Prashant Arun Sangai,, Nashik v. Tax Recovery Officer,,

CO 66/PUN/2013 | 2007-2008
Pronouncement Date: 30-04-2014 | Result: Dismissed

Appeal Details

RSA Number 6624523 RSA 2013
Assessee PAN ACCPS1596F
Bench Pune
Appeal Number CO 66/PUN/2013
Duration Of Justice 6 month(s) 5 day(s)
Appellant Prashant Arun Sangai,, Nashik
Respondent Tax Recovery Officer,,
Appeal Type Cross Objection
Pronouncement Date 30-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-04-2014
Assessment Year 2007-2008
Appeal Filed On 25-10-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE: SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO S. 61 62 & 63 / P N/ 20 1 2 ASSESSMENT YEAR S : 200 2 - 03 2006 - 07 & 2007 - 08 TAX REC OVERY OFFICER (CENTRAL) NASHIK VS. SHRI PRASHANT ARUN SANGAI 02 SWASTIK SANKUL CIDCO PATHARDI PHATA NASHIK (APPELLANT) (RESPONDENT) PAN NO. ACCPS1596F CO NOS. 64 65 & 66 /PN/20 1 3 ASSESSMENT YEAR S : 2002 - 03 2006 - 07 & 2007 - 08 SHRI PRASH ANT ARUN SANGAI 02 SWASTIK SANKUL CIDCO PATHARDI PHATA NASHIK VS. TAX RECOVERY OFFICER (CENTRAL) NASHIK (APPELLANT) (RESPONDENT) PAN NO. ACCPS1596F A SSESSEE BY: SHRI M.K. KULKARNI RESPONDENT BY: SHRI P.L. PATHADE DATE OF HEARING : 2 3 - 04 - 2014 DATE OF PRONOUNCEMENT : 30 - 04 - 2014 ORDER PER R.S . PADVEKAR JM : - THESE APPEALS ARE FILED BY THE REVENUE CHALL ENGING THE RESPECTIVE IMPUGNE D ORDERS OF THE LD. CIT(A) - I NASHIK DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1) (C) OF THE INCOME - TAX ACT FOR THE A.YS. 2002 - 03 2006 - 07 AND 2007 - 08 . THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTIONS IN THE ALL THE THREE ASSESSMENT YEARS. 2. WE FIRST TAKE THE APPEAL FILED BY THE REVENUE FOR A.YS. 2002 - 03 BEING ITA NO. 61/PN/2012 FOR DISPOSAL. IN THE A.Y. 2002 - 03 THE REVENUE HAS TAKEN THE MULTIPLE GROUNDS IN THE APPEAL BUT THE ISSUE FOR 2 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK OUR CONSIDERATION IS WHETHER THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT OF RS.15 51 846/ - FOR THE A.Y. 2002 - 03 WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATION REGARDING THE NON - GENUINE LOANS. 3. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS A PROPRIETOR OF M/S. UTKARSH TRADERS DEALING IN SCRAP HR/CR SHEETS PLATES ON WHOLESALE BASIS. THE ASSESSE IS REGULARLY ASSESSED TO INCOME TAX. THE ASSESSEE HAS ALSO MAINTAINED REGULAR BOOKS OF ACCOUNT WHICH ARE AUDITED U/S. 44AB OF THE ACT. THE ASSESSEE HA D FILED THE RETURN OF INCOME FOR THE A.Y. 2002 - 03 DECLARING TOTAL INCOME OF RS.17 17 800/ - AND AGRICULTURAL INCOME OF RS.6 47 950/ - U/S. 139 OF THE ACT . THE REGULAR ASSESSMENT OF THE ASSESSEE HAS BEEN COMPLETED U/S. 143(3) OF THE ACT. THERE WAS A SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT AGAINST THE ASSESSEE ON 08 - 11 - 2006 IN HIS RESIDENTIAL AS WELL AS BUSINESS PREMISES. THE ASSESSEE WAS ISSUED THE NOTICE U/S. 153A AND IN RESPONSE TO NOTICE U/S. 153A THE ASSESSEE FILED THE RETURN OF INCOME. THE ASSESSMENT OF THE ASSESSEE HAS BEEN COMPLETED U/S. 153A R.W.S. 143(3) OF THE INCOME - TAX ACT. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS AND LEVIED THE PENALTY OF RS.15 15 846/ - . THE FOLLOWING ADDITIONS MADE BY THE ASSESSING OFFICER WERE SUBJECTED TO THE PENALTY PROCEEDINGS : I. ADDITION U/S. 68 OF THE ACT IS IN RESPECT OF THE LOAN CREDITORS OF RS.50 00 000/ - II. THE ALLEGED BOGUS INTEREST PAYMENT TO LOAN CREDITORS OF RS.3 19 564/ - III. THE UNRECORDED PAYMENTS/INVESTMENTS OF RS. 184694/ - IV. DISALLOWANCE OF AGRICULTURE INCOME @ 20% OF RS.1 2 9 590/ - 3 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 4. AS OBSERVED BY THE ASSESSING OFFICER DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ONE LOOSE PAPER WAS FOUND AND SEIZED (PAGE NO. 123 OF A - 1) IN THE BUSINESS PREMISES OF THE ASSESSEE ON WHICH THE DETAILS IN RESPECT OF FIVE DEPOSITORS WERE MENTIONED I.E. IN RESPECT OF SHRI BHARAT BHAT M/S. B.K. ENTERPRISES SHRI DIXIT SHAH SAPNA SHAH VANITA SANGHAVI AND SHRI YATIN JOSHI. AS PER SAID STATEMENT IT WAS SEEN THAT THOSE PARTIES / PERSONS ADVANCED LOANS TO THE ASSESSEE TO THE EXTENT OF RS.26 50 000/ - . THERE IS NO DISPUTE ABOUT THE FACT THAT THOSE LOANS WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE OF M/S. UTKARSH TRADERS. AFTER EXAMINING THE SEIZED PAPER (PAGE NO. 123 OF A - 1) THE ASSESSING OFFICER WAS OF THE OPINION THAT THE LOAN TRANSACTIONS WERE NON - GENUINE TRANSACTIONS AND ONE BROKER SHRI KETAN SHAH WAS ENGAGED TO GET THOSE BOGUS NON - GENUINE ENTRIES AND FOR THAT PURPOSE THE BROKERAGE TO THE EXTENT OF RS. 64 325/ - WAS PAID TO HIM. AS OBSERVED BY THE ASSESSING OFFICE R ONCE THE SUFFICIENT CASH FLOW HAS BEEN GENERATED BY THE ASSESSEE HE HAD RETURNED THOSE LOANS BY CHEQUES AND RECEIVED THE EQUIVALENT AMOUNTS AS PER THE COMPUTATION DETAIL S GIVEN IN THE SAID PAPER. THE ASSESSING OFFICER HAS ALSO EXPLAINED THE MODUS OPERA NDI OF THE ASSESSEE BY EXPLAINING THE SAID SEIZED PAPER. 5. THE ASSESSING OFFICER ACCORDINGLY ASKED THE ASSESSEE WHY THOSE LOAN CREDITORS SHOULD NOT BE TREATED AS A NON - GENUINE AND AMOUNT SHOWN AGAINST THEIR NAME SHOULD NOT BE TREATED AS AN INCOME U/S. 68 OF THE ACT. THE ASSESSING OFFICER ALSO ASKED THE ASSESSEE THAT WHY THE INTEREST SHOWN PAID TO THOSE LOAN CREDITORS IN ALL THE ASSESSMENT YEARS SHOULD NOT BE DISALLOWED AS AN EXPENSES INCURRED NOT FOR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER HAS GIVEN THE DETAILS OF THE LOANS AS WELL AS THE INTEREST ON PAGE NOS. 7 & 8 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT ONE MORE PAPER WAS SEIZED I.E. PAPER NO. 38 OF ANNEXURE - 1 OF THE PARTY NO. 2 HAVING THE IDENTICAL 4 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK INFORMATI ON IN RESPECT OF ONE CHANDRABEN PATEL AND KUNDAN DOSHI. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE SAID PAPER PERTAINS TO BROKER KETAN SHAH. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT THOSE WERE ALSO NON - GENUINE CREDITORS AND THE ASSESSEE HA S BROUGHT HIS OWN UNDISCLOSED INCOME IN THE GARB OF SHOWING LOANS TAKEN FROM THE ABOVE PARTIES CLAIMING THEM AS LENDERS. THE ASSESSING OFFICER HAS FURTHER NOTED THAT FROM ONE MORE PAPER SEIZED ( BEING PAPER NO. 39 OF ANNEXURE - 1 OF PARTY NO. 2 ) IT IS REVEAL ED THE SIMILAR INFORMATION IN RESPECT OF THE FIVE PARTIES I.E. ( I ) . HIREN MEHTA ( II ) . KANTILAL M. SHAH ( III ) . SEJAL V. SHAH ( IV ) . VAISHALI PATEL AND ( V ) . MANOJ AJMERA. THE ASSESSING OFFICER HAS ALSO SHOWN THE INTEREST CLAIMED ON THE SAID SHEET SHOWN AS PAID TO THEM FOR THE A.YS. 2003 - 04 TO 2005 - 06. THE DETAILS OF THE AMOUNT S OF LOAN NOTED BY THE ASSESSING OFFICER (P RINCIPAL + I NTEREST ) CAN BE SUMMARIZED AS UNDER: NAME PRINCIPAL INTEREST B.K. ENTERPRISES 500000 33 305 CHANDABEN P. PATEL 550000 36 84 0 DIXIT D. SHAH 425000 28 673 HITEN R. MEHTA 225000 14 465 KANTILAL M. SHAH HUF 500000 29 589 KUNDAN K. DOSHI 475000 31 848 SAPANA M. SHAH 300000 19 313 SEJAL V. SHAH 400000 24 465 VAISHALI P. PATEL 200000 12 903 VANITA K. SANGHAVI 500000 32 505 Y ATIN H. DOSHI 425000 25 098 MANOJ AJMERA 500000 28 560 5000000 3 19 564 5 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 6. THE ASSESSEE RESISTED THE ACTION OF THE ASSESSING OFFICER AND FILED THE REPLY WHICH IS PRODUCED IN THE ASSESSMENT ORDER: 10.1 IN RESPONSE TO THIS ASSESSEE VIDE HIS LETTER DT. 10/12/2008 ASSESSEE HAS SUBMITTED AS UNDER: - WITH REFERENCE TO ABOVE AND UNDER INSTRUCTIONS OF OUR ABOVE - MENTIONED CLIENT AND IN CONTINUATION OF OUR EARLIER SUBMISSION WE HAVE TO STATE AND SUBMIT AS UNDER: - THE ASSESSEE HAS TAKEN LOANS FROM VARIOUS P ARTIES AND REPAID THE LOANS DURING THE ABOVE MENTIONED PERIOD. THE ASSESSEE HAS ALSO FILED SOME OF THE CONFIRMATION LETTERS ALONG WITH DETAILED ACCOUNT EXTRACT WITH THEIR COMPLETE ADDRESS PAN ETC. AS ASKED FOR. THE BALANCE CONFIRMATIONS AS ASKED BY YOU ARE ENCLOSED HEREWITH. THE COMPLETE DETAILS OF LOAN CREDITORS I.E. NAME ADDRESS PAN ETC. ARE ENCLOSED HEREWITH FOR YOUR VERIFICATION. IF YOU HAVE ANY OBJECTION ON THOSE LOAN CREDITORS WE KINDLY REQUEST YOU TO ISSUE SUMMONS TO SUCH PARTIES AND CHECK THE GENUINENESS ETC. OF THE SAID LOANS. HOWEVER IN OUR OPINION YOU HAVE ALSO ISSUED THE SUMMONS TO SOME OF OR ALL THE LOAN CREDITORS. KINDLY LET US KNOW THE RESULT OF THE SAME AS THE SAME IS HAVING BEARING ON THE ISSUE. AS STATED BY YOU IN YOUR NOTICE TH AT THE LOAN TAKEN FROM BHARAT BHATT M/S. B.K. ENTERPRISES DIXIT SHAH SAPNA SHAH VANITA SANGHAVI AND YATIN JOSHI ARE NON GENUINE LOANS. THE ACCOUNT EXTRACT OF ALL THIS PARTIES ALONG WITH CONFIRMATION LETTERS PAN ADDRESS ETC. ARE A/READY FURNISHED TO Y OU. THESE LOANS ARE GENUINE LOANS TAKEN BY THE ASSESSEE. AS REGARD THE PAGE CONTAINING THE WORKING OF INTEREST PAYABLE T.D.S. SHARE OF THE PARTY ETC. THIS PAGE IS JUST A ROUGH WORKING SEEMS TO BE DONE BY MR. KETAN. HOWEVER THE LOANS TAKEN BY OUR CLIENT ARE NOT FROM MR. KETAN. THE SAID LOANS ARE TAKEN FROM THE PARTIES MENTIONED ABOVE. ALL THE PARTIES ARE REGULARLY ASSESSED TO INCOME TAX. THEY HAVE SHOWN THE LOAN GIVEN TO ASSESSEE IN THEIR FINANCIAL STATEMENT AND ALSO THEY HAVE OFFERED THE INTEREST PAID B Y ASSESSEE TO THEM IN THEIR INCOME TAX RETURNS. ALL THE TRANSACTIONS ARE ENTERED THROUGH BANKING CHANNEL. IN ADDITION TO ABOVE THERE IS NO MATERIAL TO INDICATE THAT THE AMOUNT SHOWN TO BE RECEIVED ON PAGE NO. 121 OF ANN. A - 1 IS RECEIVED BY THE ASSESSEE. IT MAY KINDLY APPRAISED 6 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK THAT THE STATEMENT RELIED UPON BY YOU WAS NOT CONFRONTED TO ASSESSEE DURING THE COURSE OF SEARCH ACTION OR INVESTIGATION CARRIED OUT THEREAFTER. FIRST OF ALL THE ASSESSEE IS NOT AT ALL AWARE ABOUT THE SAID PAPER. THE SAID PAPER IS NOT IN THE HANDWRITING OF THE ASSESSEE OR ANY OF HIS STAFF MEMBERS. AS PER ACCOUNTANT'S CONTENTION MR. KETAN USE TO SEAT WITH HIM AND PREPARE DIFFERENT PLANS. TO FIND THE GENUINENESS OF THE TRANSACTIONS WITH THE SAID PARTIES WE KINDLY REQUEST YOU TO ISSU E SUMMONS TO ALL THE RELEVANT PARTIES. 7. IT APPEARS THAT VIDE LETTER DATED 12 - 07 - 2008 THE ASSESSEE OFFERED THE ABOVE AMOUNT AS HIS INCOME FOR TAX IN THE A.YS. 2002 - 03 TO 2007 - 08 BY STATING THAT WITH A VIEW TO SETTLE THE ISSUES/ DIFFERENCES FOREVER TO BU Y THE PEACE OF MIND TO AVOID PROTRACTED LITIGATION AND WITH A CONDITION TO NOT TO INITIATE ANY PENALTY PROCEEDINGS HE IS OFFERING ABOVE AMOUNTS AS HIS INCOME . THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE REGARDING THE GENUINENESS OF THE LOAN CREDITORS. IN THIS CASE THE ASSESSING OFFICER HIMSELF H AS ADMITTED THAT ALL THE PAPERS SEIZED FROM THE ASSESSEE BELONGED TO ONE BROKER SHRI KETAN SHAH. ON PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE ASSESSEE FILED THE CONFIRMATION LETTER S FROM THOSE LOAN CREDITORS GIVING THE REQUISITE DETAILS . A LL THE LOANS ARE REGULATED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE HAS ALSO PAID THE INTEREST THROUGH BANK CHEQUE AND THE TDS HAS ALSO DEDUCTED ON ALL THE INTEREST PAYMENT. THE AS SESSEE REQUESTED THE ASSESSING OFFICER TO ISSUE THE SUMMONS BY GIVING THE ADDRESS ES OF THE LOAN CREDITORS FOR VERIFYING THE GENUINENESS OF THE LOANS. THE ASSESSEE ALSO CATEGORICALLY DENIED THE AUTHORSHIP OF THE SEIZED PAPER S AND EVEN THE KNOWLEDGE ABOUT THE SAID LOOSE PAPERS WHICH WERE SEIZED DURING THE SEARCH AND SEIZURE OPERATION. THE ASSESSEE ALSO CONTENDED THAT THE SEIZED PAPERS WERE NOT CONFRONTED TO THE ASSESSEE DURING THE COURSE OF THE SEARCH ACTION. HE ALSO CON TENDED THAT ALL THE PAPERS ARE BY M R. KETAN SHAH AND NOTHING WAS FOUND TO PROVE THAT THE ASSESSEE HAS ANY UNDISCLOSED INCOME EXCEPT ABOVE REFERRED LOOSE PAPERS . 7 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK THE ASSESSING OFFICER ISSUED THE SUMMONS TO SOME OF THE PARTIES WHICH HAVE BEEN DISCUSSED BY THE ASSESSING OFFICER ON PAGE NO. 35 OF THE ASSESSMENT ORDER . ONE PARTY M/S. B.K. ENTERPRISES FILED THE REPLY STATING THAT THEY HAVE ADVANCED THE LOAN OF RS.5 00 000/ - TO THE ASSESSEE AND THE SAID AMOUNT WAS RECEIVED BACK IN THE F.Y. 2005 - 06. IT APPEARS THAT SOME OF THE LOAN CREDITORS DID NOT APPEAR AND IN RESPECT OF SOME LOAN CREDITORS SUMMONS COULD NOT BE SERVED. THE ASSESSING OFFICER THEREFORE CONCLUDED THAT THE LOAN CREDITORS SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT ARE NOT GENUINE. HE THEREFORE MADE THE ADDITION OF RS.50 00 000/ - U/S. 68 OF THE ACT IN RESPECT OF THE NON - GENUINE LOAN CREDITORS AND ALSO DISALLOWED THE INTEREST CLAIMED BY THE ASSESSEE OF RS.3 19 564/ - . 8. THE ASSESSING OFFICER ALSO TREATED RS.30 000/ - + RS.1 54 694 TOTALING RS.1 84 694/ - AS UNDISCLOSED INCOME O F THE ASSESSEE IN ALL THESE AMOUNTS WERE SUBJECTED TO THE PENALTY U/S. 271(1)(C) OF THE ACT. IN RESPONSE TO THE SHOW CAUSE IN THIS ISSUE BY THE ASSESSING OFFICER THE ASSESSEE FILED THE REPLY ON 20 - 02 - 2009 WHICH IS REPRODUCE D IN THE PENALTY ORDER AS UNDER: 12. THE ASSESSEE HAS TAKEN LOANS FROM VARIOUS PARTIES. THE ASSESSMENT FOR THE YEAR UNDER REVIEW WAS COMPLETED U/S. 143(3) OF THE ACT. ALL THE SAID LOANS AS WELL AS THE TRANSACTIONS OF TAKING LOANS WERE PROVED TO BE GENUINE DURING THE COURSE OF ASSESSME NT PROCEEDINGS. THE THEN A.0. HAS ALSO CARRIED OUT INDEPENDENT ENQUIRIES WITH THE SAID PARTIES. NO ADDITION OF THE SAME WAS MADE IN THE ASSESSMENT COMPUTED U/S. 143(3) OF THE ACT. EVEN IN THE COURSE OF REASSESSMENT PROCEEDINGS U/S. 153A OF THE ACT IN OUT IN OUR OPINION YOU HAVE CARRIED OUT THE INDEPENDENT ENQUIRIES WITH THE SAID PARTIED AND THERE IS NOTHING ANY ADVERSE FINDING. THE CONFIRMATION LETTERS ALONG WITH THE DETAILED ACCOUNT EXTRACTS WITH THEIR COMPLETE ADDRESS PAN ETC. WERE ALSO FILED BY THE AS SESSEE WHICH IS NOT DOUBTED OR REJECTED BY YOU. ALMOST ALL THE PARTIES WERE ASSESSED TO INCOME TAX. 8 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK IT WAS ALSO URGED BEFORE YOU TO SEND SUMMONS TO ALL THE PARTIES IN CASE IF YOU HAVE ANY OBJECTION OR DOUBT IN RESPECT OF THE SAID LOAN CREDITORS. HOWEVER THERE IS INTIMATION FOR YOUR OFFICE IN THIS RESPECT THEREFORE IT IS APPARENTLY PRESUMED THAT YOU WERE NOT HAVING ANY OBJECTION OR DOUBT IN RESPECT OF SAID LOAN CREDITORS. AS REGARD THE PAGE CON T AIN IN G THE WORKING OF INTEREST PAYABLE TDS SHARE OF THE PART Y ETC. THIS PAGE IS JUST A ROUGH WORKING SEEMS TO BE DONE BY MR. KETAN. HOWEVER THE LOANS TAKEN BY OUR CLIENT ARE NOT FROM MR. KETAN. THE SAID LOANS ARE TAKEN FROM THE PARTIES MENTIONED ABOVE. ALMOST A/I THE PARTIES ARE REGULARLY ASSESSED TO INCOME TAX. TH EY HAVE SHOWN THE LOAN GIVEN TO THE ASSESSEE IN THEIR FINANCIAL STATEMENTS AND ALSO THEY HAVE OFFERED THE INTEREST PAID BY THE ASSESSEE TO THEM IN THEIR INCOME TAX RETURNS WHEREVER APPLICABLE. A - LL THE TRANSACTIONS ARE ENTERED THROUGH BANKING CHANNEL. IN ADDITION TO ABOVE THERE IS NO MATERIAL TO INDICATE THAT THE AMOUNT SHOWN TO BE RECEIVED ON PAGE NO 121 OF ANNEX. A - 1 IS RECEIVED BY THE ASSESSEE. IT MAY KINDLY APPRAISED THAT THE STATEMENT RELIED UPON BY YOU WAS NOT CONFRONTED TO ASSESSEE DURING THE COURS E OF SEARCH ACTION OR INVESTIGATION CARRIED OUT THEIR AFTER. FIRST OF ALL THE ASSESSEE IS NO AT ALL AWARE ABOUT THE SAID PAPER. THE SAID PAPER IS NOT IN THE HANDWRITING OF THE ASSESSEE OF ANY OF HIS STAFF MEMBER. IT WAS POINTED OUT IN THE ASSESSMENT PROCEE DINGS THAT AS PER ACCOUNTANT'S CONTENTION MR. KETAN USED TO SEAT WITH HIM AND PREPARED DIFFERENT PLANS. THE SAID LOANS WERE OFFERED BY THE ASSESSEE FOR TAXATION JUST TO BUY THE PEACE OF MIND AND TO AVOID THE PROTRACTED LITIGATION WITH THE DEPARTMENT. IT IS ALSO WORTH TO BE NOTED THAT THE SAID LOANS WERE PREPAID BY A/C PAY CHEQUES. THE PURPOSE OF TAKING OF SAID LOANS WAS ALSO EXPLAINED TO YOU DURING THE REASSESSMENT PROCEEDINGS THAT AS THE ASSESSEE WAS NEW IN THE BUSINESS AS WELL AS NASHIK NO FINANCIAL IN STITUTE WAS READY TO FINANCE ASSESSEE. THE ASSESSEE WAS IN GREAT NEED OF WORKING CAPITAL AND THERE WAS NO ALTERNATIVE BEFORE THE ASSESSEE OTHER THAN TO BORROW FROM PRIVATE PARTIES. THEREFORE CONSIDERING THE ABOVE SUBMISSION WE KINDLY REQUEST YOU TO DROP T HE PROCEEDINGS INITIATED U/S 271(1) (C) OF THE ACT.' 9 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 9. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND LEVIED THE PENALTY U/S. 271(1)(C) OF THE INCOME - TAX ACT BY OBSERVING THAT THAT THE ASSESSEE HAS SURRENDERED THE INCOME AFTER THE ISS UE OF QUESTIONARIES BASED ON THE SEIZED MATERIAL AND EXPLANATION OF THE ASSESSEE CANNOT BE ACCEPTED. THE ASSESSING OFFICER LEVIED THE PENALTY OF RS.15 51 846/ - ON THE REASON OF FURNISHING THE INACCURATE PARTICULARS OF INCOME. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A) AND LD. CIT(A) DELETED THE ENTIRE PENALTY. THE OPERATIVE PART OF THE FINDINGS AND REASONS OF THE LD. CIT(A) ARE AS UNDER: 6.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE THE ASSESSMENT ORDER THE PENALTY ORDER AN D THE POSITION OF LAW ON THE SUBJECT. THE FACTS ON THIS ISSUE ARE THAT DURING THE SEARCH CERTAIN PAPERS WERE FOUND AND SEIZED WHICH WERE PREPARED BY ONE SHRI KETAN SHAH WHO HAD STATED TO BE ARRANGED LOANS FOR THE APPELLANT. THERE WERE TOTAL NUMBER OF 12 PA RTIES AS PER THE DETAILS AVAILABLE ON PAGE 11 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER EXAMINED THE CREDITS. D URING THE ASSESSMENT PROCEEDINGS THE APPELLANT PLEADED THAT HE HAS FILED THE CONFIRMATION LETTERS IN RESPECT OF ALL THE CREDITORS AND FURTH ER REQUESTED THE AO TO ISSUE SUMMONS TO ALL OF THEM FOR HIS SATISFACTION. THE APPELLANT ALSO SUBMITTED BEFORE THE AO THAT ALL THE CREDITORS ARE INCOME TAX PAYEES AND WHEREVER APPLICATION TAX HAS BEEN DEDUCTED BY THE APPELLANT ON THE PAYMENT OF INTEREST. TH E APPELLANT ALSO TOOK THE PLEA THAT THE PAPER ON WHICH ALL THESE DETAILS WERE FOUND DURING THE SEARCH WERE NOT IN THE HANDWRITING OF THE APPELLANT AND SUBMITTED THAT THE SAID PAPER WAS RUN BY THE SAID SHRI KETAN SHAH. THE RECEIPT OF LOAN WAS THROUGH BANKIN G CHANNELS AND THE PRIMARY BURDEN THAT LIED ON THE APPELLANT WAS DISCHARGED. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AND HE ISSUED A SHOW CAUSE NOTICE TO THE EFFECT THAT ALL THE LOAN CREDITORS TAKEN BY THE APPELLANT INCLUDING THE IMPUGNED LOAN CREDITORS OF RS.50 00 000/ - WERE NOT GENUINE. BUT THE APPELLANT MAINTAINED HIS STAND REGARDING THE GENUINENESS OF THE LOAN CREDITORS HOWEVER THE APPELLANT INFORMED THE AO VIDE LETTER DATED 22/12/2008 AS UNDER: - 10 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 'WITH REFERENCE TO ABOVE I HAVE TO STATE THAT I AM REGULARLY ASSESSED TO INCOME TAX. THERE WAS SEARCH ACTION IN MY RESIDENTIAL AS WELL AS BUSINESS PREMISES ON 08/11/2006. THAT I AM A PROPRIETOR OF M/S UTKARSHA TRADERS CARRYING ON THE BUSINESS OF STEEL PL ATES ETC. I AM ALSO CARRYING ON THE BUSINESS OF REAL ESTATE ETC. CONSIDERING THE VOLUME OF MY BUSINESS AS WELL AS MY BUSY SCHEDULE ETC. I INTEND TO SETTLE THE DISPUTES WITH THE INCOME TAX DEPARTMENT ONCE FOR ALL. THEREFORE AS PER DISCUSSIONS FROM TIME TO TIME AND WITHOUT PREJUDICE TO ACTUAL FACT ON DIFFERENT ISSUE AS EXPLAINED ON BEHALF ME FROM TIME TO TIME I INTEND TO OFFER FOR TAXATION THE AMOUNTS INVOLVED IN THE ISSUES ON WHICH THERE IS DIFFERENCE AS TO EITHER ACTUAL NATURE THEREOF OR THE TAXABILITY THEREOF. ACCORDINGLY I HEREBY OFFER FOR TAXATION THE AMOUNTS AS PER STATEMENT ENCLOSED HEREWITH FOR A.Y. 2001 - 02 TO 2007 - 08 WITH A VIEW TO SETTLE THE ISSUES/DIFFERENCES FOR EVER TO BUY THE PIECE OF MIND TO AVOID PROTRACTED LITIGATION AND WITH A CONDITIO N TO NOT TO INITIATE ANY PENALTY PROCEEDINGS IN RESPECT THEREOF. I HEREBY ASSURE TO PAY THE TAXES ON THE SAID OFFER AS EARLY AS POSSIBLE. I ONCE AGAIN CATEGORICALLY MADE IT CLEAR THAT THE ABOVE OFFER IS MADE WITHOUT PREJUDICE TO ACTUAL FACT STATED FROM TIM E TO TIME BY WHICH I STILL STAND AND JUST TO SETTLE THE ISSUES AS MENTIONED HEREINABOVE'. THE AO THEREFORE MADE THE IMPUGNED ADDITION OF RS.50 00 000/ - . DURING THE PENALTY PROCEEDINGS THE APPELLANT REITERATED THE SAME ARGUMENT BEFORE THE AO AND FURTHER A RGUED THAT ALL THE LOAN CREDITS WERE SUPPORTED BY LETTERS OF CONFIRMATION AND DETAILED ADDRESSES AND PAN. THE APPELLANT HAD ALSO FILED ACCOUNT EXTRACTS. IT WAS ALSO PLEADED DURING THE PENALTY PROCEEDINGS THAT ALL THESE LOANS HAVE BEEN VERIFIED DURING THE A SSESSMENT PROCEEDINGS U/S 143(3). ON GOING THROUGH THE ABOVE FACTS AND THE CIRCUMSTANCES IT IS EVIDENT THAT THE ASSESSING OFFICER PROCEEDED TO MAKE THE ADDITION OF RS.50 00 000/ - BY OBSERVING THAT THE LOAN CREDITORS ARE NOT GENUINE AND IN PARA 10.6 ON PAG E 14 OF THE ASSESSMENT ORDER U/S 153A DATED 26/12/2008 HELD AS UNDER: - 11 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK VIDE LETTER DATED 22/12/2008 ASSESSEE HAS OFFERED THIS INCOME FOR TAXATION DUE TO VARIOUS REASONS QUOTED THEREIN. BUT IN REALITY THE ENTIRE TRANSACTION IS NOT GENUINE. ASSESSEE HAS OFF ERED THIS AMOUNT FOR TAXATION PARTICULARLY WHEN A DETAILED QUESTIONNAIRE WAS ISSUED ON THE BASIS OF SEIZED RECORDS AND OTHER EVIDENCES. THUS OFFER BY THE ASSESSEE IS NOT VOLUNTARY. PENALTY PROCEEDINGS U/S 271( 1 )(C) READ WITH EXPLANATION 1 ARE INITIATED FOR FILING INACCURATE PARTICULARS OF INCOME'. AS MAY BE SEEN THE ASSESSING OFFICER MADE THE ADDITION OF RS.50 00 000/ - ON THIS ACCOUNT PRIMARILY BY REJECTING THE APPELLANT'S EXPLANATION BY TREATING IT AS NOT VOLUNTARY. THERE IS A PLETHORA OF JUDICIAL PRONOUN CEMENTS THAT HAVE RULED THAT AN EVIDENCE REQUIRED FOR MAKING THE ADDITION IN THE ASSESSMENT AND FOR IMPOSING TAX MAY NOT BE SUFFICIENT FOR THE PURPOSE OF IMPOSING A PENALTY U/S 271( 1 )(C). IT IS SETTLED POSITION OF LAW THAT WHILE DEALING WITH THE PENALTY PR OVISIONS A STRICT CONSTRUCTION IS MUST AND IT HAS TO BE ESTABLISHED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED HIS INCOME. FROM THE FACTS ON RECORD IT IS EVIDENT THAT THE APPELLANT HAS ALL THE TI ME CATEGORICALLY DENIED IN THE ASSESSMENT PROCEEDINGS THAT THE ENTIRE AMOUNT OF RS.50 00 000/ - THAT WAS REPRESENTED BY THE CASH CREDIT WAS HIS INCOME. IT IS ALSO SEEN THAT INITIALLY THE AO HAS ISSUED A NOTICE DATED 03/12/2008 PROPOSING TO ADD LOAN CREDITS IN RESPECT OF 60 PARTIES AS WELL AS INTEREST THEREON AMOUNTING TO RS.4 20 13 486/ - FOR A.YS. 2001 - 02 TO 2007 - 08 OUT OF WHICH LOAN CREDITS AND INTEREST THEREON AMOUNTING TO RS 88 80 634/ - PERTAIN TO THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APP EAL. HOWEVER ' FINALLY THE ID. AO MADE AN ADDITION TO THE TUNE OF RS.53 19 564/ - AS AGAINST PROPOSED BY HIM AT RS.88 80 634/ - ON THE BASIS OF OFFER MADE BY THE APPELLANT. THE APPELLANT HAS CATEGORICALLY DENIED THE CONTENTION OF THE SAID NOTICE OF THE AO VI DE HIS LETTER DATED 10/12/2008. IT IS ALSO A MATTER OF FACT THAT THE AO HAS DRAWN ADVERSE INFERENCE ON THE BASIS OF PIECE OF PAPER PREPARED BY MR. KETAN SHAH HOWEVER THE LOANS WERE NOT TAKEN FROM MR. KETAN SHAH. IN MY CONSIDERED VIEWS THE AO DID NOT HAV E ENOUGH MATERIAL TO JUSTIFY THE ADDITION ON THE BASIS OF THOSE LOOSE PAGES SEIZED AS AGAINST THE OTHER FACTORS AS MENTIONED ABOVE I.E. MOVEMENT OF FUNDS THROUGH BANKING CHANNEL FILING OF CONFIRMATIONS AS WELL AS ADDRESSES OF THE LOAN 12 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK CREDITORS FURNISHIN G OF PAN DEDUCTION OF TDS ETC. THE CONTENTION OF THE ID. A.R. OF THE APPELLANT APPEARS TO BE CORRECT THAT THE OFFER WAS MADE BY THE APPELLANT UNDER PRESSURE OF HIGH PITCHED ADDITION AS PROPOSED BY THE AO. THE AO HAS NOT CONFRONTED MR. KETAN SHAH ON THIS ISSUE. THERE IS ALSO NO 'ADVERSE FINDING RECORDED OUT OF THE INDEPENDENT ENQUIRIES CONDUCTED BY THE AO. ON THE CONTRARY IN RESPONSE TO INDEPENDENT ENQUIRIES CONDUCTED BY THE AO SOME OF THE LOAN CREDITORS HAVE ACCEPTED OF HAVING ADVANCED THE AMOUNT TO TH E APPELLANT. IT IS ALSO A MATTER OF FACT THAT THE IMPUGNED LOAN CREDITORS WERE ALSO REPAID BY THE APPELLANT BEFORE THE DATE OF SEARCH ACTION AND ALREADY FURNISHED THE REQUIRED CONFIRMATIONS TWO TIMES I.E. AT THE TIME OF ORIGINAL ASSESSMENT U/S 143(3) AND D URING PROCEEDINGS U/S 153A THE FURTHER CO - OPERATION IS NOT EXPECTED FROM THE SAID LOAN CREDITORS. THE AO AFTER ISSUE OF NOTICE ON 03/12/2008 PROPOSING TO MAKE ADDITION OF LOAN TAKEN FROM AROUND 60 PARTIES HAD ULTIMATELY MADE ADDITION IN RESPECT OF TOTAL 14 PARTIES. THEREFORE IT IS EVIDENT FROM THE RECORD THAT ULTIMATELY THE FINAL ADDITION WAS MADE BY THE AO ON THE BASIS OF OFFER MADE BY THE APPELLANT. ON PAGE 12 OF THE ASSESSMENT ORDER THE AO HAS MENTIONED THAT ON PAGE NO'123 OF BUNDLE NO.A - 1 SE IZED DURING THE SEARCH ACTION HAS NOTED THAT THE APPELLANT HAS RECEIVED BACK THE SAID AMOUNT ON THE VARIOUS DARED MENTIONED IN THE SAID SEIZED PAGE HOWEVER NO CORROBORATIVE EVIDENCE IS FOUND DURING THE SEARCH ACTION TO SUPPORT THE NOTING OF THE SAID PAGE PARTICULARLY WHEN CASH BOOKS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH ACTION CONTAINING DETAILS OF DAY - TO - DAY TRANSACTIONS OF THE APPELLANT. IT IS ALSO EVIDENT THAT THE APPELLANT DISCHARGED PRIMARY BURDEN THAT LIED ON HIM WITH REGARDS TO THESE CR EDITS BY FURNISHING LETTERS OF CONFIRMATION GIVING ADDRESSES FILING EXTRACT OF ACCOUNTS. ALL THE CREDITORS HAVING PAN AND WHEREVER APPLICABLE TAX WAS DEDUCTED AT SOURCE. THE TRANSACTIONS WERE THROUGH BANK AND IN THE ORIGINAL ASSESSMENT U/S. 143(3) DATED 23/03/2005 THESE CREDITS HAVE BEEN ACCEPTED AFTER VERIFICATION AS IS EVIDENT FROM THE SAID ASSESSMENT ORDER. THIS THEREFORE IS A CASE OF BRINGING TO TAX A SUM OF RS.50 00 000/ - PRIMARILY ON THE BASIS OF THE ASSESSEES SURRENDER OF THE INCOME TO BUY PEACE OF MIND. ON THESE FACTS IT IS SETTLED THAT SUCH OFFERS DO NOT LEAD TO A CONCLUSION THAT WAS THE POSITIVE INCOME OF THE APPELLANT FROM UNDISCLOSED SOURCES. THE APPELLANT HAD GIVEN AN EXPLANATION WHICH THE AO HAS NOT FOUND MALAFIDE. IN THE 13 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK ASSESSMENT ORDER U/S 153A DATED 26/12/2008 THERE IS NO MATERIAL EVIDENCE ON RECORD TO SUBSTANTIATE THE IMPUGNED ADDITION OF RS.50 00 000/ - EXCEPT THE APPELLANT'S LETTER OF SURRENDER. 6.3 THIS IS NOT A CASE OF CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME. ANO THER LIMB OF THE ADDITION OF RS.50 00 000/ - IS THE DISALLOWANCE OF INTEREST OF RS.3 19 564/ - ON WHICH THE PENALTY HAS BEEN IMPOSED. IN VIEW OF THE FACT THAT THERE WAS NO MATERIAL ON RECORD TO TREAT THE CASH CREDIT OF RS.50 00 000/ - AS INCOME AND THE DISALL OWANCE OF INTEREST IS ON THE PRESUMPTION THAT THE LOANS WERE EXPLAINED. IN VIEW OF THE FINDINGS GIVEN WITH REGARDS TO THE PENALTY OF RS.50 00 000/ - THE NATURAL COROLLARY FOLLOWS THAT THE APPELLANT'S EXPLANATION WITH REGARD TO THE INTEREST OF RS.3 19 564/ - IS BONAFIDE AND PLAUSIBLE. 6.4 WITH REGARDS TO PENALTY OFT RS.30 000/ - AND RS.1 54 694/ - TOTALING RS.1 84 694/ - WHICH FORMS PART OF ADDITIONAL INCOME DISCLOSED DURING SEARCH AND SHOWN IN THE RETURN OF INCOME IT IS FOUND THAT THE AMOUNT OF RS.30 000/ - R EPRESENTS THE RECEIPT OF LOAN FROM A PERSON I.E. MR. MISHRI KOTKAR AS PER THE PAGE NO.19 OF ANNEXURE - 3A. THEREFORE THIS CANNOT BE TREATED AS APPELLANT'S INCOME WARRANTING IMPOSITION OF PENALTY U/S 271 (1) (C). WITH REGARDS TO THE REMAINING AMOUNT OF RS.1 5 4 694/ - THE APPELLANT GAVE AN EXPLANATION WHICH IS PLAUSIBLE AND WHICH WAS NOT FOUND MALAFIDE BY THE ASSESSING OFFICER THEREFORE PENALTY U/S 271( 1 )(C) IS NOT JUSTIFIED ON THE ADDITION OF RS.1 84 694/ - . 6.5 IT WAS HELD BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. K.R. CHINNIKRISHNA CHETTY (246 ITR 12 1 ) (MAD.) IN THE CASE OF CIT V. APSARA TALKIES (155 ITR 303) (MAD.) IN THE CASE OF T.P.K. RAMALINGAM V. CIT (211 ITR 520) (MAD.) AND IN THE CASE OF CIT VS. M. PACHAMUTHU (2007) 295 ITR 0502 THAT ON AN ESTIMATED ADDITION CONFIRMED IN APPEAL PENALTY U/S.271( 1 )(C) CANNOT BE LEVIED. IF THE APPELLANT GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED THAT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE TH AT THE APPELLANT'S CASE IS FALSE. MERE OMISSION FROM THE RETURN OF AN ITEM OF RECEIPT AMOUNTS NEITHER TO CONCEALMENT NOR TO DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR CIRCUMSTANCES ARE FOUN D FROM WHICH IT CAN BE GATHERED THAT THE 14 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE APPELLANT TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID IMPOSITION OF TAX THEREON. 6.6 IN THE PRESENT CASE IT IS EVIDENT THAT THE APPELLANT HAS DISCLOSED FULL FACTS REGARDING THE LOAN CREDITORS AS WELL AS INTEREST ON SUCH CREDITORS BY WAY OF FURNISHING COMPLETE DETAILS THEREOF INCLUDING NAME ADDRESS PAN CONFIRMATIONS ETC. BY GIVING EXPLANATION THAT WAS NOT FOUND TO BE FALSE OR MALAFIDE. IT IS SETTLED POSITION OF LAW THAT THERE IS NO CAUSE AND EFFECT RELATIONSHIP BETWEEN AN ADDITION BEING MADE TO THE INCOME OF AN ASSESSEE AND THE PENALTY U/S 271( 1 )(C) [ 119 ITD 153 PUNE]. THE FACTS OF THIS CASE DO NOT LEAD TO ANY CONCEALMENT OF INCOME BY THE AP PELLANT BECAUSE THE EXPLANATION OFFERED BY THE APPELLANT WAS BONAFIDE AND THE SAME IS NOT FOUND FALSE. ON THESE FACTS THEREFORE IT IS FOUND THAT THIS IS NOT A FIT CASE OF IMPOSING A PENALTY U/S 271( 1 )(C). THIS VIEW IS FORTIFIED BY THE DECISION OF THE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ASK ENTERPRISES 230 ITR 48 (BOM.). IN A RECENT DECISION DATED 27/07/2011 THE HON'BLE ITAT PUNE ON IDENTICAL FACTS IN I.T.A. NO. 218/PN/2011 IN THE CASE OF P.T. CHOKSI & SONS HAS HELD THAT '........ IT IS EVIDEN T THAT THE ASSESSEE HAS DISCLOSED FULL FACTS REGARDING THE CREDIT SALES AND SOURCES OF THE QUANTITY AND VALUATION OF THE CLOSING STOCK BY GIVING EXPLANATION THAT WAS NOT FOUND TO BE FALSE OR MALAFIDE. UNDER THE FACTS AND CIRCUMSTANCES PENALTY IN QUESTION IS NOT JUSTIFIED FOR THE REASONS DISCUSSED ABOVE. SAME HAS RIGHTLY BEEN DELETED BY THE CIT(A). WE UPHOLD THE SAME'. 6.7 AS MAY BE SEEN FROM THE ABOVE THE ADDITION ON WHICH PENALTY WAS LEVIED WAS ON ACCOUNT OF UNEXPLAINED LOAN CREDITORS OF RS.50 00 000/ - I NTEREST OF RS.3 19.564/ - ON A/C OF INTEREST ON LOAN CREDITORS AND THE ADDITIONAL INCOME OF RS.1 84 694/ - . THE QUANTUM APPEAL FILED BY THE APPELLANT FOR THIS ASSESSMENT YEAR HAS SINCE BEEN WITHDRAWN BY HIM AND DISMISSED AS SUCH. HOWEVER THAT ALONE DOES NO T JUSTIFY THE IMPOSITION OF PENALTY U/S 271( 1 )(C) AS HELD BY VARIOUS COURTS AND THE HON. TRIBUNAL (SUPRA). IN VIEW OF THE ABOVE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING THE IMPUGNED PENA LTY FOR THIS ASSESSMENT YEAR. THERE IS THEREFORE NO CASE FOR EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THE IMPUGNED PENALTY ORDER DATED 29/06/2009 U/S . 15 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 271( 1 )(C) IMPOSING PENALTY OF RS.15 51 846/ - IS THEREFORE CANCELLED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. IN THIS CASE IT IS NOT IN DISPUTE THAT THE ADDITION MADE IN RESPECT OF 12 LOAN CREDITORS ARE BASED ON 2/3 LOOSE PAPERS FOUND AND SEIZED WHICH WERE PREPARED BY ONE SHRI KETAN SHAH WHO HAD STATED TO HAVE ARRANGED LOANS FOR THE ASSESSEE . A LL THE LOANS ARE DULY RECORDED IN THE BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE ASSESSEE. IN THIS CASE THE REGULAR ASSESSMENT OF THE ASSESSEE HAS BEEN COMPLETED U/S. 143(3) OF T HE ACT AND IN THE REGULAR ASSESSMENT PROCEEDINGS THE ASSESSEE HAD FILED THE CONFIRMATION LETTER. IT IS SEEN THAT THE ASSESSING OFFICER IS ALSO NOT IN DISPUTE THAT THREE SEIZED PAPERS WHICH WERE FOUND ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS MADE TH E ABOVE ADDITIONS ARE WRITTEN BY ONE MR. KETAN SHAH WHO APPEARS TO BE THE FINANCE BROKER. AS PER THE RECORD BEFORE US IT IS SEEN THAT EVEN DURING THE ASSESSMENT PROCEEDINGS AFTER THE SEARCH THE ASSESSEE FILED ALL THE CONFIRMATION LETTERS AND ALSO REQUES TED THE ASSESSING OFFICER BY GIVING THE NAME AND ADDRESS OF THE PARTIES TO ISSUE THE SUMMONS. IT APPEARS THAT THE ASSESSING OFFICER ISSUED THE SUMMONS TO SOME OF THE PARTIES AND ONE PARTY RESPONDED ALSO. IT IS TRUE THAT IN THIS CASE THE ASSESSEE CAME FOR WARD AND AGREED FOR THE ADDITIONS AND AT THE SAME TIME IT IS ALSO TRUE THAT THE ASSESSEE FILED THE EXPLANATION IN RESPECT OF LOAN CREDITORS . THE ASSESSEE TRIED TO CONVINCE THE ASSESSING OFFICER THAT ALL THE LOAN CREDITORS ARE GENUINE. IN THE PENALTY PROC EEDINGS ALSO THE ASSESSEE FILED THE REPLY EXPLAINING THAT EVEN IF HE HAS AGREED FOR ADDITION IN THE ASSESSMENT PROCEEDING THAT IS ONLY WITH THE INTENTION TO BUY THE PEACE WITH THE DEPARTMENT. 11. ANOTHER FACT IS TO BE TAKEN NOTE THAT EVEN IF THE ASSESSIN G OFFICER HAS ALSO ADMIT TED IN THE ASSESSMENT ORDER THAT THE SEIZED PAPER 16 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK BELONGED TO ONE MR. KETAN SHAH BUT THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER ARE SILENT AS TO WHY MR. KETAN SHAH WAS NOT EXAMINED BY THE ASSESSING OFFICER. AS PER RELY FILED BY THE ASSESSEE THE SEIZED PAPERS WERE NEVER CONFRONTED EVEN DURING THE COURSE OF SEARCH TO THE ASSESSEE. IT IS TRUE THAT EVEN IF THE SEIZED MATERIAL IS NOT CONFRONTED TO THE ASSESSEE DURING THE COURSE OF SEARCH BUT THE ASSESSING OFFICER IS COMPETENT TO MAKE POST SEARCH ENQUIRY. THE ENTIRE CASE OF THE ASSESSING OFFICER IS BASED ONLY ON THE UNEXPLAINED PAPER SHEET IN THE SENSE THAT THE AUTHOR OF THE SAID PAPER WAS NEVER EXAMINED. THE LD. COUNSEL HAS FILED XEROX COPY OF ONE OF THE SEIZE D PAPER S I.E. PAGE NO. 23 . THE LAW IS WELL SETTLED THAT EVEN IF THE ADDITION IS MADE IN THE ASSESSMENT PROCEEDINGS ON THE BASIS OF OFFER GIVEN BY THE ASSESSEE IT DOES NOT MEAN THAT THE SAID SHOULD BE MADE SUBJECT MATTER OF THE PENALTY IN ALL THE CASES AS IT DEPENDS ON THE FACTS OF EACH CASE. EXPLANATION 1 BELOW SEC. 271(1)(C) GIVES AN OPPORTUNITY TO THE ASSESSEE TO OFFER AN EXPLANATION IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE ASSESSEE INCOME AND THE ASSESSEE HAS OFFERED THE EXPLANATION IN THE PRESENT CASE AND THE SAID EXPLANATION HAS NOT BEEN FOUND ACCEPTABLE BY THE ASSESSING OFFICER. THE E XPLANATION 1 CREATES FICTION AGAINST THE ASSESSEE. MANY TIMES THE ASSESSEE OFFERED THE EXPLANATION WHICH IS NOT ACCEPTED BY THE ASSESSING OFFICER TO CONCLUDE THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS FALSE THEN THERE SHOULD BE SOME MATERIAL BEFORE THE ASSESSING OFFICER FOR ARRIVING AT THE SAID CONCLUSION. THERE SHOULD BE SOME TANGIBLE MATERIAL TO ARRIVE AT A CONCLUSION THAT THE ASSESSEE EXPRESSION IS FALSE. IN T HE PRESENT CASE NOTHING HAS BEEN FOUND OUT OF THE BOOKS OF ACCOUNT AND ALL THE TRANSACTIONS ARE THROUGH THE BANKING CHANNELS AND DULY RECORDED IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS ALSO DEDUCTED THE TDS FROM THE INTEREST PAID OR CREDITED TO THE PART IES. THE THEORY OF THE ASSESSING 17 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK OFFICER IS NOT SUPPORTED BY ANY EVIDENCE AS SUCH EXCEPT 2/3 LOOSE PAPERS WHICH WERE UNPROVED AS AUTHOR OF THOSE PAPERS WERE NOT EXAMINED. THE ASSESSING OFFICER HAS ALSO STATED THAT AS PER THE PROVISIONS OF SEC. 132(4A) OF THE ACT THERE IS A PRESUMPTION AGAINST THE ASSESSEE IN RESPECT OF THE LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH. THIS LEGAL PROPOSITION IS NOT DISPUTED BUT AT THE SAME TIME THOUGH THE ASSESSEE HAS DENIED THAT THE SAID LOOSE PAPERS BELONGED TO HIM O R AUTHORED BY HIM AND THE SAID LOOSE PAPERS BELONGED TO ONE MR. KETAN SHAH THE FINANCE BROKER. THIS FACT IS ALSO NOT DISPUTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HENCE THE ASSESSEE HAS EXPLAINED THE DOCUMENTS SEIZED DURING THE COURSE OF SEA RCH ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS MADE THE ADDITION AND SUBSEQUENTLY LEVIED THE PENALTY. 12. THE LD. DR HAS RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT 358 ITR 593. IN THE SAID CASE CE RTAIN DOCUMENTS WERE IMPOUNDED DURING THE COURSE OF SURVEY ACTION U/S. 133A OF THE ACT IN THE CASE OF SISTER CONCERN OF THE ASSESSEE COMPANY. THE SEIZED DOCUMENTS WERE IN RESPECT OF SHARE APPLICATION FORMS BANK STATEMENT ETC. THE ASSESSEE COMPANY CAME F ORWARD AND OFFERED THE INCOME OF RS. 40.74 LACS WITH A CONDITION THAT THE SAID OFFERED WAS MADE TO AVOID LITIGATION AND BUY PEACE AND TO MAKE AN AMICABLE SETTLEMENT AND NO OTHER EXPLANATION WAS GIVEN . T HE ASSESSING OFFICER LEVIED THE PENALTY U/S. 271(1)(C) OF THE ACT ON THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE. THE HON'BLE HIGH COURT CONFIRMED THE PENALTY ORDER. WHEN THE MATTER REACHED BEFORE THE HON'BLE SUPREME COURT IT WAS HELD THAT THE EXPLANATION TO SEC. 271(1) RAISES THE PRESUMPTION OF CONCEALME NT AND THE BURDEN IS ASSESSEE TO SHOW BY COGENT AND RELIABLE EVIDENCE. IT IS FURTHER HELD THAT THE STATUTE DOES NOT RECOGNIZE SUCH DEFENCE UNDER E XPLANATION 1 TO SEC. 271(1)(C) AND THE ASSESSEE HAS TO EXPLAIN WHY THE ADDITION WAS NOT JUSTIFIED. THE 18 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK HON'B LE SUPREME COURT ALSO HELD THAT MERELY OFFERING THE INCOME WITH CONDITION THAT THE SAME IS OFFERED IN BUYING THE PEACE IS NOT SUFFICIENT NOR IT ABSOLVE THE ASSESSEE FROM THE MISCHIEF OF PENALTY PROCEEDINGS. IN THE SAID CASE AS PER THE FACTS ON RECORD THE ASSESSEE HAS NOT FILED ANY EXPLANATION AS CONTEMPLATED UNDER E XPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. IT IS FURTHER HELD THAT IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT TO EXPLAIN THE SOURCE OF PAYM ENT MADE BY IT AND T O DECLARE IT TRUE INCOME IN THE RETURN OF INCOME FILED BY IT BY YEAR TO YEAR. IN THE PRESENT CASE THE ASSESSEE HAS RECORDED ALL THE TRANSACTIONS IN THE BOOKS OF ACCOUNT AND ALSO EXPLAINED THE GENUINENESS OF THOSE TRANSACTIONS. IN OUR HUMBLE OPINION THE PRINCIPLES LAID DOWN IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) ARE NOT APPLICABLE TO THE ASSESSEES CASE. WE THEREFORE CONFIRM THE ORDER OF THE LD. CIT(A) SO FAR AS THE ADDITION TOWARDS UNEXPLAINED LOAN CREDITORS TO THE EXTENT OF RS. 50 00 000/ - FOR DELETING THE PENALTY. 13. THE ANOTHER ADDITION WHICH IS SUBJECTED TO THE PENALTY IS THE INTEREST PAID TO THE PARTIES. WE HAVE ALREADY HELD THAT THAT THERE IS NO CASE TO LEVY THE PENALTY ON THE ADDITION MADE U/S. 68. FOR THE SAME REASONS W E HOLD THAT THERE IS NO REASON TO LEVY THE PENALTY ON THE INTEREST ELEMENT. WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY ON THE SAID ADDITION. THE ASSESSEE HAS DECLARED THE UNDISCLOSED INCOME OF RS. 4 50 000/ - . THERE IS NO MU CH DISCUSSION IN THE ASSESSMENT ORDER BUT IT APPEARS THAT THE ADDITIONS WERE BASED ON THE SOME SEIZED DOCUMENTS THAT IS IN RESPECT OF CASH PAYMENT TO ONE MISHRIKOTKAR RS.30 000/ - AND UNRECORDED INVESTMENT IN FURNITURE. THE ITAT PUNE IN THE CASE OF SMT. P RAMILA D. ASHTEKAR AND ORS. VS. ITO CENTRAL - II PUNE BEING ITA NOS. 354 TO 367/PN/2010 ORDER DATED 14 - 09 - 2012 HELD AS UNDER: 19 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 6. WE FIND THAT THE ASSESSEES CASE IS OTHERWISE SQUARELY COVERED VIDE THE DECISION OF ITAT PUNE IN THE CASE OF CHANDAN K. SHEWA NI VS. DCIT ITA NOS. 235 & 236/PN/2010. IN THE SAID CASE THE ADDITIONAL INCOME WAS DECLARED DURING THE COURSE OF SEARCH TO COVER UP THE EXPENDITURE AS WELL AS DEPOSIT IN BANK A/CS. THE TRIBUNAL CONSIDERED THE EXPLANATIONS - 3 5 & 5A TO SEC. 271(1)(C ) OF THE ACT AND HELD AS UNDER : 8. WHILE DECIDING ASSESSEES APPEAL FOR A.YS. 1999 - 2000 AND 2001 - 02 THE PENALTY LEVIED ON THE INCOME OFFERED TOWARDS THE PERSONAL EXPENDITURE OF THE ASSESSEE AND HIS DIVORCEE SISTER HAS BEEN DELETED. EVEN THOUGH THE PARL IAMENT HAS INSERTED EXPLANATION 5A TO SEC. 271(1)(C) SAID EXPLANATION IS APPLICABLE IN RESPECT OF THE SEARCH INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007. SECTION 5A IS INTRODUCED TO PATCH OUT THE LACUNAE IN THE EXISTING PROVISIONS MORE PARTICULARLY TO OVERCOME THE JUDICIAL INTERPRETATION OF EXPLANATION - 5. IF THE SEARCH IS INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007 THEN THERE IS A LEGAL PRESUMPTION THAT ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS WHICH IS CLAIMED AS INCOME BY THE ASSESSEE THE SAME WOULD BE TREATED AS DEEMED CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED THE DATE OF SEARCH IS 15.6.2004 AND HENCE EXPLAN ATION 5A TO SEC. 271(1) (C) IS NOT APPLICABLE. IT IS WELL SETTLED RULE OF INTERPRETATION OF THE PENALTY PROVISIONS THAT THE SAME SHOULD BE STRICTLY INTERPRETED AND THERE IS NO SCOPE FOR ANY PRESUMPTION FOR LEVY OF THE PENALTY UNLESS STATUTE SPECIFICALLY PR OVIDES SAME. 9. SO FAR AS THE EXPLANATION - 3 TO SEC. 271(1)(C) IS CONCERNED WHICH READS AS UNDER : EXPLANATION 3. - WHERE ANY PERSON FAILS WITHOUT REASONABLE CAUSE TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (1) OF SECTION 153 A RETURN OF H IS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL 1989 AND UNTIL THE EXPIRY OF THE 20 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK PERIOD AFORESAID NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB - SECTIO N (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME THEN SUCH PERSONAL SHALL FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB - SECTION BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148 . THE SAID EXPLANATION PRESUMES THAT THERE IS A CONCEALMENT OF PARTICULARS OF INCOME OR FILING OF THE INACCURATE PARTICULARS OF INCOME IN THE SITUATION WHERE THE ASSESSEE DID NOT FILE RETURN OF INCOME U/S. 139 OR WITHIN THE TIME LIMIT PRESCRIBED U/S. 1 53(1) OF THE ACT BUT FILES THE RETURN OF INCOME IN RESPONSE TO NOTICE U /S. 148. THE SAID EXPLANATION IS ALSO SILENT IN THE SITUATION IF THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR ANY PARTICULAR A.Y. BUT FILED THE RETURN OF INCOME FOR THE FIRST TI ME IN RESPONSE TO NOTICE U/S. 153A THEN WHAT WOULD BE THE LEGAL PRESUMPTION ? IN OUR OPINION EXPLANATION - 3 HAS NO APPLICATION WHEN THE RETURN IS FILED IN RESPONSE TO NOTICE U/S. 153A. WE THEREFORE HOLD THAT AS PER THE FACTS OF THIS CASE AND LAW APP LICABLE THERE IS NO JUSTIFICATION TO LEVY THE PENALTY FOR THE A.Y. 2002 - 03 IN THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A EVEN FOR THE SAID INCOME IS BASED ON SOME ENTRIES FOUND IN THE DIARIES OR OTHER DOCUM ENTS OR EVEN BANK ACCOUNT DURING THE COURSE OF SEARCH. WE ACCORDINGLY DELETE THE PENALTY SUSTAINED BY THE LD . CIT(A). 7. IN ALL THE APPEALS BEFORE US EXPLANATION - 3 CANNOT BE APPLIED AS HELD IN THE CASE OF CHANDAN K. SHEWANI (SUPRA). SO FAR AS EXPLA NATION 5A IS CONCERNED IT IS BROUGHT ON THE STATUTE BOOK AND IS APPLICABLE IF THE SEARCH IS INITIATED U/S. 132 ON OR AFTER 1 ST JUNE 2007. SO FAR AS THE ASSESSMENTS IN ALL THESE CASES ARE CONCERNED NO ADDITION IS MADE BY THE ASSESSING OFFICER OVER AND AB OVE THE 21 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK INCOME DECLARED IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTICE U/S. 153A AS THE EXPRESSION TAX SOUGHT TO BE EVADED APPEARING IN CLAUSE (C) TO SEC. 271(1) IS TO BE UNDERSTOOD AS A DIFFERENCE BETWEEN THE INCOME DECLARED BY THE ASSESSEE IN T HE RETURN OF INCOME AND THE INCOME FINALLY ASSESSED. AFTER INTRODUCTION OF SEC. 153A W.E.F. 1.6.2003 THERE IS NO SPECIFIC PENALTY PROVISION TO DEAL WITH THE ASSESSMENTS FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT. IN THE PRESE NT CASE AS THE RETURNED INCOME AND INCOME ASSESSED ARE THE SAME OTHERWISE ALSO NO PENALTY CAN BE LEVIED. WE THEREFORE HOLD THAT IN ALL THE APPEALS BEFORE US THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT. W E ACCORDINGLY DELETE THE PENALTIES LEVIED BY THE ASSESSING OFFICER IN ALL THE APPEALS FOR THE ABOVE MENTIONED REASONS. 14. WE THEREFORE H O LD THAT THE ABOVE ADDITIONS REFERRED DO NOT HIT BY EXPLANATION 5 BELOW SEC. 271(1)(C) AS SEC. 5A BELOW SEC. 271( 1)(C) IS BROUGHT ON THE STATUTE BOOK WHICH IS APPLICABLE TO THE SEARCH INITIATED U/S. 132 ON OR AFTER 01 - 06 - 2007 BUT IN THE PRESENT CASE THE SEARCH AGAINST THE ASSESSEE IS PRIOR TO THE SAID DATE. WE THEREFORE CONFIRM THE ORDER OF THE LD. CIT(A) ON THE A BOVE REASONS DELETING THE PENALTY ON THE ABOVE TWO ADDITIONS. 15. ON THE PERUSAL OF THE PENALTY ORDER WE FURTHER FIND THAT THE ASSESSING OFFICER HAS CONSIDERED THE ENTIRE TOTAL INCOME ASSESSED INCLUDING THE AGRICULTURAL INCOME DISALLOWED TO THE EXTENT OF 20% FOR THE PURPOSE OF LEVY AND CALCULATION OF THE PENALTY. THE ENTIRE PENALTY ORDER IS SILENT ON THE ADDITION MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OUT OF THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ONLY DISCUSSED THE ISSUES IN RESPECT OF THE UNEXPLAINED LOAN CREDITORS AND INTEREST ON THEM AND UNRECORDED PAYMENT OF RS.1 84 694/ - . MOREOVER AS PER THE REASONS GIVEN BY THE ASSESSING OFFICER FOR MAKING THE ADDITION BY DISALLOWING 20% AGRICULTURAL INCOME IS T HAT THE SAME IS NOT SUPPORTED BY ANY EVIDENCE. IT 22 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK IS SEEN THAT THE ASSESSEE HAS DECLARED THE SAID INCOME IN HIS ORIGINAL RETURN OF INCOME AND NOTHING WAS FOUND DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER MADE THE ADHOC DISALLOWANCE. IN OUR OPINIO N IN SUCH A SITUATION THE SAID ADDITION CONSIDERED FOR THE LEVY OF THE PENALTY IS NOT JUSTIFIED. WE ACCORDINGLY DELETE THE PENALTY ON THE ADDITION MADE OUT OF THE AGRICULTURAL INCOME. 16. ACCORDINGLY GROUNDS TAKEN BY THE REVENUE ARE DISMISSED AT ENTIR ETY AND ORDER OF THE LD. CIT(A) HAS BEEN CONFIRMED FOR THE A.Y. 2002 - 03. 17. NOW WE TAKE UP APPEAL FOR THE A.Y. 2006 - 07 BEING ITA NO. 62/PN/2012. IN THIS YEAR THE ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS: A. DISALLOWANCE OUT OF THE AGRICULTURAL INCO ME OF RS.1 29 353/ - B. ADDITION TOWARDS LOAN CREDITORS AND INTEREST OF RS.3 08 960/ - C. TOWARDS UNSECURED LOAN FROM SHRI BHAGWAN PRAJAPATI OF RS.3 00 000/ - D. INCOME OFFERED BY THE ASSESSEE OF RS.17 03 874/ - E. ADDITION TOWARDS UNDISCLOSED IN COME OF RS.1 25 000/ - TOTAL RS.25 67 187/ - 1 8 . THE ASSESSING OFFICER LEVIED THE PENALTY ON THE ENTIRE ADDITIONS. NOW WE ARE DEALING WITH THE EACH ADDITION SEPARATELY. SO FAR AS THE FIRST ADDITION IN RESPECT OF DISALLOWANCE OUT OF THE AGRICULTURAL INCOME IS CONCERNED THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE AT 20% OUT OF THE TOTAL AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AT RS.6 46 764/ - . WE FIND THAT THIS IS A MERELY ESTIMATION AND AD HOC 23 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK ADDITIONS MADE BY THE ASSES SING OFFICER AND NO MATERIAL WAS FOUND IN THE COURSE OF SEARCH. IN OUR OPINION THIS ADDITION CANNOT BE THE SUBJECT MATTER OF THE PENALTY U/S. 271(1)(C) OF THE ACT. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY ON THE SAID ADDITION. THE NEXT ADDITION IS IN RESPECT OF THE LOAN AND INTEREST OF RS.3 08 000/ - THE ASSESSING OFFICER HAS MERELY STATED THAT THE SAID ADDITION IS ALSO MADE IN THE A.Y. 2002 - 03 AND NO DETAILS ARE ALSO THERE ON RECORD . I F THE ADDITION IS OUT OF THE 12 PARTIES WE HAVE ALREADY DEALT WITH SAID ADDITIONS WHILE DECIDING THE ASSESSEES APPEAL FOR THE A.Y. 2002 - 03 IN WHICH WE HAVE HELD THAT NO PENALTY CAN BE LEVIED ON ADDITIONS IN RESPECT OF LOAN CREDITORS. FOLLOWING OUR REASONS IN THE A.Y. 2002 - 03 WE DIRECT THE ASS ESSING OFFICER TO EXCLUDE THE AMOUNT OF RS.3 08 960/ - (PRINCIPAL + INTEREST) FROM LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT. 19. THE NEXT ADDITION IS IN RESPECT OF LOAN FROM ONE BHAGWAN PRAJAPATI. AS NOTED BY THE ASSESSING OFFICER ON THE VERIFICATIO N OF THE RETURN OF INCOME IT WAS SEEN THAT THE ASSESSEE HAS RAISED UNSECURED LOAN OF RS.3 00 000/ - . THE ASSESSING OFFICER HAS NOTED THAT THE SAID PERSON HAS FILED AN AFFIDAVIT STATING THAT HE IS NOT AWARE ABOUT ANY TRANSACTION IN HIS BANK ACCOUNT NOR AWAR E ABOUT THE DETAILS FILED IN THE RETURN OF INCOME. HE ALSO STATED THAT HE IS A PERSON OF NO MEANS. THE ASSESSEE FILED THE FOLLOWING EXPLANATION STATING THAT MR. PRAJAPATI IS NOT KNOWN TO THE ASSESSEE. IT IS FURTHER STATED BY THE ASSESSEE THAT MR. PRAJAP ATI TOLD THAT HIS BANK ACCOUNT WAS OPERATED BY HIS FRIEND. THE SAID LOAN WAS BROUGHT THROUGH MR. DILIPBHAI. THE ASSESSEE ALSO REQUESTED THAT THE SUMMONS MAY BE ISSUED TO MR. PRAJAPATI TO VERIFY THE FACT THAT WHETHER THE MONEY IN HIS BANK ACCOUNT WAS DEPO SITED BY THE ASSESSEE AND ALSO TO FIND OUT THE IDENTITY OF THE FRIEND AS REFERRED BY HIM WHO WAS ALLEGEDLY OPERATING HIS BANK ACCOUNT. IN SUM AND SUBSTANCE THE ASSESSEE DENIED THAT HE KNOWS THE PRAJAPATI AND AS PER 24 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK THE CONTENTION OF THE ASSESSEE NOTHING WAS THERE ON RECORD TO SHOW THAT HE HAS TAKEN ANY LOAN FROM SAID MR. PRAJAPATI. IT APPEARS THAT THE SAID TRANSACTION WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS IN THE ASSESSMENT ORDER THERE IS NO RE FERENCE OF ANY SEIZED DOCUMENTS. THE REASONS GIVEN BY THE ASSESSING OFFICER ARE ALSO NOT CLEAR BUT VERY VAGUE AND CRYPTIC FOR APPLYING THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT. MOREOVER THE ASSESSEE HAS FILED HIS EXPLANATION IN RESPECT OF THE SAID ENTRY WHICH WAS NOT ACCEPTED BY THE ASS ESSING OFFICER. WE THEREFORE FOLLOWING OUR REASONS IN THE A.Y. 2002 - 03 IN RESPECT OF THE UNPROVED LOAN CREDITORS DIRECT THE ASSESSING OFFICER TO EXCLUDE THE AMOUNT OF RS.3 00 000/ - WHICH WAS IN RESPECT OF UNSECURED LOAN CREDITORS MR. BHAGWAN PRAJAPATI F ROM THE PENALTY U/S. 271(1)(C) OF T HE ACT. 20 . THE NEXT ADDITION IS RS.17 03 874/ - WHICH WAS IN RESPECT OF ENTRIES FOUND IN THE TWO CASH BOOKS SEIZED DURING THE COURSE OF SEARCH. DURING THE COURSE OF SEARCH ACTION TWO PETTY CASH BOOKS BEARING IDENTIFICAT ION MARKS A - 17 AND A - 20 WERE FOUND AND SEIZED. IT WAS CLAIMED THAT THOSE CASH BOOKS WERE MAINTAINED BY THE CASHIER OF THE ASSESSEE. THE SAID CASH BOOKS CONTAINED ENTRIES OF CASH RECEIVED AND CASH PAID. AS NOTED BY THE ASSESSING OFFICER THERE ARE NUMBERS OF CREDIT ENTRIES IN THE NAME OF SHRI SAHEB AND OTHERS . IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED FOR RECONCILIATION OF THOSE ENTRIES FROM THE ASSESSEE. THE ASSESSEE OFFERED THE AMOUNT OF RS.17 03 874/ - AS HIS UNDISCLOSED INC OME FOR TAX WHICH WAS OUT OF ENTRIES FOUND IN THE ROUGH CASH BOOKS / DIARIES SEIZED HAVING THE CREDIT AND DEBIT ENTRIES (A - 17 + A - 20). THE SAID ADDITION WAS CONSIDERED FOR LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT . THE LD. CIT(A) ACCEPTED THE EXPLANATIO N OF THE ASSESSEE AS A GENUINE EXPLANATION. THE OBSERVATIONS AND FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ARE AS UNDER: 25 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 6.5 AS REGARDS THE ADDITION OF RS.17 03 874/ - MADE ON ACCOUNT OF CASH INTRODUCED BY THE APPELLANT FROM TIME TO TIME IN THE CASH BOOK MAINTAINED BY THE CASHIER OF THE APPELLANT AT OFFICE PREMISES OF THE APPELLANT THE CONTENTION OF THE APPELLANT THAT HE IS PROPRIETOR OF M/S. UTKARSHA TRADERS WHICH HAVING CONSIDERABLE VOLUME OF TURNOVER AND THE CASH OF THE SAID PROPRIETORSHIP CONCERN WA S ALWAYS KEPT BY THE APPELLANT 'AT HIS RESIDENCE THEREFORE WHENEVER CASH WAS REQUIRED IN BUSINESS I.E. FOR MAKING PAYMENT TO CREDITORS ARE FOR EXPENSES OR FOR DEPOSITING IN THE BANK ACCOUNT THE SAID REQUIRED CASH WAS ALWAYS GIVEN BY THE APPELLANT OUT OF T HE CASH ON HAND AS PER BOOKS OF ACCOUNT TO THE CASHIER WHICH WAS ENTERED BY THE SAID CASHIER AS CASH RECEIVED FROM 'SAHEB' I.E. APPELLANT. THE FACT IS ALSO EVIDENT BECAUSE THE TRANSACTION INCURRED IN THE SAID CASH BOOK I.E. DEPOSIT OF CASH IN BANK ACCOUNT OR PAYMENT TO CREDITORS ETC. ARE ALSO ACCOUNTED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. IT IS ALSO A MATTER OF FACT THAT THE CASH WITHDRAWN FROM BANK WAS ALSO SHOWN IN THE SAID CASH BOOK AS CASH DEPOSIT IN THE CASH BOOK AND WITHDRAWAL OF THE SAME WAS SHOWN AS CASH PAID TO 'SAHEB' I.E. APPELLANT. THE CLAIM OF THE APPELLANT THE CASH INTRODUCED IN THE SAID CASH BOOK WHICH WAS MAINTAINED FOR INTERNAL CONTROL PURPOSE WAS OUT OF THE CASH ON HAND AS PER BOOKS OF ACCOUNTS APPEARS TO BE VERY MUCH LOGICAL. IT IS ALSO PERTINENT THAT THE SAID CLAIM OF THE APPELLANT COULD HAVE BEEN EASILY VERIFIED BY THE A.O. FROM THE BOOKS OF ACCOUNTS OF THE APPELLANT WHICH WERE PRODUCED BEFORE HIM. THE ANOTHER CONTENTION OF THE APPELLANT THAT THE SAID CASH WAS AVAILABLE WITH HIM B ECAUSE THE LOAN CREDITORS WHICH WERE DISALLOWED IN THE ASSESSMENT ORDER OF A.Y. 2002 - 03 & A.Y. 2003 - 04 WERE REPAID DURING THE YEAR UNDER APPEAL CONSEQUENTLY IT CAN BE PRESUMED THAT THE SAID CASH WAS ALSO AVAILABLE WITH THE APPELLANT. THE EXPLANATION OFFER ED BY THE APPELLANT ON THIS COUNT IS ABSOLUTELY CORRECT AND CANNOT BE TREATED AS FALSE . 21 . WE HAVE HEARD THE PARTIES ON THIS ADDITION. WE HAVE ALSO PERUSED THE EXPLANATION OF THE ASSESSEE. WE ARE NOT AGREEING WITH THE CONCLUSION OF THE LD. CIT(A) THAT THE TRANSACTIONS FOUND RECORDED IN THE NATURE OF THE CASH RECEIPT S ON THE NAME OF SAHEB WERE DULY REFLECTED IN THE BOOKS OF ACCOUNT . I F THE TRANSACTIONS WERE REFLECTED IN THE REGULAR BOOKS 26 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK OF ACCOUNT OF THE ASSESSEE THEN THE ASSESSEE COULD HAVE FILE D T HE RECONCILIATION SHOWING THE INCOMING AND OUTGOING OF CASH OUT OF BANK TRANSACTIONS OR OTHERWISE . TH E ASSESSEE EVEN DID NOT FILE ANY RECONCILIATION OF THE SAID ENTRIES. ON THE PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE ASSESSEE OFFERED THE UNDI SCLOSED INCOME VOLUNTAR ILY FOR TAX . N O EXPLANATION IS THERE ON RECORD. IN OUR OPINION IN RESPECT OF THIS ADDITION THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) IS SQUARELY APPLICABLE. MERELY SURRENDERING THE INCOME TO BUY THE PEACE WITHOUT OFFERING EXPLANATION WILL NOT ABSOLVE FROM THE PENALTY CONSEQUENCES UNLESS THE ASSESSEE HAS FILED THE EXPLANATION WHICH IS NOT FALSE OR THE EXPLANATION OF THE ASSESSEE IS BONAFIDE. NO ARGUMENT WAS ADVANCED ON THIS ISSUE. WE HAVE TO ONLY GO ON THE BASIS OF RECORD BEFORE US. THE ASSESSEE HIMSELF OFFERED RS.17 03 874/ - AS HE FAILED TO PROVE THAT TRANSACTIONS FOUND IN THOSE ROUGH CASH BOOKS WERE NOT RECORDED IN REGULAR BOOKS OF ACCOUNT. WE THEREFORE FOLLOWING THE PRINCIPLES LAID D OWN IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) CONFIRM THE PENALTY ON THIS ADDITION AND REVERSE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 2 2 . THE NEXT ADDITION WHICH IS SUBJECTED TO THE PENALTY IS RS.1 25 000/ - WHICH WAS IN R ESPECT OF THE PAYMENT TO ELECTRICIAN. THE ASSESSING OFFICER MADE THE ADDITION BY STAT ING THAT AS NOTED BY THE ASSESSING OFFICER A DOCUMENT WAS SEIZED (ANNEXURE A - 31 PAGE NO. 95) ON WHICH THE UNRECORDED TRANSACTION IN RESPECT OF PAYMENT TO ELECTRICIAN TO THE EXTENT OF RS.2 50 000/ - WAS FOUND RECORDED. THE ASSESSEE OFFERED THE ADDITIONAL INCOME OF RS.1 25 000/ - BY OBSERVING THAT THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE DOES NOT COVER THE SAID PAYMENT. THE ASSESSING OFFICER LEVIED THE PENALTY EFFECTIV ELY OF RS.1 25 000/ - ONLY THOUGH IT IS MENTIONED THAT FOR THE PURPOSE OF PENALTY U/S. 271(1)(C) THE ENTIRE AMOUNT OF RS.2 50 000/ - IS CONSIDERED. THE LD. CIT(A) DELETED THE 27 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK PENALTY ON THE SAID AMOUNT BY ACCEPTING THE EXPLANATION OF THE ASSESSEE. NO EXPLA NATION WAS F ILED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE. IN OUR OPINION THE AMOUNT OF RS.1 25 000/ - WAS RIGHTLY COVERED UNDER THE PENALTY EVEN THE ORDER OF THE LD. CIT(A) IS SILENT WHAT EXPLANATION WAS FILED BY THE ASSESSEE. WE ACCORDINGLY REVERS E THE ORDER OF THE LD. CIT(A) ON THIS ADDITION AND RESTORE THE ORDER OF THE ASSESSING OFFICER BY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) . IN THE RESULT THE PENALTY ON THE FOLLOWING ADDITIO N IS SUSTAINED. I. AMOUNT OFFERED BY THE ASSESSEE IN RESPECT OF ENTRIES FOUND TWO ROUGH CASH BOOKS SEIZED OF RS.17 03 874/ - AND II. ADDITION IN RESPECT OF UNEXPLAINED PAYMENT TO ELECTRICIAN OF RS.1 25 000/ - . 23. ACCORDINGLY THE GROUNDS TAKEN BY TH E REVENUE ARE PARTLY ALLOWED. IN THE RESULT THE REVENUES APPEAL FOR THE A.Y. 2006 - 07 IS PARTLY ALLOWED . 2 4 . NOW WE TAKE UP APPEAL FOR THE A.Y. 2007 - 08 BEING ITA NO. 63/PN/2012. IN THIS YEAR THE ASSESSING OFFICER MADE THE TOTAL ADDITION OF RS. 65 95 74 3/ - WHICH WAS SUBJECTED TO PENALTY U/S. 271(1)(C) OF THE ACT. THE ONE MAJOR ADDITION IS IN RESPECT OF THE TWO ROUGH CASH BOOKS SEIZED DURING THE COURSE OF SEARCH (IDENTIFICATION NO. A - 12 AND A - 15) FROM THE BUSINESS PREMISES OF THE ASSESSEE I.E. M/S. UTKAR SH TRADERS . THE NUMBERS OF CREDIT ENTRIES WERE FOUND ON THE NAME OF SHRI SAHEB AND OTHERS. THE ASSESSEE FINALLY OFFERED RS.56 03 035/ - FOR TAX AS HIS UNDISCLOSED INCOME IN RESPECT OF THE ENTRIES FOUND IN THE ROUGH PETTY CASH BOOKS/DIARIES. THE IDENTIC AL ADDITION HAS COME FOR OUR CONSIDERATION ON WHICH THE PENALTY WAS LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT IN THE A.Y. 2006 - 07 . T HE FACTS ARE ALSO IDENTICAL 28 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK AND EVIDENCE IS ALSO SAME IN THIS ASSESSMENT YEAR I.E. A.Y. 2007 - 08 . WE HAVE C ONFIRMED THE PENALTY ON THE ADDITION MADE IN RESPECT OF THE INCOME OFFERED BY THE ASSESSEE TOWARDS THE TWO SEIZED PETTY CASH BOOKS/DIARIES I.E. A - 12 AND A - 15. WE THEREFORE FOLLOWING OUR REASONINGS IN THE A.Y. 2006 - 07 ON THIS ADDITION REVERSE THE ORDER O F THE LD. CIT(A) AND CONFIRM THE ORDER OF THE ASSESSING OFFICER LEVYING THE PENALTY BY FOLLOWING THE DECISION IN THE CASE OF MAK DATA PVT. LTD. (SUPRA). 2 5 . THE NEXT ADDITION WHICH IS ALSO SUBJECTED TO THE PENALTY IS OF RS.7 46 965/ - . THE FACTS WHICH AR E REVEALED FROM THE RECORD ARE THAT THE ASSESSEE HAS PURCHASED A BUNGALOW FOR RS.1 62 03 000/ - AND SAID BUNGALOW WAS PURCHASED IN THE AUCTION BY THE NASHIK PEOPLES CO - OP. BANK. THE ASSESSING OFFICER HAS OBSERVED THAT FOR THE PURPOSE OF PURCHAS ING THE SAID BUNGALOW THE ASSESSEE HAS UTILIZED HIS CASH CREDIT FACILITIES WITH THE SHAMRAO VITHHAL BANK . THE ASSESSING OFFICER THEREFORE MADE THE PROPORTIONATE DISALLOWANCE OF THE INTEREST DEBITED TO THE PROFIT AND LOSS ACCOUNT AND ADDED BACK TO THE INCOME OF T HE ASSESSEE. THE ASSESSEE PLEADED THAT IF THE ADDITION IS MADE THEN THE SAID AMOUNT MAY BE ALLOWED AS DEDUCTION U/S. 24 OF THE ACT. THE ASSESSING OFFICER DID NOT ACCEPT THE ALTERNATE CONTENTION ALSO AND MADE THE ADDITION OF RS.7 46 965/ - WHICH WAS TOWARD S THE DISALLOWANCE OF THE BANK INTEREST. THE ASSESSING OFFICER ALSO LEVIED THE PENALTY ON THE SAID AMOUNT THE LD. CIT(A) HAS DELETED THE PENALTY. ADMITTEDLY NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH SHOWING IT IS UNDISCLOSED INCOME. THE ASSESSI NG OFFICER MADE THE DISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE ON THE REASONS THAT THE ASSESSEE HAS USED HIS CREDIT FACILIT Y WITH BANK WHICH WAS SPECIFICALLY FOR HIS BUSINESS I.E. SHAMRAO VITHHAL BANK FOR THE PURCHASE OF BUNGALOW . THE ASSESSEE ALSO MADE THE ALTERNATE CLAIM TO ALLOW THE SA ID AMOUNT AS DEDUCTION U/S. 24 OF THE ACT 29 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK WHICH WAS ALSO NOT ALLOWED. IN OUR OPINION THERE IS NO JUSTIFICATION TO LEVY THE PENALTY ON THE SAID AMOUNT AS ALL THE ENTRIES IN RESPECT OF THE BANK TRANSACTIONS WERE ALRE ADY ON THE RECORD. WE ALSO FIND THAT THE ASSESSEE ALSO FILED THE EXPLANATION WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER. WE THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY ON THE AMOUNT OF THE DISALLOWANCE OF THE INTEREST. 2 6 . THE N EXT ADDITION IS IN RESPECT OF THE AGRICULTURAL INCOME. THE ASSESSEE HAS DECLARED THE AGRICULTURAL INCOME OF RS.8 35 715/ - AND ASSESSING OFFICER MADE THE DISALLOWANCE AT 20% WHICH WAS WORKED OUT RS.1 67 143/ - THE ASSESSING OFFICER LEVIED THE PENALTY ON THE SAID AMOUNT. THE IDENTICAL ISSUE HAS BEEN ADJUDICATED BY US IN THE A.YS. 2002 - 03 AND 2006 - 07. FOLLOWING OUR REASONS IN THOSE YEARS WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY ON THE SAID AMOUNT. THE NEXT ADDITION IS RS.78 600/ - WHICH WAS IN RESPECT OF THE INTEREST DEBITED BY THE ASSESSEE ON THE LOAN CREDITORS. AS OBSERVED BY THE ASSESSING OFFICER THE AMOUNT OF RS.36 000/ - PERTAINS TO THE LOAN CREDITORS WHICH WAS DISALLOWED IN THE A.Y. 2006 - 07 . I N RESPECT OF THE BALANCE AMOUNT OF RS.42 600/ - T HE ASSESSING OFFICER HAS OBSERVED THAT AS IN HIS OPINION THE AMOUNT SHOWN THROUGH THE LOAN CREDITORS BELONGED TO THE ASSESSEE ONLY AND HENCE NO INTEREST CAN BE ALLOWED. THE ASSESSING OFFICER THEREFORE LEVIED THE PENALTY U/S. 271(1)(C) OF RS.78 600/ - . WE FIND THERE IS NO CLARITY IN THE REASONING GIVEN BY THE ASSESSING OFFICER IN THE FACTS NARRATED WHICH ARE IN VERY VAGUE . T HE LD. CIT(A) DELETED THE PENALTY ON THIS AMOUNT. IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN TH E ORDER OF LD. CIT(A) DELET ING THE PENALTY ON THIS AMOUNT. ACCORDINGLY THE GROUNDS TAKEN BY THE REVENUE ARE PARTLY ALLOWED. 2 7 . IN THE RESULT THE REVENUES APPEAL FOR THE A.Y. 2007 - 08 IS PARTLY ALLOWED. 30 ITA NOS. 61 62 & 63/PN/12 AND CO NOS. 64 65 & 66/PN/2013 SHRI PRASHANT ARU N SANGAI NASHIK 2 8 . NOW WE TAKE UP THE CROSS OBJECTIONS FILED BY THE ASSESSEE BEING CO NOS. 64 65 & 66/PN/ 2013. 2 9 . WE HAVE HEARD THE LD. COUNSEL AS WELL AS LD. DR. THE ASSESSEE HAS TAKEN THE MULTIPLE GROUNDS IN THE C ROSS O BJECTIONS. NO ARGUMENT WAS MADE BY THE LD. COUNSEL ON ANY OF THE GROUNDS TAKEN IN THE C ROSS O BJECTIONS. WE THEREFORE FIND NO REASON TO GIVE ANY OF THE ANY FINDING ON THE GROUNDS TAKEN BY THE ASSESSEE AS THE ASSESSEE IS NOT SERIOUS IN ADVANCING ANY ARGUMENTS ON THE GROUNDS TAKEN IN THE C ROSS O BJECTIONS. ACCORDINGLY ALL THE CROSS O BJECTIONS ARE DISMISSED. 30 . IN THE RE SULT THE REVENUES APPEAL FOR THE A.Y. 2002 - 03 IS DISMISSED AND A.YS. 2006 - 07 AND 2007 - 08 ARE PARTLY ALLOWED AND ALL THE C ROSS O BJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 - 04 - 201 4 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE DATED : 30 TH APRIL 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - I NASHIK 4 THE CIT - I NASHIK 5 THE DR ITAT A BENCH PU NE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE