TMI Blog2018 (3) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure other-wise not found to be bogus or patently impermissible the disallowance made by the AO by invoking the provisions of section 40(a)(ia) would not lead to conclusion that the assessee has either concealed the particulars of income or furnished inaccurate particulars of income. Once the case of disallowance under section 40(a)(ia) does not fall under the category of concealment of particulars of income or inaccurate particulars of income, the mere disallowance because of non compliance of the provisions of the Act ipso facto would not lead to levy of penalty. No error or illegality in the order of the ld. CIT (A) in deleting the penalty. Addition made under section 69C was due to the reason that the assessee failed to explain the source of said expenses. Accordingly, we concur with the view of ld. CIT (A) to restrict the penalty to 100% of the tax to be evaded of such income. The order of ld. CIT (A) is upheld. Penalty on the addition/disallowance made under section 24(a) - Held that:- The said addition was deleted by the Tribunal in the appeal filed by the assessee against the revision order. This fact of deletion of the addition has not been disputed by the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained expenditure Rs.3,15,750/- Apart from the above additions/disallowances, there was an addition on account of undisclosed cash receipt of ₹ 46,00,000/- which was declared by the assessee in the revised return filed after the survey proceedings. The AO initiated proceedings for levy of penalty under section 271(1)(c) of the Act in respect of the above additions/disallowances as well as in respect of the disallowance under section 24(a) in pursuant to the revision order passed under section 263 of ₹ 1,92,000/-. Thus the total amount on which penalty was initiated was ₹ 63,77,074/-. The AO levied a penalty of ₹ 46,67,060/- which is 200% of tax evaded on the said amount vide order dated 30th March, 2012 passed under section 271(1)(c) of the Act. The assessee challenged the action of the AO before ld. CIT (A). The ld. CIT (A) has deleted the penalty levied against the undisclosed income of ₹ 46,00,000/-, disallowance made under section 40(a)(ia) and the addition/disallowance made under section 24(a) of ₹ 1,92,000/-. The ld. CIT (A) has though confirmed the levy of penalty, however, to the extent of 100% as again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered as undisclosed income of the assessee when there is no addition made by the AO in the return of income. When a valid revised return of income was filed and accepted by the AO then the amount offered to tax in the return of income cannot be held as concealed income. Further, the ld. A/R has submitted that even otherwise this was not a real income of the assessee but only advances were received by the assessee without any actual sale during the year under consideration. The income would arise or accrued only at the time of sale in the subsequent year. Hence the mere surrender of income by the assessee in the revised return of income cannot be treated as undisclosed income of the assessee. He has relied upon the decision of Hon ble Karnataka High Court in the case of CIT vs. Vega Auto Accessories Pvt. Ltd., 212 taxman 96 (Kar.). He has also supported the order of ld. CIT (A). The ld. A/R has also relied upon the various decisions which were relied upon before ld. CIT (A). 4. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee has offered income of ₹ 46,00,000/- in its revised return of income file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2003, the assessee included the surrendered amount and filed a return of income declaring ₹ 87.71 lakhs. The assessment was made including the surrendered amount obviously on the basis of return filed. Penalty proceedings for concealment of income were initiated on the ground that the surrender was made during the survey only when the discrepancies were brought to the notice of the assessee. The assessing officer was of the view that had there been no survey the assessee would have succeeded in concealing the income and evading tax. The CIT (Appeals) and the Tribunal held that it was not a case of concealment of income as the surrendered income had been included in the return filed by the assessee. This Court upheld the finding of the Tribunal holding that there could not be any penalty on the basis of assumptions, surmises and conjectures and since the assessee had included the surrendered income in the return filed, there was no non-disclosure or concealment which could be penalised. This decision is not a case of revised return. It, therefore, does not have any relevance to the present case. 21. Both the CIT (Appeals) and the Tribunal, with respect, have not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 9 to 11 as under :- 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the relevant material on record. The AO has levied the penalty in respect of the disallowance made under section 40(a)(ia) because of non compliance of provisions of deduction of TDS. It is not the case of the AO that the expenditure claimed by the assessee is bogus or not allowable under sections 28 to 37 of the IT Act. However, the disallowance was made only because of non deduction of TDS by the assessee. The remedy against the loss of revenue in such violation of provisions of deduction of tax is two-fold. One is an order to be passed under section 201(1)/201(1A) and another remedy to make the compliance is disallowance of the said expenditure under section 40(a)(ia). Therefore, when the claim of expenditure other-wise not found to be bogus or patently impermissible the disallowance made by the AO by invoking the provisions of section 40(a)(ia) would not lead to conclusion that the assessee has either concealed the particulars of income or furnished inaccurate particulars of income. Once the case of disallowance under section 40(a)(ia) does not fall under the category of concealment of particulars of income or inaccurate particulars of income, the mere disallowance because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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