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2016 (5) TMI 848 - ITAT COCHIN

2016 (5) TMI 848 - ITAT COCHIN - TMI - Levy of penalty u/s. 158BFA(2) - Held that:- As additions have been upheld on estimation basis no penalty is leviable in the present case - Decided in favour of assessee - IT (SS) A No. 03/Coch/2014 - Dated:- 2-3-2016 - Shri B P Jain, AM And George George. K, JM For the Petitioner : Shri R. Krishna Iyer, CA For the Respondent : Sh K P Gopakumar, Sr DR ORDER Per B. P. Jain, AM This appeal of the assessee arises from the order of the Ld. CIT(A)-V, Kochi dated .....

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ed during the course of search, the Assessing Officer, vide order dated 27/06/2003 determined the undisclosed income at ₹ 31,00,724/-. The Assessing Officer observed from the books of account seized during the course of search that it was clear that the unaccounted transactions were carried out. It was further observed that the entries recorded were 1/100th of the real figures. To determine the addition, the AO multiplied the figures by 100 and arrived at the addition of ₹ 37,51,374/ .....

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grieved by the same, the assessee challenged before the ITAT. However, the appeal of the assessee was dismissed for non prosecution vide order dated 14/07/2010. 6. Penalty proceedings were initiated against the assessee by issuance of notice u/s. 158BFA(2) of the Act on 27/03/2003. The same were revived vide notice dated 01/11/2010. The Assessing Officer vide order dated 30/03/2011 imposed penalty of ₹ 18,60,043/- u/s. 158BF(2) of the Act. It was observed by the Assessing Officer from the .....

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income determined. The assessee is in appeal before us and has challenged the aforesaid order of the Ld. CIT(A) who confirmed the penalty imposed by the Assessing Officer. 8. The Ld. AR has argued that the penalty levied on the assessee should be deleted as there was no evidence to suggest that the assessee had earned unaccounted income except for the statement made by one of the partners. The Ld. AR further argued that the addition has been made on an estimation basis and therefore, penalty can .....

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of penalty and what is to be examined is whether there exists appropriate reasons for levy of penalty. The fact that the addition has been confirmed in the quantum proceedings would not by itself be the basis for sustaining the penalty u/s. 158BFA(2) of the Act. 11. The Assessing Officer has relied upon the statement of one of the partners of the assessee. The Assessing Officer has further relied upon the books of account seized during the course of search in the case of the assessee. Apart from .....

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d other advances were 100 times the accounted income. None of the parties to whom the loans had been advanced by the assessee had been examined. It is not the case of the Revenue that the unaccounted cash balance was recovered during the course of search from the premise of the assessee, so as to suggest the earning of unaccounted income. Also, the Assessing Officer has not brought on record any document pertaining to loan transaction which was executed for a higher amount than what is reflected .....

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n. There is no independent determination of the undisclosed income. Merely because the explanation of the assessee was rejected by the Assessing Officer with respect to the materials seized, penalty cannot be levied in the case of the present case, that too when the additions have been made on the basis of estimation. 13. In the case of ACIT vs. Shri Chandrakant Kashinath Kele in I.T.A. No. 804/PN/2013 dated 13/03/2015 Act, the ITAT, Pune deleted penalty u/s. 158BFA wherein the additions were ma .....

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property of ₹ 11,71,687/- has been arrived 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 .....

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on the basis of any concrete evidence found in the 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 reg .....

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tal marriage expenditure was scaled down to ₹ 7,34,047/- as against ₹ 12,00,000/- made by the Assessing Officer and as a consequence addition on account of unexplained marriage expenditure came to ₹ 1,96,335/-. On the aforesaid resultant addition, Assessing Officer has imposed penalty u/s 158BFA(2) of the Act. The expenditure has been estimated for marriage of two daughters of the assessee. The CIT(A) has reproduced the submissions of the assessee in para 6.2 of the impugned or .....

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d indicate clinchingly incurrence of unaccounted expenditure on marriage of assessee s daughters. Merely because, assessee s explanation with respect to the loose papers was rejected in the quantum proceedings and the marriage expenses estimated cannot be a ground to levy penalty u/s 158BFA(2) of the Act in the context of the facts and circumstances of the present case. Therefore, order of the CIT(A) on this aspect is also hereby affirmed. 12. Thus, we find no reasons to interfere with the decis .....

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esidential premises of Assessee and certain documents were found and seized. Consequent to search operations block assessment was completed and the total undisclosed income was determined by making addition of ₹ 11,79,901/-. The addition made by the Assessing Officer was deleted by CIT(A). Against the order of CIT(A), Revenue preferred appeal before ITAT. Hon ble ITAT confirmed the addition only to the extent of ₹ 3,77,338 as against the total addition of ₹ 11,79,901/- as made .....

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ere is nothing to suggest that the explanation of the Assessee was found to be untrue. 8. In the case of Mahendra Vyas (supra), the coordinate Bench has held as under:- 8. We do not agree with the submission of Revenue that penalty u/s. 158BFA is mandatory in view of the decision of Rajasthan High Court in the case of CIT vs. Satyendra Kumar Dosi (2009) 315 ITR 172 where the Hon ble High Court has held that levy of penalty u/s. 158BFA(2) is discretionary and not mandatory. 9. In the case of CIT .....

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