Sh. V.K. Bhatnagar, New Delhi V. DCIT, New Delhi

ITSSA 29/DEL/2010

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7518 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 29-02-2012
• Assessment Year: misc
• Appeal Filed On: 10-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: P C PORWAL
• Keywords: Unexplained investment; Search and seizure; Document seized; Opportunity of being heard; Reasonable cause; Assessment record; Block assessment; Reason to believe; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI H BENC H BEFORE SHRI A.N. PAHUJA, AM AND SHRI C.M. GARG, JM IT(SS) NO.29/D EL. /2010 BLOCK PERIOD: 1989-90 TO 15.01.1999 SHRI V.K. BHATNAGAR, AQ-1, NDSE-I, RING ROAD, NEW DELHI V/S . DEPUTY CIT,CENTRAL CIRCLE-13,NEW DELHI [PAN:AEFPB 8513E] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI P.C. PORWAL, AR REVENUE BY SHRI B.R.R.KUMAR, DR DATE OF HEARING 20-03-2012 DATE OF PRONOUNCEMENT 16-04-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 10.06.2010 BY THE ASSESSEE AG AINST AN ORDER DATED 29.03.2010 OF THE LEARNED CIT(A)-II, NEW DELH I, RAISES THE FOLLOWING GROUNDS:- 1 THE LEARNED CIT(A) HAS ERRED IN FACTS AND IN LAW IN CONFIRMING THE LEVY OF PENALTY OF ` `7,62,882/- U/S 158BFA (2). 2 THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY AN Y OF THE GROUNDS OF APPEAL. 3 THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T A SEARCH U/S 132(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) WAS CONDUCTED AT THE RESIDENCE AND SCHOOL PREMISES BELONGING TO T HE BHATNAGAR GROUP ON 15.1.1999. DURING THE SEARCH, A NUMBER OF INCRIMIN ATING DOCUMENTS WERE SEIZED. CONSEQUENTLY, IN RESPONSE TO A NOTICE DATE D 22ND OCTOBER, 1999 ISSUED U/S 158BC OF THE ACT, THE ASSESSEE FILED RETURN DEC LARING UNDISCLOSED INCOME OF ` `50 LACS. THE ASSESSING OFFICER (A.O. IN SHORT) NO TICED THAT THE ASSESSEE DERIVED RENTAL INCOME FROM RUNNING OF TWO RESTAURAN TS AT A-1, NDSE, PART-I, NEW DELHI BESIDE RUNNING FIVE SCHOOLS IN PROPRIETOR SHIP CAPACITY. ON THE BASIS OF IT(SS)A NO .29/DEL./2010 2 SEIZED DOCUMENTS, THE AO DETERMINED UNDISCLOSED INC OME OF ` ` 1,64,75,600/- VIDE ORDER DATED 30.1.2001 AS UNDER:- [IN ` ] 1. UNEXPLAINED ASSETS FOUND AT THE RESIDENCE ` 2,50,000/- VIZ. TELEVISION, REFRIGERATOR,, VIDEO CAMERA ETC. . 2. UNEXPLAINED FOREIGN CURRENCY US$ 750 `33,750/- 3. UNEXPLAINED JEWELLERY `5,07,477/- 4. UNEXPLAINED HOUSEHOLD EXPENSES `4,00,000/- 5. BOGUS EXPENSES UNDER THE HEAD TRANSPORT., `10,00,000/- REFRESHMENT ETC. & SALARY 6. BOGUS EXPENSES UNDER THE HEAD LEGAL, `3,05,000/- PROFESSIONAL, REPAIR ETC. 7. INCOME FROM VIRENDRA POULTRY FARM `3,00,000/- 8. UNEXPLAINED INVESTMENT IN BHATNAGAR DESIGNS. `1,70,000/- 9. ADDITION ON THE BASIS OF SEIZED DOCUMENTS: 3,3 6,39,262/-. LESS: ADJUSTMENT ALLOWED AS `1,68,03,997/- `1,68,35,265 GROSS TOTAL INCOME: ` 1,98,01,492 /- LESS: UNDISCLOSED INCOME DECLARED IN THE BLOCK RETU RN ` 33, 25,896/- TO THE EXTENT ADDED ABOVE. (8,37,253+3 LACS+5,00,643/-+16,88,000/-) TOTAL UNDISCLOSED INCOME: `1,64,75 ,596/- ROUNDED OFF TO: `1,64,75,600/- 2.1 INTER ALIA, PENALTY PROCEEDINGS U/S 158BFA(2) OF THE ACT WERE ALSO INITIATED. IT(SS)A NO .29/DEL./2010 3 3. ON APPEAL, THE LEARNED CIT(A) REDUCED THE UNDIS CLOSED INCOME TO ` ` 64,87,316/-.ON FURTHER APPEAL BY THE REVENUE AND TH E ASSESSEE, THE ITAT DETERMINED UNDISCLOSED INCOME OF ` ` 62,71,471/-. INTER ALIA, AN AMOUNT OF ` ` 3 LACS ON ACCOUNT OF INCOME FROM VIRENDRA POULTRY FA RM AND ` ` 10 LACS ON ACCOUNT OF BOGUS EXPENSES WERE UPHELD BY THE ITAT. THE REL EVANT FINDINGS OF THE ITAT IN IT(SS)A NOS.141 & 175/D/2005 VIDE ORDER DATED 8 TH APRIL, 2008 READ AS UNDER:- 2.4 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE ADDITION MADE IS ON ACCOUNT OF VARI OUS ELECTRONIC GOODS FOUND DURING SEARCH FROM THE RESIDENCE OF THE ASSESSEE. WE AGREE WITH THE ARGUMENT OF LEARNED DR THAT THE NATU RE OF GOODS DETAILS OF WHICH HAVE BEEN GIVEN IN PARA 2.1 OF THI S ORDER CLEARLY SHOWS THAT THESE WERE THE ELECTRONIC GOODS WHICH WE RE INTRODUCED IN THE INDIAN MARKET IN THE 90S AND WHICH SHOWED T HAT THESE WERE ACQUIRED IN THE BLOCK PERIOD. THE ASSESSEE HAD PRO DUCED NO EVIDENCE TO SHOW THAT THESE WERE PURCHASED BEFORE T HE BLOCK PERIOD. THE SOURCE HAS THEREFORE TO BE EXPLAINED B Y THE ASSESSEE. THE VALUE OF THE GOODS ESTIMATED BY THE ASSESSING O FFICER AT ` `2,50 LACS CONSIDERING THE NATURE AND NUMBER OF ITE MS FOUND IS ALSO CONSIDERED REASONABLE. THE ASSESSEE HAD DECLA RED TOTAL WITHDRAWAL FOR FAMILY EXPENSES DURING THE BLOCK PER IOD AT ` ` 12.75 LACS. THE LEARNED DR ARGUED THAT THIS ALSO INCLUDE D THE EXPENDITURE ON DAUGHTER OF THE ASSESSEE AMOUNTING T O ` ` 1.03 LACS AND THE FOREIGN TRAVEL EXPENSES. HOWEVER, AS IS CL EAR FROM THE SUBMISSION OF THE ASSESSEE IN PARA 2.3 EARLIER, THE EXPENDITURE ON DAUGHTERS MARRIAGE AS WELL AS FOREIGN TRAVEL EXPEN SES HAD BEEN SHOWN BY THE ASSESSEE SEPARATELY. STILL CONSIDERIN G THE STATUS OF THE ASSESSEE, TOTAL WITHDRAWAL OF ` ` 12.75 LACS FOR THE HOUSE HOLD EXPENSES, IS CONSIDERED NORMAL AND THE EXPENDITURE ON ACQUISITION OF ELECTRONIC GOODS IS, THEREFORE, NOT EXPLAINED FR OM THE FAMILY WITHDRAWAL. HOWEVER, WE HAVE UPHELD THE ADDITION O F ` ` 10 LACS ON ACCOUNT OF BOGUS EXPENSES VIDE PARA 5.2 OF THIS ORD ER AND THE MONEY TO THAT EXTENT WAS, THEREFORE, AVAILABLE WITH THE ASSESSEE TO EXPLAIN VARIOUS AMOUNTS. MOREOVER, THE ASSESSEE AL SO DISCLOSED IN THE BLOCK RETURN A SUM OF ` ` 8,37,253/- ON ACCOUNT OF MISC. BALANCING FIGURES NOT RELATING TO ANY ACQUISITION O F ASSETS ETC. WE HAVE ALSO CONFIRMED ADDITION OF ` `25 LACS ON ACCOUNT OF AMOUNTS COLLECTED FROM PARENTS VIDE PARA 8.67.1 OF THIS ORD ER AND FURTHER SUM OF ` `1,39,524/- ON ACCOUNT OF WITHDRAWAL FROM BANK ACCO UNTS IN PARA 8.12.1. THE AMOUNT ON ACQUISITION OF VARIOUS ASSETS IS, THEREFORE, EASILY COVERED BY THESE ADDITIONS AND NO SEPARATE IT(SS)A NO .29/DEL./2010 4 ADDITION IS REQUIRED TO BE MADE. THE ORDER OF CIT( A) IS SET ASIDE AND THE ADDITION MADE IS DELETED. 5.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IS IN RE LATION TO DISALLOWANCE OF BOGUS EXPENSES UNDER THE HEAD TRAN SPORT, REFRESHMENT AND SALARY. IT IS AN UNDISPUTED FACT T HAT THE ASSESSEE IS MASTERMIND BEHIND RUNNING OF SEVERAL SCHOOLS EVE N THOUGH HE IS NOT PROPRIETOR OF THOSE SCHOOLS. THIS IS ALSO AN A DMITTED FACT THAT THE ASSESSEE WAS RUNNING A CENTRALIZED OFFICE AT HI S RESIDENCE TO MONITOR AND CONTROL THE EXPENDITURE OF VARIOUS SCHO OLS. DOCUMENTS WERE FOUND DURING SEARCH FROM HIS RESIDENCE SHOWS T HAT CASH IN PACKETS WERE BEING BROUGHT TO HIS HOUSE FROM DIFFER ENT SCHOOLS. SIGNATURE ON REVENUE STAMPS ON BLANK PAPERS WERE AL SO FOUND FROM THE RESIDENCE INDICATING CLAIM OF BOGUS EXPENS ES. THERE WAS, THEREFORE, MATERIAL FOUND DURING SEARCH INDICATING THAT CASH OF DIFFERENT SCHOOLS BROUGHT TO HIS RESIDENCE WAS BEIN G ADJUSTED AGAINST BOGUS EXPENSES. FURTHER INQUIRY MADE BY TH E INVESTIGATING WING FROM THE VARIOUS PARTIES IN WHOSE NAMES EXPENS ES HAD BEEN BOOKED SHOWED THAT THEY WERE NOT FOUND IN EXISTENCE . DURING THE ASSESSMENT PROCEEDINGS, THE AO. ALSO ISSUED SUMMONS , WHICH WERE RETURNED BACK WITH THE REMARKS 'PARTY WAS NOT IN EXISTENCE. THE ASSESSEE, ON BEING CONFRONTED, NEITHER PRODUCED THE PARTIES NOR FILED ANY CONFIRMATION. THUS, THE EXPENSES WERE EITHER UNVOUCHED OR IN CASES WHERE THERE WERE VOUCHERS, PA RTIES WERE NOT FOUND IN EXISTENCE NOR THE ASSESSEE PRODUCED TH E PARTIES. AS THERE WAS BASIC MATERIAL FOUND DURING SEARCH INDICA TING THAT CASH FROM SCHOOLS WAS BEING BROUGHT TO THE RESIDENCE OF THE ASSESSEE AND THE BLANK RECEIPTED STAMP PAPERS FOUND INDICATE D THE ATTEMPT TO CLAIM BOGUS EXPENSES, THE MATERIAL COLLECTED ON FURTHER INQUIRIES IN RELATION TO THE PARTIES FROM WHOM THE BILLS HAD BEEN PRODUCED OR IN WHOSE NAMES EXPENSES HAD BEEN BOOKED, IS RELEVAN T MATERIAL FOR THE PURPOSE OF BLOCK ASSESSMENT AS IT IS A SETT LED LEGAL POSITION THAT MATERIAL INFORMATION AVAILABLE WITH THE A.O. I N RELATION TO THE EVIDENCE GATHERED DURING SEARCH CAN BE USED FOR FRA MING OF BLOCK ASSESSMENT. EVEN IF THE AMOUNTS ARE ENTERED IN THE BOOKS OF ACCOUNTS, IN CASE IT IS FOUND THAT THE ENTRIES ARE BOGUS AND THE CLAIM IS FALSE, AMOUNT CAN BE TAKEN AS UNDISCLOSED INCOME IN VIEW OF THE PROVISIONS OF SECTION 158B(B). THE TOTAL AMO UNT OF EXPENDITURE CLAIMED DURING THE SEARCH PERIOD UNDER THESE HEADS AS POINTED OUT BY THE A.O. WAS RS.94 LACS. THE DISALLO WANCE HAS BEEN MADE TO THE EXTENT OF RS.10 LACS, WHICH IS LITTLE O VER 10% AND WHICH IN OUR OPINION, IS JUSTIFIED ON THE FACTS OF THE CA SE. THE LD. A.R. HAS POINTED OUT THAT UNVOUCHED EXPENSES WERE FOUND ONLY TO THE TUNE OF RS.6. 73 LACS IN THE REMAND REPORT. BUT EVEN IN CASE OF EXPENSES IT(SS)A NO .29/DEL./2010 5 WHERE VOUCHERS WERE THERE, THE PARTIES WERE NOT FOU ND TO BE INEXISTENCE AND THE ASSESSEE ON BEING CONFRONTED CO ULD PRODUCE NO EVIDENCE TO SUBSTANTIATE THE EXPENDITURE . THEREFORE, HIGHER DISALLOWANCE MADE BY THE A.O. WAS JUSTIFIED. LD. A.R. HAS ALSO RAISED THE ISSUE OF CROSS-EXAMINATION OF P ARTIES. BUT WE FIND THAT AT THE TIME OF INQUIRY BY THE A.O., THE P ARTIES WERE FOUND NON-EXISTENT AND THIS HAD BEEN BROUGHT TO THE NOTICE OF THE ASSESSEE. THE ISSUE OF CROSS-EXAMINATION IS, THEREFORE; NOT RELEVANT.' WE ALSO H OLD THAT ESTIMATED DISALLOWANCE ON THE FACTS OF THE CASE, BASED ON THE RELEVANT MATERIAL FOUND DURI NG SEARCH AND MATERIAL COLLECTED ON FURTHER INQUIRY IS JUSTIF IED IN BLOCK ASSESSMENT. ACCORDINGLY, WE UPHOLD THE DISALLOWANCE OF RS.I0 LACS. THE ORDER OF CIT(A) IS ACCORDINGLY CONFIRMED. 9.2 THE GROUND NO.2 IS REGARDING ADDITION OF RS.3 L ACS ON ACCOUNT OF VIRENDER POULTRY PRODUCTS FARMS. THE SEI ZED DOCUMENT SHOWED THAT THE BANK ACCOUNT HAD BEEN OPEN ED IN THIS PROPRIETARY CONCERN ON 1.10.1994 AND CLOSED ON 19.7.1999. AS PER MS-I0, ANNEXURE A-5, PAGE 49-57, 107 & 128 CASH AMOUNTING TO RS.L1.43 LACS WAS RECEIVED BETWEEN 6.6 .1997 TO DEE 1998 FROM CRJ. SIMILARLY, PAYMENT OF RS.17.29 L ACS HAD BEEN RECEIVED FROM VARIOUS SCHOOLS BETWEEN 7. 1.199 7 TO 2. 11 .1998. THE SEIZED DOCUMENT ALSO SHOWED THAT THE EGG S WERE SUPPLIED TO RESTAURANTS AT SOUTH EXTENSION THOUGH T HE PAYMENTS WERE MADE TO POULTRY FARM, NO EVIDENCE OF SUPPLY OF EGGS SUCH AS BILLS/VOUCHERS WERE FOUND. THE ASSESSE E ALSO DID NOT FILE DETAILS OF INVESTMENT, YEARLY RECEIPTS AND YEARLY EXPENSES AND OTHER DETAILS, FROM WHICH INCOME COULD BE COMPUTED. IN THE ABSENCE OF DETAILS THE A. O. ESTIMATED THE INCOME AT RS.3 LACS. IN APPEAL, CIT(A) DELETED THE ADDITION AFTER OBSERVING THAT THE SAME HAD BEEN MADE ON THE BASIS OF GUESS WORK. BEFORE US, THE LD. A.R. FOR THE ASSESSEE AGRE ED THAT THE DOCUMENT SHOWED SUPPLY OF EGGS BETWEEN 94-99. THE B USINESS WAS CLOSED, AS IT WAS NOT FOUND VIABLE. THERE WAS N O INCOME EARNED. THE ADDITION MADE BY THE A.O. WAS NOT BASED ON ANY MATERIAL FOUND DURING SEARCH AND THEREFORE, ORDER O F CIT(A) DELETING THE ADDITION WAS JUSTIFIED. LD SR. D R ON THE OTHER HAND ARGUED THAT HE TRANSACTIONS WERE NOT DENIED. IT WAS ALSO SUBMITTED THAT THE SEIZED DOCUMENTS SHOWED RECEIPT OF SUBSTANTIAL AMOUNTS AND THE ASSESSEE MUST HAVE ALSO MADE INVESTMENT IN THE BUSINESS, DETAILS OF WHICH WERE N OT GIVEN. THE ADDITION MADE WAS THEREFORE, LEGALLY IN ORDER. 9.2.1 WE HAVE PERUSED THE RECORDS AND CONSIDERED TH E MATER CAREFULLY. THERE IS NO DISPUTE THAT THE ASSESSEE WA S RUNNING THE IT(SS)A NO .29/DEL./2010 6 POULTRY FARM DURING 1994-99 AND SUPPLIED EGGS TO VA RIOUS PARTIES. THE SEIZED DOCUMENTS ALSO SHOWED THAT THE CASH TO TUNE OF RS.11.43 LACS AND RS.17.29 LACS HAD BEEN RE CEIVED FROM JAN 1997-DEC 1998. THE ASSESSEE COULD NOT GIVE DETAILS OF INVESTMENT IN THIS BUSINESS AS WELL AS YEARLY RE CEIPT AND EXPENSES AND THIS FACT IS ALSO NOT DISPUTED. THEREF ORE, ON THE BASIS OF MATERIAL FOUND, THE A.O. IS ENTITLED TO ES TIMATE INCOME FOR THE ENTIRE PERIOD. CONSIDERING THE RECEIPT OF M ONEY AMOUNTING TO ABOUT RS.28 LACS DURING THE TWO YEAR P ERIOD FROM JAN 1997 TO DEC. 1998 AND THE FACT THAT SOME INVEST MENT IS DEFINITELY REQUIRED FOR STARING THE BUSINESS, THE E STIMATE OF INCOME ON THESE ACCOUNTS TO THE TUNE OF RS.3 LACS F OR THE ENTIRE PERIOD FROM 1994-99 IS JUSTIFIED. THE ORDER OF CIT(A), T HEREFORE, CANNOT BE SUSTAINED. THE SAME IS REVERSED AND THE A DDITION MADE IS CONFIRMED. 4. SINCE ADDITIONS OF ` ` 3 LACS ON ACCOUNT OF INCOME FROM VIRENDRA POULTRY FARMS; ` ` 10 LACS TOWARDS BOGUS EXPENSES; ` `70,270/- ON A/C OF PAYMENTS TO DIFFERENT PERSONS AS PER AA-5(MR-1) PAGE 9 & 10 OF THE SEIZED DOCUMENTS; ` 2,74,000/ PN A/C OF PAYMENTS TO CERTAIN PERSONS AS PER ANNEXURE-A- 11, ` 1,55,000/- ON A/C OF UNEXPLAINED INVESTMENT IN ANAN D PRATYABHOOT VIT NIGAM LTD;` ` 3 LACS ON A/C OF RECEIPT OF PAYMENT FROM SATISH BAT RA; ` `1,45,000/- ON A/C PAYMENTS FROM SCHOOLS; ` ` 1,39,524/- ON A/C OF PAGE 2 OF ANNEXURE AA-47 OF THE SEIZED DOCUMENTS AND ` ` 1,20,12,665/- ,COMPRISING ` 18,20,000, ` 25,00,000 & ` 76,85,000/- ON A/C DONATIONS & ` 7,665/- ON ACCOUNT OF EXPENDITURE ON AIRTICKETS WERE UPHELD BY THE LD. CIT(A)/ITAT, THE AO SHOWCAUSED THE ASSESSEE BEFORE LEVY OF PENALTY U/S 158BFA(2) OF THE ACT. I N RESPONSE TO SHOW CAUSE NOTICE DATED 21ST JULY, 2008, THE ASSESSEE REPLIED VIDE LETTER DATED 12 TH AUGUST, 2008,CONTENDING ,INTER ALIA, THAT THE DISALLOWANCE S HAVING BEEN MADE ON ESTIMATE AND THE AO HAVING NOT IDENTIFIED BOGUS PAR TIES TO WHOM PAYMENTS WERE MADE, PENALTY COULD NOT BE LEVIED. INTER ALIA, THE ASSESSEE RELIED UPON THE DECISIONS IN SHIV LAL TAK VS. CIT 251 ITR 373 (RAJ. );HARIGOPAL SINGH VS. CIT 258 ITR 85 (P&H);CIT VS. AJAIB SINGH & CO. 253 ITR 630 (P&H);CIT VS. INDEN BISLERS 240 ITR 943 (MADRAS). HOWEVER, THE AO DID N OT ACCEPT THE EXPLANATION OF THE ASSESSEE AND LEVIED A PENALTY OF ` `86,37,830/- @100% OF THE TAX SOUGHT TO BE EVADED IN THE FOLLOWING TERMS:- IT(SS)A NO .29/DEL./2010 7 5. THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED THE CASE LAWS QUOTED BY THE ASSESSEE IN HIS FAVOUR ARE NOT DIRECTLY RELATED WIT H FACTS OF THIS CASE. IN VIEW OF THE ABOVE FACTS, THE CONDUCT OF THE ASSESSEE CLEARL Y SHOWS THAT HE HAS NOT DECLARED TRUE AND FULL PARTICULARS OF HIS INCOME, T HOUGH HE WAS AWARE THAT THE DOCUMENTS SHOWING UNEXPLAINED RECEIPTS/EXPENDITURE HAVE BEEN FOUND DURING THE SEARCH AND SEIZURE OPERATION. IT CLEARLY SHOWS THAT THE ASSESSEE WILLFULLY AND KNOWINGLY HAS NOT DECLARED FULL AND TRUE PARTICULAR S OF HER INCOME AND IS LIABLE FOR THE LEVY OF PENALTY. 6. UNDER THE INCOME-TAX ACT, PENALTY PROVISIONS ARE C ONTAINED IN CHAPTER XXI IN CHAPTER XXI, IF ANY PENALTY IS IMPOSABLE THEN THE A UTHORITY IMPOSING THE PENALTY HAS TO LOOK INTO THE REASONABLENESS OF THE CAUSE FO R CONCEALING INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. H OWEVER, IT IS TO BE NOTED THAT PENALTY PROCEEDINGS U/S 158BFA(2) IS SEPARATE FROM CHAPTER XXI. THE WHOLE NEW SIMPLIFIED PROCEDURE FOR SEARCH ASSESSMENT WAS INTRODUCED IN THE ACT AND OPTION WAS GIVEN TO THE ASSESSEE TO FILE TRUE AND C ORRECT RETURN OF INCOME DISCLOSING THE TRUE AND CORRECT UNDISCLOSED INCOME AND PAY TAXES AT A FLAT RATE OF 60%. IF SOMEONE DID NOT DO SO PENALTY WAS IMPOSABLE U/S.158BFA(2) ON THE ADDITIONS MADE. IT IS PERTINENT TO NOTE THAT IN ORD ER TO LEVY PENALTY U/S.158BFA(2) THERE IS NO MENTION OF REASONABLE CAUSE OF THE DEFA ULT. THEREFORE, IN ORDER TO LEVY PENALTY U/S.158BFA(2), IT IS SUFFICIENT THAT SOME A DDITIONS WERE MADE AND ASSESSED INCOME WAS MORE THAN RETURNED INCOME. MORE OVER, IN THE INSTANT CASE, THE ASSESSEE HAS NOT BEEN ABLE TO PROVE AS TO WHY T HE PENALTY SHOULD NOT BE LEVIED. HENCE, I HAVE REASON TO BELIEVE THAT THE AS SESSEE HAS CONCEALED ITS TAXABLE INCOME AND IS LIABLE FOR PENALTY ULS.158BFA (2) OF THE INCOME-TAX ACT, 1961. 7. THE ASSESSEE HAS NOT STATED AS TO WHAT WAS THE REA SONABLE CAUSE FOR FAILURE ON ITS PART TO DISCLOSE THE TRUE STATEMENT OF INCOME I N THE RETURN FOR THE BLOCK PERIOD. IN THE CASE OF CIT V. STANDARD MERCANTILE CO. [(198 6) 160 ITR 613 (PAT.)] IT WAS HELD THAT IT WAS FOR THE ASSESSEE TO SHOW THAT HE H AD REASONABLE CAUSE FOR NOT COMPLYING WITH THE PROVISIONS OF THE ACT. IT HAS AL SO BEEN LAID DOWN BY THE HON'BLE SUPREME COURT [(1987) 165 ITR 14. 21-22 (SC )] THAT THE INITIAL BURDEN OF DISCHARGING THE ONUS OF REBUTTAL IS ON THE ASSESSEE . ONCE THAT INITIAL BURDEN IS DISCHARGED, THE ASSESSEE WOULD BE OUT OF THE MISCHI EF UNLESS FURTHER EVIDENCE WAS ADDUCED. AS TO THE NATURE OF THE EXPLANATION TO BE RENDERED BY THE ASSESSEE, THE SUPREME COURT EXPRESSED THEIR AGREEME NT [P.22] WITH THE PATNA HIGH COURT'S VIEW TO THE EFFECT THAT IT WAS PLAIN O N PRINCIPLE THAT IT WAS NOT THE LAW THAT THE MOMENT ANY FANTASTIC OR UNACCEPTABLE EXPLA NATION WAS GIVEN, THE BURDEN PLACED UPON HIM WOULD BE DISCHARGED AND THE PRESUMP TION REBUTTED. IT WAS FURTHER AGREED THAT IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED. IT MUST BE AN ACCEPTABLE EXPLANATION, ACCEPTABLE TO A FACT-FINDING BODY. THUS, IT IS TRUE THAT THE PRES UMPTION THAT AROSE WAS A REBUTTABLE PRESUMPTION THAT THERE WAS CONCEALMENT O F INCOME AND IF THERE WAS COGENT MATERIAL TO REBUT THE EVIDENCE THAT WAS ACCE PTABLE, THEN THE PRESUMPTION WOULD NOT STAND [CIT V. K. R. SADAYAPPAN, (1990) 18 5 ITR 49, 54-55 (SC), CIT V, K. GOVINDARAJULU NAIDU, (1991) 190 ITR 318, 321 (MA D): ADDL.CIT V. IRSHAD ALI, (1992) 197 ITR 144 (ALL)]. 8. DURING THE COURSE OF SEARCH ACTION AND SUBSEQUENT PROCEEDINGS U/S 158BC, IT IS PROVED BEYOND DOUBT THAT THE ASSESSEE HAS NOT ACCOU NTED HIS INCOME IN THE BOOKS OF ACCOUNT. IT(SS)A NO .29/DEL./2010 8 9. THE ASSESSEE HAD THE MENS-REA TO DEFRAUD THE REVEN UE. THIS IS CLEAR FROM THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS SEIZED FROM T HE ASSESSEE DURING THE COURSE OF SEARCH & SEIZURE PROCEEDINGS. HOWEVER, IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE BLOCK PERIOD. AS MENTIONED ABOVE, THE AFORESAID UNDISCLOSED INCOME WAS NOT FULLY DECLARED. THE ASS ESSING OFFICER AFTER EXAMINING THE SEIZED DOCUMENTS DETERMINED THE UNDIS CLOSED INCOME AND THE SAME WAS CONFIRMED BY THE HON'BLE ITAT TO THE TUNE OF RS.1,43,96,389/-. TOTAL INCOME ON WHICH TAX SOUGHT TO HAVE : RS.1,4 3,96,389/- BEEN EVADED TAX ON ABOVE @60%. : RS. 86 ,37,830/- AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE, I AM SATISFIED THAT A PENALTY OF RS.86.37,830/-. BEING 100% OF TAX SOUGHT TO BE EVADED. SHOULD BE IMPOSED IN THE CASE TOWARDS CONCEALMENT OF INCOME A ND FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY. A PENALTY OF RS .86.37.830/- IS IMPOSED U/S 158BFA(2) OF IT ACT. 5. ON APPEAL, THE LD. CIT(A) REDUCED THE PENAL TY TO ` ` 7,62,882/- IN THE FOLLOWING TERMS:- 4. I HAVE CONSIDERED THE FACTS OF THE CASE. THE SU BMISSION OF THE APPELLANT HAS ALSO BEEN GONE THROUGH VERY CAREFULLY . THERE IS DIFFERENCE BETWEEN PROVISIONS OF SECTION 271(1)(C) AND SECTION 158BFA(2) OF THE ACT. THE PENALTY U/S 271 (1)(C) IS LEVIABLE IF IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO IS SATISFI ED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN SUCH CASE S MINIMUM PENALTY OF 100% AND MAXIMUM 300% OF THE 'AMOUNT OF TAX SOUGHT TO BE EVADED' IS TO BE LEVIED. THE TERM 'THE AMOUNT OF TAX SOUGHT TO BE EVADED' HAS BEEN DEFINED AS PER EXPLANATION 4 WH ICH DEALS THE VARIOUS CIRCUMSTANCES WHICH FOR READY REFERENCE IS REPRODUCED AS UNDER: A) IN ANY CASE WHERE THE AMOUNT OF INCOME IN RESPEC T OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED HAS THE EFFECT OF REDUCING THE LOSS DECLARED IN THE R ETURN OR CONVERTING THAT LOSS INTO INCOME, MEANS THE TAX THAT WOULD HAVE BEE N CHARGEABLE ON THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED HAD SUCH INCOME BEE N THE TOTAL INCOME.; B) IN ANY CASE TO WHICH EXPLANATION 3 APPLIES, MEANS THE TAX ON THE TOTAL INCOME ASSESSED (AS REDUCED BY THE AMOUNT OF ADVANC E TAX, TAX DEDUCTED AT SOURCE, TAX COLLECTED AT SOURCE AND SELF-ASSESSM ENT TAX PAID BEFORE THE ISSUE OF NOTICE UNDER SECTION 148; C) IN ANY OTHER CASE, MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL IT(SS)A NO .29/DEL./2010 9 INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CH ARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME I N RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTI CULARS HAVE BEEN FURNISHED. 4.1. BUT IN THE CASE OF 158BFA(2) THE LEGAL PROVISI ONS ARE LITTLE DIFFERENT. IN SECTION 158BFA(2), PENALTY IS LEVIABL E ON UNDISCLOSED INCOME AND NOT WITH REFERENCE TO THE INCOME FOR WHI CH INACCURATE PARTICULARS HAVE BEEN FILED ARE CONCEALED. AS PER S ECTION 158BFA(2) THE PENALTY IS LEVIABLE IN RESPECT OF UND ISCLOSED INCOME DETERMINED BY THE A.O. WHICH IS IN EXCESS OF THE UN DISCLOSED INCOME SHOWN IN RETURN AND PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS I N EXCESS OF AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. T HUS IN A CASE OF 271(1 )(C) WHEREAS PENALTY CAN BE LEVIED ON AN A MOUNT WHICH MAY BE MORE THAN ASSESSED INCOME TO THE EXTENT OF C ONCEALMENT OR FOR WHICH INACCURATE PARTICULARS ARE FILED, IN V IEW OF SUB SECTION (A) OF EXPLANATION 4, IN CASE OF SECTION 158BFA(2), IT IS NOT SO. THE PENALTY UNDER SECTION 158BFA(2) IS LEVIABLE ONLY ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE BLOCK RETURN. THUS PENALTY U/S 158BFA(2) CANNOT BE LEVIED ON AN AMOUNT, WHICH IS M ORE THAN UNDISCLOSED INCOME DETERMINED. IN THE INSTANT CASE, AO HAS STARTED PENALTY PROCEEDING AFTER RECEIPT OF ORDER FROM THE ITAT WITHOUT GIVING EFFECT TO THE ORDER OF THE ITAT AND THEREBY WITHOUT DETERMINING THE UNDISCLOSED INCOME AS PER THIS ORDE R. IT WAS HIS DUTY TO FIRST DETERMINE THE UNDISCLOSED INCOME AS P ER THIS ORDER AND THEN COMPUTE UNDISCLOSED INCOME IN EXCESS OF UNDISC LOSED INCOME RETURNED BY THE APPELLANT AND THEN SHOW CAUSE APPEL LANT WHY ON SUCH EXCESS UNDISCLOSED INCOME, PENALTY U/S 158BFA(2) MAY NOT BE LEVIED. INSTEAD OF DOING THAT, HE HAS CONSIDERED EACH ITEM OF UNDISCLOSED INCOME AND CAME TO THE CONCLUSION THAT PENALTY U/S 158BFA(2) IS TO BE LEVIED ON AN UNDISCLOSED INCOME OF RS.1,43,96,389/-. THIS IS NOT CORRECT AS ON GOING THROUGH THE ASSESSMENT RECORDS COLLECTED FROM THE AO, IT IS SEE N THAT AFTER GIVING EFFECT TO THE ORDER OF THE ITAT THE UNDISCLO SED INCOME HAS BEEN WORKED OUT BY THE A.O. AT RS.62,71 ,470/- VIDE ORDER DATED 3/8/2009. FOR READY REFERENCE THE COMPUTATION OF UNDISCLOSED INCOME AS PER ORDER OF CIT(A) AND ORDER GIVING EFFE CT TO THE ORDER OF ITAT IS REPRODUCED AS UNDER : BY CIT(A) UNDISCLOSED INCOME AS DECLARED [IN ` ] BY THE ASSESSEE IN BLOCK RETURN: `50,00,000 IT(SS)A NO .29/DEL./2010 10 UNEXPLAINED ASSETS FOUND AT THE RESIDENCE : ` 2,50,000 UNEXPLAINED FOREIGN CURRENCY ` 33,750/- UNEXPLAINED JEWELLERY ` 5,00,000 BOGUS EXPENSES UNDER THE HEAD TPT., REFRESHMENT & SALARY ETC. `10,00,000 ADDITIONS CONFIRMED ON ACCOUNT OF SEIZED DOCUMENTS `28,88,419 ADDITION CONFIRMED ON ACCOUNT BHATNAGAR DESIGNS ` 1,40,400 LESS: ADJUSTMENT ON ACCOUNT OF ITEMS ALREADY INCLUDED IN THE BLOCK RETURN AS ALLOWED BY THE A.O. `22,25,896 `64,87,316 THE ORDER GIVING EFFECT TO THE ORDER OF ITAT INCOME REVISED U/S 250 DT. 26.05.2005: `64,87,316 LESS: RELIEF GIVEN BY ITAT 1. ON ACCOUNT OF UNEXPLAINED ASSETS FOUND AT THE RESIDENCE VIZ. TELEVISION REFRIGERATORS, VIDEO CAMERA ETC. 2,50,000 2. ON ACCOUNT OF UNEXPLAINED INVES- TMENT IN BHATNAGAR DESIGNS 1,40,400 3. ON ACCOUNT OF UNEXPLAINED FOREIGN CURRENCY US$ 750 33,750 4. ON ACCOUNT OF TOTALING MISTAKE 3,48,775 5. ON ACCOUNT OF ADDITIONS ON THE BASIS OF SEIZED DOCUMENTS. A) ON ACCOUNT OF PAYMENT FOR AIR TICKET 4060 B) ON ACCOUNT OF PAYMENT MADE FOR IT(SS)A NO .29/DEL./2010 11 HOUSEHOLD EXPENSES 6920 C) ON ACCOUNT OF RECEIPT OF CASH TREATED AS UNDISCLOSED. 50000 D) ON ACCOUNT OF PAYMENT MADE TO C.L. SHARMA 35000 E) ON ACCOUNT OF PAYMENT FOR BILL OF FLORIST 15000 F) ON ACCOUNT OF PAYMENT MADE TO COLLEX FOAM 34140 G) ON ACCOUNT OF PAYMENT MADE TO DHARAM PAL 5000 H) ON ACCOAUNT OF PAYMENT FOR CEMENT IN RESPECT OF VIRENDRA GRAM 60000 I) ON ACCOUNT OF PAYMENT MADE TO GULSHAN 90000 J) ON ACCOUNT OF PAYMENT MADE TO V. BHARGAVA: 75000 K) ON ACCOUNT OF PURCHASE OF SHAWL 16000 3,87,120 TOTAL RELIEF `11,60,045 BALANCE INCOME `53,27,271 ADDITION CONFIRMED BY ITAT 1. ON ACCOUNT OF INCOME FROM VIRENDRA PAULTRY FARM 3 ,00,000 2. ON ACCOUNT OF ADDITION ON THE BASIS OF SEIZED ACCOUNT. A) ON ACCOUNT OF PAYMENT REMAINS UNEXPLAINED: 70,200 B) ON ACCOUNT OF INVESTMENT WITH ANAND PRATYABHOOT VIT NIGAM LIMITED. 1,55,000 C) ON ACCOUNT OF AMOUNT COLLECTED FROM PARENTS. 1,45,000 D) ON ACCOUNT OF PAYMENT MADE 2,74,000 6,44,200 TOTAL 9,44,200 REVISED TAXABLE INCOME `62,71,471/- ROUNDED OFF `62 ,71,470/- IT(SS)A NO .29/DEL./2010 12 4.1.1. THUS AS PER THE FINAL ORDER, THE UNDISCLOSED INCOME DETERMINED IS RS.62,71,4701- ONLY AS AGAINST UNDISCLOSED INCOM E OFFERED BY THE APPELLANT AT RS.50,00,000/- IN THE BLOCK RETURN. TH US THE EXCESS OF UNDISCLOSED INCOME SO DETERMINED IS ONLY RS.12,71,4 70/-. THUS ONLY RS.12,71,470/ CAN BE CONSIDERED FOR LEVY OF PENALT Y ULS 158BFA(2) AND NOT RS.1,64,75,596/. 4.2. THE SECOND ISSUE IS TO BE DECIDED AS TO WHETHE R AO IS HAVING ANY DISCRETION NOT TO LEVY PENALTY EVEN ON THIS EXCESS UNDISCLOSED INCOME OF RS.12,71,470/-? THERE IS DISPUTE ON THIS ISSUE W HICH HAS NOT YET REACH FINALITY. WHEREAS AS PER THE VIEW OF REVENUE, PENALTY IS MANDATORY ULS 158BFA(2) WHEREAS AS PER OTHER VIEW T HE WORD USED IN SECTION 158BFA(2) IS 'MAY DIRECT' AND THEREFORE THE RE IS DISCRETION TO THE AO. NOT TO LEVY PENALTY AND THEREFORE LEVY OF P ENALTY IS NOT MANDATORY. THE VARIOUS ITATS AND EVEN HIGH COURT IN CLUDING THE CASES REFERRED BY THE APPELLANT HAVE HELD THAT IT I S NOT MANDATORY TO LEVY PENALTY WHEREVER THERE IS DIFFERENCE BETWEEN R ETURNED UNDISCLOSED INCOME AND ASSESSED UNDISCLOSED INCOME. I AM AGREEABLE TO THIS VIEW IN VIEW OF THESE DECISIONS. HOWEVER, THE MARGIN OF DISCRETION TO THE AO IS VERY NARROW IN THE CASE OF 158BFA(2) AS COMPARED TO SECTION 271 (1 )(C). AS IN THE CASE OF PENALTY ULS 271(1)(C) THE PENALTY IS LEVIABLE ON THE INCOME WHICH HAS BEE N CONCEALED OR ABOUT WHICH INACCURATE PARTICULARS HAVE BEEN FILED, BUT THE SAME IS NOT TRUE IN THE CASE OF 158BFA(2) WHERE THE PENALTY IS LEVIABLE ON THE DIFFERENCE OF UNDISCLOSED INCOME (UNDISCLOSED INCO ME DETERMINED BY THE AO AND UNDISCLOSED INCOME DETERMINED BY THE APP ELLANT IN THE BLOCK RETURN). THUS ONLY IN VERY VERY RARE CASES WH ERE APPELLANT COULD ESTABLISH THAT BUT FOR SEARCH, THE INCOME WHICH DUE TO SPECIAL PROVISIONS OF THE BLOCK ASSESSMENT U/S 158BB HAS TO BE TREATED AS UNDISCLOSED INCOME, THE APPELLANT COULD HAVE OFFERE D THAT INCOME AS AND WHEN THE RETURN WOULD HAVE BECOME DUE OR WHERE THERE IS A QUESTION OF ELEMENT OF ESTIMATION IN WORKING OUT UN DISCLOSED INCOME. FOR EXAMPLE IF THE EVIDENCE FOR THE UNDECLARED SALE S HAS BEEN FOUND DURING THE COURSE OF SEARCH AND AO ADOPTS A PARTICU LAR PERCENTAGE OF GP WHILE DETERMINING UNDISCLOSED INCOME IN THE BLOC K ASSESSMENT WHEREAS THE ASSESSEE HAS ESTIMATED LESSER G.P. AND OFFERED UNDISCLOSED INCOME ACCORDINGLY THEN AS PER PROVISIO NS OF THE ACT, THE DIFFERENCE SO ASSESSED WILL ALSO BE UNDISCLOSED INC OME. BUT IN SUCH SITUATION AO MAY USE HIS DISCRETION TO DECIDE AS TO WHETHER ON SUCH DIFFERENCE PENALTY U/S 158BFA(2) POSSIBLY CAN BE LEVIED OR NOT. THUS IN CASE OF 158BFA(2) PENALTY, THERE IS A HEAVY BURDEN ON THE ASSESSEE TO ESTABLISH THAT IT WAS BEYOND HIS CONTROL TO OFFE R UNDISCLOSED INCOME EVEN AFTER SEARCH TO THE EXTENT DETERMINED BY THE A O AND UPHELD BY HIGHEST FACT FINDING AUTHORITY NAMELY ITAT. IN THE INSTANT CASE THE BASIS OF UNDISCLOSED INCOME DECLARED BY THE APPELLANT AND THE FINALLY ASSESSMENT MADE AS PER DIRECTION OF CIT(A) AND AS R EVISED BY ITAT IT(SS)A NO .29/DEL./2010 13 ARE TOTALLY DIFFERENT. FROM THE PERUSAL OF THE ORDE R OF CIT(A) AND ORDER GIVING EFFECT TO THE ORDER OF ITAT( AS REPRODUCED A BOVE), IT CANNOT BE WORKED OUT AS PERTAINING TO WHICH ADDITION THE DIFF ERENCE BETWEEN THE RETURNED UNDISCLOSED INCOME AND FINALLY DETERMINED UNDISCLOSED INCOME IS ARISING. THEREFORE, THE EXPLANATION OFFER ED BY THE APPELLANT WITH REFERENCE TO EACH ADDITION CANNOT BE EASILY CO -RELATED. THIS IS SO AS EVEN APPELLANT HAS REFERRED IN ITS SUBMISSION AD DITIONS WHICH ARE MUCH MORE THAN RS 12,71,471/-. IN SUCH CIRCUMSTANCES THE PENALTY U/S 158BFA(2) HAS TO BE LEVIED ON RS. 12,71,4701- BEING DIFFERENCE OF UNDISCLOSED INCOME DETERMINED AFTER GIVING EFFECT T O THE ORDER OF THE ITAT AND UNDISCLOSED INCOME RETURNED IN THE BLOCK R ETURN. THE 100% OF TAX PAYABLE ON SUCH UNDISCLOSED INCOME IS RS.7,62,882/-. AS AO. HIMSELF HAS LEVIED MINIMUM PENALTY BEING 100% THE P ENALTY OF RS.7,62,882/- IS ONLY HELD TO BE LEVIED.THE AO IS ACCORDINGLY DIR ECTED TO REVISE PENALTY ORDER AND REDUCE PENALTY FROM RS.86, 37,830/- TO RS.7,62,882/-.THE APPELLANT GETS RELIEF OF RS.78,74 ,948/-. 6. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGA INST THE AFORESAID FINDINGS OF THE LD. CIT(A).AT THE OUTSET, THE LD. AR ON BEHALF OF THE ASSESSEE WHILE CARRYING US THROUGH THE IMPUGNED ORDER CONTENDED THAT TOTAL UNDISCLOSED INCOME AFTER GIVING EFFECT TO THE ORDER OF THE ITAT WORKED OUT T O ` ` 62,46,431/- AND NOT ` ` 62,71,471/- AS MENTIONED BY THE LEARNED CIT(A). TH OUGH, THIS FACT WAS POINTED OUT TO THE LEARNED CIT(A), HE DID NOT RECORD ANY FI NDINGS ON THIS ASPECT. AS REGARDS PENALTY LEVIED IN RELATION TO AMOUNT OF ` `3 LACS UPHELD BY THE ITAT, THE LD. AR CONTENDED THAT INITIALLY THE LD. CIT(A) DELETED THE ADDITION WHILE THE ITAT RESTORED THE ADDITION. SINCE TWO VIEWS WERE POSSIBL E, PENALTY COULD NOT BE LEVIED, THE LD. AR ARGUED. IT WAS FURTHER POINTED OUT THAT THE LOANS AND ADVANCES TO VIRENDRA POULTRY PRODUCTS WERE DISCLOSED IN THE BAL ANCESHEET AS EVIDENT FROM PAGE 78 & 79 OF THE PAPER BOOK WHEREIN AN AMOUNT OF ` `6,85,790/- IS MENTIONED AS ON 31.3.1995. IN THIS CONNECTION, THE LD. AR R ELIED UPON THE DECISION IN CIT VS. CALCUTTA CREDIT CORPORATION,166 ITR 29 (CAL) AN D CIT VS. JAGBANDHU SEN PODDAR,133 ITR 156 (CAL). AS REGARDS PENALTY LEVIE D IN RELATION TO AMOUNT OF ` ` 10 LACS, THE LD. AR REITERATED THEIR SUBMISSIONS B EFORE THE LD.CIT(A) AND CONTENDED THAT NOTHING HAS BEEN BROUGHT ON RECORD B Y THE AO AS TO WHOM THE PAYMENTS WERE MADE IN RELATION TO ALLEGED BOGUS PAR TIES. IT(SS)A NO .29/DEL./2010 14 7.ON THE OTHER HAND, THE LD. DR SUPPORTED THE FIND INGS OF LD. CIT(A) WHILE CONTENDING THAT LEVY OF PENALTY U/S 158BFA(2) IS DI FFERENT FROM PENALTY LEVIED U/S 271(1)(C) OF THE ACT. WHILE CARRYING US THROUGH THE IMPUGNED ORDER, THE LD. DR CONTENDED THAT ADDITIONS WERE MADE ON THE BASIS OF SEIZED DOCUMENTS AND WERE NOT PURELY ESTIMATED. WHILE CARRYING US THROUGH TH E FINDINGS OF THE ITAT IN THE QUANTUM APPEAL, THE LD. DR SUBMITTED THAT THERE IS NOTHING TO SUGGEST THAT TWO VIEWS WERE POSSIBLE ON THE ADDITION OF ` ` 3 LACS WHILE BOGUS EXPENSES WERE ESTIMATED ON TWO COUNTS; UNVOUCHED EXPENSES AND BOG US EXPENSES, GENUINENESS OF WHICH WAS NOT ESTABLISHED BY THE ASS ESSEE. THOUGH, THE AMOUNT OF SUCH EXPENSES EXCEEDED THE AMOUNT OF ` ` 10 LACS, THE ADDITION FINALLY WAS RESTRICTED TO ` `10 LACS. SINCE THE ASSESSEE DID NOT FURNISH BREAK UP OF ` 50 LACS DISCLOSED IN THE RETURN, THE LEVY OF PENALTY WAS JU STIFIED, THE LD. DR VEHEMENTLY ARGUED. TO A QUERY BY THE BENCH, THE LD. DR STATED THAT THE REVENUE IS NOT IN APPEAL BEFORE US AGAINST THE FINDINGS OF THE LD. CI T(A). 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID FACTS, THE ASSESSEE DECLARED UNDISCLOSED INCOME OF ` 50 LACS IN HIS RETURN WHILE UNDISCLOSED DETERMINED IN PURSUANCE TO ORDER OF THE ITAT IS ` 62,71,470/-[ ` 62,46,431/- ACCORDING TO THE ASSESSEE].INDISPUTABLY , THE ASSESSEE DID NOT FURNISH ANY DETAILS AND BREAK UP OF THE UNDISCLOSED INCOME DECLARED IN THE RETURN NOR ITS R ELEVANCE TO SEIZED DOCUMENTS WAS ESTABLISHED AT ANY STAGE OF TH E PROCEEDINGS. THE PLEA NOW MADE BEFORE US THAT THE SINCE ESTIMATE D INCOME WAS ADDED TO THE EXTENT OF ` 3 LACS AND ` 10 LACS IN THE FINAL UNDISCLOSED INCOME DETERMINED AND THEREFORE, LEVY OF PENALTY IS NOT JUSTIFIED. APPARENTLY, WHAT THE ASSESSEE SEEKS IS THAT OTHER ADDITIONS UPHELD BY THE ITAT ARE COVERED IN THE AMOUNT DISCLOSED BY HIM IN THE RETURN. BUT IN THE ABSENCE OF ANY BREAKUP OF THE AM OUNT OF ` 50 LACS, THIS PRESUMPTION OF THE ASSESSEE IS FAR FETCHED NOR ANY SUCH FINDING IT(SS)A NO .29/DEL./2010 15 IS RECORDED BY THE ITAT IN THE QUANTUM APPEAL. BEFO RE PROCEEDING FURTHER, WE MAY HAVE A LOOK AT THE RELEVANT PROVISI ONS OF SEC. 158BFA(2) OF THE ACT, WHICH READ AS UNDER: '158BFA(2)- THE AO OR THE CIT(A) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT THAT A P ERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THA N THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DE TERMINED BY THE AO UNDER CL. (C) OF S. 158BC: PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MA DE IN RESPECT OF A PERSON IF- (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CL. (A ) OF S. 158BC; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HA S BEEN PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OF FERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE; (III) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RETURN; AND (IV) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF THAT PART OF INCOME WHICH IS SHOWN IN THE RETURN: PROVIDED FURTHER THAT THE PROVISIONS OF THE PRECEDI NG PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED B Y THE AO IS IN EXCESS OF THE INCOMES SHOWN IN THE RETURN AND IN SU CH CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCL OSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDI SCLOSED INCOME SHOWN IN THE RETURN.' 8.1 AS IS APPARENT FROM THE AFORESAID PROVISIONS , IN A CASE WHERE THE INCOME FINALLY ASSESSED U/S 158BC(C) OF THE ACT IS THE ONLY UNDISCLOSED INCOME RETURNED BY THE ASSESSEE, BASED ON RETURN FILED UNDER SUB-CLAUSE(A) OF SECTION 158BC OF THE ACT AND THE ASSESSEE FULFILLS ALL THE CONDITIONS STIPULATED IN CLAUSE (I ) TO (IV) OF THE FIRST PROVISO, I.E. PAYMENT OF TAX ON THE UNDISCLOSED INC OME OR REQUEST TO THE OFFICER TO ADJUST FULL TAX AGAINST CASH IF ANY SEIZED AND HELD BY THE DEPARTMENT SUFFICIENT TO ADJUST THE TAX AND IF THE ASSESSEE FILES STATEMENT THAT NO APPEAL WILL BE FILED AGAINST THE UNDISCLOSED IT(SS)A NO .29/DEL./2010 16 INCOME RETURNED AND ASSESSED BASED ON RETURN FILED, NO PENALTY COULD BE LEVIED. HOWEVER, PENALTY WOULD BE LEVIABLE IN ALL CASES WHERE UNDISCLOSED INCOME FINALLY ASSESSED UNDER SUB -SEC. (C) OF SECTION 158BC IS IN EXCESS OF THE UNDISCLOSED INCOM E RETURNED BY THE ASSESSEE IN THE RETURN FILED UNDER CLAUSE (A) O F SECTION 158BC. IN SUCH CASES, THERE IS NO COMPLETE IMMUNITY FROM P ENALTY ON THE TAX PAYABLE ON THE UNDISCLOSED INCOME RETURNED BY T HE ASSESSEE EVEN THOUGH THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS OF CLAUSES (I) TO (IV) OF THE 1ST PROVISO AS STATED AB OVE. IF ON FINAL ASSESSMENT UNDER SUB-SECTION (C) OF SECTION 158BC I T IS FOUND THAT THE ADDITION MADE TO THE UNDISCLOSED INCOME RETURNE D BY THE ASSESSEE IS SUBSTANTIAL IN RELATION TO THE INCOME R ETURNED BY THE ASSESEE, THEN THE AO HAS TO EXAMINE AS TO WHETHER O R NOT PENALTY ON THE TOTAL INCOME ASSESSED INCLUDING UNDISCLOSED INCOME RETURNED BY THE ASSESSEE, IS LEVIABLE, NO MATTER THE ASSESSE E COMPLIED WITH THE CONDITIONS OF THE FIRST PROVISO ABOVE REFERRED IN RESPECT OF THE UNDISCLOSED INCOME RETURNED BY THE ASSESSEE. SO FAR AS RANGE OF PENALTY BETWEEN 100% TO 300% OF TAX IS CONCERNED IT WILL DEPEND UPON THE NATURE OF CONCEALMENT, CONDUCT OF THE ASSE SSEE ETC. WHICH WILL HAVE TO BE CONSIDERED WHILE FIXING QUANTUM OF PENALTY. 8.2 APPLYING THE AFORESAID PRINCIPLES TO THE FACT S OF THIS CASE, WE NOTICE THAT THE ADDITION FINALLY MADE TO THE RETURN ED UNDISCLOSED INCOME IS ` 1 2,71,470/-[ ` 1 2,46,431/- ACCORDING TO THE ASSESSEE]. INDISPUTABLY, THE ASSESSEE DID NOT FURNISH ANY DET AILS AND BREAK UP OF THE AMOUNT OF 50 LACS IN THE RETURN AND EVEN DUR ING THE ASSESSMENT PROCEEDINGS OR IN QUANTUM APPEAL AND N OR EVEN BEFORE US. IN THE INSTANT CASE, THE ASSESSEE DID NOT DISC LOSE ANY INCOME FROM M/S VIRENDRA POULTRY PRODUCTS FARMS WHILE THE SEIZED DOCUMENTS REVEALED THAT DURING THE PERIOD 1.10.199 4 TO 19.7.1999, THE ASSESSEE OPERATED A BANK ACCOUNT WHEREIN CASH A MOUNTING TO IT(SS)A NO .29/DEL./2010 17 ` 11.43 LACS WAS RECEIVED BETWEEN 6.6.1997 TO DEC. 1 998 BESIDES ` 17.29 LACS FROM SCHOOLS BETWEEN 7.1.1997 TO 2.11.19 98. EVEN THOUGH SEIZED DOCUMENTS REVEALED THAT EGGS WERE SUP PLIED TO RESTAURANTS AT SOUTH EXTENSION AND PAYMENTS WERE MA DE TO POULTRY FARMS, THE ASSESSEE DID NOT DECLARE ANY INCOME IN T HE BLOCK RETURN..ACCORDINGLY, THE AO ADDED AN AMOUNT OF ` 3 LACS WHILE THE LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT SAME HAD BEEN ADDED ON GUESS WORK. APPARENTLY, THE LD. CIT(A) IGN ORED THE VARIOUS SEIZED DOCUMENTS . BEFORE THE ITAT ,IN QUANTUM APPE AL, THE ASSESSEE AGREED THAT SEIZED DOCUMENTS REFLECTED SUP PLY OF EGGS BETWEEN 94 TO 99. IT IS ONLY IN THESE CIRCUMSTANCES THAT THE ITAT IN QUANTUM PROCEEDINGS CONCLUDED THAT CONSIDERING THE RECEIPT OF MONEY AMOUNTING TO ABOUT RS.28 LACS DURING THE TWO YEAR PERIOD FROM JAN 1997 TO DEC. 1998 AND THE FACT THAT SOME INVESTMENT IS DEFINITELY REQUIRED FOR STARING THE BUSINESS, THE ESTIMATE OF INCOME ON THESE ACCOUNTS TO THE TUNE OF RS.3 LACS FOR THE ENTIRE PERIOD FROM 1994-9 9 IS JUSTIFIED . . DURING THE PENALTY PROCEEDINGS BEFORE THE AO OR THE LD. CIT(A) , THOUGH THE ASSESSEE PLEADED THAT CERTAIN AMOUNT IS REFLECTED IN THE BALANCESHEET UNDER THE HEAD LOANS & ADVANCES ON 31.3.1995,BUT NO REASONS HAVE BEEN ADDUCED AS TO WHY DESPITE RECE IPT OF CASH IN THE BANK ACCOUNT ON ACCOUNT OF SUPPLY OF EGGS TO VA RIOUS PARTIES, NO INCOME WAS SHOWN. WHEN THE ASSESSEE DID NOT FURNISH RELEVANT DETAILS OF INCOME AND EXPENDITURE, THE AO WAS PERFE CTLY JUSTIFIED TIN MAKING THE ADDITION ON THE STRENGTH OF SEIZED DOCUM ENTS. IN THESE CIRCUMSTANCES, PARTICULARLY WHEN THE ASSESEE DID NO T FURNISH DETAILS OF RECEIPTS AND EXPENDITURE ON ACCOUNT OF ADMITTED SUPPLY OF EGGS TO VARIOUS PARTIES, CLAIM THAT EXPLANATION SUBMITTED B Y THE ASSESSEE IS BONAFIDE , IS NOT BORNE OUT FROM ANY MATERIAL ON RE CORD AND CONSEQUENTLY, CANNOT BEEN ACCEPTED .INDISPUTABLY, D ETERMINATION OF UNDISCLOSED INCOME HAS ATTAINED FINALITY AFTER THE ORDER OF THE ITAT. IT(SS)A NO .29/DEL./2010 18 8.3 LIKEWISE, IN RESPECT OF ADDITION IN RESPECT OF ADDITION OF ` 10 LACS TOWARDS BOGUS EXPENSES, THE AO DURING THE COUR SE OF ASSESSMENT PROCEEDINGS,NOTICED THAT THE ASSESSEE WA S RUNNING A CENTRALIZED OFFICE AT HIS RESIDENCE TO MONITOR AND CONTROL THE EXPENDITURE OF VARIOUS SCHOOLS. VARIOUS SEIZED DOCUMENTS REVEALED RECEIPT OF CASH IN PACKETS AT HIS HOUSE FROM DIFFERENT SCHOOLS. SIGNATURE ON REVENUE STAMPS ON BLANK PAPERS WERE ALSO FOUND FROM THE RESIDENCE INDICATIN G CLAIM OF BOGUS EXPENSES. THE SAID CASH WAS BEING ADJUSTED AGAINST BOGUS EXPE NSES IN THE NAME OF NON EXISTENT PARTIES. INQUIRY MADE BY THE INVESTIGATION WING & THE AO REVEALED THAT THESE PARTIES WERE NON-EXISTENT. ON BEING CONFRONT ED, NEITHER THE ASSESSEEE PRODUCED THE SAID PARTIES BEFORE THE AO NOR FILED ANY CONFIRMATION. THUS, THE EXPENSES WERE EITHER UNVOUCHED OR IN CASES WHERE TH ERE WERE VOUCHERS, PARTIES WERE NOT FOUND IN EXISTENCE NOR THE ASSESSEE PRODUC ED THE PARTIES DESPITE SPECIFIC OPPORTUNITY ALLOWED BY THE AO. THE TOTAL A MOUNT OF EXPENDITURE CLAIMED DURING THE SEARCH PERIOD UNDER THESE HEADS AS POINT ED OUT BY THE A.O. WAS ` .94 LACS. THE DISALLOWANCE MADE TO THE EXTENT OF ` .10 LACS, ON THE BASIS OF THE SEIZED DOCUMENTS CANNOT BE SAID TO ESTIMATED, ESPEC IALLY WHEN THE ASSESSEE DID NOT EVEN ATTEMPT TO ESTABLISH THE GENUINENESS OF EX PENDITURE DURING THE ASSESSMENT AND EVEN DURING THE PENALTY PROCEEDINGS. MOREOVER, IN QUANTUM APPEAL, THE ITAT CONCLUDED THAT THAT ESTIMATED DISALLOWANCE ON THE FACTS OF THE CASE, BASED ON THE RELEVANT MATERIAL FOUND DURING S EARCH AND MATERIAL COLLECTED ON FURTHER INQUIRY IS JUSTIFIED IN BLOCK ASSESSMENT. THE ASSESSEE HAS NOT EVEN ATTEMPTED TO SUBMIT ANY EXPLANATION A S TO WHY BOGUS EXPENSES WERE BEING CLAIMED WHEN THE PARTIES WERE NON-EXISTENT. THE ASSESSEE FAILED TO DISCHARGE THE ONUS LAID DOWN UPO N HIM AT THE ASSESSMENT STAGE AND EVEN AT THE PENALTY STAGE. 8.4 WE MAY FURTHER POINT OUT THAT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE APPLICABLE WHERE CONCEALMENT IS DETECTE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR THE ASSESSEE FURNISHED I NACCURATE PARTICULARS OF INCOME. WHEREAS IN RESPECT PENALTY UNDER SECTION 15 8-BFA (2) OF THE ACT, THE IT(SS)A NO .29/DEL./2010 19 PENALTY IS IMPOSABLE IN RESPECT OF UNDISCLOSED INCO ME DETERMINED BY THE AO. THERE IS NO PARALLEL PROVISION IN SECTION 158BFA(2 ) SIMILAR TO EXPLANATION 1 OF SECTION 271(1)(C) OF THE ACT WHERE PENALTY IS IMPOS ABLE WHEN THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, W HICH IS FOUND BY THE AO OR THE LD. CIT (APPEALS) TO BE FALSE OR OFFERS AN EXPLANAT ION, WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PROVISIONS OF SECTI ON 158-BFA (2) ARE BASED ON DETERMINATION OF UNDISCLOSED INCOME ADMITTED BY TH E ASSESSEE UNDER SECTION 158-BC (1)(A) OF THE ACT AND NOT ON CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. HON'BLE SUPR EME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS [ 2008] 166 TAXMAN 65 (SC), ( 2007-TIOL-159-SC-CX ) HELD THAT IN CIVIL LIABILITIES LIKE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT THERE IS NO NECESSITY OF PROVING MENS REA ON THE PART OF THE ASSESSEE. THEREFORE, AFTER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS EVEN IN CASE OF IMPOSITION OF PENALTY U/S. 271(1)(C), THE REVENUE IS NOT REQUI RED TO PROVE THAT ASSESSEE HAD WILFULLY CONCEALED THE INCOME OR HAD FURNISHED INAC CURATE PARTICULARS OF SUCH INCOME. THE CONCEPT OF MENS REA CANNOT BE IMPORTED IN THE PROVISIONS OF SECTION 158BFA(2) OF THE ACT . THE EFFECT OF SUCH LEGAL POS ITION IS THAT ONUS IS NOT ON THE REVENUE EITHER TO PROVE THE GUILTY MIND OR THE SUFF ICIENT CAUSE ON THE PART OF ASSESSEE. THE ONUS IS ENTIRELY ON THE ASSESSEE TO P ROVE HIS BONA FIDES ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE. IF TH E ASSESSEE CAN DISCHARGE SUCH ONUS, THEN LEVY OF PENALTY WOULD NOT BE JUSTIFIED . THE PENALTY UNDER SECTION 158BFA(2) IS IMPOSABLE WITH REFERENCE TO THE UNDISC LOSED INCOME DETERMINED BY THE AO. THE QUESTION WHETHER UNDISCLOSED INCOME HAS BEEN CORRECTLY DETERMINED OR NOT CANNOT BE RAISED NOW AFTER THE F INDINGS OF THE ITAT IN QUANTUM APPEAL. THE LEGISLATURE PROVIDED OPPORTUNIT Y TO THE ASSESSEE UNDER FIRST PROVISO TO SECTION 158BFA (2) OF THE ACT TO ADMIT THE UNDISCLOSED INCOME EVEN AFTER THE MATERIAL WAS FOUND FROM HIS POSSESSION UN DER PROCEEDINGS U/S. 132 OF THE ACT AND WHICH FORMED THE BASIS OF DETERMINATIO N OF UNDISCLOSED INCOME. THE IT(SS)A NO .29/DEL./2010 20 ASSESSEE HAVING FAILED TO AVAIL SUCH CONCESSIONS AS PROVIDED IN FIRST PROVISO TO SECTION 158-BFA (2) OF THE ACT, THE PROVISIONS OF S ECOND PROVISO COME INTO PLAY. 8.5 NOW ADVERTING TO DECISIONS RELIED UPON BY THE LD.AR. FIRST SUCH DECISION IS CALCUTTA CREDIT CORPORATION(SUPRA).IN T HAT CASE THE INCOME-TAX OFFICER FOUND ` . 1,20,000 STANDING CREDITED IN THE NAME OF ONE SHA NKARLAL DULICHAND IN THE BOOKS OF THE ASSESSEE. A SUM OF ` . 10,846 WAS ALSO SHOWN AS PAID BY WAY OF INTEREST TO THE SAID SHANKARLAL DULI CHAND. THE INCOME-TAX OFFICER DID NOT ACCEPT THE PARTICULAR ITEM OF ENTRY AND TRE ATED THE SAID SUM OF ` . 1,20,000 AS THE ASSESSEE'S INCOME FROM OTHER SOURCES. HE ALS O DISALLOWED THE ASSESSEE'S CLAIM OF DEDUCTION OF ` 10,846 WHICH WAS CLAIMED TO HAVE BEEN PAID TO SHANKARLAL DULICHAND BY WAY OF INTEREST. ON APPEAL, AAC DELETED THE ADDITION WHILE ON FURTHER APPEAL, THE ITAT RESTORED THE ADDI TION TO THE EXTENT OF ` . 40,000. THE CLAIM FOR DEDUCTION OF ` . 10,846 ALLEGED TO HAVE BEEN PAID BY WAY OF INTERE ST WAS ALSO DISALLOWED AND THE ADDITION OF THE SAID AM OUNT WAS RESTORED. IN THESE CIRCUMSTANCES, THE HONBLE HIGH COURT FOLLOWING THE VIEW IN JAGBANDHU SEN PODDAR(SUPRA)CONCLUDED THAT THE FINDING OF THE TRIB UNAL THAT IF THE EXPENSES INCURRED BY THE ASSESSEE IN EARNING THE INCOME IN D ISPUTE ARE EXCLUDED, THEN THE EXPLANATION TO SECTION 271(1)(C) LEADING TO A PRESU MPTION OF CONCEALMENT OF INCOME OR DELIBERATE FURNISHING OF INCORRECT PARTIC ULARS OF INCOME WILL BE EXCLUDED, HAS NOT BEEN CHALLENGED. IN JAGBANDHU SEN PODDAR(SUPRA), TRIBUNAL CONCLUDED THAT THERE WAS NO MATERIAL TO SHOW THAT THE ACCOUNT REPRESENTED BY THE CASH DEPOSITS WAS THE ASSESSEE'S TAXABLE INCOME OF THE SAID YEAR. ANOTHER FINDING OF THE TRIBUNAL WAS THAT THE ONLY OTHER ITE MS WHICH ACCOUNTED FOR THE DIFFERENCE BETWEEN THE TOTAL INCOME SHOWN IN THE RE TURN AND THE TOTAL INCOME ASSESSED WERE EXPENSES WHICH WERE CLAIMED AS DEDUCT ION IN COMPUTING THE INCOME BUT WERE DISALLOWED IN THE ASSESSMENT WHICH AS LAID DOWN BY THE EXPLANATION TO S. 271(1)(C) HAVE TO BE EXCLUDED FOR THE PURPOSE OF DETERMINING WHETHER THE EXPLANATION IS APPLICABLE AND ESTIMATED INCOME OF ` 8,000 IN PAKISTAN SUBJECT TO RECTIFICATION ON PRODUCTION OF PAKISTAN ASSESSMENT ORDER WHICH IS NOT LIABLE TO TAX HERE IN VIEW OF THE INDO -PAKISTAN AVOIDANCE AGREEMENT IT(SS)A NO .29/DEL./2010 21 AND WAS BESIDES AN ESTIMATE AND THAT TOO SUBJECT TO RECTIFICATION ON THE BASIS OF THE PAKISTAN ASSESSMENT ORDER. ACCORDINGLY, THE HON BLE HIGH COURT UPHELD THE FINDINGS OF THE TRIBUNAL THAT THERE COULD NOT BE A NY CHARGE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THER EOF OR FRAUD OR GROSS OR WILFUL NEGLECT, AND, THEREFORE, PENALTY UNDER S. 271(1)(C) COULD NOT BE IMPOSED. BUT SUCH ARE NOT THE FACTS AND CIRCUMSTANCES IN THE INS TANT CASE NOR ANY EXPLANATION SIMILAR TO EXPLANATION TO SEC 271(1)( C )HAS BEEN INVOKED AND NOR EVEN THE LD. AR DEMONSTRATED BEFORE US AS TO HOW THE SAID DECISI ONS HELP THE CASE OF THE ASSESSEE.. IN THE CASE BEFORE US, THE ITAT IN THE QUANTUM APPEAL UPHELD THE ESTIMATED AMOUNT ONLY ON THE BASIS OF SEIZED DOCUM ENTS. EVEN ON ESTIMATED ADDITIONS, LEVY OF PENALTY U/S 271(1)(C) OF THE AC T HAS BEEN UPHELD.[CIT VS. WARAST HUSSAIN,171 ITR 405(PATNA), COMMISSIONER OF INCOME-TAX, TAMIL NADU I, MADRAS. VS E. V. RAJAN,151 ITR189(MAD), COMMISSI ONER OF INCOME-TAX.VS HOSHIARPUR EXPRESS TRANSPORT CO. LIMITED.,162 ITR 3 93(PUNJAB & HARYANA), COMMISSIONER OF INCOME-TAX.VS FAZILKA DABWALI TRANS PORT CO. PVT. LIMITED,178 ITR 656, (PUNJAB & HARYANA).] 9. IN VIEW OF THE FOREGOING, WE THEREFORE, HOLD THAT IN VIEW OF THE APPLICATION OF THE 2ND PROVISO, THE ASSESSEE IS NOT ENTITLED TO COMPLETE IMMUNITY FROM PAYMENT OF PENALTY ON THE UNDISCLOSED INCOME R ETURNED BY THEM UNDER CLAUSE (A) OF SECTION 158BC, BY VIRTUE OF THE ADDIT ION MADE IN THE ASSESSMENT OF SUBSTANTIAL AMOUNT OF UNDISCLOSED INCOME BY WHICH T HE ASSESSEE FORFEITS THE BENEFIT OF THE 1ST PROVISO IN REGARD TO IMMUNITY FR OM PENALTY ON THE TAX PAYABLE ON UNDISCLOSED INCOME RETURNED. MOREOVER, IT IS NO T THE CASE OF THE ASSESSEE THAT OPPORTUNITY OF BEING HEARD WAS NOT GIVEN. THE AO FOLLOWED THE PROCEDURE PRESCRIBED IN SECTION 158-BFA (3) FOR IMPOSING PENA LTY UNDER SECTION 158-BFA (2) OF THE ACT. IN VIEW OF THE ABOVE, ESPECIALLY WH EN THE ASSESSEE CONSISTENTLY FAILED TO PROVE HIS BONA FIDES AT EVERY STAGE IN Q UANTUM PROCEEDINGS AND EVEN IN PENALTY PROCEEDINGS ,APPARENTLY ONUS LAID DOWN UPON THE ASSESSEE IS NOT DISCHARGED AND CONSEQUENTLY, THE LEVY OF PENALTY UN DER SECTION 158BFA(2) OF THE ACT IS JUSTIFIED WITH REFERENCE TO THE UNDISCLOSED INCOME OF IT(SS)A NO .29/DEL./2010 22 ` 12,71,471,DETERMINED BY THE AO TO BE IN EXCESS OF T HE RETURNED INCOME, IN PURSUANCE TO ORDER OF THE ITAT. IN VIEW THEREOF, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY UNDER SECTION 158-BFA (2) IMPOSED BY THE AO HAS RIGHTLY BEEN UPHELD BY THE LD. CIT(A) ON THE AFORESAID AMOUNT O F ` 12,71,471 AND WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (APPEALS), CONFIRMING THE PENALTY LEVIED UNDER SECTION 158-BFA (2) OF THE ACT TO THE AFORESAID EXTENT. HOWEVER, THE AO MAY VERIFY WHETHE R THE QUANTUM DETERMINED IN PURSUANCE TO FINDINGS OF THE ITAT AMOUNTS TO ` 62,71,471 OR ` 62,46,431 AS CLAIMED BY THE ASSESSEE AND MODIFY THE AMOUNT OF PE NALTY ACCORDINGLY .WITH THESE OBSERVATIONS, GROUND NO. 1 IN THE APPEAL IS D ISMISSED. 10. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL WHILE NO SUBMISSIONS HAV E BEEN MADE IN SUPPORT OF GROUND NO.3 IN THE APPEAL, ACCORDINGLY, BOTH THESE GROUNDS ARE DISMISSED. 11. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 12. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (C.M. GARG) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO :- 1. SHRI V.K. BHATNAGAR,AQ-1, NDSE-I, RING ROAD, NE W DELHI 2. DY. CIT, CENTRAL CIRCLE-13,NEW DELHI 3. CIT (APPEALS)-II, DELHI 4. THE CIT CONCERNED. 5. THE DR, ITAT,H BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI