ACIT, Bangalore v. Sri John Mohan Reddy, Bangalore

ITA 834/BANG/2009 | 1999-2000
Pronouncement Date: 29-01-2010 | Result: Dismissed

Appeal Details

RSA Number 83421114 RSA 2009
Bench Bangalore
Appeal Number ITA 834/BANG/2009
Duration Of Justice 5 month(s) 11 day(s)
Appellant ACIT, Bangalore
Respondent Sri John Mohan Reddy, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-01-2010
Assessment Year 1999-2000
Appeal Filed On 17-08-2009
Judgment Text
ITA NO.834/B/09 1 IN THE INCOME TAX APPELLATE T RIBUNAL BANGALORE BENCH B BEFORE GEORGE GEORGE K JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NOS.834 TO 838/BANG/2009 (ASSESSMENT YEAR 1999-00 2000-01 2001-02 2002 -03 & 2004-05) THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(2) BANGALORE. . APPELLANT VS. SRI JOHN MOHAN REDDY BANGALORE. . RESPONDENT APPELLANT BY : SMT. V.S SREELEKHA RESPONDENT BY : SHRI H NAGIN KHINCHA O R D E R PER GEORGE GEORGE K JUDICIAL MEMBER : THESE APPEALS FILED BY THE REVENUE ARE AGAINST THE CONSOLIDATED ORDER OF THE LEARNED COMMISSIONER OF I NCOME-TAX (APPEALS) DATED 27.4.2009. THE ORDER OF THE LEARNE D COMMISSIONER OF INCOME-TAX EMANATES FROM THE ORDERS OF ASST. COMMIS SIONER OF INCOME-TAX LEVYING PENALTY U/S 271(1)(C) OF THE ACT . SINCE COMMON ISSUES ARE INVOLVED IN THESE CASES THEY ARE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. 2. THE GROUNDS RAISED IN ALL THESE APPEALS ARE IDEN TICAL EXCEPT FOR VARIATION IN FIGURES. HENCE EFFECTIVE GROUNDS CON CERNING ASST. YEAR 1999-00 IS REPRODUCED BELOW : ITA NO.834/B/09 2 (I) THE LEARNED CIT(A) ERRED IN DELETING THE PENALT Y OF RS.39 000/- LEVIED U/S 271(1)(C) OF IT ACT 1961 BOTH ON TECHNICAL GROUNDS ON MERITS. (II) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED TH AT THE DIRECTION FOR INITIATION OF PENALTY IN THE ASST . ORDER IS A DIRECTION TO THE OFFICE. (III) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED T HAT THE ASST. ORDER DEMAND NOTICE AND SHOW CAUSE NOTICE U/S 274 RWS 271 HAVE BEEN DULY SERVED TOGETHER WITHIN THE DUE DATE I.E 31/12/2006 AND THE ASSESSEE HAS COMPILED TO THE SHOW CAUSE NOTICE. (IV) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED TH AT IN VIEW OF SEC. 292B THE INITIATION OF PENALTY IS VALID. (V) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THA T ADDITION OF RS.1 50 000/- AS UNEXPLAINED INVESTMENT WAS MADE IN THE ASST. ORDER ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. (VI) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED T HAT ADDITION IS MADE AFTER GIVING OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE NOTINGS AND THE INVESTMENTS MADE. (VII) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED T HAT THE ASSESSEE WOULD NOT HAVE AGREED THE ITA NO.834/B/09 3 INVESTMENTS MADE AS ADDITIONAL INCOME BUT FOR THE SEARCH ACTION U/S 132. (VIII) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ADDITIONS MADE IN THE ASST. ORDER ARE IN ADDITION TO THE RETURNED INCOME WHICH THE ASSESSEE HAS NOT DECLARED IN THE RETURNS FILED IN RESPONSE TO THE NOTICE ISSUED U/S 153A. (IX) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED TH AT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND OTHERS VS. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC) ARE APPLICABLE IN THIS CASE. (X) THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THA T SEC. 292C IS APPLICABLE IN THE INSTANT CASE. THE FACTS OF THE CASE IN BRIEF ARE AS FOLLOWS: 3. THE ASSESEE IS AN INDIVIDUAL. HE IS A DIRECTOR O F A REAL ESTATE COMPANY BY THE NAME M/S MAHASAI DEVELOPERS PVT .LTD . A SEARCH U/S 132 OF THE INCOME-TAX ACT WAS CONDUCTED ON 23/7/04 IN THE PREMISES OF THE ASSESSEE AND CERTAIN DOCUMENTS WERE SEIZED. ON THE BASIS OF THE NOTING IN THE SEIZED DOCUMENTS THE AO MADE THE ADDITION TO THE TOTAL INCOME RETURNED U/S 153A OF THE INCOME-TAX AC T. THE DETAILS OF THE INCOME RETURNED U/S 153A OF THE INCOME-TAX ACT 1961 AND THE INCOME ASSESSED ARE AS UNDER : ITA NO.834/B/09 4 ASST. YEAR INCOME RETURNED U/S 153A ASSESSED INCOME ADDITIONS MADE 1999-00 56500/- + 32600 AGRL. INCOME 206500/- + 32600/- AGGRL. INCOME 150000/- 2000-01 65000/- + 39000 AGRL. INCOME 215000/- + 39000/- AGGRL. INCOME 150000/- 2001-02 89100/- + 45500 AGRL. INCOME 239100/- + 45500/- AGGRL. INCOME 150000/- 2002-03 56500/- 206500/- 150000/- 2004-05 61400/- + 65000 AGRL. INCOME 972400/- + 65000/- AGGRL. INCOME 911000/- 4. SIMULTANEOUSLY ON COMPLETION OF ASSESSMENT PEN AL PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED AND NOTICE U/S 274 READ WITH SEC. 271 WAS ISSUED DIRECTING THE ASSESSE E TO SHOW CAUSE AS TO WHY PENALTY U/S 271(1)(C) SHOULD NOT BE IMPOS ED. THE ASSESSEE FILED A REPLY TO THE NOTICE VIDE HIS LETTER DATED 2 1/5/07. THE ESSENCE OF ASSESSES REPLY WAS THAT HE WAS INVOLVED IN COMPAN YS BUSINESS WHEREIN HE IS A DIRECTOR. THE FUNDS OF THE COMPANY WAS AVAILABLE WITH THE ASSESSEE FOR THE PURCHASE OR ACQUIRING OF LAND AT VARIOUS PLACES. ALL THE INVESTMENTS NOTING IN THE SLIP DURING THE C OURSE OF SEARCH ARE RELATING TO THE BUSINESS OF THE COMPANY AND NONE OF THE TRANSACTION OR NOTING ARE HIS PERSONAL INVESTMENTS. IT WAS FURTH ER SUBMITTED THAT ADDITIONS ARE MADE WITHOUT FURNISHING ANY SPECIFIC DETAILS AND ADDITIONS WERE ACCEPTED TO CONCLUDE THE ASST. PROCEEDINGS AND TO BUY PEACE WITH THE DEPARTMENT. THE VARIOUS OBJECTIONS TO THE LEVY OF PENALTIES WERE REJECTED BY THE AO AND PENALTIES U/S 271(1)(C) OF THE ACT WERE LEVIED AMOUNTING TO RS.39 000/- RS.45 000/- RS.52 000/- RS.36 100/- ITA NO.834/B/09 5 AND RS.3 LAKHS FOR THE ASST. YEARS 1999-00 TO 2002- 03 AND 2004-05 RESPECTIVELY. 5. AGGRIEVED BY THE ORDER OF THE PENALTY ON APPEAL BEFORE THE CIT(A) IT WAS CONTENDED THAT THE LEVY OF PENALTY I S BAD IN LAW SINCE PENALTY PROCEEDINGS WERE NOT INITIATED DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT IN A LL THESE CASES THE WORD PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIA TED SEPARATELY APPEAR AFTER THE WORDS ISSUE DEMAND NOTICE AND CHA LLAN AND THEREFORE THE INITIATION OF PENALTY IS NOT IN THE COURSE OF ASST. PROCEEDINGS. ON MERIT IT WAS SUBMITTED THAT MERE AGREEMENT TO THE ADDITION DOES NOT AMOUNT TO CONCEALMENT OR FILING O F INACCURATE PARTICULARS OF INCOME. THE CIT(A) FOLLOWING HIS OW N ORDER IN THE CASE OF SRI B.P SRINIVAS RAJU BANGALORE IN ITA NO.86 8 7 88 89 90/ACIT/CC 1(2)/BLORE/CIT(A)-VI/2007-08 DATED 26.3 .09) ALLOWED THE TECHNICAL PLEA OF THE ASSESSEE AND HELD PENALTY PR OCEEDINGS WERE NOT INITIATED IN THE COURSE OF ASST. PROCEEDINGS. THE CIT(A) ON MERITS ALSO ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. ON A QUERY FROM THE BENCH WHETHER THESE APPEALS SHOULD BE HEARD ALONG WITH SRI B.P SRINIVAS RAJUS CASE (SUPRA) ON WHIC H CIT(A) HAS PLACED RELIANCE TO DECIDE THE TECHNICAL ISSUE BOTH THE PA RTIES WERE OF THE VIEW ITA NO.834/B/09 6 THAT THE ISSUE CAN BE INDEPENDENTLY HEARD HENCE W E PROCEEDED TO HEAR THE MATTER. 7. THE LEARNED DR SUBMITTED THAT THE WORDS PENAL TY PROCEEDINGS U/S 271(1)(C) INITIATED SEPARATELY IS BEFORE THE S IGNATURE OF THE AO AND HENCE CIT(A) IS NOT RIGHT IN ALLOWING TECHNICAL GR OUND OF THE ASSESSEE. THE LEARNED DR ALSO STATED THAT THE ASST. ORDER DE MAND NOTICE AND SHOW CAUSE NOTICE U/S 274 READ WITH SEC. 271 HAS BE EN DULY SERVED TOGETHER WITHIN THE DUE DATE I.E BEFORE 31.12.06 AN D THE ASSESSEE HAS COMPLIED WITH THE SHOW CAUSE NOTICE FOR LEVYING THE PENALTY. ON MERITS IT WAS SUBMITTED THAT EVEN IN THE CASE OF A GREED ADDITION PENALTY IS IMPOSABLE. IT WAS SUBMITTED THAT ASSESS EE WAS WILLING TO HAVE THE CASH CREDIT TO BE TREATED AS HIS UNDISCLOS ED INCOME AND THEREFORE THERE WAS NO FURTHER BURDEN ON THE DEPAR TMENT TO PROVE THE CONCEALMENT. THE LEARNED DR ALSO EMPHASIZED THE GR OUND RAISED HEREIN. PER CONTRA THE LEARNED AUTHORIZED REPRESE NTATIVE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND RELIED ON THE FINDINGS OF THE CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE SHALL FIRST TAKE UP THE TECHNICAL IS SUE VIZ. WHETHER PENALTY PROCEEDINGS WERE INITIATED DURING THE COURS E OF ASST. PROCEEDINGS. THE CIT(A) WAS OF THE VIEW THAT THE P ENALTY PROCEEDINGS WERE NOT INITIATED DURING THE COURSE OF ASST. FOR THE REASON THAT THE WORDS PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITI ATED SEPARATELY ITA NO.834/B/09 7 WERE MENTIONED AFTER RECORDING OF WORDS ISSUE DEMA ND NOTICE AND CHALLAN. IN OTHER WORDS THE CIT(A) STATES THAT T HE ASST. ORDER ENDS WITH THE WORD ISSUE DEMAND NOTICE AND CHALLAN AND ANY RECORDING AFTER THESE WORDS ARE NOT PART OF THE ASST. PROCEED INGS. THE CIT(A)S REASONING DREW STRENGTH FROM HIS ORDER IN THE CASE OF SRINIVAS RAJU (SUPRA). HOWEVER IT IS PERTINENT TO NOTE THAT IN THE CASE OF SRINIVAS RAJU (SUPRA) THE WORDS PENALTY PROCEEDINGS U/S 27 1(1)(C) WERE INITIATED SEPARATELY WERE RECORDED AFTER THE SIGNA TURE OF THE CONCERNED AO. IN THE INSTANT CASE THE WORDS PENALTY PROCEE DINGS U/S 271(1)(C) WERE INITIATED SEPARATELY ARE RECORDED BEFORE THE SIGNATURE OF THE AO. WE ARE OF THE OPINION THAT THE CIT(A)S VIEW IS HYP ER TECHNICAL AND UNTENABLE. THERE IS NO SUCH FORMAT FOR CLOSURE OF T HE ASST. PROCEEDINGS. THE CIT(A)S ASSUMPTION THAT THE ASS T. IS COMPLETE WITH THE RECORD OF THE WORDS ISSUE DEMAND NOTICE AND CH ALLAN IS WITHOUT ANY LEGAL BASIS. NO JUDICIAL PRONOUNCEMENT HAS BEE N BROUGHT TO OUR NOTICE TO JUSTIFY THE VIEW OF THE CIT(A). IN THE I NSTANT CASE AT THE FOOT OF THE ASST. ORDER BEFORE THE SIGNATURE OF THE AO IT IS CLEARLY RECORDED THAT PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIA TED SEPARATELY WHICH IN OUR VIEW IS PART OF ASST. ORDER AND VALID RECORD ING OF SATISFACTION OF THE AO FOR INITIATION OF PENALTY PROCEEDINGS U/S 27 1(1)(C) IN VIEW OF INTRODUCTION OF SUB SEC. 1B OF SEC. 271(1). MOREOV ER IN THIS CASE THE ASST. ORDER THE DEMAND NOTICE AND THE SHOW CAUSE N OTICE U/S 274 READ WITH SEC. 271 HAS BEEN DULY SERVED TOGETHER WITHIN THE DUE DATE I.E BEFORE 31.12.06 AND THE ASSESSEE HAD COMPLIED WITH THE SHOW CAUSE NOTICE. ITA NO.834/B/09 8 9. THE HONBLE SUPREME COURT IN THE CASE OF KALYANK UMAR RAY VS. CIT 193 ITR 634 WAS OF THE VIEW THAT AOS CALC ULATION OF INTEREST IS PART OF THE ASST. ORDER. THE RELEVANT PORTION O F THE RULING OF THE HONBLE SUPREME COURT IS REPRODUCED BELOW : THE STATUTE DOES NOT HOWEVER REQUIRE THAT BOTH THE COMPUTATIONS (I.E OF THE TOTAL INCOME AS WELL A S OF THE SUM PAYABLE) SHOULD BE DONE ON THE SAME SHEET OF PAPER THE SHEET IS SUPERSCRIBED ASSESSMENT ORDER . IT DOES NOT PRESCRIBE ANY FORM FOR THE PURPOSE. IT WI LL BE APPRECIATED THAT ONCE THE ASSESSMENT OF THE TOTAL I NCOME IS COMPLETE WITH INDICATIONS OF THE DEDUCTIONS REB ATES RELIEFS AND ADJUSTMENTS AVAILABLE TO THE ASSESSEE THE CALCULATION OF THE NEXT TAX PAYABLE IS A PROCESS WH ICH IS MOSTLY ARITHMETICAL BUT GENERALLY TIME-CONSUMING. IF THEREFORE THE INCOME-TAX OFFICER FIRST DRAWS UP AN ORDER ASSESSING THE TOTAL INCOME AND INDICATING THE ADJUSTMENTS TO BE MADE DIRECTS THE OFFICE TO COMPU TE THE TAX PAYABLE ON THAT BASIS AND THEN APPROVES OF IT EITHER IMMEDIATELY OR SOME TIME LATER NO FAULT CAN BE FOU ND WITH THE PROCESS THOUGH IT IS ONLY WHEN BOTH THE COMPUTATION SHEETS ARE SIGNED OR INITIATED BY THE I NCOME- TAX OFFICER THAT THE PROCESS DESCRIBED IN SEC. 143( 3) WILL BE COMPLETE. 10. OUR VIEWS ARE ALSO SUPPORTED BY THE DECISION OF THE HONBLE HIGH COURT OF HIMACHAL PRADESH IN THE CASE OF RAJA RANA YOGENDRA CHANDRA VS. CIT 117 ITR 473 WHERE IN IT WAS HELD AS FOLLOWS : ITA NO.834/B/09 9 ITO AFTER RECORDING ASSESSED IN THE ASST. ORDE R DIRECTING ISSUE OF NOTICE FOR PENALTY U/S 271(1)(A) AND SIGNING THEREAFTER; IT COULD NOT BE SAID THAT ASST. WAS FIRST COMPLETED AND DIRECTION FOR ISSUE OF NOTICE FOR PEN ALTY WAS MADE THEREAFTER AND WAS AN AFTER-THOUGHT. PENA LTY IMPOSED WAS VALID AND ISSUANCE OF NOTICE TWO DAYS THEREAFTER WAS IMMATERIAL. 11. IN THE LIGHT OF THE ABOVE REASONING WE HOLD TH AT THE CIT(A) IS NOT JUSTIFIED IN CANCELING THE PENALTY ORDER ON THE TECHNICAL PLEA OF THE ASSESSEE THAT NO PENALTY PROCEEDINGS ARE INITIATED IN THE COURSE OF ASST. PROCEEDINGS. 12. LET US NOW ANALYZE THE ISSUES ON MERITS. THE REASONING OF THE AO FOR THE ADDITIONS MADE IN THE A SSESSMENT ORDERS IS RATHER IDENTICAL FOR ALL THE ASSESSMENT YEARS EX CEPT FOR THE AY 2004- 05. THE REASONING OF THE AO FOR MAKING ADDITION OF AN IDENTICAL SUM OF RS.150000/- FOR THE AYS 99-00 2000-01 2001-02 AND 2002-03 IS RATHER INTRIGUING. FOR READY REFERENCE THE REASON ING OF THE AO (FOR THE AYS. 99-00 TO 02-03) IS REPRODUCED AS UNDER: COLLECTION BOOKS: FROM THE SEIZED MATERIALS IT IS SEEN THAT THE A SSESSEE HAS TRAVELLED ALL OVER KARNATAKA AND ANDHRA PRADESH FOR SELLING THE PLOTS OFFERED BY M/S MAHASAI DEVELOPERS PVT. LTD. THESE SEIZED MATERIALS INDICATED THE VARIOUS COLLECTIONS MADE DEPOSITED W ITH THE COMPANY AND REPAYMENTS MADE AS PER THE DIRECTIONS OF THE COMPAN Y TO THE SUBSCRIBERS AND INCURRED VARIOUS EXPENDITURES. IN THIS CONNECT ION VIDES THIS OFFICE LETTER DATED 17.10.2006 THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO EXPLAIN THE TRANSACTIONS MADE THEREIN. IN REPLY THE ASSES SEE HAS APPEARED AND EXPLAINED THAT THE TRANSACTIONS REFERRED IN THESE S EIZED MATERIALS ARE VERY VAGUE WHICH ARE LOANS/COLLECTIONS MADE ON BEHALF OF M/S MAHASAI DEVELOPERS PVT. LTD. THESE ARE ROUGH TRANSACTIONS WRITTEN IN THE BOOKS OF ACCOUNTS. AS THEY ARE VERY OLD THESE TRANSACTIONS CANNOT BE RECONCILABLE ITA NO.834/B/09 10 WITH REFERENCE TO THE BOOKS OF ACCOUNTS MAINTAINED BY M/S MAHASAI DEVELOPERS PVT. LTD. THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT ACCEPTABLE. AS SUCH IT WAS PROPOSED TO TREAT A SUM OF RS.1 50 000/- AS UNEXPLAINED INVESTMENT U/S 69 AND BROUGHT TO TAX FO R THE ASST. YEAR 1999- 2000. 12.1. OF COURSE FOR THE AY 2004-05 THE REASONING HAS BEEN RECORDED AS - I.INVESTMENT IN SAI NAGAR & SAI ENCLAVE : IT IS SEEN FROM THE SEIZED MATERIALS THAT THE ASSESSEE HAS PURPORTED TO HAVE M ADE CERTAIN TRANSACTION WITH M/S MAHASAI DEVELOPERS PVT. LTD. WHEREIN HE IS THE DIRECTOR HAVING 18% OF SHARE CAPITAL IN THIS CONNECTION THE ASSES SEE WAS GIVEN AN OPPORTUNITY VIDE THIS OFFICE LETTER DT. 17.10.2006 TO EXPLAIN THE TRANSACTION MADE WITH M/S MAHASAI DEVELOPERS PVT. LTD. IN RESP ONSE THE ASSESSEE APPEARED AND EXPLAINED THESE ARE THE VARIOUS INVEST MENTS MADE ON BEHALF OF M/S MAHASAI DEVELOPERS PVT. LTD. FOR ACQUISITION OF VARIOUS LANDS SITUATED AT DANDUPALAYA AND HOSKOTE. AS PER THE CO MPANYS DISCRETION THE LANDS WERE ACQUIRED AND THE PAYMENTS WERE MADE FOR WHICH THE MONEY WAS RECEIVED FROM M/S MAHASAI DEVELOPERS PVT. LTD. THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT SATISFACTORY. THEREFO RE IT WAS PROPOSED TO TREAT A SUM OF RS.9 11 000/- AS UNEXPLAINED INVESTM ENT U/S 69 AND BROUGHT TO TAX FOR THE ASST. YEAR 2004-05 FOR WHICH THE ASS ESSEE HAS AGREED. IN THE PENALTY ORDER ALSO THE OFFICER HAS STATED IN PARA 6.1 OF HIS ORDER THAT THE ASSESSEE HAS TRAVELED ALL OVER KARNATAKA AND ANDHRA PRADESH FOR SELLING THE PLOTS OFFERED BY M/S MAHASAI DEVELOPERS PVT. LTD. THE SEIZED MATERIALS INDICATE D VARIOUS COLLECTIONS MADE DEPOSITED WITH THE COMPANY AND RE PAYMENTS MADE AS PER THE DIRECTIONS OF THE COMPANY TO THE SU BSCRIBERS AND INCURRED VARIOUS EXPENDITURE. 12.1.2 FROM THE ABOVE IT IS CLEAR THAT THE TRANSA CTION IN REALITY BELONGS TO THE COMPANY IN WHICH THE ASSESSE E IS A DIRECTOR. THE ASSESSEE HAD EXPLAINED DURING THE ASSESSMENT PR OCEEDINGS THAT THE TRANSACTIONS REFERRED TO IN THESE SEIZED M ATERIALS WERE VERY VAGUE WHICH WERE LOANS/COLLECTIONS MADE ON BEH ALF OF THE ITA NO.834/B/09 11 COMPANY AND THAT THEY WERE ROUGH TRANSACTIONS WRITT EN IN THE BOOKS OF ACCOUNT. AS THEY WERE VERY OLD THEY COUL D NOT BE RECONCILED WITH REFERENCE TO THE BOOKS OF ACCOUNT M AINTAINED BY THE COMPANY. ON THE BASIS OF THE ASSESSEES EXPLAN ATION THE AO WENT AHEAD WITH THE ADDITION OF RS.1 50 000/EACH F OR THE AY 99- 00 00-01 01-02 AND 02-03. 12.1.3 HOWEVER ON A CLOSE READING OF THE IMPUGNED ASSESSMENT ORDERS IT IS PERTINENT TO NOTE THAT THE IDENTICAL ADDITION WAS RESORTED TO U/S 69 OF THE ACT WITHOUT IDENTIFYI NG THE TYPE AND THE EXTENT OF INVESTMENT(S) IF ANY AND THE DETAIL S OF SUCH INVESTMENTS HAVE BEEN UNEARTHED DURING THE COURSE O F SEARCH OR THE AO HAS BEEN ABLE TO ESTABLISH OR RATHER SPECIFY THE SO CALLED UNEXPLAINED INVESTMENT(S). AS A MATTER OF FACT IT COULD BE SEEN FROM THE RELEVANT IMPUGNED ASSESSMENT ORDERS THAT A N IDENTICAL FIGURE OF RS.1.5 LAKHS HAS BEEN IDENTIFIED AS UNEXP LAINED INVESTMENT U/S 69 OF THE ACT. THIS GOES WITHOUT SAY ING THAT THE ADDITION HAS BEEN RESORTED TO PURELY ON AN AD-HOC ESTIMATE BASIS WHICH HAS BEEN AGREED UPON BY THE ASESSEE. ON A PER USAL OF THE IMPUGNED ASSESSMENT ORDERS WE FIND THAT THE AOS R EASONING WAS THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT ACCEP TABLE. THE REASONING FOR HIS NON-ACCEPTANCE OF THE ASSESSEES EXPLANATION SHOULD HAVE BEEN FOUND A PLACE IN THE ORDERS WHICH HE HAD FRAMED. ITA NO.834/B/09 12 12.1.4. EVEN IN THE IMPUGNED PENALTY ORDERS UNDER DISPUTE THE AO HAD AVERRED THAT ONCE THERE IS AN INTENTIONAL FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE INC OME FULLY AND TRULY TO THE DEPARTMENT SUCH CASE SQUARELY FALLS WITHIN THE AMBI T OF PENALTY U/S 271(1)(C). NO DOUBT THE AO WAS WITHIN REALM TO AFFIRM SO. HOWEVER HE WAS DUTY BOUND TO SET-OUT THE REASONS T O PROCLAIM THAT THE ASSESSEE HAD INTENTIONAL FAILURE ON HIS PA RT TO DISCLOSE INCOME FULLY AND TRULY TO THE DEPARTMENT WHICH IN OUR CONSIDERED VIEW HE HAD FAILED TO DO SO. 12.1.5. FURTHER THE ASSESSEE HAD PLACED STRONG REL IANCE TO DRIVE HOME HIS POINT IN A NUMBER OF CASE LAWS FOR WHICH THE AOS CANDID ANSWER WAS THAT THEY ARE DISTINGUISHABLE . IN CONCLUSION THE AO IN THE IMPUGNED PENALTY ORDERS HAD LISTED OUT SIX POINTS ON THE BASIS OF WHICH LEVY OF PENALTY COULD BE JUST IFIABLE. HOWEVER HE HAS NOT ANALYSED THE FACTS WITH REFERENCE TO THE SET OF POINTS AS DEVISED TO ARRIVE AT A CONCLUSION THAT THE ASSESSE E HAD FURNISHED INACCURATE PARTICULARS OF INCOME WHICH JUSTIFIED IM POSING THE PENALTY. 12.1.6 IN AN OVER ALL CONSIDERATION OF THE FACTS A ND CIRCUMSTANCES OF THE ISSUE AS DELIBERATED IN THE FO RE-GOING PARAGRAPHS WE ARE OF THE FIRM VIEW THAT THE AO WAS NOT JUSTIFIED IN LEVYING OF THE PENALTY THAT TOO AN IDENTICAL SUM OF RS.1 50 000/- ON AN AD-HOC ESTIMATE. WE ARE OF THE VIEW ON FACTS OF THIS CASE ITA NO.834/B/09 13 THE ASSESSEE HAD AGREED TO THE ADDITION NOT BECAUSE OF CONCEALMENT OF INCOME BUT TO BUY PEACE AND TO AVOI D PROTRACTED PROCEEDINGS. 13. WITH REGARD TO THE PENALTY IMPOSED FOR THE ASSESSMENT YEAR 2004-05 THE REASONS RECORDED BY TH E AO WERE IDENTICAL AND SIMILAR TO THAT OF THE PENALTY ORDERS FRAMED FOR THE EARLIER ASSESSMENT YEARS WHICH ARE ALSO UNDER DISPU TE EXCEPT THE PENALTY OF RS.3 LAKHS. AS THE ISSUE IS SIMILAR TO THAT OF THE EARLIER ASSESSMENT YEARS REFERRED SUPRA OUR FINDING FOR T HE AYS 99-00 2000-01 01-02 AND 02-03 HOLDS GOOD FOR THIS AY ALS O. IT IS ORDERED ACCORDINGLY. 14. THEREFORE THE REVENUES APPEALS FOR THE AYS 1999- 00 2000-01 2001-02 AND 2004-05 ARE ALLOWED ON TH E TECHNICAL ISSUE NAMELY WHETHER PENALTY PROCEEDINGS WERE INIT IATED IN COURSE OF ASSESSMENT PROCEEDING AND ON MERITS THE APPEALS OF REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON JAN 2010. SD/- SD/- (A. MOHAN ALANKAMONY) (GEORG E GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED : 29/01/10 VMS. ITA NO.834/B/09 14 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF ITAT NEW DELHI. BY ORDER ASST. REGISTRAR ITAT BANGAL ORE.