Mrs, Kailash K. Nagpal, Pune V. DCIT,Cir-2, Pune, Pune

ITA 994/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3115 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 18-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Assessee Lawyers: P D KUDWA
• Keywords: Unexplained investment; Gift; Search and seizure; Block assessment
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 994/PN/2009 BLOCK PERIOD: 1986-87 TO 1996-97 MRS. KAILASH K. NAGPAL, APPELLANT 407, NANA PETH, PUNE 411 002. (PAN AALPN 5140 R) VS. DY. COMMISSIONER OF INCOME TAX, RESPONDENT 1 ST FLOOR, P.M.T. BUILDING, SWARGATE, PUNE. APPELLANT BY : MR. P.D. KUDWA RESPONDENT BY : MR. ABHAY DAMLE ORDER PER G.S. PANNU, A.M.: IN THIS APPEAL, PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 22/07/09, THE ONLY ISSUE RAISED IS IN RELATION TO A PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 158BFA (2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), AMOUNTIN G TO RS. 1,34,482/- FOR THE BLOCK PERIOD 1986-87 TO 1996-97. 2. A SEARCH AND SEIZURE ACTION AT THE RESIDENTIAL/B USINESS PREMISES OF THE ASSESSEE WAS CARRIED OUT ON 27/02/9 7 AS A CONSEQUENCE OF WHICH THE ASSESSEE WAS REQUIRED TO F URNISH A RETURN OF INCOME FOR THE AFORESAID BLOCK PERIOD IN TERMS O F SECTION 158BC OF THE ACT. THE ASSESSEE FILED A RETURN OF INCOME SHOWING NIL UNDISCLOSED INCOME, WHICH WAS SUBJECTED TO AN ASSES SMENT U/S ITA NO. 994/PN/09 MRS. KAILASH K. NAGPAL 2 158BC(C) OF THE ACT ON 25/02/09 WHEREIN THE TOTAL U NDISCLOSED INCOME WAS COMPUTED AT RS. 14,26,620/-. THE SAID AS SESSMENT TRAVELED TO THE TRIBUNAL AND, THEREAFTER, THE TOTAL UNDISCLOSED INCOME REMAINING AMOUNTED TO RS. 2,24,136/- ON ACCO UNT OF UNEXPLAINED INVESTMENT IN JEWELLERY FOUND DURING TH E COURSE OF SEARCH. THE ASSESSING OFFICER VIDE ORDER DATED 29/0 6/06 HAS IMPOSED A PENALTY OF RS. 1,34,482/- U/S 158BFA(2) O F THE ACT, EQUIVALENT TO THE AMOUNT OF TAX LEVIABLE ON THE UND ISCLOSED INCOME DETERMINED U/S 158BC(C) OF THE ACT, OF RS. 2,24,136 /-. THE ASSESSEE CHALLENGED THE IMPOSITION OF PENALTY BEFORE THE CIT (A) BUT WITHOUT SUCCESS. NOT BEING SATISFIED WITH THE ORDER OF CIT( A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT PENALTY U/S 158BFA(2) OF THE ACT IS NOT LEVIABLE IN THIS CASE SINCE THE JEWELLERY IN QUESTION COULD NOT BE STRICTLY CON SIDERED AS UNEXPLAINED. IT IS SUBMITTED THAT OUT OF THE 1997.9 0 GRAMS OF JEWELLERY FOUND AT THE TIME OF SEARCH, ASSESSEE A DMITTED THAT 50% OF THE SAME BELONGED TO HER AND THE BALANCE BELONGE D TO HER MOTHER-IN-LAW, SMT. SARASWATI DEVI BODHRAJ NAGPAL. ACCORDING TO HIM, OUT OF 998.99 GRAMS OF JEWELLERY, THE ASSESSIN G OFFICER ALLOWED BENEFIT OF 500 GRAMS AND THE BALANCE OF 498 GRAMS H AS BEEN CONSIDERED AS UNEXPLAINED IN THE HANDS OF THE ASSES SEE. THE LEARNED COUNSEL POINTED OUT THAT INFACT OTHER FAMILY MEMBER S, NAMELY, MRS. SARSWATI DEVI B. NAGPAL, BODHAR S. NAGPAL HUF AND K RISHANLAL B. ITA NO. 994/PN/09 MRS. KAILASH K. NAGPAL 3 NAGPAL HUF HAVE DECLARED JEWELLERY AMOUNTING TO 170 7 GRAMS CUMULATIVELY IN THEIR WEALTH TAX RETURNS PRIOR TO T HE BLOCK ASSESSMENT AND, THEREFORE, AFTER ALLOWING CREDIT FO R SUCH JEWELLERY AND FOR THE JEWELLERY RECEIVED BY CHILDREN AS GIFTS , ETC., THE DIFFERENCE REMAINING WOULD BE MINIMAL. THEREFORE, A CCORDING TO THE LEARNED COUNSEL, THE ADDITION MADE IN THE QUANTUM P ROCEEDINGS CANNOT BE SAID TO BE POSITIVELY REFLECTING ANY CON CEALED INCOME; SINCE, THE PROBABILITY OF THE JEWELLERY BEING ACQUI RED FROM EXPLAINED SOURCES CANNOT BE RULED OUT. AS PER THE LEARNED COU NSEL, THOUGH, THE ADDITION HAS BECOME FINAL, SO, HOWEVER, IN THE PENA LTY PROCEEDINGS THE ASSESSEE IS JUSTIFIED IN MAKING OUT A CASE THAT THE ADDITION DOES NOT REFLECT ANY CONCEALED INCOME. FURTHER, IT IS CO NTENDED THAT LEVY OF PENALTY U/S 158BFA(2) OF THE ACT IS AKIN TO A PE NALTY IMPOSABLE U/S 271(1)(C) OF THE ACT AND ITS LEVY IS NOT AUTOMA TIC. ACCORDINGLY, IT WAS SUBMITTED THAT THE PENALTY IMPOSED IN THIS CASE BE DELETED. 4. ON THE OTHER HAND, LEARNED DR HAS DEFENDED THE P ENALTY LEVIED IN THIS CASE BY POINTING OUT THAT THE ADDITI ON ON ACCOUNT OF UNEXPLAINED JEWELLERY HAS BEEN MADE ON THE BASIS OF THE STATEMENT RENDERED BY THE ASSESSEE IN THE COURSE OF SEARCH U/ S 132(4) OF THE ACT. IT HAS BEEN POINTED OUT THAT JEWELLERY ADMITTE D AS UNEXPLAINED IN THE STATEMENT U/S 132(4) OF THE ACT WAS NOT DECL ARED IN THE RETURN FILED FOR THE BLOCK ASSESSMENT AND, THEREFOR E, THE INCLUSION OF THE SAME IN THE ASSESSMENT BY THE ASSESSING OFFICER WOULD INVITE LEVY OF PENALTY U/S 158BFA(2) OF THE ACT. ITA NO. 994/PN/09 MRS. KAILASH K. NAGPAL 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IT IS NOTEWORTHY THAT THE ASSESSING OFFICER IS COMPETENT TO LEVY PENALTY U/S 158BFA(2) OF THE ACT ON THAT PORTION OF THE UND ISCLOSED INCOME DETERMINED, WHICH IS IN EXCESS OF AMOUNT OF UNDISCL OSED INCOME SHOWN IN THE RETURN. IN THIS CASE, PENALTY HAS BEEN LEVIED WITH RESPECT TO A SUM OF RS. 2,24,136/- DETERMINED AS UN DISCLOSED INCOME IN THE ASSESSMENT, AND SUCH UNDISCLOSED INCO ME WAS NOT DECLARED IN THE RETURN FILED BY THE ASSESSEE IN RES PONSE TO A NOTICE U/S 158BC OF THE ACT. SO, HOWEVER, IT IS ALSO CORRE CT ON THE PART OF THE ASSESSEE TO ASSERT THAT PENALTY U/S 158BFA(2) O F THE ACT IS NOT MANDATORY AND THE SAME IS DISCRETIONARY, AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DODSAL LTD . [2009] 312 ITR 112 (BOM.). 6. IN THE PRESENT CASE, IT IS SEEN THAT IN THE STAT EMENT RECORDED U/S 132(4) OF THE ACT ON 28/02/1997, ASSESSEE ADMIT TED THAT JEWELLERY OF 998.99 GRAMS BELONGED TO HER OUT OF TO TAL JEWELLERY OF 1997.980 GRAMS FOUND DURING THE COURSE OF SEARCH. A S PER THE COPY OF STATEMENT, WHICH IS PLACED IN THE PAPER BOOK AT PAGES 16 TO 20, THE ASSESSEE STATED THAT JEWELLERY WAS ACQUIRED AS MARRIAGE GIFTS AND ALSO THROUGH PURCHASES. IT WAS ADMITTED THAT SH E COULD NOT EXPLAIN THE SOURCE OF INCOME FROM WHICH THE JEWELLE RY HAS BEEN ACQUIRED BY HER. HOWEVER, IN THE RETURN OF INCOME F ILED SUBSEQUENTLY, NO UNDISCLOSED INCOME RELATING TO JEW ELLERY FOUND ITA NO. 994/PN/09 MRS. KAILASH K. NAGPAL 5 DURING THE SEARCH WAS DECLARED. IN THE ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS NOT F ILING ANY WEALTH TAX RETURNS AND THAT SHE HAD ADMITTED OF OWNING 998 .99 GRAMS OF JEWELLERY IN THE STATEMENT U/S 132(4) OF THE ACT. T HE ASSESSEE ATTEMPTED TO EXPLAIN JEWELLERY OF 629.400 GRAMS IN THE HANDS OF THE ASSESSEE IN TERMS OF TOTAL JEWELLERY OF THE FAMILY, ALLOCATED IN THE HANDS OF THE DIFFERENT FAMILY MEMBERS. THIS EXPLANA TION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER IN V IEW OF THE STATEMENT MADE BY THE ASSESSEE U/S 132(4) OF THE AC T AT THE TIME OF SEARCH THAT 998.99 GRAMS OF JEWELLERY BELONGED TO H ER. THEREFORE, AFTER ALLOWING A CREDIT OF 500 GRAMS ON ACCOUNT OF JEWELLERY RECEIVED AS GIFTS ON MARRIAGE, ETC. THE BALANCE OF 498.98 GRAMS WAS CONSIDERED AS UNEXPLAINED AND A SUM OF RS. 2,24,13 6/- HAS BEEN ASSESSED AS UNDISCLOSED INCOME ON THIS COUNT. IN OU R CONSIDERED OPINION, IN TERMS OF STATEMENT RENDERED U/S 132(4) OF THE ACT, IT WAS IMPERATIVE FOR THE ASSESSEE TO HAVE DETERMINED UNDI SCLOSED INCOME WITH REGARD TO THE JEWELLERY ADMITTED BY HER IN THE COURSE OF STATEMENT U/S 132(4) OF THE ACT. INFACT, IN THE STA TEMENT U/S 132(4) OF THE ACT, ASSESSEE CLEARLY ADMITTED THAT SHE COU LD NOT EXPLAIN THE SOURCE OF INCOME FROM WHICH THE JEWELLERY HAS BEEN ACQUIRED. NON- DECLARATION OF SUCH UNDISCLOSED INCOME IN THE RETUR N FILED IN RESPONSE TO THE NOTICE ISSUED U/S 158BC OF THE ACT, IN OUR VIEW, CLEARLY INVITES LEVY OF PENALTY U/S 158BFA(2) OF TH E ACT ON THE ADDITION OF RS. 2,24,136/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF UNEXPLAINED JEWELLERY. THE EXPLANATION OF THE AS SESSEE BASED ON ITA NO. 994/PN/09 MRS. KAILASH K. NAGPAL 6 WEALTH TAX RETURNS OF THE OTHER FAMILY MEMBERS, IN OUR VIEW, DOES NOT MITIGATE THE RIGORS OF SECTION 158BFA(2) OF THE ACT IN THIS CASE BECAUSE THE SAME DOES NOT DISLODGE THE SPECIFIC STA TEMENT MADE BY THE ASSESSEE U/S 132(4) OF THE ACT. ACCORDINGLY, WE HEREBY AFFIRM THE ACTION OF THE LOWER AUTHORITIES IN IMPOSING PEN ALTY U/S 158BFA(2) OF THE ACT AMOUNTING TO RS. 1,34,482/-. 7. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT M EMBER PUNE, DATED: 30 TH NOVEMBER, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., PUNE KV