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2015 (12) TMI 114 - PUNJAB AND HARYANA HIGH COURT

2015 (12) TMI 114 - PUNJAB AND HARYANA HIGH COURT - TMI - Levy of penalty under section 271(1)(c) - surrender of income - Held that:- Tribunal held that the surrender had been made on account of discrepancies found in the books of account, loose papers, documents etc. maintained by the assessee. The assessee had incorporated the surrendered amount in the profit and loss account but by showing the sale of opening stock at lower price, the income was again reduced to ₹ 48,054/-. The assessee .....

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8377; 14 lacs addition imposed by the Assessing Officer. Learned counsel for the assessee has not been able to point out any error in the approach of the Tribunal warranting interference by this Court. - Decided against assessee. - ITA No.60 of 2015 (O&M) - Dated:- 5-11-2015 - MR. AJAY KUMAR MITTAL AND MR. HARI PAL VERMA, JJ. For The Appellant : Mr. Divya Suri, Advocate and Mr. Sachin Bhardwaj, Advocate For The Revenue : Mr. Yogesh Putney, Advocate Ajay Kumar Mittal,J. 1. This order shall dispos .....

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ear 2007-08, claiming following substantial question of law:- Whether under the facts and circumstances of the case, the action for levy of penalty under section 271(1)(c) is unreasonable on the true and correct interpretation of the decision of CIT vs. Ram Sanehi Gian Chand, (1972) 86 ITR 724 (P&H) on the principle of law qua getting the 'advantage of surrendered amount' credited in books once having fulfilled the test of 'nexus, character'? 3. A few facts relevant for the d .....

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income was filed at an amount of ₹ 48,050/- through e-filing. Notice under section 143(2) of the Act was issued to the assessee on 19.6.2008. Written pleadings were submitted by the assessee before the Assessing Officer on 30.11.2009 explaining the credit/surrender alongwith production of complete books of account. Not satisfied with the submissions, the addition of ₹ 14 lacs was made by the Assessing Officer vide order dated 30.12.2009, Annexure A.5 and the income was determined at .....

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rder dated 28.9.2011, Annexure A.8, the Tribunal dismissed the appeal. Still not satisfied, the assessee filed appeal in this Court being ITA No.87 of 2012 relying upon judgment of this court in CIT vs. Ram Sanehi Gian Chand, (1972) 86 ITR 724. Thereafter, notice for levy of penalty proceedings was issued on 13.4.2012 to the assessee. The assessee made written submissions. The Assessing Officer vide order dated 16.5.2012, Annexure A.10 imposed penalty of ₹ 6,53,882/-. Aggrieved by the orde .....

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h was partly allowed vide order dated 7.11.2014, Annexure A.17 deleting the penalty imposed against the additions made on account of sale of paddy and rice and upholding the penalty qua cash deposits of ₹ 14 lacs. Hence the instant appeals by the assessee. 4. We have heard learned counsel for the parties. 5. After examining the entire material on record, it has been categorically recorded by the Tribunal that the surrender had been made on account of discrepancies found in the books of acc .....

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y the Tribunal read thus:- 14. As far as the penalty on the addition of ₹ 14 lacs is concerned we are unable to agree with the submissions of learned counsel for the assessee. The surrender letter referred to by the learned counsel for the assessee which is available at page 143 of the paper book which reads as under:- To The Joint Commissioner of Income tax, Kurukshetra Range, Kurukshetra Subject: survey under section 133A(1) of IT Act 1961 conducted at M/s Mahavir Trading Company, Kuruks .....

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e for the financial year 2006-07 relevant to assessment year 2007-08 to cover up all alleged discrepancies in the books of account, loose papers, documents, stock, byproducts and other records. On document D2 outside it is written M/s Atyma Ram Sushil Kumar and on document D6 it is written M/s Jain Rice Mill but both pertain to M/s Mahavir Trading Company. That the surrender of additional income by the assessee is subject to the condition that no penalty proceedings under section 271(1)(c) of th .....

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you, Yours faithfully, sd/- M/s Mahavir Trading Company Kurukshetra The above clearly shows that surrender has been made mainly on account of discrepancies found in the books of account, loose papers, found of various products etc. the cash available was only ₹ 6500/-, therefore, no cash could possibly have been deposited. The assessee though incorporated the surrender amount in the P&L account but by showing the sale of opening stock at lower price, the income was again reduced to &# .....

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closure of facts and therefore the ratio laid down in the case of CIT vs. Reliance Petroproducts Pvt. Limited 322 ITR 158 is also not applicable. In fact the decision of Hon'ble Punjab and Haryana High Court in case of Ramesh Chander Gupta vs. Income tax Appellate Tribunal and others, 344 ITR 320 where excess stock was found during the survey and addition was made accordingly the penalty under Section 271(1)(c) was held to be leviable. Therefore, in our opinion in view of the facts and decis .....

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nt, loose papers, documents, stock, byproducts and other record, the Tribunal was right in upholding the levy of penalty on ₹ 14 lacs addition imposed by the Assessing Officer. Learned counsel for the assessee has not been able to point out any error in the approach of the Tribunal warranting interference by this Court. 7. In CIT and another vs. Mnanjunatha Cotton and Ginning Factory, (2013) 92 DTR 111 (Kar.), relied upon by the learned counsel for the appellant-assessee, it was observed b .....

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se, the position being different as the appellant while surrendering ₹ 14 lacs had admitted the discrepancies in the books of account, loose papers, documents, stock, by-products etc., he cannot derive any benefit from the said decision. 8. Again in Ram Sanehi Gian Chand's case (supra) on which reliance had been placed by the assessee, it was observed by this Court as under:- 15. In our opinion as the income-tax authorities made additions to the assessable income of the assessee in the .....

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n 271(1)(c) of the Act. It was relating to the issue of taking advantage by the assessee of the past intangible additions in its income while explaining the current income assessed from undisclosed sources, which is not the situation here. 9. In MAK Data P:.Limited vs. CIT, (2013) 358 ITR 593 (SC), relied upon by the learned counsel for the revenue, the Apex Court while delving into identical situation upheld the levy of penalty on the assessee under Section 271(1)(c) of the Act. It was recorded .....

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proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment pro .....

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