Shri Tribhovandas Chelaram, Baroda v. The ACIT.,Circle-5,, Baroda

ITA 3809/AHD/2008 | 2000-2001
Pronouncement Date: 27-09-2011 | Result: Dismissed

Appeal Details

RSA Number 380920514 RSA 2008
Assessee PAN AAAFT9768L
Bench Ahmedabad
Appeal Number ITA 3809/AHD/2008
Duration Of Justice 2 year(s) 10 month(s) 2 day(s)
Appellant Shri Tribhovandas Chelaram, Baroda
Respondent The ACIT.,Circle-5,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 27-09-2011
Date Of Final Hearing 26-09-2011
Next Hearing Date 26-09-2011
Assessment Year 2000-2001
Appeal Filed On 24-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. MOHAN ALAN KAMONY AM) ITA NO.3809/AHD/2008 A. Y.: 2000-01 TRIBHOVANDAS CHELARAM HATHIKHANA MAIN GATE FATEHPURA BARODA VS THE A. C. I. T. CICLE-5 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA PA NO. AAAFT 9768 L (APPELLANT) (RESPONDENT) APPELLANT BY MS. URVASHI SHODHAN AR RESPONDENT BY SHRI VINOD TANWANI SR. DR DATE OF HEARING: 26-09-2011 DATE OF PRONOUNCEMENT: 27-09-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-V BARODA DATED 08 TH SEPTEMBER 2008 FOR ASSESSMENT YEAR 2000-01 CHALL ENGING THE LEVY OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT. 2. THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE TH AT IN THIS CASE ASSESSMENT U/S 143(3)/147 OF THE IT ACT WAS FINALIZED ON 27-01-2005 AND INCOME WAS DETERMINED AT RS.14 63 070/- BY MAKING A DDITION OF RS.9 00 000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN STOCK UNDER SECTION 69 OF THE IT ACT. DURING THE COURSE OF SURV EY ACTION CONDUCTED UNDER SECTION 133A OF THE IT ACT IT HAD TRANSPIRED ON PHYSICAL VERIFICATION THAT THE STOCK FOUND WAS OF RS.87 93 3 80/- WHEREAS THE ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 2 STOCK AS PER BOOKS OF ACCOUNT WAS WORKED OUT AT RS. 78 93 380/-. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM. HOWEVER T HE ASSESSEE COULD NOT DO SO. SINCE THE ASSESSEE FAILED TO SUBSTANTIAT E ITS CLAIM THE AO MADE THE ADDITION AMOUNTING TO RS.9 00 000/- AS UNE XPLAINED INVESTMENT BY INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT. BEFORE THE LEARNED CIT(A) IT WAS ARGUED THAT PERUSAL OF RE CORD OF THE INVENTORIES FOUND DURING THE COURSE OF SURVEY AND T HE INVENTORY AS PER BOOKS OF ACCOUNT TALLIED IN RESPECT OF EACH AND EVERY ITEM OF QUANTITY AND THERE WAS ONLY A DIFFERENCE IN RESPECT OF VALUATION WHICH WAS THE AD-HOC BASIS FOR ARRIVING AT THE VALUATION DURING THE COURSE OF SURVEY. ALSO IT WAS ARGUED THAT THE INCREASE IN THE OPENING STOCK WAS ACCEPTED BY THE AO WHILE PASSING THE ORDER UNDER SE CTION 143(3) OF THE IT ACT. ALSO THE VALUATION ADOPTED FOR THE PUR POSE OF SURVEY IS MERELY ON AD-HOC BASIS THE ACCOUNTS OF THE ASSESSE E WERE AUDITED ACCOUNTS AND SINCE THE AMOUNT OF RS.9 00 000/- WAS DISCLOSED IN THE RETURN OF INCOME FILED THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME. FURTHER IT WAS REITERATED BY THE LEARNED CO UNSEL FOR THE ASSESSEE THAT THE DEPARTMENT VALUED THE STOCK AT TH E RATE HIGHER THAN THE RATE DISCLOSED BY THE ASSESSEE AND IT COULD NOT BE MADE THE BASIS FOR MAKING ADDITION AND ON THAT ACCOUNT THE VALUE O F CLOSING STOCK HAD INCREASED. THEREFORE THE COUNSEL FOR THE ASSES SEE STATED THAT SINCE THERE WAS MERE CHANGE OF OPINION AND THE PENA LTY ORDER PASSED BY THE AO BEING ON WRONG PREMISE THE SAME W AS NOT WARRANTED AND THE PENALTY LEVIED UNDER SECTION 271( L) (C ) OF THE IT ACT BY THE AO TO THE TUNE OF RS.3 46 500/- BE D ELETED. ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 3 3. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION O F THE ASSESSEE HOWEVER CONFIRMED THE LEVY OF PENALTY. HI S FINDINGS IN PARA 3.1 TO PARA 5 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER: 3.1 I HAVE GONE THROUGH THE RIVAL CONTENTIONS AND ALSO GONE THROUGH THE RECORDS PLACED BEFORE ME. I HAVE A LSO CONSIDERED THE OBSERVATIONS OF THE AO. THE FACTS OF THE CASE HAVE BEEN DISCUSSED ABOVE. DURING THE COURSE O F SURVEY UNDER SECTION 133A OF THE IT ACT 1961 AT TH E BUSINESS PREMISES AND GODOWN OF THE APPELLANT ON 02.02.2000 THE STOCK OF GRAINS AND PULSES WAS INVENTORISED. ON THE DATE OF SURVEY OPERATION AS P ER PHYSICAL VERIFICATION THE STOCK FOUND WAS OF THE VA LUE OF RS.87 93 380/- WHEREAS THE STOCK AS PER THE BOOKS O F ACCOUNT MAINTAINED WAS WORKED OUT AT RS.78 93 380/- . THEREFORE THERE WAS A DIFFERENCE OF RS.9 00 000/.- IN THE STOCK. THE APPELLANT HAD AGREED TO PAY THE TAX ON T HE EXCESS STOCK SO WORKED OUT. IN THE TRADING ACCOUNT FOR THE PERIOD ENDED ON 31.03.2000 FILED ALONG-WITH THE RE TURN OF INCOME FOR THE A.Y 2000-01 THE APPELLANT HAD SHOWN THE SUM OF RS.9 00 000/- UNDER THE HEAD 'OTHER INCOME(S TOCK DIFFERENCE). IT WAS HOWEVER FOUND BY THE AO THAT TH E APPELLANT HAD INCREASED THE OPENING STOCK FOR THE A.Y.2000-01 BY A SUM OF RS.9 00 000/-. THE APPELLAN T'S CLOSING STOCK FOR THE (ACCOUNTING PERIOD RELEVANT T O A.Y. 1999-00 WAS RS.74 25 000/-. THEREFORE THIS SHOULD HAVE BEEN THE OPENING STOCK FOR THE A.Y.2000-01. HOWEVER THE APPELLANT HAD INCREASED THE OPENING STOCK FOR T HE A.Y.20CO-01 FROM RS.74 25 000/- TO RS.83 25 000/-. THEREFORE IT WAS HELD BY THE AO THAT THE APPELLANT HAD NULLIFIED THE EFFECT OF EXCESS STOCK FOUND AND ADMI TTED BY IT BY INCREASING THE OPENING STOCK BY RS.9 00 000/- . IT HAS BEEN CLAIMED BY THE APPELLANTS THAT ALTHOUGH THE APPELLANT FIRM HAD INCREASED THE VALUE OF THE OPENI NG STOCK BY RS. 9 00 000/- IT HAD ALSO INCREASED THE VALUE OF CLOSING STOCK AT THE RATES TAKEN AT THE TIME OF SUR VEY. HOWEVER THE APPELLANT'S REPRESENTATIVE FAILED TO S UBMIT ANY EVIDENCE TO JUSTIFY THE ABOVE CLAIM. IT HAS ALS O BEEN ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 4 POINTED OUT BY THE APPELLANT'S REPRESENTATIVE THAT THE RATES ADOPTED BY THE LEARNED AO DURING THE COURSE OF SURV EY WERE INCORRECT. HOWEVER IN THIS REGARD ALSO NO EV IDENCE HAS BEEN BROUGHT TO SHOW AS TO HOW CORRECT RATES HA VE NOT BEEN ADOPTED WHILE VALUING THE STOCK AT THE TIM E OF SURVEY. FURTHER AS MENTIONED ABOVE THE APPELLANT H AD ADMITTED THE EXCESS STOCK OF RS.9 00 000/- FOUND DU RING THE COURSE OF SURVEY. THE APPELLANT HAD ALSO INCLUD ED THE INCOME OF RS.9 00 000/- IN THE TRADING ACCOUNT FOR THE PERIOD ENDING ON 31.03.2000. THEREFORE THE APPELLA NT HAS NOT BEEN ABLE TO EXPLAIN THE DIFFERENCE IN STOC K OF RS.9 00 000/- AS MENTIONED ABOVE. SINCE EXCESS STOC K OF RS.9 00 000/- WAS FOUND DURING THE COURSE OF SURVEY OPERATION CONDUCTED UNDER SECTION 133A OF THE I. T. ACT 1961 THE AO WAS JUSTIFIED IN MAKING THE ADDITION O F RS.9 00 000/- AS UNEXPLAINED INVESTMENT IN STOCK UN DER SECTION 69 OF THE ACT AND ACCORDINGLY THE ACTION OF THE AO WAS UPHELD BY THE THEN CIT(A)-V VIDE HIS ORDER IN APPEAL NO. CAB/V-280/04-05 DATED 08.09.2005. ACCORDINGLY THE LEVY OF PENALTY U/S 271(L) (C) BY THE AO IS ALSO JUSTIFIED FOR THE REASONS MENTIONED BELOW. 4.1 THE VARIOUS CONTENTIONS OF THE AR PUT FORTH AR E NOT ACCEPTABLE AND THE DECISIONS RELIED ON BY HIM WERE DIFFERENT ON FACTS AND AS SUCH THEY WERE NOT OF ANY MATERIAL. IT IS A CLEAR CASE OF CONCEALMENT OF PART ICULARS. INDORE BENCH OF THE MP HIGH COURT IN THE CASE OF DY CIT VS. CHIRAG METAL ROLLING MILLS LTD. REPORTED IN (2 007) 207 CTR 395 (MP) HELD THAT IN VIEW OF EXPLANATION 1 TO SECTION 271 (1) ( C) PRIMARY ONUS IS ON THE APPELL ANT TO PROVE THAT THERE IS NO CONCEALMENT HOLDING THAT TH E TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE ONUS IS ON THE REVENUE TO PROVE MALA-FIDE ON THE PART OF THE APPEL LANT. IN THIS CASE THE HON'BLE MP HIGH COURT FOLLOWED THE APEX COURT'S DECISION IN THE CASE OF K.P. MADHUSUDANAN V S. CIT (2001) 169 CTR (SC) 489:251 ITR 99 (SC) WHEREI N THE ABOVE POSITION OF LAW WAS REITERATED. TO PUT TH E MATTER STRAIGHT IT IS IMPORTANT TO READ THE EXPLAN ATION 1 TO SECTION 271(L) (C ) WHICH IS AS UNDER: ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 5 EXPLANATION 1: WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON U NDER THIS ACT (A) SUCH PERSON FAILS TO OFFER ANY EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR THE COMMISSIONERS (APPEALS) TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE I S NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SU CH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSES OF CLAUSE(C) OF THIS SUB-SECTION B E DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 4.2 A COMBINED READING OF EXPLANATION 1 TO SECTION 271(L)(C ) AND THE DECISION OF THE M. P. HIGH COURT CITED ABOVE INDICATE THAT THE ADDITION OF RS. 9 00 000/- MADE BY THE AO AND SUSTAINED BY THE CIT(A)-V BARODA AS PER REFERENCE CITED ALREADY REVEAL THAT THE AMOUNT ADDE D OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE APP ELLANT FOR THE PURPOSE OF CLAUSE ( C) OF SECTION 271 (1) ( C ) BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN THE CIRCUMSTANC ES I REUSE TO INTERVENE IN THE ACTION OF THE AO. 5. IN THE RESULT THE APPEAL IS DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT SURVEY WAS CONDUCTED ON 02-02-2000 AND DURING THE C OURSE OF SURVEY EXCESS STOCK WAS FOUND WHICH WAS ACCOUNTED F OR IN THE BOOKS ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 6 OF ACCOUNTS OF THE ASSESSEE BY MENTIONING THE EXCES S STOCK IN THE TRADING ACCOUNT IN A SUM OF RS.9 00 000/-. PB-20 IS COPY OF THE TRADING ACCOUNT. THE LEARNED COUNSEL FOR THE ASSESS EE ALSO REFERRED TO PB-23 WHICH IS THE ORIGINAL ASSESSMENT ORDER DAT ED 30-03-2001 IN WHICH THE ORIGINAL RETURN OF INCOME WAS FILED AT RS .4 23 103/- AND THE AO HAS REFERRED TO THE DIFFERENCE OF VALUATION OF S TOCK OF RS.9 00 000/- AND ACCEPTED THE CONTENTION OF THE AS SESSEE BY COMPUTING THE TOTAL INCOME AT RS.5 63 070/-. THE LE ARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE AO LATER ON REOPENED THE ASSESSMENT U/S 147/148 OF THE IT ACT AND VIDE REASO NS DATED 03-01-2005 THE REASSESSMENT PROCEEDINGS WERE INITI ATED IN WHICH THE FACT OF ESCAPEMENT OF INCOME ON ACCOUNT OF RS.9 00 000/- AS ABOVE WERE RECORDED. PB-33 IS THE REPLY FILED BEFOR E THE AO TO EXPLAIN THE DISCREPANCY IN WHICH IT WAS EXPLAINED T HAT DURING THE COURSE OF SURVEY THE DETAILS RECORDED IN THE INVENT ORY AS WELL AS BOOKS OF ACCOUNTS TALLIED WITH EACH OTHER ITEM OF Q UANTITY AND THERE WAS ONLY DIFFERENCE OF VALUATION. COPIES OF THE SAM E ARE FILED AT PB- 36 TO 40. PB-117 IS THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE ADDITION OF RS.9 00 000/- IN THE REASSESSMENT PROCE EDINGS DATED 08-09-2005. THE ASSESSEE HAS SUBMITTED THAT THE ASS ESSEE ACCEPTED THE ORDER OF THE LEARNED CIT(A) DATED 08-09-2005 ON QUANTUM AND NO SECOND APPEAL IS PREFERRED BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO PB-128 WHICH IS T HE REPLY FILED BEFORE THE AO AT THE PENALTY STAGE IN RESPONSE TO N OTICE DATED 01-02-2007. THE LEARNED COUNSEL FOR THE ASSESSEE T HEREFORE SUBMITTED THAT THE ASSESSEE FILED EXPLANATION BEFOR E THE AUTHORITIES BELOW; THEREFORE IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FILING OF ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 7 INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS SUBMITTED THAT IN CASE THE ASSESSEE WOULD HAVE CHALLENGED THE ADDITIO N ON MERIT THE ADDITION WOULD HAVE BEEN DELETED AND SHE RELIED UPO N THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF ITO VS M/S. SEV EN EARTH IN ITA NO.3951/AHD/2008 DATED 15-03-2011. SHE HAS ALSO RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF DC IT VS DR. SATISH B. GUPTA IN ITA NO.1482/AHD/2010 IN WHICH TH E DEPARTMENTAL APPEAL WAS DISMISSED. IT WAS OBSERVED THAT THE BASI S OF LEVY OF PENALTY IS RETURN OF INCOME. IF ANY AMOUNT HAS BEEN SHOWN IN THE RETURN OF INCOME THEN IT CANNOT BE SAID THAT THE A SSESSEE HAS CONCEALED ANY PARTICULARS ABOUT THE INCOME OR FURNI SHED INACCURATE PARTICULARS IN RELATION THERETO. THERE CANNOT BE AN Y CONCEALMENT PRIOR TO FILING OF THE RETURN. 5. ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE D ELIBERATELY FILED THE TRADING ACCOUNT ENHANCING/INCREASING THE OPENIN G STOCK FOR ASSESSMENT YEAR UNDER APPEAL I.E. 2000-01 BECAUSE T HE CLOSING STOCK IN THE PRECEDING ASSESSMENT YEAR 1999-2000 WA S RS.74 25 000/- BUT THE OPENING STOCK IN THE ASSESSM ENT YEAR UNDER APPEAL I. E. 2000-01 WAS SHOWN AT RS.83 25 000/-. T HUS THE ASSESSEE NULLIFIED THE EFFECT OF EXCESS STOCK FOUND AND ADMITTED DURING THE COURSE OF SURVEY BY INCREASING THE OPENI NG STOCK VALUED AT RS.9 00 000/- (PB-20). THE LEARNED DR SUBMITTED THA T THE ASSESSEE DID NOT COOPERATE WITH THE AO AT THE PENALTY STAGE. NO EVIDENCE OR MATERIAL IS PRODUCED TO SUPPORT THE CLAIM MADE BEFO RE THE AUTHORITIES BELOW. NO EVIDENCE HAS BEEN FILED AS TO HOW THE COR RECT RATES HAVE ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 8 NOT BEEN TAKEN BY THE AUTHORITIES BELOW IN VALUING THE STOCK. THE ASSESSEE DID NOT OFFER ANY PROPER EXPLANATION ON TH E ISSUE THEREFORE EXPLANATION (1) TO SECTION 271 (1) (C) OF THE IT AC T IS CLEARLY ATTRACTED IN THE MATTER. THE LEARNED COUNSEL FOR THE ASSESSE E IN THE REJOINDER SUBMITTED THAT SINCE THE ASSESSEE FILED EXPLANATION TO THE PENALTY NOTICE THEREFORE EXPLANATION (1) TO SECTION 271 ( 1) (C) OF THE IT ACT WOULD NOT APPLY IN THE MATTER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED CIT(A) PROPERLY APPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE WHILE CONFIRMIN G THE PENALTY. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE. BEFORE PROCEE DING FURTHER WE WOULD LIKE TO NOTE CERTAIN DECISIONS WHICH WOULD BE RELEVANT FOR DISPOSAL OF THE ISSUE. 6.1 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JYOTI LAXMAN KONKAR VS CIT 292 ITR 163 HELD AS UNDER: THE ASSESSEE HAD FILED A RETURN FOR THE ASSESSMENT YEAR 1999-2000 DECLARING AN INCOME OF RS.7 40 510. NOT SATISFIED THEREWITH THE ASSESSING OFFICER CARRIED OUT A SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT 1961 AND DURING THE SURVEY FOUND THAT THERE WAS A DISCREPANCY IN STOCK TO THE TUNE O F RS.18 28 706 WHICH WAS BROUGHT TO THE NOTICE OF THE ASSESSEE AND THE ASSESSEE FILED A REVISED RETURN DISCLOSING ADDITIONAL INCOME OF RS.18 28 706. THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271 (1) (C) AND THIS WAS UPHELD BY THE TRIBUNAL. ON APP EAL TO THE HIGH COURT: ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 9 HELD DISMISSING THE APPEAL THAT THE QUESTION WHETHER THERE IS CONCEALMENT OF INCOME OR NOT HAS T O BE DECIDED WITH REFERENCE TO THE FACTS OF A GIVEN C ASE AND THE FACT FINDING AUTHORITIES UNDER THE ACT HAVI NG COME TO THE CONCLUSION THAT IN THE FACTS OF THE CAS E THE ASSESSEE HAD CONCEALED THE INCOME INITIALLY WIT H A VIEW TO AVOID THE PAYMENT OF TAX THE IMPOSITION OF PENALTY WAS VALID. 6.2 THE HONBLE GUJARAT HIGH COURT IN THE CASE OF LMP P RECISION ENGG. CO. LTD. VS DCIT(ASSESSMENT) 330 ITR 93 HELD AS UNDER: HELD THAT IT WAS ONLY AFTER THE STATEMENT OF THE CHAIRMAN AND MANAGING DIRECTOR WAS RECORDED BY THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION) MUMBAI THAT THE FIRST DISCLOSURE DATED OCTOBER 20 1988 RS.54 71 463 WAS MADE ACCOMPANIED BY ANOTHER DISCLOSURE OF RS.54 LAKHS IN A ROUND FIGURE BEING DIVIDED INTO THREE SEGMENTS OF RS.18 LAKHS EACH FOR ASSESSMENT YEARS 1986-87 1987-88 AND 1988-89. THE REVISED RETURN DECLARING A SUM OF RS.78 56 613 CAME ABOUT AS A CONSEQUENCE OF FOLLOW- UP PROCEEDINGS UNDERTAKEN BY THE DEPUTY DIRECTOR OF INCOME-TAX IN RELATION TO THE OTHER THREE SUPPLIERS VIZ. SC NB AND NPST. THEREFORE THE ASSESSEE COUL D NOT BE STATED TO HAVE VOLUNTARILY COME FORWARD TO DISCLOSE INCOME WHICH HAD UNINTENTIONALLY BEEN OMITTED FROM THE ORIGINAL RETURN OF INCOME. THE IMPOSITION OF PENALTY WAS VALID. 6.3 THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RAKESH SURI 331 ITR 458 HELD AS UNDER: HELD ALLOWING THE APPEAL THAT THE ASSESSEE HAD CONCEALED THE MATERIAL FACTS AND GIVEN INCORRECT STATEMENT OF FACTS IN THE APPLICATION AND ALSO NOT PROVIDED INFORMATION REQUIRED BY THE ASSESSING ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 10 OFFICER AFTER RECEIPT OF NOTICE. ACCORDINGLY THE A CTION OF THE ASSESSEE WAS NEITHER BONA FIDE NOR VOLUNTARY . THE MANNER IN WHICH THE ASSESSEE HAD TRIED TO PROLONG THE CASE BEFORE THE ASSESSING OFFICER BY NO T PROVIDING INFORMATION IMMEDIATELY AND BY NARRATING INCORRECT FACTS IN THE LETTER DATED DECEMBER 6 200 6 SHOWED THAT THE ASSESSEE HAD CONCEALED THE INCOME AND DISCLOSURE WAS NOT VOLUNTARY BUT UNDER COMPULSION BEING CORNERED BY THE ASSESSING OFFICER. PENALTY HAD TO BE IMPOSED. 6.4 THE HONBLE PUNJAB AND HARYANA HIGH COURT IN TH E CASE OF SMT. RAM PIARI VS CIT 327 ITR 318 HELD AS UNDER: HELD THAT MERE DISCLOSURE OF AGREEMENT TO SELL IN THE APPLICATION FOR CLEARANCE CERTIFICATE IN FOR M 34- A COULD NOT BE EQUATED TO DISCLOSURE IN THE INCOME- TAX RETURN. THE ASSESSEE FAILED TO FILE A REVISED R ETURN IN SPITE OF NOTICE UNDER SECTION 148 OF THE ACT. TH E ASSESSEE WAS ALSO CONVICTED FOR CONCEALMENT. THE CONTENTION THAT THE PENALTY WAS LIABLE TO BE SET AS IDE ON ACCOUNT OF COMMISSIONER (APPEALS) DESCRIBING THE ACTION OF THE ASSESSEE AS SHOWING INACCURATE PARTICULARS WHILE THE ASSESSING OFFICER DESCRIBED IT AS CONCEALING THE PARTICULARS COULD NOT BE UPHELD . THE OBSERVATIONS OF THE COMMISSIONER (APPEALS) WERE ALSO IN THE CONTEXT OF CONCEALING AND MERE FAC T THAT MENTION OF INACCURATE PARTICULARS WAS ALSO MAD E DID NOT MAKE ANY DIFFERENCE. IT WAS CLEAR THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AS WELL AS GIVEN INACCURATE PARTICULARS. THE PENALTY PROVISION WAS TO PROVIDE REMEDY FOR LOSS OF REVENUE FOR WHICH THE ELEMENT OF WILLFUL CONCEALMENT WAS NOT ESSENTIAL. THE FINDINGS OF THE TRIBUNAL COULD N OT BE HELD TO BE PERVERSE. 6.5 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS HARPARSHAD AND COMPANY LTD. 328 ITR 53 HELD AS UNDER: ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 11 HELD THAT THE REASONS GIVEN BY THE TRIBUNAL FOR QUASHING THE PENALTY PROCEEDINGS WERE IRRELEVANT NOT GERMANE TO THE ISSUE AND THE TRIBUNAL HAD LOST SIGHT OF ASPECTS WHICH HAD BEEN CONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNAL HAD FAILED TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COMMISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE R HAD RENDERED ANY SERVICES BUT BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER CENT OF THE COMMISSION BY R OUT OF THE 3 PER CENT RECEIVED BY HER. AS FAR AS COMMISSION TO R WAS CONCERNED IT WAS ACCEPTED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICES AT ALL. THE ASSESSEE HAD FAILED TO OFFER ANY EXPLANATION IN RESPECT OF THE ADDITION OF RS.1 83 078 AND IT COULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF BY VIRTUE OF THIS EXPLANATION. THE TRIBUNAL WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE INCOME-TAX OFFICER UNDER SECTION 271 (1) (C) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES IN PENALTY PROCEEDINGS HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BUT ON THE BASIS THEREOF THE CLAIM WHICH IS MADE IS EX FACIE BOGUS IT MAY STILL ATTRACT PENALTY PROVISION. ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 12 THE EXPLANATION APPENDED TO SECTION 271 (1) (C) OF THE ACT ENTIRELY INDICATE THE ELEME NT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJECT BEHIND ENACTMENT OF SECTION 271 (1) (C) READ WITH THE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MATER OF PROSECUTION UNDER SECTION 276C OF THE ACT. 7. IT IS NOT IN DISPUTE THAT DURING THE COURSE OF S URVEY EXCESS STOCK OF RS.9 00 000/- WAS FOUND IN THE PREMISES OF THE A SSESSEE. THE ASSESSEE ADMITTED THE EXCESS STOCK AND ADMITTED TO PAY THE TAX THEREON BUT THE ASSESSEE DID NOT DO SO. IT WAS FOUN D BY THE AO THAT THE ASSESSEE HAD INCREASED THE OPENING STOCK OF ASS ESSMENT YEAR UNDER APPEAL 2000-01 BY RS.9 00 000/-. THEREFORE T HE ASSESSEE HAD NULLIFIED THE EFFECT OF EXCESS STOCK FOUND AND ADMI TTED BY THE ASSESSEE. PB-20 IS THE TRADING ACCOUNT OF THE ASSES SMENT YEAR UNDER APPEAL IN WHICH THE OPENING STOCK IS SHOWN BY THE A SSESSEE AT RS.83 25 000/- DESPITE THE CLOSING STOCK OF THE PRE CEDING ASSESSMENT YEAR 1999-2000 WAS RS.74 25 000/-. THE INCREASE OF THE OPENING STOCK OF THE ASSESSMENT YEAR UNDER APPEAL WAS THUS WITHOUT ANY JUSTIFICATION AND REASONS I.E. WHY THE ASSESSMENT W AS REOPENED AND ADDITION OF RS.9 00 000/- WAS MADE ON ACCOUNT OF EX CESS STOCK FOUND DURING THE COURSE OF SURVEY. IT THEREFORE APPEARS THAT THE ASSESSEE INCREASED THE VALUE OF THE OPENING STOCK IN THE ASS ESSMENT YEAR UNDER APPEAL DELIBERATELY IN ORDER TO DEFRAUD THE R EVENUE DEPARTMENT. ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 13 IT IS A CLEAR CASE OF ACT OF CONCEALMENT OF INCOME. THUS THE ASSESSEE FABRICATED THE TRADING ACCOUNT IN THE ASSE SSMENT YEAR IN QUESTION BECAUSE SHOWING RS.9 00 000/- AS EXCESS ST OCK AND FURTHER INCREASING THE OPENING STOCK WOULD SHOW THAT ITS RE SULT IS ZERO. THE ASSESSEE HAS THEREFORE DID NOT DISCLOSE ANY EXCES S STOCK IN THE TRADING ACCOUNT AS WELL AS IN THE RETURN OF INCOME NO SUCH AMOUNT HAS BEEN SURRENDERED FOR THE PURPOSE OF TAXATION. T HE FINDING OF FACTS RECORDED BY THE AO AND LEARNED CIT(A) HAVE REACHED FINALITY BECAUSE THE ASSESSEE ADMITTEDLY DID NOT CHALLENGE T HE ADDITION BEFORE THE TRIBUNAL. PB-23 IS THE ORIGINAL ASSESSM ENT ORDER DATED 30-03-2001 WHICH SHOWS THAT ORI0GINAL RETURN OF INC OME WAS FILED DECLARING INCOME AT RS.4 23 103/- AND AFTER MAKING THE SMALL ADDITION ON ACCOUNT OF GROSS PROFIT INCOME WAS COMPUTED AT R S.5 63 070/-. THOUGH THERE IS A REFERENCE OF EXCESS STOCK OF RS. 9 00 000/- DURING THE COURSE OF SURVEY IN THIS ASSESSMENT ORDER BUT I T APPEARS THAT THE AO WAS MISLED BY THE WRONG ENTRIES POSTED IN THE TR ADING ACCOUNT BY THE ASSESSEE AS IS NOTED ABOVE IN THE TRADING ACCOU NT PB-20 BY ENHANCING THE VALUE OF THE OPENING STOCK WHICH IS INCONSISTENT WITH THE VALUE OF THE CLOSING STOCK OF ASSESSMENT YEAR 1 999-2000. THUS THERE WAS NO DISCLOSURE OF RS.9 00 000/- ON ACCOUNT OF EXCESS STOCK IN THE ORIGINAL RETURN OF INCOME OR IN THE ORIGINAL ASSESSMENT ORDER. WHEN THE ABOVE MISTAKE WAS FOUND THE AO WAS OF THE VIEW THAT INCOME ESCAPED ASSESSMENT TO THE TUNE OF RS.9 00 00 0/- BECAUSE OF THE DELIBERATE ACT ON THE PART OF THE ASSESSEE TO E NHANCE THE OPENING STOCK BY THE SAME AMOUNT OF RS.9 00 000/-. THE PROC EEDINGS U/S 147/148 OF THE IT ACT WERE INITIATED IN WHICH THE A SSESSEE DELIBERATELY AND KNOWING WELL OF THE FACTS FILED TH E RETURN OF INCOME AT ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 14 RS.5 63 070/- WHICH WAS DETERMINED IN THE ORIGINAL ASSESSMENT ORDER DATED 30-03-2001. THE ASSESSEE DELIBERATELY DESPITE KNOWING THAT ASSESSEE IS CORNERED BY THE AO DID NOT DISCLOSE AD DITIONAL INCOME OF RS.9 00 000/- EVEN IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148 OF THE IT ACT. THE ASSESSEE THUS CONCEALED THE INCOME AS WELL AS CONCEALED THE PARTICULARS OF INCOME NOT ONL Y IN THE ORIGINAL RETURN OF INCOME BUT ALSO IN THE RETURN OF INCOME F ILED IN RESPONSE TO NOTICE U/S 148 OF THE IT ACT. THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE OF RATES OF THE STOCK EITHER BEFORE THE AO OR BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) IN HIS ORDER DAT ED 08-09-2005 (PB-117) NOTED THAT THE ASSESSEE FAILED TO SUBMIT A NY EVIDENCE TO JUSTIFY THE CLAIM OF INCREASING THE VALUE OF THE OP ENING STOCK AS WELL AS RATES TAKEN AT THE TIME OF SURVEY. EVEN AT THE P ENALTY STAGE THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE OR MATERIAL TO SHOW AS TO HOW CORRECT RATES HAVE NOT BEEN APPLIED BY THE SURV EY PARTY WHILE VALUING THE STOCK AT THE TIME OF SURVEY. SINCE IT IS ADMITTED FACT THAT EXCESS STOCK WAS FOUND DURING THE SURVEY IT WAS ALS O ADMITTED BY THE ASSESSEE AND ALSO ADMITTED TO PAY TAX THEREON THE ASSESSEE DELIBERATELY PREPARED THE TRADING ACCOUNT IN SUCH A WAY TO NULLIFY THE EFFECT OF EXCESS STOCK FOUND DURING THE COURSE OF S URVEY. THE CONDUCT OF THE ASSESSEE NOTED ABOVE CLEARLY SPEAKS AGAINST THE ASSESSEE AND POINTS TO ONLY ONE POINT THAT THE ASSESSEE HAS CONCEALED THE INCOME. THOUGH THE AO NOTED THE EFFECT OF EXCESS S TOCK IN THE ORIGINAL ASSESSMENT ORDER BUT IT WAS A MISTAKE OF T HE AO IN NOT TAKING CARE OF MAKING ADDITION OF RS.9 00 000/- BECAUSE NO AMOUNT WAS DISCLOSED IN THE ORIGINAL RETURN OF INCOME. THE CLA IM OF THE ASSESSEE IS THEREFORE NOT SUBSTANTIATED THROUGH ANY EVIDEN CE OR MATERIAL AND ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 15 THE EXPLANATION OF THE ASSESSEE CANNOT BE SAID TO B E BONA FIDE. NO PARTICULARS OF EXCESS SOCK WERE DISCLOSED IN THE OR IGINAL RETURN OF INCOME AS WELL AS IN THE RETURN FILED U/S 148 OF TH E IT ACT DISCLOSING ADDITIONAL INCOME. FINDINGS IN THE ASSESSMENT ORDER ON QUANTUM ARE RELEVANT AND HAVE PROBATIVE VALUE. SINCE THE ASSE SSEE DID NOT ADDUCE ANY EVIDENCE IN SUPPORT OF THE CLAIM AND RAT HER IT WAS FOUND THAT THE ASSESSEE MADE A WRONG CLAIM DELIBERATELY I N THE TRADING ACCOUNT BY INCREASING THE VALUE OF THE OPENING STOC K THEREFORE EXPLANATION (1) TO SECTION 271 (1) ( C ) OF THE IT ACT IS CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE. IT IS THER EFORE A FIT CASE OF LEVY OF PENALTY FOR CONCEALMENT OF INCOME. THE DECI SION OF THE TRIBUNAL IN THE CASE OF DR. SATISH B. GUPTA (SUPRA) IS CLEARLY DISTINGUISHABLE ON FACTS AS NOTED ABOVE AND WOULD N OT SUPPORT THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSIONS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE LEVY OF PENALTY U/ S 271 (1) ( C ) OF THE IT ACT. APPEAL OF THE ASSESSEE HAS NO MERIT AND IS ACCORDINGLY DISMISSED. ITA NO.3809/AHD/2008 TRIBHOVANDAS CHELARAM VS ACIT CIRCLE-5 BARODA 16 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD