Late.Mr. Tayyab Habib Chotani, Through the Legal Heir, Pune V. ACIT, Pune

ITA 2302/PUN/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93834 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-06-2015
• Assessment Year: misc
• Appeal Filed On: 22-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: VIPIN GUJRATHI
• Keywords: Unexplained investment; Unexplained expenditure; Document seized; Opportunity of being heard; Cost of acquisition; Fair market value; Block assessment; Documents seized
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.2302/PN/2012 (BLOCK PERIOD 01-04-1990 TO 14-02-2001) LATE MR. TAYYAB HABIB CHOTANI THROUGH L/H MRS. ZEENAT TAYYAB CHOTANI, FLAT NO.3, SHAD BEDAR, 12, BOAT CLUB ROAD, PUNE 411001 .. APPELLANT PAN NO.AFOPC9440B VS. ACIT, CENTRAL CIRCLE-1(1), PUNE .. RESPONDENT APPELLANT BY : SHRI VIPIN GUJRATHI DEPARTMENT BY : SHRI A.K. MODI, CIT DATE OF HEARING : 15-06-2015 DATE OF PRONOUNCEMENT : 30-06-2015 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27-07-2012 OF THE CIT(A)-I, PUNE RELATING TO BLOCK PERIOD 01-04-1990 TO 14-02-2001. 2. LEVY OF PENALTY OF RS.59,43,634/- BY THE ASSESSING OFFICER U/S.158BFA(2) OF THE I.T. ACT AND UPHELD BY THE CIT(A) IS TH E ONLY ISSUE RAISED BY THE ASSESSEE IN THE VARIOUS GROUNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE LAT E MR. TAYYAB HABIB CHOTANI WAS AN INDIVIDUAL AND WAS ENGAGED IN THE BUSINESS OF AUTO CONSULTANCY, REAL ESTATE AND HORSE RACIN G ETC. A SEARCH U/S.132 OF THE I.T. ACT WAS CONDUCTED AT HIS P REMISES ON 14-02-2001 DURING WHICH VARIOUS INCRIMINATING DOCUMENTS W ERE 2 FOUND AND SEIZED. IN RESPONSE TO NOTICE U/S.158BC(A) THE ASSESSEE FILED HIS RETURN OF INCOME ON 31-03-2002 DECLARING UNDISCLOSED INCOME OF RS.1,50,890/- ONLY. THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.1,54,28, 744/- WHICH WAS REDUCED BY THE CIT(A) TO RS.83,00,323/-. ON FURT HER APPEAL BY THE REVENUE AS WELL AS THE ASSESSEE THE TRIBU NAL DISMISSED BOTH THE APPEALS. THE ASSESSING OFFICER THEREAFTE R INITIATED PENALTY PROCEEDINGS U/S.158BFA(2) ON ACCOUNT OF FOLLOWING 3 ADDITIONS : (A) ADDITION ON ACCOUNT OF SUPPRESSED CAPITAL GAIN RS.36,24,695/- (B) UNEXPLAINED EDUCATIONAL EXPENSES OF SON RS.47,07,520/- (C) UNACCOUNTED INVESTMENTS IN SHARES RS. 1,37,500/- 4. SO FAR AS THE PENALTY LEVIED ON ADDITION ON ACCOUNT O F SUPPRESSED CAPITAL GAIN OF RS.36,24,695/- IS CONCERNED, THE FACTS ARE THAT THE ASSESSEE ALONG WITH HIS MOTHER SMT JAINAB AI H. CHOTANI WAS THE JOINT OWNER OF THE PLOT OF LAND SITUATED AT 208, YERWADA, PUNE. THE SAID PLOT OF LAND WAS SOLD TO SHRI SHIRIS H C KARIA VIDE AGREEMENT DATED 14-04-1992 AND 18-10-1991 FOR A CONSIDERATION OF RS. 76,00,000/- AND ADDITIONAL CONSIDERATIO N OF RS. 20/- PER SQ. FT ON FREE SALE AREA I.E. ABOUT 2000 SQ. MT RS AND RS. 10/- PER SQ. FT ON BUILDABLE AREA UNDER SECTION 21 OF T HE URBAN LAND (CEILING & REGULATION) ACT. THE CONSIDERATION OF RS.76,00,000/- WAS INCLUSIVE OF THE BUNGALOW TO BE ALLOTTED T O THE ASSESSEE. DURING THE COURSE OF SEARCH ACTION LOOSE PAPER (COMPUTERIZED SHEET) WAS FOUND AND INVENTORISED AT PARTY NO 6 IN BUNDLE NO 1, PAGE NO 18. THE SAID PAGE CONTAINS THE AMOU NT RECEIVED BY THE ASSESSEE IN CASH AND BY WAY OF CHEQUES FROM MR. KARIA AGAINST THE SALE OF PLOT OF LAND SITUATED AT 208, YE RWADA, 3 PUNE. THE AO MADE ADDITION OF CASH RECEIVED AS PER THE LO OSE PAPER AS UNDISCLOSED INCOME OF THE ASSESSEE OVER AND AB OVE THE CONSIDERATION AS DECIDED IN THE AGREEMENT WITH MR. SHIRISH KARIA. THUS, FOR THE DETAILED REASONS GIVEN IN THE ASSESSMENT OR DER, AO COMPUTED THE SUPPRESSED CAPITAL GAIN AT RS.63,79,104/- A) BY CONSIDERING THE SAID AMOUNT OF RS. 36,24,695/- AS T HE ON MONEY RECEIVED BY THE ASSESSEE OVER AND ABOVE THE CONSIDERATION RECORDED IN THE AGREEMENT AND B) BY ESTIMATING THE COST OF ACQUISITION OF THE SAID PROPERT Y I.E. BY ESTIMATING THE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 01/04/1981 AT RS. 10/- PER SQ.FT AND THEREBY ARRIVING AT SUPPRESSION OF CAPITAL GAIN AMOUNTING TO RS.27,54,409/- 5. BEFORE CIT(A) THE ASSESSEE DID NOT PRESS THIS GROUND FOR WHICH THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THE ASSESSEE ALSO DID NOT CHALLENGE THE ISSUE BEFORE THE TRIBUNAL. PENALTY HAS BEEN LEVIED ACCORDINGLY BY THE AO U/S.158BFA(2) WHICH HAS BEEN CONFIRMED BY THE LD.CIT(A). 6. SO FAR AS THE PENALTY LEVIED ON THE SECOND ADDITION, I.E . EDUCATION EXPENSES OF SON IS CONCERNED, THE FACTS ARE TH AT DURING THE COURSE OF SEARCH IT WAS REVEALED THAT THE ASSESSEE S SON MR. MISHAAL CHOTANI WAS STUDYING IN CORNELL UNIVERSITY, NEW YORK FROM 1997. DURING THE COURSE OF SEARCH ACTION, STATEMENT S AND PAPERS/DOCUMENTS RELATING TO TUITION FEES AND LIVING EXPENS ES OF CORNELL UNIVERSITY WERE FOUND AND SEIZED BY PARTY NO. 6 A ND ARE INVENTORISED AT PAGE NO. 25A, 26, 27, 28, 29, 47, 54, 66, 70,71 , AND 72 OF BUNDLE NO. 3 OF THE SEIZED PAPER. THESE PAPERS ARE THE MONTHLY/PERIODICAL STATEMENT OF BILLS RAISED BY CORNELL UNIVE RSITY, NEW YORK AND PAYMENTS MADE BY MR. MISHAAL CHOTANI. THE ASSESSEE WAS QUESTIONED IN RESPECT OF SOURCE OF EXPENS E I.E. 4 EDUCATIONAL EXPENSES OF HIS SON. THE ASSESSEE STATED THA T HIS SON'S EDUCATIONAL EXPENSES WERE BORNE BY MR. MOHD. SIDD IQUE, HIS COUSIN FROM U.A.E. IT WAS FURTHER STATED BY THE ASSESS EE THAT MR. SIDDIQUE, A PAKISTANI NATIONAL, WAS GOING TO BECOME THE FATHER IN LAW OF HIS SON MR. MISHAAL CHOTANI. THE CONFIRMATION OF MR. SIDDIQUE TO THE EFFECT THAT HE HAD INCURRED EDUCATIONA L EXPENSES OF MR. MISHAAL CHOTANI WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO PROPOSED TO MAKE ADDITIO N OF US $ 1,39,978 ON THE BASIS OF THE SEIZED DOCUMENTS ON ACCOU NT OF UNEXPLAINED EXPENDITURE OF THE EDUCATION OF SON OF THE ASS ESSEE. IT WAS BROUGHT TO THE NOTICE OF THE AO THAT THE ACTUA L PAYMENT AS REVEALED FROM THIS DOCUMENTS IS US $ 27,325. THE PROPOSED ADDITION OF US $ 1,36,978 IS NOTHING BUT THE CUMULATIVE TOTA L OF BILLS RAISED BY CORNELL UNIVERSITY. THE AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ENT IRE AMOUNT OF FEES ARE PAID BEFORE THE DATE OF SEARCH. SIMILARLY, THE AO DREW INFERENCE THAT THE MONEY BELONGED TO THE ASSESSEE AND IT IS FOR THIS REASON THAT HIS SON HAS BROUGHT ALL THESE DOCUMENT S TO INDIA AND HAS BEEN GIVING ACCOUNTS OF HIS EXPENDITURE INCURRED IN USA TO HIS PARENTS. IN RESPECT OF THE CLAIM OF THE ASSESSEE T HAT THE EXPENDITURE ON EDUCATION OF HIS SON WAS BORNE BY MR. USH AM IBRAHIM SIDDIQUE, THE AO REJECTED THE CLAIM OF THE ASSESS EE ON THE GROUND THAT ASSESSEE HAS NOT FURNISHED ANY EVIDENC E IN SUPPORT OF HIS CLAIM AND MADE ADDITION OF RS.54,79,120/- BEIN G EQUIVALENT AMOUNT OF US $ 1,36,988/-. 7. THE ASSESSEE CHALLENGED THE ADDITION BEFORE CIT(A) STATIN G THAT THE PAPERS FOUND DURING THE COURSE OF SEARCH WERE THE BILLS ISSUED BY CORNELL UNIVERSITY FOR TUITION FEE, HOUSING CHARGES, 5 DINING CHARGES ETC. AND THE BILLS WERE CUMULATIVE ONES. ON THE BASIS OF THE ARGUMENTS ADVANCED BY THE ASSESSEE THE L D.CIT(A) DELETED AN AMOUNT OF RS.7,74,600/- AND SUSTAINED AN AMOUN T OF RS.47,04,520/-. WHEN THE MATTER TRAVELLED TO THE TRIBUNAL THE TRIBUNAL VIDE ORDER DATED 29-07-2011 IN ITA NO.571/PN/20 05 FOR THE BLOCK PERIOD 01-04-1990 TO 14-02-2001 UPHELD THE A DDITION MADE BY THE ASSESSING OFFICER. WE FIND THE TRIBUNAL AT PAR A 19 OF THE ORDER HAS OBSERVED AS UNDER : 19. IDENTITY, CREDIT WORTHINESS, AND THE GENUINE NESS OF THE TRANSACTION ARE THE RELEVANT ISSUES FOR DECIDING THE PR ESENT DISPUTE. REGARDING IDENTITY, FROM THE ABOVE IT IS EVIDENT THA T IT IS CASE OF THE PLURALITY OF NAME OF THE IMPUGNED CREDITOR IE MR. U SMAN IBRAHIM AIAS MOHAMED SIDDIQUE ALIAS OSMAN IBRAHIM ALIAS MOHD.SI DDIQUE ETC. THE SAME CANNOT BE PUT TO REST UNLESS, A COPY OF T HE PASSPORT IS IN THE RECORDS. UNFORTUNATELY, NEITHER THE ASSESSEE NOR THE CREDITOR HAS FILED THE COPY OF THE CITED PASSPORT NO.F123860 SAI D TO HAVE BEEN ISSUED BY PAKISTHAN GOVERNMENT, REGARDING THE CREDITWO RTHINESS, THERE ARE N'T ANY INFORMATION ON RECORDS ABOUT THE SAME. THEREFORE, WE ARE UNABLE TAKE A DECISION ON THE ISSUE. IN ANY CASE , THE ONUS IS ON THE ASSESSEE TO DEMONSTRATE THE SAME AND THEREFORE, WE HO LD THE SAME AGAINST THE ASSESSEE. REGARDING THE ISSUE OF GENUINEN ESS, WE FIND THERE IS LACK OF TRANSPARENCY IN THE MATTER AND CLAIM OF SRI SIDDIQUE ABOUT DESTROYING OF THE RECORDS AND THEREBY FOLLOWING THE DUBAI'S WAY OF ACCOUNTING AND BOOK KEEPING IS NOT ACC EPTABLE. SHOULD ONE DESTROY THE RECORDS WHICH CONSTITUTE THE EV IDENCES? THUS, THERE IS OPACITY IN MATTERS OF IDENTITY, CREDITW ORTHINESS AND GENUINENESS OF THE TRANSACTIONS INVOLVING SRI SIDDIQUE. IN EFFECT, THE CONFIRMATION LETTER FILED BY MR SIDDIQUE IS AS GOOD A S THE ONE WHICH DOES NOT CATER TO THE NEEDS OF CONCERN SECTION AND THE REFORE, IT AMOUNTS NO CONFIRMATION OF SAID SUM. 8. SO FAR AS THE THIRD ISSUE IS CONCERNED, I.E. UNEXPLAINED INVESTMENT IN SHARES ETC,, THE RELEVANT FACTS ARE THAT D URING THE COURSE OF SEARCH ACTION SHARES OF THE VALUE OF RS.3,49,540/ - WHICH WERE OWNED BY THE ASSESSEES WIFE AND HIS SON MISH AAL WERE FOUND. OUT OF THESE SHARES FOUND, THE SHARES VALUED AT RS.1,37,500/- WERE ACQUIRED IN THE BLOCK PERIOD. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CONTEND ED THAT THE SHARES STOOD IN THE MAIDEN NAME OF HIS WIFE WHO WAS FILING 6 RETURNS EVEN BEFORE THE MARRIAGE. SIMILARLY, THE ASSESSE E ALSO CONTENDED THAT THE SHARES WERE NOT PURCHASED BUT WE RE ACCRUAL TO THE ORIGINAL SHARES IN THE FORM OF BONUS SHARES. THE AO AS WELL AS THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE AS SESSEE ON THE GROUND THAT THE ASSESSEE'S WIFE HAD NOT FILED RETURN S OF INCOME AFTER ASSESSMENT YEAR 1987-88 AND HENCE THE SO URCES OF INCOME TO JUSTIFY THE ACQUISITION OF SUCH SHARES REMAINE D UNEXPLAINED. THEREFORE, THE AO MADE THE SAID ADDITION AND THE LD. CIT(A) CONFIRMED THE SAME. ITAT HAS ALSO DISMISSED THE APPEAL OF THE ASSESSEE AND THE ORDER OF ITAT HAS NOT B EEN CHALLENGED BY THE ASSESSEE. 9. IN THIS BACKGROUND, THE ASSESSING OFFICER LEVIED PENALTY OF RS.59,43,634/- BEING 100% OF THE TAX SOUGHT TO BE EVADED WHICH WAS UPHELD BY THE CIT(A) BY OBSERVING AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE LAW AS ARE APPARENT FROM THE RECORD. SECTION 158BFA WAS INTRODUCED BY THE INCOME TAX(AMENDMENT) ACT, 1997 W.E.F. 1/01/199 7, IN CHAPTER XIVB, AS A LACUNA WAS NOTICED FOR NOT PROVIDING PROVI SION FOR INTEREST FOR DELAYED FILING OF RETURN AND PENALTY FOR UNDERST ATEMENT OF UNDISCLOSED INCOME IN THE BLOCK RETURN. SUB.SEC.(1) DE ALS WITH LEVY OF INTEREST AND SUB.SEC.(2) DEALS WITH LEVY OF PENALTY. PE NALTY U/S.158BFA(2) IS LEVIABLE BY THE AO OR THE CIT(A) IN THE COURSE OF ANY PROCEEDINGS UNDER CHAPTER. XIVB TO A PERSON WHIC H SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL N OT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE AO UNDER CLAUSE (C) OF SEC.1 58BC. THEREFORE FROM THE PERUSAL OF THE MAIN PROVISION, THE PENALTY CAN BE DIRECTED TO BE LEVIED BY THE AO/CIT(A) ON UNDISCLOSED INCOME DETERMINED UNDER SEC.158BC(C). IN ADDITION TO THE AB OVE, ONLY THE RATES ARE PROVIDED IN THE MAIN PROVISION WHICH IS TO B E FROM MINIMUM OF THE TAX LEVIABLE UPTO THE THREE TIMES OF THE TAX LEVIABLE. HOWEVER THE TWO PROVISOS AVAILABLE UNDER THIS SUB SEC. D EFINES THE CIRCUMSTANCES IN /WHICH THESE PENALTIES CAN BE LEVIED O R NOT LEVIED. THOUGH THE PENALTY STRUCTURE PROVIDED IN THIS SUB-SEC, IS SIMILAR TO THE ONE AVAILABLE IN SEC.271(1)(C), BUT IT HAS TO B E NOTED THAT THERE IS NO WHISPER OF THE WORDS LIKE 'CONCEALMENT' OR 'FILING OF INACCURATE PARTICULARS OF INCOME', ETC. IN THIS PROVISION AND THE REFORE IT IS INCORRECT TO EQUATE IT IN TERMS OF REQUIREMENT OF LA W WITH SEC.271(1)(C). FROM THE PLAIN READING OF THE MAIN PR OVISION IT IS CLEAR THAT THE PENALTY IS LEVIABLE FOR ENTIRE UNDISCLOSED I NCOME ASSESSED BY THE AO U/S 158BC(C). HOWEVER FIRST PROVISO GRANT IMMU NITY TO THE 7 ASSESSES WHERE THE RETURN IS FURNISHED U/S 158BC AND TAXES ARE PAID, EVIDENCES FOR PAYMENT OF TAXES ENCLOSED AND NO APPEAL IS FILED AFTER ASSESSMENT. SECOND PROVISO, DISABLES THE APPLICABILITY OF IMMUNITY AVAILABLE UNDER THE FIRST PROVISO WHERE THE ASSESSED INC OME IS MORE THAN THE RETURNED INCOME AND APPEALS ARE FILED BY TH E APPELLANT. SECOND PROVISO THEREFORE CAN BE SEEN TO BE DEALING WI TH SITUATIONS IN WHICH THE ADDITIONS ARE MADE BY THE AO OVER AND ABOV E THE RETURNED INCOME AND IN THIS RESPECT IT HAS BEEN PROVIDED THAT T HE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME WHICH ARE DETERMINED IN EXCESS OF THE AMOUNT SHOWN IN THE RETURN . THERE ALSO HAVE BEEN INSTANCES IN WHICH AOS, CONSIDERING THE LANG UAGE OF THE MAIN PROVISION AS WELL AS THE PROVISO, HAVE BEEN FOUND TO BE HOLDING THE VIEW THAT THIS PENALTY IS MANDATORY IN ALL CASES W HERE THE RETURNED UNDISCLOSED INCOME IS MORE THAN THE ASSESSED UNDI SCLOSED INCOME. IT IS A FACT THAT THE COURTS HAVE HELD THAT THIS PENALTY IS NOT MANDATORY AS THE MAIN PROVISION ITSELF SAYS 'THE ASSESSING O FFICER OR THE COMMISSIONER(APPEALS), MAY DIRECT THAT A PERSON SHAL L PAY BY WAY OF PENALTY ..............'. IT HAS BEEN HELD T HAT THE WORD 'SHALL' APPEARING BEFORE THE RATES TO BE APPLIED ONLY LEADS T O THE INTERPRETATION THAT ONCE THE PENALTY IS HELD TO BE L EVIABLE, IT CANNOT BE LESS THAN THE AMOUNT OF TAX DETERMINED AND WHICH MAY EXTEND UPTO THREE TIMES OF THE TAX SO DETERMINED. THERE CANN OT BE ANY DISPUTE TO THIS INTERPRETATION ALSO. THOUGH THE APPELL ANT HAS TRIED TO ARGUE THAT THE AO HAS LEVIED THE PENALTY TREATING TH E PROVISION AS MANDATORY, BUT THE SAME DOES NOT APPEAR TO BE SO. AFTE R CAREFUL CONSIDERATION OF THE PENALTY ORDER, I AM OF THE CONSI DERED OPINION THAT THE AO HAS NOT TREATED LEVYING OF PENALTY U/S.15 8BFA(2) AS MANDATORY IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. H E HAS CONSIDERED THE FACTS OF THIS CASE AND EXAMINED THE COND ITIONS PRESCRIBED IN THIS PROVISO BEFORE LEVYING THE PENALTY. THE EMPHASIS PLACED BY THE APPELLANT THAT THE AO FAILED TO APPRE CIATE THAT THE PENALTY AND THE ASSESSMENT PROCEEDINGS ARE DIFFERENT, AL SO WAS FOUND TO BE INCORRECT. IN THIS CONTEXT, THE APPELLAN T HAS TRIED TO ARGUE THE FACTS RELATING TO ADDITIONS MADE IN RESPECT OF UNA CCOUNTED RECEIPTS RESULTING INTO HIGHER CAPITAL GAINS AND THE U NACCOUNTED EXPENDITURE FOUND RELATING TO EDUCATIONAL EXPENDITU RE OF APPELLANT'S SON AT CORNEL UNIVERSITY, USA. WHAT THE APPELLANT APP EAR TO BE SUGGESTING WAS THE FACT THAT THE AO IS REQUIRED TO PROV E MORE THAN WHAT IS REQUIRED FOR MAKING THE ASSESSMENT, WHILE LEVYIN G THE PENALTY U/S.158BFA(2). SIMILAR ARGUMENTS HAVE ALSO BEE N MADE IN RESPECT OF UNEXPLAINED INVESTMENT IN SHARES. I HAVE CAR EFULLY CONSIDERED THE ARGUMENTS OF THE APPELLANT IN THE FACT S AND CIRCUMSTANCES OF THIS CASE. ALL THE AFORESAID ADDITIONS, IN RESPECT OF WHICH PENALTY HAS BEEN LEVIED BY THE AO, HAS BEEN EXA MINED BY THE AO, THE LD. CIT(A) AND THE ITAT. THE ADDITIONS SUSTAIN ED BY THE LD. CIT(A) HAS BEEN UPHELD BY THE HON'BLE ITAT IN ITA NO .571/PN/2005 DTD. 29/07/2011 AND IT IS ABUNDANTLY CLEAR THAT ALL POSSIBLE ANGLES WERE EXAMINED BEFORE DISMISSING THE APPEAL OF THE APPE LLANT FILED AGAINST THE ORDER OF THE CIT(A). THEREFORE IT IS INCO RRECT TO CLAIM THAT ANY POSITIVE EVIDENCE WAS NOT AVAILABLE ON RECORD, FO R LEVYING THE PENALTY. THE ORDER OF THE HON'BLE ITAT REFERRED TO ABOVE CAN BE SEEN FOR THE SAME ALONGWITH THE ORDERS OF THE LOWER AUTHOR ITIES. WITHOUT PREJUDICE TO THE ABOVE FINDING, AS DISCUSSED ABOVE, IN MY CONSIDERED OPINION LEVYING OF PENALTY U/S.158BFA(2), DOES NOT RE QUIRE FULFILLMENT OF CONDITIONS SIMILAR TO SEC.271(1)(C), AS HAS BEEN SOUGHT TO BE CLAIMED BY THE APPELLANT. AS ALREADY DISCUSSED, W HAT IS REQUIRED IS ADDITION OVER AND ABOVE THE RETURNED INC OME, WHICH 8 COULD SHOW THAT THE APPELLANT HAS TRIED TO SUPPRESS THE DECLARATION OF UNDISCLOSED INCOME AND PAYING OF TAXES EVEN AFTER THE SEARCH AND DISCOVERY OF INCRIMINATING EVIDENCES. THESE CONDITIONS AVAILABLE IN THIS SECTION ARE CLEARLY FULFILLED IN THIS CASE AND THE REFORE I DO NOT FIND ANY FAULT IN THE PENALTY LEVIED BY THE AO. THE AO HAS LEVIED THE PENALTY AT THE MINIMUM RATE AND THEREFORE EVEN THE QUANTUM OF PENALTY CANNOT BE CONSIDERED TO BE EXCESS. THE CLAIM O F THE APPELLANT THAT THE AO HAS NOT CONSIDERED THE DECISION OF THE JUR ISDICTIONAL HIGH COURT GIVEN IN THE CASE OF CIT VS DODSAL LTD. 312 ITR 112 (BOM), HAS ALSO BEEN FOUND TO BE INCORRECT. AS ALREADY DISCUSSED, THE AO HAS NOT LEVIED THE PENALTY BECAUSE HE WAS OF THE OPINION THAT THE PENALTY IS MANDATORY IN ALL CASES OF ADDITIONS. HE HAS CONSIDERED T HE NATURE OF THE ADDITIONS AND THEREAFTER CONCLUDED THE PENALTY A S LEVIABLE. IT IS A FACT THAT THE COURTS IN CERTAIN CASES HAVE ALLOWED REL IEF ONLY WHERE IT WERE FOUND THAT THE ADDITIONS HAVE BEEN MADE ON ESTIM ATE BASIS. IN DCIT VS SPARK ELECTRO COMMUNICATION SYSTEMS (2006) 281 ITR (AT) 13 (MUM), IT HAS BEEN HELD THAT THE BLOCK ASSESSMENT IS AN ASSESSMENT OF THE BLOCK PERIOD AND THEREFORE WHERE THE ASSESSEE HAS NO COGENT EXPLANATION FOR OMITTING AN INCOME IN THE BLOCK RETURN, PENALTY IS EXIGIBLE. IN THE CASE OF CIT VS BECHARBHAI P. PARMAR (2012) 341 ITR 499 (GUJ), IT HAS BEEN HELD THAT WHERE AN AD DITION ON MERIT HAS BECOME FINAL, THE CLAIM OF THE ASSESSEE THAT PENALT Y CANNOT BE LEVIED BECAUSE THE ADDITION ITSELF WAS NOT JUSTIFIED CO ULD NOT BE ENTERTAINED, AND THEREFORE PENALTY IN SUCH CASES HAVE TO BE UPHELD. THE CASE OF THE APPELLANT IS EXACTLY COVERED BY THIS J UDGMENT ALSO. IN HARISH DARGAN VS. DCIT (2011) 8 ITR (TRIB) 125 (DEI), IT HAS BEEN HELD THAT WHERE ASSESSEE'S EXPLANATION FOR CASH FOUND WAS FOUND TO BE NOT BONAFIDE, PENALTY WAS JUSTIFIED. IN THE CASE OF THE APPELLANT ALSO, IT HAS BEEN FOUND THAT THE ADDITIONS HAVE BEEN SU STAINED AND MOST OF THE EXPLANATIONS GIVEN IN RESPECT OF THEIR CLA IM WERE NOT FOUND TO BE BONAFIDE EVEN BY THE HIGHEST FACT FINDIN G AUTHORITY. IN VIEW OF THE DISCUSSIONS MADE ABOVE, I DO NOT SEE ANY MER IT IN THE CLAIM OF THE APPELLANT AND THEREFORE GROUND NO. 1 I S DISMISSED. 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONOURABLE CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED RS.59,43,634/- BY THE LEARNED ACIT CENTRAL CIRCLE 1( 1) PUNE UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT, 1961 WITHOU T APPRECIATING THE FACTS OF THE CASE AND THE LAW IN PROPER PERSPECTIV E. THE APPELLANT PRAYS THAT THE PENALTY MAY PLEASE BE DELETED. WITHOUT PREJUDICE TO ABOVE THE APPELLANT IS PREFERRI NG THE FOLLOWING GROUNDS OF APPEAL. 2) THE APPELLANT HAD RECEIVED AGGREGATE PAYMENT IN CASH AND CHEQUES NOT EXCEEDING RS. 85,22,516/- BEING AGREEMENT VALE OF THE LAND UNDER CONSIDERATION. SIMILARLY, THE APPELLANT D ID NOT RECEIVE ANY FURTHER AMOUNT OUT OF THE SO CALLED BALANCE CONSIDERA TION AFTER THE DATE OF SEARCH TILL DATE. THEREFORE, ADDITION ON ACC OUNT OF SUPPRESSION OF CAPITAL GAIN WAS BASED ONLY ON THE SURMISE THAT CASH 9 RECEIVED WAS NOT THE PART OF THE CONSIDERATION AND WA S OVER AND ABOVE THE AGREED CONSIDERATION. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONOURABLE CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED IN R ESPECT OF SO CALLED SUPPRESSION OF THE CAPITAL GAIN OF RS.36,24,695/- WITH OUT APPRECIATING THE FACT THAT THE APPELLANT HAD RECEIV ED AGGREGATE CASH AND CHEQUE NOT IN EXCESS OF THE AGREEMENT VALUE. THE HONOURABLE CIT (A) AND LEARNED AO FAILED TO APPRECIATE THE FACTS OF THE CASE. THE APPELLANT PRAYS THAT THE PENALTY LEVIED BY AO AND CO NFIRMED BY CIT(A) IN RESPECT OF ALLEGED SUPPRESSION OF CAPITAL GAI N MAY PLEASE BE DELETED. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE HONOURABLE CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ACIT CENTRAL CIRCLE 1(1) PUNE UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT, 1961 IN RESPECT OF UNEXPLAINED E DUCATIONAL EXPENSES OF HIS SON OF RS. 47,04,520/- WITHOUT APPRECIA TING THE FACT THAT THE EXPENDITURE WAS MADE BY HIS SON WHO WAS MAJOR AT THE RELEVANT POINT OF TIME AND THE ADDITION, IF ANY, SHO ULD HAVE BEEN MADE IN HIS HANDS AND NOT IN THE HANDS OF THE APPELLAN T. THE APPELLANT PRAYS THAT THE PENALTY MAY PLEASE BE DELETE D. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE HONOURABLE CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ACIT CENTRAL CIRCLE 1(1) PUNE UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT, 1961 IN RESPECT UNACCOUNTED INVE STMENT IN SHARES OF RS. 1,37,500/- WITHOUT APPRECIATING THE FACT THAT THE SAID SHARES STOOD IN THE NAME OF THE WIFE OF THE APPELLANT. THE APPELLANT PRAYS THAT THE PENALTY MAY PLEASE BE DELETED. 5) THE APPELLANT HEREBY RESERVE THE RIGHT TO ADD, A MEND, DELETE, WITHDRAW, ANY GROUND/S OF APPEAL. 11. THE ASSESSEE HAS ALSO RAISED THE TWO ADDITIONAL GROUN DS WHICH ARE AS UNDER : 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN L AW THE HONBLE CIT(A) ERRED IN CONFIRMING PENALTY LEVIED B Y AO IN RESPECT OF SUPPRESSED CAPITAL GAIN RS.36,24,695/- EVEN THOUGH ADDI TION CONFIRMED ON ACCOUNT OF SUPPRESSED CAPITAL GAIN WAS RS.3 3,07,363/-. THE APPELLANT HEREBY PRAYS THAT THE PENALTY MAY PLEA SE BE RESTRICTED WITH REFERENCE TO SUPPRESSION OF CAPITAL GAIN OF RS.33, 07,363/-. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND I N LAW THE HONBLE CIT(A) ERRED IN CONFIRMING PENALTY LEVIED B Y AO IN RESPECT OF EDUCATIONAL EXPENSES OF RS.47,04,520 WITHOUT CONSIDERI NG THE TELESCOPING EFFECT OF CASH AVAILABLE OF ABOUT RS.23.52 LACS. THE APPELLANT HEREBY PRAYS THAT THE PENALTY MAY PLEASE BE REDUCED CONSIDERING CASH AVAILABLE. 10 12. AFTER HEARING BOTH SIDES AND CONSIDERING THAT ALL MAT ERIAL FACTS ARE AVAILABLE ON RECORD, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE ADMITTED. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES. SO FAR AS THE PENALTY LEVIED ON ADDITION OF RS.36,24,69 5/- ON ACCOUNT OF SUPPRESSED CAPITAL GAIN IS CONCERNED, WE FIN D THE ASSESSEE WITHDREW THE GROUND RAISED BEFORE THE CIT(A). NO SUCH GROUND WAS TAKEN BEFORE THE TRIBUNAL ALSO. THE ASSESSIN G OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS U/S.158BFA(2). WE FIN D OUT OF ADDITION OF RS.63,79,104/- MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF SUPPRESSED CAPITAL GAIN ON SALE OF PLOT OF LAN D SITUATED AT 208, YERAWADA, PUNE, THE CIT(A) HAD GRANTED R ELIEF OF RS.30,71,741/- AND SUSTAINED ADDITION OF RS.33,07,363/-. WE FIND THE ASSESSING OFFICER LEVIED THE PENALTY ON ACCOUNT OF SUPPRESSED CAPITAL GAIN OF RS.36,24,695/- FOR THE PURPOSE O F LEVY OF PENALTY. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE ORDER GIVING APPEAL EFFECT AFTER THE ORDER OF THE CIT(A) THE ASSESSING OFFICER HIMSELF HAS MADE ADDITION OF RS.33,07,363/-. THEREFORE, PENALTY IF ANY U/S.158BFA (2) HAS T O BE RESTRICTED TO THE ADDITION FINALLY SUSTAINED AT RS.33,07,3 63/- AND NOT ON RS.36,24,695/-. IT IS A MATTER OF FACT THAT IN VIEW OF ENHANCED CLAIM OF SECTION 54F THE ADDITION CONFIRMED COMES TO RS.33,07,363/- ONLY AS POINTED OUT BY THE ASSESSING OFFICE R IN THE PENALTY ORDER AT PAGE 4 PARA 8(I). SINCE THE ADDITION SUSTAINED IS ONLY TO THE EXTENT OF RS.33,07,363/-, THEREFOR E, WE FIND MERIT IN THE ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE THAT PENALTY U/S.158BFA(2) SHOULD BE LEVIED ONLY ON RS.33,07,363/ - AND NOT ON RS.36,24,695/-. THE ADDITIONAL GROUND RAISED B Y THE 11 ASSESSEE IS ACCORDINGLY ALLOWED AND GROUND OF APPEAL NO.2 IS DISMISSED. 14. SO FAR AS THE PENALTY LEVIED ON ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON EDUCATION EXPENSES OF SON OF T HE ASSESSEE AMOUNTING TO RS.47,04,520/- IS CONCERNED, WE FIND THE TRIBUNAL HAS ALREADY GIVEN A CLEAR CUT FINDING THAT THE ASS ESSEE COULD NOT PROVE THE SOURCE OF THIS EXPENDITURE BEING INCU RRED TOWARDS EDUCATION EXPENSES OF HIS SON. IT IS THE SUBMIS SION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF TELESCOPING EFFECT IS GIVEN TO THE VARIOUS ADDITIONS SUSTAINED BY THE CIT(A) THE ASSE SSEE IS STILL LEFT WITH AN AMOUNT OF RS.23,52,702/- WHICH IS AVAILABLE TO HIM FOR MEETING THE EXPENDITURE OUT OF THE ADDITION OF RS.47,04,520/- AND PENALTY CAN BE LEVIED ONLY ON THE BALA NCE AMOUNT OF RS.23,51,818/- (I.E. 47-04,520 23,52,702). WE FIND SOME FORCE IN THE ABOVE ARGUMENT OF THE BY THE LD. CO UNSEL FOR THE ASSESSEE. WE FIND FROM THE VARIOUS DETAILS FILED IN THE PAPER BOOK THAT THE SON OF THE ASSESSEE WENT TO USA DURING THE PERIOD 1997 TO 2000. THE ADDITION IS BASED ON THE DOCUMENTS F OUND DURING THE SEARCH ACTION. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT DURING 1993 TO 1998 CASH RECEIP TS OF RS.36,24,695/- WAS TAXED AS UNDISCLOSED INCOME IN ADDITION TO RS.14,50,000/- CASH RECEIPT AS PART OF SALE CONSIDERATION O F LAND. THEREFORE, ACCORDING TO THE LD. COUNSEL FOR THE ASSESSE E, THE CASH AVAILABLE WITH THE ASSESSEE WAS RS.36,24,695/- MINUS THE TELESCOPING BENEFIT GRANTED BY CIT(A) + RS.14,50,000/-. THUS ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE CASH AVAILABLE WITH THE ASSESSEE WAS AS FOLLOWS : 12 CASH RECEIPT RS.36,24,295 LESS : ADJUSTED AGAINST BUNGALOW ALLOTTED BY MR. KARIA RS.10,40,000 -------------------- TOTAL RS.25,84,294 -------------------- ADD : CASH RECEIPT ACCEPTED AS A PART OF SALE CONSIDERATION RS.14,50,000 ------------------- TOTAL RS.40,34,295 LESS : TELESCOPIC BENEFIT GRANTED BY CIT(A) RS.16,81,591 -------------------- RS.23,52,704 -------------------- 15. SINCE THE ADDITION ON ACCOUNT OF ON-MONEY HAS BEEN CONFIRMED, THEREFORE, THE SAID AMOUNT IS AVAILABLE TO THE ASS ESSEE TO MEET THE UNACCOUNTED EXPENDITURE APART FROM MEETING THE AMOUNT PAID TOWARDS BUNGALOW. FURTHER, CASH RECEIPT TO THE TUNE OF RS.14,50,000/- HAS BEEN ACCEPTED BY THE ASSESSEE. SIN CE, TELESCOPING EFFECT HAS BEEN GIVEN ONLY FOR RS.16,81,591/-, THEREFORE, WE FIND SOME FORCE IN THE ARGUMENT OF THE LD. CO UNSEL FOR THE ASSESSEE THAT FOR LEVYING PENALTY U/S.158BFA(2) PE NALTY CAN BE LEVIED ONLY ON THE BALANCE AMOUNT, I.E. RS.23,51,818/- AS AGAINST RS.47,04,520/-. IT IS THE SETTLED PROPOSITION OF LAW THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEP ARATE AND DISTINCT. AN ASSESSEE CAN ADVANCE FRESH ARGUMENT D URING PENALTY PROCEEDINGS FOR NON-LEVY OF PENALTY OR PENALTY OF A LESSER AMOUNT. HOWEVER, THE ABOVE DETAILS FURNISHED BY THE LD. C OUNSEL FOR THE ASSESSEE REQUIRES VERIFICATION AT THE LEVEL OF THE A O. WE THEREFORE REMIT THIS ISSUE TO VERIFY AS TO WHETHER THE ASSESSEE HAS TAKEN ANY BENEFIT OUT OF THE ON-MONEY RECEIVED AS WELL AS THE CASH RECEIPT OF RS.14.50 LAKHS AND ADJUSTMENT AT RS.10.40 LAKHS. THE AO SHALL COMPUTE THE PENALTY ON THE BALANCE AMOUNT. 13 NEEDLESS TO SAY, THE AO SHALL GIVE DUE OPPORTUNITY OF BEING HEARD WHILE COMPUTING THE PENALTY ON THIS ISSUE. WE HOLD AND DIRE CT ACCORDINGLY. GROUND OF APPEAL NO.3 AND ADDITIONAL GROUND N O.2 ARE ACCORDINGLY PARTLY ALLOWED FOR STATISTICAL PURPOSES. 16. SO FAR AS THE PENALTY LEVIED U/S.158BFA(2) ON ACCOUNT OF ADDITION OF RS.1,37,500/- BEING UNEXPLAINED INVESTMENTS ARE CONCERNED, WE FIND IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE WAS NO INVESTMENT IN SHARES DURIN G THE BLOCK PERIOD AND ALL THOSE SHARES WERE BONUS SHARES OUT OF TH E HOLDING OF SHARES PRIOR TO THE BLOCK PERIOD. HOWEVER, THIS FACT WA S ALSO STATED BEFORE THE CIT(A). HOWEVER, THE ASSESSES HAD EXPRESSE D HIS INABILITY TO RECONCILE ORIGINAL AND BONUS SHARES AS THE SAME WERE OLD FOR MORE THAN 20 YEARS AT THE TIME OF ASSESSMENT. THE LD.CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT NO EVI DENCE WAS PUT FORTH TO INDICATE THAT THE SHARES ACQUIRED DURIN G THE BLOCK PERIOD WERE ACTUALLY THE CONVERSION OF DEBENTURES HELD IN THE PRE BLOCK PERIOD OR ACCRUAL IN THE FORM OF BONUS SHAR ES. WE FIND ALTHOUGH A SPECIFIC GROUND WAS TAKEN BEFORE THE TRIBUN AL HOWEVER THE SAME REMAINED UNADJUDICATED. THE ASSESSEE HAS NEITHER MOVED ANY MISCELLANEOUS APPLICATION FOR ADJUDICATION OF THE ABOVE GROUND BY THE TRIBUNAL NOR CHALLENGED THE SAM E BEFORE THE HIGHER FORUM. IT IS THE SUBMISSION OF THE LD. COUNSEL FO R THE ASSESSEE THAT GIVEN AN OPPORTUNITY HE CAN PROVE THAT THE SHARES ARE NOT PURCHASED DURING THE IMPUGNED BLOCK PERIOD AND ARE ON ACCOUNT OF BONUS SHARES ISSUED OUT OF THE DEBENTURES O R SHARES HELD PRIOR TO THE BLOCK PERIOD. HOWEVER, NOTHING WAS PRO DUCED BEFORE US TO SUBSTANTIATE THAT THE INVESTMENTS ARE OUT OF BONUS SHARES ON SHARES OR DEBENTURES HELD PRIOR TO THE BLOCK PERIOD. 14 THE ASSESSEE HAS ALREADY EXPRESSED HIS INABILITY BEFORE CI T(A) TO SUBSTANTIATE THE SAME. NO PURPOSE WILL BE SERVED BY RE MITTING THIS ISSUE TO THE FILE OF THE AO AT THIS JUNCTURE. THE PEN ALTY LEVIED BY THE AO ON THIS AMOUNT OF RS.1,37,500/- IS ACCORDINGLY U PHELD. THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS ACCO RDINGLY DISMISSED. 17. GROUND OF APPEAL NO. 5 BEING GENERAL IN NATURE IS DISMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30-06-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 30 TH JUNE, 2015 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4. CIT-I, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE