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2015 (6) TMI 273 - ITAT PUNE

2015 (6) TMI 273 - ITAT PUNE - TMI - Penalty u/s 158BFA(2) - unexplained investment in house property and unexplained marriage expenditure - CIT(A) deleted penalty levy - Held that:- DVO has estimated the investment in the property near about the same amount as declared by the assessee in the account books. The CIT(A) in the quantum proceedings estimated the value of investment at ₹ 30 lakhs as against ₹ 40 lakhs made by the Assessing Officer. Under these circumstances, in our view, .....

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with respect to the addition of ₹ 11,71,687/- on account of unexplained investment in house property.

On account of unexplained marriage expenditure CIT(A) has thoroughly examined it and his inference that addition is based on estimate basis is a reasoned one. Before us, no cogent material or reasoning has been advanced by the Ld. Departmental Representative to say that any document or evidence was found in the course of search which would indicate clinchingly incurrence of unac .....

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ndent : Shri Sunil Pathak ORDER Per G. S. Pannu, AM The captioned appeal by the Revenue is directed against an order of the Commissioner of Income Tax (Appeals)-I, Nashik dated 24.01.2013 which, in turn, has arisen from an order dated 30.09.2011 passed by the Assessing Officer u/s 158BFA(2) of the Income-tax Act, 1961 (in short the Act ) pertaining to the block period 1990-91 to 2000-01 upto 02.02.2000 & 03.02.2000 to 31.03.2000. 2. In this appeal, Revenue is aggrieved by the action of the C .....

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Act was conducted in the case of the assessee on 02.02.2000, as a consequence of which the Assessing Officer finalized a block assessment u/s 158BC r.w.s. 143(3) of the Act dated 27.02.2002 for the block period comprising of assessment years 1990-91 to 2000-01 (upto 02.02.2000 & 03.02.2000 to 31.03.2000) whereby the total undisclosed income was assessed at ₹ 1,62,93,506/-. The aforesaid assessment was subject-matter of appeal before the CIT(A) as well as before the Tribunal. As a resul .....

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the CIT(A). The CIT(A) vide his impugned order has deleted the penalty levied by the Assessing Officer with respect to the aforesaid two additions. The CIT(A) has deleted the penalty primarily on the ground that both the additions were made on the basis of estimation and thus penalty u/s 158BFA(2) of the Act was not maintainable. Against the aforesaid order of the CIT(A), Revenue is in appeal before us. 4. Before us, the Ld. Departmental Representative appearing for the Revenue contended that th .....

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he other hand, the Ld. Representative for the respondent-assessee vehemently pointed out that the CIT(A) was justified in deleting the penalty for the reasons stated in the impugned order. As per the Ld. Representative, the addition with respect to the unexplained investment in house property was primarily based on estimation and that there was no clinching evidence found in the course of search which showed any unexplained investment. Even with regard to the unexplained expenditure incurred on .....

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upon the judgement of the Hon ble Rajasthan High Court in the case of CIT vs. Dr. Giriraj Agarwal Giri, (2012) 346 ITR 152 (Raj) for the proposition that penalty u/s 158BFA(2) of the Act cannot be imposed on estimated additions. 6. We have carefully considered the rival submissions. The CIT(A) in this case has deleted the penalty imposed by the Assessing Officer u/s 158BFA(2) of the Act on the ground that the undisclosed income assessed by the Assessing Officer on account of unexplained investme .....

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tances of each case. The Hon ble Bombay High Court in the case of Dodsal Ltd. (supra) held in the context of section 158BFA(2) of the Act that the section provides a discretion to the Assessing Officer in levy of penalty. In the background of the aforesaid legal position what is required to be examined is as to whether the CIT(A) has recorded appropriate reasons for exercise of discretion of deleting the penalty, having regard to the facts and circumstances of the case. 7. In the above context, .....

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e relied upon the report of an Approved Valuer who valued the investment in property at ₹ 17,01,401/- and accordingly assessee had submitted that the investment of ₹ 18,29,313/- shown in the account books was proper. The CIT(A) had noted that the Departmental Valuation Officer (DVO) estimated the investment in property at ₹ 19,64,000/-. It is also noted that in the quantum proceedings, CIT(A) estimated the investment in property at ₹ 30,00,000/- and he sustained the addit .....

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hat no evidence was found in the course of search to demonstrate that assessee had incurred any unaccounted expenditure on construction of the house property in question. In the course of hearing before us also, the Ld. Representative explained that the loose papers found of ₹ 9.99 lakhs pertained to the construction being carried out by the assessee at the relevant point of time at three different locations namely, (i) the Bungalow in question; (ii) Dinesh Complex; and, (iii) Factory of V .....

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is almost near about the value of investment estimated by the DVO. The Ld. Representative pointed out that if the expenditure referred to in the loose papers of ₹ 9.99 lakhs pertained to the construction of the impugned property then the report of the DVO would have been much higher than ₹ 19.64 lakhs. It was pointed out that assessee could not co-relate the loose papers found in the course of search vis-à-vis the account books maintained and therefore the addition was sustain .....

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at on an estimate basis. In so far as the reference made by the Revenue to the loose papers found of ₹ 9.99 lakhs is concerned, it is quite clear that the addition has not been made with reference to the said loose papers found in the course of search. Ostensibly, Revenue has justified the addition in the quantum proceedings on the basis of estimation and so far as the estimation is concerned, even the DVO has estimated the investment in the property near about the same amount as declared .....

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he course of search towards incurrence of unaccounted expenditure qua the impugned property. Therefore, having regard to the facts and circumstances of the present case, we affirm the action of the CIT(A) in deleting the penalty with respect to the addition of ₹ 11,71,687/- on account of unexplained investment in house property. 10. With respect to the addition on account of unexplained marriage expenditure of ₹ 1,96,335/-, in this regard the relevant facts are as follows. The quantu .....

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