TMI Blog2012 (10) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... o be concluded that the surrender was not at all voluntary - A very heavy onus was placed on the assessee to explain the difference between the assessed income and returned income and the assessee in the instant case did not discharge the said onus. - no hesitation in upholding the order of the CIT(A) in confirming the penalty imposed by the AO under s. 271(1)(c) - against assessee. - ITA No. 918/Del/2012 - - - Dated:- 1-10-2012 - SHRI HARI OM MARATHA, SHRI A.N. PAHUJA, JJ. Assessee by Shri Raj Kumar Gupta, AR Revenue by Shri C.B. Singh, DR O R D E R A.N. Pahuja:- This appeal filed on 24.02.2012 by the assessee against an order dated 13th February, 2012 of the ld. CIT(A)-XXIV, New Delhi, raises the following grounds:- 1. That under the facts and circumstances, the lower authorities erred in law and on merits in levying and sustaining penalty of ₹ 48,413/-/Rs.45,073/- u/s 271(1)(c) of the I.T Act. 2. Facts, in brief, as per relevant orders are that return declaring income of ₹ 7,22,300/- for the AY 2007-08 filed on 22.10.2007 by the assessee, engaged in the business of manufacturing and wholesale trading of hydraulic, mechanical pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecoming time barred, the assessee surrendered the amount to purchase peace of mind. However, this surrender was made subject to no penalty. In these circumstances, the ld.AR pleaded that there was no concealment. However, the AO did not accept the submissions of the assessee on the ground that aforesaid submissions of the assessee were devoid of any merit. Accordingly, while relying upon explanation 1 to sec. 271(1)(c) of the Act, the AO imposed a penalty of ₹ 48,413/- @100% tax sought to be evaded on the aforesaid amount of ₹ 1,47,320/-. 4. On appeal, the ld. CIT(A) upheld the levy of penalty as under:- 4.2 As regards ground Nos. 2 3, the issue of recording of satisfaction of concealment in the assessment order as well as the issue that the penalty order is without jurisdiction, have, been adequately dealt with by the Assessing Officer in the body of penalty order itself. I have carefully considered the contentions made by the appellant as well as the penalty order passed by the AO. It is absolutely clear from the penalty order that the appellant surrendered the amounts standing in the name of two creditors only after detection of concealment by the, Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is of any support to the appellant for two reasons: (a) The appellant did not have any evidence or corroborating proof to explain the discrepancies in his books of accounts with regards to these two creditors and (b) The AO was in possession of independent material gathered by him u/s. 133(6) of the Act which conclusively proved concealment and filing of inaccurate particulars by the appellant. When the appellant found himself totally cornered by the AO, he indulged in misplaced magnanimity and surrendered the amount with the condition of no penalty. Unfortunately, the benevolent action of the appellant was too late. In my opinion, the case of the appellant is clearly covered by the judgments pronounced by Hon'ble Supreme Court of India in the cases of Dilip N Shroff Vs. Joint CIT (2007) 291 ITR 519 (SC) and Union of India Vs. Dharamendra Textile Processors (2008) 306 ITR 277 (SC). Therefore, these two grounds of appeal taken by the appellant are dismissed. 5. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. AR on behalf of the assessee while carrying us through the impugned order contended that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he may direct that such person shall pay by way of penalty,- (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income Explanation 1.- Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Deputy Commissioner (Appeals) or the Commissioner (Appeals) to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of his income or furnished inaccurate particulars of such income. In this context, Hon ble Gujrat High Court in the case of AM Shah Co. vs. CIT, 238 ITR 415(Guj) observed that;- there cannot be a straight jacket formula for detect ion of these defaults of concealment or of furnishing inaccurate particulars of income and indeed concealment of particulars of income and inaccurate particulars of income may at times overlap, as for example when half of the income under a particular head is not at all disclosed, that would be concealed to that extent while the remaining half which is in fact disclosed would, not being his complete disclosure amount to inaccurate particulars of income as regards that constituent item of the return. By the very nature of the assessment proceedings the ITO while ascertaining the total income chargeable to tax would be in a posit ion to detect the specific or definite particulars of income concealed or of which false particulars are furnished. Where in the constituents of income returned, such specific or definite particulars of income are detected as concealed, then even in the total income figure to that extent they reflect, it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment proceedings are certainly relevant in the penalty proceedings. In the absence of any fresh material during the course of penalty proceedings, specially when the assessee failed to establish that the aforesaid findings of the AO during the course of assessment proceedings were based on improper facts or wrong appreciation of the facts, we are afraid that in the penalty proceedings we are unable to take a different view. The onus laid down upon the assessee to rebut the presumption raised under explanation 1 would not be discharged by any fantastic or fanciful explanation. It is not the law that any and every explanation has to be accepted. In our considered view, the provisions of clause (B) of explanation 1 to section 271(1) (c) of the Act, are clearly attracted and the assessee miserably failed to discharge the onus laid down in this explanation. In such circumstances, we have no hesitation in upholding the levy of penalty. 6.4 We find that the legal posit ion is squarely covered by the decision of the Hon ble Apex Court in K.P. Madhusudanan v. CIT [2001] 251 ITR 99,wherein, the Hon ble Court affirmed the decision of the Kerala High Court in CIT v. K.P. Madhus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The Assessing Officer is not obliged to intimate the assessee that Explanation 1 to section 271(1) (c) is proposed to be applied. The scheme of the provisions does not provide for such a requirement either directly or inferentially. In Sir Shadilal's case [1987] 168 ITR 705, what the Supreme Court observed was that there may be several reasons for which the assessee may have offered an amount for addition, but that itself is not sufficient to infer concealment. It has not laid down as a rule of general application that whenever such is the case, penalty cannot be imposed. On the contrary, in such cases also the assessee is required to discharge the burden placed by the Explanation appended to section 271(1) (c). In case an explanation is offered, the Assessing Officer is to examine it and find out whether the assessee has been able to establish that there was no concealment. Held, that, in the case at hand, no explanation worth the name was offered by the assessee. The statement made by the assessee was to the effect that hand loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances and in the light of above noted authoritative pronouncements, when the assessee failed to discharge the onus laid down upon him in terms of explanation 1 to sect ion 271(1) (c) of the Act and failed to establish the bonafide of his explanation nor even attempted to reconcile the differences in the aforesaid two accounts even during the penalty proceedings , we have no opt ion but to uphold the findings of the ld. CIT(A), confirming the levy of penalty. Even otherwise the breach of civil obligation which attracts a penalty under the provisions of an Act would immediately at tract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intent ion or not, vide Chairman, SEBI v. Shriram Mutual Fund [2006] 131 Comp Cas 591 (SC); [2006] 5 SCC 361. This view has been reiterated by the Hon ble Supreme Court in their decision dated 29.9.2008 in the case of Union of India and others Vs. Dharmendra Textile Processors and others, in civil appeal nos.10289-10303 of 2003. Blameworthiness attached to the assessee with reference to the original return cannot be avoided by accepting the addition proposed by the AO after conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment in each case on the basis of the material on the record. If on record there is incriminating material with regard to the disclosed income, the disclosure cannot be voluntary. But if the Department has no incriminating material with regard to the income disclosed, the disclosure is liable to be treated as voluntary having been made without any compulsion or constraint of exposure to adverse action by the Department. In a case where the assessee has disclosed not only the income regarding which the Department has incriminating material, but has also disclosed the income with regard to which no incriminating material was seized by the Department, the disclosure of the income with regard to which the Department has no incriminating material, is liable to be treated as voluntary. For example, if an assessee is having five accounts and the Department has incriminating material with regard to one of those accounts only, the disclosure of income relating to four accounts with regard to which the Department has no incriminating material, is voluntary, because it was made without any constraint or compulsion, even though the disclosure of the income relating to the account regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w declared by the Court in the case of Sir Shadilal Sugar General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) was no longer applicable by reason of the addition of the Explanation to section 271. That Explanation casts a burden on the assessee to show that the additional income that had not been disclosed was not due to fraud or neglect. In this case, the assessee offered no explanation at all except to assert that he disclosed the income only to buy peace with the Department and what was disclosed, in fact, was additional income. The reason for not having disclosed the income earlier was not stated. In these circumstances, the ITAT was in error in setting aside the penalty. The question is answered in favour of the Revenue and against the assessee, in the light of the later decision of the three judge Bench of the Supreme Court in the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99. 8. Hon ble jurisdictional High Court in Jaswant Rai Another vs. CBDT, 133 ITR 19 (Del.) held that the subsequent act of disclosure of an income would not make any difference and it cannot be said that the assessee had not concealed particulars of their income or had not furnished inaccu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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