TMI Blog2015 (1) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and cash found was claimed consistently belonging to the various firms and explainable from that recorded books of accounts and none of these findings and claims have been shown to be incorrect. Thus we set aside the impugned order and quash the penalty holding that the explanation offered by the assessee is a bonafide explanation on facts which deserves to be accepted. Decided in favour of assessee. - I.T.A. No. 2516/Del/2013 - - - Dated:- 9-1-2015 - Smt. Diva Singh And Sh. T. S. Kapoor,JJ. For the Appellant : Sh. Raj Kumar Gupta, CA Saurabh Goel, CA For the Respondent : Smt. A.Misra, CIT DR ORDER Per Diva Singh, JM This is an appeal filed by the assessee against the order dated 15.03.2013 of the CIT(A)-XXVI, New Delhi pertaining to 2007-08 assessment year. Although various grounds have been raised by the assessee in the present appeal assailing the correctness of the orders on the grounds of violation of natural justice and also on the legal ground that the action is time barred, however at the time of argument Ld. AR chose to confine his arguments only to the Ground No.-3 which reads as under:- 3. The Ld. CIT(A) has grossly erred on facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd even the subsequent enhancement was under oath and made voluntarily. The AO as per record was further of the view that the usage of words in the surrender made pending verification of the seized documents did not have any relevance. Accordingly the AO proceeded to make the addition of the said amount. The AO further made an addition of ₹ 2,50,000/- shown as gifts received from Sh. Shiv Narain Aggarwal, HUF. 2.1. The record shows that the assessee assailed the addition in the quantum proceedings before the CIT(A) who restricted the addition of ₹ 1.75 crore to ₹ 13,20,950/- holding that the AO has not made reference to any seized material for substantiating the additions. The CIT(A) further directed the AO to treat the addition of ₹ 2,50,000/- as part of cash amounting to ₹ 13,20,950/- as cash from HUF found during the search. 2.2. The issue was brought in appeal before the Tribunal by the Revenue and the ITAT upheld the addition of ₹ 1.75 crore made by the AO and directed the AO to grant telescoping benefit of ₹ 2,50,000/- received as gifts from HUFs against the surrender of ₹ 1.75 crore. 3. It is seen that although the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It was submitted that the penalty proceedings and assessment proceedings are separate and distinct and levy of penalty it was submitted is a settled position is not automatic. It was his submission that the record shows that the assessee bonafide made a surrender when he was led to believe that there are incriminating materials against him, the assessee also bonafide enhances the surrender however when the seized material which is provided to him shows that there was no incriminating material the occasion to offer the same to tax does not arise. This bonafide belief of the assessee cannot be faulted with especially since no incriminating material has been referred to by the Revenue till date. Reliance was placed on the following decisions:- 1. CIT vs Ashok Taker 170 Taxman 471 (Del.); 2. CIT vs Ganesh Trading Co. (ITA No.10/99) (Jharkhand High Court order dtd.20.09.2012) [45. Taxman.com 209]; 3. Seasons Catering (P.) Ltd. vs DCIT ITA No.788/Del/2012 (Delhi ITAT order dtd. 31.12.2013); 4. ACIT vs Ashok Kumar Jain ITA No.830/JP/2011 Order dated 18.12.2012; 5. Chetan Dass Lachman Dass 214 ITR 726 (Del.) 6. Vijay Power Generators Ltd. 180 Taxman 102 (Del.) (Mag.) 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Tribunal in the quantum proceedings from internal pages 10 11 of the order (at pages 47 48 of the Paper Book):- Extract of statement recorded on 10/11/2005 S.13. Do you want to say anything else Ans:- I, Bhatirath, S/o-Shri Shiv Narain hereby declare additional income of ₹ 1 crore for current financial year 05-06 on account of documents, jewellery, cash property found during action u/s 132 for buying peace of mind and to avoid litigation. I request the Income-Tax Department that no penalty proceedings be initiated against me. Extract of statement recorded on 21.11.2005 Q.4. Do you want to say anything else. Ans:- Yes, My statement was recorded under sec. 132(4) of the Income tax Act, 1961 on 11.11.2005 wherein I had voluntarily declared a sum of ₹ 1 crore as my additional income. This voluntarily disclosure was given for peace of mind and to avoid litigation and on account of all seized documents, jewellery, cash and property which all family members, family firms and companies have acquired at different times. I voluntarily, keeping in consideration or issues, increase the total amount of disclosure of additional income to ₹ 1.75 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vasion. The income additionally offered was, therefore, rightly treated by the Assessing Officer as concealed income in respect of which penalty was levied by the Assessing Officer u/s 271(1)(c) of the Income tax Act, 1961. Although, the appellant had made an attempt to retract from the disclosure made u/s 132(4), but the Assessing Officer had successfully made out a case of concealment of income in respect of which penalty u/s 271(1)(c) was leviable. The Assessing Officer on facts and circumstances of the instant case had clearly proved that the department had detected the concealment of income to the tune of ₹ 1.75 crores for which he had no explanation to offer. 7.2. Considering the fact that in the assessment proceedings the aim and focus is on assessment of income i.e. quantification and computation of the income of the assessee in a specific year it is well-settled that penalty is levied not because addition has been made in the case of the assessee but is levied because there is concealment or filing of inaccurate particulars income. Before we dwell on the requirements under law we first set out the relevant provision under consideration:- 271. Failure to furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty proceedings it has to be considered independently keeping the requirements of the Statute in mind. For the said purpose we have already extracted from the Tribunal s order the English translation of the relevant statements of the assessee. Before we proceed to address that it is also considered necessary to take into consideration certain other relevant facts. 7.5. For the said purpose we first take into consideration the CIT(A) s order in the quantum proceedings. It is seen that the additions were largely deleted and was sustained only to the extent of ₹ 13 lacs odd. A perusal of the CIT s order dated 10.03.2008 to CIT-2, New Delhi available at pages 25 to 37 of the Paper Book filed at specific page 31 to 33 demonstrates that the following finding on facts has been arrived by the assessee:- The detailed submissions of the appellant were considered along with facts arid circumstances of the case. No doubt the statement made in the course of search proceedings carries sufficient weight to form un opinion to assess income of such person, However such statement should be backed by some material and evidences. The contents of such statement alone cannot be bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l/2008 alongwith ITA No.-2118/Del/2008 Copy of which is placed at pages 38-55 of the Paper Book would show that the assessee had offered the following explanation before the ITAT in the quantum proceedings:- 8. The learned counsel for the assessee submitted that no addition on the basis of alleged disclosure statement made under sec. 132(4) of the Act can be made. He pointed out that it is not ascertainable whether authorized officer had signed the statement at the end, the statement does not indicate the names and designation of the officer who recorded the statement. When assessee made the statement he was not having old income-tax returns, relevant details, documents and books of accounts. The assessee is an old illiterate Halwai and does not understand the intricacies of the tax matters. The statement does not bear the signatures of the witnesses. On the strength of Hon'ble Gujarat High Court s decision in the case of Kailash Ben Manharlal Chokshi Vs. CIT reported in 328 ITR 411, he contended that the statements recorded at the odd hours cannot be considered as voluntary statements under sec. 132(4) of the Act. He further contended that no addition can be made on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been confirmed by the Learned CIT(Appeals). Similarly, he pointed out that jewellery not found in the possession of each individuals ought to have not been considered as sold. The jewellery in the books of account was more than the one found at the time of search. (Emphasis provided in the present proceedings) 7.7. It is a matter of record that till date no evidence or material has been placed by the Revenue before us to support its case that there was some incriminating material found during the search. On the other hand there is a finding of fact recorded by the CIT(A) in the quantum proceedings that no property was purchased in the relevant period by any family member and the jewellery found was less than what was disclosed over the years. The cash found at the residential premises was stated to be from the business of the assessee group and explainable from the recorded books of accounts. However for the purposes of the quantum proceedings these explanations were not accepted in view of the fact that it was concluded that the assessee has failed to report any stress during or after the search; the surrender thus could not be retracted; and moreover because of the surre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 271(1)(c) of the Act. As per opinion expressed by the Supreme Court in Commissioner of Income Tax, West Bengal I, and Anr. Vs. Anwar Ali [1970] 76 ITR 696 (SC) such findings may constitute good evidence in the penalty proceedings but it does not follow that penalty for concealment under Section 271(1)(c) is mandatory whenever an addition or disallowance is made. The language of Section 271(1)(c) has undergone substantial changes since the pronouncement of the aforementioned judgment, but the said legal position, still hold good. In assessment proceedings, we are primarily concerned with the assessment of income i.e. quantification and computation of total income as per the provisions of the Act, whereas in penalty proceedings we are primarily concerned with the conduct of the assessee. Penalty is imposed not because addition is made but because there is concealment or furnishing of inaccurate particulars by the assessee. This is apparent from language of Section 271(1)(c) and Explanation 1 which are reproduced below:- 271. Failure to furnish returns, comply with notices, concealment of income, etc.--(1) If the Assessing Officer or the Deputy Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which should have been furnished or were required to be furnished or recorded in the books of accounts etc. [See CIT vs. Raj Trading Co. (1996) 217 ITR 208 (Raj.)] Inaccuracy or wrong furnishing of income would be covered by the said expression, though there are decisions that adhoc addition per se without other or corroborating circumstances may not reflect furnished inaccurate particulars . Lastly, at times and it is fairly common, the charge of concealment and furnishing of inaccurate particulars may overlap. 7.9. In the facts of the present case it stands fully addressed that the assessee has offered an explanation consistently in terms of clause (A) of Explanation-1 to section 271(1)(c) and considering the overall conduct of the assessee as is discernable form the record, we are of the view that the bonafides contemplated in Clause B of the said explanation cannot be doubted as in the facts of the present case the occasion to conceal and filing of inaccurate particulars does not arise as the assessee who is described as an illiterate old Halwai who admittedly offered to surrender income for tax which was retracted on the grounds that offer was made on the belief that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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