9911796707
TMI Blog2015 (12) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... atsoever were found. Since search officer unrelentingly demanded declaration of additional income, assessee had no alternative but to surrender certain income in search statement, relevant part of the statement is as under: ''I have perused the affidavit notarized on 14-09-2010 wherein it has been averred by the appellant that the expenses on the marriage of his son Shri Praful Mittal was incurred out of the cash gifts received from the in-laws of Shri Praful Mittal and other relatives and friends. However, no other 'positive evidence' has been added with this affidavit. The A.R. of the appellant has contended that during the course of statement u/s 132(4) the appellant has surrendered the amount in absent of any positive evidence. But even while filing the affidavit no 'positive evidence' has been adduced to substantiate the averments made in the affidavit by the appellant. No details of the names, addresses, confirmations of the persons who gave such gifts to the assessee along with the details of the amount of gifts, source of withdrawal, copy of cash book or bank account has been filed along with this affidavit. In absence of any details of substantiating evidence it is not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of order placed on paper book). 2.3 Adverting to penalty proceedings in question ld. Counsel contends that assessee in order to get rid of any other issue which may be racked by ld. AO, pursuant to notice u/s 153A, suo motu offered, further income over and above the statement taken during search as under:- AY Date of Filing Total Income declared Additional Income declared Particulars of additional Income 2003-04 30-03-2009 495210 4,00,000 Income surrendered in statement u/s 132(4) on account of marriage of son Shri Prafful Mittal 2005-06 30-03-2009 661150 5,00,000 Income surrendered in statement u/s 132(4) on account of marriage of son Shri Deepak Mittal 55,200 Income surrendered on account of unexplained cash creditors recorded in regular books 2006-07 30-03-2009 262400 1,29,697 Income surrendered in statement u/s 132(4) on account of repairs and renovation of house a) The assessments for AY 2003-04, AY 2005-06 and AY 2006-07 were framed u/s 153A by Ld. AO vide his orders dated 31.05.2010 accepting the amounts of income returned in respective years and made no other addition. b) Ld. AO thereafter initiated penalty proceedings u/s 271(1)(c) of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date of search and,- (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income.] From the reading of above provision, it is clear that in the case of searches carried out after 01.06.2007 the penalty for the previous years can only be imposed where the assessee is: - (i) found to be owner of any money, bullion, jewellery or other valuable article or thing found acquired by utilizing the income of previous year (ii) or any income based on any entry in any books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Works Vs CIT (1977) 107 ITR 379, 381 MP and (iv) Sri Krishna Vs CIT (1983) 142 ITR 618 (All). Additional income declared in return filed u/s 153A is part of the declaration of Rs. 30.00 lacs in statement u/s 132(4). Assessee had no pharmaceutical business at all which was arbitrarily forced on assessee and in assessment assessee's version was found to be correct as no addition was made. Even though no incriminating material whatsoever was found in search in this behalf, to spare the wrath of the department assessee suo motu offered Rs. 10,84,897/- as unaccounted expenses in marriage and renovation in house in these years. The fact that despite there being no incriminating material found during the course of search assessee are made to declare additional income itself indicates the arbitrary methods adopted by the search officers. Even CBDT by circulars has warned search parties not to extract such statements and declaration without incriminating material. The addition for the balance amount Rs. 19,15,303/- also stands deleted by ITAT which clearly implies that the additions ultimately returned were not based on any incriminating material and offered by assessee to ward off th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in paying the tax no penalty would be leviable under section 271(1)(C) ; that the incriminating materials found during the search were not used by the departmental authorities in making the assessments ; and the revised returns should, therefore, be considered to have been filed in good faith. The Tribunal referred to the High Court the question whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the Commissioner (Appeals) in cancelling the penalty under section 271(1)(C). The High Court answered the reference in favour of the Department. On appeal to the Supreme Court: Held, reversing the decision of the High Court, that the final fact-finding authority was the Appellate Tribunal and its decision on the facts could be gone into by the High Court only if a question had been referred on whether the finding of the Tribunal was perverse, in the sense that it was such as could not reasonably have been arrived at on the material placed before the Tribunal. In the absence of such a question the High Court had to accept the finding of fact arrived at by the Tribunal and then proceed to decide the question of law ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." It is submitted penalties confirmed by the ld. CIT(A) u/s 271(1)(c) may be deleted. 2.6 Ld. DR relied on the orders of authorities below. It is not disputed that no incriminating material was found during the search and declared income stands deleted by ITAT and the additions in question were declared in the return by the assessee. Ld. DR further contends ..... 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