TMI Blog2009 (6) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... es on February 2, 2001, in which books of account, documents and assets were found and seized. Notice under section 158BC was issued on March 8, 2002 and the assessee filed nil return on November 21, 2002. The assessment under section 158BC was completed on February 26, 2003, computing the undisclosed income of the assessee for the block period April 1, 1990 to February 2, 2001 at Rs. 18,85,648 comprising of unexplained cash of Rs. 17 lakhs and the value of unexplained investment in gold and diamond stocks at Rs. 1,85,648. Penalty proceedings were also initiated under section 158BFA(2), which were disposed of on July 31, 2007 by levying penalty of Rs. 12,58,552, being the minimum penalty leviable under the aforesaid provision. Aggrieved by this order, appeal was filed before the learned Commissioner of Income-tax (Appeals), who dismissed the appeal. Before us, learned counsel for the assessee referred to paragraph 3.1 of the assessment order which contains answer to various questions recorded on February 2, 2001 at the IGI airport where the assessee was found in possession of cash amounting to Rs. 18,07,500. The statement is written on two pages. The first page containing five an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sona Jewellers, HD-3, Pitampura, Delhi, started at 13.15 hours and was closed at 21.30 hours. Our attention was also drawn towards the panchnama of the personal search dated February 2, 2001 which shows that after interception at IGI, he was brought to the Income-tax Officer with his brief case, search in respect of which started on February 2, 2001 at 12 noon and ended at 11.40 p.m. Our attention was also drawn towards the assessment order in the case of Hira Jewellers P. Ltd. framed under section 158BC on February 26, 2003 in which the undisclosed income was computed at Rs. 1,22,042, consisting of unexplained investment in gold and silver stocks of Rs. 82,877 and unrecorded sale of diamond stock of Rs. 29,165. Our attention was also drawn towards pages 136 to 138 of the paper book, being a letter dated July 11, 2001 written by Shri Homi Rajvansh, Additional Director of Income-tax (Investigation)-VI, New Delhi, to the Director of Income-tax (Investigation)-II, New Delhi, in which it was reported that seizure of jewellery in the case of M/s. Hira Jewellers cannot be justified and the same deserves to be released. Our attention was also drawn to page 139 of the paper book, being a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention was also drawn towards page 97 pointing out that photocopies of sale bill book were not given, making it difficult for him to prepare the return under section 158BC. This fact was not rebutted in the assessment order. Thus, it was argued that penalty could not have been levied. In order to support the case, reliance was placed on the order of "E" Bench of Mumbai Tribunal in the case of Deputy CIT v. Koatex Infrastructure Ltd. [2006] 286 ITR (AT) 40 ; [2006] 100 ITD 510, in which it was held that the levy of penalty under section 158BFA(2) is not automatic in a case where assessed undisclosed income is more than the returned undisclosed income ; and the Assessing Officer has to take into account the circumstances and explanation offered by the assessee. If no mala fide could be attributed to him, the penalty could not be levied. Further, reliance was placed on the order of "C" Bench of the Bangalore Tribunal in the case of Smt. Mala Dayanithi v. Deputy CIT [2004] 270 ITR (AT) 56 ; [2004] 91 ITD 46, in which it was held that where on the basis of seized material found in the course of search, some addition was made on the basis of estimation of the value of property, penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer issued notice under section 271, the assessee was put to notice that the provision contained in the Explanation was applicable. Therefore, it was for him to show that failure to return the correct income was not due to any neglect or fraud. In absence of bona fide explanation in this behalf, the levy of penalty was justified. Further, reliance was placed on the decision of the hon'ble Supreme Court in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 in which it was held that the Explanation appended to section 271(1)(c) of the Act entirely indicate the element of strict liability on the assessee for concealment of income or for furnishing inaccurate particulars of income while filing the return. The object behind this section and the Explanation is to provide for remedy for loss of revenue, which is civil in nature and for which wilful concealment is not an essential ingredient as in the matter of prosecution under section 276C of the Act. His case was that the provision contained in section 271(1)(c) was more strict than the provision contained in section 158BFA(2). Therefore, the matter of penalty has to be decided in terms of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f time could only be attributed to the influence of the assessee over them ; and (iv) merely showing cash in the books of the company does not mean that its availability was accepted in assessment proceedings. For the sake of ready reference, paragraph 5.2 of the order of the Tribunal is reproduced below : "5.2 As regards the ownership of the cash, the explanation of the assessee, that the cash belonged to the company, is also not convincing. The assessee at the airport never stated that he was carrying the cash on behalf of the company though he had stated that he was director of the company. Further, the plea that he was carrying a letter from the company regarding cash, is also not convincing because in case he was carrying the letter, he could have easily explained and brought to the notice of the officials. There was a time gap of several hours between the time he was intercepted at the airport and the search at the premises. The assessee had not been arrested in the intervening period and, therefore, he could easily contact the officials of the company and records could be easily manipulated. These records include writing of few bills showing substantial cash received on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enacted that the Assessing Officer may direct a person that he 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 determined by the Assessing Officer. This section is not worded in the manner in which section 271(1)(c) has been worded. Section 271(1)(c) contains the element of concealment of income or furnishing inaccurate particulars of income. The levy under that section has been held to be civil in nature, which has to be decided on the basis of the statutory provision and the Explanation appended to the provision, as held in the case of Dharamendra Textile Processors [2008] 306 ITR 277 (SC). Thus, by analogy the only thing which has to be seen is whether there was justifiable reason for the assessee not to include the cash in the return as undisclosed income. We find that it was held by the Tribunal that the explanation of the assessee in respect of seized cash, as belonging to the company, has been rightly rejected by the Revenue authorities, the reasons for which have already been stated by us in paragraph 4.1 (supra). Nothing furth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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