TMI Blog2014 (8) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) of the Act qua the impugned transaction are fulfilled. In the present case, it is quite evident that the transaction resulting in short term capital gain on sale of Pirangut property was not declared in the return of income filed. It is also clear 7 that the purchase as well as sale of the property is by way of duly executed conveyance deeds and therefore it is not a case where assessee was not aware of the income accruing to her on account of the impugned transactions. Considering the totality of facts and in the absence of any plausible and bonafide explanation coming-forth from the assessee, we find that the said income has been rightly subjected to levy of penalty u/s 271(1)(c) of the Act. We hereby affirm the orders of the authorities below on this aspect. Income by way of TDR sale receipts - Held that:- For addition on account of sale of TDR it is not in dispute that the same reflects a transaction undertaken by assessee’s late husband Satish D. Misal prior to his death in the year 2003. It is quite evident that assessee was not a party to the transaction and that she is in receipt of money as legal heir of her deceased husband -merely because an assessee has agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenance of penalty with respect to the additions on account Interest on bank deposits and Short term capital gain. 3. Since the issues arise out of an assessment order passed by the Assessing Officer u/s 143(3) of the Act dated 31.12.2010 whereby the returned income was enhanced, it would be relevant to briefly note the following background. The assessee before us is an individual who filed her return of income for assessment year 2008-09 on 24.09.2008 declaring total income of ₹ 3,36,690/-. In the return of income filed assessee declared income from house property, salary from M/s Pooja Lottery Agency Private Limited as well as income under the head income from other sources . The return of income filed by the assessee was subject to a scrutiny assessment wherein various additions on account of unexplained cash credit u/s 68 of the Act, low household withdrawals, interest income, TDR receipts and short term capital gain, etc. were made which resulted in the determination of the assessed income at ₹ 1,69,64,160/-. Out of the total additions made to the returned income, the aforestated three additions were considered by the Assessing Officer to be concealed incomes w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the learned Departmental Representative has defended the orders of the authorities below by pointing out that the assessee came forward to disclose the aforesaid income only during the assessment proceedings and thus penalty u/s 271(1)(c) of the Act has been correctly levied. 7. We have carefully considered the rival submissions. On this aspect, we find that the income by way of interest on FDRs with Dena bank was declared by the assessee only in the revised computation of income submitted in the course of assessment proceedings. Ostensibly, the said income was not declared in the return of income originally filed. The Assessing Officer has justified the levy of penalty on the ground that the aforesaid income was not offered to tax by the assessee but was unearthed in the course of assessment proceedings. As per the Assessing Officer, if not for the efforts made by him, the entire amount would have remained untaxed. In this context, we have perused the following discussion made by the Assessing Officer while making the addition in the assessment order dated 31.12.2010 :- (B) Addition in respect of Interest of ₹ 4,60,091/- on FD with Dena Bank As per the revised c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now, we may take-up the penalty levied with regard to the addition of ₹ 35,00,000/- made on account of land as short term capital gain. In the 6 course of assessment proceedings, assessee was found to have received ₹ 25,00,000/- and ₹ 60,00,000/- from Karandikar Ganesh and P. P. Shinde respectively, which was explained by the assessee to be arising on sale of a Pirangut property (Gat No.1176). It was also explained by the assessee that the aforesaid property was purchased for an amount of ₹ 50,00,000/- and accordingly, ₹ 35,00,000/- was gain on sale of such property. The aforesaid short term capital gain was not declared by the assessee in the original return of income filed. The assessee also agreed to the aforesaid income in the course of assessment proceedings. The aforesaid income has been treated as concealed income within the meaning of section 271(1)(c) of the Act by the income-tax authorities. 10. Before us, the only plea raised by the assessee is that the said income remained to be declared in the return of income on account of an unintended error. It has also been contended that the bona-fides of the assessee s stand are established by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal receipt not chargeable to tax; and, therefore it was not offered to tax in the return of income. However, in the course of assessment proceedings, assessee agreed to pay tax on the same and accordingly the amount of ₹ 1,11,67,378/- was added to the total 8 income. The aforesaid sum has been subjected to levy of penalty by the Assessing Officer, primarily on the ground that assessee agreed to the addition and did not challenge it in appeal. As per the Assessing Officer, it was only due to the efforts made in the course of assessment proceedings that the impugned income was found and assessed , otherwise it would have remained untaxed. The CIT(A) has since deleted the levy of penalty on the said sum, and accordingly Revenue is in appeal before us. 16. Before us, the learned Departmental Representative has vehemently pointed out that the fact that the quantum assessment proceedings not having been challenged by the assessee in appeal goes to show that the impugned sum was indeed assessable as income, which the assessee did not disclose in the return of income. Merely because the assessee had agreed to the said addition during the course of assessment proceedings cannot a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an inference of concealment of income within the meaning of section 271(1)(c) of the Act. 19. In our considered opinion, merely because an assessee has agreed to an addition, cannot be conclusive for the purpose of penalty u/s 271(1)(c) of the Act. Quite clearly, it is a trite law that assessment proceedings and the penalty proceedings are independent proceedings and that the findings in the assessment proceedings are not conclusive for the purposes of adjudicating the levy of penalty although such findings may be relevant for the purposes of 10 penalty proceedings. In-fact, as per the Hon ble Supreme Court in the case of Anantharam Veerasingaiah Co. vs. CIT, 123 ITR 457, penalty proceedings are independent of the assessment proceedings and penalty cannot be levied merely on the basis of the findings in the assessment proceedings. Thus, merely because the additions made in the quantum proceedings have become final, does not automatically establish the ingredients of section 271(1)(c) of the Act. Therefore, the stand of the Revenue to support the levy of penalty based on the quantum assessment having been confirmed, is not justified. 20. As per the Hon ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain recoveries made by her on behalf of her late husband. Considering the entirety of above factors, we are satisfied that the explanation rendered by the assessee is bona-fide and in the absence of any dispute on the factual countours of such explanation, in our view, the initial onus cast on the assessee as per Explanation to section 271(1)(c) of the Act stands discharged. The presumption of concealment in terms of Explanation to section 271(1)(c) of the Act in the present case, in our view, is rebutted by the assessee having regard to the facts and circumstances of the case. Moreover, there is no material lead by the Revenue to show that the explanation of the assessee is either false or devoid of bona-fides. Therefore, in our view, the CIT(A) made no mistake in deleting the penalty levied with respect to the income by way of TDR sale amounting to ₹ 1,11,67,378/-. As a result, we affirm the findings of the CIT(A) on this aspect contained in paras 3.7 to 3.10 of the impugned order. Thus, on this aspect, Revenue fails. 22. Before parting, we may refer to the judgement of the Hon ble Supreme Court in the case of Mak Data Pvt. Ltd. (supra) which has been relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was surrendered later during the course of the assessment 13 proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961. 23. However, in the case before us, factually we have concluded that the CIT(A) made no mistake in concluding that the explanation rendered by the assessee is cogent and reliable as well as bona-fide. Therefore, even after applying the proposition laid down by the Hon ble Supreme Court in the case of Mak Data Pvt. Ltd. (supra) in the present case, factually speaking, penalty u/s 271(1)(c) of the Act is not attracted. Therefore, in our considered opinion, the judgement of the Hon ble Supreme Court in the case of Mak Data Pvt. Ltd. (supra) does not help th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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