Shri C.mohan v. The Assistant Commissioner Of Income-Tax,Company Circle-Ii(2)

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case (Appeal) No.940 of 2008 Shri C.Mohan.... Appellant -vs- The Assistant Commissioner of Income-tax,Company Circle-II(2),121,Mahatma Gandhi Road,Chennai-600 034. ... Respondent Tax Case (Appeal) filed under Section 260A of the Income TaxAct, 1961, against the order of the Income Tax AppellateTribunal, Chennai “A” Bench, dated 20.03.2008 in I.T.(SS)A.No.50/Mds/2004 for the assessment year Block Period 01.04.1989to 22.03.2000, against the order of the Office of theCommissioner of Income Tax (Appeals)-II Chennai-600 034 in ITAppeal No.103/03-04 dated 10.03.2004 and against the proceedingsof the Assistant Commissioner of Income Tax, Central Circle-II(2), Chennai-34 in 705M (Ce.Cir II(2) /Block dated 27/3/2003 andagainst the order of Deputy Commissioner of Income Tax, CentralCircleII(2),Chennaidated28/06/2002PA.No./G.I.R.No.AFEPM680SJ/G.I.No.M.705 for the Assessmentperiod ended on 22.3.2000. For Appellant:Mrs.Sree Lakshmi ValliFor Respondent :Mrs.K.G.Usha Rani, Junior Standing Counsel This appeal, filed by the assessee under Section 260A of theIncome Tax Act, 1961 (hereinafter referred to as “the Act”), isdirecting against the order passed by the Income Tax AppellateTribunalMadras“A”Bench,Chennai,inI.T.(SS) https://hcservices.ecourts.gov.in/hcservices/ A.No.50/Mds/2004, dated 22.04.2008 for the assessment year BlockPeriod 01.04.1989 to 22.03.2000. 2.This appeal has been admitted on 09.07.2008, on thefollowing substantial question of law:“Whether on the facts and in the circumstancesof the case, the Tribunal is right in confirmingthe levy of penalty under Section 158BFA(2) of theIncome Tax Act?” 3.Heard Mrs.Sree Lakshmi Valli, the learned counsel for theappellant and Mrs.K.G.Usha Rani, learned Junior Standing Counselfor the respondent. 4.The short question, which falls for consideration, iswhether the computation of the undisclosed income for thepurpose of invoking the Second Proviso to Section 158BFA of theAct is proper and justified. 5.The learned counsel for the assessee vehemently contendedthat the computation of the undisclosed income for such purposewas not based on the materials recovered from the search but,was based on the letter given by the assessee. 6.In support of the contention, the learned counsel placedreliance on the decision of the High Court of Delhi in the caseof Commissioner of Income Tax vs. Harkaran Das Ved Pal [(2011)336 ITR 0008]. 7.The learned Junior standing counsel appearing for therespondent/Revenue seeks to sustain the impugned order bycontending that the Assessing Officer, the first appellateauthority and the Tribunal concurrently held on facts thatpenalty and surcharge is leviable in terms of the SecondProviso. Further, it is submitted that the undisclosed incomehas been properly computed based on the seized materials anddetails furnished by the assessee pursuant to the search. Forbetter appreciation Section 158BFA of the Act is quotedhereinbelow: “Levy of interest and penalty in certain cases. Section 158BFA. (1) Where the return of totalincome including undisclosed income for the blockperiod, in respect of search initiated undersection 132 or books of account, other documents or any assets requisitioned under section 132A onor after the 1st day of January, 1997, as requiredby a notice under clause (a) of section 158BC, isfurnished after the expiry of the period specifiedin such notice, or is not furnished, the assesseeshall be liable to pay simple interest at the rateof [18][one] per cent of the tax on undisclosedincome, determined under clause (c) of section158BC, for every month or part of a monthcomprised in the period commencing on the dayimmediately following the expiry of the timespecified in the notice, and— or any assets requisitioned under section 132A onor after the 1st day of January, 1997, as requiredby a notice under clause (a) of section 158BC, isfurnished after the expiry of the period specifiedin such notice, or is not furnished, the assesseeshall be liable to pay simple interest at the rateof [18][one] per cent of the tax on undisclosedincome, determined under clause (c) of section158BC, for every month or part of a monthcomprised in the period commencing on the dayimmediately following the expiry of the timespecified in the notice, and— (a) where the return is furnished after theexpiry of the time aforesaid, ending on the dateof furnishing the return; or (b) where no return has been furnished, on thedate of completion of assessment under clause (c)of section 158BC. (2) The Assessing Officer or the Commissioner(Appeals) in the course of any proceedings underthis Chapter, may direct that a person shall payby way of penalty a sum which shall not be lessthan the amount of tax leviable but which shallnot exceed three times the amount of tax soleviable in respect of the undisclosed incomedetermined by the Assessing Officer under clause(c) of section 158BC: Provided that no order imposing penalty shallbe made in respect of a person if— (i) such person has furnished a return underclause (a) of section 158BC; (ii) the tax payable on the basis of suchreturn has been paid or, if the assets seizedconsist of money, the assessee offers the money soseized to be adjusted against the tax payable; (iii) evidence of tax paid is furnished alongwith the return; and (iv) an appeal is not filed against theassessment of that part of income which is shownin the return : Provided further that the provisions of thepreceding proviso shall not apply where theundisclosed income determined by the AssessingOfficer is in excess of the income shown in thereturn and in such cases the penalty shall beimposed on that portion of undisclosed income https://hcservices.ecourts.gov.in/hcservices/ determined which is in excess of the amount ofundisclosed income shown in the return. (3) No order imposing a penalty under sub-section (2) shall be made,— (a) unless an assessee has been given areasonable opportunity of being heard; (b) by the Assistant Commissioner [19][or DeputyCommissioner] or the Assistant Director[19][orDeputy Director], as the case may be, where theamount of penalty exceeds twenty thousand rupeesexcept with the previous approval of the [20][Joint]Commissioner or the [20][Joint] Director, as the casemay be; (c) in a case where the assessment is thesubject-matter of an appeal to the Commissioner(Appeals) under section 246 [21][or section 246A] oran appeal to the Appellate Tribunal under section253, after the expiry of the financial year inwhich the proceedings, in the course of whichaction for the imposition of penalty has beeninitiated, are completed, or six months from theend of the month in which the order of theCommissioner (Appeals) or, as the case may be, theAppellate Tribunal is received by the ChiefCommissioner or the Commissioner, whichever periodexpires later; (d) in a case where the assessment is thesubject-matter of revision under section 263,after the expiry of six months from the end of themonth in which such order of revision is passed; (e) in any case other than those mentioned inclauses (c) and (d), after the expiry of thefinancial year in which the proceedings, in thecourse of which action for the imposition ofpenalty has been initiated, are completed, or sixmonths from the end of the month in which actionfor imposition of penalty is initiated, whicheverperiod expires later; (d) in a case where the assessment is thesubject-matter of revision under section 263,after the expiry of six months from the end of themonth in which such order of revision is passed; (e) in any case other than those mentioned inclauses (c) and (d), after the expiry of thefinancial year in which the proceedings, in thecourse of which action for the imposition ofpenalty has been initiated, are completed, or sixmonths from the end of the month in which actionfor imposition of penalty is initiated, whicheverperiod expires later; (f) in respect of search initiated undersection 132 or books of account, other documentsor any assets requisitioned under section 132A,after the 30th day of June, 1995 but before the1st day of January, 1997. Explanation.—In computing the period oflimitation for the purpose of this section,— (i) the time taken in giving an opportunity tothe assessee to be reheard under the proviso tosection 129; (ii) the period during which the immunitygranted under section 245H remained in force; and (iii) the period during which the proceedingsunder sub-section (2) are stayed by an order orinjunction of any court, shall be excluded. (4) An income-tax authority on making an orderunder sub-section (2) imposing a penalty, unlesshe is himself an Assessing Officer, shallforthwith send a copy of such order to theAssessing Officer.]” 8.We are required to examine as to whether the undisclosedincome for the block period, which is to be determined underChapter XIVB, has been determined on the basis of the evidencediscovered during the search. 9.The Assessing Officer while passing the penalty orderdated 27.03.2003, has recorded a finding that the blockassessment was finalised after considering the seized materials,details furnished by the assessee and making enquiries. Theassessment order dated 28.06.2002, which was completed underSection 158BC of the Act, gives the full details. 10.We find that more than 19 hearings took place before theassessment was drawn. It may not be necessary for this Court torefer to all the statements, which were recorded and thematerials, which were called for and placed before the AssessingOfficer but, it would suffice to state that there are abundantreferences in the assessment order to show as to how theundisclosed income was computed. On facts, the AssessingOfficer clearly recorded the finding that the undisclosed incomehas been properly computed based on the seized materials as wellas the details furnished by the assessee. 11.The assessee seeks to dispute the fixation by contendingthat the fixation is based on the letter given by the assessee,which according to the assessee is voluntary. 12.We do not accept the stand taken by the assessee beforeus, since it is factually established that the determination ofthe undisclosed income was based upon the materials, which wereavailable at the time of search and the information given by theassessee pursuant thereto. 13.The first appellate authority has considered the issueindependently, especially the contention now put forth before usand noted that the undisclosed income has been properlycomputed. The Tribunal also has examined the factual positionand noted the particulars of the undisclosed income and thenrendered a finding confirming the orders passed by the firstappellate authority and the Assessing Officer. 14.Thus, we find that the three authorities haveconcurrently appreciated and re-appreciated the factual positionand held that the undisclosed income has been determined basedon the documents and other materials and information availableat the time of search. For the above reasons, the assessee hasnot made out any case for interfering with the order passed bythe Tribunal. 13.The first appellate authority has considered the issueindependently, especially the contention now put forth before usand noted that the undisclosed income has been properlycomputed. The Tribunal also has examined the factual positionand noted the particulars of the undisclosed income and thenrendered a finding confirming the orders passed by the firstappellate authority and the Assessing Officer. 14.Thus, we find that the three authorities haveconcurrently appreciated and re-appreciated the factual positionand held that the undisclosed income has been determined basedon the documents and other materials and information availableat the time of search. For the above reasons, the assessee hasnot made out any case for interfering with the order passed bythe Tribunal. 15.Accordingly, the appeal fails and the same is dismissedand the substantial question of law, framed for consideration,is answered against the assessee and in favour of the Revenue.No costs. Sd/- Assistant Registrar(CS II) //True Copy// Sub Assistant Registrar nsd/abrTo 1.The Income Tax Appellate Tribunal Madras 'A' Bench, Chennai. 2.The Assistant Commissioner of Income Tax, Company Circle-II(2), 121,Mahatma Gandhi Road, Chennai-600 034. 3.The Commissioner of Income Tax, Appeals(II), Chennai-34. 4.The Deputy Commissioner of Income Tax, Circle II(2), Chennai-34. 5.The Assistant Registrar, Income Tax Appellate Tibunal, 3[rd] Floor Rajaji Bhavan, Besant Nagar, Chennai-90. +1cc to M/S.T.R.Senthilkumar, Advoate Sr.65355+1cc to M/S.Mallika Srinivasan, Advocate Sr.65217 [25/01/2019] T.C.(A) No.940 of 2008 rk[co]srg 15/10/2018