K.Gopal, Salem V. DCIT, Salem

ITSSA 44/CHNY/2006

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8772 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-02-2013
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-02-2013
• Assessment Year: misc
• Appeal Filed On: 17-03-2006
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: DEVENDRA KUMAR
• Keywords: Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENN AI BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER .. IT(SS)A NO.0042/MDS./2006 BLOCK PERIOD: 1991-92 TO 2001-02 SHRI G.GOPALAKRISHNAN, 2/16, MELCHNTHAMANIYUR, METTUR TALUK, SALEM DISTRICT. VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. PAN ACHPG 4975 B (APPELLANT) (RESPONDENT) IT(SS)A NO.0043/MDS./2006 BLOCK PERIOD: 1991-92 TO 2001-02 SHRI K.GOVINDARAJU, 2/16, MELCHNTHAMANIYUR, METTUR TALUK, SALEM DISTRICT. VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. PAN AGAPG 3987 A (APPELLANT) (RESPONDENT) IT(SS)A NO.0044/MDS./2006 BLOCK PERIOD: 1991-92 TO 2001-02 SHRI K.GOPAL, 2/16, MELCHNTHAMANIYUR, METTUR TALUK, SALEM DISTRICT. VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. PAN ACHPG 4971 B (APPELLANT) (RESPONDENT) IT(SS).42 TO 44 /MDS/06 2 APPELLANT BY : SHRI DEVENDRA KUMAR C.A. RESPONDENT BY : SHRI ANIRUDH RAI CIT DR DATE OF HEARING : 27.02.13 DATE OF PRONOUNCEMENT : 27. 02.13 O R D E R PER ABRAHAM P GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE RESPECTIVE ASSESS EES AGAINST ORDERS DATED 15.12.2005 OF CIT(A)-II, COIMB ATORE. SINCE FACTS GIVING ARISE TO THESE APPEALS ARE SIMILAR, TH ESE APPEALS ARE DISPOSED OF THROUGH A CONSOLIDATED ORDER. 2. SHRI G.GOPALAKRISHAN, ONE OF THE APPELLANTS ENGA GED IN THE BUSINESS OF MANUFACTURE/PURCHASE AND SALE OF SILK S AREES WAS SUBJECTED TO A SEARCH UNDER SECTION 132 OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT) ON 24.08.00. SIMULTANEOU SLY, SEARCHES WERE CONDUCTED IN THE PREMISES OF SHRI K.GOVINDRAJU , FATHER OF SHRI G.GOPALAKRISHAN & SHRI K.GOPAL, BROTHER OF SH RI K.GOVINDRAJU, THE OTHER TWO APPELLANTS. BUSINESS O F THE THREE PERSONS WERE INTER-CONNECTED AND MAJOR PORTION OF T HE PURCHASES, STOCK, CASH ETC. WERE DEALT IN A COMMON MANNER AND WERE NOT IDENTIFIABLE. SINCE NO BOOKS WERE MAINTAINED BY THE ASSESSEES, IT SEEMS THAT BOTH THE REVENUE AS WELL AS ASSESSEES AG REED FOR IT(SS).42 TO 44 /MDS/06 3 DETERMINING THE INCOME ON NET-WORTH METHOD, ADOPTIN G THE DATE OF SEARCH AS THE BASE. THE ASSESSEES TOGETHER AGRE ED FOR A DISCLOSURE OF ` 82,80,568/- AS THEIR UNDISCLOSED INCOME OF THE BLOCK PERIOD. HOWEVER, WHEN THE RETURNS WERE FILED BY THE ASSESSEES, THE UNDISCLOSED INCOME DECLARED CAME TO ` 70,12,804/- ONLY. DIFFERENCE BETWEEN THE DECLARED INCOME AND THE ADMITTED INCOME WERE AS UNDER:- NAME OF ASSESSEE UNDISCLOSED INCOME DECLARED AT THE TIME OF SEARCH ` UNDISCLOSED INCOME ADMITTED IN THE RETURN ` K.GOVINDRAJU 34,04,207/- 25,44,313/- K. GOPAL 20,61,931/- 19,26,915/- G.GOPALAKRISHAN 28,14,430/- 25,41,376/- TOTAL 82,80,568 70,12,804/- RETURNS FILED BY THE ASSESSEES, CONTAINED A NOTE, W HICH INTER ALIA, STATED THAT ACCOUNTS SUBMITTED TO THE DEPARTMENT F OR PRECEDING 10 YEARS DID NOT REFLECT THE TRUE STATE OF AFFAIRS AND SUCH ACCOUNTS DID NOT HAVE ANY RELEVANCE TO THE ACTUAL NATURE OF THEIR BUSINESS. AS PER THE ASSESSEES, BECAUSE OF THIS THEY WERE AD OPTING NET-WORTH METHOD FOR DECLARING THEIR UNDISCLOSED INCOME. 3. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDIN GS, IT SEEMS A REVISED NET WORTH COMPUTATION WAS FILED BY THE THREE IT(SS).42 TO 44 /MDS/06 4 ASSESSEES. ACCORDING TO THIS REVISED STATEMENT, TO TAL NET WORTH AS ON DATE OF SEARCH CAME TO ` 83,05,554/-. ASSESSING OFFICER ADOPTED A FIGURE OF ` 83,80,615/- AS THE ACTUAL NET WORTH AS ON THE DATE OF SEARCH. THIS INCLUDED A UM OF ` 75,061/- ADMITTED BY THE ASSESSEES AS ACCRUED INTEREST IN THEIR RESPECT IVE RETURNS. 4. ASSESSEES WERE CALLED UPON TO EXPLAIN THE DIFFE RENCE OF ` 13,67,811/- VIZ. THE DIFFERENCE BETWEEN ` 70,12,804/- SHOWN IN THEIR RETURNS AND THE SUM OF ` 83,60,615/-. SUBMISSION OF THE ASSESSEE WAS THAT A SUM OF ` 3,09,610/- INCLUDED IN THE STOCK AS ON 24.08.00 COMPRISED OF DEFECTIVE GOODS AND HAD TO BE DEDUCTED FROM THE NET WORTH. ASSESSING OFFICER PA RTIALLY ACCEPTED THIS CLAIM, IN THAT HE ALLOWED ` 1,50,000/- FOR DEFECTIVE STOCK, THEREBY REDUCING THE DIFFERENCE IN NET WORTH TO ` 12,17,811/-. THERE WAS ANOTHER CLAIM THAT OUT OF THE DIFFERENCE, A SUM OF RUPEES THREE LAKHS REPRESENTED INVESTMENT IN A PROPERTY IN THE NAME OF SMT. G.CHENNAMMAL, WIFE OF ONE OF T HE ASSESSEES, NAMELY SHRI K.GOVINDRAJU. THIS WAS ALSO ACCEPTED BY THE ASSESSING OFFICER. RESULTANTLY DIFFERENCE IN TH E NET WORTH, FINALLY CAME DOWN TO ` 9,17,811/-. THIS WAS EQUALLY DIVIDED AMONG THE THREE INDIVIDUALS AND ADDITION OF ` 3,05,937/- MADE IN EACH CASE. IT(SS).42 TO 44 /MDS/06 5 5. ASSESSING OFFICER ALSO FOUND THAT ONE OF THE AS SESSEES, SHRI G.GOPALAKRISHAN HAD CONSTRUCTED A RESIDENTIAL BUILDING AT 2/142 MELCHINTHAMANIYUR DURING THE PREVIOUS YEAR EN DING 31.03.00. ADMITTED COST OF THE CONSTRUCTION WAS ` 18 LAKHS. ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE COULD GIVE DETAILS ONLY FOR A SOURCE OF ` 17 LAKHS AND THE BALANCE OF ` 1 LAKHS WAS CONSIDERED AS UNDISCLOSED INCOME FOR THAT PREVIOUS YEAR. THOUGH ASSESSING OFFICER INITIALLY ADOPTED T HE COST OF CONSTRUCTION AT ` 19,37,861/- BASED ON A DVO VALUATION, THE ADDITION WAS FINALLY RESTRICTED TO SUM OF ` ONE LAKH, ON DIRECTIONS OF THE CIT(A) ON ASSESSEES APPEAL. 6. ASSESSEE, SHRI K.GOVINDRAJU OWNED A COMMERCIAL COMPLEX AT DOOR NO.393, TRICHY MAIN ROAD, GUGAI, SALEM. ASS ESSING OFFICER FOUND THAT HE HAD ADMITTED AN EXPENDITURE O F ` 2,35,000/- FOR THIS BUILDING, DURING PREVIOUS YEAR ENDING 31.03.00, WHICH WAS ALSO NOT DISCLOSED. THIS SUM WAS ALSO AD DED IN THE HANDS OF SHRI K.GOVINDRAJU. ADDITION WAS ALSO MAD E IN THE HANDS OF SHRI K.GOVINDRAJU FOR A SUM OF 3 LAKHS INV ESTED BY HIS WIFE IN A PROPERTY AT 1/115 AT SEMMANDAPATTY ROAD,CHINTHAMANIYUR. ASSESSING OFFICER ALSO FOUND THAT SHRI IT(SS).42 TO 44 /MDS/06 6 K.GOVINDRAJU HAD CLAIMED A SUM OF ` 21,50,000/- AS AMOUNT DUE TO ONE M/S.BHARATHI SILKS KOTE, BANGALORE ON THE DA TE OF SEARCH. HOWEVER, AS PER THE CONFIRMATION FILED BY THE ASSES SEE, THE AMOUNT DUE BY THE SAID ASSESSEE AS ON 24.08.00 WAS ONLY ` 15,95,314/-. SINCE NO REASONABLE EXPLANATION WAS F ORTHCOMING FOR THE DIFFERENCE, A SUM OF ` 5,54,686/- WAS ALSO ADDED IN THE HANDS OF SHRI K.GOVINDRAJU. 7. IN THE CASE OF SHRI K.GOPAL, THE ONLY ADDITION WAS MADE THAT THE DIFFERENCE IN NET WORTH ` 3,05,937/- MENTIONED BY US AT PARA-4 ABOVE. 8. ON THE APPEALS FILED BY THE ASSESSEES BEFORE THE CIT(A), ONLY SHRI G.GOPALAKRISHAN GOT A SMALL RELIEF WITH REGARD TO THE INVESTMENT IN BUILDING FOR WHICH THE REPORT OF DVO ADOPTED BY THE ASSESSING OFFICER. THIS HAS ALREADY BEEN MENTIONED BY US AT PARA-5 ABOVE. APPEALS FILED BYTHE OTHER TWO ASSESS EES NAMELY, SHRI K.GOVINDRAJU AND SHRI K. GOPAL BEFORE THE CIT (A), WERE NOT SUCCESSFUL. IT(SS).42 TO 44 /MDS/06 7 9. FURTHER, APPEALS PREFERRED BY THE ASSESSEES BE FORE THIS TRIBUNAL WERE DISMISSED FOR NOT PROPERLY EXPLAINING THE DELAY IN FILING SUCH APPEALS. 10. THEREAFTER, PROCEEDINGS FOR PENALTY UNDER SECT ION 158BFA (2) OF THE ACT WAS INITIATED AGAINST ALL THE THREE ASSESSEES. ASSESSEES WERE REQUIRED TO EXPLAIN WHY PENALTY SHOU LD NOT BE LEVIED FOR THE ADDITIONS MADE IN THEIR RESPECTIVE B LOCK ASSESSMENTS, TO THE EXTENT SUSTAINED BY THE CIT(A). REPLY OF THE ASSESSEES WERE THAT THEY HAD FULLY CO-OPERATED WITH THE DEPARTMENT. AS PER ASSESSEES, NET WORTH METHOD AP PLIED BY THEM WAS THE MOST APPROPRIATE IN THE CIRCUMSTANCES OF THE CASES, SINCE BOOKS OF ACCOUNTS WERE NOT RELIABLE. SUBMISS ION OF THE ASSESSEES WERE THAT DIFFERENCE IN THE NET WORTH AS DETERMINED BY THE ASSESSING OFFICER AND NET WORTH FURNISHED B Y THEM WERE ONLY DUE TO DIFFERENCE IN METHODS USED. FURTHER, A S PER THE ASSESSEES, ADDITIONS MADE FOR CONSTRUCTION OF BUIL DING, AND INVESTMENT IN THE BUILDING WERE NOT AT BASED ON AN Y RECORDS SEIZED DURING THE SEARCH, BUT ONLY ON ESTIMATES. S HRI K.GOVINDRAJU ALSO ARGUED THAT CONFIRMATION OBTAIN ED M/S.BHARATHI SILK KOTE, WAS NOT CORROBORATED WHER EAS ASSESSEE HAD GIVEN THE CREDITORS BALANCE BASED ON HIS RECORD S. IT(SS).42 TO 44 /MDS/06 8 11. ASSESSEES ALSO REITERATED ITS CONTENTION THAT CLAIM OF DEFECTIVE STOCK OF ` 1,89,610/- OUT OF TOTAL ` 3,09,610/- WAS UNJUSTLY DISALLOWED. THUS, AS PER ASSESSEES, THERE WAS NO CONCEALMENT OF INCOME DURING THE COURSE OF BLOCK AS SESSMENT OR WHILE FILING THE RETURNS FOR THE BLOCK PERIOD. 12. HOWEVER, THE ASSESSING OFFICER WAS NOT IMPRESS ED. HE WAS OF THE OPINION THAT LEVY OF PENALTY UNDER SECTI ON 158BFA(2) WAS WARRANTED FOR THE DIFFERENCE BETWEEN UNDISCLOSE D INCOME FINALLY ASSESSED AND THOSE RETURNED BY THE ASSESSEE S IN THEIR RETURNS FOR THE RESPECTIVE BLOCK PERIOD. 13. ALL THE ASSESSEES MOVED IN APPEAL BEFORE THE C IT(A). SAME CONTENTIONS TAKEN BEFORE THE ASSESSING OFFICER WER E REITERATED BY THE ASSESSEES. LD. CIT(A) WAS OF THE OPINION TH AT THE DIFFERENCE IN NET WORTH TO THE EXTENT OF ACCRUED I NTEREST ON DEPOSITS AMOUNTING TO ` 75,060/- ( ` 25,020/- IN EACH CASE) AND DEFECTIVE STOCK OF ` 1,59,610/- ( ` 53,203/- IN EACH CASE) COULD NOT BE CONSIDERED AS UNDISCLOSED INCOME, WHICH WARR ANTED A LEVY OF PENALTY UNDER SECTION 158BFA(2) OF ACT. AS PER LD. CIT(A), ASSESSING OFFICER COULD NOT SHOW THAT THE CLAIM OF DEFECTIVE IT(SS).42 TO 44 /MDS/06 9 STOCK WAS INCORRECT. AS FOR THE ACCRUED INTEREST, CIT(A) WAS OF THE OPINION THAT IT WAS QUANTIFIED ONLY AFTER THE BLOCK RETURNS WERE FILED. HOWEVER, FOR THE BALANCE OF THE DIFFERE NCE IN NET WORTH RETURNED BY THE ASSESSEES, VIS--VIS THAT FIXED BY THE ASSESSING OFFICER, THE LD. CIT(A) WAS OF THE OPINION THAT AS SESSEES COULD NOT SHOW ANY REASONABLE EXPLANATION OR RECONCILIA TION. AS FOR THE ADDITIONS MADE IN THE CASE OF SHRI K.GOVINDRAJU, CI T(A) WAS OF THE OPINION THAT ALL SUCH ADDITIONS WERE MADE BASED ON THE ADMISSIONS OF ASSESSEE. AS PER CIT(A), INVESTMENT OF RS.3 LAKHS IN PROPERTY AT 1/115, SEMMANTHAPATTY ROAD, CHINTHAMANIYUR IN THE NAME OF SMT G.CHENNAMMAL, SU M OF RS.2,35,000/- INVESTED IN COMMERCIAL COMPLEX AND A SUM OF RS.2,500/- INCURRED FOR CONSTRUCTION OF PROPERTY SE MMANTHAPATTY ROAD, CHINTHAMANIYUR, AS ALSO TRADE CREDIT DIFFEREN CE IN THE ACCOUNT OF M/S.BHARATI SILKS RS.5,54,686/-, WERE AL L ADMITTED BY THE ASSESSEE HIMSELF. IN OTHER WORDS, HE UPHELD T HE LEVY OF PENALTY UNDER SECTION 158BFA(2) OF THE ACT EXCEPT F OR RELIEF GIVEN BY HIM ON THE DIFFERENCE IN SHARE OF NET WORTH ON A CCOUNT OF INTEREST ACCRUED ON DEPOSITS AND DEFECTIVE STOCK. 14. NOW, BEFORE US LD. A.R STRONGLY ASSAILING THE ORDERS OF THE CIT(A) SUBMITTED THAT THE DIFFERENCE IN NET WORTH ARISE ONLY DUE IT(SS).42 TO 44 /MDS/06 10 TO DIFFERENT METHODS FOLLOWED BY THE ASSESSEE AND T HE ASSESSING OFFICER. AS PER A.R, THIS WAS ONLY ON ESTIMATION AND THERE COULD BE NO LEVY OF PENALTY FOR AN ESTIMATED ADDITION. AS PER THE LD. A.R, IN CASE OF SHRI K.GOVINDRAJU, PAYMENTS WERE EF FECTED TO M/S.BHARATI SILKS KOTE, BANGALORE REGULARLY. ON 07 .3.11, A SUM OF RS.3,50,000/- WAS PAID BY D.D NO.104644 DRAWN ON TH E LAKSHMI VILAS BANK LTD. ACCORDING TO HIM, THERE WAS NO CLOS ING BALANCE IN THE ACCOUNT OF M/S.BHARATI SILKS KOTE AFTER 07.03.0 1. THEREFORE, ACCORDING TO HIM, PENALTY TO THIS EXTENT WAS NOT WA RRANTED. ASSESSEE COULD NOT BE CALLED UPON TO EXPLAIN THE CO NFIRMATION GIVEN BY M/S.BHARATI SILKS, WHICH WAS NOT SUPPORTED BY ANY RECORDS. AS FOR THE ADDITIONS MADE FOR PROPERTY HEL D IN THE NAME OF THE WIFE OF SHRI K.GOVINDRAJU AND INVESTMENTS I N COMMERCIAL COMPLEX, A.R SUBMITTED THAT THESE WERE ALSO ESTIMA TED ADDITIONS. FURTHER, AS PER A.R, THERE WAS NO ELEM ENT OF CONCEALMENT IN THE INVESTMENT IN THE NAME OF WIFE OF SHRI K.GOVINDRAJU. ACCORDING TO HIM, LEVY OF PENALTY UND ER SECTION 158BFA(2) WAS NOT WARRANTED. PER CONTRA LD. D.R SU PPORTED THE ORDERS OF THE CIT(A). 15. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHOR ITIES AND HEARD RIVAL CONTENTIONS. FIRST WE DEAL WITH THE IS SUE OF DIFFERENCE IT(SS).42 TO 44 /MDS/06 11 BETWEEN NET WORTH AS COMPUTED BY THE ASSESSEE AND A S COMPUTED BY THE ASSESSING OFFICER. THERE IS NO DIS PUTE THAT BOTH PARTIES HAD AGREED THAT BEST METHOD FOR DETERMINING THE UNDISCLOSED INCOME WAS NET WORTH METHOD. ASSESSEES HAD DURING THE SEARCH, MADE A DISCLOSURE OF RS.82,80,56 8/- AS THEIR NET WORTH. HOWEVER, IN THE RETURNS FILED BY THE AS SESSEES, THE AMOUNTS DISCLOSED TOTALED TO RS.70,12,804/- ONLY. IT IS AN ADMITTED POSITION THAT ASSESSEES THEMSELVES HAD IN THEIR RETURN OF INCOME GIVEN A NOTE WHICH READ ARE ASUNDER:- THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT AT HIS PREMISES. MOST OF THE ACCOUNTS SUBMITTED TO THE DEPARTMENT DURING LAST 10 YEARS DO NOT REFLECT THE TRUE STATE OF AFFAIRS OF THE CONCERN, THE ACCOUNTS DO NO T HAVE ANY RELEVANCE TO THE NATURE OF THE BUSINESS AND HEN CE THE ASSESSEE HAS OPTED TO GO ON THE INVESTMENT AND NET WORTH BASIS 16. ASSESSING OFFICER HAS GIVEN A CLEAR FINDING T HAT A REVISED NET WORTH STATEMENT WAS FILED BY THE ASSESS EE DURING THE BLOCK ASSESSMENT PROCEEDINGS. IN SUCH REVISED NET WORTH STATEMENT , NET WORTH WAS RECOMPUTED AT ` 83,05,554/-. NO DOUBT, ASSESSING OFFICER HAD ADDED ACCRUED INTERES T OF IT(SS).42 TO 44 /MDS/06 12 RS.75,061/- RETURNED BY THE ASSESSEES IN THEIR RESP ECTIVE RETURNS, TO SUCH NET WORTH AND AFTER GIVING SOME OT HER RELIEF FINALLY ARRIVED AT A DIFFERENCE OF RS.9,17,811/- ON LY. THIS AMOUNT WAS EQUALLY DIVIDED AMONG THE THREE ASSESSEES. NOT HING WAS BROUGHT BEFORE US BY THE LD A.R AS TO WHY THE NET W ORTH STATEMENT FILED BY THE ASSESSEES THEMSELVES OR DEC LARED BY THE ASSESSEES AT THE TIME OF SEARCH SHOULD NOT BE BELIE VED. NO REASON HAS BEEN SHOWN WHY THE ASSESSEES DID NOT SHOW IN THEIR RESPECTIVE RETURNS FOR THE BLOCK PERIOD, THE NET WORH AS PER THEIR OWN COMPUTATION. THERE IS NOTHING ON RECORD TO SHOW WHY THEY HAD SHOWED A LOWER AMOUNT OF RS.70,12,804/- IN THEIR RETURNS. CIT(A) HAD GIVEN CONSIDERABLE RELIEF TO TH E ASSESSEE BY EXCLUDING THE ACCRUED INTEREST AND ALSO ACCEPTING THE CLAIM OF DEFECTIVE GOODS, WHILE GIVING A PART RELIEF TO THE ASSESSEE ON THE LEVY OF PENALTY. HE HAD CONFIRMED LEVY OF PENALTY ONLY TO THE BALANCE AMOUNT OF RS.2,27,740/-OUT OF THE DEFICIT I N NET WORTH. IN THE CASE OF SHRI K.GOVINDRAJU, OTHER ADDITIONS MADE WERE ALL BASED ON THE ADMISSION OF THE SAID ASSESSEE. ASSES SEE HIMSELF HAD ADMITTED THAT A UM OF RS. 3 LAKHS WAS INVESTED BY HIM IN THE NAME OF HIS WIFE AT SEMMANDAPATTI ROAD, CHINTHAMANI YUR. ASSESSEE HIMSELF HAD ADMITTED RS.2,35,000 REPRESEN TED AN INVESTMENT IN COMMERCIAL COMPLEX AT TRICHY MAIN ROA D, SALEM. IT(SS).42 TO 44 /MDS/06 13 ASSESSEE HIMSELF HAD PRODUCED A CONFIRMATION FROM M/S.BHARATI SILKS KOTE WHICH SHOWED THAT THE CREDI T MENTIONED IN THE BOOKS WAS OVER STATED BY A SUM OF RS.5,54,68 6/-. NOTHING STOPPED THE ASSESSEE FROM SHOWING THE CORR ECT AMOUNTS IN THEIR RESPECTIVE BLOCK RETURNS. IN OUR O PINION, ASSESSEES HAD INTENTIONALLY OMITTED TO GIVE THE CO RRECT AMOUNTS IN THEIR RESPECTIVE BLOCK RETURNS. AT THIS JUNCTURE , IT IS NECESSARY TO HAVE A LOOK AT SEC.158BFA(2), WHICH IS REPRODUCE D HEREUNDER: (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY D IRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHAL L NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NO T EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF T HE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER UNDER CL AUSE (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 158 BC; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HA S 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 PROVI SO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED B Y THE ASSESSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN IT(SS).42 TO 44 /MDS/06 14 AND IN SUCH CASES THE PENALTY SHALL BE IMPOSED ON T HE PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. SECOND PROVISO CLEARLY MENTIONS THAT FIRST PROVISO WILL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY THE ASSE SSING OFFICER IS MORE THAN THE INCOME SHOWN IN THE RETURN S. HERE, NOT ONLY IS UNDISCLOSED INCOME DETERMINED BY THE ASSESS ING OFFICER HIGHER THAN WHAT WAS RETURNED, BUT SUCH ADDITION WA S NECESSITATED ONLY DUE TO THE FAILURE OF THE ASSESSE ES TO RETURN THE CORRECT UNDISCLOSED INCOME, DESPITE HAVING FULL KNOWLEDGE REGARDING ITS INCOME AND NET WORTH. IN OUR OPINION, LEVY OF PENALTY UNDER SECTION 158BFA(2) WAS JUSTIFIED. WE, THUS DO NOT FIND ANY NECESSITY TO INTERFERE IN THE ORDERS OF TH E CIT(A). 17. IN THE RESULT, APPEALS OF THE ASSESSEES STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 27 TH FEBRUARY, 2013 . SD/- SD/- (S.S.GODARA) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 27 TH FEBRUARY, 2013 . K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE IT(SS).42 TO 44 /MDS/06 15