JAGDISH J. MASUKHANI, MUMBAI V. DCIT 8(2), MUMBAI

ITA 5137/MUM/2009

• Counselvise Citation: 513719914 RSA 2009
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 07-04-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 09-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: KESHAV B BHUJLE

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.5137/M/2009 ASSESSMENT YEAR 1995-96 SHRI JAGDISH J. MANSUKHANI THE DCIT 8(2), MUMBAI 102, MAN HOUSE, S.V.ROAD VILE PARLE (WEST) MUMBAI 400 056. PAN : AACPM 2147 G APPELLANT RESPONDENT ASSESSEE BY : SHRI KESHAV B. BHUJLE REVENUE BY : MS. ASHIMA GUPTA O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 26.3.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 1995-96 . THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING LEVY OF PENALTY UNDER S ECTION 271(1)(C). 2. THE ASSESSEE IS A DIRECTOR OF M/S. MAN INDUSTRIE S LTD., WHICH BELONGED TO MANSUKHANI GROUP. A SEARCH HAD BEEN CONDUCTED AT TH E BUSINESS PREMISES OF THE GROUP AS WELL AS THE RESIDENTIAL PREMISES OF TH E DIRECTORS DURING THE COURSE OF WHICH CASH, JEWELLERY AND OTHER INCRIMINATING DO CUMENTS WERE FOUND. IT WAS FOUND THAT THE ASSESSEE HAD MADE UNACCOUNTED INVEST MENT OF RS.2,50,000/- IN IMMOVABLE PROPERTIES IN ADDITION TO CASH FOUND OF R S.50,000/-. THESE AMOUNTS WERE ASSESSED AS UNDISCLOSED INCOME OF THE ASSESSEE BY THE AO. IN APPEAL 2 CIT(A) CONFIRMED THE ADDITION OF RS.50,000/- BUT DE LETED THE ADDITION MADE ON ACCOUNT OF INVESTMENT IN IMMOVABLE PROPERTIES. IN F URTHER APPEAL THE TRIBUNAL SET ASIDE THE ORDER OF CIT(A) IN RELATION TO ADDITI ON OF RS.2,50,000/- AND CONFIRMED THE ORDER OF AO. THUS BOTH THE ADDITIONS WERE FINALLY CONFIRMED. THE AO ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IN RESPONSE TO WHICH NO REPLY HAD BEEN RECEIVED BY THE AO. THE ASS ESSEE GAVE NO EXPLANATION AS TO WHY PENALTY COULD NOT BE LEVIED. AO THEREFORE LEVIED PENALTY AT THE MAXIMUM RATE OF 300% OF TAX SOUGHT TO BE EVADED AMO UNTING TO RS.3,60,000/- WHICH WAS DISPUTED BY THE ASSESSEE. 3. IN APPEAL THE ASSESSEE SUBMITTED THAT ON 19.5.94 HE HAD ADVANCED A SUM OF RS. 1,50,000/- IN CASH TO THE PROPERTY BROKE R MR. SUNIL JAIN FOR PURCHASING A PLOT. THE TRANSACTION DID NOT MATERIAL IZE AND THE AMOUNT WAS RETURNED BY 29.5.94. SUBSEQUENTLY ON 15.6.94, AN AM OUNT OF RS.1 LAC WAS GIVEN TO MR. JAIN FOR PURCHASING A PLOT AGAIN BUT T HIS TRANSACTION HAD ALSO NOT MATERIALIZED AND THE AMOUNT WAS RETURNED. THEREAFTE R ON 30.8.94, THE ASSESSEE HAD GIVEN AN AMOUNT OF RS.2 LACS TO MR. JA IN FOR THE PURPOSE OF PURCHASING A PLOT. THE ASSESSEE EXPLAINED DURING SE ARCH PROCEEDINGS THE DETAILS OF TRANSACTIONS MENTIONED EARLIER AND OFFER ED TO TAX THE PEAK AMOUNT OF RS.2 LACS. AO HOWEVER ADDED A SUM OF RS.2,50,000/- IN RESPECT OF FIRST TWO ENTRIES BUT CIT(A) ACCEPTED THE CLAIM OF THE ASSESS EE ON PEAK BASIS AND DELETED THE ADDITION OF RS.2,50,000/-. THE TRIBUNAL HOWEVER REVERSED THE ORDER OF CIT(A) ON THE GROUND THAT THERE WAS NO EVIDENCE THAT SHRI SUNIL JAIN HAD RETURNED THE FIRST TWO AMOUNTS. AS REGARDS THE CASH FOUND, THE ASSESSEE HAD STATED THAT THE CASH WAS GIVEN TO THE ACCOUNTANT WH ICH WAS RECEIVED BACK BUT THE ASSESSEE COULD NOT GIVE THE PURPOSE FOR WHICH T HE AMOUNT HAD BEEN GIVEN. IT WAS SUBMITTED THAT THE ASSESSEE COULD NOT EXPLAI N THE MATTER AS THE DATE 3 AND PERIOD OF TRANSACTION WAS NOT MENTIONED. ACCOR DINGLY, IT WAS REQUESTED THAT THE PENALTY SHOULD BE DELETED. CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND OBSERVED THAT THE CL AIMS WERE NOT SUPPORTED BY ANY EVIDENCE. HE THEREFORE CONFIRMED THE LEVY OF PE NALTY AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US THE LEARNED AR FOR THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES WHEREAS THE LEARNED D R PLACED RELIANCE ON THE FINDINGS GIVEN BY THE LOWER AUTHORITIES. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALTY IN RELATION TO ADDITIONS MADE IN ASSESSMENT ON ACCOUNT OF ADVANCES/ INVESTMENT OF RS.2,50,000/- IN PROPERTY AND ON ACCOUNT OF CASH FOUND OF RS.50,000/-. THE AD DITIONS MADE BY THE AO HAVE BEEN UPHELD BY THE TRIBUNAL. THE AO HAS LEVIED PENALTY @ 300% OF TAX SOUGHT TO BE EVADED. THE ADDITIONS OF RS.2,50,000/- WERE ON ACCOUNT OF ADVANCE OF RS.1,50,000/- MADE BY THE ASSESSEE ON 19 .5.94 TO THE BROKER SHRI SUNIL JAIN AND ANOTHER ADVANCE OF RS.1 LAC MADE ON 15.6.94 TO THE SAME BROKER. THE CASE OF THE ASSESSEE IS THAT SUM OF RS. 1,50,000/- ADVANCED EARLIER HAD BEEN RECEIVED BACK ON 29.5.94 FROM WHICH FURTHE R ADVANCE OF RS.1 LAC WAS GIVEN. CIT(A) HAD ACCEPTED THE CLAIM OF THE ASSESSE E BUT THE TRIBUNAL REVERSED THE ORDER OF CIT(A) ON THE GROUND THAT THERE WAS NO EVIDENCE TO SHOW THAT THE MONEY ADVANCED TO MR. JAIN HAD BEEN RECEIVED BACK. SIMILARLY CASH AS PER THE NOTINGS ON THE PAPER FOUND WAS NOT EXPLAINED SATISF ACTORILY AND WAS ADDED TO THE TOTAL INCOME. UNDER THE PROVISIONS OF EXPLANAT ION 1 TO SECTION 271(1)(C) THERE WILL BE A CASE FOR PENALTY UNDER SECTION 271( 1)(C) IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT, THE ASSESSEE IS NOT ABL E TO OFFER ANY EXPLANATION; 4 OR THE EXPLANATION OFFERED IS FOUND TO BE FALSE OR THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND ALSO FAILS TO FURN ISH THAT THE EXPLANATION GIVEN IS BONAFIDE. IN THE PRESENT CASE THE ASSESSEE HAD N OT BEEN ABLE TO SUBSTANTIATE THE EXPLANATION BY GIVING PROPER EVIDENCE AND THE E XPLANATION HAS ALSO NOT BEEN FOUND TO BE BONAFIDE AS IT IS NOT EXPLAINED AS TO HOW THE ASSESSEE COULD NOT FILE CONFIRMATION FROM THE PROPERTY BROKER OR T HE ACCOUNTANT. THEREFORE IN OUR VIEW PENALTY ON THE FACTS OF THE CASE IS LEVIAB LE. HOWEVER WE FIND THAT THE AUTHORITIES BELOW HAVE BEEN RATHER HARSH IN LEVYING THE MAXIMUM PENALTY. IT IS NOT A CASE THAT THE ASSESSEE COULD NOT EXPLAIN THE MATTER OR GAVE AN EXPLANATION WHICH WAS PROVED TO BE FALSE. IT IS ON LY A CASE OF THE EXPLANATION BEING NOT SUBSTANTIATED BY PROPER EVIDENCE. IN OUR VIEW, ON THE FACTS OF THE CASE, PENALTY ONLY AT THE MINIMUM RATE WOULD BE JUS TIFIED. WE ACCORDINGLY MODIFY THE ORDER OF CIT(A) AND CONFIRM THE PENALTY TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED PARTLY. 7. ORDER WAS PRONOUNCED IN THE OPEN COURT 20.04.201 1. SD/- SD/- ( D. K. AGARWAL ) (RAJEND RA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR J BENCH, ITAT, MUMBAI 5 // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK