Sh. Vipin Kumar Jain, Chandigarh V. ACIT, Chandigarh

ITSSA 2/CHANDI/2012

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0380 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 09-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGJIVAN KUMAR GARG
• Keywords: Capital asset; Salary income; Opportunity of being heard; Principle of natural justice; Source of fund; Additional evidence; Question of law; Difference of opinion; Block assessment
• Section: 271(1)(c); 143(3); 260A; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH ACHANDIGARH !, ' # , . %.. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R. KUMAR , A M ITSS NO. 2/CHD/2012 B LOCK PERIOD : 01.04.1988 TO 30.09.1988 SHRI VIPIN KUMAR JAIN, # 2218, SECTOR 15-C, CHANDIGARH. THE ACIT, CIRCLE 2(1), CHANDIGARH. PAN NO: AAOPJ0891Q APPELLANT RESPONDENT ITSS NO. 3/CHD/2012 B LOCK PERIOD : 01.04.1988 TO 30.09.1988 SHRI CHANDER DEEP JAIN, PLOT NO. 90, INDUSTRIAL AREA, PHASE-1,CHANDIGARH. THE ACIT, CIRCLE 2(1), CHANDIGARH. PAN NO: AAUPJ0069N APPELLANT RESPONDENT ITSS NO. 8/CHD/2012 B LOCK PERIOD : 01.04.1988 TO 30.09.1988 SMT. SNEH JAIN, # 90, INDL. AREA-1, CHANDIGARH. THE ACIT, CIRCLE 2(1), CHANDIGARH. PAN NO: AAOP5267A APPELLANT RESPONDENT ASSESSEE BY : SHRI AJAY JAIN, CA ! REVENUE BY : SHRI JAGJIVAN KUMAR GARG, CIT ' !#$ DATE OF HEARING : 3 0.08. 2018 %&'()*$ DATE OF PRONOUNCEMENT : 26.11.2018 ') / ORDER PER BENCH BY THESE THREE APPEALS FILED BY DIFFERENT ASSESSEES ASSAILIN G THE CORRECTNESS OF THE SEPARATE ORDERS DATED 01.02.2012, 01 .02.2012 AND 29.08.2012 OF CIT(A) CHANDIGARH PERTAINING TO BLOCK PERIOD 0 1.04.1988 TO 30.09.1998 PASSED IN THE PENALTY PROCEEDINGS UNDER SECTIO N 158BFA(2) OF THE INCOME TAX ACT, 1961 IS ASSAILED. 2. THE ISSUES RAISED IN THE APPEAL ARE BEING DECIDED BY A COMMON ORDER AS IT WAS A COMMON STAND OF THE PARTIES BEFORE THE BENC H THAT THE ITSS- 2,3 & 8/CHD/2012 PAGE 2 OF 27 ARGUMENTS ADVANCED IN ITSS 3/CHD/2012 WOULD FULLY APPLY TO THE REMAINING TWO APPEALS ALSO AS FACTS, CIRCUMSTANCES AND CO NSEQUENTLY THE PROPOSITIONS OF LAW APPLICABLE TO THE CASES REMAIN THE SAME . WE FIND ON CONSIDERING THE MATERIAL AVAILABLE ON RECORD THAT THE SAID CLAIM OF THE PARTIES IS BORNE OUT FROM THE RECORD. IN VIEW OF THE ABOVE, THE GROUNDS RAISED IN ITSS 3/CHD/2012 ARE REPRODUCED HEREUNDER : 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE LEVY OF PENALTY US 158BFA(2) AMOUNTING TO RS. 1,04,24,129/-. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) G RAVELY ERRED IN IGNORING THE PRINCIPLES OF NATURAL JUSTICE WHILE CONFIRMING THE SAID PENALTY IN AS MUCH AS THE PRAYER FOR KEEPING THE APPEALS PENDING TILL THE DECISION O F QUANTUM APPEALS WAS SIMPLY IGNORED. 3. THE LD. AR REFERRING TO THE RECORD SUBMITTED THAT THE ADMITTED FAC TS ARE THAT THE ASSESSEE IS DERIVING INCOME FROM SALARY AND EA RNING PROFIT AND INTEREST FROM PARTNERSHIP FIRM M/S S.K. & CO. AND CLASSIC CU TLERY & HOUSE PROPERTY. THE ASSESSEE ALONGWITH THE FIRMS ETC. IT WAS SU BMITTED, WAS SUBJECTED TO SEARCH ALONGWITH SHRI VIPIN KUMAR JAIN & SMT . SNEH JAIN, THE OTHER TWO ASSESSEES IN THE PRESENT GROUP OF CASES. 4. REFERRING TO MATERIAL AVAILABLE ON RECORD, IT WAS SUBMITTED T HAT THE ASSESSEE IN ITSS 2/CHD/2012 ADMITTEDLY WAS ALSO DERIVING INCOME SALARY AND ALSO PROFIT AND INTEREST FROM VERY SAME COMPANY. 5. SMT. SNEH JAIN, THE ASSESSEE IN ITSS 8/CHD/2012, IT WAS S UBMITTED, IS NOT DERIVING INCOME FROM SALARY AND ADMITTEDLY WAS ONLY EARNING PROFIT AND INTEREST FROM THE PARTNERSHIP FIRM M/S CLASSIC CUTLERY. 6. IT WAS SUBMITTED THAT APART FROM THE FACT THAT THESE ASSESSEES WERE SEARCHED, SEARCH WAS ALSO CONDUCTED UPON M/S S.K. & CO MPANY, PARTNERSHIP AND M/S CLASSIC CUTLERY, THE TWO FIRMS FROM WHICH SALARY, P ROFIT, INTEREST ETC. WAS BEING RECEIVED BY THE ASSESSEES. 7. IN THE SAID BACKGROUND, IT WAS THE ARGUMENT OF THE LD. AR THAT THE POSITION OF LAW WHICH THE AUTHORITIES HAVE CONSISTENTLY IGNO RED IS THAT NONE OF THE ASSESSEES WERE REQUIRED TO MAINTAIN BOOKS OF ACC OUNTS U/S 44AA OF THE ACT. THIS POSITION OF LAW HAS NOT BEEN APPRECIATED BY THE TAX AUT HORITIES WHO HAVE REFUSED TO LOOK AT CASH-FLOW STATEMENTS RELIED U PON IN SET ASIDE REMAND PROCEEDINGS ONLY ON THE GROUNDS THAT THESE AR E NOT SUPPORTED BY BOOKS OF ACCOUNT. THE AUTHORITIES HAVE FAILED TO APPRECIA TE THAT THEY ARE BASED ON ENTRIES IN BANK ACCOUNTS OF THE FAMILY MEMBERS ETC. THE VERY ADDITIONS SUSTAINED BY THE ITAT HAVE BEEN CHALLENGED BEFO RE THE HIGH COURT ITSS- 2,3 & 8/CHD/2012 PAGE 3 OF 27 AND THE COURT WAS PLEASED TO ADMIT THE APPEALS ON SUBS TANTIAL QUESTIONS OF LAW ARISING IN THE CASES. IT WAS SUBMITTED THAT THE PENALT Y ORDERS HAVE BEEN UPHELD MERELY BECAUSE THE ADDITIONS HAVE BEEN SUSTAINED PARTLY BY THE ITAT IN THE QUANTUM PROCEEDINGS. 8. BEFORE ADDRESSING ARGUMENTS ON THE MERITS OF THE PRESEN T APPEAL, IT WAS HIS SUBMISSION THAT IT IS MATERIAL TO REFER TO THE FACT THAT THE INITIAL ASSESSMENT COMPLETED U/S 158BC(C) READ WITH SECTION 143(3 ) DATED 31.03.2000 WAS SET ASIDE BY THE CIT(A) VIDE ORDER DATED 19.03.2001. THE CIT(A) BY THE SAID ORDER, IT WAS SUBMITTED, SET ASIDE THE ASSESSMENT AND RESTORED THE APPEAL TO THE AO WITH A DIRECTION THAT TH E AO SHALL GIVE THE ASSESSEE DUE OPPORTUNITY TO EXPLAIN ITS CASE AND HE SHA LL ALSO INVESTIGATE THE ADDITIONAL EVIDENCE WHICH WAS FILED IN THE APPELLATE PROCEEDING S BEFORE THE CIT(A). 9. PURSUANT TO THE SAID ORDER, IT WAS SUBMITTED THE AO PASSED THE ASSESSMENT ORDER DATED 31.03.2003. THE SAID ORDER, IT WA S SUBMITTED, WAS ALSO CHALLENGED BEFORE THE CIT(A) WHO REMANDED CERTAIN ISSU ES TO THE AO TO EXAMINE AND VERIFY THE FACTS. THE CIT(A), IT WAS SUBMITTED, THEREAFTER CONSIDERING THE REMAND REPORT DATED 02.09.2005, 16.11.2005 AND 24.04.2006 PASSED AN ORDER DATED 31.03.2009. THE SAID OR DER, IT WAS SUBMITTED, WAS CHALLENGED IN APPEAL BEFORE THE ITAT AND THE ITAT VIDE ITS ORDER DATED 06.12.2013 GRANTED PART RELIEF TO THE ASSESSEE. 10. THE LD. AR SUBMITTED THAT HIS FIRST ARGUMENT FOR MAKING A PRAYER FOR QUASHING THE PENALTY ORDER IS SUPPORTED BY THE JUDICIAL P RECEDENT AS WELL SETTLED IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS P.LTD . DECISION OF THE BOMBAY HIGH COURT AMONGST OTHERS. THE POSITION OF LAW SET TLED, IT WAS SUBMITTED WAS FULLY APPLICABLE TO THE CASE AT HAND. 11. IT WAS SUBMITTED, THAT THE QUANTUM ORDERS OF THE I TAT IN THE CASE OF THESE THREE ASSESSEES HAS BEEN CHALLENGED BEFORE THE H ON'BLE PUNJAB & HARYANA HIGH COURT. REFERRING TO PAPER BOOK NO. 2 PAGE 1-2 ATTENTION WAS INVITED TO STATUS OF THE CASE IN THE HON'BLE PUNJAB & HA RYANA HIGH COURT AS ON 07.04.2016. ATTENTION WAS ALSO INVITED TO PAPER BOOK PA GE 3 TO SHOW THAT THE APPEAL OF THE ASSESSEE WAS ADMITTED BY THE HON'BLE COURT. INVITING ATTENTION TO PAPER BOOK PAGE 5 TO 18 IT WAS SUBMITTED THAT IN ITA 234/2014, CONSIDERING THE STATEMENT OF FACTS AND THE GROUND RAISED , SUBSTANTIAL QUESTIONS OF LAW WERE ADMITTED. SIMILAR WAS THE POSITION IN THE CASES OF THE REMAINING TWO ASSESSEES ALSO. ACCORDINGLY RELYING UPON T HE SETTLED POSITION ITSS- 2,3 & 8/CHD/2012 PAGE 4 OF 27 OF LAW, IT WAS SUBMITTED, THAT ONCE THE ORDER IN THE QUAN TUM PROCEEDINGS IS ADMITTED BY THE HIGH COURT ON A SUBSTANTIAL QUESTION OF LA W, THE PENALTY PROCEEDINGS CANNOT SURVIVE AS THE ADDITIONS SUSTAINED ARE DEBATA BLE. 12. ADDRESSING THE FACTUAL BACKGROUND EVEN ON MERITS, IT WAS SUBMITTED, THAT THE ISSUES HAD BEEN GIVEN UP BY THE AO IN THE REM AND PROCEEDINGS DESPITE THIS, THE ADDITIONS WERE PARTLY SUSTAINING BY THE CIT(A). THE ITAT ALSO IGNORING THE REMAND REPORT DID NOT GIVE FULL RELIEF AS MA INTAINABLE ON FACTS AND INFACT IGNORING SIMILAR SET OF FACTS ON WHICH RELIEF HA D BEEN GRANTED IN THE CASE OF SHRI VIPIN KUMAR JAIN, THE ITAT HAD SUSTAINE D THE ADDITION IN SHRI CHANDER DEEP JAINS CASE IGNORING ITS OWN FINDINGS WHIC H ISSUES ARE ASSAILED BEFORE THE HIGH COURT. THE HIGH COURT, IT WAS SU BMITTED, WAS PLEASED TO ADMIT THE APPEALS. ELABORATING THE ARGUMENT, IT WAS SUBMITTED THAT THE REMAND REPORT OF THE AO HAS BEEN PARTLY CONSIDERED B Y THE ITAT AND THE JURISDICTIONAL ISSUE RAISED BY THE ASSESSEE IN THE QUA NTUM PROCEEDINGS WAS ALSO SET ASIDE BY THE ITAT IN THE QUANTUM PROCEEDIN GS AND EVEN OTHERWISE THE ISSUES ARE NOW UNDER CHALLENGE BEFORE THE HIGH COURT AND THE SAID POSITION OF LAW IS WELL ADDRESSED BY THE CASE OF NAYAR BUILDERS AMONGST VARIOUS OTHER SIMILAR CASES. 13. APART FROM THE SAID SUBMISSION, IN THE ALTERNATE, IT WA S HIS PRAYER THAT THE ADDITIONS WHICH HAVE BEEN SUSTAINED BY THE ITA T WERE GENERALLY ON AN ESTIMATE BASIS, THUS, EVEN OTHERWISE THEY CANNOT BE S AID TO GIVE RISE TO PENALTY BEING ATTRACTED. 14. RELIANCE WAS PLACED ON THE FOLLOWING CHART : PARTICULARS AMOUNT BRIEF CASH 35,000 ALLOWED BY THE ITAT IN PARA 31 AT PAGE 24-25 HOUSEHOLD GOODS 65,000 THE ADDITION HAS BEEN ON EST IMATION BASIS WHICH HAS BEEN TIME AND AGAIN SAID IN VARIOUS ORDERS (DISCUSSED AT PARA 32-34 ON PAGE 24-25) SHARES OF ACC LTD. 16,500 THE INVESTMENTS WERE MADE FROM THE PROCEEDS OF SALES OF TREES WHICH WAS ACCEPTED AS VALID SOURCE IN THE CASE OF S HRI VIPAN KUMAR JAIN ( DISCUSSED AT PARA 35-36 ON PAGE 25- 26) SCO 7, SECTOR 5, PANCHKULA 407,000 THE AFFIDAVIT A ND NOC OF THE SALE OF THE CAR WAS FILED WHICH WERE NOT VERIFIED DUE TO LONG GAP OF TIME AND THE B ALANCE PAYMENT WERE THROUGH WITHDRAWALS EXPLAINED THROUGH CASH- FLOW STATEMENT WHICH HAS BEEN REJECTED BY THE AO FO R THE REASONS THAT NO ENQUIRIES WERE FEASIBLE AFTER 15 YE ARS FOR THE BLOCK PERIOD 01.04.1998 TO 30.09.1998 ( DISCUSSED B Y ITAT IN PARA 32 AT PAGE 25) LEEMA ENGINEERING PVT. LTD.,35, INDL. AREA 321,500 ALLOWED BY THE ITAT IN PARA 42-46 AT PAGE 28-31 JASMINE ENTERPRISES PVT. LTD. 594,333 ALLOWED BY TH E ITAT IN PARA 47-53 AT PAGE 31-33. PLOT NO. 259 INDL AREA I CHANDIGARH 650,000 ALLOWE D BY THE ITAT IN PARA 54-60 AT PAGE 33-35. SURAJ THEATRE 480,000 AO MADE THE ADDITION OF RS. 5 ,00,000/- CASH PAID TO SHRI B.D.VIJ & RS. 4,60,000/- ON THE RENOVATION OF SURAJ THEAT3ER WHICH WAS MERELY AN ESTIMATE PRESUMED BY AO. THE IN VESTMENT ITSS- 2,3 & 8/CHD/2012 PAGE 5 OF 27 MADE BY THE ASSESSEE DULY STANDS EXPLAINED BY CASH- FLOW STATEMENT FOR THE REASONS THAT NO ENQUIRIES WERE FE ASIBLE AFTER 15 YEARS FOR THE BLOCK PERIOD 01.04.1998 TO 30.09.1 998 (DISCUSSED AT PAGE 61-64 ON PAGE 35-37). LOW HOUSEHOLD EXPENSES 400,000 THESE ADDITIONS WERE PURELY ON ESTIMATION BASIS (DISCUSSED AT PARA 65-68 ON PAGE 37-40) CASH AND BANK DEPOSITS (PARA 69-86 AT PAGE 40-50) LOAN RECD THROUGH CHEQUES MERIT=1,54 1,200 GENUINE=2, 565,000 EVIDENCES WERE SUBMITTED TO THE AO DURING THE REMAN D PROCEEDINGS AND HE RECOMMENDED FOR DECISION ON MERI T. SINCE THE AO HAS NOT TAKEN ANY DECISION, SAME HAS N OT BEEN ALLOWED. THIS HAS BEEN DISCUSSED IN REMAND REPORT D ATED 02.09.2005 WHEREIN ALL THE LOAN TRANSACTIONS HAVE B EEN DISCUSSED INDIVIDUALLY. ALLOWED BY ITAT. TRANSFERS IN HUF BANK ACCOUNTS FROM ASSESSEE'S/FAMILY MEMBERS ACCOUNTS HUF ENTRIES 992,008 IN THE REMAND REPORT DATED 02.09.2005 OF DCIT CIRCLE 2(1) CHANDIGARH IT IS SAID THAT 'IT HAS BEE N STATED BY THE ASSESSEE THAT HE HAS RECEIVED HIS SHA RE OF LAND FROM HIS FATHER WHICH WAS RECEIVED BY HIS FATH ER FROM HIS FATHER. HE HAS EARNED SOME INCOME FROM THE SALE PROCEEDS OF THE TREES GROWN ON THAT LAND AND F ROM SALE OF THAT LAND. HE HAS STATED THAT ALL THE TRANS ACTION REFLECTED IN HIS HUF ACCOUNT ARE FROM THE ABOVE SOURCES. HE HAS FURTHER STATED THAT THE LAND IN QUESTION WAS THE PROPERTY OF THEIR GRANDFATHER AND AS HINDU UNDIVIDED FAMILY LAW, PROPERTY BECOMES ANCESTRAL PROPERTY IN THE HAND OF GRANDSONS. IN VIE W OF THE ABOVE FACTS THE DECISION REGARDING GENUINESS OF HUF MAY KINDLY BE TAKEN ON MERIT.' THUS INTER-BANK TRANSFERS OF THESE FUND BETWEEN HUF AND FAMILY MEMBERS SHOULD NOT BE TREATED AS INCOME WHEREAS SAME HAS BEEN TAKEN AS UNDISCLOSED INCOME. SALE OF TREES 698,000 THIS ADDITION HAS BEEN DELETED BY THE CIT(A) IN THE CASE OF SHRI VIPIN JAIN AS PER PARA 197 PAGE NO. 122 FOR THE SAME ANCESTRAL LAND. DIRECT BANK TRANSFER FROM WITHIN FAMILY/OWN BUSINESS 3,264,000 IN THE REMAND REPORT DATED 16.11.2005 THE DCIT CIRC LE 2(1) CHANDIGARH HAS STATED ' ASSESSEE HAS PRODUC ED PHOTOCOPIES OF PASS BOOK OF RELEVANT BANK ACCOUNTS OF BOTH I.E. HIS OWN ACCOUNT IN WHICH THE SAME HAS BEE N CREDITED AND THE ACCOUNT OF THE PERSON WHO HAS PAID THIS AMOUNT TO THE ASSESSEE. ALL THE ENTRIES HAVE B EEN HIGHLIGHTED. PERUSAL OF THESE PASSBOOKS/DOCUMENTS ATTACHED BY THE ASSESSEE REVEAL THAT THE ENTRIES MENTIONED IN ANNEXURE 'B' ARE APPEARING IN THESE PASSBOOKS, COPIES OF ACCOUNTS ETC. IN VIEW OF THE A BOVE IT IS SUGGESTED THAT APPEAL MAY BE DECIDED ON MERIT ' REFUND OF INCOME TAX 6,500 ALLOWED BY ITAT REFUNDS RECEIVED 95,000 ALLOWED BY ITAT TRANSFER FROM ONE BANK TO ANOTHER 420,000 IN THE REMAND REPORT DATED 16.11.2005 THE DCIT CIRCLE 2(1) CHANDIGARH HAS STATED ' IN SUPPORT OF H IS CONTENTION, ASSESSEE HAD FILED PHOTOCOPY OF BANK STATEMENT. ALL THE TRANSACTIONS HAVE BEEN HIGHLIGHT ED IN THE PHOTOCOPIES .PERUSAL OF THESE PAPERS REVEALS THAT THE ENTRIES ARE APPEARING IN THE 'PHOTOCOPIES OF BANK STATEMENT. IN VIEW OF THE ABOVE, IT IS REQUEST ED THAT APPEAL MAY KINDLY BE DECIDED ON MERIT.' SAME D AY IN 1 D AY IN LESS THAN 3 DAYS 1869,500 287,500 402,000 IN THE REMAND REPORT DATED 24.04.2006 BY THE DCIT CIRCLE 2(1) CHANDIGARH STATES THAT HOWEVER, PERUSA L OF THE CHART OF CASH IN HAND FOR THE PERIOD 01.04.1 988 TO ITSS- 2,3 & 8/CHD/2012 PAGE 6 OF 27 15. ADDRESSING THE ADDITIONS SUSTAINED ON ESTIMATE BASIS PERTAINING TO HOUSEHOLD GOODS, IT WAS SUBMITTED THAT THESE WERE MERE ESTIMATES AS SUCH, CANNOT BE AN ISSUE ON WHICH PENALTY CAN BE ATTRACTED. 16. ADDRESSING THE CHART ABOVE, IT WAS SUBMITTED ARBITR ARY CONCLUSIONS HAVE BEEN DRAWN FOR SUSTAINING THE ADDITION QUA THE INVES TMENT MADE IN SHARES OF ACC LTD. WHICH HAS BEEN EXPLAINED AS SOURCED FROM THE SALE PROCEEDS OF SALE OF TREES. THE SAID SOURCE REFERRING TO T HE RECORD IT WAS SUBMITTED HAS BEEN ACCEPTED AS A VALID SOURCE, IN THE C ASE OF SHRI VIPIN KUMAR JAIN BY THE CIT(A) WHICH HAS BEEN UPHELD BY THE IT AT IT WAS SUBMITTED THAT SINCE THIS BLATANT CONTRADICTION IS EVIDENT ON RECORD, THE APPEAL HAS BEEN ADMITTED BY THE HIGH COURT. 17. ADDRESSING THE NEXT ISSUE WHICH IS A SUBJECT MATTER OF ADDITION ON WHICH PENALTY HAS BEEN LEVIED, THE INVESTMENT IN SHOP-CUM- OFFICE IN SECTOR 7, IT WAS SUBMITTED, THE CORRECTNESS OF WHICH IS ALSO CHALLEN GED BEFORE THE HIGH COURT AND THE APPEAL HAS BEEN ADMITTED. THE EXPLAN ATION OF THE ASSESSEE, IT WAS SUBMITTED, IS IGNORED IN THE QUANTUM PROC EEDINGS WHICH IS AVAILABLE ON AN AFFIDAVIT BY THE ASSESSEE WHEREIN IT HAS BEEN EXPLAIN ED THAT IT IS SOURCED FROM THE SALE OF CAR AND THE WITHDRAWALS HAVE BEEN EXPLAINED THROUGH THE CASH FLOW STATEMENT. THE SAID EXPLANATION H AS BEEN DISCARDED BY THE ITAT ON THE REASONING THAT NO ENQUIRIES WERE FEA SIBLE AFTER 15 YEARS OF BLOCK PERIOD. 17.1 IT WAS HIS SUBMISSION THAT THERE IS NO FINDING THAT THESE CLAIMS WERE BOGUS. IT WAS ALSO HIS SUBMISSION THAT THE TIME PERIOD OF 10 YEARS IS FIXED BY THE STATUTE IN THE BLOCK PERIOD AND IT MAY BE AN UNRE ALISTIC TIME PERIOD AND PROBABLY WHICH IS WHY IT HAS BEEN REDUCED TO SIX YEARS , THE FACT REMAINS THAT FIXING OF BLOCK PERIODS IS NOT IN THE HANDS OF THE ASSESSEE. 17.2 IT WAS ALSO HIS SUBMISSION THAT IN THE ORIGINAL PRO CEEDINGS, FULL FACTS AND EVIDENCES ADMITTEDLY WERE NOT TAKEN ON RECORD WHI CH POSITION WAS RECTIFIED BY THE CIT(A) WHO ADMITTED THE FACTS AND RESTOR ED THE ISSUE TO THE AO FOR CONSIDERING FULL FACTS AND EVIDENCES. IT WAS HIS SUBM ISSION THAT THE AO IN THE SAID PROCEEDINGS, REFUSED TO LOOK AT THE EVIDEN CES STATING THAT THEY WERE NOT ORIGINALLY FILED. IT WAS HIS SUBMISSION THAT THE S AID ARGUMENT COULD OTHERS 4,331,058 30.09.1998 SUBMITTED BY THE ASSESSEE REVEALS THAT H E WAS HAVING SUFFICIENT CASH-IN-HAND IN HIS BOOKS OF ACCOUNT ON THE DATES WHEN CASH WAS DEPOSITED IN TH E BANK ACCOUNTS. ITSS- 2,3 & 8/CHD/2012 PAGE 7 OF 27 HAVE BEEN HELD TO BE A VALID ARGUMENT IF THE ORDER DIRECT ING REMAND HAD BEEN SET ASIDE BY A HIGHER FORUM. HOWEVER, THE ORDER O F THE CIT(A) WAS NEVER CHALLENGED BY THE REVENUE AND THUS THE DIRECTION THAT THE FRESH EVIDENCES BE BROUGHT ON RECORD HAD ATTAINED A FINALITY A ND IN THE CIRCUMSTANCES, THE RELUCTANCE OF THE AO TO LOOK AT THE E VIDENCES WAS CONTRARY TO JUDICIAL DISCIPLINE WHICH WAS SOUGHT TO BE ADD RESSED IN APPEAL. IT WAS SUBMITTED THAT CONSEQUENTLY THE CIT(A) DIRECTED THE AO TO PLACE HIS REMAND REPORT BEFORE HIM. HOWEVER, THE ASSESSEE EVEN B EFORE THE CIT(A), DESPITE THE REMAND REPORTS FAVOURING THE ASSESSEE THER EAFTER DID NOT SUCCEED FULLY AS AGAIN SOME ADDITIONS WERE SUSTAINED PARTIALLY CONS IDERING THE REMAND REPORT. SIMILAR WAS THE POSITION BEFORE THE ITAT W HERE ALSO THE AOS REMAND REPORT WAS PARTLY RELIED UPON BY THE ITAT IGNORING THE FA CTS. 17.3 THUS, ON THE BASIS OF THESE FACTS, IT WAS HIS SUBMISSIO N THAT NOT WITHSTANDING THE FACT THAT THE ADDITIONS STOOD PARTLY SU STAINED BY THE ITAT WHICH ISSUE IS UNDER CHALLENGE BEFORE THE HIGH COURT, EVEN OTHERWISE, IN THE PENALTY PROCEEDINGS IT NEEDS TO BE CONSIDERED THAT THE FINDING IN THE QUANTUM PROCEEDINGS THAT THE ASSESSEE'S EXPLANATION FOR INVESTMENT IN SCO 7 SECTOR 5 WAS NOT ACCEPTED ONLY BECAUSE IT WAS HELD THAT IT COULD NOT BE VERIFIED DUE TO LAPSE OF TIME. THE TIME LAPSE IT WAS SUBMITTED , WAS NOT ON ACCOUNT OF THE ASSESSEE. THE ORDER OF REMAND TO THE A O BY THE CIT(A) STANDS UNCHALLENGED BY THE REVENUE AND THE ISSUE HAVING ATTAINED FINALITY CANNOT BE RE-ARGUED NOW BY THE REVENUE, IT WAS SUBMITT ED, IN THE PENALTY PROCEEDINGS. 17.4 THE FACT THAT THE SAID CONCLUSION IS UNDER CHALLENG E BEFORE THE HON'BLE HIGH COURT THAT THE ORDER PASSED BY THE ITAT IS CONTR ARY TO LAW AND FACTS AND EVEN OTHERWISE SO FAR AS THE PENALTY PROCEEDINGS AR E CONCERNED IN THE ABSENCE OF ANY SUCH ALLEGATION THAT IT IS BOGUS FINDING, PENALTY ON THIS C OUNT, IT WAS SUBMITTED, IS NOT ATTRACTED. 18. ADDRESSING THE NEXT ADDITION SUSTAINED WHICH HAS ATTRACTED P ENALTY IS THE ESTIMATED COST OF RENOVATION EXPENSES OF SURAJ THE ATER AMOUNTING TO RS. 4,80,000/-. REFERRING TO RECORD, IT WAS SUBMITTED, THE ASSE SSEE HAS EXPLAINED THE INVESTMENT RELYING ON THE AVAILABILITY OF CASH AT THE RELEVANT POINT OF TIME SUPPORTED BY WAY OF CASH-FLOW STATEMENT MAD E RELYING UPON BANKS STATEMENT OF THE FAMILY MEMBERS AND THE HUF ETC. THE EXPLANATION HAS BEEN REJECTED FOR SIMILAR REASONS THAT NO ENQUIRIES W ERE POSSIBLE AFTER 15 YEARS, THE ADDITION HAS BEEN SUSTAINED. RELEVANT DISCUSSIO N IS IN PARA 61 TO ITSS- 2,3 & 8/CHD/2012 PAGE 8 OF 27 64 AT PAGES 35 TO 37 OF THE ITAT ORDER. THE ADDITIONS S USTAINED IGNORING THE CASH-FLOW STATEMENT RELYING ON ENTRIES IN BANK ACCOUNTS , IS ALSO AN ISSUE PENDING BEFORE THE HON'BLE HIGH COURT. THUS, THE PROPOS ITION AS IN NAYAN BUILDERS IS RELIED UPON HERE ALSO. SIMILAR WAS THE POSITION QUA THE ADDITION SUSTAINED ON THE GROUND OF LOW HOUSEHOLD EXPENSES AMOU NTING TO RS. 4 LACS DISCUSSED AT PARA 65 TO 68 AT PAGES 37 TO 40, IT WAS S UBMITTED, WAS ALSO PURELY BASED ON ESTIMATED BASIS. 19. THE NEXT ADDITION WHICH IS A SUBJECT MATTER OF CONSIDE RATION IN THE PENALTY PROCEEDINGS, IT WAS SUBMITTED, IS THE ADDITION OF RS . 15,41,200/-IT WAS SUBMITTED, THAT EVIDENCES FOR DELETING THE ADDITION WA S MADE AVAILABLE TO THE AO IN THE REMAND PROCEEDINGS WHERE IT HAD BEEN SHOWN THAT LOANS HAD BEEN RECEIVED BY CHEQUES. THE AO ACCEPTED THE EX PLANATION AND RECOMMENDED THAT THE DECISION ON MERIT BE TAKEN AND SI NCE AO HAS NOT TAKEN A DECISION, THE CIT(A) AND THE ITAT CONFIRMED THE AD DITION. SPECIFIC REMAND REPORT DATED 02.09.2005 WHEREIN ALL THE LOAN TRANS ACTIONS HAVE BEEN DISCUSSED INDIVIDUALLY, WAS HEAVILY RELIED UPON. IT WAS HIS S UBMISSION THAT ON THE BASIS OF THE SAME THE QUANTUM ADDITION IS UNDER C HALLENGE BEFORE THE HON'BLE HIGH COURT AND THE APPEAL HAS BEEN ADMITTED. 20. SIMILARLY, THE ADDITIONS OF RS. 9,92,008/-, RS. 6,98,000/-, RS . 4,95,240/- IT WAS SUBMITTED, HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE WHICH INFACT ARE TRANSFER ENTRIES FROM HUF BANK AND THE A SSESSEE'S/FAMILY MEMBERS ACCOUNTS WHICH FULLY EXPLAINS RS. 9,92,008/-; THE A DDITION OF RS. 6,92,000/- IS EXPLAINED FROM SALE OF TREES WHICH SOURCE HAS BEEN ACCEPTED BY THE CIT(A) IN THE CASE OF SHRI VIPIN JAIN EVIDENCED FROM PARA 197 PAGE 122 OF HIS ORDE4R AND IS EXPLAINED FROM THE VERY SAME SOU RCE. THE SAID FINDING HAS BEEN UPHELD BY THE ITAT IN THE CASE OF VIPIN JA IN AND CONTRARY ORDER OF CIT(A) IN CHANDER DEEP JAIN ASSAILING THIS CONTRADIC TION HAS ALSO BEEN UPHELD BY THE ITAT. THIS DISCREPANCY IS CHALLENGED B EFORE THE HIGH COURT. ADDITION OF RS. 4,95,240/- SUSTAINED REFERRING TO RECORD, IT WAS SUBMITTED, HAS BEEN EXPLAINED FROM SALE OF LAND WHICH ALSO HA S BEEN DELETED BY THE CIT(A) IN THE CASE OF SHRI VIPIN JAIN AS WOULD BE EV IDENT FROM PARA 197 PAGE 122 FOR THE SAME ANCESTRAL LAND. THE REJECTION OF THE EXPLANATION IN SIMILAR SET OF FACTS AND CIRCUMSTANCES IN THE CASE OF SHR I CHANDER DEEP JAIN, IT WAS SUBMITTED, WAS ASSAILED BEFORE THE ITAT AND T HIS FACT IS ONE OF THE REASONS ON THE BASIS OF WHICH THE SUBSTANTIAL QUESTIO N OF LAW HAS BEEN ADMITTED BY THE HIGH COURT. RS. 9,92,008/- . THESE STAND E XPLAINED FROM TRANSFER ENTRIES IN HUF BANK ACCOUNT FROM ASSESSEE'S A ND FAMILY MEMBERS ITSS- 2,3 & 8/CHD/2012 PAGE 9 OF 27 ACCOUNT, REMAND REPORT OF THE AO DATED 02.09.2005 OF THE CIT, CIRCLE 2(1) WAS HEAVILY RELIED UPON. SAME HAS BEEN EXTRACTED IN THE TWO PAGED FACT SHEET ADDRESSING THE ADDITIONS AND IS REPRODUCED HEREU NDER FOR READY REFERENCE : IN THE REMAND REPORT DATED 02.09.2005 OF DCIT CIRC LE 2(1) CHANDIGARH IT IS SAID THAT 'IT HAS BEEN STATED BY THE ASSESSEE THAT HE HAS REC EIVED HIS SHARE OF LAND FROM HIS FATHER WHICH WAS RECEIVED BY HIS FATHER FROM HIS FA THER. HE HAS EARNED SOME INCOME FROM THE SALE PROCEEDS OF THE TREES GROWN ON THAT L AND AND FROM SALE OF THAT LAND. HE HAS STATED THAT ALL THE TRANSACTION REFLECTED IN HI S HUF ACCOUNT ARE FROM THE ABOVE SOURCES. HE HAS FURTHER STATED THAT THE LAND IN QUE STION WAS THE PROPERTY OF THEIR GRANDFATHER AND AS HINDU UNDIVIDED FAMILY LAW, PROPERTY BECOMES ANCESTRAL PROPERTY IN THE HAND OF GRANDSONS. IN VIEW OF THE A BOVE FACTS THE DECISION REGARDING GENUINESS OF HUF MAY KINDLY BE TAKEN ON MERIT.' THU S INTER-BANK TRANSFERS OF THESE FUND BETWEEN HUF AND FAMILY MEMBERS SHOULD NOT BE T REATED AS INCOME WHEREAS SAME HAS BEEN TAKEN AS UNDISCLOSED INCOME. 20.1 ACCORDINGLY, IT WAS HIS SUBMISSION THAT ON ACCOUNT OF THESE FACTS, THE SUBJECT MATTER OF THESE THREE ADDITIONS COULD NOT HAVE FORMED THE BASIS FOR LEVYING PENALTY WHICH IS AN ARGUMENT ON MERIT NOT-WITHSTAN DING THE MAIN ARGUMENT THAT THE APPEAL AGAINST THE QUANTUM ORDER HA S BEEN ADMITTED BY THE HON'BLE HIGH COURT. 21. ADDRESSING THE NEXT ADDITION SUSTAINED BY THE ITAT A MOUNTING TO RS. 32,64,000/- WHICH, IT WAS STATED, WERE EXPLAINED BEFORE THE TAX AUTHORITIES AS WELL AS THE ITAT FROM DIRECT BANK TRANSFERS WITHIN THE FAMILY/OWN BUSINESS. THESE SUBMISSIONS, IT WAS STATED, WERE SUPPORTE D BY THE REMAND REPORT DATED 16.11.2005 EXTRACTED IN 2 PAGED FACT SHE ET WAS HEAVILY RELIED UPON, WHICH IS EXTRACTED HEREUNDER : IN THE REMAND REPORT DATED 16.11.2005 THE DCIT CIRC LE 2(1) CHANDIGARH HAS STATED ' ASSESSEE HAS PRODUCED PHOTOCOPIES OF PASS BOOK O F RELEVANT BANK ACCOUNTS OF BOTH I.E. HIS OWN ACCOUNT IN WHICH THE SAME HAS BEEN CRE DITED AND THE ACCOUNT OF THE PERSON WHO HAS PAID THIS AMOUNT TO THE ASSESSEE. ALL THE E NTRIES HAVE BEEN HIGHLIGHTED. PERUSAL OF THESE PASSBOOKS/DOCUMENTS ATTACHED BY THE ASSESS EE REVEAL THAT THE ENTRIES MENTIONED IN ANNEXURE 'B' ARE APPEARING IN THESE PASSBOOKS, COPIES OF ACC OUNTS ETC. IN VIEW OF THE ABOVE IT IS SUGGESTED THAT APPEAL MAY B E DECIDED ON MERIT' 22. ADDRESSING THE ADDITION OF RS. 4,20,000/- IT WAS SUBMITT ED THE ASSESSEE HAS CONSISTENTLY EXPLAINED THE SAME BY TRANSFE RS FROM ONE BANK TO THE OTHER. THE EXPLANATION OF THE ASSESSEE, IT WAS SUBMITT ED, IS SUPPORTED BY THE REMAND REPORT DATED 16.11.2005 OF THE DCIT, CIRCLE-2 CHANDIGARH. THE SAID REPORT WAS HEAVILY RELIED UPON SO AS TO ARGUE THAT EVEN IN THE QUANTUM PROCEEDINGS, ADDITION COULD NOT HAVE BEEN SUSTAINED. ACCORDINGLY, AS FAR AS PENALTY PROCEEDINGS ARE CONCERNED, IT WAS SUBMITTED, IT CA NNOT BE SAID TO BE A MATTER FOR LEVY OF PENALTY. FOR READY REFERENCE, RELEVAN T EXTRACT IS REPRODUCED HEREUNDER : ITSS- 2,3 & 8/CHD/2012 PAGE 10 OF 27 IN THE REMAND REPORT DATED 16.11.2005 THE DCIT CIRC LE 2(1) CHANDIGARH HAS STATED ' IN SUPPORT OF HIS CONTENTION, ASSESSEE HAD FILED PHOTOCOPY OF BANK STATEMENT. ALL THE TRANSACTIONS HAVE BEEN HIGHLIGHT ED IN THE PHOTOCOPIES. PERUSAL OF THESE PAPERS REVEALS THAT THE ENTRIES AR E APPEARING IN THE 'PHOTOCOPIES OF BANK STATEMENT. IN VIEW OF THE ABOV E, IT IS REQUESTED THAT APPEAL MAY KINDLY BE DECIDED ON MERIT.' 23. THE CASH DEPOSITS ON ACCOUNT OF WHICH ADDITION OF RS. 43,31,058/- HAS BEEN SUSTAINED, IT WAS HIS SUBMISSION HAS BEEN ADDRESSED BY DEMONSTRATING AVAILABILITY OF CASH ON THE VERY SAME DAY TO THE EXTENT OF RS. 18,69,500/- AND WITHIN ONE DAY TO THE EXTENT OF RS. 2,87,500/- AND W ITHIN THREE DAYS RS. 4,02,000/-. THESE FACTS HAVE BEEN ACCEPTED BY THE AO IN HIS REMAND REPORT DATED 24.04.2006. ACCORDINGLY, IT WAS HIS SUBMISSION THAT T HIS TOO CANNOT HAVE BEEN A SUBJECT MATTER OF ADDITION LET ALONE LEVY OF PENALTY. RELEVANT EXTRACT FROM THE TWO PAGED FACT SHEET IS EXTRACTED HEREUNDER : 24. IN THE SAID BACKGROUND, ATTENTION WAS INVITED TO THE COPY OF THE APPEAL FILED BEFORE THE HON'BLE HIGH COURT U/S 260A AGAINST THE O RDER DATED 06.12.2013. THE RELEVANT FACTS ON THE STATEMENT OF FACTS FILED BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WERE HIGHLIGHTED FOR OUR BE NEFIT, SAME IS REPRODUCED HEREUNDER : 2. THAT THE BRIEF FACTS OF THE PRESENT CASE ARE THA T BLOCK ASSESSMENT WAS CONDUCTED ON 30.10.2000. SEARCH IN THIS CASE WAS CO NDUCTED ON 30.09.1998. THE ASSESSMENT WAS COMPLETED BY DETERMINING UNDISCLOSED INCOME AT RS. 2,61,17,150/-. AGAINST THIS ORDER THE ASSESSEE-APPELLANT PREFERRED APPEAL BEFORE CIT(A) WHO VIDE OLDER DATED 19.03.2001 IN APPEAL NO. 389/P/2000-01 SET ASIDE THE ASSESSMENT TO BE FRAMED DENOVO WITH THE DIRECTION TO EXAMINE ADDITIO NAL EVIDENCE FILED AT THE TIME OF APPELLATE PROCEEDINGS. IT IS PERTINENT TO MENTION H ERE THAT THE ASSESSMENT WAS SET ASIDE ON THE GROUND THAT THE ASSESSEE WAS NOT GIVEN EFFECTIVE OPPORTUNITY TO PRESENT HIS DEFENCE AND HENCE THE MATTER J. WAS RES TORED FOR DENOVO ASSESSMENT. 4. THAT FEELING AGGRIEVED THE APPELLANT FILED AN APPEA L BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGAR H, WHICH WAS PARTLY ALLOWED BY THE CIT(A), CHANDIGARH. A COPY OF THE ORDER DATED 31.03.2009 IS ANNEXED HEREWITH AS ANNEXURE A-2. 5. THAT AGGRIEVED AGAINST THE ORDER OF CIT(A) THE A PPELLANT AND THE REVENUE WENT INTO APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH, 1TAT, WHEREIN ALSO THE APPEAL FILED BY THE APPELLANT WAS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE WAS DISMISSED VIDE ORDER DATED 06.12.2013. A COPY O F THE ORDER IS ANNEXED HEREWITH AS ANNEXURE A-3. CASH DEPOSITS SAME DAY IN 1 DAY IN LESS THAN 3 DAYS OTHERS 1,869,500 287,500 402,000 4,331,058 IN THE REMAND REPORT DATED 24.04.2006 BY THE DCIT CIRCLE 2(1) CHANDIGARH STATES THAT HOWEVER, PERUSAL OF THE CHART OF CASH IN HAND FOR THE PERIOD 01.04.1988 TO 30.09.1998 SUBMITTED BY THE ASSESSEE REVEALS THAT HE WAS HAVING SUFFICIENT CASH-IN-HAND IN HIS BOOKS OF ACCOUNT ON THE DATES WHEN CASH WAS DEPOSITED IN THE BANK ACCOUNTS. ITSS- 2,3 & 8/CHD/2012 PAGE 11 OF 27 25. INVITING ATTENTION TO THE QUANTUM ORDER PASSED BY THE ITAT IN ITSS 20/CHD/2009, ATTENTION WAS INVITED TO THE JURISDICTIONAL IS SUE RAISED AND ADDRESSED BY THE ITAT IN PARA 5 TO 7. RELEVANT EXTRACT OF THE SAME IS REPRODUCED HEREUNDER : 5. THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APP EAL, WHICH READS AS UNDER : THAT ASSESSMENT FRAMED UNDER SECTION 158BC READ WI TH SECTION 143(3) OF THE INCOME TAX ACT, 1961 IS BARRED BY LIM ITATION AS PER PROVISIONS OF SECTION 158BE IN AS MUCH AS THE ORIGI NAL ASSESSMENT WAS FRAMED VIDE ORDER DATED 31.10.2000 WHEREAS THE SEARCH IN THE CASE OF THE APPELLANT HAD CONCLUDED ON 30.09.1998. 6. THE LD. AR FOR THE ASSESSEE STRESSED FOR THE ADM ISSION OF THE ADDITIONAL GROUND OF APPEAL. HOWEVER, IT WAS ADMITT ED THAT THIS PLEA WAS NOT EARLIER RAISED. THE LD. DR FOR THE RE VENUE POINTED OUT THAT THE SAID PLEA OF THE ASSESSMENT BEING BARRED B Y LIMITATION CANNOT BE RAISED FOR THE FIRST TIME BEFORE THE TRIB UNAL I.E. AFTER THE MATTER WAS FIRST SET ASIDE BY THE CIT(APPEALS) AND THE PRESENT APPEAL IS FILED AGAINST THE SECOND ROUND OF APPELLA TE PROCEEDINGS. RELIANCE WAS PLACED ON ARAVALI ENGINEERS (P) LTD. V S CIT 335 ITR 508 (P&H). 7. WE FIND NO MERIT IN THE STAND OF THE ASSESSEE IN VIEW OF THE FACT THAT NO SUCH PLEA WAS RAISED IN ANY EARLIER PR OCEEDINGS AND ALSO BECAUSE OF THE RATIO LAID DOWN BY THE JURISDIC TIONAL HIGH COURT IN ARAVALI ENGINEERS (P) LTD. VS CIT (SUPRA) , WHEREIN IT HAS BEEN HELD AS UNDER : NO DOUBT THAT AN APPELLATE AUTHORITY CAN ALLOW A Q UESTION TO BE RAISED FOR THE FIRST TIME EVEN IF SUCH A QUESTION WAS NOT RAIS ED AT A LOWER FORUM BUT THE DISCRETION TO DO SO HAS TO BE EXERCISED IN THE INTE REST OF JUSTICE IN THE FACTS AND CIRCUMSTANCES AND NOT MECHANICALLY. NORMALLY A QUESTION OF FACT MAY NOT BE ALLOWED TO BE RAISED FOR THE FIRST TIME AS I T MAY PREJUDICE THE OTHER SIDE. IF SUCH QUESTION IS RAISED AT THE EARLIEST OP PORTUNITY, THE OTHER SIDE CAN LEAD EVIDENCE WHICH IT MAY NOT BE ABLE TO DO IF SUCH A QUESTION IS RAISED FOR THE FIRST TIME BEFORE THE APPELLATE AUTHORITY. OF COURSE, THERE CAN BE NO TOTAL BAR ON SUCH QUESTION BEING ALLOWED, IF INTERE ST OF JUSTICE SO REQUIRES. QUESTION OF VALIDITY OF NOTICE MAY NOT BE ALLOWED T O BE RAISED FOR THE FIRST TIME IN APPEAL. SUBSEQUENT LEGISLATIVE AMENDMENT AD DING S. 292BB SUPPORTS THIS PRINCIPLE . THE QUESTION HAS, THUS, TO BE ANSWERED AGAINST TH E ASSESSEE. CIT VS. PREMIUM CAPITAL MARKET & INVESTMENT LTD. (2 005) 198 CTR (MP) 680 : (2005) 275 ITR 260 (MP) RELIED ON . (UNDERLINE PROVIDED BY US) THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSES SEE IS THUS, DISMISSED. 26. INVITING ATTENTION TO THE VARIOUS GROUNDS RAISED, SPE CIFIC ATTENTION WAS INVITED TO THE FOLLOWING BEFORE THE HON'BLE HIGH COURT : GROUNDS 6. THAT THE IMPUGNED ORDERS ANNEXURE A-1 TO A-3 ARE PERVERSE, LEGALLY UNTENABLE, ARBITRARY AND UNSUSTAINABLE IN THE EYES OF LAW INTE R-ALIA ON THE FOLLOWING GROUNDS:- I) THAT THE IMPUGNED ORDERS ARE LEGALLY UNSUSTAINAB LE IN THE EYES OF LAW IN AS MUCH THE LD. COURTS BELOW FAILED TO TAKE INTO ACCOU NT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE STATING THAT THE ASSESSMENT SO ORIG INALLY FRAMED VIDE ORDER DATED 31.10.2000 WAS TIME BARRED IN VIEW OF THE FACT THAT THE SEARCH HAD CONCLUDED ON 30.09.1998. IT IS PERTINENT TO MENTION HERE THAT TH E AFORESAID FACTS BEING ADMITTED, THUS, THE LD. TRIBUNAL OUGHT TO HAVE CONSIDERED THE PLEA RAISED BY THE APPELLANT WHICH WAS THUS PURELY A QUESTION OF LAW. IT IS FURT HER PERTINENT TO MENTION HEREIN THAT THE LD. COURT BELOW VIDE PARA 17 OF ITS ORDER HAD CATEGORICALLY MENTIONED THAT THE ORIGINAL ASSESSMENT WAS GETTING TIME BARRED ON 30.10.2000 AND IN VIEW OF THE ITSS- 2,3 & 8/CHD/2012 PAGE 12 OF 27 FACT THAT THE ORIGINAL ASSESSMENT WAS FRAMED VIDE O RDER DATED 31.10.2000 THUS CLEARLY THE ADDITIONAL GROUNDS SO RAISED BY THE ASS ESSEE OUGHT TO HAVE BEEN ENTERTAINED BY THE COURT BELOW KEEPING IN VIEW THE ADMITTED FACTS OF THE CASE. II) THAT THE LD. COURT BELOW ERRED IN NOT CONSI DERING THE PROVISIONS OF SECTION 158 BE (1) (B) OF THE ACT WHEREIN IT IS STIPULATED THAT THE ORDER FOR BLOCK ASSESSMENT UNDER SECTION 158 BC SHALL BE PASSED WITHIN TWO YEA RS FROM THE END OF THE MONTH IN WHICH THE LAST OF THE AUTHORIZATIONS FOR S EARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, WAS EXECUTED IN CASES WHERE A SEARCH IN INITIATED OR BOOKS OF ACCOUNT OR OTHER DO CUMENTS OR ANY ASSETS ARE REQUISITIONED ON OR AFTER THE 1 ST DAY OF JANUARY, 1997. IN THE PRESENT CASE, ADMITTE DLY THE SEARCH TO PLACE ON 30.09.1998 AND THE LD. TRIBU NAL HAS ALSO OBSERVED THAT THE ORIGINAL ASSESSMENT WAS GETTING TIME BARRED ON 30.1 0.2000 AND DESPITE THE AFORESAID ADMITTED FACTUAL MATRIX, THE LD. COURT BE LOW FAILED TO CONSIDER THE ADDITIONAL GROUNDS SO RAISED. IT IS FURTHER PERTINE NT TO MENTION HEREIN THAT THIS HONBLE COURT HAS HELD ON NUMEROUS OCCASIONS THAT U NDER SECTION 260A, THIS HONBLE COURT HAS WIDE POWERS TO ENTERTAIN PURELY Q UESTION OF LAW IN VIEW OF THE ADMITTED FACT SITUATION. III) THAT THE MAJOR ADDITION TO THE INCOME OF THE ASSESSEE HAS BEEN MADE ON THE GROUND THAT THE ASSESSEE HAS VARIOUS DEPOSIT ENTRIE S IN THE BANK ACCOUNT SO HELD BY THE ASSESSEE. IT IS PERTINENT TO MENTION HEREIN THA T DESPITE THE FACT THAT THE LD. CIT IN THE 1 ST ROUND OF LITIGATION HAD CATEGORICALLY HELD THAT PR OPER OPPORTUNITY FOR LEADING EVIDENCE/DEFENCE WAS NOT AFFORDED TO THE AS SESSEE AND THEREFORE THE ORIGINAL ASSESSMENT ORDER WAS SET ASIDE AND THE MATTER WAS R EMANDED BACK TO THE AO FOR FRESH ASSESSMENT. THE SAID FINDING WAS NEVER CHALLE NGED BY THE DEPARTMENT AND THUS BECAME FINAL AND DESPITE THE OBSERVATIONS OF THE LD . CIT WHEREBY THE EVIDENCE OF THE APPELLANT WAS ALLOWED TO BE CONSIDERED THE AUTHORIT IES BELOW ERRED IN IGNORING THE SAME BY MERELY GIVING THE REASON THAT THE DOCUMENTS /EVIDENCE SO PRODUCED DURING THE FRESH ASSESSMENT TO BE MADE IN PURSUANCE OF THE ORDER OF THE LD. CIT WERE NEVER PRODUCED DURING THE ORIGINAL ASSESSMENT PROCE EDINGS. THE SAID OBSERVATIONS OF THE LD. COURT BELOW IS PATENTLY ILLEGAL IN VIEW OF THE FACT THAT THE DEPARTMENT HAD ACCEPTED THE ORDER OF THE LD. CIT AND THE FINDI NGS THEREIN BECAME FINAL QUA THE DEPARTMENT ALSO. IV) THAT THE IMPUGNED ORDERS ARE LEGALLY UNSUSTAI NABLE IN THE EYES OF LAW IN AS MUCH AS THE LD. COURT BELOW FAILED TO APPRECIATE THE FACT THAT DURING THE SECOND ROUND OF LITIGATION THE ASSESSEE HAD FILED A N APPEAL BEFORE THE LD. CIT AND HAD ALSO FILED SOME ADDITIONAL DOCUMENTS IN SUP PORT OF ITS CLAIM AND THE LD. CIT ON VARIOUS OCCASIONS HAD SOUGHT REMAND REPORT U NDER RULE 46A OF THE INCOME TAX RULE FROM T HE AO WITH RESPECT TO THE GE NUINENESS OF THE CLAIM AND THE RELEVANT MATERIAL SO PRODUCED BY THE APPELLANT THE AO IN COMPLIANCE OF THE ORDER PASSED BY THE LD. CIT WHEREBY VARIOUS REMAND REPORTS WERE SOUGHT, THE AO PREPARED THE SAME AND THE SAME WERE SUBMITTED BEFOR E THE LD. CIT. IT IS PERTINENT TO MENTION HEREIN THAT THE AO IN THE REMA ND REPORTS AFTER DUE VERIFICATION OF THE FACTUAL SITUATION HAD GIVEN FAV OURABLE FACTUAL FINDING AND DESPITE THE ABOVE SAID FACTUAL SITUATION HAVING BEEN COGENTLY PROVED THE SAME HAS BEEN IGNORED AND THE ADDITIONS HAVE BEEN M ADE. ONCE THE ASSESSING OFFICER VIDE ITS REMAND REPORTS PORTRAYED THE TRUE FACTUAL SITUATION, THE ONUS LAY HEAVILY ON THE DEPARTMENT TO PROVE THAT THE ADD ITION WERE SUSTAINABLE. V) THAT THE IMPUGNED ORDERS ARE LEGALLY UNSUSTA INABLE IN THE EYES OF LAW IN AS MUCH AS THE LD. AUTHORITIES BELOW HAVE ERRED IN NOT GRAN TING FULL RELIEF ON THE BASIS OF THE REMAND REPORTS SO SOUGHT BY THE LD. CIT. IT IS PERTINENT TO MENTION HEREIN THAT A BARE PERUSAL OF THE IMPUGNED ORDERS MAKE IT AMPLY CLEAR THAT THE ASSESSEE HAS BEEN GRANTED RELIEF BY THE LD. AUTHORITIES BELOW ON ACCOUNT OF SOME ADDITIONS BY PLACING PARTIAL RELIANCE ON THE REMAND RE PORTS. NOWHERE IN THE IMPUGNED ORDERS, HAS THE REMAND REPORT EITHER BEEN DISCARDED NOR ANY MATERIAL/EVIDENCE HAS BEEN PRODUCED BY THE DEPA RTMENT TO SUSTAIN ANY OF THE ADDITIONS FOR WHICH THE REMAND REPORTS CONTAINE D FAVOURABLE FINDING OF FACT. IT IS FURTHER PERTINENT TO MENTION HEREIN THA T IN THE IMPUGNED ORDERS SOME ADDITIONS HAVE BEEN DELETED ON THE BASIS OF THE AFORESAID REMAND REPORTS, WHEREAS, THE LD. AUTHORITIES HAVE DISALLOWED MAJOR RELIEF DESPITE THE FACT THAT SUCH REMAND REPORTS HAD FAVOURABLE OBSERVATIONS QUA THE SAID ADDITIONS. THE SAID ITSS- 2,3 & 8/CHD/2012 PAGE 13 OF 27 ACTION OF PLACING PARTIAL RELIANCE ONLY FOR FEW AD DITIONS AND NOT FOR OTHERS ON THE REMAND REPORTS SHOWS COMPLETE ARBITRARINESS IN THE PASSING OF THE IMPUGNED ORDERS. A COPY OF THE FEW OF THE RELEVANT REMAND REPORTS IS BEING ANNEXED HEREWITH TO ILLUSTRATE AS FEW EXAMPLE WHEREBY THE R EMAND REPORTS HAVE BEEN- IGNORED FOR NOT GRANTING RELIEF TO THE APPELLANT AS ANNEXURE A-4. VI) THAT THE IMPUGNED ORDERS ARE LEGALLY UNSUSTAI NABLE IN THE EYES OF LAW IN AS MUCH AS THE LD. COURT BELOW ERRED IN IGNORING THE F ACT THAT THE ASSESSEE HAD FILED EXHAUSTIVE DETAILS WITH REGARD TO THE CREDIT ENTRIE S IN THE VARIOUS BANK ACCOUNTS OF THE APPELLANT AND THE SAME ARE MARKED AS 'X-6' IN T HE RECORD FILE OF THE ASSESSEE. THE LD. AUTHORITIES BELOW HAVE CATEGORICALLY MENTIO NED IN THE IMPUGNED ORDERS THAT THE TRANSFER ENTRIES FROM ONE ACCOUNT TO THE ANOTHE R ACCOUNT HAVE BEEN EXCLUDED FROM THE SAID ANNEXURE 'X-6 AT THE TIME FRAMING OF THE ASSESSMENT. A BARE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ENTIRE AMOUN T SHOWN IN 'X-6' HAS BEEN ADDED AS UNDISCLOSED INCOME AT THE TIME OF FRAMING OF THE ASSESSMENT OF THE ENTIRE BLOCK PERIOD, THUS, THE VERY BASIS FOR THE PASSING OF THE SAID IMPUGNED ORDERS. THE TOTAL AMOUNT OF ANNEXURE X-6 FINDS SPECIFIC MENTION IN TH E ASSESSMENT ORDER AND DESPITE THAT THE FINDING HAS BEEN GIVEN THAT THE TRANSFER E NTRIES HAVE NOT BEEN TAKEN INTO CONSIDERATION. THE PARTIAL RELIEF WHICH HAS BE EN ALLOWED BY THE ID. AUTHORITIES BELOW FROM THE SAID AMOUNT PERTAINS TO REFUNDS, SALE OF AGRICULTURAL LAND BY OTHER FAMILY MEMBERS, AMOUNTS SHOWN IN THE RETURNS AND OTHER ERRORS. THE TRIBUNAL ALLOWED PARTIAL RELIEF ON ACCOUNT OF VARIO US LOANS HAVING BEEN FOUND AS GENUINE IN THE VARIOUS REMAND REPORTS. NOWHERE IN ANY OF THE IMPUGNED ORDERS HAS ANY RELIEF BEEN GRANTED TO THE ASSESSEE ON ACCO UNT OF AMOUNTS BEING TRANSFERRED FROM ACCOUNT TO THE ANOTHER OF THE APPE LLANT . A COPY OF THE ANNEXURE X-6 FROM THE TABLE SHOWING FEW ILLUSTRATIONS OF SA ME BEING ADDED TWICE AND TRANSFER ENTRIES IS ANNEXED HEREWITH AS ANNEXURE A-5. THUS, A PERUSAL OF THE ABOVE SHOWS THAT THE ENTIRE PREMISES FOR THE SAID ADDITION IS B ASED ON WRONG FACTUAL FINDINGS WHICH HAVE BEEN ERRONEOUSLY FOLLOWED BY THE ID. APPELLATE AUTHORITIES WITHOUT TAKING INTO CONSIDERATION THE EVIDENCE AVAILABLE ON RECORD. VII) THAT THE IMPUGNED ORDERS ARE LEGALLY UNSUS TAINABLE IN THE EYES OF LAW IN AS MUCH AS THE LD. COURT BELOW HAVE MADE ADDITIONS IGN ORING THE PLEA OF THE ASSESSEE THAT THE SAID AMOUNT WAS RECEIVED FROM SALE OF TREES WHEREAS IT IS PERTINENT TO MENTION HEREIN THAT THE SALE OF TREES WERE FROM THE COMMON ANCESTRAL LAND WHICH WAS CO-OWNED BY THE ASSESSEE AND HIS RELATIV ES. FURTHERMORE THE SAID LAND OF THE APPELLANT WAS SOLD B HIM AND THE PROCEEDS WERE DEPOSITED IN THE HUF, HOWEVER THE ADDITIONS QUA THE SAME HAVE BEEN MADE A S THE INCOME OF THE ASSESSEE; WHEREAS THE CASE OF THE BROTHER OF THE ASSESSEE THE SAID PLEA HAS BEEN ACCEPTED IN CASE OF THE AMOUNT RECEIVED PERTAINING TO THE SALE OF THE SAID AGRICULTURAL LAND. IN THE CASE OF THE BROTHER OF TH E ASSESSEE, THE AMOUNT SHOWN TO BE INVESTED HAS BEEN ACCEPTED BY THE DEPARTMENT TO HAVE BEEN RECEIVED FROM THE SALE OF TREES FROM THE SAID ANCESTRAL LAND. VIII) THAT WITH REGARD TO THE ALLEGED INVESTMENT IN HOUSEHOLD GOODS AND HOUSEHOLD EXPENSES, THE IMPUGNED ORDERS ARE LEGALLY UNSUSTAINABLE IN THE EYES OF LAW AS THE LD COURT BELOW ERRED AND IGNORED THE MAT ERIAL FACT THAT ONLY DEPOSIT ENTRIES HAVE BEEN CONSIDERED AT THE TIME OF MAKING ADDITION ON ACCOUNT OF DEPOSIT OF BANK ACCOUNT OF THE ASSESSEE AND THE WITHDRAWALS HA VE NOT BEEN CONSIDERED. IT IS PERTINENT TO MENTION HEREIN THAT THE SAID EXPENSES OUGHT TO HAVE BEEN TAKEN AS PART OF THE ALLEGED UNDISCLOSED INCOME OF THE ASSESSEE. THO UGH THE SAID EXPENSES AND INVESTMENT HAVE BEEN ESTIMATED PURELY BY WAY OF EST IMATION AND NOT BASED ON ANY SUBSTANTIVE PROOF/ EVIDENCE, THE AUTHORITIES BELOW HAVE NOT CONSIDERED NOR DISCUSSED ANY WITHDRAWALS FROM THE SAID BANK ACCOUNTS WITH RE GARD TO THE ALLEGED HOUSEHOLD EXPENSES. THE REVENUE HAS ALSO NOT SHOWN ANY EVIDENCE TO PROVE THAT THE SAID EXPENSES WERE BORNE OUT FROM CASH OTHER TH AN THE AMOUNT WITHDRAWN FROM THE SAID BANK ACCOUNT AND THEREFORE IN VIEW OF THE HUGE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME AS DEPOSITS IN THE BANK ACCOU NTS THE SAID SMALL AMOUNTS OUGHT TO HAVE BEEN EXPENDED FROM THE AFORESAID ADDI TION. IX) THAT THE IMPUGNED ORDERS ARE LEGALLY UNSUSTAINA BLE IN THE EYES OF LAW IN AS MUCH AS THE LD. COURT BELOW HAVE NOT APPRECIATE THE EVID ENCE PLACED ON RECORD TO EXPLAIN THE ADDITION MADE ON ACCOUNT OF INVESTMENT IN PROPERTIE S IN PANCHKULA . WITH REGARD TO THE SCO AT PANCHKULA, IT IS STATED THAT THE ASSESSE E HAD CLEARLY SHOWN HIS SOURCE ITSS- 2,3 & 8/CHD/2012 PAGE 14 OF 27 FROM SALE OF CAR AND BANK WITHDRAWALS; HOWEVER THE SAME HAS BEEN IGNORED BY GIVING THE REMARKS THAT THE SAME HAS NOT BEEN PRODU CED AT THE TIME OF ORIGINAL ASSESSMENT . IT IS AGAIN PERTINENT TO MENTION THAT THE ID. CIT . VIDE ITS ORDER DATED 19.03.2001 HAD CATEGORICALLY HELD THAT THE ASSESSEE -APPELLANT WAS NOT GRANTED PROPER OPPORTUNITY FOR LEADING EVIDENCE / DEFENCE AND THER EFORE REMITTED THE MATTER FOR DE- NOVO ASSESSMENT. THE REASONING GIVEN IN THE IMPUGNE D ORDERS THE SHOW THAT THE ORDER OF THE LD. CIT IN THE FIRST ROUND OF LITIGATI ON WHICH HAS ATTAINED FINALITY HAS BEEN IGNORED AND DESPITE NOT HAVING BEEN GRANTED E FFECTIVE OPPORTUNITY IN THE FIRST INSTANCE THE SAME HAS BEEN MADE THE BASIS FOR DISAL LOWING THE RELIEF TO THE ASSESSEE. X) THAT THE ADDITION MADE ON ACCOUNT OF INVESTMENT IN SURAJ THEATRE IS UNSUSTAINABLE IN THE EYES OF LAW IN AS MUCH AS THE REVENUE HAS BL OWN HOT AND COLD IN THE SAME BREATH. IN THE ASSESSMENT ORDER DATED 31.03.2003 IT IS BEEN STATED THAT PEAK OF THE CASH DEPOSITS WAS NOT WORKED OUT DUE TO THE FAC TS STATED IN THE ORIGINAL ASSESSMENT. IN THE ORIGINAL ASSESSMENT IT HAS BEEN STATED THAT THE WITHDRAWALS FROM THE BANK ACCOUNTS WERE MADE BY THE ASSESSEE AND HIS BROTHER FOR MAKING PAYMENT OF THE ON MONEY IN RELATION TO THE VARIOUS PROPERTIES PURCHASED BY THE ASSESSEE AND HIS BROTHER. THE AMOUNT IN THE BANK ON ACCOUNT OF VARIO US DEPOSITS HAVE ALREADY BEEN ADDED AS THE UNDISCLOSED INCOME OF THE ASSESSE E AND NOW ON THE BASIS OF THE REASONING GIVEN BY THE AO THAT THE AMOUNTS IN THE B ANK ACCOUNTS HAS BEEN USED TO PURCHASE PROPERTIES, THE SAID AMOUNTS CANNOT BE ADDED TWICE TO INCOME OF THE ASSESSEE. FURTHER THE ASSESSEE HAS TAKEN A CATEGORICALLY STAN D THAT THE INVESTMENT IN THE SAID PROPERTIES WERE MADE FROM CA SH WITHDRAWALS DONE FROM THE BANK AND THE SAME HAVE BEEN IGNORED WHEREAS AT THE TIME OF MAKING ADDITION ON ACCOUNT OF BANK DEPOSITS THE SAID EXPLANATION HAS B EEN ITSELF GIVEN BY THE ASSESSING OFFICER. XI) THAT THE IMPUGNED ORDERS ANNEXURES A-L TO A-3 ARE LEGALLY UNSUSTAINABLE IN AS MUCH AS THE SAME ARE FILLED WITH CONJECTURES AND SU RMISES AND ARE AS SUCH LIABLE TO BE SET ASIDE. XII) THAT THE APPELLANT CRAVES FOR KIND INDULGENCE OF THIS HONBLE COURT TO ALTER, AMEND OR ADD ANY GROUND AS THIS HONBLE COURT MAY D EEM FIT AND NECESSARY UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. (EMPHASIS SUPPLIED) 27. ON THE BASIS OF THE ABOVE GROUNDS, THE ASSESSEE HA S RAISED THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW : SUBSTANTIAL QUESTIONS OF LAW 7. THAT IN LIGHT OF GROUNDS TAKEN ABOVE, THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW ARISE:- I) WHETHER IN FACT AND CIRCUMSTANCES OF THE CASE, T HE ADDITIONS HAVE BEEN MADE WITHOUT TAKING INTO CONSIDERATION THE MATERIAL AND THE EXPLANATION GIVEN BY THE ASSESSEE? II) WHETHER THE IMPUGNED ORDERS HAVE BEEN PASSED BY MISREADING OF EVIDENCE AND THUS UNSUSTAINABLE IN THE EYES OF LAW? III) WHETHER THERE IS NON APPLICATION OF MIND AT THE TIME OF PASSING OF THE IMPUGNED ORDERS AS CONTRADICTORY STANDS HAVE BEEN T AKEN BY THE REVENUE TO SUSTAIN THE ADDITIONS? IV) WHETHER THE ID COURTS BELOW ERRED IN RELYING P ARTIALLY ONLY ON THE REMAND REPORTS WITHOUT ASCERTAINING ANY FAULT IN THE SAID REMAND REPORTS? V) WHETHER FINDING OF FACTS BEING CONTRARY TO THE E VIDENCE ON RECORD IS SUSTAINABLE IN THE EYES OF LAW? VI) WHETHER IN FACT AND CIRCUMSTANCES OF THE CASE, THE ACTION OF THE AUTHORITIES BELOW, THE IMPUGNED ORDERS ANNEXURE A-L TO A-3 ARE LEGALLY SUSTAINABLE IN THE EYES OF LAW? 28. THE LD. CIT-DR RELYING UPON WRITTEN SUBMISSIONS AVAILABLE ON RECORD SUBMITTED THAT TO THE EXTENT THE ADDITIONS HAVE BEEN S USTAINED BY THE ITAT ITSS- 2,3 & 8/CHD/2012 PAGE 15 OF 27 PENALTY IMPOSED U/S 158BFA(2) IS JUSTIFIED. IT WAS HIS SUBM ISSION THAT IT IS NOT DISPUTED THAT THE LEVY OF PENALTY IS NOT AUTOMATIC AN D IT IS DISCRETIONARY AND THUS WHETHER PENALTY IS TO BE IMPOSED IN A CASE OR NOT, DEPENDS ON THE FACTS OF THE SAID CASE. IN THE FACTS OF THE PRESENT CASE , THE PENALTY HAS BEEN IMPOSED WHICH HAS BEEN CONFIRMED BY THE CIT(A). INVITING AT TENTION TO ORDER DATED 06.12.2013 IN THE CASE OF SHRI CHANDER DEEP JAIN I.E. ITSS 3/CHD/2012 THE FOLLOWING ADDITIONS HAVE BEEN CONFIRMED BY THE ITAT : 1 . ADDITION OF RS. 1,59,72,599/- ON ACCOUNT OF CREDITS IN THE BANK ACCOUNT (PAGE 42- 50) II INVESTMENT OF RS. 4,50,000/- ON ACCOUNT OF INVE STMENT IN SURAJ THEATRE. (PAGE 37) III LOW HOUSE HOLD WITHDRAWALS RS. 4 LAKHS (PAGE 4 0) IV INVESTMENT IN PURCHASE OF SCO, SECTOR-5, PANCHK ULA RS. 4,07,000/- (PAGE 28) V INVESTMENT IN HOUSE HOLD GOODS RS. 65,000/- (PAG E 34) 28.1. WHILE CONFIRMING THE ADDITION, A REFERENCE HAS BEEN MAD E TO THE FOLLOWING SPECIFIC FACTS AND DEFICIENCIES : PAGE 42 I NO BALANCE SHEET WAS FURNISHED ALONGWITH RE TURN OF INCOME. II BALANCE SHEETS WERE PREPARED ONLY DURING THE C OURSE OF 2 ND ROUND OF APPELLATE PROCEEDINGS. III. THE BOOKS OF ACCOUNT WERE PREPARED AFTE R SEARCH ACTION. PAGE 43 IV. BOOKS OF ACCOUNT WERE PRODUCED ONLY DURIN G THE 2 ND ROUND OF APPELLATE PROCEEDINGS. V. DURING THE COURSE OF SEARCH INCRIMINATING MATERIAL WAS FOUND FROM THE POSSESSION OF THE ASSESSEE WHICH HAS BEEN SEIZED. VI. THE CASH FLOW STATEMENT PREPARED BY THE APP ELLANT HAD NUMBER OF DEFECTS AND CANNOT BE ADMITTED. PAGE 44 VII. THE PERSONS FROM WHOM THE LOANS WERE CLAIM ED TO HAVE BEEN TAKEN WERE NOT PRODUCED. VIII. AT THE FAG END OF THE ASSESSMENT PROCEEDI NGS, STATEMENTS OF CERTAIN PERSONS PRODUCED WERE RECORDED AND AS THERE WAS NO TIME FOR FURTHER INVESTIGATIONS, THE STATEMENTS WERE REJECTED. IX. THERE WAS TOTAL NON-COOPERATION BY THE ASSE SSEE DURING THE TWO ROUNDS OF ASSESSMENT PROCEEDINGS AND THE PROCEEDINGS BEFORE T HE CIT(A). 28.2 IT WAS ALSO HIS SUBMISSION THAT THE ITAT IN THE QUAN TUM PROCEEDINGS HAS TAKEN INTO CONSIDERATION THE REMAND REPORT O F THE AO. THE SPECIFIC SUBMISSION ADVANCED ON BEHALF OF THE REVENUE IS EXTRACTED HEREUNDE R : 5. THE HON'BLE ITAT HAS ALSO DEALT THAT THE ISSUE O F REMAND REPORT RECEIVED FROM THE ASSESSING OFFICER WHICH HAS BEEN RAISED BY THE ASSE SSEE. THE HON'BLE ITAT HAS DISCUSSED THE VARIOUS ASPECTS OF THE CASE IN DETAIL AND HELD THAT THE INVESTMENTS, CASH DEPOSITS AND BANK ENTRIES IN THE CASE OF THE APPELLANT HAVE NOT BEEN EXPLAINED TO THE EXTENT THE ADDITIONS HAVE BEEN CONFIRMED. 28.3 THE POSITION OF FACT NAMELY THAT THE ORDERS OF THE I TAT IN THE QUANTUM PROCEEDINGS HAVING BEEN CHALLENGED WERE THE SUBSTANTIAL Q UESTIONS OF LAW STOOD ADMITTED BY THE HON'BLE HIGH COURT WAS NOT DISPUT ED. HOWEVER, ITSS- 2,3 & 8/CHD/2012 PAGE 16 OF 27 RELIANCE WAS ALSO PLACED UPON ON THE DECISIONS OF THE HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MANGHA RAM OM PARKAS H 276 ITR 362 (P&H) AND M/S ROHTAK DISTRICT TRANSPORT CO-OPERATIVE LIMIT ED 179 ITR 556 (P&H). IT WAS ALSO SUBMITTED THAT THE REVENUE WOULD ALSO R ELY UPON CIT VS SPLENDOR CONSTRUCTION IN ITA 1977/2010 DATED 14.01.2011 ( COPY FILED) AND CIT VS HARKARAN DAS VED PAL 336 ITR (DELHI) AND THE DECIS ION OF ITAT CHANDIGARH IN THE CASE OF SHRI OM PARKASH GUPTA 81 ITD 55. ACCORDINGLY, IT WAS HIS SUBMISSION THAT THE PENALTY ORDERS PASSED BY THE CIT(A) DESERVE TO BE UPHELD. THE REMAND REPORT OF THE AO, IT WAS SUBMITTED, HAS BEEN TAKEN INTO CONSIDERATION BY THE CIT(A) AND THEREAFTER FURTHER RE LIEF WAS GRANTED BY THE ITAT ALSO. ACCORDINGLY, THE SAME STANDS ADDRESSED. IT WAS SUBMITTED THAT THESE ARGUMENTS WOULD FULLY APPLY TO THE REMAINING TWO APPEA LS ALSO. 29. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE WE ADDRESS THE SUBMISSIONS OF THE PARTIES BEFORE THE BENCH, IT IS APPROPRIATE TO FIRST EXTRACT THE RELEVANT FINDINGS OF THE CIT(A) WHICH IS UNDER CHALLENGE IN THE PRESENT PROCEEDINGS. ACCORDINGLY, WE REPRODUCE PARAS 3.3.1 AND 3.3.2 FROM PAGES 4 TO 6 OF THE IMPUGNED ORDER : 3.3.1 PENALTY HAS BEEN LEVIED ONLY ON THE INCOME, W HICH HAD NOT BEEN DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED IN RESP ONSE TO NOTICE ISSUED UNDER SECTION 158BC(A) AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THEREFORE, IT WAS INCUMBENT ON THE APPEL LANT TO EXPLAIN AS TO WHY THESE ITEMS OF INCOME HAD NOT BEEN DECLARED BY HIM IN THE RETURN OF INCOME FILED. THOUGH ADEQUATE OPPORTUNITY WAS GIVEN TO THE APPELL ANT BY THE ASSESSING OFFICER AS PROVIDED IN SECTION 158BFA(3)(A) OF THE ACT, THE APPELLANT CHOSE NOT TO FILE ANY WORTHWHILE EXPLANATION IN THIS REGARD. HE ONLY MADE A VAGUE STATEMENT THAT THE ADDITIONAL INCOME WAS BROUGHT TO TAX ON AC COUNT OF THE DIFFERENCE OF OPINION. HOWEVER, HE FAILED TO EXPLAIN AS TO THE BA SIS ON WHICH HE CONSIDERED THAT THE ITEMS, NOW BEING BROUGHT TO TAX BY ASSESSING OF FICER, SHOULD NOT HAVE BEEN TAKEN AS HIS INCOME. IT WAS OBLIGATORY ON THE APPEL LANT TO ADDUCE EVIDENCE TO PROVE THAT THE VIEW TAKEN BY HIM AT THE TIME OF FIL ING OF RETURN THAT THESE ITEMS DID NOT REPRESENT HIS INCOME WAS JUST AND BONAFIDE. IN THE APPELLATE PROCEEDINGS ALSO, THE LD. COUNSEL HAS CHOSEN NOT TO FILE ANY EXPLANATION AND HAS STATED THAT HE RELIES UPON CERTAIN DECISIONS OF HON 'BLE HIGH COURTS AND TRIBUNALS. IN ALL THESE JUDGMENTS, THE HON'BLE HIGH COURTS/TRIBUNALS HAVE MERELY HELD THAT PENALTY U/S 158BFA(2) SHOULD BE LE VIED AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FURTHER , THE LEVY OF PENALTY U/S 158BFA(2) IS NOT MANDATORY BUT DISCRETIONARY AND TH E DECISION WHETHER A PENALTY SHOULD OR SHOULD NOT BE IMPOSED UNDER THIS PROVISIO N HAS TO BE TAKEN AFTER DUE CONSIDERATION OF THE EXPLANATION OF THE ASSESSEE. F OR EXAMPLE, IN THE CASE OF SMT. PRAMILA PRATAP SHAH (100 ITD160), QUOTED BY LD . COUNSEL, THE HON'BLE ITAT, BOMBAY BENCH HAS HELD IN PARA 10 AS UNDER: 'FURTHER, SUB-SECTION (3) INCORPORATES THE PRINCIPL E OF NATURAL JUSTICE. PROVIDING OF OPPORTUNITY TO ASSESSEE BEFORE LEVY OF PENALTY IS NOT A MERE FORMALITY. THE ASSESSEE MAY DEMONSTRATE, WITH THE H ELP OF FACTS AND CIRCUMSTANCES HIS INNOCENCE. THEREFORE, IN OUR OPIN ION, THERE IS INBUILT MECHANISM IN THE PROVISIONS OF SECTION 158BFA TO TH E EFFECT THAT PENALTY MAY NOT BE LEVIED IF THE FACTS AND CIRCUMSTANCES OF THE CASE JUSTIFIES THE BONA FIDES OF THE ASSESSEE IN NOT RETURNING THE INC OME. ACCORDINGLY, IT HAS TO BE HELD THAT LEVY OF PENALTY UNDER SECTION 158BF A IS NOT AUTOMATIC. THE ITSS- 2,3 & 8/CHD/2012 PAGE 17 OF 27 ASSESSING OFFICER MUST CONSIDER THE CIRCUMSTANCES O F THE CASE AND THEN EXERCISE HIS DISCRETION INJUDICIOUS MANNER.' 3.3.2 THE RATIO OF ALL THE DECISIONS QUOTED BY THE APPELLANT IS THAT WHERE THERE IS AN ADEQUATE EXPLANATION OF THE ASSESSEE FOR NON-INC LUSION OF CERTAIN ITEMS OF INCOME IN THE RETURN, A PENALTY UNDER THIS PROVISIO N MAY NOT BE IMPOSED. NO COURT/BENCH OF THE ITAT HAS HELD OR COULD HAVE CONC EIVABLY TAKEN A VIEW AS THE APPELLANT IS LABOURING UNDER THAT UNDER NO CIRCUMST ANCES, PENALTY UNDER THIS PROVISION CAN BE IMPOSED. SUCH A VIEW WOULD RENDER THE PROVISION OTIOSE. THE RATIO OF THESE DECISIONS IS THAT IMPOSITION OF PENA LTY UNDER THIS PROVISION IS NOT AUTOMATIC, BUT THE ASSESSEE HAS TO BE HEARD AND HIS EXPLANATION HAS TO BE CONSIDERED BEFORE A DECISION IN REGARD TO IMPOSITIO N OF PENALTY IS TAKEN. NOW LET US APPLY THE RATIO OF THESE DECISIONS TO THE CASE O F THE APPELLANT. THE APPELLANT F HAS FILED NO EXPLANATION EITHER BEFORE THE ASSESS ING OFFICER OR IN THE I APPELLATE PROCEEDINGS TO EXPLAIN AS TO WHY CERTAIN ITEMS OF I NCOME, WHICH HAVE BEEN BROUGHT TO TAX IN THE ASSESSMENT, WERE NOT SHOWN IN THE RET URN OF INCOME. THE REASONS WHY THESE ITEMS DO FORM PART OF TAXABLE UNDISCLOSED INCOME HAVE BEEN ENUMERATED AND EXPLAINED AT LENGTH IN THE ASSESSMEN T ORDER AND THE APPELLATE ORDER. THEREFORE, ONUS WAS ON THE APPELLANT TO EXPL AIN WHY HE TOOK A POSITION THAT THESE ITEMS WERE NOT SUBJECT TO TAX. SINCE THERE WA S NO EXPLANATION ON THE PART OF THE APPELLANT, THERE WAS NOTHING FOR THE AS SESSING OFFICER TO CONSIDER BEFORE THE LEVY OF PENALTY AND SHE WAS DUTY BOUND T O LEVY THE PENALTY. 30. WE HAVE NOTED THAT THE PARTIES BEFORE US HAVE RELIED UPON VARIOUS DECISIONS IN SUPPORT OF THEIR RESPECTIVE STANDS, HOWEVER, W E FIND THAT IN THE FACE OF THE AFORESAID FINDING OF THE CIT(A) WHEREIN ON THE LE GAL PROPOSITION, THE WELL SETTLED ISSUES HAVE BEEN ADDRESSED, WE ARE OF TH E VIEW THAT NO PURPOSE WOULD BE SERVED BY MAKING REFERENCE TO THE DEC ISIONS WHERE THE PROPOSITION OF LAW WHICH THE LD. AR WOULD WANT TO RELY UPO N NAMELY THAT THE LEVY OF PENALTY IS DISCRETIONARY AND NOT MANDATORY AND T HE MERE FACT THAT ADDITIONS HAVE BEEN MADE BY WAY OF ESTIMATES PER-SE CA NNOT BE THE BASIS FOR LEVY OF PENALTY EVEN U/S 158BFA(2) AND THE COUNTER PROPO SITION OF LAW WHICH THE DEPARTMENT WOULD WANT TO CANVASS I.E. ANY AND EVERY ADDITION SUSTAINED IN THE QUANTUM PROCEEDINGS EVEN ON ESTIMATES PER-SE CA NNOT BE HELD TO BE NOT ATTRACTING PENALTY U/S 158 BFA(2) AND IT IS THE EXPLA NATION WHICH IS RELEVANT FOR CONSIDERING THE ISSUES WHICH HAS TO BE CONSID ERED IN REGARD TO THE ADDITIONS MADE AND SUSTAINED. WE FIND THAT THE CIT(A) HAS SPECIFICALLY ADDRESSED PROPOSITIONS OF LAW IN PARA 3.3.2 WHERE HE HAS S UMMED UP THAT THE DECISIONS RELIED UPON WOULD APPLY WHERE THERE IS NO E XPLANATION WHAT- SO-EVER OF THE ASSESSEE FOR NON-INCLUSION OF CERTAIN ITEMS OF INCOME IN THE RETURN AND SIMULTANEOUSLY HE ADDRESSES THE PATENTLY IN CORRECT BELIEF HARBOURED BY THE ASSESSEE THAT THE POSITION OF LAW IS TH AT UNDER NO CIRCUMSTANCES PENALTY CAN BE IMPOSED. WE FIND OURSELVES FU LLY IN AGREEMENT WITH THE AFORESAID GENERAL SUMMING UP OF THE LEGAL PROPOSI TIONS WHICH WE HOLD DOES NOT NOW FURTHER REQUIRE US TO MAKE A REFEREN CE TO ANY PARTICULAR DECISION AS THE POSITION IS WELL SETTLED. WE ALSO NOTICE THAT SIMILARLY THE CIT(A) HAS WELL APPRECIATED THE LEGAL POSITION BY NOTING THA T THE IMPOSITION OF ITSS- 2,3 & 8/CHD/2012 PAGE 18 OF 27 PENALTY IS NOT AUTOMATIC AND THE EXPLANATION OF THE ASSE SSEE HAS TO BE CONSIDERED AS OFFERED IN THE PENALTY PROCEEDINGS. IT HAS B EEN WELL NOTICED THAT THE DECISIONS WHERE NO EXPLANATION HAS BEEN OFFERED , OPERATE IN A DIFFERENT DOMAIN. THE SAID WELL ADDRESSED LEGAL POSITION IS REQ UIRED TO BE ADDRESSED IN THE LIGHT OF THE OBSERVATIONS MADE BY THE AO IN THE REMAND PROCEEDINGS WHEREIN AS PER THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSESSEE, THE AO IS SAID TO HAVE GIVEN UP THE MAINTAINA BILITY OF THE ADDITIONS, BY ACCEPTING THE EXPLANATION OF THE ASSESSEE IN THE QUANTUM PROCEEDINGS MADE AVAILABLE BY WAY OF REMAND REPORT DATE D 02.09.2005; 16.11.2005 AND 24.04.2006, COPIES OF WHICH ARE AVAILABLE IN TH E PRESENT PROCEEDINGS ALSO AND CARRIES THE SAME NUMBERS I.E. PAGE 688 TO 693; 697 TO 698 AND 706 TO 708 OF THE PAPER BOOK FILED IN THE QUANT UM PROCEEDINGS. ON THE STRENGTH OF THESE REMAND REPORTS MADE AVAILABLE TO THE CIT(A), IT HAS BEEN CANVASSED ON BEHALF OF THE ASSESSEE THAT THE CIT(A ) GRANTED PART RELIEF AND THE ISSUE HAVING BEEN CARRIED BEFORE THE ITAT, ALSO R ESULTED IN PART RELIEF TO THE ASSESSEE. THE ASSESSEE AGGRIEVED BY THE ORDER HAS CHALLENGED THE ORDER BEFORE THE HON'BLE HIGH COURT ON VARIOUS GROUNDS ON THE BASIS OF WHICH THE SPECIFIC SUBSTANTIAL QUESTIONS OF LAW HAVE BEEN RA ISED WHICH HAVE BEEN ADDRESSED IN THE EARLIER PART OF THIS ORDER WHEREIN THE CONCLUSION OF THE ITAT IN REJECTING THE JURISDICTIONAL ISSUE RAISED BY WAY OF ADDITIONAL GROUND AND SUSTAINING THE ADDITION ON MERIT HAS BEEN ADMITTED BY THE HON'BLE HIGH COURT. IN THE SAID BACKGROUND THE LD. AR HAS ARGUED TH AT THE QUESTION OF LAW HAVING BEEN ADMITTED, IT WOULD DEMONSTRATE THAT THE F INDING OF THE ITAT IGNORING THE REMAND REPORT OF THE AO CHALLENGING THE VERY BASIS OF THE ORDER WHEREIN ADDITIONS HAVE BEEN SUSTAINED IN PART, THUS IN VIEW OF THE JUDICIAL PRECEDENT AS AVAILABLE IN NAYAN BUILDERS AND DEVELOPERS PV T. LTD. AMONGST OTHERS, THE PENALTY PROCEEDINGS DESERVES TO BE QUASHED . IT IS NOTICED THAT THE DEPARTMENT HAS NOT DISPUTED THE REMAND REPORTS A ND HAS ALSO NOT ADVANCED ANY CONTRARY ARGUMENTS ON FACTS ASSAILING THE ASSESSEE'S STAND THAT CONSIDERING THE GROUNDS RAISED BY THE ASSESSEE BE FORE THE HON'BLE HIGH COURT SUBSTANTIAL QUESTIONS OF LAW HAVE BEEN ADMITTED BY THE COURT IN THE CASE OF THESE THREE ASSESSEES. THE ARGUMENT HAS BEEN RAISED THAT MERELY BECAUSE THE APPEAL HAS BEEN ADMITTED, IT DOES NOT NECES SARILY IN ANY AND EVERY CIRCUMSTANCE LEADS TO THE CONCLUSION THAT THE PEN ALTY IS NOT ATTRACTED. FOR THE SAID PROPOSITION, RELIANCE HAS BEEN PLACED UPON CI T VS SPLENDOR CONSTRUCTION IN ITA 1977/2010 DELIVERED ON 14.01.2011, COP Y OF THE SAID ITSS- 2,3 & 8/CHD/2012 PAGE 19 OF 27 DECISION HAS BEEN FILED. A PERUSAL OF THE SAME SHOWS TH AT THE QUESTIONS OF LAW RAISED BEFORE THE HON'BLE COURT WERE AS UNDER : 1.WHETHER THE TREATMENT GIVEN BY THE ASSESSEE COMPA NY TO THE SHORT TERMS CAPITAL ASSET AS A LONG TERM CAPITAL ASSET IS NOT A COLORABLE DEVICE USED BY THE ASSESSEE COMPANY TO PAY LOWER RATE OF TAX ON TH E GAIN ACCRUING FROM THE SALE OF IMMOVABLE PROPERTY UNDER THE GARB OF 'LONG TERMS CAPITAL GAIN' WHICH WAS ACTUALLY THE SHORT TERMS CAPITAL GAIN ATT RACTING NORMAL RATE OF TAX? 2. WHETHER AO WAS JUSTIFIED IN IMPOSING PENALTY UND ER SECTION 271(L)(C) AS THE INCOME DERIVED BY THE ASSESSEE WAS TAXABLE AT T HE NORMAL RATE OF TAX I.E. 35% UNDER SHORT TERMS CAPITAL GAIN, WHEREAS IN THE RETURN OF INCOME THE ASSESSEE DECLARED THIS INCOME AS LONG TERMS CAPITAL GAIN, AND PAID TAX AT A LOWER RATE I.E. 20% AND THUS FURNISHED INACCURATE PARTICULARS OF ITS INCOME?' 31. A PERUSAL OF THE SAID DECISION SHOWS THAT THE PENALTY WAS DELETED BY THE ITAT HOLDING THAT ON THE ISSUE WHETHER THE ASSET IN QUESTION WAS A LONG TERM CAPITAL ASSET OR SHORT TERM CAPITAL ASSET, THERE W AS A DEBATE. IT IS SEEN THAT THE HON'BLE DELHI HIGH COURT CONSIDERING THE FACTS HE LD THAT THE ISSUE WAS NOT DEBATABLE. SPECIFIC FACTS TAKEN INTO CONSIDERATION WERE AS UN DER : 10. THE ISSUE WAS NOT DEBATABLE, AS HELD BY THE TR IBUNAL IN THE IMPUGNED ORDER. NO DOUBT, APPEAL WAS ADMITTED. HOWEVER, THE TRIBUNA L HAS GLOSSED OVER A VERY IMPORTANT AND FUNDAMENTAL FACT. IN QUANTUM PROCEEDI NGS, APPEAL FILED BY THE ASSESSEE I.E. ITA 662/2009 CAME UP FOR ADMISSION ON 16 TH SEPTEMBER, 2009. ON THE SAME DATE, APPEAL WAS ADMITTED, ARGUMENTS HEARD AND ORDERS WER E DICTATED IN THE COURT DISMISSING THE APPEAL THERE AND THEN . IN THIS FACTUAL BACKDROP, WHEN ORDER OF THE ASSESSING OFFICER IN QUANTUM PROCEEDINGS WAS SUSTAI NED BY ALL SUCCESSIVE AUTHORITIES AND THIS COURT ALSO DISMISSED THE APPEAL AT THE ADM ISSION STAGE, ALBEIT AFTER ADMITTING THE SAME, IT CANNOT BE SAID THAT THE ISSU E WAS DEBATABLE. (EMPHASIS SUPPLIED) 32. ACCORDINGLY, IT IS SEEN THAT THE DECISION WAS PASSED N OTING THE FACT THAT THE APPEAL EVEN THOUGH ADMITTED ON A SPECIFIC DATE WAS DISMISSED ON THE VERY SAME DATE. THUS, ADMITTEDLY THE CONCLUSION OF T HE ITAT THAT A SUBSTANTIAL QUESTION OF LAW EXISTED LEADING TO A DEBATE WAS ON AN INCORRECT APPRECIATION OF FACT. BEFORE US, LD. CIT-DR HAS STATED REFERR ING TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS HARKARAN DAS VED PAL 336 ITR 8 (DELHI) THAT THOUGH THE ORDER OF THE I TAT WAS UPHELD WHEREIN THE PENALTY IMPOSED U/S 158BFA(2) WAS DELETED ON THE REASONING THAT THE COMPUTATION OF UNDISCLOSED INCOME CANNOT BE CON STRUED AS UNDISCLOSED INCOME DETERMINED BY THE AO UNDER CLAUSE (C) OF SECTION 158BC, HOWEVER, THE SPECIFIC REASONING OF THE ITAT FOR DELE TING THE PENALTY WAS NOT APPROVED. THE COURT NOTICED THAT THE REQUIREME NT OF CONCEALMENT AND/OR FURNISHING OF INACCURATE PARTICULARS WAS AN EXPRESS ION OCCURRING IN SECTION 271(1)(C) OF THE ACT WHICH DID NOT OCCUR IN SECTION 1 58BFA(2). TO THAT EXTENT, WE NOTICE THE TRIBUNAL WAS HELD TO HAVE MISC ONSTRUED THE SCOPE OF PENALTY PROVISIONS. IN THE FACTS OF THAT CASE, IT IS SEEN THE ASSESSEE HAD ITSS- 2,3 & 8/CHD/2012 PAGE 20 OF 27 SURRENDERED AN AMOUNT AND THE COURT TOOK NOTE OF THE FACT THAT DEHORS THE SURRENDER THERE WAS NO EVIDENCE. THE ORDER OF THE ITA T, WE NOTE HAD BEEN UPHELD NOTING THAT THERE WAS NO QUESTION OF IMPOSING A PE NALTY U/S 158BFA(2) OF THE ACT AS THERE WAS NO DETERMINATION OF UNDISCLOSE D INCOME IN TERMS STIPULATED IN 158BC(C) OR 158BB(1). 33. WE FURTHER FIND THAT IN CIT VS MANGAL RAM OM PARKAS H THE ASSESSEE FAILED TO DISCHARGE THE ONUS WHICH LAY UPON IT TO EXPLAIN TH E CASH CREDITS. THE FACTS ARE ENTIRELY DISTINGUISHABLE AND HAVE NO APPLICAB ILITY TO THE CASE AT HAND. SIMILARLY CIT VS ROHTAK DISTRICT TRANSPORT CO-OPINIO N LTD. HAS NO APPLICABILITY IN THE FACTS OF THE CASE AT HAND AS PENALTY TH EREIN HAD BEEN DELETED BY THE ITAT IGNORING THE FACT NO EVIDENCE WHATSO EVER HAD BEEN PLACED BY THE ASSESSEE IN SUPPORT OF THE GENUINENESS OF THE CLAIM. SIMILAR IS THE POSITION IN OM PARKASH GUPTAS CASE CITED SUPRA. 34. IN THE SAID FACTUAL AND LEGAL BACKGROUND, ON THE LEGAL IS SUE WE CONCUR WITH THE ARGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE AND HOLD THAT THE PENALTY ORDER DESERVES TO BE QUASHED. WE NOTICE THAT THE LEGAL POSITION AS ADDRESSED BY THE HON'BLE MUMBAI HIGH COURT IN THE CASE OF NAYAN BUILDERS HAS BEEN RECENTLY AFFIRMED IN THE RECENT DECISION DATED 17 TH FEB.,2017 IN CIT VS M/S ADVAIA ESTATE DEVELOPMENT PVT. LTD. IN ITA 1498 O F 2014. THE RELEVANT EXTRACT IS REPRODUCED HEREUNDER : 4. IN THE ABOVE VIEW, THE IMPUGNED ORDER FOLLOWED I TS DECISION IN NAYAN BUILDERS AND DEVELOPERS PVT.LTD. VS. THE INCOME TAX OFFICER IN INCOME TAX APPEAL NO. 2379/MUM/2009 RENDERED ON 18 TH MARCH, 2011 AND THE DECISION OF THE DELHI HIGH CO URT IN CIT VS LIQUID INVESTMENT AND TRADING CO (ITA NO .240/2009) RENDERED ON 5 TH OCTOBER, 2010 TO HOLD THAT WHEN AN APPEAL HAS BEEN ADMITTED IN QUANTUM PROCEEDINGS BY THE HIGH COURT, THEN THAT ITSELF IS AN EVIDENCE OF THE ISSUE BEING DEBATABLE, NOT WARRANTING ANY PENALTY. 5. THE REVENUE HAD FILED AN APPEAL FROM THE ORDER O F THE TRIBUNAL IN NAYAN BUILDERS AND DEVELOPERS PVT. LTD. (SUPRA) DELETING THE PENALTY. THIS APPEAL BEING CIT VS. NAYAN BUILDERS AND DEVELOPERS [(2014) 368 ITR 722] WAS NOT ENTERTAINED BY THIS COURT. IT UPHELD THE VIEW OF THE TRIBUNAL THAT THE IMPOSIT ION OF PENALTY WAS NOT JUSTIFIED AS ADMISSION OF APPEAL IN QUANTUM PROCEEDING ON THIS I SSUE AS SUBSTANTIAL QUESTION OF LAW WAS PROOF ENOUGH OF THE ISSUE BEING DEBATABLE. THE AFORESAID DECISION IN NAYAN BUILDERS AND DEVELOPERS PVT. LTD (SUPRA) WAS ALSO FOLLOWED B Y THIS COURT IN CIT-8 VS. ADITYA BIRLA POWER CO. LTD. IN INCOME TAX APPEAL NO. 851 OF 201 4 RENDERED ON 2 ND DECEMBER, 2015 . 6. HOWEVER, MR. TEJVEER SINGH, LEARNED COUNSEL APPE ARING FOR THE APPELLANT - REVENUE SEEKS TO DISTINGUISH THE DECISION OF THIS C OURT IN NAYAN BUILDERS AND DEVELOPERS PVT. LTD. (SUPRA) ON THE GROUND THAT THIS COURT HAD AFTER RECORDING THE FACT THAT WHERE APPEALS FROM ORDERS IN QUANTUM PROCEEDINGS OF THIS COURT HAVE BEEN ADMITTED AS GIVING RISE TO SUBSTANTIAL QUESTION OF LAW THEN THAT ITSEL F DISCLOSES THAT THE ISSUE IS DEBATABLE. HOWEVER, MR. SINGH POINTS OUT THAT IT ALSO FURTHER RECORDS IN OUR VIEW THERE WAS NO CASE MADE OUT FOR IMPOSITION OF PENALTY AND THE SAME WAS RIGHTLY SET ASIDE. ON THE BASIS OF THE ABOVE OBSERVATION, IT IS CONTENTION OF MR. TEJVEER SINGH THAT THE APPEAL FROM PENALTY ITSS- 2,3 & 8/CHD/2012 PAGE 21 OF 27 PROCEEDING WAS NOT ADMITTED BY THIS COURT AS ON MER ITS NO CASE FOR IMPOSITION OF PENALTY WAS MADE OUT. 7. MR. DALAL, THE LEARNED COUNSEL FOR THE RESPONDEN T-ASSESSEE INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL DATED 18 TH MARCH, 2011 IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT. LTD (SUPRA). ON PERUSAL OF THE TRIB UNAL ORDER DATED 18 TH MARCH, 2011 WE NOTE THAT THE TRIBUNAL IN NAYAN BUILDERS AND DEVELO PERS PVT. LTD (SUPRA) HAD DELETED THE PENALTY ONLY ON THE GROUND THAT AS SUBSTANTIAL QUES TION OF LAW HAD BEEN ADMITTED BY THIS COURT IN QUANTUM PROCEEDINGS THE ISSUE IS DEBATABLE . IT WAS ON THE BASIS OF THE AFORESAID REASONING OF THE TRIBUNAL IN NAYAN BUILDERS AND DEV ELOPERS PVT. LTD. (SUPRA), THAT THIS COURT HELD THAT NO PENALTY IS IMPOSABLE. THUS THE D ISTINCTION SOUGHT TO BE MADE BY MR. TEJVEER SINGH DOES NOT ASSIST THE REVENUE, AS IT DO ES NOT EXIST. 8. IN VIEW OF THE DECISION TAKEN BY THIS COURT IN N AYAN BUILDERS AND DEVELOPERS PVT. LTD (SUPRA) AS WELL AS IN ADITYA BIRLA POWER C O. LTD. (SUPRA) THE PROPOSED QUESTION DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF L AW. THUS NOT ENTERTAINED. 9. THEREFORE, THE APPEAL IS DISMISSED. NO ORDER AS TO COSTS. 35. THUS, THOUGH WE HAVE CONCLUDED THAT IN THE PECULIAR FA CTS PENALTY ORDER CANNOT STAND, HOWEVER, SINCE THE PARTIES HAVE ADV ANCED ARGUMENTS ON MERIT ALSO, WE DEEM IT APPROPRIATE TO ADDRESS THESE: CONS IDERING THE ARGUMENTS, FACTS AND CIRCUMSTANCES, WE CONCUR WITH THE A RGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE TO THE EXTENT THAT ADMITTEDLY THE ASSESSEES IN THE FACTS OF THE PRESENT CASE WERE NOT RE QUIRED TO MAINTAIN BOOKS OF ACCOUNT AS THE SOURCES OF INCOME OF THE TWO AS SESSEE'S NAMELY SHRI CHANDER DEEP JAIN AND SHRI VIPIN KUMAR JAIN WERE GETTING SALARY FROM THE FIRMS WHERE THEY WERE PARTNERS; INTEREST AND RENTAL INCOME AND IN THE CASE OF SMT. SNEH JAIN, RENTAL AND INTEREST INCOME. THE CASE OF TH E REVENUE IS THAT THE BALANCE SHEETS AND THE BOOKS MADE AVAILABLE ALONGWITH THE CASH-FLOW STATEMENT ETC. HAVE ALL BEEN MADE AVAILABLE IN THE SECOND ROUND OF THE PROCEEDINGS AND THUS, EVEN IF THESE HAVE BEEN MADE AVAILABLE TO THE AO, THEY WERE QUESTIONABLE AS THEY WERE NOT BEING REGULARLY MAINT AINED. WE NOTE THAT THE AO AND THE CIT(A) ON ACCOUNT OF THIS FACT HAVE DISCARDED THE EXPLANATION WITHOUT ASSAILING THE FACTS. ADMITTEDLY, THE ORDE R PASSED BY THE CIT(A), IN THE FIRST ROUND ADMITTING EVIDENCES ATTAINED FINALIT Y. THE RECORDS RELIED UPON HAVE BEEN SEEN BY THE AO WHO HAS GONE THR OUGH THE SAME AND COMMENTED UPON THE CORRECTNESS OF THE ASSERTIONS OF TH E ASSESSEE WHICH ALSO HAVE BEEN PARTLY ACCEPTED BY THE ITAT. THE DECIS ION OF THE CIT(A) TO REMAND BACK THE ISSUE TO THE AO, ADMITTEDLY WAS NOT CH ALLENGED BY THE REVENUE AS NOTED AND THE SAID ISSUE ADMITTEDLY HAS BEC OME FINAL. THE ADDITIONS SUSTAINED ULTIMATELY BY THE ITAT HAVE BEEN ADDRESSED BY THE AO IN THE REMAND PROCEEDINGS AND AS PER THE ASSESSEE'S SUB MISSIONS, SOME OF THESE INFACT DID NOT PERTAIN TO THE ASSESSEE AS THESE A RE EXPLAINABLE FROM THE HUF. TRANSFERS FROM THE HUF BANK ACCOUNTS OF ASSESSEE 'S FAMILY MEMBERS EMANATING FROM THE SALE OF TREES ON THE ANCESTRAL LANDS E TC. THE CORRECTNESS ITSS- 2,3 & 8/CHD/2012 PAGE 22 OF 27 OF THE SAID CLAIM IS STATED TO HAVE BEEN EXAMINED AND CON SIDERED BY THE CIT(A) AND THE ITAT IN THE CASE OF SHRI VIPIN KUMAR JAIN WHI CH FACT IS STATED TO HAVE BEEN LOST TRACK OF BY THE CIT(A) IN THE CASE OF CHANDER DEEP JAIN AND THIS FINDING IGNORING THIS MATERIAL FACT HAS BEEN UPHELD BY TH E ITAT IN THE QUANTUM PROCEEDINGS RESULTING IN CONTRADICTORY ORDERS W HEREIN ON SIMILAR SET OF FACTS AND CIRCUMSTANCES, THE ADDITION HAS BEEN SU STAINED BY THE ITAT IN THE CASE OF SHRI CHANDER DEEP JAIN AS A RESULT OF THES E CONTRADICTIONS ON SIMILAR SET OF FACTS, THE APPEAL OF THE ASSESSEE ON SUBSTA NTIAL QUESTIONS OF LAW HAS BEEN ADMITTED BY THE HON'BLE HIGH COURT. 36. THUS, NOT-WITHSTANDING THE FACT THAT THE ADDITION HAS BEEN MADE QUA THE HOUSEHOLD GOODS AND LOW HOUSEHOLD WITHDRAWALS ON THE BASIS OF ESTIMATION AND THUS ON THE SAID FACT ALONE, IT HAS BEEN AR GUED THAT PENALTY IS NOT AUTOMATICALLY ATTRACTED. CIT VS DR. GIRI RAJ AGGAR WAL GIRI 346 ITR 152 (RAJ) MAY BE REFERRED TO. WE FURTHER FIND OURSELVES IN AGRE EMENT WITH THE SUBMISSIONS ON BEHALF OF LD. AR THAT ON CONSIDERATION OF THE PECULIAR FACTS ON RECORD WHICH WE PROPOSE TO BRIEFLY TOUCH, IT IS SEEN T HAT QUA THE ESTIMATED ADDITION ON ACCOUNT OF HOUSEHOLD GOODS, THE ASS ESSEE RIGHT FROM THE BEGINNING I.E. BEFORE THE AO HAS CANVASSED THAT SINCE CERTAIN UNDISCLOSED INCOMES HAVE BEEN DECLARED IN THE BLOCK ASSES SMENT, THIS MAY BE TAKEN TO HAVE BEEN UTILIZED FOR THE PURCHASE OF THE A SSETS. APART FROM THAT, IT HAS ALSO BEEN CANVASSED THAT THE ITEMS WERE RE CEIVED ON THE OCCASION OF MARRIAGE AND OTHER CEREMONIES AND CAN BE UNDERSTOOD TO HAVE BEEN EXPLAINED THEREFROM WAS AN ARGUMENT ADVANCED AND RECOR DED IN PARA 25 PARA 34 OF THE QUANTUM ORDER PASSED BY THE ITAT. FURT HER, AT BEST THESE ARE ESTIMATED ADDITIONS WHICH IN THE PECULIAR FACTS DO NOT ATTR ACT PENALTY. SIMILARLY, IN REGARD TO THE SHARES OF M/S ACC LTD. AMOUNT ING TO RS. 16,500/-, THE ASSESSEE IS FOUND TO HAVE CLAIMED THAT THEY BELONG TO HIS WIFE MS. DOLLY JAIN AND SOURCED BY THE SALE PROCEEDS OF TREES ON LAND BELONGING TO HUF. THE RELIANCE PLACED UPON THE CASH-FLOW STATEMENT FILED BY THE ASSESSEE HAS BEEN REJECTED WHICH WE PROPOSE TO ADDRE SS SUBSEQUENTLY, HOWEVER THE ARGUMENT QUA THE SPECIFIC ADDITIONS NAMELY THAT THE SAME SOURCE HAS BEEN ACCEPTED AS A VALID SOURCE IN THE CASE OF SHRI VIPIN KUMAR JAIN BY THE CIT(A) IN QUANTUM PROCEEDINGS WHICH FINDING HAS NOT BEEN UPSET BY THE ITAT. ACCORDINGLY, WE FIND THAT IN THE PECULIAR FACT S AS FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED WE FIND THAT EVEN ON MERITS, CONSIDERING THE EXPLANATION OFFERED AS A PLAUSIBLE EXPLANATION TAKEN, THE ADDITION OUT OF THE AMOUNT OF PENALTY. ITSS- 2,3 & 8/CHD/2012 PAGE 23 OF 27 37. ADDRESSING THE IMPOSITION OF PENALTY ON ACCOUNT OF ADDIT ION FOR INVESTMENT IN SCO 7 SECTOR 5 ON MERITS OF THE PENALTY OR DER ALSO, WE FIND THAT THE ASSESSEE HAS SOUGHT TO EXPLAIN THE SAME WITH THE HELP OF THE CASH- FLOW STATEMENT AND SALE PROCEEDS OF AMBASSADOR CAR. WE FIND THAT THE SAID EXPLANATION OF THE ASSESSEE HAS ALSO BEEN ADVANCED IN T HE QUANTUM PROCEEDINGS AND IS EXTRACTED IN PARA 40 AT PAGE 27-28 OF THE QUANTUM ORDER WHEREIN THE SUBMISSIONS ADVANCED BEFORE THE CIT(A) HAVE B EEN EXTRACTED. IT IS SEEN THAT RELIANCE IS PLACED UPON DELIVERY RECEIPT/UNDE RTAKING FROM SHRI HARPAL SINGH, HOUSE NO. 1035, SECTOR 44-B CHANDIGARH REGA RDING SALE OF AMBASSADOR CAR FOR WHICH THE AMOUNT OF RS. 2,57,000/- IS S TATED TO HAVE BEEN RECEIVED IN CASH. THE CIT(A) NOTES THAT THE SAID R ECEIPT SHOULD HAVE BEEN PRODUCED IN THE COURSE OF THE ASSESSMENT PROCEED INGS. THE AFFIDAVIT OF THE ASSESSEE AVAILABLE HAS BEEN DISCARDED. THE EXPLANATIO N THAT RS. 1,50,000/- WAS WITHDRAWN FROM THE CAPITAL ACCOUNT OF M/S S .K. & CO. AND THERE WAS A WITHDRAWAL FROM CENTRAL BANK, SECTOR 18 FROM THE BANK ACCOUNT OF THE ASSESSEE WE NOTE, HAS ALSO BEEN REJECTED. HEREIN ALSO NOT- WITHSTANDING THE FACT THAT THE APPEAL AGAINST THE QUANT UM ORDER HAS BEEN ADMITTED BY THE HIGH COURT, EVEN OTHERWISE WE FIND THAT T HE PRESENT CASE IS NOT A CASE OF NO EXPLANATION AS CONSISTENT EXPLANATION HA S BEEN AFFORDED WHICH HAS BEEN DISCARDED IN THE QUANTUM PROCEEDINGS ON THE GROUNDS THAT IT WAS NOT MADE AVAILABLE IN THE ORIGINAL ROUND BEFORE THE AO. WE FIND THAT THE SAID REFRAIN HAS BEEN REPEATED BY THE CIT(A) IGNORING THE FACT THAT BECAUSE IN THE ORIGINAL PROCEEDINGS, FULL EVIDENCES ETC. COU LD NOT BE CONSIDERED, REMAND WAS DIRECTED BY THE CIT(A) WHICH ORDER ADMITTEDLY WAS NEVER CHALLENGED BY THE REVENUE. THUS, IN THESE CIRCUMSTA NCES, RELIANCE ON LACK OF EXPLANATION BEFORE THE AO IN THE ORIGINAL PROCEEDINGS CANNOT IN THE CIRCUMSTANCES SPECIALLY FOR THE PURPOSES OF PENALTY PROCE EDINGS BE A GROUND FOR REVENUE TO REFUSE TO CONSIDER THE ALLOWABILITY OF THE EX PLANATION OFFERED. THE ASSESSEE, WE FIND, FORCED TO COLLATE THE FACTS FROM THE BOOKS OF ACCOUNT OF THE TWO FIRMS; THE BANK STATEMENTS ETC. OF THE FAMILY MEMB ERS, HUF ETC. RESULTED PLACING THE CASH-FLOW STATEMENT RELYING UPON THE ACCOUNTS MAINTAINED ON THE BASIS OF THE BANK ACCOUNTS ETC. OF THE ASSESSEE FAMILY MEMBERS; FIRMS IN THE QUANTUM PROCEEDINGS WHICH FACTS WE FIND HAVE NOT BEEN UPSET BY THE REVENUE. THUS, CONSIDERING THE LEVIABILIT Y OF THE PENALTY WE FIND THAT IT IS DEFINITELY NOT A CASE OF NO EXPLANATION, W E ALSO FIND THAT THE EXPLANATION OFFERED FOR THE PURPOSE OF PENALTY PROCEEDINGS IS A PLAUSIBLE EXPLANATION. ITSS- 2,3 & 8/CHD/2012 PAGE 24 OF 27 38. WE NOTE THAT EVEN QUA THE ESTIMATED EXPENDITURE FO R RENOVATION OF SURAJ THEATER ESTIMATED AT RS. 15 LACS. WE FIND THAT TH E ASSESSEE'S EXPLANATION TO THE EXTENT OF RS. 10 LACS WAS ACCEPTED BY THE AO HIMSELF AND TO THE TUNE OF RS. 4.6 LACS, THE ASSESSEE WAS FOUND TO HA VE NOT SUBSTANTIATED ITS CLAIM. THE ASSESSEE IN THE SET ASIDE PROCEEDINGS RELIED UPON THE CASH- FLOW STATEMENT WHICH, AS WE HAVE NOTED, HAS BEEN MADE ON THE BASIS OF VARIOUS BANK ACCOUNTS MAINTAINED BY THE ASSESSEE, ITS FAM ILY AND ITS CONCERNS. THE SAID STATEMENT HAS BEEN OUTRIGHTLY REJE CTED ON THE GROUNDS THAT IT WAS NOT MADE AVAILABLE TO THE AO IN THE ORIGINAL PR OCEEDINGS. WE HAVE ALREADY NOTICED THAT THE SAID ORDER HAS ATTAINED FIN ALITY, THE ORDER HAVING REMAINED UNCHALLENGED, THE OCCASION FOR THE CIT(A) TO AGAIN REVISIT THE SAID DECISION HAS NO LEGS TO STAND. THE CASH-FLOW ST ATEMENT WHERE THE AVAILABILITY OF FUNDS IS BASED ON THE BASIS OF BANK STATEMENT S ETC., WHICH FACTS HAVE NOT BEEN UPSET, WE FIND LEAD TO THE CONCLUSION THAT PENALTY IS NOT ATTRACTED. 39. THE ESTIMATED ADDITION FOR HOUSEHOLD EXPENSES AT RS. 4 LACS HAS BEEN MADE BY THE ITAT REJECTING EXPLANATION OF AVAILABILITY OF FUN DS. THE ADDITION HAVING BEEN MADE ON THE BASIS OF ESTIMATES IN THE FACTS , WE FIND THAT THE PENAL PROVISIONS ARE NOT ATTRACTED. WE FIND THAT QUA THE ADDITION SUSTAINED BY THE ITAT TO THE EXTENT OF RS. 15,41,200/- AS LOAN REC EIVED THROUGH CHEQUES WHEREIN THE EXPLANATION HAS BEEN DISCARDED ON T HE REASONING THAT THE STATEMENT OF THE PERSONS PRODUCED ON 27.03.2002 WE RE AT THE FAG END OF THE ASSESSMENT PROCEEDINGS AND THERE WAS NO TIME TO M AKE FURTHER INVESTIGATIONS AND THE CIT(A) HAS UPHELD THE SAME AND IN T HE QUANTUM PROCEEDINGS, THE ADDITION TO THAT EXTENT HAS BEEN SUSTA INED. THE EVIDENCE, WE FIND IN THE PENALTY PROCEEDINGS ALSO REMAINS UNASSAILED. 40. THE REMAND REPORTS IN REGARD TO OWNERSHIP OF ANCE STRAL LAND AND FACTUM OF TREES ETC. GROWING AND THE LACK OF ADEQUATE ENQ UIRY BY THE AO AT THE ASSESSMENT STAGE, IT HAS BEEN ARGUED SUBMITTED, HAS BEEN ADDRESSED IN THE REMAND REPORT. THE SPECIFIC REASONING OF THE ITAT IS EXTRACT ED IN PARA 79 TO 86. THE SAME IS REPRODUCED HEREUNDER FOR READY REFERENCE : 79. THE CIT(APPEALS) HAS GIVEN A FINDING THAT WHERE THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN FORWARDED TO THE ASSESSING OFFICER FOR VERIFICATION OF THE ENTRIES, SHOULD NOT BE CONSTRUED THAT THE CIT(APPEALS) HAD TAKEN A DECISION TO ENTERTAIN SUCH DOCUMENTS WHICH WERE NEVER PRODUCED BEFORE THE ASSESSING OFFI CER. THE CIT(APPEALS) FURTHER OBSERVES THAT SUCH EXERCISE WA S TO BE BETTER AWARE OF THE FACTS. FURTHER CERTAIN RELIEF WAS GIVE N BY THE CIT(APPEALS) ON ACCOUNT OF RENTAL INCOME RECEIVED, RECEIPTS ON ACCOUNT OF SALE OF AGRICULTURE LAND AND LOAN RECEIV ED FROM THE ITSS- 2,3 & 8/CHD/2012 PAGE 25 OF 27 PERSONS WHO GOT THE MONEY BY WAY OF SALE OF AGRICUL TURE LAND, PROFITS FROM S.K. & COMPANY, INTEREST INCOME AND SA LARY. IN VIEW THEREOF, WE FIND NO MERIT IN THE STAND OF THE LD. A R FOR THE ASSESSEE THAT THE REMAND REPORTS HAVE NOT BEEN CONSIDERED BY THE CIT(APPEALS) BEFORE ADJUDICATING THE ISSUE. HOWEVE R, IN ORDER TO BE FAIR AND TO ADJUDICATE THE ISSUE FURTHER, WE CON SIDER THE ABOVESAID REMAND REPORTS SUBMITTED BY THE ASSESSING OFFICER. ANNEXURE X-6 ATTACHED TO THE ORIGINAL ASSESSMENT OR DER TABULATES THE ENTRIES IN THE BANK ACCOUNTS WHICH THE ASSESSEE HAD FAILED TO EXPLAIN AND ADDITION WAS MADE IN THE HANDS OF THE A SSESSEE ON THE BASIS OF THE AFORESAID ANNEXURE X-6 TO THE ORIGINAL ASSESSMENT ORDER. THE LD. AR FOR THE ASSESSEE HAS TIME AND AG AIN POINTED OUT THAT THE ASSESSING OFFICER HAD FAILED TO GIVE CREDI T OF THE ENTRIES RELATING TO TRANSFER OF ENTRIES FROM BANK ACCOUNT T O THE OTHER BANK ACCOUNT. HOWEVER, VIDE PARA 8 OF THE ORIGINAL ASSE SSMENT ORDER, THE ASSESSING OFFICER HAS CLEARLY MENTIONED THAT TH E ENTRIES RELATING TO TRANSFER OF ENTRIES FROM ONE ACCOUNT TO ANOTHER ACCOUNT, HAVE BEEN EXCLUDED IN ANNEXURE X-6 OF THE ORIGINAL ASSESSMENT ORDER. FURTHER IN THE ABSENCE OF ASSESSE E HAVING EXPLAINED SOURCE OF AMOUNT TRANSFERRED FROM ONE BAN K ACCOUNT TO ANOTHER, ADDITION OF THE SAME IS MERITED IN THE HAN DS OF ASSESSEE. 80. NOW COMING TO THE CONTENTS OF THE VARIOUS REMAN D REPORTS DELIVERED BY THE ASSESSING OFFICER, WE PROCEED TO D EAL WITH THE FINDINGS OF THE ASSESSING OFFICER IN EACH ONE OF TH E SAID REPORT. THE FIRST REMAND REPORT IS ANNEXURE-1 PLACED AT PAG ES 627 TO 631 IS DATED 02.09.2005 IN WHICH THERE IS VERIFICATION OF VARIOUS CREDITORS AND THE ASSESSING OFFICER HAS REPORTED TH AT SOME OF THE SAID LOANS WERE TO BE TREATED AS GENUINE AND IN RES PECT OF OTHERS, THERE IS REPORT THAT THE SAME MAYBE CONSIDERED ON M ERITS. IN VIEW OF EXERCISE CARRIED OUT BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE CREDITS REPORTED BY ASSESSING OFFICER TO BE TREATED AS GENUINE, TOTALING RS. 25,65,000/- MAYBE ACCEPTED IN THE HAND S OF THE ASSESSEE. HOWEVER, THE OTHER CREDITS WHICH TOTAL T O RS. 12,21,200/- AS PER THE DETAILS FURNISHED BY THE ASS ESSEE IN THIS REGARD, HAVE BEEN ACCEPTED VIDE CHEQUES AND MAJORIT Y OF THE SAME ARE CLAIMED TO BE REPAID DURING THE BLOCK PERIOD, B UT THE ASSESSEE HAS FAILED TO COMPLETELY DISCHARGE HIS ONUS OF ESTA BLISHING THE IDENTITY AND CREDIT WORTHINESS OF THE SAID CREDITOR S AND IN THE ABSENCE OF SAME, SUCH CREDITS CANNOT BE ACCEPTED AS GENUINE. 81. THE THIRD CREDITS ARE ON ACCOUNT OF THE AMOUNTS RECEIVED ON ACCOUNT OF SHARE OF AGRICULTURE LAND SOLD BY THE AS SESSEE ALONGWITH OTHER FAMILY MEMBERS, CREDIT OF WHICH HAS ALREADY BEEN ALLOWED BY THE CIT(APPEALS). FURTHER, THE INCOME FR OM SALE PROCEEDS OF TREES RECEIVED IN CASH CANNOT BE ACCEPT ED IN THE HANDS OF THE ASSESSEE IN VIEW OF OUR OBSERVATIONS WITH RE GARD TO THE CASH FLOW STATEMENT. 82. THE NEXT REMAND REPORT IS PLACED AT PAGES 635 A ND 636 OF THE PAPER BOOK WHICH HAVE BEEN PLACED ON RECORD BY THE ASSESSEE. THE FIRST ISSUE ARISING IN THE SAID REMAND REPORT I S IN RESPECT OF THE REFUND RECEIVED OF RS. 76,500/- WHICH MAY BE AL LOWED TO THE ASSESSEE. THE AMOUNT RECEIVED FROM FAMILY MEMBERS AS PER ANNEXURE-B OF RS. 32,64,000/- HAS ALREADY BEEN CONS IDERED BY THE CIT(APPEALS) AND RELIEF HAS BEEN ALLOWED ON ACCOUNT OF TRANSFER OF ENTRIES ON SALE OF LAND. IN VIEW THEREOF, WE FIND NO MERIT IN FURTHER ALLOWING ANY RELIEF ON THIS ACCOUNT. 83. THE NEXT ISSUE IS ON ACCOUNT OF RENT OF HOUSE N O. 52 SECTOR 8-A, CHANDIGARH WHICH HAD BEEN RECEIVED AS PER THE SUPREME COURT ORDER AND THE CREDIT FOR THE SAME HAS ALREADY BEEN ALLOWED ITSS- 2,3 & 8/CHD/2012 PAGE 26 OF 27 BY THE CIT(APPEALS) AND NO FURTHER RELIEF ON THIS A CCOUNT IS MERITED. 84. THE LAST ITEM IS IN RESPECT OF THE TRANSFER FRO M ONE ACCOUNT TO OTHERS AND SUCH BANK TRANSFERS TOTALING RS. 7,46 ,656/-. THE CIT(APPEALS) HAS GIVEN A FINDING THAT ANNEXURE X-6 DID NOT CONTAIN ANY OF SUCH AMOUNTS OF INTER-BANK TRANSFERS AND THE ASSESSEE HAVING FAILED TO CONTROVERT THE SAID FINDI NGS OF CIT(APPEALS), WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE AND THE SAME IS REJECTED. IN VIEW THEREOF, THE ASSESSEE GET S FURTHER RELIEF OF RS. 76,500/- ON ACCOUNT OF REMAND REPORT DATED 1 6.11.2005. 85. THE LAST REMAND REPORT PLACED AT PAGES 672 TO 6 74 IS DATED 1.5.2006 IN RESPECT OF CASH AVAILABLE WITH THE ASSE SSEE AND IN VIEW OF OUR DELIBERATION ON THE ISSUE, WE FIND NO MERIT IN THE STAND OF THE LD. AR FOR THE ASSESSEE ON PLACING RELIANCE ON THE SAME, AS POINTED OUT BY THE CIT(APPEALS). FURTHER, WE FIND THAT THE CIT(APPEALS) HAS AT PAGES 64 TO 66 CONSIDERED ANOTH ER ASPECT OF THE FACTS OF THE PRESENT CASE WHEREIN AS COMPARED T O THE INCOME OF RS. 11,58,158/- DECLARED BY THE ASSESSEE DURING THE BLOCK PERIOD VIS-A-VIS THE PROPERTIES ACQUIRED BY THE ASSESSEE D URING BLOCK PERIOD. THE EXPLANATION OF THE ASSESSEE IN THIS REG ARD DID NOT MATCH IN VIEW OF NON-AVAILABILITY OF THE FUNDS. TH E CLAIM OF THE ASSESSEE THAT IT HAD RAISED LOANS FROM SEVERAL PERS ONS HAS BEEN ADDRESSED BY THE CIT(APPEALS) AT PAGE 65 OF THE APP ELLATE ORDER AND REJECTED. IN VIEW THEREOF, NO CREDIT CAN BE ALL OWED ON THE SO CALLED CASH FLOW STATEMENT. 86. ANOTHER ISSUE RAISED IS AGAINST ALLEGED INVESTM ENT IN FDRS. DURING THE COURSE OF SEARCH, DOCUMENT WAS SEIZED, O N WHICH CERTAIN NOTINGS HAD BEEN MADE. THE PLEA OF THE ASS ESSEE WAS THAT THESE WERE ROUGH JOTTINGS OF SOURCES OF FUNDS/ADVAN CES. THE ASSESSING OFFICER MADE THE ABOVE ADDITION, WHICH WA S CONFIRMED BY CIT(APPEALS). HOWEVER, NO EVIDENCE OF INVESTMEN T IN FDRS WAS FOUND DURING THE COURSE OF SEARCH AND IN THE ABSENC E OF SAME, NO ADDITION IS WARRANTED. THE GROUND NO. 4 RAISED BY A SSESSEE IS THUS PARTLY ALLOWED. 41 ADMITTEDLY THE ENTIRE EXPLANATION OF THE ASSESSEE HAS NOT BEEN ACCEPTED. THE REASONING TAKEN FOR SUSTAINING PART OF THE ADDITION IS ON THE GROUND THAT THE CASH-FLOW STATEMENT WAS NOT AVAILABLE AT THE INITIAL STAGES. WE FIND THAT EVEN IF THE SAID REASON WAS GOOD ENOUGH TO MAKE THE ADDITION WHICH ADMITTEDLY IS UNDER CHALLENGE AND THE APPEAL HAS B EEN ADMITTED BY THE HON'BLE COURT, HOWEVER, AS FAR AS PENALTY PROCEEDINGS ARE CONCERNED, WE ARE OF THE VIEW THAT THE EXPLANATION OFFERED IS A PLAUSIBLE E XPLANATION. AT THE COST OF REPETITION, THE REMAND BY THE CIT(A) IN THE FIRST RO UND STANDS UNCHALLENGED ON RECORD. THE JUSTIFICATION FOR PLACING FRESH E VIDENCES ALSO STANDS UN-ASSAILED. THE CIT(A) IN THE SECOND ROUND HAD NO OCCASION TO GO BEYOND THE DECISION OF THE CIT(A) TO REMAND THE ISSUE FOR CONSIDERATION OF FRESH EVIDENCES WHICH ORDER HAS NOT BEEN UPSET BY THE REVENUE. T HUS, IN THE QUANTUM PROCEEDINGS, EVEN THOUGH THE SAME HAS BEEN UP HELD, SO FAR AS PENALTY PROCEEDINGS ARE CONCERNED, IN THE PECULIAR FACTS O F THE PRESENT CASE, WE FIND PENALTY PROCEEDINGS ARE NOT ATTRACTED. IN REGA RD TO THE HUF ENTRIES, SOME OF WHICH ARE SUPPORTED BY TRANSFER IN HUF BANK ACC OUNTS FROM ITSS- 2,3 & 8/CHD/2012 PAGE 27 OF 27 ASSESSEE'S FAMILY MEMBERS ACCOUNT, SALE OF TREES, SALE OF LAND ETC. WHICH HAS BEEN ADDRESSED BY THE AO BY WAY OF REMAND REPORT WHIC H HAS BEEN ADDRESSED BY THE LD. AR THUS, ADMITTEDLY EXPLANATION WAS CONSISTENTLY ON RECORD. IT HAS NOT BEEN SHOWN TO BE NOT PLAUSIBLE. THIS IS NOTWITHSTANDING THE FACT THAT THE VERY CORRECTNESS OF THE ORDER ON ME RITS AS WELL AS ON JURISDICTION IS DEBATABLE IN TERMS OF THE JUDICIAL PRECEDENT RELIED AND THE FACTS OF THE PRESENT CASE. ACCORDINGLY, WE FIND ON CONSID ERING THE FACTS, CIRCUMSTANCES, EXPLANATION OFFERED AND THE REMAND REPORTS AVAILABLE ON RECORD THAT THE PENALTY ORDER DESERVES TO BE QUASHED AS IT CANNOT BE UPHELD. ORDERED ACCORDINGLY. 42. SINCE ARGUMENTS ADVANCED IN IT(SS)3/CHD/2012 WOULD A PPLY MUTATIS-MUTANDIS TO IT(SS)2/CHD/2012 AND IT(SS)/CHD/8/201 2 AS FACTS, CIRCUMSTANCES AND PROPOSITIONS OF LAW APPLICABLE THEREIN REM AIN IDENTICAL IN TERMS OF THE ARGUMENTS OF THE PARTIES AND AS IS BORNE O UT FROM THE RECORD, ACCORDINGLY, FOR THE DETAILED REASONS GIVEN IN IT(SS) (3)/CHD/ 2012, APPEALS OF THE ASSESSEE IN IT(SS)( 2 & 8 ARE ALLOWED. 43. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.11. 2018. SD/- SD/- ( . %.. . & ) ( ! ) (DR. B.R.R. KUMAR) (DIVA SINGH) '( #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER + , &+,-.-) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT - 2. THE RESPONDENT - 3. ' / CIT 4. ' /01 THE CIT(A) 5. -!245$4*56789 DR, ITAT, CHANDIGARH 6. 8:# GUARD FILE &+ ' BY ORDER, ; ASSISTANT REGISTRAR