Appeal Details
Counselvise Citation
[2011] 124 COUNSELVISE.COM (IT) 8181 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 6 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
30-06-2011
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
E
Next Hearing Date
03-05-2011
Assessment Year
misc
Appeal Filed On
27-12-2007
Judgement Text
1 IT(SS)160/MUM/2007 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E MUMBAI E MUMBAI E MUMBAI E BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI P M JAGTAP, P M JAGTAP, P M JAGTAP, P M JAGTAP, AM AM AM AM & SHRI & SHRI & SHRI & SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM IT ITIT IT(SS) (SS) (SS) (SS)A NO. A NO. A NO. A NO. 160/MUM/2007 160/MUM/2007 160/MUM/2007 160/MUM/2007 ( (( (BLOCK PERIOD 1.4.90 TO 23.3.2001 BLOCK PERIOD 1.4.90 TO 23.3.2001 BLOCK PERIOD 1.4.90 TO 23.3.2001 BLOCK PERIOD 1.4.90 TO 23.3.2001) )) ) TRIUMPH INTERNATIONAL FINANCE I LTD OXFORD CENTRE, 10 SHORFF LANE, COLABA - CAUSEWAY MUMBAI 400 005 VS THE ASST COMMR OF INCOME TAX CEN.CIR 40, MUMBAI ( (( ( APPELLANT APPELLANT APPELLANT APPELLANT ) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAACE 0308A AAACE 0308A AAACE 0308A AAACE 0308A A SSESSEE BY SHRI RAJJIV KHANDELWAL REVENUE BY SHRI P DANIEL/SPL.COUNSEL PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 7.11.2007 OF THE CIT(A) ARISING FROM THE PENALTY LE VIED U/S 158BFA(2) OF THE ACT RELATING TO BLOCK ASSESSMENT. 2 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: I) THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY OF RS. 672,45,00,000 U/S 158BFA OF THE ACT. II) THE APPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE C ONFIRMED THE LEVY OF THE IMPUGNED PENALTY U/S 158BFA OF THE ACT. THE APPELLANTS FURTHER CONTEND THAT WITHOUT PREJUDI CE TO THE ABOVE GROUND AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE QUANTUM OF PENALTY WI THOUT ANY REFERENCE TO CORROBORATIVE EVIDENCES IN THE FORM OF CONFIRMATION S AND CIRCUMSTANTIAL EVIDENCES FILED BEFORE THE ASSESSING OFFICER. 2 IT(SS)160/MUM/2007 3 THE ASSESSEE COMPANY IS A MEMBER OF BOMBAY STOCK EXCHANGE IN THE RELEVANT ASSESSMENT YEAR AND WAS ENGAGED IN THE BUS INESS OF SHARE BROKING AND SHARE TRADING. A SEARCH AND SEIZURE ACTION U/S 132 WAS CARRIED OUT IN KETAN PAREKH GROUP OF CASES BEING INVOLVED IN THE SECURIT Y SCAM DURING 2001. 3.1 DURING THE COURSE OF SEARCH, 12 CDS ROM TAKEN FROM THE COMPUTER AND SERVER WERE FOUND, WHICH CONTAINED ACCOUNTINGS AND TRADING DATA OF TRIUMPH SECURITIES LTD., AND THE ASSESSEE. CONSEQUENT TO TH E SEARCH AND SEIZURE ACTION, THE ASSESSEE FILED RETURN OF UNDISCLOSED INCOME AT RS.NIL ON 29.10.2001. ON THE BASIS OF DATA IN THE CDS ROM AND ON THE BASIS OF FU RTHER EVIDENCES GATHERED BY THE ASSESSING OFFICER, IT WAS FOUND THAT IN SOME OF THE TRANSACTIONS, THE CLIENT CODE AS SHOWN IN THE STOCK EXCHANGE RECORD AT THE T IME OF STRIKING THE TRADE WAS DIFFERENT FROM THE CLIENT CODE SHOWN IN THE BOOKS O F ACCOUNT OF THE ASSESSEE. THUS, THE IDENTITY OF THE CLIENT, WHO ALLEGEDLY UND ERTAKEN THE TRANSACTION THROUGH THE ASSESSEE, BECAME SUBJECT MATTER OF FURTHER INVE STIGATION. THE MATTER WAS REFERRED FOR AUDIT U/S 142(2A) OF THE IT ACT. THE A SSESSING OFFICER NOTED THAT THE SPECIAL AUDITOR HAS MADE CERTAIN OBSERVATIONS THAT THE APPROXIMATELY 50% TO 55% OF TRANSITIONS, WHICH SHOWS VARIATIONS VIS-A-VI S BSE AND BOOKS ON RECORD REGARDING MISMATCHING OF CLIENTS ID CODE. THE ASSES SMENT WAS COMPLETED U/S 158BC W.R.S 143(3) ON 26.9.2003 DETERMINING THE UND ISCLOSED INCOME AT RS. 9,91,79,95,660/-. 3.2 AGAINST THE ASSESSMENT ORDER, THE ASSESSEE FILE D APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE HIS ORDER DATED 29.3.2004 HAS CONF IRMED THE ASSESSMENT ORDER. THE ASSESSEE FURTHER FILED APPEAL AGAINST THE ORDER OF THE CIT(A) BEFORE THE TRIBUNAL, WHICH WAS DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 7.7.1005. PENALTY PROCEEDINGS WERE ALSO INITIATED U/S 158BFA( 2) AND PENALTY OF RS. 672,45,00,000/- WAS LEVIED VIDE ORDER DATED 7.3 .2006. 3 IT(SS)160/MUM/2007 3.3 THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEF ORE THE CIT(A). THE CIT(A) UPHELD THE LEVY OF PENALTY BY OBSERVING THAT THE AS SESSMENT ORDER HAS BEEN UPHELD BOTH BY THE CIT(A) AND THE TRIBUNAL; THEREF ORE, HE DID NOT FIND ANY INFIRMITY IN THE PENALTY ORDER AND HELD THAT PENALT Y ORDER IS QUITE IN CONSONANCE WITH THE PROVISIONS OF THE ACT. 4 BEFORE US, THE LD AR HAS SUBMITTED THAT THE ASSES SEE HAS FILED AN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT AGAINST THE OR DER OF THE TRIBUNAL AND THE APPEAL OF THE ASSESSEE HAS BEEN ADMITTED BY THE HON BLE HIGH COURT; THEREFORE, THE ADDITION MADE ON THE BASIS OF MISMATCH OF THE C LIENT ID IN THE BLOCK ASSESSMENT IS A DEBATABLE ISSUE PENDING ADJUDICATIO N BEFORE THE JURISDICTIONAL HIGH COURT. THE LD AR THEN, SUBMITTED THAT WHEN THE ISSUE OF ADDITION MADE BY THE ASSESSING OFFICER BEING UNDISCLOSED INCOME IS A DEBATABLE ISSUE AND TWO VIEWS ARE POSSIBLE; THEREFORE, IN SUCH CIRCUMSTANCE S, THE PENALTY CANNOT BE IMPOSED AND SUSTAINABLE UNDER THE PROVISIONS OF LAW . 4.1 IT WAS FURTHER SUBMITTED THAT IN THE CASE OF PR EPONDERANCE OF PROBABILITIES CONCEALMENT PENALTY CANNOT BE LEVIED. IT WAS SUBMI TTED THAT THE ORDER IN THE CASE OF THE ASSESSEE, IN QUANTUM HAS BEEN DOUBTED BY THE HONBLE DIVISIONAL BENCH IN THE CASE OF TRIUMPH SECURITIES LTD IN ITA NO.IT (SS) 444/MUM/04 AND AFTER REFERRING TO THE DECISION OF THE TRIBUNAL IN THE ASSESSEES CASE FOR ASSESSMENT YEAR 1999-00 ON THE ISSUE OF , CLIENT I D MISMATCH, REFERRED THE MATTER TO THE PRESIDENT TO CONSTITUTE A SPECIAL BEN CH BECAUSE OF INCONSISTENT VIEW IS TAKEN IN THE CASE OF THE ASSESSEES BLOCK A SSESSMENT. AS SUCH, SPECIAL BENCH HAS BEEN CONSTITUTED IN THE CASE OF TRIUMPH S ECURITIES LTD., DUE TO DIFFERENT OPINIONS EXPRESSED ON SAME FACTS. THUS, P ENALTY, U/S 158BFA CANNOT BE LEVIED. HE RELIED ON THE DECISION OF THE TRIBUNAL, IN THE CASE OF MAERSK INDIA P LTD, IN ITA NO.1883/MUM/2006 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT 4 IT(SS)160/MUM/2007 CONCEALMENT PENALTY CANNOT BE LEVIED ON AN ADDITION , WHICH IS REFERRED FOR DECISION OF SPECIAL BENCH. IT WAS FURTHER SUBMITTE D THAT THE BOMBAY HIGH COURT HAS ADMITTED THE SUBSTANTIAL QUESTIONS OF LAW IN TH E CASE OF THE ASSESSEE ON THE ADDITIONS MADE IN THE BLOCK ASSESSMENT. THUS, IT W AS SUBMITTED THAT THE ORDER OF THE TRIBUNAL IN UPHOLDING THE ADDITIONS IN BLOCK ASSESSMENT IS NOT FREE FROM DOUBT AND HENCE, PENALTY U/S 158BFA CANNOT BE LEVIE D. ACCORDINGLY, THE LD AR HAS SUBMITTED THAT WHEN THE ISSUE OF ADDITION MADE IN THE BLOCK ASSESSMENT IS A DEBATABLE ISSUE AND NOT ATTAINED THE FINALITY THEN PENALTY CANNOT BE LEVIED ON SUCH AN ADDITION, WHICH WAS A SUBJECT MATTER OF THE SPECIAL BENCH. 5 ON MERIT, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT ON THE DATE OF SEARCH, RETURNS OF INCOME FOR ASSESSMENT YEAR 1998- 99, 99-00 AND 2000-01 WERE ON RECORD OF THE ASSESSING OFFICER. THE ISSUE OF C LIENT ID IS COMMON TO ALL THE AFORESAID YEARS. HOWEVER, THE ASSESSING OFFICER HA S MADE ADDITION ON ACCOUNT OF CLIENT ID MISMATCH IN ASSESSMENT YEAR 1998-99 A ND 1999-00 IN REGULAR ASSESSMENT WHEREAS SIMILAR ADDITION RELATING TO AYS 2000-01 AND 2001-02 HAVE BEEN MADE IN BLOCK ASSESSMENT. THERE IS NO DIFFEREN CE IN THE FACTS FOR THE AFORESAID RELEVANT 4 YEARS BUT THE APPROACH OF THE ASSESSING OFFICER IS DIFFERENT IN THE REGULAR ASSESSMENT I.E AYS 1998-99 AND 1999- 00 AND FOR THE BLOCK ASSESSMENT FOR AYS 2000-01 AND 2001-02. IT WAS CO NTENDED THAT THE DEPARTMENT SHOULD CLARIFY THIS APPROACH OR ELSE THE ADDITION FOR AYS 2000-01 AND 2001-02 COULD NOT HAVE BEEN MADE IN BLOCK ASSESSMEN T. IT WAS CONTENDED THAT WHEN A DECISION ONCE TAKEN IN AY 1998-99 APPLIED IN AY 1999-00 BY THE ASSESSING OFFICER, THEN HE SHOULD HAVE GONE TO LOGI CAL EXTENT AND SHOULD HAVE BEEN APPLIED TO REST OF THE YEARS AS WELL I.E. AYS 2001-02 AND 2001-02. IT WAS SUBMITTED THAT PUNCHING OF CLIENT ID WAS NOT COMPUL SORY DURING THE PREVIOUS YEARS RELEVANT TO AND UPTO ASSESSMENT YEAR 2001-02 . IT WAS SUBMITTED THAT 5 IT(SS)160/MUM/2007 WHEN PUNCHING OF CLIENT ID ITSELF WAS NOT COMPULSOR Y; THERE CAN BE NO QUESTION OF A MISMATCH, IF THE CLIENT ID IS NOT PUNCHED. THUS, TO THE EXTENT THAT THE REPORT OF THE SPECIAL AUDITORS DEALS WITH DETAILS OF TRANSACT IONS HAVING CLIENT ID MISMATCH IS OF NO RELEVANCE. HOWEVER, IN ANY VIEW OF THE MA TTER, THE ASSESSEES HAVE GIVEN DETAILED REASONS FOR OCCURRENCE OF MISMATCH. 5.1 IT WAS SUBMITTED THAT IT IS CRYSTAL CLEAR THAT THE UNDISCLOSED INCOME SHOULD BE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SE ARCH. IN THE CASE ON HAND, IT IS SEEN THAT THE SEARCH PARTY HAS TAKEN 12 CDS CONTAIN ING ACCOUNTING AND TRADING DATA OF TRIUMPH INTERNATIONAL FINANCE INDIA LTD FOR AYS 1999-2000 AND 2000-01, WHICH CONTAIN ACCOUNTING DATA FOR THE YEARS INTER A LIA AYS 1998-99 TO 2001-02. THUS, AS A RESULT OF SEARCH, NO INCRIMINATING MATER IAL WAS FOUND WHICH WOULD SUGGEST OR REVEAL THAT THERE IS UNDISCLOSED INCOME. THE CDS CONTAIN REGULAR BOOKS OF ACCOUNT. THE DEPARTMENT HAS ALSO NOT FOUND ANY UNACCOUNTED CASH OR UNDISCLOSED BANK ACCOUNT OR SHARES OR ANY OTHER INV ESTMENTS. FURTHER, IT WOULD BE SEEN THAT UNDISCLOSED INCOME CAN ALSO BE ON THE BASIS OF SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER, PROVIDED THE SAME ARE RELATABLE TO SUCH EVIDENCE; SUCH MEANS EVIDEN CE FOUND DURING SEARCH. THUS, THERE HAS TO BE LIVE LINK OR DIRECT NEXUS BETWEEN T HE DETAILS GATHERED DURING THE COURSE OF SEARCH I.E. THE DATA IN CDS AND FURTHER E VIDENCES GATHERED POST SEARCH I.E. DATA COLLECTED FROM THE STOCK EXCHANGE ON THE BASIS OF EVIDENCE FOUND THAT POINTED AT CLIENT ID MISMATCH. THAT IS, WHAT IS TH E EVIDENCE THAT PROMPTED INSTIGATED THE ASSESSING OFFICER TO CALL FOR SUCH I NFORMATION FROM THE STOCK EXCHANGE. THE RESULT OF ACCOUNTING DATA IN THE CDS ARE REFLECTED IN THE AUDITED ACCOUNTS AND THE SAME ARE SUBJECT MATTER OF REGULAR ASSESSMENT AND HENCE, CANNOT BE CONSIDERED IN BLOCK ASSESSMENT. THE FACT OF MISMATCH WAS WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER AND THE SAME CAN NOT BE SAID TO EMANATE AS A 6 IT(SS)160/MUM/2007 RESULT OF SEARCH. THE AO HAS BROUGHT TO TAX BROKER AGE EARNED BY THE ASSESSEE ON THE SAID TRANSACTIONS WHICH HAVE BEEN CONSIDERED AS UNDISCLOSED INCOME. THUS, THE STAND OF THE ASSESSING OFFICER IS INCONSI STENT IN AS MUCH AS ON ONE HAND HE BRINGS TO TAX THE TRANSACTIONS FOR WHICH CO NFIRMATION IS NOT AVAILABLE AS THE ASSESSEES OWN TRANSACTIONS AND ON THE OTHER HA ND TAXES THE BROKERAGE ON SUCH TRANSACTIONS. 5.2 OUT OF TOTAL PURCHASE TURNOVER OF RS.11,716.54 CRORES IN AY 2000-01, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 288. 56 CRORES WHICH IS JUST 2.46% OF THE TOTAL PURCHASE TURNOVER. OUT OF THIS ADDITIO N, AFTER CONSIDERING THE CONFIRMATION FILED WITH THE CIT(A)/TRIBUNAL AND OTH ER EVIDENCES, THE ASSESSEE DO NOT HAVE CONFIRMATIONS FOR TRANSACTION OF APPROXIMA TELY RS. 2.80 CRORES WHICH IS 0.02% OF THE TOTAL PURCHASE TURNOVER. 5.3 SIMILARLY, OUT OF TOTAL PURCHASE TURNOVER OF RS . 30,460.30 CRORES IN AY 2001-02, THE ASSESSING OFFICER HAS MADE AN ADDITIO N OF RS. 397.31 CRORES WHICH IS JUST 1.30% OF THE TOTAL PURCHASE TURNOVER. OUT O F THIS ADDITION, AFTER CONSIDERING THE CONFIRMATION FILED WITH THE CIT(A)/ TRIBUNAL AND OTHER EVIDENCES, THE ASSESSEE DO NOT HAVE CONFIRMATION FOR TRANSACTI ONS OF APPROXIMATELY RS. 38.62 CRORES WHICH IS 0.13% OF THE TOTAL PURCHASE T URNOVER. HENCE, IT WAS SUBMITTED THAT IT IS HUMANLY NOT POSSIBLE TO FURNIS H THE CONFIRMATION IN RESPECT OF 100% TRANSACTIONS. 5.4 FURTHER, IT WAS SUBMITTED THAT THE ADDITION HAS BEEN MADE ON ASSUMPTIONS, PRESUMPTIONS, SURMISES AND CONJECTURES AS THE ASSESSING OFFICER HAS STARTED, WITHOUT PROVING THAT THE TRANSACTIONS ARE OF THE ASSESSEE AND THE CIT(A) HAS CONFIRMED THE IMPUGNED ADDITION WITHOUT CONSIDERING THE 7 IT(SS)160/MUM/2007 CONFIRMATIONS AND CIRCUMSTANTIAL EVIDENCES FILED WI TH HIM IN RESPECT OF CLIENTS WHOSE CONFORMATIONS COULD NOT BE OBTAINED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS LEVIED PENA LTY ON TAX INCLUDING SURCHARGE. THE ASSESSEE, WITHOUT PREJUDICE TO THE CONTENTIONS ABOVE SUBMITTED THAT PENALTY CAN BE LEVIED ONLY ON THE TAX CALCULAT ED ON UNDISCLOSED INCOME. 5.5 IT WAS FURTHER SUBMITTED THAT PENALTY PROCEEDIN GS IN SEC. 158BFA(2) ARE AKIN TO THE MAIN CLAUSE OF SECTION 271(1)( C). AS P ER THE PRINCIPLES LAID DOWN IN SEC. 271(1)( C) APPLICABLE AND THE ASSESSING OFFICE R HAS TO SHOW THAT ASSESSEE HAS CONCEDED THE PARTICULARS OF UNDISCLOSED INCOME OR MATERIAL FACTS AND ALSO TO SHOW THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT BONAFIDE OR SATISFACTORY; HENCE, THE BURDEN IS ON THE DEPARTMEN T TO PROVE FACTUM OF CONCEALMENT. IT WAS FURTHER SUBMITTED THAT THAT A N ASSESSMENT CANNOT BE FRAMED IN BLOCK WAS BASED ON THE LAW THEN PREVAILIN G WITH THE ATTENDING FACT THAT NO INCRIMINATING DOCUMENTS FOUND DURING SEARCH AND THAT ONLY REGULAR BOOKS OF ACCOUNT FOUND ON SEARCH. IT WAS SUBMITTED THAT THE ENTIRE ADDITION HAS BEEN MADE ONLY FOR THE REASON THAT THE CONFIRMATIONS FRO M CLIENTS COULD NOT BE FURNISHED IN RESPECT OF TRANSACTIONS CARRIED OUT BY THE ASSESSEE AS A BROKER OR WHERE THE CONFORMATIONS RECEIVED FROM THE CLIENTS W ERE CONSIDERED INCOMPLETE BY THE ASSESSING OFFICER AS THE PAN NOT MENTIONED. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO PROVE THAT THERE WA S CONSCIOUS OR DELIBERATE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. HE RELIED ON THE DECISION REPORTED IN 106 TTJ 89(KOL) AND THE DECISION OF THE TRIBUNAL REPORTED IN 100 ITD 510 (MUM) WHEREIN IT HAS BEEN H ELD THAT THE ELEMENT OF CONCEALMENT OF PARTICULARS OF INCOME OR INCOME IS N OT CONDITION PRECEDENT FOR LEVY OF PENALTY U/S 158BFA(2) BECAUSE INCOME FOR TH E BLOCK PERIOD IS TO BE DETERMINED ON THE BASIS OF SEIZED MATERIAL WHICH IS ALREADY IN THE POSSESSION OF 8 IT(SS)160/MUM/2007 THE DEPARTMENT. THE ASSESSEE HAS TO EXPLAIN AS TO W HY IT WAS NOT ABLE TO COMPUTE THE TRUE UNDISCLOSED INCOME FROM THE SEIZED MATERIAL AND WHY IT FAILED TO RETURN THE TRUE UNDISCLOSED INCOME. 5.6 IT WAS CONTENDED THAT THE ASSESSEE HAVING FILED THE CONFIRMATION, DISCHARGE THE BURDEN OF PROVING THE ASESSEES EXPL ANATION OF CLIENT ID MISMATCH, THUS, THE PENALTY NEED TO BE DELETED. HE RELIED ON THE DECISION REPORTED IN 10 TTJ 1143 (AHD). IT WAS CONTENDED TH AT ALL THE ENTRIES WERE ENTERED IN THE REGULAR BOOKS OF ACCOUNT AND NO CONT RARY EVIDENCE HAVE BEEN COLLECTED BY THE REVENUE DURING THE SEARCH AND HENC E THE MATTER IS BEYOND THE AMBIT OF CHAPTER XIV-B. HE RELIED ON THE DECISION R EPORTED IN 95 ITD 1 (MUM)(TM). 5.7 FURTHER, IT WAS SUBMITTED THAT THE DIFFERENCE B ETWEEN UNDISCLOSED INCOME ASSESSED AND RETURNED IS NOT RESULT OF INTENTIONAL CONCEALMENT AND ALSO NOT ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING T HE COURSE OF SEIZURE BUT ONLY FOR NON FURNISHING OF CONFIRMATIONS. THUS, THE ADDI TION IS NOT ON THE BASIS OF SOME INDEPENDENT MATERIAL FOUND BUT ON THE BASIS OF FORM ULA; HENCE THIS ADDITION IS AKIN TO ADDITION ON ESTIMATE BASIS. 5.8 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ASSESSEE HAD 23 GROUP OF COMPANIES AND MASTERMIND OF SECURITY SCAM OF 2001 BY USING FUNDS OF CORPORATE HOUSES AND BANKS. THE ADDITION OF UNDISCL OSED INCOME IS BASED ON MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEAR CH. THE CDS IN QUESTION WERE TAKEN FROM THE COMPUTER OF THE ASSESSEE WHICH LEAD TO THE INFORMATION FOR UNEARTHING THE UNDISCLOSED INCOME. THE LD DR HAS F URTHER CONTENDED THAT THE QUANTUM HAS BEEN CONFIRMED BY THE TRIBUNAL. MOREO VER, THE ISSUE WHETHER THE UNDISCLOSED INCOME CAN BE ASSESSED IN THE BLOCK ASS ESSMENT HAS BEEN 9 IT(SS)160/MUM/2007 CONSIDERED AND DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEES SISTER CONCERN IN IT(SS) NO. 444/MUM/200 4 VIDE ITS DECISION DATED 7.4. 2010. THE SPECIAL BENCH OF THE TRIBUNAL HAS HELD THAT THE PROVISIONS OF SEC 69 OF THE ACT IS APPLICABLE TO THE EXTENT OF INCOME NOT DISCLOSED IN THE TRANSACTION RECORDED IN THE BOOKS OF ACCOUNT; THERE FORE, THE SAME IS ASSESSABLE IN THE BLOCK ASSESSMENT AS UNDISCLOSED INCOME. HE HAS FURTHER CONTENDED THAT THE CD TAKEN FROM THE COMPUTER RECORDS OF THE ASSES SEE DURING THE SEARCH ACTION IS AN INCRIMINATING EVIDENCE AND SHOWING U NDISCLOSED INCOME. 5.9 AS REGARDS THE SIMILARITY IN SECTION 271(1)( C) AND 158BFA(2), THE LD DR SUBMITTED THAT THERE IS NO PARI MATERIA BETWEEN THE TWO PROVISIONS. HE RELIED UPON THE DECISION OF THE LUCKNOW BENCH OF THE TRIBU NAL IN THE CASE OF SHAMIL INDUSTRIES P LTD VS DCIT REPORTED IN 179 TAXMAN 30 . HE FURTHER SUBMITTED THAT MERE ADMISSION OF THE APPEAL BY THE HIGH COURT DOES NOT AMOUNT TO EXPRESSION OF VIEW THAT PENALTY SHOULD NOT LEVIED. SINCE THE ASSESSEE WAS INVOLVED IN THE CIRCULAR TRADING BY 23 GROUP COMPANIES OF THE ASSES SEE AND ONCE THE QUANTUM HAS BEEN DECIDED AGAINST THE ASSESSEE UPTO THE STAG E OF THE TRIBUNAL THEN THE PENALTY IS A NATURAL CONSEQUENCE. 5.10 IN REBUTTAL, THE LD AR HAS SUBMITTED THAT SECU RITY SCAM HAS NO RELEVANCE IN THE ADDITION OF UNDISCLOSED INCOME IN THE CASE IN H AND. THE JPC IS NOT INVESTIGATING THE CASE OF TAXATION BUT FOR OTHER OF FENCES; THEREFORE, THE ALLEGATION OF SECURITY SCAM HAS NO INFLUENCE ON THE TAX MATTER . 6 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RELE VANT MATERIAL ON RECORD. DURING THE COURSE OF SEARCH, THE DATA AND INFORMATI ON IN THE COMPUTER AND SERVER FOUND IN THE PREMISES OF THE ASSESSEE WERE T AKEN IN 12 CDS ROM. THESE 10 IT(SS)160/MUM/2007 DATA CONTAIN ACCOUNTING AND TRADING OF THE ASSESSEE AS WELL AS THE ASSESSEES SISTER CONCERN NAMELY TRIUMPH SECURITY LTD. ON THE BASIS OF THESE DATA RECORDED IN THE CDS ROM AND ON THE BASIS OF FURTHER EVIDENCE S GATHERED, IT WAS FOUND THAT IN SOME OF THE TRANSACTIONS THERE WERE DIFFERENCES WITH REGARD TO THE IDENTITY OF THE PARTIES/CLIENTS ON WHOSE BEHALF THE TRANSACTI ONS WERE ALLEGEDLY UNDERTAKEN AND RECORDED IN THE BOOKS OF ACCOUNT. SINCE THE RE WAS A DIFFERENCE IN THE IDENTITY OF THE PARTIES/CLIENTS AS RECORDED IN THE BOOKS OF ACCOUNT AND CLIENTS CODE AS PER THE STOCK EXCHANGE RECORDS, THE MATTER WAS FURTHER INVESTIGATED AND SUBJECTED TO AUDIT U/S 142(2A) OF THE I T ACT. 6.1 FINALLY, THE BLOCK ASSESSMENT WAS FRAMED BY MAK ING AN ADDITION U/S 69 OF THE I T ACT. THE ADDITION MADE IN THE BLOCK ASSESSM ENT HAS BEEN CONFIRMED BY THE CIT(A) AND ON FURTHER APPEAL, THE TRIBUNAL HAS ALSO UPHELD THE ACTION OF THE ASSESSING OFFICER AS SELL AS THE ORDER OF THE CIT( A). 6.2 IT IS AN UNDISPUTED PROPOSITION OF LAW THAT, TH OUGH THE LEVY OF PENALTY U/S 158BFA(2) IS NOT AUTOMATIC AND MANDATORY; BUT THE A SSESSING OFFICER HAS TO TAKE INTO CONSIDERATION ALL RELEVANT FACTS AND CIR CUMSTANCES AND PARTICULARLY WHETHER THE UNDISCLOSED INCOME COMPUTED IN THE BLOC K ASSESSMENT IS BASED ON THE EVIDENCES/MATERIAL FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND MATERIAL OR INFORMA TION AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCES . IT HAS TO BE TAKEN INTO CONSIDERATION WHETHER THE UNDISCLOSED INCOME COMPUT ED IN THE BLOCK ASSESSMENT REPRESENTS THE INCOME, WHICH WOULD NOT H AVE BEEN OFFERED BY THE ASSESSEE OR DETECTED BY THE AUTHORITIES, IF THE SAM E WAS NOT DETECTED IN THE SEARCH ACTION OR A RESULT OF EVIDENCE FOUND IN THE SEARCH OR CONSEQUENT INVESTIGATION ON THE BASIS OF THE MATERIAL FOUND DU RING THE COURSE OF SEARCH. THEREFORE, THE ASSESSING OFFICER HAS TO SATISFY HIM SELF THE EXISTENCE OF THE 11 IT(SS)160/MUM/2007 CIRCUMSTANCES WHICH WARRANTS LEVY OF PENALTY U/S 15 8BFA(2). THE PROVISO 1 & 2 TO SUB.SEC 2 OF SEC 158BFA TALKS ABOUT SOME EXCEPTI ON WHERE NO PENALTY CAN BE IMPOSED. FOR READY REFERENCE, WE REPRODUCE THE PROV ISIONS OF SEC. 158BFA(2) AS UNDER: ( 2) THE ASSESSING OFFICER OR THE COMMISSIONER (APPEA LS IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN T HE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT TAXED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETER MINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC. PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MA DE IN RESPECT OF A PERSON IF; I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SECTION158BC; II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS BEEN PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OF FERS 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 O F THAT ART OF INCOME WHICH IS SHOWN IN THE RETURN. PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDI NG PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY TH E ASSESSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCL OSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDI SCLOSED INCOME SHOWN IN THE RETURN. 6.3 SUB. SECTION (2) OF SEC. 158BFA OF THE I T ACT PROVIDES THAT THE ASSESSING OFFICER OR THE CIT(A) IN THE COURSE OF PROCEEDINGS UNDER CHAPTER XIV-B MAY DIRECT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH S HALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT TAXED TH REE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DE TERMINED BY THE ASSESSING OFFICER . 6.4 THE FIRST PROVISO TO SEC. SUB.SEC. (2) OF SEC. 158BFA REFERS CERTAIN CIRCUMSTANCES BEING THE EXCEPTION IN WHICH NO ORDE R OF PENALTY SHALL BE MADE. THE SECOND PROVISO TO SUB.SEC 2 FURTHER RESTRICTS T HE APPLICABILITY OF THE PROVISO 12 IT(SS)160/MUM/2007 (1) IN CASE WHERE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER IS EXCESS OF INCOME SHOWN IN THE RETURN AND IN SUCH CA SES, PENALTY SHALL BE IMPOSED ON THE PORTION OF UNDISCLOSED INCOME DETERM INED, WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETUR N. SINCE THE ASSESSEES CASE DOES NOT EVEN FALL IN THE FIRST PROVISO AS THE ASSESSEE DISCLOSED NIL UNDISCLOSED INCOME IN THE RETURN OF INCOME AND THER EFORE, EXCEPTION PROVIDED IN THE FIRST PROVISO WOULD NOT BE ATTRACTED IN THE CAS E OF THE ASSESSEE. ONCE THE CASE DOES NOT FALL IN THE PROVISO TO SUB SECTION 2 OF SECTION 158 BFA THEN, THE ASSESSING OFFICER OR THE CIT(A), AS THE CASE MAY BE IS EMPOWERED TO IMPOSE PENALTY ON THE PERSON WHEN THE UNDISCLOSED INCOME D ETERMINED UNDER CLAUSE (C) OF SEC. 158BC IS IN EXCESS OF THE UNDISCLOSED INCOM E RETURNED BY THE ASSESSEE IN PURSUANT TO THE NOTICE U/S 158BC/BD. 6.5 THE TERM MAY DIRECT USED IN THE SUB.SEC. (2) OF SEC. 158BFA GIVES DISCRETION TO THE ASSESSING OFFICER OR THE CIT(A) TO IMPOSE PENALTY, IF THE CIRCUMSTANCES OF THE CASE SO WARRANTED. 6.6 THE TRIBUNAL WHILE DECIDING THE QUANTUM APPEAL IN IT(SS) 330/2004 HAS OBSERVED 6 UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT EVEN IT IS ASSUMED THAT THE DATA FOUND DURING THE SEARCH WAS PART OF THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT THE REAL NATURE OF T HE TRANSACTIONS RECORDED IN THE COMPUTERS OF THE ASSESSEE AW THE LIGHT OF TH E DAY ON THE BASIS OF THE MATERIAL FOND DURING THE SEARCH AND FOLLOW UP E NQUIRY MADE BY THE INCOME TAX AUTHORITIES. WE ARE ALSO IN AGREEMENT WI TH THE FINDING OF THE CIT(A) THAT THE ASSESSEE HAS FAILED TO EXPLAIN SATI SFACTORILY THE REAL NATURE OF CLIENTS ID MISMATCH. THE DEFINITION OF UNDISCLOS ED INCOME AS LAID DOWN IN SECTION 158B(B) IS AN INCLUSIVE DEFINITION AND A S SUCH, THE INGREDIENTS OF UNDISCLOSED INCOME, NEED NOT TO BE LIMITED TO WHAT IS DESCRIBED IN THE DEFINITION BUT SHALL ALSO INCLUDE ITEMS WHICH PARTA KE THE CHARACTER OF INCOME IN TERMS OF ANY ITEM WHICH WAS NOTICED OR DI SCOVERED AS A RESULT OF SEARCH. IN OUR VIEW, THE CIT(A) HAS RIGHTLY UPHELD THE VIEW OF THE ASSESSING 13 IT(SS)160/MUM/2007 OFFICER THAT THE INCOME ARISING OUT OF THE SAID ID MISMATCH IS ASSESSABLE AS UNDISCLOSED INCOME UNDER CHAPTER XIV-B OF THE IN COME TAX ACT. 7. THE FACT THAT THE PROCEEDINGS WERE INITIATED FOR ASSESSMENT YEAR 1998- 99 TO REFER THE MATTER FOR SPECIAL AUDIT U/S 142(2A ) ON THE BASIS OF MISMATCH, DOES NOT MEAN THAT THE TRUE NATURE OF THE SE ENTRIES WERE ALSO DISCLOSED BY THE ASSESSEE. THE REAL NATURE OF THESE ENTRIES I.E. ID MISMATCH ENTRIES WERE KNOWN AFTER THE MATERIAL FOUN D DURING THE SEARCH AND INQUIRES MADE THEREAFTER. THE INCOME IMPLICATIO NS OF THE SAID ID MISMATCH ENTRIES HAVE BEEN RIGHTLY ASSESSED AS UNDI SCLOSED INCOME. THE FIRST GROUND OF THE ASSESSEES APPEAL IS DISMISSED. 6.7 IT IS CLEAR FROM THE FINDINGS OF THE TRIBUNAL T HAT THE REAL NATURE OF TRANSACTION RECORDED IN THE COMPUTER OF THE ASSESSE E SAW THE LIGHT OF THE DAY ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE O F SEARCH AND FOLLOW-UP ENQUIRY MADE BY THE INCOME TAX AUTHORITIES. THIS FACT OF RE AL NATURE OF THOSE ENTRIES I.E. ID MISMATCH ENTRIES, CAME IN TO THE KNOWLEDGE OF I NCOME TAX AUTHORITIES ONLY AFTER THE MATERIAL FOUND IN THE SEARCH AND ENQUIRES MADE THEREAFTER. THEREFORE, BUT FOR THE SEARCH ACTION, THE REAL NATURE OF THE E NTRIES WOULD NOT HAVE COME TO THE KNOWLEDGE OF THE INCOME TAX AUTHORITIES, WHICH ULTIMATELY LED TO THE DETERMINATION OF THE UNDISCLOSED INCOME. 6.8 THE ISSUE IS WHETHER MERE RECORDING OF THE TRAN SACTION IN THE BOOKS OF ACCOUNT CAN BE REGARDED AS FULL DISCLOSURE OF THE A SSESSEES TRUE INCOME CAME BEFORE THE SPECIAL BENCH OF THE TRIBUNAL IN THE CAS E OF THE ASSESSEES SISTER CONCERN M/S TRIUMPH SECURITIES LTD IN ITA NO.444/M/ 04 AND THE SPECIAL BENCH OF THE TRIBUNAL VIDE ITS DECISION DATED 7.4.2010 HAS H ELD THAT: 42 AS PER SECTION 158B(B), IF AN ENTRY OR TRANSACT ION IN THE BOOKS OF ACCOUNT REPRESENTS WHOLLY OR PARTLY INCOME OR PROPE RTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED THEN SAME COM ES WITHIN THE PURVIEW OF UNDISCLOSED INCOME. THE TERM ENTRY HAS BEEN DEFINED IN BLACKS LAW DI CTIONARY AS UNDER: 14 IT(SS)160/MUM/2007 THE ACT OF MAKING OR ENTERING A RECORD, A SETTING DOWN IN WRITING OF PARTICULARS, OR THAT WHICH IS ENTERED AN ITEM GENER ALLY SYNONYMOUS WITH RECORDING THE TERM TRANSACTION HAS BEEN DEFINED IN BLACKS LAW DICTIONARY AS UNDER: ACT OF TRANSACTING OR CONDUCTING ANY BUSINESS, NEG OTIATIONS; MANAGEMENT PROCEEDINGS; THAT WHICH IS DONE AN AFFAIR. IT MAY I NVOLVE SELLING, LEASING, BORROWING, MORTGAGING OR LENDING. SOME ACTION HAS A RISEN. IT MUST THEREFORE CONSIST OF AN ACT OR AGREEMENT, OR SEVERA L ACTS OR AGREEMENTS HAVING SOME CONNECTION WITH EACH OTHER, IN WHICH MO RE THAN ONE PERSON IS CONCERNED AND BY WHICH THE LEGAL RELATIONS OF SUCH PERSONS BETWEEN THEMSELVES ARE ALTERED. IT IS A BROADER TERM THAN C ONTACT. IT IS PERTINENT TO NOTE THAT DEFINITION USES BOTH T HE TERMS VIZ ENTRY AND TRANSACTION. THE OBJECT IS TO COVER ALL FACTS STATE D N THE BOOKS OF ACCOUNT. MERE RECORDING OF TRANSACTION IN THE BOOKS OF ACCOU NT IS OF NO CONSEQUENCE UNLESS THE TRUE INCOME HAS BEEN DISCLOS ED IF IN THE COURSE OF SEARCH ANY MATERIAL IS FOUND, WHICH, PRIMA FACIE SH OWS THAT THE TRANSACTION RECORDED IN THE BOOKS OF ACCOUNT DOES N OT DISCLOSE THE ASSESSEES INCOME THEN ON THE BASIS OF MATERIAL FOU ND, INFERENCE IS TO BE DRAWN ABOUT THE TRUE NATURE OF THE TRANSACTION, FOR DETERMINATION OF UNDISCLOSED INCOME IN BLOCK ASSESSMENT. THE MATERIA L FOUND DURING THE COURSE OF SEARCH LEADS TO A CONTRARY INFERENCE THAN AS CONTEMPLATED U/S 132(4A) REGARDING THE CORRECTNESS OF THE ENTRY IN T HE BOOKS OF ACCOUNT. HOWEVER, IF NO MATERIAL IS FOUND DURING THE COURSE OF SEARCH THEN TRANSACTION IN REGULAR BOOKS CANNOT BE THE SUBJECT MATTER OF BLOCK ASSESSMENT. 43 THEREFORE, WE CONCLUDE THAT IF THE MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH FROM WHICH, IT CAN BE CONCLUDE D THAT THE TRANSACTIONS RECORDED IN THE BOOKS OF ACCOUNT DO NOT DISCLOSE TH E ASSESSEES TRUE INCOME THEN SUCH TRANSACTIONS ARE TO BE CONSIDERED IN THE BLOCK ASSESSMENT. 6.9 FURTHER THE ISSUE OF ID MISMATCH FOUND DURING T HE COURSE OF SEARCH, CONSTITUTE MATERIAL AS CONTEMPLATED U/S 58BB(1) OR NOT HAS ALSO BEEN CONSIDERED AND DECIDED BY THE SPECIAL BENCH OF TH E TRIBUNAL AND HELD THAT THE CLIENT ID MISMATCH FOUND DURING THE COURSE OF SEARC H AND CONSEQUENT ENQUIRY CARRIED OUT IN THAT REGARD WOULD BE TAKEN INTO CONS IDERATION FOR BLOCK PROCEEDINGS. 15 IT(SS)160/MUM/2007 7 ON THE ISSUE OF APPLICABLE OF PROVISIONS OF SEC. 69, THE SPECIAL BENCH OF THE TRIBUNAL HAS HELD AS UNDER: WE, ACCORDINGLY, HOLD THAT THE PROVISIONS OF SECTI ON 69 WOULD BE APPLICABLE TO THE EXTENT OF THE INCOME NOT DISCLOSE D IN THE TRANSITIONS RECORDED IN THE BOOKS OF ACCOUNT. IT IS PERTINENT T O NOTE THAT IN SECTION 69, UNEXPLAINED INVESTMENT HAS BEEN DEFINED WITH REFERE NCE TO THE ENTRE VALUE OF THE INVESTMENTS NOT RECORDED IN THE BOOKS OF ACCOUNT WHICH IS BEING TREATED AS THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. THUS, IT IS PRIMARILY THE INCOME WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT S OF REAL CONSIDERATION AND THE SAME, AS NO TED EARLIER, HAS TO BE CONSIDERED IN THE LIGHT OF THE PROVISIONS OF BLOCK ASSESSMENT. 7.1 THEREFORE, IT IS CLEAR FROM THE ORDERR OF THE T RIBUNAL IN ASSESSEES OWN CASE IN QUANTUM PROCEEDINGS AS WELL AS THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL THAT THE DETERMINATION OF THE UNDISCLOSED INCOME U/S 158BC( C) STRICTLY AS PER THE PROVISIONS OF CHAPTER XIV-B AND BASED O N THE EVIDENCES FOUND DURING THE SEARCH AND CONSEQUENT ENQUIRIES AND INVESTIGATI ONS. 8 AS REGARDS ADMISSION OF THE ASSSSEES APPEAL B Y THE JURISDICTIONAL HIGH COURT IS CONCERN, THE UNDISCLOSED INCOME DETERMINED IN THE CASE OF THE ASSESSEE IS NOT AS A RESULT OF DISALLOWING ANY CLAIM OF TH E ASSESSE BECAUSE THE SAME IS NOT ALLOWABLE AS PER THE PROVISIONS OF LAW BUT UNDI SCLOSED INCOME HAS BEEN DETERMINED ON THE BASIS OF THE EVIDENCES FOUND DUR ING THE COURSE OF SEARCH, WHICH HAS ESTABLISHED THE FACT THAT THE TRUE NATURE OF TRANSACTIONS HAVE NOT BEEN RECORDED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT AN D THE SAME HAS RESULTED THE UNDISCLOSED INCOME. IT IS NOT THE CASE WHERE THE A SSESSEE HAS CLAIMED ANY EXPENDITURE, NATURE OF INCOME OR EXEMPTION WHICH HA S BEEN DENIED BY THE TAX AUTHORITIES BY APPLYING THE PROVISIONS OF LAW; BUT IT IS A CASE WHERE SOME FACTS WERE NOT AT ALL PRESENTED BY THE ASSESSEE CORRECTLY AND TRULY. THEREFORE, FILING OF APPEAL BY THE ASSESSEE BEFORE THE JURISDICTIONAL HI GH COURT AND ADMISSION OF THE 16 IT(SS)160/MUM/2007 SAME WOULD NOT IPSO-FACTO MADE OUT OF A CASE OF NON LEVY OF PENALTY. AS PER THE PROVISIONS OF SEC. 158BFA AND PARTICULARLY SUB SEC. 3 THE PENALTY ORDER CAN BE PASSED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE COMMISSIONER (APPEAL) OR THE TRIBUNAL IS RECEIVED. THEREFORE, THE AUTHORITIES CAN WAIT UP TO THE ORDER OF THE CIT(A) OR THE TRIBUNA L; BUT THERE IS NO SUCH PROVISIONS OR EXTENSION OF TIME FOR WAITING THE OUTCOME OF TH E APPEAL FILED BEFORE THE JURISDICTIONAL HIGH COURT. THUS, FILING OF APPEAL BEFORE THE JURISDICTIONAL HIGH COURT DOES NOT AUTOMATICALLY MAKE OUT OF CASE IN FA VOUR OF THE ASSESSEE UNTIL AND UNLESS THE CIRCUMSTANCE EXISTS IN THE CASE DOES NOT WARRANT PENALTY AT ALL. IN ANY CASE IF THE ASSESSEE SUCCEED IN THE APPEAL B EFORE THE HONBL HIGH COURT, CONSEQUENTIAL EFFECT WOULD BE GIVEN TO PENALTY. IN THIS VIEW OF THE MATTER, WE DO NOT SEE ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LOWER AUTHORITIES IN IMPOSING PENALTY U/S 158BFA(2). 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED ON THE 30 TH , DAY OF JUNE 2011. SD/- SD/- ( (( ( P M JAGTAP P M JAGTAP P M JAGTAP P M JAGTAP ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH , JUNE 2011 RAJ* 17 IT(SS)160/MUM/2007 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI
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