TMI Blog2011 (7) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... heard together. Therefore, all appeals arc disposed of by this common order for the sake of convenience. Both the parties mainly argued in ITA No. 876 (Kol.)/08 and submitted that the issues are same and decision in this case may be followed in other cases. In ITA No. 90 (Kol.)/2008 there is some variation in the addition which we would discuss in the order later on. 2. There was a search in the group of cases described as Ritwika Group of cases on 24th January, 2005. The assessee belongs to this group. She filed the return u/s 153A without disclosing any unaccounted income. It is only later when the assessee received copies of seized documents that the return u/s 153A filed on 5th May, 2006, was revised with the letter dated 22.12.06 declaring the total income of Rs. 50,66,896. The income is related to the gross profit from allegedly unaccounted purchases. The declared total income at 15% of unaccounted purchase was accepted after scrutiny by the A.O. However, penalty proceedings were separately initiated. According to the assessee in the light of Explanation 5 to Section 271(1)(c) and in the light of Supreme Court judgments in the cases of CIT v. Suresh Chandra Mittal [2001] 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of search action u/s 132(4) of the Act. It was explained that the assessee was engaged in wholesale trading in fashionable sarees and the assessee made purchases of plain sarees and made the value addition in the form of embroidery work through skilled artisans. Sales are declared at Rs. 6.2 crores. There is no dispute of the receipts through cheques. The A.O. sought clarification on this point vide query letter dated 13.12.06 and proposed to reject the book results on the reasons that the cheques issued against the purchases were deposited in the bank account of the husband of the assessee. The cheque should have been given to the suppliers directly. The seized documents are C.R/1 to R.C/10 and cannot belong to the husband of the assessee because they refer to manufacturing expenses. These documents were also in the name of M/s Ritwika Creation. The payments to karigars in these documents matched with the payments recorded in R.1/12 to R.1/21. The details of the activities of the karigars are not known. The assessee wanted to inspect the seized material in order to explain the issue and the assessee revised the rate of profit after copies of the of the seized docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context of the method of payments to the karigars from whom sarees were purchased. Since the karigars would not accept payments through cheques, such payments through cheques were deposited in the bank account of the husband of the appellant, who in turn made payments to the karigars. The intention was to avoid dispute about application of section 40A(3) though it is not explained how Sri Suresh Kr. Agarwal dealt with section 40A(3) in respect of cash payments made by him. The seized documents RC/1 to RC/10 and R1/1 to R1-21 are related to these transactions. Now purchases of sarees cannot be doubled since the payments for turnover to the extent of Rs. 6.2 crores is made through cheques and is a part of audited books of account. It is the manner of payments to the suppliers or the purchases of stock in trade that appeared controversial. The appellant had a certain explanation about the method of payments to the suppliers and the reason for declaring that certain seized documents belonged to Sri Suresh Kr. Agarwal. The assessment order does not give a finding that the explanation about the cheques deposited in the bank account of Sri Suresh Kr. Agarwal and the claim made by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT v. Suresh Chandra Mittal. It is also relevant to mention that the M.P. High Court Judgment has become final in view of the dismissal of appeal against that judgment by the Supreme Court. The appellant also rightly relied on the Supreme Court Judgment in the case of Dilip and Shroff v. JCIT (210 CTR 228 and the order of the ITAT in the case of DCIT v. Sitaram Agarwal (ITA Nos. 1643 to 1646/Kol.107). In my enhancement of income in the revised return does not constitute concealment of income for the purpose of penalty u/s 271(1)(c). Accordingly, the order of penalty is cancelled." 5. Learned D.R. relied upon the order of the A.O. and submitted that the A.O. made detection of the fact that the assessee made payments to the Karigars through cheques deposited in the account of the husband of the assessee and accordingly investigated the facts even by issuing summons to the purchasers but the purchasers were found non-existent. Learned D.R. submitted that the assessee remained non-cooperative at the assessment stage and did not file proper explanation before the A.O. It, therefore, proved that the assessee made unaccounted purchases. Therefore, notice dated 13th December, 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the assessee offered income during the course of assessment proceedings, penalty is justified. 6. Order of ITAT, Chennai Bench in the case of Sri B.B.Monoharan v. DCIT in which department found investment in construction of house and others. It was held that element of wilful concealment is not essential ingredient for imposing the penalty as is decided by Apex Court in the case of Dharmendra Textile Processors Others (306 ITR 277). 7. Order of ITAT, Delhi Bench in the case of M/s Ahuja Sons Shawlwale Pvt. Ltd. in which the appeal of the assessee was dismissed on penalty u/s 158BFA (2). 8. Order of the ITAT, Mumbai Bench in the case of DCIT v. Indian Plywood Manufacturing Co. Pvt. Ltd. in which it was held that no addition made in search proceedings would have come out in the case of the assessee. If no such proceedings were made and in the absence of explanation of the assessee. 9. Decision of the Supreme Court in the case of CIT v. Abdul Mohan Bindal, in which the matter was remanded to the High Court to decide the issue in the light of its decision in the cases of Dharmendra Textiles and Rajasthan Spinning and Weaving Mills." 6. On the other hand, learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as undisclosed expenditure of the assessee. The learned CIT(A) specifically noted in the impugned order that seized documents RC 1 to RC 10 and R1/1 to R1/21 are related to the transactions in question. It would, therefore, prove that complete seized papers were not supplied to the assessee at the time of issuing notice u/s 153A of the Income Tax Act. The order sheets recorded by the A.O. also support the contention of the assessee that complete seized documents on this issue of payment to the karigars through husband of the assessee were supplied to the assessee only in December, 2006. Therefore, there was no occasion for the assessee to make surrender the additional income at the time of filing original return of income. At the most, it may be taken that in case the assessee would not have surrendered the additional income by enhancing gross profit rate, the A.O. would have rejected book results of the assessee and enhanced the income by enhancing the gross profit of the assessee. There would not have been any concealment of income or furnishing inaccurate particulars, in such a situation, because it is settled law that on mere revision of income to a higher figure by A.O. di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration of the above facts we are of the view that the facts are identical in ITA No. 876 (Kol.)/08 because the assessee surrendered the additional income on being supplied the seized papers. By following the same order, we confirm the finding of the learned CIT(A) and dismiss this departmental appeal also. IT(SS) A. No. 89 (Kol.)/08 11. Learned D.R. submitted that the facts are identical as are noted in ITA No. 876 (Kol.)/2008 and submitted that the order in that case may be followed in the present appeal. Since the facts are admittedly the same as are considered in ITA No. 876 (Kol.)/08, therefore, by following the order in that case, we dismiss this departmental appeal also. 12. In the result, all the departmental appeals are dismissed. C.D. Rao, Accountant Member - I have carefully gone through the proposed order of my Ld. Brother on all these appeals preferred by the Revenue and I am not in agreement with the same. Therefore, I propose to write my separate order. 2. All the three appeals filed by the Revenue relating to two assessees arising out of two separate orders dated 13.03.2008 and 28.03.2008 of Ld. CIT(A), Central-III, Kolkata. In my opinion, the facts r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153A. The AO completed the assessment by taking the gross profit at 15% surrendered by the assessee and initiated penalty proceedings under section 171(1)(c) of the I.T. Act. 4.1 During the penalty proceedings, the assessee filed reply by stating that the assessee is covered by Explanation 5 to section 271(1)(c) and that the assessee filed revised return under section 153A, after she received photo copy of the seized documents from the AO. The assessee further submitted that the revised return under section 153A was filed offering additional income to buy peace, avoid litigation and to extend a hand of co-operation to the department. However, the AO did not consider this reply by observing that the assessee has surrendered the higher income in the revised return only after the investigation was carried out by the department and only after the assessee was confronted with the findings. Therefore, he levied penalty of Rs. 14,16,678/- under section 271(1)(c) of the I. T. Act. 5. Aggrieved by this, the assessee went in appeal before the Ld. CIT(A). After taking into consideration of the various submissions made by the assessee, the Ld. CIT(A) has deleted the penalty mainly on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials are voluminous. The filing of return under section 153A is not possible without scrutiny and verification of seized document which was time-consuming. Based on the above submissions, he contended that the contention of the assessee that the photo copy of the seized materials was given on 15.12.06, is not correct. 7.1 Moreover, the responsibility of taking photocopy of the seized material to file her return U/s. 153 A is on the assessee. If she wanted she could have taken photocopy of the seized material even before December, 2005. Nowhere the assessee has made out a case that she had asked for photocopy of the seized material from the Department and such photocopies were refused to her. When the Assessing Officer gave further photocopies of seized documents on 15.12.06, he was acting in good faith and was following the Principles of Natural Justice to the fullest extent, even though the photocopy of the seized material was given earlier in December, 2005. Therefore, the contention of the assessee as regards the availability of photocopy of seized material only on 15.12.06 is totally incorrect. Also the reliance of CIT(A) on these submissions is totally misplaced. 7.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantiated and very much inflated and therefore surrender of higher gross profit after thorough investigation by the AO will definitely amount to concealment. The decision of CIT(A) that there is no concealment as turnover is undisturbed, is not sustainable. 7.4 The observation of CIT (A) that the show-cause notice issued by the Assessing Officer was some kind of bargaining measure is not correct. The final show-cause notice was the result of investigation conducted by the Assessing Officer. The findings of the intermediate investigation were also confronted by the AO to the assessee and she could not answer them correctly and satisfactorily. The Assessing Officer, by the show-cause notice, was obtaining the assesse's reply on the issues raised in the show cause notice. In the case of Union of India v. Banwari Lal Agarwal [1999] 238 ITR 461. Hon'ble Supreme Court has held that there is no provision in the Act sanctioning any compromise assessment which could be arrived at between the assessee and Department and Hon'ble Apex Court directed the Trial Court to proceed with the prosecution proceeding U/s.276C of Income Tax Act, 1961. This ratio laid down by the Hon'ble Apex Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discloses additional income in revised return after Search and Seizure and no explanation is offered for not having disclosed income earlier, Tribunal was not justified in setting aside the penalty 7.8 In the case of Kamal Chand Jain v. ITO [2005] 277 ITR 429 (Del) Hon'ble Delhi High Court has held that when the assessee does not file proper explanation except surrendering certain amount for taxation to buy peace and avoid further litigation, the levy of penalty is justified. 7.9 Further, ITAT 'C'-Bench, Kolkata in the case of Dy. CIT v. Samit Roy [IT Appeal No. 178 (Kol.) of 2009] has upheld levy of penalty as per the findings given below : "From the assessee's letter offering additional income, which is reproduced in the assessment order, it is evident that during the course of search of the assessee's premises, the payment for purchase of land was found recorded in the seized document at pages 20 and 24 of RPL/I4. Admittedly, the above purchase of land was made by the assessee without recording the same in the books of account. Such income was also not offered either in the statement recorded U/s. 132(4) or in the return of income filed by the assessee. The assessee offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file block return - return filed but NIL undisclosed income shown - AO makes additions and initiates penalty u/s 158-BFA(2) - held, the first proviso to section 158-BDA (2) offers a concession to the assessee to escape penalty by admitting undisclosed income in the block return and paying taxes. Since the assessee had filed Nil undisclosed income and the AO had rightly made additions for undisclosed income through unaccounted stocks, the second proviso to the Sec 158-BFA (2) comes into force as what is required to be established is only the undisclosed income in excess to the one disclosed in the block return - concealment of income like in Sec 271(1)(c) is not a pre-condition under this Section for imposing penally - this is more so in view the Apex Court decision in Dharmendra Textiles case where it is held that penalty is a civil liability and no mens rea is required to be established for imposing it Assessee's appeal dismissed." 7.13 Further, in the case of Dy. CIT v. Indian Plywood Mfg. Co. (P.) Ltd. (IT Appeal No. 654 (Mum.) of 2007, dated 6-2-2009], ITAT, Mumbai Bench "I", Mumbai has held as below: "Income tax - Penalty u/s 271(1)(c) - Held that as per the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn good law. In the case of Dharamendra Textiles Processors (supra) it has been further held that penalty u/s.271(1)(c) is civil liability and wilful concealment is not an essential ingredient for attracting civil liability. 7.17 In the latest decision of the Hon'ble Supreme Court dated 24.8.09 in the case of CIT v. Atul Mohan Bindal the decision in the case of Dharamendra Textiles Processors (supra) has been further reaffirmed, as below: "Income Tax - Penalty - The penalty under Section 271 (c) is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability - The object behind the enactment of Section 271(1)(c) read with Explanations indicates that the Section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Insofar as the present case is concerned, the High Court relied upon its earlier decision in Ram Commercial Enterprises which is said to have been approved by Supreme Court in Dillip N. Shroff. However, Dillip N. Shroff has been" held to be not laying down good law in Dharmendra Textiles. Dharmendra Textiles is explained by Supreme Court in Rajasthan Spinning and Weav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (i) Samunder Bhan Sadh v. CIT [1991] 188 ITR 638 of the Hon'ble Allahabad High Court and (ii) Vidya Sagar Oswal v. CIT [1977] l08 ITR 861 of the Hon'ble Punjab Haryana High Court. 9.2 In addition to the case laws referred to by the Ld. DR, I observe that in the following cases (i) Dy. CIT v. Glamour Restaurant [2004] 2 SOT 366 Mum.) the ITAT has held as under: "The fact that the assessee purported to file a "revised return " after its coming to know that the Revenue authorities had information in possession regarding concealed income of the assessee which had not been shown in the original return would not absolve the assessee from culpability under s. 271(1)(c). Since at the time of filing the original return the assessee must be taken to have been aware of its having earned much more income as was declared in the original return, but had nevertheless omitted to disclose the huge income in the original return, the second return filed by the assessee cannot be regarded as a "revised return" filed under s. 139(5) because there was no discovery by the assessee of any omission or wrong statement having been made by it by inadvertence in the original return. Therefore, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the matter it was held that no penalty can be imposed on the basis of the returns filed after the date of the search, pursuant to declaration under section 132(4), in which additional income was shown by the assessee though such returns related to earlier assessment years. To the same effect is the judgment of the Rajasthan High Court in Kanhaiyalal (supra). In fact, in this case the High Court has observed that it is not merely the right of the assessee to file returns for the earlier assessment years after the date of the search pursuant to declarations made under section 132(4) but it is his obligation to do so and the immunity conferred by Explanation 5(2) cannot be taken away or watered down. The view taken by the Madras High Court in S.D.V. Chandru's case (supra) has been noticed by the Ahmedabad Bench of the Tribunal in the group case of Rupesh Bholidas Patel (supra) but the Bench has preferred to follow the judgment of the Bombay High Court in the case of Sheraton Apparels (supra), a decision which has also been followed by the learned AM in the present appeals. The learned AM has also referred to the order of the Tribunal in the group case of Rupesh Bholidas Patel (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the expiry of time prescribed in clause (a) or (b) of section 139(1) and specifies in the statement the manner in which such income has been derived and pays the taxes that are due thereon, no penalty shall be leviable. " (pages 38 39of 162 ITR St.). The above circular explaining the amendment shows that the benefit of immunity conferred by the Explanation 5(2), as amended by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 with effect from 10-9-1986, is confined to the return for the year in respect of which the previous year is yet to end or even though ended, the time for filing the return under section .139(1) is yet to expire. In the present case, the search took place on 4-9-2003. In respect of the assessment year 2003-04, for which the previous year would have ended on 31-3-2003, the return under section 139(1) would be due latest by 31-10-2003. In respect of all the earlier years, needless to add, the due dates for filing returns under section 139(1) would have ended much earlier. Returns were filed by the assessees after the search, in response to notices issued under section 153A on 31-5-2004. The additional income declared in these returns d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation), Kanpur and he has informed that there is no shop in the name of Shradha Fashions at the address 49/39, 1st floor, Generalganj, Kanpur - 1 and that one person by name Shri V.P. Bansal resides at this address. During this hearing the assessee's representative was also confronted with the fact that the cheques issued by M/s Ritwika Creations (proprietary concern of the assessee) to Shradha Fashions were deposited in Account No.CA-7001777 of Bank of Punjab, Dalhousie Branch, Kolkata which is operated by Suresh Kumar Agarwal and he withdraws cash from his Bank account. A copy of this order sheet was also handed over to the assessee on 22.5.06 itself. 4. Thereafter the Assessing Officer issued another notice U/s. 142(1) and detailed questionnaire dated 22.05.2006 (page nos. 3 to 16 of Paper Book filed by Sr. DR) asking explanation in detail referring to various pages and entries in the seized documents RI/1, RI/2, RI/3, RI/4, RI75, RI/6, RI/7, RI/8, Rl/9, Rl/10, RI/11, RI/12, RI/13, RI/14, Rl/15, RI/17, RI/18, RI/19 and RI/20. Once again the assessee was asked to explain as to why the cash payment of Rs.3,14,66,552/- should not be treated as unexplained expenditure U/s.69C o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 25,84,000/- u/s 271 (1 )(c) of I.T. Act, 1961." 11. The Ld. AR again placed reliance on the orders of the Ld. CIT(A) for this assessment year also. 12. Since the Ld. DR was able to distinguish the facts of this year, in comparison to the previous year, I am of the view that the Ld. CIT(A) is not justified to delete the penalty based on the finding of the earlier assessment year 2004-05. However, since I have already expressed my opinion that even for assessment year 2004-05, the Ld. CIT(A) is not justified in deleting the penalty. For this year also, I am of the view that the same observation is applicable. Therefore, I set aside the order of the Ld. CIT(A) and restore that of the AO in this appeal also. IT(SS) No. 89/Kol./2008 for the Assessment Year 2004-05 13. Since, the facts of this case are similar to that of the one which are narrated in ITA No.876/Kol/08 and the submissions of both the Representatives are the same, I hold that the Ld. CIT(A) is not justified in deleting the penalty. Therefore, I set aside the order of the Ld. CIT(A) and restore that of the AO in this appeal also. 14. In the result, all the three departmental appeals are allowed THIRD M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the names of respective parties in the books, but ultimately all the cheques of the value of about Rs. 3.17 crores were deposited in the bank account of the assessee's husband, Sri Suresh Kr. Agarwal. The assessee stated that she used to issue cheques for payments to be made to karigars and the cheques were handed over to her husband for depositing in his bank account and making payments to the karigars by withdrawing the money from his bank account. The A.O. completed the assessment by taking gross profit @ 15% declared by the assessee in her revised return and initiated penalty proceeding u/s. 271(1)(c) of the Act. During the course of penalty proceedings, the assessee stated that after she received photo copies of seized documents, revised return declaring additional income was filed to buy peace and to avoid litigation. The A.O., however, did not accept the above explanation of the assessee by observing that the assessee has surrendered the higher income in the revised return only after the investigation was carried out by the department and after the assessee was confronted with the same. He, therefore, levied penalty of Rs.14,61,678/-u/s. 271(1)(c) of the Act, which was equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above issue on which penalty was imposed were supplied to the assessee. The A.O. recorded in this order sheet that the assessee explained that on the basis of the seized documents, the assessee would file revised return of income showing higher gross profit. The order sheet dated 15th December, 2006 also shows that the A.O. recorded in the order sheet that the xerox copies of the seized documents are supplied to the assessee on the aforesaid issue. Thus the reply of the assessee is clearly supported by the order sheets of the A.O. that the photo copies of the seized documents on the above issues were made available to the assessee only in December, 2006. The A.O. in the letter dated 13th December, 2006 on the above issue directed the assessee as to why book results of the assessee should not be rejected and why the same purchases should not be treated as undisclosed expenditure of the assessee. The learned CIT(A) specifically noted in the impugned order that seized documents RC 1 to RC 10 and RI/1 to RI/21 are related to the transactions in question. It would, therefore, prove that complete seized papers were not supplied to the assessee at the time of issuing notice u/s 153A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sagreed with the said view of Ld. J.M. and proposed a separate order. The Ld. A.M. has extensively discussed the submissions made by the ld. Departmental Representative and case laws relied upon by him as also the submissions made on behalf of the assessee at pages 3 to 10 of his proposed order. After hearing the parties and taking into considerations the following decisions, viz. Samunder Bhan Sadh's case (supra) Vidya Sagar Oswal's case (supra) Glamour Restaurant's case (supra) Kirit Dahyabhai Patel's case (supra) the ld. A.M. held that levy of penalty under section 271(1)(c) was justified. He, therefore, in his proposed order has set aside the order of ld. C.I.T.(A) and restored that of the A.O. with the following observations :- "After hearing the rival submissions and on careful perusal of the materials available on record, it is observed that the assessee was subjected to search under section 132 of the I.T. Act on 24.01.2005 and after filing the return in response to notice under section 153A(1)(a) of the I.T. Act. When the AO has confronted the assessee, the outcome of the enquiries made by him on the basis of the seized document, the assessee has filed a revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses detected due to search operation. He submitted that the burden lies on the assessee to establish that the additional income that had not been disclosed was not due to fraud or neglect and he relied on the decisions in the cases of C. Ananthan Chettiar (supra) and Kamal Chand Jain (supra) He further submitted that the ld. J.M. in his proposed order did not consider the decisions relied upon by the department in proper perspective; and the decisions cited by ld. J.M. are distinguishable on facts. The ld. Departmental Representative referred to pages 28 to 30 of the department's paper book, which are copies of statement recorded u/s. 132(4) of the Act from Sri Suresh Kr. Agarwal, husband of the assessee, during the course of search operation and referring to questions No. 5 11 and answers thereof, he pointed out that Sri Suresh Kr. Agarwal has admitted that the entries in the books of account marked RI/20 are undisclosed in nature and he will be filing a disclosure petition covering all unaccounted sales and purchases. However, no such disclosure was made. In this connection, the ld. Departmental Representative relied on the decisions in the cases of CIT v. Handloom Emporium [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, submitted that Explanation 1 of sec. 271(1)(c) of the Act shall not be applicable to the case of the assessee, because assessee's explanation was not found to be false. The ld. counsel further submitted that the assessee on getting copies of seized documents filed revised return showing higher income and as per sec. 139(5) of the Act, revised return can be furnished at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. He, therefore, submitted that on the facts and circumstances of the case, conditions contained in sec. 271(1)(c) of the Act for levying penalty are not satisfied in the case of the assessee and the ld. J.M. has rightly deleted the penalty which should be upheld and proposed order of ld. A.M. be quashed. 9. In his rejoinder, the ld. Departmental Representative submitted that there was no dispute to the fact that concealment was already detected and only quantification of the extent of concealment was pending. In this connection, he has referred to paras 1 2 of show-cause notice dated 13/12/2006 of the A.O. placed at page-8 of the assessee's paper book whereby t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment and after she was confronted with the same. The A.O., however, completed the assessment on the basis of revised return declaring higher gross profit at 15%. He also found the case of the assessee to be a good case for imposition of penalty u/s. 271(1)(c) of the Act. Penalty of Rs.14,61,678/- was thus levied by the A.O. u/s. 271(1)(c) of the Act, which was cancelled by the ld. C.I.T.(A). 11. On the aforesaid admitted facts, it is evident that some incriminating documents were found and impounded during search operation conducted u/s. 132 of the Act at the assessee's premises. The assessee filed her return of income u/s. 139(1) of the Act before the search took place declaring income of Rs.2,11,297/- and gross profit at 6.93%. Xerox copies of seized documents were made available to the assessee in December, 2005. In response to notice issued u/s. 153A of the Act, the assessee filed return on 5/5/2006 showing income of Rs.2,11,297/- without disclosing any unaccounted income. I further observe that there was a gap of about 12 months between supply of Xerox copies of seized documents in December, 2005 and asking for further copies of some other seized documents on 7/12/2006 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alauddin sons (v) Choudhury Textiles (vi) Vichitra Handlooms (vii) Navrang Sarees (viii) Pannalal Sarees (P) Ltd. (ix) Rajmal Paraskumar Sarees (P) Ltd. (x) Shree Saree Centre (xi) Anuparn sarees, (xii) Cherry Fab Trade (P) Ltd. (xiii) Jagriti Mercantile (P) Ltd., (xiv) Pushpanjali Fashions, (xv) United Sales Corporation and (xvi) Om Shanti Textiles (xvii) Geetanjali Saree House, (xviiii) Vaishali-Jaipur and (xix) Tirupati Agencies are shown. In the books of M/s Ritwika Creation, payments by way of cheques to these parties are shown. However, on enquiries (from bank other sources), it was found that in realty no payment was made to above parties. Instead, cheques were deposited in the account number 61CA7001777 of Bank of Punjab Ltd. (now Centurion Bank of Punjab Ltd.) which is maintained by Shri Suresh Kumar Agarwal. In view of this you are required to give explanation as to why the claim of purchase from above mentioned parties should not be treated as bogus. Further you are also required to explain as to why the books of account of M/s Ritwika Creation should not be rejected. 2.1 In several submissions made on various dates by your husband, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f documents are inseparable further establishes that both activities were carried out by M/s Ritwika Creation. 2.2 In view of reasons mentioned in para 2.1, you are requested to explain as to why expenses as per RC/l to RC/10, RI/1 RI/2, RI/4 to RI/15 and RI/20 should not be treated as your undisclosed expenditure." 13. On perusal of the above show cause notice, it is evident that not only during the course of search, several incriminating documents were found and seized but during the course of assessment proceedings also, the AO made thorough investigation. As a result of investigation, it was noticed that the assessee has shown to have made payment by cheques for purchase to 19 parties. However, on inquiry from the bank and other sources it was detected by the AO that the payments were not made to the above parties. On the other hand, the cheques were deposited in the bank account which belonged to Shri Sureshkumar Agrawal, husband of the assessee. Thus, it is evident that the books of account which were claimed to have been audited were not correct. In the books of account, the payments have been shown in the names of various parties and in fact no cheques were issued to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque and debited in the assessee's books of account as such was also false because such payments were encashed by the assessee's husband. When all these findings were confronted to the assessee then only the assessee furnished the revised return disclosing higher income. Therefore, the contention of the assessee that the revised return was furnished before the detection by the department and was made to buy peace cannot be accepted. The revised return was furnished by the assessee only when after thorough investigation the AO established that the seized documents which recorded various expenditure were belonging to the assessee and also that the assessee's books of account is incorrect and false and when result of the investigation was confronted to the assessee, then only the assessee furnished the revised return. 14. Identical issue has been considered by Hon'ble Madras High Court in the case of C. Ananthan Chettiar (supra). In that case, the department in a search and seizure operation conducted in the assessee's shop and residence, seized cash, jewellery and certain documents. Thereafter, the assessee filed a revised return for the A.Y. 1986-87 disclosing additional income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly clear that both the aforesaid sections meet two different situations. section 139(5) proceeds on the basis of omission or wrong statement which had crept into the original return being inadvertent and unintentional, whereas section 271(1)(c) proceeds on the basis of concealment being deliberate and the furnishing of inaccurate particulars being wilful and intentional. In the instant case, the Tribunal, while allowing the appeal by setting aside the order of penalty, proceeded on the basis that the assessee disclosed the additional amount voluntarily in call of amnesty scheme and that such disclosure of income and offering the same for tax may be for various reasons. Such voluntary disclosure cannot be said to be concealed income of the assessee. The Tribunal further proceeded on the basis that the Revenue has to prove mens rea on the part of the assessee by adducing evidence. The Tribunal has totaly misconstrued the provisions of the Act and the finding is wholly perverse in law. The Tribunal has not considered the effect of Expln. 5 to section 271(1)(c). The assessee did not act voluntarily and bona fidely in filing the revised return and offering the additional income. Admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(SS)A.No. 89 (Kol) of 2008 (A.Y. 2004-05) Smt. Monika Devi Agarwal : 18. Both the parties have stated that the facts of the case of this assessee are identical to those of Smt. Sushma Devi Agarwal for assessment year 2004-05 vide ITA No. 876 (Kol)/2008. In this case penalty of Rs.13,43,999/- has been levied u/s. 271(1)(c) of the Act, which was deleted by the ld. C.I.T.(A). The ld. J.M. in his proposed order has upheld the order of ld. C.I.T.(A), whereas the ld. A.M. in his proposed order disagreeing with the ld. J.M. has upheld the penalty levied by the A.O. u/s. 271(1)(c) of the Act. For the reasons discussed above while dealing with the case of Smt. Sushma Devi Agarwal for assessment year 2004-05 in ITA No. 876 (Kol)/2008, I concur with the conclusion of ld. A.M. in his proposed order. 19. The matter will now go to the regular Bench for passing the order as per the majority view. ORDER C.D. Rao, Accountant Member - Since there was a difference of opinion between the Ld. Members constituting "C" Bench of I.T.A.T., Kolkata with regard to the following issue, the matter was referred to Third Member u/s.255(4) of I.T. Act, 1961 for his opinion:- "Whether, on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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