ACIT, New Delhi v. Shri Om Prakash Agarwal, New Delhi

ITA 5589/DEL/2010 | 2005-2006
Pronouncement Date: 23-09-2011 | Result: Dismissed

Appeal Details

RSA Number 558920114 RSA 2010
Assessee PAN AANPA4467C
Bench Delhi
Appeal Number ITA 5589/DEL/2010
Duration Of Justice 9 month(s) 14 day(s)
Appellant ACIT, New Delhi
Respondent Shri Om Prakash Agarwal, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 23-09-2011
Date Of Final Hearing 04-08-2011
Next Hearing Date 04-08-2011
Assessment Year 2005-2006
Appeal Filed On 09-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH E DELHI ] BEFORE SHRI RAJPAL YADAV JM AND SHRI K. D. RAN JAN AM I. T. APPEAL NO. 5589 (DEL) OF 2010. ASSESSMENT YEAR : 200506. ASSTT. COMMISSIONER OF INCOME-TAX SHRI O M PRAKASH AGGARWAL C I R C L E : 25 (1) VS. B 19 LAWRENCE ROAD INDL. AREA N E W D E L H I. D E L H I. P A N / G I R NO. AAN PA 4467 C. A N D C. O. NO. 178 (DEL) OF 2011. [ IN I. T. APPEAL NO. 5589 (DEL) OF 2010 ]. ASSESSMENT YEAR : 200506. SHRI OM PRAKASH AGGARWAL ASSTT. COMMISSIONER OF INCOME-TAX B 19 LAWRENCE ROAD INDL. AREA VS. C I R C L E : 25 (1) D E L H I. N E W D E L H I. P A N / G I R NO. AAN PA 4467 C. ( APPELLANTS ) ( RESPONDENTS ) ASSESSEE BY : SHRI SURESH KUMAR GUPTA C. A.; DEPARTMENT BY : SHRI R. S. NEGI SR. D. R.; O R D E R. PER K. D. RANJAN AM : THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 ARISE OUT OF ORDER OF THE LD. CIT (APPEALS) -III NEW DELHI. THESE WERE HEARD TOGETHER 2 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . AND ARE BEING DISPOSED OF FOR THE SAKE OF CONVENIE NCE BY THIS CONSOLIDATED ORDER. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE PENALTY IMPOSED IN RESPEC T OF ADDITION ON ACCOUNT OF PROFIT FROM UN-ACCOUNTED SALES; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE PENALTY IMPOSED IN RESPEC T OF ADDITION ON ACCOUNT OF UN-EXPLAINED INVESTMENT; 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE PENALTY IMPOSED IN RESPEC T OF ADDITION MADE IN RESPECT OF CASH AMOUNTING TO RS.7 48 510/- BY HOLDING THE SAME TO BE SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SEARCH; 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) HAS ERRED IN ADMITTING THE ADDITIONAL SUBMISSION RE GARDING CASH SURRENDERED DURING SEARCH IN CONTRAVENTION TO RULE 46-A OF THE I. T. RULES. 3.1 THE ONLY ISSUE FOR OUR CONSIDERATION RELATES TO IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS THE ACT]. THE REVENUE IS IN APPEAL AGAINST DELETING THE PENALTY IMPOSED IN RESP ECT OF ADDITION ON ACCOUNT OF PROFIT FROM UNDISCLOSED SALES ADDITION ON ACCOUNT OF UNEXPLAIN ED INVESTMENT SURRENDER OF CASH AMOUNTING TO RS.7 48 510/- AND THE ASSESSEE IS IN CROSS OBJEC TION IN CONFIRMING THE PENALTY U/S 271(1)(C) ON THE AMOUNT OF CONCEALMENT OF RS.15 16 360/- ON ACCO UNT OF UNACCOUNTED SALES. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT SEARCH AND SEIZURE OP ERATION WAS CONDUCTED ON 9.2.2005 IN THE GROUP CASES OF KVM ALONG WITH ITS DIRECTORS AND ASSOCIATE S. DURING THE SEARCH OPERATION CASH BANK DEPOSITS JEWELLERY AND OTHER INCRIMINATING DOCUMEN TS WERE SEIZED. THE ASSESSEE WAS DIRECTOR AT THE RELEVANT TIME IN THE COMPANY AND IN HIS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 153A 3 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . OFFERED ADDITIONAL INCOME OF RS.1 77 50 509/-. ASS ESSMENT WAS COMPLETED UNDER SECTION 143(3)/153A ON 29/12/2006 AT AN INCOME OF RS.2 02 4 6 206/- AS AGAINST RETURNED INCOME OF RS.1 79 37 709/-. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAD FAILED TO COMPLETE LY OFFER THE CONCEALED INCOME IN HIS CONFESSIONAL STATEMENT RECORDED UNDER SECTION 132(4 ) OF THE ACT. THE AO IMPOSED PENALTY IN RESPECT OF THE FOLLOWING ADDITIONS:- 1. DIFFERENCE IN ESTIMATED PROFIT OF RS.1 60 150/-; 2. ADDITION OF RS.21 48 396/- BEING INVESTMENT IN U NRECORDED SALES; 3. UNEXPLAINED INVESTMENT IN JEWELLERY OF RS.2 54 4 90/-; 4. RS.32 394/- AS INTEREST INCOME ON FDRS.; & 5. CASH FOUND OF RS.22 64 870/-. 3.2 ON APPEAL IT WAS SUBMITTED THAT PENALTY LEVIED ON THE UNACCOUNTED CASH TO THE EXTENT IT WAS NOT COVERED BY DECLARATION MADE IN A STATEMENT GIVEN UNDER SECTION 132(4) OF THE ACT INVOKING EXPLANATION 5 TO SECTION 271(1)(C) WAS BAD IN LAW AS THE ASSESSEE DID NOT COME UNDER THE AMBIT OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. FOR LEVY OF PENALTY UNDER EXPLANATION 5 TO SECTION 271(1)(C) THE ASSESSEE SHO ULD BE FOUND TO BE THE OWNER OF THE MONEY AND HE SHOULD HAVE CLAIMED THAT SUCH ASSETS HAVE BE EN ACQUIRED BY HIM BY UTILIZING HIS INCOME. IN SUCH A CASE THE MISCHIEF OF EXPLANATION 5 WILL B E ATTRACTED IMPLYING THAT SUCH MONEY SHALL ATTRACT LEVY OF PENALTY OF CONCEALMENT IF THE MONEY IS NOT ACCOUNTED FOR BEFORE THE DATE OF SEARCH BY THE ASSESSEE AND THE ASSESSEE HAS NOT OFFERED FO R TAXATION SUCH MONEY BY WAY OF STATEMENT UNDER SECTION 132(4) OF THE ACT. 4. EXPLANATION 5 HAS CREATED A DEEMING FICTION OF C ONCEALMENT OF INCOME AND THE CIRCUMSTANCE WHERE THE DEEMING FICTION OF CONCEALME NT IS APPLICABLE IS WELL DEFINED IN THE EXPLANATION ITSELF. IN THE CASE OF THE ASSESSEE UN ACCOUNTED CASH OF RS.1 54 64 870/- WAS FOUND AT 4 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . THE BUSINESS PREMISES BELONGING TO THE ASSESSEE AND OTHER PERSONS. IN STATEMENT UNDER SECTION 132(4) THE ASSESSEE HAD EXPLAINED THAT CASH HAD BEE N FOUND FROM VARIOUS PREMISES AND CASH WAS EARNED BY M/S. KVM SPECIES PVT. LTD. WHICH WAS NOT DISCLOSED IN THE BOOKS AND THE SAME WAS DECLARED AS PER PROVISIONS OF SECTION 132(4) AS UND ISCLOSED INCOME OF THE CURRENT YEAR. HE REFERRED TO ANSWER TO QUESTION NO. 5 TO SUPPORT HIS CONTENTION. IT WAS THEREFORE PLEADED THAT THE ASSESSEE WAS NEITHER FOUND TO BE THE OWNER OF THE U NACCOUNTED CASH IN QUESTION NOR HE HAD CLAIMED THAT CASH HAD BEEN ACQUIRED BY HIM FROM THE UNDISCLOSED INCOME WHICH WAS SURRENDERED FOR TAXATION. THEREFORE THE ASSESSING OFFICER WAS NOT CORRECT IN APPLYING THE EXPLANATION 5 TO UNACCOUNTED CASH FOUND. IT WAS AL SO SUBMITTED THAT THE AO HIMSELF HAD STATED THAT THE ENTIRE UNEXPLAINED CASH OF RS.1 54 64 870/ - HAD BEEN SHOWN IN THE RETURN OF INCOME SUBMITTED BY THE ASSESSEE ON 30 TH MARCH 2006 AND THERE HAD BEEN NO ADDITION AS A RE SULT OF ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE AC T. 5. THE LD. CIT (APPEALS) ON CONSIDERATION OF FACTS OF THE CASE AND SUBMISSIONS MADE BY THE ASSESSEE OBSERVED THAT CERTAIN FACTS HAVE NOT BEEN APPRECIATED BY THE ASSESSING OFFICER WHILE IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT . NO PENALTY UNDER SECTION 271(1)(C) WAS IMPOSABLE IN RESPECT OF ESTIMATED ADDITIONS. AS REG ARDS THE IMPOSITION OF PENALTY IN RESPECT OF ADDITION OF RS.22 64 870/- THE ASSESSING OFFICER HA D MADE ADDITION ON THE GROUND THAT OUT OF CASH FOUND OF RS.1 86 99 045/- CASH AMOUNTING TO RS.31 3 4 175/- BELONGED TO DIFFERENT COMPANIES AND STOOD REFLECTED IN THE BOOKS OF ACCOUNTS. THE BALA NCE AMOUNT OF RS.1 55 64 870/- HAD BEEN DECLARED AS INCOME FROM UNEXPLAINED SOURCES. THE A SSESSEE HAD ALSO MADE CONFESSIONAL STATEMENT OF CONCEALMENT OF CASH OF RS.1 33 00 000/ - FOR FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06 DURING THE COURSE OF SEARCH . ACCORDINGLY THE AMOUNT OF RS.1 55 64 870/- WAS TREATED AS UNEXPLAINED CASH. HOWEVER PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF UNEXPLAINED CASH OF RS.22 64 870/- (1 55 64 870 1 33 00 000) SHOWN OVER AND ABOVE THE DECLARATION MADE UNDER SECTION 132(4) OF THE ACT. THE LD. CIT (APPEALS) HOWEVER NOTED THAT THE ASSESSEE HAD DISCLOSED CASH IN HIS T WO STATEMENTS RECORDED AT TWO PREMISES. SHRI OM PRAKASH AGGARWAL THE ASSESSEE IN HIS STATEMENT RECORDED ON OATH ON 9/02/2005 DURING THE COURSE OF SEARCH CONDUCTED AT 488 SAINIK VIHAR DE LHI SURRENDERED CASH OF RS.7 45 510/- FOUND 5 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . AT HIS RESIDENCE AND JEWELLERY FOR WHICH HE WAS NOT ABLE TO PRODUCE THE BILLS AND INCOME OUT OF UNACCOUNTED SALES RECORDED IN ANNEXURE. SHRI OM PR AKASH AGGARWAL ALSO SURRENDERED RS 1 33 00 000/- IN HIS STATEMENT RECORDED U/S 132(4) AT THE PREMISES OF M/S. KVM SPECIES PVT. LTD. LAWRENCE ROAD NEW DELHI WHERE CASH OF RS.1 45 57 370/- WAS FOUND. THE CASH OF RS.12 00 000/- APPROXIMATELY WAS IN THE BOOKS OF AC COUNTS OF M/S. KVM SPECIES PVT. LTD. THEREFORE AMOUNT OF RS.1 33 00 000/- WHICH WAS EAR NED BY M/S. KVM SPECIES PVT. LTD. AND NOT DISCLOSED IN THE BOOKS OF ACCOUNTS WAS SURRENDERED UNDER SECTION 132(4) OF THE ACT AS UNDISCLOSED INCOME OF THE CURRENT YEAR. THE LD. CI T (APPEALS) ON THE BASIS OF THESE TWO STATEMENTS CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DECLARED CASH OF RS.1 40 45 510/- [RS.1 33 00 000/- + RS.7 45 510/-] FOR WHICH THE AS SESSEE WAS ENTITLED FOR BENEFIT OF SECTION 132(4) OF THE ACT. THE LD. CIT (APPEALS) FURTHER O BSERVED THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHOULD NOT HAVE BEEN LEVIED IN RESPECT OF ADDITION OF RS.1 60 150/- ON ACCOUNT OF PROFIT FROM UNDISCLOSED SALES AND RS.21 48 396/- ON ACCOUNT OF UNEXPLAINED INVESTMENT BECAUSE THOSE WERE ESTIMATED ADDITIONS MADE TO THE INCOME S URRENDERED BY THE ASSESSEE HIMSELF UNDER THE HEADS BY APPLYING HIGHER GP RATES ON DISCLOSED SALE S AND AD-HOC ESTIMATION AS IN THE CASE OF UNEXPLAINED INVESTMENT. AS REGARDS ADDITIONS OF RS .2 54 490/- AND RS.32 394/- THE LD. CIT (APPEALS) DELETED THE PENALTY RELYING ON THE DECISI ON OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2001-02 2002-03 AND 2004-05 IN I. T. APPEAL NOS. 1529 1530 AND 1531 (DEL) OF 2008 DATED 06 TH FEBRUARY 2009. 6. BEFORE US THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AO HA D IMPOSED PENALTY ON FIVE ADDITIONS. THE ADDITION OF RS.1 60 150/- WAS MADE ON ESTIMATED PRO FITS. THE ASSESSEE DECLARED INCOME FROM UNACCOUNTED SALES AT RS.63 64 345/- AND THE AO HAD ESTIMATED THE INCOME AT HIGHER AMOUNT OF RS.65 24 475/- BY ADOPTING HIGHER GP RATE. THE GRO SS PROFIT RATE WAS ESTIMATED BY THE ASSESSEE AT 4.5 PER CENT ON MUSTARD OIL SALES BUT THE AO AD OPTED GP RATE OF 6.78 PER CENT. THE GP RATES ADOPTED BY THE ASSESSEE AS WELL AS THE AO ARE BASED ON ESTIMATE BASIS. WHEN ADDITION IS MADE ON ESTIMATE BASIS PENALTY UNDER SECTION 271(1)(C) I S NOT ATTRACTED. HE PLACED RELIANCE ON THE DECISION OF HONBLE CHHATISHGARH HIGH COURT IN THE CASE OF CIT VS. VIJAY KUMAR JAIN 325 ITR 6 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . 378 FOR THE PROPOSITION THAT THE ADDITIONS BASED ON HIGHER GP RATE COULD NOT BE HELD TO BE CONCEALED INCOME. IT WAS ALSO SUBMITTED THAT THE E STIMATED INCOME IS PART OF INCOME OFFERED FOR TAXATION ON ACCOUNT OF CASH FOUND AT THE TIME OF SE ARCH AS PER STATEMENT OF THE ASSESSEE RECORDED UNDER SECTION 132(4) OF THE ACT. AS REGARDS ADDITI ON OF RS.21 48 396/- BEING UNEXPLAINED INVESTMENT IN UNACCOUNTED BUSINESS IT WAS SUBMITTE D BY THE ASSESSEE THAT DURING THE COURSE OF SEARCH NO MATERIAL WAS FOUND TO SUGGEST INVESTMENT IN THE UNACCOUNTED BUSINESS EXCEPT SEIZURE OF CASH. THEREFORE THE ADDITION OF RS.21 48 396/- IS PART OF CASH FOUND WHICH HAD ALREADY BEEN SURRENDERED UNDER SECTION 132(4) OF THE ACT. SECON DLY ADDITION ON ACCOUNT OF INVESTMENT IN UNACCOUNTED BUSINESS HAD BEEN MADE ON ESTIMATED BAS IS. THEREFORE NO PENALTY CAN BE LEVIED IN RESPECT OF ADDITIONS MADE ON ESTIMATED BASIS. AS R EGARDS THE ADDITION OF RS.2 54 490/- THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD DECLARED UNACCOUNTED JEWELLERY IN THE STATEMENT RECORDED UNDER SECTION 132(4). IN THE RE TURN OF INCOME FILED UNDER SECTION 153A UNEXPLAINED JEWELLERY WAS DECLARED AND ACCEPTED BY THE AO. THE ASSESSING OFFICER BECAUSE OF FACTUAL MISTAKE IN READING THE STATEMENT TOOK THE S URRENDER OF JEWELLERY AT RS.7 45 510/- WHEREAS THE SAID AMOUNT WAS THE AMOUNT OF CASH SURRENDERED AND THE JEWELLERY WAS SURRENDERED WITHOUT QUANTIFYING THE AMOUNT. SINCE THE VALUE OF JEWELLE RY AS PER RETURN IS ACCEPTED IN ASSESSMENT AND DECLARED VALUE BY NO ARGUMENT IS MORE THAN THE AMOU NT DECLARED IN THE STATEMENT UNDER SECTION 132(4) THEREFORE EXCEPTION TO THE PRESUMPTION OF CONCEALED INCOME IS AVAILABLE TO THE ASSESSEE UNDER EXPLANATION 5 OF SECTION 271(1)(C). HE FURTH ER SUBMITTED THAT THE ITAT IN THE CASE OF THE ASSESSEE IN EARLIER YEARS HAS HELD THAT ENTIRE JEWE LLERY FOUND AT THE TIME OF SEARCH WAS CONSIDERED TO BE EXPLAINED AND HENCE NO PENALTY WAS IMPOSABLE . AS REGARDS UNEXPLAINED INTEREST ON FDRS. OF RS.32 394/- THE LD. AR OF THE ASSESSEE SUBMITTE D THAT THE SIMILAR ADDITION WAS SUBJECT MATTER OF APPEAL BEFORE THE ITAT IN ASSESSEES OWN CASE FO R AY 2002-03 AND THE ITAT F-BENCH HAS HELD THAT THE FDRS. IN QUESTION DID NOT BELONG TO T HE ASSESSEE AND THEREFORE INTEREST INCOME COULD NOT BE CONSIDERED AS CONCEALED INCOME OF THE ASSESSEE. IN VIEW OF THESE FACTS IT HAS BEEN PLEADED THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT IMPOSABLE IN RESPECT OF INTEREST ON FDRS. 7 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . 7. AS REGARDS THE UNACCOUNTED CASH OF RS.22 64 870/ - THE LD. AR OF THE ASSESSEE SUBMITTED THAT AT THE TIME OF SEARCH TOTAL CASH FOUND AT VAR IOUS PREMISES FROM POSSESSION OF DIFFERENT PERSONS WAS AT RS.1 86 99 045/- OUT OF WHICH EXPLAI NED CASH WAS RS.31 34 175/-. OUT OF BALANCE AMOUNT OF RS.1 55 64 870/- THE ASSESSEE HAD SURREND ERED RS.1 33 00 000/- UNDER SECTION 132(4) ON 10/2/2004 WHICH HAS BEEN ACCEPTED BY THE AO GIVI NG BENEFIT OF EXCEPTION PROVIDED IN EXPLANATION 5 OF SECTION 271(1)(C). THE AO OMITTED THE SURRENDER OF CASH UNDER SECTION 132(4) AT RS.7 48 510/- MADE ON 9/2/2005. HENCE THE CONCE ALED INCOME STANDS INFLATED BY RS.7 48 510/-. THE REMAINING AMOUNT OF RS.15 16 36 0/-(22 64 870 -7 48 510) IS OWNED BY VARIOUS OCCUPANTS OF THE PREMISES AND THEREFORE A S PER EXPLANATION 5 THE AMOUNT OF RS.15 16 360/- COULD NOT BE CONSIDERED AS CONCEALED INCOME. HE THEREFORE PLEADED THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT IMPOSABLE IN RESPECT OF ANY OF THE AMOUNTS ADDED. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAD FILED DETAILS OF CASH FOUND AT VARIOUS PREMISES. THE TOTAL CASH FOUND WAS AT RS.1 86 99 045/-. CASH OF RS.64 295/- WAS FOUND FR OM THE POSSESSION OF SHRI OM PRAKASH AGGARWAL. SHRI OM PRAKASH AGGARWAL IN HIS STATEMEN T RECORDED UNDER SECTION 132(4) HAD SURRENDERED THE AMOUNT OF RS.1 33 00 000/- WHICH HA S BEEN ASSESSED IN HIS HANDS. WE ALSO FIND THAT THE ASSESSEE HAD OFFERED ANOTHER CASH OF RS.7 48 510/- FOR TAXATION UNDER SECTION 132(4) ON 9/02/2005. THUS THE CASH SURRENDERED BY THE ASSES SEE OUT OF UNEXPLAINED CASH OF RS.1 55 64 870/- COMES TO RS.1 40 48 510/-. WE AL SO FIND THAT CASH OF RS.3 49 900/- WAS FOUND FROM SHRI DINESH AGGARWAL E-915 SARASWATI VIHAR DELHI; RS.2 10 000 FROM LOCKER NO. 118 IN THE NAME OF SHRI VIKAS AGGARWAL; RS.92 130/- FROM S ANJAY AGGARWAL 488 SAINIK VIHAR; RS.64 295/- FROM SHRI OM PRAKASH AGGARWAL AND RS.5 92 085/- FROM SHRI VIKAS AGGARWAL. THIS FACT HAD NOT BEEN DENIED BY THE REVENUE. THEREFORE OUT OF THE BALANCE CASH OF RS.15 16 360/- THE AMOUNT OF RS 12 44 115/- HAS BEEN FOUND FROM TH E VARIOUS OCCUPANTS OF THE PREMISES. THE REMAINING CASH OF RS 2 72 245/- (15 16 360 12 44 115) CANNOT BE SAID TO BE OWNED BY SH OM PRAKASH AGARWAL THOUGH IT IS A DIFFERENT MATTER THA T HE HAD OWNED UP RS 1 40 48 510/- U/S 132(4) AND HAD PAID TAX THEREON. THEREFORE THE CA SH OF RS. 15 16 360/- CANNOT BE TREATED TO BE OWNED BY SHRI OM PRAKASH AGGARWAL THE ASSESSEE. EX PLANATION 5 OF SECTION 271(1)(C) ENACTS A 8 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . DEEMING PROVISION FOR CONCEALMENT IN A CASE WHERE I N THE COURSE OF SEARCH INITIATED BEFORE 1.6.2006 THE ASSESSEE IS FOUND TO BE OWNER OF ANY M ONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING WHICH HAS NOT BEEN ACCOUNTED FOR AND THEREFORE LIFTS THE AFORESAID PRESUMPTION IF THE ASSESSEE MAKES A STATEMENT IN THE COURSE OF SEA RCH THAT SUCH MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING HAS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME AND ALSO SPECIFIES T HE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS TAX TOGETHER WITH INTEREST IN RESP ECT OF SUCH INCOME. THEREFORE FOR APPLICABILITY OF PROVISIONS OF EXPLANATION 5 THE ASSESSEE SHOULD BE FOUND TO BE IN POSSESSION OF SUCH MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR UNDER HIS CONTROL. IN THE INSTANT CASE THE BALANCE AMOUNT OF RS.15 16 360/- AS DISCUSSED ABOVE HAS NOT BEEN FOUND FROM THE POSSESSION OF THE ASSESSEE NOR HE WAS IN CONTROL OF SUCH CASH. TH E CASH WAS EITHER OWNED BY THE COMPANIES OR OTHER ASSESSEES. THEREFORE NO PENALTY CAN BE IMPOS ED BY INVOKING PROVISIONS OF EXPLANATION 5 OF SECTION 271(1)(C) OF THE ACT. WE THEREFORE CANC EL THE PENALTY CONFIRMED BY THE LD. CIT (APPEALS) IN RESPECT OF ADDITION OF RS.15 16 360/-. 9. AS REGARDS DELETING THE PENALTY IN RESPECT OF ADDITION ON ACCOUNT OF ESTIMATION OF GP AT RS.1 60 150/- NO PROOF OF CONCEALED INCOME HAS BEE N FOUND. SIMILAR IS THE POSITION WITH REGARD TO ESTIMATION OF INVESTMENT OF RS.21 48 396/- IN UN ACCOUNTED BUSINESS. OUR VIEW IS SUPPORTED BY THE DECISION OF HONBLE CHHATISHGARH HIGH COURT IN THE CASE OF CIT VS. VIJAY KUMAR JAIN (SUPRA) WHEREIN IT HAS BEEN HELD THAT THE INCOME DE TERMINED ON ESTIMATE BASIS COULD NOT BE HELD TO BE CONCEALED INCOME. IN CIT VS. ESCORTS FINANCE LTD. 328 ITR 44 (DEL.) I T HAS BEEN HELD THAT WHILE THE CLAIM WAS MADE BY THE ASSESSEE AT 50 PER CENT FOR ENTERTAINMENT EXPENSES THE AO REDUCED IT TO 35 PER CENT. THE LD. CIT (APPEALS) A S WELL AS THE TRIBUNAL RIGHTLY OBSERVED THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THE ADDITION WAS MADE ONLY ON ACCOUNT OF DIFFERENCE IN ESTIMATE MADE BY THE ASSESSEE AND OTHER ESTIMATE BY THE AO. THEREFORE IN SO FAR AS THIS CLAIM WAS CONCERN ED IF THE AO REDUCED IT FROM 50 PER CENT TO 35 PER CENT THAT COULD NOT ATTRACT PENALTY. RESPECTFU LLY FOLLOWING THE JUDICIAL PRECEDENTS IT IS HELD THAT NO PENALTY CAN BE SUSTAINED IN RESPECT OF ADD ITIONS MADE ON ESTIMATED BASIS. AS REGARDS THE INVESTMENT IN JEWELLERY THE ASSESSEE DURING THE COU RSE OF SEARCH HAD ADMITTED RS.10 00 000/- IN 9 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . RESPECT OF UNEXPLAINED JEWELLERY. THE ASSESSING OFF ICER HAS COMMITTED FACTUAL MISTAKE IN TAKING THE SURRENDER OF RS.7 45 510/- IN RESPECT OF JEWEL LERY WHEREAS THE SURRENDER RELATES TO CASH FOUND AT SAINIK VIHAR PREMISES. SINCE THE ASSESSEE HAD A DMITTED THE UNACCOUNTED JEWELLERY OF RS.10 00 000/- AND HAD DECLARED IN THE RETURN OF IN COME NO PENALTY CAN BE IMPOSED ON ACCOUNT OF JEWELLERY. MOREOVER ITAT DELHI BENCH F IN A SSESSEES OWN CASE HAS CONSIDERED THE JEWELLERY AS EXPLAINED. THEREFORE THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE PENALTY. AS REGARDS DELETION OF PENALTY IN RESPECT OF INTEREST ON FDRS. AMOUNTING TO RS.32 394/- ITAT IN ASSESSMENT YEAR 2002-03 HAD HELD THAT FDRS. DID NOT BELONG TO THE ASSESSEE AND THEREFORE INTEREST INCOME THEREFROM COULD NOT BE CONSIDERED A S INCOME OF THE ASSESSEE. THEREFORE THE LD. CIT (A) IN OUR CONSIDERED OPINION HAS RIGHTLY DEL ETED THE PENALTY. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 23 RD SEPTEMBER 2011. SD/- SD/- [ RAJPAL YADAV ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD SEPTEMBER 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANTS. 2. RESPONDENTS. 3. CIT 10 I. T. APPEAL NO. 5589 (DEL) OF 2010. A N D C. O. NO. 178 (DEL) OF 2011 . 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.