TaxTMI 
TaxTMI 
2015 (4) TMI 102
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.... the assessee. 3. The relevant facts of the case giving rise to this appeal are that a search and seizure action was conducted in the case of the assessee, his family members and the business concerns on September 4, 1997. Pursuant to the said action, block assessment under section 158BC of the Income-tax Act, 1961 (the Act) was passed by the Assessing Officer on September 30, 1999 determining the undisclosed income of the assessee at Rs. 53,52,237. The said order was set aside by the learned Commissioner of Income-tax (Appeals) vide his order dated March 28, 2001 passed under section 250 of the Act with a direction to the Assessing Officer to carry out certain enquiries and verifications. In the said order, the learned Commissioner of Income- tax (Appeals) accepted the stand of the assessee that certain undisclosed income assessed in his hands should be considered in the hands of the firm namely M/s. Thakoor Metal Industries. The order of the learned Commissioner of Income-tax (Appeals) dated March 28, 2001 was challenged by the assessee as well as by the Department before the Tribunal and the Tribunal vide its order dated August 31, 2005 allowed the appeal of the Department ho....
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....s taking into consideration the amounts spent by the assessee for personal as well as household expenses and other purposes such as repairs, renovation, purchase of personal effects, etc. It was submitted that the aggregate of amounts so spent by the assessee was only Rs. 10.80 lakhs and if the same was reduced from cash sale of scrap/machinery amounting to Rs. 24.92 lakhs and interest of Rs. 7.50 lakhs received in cash, cash available with the assessee at the time of search was Rs. 21.62 lakhs which was much more than the cash of Rs. 15,58,500 found during the course of search. It was contended that there was thus no justification in estimating the amount of cash sale of scrap/machinery over and above Rs. 24.92 lakhs as quantified by the Assessing Officer on the basis of seized documents and the estimation of Rs. 30 lakhs made by the Assessing Officer should be restricted to Rs. 24.92 lakhs. 4. The submissions made on behalf of the assessee were found acceptable by the learned Commissioner of Income-tax (Appeals). He noted that the undisclosed interest of Rs. 7.50 lakhs received in cash from Ramnit Chawda was stated to be distributed by the assessee amongst the partners of the ....
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....he finding that the amount of cash found at the time of search was unexplained to the extent of Rs. 5,28,500." 6. Learned counsel for the assessee, at the outset, raised a preliminary objection by submitting that the learned Commissioner of Income-tax (Appeals) has surpassed the direction given by the Tribunal and has gone beyond the scope of the order of the Tribunal setting aside the issue relating to quantification of undisclosed income of the assessee. He submitted that the learned Commissioner of Income-tax (Appeals) ought to have restricted himself the quantification of undisclosed income of the assessee on account of cash sale of scrap/machinery as per the direction of the Tribunal but he has also taken into account the quantification of undisclosed cash found during the course of search which is beyond the scope of the order of the Tribunal setting aside the matter to the learned Commissioner of Income-tax (Appeals). He contended that the assessee therefore has now filed an additional ground challenging the action of the learned Commissioner of Income-tax (Appeals) on this issue and requested that the same may be admitted. 7. Without prejudice to his preliminary objec....
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.... quantified by the Assessing Officer warranting any further relief to the assessee. 9. We have considered the rival submissions and also perused the relevant material on record. It is observed that while disposing of the miscellaneous application filed by the assessee vide its order dated July 17, 2006, the matter was sent back by the Tribunal to the file of the learned Commissioner of Income-tax (Appeals) for the limited purpose of correct determination of quantum of addition on account of unexplained cash/assets/interests in the hands of the assessee as an individual vide paragraph 5 which reads as under : "5. Factual background of the case has already been narrated above while disposing of the miscellaneous application filed by the assessee. As mentioned above all the assessees had challenged the addition of unexplained cash, asset and interest in their individual hands. The learned Commissioner of Income-tax (Appeals) decided the issue in favour of the assessee by holding that the unexplained cash/asset/ interest belonged to the firm in which they were partners. Therefore, he did no....
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....e as originally raised in the appeal of the assessee. We therefore admit the said additional ground and proceed to decide the same on merit along with the original ground as modified by the assessee. 11. It is observed that the quantum of unexplained cash found at the time of search as well as the total undisclosed income of the assessee has been determined by the learned Commissioner of Income-tax (Appeals) at Rs. 5,28,500 and Rs. 46,04,348 respectively on the basis of the following working given on page 6 of his impugned order : (1) Cash sale of scrap/machinery 24.92 (2) Cash interest from Ramnit Chawda 7.50 32.42 32.42 Less outgoings (a) Personal expenditure including. renovation and repairs as per seized documents 10.80 (b) Amount distributed to partners (excluding appellant) 7.50 (c) Amount given to Dada 3.82 22.12 10.30 It is thus evident that the cash found during the course of search in the premises of the appellant to the extent of Rs. 10.30 lakhs gets accounted for from cash sale of scrap/....
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....rect undisclosed income as per the direction of the Tribunal as rightly held by the learned Commissioner of Income-tax (Appeals). We therefore find no infirmity in the impugned order of the learned Commissioner of Income- tax (Appeals) on this issue and upholding the same, we dismiss the appeal of the assessee filed in the case of Mr. Vasant B. Thakoor in I.T. (SS)A. No. 60/Mum/2009. 12. Now we shall take up the appeal filed by Mr. Madhukar B. Thakoor in I.T. (SS)A. No. 77/Mum/2009 which is directed against the order of the learned Commissioner of Income-tax (Appeals)-XXXII, Mumbai dated April 23, 2009. 13. The solitary issue involved in this appeal relates to the quantification of exact amount of undisclosed income of the assessee on account of sale of scrap/machinery. 14. In this case, the issue involved as well as all the material facts relevant thereto are almost similar to that of the case of Mr. Vasant Thakoor inasmuch as after the initial round of litigation arising from the block assessment order passed by the Assessing Officer in pursuance of the search and seizure operation, a fresh order was passed by the Assessing Officer under section 158BC read with sections ....
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....Assessing Officer in this regard is therefore upheld to the extent of Rs. 4,94,300 and the balance of Rs. 7,55,700 is deleted. The Assessing Officer is directed accordingly. The aggregate undisclosed income of the appellant for block period would therefore be Rs. 14,20,860." The learned Commissioner of Income-tax (Appeals) thus held that the undisclosed income of the assessee from sale of scrap/machinery should be estimated at Rs. 4,94,300 as against the estimation of Rs. 12,50,000 made by the Assessing Officer and allowed a relief of Rs. 7,55,700 to the assessee. Still aggrieved, the assessee has preferred this appeal before the Tribunal. 15. We have heard the arguments of both sides and also perused the relevant material available on record. Learned counsel for the assessee has not made any submission on the issue of quantification of undisclosed income made by the learned Commissioner of Income-tax (Appeals) on merit. He however has raised the similar preliminary objection as raised in the case of Mr. Vasant Thakoor that the learned Commissioner of Income- tax (Appeals) has gone beyond the scope of order of the Tribunal in determining the quantum of addition on account of ....
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....nfirmation of the above three additions by the Tribunal vide its order dated August 31, 2005 passed in the quantum proceedings in I. T. A. No. 161/Mum/2001, notice was issued by the Assessing Officer requiring the assessee to show cause as to why penalty under section 158BFA(2) should not be imposed in respect of all the three additions made to his undisclosed income. In reply, the following submissions were made by the assessee in writing vide his letter dated January 21, 2006 : "1. At the outset, it bears mention that in view of the contemplated action of fling appeal with the High Court of Mumbai against the order of the Tribunal, it will be appreciated that the status of assessed income has not reached the stage of finality as yet. We will file with you a copy of the appeal papers after filing the appeal with the High Court of Mumbai. 2. From the aforesaid sequence of events, it will be noticed by you that the quantum of assessed income has undergone variation at many a stage of the proceedings. It is manifest that the authorities hav....
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....of the Commissioner of Income-tax (Appeals). We, therefore, submit that this is a clear case where the additions have been subjected to conflicting process of adjudication at the hands of appellate and administrative authorities. It is our submission that such contentious additions cannot be subject to levy of penalty under section 158BFA of the Act." 18. After considering the above submissions made by the assessee, the Assessing Officer found that there was nothing new in the said submissions and what was contained therein was merely reiteration of the submissions made during the course of quantum proceedings which was already considered by him as well as by the appellate authority. He therefore rejected the said submission treating the same as unacceptable and imposed penalty of Rs. 11,14,801 under section 158BFA(2) of the Act being 100 per cent. of tax sought to be evaded by the assessee in respect of additions made to the undisclosed income of the assessee. 19. The penalty imposed by the Assessing Officer under section 158BFA(2) was challenged by the assessee in an appeal filed before the learned Commissioner of Income-tax (Appeals). It was submitted, at the outset, on be....
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....indings of the search and the statement of the assessee recorded under section 132(4) of the Act were sufficient to establish the undisclosed income of the assessee on account of interest income received in cash from builders as well as unexplained fixed deposits belonging to him. He also noted that in his statement recorded during the course of search, the assessee had admitted his undisclosed income at Rs. 15 lakhs consisting of cash receipt of interest and fixed deposits and the retraction of the said statement made by the assessee after a period of about two years was a result of an afterthought with an intention to complicate this simple issue. He held that although the assessee had made an attempt to contend that the undisclosed income accepted by him in the search was actually belonging to the partnership firm, the said contention was not finally accepted by the Tribunal. The learned Commissioner of Income-tax (Appeals) held that keeping in view of these facts and circumstances of the case, penalty under section 158BFA(2) was leviable at least in respect of two additions of Rs. 4,20,000 made on account of unexplained fixed deposits and Rs. 7,38,000 made on account of interes....
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....e submissions made in this regard on behalf of the assessee before the learned Commissioner of Income-tax (Appeals) which have now been reiterated before the Tribunal, are already considered by the learned Commissioner of Income-tax (Appeals) and the same have been rejected by him by passing a well discussed and a well reasoned order. He also contended that the additions made to the undisclosed income of the assessee having been finally confirmed by the Tribunal in the quantum proceedings, the penalty provisions of section 158BFA(2) are clearly attracted. In support of this contention, he relied on the decision of the hon'ble Gujarat High Court in the case of Kandoi Bhogilal Mulchand v. Deputy CIT [2012] 341 ITR 271 (Guj). He therefore relied strongly on the impugned order of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2). 24. We have considered the rival submissions and also perused the relevant material on record. As regards the contention raised by learned counsel for the assessee relying on the decision of the Tribunal in the case of Nayan Builders and Developers P. Ltd. that the substantia....
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....ash thus have been decided against the assessee by the Tribunal whereby the different stands taken by the assessee as an afterthought with an intention to create a dispute have not been accepted and the explanation/submission made in this regard by the assessee has been rejected after having found the same to be unsatisfactory/unacceptable. During the course of penalty proceedings, the assessee again has made an attempt to reiterate the same submissions which have already been rejected in the quantum proceedings by the Tribunal. Moreover, there is nothing new brought on record by the assessee to support and substantiate his explanation or to establish satisfactorily that the said explanation is bona fide. In the case of Kandoi Bhogilal Mulchand v. Deputy CIT [2012] 341 ITR 271 (Guj) cited by the learned Departmental representative, the hon'ble Gujarat High Court has held that the income which is detected as a result of search operation under section 132 is undisclosed income of the assessee within the meaning of section 158BFA(2) of the Act and penalty provision under section 158BFA(2) would arise when the Assessing Officer has assessed the income in the block period in excess ....
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....t of interest received in cash from the builder. 28. As regards the penalty imposed in respect of addition made on account of unexplained jewellery amounting to Rs. 41,305, it is observed that out of the total jewellery worth Rs. 6,98,721 found during the course of search, jewellery worth Rs. 24,920 was found to be already declared by the assessee in his wealth-tax return. The same therefore was treated by the Assessing Officer as explained. As regards the balance jewellery, the assessee offered the same to the extent of Rs. 2,66,176 in his return of income accepting the same as unexplained and the balance jewellery worth to Rs. 4,37,725 was explained by the assessee as belongings of his relatives. This explanation of the assessee was not accepted by the Assessing Officer and he made an addition of Rs. 4,37,725 to the undisclosed income of the assessee on account of unexplained jewellery. As noted by the learned Commissioner of Income-tax (Appeals) in the penalty order passed under section 158BFA(2) of the Act, the said addition has been restricted by the learned Commissioner of Income-tax (Appeals) to only Rs. 41,305 vide his appellate order dated November 25, 2003 passed in th....
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....assessee on account of cash/assets/interests. Accordingly, the undisclosed income of the assessee on account of interest received in cash from builder was quantified by the learned Commissioner of Income-tax (Appeals) at the same amount of Rs. 7,50,000 as computed by the Assessing Officer. He, however, restricted the addition of Rs. 12,50,000 made on account of cash sale of scrap/machinery to Rs. 4,94,300 and sustained the penalty imposed by the Assessing Officer under section 158BFA(2) of the Act to the extent it was in respect of the said additions as was done in the case of late Shri Balchandra B. Thakoor, Legal heir Mrs. Sunita Samir Sao and Mr. Mohan B. Thakoor, the assessees belonging to the same group. 30. At the time of hearing before us, the learned representatives of both sides have reiterated the same submissions as made in the case of Shri Balchandra B. Thakoor, legal heir Mrs. Sunita Samir Sao and Mr. Mohan B. Thakoor which have already been considered by us and on such consideration, the action of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2) of the Act has been upheld by us in the c....