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2016 (1) TMI 799 - ITAT MUMBAI

2016 (1) TMI 799 - ITAT MUMBAI - TMI - Penalty u/s 158BFA(2) - undisclosed income - Held that:- There is no consideration by the A.O. in his penalty order, that the said declared undisclosed income of ₹ 30 lac had been covered by the conditions laid down-in the first proviso to section 158 BFA(2). The A.O. has to take that into account. Otherwise, find that no additional undisclosed income had been actually determined as any positive detection beyond what had been disclosed in the return b .....

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9. 2. Revenue has raised following grounds :- 1) On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that the penalty u/s 158BFA(2) is not leviable in assessable in assessee s case in respect of the assessed undisclosed income u/s 158Bc(b) confirmed in the quantum by the Ld. CIT(A). 2) On the facts and circumstances of the case and in law, the learned CIT(A) erred in not appreciating the position in I.T. Act, 1961 with regard to imposition of penalty u/s 15 .....

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₹ 30 lakh disclosed by the assessee, which disclosure is not entitled to immunity from penalty u/s 158BFA(2) as the conditions stated in proviso to Section 158BFA(2) were not satisfied. 4) On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that AO has not discussed as to how the assessee had been found culpable for the CIT(A) s confirmed amount of ₹ 45,10,000/- in quantum appeal, whereas: i) the assessee failed to keep any data or books of acco .....

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ed bills. 5) On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the penalty u/s 158BFA(2) by placing onus on the AO that the AO had no positive detection of materials other than suspicions as surmises, whereas the assessee s conduct of nonmaintenance of books of accounts and admissions of inflation of labour bill, and further, the labour bills having been paid in cash, have been ignored by the CIT(A). 6) On the facts and circumstances of the case and in l .....

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, Gujarat Shipping Services, Selvi Engineering Services and TPC & Co. The later one was through proprietorship of his father but operated and manage by assessee only. The assessee was engaged in and steevedoring activity which is mainly providing labour for loading and unloading operations at deep sea, port and also undertakes the work of enrolling the cargo from other ship to the small barges etc. A search and seizure action was carried out in M/s ABC Group u/s 132(1) on 02.12.1999 which al .....

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, the AO gathered that assessee was inflating expenses on account of payment of salaries and labour charges. He estimated the inflation of labour charges and the salary payment, @ 5% as ad-hoc addition to work out the undisclosed income for the block period which was worked at ₹ 57,20,788/-. Such an estimate was on the basis of examination of various evidences including the statement of the assessee that he was resorting to inflation of labour payment. During the course of the search also, .....

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unal was dismissed as un-admitted. 4. Now the penalty u/s 158BFA(2) has been levied by the AO on such an addition after detailed discussion and deliberation and held that the undisclosed income determined in the quantum was not merely an estimate but was based on various documents found and assessee s own admission that he was resorting to inflation of the payments of the labours. Accordingly, he levied the penalty of ₹ 54,12,000/- being 200% of the tax on undisclosed income. 5. Before the .....

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disclosed amount of ₹ 30 lakhs as unaccounted income. Therefore, he deleted penalty for the sums declared over and above the sum of ₹ 30 lakhs and also held that there is no reason for adopting 200% for levy of penalty when the addition has been made on estimate basis. Regarding levy of penalty on declared undisclosed income of ₹ 30 lakhs he gave directions to the AO to examine fulfillment or otherwise the conditions laid down in the first proviso to section 158BFA(2). 6. Ld. .....

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yment to Pravin Earth Movers ₹ 4,15,000 Cash payment to indecor ₹ 1,25,000 Unaccounted receipts ₹ 1,25,947 Unreconciled sales ₹ 32,988 Unexplained investment in land ₹ 75,000 ₹ 43,19,050 Since this amount on account of inflated payments worked out to 3.7% of the total labour payment of ₹ 11.44 crores, therefore, it was in this background the Ld. CIT(A) held that inflated labour expenses comes to 3.7%. Thus, the undisclosed income has been determined on a .....

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usion that penalty cannot be levied only on amount determined at ₹ 43,19,050/-. 8. After considering the rival contentions and also on perusal of the impugned orders, we find that the CIT(A) in the impugned order has noted down various discrepancies and presumptions adopted by the AO while estimating inflated expenses over and above the amount of ₹ 30 lakhs in the quantum proceedings. Once, such presumption was that salary payment made to G. Muthiah has been inflated because he is th .....

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n and evidence given by the assessee. Thus, a huge quantum of amount of disallowance on account of G.M. & Co. has no base to stand and addition cannot be sustained. Further, similar discrepancies have been highlighted by the CIT(A) with regard to various payment as given in paras 33 to 38. Thus, he came to the conclusion that in the quantum proceedings, the amount has been confirmed on the basis of certain presumptions / premise more so when the assessee himself has disclosed ₹ 30 lakh .....

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1st proviso to section 158BFA(2). The relevant observation and finding of the CIT(A) from Para 44 to 52 is reproduced hereunder :- 44. No one denies the said mechanism. In fact, that is one of the age old practices to inflate expenditure to reduce the income. But at the same time, it is expected of an intrusive action like search to find out concrete evidences of such practices and more importantly to bring the same to records. If the A.O. had ultimately to rely on the so-called confessional sta .....

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obable figure of concealment. 46. I am of the view that when the estimated figure of receipt at ₹ 14. 17 crore had been accepted, there was no positive detection of materials other than suspicions and surmises to presume that 5% of the claimed expenditure had been inflated. It was especially because at the subsequent stage of appeal, so much of allegedly inflated amount attributed to the expenditure to a firm had been only partly sustained which means that even the CIT(A) had considered th .....

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he appellant which had been subsequently denied pleading that the appellant had been asked to sign a predesigned question-answer format in English ( a language not known to the appellant) which was subsequent to his initial denial about the pagdi payment on 2/12/1999 in a statement made in Hindi language which he had understood. 48. If one sets apart these figures of ₹ 21 lacs and the deleted amount of ₹ 12,19,885/- (Rs. 26,65,000/- of A.O. minus confirmed by the CIT(A) to the tune o .....

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to be taken as unretractable, there being no direct evidence or findings, both these can be held to be also covered by the balance amount of ₹ 22,26,066/- (Rs.30 lacs minus the figure of ₹ 7,73,934/- detailed above). 50 In other words, I hold that, the A.O. or the CIT(A) had not found anything to determine any amount beyond the disclosed amount of ₹ 30 lacs as unaccounted income. I also find that in his penalty order the A.O. has not discussed as to how the appellant had been f .....

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