TMI Blog2017 (3) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/Vizag/2016, I.T.A.Nos.488/Vizag/2016, S.P. No.15/Vizag/2016 - - - Dated:- 28-2-2017 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMB For The Appellant : Shri C. Subrahmanyam, AR For The Respondent : Shri S.R.S. Narayan, DR ORDER PER G. MANJUNATHA, Accountant Member: These are two appeals filed by two different assessee s against separate, but identical orders of the Commissioner of Income Tax (A)-1, Visakhapatnam dated 17.10.2016 for the assessment year 2007-08. Since, the facts are identical and issues are common, they are clubbed, heard together and disposed-off by way of this common order for the sake of convenience. 2. The brief facts of the case, extracted from ITA No.487/Vizag/2016 are that the assessee, an individual is the Managing Partner of M/s. Sai Sree Constructions, which is engaged in the business of construction of flats. The assessee filed his return of income for the assessment year 2007-08 admitting total income of ₹ 2,43,472/-. A survey operation u/s 133A of the Income Tax Act, 1961 (hereinafter called as 'the Act') was conducted in the business premises of M/s. Sai Sree Constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that the Ld. A.O. imposed penalty on mere allegation that but for the survey, the assessee would not have disclosed higher income, ignoring the fact that additional income was offered only to buy peace from the department and to avoid protracted litigation. The A.O. ought to have known that returned income and assessed income is one and the same and hence, does not warrant invoking the provisions of section 271(1)(c) of the Act. The A.O. incorrectly placed his reliance on the decision of Hon ble Supreme Court in the case of Union of India Others Vs. Dharmendra Textile Processors reported in ITR No.306 ITR 277. The Hon ble Supreme Court explained the context of this decision in the case of CIT Vs. Rajasthan Spinning Mills Ltd. reported in (2009) 23 DTR 158, therefore the A.O. was incorrect in relied upon the decision of Supreme Court to levy penalty. 5. The CIT(A) after considering the submissions of the assessee, held that it is evident that the assessee on his own did not offer additional income or filed revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court of Delhi in the case of CIT Vs. SAS Pharmaceuticals Pvt. Ltd. (2011) 60 DTR 258. 7. The Ld. D.R. on the other hand strongly supporting the order of the Ld. CIT(A), submitted that the A.O. has clearly brought out incriminating material which suggests concealment of particulars of income before levy of penalty u/s 271(1)(c) of the Act. The assessee has admitted additional income after the department has found incriminating material which suggests concealment of income which was invested in certain properties. The assessee has admitted such concealment and agreed to offer additional income of ₹ 10 lakhs followed by filing of revised return admitting additional income, therefore it clearly proves that the assessee has concealed particulars of income within the meaning of section 271(1)(c) of the Act and hence, the A.O. was right in levy of penalty u/s 271(1)(c) of the Act. The D.R. further submitted that it is incorrect on the part of the Ld. A.R. to say that there is no incriminating material and in the absence of incriminating material, penalty cannot be levied. But, the fact is that during the course of survey operation, the department has gathered certain incri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of survey to buy peace and to end protracted litigation, cannot be considered as concealment of particulars of income. We find force in the arguments of the assessee for the reason that the assessee has admitted additional income during the course of survey in response to a statement recorded u/s 133A of the Act. The assessee also filed a revised return admitting additional income disclosed during the course of survey and paid taxes thereon. The A.O. completed assessment in pursuance of survey operations without there being any further additions or disallowances to the returned income. Though there is a slight difference in assessed income, which is because of disallowance of deductions claimed u/s 80C of the Act, which do not have any bearing on the penalty proceedings. When there is no difference between income declared by the assessee and income assessed by the A.O., the question of levy of penalty for concealment of income on income surrendered during the course of survey. Therefore, we are of the view that the assessee has not concealed particulars of his income, which warrants levy of penalty u/s 271(1)(c) of the Act. 10. In the present case on hand, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty when the AO is satisfied that the assessee has either : (a) concealed the particulars of his income; or (b) furnished inaccurate particulars of such income. It is not the case of furnishing inaccurate particulars of income, as in the IT return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the IT return. The quest/on is whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the IT return filed by the assessee, viz., whether concealment is to be found in the IT return. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the AO or the CIT('A). When the survey is conducted by a survey team, the question of satisfaction of AO or the CIT(A) or the CIT does not arise. One has to keep in mind that it is the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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