9911796707
TMI Blog2017 (3) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2007-08 admitting total income of Rs. 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 Constructions. During the course of survey, certain incriminating material was found and while explaining the incriminating material, the assessee had admitted additional income of Rs. 10 lakhs for the impugned assessment year. In pursuance of survey operation, a revised return was filed by the assessee on 19.9.2008 declaring total income of Rs. 12,43,470/-, which includes additional income offered of Rs. 10 lakhs admitted during the course of survey. Subsequently, the case has been selected for scrutiny assessment and accordingly, notices u/s 143(2) & 142(1) of the Act were issued. The A.O. completed the assessment by determining total income of Rs. 12,56,550/- inter-alia making certain additions towards disallowance of deduction claimed u/s 80C of the Act. 3. Thereafter, the assessing officer initiated penalty proceedings u/s 271(1)(c) of the Act. The A.O. noted that the additional income offered by the assessee during the course of survey was on account of incrim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme 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 revised return of income. This was triggered solely as a result of the survey in the firm's case, during the course of which certain incriminating material was found and when the assessee was questioned with reference to such incriminating material, the assessee admitted the discrepancies and also confirmed that the unaccounted income was invested in properties held in the name of partners Smt. K. Saritha and Shri K.S.R.K. Raju. The assessee's contention that additional income was offered to buy peace with the department is totally baseless and the ratio laid down by the Hon'ble Apex Court in the case of MAK Data Pvt. Ltd. Vs. CIT (358 ITR 593) (SC) would squarely apply. The CIT(A) further held that the assessee fails to offer any explanation for low income offered in the original return of income. The materials on record clearly indicate that the assessee has concealed particulars of income and therefore, found that the A.O. is justified in levying impugned penalty and accordingly, upheld penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial 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 incriminating material and when these materials were confronted to the assessee, the assessee has come forward to offer additional income. The admission of additional income by the assessee cannot be considered as voluntary, unless the survey is not taken place, the assessee would not have disclosed true and correct income. Therefore, it is a clear case of concealment of particulars of income which necessitates levy of penalty u/s 271(1)(c) of the Act. 8. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. levied penalty u/s 271(1)(c) of the Act, on the ground that the assessee has concealed particulars of income within the meaning of section 271(1)(c) of the Act. According to the A.O., the assessee would not have disclosed true and correct income, unless the survey operation has not taken place. Since, the department has gathered incriminating materials, the assessee has come forward to offer additional income, which cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee has admitted additional income to cover up the deficiencies found during the course of survey. The assessee also filed revised returns in pursuance of survey admitting additional income disclosed during the course of survey. We do not find any merits in the findings of the A.O. that the assessee would not have disclosed true and correct income, unless survey had taken place. When the assessee has filed revised return disclosing income admitted during the course of survey, even though the said surrender of additional income was after persistent queries by the A.O., once the revised returns found regularized by the revenue, the explanations of the assessee that he has declared additional income to buy peace and to come out of vexed litigation could be treated as bonafide and penalty u/s 271(1)(c) of the Act cannot be levied. 11. Coming to the case laws relied upon by the assessee. The assessee has relied upon the decision of Hon'ble Supreme Court, in the case of CIT Vs. Suresh Chandra Mittal (2001) 251 ITR 9 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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