TMI Blog2018 (1) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer is able to strictly proved that the income offered by the assessee is either concealed or filed in accurate particulars of income, otherwise section 271(1)(c) cannot be imposed. - Decided in favour of assessee. - ITA No. 44 AND 45/VIZ/2016 - - - Dated:- 23-8-2017 - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, HON BLE ACCOUNTANT MEMBER For The Assessee : Shri C. Subrahmanyam FCA For The Department : Shri M.K. Sethi Sr.DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER These are the appeals filed by the revenue against common order of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, dated 16/11/2015 for the Assessment Years 2010-11 to 2011-12. 2. Facts of the case, in brief, are that the assessee is a firm engaged in running hospital and rendering medical service, filed its return of income for the Assessment Year 2010-11 2011-12, originally declared total income of ₹ 23,56,370/- ₹ 50,75,256/- on 21/09/2010 16/09/2011 respectively. Subsequently, a survey under section 133A was conducted on 28/03/2012 in the assessee s premises. During the course of survey, the assessee made voluntary disclosur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer levied penalty under section 271(1)(c) for concealment of income at ₹10,02,000/- and ₹ 14,61,000/- respectively for the Assessment Years 2010-11 2011-12. 5. On being aggrieved, assessee carried the matter in appeal before the ld. CIT(A). It was submitted before the ld. CIT(A) that there is no single iota of evidence unearthed by the survey team except noting of self-made vouchers maintained for certain expenditure which was already recorded in the books of account of the assessee. It is further submitted that the Department did not impound any books of account and no material was found to show that the assessee has concealed the income. It was submitted that penalty may be deleted. 6. The ld. CIT(A) after considering the explanation of the assessee and also by considering the penalty order, deleted the penalty levied by the Assessing Officer. For the sake of convenience, the relevant portion of the order is extracted as under:- 5. The only issue for consideration is whether the impugned penalty is exigible in the facts and circumstances of the case. In this regard, I have considered the submissions and details filed. I have also perused the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther penalty u/s.271(1)(c) is exigible in the assessee's case, The AO has relied on the decision of the Hon'ble Supreme Court in the case of MM Data Pvt. Ltd. Vs. CIT 358 ITR 593. It has to be seen whether the ratio laid down In that case is applicable to uphold the impugned penalty. It would be appropriate to refer to the relevant extract of the judgment. 7. The Assessing Officer, in our view, shall not be carried away by the plea of the assessee like voluntary disclosure , buy peace , avoid litigation , amicable settlement , etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to section 271(1) raises a presumption of concealment, when a different is noticed by the Assessing Officer, between reported and assessed income. The burden is thereon the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amt in question constituted the income and not otherwise. 8. Assessee has only stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sees sister concern wherein certain incriminating documents such as blank transfer deeds for shares duly signed, share application forms etc. pertaining to assessee were found. When the assessee was questioned on this incriminating information during the assessment proceedings, the assessee surrendered additional income after taking into account income already surrendered by the promoter-director. The assessee has not offered any explanation as to incriminating material. It was also noted that though the assessed flied the return of income for the subject year subsequent to survey operation it did not include the said additional income. It was only when the assessee was questioned during the assessment proceedings with reference to the incriminating material, the assessee surrendered additional income but without explanation to incriminating information found. Thus In the absence of any explanation from the assessee, the Courts took the view that Explanation 1(A) to Section 271(1)(c) has to be invoked, The Hon'ble Courts also took the view that the surrender is not voluntary as it was made after questioning by the Department with reference to incriminating material and as it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metal Industries Ltd. (11 ITR 384 2011). The Hon'ble Gujarat High Court in the case of CIT Vs. Jyoti Ltd. (1ndiankanoon.ordoc/116354383) held that penalty is not exigible when the expenditure disallowed was not found to be bogus. 5.6 To sum up, in the assessee's case the offer of additional income is found to be voluntary without reference to any incriminating material. The assessee had given satisfactory explanation for maintaining serf-made vouchers for some expenses, and such expenditure was not found to be bogus The additional income is found to be offered with reference to certain percentage and the adoption of such percentage was not based on any incriminating material evidence. In view of the above factual position and in the light of the legal position discussed in the case laws referred. I consider that the conditions stipulated in Sec. 271(1)(c) are not fulfilled and this Is not a 'fit case to levy penalty u/s.271(1)(c). Accordingly, the AO is directed to cancel the impugned levied for A.Y,2010-11 A.Y.2011-12. 7. On being aggrieved, assessee carried the matter in appeal before the Tribunal. 8. The ld. Departmental Representative has submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accepted by the Assessing Officer without making any addition. The Assessing Officer has also not referred any incrementing material or discrepancies in the books of account in the assessment order passed. Even in the impugned penalty order, there is no reference to any incriminating material or detected any concealment by the Department. The only defect pointed out by the Assessing Officer is self-made vouchers. For that, the assessee has already explained that due to nature of expenditure, it is not possible to obtain for each and every expense and to cover up the discrepancies, self-made vouchers were prepared and additional income is offered by the assessee. The Assessing Officer accepted the explanation given by the assessee. It is not the case of the Assessing Officer that the explanation given by the assessee neither false nor bonafide. The Assessing Officer not made any investigation or found any discrepancies in the books of account maintained by the assessee. He accepted the revised return of income filed by the assessee. In the penalty order, the Assessing Officer has relied on the order of the Hon'ble Supreme Court in the case of MAK Data Pvt. Ltd. (supra) and hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to give a finding that the additional income offered by the assessee is a concealed income or furnished in accurate particulars of income. In the present case, in the penal proceedings, the Assessing Officer has not made any such enquiry and no such finding has been given, hence, the judgment of the Hon'ble Supreme Court in the case of MAK Data Pvt. Ltd., (supra) has no application to the facts of the case. In the penalty order, the Assessing Officer has observed that the assessee offered additional income only after revenue noticed low rate of profit declared by the assessee. The Hon'ble Delhi High Court in ITA No. 1058/2009 in the case of CIT Vs. M/s. Sas Pharmaceuticals, dated 08/04/2011, has observed that no doubt the discrepancies were found during the survey. This has yielded income from the assessee in the form of amount surrendered by the assessee. Presently, we are not concerned with the assessment of income, but the moot question is to whether this would attract penalty upon the assessee under the provisions of section 271(1)(c) of the Act. Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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