TMI Blog2011 (4) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer or the Commissioner (Appeals) or the Commissioner does not arise - Decided in favour of the assessee - 1058 of 2009 - - - Dated:- 8-4-2011 - SIKRI A. K., MEHTA M. L., JJ. JUDGMENT A. K. Sikri J.- 1. This appeal arises out of the order of the Income-tax Appellate Tribunal ( the Tribunal for brevity), vide which it has affirmed the order of the Commissioner of Income-tax (Appeals) deleting the penalty of Rs. 32,39,393 imposed by the Assessing Officer under the provisions of section 271(1)(c) of the Income-tax Act (hereinafter referred to as the Act ). It so happened that a survey was carried out at the business premises and godown of the respondent-assessee on January 6, 2003. In that survey, discrepancies in cash, stock and renovation were found. When the assessee was confronted with the same, it surrendered the amount of Rs. 88,14,676 during the survey. Since the survey was conducted on January 6, 2003, i.e., in the financial year 2002-03 corresponding to the assessment year 2003-04, for that assessment year, the assessee had not filed the income-tax return and naturally the occasion to file the income- tax return had not matured. When the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Difference in stock 5,00,200 Renovation difference 60,33,580 88,14,676 5. The assessee accepted this difference and surrendered the amount. No attempt was made by the assessee even after this surrender to retract therefrom or to explain that there were no such discrepancies. In fact, the position was carried by including this amount even in the income-tax return filed by the assessee. Thus, no doubt, the assessee has surrendered certain income during the course of survey and discrepancies noticed by the survey team would suggest that the assessee was not maintaining proper accounts in respect of cash, stock and renovation expenses, etc. Therefore, there could be a possibility that but for this survey, the discrepancies brought to the notice of the assessee and physical verification of the stock and other accounts would have gone unnoticed and the assessee might have suppressed in the income-tax return as well. However, the fact remains that it has disclosed this in the return filed by it. 6. In this context, the question would be as to whether the assessee can be imposed penalty under section 271(1)(c) of the Act when the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is specifically provided as to what would be included in the expression the amount of tax sought to the evaded , which is the basis for imposition of penalty contemplated under section 271(1)(c) of the Act. The perusal of the said Explanation also clearly establishes the direct nexus between the concealment/inaccurate particulars being furnished with the return filed. 10. To bolster this submission, the learned counsel for the assessee took refuge of Explanation 5 and Explanation 5A to section 271 of the Act and submitted that these Explanations provide that in cases of search by way of a deeming fiction, the liability towards penalty has been prescribed even in cases where the return of income for such year has not been furnished before the said date of search. Therefore, wherever the Legislature intended to impose a penal liability covering a case where return was yet to be filed, a deeming fiction has been consciously provided. In the absence of any such deeming fiction imposing penalty in a case of survey where return is yet to be filed, the penal provision of section 271 of the Act cannot be invoked as the mandatory ingredients thereof are not met at all. 11. He also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all, reject the contention of the learned counsel for the Revenue relying upon the expression in the course of any proceedings under this Act occurring in sub-section (1) of section 271 of the Act and contending that even during survey when it was found that the assessee had concealed the particular of his income, it would amount to concealment in the course of any proceedings . The words in the course of any proceedings under this Act are prefaced by the satisfaction of the Assessing Officer or the Commissioner of Income-tax (Appeals). When the survey is conducted by a survey team, the question of satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is 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. The decision to initiate penalty proceedings was taken while making the assessment order. It is, thus, obvious that the expression in the course of any proceedings under this Act cannot have the reference to the survey proceedings, in this case. 15. It necessarily follows that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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