TMI Blog2014 (8) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that there is actually a concealment or non-disclosure of particulars of income, penalty cannot be imposed - If the assessee has made a complete disclosure in the income tax return and offered the surrendered amount for the purposes of tax, there is no concealment or non-disclosure of particulars of income - the provisions of sec. 271(1)(c) should be interpreted strictly - the assessee cannot be imposed penalty u/s 271(1)(c), since it has already disclosed the surrendered amount as its income in the return of income – the order of the CIT(A) – Decided against Revenue. - I.T.A. No. 1731/Mum/2012 - - - Dated:- 25-7-2014 - Shri B. R. Baskaran (AM) And Sanjay Garg, (JM),JJ. For the Appellant : Shri Durga Dutt For the Respondent : Shri Rajesh B Shah ORDER Per B. R. Baskaran, Accountant Member: The appeal filed by the Revenue is directed against the order dated 12.12.2011 passed by Ld CIT(A)-1, Thane and it relates to the assessment year 2007-08. 2. The revenue is aggrieved by the decision of the Ld. CIT(A) in deleting the penalty of ₹ 35,34,300/- imposed by the Assessing Officer u/s 271(1) (c) of the Income Tax Act, 1961 (the Act). 3. Fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cannot be considered as concealed income. It was further submitted that the books of account for the year ending 31.3.2007 were incomplete at the time survey operations were conducted and hence the assessee has included all the discrepancies noticed during the course of survey operations in its books of account and the return of income was filed accordingly. The AO noticed that the Assessee has credited the capital account of the Partners with ₹ 1,05,00,000/-, i.e., the aggregate amount represented by unaccounted cash loan of ₹ 70,00,000/- and unexplained expenditure on purchase of flat of ₹ 35,00,000/- unearthed during the course of search. The AO took the view that the above said two items represents the income concealed by the Assessee, which was unearthed by the revenue during the course of survey operations. In respect of remaining three items referred in the table above, the AO accepted the submissions of the Assessee that they were not incorporated in the books of account due to noncompletion of accounts. Accordingly, AO levied minimum penalty of ₹ 35,34,300/- on the amount of ₹ 1,05,00,000/- referred above. 6. The Assessee carried the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 326 (Raj) vi) ACIT vs. VIP Industries (2009) 122 ITJ 289 (Mum) vii) Dy.CIT, Bharuch Vis Dr. Satish B. Gupta (ITA 1482/Ahd/2010) viii) JOINT COMMISSIONER OF INCOME-TAX V.SIGNATURE ([2005J 143 TAXMAN 28 (DELHI)) ix) Smt. Govinda Devi vs. CIT (2008) 304 ITR 0340 (All) x) CIT v.Harshvardhan Chemicals Minerals ltd. (2003) 259 ITR212(Raj) Accordingly, the assessee summarized its arguments as under:- a) The assessing officer has wrongly levied penalty when conditions stated in Section 271(1)( c ) did not existed. b) The assessee has not concealed income. c) The learned assessing officer erred held in concluding that survey is proceedings and penalty can be imposed based on surveys. d) The books of account were incomplete and the same were duly completed accounting all transactions before filing return of income and audit. e) The assessee has offered an explanation which is bonafide and hence covered by explanation 1 exemption. f) The penalty ₹ 35,34,300/- be deleted. 7. The ld.CIT(A) was convinced with the contention of the Assessee and accordingly deleted the penalty by observing as under : I have carefully gone through the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osure made during the course of survey, the provisions of Explanation I to section 271(l)(c) are not at all applicable. 4.1 Under these facts and circumstances of the case and also the settled legal, I am inclined to accept submission of the appellant that there can not be a concealment of income or furnishing of inaccurate particulars of income before filing of the original return of income and also the reliance on the ratio laid down by the Hon.ble Supreme Court in the case of Reliance Petro Products Pvt Ltd. (supra) that there can be no dispute that everything would depend upon return filed because that is the only document, where the assessee can furnish the particulars of his income when found to be inaccurate, the liability would arise. The submission of the A.R. that in the instant case, provisions of Explanation-4 to section 271(1)(c) which are related to computation of tax sought to be evaded for the purpose of quantification of penalty u/s. 271(1)(c) which are related to computation of tax sought to be evaded for the purpose of quantification of penalty u/s 271(1)( c ) fail, is also acceptable. His reliance on the decision of Hon'ble ITAT, Ahmedabad in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A No.1482/Ahd/2010, wherein the ITAT has held that Survey operations conducted u/s 133A cannot be considered as a Statutory proceeding. He further submitted that the Ahmedabad bench of Tribunal, in the above cited case, has deleted the penalty levied by the AO under identical circumstances, i.e., during the course of survey operations conducted on 22.09.2006, the assessee therein declared unaccounted income of ₹ 32,84,663/- and he included the same in the return of income filed for AY 2006-07. The return of income was accepted by the AO, but he levied penalty u/s 271(1)(c) of the Act. It was cancelled by the Tribunal by holding as under:- 9 .. Thus the act of concealment or furnishing of inaccurate particulars should be viewed by the AO as done with respect to return of income. The omission or commission or contumacious conduct has to be viewed from the return of income and if certain thing is not disclosed or not furnished therein only then it can be said that assessee has concealed the particulars of income or furnished inaccurate particulars of income. Prior to this assessee has not done any contumacious conduct on which penalty can be levied. Merely because certain re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 50.00 lakhs by accepting the contention of the assessee that the transactions relating to the above said ₹ 50.00 lakhs did not find place in the books of account due to incomplete books. The Ld A.R also contended that the Survey operations cannot be considered as Statutory proceeding . Accordingly, the Ld A.R contended that the AO could arrive at the satisfaction about the concealment of income only during the course of a statutory proceeding and since the assessee has already included the amount of ₹ 1.05 crores in its return of income, the AO could not have arrived at the satisfaction on the basis of return of income. The Ld A.R also submitted that the penalty proceedings would entirely depend upon the return of income. 13. We notice that the Hon ble Delhi High Court has considered an identical issue in the case of CIT Vs. SAS Pharmaceuticals (335 ITR 259), wherein the Hon ble High Court has expressed following view:- 14. We may, first of all, reject the contention of the learned counsel for the revenue relying upon the expression in the course of any proceedings under this Act occurring in sub-section (1) of section 271 of the Act and contending that ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. We, thus, answer the questions as formulated above, in favour of the assessee and against the revenue finding no fault with the decisions of the CIT(A) as well as the Tribunal. As a result, this appeal is dismissed. 14. On consideration of the rival submissions and the decisions referred above, we notice that the judicial view is that the penalty u/s 271(1)(c) of the Act should not be levied if there is no difference between the returned income and assessed income. Normally, there should not be any difference of opinion in respect of this proposition. However, the question that arises is whether this general proposition can be extended to the cases like that of instant case, where peculiar facts exist, viz., the declaration of certain income in the return of income as a result of or consequent to the survey operations. 15. The strong contention of the revenue is that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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