TMI Blog2012 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... do not constitute admission for the purpose of levying penalty. The addition made on the basis of more or less on the offer made by the assessee and the A.O. did not brought enough incriminating material for concealment and there is no material for establishing the concealment independently in the given facts and circumstances of the penalty is not leviable and the same is deleted – Decided in favor of assessee. - I.T.A. No. 1852/Hyd/2011, I.T.A. No. 1853/Hyd/2011, I.T.A. No. 1854/Hyd/2011, I.T.A. No. 1855/Hyd/2011, I.T.A. No. 1856/Hyd/2011, I.T.A. No. 1857/Hyd/2011 - - - Dated:- 6-1-2012 - SHRI CHANDRA POOJARI, SMT. ASHA VIJAYARAGHAVAN, JJ. Appellant by: Shri P. Murali Mohan Rao Respondent by: Shri B.V. Prasad Reddy O R D E R PER CHANDRA POOJARI, AM: These six appeals by the assessee are directed against the different orders of the CIT(A)-IV, Hyderabad dated 22.9.2011 for the assessment year 1999-2000 to 2003-04 and A.Y. 2005-06. Since all these appeals belong to same assessee and the issue involved in all these appeals being identical, they were heard together and are being disposed of by this common order for the sake of convenience. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.) Interest (Rs.) Total (Rs.) 2002-03 2,38,59,880 57,26,371 2,95,86,251 2003-04 64,95,120 72,85,200 1,37,80,320 2004-05 84,94,920 93,23,980 1,78,18,900 2005-06 1,18,35,0800 1,21,64,280 2,39,98,380 The above additions have been made since the amounts mobilised from groups as PVRR and VR1 remain unexplained. 3.4 A/PVR/5 to A/PVR/7 A.Y. Amount (Rs.) 2002-03 3,36,00,000 2002-04 3,36,00,000 2004-05 3,36,00,000 2005-06 3,36,00,000 3.5 While making the above additions on account of interests, the Assessing Officer has observed that based on loose sheet bundles A/PVR/7, average interest payment per month comes to Rs. 28,00,000. The Assessing Officer noted that particulars of interest payment were available for eight months i.e., for September 2004, August 2004, July 2004, October 2002, September 2002, November 2001, September 02 and July 2003. Accordingly, the Assessing Officer estimated unaccounted interest payment for above assessment year at Rs. 3,36,00,000 @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 to 36 and 37 relate to share application money collected for various group companies for September 2002 of Sujana Group by different persons ... Page Nos. 41 to 49 relate to share application money collected for various group companies of Sujana Group for October 2002 by different persons. page Nos. 50 to 55 relate to November, 2001 collection of share application money by Sujana Group... Q. No. 16 I am showing you sheet No. 36 of Annexure A/PVR/6. In the said sheet at Sl. No. 3 initials PVRR are mentioned. Do you agree whether PVRR refers to your name? Answer Yes, PVRR refers my name. 3.7 Similarly he has also explained relevant documents in his statements dated 1.12.2004 u/s. 132(4) of the I.T. Act. The relevant extract is taken as under: Q. No. 11 Please peruse reply to Q. No. 14 wherein you had stated that a part of the funds were mobilised by you. Do you confirm? Answer Yes, I do confirm. Q. No. 12 Please identify VR 1? Answer VR-1 stands for funds mobilised between 1995 to 1997. VR-2 represents funds mobilised prior to 1995. Q. No. 13 Can you identify the persons from whom the funds were mobilised. Answer No. 3.8 The above extracts on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 2001 FY 2001-2002 Receipts Payments Receipts Payments Receipts Payments Receipts Payments Surendra 1.34 1.10 15.62 4.00 5.00 63.20 9.50 15.25 Jitin Kumar 2.50 1.94 0.00 14.00 50.01 58.05 Y. Sivalinga Prasad 5.50 0.03 18.60 13.23 72.50 46.44 12.00 11.10 Surendra Reddy - - - 0.15 - 0.11 Y. Rishi Kanya 3.81 Total 8.84 3.07 34.22 31.46 127.51 167.80 25.31 26.35 Total receipts 8.84 34.22 127.51 25.31 Total payments 3.07 ` 31.46 167.80 26.35 Net balance 5.77` 2.76 -40.29 -1.04 3.11 However, there was a payment relating to Y. Jitin Kumar at Rs. 8 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the returned income. 3.15 For the A.Y. 2005-06 the peak credit was arrived at Rs. 25,79,321 and added to the assessee's returned income on which the assessee though went in appeal before the ITAT where this ground was not pressed. Finally the Assessing Officer levied penalty u/s. 271(1)(c) of the Act for these assessment years as follows: A.Y. Amount (Rs.) 1999-00 1,74,100 2000-01 96,000 2001-02 13,18,000 2002-03 73,83,000 2003-04 53,11,000 2005-06 8,75,000 3.16 On appeal, the CIT(A) confirmed the penalty on the reason that the assessee came up with the offer of additional income for various years only when he was pushed to the wall and he faced with huge demand raised by way of assessment orders which was affirmed by the Tribunal, were indeed based on seized material, post search investigations and the statement of the assessee himself. 4. The learned counsel for the assessee submitted that for the A.Ys. 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04 addition on account unexplained credit on the basis A/PVR/5 to A/PVR/7 was deleted and substituted only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us concealment or act of furnishing inaccurate particulars on the part of the assessee. The discrepancies noticed by the lower authorities may be enough to make addition while framing assessment but the same is not enough for levy of penalty u/s. 271(1)(c) of the Act. Levy of penalty is not automatic based upon the additions made in the assessment. The genuine basis in computation of income by the assessee as compared to the Department cannot itself be a reason for levy of penalty. There is no deliberate default and mistake. Only it is a bona fine mistake while making the computation of income. He relied on the following judgements. 4.2 ACIT vs. VIP Industries (112 TTJ 289) wherein it was held that in all cases where addition ms made the penalty was not automatically follow. The true effect is that mens rea is not to be proved by the revenue. If the A can successfully prove his bona fide by tendering a valid explanation then, penalty cannot be levied. Hence, in case of genuine difference between AO and the assessee, penalty cannot be levied. 4.3 In the case of CIT vs. Siddharth Enterprises (184 Taxman 460) the Punjab Haryana High Court held that penalty can be imposts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee before the Assessing Officer. (The penalty imposed was set aside). 4.6 In the case of Roshan Lal Madan vs. ACIT (67 ITD 33) the Tribunal held that Explanation 1, which is relevant in the instant case, consists of two clauses; clause (A) provides that the assessee fails to offer an explanation or offers an explanation which is found to be false. Clause (B) provides for the situation where the assessee is not able to substantiate the explanation and fails to prove that the explanation is bona fide. In the situations envisaged by the aforesaid clauses, deeming fiction would come into play and the amount added in the total income would be deemed to represent the income in respect of which the particulars have been concealed. This Explanation enacts a rule of evidence which has the effect of shifting the burden of proof on the assessee. It is well settled that the degree of proof required for proving a negative fact would not be as heavy as required for proving a positive fact. In the case of proving a negative fact, the test of preponderance of probabilities would apply. If the assessee is able to furnish a bona fide and plausible explanation in respect of materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connected to be receipts and payments happening in the inter group company and had been maintained for the purpose of his memory. He stated that the transactions are very difficult for him to reconcile with records as the same are very old. However, he admitted the receipts and payments for year wise, for all the persons. Finally, he offered a sum of Rs.2,86,83,440/- as income from these transactions. Accordingly, the CIT(A) while deciding the quantum issue was also of the opinion that the amount mentioned in the seized material as principle had been considered as the assessee s own funds, no further addition on account of interest payment have been required. However, the additional income offered by the assessee was not on voluntary basis, nor any offer was made during the course of post search enquiry or during the assessment proceedings. The additional income was offered only when the assessee was pushed to the wall as he was faced with the huge demand raised by way of assessment order. Considering these facts, while deciding the penalty issue, the First Appellate Authority confirmed the levy of penalty. The CIT(A) was of the opinion that though the transactions were with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in person ........ (c) has concealed the particulars of his income or furnished inaccurate particulars of such income; He may direct ....... 8. That above provision shows that the Assessing Officer is vested with a discretionary power to levy or not to levy any penalty in a deserving case. In the case of Hindustan Steel Ltd Vs. State of Orissa (83 ITR 26) (SC), held that penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. If an assessee files the revised return though at a later stage or disclosed true income, penalty need not be levied. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee s case, came forward with additional income though after deduction on account of that the assessee was not in a position to explain properly, the seized material and express remorse, in his conduct un-hesitantly, the Assessing Officer might have to exercise the discretion in favour of such assessee as otherwise the expression may in section 271(1)(c) of the Act remains redundant. If it is to be understood that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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