ACIT Cent Cle IV (1), CHENNAI V. Smt R.Jeyaiakshmi, CHENNAI

ITA 2360/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4472 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-09-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Unexplained investment; Income from undisclosed sources; Additional evidence
• Section: 143(3); 153A; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS. ASSESS - MENT YEAR APPELLANT RESPONDENT 2354 TO 2358/MDS/2012 2001-02 TO 2005-06 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-IV(1), 46, M.G.ROAD, CHENNAI-600 034. MR. D.RAJAPPA , 45, STATION ROAD VILLIVAKKAM, CHENNAI-600 049. PAN:AAIPR9708C 2359 TO 2363/MDS/2012 2000-01, 2002-03 TO 2006-07 THE ACIT., CENTRAL CIRCLE-IV (1), CHENNAI-600 034. MRS. R.JEYALAKSHMI 45, STATION ROAD VILLIVAKKAM, CHENNAI-600 049. PAN:AAJPJ8509J APPELLANT BY : MR. GURU BASHYAM, JCIT RESPONDENT BY : MR. D. ANAND, ADVOCATE DATE OF HEARING : 5 TH SEPTEMBER, 2013 DATE OF PRONOUNCEMENT : 23 RD SEPTEMBER, 2013 O R D E R PER BENCH: ALL THESE APPEALS ARE FILED BY THE REVENUE AGAINST COMMON ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)I, CHENNAI DATED 28.09.2012 IN THE CASES OF SHRI D.RAJAPPA AND SMT. R.JEYALAKSHMI, HUSBAND AND WIFE FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06 AND 2000-01 , 2002-03 TO 2006-07 RESPECTIVELY. THE ONLY GRIEVANC E IN THESE APPEALS OF THE REVENUE IS THAT THE COMMISSION ER OF ITA NOS.2354 TO 2363/MDS//2012 2 INCOME TAX (APPEALS) ERRED IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. SINCE THE ISSUE INVOLVED IN THESE APPEALS IS COMMON, APPEALS ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. 2. THERE IS A DELAY OF SEVEN DAYS IN FILING OF THES E APPEALS. THE DEPARTMENT FILED AFFIDAVITS EXPLAINING THE REAS ONS AS TO WHY THE APPEALS COULD NOT BE FILED IN TIME. HAVING GONE THROUGH THE AFFIDAVITS, WE FIND THAT THERE IS A REA SONABLE CAUSE IN FILING OF THE APPEALS WITH THE DELAY OF 7 DAYS. IN THE INTEREST OF JUSTICE, THE DELAY IS CONDONED AND THE APPEALS ARE ADMITTED. 3. BRIEF FACTS ARE THAT THE ASSESSEE SHRI D.RAJAPPA IS AN INDIVIDUAL ENGAGED IN VARIOUS BUSINESS ACTIVITIES. BOTH THE ASSESSEE AND HIS WIFE ARE DIRECTORS IN M/S. D.R. B ENEFIT FUND AND D.R.J. HOSPITALS. THE ENTIRE BUSINESS ACTIVITI ES ARE CONTROLLED AND ADMINISTERED BY SHRI D.RAJAPPA, HUSB AND OF SMT. R.JEYALAKSHMI. THE ASSESSEE MR. D.RAJAPPA ALSO DERIVES INCOME FROM D.R. SUPERMARKET, LETTING O UT OF RESIDENTIAL AND COMMERCIAL PROPERTIES. SEARCH WAS ITA NOS.2354 TO 2363/MDS//2012 3 CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESS EES ON 23.11.2005. IN PURSUANCE OF NOTICE UNDER SECTION 15 3A, ASSESSEES FILED RETURNS ON 14.8.2007 AND THESE RETU RNS WERE TREATED AS NON-EST BY THE ASSESSING OFFICER BY LETTER DATED 7.9.2007. THE ASSESSEES THEREAFTER FILED REVISED R ETURNS ON 15.11.2007. ASSESSMENTS UNDER SECTION 153A READ WIT H SECTION 143(3) OF THE ACT WERE COMPLETED BY THE AS SESSING OFFICER AND WHILE COMPLETING THESE ASSESSMENTS, ADD ITIONS WERE MADE TOWARDS REPAYMENT OF LOANS AS THE ASSESSE ES COULD NOT EXPLAIN THE SOURCE FOR REPAYMENT OF LOANS OBTAINED FROM M/S. D.R. BENEFIT FUND, D.R.J. HOSPITALS AND D .R. SUPERMARKET, WHICH ARE ALL GROUP CONCERNS OF THE AS SESSEES. THE ASSESSING OFFICER MADE SUBSTANTIAL ADDITIONS IN RESPECT OF REPAYMENT OF LOAN WHILE COMPLETING THE ASSESSMEN TS UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CALL ING FOR REMAND REPORT AND THE EXPLANATIONS SUBMITTED BY THE ASSESSEES IN THE COURSE OF REMAND REPORT DELETED TH E ADDITIONS SUBSTANTIALLY. IN RESPECT OF THE ADDITIO NS SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS), THE AS SESSING ITA NOS.2354 TO 2363/MDS//2012 4 OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 4. IN THE COURSE OF PENALTY PROCEEDINGS BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBMITTED AS UNDER:- THE ENTIRE GROUP CONCERNS OF SHRI D.RAJAPPA NAMELY, DRBF, DRJ HOSPITALS ; D.R . CHIT FUNDS AND HIS OTHER PROPRIETARY CONCERNS ARE CENTRA LLY CONTROLLED AND MANAGED BY SHRI D.RAJAPPA . THE ASSESSEE SUBMITS THAT THE FUNDS AT THE DISPOSAL OF M/S . D . R . BENEFIT FUND OF WHICH HE IS THE CHAIRMAN AND MANAGING DIRECTOR WERE USED BY HIM FOR SHORT SPELLS OF TIME TO MEET CONTINGENCY REQUIREMENTS . THE D I SALLOWANCE TO THE EXTENT OF RS . 19,66 , 4001- ON ACCOUNT OF REPAYMENT OF LOAN WAS MADE SINCE FUNDS AVAILABLE TO THE ASSESSEE VIDE LO AN FROM BANK OF BARODA WAS AVAILABLE TO THE ASSESSEE ONLY AS ON 31 . 12 . 2004 WHERE US THE ASSESSEE HAD SQUARED OF THE LOAN TRANSACTION A DAY EARLIER ITSEL F VIZ ON 30 . 12.2004, IT WAS IN THE AFORESAID CIRCUMSTANCES THE DISALLOWANCE I S MADE. THE LEARNED ASSESSING OFFICER FAILED TO SEE THAT THE ENTIRE GROUP CONCERN S OF SHRI D.RAJAPPA NAMELY , DRBF, DRJ HOSPITALS, D.R . CHIT FUNDS AND HIS OTHER PROPRIETARY CONCERNS ARE CENTRALLY CONTROLLED AND MANAGED BY SHRI D . RAJAPPA . THE ASSESSEE SUBMITS THAT THE FUNDS AT THE D I SPOSAL OF M/S . D . R . BENEFIT FUND OF WHICH HE IS THE CHA I RMAN AND MANAGING DIRECTOR WERE USED BY HIM FOR SHORT SPELLS OF TIME TO MEET CONT I NGENCY REQUIREMENTS. UNDISPUTEDLY SUBSTANTIAL SUMS OF MONEY HAVE BEEN BORROWED BY THE ASSESSEE FROM DRBF AND LARGE SUMS OF AMOUNTS HAVE BEEN BROUGHT TO TAX UNDER THE HEAD, 'REPAYMENT OF LOAN/INTEREST' AND 'UNEXPLAINED INVESTMENTS/EXPENDITURE ' ON ONE HAND BUT ON THE ITA NOS.2354 TO 2363/MDS//2012 5 OTHER HAND NO APPLICATION OF SUCH FUNDS HAVE BEEN PINPOINTED BY THE DEPARTMENT . DUE TO PASSAGE OF TIME THE ASSESSEE WAS NOT IN A POSITION TO PREPARE THE C ASH FLOW STATEMENT NOR DID THE DEPARTMENT WORK OUT ANY CASH FLOW WITH THE DATA AVAILABLE WITH THEM TO SUBSTANTIATE THAT THE EXPENSE IN QUESTION ARE FROM UNACCOUNTED INCOME FROM SOURCES WHICH ARE DIFFERENT FROM WHAT HAS ALREADY BEEN TAXED. GIVEN THIS SITUAT ION THE ADDITIONS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE DEPARTMENT DOES NOT HAVE LOGICAL BASE NEITHER DOES I POINT OUT TO ANY CONCRETE ACT O F CONCEALMENT SO AS TO LEVY PENALTY UNDER SECTION 271 (1 )(C). THE ASSESSING OFFICER HAS ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE JUSTIFY AS TO WHY PENA LTY IS NOT LEVIABLE IN THE INSTANT CASE OF ASSESSEE FO R ACT OF CONCEALMENT . BONAFIDE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS CLAIM DOES NOT AMOUNT TO CONCEALMENT AND THAT LEFT WITH NO OTHER ALTERNATIVE ASSESSEE VOLUNTARILY AGREED FOR THE ADDITION AND D ID NOT PREFER AN APPEAL AND THEREFORE PENALTY IS NOT EXIGIBLE. THE ASSESSEE RELIES ON THE FOLLOWING CASE LAWS. 249 ITR 125 (KAR)- NATIONAL TEXTILES VS CIT 290 ITR 168 (KAR) CIT VS GUJAMGADI 6 DTR 295 (ALL) CIT VS RAM PRAKASH 5. HOWEVER, THE ASSESSING OFFICER TREATED THE EXPLA NATION OF THE ASSESSEE AS NOT SATISFACTORY, SINCE THE ASSE SSEE DID NOT FURNISH ANY CASH FLOW STATEMENT OR ADDITIONAL EVIDENCE TO PROVE THAT THE FRESH LOANS TAKEN FROM M/S. D.R. BEN EFIT FUND BY THE ASSESSEE WERE THE SOURCES FOR REPAYMENT OF E XISTING LOANS. THE ASSESSING OFFICER LEVIED PENALTY UNDER S ECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ADDITIONS SU STAINED BY ITA NOS.2354 TO 2363/MDS//2012 6 THE COMMISSIONER OF INCOME TAX (APPEALS) IN BOTH TH E ASSESSEES CASES I.E. D.RAJAPPA AND HIS WIFE SMT. R.JEYALAKSHMI. THE COMMISSIONER OF INCOME TAX (APP EALS) DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ADDITIONS MADE TOWARDS REPAYMENT OF LOAN HOLDING THAT AT THE TIME OF SEARCH UNDISCLOSED INCO ME RELATING TO EACH YEAR COULD NOT BE DETERMINED AND THERE IS N O STRONG CASE FOR LEVY OF PENALTY. NOW, THE REVENUE IS IN A PPEAL BEFORE US IN BOTH THESE ASSESSEES CASES IN RESPECT OF DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ADDITIONS SUSTAINED BY THE COMMISSIONER OF INCOME T AX (APPEALS) TOWARDS REPAYMENT OF LOAN. 6. THE DEPARTMENTAL REPRESENTATIVE, RELYING ON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS) IN QUANTUM PROCEEDINGS, SUBMITS THAT THE ASSESSEE DID NOT PROVE THE SOURCE FOR REPAYMENT OF LOAN AND IN THE ABSENCE OF ANY SOURCE BEING PROVED FOR REPAY MENT OF LOANS, THE COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED ITA NOS.2354 TO 2363/MDS//2012 7 IN SUSTAINING THE ADDITION AND THE ASSESSING OFFICE R IS JUSTIFIED IN LEVYING THE PENALTY, AS THERE IS CONCEALMENT OF INCOME. 7. THE COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COUNSEL FURTHER SUBMITS THAT THE DE PARTMENT WHILE COMPLETING THE ASSESSMENTS IN THE GROUP CASES MADE ADDITIONS TO THE EXTENT OF ` 17,00,00,000/- AND ON APPEAL THE ADDITIONS WERE SCALED DOWN TO ` 4,00,00,000/-. THE COUNSEL SUBMITS THAT THE ASSESSEES ARE NOT MAINTAINING ANY BOOKS OF ACCOUNTS. THE ADDITIONS WERE MADE SINCE THE ASSESSE ES COULD NOT FILE PROPER CASH FLOW STATEMENT FOR REPAY MENT OF LOANS. THE COUNSEL SUBMITS THAT IT IS AN UNDISPUTE D FACT THAT SUBSTANTIAL SUMS OF MONEY WERE BORROWED BY THE ASSE SSEE FROM M/S. D.R. BENEFIT FUND AND A LARGE SUMS OF MON EY HAVE BEEN BROUGHT TO TAX UNDER REPAYMENT OF LOAN / INTER EST ON ONE HAND, BUT ON THE OTHER HAND, NO APPLICATION OF SUCH FUNDS HAVE BEEN PINPOINTED BY THE DEPARTMENT. THE COUNSE L SUBMITS THAT DUE TO PASSAGE OF TIME, THE ASSESSEE W AS NOT IN A POSITION TO PREPARE CASH FLOW STATEMENT NOR DID T HE ITA NOS.2354 TO 2363/MDS//2012 8 DEPARTMENT WORK OUT ANY CASH FLOW WITH THE DATA AVA ILABLE WITH THEM TO SUBSTANTIATE THAT THE EXPENSES IN QUES TION ARE FROM UNACCOUNTED INCOME FROM SOURCE WHICH ARE DIFFE RENT FROM WHAT HAS ALREADY BEEN TAXED. THE COUNSEL FURT HER SUBMITS THAT ALL THE ENTITIES OF THE ASSESSEES GROU P ARE ASSESSED SEPARATELY, ADDITIONS WERE MADE AND NO PE NALTIES WERE LEVIED IN D.R. HOSPITAL. 8. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES. THE COMMISSIONER OF INCOME TAX (APPEA LS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEES DELETE D PENALTY AS THERE IS NO STRONG CASE FOR LEVY OF PENALTY OBSE RVING AS UNDER:- REPAYMENT OF LOAN (A.Y 2001-02 TO A.Y 2006-07) : 5. DURING THE COURSE OF ASSESSMENT, ` 13,95,000/- FOR A.Y 2001-02, ` 1,50,000/-FOR A.Y 2002-03, ` 14,74,500/-FOR A.Y 2003-04, ` 15,25,000/- FOR A.Y 2004-05 , ` 73,05,000/- FOR A.Y 2005-06 AND ` 34,81,949/- FOR A.Y 2006-07 WERE ADDED TO INCOMES RETURNED AS SOURCES FOR REPAYMENT OF LOAN BY THE APPELLANT WERE NOT EXPLAINED SATISFACTORILY. DURING REMAND, IT WAS FOUND THAT TH E RELEVANT SEIZED DOCUMENT BASED ON WHICH ADDITIONS WERE MADE HAD RELEVANCE ONLY FROM THE A.Y 2004-05 ONWARDS. HOWEVER, IN THE ABSENCE OF ANY SEIZED MATERIAL FOR THE A.YS 2001-02 TO 2003-04,AS WELL AS ITA NOS.2354 TO 2363/MDS//2012 9 THE FOLLOWING YEA R S, THE APPELLANT WAS ASKED TO SUBMIT DETAILS OF AMOUNTS REPAID AND THE SOU R CE THEREOF. IN RESPONSE, THE APPELLANT HAD SUBMITTED THAT ` 7,70 , 400/- FOR A.Y 2001-02, ` 20,800/- FOR A.Y 2002- 03, ` 2,00,000/- FOR THE A.Y 2003-04, ` 5,90,600/- FOR A.Y 2004-05, ` 19,66 , 400/- FOR A.Y 2005-06 AND ` 11,77,649/- FOR A.Y 2006-07 WERE THE AMOUNTS REPAID . THE CIT(A), TO THIS EXTENT OF ADMISSION, CONFIRMED THE ADDITION MADE FOR EACH YEAR, TOWARDS REPAYMENT OF LOAN AS HAVING BEEN OUT OF UNDISCLOSED INCOME. DURING PENALTY PROCEEDINGS, IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE REPAYMENT MADE WAS OUT OF F RESH BORROWALS FROM M/S.DRBF, AND THE OUTSTANDINGS TO M/S. DRBF REFLECTED IN THE STATEMEN T OF AFFAIRS FOR EACH YEAR SUBSTANTIATED THE APPELLAN T'S STAND. IT WAS ALSO SUBMITTED THAT THE AMOUNTS SUSTAINED BY THE C!T ( A) WAS NOT APPEALED AGAINST TO AVOID FURTHER LITIGATION. THIS EXPLANATION WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS HE WAS OF THE OPINION THAT WITHOUT A CASH FLOW OR ADDITIONAL PROO F, THE EXPLANATION OFFERED IS NOT ACCEPTABLE AND HE PROCEEDED TO LEVY PENALTY. 6. THE ADDITIONS MADE WERE ` 13,95,000/- FOR A.Y 2001-02, ` 1,50,000/-FOR A.Y 2002-03, ` 14,74,500/- FOR A.Y 2003-04, ` 15,25,000/ - FOR A.Y 2004-05 , ` 73,05,000/- FOR A.Y. 2005-06 AND ` 34,81,949/- FOR A.Y 2006- 07. THE ADDITIONS SUSTAINED WERE ` 7,70 , 400/- FOR A.Y 2001-02, ` 20,800/- FOR A.Y 2 0 02-03, ` 2,00,000 /- FOR THE A.Y 2003-04, ` 5,90,600/- FOR A.Y 2004-05, ` 19,66,400/- FOR A.Y 2005-06 AND ` 11,77,649/- FOR A.Y 2006-07, FOR WHICH PENALTIES WERE LEVIED AT ~ 2,70 , 410/- FOR A.Y 2001-02, ` 14,015/- FOR A.Y 2002- 0 3, ` 63,000/- FOR A.Y 2003-04, ` 8,18,249/- FOR A.Y 2004-05, ` 7,97, 9 36/- FOR A.Y 2005-06 , ` 2 , 41,869/- FOR A.Y 2006-07. 7. THE SUBMISSIONS MADE BY THE LEARNED AR REPRODUCED SUPRA CAN BE SUMMARISED AS UNDER: 1. DURING THE COURSE OF SEARCH, INCOME UNDISCLOSED COULD NOT BE ARRIVED AT FOR EACH YEAR. ITA NOS.2354 TO 2363/MDS//2012 10 2. RETURNS WERE FILED BY THE APPEL L ANT AFTER STUDY OF SEIZED MATERIAL . 3. THESE FIRST SET OF RETURNS FILED BY THE APPELLANT WERE TREATED AS NON-EST BY THE ASSESSING OFFICER WITHOUT ASSIGNING ANY REASON. 4. THEREAFTER, AT THE INSISTENCE OF THE ASSESSING OFFICER, A SECOND SET OF RETURNS WERE FILED DECLARING INCOMES AS GIVEN SUPRA. 5. ADDITIONS WERE MADE TO THESE INCOMES AND DURING REMAND PROCEEDINGS IT WAS FOUND THAT THERE WAS NO INFORMATION OR BASIS FOR ADDITIONS TO BE MADE. 6. IN RESPONSE TO THE QUERY FROM THE ASSESSING OFFICER DURING REMAND, THE AMOUNT REPAID EACH YEAR WAS FURNISHED, BASED ON STATEMENT OF AFFAIRS FILED. 7. THE MONEY SPECIFIED BY THE APPELLANT AS HAVING BEEN REPAID DURING THE COURSE OF REMAND, WAS SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 8. FURTHER APPEAL WAS NOT PREFERRED AGAINST THIS TO BRING TO AN END TO LITIGATION. 9. DURING THE COURSE OF PENALTY PROCEEDINGS, IT WAS EXPLAINED THAT THE SOURCE FOR THESE REPAYMENTS WERE OUT OF THE LOANS TAKEN FROM M/S.DRBF. 10. THIS EXPLANATION WAS NOT ACCEPTED ON THE GROUND THAT WITHOUT ANY CASH FLOW OR ANY OTHER PROOF IT IS NOT POSSIBLE TO ACCEPT THIS EXPLANATION. HOWEVER, ADDITIONS HAVE BEEN MADE ONLY BASED ON THE STATEMENT OF AFFAIRS FILED ALONG WITH THE RETURN AND EVEN THE AMOUNTS SUSTAINED WERE AS FURNISHED BY THE APPELLANT. ITA NOS.2354 TO 2363/MDS//2012 11 11. IT WAS NOT A CASE WHEREIN THE SEIZED MATERIAL EVIDENCE REVEALS REPAYMENT WITHOUT THERE BEING ANY SOURCE. EVEN THE SEIZED MATERIAL INDICATED THAT LOANS HAVE BEEN REGULARLY TAKEN AND REPAID. 12. IN ACTUALITY, AS AGAINST PENDING LOANS EACH YEAR, REPAYMENTS WERE ONLY AS BOOK ENTRIES, ADJUSTING AGAINST FURTHER LOANS TAKEN. 13. THE STATEMENT OF AFFAIRS SHOW INCREASING BALANCES WHICH SUBSTANTIATE THIS EXPLANATION, AND THIS HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. 14. IT IS PRECISELY BECAUSE THAT A CASH FLOW COULD NOT BE MADE, BECAUSE OF PAUCITY AND LAPSE OF TIME THAT IT COULD NOT BE PREPARED. EVEN THE STATEMENT OF AFFAIRS WERE ON A ROUGH BASIS, WHICH RESULTED IN DIFFERENCES BEING FOUND BY THE ASSESSING OFFICER FOR WHICH THE APPELLANT COULD NOT OFFER EXPLANATION AND WHICH WERE ADDED AND SUSTAINED BY THE CIT(A). 15. ON ONE HAND, BASED ON THE STATEMENT OF AFFAIRS FILED ADDITIONS ARE MADE AND ON THE OTHER HAND, THE EXPLANATION OFFERED BASED ON THE SAME STATEMENT OF AFFAIRS IS BEING REJECTED, WHICH IS NOT CORRECT . 16. ALL THIS APART, LEVY OF PENALTY REQUIRES A STRI CTER TEST TO BE APPLIED WHETHER THERE HAS BEEN CONCEALMENT, WHETHER NO EXPLANATION IS OFFERED, OR AN EXPLANATION IS OFFERED WHICH IS NOT SATISFACTORY. HERE THE APPELLANT HAD OFFERED AN AMOUNT AS HAVING BEEN REPAID. IT WAS NOT DETECTED BY THE DEPARTMENT. THE SOURCE WAS EXPLAINED AS BEING OUT OF LOAN TAKEN. THIS EXPLANATION HAS NOT BEEN CONTROVERTED. IT IS NOT A CASE WHERE THIS EXPLANATION IS NOT CREDIBLE. THE ADDITION WHICH HAS BEEN UPHELD WAS NOT APPEALED AGAINST ONLY FOR THE SAKE OF BRINGING TO AN END LITIGATION. ITA NOS.2354 TO 2363/MDS//2012 12 UNDER THE CIRCUMSTANCES, HE SUBMITTED THAT LEVY OF PENALTY IS NOT JUSTIFIED. 8. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES AS WELL AS THE ARGUMENTS ADVANCED. AT THE TIME OF SEARCH, UNDISCLOSED INCOME RELATING TO EACH YEAR COULD NOT BE DETERMINED. THE RETURNS DECLARING INCOMES WERE TREATED AS NON-EST AND ANOTHER SET OF RETURNS WERE FILED DECLARING YEAR-WISE INCOMES WHIC H WERE BASICALLY ACCEPTED. MAJOR PART OF THE ADDITION S MADE WERE NOT SUSTAINED AND THE ADDITIONS SUSTAINED WERE BASED ON DATA GIVEN BY THE APPELLANT. THE EXPLANATION OFFERED FOR THE SOURCE OF THIS REPAYMEN T OF LOAN HAS NOT ALSO BEEN CONTROVERTED. UNDER THE CIRCUMSTANCES, EVEN THOUGH THE AMOUNT OF LOAN REPAID HAS BEEN SUSTAINED, THERE IS NO STRONG CASE FOR LEVY OF PENALTY AND THE PENALTY LEVIED ON THIS ACCO UNT MENTIONED SUPRA IS HEREBY DIRECTED TO BE DELETED FO R ALL THE YEARS IN QUESTION VIZ. A.Y. 2001-02 TO 2006 - 07. 9. ON READING OF THE ABOVE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE SUBMIS SIONS MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ) BY THE ASSESSEES, IT REVEALS THAT IN THE COURSE OF SE ARCH INCOME UNDISCLOSED COULD NOT BE POINTED OUT FOR EACH YEAR. THE ADDITIONS WERE MADE BASED ON THE STATEMENTS FILED B Y THE ASSESSEES AND THERE WAS NO INFORMATION OR BASIS FOR ADDITIONS TO BE MADE OTHER THAN THE STATEMENTS. THE ASSESSEE ALSO EXPLAINED THAT SOURCES FOR PAYMENTS WERE LOANS TAK EN FROM M/S. D.R. BENEFIT FUND. BUT THIS EXPLANATION WAS NO T ACCEPTED ON THE GROUND THAT THE ASSESSEE DID NOT FILE ANY CA SH FLOW STATEMENT BUT AT THE SAME TIME, ADDITIONS HAVE BEEN MADE ITA NOS.2354 TO 2363/MDS//2012 13 ONLY BASED ON THE STATEMENTS FILED ALONG WITH THE R ETURNS AND EVEN THE AMOUNTS SUSTAINED WERE AS FURNISHED BY THE ASSESSEE AND IT WAS NOT ON THE BASIS OF ANY MATERIA L DETECTED IN THE COURSE OF SEARCH. THE OBSERVATION OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT RETUR NS DECLARING INCOMES WERE TREATED AS NON-EST AT THE FIRST PLACE AND ANOTHER SET OF RETURNS FILED DECLARING INCOME Y EAR-WISE WERE ACCEPTED. MAJOR PART OF THE ADDITIONS MADE WER E NOT SUSTAINED AND THE ADDITIONS SUSTAINED WERE BASED ON THE DATA GIVEN BY ASSESSEE HIMSELF. THE EXPLANATION OFFERED FOR SOURCE OF REPAYMENT OF LOAN HAS NOT BEEN CONTROVER TED BY THE DEPARTMENT. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEES WERE RECEIVING SUBSTANTIAL AMOUNTS AS LOANS FROM T HEIR GROUP CONCERNS AND THEY WERE REPAYING THE SAME FROM TIME TO TIME. UNDER THE CIRCUMSTANCES, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VIEW THAT THOUGH THE AMOUNT OF LOAN REPAID HAS BEEN SUSTAINED, THERE IS NO STRONG CASE FOR LEVY OF PENALTY, AS THERE IS NO CONCEALMENT OF INCOME OR FU RNISHING OF INACCURATE PARTICULARS OF INCOME. THE DEPARTMENT COULD NOT REBUT ANY OF THESE FINDINGS OF THE COMMISSIONER OF INCOME ITA NOS.2354 TO 2363/MDS//2012 14 TAX (APPEALS) OR SUBMISSIONS MADE BY THE ASSESSEE A S CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEA LS). IN THE CIRCUMSTANCES, WE SUSTAIN THE IMPUGNED ORDERS O F THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN BOTH THE ASSESSEES CASES, AS THE FACTS AND CIRCUMSTANCES AR E IDENTICAL. 10. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 23 RD DAY OF SEPTEMBER, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (CHALLA NA GENDRA PRASAD) ACCOUNTANT MEMBER J UDICIAL MEMBER CHENNAI, DATED THE 23 RD SEPTEMBER, 2013. SOMU COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.