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TMI Blog2011 (9) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... e block assessment proceedings were confirmed by the Income-tax Appellate Tribunal, Ahmedabad Bench. In the course of the search of the premises of M/s. Ohm Developers and Ohm Organizers, a khatavahi marked BS-4 was seized. Pages 116 and 117 of this khatavahi contained details of the payments received from the assessee towards the purchase of flat No. 501, in Yogi Complex. The partners of M/s. Ohm Developers had accepted that the notings in such books of account represented amounts received from various parties both by cheque and in cash, for the purpose of booking flats and shops. This evidence was sufficient for the Assessing Officer to form the satisfaction that the amounts paid in cash by the assessee represented the assessee's undisclosed income. The evidence was found from the premises of the person who was searched. On the basis of such finding, inquiries were made with the assessee by the Deputy Commissioner of Income-tax, Central Circle-1, through a letter under section 133(6) of the Income-tax Act dated January 3, 2002. On receipt of the replies to the queries raised, the Deputy Commissioner of Income-tax was satisfied that this was a fit case for initiating proceedings u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hortcoming was that, she could not produce any evidence of the encashment of the dollars. Penalty for concealment could not be levied simply because of her failure to produce such evidence. The Assessing Officer rejected the assessee's contention observing that the claim was only a make belief story and relying on the cases of Khopade Kisanrao Manikrao v. Asstt. CIT [2000] 74 ITD 25 and Goani Brothers v. CIT in I.T.A. No. 579 to 583/P/1998, 165 ITC 144 (Pune) the Assessing Officer came to the conclusion that the on-money of Rs. 2,14,000 which was paid in cash, had come out of the unaccounted income of the assessee and thus it was thus a fit case for the levy of penalty under section 158BFA(2) of the Act for furnishing of inaccurate particulars and for the concealment of income. He, therefore, proceeded to levy the penalty of Rs. 1,28,400 under the said section, being 100 per cent of the tax sought to be evaded. In the written submissions submitted in the course of the appellate proceedings it was submitted before the learned Commissioner of Income-tax (Appeals) by learned counsel for the assessee that penalty proceedings are separate and distinct from assessment proceedings, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative has contended that the assessee is an non-resident Indian and has no other source of income in India. If such a claim is true, even then the assessee has to explain the source of the said sum. She could be having certain sources of income in India which have not been disclosed to the Income-tax Department. She could have also borrowed the said sum from someone who had not disclosed the same. The onus was thus clearly on the assessee to prove the source of the said sum and to explain that was duly accounted for. The fact remains that the assessee accepted the payment of on-money to the extent of Rs. 2,14,000. It was thus an open and shut case, and it was for this reason that the addition of Rs. 2,14,000 was confirmed in quantum appeal. 7.1 It has been very briefly stated by the authorised representative that penalty proceedings are separate and distinct from the assessment proceedings and that the explanation furnished in penalty proceedings is important. There is no doubt that penalty proceedings are separate from the assessment proceedings, and this very general principle has been laid down by the various courts and the Tribunals, but is often quoted out of context by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and to also prove that the explanation furnished is bona fide and that all the facts relating to such explanation and material to the computation of his total income have been disclosed. What the authorised representative has failed to appreciate is the fact that with the insertion of Explanation 1 with effect from April 1, 1976, the onus had shifted completely to the assessee. This came to be reflected in the decision of the hon'ble Supreme Court, in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 (SC), in CIT v. K.R. Sadayappan [1990] 185 ITR 49 (SC) and in Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244 (SC). The hon'ble court took the view that with the incorporation of the Explanation to section 271(1)(c) the view earlier taken in Anwar Ali's case no longer held the field and it was for the assessee to discharge the onus as contemplated in the said Explanation. This was further affirmed by the court in B.A. Balasubramaniam and Bros. Co. v. CIT [1999] 236 ITR 977, 978 (SC). This view of the hon'ble Supreme Court was followed by the hon'ble Kerala High Court in CIT v. A. Sreenivasa Pai [2000] 242 ITR 29, 36 (Ker.) and also in CIT v. Geo Sea Foods [2000] 244 ITR 44, 51-52 (Ker.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law as enumerated above, the reliance placed by the authorised representative on the case of National Textiles v. CIT [2001] 249 ITR 125 (Guj.) and other cases which pertained to the period prior to April 1, 1976 are of no relevance to the facts of the case. 7.6 Finally, the authorised representative has claimed that the levy of penalty under section 158BFA(2) is not mandatory. He has made this claim even while stating that the proceedings under section 158BFA(2) is the same and similar to the provisions of section 271(1)(c) of the Income-tax Act. Apart from the above cases, reliance is also placed on the recent decision of the hon'ble Supreme Court in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC) 'where the hon'ble court has held that, where there is evasion of tax, it is a civil liability attracting the provisions of section 271(1)(c) of the Income-tax Act, read with Explanations below the said section, which has been enacted by the Legislature to provide a remedy for the loss of revenue. The levy of penalty is mandatory and no discretion is left with the competent authority.' 7.7 Given the fact and circumstances of the case as also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (c) of section 158BC : Provided that no order imposing penalty shall be made 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 been 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 return ; and (iv) an appeal is not filed against the assessment of that part of income which is shown in the return : Provided further that the provisions of the preceding proviso shall not apply where the undisclosed income determined by the Assessing Officer is in excess of the income shown in the return and in such cases the penalty shall be imposed on that portion of undisclosed income determined which is in excess of the amount of undisclosed income shown in the return." 6. It is not in dispute that during the course of search the evidence were found regarding payment of on-money for booking the flat in cheque and cash. The assessee admitted to have made the payment in cash of Rs. 2,14,000 but no evidence was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the language in the two sections are clearly different and the contentions of learned counsel for the assessee is not tenable, yet, it is clear that the assessee was in full knowledge of undisclosed income which was not at all shown in any manner in the return to be filed for the block period. Learned counsel for the assessee argued that since the assessee filed explanation for the payment of on-money, therefore, Explanation to section 271(1)(c) of the Income-tax Act can be read into section 158BFA(2) of the Income-tax Act, we have already mentioned above and noted that sufficient evidence were found during the course of search to show undisclosed income held by the assessee, despite that evidence on record, the assessee did not disclose any undisclosed income in the return for the block period. Therefore, the Revenue authorities were justified in computing the undisclosed income. The conduct of the assessee in not disclosing undisclosed income in the return for the block period would show that the conduct of the assessee was not bona fide. Learned counsel for the assessee relied in the decision of the Income-tax Appellate Tribunal, Lucknow Bench in the case of Saluja Hire Purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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