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Income Tax Officer Versus A.C. Exports

2008 (7) TMI 1040 - ITAT MUMBAI

ITA No. 1470/Mum/2006 - Dated:- 25-7-2008 - S. V. Mehrotra (Accountant Member) And R. S. Padvekar (Judicial Member) For the Assessee : K. Gopal For the Revenue : R. Ravichandran ORDER S. V. Mehrotra (Accountant Member) This appeal filed by the Revenue is directed against the order dt. 20th Dec., 2005, of learned CIT (A)-XVIII, Mumbai, deleting the penalty of ₹ 4,56,800 levied by the AO under s. 271(1)(c) of the IT Act, 1961, pertaining to the asst. yr. 1995-96. Facts in brief are that the .....

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here was cash transaction of ₹ 15 lakhs to 18 lakhs including commission received in cash. He also stated that cash of ₹ 10 lakhs was lying at his residence and remaining amount was represented by cash loans and advances given to friends and relatives. The partner later on retracted his statement vide letter dt. 12th Dec., 1994, stating that the assessee firm was not having any commission income. In the first round of proceedings, this retraction was accepted by the Department and as .....

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to verify other various expenses claimed. This order of learned CIT was challenged before the Tribunal and the Tribunal vide its order dt. 28th Jan., 2002, in ITA No. 2157/Mum/2000 confirmed the CIT s action, inter alia, observing in para 8 of its order that "from perusal of the statement, it is clear that the assessee by his retracted letter dt. 12th Dec., 1994, has shifted from his earlier stand of commission income to unaccounted sales so that he may further claim cost of goods and othe .....

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ssee and added back the same to the total income, inter alia, observing that the submission of the assessee that there was no evidence found during the long search operation to justify the addition, it was worth mentioning that there was no search operation but survey under s. 133A which covered only business premises. This action of the AO was confirmed by learned CIT(A) after considering the submissions of the assessee that the retraction letter was quite elaborate and justifying reasons for t .....

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earning of the undisclosed income." After making these observations, learned CIT(A) held that this claim also appeared to be incorrect as in the declaration made at the time of survey, the said partner had referred to certain loose papers/chits, etc. and then, disclosed the additional undisclosed income of ₹ 20 lakhs. He further observed as under : "That these papers/chits, etc. were not impounded cannot save the declarant." He further observed that considering the specific .....

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the evidence in their favour. Revenue argues that there were incriminating papers during the survey operation and they were not impounded in view of the declaration of additional income of ₹ 20 lakhs. We examined the possibility of assessee giving a statement declaring ₹ 20 lakhs without the presence of any evidence or materials like the incriminating papers with entries of cash transaction. We have also examined that possibility with the ability of the assessee in retracting and int .....

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firmed by the learned CIT (A). Learned CIT(A), however, cancelled the penalty for the following three reasons : (i) As per order under s. 143(3), penalty was initiated for furnishing inaccurate particulars of income while as per penalty order, the same was levied for concealment of income. (ii) The AO had failed to record any satisfaction pertaining to the quantum addition. (iii) On merits, multiple opinions were expressed by the Department. At the time of hearing, learned Departmental Represent .....

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income of ₹ 20 lakhs. Learned counsel for the assessee submitted that the only evidence on the basis of which penalty was levied, was the declaration made by the assessee on 9th Dec., 1994, which was retracted on 12th Dec., 1994. He referred to the factual background as noted earlier and pointed out that as different views were expressed by the Department itself, under these circumstances, penalty is not leviable. He relied on the decision of the Hon ble Supreme Court in the case of Asstt .....

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Dec., 1997. The contents of retracted letter are contained at pp. 1 to 5 of the paper book. In the retraction, it is, inter alia, submitted as under : "(i) Since last couple of weeks, I am not keeping good health and undergoing mental strain and tension particularly, in view of the long ongoing family disputes with my brother. On the day of survey also, I was not in proper frame of mind and was in terrible tension and anxiety. (ii) During the course of the survey proceedings, though I was .....

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ully recorded and posted and hence they were complete. I also explained fully about the stocks being maintained at Kandivli premises. The said stocks are fully recorded in the books of account of the firm and there were no discrepancy in respect of the same. Thus, you will appreciate that during the course of survey proceedings : (a) The books of account of the firm were fully recorded, posted and were complete in all respects as of 8th Dec., 1994. (b) No unrecorded/unreconciled stock was found. .....

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