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TMI Blog2010 (8) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... llowances of expenses as per para-5 Rs. 8,850 2 Disallowance of depreciation as per para-6 Rs. 660 3 Disallowance of interest, as per para-7 Rs. 31,594 4 Addition on a/c of cash deposit, as per para-8 Rs. 500 5 Disallowances of electrical expenses, as per para-9 Rs. 25,879 6 Addition on a/c Insurance premium, as per para-10 Rs. 19,134 Rs. 86,617 Rs. 38,43,951 Less : Deduction u/s 80E Rs. 31,594 Total income Rs. 38,12,357 Rounded off u/s 288A Rs. 38,12,360 The AO also initiated penalty proceedings under section 271(1)(c) in respect of sum of Rs.32,84,663/- declared during the course of survey. In response to show cause notice issued by the AO before levy of penalty the assessee furnished following explanations:- "1. The survey was conducted u/s 133A on 22/09/2006 and declared income from undisclosed sources amounting to Rs.32,84,663/- and the same amount is shown as income in return of income. 2. The addition in order u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 referred to the following decisions :- - CIT vs. M. Pachamuthu & Another (2007) 295 ITR 502 (Mad) - Amir Chand vs. ITO (1994), 49 ITD 606 (Del) - ACIT vs. Gandevikar Jewellers P. Ltd. - Bhagat & Co. vs. ACIT (2006) 101 TTJ (Mum) 553 - Orient Press Ltd. vs. JCIT (2006) 99 TTJ 1091 (Mumbai) 6. For the sake of convenience we reproduce section 271(1)(c) as under :- "Sec. 271(1) -If the Assessing Officer or the Commissioner (Appeals) [or the Commissioner] in the course of any proceedings under this Act, is satisfied that any person - (a)....... (b)....... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d)...... He may direct that such person shall pay by way of penalty - Explanation -1 -Where in respect of any facts material to the computation of the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 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 difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished.] Thus in general, where a case does not fall within clause (a) or clause (b) there cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough 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 carrying into effect a legal right. In its ordinary acceptance proceedings means form and manner of conducting judicial business by a quasi judicial authority, the form in which actions are to be brought and defended and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; be charged for any contumacious conduct. There are in fact several 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asst. Year 1991-92. It was held by the Hon. Court that once prize money has been disclosed in the return of income for Asst. Year 1992-93 and also taxes were paid then assessing authority had apparently committed an error in levying the penalty. In K.C. Builders vs. ACIT (2004) 265 ITR 562 (SC) it was held Asst. Year 2006-07 by the Hon. Apex Court that where additions are made in the assessment order on the basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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