Sh. Charanjit Singh, Mohali V. ACIT, Chandigarh

ITA 788/CHANDI/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68525 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Income from undisclosed sources; Initiation of penalty proceedings; Reasonable cause; Onus to prove
• Section: 133(6); 68; 27; 28; 144; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 788/CHD/2011 ASSESSMENT YEAR : 2007-08 CHARANJIT SINGH VS. A.C.I.T. CENTRAL CIRCLE VILLAGE ISSAPUR CHANDIGARH TEHSIL DERA BASSI MOHALI BDEPS 8932H (APPELLANT) (RESPONDENT) APPELLANT BY SHRI DEEPAK AGGARWAL RESPONDENT BY: SHRI MANJIT SINGH DATE OF HEARING 2.9.2013 DATE OF PRONOUNCEMENT 26.9.2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 2.6 .2011 OF THE LD. CIT(A)-I, LUDHIANA. 2 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. 1 THAT THE ORDER OF THE LD. CIT(A) IS AGAINST THE FACS OF THE CASE AND LAW. THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PENALTY OF RS. 40,48,800/- IMPOSED U/S 271(1)(C) BY THE ACIT, CENTRAL CIRCLE, CHANDIGARH. 2. THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER KNOWING FULLY WELL THAT PENALTY PROCEEDINGS ARE TOTALLY INDEPENDE NT OF ASSESSMENT PROCEEDINGS, HAVE GRAVELY ERRED IN IGNOR ING THE EVIDENCE AND WRITTEN SUBMISSIONS FILED BY THE APPEL LANT DURING THE COURSE OF PENALTY PROCEEDINGS AND IN GIVING GRATER CREDENCE TO THE CONTENTS OF THE ASSESSMENT ORDER AND THE ORDER PASS ED U/S 264 OF THE I.T. ACT. THE CONFIRMATION OF THE PENALTY BY T HE LD. CIT(A) BEING PERVERSE AGAINST THE FACTS AND LAW DESERVES C ANCELLATION. 3. THE ORDER OF THE LD. CIT(A) IS A NON SPEAKING O RDER IS AS MUCH AS IT HAS FAILED TO TAKE COGNIZANCE OF THE WRI TTEN SUBMISSIONS FILED BY THE APPELLANT, REMAND REPORT OF THE ASSESS ING OFFICER AND THE REBUTTAL SUBMISSIONS THEREOF DATED 24.5.2011 FI LED DURING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF I.T. ACT AND P ROCEEDINGS OF THE APPEAL. THE LD. CIT(A) HAS NOT CONSIDERED THE M OST RELEVANT DOCUMENTS AND SUBMISSIONS. THE PENALTY BE ANNULLED /CANCELLED. 2 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT A SEA RCH WAS CONDUCTED IN THE S.L. ARORA GROUP CASES. SINCE THE ASSESSEE WAS ALSO A PART OF THAT GROUP, A SEARCH WAS CONDUCT ED IN HIS PREMISES ALSO AND THE CASE WAS TRANSFERRED TO CENTR AL CIRCLE-1. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED RETURN OF INCOME DECLARING RS. 1,62,653/- AS INCOME FROM COMMISSION BUSINESS AND RS. 1,80,900/- AS AGRICULTURAL INCOME. DURING T HE ASSESSMENT PROCEEDINGS IT WAS NOTED THAT THE ASSESS EE WAS HAVING BANK ACCOUNT NO. 203010100009591 WITH UTI BA NK SECTOR 8, CHANDIGARH (NOW KNOWN AS AXIS BANK). THI S BANK ACCOUNT WAS NOT REFLECTED IN THE RETURN OF INCOME O R THE SUBMISSIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE BANK STATEMENT WAS CALLED FROM TH E BANK AND IT WAS NOTICED THAT THE ASSESSEE HAD DEPOSITED A SUM OF RS. 1.20 CRORES IN THIS BANK. THE ASSESSEE WAS ASK ED TO EXPLAIN THE SOURCE OF THESE DEPOSITS. MANY ADJOURN MENTS WERE TAKEN BUT NO EXPLANATION WAS FILED. ULTIMATELY IT WAS STATED THAT THE AMOUNT HAS BEEN RECEIVED FROM SHRI PRITAM SINGH AND THE ASSESSEE WAS ASKED TO PRODUCE SHRI PRITAM SINGH . VARIOUS OPPORTUNITIES WERE GRANTED BUT NO PARTICULARS WERE FILED NOR SHRI PRITAM SINGH WAS PRODUCED. FINALLY ON 24.12.2 008 IT WAS STATED THAT THE ASSESSEE RECEIVED ADVANCES FROM SHR I PRITAM SINGH VIDE CHEQUES AND HE (PRITAM SINGH) HAS RECEIV ED A SUM FROM A COMPANY KNOWN AS M/S WEST POINT PROPERTY PVT . LTD,. FOR PURCHASE OF AGRICULTURAL LAND. SINCE THE ASSE SSEE COULD NOT ARRANGE AGRICULTURAL LAND FOR SHRI PRITAM SINGH / AND OR M/S WEST POINT PROPERTY PVT. LTD,. THE AMOUNT WAS RETU RNED TO SHRI PRITAM SINGH. IN TURN SHRI PRITAM SINGH RETURNED T HE SAME MONEY TO M/S WEST POINT PROPERTY PVT. LTD, SHRI CHA RANJIT SINGH AND OTHER. THE ASSESSING OFFICER MADE OBSERV ATIONS THAT SINCE NO PARTICULARS HAVE BEEN FILED REGARDING IDENTITY, CREDIT WORTHINESS OF SHRI PRITAM SINGH, NO PARTICUL ARS HAVE BEEN GIVEN IN RESPECT OF M/S WEST POINT PROPERTY P VT. LTD,. THEREFORE, CREDIT WAS NOT PROVED. HE ALSO REFERRED TO THE FOLLOWING CASE LAWS: 3 KALE KHAN MOHAMMAD HANIF VS. CIT, 50 ITR 1 (SC) ROSHAN DI HATTI VS. CIT,107 ITR 938 (SC) CIT VS. DEVI PRASAD VISHWANATH PRASAD, 72 ITR 194 (SC) SUMMATI DAYAL VS. CIT, 214 ITR 801 (SC) CIT VS. P. MOHANAKALA, 291 ITR 278 (SC) AND ULTIMATELY ADDED THE AMOUNT OF RS. 1.20 CRORES TO THE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 27 1(1)(C) OF I.T. ACT WERE ALSO INITIATED. 4 IN RESPONSE TO THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY, IT SEEMS THAT NO APPEARANCE WAS MADE BEFORE THE ASS ESSING OFFICER. THE ASSESSING OFFICER RECALLED THE VARIOU S ISSUES RAISED DURING THE ASSESSMENT PROCEEDINGS THAT DESPI TE VARIOUS OPPORTUNITIES NO DETAILS WERE FILED. EVEN PAN AND NAMES OF THE DIRECTOR OF M/S WEST POINT PROPERTY PVT. LTD, W AS NOT FILED. SOURCES OF THE AMOUNT DEPOSITED IN THE BANK HAVE NO T BEEN SUBSTANTIATED AND THEREFORE, PENALTY U/S 271(1)(C) WAS LEVIED AT MINIMUM OF 100% AMOUNTING TO RS. 40,60,295/-. 5 ON APPEAL THE ASSESSEE COULD NOT IMPROVE UPON HIS CASE BEFORE THE LD. CIT(A) WHO CONFIRMED LEVY OF PENALTY . 6 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT FIRST OF ALL THE ASSESSEE WAS SIMPLY DOING THE BUSI NESS OF COMMISSION AGENT OR PROPERTY AGENT. HE WAS NOT A PR OPER BUSINESSMAN AND THEREFORE, HE HAD FILED HIS RETURN OF INCOME ONLY FROM COMMISSION INCOME AND IN THIS BACKGROUND THERE WAS NO REQUIREMENT FOR THE ASSESSEE TO DISCLOSE THE ACC OUNT WITH AXIS BANK. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD GIVEN PROPER EXPLANATION REGARDING AMOUNT RECEIVED BEFORE THE ASSESSING OFFICER. IN THIS REGARD HE REFERRED TO V ARIOUS DOCUMENTS FILED IN THE PAPER BOOK. 7 HE SUBMITTED THAT EXPLANATION GIVEN BY THE ASSESS EE WAS NOT FOUND TO BE FALSE. IN ANY CASE NO ENQUIRIES WE RE CONDUCTED DURING PENALTY PROCEEDINGS AND THEREFORE, IN THE A BSENCE OF SUCH ENQUIRY PENALTY COULD NOT HAVE BEEN LEVIED. H E ALSO CONTENDED THAT THE FINDING GIVEN IN THE ASSESSMENT ORDER ARE NOT CONCLUSIVE FOR THE PURPOSE OF LEVY OF PENALTY. HE HAS ALSO MADE RELIANCE ON THE FOLLOWING DECISIONS: 4 CIT VS. ANWAR ALI, 76 ITR 696 (SC) CIT V KHODAY ESWARSA AND SONS, 83 ITR 369 (SC) ANANTHARAM VEERASINGHAIAH & CO. VS. CIT, 123 ITR 45 7 (SC) DEVSONS PVT LTD. VS. CIT, 329 ITR 483 (DELHI) 8 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 9 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. S INCE THE LD. COUNSEL OF THE ASSESSEE REFERRED TO THE OLD DEC ISION OF HON'BLE SUPREME COURT IN CASE OF CIT VS. ANWAR ALI , WE NEED TO UNDERSTAND THE PROVISIONS IN RESPECT OF PENALTY RIGHT FROM THE BEGINNING. THERE WAS A PROVISION FOR LEVY OF P ENALTY FOR CONCEALMENT OF INCOME IN THE OLD ACT I.E. INCOMETAX ACT, 1922. RELEVANT PORTION OF SECTION 28 READS AS UNDER: PENALTY FOR CONCEALMENT OF INCOME OR IMPROPER DIST RIBUTION OF PROFITS (1) IF THE ITO, THE APPELLANT ASSISTANT LD. COMMISSIONE R OR THE APPELLATE TRIBUNAL IN THE COURSE OF ANY PROCEEDINGS UNDER THI S ACT, IS SATISFIED THAT IN PERSON-------- (A)--------------------- (B)--------------------- (C) AS CONCEALED PARTICULARS OF HIS INCOME OR DELIBERATELY FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. SAME POSITION PREVAILED IN THE ORIGINAL SECTION 271 IN 1961 ACT AND THE SAME READ AS UNDER: 271 FAILURE TO FURNISH RETURNS, COMPLY WITH THE NOTICE, CONCEALMENT OF INCOME ETC. -----(1) IF THE ITO OR THE APPELLANT AS SISTANT LD. COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON----- (A)------------------ (B)----------------- (C) AS CONCEALED PARTICULARS OF HIS INCOME OR DELIBERATELY FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. BECAUSE OF THE EXPRESSION DELIBERATELY IT WAS EARLIER BELIEVED THAT UNLESS AND UNTIL SOME INCOME WAS INTENTIONALLY CONC EALED BY A PERSON, PENALTY CANNOT BE IMPOSED. BECAUSE OF THE EXPRESSIO N DELIBERATELY IT WAS HELD IN CASE OF CIT V. ANWAR ALI, 76 ITR 696 , THAT PENALTY PROCEEDINGS ARE PENAL IN NATURE AND EVEN IF EXPLANA TION OF THE ASSESSEE IS FALSE, IT DOES NOT NECESSARILY GIVE RIS E TO THE INFERENCE THAT DISPUTED AMOUNT IS INCOME. IT MAY BE NOTED THA T THIS CASE WAS DECIDED FOR ASSESSMENT YEAR 1947-48 AND THEREFORE, THE PROVISIONS OF SECTION 28(1)(C) OF I.T. ACT, 1922 WAS APPLIED. THEREAFTER IN 1961 5 ACT PENALTY PROVISIONS WERE CONTAINED IN SECTION 27 1. RELEVANT PORTION OF ORIGINAL SEC 271(1)(C) WHICH WERE ENACTE D IN 1961 ACT READS AS UNDER: 271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTI CES, CONCEALMENT OF INCOME, ETC.- (1) IF THE INCOME-TAX OFFICER OR THE APPELLATE ASSISTANT COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON- (A) . (B) (C) HAS WITHOUT REASONABLE CAUSE FAILED TO COMPLY W ITH A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) O F SECTION 143, OR (D) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR DELIBERATELY FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,- (I) (II) ..; (III) IN THE CASES REFERRED TO IN CLAUSE(C), IN ADDITION TO ANY TAX PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN TWENTY PER CENT. BUT WHICH SHALL NOT EXCEED ONE AND A HALF TIM ES THE AMOUNT OF THE TAX, IF ANY, WHICH WOULD HAVE BEEN AVOIDED I F THE INCOME AS RETURNED BY SUCH PERSON HAD BEEN ACCEPTED AS THE CO RRECT INCOME. READING OF THE ABOVE PROVISION WOULD SHOW THAT THIS PROVISION WAS ENACTED ON THE SIMILAR FOOTING AS CONTAINED IN SECT ION 28(1)(C) OF 1922 ACT. THE EXPRESSION DELIBERATE WAS RETAINED IN THIS PROVISIONS ALSO. LATER ON BY FINANCE ACT 1964 IN C LAUSE (C) THE WORD DELIBERATE WAS OMITTED W.E.F. 1.4.1964 AND F URTHER AFTER SUCH OMISSION AN EXPLANATION WAS ALSO MADE WHICH READS A S UNDER: EXPLANATION WHERE THE TOTAL INCOME RETURNED BY ANY PERSON IS LESS THAN EIGHTY PER CENT OF THE TOTAL INCOME (HEREINAFT ER IN THIS EXPLANATION REFERRED TO AS THE CORRECT INCOME) AS ASSESSED UNDE R SECTION 143 OR SECTION 144 OR SECTION 147(REDUCED BY THE EXPENDITU RE INCURRED BONA FIDE BY HIM FOR THE PURPOSE OF MAKING OR EARNING AN Y INCOME INCLUDED IN THE TOTAL INCOME BUT WHICH HAS BEEN DISALLOWED AS A DEDUCTION), SUCH PERSON SHALL, UNLESS HE PROVES THAT THE FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR ANY GROSS OR WILLFUL NEGLECT ON HIS PART, BE DEEMED TO HAVE CONCEALED THE PARTICULARS O F HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION. 10 AFTER REMOVAL OF EXPRESSION DELIBERATE AND INS ERTION OF EXPLANATION IT WAS BELIEVED THAT REQUIREMENT OF MEN S REA HAS BEEN REMOVED. HOWEVER, VARIOUS COURTS STILL RENDERE D THE DECISION IN WHICH IT WAS OPINED THAT INTENTION OF A SSESSEE HAS TO BE SEEN BEFORE LEVY OF PENALTY. THEREFORE, TO REM OVE THIS DEFECT THERE WAS FURTHER AMENDMENT IN THIS SECTION WHICH WAS MADE THROUGH TAXATION LAW (AMENDMENT) ACT, 1975. IN FACT THIS WAS DONE ON THE RECOMMENDATION OF EXPERT COMMI TTEE. THE 6 GOVERNMENT OF INDIA BY A RESOLUTION DATED 2.9.1970 HAS FORMED A COMMITTEE OF EXPERT HEADED BY SHRI K.N. WANCHOO WHO WAS APPOINTED TO EXAMINE AND SUGGEST LEGAL AND ADMINIST RATIVE MEASURES FOR COUNTERING EVASION AND AVOIDANCE OF DI RECT TAXES. THE COMMITTEE WAS FURTHER ASKED TO RECOMMENDED CONCRETE AND EFFECTIVE MEASURES FOR INTER-ALIA UNEARTHING BLACK MONEY AND PREVENTING EVASION OF TAX. VARIOUS AMENDMENTS WERE MADE IN THE INCOME TAX ACT ON THE RECOMMENDATION OF THE ABOVE C OMMITTEE WHICH IS KNOWN AS WANCHOO COMMITTEE REPORT. RELE VANT RECOMMENDATIONS OF THIS REPORT HAVE BEEN EXTRACTED IN THE COMMENTARY OF INCOME TAX LAW BY CHATURVEDI & PITHIS ARIAS (FIFTH EDITION) AT PAGE 8611 TO 8615. THUS THROUGH 1975 A CT VARIOUS EXPLANATIONS TOTALING TO NUMBER FOUR WERE INSERTED TO SECTION 271(1)(C). FOR THE PRESENT CASE ONLY EXPLANATION 1 IS RELEVANT WHICH READS AS UNDER: EXPLANATION 1 WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE INCOME-TAX OFFICER OR THE APP ELLATE ASSISTANT COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL, FOR THE PURPOSES OF CLAUSE(C) OF THIS SUB-SECTION, BE DEEMED TO REPR ESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED ; PROVIDED THAT NOTHING CONTAINED IN THIS EXPLANATION SHALL APPLY TO A CASE REFERRED TO IN CLAUSE(B) IN RESPECT OF ANY AMOUNT A DDED OR DISALLOWED AS A RESULT OF THE REJECTION OF ANY EXPLANATION OFFERE D BY SUCH PERSON, IF SUCH EXPLANATION IS BONA FIDE AND ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM. 11 LD. AUTHOR IN THE COMMENTARY ON INCOME TAX LAW B Y CHATURVEDI & PITHISARIAS (FIFTH EDITION) HAS DISCU SSED THE EFFECTS OF 1975 AMENDMENT AT PAGE 8617 TO 8620. WE ARE REPROD UCING PARA 61.8 AT PAGE 8619 AS UNDER: 61.8 NEW EXPLANATION 1 PROVIDES THAT WHERE IN RESP ECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME, AN ASSESSEE FAILS TO OFFER AN EXPLANATION OR IS UNABLE TO SUBSTANTIATE AN EXPL ANATION OFFERED BY HIM OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE , THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PE RSON AS A RESULT THEREOF WILL BE TREATED AS HIS CONCEALED INCOME. IF , HOWEVER, THE EXPLANATION OFFERED BY THE ASSESSEE IS BONA FIDE AN D ALL THE FACTS RELATING TO THE EXPLANATION AND MATERIAL TO THE COM PUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE, EXPLANA TION 1 WILL NOT BE APPLICABLE. 12 EVEN AFTER INSERTION OF THIS EXPLANATION SOME CONTR OVERSY STILL REMAINED. FIRST PART OF THE CONTROVERSY WAS WHETHER THE 7 ASSESSING AUTHORITY WAS REQUIRED TO INFORM THE ASSE SSEE THAT PENALTY PROCEEDINGS ARE BEING COMMENCED UNDER THE EXPLANATION (1) TO SECTION 271(1)(C). SOME OF THE DECISIONS ALSO RAISED DOUBT THAT PENALTY STILL REMAIN QUASI C RIMINAL PROCEEDINGS AND THEREFORE, REQUIREMENT OF MENS REA WAS STILL REQUIRED. THESE ASPECTS WERE LATER ON EXAMINED BY THE LARGER BENCH OF THE HON'BLE SUPREME COURT IN CASE OF K.P. MADHUSUDHANAN VS. CIT, 251 ITR 99 (SC). IN THAT CA SE THE ASSESSEE PURCHASED RICE FROM SUPPLIERS IN ANDHRA PR ADESH AND PAYMENT FOR THE SAME WAS BEING MADE BY DEMAND DRAFT OR TELEGRAPHIC TRANSFER. DURING THE ASSESSMENT PROCEE DINGS IT WAS NOTICED THAT ENTRIES FOR DEMAND DRAFT OR TELEGR APHIC TRANSFER WERE NOT ENTERED BY THE ASSESSEE IN THE BO OKS OF ACCOUNT ON THE DATES ON WHICH SAME WERE PURCHASED. DEMAND DRAFT FOR RS. 50,000 WAS PURCHASED ON JAN 27, 1986 IN FAVOUR OF SREE JAYALAXMI ENTERPRISES, BYRAVAPATANAM, A.P B UT THE AMOUNT WAS ENTERED ON FEB 4, 1986. SIMILARLY THE ASSESSEE HAD MADE TELEGRAPHIC TRANSFER THROUGH ANDHRA BANK, CALICUT ON MAR 24, 1986 TO MADAVENKATARATANAM AND OTHERS, BHIMAVARAM. THIS TRANSACTION WAS ENTERED IN BOOKS ON APRIL 24, 1986. WHEN THESE FACTS WERE CONFRONTED TO THE ASSESSEE, IT SUBMITTED A LETTER DATED AUG 28, 1989 STATING TH AT SUFFICIENT CASH BALANCE WAS NOT AVAILABLE TO IT ON THE DATES O F THE TRANSACTION, IT HAD OBTAINED HAND LOANS FROM FRIEND S. IT WAS EXPECTED TO REPAY SUCH LOAN WITHIN A SHORT TIME AND NO ENTRIES WERE MADE IN THE BOOKS OF ACCOUNT IN RESPECT THEREO F. THE LETTER ALSO STATED THAT SINCE THE ASSESSEE WAS NOT ABLE TO FURNISH EVIDENCE FOR SUCH LOAN, IT OFFERED THE AMOU NT OF RS. 93,000 AS ADDITIONAL INCOME. THE AMOUNT OF RS. 93, 000 WAS ASSESSED AS UNEXPLAINED INCOME AND PENALTY PROCEEDI NGS U/S 271(1)(C) WERE INITIATED. THE ASSESSING OFFICER FOU ND ASSESSEES EXPLANATION IN REGARD TO LOANS UN-ACCEP TABLE AND LEVIED PENALTY U/S271(1)(C).THE APPEAL BEFORE THE F IRST APPELLATE AUTHORITY WAS DISMISSED. ON SECOND APPEA L TO THE TRIBUNAL, SAME WAS ALLOWED IN FAVOUR OF THE ASSESSE E. WHEN THE MATTER TRAVELED TO THE HON'BLE HIGH COURT, HON' BLE HIGH COURT REVERSED THE DECISION OF THE TRIBUNAL. THE MA TTER TRAVELED TO THE HON'BLE SUPREME COURT. THE HON'BLE SUPREME 8 COURT REFERRED TO TWO DECISIONS OF BOMBAY HIGH COUR T AND MADE FOLLOWING OBSERVATIONS: IN CIT V. P.M. SHAH [1993] 203 ITR 792, THE HIGH C OURT AT BOMBAY OBSERVED THAT THE EXPLANATION TO SECTION 271(1)(C) CREATED A LEGAL FICTION. IT WAS THAT THE ASSESSEE WOULD BE DEEMED T O HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS THEREOF IN THE CIRCUMSTANCES SET OUT IN THE EXPLANATION. BUT F OR SUCH A LEGAL FICTION, IT COULD NEVER HAVE BEEN SAID THAT THERE WAS ANY CO NCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SIMP LY BECAUSE THE RETURNED INCOME WAS LESS THAN 80 PER CENT. OF THE A SSESSED INCOME. THE EXPLANATION SHIFTED THE BURDEN OF PROOF ON THE ASSE SSEE. THEREFORE, IT SAID (PAGE 797); WHEN THE EXPLANATION IS BEING RES ORTED TO BY THE INCOME-TAX OFFICER OR BY THE INSPECTING ASSISTANT C OMMISSIONER IN PENALTY PROCEEDINGS, IT IS ESSENTIAL THAT THE ASSES SEE MUST BE INFORMED THAT PENALTY PROCEEDINGS, IT IS ESSENTIAL THAT THE ASSESSEE MUST BE INFORMED THAT PENALTY PROCEEDINGS AGAINST HIM ARE B EING COMMENCED UNDER THE EXPLANATION TO SECTION 271(1)(C). IT ADD ED (PAGE 799); THE INSPECTING ASSISTANT COMMISSIONER COULD NOT HAVE PR OCEEDED TO LEVY THE PENALTY UNDER THE EXPLANATION TO SECTION 271(1)(C)I N THE ABSENCE OF ANY INITIATION OF PENALTY PROCEEDINGS UNDER THE EXPLANA TION TO SECTION 271(1)(C). THESE ARE PENALTY PROCEEDINGS AND THE SE CTION MUST BE STRICTLY CONSTRUED. THE ASSESSEE, IN OUR VIEW, HAD NO OPPORTUNITY OF MEETING THE CASE UNDER THE EXPLANATION TO SECTION 2 71(1)(C). THE BENCH OF THE HIGH COURT AT BOMBAY THAT DELIVERE D THE JUDGMENT IN THE CASE OF P.M. SHAH [1993] 203 ITR 792 FOLLOWED I T IN THE CASE OF CIT V. DHARAMCHAND L. SHAH [1993] 204 ITR 462 (BOM). IT SAID (PAGE 468): IN THE ABSENCE OF INVOKING THE EXPLANATION SPECI FICALLY, THE BURDEN WOULD REMAIN ON THE REVENUE TO BRING THE ASSESSEES CASE WITHIN THE MISCHIEF OF THE MAIN PROVISIONS OF SECTION 271(1)(C ) OF THE ACT. 13 IN THE ABOVE JUDGMENT IT WAS HELD THAT EXPLANATI ON HAS TO BE SPECIFICALLY INVOKED AND THE ASSESSEE HAS TO BE INF ORMED THAT THE ASSESSING OFFICER INTENDS TO INVOKE THE EXPLANATION . THIS CONTENTION WAS SPECIFICALLY REJECTED BY HON'BLE SUPREME COURT BY MAKING FOLLOWING OBSERVATIONS: WE FIND IT DIFFICULT TO ACCEPT AS CORRECT THE TWO JUDGMENTS AFOREMENTIONED. THE EXPLANATION TO SECTION 271(1)(C ) IS A PART OF SECTION 271. WHEN THE INCOME-TAX OFFICER OR THE APPELLATE A SSISTANT COMMISSIONER ISSUES TO AN ASSESSEE A NOTICE UNDER S ECTION 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREO F ARE TO BE USED AGAINST HIM. THESE PROVISIONS INCLUDE THE EXPLANATI ON. BY REASON OF THE EXPLANATION, WHERE THE TOTAL INCOME RETURNED BY THE ASSESSEE IS LESS THAN 80 PER CENT. OF THE TOTAL INCOME ASSESSED UNDE R SECTION 143 OR 144 OR 147, REDUCED TO THE EXTENT THEREIN PROVIDED, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, UNLESS HE PROVES THAT THE FAIL URE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR NEGLECT ON H IS PART. THE ASSESSEE IS, THEREFORE, BY VIRTUE OF THE NOTICE UNDER SECTIO N 271 PUT TO NOTICE THAT IF HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED I N THE EXPLANATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DU E TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF AND, CONSE QUENTLY, BE LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. NO EXPRESS IN VOCATION OF THE EXPLANATION TO SECTION 271 IN THE NOTICE UNDER SECT ION 271 IS, IN OUR VIEW, NECESSARY BEFORE THE PROVISIONS OF THE EXPLAN ATION THEREIN ARE APPLIED. THE HIGH COURT AT BOMBAY WAS, THEREFORE, I N ERROR IN THE VIEW THAT IT TOOK AND THE DIVISION BENCH IN THE IMPUGNED JUDGMENT WAS RIGHT. 14 THUS FROM ABOVE IT IS CLEAR THAT EXPLANATION BEING PART OF SECTION GETS INVOKED AUTOMATICALLY ONCE THE SHOW CA USE NOTICE 9 IS ISSUED. THERE WAS ANOTHER ARGUMENT THAT THERE C AN BE SO MANY REASONS FOR SURRENDER FOR WHICH ANOTHER DECISION OF HON'BLE APEX COURT IN CASE OF SIR SHADILAL SUGAR AND GENERAL MIL LS LTD. VS. CIT (1987) 168 ITR 705 WAS RELIED. THIS CONTENTION WAS ALSO REJECTED BY THE FOLLOWING OBSERVATIONS: LEARNED COUNSEL FOR THE ASSESSEE THEN DREW OUR ATTE NTION TO THE JUDGMENT OF THIS COURT IN SIR SHADILAL SUGAR AND GE NERAL MILLS LTD. V. CIT [1987] 168 ITR 705. HE SUBMITTED THAT THE ASSESSEE HAD AGREED TO THE ADDITIONS TO HIS INCOME REFERRED TO HEREINABOVE TO BUY PEACE AND IT DID NOT FOLLOW THEREFROM THAT THE AMOUNT THAT WAS AGREE D TO BE ADDED WAS CONCEALED INCOME. THAT IT DID NOT FOLLOW THAT THE A MOUNT AGREED TO BE ADDED WAS CONCEALED INCOME IS UNDOUBTEDLY WHAT WAS LAID DOWN BY THIS COURT IN THE CASE OF SIR SHADILAL SUGAR AND GENERAL MILLS LTD. [1987] 168 ITR 705 AND THAT, THEREFORE, THE REVENUE WAS REQUIR ED TO PROVE THE MENS REA OF A QUASI-CRIMINAL OFFENCE. BUT IT WAS BE CAUSE OF THE VIEW TAKEN IN THIS AND OTHER JUDGMENTS THAT THE EXPLANAT ION TO SECTION 271 WAS ADDED. BY REASON OF THE ADDITION OF THAT EXPLAN ATION, THE VIEW TAKEN IN THIS CASE CAN NO LONGER BE SAID TO BE APPLICABLE . 15 FROM ABOVE TWO POINTS EMERGE I.E. EXPLANATION (1 ) IS PART OF SECTION AND THERE IS NO NEED TO SEPARATELY INVOKE T HE SAME AND INFORM THE ASSESSEE THAT THE ASSESSING OFFICER INTE NDS TO INVOKE THIS EXPLANATION FOR LEVY OF PENALTY. SECONDLY THE ASSE SSEE IS DUTY BOUND TO EXPLAIN OR OFFER AN EXPLANATION FOR PARTIC ULAR ADDITIONS IF THE ASSESSEE WISHES TO ESCAPE THE PENAL CONSEQUENCE S. THIS DECISION CLEARLY SHOWS THAT AFTER THE INSERTION OF EXPLANATION THE BURDEN IS ON THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED THE PARTICULARS OF INCOME AND IF SUCH EXPLANATION IS FO UND TO BE BONAFIDE THEN PENALTY CAN NOT BE LEVIED BUT IF NO EXPLANATIO N IS GIVEN OR THE EXPLANATION IS FOUND TO BE FALSE THEN PENAL CONSEQU ENCES WILL FOLLOW. 16 WE MAY AGAIN RECALL OUR EARLIER OBSERVATIONS THA T DESPITE THIS EXPLANATION SOME DOUBTS WERE EXPRESSED IN CERTAIN D ECISIONS INCLUDING BY THE HON'BLE SUPREME COURT THAT DELIBE RATENESS IS STILL REQUIRED. AN OBSERVATION TO THIS EFFECT WAS MADE IN CASE OF DILIP N. SHROFF VS. JCIT, 291 ITR 519. LATER ON CORRECTNESS OF THIS DECISION WAS DOUBTED AND THE MATTER WAS REFERRED TO THE LARG ER BENCH OF HON'BLE APEX COURT. THE ISSUE WAS CONSIDERED BY TH E LARGER BENCH IN CASE OF UNION OF INDIA AND OTHERS VS. DHARMENDRA TEXTILES PROCESSORS AND OTHERS, 306 ITR 277 (SC). THE COURT CONSIDERED THE ISSUE OF LEVY OF PENALTY U/S 271(1)(C) AND ALSO SECTION 11AC OF THE CENTRAL EXCISE ACT, 1944. THE COURT AFTER DETA ILED EXAMINATION OF THE ISSUE CAME TO THE CONCLUSION THAT ISSUE OF L EVY OF PENALTY IS NOT AN ACTION OF PENAL NATURE RATHER IT INVOLVES THE ELEMENT OF STR ICT 10 CIVIL LIABILITY. IN THIS REGARD WE WOULD LIKE TO PRODUCE PARA 24 OF THE ORDER WHICH IS AS UNDER: THE EXPLANATIONS APPENDED TO SECTION 272(1)(C) OF T HE INCOME-TAX ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY O N THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WH ILE FILING THE RETURN. THE JUDGMENT IN DILIP N. SHROFFS CASE [2007] 8 SCAL E 304 (SC) HAS NOT CONSIDERED THE EFFECT AND RELEVANCE OF SECTION 276 C OF THE INCOME-TAX ACT. THE OBJECT BEHIND 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 LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSE NTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MA TTER OF PROSECUTION UNDER SECTION 276 C OF THE INCOME-TAX ACT. 16 FROM THE ABOVE DISCUSSION ON LEGAL ISSUES, FOLL OWING POINTS EMERGE: (A) PENALTY U/S 271(1)(C) IS NOT OF PENAL NATURE BU T STRICT CIVIL LIABILITY; (B) AFTER INSERTION OF EXPLANATION, THE BURDEN HAS BEEN SHIFTED ON THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF THE INCO ME; (C) EVEN IF AN AMOUNT IS SURRENDERED EVEN THEN PENA LTY IS LEVIABLE IF THE ASSESSEE FAILS TO OFFER EXPLANATION. 17 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REFER RED TO VERY OLD DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT V. ANWAR ALI (SUPRA). IN VIEW OF THE ABOVE DISCUSSION THIS DECI SION CAN NO MORE BE RELIED FOR THE PROPOSITION THAT PENALTY PROCEEDI NGS U/S 271(1)(C) ARE PENAL IN NATURE AND PROPOSITION THAT ONUS LAY U PON THE DEPARTMENT TO SHOW BY ADEQUATE EVIDENCE THAT PARTIC ULAR ITEM IS INCOME OF THE ASSESSEE. THIS ONUS STANDS SHIFTED T O THE ASSESSEE AFTER INSERTION OF EXPLANATION (1) TO SECTION 271(1 )(C). HOWEVER, WE AGREE WITH THE LD. COUNSEL OF THE ASSESSEE THAT THI S DECISION CAN BE RELIED FOR THE PROPOSITION THAT THE FINDINGS GIVEN IN ASSESSMENT ORDER ARE NOT CONCLUSIVE FOR THE PURPOSE OF LEVY OF PENAL TY. THIS DECISION HAS BEEN FURTHER UPHELD BY HON'BLE DELHI HIGH COURT IN CASE OF DEVSONS PVT LTD. VS. CIT, 329 ITR 483 FOR THIS PROP OSITION. THIS BECOMES CLEAR FROM THE OBSERVATIONS MADE BY THE HON 'BLE HIGH COURT AT PARA 28 WHICH IS AS UNDER: WE FIND NO SUBSTANCE IN THE AFORESAID CONTENTION AS IT IS WELL SETTLED THAT THOUGH ASSESSMENT AND PENALTY PROCEEDINGS ARE DISTINCT, AND THE 11 FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS MAY CONSTITUTE EVIDENCE IN THE COURSE OF PENALTY PROCEEDINGS, BUT THEY CANNOT BE REGARDED AS CONCLUSIVE. THIS IS THE LAW ENUNCIATED BY THE SUPREME COURT IN THE FOLLOWING CASES: (1) CIT V. ANWAR ALI [1970] 76 ITR 696 (SC) (2) CIT V. KHODAY ESWARSA AND SONS [1972] 83 ITR 36 9 (SC); AND (3) ANANTHARAM VEERASINGAIAH AND CO. V. CIT[1980] 1 23 ITR 457 (SC). WE FIND THAT THE DECISION IN CASE CITED BY THE LD. COUNSEL OF THE ASSESSEE IN CASE OF CIT V. KHODAY ESWARSA AND SONS, 83 ITR 369 (SC) IS ALSO OF NO ASSISTANCE BECAUSE IN THIS CASE ALSO MAINLY IT WAS HELD THAT PENALTY PROCEEDINGS ARE PENAL IN NATURE. AFTER VARIOUS AMENDMENTS AS DISCUSSED ABOVE, THIS DECISION IS OF NO ASSISTANCE PARTICULARLY IN VIEW OF THE OBSERVATIONS MADE BY TH E LARGER BENCH OF THE HON'BLE APEX COURT IN CASE OF UNION OF INDIA AN D OTHERS VS. DHARMENDRA TEXTILES PROCESSORS AND OTHERS (SUPRA) W HICH WE HAVE QUOTED ABOVE. 18 NOW LET US SEE WHAT IS THE NATURE OF THE EXPLANA TION FURNISHED BY THE ASSESSEE IN THE CASE BEFORE US. FIRST DOCUM ENT REFER TO PAGE 2 OF THE PAPER BOOK WHICH IS A COPY OF THE AFFIDAVI T OF THE ASSESSEE FURNISHED BEFORE THE ASSESSING OFFICER. THROUGH TH IS AFFIDAVIT IT WAS STATED THAT THE ASSESSEE ALONG WITH S/SHRI PRITAM S INGH, RAJWANT SINGH, RAJIV KUMAR AND S.S. EMPIRE PVT LTD. WERE IN MUTUAL AGREEMENT WITH M/S WEST POINT PROPERTY PVT. LTD. FO R PURCHASE OF LAND FOR M/S WEST POINT PROPERTY PVT. LTD,. THE PA YMENT FOR SUCH PURCHASE CAN BE MADE BY ANY OF THE PARTY. FURTHER S HRI PRITAM SINGH TRANSFERRED A SUM OF RS. 1,19,90,000/- WHICH WAS RECEIVED FROM M/S WEST POINT PROPERTY PVT. LTD,. TO ASSESSEE S AXIS BANK ACCOUNT NO. 30201010009195 IN SOME URGENT CIRCUMSTA NCES. IT IS FURTHER STATED THAT SHRI PRITAM SINGH HAD RECEIVED A SUM OF RS. 1.20 CRORE FROM M/S WEST POINT PROPERTY PVT. LTD,. IT I S FURTHER STATED THAT THE AMOUNT WAS WITHDRAWN BY THE ASSESSEE FROM AXIS BANK AND RETURNED TO M/S WEST POINT PROPERTY PVT. LTD,. AFF IDAVIT OF SHRI PRITAM SINGH TO THE SAME EFFECT HAS ALSO BEEN FILED WHICH IS PLACED AT PAGE 3 OF THE PAPER BOOK. THREE RECEIPTS FOR RE CEIPT OF A SUM OF RS. 40 LAKH EACH FROM THE ASSESSEE SIGNED BY M/S WE ST POINT PROPERTY PVT. LTD,. ARE FILED AT PAGE 4,5 & 6 OF TH E PAPER BOOK. THE LD. COUNSEL OF THE ASSESSEE ALSO REFERRED TO MOU (C OPY OF WHICH IS FIELD AT PAGE 18 TO 19 OF THE PAPER BOOK). MOU IS BETWEEN S/SHRI RAJIV KUMAR, RAJWANT SINGH, CHARANJIT SINGH AND PRI TAM SINGH AS 12 PARTY OF THE FIRST PART AND S/SHRI HARISH BHASIN ON BEHALF OF M/S WEST POINT PROPERTY PVT. LTD,. AS PARTY OF SECOND P ART. THROUGH THIS MOU THE ASSESSEE ALONG WITH THREE OTHER PERSON S, AGREED TO ARRANGE LAND IN MOHALI AREA FOR EACH PARTY. THEN T HERE IS COMPROMISE DEED PLACED AT PAGE 13 TO 17 OF THE PAPE R BOOK WHICH STATES THAT FIRST PARTY COULD NOT ARRANGE LAND, THE REFORE, MONEY HAS BEEN REFUNDED. 19 THIS EXPLANATION WAS NOT FOUND SUFFICIENT BY THE ASSESSING OFFICER THEREFORE, ADDITION WAS MADE. THE ASSESSEE DID NOT FILE ANY APPEAL AND HAD PREFERRED A PETITION U/S 264 BEFORE THE LD. CIT WHICH WAS ALSO REJECTED. 20 THE LD. CIT(A) HAD NOTED IN PARA 4 THE REASONS F OR REJECTION OF PETITION U/S 264 WHICH READS AS UNDER: THE ASSESSMENT ORDER WAS PASSED AFTER TAKING IN CO NSIDERATION THE DETAILS FURNISHED BY THE ASSESSEE, THEREFORE, THE C ONTENTION OF THE ASSESSEE THAT THE GENUINE CLAIM OF THE ASSESSEE WAS NOT CONSIDERED IS NOT ACCEPTED. 2 THE CONTENTION OF THE ASSESSEE THAT BEFORE FRAMIN G THE ASSESSMENT, THE A.O. NEVER CALLED MR. PRITAM SINGH IS NOT CORRECT. THE ASSESSEE WAS OFFERED PROPER OPPORTUNITY TO GIVE ADD RESS OF SHRI PRITAM SINGH AND THEREAFTER WAS ALSO ASKED TO PRODUCE SHRI PRITAM SINGH AND THEREAFTER WAS ALSO ASKED TO PRODUCE SHRI PRITAM SI NGH FOR RECORDING HIS STATEMENT VIDE ORDER SHEET ENTRY DATED 07.12.2008 B UT THE ASSESSEE FAILED TO DISCHARGE HIS LIABILITY. FURTHER THE ASSE SSEE HAS NOT DISCLOSED HIS BANK ACCOUNT NO. 30210100009591. IT IS PERTINEN T TO MENTION HERE THAT VIDE QUESTIONNAIRE DATED 25/09/2008, THE ASSES SEE WAS ASKED TO SUBMIT THE DETAILS REGARDING HIS BANK ACCOUNTS. BUT HE DID NOT DISCLOSE THE BANK A/C NO. 30210100009591 MAINTAINED WITH UTI BANK, SEC. 8, CHANDIGARH (NOW AXIS BANK, SEC. 8, CHANDIGARH). DUR ING THE COURSE OF ASSESSMENT, THE BANK ACCOUNT STATEMENT OF THE SAID ACCOUNT WAS CALLED FOR FROM THE BANK U/S 133(6) OF THE I.T. ACT, 1961 BY THE A.O. THE DETAILED DISCUSSION OF TRANSACTIONS IN AXIS BANK A/ C NO. 30210100009591 MADE IN THE ASSESSMENT ORDER IS AS U NDER:- TRANSACTION DATE CH. NO. WITHDRAWAL DEPOSIT BALANCE NARRATION 19.04.2006 75,00,000 75,00,000 TRF. FROM PRITAM 20.04.2006 5,00,000 70,00,000 SELF 21.04.2006 4221 70,00,000 0.00 SELF 22.04.2006 44,90,000 44,90,000 TRF. FROM PRITAM 22.04.2006 4223 44,90,000 0.00 SELF 03.08.2006 1,01,000 1,00,679 CASH DEPOSIT 03.08.2006 4226 1,00,000 679.00 RAJWANT ON VERIFICATION OF THE ENTRIES MADE IN THE SAID BAN K ACCOUNT , IT IS FOUND THE A.O. THAT DURING THE YEAR UNDER REFERENCE THE A SSESSEE HAS DEPOSITED RS. 1.20 CRORE IN THE SAID BANK ACCOUNT O N VARIOUS DATES. IN THIS REGARD, THE ASSESSEE COULD NOT OFFER ANY SATIS FACTORY EXPLANATION. HOWEVER, THE ONUS TO PROVE THE SOURCE OF MONEY FOUN D TO HAVE BEEN 13 RECEIVED BY THE ASSESSEE IS ON HIM, WHICH HE COULD NOT EXPLAIN SATISFACTORY DURING THE COURSE OF ASSESSMENT PROCEE DINGS. 3. THE CONTENTIONS OF THE ASSESSEE THAT HE WAS NOT GIVEN AN OPPORTUNITY TO PRODUCE SH. PRITAM SINGH IS NOT CORR ECT ON THIS DATE, AS IT IS EVIDENT FROM THE RECORD THAT HE WAS AFFORDED PRO PER OPPORTUNITY TO GIVE THE ADDESS OF SHRI PRITAM SING AND WAS ALSO AS KED TO PRODUCE HIM. FURTHER, THE ONUS TO PRODUCE SH. PRITAM SINGH WAS T O BE DISCHARGED BY THE ASSESSEE HIMSELF WHICH HE HAS FAILED TO DO. FUR THER, THE ASSESSEES STATEMENT IS ALSO NOT CORRECT THAT THE A.O. HAS ADM ITTED THAT THE MONEY WAS TO BELONGING TO THE ASSESSEE. 4. THE CONTENTION OF THE ASSESSEE THAT THE MONEY WA S PAID BACK TO M/S WEST PRINT PROPERTY PVT. LTD. CAN NOT BE ACCEPT ED BECAUSE THE RECEIPTS FILED BY THE ASSESSEE FOR A SUM OF RS. 1. 20 CRORE WHICH IS SHOWN TO HAVE BEEN RECEIVED BACK BY M/S WEST POINT PROPERTY PVT. LTD. DOES NOT HAVE ANY MEANING, AS THERE IS NO NAME & AD DRESS OF THE PERSON WHO HAD RECEIVE THE MONEY NOR THESE RECEIPTS ARE ON THE LETTER HEAD OF THE COMPANY. FURTHER, ASSESSEE COULD NOT SUBMIT ANY DOCUMENTARY EVIDENCE REGARDING THE DETAIL OF LAND FOR WHICH MON EY WAS TAKEN AND DISPUTE ARISEN BETWEEN THE PARTIES. THEREFORE, IT W AS NOT POSSIBLE FOR THE A.O TO TREAT IT AS GENUINE RECEIPT. MOREOVER, IT IS AGAINST THE PRINCIPLE OF PREPONDERANCE THAT A DEAL IS WORTH CORES OF RUPEE B UT NO PROPER DOCUMENT WAS EVER PREPARED. IN ADDITION OF THE ABOVE, IT IS OBSERVED AS FOLLOWS : (A) THE ASSESSEE HAS STATED IN PARA 7 OF HIS LETTER DATED 25.03.2010 THAT MR. CHARANJIT SINGH WITHDREW THE MONEY FROM HI S AXIS BANK ACCOUNT AND RETURNED TO M/S WEST POINT PROPERTY PVT. LTD. D ULY RECEIVED BY THE DIRECTOR OF THE COMPANY SH. HARISH BHASIN. HOWEVER, IT IS NOTED THAT AT THE TIME OF THE ASSESS MENT, THE ASSESSEE THROUGH HIS ADVOCATE FILED A LETTER DATED NIL WHERE IN IN PARA 6, IT WAS STATED AS FOLLOWS:- REGARDING UTI BANK A/C, IT IS SUBMITTED THAT I HA VE RECEIVED SOME MONEY FROM MR. PRITAM SINGH VIDE ACCOUNT PAYEE CHEQ UES FOR THE PURCHASE OF AGRICULTURE LAND ON BEHALF OF WEST POIN T PROPERTIES PVT. LTD. IN THE AREA OF ZIRAKPUR AND DERABASSI. I RECEIVED T HE MONEY FROM PRITAM SINGH AND AFTER THAT I WITHDRAWN FROM MY ACCOUNT FO R THE PURCHASE OF AGRICULTURE LAND. THE PURCHASED AGRICULTURAL LAND S OLD TO THE WEST POINT AS PER AGREEMENT SIGNED. CLEARLY, THE ABOVE TWO STATEMENTS MADE BY THE ASSES SEE HIMSELF DURING THE ASSESSMENT PROCEEDINGS AND DURING THE PETITION U/S 264 ARE CONTRADICTORY AND DO NOT THEREFORE CONVEY THE CORRE CT SITUATION. 21 THE LD. CIT(A) AFTER EXTRACTING ABOVE OBSERVATIO N, FURTHER OBSERVED THAT MOU WAS SIGNED BY SHRI RAJIV KUMAR AN D NOT BY ANY OTHER PARTY INCLUDING THE ASSESSEE I.E. SHRI CH ARANJIT SINGH. FURTHER WITNESSES WHO HAVE SIGNED THE DOCUM ENTS ARE SAME THOSE WHO SIGNED THREE RECEIPTS. INTERESTINGL Y THOUGH THE ABOVE DOCUMENTS I.E. MOU, COMPROMISE DEED AND RECEI PTS WAS 14 ISSUED ON DIFFERENT DATES AND ENTRY MADE ON DIFFEDR ENT LOCATIONS BUT THE SAME WERE SIGNED BY THE SAME NOTARY PUBLIC AT K HANNA (PUNJAB) ON 28.8.2007. AFTER THIS OBSERVATION THE LD. CIT(A) HAS DECIDED THE ISSUE VIDE PARA 5 WHICH IS AS UNDER: 5. IT IS CLEAR FROM THE DETAILED ORDER PASSED BY CI T(C) U/S 264 THAT THE ASSESSEE COULD NOT EXPLAIN THE CREDITS APPEARIN G IN HIS BANK ACCOUNT DESPITE HAVING MORE THAN SUFFICIENT OPPORTUNITY BOT H AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS AT THE TIME OF AP PELLATE PROCEEDINGS. THE EXPLANATION GIVEN BY THE ASSESSEE THAT THE SAID MONEY HAD BEEN RECEIVED AS ADVANCE FROM PRITAM SINGH WHO IN TURN H AD RECEIVED IT FROM WEST POINT PROPERTIES PVT. LTD. COULD HAVE BEEN VER Y EASILY PROVED AS GENUINE IF THE SAID PERSONS I.E. PRITAM SINGH OR WE ST POINT PROPERTIES PVT. LTD., HAD BEEN PRODUCED BEFORE THE A.O. TO CON FIRM THE CLAIM OF ASSESSEE. HOWEVER IT IS SEEN THAT THE ASSESSEE COUL D NOT EVEN GIVE THE DETAILED ADDRESS OF THE SAID PERSONS MAKING IT IMPO SSIBLE FOR THE A.O. TO CROSS VERIFY THE CLAIM MADE BY THE ASSESSEE. THE PR OVISIONS OF SECTION 68 CLEARLY REQUIRE THE ASSESSEE TO DISCHARGE THE ON US CAST UPON HIM IN ORDER TO PROVE IDENTITY, GENUINENESS AND CREDITWORT HINESS OF THE PERSON FROM WHOM THE AMOUNTS HAD BEEN RECEIVED. HOWEVER TH E ASSESSEE APART FROM GIVING THE NAME OF THE PERSON WHO ALLEGEDLY GA VE THE MONEY, COULD NOT PROVIDE ANY FURTHER DETAILS TO ESTABLISH THE ID ENTITY. THE COPY OF THE AFFIDAVIT FILE BEFORE THE A.O. WHEREIN ONE MR. HARI SH BHASIN CLAIMING TO BE DIRECTOR OF WEST POINT PROPERTIES PVT. LTD. DOES NOT CONTAIN ANY REFERENCE TO THE PERMANENT ACCOUNT NUMBER OF THE CO MPANY OR THE ADDRESS OF THE COMPANY OR THE JURISDICTIONAL ASSESS ING OFFICER. THEREFORE, IT BECOMES ABUNDANTLY CLEAR THAT THE ASS ESSEE HAS FAILED MISERABLY IN ESTABLISHING THE IDENTITY. IT IS FURTH ER SEEN THAT NO EVIDENCE HAD BEEN FILED TO PROVE THAT THE AMOUNT WITHDRAWN I N CASH TO THE TUNE OF RS. 1,20,00,000/- HAS BEEN CREDITED IN THE BOOKS OF ACCOUNT OF WEST POINT PROPERTIES PVT. LTD. THERE WAS NOTHING TO PRE VENT THE ASSESSEE FROM FILING THE NECESSARY EVIDENCE IN THIS REGARD, HAD THE CLAIM BEEN GENUINE. THEREFORE ASSESSEE COULD ALSO NOT ESTABLIS H THE CREDITWORTHINESS OF THE PERSON FROM WHOM HE HAS CLA IMED TO HAVE RECEIVED/PAID THE MONEY. FURTHER FACT THAT THE AMOU NT TO THE TUNE OF RS. 1,20,00,000/- HAS BEEN DEPOSITED IN ASSESSEES BANK ACCOUNT ON 19/04/2006 AND 21/04/2006 AND THE SAME HAS BEEN WIT HDRAWN IN CASH WITHIN ONE DAY OF THE DEPOSIT IS NOT EXPLAINED BY T HEORY PROPOSED HELD BY ASSESSEE. IF THE THEORY PROPOSED BY THE ASSESSEE IS TO BELIEVE, THERE WAS NOTHING TO PREVENT THE ASSESSEE FROM RETURNING THE SAID AMOUNT IN CHEQUE FROM WHOM IT HAD BEEN RECEIVED IN CHEQUE. TH E FACT THAT IT HAS BEEN WITHDRAWN IN CASH CLEARLY SHOWS THAT THE INTEN TION IS TO BLOCK THE INVESTIGATION INTO THE RECIPIENT OF THE SAID AMOUNT . THEREFORE ASSESSEE ALSO FAILS IN PROVING THE GENUINENESS OF TRANSACTIO N. AS SUCH THE AMOUNT CREDITED IN THE ASSESSEES BANK ACCOUNT HAS BEEN RI GHTLY ASSESSED AS HIS INCOME FROM UNDISCLOSED SOURCES AND PENALTY ON THE SAME HAS BEEN CORRECTLY IMPOSED. THE ORDER OF THE A.O. UNDER APPE AL IS CONFIRMED. WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT (A). IT IS TO BE SEEN THAT EVEN THE PAN OF THE COMPANY OR SHRI HA RISH BHASIN WAS NOT FURNISHED BEFORE THE ASSESSING OFFIC ER. PAN OF SHRI PRITAM SINGH WAS NOT FILED. IN FACT THE DETAI LS OF PAN IN THE AFFIDAVIT BY SHRI HARISH BHASIN, DETAIL OF PAN OF THE COMPANY IN THE AFFIDAVIT OF SHRI HARISH BHASIN ARE LEFT BLANK. EVEN THE COLUMN REGARDING PAN OF SHRI HARISH BHASIN IS LEFT BLANK. EVEN BEFORE US, NOTHING WAS FILED TO IMPROV E THE CASE. THESE FACTS CLEARLY SHOW THAT THE ASSESSEE HAS NOT BEEN ABLE 15 TO PROVE THE GENUINENESS OF THE TRANSACTION. IN TH E ABSENCE OF RELEVANT ADDRESS ALSO, THE ASSESSING OFFICER HAS BE EN PREVENTED TO MAKE ANY ENQUIRY DURING THE ASSESSMENT PROCEEDINGS. 22 WE FIND NO FORCE IN THE SUBMISSIONS IN THE ABSEN CE OF ANY ENQUIRY DURING PENALTY PROCEEDINGS, PENALTY PROCEED INGS COULD NOT HAVE BEEN LEVIED. AS STATED EARLIER WHILE DISCUSSI NG LEGAL POSITION, THE BURDEN WAS ON THE ASSESSEE TO GIVE PROPER EXPLA NATION WHICH HAS NOT BEEN FOUND TO BE BONAFIDE IN THE ABSENCE OF PAN AND OTHER DETAILS. THEREFORE, CLEARLY THE ASSESSEE HAS CONCE ALED THE PARTICULARS OF INCOME AND THE ASSESSEE HAS MISERABL Y FAILED TO PROVE THE TRANSACTION RELATING TO THE DEPOSITS RECE IVED FROM SHRI PRITAM SINGH. IN OUR OPINION, THIS IS A FIT CASE FO R LEVY OF PENALTY AND IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY CONFIR MED THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 23 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.9.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26.9.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 16 THE HEAD NOTE IN THIS CASE READS AS UNDER: PROCEEDINGS U/S 28 OF THE INCOME-TAX ACT, 1922 ARE PENAL IN CHARACTER. THE GIST OF THE OFFENCE U/S 2891)(C) IS THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR DELIBERATELY FURNISHED INACCURATE PARTICULARS OF S UCH INCOME AND THE BURDEN IS ON THE DEPARTMENT TO ESTABLISH TH AT THE SPRECEIPT OF THE AMOUNT IN DISPUTE CONSTITUTES INCO ME OF THE ASSESSEE. IF THERE IS NO EVIDENCE ON THE RECORD E XCEPT THE EXPLANATION GIVEN BY THE ASSESSEE, WHICH EXPLANATIO N HAS BEEN FOUND TO BE FALSE, IT DOES NOT FOLLOW THAT THE RECEIPT CONSTITUTES HIS TAXABLE INCOME. IT WOULD BE PERFECTLY LEGITIMATE TO SAY THAT THE MERE FACT THAT THE EXPLA NATION OF THE ASSESSEE IS FALSE DOES NOT NECESSARILY GIVE RIS E TO THE INFERENCE THAT THE DISPUTED AMOUNT REPRESENTS INCOM E. FROM THIS POSITION IT BECOMES CLEAR THAT BECAUSE OF THE EXPRESSION DELIBERATELY THE COURTS WERE OF THE OPINION THAT EVEN IF EXPLANATION OF THE ASSESSEE WAS FALSE THE BURDEN STILL LIES WIT H THE REVENUE TO PROVE BEYOND DOUBT THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME BEYOND DOUBT.