MR. GUNANATH B. THAKOOR, MUMBAI V. ACIT-20(3), MUMBAI

ITSSA 64/MUM/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9429 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-03-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 09-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJNEESH ARVIND
• Assessee Lawyers: D P BAPAT
• Keywords: Income from undisclosed sources; Opportunity of being heard; Bonafide belief; Difference of opinion; Block assessment; Tax effect; Onus to prove; Retraction
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI R.K. PAND A ,(AM) IT(SS)A NO.64/MUM/2009 ASSESSMENT YEAR : BLOCK PERIOD: 1.4.1987 TO 15.9.1997 MR. GUNANATH B. THAKOOR DSILVA BUILDING S.K. BOLE ROAD OPPOSITE AGAR BAZAR, DADAR MUMBAI-400 028. ..( APPELLANT ) P.A. NO. (AABPT 4762 H) VS. ASSTT. COMMISSIONER OF INCOME TAX -20(3) 5 TH FLOOR, PIRAMAL CHAMBERS LALBAUG, PAREL MUMBAI-400 012. ..( RESPONDENT ) APPELLANT BY : SHRI D.P. BAPAT RESPONDENT BY : SHR I RAJNEESH ARVIND O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 30.3.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR PERTAINING TO THE BLOCK PERIOD 01.4.1987 TO 15. 9.1997. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT IN THIS CASE ASSESSMENT ORDER WAS ORIGINALLY PASSED U/S.158BC OF THE IT ACT, 196 1(THE ACT), ON 30.9.1999 WHERE THE TOTAL UNDISCLOSED INCOME WAS DETERM INED AT IT(SS)A NO.64/M/09 A.Y:BP 2 RS.17,89,270/- AS AGAINST THE UNDISCLOSED INCOME DECLARED IN THE BLOCK RETURN AT RS.2,60,770/-. AGAINST THIS ORDER ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DECIDED THE APP EAL VIDE ORDER DATED 28.3.2001 GIVING CERTAIN RELIEF TO THE ASSESSEE. THEREAFTER AS A RESULT OF ORDER U/S.263 PASSED BY THE LD. CIT IN RESPECT OF APPEAL EFFECT ORDER PASSED U/S.250, ANOTHER BLOCK ASSESSMENT ORDER WAS PASSE D ON 30.4.2004 AND THE TOTAL UNDISCLOSED INCOME WAS DETERMIN ED AT RS.16,12,770/-. AS PER THIS ORDER, THE ADDITIONS MADE TO THE DECLARED INCOME ARE RS.1.00 LACS TOWARDS HOUSEHOLD EXPENSES, RS.5.00 LACS TOWARDS CASH SALE OF SCRAP/MACHINERY AND RS.7,52,000/- TOW ARDS INTEREST RECEIVED IN CASH FROM THE BUILDER. SINCE THE A SSESSED UNDISCLOSED INCOME WAS HIGHER THAN THE DISCLOSED INCOME IN THE BLOCK RETURN, THE AO AFTER CONSIDERING THE ASSESSEES REPLY DATE D 21.1.2006 WHEREIN IT HAS BEEN INTERALIA STATED THAT ON THE IMPUGNED ADDITION OF INTEREST RECEIVED IN CASH FROM BUILDER TWO APPELLATE A UTHORITIES TOOK DIVERGENT VIEWS, THUS IT IS A CLEAR CASE WHERE ADDITIONS HAVE BEEN SUBJECTED TO CONFLICTING PROCESS OF ADJUDICATION AT THE HA NDS OF THE APPELLATE AND ADMINISTRATIVE AUTHORITIES AND HENCE, THE ADDITION CANNOT BE SUBJECT TO LEVY OF PENALTY U/S.158BFA OF THE ACT, WAS OF THE VIEW THAT THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY FRESH EVIDENCE OTHER THAN REPEATING THE SUBMISSIONS AS MADE BEF ORE THE AO AND THE APPELLATE AUTHORITIES, WHO HAVE DECIDED THE I SSUE AGAINST THE IT(SS)A NO.64/M/09 A.Y:BP 3 ASSESSEE, FOUND NO MERIT IN THE SUBMISSION OF THE ASSESSEE AND ACCORDINGLY IMPOSED PENALTY OF RS.7,51,200/- BEING 100% OF TAX ON UNDISCLOSED INCOME ARRIVED AT AFTER GIVING EFFECT OF OR DER OF TRIBUNAL, VIDE ORDER DATED 9.3.2006 PASSED U/S.158 BFA(2) OF THE ACT. ON APPEAL, THE LD. CIT(A) OBSERVED THAT IT IS INCUMBENT UPON THE ASSESSEE TO COMPUTE ITS UNDISCLOSED INCOME DURING THE INTERVE NING PERIOD AND DISCLOSE THE SAME IN THE RETURN FOR THE BLO CK PERIOD. ONLY IN SUCH CASE, WHERE FULL AND TRUE DISCLOSURE OF UNDISCLOSED INCO ME HAS NOT BEEN MADE IN SPITE OF SUFFICIENT TIME AVAILABLE W ITH THE ASSESSEE, THE PENALTY BECOMES LEVIABLE. THE ONLY EXCEPTION WHER E PENALTY MAY NOT BE IMPOSED COULD BE THE CIRCUMSTANCES WHICH WERE BEYON D THE CONTROL OF THE ASSESSEE. IN THE CASE OF THE APPELLANT NO SUCH CIRCUMSTANCES EXISTED AND KEEPING IN VIEW THE FINDING RECO RDED IN THE QUANTUM APPEAL, THE ASSESSEE IS LIABLE TO PENALTY. HE FUR THER OBSERVED THAT DURING SEARCH OPERATION CONCLUDED IN SEPT. 1997 TH E APPELLANT HAD ADMITTED UNDISCLOSED INCOME U/S.132(4) AT RS.7,28,500 /- CONSISTING OF CASH FOUND DURING THE COURSE OF SEARCH. THERE AFTER, THE APPELLANT AFTER TWO YEARS RETRACTED FROM HIS DISCLOSURE VIDE AFFIDAVIT DT.8.3.1999, WHICH IS AN AFTER-THOUGHT INTENTIONALLY TRIED TO COMPLICATE THE SIMPLE ISSUE BY NOT DISCLOSING THE CORRECT INCOME IN THE BLOCK RETURN AND CLAIMING THAT THE INCOME SHOULD BE ASSESSED IN THE HANDS OF THE FIRM. THE APPELLANT SOUGHT TO CREATE A DISPUTE REGARDING IT(SS)A NO.64/M/09 A.Y:BP 4 ASSESSABILITY OF THE UNDISCLOSED INCOME. THUS THE APPELLANT DID NOT FOLLOW THE PROVISIONS OF SEC.132(4A) TO COMPUTE AND DECL ARE HIS UNDISCLOSED INCOME IN THE BLOCK RETURN. THE APPELLANT INTENTIONALLY ATTEMPTED TO REDUCE HIS TAX LIABILITY AND EVADE TAX ON HIS UNDISCLOSED INCOME WHICH HAD BEEN COMPUTED BY THE DEPARTMENT. HE F URTHER OBSERVED THAT DECLARATION MADE U/S.132(4) IS AN ADMISSIB LE EVIDENCE WHICH CAN BE USED IN ANY PROCEEDING UNDER THE ACT. THE A PPELLANT HAS NOT CLAIMED THAT THE STATEMENT WAS RECORDED UNDER COERCIO N OR ANY KIND OF PRESSURE. IT IS WRONG ON THE PART OF THE AP PELLANT TO STATE AS PER HIS AFFIDAVIT DATED 8.3.1999 THAT HIS DISCLOSURE U/S.132(4) WAS ADHOC IN NATURE AND WITHOUT ANY PARTICULAR BASIS OR DE TAILS. THE LD. CIT(A) WHILE DISTINGUISHING THE DECISIONS RELIED BY TH E LD. COUNSEL FOR THE ASSESSEE IN CIT VS. CALCUTTA CREDIT CORPN. LTD. (1987 ) 166 ITR 29(CAL.) AND IN ITO VS. SMT. PRAMILA PRATAP SHAH (2 006) 100 ITD 160(MUM.) HELD, THAT THE PENALTY U/S.158BFA(2) IS LEV IABLE IN THE CASE OF THE APPELLANT. HOWEVER, THE PENALTY SHOULD BE LEVIED ON THE BASIS OF TAX EFFECT ON THAT PART OF UNDISCLOSED INCOME WHI CH IS IN THE EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME DECLARED IN THE RETURN. ACCORDINGLY HE DIRECTED THE AO TO LEVY MINIMUM PENALTY ON THIS BASIS AND HENCE, PARTLY ALLOWED THE APPEAL. IT(SS)A NO.64/M/09 A.Y:BP 5 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING SOLE GROUND OF APPE AL: THE LD. CIT(A) HAS ERRED IN UPHOLDING LEVY OF PENALTY ON THE BASIS OF TAX EFFECT ON THAT PART OF THE UNDISCLOSED INCOME WHICH IS IN EXCESS OF UNDISCLOSE D INCOME DECLARED IN THE RETURN. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE AFTER GIVING BRIEF FACTS OF THE CASE SUBMITS THAT WITH REGARD TO THE RECEIPT OF INTEREST IN CASH OF RS.7.52 LACS NO DOUBT THE ASSESSEE HAS REP LIED IN ANSWER TO QUESTION NO.3 IN THE STATEMENT RECORDED ON 5. 9.97 THAT HE HAD RECEIVED CASH OF RS.7.52 LACS TOWARDS INTEREST FOR NON- PAYMENT OF CONSIDERATION FOR SALE OF FACTORY AT ANDHERI (E), MUMBA I BUT SUBSEQUENTLY VIDE AFFIDAVIT DATED 8.3.99 THE ASSESSEE RET RACTED THE SAID STATEMENT INTERALIA STATING THAT THE FACTORY IS OW NED BY THE PARTNERSHIP FIRM WHEREIN THE ASSESSEE AND HIS BROTHERS ARE PARTNERS, THUS, THE RECEIPT IN QUESTION IS OF THE PARTNERSHIP FIRM , AND, THEREFORE, THE CASH FOUND FROM THE POSSESSION OF THE ASSESSEE IS ONLY HI S SHARE AS A PARTNER. HE FURTHER SUBMITS THAT THE LD. CIT(A) I N THE QUANTUM APPEAL HAS CONSIDERED THE ABOVE ISSUE AND HAS HELD THAT (PARA 6.5 OF THE ORDER) ..... IN MY OPINION, SIMILAR TREATMENT CO ULD BE GIVEN TO THE TOTAL AMOUNT OF INTEREST RECEIVED BY THE PARTNERS, EIT HER BY CHEQUE OR IN CASH FROM SHRI RAMNIK CHAWDA FOR THE DELAY IN THE PAYMENT OF SALE CONSIDERATION OF THE FACTORY LAND. IN FACT, THE INTERE ST INCOME SHOULD IT(SS)A NO.64/M/09 A.Y:BP 6 FIRST BE CONSIDERED IN THE CASE OF THE FIRM, BECAUSE THE L AND BELONGED TO THE FIRM. AS CLAIMED BY THESE PARTNERS, THEY HAD RE CEIVED THE PAYMENTS OF INTEREST SEPARATELY/INDIVIDUALLY FROM SHRI RAMNIK CHAWDA. IF THIS IS CONFIRMED BY SHRI RAMNIK CHAWDA, IT WOULD BE NECESSARY TO ASCERTAIN THE BASIS FOR MAKING THESE SEPARATE PAYMENTS TO EACH PARTNERS SEPARATELY. IN FAIRNESS, ALL SUCH INTE REST RECEIPTS SHOULD BE CONSIDERED TOGETHER IN THE CASE OF THE FIRM, UNLESS THERE IS LEGAL BASIS FOR ASSESSING THESE AMOUNTS SEPARATELY IN THE HA NDS OF PARTNERS INDIVIDUALLY ON THE BASIS OF SEPARATE AMOUNTS RECEIVED BY THEM..... HE FURTHER SUBMITS THAT THE LD. CIT(A) WHI LE RESTORING THE ISSUE TO THE FILE OF THE AO DIRECTED THE AO THAT THE I NTEREST INCOME SHOULD BE CONSIDERED IN THE HANDS OF EACH PARTNER AS PER DIVISION ACCORDING TO LAW IN THE CASE OF THE FIRM. THE LD. COUN SEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE TRIBUNAL ON THE APPEAL FILED BY THE ASSESSEE AND THE DEPARTMENT, HOWEVER, REVERSED THE FINDI NG OF THE LD. CIT(A) IN THIS REGARD AND DECIDED THE ISSUE AGAINST THE ASSESSEE VIDE PARA-19 OF ITS CONSOLIDATED ORDER DATED 31.8.2005 PA SSED IN BHALCHANDRA B. THAKOOR AND OTHERS INCLUDING ASSESSEE VS. D CIT AND VICE-VERSA IN IT(SS)A NO.161 TO 165/MUM/2001 AND C.O. NO.213 TO 217/MUM/2003 FOR THE BLOCK PERIOD 1.4.1987 TO 15.9.1 997. HE FURTHER SUBMITS THAT SINCE TWO APPELLATE AUTHORITIES TOOK DIVERG ENT VIEWS IN THE MATTER, THEREFORE, IT IS A CASE OF DIFFERENCE OF OP INION AND IT IS IT(SS)A NO.64/M/09 A.Y:BP 7 SETTLED LAW THAT ON A DIFFERENCE OF OPINION PENALTY I S NOT LEVIABLE. THE RELIANCE WAS ALSO PLACED ON THE SAME DECISIONS CITED BEFORE THE LD. CIT(A) I.E. CIT VS. CALCUTTA CREDIT CORPORATION (198 7) 166 ITR 29(CAL.) AND ITO VS. SMT. PRAMILA PRATAP SHAH (2006)100 ITD 160(MUM.). HE ALSO PLACED RELIANCE ON THE DECISION IN CIT VS. DODSAL LTD . (2009) 312 ITR 112(BOM.) FOR THE PROPOSITION THAT THE PENALTY IS DISCRETIONARY AND NOT MANDATORY. HE FURTHER SUBMITS THAT IN A RECEN T DECISION IN UNION OF INDIA VS. RAJASTHAN SPINNING & WEAVING MILL S AND OTHERS, THE HONBLE SUPREME COURT IN CIVIL APPEAL NO.3527 OF 200 9 DATED 12.5.2009 HAS OBSERVED IN PARA-24 OF ITS ORDER AS UNDE R : 24. IT MUST, HOWEVER, BE MADE CLEAR THAT WHAT IS STATED ABOVE IN REGARD TO THE DECISION IN DHARMENDRA TEXTILE IS ONLY IN SO FAR AS SECTION 11AC IS CONCERNED. WE MAKE NO OBSERVATIONS(AS A MATTER OF FACT THERE IS N O OCCASION FOR IT!) WITH REGARD TO THE SEVERAL OTHER STATUTORY PROVISIONS THAT CAME UP FOR CONSIDERATION IN THAT DECISION. RELIANCE WAS ALSO PLACED IN THIS REGARD ON THE DECISION I N CIT VS. HARYANA WAREHOUSING CORPORATION (2009) 314 ITR 215(P& H). IN THE LIGHT OF THE ABOVE HE SUBMITS THAT THE DECISION IN DHAR MENDRA TEXTILE IS NOT APPLICABLE IN ASSESSEES CASE AND THEREFORE THE PENAL TY IMPOSED BY THE AO AND SUSTAINED BY THE LD. CIT(A) BE DELETED . 5. ON THE OTHER HAND, THE LD. DR , SUBMITS THAT IN VI EW OF THE FINDING RECORDED BY THE TRIBUNAL IN ASSESSEES OWN CASE, I N QUANTUM IT(SS)A NO.64/M/09 A.Y:BP 8 APPEAL, IN REJECTING THE RETRACTION MADE BY THE ASSESSEE AND IN CONFIRMING THE ADDITION OF UNACCOUNTED INCOME AS UNEXPLA INED INCOME IN THE HANDS OF THE ASSESSEE THE ORDER PASSED BY THE LD. C IT(A) IN SUSTAINING THE PENALTY BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE REL EVANT PROVISIONS OF SECTION 158BFA(2) OF THE ACT PROVIDES LEVY OF PENALT Y FOR UNDERSTATEMENT OF INCOME IN THE BLOCK RETURN IN RESPECT OF SEARCH INITIATED ON OR AFTER 1.1.1997. THE 1 ST PROVISO TO SECTION 158 BFA(2) PROVIDES FOR AN EXCEPTION FROM NON-LEVY OF PENALTY IN CASE OF ADMITTED INCOME, WITH CERTAIN CONDITIONS. HOWEVER, THE 2 ND PROVISO PROVIDES THAT WHERE THE UNDISCLOSED INCOME DETERMINED BY AO IS I N EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES THE PENA LTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RE TURN. SECTION 158BFA(3) PROVIDES THAT BEFORE LEVY OF PENALT Y ASSESSEE SHOULD BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD . 7. WE FURTHER FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE IN HIS FINAL STATEMENT RECORDED ON 5.9.1997 U/S. 132(4) HAS S TATED IN REPLY TO QUESTION NO.3 AS UNDER : IT(SS)A NO.64/M/09 A.Y:BP 9 THAT HE (HIMSELF AND HIS BROTHERS) HAD SOLD THEIR FACTORY AT CHAKALA ROAD, ANDHERI(E), MUMBAI FOR ABO UT RS.19.00 CORERS TO SHRI RAMNIK CHAWDA AND HE HAD RECEIVED BY WAY OF INTEREST FOR NON-PAYMENT OF SALE CONSIDERATION A SUM OF RS.3.76 LACS BY CHEQUE AND CASH OF EQUAL AMOUNT TWICE, I.E.. RS.7.52 LACS BY CHEQUE AND CASH ALSO RECEIVED RS.7.52 LACS. WE FURTHER FIND THAT AFTER THE EXPIRY OF ALMOST 15 M ONTHS OF MAKING THE SAID STATEMENT THE ASSESSEE TURNED AROUND TO SAY THAT THE UNACCOUNTED INCOME ADMITTED BY HIM TO BE HIS OWN BELON GED TO THE FIRM AND FILED AN AFFIDAVIT DATED 8.3.99 TO SUPPORT HIS RETRACTION. THE TRIBUNAL IN THE QUANTUM APPEAL (SUPRA), ON THIS ISS UE HAS NOT ACCEPTED THE RETRACTION MADE BY THE ASSESSEE AFTER CONSIDERI NG THE FACTS AND VARIOUS CASE LAWS ON THE ISSUE VIDE FINDINGS RECORD ED IN PARA-12, 13, 17, 18 AND 19 OF ITS ORDER DATED 31.8.2 005 AS UNDER : 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE SHORT ISSUE IS WHETHER UNACCOUNTED INCOME ADMITTED BY THE INDIVIDUAL PARTNERS AS THEIR OWN INCOME WAS INC OME OF THE FIRM OR NOT. IT IS TRUE THAT ALL THE PARTNERS H AD MADE THEIR INDIVIDUAL STATEMENTS ON OATH U/S 132(4) ADMI TTING THE UNACCOUNTED INCOME AS THEIR OWN INCOME. THEY AL SO OFFERED IT FOR TAXATION IN THEIR INDIVIDUAL HANDS. THE ASSESSEE, NAMELY, VASANT B THAKOOR VOLUNTARILY ADMI TTED U/S 132(4) THAT UNACCOUNTED INCOME OF RS. 37,26,,97 6/- WAS HIS OWN INCOME ON WHICH HE PROMISED TO PAY TAX. HE ALSO PROMISED THAT HE WOULD DECLARE THE AFORESAID I NCOME AS HIS UNDISCLOSED INCOME IN THE RETURN FOR THE BLO CK PERIOD. IT IS AFTER THE EXPIRY OF ALMOST 15 MONTHS OF MAKING THE SAID STATEMENT THAT THE ASSESSEE TURNED AROUND TO SAY THAT THE UNACCOUNTED INCOME ADMITTED BY HIM TO BE HIS OWN BELONGED TO THE FIRM AND FILED AN AFFIDAVIT TO SUPPORT HIS RETRACTION. THE RETRACTION MADE BY THE ASSESSEE, IN OUR VIEW, CANNOT BE ACCEPTED FOR S EVERAL REASONS: (I) THERE IS NO EVIDENCE ON RECORD TO PROV E THAT DECLARATION MADE BY THE ASSESSEE U/S.132(4) ON 5.9. 1997 IT(SS)A NO.64/M/09 A.Y:BP 10 WAS FACTUALLY INCORRECT; (II) THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE UNACCOUNTED INCOME CLAIMED BY THE ASSESSEE TO BE HIS OWN BELONGED TO THE FIRM; (III) UNACCOUNTED INCOME CLAIMED BY THE ASSESSEE TO BE H IS OWN HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT O F THE FIRM; (IV) THERE HAS BEEN INORDINATE DELAY IN FILIN G THE AFFIDAVIT RETRACTING FROM THE DECLARATION MADE WITH OUT ANY REASONABLE EXPLANATION FOR SUCH DELAY; (V) THE AFFI DAVIT IS NOT SUPPORTED BY ANY EVIDENCE; AND (VI) THE AFFIDA VIT IS A DOCUMENT OF SELF-SERVING NATURE NOT SUPPORTED BY AN Y EVIDENCE. IT IS HIT BY THE RATIO LAID DOWN IN DURGA PRASAD MORE 82 ITR 540 (SC). FOR THESE REASONS THE AFFIDA VIT FILED BY THE ASSESSEE WILL NOT HELP THE ASSESSEE TO RESILE FROM THE DECLARATION OF UNACCOUNTED INCOME MADE ON OATH UNDER SECTION 132(4). 13. STATEMENTS DECLARING UNACCOUNTED INCOME ARE BINDING AND CAN FORM THE SOLE BASIS FOR ASSESSMENT IF THEY ARE NOT EFFECTIVELY RETRACTED. EFFECTIVE RETRACTION IS POSSIBLE IN TWO SITUATIONS FIRST OF WHICH IS WHERE RETRACTED STATEMENT HAS NOT BEEN VOLUNTARILY MADE. A STATEMEN T, HOWEVER, CANNOT BE SAID TO BE INVOLUNTARILY MADE ME RELY BECAUSE IT IS SUBSEQUENTLY SOUGHT TO BE RETRACTED. IT IS ALSO TO BE REMEMBERED THAT THE LAW OF EVIDENCE PRES UMES REGULARITY AND CORRECTNESS OF THE OFFICIAL ACTIONS UNLESS PROVED OTHERWISE AND HENCE THE SAID PRINCIPLE WILL ALSO GOVERN THE STATEMENT RECORDED BY A PUBLIC OFFICIAL AND THIS IS MORE PARTICULARLY SO WHEN IT IS RECORDED IN PURSUANCE OF THE STATUTORY PROVISIONS OF LAW. THE PROVISIONS OF SUB-SECTION (4) OF SECTION 132 ALSO C REATE REBUTTABLE PRESUMPTION IN FAVOUR OF THE STATEMENTS RECORDED THERE-UNDER AND AUTHORIZE THEIR USE IN EVI DENCE IN ANY PROCEEDING UNDER THE INCOME-TAX ACT. THE BUR DEN IS THEREFORE SQUARELY ON THE PERSON WHO ALLEGES THA T THE STATEMENT WAS NOT MADE VOLUNTARILY TO PROVE THAT IT WAS INVOLUNTARILY MADE OR MADE UNDER COERCION OR UNDUE INFLUENCE OR THAT IT WAS MADE UNDER MISTAKEN BELIEF OR WAS OBTAINED BY FRAUD OR MISREPRESENTATION. MERE ALLEGATION WILL NOT SUFFICE. SECOND SITUATION IS WH ERE THE PERSON SEEKING TO RETRACT PROVES, BY LEADING COGENT AND RELIABLE EVIDENCE, THE ERRONEOUS OR INCORRECT NATUR E OF THE FACTS STATED OR CONFESSED AT THE EARLIEST POSSIBLE OPPORTUNITY. IN THE CASE BEFORE US, IT IS NOT THE C ASE OF THE ASSESSEE THAT HIS STATEMENT WAS OBTAINED UNDER DURESS OR COERCION. IT IS ALSO NOT HIS CASE THAT TH E STATEMENT WAS NOT VOLUNTARILY MADE BY HIM. THE ASSE SSEE HAS PLACED NO EVIDENCE BEFORE US TO SHOW THAT THE STATEMENT WAS MADE BY THE ASSESSEE UNDER A MISTAKEN IT(SS)A NO.64/M/09 A.Y:BP 11 BELIEF. IT IS NOT A CASE WHERE ONLY THE ASSESSEE, N AMELY, VASANT B THAKOOR HAS MADE THE STATEMENT. FIVE BROTH ERS WHO ARE PARTNERS IN THE SAME FIRM HAVE MADE STATEME NTS ADMITTING THE UNACCOUNTED INCOME TO BE THEIR OWN. N ONE OF THEM EVEN WHISPERED THAT THE UNACCOUNTED INCOME WHICH THEY WERE DECLARING AS THEIR OWN BELONGED TO THE FIRM. IT IS DIFFICULT TO BELIEVE THAT ALL THE FIVE PARTNERS WOULD HAVE SUFFERED FROM A COMMON MISTAKEN BELIEF T HAT THE UNACCOUNTED INCOME INDIVIDUALLY DECLARED BY THE M U/S 132(4) BELONGED TO THEM AND NOT TO THE FIRM. IN OUR VIEW, THE STATEMENT MADE BY THEM U/S 132(4) WAS BINDING O N THEM NOTWITHSTANDING THEIR ATTEMPT TO RETRACT FROM THE SAID STATEMENT THROUGH THE AFFIDAVIT. 17. THE LEARNED DEPARTMENTAL REPRESENTATIVE IS INDE ED RIGHT IN HIS SUBMISSION THAT CASH FOUND AT THE TIME OF SEARCH WAS IN THE PROFIT SHARING RATIO. IT IS THERE FORE NOT POSSIBLE TO EVEN REMOTELY INFER THAT THE FACTORY LA ND, MACHINERY, ETC. WAS SOLD BY THE FIRM AS THE FIRM, I N THAT CASE, WOULD HAVE ALLOCATED THE SALE PROCEEDS IN THE PROFIT SHARING RATIO AMONGST THE PARTNERS. IT RATHER SUPPO RTS THE CASE OF THE REVENUE THAT THE PROCEEDS BELONGED TO T HE INDIVIDUAL PARTNERS AS THE INDIVIDUAL PARTNERS THEM SELVES TREATED THEM TO BE THEIR OWN. HAD IT BELONGED TO THE FIRM, THERE WOULD HAVE BEEN SOME EVIDENCE OR ENTRY IN THE BOOKS OF THE FIRM TO SUGGEST SO. HAVING DECLARED THE UNACCOUNTED INCOME AS THEIR OWN, IT WAS NOT EXPECTE D OF THE DEPARTMENT TO PROVE THE SOURCE FROM WHICH THE INDIVIDUAL ASSESSES HAD EARNED THAT INCOME. THESE F ACTS WERE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSES A ND HENCE THE BURDEN WAS ON THEM TO PROVE WITH RELIABLE EVIDENCE THAT THE UNACCOUNTED INCOME WAS NOT THEIR OWN BUT OF THE FIRM OR OF SOMEONE ELSE. THE DECLARATION OF UNACCOUNTED INCOME BY ITS NATURE SHOWS THAT IT HAS NOT BEEN ACCOUNTED FOR IN THE BOOKS. IN THE ABSENCE OF ANY EVIDENCE, IT IS NOT POSSIBLE TO ACCEPT THAT THE UNA CCOUNTED INCOME DECLARED BY THE INDIVIDUAL ASSESSES BELONGED TO THE FIRM. 18. SECTION 69A PLACES THE BURDEN ON THE ASSESSEE W HO IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEW ELLERY OR OTHER VALUABLE ARTICLE WHICH IS NOT FOUND TO BE RECORDED IN HIS BOOKS TO SATISFACTORILY EXPLAIN THE NATURE A ND SOURCE OF THE ACQUISITION OF THE AFORESAID ITEMS. T HE EXPLANATION ENVISAGED BY SECTION 69A IS NOT A FANTA STIC EXPLANATION BUT A REASONABLE EXPLANATION DULY SUPPO RTED BY RELIABLE EVIDENCE ESTABLISHING PRIMA FACIE THE IT(SS)A NO.64/M/09 A.Y:BP 12 GENUINENESS OF THE EXPLANATION BEING TENDERED. IN T HE CASE BEFORE US, CASH WAS INDEED RECOVERED FROM THE POSSESSION OF THE ASSESSEE AND HENCE THE BURDEN WAS ON HIM TO SATISFACTORILY EXPLAIN ITS ACQUISITION. IT W AS THE CASE OF THE ASSESSEE HIMSELF AT THE TIME OF SEARCH THAT THE CASH REPRESENTED HIS UNDISCLOSED INCOME FROM WH ICH HE SUBSEQUENTLY SOUGHT TO RETRACT. IT IS THUS A CAS E OF SHIFTING EXPLANATIONS. THE SUBSEQUENT EXPLANATION B Y THE ASSESSEE THAT THE UNACCOUNTED INCOME AND CASH BELON GED TO THE FIRM WAS NEITHER SPONTANEOUS NOR SUPPORTED B Y ANY EVIDENCE. IN THE FACE OF SUCH SHIFTING EXPLANATIONS AND THE INABILITY OF THE ASSESSEE TO SUBSTANTIATE THE SUBSEQUENT EXPLANATION WITH THE HELP OF RELIABLE EV IDENCE, IT IS DIFFICULT FOR US TO HOLD THAT THE ASSESSEE HA D DISCHARGED THE REQUISITE BURDEN OF PROOF AS ENVISAG ED BY SECTION 69A. THE SUBSEQUENT EXPLANATION OF THE ASSE SSEE MUST THEREFORE FAIL. 19. CONSIDERING ALL THE FACTS AND CIRCUMSTANCES O F THE CASE, WE ARE OF THE VIEW THAT THE AO HAS RIGHTLY TA XED THE UNACCOUNTED INCOME AS UNEXPLAINED INCOME IN THE INDIVIDUAL HANDS OF THE ASSESSEE. GROUND NO.1 TAKEN BY THE ASSESSEE FAILS WHILE GROUND NO. 3 IN THE MEMORA NDUM OF CROSS OBJECTION TAKEN BY THE DEPARTMENT SUCCEEDS . FROM THE FAIR READING OF THE ABOVE WE FIND THAT THE TRIBUNAL HAS CONFIRMED THE ADDITION OF UNACCOUNTED INCOME AS UNEXPLAI NED INCOME ON THE BASIS OF ACCEPTANCE OF INCOME IN THE STATEMENT OF T HE ASSESSEE RECORDED U/S.132(4) OF THE ACT AND THE TRIBUNAL HAS RE JECTED THE RETRACTION MADE BY THE ASSESSEE THROUGH HIS AFFIDAVIT. T HUS, THERE IS NO DISPUTE THAT THE UNDISCLOSED INCOME FINALLY DETERMINE D IN THE CASE OF THE ASSESSEE IS IN EXCESS OF THE INCOME SHOWN IN THE RETUR N ON WHICH THE ASSESSEE IS LIABLE TO PENALTY ON THE ADDITION OF RS.7,51,200/. THE CONTENTION OF THE ASSESSEES COUNSEL THAT THE TWO APPE LLATE AUTHORITIES TOOK DIVERGENT VIEWS ON THE ADDITION OF R S.7,51,200/- HAS NO MERIT FOR THE REASONS (I) THE VERY BASIS OF RETRACTI ON MADE BY THE IT(SS)A NO.64/M/09 A.Y:BP 13 ASSESSEE WHICH HAS BEEN ACCEPTED BY THE LD. CIT(A) IN QUANT UM APPEAL HAS BEEN REJECTED BY THE TRIBUNAL, AS ABOVE. ( II) THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE UNACCOUNTED INCOME CLA IMED BY THE ASSESSEE TO BE HIS OWN ACTUALLY BELONGED TO THE FIRM (III) EVEN AT THIS STAGE THE ASSESSEE HAS FAILED TO PRODUCE ANY SUPPORTING MATERIAL TO SHOW THAT THE SAID INCOME WAS DISCLOSED AND ASSESSED IN THE HANDS OF THE FIRM AND (IV) NO CONTRARY MATERIAL WAS PRODUCED TO CONTROVERT THE FINDING OF FACT RECORDED BY THE TRIBUNAL. IN THI S VIEW OF THE MATTER WE ARE OF THE VIEW THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S.158BFA(2). 9. IN CIT VS. CALCUTTA CREDIT CORPORATION(SUPRA), THE AO DID NOT ACCEPT THE CREDIT OF RS.1,20,000/- STANDING IN THE NAME OF SHANKARLAL DULICHAND AND TREATED AS INCOME FROM OTHER SOURCES AND A LSO DISALLOWED THE INTEREST. ON APPEAL, THE APPELLATE ASSI STANT COMMISSIONER DELETED THE ADDITION OF THE AMOUNT. ON F URTHER APPEAL, THE TRIBUNAL, RESTORED THE ADDITION TO THE EXTENT O F RS.40,000/- ONLY AND ALSO DISALLOWED INTEREST PAID. ON THE BASIS OF THE ADDITION THE PENALTY WAS LEVIED U/S.271(1)(C) OF THE ACT. THE TRIBUN AL NOTED THE TWO OPINIONS ON THE FACTS OF THE CASE WERE POSSIBLE AND HE NCE, DELETED THE PENALTY. ON REFERENCE, THEIR LORDSHIPS WHILE OBSER VING THAT THE FACTS FOUND BY THE TRIBUNAL HAD NOT BEEN CHALLENGED AS PERVERSE OR BASED ON NO EVIDENCE, IT IS SETTLED LAW THAT MERE ADDIT ION TO THE IT(SS)A NO.64/M/09 A.Y:BP 14 TAXABLE INCOME DID NOT AUTOMATICALLY LEAD TO AN ORDER OF PENALTY, NO CASE FOR LEVY OF PENALTY HAD BEEN MADE OUT AS TWO OPI NIONS WERE ARRIVED AT ON THE SAME FACTS HELD THAT, THE TRIBUNAL W AS JUSTIFIED IN HOLDING THAT NO PENALTY WAS LEVIABLE. WHEREAS IN THE CASE BEFORE US THE FACTS ARE DIFFERENT IN ASMUCH AS THE TRIBUNAL HAS REJECTED THE RETRACTION MADE BY THE ASSESSEE WHICH HAS BEEN ACCEPTED BY THE LD. CIT(A), WHILE DELETING THE A DDITION AND HENCE, THE BASIS ON WHICH THE LD. CIT(A) HAS BASED HIS D ECISION WAS NOT ACCEPTED BY THE TRIBUNAL. THEREFORE, THE DECISION RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE AND NOT AP PLICABLE TO THE FACTS OF PRESENT CASE. 10. IN SMT. PRAMILA PRATAP SHAH (SUPRA), THE TRIBUNA L HAS UPHELD THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS DISCHARGED HER ONUS IN PROVING HER BONA FIDES. WHEREAS IN THE CASE BEFORE US IT IS NOT THE CASE OF THE A SSESSEE THAT HE WAS UNDER THE BONAFIDE BELIEF THAT THE UNDISCLOSED I NCOME IS NOT TAXABLE, AND HENCE, THE DECISION RELIED ON BY THE LD . COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT(SS)A NO.64/M/09 A.Y:BP 15 11. IN CIT VS. DODSAL LTD.(SUPRA) IT HAS BEEN HELD THAT THE PENALTY U/S.158BFA(2) IS DISCRETIONARY AND NOT MANDATORY. THER E IS NO QUARREL ON THE ABOVE PROPOSITION OF LAW AND IT IS NOT THE CASE OF THE REVENUE THAT THE PENALTY IS MANDATORY. 12. IN CIT VS. HARYANA WAREHOUSING CORPORATION(SUPRA), THEIR LORDSHIPS WHILE DISTINGUISHING THE DECISION IN UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) HA VE HELD (PAGE 216 HEADNOTE): HELD, DISMISSING THE APPEAL, THAT THE DEDUCTION CLAIMED BY THE ASSESSEE WAS LEGITIMATE AND BONA FIDE IN TERMS OF THE CONFLICTING DETERMINATION OF LAW ON TH E PROPOSITION IN QUESTION. THE CATEGORICAL FINDING A T THE HANDS OF THE TRIBUNAL IN ITS ORDER WAS THAT THE ASS ESSEE HAD DISCLOSED THE ENTIRE FACTS WITHOUT HAVING CONCE ALED ANY INCOME. THERE WAS NO ALLEGATION AGAINST THE ASSESSEE THAT IT HAS FURNISHED INACCURATE PARTICULA RS OF ITS INCOME. THE DETERMINATION OF THE TRIBUNAL HAD NOT B EEN CONTROVERTED EVEN IN THE GROUNDS RAISED IN THE APPE AL. THE ASSESSEE WAS GUILTY OF NEITHER OF THE TWO CONDI TIONS. THEREFORE, IN THE ABSENCE OF TWO PRE-REQUISITES POS TULATED UNDER SECTION 271(1)(C) IT WAS NOT OPEN TO THE REVE NUE TO INFLICT ANY PENALTY ON THE ASSESSEE. WHEREAS IN THE CASE BEFORE US THE ASSESSEES EXPLANATION BA SED ON RETRACTION MADE BY THE ASSESSEE AT LATER STAGE WAS NOT FOU ND TO BE BONA FIDE OR TRUE INASMUCH AS THE TRIBUNAL HAS REJECTED THE SAME. IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT THERE WERE DIVERGEN T VIEWS ON THE INTERPRETATION OF LAW. THEREFORE, THE DECISION RE LIED ON BY THE LD. IT(SS)A NO.64/M/09 A.Y:BP 16 COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE AND NOT APP LICABLE TO THE FACTS OF THE PRESENT CASE. 13. IN UNION OF INDIA VS. RAJASTHAN SPINNING & WEAVIN G MILLS AND OTHERS (SUPRA), THE ISSUE WAS WITH REGARD TO THE IMPOSI TION OF PENALTY U/S.11AC OF THE CENTRAL EXCISE ACT. THEIR LORDSHIPS OBSER VED IN PARA 24 THAT IT MUST, HOWEVER, BE MADE CLEAR THAT WHAT IS STATED AB OVE IN REGARD TO THE DECISION IN DHARMENDRA TEXTILE, IS ONLY IN SO FAR AS SECTION 11AC IS CONCERNED. WE MAKE NO OBSERVATIONS(AS A MATTER OF FACT THERE IS NO OCCASION FOR IT!) WITH REGARD TO THE SE VERAL OTHER STATUTORY PROVISIONS THAT CAME UP FOR CONSIDERATION IN T HAT DECISION. AND RESTORED THE MATTER TO THE TRIBUNAL. THERE IS NO QUARREL ON THE RATIO OF THE ABOVE DECISION AND THE RATIO OF THE DECISI ON IN THE CASE OF DHARMENDRA TEXTILE(SUPRA). HOWEVER, THE FACTS OF THE P RESENT CASE ARE DIFFERENT INASMUCH AS THE RETRACTION MADE BY THE ASSE SSEE THROUGH HIS AFFIDAVIT WAS NOT ACCEPTED BY THE TRIBUNAL, IN QUA NTUM APPEAL. 14. IN VIEW OF THE ABOVE DISCUSSION, KEEPING IN VIEW T HAT THE TRIBUNAL HAS NOT ACCEPTED THE RETRACTION MADE BY THE A SSESSEE, CONFIRMED THE ADDITION MADE BY THE AO AND IN THE AB SENCE OF ANY OTHER CONTRARY MATERIAL PLACED ON RECORD BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE ASSESSEE IS LIABLE TO PENALTY U/S.158BF A(2) OF THE ACT. THE ORDER PASSED BY THE LD. CIT(A) CONFIRMING THE LEVY OF IT(SS)A NO.64/M/09 A.Y:BP 17 MINIMUM PENALTY DOES NOT CALL FOR ANY INTERFERENCE. TH E GROUND TAKEN BY THE ASSESSEE IS THEREFORE REJECTED. 15. IN THE RESULT, THE ASSESSEES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.3.2010. SD/- SD/- ( R.K. PANDA ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 4.3.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 04.2.09 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 05.2.09 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 4.3.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 5.3.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER