TMI Blog1998 (1) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... by son-in-law of the assessee was reiterated on the next day also. In the statement recorded by the AO under s. 132(4) of the assessee it was stated by her that she was doing business as an estate broker on commission basis and the hotel business was started only in the assessment year under consideration. She made a disclosure of Rs. 2 lakhs under s. 132(4) in relation to her unaccounted profit of hotel business and commission income in relation to her acting as an estate broker. 2.1 During the course of assessment proceedings the AO recorded the statement of the assessee under s. 131 and also that of her son-in-law viz. Shri Vinod Chandra S. Bhimporwala on 12th Nov., 1993. In the statement recorded under s. 131 on 12th Nov., 1993, Shri Vinod Chandra S. Bhimporwala stated that the disclosure of Rs. 7 lakhs made by him on 28th Jan., 1991, and 29th Jan., 1991, in fact was wrong and the disclosure of Rs. 7 lakhs should in fact have been made in the case of the assessee Pushpaben P. Sonarupawala. It was stated that his earlier statement dt. 28th Jan., 1991 was made by him mistakenly to maintain cordial relation with his mother-in-law. During the course of statement of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the addition of Rs. 2 lakhs surrendered by the assessee under s. 132(4) was concerned, the assessee was not entitled to immunity available in terms of exceptions to Expln. 5 to s. 271(1)(c). Similarly, with respect to the addition of Rs. 7 lakhs on account of disclosure made by the assessee's son-in-law, the same was accepted as her income by the assessee only after protracted investigation by the Department, when it is found as a fact that her son-in-law did not have any independent substantial source of income. As regards the addition of Rs. 1,10,000 on account of unaccounted investments in the construction of hotel building the CIT(A) was of the view that this was also surrendered only after a question of valuation of hotel building was referred to the Departmental Valuer who valued it at a higher figure. Thus in view of the aforesaid facts the CIT(A) came to the conclusion that the AO was justified in holding the assessee guilty of concealment of income as well as furnishing of inaccurate particulars of income. He accordingly confirmed the order of the AO. 4. The assessee is aggrieved and has filed this appeal. Rasesh Shah, the learned representative of the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs related to the immovable property for which Expln. 5 is not applicable. It was further submitted that while issuing the penalty notice the AO has not invoked Expln. 1 to s. 271(1)(c) although while levying the penalty the AO has referred to Expln. 1 to s. 271(1)(c). According to the learned representative of the assessee the Expln. 1 to s. 271(1)(c) ought to have been invoked at the time of initiation of penalty proceedings. Reliance was placed on the decision of the Bombay High Court in the case of CIT vs. P.M. Shah (1993) 203 ITR 792 (Bom) and CIT vs. Dharamchand L. Shah (1993) 113 CTR (Bom) 214 : (1993) 204 ITR 462 (Bom) as well as the decision in the case of Siddhivinayak Chemicals (P) Ltd. vs. Asstt. CIT (1995) 52 ITD 226 (Bom) as well as the decision of the Gujarat High Court in the case of CIT vs. Baroda Tin Works (1996) 135 CTR (Guj) 126 : (1996) 221 ITR 661 (Guj) and CIT vs. Vinay Chand Harilal (1979) 8 CTR (Guj) 247 : (1979) 120 ITR 752 (Guj). It was further submitted that even assuming though not admitting that Expln. 1 to s. 271(1)(c) was rightly invoked by the AO while levying the penalty yet the presumption is rebuttable presumption and the assessee has rebu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings were very much relevant in the course of penalty proceedings as per the decision of the Punjab Haryana High Court in the case of New Bijli Foundry vs. CIT (1981) 23 CTR (P H) 10 : (1982) 135 ITR 593 (P H). The learned Departmental Representative also relied on the decision of the Allahabad High Court in the case of CIT vs. Zeekoo Shoe Factory (1981) 127 ITR 837 (All) and also the decision of Orissa High Court in the case of CIT vs. Prathi Hardware Stores (1993) 111 CTR (Ori) 105 : (1993) 203 ITR 641 (Ori), the decision of the Rajasthan High Court in the case of CIT vs. Dr. A.K. Sharma (1993) 112 CTR (Raj) 47 : (1993) 204 ITR 62 (Raj); the decision in the case of Nandlal Kaniyalal vs. CIT (1993) 115 CTR (Guj) 309 : (1993) 205 ITR 360 (Guj). Accordingly, it was submitted that in the facts and circumstances of the case the Departmental authorities were justified in levying/sustaining the penalty levied under s. 271(1)(c). 6. We have considered the rival submissions and have also gone through the orders passed by the AO as well as the CIT(A). We have also taken note of paper-book running into 129 pages filed by the learned representative of the assessee which contain copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 8 of Capital B of final amount of disclosure extracted above: Rs. 2,00,000 As regards the difference in the question of valuation of hotel building is concerned, it is seen that the valuation of the hotel building was done by one Shri Narendra M. Kapadia, approved registered valuer vide valuation report dt. 30th July, 1990, who valued the total property at Rs. 9,55,012 inclusive of the cost of land at Rs. 2,16,600 as per the copy of the valuation report furnished to us at pp. 68 to 79 of the paper-book. The same very property was valued by the Govt. Valuer at Rs. 14,44,920 vide report dt. 31st Jan., 1991. However, it appears that after the discussion the assessee agreed to surrender a sum of Rs. 1,10,000 on account of difference in the cost of construction and the AO accepted the same. Thus the addition of Rs. 1,10,000 was made only on account of difference in the value estimated of cost of superstructure of the hotel and there is no finding of any positive concealment by the AO except the surrender of Rs. 1,10,000 by the assessee in her statement recorded under s. 131 and in particular in answer to question No. 3. No penalty in relation to the estimate of higher cost of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree to pay all the legal tax on excess income declared by me today." From the above it is clear that though the assessee before us, declared the income of Rs. 10,10,000 and was assessed on that income, the evidence on record does not indicate that the flat in Parth Apartment actually belonged to her. In fact her son-in-law also in the statement recorded by the AO on 12th Nov., 1993 in response to question No. 4 stated as under: "Q. 4 : What do you want to say about flat in Parth Apartment? A. 4 : The flat at Parth Apartment belonged to wife of my friend Shri Ashokbhai. In order to keep secrecy from his family he kept diary with us. I will produce Sheelaben with her income-tax papers and give the detailed answer afterwards. Smt. Pushpaben has no concern with this investment." It appears that after the statement of 12th Nov., 1993, no inquiries or further proceedings were continued by the AO who passed the order of assessment on 29th March, 1994, on the basis of the revised computation filed in letter dt. 17th Nov., 1993. Thus it is seen that the entire assessment framed by the AO is based upon more or less on the admission of the assessee and her son-in-law that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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