9911796707
TMI Blog2013 (10) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... , no argument has been put forward. Accordingly, Ground No.2 is rejected as not pressed. 3. Apropos Ground No.1, the facts are that a search & seizure operation u/s 132 of the IT Act was carried out on 3.9.1997, on the Goel group, including Mr. Pawan Kumar Garg, the Assessee. The Assessee derives income from the business of sale of spares and service of induction furnaces under proprietary concerns M/s Induction Power Components and M/s Pawan Kumar Garg. During the course of search, certain documents (Annexure A-25) were seized (seized "Annexure A25" is at pages 1-81 of the paper- book). For the assessment years 1996-97 & 97-98, the Assessee declared undisclosed income of Rs.20,870/- and Rs.30,278/-, i.e., below the taxable limit. For the assessment year 1998-99 (upto 3.9.1997), the Assessee did not declare any undisclosed income for the reason that since on the date of search, the previous year had not ended and hence the return was not due and the income relating to the unexpired previous year was recorded in Annexure A-25 maintained in the normal course, therefore, income for the assessment year 1998-99 (upto 3.9.1997) was outside the scope and ambit of undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income has to be determined on the basis of the material found as a result of search. In the present case, material showing purchase of trading stock and investment in stock was found in search. No entry in respect of investment in the stock was recorded in the seized register. Therefore, benefit of section 158BA(3) read with 158BB(1)(d) cannot be allowed. Had the loans been genuine, the same would have been recorded in any of the documents maintained in the normal course (page 108 112 of the paper book). 6. Thus, a penalty of Rs.3,00,000/- has been levied by the Assessing Officer u/s 158BFA(2), primarily relying upon the findings recorded by the ITAT. The order levying the penalty was confirmed by the CIT (A) for the reason that document A-25 was maintained by the Assessee for his own information and not for declaration before tax authorities and that the undisclosed investment was neither recorded in the documents found, nor proved before the Assessing Officer by production of those persons. 7. The assessee is before us against the said action of the Ld. CIT (A). 8. The ld. counsel for the assessee has argued that the levy of penalty u/s 158BFA(2) is discretionary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT' (2011) 11 ITR (Trib) 106; that though that decision was rendered in respect of estimated addition, the principle is squarely applicable to adhoc addition; that in computing the undisclosed income, provisions of section 69 of the Act are applicable [Section 158BB(2)]; that the import of section 69 is that where the assessee had made investments which are not recorded in the books and the assessee offers no explanation about the nature and source of the investment or the explanation offered is not satisfactory, the value of the investment may be deemed to be the income of the assessee; that the material as to the source of cash loans (investment), i.e. confirmations, tax returns with acknowledgement, bank statements, assessment orders, PAN etc. may not be adequate to delete the addition; that however, examining the case independently, it can be held that since nothing was found during the search to prove that undisclosed income was introduced in the garb of cash loans, penalty was not leviable; that this finding of CIT(A) in the quantum proceedings remains uncontroverted; and that the request to reconsider the requirement to produce the parties who had granted loans needs to be v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act is different from that leviable u/s 271(1)(c) thereof; and that addition in quantum proceedings that has attained finality cannot be reopened. Further, reliance has also been placed on 'JRD Stock Brokers (P) Ltd. vs. ACIT', 124 TTJ 566 (Del), wherein it was found that there was direct evidence of the assessee having indulged in earning undisclosed income through the business of providing accommodation or fictitious entries. 12. We have heard the parties and have perused the material on record. First of all, true, the Tribunal, in the quantum appeal, reversed the CIT (A)'s findings as above. However, penalty proceedings are independent proceedings and the matter can be examined independently. 13. Apropos the first addition, whether the stock register of the assessee amounts to his books of account, in the facts and circumstances of the case, was a debatable question. This is evident from the fact that the Assessing Officer held the stock register not to be the assessee's books of account. The CIT (A), on the other hand, held it to be otherwise, i.e., to be the books of account of the assessee. The ITAT reversed the CIT (A)'s findings. Now, in 'CIT vs. Harkaran Das Ved Pal (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal is not detrimental to the assessee's claim of inculpability to the levy of penalty u/s 158BFA (2) of the Act. 16. In 'Beena Rani vs. DCIT', 11 ITR (Trib) 106 (Del), addition was made to the income of the assessee by estimating the profit at a higher rate, without any reference to any seized material found in the course of the search. In these facts, it was held that such income could not be treated as undisclosed income determined u/s 158BC (c) of the Act and that hence, no penalty u/s 158BFA (2) of the Act could be imposed. 17. In the present case, likewise, the addition of Rs. 315,179/- did not find, as its basis, anything found during the search conducted. Rather, in the stock register (Annexure A-25) seized during the search, no entry of cash loan was found recorded. It has not been shown otherwise. Therefore, in keeping with 'Beena Rani' (supra), penalty u/s 158BFA (2) cannot be imposed on this issue in the present case. 18. 'Becharbhai' (supra), sought to be relied on by the department, it is seen, is not applicable hereto. There is no dispute to what was held therein, i.e., that penalty imposable u/s 158BFA (2) of the Act is different from penalty leviable u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
