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TMI Blog2015 (10) TMI 2010X X X X Extracts X X X X X X X X Extracts X X X X ..... where complete evidence has been found against the assessee on the basis of which addition of undisclosed income has been made in the hands of assessee, we find no merit in the reliance placed upon by the learned Authorized Representative for the assessee. Accordingly, setting-aside the order of CIT(A), we direct the Assessing Officer to levy penalty under section 158BFA(2) of the Act on differential income of ₹ 17,22,500/-. The grounds of appeal raised by the Revenue are thus, allowed. - Decided against assessee. - ITA No. 1388/PN/2013 - - - Dated:- 11-9-2015 - Sushma Chowla, JM And R. K. Panda, AM For the Petitioner : Shri A K Modi, CIT Rajesh Damor For the Respondent : Shri Nikhil Pathak ORDER Per: Sushma Chowla: This appeal filed by the Revenue is against the order of CIT(A)-I, Nashik dated 02.04.2013 relating to block period 1997-98 to 2003-04 against penalty levied under section 158BFA(2) of the Income-tax Act, 1961. 2. The Revenue has raised the following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A)-I, Nashik was justified in deleting the penalty of ₹ 10,85,180/- u/s 158BFA(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 158BD of the Act was issued to the assessee. The assessee in turn, filed the block return on 30.05.2005 declaring total undisclosed income of ₹ 1 lakh. The assessment was originally completed under section 158BD r.w.s. 158BC of the Act on 27.04.2007 on assessed total undisclosed income of ₹ 18,22,500/-. The CIT(A) deleted the said addition and the Revenue filed an appeal before the Tribunal, which vide its order dated 25.02.2011 set-aside the matter back to the file of Assessing Officer, with direction to carry out the appropriate exercise in accordance with law after considering the submissions of the assessee. 5. In the second round of proceedings, notice was issued to the assessee and the assessee was asked to explain why on the basis of the material and the affidavit of Shri Y.P. Trivedi and Shri J.M.Jhala, sum of ₹ 18,22,500/- should not be treated as undisclosed income of the assessee for the block period. The written submissions filed by the assessee in this regard are incorporated as part of the assessment order. The first contention of thincorporated the assessee that reasons for invoking the provisions of section 158BD of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the condition that no penalty under section 158BFA(2) of the Act would be levied. 6. On the said basis, the Assessing Officer computed sum of ₹ 18,22,500/- as undisclosed income of the assessee for the block period. However, since the assessee had disclosed ₹ 1 lakh, the balance sum of ₹ 17,22,500/- was added as undisclosed income of the assessee for the block period and penalty proceedings under section 158BFA(2) of the Act were separately initiated against the said assessment of undisclosed income in the hands of the assessee. Notice for levy of penalty under section 158BFA(2) of the Act was issued to the assessee. 7. In the penalty proceedings, the claim of the assessee was that the presumption under section 132(4) of the Act, the presumption that the notings are to be recorded as true, is applicable only to the person, from whom the said notings were found in search action and it was not applicable to the third party. Another point raised by the assessee was that since 15 years had passed, it was difficult to collect the information and record about the said transaction and consequently, in order to buy peace, the assessee had offered the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of proceedings, when Shri Y.P. Trivedi, partner of M/s. Rushiraj Builders Developers confirmed the payment of on-money and even in cross-examination by the assessee, there was confirmation of payment of on-money of ₹ 18,22,500/-, the assessee on 16.12.2011 accepted the said additional income to buy peace and avoid litigation. However, the Assessing Officer levied penalty under section 158BFA(2) of the Act and CIT(A) deleted the same being a debatable issue. Our attention was drawn to the provisions of section 158BFA(2) of the Act and the proviso thereunder and also reference was made to the ratio laid down by the Hon'ble Supreme Court in MAK Data (P.) Ltd. v. CIT reported in 31 taxman 35 (SC) . 11. The learned Authorized Representative for the assessee in reply, referred to the seized documents placed at pages 49 and 57 of Paper Book and also pointed out that in the Affidavit filed by Shri Y.P. Trivedi , which is placed at pages 36 and 37 of Paper Book, it was confirmed that cash consideration was paid for development expenses. The sale deed was executed on 30.06.1997. It was further pointed out by the learned Authorized Representative for the assessee that sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... render, whereas in the case of the assessee, there was surrender of income in the second round of proceedings and addition was made after cross-examinations of witness. Reliance in this regard was placed upon the ratio laid down by the Hon'ble Gujarat High Court in Kandoi Bhogilal Mulchand Vs. DCIT (2012) 21 taxmann.com 153 (Gujarat). 13. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation to the penalty levied under section 158BFA(2) of the Act. Under the provisions of section 158BFA(2) of the Act, both the Assessing Officer or CIT(A) may direct that a person shalthe shall pay by way of penalty, a sum which shall not be less than the amount of tax leviable, but which shall not exceed three times the amount of tax so leviable, in respect of undisclosed income determined by the Assessing Officer under section 158BC(c) of the Act. As per the proviso under the said section, no order imposing penalty shall be made in respect of a person if (i) such person has furnished a return under clause (a) of section 158BC; (ii) the tax payable on the basis of such return has been paid or, if the assets seized consist of money, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilders and Developers on various dates in respect of lands / plots purchased from M/s. Amruta Land Developers i.e. the proprietary concern of the assessee before us. The Assessing Officer incharge of the searched person forwarded the information to the Assessing Officer in-charge of the assessee along with relevant documents. Admittedly, the assessee had entered into a Development Agreement dated 30.06.1997 in respect of plot No.2 for consideration of ₹ 4,96,000/- along with stamp charges of ₹ 84,431/- and registration charges, totalling ₹ 5,80,431/-. The seized documents reflected cash payment of ₹ 18,22,500/- in respect of the said plot No.2, as per the details which are tabulated at page 2 of the assessment order. In respect of the said cash payments, Shri Y.P. Trivedi and Shri J.M. Jhala, partners of M/s. Rushiraj Builders and Developers declared on oath that they had purchased plot No.2 from the assessee and the consideration was fixed at ₹ 23,18,500/-, out of which ₹ 4,96,000/- was made in cheque and the balance of ₹ 18,22,500/- was made in cash. In view of the above said information, the Assessing Officer in-charge of the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to the assesseethe assessee, whether any penalty could be levied under section 158BFA(2) of the Act. Another contention raised by the learned Authorized Representative for the assessee was that the said information in the documents was found from the possession of the searched person and in the absence of any search upon the assessee, no cognizance could be taken of the said documents and no presumption could be drawn against the assessee under the provisions of section 132(4A) of the Act. The next plea raised by the learned Authorized Representative for the assessee in this regard was that the addition was made in the hands of the assessee on an offer made by it, which was subject to the condition that no penalty under section 158BFA(2) of the Act would be levied. The assessee also claims that the issue being debatable and in the absence of clear-cut finding on the issue, no penalty under section 158BFA(2) of the Act could be levied against the assessee. 17. We have already referred to the provisions of section 158BFA(2) of the Act in the preceding paragraphs, wherein it has been laid down that in cases of search and seizure proceedings, whether those cases are covered unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequent to which, the assessment was completed after making addition to that extent. In view thereof, it cannot be said that no penalty under section 158BFA(2) of the Act is not leviable since the issue is debatable. We reverse the findings of CIT(A) in this regard. In view thereof, where incriminating documents were found from the possession of searched person, which are relatable to the assessee and pursuant to the proceedings initiated under section 158BD of the Act, the assessment in the case having been completed under section 158BC of the Act, where the assessed income was higher than the returned income, the assessee is liable for levy of penalty under section 158BFA(2) of the Act. Accordingly, we reverse the order of CIT(A) and uphold the order of Assessing Officer in levying penalty under section 158BFA(2) of the Act at ₹ 10,85,180/-. 19. In this regard, we find support from the ratio laid down by the Hon'ble High Court of Gujarat in Kandoi Bhogilal Mulchand Vs. DCIT (2012) 21 taxmann.com 153 (Gujarat), wherein it has been held that the penalty under section 158BFA(2) of the Act is attracted where the Assessing Officer computes the income in excess of what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment in property, the Tribunal held that in the absence of any evidence found in the course of search that the assessee had incurred any unaccounted expenditure on construction of the said property, there was no merit in levy of penalty under section 158BFA(2) of the Act. However, as pointed out by us in the paras hereinabove, evidence of sale consideration received in cash, over and above the consideration stated in the sale deed in respect of property sold by the assessee, was found during the course of search of the person who had purchased the property of the assessee. In view of direct evidence of a transaction entered into by the assessee with the purchaser, though not found from the premises of the assessee, but from the premises of the purchaser, during the search operations and also in view of the admission of the partners of searched person and their cross-examination by the assessee, where complete evidence has been found against the assessee on the basis of which addition of undisclosed income has been made in the hands of assessee, we find no merit in the reliance placed upon by the learned Authorized Representative for the assessee. Accordingly, setting-aside th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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