SHRI SHYAM MANOHAR AGRAWAL, Bhopal V. The ACIT 3(1), Bhopal

ITA 713/IND/2014

• Counselvise Citation: 71322714 RSA 2014
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Question of law; Initiation of penalty proceedings
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NOS. 713 TO 715/IND/2014 A.YS. : 2005-06TO 2007-08 SHYAMMANOHARAGARWAL, ACIT, BHOPAL VS. 3(1), BHOPAL APPELLANT RESPONDENT PAN NO. ABXPA1999A APPELLANT BY : SHRI ASHISHGO YAL , C.A. AND SHRI N. D. PATWA, ADV. RESPONDENT BY : SHRI R.A.VERMA, SR. DR DATE OF HEARING : 13 . 0 7 .201 5 DATE OF PRONOUNCEMENT : 27 . 0 8 .201 5 -:2:- 2 O R D E R PER GARASIA, J.M. THESE THREE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE COMMON ORDER FOR ASSESSMENT YEARS 2005- 06, 2006-07 AND 2007-08, WHEREIN THE AO HAS IMPOSED THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS A REAL ESTATE BROKER AND AGGREGATO R. A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE INCOME-TAX ACT, 1961, HAS BEEN CARRIED OUT ON 5.1.2007 AT VARIOUS BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE AND HIS FAMILY MEMBERS. ACCORDINGLY , PROCEEDINGS U/S 153A OF THE INCOME- TAX ACT, 1961, HAVE BEEN INITIATED AGAINST THE ASSESSEE. THE PENALTY HAS BEEN IMPOSED AS UNDER :- A.Y. ORIGINAL RETURN DETAILS RETURNED INCOME U/S 153A ASSESSED INCOME U/S 153A ADDITION MADE BY AO ADDITION CONFIRMED TILL HON'BLE I.T.A.T. PENALTY IMPOSED U/S 271(1)(C) DATE OF RETURN INCOME 2005-06 23.07.2005 5,04,221/- 24,59,245/- 49,00,250 /- 24,41,000/- 14,99,000/- 8,00,000/- 2006-07 04.02.2008 6,54,717/- 1,10,52,242 5,30,81,2 40/- 4,20,29,000/- 62,48,000/- 40,00,000/- 2007-08 -- -- 42,39,565/- 2,84,14,370/- 2,41.74,805 /- 1,88,49,600/- 95,00,000/- -:3:- 3 THE ORIGINAL RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 WAS FILED ON 23.07.2005 DECLARING A INCOME OF RS 5,04,221/-. FURTHER, IN RESPONSE TO NOTICE U /S 153A, RETURN U/S 153A WAS FILED ON 28.11.2008 DECLARING AN INCOME OF RS. 24,59,245/-. IN THIS CAS E, THE ASSESSMENT WAS COMPLETED U/S 153A R.W.S. 143(3) OF INCOME-TAX ACT, ON 31.12.2008 AND INCOME AS ASSESSED AT RS. 49,00,250/-. FOLLOWING ADDITIONS WERE MADE :- RS. INCOME AS PER RETURN OF INCOME 24,59,245/- ADD: AS PER PARA I OF ASSESSMENT ORDER 2,52,000/- AS PER PARA 2 OF ASSESSMENT ORDER 20,45,000/- AS PER PARA 3 OF ASSESSMENT ORDER 1,44,000/- TOTAL INCOME 49,00,245 ASSESSED INCOME 49,00,250/- 3. OUT OF THE ABOVE ADDITION, ADDITION OF RS. 2,52,000/- WAS DELETED BY CIT(A). THE ADDITION OF RS . -:4:- 4 20,45,000/- ON ACCOUNT OF UNEXPLAINED LOANS RECEIVE D FROM VARIOUS PERSONS WAS CONFIRMED BY THE LD. CIT(A) AND THE ADDITION WAS RESTRICTED TO RS. 13,10,000/- BY I.T.A. T., INDORE. HE ADDITION OF RS. 1.44 LACS ON ACCOUNT OF UNDISCLO SED RENTAL INCOME WHICH WAS CONFIRMED BY BOTH CIT(A) AND I.T.A.T . IN ASSESSMENT YEAR 2006-07, AN ADDITION OF RS. 45,000/ - ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES WAS ADDED IN THE INCOME OF THE ASSESSEE. THE AO HAS ALSO LEVIED THE PENALTY OF RS. 45,000/- FOR ASSESSMENT YEAR 2005-06. 4. LD. AR SUBMITTED THAT IN THESE APPEALS, WHILE FRAMING THE ASSESSMENTS, THE ASSESSING OFFICER HAS NOT SPECIFIED THE CHARGE FOR WHICH THE PENALTIES U/S 271 (1)(C) HAVE BEEN IMPOSED. THE ASSESSING OFFICER HAS SIMPLY WRITT EN THE NOTICE U/S 271(1)(C) WHILE IMPOSING THE PENALTY. THE REFORE, THE PENALTY IS NOT JUSTIFIED IN VIEW OF THE DECISION IN CASE OF ACIT VS. GRAND ORGANICS (P) LTD., 85 DTR 142 (PANAJI TRI BUNAL). THE LD. DR OBJECTED TO IT AND RELIED ON THE ORDERS OF R EVENUE AUTHORITIES. LD. COUNSEL SUBMITTED THAT THE FOLLOWIN G ADDITIONS WERE CONFIRMED BY THE ITAT. THE ASSESSEE PREFERRED THE APPEALS BEFORE THE HONBLE HIGH COURT AND HONB LE HIGH -:5:- 5 COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW AGAIN ST THE ORDER OF THE ITAT. THEREFORE, THE ISSUE IS A DEBATA BLE ISSUE, AND NO PENALTY SHOULD HAVE BEEN LEVIED IN VIEW OF TH E DECISION OF YUGAL KISHORE JAJU (INDORE) (ITA NO.272/IND/2011 , T.O. DATED 12.2.2013) AND CIT VS. LIQUID INVESTMENT & TR ADING CO. (DEL.) (ITA 240/2009, ORDER DATED 5.10.2010). ADMITTED BY HIGH COURT AY 2005-06 AY 2006-07 AY 2007-08 CASH CREDITS 13,10,000 6,00,000 (10,50,000 4,50,000) RENTAL INCOME 1,44,000 1,68,0 00 1,55,000 UNEXPLAINED INVESTMENT 3,50,000 CASH CREDITS - 26,49,600 ADVANCES RECEIVED (8049600 5400000) BACK INVESTMENT IN PURCHASE OF LAND 50,00,000 TOTAL 14,54,000 5,18,000 84,04,600 4.1 LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED AS UNDER: -:6:- 6 PENALTY NOT INITIATED ON THIS POINT AY 2005-06 AY 2006-07 AY 2007-08 UNRECORDED RECEIPTS 45,000 6,000 UNEXPLAINED INCOME 14,00,000 INVESTMENT IN 20,00,000 PURCHASE OF LAND UNACCOUNTED 3,00,000 PURCHASE AND SALE OF LAND TO ISHWARLAL MEHTA ALLEGED SALE OF LAND - 10,00,000 RECEIVED FROM HARISH BHAI UNEXPLAINED 2,25,000 PAYMENT AS PER BS 3 PG. 1 PAYMENT TO SMT. 3,00,000 VEENAWASWANI PAYMENT - NO TDS 17,95,000 DEDUCTED UNACCOUNTED 2,90,000 EXPENSES ON DEVELOPEMENT OF PALASI ROAD (LPS 13 PG.97) UNACCOUNTED 6,85,000 PURCHASE OF LAND - KAUSHALYADEVI (LPS PG. 58 TO 60) TOTAL 45,000 34,06,000 45,95,000 LD AO IN THE ASSESSMENT ORDER HAD SPECIFICALLY CHOS EN THE ITEMS ON WHICH PENALTY WAS TO BE INITIATED. THIS IS STATED O N PG. 2 TO 6 OF THE SYNOPSIS, WITH EACH OF THE ITEMS. IN RESPECT TO ITE MS ON WHICH HE DID NOT RECORD SATISFACTION DURING ASSESSMENT, IT IS CL EAR THAT HE WAS NOT SATISFIED THAT PENALTY SHALL BE INITIATED. RECORDIN G OF SATISFACTION IS AND HAS BEEN A SINA-QUA-NON FOR INITIATING PENALTY PROCEEDINGS. WHEN THE ID AO RECORDS SATISFACTION ON CERTAIN ITEMS IN RESPECT TO LEVY OF PENALTY, HE CANNOT LEVY PENALTY ON OTHER ITEMS. THE ID AO HIMSELF CHOSE NOT TO INITIATE PENALTY ON ITEMS ON WHICH NO -:7:- 7 'SATISFACTION' WAS RECORDED. IN FACT, ID AO AT THE END OF THE ASSESSMENT ORDER S TATED 'PENALTY U/S 271(1)(C} IS BEING INITIATED'. THIS FINDING IS GIVE N AND COULD BE GIVEN ONLY IN RESPECT OF THE ITEMS ON WHICH THE SATISFACT ION WAS RECORDED. IN FACT, SECTION 271(LB) WOULD BE ATTRACTED ONLY WH EN INSTEAD OF A SPECIFIC FINDING ON EACH ITEMS, THE ID AO WRITES 'P ENALTY INITIATED'. WHERE THE ID AO CHOOSE THE SPECIFIC ITEMS ON WHICH PENALTY WOULD BE LEIVED, HE CANNOT CHANGE HIS STAND AND LEVY PENALTY EVEN ON OTHER ITEMS. LN THE CASES OF MADHUSHREE GUPTA & BRITISH AIRWAYS 317 ITR 143(DEL) HOLDING THE VALIDITY OF SECTION 271(LB) IT WAS HELD AS UNDER 'THE PRESENCE OF PRIMA FACIE SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS WAS AND REMAINS A JURISDICTIONAL FACT W HICH CANNOT BE WISHED AWAY AS THE PROVISION STANDS EVEN TODAY, I.E POST AMENDMENT.' (P 147) THUS, PENALTY CANNOT BE LEVIED ON ITEMS ON WHICH SA ME IS NOT INITIATED. TELESCOPING BENEFIT CLAIMED 2. AY 2005-06 AY 2006- 07 AY 2007-08 RELIEF GIVEN BY A RELIEF OF RS. A RELIEF OF RS. HON'BLE ITAT 23,50,000 GIVEN. 80,70,000 GIVEN. ( A) TELESCOPING BENEFIT IS GIVEN TO AVOID DOUBLE TAX ATION. IN CASE THE SOURCE ITSELF HAS BEEN ADDED AND THE INVESTMENT IS ALSO ADDED, SAME WOULD AMOUNT TO A DOUBLE TAXATION. TELESCOPING BENE FIT THEREFORE DENIES SUCH DOUBLE BENEFIT AND ASSURES THAT AN INCO ME IS ADDED ONLY ONCE. SAY IN THE PRESENT CASE, THE CASH CREDITS HAV E BEEN TREATED AS INCOME; THEN SUCH AMOUNT IS AVAILABLE FOR EXPLAININ G THE INVESTMENTS. MAKING ADDITION FOR CASH CREDITS AND T HE INVESTMENTS AMOUNTS TO DOUBLE ADDITION. (B) THE OBJECTIVE OF PENALTY U/S. 271(1)(C) IS WHER E BY ANY ACT OR COMMISSION OF THE ASSESSEE, THE REVENUE HAS TO SUFF ER, PENALTY U/S. -:8:- 8 271(1)(C) WILL BE LEVIED. NO PENALTY SHOULD BE LEVI ED TO THE EXTENT THAT NO TAX LIABILITY ARISES TO THE ASSESSEE. IF THE AMOUNT WHICH IS DETECTED BY THE DEPARTMENT, ITSELF HAS BEEN EXPLAINED BY VIRTUE OF TELESCOPING BENEFIT, THE SAM E WOULD NOT AT ALL CONSTITUTE THE INCOME OF ASSESSEE. NO TAX INFACT WA S LEVIED ON THE AMOUNT ACCEPTED BY VIRTUE OF TELESCOPING BENEFIT OF RS. 23,50,000 IN A.Y. 2006-07 AND RS. 80,70,000 IN A.Y. 2007-08. (C) SECTION 271(1)(C) USES THE WORDS CONCEALMENT OF 'INCOME'. IF THERE IS NO TAXABLE INCOME OR TAX ASSESSED FOR PAYMENT DU RING A PARTICULAR YEAR, THE QUESTION OF EVASION AND CONSEQUENTLY PENA LTY DOES NOT ARISE. CIT VS PRITHIPAL SINGH & CO. 249 ITR 670 (SC). 5. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES. WE FIND THAT ASSESSING OFFICER INITIATED THE PENALTY P ROCEEDINGS U/S 271(1)(C) WITHOUT BRINGING ON RECORD WHAT DEFAULT U/S 271(1) WAS COMMITTED BY THE ASSESSES. THE ASSESSIN G OFFICER HAS NOT BROUGHT OUT ANY SPECIFIC CHARGE, THEREFORE, WHEN ASSESSING OFFICER HAS FAILED TO BRING ON RECORD THA T ASSESSEE HAD EITHER CONCEALED PARTICULARS OF INCOME OR HAD F URNISHED INACCURATE PARTICULARS OF INCOME, THE PENALTY CANNO T BE LEVIED U/S 271(1) OF THE I.T. ACT. IN THESE CASES, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS GIVEN NO SPECIFIC DI RECTION. IT IS WELL SETTLED THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE DIFFERENT. THE PENALTY PROCEEDINGS CAN BE -:9:- 9 INITIATED ON CONCEALMENT OF PARTICULARS OF INCOME A ND FURNISHING INACCURATE PARTICULARS OF INCOME AND IF THE ASSESSING OFFICER FAILED TO SPECIFY THE CHARGE, THE PENALTY CANNOT BE LEVIED. WE FIND THAT SIMILAR ISSUE HAD CO ME UP IN TRIBUNAL IN CASE OF ACIT VS. GRAND ORGANICS (P) LTD . (SUPRA), WHEREIN TRIBUNAL HAS DEALT THIS ISSUE IN DETAIL. 6. WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 271( 1)(C). WE NOTED THAT PENALTY U/S 271(1)(C) IS LEVIABLE IF AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THE INCOME T AX ACT THAT ANY PERSON HAS CONCEALED PARTICULARS OF HIS IN COME OR FURNISHED INACCURATE PARTICULARS OF INCOME. FROM TH E ASSESSMENT ORDER WE NOTED THAT THERE IS NO INDICATIO N WHICH SPEAKS OF AO BEING SATISFIED DURING THE COURSE OF T HE ASSESSMENT THAT THE ASSESSEE HAS COMMITTED DEFAULT AS STIPULATED U/S 271(1)(C). NO DOUBT, LEGISLATURE HAS INSERTED SUB-SECTION (1B) IN SEC. 271 BY FINANCE ACT, 2008 W. R.E.F. 1.4.1989 PROVIDED THAT DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS IN THE ORDER OF ASSESSMENT SHALL BE DEE MED TO CONSTITUTE SUCH SATISFACTION. IN THE ASSESSMENT WE F IND THAT -:10:- 10 THERE IS NO SUCH DIRECTION. DIRECTION IS GIVEN ONLY TO THE STAFF TO ISSUE AO, DN &CHALLAN& PEN. NOTICE U/S 271(1)(C). THIS, IN OUR OPINION, DOES NOT TANTAMOUNT TO A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) AS THE AO HAS NOT UTTERED ANYTHING IN THE ASSESSMENT ORDER IN THIS REGARD. TH E ACTION OF THE AO, IN OUR OPINION, IS TOTALLY ILLEGAL AND DOES NOT MEET THE REQUIREMENT OF SEC. 271(1)(C) EVEN AFTER THE AMENDM ENT MADE BY THE FINANCE ACT, 2008. IN THE CASE OF MS. MADHUS HREE GUPTA BRITISH AIRWAYS PLC VS. UNION OF INDIA, 317 I TR 107 (DEL), THE SCOPE OF AMENDMENT WAS EXPLAINED BY THE H ON'BLE DELHI HIGH COURT AS UNDER : IN OUR OPINION, THE IMPUGNED PROVISION ONLY PROVI DES THAT AN ORDER INITIATING PENALTY CANNOT BE DECLARED BAD IN LAW BECAUSE IT STATES THE PENALTY PROCEEDINGS ARE INITIATED, IF OTHERWISE IT IS DISCERNIBLE FROM RECOR D THAT THE AO HAS ARRIVED AT PRIMA FACIE SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS. THE ISSUE IS OF DISCERNIBILITY OF THE SATISFACTION ARRIVED AT BY THE AO DURING THE COURSE OF PROCEEDING BEFORE HIM. THE PRESENCE OF PRIMA FACIE SATISFACTION FOR INITI ATION OF PENALTY PROCEEDINGS WAS AND REMAINS A JURISDICTIONAL FACT WHICH CANNOT BE WISHED AWAY AS THE PROVISION STANDS EVEN TODAY, I.E. POST AMENDMENT. IF THERE IS NO MATERIAL TO INITIATE PENALTY PROCEE DINGS; AN ASSESSEE WILL BE ENTITLED TO RECOURSE TO A COURT OF LAW. -:11:- 11 7. THIS IS THE SETTLED LAW THAT THE PENALTY PROCEED INGS AND ASSESSMENT PROCEEDINGS ARE DIFFERENT. THE PENALTY P ROCEEDINGS CAN BE INITIATED ON TWO CHARGES I.E. I) CONCEALMENT OF PARTICULARS OF INCOME AND II) FURNISHING OF INACCUR ATE PARTICULARS OF INCOME. BOTH THE CHARGES ARE ENTIREL Y DIFFERENT. IF THE PROCEEDINGS ARE INITIATED ON CHARGE OF CONCE ALMENT, THEN PENALTY CANNOT BE LEVIED ON THE CHARGE OF FURNISHIN G OF INACCURATE PARTICULARS OF INCOME AND VICE VERSA. TH US, THERE MUST BE A CLEAR FINDING ABOUT THE CHARGE FOR WHICH P ENALTY IS IMPOSED OR INITIATED. IT IS INCUMBENT UPON THE AO T O STATE WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF I NCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF SUCH FINDINGS, THE ORDER WOULD BE BAD IN LAW. THE CASE OF NEW SORATHIA ENGINEERING CO. LTD., 282 ITR 6 42, HONBLE GUJARAT HIGH COURT HAS HELD AS UNDER: - IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STAT E WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED BY THE ASSESSEE. HELD, THAT THE PENALTY ORDER AND THE ORDER OF THE COMMISSIONER (APPEALS) SHOWED THAT NO CLEAR CUT FINDING HAD BEEN REACHED. THE TRIBUNAL HAD FAILED T O -:12:- 12 APPRECIATE THIS LEGAL ISSUE. THE RATION IN CIT V. M ANU ENGINEERING WORKS 132 ITR 306 (GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT BE UPHELD BY THE TRIBUNAL. THE ORDER WAS INVALID. IN THE CASE OF COMMISSIONER OF INCOME TAX V. RAJAN AND CO., 291 ITR 340 (DEL), WHEREIN IT IS HELD THAT THE PROVISION OF SECTION 271 (1) (C) OF THE INCOME TAX 1961 WOULD REQUIRE PROPER APPLICATION OF MIND AND RECORDING OF AT LEAST A BARE MINIMUM OPINION ON THE PART OF AO THAT A CASE FOR INITIATION OF PENALTY PROCEEDING WAS MADE AS THERE WAS CONCEALMENT OF INCOME OR THAT INCORRECT PARTICULARS HAD BEEN FURNISHED BY THE ASSESSEE WITH THE INTENTION TO AVOI D PAYMENT OF TAXES. THIS VIEW IS SUPPORTED BY VARIOUS DECISIONS OF HIGH COURT THEREFORE IT IS NOT NECESSA RY TO DISCUSS THE OTHER JUDGMENT ON THE ISSUE. 8. AO HAS NOT MADE OUT ANY SPECIFIC CHARGE EITHER OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY U/S 2 71(1) (C) CAN BE LEVIED FOR EITHER OF THE CHARGE. THE PENALTY ORDER SIMPLY STATES THAT PENALTY IS ATTRACTED ON THIS ADDITION A S IT IS MANDATORY AND AUTOMATIC. IT DOES NOT STATE FOR WHAT DEFAULT PENALTY IS LEVIED SEC. 271(1) (C) (III) IS EXPRESSL Y CLEAR THAT THE PENALTY CAN BE LEVIED FOR CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS THE PARTICULARS OF INCOME WHICH IS THE COMMON SUBJECT MA TTER OF -:13:- 13 BOTH THE CHARGES. THE WORD CONCEAL AS PER WEBSTER S DICTIONARY MEANS TO HIDE, WITHDRAW, OR REMOVE FROM OBSERVATION; COVER OR KEEP FROM SIGHT; TO KEEP SECR ET; TO AVOID DISCLOSING OR DIVULGING. THAT MEANS NON DISCLOSURE OF PARTICULARS OF INCOME. ON THE OTHER HAND, WHERE PART ICULARS ARE DISCLOSED BUT SUCH DISCLOSURE IS NOT CORRECT, T RUE OR ACCURATE, IT WOULD AMOUNT TO FURNISHING OF INACCURAT E PARTICULARS OF INCOME. FOR EXAMPLE, IN CASE OF BUSI NESSMAN, IF A PARTICULAR TRANSACTION OF SALE IS NOT SHOWN IN THE BOOKS, IT WOULD AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME WHILE SALE IS SHOWN BUT AT A LESSER VALUE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 9. IT IS PERTINENT TO NOTE THAT THRUST OF THE LEGI SLATURE IS UPON THE PARTICULARS OF INCOME WHICH ARE EITHER CON CEALED OR FURNISHED INACCURATELY BY THE ASSESSEE. THEREFORE, ONE MUST UNDERSTAND THE MEANING OF THE WORDS PARTICULARS OF INCOME. THE INCOME TAX TRIBUNAL HAD TO CONSIDER THE MEANING OF THE EXPRESSION FURNISHING OF INACCURATE PARTICULARS OF INCOME APPEARING IN SECTION 271(1) (C) IN THE CASE OF KANB AY SOFTWARE -:14:- 14 INDIA (P) LTD, 122 TTJ 721 (PUNE). IT WAS HELD THAT THE EXPRESSION PARTICULAR REFERS TO FACTS, DETAILS, SPECIFICS OR THE INFORMATION ABOUT SOMEONE OR SOMETHING. THUS, THE D ETAILS OR INFORMATION ABOUT THE INCOME WOULD DEAL WITH FACTUAL DETAILS OF INCOME AND CANNOT BE EXTENDED TO AREAS WHICH ARE SUBJECTIVE SUCH AS STATUS OF THE TAXABILITY OF AN I NCOME ADMISSIBILITY OF A DEDUCTION AND INTERPRETATION OF LAW. ACCORDINGLY, IT WAS HELD THAT MERE REJECTION OF A LE GAL CLAIM WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICU LARS OF INCOME. THIS VIEW IS FORTIFIED BY THE SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETROPRODUCTS, 322 ITR 158 SC. IN THIS CASE, THE CLAIM OF ASSESSEE U/S 36(1) (III) WAS RE JECTED BY THE AO AND THE ORDER OF AO WAS UPHELD BY THE TRIBUNAL. A S A RESULT THEREOF, THE PENALTY U/S 271(1) (C) WAS IMPOS ED ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY WAS HELD TO BE ILLEGALLY IMPOSED BY THE TRIB UNAL SINCE FACTUAL DETAILS OF INCOME FURNISHED BY THE ASSESSE E WERE FOUND TO BE CORRECT. THE MATTER ULTIMATELY REACHED THE SC AND THE HONBLE COURT UPHELD THE VIEW OF THE TRIBUNAL B Y HOLDING THAT MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAIN ABLE IN -:15:- 15 LAW, BY ITSELF, WILL NOT AMOUNTING TO FURNISHING INAC CURATE CLAIM OF FURNISHING INACCURATE PARTICULARS REGARDIN G THE INCOME OF THE ASSESSEE. 10. EXPLANATION 1 TO SECTION 271(1) (C) CANNOT BE APPLIED WHERE CHARGE AGAINST THE ASSESSEE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME SINCE IT PROVIDES A DEEMING F ICTION QUA CONCEALMENT OF PARTICULARS OF INCOME ONLY AND CONSE QUENTLY CANNOT BE EXTENDED TO A CASE WHERE CHARGE AGAINST TH E ASSESSEE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME. 11. ON THE OTHER HAND, WHERE CHARGE AGAINST THE AS SESSEE IS FURNISHING INACCURATE PARTICULARS OF INCOME, THE AO HAS TO ESTABLISH EITHER THAT ASSESSEE HAS NOT DISCLOSED THE PARTICULARS OF INCOME UNDER THE MAIN PROVISIONS OR THE CASE OF ASSESSEE FALLS WITHIN THE SCOPE OF THE DEEMING FIC TIONS CREATED UNDER THE EXPLANATIONS. FOR EXAMPLE, THE ASSESSEE MIGHT NOT DISCLOSE PARTICULAR SALES OR DIVIDEND INCOME OR INC OME FROM ANY SOURCE. SUCH INSTANCES WOULD FALL UNDER THE MAI N PROVISIONS ITSELF. IN SUCH CASES, THE BURDEN IS ON THE AO TO -:16:- 16 ESTABLISH THE EXISTENCE OF THE CHARGE ON THE BASIS OF MATERIAL ON RECORD. 12. EXPLANATION 1 TO SECTION 271(1) (C) STATES THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RESPEC T OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVI SION IS NOT ABSOLUTE ONE BUT IS REBUTTABLE ONE. IT ONLY SHIFTS THE ONUS ON THE ASSESSEE. EXPLANATION 1 REFERS TO THE TWO SITUAT IONS IN WHICH PRESUMPTION OF THE CONCEALMENT OF THE PARTICUL ARS OF INCOME IS DEEMED. IT IS NOT APPLICABLE WHERE THE CHA RGE AGAINST THE ASSESSEE IS FURNISHING INACCURATE PARTI CULARS OF THE INCOME. THE FIRST SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF HIS TOTAL I NCOME FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUND BY THE AO OR THE COMMISSIONER TO BE FALSE. THE SECO ND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FA CTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME OFFERS AN EX PLANATION, WHICH, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONA FIDE ONE AND TH AT ALL THE -:17:- 17 FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME H AVE BEEN DISCLOSED BY HIM. THE PRESUMPTION AVAILABLE UNDER EXPLANATION TO SECTION 271(1) (C), CANNOT BE DRAWN U NLESS THE CASE OF THE ASSESSEE FALLS UNDER EITHER OF THE CLAU SES (A) OR (B). 13. IN THE PRESENT CASES, THE AO HAS NOT BROUGHT O UT ANY SPECIFIC CHARGE FOR WHICH THE PENALTY HAS BEEN IMPOS ED ON THE ASSESSEE U/S 271(1) (C) OF THE ACT. HE HAS NOT BROU GHT OUT WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS O F INCOME OR WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF INCOME. THE AO HAS NOT INITIATED THE PROCEEDINGS FOR ANY PARTICULAR CHARGE. THE PENALTY WAS INITIATED VIDE NO TICE. 14. THE AO INITIATED THE PENALTY WITHOUT ANY MENTIO N OF ANY PARTICULAR DEFAULT AND LEVIED THE SAME AGAIN WITHOUT MENTIONING ANY SPECIFIC CHARGE. IN CIT V. ATUL MOHA N BINDAL (2009) 9 SCC 589, WHERE HONBLE SUPREME COURT WAS CONSIDERING THE SAME PROVISION, IT OBSERVED THAT TH E ASSESSING OFFICER HAS TO BE SATISFIED THAT A PERSON HAS CONCE ALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. THUS THE SATISFACTION OF THE AO ABO UT THE -:18:- 18 CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IS ESSENTIAL BEFORE LEVYING ANY PENALTY U/S 271(1)(C). THE AO AS IS APP ARENT FROM THE PENALTY ORDERS HAS NOT SATISFIED ABOUT THE CONC EALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. ON THIS BASIS I TSELF THE PENALTY STAND DELETED. 15. THE AO AS IS APPARENT FROM THE PENALTY ORDERS S IMPLY RELIED ON THE DECISION OF UNION OF INDIA VSDHARMEND RA TEXTILE PROCESSORS 306 ITR 277 AS WELL AS DILIP N SHROFF V JCIT 291 ITR 519 AND TOOK THE VIEW THAT THE LEVY OF THE PENAL TY IS AUTOMATIC AND MANDATORY AND ACCORDINGLY IMPOSED THE PENALTY WITHOUT BRINGING ON RECORD WHAT DEFAULT STATE D U/S 271(1) (C) WAS COMMITTED BY THE ASSESSEE. IN THE CAS E OF DHARMENDRA TEXTILES PROCESSORS (SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT PENALTY U/S 271(1) (C) IS A CIV IL LIABILITY AND THAT WILFUL CONCEALMENT AND MEANS REA ARE NOT ES SENTIAL INGREDIENTS FOR ATTRACTING THE CIVIL LIABILITY AS I S THE CASE IN THE MATTER OF PROSECUTION U/S 276 OF THE ACT. IT HAS FU RTHER BEEN -:19:- 19 HELD IN THAT CASE THAT MENSREA IS NOT AN ESSENTIAL INGREDIENT FOR IMPOSING THE PENALTY. THE HONBLE SUPREME COURT IN THIS CASE NOWHERE HELD THAT IF THE ADDITION IS MADE, PENA LTY IS AUTOMATIC. EVEN IN UNION OF INDIA V. DHARMENDRA TEX TILE PROCESSORS REPORTED IN (2008) 306 ITR 277 (SC), THE SUPREME COURT HAS OBSERVED THAT THE FINDING AS TO SUPPRESSI ON OR INACCURATE PARTICULARS IN THE RETURN ARE NECESSARY FOR ATTRACTING THE PENAL PROVISION UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT, 1961. THIS JUDGMENT DOES NOT OVERRU LE THE EXPLANATIONS APPENDED TO SECTION 271(1) (C). IT EVE N HELD THAT THE OBJECT BEHIND THE ENACTMENT OF SECTION 271(1) ( C) READ WITH EXPLANATIONS INDICATES THAT THE SAID SECTION HAS BE EN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PE NALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. THUS, THE RATI O LAID DOWN IN THIS JUDGMENT WAS CONFINED TO TREATING THE WILFUL CON CEALMENT IS NOT ESSENTIAL FOR IMPOSING THE PENALTY U/S 271(1 ) (C) OF THE ACT. WHERE AN ASSESSEE GENUINELY MAKES A CLAIM FOR A PARTICULAR DEDUCTION BY DISCLOSING ALL THE NECESSAR Y FACTS RELATING TO THE SAME, THAT CANNOT BE REGARDED TO BE CONCEALMENT EVEN IF THE ASSESSEES CLAIM IS REJECTE D. THIS IS THE -:20:- 20 SETTLED LAW THAT PENALTY PROCEEDINGS ARE DISTINCT FR OM THE ASSESSMENT PROCEEDINGS AND, THEREFORE, IF ANY ADDIT ION IS MADE, IT DOES NOT MEAN THAT THE PENALTY WILL AUTOMAT ICALLY BE LEVIED. IN THE CASE OF THE ASSESSEE, WE NOTED THAT T HE ASSESSEE DURING THE COURSE OF THE SURVEY HIMSELF SURRENDERED CERTAIN EXPENSES AND UNSECURED LOAN AS ITS INCOME ALTHOUGH THESE EXPENSES AND UNSECURED LOANS WERE DULY RECORDED IN T HE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT IS NOT A CASE WHERE THE REVENUE GOT EVIDENCE THAT THE EXPENDITURE RECORDED AND THE UNSECURED LOANS ARE BOGUS. IN THE PENALTY PROCEEDIN GS THE ASSESSEE IS GIVEN AN OPPORTUNITY TO EXPLAIN HIS CAS E IF HE SUCCESSFULLY EXPLAINS HIS POSITION AND IS NOT TRAPP ED WITHIN THE PARAMETERS OF SECTION 271(1) (C) ALONG WITH THE EXPLANATIONS DEEMING THE CONCEALMENT OF INCOME, PEN ALTY CANNOT BE IMPOSED. IN THIS CASE, THE PENALTY HAS BE EN IMPOSED MERELY OBSERVING THAT THE PENALTY IS AUTOMATIC AND MANDATORY. SECTION 271(1) (C) DEALS WITH THE TWO SITU ATIONS FOR IMPOSING THE PENALTY; HAS CONCEALED THE PARTICULARS OF HIS INCOME; OR HAS FURNISHED THE INACCURATE PARTICULARS OF SUCH INCOME. EXPLANATION 1 IS APPLICABLE ONLY IN CASE OF FIRST -:21:- 21 SITUATION I.E. AMOUNT ADDED OR DISALLOWED IN THE TO TAL INCOME BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHIC H THE PARTICULARS HAVE BEEN CONCEALED. 16. NOW THE QUESTION ARISES WHETHER IN THIS CASE CAN ONE SAY THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME. INACCURATE PARTICULARS MEANS THAT THE PARTICULARS ARE INCORRECT OR NOT ACCURATE OR NOT CORRECT. THAT MEAN S, THE PARTICULARS HAVE NOT BEEN FURNISHED IN CORRECT/EXAC T MANNER AS IS REQUIRED TO BE FURNISHED TO DETERMINE THE COR RECT INCOME CHARGEABLE TO TAX OF THE ASSESSEE. 17. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS M. S. BINDRA& SONS P. LTD 336 ITR 125 (DELHI) HAS OBSERVE D AS UNDER IN RESPECT OF DHARMENDRA TEXTILES PROCESSOR D ECISION AND DILIP N SHROFF DECISION AS RELIED BY THE A.O.:- IN FACT, SECTION 271(1) (C) CAME TO BE INTERPRETED BY THE APEX COURT IN DHARMENDRA TEXTILE PROCESSORS CAS E (SUPRA). THE THREE JUDGE BENCH OF THE APEX COURT OVER-RULED THE DECISION IN DILIP N. SHROFF V. JT. C IT (2007) 291 ITR 519 (SC) AND APPROVED THE DECISION I N CHAIRMAN, SEBI V. SHRIRAM MUTUAL FUND (2006) 5 SSC 361. IN THE SAID CASE, THE SUPREME COURT HELD: - -:22:- 22 27THE EXPLANATION APPENDED TO SECTION 271(1) (C) OF THE INCOME-TAX ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING THE RETUR N. THE JUDGMENT IN DILIP N. SHROFFS CASE (2007) 8 SCAL E 304 (SC) HAS NOT CONSIDERED THE EFFECT AND RELEVANC E OF SECTION 276C OF THE INCOME TAX ACT. THE OBJECT BEHI ND THE ENACTMENT OF SECTION 271(1) (C) READ WITH THE EXPLANATIONS INDICATES THAT THE SAID SECTION HAS BE EN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE . THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILI TY AS IS THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C OF THE INCOME-TAX ACT. 18. THE AFORESAID DECISION HAS TAKEN NOTE OF IN CIT V. RELIANCE PETROPRODUCTS (P) LTD. (2010) 322 ITR 158 (SC). WHI LE CONSIDERING THE PHRASE CONCEALMENT OF PARTICULARS, THE APEX COURT REFERRED TO SECTION 271 AND HELD AS FOLLOWS: 9. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN T HAT THE CONDITIONS UNDER SECTION 271 (1) (C) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISP UTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUC H PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. IN DILIP N. SHROFF V. JOINT CIT (2007) 6 SSC 329, THIS COURT EXPLAINED THE TERMS CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS. TH E COURT WENT ON TO HOLD THEREIN THAT IN ORDER TO ATTRA CT -:23:- 23 THE PENALTY UNDER SECTION 271(1) (C), MENSREA WAS NECESSARY, AS ACCORDING TO THE COURT, THE WORD INACCURATE SIGNIFIED A DELIBERATE ACT OR OMISSION O N BEHALF OF THE ASSESSEE. IT WENT ON TO HOLD THAT CLA USE (III) OF SECTION 271(1) (C) PROVIDED FOR A DISCRETI ONARY JURISDICTION UPON THE ASSESSING AUTHORITY, INASMUCH AS THE AMOUNT OF PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICULARS OF INCOME, BUT IT MAY NO T EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TERM INACCURATE PARTICULARS WAS NOT DEFINED ANYWHERE IN THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHI NG OF AN ASSESSMENT OF THE VALUE OF THE PROPERTY MAY NOT BY ITSELF BE FURNISHING INACCURATE PARTICULARS, IT WAS FURTHER HELD THAT THE AO MUST BE FOUND TO HAVE FAIL ED TO PROVE THAT HIS EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT THE EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANNER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOME. THE COURT ULTIMATELY WENT ON TO HOLD THAT T HE ELEMENT OF MENSREA WAS ESSENTIAL. IT WAS ONLY ON THE POINT OF MENSREA THAT THE JUDGMENT IN DILIP N. SHRO FF V. JOINT CIT WAS UPSET. IN UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS AFTER QUOTING FROM -:24:- 24 SECTION 271 EXTENSIVELY AND ALSO CONSIDERING SECTIO N 271(1) (C), THE COURT CAME TO THE CONCLUSION THAT S INCE SECTION 271(1) (C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMENT OR FO R GIVING INACCURATE PARTICULARS WHILE FILING RETURN, T HERE WAS NOT NECESSITY OF MENSREA. THE 271(1) (C) READ WIT H EXPLANATIONS INDICATED WITH THE SAID SECTION WAS FOR PROVIDING REMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY AND, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS THE CASE IN THE MA TTER OF PROSECUTION UNDER SECTION 276C OF THE ACT. THE BASI C REASON WHY DECISION IN DILIP N SHROFF V. JOINT CIT WA S OVERRULED BY THIS COURT IN UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS WAS THAT ACCORDING TO THIS COURT THE EFFECT AND DIFFERENCE BETWEEN SECTIO N 271(1) (C) AND SECTION 276C OF THE ACT WAS LOST SIGH T OF IN THE CASE OF DILIP N SHROFF V. JOINT CIT. HOWEVER , IT MUST BE POINTED OUT THAT IN UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS, NO FAULT WAS FOUND WITH THE REASONING IN THE DECISION IN DILIP N. SHROF F V. JOINT CIT, WHERE THE COURT EXPLAINED THE MEANING OF THE TERMS CONCEAL AND INACCURATE. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF V. JOINT CIT TO THE EFFECT THAT MENSREA WAS AN ESSENTIAL INGREDIENT FOR THE -:25:- 25 PENALTY UNDER SECTION 271(1) (C) THAT THE DECISION IN DILIP N. SHROFF V. JOINT CIT WAS OVERRULED. 19. FROM THE PERUSAL OF THE AFORESAID DECISIONS, I T IS APPARENT THAT IN NONE OF THE DECISION OF HONBLE SU PREME COURT AS RELIED BY THE AO, IT HAS BEEN HELD THAT TH E PENALTY U/S 271 (1) (C) IS MANDATORY OR AUTOMATIC WHEREVER THE ADDITION OR DISALLOWANCES ARE MADE BY THE AO. THE AS SESSING OFFICER MERELY OBSERVED THAT THE PENALTY IS MANDATO RY AS HE WAS FULLY AWARE OF THAT NO CHARGE AS SPECIFIED U/S 27 1 (1) (C) WAS LEVIABLE AGAINST THE ASSESSEE. ON THIS BASIS ALS O, THE PENALTY WAS WRONGLY LEVIED JUST FOR THE PURPOSE OF LE VYING THE PENALTY. WE, ACCORDINGLY REVERSE THE ORDERS OF LD. CIT(A) AND CONSEQUENTLY, DELETE THE PENALTY ORDERS PASSED BY T HE ASSESSING OFFICER U/S 271(1)(C). 20 IN RESPECT OF FOLLOWING ADDITIONS IN THREE AYS, T HE HONBLE HIGH COURT HAS ADMITTED THE QUESTION OF LAW IN FOLL OWING CASES: AY 2005-06 AY 2006-07 AY 2007-08 CASH CREDITS 13,10,000 6,00,000 (10,50,000 4,50,000) RENTAL INCOME 1,44,000 1,68,0 00 1,55,000 UNEXPLAINED INVESTMENT 3,50,000 CASH CREDITS - 26,49,600 -:26:- 26 ADVANCES RECEIVED (8049600 5400000) BACK INVESTMENT IN PURCHASE OF LAND 50,00,000 TOTAL 14,54,000 5,18,000 84,04,600 IN CASE OF SHYAMMANOHARAGRAWAL FOR AY 2007-08, THE FOLLOWING QUESTION HAS BEEN ADMITTED BY HONBLE HIGH COURT WHICH READS AS UNDER. FOLLOWING QUESTION OF LAW HAS BE EN ADMITTED BY HONBLE MP HIGH COURT IN ITA NO.76/2013 VIDE ORDER DATED 17.12.2013. A. WHETHER TRIBUNAL WAS JUSTIFIED IN NOT DECIDING GR OUND NO.2(B) THAT ASSESSMENT SHOULD HAVE BEEN COMPLETED IN THE STATUS OF ASSOCIATION OF PERSON AND NOT IN THE STAT US OF INDIVIDUAL, WHEN WARRANT WAS ISSUED IN THE JOINT NAME OF JITENDRAPUROHIT AND SHYAMMOHANAGRAWAL AND BY NOT CONSIDERING JUDGMENT OF HONBLE HIGH COURT OF ALLA HABAD IN CIT (CENTRAL) VS. VANDANAVERMA, 330 ITR 533. B. WHETHER TRIBUNAL WAS JUSTIFIED IN NOT DECIDING GR OUND 2(A) OF GROUND OF APPEAL THAT NO NOTICE U/S 143(2) WAS SERVED EVEN THOUGH IN EARLIER AYS, THIS ISSUE WAS RESTORED TO THE FILE OF AO. C. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING ADDI TION OF RS.1,55,000 ON PRESUMPTION ON ACCOUNT OF RENT IN AY 2007-08 -:27:- 27 ON THE BASIS OF RENT AGREEMENT FOR THE PERIOD 1.11. 01 TO 30.9.02 WITHOUT APPRECIATING THAT AGREEMENT LAPSED O N 30.9.02 AND WAS NOT OPERATIVE DURING AY 2007-08. D. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING ADDI TION OF RS.4,50,000 AS CASH CREDIT FROM DIVINE CITY, WITHOUT GOING THROUGH EVIDENCE, DULY SUPPORTED BY AUDIT REPORT FR OM CA FILED IN PAPER BOOK. E. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING ADDI TION OF RS.54,00,000 AS REFUND OF ADVANCE FROM MADAN MOHAN TAPADIA WITHOUT GOING THROUGH CONFIRMATION FILED BY SHRITAPADIA, STATEMENT GIVEN BY TAPADIA AND CANCELL ATION DEED FILED BY TAPADIA. F. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING ADDI TION OF RS.50,00,000 ON THE BASIS OF STATEMENT RECORDED AFT ER SEARCH, WITHOUT CORROBORATING IT WITH ADEQUATE EVIDENCE. QUESTION OF LAW HAS BEEN ADMITTED BY HONBLE MP HIGH COURT IN ITA NO.77/2013 VIDE ORDER DATED 17.12.2013 . A WHETHER TRIBUNAL WAS JUSTIFIED IN NOT DECIDING GRO UND NO.2(B) THAT ASSESSMENT SHOULD HAVE BEEN COMPLETED IN THE STATUS OF ASSOCIATION OF PERSON AND NOT IN THE STAT US OF INDIVIDUAL, WHEN WARRANT WAS ISSUED IN THE JOINT NAME OF JITENDRAPUROHIT AND SHYAMMOHANAGRAWAL AND BY NOT -:28:- 28 CONSIDERING JUDGMENT OF HONBLE HIGH COURT OF ALLA HABAD IN CIT (CENTRAL) VS. VANDANAVERMA, 330 ITR 533 (ALL). B. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING ADDI TION OF RS.1,44,000 AS INCOME FROM HOUSE PROPERTY ON THE BA SIS OF RENT AGREEMENT FOR THE PERIOD 1.11.01 TO 30.9.02 AS THE AGREEMENT LAPSED ON 30.9.02 AND WAS NOT OPERATIVE DU RING THE AY 2005-06. C. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING CRED ITORS AT RS.16,60,000 AS CASH CREDIT, IN TOTAL WHEREAS THE TR IBUNAL SHOULD HAVE RESTRICTED ADDITION TO THE EXTENT OF ON LY RS.9,50,000 BEING THE PEAK OF ALL THESE CREDITS. D. WHETHER TRIBUNAL WAS JUSTIFIED IN NOT DECIDING TH E GROUND 2(A) RAISED IN GROUNDS OF APPEAL THAT NO NOT ICE U/S 143(2) WAS SERVED ON THE APPELLANT WHEREIN IN EARLIER YEARS, THIS ISSUE WAS RESTORED TO THE LOWER AUTHORITIES. QUESTION OF LAW HAS BEEN ADMITTED BY HONBLE MP HIGH COURT IN ITA NO.75/2013 VIDE ORDER DATED 17.12.2013 . -:29:- 29 A WHETHER TRIBUNAL WAS JUSTIFIED IN NOT DECIDING GRO UND NO.2(B) OF APPEAL THAT ASSESSMENT SHOULD HAVE BEEN COMPLETED IN THAT STATUS OF AOP. B. WHETHER TRIBUNAL WAS JUSTIFIED IN NOT DECIDING TH E GROUND 2(A) OF GROUNDS OF APPEAL THAT WHEN NO NOTICE U/S 143(2) WAS SERVED EVEN THOUGH IN EARLIER YEARS, THIS ISSUE WAS RESTORED TO THE LOWER AUTHORITIES. C. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING ADDI TION OF RS.1,68,000 ON PRESUMPTION ON ACCOUNT OF RENT IN AY 2006-07 ON THE BASIS OF RENT AGREEMENT FOR THE PERIOD 1.11. 01 TO 30.9.02 WITHOUT APPRECIATING THAT AGREEMENT LAPSED O N 30.9.02 AND WAS NOT OPERATIVE DURING AY 2006-07. D. WHETHER TRIBUNAL WAS JUSTIFIED IN CONFIRMING ADDI TION OF RS.3,50,000 ON THE BASIS OF DOCUMENTS FOUND AT THE PREMISES OF THIRD PARTY WITHOUT ALLOWING EXAMINATION OF THIRD PARTY AND WITHOUT ANY EVIDENCE TO CORROBORATE IT WHEN THE APPEL LANT DENIED THE TRANSACTION. -:30:- 30 21. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LIQUID INVESTMENT LTD., ITA NO.240/2009 VIDE ITS ORDER DAT ED 5.10.2010 HAS CLEARLY HELD THAT WHERE HIGH COURT HAS ACCEPTED SUBSTANTIAL QUESTION OF LAW U/S 260A, THIS ITSELF SHOWS THAT ISSUE IS DEBATABLE. ACCORDINGLY, NO PENAL TY WAS IMPOSABLE U/S 271(1) OF THE I.T. ACT, 1961. HONBL E SUPREME COURT IN THE CASE OF SANTOSH HOSIERY, CIVIL APPEAL NO.1117 OF 2001 IN ITS ORDER DATED 3 RD FEBRUARY, 2001 OBSERVED THAT HONBLE SUPREME COURT WHILE DECIDING AS TO WHAT IS SUBSTANTIAL QUESTION OF LAW HAS HELD THAT SAME MUST BE DEBATABLE. 22. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURT AS NARRATED ABOVE, WE DIRECT THE AO TO CANCEL THE PENALTY IMPOSED U/S 271(1) WITH RESPECT TO THE ADDITIONS SO MADE BY THE AO WHICH WERE DELETED BY T HE LD. CIT(A) AND FOR WHICH SUBSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED BY HONBLE HIGH COURT & SUPREME COURT. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE ORDERS OF T HE AO FOR LEVYING THE PENALTY U/S 271(1)(C) OF THE I.T. ACT. -:31:- 31 23. FINALLY, THESE THREE APPEALS FILED BY THE ASSES SEE ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27.8. 2015. SD/- SD/- (B.C. MEENA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27.8.2015 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), CIT/DR, GUARD F ILE