9911796707
TMI Blog2014 (5) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... remises, certain incriminating documents relating to the appellant-assessee were also found and on the basis of which a notice u/s 158 BD was issued in pursuance to which the block assessment was carried out. It is the claim of the respondent-revenue that Mr. Mayur M. Thakkar, in the name of his various companies and family members, had been obtaining delivery notes by fabricating documents in the name of various concerns namely; eight companies, the names of which are quoted here ad-infra:- 1.M/s. Apex Metchem (P) Ltd. 2.M/s. A.R.A.R. Chemicals (P) Ltd. 3.M/s. Texol Chemicals 4.M/s. VIP Chem & Chemicals 5.M/s. Neelchal Chemicals Industries 6.M/s. S.S. Chemicals 7.M/s. Thinner & Co. 8.M/s. Manu Points & Chemicals. 3. It is a finding of fact as observed by the ITAT in the impugned order wherein the addition was sustained working out commission at the rate of 2% that number of person/concerns engaged in manufacturing, trading and dealership of petrochemical products were using accommodation entries by way of fictitious bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks in safe custody and one would not allow a third person to operate a bank account and leave even the signed blank cheque books and if the above facts, which have been found admittedly correct, then there had to be some consideration having been received by Mr. Sanjay Bhatia, Director of the appellant-company in allowing not only to operate the bank account but also in providing blank signed cheques. While the AO appeared to have treated all the credit balances i.e. deposits in the Union Bank of India in the account of the assessee as having not been proved, however, the ITAT, after considering the connected case of Vora Group where commission of 3% was assessed on the entire transaction but in the case of assessee, rate of 2% was worked out on the basis that this could have been an adequate consideration. The above findings clearly indicate that the Thakkar family has acted as an active accomplice in this entire unaccounted trade undertaken by M/s. Apex Metchem (P) Ltd. the appellant from its undisclosed bank account at Mumbai. Various evidences collected in this regard clearly indicate the involvement of Thakkar family. Some of the clinching evidences establishing nexus of Thak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding of the CIT(A) and came to the conclusion that the order of the CIT(A) was not proper as the addition was based on material detected as a result of the search operation and further held that the addition is nothing but the undisclosed income of the appellant-assessee which was not disclosed or recorded in the books of accounts of the appellant-assessee and sustained the penalty, as aforesaid. Hence this appeal. 11. Shri Prakul Khurana, ld. counsel for the appellant-assessee, submitted that the penalty imposed is highly unjustified and there was no evide 11. Shri Prakul Khurana, ld. counsel for the appellant-assessee, submitted that the penalty imposed is highly unjustified and there was no evidence of the commission having been earned by the appellant-assessee. Even the ITAT, in the original proceedings, on assumption and presumptions, has held 2% as the commission when nothing was received by the appellant-assessee nor there was any evidence of receipt of any such amount. He further contended that on assumptions, presumptions and estimations, no penalty in law is leviable and the very finding of the ITAT in the original proceedings applying commission at the rate of 2% and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax payable on the basis of such return has been paid or, if the assets seized consists 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. 14. In our view, it is purely a finding of fact by the ITAT and imposition of penalty is based on the order of the ITAT where the addition was sustained after elaborate discussion by the ITAT in its order dt. 29/03/2006. The said order has become final and no appeal was filed by the assessee-appellant. For ready reference, we quote hereunder Para 30 of the aforesaid order dt.29/03/2006 of the ITAT which is reproduced ad- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akkar, the ITAT applied a rate of 2% considering that in a connected case of Vora Group of Companies, rate of 3% was applied. 16. Thus, from above finding of the ITAT, it is apparent that the addition was not on estimate basis, rather in the connected case of Vora Group, the same was computed at the rate of 3%, whereas in the instant case, it has been assessed at the rate of 2% only. Therefore, in our view, the submission of the counsel for the appellant-assessee in contending that the addition was made on estimate or merely on conjectures or surmises has no force. 17. We observe that the ITAT, while sustaining the aforesaid penalty in the impugned order, has come to a categorical finding of fact which is reproduced here under:- "It is pertinent to note that the commission income sustained by the Tribunal is based on the entires in the bank account of the assessee which were not recorded in the books of accounts of the assessee. Therefore, the addition sustained by the Tribunal is based on material and evidence found during the course of search and seizure action in the shape of copy of bank account statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in the return and in such a case, penalty shall be imposed on that portion of the undisclosed income determined which is in excess of the amount which is undisclosed income shown in the return. 19. Thus, it is clear that penalty under sub-section (2) of Sec. 158 BFA of the Act is provided where the AO computes income in excess of what is declared by the assessee for the block period. 20. In our view, the submission of counsel for the appellant that penalty provisions contained in Sec. 271(1) (c) of the Act so also Sec. 158 BFA(2) are pari-materia, the same cannot be said to be correct as both are independent sections and in different situations. However, we are of the view that if the assessee fulfills the criteria, as laid down herein above i.e. conditions (i) to (iv), then certainly, no penalty is leviable but in the case under consideration, there is a categorical finding by all the three authorities that the assessee was involved in undisclosed transactions and had huge credits in the bank account to the tune of more than Rs.2.5 crores and in case the search operation would not have taken place, would have gone unnoticed. Overwhelming evidence on record clearly proves tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
