Sh. Joginder Lal Arora, Faridabad V. ACIT, Faridabad

ITA 3357/DEL/2010

• Counselvise Citation: 335720114 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: J P GULATI
• Keywords: Depreciation; Income from undisclosed sources; Search and seizure; Retraction; Revised return; Documents seized
• Section: 143(3); 133A; 139(5); 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH D DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D . RANJAN, AM I. T. APPEAL NO. 3357 (DEL) OF 2010 ASSESSMENT YEAR : 2005-06. SHRI JOGINDER LAL ARORA, ASSTT. COMMISSIONER OF INCOME-TAX, PROP. M/S. RACHNA TRADING CO., VS. C E N T R A L C I R C L E : 1, 15 NEELAM BATA ROAD, F A R I D A B A D. F A R I D A B A D. PAN / GIR NO. AALPA 4004D. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI J. P. GULATI, ADV.; DEPARTMENT BY : MS. Y. KAKKAR, SR. D. R. ; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 05-06 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-I, LUDHIANA. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS :- 1. THE LD. CIT (APPEALS) IS NOT JUSTIFIED IN CONFIRMING PENALTY UNDER SECTION 271(1)(C) AT RS.11,55,000/-, AS THE ASSESSEE HAD FI LED REVISED RETURN FOR ADDITIONAL INCOME OF RS.35 LAKHS APPARENTLY AT THE INSTANCE OF THE DDIT [INV.], TO BUY PEACE, AVOID HAZARD OF LITIGATION WITH THE CONDITION THAT NO PENALTY WOULD BE LEVIED, WHEREAS NO INCRIMINATING MATERIAL WAS FOUND DURING SURVEY EXCEPT THE INFORMATION THAT THE ASSESSEE HAD PAID CASH OF RS.6 3,570/- QUA PURCHASES OF RS.2,13,570/-; 2 I. T. APPEAL NO. 3357 (DEL) OF 2010 2. THE LD. CIT (APPEALS) HAS ERRED ON FAC TS AND IN LAW IN CONFIRMING LEVY OF PENALTY EVEN WHEN THE ASSESSEE HAD PAID FULL TAXES ON THE SURRENDERED AMOUNT OF RS.70 LAKHS FOR ASSESSMENT YEAR 2005-06 AND 2007-08 , AND FILED REVISED RETURN FOR AY 2005-06 WITHIN THE TIME PRESCRIBED U/S. 139(5), I.E. PRIOR TO THE RECORDING OF SATISFACTION BY THE AO U/S. 271(1)(C) AND AS PER IN FORMATION GATHERED BY THE ASSESSEE, THE BOARD IN ITS GUIDELINES DATED 19/06/2 009 HAVE EXCLUDED ASSESSMENTS FOR SELECTION OF SCRUTINY, IN SURVEY CASES WHERE TH ERE IS NO RETRACTION OF DISCLOSURE, AND ON FULFILLMENT OF SOME OTHER CONDIT IONS, MEANING THEREBY THAT IN SUCH CASES, PENALTY WAS NOT TO BE LEVIED, AND THE D ISCLOSURE MADE IN THE SURVEY IS ACCEPTED FOR ONLY PAYMENT OF TAXES. 3. THE ONLY ISSUE FOR CONSIDERATION CONTAINED IN GR OUNDS OF APPEAL RELATES TO CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE I. T. ACT AT RS.11,55,000/-. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE DURING THE RELEVANT ASS ESSMENT YEAR WAS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL SCRAP AND FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 AT AN INCOME OF RS.8,30,420/-. 4. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE I. T. ACT, 1961 WAS CONDUCTED ON 16/01/2007 AT THE RESIDENTIAL PREMISES OF SHRI NAVI N SOOD, THE PARTNER OF M/S. VEE GEE INDUSTRIAL ENTERPRISES DURING WHICH CERTAIN ENVELOPES CONTAINI NG MONEY AND SLIPS INSIDE WERE FOUND AND SEIZED. ON BEING CONFRONTED WITH THE CONTENTS OF EN VELOPES, SHRI NAVIN SOOD IN HIS STATEMENT RECORDED U/S 132(4) ON 16/1/2007 STATED THAT THE NO TINGS MADE ON SLIPS WERE IN RESPECT OF CASH SALE OF SCRAP. THE SMALLER SLIPS SHOWED THE TOTAL SALE OF SCRAP ON A PARTICULAR DATE. THE SALE OF SCRAP OUTSIDE THE BOOKS RELATED TO SALE OF ACCUMULA TED SCRAP IN THE FACTORY. IT WAS ALSO STATED THAT 90 PER CENT OF SCRAP WAS SOLD TO RACHNA TRADING COM PANY, PROP. SH. JOGINDER LAL ARORA. 5.1 THEREAFTER A CONSEQUENTIAL SURVEY U/S 133A WAS CONDUCTED ON 18/01/2007 AT THE BUSINESS PREMISES OF M/S. RACHNA TRADING CO., NEELAM BATA RO AD, FARIDABAD AND THE COPIES OF DOCUMENTS SEIZED FROM THE RESIDENCE OF SH. NAVIN SO OD WERE CONFRONTED TO SHRI JOGINDER LAL ARORA, THE PROP. OF M/S. RACHNA TRADING CO. IN HIS STATEMENT RECORDED ON OATH, IT WAS ADMITTED BY SHRI JOGINDER LAL ARORA THAT HE WAS PURCHASING S CRAP FROM M/S. VEE GEE INDUSTRIAL 3 I. T. APPEAL NO. 3357 (DEL) OF 2010 ENTERPRISES FOR THE LAST SEVEN/EIGHT YEARS. DURING THE FINANCIAL YEAR 2004-05 HE HAD PURCHASED SCRAP OF RS.3,26,32,202.31 FROM M/S. VEE GEE INDUST RIAL ENTERPRISES WHICH WERE RECORDED IN THE BOOKS OF ACCOUNT OF M/S. RACHNA TRADING CO. HOWEVE R, DURING THE SAME YEAR HE HAD ALSO PURCHASED SCRAP FOR RS.35,00,000/- IN CASH OUTSIDE THE REGULAR BOOKS OF ACCOUNTS FROM M/S. VEE GEE INDUSTRIAL ENTERPRISES AND OTHER PARTIES. AS R EGARDS THE ENTRIES RECORDED ON SLIPS FOUND IN ENVELOPS SEIZED FROM THE RESIDENCE OF SH. NAVIN SOO D, SHRI JOGINDER LAL ARORA IN ANSWER TO QUESTION NO. 9 EXPLAINED THE ENTRIES AS UNDER:- A : I HAVE SEEN THESE DOCUMENTS WHICH ARE P AGE NUMBERED FROM 28 TO 31. PAGE NO. 28 & 30 ARE ENVELOPES OF MY BUSINESS CONCE RN I.E. M/S. RACHNA TRADING CO. ON WHICH IT IS WRITTEN THE CASH AMOUNT KEPT IN THE ENVELOPE IS RS.45,100 AND RS.18,470. IT IS ALSO WRITTEN DATE ON WHICH THE PU RCHASE WAS MADE. ON PAGE 28 IT IS WRITTEN A FIGURE 30 = 10 WHICH IS CODED FORM OF RS.30,10,000 [RUPEES THIRTY LAKHS AND TEN THOUSAND]. SIMILARLY ON PAGE 30 IT I S WRITTEN FIGURE OF 31 = 10 WHICH IS CODED FORM OF RS.31,10,000 [RUPEES THIRTY ONE LAKH AND TEN THOUSAND] PAGE 29 IS A SLIP CONTAINING CALCULATION OF PURCHAS E AMOUNT FOR PURCHASE OF SCRAP FROM VEE GEE INDL. ENTERPRISES WHICH IS EXPLAINED B ELOW: 7455 X 510 = 38020 MEANS SCRAP OF 7455 KG. PURCH ASED @ RS.5100 PER KG. (READ RS.5100 PER TONNE). 5970 X 5100 = 30447 MEANS SCRAP OF 5970 KG. PURCHAS ED @ RS.5100 PER KG. (READ RS.5100 PER TONNE). = 68467 = 18470 PAID MEANS CASH PAID OUT OF TOTAL PURCHASE AMOUNT OF RS.68,467 50,000 IS THE BALANCE PAYABLE. 30 = 10 MEANS RUNNING BALANCE OF RS.30,10,000 AS O N 19.11.2004 AFTER INCLUDING BALANCE OF RS.50,000 AS CALCULATED ABOVE. THIS REPRESENTS TOTAL BALANCE PAYABLE AS ON 19.11.2004 TO M/S. VEE GEE INDL. ENTERPRISES ON ACCOUNT OF PURCH ASE OF SCRAP OUTSIDE REGULAR BOOKS. 4 I. T. APPEAL NO. 3357 (DEL) OF 2010 PAGE 31 CONTAIN CALCULATION OF PURCHASES AMOU NT ON 20.11.04 FOR RS.1,45,103. OUT OF THIS RS.45,100 HAS BEEN PAID I N CASH ON THE SAME DATE AND REMAINING BALANCE IS RS.1,00,000. THIS HAS BEEN AD DED TO CLOSING BALANCE ON 20.11.04 BECOMES RS.31,10,000 WHICH HAS BEEN WRITTE N AS 31 = 10. HERE I WANT TO MAKE IT CLEAR THAT THE AMOUNT SURRENDERED BY ME FOR A.Y. 2005-06 OF RS.35 LAKHS INCLUDES THE AMOUNT OF RS.31,10,000 SHOWN ON PAGE 30 WHICH IS UNACCOUNTED PURCHASE OF SCRAP IN CASH FROM M/S. VEE GEE INDL. ENTERPRISES. 5.2 IN VIEW OF ABOVE FACTS THE ASSESSEE ADMITTED P URCHASE OF SUBSTANTIAL AMOUNT OF SCRAP FROM M/S. VEE GEE INDUSTRIAL ENTERPRISES OUTSIDE THE BOO KS OF ACCOUNTS AND MADE SURRENDER OF RS.35,00,000/- AS HIS UNACCOUNTED INCOME FOR ASSESS MENT YEAR 2005-06. SHRI JOGINDER LAL ARORA ALSO SURRENDERED ANOTHER AMOUNT OF RS.35,00,000/- O N ACCOUNT OF PURCHASE OF SCRAP OUT OF BOOKS FOR ASSESSMENT YEAR 2007-08. THE ASSESSING OFFICER COMPLETED ASSESSMENT FOR AY 2005-06 ON A TOTAL INCOME OF RS.43,71,470/- BY MAKING ADDITION O F RS.35,00,000/- TO THE ORIGINAL INCOME RETURNED AT RS.8,30,420/-. 6. DURING THE COURSE OF PENALTY PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE THAT SURRENDER OF EXTRA INCOME WAS MADE IN A LETTER ADDRESSED TO D DIT (INV.) AND NOT ON THE BASIS OF STATEMENT RECORDED AS NO DISCREPANCY WAS DETECTED DURING THE COURSE OF SURVEY. THE ASSESSEE REFERRED TO LETTER ADDRESSED TO DDIT [INV.] MAKING SURRENDER OF RS.35,00,000/- IN ASSESSMENT YEARS 2005-06 AND 2007-08. SINCE NO INCRIMINATING MATERIAL WAS F OUND DURING THE COURSE OF SURVEY, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT IMPOSABL E. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THA T AN EXTRA INCOME OF RS.35,00,000/- EARNED FROM UNACCOUNTED SALE AND PURCHASE OF SCRAP WAS SUR RENDERED DURING THE COURSE OF SURVEY. THE ASSESSING OFFICER ALSO REJECTED THE CONTENTION OF T HE ASSESSEE THAT THE RETURN OF INCOME WAS FILED VOLUNTARILY ON 19/2/2007 ADMITTING AMOUNT OF RS.35, 00,000/-. THE AO RELYING ON VARIOUS DECISIONS IMPOSED PENALTY UNDER SECTION 271(1)(C) O F RS.11,55,000/-. 5 I. T. APPEAL NO. 3357 (DEL) OF 2010 7. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT THE ASSESSEE FILED REVISED RETURN ON 19/2/2007 DECLARING INCOME OF RS.43,30,430/- ON ACC OUNT OF UN-WRITTEN, BUT SOLEMN ASSURANCE OF THE CONCERNED AUTHORITIES AT THE TIME OF SURVEY THA T NO PENALTY WOULD BE LEVIED IN CASE TAX WAS PAID ON EXTRA INCOME OF RS.35,00,000/- AND THE ASSE SSEE HAD ACTED ONLY ON SUCH ASSURANCE. IT WAS ALSO CONTENDED THAT THE OFFER OF SURRENDER HAD BEEN MADE BY THE ASSESSEE TO PURCHASE PEACE OF MIND AND TO AVOID FURTHER LITIGATIONS SUBJECT TO NO PENALTY UNDER THE INCOME-TAX ACT. IT IS NO SECRET THAT THE DEPARTMENTAL OFFICERS HAVE BEEN PRE SSURISING THE ASSESSEES TO MAKE SURRENDER OF EXTRA INCOME DURING THE SURVEY ON THE CONDITION THA T NO PENALTY WOULD BE LEVIED AND SUCH ASSURANCES ARE ALSO ACTED UPON. BUT IN THE CASE OF ASSESSEE THE DISCRIMINATORY AND CONTRADICTORY TREATMENT HAD BEEN GIVEN TO HIM BY LEVYING PENALTY WHICH IS HIGHLY UNREASONABLE AND CONTRARY TO THE BASIC PRINCIPLES OF JUSTICE, EQUITY AND FAIR PL AY. THE LD. CIT (APPEALS) ON CONSIDERATION OF ABOVE FACTS OBSERVED THAT THE RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 WAS ALREADY FILED BEFORE THE SURVEY UNDER SECTION 133A OF THE ACT WAS UNDERTAKEN. IT WAS ONLY BECAUSE OF DISCREPANCIES/DEFECTS NOTICED BY THE DEPARTMENT THA T THE ASSESSEE HAD SURRENDERED THE INCOME OF RS 35,00,000/- AND REVISED THE RETURN OF INCOME ALR EADY FILED. THE ALLEGATION THAT THERE WAS PRESSURE FROM THE DEPARTMENTAL OFFICERS TO SURRENDE R THE EXTRA INCOME WAS TOTALLY UNSUBSTANTIATED. AS REGARDS THE ASSURANCES GIVEN B Y ANY OF THE DEPARTMENTAL OFFICERS THAT NO PENALTY WILL BE LEVIED, THOUGH THERE WAS NOTHING O N RECORD TO SUGGEST THAT ANY SUCH ASSURANCE WAS GIVEN, YET IT WOULD BE SUFFICE TO SAY THAT THER E COULD NOT BE ANY ESTOPPEL AGAINST THE STATUTE. THE LD. CIT (APPEALS) ACCORDINGLY UPHELD THE PENALT Y. 8. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT A REVISED RETURN OF INCOME ADMITTING RS 35,00,000/- WAS FILED BEFORE THE CASE WAS TAKEN UP FOR SCRUTINY. THE ASSESSEE HAD ADMITTED ADDITIONAL INCOME OF RS.35,00,000/- WHICH WAS SURRE NDERED UNDER SECTION 133A ON 18/1/2007. THE ASSESSEE MADE SURRENDER TO BUY MENTAL PEACE. S INCE THE ASSESSEE HAD MADE SURRENDER VOLUNTARILY TO BUY PEACE, SUBJECT TO NO PENALTY OR PROSECUTION, PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) IS AGAINST BASIC PRINCIPLES OF JUSTICE, EQUITY AND FAIR PLAY AND DESERVES TO BE DELETED. HE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAS PHARMACEUTICALS 235 ITR 259 (DEL.) FOR THE PROPOSITION THAT PENALTY INITIATED ON THE GROUND OF DISCREPANCIES FOUND DURI NG THE COURSE OF SURVEY WAS NOT JUSTIFIED. HE 6 I. T. APPEAL NO. 3357 (DEL) OF 2010 ALSO PLACED RELIANCE ON THE DECISION OF ITAT, AHMED ABAD BENCH C IN THE CASE OF DCIT VS. DR. SATISH B. GUPTA 42 SOT 489 (AHD,) WHEREIN IT HAS BE EN HELD THAT IN RESPECT OF THE AMOUNT WHICH WAS SURRENDERED BY THE ASSESSEE IN THE RETURN OF IN COME AND ACCEPTED BY THE ASSESSING OFFICER, THE ASSESSEE COULD NOT BE CHARGED FOR ANY CONTUMACI OUS CONDUCT. ON THE OTHER HAND, THE LD. SR. DR SUBMITTED THAT THE RETURN OF INCOME WAS REVISED AFTER THE SURVEY WAS CONDUCTED. THE ASSESSEE ADMITTED INCOME OF RS.35,00,000/- IN VIEW OF THE FACT THAT THE ASSESSEE WAS DEALING IN PURCHASE AND SALE OF SCRAP OUTSIDE THE BOOKS OF ACC OUNTS. AS REGARDS DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAS PHARMACEUTICA LS (SUPRA) IT WAS SUBMITTED BY THE LD. SR. DR THAT IN THAT CASE RETURN OF INCOME HAD NOT BECOM E MATURE AS THE INCOME WAS SURRENDERED IN THE YEAR IN WHICH SURVEY WAS CONDUCTED. THE LD. SR . DR FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT PROVED HIS BONAFIDE. THEREFORE, PENALTY IS IMP OSABLE. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- (I) K. P. MADHUSUDHANAN VS. CIT [2001] 251 ITR 99 (SC ); (II) CIT VS. R. SADAYAPPAN (DECD.) (BY L.RS.) [2002] 2 53 ITR 203 (MAD.); (III) M. SHAHUL HAMEED BATCHA VS. ITO [2007] 292 ITR 585 (MAD.); & (IV) CRN INVESTMENTS P. LTD. VS. CIT [2008] 300 ITR 3 42 (MAD.). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT THE ASSESS EE MADE SURRENDER OF RS 35,00,000/- ON THE BASIS OF SEIZED MATERIAL FOUND FROM THE RESIDENTIAL PREM ISES OF SHRI NAVIN SOOD, THE PARTNER OF M/S. VEE GEE INDUSTRIAL ENTERPRISES ON 16/1/2007. THE A SSESSEE WAS CONFRONTED DURING THE COURSE OF SURVEY CONDUCTED UNDER SECTION 133A ON 18/1/2007 WI TH THE STATEMENT OF SH NAVIN SOOD AND MATERIAL FOUND AND SEIZED FROM THE RESIDENTIAL PREM ISES OF SHRI NAVIN SOOD AND THE ASSESSEE HAD CATEGORICALLY ADMITTED THAT THE ENTRIES WERE RECORD ED ON DOCUMENTS IN CODED FORM. ON PAGE 28 FOR FIGURE 30 = 10 WAS DECODED AS RS.30,10,000/-. SIMILARLY ON PAGE 30 THE FIGURE OF 31 = 10 WAS DECODED AS RS.31,10,000/-. PAGE 29 OF THE SLIP CONTAINED CALCULATION OF PURCHASES OF SCRAP FROM M/S. VEE GEE INDUSTRIAL ENTERPRISES, WHICH WAS ALSO IN CODE DETAILED IN PARAGRAPH 5.1 AS ABOVE. THE ASSESSEE CAME FORWARD TO SURRENDER AN A MOUNT OF RS.35,00,000/- NOT VOLUNTARILY, BUT 7 I. T. APPEAL NO. 3357 (DEL) OF 2010 DUE TO THE FACT THAT THE ASSESSEE HAD BEEN PURCHASI NG SCRAP OUTSIDE BOOKS OF ACCOUNTS FROM M/S. VEE GEE INDUSTRIAL ENTERPRISES, THE MATERIAL IN RES PECT OF WHICH WAS FOUND FROM THE RESIDENTIAL PREMISES OF SHRI NAVIN SOOD. THEREFORE, THE OFFER OF RS.35,00,000/- IN ASSESSMENT YEAR 2005-06 WAS BASED ON THE DOCUMENTS FOUND FROM THE POSSESSIO N OF SHRI NAVIN SOOD, THE PROP. OF VEE GEE FROM WHOM THE ASSESSEE WAS MAKING PURCHASES OUT SIDE THE BOOKS OF ACCOUNTS. THE ENVELOPES CONTAINED THE NAME OF M/S. RACHNA TRADING COMPANY IN WHICH CASH OF RS.45,100/- AND RS.18,470/- WERE FOUND, EXPLANATION IN RESPECT OF WHICH WAS GIVEN BY THE ASSESSEE IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY PROC EEDINGS. THEREFORE, THE SURRENDER OF RS.35,00,000/- CANNOT BE TREATED AS A VOLUNTARY SUR RENDER. 10. THE ASSESSEE FILED REVISED RETURN AFTER THE DAT E PRESCRIBED U/S 139(5) BUT BEFORE COMPLETION OF ASSESSMENT ON 17 TH DECEMBER, 2007. THE ASSESSEE IN THE COURSE OF HEA RING BEFORE US HAD RELIED ON DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. SAS PHARMACEUTICALS. IN THAT CASE SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON 6/1/2003 AND THE ASSESSEE SURRENDERED THE AMOUNT FOR AY 2004 -05 RELEVANT TO THE YEAR OF SURVEY. IN THAT CASE RETURN OF INCOME WAS NOT DUE AS ON THE DATE OF SURVEY. THE ASSESSEE ADMITTED THE ENTIRE INCOME IN THE RETURN OF INCOME AND, THEREFORE, IT W AS HELD THAT UNLESS THERE WAS ACTUAL CONCEALMENT OR NON-DISCLOSURE OF PARTICULARS OF INC OME, PENALTY WAS NOT IMPOSABLE. IN THE CASE OF DCIT VS. DR. SATISH B. GUPTA, THE SURVEY WAS CON DUCTED ON 22/09/2006. DURING THE COURSE OF SURVEY THE ASSESSEE DECLARED UN-ACCOUNTED INCOME OF RS.32,84,663/-. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.37,57,334/- INCLUD ING UNACCOUNTED INCOME OF RS.32,84,663/-. NO REVISED RETURN OF INCOME WAS FILED BY THE ASSESS EE. IT WAS HELD THAT THE ADDITION MADE UNDER SECTION 143(3) OF THE ACT WAS NOT CONCEALMENT OF IN COME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS PER EXPLANATION TO SECTION 271(1)(C). THE QUESTION WHETHER THE ASSESSEE WAS LIABLE TO PENALTY UNDER SECTION 271(1)(C) WOULD ARISE ONLY WHEN THE RETURN OF INCOME IS SCRUTINIZED BY THE ASSESSING OFFICER WHO FINDS SOME MORE ITEMS OF INCOME OR ADDITIONAL INCOME OVER AND ABOVE WHAT HAD BEEN DECLARED IN THE RETURN OF INCOME. TH EREFORE, THIS DECISION IS ALSO OF NO HELP TO THE ASSESSEE. 8 I. T. APPEAL NO. 3357 (DEL) OF 2010 THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECIS ION OF ITAT, CHANDIGARH BENCH IN THE CASE OF DABWALI TRANSPORT COMPANY VS. ACIT 3 ITR 785 (CHD). IN THIS CASE THE ASSESSING OFFICER DISALLOWED RS.20,00,000/- ON THE GROUND THAT COMPLE TE RECORDS WERE NOT MAINTAINED BY THE ASSESSEE AND EVEN THE PARTICULARS OF DRIVERS TO WHO M THE PAYMENTS WERE MADE WERE NOT MAINTAINED. THE COMMISSIONER OF INCOME TAX REDUCED THE ADDITION BY RS.1,22,520/- AND SUSTAINED THE ADDITION OF RS.18,77,480/-. THE TRIB UNAL SUSTAINED THE ADDITION OF RS.15,00,000/-. PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT FOUND TO BE IMPOSABLE ON THE GROUND THAT THERE WAS NO CONTUMACIOUS ACT BY THE ASSESSEE LEADI NG TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THIS CASE ALSO DOES NOT HELP THE ASSESSEE. 11. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS I MPOSABLE WHEN THE ASSESSEE HAS CONCEALED INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF I NCOME. IN THE CASE OF THE ASSESSEE THE ORIGINAL RETURN OF INCOME WAS FILED DECLARING INCOME OF RS.8 ,30,420/-. THE ASSESSEE FILED REVISED RETURN ADMITTING UNDISCLOSED INCOME BASED ON THE DOCUMENTS FOUND IN THE COURSE OF SEARCH AND SEIZURE OPERATION IN THE CASE OF SHRI NAVIN SOOD. THEREFOR E, IT IS A CASE OF CONCEALMENT OF INCOME. IN CRN INVESTMENTS P. LTD. VS. CIT (SUPRA) A SURVEY UN DER SECTION 133A OF THE ACT WAS CARRIED OUT IN CASE OF B WHICH OBTAINED STEEL ROLLS ON LEASE BA SIS. THE LEASE TRANSACTION WAS A TRIPARTITE TRANSACTION INVOLVING MANUFACTURE / SUPPLIER, LESSO R, THE ASSESSEE HEREIN AND THE LESSEE, NAMELY, B. ON INVESTIGATION, IT WAS FOUND THAT THE LESSEE HAD NOT PRODUCED ORIGINAL DELIVERY CHALLANS IN ALL THE CASES. NO DOCUMENTS WERE PRODUCED FOR THE STEEL ROLLS TAKEN ON LEASE. THE ENQUIRY CONDUCTED SHOWED THAT THE SUPPLIERS HAD NEVER SUPPL IED ANY STEEL ROLLS TO B; THAT THE BILLS WERE RAISED TO FACILITATE THE FINANCE FROM CREDIT INSTIT UTIONS. ON THE BASIS OF MATERIAL THE DEPARTMENT CAME TO THE CONCLUSION THAT THE LEASE TRANSACTION W AS FALSE AND A MAKE BELIEVE ONE, TO ENABLE B TO OBTAIN FINANCE AND THE ASSESSEE TO CLAIM 100% DEPRE CIATION. PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS UPHELD UP TO THE LEVEL OF ITAT. ON FUR THER APPEAL, HONBLE MADRAS HIGH COURT HELD THAT THE CLAIM FOR DEPRECIATION MADE BY THE ASSESSE E WAS BOGUS. CONSEQUENTLY, IN THE FACE OF THE SAID FACT THE REVISED RETURN WAS CONSEQUENT ON A SE ARCH; IT CONFIRMED THE FINDING THAT THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME BY FURNISHING I NACCURATE PARTICULARS. HONBLE MADRAS HIGH COURT CONFIRMED THE LEVY OF PENALTY. 9 I. T. APPEAL NO. 3357 (DEL) OF 2010 12. IN THE CASE OF M. SHAHUL HAMID BATCHA VS. ITO 2 92 ITR 585 THE ASSESSEE FILED REVISED RETURN BEFORE ISSUE OF NOTICE UNDER SECTION 148 WHI CH WAS ACCEPTED BY THE AO, BUT THE AO LEVIED PENALTY UNDER SECTION 271(1)(C) ON THE GROUND THAT THE ASSESSEE FILED REVISED RETURN ONLY AFTER THE SEARCH HAD TAKEN PLACE IN THE PREMISES OF THE ASSES SEE. THE PENALTY UNDER SECTION 271(1)(C) WAS CONFIRMED BY THE TRIBUNAL. THE APPELLATE TRIBUNAL O N THE FACTS OF THE CASE FOUND THAT OMISSION OR WRONG STATEMENT BY THE ASSESSEE IN THE ORIGINAL RETURN WAS NOT DUE TO ANY BONAFIDE OR INADVERTENT MISTAKE ON HIS PART. ON FURTHER APPEA L IT WAS HELD THAT THE ASSESSEE FILED REVISED RETURN ONLY AFTER THE SEARCH WAS CONDUCTED IN THE P REMISES OF THE ASSESSEE. THE LEVY OF PENALTY WAS HELD TO BE JUSTIFIED. 13. IN CIT VS. R. SADAYAPPAN (DECEASED)(L. HRS.)(SU PRA) THE ASSESSEE FOR ASSESSMENT YEAR 1966-67 HAD DISCLOSED PURCHASE OF A SITE FOR A CON SIDERATION OF RS.25,000/- AND SUBSEQUENTLY ADMITTED THE FACT THAT THE REAL CONSIDERATION WAS M UCH MORE, BUT, HOWEVER, THE TRIBUNAL HELD THAT THERE WAS NO CONCEALMENT. ON REFERENCE IT WAS HELD THAT THE APPROACH OF THE TRIBUNAL COULD NOT BE APPROVED. IT WAS HELD BY HONBLE MADRAS HIGH COU RT THAT THE ASSESSEE MADE A FALSE STATEMENT KNOWING THE REAL FACTS AND AFTER A RAID AND SEIZURE , ADMISSION OF REAL FACTS WOULD NOT TAKE AWAY THE EFFECT OF WRONGFUL CONDUCT DISPLAYED EARLIER. THE ASSESSEE WAS HELD LIABLE FOR PENALTY. THE TRIBUNAL WAS HELD TO BE IN ERROR IN SETTING ASIDE T HE PENALTY. 14. IN K. P. MADHUSUDANAN VS. ACIT (SUPRA) THE ASS ESSEE HAD TAKEN CERTAIN BANK DRAFTS FOR PAYMENT TO SUPPLIERS OF RICE IN ANDHRA PRADESH. IT HAD MADE ENTRIES IN ITS ACCOUNTS NOT ON THE DATES ON WHICH THEY WERE OBTAINED, BUT A FEW DAYS L ATER. THE EXPLANATION OF THE ASSESSEE WAS THAT SUFFICIENT CASH BALANCE WAS NOT AVAILABLE ON T HOSE DATES, IT HAD OBTAINED HAND LOANS FROM FRIENDS, AND, AS IT HAD EXPECTED TO RE-PAY SUCH LOA N WITHIN A SHORT TIME, NO ENTRIES WERE MADE IN ITS BOOKS OF ACCOUNTS IN RESPECT THEREOF. THE ASSE SSEE ALSO STATED THAT SINCE IT WAS UNABLE TO FURNISH EVIDENCE FOR SUCH LOANS, IT OFFERED THE AMO UNT OF RS.93,000/- AS AN ADDITIONAL INCOME. PENALTY UNDER SECTION 271(1)(C) WAS HELD TO BE VALI DLY LEVIED. HONBLE SUPREME COURT FURTHER OBSERVED THAT EEXPLANATION TO SECTION 271(1)(C) IS A PART OF SECTION 271. WHEN THE ASSESSING OFFICER OR THE APPELLATE ASSISTANT COMMISSIONER ISS UES A NOTICE UNDER SECTION 271 HE MAKES THE 10 I. T. APPEAL NO. 3357 (DEL) OF 2010 ASSESSEE AWARE THAT PROVISIONS THEREOF ARE TO BE US ED AGAINST HIM. THESE PROVISIONS INCLUDE THE EXPLANATION. BY VIRTUE OF NOTICE UNDER SECTION 271 THE ASSESSEE IS PUT TO NOTICE THAT, IF HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED IN THE EXPLA NATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE DEEM TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, AND, CONSEQUENTLY BE LIABLE TO PENALTY UNDER THE SECTION. 15. TESTED IN THE LIGHT OF ABOVE DECISIONS WE FIND THAT THE ASSESSEE HAD FILED REVISED RETURN ADMITTING ADDITION INCOME OF RS 35,00,000/- WHEN IT WAS DETECTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS ACTIVITIES OUTSIDE BOOKS OF ACCOUNT S, WHICH CAME TO SURFACE AS A RESULT OF SEARCH IN THE CASE OF SHRI NAVIN SOOD, THE PARTNER OF M/S. VE E GEE INDUSTRIAL ENTERPRISES FROM WHOM THE ASSESSEE WAS PURCHASING SCRAP. UNDER THESE CIRCUMS TANCES, THE CONTENTION OF THE ASSESSEE THAT HE HAD OFFERED EXTRA INCOME IN THE REVISED RETURN OF I NCOME TO BUY PEACE HAS NO RELEVANCE. SINCE THE ASSESSEE HAS ADMITTED THE INCOME AFTER DETECTIO N OF THE SAME, IN OUR CONSIDERED OPINION, INCOME DISCLOSED IN THE REVISED RETURN CONFIRMS THE FACT THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS AND IS LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) CONFIRMING THE PENALTY. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 14 TH OCTOBER, 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : _14 TH OCTOBER, 2011 . *MEHTA * 11 I. T. APPEAL NO. 3357 (DEL) OF 2010 COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.