2011 (6) TMI 1039

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....s admitted that cash receipts recorded in the diary A-12 were in the nature of on money receipts and payments which were not reflected in the regular books. As regards diary A-11, it was submitted that the transactions were fully recorded in the books. The receipts mentioned in the diary A-12 were declared as undisclosed income in the name of various concerns of "Earth Group". 3. During the assessment proceedings, the Assessing Officer noted that in seven cases the amount disclosed in the diary A-11 were more than the amount disclosed in the books of account. The difference was added by the Assessing Officer to the total income. Details regarding these seven transactions were as under :- S. No. Flat No. Sale value as per seized diary A-11 Sale value as per book of account Sale Value considered by Assessing Officer Addition 1. 1001 4000000 3475000 4000000 525000 2. 802 950000 - 950000 950000 3. 1203 4200000 3250000 4200000 950000 4. 1302 5451111 5411111 5451111 40000 5. 1401 4000000 3800000 4000000 200000 6. 1402 & 1403 8700000 8100000 87000....

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....ck. The sum of Rs.3,50,750/- was recorded on the left side which represented the amount returned and therefore no addition was required. The Assessing Officer however did not accept the explanation. It was observed by him that sales recorded in diary were Rs.21,15,100/- but in the regular books, the amount recorded was Rs.17,64,350/-. The assessee had also not objected to the addition made by the Assessing Officer as no appeal had been filed before the CIT(A). He therefore, rejected the explanation. In relation to flat 1501, the assessee submitted that the flat had been booked by the purchaser in June 2004 and he had paid a sum of Rs.54,50,000/- in cash up to February 2005 and Rs.1.00 lacs in cheque in January, 2005. Due to loss in business, he was unable to pay balance amount and cancelled the deal and the amounts were returned both in cash and in cheque and the flat was vacant till date. Similar explanation was given in relation to flat No.1801 and 1802 that the booking had been cancelled and the amounts had been cancelled and the amounts had been returned. It was also submitted that the assessee had offered income of Rs.1.00 lacs in the return of income to buy peace of mind. It ....

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....Similarly it was further submitted that deal in addition to flat No.1801 and 1802 had also been cancelled. As regards flat No.1802, it was further submitted that the same had been allotted to a rehabilitated tenant free of cost. The ld. AR for the assessee further argued that the assessee has evidence to support the claim that the flat No.1501 and 1801 had been shown in the stock in the subsequent years and were sold later to other parties. It was requested that the additional evidence filed in the paper book-2 which contains the following documents should be admitted. i) Statement of flats held as on 31.3.2007 as given before Assessing Officer in Assessment Year 2007-08. ii) Copy of sale agreement dated 25.3.2009 regarding sale of flat No.1501 to Shri C. T. Bhansali and Smt. P.C. Bhansali for a consideration of Rs.1,08,00,000/- placed at page 12 to 14 of the paper book-2. iii) Copy of the agreement of sale dated 25.3.2009 in relation to flat No.1801 sold to Mrs. Savita Mahendra Jain and Shri Mahindra D. Jain for a consideration of Rs.1,34,40,000/- placed at pages 15 to 17 of the paper book-2. iv) Copy of assessment order dated 29.10.2010 for Ass....

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....dmitted. 8. We have perused the records and considered the rival contentions carefully. The dispute is regarding levy of penalty under section 271(1)(c). The penalty has been levied in respect of additions made by the Assessing Officer based on the material found during the search. During the search, a diary namely A-12 was seized which showed unaccounted cash transactions in relation to dealings in properties. The assessee at the time of search admitted that these cash transactions represented unaccounted income not disclosed in the books of account. Based on these transactions the undisclosed income had been declared in the name of different members of the group including the assessee. However, the Assessing Officer at the time of assessment found that income in respect of five properties as mentioned in the table in para-3 earlier, had not been fully disclosed. The assessee could not give any satisfactory explanation and Assessing Officer made an addition of Rs.2,00,92,546/- on this account and also initiated penalty proceedings and levied penalty for concealment of income under section 271(1)(c). 8.1. It has been argued on behalf of the assessee that a sum of Rs.3,50,750/....

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....ich the assessee is free to place further material to substantiate the claim that there was no concealment. The assessee in the present case filed copy of ledger dated 19.12.2005 before the Assessing Officer to show that a sum of Rs.1.00 lacs received by cheque on 29.1.2005 from Reena Arvind Goyal for booking of flat 1501 had been returned by cheque on 19.12.2005. This was filed at the time of penalty proceedings. Subsequently as mentioned earlier the assessee has also filed additional evidences before us to substantiate the claim that booking in respect of flat 1501 and 1801/1802 had been cancelled and flats remained with the assessee. We have now to evaluate the case of penalty considering the facts and circumstances of the case under the provisions of Explanation 271(1)(c) which provides that in relation to any addition in the assessment in case the assessee is not able to substantiate an explanation and is also not able to prove that the explanation is bonafide, it would amount to deemed concealment of income. 8.3. We now take up the individual items of additions. In relation to flat No.501, the explanation of the assessee is that a sum of Rs.3,50,060/- written on the left s....

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....2 to 14 and pages 11 to 17 of the paper book -II and these pages do not give the description of the property and therefore, it is not possible to conclude that the agreements relate to flat Nos.1501 and 1801. Secondly it is also noted that the amounts receivable in respect of the so called sale of flat No.1501 and 1801 has been shown in the list of sundry debtors as receivable on 31.3.2008 at pages 34- 35 of the paper book-II. In case, the flats were sold by agreement dated 25.3.2009, it is not clear as to how sale proceedings would appear in the balance sheet as on 31.3.2008. The assessee has also submitted copy of assessment orders for 2007-08 and 2008-09, but we find that there is no finding by the Assessing Officer regarding sale of these flats. Further even if it is accepted for the sake of argument that the flats remained with the assessee in subsequent years, such evidence can easily be created in collusion with the buyer because it suites both the parties as the assessee as well as buyer both are hit by the material found during the search. The assessee is liable for unaccounted income on account of cash received whereas the buyer has to explain the cash transactions. There....