The ACIT, Circle-3, JAMNAGAR V. Shri Dipak K. Takwani, JAMNAGAR

ITSSA 7/RJT/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1209 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2015
• Assessment Year: misc
• Appeal Filed On: 12-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: RIDDHI SHAH
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Document seized; Block assessment; Documents seized
• Section: 132; 139

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ IT(SS)A NO.07/RJT/2013 / ASSESSMENT YEAR: BLOCK PERIOD ENDING ON 08.06.1999 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3, JAMNAGAR VS SHRI DIPAK K. TAKWANI, A-204, EKTA APARTMENT, OPP. ESI HOSPITAL, HIRJI MISTRY ROAD, JAMNAGAR PAN : AAWPT 3623 N ./ IT(SS)A NO.08/RJT/2013 / ASSESSMENT YEAR: BLOCK PERIOD ENDING ON 08.06.1999 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-3, JAMNAGAR VS SMT. LATABEN D. TAKWANI, A-204, EKTA APARTMENT, OPP. ESI HOSPITAL, HIRJI MISTRY ROAD, JAMNAGAR PAN : AAVPT 2758 B / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI YOGESH PANDEY, DR ASSESSEE(S) BY : SMT. RIDDHI SHAH, CA / DATE OF HEARING : 06/10/2015 /DATE OF PRONOUNCEMENT: 27/10/2015 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF THE REVENUE AGAINST THE SEPARATE ORDERS OF EVEN DATE, I .E., 24.01.2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS), IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 2 - JAMNAGAR ON THE RESPECTIVE APPEALS OF THE RESPONDENT FOR THE BLOCK PERIOD ENDING ON 08.06.1999. 2. THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.16,80,000/- (IN THE CASE OF SHRI DIPAK K. TAKWANI) AND RS.10,20,000/- (IN THE CASE O F SMT. LATABEN DIPAK TAKWANI) IMPOSED BY THE ASSESSING OFFICER U/S 158BFA(2) OF THE INCOME-TAX ACT. 3. THE FACTS ON VITAL POINTS ARE COMMON IN BOTH THE APPEALS; THEREFORE, FOR THE FACILITY OF REFERENCE, WE ARE TA KING UP THE FACTS FROM THE CASE OF SHRI DIPAK K. TAKWANI. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT WAS CARRIED OU T AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE ON 08.06.1999 . DURING THE COURSE OF SEARCH, FOLLOWING VALUABLE AND STOCK WERE FOUND:- RESIDENTIAL PREMISES FOUND SEIZED CASH RS.4,60,000 NIL GOLD ORNAMENTS VALUE RS. 39,483 NIL HOUSEHOLD ARTICLES & RS.4,00,000 NIL CARS VALUE BUSINESS PREMISES OF M/S. TIRUPATI INDS. CASH RS. 80,325 RS.70,000 STOCK RS.31,19,530 NIL 4. BOTH THE ASSESSEES HAVE FILED THEIR RETURN OF IN COME ON 13.06.2001 IN RESPONSE TO THE NOTICE U/S 158BC OF T HE INCOME-TAX ACT. THEY HAVE SHOWN NIL INCOME. THE LEARNED ASSESSING O FFICER HAS PASSED A BLOCK ASSESSMENT ORDER IN THE CASE OF BOTH THE ASSESSEES ON 27.06.2001. HE DETERMINED THE TOTAL INCOME AT RS.2 5,89,63,460/- IN THE IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 3 - HANDS OF SHRI DIPAK K. TAKWANI AND INCOME OF RS.2,6 3,11,793/- IN THE HANDS OF SMT. LATABEN D. TAKWANI. THE NATURE OF AD DITIONS MADE BY THE ASSESSING OFFICER HAS BEEN REPRODUCED BY THE LE ARNED FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER WHICH REA D AS UNDER:- SHRI DIPAK K. TAKWANI UNEXPLAINED CASH CREDIT AS DISCUSSED IN PARA - RS.5,06,74,700 9 OF THE ASSESSMENT ORDER DATED 27.06.2001 UNEXPLAINED CASH CREDIT AS DISCUSSED IN PARA10 - RS. 43,69,606 UNEXPLAINED CASH CREDIT AS DISCUSSED IN PARA11 - RS.2,50,37,000 UNEXPLAINED CASH CREDIT AS DISCUSSED IN PARA12 - RS.12,94,23,684 UNEXPLAINED CASH CREDIT AS DISCUSSED IN PARA13 - RS. 35,10,194 UNACCOUNTED INVESTMENT AS PER PARA14 - RS. 28,00,000 UNEXPLAINED CASH CREDIT IN PARA15 - RS.1, 76,00,000 UNACCOUNTED INCOME AS PER PARA16 - RS. 72 ,28,725 UNDISCLOSED INCOME AS PER PARA17 - RS.1,38 ,22,337 UNEXPLAINED INCOME AS PER PARA18 - RS. 4 4,97,218 TOTAL INCOME -RS. 25,89,63,464 SMT. LATABEN D. TAKWANI UNEXPLAINED CASH CREDIT AS DISCUSSED IN PARA 9 - RS. 31,19,530 UNEXPLAINED CASH CREDIT IN M/S. RAJU COTEX - RS. 54,50,000 AS DISCUSSED UNEXPLAINED INCOME AS PER PARA 12 - RS.1,65, 51,263 UNEXPLAINED INCOME AS PER PARA 13 - RS. 1 1,91,000 TOTAL INCOME - RS. 2,63,11,793 5. THESE ASSESSMENT ORDERS WERE SET ASIDE BY THE I TAT VIDE ITS ORDER DATED 29.05.2006 IN IT(SS) NO.72/RJT/2004 IN THE CASE OF SHRI DIPAK K. TAKWANI AND VIDE ORDER DATED 18.10.2007 IN IT(SS) NO.73/RJT/2004 IN THE CASE OF SMT. LATABEN D. TAKWA NI. IN PURSUANCE TO THE TRIBUNALS DIRECTION, LEARNED ASSESSING OFFI CER PASSED A FRESH ASSESSMENT ORDER ON 31.12.2008 IN THE CASES OF BOTH THE ASSESSEES. HE IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 4 - DETERMINED THE TAXABLE INCOME AT THE SAME FIGURE WH ICH WAS DETERMINED IN THE ORIGINAL ASSESSMENT ORDER. DISSA TISFIED BY THE ASSESSMENT ORDER, BOTH THE ASSESSEES WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) HAS DECIDED THE APPEAL OF SHRI DIPAK K. TAKWANI VIDE ORDER DATED 08.03.2010 AND AFTER GIVING EFFECT TO T HIS ORDER, THE INCOME STAND DETERMINED AT RS.4,65,78,340/-. IN THE CASE OF SMT. LATABEN D. TAKWANI, THE INCOME WAS REDUCED AFTER THE ORDER OF THE CIT(A) TO RS.1,77,42,260/-. DISSATISFIED BY THE ORDER OF THE CIT(A), BOTH THE ASSESSEES WENT IN APPEAL BEFORE THE TRIBUNAL. THE R EVENUE HAS ALSO CHALLENGED THE ORDER OF THE CIT(A). THE TRIBUNAL H AS DECIDED FOUR APPEALS BEARING IT(SS)A NOS. 39, 40, 57 & 58 ON 23. 09.2010. THE CONCLUDING PARAGRAPH OF THE TRIBUNAL HAS BEEN REPRO DUCED BY THE LEARNED FIRST APPELLATE AUTHORITY IN THE IMPUGNED O RDER. IT IS IMPERATIVE UPON US TO TAKE NOTE OF THE TRIBUNALS F INDING IN THE QUANTUM PROCEEDINGS. THE FINDINGS OF THE TRIBUNAL READ AS UNDER:- 14. WE HAVE PERUSED THE COUNTER ARGUMENTS AND THE CONTENTS OF THE COMMON PAPER BOOK FILED BY THE APPELLANTS. WE HAVE ALSO PERUSED ABOUT THE APPLICABILITY OR OTHERWISE OF THE RATIO O F VARIOUS JUDICIAL CITATIONS RELIED UPON BY THE AR. WE HAVE ALSO SEEN THAT THE ALUMINUM BOX CONTAINING THE SEIZED HARD DISC WHICH WAS PRODU CED BY THE CIT- DR AT THE TIME OF HEARING WAS UNSEALED. WE ARE THUS IN COMPLETE AGREEMENT WITH THE CONTENTION OF THE AR THAT IT HAS CLEARLY LOST ITS EVIDENTIARY VALUE. WE HAVE ALSO APPRECIATED THE PO SITION OF THE ASSESSEES THAT THEY ARE CLEARLY PUT IN IRREPARABLE AND DEFENSELESS POSITION FOR NO FAULT OF THEM. WE ALSO UNDERSTAND T HAT THERE IS NO PRACTICAL SENSE IN SETTING ASIDE THE MATTER ALL OVE R AGAIN, SO AS TO GIVE THE DEPARTMENT A THIRD INNING TO PLAY, AS THE SAME WOULD UNNECESSARILY RESULT IN CONTINUED HARASSMENT TO THE ASSESSEES EVE N AFTER A LAPSE OF OVER ELEVEN YEARS FROM THE DATE OF SEARCH. EVEN OTH ERWISE, SETTING ASIDE IS NOT GOING TO SERVE ANY USEFUL PURPOSE WHERE WE H AVE CLEARLY NOTICED THAT ARBITRARY AND HIGH HANDED ADDITIONS HAVE BEEN MADE IN THE IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 5 - ASSESSMENT ORDER AND PARTLY SUSTAINED BY CIT(A), EV EN THOUGH SUBSTANTIAL PORTION OF THE SEIZED MATERIAL WAS ADMI TTEDLY NEVER AVAILABLE WITH THE AO. HUGE ADDITIONS WERE ALSO MAD E ON THE BASIS OF THE COMPUTER HARD DISK AND FLOPPY DISKETTES WHICH A RE ADMITTEDLY NO LONGER ASSESSABLE AND EVEN WITHOUT TAKEN PRINT OUT OF THE CONTENT OF THE SAME. FURTHER, THE FACT OF THE COMPUTER HARD DISC H AVING BEEN KEPT IN OPEN CONDITION WITHOUT REPLACING THE SEALS THEREON AND THAT TOO, WITHOUT EVEN TAKING THE PRINT OUT OF THE DATA CONTA INED THEREIN HAVE DONE IRREVERSIBLE DAMAGE TO THE ASSESSEES. EVEN THE FLOPPY DISKETTES SEIZED ARE ADMITTEDLY NOT ACCESSIBLE AND PRINT OUT OF THE DATA STORED THEREIN HAS ALSO NOT BEEN TAKEN. WE HAVE ALSO NOTIC ED FROM THE SHOW CAUSE NOTICE ISSUED BY THE AO IN THE FIRST INNING, WHICH IS PLACED IN THE PAPER BOOK FILED BY THE APPELLANTS, THAT DEDUCTIBLE EXPENSES OF CRORES OF RUPEES WERE VERY MUCH RECORDED IN THE HARD DISC AND THIS FACT WAS ADMITTED BY THE AO IN THE SAID NOTICE. THESE ARE AL SO RECORDED IN VARIOUS PHYSICAL SEIZED DOCUMENTS, AS LISTED BY THE ASSESSEES AT PAGE 26 OF THEIR COMMON PAPER BOOK. DESPITE THIS, DEDUCTION HAS BEEN ALLOWED ONLY IN RELATION TO THE SAME RECORDED ON THE FIRST PAGE OF THE SHOW CAUSE NOTICE WHILE THE SAME WAS DENIED IN RESPECT OF THE REST. WE HAVE ALSO NOTICED THAT THE AO HAS CLEARLY GONE BY THE CONTENT OF THE APPRAISAL REPORT ALONE AND IN THE FIRST ROUND OF LITIGATION; CERTAIN ANNEXURES FORMING PART OF HIS ORDER IN FACT CONTAINED THE SEA L OF THE INVESTIGATION WING. THIS FACT WAS ALSO PLACED BY US IN THE ORDER PASSED IN THE FIRST ROUND OF LITIGATION. WE ALSO UNDERSTAND THAT THE DE DUCTION IN RESPECT OF PURCHASES AND OTHER EXPENSES OF REVENUE NATURE HAD CLEARLY AND ADMITTEDLY NOT BEEN GIVEN, EVEN THOUGH THE SAME IS IMPLIEDLY AGREED BY THE AO IN THEIR REMAND REPORT SEND BY HIM TO THE CI T(A). WE HAVE FURTHER SEEN THAT HUGE ADDITIONS HAVE ALSO BEEN MAD E EITHER IN RESPECT OF THE ACCOUNTED TRANSACTIONS, FOR WHICH RETURN OF INCOME UNDER SECTION 139 WAS VERY MUCH FURNISHED (ADDITION OF RS.54,50,0 00/- IN THE CASE OF SMT. LATA TAKWANI, IN RELATION TO INVESTMENT IN RAJ OO COTEX LIMITED SHARES) OR BY ESTIMATING THE PROFIT IN CONNECTION WI TH THE TURNOVER. THESE ARE CLEARLY NOT PERMISSIBLE IN THE BLOCK ASSE SSMENT AS CLEARLY HELD BY HON'BLE GUJARAT HIGH COURT IN N,R. PAPER & BOARD LIMITED VS. DCIT, 234 ITR 733. WE HAVE ALSO NOTED THAT HUGE ADD ITIONS HAVE ALSO BEEN MADE BY TREATING . TRANSACTIONS OF THE THIRD P ARTY AS THOSE OF THE ASSESSEE, DESPITE THAT FACT THAT THE NECESSARY INFO RMATION IN THIS REGARD WAS VERY MUCH FURNISHED BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDING ITSELF. IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 6 - 15. WHILE APPRECIATING ABOUT WHAT HAS BEEN MENTIONE D ABOVE, WE ARE STILL REQUIRED TO GIVE JUSTICE TO OUR ROLE AS THE L AST FACT FINDING AUTHORITY WHEREIN WE HAVE TO TRY TO IMPART JUSTICE ON EITHER SIDE. APPRECIATING THE FACT THAT THE ACTUAL QUANTIFICATION OF UNDISCLO SED INCOME IS AN IMPOSSIBLE TASK, IN VIEW OF WHAT HAS BEEN MENTIONED ABOVE, WE ARE STILL NOT VERY COMFORTABLE IN FULLY ACCEPTING THE CONTENT ION OF THE ASSESSEES THAT THEIR TOTAL INCOME FOR THE BLOCK PERIOD IS RUN NING IN NEGATIVE (ON PROVISIONAL BASIS AND RELYING ON THE DATA TO THE EX TENT AVAILABLE WITH THEM, AS INTERPRETED BY THE AO), SO AS TO JUSTIFY T HE RETURNED INCOME OF RS. NIL IN BOTH THE CASES. WE ARE AT THE SAME TIME NOT IN AGREEMENT WITH THE VIEW OF CJT-DR THAT THE ORDER OF THE CIT(A) IS REQUIRED TO BE REVERSED IN SO FAR AS HE HAS DELETED THE ADDITIONS MADE BY THE AO. IN VIEW OF THIS, WE DEEM IT PROPER TO RESTRICT THE OVE RALL TOTAL ADDITION AT RS.28,00,000/- IN THE CASE OF DIPAK TAKWANI AND AT RS.17,00,000/- IN THE CASE OF SMT. LATA TAKWANI ON LUMP SUM BASIS WHI CH WORK OUT TO APPROXIMATELY 10% OF THE MAIN ADDITION SUSTAINED BY CIT(A). WE DELETE ALL OTHER ADDITIONS MADE BY THE AO, REFERABL E TO VARIOUS GROUNDS SUBJECT MATTER OF THESE APPEALS. REGARDING THE OTHE R GROUNDS TAKEN BY BOTH THE PARTIES, WHICH DO NOT RESULT IN ANY ADDITI ON PER SAY, WE DO NOT FIND IT NECESSARY TO SEPARATELY ADJUDICATE THE SAME IN VIEW OF WHAT HAS BEEN MENTIONED ABOVE AND THE SAME STAND DISPOSED OF F ACCORDINGLY. 6. THE ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS U/S 158BFA(2) AND ULTIMATELY IMPOSED THE PENALTY OF RS. 16,80,000/- UPON SHRI DIPAK K. TAKWANI AND RS.10,20,000/- UPON SMT. LATABEN D. TAKWANI. ON APPEAL, THE FIRST APPELLATE AUTHORITY HAS DELETED BOTH THE PENALTIES. 7. ON THE STRENGTH OF THE HONBLE GUJARAT HIGH COU RTS DECISION IN THE CASE OF KANDOI BHOGILAL MULCHAND VS. DCIT, [201 2] 341 ITR 271 (GUJ), THE LEARNED CIT-DR CONTENDED THAT ONCE INCOM E HAS BEEN DETERMINED UNDER THE BLOCK ASSESSMENT AT AN ENHANCE D FIGURE THAN THE ONE DECLARED BY THE ASSESSEE, THEN THE ASSESSEE DESERVES TO BE VISITED WITH PENALTY U/S 158BFA(2) OF THE ACT QUA T HE DIFFERENCE IN THE DISCLOSED INCOME VIS--VIS THE DETERMINED UNDISCLOS ED INCOME. HE IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 7 - FURTHER CONTENDED THAT THERE IS NO EXPLANATION AT T HE ENDS OF THE ASSESSEE AS TO WHY THEY SHOULD NOT BE VISITED WITH PENALTY U/S 158BFA(2) FOR THE DIFFERENCE IN THE UNDISCLOSED INC OME DISCLOSED BY THE ASSESSEE VIS--VIS THE INCOME DETERMINED BY THE ASSESSING OFFICER. 8. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSE SSEE RELIED UPON THE ORDER OF THE CIT(A). SHE CONTENDED THAT IN THE CASE OF SMT. LATABEN D. TAKWANI, EVEN THE ADDITION CONFIRMED BY THE TRIBUNAL HAS BEEN CHALLENGED BEFORE THE HONBLE GUJARAT HIGH COU RT AND THE APPEAL BEARING ITA NO.2574 OF 2010 STANDS ADMITTED. SHE PLACED ON RECORD THE COPY OF THE HONBLE GUJARAT HIGH COURTS ORDER DATED 09.11.2011. SHE CONTENDED THAT THE UNDISCLOSED INC OME OF BOTH THE ASSESSEES HAVE BEEN DETERMINED ON AN ESTIMATE BASIS . THEREFORE, THEY DO NOT DESERVE TO BE VISITED WITH PENALTY U/S 158BF A(2) OF THE ACT. IN SUPPORT OF HER CONTENTION, SHE PLACED RELIANCE UPON THE FOLLOWING ORDERS OF THE ITAT:- I. SHRI K.P. CHANDRADASAN VS. ACIT IN IT(SS)A NO.43/COCH./2007. II. M/S. P.D. SHROFF VS. DCIT IN IT(SS)A NO.142/AHD/200 7 III. RATILAL G. SOLANKI VS. ACIT IN ITA NO.18/PN/2010 SHE ALSO PLACED ON RECORD THE COPY OF THESE DECIS IONS. 9. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. CHAPTER XIV-B OF THE INCOME-TAX ACT PROVIDES DETERMINATION OF UN-DISCLOSED INCOME IN TH E CASE WHERE SEARCH HAS BEEN TAKEN PLACE. ON CONJOINT READING O F SECTION 158BA, 158BB AND 158BC WOULD INDICATE THAT BLOCK ASSESSMEN T IN THE CASE OF A SEARCHED PERSON WOULD BE DETERMINED ON THE BASIS OF THE SEIZED IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 8 - MATERIAL. THE ASSESSING OFFICER, BEFORE HE CALLED UPON AN ASSESSEE TO FILE RETURN FOR THE BLOCK PERIOD U/S 158BC, WAS REQ UIRED TO SUPPLY THE COPY OF THE SEIZED MATERIAL TO THE ASSESSEE. THUS, AN ASSESSEE WAS REQUIRED TO COMPUTE HIS UNDISCLOSED INCOME IN THE B LOCK PERIOD FROM THE SEIZED MATERIAL SUPPLIED TO HIM BY THE ASSESSIN G OFFICER. IN OTHER WORDS, THE MATERIAL TO COMPUTE THE UNDISCLOSED INCO ME IS COMMON WITH THE ASSESSEE AS WELL AS WITH THE ASSESSING OFF ICER. THEREFORE, IN A SIMPLE WAY, THE COMPUTATION SHOULD ALSO BE THE SAME BUT THERE HAPPENS TO BE VARIATION. AT THIS STAGE, IT IS PERT INENT FOR US TO TAKE NOT OF SECTION 158BFA(2), WHICH READS AS UNDER:- LEVY OF INTEREST AND PENALTY IN CERTAIN CASES 158BFA (1) (2) THE ASSESSING OFFICER OR THE COMMISSIONER (APPEA LS) IN THE COURSE OF ANY PROCEEDINGS UNDER THIS CHAPTER, MAY DIRECT T HAT A PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN THE AMOUNT OF TAX LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETER MINED BY THE ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC: PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MA DE IN RESPECT OF A PERSON IF I) SUCH PERSON HAS FURNISHED A RETURN UNDER CLAUSE (A) OF SECTION 158BC; II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HAS BEE N PAID OR, IF THE ASSETS SEIZED CONSIST OF MONEY, THE ASSESSEE OFFERS THE MONEY SO SEIZED TO BE ADJUSTED AGAINST THE TAX PAYABLE; III) EVIDENCE OF TAX PAID IS FURNISHED ALONG WITH THE RE TURN; AND IV) AN APPEAL IS NOT FILED AGAINST THE ASSESSMENT OF TH AT PART OF INCOME WHICH IS SHOWN IN THE RETURN: PROVIDED FURTHER THAT THE PROVISIONS OF THE PROCEED ING PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY TH E ASSESSING OFFICER IS IN EXCESS OF THE INCOME SHOWN IN THE RET URN AND IN SUCH CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UND ISCLOSED INCOME IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 9 - DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDI SCLOSED INCOME SHOWN IN THE RETURN. 10. THE BARE PERUSAL OF SECTION WOULD INDICATE THAT THE ASSESSING OFFICER SHALL LEVY PENALTY QUA THE UNDISCLOSED INCO ME WHICH EXCEEDS FROM THE RETURNED INCOME OF THE ASSESSEE. AS OBSER VED EARLIER, THE INCOME FOR THE BLOCK ASSESSMENT IS TO BE DETERMINED ON THE BASIS OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THIS MATERIAL IS COMMON FOR THE ASSESSEE AS WELL AS FOR THE ASSESSIN G OFFICER. THUS, THE CHARGE AGAINST THE ASSESSEE FOR LEVYING PENALTY U/S 158BFA(2) COULD BE WHY THE ASSESSEE FAILED TO COMPUTE TRUE UN DISCLOSED INCOME FROM THE SEIZED MATERIAL. IF AN ASSESSEE GIVES A P LAUSIBLE EXPLANATION, THEN HE MAY BE ABSOLVED FROM LEVY OF PENALTY. IN T HE PRESENT CASE, IT REVEALS THAT THE LEARNED ASSESSING OFFICER HAS DETE RMINED THE TAXABLE INCOME OF SHRI DIPAK K. TAKWANI AT A WHOOPING FIGUR E OF RS.25,89,63,460/-. SIMILARLY, IN THE CASE OF SMT. LATABEN D. TAKWANI, IT WAS DETERMINED AT RS.2,63,11,793/-. THE FIRST APPE LLATE AUTHORITY HAS REDUCED THESE AMOUNTS TO FIGURE OF RS.4,65,78,340/- AND RS.1,77,42,260/- IN THE RESPECTIVE HANDS OF THE AS SESSEE. THE TRIBUNAL FURTHER CONFIRMED THE ADDITION ON AN ESTIMATE BASIS AT RS.28,00,000/- AND RS.17,00,000/- IN THE RESPECTIVE HANDS OF THE A SSESSEE. MEANING THEREBY, THE THREE AUTHORITIES, I.E., ASSESSING OFF ICER, CIT(A) AND THE TRIBUNAL WERE UNABLE TO COMPUTE THE TRUE UNDISCLOSE D INCOME FROM THE SEIZED MATERIAL. THE INCOME HAS BEEN DETERMINE D ON AN ESTIMATE BASIS. IN SUCH SITUATION, THE ASSESSEES CANNOT BE VISITED WITH PENALTY U/S 158BFA(2). AS FAR AS THE JUDGMENT OF HONBLE G UJARAT HIGH COURT IN THE CASE OF KANDOI BHOGILAL MULCHAND VS. DCIT, [ 2012] 341 ITR 271 IT(SS)A NOS. 07 & 08-RJT- 2013 - SHRI DIPAK K. TAKWANI & SMT LATABEN D. TAKWANI BLOCK PERIOD ENDING ON 08.06.1999 - 10 - (GUJ) IS CONCERNED, PENALTY HAS BEEN CONFIRMED ON M ERIT BECAUSE THE ASSESSEE HAS FAILED TO DEMONSTRATE WHY IT COULD NOT COMPUTE THE TRUE UNDISCLOSED INCOME FROM THE SEIZED MATERIAL. THE H ONBLE COURT HAS NOT LAID DOWN THE PROPOSITION THAT WHEREVER ANY ADD ITION HAS BEEN MADE IN THE UNDISCLOSED INCOME DECLARED BY THE ASSE SSEE BY THE ASSESSING OFFICER THEN THE PENALTY WOULD BE CONSEQU ENTIAL. IF AN ASSESSEE IS ABLE TO EXPLAIN ITS POSITION WITH REGAR D TO DECLARATION OF UNDISCLOSED INCOME, THEN THE ASSESSEE MAY BE ABSOLV ED FROM LEVY OF PENALTY U/S 158BFA(2). THE LEARNED FIRST APPELLATE AUTHORITY HAS APPRECIATED THE FACTS AND CIRCUMSTANCES IN THE RIGH T PERSPECTIVE AND WE DO NOT FIND ANY MERIT IN BOTH THESE APPEALS OF T HE REVENUE; HENCE THEY ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 27.10.2015 SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD, DATED 27/10/2015 *BIJU T. ! / COPY OF ORDER FORWARDED TO:- 1. ! / APPELLANT- 2.#$ ! / RESPONDENT 3.&'& ( / CONCERNED CIT/DIT 4. (- / CIT (A) 5 .+,-#.. , , / DR, ITAT, RAJKOT 6 .-0123 / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) & ' / ITAT, RAJKOT