New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (11) TMI 1012 - ITAT MUMBAI

2015 (11) TMI 1012 - ITAT MUMBAI - TMI - Penalty u/s 271(1)(c) - additional income surrendered - Held that:- 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 are based upon that group and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

artment that conditional additional income was offered by the assessee, as discussed hereinabove. In view of the facts and the aforesaid documentary evidence, we are of the considered opinion that it is a fit case, where the penalty has to be deleted, thus, we find merit in the appeals of the assessee and direct the ld. Assessing Officer to delete the penalty imposed u/s 271(1)(c) of the Act, consequently, the appeals of the assessee are allowed. - Decided in favour of assessee. - ITA NOs.2805 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of imposition of penalty u/s 271(1)(c) of the Act on the respective amounts as contained in the respective appeals. 2. During hearing of these appeals, we have heard Shri Dilip V. Lakhani, ld. counsel for the assessee, and Shri Asgar Zain V.P., ld. DR. The crux of argument advanced on behalf of the assessee is identical to the ground raised by submitting that penalty under the impugned section is not leviable as there was clear understanding with the Department that the revised returns are being .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

en 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 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d upon the decision of Union of India & Ors. vs Dharmendra Textiles Processors in (2008) 306 ITR 277 and ITA No.275/Indore/2012, order dated 13/02/2013. 2.3. We have considered the rival submissions and perused the material available on record. Since the issue involved in all the appeals is identical, the appeals were heard together, therefore, these appeals are being disposed off by this common and consolidated order for the sake of brevity and convenience. The facts, in brief, are that for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on 30th and 31st March, 2011 for Assessment Years 2005-06 to A.Y. 2011-12. Tax of ₹ 14,49,690/- was paid for A.Y. 2006-07 on 30/03/2011. Subsequently, assessee filed another return of income on 06/09/2012 showing therein total income of ₹ 46,22,000/- which was beyond the time prescribed, for filing a valid return, u/s 139(5) of the Act. As per the Revenue, since, there was escapement of income (i.e. difference between the original return and the revised return), the assessment for A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, whether the penalty proceedings were initiated within the ambit of the provisions of the Act and also whether 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 ₹ 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 ₹ 34,123 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of ₹ 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 there is a forceful confession of undisclosed income during search and seizure/survey operation and such confession is not based on credible evidence/later retracted by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mited and appearing in Annexure A-I to A-7 seized from the residence of Mr. T.P. Subramanian have not actually been incurred by any person. b. That no Income arising out of above seized material is to be considered again after this offer. c. As such no Income has actually been evaded so far. However, to buy peace and to fully co-operate with the departments in connection with the search proceedings, above income have been offered for taxation. d. This is with clear cut understanding that no more .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of ₹ 32.63 Cr. approx. is offered under the head Income from business and profession as residue item as other' business income." 6. The above facts clearly show that our client had offered the income of ₹ 32.63 crores spread over seven assessment years voluntarily and clearly stating in the letter dated 30/05/2011 that our client has not evaded any income and only in order to buy peace and to cooperate with the Department, the income is offered for tax. Please also note tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 partic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

income of a particular amount for a particular assessment year. There should be a direct nexus or evidence for the quantum of the income as well as for the identification of that particular assessment year before a penalty proceedings can be initiated u/s 271(1)(c). On the facts of the case the Assessing Officer has accepted the bifurcation of the income (even though there is not a direct evidence of earning that particular income for that particular assessment year) and the said income whose b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on consequent to the search & seizure action the assessee has disclosed the undisclosed income. Had the search & seizure action had not been conducted, the undisclosed income would not have been unearthed. We submit that the basis of coming to the satisfaction itself is on a wrong interpretation of facts. First of all there is no search on our client. Secondly even during the search on Ispat Industries Ltd no material or evidence is found which could lead to a conclusion that undisclose .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eedings, the Assessing Officer has to frame a charge on the facts of the case to the effect that our client has concealed the income or has filed incorrect particulars of income for that relevant year. When not a single piece of paper is found during the course, of search we respectfully submit that the allegation made by the Learned Assessing Officer in the reassessment order that the undisclosed income belonging to the assessee for that particular year has been unearth. We respectfully submit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 ₹ 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 d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

90 in which it was held that penalty u/s 271(1)(c) cannot be levied in case assessee filed revised return of income disclosing amount surrendered in survey proceedings. The ratio of this decision is directly applicable on the facts of the case. 12. We further submit that in letter dated 30/05/2011 the offer of income was a conditional offer that no penal proceedings will be initiated against our client. We submit that whenever a conditional offer is made by the assessee and if the offer is accep .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een held that if the assessee has offered higher income and has given an explanation that higher income is offered to buy peace and avoid litigation, then no penalty u/s 271(1)(c) can be levied. The facts of the case before you are much stronger where even there is no evidence of concealment of income and the income is offered to buy peace and avoid litigation. The ratio of this decision is directly applicable on the facts of the case. 14. Based on above factual & legal matrix, we respectful .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd 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/und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o 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 reproduced hereunder:- The assessee had originally filed returns showing meagre income. When, after action under section 132 of the Act, 1961, a notice under section 148 was served on him, he filed revised returns showing higher income. Eventually, assessment orders were passed and the returns submitted regularised under section 148. In penalty proceedings under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

could be levied for concealment (see [2000] 241 ITR 124). The Department preferred appeals to the Supreme Court. The Supreme Court dismissed the appeals holding that no interference with the order of the High Court was called for. The Hon ble Apex Court affirmed the decision of Hon ble M.P. High Court in the aforesaid case (241 ITR 124), thus, it can be said that the aforementioned judicial reasoning squarely supports the case of the assessee, rather it can be said that in the present case, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(220 ITR 325, 332,333)(Gauh) holding that penalty u/s 271(1)(c) of the Act cannot be sustained on the basis of statement recorded in different proceeding, supports the case of the assessee. Identical ratio was laid down in CIT vs T. Abdul Majid 232 ITR 50,60-61(Kerala) and CIT vs P.K. Narayanan 238 ITR 905,911,912 (Kerala). The ratio laid down in CIT vs Best Supply Agency 241 ITR 208 (Madras) also supports the case of the assessee. It is also noted that the Hon ble Punjab & Haryana High Cou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

53 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 imposa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e, these judicial pronouncements may not help the Revenue. Even otherwise, in view of the decision, from Hon ble Apex Court in the case of CIT vs M/s Vegetable Products Ltd. 88 ITR 192 (SC) the view which favours the assessee has to be adopted. The Hon ble Apex Court held as under:- The acceptance of one or the other interpretation sought to be placed on s. 271(1) (a) (1) by the parties would lead to some inconvenient result; but the duty of. the Court is to read the section, understand its lang .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

facts of the present appeal and the letter of the assessee dated 31/08/2013 (reproduced in preceding para of this order) it is evident that the revised positive income was filed by the assessee, firstly to buy peace and to avoid litigation with the department and secondly with a clear understanding that no penal proceedings will be initiated, therefore, by following aforesaid judicial pronouncements, and further the assessee has already paid taxes to the tune of ₹ 10,95,21,288/-, the inter .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

espect to the seized material. It is also noted that the department, subsequently, acted to the offer of additional income by accepting the same 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 partic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version