Vikrant Happy Homes Pvt. Ltd., Nashik V. Deputy Commissioner of Income-tax,

ITA 345/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7743 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Business income; Search and seizure; Loose papers; Initiation of penalty proceedings; Condonation of delay; Revised return; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / I TA NO S . 345 & 346/ PUN/2015 / ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 VIKRANT HAPPY HOMES PVT. LTD. 301, PRASANNA ARCADE, NEAR MAZDA HOTEL, OLD AGRA ROAD, NASHIK - 422 002. / APPELLANT PAN : AAACV5949A / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, NASHIK / RESPONDENT A PPELLANT BY : SHRI SANKET JOSHI R ESPONDENT BY : SHRI VIVEK AGARWAL / DATE OF HEARING : 28.06.2017 / DATE OF PRONOUNCEMENT : 18 .08.2017 / ORDER PER SUSHMA CHOWLA , JM THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1, NASHIK DATED 31.12.2014 RELATING TO ASSESSMENT YEARS 2007 - 08 & 2008 - 09 AGAINST ORDER PASSED UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITA NO. 345/PUN/2015 : - 1. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 4,03,200/ - LEVIED BY THE A.O U/S. 271(1)(C) OF THE ACT. 2 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. 2. ON THE FACTS AND IN LAW THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT - (I) THE APPELLANT HAS OFFERED TO TAX AN AMOUNT OF RS. 25 LACS AS ADDITIONAL INCOME IN A.Y. 2008 - 09, OUT OF WHICH IT HAS BEEN HELD BY CIT(A) THAT INCOME TO THE EXTENT OF RS. 12 LACS RELATES TO A.Y. 2007 - 08 AND HENCE THE CIT(A) HAS DIRECTED TO TAX THE SAID INCOME IN A.Y. 2007 - 08; THE A. O HAS THERE FORE NOT INITIATED ANY PENALTY PROCEEDINGS IN A.Y. 2007 - 08 IN RESPECT OF THE ABOVE INCOME OFFERED TO TAX BY THE APPELLANT IN A.Y. 2008 - 09; THE CIT(A) HAS ALSO NOT INITIATED AND LEVIED PENALTY U/S. 271(1)(C) IN A.Y. 2007 - 08; THEREFORE PENALTY U/S. 271(1)(C) IS NOT LEVIABLE. (II) THE CIT(A) HAS NOT INITIATED OR LEVIED PENALTY U/S. 271(1)(C) OF THE ACT AND HENCE IN VIEW OF RATIO LAID DOWN IN THE CASE OF CIT V S. MANJUNATHA COTTON AND GINNING FACTORY, ITA NO. 2564 ETC. DATED 13/12/2012 OF HON'BLE KARNATAKA HI GH COURT, THE PENALTY U/S. 271(1)(C) IS REQUIRED TO BE CANCELLED. (III) THE ADDITION HAS BEEN MADE ON ESTIMATION BASIS WITHOUT BRINGING ON RECORD ANY CONCRETE EVIDENCE AND ONLY ON THE BASIS OF STATEMENT OF THE DIRECTOR AND HENCE AS THE ADDITION TO ORIGIN AL INCOME RETURNED HAS NOT BEEN PROVED TO THE HILT, PENALTY U/S. 271(1)(C) IS NOT LEVIABLE. YOUR APPELLANT CRAVES, LEAVE TO ADD, ALTER, DELETE A BOVE OR ANY OF THE GROUND/S OF APPEAL . 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN ITA NO. 346/PUN/2015 : - 1. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 4,12,5801 - LEVIED BY THE A. O U/S. 271(1)(C) OF THE ACT. 2. ON THE FACTS AND IN LAW THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT - (I) THE A. O HAS INITIAT ED PENALTY ON DIFFERENT COUNT I.E. ESTIMATING ON MONEY @ 50% OF THE TOTAL AMOUNT OF BUSINESS RECEIPTS CREDITED IN THE BOOKS OF ACCOUNT, WHEREAS, THE CIT(A) HAS CONF IR MED ADDITION IN RESPECT OF SPECIFIC PLOTS @ 17.5 % OF THE SALE CONSIDERATION WHICH IS ON DI FFERENT COUNT I.E. NOT ON THE COUNT IN RESPECT OF WHICH THE A. O HAS MADE ADDITION AND INITIATED PENALTY PROCEEDINGS. (II) THE CIT (A) HAS NOT INITIATED OR LEVIED PENALTY U/S. 271(1)(C) OF THE ACT AND HENCE IN VIEW OF RATIO LAID DOWN IN THE CASE OF CIT V S. MANJUNATHA COTTON AND GINNING FACTORY, ITA NO. 2564 ETC. DATED 13/12/2012 OF HON'BLE KARNATAKA HIGH COURT, THE PENALTY U/S. 271(1)(C) IS REQUIRED TO BE CANCELLED. (III) THE ADDITION HAS BEEN MADE ON ESTIMATION BASIS WITHOUT BRINGING ON RECORD ANY CONC RETE EVIDENCE AND ONLY ON THE BASIS OF STATEMENT OF THE DIRECTOR AND HENCE AS THE ADDITION TO ORIGINAL INCOME RETURNED HAS NOT BEEN PROVED TO THE HILT, PENALTY U/S. 271(1)(C) IS NOT LEVIABLE. YOUR APPELLANT CRAVES, LEAVE TO ADD, ALTER, DELETE ABOVE OR ANY OF THE GROUND/S OF APPEAL. 3 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. 4 . BOTH THE SE APPEALS RELATING TO THE ASSESSEE ON SIMILAR ISSUE , WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE ISSUE RAISED IN BOTH THE APPEALS IS AGAINST LEVY OF PENALTY U/S 271(1) (C) OF THE ACT. 5 . BRI EFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE ACTION U/S. 132(1) WAS CONDUCTED IN THE JADHAV - SHAH GROUP OF CASES AT NASHIK ON 08.02.2008. THE RESIDENTIA L AND BUSINESS PREMISES WERE COVERED UNDER THE SEARCH ACTION. CERTAIN DOCUMENTS WERE FOUND AND SEIZED. THE ASSESSING OFFICER ISSUED NOTICE U/S. 153A OF THE ACT TO THE ASSESSEE. IN RESPONSE THERETO, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4,30,812/ - . THE ASSESSEE HAD SHOWN NET PROFIT OF RS. 49,85,799/ - AS PER P&L ACCOUNT AND HAD DECLARED TOTAL INCOME AT RS. 46,05,185/ - , WHICH WAS SET - OFF AGAINST THE BROUGHT FORWARDED LOSSES OF RS. 41,74,373/ - . DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY 150% OF THE SALE PROCEEDS SHOULD NOT BE TREATED AS ON MONEY RECEIVED BY THE ASSESSEE COMPANY IN THE RESPECTIVE YEARS UNDER SEARCH ASSESSMENT. THE ASSESSING OFFICER ANALYZED THE REPLY GIVEN BY THE ASSES SEE AND FOUND THE SAME TO BE NOT TENABLE SINCE FULL WORKING OF CASH, CHEQUE COMPONENT, AMOUNTS RECEIVED IN CASH, READY RECKONER RATE, STAMP DUTY PAID AND REGISTRATION CHARGES PAID WERE MENTIONED COMPLETELY ON THE SEIZED DOCUMENT. THE ASSESSING OFFICER MAD E SIMILAR ANALYSES FOR EACH OF THE ENTRY AS TABULATED AT PAGE NO. 3 OF THE ASSESSMENT ORDER. ANOTHER CONTENTION OF THE ASSESSEE WAS THAT THE INSTANCES OF RECEIPT OF ON MONEY WERE ONLY D URING THE PERIOD ASSESSMENT YEAR 2008 - 09. HENCE, HE POINTED OUT THAT NO ADDITION COULD BE MADE IN THE EARLIER YEARS. THE ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE HOLDING THAT THE ASSESSEE WAS IN THE BUSINESS OF D EVELOPING AND SELLING LAND. T HE ASSESSING OFFICER FURTHER OBSERVED 4 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. THAT DURING COURSE OF SE ARCH, CONTEMPORANEOUS EVIDENCES WERE FOUND THAT SUBSTANTIATE THE CLAIMS OF RECEIPT OF ON MONEY ON REGULAR BASIS. THE ASSESSING OFFICER THUS HELD THAT IN VIEW THEREOF THE QUESTION WHICH REMAINED WAS TO QUANTIFY OR ESTIMATE THE EXTENT OF NET CASH RECEIPTS IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER NOTED FROM TABULATED DETAILS THAT THE CASH COMPONENT VARIED FROM 52% TO 250% AND CONSIDERING THE FACT THAT THE ASSESSEE MAY HAVE PAID SOME AMOUNTS IN CASH FOR MAKING ITS PURCHASES, THE ASSESSING OFFICER OPI NED TO TAKE NET CASH RECEIPTS IN THIS CASE AT 50% OF THE TOTAL SALE CONSIDERATION FOR THE YEARS UNDER CONSIDERATION. THE TABULATED YEAR - WISE CASH COMPONENT IS AVAILABLE AT PAGE NO. 6 OF THE ASSESSMENT ORDER. THUS, IN ASSESSMENT YEAR 20 07 - 08, NET ON MONEY RECEIPTS WORK ED OUT AT RS. 33,65,995/ - AND THE SAME WAS ADDED TO THE TOTA L INCOME OF THE ASSESSEE. IN ASSESSMENT YEAR 2008 - 09 , ADDITION WAS MADE OF RS.1,51,10,774/ - . THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF T HE ACT AFTER RECORDING SATISFACTION THAT THE ASSESSEE HAS CONCEALED ITS INCOME OF RS.33,65,995/ - . FURTHER, ADDITIONS WERE ALSO MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE BUT SET OFF WAS GIVEN ON ACCOUNT OF ADDITION MADE ON ACCOUNT OF ON MONEY. THE NET ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF BALANCE SUM OF RS. 93,25,772/ - WAS MADE IN ASSESSMENT YEAR 2007 - 08. 6. IN QUANTUM PROCEEDINGS VIDE PARA 4.6 AT PAGE NO. 14 OF THE APPELLATE ORDER , THE CIT(A) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING ON - MONEY INCOME IN RESPECT OF ALL TRANSACTIONS OF SALE OF PL OTS, LAND, BUNGALOWS DURING ASSESSMENT YEARS 2002 - 2003 TO 2008 - 2009. THE CIT(A) HELD THAT THE ADDITION MADE BY THE A.O ON THIS COUNT ON ESTIMATE BASIS @ 5 0% OF THE RECORDED CONSIDERATION IS THEREFORE UNWARRANTED. THE CIT(A) THEREAFTER, REFERRED TO CHART AND THE REPLY OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AND 5 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. NOTED THAT IN RESPECT OF LAST TRANSACTION, ON MONEY IN RESPECT OF 39 PLOTS SOLD WAS STATED T O BE R S. 12,00,000/ - IN RESPECT OF ASSESSMENT YEAR 2008 - 09. THE CIT(A) FURTHER OBSERVED THAT IN THE STATEMENT OF THE ASSESSEE RECORDED U/S. 132(4) OF THE ACT, THE ASS ESSEE HAD AGREED THAT DURING FINANCIAL YEAR 2006 - 07, THE COMPANY HAD RECEIVED ON MONEY OF RS. 12,00,000/ - ON SALE OF THE SAID 39 PLOTS. AS PER THE CIT(A), THE ASSESSEE HAD INCORRECTLY OFFERED TO TAX THE SAID ON - MONEY OF RS. 12,00,000/ - IN TH E RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2008 - 2009 INSTEAD OF ASSESSMENT YEAR 2007 - 08. THE C ONTENTION OF THE ASSESSEE IS THAT THE SAID PAPERS WERE ONLY ROUGH NOTING S , WAS REJECTED. I N RESPECT OF THE TRANS ACTIONS RELATING TO ASSESSMENT YEAR 2008 - 09 AND ON - MONEY THEREIN, THE CIT(A) RE - COMPUTED ADDITION ON ACCOUNT OF ON - MONEY ON THE BASIS OF DOCUMENTS FILED AND STATEMENT RECORDED U/S. 132(4) OF THE ACT AND HELD AS UNDER : 4.9 IN RESPECT OF TRANSACTION NOS. 4 TO 8 POINTED OUT BY THE A.O, IT IS NOTICED THAT THE TRANSACTIONS RELATE TO THE A.Y. 2008 - 2009. THE TOTAL ON - MONEY IN RESPECT OF THE SAID TRANSACTIONS POINTED OUT BY THE A.O IS RS. 24,30,226/ - . THESE TRANSACTIONS MAINLY RELATE TO THE PLOTS IN HINDUSTAN NAGAR PROJECT. TOTAL TRANSACTIONS IN R ESPECT OF SALE OF PLOTS IN A.Y. 2008 - 2009 IN HINDUSTAN NAGAR PROJECT SPECIFIC GAT NUMBERS STATED BY THE APPELLANT IN STATEMENT U/S. 132(4) OF THE ACT, UPTO THE DATE OF SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT AS PER AUDITED LEDGER ACCOUNTS ARE RS. 1,6 5,71,925/ - . THE A.O HAS POINTED OUT IN THE TABULAR CHART OF ON - MONEY SPECIFICALLY IN RESPECT OF PLOTS SOLD FOR RS. 16,11,500/ - . THEREFORE, THE ON MONEY RECEIPTS OF REMAINING PLOTS SOLD FOR RECORDED CONSIDERATION OF RS. 1,49,60,425/ - IS TO BE TAXED IN THE H ANDS OF THE APPELLANT. THE APPELLANT HAS AGREED IN HIS STATEMENT RECORDED U/S. 132(4) THAT IT HAS RECEIVED 15% TO 20% ON MONEY IN RESPECT OF PLOTS IN SPECIFIC GAT NUMBERS OF LAND. HENCE ON THE BASIS OF STATEMENT U/S 132(4) OF THE ACT, THE ON - MONEY RECEIPT AT 17.50% [ I.E. AVERAGE OF 15% AND 20%] OF RS. 1,49,60,425/ - WORKS OUT TO RS. 26,18,074/ - THE TOTAL ON - MONEY WHICH IS REQUIRED TO BE TAXED IS THEREFORE RS. 50,48,300/ - (I.E. RS. 24,30,226 +RS. 26,18,074). THE APPELLANT HAS OFFERED TO TAX RS. 25,00,000/ - I N RESPECT OF THESE TRANSACTIONS RELATING TO PLOTS IN HINDUSTAN NAGAR PROJECT IN RETURN OF INCOME FILED FOR A.Y.2008 - 09. THE RESULTANT ADDITION ON THIS COUNT IS RS. 25,48,300/ - . THE A.O IS DIRECTED TO MAKE ADDITION ACCORDINGLY. AS ALREADY POINTED OUT IN EAR LIER PARAGRAPH THAT THE APPELLANT HAS OFFERED TO TAX AN AMOUNT OF ON - MONEY OF RS. 12,00,000/ - IN A.Y. 2008 - 2009 INSTEAD OF A.Y. 2007 - 2008, THE SAID AMOUNT IS TO BE TAXED IN THE A.Y.2007 - 2008 AND THE APPELLANT SHALL GET CREDIT FOR THE SAME IN A.Y.2008 - 2009. THE RESULTANT ADDITION IN THE A.Y. 2008 - 2009 IN RESPECT OF ON MONEY IS THEREFORE RS. 13,48,300/ - (I.E. RS. 25,48,300 - RS. 12,00,000). 6 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. 7. THE OTHER ADDITIONS MADE BY THE ASSESSING OFFICER WERE DELETED BY THE CIT(A). 8 . THE TRIBUNAL IN ASSESSEES OWN CA SE IN ITA NOS. 1194 TO 1200/PN/2010 RELATING TO ASSESSMENT YEARS 2002 - 03 TO 2008 - 09 , IN APPEAL FILED BY THE REVENUE AND IN ITA NOS. 1315 &1316/PN/2010 RELATING TO ASSESSMENT YEARS 2005 - 06 & 2008 - 09, IN APPEAL FILED BY THE REVENUE, VIDE CONSOLIDATED ORDER DA TED 30.06.2014 UPHELD THE ADDITION MADE BY THE CIT(A). 9 . THE ASSESSING OFFICER WHILE LEVYING PENALTY U/S. 271(1) (C) OF THE ACT NOTED THAT ADDITION MADE IN ASSESSMENT YEARS 2007 - 08 WAS ON ACCOUNT OF ON - MONEY RECEIPT OF RS. 33,65,995/ - AND ON ACCOUNT OF U NEXPLAINED INVESTMENT OF RS. 93,25,772/ - . THE ASSESSING OFFICER FURTHER NOTED THAT THE CIT(A) HAD PARTLY ALLOWED THE ASSESSEES APPEAL AND ADDITION MADE BY THE AS SESSING OFFICER OF RS.93,25,772 / - WAS DELETED, WHEREAS ADDITION OF RS.33,65,995/ - WAS CONFIRM ED TO THE EXTENT OF RS. 12,00,000/ - . THE ASSESSEE IN REPLY TO THE SHOW CAUSE NOTICE ISSUED, POINTED THAT THE CIT(A) HAD DELETED ADDITION MADE OF 50% OF THE SALES ON ACCOUNT OF ON - MONEY. HENCE, THE ADDITION IN RESPECT OF WHICH, THE ASSESSING OFFICER INITIAT ED PENALTY PROCEEDINGS U/S. 271(1) (C) OF THE ACT WAS FULLY DELETED AND SINCE NO ADDITION IN RESPECT OF WHICH PENALTY PROCEEDINGS WERE INITIATED, HAD BEEN CONFIRMED, T HUS, NO PENALTY WAS LEVIABLE. ANOTHER POINT RAISED BY THE ASSESSEE WAS THAT THE CIT(A) HAD DIRECTED TO TAX ON - MONEY OF RS.12,00,000/ - I.E INCOME OFFERED BY THE ASSESSEE IN ASSESSMENT YEAR 2008 - 2009. HE FURTHER POINTED OUT THAT IN THIS RESPECT, THE ASSESSING OFFICER HAD NOT INITIATED PENALTY PROCEEDINGS THOUGH PENALTY U/S. 271(1) (C) COULD BE LEVIED ON THE SAID AMOUNT. THE ASSESSEE STATED THAT THE ADDITION OF RS. 12,00,000/ - WHICH WAS SUSTAINED BY THE CIT(A), WAS THE ADDITION MADE ON ACCOUNT OF ON - MONEY IN ASSESSMENT 7 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. YEAR 2008 - 2009. HE FURTHER POINTED OUT THAT THE ASSESSING OFFICER HAD INITIAT ED PENALTY PROCEEDINGS IN RESPECT OF ALL THE ADDITIONS ON ACCOUNT OF ON - MONEY RECEIPT DURING ASSESSMENT YEARS 2002 - 2003 TO 2008 - 2009. HE FURTHER STATED THAT THE CIT(A) PARTLY CONFIRMED THE ADDITION TO THE EXTENT OF RS. 12,00,000/ - IN ASSESSMENT YEAR 2007 - 2 008 AND RS. 13,48,300/ - IN ASSESSMENT YEAR 2008 - 2009 RESPECTIVELY. T HE ASSESSING OFFICER, IN SUCH CIRCUMSTANCES HELD THAT THE ASSESSEE HAD CONCEALED THE INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER HAD RELIED ON VARIOUS CASES LAWS VIDE PARA - 6 TO HOLD THAT ASSESSEE HAD CONCEALED THE INCOME WITHIN THE MEANING OF SECTION 271 (1)(C) READ WITH EXPLANATION 1, W HERE THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE THE EXPLANATION AND HAD FAILED TO PROVE THAT THE EXPLANATION WAS B ON - FIDE VID E PARA - 7, T HE ASSESSING OFFICER HELD THAT IN VIEW OF THE ENTIRE CIRCUMSTANCES OF THE CASE, HE WAS SATISFIED THAT THE ASSESSEE HA D FURNISHED INACCURATE PARTICULARS IN RESPECT OF ABOVE INCOME AND HENCE, PENALTY WAS LEVIED AT RS. 4,03,200/ - U/S. 27 1(1)(C) OF THE ACT. 10 . THE CIT(A) WHILE DELETING LEVY OF PENALTY U/S 271(1) (C) OF THE ACT NOTED THAT THE TRIBUNAL HAD CONFIRMED THE DECISION OF CIT(A) IN DIRECTION TO THE ASSESSING OFFICER TO TAX SAID INCOME OF RS. 12,00,000/ - IN ASSESSMENT YEAR 2007 - 2008 INSTEAD OF ASSESSMENT YEAR 2008 - 2009. THE CIT(A) FURTHER HELD THAT SINCE THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN ITS RETURN OF INCOME AND CONCEALED TRUE INCOME, IT WAS CLEAR - CUT CASE OF LEVYING PENALTY U/S. 271(1)(C) OF TH E ACT. HE FURTHER HELD THAT THE PROVISION OF SECTION 271(1) (C) READ WITH EXPLANATION 5A WERE APPLICABLE AS THE ASSESSEE HAD DECLARED ADDITIONAL INCOME IN HIS STATEMENT RECORDED U/S. 132(4) OF THE ACT ON THE BASIS OF DOCUMENTS SEIZED DURING THE SEARCH ON 0 8.02.2008. THE CIT(A) HELD THAT ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE 8 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. PARTICULARS OF INCOME TO THE TUNE OF RS. 12,00,000/ - AND UPHELD THE LEVY OF PENALTY U/S. 271(1) (C) OF THE ACT AT RS. 4,03,200/ - . NOW THE ASSESSE E IS IN APPEAL AGAINST THE ORDER OF CIT(A). 11 . IN THE FACTS OF ASSESSMENT YEAR 2008 - 09, THE ASSES SEE DURING COURSE OF SEARCH, IN THE STATEMENT RECORDED U/S. 132(4) OF THE ACT HAD OFFERED TO TAX , ADDITIONAL INCOME ON ACCOUNT OF ON MONEY IN RESPECT OF PLOT S OF HINDUSTAN NAGAR OF RS. 25,00,00 0/ - AND RS. 12,00,000/ - IN FINANCIAL YEAR 2006 - 2007 AND ALSO ON MONEY IN RESPECT OF PLOTS AT WAKAS, NERAL AT RS. 9,00,000/ - AND IN RESPECT OF LAND AT ANTHRAT AT RS. 11,82,000/ - TOTALING RS. 57,82,000/ - . THE ASSESSING OFFICER ON THE OTHER HAND COMPUTED THE ADDITION IN THE HANDS OF THE ASSESS EE A T RS. 50,48,000/ - , WHICH INCLUDED RS. 24,30,226/ - OFFERED BY THE ASSESSEE AND RS. 26,18,074/ - / - ON MONEY COMPUTED BY THE ASSESSING OFFICER. THE ASSESSEE HAD ALREADY OFFERED RS. 25,00,000/ - IN THE RETURN OF INCOME IN ASSESSMENT YEAR 2008 - 09, BALANCE ADDITI ON OF RS. 25,48,300/ - WAS DIRECTED TO BE MADE IN THE HANDS OF THE ASSESSEE BY THE TRIBUNAL. IT WAS ALSO POINTED OUT THAT SINCE RS. 12, 00,000/ - WAS TO BE TAXED IN ASSESSMENT YEAR 2007 - 1008, THE BALANCE ADDITION ON ACCOUNT OF ON MONEY WOULD BE RS. 13,48,300/ - . THIS WAS THE DIRECTION OF THE TRIBUN AL IN A SSESSEES CASE IN ASSESSMENT YEAR 2008 - 2009. IT MAY BE POINTED OUT HERE IN ITSELF THAT THE ASSESSING OFFICER WHILE LEVYING PENALTY AT PARA - 6 RECORDED SATISFACTION THAT THE ASSESSEE HAD CONCEALED INCOME AND FURN ISHED INACCURATE PARTICULARS IN RESPECT OF THE INCOME OF RS. 1 3,48,300/ - . THE CIT(A) AFTER RE LYING ON THE PROVISION OF SECTION 271(1) (C) HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED PARTICULARS OF INCOME TO THE TUNE O F RS. 13,48,000/ - AND HENCE, THE ASSESSING OFFICER WAS 9 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. JUSTIFIED IN IMPOSING PENALTY OF RS. 4,12,580/ - U/S. 271(1) (C) OF THE ACT. T HE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF CIT(A). 1 2 . BOTH THE APPEALS FILED BY THE ASSESSEE WERE FILED AFTER A DELAY OF 22 DAYS. THE ASSESSEE HAD FILED APPLICATION S FOR CONDONATION OF DELAY ALONG WITH AFFIDAVIT OF THE ASSESSEE STATING THAT THERE WAS NO INTENTION TO FILE THE APPEAL BELATEDLY AS THE TRIBUNAL APPEAL FEES IN RESPECT OF BOTH THE APPEALS WERE DULY PAID ON 01.02.2015 I.E WITHIN THE STIPULATED PERIOD. BUT BECAUSE OF THE DELAY IN THE OFFICE OF THE C/A, THE APPEALS WERE FILED LATE. IN TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE FIND MERIT IN THE PLEA OF THE ASSESSEE AND THE DELAY OF 22 DAYS IS HEREBY CONDONED. 1 3 . THE LD. AR FOR THE ASSESSEE POINTED OUT THAT CONSEQUENT TO SEARCH ACTION, L OOSE PAPERS WERE FOUND WHICH RECORDED ON MONEY RECEIPT FOR CERTAIN TRANSACTIONS. HE FURTHER POINTED THAT THE ASSESSEE ADMITTED ON MONEY RECEIPT IN HIS STATEMENT RECORDED U/S. 132(4) OF THE ACT AT TOTALING RS. 57.82 LAKHS. THE LD. AR FURTHER POINTED OUT THAT THE ADDITIONAL INCOME OFFERED DURING SEARCH W AS DECLARED IN THE H AND OF MANAGING DIRECTOR IN ASSESSMENT YEAR 2008 - 2009. HE REFERRED TO THE ORDER OF THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE COMPANY AND POINTED OUT THAT HE HAD FOUND THE ASSESSEE TO HAVE EARNED ON MONEY IN ASSESSMENT YEAR 2008 - 2009 IN RESPECT OF CERTAIN TRANSACTIONS. THE ASSESSING OFFICER ESTIMATED THE ADDITIONAL INCOME AT THE RATE OF 50% OF THE RECORDED CONSIDERATION. THE ASSESSING OFFICER MADE ADD ITION OF RS. 33,65,995/ - IN ASSESSMENT YEAR 2007 - 2008 AND INITIATED PENALTY PROCE EDINGS FOR CONCEALMENT OF INCOME U/S. 271(1)(C) OF THE ACT. THE CIT(A) HELD THAT LOOSE PAPERS FOUND DURING SEARCH IN ONE YEAR COULD NOT BE USED FOR MAKING ADDITION IN THE OTHER YEAR. HENCE, HE DELETED THE ADDITION AS PER PARA 4.6 AND 4.7 AT PAGE 10 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. NO. 37 OF THE APPELLATE ORDER. THE CIT(A) FURTHER ESTIMATED THE A DDITIONS ON ACCOUNT OF ON MONEY AND MADE ADDITION ON DIFFERENT COUNT I.E. OUT OF ON MONEY OF RS. 57.82 LAKHS DECLARED BY THE ASSESSEE DURIN G SEARCH, RS. 12,00,000/ - IN ASSESSMENT YEAR 2007 - 08. THE LD. AR FURTHER STRESSES THE BASIS ON WHICH ADDITION WAS MADE BY THE ASSESSING OFFICER, HAD BEEN DELETED AND WHERE THE CIT(A ) MADE ADDITION ON NEW GROUNDS AND NO PENALTY PROCEEDINGS HAVE BEEN INITIATED AGAINST TH E SAID ADDITION BY THE CIT(A); T HE LEVY OF PENAL TY AGAINST THE ASSESSEE IS UNWARRANTED. HE FURTHER POINTED OUT THAT IN THE PRESENT CASE, THE CIT(A) HAD TO RECORD HIS SATISFACTION AND ALSO TO INITIATE PENALTY PROCEEDINGS ON THAT GROUND. IN THIS REGARD HE REFERRED TO THE DECISION OF HONBLE KARNATAKA HIG H COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY LTD . REPORTED IN 359 ITR 565( KAR) AND REFERRED AT PAGE 27, PARA - 55 OF THE SAID ORDER. HE FURTHER PLACED HIS RELIANCE ON THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. MAN U ENGINEERING WORKS REPORTED IN 122 ITR 306 ( GUJ). OUR ATTENTION WAS ALSO DRAWN TO PAGE 3 OF THE ASSESSMENT ORDER WHEREIN THE AMOUNT OF RS. 12,00,000/ - WAS OFFERED IN ASSESSMENT YEAR 2008 - 09 AND ON THE O THER HAND CIT(A) TAXE D IT IN ASSESSMENT YEAR 200 7 - 2008. 1 4 . THE LD. DR FOR THE REVENUE IN THIS REGARD POINTED OUT WHERE THE ASSESSEE ADMITTED EARNING OF ON MONEY, STATEMENT U/S. 132(4) WAS RECORDED AND ADDITIONAL INCOME WAS OFFERED , THEN , SINCE THE ASSESSING OFFICER ESTIMATED 50% AS ON MONEY ON THE BASIS OF TRANSACTION FOUND AND THE CIT(A) VIDE PARA 4.7 ON THE BASIS OF SOME DOCUMENTS MADE ADDITION IN THE HANDS OF THE ASSESSEE , THEN LEVYING PENALTY U/S. 271(1) (C) OF THE ACT MERITS TO BE UPHELD . 15. IN REJOINDER, THE LD. AR FOR THE ASSESSEE PO INTED OUT THAT ASSESSEE HAD OFFE RED THE ADDITIONAL INCOME IN ASSESSMENT YEAR 2008 - 09 BUT ADDITION WAS 11 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. MADE IN ASSESSMENT YEAR 2007 - 08. IN R ESPECT OF PENALTY LE VIED IN ASSESSMENT YEAR 2008 - 2009, THE LD. AR FOR THE ASSESSEE POINTED OUT THAT NO ADDITIONAL INC OME WAS OFFERED IN THE HANDS OF THE ASSESSEE COMPANY. HE FURTHER REFERRED TO THE OPINION OF TH E ASSESSING OFFICER AND PRESUMPTION THAT ASSESSEE MUST HAVE RECEIVED ON MONEY FOR ALL 11 TRANSACTIONS AND TOTAL ADDITION WAS WORKED OUT AT RS. 1.51 CRORE AGAINST WHICH IN THE HANDS OF THE MANAGING DIRECTOR , THE ASSESSEE HAD OFFERED SUM OF RS. 57.82 LAKHS AND NET ADDITION OF RS. 93,28,774 / - WAS MADE . HE FURTHER POINTED OUT THAT CIT(A) HOLD S THAT THE ESTIMATION OF ADDITION WAS ON BASIS OF SPECIFIC EVIDENCE. HE REFERRED TO THE CIT(A) ORDER IN PARA 4.9 AND POINTED OUT THAT THE BASIS OF ADDITION HAD CHANGED. HE STRESSES THAT ADDITION S W ERE NOT MADE ON THE BASIS OF CLIN CHING EVIDENCE BUT WAS ON ESTIMATION AND HENCE, LEVY OF PENALTY U/S. 271(1) (C) OF THE ACT WAS NOT JUSTIFIED. HE FURTHER REFERRED TO THE ORDER OF THE ASSESSING OFFICER AND POINTED OUT THAT THOUGH SATISFACTION WAS FOR CONCEALMENT OF INCOME , IN PARA - 5 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER REFERRED TO BOTH THE LIMBS OF SECT ION 271(1)(C) OF THE ACT. IN PARA - 6 OF THE ASSESSMENT ORDER , HE LEVIED ON ACCOUNT OF CONCEALMENT OF INCOME AND IN PARA - 7 , FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 1 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH AR ISES IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. DURING THE COURSE OF SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) OF THE ACT AT THE PREMISES OF ASSESSEE ON 08.02.2008, VARIOUS INCRIMINATING DOCUMENTS WERE FOUND. THE SAID DOCUMENTS WERE CONFRONTED TO THE ASSESSEE AND HE ADMITTED THAT HE IS DEALING IN LAND DEVELOPING AND 15% TO 20% OF TOTAL CONSIDERATION WAS RECEIVED IN CASH AS ON - MONEY. IN THE STATEMENT SO RECORDED UNDER SECTION 132(4) OF THE ACT, THE ASSESSEE A DMITTED SUM OF 12 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. RS.57,82,000/ - AS UNDISCLOSED INCOME ON ACCOUNT OF ON - MONEY RECEIPTS IN HIS INDIVIDUAL HANDS. DURING THE COURSE OF SEARCH PROCEEDINGS, THE ASSESSING OFFICER TABULATED THE NOTINGS OF VARIOUS DOCUMENTS AND CONFRONTED THE ASSESSEE AS TO WHY PE RCENTAGE OF ON - MONEY RECEIVED ON SALE CONSIDERATION SHOULD NOT BE TREATED AS 50% OF RECORDED SALE CONSIDERATION. THE ASSESSING OFFICER ON THE BASIS OF DIFFERENT NOTINGS, CAME TO THE CONCLUSION THAT THE ASSESSEE WAS ACCEPTING CASH AND THE SAME WAS NOT RECO RDED IN THE BOOKS OF ACCOUNT. THE ASSESSEE ALSO POINTED OUT THAT INSTANCES OF RECEIPT OF ON - MONEY WERE ONLY DURING THE PERIOD RELATING TO ASSESSMENT YEAR 2008 - 09 AND CONSEQUENTLY, NO ADDITION COULD BE MADE IN EARLIER YEARS. THE ASSESSING OFFICER DID NOT ACCEPT THE SAID EXPLANATION OF THE ASSESSEE AND HELD THAT IT WOULD BE FAIR TO TAKE THE NET CASH RECEIPTS IN THE HANDS OF ASSESSEE AT 50% OF TOTAL SALE CONSIDERATION FOR DIFFERENT YEARS. THE TABULATED YEAR - WISE DETAILS OF ADDITION ON ACCOUNT OF ON - MONEY AR E AVAILABLE AT PAGE 6 OF THE ASSESSMENT ORDER. FOR ASSESSMENT YEAR 2007 - 08, ADDITION ON ACCOUNT OF ON - MONEY WAS MADE AT RS.33,65,995/ - AND IN ASSESSMENT YEAR 2008 - 09 AT RS.1,51,10,774/ - . CERTAIN OTHER ADDITIONS WERE ALSO MADE WHICH WERE DELETED BY THE CI T(A), HENCE, THE SAME ARE NOT BEING REFERRED. 1 7 . NOW, COMING TO THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ON - MONEY BY ESTIMATING THE SAME @ 50% OF TOTAL SALE CONSIDERATION FOR DIFFERENT YEARS UNDER SEARCH PERIOD. THE CIT(A) WHILE DECIDING THE QUANTUM ADDITION VIDE PARA 4.4 NOTED THE CONT ENTIONS OF ASSESSEE THAT ON - MONEY ADMITTED WAS IN RESPECT OF SPECIFIC PLOTS AND SPECIFIC LAND IN SPECIFIED GAT NUMBERS AND NOT IN RESPECT OF ALL PLOTS AND LAND SOLD. REFERENCE WAS MADE TO THE REPLY TO QUESTION NO.3 RECORDED IN STATEMENT UNDER SECTION 132( 4) OF THE ACT 13 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. AND THE CIT(A) FOUND THE CONTENTION OF ASSESSEE TO BE CORRECT. HE REFERRED TO THE STATEMENT OF ASSESSEE THAT IN LATER YEAR I.E. ASSESSMENT YEAR 2008 - 09, WHEN THE REAL ESTATE MARKET STARTED BOOMING AND HENCE, THE CASH ON - MONEY. HERE THE CIT( A) OBSERVED THAT THE SAME COULD NOT BE ASSUMED TO HAVE ALSO PREVAILED IN EARLIER YEARS, WHEN THERE WAS NO RISE IN REAL ESTATE MARKET. HE ALSO REFERRED TO THE TABULATED DETAILS PREPARED BY THE ASSESSING OFFICER AND NOTED THAT IN SOME CASES OF PURCHASE, ON - MONEY WAS ALSO TO BE PAID. THE CIT(A) VIDE PARA 4.6 HELD AS UNDER: - 4.6 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND ALSO IN VIEW OF THE RATIO LAID DOWN BY THE DECISIONS MENTIONED IN THE PRECEDING PARAGRAPH RELIED ON BY THE APPELLANT, I AM OF THE CONSID ERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN ESTIMATING ON - MONEY INCOME IN RESPECT OF ALL THE TRANSACTIONS OF SALE OF PLOTS, LAND AND BUNGALOWS DURING F.YS. 2001 - 2002 TO 2007 - 08 RELEVANT TO A.YS. 2002 - 2003 TO 2008 - 09. THE ADDITION MADE BY THE A.O. ON THIS COUNT ON ESTIMATE BASIS @ 50% OF THE RECORDED CONSIDERATION IS THEREFORE UNWARRANTED. 1 8 . THE CIT(A) THUS, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ESTIMATE BASIS @ 50% OF RECORDED CONSIDERATION AS UNWARRANTED. IN OTHER WORDS, THE ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING ON - MONEY @ 50% OF TOTAL CONSIDERATION WAS DELETED BY THE CIT(A). IT MAY BE POINTED OUT HEREIN ITSELF THAT THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT HAD RECORDED SATISFACTION AS TO HAVING CONCEALED ITS IN COME IN RESPECT OF AFORESAID ADDITION MADE ON ACCOUNT OF ON - MONEY. 1 9 . THE CIT(A) FURTHER IN PARA 4.7 AGAIN RELIED ON THE STATEMENT OF ASSESSEE RECORDED ON 03.03.2008, WHEREIN HE HAD ADMITTED THAT IN RESPECT OF 39 FLATS SOLD, ON - MONEY RECEIPT WAS RS.12 LA KHS IN ASSESSMENT YEAR 2007 - 08. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAD INCORRECTLY OFFERED TO TAX THE SAID ON - MONEY IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2008 - 09 INSTEAD OF FOR ASSESSMENT YEAR 2007 - 08 AND HENCE, HE DIRECTED THE ASSE SSING OFFICER TO 14 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. TAX THE SAID INCOME OF RS.12 LAKHS IN ASSESSMENT YEAR 2007 - 08 INSTEAD OF IN ASSESSMENT YEAR 2008 - 09. THE RELEVANT FINDINGS OF THE CIT(A) ARE IN PARA 4.7. THE SAID ORDER PASSED BY THE CIT(A) HAS BEEN UPHELD BY THE TRIBUNAL AND THE RELEVAN T FINDINGS OF TRIBUNAL ARE REPRODUCED BY THE CIT(A) WHILE DECIDING THE APPEAL AGAINST THE ORDER OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 20. FURTHER, IN PARA 4.9 AT PAGE 15 OF THE APPELLATE ORDER IN RESPECT OF TRANSACTION NOS.4 TO 8 RELATING TO AS SESSMENT YEAR 2008 - 09, THE TOTAL ON - MONEY IN RESPECT OF SAID TRANSACTION WAS COMPUTED BY THE ASSESSING OFFICER AT RS.24,30,226/ - . THE CIT(A) NOTED THAT THE TRANSACTION MAINLY RELATED TO PLOTS IN HINDUSTAN NAGAR PROJECT. THE TOTAL TRANSACTIONS IN RESPECT OF SALE OF PLOTS AS PER AUDITED LEDGER ACCOUNTS WERE RS.1,65,71,925/ - . THE CIT(A) NOTED THAT THE ASSESSING OFFICER HAS POINTED OUT IN TABULATED CHART OF ON - MONEY SPECIFICALLY IN RESPECT OF PLOTS SOLD FOR RS.16,11,500/ - . THEREFORE, HE FURTHER HELD THAT ON - MONEY RECEIPTS OF REMAINING PLOTS SOLD FOR RECORDED CONSIDERATION OF RS.1.49 CRORES WAS TO BE TAXED IN THE HANDS OF ASSESSEE, WHEREIN THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT HAD AGREED THAT IT HAD RECEIVED 15% TO 20% ON - MONE Y IN RESPECT OF SPECIFIC GAT NUMBERS OF PLOTS OF LAND SOLD. THE CIT(A) THUS, ESTIMATED THE ON - MONEY @ 17.50% OF RS.1,49,60,425/ - AT RS.26,18,704/ - . THE TOTAL ON - MONEY THUS, WAS HELD TO BE TAXED IN THE HANDS OF ASSESSEE AT RS.50,48,300/ - , RS.24,30,226/ - E VIDENCE FOUND PLUS RS.26,18,074/ - ESTIMATION OF ON - MONEY. AS AGAINST THE SAME, THE ASSESSEE HAD OFFERED TO TAX RS.25 LAKHS IN ASSESSMENT YEAR 2008 - 09 AND HENCE, RESULTANT ADDITION WAS WORKED OUT AT RS.25,48,300/ - . THE CIT(A) FURTHER OBSERVED THAT WHERE R S.12 LAKHS WAS ALREADY DIRECTED TO BE ASSESSED IN ASSESSMENT YEAR 2007 - 08, THEN THE BALANCE ON - MONEY TO BE TAXED IN 15 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. ASSESSMENT YEAR 2008 - 09 WAS ONLY RS.13,48,300/ - . THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS IN RESPECT OF SAID ADDITION OF RS .13,48,300/ - . 2 1. FIRST, WE SHALL TAKE THE FACTUAL ASPECTS OF ASSESSMENT YEAR 2007 - 08, WHEREIN, IN THE FIRST INSTANCE, THE ASSESSING OFFICER HAD MADE ADDITION ON ACCOUNT OF ESTIMATION OF ON - MONEY @ 50% OF TOTAL SALE CONSIDERATION. THE SAID ADDITION MAD E BY THE ASSESSING OFFICER I.E. COMPUTED BY THE ASSESSING OFFICER HAS BEEN STRUCK DOWN BY THE CIT(A) VIDE PARA 4.6 IN THE ORDER DATED 17.06.2010 AND THE SAME HAS BEEN UPHELD BY THE TRIBUNAL. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAD MADE THE ADDIT ION ON ACCOUNT OF ESTIMATION OF ON - MONEY @ 50% OF RECORDED TRANSACTIONS WHICH HAS BEEN STRUCK DOWN BY THE CIT(A). HENCE, THE BASIS ON WHICH PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE HAS BEEN STRUCK DOWN AND ONCE THE ADDITION MADE BY THE ASSE SSING OFFICER HAS BEEN DELETED, THEN INITIATION OF PENALTY PROCEEDINGS BY THE ASSESSING OFFICER ON THE BASIS OF SUCH ADDITION DOES NOT STAND. CONSEQUENTLY, PENALTY ORDER PASSED BY THE ASSESSING OFFICER, AFTER THE ORDER OF CIT(A) IN HOLDING THE ADDITION MA DE BY THE ASSESSING OFFICER ON ESTIMATE BASIS @ 50% OF RECORDED CONSIDERATION TO BE UNWARRANTED, THEN THE ASSESSING OFFICER IS EX - OFFICIO SINCE THE BASIS FOR LEVY OF PENALTY HAS BEEN STRUCK DOWN BY THE CIT(A) AND CONSEQUENTLY, NO ORDER IMPOSING PENALTY UND ER SECTION 271(1)(C) OF THE ACT COULD BE PASSED BY ASSESSING OFFICER IN SUCH CIRCUMSTANCES. 22 . THE CIT(A) AFTER STRIKING DOWN THE ADDITION ON ESTIMATE BASIS OF ON - MONEY RECEIPTS HAS FURTHER GONE TO HOLD THAT IN ASSESSMENT YEAR 2007 - 08, SUM OF RS.12 LAKHS IS TO BE ADDED IN THE HANDS OF ASSESSEE, ON THE BASIS OF STATEMENT RECORDED OF ASSESSEE DURING T HE COURSE OF SEARCH UNDER SECTION 16 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. 132(4) OF THE ACT, WHEREIN THE ASSESSEE HAD ADMITTED RECEIPT OF ON - MONEY OF RS.12 LAKHS AND IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, HAD OFFERED THE SAID AMOUNT IN HIS HANDS FOR FINANCIAL YEAR 2006 - 07. H OWEVER, WHILE FILING THE RETURN OF INCOME, THE SAME WAS OFFERED IN ASSESSMENT YEAR 2008 - 09. THE CIT(A) IN SUCH CIRCUMSTANCES, HELD THAT SUM OF RS.12 LAKHS IS TO BE ADDED IN THE HANDS OF ASSESSEE IN ASSESSMENT YEAR 2008 - 09. THIS WAS A FRESH ADDITION MADE BY THE CIT(A) ON THE BASIS OF STATEMENT OF ASSESSEE ON ACCOUNT OF ON - MONEY, BUT THE SAME HAD NO RELEVANCE TO THE ESTIMATION MADE BY THE ASSESSING OFFICER. IN SUCH CIRCUMSTANCES, WHERE THE ADDITION HAS BEEN SUSTAINED ON A GROUND OTHER THAN THE GROUND ON WH ICH THE ADDITION WAS MADE, THEN PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT INITIATED ON ORIGINAL ADDITIONS DO NOT STAND. THE CIT(A) HAD THE POWER TO INITIATE PENALTY PROCEEDINGS ON THE ADDITION MADE BY HIM IN ASSESSMENT YEAR 2007 - 08, HOWEVER, HE FAILED TO DO SO AND UNDER THE CIRCUMSTANCES, THE ASSESSEE CANNOT BE HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE INCOME IN RESPECT OF ADDITION OF RS.12 LAKHS, WHICH IS ULTIMATELY SUSTAINED IN THE HANDS OF ASSESSEE. ACCORDING LY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON ADDITION OF RS.12 LAKHS IN ASSESSMENT YEAR 2007 - 08. 2 3 . BEFORE PARTING, WE MAY ALSO MENTION THE INFIRMITY IN THE PENALTY ORDER PASSED BY THE ASSESSING O FFICER, WHEREIN WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAD RECORDED SATISFACTION THAT THE ASSESSEE HAS CONCEALED ITS INCOME FOR WHICH PENALTY PROCEEDINGS WERE INITIATED. HOWEVER, WHILE PASSING THE ORDER LEVYING PENALTY UNDER SECTION 271(1) (C) OF THE ACT, THE ASSESSING OFFICER IN THE FIRST INSTANCE, IN PARA 4 AFTER MAKING REFERENCE TO THE ADDITION OF 17 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. RS.12 LAKHS OBSERVED THAT IT PROVES THAT THE ASSESSEE HAS CONCEALED THE INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. FURTHER, I N PARA 6 OF THE PENALTY ORDER, THE ASSESSING OFFICER WAS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE INCOME WITHIN MEANING OF SECTION 271(1)(C) OF THE ACT READ WITH EXPLANATION 1 WHILE LEVYING PENALTY. IN PARA 7, HE WAS SATISFIED THAT THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF INCOME AND THEREFORE, LEVIED PENALTY AT RS.4,03,200/ - IN ASSESSMENT YEAR 2007 - 08. 2 4 . PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE ON CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. W HILE LEVYING PENALTY FOR CONCEALMENT, THE ASSESSING OFFICER HAS TO RECORD SATISFACTION AND THEREAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE C OMPLETING THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR NON - SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAD COME TO A FINDING AS TO THE ASSESSEE HAVING CONCEALED ITS INCOME OR FURNISHED INACC URATE PARTICULARS OF INCOME WITH REGARD TO THE ENHANCED INCOME SHOWN IN THE REVISED RETURN OF INCOME. HOWEVER, WHILE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS O F INCOME AND CONCEALED HIS INCOME UNDER SECTION 271(1)(C) OF THE ACT. THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT SUFFERS FROM INFIRMITIES WHERE AGAINST THE ADDITIONAL INCOME OFFERED IN THE RETURN OF INCOME THE 18 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. ASSESSEE HA S BEEN HELD TO HAVE CONCEALED ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. 2 5 . THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEALS NOS.953 OF 2014, 1097 OF 2014 A ND 1226 OF 2014, VIDE JUDGMENT DATED 05.01.2017 HELD THAT WHERE INITIATION OF PENALTY IS ON ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY . 2 6 . APPLY ING THE SAID PRINCIPLE TO THE FACTS OF THE PRESENT CASE, WHERE THE ASSESSING OFFICER HAD RECORDED SATISFACTION OF THE ASSESSEE HAVING CONCEALED ITS INCOME BUT WHERE WHILE LEVYING PENALTY FOR CONCEALMENT, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURN ISHED INACCURATE PARTICULARS OF INCOME AND ALSO CONCEALED ITS INCOME IN PARA 5 AND THEREAFTER, IN PARA 6 TO HAVE HELD THAT IT HAS CONCEALED INCOME AND IN PARA 7, THE ASSESSING OFFICER WAS SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, THE SAID ORDER OF ASSESSING OFFICER SUFFERS FROM INFIRMITIES IN NOT COMING TO THE CONCLUSION AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. PENALTY FOR CONCEALMENT IS LEVIABLE IN THE CASE OF ASSE SSEE ON SATISFACTION OF ONE OF THE LIMBS, SINCE THE ULTIMATE ADDITION WHICH HAS BEEN SUSTAINED IN THE CASE OF ASSESSEE IS ONE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, PENALTY ORDER PASSED IN THE PRESENT CASE SUFFERS FROM NON - EXERCISE OF JURISDICTIONAL POWER OF THE ASSESSING OFFICER CORRECTLY AND HENCE, THE SAME IS HELD TO BE INVALID. 19 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. 2 7 . IN ASSESSMENT YEAR 2008 - 09, THE FIRST ADDITION MADE BY THE ASSESSING OFFICER BY ESTIMATING 50% AS ON - MONEY ON RECORDED CONSIDERATION HAS BEEN HELD TO B E UNWARRANTED VIDE PARA 4.6 BY THE CIT(A). THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS ON THAT BASIS. FURTHER, ADDITION WHICH HAS BEEN MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF EVIDENCE FOUND AND ALSO ON ESTIMATION OF ON - MONEY. THE CIT(A) HAS TOTALLY CHANGED THE COLOUR OF ADDITION THOUGH ON ACCOUNT OF ON - MONEY THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN DELETED AND HAS BEEN HELD TO BE UNWARRANTED AND FURTHER, THE CIT(A) HAS DIRECTED ASSESSMENT OF ON - MONEY OF RS.12 LAKHS IN ASSESSMEN T YEAR 2007 - 08 INSTEAD OF AMOUNT OFFERED BY THE ASSESSEE IN ASSESSMENT YEAR 2008 - 09 AND HAD WORKED OUT THE BALANCE ADDITION ON ACCOUNT OF ON - MONEY AT RS.13,48,300/ - . WHERE THE CIT(A) HAS CHANGED THE COLOUR OF ADDITION, THEN IT IS INCUMBENT UPON THE CIT(A) TO INITIATE PENALTY PROCEEDINGS. THE ORDER LEVYING PENALTY PASSED BY THE ASSESSING OFFICER WAS NO DOUBT ON ADDITION SUSTAINED BY THE CIT(A) BUT WAS ON DIFFERENT BASIS. FURTHER, THE ASSESSING OFFICER HAD INITIATED PENALTY PROCEEDINGS IN THE HANDS OF ASSE SSEE ON AN ADDITION OF RS.1,51,10,774/ - FOR HAVING CONCEALED THE INCOME UNDER SECTION 271(1)(C) OF THE ACT. THE SAID ADDITION HAS BEEN STRUCK DOWN. NO OTHER SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER IN RESPECT OF ADDITION OF RS.13,48,300/ - . THE CIT(A) HAS ALSO FAILED TO RECORD SUCH SATISFACTION FOR INITIATING PENALTY PROCEEDINGS. 28. FURTHER, PENALTY ORDER PASSED BY THE ASSESSING OFFICER SUFFERS FROM INFIRMITY, WHEREIN IN PARA 4 AFTER REFERRING TO THE ADDITION SUSTAINED BY THE CIT(A), THE ASS ESSING OFFICER HOLDS THE ASSESSEE TO HAVE CONCEALED INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF ITS INCOME. FURTHER, IN PARA 6, THE ASSESSING OFFICER IS SATISFIED THAT THE ASSESSEE HAS CONCEALED INCOME AND IN PARA 7, THE 20 ITA NOS.345 & 346/PUN/2015 VIKRANT HAPPY HOMES PVT. LTD. ASSESSING OFFICER IS SATIS FIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. OUR DECISION IN PARAS HEREINABOVE ON THIS ISSUE IS TO BE APPLIED AND WE HOLD THAT NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THIS REGARD. IN THIS REGARD, WE PLA CE RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT & ANR. VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KARN), WHEREIN THE FACTS WERE SIMILAR. ACCORDINGLY, WE DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN BOTH THE YEARS UNDER APPEAL. 29. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRO NOUNCED ON 18 TH DAY OF AUGUST , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 18 TH AUGUST , 2017 . SB / GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - I, NASHIK. 4. THE CIT, NASHIK. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE