SYNERGY ART FOUNDATION LTD, CHENNAI V. DCIT CEN CIR 44, MUMBAI

ITA 682/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3470 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: J PRABHAKAR
• Keywords: Search and seizure; Question of law; Fair market value
• Section: 142(1); 153A; 132

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO 681 & 682/ MUM/201 4 ( / ASSESSMENT YEAR: 2007 - 08 AND 2009 - 10 ) M/S SYNERGY ART FOUNDATION LIMITED, 6/19, 2 ND FLOOR, GRANTS ROAD, COLABA, F MUMBAI - 40 0 00 5 . / VS. DY.COMMISSIONER OF INCCOME TAX, CENTRAL CIRCLE - 44, MUMBAI . ./ ./ PAN/GIR NO. ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI J PRABHAKAR / RESPONDENT BY : SHRI MANJUNATHA SWAMY / DATE OF HEARING : 11.2.2016 / DATE OF PRONOUNCEMENT : 22. 3.2016 / O R D E R PER RAJESH KUMAR, A. M: TH ESE APPEAL S BY THE ASSESSEE ARE DIRE C TED AGAINST THE SEPARATE OR DE RS D ATED 28.11.2013 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS) , MUMBAI (HEREINAFTER CALLED AS THE C I T (A) FOR THE ASSESSMENT YEARS 2007 - 08 AND 2009 - 10 ) . 2 ITA NO.681/MUM/2014 AND 682/MUM/2014 2. FIRST WE SHALL TAKE UP THE APPEAL BEARING ITA NO.682/MUM/20 14 IN WHICH THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING AN AD - HOC DISALLOWANCE OF 25%. OF TRAVELLING EXPENSES AT RS.16,17,742/ - ON THE SPECIOUS GROUND THAT PERSONAL TRAVE L CANNOT BE RULED OUT, WITHOUT ANY. IOTA OF EVIDENCE WHATSOEVER IN THIS REGARD. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THAT THE APPELLANT IN SUBJECT TO STATUTORY AND TAX AUDIT UNDER SECTION 44 AB AND PERSONAL EXPENSES HA VE TO BE LISTED OUT IN THE AUDIT REPORT, WHICH IS THE APPELLANT'S CASE IS ABSENT ON RECORD . 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT NEXUS TO BUSINESS PURPOSE FOR TRAVEL IS NOT ESTABLISHED, WITHOUT EXAMINING THE DETAILS FURNISHED IN THIS REGARD AND THE TAX AUDIT REPORT CONTAINS DATA ON THIS ASPECTS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DISALLOWING A SUM OF RS.11,14,272/ - PAID, TO THE DIRECTORS OF THE APPELLANT, BY INVOKING PROVISIONS OF SECTION 40 A (2) WITHOUT PROPER BASIS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT PAYMENT OF ADVISORY FEES TO THE DIRECTORS OF THE COMPANY IS NOT SUBSTANTIATED. 6. THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONCLUDING THAT NO SERVICES ARE RENDERED BY THE DIRECTORS OF THE APPELLANT TO YATRA ART FUND WITHOUT PUTTING TO TEST THE ARGUMENTS MADE OUT IN THE HAND OF YATRA ART FUND ( WHICH IS ALSO PENDING IN APPEAL BEFORE HIM) THAT THE ENTIRE ADMINISTRATIVE EXPENSES OF THE YATRA ART FUND ARE RENDERED BY THE APPELLANT. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT NO SERVICES ARE RENDERED BY THE DIRECTORS TO 3 ITA NO.681/MUM/2014 AND 682/MUM/2014 YATRA ART FUND, WITHOUT EXAMI NING THEIR ROLE IN RUNNING THE AFFAIRS OF THE TRUST FUND. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THE ADVISORY FEES TO THE DIRECTORS IN PROPER PERSPECTIVE WHEN THE APPELLANT HAD. NOT CAMOUFLAGED THE SAID PAYMENT AS PART O F THE DIRECTOR'S SALARIES BY THE APPELLANT, IN WHICH CASE SAID PAYMENTS WOULD HAVE PASSED MUSTER WITHOUT DEMUR. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE LEVY' OF INTEREST UNDER SECTION 234 B OF THE ACT AT RS .18,18,526/ - AND UNDER SECTION 234 C IN THE' SUM OF RS.15,825/ DISREGARDING THE FACTUAL AND LEGAL SUBMISSIONS MADE THAT PROPER CREDIT FOR TAXES PAID IS NOT GIVEN. 10. IN ANY EVENT, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS, ILLEGAL AND WI THOUT REFERENCE TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE AND THE LAW APPLICABLE THERETO. 11. FOR THESE GROUNDS AND FOR SUCH OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS) BE CANCELLED. 3 . THE FACTS IN BRIEF ARE THAT ASSESSEE COMPANY WAS RUNNING A ART GALLERY AND WAS ENGAGED IN THE PURCHASE AND SALES OF PAINTINGS. DURING THE YEAR THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2009 DECLARING AN INCOME OF RS. 2,57,72,440/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FRAMED THE ASSESSMENT VIDE ORDER DATED 30.12.2011 AT RS. 3,97,54,450/ - BY MAKING VARIOUS ADDITIONS INTER ALIA OF RS. 16,17,742/ - FOR TRAVELING EXPENSES BEING 25% OF TOTAL EXPENSES CLAIMED UNDER THIS HEAD AND RS. 11,14,272/ - BEING 50% OF ADVISORY FEE PAID TO DIRECTORS U/S 40A(2)(B) OF THE ACT. 4 ITA NO.681/MUM/2014 AND 682/MUM/2014 4 . THE MATTE R WAS TAKEN BEFORE THE CIT (A) WHO PARTLY ALLOWED THE APPEAL WHILE DISMISS ING THE APPEAL ON THESE TWO GROUNDS RAISED BEFORE US. THE DISALLOWANCE OF TRAVELLING EXPENSES WAS CONFIRMED FOR THE REASONS THAT THE ASSESSEE SIMPLY FILED THE TALLY GENERATED DETAI LS CONTAINING THE STANDARDIZED DETAILS OF TRAVELLING EXPENSES BUT DID NOT FURNISH THE FURTHER EVIDENCES TO PROVE THE NEXUS OF THE EXPENSES INCURRED FOR GENUINE BUSINESS REQUIREMENTS AND THUS REACHED A CONCLUSION THAT THE SAME WERE ATTRIBUTABLE TO PERSONA L TRAVELLING. ON THE SECOND ISSUE THE LD CIT(A) OBSERVED THAT 30% OF THE TOTAL ADVISORY FEE WAS PAID TO THE DIRECTORS SHRI SANJAY KUMAR AND MS GEETA MEHRA WITHOUT PROVING THE BUSINESS EXIGENCIES AND NEEDS FOR MAKING SUCH PAYMENTS. 5 . THE LD AR SUBMITTED BEFORE US THAT THE FULL DETAILS WHICH WERE TALLY GENERATED WERE FILED BEFORE THE AO AS WELL AS THE CIT(A) GIVING FULL PARTICULARS AS TO TRAVELLING SUCH AS THE PERSONS TRAVELLING , TRAVEL AGENT AND DESTINATION ETC AND THE EXPENSES WERE REQUIRED TO BE INCUR RED IN ORDER TO PURCHASE THE PAINTING AND ORGANIZE THE EXHIBITIONS AND ALSO TO INVITE EMINENT ARTISTS FOR THE FUNCTIONS OF THE ASSESSEE AND THEREFORE THE DISALLOWANCE AS MADE FOR TRAVELLING EXPENSES OF RS. 16,17,742/ - WAS UNCALLED FOR AND BE DELETED. AS RE GARDS THE SECOND DISALLOWANCE OF RS.11,14,272/ - U/S 40A(2)(B) THE LD COUNSEL ARGUED THAT THE SAID EXPENSES PAID TO THE DIRECTORS OUT OF GENUINE BUSINESS NEEDS WERE DISALLOWED WITHOUT BRINGING ANY MATERIALS ON RECORDS PROVING THE SAME TO EXCESSIVE AND UNREA SONABLE WHICH WAS PRE - REQUISITE OF MAKING SUCH DISALLOWANCE. THE LD COUNSEL FURTHER SUBMITTED THAT THERE WAS NO LOSS OF REVENUE FOR THESE PAYMENTS MADE AS THE ASSESSEE AS WELL AS THE DIRECTORS WERE 5 ITA NO.681/MUM/2014 AND 682/MUM/2014 ASSESSED TO TAX AT MAXIMUM RATE AND THEREFORE DISALLOWANCE WAS WRONG AND DESERVED DELETION. THE LD DR ON THE OTHER H AND RELIED HEAVILY ON THE ORDERS OF AUTHORITY BELOW. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL ON RECORD PLACED BEFORE US . WE FIND FROM THE ORDERS OF AUTHORITIES BELOW THAT A SUM OF RS.16,17,742 WAS DISALLOWED BEING 25% OF TRAVELLING EXPENSES FOR NOT FILING SUFFICIENT DETAILS AND BEING PERSONAL ELEMENT THEREIN AND WAS UPHELD BY THE CIT(A) FOR THE SAME REASON. IN OUR VIEW, THE DISALLOWANCE OF 25% OF TOTAL TRAVELLING EXPENSES WH ICH IS ADHOC AND ON ESTIMATED BASIS IS EXCESSIVE AND UNREASONABLE AND WE, THEREFORE, RESTRICT THE DISALLOWANCE TO THE EXTENT OF 10 % OF TOTAL TRAVELLING WHICH COME TO RS. 6,47,097 / - THEREBY DELETING THE ADDITION TO THE EXTENT OF RS. 9,70,645 / - . THEREFORE, THE ISSUE RAISED IN THE GROUND NOS.1, 2 & 3 IS PARTLY ALLOWED . I N RESPECT OF DISALLOWANCE U/S 40 A (2) OF RS.11,14,272/ - PAID TO THE DIRECTORS AS ADVISORY FEE , W E FIND THAT NO COGENT MATERIALS WAS BROUGHT ON RECORD BY THE AO OR BY THE CIT(A) TO PROVE THAT THE PAYMENT WAS EXCESSIVE AND UNREASONABLE TO THE DIRECTORS OF THE ASSESSEE TO WHOM THE PAYMENTS WERE MADE EQUAL TO 30% TOTAL ADVISORY FEE RECEIVED BY THE ASSESSEE OF RS.73,66,218 FROM YATRA ART FUND. THE PROVISION OF SECTION 40A (2) ARE VERY CLEAR THAT THE DISALLOWANCE COULD ONLY BE MADE IF EXPENDITURE INCURRED BY THE ASSESSEE BY MAKING PAYMENT TO SPECIFIED PERSONS INCLUDING THE DIRECTORS BY THE COMPANY IS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF THE GOODS, SERVICES OR FACILITIES F OR WHICH THE PAYMENT IS MADE OR THE LEGITIMATE NEEDS OF THE BUSINESS OR PROFESSION OF THE ASSESSEE OR THE BENEFIT DERIVED BY OR ACCRUING TO HIM THEREFROM, THEN SO MUCH OF THE EXPENDITURE AS IS SO CONSIDERED BY THE AO TO BE EXCESSIVE OR 6 ITA NO.681/MUM/2014 AND 682/MUM/2014 UNREASONABLE SHALL NOT BE ALLOWED AS DEDUCTION. IN THE INSTANT CASE THE AO HAS FAILED TO PROVE THAT THE PAYMENT MADE TO THE DIRECTORS WAS EXCESSIVE HAVING REGARD TO THE FAIR MARKET VALUE OF THE SAID GOODS OR SERVICE S AS NO COMPARABLE CASE WAS BROUGHT ON RECORD TO SUBSTANTIA TE THE DISALLOWANCE MADE BY THE AO. THE AO ALSO DID NOT BRING ANY COGENT EVIDENCE TO PROVE THAT THE ASSESSEE HAS NOT RECEIVED ANY SERVICES AND PAID THE MONY. IN VIEW OF THIS FACT THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY THE AO U/S 40 A (2 )(B) CA NNOT BE SUSTAINED AND THEREFORE, THE ADDITION OF RS. 11,14,272/ - IS ORDER TO BE DELETED BY DECIDING ISSUE IN FAVOUR OF THE ASSESSEE. 7 . GROUND NO. 9 IS CONSEQUENTIAL IN NATURE AND OTHER GROUNDS RAISED AS 10, 11 AND 12 ARE GENERAL IN NATURE AND THEREFOR E DO NOT REQU IRE ANY ADJUDICATION . 8 . IN THE RESULT, THE ASSESSEE APPEAL IS PARTLY ALLOWED. 9. NOW WE SHALL TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR ASSESSMENT YEAR 2007 - 08 . 10. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED U/S 271 (1)( C ) AT RS.7,40,520/ - WITHOUT CONSTRUING PARA 6 TO 10 OF STATEMENT FACTS FILED ALONG WITH APPEAL. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONCLUDING THAT THE DISCLOSURE OF ADDITIONAL INCOME OF RS.22 LAKHS IS CONSEQUENTIAL TO SEARCH ACTION, BUT FOR WHICH THE APPELLANT WOULD NOT HAVE DISCLOSED THE ALLEGED UNACCOUNTED SALES. 7 ITA NO.681/MUM/2014 AND 682/MUM/2014 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE VARIOUS SALE INSTANCES ALLEGED AS UNACCOUNTED IN THE NOTICE FOR LEVY OF PENALTY AND THE ORDER THEREUNDER DOES NOT RELATE TO THIS ASSESSMENT YEAR BUT TO EARLIER YEARS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAIL ED TO CONSTRUE THAT THE ALLEGED PAYMENT OF CASH OF RS.16 LAKHS FOUND IN SEIZED RECORD ANNEXURE A1 - 12, WAS NOT CORROBORATED C ONTEMPORANEOUSLY WITH THE PARTIES INVOLVED IN THE TRANSACTION AND THAT THE APPELLANT WAS MADE TO ADMIT THE ALLEGED TRANSACTION AS UN ACCOUNTED DURING THE COURSE OF SEARCH AND NO FURTHER INDEPENDENT INVESTIGATION WAS CARRIED OUT TO LINK THE ADMISSION OF THE RS.22 LAKHS SUO - MOTO AND VOLUNTARILY IN THE RETURN OF INCOME FILED BY THE APPELLANT AS ADDITIONAL INCOME TO THE ALLEGED INCRIMINATIN G MATERIALS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSTRUE THAT THE CUMULATIVE CASH PAYMENT FOUND IN ANNEXURE A 2 AFORESAID WAS RS.18 LAKHS WHILE WHAT WAS ADMITTED AS ADDITIONAL INCOME ON AN AD - HOC BASIS WAS RS.22 LAKHS AND THERE IS NO ESTABLISHMENT OF CONTUMACIOUS CONDUCT EITHER QUA THE SEIZED MATERIALS OR THE ADDITIONAL AMOUNTS OFFERED SUO - MOTO IN THE INCOME TAX RETURN FILED FOR THIS ASSESSMENT YEAR. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THA T THE CUMULATIVE BANKING OF CASH SALES WHICH DOES NOT REPRESENT ANY SPECIFIC BILL MADE OUT BY THE ASSESSEE AND WHICH AGGREGATE TO RS.L2,98,0001 - AND DULY DEPOSITED THE BANK ACCOUNTS OF THE APPELLANT WITH HDFC BANK AND PUNJAB NATIONAL BANK ARE COVERED B Y TH E ALLEGED INSTANCES OF CASH REFERRED TO IN SEIZED RECORDS. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING TH E PENALTY ON ALLEGED CONCEALMENT OF RS.22 LAKHS AND IN THE ABSENCE OF CORROBORATIVE EVIDENCE, THE SUMS FOUND IN THE SEIZED MATERIALS SHALL BE DEEMED TO BE INCOME OF THE APPELLANT (IN THE YEAR OF SEARCH ON 17.04.2007 ) RELEVANT TO ASSESSMENT YEAR 2008 - 09 IN TERMS OF SECTION 132 (4 A) OF THE ACT. 8 ITA NO.681/MUM/2014 AND 682/MUM/2014 8. IN ANY EVENT, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPE ALS) IS ILLEGAL, BEREFT OF REFERENCE TO THE FACTS ON RECORD AND RENDERED WITH THE JAUNDICED EYE TO ATTRIBUTE CONTUMACIOUS CONDUCT UPON THE APPELLANT. 9. FOR THESE GROUNDS AND FOR SUCH OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) BE CANCELLED. 11. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS WHICH ARE AS UNDER: 1. YOUR PETITIONER/APPELLANT CRAVES THE INDULGENCE OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL TO RAIS E THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL. A. THE LEARNED CIT (A) IS NOT JUSTIFIED IN SUSTAINING THE PENALTY LEVIED UNDER SECTION 271 (1) (C) WHEN THE STATUTORY EXPLANATIONS THEREUNDER DO NOT APPLY TO THE FACTS OF THE CASE. B. THE LEARNED CIT (A) IS NOT JUSTIFIED IN IGNORING THE STATUTORY CONSTRUCTION OF SECTION 271 AAA ON THE MANNER OF IMPOSING THE PENALTY IN THE PRESENT CASE, WHEN THE CONDITIONS RELATED THEREIN IS EFFECTIVE ONLY FOR SEARCH CONDUCTED AFTER 1/6/2007. 2. THE ABOVE ISSUES COULD NOT BE RAISED EARLIER BEFORE THE FIRST APPELLATE AUTHORITY ON ACCOUNT OF THE FACT THAT A PETITION UNDER SECTION I S4 WAS FILED BEFORE HIM ON 24/12/2013 SUBSEQUENT TO HIS ORDER DISMISSING THE' APPEAL AND NO ACTION THEREON HAS BEEN TAKEN SO FAR. 3. THE ADD ITIONAL GROUNDS RAISED ARE LEGAL ISSUES, GOING INTO THE VERY ROOT OF THE SUBJECT MATTER OF LEVY OF CONCEALMENT PENALTY, AND IF LEFT UNADJUDICATED WILL CAUSE IRREPARABLE LOSS TO THE APPELLANT ON THE SUBSTANTIAL QUESTION OF LAW RELATING THERETO. 4. IN VIEW OF THE ABOVE THE TWO ADDITIONAL GROUNDS MAY BE ADMITTED. ON RECORD FOR DISPOSAL ON MERITS. 9 ITA NO.681/MUM/2014 AND 682/MUM/2014 12 . THE FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZURE ACTION WAS CONDUCTED ON THE ASSESSEES PREMISES ON 17. 0 4.2007 AND IN CRIMINATING DOCUMENTARY EVIDENCES OF UNACCOUNTED CASH SALES WERE FOUND WHICH W ERE NOT RECORDED IN THE BOOKS OF ACCOUNT. IN THE RETURN FILED U/S 153A OF THE ACT FOR VARIOUS YEARS, THE ASSESSEE DID NOT DECLARED CONCEALED INCOME FROM UNACCOUNTED SALES IN RESPECT OF ASSESSMENT YEAR 2007 - 08 . DURING THE YEAR NO ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.2 2 .00 LAKHS OVER AND ABOVE ITS NORMAL INCOME AS PER AUDITED FINAL ACCOUNTS COVERING VARIOUS DISCREPANCIES FOUND IN THE RECORD. TH E AO OBSERVED THAT THE CONCEALMENT OF THE INCOME WAS DETECTED BY THE DEPARTMENT AT THE TIME OF CONDUCTING SEARCH ON 17. 0 4.2007 AND IT WAS ONLY IN CONSEQUENCES TO SUCH DETECTION, THE ASSESSEE DECLA R ED IN THE RETURN FILED ON 31.7.2007 WHICH IS AFTER DATE OF SEARCH. ACCORDINGLY, THE AO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE FOR CONCEALMENT OF INCOME. IN ITS REPLY DATED 11. 0 1.2010 AND 0 7. 0 5.2010 FILED BY THE ASSESSEE IN SUPPORT OF HIS ARGUMENTS, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE FACTS OF THE ASSESSEE ARE DIFFERENT FROM THAT OF AS CONSIDERED BY THE HONBLE COURT IN THE CASE OF CIT VS . RELIANCE PETROPRODUCTS LTD (2010) 322 ITR 158 ( SC ) AND THEREFORE, THE RATIO LAID DOWN IN THE SAID DECISION WAS NOT APPLICABLE T O THE CASE OF THE ASSESSEE AND CONSEQUENTLY LEVIED THE PENALTY OF RS.7,40,520/ - ON THE CONCEALED INCOME OF RS.22 LAKHS. AGGRIEVED, BY THE DECISION OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALSO CONFIRMED THE ACTION OF THE A O BY HOLDING AS UNDER :. 10 ITA NO.681/MUM/2014 AND 682/MUM/2014 7.0 THE FACTS OF THE CASE, THE GROUNDS OF APPEAL, THE STAND TAKEN BY THE AO IN THE PENALTY ORDER AND THE SUBMISSIONS MADE BY HE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. 7.1 IN THE CASE OF THE APPELLANT, A SEARCH & SEIZURE A CTION WAS CARRIED OUT ON 17.04.2007 AND AT THE TIME OF SEARCH ACTION, VARIOUS INCRIMINATING DOCUMENTARY EVIDENCES CONFIRMING CASH SALES BY THE APPELLANT WHICH WERE NOT RECORDED IN ITS BOOKS OF ACCOUNT, FOR VARIOUS ASSESSMENT YEARS WERE FOUND AND SEIZED. ON THE BASIS OF THESE INCRIMINATING DOCUMENTS, THE APPELLANT OFFERED AN ADDITIONAL INCOME OF RS.22,OO,OOO/ - FOR THE ASSESSMENT YEAR 2007 - 08, WHICH WAS ALSO INCORPORATED IN THE RETURN OF INCOME FILED. THE SEARCH TOOK PLACE AFTER THE COMPLETION OF THE ACCOUNT ING YEAR AND THE ASSESSEE HAD NOT INCORPORATED THE SAID UNACCOUNTED SALES IN ITS BOOKS OF ACCOUNT. IF THERE WAS NO SEARCH ACTION IN THE CASE OF THE APPELLANT, IT WOULD HAVE NOT INCORPORATED THE ADMITTED UNDISCLOSED INCOME IN THE RETURN OF INCOME. SINCE T HE DISCLOSURE OF THE ADDITIONAL I INCOME OF RS.22,OO,OOO/ - IS CONSEQUENT TO SEARCH ACTION U/S 132 OF THE ACT - AND THE APPELLANT ITSELF ADMITTED SUCH AD DITIONAL INCOME TO COMPENSATE FOR THE UNACCOUNTED SALES, CONCEALMENT OF INCOME IS ESTABLISHED BY ITS OW N CONDUCT OF ADMISSION, INVITING THE LEVY OF PENALTY U/S.271 (1)(C) OF THE ACT. THE VARIOUS JUDICIAL DECISIONS CITED BY THE APPELLA NT ARE NOT APPLICABLE TO THE FACTS OF THE OF T H E APPELLANT . THE APPELLANT'S CLAIM THAT THE ME NS - REA IS REQUIR ED TO BE PROVE D IN PENALTY PROCEEDINGS IS NOT NECESSARY IN VIEW OF THE HONBLE SUPREME COURT DECISION IN THE CASE OF UNION OF INDIA V/S DHARAMENDRA TEXTILE PROCESSORS (2008) 174 TAX M AMM 571 (SC) WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF LEVY OF LEVY OF 271 (1 ) (C) OF THE I. T. ACT, THE ASSESSING OFFICER IS NOT REQUIRED TO ESTABLISH MEANS - REA AS IN THE CASE OF PROSECUTION, WHICH IS A CRIMINAL LIABILITY. 7.2 IN VIEW OF THE ABOVE, THE PENALTY LEVIED U/S.271 (1 )(C) OF THE ACT AMOUNTING TO RS.7,40,520/ - FOR THE A .Y.2007 - 08 IS HERE BY CONFIRMED 11 ITA NO.681/MUM/2014 AND 682/MUM/2014 13 . AGGRIEVED BY THE DECISION OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS VIDE APPLICATION DATED 2.7.2015 AND PRAYED FOR ADMISSION OF THE ADDITIONAL GROUNDS AND ADJUDICATE THEM ALONG WITH THE GROUNDS FILED IN FORM NO.36 IN MEMORANDUM OF APPEAL. 14 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND FROM THE ADDITIONAL GROUNDS RA ISED BY THE ASSESSEE VIDE APPLICATION DATED 0 2. 0 7.2015 QUA IGNORING THE STATUTORY CONS TRUCTION OF SECTION 271(AAA) OF THE ACT AND OTHER ISSUES OF SUSTAINING THE PENALTY U/S 271(1)(C) WHEN THE STATUTORY EXPLANATION TO THE SAID SECTION DOES NOT APPLY TO THE ASS ESS EES CASE . IT IS ALSO A FACT THAT THIS ISSUE WAS NOT RAISED BEFORE FIRST APPELLATE AUTHORITY . IN THE PRESENT CIRCUMSTANCES AND FACTS WE ARE OF THE VIEW THAT THIS ISSUE SHOULD GO BACK TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION. WE, THEREFORE, W ITHOUT GOING INTO THE MERITS OF THE CASE RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) TO EXAMINE THE ISSUE RAISED BY THE ASSESSEE REGARDING SECTION 271AAA OF THE ACT AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER A FFORDING THE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 15 . IN THE RESULT, THE APPEALS OF THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 201 6 SD SD ( C.N. PRASAD ) ( RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 22. 3 .201 6 SRL:SR.P.S. 12 ITA NO.681/MUM/2014 AND 682/MUM/2014 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRA R) , / ITAT, MUMBAI