Sound of Music India (P) Ltd., New Delhi V. ITO, New Delhi

ITA 3887/DEL/2011

• Counselvise Citation: 388720114 RSA 2011
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 11-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 18-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROHIT GARG
• Assessee Lawyers: LALITA KRISHNAMURTHY
• Keywords: Gift; Depreciation; Loose papers; Period of limitation; Difference of opinion; Time period of passing order; Documents seized; Revenue expenditure; Capital expenditure
• Section: 69; 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: G NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI K.D.RANJAN, ACCOUNTANT MEMBER ITA NOS: 3886 & 3887/DEL/2011 A.Y. : 2004-2005 & 2006-07 M/S SOUND OF MUSIC INDIA (P) LTD. VS. I.T.O. CO. WA RD 9(1) 106, II FLOOR, NEW MANGLA PURI NEW DELHI MEHRAULI GURGAOEN ROAD NEW DELHI 110 030 PAN: AAF CS 5065 B (APPELLANT) (RESPONDENT) APPELLANT BY : MS. LALITA KRISHNAMURTHY, C.A. RESPONDENT BY : SH.ROHIT GARG, D.R. O R D E R PER DIVA SINGH, J.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAIN ST SEPARATE ORDERS DT. 30 TH MAY, 2011 OF LD.CIT(A)-XII, NEW DELHI PERTAINING T O A.Y. 2004-05 AND 2006-07. BOTH THESE APPEALS ARE DECIDE D BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE AS IN BOTH THESE APPEALS THE PENALTY ORDER U/S 271(1)(C ) IMPOSED BY THE A.O. HAS BEEN S USTAINED. 2. IN 2004-05 A.Y. THE ASSESSEE HAS AGITATED THAT T HE PENALTY IMPOSED BY THE A.O. HAS BEEN SUSTAINED BY THE CIT(A) WHICH IS ASSAILED AS ARBITRARY, UNJUST AND UNTENABLE ON ACCOUNT OF FACTU AL AND LEGAL REASONS. 3. THE ASSESSEE IN THE PRESENT PROCEEDINGS IS AN EV ENT MANAGER. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION FILED A RE TURN OF INCOME ON ITA 3886 & 3887/DEL/11 PAGE 2 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI 1.11.2004 DECLARING AN INCOME OF RS. 1,90,608/-. A SURVEY OPERATION U/S 133A OF THE ACT WERE CONDUCTED AT THE PREMISES OF T HE ASSESSEE COMPANY ON 14.12.2004 WHEREIN CERTAIN DOCUMENTS ETC. WERE F OUND WHICH WERE IMPOUNDED, AS A RESULT OF WHICH CERTAIN ADDITIONS W ERE MADE. THE A.O. TAKING COGNIZANCE OF THE FACT THAT THE ADDITIONS WH ICH STOOD CONFIRMED TILL THE TRIBUNAL IN THE QUANTUM PROCEEDINGS WHEREIN THE TRIBUNAL HAD UPHELD THE REASONING OF THE A.O. AND THE CIT(A) THA T THE ASSESSEE WAS INDULGING IN SUPPRESSING THE INFORMATION FROM THEME WEDDING PARTIES WHICH INCLUDES DESIGN AND LAYOUT FOR THE FUNCTIONS, IMPLEMENTATION AND COORDINATION OF WEDDINGS ETC. THE MODUS OPERANDI OF THE ASSESSEE IN THE PENALTY PROCEEDINGS WAS DISCUSSED AS UNDER BY THE A.O.: USUALLY CLIENTS COME TO THE OFFICE OR CALLS THE AS SESSEE COMPANYS REPRESENTATIVE TO THE SITES WHERE THE EVE NT IS GOING TO TAKE PLACE. ASSESSEE CO. COORDINATE ON BEHALF O F THE CLIENT AND THE AGENCIES OR SERVICE AGENCIES HAVE TO INTERA CT WITH THEM AND AFTER THAT INITIAL ESTIMATE IS GIVEN AND ALSO R ECEIVES AN ADVANCE FROM THEM AND THE FINAL BILL IS SETTLED AT THE END OF THE FUNCTION. BILLS ARE ISSUED WITH SERVICE TAX AND P AYMENT RECEIVED BY CHEQUE AND ENTERED IN THE BOOKS OF ACCO UNTS WHILE THE CASH ADVANCE AND SITE EXPENSES ARE NOT ENTERED IN REGULAR BOOKS. THIS ARRANGEMENT OF CASH PAYMENT IS BENEFIC IAL TO BOTH THE ASSESSEE COMPANY AND TO THE CLIENTS AS THE ASSE SSEE COMPANY SUPPRESS THE RECEIPTS BY ACCEPTING CASH, WH ILE THE CLIENT DOES NOT HAVE TO SHOW THE SOURCES OF THE WHO LE AMOUNTS AND THE SERVICE TAX IS ALSO SAVED. AS PER VERIFICA TION DON AND ALSO CONFIRMED BY THE DIRECTOR IN HIS STATEMENT ON OATH, ON 14.12.2004 WHICH IS REPRODUCED HEREUNDER. Q.11 : I AM SHOWING YOU PAGES 108 AND 109 OF ANNEX A-1 WHICH IS A BILL DT. 14.4.03 RAISED AGAINST CHUNNU I NTERNATIONAL FOR RS. 4,68,470/- A SERVICE TAX OF RS. 37,478/- @ 8% IS CALCULATED AND A TOTAL AMOUNT OF RS. 5,05,948/- IS SHOWN AS THE BILLED AMOUNT. IT FURTHER SHOWS AN AMOUNT OF R S.4,68,470/- ITA 3886 & 3887/DEL/11 PAGE 3 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI AS ADVANCE RECEIVED AND A BALANCE DUE OF RS.37,478/ -. PAGE NO.108 SHOWS THAT THE TOTAL AMOUNT WORKED OUT FOR T HE CLIENT IS RS.5,08,000/-. HOWEVER, A BILL OF ONLY RS.4,68,470/ - IS SEEN TO BE RAISED AND THE BALANCE OF RS.3,98,530/- IS SHOWN TO BE DUE BY CASH. PLEASE EXPLAIN. A). THESE AMOUNTS ARE RECEIVED IN CASH FOR PETTY E XPENSES AT SITE. Q.12) DOES THIS MEAN THAT YOUR TOTAL RECEIPTS ARE SUPPRESSED TO THIS EXTENT? A). A SMALL AMOUNT LIKE THIS IS ALWAYS GIVEN BY CL IENT FOR MAKING PETTY EXPENSES. Q.13): DOES THAT MEAN THAT AT BEST SUCH AMOUNT WIL L BE SUPPRESSED FOR ALMOST ALL TRANSACTIONS? A). YES, APPROXIMATELY RS.30,000/- OF PETTY EXPENS ES ARE THERE AT EVERY SITE IN ALL CASES. 4. THE A.O. TOOK COGNIZANCE OF THE FOLLOWING ADDIT IONS SUSTAINED WHICH HAD NOT BEEN REFLECTED IN THE BOOKS OF ACCOUN TS VIZ., 1. RS.39,530/- IN R/O THE FUNCTION OF CHUNNU INTERN ATIONAL; 2. RS. 1,96,000/- IN R/O THE FUNCTION OF SHRI ANKUS H SALUJA; 3. RS. 3,84,000/- IN R/O THE FUNCTION OF SHRI UDAY SINGH; 4. RS. 1,80,000/- IN R/O THE FUNCTION OF SHRI JAGOT A; 5. RS.1,00,000/- IN R/O THE FUNCTION OF SHRI KAMAL PASSI; 6. RS. 3,63,123/- IN R/O THE FUNCTION OF UDAY PARK; 7. RS. 2,30,000/- IN R/O THE FUNCTION OF SHRI RAGHA V; 8. THE ADDITION OF RS.5,41,000/- HAD BEEN MADE AS U NEXPLAINED CAPITAL EXPENDITURE (PAYMENT MADE OUTSIDE THE BOOKS), NOT R EFLECTED IN THE BOOKS OF ACCOUNTS AND DEEMED TO BE INCOME OF THE ASSESSEE U/S 69 OF THE I.T.ACT; 9. THE ADDITION OF RS.1,61,124/- ON ACCOUNT OF UNE XPLAINED CAPITAL EXPENDITURE ON RENOVATION/CONSTRUCTION EXPENSES ON OFFICE BUILDING, AS THE ASSESSEE COULD NOT PRODUCE THE BILLS/VOUCHERS. 4.1. THE A.O. OBSERVED THAT THE ASSESSMENT WAS CONC LUDED ON AN INCOME OF RS.27,11,125/-. AS A RESULT OF THE ISSUE TRAVELING TO THE CIT(A) CONSEQUENT TO THE RELIEF ALLOWED THE INCOME WAS RE COMPUTED AT RS.24,11,125/- AND AS A RESULT OF SOME FURTHER RECT IFICATION ORDER U/S ITA 3886 & 3887/DEL/11 PAGE 4 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI 154 OF THE ACT BY THE CIT(A) THE INCOME WAS RECOMPU TED AT RS.23,53,012/-. CONSEQUENT TO THE ISSUE TRAVELING TO THE TRIBUNAL THE A.O. OBSERVED IN THE PENALTY PROCEEDINGS THAT THE A SSESSEE DID NOT AGITATE THE ADDITION OF RS.39,530/- IN REGARD TO TH E SUPPRESSION OF AMOUNT FOR THE FUNCTION OF CHUNNU INTERNATIONAL. T HE ADDITIONS WHICH WERE AGITATED ON BEHALF OF THE ASSESSEE WERE AS UND ER. 1. RS.1,96,000/- IN R/O THE FUNCTION OF SHRI ANKUS H SALUJA; 2. RS.3,84,000/- IN R/O THE FUNCTION OF SHRI UDAY SINGH; 3. RS. 1,80,000/- IN R/O THE FUNCTION OF SHRI JAGOT A; 4. RS.1,00,000/- IN R/O THE FUNCTION OF SHRI KAMAL PASSI; 5. RS. 3,63,123/- IN R/O THE FUNCTION OF UDAY PARK; 6. RS. 2,30,000/- IN R/O THE FUNCTION OF SHRI RAGHA V; 7 & 8. RS.5,41,000/- AND RS.1,61,124/- ON ACCOUNT OF RENOVATION/CONSTRUCTION EXPENSES ON OFFICE BUILDING . 4.2. THE FINDING OF THE TRIBUNAL ON ISSUES NOS. 1 TO 6 TAKEN NOTE OF BY THE A.O. WERE AS UNDER. IN REGARD TO THE GROUNDS NO 1 TO 6, THE HONBLE IT AT HELD THAT WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS RIGHT IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS BEEN RECEIVING CASH OVER AND ABOVE THE CHEQUE PAYMENTS ON THE BASI S OF QUOTATIONS MADE BY THE ASSESSEE. IT IS ALSO NOTICED THAT THE ASSESSEE IS UNABLE TO PLACE BEFORE US THE DETAILS O F THE PAYMENT WHICH HAVE BEEN MADE BY THE ASSESSEE OUT OF THE REC EIPTS WHICH HAVE BEEN RECEIVED. IN REGARD TO OTHER EVENTS WHICH ARE BEING MANAGED BY THE ASSESSEE WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(A) AND THE AO FOR MAKING THE ADDITIONS ARE RIGHT. HOWE VER, A PERUSAL OF THE EVIDENCE ON THE BASIS OF WHICH THE A DDITIONS HAVE BEEN MADE CLEARLY SHOWS THAT THE CHARGES INCLU DE THE CHARGES PAYABLE TO THE TENT PROVIDER, FURNITURE PRO VIDER, THE LIGHTING PROVIDER ETC. IN THE CIRCUMSTANCES, IT CAN NOT BE SAID THAT THE TOTAL RECEIPT IS THE INCOME OF THE ASSESSEE. IT IS ALSO NOTICED THAT THE ASSESSEE IS UNABLE TO PLACE BEFORE US THE DETAILS OF THE PAYMENT WHICH HAVE BEEN MADE BY THE ASSESSEE OUT OF THE ITA 3886 & 3887/DEL/11 PAGE 5 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI RECEIPTS WHICH HAVE BEEN RECEIVED. IN THE CIRCUMSTA NCES, WE ARE OF THE VIEW THAT ONLY THE PROFITS EMBODIED IN THE R ECEIPTS CAN BE BROUGHT TO TAX. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT 54% OF THE TOTAL RECEIPTS WHICH HAVE BEEN ADDED BY THE ASSESSING OFF ICER AND CONFIRMED BY THE LD. CIT(A) ON THIS COUNT IS LIABLE TO BE TREATED AS THE INCOME OF THE ASSESSEE AND WE HOLD SO. IN TH E CIRCUMSTANCES THE ASSESSING OFFICER IS DIRECTED TO TREAT 54% AS THE G.P. OF THE ADDITION MADE AND CONFIRMED IN REGA RD TO THE CASH TRANSACTIONS ENTERED INTO BY THE ASSESSEE ON T HE EVENTS IN REGARD TO WHICH THE A.O. HAS FOUND THE EVIDENCES IN THE CORUSE OF SURVEY AND HAS MADE THE ADDITION. THE A.O. IS A LSO DIRECTED TO DELETE THE ADDITION MADE ON ACCOUNT OF SHRI RAGH AV. THUS, AS DIRECTED BY THE HONBLE ITAT, THE ADDITIO N ON ACCOUNT OF SHRI RAGHAV SHARMA WAS DELETED AND 54% OF THE TO TAL RECEIPTS WAS TO BE TREATED AS THE INCOME OF THE ASS ESSEE. THE ABOVE CONTESTED ADDITIONS AT S.NO. 1 TO 6 (EXCLUDIN G THE ADDITION OF ` 230,000/- IN R/O SHRI RAGHAV) TOTAL ` 12,23,123/-. 54% OF THESE COME TO ` 6,60,487/- WHICH IS TOBE TRE ATED AS INCOME OF THE ASSESSEE. 4.3. ON GROUND NOS. 7 AND 8 HE TOOK COGNIZANCE OF T HE FINDINGS OF THE ITAT AS UNDER. REGARDING THE GROUNDS NO. 7 & 8, THE HONBLE ITAT, IN PARA 13- 15, DIRECTED THAT IT IS FOUND THAT THE ASSESSEE IS IN THE HABIT OF DEALING IN CASH, THE EXPENDITURE IN REGARD TO ` 5,4 1,000/- SHOULD BE DEEMED TO HAVE BEEN INCURRED OUT OF THE SAID CAS H TRANSACTIONS, THE GP OF WHICH HAS BEEN DIRECTED TO BE ADDED AND DIRECTED THE ASSESSING OFFICER TO TELESCOPE THIS AD DITION OF ` 5,41,000/- INTO THE GP ADDITION ON ACCOUNT OF CASH TRANSACTION IN THE EVENT MANAGEMENT TO THE EXTENT OF THE GP ADDITI ON AS AVAILABLE. THE ORDER OF HONBLE ITAT IS SILENT ON G ROUND NO. 8 REGARDING THE ADDITION OF RS. 1,61,124/-. 4.4. CONSEQUENT TO THAT THE INCOME OF THE ASSESSEE WAS RECOMPUTED AT RS. 10,17,376/- AS UNDER: ITA 3886 & 3887/DEL/11 PAGE 6 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI PERSUANT TO THIS ORDER OF HONBLE ITAT, IN ITA NO. 986/DEL/08 DT. 21/08/2009, THE INCOME OF THE ASSESSEE WAS RECOMPUT ED AS UNDER :- INCOME AS PER THE ORDER U/S 154, 250/143(3) DT. 30/07/2008 RS. 23,51,012/- LESS : RELIEFS ALLOWED BY THE HONBLE ITAT: 1) ON A/C OF THE FUNCTION OF SHIR RAGHAV R S. 2,30,000/- RS. 5,62,636/- 2) BALANCE RELIEFS AS DISCUSSED ABOVE RS . 5,41,000/- TAXABLE INCOME : RS. 10,17,376/- 4.5. BASED ON THIS BACKGROUND THE A.O. IN THE PENAL TY PROCEEDINGS HELD THAT THE ITAT HAS UPHELD THE VIEW OF THE A.O. THAT THE ASSESSEE HAS BEEN RECEIVING CASH OVER AND ABOVE THE CHEQUE PAYMENTS O N THE BASIS OF QUOTATION MADE BY THE ASSESSEE. 5. THE A.O. AS SUCH OBSERVED THAT THE CASH RECEIPTS RECEIVED BY THE ASSESSEE TO BE BROUGHT TO TAX ONLY ON THE BASIS OF DOCUMENTS SEIZED DURING THE SURVEY AND AS FAR AS THE ADDITION OF RS. 39,530/- ON ACCOUNT OF INFORMATION OF CHUNNI INTERNATIONAL THE ISSUE WA S NOT AGITATED BEFORE THE TRIBUNAL. THE ASSESSEE WAS GRANTED OPPORTUNITY TO REPRESENT ITS CASE IN THE PENALTY PROCEEDINGS AND IN THE REPLY RECEIVE D AS PER PAGE 3 OF THE PENALTY ORDER IT WAS CONTENDED THAT THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF LOOSE PAPERS/DOCUMENTS IMPOUNDED DURIN G THE SURVEY OPERATION THE LOOSE PAPERS CONTAINED POSSIBLE BUDGE TS AND LAYOUT OF DESIGNS IN THE OFFICE. THIS IT WAS STATED GOT REV ISED THROUGH VARIOUS DISCUSSIONS AND NEGOTIATIONS DEPENDING ON THE BUDGE T AND REQUIREMENTS OF THE CLIENT BUT THAT DOES NOT MEAN THAT EACH OF T HESE BUDGETS HAD ITA 3886 & 3887/DEL/11 PAGE 7 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI TRANSFORMED INTO INCOME. THESE ARE ROUGH WORKINGS ON THE BASIS OF WHICH ESTIMATES/BUDGETS ARE MADE FOR THE WORKING T O BE DONE. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE COR RECT AND ACCEPTABLE. 6. THE FINDING OF THE A.O. HAD BEEN FOUND TO BE COR RECT BY THE CIT(A) IN APPEAL. SPECIFIC REFERENCE WAS MADE TO THE FACT THAT THE ADDITION OF RS.39,530/- WAS NOT CHALLENGED BEFORE THE TRIBUNAL AND THE ASSESSEE HAD ALSO NOT FILED ANY CONFIRMATION FROM CHUNNI INT ERNATIONAL TO NEGATE THE ADDITION OF RS.39,530/- LIKE IN THE CASE OF SOM E OTHER PARTIES. 7. SIMILARLY IN REGARD TO THE BILLS/VOUCHERS PERTAI NING TO ADDITION OF RS.1,61,124/- THEY WERE NOT PRODUCED AND THE ADDITI ON HAD BEEN MADE ON ACCOUNT OF UNEXPLAINED CAPITAL EXPENDITURE. THE EXPLANATION IN THE PENALTY PROCEEDINGS WAS FOUND NOT ACCEPTABLE WHICH ACTION STOOD CONFIRMED IN APPEAL BEFORE THE CIT(A WHO DECIDED TH E ISSUE AS UNDER: FROM THE FACTS OF THE CASE AS WELL AS SUBMISSIONS OF AO IT IS EVIDENT THAT THE ASSESSEE HAS WILLFULLY CONCEALED THE PARTICULAR S OF ITS INCOME TO THE TUNE OF RS.8,61,141/- (660,487+39,530+161,124) AS D ISCUSSED ABOVE, FOR WHICH THE ASSESSEE COMPANY HAS FAILED TO PROVIDE AN Y EXPLANATION. FURTHER ASSESSEE NEVER VOLUNTARILY DISCLOSED ALL TH ESE FACTS, IT WAS ONLY WHEN THE DEPARTMENT DID A SURVEY ALL THIS CONCEALME NT WAS UNEARTHED. I, THEREFORE, HOLD THAT THE ASSESSEE HAS COMMITTED DEF AULT WITHIN THE MEANING OF THE PROVISIONS OF SEC.271(1)(C ) AND IT HAS BEEN IMPOSED WITHIN THE LIMITATION PERIOD THEREFORE PENALTY OF RS.3,15, 113/- WHICH IS 100% OF TAX EVADED AS IMPOSED BY THE A.O. IS UPHELD. THE APPEAL OF THE ASSESSEE IS DISMISSED. 10. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. ITA 3886 & 3887/DEL/11 PAGE 8 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI 11. LD.A.R. INVITING ATTENTION TO THE ASSESSMENT OR DER IN THE QUANTUM PROCEEDINGS INVITED ATTENTION TO PARA 13 OF THE ASS ESSMENT ORDER ON THE BASIS OF WHICH IT WAS HIS SUBMISSION THAT AN AMOUN T OF RS. 1,35,000/- WAS PAID TO A, INTERIOR AS CONTRACT FEE FOR NEW O FFICE CONSTRUCTION AND RS.26,264/- AS ELECTRIC FITTINGS FOR NEW OFFICE. IT WAS HIS SUBMISSION THAT IT IS A MATTER OF DIFFERENCE OF OPINION AND I F THE EXPENSES CLAIMED WERE NOT TO BE TREATED AS REVENUE IN NATURE AND W AS TO BE TREATED AS CAPITAL THEN DEPRECIATION HAS TO BE ALLOWED TO THE ASSESSEE WHICH WAS ALLOWED BY THE CIT(A) AND IN VIEW OF THE FACT THAT DEPRECIATION HAS BEEN ALLOWED THE TRIBUNAL DID NOT INTERFERE WITH THE ORD ER BUT THE FACT REMAINS THAT PENALTY CANNOT BE IMPOSED AS IT IS MERELY A DI FFERENCE OF OPINION AND THERE IS NO ALLEGATION THAT EXPENDITURE HAS NOT BE EN INCURRED. THE LD.A.R. WAS REQUIRED TO INVITE ATTENTION TO THE BIL LS RAISED ON ACCOUNT OF THIS FACT SO AS TO CONSIDER THE NATURE OF EXPENSES . IN REPLY TO THIS RELIANCE WAS PLACED UPON FINDINGS AS AVAILABLE IN P ARA 13 OF ASSESSMENT ORDER. 12. IN REGARD TO THE MAJOR AMOUNT OF ADDITION SUSTA INED WHICH IS CONSIDERED IN THE PENALTY PROCEEDINGS AN AMOUNT OF RS.668487/- IT WAS HER SUBMISSION THAT IN THE LINE OF BUSINESS IN WHIC H THE ASSESSEE WAS I.E. THE EVENT MANAGEMENT FOR THEME WEDDINGS ETC. THE AS SESSEE HAS TO QUOTE ESTIMATES FOR ITS CLIENTS AND ON THE RECEIPTS OF TH ESE QUOTATIONS SOME OF THE CLIENTS COME BACK TO THE ASSESSEE AND AGAIN DEP ENDING ON THE JOBS ITA 3886 & 3887/DEL/11 PAGE 9 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI AND THE AMOUNT OF SERVICES REQUIRED THE QUOTATIONS CAN BE INCREASED OR REDUCED AS SUCH NEGOTIATIONS ON PRICES AND SERVICES KEEP OCCURRING. IT WAS HER STAND THAT EVEN THOUGH IN QUANTUM PROCEEDIN GS THE ADDITIONS HAVE BEEN SUSTAINED BUT WHAT EXACTLY HAS BEEN SUSTA INED IS ON THE BASIS OF ESTIMATES MADE AND THE ADDITION HAS RESULTED ON ACCOUNT OF THE ESTIMATED INCOME AND ALTHOUGH THE GROSS PROFIT HAS BEEN ESTIMATED IN THE QUANTUM PROCEEDINGS IT DOES NOT CONCLUSIVELY P ROVE THAT INCOME HAS BEEN SUPPRESSED. INVITING ATTENTION TO PAGES 33 T O 35 AND 38 OF THE PAPER BOOK WHICH ARE DIFFERENT QUOTATIONS GIVEN TO A CLIENT NAMED MR.KAMAL PASSI, IT WAS HER SUBMISSION THAT IT WOU LD SHOW THAT BASED ON THE NATURE OF SERVICES THE ESTIMATES HAD BEEN GI VEN AND IT IS NOT THAT FOR EACH OF THE ESTIMATE THE INCOME WOULD HAVE RESU LTED AS IT IS ONLY ONE EVENT FOR WHICH MANY ESTIMATES HAVE BEEN GIVEN. AS SUCH PENAL ACTION ON THIS ADDITION WAS NOT WARRANTED AND THE ACT OF S USTAINING THE SAME DESERVES TO BE REJECTED. 13. IN REGARD TO THE THIRD ADDITION WHICH IS CONSID ERED IN THE PENAL PROCEEDINGS I.E. AN AMOUNT OF RS.39,530/- IT WAS H ER SUBMISSION THAT THOUGH THE GROUND WAS NOT RAISED BEFORE THE ITAT HO WEVER THE ASSESSEE HAD SOUGHT TO RAISE THE GROUND BY WAY OF ADDITIONAL GROUND. HOWEVER THE SAID ISSUE WAS NOT ADJUDICATED UPON. THE LD.A. R. WAS REQUIRED TO SAY WHETHER ANY ARGUMENTS HAD BEEN ADVANCED FOR ADMISSI ON OF THE SAME OR NOT SHE WAS UNABLE TO CATEGORICALLY STATE THAT ARGU MENTS WERE ADVANCED. ITA 3886 & 3887/DEL/11 PAGE 10 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI ON QUERY IT WAS ACCEPTED BY HER THAT THE ASSESSEE H AS NOT FILED ANY M.A. AGAINST THE QUANTUM ORDER ON THIS ISSUE. IT WAS H ER STAND THAT THE AMOUNT BEING VERY SMALL THE GROUND MAY NOT HAVE BE EN FILED. HOWEVER REGARDLESS OF THAT FACT INVITING ATTENTION TO PAGE 39 OF THE PAPER BOOK IT WAS HER SUBMISSION THAT IT WAS PURELY AN ESTIMATE THAT IT DID NOT WARRANT ANY PENAL CONSEQUENCES AS THE SAID DOCUMEN T WOULD SHOW THAT CERTAIN EXPENSES HAVE TO BE INCURRED BY THE ASSESSE E ON ACCOUNT OF GIFTS WHICH AMOUNTED TO RS.30,000/-. IT WAS POINTED OUT BY THE BENCH THAT RS. 30,000/- HAS NOT BEEN TAKEN COGNIZANCE OF BY TH E A.O. FOR THE PENAL CONSEQUENCES. THE ATTENTION HAS ENTIRELY BEEN FOCU SSED ON THE FACT THAT IN THE BILL RAISED OF RS.5,08,000/-, RS.4,68,470/- HAS BEEN PAID BY CHEQUE AND BALANCE DUE IN CASH IS SHOWN AS RS.39,53 0/- AS SUCH RS.30,000/- AS EXPENSES INCURRED FOR GIFTS. 14. LD.D.R. ON THE OTHER HAND HEAVILY RELIED UPON T HE FACTS AVAILABLE IN THE ORDERS OF THE AUTHORITIES BELOW NAMELY THAT THE ASSESSEE HAD FILED A RETURN PRIOR TO THE SURVEY SHOWING A VERY LOW INCOM E, AS A RESULT SURVEY CONDUCTED ON 14.12.2004 WHEREIN THE ASSESSEE AS A R ESULT OF DOCUMENTS IMPOUNDED IN THE SURVEY MADE A DISCLOSURE THAT IT W OULD SURRENDER RS.15 LAKHS WHICH THE ASSESSEE CHOSE TO RETRACT. CONSEQUENT TO THIS ASSESSMENT ORDER U/S 143(3) ORDER WAS PASSED. ADDR ESSING THE MAJOR ISSUE ON THE BASIS OF WHICH THE PENAL ACTION WAS LE VIED IT WAS HIS VEHEMENT STAND THAT BASED ON THE ORDER OF THE TRIB UNAL THAT THE A.O. ITA 3886 & 3887/DEL/11 PAGE 11 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI HAD TAKEN 100% OF THE RECEIPTS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS AND IMPOUNDED DURING THE SURVEY AS THE ASSESSEES INCOME. THE TRIBUNAL ACCEPTED THE FACT THAT SOME BONAFIDE EXPE NSES NECESSARILY HAVE BEEN INCURRED AND THE ENTIRE RECEIPTS COULD NOT BE TAKEN AS ASSESSEES INCOME. ON ACCOUNT OF THIS FACT ADDITION WAS ESTIM ATED THERE IS NOT EVEN A WHISPER OF DOUBT THAT THE IMPOUNDED DOCUMENTS DI D NOT CORRELATE TO THE SUPPRESSED RECEIPTS AS SUCH IT IS NOT A CASE W HERE THE RECEIPTS HAVE BEEN ESTIMATED AS IN THE PRESENT CASE ON THE BASIS OF RECEIPTS SUPPRESSED BY THE ASSESSEE ON WHICH THERE ARE CONCURRENT FIND INGS OF THE AO THE CIT(A) THAT THE TRIBUNAL HAS UPHELD AS A RESULT OF WHICH INCOME HAS BEEN ESTIMATED @ 54% HOLDING THAT SOME EXPENDITURE NECESSARILY MUST HAVE BEEN INCURRED. AS SUCH IT WAS ARGUED THIS AMO UNTS TO CONCEALMENT AND FILING OF INACCURATE PARTICULARS FOR WHICH PEN AL ACTION WAS WARRANTED. 15. IN REGARD TO THE ISSUE PERTAINING TO ADDITION O F RS.1,60,000/- ON ACCOUNT OF CAPITAL EXPENDITURE INCURRED BY THE ASSE SSEE, IT WAS HIS STAND THAT THIS WAS NOT A BONAFIDE CLAIM OF THE ASSESSEE TILL DATE THE BILLS HAVE NEVER BEEN PRODUCED TO SHOW THE NATURE OF EXPENSES AND SINCE THESE WERE INCURRED FOR NEW OFFICE THE FINDINGS OF CIT(A ) NOT HAVING BEEN CHALLENGED BEFORE THE TRIBUNAL THE ASSESSEE CAN NO T NOW ARGUE AT THIS LATE STAGE AS LAW IS VERY CLEAR THAT EXPLANATION HA S TO BE SUBSTANTIATED BY THE ASSESSEE AND MENS REA IS NOT ESSENTIAL FOR WHI CH RELIANCE IS PLACED ITA 3886 & 3887/DEL/11 PAGE 12 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI UPON CIT VS. LAL CHAND TIRATH RAM, 225 ITR 675 (P& H) AND UNION OF INDIA & OTHERS VS. DHARMENDRA TEXTILES PROCESSORS A ND OTHERS, 306 ITR 277 (S.C.) RESPECTIVELY. 14.2. IN REGARD TO THE ADDITION ON ACCOUNT OF CHUNN U INTERNATIONAL FINDINGS IN THE ORDER WERE RELIED UPON TO CLAIM TH AT PENAL ACTION WAS WARRANTED. 15. IN REPLY THE LD.A.R. SUBMITTED THAT THERE WAS A CONFLICT OF OPINION WHETHER THE EXPENSES ARE OF REVENUE NATURE OR CAPI TAL, AS SUCH PENAL ACTION IS NOT WARRANTED. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE SAME WE ARE OF THE VIEW THAT THE CONCURRENT FINDINGS OF THE A.O. UPHE LD BY CIT(A) IN THE PENALTY PROCEEDINGS CANNOT BE FAULTED ON ACCOUNT OF PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE WHICH HAD BEEN ADEQUATELY ADDRESSED IN THE PENALTY ORDER AND THE ORDER SUSTAINING THE SAME. T HE EXPLANATION OF THE ASSESSEE NAMELY THAT THE EXPENDITURE OF RS. 1,61,00 0/- ODD CLAIMED AS REVENUE EXPENDITURE WAS A BONAFIDE CLAIM IS NOT BOR NE OUT FROM THE FACTS AVAILABLE ON RECORD AS NO DOCUMENTS IN REGARD THERE TO HAVE BEEN PLACED EITHER BEFORE ANY OF THE AUTHORITIES NOR HAVE THEY BEEN PLACED BEFORE US FOR OUR CONSIDERATION. IN THE ABSENCE OF THE SAME WE FIND NO INFIRMITY IN THE CONCLUSION ARRIVED AT AS THE CLAIM CANNOT BE SA ID TO BE BONAFIDE. AS SUCH PENAL ACTION ON THIS ACCOUNT IS UPHELD. ITA 3886 & 3887/DEL/11 PAGE 13 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI 16.1. COMING TO THE AMOUNT OF RS. 39,530/- BASED ON THE DOCUMENT AVAILABLE ON RECORD PLACED BY THE ASSESSEE IN ITS PAPER BOOK IT IS SEEN THAT IT HAS NOT BEEN AGITATED IN THE QUANTUM PROC EEDINGS AND IN THE PENALTY PROCEEDINGS THE ASSESSEE HAS NOT ABLE TO O FFER ANY EXPLANATION AS TO HOW THE AMOUNT WAS SHOWN TO HAVE BEEN RECEIVE D BY CASH. THE LD.A.R. HAD TRIED TO ADVANCE ARGUMENTS THAT THESE ARE SOME PETTY EXPENSES INCURRED BY THE ASSESSEE OF RS.30,000/- ON BEHALF OF ITS CLIENT WHICH WAS REIMBURSED AS SUCH IT IS NOT ASSESSEES I NCOME. ON A PERUSAL OF THE DOCUMENTS SHOWN IT IS SEEN THAT THE ARGUMENT ADVANCED IS NOT CORRECT ON FACTS. THE A.O. HAS NOT TAKEN COGNIZANC E OF BILL RAISED OF RS.5,08,000/-. BREAK-UP OF WHICH IS THEME RS. 4 ,50,000/-; DESIGNING RS.50,000/-; ART WORK RS.8,000/- AND CHEQUE PAY MENT IS SHOWN OF RS.4,68,470/-. BALANCE (RS.5,08,000 RS.4,68,470) RS. 39,530 AS BALANCE DUE IN CASH. 16.2. IT IS SEEN THAT THE EXPLANATION OFFERED IS INCORRECT ON FACTS. BEING SATISFIED WITH THE REASONING AND FINDING THE PENAL ACTION ON THIS COUNT IS UPHELD AS IT AMOUNTS TO CONCEALMENT AND FILING OF I NACCURATE PARTICULARS. 16.3. IN REGARD TO THE MAJOR ADDITION OF RS.6,04,48 7/- LD.A.R. HAD SOUGHT TO ADVANCE ARGUMENTS THAT IT WAS PURELY BASED ON ES TIMATE. AS WE HAVE DISCUSSED EARLIER THIS EXPLANATION IS NOT CORRECT T HE TRIBUNAL HAS GIVEN RELIEF ONLY TO THE EXTENT THAT 100% OF THE SUPPRESS ED RECEIPTS CANNOT THE INCOME OF THE ASSESSEE AS NECESSARY EXPENSES WOULD HAVE BEEN INCURRED ITA 3886 & 3887/DEL/11 PAGE 14 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI AND ON THE ESTIMATED ADDITION SO SUSTAINED IT CANNO T BE SAID THAT THE SAME WAS NOT WARRANTED ON FACTS. THE PENAL ACTION ON ACCOUNT OF CONCEALMENT AND FILING OF INACCURATE PARTICULARS IS FULLY JUSTIFIED BEING SATISFIED BY THE REASONING AND THE FINDING ARRIVED AT IN THE IMPUGNED ORDER, THE SAME IS UPHELD. 17. IN THE RESULT ITA 3886 FILED BY THE ASSESSEE IS DISMISSED. 18. ITA 3887/DEL/2010 : IN THIS APPEAL THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN UPHOLDING THE PENALTY LEVIE D U/S 271(1)(C ) OF RS.54,866/- . THE BACKGROUND OF THE SAID ADDITION AS PER THE ASSESSMENT ORDER IS AS UNDER. A SURVEY OPERATION U/S 133A OF THE ACT WAS CONDUCTE D AT THE PREMISES OF THE COMPANY ON 23.12.2005. DURING THE COURSE OF SURVEY OPERATION, STATEMENT OF SHRI I.P.SARID, DIRE CTOR OF THE COMPANY WAS RECORDED. SOME LOOSE PAPERS/DIARY ETC. WERE IMPOUNDED AS PER ANNEXURE A-1 TO A-5. THE ANNEXURE A-1 WAS A DIARY ON WHICH IT WAS SEEN THAT SOME ENTRIES/RECE IPTS WERE RECORDED. DURING THE SURVEY PROCEEDINGS, THE FIGUR ES WRITTEN ON THE DIARY WERE TALLIED WITH THE BOOKS OF ACCOUNTS A ND IT WAS SEEN THAT SOME ENTRIES WERE MISSING IN ;THE SALES L EDGER AND SHRI SARID WAS ASKED TO EXPLAIN THE SAID DISCREPANC IES. IT WAS ADMITTED BY SHRI I.P.SARID THAT COUPLE OF ENTRIES I N THE SALES LEDGER HAVE GOT MISSED OUT AND HE ADMITTED SOME OF THE DISCREPANCIES BETWEEN THE BOOKING MADE AND BOOKS OF ACCOUNTS. HE SURRENDERED AN ADDITIONAL INCOME OF RS.15,00,000/- AND AGREED TO PAY TAXES THEREON. TH E ASSESSEE PAID A SUM OF RS. 5,00,000/- ON THIS ADDITIONAL INC OME OFFERED FOR TAXATION AS TAX FOR THE F.Y. 2005-06 RELEVANT T O THE A.Y. 2006-07 IN FIVE INSTALMENTS. RS. 1,00,000/- DT. 30.12.2005 RS. 1,00,000/- DT. 19.01.2006 RS.1,00,000/- DT. 01.02.2006 RS. 1,00,000/- DT. 25.2.2006 RS.1,00,000/- DT. 20.3.2006 ITA 3886 & 3887/DEL/11 PAGE 15 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI 19. HOWEVER AT THE TIME OF FILING THE RETURN IT WAS OBSERVED THAT THE ASSESSEE HAS NOT DISCLOSED THE SAID INCOME. THE AS SESSEE IN HIS EXPLANATION STATED THAT IT HAS BEEN ABLE TO CORRELA TE THE ENTRIES IN THE DIARY WITH THE BOOKS OF ACCOUNTS AND IN THE INCOME BOOK AS SUCH THE SAID SURRENDER ON FACTS WAS NOT WARRANTED. THE A.O. CONSIDERING THE FACT THAT THERE WAS STILL A DIFFERENCE OF RS. 1,60,000 /- DID NOT ACCEPT THE RECONCILIATION OF THE ASSESSEE AND MADE AN ADDITION OF RS.15 LAKHS. THE SAID ISSUE TRAVELLED TO THE TRIBUNAL WHICH VIDE PAR A 40 INTERNAL PAGE 18 OF THE ORDER OF THE TRIBUNAL HELD AS IN ITA 3031/DE L/08 AND C.O. 100/DEL/09 FOR A.Y. 2006-07. 19. IN THE PENALTY PROCEEDINGS THE A.O. NOTED THE BACKGROUND AS UNDER. THE ASSESSEE HAS PRIMARILY CHALLENGED THE ACTION O F THE CIT(A) IN CONFIRMING THE ADDITION OF RS.1,63,000/- ON ACCO UNT OF DISCREPANCY FOUND IN THE COURSE OF SURVEY CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 23.12.2005. THE ASSESS EE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE BEFORE US TO EXPL AIN THE DISCREPANCY AS POINTED OUT BY THE A.O. THE SURVEY PARTY AS ALSO THE A.O. POINTED OUT THE DISCREPANCY IN REGARD TO ADDITION OF RS.1,63,000/- CONFIRMED BY THE CIT(A). AS THE A SSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITSELF WITH MATERIAL EVIDENCE, THE FINDINGS OF THE CIT(A) ON THE ISSUE STANDS CONFIRME D. IN THE CIRCUMSTANCES THE C.O. NO.100/DEL/2009 FILED BY THE ASSESSEE IS DISMISSED. IN THE RESULT ITA.3031/DEL/09 IS DISMISSED AND C.O.100/DEL/09 IS DISMISSED. 20. AS SUCH HE REQUIRED THE ASSESSEE TO EXPLAIN T HE SAME. ITA 3886 & 3887/DEL/11 PAGE 16 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI 21. IN REPLY IT WAS STATED THAT PENALTY CANNOT BE LEVIED SIMPLY BECAUSE THE ASSESSEE HAS NOT BEEN ABLE TO MATCH THE SAID AMOUNT WITH THE SALES REGISTER. IN VIEW OF THE FACT THAT NO EX PLANATION WAS OFFERED, IT WAS HELD THAT THE ASSESSEE WILLFULLY CONCEALED THE PARTICULARS AND FAILED TO OFFER EXPLANATION, AS SUCH PENALTY WAS IMPOSED. 22. IN APPEAL BEFORE THE CIT(A) THE SAID ACTION WAS UPHELD TAKING INTO CONSIDERATION THE REPLY OF THE ASSESSEE WHICH REMAI NED THE SAME THE CIT SPECIFICALLY TOOK COGNIZANCE OF THE FACT THAT IT IS ONLY ON ACCOUNT OF THE SURVEY CONDUCTED THAT THE CONCEALMENT WAS UNEARTHED . 23. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 24. LD.A.R. CONTENDED THAT THE MODUS OPERANDI OF T HE ASSESSEE WAS THAT VARIOUS QUOTATIONS/ESTIMATES WERE TO BE GIVE N AND IT IS NOT THAT EACH AND EVERY ENTRY IN THE DIARY WOULD BE MATCHED WITH THE BOOKS OF ACCOUNTS. INVITING ATTENTION TO PAGE 11 AND 12 OF THE PAPER BOOK FILED ON JANUARY, 2011, AS AN ILLUSTRATION IT WAS SUBMITTED THAT QUITE OFTEN THE ASSESSEE AS PER THE DIARY HAS NOTED A FIGURE FOR A SPECIFIC EVENT AT A LESSER AMOUNT AND AS PER THE SALES BOOK A HIGHER A MOUNT HAS IN FACT FINALLY BEEN CLAIMED AS SUCH THE ENTRIES IN THE DIA RY ARE ESTIMATES AND NOT SACROSANCT AND WHAT WAS FINALLY RECEIVED IS REC ORDED IN THE BOOKS OF ACCOUNTS. FOR INSTANCE IT WAS ARGUED AS WOULD BE E VIDENT FROM THE ENTRY OF MAY, 2005 IN THE CASE OF FUNCTION ORGANIZED ON B EHALF OF SANJIVLAL WHEREIN AS PER THE DIARY THE AMOUNT MENTIONED WAS R S. 12,000/-, ON THE ITA 3886 & 3887/DEL/11 PAGE 17 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI OTHER HAND FOR THE VERY SAME EVENT AS PER THE SALES BOOK IT WAS RS.16,000/-; SIMILARLY IN THE CASE OF LE MERIDIAN T HE DAIRY AMOUNT SHOWN WAS RS.7,000/- AND AS PER THE SALES BOOK IT W AS RS. 10,500/-. IN FACT THE TOTALING IT WAS ARGUED AS PER DIARY IS RS. 12 LACS AND AS PER SALES BOOK ABOUTY RS.13 LAKHS ODD AS SUCH THE DIARY IS NO T THE FINAL WORD IT IS MERELY AN AIDE MEMOIRE. ON ACCOUNT OF THESE FACT S IT WAS SUBMITTED THAT PENALTY IS TOO HARSH A PROVISION TO BE MADE A PPLICABLE TO THE ASSESSEE. 25. THE LD.D.R. ON THE OTHER HAND RELYING UPON THE IMPUGNED ORDER AND THE ORDER OF THE TRIBUNAL IN THE QUANTUM PROCEE DINGS SUBMITTED THAT SIMPLY BECAUSE THE ACCOUNTS FOR CERTAIN EVENTS ARE BOOKED AT A LESSER AMOUNT THAN THE SALES BOOK IT MERELY SHOWS T HAT THE QUANTITY OF SERVICES FINALLY OBTAINED BY A CLIENT MUST HAVE BEE N MORE IT IS NOT THAT FOR THE SAME SITUATION THE PRICE IS SUDDENLY ESCALATED. THE FACT REMAINS IT WAS ARGUED THAT FOR VARIOUS EVENTS THE ASSESSEE AS PER THE DIARY HAS SHOWN THAT CERTAIN AMOUNTS WERE RECEIVED WHICH ARE NOT CORRECTLY REFLECTED IN THE BOOKS OF ACCOUNTS THE ISSUE QUA TH E NON-RELIABILITY AND NON-RECONCILIATION OF THE FIGURES IS ALREADY CONCLU DED IN THE QUANTUM PROCEEDINGS. IT WAS REITERATED THAT THE ASSESSEE HAS FAILED TO RECONCILE THE DIFFERENT AND ON THE VERY SAME FINDING OF CIT( A) NOR OF THE TRIBUNAL AS BOTH HAVE UPHELD THE FINDINGS OF THE A.O. THAT THE ASSESSEE WAS IN ITA 3886 & 3887/DEL/11 PAGE 18 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI THE HABIT OF SUPPRESSING ITS RECEIPT. THE FACT OF LACK OF RECONCILIATION IS AVAILABLE ON RECORD AS SUCH THE IMPUGNED ORDER DESE RVES TO BE UPHELD. 26. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT THE QUANTUM AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT, EXPLANATION NOT OFFERED IN THE QUANTUM PROCEEDINGS FOR PENAL PROVISIONS CAN BE ADV ANCED. HOWEVER THE EXPLANATION HAS TO BE BONAFIDE AND SUPPORTED BY FACTS. IN THE FACTS OF THE PRESENT CASE IT IS SEEN THAT CONSISTENTLY TH E ASSESSEE HAS NOT BEEN ABLE OFFER ANY EXPLANATION AS TO HOW THE AMOUNTS CA N BE RECONCILED AND HAS MERELY CHOSEN TO TAKE A GENERAL ARGUMENT THAT T HE ENTRIES AS PER THE BOOKS ARE HIGHER THAN AS PER THE DIARY WHEREAS CONS ISTENTLY THE A.O.S FINDING HAS BEEN UPHELD THAT THE ASSESSEE HAS BEEN IN THE HABIT OF SUPPRESSING THE RECEIPTS. IN THE FACTS AS THEY STA ND WE FIND OURSELVES IN AGREEMENT WITH THE CONSISTENT FINDINGS ON RECORD AN D FIND OURSELVES UNABLE TO COME TO A CONTRARY FINDING. BEING SATISF IED WITH THE REASONING AND FINDING THE GROUND RAISED BY THE ASSESSEE IS R EJECTED. 27. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JANUARY,2012. SD/- SD/- (K.D. RANJAN) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH JANUARY, 2012 *MANGA ITA 3886 & 3887/DEL/11 PAGE 19 OF 19 A.Y. 2004-05 & 2006-07 SOUND OF MUSIC INDIA P.LTD., NEW DELHI COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR 6.GUARD FILE BY ORDER ASST. REGISTRAR