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Dy. Commissioner of Income-tax Central Circle 6, Hyderabad Versus Shri A.V. Guruva Reddy

2016 (2) TMI 237 - ITAT HYDERABAD

Penalty u/s 271(1)(c) - CIT(A) deleted the penalty - Held that:- Revenue has not made out any strong case for levy of concealment. In fact, as stated by the learned CIT(A), there was no evidence of investment in respect of assessment years, which could have been brought to tax as income of the year. The assessee has admitted income on his own and filed the returns in the course of proceedings under S.153A. That alone cannot be a basis for levy of penalty, unless there is evidence or nexus with t .....

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ax in assessment year 2010-11, as the search took place on 20th August, 2009, but the Assessing Officer chose to bring to tax in the assessment year 2008-09, which is on the basis of the admission by the assessee under S.1342(4). In view of these facts of the case, we do not see any reason to disturb the findings of the learned CIT(A) for both the years. - Decided against revenue - ITA No.1119/Hyd/14, ITA No.1120/Hyd/14 - Dated:- 6-1-2016 - SMT. P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B.RAMAKOT .....

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ment years 2007-08 and 2008-09, which have been deleted by the CIT(A). It is the contention of the Revenue that the penalties imposed by the Assessing Officer are based on the loose papers seized and the CIT(A) was not justified in deleting the penalty, particularly when the assessee himself offered income in the course of survey. 3. Briefly stated, assessee is a renowned orthopedic surgeon and he is also the Managing Director of M/s. Sarvejana Health Care Pvt. Ltd. He filed the returns of incom .....

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8 and of ₹ 3,33,45,263 for the assessment year 2008-09, thereby admitting additional income of ₹ 25,00,000 for that year. Assessments were completed on total income of ₹ 2,12,57,442 for the assessment year 2007-08 and of ₹ 3,38,84,018 for assessment year 2008-09, viz. on incomes which are less than the incomes returned by the assessee. Even though the assessee admitted income as declared under S.132(4), the Assessing Officer however in the assessment orders brought these .....

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e additions penalty under S.271(1)(c) was levied. 4. Before the learned CIT(A), assessee explained that when the assessee has admitted an amount of ₹ 75 lakhs for assessment year 2007-08, only an amount of ₹ 45 lakhs was considered for penalty. It was also explained that assessee has invested various amounts in the earlier years from assessment year 2002-03 to 2005-06, but the Assessing Officer chose to bring to tax the entire amount in assessment year 2007- 08 based on certain regis .....

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on various case-law as discussed by the CIT(A) in paras 5.6 and 5.7 of the impugned order for assessment year 2007-08. For assessment year 2008-09, it was also submitted that loose papers do not contain any date or any details and the transactions therein do not reflect any money given or received back. It was further submitted that there is no link with any of the investments in properties or earning of income by the assessee. However, in order to settle the matter, assessee offered the amount .....

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the cost of construction of ₹ 6,45,312/-, unexplained investment in property of ₹ 45,00,000/- and unexplained advances received of ₹ 4,50,000/- and issued the penalty notice u/s.271(1)(c) of I.T. Act. However, while passing the penalty order u/s. 271(1)(c}, he considered the addition of ₹ 45,00,000/- only and did not give any reasons for excluding the other two items of addition and concluded that the appellant would not have offered the income of ₹ 45,00,000/- but .....

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45,00,000 2007-08 Misc. advances given 4,50,000 2007-08 Advances towards purchase of property 25,00,000 2008-09 TOTAL 1,00,00,000 06.1 Regarding the investment in property at Hyderguda, it is noticed from seized material nos.22,24 & 25 of annexure A/AVGR/Res/02 that he made the investment for himself and also on behalf of others in 2 phases and in the first phase, the investment was ₹ 17,80,OOO/- in Asst. year 2002- 03; ₹ 88,OOO/- in Asst. year 2003-04; ₹ 14,60,OOO/- in As .....

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ed on the seized material pages 60 to 85 of annexure-A/AVGR/Res/02 which are only sale deed dt.18-5-2006. Even if we consider penalty to be imposed, it has to be done only in the year in which the appellant has concealed the particulars of his income or furnished inaccurate particulars of such income and as noted above, there was no undisclosed income invested in the property at Hyderguda during the year under consideration. 06.2 It has been held by various judicial authorities that since assess .....

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refer to the observations made by the Horr'ble jurisdictional Tribunal in the case of Sri P.V.Ramana Reddy Vs ITO in ITA Nos.1852-1857/Hyd/2011 which is reproduced as under: "The Assessing Officer is required to satisfy himself about the concealment of income or furnishing inaccurate particulars of such income. It gives discretion to the AO to exonerate the assessee from levy of penalty even in case where the assessee has concealed the income or furnish incorrect particulars of income. .....

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y because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. If an assessee files the revised return though at a later stage or disclosed true income, penalty need not believed. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee's case, came forward with additional income though after deduction on account of that the assessee was not in a position to explainp .....

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uch discretion, particularly there is divergent of opinion among the lower authorities as well as the Tribunal while deleting or sustaining the addition. It shows that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. Further as seen from the facts of the case, to avoid litigation the assessee accepted the additions or made fresh offer in the course of the proceedings before the lower authorities. After the AO had the clinching evidenc .....

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shing the concealment independently in the given facts and circumstances of the penalty is not leviable and the same is deleted. Therefore, if there is a case where the Assessing Officer has clinching evidence for concealment or any incriminating material to establish concealment independently, then there is no question of exercising discretion as to the levy of penalty. The Assessing Officer has the discretion to levy penalty and levy of penalty is not automatic and it should not be imposed mer .....

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done in the year of making the investment and not in the year of registration of the property and offer of admission of income by the appellant. It is not in spirit of the Explanation-5A of section 271(l)(c) of IT. Act. Mere admission of income does not justify penalty, more so when the alleged investment in the property was made out of the disclosed/undisclosed income in the earlier years and not 'in the year under consideration. Therefore, the penalty levied of ₹ 14,13,720/- u/s.271 .....

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rence in the cost of construction. The contention of the AO that but for the search, the appellant would not have offered the amount of ₹ 25 lakhs may sound good but penalty cannot be levied on surmises, on conjectures and possibilities and unless it is established that there is actually concealment or non-disclosure of the particulars of income. Page nO.19 & 20 of seized Annexure-A/AVGR/Res/04 have been perused and they are only some scribbling i.e., Gurivi owes Bujji on page19 and so .....

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distinct and separate proceedings. For levying penalty, it is essential to establish that the appellant concealed the particulars of income or filed inaccurate particulars. Addition made or income offered to buy peace on account of scribbling which cannot be attributable to any assessment year or to any person cannot be a basis for levy of penalty. In view of the above, the penalty levied by the assessing officer is not justified and accordingly, the same is ordered to be deleted. 5. Aggrieved .....

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