TMI Blog2016 (5) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 24/09/2015 of learned Commissioner of Income-tax(Appeals) for assessment year 2011-12 confirming the penalty, levied under section 271(1)(c) of the Income-tax Act, 1961 (for short the Act ) by the Assessing Officer. The grounds of appeal raised by the assessee are as under: 1. That the Commissioner of Income Tax(Appeals) erred on facts and in law in not holding that the impugned order dated 24.07.2014 levying penalty of ₹ 18,35,000/- under Section 271(1)(c) of the Income Tax Act, 1961 ( the Act ) is without jurisdiction, bad in law and void-ab-initio. 1.1 That the Commissioner of Income Tax(Appeals) erred on facts and in law in not appreciating that the impugned penalty order was passed without recording proper satisfaction in the assessment order passed under Section 143(3) of the Act, which is sine qua non for assuming of jurisdiction. 1.2 That the Commissioner of Income Tax(Appeals) erred on facts and in law in confirming the levy of penalty solely on the basis of findings given in the assessment order, without appreciating that penalty proceedings are separate and independent from assessment proceedings and consequently, the impugned pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was shown at ₹ 6,69,283/-. The revised form No. 16 contained perquisites related to ESOP of PepsiCo USA exercised and sold during the year under consideration. Thus, the Assessing Officer (AO) made addition for the difference amount of perquisites of ₹ 55,92,239/-. The Assessing Officer also made addition of ₹ 3,20,718/- under the head Short-Term Capital Gain for sale of the said ESOP , addition for amount of Foreign Dividend Income of ₹ 4,69,537/- and interest income of ₹ 41,760/- received from HSBC, which was not shown by the assessee in the original return of income. The assessee did not prefered appeal against the order of the Assessing Officer. The Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act in respect of all the four additions made in the assessment order. After providing opportunity of hearing to the assessee, the Assessing Officer levied a penalty of ₹ 18,34,714/-. Aggrieved, the assessee filed appeal before the ld. Commissioner of Income-tax(Appeals), who upheld the penalty levied by the AO. Aggrieved, the assessee is in appeal before us. 3. At the outset of hearing, ld. Authorized Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied in case of voluntary surrender of income by the assessee on detection of bona fide/inadvertent mistake by the assessee, the ld. AR relied on the following case laws: 1. CIT versus Manjunatha cotton and ginning factory 359 ITR 565 (Karnataka High Court) 2. CIT versus Sania Mirza 259 CTR 386 (Andhra Pradesh High Court) 3. CIT versus Saket Aggarwal 147 ITD 686 (Delhi Tribunal) 7. On the contrary, ld. DR relied on the order of the lower authorities and submitted that the assessee not only exercised the option of ESOP but also sold the same during the year but omitted to declare the same in the return of income, which amounted to concealment of income and, therefore, the assessee is liable for the penalty under section 271(1)(c) of the Act. 8. We have heard the rival submissions and perused the material on record. As regard to ESOP, the ld. Commissioner of Income-tax(Appeals) in the impugned order has held that (i) the assessee was fully aware of the ESOP related transaction which had taken place in the month of March 2011 and the payments credited in the assessee s bank account, as such there was no reason as to why the assessee could not have paid the tax by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee first offered the additional income suo-motu , which was subsequently assessed by the Assessing Officer. As regard to the finding of the ld. CIT(A) that the explanation offered by the assessee was without bonafide reasons, the ld. AR submitted that not only the assessee submitted revised computation of income but also paid the due taxes on the additional income before it came to the notice of the AO and therefore the assessee demonstrated the bonafide reason behind the mistake. As regard to the finding of the ld. CIT(A) in respect of the other income of interest and dividend, the ld. AR repeated same arguments. As regard to the finding of the ld. CIT(A), that the assessee is a well paid executive of a large MNC and could have taken assistance of consultants, the ld. AR submitted that mistake was due to the incorrect Form No. 16 received from the employer and it was not having any relation with the executive of a large company. The finding of the Ld. CIT(A) that the assessee failed to substantiate the explanation and failed to prove bonafide was opposed by the learned AR that the assessee had already submitted revised computation of income and paid taxes on such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions and surrendered the income in response to the return filed under section 148 of the Act, the conduct of the assessee was found to be bonafide and, therefore, no penalty for concealment of particulars of income was leviable. 14. In the case of CIT versus Manjunath Cotton and ginning factory (supra) the Hon ble Karnataka High Court discussed in detail the circumstances set out in Explanation-1 to the section 271(1)(c) of the Act , which justifies levy of penalty. The relevant part of the judgment is reproduced as under: 31. After insertion of Explanation 1 to Section 271(l)(c), the law on concealment and penalty has become stiffer. The explanation as it stands now is a complete code having the following features: (1) Every difference between reported and assessed income needs an explanation. (2) If no explanation is offered, levy of penalty may justified. (3) If explanation is offered, but is found to be false, penalty will be exigible. (4) If explanation is offered and it is not found to be false, penalty may not be leviable, - (a) such explanation is bona fide. (b) the assessee had made available to the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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