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TMI Blog2010 (2) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s. 158BFA(2) of Rs.18,04,980/- pertaining to block period 01.04.1988 to 13.11.1998. 2. The brief facts of the case are that a search and seizure action had been conducted in the Sagar Malkani group of cases on 13.11.1998, where, certain loose papers were found which led to the issuance of a notice u/s.158BD in the case of the assessee and, against undisclosed income declared at Rs.4,26,100/-, the income was assessed at a sum of Rs.1,14,93,650/- which after undergoing appeal process before the CIT(A) and the ITAT came to a sum of Rs.31,60,920/-. 3. The Assessing Officer has observed "since the addition of undisclosed income is finally confirmed by the ITAT to the extent of Rs.31,60,920/-, the submissions of the assessee regarding the merits of additions and the relief granted by the appellate authorities has got no importance with reference to the levy of penalty. The assessee has relied upon 8 case laws relating to levy of penalty u/s.271(1)(c) contending that levy of penalty u/s.271(1)(c) is more or less identical with the provisions of levy of penalty u/s.158BFA(2). The assessee's contention were found not acceptable because separate provisions are given in the I.T. Act f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty has been imposed is not on account of any concealment of income arising out of the non-declaration of the receipts or the expenditure but only because the AO and thereafter, the CIT(A) and the Hon'ble Tribunal have interpreted the entries in the loose papers in a different manners not accepting the explanation offered by the assessee which was bonafide explanation and which had with the other set of facts found in the documents stands corroborated. Thereafter, the natures of the additions made and confirmed and on the basis of which these additions were made and confirmed were explained in detail writing. The explanation of the assessee has been reproduced by the Learned CIT(A) at page 4 to 6 of his order. 7. After considering the detailed submissions and perusing the material on record the CIT(A) found that this is not a fit case of levy of penalty u/s.158BFA(2) and, therefore, he cancelled the penalty. The following findings have been given by the ld CIT(A) while deleting the penalty. "The issue has been carefully examined and I am in agreement with the arguments of the Ld. Counsel that the AO has erred both in law and on facts in imposing the penalty. The decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the narration "V.K. Plot" if the payment had been made to Shaifiq Thanawala in connection with the purchase of plot if at all, the appellant had made such payment in cash at the point of purchase. That entry could have been very well made against the narration of Shafiq Thanawala more so when there is a corresponding entry against the same name reflecting sale transaction." Similarly, regarding the disallowance of general expenses amounting to Rs.4,63,343/-, the CIT(A) in para 25 of his order states as under- "The submission made by the appellant's representative has been considered. The claim in this direction is in regard to the deduction of an amount Rs.2,20,328/- out of Rs.6,51,171/- recorded in the document. The reason on the basis of claim has been justified by the appellant in the submission reproduced above. Considering that the appellant is carrying on the development of plots, certain expenditure has to be incurred. A part of the expenditure has been recorded in the regular books of accounts and only in respect of the balance amount of Rs.2,20,328/- and further claim of deduction has been requested for. There is merit in the claim in this regard considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y levied by the Assessing Officer is correct as they are mandatory in nature. The Ld. DR further stated that the levy of penalty u/s.158BFA(2) is different from the levy of penalty u/s.271(1))(c) as levy of penalty u/s.158BFA(2) is mandatory in nature. 9. In reply, the Ld. Counsel of the assessee reiterated the contentions raised before the Ld. CIT(A). It was further submitted that the penalty is not automatic. Reliance was placed in 218 CTR 430 (Bom). It was further submitted that the Assessing Officer had made addition of Rs.1.19 crores; however, they have been restricted to 31 lakhs. Therefore, it cannot be said that the assessee has concealed any particulars of income in respect to additions made by the Assessing Officer. It was submitted that a document showing debit and credit entries along with some annexures were also found. The paper containing debit and credit entries was summary of the Annexures found during the course of search. The assessee had accepted the undisclosed income on the basis of that paper and has disclosed the same while filing the return u/s.158BD of the I.T. Act. 10. The Assessing Officer has made further additions on the basis of Annexure by not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search in group cases of Sagar Malkani. Whatever was recorded on debit side and credit side of the seized paper was accepted by the assessee relating to undisclosed affairs. Thereafter, in response to notice issued u/s.158BD, the assessee had disclosed income of Rs.4,26,100/- by filing its return of income. Thereafter, the AO made certain further additions on very basis of the same paper found during the course of search. There was a figure of Rs.1,24,13,250/- and the same was added to the income of the assessee. However, on appeals at the level of the CIT(A) and at the level of the Tribunal, major additions were deleted by accepting the explanation of the assessee. However, the three additions i.e. disallowances of Rs.9,26,600/-, Rs.4,63,343/- and Rs.13,44,900/- were sustained. 16 In respect to these three additions, detailed explanations were filed; however, as stated above, the Tribunal was not satisfied with the explanation and therefore, these three additions were sustained. Penalty proceedings are separate and distinct to the assessment proceedings. It was explained before the CIT(A) that the amount of Rs. 9,26,600/- was recorded on the debit side of the rough trial balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough trial balance found during the course of search was tallied and therefore, the explanation of the assessee is bonafide. While dealing with the penalty appeal, the ld CIT(A) has accepted this explanation as he found that explanation of the assessee is bonafide. In our view also since the total debit side and credit side entries of the rough trial balance found during the course of search tallied; therefore, the explanation offered by the assessee, at least for the purpose of penalty, is liable to be accepted. The sum of Rs. 13,44,900/- is shown recorded in the Annexure found during the course of search and this is also a general presumption that whatever the unrecorded items are there, they must be recorded in the trial balance because the trial balance contains entries of unrecorded transactions. Therefore, probabilities and general presumption are in favour of the assessee that the amount of Rs. 13,44,900/- is forming part of Rs. 1,24,13,250/- and therefore, at least penalty on this amount is not justified. Accordingly, we confirm the findings of the ld CIT(A) here also.
20. In the result, the appeal filed by the department is dismissed.
Order pronounced on 15.2.2010. X X X X Extracts X X X X X X X X Extracts X X X X
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