Subhash Chandra Nayak, Bhubaneswar V. DCIT, Circle-1(2), Bhubaneswar, Bhubaneswar

ITA 244/CTK/2014

• Counselvise Citation: 24422114 RSA 2014
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 18-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: GIRIJA NANDA NAIK
• Keywords: Business income; Search and seizure; Peak credit
• Section: 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO S . 243 & 244 / CTK /201 4 (ASST. YEAR S : 2002 - 03 & 200 3 - 0 4 ) SRI SUBHASH CHANDRA NAYAK, PLOT NO. 339 (P) GOUTAM NAGAR, BMC - MAUSIMA MAIN ROAD, BHUBANESWAR . VS. D CIT, CIRCLE - 1(2), BHUBANESWAR. PAN NO. AAH PN 9 344 D (APPELLANT) (RESPONDENT) ITA NO. 350/CTK/2014 (ASST. YEAR : 200 7 - 0 8 ) DCIT, CIRCLE - 1(2), BHUBANESWAR. VS. SRI SUBHASH CHANDRA NAYAK, PLOT NO. 339 (P) GOUTAM NAGAR, BMC - MAUSIMA MAIN ROAD, BHUBANESWAR. PAN NO. AAHPN 9344 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GIRIJA NANDA NAIK DEPARTMENT BY : SHRI ANIL SHARMA - D.R. DATE OF HEARING : 02 / 0 2 /2015 . DATE OF PRONOUNCEMENT : 11 / 0 3 /201 5 . O R D E R 2 PER D.T. GARASIA , J .M TH E S E APPEAL S BY THE ASSESSEE AS WELL AS BY THE DEPARTMENT ARE DIRECTED AGAINST THE SEPARATE ORDER S OF LD. CIT (A) - 1 , BHUBANESWAR DATED 2 2/0 5 /201 4 & 02/06/2014 FOR THE A.Y. 200 - 03, 200 3 - 0 4 & 2007 - 08 . SINCE THE COMMON ISSUE INVOLVED AND THE APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER . I.T.A.NOS. 243 & 244/CTK/2014 2. FOR THE SAKE OF CONVENIENCE, FACTS ARE TAKEN FROM I.T.A.NO. 244/CTK/2014. THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE : 1. FOR THAT THE ORDER DATED 22/05/2014 AS PASSED BY THE LD. CIT(A) - 1, BHUBANESWAR IS FAR FROM JUST AND LEGAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. FOR THAT THE LD. CIT(A) SHOULD NOT HAVE CONFIRMED LEVY OF PENALTY OF RS. 18,000/ - IMPOSED U/S. 271(1)(C) OF THE INCOME TAX ACT, WITHOUT PROPER CONSIDERATION TO THE ASSESSEES EXPLANATION ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE. 3. SHORT FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT', FOR SHORT) WAS CONDUCTED ON 15/11/2007 IN THE OFFICE AND RESIDENTIAL PREMISES OF THE ASSESSEE. THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,46,600/ - AND THE ASSESSMENT WAS COMPLETED U/S. 153A/143(3) OF THE ACT, WHEREIN IT WAS FOUND THAT 3 THE ASSESSEE HA S DEPOSITED RS. 1,10,00 1 / - IN CANARA BANK A/C NO. 331, SAHEED NAGAR BRANCH, BHUBANESW AR . THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF DEPOSIT, BUT HE COULD NOT EXPLAIN , THEREFORE , ASSESSING OFFICER HAS LEVIED PENALTY OF RS. 18,000/ - ON THIS AMOUNT. 4 . THE MATTER WAS CARRIED TO THE LD. CIT(A) AND LD. CIT(A) HAS CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 2.1 I HAVE CONSIDERED THE MATTER. IT IS FOUND THAT THE APPELLANT HAS SHOWN NET INCOME OF RS.62,000/ - AS INCOME FROM OTHER SOURCES (LAND DEALINGS) IN THE STATEMENT OF TOTAL INCOME ACCOMPANYING THE RETURN OF INCOME. BEFORE THE AO, THE APPELLANT HAS FILED DETAILS OF SUCH INCOME WHEREIN IT HAS BEEN CLAIMED THAT THE AMOUNT OF RS.1 , 10,001/ - CREDITED IN THE CANARA BANK ACCOUNT IS THE GROSS INCOME RECEIVED AGAINST LAND DEALINGS ON WHICH EXPENSES HAVE BEEN CLAIMED FOR AN AMOUNT OF RS.48,001/ - ARRIVING AT NET INCOME OF RS.62,000/ - . THE SAME HAS BEEN MADE PART OF CASH FLOW STATEMENT. HOWEVER, THE CLAIM MADE COULD NOT BE CORROBORATED OR SUPPORTED PROPERLY DURING THE ASSESSMENT PROCEEDINGS AND APPEAL PROCEEDINGS FOR WHICH THE ADDITION MADE BY THE AO HAS BEEN CONFIRMED. IN THE CASE OF CIT V. NALIN P. SHAH (HUF) [2013] 40 TAXMANN.COM 86 (BOMBAY), IT HAS BEEN HELD THAT NO PENALTY U/S.271(L)(C) IS LEVIABLE EVEN FOR UNSUSTAINABLE/NON - DEBATABLE CLAIMS IF THERE IS DISCLOSURE IN THE RETURN. FACTS OF THIS CASE WERE THAT, THOUGH THE INCOME FROM THE TRANSFER OF UNITS OF A MUTUAL FUND IS EXEMPT U/S .10(33), THE ASSESSEE CLAIMED A DEDUCTION FOR THE LOSS OF RS.3.08 CRORES SUFFERED BY HIM ON TRANSFER OF US 64 UNITS. THE AO DISALLOWED THE LOSS ON THE GROUND THAT THE EXEMPTION IN SECTION 10(33) APPLIED TO A LOSS AS WELL AND IMPOSED PENALTY U/S .71(L)(C). THE CIT(A) CONFIRMED THE PENALTY. THE HIGH COURT, HELD: 4 AS THE ASSESSEE HAD DISCLOSED ALL DETAILS IN THE RETURN OF INCOME, AT THE HIGHEST IT CAN BE SAID THAT THE CLAIM OF THE ASSESSEE WAS NOT SUSTAINABLE IN LAW. BUT AS THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. PENALTY U/S 271( 1 )(C) COULD NOT BE LEVIED (RELIANCE PETROPRODUCTS 322 ITR 158 (SC) REFERRED). IT WAS HELD BY THE ITAT, DELHI BENCH V IN THE CASE OF SAKET AGARWAL V. ITO, ''[2013] 36 TAXMA NN.COM 298 (DELHI - TRIB.), THAT IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE'S CASE IS FALSE, THEN THE PENALTY IS NO T IMPOSABLE. IN THE PRESENT CASE, THE ASSESSEE'S EXPLANATION REMAINED UNPROVED BUT IT CANNOT BE SAID AS DISPROVED. FURTHER, S.68 IS AN ENABLING PROVISION FOR MAKING AN ADDITION WHERE THE ASSESSEE FAILS TO GIVE AN EXPLANATION REGARDING THE CASH CREDIT BUT SUCH ADDITION DOES NOT AUTOMATICALLY JUSTIFY IMPOSITION OF PENALTY U/S.271(L)(C) R/W EXPLANATION 1 THERETO. IN ORDER TO JUSTIFY LEVY OF PENALTY, THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO A REASONABLE CONCLUSION T HAT THE AMOUNT DOES REPRESENT THE ASSESSEE'S INCOME AND THE CIRCUMSTANCES MUST SHOW, THAT THERE WAS A CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS. FROM A BARE READING OF S.271, IT IS CLEAR THAT THE PROVISIONS OF EXPLANATION 1 TO S. 271 DO NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS, IN FACT, THE INCOME OF THE ASSESSEE AND THAT THE ASSESSEE DID NOT SATISFACTORILY EXPLAIN THE CASH CREDITS BY PRODUCING EVIDENCE AND DOCUMENTS. ACCORDINGLY, PENALTY U/S.2 71( 1 )(C) IS NOT LEVIABLE (UPENDRA V. MITHANI (BO M) (INCLUDED IN FI!E ) AND NATIONAL TEXTILE 249 ITR 125 (GUJ) FOLLOWED) WHEN TWO VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE CAN BE DRAWN, IN A PENALTY PROCEEDING, PENALTY CANNOT BE IMPOSED. [2 004] 265 ITR 0025 - [CALCUTTA HIGH COURT ] DURGA KAMAL RICE MILLS V. CIT IN THE INSTANT CASE, THERE IS NO FINDING THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OR CONCEALED PARTICULARS OF INCOME IN RESPECT OF THE SAID DEPOSIT OF RS.1,10,001/ - IN CANARA BANK ACCOUNT. THE ADDITION HAS BEEN MADE SINCE THE APPELLANT COULD NOT SUPPORT THE CLAIM WITH PROPER EVIDENCES OR PARTICULARS. UNDER THE 5 CIR CUMSTANCES, THE PENALTY LEVIED FOR RS.33,000/ - IN RESPECT OF CREDIT OF RS.1,10,001/ - IN CANARA BANK ACCOUNT IS NOT CORRECT. 3. THE AO ALSO LEVIED PENALTY OF RS.18,000/ - @ 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF ADDITION OF RS.60,000/ - IN THE FORM OF CASH ADVANCES RECEIVED FROM FRIENDS AND RELATIVES. NO DETAILS - WERE SUBMITTED FOR THE SAME. EARLIER THE ASSESSEE HAS CLAIMED THE SAID AMOUNT AS ADVANCE RECEIVED FROM SRUSTI ESTATE (P) LTD. ACCORDINGLY, THE ASSESSEE HAS - TAKEN DIFFERENT STANDS BEFORE THE AO IN - RESPECT OF CASH CREDIT OF RS.60,000/ - . THE ADDITION MADE BY THE AO WAS CONFIRMED BY THE CIT(A) WITH THE FOLLOWING OBSERVATIONS: '5. THE GROUND NO. 5 RELATES TO ADDITION IN RESPECT OF CASH ADVANCE OF RS.60,000/ - CLAIMED TO HAVE BEEN, RECEIVED FROM FRIE NDS AND RELATIVES. AS OBSERVED BY THE AO, AN AMOUNT OF RS.60,000/ - WAS SHOWN AS RECEIPT OF ADVANCE IN CASH FROM SRUSTI ESTATES PVT. LTD. AFTER QUERY WAS MADE BY THE ' AO, THE APPELLANT SUBMITTED BEFORE THE AO THAT SAID RS.60,000/ - WAS ACTUALLY RECEIVED FRO M FRIENDS AND RELATIVES BUT MISTAKENLY SHOWN AS RECEIPTS FROM SRUSTI ESTATES PVT. LTD. NO FURTHER DETAILS WERE GIVEN TO THE AO. ACCORDINGLY, THE AMOUNT WAS TREATED AS UNDISCLOSED INCOME IN THE ASSESSMENT . 5.1 DURING THE APPEAL HEARING, THE EXPLANATION GIVEN BEFORE THE AO HAS BEEN REPEATED. IN THE BALANCE SHEET FILED, ON THE LIABILITY SIDE, THE NAME OF SRUSTI ESTATES PVT. LTD. APPEARS AGAINST WHICH AN ADVANCE OF RS.87,500/ - AND AN ADDITION OF RS.60,000/ - TOTALING TO RS.1,47,500/ - IS MENTIONED. IN THE CA SH FLOW STATEMENT, RS.60,000/ - WAS MENTIONED AS ADVANCE FROM SRUSTI ESTATES PVT. LTD. HOWEVER, THE APPELLANT SUBMITS THAT THE FIGURE AGAINST SRUSTI ESTATES PVT. LTD. FOR RS.60,000/ - WAS TYPOGRAPHICAL ERROR AND THE AMOUNT ACTUALLY HAS BEEN RECEIVED FROM FRI ENDS AND RELATIVES. 5.2 I HAVE GIVEN CAREFUL CONSIDERATION TO THE MATTER. THE APPELLANT HAS MADE A CLAIM INITIALLY BUT FINDING THAT THE SAME EXPLANATION DOES NOT HOLD GOOD AS THE CORRESPONDING ENTRIES IN THE BOOKS OF ACCOUNTS OF SRUSTI ESTATES PVT. LTD. IS REQUIRED TO BE TALL IED, CHANGES THE EXPLANATION. HOWEVER, THE CHANGED EXPLANATION HAS NOT BEEN SUPPORTED BY ANY DETAILS OR EVIDENCES. MERE ASSERTIONS, PARTICULARLY WHEN UNEXPLAINED ENTRIES ARE FOUND, WOULD NOT BE CONSIDERED AS A VALID EXPLANATION. THE APPELLANT HAS FAILED TO SUBSTANTIATE THE CLAIM OF RECEIPT OF LOAN FROM FRIENDS AND RELATIVES DURING THE ASSESSMENT AND APPEAL STAGES. ACCORDINGLY, THE ADDITION MADE BY THE AO IS SUSTAINED AND THIS GROUND FAILS.' 3.1 THE APPELLANT SUBMITS THAT THE ADDITION OF RS.60,000/ - TOWARDS CASH CREDIT IS ON ACCOUNT OF NON - PRODUCTION OF EVIDENCE BY THE ASSESSEE AND 6 NOT A CASE OF CONCEALMENT OF INCOME. THE CASH ADVANCED OF RS.60,000/ - WAS DULY DISCLOSED IN THE CASH FLOW STATEMENT AND IN THE BALANCE SHEET. 3.2 I HAVE CONSIDERED THE MATTER CAREFULLY. CLEARLY THE APPELLANT HAS CONCEALED INCOME, AND FURNISHED INACCURATE PARTICULARS IN RESPECT OF CASH CREDIT O F RS,60,000/ - . THE CHANGING STAND OF THE APPELLANT IS PROOF ENOUGH THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS TO CONCEAL INCOME. IN VIEW OF THE SAME, THE PENALTY LEVIED FOR RS.18,000/ - IN RESPECT OF CASH ADVANCES OF RS.60,000/ - IS CORRECT. TO SUM UP, THE PENALTY LEVIED BY THE AO IS REDUCED TO RS.18,000/ - . 5. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THIS CASE, THE ASSESSEE WAS CREDITED A SUM OF RS. 1,10,001/ - IN C A NARA BANK ACCOUNT NO. 331, SAH EE D NAGAR BRANCH, BHUBANESWAR . THE LEARNED AR SUBMITTED THAT ASSESSEE HAS DEPOSITED THIS AMOUNT TOWARDS LAND DEALING , HENCE, THIS INCOME IS BUSINESS INCOME. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SHOWN THIS AMOUNT WHICH WAS EARNED FOR LAND DEALING, BUT N O EVIDENCE WAS PRODUCED BEFORE THE ASSESSING OFFICER THAT THIS INCOME IS BUSINESS INCOME. WE FIND THAT LD. CIT(A) , IN HIS ORDER , HAS ELABORATELY DISCUSSED THE ISSUE IN DETAIL . WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD. CIT(A) , THEREFORE , OUR INTERFERENCE IS NOT REQUIRED. 6. IN I.T.A.NO. 243/CTK/2014 FOR THE A.Y. 2002 - 0 3 , AN IDENTICAL ISSUE IS INVOLVED HAVING SIMILAR FACTS, THE ONLY DIFFERENCE IS IN THE 7 AMOUNT, THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER IN RESPECT OF I.T.A. NO. 244 / CTK /2014 SHALL APPLY MUTATIS - MUTANDIS FOR I.T.A.NO. 243/CTK/2014 . I.T.A.NO. 350/CTK/2014 7. SHORT FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF THE ASSESSEE AND GROUP CONCERN . DURING THE SEARCH A PETTY CASH BOOK WAS SEIZED FROM THE MAIN OFFICE. THE ENTRIES SHOWS THAT THE ASSESSEE AS WELL AS GROUP CONCERN WAS RECEIVED CASH . THE ASSESSEE EXPLAINED THAT CASH WAS HANDED OVER TO THE CASHIER FOR PAYMENT PURPOSES AND SUCH CASH ARE PART OF CASH BALANCE OF REGULAR BOOKS OF ACCOUNTS OF THE GROUP CONCERN . THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE ADDED THE CASH OF RS. 1,22,51,864/ - . THE MATTER WAS TRAVELLED TO TRIBUNAL AND THE TRIBUNAL HAS REDUCED THIS AMOUNT TO RS. 20,14,985/ - . THE ASSESSING OFFICER HAS LEVIED THE PENALTY FOR THE SAME. 8. THE MATTER WAS CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DELETED THE PENALTY BY OBSERVING AS UNDER: - 4.1 I HAVE CONSIDERED THE MATTER CAREFULLY. AS OBSERVED BY THE CIT(A) AT PARA 4.1 IN HIS ORDER DT.3.1.2012, THE ENTRIES IN SR - 2 WAS EXPLAINED BY THE APPELLANT AS UNDER: - 8 I) CASH WITHDRAWAL FROM BANKS RS RS. SRUSTI ESTATES PVT, LTD. 22,90,000 SAMBIT RESORTS PVT. LTD. 63,42,000 NIIS A/C 13,30,000 99,62,000 II) ADVANCE FROM CUSTOMERS SRUSTI ESTATES PVT. LTD. 34,65,501 SAMBIT RESORTS PVT. LTD. 10 , 95,000 45,60,001 II I) AMOUNT RECEIVED FROM S.C.NAYK(SIR) WHICH REPRESENTS TRANSFER OF PHYSICAL CASH FROM HIS CUSTODY TO THE CASHIER FOR PAYMENT PURPOSE AND THIS CASH BALANCE ARE PART OF REGULAR BOOKS OF ACCOUNTS OF DIFFERENT CONCERNS. 34,83,500 IV) MISCELLANEOUS RECEIPTS SHOP RENT OF SRUSTI ESTATES P LTD 1,46,294 OTHER RECEIPTS 15 , 45 , 687 16 ,91,981 TOTAL 1,96,97,982 AS PER THE REMAND REPORT, WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN IS ORDER, THE AO HAS REPORTED ON THE SUBJECT AS UNDER: ........ 4. THE SEIZED DOCUMENT IDENTIFIED AS SR - 2 IS A PETTY CASH BOOK MAINTAINED BY THE CASHIER OF THE ASSESSES IN WHICH CASH RECEIPT AND PAYMENTS FOR SUBASH NAYAK HIMSELF AS WELL AS ALL THE THREE CONCERNS OF THE GROUP IN WHICH SRI SUBASH CHANDRA NAYAK IS A MANAG ING DIRECTOR/DIRECTOR/MANAGING TRUSTEE AND THE SAME WAS SEIZED FROM A/ 16, ASHOK NAGAR, BHUBANESWAR WHICH HAPPENS TO BE THE MAIN OFFICE PREMISES OF THE GROUP. THE OPENING BALANCE FOR FINANCIAL YEAR AS PER SR - 2 IS ( - ) RS,7,947/ - AND CLOSING BALANCE IS RS.8,930/ - . THE CORRECT FIGURE IN THE HEAD 'CASH BROUGHT BY SIR' AS PER SR - 2 IS AS UNDER: CASH BROUGHT BY SIR - RS. 34,93, 500/ - LESS : CASH RETURNED TO SIR - RS. 14, 78,5157 - ACTUAL CASH RECEIVED FROM SRI AS PER SR - 2 - RS.20,14,985/ - ABOVE ALL, AT THE TIME OF VERIFICATION OF THE SAID SEIZED DOCUMENT SR - 2, IT IS OBSERVED THAT THE PEAK CREDIT OF CASH IN THE PETTY CASH BOOK I.E. SR - 2 UNDER THE HEAD 'CASH BROUGHT BY SIR' IS RS.10,00,000/ - WHICH IS AT THE BEGINNING OF THE FINANCIAL YEAR. 9 ....... FROM THE ABOVE, IT IS APPARENT THAT NO FINDINGS HAVE BEEN GIVEN THAT THE APPELLANT HAS CONCEALED THE INCOME TO THE EXTENT OF RS.20,14,985/. THE ADDITION HAS BEEN MADE BY THE AO AND PARTLY SUSTAINED BY THE CI T(A)/ITAT ON THE GROUND THAT THE CLAIM OF THE APPELLANT COULD NOT BE CORROBORATED WITH BOOKS OF ACCOUNTS OF THE THREE CONCERNS. THE MAJOR PART OF THE ENTRIES IN SR - 2 HAVE BEEN CORROBORATED AND FOUND TO BE CORRECT. FURTHER, THE ADDITION MADE COULD RELATE TO THE INCOME OF THE THREE CONCERNS AS WELL AS TO THE APPELLANT BUT WAS MADE IN THE HANDS OF THE APPELLANT BEING THE DIRECTOR/MANAGING TRUSTEE, AS THE CASE MAY BE, OF THE THREE CONCERNS. THERE IS NO FINDING THAT THE CLAIM OF THE APPELLANT IS FALSE OR THAT TH E APPELLANT HAS CONCEALED THE INCOME OR FURNISHED THE INACCURATE PARTICULARS OF INCOME. THE ADDITION WAS MADE SINCE PART OF THE CLAIM COULD NOT BE CORROBORATED WITH THE BOOKS OF ACCOUNTS. THE HON'B L E CALCUTTA HIGH COURT IN THE CASE OF DURGA KAMAL RICE MILLS V. CIT, [2004] 265 ITR 0025 - [CAL], HELD THAT THE FINDINGS IN QUANTUM PROCEEDINGS ARE NOT BINDING IN PENALTY PROCEEDINGS AND THAT IMPOSITION OF PENALTY REQUIRES INDEPENDENT FINDING. WHEN TWO VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE CAN BE DRAWN, IN A PENALTY PROCEEDING, PENALTY CANNOT BE IMPOSED. IN THIS CASE, THERE WAS NOTHING TO INDICATE THAT THE EXPLANATION WAS FALSE OR MALA FIDE. THE TRIBUNAL HAD NOT ARRIVED AT ANY SUCH CONCLU SION. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, NO REASONABLE AND POSITIVE INFERENCE COULD BE DRAWN. BECAUSE OF THE TWO STANDS TAKEN BY AUTHORITY IN THE INSTANT CASE BY ADDING THE AMOUNT IN THE INCOME OF THE ASSESSEE AND AGAIN ACCEPTING THE SAME AT THE HANDS OF THE PARTNERS, THE AUTHORITY COULD NOT FALL BACK ON ONE AND REJECT THE OTHER. [PARA 11 OF THE JUDGMENT] IN THE CASE OF CIT V, GEM GRANITES (KARNATAK) (MADRAS HIGH COURT), IT WAS HELD THAT PENALTY U/S.271(L)(C) CANNOT BE LEVIED IF THE ASSESSEE DISCHARGES THE PRIMARY BURDEN BY A COGENT EXPLANATION AND THE AO IS UNABLE TO REBUT IT. IT WAS ALSO HELD THAT MERELY BECAUSE THE ASSESSMENT PROCEEDINGS HAVE BEEN CONFIRMED DOES NOT AUTOMATICALLY MEAN THAT PENALTY U/S 271(L)(C) IS JUSTIFIED. UNLESS THE CASE IS STRICTLY COVERED BY SEC. 271(L)(C), PENALTY CANNOT BE INVOKED. FOR SUSTAINING PENALTY, THE 10 BONA FIDE EXPLANATION OF THE ASSESSEE MUST BE LOOKED AT SO THAT THE CONTUMACIOUS CONDUCT OF THE ASSESSEE FOR THE PURPOSE OF SUSTAINING THE PENALTY WOULD BE TAKEN AS CONDITION THAT IS THE MAIN REQUIREMENT U/S 271( 1 )(C). IN SAKET AGARWAL V. ITO (ITAT DELHI), [2013] 36 TAXMANN.COM 298 (DELHI - TRIB.)/[2014] 147 ITD 686 (DELHI - TRIB.), IT WAS HELD THAT NO PENALTY U/S.271(L)(C) IS LEVIABLE EVEN IF EXPLANATION UNPROVED IF IT IS NOT DISPROVED BY AO. IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE'S CASE IS FALSE, THEN THE PENALTY IS NOT IMPOSABLE. IN QUANTUM PROCEEDINGS, A PARTICULAR PROVISION MIGHT BE ATTRACTED FOR ADDITION TO THE INCOME OF THE ASSESSEE. BUT WHEN IT COMES TO THE QUESTION OF IMPOSITION OF PENALTY, THEN INDEPENDENT OF THE FINDING ARRIVED AT IN THE QUANTUM PROCEEDINGS, THE AUTHORITY HAS TO FIND CONCLUSIVELY THAT THE ASSESSEE OWNS THE CONCEALED AMOUNT. IN THE PRESENT CASE, THE ASSESSEE'S EXPLANATION REMAINED UNPROVED BUT IT CANNOT BE SAID AS D ISPROVED. IN ORDER TO JUSTIFY LEVY OF PENALTY, THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO A REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSESSEE'S INCOME AND THE CIRCUMSTANCES MUST SHOW THAT THERE WAS A CONSCIOUS CONCEALMENT OR AC T OF FURNISHING OF INACCURATE PARTICULARS. FROM A BARE READING OF SEC. 271, IT IS CLEAR THAT THE PROVISIONS OF EXPLANATION 1 TO SEC.271 DO NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS, IN FACT, THE INCOME OF THE ASSESSEE A ND THAT THE ASSESSEE DID NOT SATISFACTORILY EXPLAIN THE CASH ENTRIES BY PRODUCING EVIDENCE AND DOCUMENTS. IN VIEW OF THE ABOVE DISCUSSION OF FACTS AND JUDICIAL DECISIONS, IT HAS NOT BEEN PROVED THAT APPELLANT HAS CONCEALED INCOME AND ADDITION WAS MADE SINCE THE EXPLANATION GIVEN WAS NOT ACCEPTED. ACCORDINGLY, PENALTY LEVIED IS CANCELLED. 9. WE HAVE HEARD RIV AL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT A SEARCH WAS CONDUCTED IN THE GROUP CASE OF THE ASSESSEE AND CASH OF 11 RS. 1,22,51,864/ - WAS FOUND . THE MATTER WENT UPTO TRIBUNA L AND THE TRIBUNAL HAS REDUCED THIS CASH TO RS. 20,14,985/ - . THE TRIBUNAL IN REDUCING THIS CASH HAS HELD THAT THIS CASH IS FOUND FROM THREE CONCERNS AS WELL AS TO THE ASSESSEE , BUT WAS MADE IN THE HANDS OF THE ASSESSEE BEING THE DIRECTOR /MANAGING TRUSTEE. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER HAS NOT GIVEN ANY INDEPENDENT FINDING THAT THE ASSESSEE HAS CONCEALED TH E PARTICULARS OF INCOME , THEREFORE , NO PENALTY CAN BE LEVIED. IN VIEW OF THIS, WE UPHELD THE ACTION OF LD. CIT(A), WHO DELETED THE PENALTY. 10 IN THE RESULT, APPEAL S OF THE ASSESSEE AS WELL AS THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK ON 1 1 T H MARCH, 2015. SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 TH MARCH , 201 5 . VR/ - COPY TO: 12 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., CUTTACK.