Omprakash B. Agarwal, Ichalkaranji V. ACIT,Ichalkaranji Circle, Ichalkaranji

ITA 685/PUN/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2663 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-01-2016
• Assessment Year: 1999-2000
• Appeal Filed On: 19-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Keywords: Competent authority; Bonafide mistake
• Section: 143(3); 27

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.684 & 685/PN/2011 ASSESSMENT YEARS : 1998-99 & 1999-2000 OMPRAKASH B. AGARWAL, 9/7, MUKTA SAINIK SOCIETY, ICHALKARANJI. PAN : AAZPA0942L . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, ICHALKARANJI CIRCLE, ICHALKARANJI. . RESPONDEN T / APPELLANT BY : SHRI M. K. KULKARNI / RESPONDENT BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 28.01.2016 / DATE OF PRONOUNCEMENT: 10.03.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : BOTH THE CAPTIONED APPEALS PREFERRED BY THE ASSESSE E ARE AGAINST THE COMMON ORDER OF CIT(A), KOLHAPUR DATED 24.01.2011 R ELATING TO ASSESSMENT YEARS 1998-99 & 1999-2000 PASSED UNDER SECTION 271( 1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. BOTH THESE APPEALS PREFERRED BY THE ASSESSEE ARE ON IDENTICAL GROUNDS EXCEPT FOR THE DIFFERENCE IN QUANTUM OF PENALTY. A CCORDINGLY, TO BEGIN WITH, WE SHALL TAKE-UP THE APPEAL FOR ASSESSMENT YEAR 199 8-99 AS THE LEAD CASE FOR ADJUDICATION. 2 ITA NOS.684 & 685/PN/2011 ITA NO.684/PN/2011 (A.Y. 1998-99) : 3. THE BRIEF FACTS CONCERNING THE PRESENT PENALTY A PPEAL ARE THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETE D UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 22.12.2000 WHEREIN ADDITIO N OF RS.10,12,332/- WAS MADE ON RETURNED INCOME OF RS.96,590/-. THE ASSESS EE IS AN ADVOCATE, PRACTICING AS INCOME TAX PRACTITIONER AT ICHALKARAN JI, DIST. KOLHAPUR. HE WAS HANDLING INCOME-TAX MATTERS OF ABOUT 400 CLIENTS. A CRIMINAL COMPLAINT WAS LODGED BY THE CHIEF MANAGER, STATE BANK OF INDIA, I CHALKARANJI BRANCH, ICHALKARANJI AGAINST THE ASSESSEE WITH THE POLICE A UTHORITIES UNDER COMPLAINT NO.35/99 DATED 24.03.1999. IT WAS ALLEGED IN THE S AID COMPLAINT THAT THE ASSESSEE, AS A PRACTICING INCOME-TAX PRACTITIONER, USED TO ACCEPT HARD CASH FROM HIS CLIENTS TOWARDS PAYMENT OF THEIR TAX LIABILITIE S WHICH HE WAS DEPOSITING WITH THE STATE BANK OF INDIA AFTER PREPARING THE IN COME-TAX PAYMENT CHALLANS. HOWEVER, AFTER RECEIPT OF THE COUNTER-FOILS OF THE CHALLAN FROM THE BANK, HE USED TO INCLUDE AN EXTRA DIGIT IN THE COLUMN OF TH OUSANDS TO MISREPRESENT HIS CLIENTS THAT HIGHER AMOUNT WAS PAID INTO THE BANK. THUS, THE ASSESSEE USED TO COLLECT THE HIGHER AMOUNT FROM THE CLIENTS THAN THE ACTUAL AMOUNT PAID INTO THE BANK AND THE DIFFERENCES WERE RETAINED BY HIM. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE AMOUNT SO MISAPPROPRIATED BY THE ASSESSEE REPRESENTED INCOME OF THE ASSESSEE AND SOUGHT TO TAX THE SAME IN THE HANDS OF THE ASSESSEE. WHILE INFERRING SO AND SUBSEQUENTLY QUAN TIFYING THE AMOUNT, RELIANCE WAS PLACED BY THE ASSESSING OFFICER ON THE FOLLOWING DOCUMENTS WHICH WERE MADE PART OF THE ASSESSMENT ORDER :- A) COMPLAINT LODGED BY THE MANAGER, SBI, ICHALKARAN JI BRANCH WITH THE POLICE AUTHORITIES DATED 24.03.1999; B) LETTER DATED 31.03.1999 RECEIVED FROM POLICE INS PECTOR ALONG WITH LIST OF ASSESSEES CLIENTS; C) LIST OF ASSESSEES CLIENTS RECEIVED FROM CHIEF M ANAGER, SBI SHOWING ACTUAL PAYMENT MADE BY THE ASSESSEE ON BEHA LF OF HIS CLIENTS; 3 ITA NOS.684 & 685/PN/2011 D) CHART SHOWING YEAR-WISE SEGREGATION OF TOTAL AMO UNT OF RS.19,77,900/- KEPT BY THE ASSESSEE WITH HIM. 4. THE CONTENTION OF THE ASSESSEE BEFORE THE ASSESS ING OFFICER WAS THAT HE WAS A MERE CUSTODIAN OF THE AMOUNTS GIVEN TO HIM BY THE CLIENTS AND IT WAS NEVER EARNED BY HIM AND THEREFORE, THE SAME COULD N OT BE TAXED IN HIS HANDS. HOWEVER, THIS CONTENTION WAS REJECTED BY THE ASSESS ING OFFICER, MAINLY RELYING ON THE DECISION OF THE GUAHATI HIGH COURT IN THE CA SE OF CIT VS. TROILAKYA CHANDRA BORA REPORTED IN 182 CTR 456 WHEREIN IT WAS HELD THAT MONEY RECEIVED THROUGH EMBEZZLEMENT FORMS PART OF THE INC OME. ACCORDINGLY, EXCESS AMOUNT RECEIVED THROUGH FINANCIAL IMPROPRIETY AMOUN TING TO RS.9,24,300/- AND RS.10,22,100/- WERE BROUGHT TO TAX FOR THE A.YS. 19 98-99 AND 1999-2000 RESPECTIVELY. PENALTY PROCEEDINGS UNDER SECTION 27 1(1)(C) OF THE ACT WERE INITIATED FOR CONCEALMENT OF INCOME. 5. AS A SEQUEL TO THE ASSESSMENT MAKING ADDITION OF RS.9,24,300/- AND RS.10,22,100/- FOR THE ASSESSMENT YEARS 1998-99 AND 1999-2000 RESPECTIVELY, THE ASSESSING OFFICER IMPOSED PENALTY ALBEIT AT MINIMUM RATE QUANTIFIED AT 100% RS.2,72,049/- AND RS.3,00,080/- FOR ASSESSMENT YEARS 1998-99 AND 1999- 2000 RESPECTIVELY. 6. IN THE MEANTIME, THE QUANTUM ADDITION MADE IN TH IS CASE WAS ALSO UPHELD BY THE CIT(A). APPEAL FILED BY THE ASSESSEE BEFORE THE ITAT, PUNE AGAINST THE AFORESAID ORDER OF THE CIT(A) UPHOLDING QUANTUM ADDITION WAS ALSO DISMISSED BY THE ITAT VIDE THEIR ORDER DATED 19.04. 2005 IN ITA NO.1114 AND 1115/PN/2003. 7. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER IN IMPOSING PENALTY, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITIES I.E. CIT(A). THE CIT(A) TOOK NOTICE OF THE VARIOUS LEGAL AND FAC TUAL OBJECTIONS TAKEN BY THE ASSESSEE. HOWEVER, HE DID NOT FIND MERIT IN ANY OF THE PLEAS OF THE ASSESSEE. 4 ITA NOS.684 & 685/PN/2011 HE ACCORDINGLY DISMISSED THE APPEAL AGAINST THE PEN ALTY ORDER ALSO. THE RELEVANT EXTRACTS OF THE ORDER OF CIT(A) IS REPRODU CED HEREUNDER :- 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE APPELLANT, PERUSED THE ASSESSMENT ORDER AND THE REMAND REPORT FORWARDED BY THE ASSESSING OFFICER. THE FIRST CONTENTION OF THE APPELLANT IS T HAT ORDER IMPOSING PENALTY WAS PASSED WITHOUT TAKING THE PRIOR APPROVAL OF THE ADD L. COMMISSIONER OF INCOME TAX AS MANDATED BY SEC. 271(2) OF THE I.T. ACT AND THER EFORE THE ORDER PASSED IS BAD IN LAW. ACCORDING TO THE APPELLANT, PENALTY ORDER WAS PASSED ON 18.03.2005 AND THE APPROVAL OF THE APPROPRIATE AUTHORITY I.E. ADDL. CO MMISSIONER OF INCOME TAX, ICHALKARANJI RANGE WAS OBTAINED ON 23.03.2005. THE PRELIMINARY OBJECTION RAISED BY THE APPELLANT IS NOT SUSTAINABLE. IN THIS CASE, THE ORDER IMPOSING THE PENALTY WAS PASSED AFTER OBTAINING DUE APPROVAL OF ADDL. CIT, I CHALKARANJI RANGE, ICHALKARANJI VIDE HIS LETTER NO. ICHAL/ADDL. CIT/PENAPPR/307/200 4-05 DATED 23.03.2005. THE SAID ORDER OF PENALTY WAS SERVED UPON APPELLANT ON 25.03 .2005. FROM THE RECORDS, IT IS NOTICED THAT THE DRAFT PENALTY ORDER WAS SUBMITTED TO THE ADDL. CIT, ICHALKARANJI RANGE, ICHALKARANJI VIDE A.O.S LETTER NO. ICHAL/AC . CIR/PENALTY/2004-05/2315 DATED 18.03.2005 FOR APPROVAL OF ADDL. CIT. IN THE DRAFT ORDER, AT PARAGRAPH NO.5, THE DATE OF APPROVAL OF THE ADDL. CIT WAS LEF T BLANK, TO BE FILLED IN AFTER RECEIVING THE APPROVAL. SUBSEQUENTLY, WHILE PASSING THE FINAL PENALTY ORDER, THE DATE OF APPROVAL WAS FILLED IN AS 23.03.2005 IN PAR AGRAPH 5, BUT BY OVERSIGHT, IN THE FIRST PAGE OF THE ORDER, THE DATE OF PASSING TH E ORDER IS NOT CORRECTED TO 23.03.2005 AND THE DATE REMAINED AS 18.03.2005, WHI CH IS THE DATE ON WHICH THE DRAFT WAS SENT FOR APPROVAL OF ADDL. CIT. THE F ACT THAT THE ORDER WAS SERVED ON TILE APPELLANT ON 25.03.2005 I.E. AFTER OBTAININ G THE APPROVAL ON 23.03.2005 AND NOT PRIOR TO OBTAINING APPROVAL CLEARLY SHOWS T HAT NOT CORRECTING THE DATE TO 23.03.2005 WAS ONLY INADVERTENT MISTAKE AND SUCH MI STAKE DOES NOT INVALIDATE THE PENALTY ORDER, WHICH IS OTHERWISE IN SUBSTANCE IN C ONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. 7.1 SECTION 292B CLEARLY PROVIDES THAT NO ASSESSMEN T, NO NOTICE, NO RETURN OF INCOME, SUMMONS OR OTHER PROCEEDINGS FURNISHED OR M ADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN WOULD BE INVALID OR WOULD BE DEEMED TO BE INVALID MERELY BY REASON OF A NY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, NOTI CE, SUMMONS OR OTHER PROCEEDINGS IF SUCH RETURN OF INCOME, ASSESSMENT NO TICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. IN THIS CONTEXT, REFERENCE CAN ALSO BE MADE TO THE DECISION OF APEX COURT IN THE CASE OF CIT VS. JAI P RAKASH SINGH (219 ITR 737), WHEREIN IT IS HELD ASUNDER: THE PRINCIPLE EMERGING FROM THE DECISION IN ESTATE OF LATE RANQALAL JAJODIA V. C1T 79 ITR 505 (SC), IS THAT AN OMISSION TO SERV E OR ANY DEFECT IN THE SERVICE OF NOTICES PROVIDED BY PROCEDURAL PROVISION S DOES NOT EFFACE OR ERASE THE LIABILITY TO PAY TAX, WHERE SUCH LIABILITY IS C REATED BY DISTINCT SUBSTANTIVE PROVISIONS. ANY SUCH OMISSION OR DEFECT MAY RENDER THE ORDER MADE IRREGULAR DEPENDING UPON THE NATURE OF THE PROVISION NOT COMP LIED WITH, BUT CERTAINLY NOT VOID OR ILLEGAL. 7.1.1 REFERENCE CAN ALSO BE MADE TO THE DECISION OF PUNJAB & HARYANA COURT IN THE CASE OF SMT. SWARAN KANTA (176 ITR 291) WHEREIN IT IS HELD ASUNDER: THE ITO FOLLOWED THE PROCEDURE CORRECTLY AS PROVIDE D BY SECTION 159 AND COMPLETED THE PROCEEDINGS. THE SLIGHT MISTAKE, IF A NY, COULD BE RECTIFIED UNDER SECTION 154. MOREOVER, SECTION 292B, WHICH CA ME INTO EFFECT FROM 5 ITA NOS.684 & 685/PN/2011 1-10-1975, INTER ALIA, PROVIDED THAT ASSESSMENT MAD E IN PURSUANCE OF ANY OF THE PROVISIONS OF THE ACT SHALL NOT BE INVALID NOR DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN THE ASSESSMENT IF THE ASSESSMENT IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. IN THE INSTANT CASE, THE ENTIRE PROCEEDINGS WERE CONDUCTED AFTER DEATH OF THE ORIGINAL ASSESSEE IN A CCORDANCE WITH LAW. AFTER DEATH THE LEGAL REPRESENTATIVE WAS ALSO DEEMED TO B E ASSESSEE. THEREFORE, THE TITLE OF THE ORDER, WHICH WAS NOT HAPPILY WORDE D, WOULD NOT MAKE THE ASSESSMENT ORDER INVALID. 7.1.2 IN THE INSTANT CASE ALSO, IT IS NOT IN DISPUT E THAT THE ENTIRE PENALTY PROCEEDINGS WERE OTHERWISE CONDUCTED IN ACCORDANCE WITH LAW. THEREFORE, IN VIEW OF THE PROVISION OF SECTION 2928 AND THE DECISION O F THE APEX COURT AND P&H COURT REFERRED ABOVE, THE MISTAKE, DEFECT O R OMISSION IN NOT CORRECTING THE DATE IN THE FINAL PENALTY ORDER COUL D NOT RENDER THE ORDER INVALID BY REASON OF SUCH MISTAKE, DEFECT OR OMISSI ON. ACCORDINGLY, THE PRELIMINARY OBJECTION RAISED BY THE APPELLANT IS RE JECTED. 7.2 TURNING TO THE MERITS OF THE CASE, THE CASE OF THE ASSESSING OFFICER IS THAT THE APPELLANT HAS MISAPPROPRIATED THE MONEY BELONGI NG TO HIS CLIENTS INSTEAD OF REMITTING THE AMOUNT TO THE GOVT. ACCOUNT TOWARDS T AXES DUE IN THEIR CASES. THE MODUS OPERANDI AND THE INGENIOUS METHOD ADOPTED BY THE APPELLANT FOR DIVERSION AND EMBEZZLEMENT OF THE MONEY BELONGING T O HIS CLIENTS BY MAKING MANIPULATIONS IN THE TAX PAYERS' COPY OF THE COUNTE RFOIL OF THE CHALLAN WAS ALSO DISCUSSED IN THE ASSESSMENT ORDER. THE CONTENTION O F THE APPELLANT IS THAT THESE AMOUNTS WERE MEANT FOR PAYMENT OF TAXES FOR VARIOUS CLIENTS AND HE WAS ONLY THE CUSTODIAN OF THE AMOUNTS AND THEREFORE, EVEN IF RETAINED BY HIM TEMPORARILY, THE AMOUNTS SHOULD NOT BE TREATED AS H IS PROFESSIONAL RECEIPT AND INCOME. THEREFORE, THE FIRST QUESTION TO BE DECIDED IS AS TO WHETHER THE AMOUNT EMBEZZLED OR MISAPPROPRIATED CAN BE CONSTRUED TO BE AN INCOME OF THE APPELLANT. THE DEFINITION OF 'INCOME' UNDER THE I T ACT IS AN INCLUSIVE DEFINITION AND IT IS NOT RESTRICTED TO THE CLASS OF RECEIPTS M ENTIONED IN THE DEFINITION. THE WORD 'INCOME' TAKES IN ITS AMBIT MISAPPROPRIATED OR EMBEZZLED AMOUNTS ALSO. IN THE INSTANT CASE, THE APPELLANT MISAPPROPRIATED THE MONEY BELONGING TO HIS CLIENTS IN FRAUD AND IN BREACH OF TRUST AND IT COUL D NOT BE SAID THAT HE OWED THAT MONEY TO HIS CLIENTS UNDER AN AGREEMENT. IN ANY EMB EZZLEMENT, THE MONEY IS TAKEN BY THE PERSON WITHOUT CONSENT OR KNOWLEDGE OF THE OWNER. THERE IS NO AGREEMENT TO PAY THE MONEY AT THE TIME THE MONEY IS TAKEN. THEREFORE, THE AMOUNT EMBEZZLED CANNOT PARTAKE OF THE CHARACTER OF A LOAN WITH AN OBLIGATION TO REPAY. IT CANNOT ALSO BE SAID THAT THE APPELLANT HE LD THE AMOUNTS AS CUSTODIAN OF HIS CLIENTS BECAUSE FOR HOLDING IT AS CUSTODIAN THERE M UST BE AN AGREEMENT OR UNDERSTANDING BETWEEN THE APPELLANT AND HIS CLIENTS AT THE TIME MONEY IS RECEIVED. IN THIS CASE, THERE WAS NO SUCH AGREEMENT OR UNDERS TANDING AND ON THE CONTRARY THE APPELLANT INTENDED TO APPROPRIATE THE BALANCE FULLY FOR HIMSELF IN A FRAUDULENT MANNER, INSTEAD OF DEPOSITING THEIR TAXES WITHOUT T HE KNOWLEDGE OF HIS CLIENTS. FURTHER, IN THE CASE OF TROILAKYA CHANDRA BOAR (261 ITR 299), IT WAS HELD BY THE GUAHATI HIGH COURT THAT EVEN IF SUCH MISAPPROPRIATE D AMOUNT IS AGREED TO BE RETURNED SUBSEQUENTLY BY THE EMBEZZLER, IT WOULD ST ILL BE TAXABLE AS HIS INCOME IN THE YEAR OF RECEIPT WITHIN THE MEANING OF SECTION 2(24) OF THE INCOME-TAX ACT IT HAS BEEN OBSERVED BY THE HIGH COURT THAT 'ONE WHO USES ANOTH ER'S PROPERTY OR MONEY TO SECURE OR GAIN PROFITS THERE FROM MAY EVEN THOUGH H E DID IT WRONGLY AND HOLDS IT, IS TO BE SUBJECTED TO INCOME-TAX TO THAT EXTENT'. EVEN OTHERWISE, THE APPELLANT WOULD HAVE NOT RETURNED THE MONEY IF THE CRIMINAL COMPLAI NT HAD-NOT BEEN LAUNCHED AND INQUIRIES HAD NOT BEEN CARRIED OUT BY THE BANK CONCERNED AND THE DEPARTMENT. AT THIS STAGE, IT MAY BE NECESSARY TO R EFER TO THE FOLLOWING 6 ITA NOS.684 & 685/PN/2011 OBSERVATIONS OF THE ITAT, PUNE IN ITS DECISION ON T HE QUANTUM APPEAL FILED BY THE APPELLANT. THE APPELLANT DID MANIPULATIONS IN AS MANY AS ABOU T 450 CASES OF HIS CLIENTS AND KEPT THE MISAPPROPRIATED FUNDS WITH HIM . SHRI KULKARNI, THE LD. A.R. OF THE ASSESSEE COULD NOT BRING ANYTHING ON RE CORD TO SHOW THAT THE ASSESSEE HAD ANY INTENTION OF RETURNING THE MISAPPR OPRIATED FUNDS TO HIS CLIENTS. ALSO THERE IS NOTHING ON RECORD TO SHOW TH AT HE WAS UNDER ANY OBLIGATION TO RETURN THE MONEY TO HIS CLIENTS. WE A GREE WITH THE CIT(A) THAT THE ASSESSEE WOULD HAVE NOT PAID THE MONEY IF THE C RIMINAL COMPLAINT HAD NOT BEEN LAUNCHED AND INQUIRIES HAD NOT BEEN CARRIE D OUT IN OUR OPINION. IT IS THE POINT OF TIME WHEN AN ASSESSEE COMES IN POSSESS ION OF A PARTICULAR AMOUNT THAT IS RELEVANT FOR DETERMINING AS TO WHETH ER ITS NATURE IS INCOME OR NOT. THE SUBSEQUENT EVENTS AS TO WHETHER THE AMOUNT WAS USED BY THE ASSESSEE OR NOT IS, IN OUR VIEW OF NO CONSEQUENCE. AND THEREFORE IT HAS TO BE HELD THAT THE FACTS OF THE PRESENT CASE AND THOSE I N THE CASE TROILAKYA CHANDRA BORA (SUPRA), ARE IDENTICAL. THE FACT THAT IN THE CASE OF TROILAKYA CHANDRA BORA (SUPRA), THE ASSESSEE UTILIZED THE EMB EZZLED FUNDS FOR CONSTRUCTION OF PROPERTY DOES NOT MAKE A MATERIAL D IFFERENCE. IN THE CIRCUMSTANCES THE ONLY IRRESISTIBLE INFERENCE THAT HAS TO BE DRAWN IS THAT THIS CASE IS COVERED BY THE DECISION OF GAUHATI HIGH COU RT IN THE CASE OF TROILAKYA CHANDRA BORA (SUPRA), AND THEREFORE, THE ORDER OF THE CIT(A) HAS TO BE UPHELD. WE HOLD ACCORDINGLY. 7.2.1 THUS, THE AMOUNT RECEIVED BY THE APPELLANT FR OM HIS CLIENTS IN THE ASSESSMENT YEAR IN QUESTION AND MISAPPROPRIATED FOR HIS PERSON AL GAINS IS THE 'INCOME' OF THE APPELLANT WITHIN THE MEANING OF SECTION 2(24) AND L IABLE TO BE TAXED. 7.3 THE OTHER CONTENTION RAISED BY THE APPELLANT IS THAT THE ALLEGED INCOME ADDED TO THE TOTAL INCOME BY THE ASSESSING OFFICER WAS NEVER TRANSLATED INTO REAL INCOME AND THE APPELLANT RELIED ON SOME AUTHOR ITIES IN SUPPORT OF ITS CONTENTION THAT WHEN THE INCOME DID NOT MATERIALIZE AT ALL, THERE WAS NO REAL INCOME WHICH CAN BE TAXED. THIS CONTENTION ALSO IS NOT LEGALLY TENABLE. FIRSTLY, THE CONCEPT OF REAL INCOME IS APPLICABLE ONLY IN TH E CONTEXT OF ACCRUAL OF INCOME I.E. WHERE THERE HAS BEEN ACCRUAL OF INCOME IN THEO RY BUT IN REALITY NO INCOME HAS RESULTED BECAUSE SUCH INCOME DID NOT REALLY ACC RUE. THIS CONTROVERSY AROSE MAINLY IN CONNECTION WITH TAXABILITY OF INTEREST IN COME ON STICKY OR DOUBTFUL LOANS ADVANCED IN THE COURSE OF BUSINESS ACTIVITY W HERE THE BOOKS OF A/C ARE MAINTAINED ON MERCANTILE BASIS, AND NOT IN A SITUAT ION WHERE A FRAUD WAS COMMITTED BY THE APPELLANT AND THE AMOUNT GIVEN BY HIS CLIENTS FOR PAYMENT OF TAXES TO THE GOVT. WAS EMBEZZLED. SECONDLY, IT ALSO SETTLED LEGAL POSITION THAT THE CONCEPT OF REAL INCOME CANNOT BE EMPLOYED SO AS TO DEFEAT THE PROVISIONS OF THE ACT AND THE RULES. THIRDLY, WHERE THE PROVISION S OF THE ACT AND THE RULES APPLY, IT IS ONLY THOSE PROVISIONS WHICH MUST BE AP PLIED AND FOLLOWED. IT IS NOT PERMISSIBLE TO IMPORT THE CONCEPT OF REAL INCOME SO AS TO WHITTLE DOWN, QUALIFY OR DEFEAT THE PROVISIONS OF THE ACT AND THE RULES. IN THIS REGARD, IT MAY BE RELEVANT TO REFER TO THE DECISION OF HON'BLE SUPREM E COURT IN CIT V SHIV PRAKSH JANAK RAJ & CO. PVT. LTD 222 ITR 583 WHERE THE APEX COURT HAD AN OCCASION TO EXAMINE THE CONCEPT OF REAL INCOME AND HELD AS UNDE R: 8. ,,,,,,,,,,,,,, THE CONCEPT OF REAL INCOME CANNOT BE EMPLOYED SO AS TO DEFEAT THE PROVISIONS OF THE ACT AND THE RULES. WH.ERE THE PROVISIONS OF THE ACT AND THE RULES APPLY, IT IS ONLY THOSE PROVISIONS WHICH MUST BE APPLIED AND FOLLOWED. THERE IS NO ROOM - NOR WOULD BE PERMISSIB LE FOR THE COURT - TO IMPORT THE CONCEPT OF REAL INCOME SO AS TO WHITTLE DOWN, QUALIFY OR DEFEAT THE PROVISIONS OF THE ACT AND THE RULES. 7 ITA NOS.684 & 685/PN/2011 7.3.1 THUS, THE SUPREME COURT OBSERVED THAT THE CON CEPT OF REAL INCOME SHOULD NOT BE SO READ AS TO DEFEAT THE PROVISIONS OF THE A CT AND TO MAKE ACCRUED INCOME NON-INCOME ON THE MERE IPSE DIXIT OF THE ASS ESSEE. THE APEX COURT ALSO HELD THAT THE CONCEPT OF REAL INCOME MUST BE APPLIE D WITH EXTREME CAUTION AND THAT IT SHOULD NOT BE EXTENDED TO THE AREAS WHERE I T HAS NO APPLICATION. IN THE CASE ON HAND, THE APPELLANT MANIPULATED ENTRIES IN TAX PAID CHALLANS AND SWINDLED TAX PAYERS' MONEY WITH A CRIMINAL INTENT. IN SUCH A SITUATION, THE CONCEPT OF REALITY OF INCOME CANNOT BE UTILIZED FOR WHITTLING DOWN OR NULLIFYING THE PROVISIONS OF THE I.T. ACT OR TAXABILITY OF SUC H RECEIPTS. THEREFORE, THE DECISIONS RELIED UPON BY THE APPELLANT ON THE CONCE PT OF REAL INCOME DO NOT COME TO THE AID OF THE APPELLANT. 7.3.2 THE OTHER CONTENTION OF THE APPELLANT IS THAT NOWHERE IN THE PENALTY ORDER, THE ASSESSING OFFICER HAS RECORDED ANY FINDI NG TO THE EFFECT THAT THE ADDITIONS IN RESPECT OF WHICH PENALTY HAS BEEN IMPO SED, REPRESENTED THE CONCEALED INCOME OF THE APPELLANT. THIS CONTENTION IS CONTRARY TO THE FACTS ON RECORD. AS MENTIONED IN THE PENALTY ORDER, A SHOW N OTICE WAS ISSUED AND SERVED ON 15/02/2005 ASKING THE APPELLANT TO EXPLAI N WHY PENALTY U/S.271(1)(C) FOR CONCEALMENT OF INCOME SHOULD NOT BE LEVIED, BUT THE APPELLANT HAS NOT RESPONDED TO THE SHOW CAUSE NOTICE. THEREAF TER, PENALTY WAS LEVIED BY THE ASSESSING OFFICER FOR CONCEALMENT OF INCOME. 7.3.2 AS REGARDS THE OTHER DECISIONS RELIED UPON BY THE APPELLANT DURING THE PRESENT PROCEEDINGS FOR THE PROPOSITION THAT RECEIP T BY ITSELF IS NOT TAXABLE AND IT MUST BE 'INCOME' RECEIVED, THE SAME ARE CAREFULLY P ERUSED AND THE FACTS IN THOSE CASES ARE TOTALLY DIFFERENT AND CANNOT BE APP LIED TO THE FACTS OF THE INSTANT CASE. AS ALREADY DISCUSSED HEREINABOVE, THE TERM 'I NCOME' IS OF WIDER AMPLITUDE AND IT TAKES WITHIN ITS SWEEP RECEIPTS MISAPPROPRIA TED BY THE APPELLANT AS HELD BY THE GUAHATI HIGH COURT IN THE CASE OF TROILAKYA CHANDRA BOAR (261 ITR 299) EVEN IF THE AMOUNTS WERE RETURNED TO THE RESPECTIVE CLIENTS AFTER THE POLICE COMPLIANT WAS LODGED AND ENQUIRIES WERE MADE. 7.4 THUS, IN THE CASE OF THE APPELLANT, WHAT WAS AS SESSED BY THE ASSESSING OFFICER IS THE REAL INCOME ACCRUED TO AND RECEIVED BY THE APPELLANT DURING THE YEAR AND NOT 'HYPOTHETICAL INCOME' OR 'NOTIONAL INCOME' OR 'FICTITIOUS INCOME' OR 'UNREAL INCOME' AND HENCE THE THEORY OF REAL INCOME CANNOT BE EXTENDED TO THE FACTS OF THE PRESENT CASE SO AS TO EXCLUDE IMPUGNED RECEI PTS FROM CHARGEABILITY TO TAX. 7.5 HAVING HELD THAT THE RECEIPTS IN QUESTION IS NO DOUBT THE INCOME OF THE APPELLANT, THE NEXT QUESTION THAT ARISES FOR CONSID ERATION IS WHETHER THE APPELLANT CONCEALED PARTICULARS OF SUCH INCOME OR F URNISHED INACCURATE PARTICULARS OF INCOME UNDER THE MAIN PROVISIONS OF SEC. 271(1)(C) OR DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME OR FURNISHED I NACCURATE PARTICULARS OF INCOME. THE EXPRESSION 'CONCEALMENT OF INCOME' HAS NOT BEEN DEFINED IN THE ACT, BUT THE NATURAL MEANING OF THE EXPRESSION 'CON CEALMENT' IS TO KEEP FROM BEING SEEN, FOUND, OBSERVED, OR DISCOVERED'. IT WOU LD, THEREFORE, FOLLOW THAT THE EXPRESSION CONCEALMENT OF INCOME, IN ITS NATURAL SE NSE AND GRAMMATICAL MEANING, IMPLIES AN INCOME IS BEING HIDDEN, CAMOUFL AGED OR COVERED UP SO THAT IT CANNOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. I N THE PRESENT CASE, AS PER THE CRIMINAL COMPLAINT LODGED BY THE CHIEF MANAGER, STATE BANK OF INDIA, ICHALKARANJI BRANCH, THE APPELLANT, AS PRACTICING A DVOCATE, WAS ACCEPTING CASH FROM HIS CLIENTS TOWARDS PAYMENT OF THEIR TAX LIABI LITIES. THEREAFTER, THE APPELLANT USED TO DEPOSIT LESSER AMOUNTS TO THE SBI FOR PAYMENT OF TAXES ON BEHALF OF HIS CLIENTS AND AFTER RECEIPT OF THE COUN TER-FOIL OF THE TAXPAYER'S CHALLANS, THE APPELLANT USED TO INSERT AN EXTRA DIGIT IN THE CHALLAN TO SHOW THAT HIGHER AMOUNT OF TAX WAS PAID TO THE BANK AND USED TO APPROPRIATE THE 8 ITA NOS.684 & 685/PN/2011 DIFFERENCE AMOUNT FOR HIMSELF. WHILE FILING THE INC OME-TAX RETURN OF HIS CLIENTS THE APPELLANT USED TO CLAIM TAX CREDIT FOR THE FULL AMOUNT AND BY THIS INGENIOUS AND FRAUDULENT METHOD THE APPELLANT BETRAYED THE TR UST OF HIS CLIENTS, DEFRAUDED THE REVENUE AND GOT ENRICHED BY THE DIFFE RENTIAL AMOUNT, THOUGH IT IS UNJUST ENRICHMENT. THE DIFFERENTIAL AMOUNT SO APPR OPRIATED FOR HIMSELF WAS NOT DISCLOSED IN THE RETURNS OF INCOME FILED BY THE APP ELLANT FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. THIS CLEARLY SHOWS THAT THE APPELLANT CONCEALED THE SOURCE OF INCOME AS WELL AS THE RECEIPTS IN THE RET URN OF INCOME AND THE CASE OF THE APPELLANT IS CLEARLY HIT BY THE MAIN PROVISIONS OF SEC. 271(1)(C). 7.6 NOW, IT IS EXAMINED WHETHER THE APPELLANT REBUT TED THE PRESUMPTION OF CONCEALMENT AS CONTAINED IN THE EXPLANATION 1 TO SE C. 271(1)(C). THE EXPLANATION FURNISHED BY THE APPELLANT THAT HE WAS HOLDING THE AMOUNTS AS CUSTODIAN IS NOT AT ALL BONAFIDE WHEN THE INTENTION WAS TO APPROPRIATE THE AMOUNT BY DEFRAUDING THE REVENUE AND HIS CLIENTS WI TH MANIPULATION OF ENTRIES IN TAX PAID CHALLANS. AS OBSERVED BY THE ITAT, PUNE , THE APPELLANT DID MANIPULATIONS IN AS MANY AS ABOUT 450 CASES OF HIS CLIENTS AND KEPT THE MISAPPROPRIATED FUNDS WITH HIM. THE APPELLANT COULD NOT BRING ANYTHING ON RECORD TO SHOW THAT HE HAD ANY INTENTION OF RETURNI NG THE MISAPPROPRIATED FUNDS TO HIS CLIENTS PRIOR TO LODGING OF POLICE COMPLIANT AND INITIATING ENQUIRIES. IF THE INTENTION WAS TO DEPOSIT THE TAX OR RETURN THE AMOU NT LATER, THE APPELLANT WOULD NOT HAVE RESORTED TO SUCH FRAUDULENT MEANS OF APPRO PRIATING THE MONEY FOR HIMSELF IN SO MANY CASES OF HIS CLIENTS. THE APPELL ANT CAME FORWARD TO DEPOSIT OR RETURN THE APPROPRIATED AMOUNT ONLY AFTER POLICE COMPLAINT WAS LODGED AGAINST HIM AND INQUIRIES WERE MADE. IN THESE CIRCU MSTANCES, THE EXPLANATION FURNISHED BY THE APPELLANT DOES NOT INSPIRE CONFIDE NCE AND IT IS ONLY AIMED AT AVOIDING PENAL CONSEQUENCES AFTER THE ASSESSING OFF ICER DETECTED THE SUPPRESSION OF RECEIPTS DURING THE ASSESSMENT PROCE EDINGS. THE APPELLANT HAS FURNISHED AN EXPLANATION FOR NOT ADMITTING THE RECE IPTS WHICH HE IS NOT ABLE TO SUBSTANTIATE WITH ANY MATERIAL OR EVIDENCE. THUS, T HIS IS A CASE WHERE THE APPELLANT OFFERED AN EXPLANATION BUT NOT ABLE TO SU BSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND THEREFO RE, EXPLANATION 1 TO SEC. 271(1)(C) IS ALSO APPLICABLE TO THE FACTS OF THE PR ESENT CASE. 7.7 IN VIEW OF THE AFORESAID FACTS, IT IS ABUNDANTL Y CLEAR THAT THE MISTAKE IN NOT ADMITTING THE IMPUGNED RECEIPTS IS NOT AN INADV ERTENT OR BONAFIDE MISTAKE. BUT FOR THE SCRUTINY OF THE CASE AND INVESTIGATION CARRIED OUT BY THE BANK CONCERNED AND THE DEPARTMENT, THE ENTIRE SCAM WOULD HAVE GONE UNNOTICED AND THE RECEIPTS SO APPROPRIATED WOULD HAVE ESCAPED TAX. T HE APPELLANT IS GUILTY OF CONTUMACIOUS CONDUCT AND THERE WAS GROSS AND WILLFU L NEGLECT ON THE PART OF THE APPELLANT IN NOT SHOWING THE SAID RECEIPTS IN THE R ETURN OF INCOME FURNISHED BY THE APPELLANT PARTICULARLY WHEN THE EMBEZZLED RECEI PTS WERE KNOWN TO THE APPELLANT. 7.8 TO SUM UP, THE APPELLANT CONCEALED THE PARTICUL ARS OF INCOME IN RESPECT OF RECEIPTS IN QUESTION AS DETECTED BY THE ASSESSING O FFICER DURING THE ASSESSMENT PROCEEDINGS. AS ALREADY MENTIONED, THIS IS A CASE W HERE THE APPELLANT OFFERED AN EXPLANATION BUT NOT ABLE TO SUBSTANTIATE AND ALS O FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND THEREFORE, EXPLANATION 1 TO SEC. 271(1)(C) IS ALSO APPLICABLE TO THE FACTS OF THE PRESENT CASE. THUS, THIS IS A FIT CASE FOR IMPOSITION OF PENALTY U/S. 271(1)(C) IN RESPECT OF THE ADDITIO NS MADE ON ACCOUNT OF SUPPRESSED RECEIPTS. IN THIS REGARD, REFERENCE CAN BE MADE TO THE RECENT DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F DHARMENDRA TEXTILE PROCESSORS LTD. AS REPORTED IN 306 ITR 277 WHEREIN THE APEX COURT HELD THAT MENS REA IS NOT AN ESSENTIAL INGREDIENT OF SEC. 271 (1)(C). 9 ITA NOS.684 & 685/PN/2011 7.9 FOR THE FOREGOING REASONS, I AM OF THE CONSIDER ED OPINION THAT THE ASSESSING OFFICER IS JUSTIFIED IN LEVYING THE PENAL TY FOR CONCEALMENT OF INCOME AND THE PENALTY LEVIED UNDER SEC. 271(1)(C) BY THE ASSESSING OFFICER IS UPHELD FOR BOTH THE YEARS. GROUNDS OF AP PEAL NO.1 TO 8 ARE HELD TO HAVE NO MERIT AND THEY FAIL. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN FURTHER APPEAL BEFORE US. 9. THE CONCISE GROUNDS OF APPEAL OF THE ASSESSEE BE FORE THE TRIBUNAL IS REPRODUCED HEREUNDER :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. C.I.T. (A), PUNE ERRED IN CONFIRMING THE PENALTY LEVIED UN DER SECTION 271 (1)(C) OF THE ACT (MAIN PROVISION) WITHOUT RECORDING SATISFACTION UND ER WHICH LIMB OF THE SECTION THE PENALTY PROCEEDINGS WERE INITIATED IN SPITE OF RETR OSPECTIVE INSERTION OF SUB-SECTION (1B) TO SECTION 271(1)(C) OF THE ACT, IS BAD IN LAW AND WITHOUT JURISDICTION. THE PENALTY BE QUASHED. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. C.I.T. (A) ERRED BY OBSERVING IN PARA 7.3.2 THAT ASSESSEE DID NOT RESPOND TO SHOW CAUSE NOTICE ISSUED BEFORE LEVY OF PENALTY. THE OBSERVATI ON IS TOTALLY WRONG AND MISLEADING. IT CONTRADICTS ALSO THE OBSERVATIONS AN D FINDINGS RECORDED IN SUBSEQUENT PART OF HIS ORDER. THE FACT IS THAT THE DETAILED EX PLANATION WAS SUBMITTED BEFORE A.O. WHICH WAS NOT HELD TO BE FALSE. THE PENALTY LEVIED AND CONFIRMED BY LD. C.I.T. (A) IS BAD IN LAW AND ILLEGAL. IT BE QUASHED . 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ISSUE BEING DEBATABLE NO PENALTY IS LEVIABLE. THE PENALTY LEVIE D BE QUASHED (ORIGINAL GROUND NO. 6) 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE PENALTY ORDER IS NOT SUSTAINABLE IN VIEW OF NO PRIOR APPROVAL WAS OB TAINED BEFORE LEVY OF PENALTY AS ENVISAGED BY S. 274(2) OF THE ACT. THIS IS JURISDIC TIONAL DEFECT WHICH CANNOT BE CURED. THE PENALTY BE QUASHED. (ORIGINAL GROUND NO. 7) 5) THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 10. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED AT THE OUTSET THAT THE PENALTY ORDER IS NOT SUSTAINABLE IN VIEW OF THE FACT THAT NO PRIOR APPROVAL WAS OBTAINED FROM THE COMPETENT AUTHORITY BEFORE LEVY OF PENALTY AS ENVISAGED BY SECTION 274(2) OF THE ACT. THIS HAS G IVEN RISE TO JURISDICTIONAL DEFECT WHICH CANNOT BE CURED AND THEREFORE PENALTY IMPOSED DESERVES TO BE QUASHED IN LIMINE . TO AUGMENT THIS PLEA, HE POINTED OUT THAT PENALT Y ORDER IS DATED 18.03.2005 WHEREAS THE APPROVAL HAS BEEN TAKE N SUBSEQUENTLY ON 10 ITA NOS.684 & 685/PN/2011 23.03.2005. THIS POST FACTO APPROVAL TAKEN FROM THE SUPERIOR AUTHORITY NAMELY ADDL. CIT IS NOT PERMISSIBLE IN LAW. HIS NEXT PLAN K OF OBJECTION IS THAT THE ASSESSING OFFICER HAS NOT POINTED OUT UNDER WHICH L IMB OF THE SECTION, THE ASSESSING OFFICER HAS DERIVED SATISFACTION TO PROCE ED UNDER SECTION 271(1)(C) OF THE ACT AND THEREFORE THE PENALTY ORDER IS BAD I N LAW AB INITIO AND IS WITHOUT JURISDICTION. ANOTHER ARGUMENT MARSHALED ON BEHALF OF ASSESSEE IS THAT NO FALSITY PER SE IN THE EXPLANATION SUBMITTED BY THE ASSESSEE HAS BE EN DEMONSTRATED. THE LD. AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE NEXT CONTENDED THAT THE SOLE PREMISE OF THE ENTIRE ACTIO N AGAINST THE ASSESSEE IS THE CRIMINAL COMPLAINT FILED BY THE CHIEF MANAGER OF TH E STATE BANK OF INDIA WHO HAS NOT SUFFERED ANY FINANCIAL INJURY BY THE ALLEGE D AFFAIRS. THERE IS NO LOSS ON MONEY TO THE BANK IN ANY MANNER BY THE ALLEGED ACTI ON OF ASSESSEE AND THEREFORE SUCH COMPLAINT IS NOT SUSTAINABLE. HE, T HEREAFTER, SUBMITTED THAT EVEN THE CLIENTS WHO ARE ALLEGEDLY JEOPARDIZED BY SUCH A CTION OF THE ASSESSEE HAVE ALSO NOT FILED ANY COMPLAINT AGAINST THE ASSESSEE. THE ASSESSEE WAS MERELY A CUSTODIAN OF THE EXCESS TAX AMOUNT COLLECTED FROM T HE CLIENTS AND IT WAS NEVER EARNED BY HIM AND THEREFORE SAME COULD NOT BE TAXED IN HIS HANDS. THE MONEY WAS FINALLY RETURNED BACK IN THE SUBSEQUENT YEARS. HE SUBMITTED THAT THE ALLEGED DIFFERENTIAL MONEY RECEIVED FROM ITS CLIENT S ARE NOT TAXABLE AS THE SAME IS NOT INCOME ACCRUED OR ARISEN IN THE HANDS OF THE ASSESSEE. NOTWITHSTANDING THE AFORESAID CONTENTION, THE ISSUE OF TAXABILITY OF IMPUGNED INCOME IS HIGHLY DEBATABLE AND THEREFORE IMPOSITION OF PENALTY IS NOT WARRANTED IN THE FACTS OF THE CASE. 11. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE, ON THE OTHER HAND, RELIED UPON THE PENALTY ORDER OF THE CIT(A) A ND SUBMITTED THAT IT IS GROSS CASE OF CONCEALMENT OF INCOME AND THEREFORE DOES NO T DESERVE ANY LENIENCY. 12. WE HAVE GIVEN OUR CAREFUL CONSIDERATIONS TO THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. THE ISSUE FOR REDRESSAL BEFORE US IS JUSTIFICATION OF IMPOSITION OF PENALTY IN LAW IN TH E FACTS OF THE CASE. AS NOTED 11 ITA NOS.684 & 685/PN/2011 ABOVE, THE ASSESSEE IS ALLEGED TO HAVE COLLECTED EX TRA AMOUNT FROM ITS CLIENTS BY INDULGING IN FRAUDULENT ALTERNATION OF THE INCOME-T AX CHALLANS. BY THIS PROCESS, THE ASSESSEE IS ALLEGED TO HAVE COLLECTED EXTRA MON EY FROM THE CLIENTS THAN WHAT WAS ACTUALLY PAID TO THE GOVERNMENT TREASURY O N THEIR BEHALF. THE ASSESSING OFFICER BROUGHT THE ADDITIONAL INCOME COL LECTED FROM THE CLIENTS BY SUCH ALLEGED SUBTERFUGE TO TAXATION AND ALSO IMPOSE D PENALTY BY INVOKING SECTION 271(1)(C) OF THE ACT ALBEIT AT MINIMUM RATE. WE FIND THAT THE FIRST GRIEVANCE OF THE ASSESSEE THAT NO PRIOR APPROVAL OF THE ADDL. CIT HAS BEEN TAKEN AS ENVISAGED UNDER SECTION 274(2) OF THE ACT BEFORE PASSING PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN D ULY ADDRESSED BY THE CIT(A) IN PARA 7 OF ORDER OF THE CIT(A) REPRODUCED (SUPRA). THE CIT(A) HAS EXAMINED THE FACTS AND CAME TO THE CONCLUSION THAT IT IS ONLY BY OVERSIGHT THAT THE DATE HAS BEEN INCORRECTLY MENTIONED IN THE PENA LTY ORDER WHICH WAS SERVED SUBSEQUENT TO THE DATE OF THE APPROVAL AND THEREFOR E THE MISTAKE BEING TECHNICAL STANDS CURED BY SECTION 292B OF THE ACT. WE COMPLETELY ENDORSE THE VIEW TAKEN BY THE CIT(A) ON THE ISSUE AND DO NOT PR OPOSE TO EXPAND IT FURTHER. THE SECOND OBJECTION OF THE ASSESSEE THAT HE WAS NO T INFORMED ABOUT WHICH LIMB OF THE SECTION THE PENALTY PROCEEDINGS WERE IN ITIATED ALSO LACKS MERIT. WE OBSERVE FROM THE ASSESSMENT ORDER THAT THE ASSESSIN G OFFICER HAS CLEARLY MENTIONED THAT THE PROFESSIONAL RECEIPTS ARISING FR OM SUCH ALLEGED SUBTERFUGE HAVE NOT BEEN DISCLOSED, WHICH FAILURE HAS RESULTED IN UNDERREPORTING OF INCOME. AS A COROLLARY, FROM THE TEXT AND TENOR OF THE ASSESSMENT ORDER, THE SPECIFIC CHARGE OF CONCEALMENT OF PARTICULARS OF IN COME IS EXPLICIT AS WELL AS IMPLICIT. IT IS AFTER AMPLE OPPORTUNITIES, THE PENA LTY ORDER CAME TO BE PASSED. THEREFORE, WE DO NOT FIND ANY SUBSTANCE ON THIS GRI EVANCE OF THE ASSESSEE EITHER. AS REGARDS THIRD OBJECTION OF THE ASSESSEE THAT DETAILED EXPLANATION SUBMITTED BY THE ASSESSEE WAS NOT HELD TO BE FALSE BY THE ASSESSING OFFICER, WE FIND THAT SUCH PLEA IS ALSO TOTALLY DEVOID OF ME RIT. THE ASSESSING OFFICER HAS NARRATED THE CLANDESTINE MEANS ADOPTED BY THE A SSESSEE WHICH CAME TO THE LIGHT OF THE DEPARTMENT AFTER FILING THE RETURN OF INCOME DUE TO COMPLAINT LODGED BY THE BANK WITH THE POLICE AUTHORITIES. THI S INFORMATION LED TO 12 ITA NOS.684 & 685/PN/2011 UNEARTHING OF UNREPORTED INCOME. THE ASSESSEE AT NO STAGE HAS SUCCESSFULLY CONTROVERTED THE PROPRIETY OF SUCH ALLEGATIONS. THE SURPLUS MONEY ADMITTEDLY WERE NOT RETAINED WITH THE KNOWLEDGE AND CONCURRENC E OF THE CLIENTS. AS A CONCOMITANT THERETO, THERE WAS NO OBLIGATION ON THE PART OF THE ASSESSEE TO RETURN THE SUM UNAUTHORISEDLY RETAINED. IN THE BACK DROP OF THESE FACTS, THERE IS NO MANNER OF DOUBT THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS PER SE FALSE. WHERE THE EXPLANATION OF THE ASSESSEE HAS BEEN FOUN D TO BE FALSE, THE ASSESSEE IS LIABLE FOR PENALTY FOR CONCEALMENT OF INCOME. 13. THE NEXT GROUND OF APPEAL OF THE ASSESSEE THAT ISSUE IS HIGHLY DEBATABLE ALSO A DAMP SQUIB. IN THE QUANTUM PROCEEDINGS, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS ARRIVED AT A UNEQUIVOCAL FINDING WITH REGARD TO THE TAXABILITY OF SUCH INCOME AS REPRODUCED IN PARA 7.2 OF ORDER OF T HE CIT(A) NOTED (SUPRA). WE FIND THAT THE CIT(A) HAS DISCUSSED THE ISSUE THR EADBARE AND HAS ARRIVED AT A CONCLUSION THAT WHICH WE FULLY AGREE. IN OUR VIEW, THE ARGUMENT OF THE ASSESSEE THAT HE WAS A MERE CUSTODIAN FOR THE EXCES S MONEY RECEIVED AGAINST PAYMENT OF TAXES ON BEHALF OF CLIENTS RETAINED DOES NOT STAND THE TEST OF REASONS. AS NOTED ABOVE, THE SURPLUS MONEY WAS COLL ECTED BY WRONGFUL MEANS WAS NOT INTENDED TO BE RETURNED. THERE CAN BE NO PL AUSIBLE DOUBT THAT MONEY RETAINED WITHOUT KNOWLEDGE OF THE CLIENT STANDS VES TED WITH THE ASSESSEE AND THUS HAS GIVEN RISE TO A TAXABLE EVENT. THEREFORE, IT WOULD BE IDLE TO CONTEND THAT THE ISSUE IS DEBATABLE. THE EXPLANATION OF THE ASSESSEE THAT ALLEGED INCOME RESULTED FROM THE ALLEGED FINANCIAL IMPROPRIETY IS NOT VESTED WITH ASSESSEE BUT WERE HELD AS MERE CUSTODIAN ON BEHALF OF CLIENTS IS PRIMA-FACIE UNTENABLE. THE PENALTY HAS BEEN IMPOSED AND CONFIRMED ON THE BASIS OF SPEAKING FACTS AND CIRCUMSTANCES. WE UPHOLD THE PENALTY IN VIEW OF TH E DISCUSSION HEREINABOVE. AS A CONSEQUENCE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) CONFIRMING PENALTY IN ANY MANNER. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.684/PN/2011 RELATING TO ASSESSMENT YEAR 1998-99 IS DISMISSED. 13 ITA NOS.684 & 685/PN/2011 ITA NO.685/PN/2011 (A.Y. 1999-2000) : 15. NOW, WE SHALL TAKE-UP THE APPEAL OF THE ASSESSE E IN ITA NO.685/PN/2011 RELATING TO ASSESSMENT YEAR 1999-200 0. 16. IN THIS APPEAL, THE FACTS AND ISSUES INVOLVED A RE BROADLY SIMILAR TO THAT OF ASSESSMENT YEAR 1998-99. ACCORDINGLY, OUR DECISION IN ASSESSMENT YEAR 1998- 99 SHALL APPLY MUTATIS MUTANDIS IN THIS ASSESSMENT YEAR ALSO I.E. 1999-2000. 17. IN THE RESULT, FOLLOWING THE PARITY OF REASONIN GS, THE APPEAL OF THE ASSESSEE IN ITA NO.685/PN/2011 RELATING TO ASSESSME NT YEAR 1999-2000 IS ALSO DISMISSED. 18. RESULTANTLY, BOTH THE CAPTIONED APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 10 TH DAY OF MARCH, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 10 TH MARCH, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT-II, KOLHAPUR; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE