S.S.Gururaj, Coimbatore V. ACIT, Coimbatore

ITSSA 15/CHNY/2011

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8368 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-08-2012
• Assessment Year: misc
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAJAGOPA L IRS
• Assessee Lawyers: A ARJUNARAJ
• Keywords: Search and seizure; Block assessment
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER IT(SS)A NO.15(MDS)/2011 BLOCK PERIOD : 1-4-1988 TO 5-3-1999 SHRI S.S.GURURAJ, 5/15, PERUMAL KOIL STREET, CHAIRMAN THOTTAM, SARAVANAMPATTI, COIMBATORE-641035. PAN AEAPG2327M. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE I, COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.ARJUNA RAJ, C.A. RESPONDENT BY : SHRI K.RAJAGOPAL, IRS, JCIT DATE OF HEARING : 8 TH AUGUST, 2012 DATE OF PRONOUNCEMENT : 8 TH AUGUST, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE ASSESSEE. THE APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSION ER OF INCOME-TAX(APPEALS)-II AT COIMBATORE, DATED 15-2-20 11. THE - - IT(SS)A 15 OF 2011 2 APPEAL ARISES OUT OF THE PENALTY LEVIED UNDER SECTI ON 158BFA(2) OF THE INCOME-TAX ACT, 1961. THE AMOUNT OF PENALTY IS ` 2,32,980/-. 2. THE ASSESSEE IS AN INDIVIDUAL. THERE WAS A SEA RCH AT THE PREMISES OF M/S.JAGADAMBAL FINANCE ON 5-3-19 99. THE SEARCH WAS UNDER SECTION 132 OF THE INCOME-TAX ACT, 1961. IN THE COURSE OF SEARCH, IT WAS FOUND BY THE REVENUE A UTHORITIES THAT THE ASSESSEE HAD MADE INVESTMENTS TO THE TUNE OF ` 27,25,000/- WITH M/S.JAGADAMBAL FINANCE . IT WAS ALSO NOTICED THAT THE ASSESSEE HAD MADE DRAWINGS OF ` 2,25,765/-. AS THE SOURCE FOR MAKING THE ABOVE INVESTMENT WAS TO BE EX AMINED BY THE AUTHORITIES, THE ASSESSEE WAS REQUIRED TO FILE A RETURN OF HIS INCOME UNDER THE PROVISIONS OF LAW STATED IN SECTIO N 158BD OF THE INCOME-TAX ACT, 1961. 3. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSI NG AUTHORITY, THE ASSESSEE FILED HIS RETURN OF INCOME ON 31-8-2011 DISCLOSING NIL INCOME. THE ASSESSEE HAS FILED DETA ILED STATEMENTS EXPLAINING THE SOURCES AVAILABLE IN THE HANDS OF THE ASSESSEE TO MAKE THE INVESTMENT IN M/S.JAGADAMBAL F INANCE. THE DETAILS FURNISHED BY THE ASSESSEE CONSISTED OF LOANS AVAILED - - IT(SS)A 15 OF 2011 3 FROM HIS WIFE SMT. VIJAYALAKSHMI, FROM FRIENDS AND RELATIVES OF HIS WIFE AND ALSO THE FINANCE OBTAINED FROM HIS HINDU U NDIVIDED FAMILY. THE ASSESSEE HAD FURNISHED CONFIRMATION LE TTERS IN SUPPORT OF THE LOANS AND ADVANCES OBTAINED FROM THE ABOVE STATED PARTIES. CONFIRMATION WAS NOT AVAILABLE IN ONE SINGLE CASE OF SMT. UNNAMALAI AMMAL, FROM WHOM LOAN WAS AVAILED . AT THAT POINT OF TIME SMT. UNNAMALAI AMMAL WAS BED RIDDEN A ND LATER SHE EXPIRED. 4. THE ASSESSEE HAD EXPLAINED THAT HE HAD RECEIVED ` 11 LAKHS FROM HIS WIFE SMT. VIJAYALAKSHMI BY WAY OF LOAN SO AS TO MAKE INVESTMENT IN M/S.JAGADAMBAL FINANCE. THE ASSESSEE PRODUCED THE DETAILS OF INCOME EARNED BY HIS WIFE, PARTICULARLY WITH REFERENCE TO THE AGRICULTURAL INCOME EARNED BY HER. A CERTIFICATE FROM THE VILLAGE ADMINISTRATIVE OFFICER WAS FILED DETAILING THE EXTENT OF THE LAND AND THE TYPE OF CR OPS CULTIVATED BY THE ASSESSEES WIFE. THE INCOME-TAX RETURN ALONGWI TH THE STATEMENT FILED BY THE ASSESSEES WIFE AND HER MATE RNAL GRAND- MOTHERS WILL DATED 27-11-1989 AND ANOTHER DOCUMENT DATED 12-4-1970 WERE ALSO FILED BEFORE THE ASSESSING OFFI CER TO SUPPORT THE AVAILABILITY OF FUNDS IN THE HANDS OF THE ASSES SEES WIFE. - - IT(SS)A 15 OF 2011 4 AFTER GOING THROUGH ALL THESE DETAILS AND DOCUMENTA RY EVIDENCES, THE ASSESSING OFFICER ACCEPTED THE GENUINENESS OF ` 10 LAKHS GIVEN BY THE ASSESSEES WIFE AS LOAN. THE TOTAL AM OUNT SHOWN BY THE ASSESSEE BY WAY OF LOAN AVAILED FROM HIS WIF E WAS ` 11 LAKHS. OUT OF THE ABOVE, THE ASSESSING OFFICER HAS ACCEPTED ` 10 LAKHS. HE DID NOT ACCEPT ` 1 LAKH ON THE GROUND THAT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE. AN AMOUNT OF ` 40,909/- WAS PROVIDED AS INTEREST FOR THE LOAN OF ` 1 LAKH. THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT ALSO. IN TOTAL, THE ASSESSING OFFICER DISALLOWED ` 1,40,909/- AND TREATED THE SAID AMOUNT AS UNDISCLOSED INCOME IN THE HANDS OF THE AS SESSEE. 5. AS ALREADY STATED, THE ASSESSEES WIFE SMT.VIJAYALAKSHMI HAD AVAILED LOANS FROM FRIENDS AN D RELATIVES IN ORDER TO FINANCE THE INVESTMENT MADE BY HER HUSBAND . SUCH AMOUNT OF LOANS AND ADVANCES SHOWN BY SMT.VIJAYALAK SHMI WAS ` 5 LAKHS. CONFIRMATIONS WERE FILED EXCEPT IN THE C ASE OF SMT.UNNAMALAI AMMAL. THE ASSESSING OFFICER ACCEPTE D ` 5 LAKHS AS GENUINE AND DISALLOWED ` 1 LAKH AS NOT PROVED. AN AMOUNT OF ` 18,000/- WAS PROVIDED AS INTEREST ON THIS AMOUNT O F ` 1 LAKH. THE ASSESSING OFFICER TREATED THE SUM OF ` 1,18,000/- - - IT(SS)A 15 OF 2011 5 ( ` 1 LAKH ALONGWITH THE INTEREST OF ` 18,000/-) AS THE UNDISCLOSED INCOME OF THE ASSESSEE. 6. AS STATED EARLIER, THE ASSESSEE HAD ALSO AVAILE D LOANS AND ADVANCES FROM HIS HINDU UNDIVIDED FAMILY TO THE TUNE OF ` 6.75 LAKHS. IN VIEW OF THE EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, BY WAY OF SA LE OF AGRICULTURAL PRODUCE, COPY OF FAMILY PARTITION DEED AND A CERTIFICATE FROM THE VILLAGE ADMINISTRATIVE OFFICER , THE ASSESSING OFFICER ACCEPTED ` 5.75 LAKHS AS GENUINE LOAN. HE DISALLOWED AN AMOUNT OF ` 1 LAKH. AN AMOUNT OF ` 29,389/- PERTAINED TO INTEREST ON THE ABOVE SUM OF ` 1 LAKH. THE ASSESSING OFFICER ACCORDINGLY TREATED AN AMOUNT OF ` 1,29,389/- AS THE UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. 7. IN THE MANNER STATED ABOVE, AS AGAINST THE THRE E SETS OF LOANS AND ADVANCES EXPLAINED BY THE ASSESSE E, THE ASSESSING OFFICER TREATED ` 1 LAKH EACH AS UNDISCLOSED INCOME OF THE ASSESSEE, TOTALING TO ` 3 LAKHS. THE INTEREST PROVIDED BY THE ASSESSEE ON SUCH LOANS OF ` 3 LAKHS WAS ALSO TREATED AS UNDISCLOSED INCOME. IN THIS WAY, A SUM OF ` 3,88,300/- WAS TREATED AS UNDISCLOSED INCOME AS AGAINST AN INVESTM ENT OF - - IT(SS)A 15 OF 2011 6 ` 27,25,000/- MADE BY THE ASSESSEE IN THE BUSINESS O F M/S.JAGADAMBAL FINANCE. 8. IN THE BACKDROP OF THE ABOVE, THE ASSESSING OFF ICER ISSUED NOTICE TO THE ASSESSEE PROPOSING TO LEVY PEN ALTY UNDER SECTION 158BFA(2) OF THE INCOME-TAX ACT, 1961. ACC ORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAD NOT EXPLAIN ED ANYTHING TO SUPPORT THE INCOME OF ` 3,88,300/-. ACCORDINGLY, HE CONFIRMED HIS PROPOSAL AND LEVIED PENALTY OF ` 2,32,980/-, BEING 100% OF THE TAX PAYABLE ON THE EXCESS OF UNDISCLOSED INCOME ASSESSED BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCO ME- TAX(APPEALS) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE. HE HAS CONFIRMED THE PENALTY. IT IS AGAINST THE AB OVE THAT THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBU NAL. 9. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. THE ASSESSMENT ORDER DTD. 31.7.2003 IS AGAINST LAW AND FACTS AND CIRCUMSTANCES OF THE CASE AND THE CONSEQUENT PENALTY ORDER IS ALSO NOT A VALID ONE. - - IT(SS)A 15 OF 2011 7 2. THE BLOCK ASSESSMENT WAS INITIATED NOT FOR THE ASSESSMENT UDI FOUND AS A RESULT OF SEARCH BUT FOR VERIFICATION OF INVESTMENT WHICH IS AGAINST LAW. 3. THE ASSESSMENT ORDER DTD. 31-7-2003 IS INVALID AND HENCE THE ADDITIONS MADE ARE ALSO NOT SUSTAINABLE AND CONSEQUENT PENALTY LEVIED IS ALSO NOT SUSTAINABLE. 4. THE ADDITIONS MADE IN THE ASSESSMENT IN THE HANDS OF THE ASSESSEE ARE NOT CORRECT AND CONSEQUENT PENALTY LEVIED ON THE BASIS OF ADDITIONS ARE ALSO NOT CORRECT. 10. WE HEARD SHRI A.ARJUNARAJ, THE LEARNED CHARTER ED ACCOUNTANT APPEARING FOR THE ASSESSEE AND SHRI K.RA JAGOPAL, THE LEARNED JOINT COMMISSIONER OF INCOME-TAX, APPEA RING FOR THE REVENUE. 11. WE ARE EXAMINING THIS PENALTY MATTER INDEPENDE NT OF THE CORRESPONDING QUANTUM ASSESSMENT ORDER. BUT , STILL WE - - IT(SS)A 15 OF 2011 8 HAVE TO MAKE REFERENCE TO CERTAIN BASIC FACTS OF TH IS CASE. OUT OF THE AMOUNT OF ` 27,25,000/- INVESTED BY THE ASSESSEE IN M/S.JAGADAMBAL FINANCE, THE ASSESSEE HAS EXPLAINED THE SOURCES OF HIS INVESTMENT AND THE EXPLANATIONS WERE ACCEPTED BY THE ASSESSING OFFICER ALMOST IN ITS ENTIRETY, EX CEPT IN A SMALL AMOUNT OF ` 3 LAKHS. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WORKS OUT TO LESS THAN 10% OF THE INVESTMEN T MADE BY THE ASSESSEE IN M/S.JAGADAMBAL FINANCE. THE AMOUNT S OF INTEREST OF ` 40,909/-, ` 18,000/- AND ` 29,389/- COULD NOT HAVE BEEN TREATED AS UNDISCLOSED INCOME UNLESS THEY WERE PAID BY THE ASSESSEE OUT OF ACCOUNTS. THEREFORE, WHILE CON TEMPLATING THE LEVY OF PENALTY UNDER SECTION 158BFA(2), THE AD DITIONAL AMOUNT OF INTEREST MAY NOT HAVE ANY EFFECT. THEREF ORE, IF AT ALL A CASE OF PENALTY IS TO BE CONSIDERED, THE QUANTUM BY WAY OF ADDITIONAL INCOME DETERMINED BY THE ASSESSING OFFIC ER NEEDS TO BE TAKEN AT ` 3 LAKHS ALONE. 12 NOW, COMING TO THE DETAILS OF THE SAID AMOUNT O F ` 3 LAKHS, ` 1 LAKH RELATE TO THE LOAN AVAILED BY THE ASSESSEE FROM HIS WIFE SMT.VIJAYALAKSHMI. SMT.VIJAYALAKSHM I HAS EXPLAINED HER SOURCE OF INCOME BY WAY OF AGRICULTUR E AND LEGACY - - IT(SS)A 15 OF 2011 9 OBTAINED FROM HER MATERNAL GRAND-MOTHER, ETC. ALL THESE MATTERS HAVE BEEN PROVED BY THE ASSESSEE BEFORE THE ASSESSI NG OFFICER WITH DOCUMENTARY EVIDENCES AND THE OTHER SUPPORTING MATERIALS. IT IS FOR THE SAID REASON THAT THE ASSESSING OFFICE R HAS MAGNANIMOUSLY ACCEPTED ` 10 LAKHS AS GENUINE LOAN. HE RESORTED TO A DISALLOWANCE OF A SMALL AMOUNT OF ` 1 LAKH. NOW, THE QUESTION IS WHETHER THIS AMOUNT OF ` 1 LAKH COULD BE CONSTRUED AS A CLEAR CASE OF UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE? WE ARE AFRAID; IT MAY NOT BE JUSTIFI ED. THE ASSESSEE HAS EXPLAINED THE ENTIRE AMOUNT OF ` 11 LAKHS, BUT THE ASSESSING OFFICER IN HIS GOOD DISCRETION ACCEPTED ` 10 LAKHS ALONE. THIS DOES NOT MEAN THAT ` 1 LAKH WAS NOT EXPLAINED BY THE ASSESSEE. AT THE MAXIMUM, IT IS A CASE WHERE T HE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASS ESSEE. THEREFORE, EVEN THOUGH THAT SHADOW OF DOUBT MAY SOM ETIMES BE JUSTIFIED IN QUANTUM ASSESSMENT, IT CANNOT BE A CAS E OF UNEXPLAINED INCOME IN THE HANDS OF THE ASSESSEE. I T IS FOR THE SIMPLE REASON THAT SMT. VIJAYALAKSHMI HAS EXPLAINED THE SOURCE OF HER INCOME. THE DISPUTE WAS ONLY IN RESPECT OF THE QUANTUM. THEREFORE, WE FIND THAT EVEN IF THIS AMOUNT OF ` 1 LAKH HAS BEEN - - IT(SS)A 15 OF 2011 10 TECHNICALLY ADDED AS THE UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE, THE SAME MAY NOT COME UNDER THE PURVIEW O F SECTION 158BFA(2). 13. LIKEWISE, IN THE CASE OF ` 5 LAKHS BORROWED BY THE ASSESSEES WIFE FROM HER FRIENDS AND RELATIVES, ` 4 LAKHS HAS ALREADY BEEN ACCEPTED BY THE ASSESSING OFFICER, LEA VING A NOMINAL AMOUNT OF ` 1 LAKH. CONFIRMATION WAS NOT AVAILABLE MAINLY BECAUSE OF THE ILLNESS AND THE SUBSEQUENT DE ATH OF SMT.UNNAMALAI AMMAL, THE CREDITOR OF THE CREDITOR. AN ENQUIRY INTO THE SOURCE OF SOURCE COULD BE JUSTIFIED ONLY I N CERTAIN EXCEPTIONAL CIRCUMSTANCES. IN THE PRESENT CASE, WE DO NOT FIND THE PRESENCE OF ANY SUCH EXCEPTIONAL CIRCUMSTANCE. THEREFORE, WE FIND THAT THIS ADDITION OF ` 1 LAKH IS ALSO ONLY ON THE GROUND OF THE DECISION OF THE ASSESSING OFFICER NOT TO ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPECT OF T HIS AMOUNT OF ` 1 LAKH. THIS IS NOT A CASE WHERE THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION. 14. IN THE CASE OF HINDU UNDIVIDED FAMILY LOAN ALS O, THE AMOUNT OF DISALLOWANCE WAS ONLY ` 1 LAKH. THIS AMOUNT WAS - - IT(SS)A 15 OF 2011 11 AGAIN EXPLAINED BY THE ASSESSEE, BUT NOT ACCEPTED B Y THE ASSESSING OFFICER. 15. THEREFORE, IN SHORT, WE FIND THAT THE ENTIRE A MOUNT OF ` 3 LAKHS HAS BEEN EXPLAINED BY THE ASSESSEE VIS--V IS HIS WIFE, BUT NOT ACCEPTED BY THE ASSESSING OFFICER, BEING UN SATISFACTORY. IT IS IN THIS CONTEXT THAT WE HAVE TO EXAMINE THE L AW LAID DOWN IN SECTION 158BFA(2). THE LAW STATES THAT THE ASSESSI NG OFFICER OR THE COMMISSIONER OF INCOME-TAX(APPEALS) IN THE COUR SE OF ANY PROCEEDINGS UNDER CHAPTER XIV-B MAY DIRECT THAT A P ERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE , ETC. THE MANDATE GIVEN TO THE ASSESSING AUTHORITY OR THE COMMISSIONER OF INCOME-TAX(APPEALS ) TO LEVY PENALTY UNDER SECTION 158BFA(2) IS DISCRETIONARY BE CAUSE OF THE CONSPICUOUS PRESENCE OF THE EXPRESSION MAY DIRECT . IF THE AUTHORITY DIRECTS, THEN THE PERSON SHALL PAY PENAL TY. BUT THE EXPRESSION SHALL PAY PENALTY DOES NOT INFLUENCE T HE MANDATE GIVEN TO THE AUTHORITIES AS MAY DIRECT. THIS STA TUTORY CONSTRUCTION IS IN CONSONANCE WITH THE BASIC PRINCI PLE OF TAX JURISPRUDENCE THAT TAX AND PENALTY ARE ENTIRELY DIF FERENT. LEVY OF TAX IS AN INESCAPABLE CONSEQUENCE OF AN ASSESSMENT RESULTING IN - - IT(SS)A 15 OF 2011 12 TAXABLE INCOME. PENALTY IS NOT SO. THAT IS WHY PE NALTY HAS BEEN LEVIED AS A SEPARATE SEGMENT OF LAW AND PROCEDURE. IT MEANS THAT PENALTY IS NOT AUTOMATIC. THIS GENERAL PROPOS ITION OF TAX JURISPRUDENCE IS EQUALLY APPLICABLE TO THE PENALTY PROVISION PROVIDED UNDER SECTION 158BFA(2). THEREFORE, NO AU THORITY CAN APPROACH THE QUESTION OF LEVY OF PENALTY UNDER SECT ION 158BFA(2) WITH A PREMONITION THAT PENALTY IS NECESS ARILY TO BE IMPOSED IN ALL CASES WHERE THE ASSESSING AUTHORITY HAS DETERMINED UNDISCLOSED INCOME IN EXCESS OF THE UNDI SCLOSED INCOME RETURNED BY THE ASSESSEE. THIS PROPOSITION IS ABSOLUTELY FALLACIOUS. THE AUTHORITY HAS TO EXAMINE THE GENES IS OF THE CASE, THE FACTUAL MATRIX, ABSENCE OF INSUFFICIENCY OF EVI DENCES AND ONLY AFTER EXAMINING ALL THESE MATTERS IN A REASONABLE M ANNER THAT HE SHOULD COME TO A CONCLUSION THAT LEVY OF PENALTY IN A PARTICULAR CASE IS FACTUALLY AND LEGALLY JUSTIFIED. 16. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VS. DODSAL LTD., 312 ITR 112, HAS UPHELD THE ABOVE PROPOSITION OF LAW. THE HONBLE COURT OBSERVED THAT UNDER SECT ION 158BFA(2), THE ASSESSING OFFICER OR THE COMMISSIONE R OF INCOME-TAX(APPEALS) MAY DIRECT THE PERSON TO PAY BY WAY OF - - IT(SS)A 15 OF 2011 13 PENALTY ANY SUM WHICH SHALL NOT BE LESS THAN THE AM OUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DE TERMINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 1 58BC OF THE ACT AND FURTHER HELD THAT THE TERMINOLOGY OF THE SE CTION MAKES IT CLEAR THAT THERE IS DISCRETION IN THE ASSESSING OFF ICER TO DIRECT PAYMENT OF PENALTY. THE COURT ALSO OBSERVED THAT T HE PROVISO SUPPORTS THIS INTERPRETATION AND ONLY IF THE AUTHOR ITY DECIDES TO IMPOSE PENALTY WILL IT BE NOT LESS THAN THE TAX LEV IABLE BUT NOT MORE THAN THREE TIMES THE TAX SO LEVIABLE. THE EXP RESSION SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE OR NOT EXCEEDING THREE TIMES THE TAX, DOES NOT RESULT IN READING TH E FIRST PART OF THE SECTION AS MANDATORY. THE PROVISO TO THE SUB-SECTI ON MAKES IT CLEAR THAT THERE IS DISCRETION ON THE COMMISSIONER( APPEALS) FOR THE REASONS WHICH ARE SET OUT THEREIN. THE COURT F URTHER OBSERVED THAT THE EXPRESSION USED IN A TAXING STATU TE WOULD ORDINARILY BE UNDERSTOOD IN THE SENSE IN WHICH IT I S HARMONIOUS WITH THE OBJECT OF THE STATUTE TO EFFECTUATE THE LE GISLATIVE INTENTION. IF THE LANGUAGE IS PLAIN AND UNAMBIGUOU S, ONE CAN - - IT(SS)A 15 OF 2011 14 LOOK FAIRLY AT THE LANGUAGE USED AND INTERPRET IT T O GIVE EFFECT TO THE LEGISLATIVE INTENTION. 17. THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI BEN CH ALSO HAD OCCASION TO EXPOUND THE ABOVE PROPOSITION OF LAW, AS SEEN IN THE CASE OF DR. HAKEEM S.A.SYED SATHAR, 314 ITR (AT) 290. IN THE SAID ORDER THE TRIBUNAL HELD THAT PROC EEDINGS FOR IMPOSITION OF PENALTY, THOUGH EMANATING FROM THE AS SESSMENT PROCEEDINGS, ARE ESSENTIALLY INDEPENDENT AND A SEPA RATE ASPECT OF THE PROCEEDINGS WHICH CLOSELY FOLLOW THE ASSESSM ENT PROCEEDINGS. PENALTY PROCEEDINGS ARE QUASI CRIMINA L. FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HA VE PROBATIVE VALUE, BUT SUCH FINDINGS ARE MATERIAL ALO NE AND MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN A GIVEN CA SE, BECAUSE CONSIDERATIONS THAT ARISE IN PENALTY PROCEEDINGS AR E DIFFERENT FROM THOSE THAT ARISE IN ASSESSMENT PROCEEDINGS. F INDINGS RECORDED IN THE ASSESSMENT ORDER CONSTITUTE GOOD EV IDENCE IN THE PENALTY PROCEEDINGS BUT THOSE FINDINGS CANNOT B E REGARDED AS CONCLUSIVE FOR THE PURPOSE OF THE PENALTY PROCEE DINGS. THE PROCESS OF IMPOSITION OF PENALTY IS NOT AUTOMATIC I N THE EVENTUALITY OF ESTIMATED INCOME. THE LEVY OF PENAL TY MUST BE - - IT(SS)A 15 OF 2011 15 CONSIDERED ON THE BASIS OF THE JUDICIAL DETERMINATI ON. IT MUST BE PROVED BEYOND DOUBT THAT THERE WAS ACTUALLY INCOME AND FURTHER THAT THE INCOME WAS NOT DISCLOSED. THE DEGREE OF PR OOF REQUIRED FOR THE IMPOSITION OF PENALTY IS QUITE DIFFERENT FR OM AND IS OF A MUCH HIGHER ORDER THAN WHAT IS REQUIRED FOR THE PUR POSE OF MAKING ADDITION ON ESTIMATE BASIS. BESIDES, ADDITI ON ON THE BASIS OF ESTIMATE DOES NOT IPSO FACTO SUPPLY EVIDENCE OF CONCEALMENT SO AS TO JUSTIFY PENALTY. A FINDING OF CONCEALMENT CANNOT BE BASED ON ESTIMATION ALONE. 18. THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE STATED JUDGMENT AND THE ORDER DO CLEARLY SUPPORT TH E INTERPRETATION OF SECTION 158BFA(2) MADE BY US IN T HE ABOVE PARAGRAPHS OF THIS ORDER. 19. IN THE PRESENT CASE, OUT OF A TOTAL INVESTMENT OF ` 27,25,000/-, THE ASSESSEE HAS FURNISHED DETAILS AN D EVIDENCES TO SUPPORT THE SOURCES AVAILABLE IN HIS HANDS AND T HE ASSESSING OFFICER HAS ACCEPTED THOSE EVIDENCES ALMOST TO THE FULL EXTENT OF ` 24,25,000/-. DISALLOWANCE WAS MADE ONLY IN RESPEC T OF ` 3 LAKHS. AS ALREADY STATED, THE CONSIDERATION OF INTEREST ACCRUED ON THE LOANS IS NOT RELEVANT IN THIS CONTEX T. THEREFORE, - - IT(SS)A 15 OF 2011 16 WE FIND, AS ALREADY STATED, THAT THE ASSESSEE HAS E XPLAINED FAIRLY WELL THE SOURCES AVAILABLE IN HIS HANDS TO MAKE THE INVESTMENT. ONLY FOR THE REASON THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION IN RESPECT OF ` 3 LAKHS, WHICH IS LESS THAN 10% OF THE TOTAL INVESTMENT MADE BY THE ASSESSEE, IT IS NO T POSSIBLE TO HOLD THAT THE SAID ADDITION OF ` 3 LAKHS PROVES BEYOND DOUBT THAT THE ASSESSEE HAS PURPOSELY CONCEALED UNDISCLOSED IN COME IN HIS HANDS INSPITE OF FILING A BLOCK RETURN. WE CAN NEITHER MAKE A FINDING THAT THE ASSESSEE HAS NOT EXPLAINED THE NEC ESSARY DETAILS, NOR WE CAN MAKE A FINDING THAT THE ASSESSE E HAS WITHHELD DISCLOSURE OF UNDISCLOSED INCOME. 20. THE COMMISSIONER OF INCOME-TAX(APPEALS) IN HIS ORDER HAS STATED THAT THE ASSESSING OFFICER HAS BRO UGHT OUT A CASE THAT THE ASSESSEE COULD NOT FURNISH ANY PRIMAR Y EVIDENCE REGARDING THE SOURCES OF CREDITORS AND SINCE HE COU LD NOT PROVE THE CREDITWORTHINESS OF THE CREDITORS, THEY WERE TR EATED AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961. THIS IS NOT A CORRECT STATEM ENT OF FACTS. THE ASSESSEE HAS FURNISHED DETAILS REGARDING HIS CR EDITORS AND THE DETAILS OF THE CREDITORS OF THE CREDITORS IN AL MOST ALL CASES. IT - - IT(SS)A 15 OF 2011 17 IS ONLY IN ONE CASE OF SMT. UNNAMALAI AMMAL THAT TH E ASSESSEE COULD NOT PRODUCE THE CONFIRMATION LETTER FROM THE CREDITOR OF THE CREDITOR. AS WE HAVE ALREADY STATED, IN THE MATTER OF A PENALTY, ENQUIRY INTO THE SOURCE OF THE SOURCE OF A CREDIT H AS TO BE EXCEPTIONALLY LOOKED INTO, DEPENDING UPON THE PRESS URE OF THE CIRCUMSTANCES OF A CASE. WE HAVE ALREADY HELD THAT THIS SINGULAR INSTANCE DOES NOT CREATE SUCH AN EXCEPTIONAL CIRCUM STANCE IN THE PRESENT CASE. THE COMMISSIONER OF INCOME-TAX(A PPEALS) FURTHER GOES TO EXPLAIN THAT THE ASSESSING OFFICER HAS OBSERVED IN THE PENALTY ORDER THAT DURING THE COURSE OF PENA LTY PROCEEDINGS ALSO, THE ASSESSEE COULD NOT GIVE ANY E XPLANATION AS TO HOW HE IS NOT LIABLE TO PENALTY UNDER SECTION 158BFA(2) DESPITE OPPORTUNITIES GIVEN. THIS IS ALSO NOT A PR OPER OBSERVATION IN ACCORDANCE WITH LAW. THE DUTY OF TH E ASSESSEE IS TO PROVIDE THE NECESSARY EVIDENCES BEFORE THE AUTHO RITY CONCERNED IN SUPPORT OF HIS CONTENTION. IT IS FOR HIM TO LEAD EVIDENCE. ONCE THE EVIDENCES ARE SO LED, IT IS FOR THE ADVERSARY TO SHOW THAT THE EVIDENCES ARE NOT ACCEPTABLE. IN THE PRESENT CASE, HE HAS LED EVIDENCES BEFORE THE ASSESSING OFF ICER IN ALMOST ALL THE CASES, EXCEPT IN THE CASE OF A SMALL AMOUNT. ONCE - - IT(SS)A 15 OF 2011 18 THE ASSESSEE HAS FILED SUCH DETAILS, IT IS FOR THE ASSESSING OFFICER TO ESTABLISH THAT THE INSUFFICIENCY OF THE EVIDENCE HAS MADE OUT A CIRCUMSTANCE IN WHICH HE HAS TO IMPOSE PENALTY. TH IS ONUS OF THE REVENUE IS NOT SHIFTED TO THE ASSESSEE. IT IS FOR THE REVENUE TO POINT OUT FIRST THAT THE ASSESSEES CASE IS A CA SE OF PENALTY. IT IS ONLY THEREAFTER THAT THE ONUS OF THE ASSESSEE AR ISES TO PROVE THAT HE IS NOT LIABLE FOR THE PENALTY. THE FIRST P ART TO BE PLAYED BY THE ASSESSING OFFICER HAS NOT BEEN DISCHARGED HERE. THEREFORE, WE FIND THAT THE FINDINGS OF THE COMMISSIONER OF IN COME- TAX(APPEALS) ARE AGAINST THE PROVISIONS OF LAW. 21. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CA SE, WE FIND THAT LEVY OF PENALTY IN THIS CASE IS NOT AT ALL JUSTIFIED. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS GROSSLY ERR ED IN CONFIRMING THE PENALTY LEVIED IN THIS APPEAL. ACCO RDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. THE PENALTY IS DELETED. 22. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE I S ALLOWED. - - IT(SS)A 15 OF 2011 19 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 8 TH OF AUGUST, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 8 TH AUGUST, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.