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S.L. Shiva Raj Versus The Deputy Commissioner of Income Tax, Central Circle-1 (3) , Hyderabad

Penalty u/s. 271(1)(c) - Held that:- As considered by the Hon'ble Supreme Court in the case of Mak Data (P) Ltd., Vs. CIT [2013 (11) TMI 14 - SUPREME COURT], there cannot be any surrender of income with a view to avoid litigation by peace and to channelise energy and resources towards productive working and to make amicable settlement with the Income Tax Department. Statute does not recognize those types of defenses in Explanation-I, Section 271(1)(c) of the Act. It is trite law that voluntary d .....

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- Dated:- 30-10-2015 - SHRI B. RAMAKOTAIAH, J. For The Assessee : Shri K.C. Devdas, AR For The Revenue : Shri Rama Krishna, Bandi, DR ORDER This is an assessee s appeal against the orders of the Commissioner of Income Tax (Appeals)-XI, Hyderabad dated 10-06-2015, confirming the penalty of ₹ 2,80,394/- levied on assessee u/s. 271(1)(c) of the Income Tax Act [Act] by the Assessing Officer (AO) vide the order dt. 15-06-2010. Assessee has raised as many as eight grounds on the issue of levy of .....

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se property and income from profession in the said return. There were search and seizure operations conducted in assessee s case on 16-06-2008, when he was intercepted at Rajiv Gandhi International Airport at Hyderabad on his way from Chennai and cash of ₹ 12.65 Lakhs was found. The search and seizure operation lead to the detection of 27 undisclosed bank accounts of assessee, in which there were deposits and withdrawals made at regular intervals. In his deposition u/s. 132(4), it was admi .....

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e has escaped assessment, proceedings u/s. 147 were initiated and notice u/s. 148 was issued on 30-03-2009. Assessee, it seems filed return of income on 15-05-2009 but AO again issued another letter on 25-08-2009 calling for return. Assessee vide letter dt. 02-09-2009 replied that he has already filed return of income admitting additional income of ₹ 9,16,321/-. AO completed the assessment proceedings determining the total income at ₹ 12,15,580/- as admitted in the return in response .....

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is reply on 01-06-2010 contending that assessee has admitted additional income as declared u/s. 132(4) of the Act, complying with all the conditions laid down in sub-clause 2 to Explanation-5 of Section 271(1)(c) of the Act. It was submitted that the assessment has been completed on the same income which was declared in the return in response to notice u/s. 148. As there is no difference between returned income and assessed income, no penalty can be levied. Relying on the decision of Durga Kamal .....

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deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Assessee also relied on the following case law: i. CIT Vs. Sunilchand Mittal [251 ITR 9] (SC); ii. CIT Vs. Ram Commercial Enterprises Ltd., [246 ITR 568] (Del); iii. CIT Vs. Vikas Promoters Pvt. Ltd., [277 ITR 337] (Del); iv. Diwan Enterprises Vs. CIT & Ors. [246 ITR 571] (Del); and v. CIT Vs. B.R. Sharma [275 ITR 303] (Del) 4. Ld. AO however, did not agree w .....

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learly within the meaning of concealment u/s. 271(1)(c). AO relied on the judgment of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors & Others [306 ITR 277] that penalty is a civil liability and willful concealment is not an essential ingredient. Accordingly, he arrived at the tax sought to be evaded ₹ 2,80,394/- and levied minimum 100%of the amount as penalty as per the provisions. 5. Assessee contested the issue before the Ld. CIT(A). Detailed submissions w .....

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was confronted to him and in view of this, the penalty imposed by the AO u/s. 271(1)(c) r.w. Explanation-5A is sustained . Assessee is aggrieved. 6. Ld. Counsel submitted that CIT(A) s order was not correct in the sense that Explanation-5A is not applicable to the facts of the case as assessment was done u/s. 147 and it is outside the block period. It was submitted that for the block period in all the six assessment years, assessee has disclosed incomes and penalty proceedings thereon were drop .....

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IT [291 ITR 519] (SC); vi. T. Ashok Pai Vs. CIT [292 ITR 11] (SC); vii. CIT Vs. Reliance Petroproducts Pvt. Ltd., [322 ITR 158] (SC); viii. Sudarshan Silks and Sarees Vs. CIT [300 ITR 205] (SC) It was the submission that the facts of the case does not warrant penalty u/s. 271(1)(c) as assessee has bonafidely declared the incomes as declared in the statement u/s. 132(4). 7. Ld. DR however, relied on the orders of the authorities to submit that penalty is warranted. He has relied on the following .....

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[283 ITR 254] (Mad); ix. Sardar Bhagwan Singh Chawla Vs. CIT [279 ITR 142] (ALL); x. Madanlal Kishorilal Vs. CIT (ALL) [144 CTR: Vol. 197 Dtd. 19-08-2005]; xi. CIT Vs. Gurbachan Lal [250 ITR 157] (Delhi); xii. Kamal Chand Jain Vs. ITO [277 ITR 429] (Del); xiii. Mak Data (P) Ltd., Vs. CIT [358 ITR 0593] 8. I have considered the issue and perused the various propositions laid down by rival parties and supporting case law. It is to be kept in mind that assessee admitted the transactions in the bank .....

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unity. 9. It is the fact that assessee filed his original return of income belatedly in the year 2002-03 i.e., on 31-03-2003 as against the due date of 31-08-2002, declaring Income from Profession , House property. It is also a fact that he was operating many bank accounts, depositing cash and withdrawing cash. Those details were not admitted by assessee in the original return. Even after declaration under Section 132(4) as stated by assessee, assessee had not filed return of income voluntarily .....

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aped assessment for any assessment year. Explanation-2 to Section 147 deems certain cases where income chargeable to tax has escaped assessment. Section 147…………….. ……………………. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although .....

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to furnish a report in respect of any international transaction which he was so required under section 92E;] (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed;] [(d) where a person is found to have any ass .....

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hich escaped assessment comes within the provisions of Section 271(1)(c) warranting penalty. 12. Provisions of Section 271(1)(c) empowers the AO to levy penalty either for concealment of income or for furnishing of inaccurate particulars. These two concepts are subject matter of various adjudications not only by various High Courts but also by the Hon'ble Supreme Court in different cases. Both the parties relied on various case law supporting them. However, as can be seen from the facts of t .....

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of income in the return filed in reference to original return of income filed for that year, notwithstanding that assessee had submitted correct return in compliance with the notice for reassessment. i. Guru charanPrasad in re, AIR 1931 ALL 421, ii. C.V. Govindarajulu Iyer Vs. CIT [16 ITR 391] (Mad); iii. K.C. Mukherjee Vs. CIT [37 ITR 224] (Patna); iv. CIT Vs. Angara Satyam [37 ITR 230](AP); v. CIT Vs. Gopal Krishna Singhania [89 ITR 27] (All) (FB); vi. R. Kuppu Swamy Chetty Vs. CIT [135 ITR 2 .....

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r may be the circumstances, there is an escapement of income which was brought to tax. AO has concluded that assessee is depositing more cash in various bank accounts than the known sources of income. As can be seen from the original return, assessee has declared income from profession and many of the bank accounts which assessee was maintaining are not considered at the time of original return of income, even though assessee is aware about the transactions. Only when confronted with search and .....

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ed the incomes in response to Section 153A proceedings, penalty was dropped. The scheme of assessing incomes identified in search have been modified and in the revised procedure, assessments u/s. 153A are independent of original assessment proceedings. Therefore, the immunity provided in proceedings u/s. 153A cannot be extended to the present proceedings being reassessment proceedings U/s 147. 14. Explanation-1 to Section 271(1)(c) is certainly applicable to the facts of the case. Assessee has n .....

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igh Court confirmed the penalty when cash was seized from assessee by police authorities. It was explained by assessee that part of cash belong to third persons. There is no evidence to support the explanation, that assessee has surrendered the amount for assessment. It is held that surrender is not voluntary and levy of penalty is warranted. The facts in this case are similar to assessee s argument that he has voluntarily surrendered the revised income. This argument cannot be accepted on the f .....

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is a wrong noting also that the proceedings are initiated u/s. 153A. May be the CIT(A) was on the impression that the proceedings are initiated u/s 153A and penalty was levied. Since the present proceedings are not proceedings u/s. 153A and are reassessment proceedings under Section 147, order of CIT(A) to that extent is not based on facts. Be that as it may, I am of the opinion that penalty in reassessment proceedings are warranted, in view of the various decisions relied on above. 16. Hon' .....

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