TMI Blog2019 (4) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and decide the issue in accordance with law after giving opportunity of hearing to the assessee. This ground of appeal of the Revenue is partly allowed for statistical purposes. - I.T.A. No.294/Coch/2018, C.O. No. 63/Coch/2018 - - - Dated:- 1-3-2019 - S/Shri Chandra Poojari, AM And George George K., JM For the Assessee : Shri C.B.M. Warrier, CA For the Revenue : Smt. A.S. Bindhu, Sr. DR ORDER PER CHANDRA POOJARI, AM: This appeal filed by the Revenue is directed against order of the CIT(A)-III, Kochi dated 28/03/2018 for the assessment year 2008-09. The assessee has filed Cross Objection in C.O. No. 63/Coch/2018 against the Revenue appeal. 2. The facts of the case are that the assessee is a firm with four partners and engaged in the business of Timber Trading. In this case, a search u/s. 132 of the Act was conducted on 23/10/2008. Post search, a notice dated 18/02/2010 u/s. 153A(a) was issued and served upon the assessee. In response to the notice the assessee filed its return declaring a total income of ₹ 1,28,32,920/-. The assessment was completed u/s.143(3) r.w.s 153A and the total income was assessed at ₹ 2,15,59,239/-. The main ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer to examine whether there was investment by two persons other than the assessee in purchasing the land. 4. Accordingly, the A.O made enquiries with Shri A.A.Davis and Shrl P. T.Pavunny with regard to their share of investment, if any, in the property purchased i.e 30.5 cents of land at Chembukavu, which had been registered in the name of the assessee i.e .M/s. St. Antony's Timber Depot. In response, both of the said persons vide letters dated 26/02/2014 denied having made any investment in the purchase of property made by M/s St. Antony's Timber Depot at Chembukavu. In fact, the authorised representative of the assessee had himself produced the two deponents before the Assessing Officer and he also signed on the proceedings. 4.1 Consequent to the denial letters filed by Shri A.A. Davis and Shri P.T. Pavunny, the A.O issued letter dated 27/02/2014 confronting the assessee with their denials and directing it to file its explanations / objections if any against the confirmation letters on or before 05-03-2014. In response, the authorised representative of the assessee submitted letter dated 04/03/2014 on the letter head of the assessee firm.The said letter r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in immovable property was made without any supporting evidence and disbelieving the explanations offered by us. The seized document on the basis of which the addition was made clearly showed that the investment was contributed by two other person also. The above addition has been made overlooking the statutory provision contained in the section 132 of the 1.T. Act that the contents of the seized documents should be considered as correct. We have very clearly mentioned in our letter dated 04.03.2014 that the additional investment, though not actually made by us, is accepted to avoid prolonged litigation and in order to purchase peace with the department and also with an understanding that the above acceptance should be considered positively while imposing penalties. A copy of the letter is enclosed as ready reference. 5. It has been held in ITO v Roborant investment Pvt. Ltd (2006) 7 SOT 181 (Mumbai) that penalty cannot be levied in cases involving genuine difference of opinion on matters between the assesses and the Assessing Officer. Further, it has been held that penalty cannot be levied where additions are made by the Assessing Officer rejecting the explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, it was found that in the return filed in response to the notice u/s. 153A, the income admitted during the search had not been offered. Thus, the Assessing Officer observed that the assessee had again concealed the particulars of its income in the return of income. 5.3 The A.O confronted the assessee about the seized documents during the course of assessment proceedings. The A.O also confronted the assessee about the statement of Shri Babu John, Managing Partner, Still the assessee had no convincing and satisfactory explanation. It also did not come out with any true facts or confirm the stand taken during the search. Instead after 26 months, there has been retraction. In the circumstances, the A.O went by the seized documents and the statement of Shri Babu John and added the amount of ₹ 81.60 lacs being difference between the actual amount paid i.e ₹ 99.90 lakhs and the amount mentioned in the deed of conveyance i.e. ₹ 18.30 lakhs. 5.4 The AO observed that the submissions made by the assessee are completely devoid of any merit. Though it had been contented that no income had been concealed, the AO found that the assessee not only concealed the particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee's case is one in which concealment of the particulars of income was proved on the basis of strong documentary evidence and statement on oath. Therefore, the assessee's case was totally distinguishable from the cases relied upon. In conclusion, the Assessing Officer stated that the provisions of Explanation 1 to section 271(1)(c) is squarely applicable to this case. The said Explanation provides that where in respect of any facts material to the computation of the total income of any person - (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner to be false, or (E) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this subsection, be deemed to represent the income in respect of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,03,86,100 Agreement Advance 5,00,000 98,86,100 C 32 95 367 D 32 95 367 P 32 95 367 The CIT(A) observed that the contents of the seized document showed that money was paid by three persons and C stood for the assessee, D stood for Davis and P stood for Pavunny. Since seized document was found at the premises of the assessee firm and since Mr. Davis and Mr. Pavunny denied having made any payment, the assessee firm accepted the addition of entire amount in his own hands and therefore, the AO levied penalty on the entire amount in the case of the assessee. According to the CIT(A), the basic document on the basis of which addition was made and penalty was levied, showed that payment was made by three people names of which were known to the Department and this document cannot be said to be an after thought as the same was found during the course of search and was definitely written much earlier. According to the CIT(A), the veracity of the document is beyond doubt and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 20 lakhs made by the Assessing Officer. However, it has been seen that in the assessment order, undisclosed investment of ₹ 81.60 lakhs was considered and it is not proper on the part of the CIT(A) to consider only 1/3rd of the amount of ₹ 81.60 lakhs for the levy of penalty. Accordingly, we vacate the findings of the CIT(A) and restore the issue back to his file to consider the entire undisclosed amount of ₹ 81.60 lakhs. It is admitted that these two persons, Shri Davis and Shri Pavunny have not made any payment towards the purchase of the said property and also it was on record that the assessee had accepted the addition of the entire amount in his own hands. Accordingly, we remit this issue to the file of the CIT(A) for fresh consideration and decide the issue in accordance with law after giving opportunity of hearing to the assessee. This ground of appeal of the Revenue is partly allowed for statistical purposes. C.O. No. 63/Coch/2018 : AY 2008-09 9. Since we have remitted the Revenue s appeal to the file of the CIT(A) for fresh consideration, the Cross Objection filed by the assessee in C.O. No.63/Coch/2018 has become infructuous and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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