ASST CIT CEN CIR 47, MUMBAI V. BHARAT RUIA HUF, MUMBAI

ITA 950/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8595 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 18-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2014
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Business income; Income from undisclosed sources; Opportunity of cross examination; Revised return
• Section: 143(3); 153A; 133(6); 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO. 949 TO 952 /MUM/2014 (ASSESSMENT YEARS: 2005-06, 2006-07, 2007-08 & 2008 -09) ACIT, CENT.CIR.47, MUMBAI BHARAT RUIA, HUF PROP P.R. INTERNATIONAL, RUIA HOUSE, 19, BHAUSAHEB HIRE MARG, MALBAR HILL, MUMBAI-6 PAN : AACHB3596E (APPELLANT) (RESPONDENT) I.T.A. NO. 750 TO 753/MUM/2014 (ASSESSMENT YEARS: 2005-06, 2006-07, 2007-08 & 2008 -09) BHARAT RUIA, HUF PROP P.R. INTERNATIONAL, RUIA HOUSE, 19, BHAUSAHEB HIRE MARG, MALBAR HILL, MUMBAI-6 ACIT, CENT.CIR.47, MUMBAI PAN : AACHB3596E (APPELLANT) (RESPONDENT) ASSESSEE BY NONE REVENUE BY SHRI SUMAN KUMAR DATE OF HEARING : 11-01-2017 DATE OF ORDER : 08-02-2017 O R D E R PER BENCH THESE APPEALS PERTAIN TO SAME ASSESSEE INVOLVING I DENTICAL ISSUES, THEREFORE, THESE WERE HEARD TOGETHER AND ARE DISPOS ED OF BY THIS COMMON ORDER. 2 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 2. IT IS NOTED THAT THESE APPEALS WERE EARLIER FIXED F OR HEARING ON 18-02- 2016 AND THE CASE WAS ADJOURNED AT THE REQUEST OF T HE ASSESSEES COUNSEL, VIDE LETTER DATED 15-02-2016. THE NEXT DATE OF HEA RING WAS FIXED FOR 24- 08-2016. ON THIS DATE ALSO, HEARING WAS ADJOURNED AT THE REQUEST OF THE ASSESSEES COUNSEL VIDE LETTER DATED 24-08-2016. T HE NEXT DATE OF HEARING WAS 11-01-2017. THIS DATE WAS DULY NOTED ON THE AD JOURNMENT LETTER DATED 24-08-2016 BY THE PARTNER OF M/S RAJIV & ASSO CIATES I.E. PERSON PRESENT ON THE DATE OF HEARING ON 24-08-2016. 3. IT IS NOTED THAT AS NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE DATE OF HEARING I.E. 11-01-2017. THUS, IT APPEARS THAT ASSESSEE IS NOT INTERESTED IN REPRESENTING THESE APPEALS. UNDER TH ESE CIRCUMSTANCES, WE HAVE NO OTHER OPTION BUT TO PROCEED EX-PARTE QUA THE ASSESSEE. 4. WE SHALL FIRST TAKE UP APPEAL FOR A.Y. 2005-06 IN I TA NO.750/MUM/2014 FILED BY THE ASSESSEE ON THE FOLLOW ING GROUNDS:- GROUND NO 1:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX, CENT RAL CIRCLE, MUMBAI ERRED IN INITIATING PENALTY PROCEEDINGS AND ERRED IN LEVYING PENALTY ULS 271(1)(C) AMOUNTING TO RS. 45,37,808/-. THE APPELLANT PRAYS THAT THE PENALTY LEVIED MAY KIN DLY BE CANCELLED. GROUND NO 2:- THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX HAS F AILED TO ESTABLISH THAT THE AMOUNTS OFFERED CONSTITUTED THE CONCEALED INCOME OF THE ASSESSEE AND THEREFORE, THE LEVY OF P ENALTY IS ENTIRELY UNJUSTIFIED AS HE HAS MERELY RELIED ON THE OFFER MADE BY THE ASSESSEE TO BUY PEACE. GROUND NO 3:- WITHOUT PREJUDICE TO THE ABOVE IT IS SUBMITTED THAT THE PENALTY IMPOSED IS VOID ABINITIO BECAUSE THE DCIT COULD NOT HAVE BEEN SATISFIED ABOUT THE ASSESSEE HAVING CONCEALED ANY I NCOME AS THE ASSESSEE WAS NOT FOUND TO BE THE OWNER OF ANY I NCOME. GROUND NO 4:- WITHOUT PREJUDICE TO THE ABOVE IT IS SUBMITTED THAT THE PROVISIONS OF THE SECTION 271 AAA (2) & (3) WOULD A PPLY AS 3 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 THE SEARCH WAS CAUSED AFTER THE 1ST DAY OF JUNE, 2007 AND STATEMENT HAS BEEN MADE UNDER SECTION 132(4). HENCE NO PENALTY IS ELIGIBLE UNDER SECTION 271 (1) (C). GROUND NO 5:- THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX HAS I GNORED THE FACTS OF THE CASE, WHICH CLEARLY DEMONSTRATE THAT T HE ASSESSEE HAD VOLUNTARILY AGREED IN THE COURSE OF STATEMENT U NDER SECTION 132(4) TO BE TAXED ON CERTAIN AMOUNTS WITH A VIEW T O AVOID VEXATIOUS LITIGATION AND HAD COOPERATED BY MAKING A STATEMENT THAT HE HAS AGREEABLE TO BEING TAXED ON T HE DISCLOSED AMOUNT. 4. THE BRIEF BACKGROUND AND FACTS OF THE CASE NARRATED IN THE ORDER OF LD. CIT(A) IS REPRODUCED HERE UNDER: A SEARCH & SEIZURE ACTION U/S 132 OF THE ACT WAS C ARRIED OUT AT THE RESIDENCE AND BUSINESS PREMISES OF PHOENIX GROU P ON 20/02/2008 BY DDIT(INV) UNIT-IV(2), MUMBAI. THE PHO ENIX MILLS LTD. (PML), THE FLAGSHIP COMPANY OF THE GROUP WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND DISTRI BUTION OF COTTON TEXTILES AND ALSO IN THE BUSINESS OF REAL ES TATE DEVELOPMENT. PHOENIX MILLS LTD. GROUP WAS CONTROLLED AND MANAGED BY RUIA FAMILY. HENCE, THE BUSINESS CONCERNS AND THE RESIDE NCES OF THE RUIA WAS ALSO COVERED U/S 132/133A OF THE ACT. AN O RDER U /S 153A RWS 143(3) OF THE ACT DATED 29.12.2010 WAS PASSED I N THE CASE OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, ADDITIONS WERE MADE ON THE FOLLOWING ISSUES AND PEN ALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT WERE INITIAT ED; (I) UNEXPLAINED CASH DEPOSITS IN ACCOUNT OF M/S PH ULCHAND SONS INVESTMENT AMOUNTING TO RS.99,28,000/- [DISCLO SED DURING SEARCH IN STATEMENT U/S132(4)], (II) UNACCOUNTED CASH DEPOSITS IN THE ACCOUNTS OF T HE EMPLOYEES BY THE KARTA OF THE BHARAT RUIA (HUF) AMOUNTING TO RS, 36,42,000/- (NOT DISCLOSED DURING SEARCH , HOWEVER, DETECTED IN ASSESSMENT PROCEEDINGS). THE EMPLOYEE ACCOUNTS USED BY MR. BH ARAT RUIA, KARTA OF THE ASSESSEE HUF ARE AS UNDER:- SR.NO NAME OF THE PERSON BANK ENTITY NAME BANK A/C NO. CASH DEPOSIT 4 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 1. RAJESH SHARMA DENA BANK AKASH SECURITIES 125661 44,99,500 2 VINOD KODE CORPORATION BANK VINOD ENTERPRISES 073 2,25,72,542 3 GEE VERGESH DENA BANK MAYANK GOEL 125662 67,90,000 4 RAJESH SHARMA CORPORATION BANK PHULCHAND SONS INVESTMENT CA053 99,28,000 THE AMOUNTS WERE DEPOSITED IN THE ACCOUNTS OVER DIF FERENT PERIODS AS DISCUSSED IN THE PENALTY ORDER. THE ENTRIES AT SR NO.1 TO 3 WERE DISCOVERED DURING THE ASSESSMENT WHEREAS THE ENTRY NO.4 WAS DISCLOSED BY THE ASSESSEE AT THE TIME OF SEARCH ACT ION. ALTHOUGH THE ASSESSEE DISCLOSED THE AMOUNT OF UNDISCLOSED INCOME IN SEARCH (ISSUE NO-(I) FOR RS.99,28,000L-), THE PENALTY PROCEEDINGS WERE INITIATED BY THE AO ON THE GROUND THAT THE ASSESSEE WOULD NOT HAVE DISCLOSED THE INCOME IN ABSENCE OF SEARCH. THE OTHER AMOUNT (ISSUE NO-(II)) OF RS.36,42,000/- WAS DETECTED DURING THE ASSESSMENT PROCEEDINGS AND THEREFORE, THE PENAL TY PROCEEDINGS WERE INITIATED BY THE AO ON THE GROUND THAT THE ASSESSEE FAILED TO DISCLOSE THE SAID AMOUNT IN THE RETURN OF INCOME. SUBSEQUENTLY, PENALTY ORDER U/S 271(1)C) OF THE ACT WAS PASSED IN THE APPELLANTS CASE FOR AY 2005-06 ON 30.6.2011 LEVYING PENALTY OF RS.90,75,616/-. IN THE PENALTY ORDER, T HE AO DISCUSSED THE BASIS OF THE DISCLOSURE AND THE BASIS OF ADDITI ON ON THE ABOVE ISSUES IN THE SEARCH ASSESSMENT COMPLETED. IN RESPE CT OF THE DISCLOSURE OF RS 99,28,000/- MADE BY THE ASSESSEE, IT WAS STATED BY THE AO THAT DURING THE COURSE OF SEARCH ACTION, A S TATEMENT U/S 132(4) OF THE ACT WAS RECORDED OF MR. RAJESH SHARMA, EMPLOYEE ON OATH. IN THE STATEMENT, MR. SHARMA EXPLAINED THE MODUS OPERANDI USED BY MR BHARAT R. RUIA. WHILE MR. BHARA T R. RUIA WAS CONFRONTED WITH THE STATEMENT OF MR. RAJESH SHARMA, THE ASSESSEE MADE A DISCLOSURE OF RS.9928000/- AND ADHE RED TO THE SAME IN THE RETURN FILED U/S 153A OF THE ACT. IN R ESPECT OF ADDITION OF RS.36,42,000/-, THE AO STATED THAT SHRI BHARAT R RUIA WAS ENGAGED IN DEALING IN SHARES IN THE NAME OF HIS EMPLOYEES. TO INVESTIGATE THE ISSUE A STATEMENT ON OATH OF MR. RA JESH SHARMA, AN EMPLOYEE OF MR BHARAT RUIA, WAS RECORDED ON 19.3.20 08 AT THE TIME 5 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 OF OPERATION OF PROHIBITORY ORDER AT CORPORATE OFFI CE OF M/S. PHOENIX MILLS LTD. AT 162, SENAPATI BAPAT MARG, LOWER PAREL , MUMBAI. MR. RAJESH SHARMA ALSO STATED IN HIS STATEMENT THAT TWO BANK ACCOUNTS, ONE CURRENT BANK ACCOUNT NO 073 IN CORPORATION BANK , LOWER PAREL BRANCH, MUMBAI AND SECOND CURRENT BANK ACCOUNT NO 1 25662, DENA RANK, LOWER PAREL BRANCH, MUMBAI ARE BENAMI BA NK ACCOUNTS OF SHRI BHARAT RUIA. THESE ACCOUNTS WERE O PENED BY SHRI BHARAT R. RUIA IN THE NAME OF M/S. VINOD ENTERPRISE S AND M/S MAYANK GOEL. THUS, IT IS EVIDENT THAT SHRI B.R. RUI A WAS HAVING NUMBER OF BANK ACCOUNTS. THESE ACCOUNTS WERE EFFECT IVELY CONTROLLED AND MANAGED BY SHRI BHARAT R. RUIA ONLY. THEREFORE, THE TRANSACTIONS REFLECTED IN SUCH BANK ACCOUNTS AN D DEMAT ACCOUNTS PERTAIN TO HIM. SHRI BHARAT R. RUIA WAS CONFRONTED WITH ABOVE MENTIONED STATEMENT OF MR. RAJESH SHARMA ON 1 6.4.2008. WHEN QUESTIONED SPECIFICALLY, SHRI BHARAT R. RULA A CCEPTED IN HIS STATEMENT U/S 132(4) OF THE ACT RECORDED ON 16.4.20 08 THAT M/S. RAJESH INVESTMENT AND M/S PHULCHAND SONS INVESTMENT WERE TWO CONCERNS, WHICH WERE OPERATED BY HIM ONLY THROU GH HIS EMPLOYEE, SHRI RAJESH SHARMA. THE ASSESSEE MADE CER TAIN DISCLOSURE DURING THE SEARCH PROCEEDINGS. THE DETAILS OF WHICH WERE REPRODUCED IN THE PENALTY ORDER ARE AS UNDER: SR.NO. A.Y. AMOUNT PARTICULARS 1 2005-06 99,28,000 CASH DEPOSITS IN THE ACCOUNTS OF M/S PHULCHAND SONS INVESTMENT 1 2007-08 6,54,70,275 SHARE TRADING LOSS THROUGH RAJESH INVESTMENTS 2 2007-08 30,96,263 INCOME FROM SHARE TRANSACTIONS IN THE ACCOUNT OF M/S PHULCHAND SONS INVESTMENT THE OTHER BANK ACCOUNTS WERE NOT EXPLAINED BY THE A SSESSEE DURING SEARCH PROCEEDINGS. THE AO ISSUED NOTICES TO THE BA NKS FOR PROVIDING THE COPIES OF BANK STATEMENTS AND BANK AC COUNT OPENING FORMS ETC. THE VERIFICATION OF THESE ACCOUN TS SUGGESTED THAT THE CASH WAS DEPOSITED INTO THE ACCOUNTS. THE THREE PERSONS NAMELY MR. GEE VERGESH, M. VINOD KODE & MR. RAJESH SHARMA 6 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 WERE REQUIRED TO PRESENT THEMSELVES BEFORE THE AO, BUT NO PERSON ATTENDED. THE AR OF THE ASSESSEE INFORMED THAT THE PERSONS HAD LEFT THE COMPANY. DURING THE ASSESSMENT PROCEEDINGS, A SHOW CAUSE WAS ISSUED TO APPELLANT REQUIRING TO EXPLAIN THE CA SH DEPOSITS WHICH ARE AS FOLLOWS: SR NO. NAME OF THE PERSON BANK ENTITY NAME BANK A/C CASH DEPOSIT 1 RAJESH SHARMA DENA BANK AKASH SECURITIES 12561 44,99,500 2 VINOD KODE CORPORATION BANK VINOD ENTERPRISES 073 2,25,71,542 3 GEE VERGESH DENA BANK MAYANK GOEL 125662 67,90,000 IN REPLY, THE ASSESSEE SUBMITTED THAT MR RAJESH SHA RMA WAS AN EMPLOYEE OF THE ASSESSEE COMPANY AND THE OTHER T WO PERSONS WERE NOT RELATED TO THE ASSESSEE. IT WAS FURTHER SU BMITTED THAT THE BANK ACCOUNTS STANDING IN THE NAME OF SHRI RAJE SH SHARMA WERE NOT RELATED TO THE ASSESSEE AND THE ASSESSEE A LREADY OFFERED THE TRANSACTIONS IN CASE OF M/S. RAJESH INV ESTMENTS AND M/S. PHULCHAND SONS INVESTMENT AT THE TIME OF SEARC H AS THESE WERE ACCEPTED TO BE OPERATED BY THE ASSESSEE. HOWEV ER, THE ASSESSEE OFFERED THE FOLLOWING AMOUNTS IN RESPECT O F THE ABOVE TRANSACTIONS WITHOUT PREJUDICE TO THE CONTENTION TH AT THEY DID NOT RELATE TO THE ASSESSEE AND IN ORDER TO AVOID PROLON GED LITIGATION AND TO BUY MENTAL PEACE WITH AN UNDERSTANDING THAT NO P ENALTY WILL BE INITIATED / LEVIED: ASSESSMENT YEAR MAYANK GOEL AKASH SECURITIES VINOD ENTERPRISES 2005-06 5,000 5,000 36,32,000 2006-07 67,85,000 44,94,500 1,37,75,555 2007-08 -- -- -- 2008-09 -- -- 51,63,987 TOTAL 67,90,000 44,99,500 2,25,71,542 SHARMA REFERRED TO ALL THE BANK ACCOUNTS IN WHICH, CASH WAS DEPOSITED. AS A RESULT OF THE SAME, SHRI BHARAT RUI A MADE CERTAIN DISCLOSURES IN THE RESPECTIVE ASSESSMENT YEARS 7 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 THE AO DID NOT ACCEPT THE SUBMISSION OF THE ASSESSE E FOR THE FOLLOWING REASONS:- (I) DURING THE COURSE OF SEARCH ACTION, STATEMENT OF MR . RAJESH SHARMA WAS RECORDED UNDER OATH U/S 132(4) OF THE AC T, WHICH WAS ALSO CONFRONTED WITH MR. BHARAT RUIA, KARTA OF HUF DURING THE SEARCH PROCEEDINGS WHEREIN MR. RAJESH SHARMA RE FERRED TO ALL THE BANK ACCOUNTS IN WHICH CASH WAS DEPOSITED. AS A RESULT OF THE SAME, SHRI BHARAT RUIA MADE CERTAIN DISCLOSURES IN THE RESPECTIVE ASSESSMENT YEARS. (II) THE BANK ACCOUNT STATEMENTS OF THE THREE ACCOUNTS W ERE NOT AVAILABLE AT THE TIME OF SEARCH WHICH WERE OBTAINED U/S 133(6) OF THE ACT DURING THE ASSESSMENT PROCEEDINGS. (III) THE REQUEST TO CALL FOR CROSS EXAMINATION WAS REJEC TED BY THE A.O ON THE GROUND THAT THE ASSESSEE DID NOT RAISE ANY O BJECTION TO THE STATEMENT OF SHRI RAJESH SHARMA, WHICH WAS ALREADY CONFRONTED TO THE ASSESSEE AT THE TIME OF SEARCH. IT WAS THE ONUS OF THE ASSESSEE TO SHOW AS TO HOW THE STATEMEN T OF MR. SHARMA, THE EMPLOYEE WAS WRONG IF IT WAS SO, AS THE ASSESSEE WAS ALSO ACCORDED AN OPPORTUNITY PRODUCE MR. SHARMA, WHO WAS EMPLOYED WITH THE ASSESSEE. THE ASSESSEE, HOWEVER, ACCEPTED THE CASH DEPOSITS IN 'THE BANK ACCOUNTS AS UNDISCLO SED BUSINESS INCOME IN VIEW OF THE ABOVE, THE AO ADDED THE CASH DEPOSIT S IN RESPECTIVE ASSESSMENT YEARS AS UNDISCLOSED INCOME OF THE ASSES SEE. FOR THE YEAR UNDER CONSIDERATION, THE ADDITION ON THIS COUNT WAS RS 36,42,000/-. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE WAS AS KED TO EXPLAIN AS TO WHY PENALTY U/S 271(1)(C) OF THE ACT SHOULD N OT BE LEVIED. IN REPLY, THE ASSESSEE SUBMITTED IN RESPECT OF UNDISCL OSED INCOME OF RS 99,28,000/- THAT THE SAME WAS OFFERED BY THE ASSESS EE IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT UNDER THE HEAD INCOME FROM BUSINESS OVER AND ABOVE THE NORMAL PROFIT DERIVED F ROM PROFIT & LOSS ACCOUNT, ON WHICH DUE TAXES WERE PAID. IT WAS, THER EFORE, CONTENDED THAT THE ASSESSEE SHOULD NOT BE PENALIZED UNDER THE PROVISIONS OF SECTION 271(L)(C) OF THE ACT. WITH RE SPECT TO THE OTHER ISSUE OF ADDITION OF RS 36,42,000/-, THE ASSESSEE S UBMITTED THAT THE ACCOUNTS IN WHICH CASH DEPOSITS WERE FOUND DID NOT BELONG TO THE ASSESSEE AND THE ASSESSEE WAS NOT CONTROLLING T HESE ACCOUNTS. HOWEVER, THE ASSESSEE ACCEPTED THESE DEPO SITS 8 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 UNDER PROTEST AND TO BUY PEACE OF MIND AND AVOID FU RTHER LITIGATION UNDER AN UNDERSTANDING THAT PENALTY PROVISIONS WOUL D NOT BE INVOKED AS THE INCOME WAS BEING ACCEPTED UNDER PROTEST AND WITHOUT PREJUDICE TO THE FACT THAT THE CASH DEPOSITS DID NO T BELONG TO THE ASSESSEE. THE ASSESSEE ALSO SUBMITTED THAT THE PROV ISIONS OF SECTION 271(1)(C) OF THE ACT WILL HAVE TO BE READ WITH SECT ION 271AAA OF THE ACT AND INTENTION OF SECTION 271AAA OF THE ACT SHOU LD BE CONSIDERED. THE A.O DID NOT ACCEPT THE SUBMISSIONS OF THE ASSES SEE FOR THE FOLLOWING REASONS: (I) THE SEARCH WAS CONDUCTED ON 20.2.2008. THE FINANCIA L YEAR WITH RESPECT TO THE AMOUNT OF RS. 99,28,000/- IS 2004-05 THUS, THE ASSESSEE HAD NO INTENTION TO DISCLOSE THE AMOUNT. T HE DETECTION 01 CASH DEPOSITS IN THE ACCOUNT OF THE EMPLOYEE CAM E TO LIGHT ONLY AFTER SEARCH ACTION. THEREFORE, IT IS NOT A VOLUNTA RY COMPLIANCE OF THE ASSESSEE. THE DISCLOSURE U/S. 132(4) OF THE ACT, TH EREFORE, HAS NO CHARACTER OF VOLUNTARY DISCLOSURE. (II) THE CASH DEPOSITS IN THE BANK ACCOUNT OF THE EMPLOY EE SHRI RAJESH SHARMA WERE SUBSTANTIATED BY SHRI RAJESH SHARMA HIMSELF UNDER OATH U/S 132(4) OF THE ACT THAT THE SAME WERE DEPOSITED IN THE BANK ACCOUNT WHICH WAS OPENED AND OPERATED BY BHARAT RUIA (HUF). (III) SHRI RAJESH SHARMA, IN HIS STATEMENT U/S 132(4) OF THE ACT REVEALED THAT THERE WERE OTHER BANK ACCOUNTS OF VINOD KODE A ND GEE VARGHESE IN HIS STATEMENT. (IV) THE TRANSACTIONS IN THE BANK ACCOUNT OF SHNI VINOD KODE AND GEE VARGHESE WERE DETECTED BY THE ENQUIRY MADE BY THE AO AND NOT BY THE VOLUNTARY DISCLOSURE OF THE ASSESSEE, (V) THE QUESTION RAISED BY THE ASSESSEE TO CROSS EXAMIN E SHRI VINOD KODE AND SHRI GEE VARGHESE CARRIES NO WEIGHT BECAUS E THE DEPARTMENT HAD SHOWN THE BANK ACCOUNT COPY OF THESE PERSONS AND ISSUED SHOW CAUSE WHY THE AMOUNTS CONTAINED IN THE BANK ACCOUNT NOT BE TREATED AS THE ASSESSEE T S INCOME THE ASSESSEE DID NOT PRODUCE VINOD KODE OR GEE VARGHESE ALTHOUGH THEY WE RE EMPLOYED WITH HIM. (VI) THE ASSESSEE DEPOSITED HIS UNACCOUNTED CASH AMOUNTI NG TO RS. 99,28,000/- IN THE ACCOUNT OF M/S. PHULCHAND SONS I NVESTMENT, IN ORDER TO AVOID ITS OWN TAX LIABILITY, (VII) THE ADDITIONS TO THE TOTAL INCOME IN THE ASSESSMENT WERE MADE ON THE BASIS OF THE STATEMENT U/S 132(4) AND ON THE SP ECIFIC FINDINGS AND QUANTIFICATION OF THE CONCEALED INCOME THE QUANTIFI CATION WAS PURELY 9 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 BASED ON THE CRYSTAL CLEAR FACTS THAT THE BANK STATEMENTS WERE OBTAINED AND CASH DEPOSITS WERE QUANTIFIED- (VIII) THERE HAD BEEN DELIBERATE ATTEMPT ON THE PART OF TH E ASSESSEE TO DEPOSIT CASH INTO THESE ACCOUNTS. THE ASSESSEE ALSO ADMITTED TO HAVE UTILIZED THE ACCOUNTS FOR THE PURPOSE OF BOOKING BO GUS LOSSES INTO TRADING ACCOUNT, THE STATEMENT DATED 16.4.2005 OF M R BHARAT RUIA STATES AT ANSWER NO.9 THAT 'THIS LOSS HAD BEEN BOOK ED BY NON GENUINE OFT MARKET TRANSACTIONS BETWEEN R.R INTERNA TIONAL & M/S RAJESH INVESTMENTS AS PER PRE-DEFINED ARRANGEMENT, THIS PROVES THAT THE ASSESSEE DELIBERATELY AND WILLFULLY RESORTED TO TAX EVASION, (IX) THE BANK ACCOUNTS OPENED IN THE NAME OF THE EMPLOYE E WERE INTRODUCED BY ANOTHER EMPLOYEE FOR E.G. THE ACCOUNT OF VINOD ENTERPRISES AT CORPORATION BANK WAS INTRODUCED BY M /S PHULCHAND SONS INVESTMENT THE ASSESSEE COULD NOT PROVE HOW TH E CASH DID NOT BELONG TO HIM WHICH WAS DEPOSITED IN THESE ACCOUNTS. (X) THE CASH WAS DEPOSITED INTO THESE ACCOUNTS OVER A P ERIOD OF AYRS.2005-03 TO 200-09, THUS THERE WAS CONTINUOUS AND REPEATED ATTEMPT ON THE PART OF THE ASSESSEE TO DEFRAUD THE REVENUE. (XI) THE ASSESSEE'S EXPLANATION DURING THE COURSE OF PEN ALTY PROCEEDINGS HAD NO STRENGTH BECAUSE THE EXPLANATION RELATES TO SECTION 271AAA WHEREAS THE PENALTY LEVIABLE RELATES TO SECTION 271(1)(C) OF THE ACT. THEREFORE, THE AO LEVIED PENALTY U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS.90,75,316/- @ 200% OF THE TAX SOUGHT TO BE EV ADED. 5. IN THE APPEAL ORDER, LD. CIT(A) HAS NOTED THAT D ETAILED SUBMISSIONS WERE MADE TO CHALLENGE THE LEVY OF PENA LTY AMOUNTING TO RS.90,75,616 LEVIED @200% OF THE TAX SOUGHT TO BE E VADED BY THE ASSESSEE. IT WAS SUBMITTED THAT LEVY OF PENALTY @2 00% IS NOT JUSTIFIED AT ALL AS NO CONCEALMENT WAS DONE BY THE ASSESSEE. TH EREFORE, WITHOUT PREJUDICE TO OTHER SUBMISSIONS, IT SHOULD BE REDUCE D TO 100%. THEREAFTER IT WAS ALSO SUBMITTED AT LENGTH THAT LEVY OF PENALT Y IS NOT JUSTIFIED AT ALL AND IT SHOULD BE DELETED. THE ASSESSEE MADE DETAIL ED SUBMISSIONS TO ARGUE ON THE POINT THAT PERUSAL OF STATEMENTS RECOR DED OF THE ASSESSEE AND SHRI RAJESH SHARMA WOULD REVEAL THAT THERE ARE MANY GAPS IN THE 10 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 STATEMENTS, AND THEREFORE, NO CONCEALED INCOME COUL D BE PROVED BEYOND DOUBT. THEREFORE, LEVY OF PENALTY WAS HIGHLY UNJUS TIFIED. 6. THE ASSESSEE FURTHER SUBMITTED THAT THAT HE HAD VOLUNTARILY MADE THE DISCLOSURE OF RS.99,28,000/- EVEN THOUGH NO INC RIMINATING MATERIAL WAS FOUND DURING THE SEARCH PROCEEDINGS AND THE DEP ARTMENTAL HEAVILY RELIED ON SUCH DECLARATIONS MADE BY THE APP ELLANT TO MAKE ADDITIONS IN THE ASSESSMENT ORDER PASSED ULS.143(3) R.W.S. 153A OF THE ACT, THE DEPARTMENT HAS NO CORROBORATIVE I CLINCHING EVIDENCE BY WAY OF SEIZED MATERIAL TO PROVE THAT SUCH INCOMES WERE CONCEALED BY THE ASSESSEE AND THE AO IS SIMPLY OF THE VIEW THAT THE SAME WAS UNEARTHED ONLY TO DUE TO SEARCH PROCEEDINGS AND HENCE PENALTY MUST BE LEVIED. THE ASSESSEE RELIED UPON THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF CIT VS. KHODAY ESWARSA AND SONS 83 ITR 69. WITH REGARD TO THE PENALTY ON THE ADDITIONS MADE IN THE ASSESSMENT PROCEEDINGS, THE IT WAS SUBMITTED THAT HE HAD ENTERED INTO TRANSACTIONS WITH M/S.VINOD ENTERPRISES AND MR. MAYAN GOEL AND THE ASSESSEE HAD DEBIT BALANCES I.E. MONEY RECEIVABLE FROM THE AFORESAID PARTIES. THE A SSESSEE SUBMITTED THAT EVEN IF IT IS BELIEVED THAT THE ALLEGED BANK ACCOUNTS IN WHICH CASH DEPOSITS WERE MADE OF THE ABOVE CONCERNS WERE ACTUA LLY OF THE ASSESSEE, THEN THE MONEY DEPOSITED IN THESE ACCOUNTS SHOULD NOT HAVE BEEN TAXED, AS IT IS ONLY THE EARLIER DEBIT BA LANCE WHICH IS NOW GETTING SQUARED-UP. THE ASSESSEE THEREFORE SUBMITTED THAT WITH NO EVIDENCE WAS AVAILABLE TO SUGGEST ANY CONCEALMENT O F INCOME, THE LEVY OF PENALTY WAS NOT JUSTIFIED. 7. LD.CIT(A) CONSIDERED ALL THE SUBMISSIONS OF THE ASS ESSEE AND ALSO CONSIDERED THE ORDERS PASSED BY THE AO, I.E. ASSESS MENT ORDER AS WELL AS PENALTY ORDER AND THEREAFTER IT WAS CONCLUDED BY HI M THAT LEVY OF PENALTY 11 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 BY THE AO WAS JUSTIFIED. BUT HE REDUCED THE PENALT Y FROM 200% TO 100%. RELEVANT PART OF ORDER OF LD. CIT(A) IS REPR ODUCED HEREUNDER:- 9.0 I HAVE CAREFULLY EXAMINED THE FACTS OF THE CA SE, THE STAND TAKEN BY THE ASSESSING OFFICER IN THE PENALTY ORDER, THE GROUNDS OF APPEAL AND THE WRITTEN SUBMISSIONS FILED BY THE A P PELLANT DURING THE APPEAL PROCEEDINGS. 9.1 DURING THE A.Y.2005-06, THE APPELLANT HAS ADMITTED UNDISCLOSED INCOME OF RS.9928,000/- IN THE STATEMENT RECORDED UIS.132(4) OF THE ACT AND FOLLOW ED IT BY DISCLOSING THE SAME IN THE RETURN OF INCOME FILED I N RESPONSE TO NOTICE ULS.153A OF THE ACT. THE ADMISSION OF UNDISC LOSED INCOME BY THE APPELLANT IS THE OUTCOME OF ACTION U/ S. 132 OF THE ACT. THE STATEMENT RECORDED FROM MR,RAJESH SHAR MA, THE EMPLOYEE OF MR.BHRAT RUIA EVIDENCES THAT THE APPELLANT (KARIA OF HUF) WAS DEALING IN SHARES IN THE NAMES OF HIS E MPLOYEES. DURING THE COURSE OF SEARCH MANY BANK ACCOUNTS AND HUGE DEPOSITS IN THESE BANK ACCOUNTS WERE DISCOVERED. IT WAS ALSO DETECTED THAT MR. BHARAT R. RUIA HAS BEEN OPERATING CERTAIN DEMAT ACCOUNTS ONLY WITH A VIEW TO CREATE BOGUS LOSSES IN THE BOOKS OF ACCOUNT OF M/S. BR. INTERNATIONAL, A PROPR IETARY CONCERN OF MR.BHARAT R RUIA. THE RELEVANT STATEMENT RECORDED FROM MR. RAJESH SHARMA IS REPRODUCED AS UNDER FOR CONVENIENCE: Q4: SINCE, WHEN YOU ARE WORKING IN M/S. B.R. INTERNATIONAL? MS. I AM WORKING IN THE FIRM M/S. B.R.INTERNATIONAL , FOR THE LAST SIX YEARS. Q.5: DURING THE COURSE OF SEARCH ACTION, IT HAS BEE N FOUND THAT THERE ARE TWO BANK ACCOUNTS, IN THE NAME OF M/S.RAJESH INVESTMENT (ACCOUNT NO.C8CA 229) AND M/S.PHULCHAND SONS INVESTMENTS (ACCOUNT NO. CA 053) IN CORPORATION BANK, PHOENIX MILLS COMPOUND, LOWER PAR EL, MUMBAI. THERE ARE SIGNIFICANT CASH DEPOSITS IN THO SE HONK ACCOUNTS, WHEREAS YOU HAVE STATED THAT YOUR MA IN SOURCE OF INCOME IS FROM SALARY AND SAVING BANK ACC OUNT INTEREST. PLEASE EXPLAIN FOR WHAT PURPOSE THESE ACC OUNTS HAVE BEEN OPENED AND WHAT KIND OF TRANSACTIONS WERE CARR IED OUT THROUGH THESE ACCOUNTS. 12 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 ANS. I AM NOT AWARE OF THE NATURE OF THE TRANSACTIO NS CARRIED OUT IN THESE BANK ACCOUNTS. I AM ONLY SIGNI NG THE CHEQUES AND DEPOSITING THE CHEQUE/CASH, AS PER INSTRUCTION OF SHRI BHARAT RUIA. THESE ACCOUNTS HAV E BEEN OPENED AT THE INSTRUCTION OF SHRI BHARAT RUIA. THE TRANSACTIONS APPEARING IN THESE TWO HANK ACCOUNTS D O NOT PERTAIN MC AT ALL. THESE BANK ACCOUNTS ARE MAI NLY USED FOR THE PURPOSE OF SHARE TRANSACTIONS. Q.6. PLEASE SATE, TO WHOM THE TRANSACTIONS APPEARING IN ABOVE MENTIONED TWO BANK ACCOUNTS PERT AIN? ANS. THESE BANK ACCOUNTS ARE BEING OPERATED AS PER THE INSTRUCTIONS OF SHRI BHARAT RUIA ONLY. I DO NOT HAV E THE MEANS AND RESOURCES FOR LARGE TRANSACTION APPEARING IN THESE BANK ACCOUNTS. THESE BANK ACCOUNTS ARE BENAMI ACCOUNTS OF SHRI BHARAT RUIA. Q.7: PLEASE PROVIDE DETAILS OF ANY OTHER BANK ACCOU NT, WHICH IS BEING OPERATED BY YOU AT THE INSTRUCTION O F SHRI BHARAT RUIA OR OTHER PERSONS? ANS. THE DETAILS OF SUCH BANK ACCOUNTS IN THE NAME MY PROPRIETARY BUSINESS CONCERNS ARE AS UNDER, (,) WS. A.KASH SECURITIES, CURRENT ACCOUNT NO. 1256 11 - DENAK BANK, LOWOR PARE! BRANCH, MUMBAL. (II) MIS. RAJESH INVESTMENT, CURRENT ACCOUNT NO. CBCA-229, CORPORATION BANK, LOWER PAREL BRANCH. MUMBAI. (TH) MIS. RAJESH INVESTMENT, CURRENT A/C. NO.008610110000, BANK OF INDIA, STOCK EXCHANGE BRANCH, MUMBAI. HERE, I WOULD LIKE TO STATE THAT THESE BANK ACCOUNT S ARE NOT SHOWN IN MY RETURN OF INCOME AS THESE BANK ACCOUNTS ARE BEING OPERATED AT THE INSTRUCTION OF SHRI BHARAT RUIA. FU RTHER, WHATEVER AMOUNTS DEPOSITED IN BANK ACCOUNTS ARE NOT BELONGING TO ME OUT BELONGING TO SHRI BHARAT RUIA. THE ABOVE MENTIONED CONCERNS ARE BEING OPERATED BY SHRI BHARA T RUIA USING MY NAME. I AM ONLY EMPLOYEE OF M/S. B.R . INTERNATIONAL AND WORKING AS ACCOUNTANT IN THIS OFF ICE. Q.8 PLEASE PROVIDE DETAILS OF ALL YOUR DEMAT ACCOUN TS AND EXPLAIN THE SOURCES OF ACQUISITION OF THE SHARES IN SUCH ACCOUNTS. 13 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 ANS. THE DEMAT ACCOUNTS OPERATED BY ME AT THE INSTR UCTION OF SHRI BHARAT RUIA ARE AS UNDER:- (I) M/S RAJESH INVESTMENT, KOTAK SECURITIES LTD, NARIMA N POINT BRANCH, A/C NO.12900315. (II) M/S RAJESH INVESTMENT, ORACLE SECURITIES PVT. LTD, A/C NO. GURUNANAK ROAD, BANDA, MUMBAI, A/C NO.1203050000000722. IN RESPECT OF THE SOURCE OF THE ACQUISITION OF THE SHARES REFLECTED IN THOSE ACCOUNTS, 1 WOULD LIKE TO STATE THAT ALL T RANSACTIONS IN THESE ACCOUNTS ARE OFF MARKET TRANSACTIONS, ALMOST ALL TRANSACTIONS OF SHARES THROUGH THESE DEMAT ACCOUNTS HAVE BEEN DONE WITH M/S B.R. INTERNATIONAL ONLY. THERE IS NO RECEIPT OR PAYMENT OF ANY SUM IN RESPECT OF SUCH SH ARE TRANSACTIONS WITH M/S. B.R. INTERNATIONAL. THE AMOU NTS ARE SHOWN, AS OUTSTANDING. THESE SHARE TRANSACTIONS WIT H M/S. B.R. INTERNATIONAL THROUGH MY DEMAT ACCOUNTS HAVE B EEN CARRIED OUT AS PER DIRECTION AND INSTRUCTION OF SHR I B.R. RUIA Q.9.- PLEASE EXPLAIN THE MODUS OPERANDI OF OPERATIN G THE CURRENT BANK COUNT AND DEMAT ACCOUNT OPENED IN NAME OF YOUR PROPRIETARY CONCERN? ANS ALL ABOVE THE CURRENT BANK ACCOUNTS AND DEMAT ACCOUNTS HAVE BEEN OPENED IN MY NAME BUT I HAVE NEV ER DONE ANY TRANSACTION OF DEPOSITING OR WITHDRAWING T HE MONEY IN THESE ACCOUNTS. I HAVE HANDED OVER THE CHE QUE BOOKS OF THESE BANK ACCOUNTS AND I DELIVERY INSTRUCTION BOOKS OF MY DEMAT ACCOUNTS TO SHRI BR. RUIA. THESE CHEQUE BOOKS / DELIVERY INSTRUCTION BOOKS ARE SIGNED, WHEN EVER REQUIRED BY B.R.RUIA, BY ME WITHOUT MENTIONING THE NAME OF PAYEE, AMOUNT AND DATE. AFTER FILING THE RELEVA NT DETAILS, THE CHEQUE / DELIVERY INSTRUCTIONS ARE DEPOSITED. T HESE CHEQUE BOOKS / DELIVERY INSTRUCTION BOOKS ARE EXCLUSIVELY HANDLED BY SHRI B. R. RUIA ON HIS OWN. I HAVE NOTHING TO DO WITH THESE CHEQUE BOOKS AS ALL MONEY DEPOSITED IN THESE BANK ACCOUNT BELONGS TO SHRI B. R. RUIA FR OM DEMAT ACCOUNT, YOU CAN SEE THAT (HERE IS PROFIT IN MY CON CERNS ON SHARE TRANSACTION IN THE HANDS OF M/S. B.R. INTERNA TIONAL. THE ABOVE MENTIONED DEMAT ACCOUNTS ARE, THEREFORE, USED FOR THE PURPOSE OF BOOKING THE LOSSES IN THE BOOKS OF 14 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 M/S,B.R. INTERNATIONAL IN THE RETURN OF INCOME. AS SLATED EARLIER, / HAVE NOT RECEIVED ANY PAYMENT IN CASH I CHEQUE FROM MIS. B. R. INTERNATIONAL / SHRI B. R, RUIA, ON ACCO UNT OF SUCH PROFIT. THUS, THE ENTIRE AMOUNT HAS BEEN SHOWN AS O UTSTANDING IN THE BOOKS OF WS. B. R. INTERNATIONAL. HERE, I WO ULD LIKE TO STATE THAT I HAVE NEVER MAINTAINED ANY BOOKS OF ACC OUNT FOR ANY FINANCIAL YEAR FOR MY ABOVE CONCERNS, THE WHOLE ARRANGEMENT OF SHARE TRANSACTION IN MY DEMAT ACCOUN TS HAVE BEEN DONE BY SHN B.R. RUIA. Q. 10: PLEASE GIVE THE DETAILS OF ALL OTHER SUCH BA NK ACCOUNTS / DEMAT ACCOUNTS, WHICH HAVE BEEN OPENED BY SH. BR. R UIA IN THE NAME OF OTHER PERSON / CONCERNS AND WHICH ARE B EING MANAGED I ARRANGED BY HIM? ANS. THE BANK ACCOUNTS OPENED BY SH. B.R. RUIA IN T HE NAME OF OTHER PERSON WHICH ARE BEING MANAGED/HANDLED BY HIM ARE AS UNDER. (I) SHNI VINOD KODE, PROPRIETOR OF MIS VINOD ENTERPRISE S, CURRENT BANK ACCOUNT NO. 073 IN CORPORATION BANK, L OWER PAREL BRANCH, MUMBEI. (II) (II)S/UI GEE VERGESH. P R OPRIETOR OF M/S. MAYANK GOEL, CURRENT BANK A/C. NO. 125662, DENA BANK, LOWER PARE! BRANCH, MUMBAI, HERO, I WOULD LIKE TO STATE THAT THE MODUS OPERANDI STATED IN EARLIER QUESTIONS IS ENTIRELY APPLICABLE IN THE CASE OF ABOVE PERSONS SINCE THE ABOVE SAID BANK ACCOUNTS ARE OPEN ED BY THE SAID PERSONS BUT MANAGED AND ARRANGED BY SHRI B, R. RUIA. 9.2 SHRI RAJESH SHARMA ALSO STATED IN HIS STATEMENT THAT TWO OTHER BANK ACCOUNTS, ONE CURRENT BANK ACCOUNT NO.073 WITH CORPORATION BANK, LOWER PAREL BRANCH, MUMBAL AND SECOND CURRENT BANK ACCOUNT NO.125662, DENA BANK, LOWER PAREL BRANCH, MUMBAI ARE ALSO BENAMI BA NK ACCOUNTS OF SHRI B.R. RUIA. THESE BANK ACCOUNTS HAV E BEEN OPENED BY SHRI BHARAT R. RUA IN THE NAME OF M/S.VIN OD ENTERPRISES AND MR.MAYANK GOEL, THUS, IT IS EVIDENT THAT SHRI B.R. RUIA IS HAVING NUMBER OF BANK ACCOUNTS WHICH A RE EFFECTIVELY CONTROLLED AND MANAGED BY SHRI BHARAT R RUIA ONLY. THEREFORE, THE TRANSACTIONS REFLECTED IN SUCH BANK ACCOUNTS AND 15 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 DEMAT ACCOUNTS PERTAIN TO HIM. 9.3 MR. BHARAT R. RUIA WAS CONFRONTED WITH THE ABOV E STATEMENT RECORDED FROM MR RAJESH SHARMA. IN THE ST ATEMENT RECORDED ON 16.4.2008 U/S.132(4) OF THE ACT, MR BHA RAT R RUIA ADMITTED UNDISCLOSED INCOME OF RS785.03 LACS. THE R ELEVANT STATEMENT OF MR. BHARAT R RUIA IN RESPONSE TO Q. NO . 9 OF THE STATEMENT RECORDED U/S.132(4) OF THE ACT ON 16.4.20 08 IS GIVEN AS UNDER: 'Q DURING THE COURSE OF OPERATION OF PROHIBITORY OR DER AT CORPORATE OFFICE OF MJS.PML AT 462, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI ON 19.03.2008, A STATEMENT ON O ATH OF SHRI RAJESH SHARMA, YOUR EMPLOYEE, WAS RECORDED. TH E STATEMENT SHOWS THAT YOU HAVE BEEN OPERATING SEVERA L BUSINESS CONCERNS IN THE NAME OF OTHER PERSONS INCL UDING YOUR EMPLOYEES AND CLOSE RELATIVES. THE EFFECTIVE C ONTROL OF SUCH CONCERNS LIE WITH YOU. THE FUNDS HAVE BEEN DEP LOYED BY YOU DIRECTLY OR INDIRECTLY IN THESE CONCERNS. TWO O F SUCH CONCERNS ARE M/S. RAJESH INVESTMENT AND MIS. PHULCH AND SONS INVESTMENT IN THE NAME OF ONE OF YOUR EMPLOYEE S, SHRI RAJESH SHAMA. IN HIS STATEMENT ON OATH RECORDED ON 19.03.2008, SHRI RAJESH SHARMA HAS STATED THAT SHRI BHARAT RUIA IS REAL OWNER AND BENEFICIARY OF TRANSACTIONS CARRIED OUT IN THE NAME OF ABOVE CONCERNS AND HE ACTS AS PER TH E INSTRUCTIONS OF SHRI BHARAT RUIA. IN THIS REGARD, P LEASE PROVIDE DETAILS OF ALL SUCH BUSINESS ENTITIES / CONCERNS, W HICH HAVE BEEN OPERATED BY YOU DURING THE SEVEN YEARS IN THE NAME OF OTHER PERSONS ALONG WITH THE DETAILS OF TRANSACT IONS, IN RELATION TO MIS. RAJESH INTERNATIONAL AND M/S, PHULCHAND SONS INVESTMENT, , PLEASE PROVIDE COMPLETE DETAILS REGARDING NATURE AND QUANTUM OF TRANSACTION S ALONG WITH DETAILS OF INCOME NOT OFFERED FOR AX DUE TO SU CH ARRANGEMENTS? ANS. M/S. RAJESH INVESTMENT AND WS. PHULCHAND SONS INVESTMENT ARE TWO CONCERNS WHICH HAVE BEEN OPERATE D BY MY EMPLOYEE RAJESH SHARMA AS PER MY INSTRUCTIONS. T HE TRANSACTIONS UNDERTAKEN IN M/S. RAJESH INVESTMENT H AVE RESULTED INTO GENERATION OF NON-GENUINE LOSS IN BOO KS OF M/S.B.R. INTERNATIONAL TO THE TUNE OF RS. 654. 79 L ACS DURING A. Y.2007-08. THIS TOSS HAD BEEN BOOKED BY WAY OF NON GENUINE OFF MARKET SHARE TRANSACTIONS BETWEEN M/S.B.R. INTE RNATIONAL 16 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 AND M/S. RAJESH INVESTMENT AS PER PREDEFINED ARRANG EMENT. THEREFORE, I, IN THE CAPACITY OF KARTA OF B.R. RUIA (HUF), PROPRIETOR OF M/S B.R. INTERNATIONAL HEREBY DECLARE THE SAID NON-GENUINE LOSS OF RS. 654 79 LACS AS UNDISCLOSED INCOME FOR THE A. Y2007-08 IN THE HANDS OF M/S.,8.,R. INTERNAT IONAL OVER AND ABOVE THE REGULAR INCOME. I WOULD PAY THE TAXES DUE ON SUCH ADDITIONAL INCOME DISCLOSED BY ME. M/S. PHULCHOND SONS INVESTMENT IS ALSO ENGAGED IN T HE BUSINESS OF SHARE TRADING, DURING A. Y2005-06 AN AM OUNT OF RS.99.28 LACS WAS DEPOSITED IN CASH IN THE BANK ACC OT.NL M/S.PHULCHAND SONS INVESTMENT BY M/S B.R. INTERNATI ONAL, THIS CASH DEPOSITED REPRESENT THE UNACCOUNTED INCOME IN THE HANDS OF MIS B.R. INTERNATIONAL AS SOURCES, OF SUCH CASH DEPOSIT CANNOT BE EXPLAINED. THEREFORE, L, IN THE CAPACITY OF KARTA OF BR. RUIA (HUF), PROPRIETOR OF BR. INTERNATIONAL HEREBY DECLARE THE SAID CASH DEPOSITS OF RS. 99.28 LACS AS UNDISLOSED INCOME OF MIS. B.R. INTERNATIONAL FOR THE A. Y2005 -06 OVER AND ABOVE THE REGULAR INCOME. I WOULD PAY THE TAXES DUE ON SUCH ADDITIONAL INCOME DISCLOSED BY ME. DURING THE A.Y 2OO7-08, M/S PHULCHAND SONS INVESTME NT HAS TRANSACTED IN SHARES AND EARNED AN INCOME OF RS . 30.96 LACS. THE SAID INCOME HAS NOT BEEN OFFERED FO R LAX BY MIS PHULCHAND SONS INVESTMENT. IN LIGHT OF THE STAT EMENT OF SHRI RAJESH SHARMA AND THE FACTS DISCUSSED ABOVE, THE SA ID INCOME IS HEREBY BEING OFFERED AS UNDISCLOSED INCOME IN TH E HANDS OF M/S.B.R. INTERNATIONAL. THEREFORE, I, IN THE CAPACI TY OF KARTA OF B.R. RUIA HUF, PROPRIETOR OF B.R. INTERNATIONAL, HE REBY DECLARE THE AMOUNT OF RS.30.28 LACS AS UNDISCLOSED INCOME O F M/S BR. INTERNATIONAL FOR THE A. V 2007-08 OVER AND ABOVE T HE REGULAR INCOME. I WOULD PAY THE TAXES DUE ON SUCH ADDITIONA L INCOME DISCLOSED BY ME......' THUS, DISCLOSURE MADE BY WS. BHARAT RUIA U/S. 132(4 ) IN HANDS OF M/S.B.R. INTERNATIONAL UNDER VENOUS HEADS IS A S UNDER: 17 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 S . N . ISSUE INVOLVED A.Y. 2005- 06 RS. IN LACS A.Y. 2007-08 RS.IN LACS 1 PURCHASE OF NO GENUINE LOSS FROM M/S RAJESH INVESTMENT - 654.79 2 UNEXPLAINED CASH DEPOSITS IN CASH OF M/S PHULCHAND SONS INVESTMENT 99.28 - 3 UNDISCLOSED INCOME FROM SHARE TRANSACTIONS IN CASE OF M/S PHULCHAND SONS INVESTMENT - 30.96 TOTAL YEAR-WISE DISCLOSURE 99.28 685.75 9.4 FROM THE ABOVE ADMISSION, IT CAN BE SEEN THAT T HE APPELLANT ADMITTED UNDISCLOSED INCOME OF RS.99.28 L ACS FOR THE A.Y.2005-06 AND ACCORDINGLY FILED THE RETUR N OF INCOME U/S.153A OF THE ACT DECLARING TOTAL INCOME O F RS.25,10424/-. IN THIS CASE, THE APPELLANT FILED THE ORIGINAL RETURN OF INCOME AND THE SAME WAS ASSESSED ULS.143( 3) OF THE ACT ON 28 12.2007. IN THE ORIGINAL RETURN OF INCOME THE APPELLANT DID NOT DISCLOSE THE ADDITIONAL INCOME OF RS.9.28 LACS NOW DISCLOSED IN RESPONSE TO NOTICE ISSUED ULS.153A OF THE ACT. THE DISCLOSURE MADE BY THE APPELLANT IS DUE TO THE EVIDENCES DISCOVERED DURING THE COURSE OF SEARCH. I F THERE WAS NO SEARCH ACTION IN THE USE OF THE APPELLANT HE WOU LD NOT HAVE FILED THE RETURN OF INCOME ADMITTING THE UNDIS CLOSED INCOME. THE HON 1 BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PREM PAL GANDHI VS. CIT (2001) 335 ITR 23 ( P&H) UPHELD THAT WHERE REVISED RETURN, SHOWING HIGHER IN COME IS FILED AFTER DETECTION OF CONCEALED INCOME BY THE DEPARTMENT, IMPOSITION OF PENALTY WOULD BE JUSTIFIE D. CONCEALMENT TAKES PLACE ON THE DATE WHEN RETURN S F ILED WITHOUT DISCLOSING THE PARTICULARS OF INCOME OF THA T YEAR AS 18 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 HELD BY THE APEX COURT IN THE CASE OF BRIJMOHAN-VCL T 120 ITR I 5C IN THIS CASE, THE ORIGINAL RETURN OF INCOME WAS FILED WITHOUT DISCLOSING THE INCOME DETECTED DURING THE COURSE OF SEARCH U!S.132 OF THE ACT AND THIS INCOME WAS LA TER DISCLOSED IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NO TICE ISSUED U1S.153A OF THE ACT, CONSEQUENT TO SEARCH ACTION UL S.132 OF THE ACT, THEREBY ESTABLISHING THE CONCEALMENT. 9.5 DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE BASIS OF THE INFORMATION PROVIDED BY MR. RAJESH SHA RMA IN CONNECTION WITH THE BANK ACCOUNTS IN DENA BANK AND THE CORPORATION BANK IN THE STATEMENT RECORDED U/S.132 (4) OF THE ACT ON 19.3.2008 AS REFERRED ABOVE (REFER Q. NO, 7 &10 OF THE STATEMENT), THE ASSESSING OFFICER OBTAINED CERTAIN BANK ACCOUNT DETAILS U/S.133(6) OF THE ACT AND HAD NOTIC ED HUGE CASH DEPOSITS IN SUCH ACCOUNTS THE DETAILS ARE AS U NDER:- S R . N O . NAME OF THE PERSON BANK ENTITY NAME BANK A/C CASH DEPOSIT 1 RAJESH SHARMA DENA BANK AKASH SECURITIES 125661 44,99,500 2 VINOD KODE COPRPO RATION BANK VINOD ENTERPRIS ES 073 2,25,71,542 3 GEE VERGESH DENA BANK MAYANK GOEL 125662 67,90,000 TOTAL 3,38,61,042 9.3 THE APPELLANT WAS REQUESTED TO EXPLAIN THE SOUR CES OF THE CREDITS. THOUGH THE APPELLANT FEIGNED IGNORANC E ABOUT THESE ACCOUNTS, HOWEVER HE ADMITTED THE FOLLOWING I NCOME:- ASSESSM ENT YEAR / PARTYS NAME MAYANK GOEL AKASH SECURITIES VINOD ENTERPRISES 2005-06 5,000 5,000 36,32,000 2006-07 67,85,000 44,94,500 1,37,75,555 2007-08 - - - 2008-09 - - 51,63,987 TOTAL 67,90,000 44,99,500 2,25,71,542 9.7 AS AGAINST THE ABOVE ADMISSION, THE ASSESSING O FFICER 19 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 BROUGHT TO TAX THE FOLLOWING SUMS: ASSESSM ENT YEAR / PARTYS NAME MAYANK GOEL AKASH SECURITIES VINOD ENTERPRISES TOTAL 2005-06 5,000 5,000 36,32,000 36,42,000 2006-07 67,85,000 44,94,500 1,37,75,555 2,50,55,055 2008-09 - - 51,63,987 51,63,987 TOTAL 67,90,000 44,99,500 2,25,71,542 3,38,61,042 9.8 THE APPELLANT HAS ADMITTED RS.36,32,000/- FOR T HE' A,Y.2005-06 DURING THE ASSESSMENT PROCEEDINGS. HOWEVER DURING THE APPELLATE PROCEEDINGS, THE APPELLANT ARG UED THAT THE PENALTY SHOULD NOT BE IMPOSED AS THE SAID ACCOU NTS DO NOT BELONG TO HIM. THE APPELLANT ALSO SUBMITTED THA T NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN TO HIM. THE APPELLANT'S CONTENTIONS ARE NOT ACCEPTABLE. THE ADM ISSION OF UNDISCLOSED INCOME OF RS 785.03 LACS IN THE STATEMENT RECORDED FROM MR.BHARAT R. RUIA ON 16.4.2008 IS SIM ILAR TO THE FACTS AND CIRCUMSTANCES EMANATING OUT OF CASH D EPOSITS OF RS.3,38,61,042/- (RS.36,42,000/- FOR THE A.Y.2005-0 6) DISCOVERED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. THE ONLY DIFFERENCE IS THAT THE FIRST ADMISSION BY MR. BHARAT RUIA (RS.785.03 LAKHS) WAS DURING THE COURSE OF SEARCH W HERE AS THE SUBSEQUENT DEVELOPMENTS HAVE EMANATED FROM THE ENQU IRY CONDUCTED AT THE TIME OF ASSESSMENT PROCEEDINGS. TH OUGH THE ENQUIRY WAS CONDUCTED AT THE TIME OF ASSESSMENT PROCEEDINGS BUT THE ENTIRE ENQUIRY WAS THE FALLOUT OF THE STATEMENT RECORDED FROM MR. RAJESH SHARMA WHO HAS G IVEN THE DETAILS OF THE BANK ACCOUNTS IN DENA BANK AND THE C ORPORATION BANK (REFER TO Q NOS, 7 & 10) AT THE TIME OF STATEM ENT RECORDED FROM HIM U/S 132(4) OF THE ACT ON 19.3.2008. THE AP PELLANT CANNOT FEIGN IGNORANCE ABOUT THESE ACCOUNTS MORE SO DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT ALSO ADMITTED THE DEPOSITS AS UNDISCLOSED INCOME. THE AP PELLANT ALSO DID NOT CONTEST THE SAID ADDITIONS IN APPEAL A ND THE ASSESSMENTS HAVE BECOME FINAL. THESE FACTS REVEAL T HE CULPABILITY OF THE APPELLANT IN CONCEALING THE INCOME. THEREFORE THE LEVY OF PENALTY THE ACT IS JUSTIFIABLE. 8. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE AO AS WELL AS THE AFORESAID DETAILED FINDINGS OF LD. CIT(A). IT IS N OTED THAT IT HAS BEEN 20 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 EXAMINED IN DETAIL BY THE LD. CIT(A) THAT FROM THE STATEMENTS RECORDED OF SHRI RAJESH SHARMA AS WELL AS THE ASSESSEE IT WAS C LEAR THAT ASSESSEE WAS OPERATING SEVERAL BUSINESS CONCERNS IN THE NAME OF OTHER PERSONS INCLUDING ASSESSEES EMPLOYEES AND CLOSE ASSOCIATES AND WAS MAINTAINING VARIOUS BOGUS BANK ACCOUNTS, THROUGH WHICH UNACCOUN TED INCOME WAS GENERATED REGULARLY. WE FIND THAT FINDINGS HAVE BE EN RECORDED BY THE LD. CIT(A) ON THE BASIS OF FACTS AND MATERIAL HELD ON R ECORD. NOTHING HAS BEEN BROUGHT BEFORE US TO CONTROVERT OR NEGATE THESE FAC TUAL FINDINGS. UNDER THESE CIRCUMSTANCES, WE FIND IT APPROPRIATE TO UPHO LD THE ORDER OF THE LD. CIT(A). GROUNDS 1 TO 3 & 5 ARE DISMISSED. 9. GROUND 4 : IN THIS GROUND, THE ASSESSEE HAS CONTENDED THAT N O PENALTY WAS EXIGIBLE U/S 271(1)(C) SINCE PROVISIONS OF SECTIONS 271AA(2) & (3) WOULD APPLY AS THE SEARCH WAS CARRIED OUT AFTER 1 ST DAY OF JUNE, 2007 AND STATEMENT WAS MADE U/S 132(4). 10. IN THIS GROUND, IT IS CLAIMED THAT THE ASSESSEE WAS EXEMPT FROM LEVY OF PENALTY UNDER PROVISIONS OF SECTIONS 271AAA (2) & (3) OF THE ACT. IT IS NOTED THAT THIS ISSUE HAS ALSO BEEN DECIDED BY LD. CIT(A) BY OBSERVING AS UNDER:- IN THIS CONNECTION IT IS MADE CLEAR THAT THE PROVI SIONS OF SUBSECTION 2 AND 3 OF SECTION 27IAAA WILL NOT BE APPLICABLE TO THE APPELLANT AS THE ASSESSMENT YEAR 2005 . 06 IS NOT THE SPECIFIED PREVIOUS YEAR. THE SAID PROVISIONS ARE AP PLICABLE ONLY FOR THE SPECIFIED PREVIOUS YEAR. THE EXPLANATION (B ) TO SECTION 27IAAA DEFINES THE TERM SPECIFIED PREVIOUS YEAR. TH E RELEVANT PROVISION IS AS UNDER: (B) SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEA R (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUBSECTION (1) OF SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE O F SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF IN COME FOR THE 21 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 PREVIOUS YEAR BEFORE THE SAID DATE: OR (II)N WHICH SEARCH WAS CONDUCTED]' 9.10 THE SEARCH IN THIS CASE WAS CONDUCTED ON 20.2. 2008. SINCE THE XY.2005-(163 IS NOT THE SPECIFIED PREVIOUS YEAR , THE PROVISIONS OF SECT' (2) & 3) OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF THE APPELLANT. DURING THE COURSE OF HEARING BEFORE US, NOTHING HAS BEEN BROUGHT TO POINT OUT ANYTHING WRONG ON LAW OR ON FACTS IN THE AFORESAID FINDINGS OF LD. CIT(A). UNDER THESE CIRCUMSTANCES, THE ORDER OF LD . CIT(A) IS UPHELD. GROUND 4 IS REJECTED. 11. AS A RESULT, APPEAL OF THE ASSESSEE IS HEREBY DISMI SSED. 12. NOW WE SHALL TAKE UP ASSESSEES APPEALS FOR A.Y S. 2006-07 AND 2007-08 IN ITA NO.751 AND 752/MUM/2014 AND APPEAL F OR A.Y. 2008-09 IN ITA NO.753/MUM/2014. IT IS NOTED THAT GROUNDS RAISED AND ISSUES INVOLVED IN THESE APPEALS ARE IDENTICAL TO APPEAL FOR A.Y. 2005-06. THEREFOR E, OUR ORDER FOR A.Y. 2005- 06 SHALL APPLY MUTATIS MUTANDIS ON THE APPEALS OF T HESE YEARS. AS A RESULT, THESE APPEALS ARE ALSO DISMISSED. 13. NOW WE SHALL TAKE UP REVENUES APPEALS FOR A.Y. 2005-06 (ITA NO.949/MUM/2014); A.Y. 2006-07 (ITA NO.950/MUM/2014 ); A.Y. 2007-08 (ITA NO.951/MUM/2014); AND A.Y.2008-09 (ITA NO.952/ MUM/2014). IT IS NOTED THAT THE SOLITARY GROUND RAISED BY THE REVENUE IN ALL THESE APPEALS IS FOR CHALLENGING THE ACTION OF LD. CIT(A) IN REDUCING THE QUANTUM OF PENALTY FROM 200% TO 100%. IT IS NOTED THAT PEN ALTY HAS BEEN LEVIED BY THE AO @200% OF TAX SOUGHT TO BE EVADED. HOWEVER, WHILE LEVYING THE PENALTY AT 200%, NO JUSTIFICATION HAS BEEN GIVEN BY AO IN THE PENALTY ORDER AS TO WHY IT WAS A FIT CASE FOR LEVY OF PENALTY AT 200% AND NOT AT MINIMUM 22 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 RATE OF 100%. UNDER THESE CIRCUMSTANCES, LD. CIT(A ) REDUCED THE SAME TO 100% BY OBSERVING AS UNDER:- 9.11 THE APPELLANT ALSO ARGUED THAT THE PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE ACT ARE QUASI CRIMINAL IN NATU RE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS AND THEREFORE NO PE NALTY COULD BE LEVIED IN ITS CASE IS NOT ACCEPTABLE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURTS DECISION IN THE CASE OF UNION OF INDIA V DHARAMENDRA TEXTILE PROCESSORS [2008] 174 T AXMAN 571 (SC) WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF LE VY OF PENALTY U/S 271(1)(C OF THE I.T. ACT, THE ASSESSING OFFICER IS NOT REQUIRED TO ESTABLISH MENS REA AS IN THE CASE OF PROSECUTION , WHICH IS A CRIMINAL LIABILITY. 9.12 IN VIEW OF THE ABOVE, LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT BY THE A.O. IS JUSTIFIABLE. HOWEVER, AS FAR AS THE QUANTUM OF THE PENALTY IS CONCERNED, CONSIDERING THE OVERALL F ACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY AT 100% OF TH E AMOUNT OF TAX SOUGHT TO BE EVADED WILL MEET THE ENDS OF JUSTI CE INSTEAD OF 200% AS LEVIED BY THE ASSESSING OFFICER, ACCORDINGL Y THE ASSESSING OFFICER IS DIRECTED TO LEVY PENALTY ONLY AT 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED. 14. DURING THE COURSE OF HEARING BEFORE US, NOTHING HAS BEEN ARGUED BY THE LD. DR TO SHOW ANYTHING WRONG IN THE REASONING GIVEN BY LD. CIT(A). NO JUSTIFICATION WAS GIVEN BEFORE US AS TO WHY THE PEN ALTY SHOULD BE LEVIED AT 200%. NOTHING COULD BE SHOWN FROM THE ORDER OF THE AO WHEREIN ANY JUSTIFICATION WAS GIVEN BY AO FOR LEVY OF PENALTY A T 200%. UNDER THESE CIRCUMSTANCES, WE FIND THAT NO INTERFERENCE IS CALL ED FOR IN THE ORDER OF LD. CIT(A). THEREFORE, HIS ORDER ON THIS ISSUE IS UPHE LD. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 15. AS A RESULT, ALL THE APPEALS FILED BY THE REVENUE A RE DISMISSED. 23 I.T.A. NO.949 TO 952/MUM/2014 I.T.A NOS.750 TO 753/MUM/2014 16. AS A RESULT, ASSESSEES APPEALS AS WELL AS REVENUE S APPEALS ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF THE HEARING. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 8 TH FEBRUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , B-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES