TaxTMI 
TaxTMI 
2022 (10) TMI 603
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....that the matter pertaining to Shri Mangi Lal Kandoi in ITA no. 319/JPR/2022 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are exactly identical except the difference in the amount of levy of penalty in other assessment year. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 319/JPR/2022 is taken as a lead case. 4. Based on the above arguments we have also seen that for all three appeals grounds are similar, facts are similar and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds and arguments from the folder in ITA No. 319/JPR/2022. 5. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 319/JPR/2022 before us on the following grounds; "1. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the learned AO in imposing the penalty u/s 271(1....
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....42(1)/143(2) along with questionnaire was issued on 11.11.2014. Meanwhile, the assessee filed an application before the Hon'ble Income Tax Settlement Commission, New Delhi [ here in after referred as ITSC ] on 04.03.2015. Various reports including Rule-9 report, reply to Counter Comments under rule 9A and Verification Report were also filed before the Hon'ble ITSC from time to time during the pendency of settlement proceedings, The Hon'ble ITSC, New Delhi passed order u/s 245D(4) of the IT Act rejecting the assessee's application vide S.A. No. RJ/JP-51/2014-15/40-IT on 19.09.2016 stating that "Considering the facts of the case the issues emanating therefrom as discussed in the foregoing pages, and judicial opinion as narrated in the earlier para, we are of the considered opinion that the appellants have failed to make neither a fair and true disclosure, nor given any sound basis for explaining the manner of earning such undisclosed income and working out such income. Hence, the mandatary conditions of section 245C remain unfulfilled. As such, the Commissioner if unable to provide for the terms of settlement as required u/s. 245D(6). Accordingly, the application in b....
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.... the appellant are being discussed and decided as under: (i) I have perused the order of the AO imposing penalty and detailed submissions made by the Ld. AR including the judgements cited in this regard. The fact remains that during the course of search, the appellant has disclosed Rs. 12.41 Lakh on account of entries made in Annexure A-1, Page 1 & 2 found from his residence, being undisclosed. loans and advances and the same was confirmed by him in his statement recorded u/s 13214) of the Act. The AO observed that the appellant has failed to point out the duplication of the amount of Rs. 12.41 Lakhs determined from the seized documents at Annexure A-1, Page 1 & 2 with the pocket diaries at AS Exhibit-4, 5 & 6 as contended by the appellant. Further it was observed that such duplication was neither pointed out during the search proceedings and in the statement recorded u/s 132(4) and also in the Affidavit dt. 30.07.2012. The AO further observed that both Annexure A-1 & Annexure AS separate and unrelated documents which have been separately seized and therefore there was no correlation between the two and the appellant himself failed to point out the alleged correlation. Fur....
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.... not only added by the AO in the assessment order but was also confirmed by Ld. CITA). It is observed that on further appeal, the Hon'ble ITAT vide their order in ITA No. 1309/JP/2018 dated 07.09.2020 has also confirmed the aforesaid addition in the current year but has given the set off of this addition in Assessment Year 2011-12 by holding that this amount was available with the appellant for making advance in subsequent years. These findings are given in para 67 on page no. 75 of the order of the Hon'ble ITAT wherein the Hon'ble ITAT has allowed the set off in assessment year 2011-12. Thus, the fact remains that an addition of Rs.6,00,000/- was made by the AO on account of undisclosed advances which has been confirmed by the Ld. CIT(A). This addition has been further confirmed by the Hon'ble ITAT which implies that the appellant failed to explain the snare of undisclosed advances of Rs. 6,00,000/- Thus the case of the appellant is squarely covered under the provisions of sec. 27(1)(c) of the Act. (iv) It is in this background when the appellant himself admitted the undisclosed. income, that this amount was added by the AO in the quantum proceedings as un....
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....icable settlement with the income tax department. Statute does not recognize those types of defences under the Explanation 1 to section 271/1еk 5 It is trite law that the voluntary disclosure does not free the assessee from the mischief of penal proceedings under section 27111c). The law does not provide that when an assessee makes a voluntary disclosure of his concealed Income, he has to be absolved from penalty: 6) The surrender of income in this case was not voluntary in the sense that the offer of surrender was made in view of detection made by the Assessing Officer in the search conducted in the sister concern of the assessee; 7) The Assessing Officer had to satisfy whether the penalty proceedings were initiate or not during the course of the assessment proceedings and the Assessing Officer tous not required to record his satisfaction in a particular manner or reduce it into writing. Thus, there was no illegality in action of department in initiating penalty proceedings. Accordingly, the contentions of voluntary surrender to buy peace and avoid litigation etc cannot be considered as defence for non-levy of penalty under section 271(1)(....
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.... penalty because he agreed to the addition at the time of assessment. By offering the income in assessment proceedings, it is clear that the assesse himself admits that the same was taxable income. (xii) In view of the facts and circumstances of the case and discussion here in above, the contentions and submissions of the appellant are not found to be acceptable and therefore they are rejected and the penalty of Rs. 1,85,400/- imposed by the AO u/s 271(1((c) is confirmed. Accordingly, the Ground of Appeal No. 4 is treated as dismissed. 11. As the assessee not finding favour with the order of the ld. CIT(A), has filed an appeal before this tribunal. In this appellant proceeding the ld. AR of the assessee submitted following written submission to support the various grounds raised before us. The written submission filed by the assessee is reiterated here in below: Ground No. 1 to 4:- 1. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the Learned AO in imposing the penalty u/s 271(1)(c) of the Income Tax Act, 1961. 2. In the facts and circumstances of the case the learned CIT(A) has erred in con....
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....Learned Assessing Officer has made the addition of Rs. 6,00,000/- in the hands of the asseseee in view of an affidavit filed by the assessee on 13.09.2017 that additions if any are required in respect of this matter the same may be made in the hands of the assesseee. However, the Learned Assessing Officer could not be ignorant of the position of law. Both the Learned Assessing Officer and for that matter the assessee cannot change the position of law by mutually agreeing on some issues. It is settled position of law that what is otherwise not taxable cannot become taxable because of the admission of the assessee nor can there be any waiver of the right otherwise admissible to the assessee in law. The chargeability of income is not dependent on the admission of or waiver by the assessee. Chargeability is dependent on the charging section of the Income Tax Act which needs to the strictly construed and followed. CIT vs. Bhaskar Mittar 262 ITR 638 (Kol) The position of law being so no addition could have been made in the hands of the assessee. But since the assessee has accepted, therefore the addition was made in his hand and finally sustained. The learned AO has ini....
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.... engaged by the assessee for purposes of appearance before the Settlement Commission. Actually the annexure A-1 page no. 3, 4, & 5 contains the details of receipt of loan which the assessee has taken from the various parties in cash for his business requirements. But due to technical difficulties these unsecured loans taken by the assessee has been shown as loan given by the assessee. Actually these are not income or assets of the assessee but these are the liabilities of the assessee on which the assessee has paid taxes to over come with the technical and legal difficulties and purchase peace of mind and avoid unnecessary prolonged litigation. The counsel has been changed as the assessee did not find favour with the scheme of the counsel. The previous counsel had also wrongly pleaded before the Settlement Commission regarding the other papers that these indicated loans advanced by the assessee whereas these are the loan taken by the assessee. The position being so it is submitted that assessee may not be punished for the wrong doing of the counsel because he has already paid the taxes and penalty should not be levied in such circumstances. The observations of the Learned ....
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....#39; Third Member Bench (2001 73 TTJ (Ahd) 171. (v) CIT vs Bengal Galvanising Works (1987) 165 ITR 249 (Cal) (vi) Hindustan Steel Ltd. vs State of Orissa (1972) 83 ITR 26 (SC) 4. Other favourable case laws - (i) National Textiles vs CIT 249 ITR 125 (Guj.) It is not enough for the purpose of penalty that the amount in question has been assessed as income (ii) S.P.Goel vs DCIT 82 ITD 85 (Bom) Mere entry on a loose sheet of paper does not indicate undisclosed income unless circumstantial evidence in the form of extra cash, jewellery or investment outside books is found. (iii) Ashwini Kumar vs ITO 39 ITD 183 (Del) In the case of dumb document, revenue should collect necessary evidence that the figures represent incomes earned by the assessee. (iv) JCIT vs West Bengal Trading Agency, IT(SS) NO.49(Cal) of 2001 There has to be direct or circumstantial material to establish that the intention expressed in the seized document/books has actually been implemented (vide para 8). (v) P.R.Patel v. Dy.CIT 78 ITD 51 (TBOM) No addition can be made on the basis of a seized documents w....
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....edings stand on different footing and each and every disallowance/addition in the former does not ipso facto attract the latter penal provision. The Learned CIT(A) has not given any new finding. He has just repeated the plea taken by the Learned AO which has been controverted by the assessee before the Learned CIT(A). Merely because the assessee has surrendered an amount, which was seized from him after initial explanation, that it belonged to his son/relative, penalty cannot be avoided, since the initial explanation was prima facie unbelievable, so that the surrender of such income can only be treated as involuntary. In view of the Explanation deeming concealment, the assessee has a duty to offer an explanation. But where an explanation was offered and found to be unreliable, penalty becomes exigible. [CIT v Mohd. Mohtram Farooqui (2003) 259 ITR 132 (Raj)]. Therefore, your honour is requested to delete the penalty imposed by the learned AO and confirmed by the Learned CIT(A). Ground No. 6 - The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing. Not pressed. Your Honor is ....
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....ion submitted that when there is no income which is corroborated with the relevant asset found in the search proceeding merely the assessee has surrendered the amount the levy of the penalty is not justified. He has further submitted that the decision relied upon by ld. CIT(A) all are on different facts and therefore, the facts of the case relied upon and the facts of the assessee's case are different the ratio of the decision relied upon are not applicable in the present case. The revenue has not controverted that the fact that this paper is belonging to the assessee and not of Shri Anand Singhal as claimed by the assessee. The ld. AR of the assessee further submitted that the department has also not proved that the amount recorded in the dump document is the loan given or taken and in both the situation the other party is not referred or examined so far by the revenue and thus this unilateral transaction and that too is not related to assessee cannot be considered the concealment of income for levy of penalty. 13. The ld. DR is heard who has relied on the findings of the lower authorities and vehemently argued that the assessee has not shown the income in the return of income ....
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.....6,00,000/- on account of the alleged loan given which is in fact sustained in the hands of the assessee in view of an affidavit filed by the assessee on 13.09.2017 stating that the addition if any are required in respect of this matter the same may be made in the hands of the assessee. 16. Therefore, the ld. AR of the assessee as regarding the addition made on account of undisclosed advances submitted that the advance is related to Shri Anand Singhal and Shri Subhaji, it has not relation with the assessee it did not contain name of the assessee. The papers could not be linked with the business of the assessee. Further these papers do not have the signature of the assessee. In view of this it not correct on the part of the Learned Assessing Officer to make any addition with reference to these papers and even if made the same made it is not liable for any penalty as it not undisclosed income of the assessee or concealed income of the assessee. The aforesaid facts established that these page is rough, dump and related to the assessee. Thus, based on that facts on record no addition is warranted on the basis of the said seized paper. But the assessee agreed to pay tax to avoid prol....
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.... needs to strictly constructed as decided by the Calcutta high court in the case of CIT Vs. Bhaskar Mittar 262 ITR 638 (Kol). Thus, in the present case not addition could have been made in the hands of the assessee. But assessee has accepted therefore, the same is sustained. Thus, the basic condition to have the income is not evidently or credible proved by the revenue with cogent material which prove that the said income is really the income of the assessee merely admission without any cogent material the same cannot be termed as concealed income lead to penalty u/s. 271(1)(c) of the Act. Both the statement relied upon by the revenue was recorded under duress and pressure, otherwise the entry is not linked with the affairs of the assessee. 18. The ld. AR Vehemently argued that the Learned Assessing Officer has not made any post search enquiries so as to link the entry with the business of the assessee. No effort was made even to examine the person who had taken the loan from the assessee nor any action considered in his hands this parties were initiated; all these suggest that the revenue is taking the benefit of the voluntary surrender made by the assessee and ld. AO acted hav....
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....urther appeal, the Hon'ble ITAT vide their order in ITA No. 1309/JP/2018 dated 07.09.2020 has also confirmed the aforesaid addition in the current year but has given the set off of this addition in Assessment Year 2011-12 by holding that this amount was available with the appellant for making advance in subsequent years. These findings are given in para 67 on page no. 75 of the order of the Hon'ble ITAT wherein the Hon'ble ITAT has allowed the set off in assessment year 2011-12. Thus, the fact remains that an addition of Rs.6,00,000/- was made by the AO on account of undisclosed advances which has been confirmed by the Ld. CIT(A). This addition has been further confirmed by the Hon'ble ITAT which implies that the appellant failed to explain the snare of undisclosed advances of Rs. 6,00,000/- Thus the case of the appellant is squarely covered under the provisions of sec. 27(1)(c) of the Act." 19. Moreover, additions on account of advances to person found noted here and there on various papers deserved to be segregated and peak amount required to be added. No such exercise was done by the Learned Assessing Officer nor an opportunity was allowed to the assessee for ....
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....ment. On the contrary submitted that the surrender was not voluntary and the facts placed on record is not investigated by the revenue. So, when an explanation was offered and found to be unreliable, penalty becomes exigible [ CIT Vs. Mohd. Mohtram Farroqui -2003 259 ITR 132(Raj) ]. In addition the ld. AR of the assessee he has relied upon the various decision cited and relevant important finding of the court i.e. in case of National Textiles vs CIT 249 ITR 125 (Guj.) "It is not enough for the purpose of penalty that the amount in question has been assessed as income", in the case of S.P.Goel vs DCIT 82 ITD 85 (Bom) "Mere entry on a loose sheet of paper does not indicate undisclosed income unless circumstantial evidence in the form of extra cash, jewellery or investment outside books is found", in the case of Ashwini Kumar vs ITO 39 ITD 183 (Del) " In the case of dumb document, revenue should collect necessary evidence that the figures represent incomes earned by the assessee." In the case of JCIT vs West Bengal Trading Agency, IT(SS) NO.49(Cal) of 2001 "There has to be direct or circumstantial material to establish that the intention expressed in the seized document/books has actu....
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....‚ आप कà¥à¤¯à¤¾ जानते है। उतà¥à¤¤à¤®à¥à¤ मैने उपरोकà¥à¤¤ दोनो पृषà¥à¤ देख लिठहै शà¥à¤°à¥€ आननà¥à¤¦ वियल जो कि यहां उपसà¥à¤¥à¤¿à¤¤ है उनà¥à¤¹à¥‹à¤‚ने बताया कि ये दोनो पेज Mrigal 25742 ३. नरà¥à¤• हपà¥à¤¤ बजे पृषà¥à¤Ÿ ।षà¥à¤Ÿ 1,91,200/- (শষकी à¦à§€à¦¨ सà¥à¤µ पà¥à¤°à¤¸à¥à¤¤ 50,000/- के था लीन à¤à¤µà¤‚ दिठहà¥à¤ तथा दरà¥à¤›à¤¾ नहीं है पà¥à¤¸ 2 पà¤....
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....¤‚ पृषà¥à¤ देख लिठहैं, शà¥à¤°à¥€ आननà¥à¤¦ सिंघल जो कि यहां उपसà¥à¤¥à¤¿à¤¤ हैं उनà¥à¤¹à¥‹à¤¨à¥‡à¤‚ बताया कि ये दोनों पेज इनके हसà¥à¤¤à¤²à¥‡à¤– में हैं पृषà¥à¤ 1 पर 1,91,200 /- रूपये की पà¥à¤°à¤¾à¤ªà¥à¤¤à¤¿ à¤à¤µà¤‚ पृषà¥à¤ à¤à¤• के पीछे 2 पर 4,50,000/- रूपये Loan दिये हà¥à¤ तथा पृषà¥à¤ 2 पर 6,00,000/- के दिये हà¥à¤ Loan लिखे हà¥à¤ हैं। जो à....