TMI Blog2013 (12) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... ing pointed out by AO Without appreciating the fact that the correct figure was suo moto offered by appellant during the course of hearing and the fact has also not been disputed by AO in its order passed u/s 271(l)(d) of the Act. 3. That on the facts and circumstances of the fact CIT(A) erred in confirming the penalty levied by AO On the grounds that wrong claim of expenses were offered during the course of investigation u/s 115WE(3) of the Act and if assessment would not have initiated appellant might not have admitted its mistake. 3. Briefly stated the facts giving rise to this appeal are that during the quantum assessment proceedings, the Assessing Officer observed that an amount of ₹ 11,55,634/- on account of conveyance was not included in the value of fringe benefit. Accordingly, the Assessing Officer disallowed 20% of these expenses which was added to the total value of fringe benefit. On being informed by the Assessing Officer, the assessee agreed that this was a mistake in calculating the value of FBT. The Assessing Officer relied upon the various judicial pronouncements to support his argument that the assessee had wrongly made the claim of FBT and accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the penalty order. The counsel of the assessee also pointed out that the Commissioner of Income Tax(A) erred in confirming the penalty order on the ground that wrong claim of expenses was offered during the course of investigation u/s 115WE(3) of the Act and if the assessment had not been initiated, the assessee might not have admitted its mistake. 6. The counsel of the assessee also submitted that as per assessment order passed u/s 143(3) r/w 115WE(3) of the Act, the assessee declared the value of fringe benefit at ₹ 2,52,54,088/- and the amount of ₹ 11,55,634/- on account of impugned conveyance expenses was not considered in the value of FBT due to casual error which was suo moto rectified during the course of assessment hearing. The counsel contended that the assessee is an honest taxpayer and the impugned amount is very meager in comparison to the value of fringe benefit already declared by the assessee before the revenue authorities. Therefore, the authorities below were not justified in holding that the assessee had furnished inaccurate particulars of income. 7. The counsel of the assessee has placed reliance on the judgment of ITAT Delhi G Bench in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity but the assessment order is not conclusive evidence that the amount assessed was in fact the income of the assessee and it cannot be presumed that there was a conscious concealment or act of furnishing of inaccurate particulars by the assessee. Accordingly, respectfully following the judgement of Hon ble High Court of Gujarat in the case of National Textile vs Commissioner of Income Tax(supra) we hold that the penalty is not imposable in the present case and the Assessing Officer imposed penalty on erroneous assumptions which was wrongly confirmed by the Commissioner of Income Tax(A). 8. On above contentions and submissions of the assessee, ld. DR placed reliance on the decision of Hon ble Supreme Court in the case of K.P. Madhusudan vs Commissioner of Income Tax(2001) 251 ITR 99 (SC), decision of Hon ble High Court of Rajasthan in the case of Commissioner of Income Tax vs Mohd. Farukhi (2003) 259 ITR 132 (Raj) and decision of Hon ble Madras High Court in the case of Commissioner of Income Tax vs Krishna Co. 120 ITR 144 (Madras). To support this proposition that in case where the assessee himself had admitted that the amount represented his own income, no further evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration of above contentions, we enlighten ourselves by the decision of Hon ble Apex Court in the case of K.P. Madhusudan vs Commissioner of Income Tax (supra) wherein it has been held that the assessee is deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof unless the assessee proves that the failure to return the correct income did not arise from any fraud or neglect on his part. In the present case, during the assessment proceedings u/s 143(3) r/w 115WE(3) of the Act, when a calculation mistake was pointed out by the Assessing Officer, the assessee suo moto offered the same for taxation without agitating the issue further and the assessee did not carry out the issue in further appeal. In this situation, when the assessee is offering a huge amount of value of fringe benefit amounting to ₹ 2.55 crore for taxation, then calculation mistake made by the assessee for this purpose, cannot be said to be an act of furnishing of inaccurate particulars to make a false claim. The assessee has shown its bona fide on two counts, firstly when the calculation mistake was pointed out by the AO, the assessee came forward to voluntarily surrende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1s section 271 of the act are quasicriminal proceedings and penalty will ordinarily be imposed if the party obliged either acted deliberately in defiance of law or was guilty of conduct con-tumacious or dishonest, or acted in conscious disregard to its obligation. 2.2 In the instant case your goodself, will appreciate from the perusal of the above fact that the assessee didn't have any intention to conceal any factor furnish any inaccurate particular, the mistake committed by assessee at the time of preparation of return of income was just an error of omission which was identified by assessee at the time of preparation of details for the assessment and therefore was duly admitted suo moto during the course of hearing. 2.3 In this regard reliance may be placed on the decision of hon'ble supreme court in the case of K.C. Builders and Anr. Vs ACIT: (2004) 135 taxman 461, wherein apex court has held as under: the word 'concealment' as used in section 271(1)(c) inherently carried with it the element of mens rea, therefore, the mere fact that some figure or some particulars have been disclosed by itself, even if takes out the case from the purview of non-disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of FBT and was not due to the detection of any concealment of facts or the inaccurate particulars by the A.O. The assessee also relied upon the various case laws and prayed that the penalty proceedings may please be dropped. The submissions of the assessee have duly been considered and I do not find any merit in the same. Moreover, the facts of the cases relied upon by the assessee are distinguishable from the facts of the present case. 15. During the first appellate proceedings against the penalty order, the Commissioner of Income Tax(A) observed and held as under:- 4. After considering the facts of the case, observations of the A.O., submissions of the A.R. of the appellant it is observed that In this case the false claim made by the appellant had been detected only after the case was being investigated u/s 143(3) of the LT. Act. It Is, therefore, clear that this wrong claim would not have come to light if the case had not been taken up for scrutiny. The various judicial pronouncements related upon by the A.R. of the appellant are based on the argument that no inaccurate particulars had been provided by the assessee. However, in the present case, the appellant had fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the Commissioner of Income Tax(A) upheld the penalty on wrong basis and relying on irrelevant citations. As per factual matrix, the assessee did not include value of conveyance expenses to the value of FBT. Obviously, the voluntary surrender during assessment proceedings does not create any immunity from penalty for the assessee but as per Explanation 1 to section 271(1) of the Act, the penalty can only be imposed when (i) the assessee fails to offer explanation or, (ii) the explanation of the assessee is found to be false or (iii) the assessee offers an explanation which he is not able to substantiate or (iv) the assessee fails to prove that such explanation is bona fide and that all facts relating to the same and material to the computation of income have been disclosed by the assessee. 18. In the case in hand, the assessee has offered above explanation which was not found to be false and the authorities below have not adjudicated the explanation in a proper way because as per decision of Hon ble apex court in the case of MAC DATA (P) Ltd. vs C.I.T., voluntary surrender is not a cover to provide immunity from penalty but at the same time, explanation of the assessee is to ..... 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