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A.C.I.T., Central Circle-1, Faridabad. Versus Quantum Land & housing (P) Ltd

2016 (9) TMI 850 - ITAT DELHI

Penalty levied u/s. 271(1)(c) - voluntary surrender of income by assessee - Held that:- A.O. has failed to make out the case of concealment of particulars of income or furnishing of inaccurate particulars of such income by the assessee, rather, it was a case of voluntary surrender of income for tax purpose in order to buy peace of mind and to avoid vexed litigation and Ld. CIT(A) has legally and rightly passed the impugned order. Finding no illegality or perversity in the impugned order, we here .....

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deletion of penalty u/s. 271(1)(c) of the IT Act, 1961 on the following grounds of appeal : 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred both on facts and in law, in cancelling the penalty of ₹ 11,78,100/- levied u/s. 271(1)(c) by the A.O. even when the assessee deliberately concealed its income by not disclosing his income voluntarily prior to the ate of search. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred both on facts .....

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2. The brief facts of the case are that assessee company is in the business of real estate. The assessee filed its return of income on 24.03.2008 declaring nil income. A search and seizure operation was carried out at the various corporate/administrative office premises, various business premises of the companies of Orris Group, residential premises of directors of Orris Group. Simultaneous, surveys under section 133A of the Act were also conducted in the premises of some of the assessees in the .....

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s of assessee Group have received a cash of ₹ 1,15,00,000/- as advance against the sale of some land at Rewari. Shri Vijay Gupta, Director was asked to explain whether this cash was accounted for or not, for which he replied that the cash received by the above companies through this Ikrarnama is not explainable and therefore, he surrendered this cash receipt of ₹ 1,15,00,000/- as undisclosed income in the hands of above group companies as under : (i). M/s. Crazy Developers (P) Ltd Rs .....

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penalty of ₹ 11,78,100/- under the said section. The matter was carried before the ld. CIT(A), who after considering the explanations of the assessee, deleted the penalty vide impugned order. Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before the Tribunal. 3. During the course of hearing, the ld. DR contended that the ld. CIT(A) is not justified in cancelling the penalty ignoring the provisions of Explanation 5A to section 271(1)(c) of the Act. It was submitted that the .....

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by the same Assessing Officer for the same assessment year for the similar payment in the case of one of the parties to the above mentioned agreement, i.e., M/s. Crazy Developers Pvt. Ltd. and the penalty so imposed has been deleted by the ITAT, Delhi Bench-B vide order dated 30.11.2015 in ITA No. 4250/Del./2011. Therefore, the case of the assessee is squarely covered by the said decision of coordinate bench in favour of the assessee. 5. Having considered the rival submissions and gone through .....

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the A.O. u/s 271(1)(c) of the Act . 8. We have heard Authorized Representatives of the parties, gone through the material placed on record in the light of facts and circumstances of the case and orders of tax authorities below. 9. Undisputedly, during the search and seizure operation conducted by the Revenue on 30.03.2008 at the premises of Orris group companies an amount of ₹ 1,15,00,000/- was found to have been received in cash by the company of the assessee by virtue of agreement to sel .....

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against the sale of land, treated as forfeiture in Assessment Year 2008-09, it would not constitute taxable income and, therefore, the disclosure of the same is merely an act in good faith and no concealment could be established . Ld. CIT(A) has also arrived at the conclusion that the impugned amount of cash has become income only on the basis of the statement made by the Director of the assessee company and an independent factual /legal appreciation of the facts of the case lead only to the lo .....

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declaring Nil income on 24.03.2008 and the amount disclosed during the course of search operation had been returned in a return of income filed in response to notice issued by the AO u/s 1S3C and therefore, the provisions of explanation SA read with S.271(1)(c) do seem to apply to the facts of the case. However, the AR of the appellant has taken the arguments that the receipt of cash in pursuance of an agreement to sell the land of the assessee company did not amount to generation of income for .....

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te proceedings, the AR was asked to explain as to how the agreement to sell did not culminate into transaction of sale for so many years and the amount received as advance also remained with the assessee. It was apparent that the impugned advance received by the assessee company in fact belonged to the assessee company in the form of forfeiture of the same. It was also suggested that since no evidence of forfeiture of the said amount in the F/Y 2009-10 had been filed it could be easily concluded .....

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y takes place. It was submitted that in the event of forfeiture in the A/Y 2007-08 itself, the amount of advance received would lead to reduction in the work-in-progress and at the time of actual sale only the amount of advance received would automatically become the profit and hence income arid therefore, the timing of forfeiture did not materially effect the taxable income. The AR placed reliance upon the provisions of 5.51 of the LT. Act in support of his arguments. The AR therefore concluded .....

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ure of the same is merely an act in good faith and no concealment could be established as the income returned by the assessee company is purely an act to settle the issues. The impugned amount of cash has become income only' on the basis of a statement made by the Director of the assessee company and an independent factual/legal appreciation of the facts of the case lead only to one logical conclusion that there was no income on account of cash received in pursuance of agreement to sell for .....

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per the facts of the case. The Hon'ble Supreme Court in the case of Abraham (C.A.) Vs LT.O. (1961) 41 LT.R. 425 (SC) has held that penalty proceedings is part of machinery for assessment and penalty partakes character of additional tax. It should be possible for the taxpayer to question the validity of assessment / reassessment on merits, but limiting the claim for relief to cancellation of penalty, since a valid assessment/re-assessment is foundation for a valid penalty. In the present case .....

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lty u/s 271 (1) (c ) of the LT. Act, 1961. 8. It would also be relevant to refer to the judgement of Hon'ble Apex Court in the case of CIT Vs. Suresh Chandra Mittal 251 ITR 9(SC), wherein, the assessee had originally filed returns showing meager income. After search u/s 132 and notice for re-opening, revised returns were filed showing higher income. In penalty proceedings under section 271, assessee claimed that he had offered additional income to purchase peace and avoid litigation. Penalty .....

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the factum of disclosure by the assessee to show that the amount in question constituted income much less undisclosed income. The admission on part of the assessee that the amount received belongs to him did not mean that it was his income for the relevant year. As such, I don't consider this case to be fit for imposition of penalty u/s 271(1)(c) and the same is deleted. 11. Ld. CIT(A) relied upon the judgement in the case of CIT Vs Suresh Chandra Mittal (supra). Hon ble Apex Court has decid .....

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1. The assessee had originally filed returns showing meager income. When, after action under section 132 of the Income tax Act, 1961, a notice under section 148 was served on him, he filed revised returns showing higher income. Eventually, assessment orders were passed and the returns submitted regularized under section 148. In penalty proceedings under section 271, the assessee claimed that he had offered additional income to buy peace of mind and avoid litigation. Penalty orders were passed an .....

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peals holding that no interference with the order of the High Court was called for. 12. The ratio of judgement cited as CIT vs Harish Talwar (supra) and CIT Vs SAS Pharmaceuticals (supra) delivered by Hon ble Jurisdictional High Court is that, to proceed with the imposition of penalty u/s 271(1)(c), the A.O. has to prove that there was concealment of particulars of income or assessee has furnished inaccurate particulars of such income . 13. Undisputedly, penalty proceedings as well as assessment .....

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