TMI Blog2013 (9) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... e out of past savings. Reliance has been placed upon the Hon’ble Tribunal decision in the case of Deputy CIT v. Dr. Satish B. Gupta[2010 (8) TMI 641 - ITAT, AHMEDABAD], wherein it has been held that question of considering whether the assessee is liable for action under section 271(1)(c) would arise only when return of income is scrutinised by the Assessing Officer and he finds some more items of income or additional income over and above what is declared in the return. Also, assessee would be liable for action under section 271(1)(c) in respect of such items only which are discovered by the Assessing Officer on the scrutiny of return of income or after carrying out investigation and discovering some more items of income not found declared or mentioned in the return of income – Following the above judgment and various other judgments cited by assessee, penalty is deleted – Decided in favor of Assessee. - I.T.A. No. 723/Ahd/2012, I.T.A. No. 724/Ahd/2012, I.T.A. No. 725/Ahd/2012 - - - Dated:- 12-10-2012 - Order The order of the Bench was delivered by A. K. Garodia (Accountant Member).-All these three appeals are filed by there different assessees for the same assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, we reproduce the facts of the case from I. T. A. No. 723/Ahd/2012. The brief facts till the assessment stage are noted by the learned Commissioner of Income-tax (Appeals) in paragraph 5.1 of his order which is reproduced below for the sake of ready reference : 5.1 Observation of the Assessing Officer:During the course of assessment proceedings, an information was received by the Additional Director of Income-tax (Headquarters) regarding the suspicious transaction undertaken by the assessee, having invested an amount of ₹ 5 lakhs in Kotak Mahindra Old Mutual Life Insurance Ltd. in the month of March, 2008 through cash and multiple demand drafts each denominated for ₹ 50,000. The inquiry was conducted by the Additional Director of Income-tax (Investigation), Valsad and statement under section 131 of the Act was recorded on November 28, 2008, in which the assessee confessed of having invested ₹ 5 lakhs in Kotak Mahindra Old Life Insurance Ltd. During the inquiry proceedings, he confessed in his statement and declared additional income of ₹ 5 lakhs by furnishing the revised return of income. The Assessing Officer was not satisfied with this and initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a copy of the notices issued under section 131 on November 20, 2008 in all these three cases. We have considered the rival submissions, perused the material on record and have gone though the orders of the authorities below. We find that the revised return of income was filed by the assessee on November 24, 2008 and notice under section 131 of the Income tax Act, 1961 was issued by the Deputy Director of Income-tax, Valsad on November 20, 2008 in which the assessee was asked to appear personally before him on November 24, 2008. The contents of this notice issued by the Deputy Director of Income-tax (Investigation) under section 131 is reproduced below: Summons to assessee/witness under section 131 of the Incometax Act, 1961. Dated : November 20, 2008 To Shri Jaysukhlal Maganlal Parmar White House Medical Centre Beachar Road Near Maonghabhai Hall Valsad-396001 Whereas your attendance is required in connection with the proceedings under the Income-tax Act, 1961 in your case, you are hereby requested personally to attend my office at Room No. 525, Aayakar Bhavan, Majuragate, Surat on the 24th day of November 2008 at 12.30 P.M. to give evidence and/or to prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of Income-tax (Investigation) under section 131 but the same was filed after the receipt of notice under section 131 asking the assessee to produce the copies of return of income and enclosures along with books, etc. In the light of these facts, we examine the applicability of various judgments cited by the learned authorised representative: Reliance was placed by the learned authorised representative on the Tribunal decision rendered in the case of Deputy CIT v. Dr. Satish B. Gupta [2010] 42 SOT 48 (Ahd.). The facts of that case are that a survey under section 133A was carried out on September 22, 2006 at the premises of the assessee, who is a practicing doctor, and during the course of survey, the assessee disclosed unaccounted income of ₹ 32.85 lakhs and thereafter, the assessee filed the return of income declaring the total income of ₹ 37.57 lakhs which included unaccounted income of ₹ 32 lakhs as declared by the assessee during the course of survey. The assessment was finally completed at a figure of ₹ 38,12,360 and the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act in respect of a sum of ₹ 32.85 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying out survey under section 133A does not create any liability against the assessee which is created only through assessment proceedings or penalty proceedings. Therefore, the learned Departmental representative is incorrect in his submission that survey being a proceedings and the Assessing Officer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able if addition is deleted. The hon'ble Punjab and Haryana High Court in CIT v. Parkash 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'ble High Court has held as under (headnote): 'A search showed that the assessee had received amount of ₹ 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 in fact been paid and the claim for depreciation could not be allowed as the machinery was not in the possession of the assessee during physical verification. The Commissioner (Appeals) upheld the addition in respect of receipts shown to have been made from S but deleted the addition towards lease rent and depreciation allowance, taking into account additional evidence led by the assessee. On further appeal, the Tribunal upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o penalty would survive if addition did not survive. In CIT v. S. S. K. G. Arthanariswamy Chettiar [1982] 136 ITR 145 (Mad) the hon'ble 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 v. CIT [1980] 121 ITR 373 (MP) it was held that an assessee incurs penalty under section 271(1)(c) if he files inaccurate particulars or his income in the return or conceals the particulars of income therein. There can be no concealment until there is a duty to disclose. The duty to disclose particulars of income arises at the time when the assessee furnishes return of income under section 139 and if in filing his return he conceals the particulars of income or furnishes inaccurate particulars he incurs penalty under section 271(1)(c). In the case of Patna Guinea House v. CIT [2000] 243 ITR 274 (Patna) it is held that there is no case for levy of penalty if income is disclosed in the return of income but the assessee has refused to disclose source of income. In that case, the assessee declared additional income in the course of survey and thereafter, included the same in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, it is not in dispute that the revised return was filed well in time as permitted in law and the same is valid. In our considered opinion, the facts of the present case are even better than the case cited by the learned authorised representative as noted above and therefore, by following this Tribunal decision, penalty in the present case is deleted. Now, we consider the applicability of various judgment cited by the learned Departmental representative. The first judgment cited by the learned Departmental representative is the judgment of the hon'ble Gauhati High Court rendered in the case of F. C. Agarwal v. CIT as reported in [1976] 102 ITR 408 (Gauhati), which is confirmed by the hon'ble apex court as per the judgment reported in G. C. Agarwal v. CIT [1990] 186 ITR 571 (SC). In that case also, the assessee filed revised return of income under section 139(5) of the Income-tax Act, 1961 and declared additional income as compared to the original return of income filed under section 139(1) of the Income-tax Act, 1961 and under these facts, the penalty was imposed by the Assessing Officer which was confirmed by the Tribunal as well as by the hon'ble High Court also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fact was also noted by the hon'ble High Court that revised return was filed by the assessee after the Income-tax Officer had confronted with the information in his possession regarding the impugned receipt and therefore, it cannot be regarded as revised return filed under section 139(5) because there was no discovery by the assessee of any omission or wrong statement having been made by him by inadvertence in the original return. In the present case, the facts are different. In the present case, there is no definite information in the possession of the Department regarding any additional income of the assessee and on issuance of notice under section 131 of the Income-tax Act, 1961 by the Deputy Director of Income-tax (Investigation), the assessee noted that his investments were made out of past saving but since he could not substantiate this explanation, he was advised by his chartered accountant to file revised return of income by declaring additional income. In our considered opinion, the facts of the present case are different and, therefore, this judgment is also not applicable in the present case. The third judgment cited by the learned Departmental representative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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