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TMI Blog2015 (4) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in determining the exact quantum of addition made on account of unexplained cash. We therefore overrule the objection raised by him in this regard and proceed to decide the issue relating to quantification of undisclosed income on merit. Cash of ₹ 10.80 lakhs was stated by the assessee himself to have been spent on personal expenditure as per the seized documents. As regards the other contention raised by learned counsel for the assessee in this regard that the cash of ₹ 7.50 lakhs received as interest and distributed amongst the partners was used to meet the personal expenditure of ₹ 10.80 lakhs, it is observed that the learned Commissioner of Income-tax (Appeals) has specifically noted in the working given above that the amount of ₹ 7.50 lakhs was distributed to the partners excluding the assessee whereas the personal expenditure of ₹ 10.80 lakhs was found to be incurred by the assessee. We, therefore, find no mistake in the working made by the learned Commissioner of Income-tax (Appeals) while quantifying the unexplained cash found during the course of search at ₹ 5,28,500. It is also noted that if the said amount of unexplained cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s detected as a result of search operation under section 132 is undisclosed income of the assessee within the meaning of section 158BFA(2) of the Act and penalty provision under section 158BFA(2) would arise when the Assessing Officer has assessed the income in the block period in excess of the income declared by the assessee. Thus no justifiable reason to interfere with the impugned order of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2) of the Act - Decided against assessee. Unaccounted interest received in cash from the builder and unexplained jewellery found during the course of search - penalty under section 158BFA(2) - Held that:- No justifiable reason to interfere with the impugned order of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2) in respect of addition of ₹ 7,71,000 made to the undisclosed income of the assessee on account of interest received in cash from the builder. As regards the penalty imposed in respect of addition made on account of unexplained jewellery the explanation of the assessee in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax (Appeals) dated March 28, 2001 was challenged by the assessee as well as by the Department before the Tribunal and the Tribunal vide its order dated August 31, 2005 allowed the appeal of the Department holding that the undisclosed income was rightly taxed by the Assessing Officer in the hands of the assessee in his individual capacity. Meanwhile, the order passed by the Assessing Officer dated March 28, 2003 giving effect to the order of the learned Commissioner of Income-tax (Appeals) dated March 28, 2001 was set aside by the Commissioner of Income-tax under section 263 vide an order dated September 30, 2003 directing the Assessing Officer to make certain further enquiries and verifications. The Assessing Officer accordingly passed a fresh order under section 158BC read with sections 250 and 263 on April 30, 2004 computing the undisclosed income of the assessee at ₹ 43,83,737. Incidentally, the assessee moved a miscellaneous application before the Tribunal stating that one of the issues raised by him regarding correct quantification of undisclosed income in his individual hands had not been adjudicated by the Tribunal. The Tribunal vide its order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs. 4. The submissions made on behalf of the assessee were found acceptable by the learned Commissioner of Income-tax (Appeals). He noted that the undisclosed interest of ₹ 7.50 lakhs received in cash from Ramnit Chawda was stated to be distributed by the assessee amongst the partners of the firm whereas the cash of ₹ 24.92 lakhs received from sale of scrap/ machinery was stated to be utilised for giving ₹ 3.82 lakhs to Mr. B.B. Thakoor (Dada) for personal expenditure and for incurring the personal expenditure including renovation and repairs to the extent of ₹ 10.80 lakhs as per the seized documents. He found that the cash only to the extent of ₹ 10.30 lakhs thus was available with the assessee at the time of search out of the undisclosed cash receipts of ₹ 32.42 lakhs as against the cash of ₹ 15,58,500 found during the course of search. The learned Commissioner of Income-tax (Appeals) held that the cash found during the course of search thus had remained unexplained to the extent of ₹ 5,28,500 and if the same is included in the other undisclosed income assessed by the Assessing Officer including income from sale of scrap/ machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee therefore has now filed an additional ground challenging the action of the learned Commissioner of Income-tax (Appeals) on this issue and requested that the same may be admitted. 7. Without prejudice to his preliminary objection, learned counsel for the assessee submitted that the cash of ₹ 7.50 lakhs received as interest from Ramnit Chawda was distributed amongst the partners and the same was available to meet the personal expenditure including the renovation and repairs amounting to ₹ 10.80 lakhs. He submitted that even the quantification of such expenses at ₹ 10.80 lakhs was without any basis and therefore the quantification of undisclosed cash found during the course of search as made by the learned Commissioner of Income-tax (Appeals) at ₹ 5,28,500 is not correct. He contended that the quantification of cash sale of scrap/machinery thus should have been made by the learned Commissioner of Income-tax (Appeals) only to the tune of ₹ 24.92 lakhs independently as done by the Assessing Officer on the basis of seized documents. 8. The learned Departmental representative, on the other hand, invited our attention to the relevant portion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax (Appeals) decided the issue in favour of the assessee by holding that the unexplained cash/asset/ interest belonged to the firm in which they were partners. Therefore, he did not adjudicate upon the correctness of the quantum of addition. It is in this background that the learned authorised representative for the assessee had specifically raised a plea at the time of hearing of the appeals and cross-objections that if the issue was to be decided in favour of the Department, the matter would still need to go back to the file of the Commissioner of Income-tax (Appeals) for correct determination of quantum of addition on account of unexplained cash/asset/interest in the hands of individual assessees. We find that the aforesaid submission made by the assessee carried force. The plea of the assessee for adjudication with regard to quantum of addition has not been considered either by the Commissioner of Income-tax (Appeals) or by this Tribunal. It is, therefore, considered appropriate to restore the matter back to the file of the learned Commissioner of Income-tax (Appeals) with the direction to adjudicate upon the limited issue of correctness of the quantum of addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epairs as per seized documents 10.80 (b) Amount distributed to partners (excluding appellant) 7.50 (c) Amount given to Dada 3.82 22.12 10.30 It is thus evident that the cash found during the course of search in the premises of the appellant to the extent of ₹ 10.30 lakhs gets accounted for from cash sale of scrap/machinery and interest from the builder. Therefore the excess cash found of ₹ 5,28,500 still remains unexplained. The total undisclosed income should therefore be worked out as under : (Rs.) (a) Income declared in the return 2,87,871 (b) Addition on account of unexplained jewellery 5,20,866 (c) Unexplained cash credit 25,000 (d) Interest from builders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue and upholding the same, we dismiss the appeal of the assessee filed in the case of Mr. Vasant B. Thakoor in I.T. (SS)A. No. 60/Mum/2009. 12. Now we shall take up the appeal filed by Mr. Madhukar B. Thakoor in I.T. (SS)A. No. 77/Mum/2009 which is directed against the order of the learned Commissioner of Income-tax (Appeals)-XXXII, Mumbai dated April 23, 2009. 13. The solitary issue involved in this appeal relates to the quantification of exact amount of undisclosed income of the assessee on account of sale of scrap/machinery. 14. In this case, the issue involved as well as all the material facts relevant thereto are almost similar to that of the case of Mr. Vasant Thakoor inasmuch as after the initial round of litigation arising from the block assessment order passed by the Assessing Officer in pursuance of the search and seizure operation, a fresh order was passed by the Assessing Officer under section 158BC read with sections 263 and 250 of the Act on April 30, 2004 computing the undisclosed income of the assessee at ₹ 21,76,560 after making addition on account of cash sale of scrap/machinery at ₹ 12.50 lakhs. Thereafter the appeal filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals) thus held that the undisclosed income of the assessee from sale of scrap/machinery should be estimated at ₹ 4,94,300 as against the estimation of ₹ 12,50,000 made by the Assessing Officer and allowed a relief of ₹ 7,55,700 to the assessee. Still aggrieved, the assessee has preferred this appeal before the Tribunal. 15. We have heard the arguments of both sides and also perused the relevant material available on record. Learned counsel for the assessee has not made any submission on the issue of quantification of undisclosed income made by the learned Commissioner of Income-tax (Appeals) on merit. He however has raised the similar preliminary objection as raised in the case of Mr. Vasant Thakoor that the learned Commissioner of Income- tax (Appeals) has gone beyond the scope of order of the Tribunal in determining the quantum of addition on account of cash sale of scrap/ machinery. Since similar issue involved in identical facts and circumstances has already been decided by us holding that a direction was given by the Tribunal to the learned Commissioner of Income-tax (Appeals) to determine the exact quantum of unexplained cash/ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the quantum proceedings in I. T. A. No. 161/Mum/2001, notice was issued by the Assessing Officer requiring the assessee to show cause as to why penalty under section 158BFA(2) should not be imposed in respect of all the three additions made to his undisclosed income. In reply, the following submissions were made by the assessee in writing vide his letter dated January 21, 2006 : 1. At the outset, it bears mention that in view of the contemplated action of fling appeal with the High Court of Mumbai against the order of the Tribunal, it will be appreciated that the status of assessed income has not reached the stage of finality as yet. We will file with you a copy of the appeal papers after filing the appeal with the High Court of Mumbai. 2. From the aforesaid sequence of events, it will be noticed by you that the quantum of assessed income has undergone variation at many a stage of the proceedings. It is manifest that the authorities have taken differing views at various stages of the proceedings. It is, therefore, obvious that the nature and quantum of the undisclosed income has been the subject matter of differing viewpoints either in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentious additions cannot be subject to levy of penalty under section 158BFA of the Act. 18. After considering the above submissions made by the assessee, the Assessing Officer found that there was nothing new in the said submissions and what was contained therein was merely reiteration of the submissions made during the course of quantum proceedings which was already considered by him as well as by the appellate authority. He therefore rejected the said submission treating the same as unacceptable and imposed penalty of ₹ 11,14,801 under section 158BFA(2) of the Act being 100 per cent. of tax sought to be evaded by the assessee in respect of additions made to the undisclosed income of the assessee. 19. The penalty imposed by the Assessing Officer under section 158BFA(2) was challenged by the assessee in an appeal filed before the learned Commissioner of Income-tax (Appeals). It was submitted, at the outset, on behalf of the assessee that the issue of correct determination of undisclosed income of the assessee had been restored by the Tribunal to the file of the learned Commissioner of Income-tax (Appeals) in the quantum proceedings and accordingly in the set aside pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits belonging to him. He also noted that in his statement recorded during the course of search, the assessee had admitted his undisclosed income at ₹ 15 lakhs consisting of cash receipt of interest and fixed deposits and the retraction of the said statement made by the assessee after a period of about two years was a result of an afterthought with an intention to complicate this simple issue. He held that although the assessee had made an attempt to contend that the undisclosed income accepted by him in the search was actually belonging to the partnership firm, the said contention was not finally accepted by the Tribunal. The learned Commissioner of Income-tax (Appeals) held that keeping in view of these facts and circumstances of the case, penalty under section 158BFA(2) was leviable at least in respect of two additions of ₹ 4,20,000 made on account of unexplained fixed deposits and ₹ 7,38,000 made on account of interest received in cash as the remaining addition of ₹ 7 lakhs made on account of cash sale of scrap/ machinery had already been deleted in the quantum proceedings. Accordingly he sustained the penalty imposed by the Assessing Officer to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) and the same have been rejected by him by passing a well discussed and a well reasoned order. He also contended that the additions made to the undisclosed income of the assessee having been finally confirmed by the Tribunal in the quantum proceedings, the penalty provisions of section 158BFA(2) are clearly attracted. In support of this contention, he relied on the decision of the hon'ble Gujarat High Court in the case of Kandoi Bhogilal Mulchand v. Deputy CIT [2012] 341 ITR 271 (Guj). He therefore relied strongly on the impugned order of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2). 24. We have considered the rival submissions and also perused the relevant material on record. As regards the contention raised by learned counsel for the assessee relying on the decision of the Tribunal in the case of Nayan Builders and Developers P. Ltd. that the substantial question of law having been already admitted by the hon'ble Bombay High Court on the issue of addition made on account of interest received from the builder in cash, no penalty under section 158BFA(2) can be imposed in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this regard by the assessee has been rejected after having found the same to be unsatisfactory/unacceptable. During the course of penalty proceedings, the assessee again has made an attempt to reiterate the same submissions which have already been rejected in the quantum proceedings by the Tribunal. Moreover, there is nothing new brought on record by the assessee to support and substantiate his explanation or to establish satisfactorily that the said explanation is bona fide. In the case of Kandoi Bhogilal Mulchand v. Deputy CIT [2012] 341 ITR 271 (Guj) cited by the learned Departmental representative, the hon'ble Gujarat High Court has held that the income which is detected as a result of search operation under section 132 is undisclosed income of the assessee within the meaning of section 158BFA(2) of the Act and penalty provision under section 158BFA(2) would arise when the Assessing Officer has assessed the income in the block period in excess of the income declared by the assessee. Keeping in view the said decision of the hon'ble Gujarat High Court and having regard to all these facts of the case, we are of the view that there is no justifiable reason to interfere wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellery worth ₹ 6,98,721 found during the course of search, jewellery worth ₹ 24,920 was found to be already declared by the assessee in his wealth-tax return. The same therefore was treated by the Assessing Officer as explained. As regards the balance jewellery, the assessee offered the same to the extent of ₹ 2,66,176 in his return of income accepting the same as unexplained and the balance jewellery worth to ₹ 4,37,725 was explained by the assessee as belongings of his relatives. This explanation of the assessee was not accepted by the Assessing Officer and he made an addition of ₹ 4,37,725 to the undisclosed income of the assessee on account of unexplained jewellery. As noted by the learned Commissioner of Income-tax (Appeals) in the penalty order passed under section 158BFA(2) of the Act, the said addition has been restricted by the learned Commissioner of Income-tax (Appeals) to only ₹ 41,305 vide his appellate order dated November 25, 2003 passed in the quantum proceedings. The explanation of the assessee in respect of jewellery found during the course of search thus has been substantially accepted in the quantum proceedings and keeping in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned Commissioner of Income-tax (Appeals) at the same amount of ₹ 7,50,000 as computed by the Assessing Officer. He, however, restricted the addition of ₹ 12,50,000 made on account of cash sale of scrap/machinery to ₹ 4,94,300 and sustained the penalty imposed by the Assessing Officer under section 158BFA(2) of the Act to the extent it was in respect of the said additions as was done in the case of late Shri Balchandra B. Thakoor, Legal heir Mrs. Sunita Samir Sao and Mr. Mohan B. Thakoor, the assessees belonging to the same group. 30. At the time of hearing before us, the learned representatives of both sides have reiterated the same submissions as made in the case of Shri Balchandra B. Thakoor, legal heir Mrs. Sunita Samir Sao and Mr. Mohan B. Thakoor which have already been considered by us and on such consideration, the action of the learned Commissioner of Income-tax (Appeals) sustaining the penalty imposed by the Assessing Officer under section 158BFA(2) of the Act has been upheld by us in the case of Shri Balchandra B. Thakoor, legal heir Mrs. Sunita Samir Sao and Mr. Mohan B. Thakoor. As held by us in the said cases, there being nothing new b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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