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R. Umedbhai Jewellers Pvt. Ltd. Versus The Dy. CIT (OSD) , Circle-5, Ahmedabad

2015 (12) TMI 446 - ITAT AHMEDABAD

Penalty u/s.271(1)(c) - survey action was conducted at the premises of the assessee wherein assessee admitted to the introduction of share capital - Revenue’s contention is that, in case, the survey would have not been carried out at the premises of the assessee, it might have not included this amount into its return of income - Held that:- In the present case, the assessee had filed its return of income before the due date of filing and including the amount on which penalty has been levied, adm .....

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AT, JUDICIAL MEMBER : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-9, Ahmedabad [ CIT(A) in short] dated 09/12/2014 pertaining to Assessment Year (AY) 2010-11. The Assessee has raised the following grounds of appeal:- 1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty of ₹ 1,99,35,135/- levied by the Assessing Officer u/s.271(1)(c) of the I.T.Act, 1961. 2. The appellant craves leave to add, alte .....

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rt) accepted the income declared as per return dated 31/08/2010. However, the AO initiated the penalty proceedings u/s.271(1)(c) of the Act in respect of the amount of share capital of ₹ 5,86,50,000/- admitted being unaccounted income for AY 2010-11 during the course of survey proceedings carried out u/s.133A of the Act at the premises of the assessee on 01.07.2010. Subsequently, the AO levied the impugned penalty amounting to ₹ 1,99,35,135/-. The assessee being aggrieved by this ord .....

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y arbitrary and unjustified. He submitted that there is no dispute with regard to the fact that the assessee had filed return of income before the due date of filing of such return. The assessee had declared and disclosed the amount on which penalty has been levied. He submitted that the case-laws as relied upon by the ld.CIT(A) are not applicable on the facts of the present case. He submitted that a bare-reading of section 271(1)(c) would make it clear that the action of the authorities below i .....

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eclared all particulars of income, the income so declared is duly accepted by the AO, therefore, under these facts, the penalty proceedings initiated is illegal and bad in law. 3.1. On the contrary, ld.Sr.DR supported the orders of the authorities below and submitted that the assessee has not voluntarily disclosed the amount of share capital and it was only when detected during survey proceedings on 01/07/2010. The assessee has included the amount in the return of income. The ld.Sr.DR, in suppor .....

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ining to the assessment year under appeal on 31/08/2010, i.e. before due date of filing of such return, declaring total income of ₹ 6,29,21,560/-. A survey action was conducted on 01/07/2010 at the premises of the assessee and during the course of survey proceedings, the assessee admitted to the introduction of share capital of ₹ 5,86,50,000/-. The Revenue s contention is that, in case, the survey would have not been carried out at the premises of the assessee, it might have not incl .....

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…. (b)…. (c) has concealed the particulars of his income or [ * * * ] furnished inaccurate particulars of such income. 4.1. From the above, it is evident that the proceedings can be initiated when the assessee is guilty of concealing the particulars of his income or furnishing inaccurate particulars of such income. In the instant case, the income declared in the return has been accepted. The AO has observed that from the audited financial statements of the assessee and the return o .....

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been brought into the books of the assessee without paying a single Rupee tax on the entire amount. The AO further observed that the disclosure by the assessee and then subsequent inclusion of the entire amount as income from other sources and payment of taxes on the same were clearly the results of the survey. Therefore, the AO has proceeded on the basis of assumption in our view, the penalty proceedings cannot be based on conjectures and surmises. Further, as per AO, there was an obvious and d .....

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scribed under the law. In our considered view, unless the return is filed before the Revenue, the provisions of section 271(1)(c) of the Act would not come into play for the simple reason that section 271(1)(c) envisages two conditions; i.e., concealment of particulars of his income or furnishing inaccurate particulars of such income. The AO has initiated the penalty proceedings for concealment of income . However, the AO has accepted the fact that this amount was duly disclosed in the return of .....

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rded by the Hon ble Apex Court are as under:- 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 proceedings has noticed that certain documents comprising of share application forms, bank statements, memor .....

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turn declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding t .....

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lared a total income of ₹ 16,17,040/-, however, before the AO, assessee surrendered another amount of ₹ 40.74 lacs to avoid litigation, buy peace and amicable settlement of the dispute. In the present case, the assessee had filed its return of income before the due date of filing and including the amount on which penalty has been levied, admittedly, prior to initiation of assessment proceedings. Further, the ld.CIT(A) failed to take note of the observation of the Hon ble Apex Court t .....

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n of income, therefore, in our considered view, the assessee cannot be held guilty of concealing the particulars of income. The Coordinate Bench of the Tribunal (ITAT A Bench Ahmedabad) in ITA No.1960/Ahd/2011 for AY 2006-07 in the case of ITO vs. Shri Valibhai Khanbhai Mankad, vide its order dated 27/02/2015 has confirmed the view of the ld.CIT(A) by observing as under:- 6. …… . The Id. CIT(A) has followed the decision of this Bench of the Tribunal rendered in the case of DCIT Vs. .....

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