TMI Blog2013 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed the income on exactly the same amount. There is no reference to any investigation or adverse material. Thus, the assessee’s offer is to be held as voluntary surrender, accepted by the department accordingly. There being no adverse material available on record or any reliance thereon, the observations of assessing officer and CIT(A) about concealment or inaccurate particulars are not borne from the record and the same are contradictory to each other - Decided in favour of assessee. - ITA No. 871/Del/2013 - - - Dated:- 30-8-2013 - Shri R. P. Tolani And Shri B. C. Meena , JJ. For the Appellant: Shri Ashwani Taneja Adv. For the Respondent: Shri Sameer Sharma Sr. DR ORDER Per R. P. Tolani , J.M: This is assessee s appeal against CIT(A) s order dated 24-12-2012, partly sustaining the penalty @ 150% of the tax sought to be evaded as against 200% imposed by the assessing officer at ₹ 47,96,000/- u/s 271(1)(c) of the Income-tax Act, 1961, relating to A.Y. 2009-10. 2. Brief facts are: For A.Y. 2009-10, the assessee filed return declaring income of ₹ 4,35,757/- on 30-9-2009. During the course of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of her income and the penalty was imposed at ₹ 47,96,000/- i.e. @ 200%. 2.2. Aggrieved, assessee preferred first appeal before CIT(A) where following effective submissions were made: (i) Assessee maintains complete books of accounts, no defects are found therein by AO. As the assessing officer queried during course of the assessment proceedings about cash payments made to farmers, the assessee in order to put the enquiries at rest voluntarily offered the taxable income at ₹ 75 lacs as against declared income of ₹ 4,35,757/-. (ii) In the assessment order, assessing officer himself observed that assessee s books are duly audited and balance sheet and entries therein are properly made and they do not require any adverse comment. The query was only in respect of the cash payments made by the assessee to the farmers from whose fields the earth/ soil was excavated for onward sale. (iii) The numbers of trucks/ transport vehicle supplied to the contractors for filling purpose are not objected. Thus, the number of transport vehicles sold are ascertainable as correspondingly the same number of trucks represent the number purchased from farmers. (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (All.) (iv) Though finding in assessment proceedings are not conclusive but it can be used in penalty proceedings as an evidence before penalty is imposed Hari Shankar Goptal Hari Vs. CIT 97 ITR 716 (All.) and various other judgments cited in para 6.2.3 of CIT(A) s order. (v) In case of best judgment assessment, the burden is on the assesse and where no explanation is furnished, there is a failure to discharge onus and the penalty will be attracted CIT Vs. Ajay Textiles 224 ITR 98 (P H); Jain Bros Vs. CIT 251 ITR 302 (Del.). (vi) Mere offering of explanation would not absolve the assessee from levy of penalty and the same is to be substantiated by cogent and reliable evidence CIT Vs. Lal Chand Tirath Ram 225 ITR 675 2.6. CIT (A) relied on various other case laws which are mentioned in the order. After these observations, CIT (A) held that in the present case (i) The admission of enhancement of income obviously came forward as a result of inquiries and investigations by the assessing officer and assessee s fear that the true income soon or later will be detected by the department. Therefore, the surrender was a result of inquiries and investigations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned by A.O. that assessee has not paid the tax on surrendered amount even till now, cannot be brushed aside. Non-payment of tax, inspite of admitted surrender during the assessment, tentamounts to an element of non co-operation, making the behaviour of the assessee, non co-operative and suspicious to some extent. Weighing both the sides, I am of the view that it would be fair if penalty is imposed @ 150% of the tax evaded. To that extent A.O. is directed to modify the quantum of penalty. Aggrieved, assessee is before us. 3. Learned counsel for the assessee contends as under: (i) From assessment order, it clearly emerges that assessee s books of accounts were otherwise acceptable to assessing officer, which were examined and no adverse comment has been offered. (ii) The imposition of penalty depends on the peculiar facts of each case. In this case the peculiar facts of the case are that assessing officer asked the assessee to file the details about the cash payments made to the farmers. Assessee visualized the difficulties as the payments were made before 31-3-2009 to farmers. The assessee was asked this query on 21-12-2011 to give the details of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the proof of purchase of sale of earth soil from the farmers for which the payments were made in cash. Assessee realized that the farmers may not come forward because of various reasons i.e. having received cash they will not feel any responsibility towards assessee; the farmers are hesitant to appear before any officer including Income-tax Office and therefore the compliance sought will be very difficult for the assessee to meet with. The assesse surrendered the amount with clear stipulation that the income of ₹ 75 lacs was being offered to buy peace and to put an end to inquiries and as a gesture of cooperation with the department. Assessee further made a clear condition that offer is subject to the fact that no penalty will be imposed on the assessee. (viii) Para 3.1 of the assessment order does not refer to any investigation but to a query dated 21-12-2011 i.e. 9 days prior to the assessment to file evidence by 23-12-2011. Thus, there is no merit in the assumption made by the CIT(A) that the assessee s offer came after the investigation by the department. Under these facts and circumstances, the assessee s surrender with its conditions is clearly a voluntary offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sarv Prakash Kapoor Vs. ACIT another (ITA nos. 107 195/Agra/2011): 9. We may note further that the A.O. in the penalty order has recorded his satisfaction that the assessee has deliberately concealed the particulars of income and furnished inaccurate particulars of income in respect of the loan amount, therefore, the penalty is leviable under Section 271(1)(c) read with Explanation (1) to the above section. From such findings recorded by the A.O. and inference drawn, it is evident that Assessing officer did not give clear cut finding in the penalty order, nor there was any such findings in the impugned order as to whether there was concealment of income or furnishing of inaccurate particulars of income by assessee. 10. From the language of Section 271(1)(c) of the Act it was incumbent upon the Assessing officer or learned CIT(A) to come to a positive finding as to whether there was concealment of the income by the assessee or whether any inaccurate particulars of such income have been furnished by the assessee. In the absence of such clear cut finding, the penalty order passed by the A.O. was liable to be set aside. This view is supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel pleads that from the above case laws it is clear that merely because assessee has surrendered the income it does not automatically mean that it was a concealed income or income for which inaccurate particulars were furnished. Assessee s explanation is to be objective and is to be ascertained by assessing officer/ CIT(A), whether the same is bona fide or not. Merely because an addition is made, therefore, penalty cannot be imposed on this basis alone. A finding about additional income or surrendered income may be a relevant evidence in the penalty proceedings but that cannot be a conclusive evidence to impose the penalty, more so when in the assessee s case assessing officer himself in assessment order has recorded that assessee voluntarily offered the income. From the assessment order it clearly emerges that the query was raised at the fag end of assessment on 21-12-2011, to be complied within two days on 23-12-2011 and assessee being unable to comply with the query, to end the litigation; to cooperate with the department; and to buy peace of mind, surrendered a round figure of income of ₹ 75 lacs on 29-12-2011. The assessing officer passed the assessment order on 31- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such claim escaped the attention of the auditors. (iii) The ITAT did not record a finding that the assessee s explanation was bona fide. (iv) The order of ITAT suffers from _____ perversity as it cannot be accepted as general proposition that no person would ever claim the amount of income tax as deduction with a view to avoid payment of tax. Thus, in peculiar facts, the penalty was imposed. 5.1. In assessee s case, the offer is bona fidely accepted by assessing officer. The assessee is not a company but a lady contractor and does not have the help of auditors etc. Lower authorities have failed to consider the crucial and relevant facts and on contradictory findings and assumptions, the penalty has been imposed. 5.2. Hon ble Delhi High Court in the case of CIT Vs. Societex 24 Taxman.com 309 (Del), after considering the judgments of Zoom Communication; Escort Finance; and Reliance Petro Products, upheld the finding of the Tribunal that the mistake and explanation of the assessee was bona fide. Thus the Zoom Communication also does not lay down any general proposition of law and every case of penalty is discretely to be considered in the peculiar facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts about voluntary surrender and stipulation about condition of non-imposition of penalty has been highlighted. Similarly, the voluntary offer, being given at the fag end of assessment proceedings also makes the assessee s case distinguishable. In the absence of any discernable investigation by assessing officer and surrender by the assessee being not in respect of concealed income as projected by CIT(A), we are unable to uphold this finding and rely on the case laws cited by the CIT(A) and ld. CIT(DR). 6.5. It is a settled law that penalty proceedings are separate and independent and a finding in the assessment order may be an evidence which can be relied but it cannot be conclusive by itself for imposition of penalty. Besides in this case the finding in assessment order is not of concealed income but that of a voluntary surrender and hence cannot be made a sole basis for imposing penalty. Thus, the finding in the assessment order itself does not militate against the stand taken by the assessee that it was a voluntary surrender. In view of the above facts and circumstances we have no hesitation to hold that the assessee made this surrender offer voluntary in peculiar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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