Jayaram K. Shetty, Mumbai vs Assessee

आयकर अपीलीय अिधकरण, अिधकरण मुंबई यायपीठ 'जे' मुंबई ।

IN THE INCOME TAX APPELLATE TRIBUNAL " J " BENCH, MUMBAI

ी िवजय पाल राव, याियक सद य, एवं ी डी. क णाकर राव, लेखा सद य के सम । BEFORE SHRI VIJAY PAL RAO , JM AND SHRI D. KARUNAKARA RAO, AM

आयकर अपील सं./I.T.A. No.4513/Mum/2013 ( िनधा रण वष / Assessment Year : 2004-05 )

M/s. Jayaram K. बनाम/ बनाम ACIT - Central Circle-24 & 26 Shetty Vs. Aayakar Bhavan 215, BCI Shed Mumbai. Amoroliwala Compound N.M. Joshi Marg Mumbai-400 013. थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AADPS 5939 D (अपीलाथ /Appellant) ... ( यथ / Respondent)

अपीलाथ ओर से / Appellant by : Shri Ashok K. Patil यथ क! ओर से/Respondent by : Shri S.D. Shrivastava and Shri Akhilendra Yadav

सुनवाई क! तारीख / Date of Hearing : 03/02/2015 घोषणा क! तारीख /Date of 13/02/2015 Pronouncement :

आदेश / O R D E R

PER VIJAY PAL RAO, JM:

This appeal by the assessee is directed against the order dated 13/03/2013 of CIT(A) arising from penalty order passed under section 271(1)(c) of the Income tax Act for the assessment year 2004-05. The assessee has raised the following grounds :-

"On the facts and circumstances of the case, the Assessing officer has erred in imposing penalty section. 271(1) (C) of the IT. Act. 1961 for AY 2004-2005 since AO 2 ITA No.4513/M/13

erred in treating an amount of Rs 6623000/ being a proposal amount to Architect as an income without appreciating the facts of the case in its proper perspective. An appeal had been filed with Tribunal against the addition of Rs 6623000/. Tribunal had considered the facts and allowed partly for statistical purpose the appeal. However the CIT (A) interpreted the order as partly allowed and accordingly allowed the penalty order partly which is contrary to the facts of the case. The CIT ( A) had confirmed penalty on addition of Rs 16.23 lacs relating to Ashok Pandit who affirmed in his affidavit that he did not receive the said amount . Therefore penalty should not be imposed on Rs 16.23 lacs."

2. A search under section 132 of the Act was carried out at the business premises of the assessee on 11/9/2007. During the course of search incriminating material was found and accordingly some paper and diary were seized. One of the seized papers contains the entries of payment of Rs.66,23,000/- as per page No.16 of the seized diary. The assessee in his statement under section 131 recorded on 5/11/2007 admitted the said payment of Rs.66,23,000/- found recorded in the seized diary. However, vide letter dated 31/12/2007 the assessee retracted its statement and stated that the amount of Rs.66,23,000/- mentioned in the diary was only a payment supposed to be made and was not actually paid.

2.1 In the assessment framed under section 153A the AO made addition of Rs.66,23,000/- as undisclosed income of the assessee. The said addition was confirmed by CIT(A) and on further appeal the Tribunal confirmed part addition to the extent of Rs.16,23,000/- shown as payment made to Mr. Ashok Pundit. However, the Tribunal remanded the issue to the extent of payment of Rs.50,00,000/- shown as made to MHADA to the record of AO for verification from MHADA whether the said payment was actually made by the assessee . In the meantime the AO initiated penalty under section 271(1)(c) and levied penalty of Rs.21,98,199/- being 100% of tax sought to be evaded in respect of addition of Rs.66,23,000/-. In the set aside proceedings the AO found that payment of Rs.50.00 lacs was not received by MHADA from assessee during the period under consideration. Accordingly the AO granted relief of the said amount to the assessee while passing the order dated 20/11/2013. Against the levy of penalty, the assessee filed appeal before the CIT(A). CIT(A) has restricted the penalty to the extent 3 ITA No.4513/M/13

of addition of Rs.16,23,000/- as confirmed by the Tribunal while passing the quantum order. Thus, the grievance of the assessee before us is only in respect of the penalty levied against the addition to the extent of Rs.16,23,000/- which was confirmed by this Tribunal in the quantum appeal.

3. Before us, the ld. AR of the assessee has submitted that the diary seized during the search carried out, contains the amount of Rs.16,23,000/- to be paid to one Mr. Ashok Pandit which was not actually paid by the assessee on 29/03/2004, but the assessee made the payment of Rs.30.00 lacs to Shri Ashok Pandit on 30/4/2004 which was offered by the assessee to tax in the assessment year 2005-06. He has further submitted that the assessee retracted the statement recorded on 05/11/2007 by filing letter dated 31/12/2007 and clarified that the writing in the diary regarding payment of Rs.16,23,000/- to Shri Ashok Pandit was wrongly interpreted as paid on 29.03.2004 whereas it was only an estimate and the said payment was to be made by the assessee which was actually paid on 30/4/2004 for Rs.20.00 lacs to the contractor and Rs.10.00 lacs to Mr. Ashok Pandit. The ld. AR has further submitted that out of the total amount of Rs.66,23,000/-, the AO has allowed the relief of Rs.50.00 lacs shown as payment to MHADA which shows that the entries in the diary shown as payment on 29/3/2004 were not the actual payments. Though, the Tribunal has confirmed the addition regarding the balance amount of Rs.16,23,000/-, however, when the assessee has explained before the AO that this amount was not the actual payment then the penalty u/s.271(c) is not attracted on such disallowance. The ld. AR has further submitted that part of the entries in the diary seized during the search was accepted by the AO as not actual payment then the rest of the payment of Rs.16,23,000/- cannot be treated as undisclosed income of the assessee . He has pleaded that the penalty levied in respect of the amount of Rs.16,23,000/- shown in the said paper should be deleted.

3.1 On the other hand the ld. DR has submitted that apart from the seized paper from the business premises of the assessee, the assessee in its statement recorded on 05/11/2007 has admitted the said amount as undisclosed income. Further, it was not a 4 ITA No.4513/M/13

statement recorded on the date of search or immediately after search but the statement was recorded after 55 days from the date of search. Therefore, there is no scope of any misunderstanding or confusion in the mind of the assessee regarding the undisclosed income admitted in the statement recorded under section 131. The retraction of the statement is nothing but an afterthought as held by this Tribunal in the quantum appeal. The addition is based on seized material as well as the statement of the assessee being undisclosed income of the assessee. Therefore, the assessee is guilty of furnishing of inaccurate particulars of income as well as concealment of income attracting penalty provisions of section 271(1)(c). He has relied upon the orders of authorities below.

4. We have considered the rival submissions as well as relevant material on record. There is no dispute that during the course of search action on 11/9/2007 apart from the other material a diary was found and seized containing the entries. The English translation of the entries as submitted by the assessee are as under :-

Page-16:FY 2003-04

Rs.50 lacs MHADA Rs.5 lacs Mr. Pandit Rs.8 lacs 60 thousand Mr. Pandit Rs.2 lacs Mr. Pandit Rs.18 thousand Mr. Pandit Rs.20 thousand Mr. Pandit 29-03-2004 Rs.25 thousand Mr. Pandit

Page- 4: F.Y. 2004-05

Paid to Contractor on 30.04.2004 Rs.20,00,000/-

Paid to Mr. Pandit Rs.10,00,000/-

30-04-2004

4.1 For the year under consideration the entries of first part of Rs.66,23,000/- is relevant and the AO made the addition of the said amount of Rs.66,23,000/- as 5 ITA No.4513/M/13

undisclosed income of the assessee. We further note that in the statement recorded on 5/11/2007 under section 131 the assessee has admitted that the said amount was paid by the assessee to the parties mentioned in the diary. Though the assessee has retracted the statement vide letter dated 31/12/2007, however, in the absence of any plausible explanation and particularly in view of the fact that the original statement was recorded after a gap of 55 days from the date of search, the retraction of the assessee cannot be accepted as there is no reason to believe that in a statement given by the assessee after a gap of 55 days of the search was under any duress or coercion or under any disturbed state of mind. The Tribunal in the quantum appeal confirmed the addition to the extent of Rs.16,23,000/- representing the payment to Mr. Ashok Pandit written as Mr. Pundit in the diary. Since the remaining payment of Rs.50.00 lacs was shown to MHADA the Tribunal in the quantum appeal remitted the issue to the record of the AO for verification of the said payment from MHADA. Thus, the limited issue before us is regarding the penalty in respect of the addition of Rs.16,23,000/- to Mr. Ashok Pandit as undisclosed income. The ld. AR of the assessee has given much stress on the fact that the payment of Rs.30.00 lacs shown in the said diary as on 30/4/2004 was actually made by the assessee to Mr. Ashok Pandit, and the same has been offered to tax for the assessment year 2005-06 as the said payment was returned to the assessee. It is pertinent to note that as per the entry in the diary the amount of Rs.20.00 lacs was shown as paid to contractor and Rs.10.00 lacs to Mr. Pandit on 30/4/2004. Whereas in the affidavit of Mr. Ashok Pandit it is stated that he received a sum of Rs.30.00 lacs on 30/4/2004 which was returned to the assessee on 2/5/2004.

This statement of Mr. Ashok Pundit is contrary to the admitted entries of the diary wherein out of Rs.30,00,000/- Rs.20.00 lacs has been shown as paid to contractor and Rs.10.00 lacs shown as paid to Mr. Ashok Pandit on 30/4/2004. Further if the amount was returned to the assessee on 2/5/2004 then at the time of statement on 5/11/2007 this fact should have been explained by the assessee. Further, in the retraction letter dated 31/12/2007, again this fact was not disclosed by the assessee that the amount was received back by the assessee and the assessee has stated that only Rs.30.00 lacs 6 ITA No.4513/M/13

was paid on 30/4/2004. We further note that the assessee has not explained the purpose for which the amount of Rs.50.00 las was to be paid to MHADA. Since payment was to be made out of the accounts therefore, the possibility of making the said payment as illicit money is not ruled out and therefore, there is no question of the said payment could be verified from the record of MHADA. In view of the facts and circumstances of the case we do not find any merits and substance in the explanation of the assessee. Since the amount was not disclosed in the books of account and it was assessed as undisclosed income of the assessee which has been confirmed by this Tribunal in the quantum appeal, therefore, it is a case of concealment of income as well as furnishing of inaccurate particulars of income. Accordingly we are of the view that the penalty levied under section 271(1)(c) is justified in the case of the assessee.

5. In the result, appeal is dismissed.

Order pronounced in the open court on 13th February, 2015.

आदेश क! घोषणा खुले यायालय म* +दनांकः 13/02/2015 को क! गई ।

Sd/- Sd/-

(D. Karunakara Rao) (Vijay Pal Rao ) लेखा सद य / ACCOUNTANT MEMBER याियक सद य / JUDICIAL MEMBER मुंबई Mumbai; +दनांक Dated 13/02 /2015 व.िन.स./ Jv, Sr. PS

आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. आयकर आयु (अपील) / The CIT(A)- 4. आयकर आयु / CIT

5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड फाईल / Guard file.

आदेशानुसार/ BY ORDER, स यािपत ित //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai.