TMI Blog2015 (4) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... but to M/s.Pathathu Brothers. From the cash flow statement as furnished before the Assessing Officer, at the time of offering of the additional income, it is seen that they are out of amount received on various dates for Roshani Project, specifically falling in the financial year 2001-2002 and financial year 2002- 2003. The other amount is on account of rent received. Admittedly, Roshani Project does not belong to the assessee or his company in which he is a Director. The said project belongs to M/s.Pathathu Brothers, wherein the assessee had no interest. Even the rental income does not belong to any of his property, albeit belongs to his father, in which the assessee has no concern. Thus, prima facie, the seized documents revealed that nothing belongs to the assessee but his father. Also that the assessee had reconciled the income and explained each and every entry has not been rebutted at any stage. The amount which was offered for additional income as stated before the authorities below, was to only buy peace of mind and to avoid protracted litigation and to save his aged father from harassment. Nothing has been brought on record by the department that, the assessee had any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003-2004 31.12.2003 Rs.4,30,520 2004-2005 19.11.2004 Rs.1,65,620 2005-2006 31.03.2006 Rs.1,50,000 The returns of income were duly accepted u/s 143(1). 2.1 A search and seizure action u/s.132(1) was conducted on 18.01.2007 in the case of Mr.Sudhakar Shetty Group and M/s.HDIL. Since, the assessee was Director in HDIL, he was also covered under the search. During the course of search, certain seized documents was found from the premises - 45C, Pattathu House, Santacruz (East), Mumbai, which belonged to Shri Antony Joseph Pattathu, proprietor of M/s.Pattathu Brothers. Shri Antony Joseph Pattathu is the father of the assessee. The assessee did not stay with his parents and used to stay at a different place at Aishwariya Tower, Kalina. At the time of search at the residential premises belonging to his father, Shri Antony Joseph Pattathu, a statement on oath u/s 132(4) of the assessee was recorded, wherein, he was confronted with certain bunch of papers especially seized paper nos.45 and 46 of Annexure A-2 and other l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken place till date. All the other papers from Page no.2 to 57 are belonging to M/s.Pattathu Brothers a proprietory concern of my father Shri Anthony Joseph Pattathu. I may add that all those paper form page 2 to 57 are found from the office premises of M/s.Pattathu Brothers and page no.2 was found from my car. I have also consulted my father who has confirmed that all the loose papers form pages 2 to 57 are belonging to his proprietory concern M/s.Pattathu Brothers. I have nothing to do with any of these papers. 2.2 During the course of assessment proceedings that ensued after notice u/s 153A issued on 25.09.2007, the assessee after explaining the entire facts, that all the seized documents belonged to his father and his proprietory business, wherein the assessee had no interest, still offered the income worked out on the basis of seized documents in his own hands to avoid protracted litigation and to save his aged father from harassment and to buy peace of mind. Accordingly, the assessee offered additional income in the years under appeal in the following manner:- Asst.Year Amount (Rs.) 2002-03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. During the course of the penalty proceedings, the assessee had submitted that additional income was offered on the basis of cash flow statement, which was duly reconciled on the basis of noting in the seized documents, found from the premises 45C, Pattathu House, Santacruz (East), Mumbai, i.e., the residential house of the assessee s father. It was further submitted that the assessee has not concealed any income as all these transactions related to the proprietory concern, of his father and does not belong to him. The additional income was offered in respect of the projects and property which did not belong to him, but was made only to buy peace of mind and to avoid litigation despite that most of the entries were reconciled from the books of account of M/s.Pattathu Brothers. However, the Assessing Officer did not accept the assessee s contention and held that penalty should be levied u/s 271(1)(c) for furnishing of inaccurate particulars of income and also under the deeming provision contained in Explanation 5. Accordingly, he levied the penalty at 100% of the tax sought to be evaded, in the following manner:- Asst.Year Penalty Levied (R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C cannot be presumed against the assessee, because nothing has been found from the possession of the assessee. Thus, he submitted that penalty levied in all the assessment years should be deleted. 6. On the other hand, the learned Departmental Representative strongly relying upon the order of the CIT(A), submitted that it is an admitted fact that the assessee has owned the income which have been worked out on the basis of seized material. Once it has been owned by the assessee, then presumption is that it belongs to the assessee only. Here in this case, the assessee has offered the amount not in the return of income filed u/s.153A, but only when notices were sent by the Assessing Officer. Hence the amount offered is after the commencement of the assessment proceedings and therefore, cannot be held to be voluntary. The assessee has not given proper explanation with regard to income worked out on the basis of seized material. Thus, penalty levied should be confirmed. 7. We have heard the rival submissions, perused the relevant material placed on record. From the facts narrated above, it is seen that the additions which are subject mater of penalty are based on seized materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal income, which is to be treated as undisclosed income. It is a settled law that considerations, which arises in the penalty proceedings are separate and distinct from the assessment proceedings and the assessee can rely upon the same material and explanation to show that he is not guilty of either concealment of income or furnishing of inaccurate particulars. The assessee s explanation that no material was found from the possession of the assessee stands unrebutted even upto this stage. Department has not brought any material to show that seized document belong to the assessee or assessee s explanation is false or has not been substantiated. Thus, on these facts, it cannot be held that any penalty u/s 271(1)(c) can be levied against the assessee. Further, the deeming provision of Explanation 5 will also not apply for the reason that, it postulates that the assessee should be found to be the owner of any money, bullion, jewellery or other valuable, article or thing, which here in this case, is completely absent, because the assessee has not been found to be in possession of such things as mentioned in Explanation 5. Thus, we set aside the order of the CIT(A) and delete the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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