DCIT 25(2), MUMBAI v. YOGESH J. LAKHANI, MUMBAI

ITSSA 8/MUM/2010 | misc
Pronouncement Date: 29-02-2012 | Result: Dismissed

Appeal Details

RSA Number 819916 RSA 2010
Assessee PAN AAAPL3109P
Bench Mumbai
Appeal Number ITSSA 8/MUM/2010
Duration Of Justice 2 year(s) 24 day(s)
Appellant DCIT 25(2), MUMBAI
Respondent YOGESH J. LAKHANI, MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 29-02-2012
Date Of Final Hearing 07-02-2012
Next Hearing Date 07-02-2012
Assessment Year misc
Appeal Filed On 04-02-2010
Judgment Text
IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 1 OF 13 IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH MUMBAI BEFORE SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER AND SHRI V. DURGA RAO JUDICIAL MEMBER IT(SS)A NO. 08/MUM/2010 (BLOCK PERIOD: 01/04/1990 TO 06/11/2000) DCIT 25(2) SHRI YOGESH J. LAKHANI C-11 1 ST FLOOR PRATYAKSHKAR BHAVAN 14 RAI CRYSTAL ROYAL COMPLEX EKSAR ROAD BANDRA(E) BORIVALI(W) MUMBAI 400051 VS MUMBAI 400091 PAN NO:AAAPL 3109 P APPELLANT RESPONDENT C.O. NO.201/MUM/2010 (ARISING OUT OF IT(SS)A NO. 08/MUM/2010) (BLOCK PERIOD: 01/04/1990 TO 06/11/2000 SHRI YOGESH J. LAKHANI DCIT 25(2) 14 RAI CRYSTAL ROYAL COMPLEX EKSAR ROAD C-11 1 ST FLOOR PRATYAKSHKAR BHAVAN BORIVALI(W) BANDRA(E) MUMBAI 400091 VS MUMBAI 400051 CROSS OBJECTOR RESPONDENT APPELLANT BY: SHRI PAVAN VED CIT (DR) RESPONDENT BY: DR.K.SHIVARAM & SHRI AJAY SINGH DATE OF HEARING: 07/02/2012 DATE OF PRONOUNCEMENT: 29/02/2012 O R D E R PER B. RAMAKOTAIAH A.M. THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF C IT (A)-35 MUMBAI DATED 12.11.2009 CANCELLING THE PENALTY UND ER SECTION 158BFA(2) OF RS. 10 91 546/-. THE ASSESSEES CROSS OBJECTION IS WITH REFERENCE TO THE JURISDICTION OF PASSING THE ORDER BEYOND THE PERIOD OF LIMITATION PROVIDED. IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 2 OF 13 2. THE FACTS IN APPEAL ARE THAT ASSESSEE IS AN INDIVI DUAL ENGAGED IN THE BUSINESS OF ERECTING ADVERTISEMENT HOARDINGS . CONSEQUENT TO THE SEARCH & SEIZURE OPERATION ON 5.10.2000 A NOTI CE UNDER SECTION 158BC WAS ISSUED ON 16/02/2001. THE ASSESSEE ON 16/ 03/2001 FILED A RETURN OF INCOME ADMITTING UNDISCLOSED INCO ME OF RS. 50 LAKHS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE REVISED THE COMPUTATION OF INCOME TO RS. 80 LAKHS BUT THE ASSESSING OFFICER RECOMPUTED THE INCOME UNDER THE B LOCK TO DETERMINE THE UNDISCLOSED INCOME AT RS. 1 63 36 273 /-. THE MATTER WAS CARRIED UP TO THE ITAT AND CONSEQUENT TO THE DI RECTIONS OF THE ITAT THE REASSESSMENT WAS DONE RE-DETERMINING THE TOTAL INCOME AT RS. 81 09 817/- WHICH WAS THE SAME AS BEFORE THE AP PEAL THAT WAS PREFERRED BY REVENUE CONSEQUENT TO THE ORDERS OF TH E CIT (A). AFTER COMPLETING THE REASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER CONSIDERED FOR LEVY OF PENALTY UNDER SECTION 158BFA (2) AND DETERMINED THE PENALTY AT RS. 10 91 546/- EXCLUDING THE AMOUNT ALREADY DISCLOSED BY THE ASSESSEE AT THE TIME OF FI LING THE RETURN. THE CIT (A) CONSIDERING THE FACTS THAT THE ASSESSEE WAS NOT GIVEN THE SEIZURE MATERIAL IN TIME AND THE DISCLOSURE WAS MAD E IN THE ABSENCE OF ANY DOCUMENT HELD THAT WAS A REASONABLE CAUSE FOR NOT DECLARING THE CORRECT INCOME AND ALSO TAKING INTO A CCOUNT THE REVISED LETTER FILED ADMITTING INCOME OF RS. 80 LAK HS HE DELETED THE PENALTY. 3. THE REVENUE IS AGGRIEVED NOT ONLY ON THE DELETION O F PENALTY OF RS. 10 91 546/- BUT ALSO DESIRES THE ITAT TO IN CREASE THE AMOUNT OF PENALTY TO RS. 56 93 092/- BY WAY OF ADDI TIONAL/ REVISED GROUND IN THE REVISED FORM NO.36 ON THE REASON THAT THE ASSESSING OFFICER WRONGLY CONSIDERED ONLY AN AMOUNT OF RS. 3 1 09 817/- (EXCLUDING RS. 50 LAKHS DISCLOSED) AND WRONGLY DE TERMINED THE PENALTY WHICH SHOULD HAVE BEEN AT RS. 21 83 092/- AS AGAINST THE CORRECT UNDISCLOSED INCOME OF RS. 81 09 817/- ON W HICH THE PENALTY WORKS OUT TO RS. 56 93 092/-. IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 3 OF 13 4. THE LEARNED CIT (DR) IN HIS ARGUMENTS SUBMITTED THA T THE ASSESSEE CONTESTED THE ENTIRE AMOUNT OF ADDITION MA DE BY THE ASSESSING OFFICER WHICH INCLUDED THE DISCLOSED INCO ME. THEREFORE AS PER THE PROVISIONS OF SECTION 158BFA(2) ASSESSI NG OFFICER SHOULD HAVE CONSIDERED THE ENTIRE AMOUNT FOR LEVY OF PENAL TY AND SINCE THERE WAS AN ERROR IN THE ASSESSING OFFICERS ORDER WHICH COULD HAVE BEEN RECTIFIED BY THE CIT (A) IT WAS SUBMITTE D THAT THE ITAT HAS THE POWER TO ENHANCE THE PENALTY ACCORDING TO L AW ON REACHING THE CONCLUSION THAT COMPUTATION OF PENALTY MADE BY THE ASSESSING OFFICER IS NOT ACCORDING TO THE LAW. HE RELIED ON T HE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ASSAM TRAVELS & SERVICES FOR THE PROPOSITION THAT THE POWERS OF THE ITAT ARE WIDE ENOUGH TO INCLUDE THE POWER TO REMAND TO AUTHORITY COMPETENT TO MAKE A REQUISITE ORDER IN ACCORDANCE WITH THE LAW. HE ALSO MADE VARIOUS OTHER PROPOSITIONS REGARDING THE POWERS OF THE ITAT RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF KAPURCHAND SHRIMAL VS. COMMISSIONER OF INCOME TAX ( 7 TAXMAN 1(SC) AND BHAVANA CHEMICALS LTD. VS. COMMISSIONER O F INCOME TAX 99 TAXMAN1 (SC) FOR THE PROPOSITION THAT THE APPELL ATE AUTHORITY HAS JURISDICTION AS WELL AS DUTY TO CORRECT ALL ERR ORS IN THE PROCEEDINGS UNDER APPEAL AND TO ISSUE IF NECESSARY APPROPRIATE DIRECTIONS TO THE AUTHORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED TO DISPOSE OFF OF THE WHOLE OR ANY PART O F THE MATTER AFRESH UNLESS PROHIBITED FROM DOING SO BY THE STATUTE. IT WAS HIS SUBMISSION THAT BOTH THE ASSESSING OFFICER AND THE CIT (A) ERRED IN CONSIDERING THE AMOUNT OF EVEN .50 LAKHS DISCLOSED BY THE ASSESSEE AS COVERED BY THE EXEMPTION PROVISIONS OF SECTION 1 58BFA(2) WHILE THEY IGNORED THE FACT THAT THE ASSESSEE CONTESTED T HE ENTIRE AMOUNT AND THEREFORE THE EXEMPTION DOES NOT APPLY IN THE FACTS OF THE CASE. IT WAS HIS SUBMISSION THAT A PENALTY SHOULD HAVE BE EN IMPOSED ON THE ENTIRE INCOME DETERMINED BY THE ASSESSING OFFIC ER IN THE CONSEQUENTIAL PROCEEDINGS AND THEREFORE AS THE ORD ER BEING BAD IN IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 4 OF 13 LAW REQUESTED THE ITAT TO SET ASIDE THE ORDER AND R ESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. COMING TO THE MERITS IT WAS HIS SUBMISSION THAT THE CIT (A) ERRED IN DELETING THE P ENALTY WHEN IN FACT THE ASSESSEE CONCEALED THE INCOME AND DISCLOSE D LESS INCOME THAN WHAT WAS ULTIMATELY DETERMINED. IT WAS SUBMITT ED THAT THE SEIZED PAPERS WERE IN HIS CUSTODY AND HE KNEW THE E XTENT OF UNDISCLOSED INCOME EARNED. THEREFORE THE REASONABL E CAUSE AS CONSIDERED BY THE CIT (A) WAS NON EXISTENT AND THER EFORE THE PENALTY SHOULD BE UPHELD. HE FURTHER RELIED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. AN JU R. INNANI 323 ITR 626 TO SUBMIT THAT THE ASSESSEE WAS NOT ENT ITLED TO THE BENEFIT OF PROHIBITORY PROVISIONS CONTAINED IN SUB SECTION 2 OF SECTION 158BFA. 5. THE LEARNED COUNSEL HOWEVER SUBMITS THAT THE REVEN UE CANNOT AGITATE ON THE ISSUE OF QUANTUM FOR LEVY OF PENALTY AS THE ASSESSING OFFICER ACCEPTED THAT PENALTY CAN ONLY BE CONSIDERED OVER AND ABOVE THE AMOUNT DISCLOSED IN THE RETURN OF INC OME. THE CIT (A) DID NOT AFFIRM EVEN ON THIS AMOUNT CONSEQUENT TO HI S FINDING THAT THERE IS A REASONABLE CAUSE. IT WAS SUBMITTED THAT IT WAS THE DISCRETION OF THE ASSESSING OFFICER TO LEVY OR NOT TO LEVY PENALTY AND RELIED ON THE DECISION OF THE VERY SAME HON'BLE BOM BAY HIGH COURT JUDGMENT IN THE CASE OF CIT VS. ANJU R. INNANI 323 ITR 626 (BOM.) WHEREIN THE EXPRESSION MAY DIRECT THAT A PERSON SH ALL PAY BY WAY OF PENALTY A SUM DO INDICATE THAT IN ONLY IN CERTA IN CIRCUMSTANCES THE ORDER IMPOSING THE PENALTY SHALL BE MADE AND TH E IMPOSITION OF PENALTY IS DISCRETIONARY AND NOT MANDATORY. FURTHER THE INFERENCE THAT THE ASSESSEE CONTESTED THE AMOUNT DISCLOSED IS ALSO NOT BORNE OUT OF FACTS. IT WAS SUBMITTED THAT THE ASSESSEE OR IGINALLY ADMITTED ONLY AN AMOUNT OF RS. 50 LAKHS IN THE ABSENCE OF C OPIES OF THE SEIZED MATERIAL AND WHEN THE SEIZED MATERIAL WAS PR OVIDED OFFERED AN INCOME OF RS. 80 LAKHS TO THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER INSTEAD OF ACC EPTING THE IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 5 OF 13 AMOUNT OFFERED RECOMPUTED TOTAL INCOME IN THE BLOCK ON THE BASIS OF HIS WORKING BY DETERMINING THE TOTAL INCOME AT RS. 1.63 CRORES ON VARIOUS ISSUES. THEREFORE THE ASSESSEE HAD TO CONT EST ALL THE ISSUES AS IT INVOLVED INTER-LINKING OF AMOUNTS INVOLVED T HEREIN THEREFORE CONSEQUENT TO THE SUBMISSIONS MADE BY THE ASSESSEE THE CIT (A) RE-DETERMINED THE INCOME ACCEPTING UNDISCLOSED INCO ME IN THE BLOCK PERIOD AT RS. 81 09 817/-. THE MATTERS WERE CARRIED BEFORE THE ITAT ON THE DEPARTMENTAL APPEAL AND THE ITAT VI DE ORDER DATED 20/06/2007 SET ASIDE AND RESTORED THE MATTER TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. IT WAS FURTHER SUBM ITTED THAT THE RE- ASSESSMENT UNDER SECTION 143(3) R.W.S. 254 WAS MADE ON 31/12/2008 DETERMINING THE TOTAL INCOME AT RS. 81 09 817/- THE SAME AS DETERMINED BY AO AFTER THE ORDER OF CIT (A ). THE LEARNED COUNSEL ALSO PLACED ON RECORD THE ORDER PASSED BY T HE ASSESSING OFFICER WHICH IS VERY BRIEF TO STATE THAT THE ISSUE S WHICH ARE CONSIDERED FOR PENALTY ARE NEVER DISCUSSED IN THE R E-ASSESSMENT ORDER. THEREFORE THE SUBMISSIONS OF THE LEARNED CI T DR THAT THE PENALTY WAS WRONGLY LEVIED WERE NOT BORNE OUT OF TH E FACTS. IN REPLY TO THE DEPARTMENTAL REPRESENTATIVES REQUEST FOR EN HANCEMENT OF PENALTY THE LEARNED COUNSEL RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MCORP GLOBAL (P) LTD V S. CIT 309 ITR 434 (SC) TO SUBMIT THAT UNDER SECTION 254(1) OF THE INCOME TAX ACT THE APPELLATE TRIBUNAL HAS NO POWER TO TAKE BACK TH E BENEFIT CONFERRED BY THE ASSESSING OFFICER OR ENHANCE THE A SSESSMENT. RELYING ON THE PRINCIPLES LAID DOWN THEREIN IT WAS SUBMITTED THAT SINCE ASSESSING OFFICER VALIDLY CONCLUDED THAT THE AMOUNT DISCLOSED CANNOT BE SUBJECTED TO PENALTY THE REVENUES ADDIT IONAL GROUND/ REVISED GROUND IN REVISED FORM NO.36 IS NOT VALID. FURTHER THE LEARNED COUNSEL RELIED ON THE DECISION OF THE HON'B LE SUPREME COURT IN THE CASE OF CIT VS. GREEN WORLD CORPORATIO N (2009) 314 ITR 81 (SC) TO SUBMIT THAT WHEN A STATUTE PROVIDES FOR DIFFERENT HIERARCHIES PROVIDING FOR FORUMS IN RELATION TO PAS SING OF AN ORDER AS ALSO APPELLATE OR REVISIONAL ORDER BY NO STRETCH O F IMAGINATION CAN A IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 6 OF 13 HIGHER AUTHORITY INTERFERE WITH THE INDEPENDENCE WH ICH IS THE BASIC FEATURE OF ANY STATUTORY SCHEME INVOLVING ADJUDICAT ORY PROCESS. IT WAS HIS SUBMISSION THAT THE ASSESSING OFFICER HAVIN G ACCEPTED THAT NO PENALTY CAN BE LEVIED THAT EXERCISE OF DISCRETIO N SHOULD BE UPHELD AND THE REVENUE CANNOT CONTEST THAT THE ASSESSING O FFICER MADE A MISTAKE IN NOT LEVYING THE PENALTY ON THE ADMITTED INCOME. IT WAS FURTHER SUBMITTED RELYING ON THE COORDINATE BENCH D ECISION IN THE CASE OF INCOME TAX OFFICER VS. M.M TEXTILES 122 ITD 435 TO SUBMIT THAT WHEN THE ASSESSING OFFICER ACCEPTED THAT THE P ENALTY IS NOT LEVIABLE ON THE AMOUNT DISCLOSED IT DOES NOT REQUIR E ANY ADJUDICATION. 6. COMING TO THE MERITS IT WAS THE SUBMISSION OF THE LEARNED COUNSEL THAT THE AMOUNTS WERE ORIGINALLY DISCLOSED ON ESTIMATE BASIS IN THE ABSENCE OF SEIZED DOCUMENTS AND AS AND WHEN THE DOCUMENTS WERE PROVIDED ASSESSEE OFFERED HIGHER IN COME OF .80 LAKHS AND EVEN THOUGH THE ASSESSING OFFICER DETERMI NED THE INCOME AT RS. 1.63 CRORES ULTIMATELY IT WAS AT RS. 81 09 817/-. THEREFORE THE ASSESSING OFFICER WAS RIGHT IN CONSIDERING ONLY ADDITIONAL AMOUNT WHILE LEVYING PENALTY. FINDING THAT THERE IS A REASONABLE CAUSE THE CIT (A) DELETED THE PENALTY. HE SUPPORTE D THE ORDERS OF THE CIT (A). 7. WE HAVE CONSIDERED THE ISSUE AND RIVAL CONTENTIONS. IT IS RATHER ACADEMIC TO DISCUSS WHETHER THE ITAT HAS POW ERS TO ENHANCE OR NOT. THE ITAT CAN ONLY CONSIDER THE ISSUE WHICH WAS AGITATED BEFORE IT AND ONLY ON THAT ISSUE IT HAS POWERS TO P ASS ORDERS AS IT THINKS FIT. IN THE CASE OF ASSAM TRAVELS & SHIPPING SERVICES 67 TAXMAN 199 ITR 1 THE HON'BLE SUPREME COURT VERY CL EARLY STATED THAT THE POWER OF THE TRIBUNAL TO MAKE AN ORDER OF REMAND IN SUCH A SITUATION WAS WELL SETTLED AS HELD IN HUKUMCHAND MILLS LTD VS. CIT 63 ITR 232 (SC). THIS BEING THE POSITION OF LA W IT WAS HELD THAT THE TRIBUNAL WAS NOT JUSTIFIED IN TAKING A VIEW IT HAD NO OTHER ALTERNATIVE EXCEPT TO AFFIRM THE ORDER OF THE ASSES SING OFFICER IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 7 OF 13 CANCELLING EVEN LESSER PENALTY IMPOSED BY THE INCOM E TAX OFFICER. IN THAT CASE THE INCOME TAX OFFICER IMPOSED THE PENALT Y LESS THAN SUCH AMOUNT STATUTORILY LEVIABLE WHICH WAS DELETED BY T HE AAC BY TAKING A WRONG VIEW THAT HE HAD NO POWERS TO ENHANCE THE P ENALTY EVEN AFTER REACHING THE CONCLUSION THAT THE COMPUTATION OF PENALTY MADE BY THE INCOME TAX OFFICER WAS ILLEGAL. IN THAT CONT EXT THE HON'BLE SUPREME COURT HELD THAT THE TRIBUNAL ITSELF CANNOT MAKE THE ORDER ENHANCING THE AMOUNT OF PENALTY BUT SHOULD HAVE REM ANDED THE MATTER TO THE AAC FOR PROCEEDING TO ENHANCE PENALTY IN ACCORDANCE WITH THE LAW. HOWEVER THAT SITUATION WOULD ARISE O NLY WHEN IT IS HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS PATENTLY WRONG AND NOT ACCORDING TO THE LAW. 8. AS SEEN FROM THE PENALTY ORDER THE ASSESSING OFFIC ER VERY CLEARLY STATED THAT THE ASSESSEE HAS MADE ADMISSION OF UNDISCLOSED INCOME OF RS. 50 LAKHS DURING THE COURSE OF SEARCH UNDER SECTION 132 AND THE RETURN FOR THE BLOCK PERIOD WAS FILED D ISCLOSING THE TOTAL INCOME OF RS. 50 LAKHS. IT WAS FURTHER STATED THAT THE INCOME FINALLY DETERMINED IS FAR MORE THAN THE INCOME RETURNED BY THE ASSESSEE. THEREFORE IT CAN BE ASSUMED THAT THE ASSESSING OFF ICER ACCEPTED THAT THE INCOME RETURNED OF RS. 50 LAKHS DOES NOT CALL FOR PENALTY. NOT ONLY THAT AS SEEN FROM THE ASSESSMENT ORDER AND THE ORDER OF THE CIT (A) AND THE ITAT THE ASSESSEE WAS ALL ALON G CONTESTING THE WORKING BY THE ASSESSING OFFICER WHICH DIFFERED FRO M THE ADMISSION OF INCOME BY THE ASSESSEE. SINCE THE COMPUTATION WA S ENTIRELY DIFFERENT THE ASSESSEE HAS TO CHALLENGE THE METHOD OF COMPUTATION BUT IT CANNOT BE STATED THAT THE AMOUNT OF RS. 50 LAKHS WAS ALSO CHALLENGED BY THE ASSESSEE. SINCE THE ASSESSING OFF ICER HAS CAME TO AN OPINION THAT ONLY THE ADDITIONS SURVIVED OVER TH E INCOME RETURNED IN THE BLOCK CALLS FOR PENALTY WE ARE OF THE VIEW THAT THE REVENUE HAS NOT MADE OUT ANY CASE IN ESTABLISHING T HAT PENALTY WAS LEVIED WRONGLY LESS THAN LEVIABLE. THEREFORE T HE ADDITIONAL IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 8 OF 13 GROUND/ REVISED GROUND RAISED CANNOT BE ADMITTED/CO NSIDERED ON MERITS. 9. WITH REFERENCE TO THE PENALTY WHICH WAS DELETED BY THE CIT (A) THE REVENUE HAS RAISED THE GROUND ORIGINALLY C ONTESTING THAT THE CIT (A) ERRED IN DELETING PENALTY OF RS. 10 91 546 /- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS DISPUTE D THE ADDITIONS MADE IN THE BLOCK ASSESSMENT. IN THE REVISED FORM-3 6 THIS GROUND DOES NOT EXIST AND THE REVENUE SUBSTITUTED THE GROU ND STATING THAT THE PENALTY WAS WRONGLY LEVIED ON AN AMOUNT OF RS. 31 09 817/- AS AGAINST UNDISCLOSED INCOME OF RS. 81 09 817/- WHIC H TECHNICALLY SPEAKING DOES NOT ARISE OUT OF THE CIT (A) ORDER. THERE IS NO CHALLENGE TO THE DELETION OF PENALTY BY THE CIT (A) IN THE REVISED FORM 36. THIS SHOWS THAT THERE IS NO APPLICATION OF MIND BY THE REVENUE WHILE PREFERRING THE GROUND OF APPEAL IN RE VISED FORM 36. 10. BE THAT AS IT MAY WE ARE OF THE VIEW THAT THERE IS NO NEED FOR DIFFERING FROM THE ORDER OF THE CIT (A) WHO DELETED THE PENALTY ON CONSIDERATION OF VARIOUS FACTS. THE REASONS GIVEN B Y THE CIT (A) WHILE DELETING THE PENALTY ARE AS UNDER: 44. I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRESENTATIVE AND THE STAND TAKEN BY THE A.O. ADMITTEDLY THE APPELLANT FILED BLOCK RETURN ADMITTI NG UNDISCLOSED INCOME OF RS.50 LACS ON ESTIMATED BASIS WITHOUT SPECIFYING THE NATURE OF INVESTMENT OR ASSE T AND THE A.O. COMPLETED THE ASSESSMENT DETERMINING THE UNDISCLOSED INCOME AT RS.1 63 36 273/- WHICH WAS REDUCED TO RS.81 09 817/- BY CIT(A). ON FURTHER APPEAL WHEN THE ISSUE WAS SET ASIDE BY THE ITAT. AO DETERMINED THE UNDISCLOSED INCOME AT THE SAME ABOVE FIGURE OF RS.81 09 817/-. THE REASON FOR NOT ADMITTING CORRECT UNDISCLOSED INCOME WAS ON ACCOUNT OF THE FACT THAT THE APPELLANT WAS NOT PROVIDED WIT H ZEROX COPIES OF SEIZED DOCUMENTS AND THIS IS CLEAR FROM THE LETTER DATED 19.03.2001 FILED BY THE APPELLANT BEFORE THE A.O. WHICH READS AS UNDER: AS REQUESTED IN MY PERSONAL MEETING WITH YOUR HONOUR EARLIER PLEASE PERMIT MY ASSISTANT TO TAKE XEROX COPIES OF SEIZED FILES A-I TO A-4 OF RAJ IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 9 OF 13 CRYSTAL- 14 AND OTHER SEIZED PAPERS NOT PROVIDED SO FAR. THIS WILL ENABLE ME TO FILE CORRECT RETURN AT THE EARLIEST. KINDLY INFORM ME THE DATE & TIME TO DEPUTE MY ASSISTANT & OBLIGE. FURTHER IT IS SEEN THAT THE APPELLANT FILED A LETTE R DATED 15.03.2001 STATING THE RETURN WAS TO BE FILE D ON 16. 03. 2001 AS PER NOTICE U/S 158BC DATED 16.02.2001 BUT REQUESTED FOR 15 DAYS EXTENSION AND THE A.O. REJECTED THE SAME ON THE SAME DATE AND IT IS FURTHER SEEN THAT THE APPELLANT FILED HIS BLOCK RET URN ON 30.03.2001 ITSELF IN WHICH A SUM OF RS.50 LACS WAS ADMITTED AS UNDISCLOSED INCOME FOR A.Y.2001- 2002. AS SEEN FROM THE RETURN THERE WAS NO BREAK U P FOR RS.50 LACS AND IT WAS ADMITTED ON ESTIMATE BASI S. WHEN THE ASSESSMENT PROCEEDINGS WERE IN PROGRESS THE APPELLANT FILED A LETTER DATED 03.08 .2002 WHIC H READS AS UNDER: AS YOUR HONOUR WILL RECOLLECT THAT THE BLOCK RETUR N WAS FILED ON ESTIMATE BASIS IN ABSENCE OF XEROX COPIES OF SEIZED PAPERS. ON MAKING SUCH PAPERS AVAILABLE AFTER FILING BLOCK RETURN I ESTIMATE UNDISCLOSED INCOME OF APP.RS.80 LACS AND THEREFORE SURRENDER THIS AMOUNT VOLUNTARILY. THE BREAK UP WILL BE PROVIDED BY ME ON DETAILED EXAMINATION OF SEIZED PAPERS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. TAXES ON ADDITIONAL DECLARATION WILL BE PAID IN DUE COURSE OR ON REGULAR DEMAND. 4.1 FROM THE ABOVE IT IS CLEAR THAT ONLY BECAUSE T HE APPELLANT WAS NOT PROVIDED WITH ZEROX COPIES OF SEIZED PAPERS HE COULD NOT DISCLOSE THE CORRECT INC OME IN THE RETURN FILED BY HIM: WHEN COPIES OF SEIZED PAPERS WERE MADE AVAILABLE SUBSEQUENTLY THE APPELLANT HIMSELF REVISED THE INCOME TO RS.80 LACS AND WAS PREPARED TO PAY THE ADDITIONAL TAX. AS CONTENDED BY THE REPRESENTATIVE THE LEVY OF PENALT Y U/S.158BFA(2) IS NOT MANDATORY BUT DISCRETIONARY AS HELD BY THE MUMBAI HIGH COURT IN THE CASE OF CIT VS . DODSAL LTD.(CITED ABOVE). THUS IT IS TO BE EXAMINED AS TO WHETHER THERE WAS REASONABLE CAUSE FOR NOT ADMITTING THE CORRECT UNDISCLOSED INCOME IN THE BLO CK RETURN. THE ABOVE REASONS GIVEN BY THE APPELLANT SHOW THAT THERE WAS REASONABLE AND SUFFICIENT CAUSE FOR NOT ESTIMATING THE UNDISCLOSED INCOME CORRECTLY . IF THE APPELLANT HAD BEEN PROVIDED WITH COPIES OF SEIZ ED DOCUMENTS HE COULD HAVE FILED BLOCK RETURN IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 10 OF 13 ESTIMATING THE CORRECT UNDISCLOSED INCOME. FURTHER AS CONTENDED BY THE REPRESENTATIVE THE A.O. HIMSELF COULD NOT DETERMINE THE CORRECT UNDISCLOSED INCOME OF THE APPELLANT AND WHEN HE DETERMINED THE UNDISCLOSED INCOME AT RS.1 63 36 273/- THE SAME WAS REDUCED TO RS.81 09 817/- AND THE SAME HAS BECOME FINAL. THUS THERE WAS A VAST DIFFERENCE BETWEEN THE INCOME DETERMINED BY THE A.O. AND CLT(A). FURTHER AS CONTENDED BY THE REPRESENTATIVE THE A.O. HAS NOT GIVEN ADEQUATE REASON IN THE IMPUGNED ORDER TO JUSTIFY THE LEVY OF PENALTY. AFTE R REPRODUCING THE REPLY OF THE APPELLANT HE MERELY STATED THAT THOUGH THE NATURE OF ADDITIONS WERE SUC H THAT THE APPELLANT COULD NOT HAVE QUANTIFIED IT EXA CTLY THE SAME SHOULD HAVE BEEN AT LEAST TAKEN CARE OF WHILE FILING THE RETURN FOR THE BLOCK PERIOD AND BY NOT DOING SO THE APPELLANT HAS FAILED TO DECLARE THE CORRECT UNDISCLOSED INCOME. THE ABOVE REASONING GIVEN BY THE A.O. IS NOT SUFFICIENT TO IMPOSE PENAL TY. THE AC HIMSELF AGREED THAT THE NATURE OF ADDITIONS WERE SUCH THAT THE APPELLANT COULD NOT HAVE QUANTIFIED IT EXACTLY WHICH MEANS THAT HE HAS ACCEPTED THE REPLY OF THE APPELLANT BUT FOR THE SAK E OF IMPOSING PENALTY HE ADDED THAT THE APPELLANT SHOULD HAVE AT LEAST TAKEN CARE WHILE FILING THE RETURN. T HUS I FIND THAT THE A.O. HAS NOT GIVEN VALID REASONS FO R IMPOSING PENALTY ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. I THEREFORE HOLD THAT IT IS NOT A FIT CASE FOR IMPOSING PENALTY U/S.158BFA(2) A ND THE SAME IS CANCELLED. THE CIT (A) HAS GIVEN VALID REASONS AND HAS ACCEPTE D THE ASSESSEES EXPLANATION THAT THERE WAS A REASONABLE CAUSE IN NO T DISCLOSING THE AMOUNT AND ALSO ACCEPTED THAT THE ASSESSEE HIMSELF REVISED THE INCOME TO RS. 80 LAKHS IN THE COURSE OF THE ASSESS MENT PROCEEDINGS. NOT ONLY THAT LD. CIT(A) ALSO FOLLOWE D THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF C IT VS. DODSAL LTD 218 CTR 430 THAT LEVY OF PENALTY UNDER SECTION 158B FA(2) IS NOT MANDATORY BUT DISCRETIONARY. WE UPHOLD THE ORDER O F THE CIT (A) AS REVENUE FAILED TO FURNISH ANY REASON TO DIFFER FROM THE ABOVE OBSERVATIONS OF THE CIT (A). AS SEEN FROM THE ASSES SMENT ORDER AND OTHER ORDERS THERE WAS A SEARCH IN THE ASSESSEES PREMISES DURING IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 11 OF 13 OCTOBER/NOVEMBER 2000 WHEREAS THE NOTICE UNDER SEC TION 158BC WAS ISSUED ON 16/2/2001 CALLING FOR RETURN IN A MON THS TIME. THE ASSESSEE ASKED FOR COPIES OF SEIZED DOCUMENTS VIDE LETTER DATED 16- 03-01 WITH A REQUEST FOR SOME MORE TIME FOR FILING RETURN. ON REJECTION ASSESSEE FILED THE RETURN ON 30.03.2001 AS DIRECTED ADMITTING AMOUNT OF RS. 50 LAKHS AS PER THE DISCLO SURE MADE UNDER SECTION 132(4). VIDE THEIR LETTER DATED 3/8/01 IT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT THE BLOCK RETU RN WAS FILED ON ESTIMATE BASIS IN THE ABSENCE OF XEROX COPIES OF AS SESSEES SEIZED PAPERS. ON MAKING SUCH PAPERS AVAILABLE AFTER FILIN G THE BLOCK RETURN THE ESTIMATE WAS INCREASED TO RS. 80 LAKHS AND THE ASSESSEE ADMITTED THIS AMOUNT VOLUNTARILY. THE ASSE SSMENT ORDER WAS PASSED ON 29.11.2002 ORIGINALLY AT A HIGHER AM OUNT BUT CONSEQUENT TO THE ORDERS OF THE CIT (A) THE TOTAL INCOME WAS DETERMINED AT RS. 81 09 817/-. IN THE REVISED PROC EEDINGS THE ORDER UNDER SECTION 143(3) R.W.S. 254 WAS MADE ON 1 3/04/2008 DETERMINING THE TOTAL INCOME AS CONFIRMED BY THE CI T (A) WITHOUT ANY DISCUSSION. THEREFORE THERE IS NO MERIT IN THE REVENUES CONTENTION THAT THE CIT (A) DELETED THE PENALTY WIT HOUT CONSIDERING THE FACTS. ACCORDINGLY THE ORDER OF THE CIT (A) IS UPHELD AND THE REVENUE APPEAL IS DISMISSED. C.O. NO.201/MUM/2010 11. ASSESSEE PREFERRED CROSS OBJECTION CONTESTING THAT THE PENALTY ORDER DATED 30/06/2009 WAS PASSED BEYOND THE PERIOD OF LIMITATION AND FILED CONDONATION PETITION FOR FILING THE CROSS OBJECTION BELATEDLY WITH A DELAY OF 69 DAYS. CONSIDERING THE AFFIDAVIT THE DELAY IS CONDONED. 12. IT WAS THE CONTENTION OF THE ASSESSEES COUNSEL THA T THE PENALTY ORDER IS TO BE PASSED WITHIN 6 MONTHS FROM THE DATE OF RECEIPT OF ORDER OF THE CIT (A) OR ITAT ORDER. SINC E THE ORDER WAS PASSED ON 30 TH JUNE 2009 THE SAME WAS BARRED BY LIMITATION. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ITAT HAS SET ASIDE THE IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 12 OF 13 ASSESSMENT AND THEREFORE THE ORIGINAL PROCEEDINGS CONSEQUENT TO WHICH PENALTY WAS INITIATED ALSO GOT CANCELLED. REV ISED ASSESSMENT ORDER WAS PASSED ON 30.12.2008. CONSEQUENTLY THE PE NALTY PROCEEDINGS INITIATED SEPARATELY UNDER THIS ORDER H AVE BEEN CONCLUDED IN TIME AS PER THE PROVISIONS OF THE ACT. THEREFORE THERE IS NO MERIT IN THE CROSS OBJECTION. 13. WE HAVE CONSIDERED THE ISSUE. THE ITAT VIDE IT(SS)A NO.410/ MUM/04 ON REVENUE APPEAL HAD SET ASIDE THE ORDER OF THE CIT (A) AND RESTORED THE MATTER TO THE FILE OF THE ASSESSIN G OFFICER AND ACCORDINGLY THE REVENUE APPEAL WAS ALLOWED FOR STAT ISTICAL PURPOSES. CONSEQUENT TO THAT ASSESSING OFFICER PASSED FRESH A SSESSMENT ORDER ACCEPTING THE INCOME AS DETERMINED BY THE CI T (A) IN THE ORIGINAL ASSESSMENT PROCEEDINGS. SINCE A FRESH ORDE R WAS PASSED AND FRESH PROCEEDINGS WERE INITIATED THE ORDER OF PENALTY WAS PASSED WITHIN THE TIME LIMITS AS PRESCRIBED UNDER T HE STATUTE. IN VIEW OF THIS THERE IS NO MERIT IN THE CROSS OBJECT ION THAT THE PENALTY ORDER WAS PASSED BEYOND THE TIME LIMIT. NOT ONLY TH AT SINCE THE REVENUE APPEAL WAS DISMISSED ON MERITS THE CROSS O BJECTION BECOMES ACADEMIC IN NATURE. IN VIEW OF THIS THE CRO SS OBJECTION IS ALSO ACCORDINGLY DISMISSED. 14. IN THE RESULT APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH FEBRUA RY 2012. SD/- SD/- ( V.DURGA RAO ) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 29TH FEBRUARY 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR G BENCH ITAT MUMBAI BY ORDER IT(SS)A NO 08 OF 2010 AND CO 201 OF 2010 YOGESH J. LAKHANI MUMBAI PAGE 13 OF 13 ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI