MITHALAL N. SISODIA HUF, MUMBAI V. ITO WD 14(1)(2), MUMBAI

ITA 2586/MUM/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7267 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: P K PARIDA; MRS SANJUKTA CHOWDHARY
• Keywords: Unexplained investment; Peak credit; Question of law; Accommodation entries; Revised return
• Section: 54F; 139(5); 131; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI R.S.SYAL(A.M) AND SHRI N.V.VASUDEVAN(J. M) ITA NO. 2586/MUM/2010(A.Y.2005-06) SHRI MITHALAL N. SISODIA HUF, ROOM NO.15, GURUKUL CHAMBERS, 2 ND FLOOR, 185/187,MUMBAIDEVI ROAD, MUMBAI 400 002. PAN:AAAHS 1562B (APPELLANT) VS. THE INCOME TAX OFFICER 14(1)(2) ROOM NO.204, EARNEST HOUSE, NARIMAN POINT, MUMBAI 21. (RESPONDENT) APPELLANT BY : SHRI P.K.PARIDA & MRS. SANJUKTA CHOWDHARY RESPONDENT BY : SHRI P.C.MAURYA DATE OF HEARING : 28/07/2011 DATE OF PRONOUNCEMENT : 05/08/2011 ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 9/2/2010 OF CIT(A) 25, MUMBAI RELATING TO ASSESSMENT YEAR 2005- 06. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE O RDER OF THE CIT(A), WHEREBY THE CIT(A) CONFIRMED THE ORDER OF THE AO IM POSING PENALTY ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961(THE ACT). THE FACTS AND CIRCUMSTANCES UNDER WHICH THE PENALTY U/S . 271(1)(C) OF THE ACT WAS IMPOSED ON THE ASSESSEE BY THE AO ARE AS FOLLOW S. 3. THE ASSESSEE IS A HUF. IN THE RETURN OF INCOME FILED FOR A.Y 2005-06 THE ASSESSEE CLAIMED TO HAVE EARNED A LONG TERM CAP ITAL GAIN (LTCG) ON SALE OF SHARES. THE LTCG WAS CLAIMED EXEMPT UNDER SECTION 54F OF THE ACT ITA NO.2586/MUM/2010(A.Y.2005-06) 2 BECAUSE OF THE INVESTMENT OF THE LTCG IN PURCHASE O F A FLAT. THE LTCG AROSE OUT OF SALE OF 6000 SHARES OF A COMPANY BY NA ME POONAM PHARMACEUTICALS LTD., LATER KNOW AS POONAM CORPORAT ION LTD. (POONAM). THE SHARES HAD BEEN PURCHASED BY THE ASSESSEE ON 8/ 4/2003 FOR A SUM OF RS. 14,320/- THROUGH M/S. V.K.SINGHANIA & CO., STO CK & SHARE BROKER, CALCUTTA. THE ASSESSEE HAD PAID THE SALE CONSIDERA TION IN CASH AT THE TIME OF PURCHASE. THE SHARES WERE SOLD IN AUGUST, SEPTE MBER AND NOVEMBER, 2004 FOR A TOTAL CONSIDERATION OF RS. 17,87,450/-. THE SHARES HAD BEEN SOLD BY THE ASSESSEE THROUGH STOCK AND SHARE BROKERS, SH YAMLAL SULTANIA, CALCUTTA. 4. THE AO ADDRESSED LETTERS TO POONAM. THE LETTER S WERE RETURNED UNSERVED WITH A REMARK NOT KNOWN. THE ASSESSEE WAS EXAMIN ED UNDER SECTION 131 OF THE ACT AND THE STATEMENT WAS RECORDED ON 6/12/2 007 (IN THE COURSE OF ASSESSMENT PROCEEDINGS). IN HIS STATEMENT THE ASSE SSEE STATED THAT HE PURCHASED THE SHARES THROUGH ONE SHRI RISHAB BHAI W HO WAS KNOWN TO HIM. IT WAS ALSO SUBMITTED THAT THE ADVICE FOR PURCHASE AND SALE OF SHARES WAS GIVEN BY RISHAB BHAI. HE WAS ALSO ASKED AS TO WHY HE PURCHASED AND SOLD SHARES THROUGH BROKERS IN CALCUTTA WHEN HE WAS A RE SIDENT OF MUMBAI. THE ASSESSEE SUBMITTED THAT POONAM HAD OFFICE IN MUMBAI AND THAT HE HAD DONE THE TRANSACTIONS FROM MUMBAI. THE AO THEREAFTER CO NFRONTED THE ASSESSEE WITH A LETTER RECEIVED FROM SHAMLAL SULTANIA, THE P ERSON THROUGH WHOM THE SHARES WERE SOLD BY THE ASSESSEE, WHEREIN HE HAS C ATEGORICALLY STATED THAT THE ASSESSEE WAS NOT HIS CLIENT AND THERE WAS NO TR ANSACTION OF THE SHARES OF POONAM DURING THE PREVIOUS YEAR. THE ASSESSEE EXPL AINED THAT IT HAD PURCHASED AND SOLD THE SHARES AND CANNOT SAY ANYTHI NG MORE. THE AO ALSO CONFRONTED THE ASSESSEE WITH A LETTER RECEIVED FROM CALCUTTA STOCK EXCHANGE LTD., WHEREIN IT WAS INFORMED THAT M/S.V.K.SINGHANI A HAD NOT DONE ANY TRASACTION IN SCRIP POONAM IN THE PHYSICAL FORM IN THE ONLINE TRADING SYSTEM OF CALCUTTA STOCK EXCHANGE. THE ASSESSEE HOWEVER M AINTAINED THAT HE HAD ITA NO.2586/MUM/2010(A.Y.2005-06) 3 DONE TRANSACTION THROUGH HDFC BANK D-MAT ACCOUNT. HE ALSO SUBMITTED THAT HE WAS NOT IN A POSITION TO EXPLAIN THE DISCRE PANCIES POINTED OUT BY THE AO AND THAT HE NEEDED 7 DAYS TIME TO GIVEN HIS EXPL ANATION. AGAIN ON 19/12/2007 THE ASSESSEE WAS EXAMINED. EVEN PRIOR T O HIS EXAMINATION ON 19/12/2007, THE ASSESSEE HAD WRITTEN A LETTER TO TH E A.O. DATED 14.12.2007. THE SAID LETTER READS AS FOLLOWS: I UNDERSIGNED MITHALAL N. SISODIA, HUF AS THE KART A OF THE HUF HEREBY SUBMIT AS DURING THE YEAR REFERENCE I HAVE CLAIMED DEDUCTION U/S.54F OF INCOME TAX ACT 1961 AGAINST LTCG ON SALE OF SHARES. THOUGH I HAVE SUBMITTED DOCUMENTS REGARDING PURCHSE & SALE OF SHARES TO YOURSELF. YOURSELF HAS RAISED DETAILED Q UERIES ABOUT TRANSACTIONS RELATED TO PURCHASE & SALE OF SHARES. AS I AM AGED ABOUT 60 YEARS OLD & I AM NOT IN A POSITION TO SUBMIT COM PLETE DETAILS AS MOST OF THE DETAILS ARE REQUIRED TO BE OBTAINED FRO M CULCUTTA. IN ORDER TO AVOID LITIGATION AT THIS OLD AGE & TO BUY PEACE OF MIND I SURRENDER MY CLAIM OF U/S.54F OF INCOME TAX ACT 1961 AND VOLU NTARILY OFFER FOR TAXATION OF RS. 17,57,450/- BEING THE AMOUNT ON ACC OUNT OF SALES OF SHARES AS INCOME FROM OTHER SOURCES. FURTHER I H AVE ALSO FILED REVISED RETURN ON 19/12/2007 & I HAVE PAID TAX ON R EVISED INCOME INCLUDING OF AMOUNT OF CLAIM U/S. 54F INCOME TAX AC T 1961. HENCE ALL TRANSACTIONS ON ACCOUNT OF PURCHASE & SALE OF SHARE S WERE REFLECTED IN RETURN OF INCOME, SUBMISSION ON 14/12/2007 & REVISE D RETURN ON INCOME. HENCE, I HAVE NEITHER CONCEALED ANY INCOME NOR FILED WRONG PARTICULARS OF PURCHASE & SALE OF SHARES. HENCE IN ORDER TO BUY PEACE AND TO AVOID FURTHER LITIGATION I HAVE AGREED TO OF FER THE SAID AMOUNT OF SALE OF SHARES FOR REGULAR TAXATION. AT THE TIME O F HEARING IT WAS UNDERSTOOD THAT ON OFFERING THE SAID AMOUNT FOR REG ULAR TAXATION THERE WILL BE NO LEVY OF PENALTY U/S. 271(1)(C) OF INCOME TAX ACT 1961. FURTHER I HAVE NOT GONE FOR ANY APPEAL. LOOKING TO THE FACTS OF THE CASE & OUR CLIENT HAVE GOOD BONAFIDE OF INTENSION O R BELIEF THAT AFTER OFFERING THE SAID AMOUNT FOR REGULAR TAXATION & HAV ING PAID THE I.TAX ON THE SAID AMOUNT IN ORDER TO BUY PEACE OF MIND, T HERE IS NO QUESTION OF LEVY OF PENALTY U/S. 271(1)(C) OF INCOME TAX ACT 1961. 5. ON 19/12/2007 IN HIS STATEMENT THE ASSESSEE SUB MITTED AS FOLLOWS: Q.2. DO YOU NEED TO SAY SOMETHING? ANS: DUE TO OLD AGE AND TO AVOID LITIGATION AT THIS AGE AND TO BUY PEACE OF MIND I THE KARTA OF MITALAL SISODIA, HUF HEREBY SURRENDER MY CLAIM FOR EXEMPTION U/S. 54F OF THE I.T. ACT, 1961 AND HA VE VOLUNTARILY OFFERED THE INCOME FOR TAXATION WHICH IS SELF EXPLA NATORY AS PER MY ITA NO.2586/MUM/2010(A.Y.2005-06) 4 LETTER DATED 14/12/2007. MOREOVER, I AM SUBMITTING HEREWITH XEROX COPY OF REVISED RETURN FILED ALONGWITH REVISED COMP UTATION OF INCOME AND PROOF FOR THE PAYMENT OF TAXES THEREON. 6. THEREAFTER THE AO MADE A REFERENCE TO INVESTIGA TION CONDUCTED BY INVESTIGATION WING OF THE DEPARTMENT AND HAS POINTE D OUT THE MODUS OPERANDI FOLLOWED BY VARIOUS PERSONS CLAIMING LTCG. THIS IS A GENERAL REFERENCE TO THE PRACTICE OF INCOME TAX PRACTITIONE RS IN COLLUSION WITH CERTAIN SHARE BROKERS GIVING ACCOMMODATION ENTRIES TO VARIO US BENEFICIARIES ON ACCOUNT OF LTCG. THE AO THEREAFTER CONCLUDED THAT THE ASSESSEE ALSO AVAILED OFF ONE SUCH ACCOMMODATION ENTRY. THE HOLD THAT THE ASSESSEE HAD BROUGHT INTO HIS ACCOUNTS MONEY WHICH REMAINED UNAC COUNTED AND FURTHER PAID LESS TAX BY CLAIMING THE SUM BROUGHT IN THE BO OKS AS LTCG. ACCORDING TO THE AO, LEGITIMATE PAYMENT OF TAX TO THE GOVERNM ENT WAS AVOIDED BY THE ASSESSEE. 7. WE HAVE ALREADY NOTICED THAT THE ASSESSEE FILED REVISED RETURN ON 19/12/2007. THE AO HOWEVER REFUSED TO TAKE COGNIZA NCE OF THE REVISED RETURN BECAUSE THE REVISED RETURN WAS FILED BEYOND THE PERIOD PERMITTED IN LAW UNDER THE PROVISIONS OF SECTION 139(5) OF THE A CT. FOR ALL THE ABOVE REASONS THE AO TREATED THE SALE PROCEEDS OF THE SAL E OF SHARES AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. FURTHER THE DEDU CTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F OF THE ACT WAS ALSO NOT ALLOWED. 8. IT IS NOT IN DISPUTE THAT THE ADDITION MADE BY T HE AO WAS ACCEPTED BY THE ASSESSEE. ON THE ABOVE FACTS, THE AO INITIATE D PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSE SSEE. THE AO HELD THAT THE ASSESSEE CONCEALED PARTICULARS OF INCOME AND TH AT WHEN INVESTIGATIONS WERE CARRIED OUT THE ASSESSEE SURRENDERED AND OFFER ED TO TAX THE SALE PROCEEDINGS OF THE SHARES AS INCOME FROM OTHER SOUR CES. THE AO ALSO HELD ITA NO.2586/MUM/2010(A.Y.2005-06) 5 THAT THE ASSESSEE DID NOT GIVE PROPER EXPLANATION R EGARDING THE ADDITION MADE, EVEN IN THE PENALTY PROCEEDINGS AND, THEREFOR E, IMPOSITION OF PENALTY WOULD BE THE MOST APPROPRIATE COURSE. THE AO ALSO REFERRED TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF K.P.MAD HUSUDANAN VS. CIT , 251 ITR 99 (SC) AND HELD THAT UNDER EXPLANATION-1 T O SECTION 271(1)(C) OF THE ACT THERE IS A PRESUMPTION OF CONCEALMENT OF INCOM E WHENEVER AN ADDITION IS MADE TO THE INCOME RETURNED BY AN ASSESSEE AND T HAT IN SUCH A SITUATION THE BURDEN LIES ON THE ASSESSEE TO EXPLAIN AS TO WH Y PENALTY SHOULD NOT BE IMPOSED. THE AO HELD THAT THE ASSESSEE DID NOT FUR NISH ANY SUCH EXPLANATION AND, THEREFORE, THE AO IMPOSED PENALTY OF A SUM EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED. ON APPEAL BY THE A SSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO. 9. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSE E HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 10. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSE L FOR THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DIS ALLOWANCE OF A CLAIM PER- SE DOES NOT CALL FOR IMPOSITION OF PENALTY FOR CONC EALMENT. IN THIS REGARD OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD., 322 ITR 158 (SC) AND CERTAIN OTHER DECISIONS. IT IS FURTHER SUBMITTED T HAT IMPOSITION OF PENALTY IS DISCRETIONARY AND THE FACTS OF THE PRESENT CASE DOE S NOT JUSTIFY IMPOSITION OF PENALTY. IN THIS REGARD LD. COUNSEL FOR THE ASSES SEE DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE SURRENDERED ITS CLAIM TH AT HE HAD DERIVED LONG TERM CAPITAL GAINS UNDER SECTION 54F OF THE ACT BY DECLARING THE SAME AS INCOME FROM OTHER SOURCES ONLY WITH A VIEW TO PURCH ASE PEACE AND AVOID LITIGATION. IN THIS REGARD THE LD. COUNSEL FOR TH E ASSESSEE DREW OUR ATTENTION TO THE LETTER DATED 14/12/2007 WRITTEN BY THE ASSES SEE TO THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS, WHEREIN HE HAS SU RRENDERED THE INCOME ITA NO.2586/MUM/2010(A.Y.2005-06) 6 SUBJECT TO THE CONDITION THAT THERE WOULD BE NO LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT WAS ALSO ARGUED THAT LE VY OF PENALTY IS NOT AUTOMATIC AND IN THIS REGARD RELIED ON THE DECISION OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ASK ENTERPRISES, 230 ITR 48 (BOM) AND HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SHOUBHAGAN LAL MAHAVIRCHAND 142 ITR 747. IT WAS ALSO ARGUED THAT PENALTY PROCEEDIN GS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINCT. IT WAS ALSO ARGUED THAT IN A.Y 2004- 05 THE ASSESSEE HAD DECLARED PURCHASE OF SHARES IN BALANCE SHEET AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE. 11. THE LD. D.R HOWEVER SUBMITTED THAT THE SURRENDE R MADE BY THE ASSESSEE WAS NOT VOLUNTARY AND THAT THE SAME WAS MA DE ONLY WHEN THE AO CONFRONTED INCRIMINATING MATERIAL TO THE ASSESSEE I N THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER RELIANCE WAS PLACE D ON EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT AND IT WAS SUBMITTED T HAT THE ASSESSEE DID NOT PRODUCED ANY EVIDENCE TO SHOW AS TO HOW THE CLAIM MADE BY THE ASSESSEE WAS BONAFIDE. FURTHER RELIANCE WAS PLACED ON THE C ERTAIN JUDICIAL PRECEDENTS TO WHICH WE SHALL MAKE A REFERENCE LATER. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE H AVE ALREADY NARRATED THE SEQUENCE OF EVENTS. IT IS SEEN FROM THE PAPER BOOKS FILED BY THE ASSESSEE THAT THE ASSESSEE HAD FILED BEFORE THE AO PARTICUL ARS OF PURCHASE AS WELL AS SALE OF THE SHARES. PURCHASE OF THE SHARES IN QUES TION WAS MADE BY THE ASSESSEE ON 14/4/2003. THE SAME WAS SHOWN AS INVE STMENT IN THE BALANCE SHEET AS ON 31/3/2004 AND THE SAME WAS ACCEPTED BY THE REVENUE. THE SALE OF SHARES WAS DONE BY THE ASSESSEE IN THREE INSTALL MENTS ON 6/3/2004, 10/9/2004 AND 5/11/2004. ON ENQUIRY BY THE AO, THE BROKER WHO SOLD THE SHARES INFORMED THE AO THAT THE ASSESSEE WAS NOT HI S CLIENT AND THAT HE HAD NOT DONE ANY TRANSACTION OF THE SCRIP POONAM DURING THE PREVIOUS YEAR. IT IS ITA NO.2586/MUM/2010(A.Y.2005-06) 7 ALSO NOT DISPUTED THAT THE SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE IN THE D-MAT ACCOUNT AND ON SALE BY THE AS SESSEE THESE SHARES WERE TRANSFERRED FROM D-MAT ACCOUNT OF THE ASSESSEE TO THE D-MAT ACCOUNT OF THE PURCHASER. THE SALE PROCEEDS HAVE BEEN RECEIVE D BY THE ASSESSEE THROUGH BANKING CHANNELS. THE ENQUIRY BY THE AO FR OM THE CALCUTTA STOCK EXCHANGE SHOWED THAT THE SHARES IN QUESTION HAD NOT BEEN DONE THROUGH STOCK EXCHANGE. THIS FACT ALONE CANNOT BE TAKEN AS A BASIS TO CONCLUDE THAT THE TRANSACTIONS OF SALE OF SHARES WAS NOT GENUINE. IT IS ONLY THE DENIAL OF SHYAMLAL SULTANIA, SHARE BROKER THROUGH WHOM THE SH ARES WERE SOLD THAT HE HAD NOT SOLD THE SHARES ON BEHALF OF THE ASSESSE E IS A CIRCUMSTANCE WHICH GOES AGAINST THE ASSESSEE. IN THIS REGARD THE ASSE SSEE DID NOT INSIST ON ANY CROSS EXAMINATION OF SHYAMLAL SULTANIA. THE ASSES SEE HOWEVER, MADE A SURRENDER OF THE CLAIM OF LONG TERM CAPITAL GAINS A ND EXEMPTION UNDER SECTION 54F OF THE ACT. WE HAVE ALREADY SET OUT TH E LETTER OF SURRENDER BY THE ASSESSEE. FROM THE SEQUENCE OF EVENTS IT CANNOT BE SAID WITH CERTAINTY THAT THE CLAIM MADE BY THE ASSESSEE WAS BOGUS. IT IS AL SO SEEN THAT THE SURRENDER WAS MADE BY THE ASSESSEE ONLY WITH A VIEW TO PURCHASE PEACE AND AVOID LITIGATION. 13. THE LETTER DATED 14.12.2007 SUFFICIENTLY EXPLA INS THE REASONS AS TO WHY THE ASSESSEE ACCEPTED THAT HE WAS NOT ABLE TO PROVE THE LTCG DECLARED BY IT. THE TENOR OF THE LETTER SHOWS THAT THE ASSESSEE AGR EED THAT THE LTCG DECLARED BY IT BE ASSESSED AS INCOME FROM OTHER SOU RCES AND FURTHER THE DEDUCTION U/S.54F MAY ALSO BE CONSIDERED AS GIVEN U P. THE ASSESSEE FILED A REVISED RETURN OF INCOME. THE AO DID NOT ACCEPT TH E REVISED RETURN OF INCOME. THE ONLY CIRCUMSTANCE AGAINST THE ASSESSEE WAS THE LETTER DATED 6.11.2007 OF MR.SHYAM SULTANIA, THE BROKER THROUGH WHOM THE ASSESSEE SOLD HIS SHARES. THIS LETTER IN OUR VIEW IS NOT C ONCLUSIVE TO SHOW THAT THE ASSESSEE INDULGED IN ACCOMMODATION TRANSACTIONS TO DEFRAUD THE REVENUE. EVEN IN THE LETTER DATED 14.12.2007 WHEREBY THE ASS ESSEE GAVE UP ITS CLAIM ITA NO.2586/MUM/2010(A.Y.2005-06) 8 REGARDING LTCG AND EXEMPTION U/S.54F, IT WAS MADE C LEAR THAT THE TRANSACTION WAS GENUINE AND IT WAS ONLY BECAUSE OF THE INABILITY OF THE ASSESSEE DUE TO HIS OLD AGE TO GO TO CALCUTTA TO CO LLECT THE NECESSARY DETAILS THAT THE SURRENDER IS BEING MADE. THE LETTER ALSO CLARIFIES THAT THE TRANSACTIONS IS SUPPORTED BY DOCUMENTARY EVIDENCE A ND THE SURRENDER WAS MADE ONLY TO AVOID LITIGATION AND PURCHASE PEACE. IN THE ORDER OF ASSESSMENT, THE AO HAS REFERRED TO THE FACT THAT IN VESTIGATION WING OF THE DEPARTMENT HAS FOUND THAT CERTAIN PERSONS WERE ADOP TED A MODUS OPERANDI WHEREBY THROUGH ACCOMMODATION ENTRIES BOGUS LTCG IS BEING DECLARED TO CLAIM BENEFITS OF EITHER EXEMPTION OR LOWER RATE OF TAX. THE AO HAS HOWEVER NOT BROUGHT ON RECORD ANY INDEPENDENT MATERIAL TO S HOW THAT THE ASSESSEE WAS PART OF ANY SUCH INVESTIGATION. SUCH GENERAL O BSERVATIONS, IN OUR VIEW, WOULD NOT BE SUFFICIENT TO IMPOSE PENALTY ON THE AS SESSEE FOR CONCEALMENT OF INCOME. 14. THE LEARNED D.R. HAS RELIED ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF K.L. SWAMY V. COMMISSIONER OF INCOME-TAX 239 ITR 386 (KAR) AND HONBLE ALLAHABAD HIGH COURT IN THE CASE OF MOHD. FAROOQ V. COMMISSIONER OF INCOME-TAX 230 ITR 855 (ALL). BOTH THE AFORESAID DECISIONS WERE RENDERED IN THE CONTEXT OF SEC.273A OF THE ACT , WHERE THE COMMISSIONER HAS POWERS TO WAIVE PENALTY AND THE CONDITION PRECE DENT FOR EXERCISE OF POWER OF WAIVER WAS THE SURRENDER SHOULD BE MADE BY THE ASSESSEE VOLUNTARILY AND IN GOOD FAITH. IN OUR VIEW THE C RITERIA FOR DECIDING WHETHER PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME THE CRITERIA WOULD BE DIFFERE NT AND THEREFORE THOSE DECISIONS WILL NOT OF ANY ASSISTANCE TO THE PLEA OF THE D.R. BEFORE US. THE DECISION IN THE CASE OF POLO SINGH AND CO. V. COMMI SSIONER OF INCOME-TAX 98 ITR 564 (PATNA) WAS A CASE WHERE THE HONBLE HIGH C OURT HELD THAT FINDING THAT THERE WAS CONCEALMENT WAS A FINDING OF FACT A ND NO QUESTION OF LAW ARISES OUT OF THE ORDER OF THE TRIBUNAL. IN COMMIS SIONER OF INCOME-TAX V. ITA NO.2586/MUM/2010(A.Y.2005-06) 9 KRISHNA AND CO. 120 ITR 144 (MAD) THE FACTS WERE T HAT THE BOOKS OF THE ASSESSEE SHOWED CERTAIN BORROWINGS AND REPAYMENTS F ROM CERTAIN BANKERS. THE ASSESSEE PRODUCED THE DISCHARGED HUNDIS BEFORE THE ITO WHO, HOWEVER, HELD THAT THE BANKERS HAD MERELY LENT THEIR NAMES I N WHAT WAS KNOWN AS BOGUS HAWALA TRANSACTIONS. THE ASSESSEE, THEREUPON, AGREED TO THE ADDITION OF THE PEAK CREDIT TO HIS INCOME. IN THE PENALTY PR OCEEDINGS, THE ASSESSEE'S SUBMISSION THAT NO PENALTY WAS EXIGIBLE WAS REJECTE D BY THE IAC BUT ACCEPTED BY THE TRIBUNAL. ON A REFERENCE TO THE HIG H COURT, IT WAS HELD THAT IN A CASE WHERE THE ASSESSEE HIMSELF HAS ADMITTED T HAT THE AMOUNT REPRESENTED HIS OWN INCOME, NO FURTHER EVIDENCE WOU LD BE NECESSARY TO SHOW THAT IT WAS THE AMOUNT WHICH REPRESENTED HIS INCOME AND IT REPRESENTED HIS CONCEALED INCOME AND THAT LEVY OF PENALTY WAS JUSTI FIED. WE NOTICE THAT IT WAS NOT A CASE OF QUALIFIED SURRENDER AS ARE THE FA CTS OF THE PRESENT CASE. IN COMMISSIONER OF INCOME-TAX V. GUPTA (R.C.)(DR.) AND CO. 122 ITR 567, THE HONBLE RAJASTHAN HIGH COURT HELD THAT IN A CASE WH ERE THE ASSESSEE HIMSELF HAS ADMITTED THAT A CERTAIN AMOUNT REPRESENTED HIS INCOME, NO FURTHER EVIDENCE WOULD BE NECESSARY TO SHOW THAT IT WAS THE AMOUNT WHICH REPRESENTED HIS INCOME AND/OR THAT IT REPRESENTED H IS CONCEALED INCOME. HERE AGAIN IT IS CASE WHERE THE SURRENDER WAS NOT M ADE BY THE ASSESSEE UNDER CIRCUMSTANCES UNDER WHICH THE SURRENDER WAS M ADE BY THE ASSESSEE IN THE CASE BEFORE US. 15. WE ARE OF THE VIEW THAT IMPOSITION OF PENALTY WOULD DEPEND ON FACTS AND CIRCUMSTANCES OF A GIVEN CASE. ON THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE CIRCUMSTANCES UNDER WHICH SURREND ER WAS MADE BY THE ASSESSEE , THE FACT THAT DUE HIS AGE HE COULD NOT TRAVEL TO CALCUTTA TO VERIFY DETAILS, THE FACT THAT HE WANTED TO BUY PEACE AND A VOID LITIGATION ETC., SHOWS THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS BON AFIDE. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT PENALTY SHOU LD NOT BE IMPOSED ON THE ITA NO.2586/MUM/2010(A.Y.2005-06) 10 ASSESSEE. WE THEREFORE DIRECT THAT THE PENALTY IMP OSED SHOULD BE CANCELLED. WE ORDER ACCORDINGLY. THE APPEAL OF THE ASSESSEE I S ALLOWED. 16. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 5 TH DAY OF AUG., 2011. SD/- SD/- (R.S.SYAL) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 5 TH AUG.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RB BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.2586/MUM/2010(A.Y.2005-06) 11 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 1/8/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER