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TMI Blog2014 (2) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... as also a survey u/s. 133A of the Act conducted in the case of E. Krishnappa on 11.11.2009. Consequent to survey in the case of E. Krishnappa, the assessee and E. Krishnappa declared income from joint venture of developing a layout known as 'Singapore Layout'. The assessee declared his share of income from the joint venture of Rs.81,36,400. The assessee had also declared income of Rs.88,00,098 from business. The assessee in all declared income for the A.Y. 2008-09 of a sum of Rs.1,76,94,888, which apart from business income stated above also included an amount of Rs.7,57,401 as income from property and Rs.979 as income from other sources. Return of income was filed by the assessee on 09.06.2010. Since it was a belated return, the same was lodged. To regularize the return filed by the assessee, a notice u/s. 148 was issued. The assessee through his AR by letter dated 16.09.2010, pleaded that the return filed on 09.06.2010 may be treated as return filed in response to notice u/s. 148 of the Act. Thereafter, the AO referred to the survey and the outcome of the survey, accepted the income declared by the assessee in the return of income. The following are the relevant observations of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 499 & 450/Bang/2012 dated 22.2.2013. Reliance was also placed on the decision of the Hon'ble Delhi High Court in the case of CIT v. SAS Pharmaceuticals 335 ITR 259 (Del) wherein on identical facts of the case, the Hon'ble Delhi High Court took the view that penalty u/s.271(1)(c) of the Act, cannot be imposed. 7. We have considered the rival submissions. As far as imposition of penalty on the income offered in the return of income by the Assessee is concerned, we are of the view that there cannot be any penalty on income which is declared in a return of income, on the facts and circumstances of the present case. Penalty u/s.271(1)( c) of the Act is imposed for "concealing particulars of income or furnishing inaccurate particulars of income". When an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inaccurate particulars of income". The starting point of determining concealment for imposing penalty is the return of income. If the return of income declares income which is ultimately brought to tax there can be no complaint by the revenue that the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in sub-section (1) of section 153 a return of his income which he is required to furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989, and, until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of sub-section (1) of section 142 or section 148 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148. Explanation 5 - Where in the course of a search initiated under section 132 before the 1st day of June, 2007, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income." 8. Explanation-3 is an exception to the rule that when an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the IT return and offered the surrendered amount for the purposes of tax and therefore no penalty under s. 271(1)(c) could be levied. The words 'in the course of any proceedings under this Act' in Sec. 271 (1)(c) of the Act are prefaced by the satisfaction of the AO or the CIT(A). When a survey is conducted by a survey team, the question of satisfaction of AO or the CIT(A) or the CIT does not arise. One has to keep in mind that it is the AO who initiates penalty proceedings and directs the payment of penalty. He cannot record any satisfaction during the course of survey. Decision to initiate penalty proceedings is taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the IT return filed by it. The assessee can furnish the particulars of income in his return and everything would depend upon the IT return filed by the assessee. This view gets supported by Explanations 4 as well as 5 and 5A of s. 271. Obviously, no pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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