011AND 1005/DEL/2011 FOR ASSE SSMENT YEARS 2004-05 AND 2005-06, THAT THE INCOME DECLARED BY THE ASSESSEE WAS VOLUNTARY AND THE NATURE OF INCOME WAS NOT ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. IN VIEW OF THE ABOVE FINDINGS, WE ARE OF THE CONSIDERED VIEW T HAT PENALTY IS NOT LEVIABLE EVEN ON THE FACTS OF THE CASE OF THE A SSESSEE COMPANY AND IT IS NOT A CASE WHERE THERE WAS ANY DETECTION OF INCOME BY THE AUTHORITIES BELOW PRIOR TO THE DECLARATION OF I NCOME BY THE ASSESSEE. ON THE CONTRARY, THE REASONS RECORDED EST ABLISH THAT INCOME WAS SOUGHT TO BE ASSESSED ON THE BASIS OF DE CLARATION OF INCOME BY THE ASSESSEE COMPANY. 11.13 THE THIRD MEMBER OF THE ITAT IN THE CASE OF ADDL. C IT VS. PREMCHAND GARG REPORTED IN 123 TTJ 433 HAS HELD AS UNDER: 19. THE FACT, WHETHER THERE IS CONCEALMENT OF INCO ME OR WHETHER INACCURATE PARTICULARS THEREOF HAVE BEEN FU RNISHED IS ESSENTIALLY A QUESTION OF FACT. TO FIND OUT THAT OR TO DECIDE WHICH, ALL THE ATTENDING CIRCUMSTANCES HAVE TO BE T AKEN INTO ACCOUNT. THE QUESTION IS AT WHAT POINT OF TIME THIS MATERIAL FACT IS TO BE FOUND OUT. GENERALLY IT IS WITH REFER ENCE TO THE RETURN OF INCOME AND AT THAT TIME IT IS TO BE SEEN WHETHER THERE WAS CONCEALMENT OF INCOME FROM OR FURNISHING OF INACCURATE PARTICULARS THEREOF IN THE RETURN OF INC OME CHARGEABLE TO TAX. BUT THERE MAY BE CASES, WHERE AN INCOME IS NOT DECLARED IN THE RETURN OR THE PARTICULARS OF INCOME SHOWN INACCURATELY IN THE RETURN BUT ASSESSEE ON RE ALIZATION OF MISTAKE, OMISSION OR MISDEED RECTIFIES THAT AND CORRECTS HIMSELF AND CLEANS HIS BREAST CAN HE STILL BE ACCUS ED OF CONCEALMENT THOUGH IN THE RETURN THERE HAS BEEN THE OMISSION. BY THE TIME THE AO TAKES UP THE ISSUE AND COMES ACROSS THE INFORMATION IN HIS POSSESSION, IF THE AS SESSEE MAKES UP THE DEFICIENCY AND OFFERS THE INCOME OR FU RNISHES ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ACCURATE PARTICULARS HE, IN OUR OPINION, CANNOT BE HELD GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF HIS INCOME. ANY ACTION RECTIFIED REL ATES BACK TO ORIGINAL ACT AND TO THE DATE AND TIME OF FILING THE RETURN. WHEN THE AO STARTS SCRUTINY OF THE RETURN AND INITIATES ASSESSMENT PROCEEDINGS THERE IS NOTHING CONCEALED AND THE INAC CURACY, IF ANY, DISAPPEARED. .. 20. A PERUSAL OF THIS PROVISION CLEARLY SHOWS THAT IT IS IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, ASSESSMENT PROCEEDINGS IN THIS CASE, THAT THE AO IS TO BE SATI SFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS I NCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS THUS TO BE JUDGED AT THIS STAGE AND IF AT THIS STAGE HE HAS DECLARED THE CORRECT INCOME AND/OR FURNISHED ACCURATE PARTIC ULARS OF HIS INCOME THEN THERE IS NO SCOPE, IN OUR OPINION, TO ARRIVE AT THE SATISFACTION BY THE AO BECAUSE AT THAT STAGE TH ERE IN NO SUCH CONCEALMENT. IT DISAPPEARED BY AN ACTION OF TH E AO. IN THIS CASE THE ASSESSEE HAS NO DOUBT DID NOT SHOW TH E AMOUNTS RECEIVED AS ALLEGED GIFTS AS HIS INCOME, BU T NO DETAILS OF LOANS - ARE GIVEN IN THE RETURN NOR ANY OTHER PARTICULARS THEREOF GIVEN BY THE ASSESSEE AT THAT S TAGE, NOT TO SPEAK OF INACCURATE ONE. WHEN THE ASSESSMENT WAS TA KEN UP AND A GENERAL ENQUIRY WAS MADE BY THE AO REQUIRING HIM TO FURNISH DETAILS OF ANY LOANS/GIFTS, IF ANY, THE ASS ESSEE OFFERED THE AMOUNTS RECEIVED AS ALLEGED GIFTS AS HIS INCOME AND BEFORE IT COULD BE DETECTED BY THE AO. THERE WAS TH US NO CONCEALMENT OF THE PARTICULARS OF HIS INCOME NOR TH ERE REMAINED FURNISHING OF ANY INACCURATE PARTICULARS O F HIS INCOME. IT VANISHED BEFORE IT COULD BE DETECTED. 21. THE CORRECT AND ACCURATE DISCLOSURE MAY BE BY F ILING THE REVISED RETURN OR BY FURNISHING THE PARTICULARS OF SUCH INCOME BEFORE THE DETECTION BY THE AO. THE MERE FACT THAT THE ASSESSEE HAD NOT REVISED RETURNS OR THAT THE OFFER WAS BY LETTER TO AVOID HARASSMENT TO THE ASSESSEE AND THE DONORS WHO WERE NON-RESIDENT PERSONS, IT CANNOT CONVERT AN OFFER TO ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS TAX AS CONCEALMENT OF INCOME. THEREFORE, IN MY OPIN ION THE ASSESSEE HAS NOT FURNISHED INACCURATE PARTICULARS O F THE INCOME IN THE RETURNS BEFORE DETECTION BY THE REVEN UE. 22. THEREFORE, MERE OMISSION OF THE SURRENDERED INC OME FROM THE RETURN OF AN ITEM OF RECEIPT DOES NEITHER AMOUN T TO CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULAR S OF INCOME UNLESS AND UNTIL THERE IS SOME EVIDENCE TO S HOW/EXIST OR SOME CIRCUMSTANCES FOUND FROM WHICH IT CAN BE GA THERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR A DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. APART FR OM THE SURRENDER THERE WAS NOTHING MORE ON RECORD TO HOLD THE ASSESSEE GUILTY OF OFFERING THE SAID AMOUNT ON DETE CTION OF THE CONCEALMENT. EVEN IN ASSESSMENT ORDER THERE IS NOTH ING OF THAT SORT. 24. THERE WAS NO SPECIFIC PROVOCATION OR AN APPREHE NSION OF DETECTION PREVAILING AT THE TIME WHEN THE OFFER WAS MADE AND IN THE ABSENCE OF ANY SUCH IMMINENT FEAR FROM THE S IDE OF THE REVENUE, IF THE ASSESSEE CAME FORWARD AND PAID THE TAX THEREON BY ADDING THE SAME IN THE RETURNED INCOME, IT HAS TO BE TAKEN AS A VOLUNTARY OFFER TO TAX. ON THE FACE O F THE EVIDENCE IN THE SHAPE OF CONFIRMATION LETTERS, BANK ACCOUNTS, PASSPORT ETC. IN THE HANDS OF THE ASSESSEE, IT MIGH T BE VALID GIFT THAT WOULD HAVE CONVINCED A REASONABLY MINDED PERSON, SPECIALLY A PERSON EXERCISING A JUDICIAL FUNCTION. THE ACCEPTED POSITION OF LAW IS THAT MERELY BECAUSE AN ASSESSEE HAD AGREED TO THE ASSESSMENT THAT CANNOT BRING IN AUTOM ATIC LEVY OF PENALTY. 25. THE FACTS AND CIRCUMSTANCES AND THE MERITS OF T HE CASE AND THE COGENT EVIDENCES PLACED ON RECORD ARE SUCH AS TO EXONERATE THE ASSESSEE FROM CONCEALMENT PENALTY. TH E CIT(A) IN MY OPINION IS RIGHT IN DELETING THE PENALTY, HIS ORDER IS AFFIRMED AND THE APPEALS OF THE REVENUE ARE DISMISS ED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 11.14 ALSO, THE HONBLE PUNJAB & HARYANA HIGH COURT IN T HE CASE OF CIT V. RAJIV GARG REPORTED IN 313 ITR 256 ( P &H) HAS HELD AS UNDER: 'THE DEPARTMENT HAS SIMPLY RESTED ITS CONCLUSION ON THE ACT OF THE ASSESSEE OF HAVING OFFERED ADDITIONAL INCOME IN THE RETURN FILED IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148. THEREFORE, IN VIEW OF THE AFORESAID FINDING, T HE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE ORDER OF THE CIT (A) , WHEREBY THE PENALTY IMPOSED U/S 271(1)(C) BY THE AO WAS ORD ER TO BE DELETED.' 11.15 FURTHER, THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL REPORTED IN 241 ITR 124 (MP), WHICH HAS BEEN AFFIRMED BY THE HONBLE APEX C OURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL REPORTED IN 2 51 ITR 9 (SC) HAS HELD AS UNDER: IT IS WELL SETTLED THAT UNDER SECTION 271(1)(C) TH E INITIAL BURDEN LIES ON THE REVENUE TO ESTABLISH THAT THE AS SESSEE HAD CONCEALED THE INCOME OR HAD FURNISHED INACCURAT E PARTICULARS OF SUCH INCOME. THE BURDEN SHIFTS TO TH E ASSESSEE ONLY IF HE FAILS TO OFFER ANY EXPLANATION FOR THE U NDISCLOSED INCOME OR OFFERS AN EXPLANATION WHICH IS FOUND TO B E FALSE BY THE ASSESSING AUTHORITY. HOWEVER THE PROVISO TO EXP LANATION 1 PROVIDES FOR SHIFTING OF THIS BURDEN AGAIN WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE BONA FIDE. IN THE PRESENT CASE THOUGH IT IS TRUE THAT THE ASSE SSEE HAD NOT SURRENDERED AT ALL AND THAT HE HAD DONE SO ON THE P ERSISTENT QUERIES MADE BY THE ASSESSING OFFICER BUT ONCE THE REVISED ASSESSMENT WAS REGULARISED BY THE REVENUE AND ONCE THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ASSESSING AUTHORITY HAD FAILED TO TAKE ANY OBJECTIO N IN THE MATTER THE DECLARATION OF INCOME MADE BY THE ASSESS EE IN HIS REVISED RETURNS AND HIS EXPLANATION THAT HE HAD DON E SO TO BUY PEACE WITH THE DEPARTMENT AND TO COME OUT OF VE XED LITIGATION COULD BE TREATED AS BONA FIDE IN THE FAC TS AND CIRCUMSTANCES OF THE CASE. THEREFORE THE TRIBUNAL W AS JUSTIFIED IN CANCELLING THE PENALTY LEVIED BY THE A SSESSING OFFICER AND AFFIRMED BY THE COMMISSIONER OF INCOME- TAX (APPEALS) IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. THIS REFERENCE IS ACCORDINGLY ANSWERED IN THE AFFIRMATIV E HOLDING THAT THE TRIBUNAL WAS JUSTIFIED IN DOING SO. 11.16 THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CI T V. NEERAJ JINDAL REPORTED IN 393 ITR 1 (DEL) HAS HELD AS UNDER: 17. IN THIS CASE, THE A.O. IN HIS ORDER NOTED THAT THE DISCLOSURE OF HIGHER INCOME IN THE RETURN FILED BY THE ASSESSEE WAS A CONSEQUENCE OF THE SEARCH CONDUCTED AND HENCE , SUCH DISCLOSURE CANNOT BE SAID TO BE 'VOLUNTARY'. HENCE, IN THE A.O.'S OPINION, THE ASSESSEE HAD 'CONCEALED' HIS IN COME. HOWEVER, THE MERE FACT THAT THE ASSESSEE HAS FILED REVISED RETURNS DISCLOSING HIGHER INCOME THAN IN THE ORIGIN AL RETURN, IN THE ABSENCE OF ANY OTHER INCRIMINATING EVIDENCE, DO ES NOT SHOW THAT THE ASSESSEE HAS 'CONCEALED' HIS INCOME F OR THE RELEVANT ASSESSMENT YEARS. ON THIS POINT, SEVERAL H IGH COURTS HAVE ALSO OPINED THAT THE MERE INCREASE IN T HE AMOUNT OF INCOME SHOWN IN THE REVISED RETURN IS NOT SUFFIC IENT TO JUSTIFY A LEVY OF PENALTY. 18. THE PUNJAB & HARYANA HIGH COURT IN CIT V. SURAJ BHAN [2007] 294 ITR 481/159 TAXMAN 26, HELD THAT WH EN AN ASSESSEE FILES A REVISED RETURN SHOWING HIGHER I NCOME, PENALTY CANNOT BE IMPOSED MERELY ON ACCOUNT OF SUCH HIGHER INCOME FILED IN THE REVISED RETURN. SIMILARLY, THE KARNATAKA HIGH COURT IN THE CASE OF BHADRA ADVANCING (P.) LTD V. ASSTT. CIT [2008] 175 TAXMAN 551, HELD THAT MERELY ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS BECAUSE THE ASSESSEE HAS FILED A REVISED RETURN AND WITHDRAWN SOME CLAIM OF DEPRECIATION PENALTY IS NOT LEVIABLE. THE ADDITIONS IN ASSESSMENT PROCEEDINGS WILL NOT AUTOMATICALLY LEAD TO INFERENCE OF LEVYING PENALTY. THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SURESH CH AND BANSAL [2010] 329 ITR 330 HELD THAT WHERE THERE WAS AN OFFER OF ADDITIONAL INCOME IN THE REVISED RETURN FI LED BY THE ASSESSEE AND SUCH OFFER IS IN CONSEQUENCE OF A SEAR CH ACTION, THEN IF THE ASSESSMENT ORDER ACCEPTS THE OFFER OF T HE ASSESSEE, LEVY OF PENALTY ON SUCH OFFER IS NOT JUST IFIED WITHOUT DETAILED DISCUSSION OF THE DOCUMENTS AND THEIR EXPL ANATION WHICH COMPELLED THE OFFER OF ADDITIONAL INCOME. THE MADRAS HIGH COURT IN THE CASE OF S.M.J. HOUSING V. CIT [20 13] 357 ITR 698/38 TAXMANN.COM 203 HELD THAT WHERE AFTE R A SEARCH WAS CONDUCTED, THE ASSESSEE FILED THE RETURN OF HIS INCOME AND THE DEPARTMENT HAD ACCEPTED SUCH RETURN, THEN LEVY OF PENALTY UNDER SECTION 271(1)(C) WAS NOT JUS TIFIED. FROM THE ABOVE CASES IT WOULD BE CLEAR THAT WHEN AN ASSE SSEE HAS FILED REVISED RETURNS AFTER SEARCH HAS BEEN CONDUCT ED, AND SUCH REVISED RETURN HAS BEEN ACCEPTED BY THE A.O., THEN MERELY BY VIRTUE OF THE FACT THAT SUCH RETURN SHOWE D A HIGHER INCOME, PENALTY UNDER SECTION 271(1)(C) CANNOT BE AUTOMATICALLY IMPOSED. 11.17 IN VIEW OF THE AFORESAID, HAVING REGARD TO THE ABO VE, WE FIND THAT NO PENALTY IS LEVIABLE ON THE FACTS OF TH E CASE OF APPELLANT AND PENALTY LEVIED IS DELETED. GROUNDS RA ISED BY THE ASSESSEE ARE THEREFORE ALLOWED FOR BOTH ASSESSMENT YEARS. 11.18 IN THE RESULT, ITA NOS. 4388/DEL/2014 AND 4389/DEL/2014 FILED BY THE ASSESSEE ARE ALLOWED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 12. ITA NOS. 1946/DEL/2010 TO 1950/DEL/2010 FOR ASSES SMENT YEARS 2000-01 TO 2004-05 ARE THE FIVE APPEALS IN TH E CASE OF RAVINA KHURANA, DIRECTOR OF M/S RAPL. IN ITA NO. 1946/DEL/2010 FOR AY 2000-01, THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT RETURN OF INCOME FILED BY THE APPELLANT ON 12.2.2007 DECLARIN G INCOME REPRESENTING THE RECEIPTS CREDITED IN NATWEST BANK ACCOUNT, LONDON IS NOT VOLUNTARY. 1.1 THAT IN ARRIVING AT THE AFORESAID CONCLUSION, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS OVERLOOKED THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS UNDE R SECTION 147 OF THE ACT WHEREIN IT HAS BEEN STATED THAT PROC EEDINGS UNDER SECTION 147 OF THE ACT HAD BEEN INITIATED ON THE BASIS OF INCOME DECLARED BY THE APPELLANT IN LETTER DATED 1.4.2006 AND THE RETURN OF INCOME FILED BY THE APPELLANT ON 12.02.2007 AND THEREFORE, CONCLUSION THAT RETURN OF INCOME WAS NOT VOLUNTARY IS WHOLLY MISCONCEIVED, MISPLACED AND UNT ENABLE. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IN ARRIVING AT THE AFORESAID CONCLUSION, HAS FAILED TO APPRECIATE THAT A CRIMINAL CASE WAS REGISTERED UNDE R THE INDIAN PENAL CODE AND PREVENTION OF CORRUPTION ACT AGAINST THE UNKNOWN OFFICIALS OF NTPC OF INDIA AND OTHERS O N 6.3.2006 AND NOT AGAINST THE APPELLANT AND THEREFOR E, THE SAME NEITHER IN LAW AND NOR ON FACT COULD HAVE BEEN MADE A BASIS TO ASSUME MUCH LESS CONCLUDE THAT INCOME DECL ARED BY THE APPELLANT IN LETTER DATED 1.4.2006 AND RETURN O F INCOME FILED BY THE APPELLANT ON 12.2.2007 IS NOT VOLUNTAR Y. 1.3 THAT THE ADVERSE FINDINGS RECORDED BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) ARE NOT ONLY F ACTUALLY MISCONCEIVED BUT ALSO LEGALLY UNSUSTAINABLE AND INF ACT, ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS OVERLOOK THE SUBMISSIONS MADE BY THE APPELLANT AND JUDICIAL PRONOUNCEMENTS TO ESTABLISH THAT INCOME DECLARED BY THE APPELLANT WAS NOT VOLUNTARY IN AS MUCH AS NO MATERI AL HAS BEEN GATHERED OR OBTAINED BY THE DEPARTMENT PRIOR T O FURNISHING OF DECLARATION OF INCOME BY THE APPELLAN T TO SUGGEST OR EVEN HOLD THAT INCOME DECLARED BY THE AP PELLANT RELATING TO SUMS CREDITED IN THE NATWEST BANK ACCOU NT AT LONDON WAS NOT VOLUNTARY. 1.4 THAT THE ENTIRE BASIS ADOPTED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO ARRIVE AT T HE CONCLUSION IS BASED ON ASSUMPTIONS AND PRESUMPTIONS WHICH ARE UNSUPPORTED BY ANY MATERIAL AND HENCE NOT TENAB LE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED BOTH IN LAW AND, ON FACTS IN HOLD ING THAT, AGGREGATE SUM OF RS. 59,58,975/- REPRESENTED UNEXPL AINED INVESTMENT UNDER SECTION 69 OF THE ACT. 2.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT, SUM OF RS.59,58,975/ - REPRESENTED RETAINERSHIP CHARGES FROM M/S INTERSPUT NIK OF RS. 35,41,479/-, BANK INTEREST OF RS. 21,47,047/- A ND OTHER MISCELLANEOUS RECEIPTS RECEIVED IN THE COURSE OF BU SINESS OF CONSULTANCY OF RS. 2,70,449/- AND, AS SUCH, THE AFO RESAID SUMS NEITHER IN LAW AND, NOR ON FACT COULD VALIDLY BE HELD TO BE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 2.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE DOCUMENTARY EVIDENCE FURNISHED B Y THE APPELLANT TO DEMONSTRATE THE NATURE OF INCOME RECEI VED BY THE APPELLANT AND AS SUCH, CONCLUSION SO ARRIVED OVERLO OKS THE FACTS AND, IS ALSO NOT IN ACCORDANCE WITH LAW AND H ENCE UNSUSTAINABLE. 2.3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT SUMS BROUGHT TO TAX A S RETAINERSHIP CHARGES WERE ON THE BASIS OF BANK STAT EMENTS CREDITED IN THE BANK ACCOUNT MAINTAINED BY THE APPE LLANT WITH NATWEST BANK LONDON AND, SINCE BANK STATEMENT ITSELF DEMONSTRATE THE NATURE OF RECEIPTS BEING RETAINERSH IP CHARGES ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS FROM INTERSPUTNIK, THERE WAS NO VALID JUSTIFICATION FOR THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO HAV E CONCLUDED THAT SUCH SUMS REPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. 2.4 THAT THE FINDING RECORDED BY THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) THAT DOCUMENTS PRODUCED BY THE APPELLANT IN THE SHAPE OF AGREEMENTS, CONFIRMATION AND CORRESPONDENCE DO NOT IN ANY WAY THROW SUFFICIENT L IGHT ON THE SOURCE AND NATURE OF THE HUGE DEPOSITS MADE IN THE ABOVE ACCOUNTS MAINTAINED BY THE APPELLANT IS MISCONCIEVE D, MISPLACED AND HENCE UNSUSTAINABLE. 2.5 THAT FURTHER THE FINDINGS RECORDED BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) THAT AO HAS A LSO RAISED A NUMBER OF OBJECTIONS AND POINTED OUT A NUM BER OF ANOMALIES IN THE APPELLANTS SUBMISSIONS BOTH IN TH E ASSESSMENT ORDER AND IN THE REMAND REPORT. I FIND T HAT THE APPELLANT HAS NOT BEEN ABLE TO COUNTER THE ABOVE OB JECTIONS OR EXPLAIN THE ANOMALIES BY ANY DOCUMENTARY EVIDENCE O R CLARIFICATION IS FACTUALLY INCORRECT, OVERLOOKS TH E STATEMENT MADE BY THE APPELLANT AND DOCUMENTARY EVIDENCE TEND ERED BOTH IN THE COURSE OF ASSESSMENT PROCEEDINGS AND AP PELLATE PROCEEDINGS AND THEREFORE NOT TENABLE. 2.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE SUBMISSION OF THE APPELLAN T THAT ORIGINAL COPY OF THE APPELLANT WAS NOT RETAINED BY THE APPELLANT AND THEREFORE, COULD NOT BE PRODUCED. INF ACT, THE APPELLANT HAD REQUESTED THE LEARNED OFFICER TO ISSU E SUMMONS TO M/S INTERSPUTNIK AND DESPITE SUCH SPECIF IC REQUEST HAVING BEEN MADE, NO SUMMONS WERE ISSUED, I N SUCH CIRCUMSTANCES, IT COULD NOT THUS HAVE BEEN VALIDLY HELD THAT SUMS SO RECEIVED WERE NOT FOR SERVICES RENDERED AND DID NOT REPRESENT RETAINERSHIP CHARGES RECEIVED BY THE APPE LLANT. 2.7 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN HOLDING THE MISCELLANEOUS RECEIPTS AS CREDITED IN THE BANK ACCO UNT AT NATWEST BANK LONDON REPRESENTING UNEXPLAINED INVEST MENT ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS U/S 69 OF THE ACT. IN FACT, THAT THE FINDING THAT, THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE NATURE AND SOURCE OF SUCH RECEIPTS BY ANY SATISFACTORY DOCUMENTARY EVIDENCE O R BOOKS OF ACCOUNTS IS HIGHLY MISCONCEIVED IN AS MUCH AS IT IS CONTRARY TO THE FACTUAL MATRIX OF THE CASE OF THE A PPELLANT. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 84,180/- REPRESENTING PROFESSIO NAL CHARGES PAID BY THE APPELLANT. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN UPHOL DING THE LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT WHICH ON THE FACTS OF THE CASE WAS NOT LEVIABLE. 4.1 THAT WHILE UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE SUBMI SSIONS MADE BY THE APPELLANT TO ESTABLISH THAT NO INTEREST IS LIABLE ON THE FACTS OF THE CASE OF THE APPELLANT AND THUS INTEREST CONFIRMED WAS NOT IN ACCORDANCE WITH LAW. 4.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FURTHER FAILED TO APPRECIATE THAT EVEN OTHERWIS E, NO INTEREST WAS LEVIABLE AFTER SUCH SUM HAD DULY OFFER ED TO TAX VIDE LETTER DATED 01.04.2006 AND THUS INTEREST LEVI ED AND, SUSTAINED MECHANICALLY IS ILLEGAL, INVALID AND, NOT SUSTAINABLE. IT IS, THEREFORE, PRAYED THAT, IT BE HELD THAT INCO ME DECLARED BY THE ASSESSEE OF RS. 59,58,975/- REPRESENTED RETA INERSHIP CHARGES FROM M/S INTERSPUTNIK OF RS. 35,41,479/-, BANK INTEREST OF RS. 21,47,047/- AND OTHER MISCELLANEOUS RECEIPTS OF RS. 2,70,449/- AND, NOT UNEXPLAINED INVESTMENT 6 9 OF THE ACT. IT BE ALSO HELD THAT, INCOME DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED ON 12.2.2007 AND ALSO IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 147 OF THE ACT WAS VOLUNTARY AND FURTHER, DISALLOWANCE MADE AL ONG- WITH INTEREST LEVIED BE DELETED AND, APPEAL OF THE APPELLANT BE ALLOWED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 12.1 IDENTICAL GROUNDS HAVE ALSO BEEN RAISED IN THE APP EALS FOR ASSESSMENT YEARS 2001-02 TO 2004-05 IN ITA NOS. 1947/DEL/2010 TO 1950/DEL/2010. 12.2 THE RELEVANT FACTS IN BRIEF ARE THAT THE ASSESSEE HAD FILED HER ORIGINAL RETURNS OF INCOME FOR THE DIFFERENT AS SESSMENT YEARS AS MENTIONED BELOW: ASSESSMENT YEAR DATE OF FILING OF RETURN OF INCOME TOTAL INCOME DECLARED 2000 - 01 30.08.2000 1,26,200/ - 2001 - 02 31.07.2001 1,27,100/ - 2002 - 03 01.08.2002 1,67,719/ - 2003 - 04 22.12.2003 1,79.390/ - 2004 - 05 21.09.2004 1,69,135/ - 12.3 THE AFORESAID RETURNS WERE PROCESSED U/S 143(1) OF THE ACT. 12.4 AN EXPLANATORY NOTE WAS ATTACHED TO EACH OF THE AB OVE RETURNS OF INCOME FILED ON 12.02.2007. THE EXPLANAT ORY NOTE FOR AY 2000-01, WHICH IS SIMILAR IN CONTENT TO NOTES FO R OTHER YEARS, IS REPRODUCED HEREUNDER: 1. FOR THE INSTANT ASSESSMENT YEAR, THE ASSESSEE N AMED ABOVE, HAD FURNISHED A RETURN OF INCOME U/S 139(1) OF THE ACT ON 30.8.2000 DISCLOSING AN INCOME OF RS. 1,26,200/- . ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 2. THE ASSESSEE COMPANY HOWEVER NOW OFFERING RECEIP TS RECEIVED IN THE NATWEST BANK ACCOUNTS-LONDON DURING THE YEAR OF RS. 59,58,973.55/- AS INCOME OF THE INSTANT ASSESSMENT YEAR BY REVISING THE RETURN ALREADY FILE D BY THE ASSESSEE. THE DETAILS OF THE ENTIRE RECEIPTS IN THE NATWEST BANK ACCOUNTS-LONDON RECEIVED BY THE ASSESSEE ARE E NCLOSED AS ANNEXURE-B (PAGES 11 OF PAPER BOOK-I) TO THIS RE TURN OF INCOME. THE PERUSAL OF THE DETAILS WOULD DISCLOSE T HAT THE ASSESSEE HAS RECEIVED RETAINERSHIP CHARGES FROM M/S INTERSPUTNIK OF RS. 35,41,478.37/- BANK INTEREST OF RS. 21,47,046.47/- AND, OTHER MISCELLANEOUS RECEIPTS OF RS. 2,70,448.71/-. FURTHER APART FROM THE ABOVE RECEIPT S, THE ASSESSEE IS ALSO OFFERING AN AMOUNT BANK INTEREST O F RS. 4,351/- TO BE ADDED IN THE RETURNED INCOME IN PLACE OF RS. 4,284/- WHICH HAS ALREADY BEEN ADDED IN THE ORIGINA L RETURN OF INCOME. IT MAY BE STATED AND, CLARIFIED HERE THAT, THE ASSE SSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING AND, AS INCOME HAS BEEN OFFERED AS INCOME OF THE ASSESSEE FOR THE INSTANT A SSESSMENT YEAR. 3. APART FROM ABOVE, FOLLOWING DOCUMENTS ARE ENCLOS ED WITH THIS RETURN OF INCOME. A) COPY OF ORIGINAL RETURN OF INCOME (ANNEXURE-C) B) COPY OF ORIGINAL COMPUTATION OF INCOME (ANNEXURE -D) C) BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31.03.2000 (ANNEXURE-E) D) TAX AUDIT REPORT FOR THE YEAR ENDING ON 31.03.20 00 (ANNEXURE-F) 4. DETAILS OF FOREIGN TRAVEL THE ASSESSEE DURING TH E INSTANT YEAR ARE ENCLOSED AS ANNEXURE-G. IT IS STATED THAT, EXPENDITURE OF TRAVELING AND , LODGING OF THE ASSES SEE STANDS DEBITED IN THE BOOKS OF M/S RAVINA & ASSOCIATES (P) LTD. SINCE SHE HAS TRAVELED ABROAD FOR THE BUSINESS PURP OSES OF THE AFORESAID COMPANY. 5. IT IS PRAYED THAT TAX OF RS. 35,26.00/- MAY KIND LY BE COLLECTED FROM BANK ACCOUNT NOS. 44259816 & 140-01- ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 03368092 WITH NATWEST BANK, LONDON AND 051-22389900 6 WITH HSBC, BIRLA TOWER, EARAKHAMBA ROAD, NEW DELHI- 110001 OF THE ASSESSEE, WHICH ARE LYING ATTACHED PR OBABLY, AT THE INSTANCE OF THE ORDER OF SPECAIL JUDGE, CBI COURT, BEFORE WHOM, THE ASSESSEE IS ALSO MAKING A SEPARATE REQUES T. A COPY OF ORDER OF SPECIAL JUDGE, CBI COURT IS ENCLOS ED AS ANNEXURE-H AND, INTIMATION THEREOF TO US BY THE BAN K IS ENCLOSED AS ANNEXURE-I. 6. THE INTEREST OF 234B AND 234C OF THE ACT HAS BEE N COMPUTED BY THE ASSESSEE WITH RIGHT OF WAIVER AVAIL ABLE TO THE ASSESSEE UNDER THE ACT. 7. IT IS LASTLY PRAYED THAT, THE AFORESAID RETURN O F INCOME BE REGULARIZED BY ISSUING NOTICE U/S 148 OF THE ACT. 12.5 THEREAFTER, PROCEEDINGS WERE INITIATED BY THE AO U /S 147 OF THE ACT AND NOTICE U/S 148 WAS SERVED UPON THE ASSE SSEE ON 19.02.2007. IN RESPONSE TO SAME, THE ASSESSEE FILED REPLY DATED 28.02.2007 STATING THAT THE RETURNS OF INCOME FILED ON 12.02.2007 MAY BE TREATED AS RETURNS IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. SUBSEQUENTLY, AFTER PROVIDING T HE ASSESSEE AN OPPORTUNITY OF BEING HEARD, THE IMPUGNED ASSESSMENT ORDERS U/S 142(3)/147 WERE PASSED BY THE AO DETERMINING THE TO TAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AS UNDER: SR. NO. PARTICULARS ASSESSMENT YEAR 2000-01 2001-02 2002-03 2003-04 2004-05 1. TOTAL INCOME ASSESSED 6,83,03,103 1,31,46,854 39,91,310 14,66,018 1,12,22,573 2. TOTAL ADDITION MADE 6,23,03,193/- 1,29,244/- 1,29,180/- 1,29,128/- 1,42,683/- ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 3. NATURE OF ADDITIONS I) NATIONAL RENTAL INCOME FROM HOUSE PROPERTY 45,000 45,000 45,000 45,000 45,000 II) DISALLOWANCE OF CLAIM OF EXPENDITURE ON ACCOUNT OF PROFESSIONAL CHARGES 84,180 84,180 84,180 84,180 84,180 III) OPENING BALANCE IN THE BANK ACCOUNT 6,23,72,953 ----- ----- ------ ----- IV) DISALLOWANCE CLAIM DEDUCTION U/S 80L 67 62 ----- ------ ------ 12.6 DURING THE FIRST APPELLATE PROCEEDING, THE ASSESSE E, VIDE LETTER DATED 28.05.2008, FILED APPLICATION FOR ADMI SSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME-TA X RULES, 1962. THE SAME WAS FORWARDED TO THE AO FOR REMAND R EPORT. FURTHER, THE ASSESSEE ALSO FILED WRITTEN SUBMISSION S WHICH WERE ALSO FORWARDED TO THE AO SEEKING HIS COMMENTS. THE AO SUBMITTED HIS REMAND REPORT ON THE ADDITIONAL EVIDE NCE/S AND COMMENTS ON THE WRITTEN SUBMISSIONS VIDE TWO SEPARA TE LETTERS AND THE ASSESSEE FILED HER REPLY TO THE ABOVE REPOR TS OF THE AO VIDE TWO SEPARATE LETTERS DATED. THEREAFTER, THE LE ARNED CIT (A) PROCEEDED TO DISMISS THE APPEALS AND HENCE THESE AP PEALS BEFORE US. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 12.7 BOTH THE PARTIES BEFORE US AGREED THAT THE FINDING S RECORDED BY US IN ITA NO. 1004/DEL/2011 AND ITA NO. 1005/DEL /2011 IN THE CASE OF RAPL WOULD APPLY MUTATIS MUTANDIS TO THE CASE OF THE ASSESSEE FOR THE INSTANT ASSESSMENT YEARS AND HAVIN G REGARD TO THE SAME, WE DECIDE EACH OF THE GROUNDS RAISED IN T HESE APPEALS. 12.8 GROUNDS 1 TO 1.4 FOR ASSESSMENT YEARS 2000-01 TO 20 04-05 ARE IDENTICAL TO GROUNDS 1 TO 1.4 IN ITA NO. 1004/D EL/2011 AND ITA NO. 1005/DEL/2011 FOR ASSESSMENT YEARS 2004-05 AND 2005- 06 IN THE CASE OF RAPL. WE HAVE ALREADY HELD, WHILE ADJUDICATING THE SAID GROUNDS, THAT INCOME DECLARED BY THE ASSES SEE WAS VOLUNTARY. IN VIEW OF THE ABOVE, HAVING REGARD TO T HE FINDINGS REFERRED BY US IN GROUND NO(S) 1 TO 1.4 FOR ASSESSM ENT YEARS 2004-05 AND 2005-06, THE INSTANT GROUNDS IN ALL THE FIVE APPEALS ARE ALSO ALLOWED. 12.9 GROUNDS 2 TO 2.7 FOR ASSESSMENT YEARS 2000-01 TO 2 004-05 ARE IDENTICAL TO GROUNDS 3 TO 3.5 IN ITA NO. 1004/D EL/2011 AND 1005/DEL/2011 FOR ASSESSMENT YEARS 2004-05 AND 2005 -06 IN THE CASE OF RAPL. ON CONSIDERATION OF THE AFORESAID GROUNDS, WE HAVE ALREADY HELD THAT THE RECEIPTS WERE NOT UNEXPL AINED INVESTMENT UNDER SECTION 69 OF THE ACT. THUS, HAVI NG REGARD TO THE FINDINGS RECORDED IN THE SAID GROUNDS, WE HOLD THAT THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS IMPUGNED INCOME IS NOT UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. THUS, GROUNDS 2 TO 2.7 IN THE FIVE A PPEALS ARE ALLOWED. 12.10 GROUND NO. 3 IN EACH OF THESE APPEALS FOR THE ASSES SMENT YEARS 2000-01 TO 2004-05 CHALLENGES THE DISALLOWANC E OF PROFESSIONAL CHARGES PAID BY THE ASSESSEE. THE LEAR NED CIT (A) HAD REJECTED THE CLAIM BY CONCLUDING AS UNDER: 9.1 THE AO HAS DISALLOWED THE ABOVE AMOUNT OF RS. 84,180/- CLAIMED AS EXPENDITURE ON ACCOUNT OF AUDIT ORS FEES ON THE GROUND THAT THE APPELLANT IS FOLLOWING CASH SYSTEM OF ACCOUNTING AND THE SAID AMOUNT OF RS. 84,180/- HAS NOT BEEN PAID DURING THE YEAR. THE LD. AR HAS ARGUED THAT T HE MERE FACT THAT SUM HAS NOT BEEN PAID CANNOT BE MADE A BA SIS TO HOLD THAT THIS EXPENDITURE IS NOT ELIGIBLE BUSINESS EXPENDITURE. ON CAREFUL CONSIDERATION OF THE MATTE R, I AM OF THE VIEW THAT SINCE THE SAID AMOUNT HAS NOT BEEN PA ID BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION, FOLL OWING HE CASH SYSTEM OF ACCOUNTING BEING FOLLOWED BY THE APP ELLANT, THE SAID DISALLOWANCE HAS BEEN CORRECTLY MADE. THE SAME IS THEREFORE, CONFIRMED. 12.11 ON CAREFUL CONSIDERATION OF THE FACTS, WE DO NOT F IND ANY MERIT IN THE SAID CLAIM OF THE APPEAL AND THEREFORE , THE SAME IS REJECTED. GROUNDS RAISED ARE ACCORDINGLY REJECTED. 12.12 GROUNDS 4 TO 4.2 RELATING TO LEVY OF INTEREST IN EA CH OF THESE APPEALS FOR ASSESSMENT YEARS 2000-01 TO 2004- 05 ARE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS IDENTICAL TO GROUNDS 8 TO 8.2 AND GROUNDS 7 TO 7.2 IN ITA NOS. 1004/DEL/2011 AND 1005/DEL/2011 FOR ASSESSMENT YEAR S 2004- 05 AND 2005-06 IN THE CASE OF RAPL. WE HAVE ALREADY HELD THEREIN THAT THE LEVY OF INTEREST IS COMPENSATORY B UT NO INTEREST IS CHARGEABLE AFTER 1.4.2006 UNDER THE ACT. IN VIEW O F THE ABOVE, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED IN A LL THE FIVE APPEALS. 12.13 IN THE RESULT, ITA NOS. 1946/DEL/2010 TO 1950/DEL/ 2010 ARE PARTLY ALLOWED. 13. ITA NO. 3173/DEL/2010 IS AN APPEAL PREFERRED BY TH E REVENUE FOR AY 2000-01 IN THE CASE OF MRS. RAVINA K HURANA. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL WHICH READ AS UNDER: 1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F RS. 6,23,75,953/- TREATED AS INCOME FOR THE AY 2000-01 U/S 69 OF THE I.T. ACT, 1961 WHICH WAS NOT EXPLAINED BY TH E ASSESSEE. 2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADD ITION SIMPLY RELYING ON BANK ACCOUNT EVEN WHEN THE ASSESSEE FAIL ED TO EXPLAIN THE NATURE AND SOURCE OF THE DEPOSITS. THE BANK STATEMENT CANNOT BE CONSIDERED AS THE BOOKS OF THE ACCOUNT OF THE ASSESSEE. THE NATURE OF AMOUNT MAY BE ADVAN CE OR DEPOSIT WHICH HAS TO BE ASCERTAINED BY EXAMINATION OF THE NATURE OF THE TRANSACTION LEADING TO THE DEPOSIT. SINCE THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS NATURE OF THE TRANSACTIONS LEADING TO THE DEPOSIT W AS NOT EXPLAINED BY THE ASSESSEE, THE AO WAS JUSTIFIED IN MAKING THE ADDITION. 3 THE APPELLANT CRAVES TO BE ALLOWED TO ADD, DELET E OR AMEND ANY OTHER GROUNDS OF APPEAL. 13.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL ON RECORD. THE LD. CIT (A) HAS DELETED THE IMPUGNED ADDITION BY HOLDING AS UNDER: 8.6 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER, REMAND REPORT OF THE AO AND THE SUBMISSIONS MADE BY THE LD. AR ON THE ABOVE ISSUE. THE APPELLANTS ARGUMENT THA T THE BANK ACCOUNT CAN BE EQUATED WITH BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT IS NOT ACCEPTABLE FOR D ETAILED REASONS CITED BY ME IN PARA 7.9.2 ABOVE. HOWEVER, I FIND THAT THIS ISSUE IS NOT MATERIAL TO DECIDING THE TAXABILI TY OF THE OPENING BALANCE OF RS. 6,23,72,953/- IN THE BANK AC COUNT OF THE APPELLANT AS ON 01.04.1999. IT IS NOT IN DISPUT E THAT THE ABOVE AMOUNT REPRESENTS THE BROUGHT FORWARD CLOSING BALANCE IN THE AFORESAID BANK ACCOUNTS AS ON 31.03. 1999. IT IS SETTLED LAW THAT WHAT CAN BE BROUGHT UNDER THE A MBIT OF UNEXPLAINED INVESTMENT U/S 69 IS THE VALUE OF SUCH INVESTMENT MADE BY THE ASSESSEE DURING THE FINANCIA L YEAR IMMEDIATELY PRECEDING THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION AND NOT THE BROUGHT FORWARD BALANCES OF EARLIER YEARS. THIS IS CLEARLY BORNE OUT BY THE PROVISIONS OF SECTION 69 WHICH SPECIFIES THAT WHERE IN THE FINANCIAL YEAR I MMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENT WHICH ARE NOT RECORDED IN THE BOOKS OF A CCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AN D THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE AO, SATISFACTORY, THE VALUE OF T HE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE A SSESSEE OF SUCH FINANCIAL YEAR. (EMPHASIS SUPPLIED). THE A BOVE STATUTORY PROVISION IS IDENTICAL IN NATURE TO THE Y EAR OF TAXATION OF UNEXPLAINED CASH CREDIT U/S 68 OF THE A CT ALSO. IT IS SETTLED LAW THAT CORRECT INCOME IS TO BE TAXED I N CORRECT HANDS AND IN THE CORRECT YEAR. THIS HAS BEEN JUDICI ALLY UPHELD IN A LARGE NUMBER OF CASES. IN IDENTICAL CIR CUMSTANCES, THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT V. OM PRAKASH MAHAJHAN 152 ITR 583 HELD AS UNDER: IF AN EXPLANATION IS OFFERED REGARDING THE CASH CR EDIT ENTRY WHICH IS REJECTED IN TO, THE AMOUNT MAY BE ADDED IN THE YEAR IN WHICH THE ENTRY APPEARS, I.E., IN THE PRESENT CA SE, IT WOULD BE TAXED IN THE ASSESSMENT YEAR 1967-68. IF THE EXP LANATION IS PARTIALLY ACCEPTED TO THE EXTENT THAT THE ENTRY ELATES TO THE INCOME EARNED IN SOME PREVIOUS PERIOD, THEN THE EN TRY CANNOT BE TAXED IN 1967-68, BUT HAS TO BE TAXED IN THE CORRECT YEAR. LEARNED COUNSEL FOR THE COMMISSIONER URGED TH AT IT COULD ONLY BE TAXED IN 1967-68 ON THE FOOTING THAT A PARTIALLY ACCEPTED EXPLANATION MEANS REJECTION OF THE EXPLANA TION. HOWEVER, THE WORDING OF S. 68 SAYS THAT THE AMOUNT MAY BE TAXED IN THE PREVIOUS YEAR. IF THIS INCOME RELATES TO SOME OTHER YEAR, IT MUST BE TAXED IN THE CORRECT YEAR. T HEREFORE, THE APPLICATION OF THE PROVISION DEPENDS ON THE FACTS A CTUALLY FOUND IN ANY PARTICULAR CASE. LEARNED COUNSEL FOR THE DEPARTMENT ALSO URGED THAT HE DID NOT REALLY CHALLENGE THIS POINT OF VIEW BUT HE SUBM ITTED THAT THE TRIBUNAL HAD WRONGLY ACCEPTED THE EXPLANATION TO THE EXTENT OF HOLDING THAT THE AMOUNT WAS IN EXISTENCE IN MARCH, 1966. WE THINK THIS IS A FINDING OF FACT. THE TRIBU NAL COULD HAVE REJECTED THE EXPLANATION, BUT IN ORDER TO MAKE IT TAXABLE IN THE HANDS OF THE ASSESSEE, THERE HAD TO BE A FIN DING THAT THE AMOUNT WAS BENAMI AND DID NOT BELONG TO THE WIF E. THE WIFES POINT OF VIEW WAS THAT THIS WAS THE SAME AMO UNT WHICH WAS DISCLOSED UNDER THE VOLUNTARY DISCLOSURE SCHEME ON MARCH, 1966. WHEN THIS EXPLANATION WAS REJECTED ON THE FOOTING THAT THE WIFE HAD NEVER ANY SOURCE OF INCOM E, AN ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS INFERENCE OF FACT WAS DRAWN THAT THIS WAS THE HUSBA NDS MONEY WHICH WAS DISCLOSED BY THE WIFE. IT WOULD, TH EREFORE, FOLLOW THAT THE FINDING THAT THE AMOUNT WAS IN EXIS TENCE IN MARCH, 1966, FOLLOWED FROM THE EXPLANATION GIVEN BY THE ASSESSEE AND THAT GIVEN BY HIS WIFE. IT IS A CONCLUSION OF FACT. THIS VIEW HAS RECENTLY BEEN EXPRESSED BY THE HONBL E DELHI HIGH COURT IN THE CASE OF CIT V USHA STUD AGRICULTU RAL FARMS LTD. REPORTED IN 301 ITR 384, WHEREIN IT HAS BEEN H ELD AS UNDER: 7. HERE, THE CIT(A) HAS DELETED THE ADDITION OF RS . 15 LAKHS MAINLY ON THE GROUND THAT THIS CREDIT BALANCE OF RS . 15 LAKHS IS BEING REFLECTED IN THE ACCOUNTS OF THE ASSESSEE OVER THE PAST FOUR TO FIVE YEARS OR SO AND HENCE THIS WAS NO T A FRESH CREDIT ENTRY OF THE PREVIOUS YEAR UNDER CONSIDERATI ON AND THESE CREDIT ENTRIES WERE ALREADY MADE AND ACCOUNTE D FOR IN THE ASSESSMENT YEARS 1995-96 AND 1997-98 WHICH WERE INTRODUCED IN THE FORM OF ADVANCE AGAINST BREEDING STALLIONS OWNED BY THE ASSESSEE AND THUS THESE CREDIT ENTRIES DID NOT RELATE TO THE YEAR UNDER CONSIDERATION FOR BEING CO NSIDERED UNDER SECTION 68 OF THE ACT. 8. SINCE IT IS A FINDING OF FACT RECORDED BY THE CI T(A) THAT THIS CREDIT BALANCE APPEARING IN THE ACCOUNTS OF THE ASS ESSEE, DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION, U NDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER WAS NOT JUSTIF IED IN MAKING THE IMPUGNED ADDITION UNDER SECTION 68 OF TH E ACT AND AS SUCH NO FAULT CAN BE FOUND WITH THE ORDER OF THE TRIBUNAL WHICH HAS ENDORSED THE DECISION OF THE CIT (A). 9. THE ABOVE BEING THE POSITION, NO FAULT CAN BE FO UND WITH THE VIEW TAKEN BY THE TRIBUNAL. IDENTICAL VIEW HAS BEEN EXPRESSED BY THE HONBLE RA JASTHAN HIGH COURT IN THE CASE OF CIT V PRAMESHWAR BOHRA RE PORTED IN 301 ITR 404, WHEREIN IT HAS BEEN HELD AS UNDER: 5. ON THE MERIT, OF THE ADDITIONS MADE IN THE INCO ME OF THE ASSESSEE, THERE IS A CLEAR FINDING, AND ABOUT WHICH THERE IS NO DISPUTE, THAT THE AMOUNT ADDED IN THE INCOME OF THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ASSESSEE AS UNEXPLAINED INVESTMENT OR CASH CREDIT I N THE ASST. YR. 1993-94 WAS THE SAME AMOUNT WHICH WAS CRE DITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR PREVIOU S YEAR ENDING ON 31ST MARCH, 1992. THE TRIBUNAL HAS CATEGO RICALLY COME TO A FINDING, AND THAT FINDING IS NOT UNDER CH ALLENGE, THAT THIS IS NOT A CASE OF CASH CREDIT ENTERED IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE DURING THE YEAR BUT IT IS A CASE IN WHICH THE ASSESSEE HAS INVESTED THE CAPITAL IN. THE BUSINESS AND THIS AMOUNT WAS SHOWN AS A CLOSING CAPITAL AS O N 31ST MARCH, 1992 AND ON 1ST APRIL, 1992 IT WAS AN OPENIN G BALANCE. CONSIDERING THIS ASPECT, THE TRIBUNAL HAS COME TO THE CONCLUSION THAT WHAT WAS ALREADY CREDITED IN TH E BOOKS OF ACCOUNT ENDING ON 31ST MARCH, 1992 FOR FINANCIAL YE AR 1991- 92 RELEVANT TO ASST. YR. 1992-93 CANNOT BE AN UNEXP LAINED CASH CREDIT OR INVESTMENT IN THE BOOKS OF ACCOUNT M AINTAINED FOR THE FINANCIAL YEAR 1992-93, THE ACCOUNTING PERI OD OF WHICH ENDS ON 31ST MARCH, 1993 SO AS TO WARRANT ITS CONSI DERATION AS UNEXPLAINED INVESTMENT OR CASH CREDIT FOR ITS RE LEVANT ASST. YR. 1993-94. 6. IT DOES NOT REQUIRE ANY ELABORATE ARGUMENT THAT A CARRIED FORWARD AMOUNT OF THE PREVIOUS YEAR DOES NOT BECOME AN INVESTMENT OR CASH CREDIT GENERATED DURING THE RELE VANT YEAR 1993-94. THIS ALONE IS SUFFICIENT TO SUSTAIN THE OR DER OF THE TRIBUNAL IN DELETING THE AMOUNT OF RS. 1,55,316 FRO M THE ASSESSMENT FOR ASST. YR. 1993-94. SINCE THE APPEAL SUCCEEDS ON THE MERIT OF THE ASSESSEE'S CASE IN RESPECT OF T HE ADDITIONS MADE IN THE INCOME COMPUTED ON REASSESSMENT, THE VA LIDITY OF NOTICE DT. 17TH JUNE, 1997 NEED NOT BE GONE INTO . 7. ACCORDINGLY, THIS APPEAL FAILS AND IS HEREBY DIS MISSED. NO ORDER AS TO COSTS. FURTHER, THE HONBLE ITAT, DELHI IN THE CASE OF JAG TAR SINGH VS. ITO 69 ITD 47 HAS HELD AS UNDER: 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, FACTS AND CIRCUMSTANCES OF THE CASE AND THE ASSESSEES STATEM ENT OF AFFAIRS, AND THE CASE LAW RELIED BY THE ASSESSEES COUNSEL, WE ARE OF THE OPINION THAT THE SUBMISSION OF THE LE ARNED ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS DEPARTMENT REPRESENTATIVE THAT ADDITION SHOULD BE SUSTAINED UNDER SECTION 69 HAS NO FORCE BECAUSE THE PROVISIONS OF SECTIONS 69 AND 69A ARE QUITE DIFFERE NT IN THE MATERIAL RESPECT, AND THE REVENUE CANNOT SUPPORT IT S CASE ON THE PLEA THAT IN CASE THE ADDITION CANNOT BE SUSTAI NED UNDER SECTION 69A, THE SAME SHOULD BE SUSTAINED UNDER SEC TION 69 OF THE INCOME-TAX ACT. ON THE OTHER HAND, WE ARE IN CLINED TO AGREE WITH THE SUBMISSION OF THE ASSESSEES COUNSEL THAT IN VIEW OF THE ASSESSEES STATEMENT OF AFFAIRS AVAILAB LE WITH THE REVENUE SINCE 1982-83, THE GENUINENESS OF THE BROUG HT- FORWARD CAPITAL CANNOT BE DOUBTED. SIMPLY BECAUSE T HE ASSESSEES INCOME BECAME TAXABLE IN THIS YEAR AND T HE ASSESSEE FILED THE RETURN COMPLYING WITH THE PROVIS IONS OF LAW CANNOT BE A GROUND TO PENALIZE THE ASSESSEE BY NOT ACCEPTING ITS BROUGHT FORWARD CAPITAL AND THAT TOO WITHOUT BRINGING ANY EVIDENCE TO THE CONTRARY. THE REVENUE S ALLEGATION THAT THE ASSESSEE STONE-WALLED THE INVES TIGATIONS ALSO CANNOT BE APPRECIATED BECAUSE IN CASE THE ASSE SSEE WAS NOT FURNISHING THE DETAILS REQUIRED BY THE ASSE SSING OFFICER, HE HAD AMPLE POWER UNDER THE INCOME-TAX AC T TO MAKE NECESSARY ENQUIRY AT HIS OWN LEVEL AND SHOULD NOT HAVE ALLOWED THE ASSESSEE TO ESCAPE THE LIABILITY O F PROPER TAX. 5. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT AS FAR AS THE ADDITION OF OPENING CAPI TAL IS CONCERNED, THE SAME CANNOT BE SUSTAINED. 8.7 CONSIDERING THE ABOVE POSITION OF LAW AND RESPE CTFULLY FOLLOWING THE PLETHORA OF JUDICIAL PRONOUNCEMENTS O N THE SUBJECT AS MENTIONED ABOVE, I FIND THAT THE ADDITIO N OF RS. 6,23,72,953/- REPRESENTING THE BROUGHT FORWARD OPEN ING BALANCE IN THE BANK ACCOUNT FOR THE YEAR UNDER CONS IDERATION CANNOT BE SUSTAINED EITHER ON FACTS OR IN LAW. THE SAME IS, THEREFORE, DELETED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 13.2 FROM THE AFORESAID FINDINGS, IT IS APPARENT THAT T HE SUM BROUGHT TO TAX DOES NOT REPRESENT ANY INCOME FOR TH E INSTANT YEAR. ON THE CONTRARY, IT REPRESENTED OPENING BALAN CE AS ON 1.4.1999 AND THEREFORE, SUCH OPENING BALANCE WAS IN CORRECTLY BROUGHT TO TAX FOR THE INSTANT YEAR. THE REVENUE HA S NOT PLACED ON RECORD ANY MATERIAL TO REBUT THE FACTUAL AND THE LEGAL CONCLUSIONS ARRIVED AT BY THE LEARNED CIT (A) AND T HUS, FOR THE REASONS STATED BY THE LD. CIT (A) AND HAVING REGARD TO THE AFORESAID FACTUAL MATRIX, WE CONCUR WITH THE SAME. THE GROUNDS RAISED BY THE REVENUE ARE, THEREFORE, REJECTED. 13.3 ITA NO. 3173/DEL/2010 FILED BY THE REVENUE IS DIS MISSED. 14. ITA NOS. 1877 TO 1881/DEL/2013 FOR AYS 2000-01 TO 2004- 05 ARE THE PENALTY APPEALS FILED BY THE ASSESSEE IN THE CASE OF RAVINA KHURANA. 14.1 IN ITA NO. 1877/DEL/2013 FOR AY 2000-01, THE ASSESS EE HAS RAISED GROUNDS OF APPEAL WHICH READ AS UNDER: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) XVIII NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING PENALTY LEVIED OF RS. 17,87,700/- UNDER S ECTION 271(1)(C) OF THE ACT. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHILE UPHOLDING THE PENALTY HAS FAILED TO APPRECIAT E THAT INCOME IN RESPECT OF WHICH PENALTY HAVE BEEN LEVIED WAS THE ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS INCOME DECLARED VOLUNTARILY BY THE APPELLANT FIRSTL Y BY LETTERS DATED 1.4.2006 AND 11.4.2006 AND THEREAFTER IN RETU RN FILED ON 12.2.2007 AND ALSO IN RETURN FILED IN RESPONSE T O NOTICE U/S 148 OF THE ACT AND AS SUCH, IT CANNOT BE VALIDL Y HELD THAT ASSESSEE HAS EITHER CONCEALED INCOME OR FURNISHED I NACCURATE PARTICULARS OF INCOME MERELY ON THE GROUND THAT, SU CH RECEIPTS WERE NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME . 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS OVERLOOKED THE FACT THAT INCOME ASSESSED WAS NO T BASED ON THE REVISED RETURN BUT ON THE BASIS OF RETURN FI LED IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND THE REASO NS RECORDED FOR INITIATION U/S 147 OF THE ACT ESTABLIS HED THAT PROCEEDINGS HAD BEEN INITIATED ON THE BASIS OF INFO RMATION CONTAINED IN THE REVISED RETURN AND NOT BY WAY OF A NY DETECTION AND HENCE THE FINDING THAT THERE WAS WIL LFUL ATTEMPT TO EVADE TAX OVERLOOKS THIS FACTUAL FUNDAM ENTAL ASPECT AND MATERIAL ON RECORD AND AS SUCH ORDER UPH OLDING THE LEVY OF PENALTY IS VITIATED AND UNTENABLE. 1.3 THAT FINDING OF THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) THAT IT IS PERTINENT TO MENTION HERE WHI LE THE FIR WAS FILED BY THE CBI ON 6.03.2006, THIS MUST HAVE B EEN PRECEDED BY A DETAILED INVESTIGATION WHICH MUST HAV E CONTINUED FOR A LENGTH OF TIME. FURTHER, THE SAID INVESTIGATION AND FIR WERE IN RESPECT OF CONTRACTS ENTERED INTO B Y RAPL OF WHICH THE APPELLANT IS THE MAIN DIRECTOR, THE ONLY OTHER DIRECTOR BEING HER MOTHER MRS. GOVINDA KHURANA. TH EREFORE, IT CAN BY NO STRETCH OF IMAGINATION BE SAID THAT TH E APPELLANT WAS NOT AWARE OF THE AFORESAID CRIMINAL INVESTIGATI ON IN PROGRESS, AND THE FILING OF FIR, THE ISSUE OF LETTE R ROGATORY AND RESTRAINT ORDER ON THE BANK ACCOUNT PRIOR TO 25.04. 2006 IS BASED ON SUBJECTIVE ASSUMPTIONS AND PRESUMPTION AND NOT ANY MATERIAL MUCH LESS VALID MATERIAL. INFACT NO O PPORTUNITY WAS GRANTED TO THE APPELLANT BEFORE ARRIVING AT SUC H AN ARBITRARY CONCLUSION. 1.4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE AND IS OTHERWISE IS A MATT ER OF RECORD ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS THAT NO NOTICE OR PROCEEDINGS WERE INITIATED AGAINS T THE APPELLANT BY CBI TILL THE DATE OF FILING OF FIR MUC H LESS ANY CRIMINAL INVESTIGATION. INFACT TILL DATE NO CONNEC TION HAVE BEEN ESTABLISHED BETWEEN ANY PAYMENTS RECEIVED BY T HE APPELLANT AND NTPC OFFICIALS. 1.5 THAT FURTHER FINDING OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) THAT LETTER DATED 1.04.2006 F ILED BY THE APPELLANT WITH THE DEPARTMENT ACKNOWLEDGING HER TAX LIABILITY WAS NOT A VOLUNTARILY ACT, BUT WAS PURSUANT TO THE FILING OF FIR BY THE CBI IS ALSO BASED ON SURMISES, CONJECTU RE AND SUSPICION AND NOT BASED ON ANY VALID MATERIAL AND H ENCE UNTENABLE 1.6 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT TILL THE DATE OF FILING OF RETURN ON 12.2.2007 WHEN ASSESSEE HAD REVISED RETUR N OF INCOME BY INCLUDING AN AMOUNT OF RS. 59.58 LACS, NO ENQUIRY WAS EITHER INITIATED OR LAUNCHED AND THUS, INCOME O FFERED IN THE SAID RETURN REPRESENTED THE INCOME WHICH HAD BE EN SHOWN TO BE ASSESSED AND AS SUCH NO PART OF INCOME ASSESSED COULD REPRESENT AN INCOME WHICH CAN BE SAI D TO HAVE BEEN CONCEALED BY THE APPELLANT. 1.7 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT IT WAS ONLY ON D ISCUSSIONS WITH SH. RAM JETHMALANI SENIOR ADVOCATE IN FEBRUARY 2006 IN THE CONTEXT OF SUPPORT SERVICES PROVIDED BY M/S RAVINA &ASSOCIATES PVT. LTD. A COMPANY IN WHICH ASSESSEE I S A DIRECTOR, THE ASSESSEE CAME TO KNOW OF HER OBLIGATI ON UNDER THE STATUTORY PROVISIONS OF THE ACT AND, TAX LIABIL ITY ON SUCH INCOME AND AS SUCH, ON ADVICE OF HER CHARTERED ACCO UNTANT SHE FILED THE REVISED RETURN OF INCOME. 1.8 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FAILED TO APPRECIATE THAT FILING OF FIR ON 6.3. 2006 WAS IN RESPECT OF THE AMOUNT OF RS. 97,13,86,901/- RECEIVE D IN NATWEST BANK PERTAINING TO M/S RAVINA & ASSOCIATES PVT. LTD. FOR ASSESSMENT YEAR 2006-07 WHICH WAS DECLARED IN THE ORIGINAL RETURN OF INCOME AND, NOT FOR THE SUM DECL ARED AND, ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS ASSESSED IN THE INSTANT ASSESSMENT YEAR AND THAT TO O, IN HER INDIVIDUAL CAPACITY AND AS SUCH, THE SAME COULD NOT BE GROUND TO HOLD THAT APPELLANT HAD NOT DECLARED THE INCOME VOLUNTARILY. 1.9 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ALSO FAILED TO APPRECIATE THAT ASSUMING FOR THE SAKE OF AN ARGUMENT (THOUGH THE SAME IS SERIOUSLY DISPUTED) T HAT THERE WAS DETECTION OF INCOME BY THE CBI AND IT WAS ONLY ON ACCOUNT OF DETECTION BY CBI THAT ASSESSEE HAD DECLA RED SUCH INCOME THEN TOO TO DETERMINE AS TO WHETHER INCOME D ECLARED BY THE ASSESSEE IN THE RETURN OF INCOME WAS NOT VOL UNTARY OR NOT, WHAT HAS TO BE SEEN IS, WHETHER THE INCOME WAS DETECTED BY THE LEARNED AO OR WHETHER THE SAME WAS VOLUNTARI LY OFFERED BY THE APPELLANT AND, NOT THAT, IT WAS ALLE GEDLY DETECTED BY CBI AND AS SUCH THE CONCLUSION OF THE L EARNED OFFICER IS BASED ON MISINTERPRETATION OF PROVISIONS OF LAW 1.10 THAT VARIOUS ADVERSE FINDINGS RECORDED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OVERLOOK THE W RITTEN SUBMISSIONS AND JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FAILED TO APPRECIATE THAT NOTICE ISSUED FOR LEV YING THE PENALTY WAS VAGUE, NON-SPECIFIC AND AS SUCH PENALTY LEVIED ON THE BASIS OF THE SAID NOTICE WAS INVALID AND NOT IN ACCORDANCE WITH LAW. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ALSO FAILED TO APPRECIATE THAT IN ABSENCE OF AN Y VALID SATISFACTION HAVING BEEN RECORDED IN THE ORDER OF A SSESSMENT THE PENALTY LEVIED WAS OTHERWISE NOT SUSTAINABLE. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT PENALT Y SO LEVIED AND SUSTAINED IS ILLEGAL, INVALID AND THEREFORE, MA Y KINDLY BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED. 14.2 IDENTICAL GROUNDS HAVE ALSO BEEN RAISED IN THE APP EALS FOR ASSESSMENT YEARS 2001-02 TO 2004-05 IN ITA NOS. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 1878/DEL/2013 TO 1881/DEL/2013. ALL THE AFORESAID G ROUNDS AS STATED ABOVE RELATE TO THE LEVY OF PENALTY OF RS. 1 7,87,700, RS. 45,69,700/- RS. 11,70,120/- RS. 4,05,560/- AND RS. 35,76,070/- IN ASSESSMENT YEARS 2000-01 TO 2004-05 RESPECTIVELY UNDER SECTION 271(1)(C) OF THE ACT. FROM THE PERUSAL OF O RDERS DATED 30.3.2012 PASSED BY THE DCIT, CIRCLE 15(1), NEW DEL HI, IT IS NOTED THAT THE PENALTY HAS BEEN LEVIED ON THE GROUND THAT THE RECEIPTS DECLARED BY THE ASSESSEE IN THE ASSESSMENT YEARS WE RE NOT A VOLUNTARY DECLARATION BUT WAS A CASE OF INTENTIONAL ATTEMPT TO CONCEAL THE PARTICULARS OF INCOME BY THE ASSESSEE C OMPANY. THE LD. CIT (A) UPHELD THE CONCLUSION OF THE ASSESSING OFFICER AND CONFIRMED THE LEVY OF PENALTIES UNDER SECTION 271(1 )(C) OF THE ACT. 14.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT FROM THE NOTICES U/S 274 R.W.S. 271 OF THE ACT DATED 20.12.2007, 17.12.2 007 AND 9.3.2012 FOR THE IMPUGNED YEARS THAT THE AO HAS NOT SPECIFICALLY SPECIFIED AS TO UNDER WHICH LIMB OF SECTION 271(1)( C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED BY HIM, I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FUR NISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD, RELIANCE IS PLACED UPON THE DECISION OF HONBLE HIGH COURT OF K ARNATAKA IN ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACT ORY REPORTED IN 359 ITR 565 (KAR) AND THE RELEVANT PORTION OF TH E JUDGMENT IS AS UNDER: (P) NOTICE UNDER SECTION 274 OF THE ACT SHOULD SPE CIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C) I. E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING O F INACCURATE PARTICULARS OF INCOME (Q) SENDING PRINTED FORM WHERE ALL THE GROUND MENTI ONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW. 14.4 THE ABOVE SAID DECISION OF HONBLE HIGH COURT OF K ARNATAKA IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING F ACTORY (SUPRA) HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. SSAS EMERALD MEADOWS 73 TAXM ANN.COM 241 AND THE RELEVANT PORTION IS AS UNDER: 2. THIS APPEAL HAS BEEN FILED RAISING THE FOLLOWIN G SUBSTANTIAL QUESTIONS OF LAW: 1 WHETHER, OMISSION IF ASSESSING OFFICER TO EXPLICI TLY MENTION THAT PENALTY PROCEEDINGS ARE BEING INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OR THAT FOR CO NCEALMENT OF INCOME MAKES THE PENALTY ORDER LIABLE FOR CANCELLAT ION EVEN WHEN IT HAS BEEN PROVED BEYOND REASONABLE DOUBT THA T THE ASSESSEE HAD CONCEALED INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE? 2 WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) I S BAD IN LAW AND INVALID DESPITE THE AMENDMENT OF SECTION 27 1(1B) ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS WITH RETROSPECTIVE EFFECT AND BY VIRTUE OF THE AMEN DMENT, THE ASSESSING OFFICER HAS INITIATED THE PENALTY BY PROP ERLY RECORDING THE SATISFACTION FOR THE SAME? 3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DECIDING THE AP PEALS AGAINST THE REVENUE ON THE BASIS OF NOTICE ISSUED U NDER SECTION 274 WITHOUT TAKING INTO CONSIDERATION THE A SSESSMENT ORDER WHEN THE ASSESSING OFFICER HAS SPECIFIED THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME?' 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCO ME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT D ID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PEN ALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISIO N BENCH OF THIS COURT RENDERED IN THE CASE OF CIT V. MANJUNATH A COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.). 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG MENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION , NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL F OR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDIN GLY DISMISSED. 14.5 THE SLP FILED BY THE REVENUE AGAINST THE ABOVE JUD GMENT HAS BEEN DISMISSED BY HONBLE SUPREME COURT OF INDI A AND THE DECISION OF HONBLE SUPREME COURT IS REPRODUCED HER E IN BELOW: 1 DELAY CONDONED 2 WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS ACCORDINGLY DISMISSED. ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS 3 PENDING APPLICATION, IF ANY STANDS DISPOSED OFF. 14.6 THEREFORE, IN THE CIRCUMSTANCES AND ON THE FACTS O F THE PRESENT CASE AND IN LIGHT OF THE JUDGMENTS OF THE H ONBLE KARNATAKA HIGH COURT AND THE HONBLE SUPREME COURT REPRODUCED HEREINABOVE, WE ARE OF THE CONSIDERED VI EW THAT THE ASSESSING OFFICER IS REQUIRED TO SPECIFY AS TO UNDE R WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDIN GS HAD BEEN INITIATED, I.E. WHETHER FOR CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FR OM THE PERUSAL OF THE NOTICE U/S 274 R.W.S. 271 OF THE ACT, ASSESS ING OFFICER HAS NOT SPECIFIED AS TO UNDER WHICH OF THE TWO LIMBS TH E PENALTY IS IMPOSABLE. IN THE CIRCUMSTANCES AND FACTS OF THE CA SE, THE PENALTY PROCEEDINGS SO INITIATED BY THE AO ARE BAD IN LAW AND ACCORDINGLY THE PENALTIES SO INITIATED ARE ORDERED TO BE CANCELLED AND THE ORDER/S OF THE LEARNED CIT (A) ARE REVERSED . THUS, THE LEGAL GROUND RAISED IS DECIDED IN FAVOUR OF THE ASS ESSEE AND IS ALLOWED. 14.7 MOREOVER, EVEN ON MERITS, THE REASON WHICH HAS LED THE AUTHORITIES BELOW TO LEVY THE IMPUGNED PENALTY IS T HAT THERE WAS NO VOLUNTARY DECLARATION BY THE ASSESSEE. WE HAVE A LREADY HELD, ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS WHILE DISPOSING OFF THE PENALTY APPEALS IN THE CASE OF RAPL, IN ITA NOS. 4388/DEL/2014 AND 4389/DEL/2014 FOR ASSESSMENT YEARS 2004-05 AND 2005-06 THAT NO PENALTY IS LEVIABLE. IN VIEW OF THE ABOVE FINDINGS AND SINCE THE FACTS OF THESE APPEALS ARE IDENTICAL, WE ARE OF THE CONSIDERED VIEW THAT NO PENALTY IS LE VIABLE. THE PENALTIES LEVIED THEREFORE, ARE DELETED. GROUNDS RA ISED BY THE ASSESSEE ARE ALLOWED IN ALL THE FIVE APPEALS. 14.8 IN THE RESULT, ITA NOS. 1877 TO 1881/DEL/2013 FILED BY THE ASSESSEE ARE ALLOWED. 15. IN THE FINAL RESULT, I) ITA NOS 1004/DEL/2011 AND 1005/DEL/2011 FOR AYS 2004-05 AND 2005-06 IN THE CASE OF RAPL ARE PARTLY ALLOWED; II) ITA NOS 4388/DEL/2014 AND 4389/DEL/2014 FOR AYS 2004-05 AND 2005-06 IN THE CASE OF RAPL ARE ALLOWED ; III) ITA NOS 1946/DEL/2010 TO 1950/DEL/2010 FOR AYS 2000-01 TO 2004-05 IN THE CASE OF RAVINA KHURANA AR E PARTLY ALLOWED; IV) ITA NO. 3173/DEL/2010 FOR AY 2000-01 IN THE CAS E OF RAVINA KHURANA FILED BY REVENUE IS DISMISSED; ITA NO. 1004, 1005/D/2011, 4388/D/14 & OTHERS ASSESSMENT YEAR 2004-05 & OTHRS V) ITA NOS 1877/DEL/2013 TO 1881/DEL/2013 FOR AYS 2000-01 TO 2004-05 IN THE CASE OF RAVINA KHURANA AR E ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 26.03 .2018. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH MARCH, 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR