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M/s. Oleander Farms Pvt. Ltd D-73/1, TTC Industrial Area, MIDC Turbhe, Navi Mumbai- 400 705 Vs. ITO-10(3)(4) Mumbai
April, 25th 2014
                       MUMBAI BENCH "C", MUMBAI
                 DR. S.T.M. PAVALAN, JUDICIAL MEMBER
                              ITA No. 1504/Mum/2010
                               Assessment Year: 1996-97

         M/s. Oleander Farms Pvt. Ltd     ITO-10(3)(4)
         D-73/1, TTC Industrial Area,     Mumbai
         MIDC Turbhe, Navi Mumbai-
         400 705

                (Appellant)                              (Respondent)

                   Permanent Account No. :-AAACO 6556 G

                          Assessee by          Shri Pramod Kumar Parida &
                                               Mrs. Sanjukta Chowdhury
                              Revenue by   :   Shri M. L. Perumal

                      Date of hearing  : 03.04.2014
                 Date of Pronouncement : 22.04.2014



      This appeal filed by the Assessee is directed against the order of the
Ld.CIT(A)-22, Mumbai dated 01.10.2010 confirming the penalty of Rs.5,98,000/-
levied by the AO u/s 271(1)(c) of the Income-tax Act for the Assessment Year 1996-

2.    Briefly stated, the assessee filed its return of income for the assessment
under consideration declaring a loss of Rs.1,52,476/-. The sources of income shown
by the assessee were (i) interest on loans Rs. 58,550/-, (ii) income from lease and
hire pruchase Rs. 2,227/-, (iii) income from trading in investments Rs. 11,357/- (iv)
interest on debentures Rs. 44,975/- and (v) increase in stock Rs. 10,05,005/-. In
addition, the assessee had shown a gross receipt of Rs.1,05,67,691/- from
agriculture and a net profit of Rs.49,47,180/- from the same. During the course of
assessment proceedings, it emerged that the assessee carried out agricultural
activities in the form of growing different kinds of flowers, vegetables and mushroom
                                                                     ITA No. 1504/Mum/2010
                                          2                          M/s. Oleander Farms Pvt. Ltd
                                                                       Assessment Year: 1996-97

in around 40 acres of leased land at Karjat and about 10 to 12 acres of land at
Talegaon and according to the assessee these activities resulted in production and
sale of these products to the extent of Rs.1,05,67,691/-. After harvest, the details of
produce of each item was entered in a daily operations register at the farm, after
which the goods were transported to the assessee's head office at D-73/1 TTC
Industrial Area, Turbhe, Navi Mumbai along with delivery challans. From the
assessment order, it is seen that during the course of survey u/s 133 on 17.2.1999,
the AO made an addition of Rs. 40 lakhs and the said addition was made on the
basis of statement of Shri Viren Ahuja, Director of the assessee company. On appeal
against the assessment order, the Ld.CIT(A) noted that the basis of addition was
assessee's inability to produce the complete delivery challans and sales vouchers to
substantiate the deposits in its bank account of cash, stated to be realization from
sales of agricultural produce. The Ld.CIT(A) further noted that the AO had not
brought on record any facts supported by documentary evidence, to establish that
the cash deposits in the bank account of the assessee were not from any other
source except sale of agricultural produce. Accordingly, the Ld.CIT(A) sustained the
addition of Rs. 13 lakhs because of the reason that the assessee himself had paid
tax of Rs. 10 lakhs which includes interest also. In the appeal filed by the Revenue
before the Tribunal against the decision of the Ld.CIT(A) deleting the addition of Rs
27 lakhs, made by the AO, the Tribunal dismissed the appeal and sustained the said
deletion. In view of the addition of Rs. 13 lakhs sustained in the quantum
proceedings, the AO initiated penalty proceedings u/s 271(1)(c) and consequently
levied a penalty of Rs. Rs.5,98,000/-, which was upheld by the Ld.CIT(A). Aggrieved
by the impugned order, the assessee is in appeal before us.

3.    Before us, the Ld.AR of the assessee has relied on the decisions of the
Tribunal in the cases of ACIT Vs. Indica Export 129 TTJ (Del) 269, ACIT Vs. Malu
Electricals P. Ltd. 127 TTJ (Nag) 599 and Smt. Rajrani Mittal Vs. ITO (2010) 360 SOT
47 (Del) to support the claim of the assessee that the case does not attract the levy
of penalty u/s 271(1)(c) of the Act and thus prayed that the levy of penalty
confirmed by the Ld.CIT(A) ought to be deleted. On the other hand, the Ld.DR has
stated that the confirming of the levy of penalty by the Ld.CIT(A) is justified and the
                                                                               ITA No. 1504/Mum/2010
                                                 3                             M/s. Oleander Farms Pvt. Ltd
                                                                                 Assessment Year: 1996-97

voluntary disclosure during the survey cannot absolve the assessee from the rigor of
penalty proceedings. In this connection, the Ld.DR has relied on the decision of the
Hon'ble Apex Court in the case of MAK DATA P. Ltd. Vs. CIT (2013) 358 ITR 593
4.      We have heard both the sides and perused the material on record. It is not
disputed that the cash deposits in the bank account of the assessee amounting
Rs.1,05,67,691/- are not from any other source except sale of agricultural produce.
Also, there is nothing on record to establish that the assessee has earned the
income from any other source. The perusal of the appellate orders in the quantum
proceedings indicates that the basis of addition is the assessee's inability to produce
the complete delivery challans and sales vouchers to substantiate the deposits in its
bank account of cash, stated to be realization from sales of agricultural produce. It is
also seen that it is not the case of the department that the amount surrendered by
the assessee has been found invested in some other assets or is found in cash. The
addition of Rs. 13 lakhs has been sustained in the quantum proceedings because of
the reason that the assessee himself has paid tax of Rs. 10 lakhs which includes the
interest also. Considering the said facts, we are of the considered opinion that the
assessee has neither furnished any inaccurate particulars nor concealed the income
for the purpose of invoking section 271(1)(c) of the Act. In view of that matter, the
impugned penalty sustained by the Ld.CIT(A) stands deleted.
5.      In the result, the appeal filed by the assessee is allowed.
        Order pronounced in the open court on this 22nd day of April, 2014.
             Sd/-                                                           Sd/-
       (R.C. SHARMA)                                                (Dr. S.T.M. PAVALAN)
     ACCOUNTANT MEMBER                                               JUDICIAL MEMBER
Mumbai, Dated: 22.04.2014.
Copy to: The   Appellant
         The   Respondent
         The   CIT, Concerned, Mumbai
         The   CIT(A) Concerned, Mumbai
         The   DR "C" Bench
                                          //True Copy//

                                                              By Order

                                                Dy/Asstt. Registrar, ITAT, Mumbai.
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