Chandrakant Mulchand Kankaria, v. Income-tax Officer,,

ITA 1936/PUN/2013 | 2003-2004
Pronouncement Date: 30-04-2014 | Result: Dismissed

Appeal Details

RSA Number 193624514 RSA 2013
Assessee PAN ABKPK9377M
Bench Pune
Appeal Number ITA 1936/PUN/2013
Duration Of Justice 5 month(s) 29 day(s)
Appellant Chandrakant Mulchand Kankaria,
Respondent Income-tax Officer,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-04-2014
Date Of Final Hearing 22-04-2014
Next Hearing Date 22-04-2014
Assessment Year 2003-2004
Appeal Filed On 01-11-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NOS.1935 TO 1940/PN/2013 (A.YS. : 2002-03 TO 2007-08) SHRI CHANDRAKANT MULCHAND KANKARIA 211/12 M.G. ROAD PUNE 411 001. PAN : ABKPK9377M . APPELLANT VS. INCOME TAX OFFICER (CENTRAL)-II PUNE. . RESPONDENT ASSESSEE BY : MR. M. K. KULKARNI DEPARTMENT BY : MR. P. L. PATHADE DATE OF HEARING : 28-04-2014 DATE OF PRONOUNCEMENT : 30-04-2014 ORDER PER G. S. PANNU AM ALL THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AND INVOLVE A COMMON ISSUE RELATING TO LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) FOR THE ASSESSME NT YEARS 2002-03 TO 2007- 08. SINCE THE ISSUE INVOLVED IS COMMON ALL THE AP PEALS HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEIN G PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. BEFORE WE CONSIDER INDIVIDUAL APPEALS FOR THE RE SPECTIVE ASSESSMENT YEARS A BRIEF BACKGROUND OF THE CASE LEADING UP TO THE PRESENT PROCEEDINGS IS SUMMARIZED AS FOLLOWS. THE APPELLANT IS AN INDIVID UAL ENGAGED IN THE BUSINESS OF REAL ESTATE CONSULTANCY AS A PROPRIETOR TO M/S INTERNATIONAL ESTATE CONSULTANTS. A SEARCH AND SEIZURE ACTION WAS CARRI ED OUT IN THE PREMISES OF THE ASSESSEE ON 14.02.2007 WHEREIN VARIOUS INCRIMIN ATING DOCUMENTS AND MATERIAL WAS FOUND AND SEIZED. APART FROM OTHER TH INGS SEARCH ACTION REVEALED THAT ASSESSEE WAS ADVANCING CASH LOANS AGA INST INTEREST AND SUCH ITA NOS.1935 TO 1940/PN/2013 TRANSACTIONS WERE NOT ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT. NOTABLY CERTAIN POSTDATED CHEQUES RECEIVED AS SECURITY AGAI NST THE LOANS WERE ALSO FOUND AND SEIZED. IN COURSE OF SEARCH ACTION ASSE SSEES STATEMENT WAS RECORDED U/S 132(4) OF THE ACT WHEREIN HE ADMITTED TO CARRYING ON MONEY LENDING BUSINESS AND SINCE HE WAS NOT IN A POSITION TO FURNISH NAMES AND ADDRESSES OF THE PERSONS FROM WHOM HE HAD BORROWED AND IN-TURN ADVANCE MONEY AN AMOUNT OF RS.1 CRORE IN CASH WAS DECLARED AS INCOME. ADDITIONAL INCOME OF RS.40 00 000/- TOWARDS UNACCOUNTED INTERE ST RECEIVED IN CASH ON THE LOANS WAS ALSO OFFERED. THE SUBSEQUENT ASSESSM ENTS HAVE BEEN COMPLETED WHEREBY CERTAIN ADDITIONS ON ACCOUNT OF I NTEREST DISALLOWANCE OF BAD DEBTS WRITTEN-OFF ETC. HAVE BEEN MADE BY THE A SSESSING OFFICER AND IN APPEAL PROCEEDINGS ASSESSEE HAS RECEIVED CERTAIN RE LIEFS AS A RESULT OF THE ORDER OF THE TRIBUNAL. THE PROCEEDINGS BEFORE US R ELATE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON ACCOUNT OF VARIOUS ADDITION S/DISALLOWANCES MADE IN THE COURSE OF ASSESSMENT. THE CIT(A) HAS ALLOWED PARTI AL RELIEF INCLUDING THE PENALTY ON ACCOUNT OF ADDITIONS WHICH WERE DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 28.02.2013 WHICH WAS SUBSEQUENT TO THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY U/S 271(1)(C) OF THE ACT. IN THIS BACKGROUND WE MAY NOW TAKE-UP THE RESPECTIVE APPEALS PERTAINING TO DI FFERENT ASSESSMENT YEARS. 3. IN SO FAR AS THE ASSESSMENT YEAR 2002-03 IS CONC ERNED THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-III PUNE DATED 16.09.2013 WHICH IN TURN HAS ARISEN FR OM AN ORDER DATED 31.12.2008 PASSED BY THE ASSESSING OFFICER U/S 143( 3) R.W.S. 153A OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 4. IN THIS ASSESSMENT YEAR ASSESSEE FILED A RETURN OF INCOME ON 31.08.2008 IN RESPONSE TO A NOTICE U/S 153A OF THE ACT ON 15.11.2007 DECLARING TOTAL INCOME OF RS.10 80 670/-. THE ASSE SSING OFFICER NOTED THAT IN TERMS OF THE DISCLOSURE MADE IN THE STATEMENT RECOR DED U/S 132(4) OF THE ACT ITA NOS.1935 TO 1940/PN/2013 ASSESSEE RETURNED AN INCOME OF RS.1 CRORE ON ACCOUN T OF UNACCOUNTED MONEY IN MONEY LENDING BUSINESS. SO HOWEVER WHILE DECLA RING SUCH INCOME ASSESSEE CLAIMED BAD DEBTS TO THE TUNE OF RS.90 89 850/- WHICH ARE DETAILED AS UNDER :- (A) BAD DEBTS (I) SHRI S. S. SOWTU (CASH LOAN GIVEN IN F.Y. 1998- 99) RS.14 50 000/- (II) MR. REJULA (CASH LOAN GIVEN IN F.Y. 1997-98) R S. 7 50 000/- (III) MAYFAIR BUILDERS & DEVELOPERS (CASH LOAN GIVE N IN F.Y. 1996-97) RS. 8 00 000/- (IV) SHRI BHOMRAJ PORWAL (CASH LOAN GIVEN IN F.Y. 1 995- 96) RS. 3 50 000/- (V) PORWAL PARMAR ASSOCIATES (CASH LOAN GIVEN IN F. Y. 1995-96) RS.15 00 000/- (VI) MANAS CONSTRUCTION (CASH LOAN GIVEN IN F.Y. 19 98- 99) RS. 2 00 000/- --------------------- RS.50 50 000/- (B) LOSS OF ADVANCE (INVESTMENT) AGAINST LAND PURCHASES AT AGLAMBE VILLAGE AND AT DHANORI (I) NIDHALKAR (FOR AGLAMBE LAND PURCHASE) (ADVANCE GIVEN BY CHEQUE IN THE PERIOD 1995-96) RS. 75 000/- (II) NIDHALKAR (FOR AGLAMBE LAND PURCHASE) (ADVANCE GIVEN BY CHEQUE IN THE PERIOD 1995-96) RS.34 95 000/- (III) BPL DEVELOPERS (FOR DHANORI PLOT) (ADVANCE GIVEN BY CHEQUE IN F.Y. 1998-99) RS. 1 64 119/- (IV) BPL DEVELOPERS (FOR DHANORI PLOT) (ADVANCE GIVEN BY CHEQUE IN F.Y. 1998-99) RS. 3 05 731/- --------------------- TOTAL RS.40 39 850/- 5. IN THE ASSESSMENT FINALIZED U/S 153A R.W.S. 143( 3) DATED 31.12.2008 THE AFORESAID CLAIM WAS DISALLOWED BY THE ASSESSING OFFICER HOLDING (I) THAT THE ADDITIONAL INCOME OF RS.1 CRORE WAS TAXABLE U/S 68 OF THE ACT AND THERE WAS NO PROVISION FOR ALLOWING ANY EXPENSES AGAINST DEEMED INCOME ASSESSABLE U/S 68 OF THE ACT; (II) THAT THE LOSSES ON ACCOUNT OF L AND PURCHASES AS WELL AS MONEY LENDING REPRESENT CAPITAL INVESTMENT AND SUCH CAPITAL LOSSES CANNOT BE ALLOWED; (III) THAT THE DEBTS WHICH HAVE BEEN WRITT EN-OFF AND CLAIMED AS A DEDUCTION WERE INTRODUCED FOR THE FIRST TIME IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT FOR ASSESSMENT YEAR 2001 -02 WHICH WAS FILED ONLY AFTER THE SEARCH ACTION; (IV) THAT THE CORRESPONDIN G AMOUNTS WERE NOT OFFERED AS INCOME IN THE EARLIER YEARS AND THUS DID NOT QUA LIFY AS BAD DEBTS; AND (V) ITA NOS.1935 TO 1940/PN/2013 THAT THE RETURN FILED IN THE PAST YEAR BY THE ASSES SEE DID NOT INDICATE THAT HE WAS ENGAGED IN MONEY LENDING BUSINESS AND THEREFOR E SUCH BAD DEBTS ARE NOT INCURRED IN THE ORDINARY COURSE OF BUSINESS. 6. ULTIMATELY THE STAND OF THE ASSESSING OFFICER H AS BEEN PARTLY SUSTAINED BY THE TRIBUNAL ALSO WHILE DISPOSING OF APPEAL OF T HE ASSESSEE IN ITA NOS.185 TO 190/PN/2011 DATED 28.02.2013. AS PER THE TRIBUN AL ASSESSEE HAD NOT ESTABLISHED INCOME FROM MONEY LENDING IN THE PAST Y EAR BUT HE CAME FORWARD TO DECLARE THE SAME ONLY CONSEQUENT TO THE SEARCH A CTION. THE SEIZED MATERIAL AS WELL AS THE STATEMENT OF THE ASSESSEE R ECORDED IN THE COURSE OF SEARCH U/S 132(4) OF THE ACT REFLECTED THAT ASSESSE E WAS UNDERTAKING MONEY LENDING BUSINESS AND AS PER THE TRIBUNAL THE DISCLO SURE OF THE INCOME OF RS.1 CRORE WAS UNDISPUTEDLY RELATED TO SUCH BUSINESS. T HE TRIBUNAL HELD THAT EVEN IF SUCH BUSINESS WAS NOT DECLARED PRIOR TO SEARCH NEVERTHELESS SUCH DISCLOSURE OF INCOME WAS A BUSINESS INCOME. IN SO FAR AS ASSESSEES CLAIM FOR DEDUCTION OF BAD DEBTS AND LOSS OF ADVANCE (INVESTM ENT) AMOUNTING TO RS.50 50 000/- AND RS.40 39 850/- RESPECTIVELY ARE CONCERNED THE TRIBUNAL HELD THAT IN RELATION TO ONLY TWO CLAIMS NAMELY R S.14 50 000/- AND RS.7 50 000/- RELATING TO SHRI S.S. ROWTU AND MR. T EJUJA RESPECTIVELY WERE ALLOWABLE AS A DEDUCTION. THOUGH THE TRIBUNAL DID NOT ALLOW THE DEDUCTION AS A BAD DEBT BUT HAVING REGARD TO THE EVIDENCE OF THE AFORESAID TWO PERSONS WHO CAME FORWARD AND CONFIRMING NON-REPAYMENT OF LO AN TO ASSESSEE THE TRIBUNAL HELD THAT SUCH AMOUNTS REFLECTED A BUSINES S LOSS INCURRED BY THE ASSESSEE WHILE CARRYING ON THE BUSINESS OF MONEY LE NDING. THE INCOME ASSESSED BY THE ASSESSING OFFICER IN RELATION TO TH E DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION OF BAD DEBTS AND LOS S OF ADVANCES AMOUNTING TO RS.90 89 850/- MINUS RS.22 00 000/- RELIEF ALLOW ED BY THE TRIBUNAL HAS BECOME FINAL AS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THE COURSE OF HEARING AT BAR. ITA NOS.1935 TO 1940/PN/2013 7. THE CIT(A) HAS FOUND IT FIT TO UPHOLD THE PENALT Y ON SUCH ADDITION WHICH WAS LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) O F THE ACT. THE CIT(A) HAS SUSTAINED THE PENALTY IN RELATION TO THE INCOME OF RS.68 89 850/- (I.E. RS.90 80 850 MINUS RS.22 00 000/-) AND IN DOING SO THE FOLLOWING DISCUSSION HAS BEEN MADE :- 4.5. THE APPELLANT HAS CHALLENGED THE LEVY OF PENA LTY BY THE ASSESSING OFFICER ON THE CLAIM OF BAD DEBTS OF RS.9 0 89 850/- SINCE HE HAS ONLY DISALLOWED THE EXPENDITURE CLAIMED ON THE TEC HNICAL GROUND THAT NO EXPENSES CAN BE ALLOWED FOR EARNING INCOME OFFERED BY THE APPELLANT WHICH HAS BROUGHT TO TAX U/S 68. IT HAS BEEN CLAIMED THAT SINCE IT IS AN ADMITTED POSITION BY THE ASSESSING OFFICER AS WELL AS BOTH T HE APPELLATE AUTHORITIES THAT THE ASSESSEE WAS IN THE BUSINESS OF MONEY LENDING THE LOSSES INCURRED BY THE APPELLANT WOULD AMOUNT TO TRADING LOSSES. IT HA S BEEN CLAIMED THAT IN THE CASE OF THE APPELLANT THERE IS NO LOSS OF ANY INVE STMENT AND THE LOSS SOLELY EMANATES FROM 'MONEY LENDING ACTIVITIES'; CONSEQUEN TLY THE CLAIM OF BAD IS DEBTS IS AN ALLOWABLE DEDUCTION U/S 36(1)(VII). IT HAS BEEN CLAIMED THAT THERE IS ONLY DIFFERENCE OF OPINION BETWEEN ASSESSING OFFICE R AND APPELLANT WITH REGARD TO THE CLAIM OF BAD DEBTS. 4.6. I HAVE CONSIDERED THE CONTENTIONS THAT ARE RAI SED ON BEHALF OF THE APPELLANT. FOLLOWING THE SEARCH AND SEIZURE ON 14.02.2007 AND WHEN CONFRONTED WITH THE SEIZED MATERIAL THE APPELLANT MADE A DISCLOSURE OF RS. 1 CRORE TOWARDS CASH LOANS WHICH WAS OFFERED AS UNACC OUNTED MONEY. THEREAFTER IN RESPONSE TO NOTICE U/S 153A THE APP ELLANT FILED RETURN OF INCOME FOR A.Y. 2002-03 ON 31.02.2008 IN WHICH THE ADDITI ONAL INCOME OF RS.1 CRORE WAS DISCLOSED. HOWEVER HE ALSO CLAIMED BAD DEBTS W RITTEN OFF IN THE BUSINESS OF MONEY LENDING AND LAND INVESTMENT AMOUN TING TO RS.90 89 850/- AGAINST THE SAID INCOME. A CAREFUL PERUSAL OF THE O RDERS OF THE APPELLATE AUTHORITIES SHOWS THAT THE APPELLANT CAME FORWARD T O DECLARE UNDISCLOSED INCOME FROM MONEY LENDING ONLY AS A CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION. WHEN CONFRONTED WITH THE SEIZED DOCUMENT S DURING SEARCH THE APPELLANT CLAIMED THAT HE WAS DOING THE FINANCE BUS INESS BY BORROWING AMOUNT ON WHICH INTEREST WAS PAID AND LENDING AMOUN TS TO OTHERS ON INTEREST. HE WAS RETAINING SMALL PORTION ON THE INTEREST CHAR GED ON THE AMOUNT LENT. THIS FINDING IS RECORDED AS PARA 11 & 12 OF THE ORD ER OF HON'BLE ITAT PUNE BUT SINCE ONLY TWO PARTIES WERE IDENTIFIED AND PROD UCED BEFORE THE ASSESSING OFFICER IN CASES OF BORROWERS WHO COULD NOT REPAY T HE LOANS IT WAS HELD BY THE ITAT THAT ONLY IN RESPECT OF THESE 02 PARTIES COULD IT BE SAID THAT THE MONEY HAD BEEN ADVANCED TO THEM BY WAY OF LOANS AND THERE FORE THE SAME COULD BE ALLOWABLE AS BUSINESS LOSSES. FOR THE BALANCE AMOUN T OF RS. 28 50 000/- THE FINDING OF THE ITAT IS RECORDED AS PARA 12 AS UNDER :- 'THE ASSESSEE WAS NOT IN THE REGULAR MONEY LENDING BUSINESS. HENCE HE CANNOT TAKE THE SHELTER OF SECTION 36(1)( VII) OF THE ACT R.W.S. 36(2)(I). ANOTHER LEGAL ASPECT IS TO BE CONSIDERED HERE IS THAT THE ASSESSEE HAS TO WRITE OFF THE BAD DEBT IN THE BOOKS OF ACCOUNTS. AS PER THE BOOKS FOUND IN THE COURSE OF THE SEIZURE NO BA D DEBT WAS WRITTEN OFF. THE ASSESSEE HAS ONLY SHOWN THE BAD DEBT IN TH E BALANCE SHEET AND CLAIMED THE DEDUCTION. IN OUR OPINION THE ADVA NCES GIVEN BUT COULD NOT BE RECORDED CANNOT BE SAID TO BE BAD DEBT S IN STRICT SENSE.' 4.7. THUS THE TRIBUNAL HAS INFERRED THAT THE LOAN AMOUNTS WERE NOT IN THE REGULAR COURSE OF MONEY LENDING BUSINESS. SI NCE THE IDENTITY AND THE ITA NOS.1935 TO 1940/PN/2013 SOURCE OF THE LOANS BORROWED AND SUBSEQUENTLY LENT BY THE APPELLANT HAVE NOT BEEN ESTABLISHED WITH THE EXCEPTION OF THE 02 PART IES AS DISCUSSED ABOVE THE ADDITION MADE ON ACCOUNT OF MONEY LENDING BUSINESS STANDS SUSTAINED. THE METHOD OF WRITING OFF OF BAD DEBTS AS PRESCRIBED U/ S 36(1)(VII) R.W.S. 36(2)(I) HAS BEEN HELD BY THE TRIBUNAL TO NOT HAVING BEEN FO LLOWED. NO BAD DEBTS WRITTEN AS PER BOOKS FOUND DURING COURSE OF SEARCH. THERE IS A TACTUAL FINDING BY THE ITAT THAT THE APPELLANT HAS ONLY SHOWN THE B AD DEBT IN THE BALANCE SHEET AND CLAIMED DEDUCTION THEREON. NEITHER THE AM OUNT HAS BEEN OFFERED AS INCOME IN THE PRECEDING YEARS AS REQUIRED BY SPECIF IC PROVISIONS OF SEC. 36(2)(I) NOR DO ANY OF THE SEIZED DOCUMENTS PROVE T HAT THE BALANCES OF THESE DEBTS HAD BECOME BAD. THIS HAS BEEN SPECIFICALLY ME NTIONED BY THE CIT(A) CENTRAL AT PARA 6.11 AND 6.11.1. THE TRIBUNAL'S CLE AR FINDING OF FACT IS THAT THE ASSESSES WAS NOT REGULAR IN THE MONEY LENDING BUSIN ESS. HE WAS A REAL ESTATE CONSULTANT. INCOME FROM MONEY LENDING WAS NEVER DIS CLOSED TO THE DEPARTMENT PRIOR TO THE SEARCH AND THEREFORE THE TR IBUNAL HAS CORRECTLY HELD THAT THE APPELLANT CANNOT TAKE RECOURSE TO THE PROV ISION OF SECTION 36(1)(VII) R.W.S. 36(2)(I) WHICH IS APPLICABLE ONLY IN THE CAS E OF MONEY LENT IN THE ORDINARY COURSE OF THE BUSINESS OF MONEY LENDING. THEREFORE THE CLAIM MADE BY THE APPELLANT IS MERELY AN AFTERTHOUGHT. 4.8. THE CONTENTION OF THE APPELLANT THAT THERE IS NO FINDING OF THE ASSESSING OFFICER THAT THE CLAIM OF BAD DEBT WAS NO T GENUINE OR BOGUS BUT HAS ONLY BEEN DISALLOWED ON TECHNICAL GROUNDS HAS BEEN EXAMINED. IT IS THE SEARCH AND SEIZURE OPERATION WHICH HAS UNEARTHED TH E UNACCOUNTED MONEY LENDING BUSINESS OR CASH LOANS ADVANCE BY THE APPEL LANT. HOWEVER AFTER MAKING A DECLARATION U/S 132(4) THE APPELLANT HAS TRIED TO REDUCE HIS TAX LIABILITY BY CLAIMING THE WRITE OFF OF THE LOANS IN QUESTION. NOT ONLY THAT HE HAS ALSO CLAIMED WRITE OFF OF CERTAIN ADVANCES MADE FOR PURCHASE OF LAND WHICH ARE UNQUESTIONABLY CAPITAL INVESTMENT. THEREFORE TH E PLEA OF THE APPELLANT THAT THERE IS NO LOSS ON ACCOUNT OF CAPITAL INVESTMENT A ND THE LOSS SOLELY EMANATES FROM MONEY LENDING ACTIVITIES HAS BEEN FOUND TO BE GROSSLY INCORRECT BY THE LEARNED ITAT. THE ITAT HAS CONFIRMED THE FINDING OF THE ASSESSING OFFICER THAT THE LOSS INCURRED BY THE APPELLANT ON ACCOUNT OF HIS REAL ESTATE BUSINESS IS NOT A REVENUE LOSS SINCE THE SAME IS NOT IN THE NAT URE OF ANY MONEY LENDING TRANSACTION. IN SUCH A SITUATION THE CLAIMS MADE B Y THE APPELLANT IN THE RETURN FILED U/S 153A ARE SEEN TO BE GROSSLY INCORRECT AN D EXPLANATION NO. 1 TO SECTION 271(1)(C) COMES INTO OPERATION. THE EXPLANA TION OFFERED BY THE APPELLANT IN SUPPORT OF HIS CLAIM REPRESENTING CLAI M TOWARDS BAD DEBT OUT OF LOANS ADVANCED AND INVESTMENT IN LAND HAVE NOT BEEN SUBSTANTIATED NOR IS IT A BONAFIDE CLAIM. THE APPELLANT HIMSELF ADMITS IN THE WRITTEN SUBMISSION DATED 12.08.2013 DURING THE COURSE OF THE PRESENT APPELLA TE PROCEEDINGS ( ..............) QUOTE GENERALLY SPEAKING THE LOSS INCURRED BY A FI NANCIER OR A MONEY LENDER WOULD BE TRADING LOSSES BUT IT DOES NOT FOLLOW THAT EVERY TRANSACTION OF A MONEY LENDER IS A PART OF HIS MONEY LENDING ACTIVIT IES. HE MAY HAVE INVESTMENT LIKE OTHERS AND LOSS IN SUCH INVESTMENT WOULD BE CAPITAL IN NATURE. ACCORDINGLY IT IS HELD THAT THE PENALTY LEVIED ON CLAIM ON BAD DEBTS TO THE EXTENT OF RS. 68 89 850/- (RS. 90 89 850 - RS.22 00 000/-) HAS BEEN CORRECTLY LEVIED. THE ASSESSING OFFICER IS DIRECTED TO RECOMP UTE THE PENALTY ON THE AMOUNT SUSTAINED BY THE TRIBUNAL IN VIEW OF THE DE TAILED REASONING GIVEN HERE IN ABOVE. 8. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY POINTED OUT THAT THERE WAS NO FINDING BY THE ASSESS ING OFFICER OR BY THE CIT(A) THAT THE CLAIM OF BAD DEBTS AND THE LOSS OF ADVANCE (INVESTMENT) MADE IN THE ITA NOS.1935 TO 1940/PN/2013 RETURN OF INCOME WAS EITHER BOGUS OR NON-GENUINE. THE LEARNED COUNSEL ASSERTED THAT IT WAS AN ADMITTED POSITION AS A RESU LT OF THE SEARCH ACTION THAT ASSESSEE WAS IN THE BUSINESS OF MONEY LENDING AND T HEREFORE WHEN HE COMPUTED THE INCOME FROM SUCH SOURCE AND FILED THE RETURN OF INCOME AFTER THE SEARCH ASSESSEE CLAIMED DEDUCTION IN RELATION TO S UCH DEBTS WHICH HAD BECOME BAD OR NON-RECOVERABLE. IT HAS BEEN VEHEMEN TLY POINTED OUT THAT EVEN THE DISCUSSION MADE BY THE TRIBUNAL IN THE QUA NTUM PROCEEDINGS WOULD SHOW THAT THERE WAS NO FALSITY OR IN-GENUINENESS IN THE CLAIM BUT IT HAS BEEN DISALLOWED MERELY ON THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE SUCH CLAIM. 9. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ORDER OF THE CIT(A ) BY POINTING OUT THAT EVIDENTLY THE MONEY LENDING BUSINESS WAS NEVER DISC LOSED TO THE DEPARTMENT PRIOR TO SEARCH AND THE INCOME SURRENDERED ON THIS POINT EMANATED FROM THE SEARCH ACTION AND THEREFORE THE CLAIM TOWARDS BAD D EBTS AND LOSS OF ADVANCE (INVESTMENT) WERE RIGHTLY DISALLOWED AND PENALTY U/ S 271(1)(C) OF THE ACT WAS JUSTIFIED AS THE CLAIMS WERE NOT BONAFIDELY MADE. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE ISSUE RELATING TO THE LEVY OF PENALTY ON THIS ASPECT LIES IN A NAR ROW COMPASS. THE ADDITION IN DISPUTE WHICH HAS RESULTED IN THE LEVY OF PENALTY H AS ALREADY BEEN ELUCIDATED BY US IN THE EARLIER PARAGRAPHS WHICH COMPRISED OF A CLAIM OF RS.90 89 850/- ON ACCOUNT OF BAD DEBTS ON CASH LOANS AND LOSS OF A DVANCE (INVESTMENT) AGAINST THE LAND PURCHASES AMOUNTING TO RS.50 50 00 0/- AND RS.40 39 850/- RESPECTIVELY. THE ENTIRE CLAIM WAS DISALLOWED IN T HE ASSESSMENT PROCEEDINGS BUT THE TRIBUNAL HAS ALLOWED THE CLAIM TO THE EXTEN T OF RS.22 00 000/- (I.E. RS.14 50 000/- AND RS.7 50 000/- RELATING TO SHRI S .S. SOWTU AND MR. REJULA RESPECTIVELY). IT IS A SETTLED POSITION OF LAW THA T A MERE DISALLOWANCE OF A CLAIM OF DEDUCTION IN THE COURSE OF ASSESSMENT PROCEEDING S WOULD NOT IPSO FACTO PROVE CONCEALMENT OR FURNISHING OF INACCURATE PARTI CULARS OF INCOME WITHIN THE ITA NOS.1935 TO 1940/PN/2013 MEANING OF SECTION 271(1)(C) OF THE ACT. IT IS ALS O A WELL-SETTLED PROPOSITION THAT THE ASSESSMENT PROCEEDINGS AND THE PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE ACT ARE INDEPENDENT PROCEEDINGS AND THEREFORE T HE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE TO DETERMINE THE EFF ICACY OF PENALTY U/S 271(1)(C) OF THE ACT EVEN THOUGH THE EVIDENCE FOUND IN THE ASSESSMENT PROCEEDINGS CAM FORM A RELEVANT CONSIDERATION DURIN G THE PENALTY PROCEEDINGS. BE THAT AS IT MAY IN THE PRESENT CAS E THE REASONS ADVANCED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT P ROCEEDINGS TO DENY THE CLAIM DESERVE TO BE APPRECIATED IN ORDER TO UNDERST AND THE MANNER IN WHICH THE CLAIM HAS BEEN DEALT WITH. THE CLAIM WAS OF TW O CATEGORIES. FIRSTLY AN AMOUNT OF RS.50 50 000/- STATED TO BE BAD DEBTS ON CASH LOANS ADVANCED. SECONDLY AN AMOUNT OF RS.40 39 850/- STATED TO BE LOSS OF ADVANCE (INVESTMENT) AGAINST LAND PURCHASES. WE HAVE ALREA DY ENUMERATED IN THE EARLIER PARAGRAPHS THE REASONS WHICH WEIGHED WITH T HE REVENUE TO DISALLOW THE ASSESSEES CLAIM WHICH HAS BEEN PARTLY ALLOWED BY THE TRIBUNAL. THE PARTIAL RELIEF BY THE TRIBUNAL IS IN THE CONTEXT OF THE FACTUAL APPRECIATION OF THE MATTER WHICH SHOWED THAT TWO OF THE PARTIES CAME F ORWARD AND CONFIRMED THE NON-REPAYMENT OF CASH LOANS ADVANCED TO THEM. THE TRIBUNAL WHILE ACCEPTING THE POSITION OF THE REVENUE THAT THE CLAIM OF BAD D EBTS WAS NOT IN ACCORDANCE WITH SECTION 36(1)(VIII) OF THE ACT HELD THAT IT W AS ONLY IN THE COURSE OF MONEY LENDING BUSINESS THAT SUCH A LOSS WAS INCURRED WHI CH STOOD SUBSTANTIATED TO THE EXTENT OF RS.22 00 000/-. IN THIS MANNER WE A RE OF THE VIEW THE BALANCE OF THE DISALLOWANCE ON ACCOUNT OF BAD DEBTS OF CASH LO ANS I.E. RS.28 50 000/- ADMITTEDLY IS A CASE WHERE THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE INCURRENCE OF LOSS. THE CONSIDERATIONS WEIGHING WI TH THE REVENUE DO NOT SHOW THAT SUCH CLAIM WAS FOUND TO BE FALSE OR A BOG US CLAIM. NO DOUBT SUCH CLAIM HAS BEEN MADE ONLY AFTER SEARCH ACTION WHICH LEAD THE ASSESSEE TO DECLARED HITHERTO UNDECLARED INCOME FROM THE MONEY LENDING BUSINESS. WHILE COMPUTING INCOME FROM SUCH MONEY LENDING BUSINESS T HE ASSESSEE PUT-FORTH CERTAIN CLAIMS ON ACCOUNT OF BAD DEBTS WHICH HE HAS FAILED TO SUBSTANTIATE. A ITA NOS.1935 TO 1940/PN/2013 LACK OF SUBSTANTIATION OF A CLAIM ON THE PART OF TH E ASSESSEE DOES NOT COME WITHIN THE MEANING OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME U/S 271(1)(C) OF THE ACT. IN THIS CONTEXT ONE MAY REFER TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. 322 ITR 158 (SC) WHEREIN IT HAS BEEN HELD THAT SO LONG AS THE PARTICULARS FURNISHED BY THE ASSESSEE IN HIS RETURN INCOME ARE NOT FOUND TO BE ERRONEOUS OR FALSE IT WOULD NOT SUGGEST FURNI SHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. AS PER THE HONBLE SUPREME COURT A MERE CLAIM MADE IN THE RETURN OF INCOME WHICH IS FOUND UNSUSTAINABLE OF LAW BY ITSELF WOULD NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. CO NSIDERING THE AFORESAID IN OUR VIEW IN SO FAR AS THE ASSESSEES CLAIM FOR DED UCTION OF BAD DEBTS ON ACCOUNT OF CASH LOANS OF RS.28 50 000/- (AFTER CONS IDERING RS.22 00 000/- ALLOWED BY THE TRIBUNAL) CANNOT BE CONSIDERED AS FU RNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME WITH IN THE MEANING OF SECTION 271(1)(C) OF THE ACT. AT THIS POINT WE MAY ALSO O BSERVE THAT THE CLAIM MADE BY THE ASSESSEE IN THIS REGARD IN THE RETURN OF INC OME CANNOT BE CONSTRUED AS A NON-BONAFIDE CLAIM OR A CLAIM WHICH WAS FALSE IN ITS ENTIRETY. IN-FACT THE VERIFICATION EXERCISE CARRIED OUT IN THE COURSE OF ASSESSMENT PROCEEDINGS BROUGHT OUT THAT TWO OF THE PARTIES NAMELY SHRI S .S. SOWTU AND MR. REJULA CONFIRMED NON-REPAYMENT OF CASH LOAN OF RS.22 00 00 0/-. THE AFORESAID EXERCISE WOULD SHOW THAT THE CLAIM WAS OTHERWISE BO NAFIDE. MERE NON- SUBSTANTIATION OF OTHER BAD DEBTS OF RS.28 50 000/- ON ACCOUNT OF CASH LOANS IN OUR VIEW CANNOT BE CONSIDERED AS A NON-BONAFIDE CLAIM. THEREFORE IN SO FAR AS THE SUSTENANCE OF PENALTY U/S 271(1)(C) OF T HE ACT IN RELATION TO THE DISALLOWANCE OF BAD DEBTS OF CASH LOANS OF RS.28 50 000/- (AFTER CONSIDERING OF RS.22 00 000/- DELETED BY THE TRIBUNAL) IS CONCERNE D IN OUR VIEW THE LOWER AUTHORITIES HAVE ERRED IN LEVYING PENALTY. THE ASS ESSING OFFICER IS DIRECTED TO DELETE THE IMPUGNED PENALTY ON THIS ASPECT. ITA NOS.1935 TO 1940/PN/2013 11. NOW WE MAY CONSIDER THE PENALTY LEVIED ON THE SECOND LIMB OF THE CLAIM OF RS.40 39 850/- REPRESENTING LOSS OF ADVANC E (INVESTMENT) AGAINST LAND PURCHASE AS DETAILED IN PARA 3 ABOVE. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE WAS REQUIRED TO EXPLAIN TH E JUSTIFICATION FOR SUCH A CLAIM WHEN OSTENSIBLY THE AMOUNTS WERE ADVANCED FO R LAND PURCHASES WHICH WAS A CAPITAL INVESTMENT. THE LEARNED COUNSEL SUBM ITTED THAT THE SAID INVESTMENTS WERE ALSO MADE IN THE COURSE OF MONEY L ENDING ACTIVITY AND THEREFORE IT HAS TO BE SEEN AS A BUSINESS ACTIVITY QUA THE ASSESSEE. IT WAS ALSO POINTED OUT THAT SUCH ADVANCES WERE MADE IN TH E PAST YEARS BY CHEQUE AND THAT THE SAME WERE DOUBTFUL OF RECOVERY AND THE REFORE THE SAME WAS CLAIMED AS A DEDUCTION. THE LEARNED COUNSEL ALSO F AIRLY POINTED OUT THAT THE SAID AMOUNTS HAVE BEEN SUBSEQUENTLY RECEIVED BY THE ASSESSEE AND OFFERED FOR TAXATION IN ASSESSMENT YEAR 2009-10. THE LEARN ED COUNSEL ALSO ASSERTED THAT THERE WAS NO CLINCHING EVIDENCE WHICH WOULD SH OW THAT THE CLAIM WAS FALSE OR BOGUS. IN THIS MANNER THE LEVY OF PENALT Y U/S 271(1)(C) OF THE ACT WAS ASSAILED. 12. WE ARE UNABLE TO APPRECIATE THE BONAFIDES OF TH E ASSESSEE WHILE MAKING SUCH CLAIM IN THE RETURN OF INCOME. AS NOTE D EARLIER IN THIS CASE A SEARCH ACTION U/S 132 TOOK PLACE ON 14.02.2007 IN T HE COURSE OF WHICH ASSESSEE MADE A DISCLOSURE OF RS.1 CRORE ON ACCOUNT OF HITHERTO UNDISCLOSED MONEY LENDING ACTIVITY. IN THIS CONTEXT WE HAVE A LSO PERUSED THE STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) OF THE ACT ON 14.0 2.2007 AND 15.02.2007. IN ANSWER TO QUESTION NO.39 ASSESSEE CONCEDED THAT HE WAS NOT IN A POSITION TO GIVE THE NAME AND ADDRESSES OF THE PERSONS FROM WHOM HE RAISED FUNDS TO THE EXTENT OF RS.1 CRORE AND THEREFORE HE OFFERED RS.1 CRORE AS UNACCOUNTED INCOME. HOWEVER IN AN ANSWER TO QUESTION NO.19 A SSESSEE ALSO CONCEDED THAT CERTAIN ADVANCES OF RS.60 00 000/- WAS DOUBTFU L OR NON-RECOVERABLE. WE HAVE ONLY POINTED OUT THE AFORESAID FOR THE REASON THAT ASSESSEE WAS AWARE OF THE NON-RECOVERABLE AND DOUBTFUL ADVANCES BUT SO FA R AS THE CLAIM OF ITA NOS.1935 TO 1940/PN/2013 RS.40 39 850/- REPRESENTING LOSS OF INVESTMENTS AGA INST LAND PURCHASE IS CONCERNED THERE WAS NO SUCH MENTION MADE. THIS IS INSPITE OF THE FACT THAT THE SAID AMOUNTS ARE STATED TO HAVE BEEN ADVANCED B Y CHEQUES IN THE PAST YEARS. THE ASSESSEE HAS ALSO RECOVERED SUCH AMOUNT S IN THE ASSESSMENT YEAR 2009-10 I.E. DURING THE FINANCIAL YEAR 01.04.2 008 TO 31.03.2009. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 WAS FI LED ON 31.03.2008 IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT AND IT I S IN SUCH RETURN THE CLAIM OF DEDUCTION HAS BEEN MADE. THE ASSESSEE HAS NOT POIN TED OUT THE COMPELLING REASONS WHICH PREVAILED WITH HIM TO MAKE SUCH A CLA IM OF DEDUCTION IN THE RETURN FILED WHEREAS IN THE PROXIMATE PERIOD OF MAK ING SUCH A CLAIM THE AMOUNTS WERE RECOVERED. THEREFORE IT IS A CASE WH ERE THE CLAIM WAS WHOLLY UNSUSTAINABLE AND HAS BEEN MADE WITHOUT ANY JUSTIFI ABLE CAUSE OR REASON. EVEN IN THE COURSE OF HEARING BEFORE US NO COGENT REASONS HAVE BEEN ADVANCED TO SUPPORT THE BONAFIDES OF SUCH A CLAIM A ND THEREFORE IN OUR OPINION MAKING OF SUCH A CLAIM IN THE RETURN OF IN COME WAS WITH THE OBJECT OF REDUCING THE ADDITIONAL INCOME SURRENDERED DURING T HE SEARCH FOR THE PURPOSE OF REDUCING THE ULTIMATE TAX LIABILITY; AND IT WAS NOT A BONAFIDE CLAIM THUS IT TANTAMOUNTS TO CONCEALMENT OF INCOME WITHIN THE MEA NING OF SECTION 271(1)(C) OF THE ACT. THEREFORE QUA THE AFORESAID DISALLOWA NCE AMOUNTING TO RS.40 39 850/- WE FIND THAT THE LOWER AUTHORITIES WERE JUSTIFIED IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. 13. THE OTHER LIMB OF THE PENALTY WHICH IS CHALLENG ED BY THE ASSESSEE IS WITH RESPECT TO THE ADDITION OF RS.10 90 440/- SUST AINED BY THE TRIBUNAL ON ACCOUNT OF INTEREST ON LOANS GIVEN. INITIALLY THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS.22 32 805/- AND THE SAME WAS BASE D ON SEIZED PAPERS NOS.71 72 & 73 BUNDLE 3 WHICH REPRESENTED INTERES T CALCULATION MADE BY THE ASSESSEE HIMSELF ON ACCOUNT OF INTEREST RECEIVABLE. THE ASSESSING OFFICER ASSUMED THE PRINCIPAL AMOUNT LENT FOR ASSESSMENT YE AR 2002-03 AT RS.1 03 20 000/- WHICH REPRESENTED THE ACTUAL LOANS ADVANCED BY THE ITA NOS.1935 TO 1940/PN/2013 ASSESSEE AS DISCLOSED DURING THE SEARCH ACTION. TH E CIT(A) NOTED THAT THE CORRECT AMOUNTS OF LOANS AS PER THE SEIZED MATERIAL AS ON 02.04.2002 (I.E. PAGE 72 OF THE SEIZED DOCUMENT) WAS RS.50 40 000/- WHEREAS THE ASSESSING OFFICER HAD TAKEN IT AS RS.1 03 20 000/- WHICH THE TOTAL AMOUNT OF LOANS DISCLOSED DURING SEARCH. THUS FOR ASSESSMENT YEAR 202-03 THE CIT(A) TOOK THE LOANS GIVEN AT RS.50 40 000/- AND THEREFORE TH E CIT(A) SUSTAINED ADDITION ON ACCOUNT OF INTEREST TO RS.10 90 440/- WHICH WAS ASSESSEES WORKINGS AS PER SEIZED DOCUMENTS AS AGAINST AN ADDITION OF RS. 22 32 805/- MADE BY THE ASSESSING OFFICER. THE TRIBUNAL HAS ALSO AFFIRMED THE ACTION OF THE CIT(A). 14. ON THE ASPECT OF PENALTY ON SUCH SUM THE CIT(A) HAS SUSTAINED THE SAME ON THE GROUND THAT THE ADDITION ON ACCOUNT OF INTEREST IS ENTIRELY BASED ON ASSESSEES OWN EXPLANATIONS REGARDING THE ENTRIE S FOUND IN THE SEIZED MATERIAL. THE ADDITION WAS BASED ON ACTUAL ENTRIES IN THE SEIZED MATERIAL WHICH WERE HITHERTO NOT OFFERED TO TAX BY THE ASSES SEE IN THE RETURN OF INCOME. AGAINST SUCH SUSTENANCE OF PENALTY BY THE CIT(A) A SSESSEE IS IN APPEAL BEFORE US. 15. BEFORE US THE ONLY PLEA OF THE ASSESSEE IS THA T NO CONCRETE EVIDENCE WAS DELETED DURING THE SEARCH WHICH SHOWED THAT INT EREST HAS BEEN ACTUALLY EARNED. IT IS FURTHER SUBMITTED THAT IT IS A CASE OF MERE ESTIMATION OF INCOME BY INTEREST AND NO PARTICULAR CONCEALMENT CAN BE FASTE NED ON THE ASSESSEE. 16. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT O F THE CASE OF THE REVENUE. 17. IN THE CONTEXT OF LEVY OF PENALTY ON THE ADDITI ON OF RS.10 90 440/- ON ACCOUNT OF INTEREST INCOME THE FOLLOWING DISCUSSIO N BY THE CIT(A) IS RELEVANT :- 4.2. THUS IT CAN BE SEEN THAT THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST ON LOAN GIVEN IS ENT IRELY BASED ON THE APPELLANT'S EXPLANATION DURING THE COURSE OF SEARCH REGARDING THE ENTRIES IN THE SEIZED ITA NOS.1935 TO 1940/PN/2013 MATERIALS. THE ADDITIONS WERE MADE ON ACCOUNT OF AC TUAL ENTRIES IN THE SEIZED MATERIALS WHICH WERE HITHERTO NOT OFFERED TO TAX B Y THE APPELLANT AND IT FOR THIS REASON THAT THE ADDITION OF RS.10 90 440/- REPRESEN TING INTEREST INCOME FOR A.Y. 2002-03 HAS BEEN CONFIRMED NOT ONLY BY THE CIT (A) BUT ALSO BY THE ITAT. THE APPELLANT'S CASE IS THAT NO CONCRETE EVIDENCE H AS BEEN DETECTED TO INDICATE THAT INTEREST HAS ACTUALLY BEEN RECEIVED. THIS CONTENTION HAS ALREADY FOUND FAVOUR WITH THE CIT(A) AND ITAT IN SO FAR AS THE FIGURE OF INTEREST RECEIVED ON ADDITIONAL CASH LOANS NOT REFLECTED IN THE BOOKS OF ACCOUNT ARE CONCERNED. THE ASSUMPTION OF INTEREST INCOME ON SUC H CASH LOANS IS THEREFORE NOT THE SUBJECT MATTER OF LEVY OF PENALTY SINCE IT ALREADY STANDS EXCLUDED BY THE ASSESSING OFFICER IN DETERMINING THE QUANTUM OF PENALTY. SO FAR AS THE INTEREST INCOME OF RS.10 90 440/- IS CONCERNED THE TRIBUNAL HAS RIGHTLY UPHELD THE ADDITION SINCE THE SAME WAS BASED ON THE SEIZED MATERIAL AND THERE IS NOTHING ON RECORD TO PROVE THAT THE ADVANCES GIVEN WERE NOT RECOVERABLE AND HENCE THE INTEREST THEREON CANNOT BE TAXED. 4.3. ON A CUMULATIVE CONSIDERATION OF FACTS RELATIN G TO LEVY OF PENALTY ON INTEREST INCOME OF RS.10.90 440/- IT IS HELD THAT THE AMOUNT REPRESENTS CONCEALED INCOME ON WHICH THE SAID PENAL TY HAS BEEN CORRECTLY LEVIED. 18. THE AFORESAID DISCUSSION MADE BY THE CIT(A) SHO WS THAT THE PLEA OF THE ASSESSEE OF NO CONCRETE EVIDENCE BEING AVAILABLE TO ASSESS THE INTEREST INCOME HAS BEEN APPROPRIATELY DEALT WITH BY THE CI T(A). AS PER THE CIT(A) THE INTEREST INCOME IN QUESTION IS ON ACCOUNT OF AC TUAL ENTRIES FOUND IN THE SEIZED MATERIAL WHICH WERE HITHERTO NOT OFFERED TO TAX BY THE ASSESSEE. ON THIS ASPECT OF THE MATTER THERE IS NO EFFECTIVE REB UTTAL FROM THE SIDE OF THE ASSESSEE. MOREOVER THE OTHER PLEA OF THE ASSESSEE THAT THE ASSESSMENT OF INTEREST INCOME IS ON A MERE ESTIMATION IS ALSO EFF ECTIVELY DEALT WITH BY THE CIT(A). AS PER THE CIT(A) THE INTEREST INCOME IN QUESTION IS BASED ON THE SEIZED MATERIAL AND IN SO FAR AS THE OTHER ADDITION ON ACCOUNT OF INTEREST MADE BY THE ASSESSING OFFICER WHICH WAS IN RELATION TO A DDITIONAL CASH LOANS NOT REFLECTED IN THE MATERIAL STANDS ALREADY DELETED. THEREFORE THE ASSESSMENT OF INTEREST ON AN ESTIMATION AS SOUGHT TO BE MADE OUT BY THE ASSESSEE IS NOT THE SUBJECT OF LEVY OF PENALTY AS FOUND BY THE CIT (A). THIS ASPECT OF THE MATTER ALSO LIES UNREBUTTED ON BEHALF OF THE ASSESS EE. THEREFORE CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES LEADING TO THE A DDITION OF RS.10 90 440/- ON ACCOUNT OF INTEREST INCOME CLEARLY POINT TO A FAILU RE ON THE PART OF THE ASSESSEE TO BONAFIDELY DECLARE SUCH INCOME AND THEREFORE IN OUR VIEW THE LOWER ITA NOS.1935 TO 1940/PN/2013 AUTHORITIES WERE JUSTIFIED IN LEVYING OF PENALTY U/ S 271(1)(C) OF THE ACT. THUS ON THIS ASPECT ALSO ASSESSEE FAILS. 19. IN THE RESULT THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 2002-03 IS PARTLY ALLOWED. 20. IN ALL THE OTHER APPEALS RELATING TO ASSESSMENT YEARS 2003-04 TO 2007- 08 THE SOLITARY ISSUE RELATES TO THE LEVY OF PENALT Y ON ACCOUNT OF ADDITION MADE FOR INTEREST INCOME. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTUAL MATRIX IS SIMILAR TO WHAT HAS BEEN CONSIDER ED BY US IN THE APPEAL FOR ASSESSMENT YEAR 2002-03 RELATING TO LEVY OF PENALTY ON INTEREST INCOME OF RS.10 90 440/-. THEREFORE OUR DECISION IN THE APP EAL FOR ASSESSMENT YEAR 2002-03 SHALL APPLY MUTATIS-MUTANDIS IN ALL THE OTHER APPEALS ALSO. 21. IN THE RESULT WHEREAS THE APPEAL OF THE ASSESS EE FOR ASSESSMENT YEAR 2002-03 IS PARTLY ALLOWED THAT OF APPEAL FOR ASSESS MENT YEARS 2003-04 TO 2007-08 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED : 30 TH APRIL 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III PUNE; 4) THE CIT-III PUNE; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE