TMI Blog2020 (9) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... income filed under section 148 viz a viz the income as assessed by the AO. As, there was no difference between the return and the assessed income, then in our considered view, the question of penalty does not arise merely on the basis of the income admitted during the survey proceedings. There cannot be a penalty merely on the basis that the assessee has disclosed income after receiving the notice from the ADIT and the income was accepted during survey proceedings as discussed above. No incriminating documents discovered during the course of survey at the premises of the assessee. Similarly, the additional income offered by the assessee in return filed in response to notice under section 148 of the Act admitted as it is by the AO. Accordingly, we conclude that the principles laid down in the case MAK Data [ 2013 (11) TMI 14 - SUPREME COURT] are not applicable on the case in hand. Hence, the penalty in the instant case cannot be attracted under the provisions of section 271(1)(c) in the present facts and circumstances. - Decided in favour of assessee. - ITA No.563/Ahd/2016 , 1061/Ahd/2016 1853/Ahd/2017 602/Ahd/2016 & 1042/Ahd/2017 1043/Ahd/2017 152/Ahd/2018 & 153/Ahd/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insurance policies held by him and his family members. 4.2 However, the assessee, in the meantime, vide letter dated 24th of July 2013, addressed to the Commissioner of Income Tax under section 273A of the Act, disclosed an income of ₹ 5.30 crore representing the investment made by the him in the insurance policies in the different years. The details of the investment made in the insurance policies in different years stand as under: Assessment Year Amount 2009-10 50,00,000 2010-11 75,00,000 2011-12 2,20,00,000 2013-14 1,85,00,000 Total 5,30,00,000 4.3 The assessee finally complied with the summon issued by the ADIT dated 28 May 2013 by making a reply dated 31st July 2013 along with the necessary documents as required in the notice issued under section 131 (1A) of the Act. 4.4 Subsequently a survey was conducted under section 133A of the Act at the business premises of the assessee dated 30th Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271(1)(c) of the Act for the investment made in the insurance policies on account of concealment of income. 5.4 However, the AO rejected the contention of the assessee and levied the penalty of ₹ 17,19,850/- being 100% of the amount of tax sought to be evaded for the concealment of income. 6. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing that the assessee has disclosed such income only upon receiving the notice under section 131(1A) of the Act by the ADIT dated 28th of May 2013. Upon receiving the notice from the ADIT, there was no option available to the assessee except to disclose such income in the income tax return. This fact also becomes fortified as the assessee neither disclosed such income in the original return of income tax return nor during the assessment framed under section 143(3) of the Act. As such the assessee had opportunities on the earlier occasion to disclose such income but he failed to do so. Therefore the act/deed of the assessee suggest that the assessee has not disclosed such income voluntarily and before the detection of the same by the Income Tax Department. Accordingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited was asked to provide details alongwith copies of all insurance policies taken by Shri Niral K Patel with their branch along with KYC vide summons u/s 131(1 A) dated 28-05- 2013. Details of payment made by assessee, premium paid, tenure of policy, mode of the payment etc were specifically asked for. (Copy enclosed as Exhibit B). iii. Further vide summons u/s 131(1 A) dated 11-06-2013, the principal officer of Kotak Mahindra Old Mututal Life Insurance Limited was asked to provide details of all-insurance policies opened at the address of Shri Niral K Patel. (Copy enclosed as Exhibit C). This itself shows that details of all the insurance policies opened at his address was called for. iv. Subsequently, vide summons u/s 131(1 A) dated 24-06-2013, Shri Niral K Patel was asked to provide details and copies of all bank accounts/insurance policies (either operational or non operational) maintained by him as well as his companies/concerns for the period from 01-04-2009 till 24-06-2013. He was also asked to provide bank account/policy number, tenure of policy, premium paid, type of account, name and address of the bank branch. (Copy enclosed as Exhibit D). v. Vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued to the Bank asking details of insurance policies held by the family members. Thus, it is again evident that the disclosure . during the survey was not made voluntary but in fact it was only made after detection and enquiries conducted by the Department. 6. In view of the above facts and circumstances and the specific documents and notices, it is humbly submitted that the disclosure of the investments made in insurrance policies were not made voluntarily by Shri Niral K Patel and his family members. In fact, the disclosure was only made after detection and enquiry made by the Department. Therefore, it is requested to kindly consider these submisions and documents in the interest of justice. 9. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee disclosed the income in dispute only after receiving the notice under section 131(1A) of the Act from the ADIT dated 28th of May 2013 where certain enquiries were raised which are detailed as under: Date: 28.05.2013 Sh. Niral K. Patel, Mahapura Road, Near Talav, Gotri- Sindhrot Road Baroda 391101 Whereas your attendan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of income, P L account and balance sheet. 2. Details and copies of all bank accounts/insurance policies (either operational of non operational) maintained by you as well as your companies/business concerns for the period from 01.04.2009 till date. Also giving the bank account/policy no., tenure of policy, premium paid, type of account, name and address of the bank branch. 9.3 Going forward, we also note that the ADIT has also issued summon dated 28th May 2013, 11th June 2013 and 22nd July 2013 under section 131(1A) to the Kodak Mahindra Old Mutual Life Insurance Limited for furnishing the detail of insurance policies held by the assessee along with his family members . The relevant extract of summon issued as on 22nd July 2013, for the sake of ready reference is reproduced as under: Documents to be filed 1. Details of Insurance policies opened at the address of Shri Niral K patel (PAN ACQPP6163R) 2. Details of insurance policies held in the name of Shri Krupesh N. Patel, Shr Amish K Patel Punja Niral Patel along with KYC norms. 9.4 A conjoint reading of all the summons issued under section 131(1A) of the Act to the assessee and the Kodak Mahi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s envisaged under section 271(1)(c)of the Act. The answer certainly stand in negative. It is because, the summon was issued under section 131(1A) of the Act by the ADIT much before the initiation of the proceedings initiated under section 148 of the Act. Similarly, the assessee disclosed the income much before the initiation of the proceedings initiated under section 148 of the Act. 9.8 Admittedly, the income disclosed by the assessee in response to the notice issued under section 148 of the Act was accepted by the revenue without any further addition. As such the return income was accepted by the revenue. Accordingly, the revenue has to find out the concealment of income with reference to the income declared by the assessee in the return of income filed under section 148 of the Act viz a viz the income as assessed by the AO. As, there was no difference between the return and the assessed income, then in our considered view, the question of penalty does not arise merely on the basis of the income admitted during the survey proceedings. 9.9 In holding so, we draw support and guidance from the judgment of Hon ble Delhi High Court in the case of CIT vs. SAS Pharmaceuticals repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld amount concealment in the course of 'any proceedings'. Such contention could not be accepted. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the Assessing Officer or the Commissioner (Appeals). When the survey is conducted by a survey team, the question of satisfaction of Assessing Officer or the Commissioner (Appeals) or the Commissioner does not arise. It was the Assessing Officer who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It was, thus, obvious that the expression 'in the course of any proceedings under this Act' could not have the reference to survey proceedings in the instant case. [Para 14] It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income-tax return filed by it. There is sufficient indication of this in the judgment in the case of CIT v. Mohan Das Hassa Nand [1983] 141 ITR 203/ 13 Taxman 328 (Delhi) and in CIT v. Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come out of vexed litigation could be treated as bona fide. Therefore, the Tribunal was justified in cancelling the penalty levied. In the light of the above stated discussion, we hold that there cannot be a penalty merely on the basis that the assessee has disclosed income after receiving the notice from the ADIT and the income was accepted during survey proceedings as discussed above. 9.11 Now coming to the case law referred by the AO i.e MAK Data, we find that the principles laid down by the Hon ble Apex Court in the case of MAK Data (P) Ltd vs. CIT reported in 358 ITR 593, in our humble opinion are factually different from the present facts of the case. In that case there were many documents found during the survey proceedings which were incriminating in nature. Thereafter a specific query was raised by the AO during assessment proceedings with respect to such incriminating documents found during the course of survey. Thus, the assessee in response to such specific query surrendered income of ₹ 40.74 lacs. However, in the present case there was no any incriminating documents discovered during the course of survey at the premises of the assessee. Similarly, the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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