Sh. Ashwani Jain, New Delhi V. ACIT, New Delhi

ITA 2422/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97533 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: SSH RAKESH GUPT A; TARUN KUMAR S
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Principle of natural justice; Valuation report; Onus to prove; Retraction
• Section: 69C; 143(3); 133A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO . 2422 /DEL/20 13 ASSESSMENT YEAR: 2007 - 08 ASHWANI JAIN, A - 92, VS. ASSTT. COMMISSIONER OF GUJRAWALAN TOWN, PART - 1, INCOME TAX, CIRCLE - 20(1), NEW DELHI NEW DELHI (PAN: AAHPJ3505G ) (APPELLANT) (RESPONDENT) APPELLANT BY : S/SH. RAKESH GUPTA & TARUN KUMAR, ADVOCATES RESPONDENT BY : SH. K.K. JAISWAL, DR DATE OF HEARING: 08.09.2015 DATE OF PRONOUNCEMENT: 30.09.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF CIT(A) - XXII, NEW DELHI, DATED 31.12.2012 PASSED FOR THE ASSESSMENT YEAR 2007 - 08. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: I. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY OF RS.6,23,046/ - AND THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE IMPUGNED PENALTY ORDER BEING ILLEGAL AND VOID AB - INITIO. II. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN NOT QUASHING THE PENALTY ORDER FRAMED BY LD. AO IS BEYOND JURISDICTION AND WITHOU T CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE IMPUGNED PENALTY ORDER BEING ILLEGAL AND VOID AB - INITIO AND THE IMPUGNED PENALTY ORDER HAS BEEN FRAMED WITHOUT CONSIDERING THE SUBMISSIONS/EVIDENCES OF THE ASSESSEE AND WITHOUT PROVIDING ANY ADV ERSE 2 MATERIAL ON RECORD AND WITHOUT ESTABLISHING THAT THERE WAS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. III. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE ACTION OF LD. AO IN PASSING THE IMPUGNED PENALTY ORDER BEING CONTRARY TO LAW AS THE ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) DATED 24 - 12 - 2009 AND ADDITIONS MADE THEREIN WERE ALSO ILLEGAL, BEYOND JURISDICTION AND VOID AB - INITIO. IV. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY U/S 271(1)(C) ON THE ADDITIONS MADE IN THE ASSESSMENT ORDER U/S 143(3) DATED 24 - 12 - 2009 AS THESE ADDITIONS ARE ALSO CONTRARY TO LAW AND FACTS. V. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY U/S 271 (L)( C) IS BAD IN LAW BEING BEYOND JURISDIC TION AND BARRED BY LIMITATION AND CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE AND HAS BEEN PASSED BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND WITHOUT CONSIDERING THE SUBMISSIONS/EVIDENCES OF THE A SSESSEE AND WITHOUT PROVIDING ANY ADVERSE MATERIAL ON RECORD AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. VI. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT QUASHING THE IMPUGNED PENALTY ORDER FRAMED BY LD. AO THAT TOO WITHOUT RECORDING MANDATORY 'SATISFACTION' AS PER LAW. VII. THAT THE ASSESSEE CRAVES THE LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL AT ANY STAGE AND ALL THE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. IT DERIVES INCOME FROM EXPORT OF READYMADE GARMENTS IN THE NAME AND STYLE OF A.K. ENTERPRISES. THE RETURN FOR THE ASSESSMENT YEAR 2007 - 08 WAS FILED ON 31.10.2007, DISCLOSING INCOME OF RS. 6,92,300/ - . AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 24 TH DECEMBER, 2009, UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) AT A TOTAL INCOME OF RS. 30,94,830/ - . WHILE DOING SO, THE ASSESSIN G OFFICER MADE ADDITION 3 22,51,000/ - UNDER THE PROVISIONS OF SECTION 69C OF THE ACT BASED ON THE STATEMENT GIVEN BY THE ASSESSEE DURING THE COURSE OF SURVEY OPERATIONS CONDUCTED ON 28 TH MARCH, 2007. THE FACTS REVOLVING AROUND THIS ISSUE ARE THAT THE SURVEY OPERATIONS IN THE BUSINESS PREMISES OF THE APPELLANT WERE CONDUCTED IN THE YEAR 2007. DURING THE COURSE OF SURVEY, THE OPERATIONS I.E. ON 28 TH MARCH, 2007, THE ASSESSEE SURRENDERED SUM OF RS. 22.1 LACS AS PER STATEMENT QUESTION NO. 17, WHICH IS REPRODUCED BELOW: Q.17 DURING THE SURVEY OPERATION EXPENDITURE VOUCHERS TOTAL AMOUNTING TO RS. 45,02,000/ - HAVE BEEN FOUND WHICH RELATED TO CURRENT F.Y. PLEASE STATE WHETHER THESE HAVE BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OR NOT? ANS. THE VOUCHERS RELATED TO THE EXPENDITURE INCURRED ON THE BUILDING B - 14 OWNED JOINTLY WITH MY WIFE. THESE VOUCHERS/BILLS HAVE NOT BEEN ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS. I OFFER 50% OF THE EXPENDITURE INCURRED I.E. 22.1 LACS FOR TAXATION FOR A.Y. 2007 - 08 IN ADDITION TO MY NORMAL INCOME FOR THIS YEAR. IT IS THE CONTENTION OF THE APPELLANT THAT THE AFORESAID STATEMENT WAS OBTAINED UNDER DURESS AND THERE WERE NO VOUCHERS FOUND AS A RESULT OF SURVEY OPERATIONS WHICH WERE NOT ACCOUNT ED IN THE BOOKS OF ACCOUNT AS ALLEGED BY THE ASSESSING OFFICER. SUBSEQUENTLY, THE SAID STATEMENT WAS RETRACTED VIDE ITS LETTER DATED 25 TH OCTOBER, 2007 AND WHILE RETRACTING THE STATEMENT MADE DURING THE COURSE OF SURVEY OPERATIONS, THE APPELLANT REITERATED T HAT THERE WERE NO PAPERS FOUND INDICATING UN DISCLOSED INVESTMENTS IN THE CONSTRUCTION OF BUILDING AT B - 14, INDUSTRIAL AREA, G.T. KARNAL ROAD, DELHI. IT WAS FURTHER SUBMITTED THAT BASED ON THIS OBJECTIONS, THE ASSESSING OFFICER REFERRED THE MATTER TO DVO WH O VIDE HIS REPORT DATED 16 TH DECEMBER, 2009, STATED THAT THE 4 CONSTRUCTION OF THE PROPERTY TOOK PLACE DURING THE PERIOD FROM 1 ST FEBRUARY, 2003 TO 13 TH MARCH, 2006 WHICH MEANS THERE WAS NO CONSTRUCTION THAT TOOK PLACE DURING THE PREVIOUS YEAR RELEVANT TO TH E ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT MADE APPLICATION UNDER THE PROVISIONS OF SECTION 144A OF THE ACT TO THE ADDITIONAL COMMISSIONER OF INCOME TAX FOR ISSUANCE OF DIRECTION TO THE ASSESS ING OFFICER ON THE MATTER. THE APPELLANT, APART FROM PRODUCING THE EVIDENCE, REITERATED THE SUBMISSION MADE BEFORE THE ASSESSING OFFICER. THE APPELLANT FILED THE COPIES OF LICENCE ISSUED BY THE MUNICIPAL CORPORATION, DELHI ON 26 TH JUNE, 2004 TO RUN THE BUS INESS, PROPERTY TAX RETURN OF THE BUILDING FOR THE FINANCIAL YEAR 2003 - 04 ; NEW ELECTRICITY CONNECTION AND APPLICATION FOR ELECTRICITY CONNECTION TO NDPL ON 11 TH NOVEMBER, 2003; COPY OF THE TELEPHONE CONNECTION TO THE MTNL ON 9 TH JANUARY, 2003, AND COPIES O F COMPLETION CERTIFICATE OF BUILDING RECEIVED FROM MCD, DATED 25 TH OCTOBER, 2004. DESPITE THIS, THE APPELLANT HAD AGREED FOR THE ADDITION OF RS. 22.5 LAKHS ON THE ADVICE OF HIS COUNSEL SH. SANJAY AGGARWAL IN ORDER TO BUY PEACE FROM THE DEPARTMENT AND AVOID UNNECESSARY LITIGATION WITH THE DEPARTMENT WITH THE CONDITION NOT TO INITIAT E THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 24.12.2009, AFTER MAKING THE ADDITIONS OF RS. 22,51,000/ - . THUS, THE ASSESSMENT PROCEEDINGS ATTAINED FINALITY. HOWEVER, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR 5 FURNISHING BOTH INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME VIDE SHOW CAUSE NOTICE D ATED 24.12.2009. IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS SUBMITTED THAT THE SURRENDER OF INCOME WAS MADE ONLY WITH THE INTENTION TO BUY PEACE WITH THE DEPARTMENT AND AVOID UNNECESSARY LITIGATION ON THIS ISSUE. THERE WAS NO EVIDENCE BROUGHT BY THE REVE NUE SUPPORTING THIS ADDITION. THE APPELLANT RELIED ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. CIT, 282 ITR 642 (GUJ.) AND ON THE DECISIONS OF HON BLE SUPREME COURT IN THE CASES OF T. ASHOK PAI VS. CIT, 292 ITR 11 (SC) AND DILIP N. SHROFF VS. CIT, 291 ITR 519 (SC) . THE ASSESSING OFFICER HAD BRUSHED ASIDE THE EXPLANATION FURNISHED BY THE ASSESEE AND PROCEEDED TO LEVY THE PENALTY OF RS . 6,23,046/ - VIDE HIS ORDER DATED 30 TH JUNE, 2 010. AGGRIEVED BY THIS ORDER OF PENALTY, THE APPELLANT PREFERRED AN APPEAL BEFORE THE CIT(A) , WHO VIDE ORDER DATED 31.12.2012 DISMISSED THE APPEAL VIDE PARAS 8 TO 8.9 & 9 OF THE ORDERS, WHICH ARE REPRODUCED BELOW: 8.1 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT IS BASICALLY CHALLENGING 'THE IMPOSITION OF THE TAX UPON HIM CLAIMING THAT THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN CONSTRUCTION OF PROPERTY. IT HAS BEEN REPEATEDLY CLAIMED THAT NO SUCH DOCUMENTS /PAPER WERE FOUND DURING SURVEY WHICH COULD JUSTIFY THE INVESTMENT MADE BY THE APPELLANT AND HIS WIFE ON THE CONSTRUCTION OF THE BUILDING DURING F. Y. 2006 - 07 AND THEREFORE THERE IS NO JUSTIFICATION FOR ADDITIO N IN THE CASE OF THE APPELLANT OR IN THE CASE OF HIS WIFE SMT. KAMINI JAIN. HOWEVER, THESE ARGUMENTS DO NOT GIVE THE TRUE PICTURE OF THE CASE WHICH IS DISCUSSED HEREUNDER. 8.2 IT IS FURTHER SEEN THAT THIS IS NOT A CASE OF A FORCED SURRENDER FOLLOWED BY A RETRACTION. IN FACT, IN THIS CASE THE SURRENDER HAD BEEN MADE WAS ENTIRELY ON THE BASIS OF DOCUMENTS FOUND IN THE SURVEY AND SUBSEQUENTLY THE ASSESSEE AND HIS WIFE GAVE LETTERS SEEKING RETRACTION OF THE SURRENDER ON 6 25.10.2007. HOWEVER, SUBSEQUENTLY IT I S SEEN THAT AS PER THE FIRST TWO PARAGRAPHS ON PAGE 5 OF THE WRITTEN SUBMISSIONS OF THE APPELLANT THE RETRACTION OF 25.10.2007 WAS WITHDRAWN. THUS IN THIS CASE THERE WAS A SURRENDER FOLLOWED BY A RETRACTION WHICH WAS FOLLOWED BY A WITHDRAWAL OF THE RETRACT ION. THE ABOVEMENTIONED TWO PARAGRAPHS ON PAGE 5 OF THE WRITTEN SUBMISSIONS OF THE APPELLANT HAVE BEEN TYPED IN BOLD LETTERS IN THIS ORDER ON PAGE 14 SHOW THAT THE ASSESSEE WITHDREW THE RETRACTION DURING THE ASSESSMENT PROCEEDINGS. IN SUCH A SITUATION WHEN THE RETRACTION HAS BEEN WITHDRAWN, THERE IS NO POINT IN TALKING ABOUT THE RETRACTION AS NOW IT IS CLEAR THAT THE ASSESSEE HAS CLEARLY ADMITTED THE UNACCOUNTED INCOME INVESTED IN THE CONSTRUCTION OF PROPERTY. IT IS NOTEWORTHY THAT THE ASSESSEE HIMSELF HAS STATED THAT THE WITHDRAWAL OF THE RETRACTION WAS DONE TAKING THE ADVICE OF HIS COUNSEL. THUS IN THESE CIRCUMSTANCES THE ASSESSEE CANNOT EVEN CLAIM THAT THE WITHDRAWAL OF THE RETRACTION WAS UNDER ANY DURESS AS IT WAS AFTER DUE DELIBERATION AND AFTER SEEKING ADVICE OF HIS COUNSEL. IN VIEW OF THIS SITUATION ANY DISCUSSION ABOUT THE TAXABILITY OF THE AMOUNT INVOLVED AND ABOUT THE LEGAL POSITION INVOLVED IN CASES OF RETRACTION IS NOT AT ALL REQUIRED. 8.3 IT IS SEEN THAT DURING THE PENALTY PROCEEDINGS THE APPE LLANT HAS TRIED TO RAKE UP THE ISSUES RELATING TO THE QUANTUM OF ADDITION AND ALSO ABOUT THE RETRACTION AND THUS HAS TRIED TO SHOW THE FACTS AS DIFFERENT FROM WHAT THEY ACTUALLY ARE. HOWEVER, PERUSAL OF THE ASSESSMENT ORDER U/S 143(3) DATED 24.12.09 IN THE CASE SHOWS THAT SURVEY U/S 133 A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED ON 20.03.2007 WHEN IN ADDITION TO EXCESS CASH AND EXCESS STOCK BEING FOUND, SOME VOUCHER S OF EXPENDITURE OF RS.45,02,000/ - RELATING TO CONSTRUCTION WERE FOUND AND AS THESE VOUCHERS WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, THE ASSESSEE AND HIS WIFE SURRENDERED THIS AM OUNT OF RS.45,02,000/ - , BEING RS.22,51,000/ - IN THE HANDS O F THE ASSESSEE AND RS.22,51,000/ - IN THE HANDS OF HIS WIFE SMT. KAMINI JAIN. IT IS SEEN THAT AFTER ABOU T 8 MONTHS ON 25.10.2007 THE ASSESSEE RETRACTED THE SURRENDER. PERUSAL OF THE ASSESSMENT ORDER FURTHER SHOWS THAT THE PROPERTY IN QUESTION I . E. B - 14, INDUSTRIAL AREA G.T. KARNAL ROAD WAS REFERRED TO THE VALUATION CELL FOR DETERMINATION OF COST OF CONSTRUCT ION ON THE PLOT AS ON 31.03.2007 AND THE VALUATION OFFICER VIDE HIS REPORT DATED 16.12.2009 DETERMINED THE COST OF INVESTMENT 1 CONSTRUCTION AS ON 31.03.2007 AT RS. L,61,01,272/ - AS AGAINST DECLARED VALUE OF ONLY RS. L,08,29,8591 - . THE RELEVANT PART FROM T HE ASSESSMENT ORDER DATED 24.12.09 FROM PAGE 3 AND PAGE 4 OF THE ASSESSMENT ODER IS REPRODUCED BELOW: - 'FURTHER, AS PER THE DIRECTIONS OF ADDL. CIT, RANGE - 20, NEW DELHI THE PROPERTY AT B - 14, INDUSTRIAL AREA, G.T. KARNAL ROAD WAS REFERRED TO THE VALUATION CELL FOR DETERMINATION OF COST OF CONSTRUCTION ON THE PLOT AS ON 31.3.2007. THE VALUATION OFFICER VIDE HIS REPORT DATED 16.12.2009 HAS 7 DETERMINED THE COST OF INVESTMENT/CONSTRUCTION AS ON 31.3.2007 AT RS. 1,61,01,272/ - AS AGAINST DECLARED VALUE OF RS. 1, 08,29,859/ - . THE ASSESSEE WAS PROVIDED COPY OF VALUATION REPORT FOR HIS COMMENTS. IN COMPLIANCE THERETO THE AR OF THE ASSESSEE SH. SANJAY AGGARWAL ATTENDED ON 23.12.2009 AND REQUESTED THAT THE DVO HAS ALLOWED DEDUCTION OF SALE SUPERVISION AT THE RATE OF 5% ONLY. YOU ARE REQUESTED TO ENHANCE THIS DEDUCTION. THE AR OF THE ASSESSEE ALSO REQUESTED THAT THE ADDITION OF RS. 22,51,060/ - ON ACCOUNT OF INVESTMENT IN THE PROPERTY AS ADMITTED IN THE STATEMENT DURING THE COURSE OF SURVEY BE MADE AND REMAINING DIFFERENC E BE CONSIDERED IN THE CASE OF ASSESSEE' WIFE SMT. KAMINI LAIN. ACCORDINGLY, THE CASE WAS REFERRED TO THE ADDL. CIT, RANGE - 20 FOR HIS DIRECTIONS U/S 144A FOR MAKING PROPOSED ADDITION OF RS. 22,51,000 / - ON ACCOUNT OF INVESTMENT IN THE PROPERTY ON THE BASIS OF VOUCHERS OF EXPENSES FOUND AT THE TIME OF SURVEY. THE ADDL. CIT VIDE LETTER NO. 1185 DATED 23.12.2009 APPROVED THE PROPOSED ADDITIONS AS PER DIRECTIONS REPRODUCED HEREUNDER - 'ON THE BASIS OF FACTS MENTIONED IN YOUR ABOVE REFERRED LETTER AS WELL AS ON PERSONAL DISCUSSION HELD IN MY CHAMBER TODAY, WHERE THE ASSESSEE'S AR SHRI SANJAY AGGARWAL, CA WAS ALSO PRESENT, THE ADDITIONS PROPOSED BY YOU IN THE CASE OF SH. ASHWANI KUMAR LAIN AND SMT. KAMINI LAIN ARE HEREBY APPROVED. ' IN VIEW OF ALL THESE FACTS NOTED ABOVE AN ADDITION OF RS. 22,51,000/ - WAS MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN CONSTRUCTION OF PROPERTY AS SURRENDERED BY THE ASSESSEE TREATED THE SAME AS HIS INCOME FROM UNDISCLOSED SOURCES WI THIN THE MEANING OF SECTION 69C. SINCE THE ASSESS EE HAS FURNISHED INACCURATE PARTICULARS OF INCOME/CONCEALED PARTICULARS OF INCOME, PENALTY PROCEEDINGS U/S 271 (J)(C) ARE INITIATED SEPARATELY. ' 8.4 THUS IT IS SEEN THAT AS AGAINST THE DISCLOSED VALUE OF ONLY RS.L,08,29,8591 - , THE VALUE WAS DETERMINED B Y THE VALUATION OFFICER AT RS. L ,61,01,272/ - , AS PER WHICH THE EXCESS INVESTMENT AMOUNTED TO RS. 5 2, 71,413/ - . IT IS SEEN THAT AS AGAINST THIS EXCESS AMOUNT INVESTED IN THE CONSTRUCTION DETERMINED BY THE VALUATION OFFICER, AN ADDITION OF ONLY RS.45 ,02,000 1 - WA S MADE, BEING RS.22,5 1 ,0001 - IN THE HANDS OF THE ASSESSEE AND RS.22,5 1,0001 - IN THE HANDS OF HIS WIFE SMT. KAMINI LAIN AFTER SEEKING DIRECTIONS U/S 144 A OF THE LT. ACT, 1961 FROM THE ADDL . CIT, RANGE - 20. THIS WAS DONE PRIMARILY TO ACCOUNT FOR HIGHER DEDUCTION FOR SUPERVISION AND ALSO TO BRING THE ADDITION IN LINE WITH THE INVESTMENT IN THE PROPERTY AS ADMITTED IN THE STATEMENT DURING THE COURSE OF SURVEY. IT WAS ON THIS BASIS THAT AS AGAINST THE EXCESS INVESTMENT DETERMINED BY THE VALUATION CELL AT R S. 5 2, 71,413/ - , ADDITION OF ONLY RS.45,02,0001 - WAS MADE, 8 RS.22,5L,000/ - IN THE CASE OF THE ASSESS EE AND ANOTHER AMOUNT OF RS.22,5L,000/ - IN THE CASE OF HIS WIFE SMT. KAMINI LAIN. THUS THE CLAIM OF THE APPELLANT THAT THE ADDITION OF RS.22,5L,000 / - WAS MADE MERELY ON THE BASIS OF HIS ADMISSION IS FALSE AS THE ADDITION WAS BASED NOT ONLY ON THE BASIS OF THE ADMISSION BY THE APPELLANT BUT ALSO ON THE BASIS OF THE DOCUMENTS FOUND DURING SURVEY AND ALSO ON THE BASIS OF THE ACTUAL UNACCOUNTED INVESTMENT MADE IN CO NSTRUCTION WHICH WAS DETERMINED BY THE VALUATION CELL AT RS. 52,71 ,413/ - , BUT AN ADDITION OF ONLY RS.45 ,02,0001 - WAS MADE TOWARDS UNACCOUNTED INVESTMENT IN THE HANDS OF THE ASSESSEE AND HIS WIFE. 8.5 PERUSAL OF THE PENALTY ORDER SHOWS THAT IT WAS THE FA ULT OF THE ASSESSEE THAT THE DOCUMENTS WERE NOT PRODUCED. PERUSAL OF THE SECOND PARAGRAPH ON PAGE 1 OF THE PENALTY ORDER DATED 30.06.2010 SHOWS THE FOLLOWING NARRATION: - 'IN THE INSTANT CASE A SURVEY ULS 133A WAS CONDUCTED AT THE ASSESSEE'S BUSINESS PREMISES ON 20.3.2007, THE ASSESSEE SURRENDERED AN AMOUNT OF RS.45,02,0001 - BEING UNACCOUNTED EXPENDITURE INCURRED ON CONSTRUCTION AT B - L4, G.T KARNAL ROAD, DELHI IN F. Y 2006 - 07. THIS AMOUNT WAS SURRENDERED ON THE BASIS OF CERTAIN VOUCHERS FOUND AT THE TIME OF SURVEY, COPIES OF WHICH WERE PROMISED TO BE PRODUCED BY THE ASSESSEE BEFORE THE AO WITHIN A COUPLE OF DAYS BUT WHICH WERE NEVER PRODUCED. ' 8.6 THUS IT IS SEEN THAT TH E ADDITION MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE FOR CONSTRUCTION OF PROPERTY WAS MADE NOT JUST ON THE BASIS OF THE STATEMENT OR ADMISSION OF THE ASSESSEE BUT RATHER THERE WERE VOUCHERS WHICH GAVE EVIDENCE FOR THIS UNACCOUNTED INVESTMENT WHICH WERE F OUND DURING THE COURSE OF SURVEY. THESE DOCUMENTS WERE TO BE PRODUCED BY THE APPELLANT BEFORE THE INCOME TAX AUTHORITIES BUT WERE NEVER PRODUCED. NO BENEFIT CAN BE GIVEN TO THE ASSESSEE FOR HIS OWN DEFAULT. FURTHER, IT IS SEEN THAT THE ADDITION WAS MADE NO T JUST ON THE BASIS OF THE ADMISSION OF THE ASSESSEE AND THE VOUCHERS FOUND DURING THE COURSE OF SURVEY BUT RATHER THESE WERE BASED ON THE ACTUAL UNACCOUNTED CONSTRUCTION ON THE SITE WHICH WAS DETERMINED BY THE VALUATION OFFICER AT RS. 52,71 ,413/ - BUT AFTE R SEEKING INSTRUCTIONS U/S 144A FROM THE ADDL. CI T THE ADDITION WAS RESTRICTED TO RS. 45,02,000 / - . THUS THE ADDITION MADE IN THE CASE IS ON THE BASIS OF 3 ASPECTS I . E. THE STATEMENT OF THE ASSESSEE, THE VOUCHERS FOUND DURING THE SURVEY (WHICH WERE PROMISED TO BE PRODUCED BY THE ASSESSEE BUT WERE NEVER PRODUCED AGAIN) AND THE ACTUAL UNACCOUNTED CONSTRUCTION ON THE SITE WHICH WAS DETERMINED BY THE VALUATION OFFICER. 8.7 THE ASSESSEE RELIED UPON SEVERAL JUDICIAL DECISIONS IN THE PENALTY PROCEEDINGS BEFORE THE ASSESSING OFFICER AND ALSO IN THE APPELLATE 9 PROCEEDINGS. THE ASSESSING OFFICER HAS OBSERVED IN THE SECOND PARAGRAPH ON PAGE 4 OF THE PENALTY ORDER AS UNDER: - ' .. .FACTS OF THE ASSESSEE'S CASE ARE ENTIRELY DIFFERENT FROM THE FACTS OF CASES REFERRED BY HIM. THEREFORE, THESE DECISIONS DID NOT COME TO RESCUE HIM. FURTHER THE AR OF THE ASSESSEE VIDE LETTER DATED 9.6.2010 ALSO REFERRED DECISION OF HON'BLE SUPREME COUR T IN THE CASE OF QILIP N. SHROFF VS. CLT 291 ITR - 519 (SC). THE FACTS OF THE ABOVE REFERRED CASE OF HON'BLE SUPREME COURT ARE ESTIMATION OF INVESTMENT ON THE BASIS OF OVA WHEREAS IN THE INSTANT CASE THE ASSESSEE SURRENDERED CERTAIN INVESTMENT IN CONSTRUCTIO N OF PROPERTIES ON THE BASIS OF VOUCHERS OF EXPENDITURE/INVESTMENT WERE FOUND DURING THE COURSE OF SURVEY AND ALSO DEPOSITED TAX ON THE SURRENDERED AMOUNT BUT LATER ON RETRACTED FROM THE SURRENDERED AND ALSO DEMANDED IN HIS APPLICATION U/S 144A DATED 23.12 .2009 THAT THE PROPERTY IN QUESTION BE GET VALUED FROM THE OVA AND ACCORDINGLY TO ASCERTAIN VERACITY OF FACTS THE CASE WAS REFERRED TO THE OVA AND THE OVA CONFIRMED THE UNDISCLOSED INVESTMENT IN CONSTRUCTION AS SURRENDERED BY THE ASSESSEE. IN VIEW OF ALL T HESE FACTS THE DECISION REFERRED BY THE ASSESSEE ARE NOT APPLICABLE IN THIS CASE. MOREOVER, THE APEX COURT'S JUDGMENT IN THE CASE OF DILIP N. SHROFF VS. CLT (SUPRA) HAS BEEN REVERSED BY THE LATER JUDGMENT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTIL ES PRODUCTS (306 ITR 277) (SC).' 8.8 THE ASSESSING OFFICER HAS ALSO DISCUSSED SEVERAL OTHER JUDICIAL DECISIONS AND ON THE BASIS OF THESE JUDICIAL DECISIONS AND THE FACTS OF THE CASE, HELD AS UNDER IN THE LAST PARAGRAPH OF PAGE 5 AND THE FIRST PARAGRAPH O F PAGE 6 OF THE PENALTY ORDER : - 'THUS IT IS CLEAR FROM THE ABOVE THAT THE ASSESSEE HAD KNOWINGLY, INTENTIONALLY AND FRAUDULENTLY CONCEALED PARTICULARS OF INCOME ON ACCOUNT OF UNACCOUNTED INVESTMENT IN CONSTRUCTION OF PROPERTY AS SURRENDERED DURING THE C OURSE OF SURVEY AND NEITHER PROVED DURING THE ASSESSMENT PROCEEDINGS NOR PENALTY PROCEEDINGS THE ASSESSEE COULD ADDUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS AND FURTHER DERIVING SUPPORT FROM THE JUDICIAL DECISION SUP RA, 1 HOLD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED ITS INCOME FOR THE YEAR UNDER CONSIDERATION. CONSEQUENTLY, AS THE DEFAULT OF THE ASSESSEE U/S 271 (L)(C) IS ESTABLISHED. ' 8.9 I T IS SEEN THAT THE ASSESSEE HAS TRIED TO TWIST THE FACTS OF THE CASE TO CLAIM THAT IT WAS ONLY ON THE BASIS OF THE STATEMENT OF THE ASSESSEE THAT THE ADDITION WAS MADE AND THAT THE PENALTY WAS IMPOSED ONLY BECAUSE THE ADDITION WAS MADE. HOWEVER, THIS IS NOT THE CASE AS SEEN ABOVE AND IT IS 10 HELD THAT THE ASSESSEE DELIBERATELY CONCEALED THE PARTICULARS OF HIS I NCOME , AND FURNISHED IN - ACCURATE PARTICULARS OF SUCH INCOME. IT IS SEEN THAT NOT ONLY UNACCOUNTED CONSTRUCTION IN PROPERTY WAS DONE BY THE ASSESSEE BUT ALSO THE ASSESSEE VERY ACTI VELY TRIED TO E VADE THE IMPOSITION OF TAX. THE VOUCHERS EVIDENCING THE UNACCOUNTED INVESTMENT IN CONSTRUCTION WERE FOUND DURING THE SURVEY AND THE ASSESSEE IN AN ATTEMPT TO EVADE THE TAXES SURRENDERED THE INCOME AND PROMISED TO PRODUCE THE VOUCHERS, WHICH HE NEVER PRODUCED. SUBSEQUENTLY AFTER ABOUT 8 MONTHS THE ASSESSEE RETRACTED HIS ADMISSION. HOWEVER, AFTER THE VALUATION BY THE VALUATION OFFICER DETERMINED THE UNACCOUNTED INVESTMENT IN CONSTRUCTION AT RS. 52,71,413/ - , THE ASSESSEE WITHDREW THE RETRACTION AND REQUESTED THE INCOME TAX AUTHORITIES TO MAKE THE ADDITION IN LINE WITH HIS EARLIER STATEMENT TO RESTRICT THE ADDITION TO ONLY RS.45,02,000 / - . NOW THE APPELLANT SEEKS TO CLAIM AS IF THE ADDITION WAS MADE ONLY BECAUSE OF HIS STATEMENT WHEREAS THAT IS FA R FROM THE TRUTH AND THE ADDITION HAD BEEN MADE FOR THE UNACCOUNTED INCOME INVESTED IN THE CONSTRUCTION. IN VIEW OF THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE IT IS HELD THAT PENALTY U/S 271(L)(C) IS IMPOSABLE UPON. THE ASSESSEE AND THE PENALTY OF RS. 6,23,046/ - IMPOSED BY THE ASSESSING OFFICER VIDE ORDER U/S 271(1)(C) DATED 30.06.2010 UPON THE ASSESSEE FOR A.Y. 2006 - 07 IS HEREBY CONFIRMED. BEING AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS BEFORE US WITH THE PRESENT APPEAL. 3. LEARNED COUNSEL FOR THE APPELLANT VEHEMENTLY ARGUED THAT THE ADDITION WAS MADE BASED ON MERE STATEMENT MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THOUGH THE STATEMENT OF SURRENDER WAS RETRACTED LATER THE ASSESSEE HAD AGREED FOR THE ADDITION WITH THE INTENTION BUYING PEACE WITH THE DEPARTMENT AND TO AVOID THE UNNECESSARY LITIGATION. APART FROM THE STATEMENT OF SURRENDER, THERE WAS NO INDEPENDENT INCRIMINATING MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER AND IN FACT, THE DVO HAD CLEARLY STATED T HAT THERE WAS NO CONSTRUCTION WHICH TOOK PLACE DURING THE PREVIOUS YEAR RELEVANT FOR THE YEAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT THE FINDING OF 11 CIT(A) IN PARA 8.5 OF HIS ORDER IS THAT THE COPIES OF VOUCHERS WERE PROMISED TO BE PRODUCE D BY THE A PPELLANT , BUT THE SAME WAS NEVER PRODUCED. HE FURTHER S UBMITTED THAT THE ONUS TO PROVE THIS FACT LIES WITH THE DEPARTMENT BECAUSE IT IS A DEPARTMENT WHO ALLEGED THAT THE SOME VOUCHERS WERE FOUND AS A RESULT OF SURVEY OPERATIONS. HE ALSO ASSAILED THE FINDIN G OF THE CIT(A) THAT THE ADDITION WERE BASED ON THE DVO S REPORT. HE FURTHER SUBMITTED THAT NO ADDITION CAN BE MADE BASED ON MERE STATEMENT OF SURRENDER OF THE ASSESSEE. IN SUPPORT OF THIS PROPOSITION, HE RELIED ON THE DECISION OF HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. KHADER KHAN SON, 300 ITR 157 (MAD.) AND THE DECISION OF THE HON BLE KERALA HIGH COURT IN THE CASE OF P AUL MATHEWS AND SONS VS. CIT, (2003) 263 ITR 101 (KER.). HE FURTHER SUBMITTED THAT NO PENALTY IS LEVIABLE AND IN RESPECT OF AN IT EM FOR WHICH THE ADDITION W AS MADE BASED ON THE CONCESSION OF THE PARTY AND IN SUPPORT OF THIS PROPOSITION , HE RELIED ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT, (2001) 249 ITR 125 (GUJ.) . HE ALSO SUBMITTED THAT NO PENALTY CAN BE LEVIDED BASED ON THE DVO S REPORT AS HELD BY THE HON BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. CIT, 291 ITR 519 (SC) AND HE FINALLY SUBMITTED THAT THE ASSESSING OFFICER HIMSELF WAS NOT SURE AS TO WHAT CHARGE SHOULD BE LEVEL L ED AGAINST THE APPELLANT EITHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF THE INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT THE TWO ARE MUTUALLY EXCLUSIVE AND IN SUPPORT OF THIS PROPOSITION, HE RELIED ON THE DECISION OF COORDINATE BE NCH OF ITAT, 12 AHMEDABAD, IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX VS. APSARA PROCESSORS (P) LTD., 27 ITD 411 AND THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF NEW SAROTHIA ENGG. CO. VS. CIT, 282 ITR 642 (GUJ.). THEREFORE, ACCORDIN G TO THE LEARNED COUNSEL FOR THE ASSESSEE THE PENALTY PROCEEDINGS SHOULD NOT BE SUSTAINED IN THE EYES OF LAW. 4. ON THE OTHER HAND, THE LEARNED SR. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE APPELLANT IS GUILTY OF BOTH THE CO NCEALMENT OF PARTICULARS OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. HENCE, THE PENALTY ORDER SHOULD BE SUSTAINED IN THE EYES OF L A W. 5. WE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER LEVIED A PENALTY OF R S. 6,23,046/ - VIDE ORDER OF PENALTY DATED 30 TH JUNE, 2010. ON PERUSAL OF THE PENALTY ORDER, IT IS CLEAR THAT T HE PENALTY WAS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED THE PARTICULARS OF INCOME WHICH MEANS THAT THIS FINDING, IN OUR CONSIDERED OPINION, IS CONFUSING AND IS NO T CLEAR WHETHER THE ASSESSING OFFICER HOLDING THE ASSESSEE GUILTY OF FURNISH ING THE INACCURATE PARTICULARS OF INCOME OR CONCEALING THE PARTICULARS OF INCOME. THIS GOES TO PROVE THAT THE ASSESSING OFFICER HAD NOT ARRIVED AT THE SATISFACTION AS TO THE GUILTY STATE OF MIND OF THE ASSESSEE. FURTHER, WE FIND THAT THE STATEMENT OF SURRENDER IS THE SOLE BASIS FOR MAKING THE ADDITION OF RS. 22,51,000/ - , W HILE SURRENDERING THIS AMOUNT, THE ASSESSEE CLEARLY STATED THAT THE SURRENDER IS MADE WITH THE INTENTION OF BUYING PEACE AND AVOIDING 13 UNNECESSARY LITIGATION AND THE AMOU NT SURRENDERED CANNOT BE CO - RELATED WITH INCRIMINATING MATERIALS FOUND AS A RESULT OF SURVEY OPERATIONS. THOUGH THE ASSESSING OFFICER AND THE CIT(A) RECORDED THE FINDING THAT THE ASSESSEE PROMISED TO PRODUCE THE VOUCHERS, WHICH WERE NOT ACCOUNTED IN THE BO OKS OF ACCOUNT, FAILED TO DO SO. IT IS A TRITE LAW THAT THE ONUS ALWAYS LIES ON THE PERSON WHO ALLEGES IN THIS CASE THAT IT IS THE DEPARTMENT WHO MADE AN ALLEGATION THAT SOME VOUCHERS FOUND WHICH WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. THEREFORE, IT IS THE DUTY OF THE REVENUE TO PROVE THAT WHICH VOUCHERS WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER NEVER BROUGHT ANY SUCH VOUCHERS ON THE RECORD EXCEPT MAKING IPSE DIXIT STATEMENT THAT SOME VOUCHERS ARE FOUND THAT APART, THE HON BLE MA DRAS HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN SONS, 300 ITR 157 (MAD.) AND THE HON BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS AND SONS VS. CIT, (2003) 263 ITR 101 (KER.) HAD CLEARLY HELD THAT NO ADDITION CAN BE MADE BASED ON THE MERE STATEME NT. THE DECISION OF THE HON BLE MADRAS HIGH COURT WAS APPROVED BY HON BLE SUPREME COURT IN THE CASE OF CIT VS. KHADER KHAND SON, (2013) 352 ITR 480 (SC) AFTER GRANTING THE LEAVE . THAT APART , THE CBDT WHICH IS THE APEX BODY IN ADMINISTERING THE PROVISIONS OF I NCOME TAX ACT HAD ISSUED CIRCLE DT. 10 TH MARCH, 2003 TO ITS OFFICERS THAT NO ADDITION CAN BE MADE ON MERE STATEMENT OF ASSESSEE WITHOUT BRINGING ANY INDEPENDENT INCRIMINATING MATERIAL ON RECORD. THEREFORE, IN THE LIGHT OF THE ABOVE DECISION, THE VERY ADDITION MADE BY THE ASSESSING OFFICER IS NOT FREE FROM DOUBT. THE MERE 14 DISALLOWANCE CANNOT BE A SOUND BASIS FOR IMPOSITION OF PENALTY. IN THIS REGARD, WE PLACE RELIANCE ON THE DECISION OF COORDINATE BENCH OF ITAT, BOMBAY IN THE CASE OF BOSTON CONSULTING GROUP (INDI) PVT. LTD., (2011) 12 TAXMANN.COM 278/47; SOT 25 (MUM.) URO . FURTHER, WE FIND FROM THE PENALTY ORDER THAT THE ASSESSING OFFICER HAD NOT GIVEN A FINDING AS TO HOW AND IN WHAT MANNER THE ASSESSEE HAD FURNISHED THE I NACCURATE PARTICULARS OF INCOME RESULTIN G IN ADDITION EXCEPT MAKING A BA LD CHARGE AGAINST THE ASSESSEE THAT IT HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE PARTICULARS OF INCOME. IN THE ABSENCE OF ANY SUCH FINDINGS, THE PENALTY ORDER CA NNOT BE SUSTAINED IN THE EYES OF LAW AND IN SUPPORT OF THIS PROPOSITION, WE RELY ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. JCIT, (2007) 291 ITR 519, WHEREIN THE HON BLE SUPREME COURT HELD AS FOLLOWS: 83. IT IS OF SOME SIG NIFICANCE THAT IN THE STANDARD PROFORMA USED BY THE ASSESSING OFFICER IN ISSUING A NOTICE DESPITE THE FACT THAT THE SAME POSTULATES THAT INAPPROPRIATE WORDS AND PARAGRAPHS WERE TO BE DELETED, BUT THE SAME HAD NOT BEEN DONE. THUS, THE ASSESSING OFFICER HIMS ELF WAS NOT SURE AS TO WHETHER HE HAD PROCEEDED ON THE BASIS THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS. EVEN BEFORE US, THE LEARNED ADDITIONAL SOLICITOR GENERAL WHILE PLACING THE ORDER OF ASSESSMENT LAID EMPHASIS THAT HE HAD DEALT WITH BOTH THE SITUATIONS. 84. THE IMPUGNED ORDER, THEREFORE, SUFFERS FROM NON - APPLICATION OF MIND. IT WAS ALSO BOUND TO COMPLY WITH THE PRINCIPLES OF NATURAL JUSTICE. [ SEE MALABAR INDUST RIAL CO. LTD. V. COMMISSIONER OF INCOME TAX, KERALA STATE , (2000) 2 SCC 718] 6. IN THE LIGHT OF THE ABOVE LEGAL POSITION, WE HAVE NO HESITATION TO QUASH THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. HENCE, THE APPEAL FILED BY THE ASSESSEE IS ALL OWED IN FULL. 15 7. IN THE RESULT, THE APPEAL IS ALLOWED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 3 0 T H SEPTEMBER, 2015. S D / - S D / - (BEENA A. PILLAI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H SEPTEMBER, 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI