SMT. SHASHIKALA CHOUDHARY, MUMBAI V. D.C.I.T.,CIRCLE 21(2), MUMBAI

ITSSA 109/MUM/2008

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9439 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 04-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K SINGH
• Assessee Lawyers: DINESH AGARWAL
• Keywords: Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M.JAGTAP, AM & SMT. P.MADHAVI DEVI, JM I.T[SS].A.NO.109/MUM/2008 BLOCK PERIOD 1-4-99 TO 13-11-2000 SMT. SHASHIKALA CHOUDHARY, ARUNODAYA, BAPUBHAI VASHI RD., VILE PARLE (WEST), MUMBAI 400 056. PAN NO.AAAPC 9224 E DY. COMMISSIONER OF I.T., CIRCLE 21(2). MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH AGARWAL. REVENUE BY : SHRI B.K.SINGH. O R D E R PER P.MADHAVI DEVI, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST CI T(A)S ORDER DATED 28-8-2008. 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT[A] IN UPHOLDING THE PENALTY OF RS.1,80,000/- L EVIED BY THE AO LU/S.158BFA(2) OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL. THERE WAS A SEARCH AND SEIZURE ACTION U/S.132 OF TH E ACT ON 14-11-2000. IN RESPONSE TO THE NOTICE U/S.158BC ASS ESSEE FILED A BLOCK RETURN ON 15-2-2002 DECLARING UNDISCLOSED INCOME AT NIL. DURING THE COURSE OF SEARCH, JEWELLERY WORTH RS.30,63,357/- AN D CASH OF RS.3,00,000/- WAS FOUND IN LOCKER NO.700 STANDING I N THE NAME OF THE ASSESSEE IN DENA BANK, VILE PARLE (WEST) BRANCH, MU MBAI. THE 2 ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF JEWELLE RY AND CASH FOUND. THE ASSESSEE SUBMITTED HER REPLY STATING THAT THE G OLD WAS PURCHASED BY HER FROM TIME TO TIME OUT OF CASH WITHDRAWALS OF HER HUSBAND SHRI SHANKAR CHOUDHARY. THE AO HOWEVER TREATED AN AMOUNT OF RS.7,29,948/- AS INVESTMENT NOT FULLY DISCLOSED IN THE BOOKS OF ACCOUNTS AND ADDED IT TO THE TOTAL INCOME OF THE AS SESSEE FOR THE BLOCK PERIOD U/S.69B OF THE ACT. 4. AS REGARDS CASH PF RS.3.00,000/- FOUND IN THE LO CKER OF THE ASSESSEE, ASSESSEE VIDE LETTER DATED 26-11-2002 EXP LAINED THAT THE CASH WAS OUT OF CASH BALANCE OF THE ASSESSEE AND HE R HUSBAND AS ON 13-11-2000. THIS EXPLANATION WAS ALSO NOT FOUND SAT ISFACTORY BY THE AO AND HE TREATED THE SAME AS UNEXPLAINED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD U/S.69 OF THE ACT. 5. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE C IT[A] WHO DELETED THE ADDITION OF RS.7,29,948/- ON ACCOUNT OF JEWELLERY PURCHASED IN CASH, BUT CONFIRMED THE ADDITION OF RS .3,00,000/- ON ACCOUNT OF CASH FOUND IN THE BANK LOCKER. ON APPEAL TO THE TRIBUNAL, THIS ADDITION WAS CONFIRMED. MEANWHILE, THE AO INIT IATED PENALTY PROCEEDINGS U/S.158BFA(2) OF THE ACT BY ISSUING A S HOW CAUSE NOTICE. THE ASSESSEE VIDE LETTER DATED 21/2/07 EXPLAINED TH AT THE CASH WAS OUT OF CASH BALANCE OF THE ASSESSEE AND HER HUSBAND AS ON 13-11-2000 AND THAT IT WAS REQUIRED TO BE KEPT TO MEET THE MED ICAL EXPENSES OF HER HUSBAND WHO HAD ALREADY SUFFERED A HEART ATTACK . AO WAS HOWEVER NOT SATISFIED WITH THE SAID EXPLANATION AND HELD TH AT THE ASSESSEE HAS 3 NOT PLACED ANY EVIDENCE ON RECORD TO SHOW OWNERSHIP OF THE CASH AND SINCE SHE WAS AWARE OF THE CASH SEIZED AT THE TIME OF SEARCH, OUGHT TO HAVE DISCLOSED IT AS HER INCOME IN HER RETURN FOR T HE BLOCK PERIOD WHICH HAS NOT BEEN DON AND, THEREFORE, PENALTY LEVIED U/S .158BFA(2) OF THE ACT WAS JUSTIFIED. HE, THEREFORE, LEVIED A MINIMUM PENALTY OF RS.1,80,000/- FOR THE UNDISCLOSED INCOME OF THE ASS ESSEE. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE CIT[A] REITERA TING THE SUBMISSIONS MADE BEFORE THE AO. THE CIT[A] CONFIRMED THE ORDER OF THE AO AND ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE SHRI DINESH AGA RWAL, WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORI TIES BELOW, SUBMITTED THAT PENALTY U/S.158BFA(2) IS NOT MANDATO RY BUT IS DISCRETIONARY AS HELD BY THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SATYENDRA KUMAR DOSI (2009) 18 DTR (RAJ) 236. HE ALSO SUBMITTED THAT THE ASSESSEE HAD DISCLOSED THE FACT OF CASH FIGURE OF RS.3 LAKHS IN HER RETURN OF INCOME FORM NO.2B AND S TATEMENT OF UNDISCLOSED INCOME VERY CLEARLY AND, THEREFORE, THE RE WAS COMPLETE DISCLOSURE AND THE PENALTY IS BEING IMPOSED ONLY BE CAUSE OF THE BONA FIDE EXPLANATION AND SUBMISSION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING AUTHORITY. HE ALSO PLACED RELIANCE UP ON THE DECISION OF THE HIGH COURT OF JHARKHAND IN THE CASE OF CIT VS. ASHIM KUMAR AGARWAL REPORTED IN (2005) 196 CTR (JHARKHAND) 23, WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ANY EVIDENCE ON RECORD WHICH SUGGESTS THAT THERE WAS A DELIBERATE ATTEMPT OR EVEN AN INTENTION ON THE PART OF THE 4 ASSESSEE TO CONCEAL INCOME OR TO FURNISH INACCURATE PARTICULARS OF INCOME, PENALTY U/S.271[1][C] CANNOT BE IMPOSED IN RESPECT OF CASH FOUND DURING THE SEARCH THOUGH ADDITION WAS MADE RE JECTING THE EXPLANATION OF THE ASSESSEE. 7. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW, AND SUBMITTED THAT IT IS NOT SUF FICIENT THAT THE ASSESSEE OFFERS AN EXPLANATION, BUT THAT IT SHOULD BE REASONABLE AND PLAUSIBLE EXPLANATION, WITHOUT WHICH PENALTY IS JUS TIFIED. 8. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE MATERIAL ON RECORD, WE FIND THAT THE PENALTY U/S.15 8BFA(2) IS LEVIED ON THE GROUND THAT ASSESSEE HAS NOT OFFERED RS.3 LAKHS AS HER UNDISCLOSED INCOME FOR THE BLOCK PERIOD THOUGH IT WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH. THE EXPLANATION OF THE ASSESSEE THAT THIS AMOUNT FOUND IN THE LOCKER WAS KEPT FOR MEDICAL EMERGENCY OF HER HUSBAND WAS NOT FOUND FAVOURABLE WITH THE AO, CIT[A] OR EV EN THE ITAT. THE ADDITION HAS ALSO BEEN CONFIRMED BY THE TRIBUNAL. A S HELD BY THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SATYEN DRA KUMAR DOSI [CITED SUPRA], PENALTY U/S.158BFA(2) IS DISCRETIONA RY AND NOT MANDATORY. TO EXERCISE DISCRETION, THE ASSESSEE HAS TO OFFER A SATISFACTORY EXPLANATION TO THE AO. THE EXPLANATION OFFERED BY THE ASSESSEE HAS NOT BEEN FOUND SATISFACTORY BY THE AO, BUT WE FIND THAT THE ASSESSEE IN HER RETURN OF INCOME FOR THE BLOCK PERIOD AT COLUMN-16 HAS SHOWN THAT THE TAX PAYABLE BY HER HAS BEEN ADJU STED AGAINST THE CASH OF RS.3 LAKHS SEIZED AND IN THE STATEMENT OF U NDISCLOSED INCOME 5 SHE HAS MENTIONED ABOUT THE CASH BEING AVAILABLE OU T OF HER HUSBANDS CASH BALANCE. THE ADDITION CONFIRMED BY THE REVENUE AUTHORITIES AS WELL AS THE TRIBUNAL IS NOT THE ONLY BASIS FOR LEVY ING THE PENALTY. THE EXPLANATION OF THE ASSESSEE SHOULD HAVE BEEN FOUND TO BE INCORRECT AND NOT JUST UNACCEPTABLE. BEFORE US, THE ASSESSEE HAS ALSO FILED THE COPIES OF THE CASH FLOW STATEMENTS TO DEMONSTRATE T HE SOURCE OF THE CASE SEIZED AND SUBMITTED THAT IT WAS AVAILABLE BEF ORE THE AUTHORITIES BELOW. FROM THE SAID STATEMENT ALSO, WE FIND THAT T HE HUSBAND OF THE ASSESSEE AND THE ASSESSEE TOGETHER HAD A CLOSING CA SH BALANCE OF RS.3,81,837/- AS ON 13-11-2000 I.E. A DAY BEFORE TH E SEARCH. NO ADVERSE FINDING HAS BEEN GIVEN ON THIS EVIDENCE. IN VIEW OF THE SAME, WE ARE INCLINED TO DELETE THE PENALTY LEVIED U/S.15 8BFA(2) OF THE ACT. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF FEBRUARY, 2010. SD/- SD/- (P.M.JAGTAP) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 24 TH FEBRUARY, 2010. P/-*