TMI Blog2017 (1) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... ants levy of penalty u/s 271(1)(c) of the Act. We further observed that when assessee surrendered additional income to cover up the deficiencies found during the course of survey and offered additional income by filing revised return in response to notice u/s 148 of the Act, the A.O. was incorrect in levying penalty for concealment of particulars of income and furnishing inaccurate particulars of income. It is not automatic that whatever amount has been offered by the assessee, penalty is to be imposed. Generally, concealment provision cannot be invoked in case of surrender of addition, if surrender is made specifically on condition that no penalty will be levied or if surrender is made with a view to buy peace or to avoid harassment or litigation. In this view of the matter we are of the view that the assessee neither concealed particulars of his income nor furnished inaccurate particulars of income, which warrants levy of penalty u/s 271(1)(c) of the Act. The income finally assessed is merely an estimation of income without reference to any concealment of particulars of income. - Decided in favour of assessee - I.T.A.Nos.251 & 286/Vizag/2015, I.T.A.Nos.273, 275 & 277/Vizag/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n response to notice issued u/s 148 of the Act. However, the assessee did not filed return for the assessment year 2012-13. Therefore, the A.O. issued notice u/s 142(1) of the Act, calling for return of income on 16.11.2012. In response to notice, the assessee filed his return of income on 19.2.2013 declaring total income of ₹ 3,77,341/- and agricultural income of ₹ 2,40,000/-. Later on, the assessee has filed a revised return declaring total income of ₹ 16,02,341/- as against the original income return of ₹ 3,77,341/-, thus admitting additional income of ₹ 12,25,000/-. The A.O. after considering various explanations filed by the assessee completed the assessment u/s 143(3) r.w.s. 147 of the Act by determining the total income of 18,22,104/-, ₹ 1,10,66,802/-and ₹ 3,80,27,004/- respectively for the assessment years 2010-11, 2011-12 and 2012-13. 4. Thereafter, the A.O. initiated penalty proceedings u/s 271(1)(c) of the Act and asked to explain as to why penalty shall not be levied for concealment of particulars of income or furnishing inaccurate particulars of income. In response, the assessee submitted that he preferred appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s detected and questioned by the department. The assessee retracted from the earlier statement given at the time of survey and also denied the admission of additional income without producing any verifiable evidences. The assessee denied his statement from time to time and also failed to produce verifiable evidences for his own and self-serving claims. Therefore, opined that it is a clear case of deliberate concealment of particulars of income and furnishing inaccurate particulars of income, warrants levy of maximum penalty of 300% u/s 271(1)(c) of the Act. Accordingly, levied penalty of 300% of tax sought to be evaded. 6. Aggrieved by the penalty orders, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee submitted that there is no concealment of particulars of income or furnishing inaccurate particulars of income, as the A.O. has made additions towards estimated net profit on suppressed sales turnover. The assessee further submitted that he had explained the sources for credit found in the bank account, however, the A.O. has rejected the explanations offered by the assessee and made additions towards total credits found in the bank account. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of estimate would not in any manner absolve the assessee from the penal liability prescribed under the law when the conditions prescribed for such penal liability is satisfied and when the addition was estimated with reference to the material discrepancies detected. With these observations, opined that the assessee has concealed particulars of his income and furnished inaccurate particulars of his income and hence, the A.O. was right in levying penalty u/s 271(1)(c) of the Act. However, the CIT(A) further held that though the assessee has concealed particulars of his income, it is not a fit case for levy of maximum penalty of 300% as the reason given by the A.O. to levy maximum penalty of 300% is incorrect. The CIT(A) further observed that it is the duty of the department to make necessary enquiries to determine the correct income and establish concealment. The assessee cannot be expected in all cases to surrender additional income. The facts brought out by the A.O. only justify the basis for levy of penalty u/s 271(1)(c) of the Act. The conduct of the assessee cannot be said to be totally recalcitrant as the assessee had responded to the notices u/s 148 of the Act and filed r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of net profit, the additions sustained by the CIT(A) are purely an estimation without any evidences. Therefore, the CIT(A) was erred in confirming minimum penalty u/s 271(1)(c) of the Act. 10. On the other hand, the Ld. D.R. submitted that the assessee has concealed particulars of his income and furnished inaccurate particulars of income, which is evident from the fact that during the course of survey, the department has unearthed several discrepancies in the form of unaccounted bank account, purchases and suppression of sales turnover. The D.R. further submitted that the assessee has admitted additional income and also filed revised return by admitting additional income disclosed during survey, which clearly shows that the assessee has concealed particulars of his income while filing return u/s 139(1) of the Act. The D.R. referring to the penalty order, submitted that the A.O. has brought out clear facts wherein he had proved that there is a concealment of income within the meaning of section 271(1)(c) of the Act. The D.R. further submitted that the assessee tried to mislead the department by making fake claims without any verifiable evidences, non-disclosure of facts un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed particulars of income or furnished inaccurate particulars of his income which warrants levy of penalty u/s 271(1)(c) of the Act. The facts relating to disclosure of additional income consequent to survey operations and estimation of higher income by the A.O. is not disputed. But, the CIT(A), in the quantum appeal proceedings has directed the A.O. to delete most of the additions made by the A.O. towards unexplained credits found in the bank account and unaccounted purchases. Though, the CIT(A) has sustained part of the additions made by the A.O. towards estimation of sales turnover and estimation of net profit on such turnover, it is the fact that income finally sustained by the CIT(A) is purely on the basis of estimation. We further noticed that the ITAT in the quantum appellate proceedings in ITA Nos.274/Vizag/2015 276/Vizag/2015 has further reduced additions sustained by the CIT(A) towards estimation of suppressed sales turnover and net profit on such turnover. On perusal of the quantum appeal orders, we find that the ITAT, has finally directed the A.O. to accept additional turnover declared by the assessee for the assessment years 2011-12 2012-13 and directed the A.O. to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60% net profit on additional turnover, the ITAT finally directed the A.O. to estimate net profit of 20% on additional turnover declared by the assessee. Though there is a slightly higher income finally assessed consequent to the findings of the ITAT, it is mainly because of estimation of net profit which cannot be considered as concealment of income, which warrants levy of penalty u/s 271(1)(c) of the Act. We further observed that when assessee surrendered additional income to cover up the deficiencies found during the course of survey and offered additional income by filing revised return in response to notice u/s 148 of the Act, the A.O. was incorrect in levying penalty for concealment of particulars of income and furnishing inaccurate particulars of income. It is not automatic that whatever amount has been offered by the assessee, penalty is to be imposed. Generally, concealment provision cannot be invoked in case of surrender of addition, if surrender is made specifically on condition that no penalty will be levied or if surrender is made with a view to buy peace or to avoid harassment or litigation. 15. Coming to the case laws relied upon by the parties. The assessee has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings in this case. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the IT return filed by it. The assessee can furnish the particulars of income in his return and everything would depend upon the IT return filed by the assessee. This view gets supported by Explns. 4 as well as S and 5A of s. 271. obviously, no penalty can be Imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Sec. 271 (1) (c) has to be construed strictly. Unless it is found that there is actually a concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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