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2016 (5) TMI 818 - ITAT CHANDIGARH

2016 (5) TMI 818 - ITAT CHANDIGARH - TMI - Penalty u/s 271(1)(c) - income surrendered - Held that:- As during survey, admittedly, certain documents were found, which were not explainable by the assessee. However, there was neither any detection by the Department on the basis of these documents, that these contain some element of income pertaining to the assessee. Admittedly, also that the assessee made surrender, however, the assessee kept on maintaining that this is not its total income, at bes .....

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additional taxes on it, is not a question, before us, to go into.

In these circumstances, it cannot be said that the income was surrendered after detection by the Department. As no income accrued to the assessee during the relevant assessment year. Though it is also a matter to be deliberated upon that there were certain amounts jotted down on the seized documents, which were not explainable by the assessee. However, none has gone into to find the nature of these figures, in view of .....

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ishan ORDER Per Rano Jain, A. M. These two appeals appeal filed by the Revenue are directed against the separate orders of learned Commissioner of Income Tax (Appeals), Chandigarh, both dated 23.3.2012, relating to assessment years 2006-07 and 2007-08, passed under section 250(6) of the Income Tax Act, 1961 (in short 'the Act'). 2. In both the appeals, the issue is common and, therefore, these appeals were heard together and are being disposed off by this common order for the sake of con .....

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itional income of ₹ 1 crore. On a return filed in pursuance of notice under section 148, the assessee added the surrendered income in its return of income. The assessment was completed at an income of ₹ 1,00,32,548 making addition of ₹ 32,548- on account of interest on FDRs. Penalty proceedings under section 271(1)(c) of the Act were initiated. During the penalty proceedings, it was stated that the income was surrendered with a condition not to impose penalty. Rejecting the con .....

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ad not achieved even a bare minimum level so as to account for revenue, the revenue recognition was deferred. Therefore, at best the amount surrendered can be considered as an advance received. Reliance was placed on a number of judgments for the proposition that no penalty can be levied on the income surrendered by the assessee. The CIT (Appeals), after considering the arguments of the assessee, allowed the appeal of the assessee, relying on the judgment of the Hon'ble Punjab & Haryana .....

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come-tax Act, 1961 on concealed income of ₹ 1,00,00,000/-. 3. It is prayed that the order of the Ld. CIT (A) be set aside and that of the Assessing officer may be restored. 4. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard or disposed off." 7. The learned D.R. relying on the order of the Assessing Officer stated that just because the assessee has itself surrendered the income, penalty under section 271(1)(c) of the Act cannot be deleted. He .....

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ent year being the initial phase of the project carried on by the assessee and the assessee following project completion method, no income could have been said to have occurred to it. Attempt was also made to distinguish the facts of the case of MAK Data (P) Ltd. (supra) from the facts of the present case. 9. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The undisputed facts are that b .....

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n to analyze the said judgment vis-à-vis the facts of the present case. 10. The relevant findings of the Hon'ble Supreme Court in the case of MAK Data (P) Ltd. (supra) are as follows : The AO, in our view, shall not be carried away by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct. The question is whether the assessee has offered any explanation for c .....

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ddition of ₹ 32,548/-, the penalty on which was confirmed by the CIT (Appeals), assessee is not in appeal). Further, in the background of the facts of MAK Data (P) Ltd. (supra), the Hon'ble Supreme Court analyzed the laws on penalty on surrendered income in following terms : "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 con .....

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e of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return 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 asses .....

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in that case during the survey proceedings on a third party, before ten months from the date on which assessee filed the return. These facts go to prove that even after detection of income the assessee did not added the same in his return of income. 13. Coming to the facts of the present case, during survey, admittedly, certain documents were found, which were not explainable by the assessee. However, there was neither any detection by the Department on the basis of these documents, that these .....

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urt derived from the facts that the assessee had no intention to declare its true income. In the present case, without any rebuttal by the lower authorities, we can very safely infer that whatever amount was surrendered by the assessee was not its actual income, but just an estimate. Why and how the assessee decided to surrender the same and pay additional taxes on it, is not a question, before us, to go into. 14. In these circumstances, it cannot be said that the income was surrendered after de .....

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pany is in the process of development of Mega Housing Project. The sale will commence only on completing of development. " 16. In view of the above also, it is quite clear that in fact, no income accrued to the assessee during the relevant assessment year. Though it is also a matter to be deliberated upon that there were certain amounts jotted down on the seized documents, which were not explainable by the assessee. However, none has gone into to find the nature of these figures, in view of .....

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