Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 3204 (ITAT-NAGPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 10 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-04-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
2004-2005
Appeal Filed On
30-05-2012
Judgement Text
, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI RAJENDRA , A M ITA NO. 1 94 &1 9 5 / N AG / 20 1 2 ( ASSESSMENT YEAR : 200 4 - 0 5 & 200 6 - 07 ) M/S PRABHU STEEL INDUSTRIES LIMITED, C/O M/S LOYA BAGRI & CO., CHARTERED ACCOUNTANTS GANDHIBAG, NAGPUR. VS. ACIT, CENTRAL CIRCLE1(3), NAGPUR - 440 001. PAN/GIR NO. : A ABCP 0025 F ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. RAJESH LOYA /REVENUE BY : DR. M. BHUSARI DATE OF HEARING : 1 ST FEB . , 2012 DATE OF PRONOUNCEMENT : 20 TH MARCH ,201 3 O R D E R P ER SHRI R.K.G UPTA, JM : TH E ASSESSEE HAS PREFERRED THESE TWO APPEALS BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAINST THE ORDER OF LEANED CIT (A) - I , NAGPUR (MAHARAS HTRA) , WHO CONFIRMED THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS.13,50,000/ - FOR ASSESSMENT YEAR 2004 - 05 AND RS.55,00,000/ - FOR ASSESSMENT YEAR 2006 - 07, RESPECTIVELY, WHICH HA VE BEEN HEARD THROUGH E - COURT, MUMBAI . 2 . FIRST, WE WILL TAKE I TA NO. 194/NAG/2012 FOR ASSESSMENT YEAR 2004 - 05. ITA NO S . 1 9 4&1 9 5 /20 1 2 2 3 . BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 132 OF THE ACT WAS CONDUCTED ON 27 - 09 - 2005 IN THE CASE OF THE ASSESSEE COMPANY ALONG WITH OTHER GROUP CASES OF ASSESSEE COMPANY. DURING THE COURSE OF THE SEARC H CERTAIN DOCUMENTS WERE FOUND AND SEIZED AND ASSESSEE HAS OFFERED UNDISCLOSED INCOME ON THE BASIS OF DOCUMENTS SEIZED. NOTICE U/S 153A OF THE I.T. ACT WAS ISSUED ON 05 - 12 - 2006 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE TO THE NOTICE THE ASSESSEE COMPANY HAS FILED A RETURN OF INCOME U/S 153A OF THE ACT ON 08 - 10 - 2007 DEC LARING ADDITIONAL INCOME OF RS. 55 , 70 , 000/ - . THIS INCLUDE BUS INESS INCOME SURRENDERED AT RS. 9 LACS AND INCOME FROM SHORT TERM CAPITAL GAIN OF RS. 46,70,000/ - . ASSESSMENT WAS COMPLETED ON 31 - 12 - 2007. CERTAIN ADDITIONS OVER AND ABOVE DECLARING INCOME WAS MADE , WHICH WAS DELETED IN APPELLATE PROCEEDINGS MEANING THEREBY THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A WAS ACCEPTED. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C ) WERE ALSO INITIATED WHILE COMPLETING THE ASSESSMENT. THE AO BY OBSERVING THAT THERE HAS BEEN NO DISCLOSURE IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE AS UNDISCLOSED INCOME WAS DISCLOSED SUBSEQUENT TO SEARCH AND AFTER DEDUCTIO N BY THE DEPARTMENT. THE AO OBSERVED THAT THERE WAS NO VOLUNTARILY SURRENDER OF INCOME AS INCOME WAS OFFERED SUBSEQUENT TO SEARCH PROCEEDING. ACCORDINGLY, HE LEVIED A PENALTY OF RS. 13,50,000/ - ON THE INCOME OF RS. 55,70,000/ - DISCLOSED IN THE RETURN FILED UNDER SECTION 153A OF THE ACT. ITA NO S . 1 9 4&1 9 5 /20 1 2 3 4 . THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), BEFORE WHOM DETAIL WRITTEN SUBMISSIONS WERE FILED, WHICH ARE INCORPORATED IN THE ORDER OF THE CIT(A) IN PARA 3 AT PAGE 2 TO 4. IT WAS EXPLAINED BEFORE THE CIT(A) THAT THE A SSESSEE HAS FILED DETAIL ED EXPLANATION VIDE LETTER DATED 18 - 1 - 2010 DURING THE PENALTY PROCEEDINGS. THE ASSESSEE HAS CLAIMED IN THE ASSESSMENT PROCEEDINGS AS WELL AS IN THE PENALTY PROCEEDINGS THAT THERE IS NO ACTUAL INCOME. THE EXPLANATION OF THE ASSESSEE WAS BONAFIDE AND NO DOUBT/FAULT NOR THE EXPLANATION WAS FOUND FALSE BY THE AO. HENCE, THE PENALTY LEVIED BY THE AO BY DISREGARDING THE EXPLANATION OF THE ASSESSEE IS UNJUSTIFIED. IT WAS FURTHER EXPLAINED THAT RETURNED INCOME UNDER SECTION 153A HAS BEEN AC CEPTED AND THERE IS NO ACTUAL INCOME EARNED BY THE ASSESSEE NEITHER THE ASSESSEE HAS TAKEN ANY CREDIT OF THE SURRENDERED AMOUNT BY INTRODUCING THE CASH IN THE BOOKS OF ACCOUNT OR INVESTING IN ASSET. THE SURRENDER WAS MADE ONLY FOR THE REASON THAT THE ASSES SEE FOUND THAT THE AUTHORIZED OFFICER AS WELL AS THE AO WOULD NOT CONSIDER THE EXPLANATION/REPLY OF THE ISSUE INVOLVED AND JUST TO BUY PEACE AND AVOID PROTRACTED LITIGATION, THE ASSESSEE HAS SURRENDERED THE AMOUNT. 4.1 IT WAS ALSO EXPLAINED THAT THE ASSE SSEE AND ITS GROUP HAVE MADE A SURRENDER OF RS. 2 CRORE AT THE TIME OF SEARCH WHICH INCLUDES AN AMOUNT OF RS.55,70,000/ - . IT WAS EXPLAINED THAT THE AMOUNT OF RS. 9 LACS WAS SURRENDERED IN VIEW OF THE DOCUMENT FOUND IN RESPECT TO THE TRANSACTION OF SHREEKRISH NA PAPER MILLS LTD, KOLKATA. M/S SHREEKRISHNA PAPER MILLS LTD. WAS HAVING LAND AT NAGPUR AND THE ASSESSEE WAS ITA NO S . 1 9 4&1 9 5 /20 1 2 4 KNOWN TO THIS COMPANY OF KOLKATA, WHO HELPED THE PARTY TO NEGOTIATE THE LAND TRANSACTION. THE ASSESSEE WAS NEITHER A PURCHASER OR A SELLER IN THE TRANSACTION, THEREFORE, THE AMOUNT OF RS.9 LACS WAS ONLY SURRENDERED JUST TO BUY PEACE AND TO AVOID PROTRACTED LITIGATION. IN RESPECT TO THE AMOUNT OF RS. 46.70 LAKHS, IT WAS EXPLAINED THAT THE IMPUGNED DOCUMENT WAS THE ACCOUNT OF PROPOSED BUYERS OF THE PRO PERTY, WHO HAD COLLECTED THE MONEY AND SPENT THE SAME FOR VARIOUS EXPENDITURE IN RELATION TO EVICTION OF THE PROPERTY, SATISFACTION OF LABOURERS AND UNION LEADERS. THIS EXPLANATION OF THE ASSESSEE WAS EXAMINED BY THE AO IN HIS ASSESSMENT ORDER AT PAGES 8 & 9. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND FALSE OR INCORRECT. THE PARTY HAS CONFIRMED THAT THESE TRANSACTIONS WERE MADE ON THEIR BEHALF, HOWEVER, SINCE AT THE TIME OF SEARCH, THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN ALL THE MATRIX OF THE CASE, THEREFORE, JUST TO BUY PEACE AND TO AVOID PROTRACTED LITIGATION, THIS AMOUNT WAS SURRENDERED. IT WAS FURTHER EXPLAINED THAT THERE SHOULD BE SOME CONCEALED INCOME BY THE ASSESSEE THEN ONLY PENALTY UNDER SECTION 271(1)(C) CAN BE IMPOSED . M ERELY THAT ASSESSE E SURRENDERED SOME AMOUNT, PENALTY CANNOT BE LEVIED AS PENALTY IS NOT AUTOMATIC. 4.2 ATTENTION OF THE LEARNED CIT(A) WAS DRAWN ON SUBMISSION OF SHRI GANGARAM AGRAWAL AND THE ASSESSEE WHICH WERE RECORDED IN THE SEARCH PROCEEDING UNDER SECTION 132(4) DURING WHICH HE CATEGORICALLY ADMITTED THE INCOME AND VOLUNTARILY DECLARED THE INCOME AND PROMISED TO INCLUDE THE SAME IN THE RETURN OF INCOME AND PAY THE TAXES ITA NO S . 1 9 4&1 9 5 /20 1 2 5 ACCORDINGLY. THIS INCOME WAS SURRENDERED JUST TO BUY PEACE AND SUBJECT TO NO LEVY OF PENALTY. LEARNE D CIT(A) AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, FOUND THAT IN SEARCH PROCEEDING CERTAIN LOOSE PAPERS WERE FOUND IN WHICH CERTAIN TRANSACTIONS WERE NOTED AND ON THE BASIS OF THOSE TRANSACTIONS , THE ASSESSEE HAS SURRENDERED A S UM OF RS. 55.70 LACS BUT RETURN UNDER SECTION 139 (1) WAS ALREADY FILED. THEREFORE, IF THERE SHOULD NOT HAVE ANY SEARCH THEN THE ASSESSEE WOULD NOT HAVE SHOWN THIS INCOME. LEARNED CIT(A) HELD THAT IM MUNITY BY EXPLAN A TI ON 5 TO SECTION 271(1)(C) IS ALSO NOT A VAILABLE TO THE ASSESSEE AS THE ASSESSEE HAS NOT DECLARED THE INCOME BY FILING RETURN UNDER SECTION 139(1) . ACCORDINGLY, THE EXPLANATION FILED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE CIT(A) ALSO, THEREFORE, HE CONFIRMED THE ACTION OF THE LEARNED AO . 5 . AGGRIEVED THEREBY, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6 . THE CONTENTION RAISED BEFORE THE LOWER AUTHORITIES WERE REITERATED BY THE LEARNED AR OF THE ASSESSEE. ATTENTION OF THE BENCH WAS DRAWN ON WRITTEN SUBMISSION FILED BEFORE CIT(A) ALONG WITH SOME COPY OF SEIZED MATERIAL PLACED IN THE PAPER BOOK. ATTENTION OF THE BENCH WAS ALSO DRAWN ON COPY OF STATEMENT RECORDED ON 27 - 9 - 2005 , WHICH IS ALSO PLACED ON RECORD. THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH, COPY OF WHICH IS PLACED AT PAGES 23 - 26 WERE ALSO EXPLAINED. IT WAS SUBMITTED THAT SEARCH PARTY AS WELL AS THE AO HAS TAKEN INTO CONSIDER A TION THE LEFT SIDE OF THE PAPER WHERE A SUM OF RS. 8 LAKHS AND ITA NO S . 1 9 4&1 9 5 /20 1 2 6 RS. 46.70 LAKHS WERE MENTIONED, HOWEVER, THEY HAVE NOT TAKEN INTO CONSIDERATION THE RIGHT SIDE OF THE PAPERS WHERE DETAIL OF EXPENSES WERE MENTIONED. THE PAPER FOUND DURING THE COURSE OF SEARCH SHOULD HAVE BEEN TAKEN INTO CONSIDERATION AS A WHOLE, NOT PART OF THAT. IF BOTH SIDES ARE TAKEN INTO CONSIDERATION, THEN IT IS FOUND THAT THERE I S NO CONCEALMENT OF INCOME EITHER BY THAT PARTY TO WHOM THE PAPER BELONGS OR TO THE ASSESSEE. IT WAS MADE A SIMPLE SURRENDER JUST TO BUY PEACE AND TO AVOID LITIGATION. 7 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF AO AND CIT(A) . IT WAS FURTHER EXPLAINED THAT THE SURRENDER WAS MADE VOLUNTARILY BY THE ASSESSEE ON THE BASIS OF LOOSE PAPERS FOUND AS THERE WAS NO COERCION. THE ASSESSEE HAS ALREADY FILED ORIGINAL RETURN UNDER SECTION 139(1) AND NO SUCH INCOME WAS SHOWN BY THE ASSESSEE IN THAT RETURN. ONLY AFTER SEARCH, WHEN CERTAIN LOOSE PAPERS WERE FOUND THEN ASSESSEE CAME FORWARD TO SURRENDER THE AMOUNT. THEREFORE, THE PENALTY WAS RIGHTLY LEVIED BY THE AO, WHICH IS CONFIRMED BY THE CIT(A) . ACCORDINGLY, IT WAS STATED THAT THE ORDER OF LEARNED CIT(A) IS LIABLE TO BE CONFIRMED. 8 . AFTER HEARING THE RIVAL SUBMISSIONS AND CONSIDERING THE MATERIAL ON RECORD ALONG WITH WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A) ON WHICH RELIANCE HAS BEEN PLACED BY THE LEARNED AR, WE FIND THAT THE ASSESSEE DESERVE S TO SUCCEED IN ITS APPEAL. BRIEF STATED FACTS HAVE ALREADY BEEN DISCUSSED ABOVE. IN THIS CASE THE ASSESSEE HAS SURRENDERED A SUM OF RS. 2 CRORE DURING THE COURSE OF SEARCH AND THIS ITA NO S . 1 9 4&1 9 5 /20 1 2 7 AMOUNT INCLUDES THE AMOUNT OF ADDITION MADE IN THIS CASE AT RS. 55,70,000/ - , WHICH INCLUDES AN AMOUNT OF RS. 9 LAKHS UNDER THE BUSINESS HEAD AND A SUM OF RS. 46,70,000/ - ON THE HEAD CAPITAL GAIN. CERTAIN ADDITIONS OVER AND ABOVE THIS SURRENDER WAS MADE BY THE AO WHICH HAS BEEN DELETED IN THE APPELLATE PROCEEDING. THE AMOUNT OF RS.55 .70 LAKHS SHOWN BY THE ASSESSEE IN ITS RETURN IN RESPONSE TO NOTICE UNDER SECTION 153A, IS FINALLY ASSESSED. THE AO HAS ALSO LEVIED PENALTY ON THIS AMOUNT WHICH IS EQUIVALENT TO RS. 13,50,000/ - . WHILE LEVYING PENALTY THE AO OBSERVED THAT THE ASSESSEE HAS NOT DISCLOSED THIS AMOUNT OF SURRENDER IN THE ORIGINAL RETURN AND IF THERE WOULD NOT HAVE ANY SEARCH, THEN THE ASSESSEE COULD NOT HAVE SHOWN ANY AMOUNT. ACCORDINGLY, HE LEVIED THE PENALTY, WHICH HAS BEEN CONFIRMED BY THE LEARNED CIT(A) . LEARNED CIT(A) CONFIRM ED THE PENALTY FOR TH E REASON THAT EXPLANATION 5 T O SECTION 271(1)(C) IS APPLICABLE AS THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS FOR IMMUNITY. THE LEARNED CIT(A) FURTHER WAS IN AGREEMENT WITH THE AO THAT THE ASSESSEE HAS NOT SHOWN THIS AMOUNT IN ORIGIN AL RETURN. 8.1 WE HAVE EXAMINED ALL THE RECORDS ON WHICH BASIS THE SURRENDER WAS MADE AND AFTER EXAMINING THE RECORDS, IT EMERGES THAT THERE WAS NO CONCEALMENT ON THE PART OF THE ASSESSEE. SINCE THE ASSESSEE AGREED TO SURRENDER RS. 2 CRORE IN THE GROUP CON CERN AND, THEREFORE, THE AMOUNT OF ADDITION WAS BIFURCATED. 8.2 THE FIRST AMOUNT OF SURRENDER IS OF RS. 9 LAKHS. PAPER ON WHICH BASIS THIS SURRENDER WAS MADE IS PLACED AT PAGE 23 OF THE PAPER BOOK. ITA NO S . 1 9 4&1 9 5 /20 1 2 8 THIS PAPER IS IN THE NAME OF ONE SHRIKRISHA PAPER MILLS. IN THIS PAPER, AN AMOUNT OF RS. 8 LAKHS IS MENTIONED AS CASH, WHICH IS SHOWN AS LESS AMOUNT PAID, HOWEVER, THE ASSESSEE HAS SURRENDER RS. 9 LAKHS. THIS MAY BE DUE TO OVERSIGHT MISTAKE. UNDISPUTEDLY, THIS PAPER DOES NOT BELONG TO THE ASSESSEE. THE ASSESSEE HA S GIVEN EXPLANATION THAT M/S SHRIKRISHNA PAPER MILLS, WHICH BELONGS TO CALCUTTA WAS KNOWN TO THE ASSESSEE. M/S SHRIKRISHNA PAPER MILLS WAS HAVING A PIECE OF LAND HERE AT NAGPUR AND THE ASSESSEE HELPED THE FIRM TO DISPOSE OF THAT LAND AND FOR THAT REASON CE RTAIN PAPERS WERE PREPARED ON BEHALF OF M/S SHRIKRISHNA PAPER MILLS. THE AMOUNT WHICH WAS RECEIVED ON ACCOUNT OF SALE OF LAND WAS RECEIVED BY CHEQUE AS WELL AS BY CASH AND ACCOUNT OF THAT WAS SENT TO M/S SHRIKRISHNA PAPER MILLS . THIS EXPLANATION OF THE ASS ESSEE WAS NOT FOUND FALSE OR INCORRECT. THEREFORE, IT CAN BE SAID THAT THOUGH THE ASSESSEE HAS SURRENDERED THIS AMOUNT OF ITS OWN BUT DOES NOT BELONG TO HIM AND JUST TO AVOID LITIGATION HAS SURRENDERED THIS AMOUNT. IT IS FURTHER SEEN THAT THE ASSESSEE NEIT HER HAS TAKEN ANY CREDIT OF SUCH AMOUNT IN BOOKS OF ACCOUNTS NOR ANY ASSET HAS BEEN CREATED NOR IT WAS FOUND IN THE COURSE OF SEARCH. THEREFORE, WITHOUT BRINGING ANY POSITIVE MATERIAL ON RECORD TO ESTABLISH THAT THIS IS ASSESSEES CONCEALED INCOME OR UNDIS CLOSED INCOME, IN OUR CONSIDERED VIEW AT LEAST LEVY OF PENALTY WAS NOT JUSTIFIED. THERE SHOULD BE SOME CORROBORATIVE EVIDENCE ON RECORD TO HOLD THAT THIS IS UNDISCLOSED INCOME OF THE ASSESSEE. THE PENALTY PROCEEDING S ARE NOT AUTOMATICALLY AS PENALTY PROCEE DINGS ARE DISTINCT AND SEPARATE FROM THE ITA NO S . 1 9 4&1 9 5 /20 1 2 9 ASSESSMENT PROCEEDINGS. IT IS ALSO SEEN THAT THIS VERY STAND WAS TAKEN DURING THE ASSESSMENT PROCEEDING ALSO AND NOTHING WAS FOUND CONTRARY TO THE STAND TAKEN BY THE ASSESSEE. THEREFORE, TAKING INTO CONSIDERATION AL L THESE FACTS AND CIRCUMSTANCES OF THE CASE AND TAKING INTO CONSIDERATION THAT AMOUNT OF RS. 9 LAKHS, IN FACT, WAS NOT UNDISCLOSED INCOME OF THE ASSESSEE BUT ASSESSEE HAS SURRENDERED THE SAME JUST TO AVOID LITIGATION, WE ARE OF THE VIEW THAT THE PENALTY IS NOT LEVIABLE ON THIS AMOUNT. THEREFORE, WE CANCEL THE LEVY OF PENALTY ON RS. 9 LAKHS. 8. 3 REG A RDING PENALTY LEVIED ON THE AMOUNT OF RS. 46.70 LAKHS, WE FOUND THAT THE PENALTY WAS LEVIED ON THE BASIS OF PAPERS FOUND DURING THE COURSE OF SEARCH. COPY OF WHIC H IS PLACED AT PAGES 24 & 25. WE FOUND THAT THIS PAPER ALSO DOES NOT BELONG TO THE ASSESSEE. IN FACT, THE ASSESSEE WAS HAVING SOME LAND IN HYDERABAD, WHICH WAS SOLD FOR A SUM OF RS. 2,06,18,827/ - AND FOR THE PURPOSE OF STAMP VALUATION, VALUATION WAS TAKEN A T RS. 4,04,48,000/ - . DURING THE ASSESSMENT PROCEEDING, IT WAS ANSWERED THAT IF THE AO WANTS TO ASSESS ON THE AMOUNT OF RS.4,04,48,000/ - , THEN SURRENDER OF RS. 2 LAKHS MADE BY THE ASSESSEE SHOULD BE TREATED AS WITHDRAWN. THE EXPLANATION OF THE ASSESSEE WAS AC CEPTED AND NO ADDITION ON THE BASIS OF ADDITION ADOPTED BY THE STAMPING AUTHORITY WAS MADE. HOWEVER, THE ADDITION OF RS. 46.70 LAKHS WHICH WAS SURRENDERED BY THE ASSESSEE WAS BASED ON A PAPER NOTING. IN THE LEFT SIDE OF THIS PAPER, A SUM OF RS. 10 LAKHS, RS .24.50 LAKHS AND BACK OF THIS PAPER A SUM OF RS. 12.20 LAKHS HAVE ITA NO S . 1 9 4&1 9 5 /20 1 2 10 BEEN MENTIONED. THE TOTAL OF THIS AMOUNT COMES TO RS. 46.70 LAKHS. THIS AMOUNT WAS SURRENDERED BY THE ASSESSEE AS IN VIEW OF THE DEPARTMENT THE ASSESSEE WAS UNABLE TO EXPLAIN IN REGARD TO THES E ENTRIES. THE ASSESSEE MADE SURRENDER OF THIS AMOUNT . D URING THE COURSE OF STATEMENT RECORDED AT THE TIME OF SEARCH, IT WAS CATEGORICALLY STATED THAT THE ASSESSEE IS SURRENDERING TOTAL RS. 2 CRORE SUBJECT TO NON - LEVY OF PENALTY . COPY OF STATEMENT IS PLACED ON THE RECORD AT PAGE 13 TO 22. THE PAPER ON WHICH BASIS THIS ADDITION WAS MADE IS PLACED AT PAGE 24 TO 26. 8. 4 WE FOUND THAT THE AO HAS TAKEN INTO CONSIDERATION THE ENTRIES OF THE PAPER MADE IN LEFT SIDE, HOWEVER, ENTRIES OF RIGHT SIDE WHICH PERTAIN TO CERTAIN EXPENSES HAVE NOT TAKEN INTO CONSIDERATION. IN OUR CONSIDERED VIEW, THE PAPER SHOULD HAVE BEEN CONS I DERED AS A WHOLE AND NOT PART OF THE PAPER. IF THE ENTRIES OF THE RIGHT SIDE ARE TAKEN INTO CONSIDERATION , THEN IT IS SEEN THAT OUT OF THE AMOUNT OF RS. 46.70 LAKHS THE ASSESSEE HAS SHOWN VARIOUS EXPENSES INCLUDING THE AMOUNT PAID TO VARIOUS PERSONS ON ACCOUNT OF LABOUR CHARGES, LEGAL CHARGES, ETC. ETC. IT IS SEEN THAT THIS PAPER WAS PREPARED SHOWING SOME RECEIPTS AND INCURRING CERTAIN EXPENSES. FROM THIS PAPER, IT IS NOT EMERGED THAT THIS PAPER BELONGS TO CERTAIN UNDISCLOSED INCOME OF THE ASSESSEE, THOUGH THE ASSESSEE HAS SURRENDERED THIS AMOUNT JUST TO AVOID LITIGATION AND TO BUY PEACE . I N OUR CONSIDERED VIEW, THIS AMOUNT OF SURRENDER SHOULD NOT BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF LEVY OF PENALTY AS THERE IS NO CORROBORATIVE EVIDENCE OF ANY KIND FOUND DURING THE COURSE OF ITA NO S . 1 9 4&1 9 5 /20 1 2 11 SEARCH. THE AMOUNT HAS BEEN SIMPLY SURRENDERED AND THE SAME HAS BEEN ASSESSED BY THE AO . DURING THE ASSESSMENT PROCEEDI NG ALSO, THE DETAIL ED OF EX PLANATION WAS FILED BEFORE THE AO EXPLAINING THE ENTRIES OF THE PAPER. HOWEVER, THE ASSESSEE HAS HIMSELF SURRENDERED THIS AMOUNT, THEREFORE, THE ASSESSMENT WAS COMPLETED ACCEPTING THE SURRENDER SHOWN BY THE ASSESSEE ON ACCOUNT O F CAPITAL GAIN. 8.5 IN FACT, THERE WAS A PLOT IN HYDERABAD AND THERE WAS LITIGATION GOING ON. THE ASSESSEE HAS TAKEN LOAN IN THE YEAR 1994 AND LOAN ACCOUNT OF THE ASSESSEE BECAME NPA AND RECOVERY ACTION WERE INITIATED BY ANDHRA BANK. THE IMPUGNED PLOT AT BALANAGAR, KUKUTPALLY, HYDERABAD WHERE THE UNIT WAS SITUATED WAS MORTGAGED TO THE BANK AS SECURITY AGAINST THE LOAN . THE BANK WAS MAKING ALL EFFORTS TO SELL THE PROPERTY AND ADJUST THE REALIZATION AGAINST THE OUTSTANDING LOAN. FINALLY THE LAND WAS SOLD FO R A CONSIDERATION OF RS. 2.06 CRORES OR ODD AND CAPITAL GAIN OF RS. 1.30 CRORE OR ODD WAS ARRIVED AT WHICH WAS OFFERED FOR TAXATION. THE AMOUNT OF RECEIPT WAS ADJUSTED BY THE BANK AND THIS WAS DONE DURING THE DRT PROCEEDINGS IN HYDERABAD AND FOR THAT PURPOSE CERTAIN DOCUMENTS WERE PREPARED AND THE AMOUNT OF RECEIPT WAS SHOWN IN LEFT SIDE AND VARIOUS EXPENSES INCURRED WERE SHOWN IN RIGHT SIDE. THE AO HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT THE DIFFERENCE AS PER SALE AGREEMENT AND AS PER STAMPING AUTH ORITY SHOULD NOT BE ADDED TO THE INCOME AND THE AMOUNT WHICH WAS SURRENDERED TO BUY PEACE , WAS TO BE ADDED ONLY . THIS FACT HAS BEEN NOTED BY THE AO AT PAGE 7 TO 9 OF THE ASSESSMENT ORDER. COPY OF WHICH ITA NO S . 1 9 4&1 9 5 /20 1 2 12 IS PLACED ON RECORD. IT IS FURTHER SEEN THAT THE AMOUN T OF RS. 46.70 LAKHS WAS COLLECTED FOR COMMON KITTY AND BROKERS ON ACCOUNT OF SALE OF THE LAND AT HYDERABAD. IT IS SEEN THAT CALCULATION MADE TO SETTLE THE DUES/DISPUTES OF LABOUR BY VARIOUS MEANS AND TO MAKE PROPERTY FREE FROM ENCROACHERS AND TO SATISFY TH E VENKATESHWARA CO.OPERATIVE SOCIETY TO WHOM THE PLOT WAS SOLD. ALL THESE FACTS HAVE ALSO BEEN RECORDED IN THE ORDER OF THE AO AT PAGE 9. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND FALSE OR INCORRECT. IT IS ALSO A MATTER OF FACT THAT NEITHER ANY CASH W AS FOUND NOR ANY ASSET WAS FOUND SHOWING THAT THE ASSESSEE HAS INVESTED A SUM OF RS. 46.70 LAKHS IN THOSE ASSETS, NE I T H ER ANY CREDIT OF THIS AMOUNT OF RS. 46.70 HAS BEEN TAKEN BY THE ASSESSEE. THEREFORE, FOR ALL THESE REASONS, WE ARE OF THE VIEW THAT AT LEAS T PENALTY ON THIS AMOUNT OF RS. 46.70 LAKHS ALSO SHOULD NOT HAVE BEEN LEVIED AS THERE IS NOTHING ON RECORD TO CONTROVERT THE EXPLANATION FILED BY THE ASSESSEE. THE AMOUNT OF RS.46.70 LAKHS WAS A RECEIPT COLLECTED FROM VARIOUS PARTIES BELONGS TO SOCIETY , JUS T TO MAKE THE PAYMENT TO LABOURERS OR TO VARIOUS PERSONS SO THAT PROPERTY OF THE ASSESSEE SITUATED AT HYDERABAD SHOULD NOT BE ENCROACHED. AS STATED ABOVE, THE PAPER SHOULD HAVE BEEN TAKEN INTO CONSIDERATION AS A WHOLE NOT IN PART. IF THE RIGHT SIDE OF THE PAPER IS TAKEN INTO CONSIDERATION, THEN IT IS SEEN THAT THE ENTIRE AMOUNT I.E. RS. 46.70 LAKHS HAS GONE OUT IN SHAPE OF VARIOUS EXPENSES ON ACCOUNT OF ADVOCATE PAYMENT, LABOUR CHARGES ETC. ETC.. ITA NO S . 1 9 4&1 9 5 /20 1 2 13 8.6 IN SIMILAR CIRCUMSTANCES IN THE CASE OF M/S RADHEY MINER ALS LIMITED VS. ACIT , DECIDED IN ITA NO. 140 TO 142/NAG/2012, VIDE ORDER DATED 6 - 2 - 2013 , THE TRIBUNAL HAS DELETED THE PENALTIES LEVIED UNDER SECTION 271(1)(C) OF THE ACT. IN THAT CASE ALSO A SUM OF RS. 15 LAKHS WAS DECLARED AS ADDITIONAL INCOME. ON THIS AMOU NT THE AO LEVIED PENALTY UNDER SECTION 271(1)(C), WHICH WAS CONFIRMED BY THE CIT(A) AND IN APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL DELETED THE PENALTIES. THE FINDINGS OF THE TRIBUNAL HAVE BEEN RECORDED IN PARA 9 AS UNDER : - 9 . WE HAVE GONE THROUGH THE ORD ER OF THE AO AND CIT(A) AND WE FOUND THAT THE EXPLANATION OF THE ASSESSEE NEITHER WAS FOUND INCORRECT NOR THERE WAS ANY ARTICLE/MATERIAL SHOWING THAT THE ASSESSEE HAS CONCEALED ANY INCOME. IT IS FURTHER SEEN THAT THE ASSESSEE ON INSPECTION OF RECORDS FOUND THAT CORRECT FIGURE OF INCOME IS NOT POSSIBLE TO ARRIVE AND THEREFORE, TO AVOID LITIGATION AND ON ASSURANCE THAT NO PENALTY WILL BE LEVIED, AN ADDITIONAL OF RS.15 LAKHS WAS SURRENDERED. AFTER GOING THROUGH THE ORDERS OF BOTH THE LOWER AUTHORITIES, IT IS SEEN THAT THESE CONTENTIONS OF THE ASSESSEE WERE NOT FOUND FALSE OR OTHERWISE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT PENALTY LEVIED BY THE AO, WHICH IS CONFIRMED BY THE CIT(A) ON ADDITIONAL AMOUNT OF SURRENDERED WAS NOT JUSTIFIED. IT IS SETTLED POS ITION OF LAW THAT THERE SHOULD BE A CONCRETE MATERIAL BY WHICH IT CAN BE ASCERTAINED THAT ANY PART OF INCOME HAS BEEN CONCEALED OR CERTAIN INACCURATE PARTICULAR HAS BEEN FURNISHED TO CONCEAL THE INCOME. IN THE PRESENT CASE, AS STATED ABOVE, THE ASSESSEE WI THOUT ANY MATERIAL HAD SURRENDERED ADDITIONAL INCOME OF RS.15 LAKHS FOR THE YEAR UNDER CONSIDERATION, THEREFORE, WE ARE OF THE VIEW THAT NO PENALTY CAN BE LEVIED WHEN THERE IS NO DIRECT MATERIAL SHOWING THAT ANY INCOME HAS BEEN CONCEALED. WE FURTHER NOTED THAT IN SIMILAR FACTS, THE TRIBUNAL HAS CANCELLED THE LEVY OF PENALTY IN THE CASE OF M/S GUPTA DOMESTIC FUELS P. (N) LTD., DECIDED IN IT(SS)A NO.246/NAG/2007 FOR THE ASSESSMENT YEAR 2000 - 01 VIDE ORDER DATED 14 - 10 - 2008 . WE FURTHER NOTED THAT THE HONBLE NA GPUR BENCH OF HIGH COURT OF BOMBAY IN CASE OF MUKESH DEDUTTA GUPTA IN ITA NO.76/2009 VIDE ITS ORDER DATED 3 - 9 - 10 , HAS HELD THAT THE TRIBUNAL DELETED THE PENALTY FIRSTLY ON THE GROUND THAT THE ASSESSEE HAS FILED RETURN PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT OFFERING ADDITIONAL INCOME WITH A VIEW TO BUY PEACE AND ON THE UNDERSTANDING THAT NO PENALTY WOULD BE LEVIED. HAVING ACCEPTED THE RETURN SUBJECT TO CONDITION ATTACHED TO IT, IMPOSITION OF PENALTY WAS NOT JUSTIFIED. ACCORDINGLY, THE ORDER OF TH E TRIBUNAL CANCELLING THE LEVY OF PENALTY IS CONFIRMED. FACTS IN THE PRESENT CASE ARE SIMILAR AS THE ASSESSEE OFFERED ADDITIONAL INCOME OF RS. 15 LAKHS JUST TO BUY PEACE AND AVOID ITA NO S . 1 9 4&1 9 5 /20 1 2 14 LITIGATION. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE CA NCEL THE LEVY OF PENALTY OF RS.5,80,000/ - LEVIED FOR THE YEAR UNDER CONSIDERATION. 8. 7 IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT PENALTY LEVIED ON THIS AMOUNT ALSO NOT JUSTIFIED. ACCORDINGLY, WE CANCEL THE LEVY OF PENA LTY ALSO. 9 . NOW, WE WILL TAKE UP THE APPEAL I.E. ITA NO. 195/NAG/2012 FOR THE ASSESSMENT YEAR 2006 - 07. 9.1 WE HAVE DISCUSSED THE FACTS IN THIS REGARD ABOVE ALSO AS THE ASSESSEE SURRENDERED A SUM OF RS. 2 CRORE AND THE SAME HAS BEEN OFFERED FOR TAXATION I N THE NAME OF VARIOUS PERSONS OF GROUP CONCERN. THE SURRENDER OF RS. 2 CRORE INCLUDES A SUM OF RS. 1 CRORE SHOWN IN THE YEAR UNDER CONSIDERATION. THE RETURN UNDER SECTION 139(1) WAS NOT DUE AT THE TIME OF SEARCH WHICH TOOK PLACE ON 27 - 9 - 2005 . THOUGH RETURN UN DER SECT ION 139 (1) WAS FILED WITHOUT DISCLOSING THIS AMOUNT OF RS. 1 CRORE BUT THE ASSESSEE WAS CONTINUOUSLY ASKING THE AO TO PROVIDE THE MATERIAL FOUND IN THE COURSE OF SEARCH SO THAT WHATEVER THE AMOUNT OF SURRENDER HAS BEEN AGREED THAT CAN BE SHOWN. COP Y OF THESE LETTERS REQUESTING THE AO TO PROVIDE CO PY OF SEARCH MATERIAL ARE PLACE D ON RECORD AT PAGES 23 TO 25. IT IS FURTHER SEEN THAT NEITHER ANY DOCUMENT RELATING TO SURRENDER OF RS. 1 CRORE WAS FOUND NOR THERE WAS ANY OF THE ASSET DETECTED BY THE SEARCH PARTY . SINCE THE ASSESSEE HAS AGREED TO SURRENDER A SUM OF RS. 2 CRORE AND TO HONOUR THE AGREEMENT MADE DURING THE COURSE OF SEARCH, THE ASSESSEE HAS SHOWN THIS AMOUNT OF RS.1 CRORE BY FILING A SEPARATE RETURN ON 27 - 12 - 2006 . RETURNED INCOME ITA NO S . 1 9 4&1 9 5 /20 1 2 15 WAS ACCEPTED. TH EREAFTER PENALTY PROCEEDING WAS ALSO INITIATED UNDER SECTION 271(1) (C) AND PENALTY OF RS. 55 LAKHS WAS LEVIED BY OBSERVING THAT THE ASSESSEE HAS NOT SHOWN THIS INCOME BY FILING THE RETURN UNDER SECTION 139(1) AND IF THERE WAS NO SEARCH THEN THE ASSESSEE MIGH T NOT HAVE SHOWN THIS AMOUNT OF RS. 1 CRORE. LEARNED CIT(A) HAS CONFIRMED THE LEVY OF PENALTY. 9.2 AFTER CONSIDERING THE WRITTEN SUBMISSION, COPY OF WHICH IS PLACED IN THE PAPER BOOK AND AFTER TAKING INTO CONSIDERATION THE OTHER MATERIAL, WE FOUND THAT THE PENALTY ON THIS AMOUNT IS ALSO NOT JUSTIFIED. IT IS SEEN THAT NEITHER THERE WAS ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS CONCEALED THE INCOME OF RS. 1CRORE, NO R ANY OTHER DOCUMENT WAS FOUND ., N EITHER THE ASSESSEE HAS TAKEN CREDIT OF THIS AMOUNT BY WAY O F INTRODUCING THE CAPITAL IN ITS BOOKS OF ACCOUNT OR INVESTING IN ASSETS. THE AMOUNT OF RS. 1 CRORE WAS SURRENDERED AS AN AGREEMENT WAS MADE DURING THE COURSE OF SEARCH TO SURRENDER A SUM OF RS. 2 CRORE. IT IS ALSO SEEN THAT THE DUE DATE FOR FILING RETURN WA S NOT OVER. THE ASSESSEE HAD MADE THREE REQUEST TO THE AO TO PROVIDE THE MATERIAL OR COPY OF STATEMENT RECORDED DURING THE COURSE OF SEARCH, SO THAT THE SURRENDERED AMOUNT AGREED AT THE TIME OF SEARCH CAN BE SHOWN. WHEN COPY OF STATEMENT WAS PROVIDED TO TH E ASSESSEE, THEN THE ASSESSEE HA D DISCLOSED RS.1 CRORE IMMEDIATELY TO HONOUR THE AGREEMENT MADE AT THE TIME OF SEARCH. THERE IS NO MATERIAL AT ALL TO HOLD THAT THE ASSESSEE HAS CONCEALED ANY INCOME OF RS. 1 CRORE. WITHOUT BRINGING ANY CORROBORATIVE MATERIAL , IN OUR CONSIDERED VIEW, LEVY OF PENALTY WAS ITA NO S . 1 9 4&1 9 5 /20 1 2 16 NOT JUSTIFIED. PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE TO THE ASSESSMENT PROCEEDING . P ENALTY SHOULD BE LEVIED ONLY WHEN IT IS SEEN THAT THE ASSESSEE HAS UNDISCLOSED INCOME. MERELY MAKING SURRENDER , IN OUR VIEW, DOES NOT ATTRACT ANY PENALTY PROVISION AUTOMATICALLY. 9.3 IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE REASONINGS GIVEN BY US WHILE CANCELLING THE LEVY OF PENALTY FOR THE ASSESSMENT YEAR 2004 - 05, WE CANCEL THE LEVY OF PEN ALTY FOR THE YEAR UNDER CONSIDERATION ALSO. 1 0 . IN THE RESULT , APPEAL S OF THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED IN THE E - COURT ON THIS 2 0 TH DAY OF M AR . 201 3 . - 201 3 SD/ - SD/ - ( ) ( RAJENDRA ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 2 0 / 0 3 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI
