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The Asst. Commissioner of Income Tax, Circle-5 (1) , Hyderabad Versus Shri G.S. Arora,

Penalty u/s. 271(1)(c) - CIT(A) deleted the penalty - Held that:- Even though a survey was conducted 22-03-2009 i.e., during the financial year relevant to the AY. 2009-10, even though there was no incriminating material and only certain discrepancies have been found, assessee volunteered to pay additional taxes of ₹ 10 Lakhs. The statement itself, as extracted by the Ld. CIT(A) in the order, do indicate that there was no quantification of concealed income in the course of survey. In fact, .....

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Question of furnishing inaccurate particulars does not arise on the facts of the case, which was accepted by DR as well. Looking at either way, the conditions specified u/s. 271(1)(c) are not satisfied. Moreover, the returned income and assessed income being the same, the computation of penalty also fails. Explanation-I with reference to expression Concealed income has deemed the amount concealed income indicates that the amount added or disallowed in computing the total income of such person s .....

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alty on an income identified/un-earthed in the course of survey proceedings. - Decided in favour of assessee. - I.T.A. No. 1789/HYD/2013 - Dated:- 21-8-2015 - SHRI B. RAMAKOTAIAH, J. For The Revenue : Shri Rama Krishna Bandi, DR For The Assessee : Shri A.V. Raghu Ram, AR ORDER This is a Revenue s appeal against the order of the Commissioner of Income Tax (Appeals)-V, Hyderabad dt. 30-09-2013 cancelling the penalty of ₹ 10 Lakhs levied u/s. 271(1)(c) of the Income Tax Act [Act]. 2. Briefly .....

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its proprietor. Assessee also had rental incomes and income from interest. Assessee in the statement recorded u/s. 133A has agreed to pay an additional tax of ₹ 10 Lakhs for the current year. It was stated- to quote- to cover the deficiencies of earlier years a well as current year and to purchase peace with the department, I offer an additional tax of ₹ 10 Lakhs for the current year. Accordingly, assessee paid advance tax and corresponding amount of ₹ 29,42,000/-covering the t .....

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e the Ld. CIT(A) that provisions of Section 271(1)(c) were not attracted as the conditions stipulated in the provisions were not satisfied. It was submitted that even though there were no incriminating material or concealed income identified in the course of survey, assessee voluntarily offered to pay additional tax and filed return of income accordingly. Since the return of income was accepted as such, penalty provisions are not attracted. Assessee relied on the decision of the Hon ble Delhi Hi .....

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mpugned order which is as under: 6.2 I have carefully considered the assessment order, submissions of the appellant and I find force in the argument of the appellant. Regarding the discrepancy found in cash of ₹ 2.5 lakhs, the explanation of the appellant is acceptable, particularly in view of the fact that the appellant offered the same to tax. The question of concealing the particulars of income or furnishing of inaccurate particulars of income will arise only with reference to the retur .....

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r survey, which was accepted by the Department. Penalty u/s 271 (1) (c) was levied. Cancelling the penalty so levied, the Hon ble High Court observed as follows (Para 2 at page 264): It is to be kept in mind that Section 271(1)(c) of the Act is a penal provision and such a provision has to be strictly construed unless the case falls within the four corners of the said provision, penalty cannot be imposed. Sub-section (1) of Section 271 stipulated certain contingencies on the happening whereof th .....

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articulars of income have been duly furnished and the surrendered amount was duly reflected in the Income Tax Return. The question is whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the income tax return filed by the assessee viz whether concealment is to be found in the Income Tax Return. 6.4 It necessarily follows that concealment of particulars of income or furnishing of inaccurate particul .....

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Explanation 4 as well as Explanation 5 and Explanation 5A to Section 271 of the Act. The Court held that: No penalty can be imposed unless the conditions stipulated in the said provision are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be/ it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises/ conjectures and possibilities. Section 271 (1)(c) of the Act has to be construed strictly. Unless it .....

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crepancy found in cash of ₹ 2.5 lakhs was a stark reality which goes to say that the assessee had not recorded all his transactions in his regular books of accounts and it was not certainly a case giving room for surmises, conjectures and inferences (possibilities) and hence, penalty was levied. Here, the AO loses jurisdiction since it is a well settled principle that what is good for addition is not good evidence for penalty. Something more to indicate what the assessee has concealed part .....

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is regard, the decision in the case of Sir Shadilal Sugar General Mills Ltd (1987) 168 ITR 705(SC) is relevant. It was observed that from agreeing to additions, it did not follow that the amount agreed to be added was concealed. There may be hundred and one reasons for such admissions i.e. when the assessee realized the true position it did not dispute certain disallowance but that did not absolve the revenue from proving the mens rea. It is for the Income Tax Authority to prove that a particula .....

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ITR 9(SC); (iv) The appellant, in his sworn statement dated 23-6-2009 during the course of survey operations, offered additional income voluntarily to purchase peace with the department and on the understanding that that no penalty would be levied. 6.5 On the facts of the case, it is a fact not disputed that there was no specific incriminating material found during the course of survey in the business premises of the appellant, for the AY under consideration. The appellant has been consistently .....

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tances in his penalty order to prove that the appellant had in fact concealed the particulars of income. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in the instant case, it is seen that at no stage the appellant admitted the surrendered amount/voluntary income, as its concealed income. Except the offer made by the appellant, nothing was available with the AO on the basis of which it can be inferred that the appellant had concea .....

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e AO should be used not to levy penalty because there was no conclusive proof that the appellant concealed income or furnished inaccurate particulars of income. The appellant s offer was to avoid litigation. If the AO had clinching evidence of concealment, he should not have accepted voluntary disclosure of additional income, in the first instance at all. 6.6 While accepting the voluntarily declared income, the AO cannot levy penalty on the assumption that the assessee has concealed income, in a .....

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the above factual position and in the absence of any cogent evidence, I am of the considered view that the penalty imposed by the AO u/s 271(1)(c), is not sustainable, especially, in absence of any adverse material, except basing on a voluntary disclosure/surrendered income. Thus, the view taken by Assessing Officer cannot be said to be permissible in law particularly when the appellant had voluntarily came forward and offered additional income in order to buy peace with the department. More so .....

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he appellant with his intention and in the case in hand, on micro reading of the penalty order, which is not a speaking one, and also in the absence of any finding/satisfaction that the amount of voluntary surrendered income was concealed income, I am unable to see exact reason for levy of penalty u/s 271(1)(c). In view of my above observations and relying on the caselaws cited above, the action of the AO in levying the penalty of ₹ 10,00,000/- is not justified and the same is ordered to b .....

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that furnishing inaccurate particulars of income is with reference to return of income, whereas concealing particulars of income can be with reference to either filing of return of income or books of accounts or both. Since survey took place in this specific case on 23.03.2009, survey declaration was also for the Financial Year 2008-09 (relevant to AY 2009-10) and also since the assessee had shown the declared amount in the return of income, though penalty U/s. 271(1)(c) cannot be levied on gro .....

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r repairs of the flat, (ii) unverifiable payments claimed to be made towards agent commission and (iii) availability of unaccounted cash of ₹ 2,50,000/- on the day of survey. The Assessing Officer had also mentioned in the final survey report that the assessee offered additional income of ₹ 29,42,000/- due to the above mentioned discrepancies. Whereas, I am not competent to answer why the assessee had offered additional income in the assessment year 2009-10, rather it is for the asse .....

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09-10, even though there was no incriminating material and only certain discrepancies have been found, assessee volunteered to pay additional taxes of ₹ 10 Lakhs. The statement itself, as extracted by the Ld. CIT(A) in the order, do indicate that there was no quantification of concealed income in the course of survey. In fact, what assessee has admitted was payment of ₹ 10 Lakhs as additional tax, accordingly, he worked out the income to be offered which he did in the return filed su .....

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1)(c) are not satisfied. Moreover, the returned income and assessed income being the same, the computation of penalty also fails. Explanation-I with reference to expression Concealed income has deemed the amount concealed income indicates that the amount added or disallowed in computing the total income of such person shall for the purpose of Clause-C of this sub-section be deemed to represent the income in respect of which particulars have been concealed . As already stated, there is no amount .....

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vari Townships Pvt. Ltd., Vs. DCIT [148 ITD 463] as under: 16.2 More importantly on similar issue, the Hon ble High Court of A. P. in the case of V. V. Projects and Investments Pvt. Ltd. Vs. DCIT 300 ITR 40 (A. P.) considered similar situation and held that penalty is not imposable. The Hon ble High Court considering the facts held as under : The language of sub-s. (1) of s. 271 itself makes it clear that recording of satisfaction of concealment of income by a person or furnishing inaccurate par .....

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tion amounts to a jurisdictional defect which cannot be cured. It is also relevant to note that whether the assessee has concealed his income or has deliberately furnished inaccurate particulars thereof is essentially a finding of fact which has to be spelt out by way of recording the satisfaction of the AO as required under s. 271(1). Therefore, in the absence of such a finding in the assessment order no penalty proceedings can be initiated. The declaration of income made by the assessee compan .....

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lect any satisfaction as required under s. 271(1) but even the show-cause notice was silent with reference to the satisfaction arrived at by the AO with reference to the concealment of income by the assessee company. Nothing has been placed before this Court by the Revenue to show that any other material was available with the AO to the effect that the assessee concealed the income. In the circumstances, it is not open to the AO to invoke the power under s. 271(1)(c) levying penalty. The impugne .....

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income is not taxable, this contention of the assessee was not rebutted. As briefly stated above in the facts, A.O. has neither brought any calculations on record nor mentioned how the amount was quantified. In these set of circumstances, assessee s contention that it had unexplained expenditure in earning that gross receipts cannot be rejected. Therefore, even the provisions of Explanation 1 to section 271(1)(c) come into operation as the assessee s explanation has not been disproved. Therefor .....

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y cannot be deemed to be concealed income , treating the same as concealed income as was done by A.O. does not arise. A.O. has to establish the nature of income as concealed income before levy of penalty. As discussed earlier, nothing was done by A.O. except accepting the revised income returned in the assessment proceedings under section 143(3) of the Act. (emphasis supplied) 17. The learned CIT(A) in his detailed order has elaborately discussed principles of law with which we have no objection .....

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ceuticals [335 ITR 259] has considered the issue elaborately on similar facts. The Hon ble Delhi High Court held as under: Held, dismissing the appeal, that clause (c) of section 271(1) of the Act authorizes imposition of penalty when the Assessing Officer is satisfied that the assessee had either concealed particulars of his income or furnished inaccurate particulars of such income. It was not a case of furnishing inaccurate particulars of income, as in the income-tax return, particulars of inc .....

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