Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2017 (7) TMI 29

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... lacs, with we rather finding the assessee to have been allowed unmerited relief in assessment. The very fact that the tribunal restored the matter back qua the said amount implies that it did not consider the same as explained. The quantum proceedings stand since finalized. The penalty can therefore only be levied with reference to the income assessed. The income returned pursuant to the search is the same as originally disclosed. There is no question of the assessee having agreed to an amount, disclosing income to that extent, which he continues to contest even in the second round. The AO, however, has levied penalty on the entire income assessed (Rs. 34.86 lacs), which includes ₹ 2.73 lacs returned by the assessee. The same can only be levied with reference to the tax sought to be evaded as defined in Explanation 4 to s. 271(1)(c). The AO shall recompute the penalty amount, and the assessee gets part relief. - ITA No. 1857/Mds/2014 - - - Dated:- 23-1-2017 - SHRI SANJAY ARORA, ACCOUNTANT MEMBER, AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER For The Appellant : Shri A.V.Sreekanth , Jt. CIT For The Respondent : Shri G.Baskar, Advocate ORDER Per Sanjay .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 15 Cts. Cash : Rs.1,23,585/- The assessee admitting to the said assets as well as of the same being unaccounted, the same were sought to be assessed as his undisclosed income, i.e., besides the returned income (on 21.09.2007) of ₹ 2,72,813/- (after adjusting the loss of ₹ 7,51,545/-), i.e., as originally returned u/s. 139(1) on 29.10.2004. That apart, another secret file document codenamed Dhanraj (being the assessee s nick name) was found on a computer system, which revealed loans and advances to various persons at an amount of ₹ 2,14,21,150/- and cash-in-hand at ₹ 34,17,850/- i.e., at a total of ₹ 248.39 lacs, for which addition was made (vide order u/s. 153A r/w s. 143(3) dated 26/12/2007), the details are as under: (Amount in Rs.) Loans forwarded - 1,07,78,150 Amounts due on sale of gold jewellery - 1,06,43,000 Cash balance available - 34,17,850 2,48,39,000 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ced at pg. 4 of the penalty order) 'I have not maintained any detailed record of the jewelleries disposed off or purchases made thereupon. The surpluses arising out of jewellery business were being circulated in the finance business and the receipts and the income accretions were again being utilized for being reinvested in gold, silver, diamond, etc. at various points of time. (Note forming part of the assessee s return for A.Y 2003-04) We have noticed that from the loose sheets found during search/survey, various purchases/sales were detected to have been made outside the books of accounts. This fact clearly establishes that the assessee was purchasing and selling jewellery outside the books of accounts. (Extract from para 36 (pg. 66) of the tribunal s order dated 05.05.2011) In sum, the basis of the levy of penalty is that the assessee has not been able to effect any improvement in his case in the second round, with the assets under reference being admitted. The same however did not find approval of the ld. CIT(A), in whose view the non-contesting of the assessment by the assessee could not itself be a ground for the levy of penalty for concealment, or fur .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e assessee available for investment ₹ 25,39,157 Total income ₹ 34,85,857 (*) (*) (exact amount works to ₹ 34,85,897/-) We are unable to see as to how the undisclosed assets of ₹ 35.53 lacs (refer para 3.2) are explained in any manner except that offered as income for the years prior to the current year, being ₹ 29,589/- by way of interest on loan (for A.Y 2003-04). The estimated income of ₹ 1.50 lacs on the sale of jewellery for that year (Rs. 17.75 lacs) is included in the sale value, credit for the entire of which stands already allowed to the assessee (as part of ₹ 84.44 lacs). The interest income (on loans) of ₹ 7,74,568/- and the admitted income of ₹ 2.50 lacs (on jewellery sale of ₹ 66.69 lacs) are to be offered to tax only for the current year. In-as-much as the assessee has been allowed credit for the entire sum of ₹ 66.69 lacs (as part of ₹ 84.44 lacs), it has already been allowed excess credit to that extent (Rs. 2.50 lacs). No credit for the income for AY 2005-06, allo .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... es it no longer outstands and is either lent or recycled, converting into sale again, swelling the sale ( qua the same amount), for the entire of which (sale) credit stands allowed. And further, that the sale does not include any sale after January, 2004, as the explanation is only for the assets as in January, 2004, so that sales after that date cannot explain the same. The point is that credit in respect of and in terms of its explanation advanced, if not at a higher amount, stands already allowed to the assessee. No improvement whatsoever in his case stands made subsequently, whereat an excess credit has been allowed by the Revenue to an extent of at least ₹ 24.60 lacs. There is, as rightly pointed by the AO, no question of allowing any credit for cash recorded or physically found. The cash found is in fact from the business premises of the four firms, only two of which belong to the assessee. Two, it is the source of the assets found or admitted (refer s. 292C), for which explanation, supported by material, is to be furnished, and do not themselves explain the assets. In fact, once the amount of undisclosed assets has been arrived at (Rs.141.96 lacs), its configuration l .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates