TaxTMI 
TaxTMI 
2019 (4) TMI 693
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....15,59,239/-. The main addition made was of an amount of Rs. 81.60 lacs on account of investment in immovable property being land admeasuring 30.5 cents at Chembukavu Thrissur. The Assessing Officer held this investment as made out of its undisclosed income of the assessee. 2.1 The said land had been purchased by an agreement dated 24/04/2007 for a recorded consideration of Rs. 18.30 lacs. However, during the search, one of the seized documents viz. page no. 10 of SJ-3 seized from the residence of Shri Babu John, Managing Partner of the firm, contained notings that indicated that the actual cost of purchase of the said land at Chembukavu was Rs. 99.90 lakhs. In addition to this fact, Shri Babu John admitted in his statement recorded u/s. 132(4), that the purchase consideration of the land at Chembukavu was indeed Rs. 99.90 lakhs. The notings on the seized paper were also deciphered by him. The A.O. pointed this to the assessee's authorised representative but as he had no convincing and satisfactory explanation, the difference between 99.90 lakhs and 18.30 lakhs amounting to Rs. 81.60 lakhs was added to the total income as assessee's investment out of undisclosed income. 2.....
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....s: " With reference to the above, we may be permitted to submit that these two persons namely A.A. Davis and P. T. Pavunny had actually invested 1/3rd each in the property at Chembukavu and this fact is available from the seized records itself. However we do not have any other documentary proof to establish that these persons had contributed to the purchase of the said property. In view of the above, we have no objection against these confirmation letters. Please note that the above acceptance does not mean that the entire investment had been met by us. However in order to avoid prolonged litigation and to purchase peace with the department the issue is agreed to be settled as such. This may,' kindly be taken into account while considering the penalty proceedings, if any, that may be initiated against us. " 4,2 Thereafter, the A.O passed order dated 25/03/2014 u/s 143(3) r.w.s 254 of the Income Tax Act,1961. In this order he considered the letters filed by the two other persons and the submission filed by the assessee and completed the reassessment by retaining the addition of Rs. 81.60 lakhs on account of undisclosed investment. The A.O also initiated penalty u/s 271(l)(c) o....
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....cealment of income within the meaning of Explanation to section 271.(Devki Nandan v. Assessing Officer(2006) 150 Taxman 44) 6. Considering the above explanations it is humbly requested that the proposed penalty proceedings may kindly be dropped. 5. After considering the submissions, the Assessing Officer observed that during the course of search, documentary evidence of unaccounted payment in cash towards purchase of land was found and seized. The Assessing Officer referred to Section 292C of the Income Tax Act which provides for inter alia a presumption that where books of accounts or documents etc are found in the possession or control of any person in the course of search u/s. 132, it may, in any proceeding under the Income Tax Act, be presumed - a) that such books of account, other document etc belong to that person b) that the contents of such books of account and other documents are true and c) that it is signed / written by such person where it is purported to be so signed and written. 5.1 In this regard, the Assessing Officer noticed that there had not been any rebuttal of the presumption by the assessee. The Managing Partner of the firm Shri Babu John did retract his....
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...., it again concealed the particulars of such income by not offering it in the return filed by him. Though it was contended that the assessee had co-operated with the department during the assessment proceedings and furnished all the information asked for, according to the Assessing Officer, the assessee retracted the admission of income and had failed to disclose the true facts relating to the transaction. After the matter was set aside by the ITAT to the file of the A.O to examine whether there was investment by two persons other than the assessee in purchasing the land, the assessee's authorised representative had himself produced the two other persons viz. Shri A.A. Davis and Shri P.T. Pavunny and they submitted letters denying their role in the transaction. However, considering the notings on the seized documents, the Assessing Officer observed that one of the possibility is that these persons also contributed to the purchase and have been subsequently repaid or agreed to be repaid in cash by the assessee. The Assessing Officer observed that when the two persons introduced by the assessee's representative had submitted that they did not make any investment in the purch....
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....rge of concealment of particulars of income is also proved in terms of the Explanation 1 to section 271(1)(c) of the Act. 5.6. In view of the above discussion of the facts and provisions of law, the Assessing Officer was satisfied that this is a fit case for imposing penalty u/s 271(l)(c) as the assessee had concealed the particulars of its income. The minimum penalty @ 100% of the tax sought to be evaded works at Rs. 27,73,587/-and the maximum penalty @ 300% works out to Rs. 83,20,761/-. Considering the absence of any clear mitigating factors, the Assessing Officer impoed penalty u/s.271(l)(c) of an amount of Rs. 30,00,000/- (Rupees Thirty lakhs only) upon the assessee and direct the same shall be paid by the assessee. 6. After going through the penalty order and facts of this case, the CIT(A) observed that it is a settled legal position now that assessment proceedings and penalty proceedings are separate proceedings. According to the CIT(A), every addition made or accepted by the assessee does not automatically mean that the assessee has concealed his income or has furnished inaccurate particulars of income. In the instant case, the CIT(A) observed that the addition was based o....
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....on in the hands of Mr. Davis and Mr. Pavunny, in spite of seized material being found. The assessee accepted the addition, because the document was found in his premises and to avoid prolonged litigation. In view of these facts and clear content of the seized material, the CIT(A) levied penalty only at 1/3rd of the total amount, as that was the amount, which was conclusively proved to be assessee's concealed income. Thus, out of the total penalty levied of Rs. 30,00,000/-, penalty of Rs. 20,00,000/- was deleted and penalty of Rs. 10,00,000/- was confirmed. 7. Against this, both assessee as well as Revenue are in appeal before us. 8. We have heard the rival contentions and perused the record. The Assessing Officer made the addition of Rs. 81.60 lakhs on account of undisclosed investment in purchase of property admeasuring 27 cents at Chembukavu, Thrissur. The property was purchased in the name of the assessee as follows: 1/3 C 1/3 D 1/3 P 27 cent @ 3,70,000 99,90,000 Commission 1,00,000 1,00,90,000 Regn. Charge 2,96,100 1,03,86,100 Agreement Advance 5,00,000 98,86,100 The contents of the seized document showed that money w....