DIWAN RAHUL NANDA, MUMBAI V. DCIT 8(3), MUMBAI

ITSSA 3/MUM/2012

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8683 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 11-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAMSH RAHUL K HAKANI
• Keywords: Unexplained investment; Loose papers; Block assessment
• Section: 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI SANJAY ARORA , AM & SHRI VIJAY PAL RA O, JM IT(SS)A NO.03/MUM/2012 (BLOCK ASST 1.4.1990 TO 4.8.2000 ) DIWAN RAHUL NANDA 5 SUJATA BLDG JUHU TARA ROAD, JUHU MUMBAI 49 VS THE DY COMMR OF INCOME TAX 8(3), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AABPN2562K ASSESSEE BY DR K SHIVARAM/SH RAHUL K HAKANI REVENUE BY SMT RUPINDER BRAR DT.OF HEARING 17 TH JAN 2013 DT OF PRONOUNCEMENT 31 ST JAN 2013 ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 9 TH NOV 2011 OF THE COMMISSIONER OF INCOME TAX(APPEALS) ARI SING FROM THE PENALTY ORDER PASSED U/S 158 BFA(2) OF THE I T ACT FOR THE BLOCK ASSESSMENT PERIOD FROM 1.4.1990 TO 4.8.2000. 2 THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS AP PEAL IS AS UNDER: THE LD COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRE D IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE PENALTY OF ` 2,00,080/- FOR THE BLOCK PERIOD FROM 1.4.90 TO 4.8.2000 UNDER THE PROVISIONS OF SE. 158FA (2) OF THE I T ACT. 1961.: 3 THE BRIEF FACTS EMERGING FROM THE RECORD LEADING TO THE LEVY OF PENALTY UNDER CONSIDERATION ARE AS UNDER: 3.1 THERE WAS A SEARCH OPERATION CARRIED OUT AT THE RESIDENCE OF THE ASSESSEE ON 4.8.2000. IT WAS ALSO CARRIED AT THE OFFICES OF TOP S DETECTIVE & SECURITY SERVICES LTD IT(SS)A NO. 03/MUM/2012 . 2 WHERE THE ASSESSEE WAS A MANAGING DIRECTOR. WHILE COMPLETING THE BLOCK ASSESSMENT U/S 158BC, THE ASSESSING OFFICER MADE VA RIOUS ADDITIONS. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER AGAI NST THE ORIGINAL BLOCK ASSESSMENT BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS). TH E COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION IN QUESTION. ON FURTHER APPEAL BY THE REVENUE, THIS TRIBUNAL VIDE ORDER DATED 6.10.2008 REVERSED T HE FINDINGS OF THE COMMISSIONER OF INCOME TAX(APPEALS) AND CONFIRMED THE FOLLOWING ADD ITIONS MADE BY THE ASSESSING OFFICER: I) UNEXPLAINED CASH OF ` 57,000/- FOUND DURING THE SEARCH. II) FOREIGN TRAVEL EXPENSES OF ` 1,81,400/- III) PURCHASED OF TV FOR A SUM OF ` 26,5000/- IV) ADDITION ON ACCOUNT OF UNEXPLAINED SOURCE OF REGISTRATION CHARGES AMOUNTING TO ` 20,120 3.2 IN THE MEANTIME, THE COMMISSIONER EXERCISED HI S POWER U/S 263 OF THE ACT AND REVISED THE BLOCK ASSESSMENT ON SOME OTHER ISSU ES AND PENALTY ON THOSE ADDITIONS THE LEVY BY THE ASSESSING OFFICER HAS AL READY BEEN CANCELLED BY THE TRIBUNAL VIDE ORDER DATED 18.6.2010 IN IT(SS) A NO. 22/MUM/2009. HOWEVER, THAT DEVELOPMENT IS NOT RELEVANT FOR THE DISPUTE BEFORE US. CONSEQUENT TO THE ORDER OF THE TRIBUNAL DATED 8.10.2008, THE ASSESSING OFFICER INITIATED THE PROCEEDINGS U/S 158BFA(2) FOR ENHANCING/LEVYING OF PENALTY AGAINST THE ADDITIONS CONFIRMED BY THIS TRIBUNAL. ACCORDINGLY, THE ASSESSING OFFICER HAS LEVIED A PENALTY OF ` 2 LACS VIDE ORDER 29 TH JUNE 2009. 3.3 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) HAS CONFIRMED THE PENALTY LEVIED U/S 158BFA(2). IT(SS)A NO. 03/MUM/2012 . 3 4 BEFORE US, THE LD AR OF THE ASSESSEE HAS REITERAT ED THE CONTENTIONS AS RAISED BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) AND RECORDED IN PARA 2 OF THE IMPUGNED ORDER AS UNDER: 2. WE GIVE BELOW SOME FACTS BEFORE COMING ON MERITS I) THERE WAS A SEARCH OPERATION CARRIED OUT AT THE RESI DENCE OF THE ASSESSEE ON 4.8.2000. IT WAS CARRIED OUT ALSO AT THE OFFICE OF TOPS DETECTIVE & SECURITIES SERVICES LTD WHERE THE ASSESSEE WAS A MANAGING DIRECT OR. A VOLUMINOUS SET OF DOCUMENTS PAPERS ETC WERE SEIZES AND TILL DATE HAVE NOT BEEN RETURNED. II) AT THE TIME OF ASSESSMENT, ALL AVAILABLE DETAIL S REGARDING THE PAYMENT OF REGISTRATION CHARGES OF RS. 20120/- WERE GIVEN AS STA TED IN THE ASSESSMENT ORDER. THE ASSESSEE HAD WITHDRAWALS OF RS. 232696/. . DURING A. Y. 1998-99 AS STATED BY A. 0. IN PARA 6 SUB PARA 3 OF HIS ORDER. THE WITHDRAWALS WERE RS. 30665 + RS. 20203 1/- = RS. 232696/- FROM FIRM WHERE HE IS A PARTNER. THE AMOUNT OF RS. 20120/- WAS PART OF TOTAL WITHDRAWAL O F RS. 232696/- WHICH WAS EXPLAINED AND CIT(APPEALS) ACCEPTED IT ALSO. HOWEVE R, IT DID NOT FIND FAVOUR WITH LEARNED MEMBERS OF ITAT, IN SPITE OF THIS EXPLA NATION. THE RECEIPT OF REGISTRATION CHARGES WAS FOUND, WHICH ITSELF WAS A PROO F OF PAYMENT AND THE SAME WAS PAID THROUGH THE FIRM, BUT INSTEAD OF SHOWI NG A BREAK-UP OF REGISTRATION CHARGES AND WITHDRAWALS SEPARATELY, A C ONSOLIDATED FIGURE WAS GIVEN. HOWEVER, THE ITAT DID NOT BRING ANYTHING ON RECORD TO SHOW THAT THE REGD. CHARGES WERE PAID FROM UNACCOUNTED SOURCES. THERE FORE, PENALTY WHICH IS OF A QUASI CRIMINAL NATURE SHOULD NOT BE LE VIED, BECAUSE IT IS CLEAR THAT THE WITHDRAWALS WERE MORE THAN SUFFICIENT AS ALL THE OTHER THREE MEMBERS OF THE FAMILY HAD SEPARATE WITHDRAWALS FOR HOUSE HOL D EXPENSES, AND THERE WAS NO CASE MADE FOR A DELIBERATE DEFAULT. AGAIN FOR SAME A. Y. 1998-99, AND ADDITION OF RS. 26500/- ON ACCOUNT OJ PURCHASE OF TV . THIS ALSO WAS PURCHASED OUT OF TOTAL WITHDRAWALS OF RS. 232 696/- WHICH DID NOT FIND FAVOUR WITH HON BLE INCOME TAX APPELLATE TRIBUNAL. WE SUBMIT THAT NOTHING WAS BROUGHT ON RECORD TO SHOW THAT TV. WAS PURCHASED FROM UNACCOUNTED SOURCES, AND THAT ASSESSEE HAD DELIBERATELY DEFAULTED BY CONCEALING FA CTS. WE ALSO WISH TO SUBMIT THAT THE FAMILY WAS LIVING T OGETHER UNDER ONE KITCHEN AND THE COMBINED WITHDRAWALS OF MAJ. R. C. NANDA, M RS. SUNEETA NANDA, DIWAN RAHUL NANIA, MRS. RANEETA NANDA SHOULD BE CON SIDERED FOR ALL THE EXPENSES INCLUDING THE ABOVE ALL REGISTRATION CHARGE S AND PURCHASE OF TV. THEREFORE, THE PENALTY SHOULD BE DELETED. III) AN AMOUNT OF RS. 181400/- WAS ADDED ON ACCOUNT OF FOREIGN TRAVEL WHICH WAS ADDED ON ACCOUNT OF SOME PAPER SCRIBBLING FOUN D NUMBERED AS PAGE 42 ON PAGE 42 DRN 50400. ON BACK OF PAGE 42 FUNDED BY DRN 3650 DOLLAR = RS. 131400/-, THESE SHOULD HAVE BEEN TREATED AS DUMB DOCUMENTS. IT IS NOT UNDERSTOOD WITH DUE RESPECTS, WHY THIS ADDITION WAS REVERSED BY THE LEARNED MEMBERS OF ITAT. WE HAD SUBMITTED THE LEDGER COPY OF DIRECTORS TRAVEL IN THE BOOKS OF TOPS DETECTIVES & SECURITY SERVICES LTD., WH ICH WAS CHECKED WITH EACH ENTRY IN THE PASSPORT. IN FACT, THE AO SUBMITS IN PARA 8 OF HIS ORDER, THAT IT(SS)A NO. 03/MUM/2012 . 4 DATE OF TRAVEL IS NOT CLEAR FROM THE SEIZED PAPER AND COULD NOT IDENTITY THE DATE OF TRAVEL, AND THEREFORE CHOSE TO ADD IN THE INC OME OF PART PERIOD 1-4- 2000 TO 04/08/2002, WHICH SHOULD BE READ AS 04-08- 2000. ACTUALLY, THE BENEFIT OF DOUBT SHOULD HAVE BEEN GIVEN TO THE ASSE SSEE. FURTHER, THE ASSESSEE IS NOT BOUND TO MAINTAIN BOOKS OF ACCOUNTS , AND NO CASE WAS MADE OUT THAT BOOKS WERE INCOMPLETE ETC., AND THEREFO RE, NO ADDITION SHOULD HAVE BEEN MADE FOR THE PART PERIOD 1-4-2000 TO 4-08- 2000. IN SPITE OF THESE GLARING OMISSIONS THE DELETION BY CIT(A) WAS REVERSE D. THEREFORE, PENALTY SHOULD BE DELETED AS NOTHING HAS BEEN BROUGHT ON RECO RD TO SHOW THAT THIS AMOUNT WAS SPENT ON TRAVEL AS NO TICKETS, VOUCHERS NO ENTRY IN PASSPORT WAS FOUND. AN ADDITION OF RS. 57000/- AS UNEXPLAINED CASH WAS REVERSED BY HON BLE JTAT WITHOUT APPRECIATING THE FAD THAT ALL THE FOUR MEMBER OF THE FACILITY I.E. THE ASSESSEE, HIS FATHER MAJ. R. C. NANDA, HIS MOTHER MR S. SUNITA NANDA, HIS WIFE MRS. RANEETA NANDA HAD RECEIVED SALARIES IN CASH FOR T HE MONTH OF JULY 2000, ON 1/08/2000 AND THE CASH WAS ALWAYS KEPT WITH HIS MOTHER MRS. SUNITA NANDA. MRS. SUNITA NANDA ALSO HAD RS. 150000/- WHIC H WAS HER OWN CASH RECEIVED FROM A KITTY HELD WITH FRIENDS ONLY TWO DAYS BEFORE DATE OF SEARCH ON 4-08-2000. SHE CHOSE TO DISCLOSE THE AMOUNT TO BUY PEACE, SINCE IT WAS A BIG JOB OF GETTING CONFIRMATIONS FROM OTHER LADIES. THE C ASE OF RS. 57000/- BELONGED TO ALL THE FAMILY MEMBERS WHICH WAS PART O F THEIR SALARIES. THESE ARE FACTS WHICH THE TRIBUNAL DID NOT RECORD BUT CHOSE TO REVERSE THE DELETION BY CIT(APPEALS,) BY STATING THAT NO WORKING WAS GIVEN. THESE FACTS WERE FULLY EXPLAINED BUT HAVE NOT BEEN RECORDED BY THE MEMBERS. THEREFORE, THE PENALTY SHOULD BE DELETED. 4.1 HE HAS ALSO RELIED UPON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS DODSAL LTD REPORTED IN 312 IT R 112(BOM) AND SUBMITTED THAT THE PENALTY U/S 158BFA IS NOT JUSTIFIED WHEN TWO VIEWS ARE POSSIBLE ON THE SAME FACT; HENCE, NO PENALTY CAN BE LE VIED IN THE CASE OF THE ASSESSEE. HE HAS FURTHER CONTENDED THAT THE COMMISSIONER OF INCOME TAX(APPEA LS) DELETED THE ADDITIONS; HOWEVER, THE TRIBUNAL HAS CONFIRMED THE SAME WHICH CLEARLY SHOWS THAT TWO VIEWS ARE POSSIBLE AND THE VIEW TAKEN BY THE TRIBUNAL IS ONE OF THE POSSIBLE VIEW. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS HARHAVARDHAN CHEM ICALS & MINERAL LTD REPORTED IN 259 ITR 212. 4.2 ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THE ADDITION IS BASED ON THE FACTS AND NOT UNDER ANY LEGAL PROVISIONS OF THE ACT . THEREFORE, ONCE THE ADDITION HAS IT(SS)A NO. 03/MUM/2012 . 5 BEEN CONFIRMED BY THE TRIBUNAL, THE PENALTY U/S 158 BFA(2) IS JUSTIFIED. HE HAS FURTHER SUBMITTED THAT THE ADDITION IS ASSESSED AS UNDISCLO SED INCOME U/S 158BC; THEREFORE, IT HAS SATISFIED THE REQUIREMENT OF LEVY OF PENALTY . SHE HAS RELIED UPON THE DECISION OF THE DELHI BENCHES OF THE TRIBUNAL IN THE CASED OF K AY CEE ELECTRICALS V. DEPUTY COMMISSIONER OF INCOME-TAX REPORTED IN 87 ITD 35. 5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL THE RELEVANT MATERIAL ON RECORD. THE PENALTY IN QUESTION HAS BEEN LEVIED BY THE ASSESSING OFFICER IN RESPECT OF 4 ADDITIONS CONFIRMED BY THE TRIBUNAL WHICH ARE MEN TIONED ABOVE. 6 THE FIRST ITEM IS CASH FOUND DURING THE SEARCH. 6.1 DURING THE SEARCH AT THE RESIDENCE OF THE ASSES SEE CASH OF ` 2,07,000/- WAS FOUND. IN THE BLOCK RETURN OF INCOME OF MRS SUNITA NANDA ` 1,50,000/- WAS DISCLOSED ON ACCOUNT OF CASH SEIZED. ACCORDINGLY, THE ASSESSI NG OFFICER MADE AN ADDITION OF ` 57,000/- BEING THE BALANCE UNEXPLAINED AMOUNT AND T REATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. 6.2 THE ASSESSEE HAS EXPLAINED BEFORE THE ASSESSING OFFICER DURING THE PENALTY PROCEEDINGS THAT THE TOTAL WITHDRAWAL FOR THE AY 20 00-01 IS ` 3,53,258/- WHICH IS SUFFICIENT TO EXPLAIN THE AVAILABILITY OF CASH OF ` 57,000/-. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE ASSESSEE AND THE FAMILY MEMBERS HAVE RECEIVED SALARY IN CASH AND THEREFORE, THE AMOUNT OF ` 57,000/- CANNOT BE TREATED AS UNEXPLAINED CASH. 7 THE NEXT ITEM OF ADDITION IS FOREIGN TRAVEL EXPEN SE OF ` 1,81,400/-. 7.1 THE ASSESSEE HAS EXPLAINED THAT THE FOREIGN TRA VEL EXPENSES ARE INCURRED FROM THE COMPANY. IN SUPPORT OF THE EXPLANATION, THE ASS ESSEE HAS ALSO FURNISHED THE LEDGER ACCOUNT OF THE DIRECTORS TRAVELLING VIDE LET TER DATED 26.8.2002. THE ASSESSING IT(SS)A NO. 03/MUM/2012 . 6 OFFICER MADE THE ADDITION ON THE GROUND THAT THE FI GURE OF EXPENDITURE ON FOREIGN TRAVEL IN THE BOOKS OF THE COMPANY IS NOT MATCHING WITH THE FIGURE MENTIONED IN THE SEIZED PAPER. 8 IT IS TO BE NOTED THAT THE EXPLANATION OF THE ASS ESSEE, THOUGH WAS NOT ACCEPTED DURING THE ASSESSMENT PROCEEDINGS; HOWEVER , DURING THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER WAS REQUIRED TO CONSIDER THE EXPLANATION AFRESH AND IF THE EXPLANATION OF THE ASSESSEE IS NOT FOUND BOGUS OR PATENT LIE, THEN NO PENALTY CAN BE LEVIED ON THE ADDITION AS THE SAME W AS BASED ON THE INDEFINITE FINDING AND THE ENTIRE EXPENDITURE WAS TREATED AS U NDISCLOSED INCOME; WHEREAS IT IS NOT DISPUTED THAT FOREIGN TRAVEL EXPENSE WERE RECOR DED IN THE BOOKS OF THE COMPANY AND ONLY THE FIGURE OF BOOKS OF ACCOUNT AN D SEIZED PAPERS DO NOT MATCH. THE ASSESSING OFFICER HAS DOUBTED THE EXPE NDITURE INCURRED ON FOREIGN TRAVEL BY THE COMPANY SINCE THERE IS A DISCREPANCY IN THE AMOUNT IN THE BOOKS OF ACCOUNT OF THE COMPANY WHICH DO NOT MATCH THE SEIZE D MATERIAL. THEREFORE, THE EXPLANATION OF THE ASSESSEE FURNISHED DURING THE AS SESSMENT PROCEEDINGS WAS NOT ACCEPTED BY THE ASSESSING OFFICER BEING DOUBTFUL; B UT AT THE SAME TIME, THE ASSESSING OFFICER HAS NOT GIVEN THE FINDING THAT TH E SAID EXPLANATION IS ABSOLUTELY FALSE. 9 THE NEXT ADDITION WAS ON ACCOUNT OF PURCHASE OF T V. 9. 1 DURING THE SEARCH, COPY OF BILL DATED 9.9.98 O F BPL TV IN THE NAME OF THE ASSESSEE ` 26,500/- WAS FOUND. THE ASSESSING OFFICER MADE TH E ADDITION BY TREATING THE SAID AMOUNT AS UNEXPLAINED INVESTMENT U/S 69 OF THE I T ACT. 10 THE ASSESSEE HAS EXPLAINED THAT THE FAMILY WITHD RAWAL FOR THE ASSESSMENT YEAR 1999-00 WAS ` 1,82,000/-. THEREFORE, THE SAID WITHDRAWAL WAS SUF FICIENT FOR THE IT(SS)A NO. 03/MUM/2012 . 7 FUND FOR PURCHASED OF TV IN QUESTION. THE SAID ADD ITION HAS BEEN MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE TRIBUNAL BY CONSIDERING THE WITHDRAWAL OF THE ASSESSEE ONLY. THEREFORE, THE EXPLANATION OF THE AS SESSEE THAT THE WITHDRAWAL OF THE ENTIRE FAMILY HAS TO BE CONSIDERED AND HENCE, THER E IS A POSSIBILITY OF TWO VIEWS ON THIS ACCOUNT. WE NOTE THAT THE ASSESSING OFFICER HA S NOT GIVEN A SPECIFIC FINDING ABOUT THE REJECTION OF THE EXPLANATION OF THE ASSES SEE DURING THE PENALTY PROCEEDINGS. 11 THE NEXT ADDITION IS REGARDING REGISTRATION CHAR GES. 11.1 THE ASSESSEE PURCHASED THE PROPERTY NAMELY MAG NUM BUNGALOW FOR ` . 27,50,000/-. THE ASSESSING OFFICER NOTED THAT TH E PAYMENT OF ` 1,78,750/- WAS MADE TOWARDS STAMP DUTY AND ` 20,120/- FOR REGISTRATION CHARGES ETC., THE ASSESS EE EXPLAINED THE SOURCE OF PURCHASE CONSIDERATION AS W ELL AS PAYMENT OF STAMP DUTY AS THE PAYMENTS WERE MADE FROM THE PARTNERSHIP FIRM . HOWEVER, THE ASSESSING OFFICER MADE THE ADDITION OF ` 20,120/- TOWARDS REGISTRATION CHARGES BY TREATING THE SAME AS UNEXPLAINED INCOME OF THE ASSESSEE. 12 IT IS PERTINENT TO NOTE THAT THE SAID ADDITION I S NOT ARISING FROM THE SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THEREFO RE, IN OUR OPINION, NO PENALTY CAN BE LEVIED U/S 158BFA(2) WHEN THE ADDITION IN QUESTI ON IS NOT BASED ON THE SEIZED MATERIAL. THE EXPLANATION OF THE ASSESSEE THAT THE TOTAL WITHDRAWAL OF THE FAMILY OF THE ASSESSEE DURING THE YEAR IS ABOUT ` 6 LACS HAS NOT BEEN DEALT WITH BY THE ASSESSING OFFICER WHILE PASSING THE PENALTY ORDER . THEREFORE, THE SAID EXPLANATION OF AVAILABILITY OF CASH HAS NOT BEEN REBUTTED BY T HE ASSESSING OFFICER WHILE PASSING THE PENALTY ORDER. IT(SS)A NO. 03/MUM/2012 . 8 12.1 HAVING CONSIDERED THE FACTS AS RECORDED ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS GIVEN THE EXPLANATION OF AVAILABILITY OF THE FU NDS IN RESPECT OF THE ADDITIONS ON WHICH THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER. THE PENALTY PROCEEDINGS ARE SEPARATE FROM THE ASSESSMENT PROCEE DINGS AND THEREFORE, THE ASSESSING OFFICER HAS TO SEPARATELY AND INDEPENDENT LY DECIDE THE LEVY OF PENALTY DESPITE THE ADDITIONS MADE IN THE ASSESSMENT PROCEE DINGS. NO DOUBT, THE ADDITION MADE DURING THE ASSESSMENT IS A MATERIAL EVIDENCE F OR THE PURPOSE OF LEVY OF PENALTY; HOWEVER, THE PENALTY IS NOT AUTOMATIC AND CANNOT BE LEVIED IPSO FACTO MERELY BECAUSE OF THE REASON THAT THE ADDITION MADE IN THE ASSESSMENT PROCEEDINGS HAS BEEN CONFIRMED. 12.2 THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF DODSAL LTGD (SUPRA) HAS OBSERVED IN PARA 6 AS UNDER: 6. THE TERMINOLOGY OF THE SAID SECTION MAKES IT C LEAR THAT THERE IS A DISCRETION IN THE ASSESSING OFFICER TO DIRECT PAYMENT OF PENALTY . THE PROVISO SUPPORTS THIS INTERPRETATION. ONLY IF THE AUTHORITY DECIDES TO IMPO SE PENALTY THEN, IT WILL NOT BE LESS THAN THE TAX LEVIABLE BUT SHALL NOT EXCEED THREE TIMES THE TAX SO LEVIABLE. IT IS, THEREFORE, NOT POSSIBLE TO ACCEPT TH E SUBMISSION ON BEHALF OF THE REVENUE THAT ONCE THE ASSESSING OFFICER COMES TO THE CONCLUSION THAT THERE IS A BREACH OF THE MANDATE OF SECTION 158BFA( 1), THEN THE PENALTY SHOULD BE IMPOSED. MERELY BECAUSE THE EXPRESSION US ED IS SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE OR NOT EXCEEDING T HREE TIMES THE TAX, DOES NOT RESULT IN READING THE FIRST PART OF THE SECTION A S MANDATORY. THE PROVISO TO THE SUB SECTION MAKES IT CLEAR THAT THERE IS DISCRET ION CONFERRED ON THE COMMISSIONER (APPEALS) FOR THE REASONS WHICH ARE SET O UT THEREIN. WHILST CONSIDERING THE TAXING STATUTE, THE SUPREME COURT H AS HELD THAT IT IS SETTLED LAW THAT THE EXPRESSIONS USED IN A TAXING STATUTE W OULD ORDINARILY BE UNDERSTOOD IN THE SENSE IN WHICH IT IS HARMONIOUS W ITH THE OBJECT OF THE STATUTE TO EFFECTUATE THE LEGISLATIVE INTENTION. IT IS EQUALLY SETTLED LAW THAT, IF THE LANGUAGE IS PLAIN AND UNAMBIGUOUS, ONE CAN LOOK FAIRLY AT THE LANGUAGE USED AND INTERPRET IT TO GIVE EFFECT TO THE LEGISLA TIVE INTENTION. TAX LAWS, NEVERTHELESS, HAVE TO BE INTERPRETED REASONABLY AND IN CONSONANCE WITH JUSTICE ADOPTING A PURPOSIVE APPROACH. SEE CIT V. G WALIOR RAYON SILK MANUFACTURING CO. LTD. [1992] 196 ITR 149 (SC). IN THE INSTANT CASE, BOTH THE COMMISSIONER OF INCOMETAX (APPEALS) AND THE INCOME-T AX APPELLATE TRIBUNAL HAVE RECORDED REASONS FOR EXERCISE OF THEIR DISCRETION . BEFORE US, THE REVENUE HAS NOT CHALLENGED THE SAID FINDING OF FACT AS TO T HE EXERCISE OF DISCRETIONARY IT(SS)A NO. 03/MUM/2012 . 9 POWER. WE, THEREFORE, UPHOLD THE VIEW TAKEN BY INCOM E-TAX APPELLATE TRIBUNAL THAT THE SECTION IS DIRECTORY AND NOT MANDAT ORY. 12.3 THUS, AS HELD BY THE HONBLE HIGH COURT (SUPR A) THAT IN ORDER TO LEVY THE PENALTY, THE ASSESSING OFFICER HAS TO COME TO THE C ONCLUSION THAT THERE IS A BREACH OF THE MANDATE OF SEC 158BFA(1). 13 AS WE HAVE NOTED ABOVE IN THE CASE OF REGISTRATI ON CHARGES, THE ADDITION IS NOT BASED ON THE SEIZED MATERIAL AND THEREFORE, IN VIEW OF THE EXPLANATION OF THE ASSESSEE THAT THE TOTAL WITHDRAWAL OF THE FAMILY ME MBERS OF THE ASSESSEE IS ` 6 LACS DURING THAT YEAR, THE PENALTY ON THE SAID ADDITION IS NOT JUSTIFIED. 14 SIMILARLY, THE EXPLANATION WITH REGARD TO THE FO REIGN TRAVEL EXPENDITURE ARE ALSO NOT FOUND AS PATENT FALSE OR BOGUS; BUT THE AD DITION WAS MADE BY THE ASSESSING OFFICER BY DOUBTING THE EXPLANATION OF THE ASSES SEE AS THE FIGURE IN THE SEIZED PAPER AND BOOKS OF ACCOUNT OF THE COMPANY DO NOT TA LLY. THOUGH, THE ADDITION WAS CONFIRMED ON THIS ACCOUNT; HOWEVER, WHEN THE EX PLANATION OF THE ASSESSEE LEADING TO POSSIBILITY OF TWO VIEWS THEN, NO PENAL TY CAN BE LEVIED ON THE SAID ADDITION WHILE EXERCISING THE JURISDICTION U/S 158B FA(2). 15 AS REGARDS THE CASH OF ` 57,000/- AND PURCHASE OF TV OF ` 26,500/- WHEN THE ASSESSEE HAS BROUGHT OUT THE FACT AND EXPLAINED THE AVAILABILITY OF THE FUNDS AS THE WITHDRAWAL OF THE FAMILY MEMBERS OF THE ASSESSEE, T HEN WITHOUT GIVING A FINDING BY NEGATING THE SAID EXPLANATION DURING THE PENALTY PR OCEEDINGS, THE PENALTY ON THIS ADDITION IS NOT JUSTIFIED SPECIFICALLY WHEN THE P OSSIBILITY OF THE FUNDS AVAILABLE WITH THE ASSESSEE ON ACCOUNT OF WITHDRAWAL OF THE FAMIL Y MEMBERS OF THE ASSESSEE IS NOT RULED OUT. IT(SS)A NO. 03/MUM/2012 . 10 15 IN NUTSHELL, THE LEVY OF PENALTY OF ` 2 LACS U/S 158BFA IS DELETED. 16 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCEMENT IN THE OPEN COURT ON THIS 31 ST DAY OF JAN 2013 SD/- SD/- ( SANJAY ARORA ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 31 ST JAN 2013 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI