TMI Blog2017 (5) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty cannot be levied and merely because an amount is not allowed or taxed to income, it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. Further, conscious concealment is necessary. Even if some deduction or benefit is claimed by the assessee wrongly but bonafide and no malafide can be attributed, the penalty would not be levied. As argued that not filing correct return of income is equal to filing incorrect return of income and therefore the assessee can be said to be guilty of filing inaccurate particulars of income but for levy of penalty u/s. 271(1)(c) this status is not sufficient. The AO has to show by some positive material with which he can compare that what was filed by the assessee was inaccurate or was false leading to the inference that the assessee has concealed income or filed inaccurate particulars of income. Mere disallowance or not accepting the claim of the assessee will not be sufficient. The assessee had disclosed all material facts, it is held that there is no case of concealment or furnishing of inaccurate particulars of its income in respect of the disallowances. In view of above, we note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,11,255/- vide his order dated 30.1.2009. 3. Aggrieved with the aforesaid penalty order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 31.5.2011 has deleted the penalty in dispute allowed the appeal of the assessee. 4. Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal. 5. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. He stated that voluntary disclosures does not release assesee from mischief of penal proceedings u/s. 271(1) of the I.T. Act, 1961. To support his contention, he relied upon the decision of the Hon ble Supreme Court of India in the case of Mak Data (P) Ltd. vs. CIT-II reported in (2013) 38 taxmann.com 448 (SC). 6. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, no cognizance shall be taken of the revised computation of income filed by the assessee company . . .. Thus, no cognizance shall be taken of the revised computation of income filed by the assessee company. The facts remains that the assessee company has deliberately understated its closing stock by an amount of ₹ 60,58,065, which was surrendered by it only after prior detection made by the undersigned. This fact also conveys that the books of accounts maintained by the assessee company are also deficient as they do not reflect the true and correct particulars of income of the assessee company. The aforesaid discussions clearly establish that the assessee company intentionally underdeclared its closing stock in its books of accounts to suppress its profits. Accordingly, the books of accounts maintained by the assessee company are hereby rejected. Hence, an amount of ₹ 60,58,065 is added to the total income of the assessee company on account of suppression in closing stock . 4.2. The meaning of word Voluntarily has recently been explained by the Hon'ble Allahabad High Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Juhi Investment Co. Pvt. Ltd. account regarding which the Department has incriminating material, is liable to be treated as non-voluntary. ' Dictionary: 42. Black's Law Dictionary (Seventh Edition) defines 'voluntarily' as intentionally or without coercion. It shall be appropriate to reproduce meaning of voluntarily and 'voluntary' as given in Black's Law Dictionary, which is as under: Voluntarily, adv. Intentionally; without coercion. Voluntary, Adj. 1. Done by design or intention. 2. Unconstrained by interference; not impelled by outside influence. 3. without valuable consideration; gratuitous. 4. Having merely nominal consideration -voluntariness, n.'. 43. In the Law Lexicon by P. Ramanatha Aiyar, meaning of Voluntary has been given as, to quote Voluntary - Of one's free will, impulse of choice; not constringed by another; acting voluntarily or willingly [S 2(2), Sale of Goods ActJ; [Art. 101 (3), prov., Const.] Voluntary-The expression 'voluntary is used in this section to some states have adopted at different times. T.E. Mohomed Usman v. State of Madras, AIR 1961 Mad 129, 138. [Citizenship Act, 1955, S 9( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the penalty proceedings are distinct and different from assessment proceedings. Findings in the assessment proceedings are not conclusive. The entire material available should be considered afresh by the Assessing Officer before imposing penalty uls 271(1)(c) of the Act. The Explanation to section 271(1)(c) provides a rule of evidence raising a rebuttable presumption in certain circumstances. No substantive right is created or annulled thereby. The substantive law relating to levy of the penalty is preserved. The initial burden of proof is cast on the assessee to establish the presumption arisingirr certain cases. The assessee can discharge the onus either by direct evidence or circumstantial evidence or by both. The cumulative effect of all facts should be taken into consideration. During the course of penalty proceedings, the assessee is entitled to show and establish by the material and relevant facts, which may go to affect and having direct bearing on the liability for penalty. Whether there is a concealment to make the penalty exercisable is normally a question of fact. Where the burden of proof in a given case has been discharged on a set of facts, is also a questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lars or non-disclosure of full particulars can be levied only when in the accounts/ return an item has been suppressed dishonestly or the item has been claimed fraudulently or a bogus claim has been made. When the facts are clearly disclosed in the return of income, penalty cannot be levied and merely because an amount is not allowed or taxed to income, it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. Further, conscious concealment is necessary. Even if some deduction or benefit is claimed by the assessee wrongly but bonafide and no malafide can be attributed, the penalty would not be levied. Reliance is also placed on the judgment of the Supreme court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd.(2010) 322 ITR 158. 4.7 From the decisions cited above, it can be concluded that mere disallowance or addition will not be sufficient for levy of penalty u/s. 271(1)(c). Though it may be argued that not filing correct return of income is equal to filing incorrect return of income and therefore the assessee can be said to be guilty of filing inaccurate particulars of income but for levy of penalty u/s. 271(1) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any compulsion. Disclosure of concealed income after the Department has seized the incriminating material with regard to the income so disclosed, cannot be voluntary disclosure, because it was made under the constraint of exposure to adverse action by the Department. But it cannot be held as a principle of law that the disclosure of income made after the search/raid cannot be voluntary. It is a question which has to be decided by the Department in each case on the basis of the material on the record. If on record there is incriminating material with regard to the disclosed income, the disclosure cannot be voluntary. But if the Department has no incriminating material with regard to the income disclosed, the disclosure is liable to be treated as voluntary having been made without any compulsion or constraint of exposure to adverse action by the Department. In a case where the assessee has disclosed not only the income regarding which the Department has incriminating material, but has also disclosed the income with regard to which no incriminating material was seized by the Department, the disclosure of the income with regard to which the Department has no incriminating material, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department has collected incriminating material with regard to the income so disclosed, cannot be voluntary disclosure, because it was made under the constraint of exposure to adverse action by the Department. In the present case, the AO has not collected any incriminating material against the assessee with regard to the closing stock of shares of Apollo Tyres valuing ₹ 60,58,065/- . The disclosure was made by the assessee through revised computation of income vide letter dated 8/8/06 and not under the constraint of exposure to adverse action by the AO. It is, thus, the case where disclosure has been made voluntarily and out of free will, but not under compulsion. Taking the entire gamut of the case into account, we note that there was no case for the AO that the explanation offered by the assessee was not bona fide or there was a concealment. In taking this view, Ld. CIT(A) has rightly relied upon the decision of the TAT, Delhi Bench in the case of Prem Chand Garg (supra) Addl. CIT v. Prem Chand Garg (2009) 31 SOT 97 (Delhi)(TM)/ (2009) 123 TTJ (Del)(TM) and that of the Hon'ble Punjab and Haryana High Court in the case of CIT v. Balbir Singh (2008) 304 ITR 125/ (2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utomatic. In National Textiles Vs. CIT [2001] 249 ITR 125 the Gujarat High Court held that it is not enough for the purpose of penalty that the amount has been assessed as income, the circumstances must show that there was animus i.e. conscious concealment or act of furnishing inaccurate particulars on the part of the assessee. In the present case, the assessee s conduct and the explanation offered by it shows that there was no conscious or intentional act of assessee to conceal or furnish inaccurate particulars of income. 7.6 In view of the above, we are of the considered view that the assessee had not furnished the inaccurate particulars of his income when it furnished the return as the assessee has disclosed the impugned expenses in its Profit and loss account filed along with the return of income. There is only difference of opinion on the relevant issues. If an assessee gives an explanation which is unproved but not disproved i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false. Hon'ble Punjab Haryana High Court in the case of CIT Vs. Ajaib Singh Co. [2002] 253 ITR 630 have observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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