9911796707
TMI Blog2010 (3) TMI 1187X X X X Extracts X X X X X X X X Extracts X X X X ..... ght (gms.) Net weight (gms.) Value (Rs.) Residence : As per valuation report filed 1,410.200 1,208.600 6,02,955 Locket No. 862 with PNB, Patel Nagar 808.800 695.000 2,72,989 Total jewellery found 1,903.600 Jewellery declared in WT return for asst. yr. 1992-93 1,169.850 Unexplained jewellery 733.750" 3. The explanation of the assessee for the rest of the jewellery i.e., 733.750 gms. was that 500 gms. of jewellery was acquired by the wife of the assessee as per will of her grandmother, Smt. Bharvan Devi, who died on 14th Oct., 1993 and the balance jewellery was purchased by the assessee out of his taxable income during the years 1994-95, 1995-96 and 1996-97. Against that explanation of the assessee, the observations of the AO as recorded in the order of the CIT(A) in quantum proceedings in para No. 8 are that the locker was in the name of assessee and his wife and the wife of the assessee did not have any independent source of income. The assessee did not produce balance sheet to prove that there were actually withdrawals made for investment in jewellery and, thus, the AO treated that explanation of the assessee being not satisfactory and value of excess jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasing jewellery as was alleged by the assessee in those years. As per the finding of these facts, addition in quantum was upheld by the CIT(A). The matter went before the Tribunal where the appeal of the assessee was decided by the Tribunal vide order dt. 24th Feb., 2006 in IT(SS)A No. 75/Del/2001. The Tribunal, after going through the above-mentioned findings of the CIT(A) observed that the assessee could not prove the existence of jewellery and the evidence produced in the shape of will was found unreliable by the authorities below for the reasons given in their orders and, thus, it was observed that the jewellery was rightly considered to be unexplained in the hands of the assessee. Not satisfied with the upholding of addition by the Tribunal, the assessee preferred an appeal before the Hon'ble Delhi High Court wherein the assessee besides challenging the validity of search proceedings had also contested the additions on merits. Their Lordships of Delhi High Court vide order dt. 30th Jan., 2008 in IT Appeal No. 1429/Del/2006 [reported at Sunil Dua vs. CIT (2008) 217 CTR (Del) 203: (2008) 7 DTR (Del) 311'Ed.] (copy placed at pp. 31-34 of the paper book) have upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... she had understood the contents of the will and the contents were explained to her. The genuineness of the will was not acceptable and for remaining jewellery also the assessee could not established that it was purchased by him from the income declared in the years stated by him and mere contention that this jewellery was purchased out of income was not enough. The contention was not supported by any evidence in the shape of purchase bill or the balance sheet, etc. and, in this manner, learned CIT(A) has arrived at a conclusion that the assessee did not disclose his income truly in the return of block period and concealed the facts and furnished inaccurate particulars of income to the extent of value of jewellery. He also rejected the grounds taken by the assessee with regard to invalid initiation of penalty proceedings because he found that in the assessment order dt. 31st Jan., 2000, it was clearly mentioned that penalty proceedings have already been initiated separately. He also held that a show-cause notice was issued to the assessee on 17th Nov., 2006 for hearing on 27th Nov., 2006 and, thus, he found that a proper opportunity of hearing was also given. He found that penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He contended that the first ever notice with regard to levy of such penalty was a notice dt. 10th July, 2000 a copy of which is placed at p. 47 of the paper book. He contended that as per trite law if the penalty notice is not issued with the assessment order then penalty cannot be levied by issuing notice subsequently, and therefore also the levy of penalty in the present case is against the provisions of law. For this contention learned Authorised Representative has also relied on the aforementioned decisions. 9. So as it relates to merits, he placed reliance on the following decisions : (1) Dy. CIT vs. Suresh Kumar (2005) 95 TTJ (Kol) 926: (2005) 97 ITD 527(Kol); (2) ITO vs. P. Palaniswamy (1986) 26 TTJ (Mad) 42: (1986) 16 ITD 529(Mad); (3) Smt. Mala Dayanithi vs. Dy. CIT (2005) 92 TTJ (Bang) 270: (2004) 91 ITD 46(Bang); (4) Jashwant D. Parmar vs. Asstt. CIT (2007) 109 TTJ (Ahd) 56; (5) Dasondhi Ram vs. ITO (1982) 13 TTJ (Asr) 450; (6) S.C. Tripathy vs. ITO (1982) 13 TTJ (Cal) 320. 10. On the other hand, it was submitted by the learned Departmental Representative that the penalty proceedings under s. 158BFA(2) are not like proceedings under s. 271(1)(c). It was contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined under cl. (c) of s. 158BC, for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time specified in the notice, and'(a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) Where no return has been furnished, on the date of completion of assessment under cl. (c) of s. 158BC. (2) The AO or the CIT(A), in the course of any proceedings under this chapter, may direct that a person 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 the undisclosed income determined by the AO under cl. (c) of s. 158BC : Provided that no order imposing penalty shall be made in respect of a person if' (i) such person has furnished a return under cl. (a) of s. 158BC; (ii) the tax payable on the basis of such return has been paid or, if the assets seized consist of money, the assessee offers the money so seized to be adjusted against the tax payable; (iii) evidence of tax paid is furnished along with the return; and (iv) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Authorised Representative that there was no initiation of penalty proceedings during the course of assessment proceedings as it was clearly stated in the assessment order itself. 13. Now, it has been the contention of learned Authorised Representative that no notice accompanying the assessment order for levy of penalty under s. 158BFA(2) was issued and the only notice which was issued to assessee in this regard was notice dt. 10th July, 2000. We have carefully considered this submission of learned Authorised Representative. For raising such contention he argued that the languages of ss. 271(1)(c) and 158BFA(2) are in pari materia and according to the arguments of learned Authorised Representative, the AO could issue notice under s. 158BFA(2) only during the course of assessment proceedings and in the absence of issue of such notice penalty proceedings were not valid as per the case laws existing on the provisions of s. 271(1)(c). 14. In this regard it may be mentioned that no doubt that the provisions of s. 271(1)(c) also describe the words "in the course of any proceedings under this Act" as against the description in the provisions of s. 158BFA(2) "in the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no satisfaction of the ITO during the assessment proceedings that the assessee had concealed the particulars of his income or had furnished incorrect particulars of such income. What is contemplated by cl. (1) of s. 271 is that the ITO or the AAC should have been satisfied in the course of proceedings under the Act regarding matters mentioned in the clauses of that sub-section. It is not, however, essential that notice to the person proceeded against should have also been issued during the course of the assessment proceedings. Satisfaction in the very nature of things precedes the issue of notice and it would not be correct to equate the satisfaction of the ITO or AAC with the actual issue of notice. The issue of notice is a consequence of the satisfaction of the ITO or the AAC and it would, in our opinion, be sufficient compliance with the provisions of the statute if the ITO or the AAC is satisfied about the matters referred to in cls. (a) to (c) of sub-s. (1) of s. 271 during the course of proceedings under the Act even though notice to the person proceeded against in pursuance of that satisfaction is issued subsequently. We may in this context refer to a decision of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition to understand the contents of the will. Language used in the will also clearly suggested that it was made only for the purpose of showing 500 gms. of jewellery bequeathed in favour of the assessee. The executant of the will had signed in Gurmukhi while the will was written in Hindi and there was nothing to suggest that the executant had understood the contents of the will or its contents were explained to her and it was recorded by their Lordships that there was no fallacy in the view adopted by any of the Departmental authorities whereby the genuineness of the will was not accepted. Thus, according to these findings, the will produced by the assessee to substantiate his contention was a non-genuine document prepared and produced only for the purpose of explaining the jewellery found at the time of search. Thus, it cannot be said that in any manner the explanation of the assessee with regard to 500 gms. jewellery was genuine or bona fide. Sec. 158BFA authorizes the IT authority for levy of penalty by exercising his discretion judicially when the income returned under that chapter is found to be less than the income assessed under that chapter. In the said section, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been relied upon by learned Authorised Representative : (i) CIT vs. Rajinder Kumar Somani (supra) : The words mentioned in the assessment order were "are to be initiated separately" and it was found by their Lordships that the penalty proceedings were not initiated as the word mentioned were "are to be". (ii) CIT vs. Sardar Amarjit Singh (supra) : The question involved in the said decision was that whether the Tribunal was justified in reducing the penalty leviable under s. 271(1) at a figure lower than the sum of 2 per cent of the tax of every month during which the default continued, but not exceeding in the aggregate 50 per cent of the tax and, thus, the question was not regarding validity or otherwise of penalty proceedings on the basis of issuance or non-issuance of notice during the course of assessment proceedings. (iii) H. Ajitbhai & Co. vs. Asstt. CIT (supra) : The question was relating to levy of penalty under s. 44AB and penalty proceedings in that case were not initiated during the course of assessment proceedings and, thus, it was held that the AO was not justified in initiating penalty proceedings 16 months after completion of assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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