VASANT THAKOOR, MUMBAI V. ACIT 20(3), MUMBAI

ITSSA 59/MUM/2009

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0459 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 20-03-2014
• Assessment Year: misc
• Appeal Filed On: 29-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R R PRASAD
• Assessee Lawyers: D P BAPAT
• Keywords: Search and seizure; Document seized; Question of law; Corroborative evidences; Block assessment; Tax effect; Retraction; Revised return; Documents seized
• Section: 27; 132

Judgement Text

, ,Q ,Q,Q ,Q INCOME TAX APPELLATE TRIBUNAL,MUMBAI - F BENCH. , ! , BEFORE S/SH.VIJAY PAL RAO, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. IT(SS)NO.59/MUM/2009, ' # ' # ' # ' # /BLOCK ASSESSMENT PERIOD 01.04.1987 TO 15.09.1997 VASANT THAKOOR, D'SILVA BUILDING, S.K. BOLE ROAD, OPPOSITE AGAR BAZAR, DADAR,MUMBAI-400028 PAN:AAAFT1726A VS ACIT 20(3), MUMBAI. ( $% / APPELLANT) ( &'$% / RESPONDENT) #(' #(' #(' #(' ) ) ) ) / ASSESSEE BY : SHRI D.P.BAPAT. * ) / REVENUE BY : SHRI R.R.PRASAD. # # # # * ** * '+ '+ '+ '+ / DATE OF HEARING : 27-10-2014 ,-. * '+ / DATE OF PRONOUNCEMENT : 19-11-2014 # # # #1961 1961 1961 1961 * * * * 254 254 254 254( (( (1 11 1) )) ) '7' '7' '7' '7' 8 8 8 8 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! # # # # : CHALLENGING THE ORDER DATED 15.03.2009 OF THE CIT(A )-XXXII, MUMBAI, THE ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL. BEING AGGRIEVED BY THE ORDER PASSED BY THE COMMISSI ONER OF INCOME-TAX (APPEALS) XXXII, MUMBAI,YOUR APPELLANTS SUBMITS THE FOLLOWING GROUND OF APPEAL FOR SYMPATHETIC CONSIDERATION: THE LEARNED CIT(A) HAS ERRED IN UPHOLDING LEVY OF P ENALTY OF RS 25,77,520 UNDER SECTION 158 BFA OF THE INCOME TAX ACT. YOUR APPELLANT RESERVES THE RIGHT TO ADD TO, ALTER OR AMEND THE ABOVE GROUND OF APPEAL, IF NECESSARY. BRIEF FACTS: 2. THE ASSESSEE,AN INDIVIDUAL,FILED HIS RETURN OF INCO ME FOR BLOCK PERIOD 0L.04.1087 TO 30.09.1997 ON 10.02.1998 DECLARING TAXABLE INCOME OF RS 2,87,8 71/- ON ACCOUNT OF EXCESS JEWELLERY FOUND DURING THE COURSE OF SEARCH AND SEIZURE.ON 30.09.19 99,AN ORDER U/S.158BC OF THE ACT WAS PASSED BY THE ASSESSING OFFICER(AO)WHEREIN THE TOTAL-INCOM E WAS ASSESSED AT RS 53,52,237/-.AGAINST THIS ORDER, ASSESSEE PREFERRED AN APPEAL WITH FIRST APPELLATE AUTHORITY(FAA).EFFECT TO THE ORDER OF THE FAA WAS GIVEN WHEREBY TOTAL INCOME WAS REVIS ED TO RS 8,33,737/-.THEREAFTER, ON 30. 04. 2004 THE INCOME-WAS AGAIN REVISED IN PURSUANCE OF T HE ORDER OF THE CIT,PASSED U/S.263 OF THE ACT,DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS 45,83,737/- COMPRISING OF: I) TOTAL INCOME AS PER ORDER GIVING EFFECT TO ORDER DT. 20.03.01 RS. 8,33,837/- II) UNDISCLOSED INCOME BEING INTEREST RECEIVED IN C ASH RS. 7,50,000/- III) INCOME ON SALE OF SCRAP/MACHINERY AS PER ORIGI NAL ORDER DATED 30.09.99 RS 30,0 0,000/- IT(SS)NO.59/MUM/09/VT-BLOCK87-97 2 WHILE PASSING THE ORDER U/S.158BC OF THE ACT,PENALT Y PROCEEDINGS U/S 158BFA WERE ALSO INITIATED.AFTER RECEIVING THE ORDER OF THE TRIBUNAL THE PENALTY PROCEEDINGS WERE TAKEN UP.THE AO ISSUED A LETTER, DATED 12.01.2006,CALLING EXPLANATI ON FROM THE ASSESSEE AS TO WHY PENALTY SHOULD NOT BE IMPOSED.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,FILED VIDE HIS LETTER DATED 21. 01.06,THE AO HELD THAT THE ASSESSEE HAD NOT BROUGHT ANY FRESH EVIDENCE DURING THE HEARING OF PENALTY PROCEEDINGS,THAT HE HAD REPEATED THE SUBMIS SIONS THAT WERE MADE BEFORE THE AO AND THE APPELLATE AUTHORITIES,THAT ARGUMENTS MADE BY HIM HA D BEEN CONSIDERED BY THE AUTHORITIES CONCERNED AND WERE WEIGHED AGAINST HIM.FINALLY,THE AO LEVIED A PENALTY OF RS. 25,77,520/-U/S. 158 BFA(2) OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE PENALTY ORDER PASSED BY THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE FAA.DURING THE APPELLANT PROCEEDINGS THE ASSESSEE,VIDE HIS LETTER DATED 24.03. 2008,STATED THAT THE MATTER OF CORRECT COMPUTATION OF QUANTUM OF ADDITION MADE ON ACCOUNT OF CASH/ASSETS/INTERESTS HAS BEEN SET-AIDE BY ITAT AN D HAD BEEN RESTORED TO THE FILE OF THE FAA,THAT PENALTY U/S.158 BFA(2) SHOULD BE DECIDED ONLY AFTER QUANTIFICATION OF THE UNDISCLOSED INCOME. THE FAA(APPEAL NO. CIT(A)-XXXII/IT-86/ 04-05),DECID ED THE ISSUE OF QUANTIFICATION OF UNDIS -CLOSED INCOME AND HELD THAT THE ORDER OF THE AO,DA TED 30/04/04,PASSED U/S.158BC R.W.S 250 AND 263 OF THE ACT,WAS AS PER LAW. BEFORE HIM,THE ASSESSEE PLEADED THAT THE LEVY OF PE NALTY WAS NOT AUTOMATIC AND IT COULD NOT BE LEVIED IF THE FACTS AND CIRCUMSTANCES JUSTIFY THE B ONAFIDES OF THE ASSESSEE IN NOT RETURNING THE INCOME WHICH WAS ADDED DURING THE BLOCK ASSESSMENT PROCEEDINGS,THAT THE AO WAS SUPPOSED TO CONSIDER ALL THE CIRCUMSTANCES AND ONLY THEN EXERCI SE HIS DISCRETION IN JUDICIAL MANNER,THAT DURING THE EARLIER APPELLATE PROCEEDINGS, THE THEN FAA HAD ,VIDE HIS ORDER DATED 28/03/01,CLEARLY HELD THAT THE RECEIPTS ASSESSED IN THE HANDS OF THE ASSE SSEE DID NOT BELONG TO HIM,THAT THOSE RECEIPTS REPRESENTED THE INCOME OF THE PARTNERSHIP FIRM,THAT ALTHOUGH THESE FINDINGS WERE REVERSED BY THE TRIBUNAL YET FACT REMAINED THAT THE TWO APPELLATE A UTHORITIES HAD GIVEN DIFFERENT FINDINGS ON THE SAME ISSUE, THAT PENALTY WAS NOT IMPOSABLE.REGARDIN G ADDITION OF JEWELLERY IT HAS BEEN STATED BY THE ASSESSEE THAT THE EXPLANATIONS GIVEN BY HIM WER E NOT CONSIDERED BY THE AO OR FAA,THAT THE ASSESSEE HAD INHERITED ANCESTRAL JEWELLERY,THAT IN THIS REGARD AN AFFIDAVIT WAS FILED BY HIM,THAT HE WAS NOT GIVEN OPPORTUNITY TO SUBSTANTIATE HIS ST AND, THAT ALTHOUGH EXPLANATION NOT ACCEPTED BY THE AUTHORITIES HAD NOT BEEN DISPROVED AND HENCE PE NALTY WAS NOT LEVIABLE IN VIEW OF THE JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF NATI ONAL TEXTILE(249 ITR 123). WITH REGARD TO ADDITION OF CASH CREDIT OF RS.25,000/- IT IS STATED THAT NO INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF THE CASH CREDIT DURING SEARCH,THAT HE CO ULD NOT PRODUCE THE CONFIRMATION, THAT THE AMOUNT WAS RECEIVED BY CHEQUE,THAT NO PENALTY WAS L EVIABLE IN RESPECT OF ADDITION OF THE SAID AMOUNT.IN SUPPORT OF HIS ARGUMENTS THE ASSESSEE REL IED UPON THE JUDGMENT OF CALCUTTA HIGH COURT IN THE CASE OF CALCUTTA CREDIT CORPORATION LT D.(166 ITR 29) AS WELL AS MUMBAI TRIBUNAL DECISION IN THE CASE OF SMT. PRAMILA PRATAP SHAH (1 00 ITD 60). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A S WELL AS THE ORIGINAL ASSESSMENT ORDER PASSED BY THE AO,THE ASSESSMENT ORDER PASSED IN PUR SUANCE OF DIRECTION GIVEN BY THE CIT U/S.263 OF THE ACT AND ORDER OF THE TRIBUNAL,HE HELD THAT H E DID NOT AGREE WITH STAND TAKEN BY THE ASSESSEE.HE FURTHER HELD THAT THE PROVISIONS OF SEC TION 158BFA(2) WERE VERY CLEAR,THAT SAME WERE DIFFERENT FROM THE PROVISIONS OF SECTION 271(L )(C) OF THE ACT,THAT THE PENALTY U/S.158BFA(2) WAS LEVIABLE IF THE UNDISCLOSED INCOME DETERMINED B Y THE AO WAS IN EXCESS OF THE INCOME SHOWN IN THE RETURN FILED BY THE ASSESSEE,THAT PENALTY WA S LEVIED ON THE BASIS OF TAX EFFECT ON SUCH EXCESS IT(SS)NO.59/MUM/09/VT-BLOCK87-97 3 AMOUNT,THAT THERE WAS NO SCOPE TO INTERPRET THE LAN GUAGE USED IN THE SAID SECTION IN ANY MANNER OTHER THAN THE PLAIN AND SIMPLE MEANING THAT THE PE NALTY MIGHT BE IMPOSED BY THE AO IF THE UNDISCLOSED INCOME ASSESSED EXCEEDED THE UNDISCLOSE D INCOME DECLARED IN THE BLOCK RETURN.THE FAA WAS OF THE OPINION THAT AFTER THE SEARCH OPERA TION WAS CONCLUDED AND THE INCRIMINATING MATERIAL INDICATING UNDISCLOSED INCOME LIABLE TO BE TAXED HAD BEEN RECOVERED THE ASSESSED HAD SUFFICIENT TIME TO COMPUTE THE UNDISCLOSED INCOME B ASED ON SUCH INCRIMINATING MATERIAL,THAT THE AO WOULD ISSUE NOTICE U/S.158 BC OF THE ACT ONLY A FTER THE SEIZED DOCUMENTS AND OTHER MATERIALS WERE FORWARDED TO THE AO BY THE INVESTIGA TION WING AFTER COMPLETION OF POST SEARCH ENQUIRIES.HE FURTHER HELD THAT EVEN AFTER THE NOTIC E THE ASSESSEE WAS GIVEN SUFFICIENT TIME TO COMPUTE HIS UNDISCLOSED INCOME WHICH SHOULD BE INCL UDED IN THE BLOCK RETURN,THAT THE WHOLE OF THE INTERVENING PERIOD FROM THE DATE OF CONCLUSION OF SEARCH TILL THE DATE SPECIFIED IN THE NOTICE U/S 158BC WAS AVAILABLE TO THE ASSESSEE TO COMPUTE HIS UNDISCLOSED INCOME,THAT IT WAS INCUMBENT UPON THE ASSESSEE TO CORRECTLY COMPUTE HI S UNDISCLOSED INCOME DURING THE SAID INTERVENING PERIOD AND DISCLOSE THE SAME IN THE RET URN FOR BLOCK PERIOD,THAT ONLY IN SUCH CASES WHERE FULL AND TRUE DISCLOSURE OF UNDISCLOSED INCOM E HAD NOT BEEN MADE INSPITE OF SUFFICIENT TIME AVAILABLE WITH THE ASSESSEE THE PENALTY WAS LEVIED, THAT THE ONLY EXCEPTION WHERE PENALTY COULD NOT BE IMPOSED WOULD BE THE CIRCUMSTANCES WHICH WER E BEYOND THE CONTROL OF THE ASSESSEE ON ACCOUNT OF WHICH THE ASSESSEE MIGHT PLEAD THAT HE C OULD NOT COMPUTE HIS UNDISCLOSED INCOME CORRECTLY ON ACCOUNT OF THOSE CIRCUMSTANCES,THAT IN THE CASE UNDER CONSIDERATION SUCH EVENTUALITY DID NOT EXIST.COMPARING THE PROVISIONS OF SECTION 1 58BFA(2) WITH THE PROVISIONS OF SECTION 271(L)(C),THE FAA HELD THAT THE PENALTY U/S.158BFA( 2) WAS IMPOSSIBLE IN SEARCH CASES COVERED UNDER CHAPTER XIV-B OF THE ACT,THAT PENALTY U/S. 27 1 WAS IMPOSABLE IN OTHER CASES WHERE CONCEALMENT WAS DETECTED,THAT THE LANGUAGE USED IN BOTH THE SECTIONS WAS ALSO TOTALLY DIFFERENT, THAT IN SEARCH CASES NO OTHER PENALTY PROVISIONS WO ULD APPLY,THAT THE SEARCHED PERSON WAS REQUIRED TO DECLARE HIS UNDISCLOSED INCOME IN PURSU ANCE TO NOTICE ISSUED BY THE AO U/S 158BC OF THE ACT BASED ON THE MATERIAL FOUND DURING THE SEAR CH,THAT SECTION132(4A) OF THE ACT PROVIDED THAT THE MATERIAL (BOOKS OF ACCOUNT, OTHER DOCUMENT S, MONEY,BULLION, JEWELLERY AND OTHER VALUABLE ARTICLE OR THING) FOUND DURING SEARCH BELO NGED TO THE PERSON IN WHOSE POSSESSION OR CONTROL THE SAME WAS FOUND,THAT THOSE PROVISIONS MA DE AND ENABLED THE COMPUTATION OF UNDISCLOSED INCOME ON THE PART OF THE ASSESSEE A VE RY SIMPLE EXERCISE WHICH HE WAS REQUIRED TO DO AFTER CONCLUSION OF SEARCH,THAT PROVISIONS OF SE CTION 132(4A)OF THE ACT INDICATED THAT THE UNDISCLOSED INCOME FROM CASH SALE OF SCRAP/MACHINER Y AS EVIDENCED FROM SEIZED DOCUMENTS AND CASH RECEIPT OF INTEREST FROM THE BUILDER AS WELL U NEXPLAINED JEWELLERY BELONGED TO THE ASSESSEE, THAT THE ASSESSEE HAD NOT PRODUCED UN-REBUTTABLE EV IDENCE TO PROVE THAT THE SAID INCOME BELONGED TO SOME OTHER PERSON,THAT HE DID NOT CHOOSE TO TAKE HELP THE SAID PROVISION TO COMPUTE HIS UNDISCLOSED INCOME,THAT DURING THE COURSE OF SEARCH HE HIMSELF HAD ADMITTED THAT THE SAID INCOME BELONGED TO HIM,THAT THE SEARCH OPERATION WERE CONC LUDED IN SEPTEMBER, 1997 WHEREIN THE ASSESSEE HAD ADMITTED THE UNDISCLOSED INCOME U/S.13 2(4) AT RS.37,26,976/- CONSISTING, OF CASH SALE OF SCRAP/MACHINERY AND CASH RECEIPT OF INTERES T,THAT HE DID NOT FOR ABOUT ONE AND HALF YEARS STATE ANYTHING TO THE CONTRARY BEFORE THE ADIT(INV) /DDIT(INV.),THAT WHEN THE BLOCK ASSESSMENT PROCEEDINGS WERE INITIATED HE FILED RETRACTION LETT ER VIDE AFFIDAVIT DATED 09/03/99, THAT THE ASSESSEE,AS A RESULT OF AN AFTERTHOUGHT INTENTIONAL LY TRIED TO COMPLICATE THE SIMPLE ISSUE BY NOT DISCLOSING THE CORRECT INCOME IN THE BLOCK RETURN A ND CLAIMING THAT THE INCOME SHOULD BE ASSESSED IN THE HANDS OF THE FIRM,THAT HE ATTEMPTED TO EVADE TAX ON HIS UNDISCLOSED INCOME,THAT HE SOUGHT TO CREATE A DISPUTE REGARDING ASSESSABILITY OF THE UNDISCLOSED INCOME IN HIS HANDS VIZ-A-VIZ THE FIRM,THAT HE DID NOT SUCCEED IN HIS ATTEMPT AT ITAT LEVEL,THAT HE DID NOT FOLLOW THE PROVISIONS OF IT(SS)NO.59/MUM/09/VT-BLOCK87-97 4 SECTION 132(4A) TO COMPUTE AND DECLARE HIS UNDISCLO SED INCOME IN THE BLOCK RETURN,THAT THE WAS CONVERTING A SIMPLE ISSUE OF COMPUTATION OF UNDISCL OSED INCOME TO A COMPLEX ISSUE THROUGH REPEATED LITIGATION AT VARIOUS LEVELS. AS PER THE FAA FACTS OF BOTH THE CASES RELIED UPON BY THE ASSESSEE WERE DIFFERENT.HE HELD THAT IN THE CASE OF NATIONAL TEXTILE AND CALCUTTA CREDIT CO RPORATION LTD.(SUPRA) THE ISSUE WAS WHETHER THE ASSESSEE HAD CONCEALED PARTICULARS OF HIS INCOM E OR HAD FURNISHED INACCURATE PARTICULARS IN VIEW OF THE PROVISIONS OF SECTION 271(1)(C)OF THE A CT,THAT PROVISIONS OF SECTION 271(1) WERE COMPLETELY DIFFERENT FROM THE PROVISIONS OF SECTION 158BFA(2) OF THE ACT.WITH REGARD TO THE CASE OF SMT. PRAMILA PRATAP SHAH(SUPRA),HE STATED T HAT THE ASSESSEE ACTING AS A LEGAL HEIR OF HER DECEASED HUSBAND HAD INITIALLY FILED A RETURN FOR T HE BLOCK PERIOD AT NIL WHICH SHE LATER REVISED AND DECLARED UNDISCLOSED INCOME AT RS.9,82,439/-,TH AT LATER ON SHE PLEADED A MISTAKE OR OMISSION ON HER PART DUE TO IGNORANCE ON HER PART AND CLAIME D THAT THE REVISED RETURN HAS BEEN FILED VOLUNTARILY,THAT SHE HAD PLEADED CIRCUMSTANCES WHIC H WERE BEYOND HER CONTROL DUE TO HER IGNORANCE REGARDING THE FINANCIAL AFFAIRS OF HER DE CEASED HUSBAND,THAT THE FACTS IN THE CASE OF THE APPELLANT WERE COMPLETELY DIFFERENT FROM THE FACTS OF THE CASE CITED BY IT,THAT HE COULD NOT DERIVE ANY BENEFIT FROM THE JUDGMENT.FINALLY,HE CONFIRMED THE PENALTY ORDER OF THE AO AND DISMISSED THE APPEAL FIELD THE ASSESSEE. 5. BEFORE US,THE AR ARGUED THAT TWO APPELLATE AUTHORIT IES HAD TAKEN TOOK DIVERGENT VIEWS,THAT THE ADMINISTRATIVE AUTHORITIES HAD TAKEN DIVERGENT VIEW S REGARDING THE INTERPRETATION OF THE ORDER OF THE FAA,THAT PENALTY UNDER SECTION 158 BFA WAS NOT MANDATORY BUT DISCERTIONERY,THAT THE ADDITIONS HAD BEEN SUBJECTED TO CONFLICTING PROCESS OF ADJUDICATION AT THE HANDS OF APPELLATE AND ADMINISTRATIVE AUTHORITIES,THAT SUCH CONTENTIOUS AD DITIONS COULD NOT BE SUBJECT TO LEVY OF PENALTY U/S.158BFA OF THE ACT.THE AR REFERRED TO THE PAGE N O.97,118,139,140,160,164D,195 OF THE PAPER BOOK.HE RELIED UPON THE ORDER OF NAYAN BUILDE RS.HE FURTHER ARGUED THAT INCOME WITH REGARD TO MACHINERY AND SCRAP SALE BELONGS TO THE F IRM.DEPARTMENTAL REPRESENTATIVE (DR) STATED THAT QUANTUM APPEAL WAS FINALISED BY THE TRIBUNAL, THAT MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE WAS DISMISSED, THAT COST OF RS. 5000/- WAS LEVIED BY THE TRIBUNAL FOR THE FRIVOLOUS MISCELLANEOUS APPLICATION, THAT ADMISSION BY HIGH C OURT OF AN APPEAL WAS NOT A DEBATABLE ISSUE,THAT MATTER OF NAYAN BUILDERS (SUPRA) DEALT W ITH PENALTY U/S 271(1)(C) OF THE ACT AND NOT WITH THE PROVISIONS OF 158BFA, THAT THE AFFIDAVIT F ILED BY THE ASSESSEE WAS CONSIDERED BY THE AO, HE REFERRED TO THE CASES OF 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ADDITIONS MADE IN THE ORIGINAL ASSESSMENT ORDER WERE SET ASIDE BY THE THEN FAA WITH A DIRECTION THAT THE SAI D INCOME SHOULD BE ASSESSED IN THE HANDS OF THE PARTNERSHIP FIRM AFTER CONDUCTING CERTAIN ENQUI RIES,THAT IN THE ORDER DATED 28.03.03 GIVING EFFECT TO THE ORDER OF THE FAA THOSE ADDITIONS WERE DELETED,THE CIT SET ASIDE THAT ORDER U/S.263 AS A RESULT OF WHICH THE ASSESSMENT WAS REFRAMED AND T HOSE ELEMENTS OF UNDISCLOSED INCOME WERE RESTORED AS PER THE ORDER DT 30.04.04,THAT THE TRIB UNAL VIDE ITS ORDER 31.08.2005 DECIDED THE QUANTUM APPEALS IN THE FIRST ROUND,THAT VIDE ITS OR DER 17.08.2006 THE TRIBUNAL PASSED AN ORDER U/S.254(2)OF THE ACT AND RESTORED THE MATTER TO THE FILE OF THE FAA.IN THE SECOND ROUND OF QUANTUM APPEAL,THE TRIBUNAL DECIDED THE ISSUE ON 20 .03.2013 AND ON THAT DAY PENALTY APPEALS FILED IN GROUP CASES WERE ALSO ADJUDICATED UPON.THR EE ASSESSEES OF THE GROUP FILED APPLICATIONS U/S.254(2)OF THE ACT MENTIONING THAT THERE WERE CER TAIN MISTAKES IN THE ORDERS OF THE TRIBUNAL, PASSED ON 20.03.2013.VIDE IT ORDER DATED 13.12.2013 THE TRIBUNAL DISMISSED THE MAS FILED BY IT(SS)NO.59/MUM/09/VT-BLOCK87-97 5 THE ASSESSEE.BESIDES,COST OF RS.5,000/-WAS ALSO IMP OSED ON EACH OF THE ASSESSEE.IT IS FOUND THAT IN THE CASE OF THE ASSESSEE THE HONBLE JURISDICTIO NAL HIGH COURT HAS ADMITTED THREE SUBSTANTIAL QUESTIONS OF LAW(INCOME TAX APPEAL NO.28OF 2006) WI TH REGARD TO THE DECISION OF THE TRIBUNAL DATED 31.08. 2005.WE FURTHER FIND THAT THAT AO HAD LEVIED PENALTY U/S.158BFA(2)OF THE ACT AT THE RATE OF 100% I.E.AT MINIMUM RATE AS AGAINST THE MAXIMUM RATE OF 300% 6.1. BEFORE PROCEEDINGS FURTHER,WE WOULD LIKE TO ANALYSE THE BACKGROUND AND THE PROVISIONS OF SEC.158BFA OF THE ACT,AS THE SECTION DEALS WITH LEV YING OF PENALTY IN SEARCH AND SEIZURE CASES. IN THE MATTER OF P.P.UMMERKUTTY THE HONBLE HIGH CO URT OF KERALA(279ITR213)HAS HELD THAT THE OBJECT AND PURPOSE OF SEC.58BFA OF THE ACT IS TO PR OVIDE PENALTY FOR CONCEALMENT OF INCOME AND PROVIDING A DETERRENT AGAINST TAX EVADERS.THE CONCE PT OF BLOCK ASSESSMENT IS AN EXCEPTION TO THE SCHEME OF THE ACT IN BRINGING TO TAX THE INCOME OF THE PREVIOUS YEAR IN THE CORRESPONDING AY. THE SCHEME OF BLOCK ASSESSMENT UNDER CHAPTER XIV-B OF THE ACT IS A SELF-CONTAINED CODE.PRIOR TO 01.01.1997,THE TOTAL UNDISCLOSED INCOME OF THE B LOCK PERIOD WAS DETERMINABLE UNDER SECTION 158BC OF THE ACT AND TAX WAS LEVIABLE AT THE RATE O F 60 % ONLY FREE FROM INTEREST OR PENALTY WHEREAS IN VIEW OF SECTION 158BFA INSERTED WITH EFF ECT FROM 01.01.1997 INTEREST AND PENALTY ARE ALSO CHARGEABLE ON THE UNDISCLOSED INCOME OF THE BL OCK PERIOD.UNDER SECTION 158BC THERE WAS ABSOLUTE CERTAINTY OF LEVIABILITY OF TAX ONLY UP TO 60% OF THE AMOUNT RECOVERED IN PURSUANCE OF AN AUTHORISATION ISSUED UNDER SECTION 132A OF THE A CT WHEREAS IN VIEW OF THE INSERTED SECTION 158BFA A HIGHER AMOUNT THAN RECOVERED CAN BE REALIS ED.NOW THE INCOME-TAX AUTHORITIES ARE EMPOWERED UNDER THE AFORESAID SECTION TO IMPOSE IN TEREST AT THE RATE OF 2% OF THE TAX ON UNDISCL -OSED INCOME DETERMINED UNDER CLAUSE (C) OF SECTION 158BC FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY IMMED IATELY FOLLOWING THE EXPIRY OF THE TIME SPECIFIED IN THE NOTICE.NOT ONLY THIS UNDER SUB-SEC TION (2) OF SECTION 158BFA OF THE ACT,THE AO/ FAA IN THE COURSE OF ANY PROCEEDINGS UNDER CHAPTER XIV-B OF THE ACT MAY DIRECT THAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT B E LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF T AX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE AO UNDER CLAUSE (C) OF SEC TION 158BC.THE PROVISO TO SUB-SECTION (2) CARVES OUT AN EXCEPTION AND PROVIDES THE CIRCUMSTAN CES IN WHICH NO ORDER IMPOSING A PENALTY SHALL BE MADE. ONE OF THE REQUIREMENTS THEREOF IS T HAT THE TAX PAYABLE ON THE BASIS OF SUCH RETURN UNDER CLAUSE (A) OF SECTION 158BC 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. HERE,WE WOULD LIKE TO MENTION SOME OF THE PRINCIPLE S THAT HAVE BEEN CULLED OUT OF VARIOUS JUDGMENTS AND THAT GOVERN THE LEVY OF PENALTY U/S.1 58BFA(2) OF THE ACT: I. THE PENALTY UNDER SECTION 158BFA(2) IS DISCRETIONAR Y AND NOT MANDATORY.PENALTY UNDER SUB- SECTION (2) OF SECTION 158BFA OF THE ACT,IS OPTIONA L UNLIKE INTEREST CHARGEABLE UNDER SUB-SECTION (1).THE WORD USED IN SUB-SECTION(2)IS MAY UNLIKE TH E WORD SHALL IN SUB-SECTION (1).THE WORD MAY RELATES TO LEVY OF PENALTY WHILE THE WORD SHALL REL ATES TO THE QUANTUM OF PENALTY TO BE IMPOSED. THE HONBLE BOMBAY HIGH COURT HAS IN THE CASE OF DO DSAL LTD.(312ITR 112) HELD AS UNDER: UNDER SECTION 158BFA(2) OF THE INCOME-TAX ACT, 196 1, THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) MAY DIRECT THE PERSON TO PAY BY WAY OF PENALTY ANY SUM WHICH SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH S HALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETER MINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC OF THE ACT. THE TERMINOLOGY OF THE SECTION MAKES IT CLEAR THAT THERE IS A IT(SS)NO.59/MUM/09/VT-BLOCK87-97 6 DISCRETION IN THE ASSESSING OFFICER TO DIRECT PAYME NT OF PENALTY. THE PROVISO SUPPORTS THIS INTERPRETATION. ONLY IF THE AUTHORITY DECIDES TO IM POSE PENALTY WILL IT BE NOT LESS THAN THE TAX LEVIABLE BUT NOT MORE THAN THREE TIMES THE TAX SO L EVIABLE. THE EXPRESSION 'SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE OR NOT EXCEEDING THREE T IMES THE TAX', DOES NOT RESULT IN READING THE FIRST PART OF THE SECTION AS MANDATORY. THE PROVISO TO THE SUB-SECTION MAKES IT CLEAR THAT THERE IS DISCRETION ON THE COMMISSIONER (APPEALS) FOR THE RE ASONS WHICH ARE SET OUT THEREIN. IN SHORT,THE OPERATIVE FORCE OF THE WORD SHALL IS D IRECTED TOWARDS THE QUANTUM AND NOT ON THE BASIC CONSIDERATION AS TO WHETHER PENALTY IS TO BE LEVIED OR NOT. II. PRESENCE OF MENS REA IS NOT A PRE CONDITION FOR IMP OSING PENALTY U/S.158 BFA OF THE ACT.THE ONUS IS NOT ON THE REVENUE EITHER TO PROVE THE GUIL TY MIND OR THE SUFFICIENT CAUSE ON THE PART OF THE ASSESSEE. THE ONUS IS ENTIRELY ON THE ASSESSEE TO PROVE HIS BONA FIDES ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE. III. IF THE DIFFERENCE BETWEEN THE UNDISCLOSED INCOME AS SESSED AND THE UNDISCLOSED INCOME SHOWN IN THE RETURN DOES NOT RELATE TO THE BLOCK PERIOD A S SUCH PROVISIONS OF SECTION 158BFA(2)CANNOT BE INVOKED. IV. IF THERE IS DIRECT EVIDENCE AGAINST THE ASSESSEE TH AT HE HAD UNDISCLOSED INCOME AND IN SPITE OF THIS HE DOES NOT FILE ANY RETURN OF INCOME IN RESPO NSE TO THE NOTICE ISSUED UNDER SECTION 158BD READ WITH SECTION 158BC OF THE ACT FOR THE BLOCK AS SESSMENT,THEN THE AO IS JUSTIFIED IN LEVYING THE PENALTY AGAINST HIM. V. IF THE DETERMINATION OF UNDISCLOSED INCOME IS BASED ON ESTIMATES BY THE AO/FAA,PENALTY UNDER SECTION 158BFA(2)IS NOT ATTRACTED.IN OTHER WO RDS,THE PENALTY UNDER SECTION 158BFA(2) CAN BE LEVIED ONLY WHERE UNDISCLOSED INCOME FALLING WIT HIN THE AMBIT OF THE PROVISIONS OF CHAPTER XIV-B IS NOT DECLARED IN THE RETURN UNDER SECTION 1 58BC.THE UNDISCLOSED INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE IS THAT INCOME WHICH IS A SSESSED ON THE BASIS OF DOCUMENTS OR OTHER MATERIALS FOUND IN THE COURSE OF SEARCH/ REQUISITIO N OF BOOKS OF A/CS.THEREFORE,IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF S EARCH, NO INCOME CAN BE ASSESSED UNDER THE PROVISIONS OF CHAPTER XIV-B. VI. NON-FILING OF APPEAL BY THE ASSESSEE BEFORE THE TRI BUNAL COULD NOT BE VIEWED AGAINST THE ASSESSEE SO AS TO ATTRACT THE PENALTY UNDER SECTION 158BFA(2). VII. PENALTY U/S.158BFA IS IMPOSED FOR FAILURE OF THE AS SESSEE IN MAKING A FULL AND TRUE DISCLOSURE IN THE BLOCK RETURN.IF THE ASSESSEE CLAIMS THAT CER TAIN ITEMS OF INCOME ARE NOT PART OF HIS UNDISCLOSED INCOME HE HAS TO PROVE HIS CLAIM BY COG ENT REASONS-ONLY THEN HE CAN ESCAPE FROM THE PENAL PROVISIONS. VIII. IF UNDISCLOSED INCOME IS COMPUTED MERELY ON THE BAS IS OF SURRENDER MADE BY THE ASSESSEE IN THE COURSE OF THE BLOCK ASSESSMENT PROCEEDINGS AND DE HORS THE SURRENDER THERE IS NO EVIDENCE WHICH COULD HAVE BEEN SAID TO HAVE BEEN FOUND AS A RESULT OF SEARCH,THE ASSESSEE CANNOT BE VISITED BY THE PENAL PROVISIONS AS ENVISAGED BY THE SECTION 158BFA(2). IX. THE PROVISIONS OF SECTION 271(1)(C) ARE NOT SIMILAR TO THE PROVISIONS OF SECTION 158BFA(2) OF IT(SS)NO.59/MUM/09/VT-BLOCK87-97 7 THE ACT.THE PROVISIONS OF SECTION 271(1)(C) AND THE RATIO OF THE DECISIONS OF THE VARIOUS COURTS WHILE DEALING WITH THE PENALTY RELATING TO CONCEALM ENT OF INCOME DO NOT APPLY MUTATIS MUTANDIS TO THE PROVISIONS OF SECTION 158BFA(2).THE SIMPLE R EASON BEHIND THE LOGIC IS THAT THE ELEMENT OF CONCEALMENT OF PARTICULARS OF INCOME OR INCOME IS N OT A CONDITION PRECEDENT FOR THE LEVY OF PENALTY UNDER SECTION 158BFA(2).THE ASSESSEE HAS TO EXPLAIN AS TO WHY IT WAS NOT ABLE TO COMPUTE THE TRUE UNDISCLOSED INCOME FROM THE SEIZED MATERIAL AND WHY IT FAILED TO RETURN THE TRUE UNDISCLOSED INCOME. IN OUR OPINION,IT WOULD BE USEFUL TO TAKE NOTE OF T HE CASE OF BECHARBHAI P. PARMAR DECIDED BY THE HONBLE GUJARAT HIGH COURT (341 ITR 499)WHEREIN IT HAS BEEN HELD: THE CONCEPT OF PROVING CONCEALMENT OF INCOME CAN N OWHERE BE TRACED IN SECTION 158BFA(2). THE PENALTY ENVISAGED AND IMPOSABLE UNDER SECTION 2 71(1)(C) OF THE ACT IS DIFFERENT FROM THAT IMPOSED UNDER SECTION 158BFA.SECTION 271(1)(C) OF T HE ACT PROVIDES FOR PENALTY IN CASE AN ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. MERE DISALLOWANCE OF A CLAIM WOULD NOT GIVE RISE TO PENAL PROCEEDINGS UNLESS AS PROVIDED IN SECTION 271(1)(C) OF THE ACT, THE ASSES SEE HAD CONCEALED THE INCOME OR PROVIDED INACCURATE PARTICULARS OF SUCH INCOME.UNDER SUB-SEC TION (2) OF SECTION 158BFA, NO SUCH REQUIREMENT IS PROVIDED. NONE CAN BE READ THEREIN. SECTION 158BF PROVIDES, INTER ALIA, THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHALL BE LEVIABLE WITH RESPECT TO UNDISCLOSED INCOME DETERMINED IN THE BLOCK ASSESSMENT.THUS, STATUTORIL Y ALSO, PENALTY PROVIDED UNDER SUB-SECTION (2) OF SECTION 158BFA IS SET APART FROM THAT IMPOSABLE UNDER SECTION 271(1)(C) OF THE ACT. THE CONCEPT OF THE ONUS ON THE REVENUE TO PROVE CONCEAL MENT OF INCOME, THEREFORE, CANNOT BE IMPORTED WHILE CONSIDERING THE QUESTION OF PENALTY UNDER SUB-SECTION (2) OF SECTION 158BFA OF THE ACT.ADDITIONS MADE ON THE BASIS OF ESTIMATION M AY BE ONE OF THE GROUNDS ON WHICH DISCRETION NOT TO IMPOSE PENALTY MAY BE EXERCISED. HOWEVER, IN THE ABSENCE OF ANY REQUIREMENT TO PROVE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS FOUND IN SECTION 271(1)(C) OF THE ACT THIS CANNOT FORM THE SOLE BASIS TO DELETE THE PENALTY IM POSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER (APPEALS). COMING TO THE FACTS OF THE CASE, WE HAVE ALREADY NO TED THE REASONS RECORDED BY THE TRIBUNAL FOR DELETING THE PENALTIES UNDER DIFFERENT HEADS. PRINC IPALLY, THE TRIBUNAL DELETED THE PENALTIES ON THREE GROUNDS : FIRSTLY, THAT THE ADDITION WAS MADE ONLY ON ESTIMATION ; SECONDLY, THERE WAS NO CONCEALMENT PROVED BY THE REVENUE, AND, THIRDLY, TH AT, ACCORDING TO THE TRIBUNAL, CERTAIN ADDITIONS WOULD NOT GIVE RISE TO PENALTY PROCEEDING S. IN THIS MATTER THE AO HAD LEVIED PENALTY U/S.158BFA (2)OF THE ACT AND SAME WAS CONFIRMED BY THE FAA.THE ASSESSEE CHALLENGED HIS ORDER BEFORE TH E TRIBUNAL AND HE GOT RELIEF.DECIDING THE APPEAL FILED BY THE DEPARTMENT,THE HONBLE HIGH COU RT HELD AS UNDER: WE ARE AFRAID, NONE OF THE GROUNDS WERE SUFFICIENT IN FACTS OF THIS CASE TO PERMIT THE TRIBUNAL TO DELETE THE PENALTIES.FIRSTLY, WE ARE OF THE CLEAR O PINION THAT THE CONCEPT OF PROVING CONCEALMENT OF INCOME CAN NOWHERE BE TRACED IN SECTION 158BFA(2 ). THE PENALTY ENVISAGED AND IMPOSABLE UNDER SECTION 271(1)(C) OF THE ACT IS DIFFERENT FRO M THE ONE THAT CAN BE IMPOSED UNDER SECTION 158BFA. SECTION 271(1)(C) OF THE ACT PROVIDES FOR P ENALTY IN CASE AN ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. IT CAN BE EASILY SEEN THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FO R NORMAL ASSESSMENT, A LARGE NUMBER OF CLAIMS AND DEDUCTIONS MAY BE PUTFORTH BY THE ASSESS EE WHICH MAY OR MAY NOT BE ACCEPTED IN FACTS OR ON LAW BY THE ASSESSING OFFICER. MERE DISALLOWAN CE OF A CLAIM, THEREFORE, WOULD NOT GIVE RISE TO THE PENAL PROCEEDINGS UNLESS, AS PROVIDED IN SEC TION 271(1)(C) OF THE ACT, THE ASSESSEE HAD CONCEALED THE INCOME OR PROVIDED INACCURATE PARTICU LARS OF SUCH INCOME. UNDER SUB-SECTION (2) OF SECTION 158BFA, NO SUCH REQUIREMENT IS PROVIDED. NONE CAN BE READ THEREIN. SIGNIFICANTLY, AS ALREADY NOTED, THE SAID PROVISO IS PART OF CHAPTER XIV-B OF THE ACT WHICH MAKES SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES. ADDITIONA LLY, WE ALSO NOTICE THAT SECTION 158BF IT(SS)NO.59/MUM/09/VT-BLOCK87-97 8 PROVIDES, INTER ALIA, THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHALL BE LEVIABLE WITH RESPECT TO UNDISCLOSED INCOME DETERMINED IN THE BLO CK ASSESSMENT. THUS, STATUTORILY ALSO, PENALTY PROVIDED UNDER SUB-SECTION (2) OF SECTION 158BFA IS SET APART FROM ONE IMPOSABLE UNDER SECTION 271(1)(C) OF THE ACT. THE CONCEPT OF THE ONUS ON TH E REVENUE TO PROVE CON-CEALMENT OF THE INCOME, THEREFORE, CANNOT BE IMPORTED WHILE CONSIDE RING THE QUESTION OF PENALTY UNDER SUB- SECTION (2) OF SECTION 158BFA OF THE ACT. IF WE ANALYSE THE PROVISIONS CONTAINED IN SUB-SECTI ON (2) OF SEC-TION 158BFA, IT WOULD APPEAR THAT PENALTY NOT LESS THAN THE AMOUNT OF TAX LEVIABLE BU T NOT EXCEEDING THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETER MINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC OF THE ACT IS ENVISAGED. THE F IRST PROVISO TO SUB-SECTION (2) OF SECTION 158BFA, HOWEVER, PROVIDES THAT NO ORDER IMPOSING PE NALTY SHALL BE MADE IF THE CONDITIONS (I) TO (IV) THEREIN ARE SATISFIED. IN ESSENCE, NO PENALTY WOULD BE IMPOSED IF THE ASSESSEE FURNISHES RETURN OF INCOME ; PAYS OR OFFERS TAX BY WAY OF ADJUSTMENT ON SUCH INCOME ; PRODUCES EVIDENCE OF TAX HAVING BEEN PAID ALONG WITH THE RETURN AND ALSO DOE S NOT DIS-PUTE BY FILING APPEAL AGAINST THAT PORTION OF ASSESSMENT WHICH HE HAS SHOWN IN HIS RET URN. BY A FURTHER PROVISO, HOWEVER, IT IS CLARIFIED THAT SUCH EXCLUSION WILL NOT BE AVAILABLE WHERE THE UNDISCLOSED INCOME DETERMINED BY THE ASSESSING OFFICER IS IN EXCESS OF THE INCOME SH OWN IN THE RETURN AND IN SUCH A CASE, PENALTY SHALL BE IMPOSED ON THAT PORTION OF THE UNDISCLOSED INCOME DETERMINED, WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. IN ESSENCE, THEREFORE, PENALTY UNDER SUB-SECTION (2 ) OF SECTION 158BFA OF THE ACT IS PROVIDED WHERE THE ASSESSING OFFICER COMPUTES INCOME IN EXCE SS OF WHAT IS DECLARED BY THE ASSESSEE FOR THE BLOCK PERIOD. THIS PROVISO THUS IS VITALLY DIFFERENT FROM THE PEN ALTY PROVISIONS CONTAINED IN SECTION 271(1)(C) OF THE ACT, WHICH PROVIDES FOR PENALTY WHERE THE ASSES SEE HAS CONCEALED THE PARTICULARS OF HIS INCOME, OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS, THEREFORE, OFTEN STATED BY DIFFERENT COURTS THAT MERE DISALLOWANCES OF A CLAIM OR ADDI-TIONS MADE BY THE ASSESSING OFFICER WOULD NOT IPSO FACTO GIVE RISE TO PENALTY PROCEEDIN GS UNDER SECTION 271(1)(C) OF THE ACT. WHAT IS FURTHER REQUIRED TO BE ESTABLISHED IS THAT THE ASSE SSEE HAD EITHER CON-CEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN CONTRAST, NO SUCH LANGUAGE IS USED IN SECTION 158BFA OF THE ACT. WE MAY RECALL THAT UN DER SECTION 158BFA(2) OF THE ACT, PENALTY PROCEEDINGS WOULD ARISE WHILE THE ASSESSING OFFICER HAD ASSESSED THE INCOME FOR THE BLOCK PERIOD IN EXCESS OF THE INCOME DECLARED BY THE ASSESSEE. THE CONSIDERATION OF THE QUESTION OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WAS NOT A RELEVANT CONSIDERATION IN THE F ACTS OF THE PRESENT CASE. TO THAT EXTENT, THE TRIBUNAL HAD MISCONSTRUED THE SCOPE OF THE PENALTY PRO-VISIONS APPLICABLE IN THE PRESENT CASE. WE ARE FURTHER OF THE OPINION THAT THE TRIBUNAL DEL ETED THE PENALTY ON THE GROUNDS WHICH WERE SIMPLY NOT PERMISSIBLE. AS ALREADY NOTED, THE PENAL TY ON THE GROUNDS OF THE ADDITION OF RS. 7.23 LAKHS AND RS. 2 LAKHS WAS DELETED OBSERVING THAT TH E FINDINGS OF THE ASSESSING OFFICER IS MERE PRESUMPTION AND THAT NOTHING INCRIMINATING WAS FOUN D WHICH WOULD REVEAL THAT THE ASSESSEE HAD INCURRED SUCH AN EXPENDITURE. WE ARE AFRAID, SUCH A N WOULD AMOUNT TO REOPENING THE QUESTION OF QUANTUM ADDITION WHICH HAD ATTAINED FINALITY BY VIR TUE OF THE DECISION OF THE TRIBUNAL. PENALTY ON THE INCOME OF RS. 4.60 LAKHS WAS DELETED OBSERVING THAT THOUGH THE ASSESSEE HAD FAILED TO PRODUCE SUPPORTING EVIDENCE, FOR MERE ABSENCE OF SUPPORTING EVIDENCE, IT CANNOT BE HELD THAT SUCH AGRICULTURAL INCOME DID NOT EXIST. SUCH OBSERV ATION AGAIN, IN OUR OPINION, WOULD AMOUNT TO REOPENING THE CLOSED ISSUES OF ADDITION SUSTAINED U P TO THE LEVEL OF THE TRIBUNAL. SURELY, THE TRIBUNAL, WHILE CONSIDERING THE PENALTY PRO-CEEDING S COULD NOT HAVE OVERRULED THE PREVIOUS FINDINGS WHICH HAD ATTAINED FINALITY. PENALTY CORRESPONDING TO THE ADDITION OF RS. 17.22 LAKHS WAS DELETED ON THE GROUND THAT THE ASSESSEE HAD DEMONSTRATED THAT THERE WAS ESTIMA-TIO N OF ADDITIONS AND THAT, THEREFORE, NO PENALTY COULD BE LEVIED. HERE AGAIN, WE ARE OF THE OPINION THAT THE TRIBUNAL INTERFERED WITH THE PENALTY ON IT(SS)NO.59/MUM/09/VT-BLOCK87-97 9 THE GROUND WHICH WAS NOT PERMISSIBLE. ADDITIONS MAD E ON THE BASIS OF ESTIMATION MAY BE ONE OF THE GROUNDS ON WHICH DISCRETION NOT TO IMPOSE PENAL TY MAY BE EXERCISED. HOWEVER, IN THE ABSENCE OF ANY REQUIREMENT TO PROVE THE CONCEALMENT OR FURN ISHING OF INACCURATE PARTICULARS FOUND IN SEC- TION 271(1)(C) OF THE ACT CANNOT FORM THE SOLE BASI S TO DELETE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER (APPEALS) . WE ARE, THEREFORE, OF THE OPINION THAT THE TRIBUNAL COMMITTED A GRAVE ERROR IN INTERFERING WITH THE PENALTIES IMPOSED BY THE ASSESSING OFFICER AND CONF IRMED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THE GROUNDS MENTIONED IN THE ORDER. IN OTHER WORDS, EXERCISE OF DISCRETION BY THE TRIBUNAL CANNOT BE SUSTAINED. 6.2. THE LIMITED QUESTION BEFORE US IS WHETHER THE FAA W AS JUSTIFIED IN CONFIRMING THE PENALTY ORDER PASSED BY THE AO U/S.158BFA(2)OF THE ACT,CONS IDERING THE FACTS AVAILABLE TO HIM.IT IS FOUND THAT THE FAA HAD,IN PURSUANCE OF THE DIRECTI ONS OF THE TRIBUNAL,DETERMINED THE CORRECT QUANTUM OF ADDITION ON ACCOUNT OF UNEXPLAINED CASH/ ASSETS/INTERESTS IN THE HANDS OF THE ASSESSEE AND THE AO HAD LEVIED PENALTY @OF 100%.IT IS A FACT THAT THE ASSESSEE HAD ADMITTED UNDISCLOSED INCOME OF RS.37.26 LAKHS DURING THE COURSE OF SEARC H AND SEIZURE PROCEEDINGS WHILE MAKING STATEMENT U/S.132 OF THE ACT.IT IS ALSO A FACT THAT THE ADMISSION WAS WITH REGARD TO CASH SALE OF SCRAP/MACHINERY,CASH RECEIPT OF INTEREST AND JEWELL ERY.IT IS NOT DISPUTED THAT THE ADMISSION WAS NOT BACKED BY CASH/ASSETS/DOCUMENTS.IN OTHER WORDS THE ADDITIONS MADE AND SUSTAINED DURING ASSESSMENT/APPELLATE PROCEEDINGS WERE NOT BASED ON SURRENDER SIMPLICITER.IT IS ALSO A FACT THAT DIFFERENCE BETWEEN THE UNDISCLOSED INCOME ASSESSED AND THE UNDISCLOSED INCOME,SHOWN IN THE RETURN OF INCOME,PERTAINED TO THE BLOCK PERIOD AND THERE WAS DIFFERENCE BETWEEN THE TWO.WE FIND THAT THE ASSESSEE HAD NOT PROVED THAT HE WAS COVERE D BY ANY OF THE EXCEPTIONS MENTIONED IN THE SECTION THAT PROVIDE IMMUNITY TO THE ASSESSEES FROM PENALTY. IN OUR OPINION,THE PAGES OF PB,RELIED UPON BY THE A SSESSEE,ARE DIRECTLY RELEVANT TO DECIDE QUANTUM PROCEEDINGS.AFTER TWO ROUNDS OF LITIGATIONS THE QUANTUM APPEAL HAS ALREADY ATTAINED FINALITY AND WE NOT ARE SUPPOSED TO RECONSIDER THE VALIDITY OF THOSE ORDERS.AS FAR AS THE MATTER OF NAYAN BUILDER AND OTHER ARGUMENTS ADVANCES THE = AR E CONCERNED WE FIND THAT SAME HAS BEEN DELIBERATED UPON BY THE TRIBUNAL WHILE DECIDING THE APPEALS FILED BY MADHUKAR B. THAKOOR, BALCHANDRA B.THAKOOR, LEGAL HEIR MRS. SUNITA SA MIR SAO,AND MOHAN B.THAKOOR(IT(SS)A NO. 77&79/MUM/2009),(IT(SS)ANO.65/MUM/ 2009) AND (IT(SS ) A NO.66/ MUM/2009) RESPECTIVELY. WE FIND THAT IN THOSE MATTERS THE TRIBUNAL VIDE IT S ORDERS DATED 20.03.2013 HAS DECIDED PENALTY APPEALS AS UNDER: . 16.NOW WE SHALL TAKE UP THE APPEAL FILED IN THE CASE OF LATE SHRI BALCHANDRA B. THAKOORE BY LEGAL HEIR MRS. SUNITA SAMIR SAO BEING IT(SS)A NO. 65/MUM/09 WHICH IS DIRECTED AGAINST THEORDER OF LD. CIT(A) - XXXII MU MBAI DTD. 16-3-2009 WHEREBY HE SUSTAINED THE PENALTY IMPOSED BY THE A.O. U/S 158BFA(2) OF THE ACT TO THE EXTENT IT WAS IN RESPECT OF ADDITIONS MADE TO THE UNDISCLOSED INCOME O F THE ASSESSEE X X X X X X 22.THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET SET, SUBMITTED THAT THE ISSUE INVOLVED IN ADDITION OF RS. 7,38,000/- ON ACCOUNT OF INTER EST RECEIVED IN CASH FROM THE BUILDER HAS BEEN RAISED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE HONBLE BOMBAY HIGH COURT AND A QUESTION RAISED IN THIS REGARD HAS ALREADY BE EN ADMITTED BY THE HONBLE BOMBAY HIGH COURT AS A SUBSTANTIAL QUESTION OF LAW. RELYING ON THE DECISIONS OF THE TRIBUNAL IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT. LTD. VS. I TO (ITA NO. 2379/MAD/2009 DTD. 18-3- 2011), HE CONTENDED THAT THE ADMISSION OF THE SU BSTANTIAL QUESTION OF LAW BY THEHONBLE IT(SS)NO.59/MUM/09/VT-BLOCK87-97 10 BOMBAY HIGH COURT CLEARLY SHOWS THAT THE ADDITION O F RS. 7,58,000/- INVOLVE DEBATABLE ISSUE AND PENALTY CANNOT BE IMPOSED IN RESPECT OF THE SAID AD DITION. AS REGARDS THE ADDITION ON ACCOUNT OF UNEXPLAINED FDS, HE SUBMITTED THAT THE SAID ADDITION WAS MADE TO THE UNDISCLOSED INCOME OF THE ASSESSEE MERELY ON THE BASIS O F STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S 132(4) OF THE ACT AND THERE WAS NO EVIDENCE FOUND DURING COURSE OF SEARCH TO SHOW THE EXISTENCE OF ANY SUCH DEPOSIT IN TH E NAME OF THE ASSESSEE. HE CONTENDED THAT THE CASE OF THE ASSESSEE THUS IS NOT A FIT CASE TO IMPOSE PENALTY U/S 158 BFA(2) OF T HE ACT AND THE SAME AS IMPOSED BY THE A.O. AND SUS TAINED BY THE LD. CIT(A)MAY BE CANCELLED. 23. THE LD. D.R., ON THE OTHER HAND, SUBMITT ED THAT MERELY BECAUSE SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE BOMBAY HIGH COURT, IT CANNOT BE SAID THAT THE RELEVANT ISSUE INVOLVED IS A DEBATABLE ISSUE AN D PENALTY CANNOT BE IMPOSED IN RESPECT OF THE ADDITION MADE ON SUCH ISSUE. HE CONTENDED THAT THE ISSUE RELATING TO IMPOSITION OF PENALTY NEEDS TO BE CONSIDERED AND DECIDED ON MERITS KEEPING IN V IEW ALL THE RELEVANT FACTS OF THE CASE AS WELL AS THE PROVISIONS OF LAW. HE CONTENDED THAT ALL THE SUBMISSIONS MADE IN THIS REGAR D ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) WHICH HAVE NOW BEEN REITERATED BEFORE THE TRIBUNAL, ARE ALREADY CONSIDERED BY THE LD. CIT(A) AND THE SAME HAVE BEEN REJECTED BY HIM BY PASSING A WELL DISCUSSED AND A WELL REASONED ORDER. HE ALSO CONTENDED THAT THE ADDITIONS MADE TO THE UNDISCLOSED INCOME OF TH E ASSESSEE HAVING BEEN FINALLY CONFIRMED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS, THE PENALTY PROVISIONS OF SECTION 158 BFA(2) ARE CLEARLY ATTRACTED. IN SUPPORT OF THIS CONTENT ION, HE RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KANDOI BHOGILAL M ULCHAND VS. DCIT (2012) 21 TAXMANN.COM 153 (GUJ). HE THEREFORE RELIED STRO NGLY ON THE IMPUGNED ORDER OF THE LD. CIT(A) SUSTAINING THE PENALTY IMPOSED BY THE A.O. U/S 158 BFA(2). 24.WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT. LTD. (SUPRA) THAT THE SUBSTANTIAL QUESTION OF LAW HAVI NG BEEN ALREADY ADMITTED BY THE HONBLE BOMBAY HIGH COURT ON THE ISSUE OF ADDITION MADE ON ACCOUNT OF INTEREST RECEIVED FROM THE BUILDER IN CASH, NO PENALTY U/S 158 BFA(2) CA N BE IMPOSED IN RESPECT OF THE SAID ADDITION INVOLVING A DEBATABLE ISSUE, IT IS OBSERVED TH AT A SIMILAR CONTENTION RAISED ON BEHALF OF THE ASSESSEE WAS ACCEPTED BY THE TRIBUNAL IN THE CASE OF SPLENDER CONSTRUCTION, BUT THE HONBLE DELHI HIGH COURT DID NOT AGREE WITH THE SAME IN ITS JUDGMENT DELIVERED ON 14-1- 2011 IN INCOME TAX APPEAL NO. 1977 OF 2010 HOLDING THAT THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY HONBLE HIGH COURT BY ITSELF WOULD NOT BE SUFFICIENT TO HOLD THAT THE ISSUE WAS DEBATABLE ON WHICH LEVY OF PENALTY COULD NOT BE ATTRACTED. IT WAS HELD THAT T HE ADDITIONS MADE TO THE UNDISCLOSED INCOME OF THE ASSESSEE HAD BEEN CONFIRMED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS SHOWING C LEARLY THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND AFTER ADMI SSION OF THE APPEAL OF THE ASSESSEE FILED AGAINST THE ORDER OF THE TRIBUNAL, THE SAID APPEA L WAS DISMISSED BY THE HONBLE HIGH COURT. KEEPING IN VIEW THE SAID DECISION OF THE HO NBLE DELHI HIGH COURT, WE REJECT THE CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE BEING DEVOID OF MERIT. 25. IT IS OBSERVED THAT THE UNDISCLOSED INCO ME ON ACCOUNT OF INTEREST RECEIVED IN CASH A S WELL AS UNEXPLAINED FDS IN RESPECT OF WHICH THE IMPUGNED PENALTY IS LEVIED, WAS ADMITTED BY THE ASSESSEE IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT WHEREIN THE ASSESSEE HAD NOT ACTUALLY ACCEPTED THAT THE SAID INCOME WA S BELONGING TO HIM BUT ALSO AGREED TO DISCLOSE THE SAME AS HIS UNDISCLOSED INCOME IN THE BLOCK RETURN. ALTHOUGH THE ASSESSEE MADE AN ATTEMPT TO RETRACT THE SAID STATEMENT BY TAKING DIFFERENT STAND THAT THE SAID INCOME WAS BELONGING TO THE PARTNERSHIP FIRM, SUCH RETRACTION CAME AFTER A LONG GAP OF MORE THAN TWO YEARS AND THE SAME WAS NOT AC CEPTED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS KEEPING IN VIEW ALL THE FACTS OF THE CA SE AS WELL AS THE STATEMENT GIVEN BY THE IT(SS)NO.59/MUM/09/VT-BLOCK87-97 11 ASSESSEE U/S 132(4) OF THE ACT. THE ISSUES INVOLVING THE TWO ADDITIONS MADE TO THE UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED FDS AND RECEIPT OF INTEREST FROM THE BUILDER IN CASH THUS HAVE BEEN DECIDED A GAINST THE ASSESSEE BY THE TRIBUNAL WHEREBY THE DIFFERENT STAND TAKEN BY THE ASSESSEE AS AN AFTER THOUGHT WITH AN INTENTION TO CREATE A DISPUTE HAS NOT BEEN ACCEPTED AND THE EXPLANATION/ SUBMISSION MADE IN THIS REGARD BY THE ASSESSEE HAS BEEN REJECTED AFTER HAVING FOUND THE SAME TO BE UNSATISFACTORY/UNACCEPTABLE. DURING THE COURSE OF PENALTY PROCEEDINGS, THE AS SESSEE AGAIN HAS MADE AN ATTEMPT TO REITERATE THE SAME SUBMISSIONS WHICH HAVE ALREA DY BEEN REJECTED IN THE QUANTUM PROCEEDINGS BY THE TRIBUNAL. MOREOVER, THERE IS NOTHING NEW BROUGHT ON RECORD BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE HIS EXPLANATI ON OR TO ESTABLISH SATISFACTORILY THAT THE SAID EXPLANATION IS BONA-FIDE. IN THE CASE OF KANDOI B HOGILAL MULCHAND VS. DCIT (2012) 21 TAXMANN.COM 153 (GUJ.) CITED BY THE LD. D.R., THE HONBLE GUJARAT HIGH COURT HAS HELD THAT THE INCOME WHICH IS DETECTED AS A RESULT OF SE ARCH OPERATION UNDER SECTION 132 IS UNDISCLOSED INCOME OF THE ASSESSEE WITHIN THE MEANING OF SECTIO N 158 BFA(2) OF THE ACT AND PENALTY PROVISION U/S 158 BFA(2) WOULD ARISE WHEN THE A.O. HAS ASSESSED THE INCOME IN THE BLOCK PERIOD IN EXCESS OF THE INCOME DECLARED BY T HE ASSESSEE. KEEPING IN VIEW THE SAID DECISION OF HONBLE GUJARAT HIGH COURT AND H AVING REGARD TO ALL THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THERE IS NO JUSTIF IABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) SUSTAINING THE PENALTY IMPOSED BY THE A.O. 158 BFA(2) OF THE ACT TO THE EXTENT IT IS IN RESPECT OF TWO ADDITIONS MADE TO THE UNDISCLOSED INCOME OF THE ASSESSEE WHICH HAD BECOME FINAL AT THE STAGE OF THE TRIBUNAL. IN THAT VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND WE DISMISS THE APP EAL FILED BY THE ASSESSEE. 26. NOW WE SHALL TAKE UP THE APPEAL FILED BY MR. MOHAN B. THAKOOR BEING IT(SS)A NO. 66/MUM/2009 WHICH IS DIRECTED AGAINST THE ORD ER OF THE LD. CIT(A) -XXXII, MUMBAI DTD. 31-03-2009 WHEREBY HE SUSTAINED THE PENALTY IMP OSED BY THE A.O. U/S 158 BFA(2) OF THE ACT TO THE EXTENT IT WAS IN RESPECT OF ADDITIONS MAD E TO THE UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF INTEREST RECEIVED IN CASH FROM THE BUILDER AMOUNTING TO RS. 7,71,000/- AND UNEXPLAINED JEWELLERY FOUND DURING THE COURSE OF SE ARCH AMOUNTING TO RS. 41,305/-. 27. AFTER CONSIDERING THE RIVAL SUBMISSIONS A ND PERUSING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ISSUE RELATING TO P ENALTY U/S 158 BFA(2) OF THE ACT IMPOSED IN RESPECT OF ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF INTEREST RECEIVED IN CASH FROM THE BUILDER IS SIMILAR TO THE ONE INVOLVE D IN THE CASE OF LATE SHRI BALCHANDRA B. THAKUR,LEGAL HEIR MRS. SUNITA SAMIR SAO WHICH HAS ALREADY BEEN CONSIDERED AND DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDE R. SINCE ALL THE MATERIAL FACTS RELEVANT TO THE SAID ISSUE AS INVOLVED IN THE PRESENT CASE A S WELL AS THE SUBMISSIONS MADE BY BOTH THE SIDES ARE SIMILAR TO THAT OF THE CASE OF MR . SHRI BALCHANDRA B. THAKUR, LEGAL HEIR MRS. SUNITA SAMIR SAO (SUPRA) WE FOLLOW OUR CONCL USION DRAWN IN THE CASE OF SHRI BALCHANDRA B. THAKUR, LEGAL HEIR MRS. SUNITA SAMIR SAO A ND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE PENALTY IMPOSED BY THE A.O. U/S 158 BFA(2) OF THE ACT IN RESPECT OF ADDITION OF RS. 7,71,000/- MADE TO THE U NDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF INTEREST RECEIVED IN CASH FROM THE BUILD ER. 28. AS REGARDS THE PENALTY IMPOSED IN RESPEC T OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED JEWELLERY AMOUNTING TO RS. 41,305/ -, IT IS OBSERVED THAT OUT OF THE TOTAL JEWELLERY WORTH RS. 6,98,721/- FOUND DURING T HE COURSE OF SEARCH, JEWELLERY WORTH RS. 24,920/- WAS FOUND TO BE ALREADY DECLARED BY THE ASSESSEE IN HIS WEALTH TAX RETURN. THE SAME THEREFORE WAS TREATED BY THE A.O. EXPLAINED. AS REGARDS THE BALANCE JEWELLERY, THE ASSESSEE OFFERED THE SAME TO THE EXTENT OF RS. 2,66,176/- IN HIS RETURN OF INCOME ACCEPTING THE SAME AS UNEXPLAINED AND THE BALANCE JEWELLERY WORTH TO R S. 4,37,725/- WAS EXPLAINED BY THE ASSESSEE AS BELONGINGS OF HIS RELATIVES. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED IT(SS)NO.59/MUM/09/VT-BLOCK87-97 12 BY THE A.O. AND HE MADE AN ADDITION OF RS. 4,37,725/- TO THE UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED JEWELLERY. AS NO TED BY THE LD. CIT(A) IN THE PENALTY ORDER PASSED U/S 158 BFA(2) OF THE ACT, THE SAID ADDITION HAS BEEN RESTRICTED BY THE LD. CIT(A) TO ONLY RS. 41,305/- VIDE HIS APPELLATE ORDER DTD. 25 -11-2003 PASSED IN THE QUANTUM PROCEEDINGS. THE EXPLANATION OF THE ASSESSEE IN RESPECT O F JEWELLERY FOUND DURING THE COURSE OF SEARCH THUS HAS BEEN SUBSTANTIALLY ACCEPTED IN THE Q UANTUM PROCEEDINGS AND KEEPING IN VIEW THE ESTIMATIONS AND APPROPRIATIONS INVOLVED IN THE VALUATION OF JEWELLERY AS MADE AT DIFFERENT STAGES, WE ARE OF THE VIEW THAT THE MARGINA L DIFFERENCE OF RS. 41,305/- ADDED TO THE TO TAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAI NED JEWELLERY CANNOT BE TREATED AS CONCEALMENT IN ORDER TO ATTRACT PENALTY U/S 1 58 BFA(2) OF THE ACT. WE THEREFORE SUSTAIN THE PENALTY IMPOSED U/S 158 BFA(2) OF THE AC T ONLY TO THE EXTENT IT IS IN RESPECT OF ADDITION OF RS. 7,71,000/- MADE TO THE UNDIS CLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF INTEREST RECEIVED IN CASH FROM THE BUILDER AND PART LY ALLOW THIS APPEAL OF THE ASSESSEE. 28. NOW WE SHALL TAKE UP THE APPEAL FILED BY MR. MA DHUKAR B. THAKOOR BEING IT(SS)A NO. 79/MUM/2009 WHICH IS DIRECTED AGAINST THE OR DER OF THE LD. CIT(A) XXXII, MUMBAI DTD. 20-5-2009 WHEREBY HE SUSTAINED THE PENALTY IMPOSED BY THE A.O. U/S 158 BFA(2) OF THE ACT TO THE EXTENT IT WAS IN RESPECT OF ADDITIONS MADE TO THE UNDISCLOSED INCOME OF THE ASSESS EE ON ACCOUNT OF INTEREST RECEIVED IN CASH FRO M THE BUILDER AMOUNTING TO RS. 7,52, 000/- AN D CASH SALE OF SCRAP/MACHINERY AMOUNTING TO RS. 4, 94,300/-. 29. IN THIS CASE, THE ISSUE INVOLVED AS WEL L AS MATERIAL FACTS RELEVANT THERETO ARE SIMI LAR TO THE CASE OF LATE SHRI BALCHANDRA B. THAK UR, LEGAL HEIR MRS. SUNITA SAMIR SAO AND MR. MOHAN B. THAKOOR INASMUCH AS PURSUANT TO T HE SEARCH AND SEIZURE OPERATION, BLOCK ASSESSMENT WAS ORIGINALLY COMPLETED BY THE A.O. U/ S 158 BC OF THE ACT ON 30-9-1999 AND AFTER THE INITIAL ROUND OF LITIGATION, FRESH ORDER WAS PASSED BY THE A.O. U/S 158 BC R.W.S. 2 50 & 263 ON 30-4-2004 DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. 21,76,560/- AFTER MAKING ADDITION OF RS. 12,50,000/- ON ACCOUNT OF CASH SALE OF SCRAP/MACHINERY AND RS. 7,52,000/- ON ACCOUNT OF INTEREST RECEIVED BY THE ASSESSEE IN CASH FROM THE BUILDER. THEREAFTER, THE MISC. APPLICATION FILED BY THE ASSE SSEE WAS DISPOSED OF BY THE TRIBUNAL DIRECTING THE LD. CIT(A) TO DETERMINE THE EXACT QUANTU M OF ADDITION MADE TO THE UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF CASH/ASS ETS/INTERESTS. ACCORDINGLY, THE UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF INTEREST RECEIVED IN CASH FROM BUILDER WAS QUANTIFIED BY THE LD. CIT(A) AT THE SAME AMOUNT OF RS . 7,50,000/- AS COMPUTED BY THE A.O. HE, HOWEVER, RESTRICTED THE ADDITION OF RS. 12,50, 000/- MADE ON ACCOUNT OF CASH SALE OF SCRAP/MACHINERY TO RS. 4,94,300/- AND SUSTAINED THE PENALTY IMPOSED BY THE A.O. U/S 158 BFA(2) OF THE ACT TO THE EXTENT IT WAS IN RESPECT OF THE SAID ADDITIONS AS WAS DONE IN THE CASE OF LATE SHRI BALCHANDRA B. THAKUR, LEGAL HEIR MRS. SUNITA SAMIR SAO AND MR. MOHAN B. THAKOOR, THE ASSESSEES BELONGING TO THE SAME GROUP. 30. AT THE TIME OF HEARING BEFORE US, THE LD. REPR ESENTATIVES OF BOTH THE SIDES HAVE REITERATED TH E SAME SUBMISSIONS AS MADE IN THE CASE OF SHR I BALCHANDRA B. THAKUR, LEGAL HEIR MRS. SUNITA SAMIR SAO AND MR. MOHAN B. THAKOOR WHICH HAVE A LREADY BEEN CONSIDERED BY US AND ON SUCH CONSIDERATION, THE ACTION OF THE LD. CIT(A) SU STAINING THE PENALTY IMPOSED BY THE A.O. U/S 158 BFA(2) OF THE ACT HAS BEEN UPHELD BY US IN THE CASE OF SHRI BALCHANDRA B. THAKUR, LEGAL HEIR MRS. SUNITA SAMIR SAO AND MR. MOHAN B. THAKOOR. AS HELD BY US IN THE SAID CASES,THERE BEING NOTHING NEW BROUGHT ON RECORD BY THE ASSESSEE S AND THE EXPLANATION OFFERED IN RESPECT OF THE IMPUGNED ADDITIONS MADE TO THE TOTAL IN COME OF THE ASSESSEE, WHICH ARE REITERATED DURING THE PENALTY PROCEEDINGS, HAVING BEEN AL READY REJECTED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO SUPPORT AND SUBSTANTIATE HIS EXPLANATION OFFERED DURING THE COURSE OF PENALTY PROCEEDING. AS REGARDS THE CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESS EE RELYING ON THE DECISION OF THE CO-ORDINATE IT(SS)NO.59/MUM/09/VT-BLOCK87-97 13 BENCH OF THIS TRIBUNAL IN THE CASE OF NAYAN BUILDERS & DEVELOPERS PVT. LTD. VS. ITO (ITA NO. 2379/MUM/2009 DTD. 18-3-2011) THAT THE ISSUES RAISE D BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE HONBLE BOMBAY HIGH COURT RELATING TO BO TH THE ADDITIONS MADE ON ACCOUNT OF INTEREST RECEIVED IN CASH AND SALE OF SCRAP/M ACHINERY HAVING BEEN ADMITTED BY THE HONBLE BOMBAY HIGH COURT AS A SUBSTANTIAL QUE STIONS OF LAW, IT BECOMES APPARENT THAT THE SAID ADDITIONS INVOLVE DEBATABLE ISSUES FO R WHICH PENALTY CANNOT BE IMPOSED, WE HAVE ALREADY NOTED THAT A SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL IN THE CASE OF CIT VS. SPLENDER CONSTRUCTION BUT THE HONBLE DELHI HI GH COURT DID NOT AGREE WITH THE SAME IN ITS JUDGMENT DELIVERED ON 14-1-2011 IN INCOME TAX APPEAL NO. 1977 OF 2010 HOLDING THAT THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY HON BLE HIGH COURT BY ITSELF WOULD NOT BE SUFFICIENT TO HOLD THAT THE ISSUE WAS DEBATA BLE ON WHICH LEVY OF PENALTY COULD NOT BE ATTRACTED. IT WAS HELD THAT THE ADDITIONS MADE TO THE UNDISCLOSED INCOME OF THE ASSESSEE HAD BEEN CONFIRMED BY THE TRIBUNAL IN THE QU ANTUM PROCEEDINGS SHOWING CLEARLY THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND AFTER ADMISSION OF THE APPEAL OF THE ASSESSEE FILED AGAINST THE ORD ER OF THE TRIBUNAL, THE SAID APPEAL WAS DISMISSED BY THE HONBLE HIGH COURT. IN THE CASE OF KANDOI B HOGILAL MULCHAND VS. DCIT (2012) 21 TAXMANN.COM 153 (GUJ.) CITED BY THE LD. D.R., THE H ONBLE GUJARAT HIGH COURT HAS HELD THAT THE INCOME WHICH IS DETECTED AS A RESULT OF SEARCH OPER ATION UNDER SECTION 132 IS UNDISCLOSED INCOME OF THE ASSESSEE WITHIN THE MEANING OF SECTION 158 BFA(2) OF THE ACT AND PENALTY PROVISION U/S 158 BFA(2) WOULD ARISE WHEN THE A.O. HAS ASSESSED THE INCOME IN THE BLOCK PERIOD IN EXCESS OF THE INCOME DECLARED BY THE ASSESSEE. 31.KEEPING IN VIEW THE RATIO OF THE JUDICIAL PRONOU NCEMENTS DISCUSSED ABOVE AND HAVING REGARD TO ALL THE FACTS OF THE CASE, WE FIND NO JUSTIFIABL E REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A)AND FOLLOWING OUR DECISION RENDERED IN T HE CASE OF LATE SHRI BALCHANDRA B. THAKUR, LEGAL HEIR MRS. SUNITA SAMIR SAO AND MR. MOH AN B. THAKOOR, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) SUSTAINING THE PENAL TY IMPOSED BY THE A.O. U/S 158 BFA (2) TO THE EXTENT IT IS IN RESPECTOF THE ADDITIONS MADE TO THE UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF INTEREST RECEIVED IN CASH FROM BUILDER AMOUN TING TO RS. 7,52,000/- AND CASH SALE OF SCRAP/MACHINERY AMOUNTING TO RS. 4,94,300/-. WE ARE OF THE OPINION THAT THE PROVISIONS OF CHAPTE R XIVB WERE INTRODUCED IN THE ACT WITH SPECIFIC PURPOSE AND THEY HAVE TO INTERPRETED AND U NDERSTOOD ACCORDINGLY.THE PURPOSE BEHIND THE INTRODUCTION OF BLOCK ASSESSMENT CONCEPT WAS TO ASS ESS THE INCOME OF THE ASSESSEES,WHO HAVE BEEN SEARCHED OR IN WHOSE CASES REQUISITION OF BOOK S OF ACCOUNTS/ASSETS HAVE BEEN MADE,IN A PARTICULAR MANNER.THOUGH THERE ARE NORMAL PROVISION S WITH REGARD TO LEVY OF PENALTY AND INTEREST IN THE ACT,YET THE LEGISLATURE,TO ITS WISDOM,DECIDE D TO INCORPORATE PROVISIONS GOVERNING THE PENALTY IN THE CHAPTER XIVB OF THE ACT.IF THE PENAL PROVISIONS ENVISAGED BY SECTION 271(1) (C) WERE APPLICABLE TO THE SEARCH CASES,THERE WAS NO NE ED TO INTRODUCE SECTION 158BFA(2) OF THE ACT. IT IS SAID THAT NO WORD OF THE STATUTE IS TO BE CON SIDERED UNNECESSARY.THEREFORE,THE PENAL PROVISIONS MENTIONED IN SECTION 158BFA ARE DIFFEREN T FROM THE PROVISIONS OF CHAPTER XXI AND PRINCIPLES GOVERNING THOSE PROVISIONS CANNOT AND SH OULD NOT BE APPLIED WHILE DECIDING THE PENALTY ISSUE OF BLOCK PERIOD.IN THE SEARCH AND SEI ZURE CASES,THE ASSESSEE IS PROVIDED SUFFICIENT TIME TO GO THROUGH THE SEIZED DOCUMENTS AND THE STA TEMENTS MADE BY HIM AND ONLY AFTER THAT HE IS SUPPOSED TO FILE BLOCK RETURN.THEREFORE,IT IS THE D UTY OF THE ASSESSEE TO RETURN HIS CORRECT INCOME FOR THE BLOCK PERIOD.IT IS NOT THE CASE OF THE ASSE SSEE THAT HE WAS NOT SUPPLIED THE COPIES OF THE STATEMENTS OR THE SEIZED DOCUMENTS OR THAT TIME GIV EN TO HIM FOR FILING BLOCK RETURN WAS NOT SUFFICIENT.IN THESE CIRCUMSTANCES,IF THERE WAS DIFF ERENCE BETWEEN THE RETURNED UNDISCLOSED IT(SS)NO.59/MUM/09/VT-BLOCK87-97 14 INCOME AND THE ASSESSED UNDISCLOSED INCOME THE BURD EN WAS ON THE ASSESSEE TO EXPLAIN THE SAME. WE FIND THAT HE HAS FAILED SUBSTANTIATE HIS CLAIM T HAT THERE WAS NO DIFFERENCE IN THE INCOME RETURN DISCLOSED AND INCOME ASSESSED THAT AND SAME WAS NOT BACKED BY THE SEIZED DOCUMENTS/ASSETS.WE FIND THAT THE AO HAS NOT LEVIED PENALTY @300% AND H AS USED HIS DISCRETION IN FAVOUR OF THE ASSESSEE BY IMPOSING PENALTY @100% ONLY.THUS,THERE IS NO SCOPE FOR US TO INTERFERE WITH IT. IN THESE CIRCUMSTANCES,CONSIDERING THE FACTS AND CI RCUMSTANCES OF THE CASE UNDER APPEAL AND DELIBERATING UPON THE PENALTY ORDERS PASSED BY THE TRIBUNAL ON 2.03.2013 IN THE CASES OF MADHUKAR B.THAKOOR,BALCHANDRA B.THAKOOR,LEGAL HEI R MRS. SUNITA SAMIR SAO,AND MOHAN B. THAKOOR WE ARE DECIDING THE EFFECTIVE GROUND OF APP EAL AGAINST THE ASSESSEE. AS A RESULT,APPEA L FILED BY THE ASSESSEE STANDS DISMISSED. ( 9 #(' * # : * ' ;<. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER,2014 . 8 * ,-. > ?# 19 UOACJ UOACJ UOACJ UOACJ , 201 4 - * 7 @ SD/- SD/- ( / VIJAY PAL RAO) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER , / MUMBAI, ?# /DATE: 19.11 . 2014. SK 8 8 8 8 * ** * &' &' &' &' A .' A .' A .' A .' / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ B C , 4. THE CONCERNED CIT / B C 5. DR F BENCH, ITAT, MUMBAI / D7 &'# ,Q ,Q,Q ,Q , . . . 6. GUARD FILE/ 7 E '' '' '' '' &' &'&' &' //TRUE COPY// 8# / BY ORDER, F / ; DY./ASST. REGISTRAR , /ITAT, MUMBAI.