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2016 (4) TMI 807 - ITAT VISAKHAPATNAM

2016 (4) TMI 807 - ITAT VISAKHAPATNAM - TMI - Penalty u/s 271(1)(c) - Held that:- In the present case on hand, the assessee right from the beginning contends that he has not maintained regular books of accounts, so as to say whether those 12 receipts which are the basis for estimation of income was accounted in the books of accounts or not. The assessee explained that he has fairly estimated his income based on the available information and arrived at annual gross receipts of ₹ 20 to 25 la .....

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account of referral income from two hospitals amounting to ₹ 2,14,177/- which is subsumed in the extra income declared during the course of survey. The A.O. had his own apprehension that assessee would not have declared his true and correct income, if survey could not taken place. Whether survey is taken place or not, the fact remains that the due date for furnishing return for both the assessment years was not over as on the date of survey. Therefore, there is no scope for such suspicion .....

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o levy penalty. Therefore, we direct the A.O. to delete the penalty of ₹ 10 lakhs levied u/s 271(1)(c) of the Act. - Decided in favour of assessee - I.T.A.No.314/Vizag/2013, I.T.A.No.318/Vizag/2013 - Dated:- 18-3-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri M.N. Murthy Naik, DR PER G. MANJUNATHA, Accountant Member: These cross appeals filed by the assessee, as well as revenue are direc .....

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22,78,580/-. A notice u/s 271(1)(c) r.w.s. 274 of the Act was issued to the assessee, for concealment of particulars of income or furnishing inaccurate particulars of income. A survey was conducted u/s 133A of the Act on the professional premises of the assessee on 23.9.2008. During the course of survey, it was noticed that the assessee has not filed any return of income for the assessment year in question and also for the assessment year 2007-08. It was further noticed that a few loose slips fo .....

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lections from the profession from inpatient and out-patient is about ₹ 6,000/-. By taking into account average daily collections of ₹ 6,000/- per day, his annual collections would be around ₹ 20 to 25 lakhs and after all expenditure towards maintenance of hospital, the net annual income would be around ₹ 15 lakhs. However, I am not in a position to substantiate my professional receipts and expenses with necessary documentary evidence, therefore agreed to admit a sum of &# .....

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before filing the return of income. The Assessing Officer has completed the assessment u/s 143(3) of the Act and determined total income of ₹ 22,78,580/-. While doing so, the Assessing Officer has accepted the return of income filed by the assessee, in addition made separate additions towards referral income received from two diagnostic centers, which was not considered by the assessee in the return of income. 3. Thereafter, the Assessing Officer issued a show cause notice u/s 271(1)(c) r. .....

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mooth completion of the assessment proceedings with a request to the assessing officer for immunity from penal proceedings. Therefore, requested to drop penalty proceedings. The Assessing Officer however after considering the explanations furnished by the assessee, levied the penalty u/s 271(1)(c) of the Act. While doing so, the Assessing Officer was of the opinion that the assessee has willfully concealed the particulars of income and also furnished inaccurate particulars of income. Therefore, .....

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nformation, the assessee was compelled to admit additional income, therefore, it cannot be considered as voluntary disclosure of income. With these observations, the Assessing Officer levied penalty of ₹ 10 lakhs u/s 271(1)(c) of the Act. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the Assessing Officer. The CIT(A) after considering the explanations furnished by the assessee .....

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er, the revenue as well as assessee are in appeal before us. 5. The Ld. Authorised Representative of the assessee submitted that the order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. The Authorised Representative further submitted that the CIT(A) was not justified in sustaining minimum penalty of 100% levied u/s 271(1)(c) of the Act. The Authorised Representative further submitted that the assessee has disclosed additional income during the co .....

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g the return and paid taxes as admitted during survey, the Assessing Officer levied penalty by holding that the assessee did not filed the return of income as on the date of survey. The Authorised Representative further submitted that as on the date of survey, i.e. on 23.9.2008, the due date for furnishing return of income for the assessment year in question was not over. Therefore, the Assessing Officer was not correct in holding that the assessee would not have filed return of income and discl .....

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to have sustained the penalty levied u/s 271(1)(c) of the Act in total, as he himself stated that it is a fit case for levy of penalty. The Ld. D.R. further submitted that the CIT(A) erred in not giving cogent reasons for restricting the penalty to 100% of the taxes sought to be evaded, when he is convinced that the assessee did not offer any explanations, therefore requested to uphold the penalty order passed by the assessing officer. The D.R. further submitted that the assessee has willfully c .....

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he assessee was compelled to admit additional income, which cannot be considered as voluntary disclosure of income. Therefore, requested to uphold the penalty order passed by the A.O. 7. We have heard both the parties and perused the materials available on record. The factual matrix of the case is that there was a survey u/s 133A of the Act in this case on 23.9.2008. As on the date of survey, the assessee did not filed return of income for the assessment year in question and also for the assessm .....

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ks of accounts. The assessee, in reply to a further query from the A.O. admitted that his average daily collection from inpatient and outpatient is around ₹ 6,000/-, by taking into account the average daily collection his professional collections would be around ₹ 20 to 25 lakhs per annum. From this, after meeting the expenditure for maintenance of hospital, the net income would be around ₹ 15 lakhs per annum, which is probable and estimated. Since, I am not in a position to su .....

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fide intention willfully concealed the particulars of income, which is evident from the facts that he did not filed return and also not paid any advance tax. The A.O. was of the opinion that if the survey could not taken place, the assessee would not have disclosed his true and correct income. Because, the survey party found loose sheets which indicates the suppressed income, the assessee has accepted additional income which is not voluntary. The department has gathered some material information .....

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disclosed the income admitted during the course of survey and also paid taxes before filing the return of income. He further submitted that he had made a fair estimation of income and disclosed over and above his probable income to buy peace and to cooperate with the department for smooth completion of assessment proceedings. It was further stated that the declaration of income was made with a request to immunity from penalty provisions and his request at the time of survey have to be taken as i .....

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sum not less than 100% and not more than 300% of tax sought to be evaded. Explanation (1) appended to section 271(1)(c) of the Act, provides for levy of penalty, if that person fails to offer an explanation or the explanation offered by such person is found to be false or the explanation offered by him is not substantiated and he fails to prove such explanations is bonafide and that all facts relating to the same and material to the computation of his total income has been disclosed by him repr .....

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e Act or u/s 148 of the Act and the A.O. or CIT(A) is satisfied that in respect of such assessment year, such person has taxable income, then such person shall for the purpose of clause (c) of this sub section, be deemed to have concealed the particulars of his income, notwithstanding the fact that such person furnishes a return of his income at any time after the expiry of the period aforesaid. The concealment of particulars of income and furnishing inaccurate particulars of income should be re .....

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the assessee has fairly estimated his gross collections between ₹ 20 to 25 lakhs and after all expenditure a net income of ₹ 15 lakhs has been estimated. Further, the assessee has disclosed ₹ 20 lakhs for the assessment year under consideration and also for the assessment year 2007-08. Further, the assessee has filed return of income admitting income disclosed in the survey and also paid taxes before filing the return of income. It is not a case of A.O. that he had gathered co .....

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ct. 10. Explanation 3 appended to section 271(1)(c) of the Act provides for levy of penalty, in a case where any assessee, fails without reasonable cause, to furnish within the period specified in sub section 1 of section 153 of the Act, a return of his income which he is required to furnish under section 139 of the Act, in respect of any assessment year and the A.O. and CIT(A) is satisfied that in respect of such assessment year, such person has taxable income, than such person shall for the pu .....

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Act. We do not see any merits in the contention of the A.O. that assessee would not have filed return and not disclosed true and correct income. In the present case on hand, as on the date of survey i.e. on 23.9.2008, the due date of furnishing return of income for the assessment year 2008-09 was not over. Therefore, the A.O. was not correct in coming to the conclusion that the assessee would not have filed return of income if survey was not conducted. Similarly, the A.O. stated that assessee ha .....

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cause for which the requirement of concerned provisions of section could not be complied with is primarily an essential question of fact and it has to be decided in each case on consideration of materials placed before the concerned authority. The levy of penalty u/s 271(1)(c) of the Act is not automatic. Before levying the penalty, the concerned officer is required to find out that even there was any violation referred to in the said provisions and the same was without a reasonable cause. The i .....

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ts, so as to say whether those 12 receipts which are the basis for estimation of income was accounted in the books of accounts or not. The assessee explained that he has fairly estimated his income based on the available information and arrived at annual gross receipts of ₹ 20 to 25 lakhs and after all expenses for maintenance of hospital, net income would be around ₹ 15 lakhs which is probable and estimated. However, he disclosed ₹ 20 lakhs which is over and above his estimate .....

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not have declared his true and correct income, if survey could not taken place. Whether survey is taken place or not, the fact remains that the due date for furnishing return for both the assessment years was not over as on the date of survey. Therefore, there is no scope for such suspicion and surmises in the penalty proceedings. 12. Coming to the case laws relied upon by the assessee. The assessee relied upon the judgment of Hon ble High Court of Delhi, in the case of CIT Vs. SAS Pharmaceutica .....

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the CIT(A) may direct payment of penalty by the assessee. Sec. 271(1)(C) authorizes imposition of penalty when the AO is satisfied that the assessee has either : (a) concealed the particulars of his income; or (b) furnished inaccurate particulars of such income. It is not the case of furnishing inaccurate particulars of income, as in the IT return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the IT return. The quest/on is whether the .....

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keep in mind that it is the AO who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings in this case. It necessarily follows that concealment of particulars of income or furnishing of in .....

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ed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Sec. 271 (1) (c) has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax.-CIT vs. Mohan Das Hassa Na .....

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. in case of V.V. Projects and Investments Pvt. Ltd. Vs. DCIT 300 ITR 40 (A.P.) considered similar situation and held that penalty is not imposable. Further, held that in absence of anything to show that any other material was available with Assessing Officer to effect that assessee concealed income, it is not open to Assessing Officer to invoke power u/s 271(1)(c) levying penalty. Following said decision penalty u/s 271(1)(c) was not imposable. Even otherwise, assessee having given bonafide exp .....

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