TMI Blog2010 (8) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee - ITA No. 1482/Ahd/2010 - - - Dated:- 6-8-2010 - Mumul Kr. Shrawat Judicial Member J. D.C. Agrawal Accountant Member J. Revenue by :- Shri Shel ley Jindal, Sr.DR Assessee by: - Shri M. K. Patel, AR ORDER Per D. C. Agrawal, Accountant Member. This is an appeal filed by the Revenue against the order of ld. CIT(A), dated 5.1.2010 wherein he has cancelled the penalty of Rs.10,49,520/- levied u/s 271(1)(c) of the Act. 2. The facts of the case are that a survey under section 133A was carried out on 22.9.2006 at the premises of assessee who is a practicing medical Doctor. During the course of survey assessee declared unaccounted income of Rs.32,84,663/-. The assessee filed return of income declaring income of Rs.37,57,334/- wherein apparently assessee has disclosed the unaccounted income of Rs.32,84,663/- as declared by him during the course of survey. The assessment was finally completed on an income of Rs.38,12,360/- after making minor additions as under :- 1 Disallowances of expenses as per para-5 Rs. 8,850 2 Disallowance of depreciation as per para-6 Rs. 660 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement recorded on oath assessee has admitted that receipts are not prepared and issued to all the patients. Thus assessee has admitted concealment of income. Merely because assessee has disclosed declared income in the return of income will not be sufficient to prove that case of the assessee does not fall under the provisions of section 271(1)(c). 5. On the other hand, ld. AR had submitted that penalty cannot be levied if impugned amount has been declared in the return of income. The penalty has to be considered on the basis of return filed by the assessee and if no addition is made of the impugned amount then there is no case for levy of penalty. He referred to the machinery section of 271(1)(c) which refers to calculation of penalty according to which penalty is leviable equivalent 100% to 300% of tax sought to be evaded and tax sought to be evaded is a difference between tax levied on returned income and tax levied on assessed income. Since in the present case tax levied on returned income and on the assessed income is the same, barring few minor additions, penalty could not be levied in respect of amount declared by the assessee in survey. The ld. AR then referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is reduced by the amount added. Since in the present case the AO has not made any addition in the returned income, question of working out any tax sought to be evaded would not arise. For the sake of convenience we reproduce Explanation-4 to section 271(1)(c) as under :- Explanation-4 For the purposes of clause (iii) of this sub-section, the expression the amount of tax sought to be evaded - [(a) in any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, means the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income;] (b) in any case to which Explanation 3 applies, means the tax on the total income assessed [as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148]; (c) in any other case, means the diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings or not it is to be seen whether it can be brought to a legal conclusion against the assessee by determining his right or liability. Merely carrying out survey under section 133A does not create any liability against the assessee which is created only through assessment proceedings or penalty proceedings. Therefore, the ld. DR is incorrect in his submission that survey being a proceedings and AO has discovered concealment during survey, therefore, the assessee is liable for penalty under section 271(1)(c). In this regard we refer to some common definitions of word proceedings. Proceedings proceedings have been defined in various ways. It includes any suit, appeal or application. It includes any procedural means for seeking redress from the Tribunal or Court; the business conducted by a Court or other official body, the term proceedings may include the institution of action against defendant, the submissions of defence and trial. It also means a legal action or process and act done by an authority of a court of law; any step taken by either party in a legal proceeding, an action or course of action before a court. It is also a prescribed mode of action for ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veral judgments according to which penalty is not leviable if addition is deleted. Hon. Punjab Haryana High Court in CIT vs. Prakash Industries Ltd. (2010) 322 ITR 622 (P H) held that basis for levy of penalty is returned income. If additions are deleted in quantum proceedings penalty could not be imposed. The Hon. High Court has held as under :- A search showed that the assessee had received amount of Rs.3.5 crores from the bank account of S. Faridabad. It was observed that the firm was a bogus firm and the claim of the assessee that the amount was received towards consideration for sale of material, was not accepted. Hence, addition was made to the declared income. Further additions were made by holding that lease rent shown to have been paid by the assessee had not been in fact been paid and the claim for depreciation could not be allowed as the machinery was not in the possession of the assessee during physical verification. The Commissioner (Appeals) upheld the addition in respect of receipts shown to have been made from S but deleted the addition towards lease rent and depreciation allowance, taking into account additional eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty for concealment. No penalty would survive if addition did not survive. In CIT vs. Arthanariswamy Chettiar (S.S.K.G.) (1982) 136 ITR 145 (Mad) Hon. Madras High Court held that penalty can be imposed with reference to the concealment done in the original return filed under section 139. In the case of Sulemanji Ganibhai vs. CIT (1980) 121 ITR 0373 (M.P.) it was held that an assessee incurs penalty under section 271(1)(c) if he files inaccurate particulars of his income in the return or conceals the particulars of income therein. There can be no concealment until there is a duty to disclose. The duty to disclose particulars of income arises at the time when assessee furnishes return of income under section 139 and if in filing his return he conceals the particulars of income or furnishes inaccurate particulars he incurs penalty under section 271(1)(c). In the case of Patna Guinea House vs. CIT (2000) 243 ITR 0274 (Pat) it is held that there is no case for levy of penalty if income is disclosed in the return of income but assessee has refused to disclose source of income. 11. Thus where returned income is accepted there is no case for levy of penalty. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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