Dr. T. Suryanarayana Rao, Hyd, Hyderabad V. ITO, W-13(1), Hyderabad

ITA 646/HYD/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6616 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-06-2011
• Assessment Year: 1992-1993
• Appeal Filed On: 18-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Document seized; Difference of opinion; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.646/HYD/2011 ASSESSMENT YEAR 1992-93 DR. T. SURAYANARAYANA RAO, HYDERABAD (PAN ABZPT 9724 A ) VS INCOME-TAX OFFICER, WARD-13(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SHRI T.DIWAKAR PRASAD O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1992-93 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, HYDERABAD DATED 14.3.2011. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO VALIDITY OF THE PENALTY IMPOSED UNDER S.271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE WAS WORKING AS A GOVERNMENT LECTURER. DURING THE YEAR 1990-91, THE ASSESSEE WENT ON EXTRA ORDINARY LEAVE AND VENTURED INTO REAL ESTATE BUSINESS AND MADE PROFITS FOR THE ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 2 ASSESSMENT YEARS 1991-92 AND 1992-93. ON 4.11.1993, A SEARCH AND SEIZURE OPERATION UNDER S.132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE. DURING THE SAID OPERATION, CERTAIN PAPERS/DOCUMENTS RELATING TO REAL E STATE BUSINESS/LAND DEALS WERE SEIZED. IT WAS FOUND THAT THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 1992-93. IN RESPONSE TO THE NOTICE UNDER S.148 DATED 8.2.1995, ISSUED BY THE ASSESSING OFFICER, THE ASSESSEE FILED RETURN OF INCOME ON 4.4.1995, DECLARING A TOTAL INCOME OF RS.45,455. IN THE ASSESSMENT THAT HAS ULTIMATELY BEEN COMPLETED UNDER S.143(3) READ WITH S .250 OF THE INCOME-TAX ACT, THE ASSESSING OFFICER DETERMINED TH E TAXABLE INCOME OF THE ASSESSEE AT RS.5,20,460, AFTER MAKI NG THE FOLLOWING ADDITIONS/DISALLOWANCES- 1. DISALLOWANCE OF PLOTTING, STONING AND CLEANING EXPENSES ON ESTIMATE BASIS RS. 5,000 2. DISALLOWANCE OF EXPENSES INCURRED FOR CULVERT, TRENCHING AND PLANTING OF TREES RS. 15,000 3. DISALLOWANCE OF CONVEYANCE EXPENSES ON ESTIMATE BASIS RS. 5,000 4. DISALLOWANCE OF ADMINISTRATIVE EXPENSES ON ESTIMATE BASIS RS. 10,000 5. ADDITION TOWARDS UNEXPLAINED EXPENDITURE INCURRED FOR DAUGHTERS MARRIAGE RS.2,00,000 6. ADDITION MADE ON ACCOUNT OF UNEXPLAINED CREDITS, WHICH WERE CLAIMED TO HAVE BEEN RECEIVED ON ACCOUNT OF- (A)LOAN FROM Y.VENKATESWARA RAO RS . 50,000 (B)LOAN FROM RAMABRAHMAM ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 3 RS.1,00,000 (C)LOAN FROM N.RAMANUJACHARI RS. 50,000 (D)SALE OF GOLD BANGLES RS. 40,000 RS.2,40,000 4. THOUGH THE CIT(A), ON APPEAL, CONFIRMED THE ABOVE ADDITIONS, ON FURTHER APPEAL, THE TRIBUNAL DE LETED ONLY THE ADDITION OF RS.2,00,000 MADE ON ACCOUNT OF THE EXPENSES IN CONNECTION WITH THE MARRIAGE OF ASSESSEES DAUGHTER, WHILE CONFIRMING THE OTHER ADDITIONS. 5. THE ASSESSING OFFICER INITIATED THE PROCEEDINGS FOR LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT, AND ULTIMATELY IMPOSED A PENALTY OF RS.1,65,567, TREATING THE UNPROVED CREDITS OF RS.2,40,000 AND OTHER DISALLOWANCES MADE ON ESTIMATE BASIS, BESIDES THE VERY RETURNED INCOME OF RS.45,455, AS CONSTITUTING THE CONCEALED INCOME OF THE ASSESSEE, VIDE PENALTY ORDER DATED 29.11.2006 PASSED UNDER S.271(1)(C) OF THE ACT. 6. ON APPEAL, THE CIT(A), BY THE IMPUGNED ORDER 14.3.2011, CONFIRMED THE ABOVE PENALTY LEVIED UNDER S.271(1)(C) OF THE ACT, AND DISMISSED THE APPEAL OF THE ASSESSEE. HENCE, THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 7. THE LEARNED COUNSEL OR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBM ITTED THAT THE ASSESSING OFFICER HAS TREATED EVEN THE INCOME ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 4 RETURNED BY THE CASE OF RS.45,555 AS THE CONCEALED INCOME OF THE ASSESSEE. HE ALSO SUBMITTED THAT EVEN THE ESTIMATE D ADDITIONS/DISALLOWANCES MADE IN THE ASSESSMENT WERE TREATED AS THE CONCEALED INCOME OF THE ASSESSEE WHICH IS NOT JUSTIFIED. SINCE SUCH ESTIMATED ADDITIONS ARE MADE ONLY ON ACCOUNT OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT OR ON ACCOUNT OF ASSESSEES INABILITY TO SUBSTANTIATE THE CLAIM FOR EXPENSES TO THE SATISFACTION OF THE ASSESSING OFFICER, SUCH ESTIMATED ADDITIONS/DISALLOWANCE CANNOT LEAD TO THE INFERENCE OF CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. AS FOR THE PENALTY LEVIED WITH REGARD TO UNPROVED CREDITS, WHICH PROMPTED THE ASSESSING OFFICER TO MAKE AN ADDITION OF RS. 2,40,000 IN THE ASSESSMENT, IT IS SUBMITTED THAT THE ASSESSEE HAS DONE ALL THAT THAT WAS POSSIBLE TO ESTABLISH THE GENUINENESS OF THE SAID CREDITS, AND STILL NOT SATISFIED WITH THE EVIDENCE A DDUCED BY THE ASSESSEE, THE ASSESSING OFFICER HAS MADE THE ADDITION IN QUESTION, BUT MERELY BASED ON SUCH ADDITIONS MADE IN ASSESSMENT, IT IS NOT POSSIBLE TO IMPOSE PENALTY TREATING SUCH ADDITIONS AS CONSTITUTING CONCEALED INCOME OF THE ASSESSEE. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUBMITTED THAT IT IS A FIT CASE FOR THE LEVY OF PENALTY FOR CONCEALMENT, SINCE THE ASSESSEE HAS NOT EVEN FILED THE RETURN OF INCOME, IN TIME AND COULD NOT ADD UCE EVIDENCE IN SUPPORT OF HIS CLAIM WITH REGARD TO EITHER ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 5 EXPENSES CLAIMED OR THE CREDITS. HE RELIED ON THE FOLLOWI NG JUDGEMENTS: 1. SURENDER PAUL VS. CIT (287 ITR 223) (P&H) 2. CIT VS. R. KESAVAN NAIR (287 ITR 276) (KER. HC) 3. ASHOK KUMAR GUPTA VS. CIT (287 ITR 376) (P&H) 4 RAVI & CO. & OTHERS VS. ACIT (271 ITR 286) (MAD. HC) 5. CIT VS. SMT. CHANDRAKANTA & ANOTHER (205 ITR 60 7) (MP HC) 6. PREMPAL GANDHI VS. CIT (231 CTR 100) (P&H) 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE IMPUGNED PENALTY HAS BEEN LEVIED WITH REFERENCE TO TH E INCOME DISCLOSED IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER S.148, ESTIMATED ADDITIONS/DISALLOWANCES MADE OUT OF EXPENSES INCURRED ON VARIOUS COUNTS, AND THE ADDITION OF RS.2,40,000/- MADE ON ACCOUNT OF UNPROVED CREDITS WHICH WERE CLAIMED BY THE ASSESSEE TO BE REPRESENTING LOANS FROM THREE PERSONS AGGREGATING TO RS.2,00,000 AND PROCEEDS ON SALE OF BANGLES OF RS.40,000. THE INCOME DECLARED BY TH E ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER S.148, IS ONLY RS.45,555/-. 10. THE FIRST ADDITION CONSIDERED FOR LEVY OF PENALT Y IS THE DISALLOWANCE OF RS.35,000/- UNDER VARIOUS HEADS ON ESTIMATE BASIS. THE ASSESSEE ACCEPTED THIS DISALLOWANCE ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 6 AND HAS NOT PREFERRED APPEAL BEFORE THE HIGHER AUTHO RITIES. THE DISALLOWANCE OF RS.35,000/- IS ON ESTIMATED BASIS. T HE ASSESSEE HAS ACCEPTED THIS DISALLOWANCE ON THE REASON THAT THE ASSESSEE WAS NOT IN A POSITION TO LEAD REQUIRED EVIDE NCE. THIS ITSELF CANNOT BE CONSTRUED AS EITHER CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO JUST IFY LEVY OF PENALTY U/S 271(1)(C ) OF THE IT ACT. THE FACT REMAINS THAT THE ASSESSEE HAS INCURRED EXPENDITURE BUT WHAT WAS DOUBTED WAS THE BUSINESS PURPOSE OF THE EXPENDITURE. IT WAS HELD IN THE CASE OF CIT VS. RELIA NCE PRODUCTS (PVT.) LTD. (322 ITR 158) THAT WHERE THE RE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271 (1) (C ). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S. ON THIS COUNT, IN OUR OPINION, PENALTY U/S 271(1) IS NOT LEVIABLE. 10.1. HOWEVER, THE SAME CANNOT BE SAID ABOUT THE FOLLOWING ADDITIONS: ADDITION MADE ON ACCOUNT OF UNEXPLAINED CREDITS, WHICH WERE CLAIMED TO HAVE BEEN RECEIVED ON ACCOUNT OF- (A)LOAN FROM Y.VENKATESWARA RAO ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 7 RS . 50,000 (B)LOAN FROM RAMABRAHMAM RS.1,00,000 (C)LOAN FROM N.RAMANUJACHARI RS. 50,000 (D)SALE OF GOLD BANGLES RS. 40,000 RS.2,40,000 ONUS OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS IS CONFINED TO EVIDENCE REGARDING IDENTITY OF THE CREDIT OR, CREDIT WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS, HOWEVER, IN PENALTY PROCEEDINGS IT IS NOT T HE CASE THAT ENTIRE BURDEN IS ON THE DEPARTMENT TO SHOW T HAT WHAT WAS ADDED WAS IN FACT CONCEALED INCOME OF THE ASSESSEE. EXPLANATION TO SECTION 271(1) (C ) PROVIDES F OR DEEMING ADDITION AS CONCEALED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED PROVI DED CONDITIONS LAID DOWN IN EITHER OF THE CLAUSES ARE SATISFIE D. IF ASSESSEE DOES NOT FURNISH ANY EXPLANATION, IN RESPECT OF ADDITION MADE, OR EXPLANATION FURNISHED IS FOUND FALSE , THEN CLAUSE (A) EXPLANATION 1 CAN BE INVOKED. WHERE ASSESSEE FURNISHES AN EXPLANATION IN RESPECT OF ADDITION MADE, THEN AS PER CLAUSE (B) OF EXPLANATION 1, THE ADDITION WOULD BE DEEMED AS CONCEALED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED, PROVIDED FOLLOWING THREE CONDITIONS ARE SATISFIED: I) ASSESSEE IS NOT ABLE TO SUBSTANTIATE HIS EXPLANATION II) EXPLANATION FURNISHED BY HIM IS NOT BONA FIDE ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 8 III) ALL THE MATERIAL FACTS, NECESSARY FOR ASSESSMENT, OR IN RESPECT OF EXPLANATION, ARE NOT FURNISHED BY HIM. IF ASSESSEE IS ABLE TO SHOW PRIMA FACIE THAT HE IS NEITHER HIT BY CLAUSE (A) OR BY CLAUSE. (B) OF EXPLANATION 1, THEN ONUS WILL SHIFT TO THE ASSESSING OFFICER THAT CONDITION LAID DOWN THEREIN ARE SATISFIED. 11. IN RESPECT OF EXPLANATION 1 THE DEEMING FICTION IS RAISED AND ADDED/DISALLOWED AMOUNT IS TREATED AS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALE D. EXPLANATION 1(B) WILL NOT APPLY IF THE EXPLANATION, GIVEN BY THE ASSESSEE IN THER QUANTUM PROCEEDINGS WHICH HE COULD NOT SUBSTANTIATE IN THOSE PROCEEDINGS WAS (I) BONA FIDE A ND (II) HE HAD DISCLOSED IN ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME. IN CA SES WHERE EXPLANATION WAS OFFERED, BUT WAS REJECTED AS IT CO ULD NOT BE SUBSTANTIATED BY THE ASSESSEE, THERE WOULD ARISE NO PRESUMPTION OF CONCEALMENT OF THE PARTICULARS OF INCOME THAT WAS ADDED OR DISALLOWED IF SUCH ASSESSEE CAN SHOW THA T THE SAID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD DISCLOSED ALL FACTS RELATING TO SUCH EXPLAN ATION AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME D URING THE QUANTUM PROCEEDINGS. FOR BRINGING THE CASE UNDER T HE MAIN PROVISION THE ONUS IS PUT ON THE DEPARTMENT TO P ROVE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF. TO BRING THE CASE OF THE ASSESSEE WITHIN ITS MISCHIEF, MERE REJECTION ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 9 OF ASSESSEES CLAIM WOULD NOT BE SUFFICIENT AND THE ASSESSEE CANNOT BE HELD GUILTY OF CONCEALMENT. IT IS BY VIRTUE OF EXPLANATION THAT ASSESSING OFFICER CAN RAISE THE PRESUMPTI ON ABOUT ADDITIONS MADE TO THE TOTAL INCOME OR DEDUCTION DISALLOWED THAT IT REPRESENTS ASSESSEES CONCEALED INCOME OR THE INCOME IN RESPECT OF WHICH ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. WHEN WE EXAMINE PART B OF EXPLANATION 1 CAREFULLY THEN WE ARE OF THE VIEW THAT THE WORDS NOT SUBSTANTIATE USED IN THAT CLAUSE DOES NOT MEA N THAT IS NOT ACCEPTED BY THE CONCERNED AUTHORITY, BUT IT MEANS THAT THERE IS NO SUBSTANCE IN THE CLAIM MADE BY TH E ASSESSEE. THE WORD SUBSTANTIATE IS OPPOSITE TO THE WORD VAGUE OR FANCIFUL OR WITHOUT ANY FOUNDATION OR BASIS. THE PHRASE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE ME ANS THAT THE ASSESSEE HAS TO SHOW THAT CIRCUMSTANCES EXISTED WHEREBY IT HAS MADE THE CLAIM, OR THAT, AS IN THE PRE SENT CASE, IT HAD IN FACT RECEIVED THE MONEY FROM THE CREDITO RS BUT THEIR CREDENTIALS CANNOT BE ESTABLISHED. IT HAS TO B E PROVED THAT FAILURE OF THE ASSESSEE TO FURNISH EVIDENCE I N SUPPORT THE CLAIM WAS BEYOND HIS CONTROL. ASSESSEE HAS TO PROVE OR FURNISH EVIDENCE THAT CIRCUMSTANCES EXISTED WHICH DISABLED HIM TO FURNISH THE EVIDENCE IN SUPPORT OF HIS C LAIM. THE THIRD CONDITION IS THAT ALL THE FACTS RELATING TO T HE CLAIM AND MATERIAL TO THE COMPUTATION OF ITS TOTAL INCOME HA S BEEN DISCLOSED BY HIM. IT MEANS THAT ALL THE MATERIAL FACTS WHICH ARE RELEVANT FOR COMPUTATION OF INCOME OF THE ASSESSEE HA VE BEEN DISCLOSED TO THE DEPARTMENT NOT MERELY DURING THE ASSESSMENT PROCEEDINGS BUT IN THE RETURN OF INCOME. ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 10 12. WHEN WE EXAMINE THE FACTS OF THE PRESENT CASE, AS OBSERVED BY THE TRIBUNAL IN ITS ORDER DATED 10.8.200 4 IN ITA NOS.47 & 48/H/2002 THAT THE AMOUNTS WERE ADVANCED IN THE YEAR 1987, 1988 AND 1989. THE ASSESSEES WIFE IN RE PLY TO QUESTION NO.8, IN HER STATEMENT RECORDED ON 4.11.19 93, WHICH IS AT PAGE -14 OF THE APB STATED THAT THE LOAN O F RS.50,000 FROM T. VENKATESWARA RAO AS WELL AS RS.50,000 FROM KINNERA HOTEL AND THE AMOUNT OF RS.1 LAKH FROM M R. RAMABRAHMAN WERE TAKEN ABOUT 7 YEARS AGO. THUS, THESE THREE LOANS WERE NOT TAKEN DURING THE YEAR AND, THUS CANNOT BE SAID TO BE A SOURCE FOR INVESTMENT IN THE PURCHASE OF LAND DURING THE YEAR. THERE IS NO PROXIMITY OF SOURCE WHATSOEVER. EVEN OTHERWISE, THE ASSESSEE HAS NOT LED ANY EVIDENCE TO PROVE THE IDENTITY OF THE CREDITOR, THEIR CREDITWORTHINESS, AND THE GENUINENESS OF THE TRANSACTION . A THREE LINE CONFIRMATION LETTER WAS FILED BEFORE THE A SSESSING OFFICER IS INCLINED TO DISBELIEVE THIS LOAN, HE HAS NOT CO ME FORWARD EVEN DURING THE SECOND ROUND OF ASSESSMENT PROCEEDINGS TO FILE ANY EVIDENCE IN THIS REGARD. THE ASSESSEE HAS ALSO NOT MADE A REQUEST TO THE ASSESSING OFFICER TO SUMMON OR EXAMINE THESE CREDITORS ON THE GROU ND THAT THEY ARE NOT COOPERATING WITH HIM IN FURNISHING THE DETAILS AND IT CANNOT BE TAKEN AS EVIDENCE OF SOURCE OF INVESTMENT. 13. FURTHER IT WAS OBSERVED BY THE TRIBUNAL THAT TH E SALE PROCEEDS OF GOLD ORNAMENTS, WE FIND THAT IN THE COPY OF THE ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 11 SEIZED DOCUMENTS PLACED BEFORE US, WHICH IS RELIED UPON BY THE ASSESSEE SHOWS THAT ON 18.5.1992, 8 BANGLES ARE WORTH RS.30,000/-. THE ASSESSMENT YEAR IN QUESTION IS 1992-93. PREVIOUS YEAR ENDED ON 31.3.1992. SO THE DOCUMENT OF MAY, 1992 DOES NOT COME TO THE RESCUE OF THE ASSESSEE AND OBSERVED THAT THE EVIDENCE PRODUCED DOES NOT SUPPORT THE ASSESSEES CASE AS A SOURCE OF INVESTMENT. 14. THUS, THERE IS NO EVIDENCE REGARDING THE SOURCE OF INVESTMENT. THE EXPLANATION FURNISHED BY THE ASSESSEE CANNOT BE SAID TO BE SUBSTANTIATED. IT IS APPARENTLY VA GUE, FANCIFUL AND WITHOUT ANY COORDINATION OR BASIS. IN RESP ECT OF SECOND CONDITION, IN EXPLANATION 1(B), WE ARE OF THE V IEW THAT EXPLANATION FURNISHED BY THE ASSESSEE IS NOT BONA FI DE. THE ASSESSEE HAS EXPLAINED THAT THE MONEY HAS BEEN RECEIVED AS A LOAN FROM THREE PARTIES AND SALE OF GOLD BANGLES. THIS EXPLANATION IS FOUND TO BE UNSUBSTANTIATE D COUPLED WITH THE BUNDLE OF CONTRADICTIONS LEADING TO TH E BELIEF THAT IT IS UNTRUE. THERE IS NO EVIDENCE THAT T HE ASSESSEE REALLY AVAILED ANY LOAN FROM SHRI Y. VENKATESWA RA RAO, RAMABRAMAM AND SHRI N. RAMANUJACHARILU OR THER E WAS ANY SALE OF GOLD. THE INGREDIENT ABOUT A BONA FI DE CLAIM IS THAT THE ASSESSEE SHOULD BE ABLE TO SHOW OR PROVE SOME IMMEDIATE STEPS IN THE WHOLE PROCESS OF TRANSACTION., IF IT IS NOT ABLE TO GIVE EVIDENCE IN RESPECT OF ANY ST EP IN THE WHOLE PROCESS OF TRANSACTION THEN IT CAN BE SAID THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT BONA FIDE. IT IS NOTHING BUT A BALD CLAIM. THERE IS NOTHING TO SHOW TH AT THE ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 12 DETAILS OF THE FUNDS AS CLAIMED BY THE ASSESSEE HAVE ACTUAL LY COME FROM THE ALLEGED LENDER OR SALE OF GOLD. THUS, T HE EXPLANATION FURNISHED BY THE ASSESSEE CANNOT BE TREATED AS BONA FIDE. IN VIEW OF THESE ALL THE INGREDIENTS LAID DOWN IN EXPLANATION 1 (B) ARE FULLY SATISFIED AND THEREFORE, THE ASSESSING OFFICER CAN DEEM THE ADDITION AS INCOME WITH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. AS A RESULT, WE HOLD THAT PENAL TY IS LEVIABLE U/S 271(1)(C ) IN RESPECT OF ADDITION ON ACCOUNT OF UNEXPLAINED CREDITS, WHICH WERE CLAIMED TO HAVE BEEN RECEIVED FROM SHRI Y. VENKATESWARA RAO, RAMABRAMAM AN D SHRI N. RAMANUJACHARILU OR SALE OF GOLD TOTALLING AT RS.2,40,000/-. THE ASSESSING OFFICER HAS TO RE-COMPUTE THE PENALTY ACCORDINGLY. 15. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30.6.2011 SD/- SD/- (G.C. GUPTA) (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 30 TH JUNE, 2011 ITA NO.646/H/2011 DR. T. SURAYANARAYANA RAO, HYDERABAD 13 COPY FORWARDED TO: 1. DR. T. SURAYANARAYANA RAO, C/O. SHRI K.VASANT KUM AR, SHRI A.V.RAGHURAM, SHRI P.VINOD & SHRI B.PEDDIRAJULU, AD VOCATES, FLAT NO.610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEER BAGH, HYDERABAD 500 001. 2. INCOME-TAX OFFICER, WARD-13(1), HYDERABAD 3. CIT(A)-II, HYDERABAD. 4. COMMISSIONER OF INCOME-TAX I, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S