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TMI Blog2009 (4) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search the assessee was found in possession of 92,523 pieces of shawls. However, as per stock register the numbers of pieces of shawls were 66,269. The assessing officer also noticed that the Annexure A-2 contained papers 1 to 69 which were purchase bills in the name of Ahujasons Shawlwale P. Ltd. issued by various parties and they were dated 1st August, 1977 till 20th September, 1997. Similarly the sales bills as contained in the Annexure A-1 were the bills of sales on various dates from 2nd September, 1977 till 16th September, 1977. The assessing officer also noted that stock of shawls of 92,523 included 5,211 sample pieces as mentioned in the Panchnama. Thus, the stock as per physical verification was at 87,312. However as per reconciliation the stock was 89,379. Therefore, there was difference of 2,067 shawls. As regards sample pieces of shawls the AO noted that there was no record of such samples. Even the assessee could not give names of the persons to whom samples were given. Therefore, the conclusion drawn was that the shawls numbering 2,067 were sold outside the books of accounts. The assessing officer in order to determine the sale price of 2,067 pieces of shawl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en purchasing shawls from the parties on approval basis as they were not regular suppliers and a new supplier who had not dealt with the assessee it was very unlikely that the supplier will leave goods at the premises of a new purchaser. The second addition of ₹ 1,57,250/- was made on the basis of finding recorded by the assessing officer that from invoices raised it was seen that all the invoices were serial numbered but the dates which have been written have a gap of 7 and 8 days between two invoices which also indicated that the party was not genuine because in a normal course of business the invoices were issued regularly and it was highly unlikely that in 15 days three serial numbered invoices were only issued. The assessing officer also noted that invoice No. 8 had date of 15.09.1997 where invoice No. 9 was dated 14.09.1997 which was not possible in a bonafide transaction. These circumstances and evidences suggested that the transaction was not a genuine transaction and purchases were treated as non-verifiable and the same were never intended to be recorded in the regular books of accounts. Likewise, the addition of ₹ 22,17,512/- was made on the ground that all si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee or would have not been disclosed. It has been established that these transactions were not recorded in the books of accounts and would not have been disclosed for the purposes of Income-tax. The contention of the assessee that penalty under section 158-BFA can only be imposed when the assessee concealed the particulars of income or furnished inaccurate particulars of its income or has not been able to justify the claim, was also not acceptable to assessing officer on the ground that the provisions of section 158-BFA (2) of the Act did no stipulate any such condition. For imposition of penalty under section 158-BFA (2) of the Act, the only requirement to be established was that undisclosed income of block period had been determined in accordance with the provisions of Chapter-XIV-B of the Act. The assessing officer, therefore, came to the conclusion that it has been established that the assessee has indulged in the transactions, which were not recorded in the books of accounts. The assessee was given opportunity to declare undisclosed income for the block period, but the assessee responded by filing block period return with NIL un-disclosed income. Therefore, the assessee clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he undisclosed income determined at ₹ 43,85,705/- became final. That being the case in view of the language employed in section 15-BFA (2) the imposition of penalty on undisclosed income of ₹ 43,85,705/- was automatic and, therefore, he upheld the order of the assessing officer imposing penalty of ₹ 30,26,126/-. 7. Before us the ld. AR of the assessee submitted that the search was conducted on 23rd September, 1994. Certain purchase invoices, which were posted up to the date of search, were seized. The goods were received by the assessee on approval basis. During the course of search shortage of stock of ₹ 15,54,483/- was found an excess cash of ₹ 42,400/- was found at the time of search. The ld. CIT (Appeals) confirmed the addition of ₹ 42,400/-. The issue of shortage of stock was restored to the assessing officer to be decided afresh. However, the ld. CIT (Appeals) enhanced the income by ₹ 1,72,14,704/-. On further appeal, ITAT restored the matter to the file of the assessing officer with regard to enhancemnent made by the ld CIT (Appeals). As regards addition on account of shortage of stock, no appeal was preferred as CIT(A) had set as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order u/s. 154/254/158BC on 29.03.2004 determining undisclosed income from trading at ₹ 15,96,784/-, copy thereof has not been placed on record by the assessee. Therefore, it is incorrect on part of the ld. AR of the assessee that assessing officer had made addition without any discussion in assessment order. He further submitted that for imposition of penalty under section 158-BFA (2) the element of mens rea is not is not required. The provisions of section 158-BFA (2) of the Act are not pari materia with the provisions of section 271(1)(c). Penalty under section 158BFA(2) is imposable on excess undisclosed income determined by the assessing officer. If the assessee was aggrieved against the additions made by the assessing officer, he should have filed appeal before the ld. CIT (Appeals) and agitated additions in appeal. Since the assessee was not aggrieved from the assessment order and, therefore, no appeal was filed by it. He further submitted that the appeal filed by the assessee is against the penalty order and not against the quantum and, therefore, the assessee is not permitted to advance arguments that the additions could not have been made. Under section 158-BFA (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loser of undisclosed income for the block period was made. However, second proviso to section 158-BFA (2) of the Act provides that the provisions of first proviso shall not apply where undisclosed income is determined by the assessing officer in excess of income shown in the return and in such cases penalty shall be imposed on that portion of the undisclosed income determined which is in excess of the amount of undisclosed income shown in the return. In the instant case, the assessee had chosen to file return of undisclosed income for the block period at NIL income when assessing officer had issued notices u/s. 158BC two times and a reminder subsequently. Thus the assessee had not only chosen to avail the concession granted by the law under the first proviso but had accepted the determination of undisclosed income at ₹ 43,85,705/- after two rounds of litigations and had paid tax thereon. Therefore, the assessee's case falls under second proviso to section 158-BFA (2) of the Act. 10. The contention of the ld. AR of the assessee is that the additions made to do involve concealment on the part of the assessee. From the appellate order of the ld. CIT (Appeals) we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer and accepted by the assessee did not form part of un-disclosed income. The payments made subsequent to search by the assessee will not change the situation that there was no un-disclosed income arising from the bills found during the course of search, which were not entered in the books of accounts for the period of six to eight months. 11. The provisions of section 271(1)(c) of the Act are applicable where concealment has been detected during the course of assessment proceedings or the assessee has filed inaccurate particulars of income whereas in respect penalty under section 158-BFA (2) the penalty is imposable in respect of excess undisclosed income determined by the assessing officer. There is no provision in section 158BFA(2) similar to Explanation 1 of section 271(1)(c) where penalty is imposable when the assessee fails to offer an explanation or offers an explanation, which is found by the assessing officer or the ld. CIT (Appeals) to be false or offers an explanation, which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The order pronounced in the open court on 30.04.2009. <!--[if gte mso 9]> Normal 0 false false false EN-IN X-NONE <![endif]--><!--[if gte mso 9]> <![endif]--><!--[if gte mso 10]> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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