M/S. EARTH CASTLE, MUMBAI V. THE DCIT CEN CIR-32,

ITA 3064/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49194 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Income from undisclosed sources; Additional evidence
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E : MUMBAI BEFORE SHRI R.S. PADVEKAR,(JM) AND SHRI RAJENDRA S INGH ,(AM) ITA NO.3064/MUM/2008 ASSESSMENT YEAR :2006-07 M/S. EARTH CASTLE 101, AKRUTI ADITYA TOWER 36, NOSHIR BHARUCHA MARG MUMBAI-400 007. ..( APPELLANT ) P.A. NO. (AABFE 3880 F) VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-32 AAYAKAR BHAVAN MUMBAI-. ..( RESPONDENT ) APPELLANT BY : SHRI ANANT PAI RESPONDENT BY : SHRI G .P. TRIVEDI O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29.2.2008 OF THE CIT(A) FOR THE ASSESSMENT YEAR 200 6-07. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING LEVY OF PENALTY UNDER SECTION 271(1)(C) FOR CONCEALMENT OF INCOME. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FIRM IS A BUILDER AND DEVELOPER WHICH BELONGS TO EARTH GROUP. A SE ARCH HAS BEEN CONDUCTED UNDER SECTION 132 IN CASE OF EARTH GROUP ON 1.9.2005 WHICH ALSO CO VERED THE ASSESSEE. DURING THE COURSE OF SEARCH TWO DIAR IES MARKED AS A-11 AND A-12 WERE FOUND AND SEIZED. THE PARTNER SHRI BHUPE SH P. JAIN STATED ON 3.9.2005 THAT THE DIARY A-11 CONTAINED ALL PAYMENTS RECEIVED BY THE ASSESSEE BY CHEQUE WHEREAS ALL CASH SALE RECEIPTS W ERE RECORDED IN THE DIARY A-12. IT WAS ADMITTED THAT CASH RECEIPTS RECORDED IN THE DIARY A-12 WERE IN THE NATURE OF ON MONEY RECEIPTS AND PAYMENTS WHICH WERE NOT REFLECTED IN ITA NO.3064/M/08 A.Y:06-07 2 THE REGULAR BOOKS. AS REGARDS DIARY A-11, IT WAS S UBMITTED THAT THE TRANSACTIONS WERE FULLY RECORDED IN THE BOOKS. THE RECEIPTS MENTIONED IN THE DIARY A-12 WERE DECLARED AS UNDISCLOSED INCOME IN T HE NAME OF VARIOUS CONCERNS OF EARTH GROUP. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT IN SEVEN CASES THE AMOUNT DISCLOSED IN THE DIARY A- 11 WERE MORE THAN THE AMOUNT DISCLOSED IN THE BOOKS OF ACCOUNT. THE DIFF ERENCE WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME. DETAILS REG ARDING THESE SEVEN TRANSACTIONS WERE AS UNDER :- S.NO. FLAT NO. SALE VALUE AS PER SEIZED DIARY A-11 SALE VALUE AS PER BOOK OF ACCOUNT SALE VALUE CONSIDERED BY ASSESSING OFFICER ADDITION 1. 1001 4000000 3475000 4000000 525000 2. 802 950000 - 950000 950000 3. 1203 4200000 3250000 4200000 950000 4. 1302 5451111 5411111 5451111 40000 5. 1401 4000000 3800000 4000000 200000 6. 1402 & 1403 8700000 8100000 8700000 600000 7. 1503 4788000 4011000 4788000 777000 SIMILARLY THE ASSESSING OFFICER ALSO NOTED THAT THE RE WAS DISCREPANCY WITH RESPECT TO DIARY A-12 AND IN FOUR CASES THE AMOUNT RECORDED IN THE DIARY WERE MORE THAN THE AMOUNT OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME. THE DETAILS OF TRANSACTIONS WERE AS UNDER :- S.NO. FLAT NO. SALE VALUE AS PER SEIZED DIARY A-12 SALE VALUE AS PER BOOKS OF ACCOUNTS SALE VALUE CONSIDERD BY ASSESSING OFFICER ADDITION 8. 501 2115100 1764350 2115100 350750 9. 1501 5450000 NIL 5450000 5450000 10. 1801/1802 10000000 100000 10000000 9900000 11. SHOP-19 1310000 NIL 1310000 1310000 ITA NO.3064/M/08 A.Y:06-07 3 THE TOTAL AMOUNTS NOT ACCOUNTED BY THE ASSESSEE AS PER DETAILS MENTIONED ABOVE CAME TO RS.2,42,07,888/-. SINCE THE ASSESSEE HAD COMPLETED ONLY 83% OF THE PROJECT, THE ASSESSING OFFICER TREATED 8 3% OF THE EXCESS SALE MENTIONED ABOVE I.E. RS.2,00,92,546/- AS UNDISCLOSE D SALES AND ADDED TO THE TOTAL INCOME. THE ASSESSING OFFICER HAD ALSO INITI ATED PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME AND LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED WHICH CAME TO RS.67,63,150/-. 4. IN APPEAL, THE CIT(A) IN RELATION TO THE ADDITIO N MADE ON THE BASIS OF DIARY A-11 OBSERVED THAT THERE WERE NO DISPUTES THA T ALL THE PAYMENTS WERE BY CHEQUE AND THEREFORE, IT COULD NOT BE SAID THAT THE ASSESSEE HAD NOT INTENDED TO DISCLOSE THE TRANSACTIONS IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAD FILED EXPLANATION WHICH WAS SUPPORTED BY DOCUME NTARY FACTS. THE CIT(A) THEREFORE, DELETED THE PENALTY IN RELATION TO ADDIT ION MADE BASED ON DIARY A- 11. THE CIT(A) HOWEVER, CONFIRMED THE PENALTY IN R ELATION TO ADDITIONS MADE BASED ON DIARY A-12. REVENUE IS NOT IN APPEAL AGAI NST RELIEF ALLOWED BY CIT(A). WE HAVE THEREFORE TO DEAL WITH ONLY THE PE NALTY IN RELATION TO ADDITION MADE BASED ON DIARY A-12. 5. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE SUB MITTED BEFORE THE ASSESSING OFFICER THAT PENALTY PROCEEDINGS WERE DIF FERENT FROM ASSESSMENT PROCEEDINGS AND THAT MERE ADDITION IN ASSESSMENT CO ULD NOT AUTOMATICALLY LEAD TO CONCEALMENT. THE ASSESSEE WAS ENTITLED TO ADDUCE EVIDENCE IN SUPPORT OF CONTENTION THAT THERE WAS NO CONCEALMENT . IN RELATION TO FLAT NO.501, IT WAS SUBMITTED THAT IN THE SEIZED DIARY, THE LEFT SIDE SHOWED THE AMOUNT GIVEN BACK/RETURNED BACK. THE SUM OF RS.3,5 0,750/- WAS RECORDED ON THE LEFT SIDE WHICH REPRESENTED THE AMOUNT RETUR NED AND THEREFORE NO ADDITION WAS REQUIRED. THE ASSESSING OFFICER HOWEV ER DID NOT ACCEPT THE EXPLANATION. IT WAS OBSERVED BY HIM THAT SALES REC ORDED IN DIARY WERE RS.21,15,100/- BUT IN THE REGULAR BOOKS, THE AMOUNT RECORDED WAS RS.17,64,350/-. THE ASSESSEE HAD ALSO NOT OBJECTED TO THE ADDITION MADE BY THE ASSESSING OFFICER AS NO APPEAL HAD BEEN FILED B EFORE THE CIT(A). HE ITA NO.3064/M/08 A.Y:06-07 4 THEREFORE, REJECTED THE EXPLANATION. IN RELATION T O FLAT 1501, THE ASSESSEE SUBMITTED THAT THE FLAT HAD BEEN BOOKED BY THE PURC HASER IN JUNE 2004 AND HE HAD PAID A SUM OF RS.54,50,000/- IN CASH UP TO F EBRUARY 2005 AND RS.1.00 LACS IN CHEQUE IN JANUARY, 2005. DUE TO LO SS IN BUSINESS, HE WAS UNABLE TO PAY BALANCE AMOUNT AND CANCELLED THE DEAL AND THE AMOUNTS WERE RETURNED BOTH IN CASH AND IN CHEQUE AND THE FLAT WA S VACANT TILL DATE. SIMILAR EXPLANATION WAS GIVEN IN RELATION TO FLAT NO.1801 A ND 1802 THAT THE BOOKING HAD BEEN CANCELLED AND THE AMOUNTS HAD BEEN CANCELL ED AND THE AMOUNTS HAD BEEN RETURNED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD OFFERED INCOME OF RS .1.00 LACS IN THE RETURN OF INCOME TO BUY PEACE OF MIND. IT WAS POINTED OUT THAT FLAT NO.1801 WAS STILL VACANT AND FLAT 1802 HAD BEEN GIVEN TO A RE-HABILITATED TENANT FREE OF COST. IN REGARD TO SHOP NO.19, IT WAS SUBMITTED THAT THE PURCHASER HAD REQUESTED THE ASSE SSEE FOR SOME INTERIOR WORK. THE ASSESSEE HAD THEREFORE GIVEN INSTRUCTION ON BEHALF OF THE PURCHASER TO LABOUR CONTRACTOR FOR INTERIOR WORK. THE AMOUNT WRITTEN IN THE DIARY WAS RECEIVED BY THE ASSESSEE FROM THE PURCHAS ER AND GIVEN DIRECTLY TO THE LABOUR CONTRACTOR. THE ASSESSING OFFICER HOWEV ER DID NOT ACCEPT THE EXPLANATION AND ARGUED THAT THE ASSESSEE HAD HIMSEL F CLAIMED THAT THE TRANSACTIONS WERE NOT RECORDED. THERE WAS ALSO NO EVIDENCE TO SUBSTANTIATE THE CLAIM. HE THEREFORE, LEVIED PENALTY @ 100% OF T AX SOUGHT TO BE EVADED. IN APPEAL CIT(A) AGREED WITH THE ASSESSING OFFICER AND OBSERVED THAT THE EXPLANATION GIVEN BY ASSESSEE WAS NOT SUPPORTED BY DOCUMENTARY EVIDENCE. ASSESSEE HAD NOT FILED CONFIRMATION REGARDING CANCE LLATION OF BOOKING AND RETURN OF AMOUNTS. THE ENTRIES HAVE CLEARLY RECORDE D IN THE SEIZED DIARY. THE ASSESSEE ALSO COULD NOT PRODUCE EVIDENCE TO SHOW TH AT THE AMOUNT RECEIVED FOR INTERIOR DECORATION WAS GIVEN TO THE CONTRACTOR . CIT(A) THUS AGREED WITH THE ASSESSING OFFICER THAT ASSESSEE HAD CONCEALED T HE INCOME AND PENALTY WAS LEVIABLE. HE THEREFORE, CONFIRMED THE PENALTY T O THE TUNE OF RS.47,52,29/-. AGGRIEVED BY THE SAID DECISION, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.3064/M/08 A.Y:06-07 5 6. WE HAVE HEARD BOTH THE PARTIES. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT MERELY BECAUSE THERE IS AN ADDITION IN THE ASSESSMENT AND THE ASSESSEE HAD NOT FILED AN APPEAL CANNOT AUTOMAT ICALLY LEAD TO CONCEALMENT AND THE ASSESSEE WAS FREE TO PRODUCE EV IDENCE IN THE PENALTY PROCEEDINGS TO PROVE THAT THERE WAS NO CONCEALMENT OF INCOME. IT WAS SUBMITTED THAT ADDITION OF RS.3,50,050/- MADE ON TH E BASIS OF ENTRY ON THE LEFT SIDE OF PAGE-50 OF THE DOCUMENT A-12 WAS NOT J USTIFIED AS THE AMOUNT HAD BEEN RETURNED. THERE WAS ANOTHER AMOUNT OF RS. 2.90 LACS WRITTEN ON THE LEFT SIDE WHICH HAD BEEN DEDUCTED BUT NO DEDUCTION HAD BEEN ALLOWED IN RESPECT OF RS.3,50,050/- WHICH WAS NOT CORRECT. IN REGARD TO FLAT NO.1501 IT WAS SUBMITTED THAT THE DEAL HAD NOT MATERIALIZED AN D THE AMOUNT HAD BEEN RETURNED ON 19.12.2005 WHICH WAS CLEAR FROM THE LED GER COPY PLACED AT PAGE-5 OF THE PAPER BOOK SHOWING RETURN FOR RS.1.00 LACS BY CHEQUE TO REENA ARVIND GOYAL IN RELATION TO FLAT NO.1501. SI MILARLY IT WAS FURTHER SUBMITTED THAT DEAL IN ADDITION TO FLAT NO.1801 AND 1802 HAD ALSO BEEN CANCELLED. AS REGARDS FLAT NO.1802, IT WAS FURTHER SUBMITTED THAT THE SAME HAD BEEN ALLOTTED TO A REHABILITATED TENANT FREE OF COST. THE LD. AR FOR THE ASSESSEE FURTHER ARGUED THAT THE ASSESSEE HAS EVIDE NCE TO SUPPORT THE CLAIM THAT THE FLAT NO.1501 AND 1801 HAD BEEN SHOWN IN TH E STOCK IN THE SUBSEQUENT YEARS AND WERE SOLD LATER TO OTHER PARTI ES. IT WAS REQUESTED THAT THE ADDITIONAL EVIDENCE FILED IN THE PAPER BOOK-2 W HICH CONTAINS THE FOLLOWING DOCUMENTS SHOULD BE ADMITTED. I) STATEMENT OF FLATS HELD AS ON 31.3.2007 AS GIVE N BEFORE ASSESSING OFFICER IN ASSESSMENT YEAR 2007-08. II) COPY OF SALE AGREEMENT DATED 25.3.2009 REGARDIN G SALE OF FLAT NO.1501 TO SHRI C. T. BHANSALI AND SMT. P.C. BHANSA LI FOR A CONSIDERATION OF RS.1,08,00,000/- PLACED AT PAGE 12 TO 14 OF THE PAPER BOOK-2. III) COPY OF THE AGREEMENT OF SALE DATED 25.3.2009 I N RELATION TO FLAT NO.1801 SOLD TO MRS. SAVITA MAHENDRA JAIN AND SHRI MAHINDRA D. JAIN FOR A CONSIDERATION OF RS.1,34,40,000/- PLACED AT PAGES 15 TO 17 OF THE PAPER BOOK-2. ITA NO.3064/M/08 A.Y:06-07 6 IV) COPY OF ASSESSMENT ORDER DATED 29.10.2010 FOR A SSESSMENT YEAR 2008-09. V) DETAILS OF PLOT SOLD SUBMITTED TO ASSESSING OFF ICER IN ASSESSMENT YEAR 2008-09 PLACED AT PAGE 27 AND 28 OF THE PAPER BOOK. VI) DETAILS OF SUNDRY DEBTORS AS ON 31.3.2008 SHOWI NG AMOUNT RECEIVABLE IN RESPECT OF FLAT NOS. 1501 AND 1801 AT PAGE 34 TO 35 OF THE PAPER BOOK. VII) COPY OF AGREEMENT DATED 25.2.2008 REGARDING FLAT NO .1802 GIVEN TO REHABILITATED TENANT AT PAGE 40 TO 44 OF THE PAPER BOOK. 6.1. IT WAS REQUESTED BY THE LD. AR THAT THE ADDITI ONAL EVIDENCE SHOULD BE ACCEPTED WHICH WILL SUPPORT THE BONAFIDE OF THE CLA IM OF THE ASSESSEE THAT THE FLATS HAD NOT BEEN SOLD IN THE RELEVANT ASSESSMENT YEAR. IT WAS ARGUED THAT THE BONAFIDE OF THE EXPLANATION SHOULD BE TESTED BY PROBABILITY OF THE EXPLANATION GIVEN AND IN CASE THERE WAS EQUAL POSS IBILITY OF ACCEPTING OR REJECTING THE EXPLANATION THE BENEFIT OF DOUBT SHOU LD BE GIVEN TO THE ASSESSEE. RELIANCE WAS PLACED ON THE JUDGMENT OF HO NBLE HIGH COURT OF GUJARAT IN CASE OF NATIONAL TEXTILES LIMITED VS. CI T (249 ITR 145) AND THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN CASE OF SMT. SHANTA KUMARI VS. ITO (38 ITD 175). IT WAS ALSO SUBMITTED THAT PENALTY W AS NOT AUTOMATIC AND SHOULD BE LEVIED ONLY WHEN STATUTORY CONDITIONS FOR LEVY ARE SATISFIED AS HELD BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. ATUL MOHAN BINDAL (317 ITR 1). ACCORDINGLY IT WAS URGED THAT THE PENALTY LEVI ED SHOULD BE DELETED. 7. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT WAS ARGUED THAT THE ASSESSEE HAD ITSELF ADMITTED THAT THE TRANSACTION RECORDED IN THE DIARY A-12 WERE CAS H TRANSACTIONS NOT RECORDED IN THE BOOKS AND THE ASSESSEE HAD ITSELF D ECLARED UNDISCLOSED INCOME ON THIS ACCOUNT. FURTHER ADDITION HAD BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF SOME DISCREPANCIES AND THES E ADDITIONS WERE ALSO ACCEPTED BY THE ASSESSEE AS THE ASSESSEE DID NOT F ILE APPEAL AGAINST THE ADDITIONS. IT WAS IMPROBABLE THAT THE FLAT HAVING BEEN NOT SOLD DURING THE YEAR, THE ASSESSEE WOULD AGREE TO SUBSTANTIAL ADDI TIONS AND WOULD NOT FILE ITA NO.3064/M/08 A.Y:06-07 7 APPEAL. THE LD. DR ALSO OPPOSED THE ADMISSION OF A DDITIONAL EVIDENCE ON THE GROUND THAT THE ASSESSEE COULD HAVE EASILY FILED EV IDENCE REGARDING CANCELLATION OF THE SALE AGREEMENT AND RETURN OF TH E MONEY BEFORE ASSESSING OFFICER WHICH HAD NOT BEEN DONE. ACCORDINGLY IT WA S REQUESTED THAT THE ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED. 8. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALT Y UNDER SECTION 271(1)(C). THE PENALTY HAS BEEN LEVIED IN RESPECT OF ADDITIONS MADE BY THE ASSESSING OFFICER BASED ON THE MATERIAL FOUND DURING THE SEAR CH. DURING THE SEARCH, A DIARY NAMELY A-12 WAS SEIZED WHICH SHOWED UNACCOUNT ED CASH TRANSACTIONS IN RELATION TO DEALINGS IN PROPERTIES. THE ASSESSE E AT THE TIME OF SEARCH ADMITTED THAT THESE CASH TRANSACTIONS REPRESENTED U NACCOUNTED INCOME NOT DISCLOSED IN THE BOOKS OF ACCOUNT. BASED ON THESE TRANSACTIONS THE UNDISCLOSED INCOME HAD BEEN DECLARED IN THE NAME OF DIFFERENT MEMBERS OF THE GROUP INCLUDING THE ASSESSEE. HOWEVER, THE ASSE SSING OFFICER AT THE TIME OF ASSESSMENT FOUND THAT INCOME IN RESPECT OF FIVE PROPERTIES AS MENTIONED IN THE TABLE IN PARA-3 EARLIER, HAD NOT BEEN FULLY DISCLOSED. THE ASSESSEE COULD NOT GIVE ANY SATISFACTORY EXPLANATION AND ASS ESSING OFFICER MADE AN ADDITION OF RS.2,00,92,546/- ON THIS ACCOUNT AND AL SO INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY FOR CONCEALMENT OF I NCOME UNDER SECTION 271(1)(C). 8.1. IT HAS BEEN ARGUED ON BEHALF OF THE ASSESSEE T HAT A SUM OF RS.3,50,750/- ADDED BY THE ASSESSING OFFICER ON ACC OUNT OF FLAT -501 WAS THE MONEY REFUNDED BY THE ASSESSEE AS MENTIONED IN THE DIARY ITSELF. THEREFORE, ADDITION WAS NOT JUSTIFIED IN RELATION TO FLAT NO.5 01. IN RELATION TO FLATS 1801/1802 IT HAS BEEN SUBMITTED THAT THE BOOKINGS H AD BEEN CANCELLED AND THE AMOUNT HAD BEEN RETURNED SUBSEQUENTLY. IT HAS ALSO BEEN SUBMITTED THAT FLAT 1802 HAD SUBSEQUENTLY BEEN GIVEN TO A RE- HABILITATED TENANT FREE OF COST. REGARDING SHOP NO.19 IT WAS SUBMITTED THAT T HE AMOUNT REPRESENTED MONEY RECEIVED FROM THE PURCHASER FOR SOME INTERIOR WORK WHICH HAD BEEN ITA NO.3064/M/08 A.Y:06-07 8 GIVEN TO THE CONTRACTOR AND WAS NOT INCOME OF THE A SSESSEE. IT WAS ALSO SUBMITTED THAT MERELY BECAUSE THE ASSESSEE DID NOT DISPUTE THE ADDITION IT COULD NOT BE A GROUND FOR LEVY OF PENALTY AND THAT THE ASSESSEE WAS FREE TO ADDUCE FURTHER MATERIAL AND RAISE FURTHER PLEA AT T HE TIME PENALTY PROCEEDINGS. THE ASSESSEE AT THE TIME OF HEARING OF THE APPEAL BEFORE US, ALSO FURNISHED SOME ADDITIONAL EVIDENCE SUCH AS AGR EEMENTS DATED 25.3.2009 IN RESPECT OF SALE OF FLATS 1501 AND 1801 TO DIFFERENT PERSONS IN FINANCIAL YEAR 2008-09 AND OTHER EVIDENCE AS MENTIO NED ON PARA-6 EARLIER TO SUBSTANTIATE THE PLEA THAT THE BOOKINGS IN RESPECT OF THE FLATS HAD BEEN CANCELLED AND THE FLATS REMAINED WITH THE ASSESSEE. WE ADMIT THESE ADDITIONAL EVIDENCES AS THESE CAME TO THE POSSESSIO N OF THE ASSESSEE SUBSEQUENTLY IN THE INTEREST OF JUSTICE AND WILL DE AL WITH THEM AT APPROPRIATE PLACE LATER. 8.2. IT IS A SETTLED LEGAL POSITION AS HELD BY HONB LE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS AND OTHERS (3 06 ITR 277) THAT PENALTY UNDER SECTION 271(1)(C) IS ONLY A CIVIL LIA BILITY AND IS REMEDY FOR LOSS OF REVENUE. MENS REA OR WILLFULL CONCEALMENT IS NOT REQUIRED TO BE PROV ED BY THE REVENUE. HOWEVER, WE AGREE WITH THE LD. AR THAT EACH AND EVERY ADDITION MADE IN THE ASSESSMENT CAN NOT AUTOMATICAL LY LEAD TO PENALTY. SIMILARLY NON-FILING OF THE APPEAL BY THE ASSESSEE AGAINST ADDITION MADE IN THE ASSESSMENT CAN ALSO NOT BE THE GROUND TO CONCLU DE THAT ASSESSEE ACCEPTED CONCEALMENT. THE PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS. IT IS A SETTLED LEGAL POSI TION AS HELD BY THE HONBLE SUPREME COURT IN CASE OF ANANTHARAM VEERASINGAIAH & CO. (123 ITR 457) THAT THOUGH THE ADDITION MADE IN THE ASSESSMENT CON STITUTES GOOD EVIDENCE BUT THE SAME IS NOT CONCLUSIVE IN THE PENALTY PROCE EDING IN WHICH THE ASSESSEE IS FREE TO PLACE FURTHER MATERIAL TO SUBST ANTIATE THE CLAIM THAT THERE WAS NO CONCEALMENT. THE ASSESSEE IN THE PRESENT CA SE FILED COPY OF LEDGER DATED 19.12.2005 BEFORE THE ASSESSING OFFICER TO SH OW THAT A SUM OF RS.1.00 LACS RECEIVED BY CHEQUE ON 29.1.2005 FROM REENA ARV IND GOYAL FOR BOOKING OF FLAT 1501 HAD BEEN RETURNED BY CHEQUE ON 19.12.2 005. THIS WAS FILED AT ITA NO.3064/M/08 A.Y:06-07 9 THE TIME OF PENALTY PROCEEDINGS. SUBSEQUENTLY AS M ENTIONED EARLIER THE ASSESSEE HAS ALSO FILED ADDITIONAL EVIDENCES BEFORE US TO SUBSTANTIATE THE CLAIM THAT BOOKING IN RESPECT OF FLAT 1501 AND 1801 /1802 HAD BEEN CANCELLED AND FLATS REMAINED WITH THE ASSESSEE. WE HAVE NOW TO EVALUATE THE CASE OF PENALTY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER THE PROVISIONS OF EXPLANATION 271(1)(C) WHICH PROVIDES THAT IN RELATION TO ANY ADDITION IN THE ASSESSMENT IN CASE THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AN EXPLANATION AND IS ALSO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, IT WOULD AMOUNT TO DEEMED CONCEALMENT OF INCOME. 8.3. WE NOW TAKE UP THE INDIVIDUAL ITEMS OF ADDITIO NS. IN RELATION TO FLAT NO.501, THE EXPLANATION OF THE ASSESSEE IS THAT A S UM OF RS.3,50,060/- WRITTEN ON THE LEFT SIDE OF THE DIARY WAS THE AMOUN T WHICH HAD BEEN RETURNED AND THEREFORE, IT WAS WRONGLY ADDED. WE HAVE PERUSE D THE SAID PAGE OF THE DIARY. WE FIND THAT THE TOTAL OF THE TRANSACTIONS WORKED OUT BY THE ASSESSEE IS RS.24,05,000/-. ON THE LEFT SIDE THERE IS ONE N OTING OF RS.2,90,000/- AGAINST WHICH DATE IS ALSO MENTIONED WHICH THE ASSE SSEE DEDUCTED FROM THE GROSS AMOUNT AND THE NET AMOUNT OF RS.21,15,000/- W AS MENTIONED AT THE TOP OF THE PAGE ITSELF. THE OTHER AMOUNT WAS RS.3, 50,060/- MENTIONED ON THE LEFT SIDE IS NOT DATED AND THE ASSESSEE DID NOT DEDUCT THE SAME WHICH SHOWS THAT THIS AMOUNT HAD NOT BEEN REFUNDED. MORE OVER THE ASSESSEE HAD ITSELF WORKED OUT THE NET AMOUNT WHICH HAD BEEN TAK EN BY THE ASSESSING OFFICER AND THEREFORE, WE SEE NO ERROR IN THE WORKI NG MADE BY THE ASSESSING OFFICER. THE EXPLANATION OF THE ASSESSEE THAT THE SUM OF RS.3,50,060/- HAD BEEN REFUNDED IS NEITHER SUBSTANTIATED WITH ANY EVI DENCE NOR ON THE FACTS OF THE CASE THE EXPLANATION IS CONSIDERED BONAFIDE. TH EREFORE, IN OUR VIEW PENALTY IS LEVIABLE. 8.4. AS REGARDS FLAT NO.1501 TOTAL CASH OF RS .54,50,000/- HAD BEEN RECEIVED DURING THE PERIOD 26.6.2004 TO 26.2.2005 A ND IS RECORDED IN THE DIARY AND PAYMENT OF RS.1.00 LACS BY CHEQUE ON 29.1 .2005. IN RELATION TO FLAT NO.1801 AND 1802, TOTAL CASH RECEIPT OF RS.1.0 0 CRORES IS RECORDED IN THE ITA NO.3064/M/08 A.Y:06-07 10 DIARY IN THE RELEVANT YEAR. THE ASSESSEE AT THE TI ME OF PENALTY PROCEEDINGS SUBMITTED LEDGER COPY SHOWING THAT A SUM OF RS .1.00 LACS WAS RETURNED TO REENA ARVIND GOYAL BY CHEQUE ON 19.12.2005. IN ADD ITION TO FLAT NO.1801, THERE IS NO SUCH EVIDENCE GIVEN. THE ASSESSEE HAS ALSO FILED AGREEMENTS DATED 19.3.2009 TO SHOW THAT THE SAID FLAT HAD BEEN SOLD BY THE ASSESSEE TO SOME OTHER BUYER AND THEREFORE, THE EARLIER BOOKING IN 2005 HAD BEEN CANCELLED. IT MAY BE NOTED THAT THE LEDGER COPY DA TED 19.12.2005 IS ONLY AFTER SEARCH IN THE NEXT YEAR AND THEREFORE, SUCH E VIDENCE IS NOT RELIABLE AND CAN BE EASILY CREATED. FURTHER THERE IS NO CONFIRM ATION FROM THE BUYER TO SUBSTANTIATE THE CLAIM THAT THE BOOKING HAD BEEN CA NCELLED. THEREFORE, ONLY BY ISSUE OF CHEQUE OF RS.1.00 LACS AND THAT TOO SUB SEQUENT TO SEARCH THE ASSESSEE CANNOT SHOW THAT THE FLAT HAD BEEN RETURNE D. AS REGARDS THE ADDITIONAL EVIDENCES PRODUCED BEFORE US SUCH AS AGR EEMENTS DATED 19.3.2009 WE FIND THAT THE ASSESSEE HAS GIVEN ONLY THREE PAGES I.E., PAGES 1,8, AND 58 OF THE AGREEMENTS PLACED AT PAGES 12 TO 14 AND PAGES 11 TO 17 OF THE PAPER BOOK II AND THESE PAGES DO NOT GIVE T HE DESCRIPTION OF THE PROPERTY AND THEREFORE, IT IS NOT POSSIBLE TO CONCL UDE THAT THE AGREEMENTS RELATE TO FLAT NOS.1501 AND 1801. SECONDLY IT IS A LSO NOTED THAT THE AMOUNTS RECEIVABLE IN RESPECT OF THE SO CALLED SALE OF FLAT NO.1501 AND 1801 HAS BEEN SHOWN IN THE LIST OF SUNDRY DEBTORS AS RECEIVABLE O N 31.3.2008 AT PAGES 34- 35 OF THE PAPER BOOK-II. IN CASE, THE FLATS WERE S OLD BY AGREEMENT DATED 25.3.2009, IT IS NOT CLEAR AS TO HOW SALE PROCEEDIN GS WOULD APPEAR IN THE BALANCE SHEET AS ON 31.3.2008. THE ASSESSEE HAS AL SO SUBMITTED COPY OF ASSESSMENT ORDERS FOR 2007-08 AND 2008-09, BUT WE F IND THAT THERE IS NO FINDING BY THE ASSESSING OFFICER REGARDING SALE OF THESE FLATS. FURTHER EVEN IF IT IS ACCEPTED FOR THE SAKE OF ARGUMENT THAT THE FL ATS REMAINED WITH THE ASSESSEE IN SUBSEQUENT YEARS, SUCH EVIDENCE CAN EAS ILY BE CREATED IN COLLUSION WITH THE BUYER BECAUSE IT SUITES BOTH THE PARTIES AS THE ASSESSEE AS WELL AS BUYER BOTH ARE HIT BY THE MATERIAL FOUND DU RING THE SEARCH. THE ASSESSEE IS LIABLE FOR UNACCOUNTED INCOME ON ACCOUN T OF CASH RECEIVED WHEREAS THE BUYER HAS TO EXPLAIN THE CASH TRANSACTI ONS. THEREFORE, BOTH CAN EASILY COLLUDE AND ASSESSEE CAN BUY THE FLAT SUBSEQ UENTLY FROM THE SAME ITA NO.3064/M/08 A.Y:06-07 11 BUYER AT THE SAME PRICE AND EXPLAIN THAT THE BOOKIN G HAD BEEN CANCELLED AND THE AMOUNT REFUNDED AND THE FLAT REMAINED WITH THE ASSESSEE. SUCH EVIDENCES THEREFORE DO NOT DISPROVE THE FACT THAT T HE FLATS HAD BEEN SOLD IN THE RELEVANT YEAR. IN CASE THE ASSESSEE SELLS THE FLAT IN A PARTICULAR YEAR AND SUBSEQUENTLY IN THE NEXT YEAR BUYS BACK THE SAME FL ATS AT THE SAME PRICE, THESE ARE TWO DIFFERENT TRANSACTIONS. THE ASSESSEE HAS TO SHOW INCOME IN RESPECT OF FLATS SOLD IN THE EARLIER YEAR THOUGH TH ERE WILL BE NO INCOME IN RELATION TO THE SUBSEQUENT TRANSACTION BEING ON THE SAME PRICE. IN RELATION TO THE SHOP, NO ARGUMENTS WERE ADVANCED BY THE LD. AR. 8.5. THUS THE EVIDENCE FILED BY THE ASSESSEE ARE NO T ONLY NOT RELIABLE, THESE ALSO DO NOT ESTABLISH THAT THE ASSESSEE HAD NOT SOL D THE FLATS IN THE RELEVANT YEAR. BY BRINGING BACK THE FLATS IN ITS BOOKS IN TH E SUBSEQUENT YEAR AFTER THE SEARCH, THROUGH A COLLUSIVE TRANSACTION WHICH HELPS BOTH THE PARTIES, THE ASSESSEE CANNOT DENY THE SALE TRANSACTIONS IN THE E ARLIER YEAR WHICH IS DULY SUPPORTED BY CASH RECEIPTS RECORDED IN THE DIARY WH ICH THE ASSESSEE ITSELF ADMITTED AS ITS UNACCOUNTED INCOME. IT MAY ALSO BE NOTED THAT SUBSTANTIAL ADDITION OF RS.2,00,92,546/- MADE IN THE ASSESSMENT HAS BEEN ACCEPTED BY THE ASSESSEE . NO ASSESSEE WOULD ACCEPT SUCH HUGE A DDITIONS RUNNING INTO CRORES IN CASE NO SALE HAD TAKEN PLACE AND THERE WA S NO INCOME. IT IS NOT A CASE OF ADDITION OF FEW THOUSANDS WHICH THE ASSESSE E MAY NOT PURSUE IN APPEAL AS IT MAY NOT BE COST EFFECTIVE BUT NOT DISP UTING ADDITIONS RUNNING INTO CRORES WHICH THE ASSESSEE THINKS THAT THERE WAS NO INCOME AT ALL, DOES NOT CONFORM TO NORMAL HUMAN CONDUCT. CONSIDERING THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBAB ILITY, WE HAVE TO CONCLUDE THAT THE EXPLANATION OF THE ASSESSEE THAT THE SALES HAD NOT MATERIALIZED WHICH IS NOT SUPPORTED BY ANY RELIABLE EVIDENCE CANNOT BE CONSIDERED AS BONAFIDE. THE LD. AR FOR THE ASSESS EE ARGUED THAT WHEN THERE IS EQUAL PROBABILITY FOR ACCEPTING OR REJECTING THE EXPLANATION, THE ASSESSEE HAS TO BE GIVEN THE BENEFIT OF DOUBT, BUT AS MENTIO NED EARLIER, IN THIS CASE THERE IS ALL THE PROBABILITY OF REJECTING THE EXPLA NATION AS BEING NOT BONAFIDE. THE LD. AR HAS ALSO RELIED ON CERTAIN JUDGMENTS WH ICH IN OUR VIEW ARE ITA NO.3064/M/08 A.Y:06-07 12 DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE CASE. IN THE CASE OF NATIONAL TEXTILES LIMITED (SUPRA), THE ADDITION H AD BEEN MADE ON ACCOUNT OF LOANS TAKEN WHICH COULD NOT BE EXPLAINED SATISFACTO RILY. THE LOANS HAD BEEN TAKEN THROUGH THE ACCOUNTANT WHO HAD LEFT THE FIRM AND THE ASSESSEE COULD NOT PRODUCE HIM DUE TO STRAINED RELATIONS AND THERE FORE, ADDITION HAD BEEN MADE. THE HONBLE HIGH COURT DELETED THE PENALTY ON THE GROUND THAT THERE WAS NO MATERIAL TO DRAW CONCLUSION THAT THE CREDITS REPRESENTED THE INCOME OF THE ASSESSEE AND THAT THERE WAS NO CONSCIOUS CON CEALMENT. THE SAID JUDGMENT MAY NOT BE RELEVANT NOW AFTER THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PRO CESSORS (SUPRA) IN WHICH IT HAS BEEN HELD THAT CONSCIOUS CONCEALMENT I S NOT REQUIRED TO BE PROVED BY THE REVENUE AND THAT PENALTY IS ONLY A CI VIL LIABILITY. THE DECISION OF THE TRIBUNAL IN CASE OF SMT. SHANTA KUMAR (SUPRA ), IS ALSO DISTINGUISHABLE. IN THAT CASE THE ASSESSING OFFICER HAD ADDED PART O F THE LOAN BUT IN APPEAL THE LD. AAC ADDED THE ENTIRE AMOUNT. IT WAS HELD T HAT PENALTY IN RESPECT OF THE ENTIRE LOAN WAS NOT JUSTIFIED. THE FACTS ARE O BVIOUSLY DIFFERENT AND THE SAID DECISION CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. IN VIEW OF THE FOREGOING DISCUSSION AND FOR THE REASONS GIVEN EARLIER WE ARE OF THE VIEW THAT THE CASE OF THE ASSESSEE IS COVERED BY THE PRO VISIONS OF EXPLANATION 1 TO SECTION 271(1)(C) AND THE PENALTY HAS BEEN RIGHTLY LEVIED. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A). 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.6.2011. SD/- SD/- (R.S. PADVEKAR) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 17.6.2011. JV.