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2015 (10) TMI 2010 - ITAT PUNE

2015 (10) TMI 2010 - ITAT PUNE - TMI - Penalty u/s 158BFA(2) - sale consideration received in cash, over and above the consideration stated in the sale deed - Held that:- Where the addition was made on the basis of estimation of investment in property, the Tribunal held that in the absence of any evidence found in the course of search that the assessee had incurred any unaccounted expenditure on construction of the said property, there was no merit in levy of penalty under section 158BFA(2) of t .....

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and also in view of the admission of the partners of searched person and their cross-examination by the assessee, where complete evidence has been found against the assessee on the basis of which addition of undisclosed income has been made in the hands of assessee, we find no merit in the reliance placed upon by the learned Authorized Representative for the assessee. Accordingly, setting-aside the order of CIT(A), we direct the Assessing Officer to levy penalty under section 158BFA(2) of the Ac .....

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evied under section 158BFA(2) of the Income-tax Act, 1961. 2. The Revenue has raised the following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A)-I, Nashik was justified in deleting the penalty of ₹ 10,85,180/- u/s 158BFA(2) of the Income Tax Act, 1961. 2. The appellant prays the order of the Assessing Officer may be restored. 3. The appellant prays to adduce such further evidence to substantiate his case. 4. The appellant prays leave to ad .....

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he said firm on 25.03.2003. Certain books of account and documents were seized from the said premises. The document marked at Annexure A-2, seized from the residence of Shri Y.P. Trivedi reflected certain payments in cash were made by M/s. Rushiraj Builders and Developers on various dates in respect of lands / plots purchased for development by them from M/s. Amruta Land Developers, proprietor Shri Vilash Ramchandra Bagad i.e. the assessee before us. Certain information was received from the Ass .....

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had further paid cash consideration of ₹ 18,22,500/- in respect of the said plot No.2, as per the details tabulated at page 2 of the assessment order. Shri Y.P Trivedi and Shri J.M. Jhala had filed an affidavit dated 21.03.2005, in which they had declared on oath that they had purchased the aforesaid plot No.2 for the development from M/s. Amruta Land Developers through the assessee. After discussions and negotiations, consideration was fixed at ₹ 23,18,500/-, out of which ₹ 4 .....

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CIT(A) deleted the said addition and the Revenue filed an appeal before the Tribunal, which vide its order dated 25.02.2011 set-aside the matter back to the file of Assessing Officer, with direction to carry out the appropriate exercise in accordance with law after considering the submissions of the assessee. 5. In the second round of proceedings, notice was issued to the assessee and the assessee was asked to explain why on the basis of the material and the affidavit of Shri Y.P. Trivedi and S .....

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the proceedings under section 158BD of the Act. The second contention of the assessee as to whether the presumption under section 132(4A)(iii) of the Act that the contents of such books or accounts and other documents are true, can be drawn only against the person from whom the books of account and other documents were seized and not against any other third person. The Assessing Officer rejected the contentions of the assessee and held that in the particular case wherein on the seized documents .....

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vedi stated that he has paid sum of ₹ 18,22,500/- to Shri Vilas Bagad i.e. the assessee before us in cash and ₹ 4,96,000/- by cheque for the purpose of plot No.2. He has further confirmed that they have furnished an affidavit dated 21.03.2005 in respect of the above transaction. The assessee has also furnished an affidavit on 12.03.2007 denying the receipt of ₹ 18,22,500/- in cash from M/s. Rushiraj Builders & Developers against purchase of plot No.2. Therefore, summons wer .....

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2.2011, the assessee offered the said sum to tax and stated that we are ready to offer income of ₹ 17,22,500/-, as ₹ 1 lakh was already offered, for the above said block period, to buy peace of mind and also to cooperate with the Department to avoid litigation, subject to the condition that no penalty under section 158BFA(2) of the Act would be levied. 6. On the said basis, the Assessing Officer computed sum of ₹ 18,22,500/- as undisclosed income of the assessee for the block p .....

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esumption under section 132(4) of the Act, the presumption that the notings are to be recorded as true, is applicable only to the person, from whom the said notings were found in search action and it was not applicable to the third party. Another point raised by the assessee was that since 15 years had passed, it was difficult to collect the information and record about the said transaction and consequently, in order to buy peace, the assessee had offered the said sum of ₹ 18,22,500/- as a .....

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Tribunal, the assessee offered the said additional income. The undisclosed income of ₹ 17,22,500/- was assessed in the hands of assessee on account of cash receipt received from M/s. Rushiraj Builders & Developers, evidence of which was found during the search conducted on M/s. Rushiraj Builders & Developers. The contention of the assessee vis-a-vis presumption under section 132(4) of the Act was also not accepted by the Assessing Officer. Consequently, penalty under section 158BFA .....

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course of search on the premises of M/s.Rushiraj Builders & Developers on 25.03.2003, documents were found in which there was noting that the assessee had received on-money of ₹ 18,22,500/-. The learned Departmental Representative for the Revenue further pointed out that the assessee himself had declared sum of ₹ 1 lakh in the return of income filed pursuant to notice under section 158BD of the Act and the assessment was completed after making an addition of ₹ 17,22,500/-. .....

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oney and even in cross-examination by the assessee, there was confirmation of payment of on-money of ₹ 18,22,500/-, the assessee on 16.12.2011 accepted the said additional income to buy peace and avoid litigation. However, the Assessing Officer levied penalty under section 158BFA(2) of the Act and CIT(A) deleted the same being a debatable issue. Our attention was drawn to the provisions of section 158BFA(2) of the Act and the proviso thereunder and also reference was made to the ratio laid .....

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nted out by the learned Authorized Representative for the assessee that sum of ₹ 1 lakh was offered in the return of income on adhoc basis. Our attention was drawn to the order of Tribunal, which is placed at pages 19 onwards of Paper Book, under which the matter was set-aside to the file of Assessing Officer, who in turn, recorded the statement of Shri Y.P. Trivedi and the assessee was given the opportunity to cross-examine the same and copies of both statements are placed at pages 64 and .....

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ned Authorized Representative for the assessee that notings in the same diary were basis for making addition in ACIT Vs. M/s. Manoj Marketing Pvt. Ltd. in ITA No.965/PN/2008 and CO No.28/PN/2009, relating to block period 1997-98 to 2003-04 and the Tribunal vide order dated 30.01.2015, deleted the addition in the hands of the said assessee. Another issue raised by the learned Authorized Representative for the assessee was that where the issue was debatable, no penalty under section 158BFA could b .....

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008-09 and 2009-10 respectively, order dated 27.05.2015. 12. The learned Departmental Representative for the Revenue in rejoinder stated that where the assessee has not fulfilled the conditions laid down in section 158BFA(2) of the Act, levy of penalty is thus, compulsory. It was further pointed out by the learned Departmental Representative for the Revenue that in the facts of the case before the Hon'ble Supreme Court in MAK Data (P.) Ltd. v. CIT (supra), there was no surrender, whereas in .....

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nder the provisions of section 158BFA(2) of the Act, both the Assessing Officer or CIT(A) may direct that a person shalthe shall pay by way of penalty, a sum which shall not be less than the amount of tax leviable, but which shall not exceed three times the amount of tax so leviable, in respect of undisclosed income determined by the Assessing Officer under section 158BC(c) of the Act. As per the proviso under the said section, no order imposing penalty shall be made in respect of a person if (i .....

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here the undisclosed income determined by the Assessing Officer was in excess of income shown in the return and in such cases, the penalty shall be imposed on such portion of undisclosed income determined, which is in excess of undisclosed income declared in the return of income. Under clause (3), it is provided that no order imposing penalty under section 158BFA(2) of the Act shall be made unless the assessee had been given a reasonable opportunity of hearing and such other conditions which are .....

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Under sub-section (4)(a) to section 132 of the Act, where any books of account, other documents, money, bullion, jewellery or other valuable article or things are found in the possession or in control of any person, during the course of search, the presumption is that such books of account, documents, moneysearch, money, bullion, jewellery, etc. belong or belongs to such person and that the contents of such books of account and other documents are true and also where the documents or books of a .....

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Annexure A-2 reflected certain payments in cash made by M/s. Rushiraj Builders and Developers on various dates in respect of lands / plots purchased from M/s. Amruta Land Developers i.e. the proprietary concern of the assessee before us. The Assessing Officer incharge of the searched person forwarded the information to the Assessing Officer in-charge of the assessee along with relevant documents. Admittedly, the assessee had entered into a Development Agreement dated 30.06.1997 in respect of pl .....

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2 from the assessee and the consideration was fixed at ₹ 23,18,500/-, out of which ₹ 4,96,000/- was made in cheque and the balance of ₹ 18,22,500/- was made in cash. In view of the above said information, the Assessing Officer in-charge of the assessee issued notice under section 158BD of the Act to the assessee. In response, return of income declaring additional income of ₹ 1,00,000/- was filed by the assessee. However, the Assessing Officer made an addition of total und .....

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(a)(iii) of the Act could only be drawn in respect of searched persons and could not be drawn against the assessee, who was not searched. Another contention raised by the assessee before the Assessing Officer during the course of assessment proceedings was that it had not received the said cash payment of ₹ 18,22,500/- from M/s. Rushiraj Builders and Developers. Crossexamination of Shri Y.P. Trivedi was d emanded by the assessee and the Assessing Officer summoned the said person for cross- .....

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sessing Officer was that the said admission was made to buy peace of mind and also to cooperate with the Department to avoid litigations. However, the same was subject to the condition that no penalty under section 271(1)(c) of the Act would be levied. The Assessing Officer in the set-aside proceedings included the said income in the hands of the assessee and thereafter, held the assessee liable for levy of penalty under section 158BFA(2) of the Act at ₹ 10,85,180/-. 16. The issue arising .....

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assessee, no cognizance could be taken of the said documents and no presumption could be drawn against the assessee under the provisions of section 132(4A) of the Act. The next plea raised by the learned Authorized Representative for the assessee in this regard was that the addition was made in the hands of the assessee on an offer made by it, which was subject to the condition that no penalty under section 158BFA(2) of the Act would be levied. The assessee also claims that the issue being debat .....

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ficer under section 158BC(c) of the Act, then both the Assessing Officer or the CIT(A) is empowered to levy penalty under section 158BFA(2) of the Act on such person equal to the sum which was not less than the amount of tax leviable. The conditions provided in the proviso under section 158BFA(2) of the Act are not applicable to the facts of the present case as the assessee has though furnished his return of income under section 158BD of the Act, but had not included the additional income determ .....

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urn of income filed pursuant to notice issued under section 158BD of the Act. The assessee has not furnished any details as to the nature of the said undisclosed income of ₹ 1,00,000/- except to its claim that while treating the undisclosed income of ₹ 18,22,500/-, the credit for the sum of ₹ 1,00,000/- declared, should be allowed to it, while computing penalty under section 158BFA(2) of the Act. 18. In the above said facts and circumstances, where the assessee had entered into .....

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build its case of non-receipt of cash consideration, we find no merit in the plea of the assessee. Further, during the course of assessment proceedings itself, the assessee had declared the said additional income as undisclosed income to be assessed in its hands consequent to which, the assessment was completed after making addition to that extent. In view thereof, it cannot be said that no penalty under section 158BFA(2) of the Act is not leviable since the issue is debatable. We reverse the f .....

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f CIT(A) and uphold the order of Assessing Officer in levying penalty under section 158BFA(2) of the Act at ₹ 10,85,180/-. 19. In this regard, we find support from the ratio laid down by the Hon'ble High Court of Gujarat in Kandoi Bhogilal Mulchand Vs. DCIT (2012) 21 taxmann.com 153 (Gujarat), wherein it has been held that the penalty under section 158BFA(2) of the Act is attracted where the Assessing Officer computes the income in excess of what is declared by the assessee for the blo .....

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to penalty proceedings under section 271(1)(c) of the Act. What is further required to be established is that the assessee had either concealed the particulars of his income or furnished inaccurate particulars of such income. In contrast, no such language is used in section 158BFA of the Act. We may recall that under section 158BFA(2) of the Act, penalty proceedings would arise while the Assessing Officer had assessed income for the block period in excess of the income declared by the assessee. .....

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for the assessee had placed reliance on the ratio laid down by Pune Bench of Tribunal in ACIT Vs. Shri Chandrakant Kashinath Kele (supra) for the proposition that no penalty under section 158BFA(2) of the Act is leviable in respect of additions made in the hands of the assessee. We find that the facts before Pune Bench of Tribunal in ACIT Vs. Shri Chandrakant Kashinath Kele (supra) were at variance to the facts of the present case before us. In the facts of ACIT Vs. Shri Chandrakant Kashinath Ke .....

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