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2015 (11) TMI 418 - ITAT DELHI

2015 (11) TMI 418 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - concealment of particulars of income as well as furnishing of inaccurate particulars of income - Held that:- On perusal of the penalty order, it is clear that the penalty was levied for furnishing inaccurate particulars of income and thereby concealed the particulars of income which means that this finding, in our considered opinion, is confusing and is not clear whether the Assessing Officer holding the assessee guilty of furnishing .....

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e amount surrendered cannot be co-related with incriminating materials found as a result of survey operations. Though the Assessing Officer and the CIT(A) recorded the finding that the assessee promised to produce the vouchers, which were not accounted in the books of account, failed to do so. It is a trite law that the onus always lies on the person who alleges in this case that it is the department who made an allegation that some vouchers found which were not accounted in the books of account .....

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rly held that no addition can be made based on the mere statement.

The decision of the Hon’ble Madras High Court was approved by Hon’ble Supreme Court in the case of CIT Vs. Khader Khand Son, (2013 (6) TMI 305 - SUPREME COURT) after granting the leave. That apart, the CBDT which is the apex body in administering the provisions of Income Tax Act had issued Circle dt. 10th March, 2003 to its officers that no addition can be made on mere statement of assessee without bringing any indepe .....

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HRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Appellant : S/sh. Rakesh Gupta & Tarun Kumar, Advocates For The Respondent : Sh. K.K. Jaiswal, DR ORDER PER INTURI RAMA RAO, A.M.: This is an appeal filed by the assessee directed against the order of CIT(A)-XXII, New Delhi, dated 31.12.2012 passed for the assessment year 2007-08. The assessee raised the following grounds of appeal: i. That having regard to the facts and circumstances of the case, Ld. CI .....

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case and the impugned penalty order being illegal and void ab-initio and the impugned penalty order has been framed without considering the submissions/evidences of the assessee and without providing any adverse material on record and without establishing that there was concealment or furnishing of inaccurate particulars of income on the part of the assessee. iii. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of L .....

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ntrary to law and facts. v. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in levying penalty u/s 271 (l)( c) is bad in law being beyond jurisdiction and barred by limitation and contrary to the principles of natural justice and has been passed by recording incorrect facts and findings and without giving adequate opportunity to the assessee and without considering the submissions/evidences of the assessee .....

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udice to each other. 2. The brief facts of the case are that the assessee is an individual. It derives income from export of readymade garments in the name and style of A.K. Enterprises. The return for the assessment year 2007-08 was filed on 31.10.2007, disclosing income of ₹ 6,92,300/-. Against the said return of income, the assessment was completed vide order dated 24th December, 2009, under Section 143(3) of the Income-tax Act, 1961 (for short the Act ) at a total income of ₹ 30, .....

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as per statement question no. 17, which is reproduced below: Q.17 During the survey operation expenditure vouchers total amounting to ₹ 45,02,000/- have been found which related to current F.Y. Please state whether these have been accounted for in the books of accounts or not? Ans. The vouchers related to the expenditure incurred on the building B-14 owned jointly with my wife. These vouchers/bills have not been accounted for in the regular books of accounts. I offer 50% of the expenditure .....

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ey operations, the appellant reiterated that there were no papers found indicating undisclosed investments in the construction of building at B-14, Industrial Area, G.T. Karnal Road, Delhi. It was further submitted that based on this objections, the Assessing Officer referred the matter to DVO who vide his report dated 16th December, 2009, stated that the construction of the property took place during the period from 1st February, 2003 to 13th March, 2006 which means there was no construction th .....

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he Municipal Corporation, Delhi on 26th June, 2004 to run the business, property tax return of the building for the financial year 2003-04; new electricity connection and application for electricity connection to NDPL on 11th November, 2003; copy of the telephone connection to the MTNL on 9th January, 2003, and copies of completion certificate of building received from MCD, dated 25th October, 2004. Despite this, the appellant had agreed for the addition of ₹ 22.5 lakhs on the advice of hi .....

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rnishing both inaccurate particulars of income and concealment of income vide show cause notice dated 24.12.2009. In response to the show cause notice, it was submitted that the surrender of income was made only with the intention to buy peace with the department and avoid unnecessary litigation on this issue. There was no evidence brought by the Revenue supporting this addition. The appellant relied on the decision of Hon ble Gujarat High Court in the case of New Sorathia Engineering Co. Vs. CI .....

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o 8.9 & 9 of the orders, which are reproduced below: 8.1 I have considered the Observations of the Assessing Officer and Submissions of the Appellant. It is seen that the Appellant is basically challenging 'the imposition of the tax upon him claiming that the addition made on account of unaccounted investment in construction of property. It has been repeatedly claimed that no such documents/paper were found during survey which could justify the investment made by the Appellant and his wi .....

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tly the Assessee and his wife gave letters seeking retraction of the surrender on 25.10.2007. However, subsequently it is seen that as per the first two paragraphs on page 5 of the written submissions of the Appellant the retraction of 25.10.2007 was withdrawn. Thus in this case there was a surrender followed by a retraction which was followed by a withdrawal of the retraction. The abovementioned two paragraphs on page 5 of the written submissions of the Appellant have been typed in bold letters .....

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ces the Assessee cannot even claim that the withdrawal of the retraction was under any duress as it was after due deliberation and after seeking advice of his Counsel. In view of this situation any discussion about the taxability of the amount involved and about the legal position involved in cases of retraction is not at all required. 8.3 It is seen that during the penalty proceedings the Appellant has tried to rake up the issues relating to the quantum of addition and also about the retraction .....

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this amount of ₹ 45,02,000/-, being ₹ 22,51,000/- in the hands of the Assessee and ₹ 22,51,000/- in the hands of his wife Smt. Kamini Jain. It is seen that after about 8 months on 25.10.2007 the Assessee retracted the surrender. Perusal of the Assessment Order further shows that the property in question i.e. B-14, Industrial Area G.T. Karnal Road was referred to the Valuation Cell for determination of cost of construction on the Plot as on 31.03.2007 and the Valuation Officer .....

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ion on the plot as on 31.3.2007. The Valuation Officer vide his report dated 16.12.2009 has determined the cost of investment/construction as on 31.3.2007 at ₹ 1,61,01,272/- as against declared value of ₹ 1,08,29,859/-. The assessee was provided copy of valuation report for his comments. In compliance thereto the AR of the assessee Sh. Sanjay Aggarwal attended on 23.12.2009 and requested that the DVO has allowed deduction of sale supervision at the rate of 5% only. You are requested .....

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f vouchers of expenses found at the time of survey. The Addl. CIT vide letter No. 1185 dated 23.12.2009 approved the proposed additions as per directions reproduced hereunder- "On the basis of facts mentioned in your above referred letter as well as on personal discussion held in my chamber today, where the assessee's AR Shri Sanjay Aggarwal, CA was also present, the additions proposed by you in the case of Sh. Ashwani Kumar lain and Smt. Kamini lain are hereby approved. " In view .....

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,29,8591-, the value was determined by the Valuation Officer at Rs. l,61,01,272/-, as per which the excess investment amounted to ₹ 52,71,413/-. It is seen that as against this excess amount invested in the construction determined by the Valuation Officer, an addition of only ₹ 45,02,0001- was made, being ₹ 22,51 ,0001- in the hands of the Assessee and ₹ 22,51,0001- in the hands of his wife Smt. Kamini lain after seeking directions u/s 144 A of the LT. Act, 1961 from the .....

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fe Smt. Kamini lain. Thus the claim of the Appellant that the addition of ₹ 22,5l,000/- was made merely on the basis of his admission is false as the addition was based not only on the basis of the admission by the Appellant but also on the basis of the documents found during Survey and also on the basis of the actual unaccounted investment made in construction which was determined by the Valuation Cell at ₹ 52,71,413/-, but an addition of only ₹ 45,02,0001- was made towards un .....

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on construction at B-l4, G.T Karnal Road, Delhi in F. Y 2006-07. This amount was surrendered on the basis of certain vouchers found at the time of survey, copies of which were promised to be produced by the assessee before the AO within a couple of days but which were never produced. " 8.6 Thus it is seen that the addition made on account of unexplained expenditure for construction of property was made not just on the basis of the statement or admission of the Assessee but rather there were .....

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on the site which was determined by the Valuation Officer at ₹ 52,71,413/- but after seeking instructions u/s 144A from the Addl. CIT the addition was restricted to ₹ 45,02,000/-. Thus the addition made in the case is on the basis of 3 aspects i.e. the statement of the Assessee, the vouchers found during the Survey (which were promised to be produced by the Assessee but were never produced again) and the actual unaccounted construction on the site which was determined by the Valuati .....

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ecision of Hon'ble Supreme Court in the case of Qilip N. Shroff vs. ClT 291 ITR-519 (SC). The facts of the above referred case of Hon'ble Supreme Court are estimation of investment on the basis of ova whereas in the instant case the assessee surrendered certain investment in construction of properties on the basis of vouchers of expenditure/investment were found during the course of survey and also deposited tax on the surrendered amount but later on retracted from the surrendered and al .....

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later judgment in the case of Union of India Vs. Dharmendra Textiles Products (306 ITR 277) (SC)." 8.8 The Assessing Officer has also discussed several other judicial decisions and on the basis of these judicial decisions and the facts of the case, held as under in the last paragraph of page 5 and the first paragraph of page 6 of the penalty order :- "Thus it is clear from the above that the assessee had knowingly, intentionally and fraudulently concealed particulars of income on acco .....

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the default of the assessee U/S 271(l)(c) is established. " 8.9 It is seen that the Assessee has tried to twist the facts of the case to claim that it was only on the basis of the statement of the Assessee that the addition was made and that the penalty was imposed only because the addition was made. However, this is not the case as seen above and it is held that the Assessee deliberately concealed the particulars of his income, and furnished in-accurate particulars of such income. It is s .....

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ion Officer determined the unaccounted investment in construction at ₹ 52,71,413/-, the Assessee withdrew the retraction and requested the income tax authorities to make the addition in line with his earlier statement to restrict the addition to only ₹ 45,02,000/ -. Now the Appellant seeks to claim as if the addition was made only because of his statement whereas that is far from the truth and the addition had been made for the unaccounted income invested in the construction. In view .....

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he course of assessment proceedings. Though the statement of surrender was retracted later the assessee had agreed for the addition with the intention buying peace with the department and to avoid the unnecessary litigation. Apart from the statement of surrender, there was no independent incriminating material brought on record by the Assessing Officer and in fact, the DVO had clearly stated that there was no construction which took place during the previous year relevant for the year under cons .....

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no addition can be made based on mere statement of surrender of the assessee. In support of this proposition, he relied on the decision of Hon ble Madras High court in the case of CIT Vs. Khader Khan Son, 300 ITR 157 (Mad.) and the decision of the Hon ble Kerala High Court in the case of Paul Mathews and Sons Vs. CIT, (2003) 263 ITR 101 (Ker.). He further submitted that no penalty is leviable and in respect of an item for which the addition was made based on the concession of the party and in su .....

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or for furnishing of the inaccurate particulars of income. He submitted that the two are mutually exclusive and in support of this proposition, he relied on the decision of coordinate bench of ITAT, Ahmedabad, in the case of Assistant Commissioner of Income Tax Vs. Apsara Processors (P) Ltd., 27 ITD 411 and the decision of the Hon ble Gujarat High Court in the case of New Sarothia Engg. Co. Vs. CIT, 282 ITR 642 (Guj.). Therefore, according to the learned counsel for the assessee the penalty pro .....

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of ₹ 6,23,046/- vide order of penalty dated 30th June, 2010. On perusal of the penalty order, it is clear that the penalty was levied for furnishing inaccurate particulars of income and thereby concealed the particulars of income which means that this finding, in our considered opinion, is confusing and is not clear whether the Assessing Officer holding the assessee guilty of furnishing the inaccurate particulars of income or concealing the particulars of income. This goes to prove that t .....

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h the Assessing Officer and the CIT(A) recorded the finding that the assessee promised to produce the vouchers, which were not accounted in the books of account, failed to do so. It is a trite law that the onus always lies on the person who alleges in this case that it is the department who made an allegation that some vouchers found which were not accounted in the books of account. Therefore, it is the duty of the Revenue to prove that which vouchers were not accounted in the books of account. .....

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t in the case of CIT Vs. Khader Khand Son, (2013) 352 ITR 480 (SC) after granting the leave. That apart, the CBDT which is the apex body in administering the provisions of Income Tax Act had issued Circle dt. 10th March, 2003 to its officers that no addition can be made on mere statement of assessee without bringing any independent incriminating material on record. Therefore, in the light of the above decision, the very addition made by the Assessing Officer is not free from doubt. The mere disa .....

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