ACIT 5(2), MUMBAI V. METROPOLIS HELATH SERVIC ES (INDIA) P. LTD, MUMBAI

ITA 6504/MUM/2009

• Counselvise Citation: 650419914 RSA 2009
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 18-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: JITENDRA B SANGHAVI
• Keywords: Unexplained investment; Business income; Search and seizure
• Section: 143(3); 133A; 131; 27; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI D. MANMOHA, VICE PRESIDENT AND SHRI P.MJAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 6504/MUM/2009 ASSESSMENT YEAR : 2004-05 ASSTT. COMMISSIONER OF INCOME-TAX, M/S METROPOLIS HEALTH SERVICES 5(2), MUMBAI. VS. (INDIA) PVT. LTD. 250-D UDYOG BHAVAN, SUDAM KALU AHIRE MARG, WORLI, MUMBAI 400 030. PAN AAACI5145D. APPELLANT. RESPONDENT. APPELLANT BY :SHRI D.S. SUNDER SINGH. RESPONDENT BY : SHRI JITENDRA B. SANGHAVI. DATE OF HEARING : 18-08-2011 DATE OF PRONOUNCEMENT : 09-09-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-9, MUMBAI DATED 12-10-2009 WHEREBY HE CANCELLED THE PENALTY OF RS.8,96,875/- IMPOSED BY THE AO U/S 271(1)(C). 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF RENDERING DIAGNOSTIC MEDICAL SERVICES. IN A SEARCH ACTION CONDUCTED U/S 132 ON 03-03-2004, MS. AMEERA SHAH, VICE PRESID ENT OF THE ASSESSEE WAS FOUND TO BE CARRYING CASH OF RS.25 LAKHS IN HER HAN D BAGGAGE. WHILE EXPLAINING THE SAID CASH, MS. AMEERA SHAH STATED THAT THE SAME WAS BELONGING TO THE ASSESSEE 2 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. COMPANY AND SHE WAS CARRYING IT FOR BUSINESS PURPOS E. SHE ALSO STATED IN HER STATEMENT RECORDED U/S 132 THAT THE SAID CASH WAS H ANDED OVER TO HER BY SHRI ARVIND MANTRI, ACCOUNTS MANAGER OF THE ASSESSEE COM PANY. A SURVEY U/S 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASS ESSEE DURING THE COURSE OF WHICH IT WAS FOUND THAT ENTRY OF RS.25 LAKHS FOR CASH REC EIVED ON ACCOUNT OF SHARE APPLICATION MONEY WAS MADE ON 01-2-2004 IN THE CASH BOOK MAINTAINED IN TALLY ACCOUNTING SYSTEM. THERE WAS, HOWEVER, NO SUCH ENTR Y MADE EITHER IN THE SUBSIDIARY BOOKS OR IN THE MANUAL CASH BOOK ON 01-0 2-2004 RELATING TO CASH RECEIPT OF RS.25 LAKHS. IN HIS STATEMENT RECORDED U/S 131, SHRI ZOGDE WHO WAS LOOKING AFTER THE MAINTENANCE OF CASH AND CASH BOOK OF THE ASSESSEE COMPANY, ADMITTED THAT ENTRY RELATING TO CASH RECEIPT OF RS.25 LAKHS WAS MADE IN THE TALLY ACCOUNTING SYSTEM ONLY ON 03-03-2004 AT 3 P.M. I.E. AFTER MS. AMEEA SHAH WAS SEARCHED AND IT WAS DONE AT THE BEHEST OF SHRI ARVIND MANTRI, AC COUNTS MANAGER OF THE ASSESSEE COMPANY. A STATEMENT OF DR. SUSHIL SHAH, CHAIRMAN O F THE ASSESSEE COMPANY WAS ALSO RECORDED U/S 131 ON 11-03-2004 WHEREIN HE ADMI TTED THAT CASH OF RS.25 LAKHS FOUND AND SEIZED FROM MS. AMEERA SHAH WAS UNDISCLOS ED INCOME OF THE ASSESSEE COMPANY FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMEN T YEAR 2004-05. HE ALSO AGREED TO INCLUDE THE SAID INCOME IN THE INCOME OF THE ASS ESSEE COMPANY FOR ASSESSMENT YEAR 2004-05 AND PAY TAX THEREON. THE RETURN OF INC OME FOR ASSESSMENT YEAR 2004- 05 OF THE ASSESSEE COMPANY WAS FILED ON 01-11-2004 DECLARING TOTAL INCOME OF RS.3,31,44,874/-. IN THE PROFIT & LOSS ACCOUNT FILE D ALONG WITH THE SAID RETURN, A SUM OF RS.25 LAKHS WAS SHOWN AS OTHER INCOME AND TH E SAME WAS INCLUDED BY THE ASSESSEE IN THE INCOME OFFERED UNDER THE HEAD PROF ITS & GAINS OF BUSINESS OR PROFESSION. ACCORDING TO THE AO, THE SAID AMOUNT D ID NOT REPRESENT BUSINESS INCOME OF THE ASSESSEE COMPANY AS THE SOURCE THEREO F COULD NOT BE EXPLAINED SATISFACTORILY BY THE ASSESSEE. HE HELD THAT THE EX PLANATION OFFERED BY THE ASSESSEE 3 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. THAT THE SAID AMOUNT WAS RECEIVED AS SHARE APPLICAT ION MONEY COULD NOT BE ESTABLISHED AND THE SAID AMOUNT THUS REPRESENTED UN EXPLAINED INVESTMENT OF THE ASSESSEE. ACCORDINGLY HE EXCLUDED THE AMOUNT OF RS. 25 LAKHS FROM THE INCOME OF THE ASSESSEE OFFERED UNDER THE HEAD PROFITS & GAIN S OF BUSINESS OR PROFESSION AND BROUGHT THE SAME TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 24-03-2006. THE ORDER OF THE AO ON THIS ISSUE WAS UPHELD BY THE LEARNED CIT(APPE ALS) IN THE QUANTUM PROCEEDINGS. 3. THEREAFTER A NOTICE U/S 271(1)(C) WAS ISSUED BY THE AO REQUIRING THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S 271(1)(C) SHOULD NOT BE IMPOSED IN RESPECT OF THE AMOUNT OF RS.25 LAKHS REPRESENTING I TS UNEXPLAINED INVESTMENT BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SO URCES. IN REPLY, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE COMPANY INTER A LIA, THAT THERE WAS NO DISPUTE AS REGARDS THE INCLUSION OR EXCLUSION OF THE AMOUNT OF RS.25 LAKHS FROM ITS TOTAL INCOME BUT THE DISPUTE WAS ONLY IN RELATION TO THE MANNER OF TAXING IT. IT WAS SUBMITTED THAT THIS AMOUNT HAD ALREADY BEEN OFFERED TO TAX IN THE ORIGINAL RETURN OF INCOME AND ONCE IT WAS SO OFFERED, THERE WAS NO CON CEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME ATTRACTING PENALTY U/S 271(1)(C). THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE AO. ACCORDING TO HIM, THE ASSESSEE HAD CONCEALED THE PA RTICULARS OF ITS INCOME WHICH WAS DETECTED BY THE DEPARTMENT DURING THE COURSE OF SEARCH. HE HELD THAT THE DISCLOSURE MADE BY THE ASSESSEE IN THE RETURN OF IN COME WAS NOT VOLUNTARY AND SINCE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF ITS INCOME TO THE EXTENT OF RS.25 LAKHS, IT WAS LIABLE FOR PENALTY U/S 271(1)(C). ACC ORDINGLY, HE IMPOSED A PENALTY OF RS.8,96,875/- U/S 271(1)(C) BEING 100% OF THE TAX S OUGHT TO BE EVADED BY THE ASSESSEE IN RESPECT OF THE SAID INCOME. 4 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. 4. THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LEARNED CIT( APPEALS). IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEA LS) THAT SINCE THE AMOUNT OF RS.25 LAKHS WAS DISCLOSED IN THE RETURN OF INCOME F ILED BY THE ASSESSEE COMPANY U/S 139(1) ON 01-11-2004, IT COULD NOT BE HELD THAT THE ASSESSEE COMPANY HAS CONCEALED PARTICULARS OF ITS INCOME. IT WAS CONTEND ED THAT SINCE THE INCOME HAD ALREADY BEEN DISCLOSED IN THE RETURN OF INCOME ORIG INALLY FILED, THERE WAS NO QUESTION OF ANY CONCEALMENT OF THAT INCOME. IT WAS FURTHER CONTENDED THAT THERE WAS A DISPUTE ONLY IN RESPECT OF THE HEAD OF INCOME UNDER WHICH THE SAID AMOUNT WAS CHARGEABLE TO TAX AND IT WAS, THEREFORE, NOT A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C) AS HELD BY HONBLE DELHI HIGH COURT IN TH E CASE OF V.V. REGENCY BUILDERS P. LTD. 166 TAXMAN 269. IT WAS ALSO CONTEN DED THAT EVEN EXPLANATION 1 TO SECTION 271(1)(C) COULD NOT BE APPLIED IN THE CASE OF THE ASSESSEE COMPANY SINCE NO AMOUNT WAS DISALLOWED OR ADDED BACK WHILE COMPUTING ITS TAXABLE INCOME. 5. THE LEARNED CIT(APPEALS) FOUND MERIT IN THE SUBM ISSIONS MADE ON BEHALF OF THE ASSESSEE AND CANCELLED THE PENALTY IMPOSED BY T HE AO U/S 271(1)(C) FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 3.4 OF HIS IMPUGNED ORDER : I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLAN T AND PERUSED THE FACTS OF THE CASE. IN THE PRESENT CASE THE APPELLAN T WAS DECLARED THE INCOME IN THE RETURN OF INCOME FILED ON 1.11.2004 AS OTHER INCOME. NO ADDITION WAS MADE TO THE INCOME OF THE APPELLANT BY THE ASSESSIN G OFFICER. THE ASSESSING OFFICER ONLY HELD THAT THIS INCOME OF THE APPELLANT IS LIABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES WHEREAS THE APPELLANT HAS SHOWN IT AS BUSINESS INCOME. ACT OF CONCEALMENT IS COMMITTED AT THE TIME OF FILING OF THE RETURN. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AGAINST MS. AMEERA SHAH, VICE PRESIDENT OF THE APPELLANT CO MPANY ON 3.02.2004. THIS DATE WAS IN THE PREVIOUS YEAR ITSELF. THOUGH T HE APPELLANT TRIED TO EXPLAIN THE SOURCES OF CASH OF RS.25,00,000, FOUND FROM MS. AMEERA SHAH WHEN SHE WAS TRAVELLING FROM CHENNAI TO MUMBAI, BY MAKING BACK DATED 5 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. ENTRIES IN THE BOOKS OF ACCOUNTS AND ALSO BY SHOWIN G THAT IT HAS RECEIVED SHARE APPLICATION MONEY BUT SINCE THE APPELLANT HAS DISCLOSED THE AMOUNT IN THE RETURN OF INCOME, IT CANNOT BE SAID THAT THE AP PELLANT HA FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTI CULARS OF INCOME. IN THE PRESENT CASE, INCOME HAS BEEN DISCLOSED. THE APPELL ANT HAS SHOWN THE INCOME UNDER THE HEAD BUSINESS INCOME WHEREAS THE A SSESSING OFFICER BROUGHT THE SAME TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. THERE IS NO VARIATION OF TOTAL INCOME DISCLOSED BY THE AP PELLANT IN THE RETURN OF INCOME FILED ON 1.11.2004 ON THIS ACCOUNT. THUS, IT IS A CASE WHERE THE APPELLANT WAS TRYING TO CONCEAL THE PARTICULARS OF INCOME; BUT ACTUALLY HAS NOT CONCEALED PARTICULARS OF INCOME. ACCORDINGLY, N O PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT CAN BE LEVIED. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 6. THE LEARNED DR STRONGLY RELIED ON THE PENALTY OR DER PASSED BY THE AO IN SUPPORT OF THE REVENUES CASE THAT THE ASSESSEE HAV ING CONCEALED THE PARTICULARS OF ITS INCOME, IT WAS A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C). HE SUBMITTED THAT EVEN THOUGH THE AMOUNT OF RS.25 LAKHS WAS OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME AS ITS BUSINESS INCOME, THIS OFFER WAS MADE ONLY AFTER DETECTION OF CONCEALED INCOME IN THE FORM OF CASH FOUND FROM THE POSSESSION OF THE VICE PRESIDENT OF THE ASSESSEE COMPANY. HE CONTENDED THA T THIS OFFER MADE BY THE ASSESSEE THUS WAS NOT A VOLUNTARY OFFER AND SINCE T HE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURCE OF THE SAID CASH, THE AO WAS FULLY JUSTIFIED IN TREATING THE SAME AS UNEXPLAINED INVESTMENT OF THE ASSESSEE AND IMPOSING PENALTY U/S 271(1)(C) TREATING THE SAME AS CONCEALMENT OF P ARTICULARS OF ITS INCOME BY THE ASSESSEE. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUBMITTED THAT CASH OF RS.25 LAKHS FOUND FROM THE POSSESSION OF ITS VIC E PRESIDENT WAS OWNED BY THE ASSESSEE COMPANY AND THE SAME WAS OFFERED TO TAX UN DER THE HEAD PROFITS AND 6 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. GAINS OF BUSINESS OR PROFESSION. HE CONTENDED THAT SINCE THE AMOUNT SO OFFERED WAS DULY DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME FILED REGULARLY U/S 139(1), THERE WAS NO QUESTION OF CONCEALMENT OF PARTICULARS OF ITS INCOME BY THE ASSESSEE COMPANY ATTRACTING LEVY OF PENALTY U/S 271(1)(C). I N SUPPORT OF THIS CONTENTION, HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. M/S SAS PHARMACEUTICALS (ITA NO. 1058 OF 2009 DATED 8 TH APRIL, 201). HE ALSO CONTENDED THAT INCOME OFFERED BY THE ASSESSEE ON THIS ISSUE I N THE RETURN OF INCOME FILED REGULARLY WAS ACCEPTED BY THE AO WITH THE ONLY CHAN GE IN THE HEAD OF INCOME TREATING THE SAME AS INCOME FROM OTHER SOURCES. HE CONTENDED THAT SUCH CHANGE IN THE HEAD OF INCOME WITHOUT ANY ADDITION TO THE INCO ME RETURNED BY THE ASSESSEE CANNOT ATTRACT PENALTY U/S 271(1)(C) AS RIGHTLY HEL D BY THE LEARNED CIT(APPEALS). HE, THEREFORE, STRONGLY SUPPORTED THE IMPUGNED ORDE R OF THE LEARNED CIT(APPEALS) CANCELLING THE PENALTY IMPOSED BY THE AO U/S 271(1) (C) AND URGED THAT THE SAME MAY BE UPHELD. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT CASH OF RS. 25 LAKHS WAS FOUND FROM THE POSSESSION OF MS. AMEERA SHAH, VICE PRESIDENT OF TH E ASSESSEE COMPANY DURING THE COURSE OF SEARCH. WHILE EXPLAINING THE SAID CAS H, MS. AMEERA SHAH STATED THAT THE SAME WAS BELONGING TO THE ASSESSEE COMPANY. A S URVEY U/S 133A WAS ALSO CARRIED OUT AT THE PREMISES OF THE ASSESSEE COMPANY WHEREIN IT WAS FOUND THAT A BACK DATED ENTRY WAS MADE SHOWING RECEIPT OF CASH O N ACCOUNT OF SHARE APPLICATION MONEY IN AN ATTEMPT TO EXPLAIN THE CASH FOUND FROM THE POSSESSION OF MS. AMEERA SHAH. IN HIS STATEMENT RECORDED U/S 131, DR. SUSHIL SHAH, CHAIRMAN OF THE ASSESSEE COMPANY ADMITTED THAT THE CASH OF RS.25 LAKHS FOUND AND SEIZED FROM MS. AMEERA SHAH WAS THE UNDISCLOSED INCOME OF THE ASSESSEE FOR YEAR UNDER CONSIDERATION. HE ALSO AGREED TO OFFER THE SAID INCOME IN THE HANDS O F THE ASSESSEE COMPANY AND 7 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. ACCORDINGLY IN THE RETURN OF INCOME FILED FOR THE Y EAR UNDER CONSIDERATION, THE AMOUNT OF RS.25 LAKHS WAS DECLARED AS INCOME OF THE ASSESSEE UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION. HOWEVE R, THE ASSESSEE COULD NOT OFFER ANY SATISFACTORY EXPLANATION ABOUT THE SOURCE OF TH E SAID INCOME OFFERED AS BUSINESS INCOME AND IN THE ABSENCE OF SUCH EXPLANAT ION, THE AO TREATED THE CASH OF RS.25 LAKHS FOUND DURING THE COURSE OF SEARCH CONDU CTED ON MS. AMEERA SHAH AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. ACCORDINGLY , THE SAID AMOUNT WAS EXCLUDED BY HIM FROM THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE UNDER T HE HEAD INCOME FROM OTHER SOURCES. PENALTY U/S 271(1)(C) WAS ALSO IMPOSED BY THE AO HOLDING THAT THERE WAS CONCEALMENT OF PARTICULARS OF ITS INCOME BY THE ASS ESSEE COMPANY TO THE EXTENT OF RS.25 LAKHS. 9. THE FIRST QUESTION THAT ARISES FOR OUR CONSIDERA TION IS WHETHER THE ASSESSEE WAS GUILTY OF CONCEALING PARTICULARS OF ITS INCOME AS ALLEGED BY THE AO. AS ALREADY NOTED BY US, EVEN THOUGH THE AMOUNT OF RS.25 LAKHS FOUND FROM THE POSSESSION OF ITS VICE PRESIDENT, MS. AMEERA SHAH WAS DECLARED BY THE ASSESSEE IN THE RETURN OF ITS INCOME AS BUSINESS INCOME, THE SOURCE OF THE SA ID CASH COULD NOT BE EXPLAINED SATISFACTORILY BY THE ASSESSEE AT ANY STAGE. THE AR GUMENT RAISED ON BEHALF OF THE ASSESSEE IN THIS REGARD IS THAT THE ASSESSEE HAVING DECLARED THE AMOUNT OF RS.25 LAKHS IN THE RETURN OF INCOME FILED FOR THE YEAR UN DER CONSIDERATION, THERE WAS NO QUESTION OF CONCEALMENT OF PARTICULARS OF ITS INCOM E BY THE ASSESSEE. IT IS OBSERVED THAT A SOME WHAT SIMILAR ARGUMENT WAS RAISED ON BEH ALF OF THE ASSESSEE IN THE CASE OF V.P. SAMTANI VS. CIT 140 ITR 693 SUBMITTING THAT THE EXPRESSION PARTICULARS OF SUCH INCOME USED IN SECTION 271(1)(C) SHOULD REFER TO DETAILS ABOUT SOURCE OF INCOME AND NOT WHERE SUCH INACCURATE PARTICULARS AR E FURNISHED ABOUT THE SOURCE ITSELF. THIS ARGUMENT, HOWEVER, WAS NOT FOUND ACCEP TABLE BY THE HONBLE CALCUTTA 8 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. HIGH COURT. IT WAS HELD BY THEIR LORDSHIPS THAT THE EXPRESSION INACCURATE PARTICULARS OF SUCH INCOME OCCURRING IN SECTION 27 1(1)(C) IS WIDE ENOUGH TO COVER A CASE WHERE A FALSE EXPLANATION WAS GIVEN TO EXPLA IN THE SOURCE OF INCOME. IT WOULD BE PERTINENT TO NOTE HERE THAT THE WORD CONC EALED WOULD SIGNIFY HIDING OR KEEPING A SECRET AND WHERE AN INCOME IS BROUGHT TO ACCOUNT, THERE WOULD BE CONCEALMENT WHEN THE FACTS RELATING TO THEM HAVE BE EN KEPT BACK BY THE ASSESSEE WHO HAS THE KNOWLEDGE OF THE PARTICULARS OF SUCH IN COME. IN OUR OPINION, IF THE FACTS OF THE PRESENT CASE ARE CONSIDERED IN THE LIG HT OF DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF V.P. SAMTANI (SUPRA), THE ASSESSEE WAS GUILTY OF CONCEALING PARTICULARS OF ITS INCOME AS RIGHTLY HEL D BY THE AO. 10. HAVING HELD THAT THE ASSESSEE WAS GUILTY OF CON CEALING PARTICULARS OF ITS INCOME, THE NEXT ISSUE WHICH ARISES FOR OUR CONSIDE RATION IS IN RESPECT OF ASCERTAINING THE EXTENT OF SUCH CONCEALMENT FOR THE PURPOSE OF COMPUTING PENALTY LEVIABLE U/S 271(1)(C). AS ALREADY NOTED BY US, THE AMOUNT OF RS.25 LAKHS OFFERED AS ITS BUSINESS INCOME IN THE RETURN OF INCOME BY T HE ASSESSEE COMPANY WAS EXCLUDED BY THE AO FROM THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND THE SAME WAS BROUGHT TO TAX UNDER THE HEAD INC OME FROM OTHER SOURCES BEING UNEXPLAINED INVESTMENT OF THE ASSESSEE. EFFECTIVELY THERE WAS THUS NO ADDITION MADE ON THIS ISSUE WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. AS PER EXPLANATION 1 TO SECTION 271(1)(C) WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF ANY PERSON UNDER THE ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FO UND TO BE FALSE OR SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBST ANTIATE, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PE RSON AS A RESULT THEREOF SHALL, FOR THE PURPOSE OF SECTION 271(1)(C), BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN THE PR ESENT CASE, THE AMOUNT OF RS.25 9 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. LAKHS WAS NEITHER ADDED NOR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE AND THIS BEING SO, WE ARE OF THE OPINION T HAT THE SAME CANNOT BE TREATED AS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BE EN CONCEALED FOR THE PURPOSE OF COMPUTING PENALTY U/S 271(1)(C) AS PER EXPLANATION 1. MOREOVER, AS PER CLAUSE (III) OF SECTION 271(1), A PERSON IN THE CASES REFERRED T O IN CLAUSE (C) MAY BE DIRECTED TO PAY BY WAY OF PENALTY IN ADDITION TO TAX IF ANY PAY ABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTIC ULARS OF HIS INCOME OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME . IN THE CASE OF MANSUKHLAL AND BROS. VS. CIT REPORTED IN 73 ITR 546, THE HONBLE S UPREME COURT HELD THAT PENALTY WAS NOT RESTRICTED TO TAX EVADED BY REASON OF CONCE ALMENT. IT WAS HELD THAT WHERE IT WAS DISCOVERED THAT INCOME HAD BEEN CONCEALED, THE LEGISLATURE WANTED THE INCOME-TAX AUTHORITIES TO DETERMINE WHAT WOULD HAVE BEEN THE AMOUNT OF TAX THAT WOULD HAVE THE ESCAPED INCOME HAD THE INCOME SHOWN IN THE RETURN BEEN ACCEPTED AS CORRECT. IN THE CASE OF KALURAM GANESHRAM (HUF) VS. CIT REPORTED IN 172 ITR 154 (M.P.), THE FINDING RECORDED WAS THAT THE ASSES SEE HAD CONCEALED GAINS OF RS.9000/-. OUT OF THE SAID AMOUNT, ONLY RS.2200/- W AS TAXABLE AFTER BASIC AND OTHER DEDUCTIONS IN COMPUTATION OF CAPITAL GAINS AND IT W AS HELD BY THE HONBLE MADHYA PRADESH HIGH COURT THAT ONLY THE AMOUNT OF RS.2200/ - COULD BE TAKEN AS TAX BASE FOR RECKONING THE PENALTY AND NOT RS.9000/-. IN THE PRESENT CASE, THERE WAS EFFECTIVELY NO ADDITION MADE IN THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE ON THE ISSUE OF CASH OF RS.25 LAKHS FOUND DURING THE C OURSE OF SEARCH AS THE SAID AMOUNT WAS EXCLUDED BY THE AO FROM THE HEAD PROFIT S & GAINS OF BUSINESS OF PROFESSION UNDER WHICH THE SAME HAD BEEN OFFERED B Y THE ASSESSEE AND WAS BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SO URCES. THE AMOUNT OF TAX SOUGHT TO BE EVADED BY THE ASSESSEE BY THE REASON O F CONCEALMENT OF PARTICULARS OF 10 ITA NO.6504/MUM/2009 ASSESSMENT YEAR : 2004-05. ITS INCOME THUS WAS NIL AND THE PENALTY LIABLE TO B E IMPOSED AS PER THE COMPUTATION PROVISION CONTAINED IN CLAUSE (III) OF SECTION 271( 1) IS NIL. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE LEARNED CIT(APPEALS ) THAT NO PENALTY U/S 271(1)(C) IS PAYABLE BY THE ASSESSEE IN THE FACTS OF THE PRES ENT CASE AND UPHOLD HIS IMPUGNED ORDER ON THIS ISSUE ALTHOUGH ON DIFFERENT GROUNDS. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. \. ORDER PRONOUNCED ON THIS 9 TH DAY OF SEPT. , 2011. SD/- SD/- (D. MANMOHAN) (P.M. J AGTAP) VICE PRESIDENT. A CCOUNTANT MEMBER MUMBAI, DATED: 9 TH SEPT. , 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, J-BENCH. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI BENC HES, MUMBA I. WAKODE