TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 117
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 14.12.2004 wherein certain documents etc. were found which were impounded, as a result of which certain additions were made. The A.O. taking cognizance of the fact that the additions which stood confirmed till the Tribunal in the quantum proceedings wherein the Tribunal had upheld the reasoning of the A.O. and the CIT(A) that the assessee was indulging in suppressing the information from theme wedding parties which includes design and layout for the functions, implementation and coordination of weddings etc. The modus operandi of the assessee in the penalty proceedings was discussed as under by the A.O.: "Usually clients come to the office or calls the assessee company's Representative to the sites where the event is going to take place. Assessee co. coordinate on behalf of the client and the agencies or service agencies have to interact with them and after that initial estimate is given and also receives an advance from them and the final bill is settled at the end of the function. Bills are issued with service tax and payment received by cheque and entered in the books of accounts while the cash advance and site expenses are not entered in regular books. This arrangement of cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... result of the issue traveling to the CIT(A) consequent to the relief allowed the income was recomputed at Rs.24,11,125/- and as a result of some further rectification order u/s 154 of the Act by the CIT(A) the income was recomputed at Rs.23,53,012/-. Consequent to the issue traveling to the Tribunal the A.O. observed in the penalty proceedings that the assessee did not agitate the addition of Rs.39,530/- in regard to the suppression of amount for the function of Chunnu International. The additions which were agitated on behalf of the assessee were as under. 1. Rs.1,96,000/- in r/o the function of Shri Ankush Saluja; 2. Rs.3,84,000/- in r/o the function of Shri Uday Singh; 3. Rs. 1,80,000/- in r/o the function of Shri Jagota; 4. Rs.1,00,000/- in r/o the function of Shri Kamal Passi; 5. Rs. 3,63,123/- in r/o the function of Uday Park; 6. Rs. 2,30,000/- in r/o the function of Shri Raghav; 7 & 8. Rs.5,41,000/- and Rs.1,61,124/- on account of renovation/construction expenses on office building. 4.2. The finding of the Tribunal on issues nos. 1 to 6 taken note of by the A.O. were as under. "In regard to the grounds no 1 to 6, the Hon'ble ITAT held that "we are of the view that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5,41,000/- should be deemed to have been incurred out of the said cash transactions, the GP of which has been directed to be added and directed the Assessing Officer to telescope this addition of Rs. 5,41,000/- into the GP addition on account of cash transaction in the event management to the extent of the GP addition as available. The order of Hon'ble ITAT is silent on ground no. 8 regarding the addition of Rs. 1,61,124/-." 4.4. Consequent to that the income of the assessee was recomputed at Rs. 10,17,376/- as under: Income as per the order u/s 154, 250/143(3) dt. 30/07/2008 Rs. 23,51,012/- LESS : Reliefs allowed by the Hon'ble ITAT: 1) on a/c of the function of Shir Raghav Rs. 2,30,000/- Rs. 5,62,636/- 2) balance reliefs as discussed above Rs. 5,41,000/- Taxable Income : Rs. 10,17,376/- 4.5. Based on this background the A.O. in the penalty proceedings held that the ITAT has upheld the view of the A.O. that the assessee has been receiving cash over and above the cheque payments on the basis of quotation made by the assessee. 5. The A.O. as such observed that the cash receipts received by the assessee to be brought to tax only on the basis of documents seize....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ribunal. 11. Ld.A.R. inviting attention to the assessment order in the quantum proceedings invited attention to para 13 of the assessment order on the basis of which it was his submission that an amount of Rs. 1,35,000/- was paid to 'A', Interior as contract fee for new office construction and Rs.26,264/- as electric fittings for new office. It was his submission that it is a matter of difference of opinion and if the expenses claimed were not to be treated as revenue in nature and was to be treated as capital then depreciation has to be allowed to the assessee which was allowed by the CIT(A) and in view of the fact that depreciation has been allowed the Tribunal did not interfere with the order but the fact remains that penalty cannot be imposed as it is merely a difference of opinion and there is no allegation that expenditure has not been incurred. The Ld.A.R. was required to invite attention to the bills raised on account of this fact so as to consider the nature of expenses. In reply to this reliance was placed upon findings as available in para 13 of assessment order. 12. In regard to the major amount of addition sustained which is considered in the penalty proceedin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en taken cognizance of by the A.O. for the penal consequences. The attention has entirely been focussed on the fact that in the bill raised of Rs.5,08,000/-, Rs.4,68,470/- has been paid by cheque and balance due in cash is shown as Rs.39,530/- as such Rs.30,000/- as expenses incurred for gifts. 14. Ld.D.R. on the other hand heavily relied upon the facts available in the orders of the authorities below namely that the assessee had filed a return prior to the survey showing a very low income, as a result survey conducted on 14.12.2004 wherein the assessee as a result of documents impounded in the survey made a disclosure that it would surrender Rs.15 lakhs which the assessee chose to retract. Consequent to this assessment order u/s 143(3) order was passed. Addressing the major issue on the basis of which the penal action was levied it was his vehement stand that based on the order of the Tribunal that the A.O. had taken 100% of the receipts not disclosed in the books of accounts and impounded during the survey as the assessee's income. The Tribunal accepted the fact that some bonafide expenses necessarily have been incurred and the entire receipts could not be taken as assessee's in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... our consideration. In the absence of the same we find no infirmity in the conclusion arrived at as the claim cannot be said to be bonafide. As such penal action on this account is upheld. 16.1. Coming to the amount of Rs. 39,530/- based on the document available on record placed by the assessee in its paper book it is seen that it has not been agitated in the quantum proceedings and in the penalty proceedings the assessee has not able to offer any explanation as to how the amount was shown to have been received by cash. The ld.A.R. had tried to advance arguments that these are some petty expenses incurred by the assessee of Rs.30,000/- on behalf of its client which was reimbursed as such it is not assessee's income. On a perusal of the documents shown it is seen that the argument advanced is not correct on facts. The A.O. has not taken cognizance of bill raised of Rs.5,08,000/-. Break-up of which is Theme - Rs. 4,50,000/-; Designing - Rs.50,000/-; Art work - Rs.8,000/- and cheque payment is shown of Rs.4,68,470/-. Balance (Rs.5,08,000 - Rs.4,68,470) Rs. 39,530 as balance due in cash. 16.2. It is seen that the explanation offered is incorrect on facts. Being satisfied with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said income. The assessee in his explanation stated that it has been able to correlate the entries in the diary with the books of accounts and in the income book as such the said surrender on facts was not warranted. The A.O. considering the fact that there was still a difference of Rs. 1,60,000/- did not accept the reconciliation of the assessee and made an addition of Rs.15 lakhs. The said issue travelled to the Tribunal which vide para 40 internal page 18 of the order of the Tribunal held as in ITA 3031/Del/08 and C.O. 100/Del/09 for A.Y. 2006-07. 19. In the penalty proceedings the A.O. noted the background as under. "The assessee has primarily challenged the action of the CIT(A) in confirming the addition of Rs.1,63,000/- on account of discrepancy found in the course of survey conducted on the premises of the assessee on 23.12.2005. The assessee has not been able to produce any evidence before us to explain the discrepancy as pointed out by the A.O. The survey party as also the A.O. pointed out the discrepancy in regard to addition of Rs.1,63,000/- confirmed by the CIT(A). As the assessee has not been able to substantiate itself with material evidence, the findings of the CIT....