TMI Blog2014 (12) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... e shown – Held that:- Assessee contended that the voluntary surrender of income was not acceptance of incorrectness of these cash creditors, but it was offered to buy peace of mind by herself and her relatives and this does not mean that the cash credits were the assessee's own income and she attempted to conceal the same in the disguise of cash credits - the assessee had shown cash credits of ₹ 5,40,000/-, but failed to explain the names of the persons from whom those credits were received - when the assessee was unable to explain those cash credits to the satisfaction of the AO, she preferred to surrender the income and offered the same for taxation. AO did not accept the explanation of the assessee and credited the same as concealment of income and accordingly initiated the penalty proceedings u/s. 271(1)(c) of the Act - had the case been not selected for scrutiny and the AO did not ask for explanation from the assessee, the addition was not possible because only when the assessee was cornered the amount was surrendered and merely on this basis that the assessee made the surrender, it cannot be said that there was no concealment of income - relying upon MAK Data P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of income. In view of this fact, the impugned penalty order is not sustainable in law and the appellant appeals for its cancellation. 1B. That the notice issued u/s 274 r/w sec. 271(1)(c) of the IT Act, 1961 dtd. 25/10/2010 was not in accordance with the satisfaction as recorded in the assessment order, which was to the effect that the assessee concealed income of ₹ 5,40,000 and, therefore, the show cause notice as well as consequential penalty order are not sustainable in law and the appellant appeals for the cancellation of the impugned penalty order. 2 Regarding the request for admission of the aforesaid additional grounds of appeal, the appellant's humble submissions are as follows:- i. That while drafting the memorandum of appeal, the appellant was under bona fide impression that the ground no. 1 which challenged the validity of the penalty order, would cover all the relevant issues also and, therefore, the aforesaid additional grounds of appeal were not raised in the memorandum of appeal. Now, as a measure of abundant precaution i.e., to meet with any difference in interpretation of the ground no. 1 of the memorandum of appeal, the appellant needs to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken were not available, therefore, to avail peace of mind, she herself offered ₹ 5,40,000/- for addition and as such no penalty u/s. 271(1)(c) of the Act would be levied. The Assessing Officer after considering the submissions of the assessee observed that it was not the case where the assessee herself offered ₹ 5,40,000/- whereas fact was that the assessee could not furnish details of those creditors and under those circumstances, identity, capacity, creditworthiness of the creditors and genuineness of the transactions remained unproved. He, therefore, held that the assessee furnished inaccurate particulars of income with respect of the said addition of ₹ 5,40,000/- and levied penalty of ₹ 1,82,596/- u/s. 271(1)(c) of the Act. 9. Being aggrieved, the assessee carried the matter to the ld. CIT(A) and submitted that while initiating the penalty proceedings in the assessment order, the Assessing Officer concluded that the assessee had tried to make clear concealment of income by way of claiming unexplained credits whereas while imposing the penalty, the Assessing Officer concluded that the assessee was guilty of furnishing inaccurate particulars of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity, capacity of the lenders and the decision relied in the case of Padma Ram Bharali Vs. CIT 110 ITR 54 (Gau.) will be applicable to the facts of the assessee's case as no contradiction was found in the Assessing Officer's finding. Now the assessee vide additional ground challenged the validity of the penalty levied u/s. 271(1)(c) of the act. 12. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the Assessing Officer in the assessment order recorded the satisfaction that the assessee concealed income of ₹ 5,40,000/- whereas in the penalty order, he imposed penalty on the ground of furnishing of inaccurate particulars of income. Therefore, notice issued u/s. 274 r.w.s. 271(1)(c) of the Act was not in accordance with the satisfaction as recorded in the assessment order. Therefore, penalty order was not sustainable in the law. Reliance was placed on the following case law:- 1. CIT Ano. Vs. Manjunatha Cotton Ginning Factor (2013) 263 CTR (Kar) 153. 13. In his rival submissions, learned D.R. strongly supported the orders of the authorities below and further submitted that the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds to the merit of the case, the assessee submitted to the Ld. CIT(A) that the cash credits of ₹ 5,40,000/- were voluntarily surrendered by her as income and the amount of ₹ 5,40,000/- was taken from a large number of relatives of which names and list were not available with the assessee and in absence of such details, she came forward to pay tax on the said amount. It was further stated that this voluntary surrender of income was not acceptance of incorrectness of these cash creditors, but it was offered to buy peace of mind by herself and her relatives and this does not mean that the cash credits were the assessee's own income and she attempted to conceal the same in the disguise of cash credits. Therefore, the penalty u/s. 271(1)(c) of the Act was not leviable. Reliance was placed on the following case laws:- 1. Santosh Narain Kapoor Vs. DCIT 115 TTJ (Luc) 402. 2. Ruchi Organisors (P) Ltd. Vs. ACIT 93 TTJ 242. 3. Bhagat Co. Vs. ACIT 101 TTJ (Mum) 553 4. CIT Vs. D H Secheron Electrodes Ltd. 203 CTR (MP) 164. 17. The learned CIT(A), after considering the submissions of the assessee, observed that the assessee had shown various cash creditors amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies non-maintenance or non-existence of books of accounts for the purpose of assessment proceedings, there was no objection to the proposition that the ITO can rely upon rejected books of accounts for the purpose of making addition towards unexplained cash as held by the Hon'ble Andhra Pradesh High Court in the case of CIT, A.P. Vs. Maduri Rajaiahgari Kistaiah reported in 120 ITR 294. The Ld. CIT(A) also relied on the following case laws:- 1. Kale Khan Mohammad Hanif Vs. CIT (1963) 50 ITR 1 (SC) 2. CIT Vs. Devi Prasad Vishwanath Prasad (1969) 72 ITR 196 (SC). Now the Department is in appeal. 19. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee did not want to disturb the cash creditors who were her relatives and therefore, in order to buy peace of mind for the relatives and herself she surrendered/offered the amount of cash credits as her income with a request for not imposing penalty u/s. 271(1)(c) of the Act. The surrender / offer was voluntary in the sense that prior to the surrender/offer the Assessing Officer did not have any material for treating the cash creditors in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e surrender, it cannot be said that there was no concealment of income. Recently, the Hon'ble Supreme Court in the case of MAK Data P. Ltd. Vs. CIT reported in (2013) 358 ITR 593 has held as under:- Explanation to section 271(1) of the Income-tax Act, 1961, raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the Explanation, has been discharged by him, the onus shifts on the Department to show that the amount in question constituted the income and not otherwise. Voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. The Assessing Officer should not be carried away by the plea of the assessee such as 'voluntary disclosure', 'buy peace', 'avoid litigation', 'amicable settlement', to explain away its conduct. The question is whether the assessee has offered any explanation for co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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