TMI Blog2011 (9) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... return for the block period would show that the conduct of the assessee was not bona fide - Decided against the assessee - IT (SS) APPEAL NO. 111 (AHD.) OF 2009 - - - Dated:- 30-9-2011 - G.D. AGARWAL, BHAVNESH SAINI, JJ. K.K. Shah for the Appellant. Vinod Tanwani for the Respondent. ORDER Bhavnesh Saini, Judicial Member This appeal by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-II, Surat, dated June 17, 2009 for the above block period challenging the levy of penalty under section 158BFA (2) of the Income-tax Act. 2. The facts as noted in the impugned order are that in the course of search of the premises of M/s. Ohm Developers and M/s. Ohm Organizers, evidence was found regarding the receipt of on-money from various persons who had booked flats and shops at Yogi Complex, Rander Road, Surat. The partners of the firms whose statements were recorded on oath, admitted to have received on-money as per the accounts seized in course of the search. The on-money so received was assessed in the hands of M/s. Ohm Developers and M/s. Ohm Organizers and the additions made in the block assessment proceedings were conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s totalled Rs. 2,16,250. However, cheque Nos. 125284 and 125285 for Rs. 50,000 each, were not reflected in the bank statement. The assessee explained that due to mistake committed by the bank the said entries were not reflected in the passbook. The Assessing Officer rejected the assessee's explanation and observed that if there was indeed any mistake in the entries, the assessee could have easily got it rectified. He, therefore, treated the on-money paid in cash of Rs. 2,14,000 + Rs. 1,00,000 = Rs. 3,14,000, as unexplained investment in the said flat. Consequently, he added the sum of Rs. 3,14,000 to the assessee's total income. At the same time, proceedings under section 158BFA(2) of the Income-tax Act were initiated for furnishing of inaccurate particulars of income. When further opportunity was provided in the course of penalty proceedings to present her case, the assessee reiterated the submissions that were made in the assessment proceedings. It was thus submitted that the source of the on-money of Rs. 2,14,000 was the dollars which she had brought into the country during her visit from the U.S.A., and represented her savings. The only shortcoming was that, she could not produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case law : (i) CIT v. Gouri Shankar Suresh Prasad [1997] 224 ITR 26 (Pat.); (ii) Burmah-Shell Oil Storage Distributing Co. of India Ltd. v. ITO [1978] 112 ITR 592 (Cal.); and (iii) CIT v. V. Ramaswami Naidu [1994] 208 ITR 377 (Mad.). 3. The learned Commissioner of Income-tax (Appeals) considering the explanation of the assessee in the light of the provisions of law confirmed the penalty and dismissed the appeal of the assessee. His findings in the impugned order in paragraph 7 to paragraph 7.7 are reproduced as under : "7. I have carefully considered both positions. In quantum appeal, it was held that a further sum of Rs. 1 lakh had been paid by cheque which was on the basis of the certificate issued by the SBI, Nanpura branch. The addition of Rs. 3,14,000 on account of unexplained investment was therefore restricted to Rs. 2,14,000, which was confirmed on the ground that there was simply no evidence regarding the course of such investment. The claim that the sum of Rs. 2,14,000 had been paid out of the dollars that the assessee had brought into India in cash, was not supported by any evidence. The authorised representative has contended that the assessee is an non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars of such income, he may direct that such person shall pay by way of penalty,- . .. Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act, (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate, and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed.' 7.3 The provision of the aforesaid section, could not be applied simply because the explanation furnished by the assessee. As per clause (B) to Explanation 1, the explanation furnished by the assessee is also required to be substantiated by him and to also prove that the explanation furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the total income is deemed to represent the income in respect of which particulars have been concealed. The onus is clearly on the assessee to establish that the explanation offered is bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him. 7.5 In the case of the assessee, though he had provided an explanation yet, he was unable to substantiate the same. Nor was he able to establish that the explanation provided was bona fide and that, all the facts relating to the same and material to the computation of his total income had been disclosed by him. Given the prevailing provisions of the Act in section 271(1)(c) read with Explanation 1 below the said section, there was clearly a burden on the assessee to establish the genuineness of his claims behind the income disclosed by him in the return of income. The assessee failed to discharge this burden. Consequently, the presumption that he had failed to furnish full and accurate particulars of his income to the extent of the addition made, was clearly available to be drawn by the Assessing Officer. Given the present position of law as enumerated above, the reliance placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. He has relied upon the order of the Income-tax Appellate Tribunal, Lucknow Bench in the case of Saluja Hire Purchase Ltd. v. Asstt. CIT [2008] 305 ITR (AT) 39/[2009] 120 ITD 394. On the other hand, the learned Departmental Representative relied upon the orders of the authorities below and submitted that though the provisions of section 271(1)(c) of the Income-tax Act would not apply to the present proceedings but anyhow the assessee has not substantiated its explanation through any evidence or material on record. Addition was based on the seized materials, therefore, penalty was rightly imposed in the matter. 5. We have considered the rival submissions and perused the findings of the authorities below. Section 158BFA(2) of the Income-tax Act provides as under : "158BFA.(2) The Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Chapter, may direct that 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 determined by the Assessing Officer under clause (c) of section 158BC : Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee that the assessee was indulged in earning undisclosed income. Therefore, it is not possible to ignore the seized material found during the course of search. In spite of these evidences found during the course of search and of which there was knowledge, the assessee did not file any return of income in response to the notice issued under section 158BD read with section 158BC of the Income-tax Act for the block assessment. The proviso to section 158BFA(2) of the Income-tax Act provides that penalty could be imposed where undisclosed income determined by the Assessing Officer is in excess of the income shown in the return of income. However, as noted above the assessee did not file any return for the block period despite service of the notice. Therefore, undisclosed income determined by the Assessing Officer in the block assessment was sufficient to levy penalty against the assessee. While there could be a dispute between the Revenue and the assessee as to whether provisions of section 271(1)(c) of the Income-tax Act would be applicable to penalty proceedings under section 158BFA(2) of the Income-tax Act, the language in the two sections are clearly different and the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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