Mr. Dhiraj Dhir, New Delhi V. ACIT, New Delhi

ITA 3108/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9720 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-09-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 06-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURBHI VERMA G ARG
• Keywords: Depreciation; Search and seizure; Retrospective amendment; Initiation of penalty proceedings; Wrong claim; Revised return; Capital Gains
• Section: 271(1)(c); 139(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D DELHI BEFORE SHRI K.G. BANSAL AND SHRI GEORGE MATHAN I.T.A. NO. 3108(DEL)/2009 ASSESSMENT YEAR: 2004-05 MR. DHIRAJ DHIR, ASSTT. COMMISSIONER OF INCOME M/S DHIRSONS JEWELLERS, TAX, CIRCLE 32(1), NEW DELHI. D-32,CENTRAL MARKET, LAJPAT NAGAR, NEW DELHI. (APPELLANT) (RESPONDENT) APPALLENT BY : SHRI VIVEK VERMA, ADVOCATE RESPONDENT BY : MS. SURBHI VERMA GARG, SR. DR ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE ASSESSEE EMANATES FROM TH E ORDER OF CIT(APPEALS)-XXVI, NEW DELHI, PASSED ON 15.5.2 009 IN APPEAL NO. 47(DEL)/2007-08, AND IT PERTAINS TO ASSESSMENT YE AR 2004-05. THE ASSESSEE HAS TAKEN UP FOUR GROUNDS IN THE APPE AL, THE SUM AND SUBSTANCE OF WHICH IS THAT THE LD. CIT(APPEALS) ERRED IN SUSTAINING THE PENALTY OF RS. 3.33 LAKH, LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. IT IS MENTIONED THAT HE ERRED IN NOT ADJUD ICATING ON THE ISSUE THAT SINCE THE ASSESSEE HAD VOLUNTARILY SURRENDERED THE INCOME FOR TAXATION, THE PENALTY WAS NOT LEVIABLE. ITA3108(DEL)2009 2 2. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS FOU ND THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF JEWELLERY IN THE NA ME OF PROPRIETARY CONCERN, M/S DHIRSONS JEWELLERS. THE PREMISES OF THIS CON CERN WERE SURVEYED ON 13.10.2003, IN WHICH IT WAS FOUND THAT THE A SSESSEE WAS IN POSSESSION OF EXCESS STOCK OF RS. 80,33,395/-. THIS AMOUNT WAS SURRENDERED FOR TAXATION. THE RETURN OF INCOM E WAS FILED ON 1.11.2004, DECLARING TOTAL INCOME OF RS. 80,27,667/-. THE P OSITION OF CLOSING STOCK WAS SOUGHT TO BE RECONCILED IN THE COURSE OF A SSESSMENT PROCEEDINGS, IN RESPONSE TO WHICH HE OFFERED A SUM OF RS. 10. 00 LAKH FOR TAXATION. THE AO ALSO FOUND THAT CORRESPONDING ENTRY OF EX CESS STOCK HAD NOT BEEN MADE IN THE BOOKS. THIS AMOUNT WAS ADDED TO T HE TOTAL INCOME RETURNED BY THE ASSESSEE. PENALTY PROCEEDINGS WERE ALS O INITIATED U/S 271(1)(C) OF THE ACT, WHICH WERE DISPOSED OFF ON 25.6.2007 BY LEVYING THE MINIMUM PENALTY OF RS. 3.33 LAKH. WHILE DOING SO, THE SU BMISSION OF THE ASSESSEE THAT THE MATTER WAS NOT SUCH SO AS TO ATTRACT THE PENALTY WAS DISMISSED. IT WAS ALSO MENTIONED THAT THE ADDITION HAS N OT BEEN CONTESTED BY THE ASSESSEE. FINALLY, IT WAS HELD THAT THE ASSES SEE FURNISHED INACCURATE PARTICULARS OF INCOME AND THAT HE WAS AWARE THAT SUCH PARTICULARS WERE UNTRUE. ITA3108(DEL)2009 3 2.1 AGGRIEVED BY THIS ORDER, THE ASSESSEE FIL ED AN APPEAL BEFORE THE LEARNED CIT(APPEALS). IT WAS CONTENDED THAT THE SURRENDER WAS MADE WITH A VIEW TO BUY MENTAL PEACE SUBJECT TO THE STIPULATION THAT PENALTY AND PROSECUTION PROCEEDINGS WILL NOT BE INITIATED . THE CASE OF THE AO BEFORE THE LEARNED CIT(APPEALS) WAS THAT THE EXCESS STOCK WAS DETECTED BY THE REVENUE IN THE COURSE OF SURVEY PROCEEDINGS AS WELL AS ASSESSMENT PROCEEDINGS. THEREFORE, THE SURRENDE R WAS NOT VOLUNTARILY MADE. THE INCOME OF RS. 12,45,541/- WOULD HAVE ESCAPED ASSESSMENT IF SURVEY WAS NOT CONDUCTED AND SCRUTINY WAS NOT MADE. THE LEARNED CIT(APPEALS) CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS MADE BEFORE HIM. HE WAS OF THE VIEW THAT ME RE SURRENDER MAY NOT BE A GOOD DEFENCE IN PENALTY PROCEEDINGS AS THE WHOLE MATTER HAS TO BE EXAMINED ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE. THE DISCREPANCY RELATING TO NON-ENTRY OF STOCK IN THE BOOK OF ACCOUNT WAS DETECTED BY THE AO AND MENTIONED IN THE ORDER-SH EET ENTRY DATED 22.12.2006. IT WAS THEREAFTER ON 29.12.2006 THAT THE ASSESSEE SURRENDERED THE AMOUNT OF RS. 10.00 LAKH FOR TAX ATION. THEREFORE, THE LEVY OF PENALTY WAS UPHELD. ITA3108(DEL)2009 4 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SURRENDERED CERTAIN AMOUNT OF ST OCK IN THE COURSE OF SURVEY AND A FURTHER SURRENDER OF RS. 10.00 L AKH WAS MADE IN THE ASSESSMENT PROCEEDINGS VOLUNTARILY AND TO BUY P EACE OF MIND. IN THESE CIRCUMSTANCES, IT COULD NOT BE SAID THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME IN THE RETUR N. HE DREW OUR ATTENTION TOWARDS THE DISCUSSION IN THE ASSESSMENT ORDER AS WELL AS IN THE PENALTY ORDER, WHICH SUBSTANTIATED THE AFORESAID SUBMI SSIONS. THUS, HIS CASE WAS THAT PENALTY COULD NOT HAVE BEEN LEVIED. 3.1 IN ORDER TO SUPPORT HIS CONTENTION, RELIA NCE WAS PLACED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. KISHOREKUMAR SHYAMJI (2000) 244 ITR 702. TH E FACTS OF THAT CASE ARE THAT AFTER COMPLETION OF THE ASSESSMENT F OR ASSESSMENT YEAR 1978- 79, SEARCH AND SEIZURE OPERATION WAS CONDUCT ED AND CERTAIN BOOKS AND DOCUMENTS WERE SEIZED. A BILL WAS FOUND IN WH ICH THE PURCHASE PRICE WAS CORRECTED TO INCREASE IT BY AN AMOUNT OF RS. 5.00 LAKH. THE AO COMPLETED THE ASSESSMENT BY MAKING ADDITION OF THE AFORESAID AMOUNT AND ANOTHER AMOUNT OF RS. 81,760/-, STATED TO BE ON ACCOUNT OF INFLATION IN OTHER PURCHASES. IT WAS EXPLAINED THAT A NUMBER OF ITA3108(DEL)2009 5 PURCHASES WERE MADE FROM THE SELLER AT LESS THAN MARKET PRICE AND IN ORDER TO CORRECT THE PICTURE OF PROFITS, A D ECISION WAS TAKEN TO INCREASE THE TOTAL PURCHASE PRICE FROM THE SELLER. ON T HE BASIS OF THIS EXPLANATION, THE PENALTY WAS CANCELLED BY THE TRIBUNAL. REVER SING THIS DECISION, THE HONBLE HIGH COURT MENTIONED THAT THE SELLER WAS A CONCERN OF ASSESSEES WIFE. THE EXPLANATION THAT THE I NCREASE IN PURCHASE PRICE WAS MADE WITH A VIEW TO UNDO THE FINANCIAL LOSS ES OF THE SELLER, WAS NOT ACCEPTABLE. VARIOUS EVIDENCES ON RECORD SHOW THAT THERE WAS AN ADMISSION IN CLEAR TERMS ABOUT INFLATION OF P URCHASES AND SUCH INFLATION OF PURCHASES WAS KEPT IN CASH, WHICH WAS INT RODUCED IN THE PROPRIETARY CONCERN OF THE ASSESSEES WIFE. THUS, IT WAS HELD THAT THE TRIBUNAL PROCEEDED ON AN ERRONEOUS ASSUMPTION THAT THE INFLATED PURCHASE PRICE WAS PAID TO THE SELLER AND, THEREFORE, IT WAS NO T JUSTIFIED IN CANCELING THE PENALTY. IT MAY BE MENTIONED THAT THE SPECI AL LEAVE PETITION AGAINST THIS JUDGMENT WAS DISMISSED BY HON'BLE SUPREM E COURT AT (2000) 244 ITR (ST.) 51. WE FIND THAT THIS DECISION DOES NOT ADVANCE T HE CASE OF THE ASSESSEE THAT WHERE SURRENDER IS MADE SUBJECT TO NON-LEVY OF PENALTY, THE PENALTY CANNOT BE LEVIED. ITA3108(DEL)2009 6 3.2 FURTHER, HE RELIED ON THE DECISION OF HO NBLE MADRAS HIGH COURT IN THE CASE OF P. GOVINDASWAMI VS. CIT (2000) 244 ITR 510, IN WHICH IT WAS MENTIONED THAT THE PENALTY U/S 271(1) (C) IS LEVIABLE EITHER FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME. THE FACTS REGARDING EITHER OF THE T WO PARAMETERS SHOULD BE THERE ON THE RECORD BEFORE IMPOSITION OF PENAL TY. IT WAS FOUND AS A MATTER OF FACT THAT THE SUM OF RS. 2.00 LAKH ADDED TO THE INCOME OF THE ASSESSEE BELONGED TO HIM AND OUT OF THE INTEREST OF RS. 1,10,000/-, A SUM OF RS. 64,042/- WAS TRACEABLE TO HIM. THE HON BLE COURT REFERRED TO THE PROVISION CONTAINED IN SECTION 58 OF THE EVI DENCE ACT, 1872 THAT ADMITTED FACTS NEED NOT BE PROVED. THE AFO RESAID FACTS HAVE BEEN ACCEPTED BY THE ASSESSEE. IN SUCH CIRCUMSTANC ES, THE LEVY OF PENALTY WAS HELD TO BE JUSTIFIABLE. WE FIND THAT THE RATIO OF THIS CASE GOES AG AINST THE CASE OF THE ASSESSEE. 3.3 HE ALSO RELIED ON THE DECISION OF HONBL E KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K.P. SAMPATH REDDY (1 992) 197 ITR 232. THE FACTS OF THAT CASE ARE THAT THE ASSESS EE HAD FILED THE RETURN ITA3108(DEL)2009 7 DECLARING TOTAL INCOME OF RS. 11,310/- FOR ASSE SSMENT YEAR 1976-77. A SURVEY WAS CONDUCTED AT HIS BUSINESS PREMISE S AND THE BOOKS OF ACCOUNT WERE IMPOUNDED. THESE BOOKS RECORDED SEVERAL ERRONEOUS ENTRIES. TAKING THESE ENTRIES AND OTHER FACTO RS INTO ACCOUNT, THE TOTAL INCOME FOR ASSESSMENT YEARS 1972-73 TO 1977-7 8 WAS ESTIMATED AT RS. 6.00 LAKH AND THE INCOME OF RS. 1.44 LAKH WAS A LLOCATED TO ASSESSMENT YEAR 1976-77. THE ASSESSEE FURNISHED A LETTER TO THE AO AGREEING TO THE TOTAL INCOME OF RS. 6.00 LAKH FOR AFORESAID Y EARS. THUS, THE ASSESSMENT OF THIS YEAR WAS COMPLETED AT RS. 1.44 LAKH. PENALTY WAS ALSO LEVIED U/S 271(1)(C) OF THE ACT. THE P ENALTY WAS DELETED BY THE TRIBUNAL. REVERSING THIS ORDER, THE HONBLE COUR T MENTIONED THAT THE TRIBUNAL COMPLETELY IGNORED THE ASSESSMENT O RDER, WHICH WAS NOT BASED ON ANY CONCESSION FROM THE ASSESSEE. T HE CONCEALMENT OF INCOME IN THE RETURN WAS A GLARING FACT. THE AGRE EMENT WITH THE REVENUE COULD NOT BE INFERRED EITHER IN CLEAR TERM S OR BY NECESSARY IMPLICATION. THUS, THE LEVY OF PENALTY WAS UPHELD. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. BALAKRISHNA TEXTILES & OTHERS (1992) 193 ITR 361. THAT ASSESSEE WAS CARRYING ON THE BUSINESS OF ART SILK FA BRIC, HANDLOOM CLOTH, HANDICRAFTS ETC. RETURNS FOR ASSESSMENT YEA RS 1962-63 TO 1964-65 ITA3108(DEL)2009 8 WERE FILED ON THE BASIS OF BOOKS OF ACCOUNT MAIN TAINED BY IT. IN JANUARY, 1965, THERE WAS A SEARCH AT THE BUSINESS PRE MISES OF THE ASSESSEE BY ECONOMIC OFFICES WING. THEREAFTER, THE ASS ESSEE CAME FORWARD WITH SOME DISCLOSURES U/S 68 OF THE FINANCE ACT, 1965. THE ASSESSEE ALSO FILED REVISED RETURN, IN WHICH CORRECT POSITI ON OF PROFIT WAS NOT SHOWN. IN THE COURSE OF ASSESSMENT, THE ASSESSEE OFFE RED FURTHER AMOUNT. THE AO ALSO FOUND THAT THE ASSESSEE HAD SUPPRES SED THE SALE OF IMPORT LICENCES AND PROFITS DERIVED THEREFROM. T HEREFORE, HE LEVIED PENALTY U/S 271(1)(C). THE PENALTY WAS CANCELLED B Y THE TRIBUNAL ON THE GROUND THAT THE ASSESSEE HAD FILED REVISED R ETURN. REVERSING THIS ORDER, THE HONBLE COURT MENTIONED THAT NEITHER THE ORIGINAL RETURN NOR THE REVISED RETURN SHOWED THAT THE ASSESSEE H AS SOLD IMPORT LICENCES. NO EVIDENCE WAS PRODUCED BY THE ASSESSEE TO SHOW THAT FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR ANY GROSS OR WILLFUL NEGLECT ON ITS PART. BECAUSE OF FAI LURE TO DO SO, IT MUST BE DEEMED THAT THE ASSESSEE FURNISHED INACCURA TE PARTICULARS OF INCOME. THIS PRESUMPTION REMAINED TOTALLY UNREBUTTED. THUS, THE LEVY OF PENALTY WAS UPHELD. ITA3108(DEL)2009 9 WE FIND THAT THIS CASE ALSO DOES NOT ADVANCE TH E ARGUMENT OF THE ASSESSEE AGAINST LEVY OF PENALTY. IN FACT, THE RATIO OF THE CASE GOES AGAINST THE ASSESSEE. 3.4 THE LD. COUNSEL ALSO RELIED ON THE DECISIO N OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VIDEON (2008) 301 ITR 260. THE FACTS OF THAT CASE ARE THAT THE ASSESSEE S OLD AGRICULTURAL LAND AND OFFERED INCOME TAXABLE UNDER THE HEAD CAPITAL GAINS. THEREAFTER, A REVISED RETURN WAS FILED, IN WHICH CAPITAL GAI NS WERE CLAIMED TO BE EXEMPT ON THE GROUND THAT THE LAND WAS AGRICUL TURAL LAND. THE CLAIM WAS SURRENDERED IN THE COURSE OF ASSESSMENT PRO CEEDINGS. THE HONBLE COURT POINTED OUT THAT IT WAS MERELY A CASE OF CLAIMING EXEMPTION IN THE REVISED RETURN AFTER OFFERING THE AMOUNT FOR TAXATION IN THE ORIGINAL RETURN. THUS, THERE WAS NEITHER CONCEALMENT OF INCOME NOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ARGUMENT OF THE LD. COUNSEL WAS THAT THE A SSESSEE HAD ALSO SURRENDERED THE AMOUNT IN THE COURSE OF ASSESSM ENT AND, THEREFORE, PENALTY WAS NOT LEVIABLE. HOWEVER, THE FACT S ARE QUITE DISTINGUISHABLE ITA3108(DEL)2009 10 AS IN THAT CASE ALL FACTS REGARDING THE TRANS ACTION WERE AVAILABLE IN THE RETURN OF INCOME. 3.5 RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. MAHENDRA C. SH AH (2008) 299 ITR 305. IN THAT CASE, THE HONBLE COURT EXPLAINE D THE IMPORT OF EXPLANATION-5 TO SECTION 271(1)(C) IN A CASE WHERE DURING THE COURSE OF SEARCH THE ASSESSEE IS FOUND TO BE OWNER OF A NY VALUABLE ASSET, AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAD BEEN ACQ UIRED BY HIM BY UTILIZING HIS INCOME FOR ANY PREVIOUS YEAR WHICH HAS ENDE D BEFORE THE DATE OF SEARCH, BUT THE RETURN OF INCOME HAS NOT BEEN F URNISHED BEFORE THE DATE OF SEARCH; OR WHERE SUCH RETURN OF INCOME HAS BEEN FURNISHED BEFORE THE DATE OF SEARCH AND SUCH INCOME REPRESENTED BY SUCH ASSETS HAS NOT BEEN DECLARED IN THE RETURN OF INCOME; OR FOR ANY PRE VIOUS YEAR WHICH HAS TO END ON OR AFTER THE DATE OF SEARCH, THEN, SUC H INCOME SHALL BE DEEMED TO BE THE INCOME WHICH HAS BEEN CONCEALED FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271(1)(C). THIS PRESUMPTION GETS LIFTED IN TWO SITUATIONS, NAMELY, THAT - (I) THE INCOME IS REFLECTED IN T HE BOOKS OF ACCOUNT, OR (II) IT HAS BEEN DISCLOSED TO THE CHIEF COMMISSIONER BEF ORE THE DATE OF FILING THE RETURN. IN THE SECOND SITUATION, IT IS FURTHER STIPULATED THAT THE ITA3108(DEL)2009 11 ASSESSEE MAKES A STATEMENT U/S 132(4) THAT HE IS IN POSSESSION OF AN ASSET ACQUIRED OUT OF THE INCOME WHICH HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME TO BE FURNISHED BEFORE THE TIME SPECIFIED IN SECTION 139(1) AND ALSO SPECIFIES THE MODE AND MANNER IN WHICH THE INCOME HAS BEEN EARNED. THE CASE OF THE ASSESSEE WAS THA T THE INCOME WAS DECLARED BY THE ASSESSEE IN THE ASSESSMENT AND , THEREFORE, PENALTY WAS NOT LEVIABLE. 3.6 RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF V.V. PROJECTS AND INVESTMENT (P) LTD. VS. DY. CIT (2008) 300 ITR 40. THE CASE DEA LT WITH THE CLAIM OF DEPRECIATION @ 50% ON SOLAR EQUIPMENTS USED IN THE HOTEL PROJECT OF THE ASSESSEE. THE ASSESSEE FILED A REVISED RE TURN, IN WHICH THE CLAIM WAS GIVEN UP, AS IT COULD NOT BE PROPERLY ESTABLIS HED FROM THE BOOKS OF ACCOUNT OF THE SUPPLIER THAT THE SAME WAS SU PPLIED TO IT. THE CLAIM WAS WITHDRAWN OSTENSIBLY TO AVOID LITIGATION PROVI DED THAT PENALTY U/S 271(1)(C) IS NOT LEVIED. THE HONBLE COURT HELD TH AT THE PENALTY WAS NOT LEVIABLE AS THE ASSESSMENT WAS MADE ON THE BASI S OF REVISED RETURN AND THE EXPLANATION THAT THE CLAIM WAS WITHDRAWN TO AVOID PROTRACTED LITIGATION. THE CASE ALSO DEALS WITH RECORDI NG OF SATISFACTION BEFORE ITA3108(DEL)2009 12 INITIATION OF PENALTY, WHICH HAS BECOME INCONSEQU ENTIAL ON ACCOUNT OF RETROSPECTIVE AMENDMENT IN THIS MATTER. 3.7 THE ASSESSEE ALSO RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF OM PRAKASH IN ITA NO. 1842(DEL)/1992 FOR ASSESSMENT YEAR 1982- 83 DATED 14.10.1997, IN WHICH IT WAS HELD THA T ONCE A CONDITIONAL SURRENDER IS ACCEPTED, THERE WILL BE NO JUSTIFI CATION FOR LEVYING THE PENALTY. 3.8 THE LD. COUNSEL ALSO RELIED ON THE DECISIO N OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VS. M. PACHAM UTHU & ANOTHER (2007) 295 ITR 502, IN WHICH THE HONBLE COURT POINTED OUT THAT THE CONCEALMENT WAS NOT DISCOVERED AS A RESULT OF ENQUIRY OR INVESTIGATION INTO THE MATERIAL FOUND DURING THE COURSE OF SURVEY. IT WAS ALSO NOT A CASE OF COMPATIBILITY OF DISCLOSURE MADE WITH THE ITEMS OF EXPENDITURE, SALES, PURCHASES, INVESTMENT OR ANY OTHER INCOME DISCLOSED BY THE ASSESSEE ON THE DISCOVERY OF ANY EVID ENCE. IT WAS HELD THAT THE PENALTY WAS NOT LEVIABLE AS THERE WAS NO MATERI AL ON RECORD EXCEPT THE ADMISSION FOR MAKING THE ADDITION OR LEVYING THE PENALTY. ITA3108(DEL)2009 13 3.9 IN REPLY, THE LEARNED DR REFERRED TO THE ASSESSMENT ORDER, THE PENALTY ORDER AND THE IMPUGNED ORDER. IT WAS CO NTENDED THAT FROM THE ORDER IT IS CLEAR THAT DISCLOSURE WAS MADE ONLY AFTER DETECTION BY THE REVENUE ABOUT THE DISCREPANCY IN THE STOCK. SHE REFERRED TO THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF KAMAL CHAND JAIN VS. ITO (2005) 277 ITR 429, IN WHICH IT WAS HELD THAT IT WAS NECESSARY FOR THE ASSESSEE TO SUBSTANTIALLY SUPPORT HIS EX PLANATION IN REGARD TO THE ADDITION MADE BY THE AO IN THE ASSESSMENT. AS TH ERE WAS NO EXPLANATION FURNISHED BY THE ASSESSEE EXCEPT TH AT THE AMOUNT WAS SURRENDERED FOR TAXATION TO BUY PEACE AND TO AVOID LITIGATION, THE LEVY OF THE PENALTY WAS JUSTIFIABLE. FURTHER, SHE REFERRED TO THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF ANAND LIQUORS VS. CIT (1998) 232 ITR 35, IN WHICH ADDITIONS WE RE MADE IN RESPECT OF EXPENSES ON SALARY, COMMISSION AND TRANSPORT AS THERE WAS NO PROPER VOUCHER TO SUPPORT THE EXPENDITURE AND THE BOO KS OF ACCOUNT WERE NOT MAINTAINED PROPERLY. THE CREDITS IN THE NAME OF THE PARTNERS WERE ALSO NOT PROPERLY EXPLAINED. THE ASSESSEE SURRE NDERED THE AMOUNT STATING THAT THE PENALTY MAY NOT BE LEVIED. THE HONBL E COURT HELD THAT THE MATERIAL ON RECORD DID NOT SPELL OUT ANY A GREEMENT THAT THE PENALTY WOULD NOT BE LEVIED. SINCE THE ASSESSEE FAILED TO FURNISH SATISFACTORY ITA3108(DEL)2009 14 EXPLANATION, THE DEEMING PROVISION OF EXPLANAT ION-1 CAME INTO OPERATION. THUS, IT WAS HELD THAT THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE LEVY OF THE PENALTY. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. CIT VS. D.K.B. & COMPANY (2000) 243 ITR 618, IN WHICH IT WAS HELD THAT THERE IS NO ESTOPPEL AGAINST THE STATUTE AND A CONDITIO NAL SURRENDER WILL NOT BIND THE AO. THE MATTER WILL HAVE TO BE DECIDED IN THE LIGHT OF FACTS ON RECORD AND MERITS OF THE CASE. RELIANCE WA S ALSO PLACED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CA SE OF RATHNAM & CO. VS. INSPECTING ASSISTANT COMMISSIONER (1980) 124 ITR 377, IN WHICH IT WAS HELD THAT LEVY OF PENALTY WAS NOT DEPEND ENT UPON THE CONSENT OR OTHERWISE OF THE ASSESSEE. 3.10 IN THE REJOINDER, THE LD. COUNSEL REITE RATED THAT THE DISCREPANCY IN THE RETURN WAS MADE GOOD AT THE TIME OF A SSESSMENT AND, THEREFORE, PENALTY COULD NOT BE LEVIED. RELIANCE WAS ALS O PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. FREEMENTLE INDIA TELEVISION PRODUCTION (P) LTD. (2007) 294 I TR 88, IN WHICH THE ASSESSEE HAD REVISED THE COMPUTATION OF INCOME EVEN BEFORE THE ASSESSMENT PROCEEDINGS STARTED. IT WAS HELD THA T IT WAS NOT A CASE OF ITA3108(DEL)2009 15 FURNISHING INACCURATE PARTICULARS AS THE CONT RACTUAL LIABILITY HAD TO BE TAKEN INTO ACCOUNT ON DUE BASIS. IN ANY CASE, THE ASSESSEE HAD WITHDRAWN THE CLAIM OF THE LIABILITY WELL IN TIME BEFORE INITIATION OF PENALTY PROCEEDINGS. THUS, NO SUBSTANTIAL QUE STION OF LAW AROSE FROM THE ORDER OF THE TRIBUNAL. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. BEFORE PROCEEDING FURTHER, IT MA Y BE MENTIONED THAT FURNISHING OF INACCURATE PARTICULARS OF INCOME IS A MATTER OF FACT, WHICH HAS TO BE DECIDED ON PECULIAR FACTS OF EACH CASE. THE FACTS OF THE CASE ARE THAT A SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 13.10.2003. THE RETURN OF INCOME WAS FILED ON 1.11.2004 AFTER THE CONDUCTING OF THE SURVEY, IN WHICH EXCESS STO CK OF RS. 80,33,395/- WAS DETECTED. IN THE COURSE OF ASSESSMENT PROCEEDIN GS, IT WAS FOUND THAT THE STOCK HAS NOT BEEN PROPERLY ACCOUNTED FOR IN T HE RETURN OF INCOME AND THERE WAS A DISCREPANCY OF RS. 12,45,541/-. WHE N CONFRONTED WITH THIS FACT, THE ASSESSEE OFFERED A SUM OF RS. 10.00 LAKH FOR TAXATION. IT WAS ALSO MENTIONED THAT PENALTY AND PROSECUTION PROC EEDINGS SHALL NOT BE INITIATED. THE FACTS SHOW THAT THE BOOKS OF ACCOUNT AND FACTS DISCOVERED IN SURVEY WERE EXAMINED AND ACCOUNTI NG OF THE STOCK WAS ITA3108(DEL)2009 16 CONSIDERED BY THE AO, WHICH REVEALED THE DISCRE PANCY. THUS, THE FACTUAL POSITION IS THAT THE CONDITIONAL OFFER W AS MADE AFTER DETECTION OF DISCREPANCY IN THE COURSE OF ASSESSMENT PROCEE DINGS. THEREFORE, IT CAN ALSO BE SAID THAT THE ADDITION WAS NOT A BLAND ADDITION BASED ON SURRENDER, BUT AN ADDITION MADE ON FACTS. 4.1 IN THE CASE OF FREEMENTLE INDIA TELEVISION PRODUCTION LTD. (SUPRA), THE CLAIM OF EXPENDITURE WAS WITHDRAWN ON THE BASIS OF AUDIT REPORT SUBMITTED ON 24.12.1999. THIS WAS DONE EVEN BEFORE ASSESSMENT PROCEEDINGS HAD STARTED. THUS, THE FACTS OF T HIS CASE ARE DISTINGUISHABLE. IN THE CASE OF M. PACHAMUTH U & ANOTHER (SUPRA), THE ADDITION WAS MADE MERELY ON SURRENDER AND THERE WAS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS FOUND IN THE C OURSE OF SURVEY, ENQUIRY OR INVESTIGATION. THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABLE. IN THE CASE OF V.V. PROJECTS & INVESTMENTS (P) LTD. (SU PRA), THE CLAIM OF DEPRECIATION WAS WITHDRAWN AS THE PURCHASE OF SOLAR EQUIPMENTS COULD NOT BE VERIFIED WITH RESPECT TO BOOKS OF THE VENDOR, WHICH WERE NOT PROPERLY MAINTAINED. THE CLAIM WAS GIVEN UP V OLUNTARILY WITHOUT DETECTION. THUS, THE FACTS OF THIS CASE ARE ALSO DISTINGUISHABLE. IN THE CASE OF VIDEON (SUPRA), THE CASE WAS ONE O F WRONG CLAIM AND NOT ITA3108(DEL)2009 17 FALSE CLAIM AS ALL THE FACTS HAD BEEN CORRE CTLY DISCLOSED IN THE ORIGINAL RETURN. THUS, IT WAS HELD THAT THE PE NALTY WAS NOT LEVIABLE. THE FACTS OF THAT CASE ARE ALSO DISTINGUISHABLE, AS IN THIS CASE THE ASSESSEE HAD UNDER-STATED THE STOCK. THE CASE OF MAHENDRA C.SHAH (SUPRA) DEALS WITH DEEMED CONCEALMENT UNDER E XPLANATION-5, WHICH GETS OBLITERATED IN CERTAIN CIRCUMSTANCES MENTIONED IN THE EXPLANATION. THE INSTANT CASE IS NOT A CASE OF DEEMED CONCEA LMENT, BUT ONE OF SUPPRESSION OF STOCK. THUS, THE TWO CASES STAND ON DIFFERENT FOOTINGS IN LAW. ON THE OTHER HAND, THE FACTS OF THE CASE ARE CLOSER TO THE FACTS OF THE CASE OF K.P. SAMPATH REDDY (SUPRA), IN WHICH IT WAS HELD THAT THE ASSESSMENT WAS NOT BASED ON ANY CONCESSION BY TH E ASSESSEE AND, THUS, PENALTY WAS LEVIABLE. IN THIS CASE ALSO, THE ASSESSMENT IS BASED ON FACTS ON RECORD AND NOT MERELY ON CONCESSION BY THE ASSESSEE. IN THE CASE OF RATHNAM & COMPANY (SUPRA), THERE WAS N OTHING TO SUGGEST THAT THE ADDITION WAS MADE SUBJECT TO THE CONDITI ON THAT PENALTY WILL NOT BE LEVIED. THUS, THE RATIO OF THAT CASE IS NOT APPLICABLE TO THE FACTS OF THIS CASE. IN THE CASE OF B.K.B &COMPANY, IT WAS HELD THAT THERE CANNOT BE ANY ESTOPPLE AGAINST THE STATUTE AND THE ISSUE HAS TO BE DECIDED ON MERITS. ON MERITS, IT IS A MATTER OF FACT T HAT THERE WAS A DISCREPANCY IN STOCK, FOR WHICH NO EXPLANATION WAS TEN DERED. IN THE CASE OF ITA3108(DEL)2009 18 ANAND LIQUORS (SUPRA) ALSO, IT WAS HELD THAT TH E MATTER HAS TO BEEN SEEN IN THE CONTEXT OF EXPLANATION-1 TO SECTION 271(1)(C) AS THERE WAS NOTHING ON RECORD TO SHOW THAT THERE WAS AN AGREEMENT NOT TO LEVY THE PENALTY. IN THIS CASE ALSO, THE ASSESSEE HAS NOT BEEN ABLE TO PLACE ANYTHING ON RECORD THAT THERE WAS ANY AGREE MENT BETWEEN HIM AND THE AO NOT TO LEVY THE PENALTY. IN ANY CASE, AN Y AGREEMENT AGAINST THE STATUTE WILL BE VOID IN LAW. IN THE CASE OF KAMAL CHAND JAIN (SUPRA), IT WAS HELD THAT IT WAS FOR THE ASSESSEE TO SUBSTA NTIALLY SUPPORT HIS EXPLANATION. THERE IS NO EXPLANATION FROM THE ASSESSEE IN THIS CASE AS TO WHY THE STOCK WAS UNDER-DECLARED BY AN AMOUN T OF RS. 10.00 LAKH. IN THE CASE OF BALKRISHAN TEXTILES & OTHERS (SUP RA), IT WAS HELD THAT THE PROVISION OF EXPLANATION TO SECTION 271(1)(C) CREATES A FICTION OF DEEMED CONCEALMENT, WHICH COULD ONLY BE LIFTED BY SATISFACTORY EXPLANATION BY THE ASSESSEE. IN THE CASE OF KISH ORE KUMAR SHYAMJI (SUPRA), IT WAS HELD THAT THERE WAS A CLEAR ADMISSION THAT THERE WAS INFLATION OF PURCHASES, WHICH WAS IGNORED BY THE TRIBUNAL. IN THE CASE OF P. GOVINDASWAMY (SUPRA), IT WAS HELD THAT A FACT ADMITTED DOES NOT REQUIRE ANY PROOF AND, THUS, THE PENALTY WAS RI GHTLY UPHELD BY THE TRIBUNAL. ITA3108(DEL)2009 19 4.2 COMING TO THIS CASE, THE ASSESSEE HAS N OT FURNISHED ANY EXPLANATION REGARDING THE STOCK DISCREPANCY E XCEPT THAT THE AMOUNT WAS SURRENDERED VOLUNTARILY. IT HAS BEEN SEEN FROM THE CASES DISCUSSED ABOVE THAT IT IS FOR THE ASSESSEE TO SUBSTANTI ATE THE EXPLANATION. IN THIS CASE, THERE IS NO EXPLANATION TENDERED BY THE ASSESSEE BEFORE ANY OF THE LOWER AUTHORITIES OR BEFORE US. THEREFORE, IT IS HELD THAT IT IS A FIT CASE FOR LEVY OF PENALTY AND THE LEARNED CIT(APPEALS) WAS RIGHT IN UPHOLDING THE PENALTY, LEVIED BY THE AO. 5. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18.9.2009. SD/- SD/- (GEORGE MATHAN) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 18 .9.2009. SP SATIA COPY OF THE ORDER FORWARDED TO:- SHRI DHIRAJ DHIR, NEW DELHI. ACIT, CIRCLE-32(1), NEW DELHI. CIT CIT(A) THE DR, ITAT, NEW DELHI. ASSISTANT REGIST RAR.