Prakash K. Kothari v. Commissioner Of Income Tax-20

IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO. 2028 OF 2010 Prakash K. Kothari ...Appellant. Vs.Commissioner of Income Tax-20..Respondent. Mr. Shashi Tulsania with Sutapa Saha for the Appellant.Mr. D.K. Kamwal for the Respondent. CORAM : J.P. DEVADHAR AND A.A. SAYED, JJ. DATE : 21ST JULY, 2011. P.C. 1. Whether the ITAT was justified in confirming the penalty levied under section 158BFA(2) of Income Tax Act, 1961 is a question of law raised in this appeal. 2.Pursuant to a search action initiated on 22nd February, 2002, Block Assessment proceedings were initiated against the appellant. The appellant filed block return declaring undisclosed income of Rs. 70,00,000/- The assessee had also claimed expenditure of Rs. 12, 48,708/- as a personal expenditure and Rs. 14,88,659/-being payments made to group units at Goa. While accepting the block return, the assessing officer disallowed the expenditure of Rs.12,48,708/- and Rs. 14,88,659/- claimed by the assessee. The disallowance of the expenditure amounting to Rs. 12,48,708/- and Rs. 14,88,659/- have been upheld by the ITAT and assessee has accepted the decision of the ITAT. Thus the quantum disallowance made by the assessing officer has attained the finality. 2.As regards the imposition of penalty under section 158BFA( 2) of the Income Tax Act, 1961 which is upheld by the ITAT, it is contended by the learned Counsel for the appellant that once the affidavit filed by Shri Umesh Rawal, Accountant of the appellant was accepted in so far as undisclosed income is concerned, the said affidavit ought to have been accepted in respect of the expenditure incurred by the assessee, and in any event, it was not a case for imposing penalty under Section 158 BFA (2) of the Act. 3.We see no merit in the above contention, because, the finding of fact recorded by the ITAT is that in the present case, the Special Auditors have found that the claim of Rs. 12,48,708/- was not in the nature of expenses and hence the said claim cannot be said to be a bonafide claim. As regards the claim of Rs. 14,88,659/- is concerned, the Tribunal has recorded a finding of fact that the assessee has not been able to give a satisfactory explanation in incurring that expenditure. 4.In these circumstances, the decision of the ITAT in disbelieving the affidavit of Umesh Rawal relating to the above expenses and upholding the penalty levied cannot be faulted. 5.In the result, we see no merit in the appeal and the same is hereby dismissed. ( A.A. SAYED, J. ) ( J.P. DEVADHAR , J.)