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2013 (4) TMI 485 - AT - Income TaxPenalty u/s. 271(1)(c) - concealment of particulars - bifurcating the income on which tax sought to be evaded - income surrendered during survey - difference between assessed income and returned income - Held that:- There can be no concealment or non-disclosure, as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax and therefore no penalty under s. 271(1)(c) could be levied. The words 'in the course of any proceedings under this Act' in Sec. 271(1)(c ) of the Act are prefaced by the satisfaction of the AO or the CIT(A). When a survey is conducted by a survey team, the question of satisfaction of AO or the CIT(A) or the CIT does not arise. One has to keep in mind that it is the AO who initiates penalty proceedings and directs the payment of penalty. He cannot record any satisfaction during the course of survey. Decision to initiate penalty proceedings is taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings. There can be no justification for imposition of penalty on the income offered in the return of income by the Assessee for both the A.Ys., because there cannot be any penalty on income which is declared in a return of income, on the facts and circumstances of the present case. Penalty - difference between assessed income and returned income - held that:- Assessee was that it was due to inadvertence that the income declared in the return of income was less than what was offered at the time of survey. - the estimation of income is not on any incriminating material but based on agreement between the revenue and the Assessee at the time of survey. In respect of such addition, for which a bona fide explanation has been given by the Assessee, no penalty can be imposed. The law is well settled that an Explanation inserted in a penal provision cannot be regarded as a substantive provision by itself and such an Explanation can only be regarded as a rule of procedure and a rule of evidence leaving it to the assessee and the Revenue to adopt the same as the basis to substantiate their rival claims having regard to the facts of the case and the law applicable. - No penalty - Decided in favor of assessee.
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