Smt. Madhuben R.Barot, Surat V. The ACIT.,Circle-3, Surat

ITSSA 111/AHD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8132 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-09-2011
• Assessment Year: misc
• Appeal Filed On: 09-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: KK SHAH
• Keywords: Unexplained investment; Income from undisclosed sources; Source of fund; Competent authority; Block assessment
• Section: 69C; 133(6); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND SHRI BHAVNESH SAINI, JM) IT(SS)A NO.111/AHD/2009 B. P.: 1990-91 TO 1999-2000 SMT. MADHUBEN R. BAROT, B-5001, YOGI COMPLEX, NR. AMIDHARA, RANDER ROAD, SURAT VS THE A. C. I. T., CIRCLE-3, SURAT PA NO. ALDPB 9245 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. K. SHAH, AR RESPONDENT BY SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 27-09-2011 DATE OF PRONOUNCEMENT: 30-09-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II , SURAT DATED 17 TH JUNE, 2009 FOR THE ABOVE BLOCK PERIOD CHALLENGING THE LEVY OF PENALTY U/S 158 BFA (2) OF THE IT ACT. 2. THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THA T IN THE COURSE OF SEARCH OF THE PREMISES OF M/S. OHM DEVELOPERS AND M/S. OHM ORGANIZERS, EVIDENCE WAS FOUND REGARDING THE RECEIP T OF ON MONEY FROM VARIOUS PERSONS WHO HAD BOOKED FLATS AND SHOPS AT YOGI COMPLEX, RANDER ROAD, SURAT. THE PARTNERS OF THE FI RMS WHOSE STATEMENTS WERE RECORDED ON OATH, ADMITTED TO HAVE RECEIVED ON- IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 2 MONEY AS PER THE ACCOUNTS SEIZED IN COURSE OF THE S EARCH. THE ON MONEY SO RECEIVED WAS ASSESSED IN THE HANDS OF M/S. OHM DEVELOPERS AND M/S. OHM ORGANIZERS AND THE ADDITION S MADE IN BLOCK ASSESSMENT PROCEEDINGS WERE CONFIRMED BY THE ITAT AHMEDABAD BENCH. IN COURSE OF THE SEARCH OF THE PRE MISES OF M/S OHM DEVELOPERS AND OHM ORGANIZERS, A KHATAVAHI MARK ED BS-4 WAS SEIZED. PAGES 116 AND 117 OF THIS KHATAVAHI CON TAINED DETAILS OF THE PAYMENTS RECEIVED FROM THE ASSESSEE TOWARDS THE PURCHASE OF A FLAT NO. 501, IN YOGI COMPLEX. THE PARTNERS OF M/S. OHM DEVELOPERS HAD ACCEPTED THAT THE NOTINGS IN SUCH BOOKS OF ACCO UNT CONTAINED AMOUNTS RECEIVED FROM VARIOUS PARTIES BOTH IN CHEQUE AND IN CASH, FOR THE PURPOSE OF BOOKING FLATS AND S HOPS. THIS EVIDENCE WAS SUFFICIENT FOR THE AO TO FORM THE SATISFACTION THAT THE AMOUNTS PAID IN CASH BY THE ASSESSEE REPRESENTED THE ASSESS EE'S UNDISCLOSED INCOME. THE EVIDENCE WAS FOUND FROM THE PREMISES OF THE PERSON WHO WAS SEARCHED. ON THE BASIS OF SUCH F INDING, INQUIRIES WERE MADE WITH THE ASSESSEE BY THE DCIT, CENTRAL CI R- 1, THROUGH A LETTER U/ S. 133(6) OF THE IT ACT DATED 03-01-2002 . ON RECEIPT OF THE REPLIES TO THE QUERIES RAISED, THE DCIT WAS SATIS FIED THAT THIS WAS A FIT CASE FOR INITIATING PROCEEDINGS U/S 158BD OF THE IT ACT. HE THEREFORE, SENT THE REQUISITE INTIMATION ALONG WITH THE SEIZED MATERIALS TO THE ACIT, CIR- 3, SURAT WHO HELD JURISDICTION OVER THE ASSESSEE. THEREFORE, ALL THE CONDITIONS U/S 158 BD R. W. S. 158B C OF THE IT ACT WERE CLEARLY SATISFIED. IT WAS ONLY A FTER THIS, THAT THE NOTICE U/S 158BD OF THE IT ACT WAS ISSUED ON 10-6-2 004. THE ASSESSEE FAILED TO FILE THE REQUISITE RETURN IN RES PONSE TO THE SAID NOTICE. FROM, THE NOTINGS ON PAGES 116 AND 117 OF T HE KHATAVAHI IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 3 MARKED BS-4, THE AO OBSERVED THAT THE ASSESSEE HAD PAID A TOTAL CONSIDERATION OF RS 5,30,250/- TOWARDS THE PURCHASE OF FIAT NO. B - 501 AT YOGI COMPLEX, RANDER ROAD, SURAT. THIS INCLU DED A SUM OF RS.3,16,250/- PAID THROUGH CHEQUES AND RS. 2,14,000 /- PAID IN CASH. THE ASSESSEE ADMITTED TO THE PAYMENT OF RS 5,30,250 /-. IT WAS ALSO EXPLAINED THAT THE CHEQUE PAYMENTS WERE MADE FROM A N NRE ACCOUNT OF HER HUSBAND SHRI KETAN BAROT. THE AO NOT ED THAT OUT OF THE TOTAL OF SEVEN CHEQUES ISSUED FROM THE SAID BAN K ACCOUNT, CHEQUE NOS. 135280 TO 135283 AND 135286 WERE DULY R EFLECTED IN THE BANK STATEMENT. THE SUMS PAID THROUGH THESE CHE QUES TOTALED RS.2,16,250/-. HOWEVER, CHEQUE NOS.125284 AND 12528 5 FOR RS.50,000/- EACH, WERE NOT REFLECTED IN THE BANK ST ATEMENT. THE ASSESSEE EXPLAINED THAT DUE TO MISTAKE COMMITTED BY THE BANK THE SAID ENTRIES WERE NOT REFLECTED IN THE PASSBOOK. TH E AO REJECTED THE ASSESSEE'S EXPLANATION AND OBSERVED THAT IF THERE W AS INDEED ANY MISTAKE IN THE ENTRIES, THE ASSESSEE COULD HAVE EAS ILY GOT IT RECTIFIED. HE THEREFORE, TREATED THE ON-MONEY PAID IN CASH OF RS. 2,14,000/- + RS.1,00,000/- = RS.3,14,000/-, AS UNEXPLAINED INVES TMENT IN THE SAID FIAT. CONSEQUENTLY, HE ADDED THE SUM OF RS.3,14,000 /- TO THE ASSESSEE'S TOTAL INCOME. AT THE SAME TIME, PROCEEDI NGS U/S 158BFA (2) OF THE IT ACT WAS INITIATED FOR FURNISHING OF I NACCURATE PARTICULARS OF INCOME. WHEN FURTHER OPPORTUNITY WAS PROVIDED IN C OURSE OF THE PENALTY PROCEEDINGS TO PRESENT HE R CASE, THE ASSESSEE REITERATED THE SUBMISSIONS THAT WERE MADE IN ASSESSMENT PROCEEDING S. IT WAS THUS SUBMITTED THAT THE SOURCE OF THE ON-MONEY OF RS 2,1 4,000/- WAS THE DOLLARS WHICH SHE HAD BROUGHT INTO THE COUNTRY DURI NG HER VISIT FROM USA, AND REPRESENTED HER SAVINGS. THE ONLY SHORTCOM ING WAS THAT, IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 4 SHE COULD NOT PRODUCE ANY EVIDENCE OF THE ENCASHMEN T OF THE DOLLARS. PENALTY FOR CONCEALMENT COULD NOT BE LEVIED SIMPLY BECAUSE OF HER FAILURE TO PRODUCE SUCH EVIDENCE. THE AO REJECTED T HE ASSESSEE'S CONTENTIONS OBSERVING THAT THE CLAIM WAS ONLY A MAK E BELIEF STORY AND, RELYING ON THE CASES OF KHACPADE KISANRAO MANI : KRAO V/S ACIT 74 ITD 25, (PUNE) AND GO/ANI BROTHERS V/S CIT IN ITA NO 579 TO 583/ P/1998, 165 ITC 144 (PUNE) THE AO CAME TO THE CONCLUSION THAT THE ON-MONEY OF RS.2,14,000/- WHICH WAS PAID IN CASH, H AD COME OUT OF THE UNACCOUNTED INCOME OF THE ASSESSEE AND THUS IT WAS THUS A FIT CASE FOR THE LEVY OF PENALTY U/S 158BFA (2) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS AND FOR THE CONCEALMENT OF I NCOME. HE THEREFORE PROCEEDED TO LEVY THE PENALTY OF RS 1,28, 400/- UNDER THE SAID SECTION, BEING 100% OF THE TAX SOUGHT TO BE EV ADED. IN THE WRITTEN SUBMISSIONS SUBMITTED IN THE COURSE OF APPE LLATE PROCEEDINGS IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) BY THE L EARNED COUNSEL FOR THE ASSESSEE THAT PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM ASSESSMENT PROCEEDINGS, AND THEREFORE, THE EXPLANAT ION FILED IN PENALTY PROCEEDINGS WAS IMPORTANT FOR DECIDING THE ISSUE OF PENALTY. IT HAS BEEN URGED THAT THE ASSESSEE IS AN NRI AND S HE HAS NO OTHER SOURCE OF INCOME EXCEPT FOR THE REMITTANCES BROUGHT INTO INDIA AS AND WHEN SHE COMES HERE. THE SUM OF RS.3,16,250/- OUT O F THE TOTAL PURCHASE CONSIDERATION OF RS.5,30,250/- HAD BEEN AC CEPTED AS INVESTMENT MADE OUT OF SUCH REMITTANCES. THE REMAIN ING SUM WAS PAID OUT OF THE DOLLARS WHICH SHE HAD CARRIED FOR P ERSONAL EXPENSES. IT HAS BEEN ARGUED THAT SIMPLY BECAUSE THE EXPLANATION WAS NOT FOUND TO BE SATISFACTORY BY THE AO, THE PENALTY COULD NOT BE LEVIED. PENALTY PROCEEDINGS U/S 158BFA (2) OF THE IT ACT ARE SIMILA R TO THE IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 5 PROCEEDINGS U/S 271 (1) (C) OF THE IT ACT AND, THER EFORE, VARIOUS CANNONS OF LAW ON SECTION 271 (1) (C) OF THE IT ACT OUGHT TO BE APPLICABLE TO THE PROCEEDINGS U/S 158 BFA (2) OF TH E IT ACT. IT HAS BEEN FURTHER CONTENDED THAT LEVY OF PENALT8Y U/S 15 8 BFA (2) OF THE IT ACT IS NOT MANDATORY. IN THIS CONTEXT, RELIANCE HA S BEEN PLACED IN THE CASE OF SMT. MALA DAYANITHI 91 ITD 46. RELIANCE WA S ALSO PLACED ON THE FOLLOWING CASE LAWS: (I) CIT VS GAURISHANKAR SURESH PRASAD 224 ITR 27 (P AT) (II) BURMA SHELL OIL STORAGE & DISTRS. OF INDIA CO. VS ITO 112 ITR 592 (CAL) (III) CIT VS RAMSWAMI NAIDU 208 ITR 377 (MAD) 3. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION O F THE ASSESSEE IN THE LIGHT OF THE PROVISIONS OF LAW CONF IRMED THE PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDI NGS IN THE IMPUGNED ORDER IN PARA 7 TO PARA 7.7 ARE REPRODUCED AS UNDER: 7. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS. IN QUANTUM APPEAL, IT WAS HELD THAT A FURTHER SUM OF R S.1 LAKH HAD BEEN PAID BY CHEQUE WHICH WAS ON THE BASIS OF THE CERTIFICATE ISSUED BY THE SBI, NANPURA BRANCH. THE ADDITION OF RS.3,14,000 ON ACCOUNT OF UNEXPLAINED INVESTMENT WAS THEREFORE RESTRICTED TO RS.2,14,000, WHICH WAS CONFIRMED ON THE GROUND THAT THERE WAS SIMPLY N O EVIDENCE REGARDING THE COURSE OF SUCH INVESTMENT. T HE CLAIM THAT THE SUM OF RS.2,14,000 HAD BEEN PAID OUT OF THE DOLLARS THAT THE ASSESSEE HAD BROUGHT INTO INDI A IN CASH, WAS NOT SUPPORTED BY ANY EVIDENCE. THE AR HAS CONTENDED THAT THE ASSESSEE IS AN NRI AND HAS NO OT HER SOURCE OF INCOME IN INDIA. IF SUCH A CLAIM IS TRUE, EVEN THEN THE ASSESSEE HAS TO EXPLAIN THE SOURCE OF THE SAID SUM. SHE COULD BE HAVING CERTAIN SOURCES OF INCOME IN INDIA WHICH HAVE NOT BEEN DISCLOSED TO THE IT DEPT. SHE IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 6 COULD HAVE ALSO BORROWED THE SAID SUM FROM SOMEONE WHO HAD NOT DISCLOSED THE SAME. THE ONUS WAS THUS CLEARLY ON THE ASSESSEE TO PROVE THE SOURCE OF THE SAID SUM AND TO EXPLAIN THAT WAS DULY ACCOUNTED FOR. THE FACT REMAINS THAT THE ASSESSEE ACCEPTED THE PAYMENT OF O N- MONEY TO THE EXTENT OF RS.2,14,000. IT W AS THUS AN OPEN AND SHUT CASE, AND IT WAS FOR THIS REASON THAT THE ADDITION OF RS.2,14,000 WAS CONFIRMED IN QUANTUM APPEAL. 7.1 IT HAS BEEN VERY BRIEFLY STATED BY THE AR THAT THE PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM ASSESSMENT PROCEEDINGS AND THAT THE EXPLANATION FURNISHED IN PENALTY PROCEEDINGS IS IMPORTANT. THER E IS NO DOUBT THAT PENALTY PROCEEDINGS ARE SEPARATE FROM ASSESSMENT PROCEEDINGS, AND THIS VERY GENERAL PRIN CIPLE HAS BEEN LAID DOWN BY VARIOUS COURTS AND TRIBUNALS, BUT IS OFTEN QUOTED OUT OF CONTEXT BY ASSESS EE'S AND THEIR REPRESENTATIVES, WITHOUT MAKING ANY REL EVANCE TO THE ISSUE AT STAKE. IN THE CASE OF THE ASSE SSEE, FULL OPPORTUNITY WAS PROVIDED IN PENALTY PROCEEDIN GS TO FURTHER EXPLAIN AND SUBSTANTIATE THE PAYMENT OF ON- MONEY. THE ASSESSEE FURNISHED A DETAILED REPLY WHIC H HAS BEEN REPRODUCED BY THE AO IN THE BODY OF THE ASSESSMENT ORDER. THE ASSESSEE'S REPLY HAS BEEN CONSIDERED IN DETAIL BY THE AO BEFORE DRAWING HIS CONCLUSION REGARDING THE FURNISHING OF INAC CURATE PARTICULARS OF INCOME AND CONCEALMENT. THE LEVY OF PENALTY U/S 158BFA (2) OF THE ACT WAS THEREFORE, FU LLY JUSTIFIED ON THE FACTS OF CASE. 7.2 THE AR HAS MADE AN IMPORTANT THOUGH VERY B RIEF SUBMISSION THAT THE PENALTY COULD NOT BE LEVIED SIM PLY BECAUSE THE AO WAS NOT SATISFIED WITH THE EXPLANATI ON FURNISHED BY THE ASSESSEE. IN ORDER TO DEAL WITH TH IS CLAIM, IT IS NECESSARY TO EXAMINE THE PROVISIONS OF SECTION 271(1 ) (C) OF THE ACT, WHICH IS AS UNDER: 'IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 7 PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON- (C) HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. - . HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - 'EXPLANATION - 1: WHERE IN RESPECT OF ANY FACTS MAT ERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON U NDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSE SSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE, AND FAIIS TO PROVE THAT SUCH EXPENDITURE IS BONAFIDE AND THAT ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAD BEEN DISCLOSED BY HIM, THEN THE AMOUNT AIDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F SUCH PERSON AS A RESULT THEREOF SHALL, OF THE PURPOSE OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 7.3 THE PROVISION OF THE AFORESAID SECTION, COULD NOT BE APPLIED SIMPLY BECAUSE THE EXPLANATION FURNISHED BY THE ASSESSEE. AS PER CLAUSE (B) TO THE EXPLANATION-1, T HE EXPLANATION FURNISHED BY THE ASSESSEE IS ALSO REQUI RED TO BE SUBSTANTIATED BY 'HIM AND TO ALSO PROVE THAT THE EXPLANATION FURNISHED IS BONAFIDE AND THAT ALL THE FACTS RELATING TO SUCH EXPLANATION AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED . WHAT THE AR HAS FAILED TO APPRECIATE IS THE FACT TH AT WITH THE INSERTION OF THE EXPLANATION-1 WITH EFFECT FROM 01-04- 1976, THE ONUS HAD SHIFTED COMPLETELY TO THE ASSESS EE, THIS CAME TO BE REFLECTED IN THE- DECISION OF THE H ON'BLE IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 8 SUPREME COURT, IN CIT V/S MUSSADILAL RAM BHAROSE (1987) 165 1TR 14, IN CIT V/S K.R. SADAYAPPAN (1990 ) 185 ITP 49 AN IF IN ADD I. CIT V/S JEEVANLAL SHAH ( 1994) 205 ITR 244. THE HON'BLE COURT TOOK THE VIEW THAT W ITH THE INCORPORATION OF THE EXPLANATION TO SECTION 271 (1) (C) THE VIEW EARLIER TAKEN IN ANWAR ALI'S CASE NO LONGE R HELD THE FIELD AND IT WAS FOR THE ASSESSEE TO DISCHARGE THE ONUS AS CONTEMPLATED IN THE SAID EXPLANATION. THIS WAS FURTHER AFFIRMED BY THE COURT IN B.A. BALASUBRAMANI UM & BROS. V/S CIT (1999) 236 ITR 977,978. THIS VIEW OF THE HON'BLE SUPREME COURT WAS FOLLOWED BY THE HON'BLE KERALA HIGH COURT IN CIT V/S A. SREENIVASA PAL (200 0) 242 ITR 29, 36 AND ALSO IN CIT V/S GEO SEA FOODS (20DC) 244 ITR 44, 51-52. 7.4 THE CLAUSE (B) TO EXPLANASTION-1 WHICH WAS FU RTHER AMENDED BY THE TAXATION LAWS (AMENDMENT AND MISC. PROVISIONS) ACT OF 1986 W. E .F. 10-09-1986 (AND WH ICH HOLDS GOOD EVER TODAY) FURTHER THRUST THE ONUS ON T HE ASSESSEE TO PROVE THAT THE EXPLANATION PROVIDED IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAM E AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAS BEEN DISCLOSED BY HIM. WHAT THE SECTIONS 68, 69, 69A, 69 8 AND 69C DEEM FOR THE PURPOSE OF ASSESSMENT, SUCH AMENDMENT INFECTED THE DEEMINQ FOR THE PURPOSE OF PENALTY AS WELL. WHAT WAS INSERTED BY THE TAXATION LAWS (A & M.P.) ACT OF 1986 WAS EARLIER CONTAINED IN THE PROVISO BELOW THE EXPLANATION, WHICH WAS OMITTED A FTER THE SAME WORDS WERE INSERTED IN CL AUSE (B) TO EXPLANATION-1, THUS, THE EXPLANATION-1 BELOW SEC TION 271(L)(C) AUTOMATICALLY COMES INTO OPERATION W HEN, IN RESPECT OF ANY FACES MATERIAL TO THE CO MPUTATION OF THE TOTAL INCOME OF ANY PERSON, THERE IS A FAILU RE TO OFFER AN EXPLANATION OR AN EXPLANATION IS OFFERED WHICH IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR THE F IRST APPELLATE AUTHORITY, OR AN EXPLANATION IS OFFERED W HICH IS NOT SUBSTANTIATED. IN SUCH A CASE, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. THE ONUS IS CLEARLY EN THE ASSESSEE TO IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 9 ESTABLISH THAT THE EXPLANATION OFFERED IS BONA FIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HIM. 7.5 IN THE CASE OF THE ASSESSEE, THOUGH HE HAD PROVIDED AN EXPLANATION YET, HE WAS UNABLE TO SUBSTANTIATE THE SAME. NOR WAS HE ABLE TO ESTABLISH THAT THE EXPLANATION PROVIDED WAS BONAFIDE AND THAT, ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF HIS TOTAL INCOME HAD BEEN DISCLOSED BY HIM, GIVE N THE PREVAILING PROVISIONS OF THE ACT IN SECTION 271 (L) (C) R. W. THE EXPLANTION-1 BELOW THE SAID SECTION, THERE WAS CLEARLY A BURDEN ON THE ASSESSEE TO ESTABLISH THE GENUINENE SS OF HIS CLAIMS BEHIND THE INCOME DISCLOSED BY HIM IN TH E RETURN OF INCOME. THE ASSESSEE FAILED TO DISCHARGE THIS BURDEN. CONSEQUENTLY, THE PRESUMPTION THAT HE HAD F AILED TO FURNISH FULL AND ACCURATE PARTICULARS OF HIS INC OME TO THE EXTENT OF THE ADDITION MADE, WAS CLEARLY AVAILABLE TO BE DRAWN BY THE AO. GIVEN THE PRESENT POSITION OF LAW AS ENUMERATED ABOVE, THE RELIANCE PLACED BY THE AR ON THE CASE OF NATIONAL TEXTILES VS CIT (SUPRA) AND OTHER CASES WHICH PERTAINED TO THE PERIOD PRIOR TO 01/04/1976 A RE OF NO RELEVANCE TO THE FACTS OF THE CASE. 7.6 FINALLY, THE AR HAS CLAIMED THAT THE LEVY OF P ENALTY U/S 158BFA (2) IS NOT MANDATORY. HE HAS MADE THIS C LAIM EVEN WHILE STATING THAT THE PROCEEDINGS U/S 1583FA (2) IS THE SAME: AND SIMILAR TO THE PROVISIONS OF SECTION 271(L) (C) OF THE IT ACT. APART FROM THE ABOVE CASES, RELI ANCE IS ALSO PLACED ON THE RECENT DECISION OF THE HONB L E SUPREME COURT IN THE CASE OF UOI AND ORS V/S DHAREMENDRA TEXTILE PROCESSORS, (2008) 306 ITR 277 'WHERE THE HON'B!E COURT HAS HELD THAT, WHERE THERE IS EVASION OF TAX, IT IS A CIVIL LIABILITY ATTRACTING THE PROVISIONS OF SECTION 2.71(L) (C) OF THE IT ACT, R. W. THE EXP LANATIONS BELOW THE SAID SECTION, WHICH HAS BEEN ENACTED BY T HE LEGISLATURE TO PROVIDE A REMEDY FOR THE LOSS OF REV ENUE. THE LEVY OF PENALTY IS MANDATORY AND NO DISCRETION IS LEFT WITH THE COMPETENT AUTHORITY,' IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 10 7.7 GIVEN THE FACT; AND CIRCUMSTANCES OF THE CASE AS ALSO THE LEGAL POSITION AS DISCUSSED ABOVE IN DETAI L AND FURTHER RELYING ON THE LATEST DECISION OF HON'BLE S UPREME COURT IN THE CASE OF IN UOI AND ORS V/S DHARMENDRA TEXTILE PROCESSORS, (2008) 3 16 ITR 277 IT IS HELD THAT THE AO WAS FULLY JUSTIFIED IN NOT ONLY TREATING THE ON- MONEY PAYMENT OF RS.2,14,000 AS UNEXPLAINED BUT ALSO IN LEVYING THE PENALTY OF SUM OF RS.1,28,400 UNDER THE PROVISIONS OF SECTION 158BFA (2) OF THE IT ACT. IN THE RESULT, THE ASSESSEE'S APPEAL IS DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT NO INCOME WAS DECLARED IN THE RETURN OF THE BLOCK PERI OD. HE HAS SUBMITTED THAT THE ASSESSEE IS AN NRI AND EXPLANATI ON WAS FILED TO THE PENALTY MATTER, THEREFORE, NO PENALTY WAS LEVIA BLE IN THE MATTER. HE HAS SUBMITTED THAT PROVISIONS OF SECTION 158 BFA OF THE IT ACT ARE SIMILAR TO THE PROVISIONS OF SECTION 271 (1) (C) OF THE IT ACT, THEREFORE, ON GIVING EXPLANATION, NO PENALTY IS LEVIABLE. HE H AS FURTHER SUBMITTED THAT PENALTY IS NOT MANDATORY IN EACH AND EVERY CAS E AND SINCE EXPLANATION IS FILED, THEREFORE, PENALTY SHOULD NOT BE IMPOSED BEING THE PENALTY NOT MANDATORY IN NATURE. HE HAS RELIED UPON THE ORDER OF ITAT LUCKNOW BENCH IN THE CASE OF SALUJA HIRE PURCH ASE LTD. VS ACIT, 305 ITR (AT) 39. ON THE OTHER HAND, THE LEAR NED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMIT TED THAT THOUGH THE PROVISIONS OF SECTION 271 (1) (C) OF THE IT ACT WOULD NOT APPLY TO THE PRESENT PROCEEDINGS BUT ANYHOW THE ASSESSEE HAS NOT SUBSTANTIATED ITS EXPLANATION THROUGH ANY EVIDENCE OR MATERIAL ON IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 11 RECORD. ADDITION WAS BASED ON THE SEIZED MATERIALS, THEREFORE, PENALTY WAS RIGHTLY IMPOSED IN THE MATTER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE FINDINGS OF THE AUTHORITIES BELOW. SECTION 158 BFA (2) OF THE IT ACT PROVIDES AS UNDER: SECTION 158 BFA (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IN THE COURSE OF ANY PROCEED INGS UNDER THIS CHAPTER, MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOU NT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOM E DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE ( C ) OF SECTION 158BC : PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MADE IN RESPECT OF A PERSON IF ( I ) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE ( A ) OF SECTION 158BC ; ( II ) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS B EEN PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSE SSEE OFFERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE; ( III ) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RETURN; AND ( IV ) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN : PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDING PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERM INED BY THE ASSESSING OFFICER IS IN EXCESS OF THE INCOME SH OWN IN THE RETURN AND IN SUCH CASES THE PENALTY SHALL BE IMPOS ED ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS I N EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETUR N. IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 12 IT IS NOT IN DISPUTE THAT DURING THE COURSE OF SEAR CH THE EVIDENCES WERE FOUND REGARDING PAYMENT OF ON MONEY FOR BOOKIN G THE FLAT IN CHEQUE AND CASH. THE ASSESSEE ADMITTED TO HAVE MADE THE PAYMENT IN CASH OF RS.2,14,000/- BUT NO EVIDENCE WAS FILED TO SUBSTANTIATE THE SOURCE OF PAYMENT OF ON MONEY. THUS, THE ADDITION O N QUANTUM WAS MADE ON THE BASIS OF THE SEIZED MATERIAL FOUND DURI NG THE COURSE OF SEARCH ON WHICH SEPARATE ADDITION IS ALREADY MADE I N THE CASE OF THE PERSON SEARCHED. SINCE THE ASSESSEE IS NOT ABLE TO EXPLAIN THE SOURCE OF PAYMENT OF ON MONEY IN CASH, THEREFORE, F URTHER ADDITION OF RS.2,14,000/- WAS MADE IN THE CASE OF THE ASSESSEE. THE ADDITION WAS ACCEPTED BY THE ASSESSEE BY NOT PREFERRING FURT HER APPEAL. THUS, THE COMPUTATION OF INCOME IN THE BLOCK ASSESSMENT W AS MADE ON THE BASIS OF THE EVIDENCES FOUND DURING THE COURSE OF S EARCH WHICH WERE INCRIMINATING IN NATURE AGAINST THE ASSESSEE. THE L EARNED COUNSEL FOR THE ASSESSEE HOWEVER, SUBMITTED THAT LEVY OF PENALT Y IS NOT AUTOMATIC OR MANDATORY BUT THE SURROUNDING EVIDENCES HAVE TO BE TAKEN INTO CONSIDERATION FOR DECIDING WHETHER THE PENALTY SHOU LD BE LEVIED OR NOT. IN THIS CASE, THE AO HAD GRANTED OPPORTUNITY O F BEING HEARD TO THE ASSESSEE BEFORE LEVY OF PENALTY. IN THE CASE OF THE ASSESSEE IT IS ADMITTED FACT THAT ADDITION WAS MADE ON ACCOUNT OF MONEY PAID IN CASH WHICH WAS BASED ON THE SEIZED MATERIAL FOUND D URING THE COURSE OF SEARCH WHICH WAS ULTIMATELY ACCEPTED BY THE ASSE SSEE, THEREFORE, THERE WAS DIRECT EVIDENCE AGAINST THE ASSESSEE THAT THE ASSESSEE WAS INDULGED IN EARNING UNDISCLOSED INCOME. THEREFO RE, IT IS NOT POSSIBLE TO IGNORE THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. IN SPITE OF THESE EVIDENCES FOUND DURING TH E COURSE OF SEARCH AND OF WHICH THERE WAS KNOWLEDGE, THE ASSESSEE DID NOT FILE ANY IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 13 RETURN OF INCOME IN RESPONSE TO THE NOTICE ISSUED U /S 158 BD READ WITH SECTION 158BC OF THE IT ACT FOR THE BLOCK ASSE SSMENT. THE PROVISO TO SECTION 158 BFA (2) OF THE IT ACT PROVID ES THAT PENALTY COULD BE IMPOSED WHERE UNDISCLOSED INCOME DETERMINE D BY THE AO IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN OF I NCOME. HOWEVER, AS NOTED ABOVE THE ASSESSEE DID NOT FILE ANY RETURN FOR THE BLOCK PERIOD DESPITE SERVICE OF THE NOTICE. THEREFORE, UN DISCLOSED INCOME DETERMINED BY THE AO IN THE BLOCK ASSESSMENT WAS SU FFICIENT TO LEVY PENALTY AGAINST THE ASSESSEE. WHILE THERE COULD BE A DISPUTE BETWEEN THE REVENUE AND THE ASSESSEE AS TO WHETHER PROVISIONS OF SECTION 271 (1) ( C ) OF THE IT ACT WOULD BE APPLI CABLE TO THE PENALTY PROCEEDINGS U/S 158 BFA (2) OF THE IT ACT, THE LANG UAGE IN THE TWO SECTIONS ARE CLEARLY DIFFERENT AND THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE IS NOT TENABLE, YET, IT IS CLEAR THAT THE ASSESSEE WAS IN FULL KNOWLEDGE OF UNDISCLOSED INCOM E WHICH WAS NOT AT ALL SHOWN IN ANY MANNER IN THE RETURN TO BE FILE D FOR THE BLOCK PERIOD. THE LEARNED COUNSEL FOR THE ASSESSEE ARGUE D THAT SINCE THE ASSESSEE FILED EXPLANATION FOR THE PAYMENT OF ON MO NEY, THEREFORE, EXPLANATION TO SECTION 271 (1) ( C ) OF THE IT ACT CAN BE READ INTO SECTION 158 BFA (2) OF THE IT ACT, WE HAVE ALREADY MENTIONED ABOVE AND NOTED THAT SUFFICIENT EVIDENCES WERE FOUND DURI NG THE COURSE OF SEARCH TO SHOW UNDISCLOSED INCOME HELD BY THE ASSES SEE, DESPITE THAT EVIDENCES ON RECORD, THE ASSESSEE DID NOT DISC LOSE ANY UNDISCLOSED INCOME IN THE RETURN FOR THE BLOCK PERI OD. THEREFORE, THE REVENUE AUTHORITIES WERE JUSTIFIED IN COMPUTING THE UNDISCLOSED INCOME. THE CONDUCT OF THE ASSESSEE IN NOT DISCLOSI NG UNDISCLOSED INCOME IN THE RETURN FOR THE BLOCK PERIOD WOULD SHO W THAT THE CONDUCT IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 14 OF THE ASSESSEE WAS NOT BONA FIDE. THE LEARNED COUN SEL FOR THE ASSESSEE RELIED IN THE DECISION OF ITAT LUCKNOW BEN CH IN THE CASE OF SALUJA HIRE PURCHASE LTD. (SUPRA) IN WHICH IT WAS H ELD THAT PENALTY U/S 158 BFA (2) OF THE IT ACT IS NOT MANDATORY OR AUTOM ATIC, HOWEVER, IN THIS CASE NO MATERIAL WAS FOUND DURING THE COURSE O F SEARCH TO SHOW THAT SHARE APPLICATION MONEY WAS ASSESSES UNDISCLO SED INCOME. FACTS OF THIS CASE ARE TOTALLY DIFFERENT FROM THE F ACTS OF THE CASE OF THE ASSESSEE. CONSIDERING THE FACTS AND CIRCUMSTANCES O F THE CASE AND THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THE AUTHO RITIES BELOW WERE JUSTIFIED IN LEVYING AND CONFIRMING THE PENALTY AGA INST THE ASSESSEE. THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE. SA ME IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- IT (SS)A NO.111/AHD/2009 SMT. MADHUBEN R. BAROT VS ACIT, CIRCLE-3, SURAT 15 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD