TMI Blog2013 (9) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... search operation under s. 132 of the Act was carried out on 18th Jan., 2007, wherein different residential and business premises were covered and certain incriminating documents were found along with cash and jewellery. During the course of search operation from the premises of Shri Devi Das Sukhani at A-25, Shastri Nagar, Jodhpur and also from the premises of Devi Das Sukhani at B-45, Shastri Nagar, Jodhpur, certain incriminating documents belonging to the assessee were seized. Therefore, AO after recording the satisfaction/reasons in writing on 11th Jan., 2008 issued notice under s. 153(a) [sic- 153C) r/w s. 153A of the Act, which was duly served upon the assessee on 19th Jan., 2008. In response to the said notice, the assessee filed the return of income declaring total income of ₹ 7,18,027 on 24th April, 2008 for the assessment year under consideration and the assessment under s. 153C r/w s. 153A of the Act was completed on 23rd Dec, 2008 at total income of ₹ 7,68,030. The AO also initiated penalty proceedings under s. 271(l)(c) r/w s. 274 of the Act for concealing the particulars of income by the assessee in the original return which was filed on 18th Jan., 2005. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of tax. In the original return the assessee showed profit on sale of the same as business income. However, in the return of income under s. 153C the assessee has shown, the profit as capital gain in order to avoid undue litigation. 3. Thus on facts, there is no concealment of income or furnishing of the inaccurate particulars of the income. 4. The assessee also relies on the decision of Hon'ble Tribunal, Mumbai Bench in Asstt. CIT v. VIP Industries Ltd. [2009] 122 TTJ (Mumbai) (Trib.) 153 wherein it was held that the assessee agreeing to-addition under s. 41(1) on creditor's claim becoming barred by limitation there is no concealment attracting penalty under s. 271(l)(c). 4. The AO did not find any merit in the above submissions of the assessee and held that assessee wilfully concealed the particulars of his income and deliberately furnished inaccurate particulars in the original return filed on 18th Jan., 2005. He, therefore, levied penalty of ₹ 2,00,000 on the tax sought to be evaded by him. 5. Being aggrieved, assessee carried the matter to the learned CIT(A) and furnished the written submissions, which are incorporated in para 4.5 of the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own volition. The assessee has been assessed on the returned income as such accepting the income as declared by him in the return so filed except making disallowance of ₹ 50,000. Hence, on the facts and circumstances of case, there cannot be said to be any concealment of income or furnishing inaccurate particulars of income in terms of Expln. 5 to s. 271(l)(c) of the Act. 5.2 The case of the assessee is squarely covered by the landmark judgment of the Supreme Court in CIT v. Suresh Chandra Mittal [2001] 170 CTR (SC) 182 : [2001] 251 ITR 9 (SC) wherein it was held that where the assessee filed revised returns showing higher income after search and notice for reopening of assessment, to purchase peace and avoid litigation and Department simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, High Court has been justified in holding that no penalty could be levied. 5.3 The case of the assessee is also covered by the judgment of the Madhya Pradesh High Court in CIT v. Shyamlal M. Soni [2005] 144 Taxman 666 (MP), in which it has been held, penalty under s. 271(l)(c) could not be levied in the case, where the income returned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot found tenable ultimately, did not make a case of deliberate concealment of income, but it was a case of bona fide contesting claim of exemption and, therefore, penalty was not leviable. (iv) Similarly, in CIT v. Eicon International (P) Ltd. [2008] 166 Taxman 12 (Del) it was held that where deduction under s. 80HHC and/or s. 80HHB was claimed by assessee in original return and in subsequently revised return, even though it was not entitled, therefore, it does not mean that assessee concealed the income with view to gaining any unforeseeable benefit and in such a case penalty under s. 271(l)(c) was not imposable, there being no finding of AO that assessee had concealed the income or had furnished inaccurate particulars thereof. 6.4 It is settled proposition under the income-tax law that mere error in calculation does not amount to concealment of particulars of income. The case of the assessee is covered by the judgment of the Hon'ble Calcutta High Court in Udayan Mukherjee v. CIT [2007] 291 ITR 318 (Cal) wherein it was held that wrong calculation on the basis of a mistaken indexation does not come within the purview of s. 271(l)(c). 6.5 The assessee has acted bona fid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is failure to discharge his burden in terms of Explanation appended to s. 271(l)(c) would not arise. 7. The law is well settled that an order imposing penalty is result of quasi-criminal proceeding and penalty should not ordinarily be imposed unless the obliged either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation. No penalty should be imposed if the assessee was acting in honest and genuine belief in a particular manner, in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC), the apex Court has held that penalty should not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is matter of discretion of the authority to be exercised judicially and, on a consideration of all the relevant circumstances. Even if minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of provisions of the Act or when the breach flows from a bona fide belief that the offender is not liable to act in the manner pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 2,81,965 on sale of plot No. 29 at village Pal. Learned CIT(A) further observed that AO treated the aforesaid income surrendered by the assessee as concealed income for imposition of penalty for the reason that the return of income filed under s. 153C was not voluntary, but due to the search action in as much as no such income has been shown in the original return filed under s. 139(1) of the Act. Learned CIT(A) has pointed out that during the course of search, incriminating documents had been found and seized, which indicated liability on account of capital gains, therefore, the contention of the assessee was factually incorrect to say that such income had been shown voluntarily. According to him, there was no valid surrender under s. 132(4) of the Act and, therefore, immunity under Expln. 5 of s. 271(l)(c) of the Act was not available. He also pointed out that assessee claimed expenses of ₹ 1,45,255 on account of land filling and levelling charges and the AO made the disallowance of ₹ 50,000 only by considering that another amount of ₹ 95,000 was added under the head of sundry creditors. Learned CIT(A) confirmed the penalty levied by the AO and also obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aled the income or furnished inaccurate particulars of income in respect of abovesaid two additions, which were already disclosed by the assessee in his return of income filed under s. 153A of the Act and assessed under s. 153C of the Act. So, the penalty under s. 271(l)(c) was not leviable on the said amounts. Another addition of ₹ 50,000 out of the expenses appears to be made on estimate basis, on which penalty under s. 271(l)(c) of the Act is not leviable because it cannot be said that the addition made on estimate basis was on account of concealment of income or furnishing of inaccurate particulars of income. 10. As regards amount of ₹ 2,81,965 shown as profit on account of capital gain is concerned, it was claimed that the same had been shown earlier as a business income, So, at the most, it can be said that there was a wrong claim by the assessee in the original return, which has been corrected when return of income was filed under s. 153A of the Act. As regards, wrong claim vis-a-vis the penalty leviable under s. 271(l)(c) of the Act, the Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. (supra) has held as under : A glance a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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