M/S. MARATHON NEXTGEN REALTY & TEXTILES LTD., V. THE DY CIT CEN CIR-38,

ITA 3073/MUM/2008

• Counselvise Citation: 307319914 RSA 2008
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Keywords: Business expenditure; Loose papers; Document seized; Corroborative evidences; Revised return; Documents seized
• Section: 153A; 132; 139

Judgement Text

1 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHIRI B.R. MITTAL, JM AND SHRI R.K. PANDA, A M ITA NO. : 3073/MUM/2008 ASSESSMENT YEAR : 2005-06 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. MARATHON HOUSE, DEVIDAYAL ROAD, MULUND (W), MUMBAI-400 080 PAN NO: AAACP 8032 E DCIT, CENTRAL CIRCLE-38, MUMBAI-400 080 (APPELLANT) VS. (RESPONDENT) ITA NO. : 3972/MUM/2008 ASSESSMENT YEAR : 2005-06 DCIT, CENTRAL CIRCLE-38, MUMBAI-400 080 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. MARATHON HOUSE, DEVIDAYAL ROAD, MULUND (W), MUMBAI-400 080 PAN NO: AAACP 8032 E (APPELLANT) VS. (RESPONDENT) ASSESSEE BY : SHRI SASHI TULSIYAN DEPARTMENT BY : SHRI P. C. MAURYA DATE OF HEARING : 18.10.2011 DATE OF PRONOUNCEMENT : 14.12.2011 ORDER PER R. K. PANDA (AM) : THESE ARE CROSS APPEALS. THE FIRST ONE IS FILED BY THE ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTE D AGAINST THE ORDER DATED 24.03.2008 PASSED BY THE LD. CIT(A) CENTRAL V I, MUMBAI RELATING 2 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. TO ASSESSMENT YEAR 2005-06. FOR THE SAKE OF CONVENI ENCE THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER. 2. THE ASSESSEE IN THE GROUNDS OF APPEAL HAS CHALLE NGED THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) OF THE I.T. ACT IN RESPECT OF ON MONEY RECEIPT OF `. 1.63 CRORES. THE REVENUE IN ITS GROUNDS OF APPEAL HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY LEVIED BY THE AO U/S . 271(1)(C) OF THE I.T. ACT IN RESPECT OF ADDITION OF `. 110.50 LAKHS. 3. THE BRIEF FACTS LEADING TO THE LEVY OF PENALTY B Y THE AO ARE AS UNDER : A SEARCH U/S.132 OF THE I.T. ACT WAS INITIATED ON 02 ND DECEMBER, 2004 IN THE CASE OF THE ASSESSEE ALONG WITH M/S. MA RATHON REALTY LTD. AND OTHER GROUP CASES. DURING THE COURSE OF THE SAI D SEARCH VARIOUS DOCUMENTS, BOOKS OF ACCOUNTS ETC. WERE FOUND AND SE IZED. DURING THE COURSE OF SEARCH ACTION AT THE RESIDENCE OF SHRI VI RENDRA SHETTY, SENIOR EXECUTIVE OF THE ASSESSEE GROUP COMPANIES RESIDING AT C-401, SAIDHAM COMPLEX, PK ROAD EXTENSION, MULUND (W), MUMBAI-80, A FILE MARKED AS ANNEXURE A-1 CONTAINING PAGES 1 TO 10 AS PER PANC HANAMA DATED 02.12.2004 WAS FOUND AND SEIZED. PAGE NO. 6 (BOTH S IDES) AND 7 OF THIS FILE PERTAINS TO THE ASSESSEE. IN THE STATEMENT REC ORDED AT THE TIME OF SEARCH PROCEEDINGS FROM SHRI VIRENDRA SHETTY AND SH RI MAYYUR SHAH, DIRECTOR OF THE ASSESSEE COMPANY THEY ADMITTED THE FACT THAT THE CONTENTS OF THE PAGES 6 & 7 PERTAINS TO THE ASSESSE E GROUP COMPANIES. THE PAGE NO.6 REVEALED THAT THE CASH REFLECTED IN T HE SEIZED PAPER WAS RECEIVED BY SHRI VIRENDRA SHETTY ON VARIOUS DATES B ETWEEN 04.09.2004 TO 01.12.2004 ON BEHALF OF THE ASSESSEE AND WAS ULT IMATELY HANDED OVER 3 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. PERIODICALLY TO THE DIRECTORS/FAMILY MEMBERS OF THE GROUP. THIS CASH AMOUNT REFERRED THEREIN ARE RECEIVED BY THE ASSESSE E GROUP AS ON- MONEY CHARGED BY MARATHON GROUP IN ITS VARIOUS PAG ES AS APPEARING IN THE SAID PAPER. THIS PAGE REFERS TO THE PROJECTS OF THE ASSESSEE I.E. M/S. MARATHON NEXTGEN REALTY & TEXTILES LTD. AND M/S. MA RATHON REALTY LTD. 3.1 DURING THE COURSE OF POST-SEARCH PROCEEDINGS AN D ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY WAS ASKED TO EXPL AIN THE CONTENTS OF THE DOCUMENTS BEING PG. NO.6 OF FILE A/1 SEIZED FRO M THE RESIDENCE OF SHRI VIRENDRA SHETTY. DURING THE POST-SEARCH ENQUIR Y I.E. ON 22.01.2005, SHRI MAYUR SHAH WAS ALSO CONFRONTED WIT H THE STATEMENT OF SHRI VIRENDRA SHETTY RECORDED ON 02.12.2004 WHEREIN SHRI MAYUR SHAH HAS ALSO CONFIRMED THE FACT OF HAVING RECEIVED THE ON-MONEY ON SALE OF FLATS IN THEIR PROJECTS. 4. THE AO NOTED THAT ALTHOUGH THE TOTAL AMOUNT OF O N-MONEY DETAILS FOUND WAS `. 449.48 LACS, THE ASSESSEE HAS OFFERED ONLY `. 123.85 LACS IN ITS BOOKS AS AGAINST `. 402.53 LACS MENTIONED IN THE SEIZED PAPER REGARDING ON-MONEY AND PERTAINING TO THE ASSESSEE C OMPANY. HE NOTED THAT THE BALANCE ON-MONEY OF `. 46.95 LACS PERTAINS TO MARATHON REALTY LTD. FOR THE ASSESSMENT YEAR 2005-06. 4.1 THE AO ASKED THE ASSESSEE COMPANY TO JUSTIFY IT S CLAIM ON CERTAIN AMOUNTS WHICH WERE NOT ACTUALLY RECEIVED CLAIMING A S NOT HAVING BEEN ACKNOWLEDGED BY WAY OF SIGNATURE OF THE DIRECTORS/F AMILY MEMBERS OF THE ASSESSEE GROUP. ACCORDING TO THE AO ALL THE PAR TICULARS BEING DATE, PARTIES NAME, PROJECT NAME, AMOUNT AND REMARKS ARE FOUND NOTED IN THE SEIZED PAPER, EXCEPT FOR THE INITIAL OF RECEIVER. H E NOTED THAT SHRI 4 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. VIRENDRA SHETTY BEING SALES EXECUTIVE RECEIVED THE CASH ON BEHALF OF THE ASSESSEE GROUP COMPANIES ONLY. THE ASSESSEE IS IN R ECEIPT OF THE SAID CASH AMOUNTS FOR WHICH ACKNOWLEDGEMENT (SIGNATURE) OF THE DIRECTORS/FAMILY MEMBERS OF MARATHON GROUP REMAINED TO BE OBTAINED ON SEIZED PAPER. THE MONEY HAS BEEN RECEIVED ON BEH ALF OF THE ASSESSEE COMPANY BY SHRI VIRENDRA SHETTY. ONLY THE SIGNATURE PART WAS PENDING. THEREFORE, THIS IN NO WAY TAKES AWAY FROM THE FACTS OF THE RECEIPT OF THE ON-MONEY BY THE ASSESSEE COMPANY. THE AO ALSO ASKED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF HAVING INCURRED EXPENDITU RE AS UNACCOUNTED BUSINESS EXPENSES OF `. 25 LACS AND PAYMENTS MADE TO MIDDLEMAN OF `. 138 LACS AND ITS ALLOWABILITY IN COMPUTATION OF TOT AL INCOME OF THE ASSESSEE COMPANY AS DEDUCTION FROM THE GROSS AMOUNT OF CASH OF `. 4.49 CRORE AS APPEARING IN THE SEIZED PAPER. THE AO NOTE D THAT THE ASSESSEE COULD NOT SUBMIT ANY DETAILS BEING NATURE OF SUCH E XPENSES, PERSONS TO WHOM PAYMENTS MADE, BILLS, VOUCHERS OR ANY OF THE R ELEVANT DOCUMENTS. REGARDING MIDDLE MAN PAYMENTS THE ASSESSEE COULD NO T GIVE ANY DETAILS AS TO NAMES OF PERSONS WHO ACTED AS MIDDLE MAN. ACC ORDING TO HIM EVEN OTHERWISE ALSO THOSE PAYMENTS ARE TO BE CONSIDERED AS ILLEGAL PAYMENT, SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM OF SUCH EXPENDITURE OR PAYMENTS TO MIDDLEMAN. THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE TOTAL OF TRANSACTION RECORDED IN THE SEIZED PAPERS BEING `. 4,49,48,800/- SHOULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF ON-MONEY RECEIPTS. 4.2 THE ASSESSEE IN ITS REPLY FILED ITS SUBMISSIONS WHICH READ AS UNDER: THERE WAS SEARCH & SEIZURE ACTION U/S 132 OF IT AC T 1961 AT THE PREMISES OF MARATHON GROUP AS ON 02.12.2004 & 03.12.2004. AT THAT TIME WE HAD DECLARED AN UNDISCL OSED INCOME OF `. 1,23,85,000/- (IN A.Y. 2005-2006). THE TOTAL OFFER 5 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. OF INCOME BY THE GROUP IN STATEMENT U/S. 132(4) WAS IN FOLLOWING MANNER AND WAS DETERMINED ON THE BASIS OF CASH FOUND AT THE TIME OF SEARCH: MARATHON NEXTGEN REALTY & TEXTILES LTD. `. 1,23,85,000 MARATHON REALTY LTD. `. 46,95,000 UNITED BUILDERS `. 4,40,000 `. 1,75,20,000 AFTER COMPLETION OF THE SEARCH PROCEEDINGS WE HAD F ILED THE RETURN OF INCOME FOR A.Y. 2005-2006 U/S 153A OF IT ACT 1961 INCLUSIVE OF DECLARED INCOME OF `. 1,23,85,000/-. DURING THE COURSE OF SEARCH SOME PAPERS WERE FOUND FROM POSSESSION OF ONE OF THE EMPLOYEES BEING MR. VIREN DRA SHETTY AND THE ASSESSEE GROUP HAD EXPLAINED ALL THE SEIZED PAPERS. WE WERE ASKED TO SHOW CAUSE WHY TOTAL OF TRANSACTIONS RECORDED IN PAPER SEIZED FROM HIM BEIN G `. 4,49,48,800/- SHOULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE GROUP AND WE HAD SUBMITTED EXPLANATIONS ON T HE BASIS OF WHICH EXPLANATIONS FOR FOLLOWING ITEMS WAS ACCEP TED SUBJECT TO VERIFICATION AT THE TIME OF ASSESSMENT: `. 10,00,000/- FOR ERA IV PROJECT-AS THE PAPERS WERE UNSIGNED `. 1,00,50,000/- FOR INNOVA PROJECT AS THE PAPERS WER E UNSIGNED. `. 25,00,000/- UNACCOUNTED EXPENSES - THOUGH THEY WER E GENUINE EXPENSES THE ASSESSEE IS NOT IN POSITION TO JUSTIFY THE SAME WITH SUPPORTING DOCUMENTS `. 1,38,00,000/- PAYMENT MADE TO MIDDLE MAN FOR REMOV AL OF ENCROACHMENTS FROM THE LAND WHICH IS ACTUAL EXPENSES FOR THE ASSESSEE BUT CANNOT BE JUSTIFIED U/S.37 (1) OF IT ACT. `. 5,18,800/- MISCELLANEOUS EXPENSES `. 2,78,68,800/- THE ASSESEE HAS FURNISHED DETAILED EXPLANATION ON E ACH OF THE ABOVE ISSUES DURING THE COURSE OF ASSESSMENT 6 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. PROCEEDINGS AND THE ASSESSEE SUBMITS THAT THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE. HOWEVER, WITH A VIEW BUY PEACE AND AVOID LITIGATION , THE ASSESSEE SEEKS TO OFFER THE SAID AMOUNT BY WAY OF I NCOME SUBJECT TO THE CONDITION THAT NO PENAL PROCEEDINGS SHALL BE INITIATED NOR ANY PENALTY LEVIED. AFTER ADDITION OF `. 2,78,68,800/- TO THE DISCLOSED AMOUNT OF `. 1,23,85,000/-, THE TOTAL ADDITIONAL INCOME TO `. 4,02.53,800/- FOR MRNTL. ON ADDITION OF UNDISCLOSED INCOME FOR MARATHON REALTY LTD. OF `. 46,95,000/- THE TOTAL UNDISCLOSED INCOME FOR MARATH ON GROUP COMES TO `. 4,49,48,800/-. WE HAD NOT CHARGED ON-MONEY IN THE VARIOUS PROJECTS SINCE THE PROJECTS THOUGH COMMENCED IN FEBRUARY 2004 THE BOOKING OF THE FLATS WAS STARTED IN SEPTEMBER 2004. SINCE T HESE WERE RELATIVELY NEW PROJECTS THERE, IS NO QUESTION OF CH ARGING ON- MONEY PREVIOUSLY. WHATEVER AMOUNT COLLECTED BY US W ERE TO MEET EXPENSES OF MIDDLE MAN FOR FREEING THE PROPERT Y OF ENCROACHMENTS AND OTHER EXPENSES TO MEET FOR THE SA ME PURPOSE. THESE IS NOT THE NORMAL BUSINESS PRACTICE OF US. ALL THE ABOVE AMOUNTS STATED THOUGH THE SAME ARE GENUIN E EXPENSES FOR US, WE ARE NOT IN THE POSITION TO JUST IFY THE SAME WITH INCOME TAX DEPARTMENT. WE WANT TO BUY PEACE OF MIND AND TO AVOID PROTRACTE D LITIGATION WE HAVE NO OBJECTION IF THE INCOME TAX D EPARTMENT MADE ADDITION TO ITS UNDISCLOSED INCOME AT THE TUNE OF `. 2,78,68,800/- AS DISCUSSED ABOVE. WE REQUEST THAT THE IT DEPARTMENT SHOULD NOT LEVY P ENALTY PROCEEDINGS U/S 271 (1) (C) OF IT ACT 1961 TAKING I NTO CONSIDERATION THE FACT THAT WE HAVE ALWAYS COOPERAT ED WITH THE IT DEPARTMENT ON ALL ISSUES. 5. HOWEVER, THE AO WAS NOT CONVINCED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE SEIZED PAPER FOU ND FROM THE RESIDENCE OF SHRI VIRENDRA SHETTY AS WELL AS UNACCO UNTED CASH FOUND FROM THE RESIDENCE OF DIRECTORS CLEARLY SHOW THAT T HE ASSESSEE GROUP HAS CHARGED ON-MONEY ON THE SALE OF FLATS AND COMMERCIA L PREMISES IN ITS PROJECTS REFERRED TO IN THE SAID SEIZED DOCUMENTS W HICH ARE NOT 7 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS OF THE A SSESSEE COMPANY. SINCE AN AMOUNT OF `. 46,95,000/- HAS BEEN TREATED AS UNDISCLOSED INCOME PERTAINING TO M/S. MARATHON REALTY LTD. AN D IS CONSIDERED IN ITS ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06, THE AO TREATED THE BALANCE AMOUNT OF `. 4,02,53,800/- AS ADDITIONAL INCOME OF THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2005-06. SIN CE THE ASSESSEE HAS DISCLOSED ADDITIONAL INCOME OF `. 1,23,85,000/- IN ITS RETURN OF INCOME, THE AO MADE AN ADDITION OF `. 2,78,68,800/- AS THE ADDITIONAL INCOME BEING ON-MONEY RECEIPTS OF THE ASSESSEE COM PANY. 5.1 SUBSEQUENTLY THE AO INITIATED PENALTY PROCEEDIN GS U/S. 271(1)(C) OF THE I. T. ACT. IT WAS EXPLAINED BY THE ASSESSEE THAT THE TOTAL AMOUNT OF ON-MONEY RECEIPTS SHOWN IN PAGE 6 OF ANNEXURE-1 WAS `. 4,02,53,800/- (TOTAL `. 4,49,48,800/- OUT OF WHICH `. 46,95,000/- RELATED TO MARATHON REALTY LTD.), TWO AMOUNTS OF `. 10 LACS AND `. 100.50 LACS WERE NOT RECEIVED AND THE SAME DID NOT ALSO BEAR INITIAL OF ANY PERSON ON THE LAST COLUMN OF PAGE 6 OF ANNEXURE A-1. OUT OF THE BALANC E AMOUNT REMAINING EXPENSES WERE CLAIMED TO THE EXTENT OF `. 1,68,18,800/- AND THUS, THE BALANCE AMOUNT OF `. 1,23,85,000/- WAS OFFERED FOR TAX IN THE RETURN OF INCOME FILED FOR THE A.Y. 2005-06. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A LETTER. ON THE BA SIS OF THE LETTER SO FILED AND THE ADDITIONAL INCOME SO OFFERED, THE AO MADE A DDITION OF `. 2,78,68,800/- TO THE RETURNED INCOME OF `. 2,40,76,210/-. 5.2 IT WAS SUBMITTED THAT SO FAR AS THE AMOUNT OF `. 1,23,85,000/- IS CONCERNED, THE ASSESSEE HAS OFFERED THE SAID AMOUNT DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) AS A DDITIONAL INCOME IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2005-06, AND FOR 8 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. WHICH THE FINANCIAL YEAR WAS NOT ENDED AT THE TIME OF SEARCH ACTION CONDUCTED ON 02.12.2004. THE ASSESSEE HAS THUS DISC LOSED THE AMOUNT IN THE RETURN OF INCOME FILED, DISCLOSED IN THE STA TEMENT RECORDED U/S.132(4) AND THE MANNER OF EARNING THE SAID INCOM E HAS ALSO BEEN DISCLOSED AND THE TAX ON THE SAME HAS ALSO BEEN PAI D. THEREFORE, THE ASSESSEE FALLS WITHIN THE SCOPE OF IMMUNITY PROVIDE D UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. 5.3 SO FAR AS THE BALANCE AMOUNT OF `. 2,78,68,800/- IS CONCERNED, IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS EXPLAINED BEFORE THE AO THAT `. 110.50 LACS WAS NOT RECEIVED AT ALL, AS THERE WAS NO INITIALS OF ANY FAMILY MEMBER RECEIVIN G SUCH AMOUNT IN THE LOOSE PAPERS SEIZED, ON THE BASIS OF WHICH THE ADDI TION IS MADE. SO FAR AS THE BALANCE AMOUNT OF `. 1,68,18,800/- IS CONCERNED IT WAS CATEGORICALLY STATED DURING THE COURSE OF SEARCH PR OCEEDINGS ITSELF THAT THIS WAS INCURRED AS EXPENSES FOR REMOVING ENCROACH MENTS ETC. IT WAS SUBMITTED THAT MERELY BECAUSE THE EXPLANATION GIVEN COULD NOT BE SUBSTANTIATED, THAT BY ITSELF WOULD NOT LEAD TO CON CEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND HENCE, THE PENALTY PROCEEDINGS INITIATED MAY BE DROPPED. 5.4 VARIOUS DECISIONS WERE ALSO CITED BEFORE THE AO . IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E ASSESSEE HAD OFFERED THE ENTIRE AMOUNT OF `. 2,78,68,800/- BY FILING A LETTER WHEREIN THE AMOUNT OFFERED WAS A CONDITIONAL OFFER FOR NOT TO INITIATE OR LEVY PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. REFER RING TO THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF RAMNATH JA GANNATH VS. STATE OF MAHARASHTRA (1984) REPORTED IN 57 STC 46 (BOM) A T PAGE 51 IT WAS 9 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. SUBMITTED THAT AN OFFER IS COUPLED WITH CONDITIONS WHICH ARE NOT REASONABLE OR ONE WHICH CANNOT BE ACCEPTED IN LAW C OMPLETELY WOULD NOT RENDER, UNCONDITIONAL THE OFFER WHICH IS IN TERMS M ADE ON A CONDITION. IF IT IS NOT POSSIBLE TO ACCEPT THAT CONDITION, THE ON LY RESULT WOULD BE THAT THAT OFFER MUST BE REJECTED. BUT WHERE AN OFFER IS COUPLED WITH CONDITIONS, WHICH CANNOT BE ACCEPTED FULLY, THE OFF ER CANNOT BE TREATED AS AN UNCONDITIONAL OFFER MERELY ON THAT COUNT. REF ERRING TO THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V S. AMALENDU PAUL (1984) REPORTED IN 145 ITR 439 IT WAS SUBMITTED THA T WHEN A CASH CREDIT WAS INCLUDED IN REVISED RETURN WITH A PRAYER THAT N O PENALTY BE LEVIED, IT WAS HELD THAT A CONDITIONAL ADMISSION OF THE ASSESS EE CANNOT BE MADE BASIS FOR PENALTY. VARIOUS OTHER DECISIONS WERE ALS O CITED BEFORE THE AO TO THE PROPOSITION THAT NO PENALTY U/S.271(1)(C) OF THE I.T. ACT. SHOULD BE LEVIED. 5.5 HOWEVER, THE AO WAS NOT CONVINCED WITH THE EXPL ANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM ON-MONEY OF `. 110.50 LAKHS WAS RECEIVED BY SHRI VIRENDRA SHETTY, MARKETING EXECUTIVE OF THE ASSESSEE COMPANY WHICH ITSELF SHOWS THAT THE MONEY HAS BEEN RECEIVED BY THE ASSESSEE GROUP. SIMILARLY, THE ASSESSEE HAS ALSO NOT GIVEN A NY EXPLANATION WITH EVIDENCE TO THE SATISFACTION OF THE AO REGARDING TH E EXPENDITURE OF `. 1,68,18,800/-. THEREFORE, THE AO RELYING ON A COUPL E OF DECISIONS, HELD THAT THE ASSESSEE HAS CONCEALED ITS INCOME BY FURNI SHING INACCURATE PARTICULARS OF INCOME OF AN AMOUNT OF `. 2,78,68,800/-. THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT SUBSTANTIATED WITH E VIDENCE. HE, THEREFORE, LEVIED PENALTY OF `. 1,01,97,891/- U/S 271(1)(C) OF THE ACT BEING 100% O F THE TAX SOUGHT TO BE EVADED. 10 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. 6. BEFORE THE LD. CIT(A) THE ASSESSEE REITERATED TH E SAME SUBMISSIONS AS MADE BEFORE THE AO. IT WAS SUBMITTED THAT THE ASSESSEE HAS SURRENDERED THE ADDITIONAL INCOME DURING THE AS SESSMENT PROCEEDINGS JUST TO BUY PEACE AND TO AVOID PROLONGE D LITIGATION AND WITH A SPECIFIC PRAYER / CONDITION THAT NO PENALTY SHOUL D BE LEVIED IN RESPECT OF THIS ADDITION. THUS IN THE ASSESSMENT ORDER THE ADDITION WAS MADE BY WAY OF AGREED ASSESSMENT, FOR WHICH THE ASSESSEE DI D NOT PREFER ANY APPEAL AGAINST THE ADDITION. THE ADDITION WAS MADE ON THE BASIS OF ASSESSEES OFFER OF THE AMOUNT AND THERE IS NO OTHE R INDEPENDENT MATERIAL / EVIDENCE ON RECORD TO ESTABLISH THAT THE AMOUNT OF ADDITION REPRESENTED THE ASSESSEES INCOME SO AS TO CONCLUDE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME. IT WAS SUBMITTED THAT IN THIS CASE SINCE THE AO HAD MADE THE ADDITION ON THE BASI S OF OFFER/SURRENDER BY THE ASSESSEE, AND HAS THUS ACCEPTED THE OFFER, T HEREFORE, THE OFFER HAS TO BE ACCEPTED ALONG WITH THE CONDITION AND NOT WIT HOUT THAT. THE DEPARTMENT CANNOT BLOW HOT AND COLD AT THE SAME TIM E. IT CANNOT ACCEPT THE OFFER TO MAKE THE ADDITION AND REJECT THE ATTAC HING CONDITION TO IMPOSE THE PENALTY. IT WAS SUBMITTED THAT THE DEPAR TMENT IN THE INSTANT CASE HAS NOT MADE ANY INDEPENDENT ENQUIRY. THEREFOR E, IF THE ASSESSEES CONDITIONAL OFFER IS REMOVED, THERE REMAINS NOTHING ON RECORD TO ESTABLISH OR EVEN TO SUGGEST THAT THE AMOUNT OF `. 110.50 LACS, WHICH DOES NOT BEAR INITIALS OF THE RECIPIENT IN THE LAST COLUMN ON PG.6 OF ANNEXURE A-1 WAS INDEED RECEIVED. SIMILARLY, THER E IS NO EVIDENCE WITH THE DEPARTMENT THAT THE AMOUNT OF `. 1,68,18,800/- HAD NOT BEEN INCURRED AS EXPENDITURE. IT WAS SUBMITTED THAT IN T HE EXPLANATION 1 TO SECTION 271, THE INITIAL BURDEN IS ON THE DEPARTMEN T TO PRIMA FACIE ESTABLISH CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS BY ASSESSEE AND, THEREAFTER, ONLY THE ASSESSEES E XPLANATION IS TO BE CONSIDERED AS TO WHETHER THE SAME IS FALSE, BONAFID E OR HAS NOT BEEN 11 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. SUBSTANTIATED ETC. THE PROVISIONS OF SECTION 271(1) (C) OF THE I.T. ACT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A). FURTHER, T HE STATEMENTS RECORDED U/S.132 (4), DURING THE COURSE OF SEARCH ACTION FRO M SHRI VIRENDRA SHETTY AND SHRI MAYUR SHAH, DIRECTOR OF THE ASSESSE E COMPANY WERE BOUGHT TO THE NOTICE OF THE LD. CIT(A) TO SUBSTANTI ATE THAT THE AMOUNT OF `. 110.50 LAKHS WAS NOT RECEIVED AND AN AMOUNT OF `. 1,68,18,800/- HAS BEEN INCURRED AS EXPENSES. RELYING ON A COUPLE OF D ECISIONS IT WAS SUBMITTED THAT NO PENALTY U/S.271(1)(C) OF THE I.T. ACT SHOULD BE LEVIED. 6.1 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , THE LD. CIT(A) DELETED THE PENALTY LEVIED BY THE AO U/S.271(1)(C) OF THE I.T. ACT. ON ADDITION OF `. 110.50 LACS AND SUSTAINED THE PENALTY LEVIED BY THE AO ON THE BALANCE AMOUNT OF `. 1.63 CRORES. WHILE DOING SO HE HELD THAT SO FAR AS THE ON-MONEY OF `. 110.50 LAKHS CLAIMED BY THE ASSESSEE AS NOT RECEIVED IS CONCERNED, IT IS AN UNDISPUTED FACT THA T THERE WERE NO SIGNATURE AS A TOKEN OF RECEIPT OF MONEY TAKEN AGAI NST THE TWO ENTRIES OF `. 100.5 LACS AND `. 10 LACS IN THE DOCUMENT FOUND AND SEIZED DURING THE COURSE OF SEARCH. THE MARKETING EXECUTIVE OF ASSESS EE COMPANY SHRI VIRENDRA SHETTY IN HIS STATEMENT RECORDED U/S.132(4 ) DURING THE COURSE OF SEARCH IN RESPONSE TO ANSWER TO QUESTION NO.8 HA S ALSO CATEGORICALLY STATED THAT THE AMOUNT HAS NOT BEEN RECEIVED. A DIR ECTOR OF THE ASSESSEE COMPANY SHRI MAYUR SHAH HAS ALSO GIVEN DETAILED EXP LANATION IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT OUT OF THE TO TAL INCOME OF `. 4,02,53,800/- TWO AMOUNTS OF `. 10 LACS AND `. 100.50 LACS WERE NOT RECEIVED AND THE SAME DID NOT HAVE INITIALS OF ANY PERSONS ON THE LAST COLUMN OF THE DOCUMENT. THE AO HAS NOT CONTROVERTED THE ABOVE SUBMISSIONS OF THE RESPONSIBLE PERSONS. ACCORDING T O HIM THE ASSESSEE HAD OFFERED AN EXPLANATION WITH REFERENCE TO THE NO N RECEIPT OF THE SAID TWO AMOUNTS AND HAS BEEN ABLE TO SUBSTANTIATE THE S AME WITH THE HELP 12 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. OF STATEMENT OF SHRI VIRENDRA SHETTY AS WELL AS THE ABSENCE OF INITIALS AGAINST THE SAID ENTRIES IN THE SEIZED DOCUMENTS. T HE ABOVE EXPLANATION HAS NOT BEEN PROVED TO BE FALSE OR UNTRUE. THEREFOR E, THE PENALTY U/S.271(1)(C) OF THE I.T. ACT. CANNOT BE LEVIED ON THE AMOUNT OF `. 110.50 LAKHS. 6.2 SO FAR AS THE OTHER TWO AMOUNTS I.E. 1.38 CRORE S AND 25 LAKHS ARE CONCERNED, HE NOTED THAT THE SAME HAS BEEN CLAIMED TO BE EXPENDITURE ON ACCOUNT OF PAYMENTS MADE TO MIDDLEMAN TO SETTLE PROPERTY ENCROACHMENTS AND BUSINESS EXPENDITURE RESPECTIVELY . HOWEVER, NO EVIDENCE WAS FILED TO SUBSTANTIATE THE SAID STATEME NT, NO DOCUMENTS INDICATING ANY SUCH EXPENSES HAVING BEEN INCURRED W ERE FOUND AND SEIZED DURING THE COURSE OF SEARCH ACTION. THEREFOR E, THE EXPENDITURE CANNOT BE ACCEPTED AS GENUINE MERELY ON THE BASIS O F STATEMENT WITHOUT FILING ANY DOCUMENT OR EVIDENCE TO CORROBORATE THE SAID STATEMENT. THE SUBMISSIONS OF THE ASSESSEE THAT DISCLOSURE WAS MAD E ONLY TO BUY PEACE OF MIND AND AVOID PROTRACTED LITIGATION HAS NOT MUC H TRUTH, SINCE IT IS A MATTER OF RECORD, THAT MATERIAL WAS FOUND DURING TH E COURSE OF SEARCH INDICATING THE RECEIPT OF ON-MONEY AND NO SUCH EVID ENCE WAS FOUND DURING THE COURSE OF SEARCH REGARDING ANY EXPENDITU RE. IN THE INSTANT CASE, THERE WAS MATERIAL IN THE POSSESSION OF THE D EPARTMENT TO CORROBORATE THE THEORY OF RECEIPT OF ON-MONEY BUT T HE ASSESSEE HAS NO MATERIAL TO CORROBORATE ITS THEORY OF EXPENSES HAVI NG BEEN INCURRED. THEREFORE, HE CONCURRED WITH THE FINDING OF THE AO THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM OF HAVING I NCURRED EXPENDITURE ON UNACCOUNTED BUSINESS EXPENSES OF `. 25 LACS AND PAYMENTS MADE TO MIDDLEMEN OF `. 138 LACS AND ITS ALLOWABILITY IN THE COMPUTATION OF THE TOTAL INCOME OF THE ASSESSEE AS DEDUCTION FROM THE GROSS AMOUNT OF CASH OF `. 4.49 CRORES AS APPEARING IN THE SEIZED PAPER. THE A SSESEE ALSO COULD 13 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. NOT SUBMIT ANY DETAILS REGARDING THE NATURE OF SUCH EXPENSES, PERSONS TO WHOM PAYMENTS WERE MADE, BILLS, VOUCHERS OR ANY OTHER RELEVANT DOCUMENT. THE ASSESSEE COULD NOT GIVE THE NAMES OF THE MIDDLEMAN AND THE ADDRESSES OF THE MIDDLEMAN WHO RECEIVED PAYMENT S AGGREGATING TO `. 138 LACS. HE, ACCORDINGLY, CONFIRMED THE LEVY OF PE NALTY U/S.271(1)(C) OF THE I.T. ACT. ON `. 138 LACS AND RS. 25 LACS RESPECTIVELY. 7. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE LD. CIT(A), THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFOR E US. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE AO AND THE LD. CIT(A). HE SUBMIT TED THAT THE PENALTY IN THIS CASE WAS LEVIED ON AGREED ASSESSMEN T. REFERRING TO THE COPY OF ASSESSMENT ORDER, THE LD. COUNSEL FOR THE A SSESSEE DREW THE ATTENTION OF THE BENCH TO PAGE NO.2 AND 3 OF THE AS SESSMENT ORDER AND SUBMITTED THAT THE CONTENTS OF THE SEIZED PAPER WHI CH HAS BEEN EXTRACTED BY THE AO DOES NOT CONTAIN ANY ON-MONEY R ECEIPT AND ARE WRITTEN IN CODED LANGUAGE SUCH AS P.P, F.P, L, CRS, MRS, ARS AND SCS ETC. THE REVENUE WAS NOT ABLE TO DECIPHER THE CODED LANGUAGE WITHOUT THE HELP OF THE ASSESSEE. REFERRING TO THE COPY OF STATEMENT OF SHRI VIRENDRA SHETTY RECORDED BY THE DEPARTMENT DURING T HE COURSE OF SEARCH ON 02.12.2004 U/S.132(4) OF THE I.T. ACT, THE LD. C OUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO Q.NO.8 PUT TO SHRI VIRENDRA SHETTY AND THE REPLY GIVEN BY HIM, ACCORDING TO WHI CH THE AMOUNT MENTIONED AGAINST DATE 16.10.2004 AND 20.10.2004 WE RE TO BE RECEIVED. BUT ANY HOW THE MONEY WAS NOT RECEIVED AND, THEREFO RE, THERE IS NO SIGNATURE. PERSONS WHO USE TO RECEIVE THE CASH HAVE MADE STATEMENTS BEFORE THE SEARCH PARTY ITSELF THAT THE AMOUNT OF `. 100.50 LAKHS AND `. 10 14 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. LACS WERE NEVER RECEIVED. REFERRING TO THE STATEMEN T OF SHRI MAYUR SHAH, DIRECTOR OF THE ASSESSEE COMPANY RECORDED BY THE SE ARCH PARTY ON 22.01.2005 U/S.132(4) OF THE ACT, THE LD. COUNSEL F OR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO Q.NO.7 PUT BY THE DDI AND THE REPLY GIVEN BY HIM ACCORDING TO WHICH AN AMOUNT OF `. 3.38 CRORES ONLY ARE RECEIVED WHICH ARE DULY ACKNOWLEDGED. HE SUBMITTED THAT IN R ESPONSE TO Q.NO.8, THE DIRECTOR HAD STATED THAT OUT OF `. 3.38 CRORES RECEIVED, `. 1.75 CRORES WAS FOUND AND THE BALANCE AMOUNT WAS SPENT. FURTHER , THE DIRECTOR HAD ALSO GIVEN THE BREAK UP OF EXPENDITURE ACCORDING TO WHICH AN AMOUNT OF `. 25 LACS WAS INCURRED FOR BUSINESS NEEDS AND AN AMOU NT OF `. 1.38 CRORES WAS PAID TO MIDDLEMAN TO SETTLE PROPERTY ENC ROACHMENT. REFERRING TO THE ANSWER GIVEN BY THE DIRECTOR IN RE PLY TO THE Q.NO.10 PUT BY THE DDIT, THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE DIRECTOR AT THAT TIME HAD STATED THAT DUE TO BUSINE SS EXIGENCIES, HE IS UNABLE TO DISCLOSE THEIR NAMES. REFERRING TO THE LE TTER ADDRESSED TO THE AO ON 26.12.2006, COPY OF WHICH IS PLACED AT PAPER BOOK PAGE NUMBER 21 AND 22, HE SUBMITTED THAT THE ASSESSEE HAD MADE A CONDITIONAL OFFER TO THE AO FOR MAKING THE ADDITION OF `. 2,78,68,800/-. IT WAS OFFERED TO BUY PIECE OF MIND AND TO AVOID PROLONGED LITIGATION . UNDER THESE CIRCUMSTANCES, THE ASSESSEE HAD NO OBJECTION FOR TH E AMOUNT OF `. 2,78,68,800/- TO BE ADDED TO THE TOTAL INCOME OF TH E ASSESSEE WITH A REQUEST NOT TO INITIATE THE PENALTY PROCEEDINGS U/S .271(1)(C) OF THE I.T. ACT. 8.1 HE SUBMITTED THAT THE DISCLOSURE WAS ON THE BAS IS OF ONE LOOSE PAPER. THE DEPARTMENT HAS NOT BROUGHT ANY MATERIAL WHATSOEVER WHICH HAS BEEN ACCEPTED BY THE ASSESSEE. REFERRING TO A N UMBER OF DECISIONS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CBI VS. V.C. SHUKLA & OTHERS REPORTED IN AIR 1998 SUPREME C OURT 1406, HE 15 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. SUBMITTED THAT LOOSE SHEETS OF PAPERS CONTAINED IN FILES ARE NOT BOOKS OF ACCOUNT AND CANNOT BE RELIABLE. HE SUBMITTED THAT W HEN A STATEMENT IS RECORDED FROM THE ASSESSEE AND ADDITION IS MADE ON THE BASIS OF THE STATEMENT RECORDED THEN THE SAME STATEMENT HAS TO B E ACCEPTED IN FULL OR REJECTED IN FULL. THE REVENUE CANNOT PICK UP AND CHOOSE THAT PORTION WHICH IS FAVOURABLE TO THE DEPARTMENT AND AGAINST T HE ASSESSEE. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE TRIBU NAL IN THE CASE OF SHRI PRAKASH K. KOTHARI VIDE IT(SS)A NO.241/MUM/2005 ORD ER DATED 20.04.2006 FOR THE BLOCK PERIOD 01.04.1995 TO 21.02 .2002. HE SUBMITTED THAT IN THE INSTANT CASE THE REVENUE HAS NOT BROUGHT OUT ANYTHING BY CONDUCTING ANY INDEPENDENT ENQUIRY. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO CLA USE 2 OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE I.T. ACT. ACCORDING T O WHICH NO PENALTY U/S.271(1)(C) OF THE I.T. ACT. CAN BE IMPOSED, IF T HE ASSESSEE IN THE COURSE OF SEARCH MAKES A STATEMENT UNDER SUB SECTIO N 132(4) THAT THE UNDISCLOSED ASSET HAS BEEN ACQUIRED OUT OF HIS INCO ME WHICH HAS NOT BEEN DISCLOSED IN HIS RETURN OF INCOME TO BE FURNIS HED BEFORE THE EXPIRY OF TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 139 AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF SUCH INCOME. HE SUBMITTED THAT THE ASSESSEE IN THE INSTANT CASE HAS MET ALL THE CONDITIONS OF THE EXPLANATION 5 TO SECTION 271(1)(C ) OF THE I.T. ACT. REFERRING TO THE PROVISIONS OF EXPLANATION 1 TO SEC TION 271(1)(C) OF THE I.T. ACT, HE SUBMITTED THAT THE ASSESSEE IN THE INS TANT CASE HAS OFFERED AN EXPLANATION TO THE AO WHO HAS NOT BROUGHT OUT AN YTHING ON RECORD TO SHOW THAT SUCH EXPLANATION IS FALSE. THE ASSESSEE H AS ALSO SUBSTANTIATED THE DISPARITY MADE BY IT GIVING THE G ROSS AND NET AMOUNT. HE SUBMITTED THAT THE BONAFIDE OF THE ASSESSEE SHOW S THAT THE STATEMENT GIVEN AT THE TIME OF SEARCH WAS NOT AN AF TER THOUGHT. 16 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. 8.2 REFERRING TO THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD. VS. DCIT REPORTED IN 22 DTR 481 HE DREW THE ATTENTION OF THE BENCH TO PARA 60 TO 68 OF THE ORDER AND SUBMITTED THAT WHEN AN EXPLANATION IS OFFERED BY TH E ASSESSEE IN DISCHARGE OF THE ONUS CAST UPON HIM BY EXPLANATION 1 TO SECTION 271(1)(C) OF THE I.T. ACT., IT IS NOT FOR THE AO TO PONDER OVER WHAT SHOULD HAVE HAPPENED IN IDEAL CIRCUMSTANCES, AND REJECT T HE EXPLANATION BECAUSE WHAT HAS ACTUALLY HAPPENED IS LESS THAN SUC H AN IMAGINARY IDEAL SITUATION; HE HAS TO CONSIDER THE EXPLANATION OBJECTIVELY AND UNLESS HE FINDS THE SAME AGAINST THE HUMAN PROBABIL ITIES OR UNLESS THERE ARE ANY REAL INCONSISTENCIES OR FACTUAL ERROR S IN SUCH AN EXPLANATION, THE AO OUGHT TO ACCEPT THE SAME. IT CA NNOT ALWAYS BE FEASIBLE TO PROVE THE CLAIM OF BONA FIDES TO THE HI LT, NOR THE ASSESSEE CAN BE EXPECTED TO DO SO. THE EXPLANATION FOR BONAFIDE NEEDS TO BE CONSIDERED IN A FAIR AND OBJECTIVE MANNER AND IN TH E LIGHT OF THE HUMAN PROBABILITIES. HE SUBMITTED THAT THE ASSESSEE IN TH E INSTANT CASE IS A BUILDER AND AS SUCH PAYMENTS OF THE TYPE EXPLAINED EARLIER ARE NORMAL IN SUCH TYPE OF BUSINESS. THE STATEMENT WAS GIVEN U /S.132(4) EXPLAINING THE NATURE OF EXPENSES INCURRED AND THE BUSINESS EX IGENCY FOR NON DISCLOSURE OF THE NAMES OF THE MIDDLEMAN. THEREFORE , THE ASSESSEE DISCHARGED THE ONUS CAST ON IT BY MAKING AN EXPLANA TION. 8.3 REFERRING TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 HE SUBMITTED THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 17 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. 8.4 REFERRING TO THE DECISION OF THE TRIBUNAL IN TH E CASE OF TARACHAND GHANSHYAMDAS V. CIT REPORTED IN 59 ITR 378 HE SUBMI TTED THAT WHEN THE OFFER WAS CONDITIONAL, THE AO CANNOT GO TO THAT PART OF THE OFFER WHICH IS FAVOURABLE TO THE DEPARTMENT AND AGAINST T HE ASSESSEE. HE ALSO RELIED ON A COUPLE OF DECISIONS AS PER THE WRITTEN SUBMISSIONS AND SUBMITTED THAT THE PENALTY LEVIED BY THE AO AND CON FIRMED BY THE LD. CIT(A) SHOULD BE DELETED AND THE PORTION ON WHICH P ENALTY LEVIED BY THE AO HAS BEEN DELETED BY THE LD. CIT(A) SHOULD BE UPH ELD. IN SUM AND SUBSTANCE HE SUBMITTED THAT NO PENALTY U/S.271(1)(C ) OF THE I.T. ACT. CAN BE LEVIED IN THE INSTANT CASE. 9. THE LD. DR ON THE OTHER HAND, WHILE SUPPORTING T HE ORDER OF THE AO SUBMITTED THAT THIS IS A FIT CASE FOR LEVY OF PE NALTY U/S.271(1)(C) OF THE I.T. ACT. REFUTING THE SUBMISSION OF THE LD. CO UNSEL FOR THE ASSESEE THAT THE SEIZED DOCUMENT CONTAIN CODED LANGUAGE WHI CH COULD NOT BE DECIPHER WITHOUT THE HELP OF THE ASSESSEE, HE SUBMI TTED THAT THERE IS NO CODE AS SUCH SINCE IT IS CRYSTAL CLEAR FROM THE LAN GUAGE ITSELF. SO FAR AS THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT WAS A CONDITIONAL OFFER, HE SUBMITTED THAT CONDITIONAL OF FER HAS NO LEGAL SANCTITY AS FAR AS INCOME TAX PROCEEDINGS ARE CONCE RNED. REFERRING TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F V.C. SHUKLA (SUPRA) RELIED ON BY THE LD. COUNSEL FOR THE ASSESS EE, HE SUBMITTED THAT THE RATIO OF THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE SUBMITTED THAT WHEN THE ASSESSEE DURING TH E COURSE OF SEARCH PROCEEDINGS AND ASSESSMENT PROCEEDINGS HAS ADMITTED THE RECEIPT OF ON- MONEY, NO FURTHER ENQUIRY WAS REQUIRED BY THE DEPAR TMENT. 18 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. 9.1 THE LD. DR ALSO RELIED ON THE DECISION IN THE C ASE OF DY. DIRECTOR OF INCOME TAX V. CHIRAG METAL ROLLING MILLS LTD. RE PORTED IN 305 ITR 29 (MP) AND THE DECISIONS REPORTED IN 153 ITR 376 (MAD RAS), 243 ITR 618 (KERALA) AND 124 ITR 376 (MADRAS). SO FAR AS THE AM OUNT OF `. 110.50 CRORES IS CONCERNED, THE LD. D.R SUBMITTED THAT ALT HOUGH THE SIGNATURE IS NOT THERE BUT ALL OTHER CONDITIONS ARE FULFILLED SUCH AS SPECIFIC DATE, NAME OF THE PROJECT, AREA, AMOUNT ETC. SINCE THE AS SESSEEE HAS OFFERED THE AMOUNT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, IT IS NOT CORRECT TO SAY THAT THE AMOUNT HAS NOT BEEN RECEIVE D. SINCE THE LD. CIT(A) HAS NOT GIVEN ANY COGENT REASON WHILE DELETI NG THE PENALTY ON THIS AMOUNT, HE SUBMITTED THAT THE PENALTY LEVIED BY THE A.O ON THIS AMOUNT SHOULD BE UPHELD. 10. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER SUBMITTED THAT THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH ON THE BASIS OF WHICH ADDITION HAS BEEN MADE WAS IN FACT IN CODED FORM. O NLY ON THE BASIS OF THE EXPLANATION GIVEN BY THE ASSESSEE, THE REVENUE WAS ABLE TO DECIPHER THE SAME. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE LD. CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT TH AT DURING THE COURSE OF SEARCH A FILE MARKED ANNEXURE A-1 CONTAINING PAGE 1 TO 10 AS PER THE PANCHNAMA DTD. 2.12.2004 WAS FOUND AND SEIZED. THE RE IS ALSO NO DISPUTE TO THE FACT THAT PAGE NO. 6 & 7 OF THE SAID ANNEXURE A-1 PERTAINS TO THE ASSESSEE WHICH CONTAINS RECEIPT OF ON MONEY BY THE ASSESSEE FROM VARIOUS PERSONS IN RESPECT OF ITS VARIOUS PROJ ECTS. WE FIND OUT OF 19 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. THE TOTAL ON MONEY OF RS. 449.48 LACS, AN AMOUNT OF RS. 46.95 LACS PERTAINS TO MARATHON REALITY LTD., AN ASSOCIATE CON CERN. OUT OF THE BALANCE AMOUNT OF RS. 402.53 LACS, THE ASSESSEE HAD OFFERED ONLY RS. 123.85 LACS IN THE RETURN FILED. OUT OF THE BALANC E AMOUNT OF RS. 2,78,68,800/- IT WAS EXPLAINED DURING THE SEARCH PR OCEEDINGS THAT AN AMOUNT OF RS. 1,10,50,000/- WAS NOT RECEIVED BY THE ASSESSEE SINCE IT DOES NOT CONTAIN INITIAL OF ANY OF THE FAMILY MEMBE RS ACKNOWLEDGING RECEIPT OF THE SAID AMOUNT. IT WAS FURTHER EXPLAINE D THAT AN AMOUNT OF RS. 25 LACS WAS SPENT FOR VARIOUS EXPENSES, AN AMOU NT OF RS. 1,38,00,000/- WAS PAID TO MIDDLEMAN FOR REMOVAL OF ENCROACHMENT FROM THE LAND AND AN AMOUNT OF RS. 5,18,800/- WAS INCURR ED FOR MISCELLANEOUS EXPENSES. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE OFFERED THE AMOUNT OF RS. 2,78,68,800/- AS ADDITIONAL INCOME WITH A CONDITION THAT NO PENALTY SHOULD BE LEVIED. IT WAS ALSO EXPLAINED THAT THE SAME IS BEING OFFERED A S THE ASSESSEE IS NOT IN A POSITION TO SUBSTANTIATE WITH EVIDENCE AND TO BUY PEACE AND TO AVOID PROLONGED LITIGATION. WE FIND THE A.O. WAS NO T CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND LEVIED PENALT Y ON THE AMOUNT OF RS. 1,10,50,000/- AND RS. 1,63,00,000/- RESPECTIVE LY WHICH IS THE DISPUTE IN THE IMPUGNED CROSS APPEALS. 11.1 WE FIND THE LD. CIT(A) DELETED THE PENALTY LEV IED BY THE A.O. ON THE AMOUNT OF RS. 110.50 LACS ON THE GROUND THAT THERE IS NO SIGNATURE ON THE SEIZED DOCUMENT AS A TOKEN OF RECEIPT OF ON MON EY AGAINST THE ENTRIES OF RS. 100.5 LAKHS AND RS. 10 LAKHS RESPECT IVELY. FURTHER SHRI VIRENDRA SHETTY IN HIS STATEMENT RECORDED U/S 132(4 ) HAD STATED NON- RECEIPT OF THE SAID AMOUNT AND THE DIRECTOR SHRI MA YYUR SHAH HAD ALSO STATED DURING THE ASSESSMENT PROCEEDINGS ABOUT NON- RECEIPT OF THE SAID AMOUNT. HOWEVER, HE SUSTAINED THE PENALTY ON RS. 1 .63 CRORES ON THE 20 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. GROUND THAT NO DOCUMENTARY EVIDENCE WAS FILED TO SU BSTANTIATE THAT SUCH EXPENDITURE HAS BEEN INCURRED. IT IS THE SUBM ISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF RS. 1,1 0,50,000/- WAS NOT RECEIVED BY THE ASESSEE AS ON MONEY SINCE IT DOES N OT CONTAIN INITIAL OF ANY OF THE FAMILY MEMBERS WHICH IS SUPPORTED BY THE STATEMENT OF SHRI VIRENDRA SHETTY DURING THE COURSE OF SEARCH AND OF SHRI MAYYUR SHAH DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHE R THE AMOUNT OF RS. 1.63 CRORES HAS BEEN SPENT FOR THE PURPOSE OF BUSIN ESS AND SINCE THE ASSESEE HAD NO SUPPORTING EVIDENCE, IT OFFERED THE SAME AS ADDITIONAL INCOME TO BUY PEACE AND AVOID PROLONGED DELAY, THER EFORE, NO PENALTY IS CALLED FOR. IT IS THE SUBMISSION OF THE LD. D.R. T HAT ALTHOUGH NO INITIAL IS THERE BUT THE PAPER CONTAINS ALL OTHER PARTICULARS WHICH GIVES STRONG INDICATION OF RECEIPT OF ON MONEY OF RS. 1,10,50,00 0/-. THE ASSESSEE HAS OFFERED THE SAME AS ADDITIONAL INCOME. THEREFO RE, PENALTY U/S 271(1)(C) IS ATTRACTED ON THIS AMOUNT. SO FAR AS T HE AMOUNT OF RS. 1,63,00,000/- IS CONCERNED, NO EVIDENCE WHATSOEVER WAS FILED TO SUBSTANTIATE THAT SUCH EXPENDITURE HAS BEEN INCURRE D. THEREFORE, THE PENALTY U/S 271(1)(C) IS ATTRACTED ON THIS AMOUNT. HOWEVER, HE SUSTAINED THE PENALTY LEVIED BY THE A.O. ON THE ADD ITION OF RS. 1,63,00,000/-. 11.2 SO FAR AS THE GROUNDS RAISED BY THE REVENUE RE GARDING THE DELETION OF PENALTY ON AMOUNT OF RS. 110.50 LACS IS CONCERNED WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). ADMITTEDL Y, THE BASIS OF ADDITION WAS THE NOTINGS IN THE SEIZED DOCUMENT WHICH CONTAI NS THE DATE, NAME, PROJECT, AREA, TOTAL, REMARKS AND INITIAL OF RECEIV ER. ADMITTEDLY, THE AMOUNT OF RS. 100.50 LACS ON 16.10.2004 AND RS. 10 LACS ON 20.10.2004 DOES NOT CONTAIN INITIALS OF ANY RECEIVE R. WE FIND SHRI 21 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. VIRENDRA SHETTY IN HIS STATEMENT RECORDED U/S 132(4 ) OF THE ACT ON 2.12.2004 VIDE HIS ANSWER TO QUESTION NO. 8 HAS CAT EGORICALLY STATED THAT THE AMOUNT MENTIONED ON 16.10.2004 WAS TO BE R ECEIVED BUT ANYHOW IT WAS NOT RECEIVED AND THEREFORE THERE IS N O SIGNATURE OF OUR DIRECTOR AGAINST THE DATE. NOTHING HAS BEEN BROUGH T ON RECORD TO DISPROVE THE ABOVE STATEMENT GIVEN BY SHRI VIRENDRA SHETTY DURING THE COURSE OF SEARCH RECORDED U/S 132(4) OF THE ACT. W E FURTHER FIND THE DIRECTOR SHRI MAYYUR SHAH GAVE DETAIL EXPLANATION D URING THE COURSE OF ASSESSMENT PROCEEDINGS THAT TWO AMOUNTS OF RS. 10 L ACS AND 100.50 LACS RESPECTIVELY WERE NOT RECEIVED AND THE SAME D ID NOT BEAR INITIAL OF ANY PERSON ON THE LAST COLUMN OF THE DOCUMENT. WHE N THE MARKETING EXECUTIVE SHRI VIRENDRA SHETTY AND THE DIRECTOR OF THE COMPANY SHRI MAYYUR SHAH HAS CATEGORICALLY STATED THAT THE AMOUN T OF RS. 10 LACS AND 100.50 LACS WERE NOT RECEIVED AND WHEN THE SEIZ ED DOCUMENT DOES NOT CONTAIN THE SIGNATURE OR INITIAL OF ANY FAMILY MEMBER OR DIRECTOR OF THE ASSESSEE COMPANY ACKNOWLEDGING THE RECEIPT OF T HE SAME, THEREFORE, MERELY BECAUSE THE ASSESSEE HAS OFFERED THE SAME AS ADDITIONAL INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE SA ME IN OUR OPINION DOES NOT CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED DISCUSSION B Y THE LD. CIT(A) ON THIS ISSUE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE FINDINGS OF THE LD. CIT(A) ON THIS ISSU E WE DO NOT FIND ANY INFIRMITY IN HIS ORDER DELETING THE PENALTY LEVIED ON RS. 1,10,50,000/-. WE ACCORDINGLY UPHOLD THE SAME AND THE GROUND RAISE D BY THE REVENUE IS DISMISSED. 22 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. 12. NOW COMING TO THE GROUND RAISED BY THE ASSESSEE , WE FIND THE DIRECTOR OF THE ASSESSEE COMPANY SHRI MAYYUR SHAH I N HIS STATEMENT RECORDED U/S 132(4) OF THE ACT ON 22.1.2005 VIDE QU ESTION NO. 8 HAS CATEGORICALLY STATED THAT THE AMOUNT OF RS. 25 LACS WAS SPENT AS BUSINESS EXPENDITURE AND NOT DEBITED IN THE REGULAR BOOKS OF ACCOUNT. SIMILARLY RS. 1.38 CRORES WAS GIVEN TO VARIOUS MIDD LEMEN TO SETTLE THE PROPERTY ENCROACHMENT. WE FIND SHRI MAYYUR SHAH IN HIS REPLY TO QUESTION NO. 10 HAD STATED THAT FOR BUSINESS EXIGEN CY HE IS UNABLE TO DISCLOSE THE NAMES OF THE MIDDLEMAN TO WHOM THE PAY MENTS OF RS. 1.38 CRORES WAS GIVEN. NO DOUBT, THE ASSESSEE HAS OFFERE D THE ABOVE 2 AMOUNTS AS ADDITIONAL INCOME DURING THE COURSE OF A SSESSMENT PROCEEDINGS ON THE GROUND THAT IT IS NOT IN A POSIT ION TO SUBSTANTIATE WITH EVIDENCE AND THEREFORE TO BUY PEACE AND TO AVO ID PROLONGED LITIGATION IT WANTS TO OFFER THE SAME AS ADDITIONAL INCOME. SINCE THE ASSESSEE OFFERED THE SAME AS ADDITIONAL INCOME, THE A.O. WAS JUSTIFIED IN MAKING THE ADDITION. BUT THE ADDITION BY ITSELF WIL L NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF IN-ACCURATE PARTICULARS OF INCOME TO ATTRACT THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE WOULD NOT HAVE OFFERED THE AMOUNT IF HE HA D THE SUPPORTING DOCUMENTS TO SUBSTANTIATE THE EXPENDITURE. WE ALSO FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE NATURE OF EXPENDITURE EXPLAINED DURING THE COURSE OF SEARCH I S COMMON IN REAL ESTATE BUSINESS. SINCE THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THE CLAIM WITH SUPPORTING EVIDENCE IT OFFERED THE SAME AS ADDITIONAL INCOME TO BUY PEACE AND TO AVOID PROLONGED LITIGATION. TH E REVENUE HAS NOT BROUGHT ANYTHING ON RECORD TO SUGGEST THAT THE AMOU NT HAS NOT BEEN SPENT BY THE ASSESSEE OR IT HAS BEEN UTILISED FOR A CQUIRING SOME OTHER 23 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. ASSETS. THE ENTIRE ADDITION HAS BEEN MADE ON THE B ASIS OF ADMISSION BY THE ASSESSEE IN SHAPE OF THE COVERING LETTER OFFERI NG THE SAME AS ADDITIONAL INCOME WE THEREFORE FIND FORCE IN THE SU BMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN A STATEMENT IS R ECORDED FROM THE ASSESSEE AND ADDITION IS MADE ON THE BASIS OF THE S TATEMENT RECORDED THEN THE SAME STATEMENT HAS TO BE ACCEPTED IN FULL OR REJECTED IN FULL. THE REVENUE CANNOT PICK-UP AND CHOOSE THAT PORTION WHICH IS FAVOURABLE TO THE DEPARTMENT AND AGAINST THE ASSESS EE. . THEREFORE, IN OUR OPINION, THE ADDITION MADE ON THE BASIS OF THE OFFER LETTER OF THE ASSESSEE DOES NOT CALL FOR LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT. 12.1 WE FIND THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 HAS HELD AS UNDER:- (SHORT NOTES): A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INC OME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. THE MEANING O F THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIV EN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE I NACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. 24 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS CIT V. RETURN ARE FOUND TO BE INCOR RECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. 12.2 WE FIND THE OFFER BY THE ASSESSEE ADMITTING TH E ADDITIONAL INCOME WAS A CONDITIONAL OFFER WHEREIN THE ASSESSEE HAD OF FERED THE ADDITIONAL INCOME AND AT THE SAME TIME REQUESTED FOR NON-LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT. WE FIND THE HONBLE BOM BAY HIGH COURT IN THE CASE OF RAMNATH JAGANNATH V. STATE OF MAHARASTRA (S UPRA) HAS HELD AS UNDER:- (SHORTNOTES):- THC ASSESSEE CARRIED ON THE BUSINESS OF BUYING AND SELLING PROVISIONS. FOR THE ASSESSMENT YEARS 1 ST APRIL 1955. TO 31ST MARCH, 1956, AND 1ST APRIL. 1956. TO 31ST MARCH, 19 57, THE SALES TAX OFFICER PASSED ASSESSMENT ORDERS DISALLOW ING THE CLAIM OF THE ASSESSEE FOR DEDUCTIONS UNDER THE FIRS T PROVISO TO SECTION 9 OF THE BOMBAY SALES TAX ACT, 1953, ON THE GROUND THAT THE ASSESSSE HAD PRODUCED BOGUS DECLARATIONS I N: K FORMS. THE ASEPSISS APPEALS TO THE ASSISTANT COMMI SSIONER WERE DISMISSED AND PENALTY WAS LEVIED UNDER THE PRO VISIONS OF SUB-SECTION (4) OF SECTION 16 OF THE ACT FOR LAT E PAYRNENT BY THE ASSISTANT COMMISSIONER. THE ASSESSEE THEN FILED APPLICATIONS FOR REVISION TO THE DEPUTY COMMISSIONE R BEFORE WHOM THE ASSESSESS COUNSEL MADE AN ORAL OFFER IF T HE POST- ASSESSMENT PENALTY WHICH WAS LEVIED BY THE ASSISTAN T COMMISSIONER WAS REMITTED IN FULL, IN ORDER TO PUT AN END TO THE PROCEEDINGS, THE ASSESSEE WAS AGREEABLE TO PAY THE ENTIRE AMOUNT OF TAX TO WHICH IT WAS ASSESSED. THE DEPUTY COMMISSIONER ASKED THE COUNSEL OF THE ASSESSEE TO P UT DOWN THE ASSESSESS OFFER IN WRITING AND ACCORDINGLY A LETTER WAS ADDRESSED TO THE DEPUTY COMMISSIONER BY THE COUNSEL OF ASSESSEE. NO COMMUNICATION WAS MADE TO THE COUNSEL BY THE DEPUTY COMMISSIONER. THE DEPUTY COMMISSIONER DISMIS SED THE REVISION APPLICATION HOLDING THAT IT WAS NOT A PROPER AND FIT CASE TO WAIVE OR REDUCE THE POST-ASSESSMENT PENALT Y AND THAT THE COUNSEL OF THE ASSESSEES UNCONDITIONALLY GAVE U P THE CLAIM UNDER THE FIRST PROVISO TO SECTION 9 OF THE ACT AND ONLY ARGUED FOR THE WAIVER OR REDUCTION OF THE PENALTY. THE TRI BUNAL IN 25 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. FURTHER REVISION HELD THAT THE ASSESSEE AGREED TO G ET ITS CLAIM FOR DEDUCTION UNDER FIRST PROVISO TO SECTION 9 OF THE ACT REJECTED UNCONDITIONALLY BUT DID NOT AGREE TO THE POST-ASSES SMENT PENALTY. ON REFERENCE : HELD, THAT ON A PLAIN READING OF THE LETTER OF ASS ESSESS COUNSEL TO THE DEPUTY AND IN THE LIGHT OF THE FACTS , IT WAS CLEAR THAT THE OFFER-MADE IN THE LETTER TO GIVE UP THE CL AIM OF DEDUCTION UNDER FIRST PROVISO TO SECTION 9 OF THE A CT WAS CLEARLY A CONDITIONAL OFFER ON THE POST-ASSESSMENT PENALTY LEVIED AND LEVIABLE BEING GIVEN UP. IF IT WAS REJECTED BY THE DEPUTY COMMISSIONER HE WAS BOUND TO DEAL WITH THE CLAIM OF THE ASSESSEES FOR DEDUCTION UNDER THE FIRST PROVISO TO SECTION 9 OF THE ACT ON MERITS. THAT AN OFFER IS COUPLED WITH CONDITIONS WHICH ARE NOT REASONABLE OR ONE WHICH CANNOT BE ACCEPTED IN LAID COMPLETELY WOULD NOT RENDER UNCONDITIONAL THE OFFER WHICH IS I N TERMS MADE ON A CONDITION. IF IT IS NOT POSSIBLE TO ACCEP T THAT CONDITION, THE ONLY RESULT WOULD BE THAT OFFER MUST BE REJECTED. BUT WHERE AN OFFER IS COUPLED WITH CONDITIONS WHICH CANNOT BE ACCEPTED FULLY, THE OFFER CANNOT BE TREATED AS AN U NCONDITIONAL OFFER MERELY ON THAT COUNT. 12.3 CONSIDERING THE TOTALITY OF THE FACTS OF THE C ASE AND CONSIDERING THE FACT THAT THE ASSESSEE DURING THE COURSE OF SEA RCH IN THE STATEMENT RECORDED U/S 132(4) HAD STATED THAT THE AMOUNT OF R S. 25 LACS WAS UNACCOUNTED EXPENSES THOUGH THEY WERE GENUINE EXPEN SE AND AN AMOUNT OF RS. 1.38 CRORES HAS BEEN PAID TO MIDDLEMA N FOR REMOVAL OF ENCROACHMENT IN THE LAND AND SINCE THE DEPARTMENT H AS NOT PROVED THAT THE AMOUNT HAS NOT BEEN SPENT AND HAS BEEN UTILISED FOR SOME OTHER PURPOSE AND FURTHER CONSIDERING THE FACT THAT THE A SSESSEE MADE A CONDITIONAL OFFER, THEREFORE, ALTHOUGH THE SAME IS JUSTIFIED FOR ADDITION IN THE QUANTUM ASSESSMENT, HOWEVER, THE SAME IS NOT SU FFICIENT TO ATTRACT THE LEVY OF PENALTY U/S 271(1)(C). IN THIS VIEW OF THE MATTER WE ARE OF THE CONSIDERED OPINION THAT NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED ON THE AMOUNTS OF RS. 25 LACS AND 1.35 CRORES RESPE CTIVELY. THEREFORE, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 26 ITA NO. 3073/M/2008 & 3972/M/2008 M/S. MARATHON NEXTGEN REALITY & TEXTILES LTD. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 14 TH DAY OF DECEMBER, 2011. SD/- -SD/- ( B.R. MITTAL ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 14.12.2011. COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI/RK