TMI Blog2015 (3) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 271(1)(c) of the Act is cancelled. - Decided in favour of assessee. - ITA No.777/Bang/2012 - - - Dated:- 28-2-2014 - SHRI GEORGE GEORGE K. AND SHRI JASON P. BOAZ , JJ. For the Appellant : Shri B.P. Sachin Kumar, CA For the Respondent : Shri M.K. Biju, (DR) ORDER George George K. (Judicial Member).- This appeal instituted, at the instance of the assessee-firm, is directed against the order of the Commissioner of Income-tax (Appeals)-II, Bangalore, dated March 26, 2012. The relevant assessment year is 2005-06. The order of the Commissioner of Income-tax (Appeals) arise out of order passed under section 271(1)(c) of the Act. 2. The assessee has, in its memorandum of appeal, raised a solitary issue, namely, that the Assessing Officer and the Commissioner of Income-tax (Appeals) failed to appreciate that all the material facts were made available during the course of search and assessment proceedings and, accordingly, the assessee had not furnished any inaccurate particulars of income. 3. Briefly stated, the facts of the issue are as under : The assessee is a partnership firm, carrying on business as developer and builder of resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which has been unearthed by action under section 132. I hold that this is a fit case for levy of penalty under section 271(1)(c) of the Act. The Assessing Officer had levied minimum penalty of ₹ 49,49,686. The same is, therefore, upheld. 6. Aggrieved, the assessee has come up before us with the present appeal. During the course of hearing, the submissions made by the learned authorised representative are summarised as under : -that the search was conducted apart from the business premises of the assessee, the following assessee's belonging to the same group were also searched, namely, (i) Concorde Developers, (ii) Concorde Garden City; (iii) Concorde Homes ; (iv) Concorde Shelters Pvt. Ltd. (v) Gopal Reddy ; and (vi) B. S. Shivaram -that the addition of ₹ 1.64 crores was made only on the strength of the loose sheets unearthed during the course of search and it was explained that the contents of loose sheets were rough workings of one of the staff members of the group and that the profit element therein was the total profits of the entire group and not the profit of the assessee alone and that the noting and entries in the loose sheets were not a conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of the satisfaction of the Assessing Officer in survey proceedings. Relies on the judgment of the hon'ble Delhi High Court in CIT v. SAS Pharmaceuticals [2011] 335 ITR 259 (Delhi) : -that the satisfaction under section 271(1)(c) of the Act should be arrived at during the course of any proceedings but not penalty proceedings- Ms. Madhushree Gupta v. Union of India [2009] 317 ITR 107 (Delhi) ; -that for invoking Explanation 1(B) to section 271(1)(c), the following three ingredients are required to be satisfied concurrently and cumulatively, namely : (i) the assessee offers an explanation which he is not able to substantiate ; (ii) he fails to prove that such explanation is bona fide ; and (iii) all the facts relating to the same (explanation) and material to the computation of his total income have been disclosed by him. -that the Assessing Officer had not given a finding on the basis of material on record that all these conditions are cumulatively and simultaneously satisfied and, thus, penalty under section 271(1)(c) read with Explanation 1(B) cannot be levied-Dholu Construction and Projects Ltd. v. ITO (ITA No. 413/Ahd/2007 dated March 31, 2010) ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rough workings of its staff members and that this was explained to the Investigation Wing. However, this claim of the assessee was refuted by the learned Departmental representative for the reason that the noting made indicate a systematic and concrete calculation of sale price of plots, allocation of prices etc. It was, further, disputed the assessee's other contention that the profits shown in the impugned loose sheets relate to profit of the entire group since the entries relate only to the assessee's business. The learned Departmental representative had, therefore, justified the Assessing Officer's stand in rejecting the assessee's explanation and imposing the penalty under section 271(1)(c) of the Act. With regard to the assessee's contention that the impugned addition was made only on the strength of loose sheets found during the course of search operation etc., it was submitted by the learned Departmental representative that in terms of section 132(4A) of the Act, there is an obligation cast on the assessee to explain the contents of the seized materials which have been seized from the premises of the assessee. Further illustrating the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that it is evident from the section, the onus lies on the assessee to offer explanation. Though the assessee had offered explanation about the seized loose sheets, it could not substantiate the same and therefore, the Assessing Officer took a stand that the assessee had concealed its income. To strengthen his submission, the learned Departmental representative placed reliance on the findings of the earlier Bench of this Tribunal reported in Mandli Hanumanthappa Setty v. First ITO [1989] 30 ITD 480 (Bang). He had, further, submitted that taking into account the totality of the case, it was evident that there was a deliberate act on the part of the assessee in withholding the true facts and that the assessee had consciously made concealment and furnished inaccurate particulars of its income and, thus, the assessee's case squarely falls under Explanation 1(B) of section 271(1)(c) of the Act. In conclusion, it was pleaded that the finding of the Commissioner of Income-tax (Appeals) sustaining the levy of penalty under section 271(1)(c) of the Act be upheld and the appeal of the assessee be dismissed. 11. We have carefully considered the rival submission, perused the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said exhibit, i.e., A/CD.4/4 page Nos. 72, 73 and 74, a question was put to the managing partner Sri B. S. Shivaram, he has replied as below in his sworn statement in page 72-'it represents the valuation of the work in progress. This is working of one of our working staff while reviewing the ledgers.' Ans : pages 73 to 79 these are rough working of the staff regarding the tax payable in respect of each group companies. As seen from the said loose sheet, the actual profit of M/s. Con corde Housing Corporation is worked at ₹ 4,21,71,890. (Courtesy : page 10 of the assessment order) 7.1. Accordingly, penal proceedings under section 271(1)(c) of the Act were initiated for the following reasons : Penalty proceedings under section 271(1)(c) : Since it is proved that the assessee has concealed particulars/ furnished inaccurate particulars as discussed above in respect of cash payment of ₹ 43,24,000 and inflation of expenditure of ₹ 1,64,98,954. Proceedings under section 271(1)(c) are initiated. (Refer : page 10 of the assessment order). 7.2. During the course of penal proceedings under section 271(1)(c) of the Act, after due consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation furnished by the assessee along with the return of income. As regards to the said exhibit i.e., A/CD.4/4 page Nos. 72, 73 and 74, a question was put to the managing partner Sri B. S. Shivaram, he has replied as below in his sworn statement in page 72-'it represents the valuation of the work in progress. This is working of one of our working staff while reviewing the ledgers.' Ans : pages 73 to 79 these are rough working of the staff regarding the tax payable in respect of each group companies. (emphasis supplied) As seen from the said loose sheet, the actual profit of M/s. Con corde Housing Corporation is worked at ₹ 4,21,71,890. 7.5. Another significant feature which we have noticed that As seen from the said loose sheet, the actual profit of M/s. Concorde Housing Corporation is worked at ₹ 4,21,71,890. was not finding a place also in the original statement of Shri Shivaram recorded. When the above discrepancies have been pointed out, the learned Departmental representative fairly conceded that there were material differences in the original statement of Shri Shivaram recorded and what has been reproduced in the assessment order (paragraph 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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