Ehasan Haji Amin Gadawala, Surat V. The ACIT.Cent.Circle-4, Surat

ITSSA 470/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0680 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: RAMESH KUMAR MA LPANI
• Keywords: Unexplained expenditure; Gift; Search and seizure; Loose papers; Deemed to accrue or arise in india
• Section: 69C; 5(2)

Judgement Text

IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR, AM AND S.S. GODARA, JM] IT(SS)A NOS.470/AHD/2011. ASSESSMENT YEAR: 2006-07 EHASAN HAJI AMIN GADAWALA, .APPELLANT C/O. ALA INTERNATIONAL PVT. LTD., A-501/502, LEO APARTMENT, PLOT NO.479, 24 TH ROAD, KHAR (WEST), MUMBAI 52. [PAN: AELPG 7401 A] VS. ASSTT. COMMISSIONER OF INCOME TAX, .RESPONDENT CENTRAL CIRCLE 4, SURAT. APPEARANCES BY: RAMESH KUMAR MALPANI, FOR THE APPELLANT P.L. KUREEL, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: 20 TH APRIL, 2015 DATE OF PRONOUNCING THE ORDER: 24 TH APRIL, 2015 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CALLED INTO QUESTION CORRECTNESS OF THE ORDER DATED 16 TH AUGUST, 2010 PASSED BY THE CIT(A) IN THE MATTER OF PENALTY OF RS.4,84,832/- IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESSMENT YEARS 2006-07, ON THE FOLLOWING GROUNDS :- 1) A) THAT LD. CIT(A) HAS ERRED IN SUSTAINING THE PEN ALTY LEVIED OF RS.4,84,832/- U/S 271(1)(C) OF THE ACT. B) THAT THE ORDER PASSED BY LD. CIT(A) IS WRONG AND B AD IN LAW. IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 2 OF 9 C) THAT PENALTY OF RS.4,84,832/- LEVIED BY LD. A.O. U/S 271(1)(C) OF THE ACT IS WRONG AND INCORRECT IN FACTS AS WELL AS IN L AW AND THEREFORE LD. CIT(A) HAS ERRED IN SUSTAINING THE SAME. 2. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE, AS ALSO HIS FAMILY AND GROUP MEMBERS, WERE SUBJECTED TO A SEARCH AND SEIZU RE OPERATION ON 14 TH DECEMBER, 2005. ON THE BASIS OF DOCUMENTS FOUND IN THIS SEAR CH AND SEIZURE PROCEEDINGS, ADDITIONS OF RS.11,16,106/- (I.E. ADDITION IN RESPE CT OF ALLEGED UNEXPLAINED EXPENDITURE OF RS.16,16,106/- MINUS VOLUNTARY DECLARATION, UNDE R SECTION 132(4), OF RS.5,00,000/-) BY OBSERVING AS FOLLOWS :- DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, SEVERAL DOCUMENTS WERE FOUND AND SEIZED VIDE ANNEX. A-1 TO A-7 TO PANCHANAM A DATED 14.12.2005. THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF ACQ UISITION OF JEWELLERY WORTH RS.1,51,056/- (RS.1,18,478/- AND RS.32,578/-) FOUND AS PER PAGE NO.1 AND 2, ANNEX. A-1. THE EXPLANATION THAT THE JEWELLERY HAS BEE N RETURNED IS NOT ACCEPTABLE KEEPING IN VIEW THE NATURE OF JEWELLERY BUSINESS AND ALSO THAT NO SUCH EXPLANATION WAS OFFERED DURING THE POST-SEARCH PR OCEEDINGS BEFORE THE INVESTIGATION WING. FURTHER, THE SALES RETURN BILL I S DEVOID OF ANY DETAILS OF JEWELLERY RETURNED, THUS NO EVIDENCE HAS BEEN ADVANC ED AS PER TO THE FACT THAT THE SAME JEWELLERY HAVE BEEN RETURNED. AS PER PAGE NO.4 OF ANNEX. A-1, EXPENDITURES TO THE TUNE OF RS.2,51,300/- (RS.1,61,750/- + RS.89,550/-) HAVE BEEN EVIDENCED. DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS, IT HAS BEEN CLAIMED TO BE PERSONAL SAVING OF LADIES FROM WHICH JEWELLERY HAVE BEEN PURCHASED SUBSEQU ENTLY. THESE ROUGH NOTINGS ON PAGE-4 OF ANNEXURE-A/1 HAVE BEEN CLAIMED TO BE MADE BY HOUSE LADIES IN RESPECT OF AMOUNT AVAILABLE/SPENT BY THEM OUT OF WITHDRAWALS/PERSONAL SAVINGS. HOWEVER, NO SOURCE OF THOSE SAVINGS/INCOME HAVE BEEN DISCLOSED NOR SATISFACTORILY EXPLAINED. A LSO, THE CLAIM THAT THE SUM RS.89,550/- HAS NOT BEEN EXPENDED AND HAS BEEN RECEI VED BACK HAS NOT BEEN ADEQUATELY SUBSTANTIATED. HENCE, THE AMOUNTS ARE TR EATED AS UNEXPLAINED EXPENDITURE. ALSO THAT, THE ASSESSEE HAS ADMITTED THE SAME UNDER THE AMOUNT DISCLOSED U/S 132(4). THEREFORE, ADDITION OF RS.2,51,300/- IS MADE AS UNEXPLAINED EXPENDITURES. FURTHER, PAGE NOS. 8 OF MATERIAL SEIZED VIDE ANNEX. A-1 REFLECT EXPENSES OF RS.1,44,520/-, AND PAGE NOS.9 TO 12 OF ANNEX. A-1 R EFLECT EXPENSES OF RS.3,04,770/- RESPECTIVELY. HOWEVER, NO PROPER SO URCE OF THESE EXPENDITURES AMOUNTING TO RS.4,49,290/- WERE FURNISHED, THUS RENDE RING THE SOURCE UNEXPLAINED. IT HAS BEEN ADMITTED THAT THE EXPENSES AS PER PAGE NO.8 TO 12 OF ANNEXURE-A/1 ARE COVERED BY THE AMOUNT DISCLOSED U/S . 132(4). HENCE, THE IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 3 OF 9 EXPENSES OF RS.4,49,290/- HAVE BEEN ADMITTED AS UNA CCOUNTED AND UNEXPLAINED. THEREFORE, SUCH ADDITION OF RS.4,49,290/- IS MADE AS DEEMED INCOME TOWARDS UNEXPLAINED EXPENDITURE. AS PER PAGES OF SEIZED MATERIAL VIDE A-3, PAGE NO.1 , JEWELLERY TO THE TUNE OF RS.4,34,800/- HAS BEEN PURCHASED. IT HAS BEEN CONTEN DED THAT THE SOURCE OF THESE EXPENDITURES ON JEWELLERY HAVE BEEN COVERED IN TRANSACTIONS IN PAGE NO.8 TO 12, ANNEX. A-1. HOWEVER, THIS EXPLANATION I S NOT ACCEPTABLE IN ITS ENTIRETY DUE TO ABSENCE OF ANY DIRECT NEXUS OR EVID ENCE. FURTHER, AS PER PAGE NO.2 A SUM OF RS.3,71,000/- HAS BEEN SPENT ON BASHAR S MITHA MODU RITUAL, FOR WHICH NO EXPLANATION HAS BEEN FURNISHED. THUS, THE AGGRE GATE OF THESE EXPENDITURES ON JEWELLERY ARE RS.8,05,800/-. HOWEV ER, FOR THE SAKE OF REASONABILITY AND JUSTICE, DUE CREDIT IS GIVEN TO T HE EXPENDITURE AS PER PAGE NOS. 8 TO 12, ANNEX. A-1 AMOUNTING TO ONLY RS.4,49, 290/-. THUS, A SUM OF RS.3,56,510/- (RS.8,05,800 RS.4,49,290) HAS NOT BEEN EXPLAINED AND IS ADDED U/SECTION 69C OF THE INCOME TAX ACT, 1961. THE DISCLOSURE ON THIS COUNT HAS BEEN MADE TO THE TUNE OF RS.1,00,000 IS NO T ADEQUATE. FURTHER, AS PER PAGE NO.4, 5 AND 6, GOLD WEIGHT 22 + 5 + 4 + 10 = 41 GINNI [41 GMS. OF 22 CARAT GOLD AMOUNTING TO RS.41,000/-] HAVE BEEN RECEIVED IN NAME WIFE OF THE ASSESSEE, ON WHOSE BEHALF ASSESSEE HAS ACC EPTED ALL TAX LIABILITIES. THESE HAVE NOT BEEN AMOUNTED OR REFLECTED IN BOOKS OF ACCOUNTS. THE CLAIM THAT THESE ARE GIFS HAS NOT BEEN SUPPORTED BY ANY EVID ENCE/STATEMENT OF DONOR ETC. FURTHER, THIS AMOUNT OF RS.41,000/- HAS BEEN VOLUNTARILY DISCLOSED AS UNRECORDED GIFT BY THE ASSESSEE IN STATEMENT MADE U/SECTION 131, DATED 09.01.2006 IN HIS REPLY TO QUESTION NO.4. DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS, IT HAS BEEN FOUND THAT AS PER PAGE NO.17 OF MATERIALS SEIZED VIDE A-5, A SUM OF RS.3,66,950/- HAS BEEN EXPENDED BY HOUSE LADIES TOWARDS GOLD JEWELLERY PURC HASES. IT HAS BEEN CLAIMED THAT ROUGH NOTINGS ON PAGE 17 OF ANNEXURE A-5 ARE CANCELLED ROUGH NOTINGS BY HOUSE LADIES. THE VOUCHERS AND DETAILS OF THESE TRANSACTIONS HAVE BEEN ACCOUNTED THROUGH VARIOUS PAGES OF ANN. A-1 TO A -6. THE CONTENTION THAT THESE ARE ROUGH AND CANCELLED NOTINGS BY HOUSE LADIES IN RESPECT OF TALLY OF CASH AVAILABLE WITH THEM FOR ABOVE PURPOSE IS NOT A CCEPTABLE SINCE NO NEXUS BETWEEN THESE ENTRIES AND THE JEWELLERY PURCHAS ED AS PER THE REFERRED PAGES HAVE BEEN ESTABLISHED. MERE ASSERTIONS CAN NOT BE THE BASIS OF ASSESSMENT. THEREFORE, THE SUM OF PROCEEDINGS, IT HAS BEEN FOUND THAT AS PER PAGE NO.17 OF MATERIALS SEIZED VIDE A-5, A SUM OF RS.3,66,950/- IS DEEMED TO BE INCOME OF THE ASSESSEE ON BASIS OF UNEXPLAINED E XPENDITURES. THUS FROM THE ABOVE DISCUSSION IT IS EVIDENT THAT THE A SSESSEE HAS FURNISHED INACCURATE PARTICULARS BY UNDER-REPORTING THE EXPEND ITURES ON JEWELLERY AND OTHER VALUABLES AND ON ACCOUNT OF INCOME DEEMED TO HA VE ACCRUED/ARISEN TO HIM. THE ENSUING INCOME HAS BEEN UNDER-REPORTED BY THI S FURNISHING OF INACCURATE PARTICULARS AND HENCE THERE HAS BEEN RESUL TANT CONCEALMENT OF INCOME. THEREFORE, SATISFIED ON ACCOUNT OF THESE RE ASONS AS ABOVE, PENALTY IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 4 OF 9 PROCEEDINGS U/S. 271(1)(C) IS BEING INITIATED FOR F URNISHING INACCURATE PARTICULARS OF INCOME AND THEREBY LEADING TO CONCEAL MENT OF INCOME. ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE RS .16,16,106/- 3. THE ASSESSEE DID NOT CHALLENGE THESE ADDITIONS I N APPEAL BUT THE MATTER DID NOT REST THERE. THE ASSESSEE WAS ALSO LEVIED PENALTY U NDER SECTION 271(1)(C) OF THE ACT. IN THESE PENALTY PROCEEDINGS, THE EXPLANATIONS OF THE ASSESSEE WERE REJECTED AND THE IMPOSITION OF PENALTY WAS JUSTIFIED, INTER ALIA, AS FOLLOWS :- 3. AS REFLECTED IN THE SEIZED MATERIALS AS LISTED B ELOW, CERTAIN UNEXPLAINED EXPENDITURES HAVE BEEN DETECTED FROM INC RIMINATING DOCUMENTS/MATERIALS DURING THE COURSE OF INSTANT PE NALTY PROCEEDINGS : (I) AN AMOUNT OF RS.2,51,300/- (RS.1,61,750/- + RS. 89,550/-) AS PER PAGE NO.4 OF ANNEX. A-1 HAS BEEN CLAIMED TO BE PERSONAL SAVING OF LADIES. HOWEVER, NO SOURCE OF THOSE SAVINGS HAVE BEEN DISCLOSED. IN EXPLANATION TO THE ABOVE, THE ASSESSEE STATED THAT : PAGE NO.4 OF ANNEXURE 1 ARE ROUGH NOTINGS BY HOUSE LADIES IN RESPECT OF AMOUNT AVAILABLE WITH THEM OUT OF WITHDRAWALS/PERSONAL SAVINGS. THE TOTAL HOUSE HOLD WITHDRAWALS REFLECTED BY MY FAMILY IN A.Y. 2006-07 ARE AS UNDER :- EHSAN HAJIAMIN GADAWALA RS.8,08,423/- ASFANA EHSAN GADAWALA RS.1,14,497/- MALIKA HAJIAMIN GADAWALA RS.44,025/- ----------------------------------- -------------- ---- TOTAL RS.9,66,945/- IN ADDITION TO THAT WITHDRAWALS FOR HOUSE RENOVATIO N ARE THERE IN THE HAND OF MY WIFE OF RS.19,45,000/-. THE ROUGH JOTTINGS ON PAG E NO.4 OF ANNEXURE A-1 ARE REGARDING THESE AMOUNTS AVAILABLE WITH THE HOUSE LA DIES. THE SAME CANNOT BE AN INCOME EARNED BY ME. OUR WITHDRAWALS A RE SUFFICIENT TO PROVE THAT THE CASE WAS AVAILABLE WITH HOUSE LADIES AND THESE JOTTING ARE IN RESPECT OF CASH AVAILABLE WITH THEM OUT OF THESE WITHDRAWALS. REBUTTAL: THE ASSESSEES CLAIM THAT THE NOTINGS AS PER THE SEIZE D MATERIAL PERTAIN TO AMOUNTS AVAILABLE WITH THE HOUSE LADIES IS DEVOID OF ANY PROOF OR EVIDENCE. ASSESSEE HAS FAILED TO FURNISH EXACT NEXUS BETWEEN THE EXPENDITURES AS PER THE NOTINGS AND THE WITHDRAWALS FOR HOUSEHOLD PURPOSES. THE REFORE, ASSESSES EXPLANATION IS REJECTED ON ACCOUNT BEING BASED ON M ERE UNFOUNDED CLAIMS. IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 5 OF 9 (II) AS PER PAGE NOS.8 TO 12 OF ANNEX. A-1, EXPENSE S OF RS.1,44,520/-, RS.5,270/-, RS.68,595/-, RS.1,93,000/- AND RS.39,50 0/- RESPECTIVELY HAVE BEEN EVIDENCED. HOWEVER, NO PROPER SOURCE OF THESE EXPEN DITURES AMOUNTING TO RS.4,50,885/- HAVE BEEN FURNISHED, THUS RENDERING THE EXPENDITURE INCURRED FROM UNEXPLAINED SOURCES. THE ASSESSEE CLAIMED THAT : PAGE NO.1 AND 2 OF ANNEXURE A-3 ARE NOTINGS OR PLAN NINGS BY THE HOUSEHOLD LADIES IN RESPECT OF OCCASION OF FAMILY. THERE ARE NOT ACTUAL EXPENDITURE BUT ARE PLANNING. ACTUAL EXPENDITURE INCURRED WAS COVE RED BY LOOSE PAPERS/NOTINGS IN OTHER ANNEXURES. JEWELLERY ACTUA LLY PURCHASED FOR THESE OCCASIONS WAS COVERED BY PAGE NO.4 AND 8 TO 12 OF A NNEXURE 1 AS MENTIONED IN ABOVE PARA. OTHER EXPENSES WERE INCURR ED FROM OUT WITHDRAWALS FOR WHICH ME AND MY FAMILY MEMBERS ARE HAVI NG SUFFICIENT H.H. WITHDRAWALS. THUS, OTHER EXPENSES ACTUALLY INCURRED A RE COVERED BY H.H. WITHDRAWALS. NOTINGS ON PAGES OF ANNEXURE A-3 ARE O NLY PLANNING AND NOT ACTUAL. HENCE, THE ADDITION MADE BY LEARNED A.O. IS BASED ON PRESUMPTION OR SUSPICION. MY EXPLANATION IS BONAFIDE. THESE JOTTI NGS WERE JUST PLANNING. ACTUAL SPENDING ARE COVERED AS EXPLAINED ABOVE. HE NCE, THIS ADDITION ALSO DOES NOT FALL INTO THE AMBIT OF SECTION 271(1|)(C) O F THE ACT. REBUTTAL: THE NOTINGS CLEARLY INDICATE THE EXACT QUANTITY AND DETAILS OF THE PURCHASED JEWELLERY AND VALUABLES. THE CLAIM THAT THESE ARE ME RE PLANNING OR INTENDED PURCHASES IS NOT ACCEPTABLE, AS NO EVIDENCE HAS BEEN FURNISHED IN REGARD TO THIS CLAIM. ANY PAPER CAN BE CLAIMED TO BE MERE PL ANNING FOR EVASION OF DUE TAX. THEREFORE, IN ABSENCE OF PROPER DOCUMENTARY EV IDENCE SHOWING THE BONA FIDE OF ASSESSEES EXPLANATION, THE EXPLANATION CAN NOT BE ACCEPTED MERELY ON GROUND OF SURMISE. THEREFORE, CONCLUSIVELY, IT S ES TABLISHED THAT THE ASSESSEE HAS UTILISED UNACCOUNTED SOURCES FOR THE PURCHASE OF THE VALUABLES AND HAS CONCEALED THE PARTICULARS OF THAT SOURCE. (IV) AS PER PAGE NO.4, 5 AND 6, GOLD WEIGHT 22 + 5 + 4 + 10 = 41 GINNI [41 GMS. OF 22 CARAT GOLD AMOUNTING TO RS.41,000/-] HAVE BEEN RECEIVED IN NAME OF SMT. ASFANABAI GADAWALA, WHICH HAS NOT BEEN ACCOUNT ED OR REFLECTED IN BOOKS OF ACCOUNTS. THE SAME ARE REQUESTED TO BE EXP LAINED. PAGE NO.4 TO 6 OF ANNEXURE A-3 IS LIST OF PLANNING I.E. ITEMS TO BE RECEIVED BY FAMILY MEMBERS IN GIFT IN RESPECT OF FAMILY OCCASIO N. GOLD COINS (GINNI) WERE PLANNED TO BE RECEIVED AS PER CUSTOM PREVAILING IN OUR RELIGION. THIS WAS JUST A PLANNING. THIS DOES NOT REPRESENT ANY INCOME EARN ED BY ME. REBUTTAL: IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 6 OF 9 THE NOTHINGS MENTION IN DETAIL THE QUANTITY OF THE PURC HASED JEWELLERY AND VALUABLES. THE CLAIM THAT THESE ARE MERE PLANNED PURC HASES IS NOT ACCEPTABLE, AS NO EVIDENCE HAS BEEN FURNISHED IN REGA RDS TO THIS CLAIM. ANY PAPER CAN BE CLAIMED TO BE MERE PLANNING FOR THE P URPOSE OF EVASION OF TAX. IN ABSENCE OF PROPER DOCUMENTARY EVIDENCE SHOWING THE BONA FIDE OF ASSESSEES EXPLANATION, THE EXPLANATION CAN NOT BE A CCEPTED MERELY ON GROUND OF SURMISE. THEREFORE, IT IS ESTABLISHED CONCLUSIVEL Y THAT THE ASSESSEE HAS USED UNACCOUNTED SOURCES FOR THE PURCHASE OF THE VALUABLES AND HAS CONCEALED THE PARTICULARS OF THAT SOURCE. (V) AS PER PAGE NO.17 OF MATERIALS SEIZED VIDE A-5, A SUM OF RS.3,66,950/- HAS BEEN EXPENDED BY SMT. ASFANABAI TOWARDS GOLD JEW ELLERY PURCHASES. FURTHER, AS PER PAGE NO.24, A SUM OF RS.1,67,900/- HA S BEEN LAID OUT ON HOUSE EXPENDITURES FOR WHICH THE SOURCE HAS NOT BEEN EXPLAINE D. THE ASSESSEE CONTENDED THAT : PAGE NO.17 OF ANNEXURE A-5 ARE CANCELLED ROUGH NOTIN GS BY HOUSE LADIES. THE SAME HAVE BEEN CANCELLED AND CUT. THE AMOUNT WITHDRAW N FOR HOUSE RENOVATION, H.H. WITHDRAWALS WERE AVAILABLE WITH HOUSE LADIES. THESE ROUGH NOTINGS ARE IN RESPECT OF THIS CASH AVAILABLE WITH HOUS E LADIES AND AFTER TALLY THE SAME WERE CANCELLED. ALL THESE ROUGH NOTINGS ARE FOR SAME CASH AVAILABLE WITH THEM. HOUSE LADIES KEPT THIS CASH WITH THEM AND UTI LISED FOR HOUSE RENOVATION, H.H. EXPENSES AND JEWELLERY PURCHASED. TO TALLY THIS CASH WITH THEM FROM TIME TO TIME THESE ROUGH NOTINGS ARE JOTTED AND ON RECONCILIATION THE SAME WERE CUT AND CANCELLED. THE VOUCHERS AND DET AILS HAVE BEEN FOUND ON VARIOUS PAGES OF ANNEXURE A-1 TO A-6. FOR E.G. JEWELLERY ACTUALLY PURCHASED AS PER PAGE 4 AND 8 TO 12 OF ANNEXURE A-1. HOUSE RENOVATION EXPENSES IN ANNEXURE A-2 ETC. THESE ROUGH NOTINGS AR E FOR CASH AVAILABLE FOR THESE ITEMS ONLY AND IS THUS COVERED BY EXPLANATION F OR THESE ITEMS. SIMILAR ARE THE ROUGH NOTINGS ON PAGE NO.24 WHICH CONTAINS DETA ILS ON HOUSE RENOVATION EXPENSES ETC. THUS, THESE ARE ROUGH CANCEL LED NOTINGS BY HOUSE LADIES IN RESPECT OF TALLY OF CASH AVAILABLE WITH THEM FOR ABOVE PURPOSE FOR WHICH THERE WERE SUFFICIENT WITHDRAWALS AS MENTIONED AB OVE. HENCE, ALL THESE JOTTINGS ARE IN RESPECT OF ABOVE ITEMS EXPLAINED AN D COVERED. THE ADDITION ALSO DOES NOT REPRESENT ANY INCOME ACTUALLY EARNED BY ME. REBUTTAL: THE CLAIMS THAT THE IMPUGNED ENTRIES ARE MERE ROUGH NOT INGS AND THERE HAVE BEEN ADEQUATE CASH AVAILABLE WITH THE ASSESSEE FOR THE IMPUGNED EXPENSES HAVE NOT BEEN BACKED BY ANY EVIDENCE. THE EXACT BREA K-UP OF HOUSEHOLD EXPENSES HAVE NOT BEEN FURNISHED. NEITHER THE CLAIM T HAT THE CASH HAS BEEN RECONCILED AND SCRIBBLED ON THE SEIZED MATERIALS HAS BEEN BUTTRESSED BY ANY EVIDENCE. MERE ASSERTION CAN NOT BE ACCEPTED AS AN EXPLANATION IN LIGHT OF THE INCRIMINATING EVIDENCE FOUND AND SEIZED. THUS, THE E XPLANATION OF THE ASSESSEE IS REJECTED AND CONCEALMENT IS ESTABLISHED . IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 7 OF 9 4. AGGRIEVED BY THE PENALTY SO IMPOSED, ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. WHILE R EJECTING THE APPEAL, LEARNED CIT(A), INTER ALIA, OBSERVED AS FOLLOWS :- 4. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS. I DO NOT AGREE WITH THE APPELLANTS VIEW. THE APPELLANT HAS NOT DISCLOSE D THE CORRECT AMOUNT AT THE TIME OF SEARCH, AS HE DISCLOSED ONLY RS.5,00,000/ - BUT THE UNDISCLOSED INCOME WORKS OUT TO MUCH MORE THAN IT. HENCE, HE IS NOT ENTITLED FOR IMMUNITY UNDER EXPLANATION 5(2) TO SECTION 271(1)(C ) OF THE ACT. FURTHER, THE ADDITION IS BASED ON THE PAPERS FOUND IN THE SEARC H WHICH HAVE NOT BEEN PROPERLY EXPLAINED AND THE ASSESSMENT HAS BECOME FINA L. AS THIS IS THE CASE OF SEARCH WHERE INCRIMINATING DOCUMENTS AND VALUABLES HA VE BEEN FOUND ON THE BASIS OF WHICH THE INCOME HAS BEEN COMPUTED, THE DEEMIN G PROVISION OF EXPLANATION 5(2) TO SECTION 271(1)(C) IS APPLICABLE . HENCE THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY WHICH IS UPHELD. 5. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PURSUED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE, IN THE LIGHT OF THE A PPLICABLE LEGAL POSITION. 7. WE FIND THAT THE RELATED ADDITION, WHICH HAS BE EN FINALLY BROUGHT TO TAX, IS RS.11,16,106/- AND NOT RS.16,16,106/- SINCE WHILE C OMPUTING THE TAXABLE INCOME, THE ASSESSING OFFICER HIMSELF HAS GIVEN A SET OFF OF RS .5,00,000/- IN RESPECT OF THE VOLUNTARY DISCLOSURE MADE BY THE ASSESSEE. THIS IS EVIDENT F ROM THE COMPUTATION OF INCOME BY THE ASSESSING OFFICER AT PAGE 6 OF THE ASSESSMENT ORDER , WHICH READS AS FOLLOWS :- PARTICULARS IN RS. TOTAL INCOME AS PER COMPUTATION OF INCOME 2,42,940/ - ADD: DISALLOWANCE /ADDITION AS DISCUSSED ABOVE: ADDITION ON ACCOUNT OF UNEXPLAIN ED EXPENDITURES 16,16,106/ - LESS : VOLUNTARY DISCLOSURE U/S 132(4) 5,00,000/ - TOTAL DISALLOWANCE/ADDITION 11,16,106/ - TOTAL INCOME 13,59,046/ - TOTAL INCOME ROUNDED OFF U/S 288A 13,59,050/ - IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 8 OF 9 8. THE AUTHORITIES BELOW HAVE THUS CLEARLY ERRED AN D HAVE NOT APPLIED THEIR MIND TO THE FACTS OF THE CASE. WHILE THE ADDITION IS MADE ONLY OF RS.11,16,106/-, THE PENALTY IS LEVIED IN RESPECT OF INCOME OF RS.16,16,106/- SAID TO HAVE BEEN SOUGHT TO BE EVADED. THE CIT(A) IS ALSO IN ERROR IN JUSTIFYING IMPOSITIO N OF PENALTY ON THE GROUND THAT THE ADDITION IS BASED ON THE PAPERS FOUND IN THE SEARCH WHICH HAVE NOT BEEN PROPERLY EXPLAINED AND THE ASSESSMENT HAS BECOME FINAL. TH E ADDITION HAVING ATTAINED FINALITY OR THE ADDITIONS HAVING BEEN MADE ON THE BASIS OF S EIZED PAPERS ARE NOT THE DECISIVE FACTORS FOR COMING TO THE CONCLUSION WHETHER OR NOT IT IS A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONC EALMENT OF INCOME. WHAT, IN OUR HUMBLE UNDERSTANDING, IS CRUCIAL IS WHETHER THE ASS ESSEE HAS AN EXPLANATION IN RESPECT OF ADDITIONS HAVING BEEN MADE TO HIS INCOME, AND, I F ASSESSEE HAS SUCH AN EXPLANATION, WHETHER SUCH AN EXPLANATION IS A REASONABLE AND ACC EPTABLE EXPLANATION ON THE FACTS OF THAT CASE. 9. WE HAVE NOTED THAT THE EXPLANATION GIVEN BY THE ASSESSEE HAS NOT BEEN FOUND TO BE UNTRUE OR INCORRECT. ALL THAT THE ASSESSING OFF ICER HAS POINTED OUT IS THAT THERE IS POSSIBILITY OF SUCH AN EXPLANATION BEING INCORRECT AND AS TO WHAT OUGHT TO HAVE BEEN DONE IN THE IDEAL CIRCUMSTANCES. HOWEVER, IN OUR C ONSIDERED VIEW, WHILE EXAMINING EXPLANATION OF AN ASSESSEE, AN ASSESSING OFFICER IS NOT TO PONDER ABOUT THE SITUATIONS IN WHICH SUCH AN EXPLANATION COULD PROVE TO BE INCORRE CT OR WHAT OUGHT TO HAVE HAPPENED IN IDEAL CIRCUMSTANCES. ALL THAT HE HAS TO SEE IS WHETHER THE EXPLANATION IS INCORRECT, UNDUE, SUFFERS FROM INCONSISTENCIES, HAS CONTRADICT IONS, OR IS BEYOND THE REALM OF POSSIBILITIES. WHEN HE FINDS NO SUCH CHARACTERISTI CS, HE SHOULD NORMALLY EXPLAIN THE EXPLANATION. MERELY BECAUSE THE ADDITIONS HAVE BEE N ACCEPTED BY THE ASSESSEE AND THE SAME HAVE NOT BEEN CHALLENGED IN APPEAL CANNOT BE P UT AGAINST THE ASSESSEE. SUCH AN APPROACH WILL BE DEINCENTIVISING THE ASSESSEES WHO PREFER TO AVOID LITIGATION AND LET THE MATTER REACH FINALITY SOONER RATHER THAN LATER. IN ANY CASE, THE EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE INCORRECT, UNTRUE , INCONSISTENT OR SIMPLY INACCEPTABLE BY THE ASSESSING OFFICER OR BY THE CIT(A). IN TH ESE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, IT WAS NOT A FIT CASE FOR IMPOSITION, OR CONF IRMATION, OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE FACTS OF THIS CASE. IT(SS)A NO.470/AHD/2011 ASSESSMENT YEAR: 2006-07 PAGE 9 OF 9 10. FOR THE REASONS SET OUT ABOVE, AS ALSO BEARING IN MIND THE ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED PENAL TY OF RS.4,84,832/- ON THE FACTS OF THIS CASE. THE ASSESSEE GETS THE RELIEF ACCORDINGL Y. 11. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUN CED IN THE OPEN COURT TODAY ON 24 TH APRIL, 2015. SD/- SD/- S.S. GODARA PRAMOD KUMA R (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD; DATED THE 24 TH DAY OF APRIL, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CONCERNED CIT (4) THE CIT(A)-II, AHMEDABAD. (5) DEPARTMENTAL REPRESENTATIVE, ITAT, AHMEDABAD (6) GUARD FILE BY ORDER (DY./ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AHMEDABAD