TMI Blog2015 (7) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of ₹ 33,07,363/-, therefore, we find merit in the argument of Ld. Counsel for the assessee that penalty u/s.158BFA(2) should be levied only on ₹ 33,07,363/- and not on ₹ 36,24,695/-. - Decided in favour of assessee. Unexplained expenditure on education expenses of son of the assessee - submission of the assessee that if telescoping effect is given to the various additions sustained by the CIT(A) the assessee is still left with an amount of ₹ 23,52,702/- which is available to him for meeting the expenditure out of the addition of ₹ 47,04,520/- and penalty can be levied only on the balance amount of ₹ 23,51,818/- (i.e. 47-04,520 – 23,52,702) - Held that:- Since the addition on account of on-money has been confirmed, therefore, the said amount is available to the assessee to meet the unaccounted expenditure apart from meeting the amount paid towards bungalow. Further, cash receipt to the tune of ₹ 14,50,000/- has been accepted by the assessee. Since, telescoping effect has been given only for ₹ 16,81,591/-, therefore, we find some force in the argument of the Ld. Counsel for the assessee that for levying penalty u/s.158BFA(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Vikas Awasthy, JJ. For the Petitioner : Shri Vipin Gujrathi For the Respondent : Shri A.K. Modi, CIT ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 27-07-2012 of the CIT(A)-I, Pune relating to Block Period 01-04-1990 to 14-02-2001. 2. Levy of penalty of ₹ 59,43,634/- by the Assessing Officer u/s.158BFA(2) of the I.T. Act and upheld by the CIT(A) is the only issue raised by the assessee in the various grounds of appeal. 3. Facts of the case, in brief, are that the assessee Late Mr. Tayyab Habib Chotani was an individual and was engaged in the business of Auto consultancy, Real Estate and Horse Racing etc. A search u/s.132 of the I.T. Act was conducted at his premises on 14-02-2001 during which various incriminating documents were found and seized. In response to notice u/s.158BC(a) the assessee filed his return of income on 31-03-2002 declaring undisclosed income of ₹ 1,50,890/- only. The Assessing Officer completed the assessment on a total income of ₹ 1,54,28,744/- which was reduced by the CIT(A) to ₹ 83,00,323/-. On further appeal by the Revenue as well as the assessee th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer. The assessee also did not challenge the issue before the Tribunal. Penalty has been levied accordingly by the AO u/s.158BFA(2) which has been confirmed by the Ld.CIT(A). 6. So far as the penalty levied on the second addition, i.e. Education expenses of son is concerned, the facts are that during the course of search it was revealed that the assessee s son Mr. Mishaal Chotani was studying in Cornell University, New York from 1997. During the course of search action, statements and papers/documents relating to tuition fees and living expenses of Cornell University were found and seized by Party No. 6 and are inventorised at Page No. 25A, 26, 27, 28, 29, 47, 54, 66, 70,71, and 72 of bundle no. 3 of the seized paper. These papers are the monthly/periodical statement of bills raised by Cornell University, New York and payments made by Mr. Mishaal Chotani. The assessee was questioned in respect of source of expense i.e. educational expenses of his son. The assessee stated that his son's educational expenses were borne by Mr. Mohd. Siddique, his cousin from U.A.E. It was further stated by the assessee that Mr. Siddique, a Pakistani National, was going to become the fath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Unfortunately, neither the assessee nor the creditor has filed the copy of the cited passport No.F123860 said to have been issued by Pakisthan Government, Regarding the creditworthiness, there are n't any information on records about the same. Therefore, we are unable take a decision on the issue. In any case, the onus is on the assessee to demonstrate the same and therefore, we hold the same against the assessee. Regarding the issue of genuineness, we find there is lack of transparency in the matter and claim of Sri Siddique about destroying of the records and thereby following the Dubai's way of accounting and book keeping is not acceptable. Should one destroy the records which constitute the evidences? Thus, there is opacity in matters of identity, creditworthiness and genuineness of the transactions involving Sri Siddique. In effect, the confirmation letter filed by Mr Siddique is as good as the one which does not cater to the needs of concern section and therefore, it amounts no confirmation of said sum. 8. So far as the third issue is concerned, i.e. unexplained investment in shares etc,, the relevant facts are that during the course of search action shares o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalties can be levied or not levied. Though the penalty structure provided in this sub-sec, is similar to the one available in sec.271(1)(c), but it has to be noted that there is no whisper of the words like 'concealment' or 'filing of inaccurate particulars of income', etc. in this provision and therefore it is incorrect to equate it in terms of requirement of law with sec.271(1)(c). From the plain reading of the main provision it is clear that the penalty is leviable for entire undisclosed income assessed by the AO u/s 158BC(c). However first proviso grant immunity to the assesses where the return is furnished u/s 158BC and taxes are paid, evidences for payment of taxes enclosed and no appeal is filed after assessment. Second proviso, disables the applicability of immunity available under the first proviso where the assessed income is more than the returned income and appeals are filed by the appellant. Second proviso therefore can be seen to be dealing with situations in which the additions are made by the AO over and above the returned income and in this respect it has been provided that the penalty shall be imposed on that portion of undisclosed income which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble ITAT in ITA No.571/PN/2005 dtd. 29/07/2011 and it is abundantly clear that all possible angles were examined before dismissing the appeal of the appellant filed against the order of the CIT(A). Therefore it is incorrect to claim that any positive evidence was not available on record, for levying the penalty. The order of the Hon'ble ITAT referred to above can be seen for the same alongwith the orders of the lower authorities. Without prejudice to the above finding, as discussed above, in my considered opinion levying of penalty u/s.158BFA(2), does not require fulfillment of conditions similar to sec.271(1)(c), as has been sought to be claimed by the appellant. As already discussed, what is required is addition over and above the returned income, which could show that the appellant has tried to suppress the declaration of undisclosed income and paying of taxes even after the search and discovery of incriminating evidences. These conditions available in this section are clearly fulfilled in this case and therefore I do not find any fault in the penalty levied by the AO. The AO has levied the penalty at the minimum rate and therefore even the quantum of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of appeal. 2) The appellant had received aggregate payment in cash and cheques not exceeding ₹ 85,22,516/- being agreement vale of the land under consideration. Similarly, the appellant did not receive any further amount out of the so called balance consideration after the date of search till date. Therefore, addition on account of suppression of capital gain was based only on the surmise that cash received was not the part of the consideration and was over and above the agreed consideration. On the facts and circumstances of the case and in law the honourable CIT (A) erred in confirming the penalty levied in respect of so called suppression of the capital gain of ₹ 36,24,695/- without appreciating the fact that the appellant had received aggregate cash and cheque not in excess of the agreement value. The honourable CIT (A) and learned AO failed to appreciate the facts of the case. The appellant prays that the penalty levied by AO and confirmed by CIT(A) in respect of alleged suppression of capital gain may please be deleted. 3) On the facts and circumstances of the case and in law the honourable CIT (A) erred in confirming the penalty levied by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.158BFA(2). We find out of addition of ₹ 63,79,104/- made by the Assessing Officer on account of suppressed capital gain on sale of plot of land situated at 208, Yerawada, Pune, the CIT(A) had granted relief of ₹ 30,71,741/- and sustained addition of ₹ 33,07,363/-. We find the Assessing Officer levied the penalty on account of suppressed capital gain of ₹ 36,24,695/- for the purpose of levy of penalty. It is the submission of the Ld. Counsel for the assessee that in the order giving appeal effect after the order of the CIT(A) the Assessing Officer himself has made addition of ₹ 33,07,363/-. Therefore, penalty if any u/s.158BFA (2) has to be restricted to the addition finally sustained at ₹ 33,07,363/- and not on ₹ 36,24,695/-. It is a matter of fact that in view of enhanced claim of section 54F the addition confirmed comes to ₹ 33,07,363/- only as pointed out by the Assessing Officer in the penalty order at page 4 para 8(i). Since the addition sustained is only to the extent of ₹ 33,07,363/-, therefore, we find merit in the argument of Ld. Counsel for the assessee that penalty u/s.158BFA(2) should be levied only on ₹ 33,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee to meet the unaccounted expenditure apart from meeting the amount paid towards bungalow. Further, cash receipt to the tune of ₹ 14,50,000/- has been accepted by the assessee. Since, telescoping effect has been given only for ₹ 16,81,591/-, therefore, we find some force in the argument of the Ld. Counsel for the assessee that for levying penalty u/s.158BFA(2) penalty can be levied only on the balance amount, i.e. ₹ 23,51,818/- as against ₹ 47,04,520/-. It is the settled proposition of law that penalty proceedings and assessment proceedings are separate and distinct. An assessee can advance fresh argument during penalty proceedings for non-levy of penalty or penalty of a lesser amount. However, the above details furnished by the Ld. Counsel for the assessee requires verification at the level of the AO. We therefore remit this issue to verify as to whether the assessee has taken any benefit out of the on-money received as well as the cash receipt of ₹ 14.50 lakhs and adjustment at ₹ 10.40 lakhs. The AO shall compute the penalty on the balance amount. Needless to say, the AO shall give due opportunity of being heard while computing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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