Prasad Bullion, MUMBAI V. Dy.CIT14(1) Mumai, MUMBAI

ITSSA 28/MUM/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8357 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-05-2011
• Assessment Year: misc
• Appeal Filed On: 31-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA
• Keywords: Business income; Document seized; Block assessment; Documents seized
• Section: 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. K.AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) IT(SS) NO.28/M/2010 BLOCK PERIOD 20.11.98 TO 3.11.99 PRASAD BULLION THE DY.CIT 14(1), MUMBAI SHREENATHJI BUILDING GROUND FLOOR, 97-BHULESHWAR ROAD MUMBAI 400 002. PAN : AADFP9197Q APPELLANT RESPONDENT ASSESSEE BY : SHRI ANANT N. PAI REVENUE BY : SHRI AJIT KUMAR SINHA ORDER PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 4.2.2010 OF CIT(A) FOR THE BLOCK PERIOD 20.11.98 TO 3.11.99. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING LEVY OF PENALTY UNDER SECT ION 158BFA(2) OF THE I.T.ACT. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 HAD BEEN CONDUCTED IN CASE OF THE ASSESSEE BUT NO B OOKS OF ACCOUNTS OR ANY ASSETS WERE SEIZED. DURING THE POST SEARCH ENQUIRY, THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE HAD BEEN IMPOUNDED. ASSESS EE FILED THE BLOCK RETURN IN WHICH UNDISCLOSED INCOME DECLARED WAS NIL. A SEA RCH HAD ALSO BEEN CONDUCTED IN CASE OF M/S. PATEL BULLION, AHMEDABAD DURING THE COURSE OF WHICH CERTAIN INVOICES-CUM- DELIVERY CHALLANS WERE SEIZED AS PER ANNEXURE A-4 AND ANNEXURE A-5. THESE DOCUMENTS HAD BEEN OBTAINED BY THE AO FROM THE AO 2 HAVING JURISDICTION OVER M/S. PATEL BULLION. THE TR ANSACTIONS OF PURCHASE SHOWN IN THESE INVOICES WERE NOT REFLECTED IN THE BOOKS O F ACCOUNTS OF THE ASSESSEE. THE AO AFTER EXAMINATION OF THESE DOCUMENTS HELD TH AT SALE TRANSACTIONS MENTIONED AS PER ANNEXURE A-4 HAD BEEN CANCELLED BE FORE THE SAME WERE COMPLETED AND THEREFORE HE DID NOT MAKE ANY ADDITIO N IN RESPECT OF TRANSACTIONS MENTIONED IN ANNEXURE A-4 IN CASE OF T HE ASSESSEE. THE ANNEXURE A-5 CONTAINED OTHER INVOICES-CUM-DELIVERY CHALLANS OF M/S. PATEL BULLION SHOWING SALES BY M/S. PATEL BULLION IN THE NAME OF THE ASSESSEE TOTALLING RS.2,53,17,960/- AS PER DETAILS GIVEN BELOW. BILL NO NAME DATE 10 TOLA GOLD BARS AMOUNT 5,856 M/S. PRASAD BULLION 28.9.99 40 21,54,720 5,857 28.9.99 50 26,93,400 5,858 28.9.99 40 21,54,720 5,859 28.9.99 45 23,24,060 5,860 28.9.99 55 29,62,740 5,861 28.9.99 40 21,54,720 5,862 28.9.99 50 26,93,400 5,863 28.9.99 50 26,93,400 5,864 28.9.99 50 26,93,400 5,865 28.9.99 50 26,93,400 TOTAL 253,17,960 3. THE AO IN THE BLOCK ASSESSMENT UNDER SECTION 158 BC DATED 20.11.98 DETERMINED THE UNDISCLOSED INCOME FOR THE BLOCK PER IOD AT RS.16,68,682/- 3 WHICH INCLUDED UNDISCLOSED PROFIT OF RS.7,69,666/- IN RELATION TO THE PURCHASE TRANSACTIONS MENTIONED IN THE BILLS AS PER ANNEXURE A-5. CIT(A) HAD DELETED THE ADDITION BUT ITAT VIDE ORDER DATED 23.2.2006 HAD RE STORED THE ADDITION OF RS.7,69,666/- WORKED OUT ON THE BASIS OF DOCUMENTS IN ANNEXURE A-5 ESTIMATED GP RATE AT 3.4% TO THE FILE OF AO FOR DEC IDING THE ISSUE AFRESH AFTER CARRYING OUT VERIFICATION AS MENTIONED BELOW: (I) WHETHER THE BILLS WERE MAINTAINED AS PER NORMAL PRA CTICE AND IN ACCORDANCE WITH THE LAW. (II) REASONS FOR USING CANCELLED BILL AGAIN (III) WHETHER ANY COMPENSATION WAS CLAIMED FOR CANCELLATI ON OF TRANSACTION DUE TO FLUCTUATION IN THE RATES. 4. DURING THE FRESH ASSESSMENT PROCEEDINGS, THE ASS ESSEE REITERATED THAT IT HAD NOT MADE ANY PURCHASES FROM M/S. PATEL BULLION AS MENTIONED IN ANNEXURE A-5. IT WAS ALSO STATED THAT THE ASSESSEE HAD NOT P URCHASED ANY THING ON 28.9.99 FROM M/S. PATEL BULLION. THE ASSESSEE EXPLA INED THAT THE TRANSACTIONS MENTIONED IN ANNEXURE A-5 HAD NOT MATERIALIZED. IT WAS ALSO SUBMITTED THAT M/S. PATEL BULLION WHO WAS A REGULAR SUPPLIER OF GO LD BULLION TO THE ASSESSEE MAY HAVE RAISED BILLS IN THE NAME OF PRASAD BULLION FOR SUPPLY OF GOODS TO DIFFERENT PERSONS THROUGH THE ASSESSEE BUT DUE TO P RICE FLUCTUATION THE TRANSACTIONS WERE NOT COMPLETED AND THE BILLS WERE CANCELLED. THE ASSESSEE WAS NOT AWARE WHY THE BILLS WERE RAISED IN ITS NAME AND WHY THESE WERE SUBSEQUENTLY CANCELLED BUT THE FACT WAS THAT NO TRA NSACTION HAD TAKEN PLACE. THE AO WAS HOWEVER NOT SATISFIED BY THE EXPLANATION GIVEN. IT WAS OBSERVED BY HIM THAT THERE WERE DELIVERY CHALLANS ALSO ATTACHED TO THE BILLS AND SALES TAX HAD ALSO BEEN CHARGED. AO ALSO OBSERVED THAT THE AS SESSEE DID NOT PRODUCE 4 ANY DAY TO DAY STOCK REGISTER TO PROVE THAT THERE W ERE NO MOVEMENTS OF GOODS FROM M/S. PATEL BULLION. THE BOOKS OF ACCOUNTS OF T HE ASSESSEE WERE ALSO NOT FOUND TO BE COMPLETE AND PROPERLY MAINTAINED. IN TH E SALES INVOICE-CUM- CHALLAN FOLDER, THERE WERE MANY BILLS ON WHICH NO N AME, DATE OR ADDRESS WERE WRITTEN. THERE WERE ALSO NO SIGNATURES OF CUSTOMERS EVEN IN CASE OF BILLS HAVING SUBSTANTIAL TRANSACTIONS. THE AO FURTHER OBSERVED T HAT M/S. PATEL BULLION HAD NOT MAINTAINED BILLS AS PER NORMAL PRACTICE AS PER WHICH THE BILLS ARE REQUIRED TO BE MAINTAINED IN A SERIAL NUMBER AND IF ANY BILL IS CANCELLED THE SAME NUMBER IS NOT USED AGAIN. IN THIS CASE, AGAINST THE CANCELLED NUMBER, FRESH BILLS HAD BEEN ISSUED. THE TRANSACTIONS WERE BEING RECORDED AS PER THEIR CONVENIENCE. THE AO THEREFORE DID NOT ACCEPT THE CL AIM THAT THE SALES BILLS FOUND WERE SUBSEQUENTLY CANCELLED AND NO TRANSACTIO N HAD TAKEN PLACE. HE CONCLUDED THAT THE ENTIRE PURCHASE OF RS.2,53,17,96 0/- MENTIONED IN ANNEXURE A-5 HAD BEEN SOLD BY THE ASSESSEE UNACCOUNTED. HE E STIMATED GROSS PROFIT @ 3.04% WHICH CAME TO RS.7,60,666/- WHICH WAS ADDED I N CASE OF THE ASSESSEE AS UNDISCLOSED INCOME AND THE PENALTY PROCEEDINGS U NDER SECTION 158BFA(2) WERE ALSO INITIATED. 5. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE SUB MITTED THAT PENALTY PROCEEDINGS WERE DIFFERENT FROM ASSESSMENT PROCEEDI NGS AND THEREFORE ONLY ON THE BASIS OF ADDITION MADE IN THE ASSESSMENT, NO PE NALTY COULD BE IMPOSED AS PENALTY WAS DISCRETIONARY AND NOT MANDATORY. IT WAS ALSO SUBMITTED THAT PLEA OF THE ASSESSEE THAT BILLS WERE CANCELLED WAS ALSO SUPPORTED BY THE STATEMENT OF M/S. PATEL BULLION. THERE WAS NO EVIDENCE FOUND EITHER IN CASE OF THE ASSESSEE OR IN CASE OF M/S. PATEL BULLION SHOWING T HE ACTUAL DELIVERY OF GOLD BARS TO THE ASSESSEE. IT WAS POINTED OUT THAT SIMIL AR EXPLANATION IN RESPECT OF BILLS FOUND AS PER ANNEXURE A-4 HAD BEEN ACCEPTED B Y THE AO AND THE BILLS 5 WERE TREATED BY HIM AS CANCELLED. IT WAS FURTHER AR GUED THAT ADDITIONS IN THE BLOCK ASSESSMENT COULD BE MADE ONLY ON THE BASIS OF MATERIAL FOUND AS A RESULT OF SEARCH BUT THE MATERIAL ON WHICH THE ADDITIONS W ERE MADE HAD NOT BEEN FOUND DURING THE COURSE OF SEARCH IN CASE OF THE AS SESSEE AND THEREFORE THE ADDITION ITSELF WAS NOT IN ORDER. MERELY BECAUSE TH E ASSESSEE HAD NOT FILED APPEAL AGAINST THE ADDITION, COULD NOT BE THE SOLE GROUND FOR LEVY OF PENALTY. THE AO HOWEVER DID NOT ACCEPT THE CONTENTIONS RAISE D. IT WAS OBSERVED BY HIM THAT THE ADDITIONS HAD BEEN MADE IN CASE OF THE ASS ESSEE ON THE BASIS OF EVIDENCE FOUND AT THE TIME OF SEARCH IN CASE OF M/S . PATEL BULLION. HE THEREFORE LEVIED PENALTY @ 100% OF TAX WORKED OUT ON THE UNDI SCLOSED INCOME OF RS.7,69,666/- WHICH COME TO RS.5,07,980/-. 6. IN APPEAL, THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BEFORE THE AO THAT THERE WAS NO EVIDENCES FOUND FROM THE PREMISES OF THE ASSESSEE AND THAT ADDITION HAD BEEN MADE NOT ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH IN CASE OF THE ASSESSEE AND THEREFORE ADDITI ON WAS NOT PROPER. IT WAS ALSO SUBMITTED THAT PENALTY PROCEEDINGS WERE DIFFER ENT FROM ASSESSMENT PROCEEDINGS AND THAT THE PENALTY UNDER SECTION 158B FA WAS DISCRETIONARY AND NOT MANDATORY. IT WAS ALSO SUBMITTED THAT ADDITION HAD BEEN MADE IN CASE OF THE ASSESSEE ONLY ON THE GROUND THAT IN RELATION TO THE SAID TRANSACTIONS ADDITION TO THE GROSS PROFIT OF RS.8355 HAD BEEN MA DE IN CASE OF M/S. PATEL BULLION. THE ASSESSEE PLACED RELIANCE ON SEVERAL JU DGMENTS. CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSER VED BY HIM THAT THE BILLS WERE ACCOMPANIED BY DELIVERY CHALLAN DATED 28.9.99 ISSUED BY M/S. PATEL BULLION IN THE NAME OF THE ASSESSEE WHICH ALSO REFL ECTED SALE TAX CHARGED. THE CLAIM OF THE ASSESSEE THAT BILLS WERE CANCELLED AND NO SALES WERE MADE WAS THEREFORE NOT ACCEPTABLE. CIT(A) ALSO OBSERVED THAT THERE WERE NO SEIZURES OF 6 CASH OR BOOKS OF ACCOUNTS IN CASE OF THE ASSESSEE B UT THE DOCUMENTS HAD BEEN FOUND DURING THE SEARCH PROCEEDINGS ONLY. AS THERE WAS SEARCH CONDUCTED IN CASE OF THE ASSESSEE PROCEEDINGS UNDER SECTION 158B C WERE IN ORDER. THE AO ALSO NOTED VARIOUS DISCREPANCIES IN THE MAINTENANCE OF BOOKS OF ACCOUNTS AND OBSERVED THAT THE ASSESSEE COULD NOT SHOW FROM THE BOOKS OF ACCOUNTS THAT THE SAID TRANSACTION HAD NOT TAKEN PLACE. THE ADDITION MADE IN THE BLOCK ASSESSMENT HAD BEEN ACCEPTED BY THE ASSESSEE. CIT(A ) FURTHER OBSERVED THAT ARGUMENT OF THE ASSESSEE THAT THE CORRESPONDING ADD ITIONS MADE IN THE ASSESSMENT IN CASE OF PATEL BULLION HAD BEEN DELETE D WAS NOT FACTUALLY CORRECT. THE ADDITION OF RS.8355 BEING THE ESTIMATED GROSS P ROFIT IN CASE OF M/S. PATEL BULLION HAD BEEN MADE ON THE BASIS OF DOCUMENT I.E. ANNEXURE A-4 WHICH WERE DELETED AND WHICH WERE NOT CONNECTED TO ANNEXURE A- 5. CIT(A) ALSO NOTED THAT PENALTY UNDER SECTION 158BFA WAS DIFFERENT FROM PEN ALTY UNDER SECTION 271(1)(C). THE PENALTY UNDER SECTION 158BFA(2) HAS TO BE LEVIED ON THE UNDISCLOSED INCOME FOUND IN EXCESS OF THE UNDISCLOS ED INCOME DECLARED BY THE ASSESSEE IN THE RETURN. THERE WAS NO DISPUTE THAT U NDISCLOSED INCOME DETERMINED WAS MORE THAN THE UNDISCLOSED INCOME AS PER RETURN AND THEREFORE PENALTY WAS LEVIABLE. CIT(A) ACCORDINGLY CONFIRMED THE PENALTY LEVIED BY THE AO AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US THE LEARNED AR FOR THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES THAT THE ASSESSEE HAD NOT PURCHASED ANY GOLD AS PER THE BILLS MENTIONED IN ANNEXURE A-5 WHICH HAD A LSO BEEN CONFIRMED BY M/S. PATEL BULLION. THERE WAS NO EVIDENCE THAT THE ASSE SSEE HAD RECEIVED THE GOLD AS PER THE PURCHASE BILLS NOR ANY MATERIAL HAD BEEN FOUND DURING THE SEARCH TO SUBSTANTIATE THE SAME. IT WAS ALSO SUBMITTED THAT A DDITIONS HAD BEEN MADE IN CASE OF THE ASSESSEE ONLY ON THE GROUND THAT SIMILA R ADDITION HAD BEEN MADE IN 7 CASE OF PATEL BULLION IN RELATION TO THESE TRANSACT IONS. IT WAS POINTED OUT THAT CIT(A) WAS NOT CORRECT IN STATING THAT ADDITION MAD E IN CASE OF PATEL BULLION HAD NOT BEEN DELETED BY CIT(A). HE REFERRED TO THE COPY OF THE ASSESSMENT ORDER DATED 31.10.2001 IN CASE OF PATEL BULLION PLACED AT PAGES 6 TO 22 OF THE PAPER BOOK IN WHICH IN PARA 15 THE AO HAD MADE ADDITIONS IN RELATION TO THE BILLS FOUND AS PER ANNEXURE A-5 AMOUNTING TO RS.8355/-. F URTHER CIT(A) IN HIS ORDER DATED 24.9.2002 COPY OF WHICH HAS BEEN PLACED AT PA GES 23 TO 27 OF THE PAPER BOOK HAD CONSIDERED THE SAID ADDITION AND DELETED T HE SAME VIDE PARA 3 OF HIS ORDER. THE LEARNED AR REFERRED TO THE ITAT ORDER IN CASE OF M/S. PATEL BULLION IN ITSS NO.358/AHD/2002 IN WHICH NO GROUND HAD BEEN RA ISED BY THE REVENUE AGAINST THE ADDITION DELETED BY THE CIT(A) RELATING TO THE DOCUMENT I.E. ANNEXURE A-5. IT WAS SUBMITTED THAT MERELY BECAUSE THE ASSESSEE HAD NOT FILED APPEAL AGAINST THE ADDITION MADE IN THE ASSESSMENT, PENALTY COULD NOT BE LEVIED AS PENALTY WAS NOT MANDATORY BUT ONLY DISCRE TIONARY. IT WAS ALSO POINTED OUT THAT IN THE BLOCK ASSESSMENT, ADDITION COULD BE MADE ONLY ON THE BASIS OF MATERIAL FOUND DURING THE SEARCH AND SINCE NO MATER IAL HAD BEEN FOUND DURING THE SEARCH IN CASE OF THE ASSESSEE THE ADDITION ITS ELF WAS NOT PROPER AND MERELY BECAUSE THE ASSESSEE HAD NOT CHALLENGED THE ADDITIO NAL PENALTY COULD NOT BE JUSTIFIED. RELIANCE WAS PLACED ON THE JUDGMENT OF H ONBLE HIGH COURT OF DELHI IN CASE OF CIT VS PRAMODKUMAR GUPTA (320 ITR 408) IN W HICH IT WAS HELD THAT BLOCK ASSESSMENT COULD BE MADE ONLY ON THE BASIS OF EVIDENCE FOUND DURING THE SEARCH. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF AUTHORITIES BELOW REGARDING LEVY OF PENALTY. HE PLACED RELIANCE ON THE FINDINGS GIVEN IN THE RESPECTIVE ORDERS. IT WAS ALSO ARGUED THAT PENALTY UNDER SECTION 158BFA(2) WAS DIFFERENT FROM PENALTY UNDER SECTION 271(1)(C) AND IT HAS TO BE LEVIED IN CASE THE UNDISCLOSED INCOME DETERMINED IN THE ASSESSMENT WAS MORE THAN THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE RETURN. HE PLACED RELIANCE 8 ON THE DECISION OF THE TRIBUNAL IN CASE OF SUDHAKAR T.PENDSE VS ITO-ITSS NO.349/M/2005. 8. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALTY UNDER SECTION 158BFA(2). PENALTY UNDER THE SAID SECTION IS LEVIABLE IN RESPE CT OF ANY ADDITION MADE TO THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE IN THE BLOCK RETURN. AT THE TIME OF BLOCK ASSESSMENT, THE AO OBTAINED CERTAIN DOCUMENTS AS PER ANNEXURE A-5 SEIZED IN CASE OF PATEL BULLION WHICH CONTAINED INV OICES CUM DELIVERY CHALLANS ISSUED BY THE SAID CONCERN IN THE NAME OF THE ASSES SEE SHOWING TOTAL SALES TO THE ASSESSEE AT RS.2,53,17,960/-. THE ASSESSEE SUBM ITTED BEFORE AO THAT THE SALES MENTIONED IN THE SEIZED DOCUMENTS HAD NOT MAT ERIALIZED AND THE CASH MEMOS HAD BEEN CANCELLED AND NO TRANSACTION HAD TAK EN PLACE. AO HOWEVER DID NOT ACCEPT THE CLAIM. HE POINTED OUT CERTAIN DE FECTS IN THE BOOKS OF THE ASSESSEE SUCH AS THERE BEING MANY BILLS IN WHICH NA ME, ADDRESS AND DATE HAD NOT BEEN MENTIONED AND IN SOME CASES SIGNATURE OF C USTOMERS WERE NOT APPEARING IN THE BILLS. AO ALSO NOTED THAT M/S. PAT EL BULLION HAD NOT MAINTAINED BOOKS AS PER NORMAL PRACTICE AND HAD NOT MAINTAINED THE BILLS IN SERIAL NUMBER. THE SERIAL NUMBER MENTIONED IN THE ALLEGED CANCELLE D BILLS HAD BEEN USED AGAIN. HE THEREFORE TREATED THE SUM OF RS.2,53,17,9 60/- AS UNACCOUNTED PURCHASE BY THE ASSESSEE WHICH HAD BEEN SOLD IN THE UNACCOUNTED MARKET. HE ESTIMATED GROSS PROFIT @ 3.04% AND THUS MADE ADDITI ON OF RS.7,60,666/- TO THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE. THE AO HAD ALSO LEVIED PENALTY UNDER SECTION 158BFA(2) @ 100% OF TAX ON THE UNDISC LOSED INCOME AMOUNTING TO RS.5,07,980/- AFTER OBSERVING THAT THE ASSESSEE HAD NOT FILED ANY APPEAL AGAINST THE ADDITION MADE IN ASSESSMENT. 9 8.1 BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT PEN ALTY PROCEEDINGS WERE DIFFERENT FROM ASSESSMENT PROCEEDINGS AND THEREFORE MERELY BECAUSE THE ASSESSEE HAD NOT FILED APPEAL AGAINST THE ASSESSMEN T PENALTY COULD NOT BE LEVIED. IT WAS ALSO SUBMITTED THAT EVEN THE ADDITIO N ITSELF WAS NOT PROPER AS IN THE BLOCK ASSESSMENT, ADDITION CAN BE MADE ONLY ON THE BASIS OF MATERIAL FOUND IN CASE OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT ADDITION IN RELATION TO THE SAID DOCUMENTS MADE IN CASE OF M/S. PATEL BULLION H AD BEEN DELETED. CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTIONS RAISED. IT W AS OBSERVED BY HIM THAT THE BILLS FOUND WERE ACCOMPANIED BY DELIVERY CHALLANS W HICH ALSO SHOWED THE SALES TAX PAID AND THESE BILLS HAD BEEN FOUND DURING THE SEARCH IN CASE OF PATEL BULLION AND THEREFORE THE ADDITION COULD BE MADE IN CASE OF THE ASSESSEE BASED ON SUCH MATERIAL. HE ALSO REFERRED TO VARIOUS DEFEC TS POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNTS MAINTAINED. CIT(A) ALSO DID N OT ACCEPT THE PLEA OF THE ASSESSEE THAT ADDITION IN CASE OF M/S. PATEL BULLIO N HAD BEEN DELETED AND OBSERVED THAT THE ADDITION DELETED WAS IN RESPECT O F THE SEIZED DOCUMENTS AS PER ANNEXURE A-4. CIT(A) OBSERVED THAT PENALTY UNDE R SECTION 158BFA(2) HAS TO BE IMPOSED IN RESPECT OF EXCESS UNDISCLOSED INCO ME FOUND AND ACCORDINGLY HE CONFIRMED THE PENALTY. 9.2 WE HAVE CAREFULLY CONSIDERED THE VARIOUS ASPECT S OF THE CASE AND THE SUBMISSIONS MADE BY BOTH THE PARTIES. IT IS A SETTL ED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDIN GS AND THOUGH THE FINDINGS GIVEN IN THE ASSESSMENT CONSTITUTES GOOD EVIDENCE, THE SAME IS NOT CONCLUSIVE IN THE PENALTY PROCEEDINGS AS HELD BY THE HONBLE S UPREME COURT IN CASE OF ANANTHRAM (123 ITR 457). THEREFORE PENALTY CANNOT B E LEVIED ONLY ON THE GROUND THAT ADDITION HAD BEEN MADE IN THE ASSESSMEN T AND IT IS STILL OPEN TO THE ASSESSEE TO SHOW THAT NO PENALTY IS LEVIABLE. S ECONDLY, IN SO FAR AS THE 10 PENALTY UNDER SECTION 158BFA(2) IS CONCERNED, THE S AME IS NOT MANDATORY AND IS DISCRETIONARY AND HAS TO BE LEVIED AFTER CONSIDE RING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE. THIS VIEW IS SUPPORTED B Y THE DECISION OF THE TRIBUNAL IN CASE OF ITO VS PREMLEELA PRATAP SHAH (285 ITR (A T) 1). IN THE CASE OF THE ASSESSEE, THE ADDITION HAD BEEN MADE ON THE BASIS O F SOME BILLS FOUND IN CASE OF M/S. PATEL BULLION SHOWING PURCHASES TO THE ASSE SSEE. M/S. PATEL BULLION ITSELF HAD CONFIRMED THAT THE BILLS WERE CANCELLED AND NO SALES WERE MADE. THERE WAS NO MATERIAL FOUND FROM THE ASSESSEE IN WHOSE CASE A LSO SEARCH HAD BEEN CONDUCTED SHOWING ANY SUCH PURCHASES HAD MADE FROM M/S. PATEL BULLION. THEREFORE THE ADDITION MADE BY THE AO IN CASE OF TH E ASSESSEE IS NOT SUPPORTED BY ANY PROPER EVIDENCE. MERELY BECAUSE SOME DEFECTS WERE POINTED OUT IN THE BOOKS OF ASSESSEE COULD NOT BE GROUND TO TREAT THE PURCHASES FOUND AS PER BILLS ISSUED BY THE THIRD PARTIES AS PURCHASE OF THE ASSE SSEE WHEN THE SAID PARTY ITSELF CONFIRMED THAT THE BILLS HAD BEEN CANCELLED. MOREOVER WE ALSO NOTE THAT ADDITION MADE ON THE BASIS OF THE SAME TRANSACTIONS IN CASE OF M/S. PATEL BULLION FROM WHOSE PREMISES THE BILLS WERE FOUND HA S BEEN DELETED BY THE CIT(A) IN THE ORDER DATED 24.09.2002 A COPY OF WHIC H HAS BEEN PLACED ON RECORD WHICH CLEARLY SHOWS THAT THE ADDITIONS MADE IN RELATION TO TRANSACTIONS AS PER DOCUMENT NAMED ANNEXURE A-5 HAD BEEN DELETED . THE LEARNED AR HAS ALSO PLACED ON RECORD THE ITAT ORDER IN CASE OF M/S . PATEL BULLION IN ITSS NO.358/AHD/2002 WHICH ALSO SHOWS THAT THE REVENUE H AD NOT CHALLENGED THE DELETION OF ADDITION IN RELATION TO DOCUMENT ANNEXU RE A-5. THEREFORE WHEN THE ADDITION MADE ON THE BASIS OF THE SAME DOCUMENT IN CASE OF THE PATEL BULLION FROM WHOSE PREMISES THE DOCUMENTS HAD BEEN FOUND HA S BEEN DELETED, THERE SHOULD NOT BE ANY QUESTION OF MAKING ADDITION IN CA SE OF THE ASSESSEE. MERELY BECAUSE ADDITION HAD BEEN MADE IN CASE OF THE ASSES SEE AND THE ASSESSEE DUE TO IGNORANCE OR DUE TO LACK OF PROPER ADVICE HAD NO T FILED APPEAL, NO PENALTY 11 CAN BE IMPOSED IN CASE OF THE ASSESSEE. THE LEARNED DR HAS PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL IN CASE OF SUDHAKAR V. PENDSE VS ITO IN ITSS NO.349/M/2005. WE HAVE GONE THROUGH THE SAID DECISI ON OF THE TRIBUNAL. EVEN THE TRIBUNAL IN THAT CASE MENTIONED THAT THE PENALT Y WAS NOT MANDATORY AND IS ONLY DISCRETIONARY. HOWEVER THE PENALTY HAD BEEN CO NFIRMED ON THE FACTS OF THAT CASE WHICH ARE TOTALLY DIFFERENT FROM THE FACT S IN THE CASE OF THE ASSESSEE. EACH CASE HAS TO BE EVALUATED ON THE FACTS AND CIRC UMSTANCES OF THAT CASE. IN OUR VIEW ON THE FACTS OF THE PRESENT CASE LEVY OF P ENALTY UNDER SECTION 158BFA(2) CANNOT BE JUSTIFIED. WE THEREFORE SET ASI DE THE ORDER OF CIT(A) AND DELETE THE PENALTY LEVIED BY THE AO. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 25 .05.2011. SD/- SD/- ( D. K. AGARWAL ) (RAJENDRA SIN GH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 25.05.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR C BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK 12