HARISH KUMAR RAIMALANI, Ajmer V. ITO, Ajmer

ITA 834/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5413 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH MANGAL JCIT DHK
• Keywords: Unexplained investment; Gift; Business income; Opportunity of being heard; Initiation of penalty proceedings
• Section: 143(3); 133A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 834/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. HARISH KUMAR RAIMALANI, PROP.- M/S DETARAM GOLUMAL, NAYA BAZAR, AJMER. CUKE VS. I.T.O. WARD 1(1), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AFMPR 6417 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 770/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. I.T.O. WARD 1(1), AJMER. CUKE VS. HARISH KUMAR RAIMALANI, PROP.- M/S DETARAM GOLUMAL, ] NAYA BAZAR, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AFMPR 6417 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/02/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/04/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THESE ARE CROSS APPEALS ONE BY THE ASSESSEE AND THE ANOTHER BY THE REVENUE ARISE AGAINST THE ORDER DATED 27/08/201 3 PASSED BY THE LD 2 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO CIT(A), AJMER FOR A.Y. 2007-08. THE EFFECTIVE GROUNDS OF BOTH THE APPEAL ARE AS UNDER:- GROUNDS OF ASSESSEES APPEAL:- 1. THAT ON THE FACTS AND IN LAW THE LD CIT(A), AJMER HAS WRONGLY CONFIRMED THE PENALTY U/S 271(1)(C). 2. THAT THE APPELLANT PRAYS FOR BEING PERMITTED TO R AISE FRESH GROUND OF APPEALS OR TO ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE MODIFIED ACCORDINGLY AND THE PENALTY SHOWED BE CANCELLED. GROUND OF REVENUES APPEAL:- 1. DIRECTING THE A.O. TO RECOMPUTED THE PENALTY, A FTER DELETING THE INCOME BY WAY OF EXCESS CASH, UNDISCLOSED STOCK AND INVESTMENT IN HOUSE PROPERTY, WHICH WAS SURRENDERED DURING THE COURSE OF SURVEY U/S 133A CARRIED OUT AT THE BUSINESS PREMISES. 2. THE ASSESSEE IS IN TRADING OF GOLD AND SILVER ORN AMENTS AND PAWNING BUSINESS. THE RETURN FOR A.Y. 2006-07 WAS FIL ED ON 31/10/2007 DECLARING TOTAL INCOME OF RS. 15,19,443/-, WHICH WAS ASSESSED BY THE ASSESSING OFFICER AT RS. 76,65,136/-. THE FOLLOWING ADDITIONS WERE MADE BY THE ASSESSING OFFICER UNDER THE HEADS AS UN DER: I. EXCESS CASH RS. 1,76,604/- II. EXCESS STOCK RS. 29,79,970/- 3 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO III. HOUSE PROPERTY RS. 25,23,200/- IV. PAWNING RS. 4,65,919/- THUS, TOTAL ADDITION OF RS. 61,45,693/- WAS MADE BY T HE ASSESSING OFFICER. PENALTY U/S 271(1)(C) WAS INITIATED BY THE ASSESSING OFFICER SEPARATELY (NOT SPECIFIED THE PENALTY WAS FOR CONCEA LING OF PARTICULARS OF INCOME OR FURNISHING IN ACCURATE PARTICULARS OF INC OME). 2.1 BEFORE IMPOSING PENALTY U/S 271(1)(C), THE ASSE SSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD, WHICH WAS AVAILED BY THE ASSESSEE. REPLY OF THE ASSESSEE HAS BEEN REPRODUCED BY THE ASSESSING OFFICER ON PAGE 2 AND 3 OF THE PENALTY ORDER. IT HA S BEEN SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING TH E APPELLATE PROCEEDINGS THAT THE PENALTY PROCEEDINGS MAY BE KEP T IN ABEYANCE TILL DISPOSAL OF THE M.A. AND APPEAL FILED BEFORE THE HO NBLE HIGH COURT BUT THE LD ASSESSING OFFICER HELD THAT PENALTY CANNOT B E KEPT IN ABEYANCE AS LD CIT(A) AS WELL AS HONBLE ITAT HAS DECIDED THE ISSUE AND MATTER HAS GOT ITS FINALITY AND PENALTY PROCEEDINGS WERE TI ME BARRING. HE FURTHER OBSERVED THAT THERE WAS A SURVEY U/S 133A ON 21/3/2004 OF THE ACT AND THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS O F ACCOUNT. EVEN THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT AT THE TIME OF ASSESSMENT U/S 143(3) OF THE ACT. THE DISCREPANCY FO UND AT THE TIME OF 4 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO SURVEY WHICH HAS BEEN CONFIRMED BY THE APPELLATE AUT HORITY ON THE BASIS OF WHICH THE PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED. THE LD ASSESSING OFFICER OBSERVED IN PENALTY ORDER A S UNDER:- (I) EXCESS CASH FOUND: - DURING THE COURSE OF SURV EY ON PHYSICAL VERIFICATION, CASH WAS FOUND AT RS. 5,09,00 0/- OUT OF WHICH THE ASSESSEE SURRENDERED RS. 3,09,000/-. THE ASSESSEE H AS SHOWN CASH BALANCE AS ON 31/3/2006 IN BALANCE SHEET AT RS. 23, 396/-. THUS, REMAINING CASH OF RS. 4,85,604/- OUT OF WHICH SURREN DERED CASH OF RS. 3,09,000/- AND THE FINAL DIFFERENCE OF RS. 1,76,604 /- HAS NOT BEEN EXPLAINED BY THE ASSESSEE. THE LD CIT(A) HAS CONFIRME D THE ADDITION OUT OF WHICH EXCESS CASH OF RS. 1,00,000/- AFTER GIV ING THE RELIEF OF RS. 76,604/-. THUS, HE HELD THAT EXCESS CASH TO THE TUNE OF RS. 4,09,000/- HAS CONCEALED INCOME OF THE ASSESSEE. (II) EXCESS STOCK FOUND AT THE TIME OF SURVEY:- ON VERIFICATION OF STOCK DURING THE COURSE OF SURVEY, STOCK OF RS. 52,87,062/- WAS FOUND OUT OF WHICH, THE ASSESSEE SURRENDERED RS. 8.0 0 LACS. THE ASSESSEE DID NOT KEEP ANY RECORD AND HE WAS NOT IN A POSITION TO EXPLAIN THE STOCK OF GOLD, SILVER AND DIAMOND JEWELL ERY AVAILABLE IN HIS SHOP. HE HAD NO BASIS BUT KEEPING IN MIND THE DEFIC IENCY OF HIS BUSINESS, HE SURRENDERED RS. 8.00 LACS. THE LD ASSES SING OFFICER HELD 5 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO THAT AT THE TIME OF ASSESSMENT, THE ASSESSEE WAS REQ UIRED TO EXPLAIN THE BASIS OF SURRENDER OF INCOME OF RS. 8.00 LACS O NLY AS AGAINST THE EXCESS STOCK FOUND OF RS. 52,87,062/-PARTICULARLY I N ABSENCE OF ANY BOOKS OF ACCOUNT. THE ASSESSEE SUBMITTED THAT ON THE BASIS OF AVERAGE SALE AND THE CLOSING STOCK OF LAST THREE YEARS, THE STOCK OF RS. 52,87,062/- WAS JUSTIFIED. MOREOVER THE STOCK OF RS.52,87,062/- WAS VALUED ON MARKET PRICE AND THE AVERAGE RATE OF GOLD WAS TO RS. 11060/- AND RATE OF SILVER WAS RS.19550/-. ON THAT BASIS H E HAD SURRENDERED RS.8,00,000/- AND CLAIMED IT REASONABLE AND REQUEST ED THAT NO ADDITION IS TO BE MADE UNDER THIS HEAD. THE ASSESSEES PLEA WA S NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER AS THE ASSESSEE ALREADY TAKEN THE VALUE OF GOLD @ 1175 PER GM AND SILVER @ 18,750/- PER KG, WHICH WAS ALREADY MORE THAN THE RATE REQUESTED TO BE ADOPTED BY THE AR OF THE ASSESSEE. THEREFORE, ADDITION OF RS. 27,79,970/- WAS MADE ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY A FTER GIVING THE CREDIT OF STOCK OF RS. 15,07,092/- AS PER BALANCE SHEET AS ON 31/3/2006 AND THE STOCK OF RS. 8.00 LACS ALREADY SURRENDERED. THE HONBLE ITAT HAS SUSTAINED THE ADDITION OF RS. 19,87,062/- AND HE HE LD CONCEALED INCOME OF RS. 27,87,062/- UNDER THIS HEAD. 6 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO (III) UNEXPLAINED INVESTMENT IN HOUSE PROPERTY:- D URING THE COURSE OF SURVEY A COPY OF AGREEMENT WAS FOUND. AS P ER THE SAID AGREEMENT, THE ASSESSEE PURCHASED A HOUSE PROPERTY NO. M-80, RAMBAL ROAD, AJMER FOR RS.46,11,000/- AND THE ADVAN CE PAYMENT OF RS.27,00,000/- WAS MADE UPTO 21.03.2007. IT IS FURTH ER OBSERVED THAT DURING THE COURSE OF SURVEY, THE ASSESSEE HAD ADMIT TED THAT HIS WIFE DID NOT HAVE ANY SOURCE OF INCOME NOR ANY PAN, AS S UCH PAYMENTS MADE FROM HER ACCOUNT OF RS. 5 LACS WAS HIS OWN UNDIS CLOSED MONEY. SIMILARLY THE CHEQUES OF RS.5,00,000/- ISSUED FORM HIS SONS SAVINGS ACCOUNT WERE ALSO OUT OF HIS OWN UNDISCLOSED INCOME. BESIDES, THE REMAINING RS. 17,00,000/- WERE ALSO PAID OUT OF OWN U NDISCLOSED INCOME. THUS, HE SURRENDERED THE INCOME OF RS.27,00, 000/- FOR TAXATION. BUT LATER ON, THE ASSESSEE DID NOT DISCLO SE THE SAID SURRENDERED INCOME IN HIS RETURN FILED. THE ASSESSE E VIDE LETTER DATED 16/12/2009 HAD EXPLAINED THAT THE INVESTMENT OF RS. 17 LACS IN THE PROPERTY WAS NOT SHOWN IN THE RETURN AS THE SAME WAS M ADE BY HIS WIFE AND SON. THE CHEQUE OF RS. 3 LACS WAS NOT PRESE NTED BY THE SELLER AND RS. 3,20,000/- WERE GIVEN BY HIS SON AND RS. 1,7 6,800/- WERE GIVEN BY HIS DAUGHTER IN LAW. THE DAUGHTER IN LAW SOLD A CAR OF RS. 2,25,000/-, WHICH WAS GIFTED BY THE PARENTS AT THE TI ME OF HER 7 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO MARRIAGE. THUS, THE ASSESSEE CLAIMED FOR CREDIT OF R S. 7,76,800/- AND BALANCE AMOUNT OF RS. 9,03,200/- WAS SURRENDERED. THE ASSESSING OFFICER HAS NOT ACCEPTED THE ASSESSEES CLAIM AS TH E ASSESSEE IN HIS STATEMENT DURING THE COURSE OF SURVEY ADMITTED THIS UNDISCLOSED INCOME. THUS, THE LD ASSESSING OFFICER MADE ADDITION OF RS.25,23,200/-. HOWEVER, THE HONBLE ITAT HAS CONFIRMED THE ADDITION OF RS. 19,98,200/- BESIDES THE VERIFICATION BY THE ASSESSI NG OFFICER TO ALLOW THE CREDIT OF RS. 2,25,000/- ON ACCOUNT OF SALE OF THE CAR BY THE DAUGHTER IN LAW OF THE ASSESSEE. THUS HE CALCULATED T HE CONCEALED INCOME AS A RESULT OF SURVEY AT RS. 22,23,200/- UND ER THIS HEAD. THE ASSESSEE FURTHER ALSO DISCLOSED THE ADDITIONAL INCOME OF RS. 30,000/- ON ACCOUNT OF UNEXPLAINED REPAIR OF THE PR OPERTY, WHICH WAS SHOWN IN THE RETURN AT RS. 35,000/-. THE LD ASSESSIN G OFFICER HELD THAT THE ASSESSEE HAD NOT MAINTAINED BOOKS OF ACCOUNT EV EN HIS SALES WERE AT RS. 94 LACS, IS HABITUAL OFFENDER OF CONCEALING INCOME AND INFRINGEMENT OF PROVISIONS OF SECTION 44AA AND 44AB OF THE ACT. THE LD ASSESSING OFFICER FURTHER HELD THAT HAD THERE BEEN NO SURVEY, THIS INCOME MIGHT HAVE CONCEALED BY THE ASSESSEE FOR NON -DISCLOSING IT IN THE REGULAR RETURN. WHATEVER ADMISSION MADE DURING THE COURSE OF SURVEY, HAS NOT BEEN DISCLOSED FULLY IN THE RETURN AS WELL AS DURING THE 8 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE CHALL ENGED THESE ADDITIONS BEFORE THE APPELLATE AUTHORITY WITHOUT ANY BASIS AND COGENT EVIDENCES. THEREFORE, THERE HAS BEEN CONCEALMENT OF INCOME, WHICH WAS DETECTED DURING THE COURSE OF ASSESSMENT. HE REL IED UPON THE VARIOUS CASE LAWS. THUS, HE IMPOSED MINIMUM PENALTY I .E. 100% ON TAX SOUGHT TO BE EVADED AT RS. 18,65,860/-. 3. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD PARTLY ALLOWED THE APPEAL BY OBSERVING THAT THE CASH OF RS. 1,00,000/- WAS FOUND UNDISCLOSED ON WHICH PENALTY IS LEVIABLE. THE A SSESSEE HAS SURRENDERED INCOME OF RS. 3,09,000/-, ACCORDINGLY H E CANCELLED THE PENALTY ON ACCOUNT OF EXCESS CASH. UNDER THE HEAD E XCESS STOCK, HE CANCELLED THE PENALTY ON SURRENDER MADE UNDER THIS HEAD AT RS. 8.00 LACS. UNDER THE HEAD UNEXPLAINED INVESTMENT IN HOUS E PROPERTY, HE FOUND UNEXPLAINED INVESTMENT IN THE HOUSE AT RS. 22 ,23,200/- AS DISCUSSED BY THE ASSESSING OFFICER IN THE PENALTY O RDER. THE ASSESSEE HAS NOT OFFERED ANY AMOUNT ON THIS ACCOUNT IN INCOM E TAX RETURN FILED BY HIM. THUS, HE CONFIRMED THE PENALTY U/S 271(1)(C) AND PENALTY LEVIED ON AMOUNT OF RS. 35,000/- UNDER THE HEAD OF REPAIR OF PROPERTY HAS ALSO BEEN DELETED. 9 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO 4. NOW BOTH ARE IN APPEALS BEFORE US. THE ASSESSEE CH ALLENGED PART CONFIRMATION OF PENALTY AND REVENUE IS AGAINST PART DELETION OF PENALTY. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ADD ITIONS CONFIRMED BY THE APPELLATE AUTHORITY UNDER THE HEAD CASH IS O NLY MATTER OF ESTIMATION. THE SURVEY WAS CONDUCTED ON 21/3/2007 ALM OST WHEN A COMPLETE YEAR WAS TO END AND BY OWN ADMISSION OF THE ASSESSING OFFICER, TRANSACTION OF PURCHASE AND SALES WERE CARR IED OUT THIS YEAR AND THE RESULT PROFIT THEREFROM HAS BEEN DECLARED A CCEPTED. THEREFORE, AVAILABILITY OF CASH COULD NOT BE DENIED. THE LD CIT (A) ALSO STATED THAT THERE BEING PURCHASE AND SALE AVAILABILITY OF CASH WAS TO BE ESTIMATED AND SUCH A FINDING NOT HAVING BEEN CHALLENGED BY T HE REVENUE BEFORE THE HONBLE ITAT HAD BECOME FINAL. ASSUMING NO BOOKS OF ACCOUNT WERE THERE, IN ANY CASE, VALID MATERIALS FOR MAKING A FAIR ESTIMATION IN THE SHAPE OF THE CASH BOOK PREPARED ON DAY TO DAY B ASIS ALONGWITH THE AUDITED BALANCE SHEET AND AN EXTRACT FOR THE MONTH OF MARCH, 2005. WERE FILED BEFORE THE AUTHORITIES BELOW UPTO THE HON BLE ITAT. THIS WAS EVIDENT FROM PARAS 2.8 TO 2.13 OF THE HONBLE ITAT O RDER. NO DEFECT AS SUCH WAS FOUND IN SUCH FUND FLOW STATEMENT OR CASH BO OK EXCEPT MERELY REJECTING THE SAME. ACCORDINGLY ON 31.03.200 7, CASH OF RS.3,12,046/- WAS AVAILABLE. THE ADMITTED FACTS OF TH E HUGE CASH SALES 10 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO OF RS.94,05,222/-. THE EXISTENCE OF THE SUNDRY CRED ITORS OF RS.41.53 LACS THOUGH NOTICED BY THE HONBLE ITAT THAT WERE CO MPLETELY IGNORED CONSIDERING THE WHILE MAKING THE FAIR ESTIMATION AS REGARD THE AVAILABILITY OF CASH. BY CONSIDERING THIS, NO ADDI TION WAS WARRANTED. THUS, CASH ADDITION CONFIRMED BY THE LD CIT(A) IS ON THE BASIS OF ESTIMATION ONLY. THE ASSESSEE HAS FURNISHED A BONAFI DE AND PLAUSIBLE EXPLANATION BEFORE THE AUTHORITY, WHICH WAS NOT FOUND FALSE. THE APPELLANT ALSO SUCCESSFULLY SUBSTANTIATED THE SAME WITH FACTS AND FIGURES AND BASED ON THE IMPOUNDED RECORDS. THE ALLE GED DISCREPANCY POINTED OUT BY THE ASSESSING OFFICER, CONFIRMED BY THE LD CIT(A), WHICH WAS PARTLY CONFIRMED BY THE HONBLE ITAT. HOWEVER, THE HONBLE ITAT ACCEPTED THE AVAILABILITY OF THE ACCOUNTS AS STOCK TO THE EXTENT OF RS. 25 LACS AND THUS REDUCED THE ADDITION TO RS. 19,87,062 /-. THUS, IT WAS A CASE OF MERE ESTIMATION OF INCOME BUT ESTIMATION AL WAYS REMAINS ESTIMATION AND CANNOT TAKE PLACE OF THE REALITY. THE REFORE, IT CANNOT BE SAID THAT EVEN THE ADDITION SUSTAINED BY THE HONBL E ITAT UP TO RS. 19,87,062/- WAS THE EXCESS STOCK FOUND WITH A MATHEMA TICAL PRECISION. IT IS UNDISPUTED FACT THAT DURING THE COURSE OF SUR VEY, NO BOOKS OF ACCOUNT WERE FOUND AS NOT BEEN MAINTAINED. HOWEVER, T HE SAME WERE PREPARED LATER AND THE SAME WERE ALSO GOT AUDITED. TH E ASSESSEE 11 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO SUBMITTED TAX AUDIT REPORT AT ALL STAGES INCLUDING THE HONBLE ITAT. HOWEVER, THE SAME WAS COMPLETELY IGNORED. THE LD ASSES SING OFFICER ACCEPTED THE SALE, PURCHASE, OPENING AND CLOSING BA LANCE FIGURE EVEN NOT DISTURBED THE GP RATE DISCLOSED BY THE ASSESSEE . IN THE PRECEDING YEAR, THE ASSESSEE HAS MEAGRE SALE OF RS. 14.83 LAC S ON WHICH THE GP HAS BEEN DECLARED @ 26.62% WHEREAS DURING THE YEAR U NDER CONSIDERATION, TOTAL SALES WERE 94.05 LACS ON WHICH G P @ 7.23% DISCLOSED. DUE TO HUGE INCREASE IN THE TURNOVER RES ULTED IN SHARP DECLINE IN GP RATE. HE FURTHER ARGUED THAT THERE WAS NO ABNORMAL STOCK WAS FOUND DURING THE COURSE OF SURVEY TO TURNOVER RA TIO. HE HAS DRAWN OUR ATTENTION ON PAGE NO. 23 OF THE PAPER BOOK AND TRIED TO EXPLAIN THAT AVERAGE STOCK AND AVERAGE SALES OF THREE YEARS ARE MORE OR LESS MATCHING. DURING THE YEAR UNDER CONSIDERATION, THE TOTAL SALES WERE 90.05 LACS WHEREAS THE STOCK WAS FOUND DURING THE SU RVEY AT RS. 52.87 LACS, THUS NO ADDITION WAS WARRANTED BUT HONBLE ITAT ACCEPTED THE ESTIMATED STOCK OF THE ASSESSEE ON THE DATE OF SURV EY AT RS. 25 LACS AND REMAINING HAS BEEN CONFIRMED. IT IS FURTHER ARG UED THAT OUT OF TOTAL STOCK FOUND DURING THE COURSE OF SURVEY, RS. 12,91, 260/- WAS BELONGED TO THE CLIENT. HE HAS DRAWN OUR ATTENTION ON PAGE NO . 15 OF THE PAPER BOOK, WHICH WAS ESCAPED KIND ATTENTION AT THE TIME OF EVEN ASSESSMENT 12 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO AND APPELLATE PROCEEDINGS. FURTHER HE ARGUED THAT O N THE DATE OF SURVEY, THE CLOSING STOCK WAS VALUED ON THE BASIS OF MARKET RATE, HOWEVER, THESE STOCKS WERE COMING FROM YEAR TO YEAR I N THE CLOSING STOCK. THEREFORE, CLOSING STOCK HAS NOT BEEN VALUED ON COST PRICE OR MARKET PRICE WHICHEVER IS LESS. THIS ASPECT IF HAD BE EN CONSIDERED BY THE ASSESSING OFFICER THEN HARDLY ANY DIFFERENCE WAS IN THE STOCK FOUND AT THE TIME OF SURVEY. HE FURTHER ARGUED THAT THE A SSESSEE MADE INVESTMENT IN THE HOUSE PROPERTY AT RS. 27 LACS. FO UR CHEQUES OF 2.5 LACS EACH (TOTAL FOUR CHEQUES) WERE RECEIVED FROM WIF E AND SON OF THE ASSESSEE THROUGH BANKING CHANNEL BEFORE THE DATE OF SEARCH, WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE UP TO THE HON BLE ITAT. THE HONBLE ITAT HAD ALSO OBSERVED IN ITS ORDER THAT SUB STANTIAL AMOUNT IN PURCHASE OF HOUSE WERE MADE FROM NOVEMBER, 2006 TO M ARCH, 2007 AND HENCE SALE PROCEEDS WERE DIVERTED AND FUNDS WERE SUBSTANTIALLY NOT AVAILABLE FOR KEEPING THE STOCK. THUS, THE SOURC E OF INVESTMENT IN HOUSE UP TO RS. 10 LACS WAS FULLY ESTABLISHED. RS. 3 .2 LACS WERE PAID BY HIS SON FROM THE SAVINGS BANK ACCOUNT NO. 217841. H E HAS DRAWN OUR ATTENTION ON PAGE NO. 32 TO 33 OF THE PAPER BOOK, WH ICH SHOWS THAT HIS SON HAD WITHDRAWN FROM THE BANK ACCOUNT CASH ON VARI OUS DATES, WHICH WAS USED IN THE INVESTMENT OF THE HOUSE. RS. 1,76,80 0/- WAS GIVEN BY 13 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO HIS DAUGHTER IN LAW FROM THE SALE PROCEEDINGS OF CA R AMOUNT TO RS. 2.25 LACS, WHICH WAS DEPOSITED IN HER BANK ACCOUNT AND AFT ER WITHDRAWING THE SAME WAS GIVEN TO THE ASSESSEE. IT WAS A MERE REJ ECTION OF EXPLANATION HAS NOT FOUND SATISFACTORY BUT SUCH EXP LANATION WAS NEITHER DISPROVED WITH THE HELP OF COGENT EVIDENCE NOR ANY S UCH ATTEMPT WAS MADE BY THE ASSESSING OFFICER NEITHER IN THE ASSESS MENT ORDER NOR IN THE IMPUGNED PENALTY ORDER. MERELY BECAUSE, THE REV ENUE REFUSED TO ACCEPT THE CLAIM, IT CANNOT BE SAID THAT THE ASSESS EE HAD CONCEALED ITS INCOME FOR WHICH HE RELIED ON THE DECISION OF HONBL E GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT (2001) 249 ITR 125 (GUJ), CIT VS SANTOSH FINANCIERS (2001) 247 ITR 742 (KER) A ND BALAJI VEGETABLE PRODUCTS (P) LTD.VS. CIT (2007) 290 ITR 172 (KAR.) HE FURTHER RELIED ON THE FOLLOWING DECISIONS:- (I) CIT VS SMT. GEETA DEVI (2002) 75 TTJ 362 (DEL) F OR SURRENDER ON ACCOUNT OF DISCREPANCY FOUND IN THE CL OSING STOCK. (II) ITO VS BOMBAYWALA READYMADE STORES 271 ITR 1 IT AT PART 1 (TM) FOR NOT MAINTAINING DAY TO DAY STOCK RE GISTER. (III) ITO VS SHREE BALAJI INDUSTRIES (1991) 40 TTJ 2 22 (PUNE) FOR DIFFERENCES FOUND IN THE STOCK DURING THE SURVE Y. 14 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO (IV) ITO VS DR. ANAND CHHABRA (2007) 107 TTJ (JD) 83 1 FOR ADDITION BASED ON STATEMENT RECORDED DURING THE SUR VEY. (V) K.L. KATHURIA VS. ITO (1981) 11 TTJ (DEL) 85 FOR DISCREPANCY FOUND IN THE STOCK. HE FURTHER ARGUED THAT NO PENALTY CAN BE LEVIED ON MERE ESTIMATION OF INCOME ADDED IN THE HANDS OF THE ASSESSEE. THE HONB LE DELHI HIGH COURT IN THE CASE OF CIT VS. AERO TRADERS PVT. LTD. ( 2010) 322 ITR 316 (DELHI) HAS HELD THAT WHEN THE ADDITION IS MADE BY T HE ASSESSING OFFICER ON ESTIMATED PROFIT, THE SAME COULD NOT BE SUBJECT MATTER OF PENALTY FOR CONCEALMENT OF INCOME. HE FURTHER REFER RED THE DECISION IN THE CASE OF CIT VS S. RAHAMAT KHAN BIRBALKHAN BADRUD DIN & PARTY (1999) 240 ITR 887 (RAJ) AND SHIV LAL TAK VS CIT 251 I TR 373 (RAJ.). THE LD AR FURTHER ARGUED THAT THE LD ASSESSING OFFIC ER HAS NOT RECORDED ANY SATISFACTION AT THE TIME OF INITIATION OF PENAL TY PROCEEDINGS WHETHER THE ASSESSEE COMMITTED DEFAULT OF FURNISHING OF INA CCURATE PARTICULARS OF INCOME OR CONCEALED THE INCOME. SUCH AS SATISFAC TION OF THE ASSESSING OFFICER IS A CONDITION PRECEDENT IS NOT A T ALL DISCERNABLE FROM THE ASSESSMENT ORDER. HENCE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER DERIVED SATISFACTION AS TO CHARGE OF CONCEA LMENT/FURNISHING INACCURATE PARTICULARS OF INCOME WITH REFERENCE TO T HE IMPUGNED 15 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO ADDITIONS SO MADE AND PARTLY SUSTAINED. MERELY BECA USE EVEN FROM THE IMPUGNED PENALTY ORDER, IT IS NOT CLEAR WHETHER THE ASSESSING OFFICER HAD IMPOSED PENALTY FOR THE CHARGE OF CONCEALMENT O R FOR CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN ORD ER WORDS, NEITHER FROM THE ASSESSMENT ORDER NOR FROM THE PENALTY ORDE R, IT IS DISCERNABLE THAT THE SATISFACTION TO IMPOSE PENALTY WAS DERIVED WITH RESPECT TO SUBJECTIVE ADDITION MADE/PARTLY SUSTAINED. HE HAS F URTHER DRAWN OUR ATTENTION ON FORM NO. 35 WHERE HE HAS CHALLENGED THE PENALTY ORDER OF THE ASSESSING OFFICER ON THE GROUND OF ERRONEOUS OR DER OF PENALTY IN POINT OF LAW AND ON FACT, WHICH HAS BEEN SUMMARILY DI SMISSED BY THE LD. CIT(A), BUT THERE IS NO SATISFACTION RECORDED BY THE ASSESSING OFFICER AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT. THEREFORE, ON TECHNICAL GR OUND ALSO, THE PENALTY IS DESERVED TO BE DELETED. HE FURTHER ARGUE D THAT THE LD CIT(A) HAS DELETED THE PENALTY ON SURRENDER MADE AND DISCL OSED IN THE RETURNED INCOME. THE VARIOUS ITATS AND HONBLE HIGH COURTS HAVE DECIDED THAT NO PENALTY CAN BE IMPOSED ON RETURNED INCOME OR REVISED INCOME. HE HAS PARTICULARLY DRAWN OUR ATTENTION ON D ECISION IN THE CASE OF ITO VS TOLARAM 38 TAXWORLD 121 (JP), CIT VS SURESH CHAND MITTAL (2001) 170 CTR 182 (SC) AND CIT VS JAGDISH SAREE BHAN DAN (1996) 84 16 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO TAXMAN 0092 (ALL). THUS, HE PRAYED TO DELETE THE PENA LTY CONFIRMED BY THE LD CIT(A) AND DISMISS THE APPEAL FILED BY THE R EVENUE AGAINST THE ORDER OF THE LD CIT(A). 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT THE PENALTY O RDER ITSELF SHOWS SATISFACTION OF THE ASSESSING OFFICER, ITEM WISE ADD ITIONS MADE BY THE ASSESSING OFFICER AND DURING THE COURSE OF SURVEY A LL INCRIMINATING DOCUMENTS HAVE BEEN CONSIDERED FOR ASSESSING THE IN COME OF THE ASSESSEE HEAD WISE. THE LD ASSESSING OFFICER IN PENAL TY PROCEEDINGS ALSO HAS CONCLUDED THAT THE ASSESSEE HAD CONCEALED INCOME UNDER THE VARIOUS HEADS. THEREFORE, ORDER OF THE ASSESSING OFF ICER MAY PLEASE BE CONFIRMED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS UND ISPUTED FACT THAT THE ASSESSEE WAS NOT MAINTAINING REGULAR BOOKS OF ACCOUN T BUT FILING THE RETURN REGULARLY AND DISCLOSING THE CLOSING CASH BA LANCE AS WELL AS STOCK IN THE BALANCE SHEET, WHICH HAS ALSO BEEN CONSIDERED BY THE ASSESSING OFFICER WHILE COMPUTING THE CONCEALED INCOME BUT WHAT EVER EVIDENCE FOUND DURING THE COURSE OF SURVEY, THE ASSESSEE PRE PARED A CASH FLOW FUND AND ALSO AUDIT REPORT WAS FILED, WHICH HAS NOT B EEN CONTROVERTED 17 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO BY THE LD ASSESSING OFFICER AND LD CIT(A). WHATEVER DISCREPANCY FOUND, HAS BEEN ADMITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY BUT LATER ON HE RECONSIDERED THE EVIDENCES FOUND DURING THE COURSE OF SURVEY AS WELL AS BANK ENTRIES OF THE FAMILY MEMBERS AND EXPENDITURE AND SOURCES OF CASH, INVESTMENT MADE IN THE HOUSE P URCHASED AND ALSO DISCREPANCY FOUND IN THE CLOSING STOCK. IT IS ALSO UNDISPUTED FACT THAT THE ASSESSEES CLOSING STOCK CONTINUOUSLY HAS BEEN SHOWN MORE OR LESS EQUAL TO SALE OF THE RESPECTIVE YEARS, WHICH ALSO SU PPORTS THE ASSESSEES CASE THAT STOCK FOUND DURING THE COURSE OF SURVEY WAS MATCHING WITH THE SALE SHOWN DURING THE YEAR UNDER CO NSIDERATION. THE INVESTMENT MADE IN THE HOUSE PURCHASED WAS WITHDRAWN F ROM THE BANK ACCOUNT OF THE SON AS WELL AS WIFE OF THE ASSESSEE, WH ICH HAS ALSO NOT BEEN CONTROVERTED BY THE LOWER AUTHORITIES. THE DAUGH TER IN LAW OF ASSESSEE ALSO MADE PAYMENT FOR THE PURCHASE OF HOUS E FROM THE SALE PROCEEDS OF HER CAR. THESE EXPLANATIONS WERE MADE BEF ORE THE LD ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, BUT HAD NOT BEEN ACCEPTED BY HIM. IT IS ALSO UNDISPUTED FAC T THAT THE VARIOUS ADDITIONS HAVE BEEN CONFIRMED BY THE COORDINATE BEN CH UNDER VARIOUS HEADS BUT IN OUR VIEW THAT THE ASSESSEE HAS FILED BO NAFIDE EXPLANATION, WHICH WAS NOT FOUND FALSE TO THE LOWER AUTHORITIES. WH ATEVER INCOME IN 18 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO THE RETURN CANNOT BE ASSUMED BY THE ASSESSING OFFIC ER AS CONCEALED INCOME AS THE VARIOUS HON'BLE HIGH COURTS HAVE DECI DED THIS ISSUE IN FAVOUR OF THE ASSESSEE WHEN FINANCIAL YEAR OF RELEVA NT ASSESSMENT YEAR 2007-08 HAS NOT BEEN ENDED I.E. SURVEY WAS CONDUCTED ON 21/3/2007, THEREFORE, ASSESSEE FOR REASON TO FILE THE RETURN O N OR BEFORE 31 ST OCTOBER, 2007, WHICH HAS BEEN FILED ON 31/10/2007 AN D DISCLOSED THE INCOME AT RS. 15,19,443/- IN IT. THE LD AR OF THE AS SESSEE ALSO CONTENDED THAT THERE WAS NO SATISFACTION OF THE ASSE SSING OFFICER AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS OF THE AS SESSING OFFICER FOR SPECIFICALLY CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS A FACT THAT THE LD ASS ESSING OFFICER INITIATED THE PENALTY PROCEEDINGS PENALTY NOTICE U/S 271(1)( C) IS BEING ISSUED SEPARATELY BUT HE HAS NOT MENTIONED WHETHER THIS PE NALTY IS FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. HOWEVER, IN THE PENALTY ORDER UNDER THE VARIOUS HEAD S, HE HELD THIS PENALTY FOR CONCEALED INCOME. AFTER CONSIDERING THE TOTALITY OF ALL FACTS AND LEGAL POSITION, WE FIND THAT THE LD CIT(A) WAS NOT RIGHT IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT EVE N ON REMAINING ADDITIONS. ACCORDINGLY, WE DELETE THE PENALTY CONFIR MED BY THE LD 19 ITA NO. 834 & 770/JP/2013 HARISH KUMAR RAIMALANI VS. ITO CIT(A) AND DISMISS THE REVENUES APPEAL AGAINST THE ORDER OF THE LD CIT(A). 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED A ND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/04/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12 TH APRIL, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI HARISH KUMAR RAIMALANI, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 1(1), AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.834 & 770/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR