Habibullah Abbasali Chaudhary, Pune V. Assistant Commissioner of Income-tax,

ITA 496/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9146 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-11-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 13-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI
• Keywords: Unexplained investment; Search and seizure; Corroborative evidences
• Section: 133A; 153A; 69; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . . . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS. 495 TO 497/PUN/2014 / ASSESSMENT YEAR : 2002-03 TO 2004-05 SHRI HABIBULLAH ABBASALI CHAUDHARY, S.NO.99, PLOT NO.06, YESHWANT NAGAR, TELCO-BHOSARI ROAD, PIMPRI, PUNE 18. PAN : AABPC1577B . /APPELLANT V/S ACIT, CENTRAL CIRCLE - 2(3) , PUNE . /RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 3 APPEALS UNDER CONSIDERATION AND ALL OF THEM ARE FILED BY THE ASSESSEE IN CONNECTION WITH THE PENALTY ORDER P ASSED U/S.271(1)(C) OF THE ACT. THE APPEALS RELATE TO THE ASSESSMENT YEARS 20 02-03 TO 2004-05. THE ISSUES IN THESE APPEALS ARE IDENTICAL, THEREFORE, T HE APPEALS ARE BEING TAKEN UP FOR ADJUDICATION IN THIS COMPOSITE ORDER. ITA NO.495/PUN/2014 ASSESSMENT YEAR 2002-03 : 2. TO START WITH WE SHALL TAKE UP THE APPEAL FOR A. Y. 2002-03. THE GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UND ER : / DATE OF HEARING :13.07.2017 / DATE OF PRONOUNCEMENT: 26.07.2017 2 ITA NOS.495 TO 497/PUN/2014 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN SUSTAINING THE PENALTY U/S.271(1)(C). 2. THE CIT(A) HAS ERRED IN TOTALLY OVERLOOKING THE FACT THAT THE SUBJECT MATTER NAMELY ALLEGED UNEXPLAINED DEPOSIT IN THE BA NK INFACT ARE MADE BY SHRI TANAJI JAGTAP AND THEREFORE AN ADDITION ITSELF MADE IN THE ASSESSMENT ORDER IS BAD IN LAW AND INVALID THOUGH ADMITTED FOR CERTAIN REASONS OUT OF SHEER RELUCTANCE. 3. FURTHER, THE ASSESSEE SUBMITTED THAT THE ADDITI ONAL GROUND, SAID TO BE A LEGAL ONE IN NATURE, WAS ALSO FILED AND THE SAME READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE ASSESSING OFFICER U/S.271(1)(C) IS BAD IN LAW IN AS MUCH AS THERE EXISTS VAGUENESS, AMBIGUITY AND NON APPLICATION OF MIND WH ILE RECORDING THE SATISFACTION ON ONE GROUND AND LEVYING THE PENALTY ON THE OTHER GROUND. 4. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN SCRAP AND STE EL CUTTING. A SEARCH U/S.132 WAS CONDUCTED ON 24-10-2007 AT THE RESIDENT IAL PREMISE OF THE ASSESSEE LOCATED AT S.NO.99, PLOT NO.6, YESHWANT NA GAR, TELCO-BHOSARI ROAD, PIMPRI, PUNE -18 WHICH WAS PART OF THE SEARCH ACTIO N CONDUCTED IN THE CASES OF HABIBULLAH CHAUDHARY, CHETAN MEHTA AND VISHAL MA LHOTRA GROUP OF PUNE CONSISTING OF VARIOUS BUSINESS ENTERPRISES. ASSESS EE FILED THE ORIGINAL RETURN ON 30-10-2002 DISCLOSING TOTAL INCOME OF RS.13,84,1 81/-. 5. ASSESSEE WAS COVERED IN THE SAID SEARCH ACTION U /S.132 OF THE ACT ON 24-10-2007. AS PER THE LD. COUNSEL FOR THE ASSESSE E, NO SEIZED DOCUMENT OR CASH, JEWELLERY, ETC., WERE FOUND AND SEIZED BY THE DEPARTMENT U/S.132 OF THE ACT. HOWEVER, ASSESSEE HAD VOLUNTARILY DISCLOS ED THE INCOME OF RS.4 CRORES FOR THE A.Y. 2008-09. THE DETAILS OF THE SA ID DISCLOSURE IN THE FORM OF MOVABLE AND IMMOVABLE ASSETS AND THEIR BREAK-UP ARE GIVEN IN A TABULAR FORM WHICH IS EXTRACTED AS UNDER. THE ASSESSEE ALS O FURNISHED ASSESSMENT YEAR WISE BREAK-UP OF THE ABOVE AMOUNT SEPARATELY. 3 ITA NOS.495 TO 497/PUN/2014 SR. NO PARTICUOLARS VALUE AS ON 01/04/2007 ADD DURING THE YEAR SALES DUR. THE YEAR TOTAL 1 FLAT NO.1106 1,614,291.00 461,222.00 0.00 2,075,513.00 2 FLAT NO.1107 1,591,800.00 454,800.00 0.00 2,046,600.00 3 FLAT NO.1 41 2,141,073.00 0.00 0.00 2,141,073.00 4 FLAT NO.A-702 1,554,000.00 906,600.00 0.00 2,460,600.00 5 SHOP NO.03 382,780.00 0.00 0.00 382,780.00 6 FLAT FOUR 2,750,000.00 0.00 0.00 2,750,000.00 7 FLAT NO.804-C 1,898,830.00 173,000.00 0.00 2,071,830.00 8 SHOP NO.05 276,785.00 0.00 0.00 276,785.00 9 SHOP NO.06 229,325.00 0.00 0.00 229,325.00 10 LAND-GAT NO.115 (63GUNTHA) 2,819,580.00 0.00 0.00 2,819,580.00 11 LAND-GAT NO.115 (45GUNTHA) 1,767,900.00 0.00 0.00 1,767,900.00 12 FLAT NO.B-19 487,130.00 0.00 0.00 487,130.00 13 SHOP NO.04 442,026.00 0.00 0.00 442,026.00 14 SHOP NO.06 334,980.00 0.00 0.00 334,980.00 15 FLAT NO.12 390,715.00 0.00 0.00 390,715.00 16 LAND GAT NO.779 (5500 SQ. FT.) 210,000.00 0.00 0.00 210,000.00 17 LAND GAT NO.680 (4025 SQ. FT) 80,000.00 0.00 0.00 80,000.00 18 L.I.P HDFC 307,830.00 102,460.00 0.00 409,840.00 19 L.I.P HDFC 307,830.00 102,610.00 0.00 410,440.00 20 VEHICLE TEMPO 704,145.00 0.00 0.00 704,145.00 21 VEHICLE SANTRO 363,458.00 0.00 0.00 363,458.00 22 VEHICLE FESTA 870,954.00 0.00 0.00 870,954.00 23 CASH 0.00 16,274,326.00 0.00 16,274,326.00 TOTAL : - 21,524,982.00 18,475,018.00 40,000,000.00 6. REFERRING TO THE ABOVE STATEMENT, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT AGAINST THE SAID DISCLOSURE OF RS. 4 CRORE, THERE ARE INVESTMENTS IN THE FORM OF MOVABLE AND IMMOVABLE PR OPERTIES AND SUCH INVESTMENTS DOES NOT ACCOUNT FOR THE SAID ENTIRE RS .4 CRORES. THEREFORE, ASSESSEE DISCLOSED SUM OF RS.1,62,74,326/- AS CASH IN HAND. DURING THE SEARCH ACTION, THE PREMISES OF MR. TANAJI SAUDAGAR JAGTAP WHO OPERATED SOME BANK ACCOUNTS LYING WITH SEVA VIKAS COOPERATIV E BANK LTD. (SVCB) WAS ALSO COVERED. THERE ARE HUGE CASH DEPOSITS INT O THESE ACCOUNTS WITH THE SAID BANK. THERE WAS INVESTIGATION TO THE SOUR CE OF THESE FUNDS AND OWNERSHIP OF THE SAID BANK ACCOUNTS WITH THE SEVA V IKAS COOPERATIVE BANK LTD. AND THESE PAPERS WERE CONFRONTED TO MR. TANAJ I SAUDAGAR JAGTAP. STATEMENT RECORDED U/S.133A IN THE CASE OF MR. TANA JI SAUDAGAR JAGTAP WAS 4 ITA NOS.495 TO 497/PUN/2014 TAKEN ON 26-11-2009. IN RESPONSE TO QUESTION NOS. 14, 15 AND 16 MR. TANAJI SAUDAGAR JAGTAP OWNED UP THE SAID BANK ACCOU NTS. RELEVANT QUESTIONS AND ANSWERS ARE EXTRACTED AS UNDER : 14. QUESTION NO.14 IN THE STATEMENT RECORDED ON 15-11-2011 YOU HAVE STATED THAT YOU HAVE TWO BANK ACCOUNT, YOU ARE GIVI NG THE STATEMENT ON OATH AND KEEPING THIS IN MIND TELL US IN WHICH BANK YOU HAVE THE BANK ACCOUNTS. ANSWER SEVA VIKAS BANK, NEHRU NAGAR BRANCH, SAVIN G ACCOUNT NUMBER I DO NOT REMEMBER THE NUMBER, I DO NOT REMEMBER THE B ANK ACCOUNT IN ANY OTHER BANK. QUESTION NO.15 ON THE ENQUIRY CARRIED BY THE I.T. DEPARTMENT IT IS OBSERVED YOU HAVE SAVING BANK NO.4022 IN SEVA VIKAS BANK, WE SHOW THE ACCOUNT OPENING FORM AND TELL US WHETHER IT IS YOUR BANK ACCOUNT? ANSWER I HAVE SEEN THE BANK OPENING FORM, THE PHO TO ATTACHED ON IT AND MY SIGNATURE THEREON WHICH I RECOGNIZE. THIS BANK ACCOUNT IS MINE. HOWEVER I DONT REMEMBER ANYTHING MORE. QUESTION NO.16 ON ENQUIRY BY THE I.T. DEPARTMENT IT IS FOUND THAT YOU HAVE BANK ACCOUNT IN IDBI, UNDER THE NAME TANAJI SA UDANAGAR JAGTAP UNDER SAVING ACCOUNT NUMBER 89450. I SHOW YOU THE EXTRAC T OF THE SAID BANK ACCOUNT. TELL US ABOUT THIS BANK? ANSWER I HAVE CAREFULLY EXAMINED THE EXTRACT OF T HIS BANK ACCOUNT. THIS IS MY BANK ACCOUNT HOWEVER I CANNOT STATE ANYTHING FUR THER. 7. SUBSEQUENTLY, FOR SOME REASON, THE ASSESSEE ACCE PTED THE SAID BANK ACCOUNTS AS BELONGING TO HIM AND IN THIS REGARD HE FILED A LETTER DATED 20-11-2007 ADDRESSED TO THE DDIT (INVESTIGATION) UN IT -1(1), SADUVASWANI ROAD, PUNE 411 001 AND GAVE THE FOLLOWING SUBMISS IONS : THE SEARCH ACTION U/S 132 WAS TAKEN ON 24/10/07 AN D IT CONTINUED TILL 25/10/07. DURING THE SEARCH OPERATION NOTHING HAS BEEN FOUND WHICH CAN BE SAID AS UNACCOUNTED ASSET. PRECISELY FOR THIS R EASON THERE HAS NOT BEEN ANY SEIZURE EITHER OF ANY ASSET OR BOOKS OF ACCOUNT S. THIS RAID PARTY HAS NOT DETECTED ANY UNACCOUNTED ASSET. NEVER THE LESS THE UNDERSIGNED HEREBY ON HIS OWN MAKES A DECLARATION OF RS. 4 CRORES ONLY WH ICH IS EARNED IN THE COURSE OF HIS OWN BUSINESS AS WELL AS THE BUSINESS WHICH WAS RUN IN THE NAME OF SHRI. TANAJI SAUDAGAR JAGTAP. THE ABOVE DECLARATION OF RS. 4 CRORES COMPRISES OF THE LANDED PROPERTY., VEHICLES, BANK BALANCE AND THE CASH BALANCE HELD OU TSIDE THE BOOKS OF ACCOUNTS. THE DETAILS OF THESE ASSETS ARE BEING WO RKED OUT AND THE SAME WOULD BE FURNISHED IN DUE COURSE. THIS DECLARATION IS THEREFORE BEING MADE VOLUNTARILY AND HONESTLY, AT THE BACKGROUND OF THE FACT THAT NOTHING HAS BEEN DETECTED BY THE RAID PARTY. THE UNDERSIGNED ACCORD INGLY SHALL PAY THE ADVANCE TAX BEFORE 15 TH DECEMBER 2007 AND 15 THE MARCH 2008. THE 5 ITA NOS.495 TO 497/PUN/2014 UNDERSIGNED IS AWARE OF THE FACT THAT IF THIS AMOUN T DECLARED IS ULTIMATELY HELD AS A CONCEALED INCOME WITHOUT HIS RIGHT TO APP ROACH THE APPELLATE AUTHORITIES, HE SHALL PAY THE PENALTY AS PROVIDED U /S 271 AAA. 8. DURING THE ASSESSMENT PROCEEDINGS, THERE WAS FUR THER SCRUTINY OF CASH DEPOSITS AND IT WAS SUBMITTED THAT THE CASH DEPOSIT S AMOUNTING TO RS.41,13,860/- PERTAINS TO A.Y. 2002-03, RS.53,68,0 20/- PERTAINS TO A.Y. 2003-04 AND RS.51,28,160/- PERTAINS TO A.Y. 2004-05 . THESE AMOUNTS WERE REDUCED FROM THE DISCLOSURE GIVEN FOR A.Y.2008-09 A ND THEY WERE SUBJECTED TO TAX FOR THE SAID ASSESSMENT YEARS. ACCORDINGLY, FOR THE A.Y. 2002-03, AGAINST THE ASSESSED INCOME OF RS.13,84,181/- THE T OTAL INCOME IS DETERMINED AT RS.54,98,041/- AFTER MAKING ADDITION OF RS.41,13,860/- U/S.69B OF THE ACT. THE CONTENTS OF PARA 6 OF THE ASSESSMENT ORDER ARE RELEVANT. THERE IS NO FURTHER APPEAL ON THESE ISSU ES IN ALL THE 3 ASSESSMENT YEARS. THUS, THE ADDITION ON QUANTUM HAS BECOME FI NAL. WHILE MAKING THE ASSESSMENT, AO INITIATED THE PENALTY PROCEEDINGS IN RESPECT OF THE SAID ADDITION OF RS.41,13,860/-. 9. TO SUM UP, THIS AMOUNT OF ADDITION IN EFFECT IS DIVERTED FROM THE DISCLOSURE MADE ORIGINALLY FOR THE A.Y. 2008-09 WHI CH IS PART OF THE SAID RS.4 CRORES AND WHICH REFLECTS THE CASH DEPOSITS IN THE BANK ACCOUNTS STANDING IN THE NAMES OF MR. TANAJI SAUDAGAR JAGTAP. HOWEVER, THESE BANK ACCOUNTS ARE OWNED UP BY THE ASSESSEE AS BELONGING TO HIM AN D THEREFORE THE ABOVE DISCLOSURE OF RS.4 CRORES. WHILE CONCLUDING THE AS SESSMENT PROCEEDINGS THE AO MENTIONED THAT THE PENALTY PROCEEDINGS ARE INITI ATED FOR CONCEALING PARTICULARS OF INCOME OF RS.41,13,860/-. NOTICE U/ S.274 WAS ISSUED ON 31- 12-2009 (PAGE 5 OF THE PAPER BOOK RELATING TO THE A DDITIONAL GROUND AS RELEVANT). 6 ITA NOS.495 TO 497/PUN/2014 10. WITH THE BACKGROUND OF THE ABOVE FACTUAL MATRIX , LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE PRELIMINARY I SSUE RELATING TO THE ADMISSION OF THE ADDITIONAL GROUND. RELYING ON VAR IOUS BINDING DECISIONS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAI D ADDITIONAL GROUND ALREADY EXTRACTED ABOVE IS LEGAL IN NATURE AND THE SAME IS REQUIRED TO BE ADMITTED AND ADJUDICATED. 11. ON HEARING BOTH THE SIDES, WE FIND THE ASSESSEE S REQUEST FOR ADMITTING THE ADDITIONAL GROUND IS REASONABLE. THE REFORE, WE PROCEED TO ADJUDICATE THE SAME. IN THIS REGARD, LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE AO DID NOT APPLY HIS MIND TO THE CORRECT L IMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. IN THIS REGARD, BRINGING OUR AT TENTION TO THE ORDER OF THE AO ON MERITS, LD. COUNSEL SUBMITTED THAT THE AO INI TIATED THE PENALTY IN RESPECT OF THE ABOVE AMOUNT OF RS.41,13,860/-, IN P ARA NO.6.8 OF THE ASSESSMENT ORDER STATING THE FOLLOWING: 6.8 THE UNEXPLAINED INVESTMENT OF RS.41,13,860/- T OWARDS UNEXPLAINED CASH/CHEQUE DEPOSITS IN THESE 9 ACCOUNTS DURING THI S YEAR WAS PROPOSED TO BE ADDED TO THE RETURNED INCOME OF THE ASSESSEE. T HE ASSESSEE AGREED TO THE ADDITION OF RS.41,13,860/- VIDE LETTER DATED 24 -12-2009. SINCE THE ASSESSEE HAS CONCEALED PARTICULARS OF THIS INCOME, SEPARATE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT, ARE BEIN G INITIATED. 12. FURTHER, BRINGING OUR ATTENTION TO THE NOTICE I SSUES U/S.274 R.W.S. 271(1)(C) OF THE ACT, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AO NEVER STRUCK OFF ANY OF THE LIMBS OF THE CLAUSE (C) OF SE CTION 271(1)(C) OF THE ACT. HE MENTIONED THAT THE BLANKS LEFT IN THE NOTICE ARE NEVER FILLED-IN BY APPLYING HIS MIND. FURTHER, ALSO BRINGING OUR ATTENTION TO THE PENALTY ORDER OF THE AO WHERE PENALTY AMOUNTING TO RS.11,59,160/- WAS LEVIE D VIDE HIS ORDER DATED 29-06-2010, LD. COUNSEL SUBMITTED THAT THE AO WAS V AGUE IN GIVING THE REASONS FOR LEVYING THE PENALTY STATING THAT ASSESSEE HAS CLEARLY CONCEALED HIS INCOME . CONSIDERING THE DEFICIENCIES IN THE LANGUAGE OF THE 7 ITA NOS.495 TO 497/PUN/2014 AO IN THIS REGARD AS WELL AS THE BLANKS LEFT NOT ST RICKEN OF BY THE AO IN THE NOTICE, LD. COUNSEL IS OF THE OPINION THAT AO IS NO T CLEAR ABOUT THE LIMB FOR WHICH SAID PENALTY WAS LEVIED. 13. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE FOR THE REVENUE DUTIFULLY OBJECTED TO THE ADMISSION OF THE ADDITION AL GROUND. FURTHER, HE SUBMITTED THAT THE MIND OF THE AO IS VERY CLEAR THA T THE PENALTY WAS ALWAYS INITIATED FOR CONCEALMENT OF INCOME AND ALSO LEVIED FOR THE SAME. CONSIDERING THE SAME THE BLANKS LEFT OVER/NOT STRIC KEN OFF IN THE NOTICE U/S.274 SHOULD NOT BE CONFUSED AS LACK OF APPLICATI ON OF MIND BY THE AO TO THE CORRECT LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. 14. WE HEARD BOTH THE PARTIES AND PERUSED THE ABOVE EXTRACTS READ OUT BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE ARGU MENTS OF THE LD. COUNSEL FOR THE ASSESSEE IS NOT SUSTAINABLE AS THE AO NOT O NLY INITIATED FOR THE CONCEALMENT OF INCOME, ONE OF THE TWO LIMBS, AND LE VIED THE PENALTY FOR THE SAME LIMB. CONSIDERING THE SAME, AOS FAILURE TO L EAVE THE BLANKS IN THE SAID NOTICE U/S.274 CANNOT MAKE THE PENALTY ORDER ULTRAV IRES LEGALLY. ACCORDINGLY, FOR THE REASONS MENTIONED ABOVE, THE ADDITIONAL GRO UND RAISED BY THE ASSESSEE IS ADMITTED AND EVENTUALLY DISMISSED. 15. WE SHALL NOW PROCEED TO THE ORIGINAL GROUNDS RA ISED BY THE ASSESSEE FOR THIS ASSESSMENT YEAR, I.E. A.Y. 2002-03. ASSES SEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMING THE PENALTY OVERL OOKING THE FACT THAT THE ABOVE REFERRED CASH/CHEQUE DEPOSITS IN THE BANK BEL ONGING TO MR. TANAJI SAUDAGAR JAGTAP. LD. COUNSEL SUBMITTED THAT IF THE ASSESSEE WERE TO CONTEST THESE ADDITIONS BUT FOR THE VOLUNTARY ACT OF OFFERI NG THE SAME TO TAX, THE ADDITION WOULD NOT HAVE BEEN LEGALLY UNSUSTAINABLE AND THEREFORE EVENTUALLY DELETED. LEVY OF PENALTY RELATING TO SUCH ADDITION S OF DEBATABLE NATURE IS UNSUSTAINABLE IN LAW. HIGHLIGHTING THE DEBATABILIT Y ON THE OWNERSHIP OF THE 8 ITA NOS.495 TO 497/PUN/2014 BANK ACCOUNTS LYING WITH SEVA VIKAS COOPERATIVE BAN K LTD. AND EVENTUALLY OWNED UP BY MR. TANAJI SAUDAGAR JAGTAP, IN THIS REG ARD, LD. COUNSEL BROUGHT OUR ATTENTION TO THE STATEMENTS RECORDED FROM MR. T ANAJI SAUDAGAR JAGTAP (SUPRA) AND SUBMITTED THAT THOSE ACCOUNTS DO NOT BE LONG TO THE ASSESSEE. REFERRING TO THE FINDING OF THE CIT(A) ON THE OWNER SHIP OF THESE ACCOUNTS AS DISCUSSED IN PARA NOS. 6.4 TO 6.5, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DISCUSSION BY THE CIT(A) ONLY CREATES A DE BATE IF THEY ACTUALLY BELONG TO THE ASSESSEE. THERE IS NO CONCLUSIVE EVI DENCE TO SUGGEST THAT THESE BANK ACCOUNTS REALLY BELONG TO THE ASSESSEE. THE CONCLUSIONS DRAWN BY HIM SUFFERS FROM DEBATE AND DISCUSSION. DESCRIB ING THESE ACCOUNTS BELONGING TO THE ASSESSEE MERELY AN OPINION OF THE CIT(A), WHICH IS OTHERWISE OPEN TO THE ASSESSEE TO CONTEST HIS LEGIT IMATE DEBATABLE RIGHT. THEREFORE, HE SUBMITTED THAT, WHEN THERE IS POSSIBL E DEBATE ON THE OWNERSHIP OF THE ACCOUNTS AS WELL AS THE CONTENTS T HEREIN LEVY OF PENALTY U/S.271(1)(C) OF THE ACT FOR THE ALLEGATION OF CONC EALMENT OF INCOME IS NOT SUSTAINABLE. 16. REFERRING TO THE WAY THE AO MADE ADDITION OF RS .41,13,860/- U/S.69B OF THE ACT, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEPOSITS IN THE BANK ACCOUNTS DOES NOT CONSTITUTE INVESTMENTS AND T HEREFORE THE PROVISIONS OF SECTION 69B DO NOT APPLY. FURTHER, THESE AMOUNT S ARE OUTSIDE THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IN SUCH CASE, PROVISI ONS OF SECTION 69B OF THE ACT HAS NO APPLICATION AS THE SECTION RELATES TO A MOUNT OF INVESTMENT ETC., NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNT. IN O THER WORDS, THESE PROVISIONS CAN BE INVOKED ONLY WHEN THE INVESTMENTS ARE RECORD ED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IN EFFECT, CO NSIDERING THE DEBATE/DISCUSSION ABOVE, THESE ACCOUNTS BELONG TO M R. TANAJI SAUDAGAR JAGTAP AND OFCOURSE OWNED UP BY THE ASSESSEE FOR AV OIDING PROTRACTED LITIGATION AND THERE IS NO COLLABORATIVE EVIDENCE T O DEMONSTRATE THAT THE SAID 9 ITA NOS.495 TO 497/PUN/2014 BANK ACCOUNTS ACTUALLY PERTAIN TO THE ASSESSEE AND IN SUCH CASES THE PROVISIONS OF SECTION 69B DO NOT COME INTO FORCE. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.41,13,860/- IS INFAC T LIKELY TO BE DELETED HAD THERE BEEN A LITIGATION IN THE MATTER ON THE ME RITS OF ADDITION. CONSIDERING THE DEBATE AS WELL AS THE LIKELY DELETI ON OF THE ADDITIONS, LEVY OF PENALTY ON SUCH ADDITIONS COULD NOT BE CONFIRMED AS SUSTAINABLE LEGALLY. 17. FURTHER, LD. COUNSEL FOR THE ASSESSEE FILED WRI TTEN SUBMISSIONS ON THE ABOVE ISSUE (PAGE 111 TO 113 OF THE PAPER BOOK) AND RELIED ON THE VARIOUS DECISIONS IN SUPPORT OF THE SAME. RELEVANT LINES A RE EXTRACT AS UNDER : THE APPELLANT IS ENGAGED IN THE BUSINESS OF TRADIN G OF SCRAP AND STEEL CUTTING. THE SEARCH ACTION U/S 132 WAS CARRIED ON 24.7.2007. THE RETURNS OF INCOME WERE FILED IN RESPONSE TO NOTICE U/S 153A . ON COMPLETION OF ASSESSMENT AO MADE THE FOLLOWING A DDITIONS- ASSESSMENT YEAR AMOUNT(RS) PARTICULARS 2002 - 03 RS 41,13,860/ - UNEXPLAINED CASH DEPOSIT IN BANK OF SHRI TANAJI JAGTAP (U/S. 69B) 2003 - 04 RS 53 ,60,820/ - UNEXPLAINED CASH DEPOSIT IN BANK OF SHRI TANAJI JAGTAP (U/S. 69B) 2004 - 05 RS 51,28,160/ - UNEXPLAINED CASH DEPOSIT IN BANK OF SHRI TANAJI JAGTAP (U/S. 69B) THESE ARE UNEXPLAINED CASH DEPOSITS MADE IN SAVING BANK ACCOUNT IN SEVA VIKAS CO-OPERATIVE BANK OPENED AND OPERATED BY MR. TANAJI SAUDAGAR JAGTAP. THE RELEVANT PASSBOOK WAS FOUND WITH MR. T ANAJI SAUDAGAR JAGTAP IN THE COURSE OF ACTION U/S 132 SEPARATELY TAKEN AG AINST HIM.ON EXAMINATION OF THESE DEPOSITS THE AO CONFRONTED THE APPELLANT T O WHICH APPELLANT REPLIED THAT HE DOES NOT HAVE ANY SUCH UNDISCLOSED BANK ACCOUNT. THE APPELLANT HOWEVER SUBMITTED THAT THE SAID CASH DEPOSITS HAVE BEEN OFFERED BY HIM IN THE DECLARATION OF RS 4 CRORES TH AT INCLUDED VARIOUS MOVABLE AND IMMOVABLE PROPERTIES FOR WHICH APPELLAN T HAS ASSUMED THE UTILIZATION OF THESE CASH DEPOSITS ON BEING WITHDRA WN. REFERRING TO THE DETAILS OF ASSETS COVERED IN THE DECLARATION OF RS 4 CRORES IT SHOWS CASH OF RS 1,62,74,326/- BESIDES OTHER IMMOVABLE AND MOVABLE P ROPERTIES IN ORDER TO MEET THE FIGURE OF DECLARATION OF RS 4 CRORES BEING GIVEN. THUS THIS AMOUNT WAS OFFERED AND ACCEPTED IN LINE WITH THE DECLARATI ON MADE IN ORDER TO AVOID THE LITIGATION. REJECTING THE APPELLANTS CONTENTION AO OBSERVED TH AT IT IS A MAKE BELIEVE STORY AND LEVIED THE PENALTIES AS UNDER- 10 ITA NOS.495 TO 497/PUN/2014 AY AMT(RS) 2002 - 03 RS 11,59,160/ - 2003 - 04 RS 16,08,250/ - 2004 - 05 RS 14,63,450/ - THE CIT(A) CONFIRMED THE PENALTY. REFER PARA 6.4 TO 6.8 OF HIS CONSOLIDATED ORDER FOR ALL THE ABOVE ASSESSMENT YEA RS. SUBMISSION:- 1. AT THE OUTSET NO ADDITION AT ALL WAS WARRANTED MAINLY BECAUSE THOSE RELEVANT BANK PASSBOOKS WERE NOT FOUND WITH THE APP ELLANT. THEREFORE AO IS BARRED FROM ASSUMING THOSE DEPOSITS IN THE SAID BAN K AS THAT OF THE APPELLANT. THE AO IS ALLOWED TO HAVE ASSUMPTION U/ S 132(4A). HOWEVER IT IS CONFINED ONLY WITH RESPECT TO DOCUMENTS , PAPERS ET C FOUND WITH AND SEIZED FROM APPELLANT ONLY. THE AO HOWEVER WOULD HAVE BEE N LEGALLY RIGHT IN ASSUMING THE SAID CASH DEPOSITS AS INCOME OF SHRI T ANAJI SAUDAGAR JAGTAP FROM WHOSE RESIDENCE THESE BANK PASSBOOKS HAVE BEEN SEIZED IN AN ACTION U/S 132(2). IT IS AN ESTABLISHED POSITION OF LAW THAT THERE CAN BE MADE NO ADDITION ON THE BASIS OF ANY MATERIAL SEIZED FROM THIRD PARTY U NLESS THE AO BRING ON RECORD CORROBORATIVE EVIDENCES . THE ADDITION IS MADE ONLY BECAUSE THE APPELLANT HAS AGREED AND NOT BECAUSE ANY EVIDENCE FOUND AGAINST THE APPELLAN T. THEREFORE WHERE THE ADDITION ITSELF WAS NOT WARRANT ED THERE IS NO SCOPE TO BELIEVE THAT APPELLANT HAS CONCEALED THE INCOME OR FURNISHED THE INACCURATE PARTICULARS OF INCOME AND CONSEQUENTLY THERE CAN BE NO PENALTY LEVIABLE. 18. ASSESSEE RELIED ON THE FOLLOWING DECISIONS TOO AGAINST THE AOS PRESUMPTION THAT THE ACCOUNTS BELONG TO THE ASSESSE E : I. KETAN SHAH VS. ACIT ITA NOS. 2321 & 2322/MUM/2013 DATED 26.06.2015 II. STRAPETX INDIA PVT. LTD. VS. DCIT 84 ITD 320 III. AMARJITSING BAKSHI (HUF) VS. ACIT 81 TTJ 169 (TM 19. ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS FOR THE LEGAL PROPOSITION THAT NO ADDITION CAN BE MADE WITHOUT HA VING ANY MATERIAL SEIZED DURING THE SEARCH ACTION : I. RAMA TRADERS VS FIRST INCOME TAX OFFICER PATNA IT AT 32 TTJ 483 II. SETH AKSHAY PUSHPVADAN VS. DCIT AHMADABAD BENCH 130 TTJ 42 11 ITA NOS.495 TO 497/PUN/2014 20. WE HEARD BOTH THE PARTIES ON THE DEBATABILITY O F THE ISSUE AS WELL AS APPLICATION OF PROVISIONS OF SECTION 69B OF THE ACT . SO FAR AS THE PROVISIONS OF SECTION 69B QUA THE FACTS OF THE IMPUGNED ADDITI ON IS CONCERNED, WE FIND THE DEPOSITS FOUND IN THE BANK ACCOUNTS LYING WITH SEVA VIKAS COOPERATIVE BANK LTD. ARE STANDING IN THE NAME OF MR. TANAJI SA UDAGAR JAGTAP. OBVIOUSLY, THESE ACCOUNTS WILL NOT/ARE NOT FIGURING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THEREFORE, INVOKING THE PROVISION S OF SECTION 69B IS NOT SUSTAINABLE. THE SAID PROVISION DO NOT AGREE TO TH E FACT THAT THE OWNING UP OF THE ACCOUNTS BY THE ASSESSEE TANTAMOUNT TO DISCL OSURE OF THE SAID BANK ACCOUNTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. TAKING SUCH AN EXTREME INTERPRETATION DOES NOT GEL-WELL WHEN IT COMES TO T HE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. THEREFORE, THE ARGUMENTS RAISED BY THE ASSESSEE IN THIS REGARD HAVE TO BE ALLOWED AND AGAINST THE REVE NUE. 21. REGARDING THE DEBATABILITY OF THE ADDITIONS AND THEREFORE UNSUSTAINABILITY OF THE PENALTY PROCEEDINGS, WE FIN D MR. TANAJI SAUDAGAR JAGTAP HAS OWNED UP THE BANK ACCOUNTS AND THE SAME IS CONFIRMED BY THE RECORDS OBTAINED FROM THE BANK WHERE HIS NAME, HIS SIGNATURE, HIS PHOTOGRAPHS WERE FOUND IN THE BANK OPENING FORMS WI TH THE BANK. IN THE STATEMENT RECORDED DURING 133A OF THE ACT, THERE IS CATEGORICAL OWNING UP OF THE ACCOUNTS BY MR. TANAJI SAUDAGAR JAGTAP ONLY. I T IS ONLY IN THE LETTER WRITTEN BY THE ASSESSEE TO THE DDIT (INVESTIGATION) ON 2011-2007 (SUPRA) ON THE SUBJECT RELATING TO THE DECLARATION OF UNACCOUN TED INCOME, COPY OF WHICH IS EXTRACTED ABOVE, ASSESSEE MENTIONED THAT THE ASS ESSEES BUSINESSES ARE RUN IN THE NAME OF TANAJI SAUDANAGAR JAGTAP. OTHER WISE, ASSESSEE HAS BEEN CONTENTING CONSISTENTLY THAT THE SAID ACCOUNTS BELO NGS TO MR. TANAJI SAUDAGAR JAGTAP AND NOT TO THE ASSESSEE. THE FAT O F LETTER DATED 24-12- 2009 ADDRESSED TO THE DDIT, CIRCLE-2(3) BY THE ASSE SSEE CONFIRMED THE 12 ITA NOS.495 TO 497/PUN/2014 SAME. CONTENTS OF PARA NO.8 ARE RELEVANT AND THE S AME IS EXTRACTED AS UNDER : 8. YOU ARE FURTHER STATING THAT MR. TANAJI JAGTAP I S MY EMPLOYEE AND THAT I HAVE GIVEN HIM THE POWER OF ATTORNEY. THE F ACT OF THE MATTER IS SHRI. TANAJI JAGTAP WAS AND IS NEVER MY EMPLOYEE. ALTHOU GH HE IS KNOWN TO ME AS A FRIEND AND WHENEVER NECESSARY HE ASSISTS ME AS A CASUAL WORKER. I GAVE HIM THE POWER OF ATTORNEY ONLY IN RESPECT OF S ALE TRANSACTION OF LAND GAT NO. 64 SITUATED AT CHIKALI TO REPRESENT ME AND SIGN THE DOCUMENT OF REGISTRATION AS VENDOR. HOWEVER THAT SALE DOCUMENT WAS NOT REGISTERED AND HE WAS NOT REQUIRED TO SIGN SUCH DOCUMENT. THIS TE MPORARY ARRANGEMENT WAS MADE BECAUSE AT THAT TIME I WAS CONFINED TO BED ON ACCOUNT OF SPINAL AND BACK ACHE. IN THE CIRCUMSTANCE ALL THE STATEME NT/ALLEGATION MADE IN YOUR LETTER THAT THOSE PARTIES HAS TAKEN THE LOANS FROM ME DIRECTLY OR THROUGH LALLAN SINGH ETC ARE NOT AT ALL ACCEPTED BY ME. SIMILARLY YOUR STATEMENT THAT MR. TANAJI JAGTAP WAS AND IS MY AGEN T IS ALSO UNTRUE. MOREOVER DOCUMENTS AND PAPERS ARE FOUND AT THE RESI DENCE OF SHRI. TANAJI JAGTAP. THESE CAN NEVER BE CONSIDERED AT THE TRANS ACTION OR INVESTMENT OR INCOME EARNED BY ME AND IT IS EQUALLY UNTRUE TO SAY THAT MR. TANAJI JAGTAP WAS MY CUSTODIAN. IN VIEW OF THIS FACTUAL AND LEGA L POSITION IT IS SUBMITTED THAT PROPOSED ADDITION OF RS. 40205000/- AS AN UNEX PLAINED INVESTMENT U/S 69 FOR A.Y. 2006-07 IN MY HAND WOULD BE NOT ONLY INC ORRECT BUT ILLEGAL. 22. THE ABOVE EXTRACT SUGGESTS THAT THE DISCOVERIES FOUND FROM THE PREMISES OF MR. TANAJI SAUDAGAR JAGTAP HAVE NOTHING TO DO WITH THE ASSESSEE AND IT ALSO SUPPORTS THE CONTENTS OF APPLI CABILITY OF PROVISIONS OF SECTION 69 IN THIS REGARD. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE OWNERSHIP OF THE BANK ACCOUNTS AND THE TRANSACT IONS RECORDED IN THE SAID BANK ACCOUNTS CANNOT BE CONSIDERED FREE FROM THE DE BATE RELATING TO OWNERSHIP THAT IT BELONGS TO THE ASSESSEE. IT IS S ETTLED LEGAL PROPOSITION IN LAW THAT THE PENALTY CANNOT BE SUSTAINED ON THE ADD ITION WHICH IS NOT FREE FROM THE REASONABLE OR GENUINE DEBATE AND DISPUTE. ON THIS GROUND ALSO, ASSESSEE WILL SUCCEED. THEREFORE, THE RELEVANT GRO UNDS RAISED BY THE ASSESSEE ARE ALLOWED. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ITA NOS. 496 AND 497/PUN/2014 ASSESSMENT YEARS 20 03-04 & 2004-05 : 24. THE FACTS ARE IDENTICAL, GROUNDS AND ADDITIONAL GROUNDS ARE SIMILARLY PROVIDED. ONLY DIFFERENCE IS WITH REGARD TO THE DI SCLOSURE OF INCOME. THE 13 ITA NOS.495 TO 497/PUN/2014 AMOUNT OF RS.53,60,820/- WAS THE ADDITION MADE BY T HE AO U/S.69B OF THE ACT FOR THE A.Y. 2003-04. SIMILARLY, AN AMOUNT OF RS.51,28,160/- WAS THE ADDITION MADE BY THE AO U/S.69B FOR THE A.Y. 2004-0 5. OTHERWISE, FACTS ARE IDENTICAL, EXPLANATIONS ARE SAME AND ARGUMENTS AND COUNTER ARGUMENTS ARE ALSO COMMON TO THE ONE WHICH WE HAVE ALREADY DISCUS SED IN CONNECTION WITH A.Y. 2002-03. CONSIDERING THE SAME, WE ARE OF THE VIEW THAT OUR CONCLUSIONS BOTH ON THE GROUNDS AND ADDITIONAL GROUNDS ARE EQUA LLY RELEVANT FOR THESE TWO ASSESSMENT YEARS ALSO. THEREFORE, ALL THE GROU NDS IN THE ABOVE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 25. IN THE RESULT, ALL THE 3 APPEALS OF THE ASSESSE E ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF JULY, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 26 TH JULY, 2017. COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) CENTRAL , PUNE 4. CIT CENTRAL, PUNE 5. A BENCH PUNE; 6. GUARD FILE.