Smt Farah Rafi, Bangalore V. ACIT, Bangalore

ITSSA 43/BANG/2009

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3422 (ITAT-BANGALORE)
• Duration Of Justice: 10 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-12-2019
• Assessment Year: misc
• Appeal Filed On: 08-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K R NARAYAN J CIT BENGALURU
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained investment; Document seized; Assessment record; Block assessment; Documents seized
• Section: 158BC; 13; 158BFA; 158BD; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER IT(SS)A NO. AND ASSESSMENT YEAR APPELLANT RESPONDENT 12/BANG/2012 1995-2012 SMT. FARAH RAFI, #198/1, KWAJA MANSION, DAS COMPOUND, BASAVANAGUDI, BENGALURU 560 004. PAN : AFLPR 5708 N THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BENGALURU. 13/BANG/2012 1995 TO2002 SHRI. FASI BAIG, #198/1, KWAJA MANSION, DAS COMPOUND, BASAVANAGUDI, BENGALURU 560 004. PAN : ABBPF 4381 R -DO- 9/BANG/2008 01.04.1995 TO 26.03.2002 SHRI. RAFFI BAIG, #195/1, KWAJA MANSION, DAS COMPOUND, BASAVANAGUDI, BENGALURU 560 004. PAN : ABDPR 6537 M THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BENGALURU. 43/BANG/2009 01.04.1995 TO 28.03.2002 SMT. FARAH RAFI, #198/1, KWAJA MANSION, DAS COMPOUND, BASAVANAGUDI, BENGALURU 560 004. PAN : AFLPR 5708 N -DO- 22/BANG/2010 01.04.1995 TO 28.03.2002 SHRI. FASI BAIG, #198/1, KWAJA MANSION, DAS COMPOUND, BASAVANAGUDI, BENGALURU 560 004. PAN : ABBPF 4381 R -DO- IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 2 OF 14 ASSESSEE BY : SHRI. V. SRINIVASAN, ADVOCATE REVENUE BY : SHRI. K. R. NARAYAN , J CIT (DR)(ITAT), BENGALURU DATE OF HEARING : 0 9 . 1 2 .20 20 DATE OF PRONOUNCEMENT : 06 . 0 3 .20 20 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER IN THIS BUNCH OF 5 APPEALS, ALL APPEALS ARE FILED BY THE ASSESSEE AND OUT OF 5 APPEALS, 3 APPEALS ARE IN QUANTUM PROCEEDINGS IN THE CASES OF SMT. FARAH RAFI, SHRI. RIAZ BAIG AND SHRI. FASI BAIG AND THESE ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF LEARNED CIT(A)-6, BENGALURU, DATED 09.10.2009 IN THE CASE OF SMT. FARAH RAFI, OF CIT(A)-5 IN THE CASE OF SHRI. RAFI BAIG DATED 06.02.2008 AND CIT(A)-6 DATED 09.10.2009 IN THE CASE OF SHRI. FASI BAIG. REMAINING TWO APPEALS ARE IN THE PROCEEDINGS OF PENALTY UNDER SECTION 158BFA (2). BOTH THESE APPEALS ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT(A) 2, BENGALURU DATED 29.05.2012 IN THE CASE OF SMT. FASI BAIG AND SMT. FARAH RAFI FOR THE BLOCK PERIOD FROM 01.04.1995 TO 28.03.2002. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE QUANTUM APPEAL IN THE CASE OF SMT. FARAH RAFI IN IT(SS)A NO.43/BANG/2009. 3. IN THE COURSE OF HEARING, LEARNED AR OF THE ASSESSEE SUBMITTED THAT GROUND 1 IS GENERAL AND GROUND NO.3 IS NOT PRESSED AND ACCORDINGLY IT IS HELD THAT NO SEPARATE ADJUDICATION IS CALLED FOR REGARDING GROUND NO.1 AND GROUND NO.3 IS REJECTED AS NOT PRESSED. IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 3 OF 14 4. HE ALSO SUBMITTED THAT AS PER GROUND NO.2, THE ASSESSEES GRIEVANCE IS THIS THAT THE ORDER OF BLOCK ASSESSMENT PASSED BY THE AO UNDER SECTION 158BD OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AND VOID-AB-INITIO BECAUSE NO VALID SATISFACTION HAS BEEN RECORDED BY THE AO OF THE SEARCHED PERSON BEFORE ISSUANCE OF NOTICE UNDER SECTION 158BD OF THE IT ACT AND THEREFORE, THE ASSESSMENT ORDER SHOULD BE QUASHED BY FOLLOWING THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF MANISH MAHESHWARI AS REPORTED IN 289/ITR/341 (SC). 5. HE FURTHER SUBMITTED THAT AS PER THE IMPUGNED ORDER, IT IS NOTED BY LEARNED CIT(A) ON PAGE 3 OF HIS ORDER THAT ON PERUSAL OF THE BLOCK ASSESSMENT RECORDS OF SHRI. RAFFI BAIG IN WHOSE CASE, THE SEARCH WAS CONDUCTED AND ASSESSMENT WAS COMPLETED UNDER SECTION 158BC IN CONSEQUENCE TO THE SEARCH, IT IS FOUND THAT THE AO HAS CLEARLY RECORDED A SATISFACTION IN REGARD TO THE UNDISCLOSED INCOME PERTAINING TO THIS ASSESSEE I.E., SMT. FARAH RAFI AND CIT(A) HAS FURTHER OBSERVED THAT THE RELEVANT PARA OF THE SATISFACTION HAS BEEN INCORPORATED BY THE AO IN THE ASSESSMENT ORDER PASSED IN THE CASE OF SMT. FARAH RAFI ON PAGES 2 TO 17 OF THE ASSESSMENT ORDER. HE SUBMITTED THAT THE DATE OF ASSESSMENT ORDER UNDER SECTION 158BC IN THE CASE OF SHRI. RAFFI BAIG IS DATED 30.03.2004 WHEREAS NOTICE UNDER SECTION 158BD IN THE CASE OF SHRI. FARAH RAFI WAS ISSUED ON 20.12.2005. THEREAFTER HE REFERRED TO PAGE 17 OF THE ASSESSMENT ORDER IN THE CASE OF SMT. FARAH RAFI AND POINTED OUT THAT IN THE CASE OF SHRI. RAFFI BAIG, THE AO HAS NOTED THAT THE SHARE OF SHRI. RAFFI BAIG WAS1/4 TH OF RS.103 LAKHS AND WORKED OUT THE SAME AT RS.25.75 LAKHS BUT HE HAS NOWHERE STATED THAT WHO IS HOLDING THE REMAINING 3/4 TH SHARE OF THE SAID AMOUNT OF RS.103 LAKHS AND IN WHAT PROPORTION AND THEREFORE, IT IS CLEAR THAT VALID SATISFACTION WAS NOT RECORDED BY THE AO. AS AGAINST THIS, LEARNED DR OF IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 4 OF 14 THE REVENUE SUPPORTED THE ORDER OF CIT(A). HE ALSO SUBMITTED WRITTEN SUBMISSIONS ALONG WITH TRIBUNAL ORDER RENDERED IN THE CASE OF DCIT VS. SMT. PADMAVATHI KRISHNA IN ITA NOS.1183 AND 1184/BANG/2013 DATED 30.06.2017 AND IT IS STATED IN THE WRITTEN SUBMISSIONS THAT PARAS 24 AND 29 OF THIS TRIBUNAL ORDER ARE RELEVANT AND IN PARA 29, IT IS HELD THAT EVEN IF THE SATISFACTION IS RECORDED IN THE FILE OF THE ASSESSEE 3 RD PERSON NOT BEING A SEARCHED PERSON THEN ALSO SUCH SATISFACTION IS VALID. IN THE PRESENT CASE, THE SATISFACTION IS DULY RECORDED IN THE CASE OF THE PRESENT ASSESSEE AND THEREFORE, VALID SATISFACTION IS RECORDED BY THE AO PARTICULARLY WHEN THE AO OF THE ASSESSEE AND OF THE SEARCHED PERSON IS ONE AND SAME. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. INSTRONICS LTD. (2017) 82 TAXMANN.COM 357 (DELHI). HE POINTED OUT THAT IN PARA 15 OF THIS JUDGMENT, IT IS HELD THAT IF THE AO OF THE OTHER PERSON IS ALSO THE AO OF THE SEARCHED PERSON, THEN SUCH SATISFACTION SATISFY THE REQUIREMENT OF THE LAW REGARDING ISSUE OF NOTICE UNDER SECTION 153C OF THE IT ACT. HE SUBMITTED THAT PROVISIONS OF SECTION 158BD AND 153C ARE PARA MATERIA AND THEREFORE, THESE JUDGMENTS ARE APPLICABLE IN THE PRESENT CASE ALSO. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT ON PAGES 2 TO 17 OF THE ASSESSMENT ORDER PASSED IN THE PRESENT CASE I.E., IN THE CASE OF SMT. FARAH RAFI, THE AO HAS REPRODUCED RELEVANT PORTION OF THE ASSESSMENT ORDER PASSED UNDER SECTION 158BC OF THE IT ACT IN THE CASE OF MR. RAFFI BAIG BEING ONE OF THE 4 CO-OWNERS OF THE PROPERTY AND BUSINESS. ON PAGE NO.4 OF THE ASSESSMENT ORDER, THE AO HAS REPRODUCED THE RELEVANT PORTION OF THE WRITTEN REPLY OF THAT ASSESSEE DATED 05.03.2004 IN WHICH IT IS NOTED THAT THE ASSESSEE POSSESSES 1/4 TH SHARE IN THE PROPERTY NOW CALLED MOIN COMMERCIALS AND IT IS ALSO NOTED THAT M/S. OM SHAKTHI ENTERPRISES INITIALLY CONSISTED 4 IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 5 OF 14 MEMBERS I.E., MR. RAFFI BAIG, MR. FASI BAIG, SMT. FARAH RAFI AND SMT. FASI BAIG. ON PAGE 17 OF THE ASSESSMENT ORDER, IT IS CLEAR CUT NOTED BY THE AO THAT 1/4 TH SHARE OF RS.103 LAKHS COMPUTED AT RS.25.75 LAKHS WITH UNEXPLAINED INVESTMENT OF SHRI. RAFFI BAIG IN WHOSE CASE SEARCH WAS CARRIED OUT AND THE NAME OF OTHER CO-OWNERS IS DULY NOTED ON PAGE 4 OF THE ASSESSMENT ORDER AND HENCE, IN OUR CONSIDERED OPINION, THE SATISFACTION RECORDED BY THE AO OF THE SEARCHED PERSON IN THE ASSESSMENT ORDER PASSED IN THE CASE OF SHRI. RAFFI BAIG ON 30.03.2004 IS A VALID SATISFACTION NOTE FOR ISSUING NOTICE TO THE PRESENT ASSESSEE UNDER SECTION 158BD ON 20.12.2005 AND THEREFORE, WE FIND NO MERIT IN GROUND NO.2 RAISED BY THE ASSESSEE AND THE SAME IS REJECTED. THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF MANISH MAHESHWARI (SUPRA) 289 ITR 341 DOES NOT RENDER ANY HELP TO THE ASSESSEE IN THE PRESENT CASE BECAUSE IN THAT CASE, THE REQUIRED SATISFACTION WAS NOT RECORDED BY THE AO OF THE SEARCHED PERSON WHEREAS IN THE PRESENT CASE, SUCH SATISFACTION WAS DULY RECORDED BY THE AO OF THE SEARCHED PERSON IN THE ASSESSMENT ORDER PASSED BY THE AO IN THE CASE OF SEARCHED PERSON UNDER SECTION 158BC OF THE IT ACT. 7. NOW WE TAKE UP AND DECIDE THE ISSUE ON MERIT REGARDING ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) OF RS.25.75 LAKHS TO THE EXTENT OF 1/4 TH SHARE OF THE INVESTMENT MADE IN THE PROPERTY AT HOSUR ROAD, BENGALURU. LEARNED AR OF THE ASSESSEE HAS FILED SYNOPSIS OF ARGUMENTS IN WHICH IT IS STATED THAT THE AO HAS MADE ADDITION OF 1/4 TH OF 4 AMOUNTS I.E., LOAN TO MR. MALIK RS.20 LAKHS, LOAN DUE TO MR. JAVID AND NAVID RS.25 LAKHS, AMOUNTS CLEARED THROUGH LOAN OBTAINED FROM RAJU RS.12 LAKHS AND FINAL PAYMENT AT THE TIME OF EXECUTING SALE DEED RS.30 LAKHS, TOTAL RS.87 LAKHS AND 1/4 TH OF THE SAME WAS WORKED OUT AT RS.21.75 LAKHS. OUT OF THIS, LEARNED CIT(A) HAS DELETED 1/4 TH ADDITION TO THE EXTENT OF RS.7.5 LAKHS IN RESPECT OF 30 LAKHS BEING IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 6 OF 14 FINAL PAYMENT AT THE TIME OF EXECUTING SALE DEED AND HENCE, THE ADDITION CONFIRMED BY LEARNED CIT(A) IS ONLY OF RS.14.25 LAKHS BEING 1/4 TH OF THE REMAINING FIRST 3 AMOUNTS NOTED ABOVE. ALTHOUGH AS PER GROUND NOS. 4 AND 5 RAISED BY THE ASSESSEE, THE ASSESSEE HAS ALSO RAISED AN ISSUE IN RESPECT OF ADDITION OF RS.23.25 LAKHS BEING TRANSACTIONS THAT PERTAIN TO OM SHAKTHI ENTERPRISES, AOP BUT IN THE COURSE OF HEARING, NO ARGUMENT WAS ADVANCED BY LEARNED AR OF THE ASSESSEE ON THIS ISSUE AND HENCE, IT IS INFERRED THAT THIS ISSUE IS NOT PRESSED AND HENCE, THE SAME IS REJECTED AS NOT PRESSED. 8. REGARDING THE FIRST ITEM I.E., LOAN DUE TO MALIK OF RS.20 LAKHS, IT HAS BEEN SUBMITTED THAT THE AO HIMSELF HAS NOTED ON PAGE 8 OF THE ASSESSMENT ORDER THAT LIABILITY DUE TO MALIK HAS BEEN CLEARED THROUGH SOME PROPERTY TRANSACTIONS AND ON THAT BASIS, THE AO HAS HELD THAT THE LIABILITY DUE TO MR. MALIK HAS BEEN CLEARED THROUGH THIS TRANSACTION OF LAND SETTLEMENT AND NO MONEY IS DUE TO HIM AS ON THE DATE OF SEARCH. HE SUBMITTED THAT IN VIEW OF THIS FINDING IN THE ASSESSMENT ORDER, NO ADDITION CAN BE MADE REGARDING THIS AMOUNT EVEN IF IT IS HELD THAT NO AMOUNT IS DUE TO MALIK BECAUSE THIS BECOMES ADMITTED POSITION OF FACT THAT NO MONEY IN CASH WAS PAID BY THE ASSESSEE TO MR. MALIK TO CLEAR THIS LIABILITY. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE DISPUTE IS THIS IN THE PRESENT CASE THAT IT IS ADMITTED POSITION OF FACT THAT TO THE EXTENT OF RS.20 LAKHS, THE AMOUNT IS EXPLAINED BY THE ASSESSEE BY WAY OF LIABILITY PAYABLE TO MR. J. K. MALIK BUT HE AO HAS REJECTED THIS CLAIM OF THE ASSESSEE ON THIS BASIS THAT ON THE DATE OF SEARCH, NO SUCH LIABILITY WAS IN EXISTENCE BECAUSE THE SAME WAS CLEARED ON ACCOUNT OF SOME PROPERTY TRANSACTION. THIS IS NOT THE CASE OF THE AO THAT THE PROPERTY HANDED OVER TO MR. MALIK TO CLEAR IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 7 OF 14 THIS LIABILITY WAS AN UNACCOUNTED PROPERTY ACQUIRED DURING THE BLOCK PERIOD. EVEN IF THAT PROPERTY IS UNACCOUNTED PROPERTY BUT ACQUIRED BY ASSESSEE PRIOR TO BLOCK PERIOD THEN ALSO THE SAID PROPERTY CANNOT BE ADDED IN THE BLOCK PERIOD AS UNDISCLOSED INCOME. IF AN UNACCOUNTED PROPERTY IS ACQUIRED PRIOR TO BLOCK PERIOD, THEN NO ADDITION CAN BE MADE ON ACCOUNT OF THAT PROPERTY IN BLOCK PERIOD. THIS IS ALSO NOT THE FINDING OF THE AO THAT ANY MONEY IN CASH WAS PAID BY THE ASSESSEE TO CLEAR THIS LIABILITY OF MR. MALIK. HENCE, WE HOLD THAT THIS AMOUNT OF RS.20 LAKHS CANNOT BE CONSIDERED FOR THE PURPOSE OF MAKING ADDITION IN THE HANDS OF THE ASSESSEE BECAUSE THIS IS NOT THE CASE OF THE AO THAT NO LIABILITY WAS INCURRED BY THE ASSESSEE PAYABLE TO MR. MALIK. THIS IS ALSO NOT THE CASE OF THE AO THAT THE LIABILITY IN QUESTION PAYABLE TO MALIK WAS SQUARED UP BY THE ASSESSEE BY WAY OF CASH PAYMENT OR BY WAY OF TRANSFERRING THE PROPERTY BEING UNDISCLOSED PROPERTY ACQUIRED DURING BLOCK PERIOD. HENCE, TO THIS EXTENT THE SOURCE OF INVESTMENT HAS TO BE ACCEPTED AND WE ORDER ACCORDINGLY. 10. THE SECOND AMOUNT IN DISPUTE IS AMOUNT DUE TO MR. NAVID AND MR. JAVID RS.25 LAKHS. REGARDING THIS, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT ON PAGE 9 OF THE ASSESSMENT ORDER, THE AO HIMSELF HAS NOTED THAT IN THE EXPLANATION GIVEN BY THE ASSESSEE AND THE AGENT MR. AKRAM KHAN WITH REGARD TO LIABILITY OF MR. JAVID TO MR. RAMAKRISHNA IN THIS PROPERTY TRANSACTION WHICH WAS TAKEN OVER BY THE AGENT MR. AKRAM KHAN ON BEHALF OF THE ASSESSEE AND THE 3 CO-OWNERS, THE SAME IS FOUND DOCUMENTED AND APPEAR PRIMA FACIE REASONABLE. HE SUBMITTED THAT EVEN AFTER ACCEPTING THIS THAT THE EXPLANATION IS FOUND DOCUMENTED AND APPEARING PRIMA FACIE REASONABLE, THE AO HAS REJECTED THE SAME ON THIS BASIS ALONE THAT THE SAID CREDITOR WAS NOT PRODUCED FOR EXAMINATION. HE SUBMITTED THAT MERELY BECAUSE A PERSON COULD IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 8 OF 14 NOT BE PRODUCED FOR EXAMINATION, A WELL-DOCUMENTED EXPLANATION OF THE ASSESSEE WHICH IS PRIMA FACIE REASONABLE CANNOT BE REJECTED BY THE AO. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF CIT(A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE THE RELEVANT PARA FROM PAGE 9 OF THE ASSESSMENT ORDER WHICH READS AS UNDER: NEXT, WITH REGARD TO ( C ), IN THE BACKGROUND OF THE EXPLANATION GIVEN BY THE ASSESSEE AND MR. AKRAM KHAN WITH REGARD TO THE LIABILITY OF MR.JAVED TO MR. RAMAKRISHNA IN THIS PROPERTY TRANSACTION, WHICH WAS TAKEN OVER BY THE AGENT MR. AKRAM KHAN ON BEHALF OF THE ASSESSEE AND THE THREE CO-OWNERS THE SAME IS FOUND DOCUMENTED AND APPEAR PRIMA FACIE REASONABLE. BUT TO HOLD THAT THE ASSESSEE HAS PROVED THAT THE SAID CREDITOR HAS NOT BEEN CLEARED AND CONTINUED TILL THE DATE OF SEARCH, THE ASSESSEE HAD _PROMISED TO PRODUCE THE SAID PERSON FOR EXAMINATION AND HE HAS NOT DONE SO TILL DATE IN SPITE OF SEVERAL OPPORTUNITIES ALLOWED TO HIM IN THIS REGARD. HENCE, I AM CONSTRAINED TO HOLD THAT THE ASSESSEE HAS NOT AVAILED THE OPPORTUNITY ALLOWED TO HIM AND PRODUCE THE PARTY FOR VERIFICATION OF FACTUAL POSITION. IN VIEW OF THIS, I AM CONSTRAINED TO HOLD THAT THIS CREDITOR IS ALSO NOT ESTABLISHED AS GENUINE AS ON THE DATE OF SEARCH. THE ABOVE VIEW HAS BEEN TAKEN BY ME IN THE BACK GROUND OF THE MATERIAL AVAILABLE IN SEIZED DOCUMENTS THAT THE ASSESSEE HAD RECEIVED CERTAIN AMOUNTS FROM MR. MOHAMMED ASADULLA WHICH THE ASSESSEE WILL HAVE NATURALLY USED IT FOR DISCHARGING LIABILITIES EXISTING AD ADMITTED BY HIM BEFORE THE DDI(INV) AND ALSO BEFORE ME. 12. FROM THE ABOVE PARA REPRODUCED FROM PAGE 9 OF THE ASSESSMENT ORDER, IT COMES OUT THAT EVEN AS PER THE AO, THE EXPLANATION OF THE ASSESSEE IS DOCUMENTED AND APPEAR PRIMA FACIE REASONABLE. THE AO HAS REJECTED THIS EXPLANATION MERELY BECAUSE THE ASSESSEE HAS NOT PRODUCED THE CONCERNED PERSON FOR EXAMINATION. IF THE EXAMINATION OF THAT PERSON WAS SO MUCH IMPORTANT FOR AO, THE AO SHOULD HAVE USED HIS POWERS TO SUMMON HIM AND ENSURE HIS EXAMINATION BUT THIS IS NOT DONE BY THE AO. HENCE IN OUR IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 9 OF 14 CONSIDERED OPINION, THIS EXPLANATION OF THE ASSESSEE CANNOT BE REJECTED FOR THIS REASON ALONE THAT THE ASSESSEE COULD NOT PRODUCE THE PERSON, WHEN IT IS FOUND BY THE AO THAT THE EXPLANATION OF THE ASSESSEE IS DOCUMENTED AND IS PRIMA FACIE REASONABLE. HENCE, WE HOLD THAT ON THIS ISSUE ALSO, THE EXPLANATION OF THE ASSESSEE SHOULD BE ACCEPTED AND THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. 13. THE THIRD AMOUNT IN DISPUTE IS REGARDING A SUM OF RS.12 LAKHS SAID TO BE DUE TO MR. RAJU. LEARNED AR OF THE ASSESSEE SUBMITTED THAT ON PAGE 10 OF THE ASSESSMENT ORDER, IT IS HELD BY THE AO THAT THE LIABILITY DUE TO MR. RAJU OF RS. 12 LAKHS HAS BEEN CLEARED THROUGH LAND TRANSACTION SETTLEMENT AND NO MONEY IS DUE TO HIM AS ON THE DATE OF SEARCH AND ON THIS BASIS, THE AO HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAS TRIED TO BRING A BOGUS CREDITOR TO EXPLAIN THE SOURCE OF AVAILABILITY OF FUNDS TO THE EXTENT OF RS.12 LAKHS AND HE HAS MADE ADDITION. THE AO ON PAGE 10 OF THE ASSESSMENT ORDER HAS HELD THAT FOR HOLDING THAT THE CREDITOR IS NOT GENUINE AS ON THE DATE OF SEARCH IN OTHER CASE OF CREDITORS DISCUSSED ABOVE EQUALLY APPLY HERE ALSO. HE HAS FINALLY HELD THAT THE LIABILITY DUE TO MR. RAJU OF RS.12 LAKHS HAS BEEN CLEARED THROUGH PROPERTY TRANSACTION SETTLEMENT. REGARDING SIMILAR CLAIM IN RESPECT OF PROPERTY TRANSACTION CLEARING THE LIABILITY OF MR. MALIK, WE HAVE ALREADY HELD THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED WITHOUT GIVING FINDING THAT LIABILITY WAS CLEARED BY MAKING CASH PAYMENT OR THAT LIABILITY WAS CLEARED BY WAY OF PROPERTY TRANSACTION SETTLEMENT BEING UNEXPLAINED PROPERTY ACQUIRED DURING BLOCK PERIOD. FOR THIS TRANSACTION ALSO, THIS IS NOT THE FINDING OF THE AO THAT THE LIABILITY OF MR. RAJU IS CLEARED BY WAY OF CASH PAYMENT OR THAT THE LIABILITY WAS CLEARED BY WAY OF A PROPERTY TRANSACTION OF UNDISCLOSED IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 10 OF 14 INVESTMENT IN PROPERTY ACQUIRED DURING BLOCK PERIOD. HENCE, WE HOLD THAT THIS ADDITION IS ALSO NOT JUSTIFIED. 14. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT ALL THE 3 AMOUNTS OF RS. 20 LAKHS, RS. 25 LAKHS AND RS.12 LAKHS STAND EXPLAINED AND THE ADDITION MADE BY THE AO IN THE PRESENT CASE TO THE EXTENT OF 1/4 TH THEREOF RS.14.25 LAKHS IS HEREBY DELETED. 15. IN THE RESULT, THE ASSESSEES APPEAL IN THE CASE OF MR. RAFFI BAIG IS PARTLY ALLOWED. 16. NOW WE TAKE UP THE SECOND QUANTUM APPEAL IN THE CASE OF SMT. FARAH RAFI IN ITA NO.43/BANG/2009. IN THIS CASE, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT GROUND NO.1 IS GENERAL AND GROUND NO.3 IS NOT PRESSED AND ACCORDINGLY WE HOLD THAT FOR GROUND NO.1, NO SEPARATE ADJUDICATION IS CALLED FOR AND GROUND NO.3 IS REJECTED AS NOT PRESSED. REGARDING GROUND NO.2, THE SAME ARGUMENTS WERE ADVANCED REGARDING ABSENCE OF REQUIRED SATISFACTION AND IT WAS AGREED BY BOTH SIDES THAT THE FACTS ARE IDENTICAL IN THIS CASE AND IN THE CASE OF MR. RAFFI BAIG AND THIS GROUND CAN BE DECIDED ON SIMILAR LINE. IN THE CASE OF MR. RAFFI BAIG, WE HAVE REJECTED GROUND NO.2 AS PER PARA NO.6 ABOVE AND ON THE SAME LINE IN THE CASE OF SMT. FARAH RAFI, GROUND NO.2 IS REJECTED. 17. REGARDING MERIT, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT THE ISSUE IN DISPUTE ON MERIT IS SIMILAR TO THE ISSUE IN DISPUTE IN THE CASE OF MR. RAFFI BAIG EXCEPT TWO DIFFERENCES. IT WAS POINTED OUT THAT ONE DIFFERENCE IS THIS THAT IN THE CASE OF MR. RAFFI BAIG, ADDITION OF RS.7.5 LAKHS WAS DELETED BY CIT(A) IN RESPECT OF 1/4 TH OF RS.30 LAKHS BEING FINAL PAYMENT AT THE TIME IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 11 OF 14 OF EXECUTING SALE DEED WHEREAS IN THE CASE OF SMT. FARAH RAFI, THIS ADDITION WAS ALSO NOT DELETED. HE SUBMITTED THAT SINCE THE FACTS ARE SIMILAR, THE SAID ADDITION OF RS.7.5 LAKHS SHOULD BE DELETED IN THE CASE OF SMT. FARAH RAFI ALSO. HE SUBMITTED THAT THE SECOND DIFFERENCE IS THIS THAT IN THE CASE OF MR. RAFFI BAIG, THE ASSESSEE HIMSELF HAS DECLARED AN AMOUNT OF RS.4 LAKHS AS UNDISCLOSED INCOME WHEREAS IN THE CASE OF SMT. FARAH RAFI, NO SUCH AMOUNT WAS DECLARED BY THE ASSESSEE AND HENCE, IN THE CASE OF SMT. FARAH RAFI, THE ADDITION OF RS.4 LAKHS MAY BE CONFIRMED OUT OF TOTAL ADDITION OF RS.25.75 LAKHS CONFIRMED BY CIT(A). LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF CIT(A). 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS IS AN ADMITTED POSITION OF FACT THAT THE ISSUE ON FACTS AND MERITS IS IDENTICAL IN THE CASE OF SHRI. RAFFI BAIG AND SMT. FARAH RAFI EXCEPT TWO DIFFERENCES POINTED OUT BY LEARNED AR OF THE ASSESSEE. REGARDING THE PAYMENT OF RS.30 LAKHS BEING FINAL PAYMENT AT THE TIME OF EXECUTING THE SALE DEED, IT IS HELD BY LEARNED CIT(A) IN THE CASE OF MR. RAFFI BAIG IN PARA NO.9.5 OF HIS ORDER IN THAT CASE THAT THE SALE DEEDS WERE ON 01.07.2002 WHEREAS THE DATE OF SEARCH WAS 26.03.2002 AND THEREFORE, REGARDING THIS PAYMENT OF RS.30 LAKHS DUE TO SHRI. RAMAKIRSHNA, THE SAME HAS TO BE ALLOWED AS CLAIMED BY THE ASSESSEE BECAUSE THE SALE DEEDS WERE EXECUTED ON 01.07.2002 AND THE DATE OF SEARCH WAS 26.03.2002. IN VIEW OF THESE FACTS, WE HOLD THAT IN THE CASE OF SMT. FARAH RAFI ALSO, THIS ADDITION OF RS.7.5 LAKHS IS DELETED BECAUSE THIS IS AFTER SEARCH. THE REMAINING 3 ADDITIONS BEING 1/4 TH OF RS.20 LAKHS, RS.25 LAKHS AND RS.12 LAKHS, TOTAL RS.57 LAKHS OF WHICH 1/4 TH COMES TO RS.14.25 LAKHS IS ALSO DELETED ON THE SAME LINE AS PER WHICH THESE 3 ADDITIONS WERE DELETED IN THE CASE OF MR. RAFFI IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 12 OF 14 BAIG AND ONLY ADDITION OF RS.4 LAKHS IS CONFIRMED IN THE CASE OF SMT. FARAH RAFI OUT OF TOTAL ADDITION CONFIRMED BY LEARNED CIT(A) OF RS.25.75 LAKHS. 19. IN THE RESULT, APPEAL IN THE CASE OF SMT. FARAH RAFI IS ALSO PARTLY ALLOWED. 20. NOW WE TAKE UP THE THIRD QUANTUM APPEAL IN THE CASE OF SHRI. FASI BAIG IN IT(SS)A NO.22/BANG/2010. IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT THE GROUNDS RAISED BY THE ASSESSEE IN THE CASES OF SHRI. FASI BAIG AND SMT. FARAH RAFI ARE IDENTICAL AND THE SAME CAN BE DECIDED ON SIMILAR LINE. ACCORDINGLY, WE HOLD THAT NO ADJUDICATION IS CALLED FOR REGARDING GROUND 1, GROUND NO.3 IS REJECTED AS NOT PRESSED AND GROUND NO.2 IS REJECTED ON SIMILAR LINE AS IN THE REMAINING TWO QUANTUM APPEALS. REGARDING MERIT OF ADDITION OF RS.25.75 LAKHS CONFIRMED BY LEARNED CIT(A), WE CONFIRM THE ADDITION OF RS.4 LAKHS AND DELETE THE BALANCE ADDITION OF RS.21.75 LAKHS AS IN THE CASE OF SMT. FARAH RAFI. 21. IN THE RESULT, APPEAL OF SHRI. FASI BAIG IS ALSO PARTLY ALLOWED. 22. NOW WE TAKE UP TWO PENALTY APPEALS BEING THE PENALTY IMPOSED UNDER SECTION 158BFA (2) IN CASE OF SMT. FARAH RAFI AND SHRI. FASI BAIG. AS PER TWO SEPARATE PENALTY ORDERS PASSED BY THE AO UNDER SECTION 158BFA(2) OF THE IT ACT, 1961, IN THESE TWO CASES, THE AO HAS IMPOSED PENALTY OF RS.1575,900/- IN EACH CASE ON THIS BASIS THAT THE ADDITION OF RS.25.75 LAKHS HAVE BEEN CONFIRMED IN EACH OF THESE TWO CASES. OUT OF THIS ADDITION OF RS.25.75 LAKHS IN EACH OF THESE 2 CASES, WE HAVE ALREADY DELETED THE ADDITION OF RS.21.75 LAKHS IN EACH CASE WHILE DECIDING THE QUANTUM APPEALS IN ABOVE PARAS AND HENCE, THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LEARNED CIT(A) IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 13 OF 14 HAS TO BE COMPUTED AFRESH IN RESPECT OF ADDITION OF RS.4 LAKHS IN EACH CASE EVEN IF THE ASSESSEE FAILS IN THESE 2 APPEALS. 23. REGARDING MERIT OF THE PENALTY UNDER SECTION 158BFA(2), THIS IS THE CLAIM OF THE ASSESSEE THAT THERE IS NO DEFAULT, OMISSION/COMMISSION OF THE ASSESSEE WHICH IS ACTIONABLE UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT, 1961 AND THEREFORE, NO PENALTY SHOULD BE IMPOSED UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT, 1961. AT THIS JUNCTURE, WE REPRODUCE THE PROVISIONS OF SECTION 158BFA (2) OF INCOME TAX ACT, 1961. THE SAME READS AS UNDER: 158BFA (1) . (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS), IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC : PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MADE IN RESPECT OF A PERSON IF - (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SECTION 158BC; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS BEEN PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS 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 PRECEDING PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. 24. AS PER THE ABOVE PROVISIONS, PENALTY IS ALMOST AUTOMATIC UNLESS IT IS COVERED BY THE PROVISO. IN THE PRESENT CASE, RETURN WAS NOT FILED BY THESE TWO ASSESSES AFTER RECEIPT OF NOTICE U/S 158BD. HENCE, THE PROVISO IS NOT APPLICABLE IT(SS)A NOS.9/BANG/2008, 43/BANG/2009 22/BANG/2010, 12,13/BANG/2012 PAGE 14 OF 14 AND HENCE, WE UPHOLD THE PENALTY BUT DIRECT THE AO TO RECOMPUTE THE SAME ON THE QUANTUM ADDITION OF RS. 4 LACS ONLY UPHELD BY US WHILE DECIDING THE RELEVANT QUANTUM APPEALS. 25. IN THE RESULT, BOTH PENALTY APPEALS ARE PARTLY ALLOWED. 26. IN THE COMBINED RESULT, ALL THREE QUANTUM APPEALS AND TWO PENALTY APPEALS ARE PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- ( PAVAN KUMAR GADALE ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 06 TH MARCH, 2020. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.