SUNIL V. SANGOI, MUMBAI V. DCIT CEN CIR 33, MUMBAI

ITA 8486/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79133 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 15-05-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 14-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAURYA PRATAP
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Principle of natural justice; Bonafide belief; Non passing of speaking order
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 8486 / MUM./201 1 ( / ASSESSMENT YEAR : 20 00 01 ) MR. SUNIL V. SANGOI 2 ND FLOOR, VASUNDHARA OPP. SONY MONY S.V. ROAD VILE PARLE (W), MUMBAI 400 056 .. / APPELLANT V/S DY. COMM ISSIONER OF INCOME TAX CENTRAL CIRCLE 33, MUMBAI .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAIPS8992D / ASSESSEE BY : MR. VIJAY MEHTA / REVENUE BY : MR. MAURYA PRATAP / DATE OF HEARING 2 0 .0 5 .201 4 / DATE OF ORDE R 11.06.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATE D 16 TH SEPTEMBER 2011 , PASSED BY HE LEARNED COMMISSIONER (APPEALS) XXXVI, MUMBAI , FOR THE ASSESSMENT YEAR 20 0 0 01 , IN THE MATTER OF PENALTY LEVIED UNDER SECTION MR. SUNIL V. SANGOI 2 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') . THE GROUNDS RAISED BY THE ASS ESSEE, READ AS UNDER: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S 250 OF TH ACT IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ORDER PASSED U/S 274 R/W SECTION 271(1)(C) IS BAD IN LAW, ILLEGAL AND VOID. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ASSESSMENT ORDER IN GROSS VIOLATIONS OF PRINCIPLES OF NATURAL JUSTICE. 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S 271(1)(C) LEVYING THE PENALTY AMOUNTING TO ` 3,22,102. 2 . FACTS IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME MOSTLY FROM HIS PROPRIETORSHIP CONCERN , M/S. VARSHA CATERERS , AND HAD FILED HIS RETURN OF INCOME ON 26 TH DECEMB ER 2000, DECLARING INCOME OF ` 1,87,890. A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) HAD TAKEN PLACE ON 20 TH APRIL 2006, AT ASSESSEES PREMISE, WHEREIN, DURING THE COURSE OF SEARCH, HIS STATEMENT ON OATH WAS RECORDED UNDER SECTION 132(4) . IN THE STATE MENT, THE ASSESSEE ADMITTED THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2000 01, UNACCOUNTED CASH OF ` 3,04,500, HAS BEEN DEPOSITED IN HIS BANK ACCOUNT WITH COSMOS CO O PERATIVE BANK LTD., VILE PARLE (WEST), MUMBAI. ACCORDINGLY, NOTICE UND ER SECTION 148, WAS ISSUED VIDE NOTICE DATED 26 TH MARCH 2007. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED HIS MR. SUNIL V. SANGOI 3 RETURN OF INCOME ON 26 TH APRIL 2007, DECLARING INCOME OF ` 4,92,390, WHICH WAS ALSO INCLUDED THE UNACCOUNTED INCOME OF ` 3,04,500, DECLARED DURING THE COURSE OF SEARCH. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED HIS BANK STATEMENT IN RESPECT OF HIS PROPRIETARY CONCERN , M/S. VARSHA CATERERS, WITH COSMOS CO OPERATIVE BANK , WHEREIN THE TOTAL CREDIT FOR THE ASSESSMENT YEAR 2000 0 1 STOOD AT ` 17,19,733. OUT OF THE SAID DEPOSITS, THE ASSESSEE COULD NOT GIVE PROPER EXPLANATION WITH REGARD TO THE DEPOSITS AGGREGATING TO ` 7,58,233, AS PER THE DETAILS GIVEN AT PAGE 4 AND 5 OF THE ASSESSMENT ORDER. THE ASSESSEES CONTENTION HAS BEEN THA T SOME OF THE DEPOSITS RELATE TO THE SALE PROCEEDS OF TWO MOTOR VEHICLES OWNED BY THE ASSESSEE, THE WRITTEN DOWN VALUE OF WHICH, AS ON 31 ST MARCH 1999, WAS AT ` 8,85,479. BESIDES THIS, THE ASSESSEE HAD ALSO MADE WITHDRAWALS, WHICH HAS BEEN DEPOSITED IN THE SAID BANK ACCOUNT. HOWEVER, THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION AND ADDED THE SAME AMOUNT UNDER SECTION 68. IN THE QUANTUM PROCEEDINGS, THESE ADDITIONS WERE CONFIRMED FROM THE STAGE OF THE LEARNED COMMISSIONER (APPEALS) AND ALSO BY TH E TRIBUNAL, VIDE ORDER DATED 18 TH AUGUST 2009, IN ITA NO.4702/MUM./2008. THEREAFTER, P ENALTY PROCEEDINGS WERE INITIATED WITH RESPECT TO THE AFORESAID ADDITIONS I.E., UNEXPLAINED CREDIT ENTRIES IN THE BANK ACCOUNT ADDED UNDER SECTION 68 FOR SUMS AGGREGATING TO ` 7,58,233 AND UNDISCLOSED INCOME DECLARED DURING THE MR. SUNIL V. SANGOI 4 COURSE OF SEARCH UNDER SECTION 132(4) OF ` 3,04,500 , AND SHOW CAUSE NOTICE WAS ISSUED . IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE FILED A VERY DETAIL AND ELABORATE SUBMISSIONS / EXPLANATION WITH REGARD TO THE ADDITIONS CONFIRMED IN THE QUANTUM PROCEEDINGS, VIDE LETTER DATED 5 TH MARCH 2010. HOWEVER, THE ASSESSING OFFICER, WITHOUT CONSIDERING THE SAID EXPLANATION, LEVY THE PENALTY OF ` 3,22,102, SIMPLY ON THE GROUND THAT THE LEARNED COMMISSIONE R (APPEALS) HAS ALSO UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. THIS PENALTY ORDER HAS ALSO BEEN CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS). 3 . BEFORE US, THE LEARNED COUNSEL, MR. VIJAY MEHTA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE PENALT Y ORDER PASSED BY THE ASSESSING OFFICER IS ABSOLUTELY A NON SPEAKING ORDER WITHOUT ASSIGNING ANY REASON AS TO WHY THE ASSESSEES EXPLANATION FURNISHED WITH REGARD TO BOTH THE ADDITIONS ARE NOT TENABLE. HE HAS ALSO NOT REJECTED THE SAID EXPLANATION ON MERIT S AND THERE BEING NO APPLICATION O F MIND BY THE ASSESSING OFFICER. THEREFORE, THE ASSESSEES EXPLANATION SHOULD BE ACCEPTED AND THE PENALTY LEVIED UNDER SECTION 271(1)(C) MUST BE QUASHED ON THIS GROUND A L ONE . HE SUBMITTED THAT IN THE EXPLANATION FILED BEFO RE THE ASSESSING OFFICER, THE ASSESSEE HAS SET OUT THE ENTIRE REASONS AS TO WHY THE PENALTY CANNOT BE LEVIED ON THESE ADDITIONS AND ALSO WHY EXPLANATION 5 CANNOT BE INVOKED. ONCE THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON S FOR REBUTTING THE EXPLANATION OF THE ASSESSEE, THEN MR. SUNIL V. SANGOI 5 THE PENALTY CANNOT BE CARRIED, BECAUSE THERE IS NO REASON GIVEN BY THE ASSESSING OFFICER ON WHICH THE PENALTY CAN BE CONFIRMED . HE FURTHER SUBMITTED THAT INSOFAR AS THE ADDITION MADE ON ACCOUNT OF DEPOSITS IN THE BANK, THE ASSESSEE H AS DULY DISCLOSED HIS BANK ACCOUNT IN HIS BALANCE SHEET AND ALSO IN THE RETURN OF INCOME NOT ONLY IN THIS YEAR BUT ALSO IN THE EARLIER YEARS. THE SEARCH HAD TAKEN PLACE AFTER A GAP OF SIX YEARS AND THEREFORE, IT WAS DIFFICULT TO EXPLAIN EACH AND EVERY DEPO SIT AFTER SUCH A LONG GAP . HOWEVER, THE ASSESSEE HAD EXPLAIN THE OVERALL SOURCE OF THE DEPOSIT S, WHICH HAS NOT BEEN REBUTTED OR FOUND TO BE FALSE IN THE COURSE OF PENALTY PROCEEDINGS , EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED COMMISSIONER (APPEALS) . IN THE QUANTUM PROCEEDINGS, THE MATTER HAS BEEN DECIDED AGAINST THE ASSESSEE ONLY ON THE GROUND THAT THE ASSESSEES EXPLANATION WITH REGARD TO AVAILABILITY OF SOURCE OF MONEY WAS NOT CORROBORATED BY OTHER EVIDENCE S . THE EVIDENCES FILED BY THE ASSESSEE WI TH REGARD TO SALE OF CARS AND WITHDRAWALS MADE FOR THE PURPOSE OF DEPOSITS , HA VE NOT BEEN FOUND TO BE FALSE , EXCEPT THAT THE EVIDENCE FURNISHED WERE NOT SUFFICIENT. WITH REGARD TO THE AMOUNT SURRENDERED DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED UNDER SECTION 1 32(4), THE LEARNED COUNSEL FAIRLY ADMITTED THAT THE LEVY OF PENALTY ON THIS ISSUE HAS BEEN CONFIRMED BY THE TRIBUNAL IN THE SUBSEQUENT YEARS VIDE ORDER DATED 20 TH OCTOBER 2010. HOWEVER, HIS MAIN THRUST OF ARGUMENT WAS MAINLY ON PRELIMINARY MR. SUNIL V. SANGOI 6 ISSUE THAT THE PENALTY ORDER DOES NOT CONTAIN ANY REASONS AND THERE IS NO APPLICATION OF MIND. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT ONCE THE EXPLANATION HAS BEEN FILED, THEN THE ASSESSING OFFICER NEED NOT GIVE DETAIL REASONS FOR REJECTING THE SAME. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS MENTIONED THAT THE ASSESSEES EXPLANATION HAS NOT BEEN FOUND TO BE ACCEPTABLE. MOREOVER, IN THIS CASE, THE LEARNED COMMISSIONER (APPEALS) HAS ALSO CONFIRMED THE PENALTY. EVEN ON MERITS, ON THE ISSUE OF SURRENDER OF INCOME UNDER SECTION 132(4), PENALTY HAS BEEN CONFIRMED BY THE TRIBUNAL IN THE SUBSEQUENT YEARS AND ON THE ISSUE OF DEPOSITS IN THE BANK ACCOUNT, THE ASSESSEES EXPLANATION HAS NOT BEEN FOUND TO BE ACCEPTABLE IN THE QU ANTUM PROCEEDINGS EVEN BY THE TRIBUNAL. THUS, THE PENALTY LEVIED HAS RIGHTLY BEEN CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS). 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND THE ORDERS OF THE AUTHORITIES BELOW . ON A PERUSAL OF THE RECORDS AVAILABLE BEFORE US , IT IS EVIDENT THAT DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE, IN RESPONSE TO THE SHOW CAUSE NOTICE, FOR LEVY OF PENALTY UNDER SECTION 271(1)(C), HAS FILED DETAIL EXPLANATION VIDE LETTER DATED 5 TH MARCH 2010, WHEREIN, THE ASSESSEE HAS GIVEN E LABORATE SUBMISSIONS DULY SUPPORTED BY CASE LAWS AND ALSO ON THE MERITS OF THE ADDITIONS. SUCH AN MR. SUNIL V. SANGOI 7 EXPLANATION HAS ALSO BEEN ACKNOWLEDGED TO HAVE BEEN RECEIVED BY THE ASSESSING OFFICER IN THE PENALTY ORDER. HOWEVER, THE ASSESSING OFFICER HAS GIVEN THE FOLLO WING REASONS FOR LEVYING THE PENALTY. 8. THE ASSESSEE HAD VIDE LETTER DATED 05/3/2010 FURNISHED A REPLY AND HAS REQUESTED THAT THE PENALTY PROCEEDINGS BE DROPPED. 9. THE SUBMISSIONS PUT FORTH BY THE ASSESSEE HAVE BEEN CAREFULLY CONSIDERED. HOWEVER, TH E ASSESSEES REQUEST TO DROP THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: FURTHER, THE LEARNED CIT(A) HAS ALSO UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER. 10. IN VIEW OF THE ABOVE DISCUSSION, I AM SATISFIED THAT THIS IS A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C) ON THE ADDITION OF ` 10,62,733 WHICH IS CONSIDERED AS SOURCED OUT OF THE UNACCOUNTED INCOME OF THE ASSESSEE. 6 . FROM THE ABOVE, IT CAN BE SEEN THAT THE ONLY GROUND FOR LEVYING THE PENALTY IS THAT THE LEARNED COMMISSIONER (APPEALS) HAS ALSO UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. THIS REASON ALONE CANNOT BE HELD TO BE THE BASIS FOR LEVY OF PENALTY , AS IT IS QUITE A SETTLED LAW THAT THE FINDINGS GIVEN IN THE ASSESSMENT PRO CEEDINGS ALONE, MAY NOT JUSTIFY IMPOSITION OF PENALTY , AS THE CONSIDERATION THAT ARISE IN THE PENALTY PROCEEDINGS ARE DIFFERENT FROM THOSE IN THE ASSESSMENT PROCEEDING. THE FINDINGS IN THE QUANTUM PROCEEDINGS, THOUGH HAVE A PROBATIVE VALUE, BUT IN THE PENA LTY PROCEEDINGS THE EXPLANATION AND THE MATERIALS HAVE TO BE REAPPRAISE AFRESH TO EXAMINE , WHETHER THE MR. SUNIL V. SANGOI 8 ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. 7 . F OR ADJUDGING THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOM E AND FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE EXPLANATION OF THE ASSESSEE, CIRCUMSTANCES AND SURROUNDING FACTS LEADING TO SUCH ADDITIONS, BONAFIDE BELIEF, PREPONDERANCE OF PROBABILITY AND OTHER FACTORS HAVE TO BE EXAMINED. IN THE PENALTY PROCEE DINGS, THE ASSESSEE CAN ALWAYS TAKE A PLEA RELYING ON THE SAME MATERIAL OR BY ADDUCING SOME FRESH EVIDENCE WHICH MAY GO TO AFFECT NOT ONLY HIS BONAFIDE BUT WOULD ALSO AFFECT THE QUANTUM OF PENALTY. THE EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THAT , IF A PERSON FAILS TO OFFER AN EXPLANATION WHICH HAS BEEN FOUND TO BE FALSE OR HE HAS NOT BEEN ABLE TO SUBSTANTIATE OR FAIL TO PROVE THAT SUCH EXPLANATION IS BONAFIDE , THEN THAT PERSON IS DEEMED TO HAVE CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS . IF THE ASSESSEE RENDERS ANY EXPLANATION , THEN IT IS INCUMBENT UPON THE ASSESSING OFFICER TO REBUT SUCH EXPLANATION THAT IT IS FALSE AND/OR IT IS NOT BONAFIDE. THUS, THE E XPLANATION 1 RAISES A REBUTTABLE PRESUMPTION AND THE ONUS SHIFT ON THE REVENUE , ONCE THE EXPLANATION HAS BEEN RENDERED BY THE ASSESSEE . IF NO REASONS HAVE BEEN ASSIGNED IN THE PENALTY ORDER AS TO WHY THE ASSESSEES EXPLANATION IS NOT CORRECT OR NOT BONAFIDE, THEN THE PRESUMPTION RAISED UNDER THE SAID E XPLANATION IS THAT THE ASSESSEES EXPL ANATION HAS TO BE MR. SUNIL V. SANGOI 9 ACCEPTED QUA THE FACTUM OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SIMPLY BECAUSE THE ADDITIONS HAVE BEEN CONFIRMED IN THE QUANTUM PROCEEDINGS, THE PENALTY UNDER SECTION 271(1)(C) IS NOT DEEMED TO BE AUTOM ATIC. THE REASONS SET FORTH IN THE PENALTY PROCEEDINGS BY THE ASSESSING OFFICER CAN ONLY BE THE BASIS TO ADJUDGE WHETHER THE PENALTY HAS BEEN CORRECTLY LEVIED OR NOT. THERE CANNOT BE A SCOPE OF INFERENCE AND GUESS WORK TO BE DEDUCED FROM THE PENALTY ORDER. THE CHARGE OF CONCEALMENT AND/OR FURNISHING OF INACCURATE PARTICULARS HAS TO BE VERY SPECIFIC AND WHY THE ASSESSEES EXPLANATION CANNOT BE UPHELD. 8 . EVEN BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE AGAIN FURNISHED HIS SUBMISSIONS VIDE LETTER D ATED 16 TH SEPTEMBER 2011. HOWEVER, THE LEARNED COMMISSIONER (APPEALS) TOO CONFIRMED THE PENALTY IN A CASUAL MANNER AFTER OBSERVING AND HOLDING AS UNDER: 9. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE ORDER OF THE A.O. THE MAIN ARGUMENTS R AISED BY THE APPELLANT ARE DEALT WITH AS UNDER: 10 . THE ARGUMENT THAT THE ADDITIONAL INCOME WAS DECLARED ONLY WITH THE CONDITION THAT PENALTY WOULD BE WAIVED IS NOT BORNE OUT OF ANY FACTS. FURTHER, THE POWER TO WAIVE PENALTY U/S 273A IS ONLY WITH THE COM MISSIONER OF INCOME TAX SUBJECT TO THE CONDITIONS MENTIONED THEREIN WHICH INTERALIA INCLUDES THAT THE DECLARATION OF INCOME AND PAYMENT OF TAX ON THE SAME HAS TO BE PRIOR TO DETECTION. IN THE INSTANT CASE, THE APPELLANT HAD AN UNDISCLOSED BANK ACCOUNT WHIC H WAS NOT SHOWN AT ALL IN THE RETURN OF INCOME FILED BEFORE THE SEARCH TOOK PLACE AND ONLY WHEN THE DETAILS OF THE BANK ACCOUNT WERE FOUND AND THE APPELLANT WAS CONFRONTED WITH THE SAME, HE DECLARED THE MR. SUNIL V. SANGOI 10 ADDITIONAL INCOME. IT IS FURTHER PERTINENT TO NOTE TH AT EVEN IN THE DISCLOSED ACCOUNT, THE A.O. FOUND THAT CERTAIN ENTRIES COULD NOT BE EXPLAINED AND HENCE THE APPELLANT DOES NOT SATISFY THE CONDITIONS OF WAIVER. IT IS ALSO NOT EVIDENCED THAT THE DECLARATION WAS MADE SUBJECT TO WAIVER OF PENALTY AS SUCH DECL ARATION IS MEANINGLESS AND LACK THE AUTHORITY OF LAW. 11. THE PENALTY HAS BEEN LEVIED WHEN IT WAS DETECTED THAT THE APPELLANT HAD CONCEALED THE INCOME IN THE FORM OF UNDISCLOSED BANK ACCOUNT AND UNEXPLAINED CREDIT ENTRIES IN THE DECLARED BANK ACCOUNT. HE NCE, THE APPELLANT HAS NO SATISFACTORY EXPLANATION FOR THE SAME. 9 . FROM THE AFORESAID FINDINGS, IT CAN BE SEEN THAT THE LEARNED COMMISSIONER (APPEALS) HAS ALSO NOT TRIED TO DEAL WITH THE ASSESSEES EXPLANATION IN PROPER PERSPECTIVE AND WITHOUT CONSIDERING THE ASSESSEES EXPLANATION IN THE OBJECTIVE MANNER. 10 . NOW THAT BOTH THE AUTHORITIES HAVE FAILED TO CONSIDER THE ASSESSEES EXPLANATION, THEREFORE, WE ARE PROCEEDING TO CONSIDER THE ASSESSEES EXPLANATION AND FACTS ON RECORD TO DECIDE ON MERITS. ON A PERUS AL OF THE MATERIAL ON RECORD AND ALSO THE ASSESSEES EXPLANATION FILED BEFORE THE AUTHORITIES BELOW, IT IS SEEN THAT AS REGARDS THE AMOUNT OF INCOME SURRENDERED DURING THE COURSE OF SEARCH, THE ASSESSEES EXPLANATION HAS BEEN THAT , HE HAS BEEN CARRYING ON THE BUSINESS OF CATERING WHICH HE WANTED TO DISCONTINUE AND WAS IN THE PROCESS OF HANDING OVER H IS BUSINESS TO HIS BROTHER , MR. VINOD SANGOI. SINCE THE ASSESSEE WAS UNDER BONAFIDE PRESUMPTION THAT THE SAID ACCOUNT HAS ALSO BEEN HANDED OVER TO HIS BROTHER, THEREFORE, HE DID NOT EXAMINE MR. SUNIL V. SANGOI 11 THE CASH DEPOSITS MADE IN THE VARIOUS ASSESSMENT YEARS. THE AMOUNT WAS , THEREFORE, SURRENDERED ONLY TO BUY PEACE AND AVOID ANY FURTHER LITIGATION. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE PROVISIONS O F EXPLANATION 5 TO SECT ION 271(1)(C) IS NOT APPLICABLE QUA THIS ADDITION ON ACCOUNT OF SURRENDER, AS HE HAS SATISFIED THE NECESSARY CONDITIONS FOR GETTING THE BENEFIT UNDER EXPLANATION 5 . HOWEVER, WE FIND THAT SIMILAR EXPLANATION GIVEN BY THE ASSESSEE IN THE SUBSEQUENT YEARS , WH EREIN SIMILAR KIND OF DEPOSITS WERE FOUND AND WERE SURRENDERED AT THE TIME OF SEARCH , T HE TRIBUNAL HAS DEALT THE ASSESSEES EXPLANATION IN DETAIL AND HAS CONFIRMED THE PENALTY. SINCE SIMILAR FACTS ARE PERMEATING IN THIS YEAR ALSO, THE SAID FINDING WILL APP LY MUTATIS MUTANDIS IN THIS YEAR ALSO QUA THE AMOUNT OF SURRENDER AND, THEREFORE, WE CONFIRM THE LEVY OF PENALTY ON THE ADDITION OF ` 3,04,500, WHICH WAS DECLARED DURING THE COURSE OF SEARCH UNDER SECTION 132(4). 11 . WITH REGARD TO THE EXPLANATION ON THE UNE XPLAINED CREDIT ENTRIES IN THE BANK ACCOUNT WHICH HAS BEEN ADDED IN SECTION 68, THE ASSESSEES EXPLANATION HAS BEEN THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED A DETAIL REPLY DATED 10 TH DECEMBER 2007 , EXPLAINING THE SOURCE OF THE CREDIT STANDING IN HIS BANK ACCOUNT NUMBER 960006 WITH COSMOS CO OPERATIVE BANK. THE SAID BANK ACCOUNT WAS DISCLOSED IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME FROM YEAR TO YEAR. IT WAS FURTHER EXPLAINED THAT THE MR. SUNIL V. SANGOI 12 ASSESSEE WAS CARRYIN G OUT HIS CATERING BUSINESS FROM A GARAGE PREMISE TAKEN ON LEASE. DUE TO FLOOD IN MUMBAI IN JUL Y 200 5 , ALL THE OLD RECORDS KEPT BY THE ASSESSEE FOR ITS BUSINESS PURPOSE WERE FULLY DESTROYED AND, THEREFORE, THE ASSESSEE COULD NOT ESTABLISH THE EXACT NATURE OF CREDIT ENTRIES APPEARING IN THE BANK ACCOUNT. FURTHER, THE DATA PERTAINED TO THE FINANCIAL YEAR 1999 2000, THEREFORE, THE EXPLANATION ON THE SOURCE OF CREDITS WERE GIVEN BASED ON CIRCUMSTANTIAL EVIDENCE S. THE RECONCILIA TION WAS MADE IN THE FOLLOWING MA NNER: NATURE OF CREDITS AMOUNT AMOUNT NET CASH DEPOSITED CREDIT FOR CASH WITHDRAWN IN DECEMBER 1999 BY CHEQUE NO.003 ` 80,000 LOAN RECEIVED DEPOSITED ON 28.6.1999 A ) VINOD SANGOI B ) MANSUKH GALA C ) RAJAN GALA D ) JAYAWANTIBEN CHHEDA ` 1,00,000 ` 50,000 ` 55,0 00 ` 50,000 ` 2,55,000 REPAYMENT OF TRADE DEPOSIT PAID TO INDIAN EDUCATION SOCIETY MANAGEMENT CHARGES RECEIVED AS PER INCOME & EXPENDITURE A/C ` 5,16,130 BALANCE ` 6,68,703 12 . BESIDES THIS, IT WAS ALSO EXPLAINED THAT THE ASSESSEE HAS ALSO SOLD TWO M OTORCARS ( OWNED BY THE ASSESSEE ), DURING THE RELEVANT FINANCIAL YEAR, THE WDV OF THE SAID CARS WAS SHOWN IN THE BALANCE SHEET AS ON 31 ST MARCH 1999, AMOUNTING TO ` 8,85,479. THE SALE PROCEEDS WERE MR. SUNIL V. SANGOI 13 DEPOSITED IN THE SAID BANK ONLY. APART FROM THAT, THERE WER E CERTAIN DEPOSITS IN THE FORM OF MATURITY PROCEEDINGS FROM LIC. THUS, THESE FUNDS WERE SUFFICIENT TO COVER THE AGGREGATE ENTRIES OF ` 7,58,233. THOUGH SUCH AN ADDITION HAS BEEN CONFIRMED IN THE QUANTUM PROCEEDINGS UP TO THE STAGE OF THE TRIBUNAL , SOLELY O N THE GROUND THAT T HE ASSESSEE HAS NOT FURNISHED FULL AND COMPLETE EVIDENCE WITH REGARD TO SUCH RECONCILIATION. HOWEVER, THIS EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE BY THE AUTHORITIES BELOW , IN THE COURSE OF PENALTY PROCEEDINGS. UN DER T HE FACTS AND CIRCUMSTANCES AND THE E XPLANATION GIVEN BY THE ASSESSEE WITH REGARD TO THE SOURCE OF CREDIT ENTRIES IN THE BANK ACCOUNT, WE FIND THAT THERE IS A PREPONDERANCE OF PROBABILITY WITH REGARD TO THE RECONCILIATION , BECAUSE, FIRSTLY, THE NATURE OF CR EDIT FOR SUMS AGGREGATING TO ` 6,68,703, IS BASED ON THE PRIMARY EVIDENCE LIKE WITHDRAWAL OF CASH THROUGH CHEQUE, LOAN RECEIVED FROM VARIOUS PERSONS, REPAYMENT OF TRADE DEPOSITS PAID TO INDIAN EDUCATION SOCIETY AND MANAGEMENT CHARGES RECEIVED AND SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT. THUS, THE SOURCE OF CREDITS ARE EITHER THROUGH BANKING CHANNEL OR HAS BEEN SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT. SECONDLY, THE CARS WHICH HAS BEEN ALLEGED TO BE SOLD IN THIS YEAR, IS PART OF THE ASSETS SHOWN IN TH E BALANCE SHEET AND THE SAID ASSET IS NOT APPEARING IN THE SUBSEQUENT YEAR, THEREFORE, THE NORMAL PRESUMPTION WOULD BE THAT THE ASSESSEE MUST HAVE SOLD HIS CAR AND THE MR. SUNIL V. SANGOI 14 SALE PROCEEDS MUST BE AVAILABLE WITHIN THE ASSESSEE, WHICH COULD HAVE BEEN DEPOSITED IN THE BANK ACCOUNT. LASTLY, TH I S PROBABLE EXPLANATION HAS NOT BEEN REBUTTED OR FOUND TO BE FALSE IN THE PENALTY PROCEEDINGS , AS STATED IN OUR EARLIER PART OF THE FINDINGS . A DISTINCTION HAS TO BE MADE BETWEEN THE ADDITION MADE ON THE GROUND OF LACK OF CORR OBORATIVE EVIDENCE IN THE QUANTUM PROCEEDINGS AND PLAUSIBLE EXPLANATION IN THE PENALTY PROCEEDINGS, WHICH HAS BEEN SUBSTANTIATED BY WAY OF PRIMA FACIE RECORDS AND HAS NOT BEEN FOUND TO BE FALSE. THE EXPLANATION 1 RAISES A REBUTTABLE PRESUMPTION AND ONUS KE EPS ON SHIFTING. ONCE THE ASSESSEE HAS GIVEN THE EXPLANATION , WHICH ON THE FACTS OF THE CASE IS PROBABLE EXPLANATION AND ALSO SUBSTANTIATES PRIMA FACIE FROM MATERIAL ON RECORD AND OTHER ATTENDANT FACTS, THEN THE ONUS SHIFTS UPON THE ASSESSING OFFICER TO SH OW THAT SUCH AN EXPLANATION IS FALSE OR NOT BONAFIDE AND THEN ONLY THE ASSESSING OFFICER CAN PROCEED TO LEVY THE PENALTY. IN THE PRESENT CASE, AFTER THE ASSESSEES EXPLANATION, NEITHER THE ASSESSING OFFICER NOR THE LEARNED COMMISSIONER (APPEALS) HAS BEEN A BLE TO REBUT THE ASSESSEES EXPLANATION AS FALSE AND, THEREFORE, THE PENALTY LEVIED ON THIS SCORE IS UNWARRANTED. THUS, WE ARE OF THE OPINION THAT INSOFAR AS THE LEVY OF PENALTY ON ACCOUNT OF ADDITION OF ` 7,58,233 MADE ON ACCOUNT OF CREDIT APPEARING IN TH E BANK ACCOUNT, PENALTY UNDER SECTION 271(1)(C) CANNOT BE CONFIRMED. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER MR. SUNIL V. SANGOI 15 (APPEALS) AND DELETE THE PENALTY LEVIED ON SUMS AGGREGATING TO ` 7,58,234. 13 . THUS, IN THE RESULT, THE PENAL TY UNDER SECTION 271(1)(C) IS CONFIRMED ON THE ADDITION OF ` 3,04,500 AND PENALTY IS DELETED ON THE ADDITION OF ` 7,58,234. 14 . 1 3 . IN THE RESULT, ASSESSEES APPEAL PARTLY IS ALLOWED. 11 TH JUNE 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 11 TH JUNE 2014 SD/ - SANJAY ARORA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 11 TH JUNE 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWD HURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI