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TMI Blog2015 (11) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... ed returns are being filed purely on the understanding with the Department to buy peace, to avoid litigation and no penal proceedings will be initiated for which our attention was invited by the ld. counsel to the letter dated 31/08/2013 (filed with the office of the ACIT 02/09/2013) available on record. Plea was raised that the income, so offered, was accepted by the department. The ld. counsel contended that penalties were levied under explanation 5A to section 271(1)(c) of the Act by contending that had there been no search or survey against the assessee, the incriminating material could not have been recovered. It was submitted that the assessee filed return on 06/09/2012 voluntarily, whereas, notice u/s 148 was issued on 20/12/2012. Plea was also raised that whatever paper were found belongs to Ispat Group and not to the assessee. Reliance was placed upon the decision of the Tribunal from the Indore Bench (ITA No.222 and 223/Indore/2012), A.M. Shah & company vs CIT 238 ITR 415 (Guj.) and 31 SOT 153 (Pune). 2.1 On the other hand, the ld. DR, strongly defended imposition as well as confirmation of penalties by contending that department made search upon Ispat Group, whereupon i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the assessee filed revised return to buy peace with the department. Under the facts, stated hereinabove, one undisputed fact is clearly oozing out that the original returns were filed by the assessee on 15/11/2006 (A.Y. 2006-07), wherein, loss of Rs. 1,76,409/- was declared, 31/10/2007 (A.Y. 2007- 08), declaring nil income, 30/09/2008 (A.Y. 2008-09) declaring loss of Rs. 34,123/-, 28/09/2009, (A.Y. 2009-10) declaring loss of Rs. 40,608/- and 24/09/2010 (A.Y. 2010- 11) declaring loss of Rs. 60,996/-. All these returns were processed u/s 143(1) of the Act, the total loss declared by the assessee for all the A.Ys. before us was to the tune of Rs. 3,12,136/-, whereas, as per the revised returns, positive income was declared. The search and seizure operation was carried out on the Ispat Group of cases on 30/11/2010. The assessee declared total income to the tune of Rs. 32.36 crores and paid taxes thereon. 2.5. During hearing of this appeal, the ld. counsel for the assessee brought to our notice, Board Letter No.286/2/2003-IT(Inv) Dt.3rd October, 2013 (copy placed on record) addressed to all the Chief Commissioner of Income Tax, wherein, the Central Board has instructed that when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this fact is also evident from the factual aspect that notice u/s 148 is dated 20/12/2012, the reasons are recorded also after the date of voluntary disclosure of income. 8. We would like to clarify at this juncture that in letter dated 30/05/2011, it is only the bifurcation of total 32.63 crores is given and nowhere it is stated that in each of the respective year such income was concealed or not offered for tax. Whenever an bifurcation is given of the total income which is agreed to be offered for tax voluntarily and such bifurcation is spread over seven years and for each of the year certain amount is offered for tax does not tantamount to that for that particular year that particular income is concealed or for that particular income incorrect particulars of income is filed. 9. We submit that in order to initiate penalty proceedings as well as levy the penalty u/s 271(1)(c) the Assessing Officer has to without any ambiguity or without any doubt has to first come to conclusion that a particular amount of income is concealed by the assessee for a specific particular year. Unless & until this charge is framed against the assessee based on the material on record, under no cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer in the reassessment order that the undisclosed income belonging to the assessee for that particular year has been unearth. We respectfully submit that the basic conditions of issue of notice u/s 271(1)(c) itself is not satisfied. It is an established legal position that the Assessing Officer who has framed the assessment has to be satisfied by invoking the conditions of Section 271(1)(c) that there is a concealment of income or filing of incorrect particulars of income. In a criminal proceedings the charge has to be specific against the accused as to what is his default and that to also it has to be established that default is intentional and with the guilt mind and with the purpose of defrauding the revenue. We submit that based on the facts of the case under no circumstances it could be construed that our client had intentionally not disclosed the income relevant to A.Y. 2007-08 to the extent of Rs. 2,86,24,000/-. 11. In support of the claim that when the assessee offers income voluntary and even if it is done in the search proceedings in the case of the same assessee, then also no penalty can be levied. We rely upon the decision of Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring in annexure-2 (seized from Delhi office of Ispat Industries) and annexure-A1 to A7(seized from residence of Mr. T.P. Subramanian) was actually not incurred by any person/assessee. The offer of additional income was with clear understanding with the department that no more explanation or enquiries would be made by the department and further the offer is made to buy peace with the department and no penal proceedings would be initiated. In such situation, it is inferred that additional income was offered as income of the assessee subject to the conditions/understanding mentioned in the letter dated 31/08/2013. This factual matrix was not denied by the ld. DR. The aforesaid letter is, even otherwise, self explanatory, therefore, the ratio laid down in CIT vs Suraj Bhan (249 ITR 481) (Punjab & Haryana), wherein, it was held that if the assessee offer higher income and give an explanation that higher income was offered to buy peace and to avoid litigation then no penalty u/s 271(1)(c) can be levied, supports the case of the assessee. Identical ratio was laid down by the Hon'ble Apex Court in CIT vs Suresh Chandra Mittal (2001) 251 ITR 9 (SC). The relevant portion from the order is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b), following CIT vs Badrilal Chaturbhuj 265 ITR 329 (Rajasthan), where there was a recording of facts by the Tribunal that the assessee agreed to the addition in order to buy peace of mind and avoid litigation on an understanding and assurance that no penalty will be levied, in such a case, it was held that it does not give rise to any question of law, strongly supports the case of the assessee. The ratio laid down in CIT vs Pradip Kumar Ganadiwal (2002) 253 ITR 361, 363 (MP), wherein the assessee revised the return to buy peace with the Department, the penalty was held to be not leviable. The ratio laid down in CIT vs Rajiv Garg, etc. (2009) 313 ITR 256 (P &H), SLP dismissed by Hon'ble Apex Court in 2009 313 ITR (St.) (29)(SC), wherein, revised return was filed in which entire income was surrendered with explanation. The revised return was regularised by the Revenue. The Tribunal was held to be justified in holding that penalty is not imposable. 2.8. We are aware that there are certain decisions which are in favour of the Revenue like Deepak Construction Company Ltd. vs CIT 293 ITR 285 (Guj.), D & H Secheron Electrods Pvt. Ltd. 281 ITR 421 (MP), CIT vs Mahabir Prasad Bajaj 298 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and this factual aspect is mentioned in notice under section 148 dated 20/12/2012, as the reasons were recorded after the date of voluntarily disclosure of income. Even otherwise, in order to initiate proceedings as well as levy of penalty u/s 271(1)(c), the Assessing Officer without any ambiguity or doubt first had to come to the conclusion that particulars of income are concealed by the assessee. Unless and until, these charges are framed against the assessee, based on the material on record, under no circumstances, it can be construed that the assessee concealed the income of a particular amount for a particular Assessment Year. There should be a direct nexus or evidence for quantum of income as well as the identification of that particular Assessment Year before penalty proceedings are initiated u/s 271(1)(c) of the Act. Under the present facts, the Assessing Officer has accepted the bifurcation of income, which was voluntarily surrendered by the assessee vide letter dated 30/05/2011. The foundation of satisfaction, arrived at by the Assessing Officer, is based upon the disclosure of additional income, which was pursuant to search action upon Ispat Group, thus, the allegation a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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