TaxTMI 
TaxTMI 
2025 (10) TMI 1414
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.... Amount of addition made by the AO in respect of gross profit towards unaccounted purchases 7,05,165 6,14,913 12,56,464 1,97,841 Amount of penalty levied by the AO u/s. 270A(9)(e) 4,35,794 3,83,706 7,84,034 1,23,452 3. The brief facts of the case are that a search action u/s.132 was initiated on 10.11.2020 in the case of Mohanlal Jewellers (P) Ltd. (MJPL), Mohanlal Jewellers Chennai (P) Ltd., Shri. Suresh Kumar Khatri and others. During the course of search proceedings u/s.132, it was found that the group had been using customized software named "JPACK" for recording the accounted and unaccounted gold and cash transactions carried out by Mohanlal Jewellers group concerns in an Iball Desktop PC. It is mentioned by the Assessing Officer in the assessment order that pendrives containing JPACK data were also found and seized from the residential premises of Shri. Rajendra Kothari (Accountant of MJPL). Statements were recorded from Shri. Suresh Kumar Khatri on 11.11.2020 and on 04.12.2020. Statements were also recorded from Shri. Rajendra Kothari on 10.11.2020 and on 30.11.2020. Based on the above statements and on identification of ledgers from the JPAC....
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....ing authority is bound to consider the matter afresh in the material before it and, in the light of the burden to prove resting on the Revenue, to ascertain whether a particular amount is a revenue receipt. No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding." It was further submitted by the Ld. AR that similar views have been taken in the following catena of cases: I. B. MuniappaGounder v CIT [1976] 102 ITR 7987 (Mad) II. Krishnan Lal Shiv Chand Rai v CIT [1973] 88 ITR 293 (P&H) III. CIT v J K Synthetics Ltd. [1996] 219 ITR 267 (Del) IV. CIT v Doris S. Luiz [1974] 96 ITR 646 (Ker) The Ld. AR also placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v Khoday Eswarsa & Sons [1972] 83 ITR 369 (SC)wherein it was held that penalty cannot be levied solely on the basis of the reasons given in the original order of assessment. The Ld. AR on the basis of the above judicial precedents, submit....
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....ssessing Officer's reliance on ledger named "SABARI" which is not the name of the assessee, to pin the additions of the assessee, without any corroborative evidence is devoid of any merits. The Ld. AR, secondly, contended that the sworn statements recorded from Shri. Suresh Kumar Khatri and Shri. Rajendra Kothari do not contain a whisper about the assessee (M/s. Sabari Diamonds & Jewels) anywhere in their statements, and more particularly there is no statement identifying that the transactions in the ledger by name "SABARI" actually pertains to the assessee. In fact, the Ld. AR pointed out to the sworn statement of Shri. Suresh Kumar enclosed in the Paper Book and submitted that, at best, in the sworn statement of Shri. Suresh Kumar Khatri in response to Q.No.27, he identifies the ledgers grouped under customers and states that the same is contained in Annexure to the statement wherein it may be seen that the name "SABARI" is not to be found anywhere, which is not even the actual name of the assessee, thereby proving that the assessee had not entered into any unaccounted purchase transactions with MJPL. The Ld. AR further pointed out various discrepancies in the ledger by name ....
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.... in which the above transaction is reflected at two different pages of the assessment year, it is clear that the said entry cannot be relied upon since at one place the said entry denotes that the assessee has sold gold to MJPL and on the other the very same entry denotes that the assessee has purchased gold from MJPL, which definitely cannot be the case. Apart from the above, the Ld. AR submitted details of the other discrepancies in the ledger "SABARI" extracted from the JPACK software reflecting transactions for the assessment year 2018-19 which are as under: Tr. Code Details Receipt Issued Gross Touch Net Wt Amoun t Gross Touch Net Wt Amount 13/01 RATE PURCHASE NIL 18.89 0 135.2 6 25.55 0 774.10 Balance 412.96 0 95.92 396.12 0 1) The Assessing Officer in the assessment order has clearly stated in Para 8.2 (i) at Page 6 of the assessment order for AY 2018-19 that column 2 "TOUCH" signifies purity of gold. That being the case, it may be noted that in the transaction dated 13.01.2018, the touch % (Pur....
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.... Amount Gross Touch Net Wt Amoun t 07/07 METAL ISSUE NIL 1.170 21/03 METAL ISSUE NIL 11.27 0 0.27 0.030 1) In the transaction dated 07.07.2019, it is stated that the assessee has purchased 1.170 gms of gold where such low quantities are not transacted by dealers. 2) In the transaction dated 21.03.2020, it is not possible to transact 11.270 gms of gold with a touch % (Purity of gold) of 0.27%. Therefore, in the light of above table, the Ld. AR finally concluded that the additions made in the assessment order though accepted by the assessee solely for the reason of purchasing peace with the department cannot become a reason for automatic levy of penalty u/s.270A of the Income Tax Act and thus prayed that the penalty u/s.270A levied by the Assessing Officer be deleted for all the assessment years involved in appeal. The Ld. AR further submitted that the additions cannot be based on mere loose sheets and consequently no penalty can be levied on such additions. In this regard, the Ld. AR submitt....
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....e books of accounts of the assessee. c) That besides the above reasons, the unaccounted income is determined based on the analysis of the entries in the seized material and not based on the statement of Shri. Suresh Kumar Khatri. The Ld. AR in this connection, submitted that the above observations of the Assessing Officer in denying the opportunity of cross examination were incorrect since: a) There is no shred of evidence to demonstrate that Shri. Suresh Kumar Khatri in his statement had identified that the ledger "SABARI" extracted from the JPACK software belonged to the assessee. In fact, in Para 6.6 at Page 3 of the assessment order for the assessment year 2018-19, it can be seen that the Assessing Officer has merely stated that "On further investigation of the said "J Pack" Software, it is found that a ledger named "SABARI" is maintained." This goes on to show that the observation of the Assessing Officer in this regard to deny the opportunity to cross examine was not valid. b) The observation of the Assessing Officer that on cross verification it was found that many of the transactions recorded in the JPACK account match with the transactions rec....
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....original additions were made. We also agree with the Ld. AR that the Tribunal, being the final fact-finding authority, has the power to allow the assessee to question the correctness of the additions forming the basis for the penalty during the course of penalty proceedings. 9. During the hearing, the Bench sought clarification on the applicability of the Hon'ble Supreme Court's decision in MAK Data (P.) Ltd. v. CIT [2013] 358 ITR 593 (SC), which held that where income was surrendered following detection by the Assessing Officer, such surrender could not be regarded as voluntary, and penalty under section 271(1)(c) was justified. The Ld. AR submitted that the facts of MAK Data differ from the present case. In MAK Data, the assessee merely disclosed income to "buy peace" without providing any explanation for such disclosure. In contrast, the present assessee has denied any link to the transactions recorded in the JPACK ledger under the name "SABARI." The additions were accepted solely to avoid prolonged litigation and not due to any detection of undisclosed income by the Assessing Officer. Furthermore, during the penalty proceedings, the assessee challenged the validity o....