TMI Blog2018 (3) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... not declared in the original return of income cannot be a ground to automatically conclude that it is unexplained investment particularly having regard to the aforesaid evidences and factual position placed on record which remains un-assailed despite examination at various levels. - Decided in favor of assessee. Disallowance of expenditure - Held that:- AO had made the disallowance since this audit report mentions that the expenses vouchers were not supported by documentary evidence. It has been also noted that during the appellate proceedings, the assessee has not produced any evidence to justify the claim of expenditure. It has been held that mere contention that disallowance is ad hoc was not a valid basis. Having regard to the reasonable estimate made by the learned Assessing Officer, the aforesaid disallowances were deleted. No reason to deviate from the aforesaid findings recorded by the Ld. CIT (A). The assessee has not brought any material so as to warrant a view different from the aforesaid conclusion. In view of the aforesaid reasons, claim raised by the assessee is rejected. Interest levied under section 234B and 234C - Held that:- We hold that levy of interest is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals) has erred both in law and on facts in holding that income declared by the appellant company relating to receipts from M/s TPE, a semi-government company incorporated in Russia and, credited in Natwest Bank Account, London is not voluntary. 1.1 That in arriving at the aforesaid conclusion, the learned Commissioner of Income Tax (Appeals) has overlooked the reasons recorded for initiation of proceedings under section 147 of the Act wherein it has been stated that proceedings under section 147 of the Act had been initiated on the basis of income declared by the appellant-company in letter dated 11.4.2006 and therefore, conclusion that return of income was not voluntary is wholly misconceived, misplaced and untenable. 1.2 That the learned Commissioner of Income Tax (Appeals) in arriving at the aforesaid conclusion, has failed to appreciate that a criminal case was registered under the Indian Penal Code and Prevention of Corruption Act against the unknown officials of NTPC of India and others on 6.3.2006 and not against the appellant and therefore, the same neither in law and nor on fact could have been made a basis to assume much less conclude that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbishment of Obra Thermal Power Station, Uttar Pradesh and, as such, the aforesaid sums could not be held to be unexplained investment under section 69 of the Act and, infact, were sums received in the course of business of appellant company and, thus assessable under the head Profits and Gains of business of profession . 3.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the documentary evidence furnished by the appellant to demonstrate the nature of the income received by the assessee and, as such, the conclusion so arrived is wholly misconceived, unsustainable and unwarranted. 3.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, mere fact that original agreement was not filed by the assessee with M/s TPE could not be made a basis to hold that, receipts of ₹ 10,48,44,798.60 did not represent the income received by the appellant from M/s TPE particularly, when photocopy of the agreement and, also illustrative correspondence regarding support services provided by the appellant to M/s TPE had been placed on record during the course of both assessment and, appellate proceedings. 3.4 That the learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted unexplained investment u/s 69 of the Act. 6 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in confirming the adhoc disallowance of ₹ 1,00,000/- out of expenditure incurred and, claimed by the appellant company. 7. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in upholding disallowance of ₹ 10,000/- u/s 14A of the Act. 8. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest under section 234B and 234C of the Act, which on the facts of the case was not leviable. 8.1 That while upholding the levy of interest under section 234B and 234C of the Act, the learned Commissioner of Income Tax (Appeals) has failed to appreciate submissions made by the appellant to establish that no interest is liable on the facts of the case of the appellant and thus interest confirmed was not in accordance with law. 8.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that even otherwise, no interest was leviable after such sum had been duly offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al has been gathered or obtained by the Department prior to furnishing of declaration of income by the appellant to suggest or even hold that income declared by the appellant relating to sums credited in the Natwest Bank Account at London was not voluntary. 1.4 That the entire basis adopted by the learned Commissioner of Income Tax (Appeals) is based on assumptions and presumptions, unsupported by any material and hence not tenable. 2 That the learned Commissioner of Income Tax (Appeals) further erred both in law and on facts in holding that the revised return of income filed by the assessee on 12.2.2007 declaring an income of ₹ 4,60,13,040/- was nonest and invalid return. 2.1 That the learned Commissioner of Income Tax (Appeals) has overlooked the written submissions duly supported by judicial pronouncements wherein it was established that, revised under section 139(5) of the Act was a valid return. 3 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in holding that, aggregate sum of ₹ 4,10,20,996.81/- disclosed by the assessee in the revised return filed on 12.2.2007 represented unexplained invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Power Station, Uttar Pradesh to M/s TPE did not correlate with the sums received by the appellant company from M/s TPE was factually incorrect, wholly misconceived and entirely misplaced. Infact, the sums received by the appellant company have full correlation with the advances received by M/s TPE from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited. 4 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in not allowing the claim of deduction of 15% of total receipts in view of the principles laid down by the Apex Court in the case of Calcutta Company Ltd. reported in 37 ITR 1. 4.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that clause 2 of the agreement dated 23.7.2003 clearly provided that the assessee company has to discharge several obligations and in view thereof, it was highly unjustified and unreasonable to tax the entire receipt as income of the appellant company in the instant assessment year. 5 That the learned Commissioner of Income Tax (Appeals) in law and on facts in holding that the bank interest of ₹ 611.08 represented unexplained investment under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 49,97,160/- 5.1 Thereafter, proceedings were initiated by the AO u/s 147 of the Income Tax Act, 1961 (hereinafter called the Act ) for A.Y. 2004-05 and notice u/s 148 was served upon the assessee on 22.05.2006. In response to the same, the assessee filed return of income on 21.06.2006 declaring income at ₹ 1,86,28,990/- by including income stated to have been earned from providing support services to M/s. TPE, a company incorporated in Russia (hereinafter referred to as TPE ) under an agreement dated 23.07.2003 during implementation of their contract dated 5.02.2003 with M/s. Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Ltd. (hereinafter referred to as UPRVUNL ) for the latter s Obra Project. In the note to the return of income, it was stated as under: We, vide our letter dated 1.4.2006, addressed to the Assessing Officer, supplemented by our subsequent letters addressed to him, have disclosed having received payment of U.S. Dollars 23,08,797.84 from TPE (hereinafter TPE), during the previous year ending on 31.3.2004 as advance revenue under our agreement dated 23.7.2003 with them, for providing support services to TPE during implem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord, accordingly works out as under: Advance revenues received during the current year 10,01,78,738 Allocated to current year appropriated to its profit (8/52 parts) 1,54,12,114 Add: Other unaccounted receipts 39,482 Total Current Revenues 15,54,51,596 Less Deduction on account of expenses Nil Net income since disclosed in this return of income 1,54,51,596 Un-appropriated advance revenues received in previous years 2003-04, which is carried over for allocation and appropriation to compute the profits of subsequent previous year works out as under: Advance revenues received during The current year 10,01,78,738 Less: Allocated to current year appropriated To its profit (8/52 parts) 1,54,12,114 Un-appropriated advance revenue c/f to A.Y.2005-06 8,47,66,624 Reservatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racter of income and, is thus not income for the instant Asstt. Year. Since the assessee company may have no objection of including the entire receipt as income, it only seeks to pray a deduction of 15% of total receipts to be allowed as deduction, keeping in view of the principle laid down by the apex Court in the case of Calcutta Co. Ltd. Vs CIT, 37 ITR 1. Perusal of clause 2 of the agreement shows that the assessee company has to discharge several obligations which has been specified therein. It is therefore, not justifiable to tax the entire receipt as income in the instant year and not to allow any deduction whatsoever from gross receipts. The assessee however, is willing to pay tax on the entire receipts, subject to aforesaid claim. Details of the income received by the assessee under the agreement dated 23.07.03 with M/s T P E, Russia are enclosed as Annexure II to this return of income. It may be clarified here that assessee company had earlier computed the revenues received during the year at ₹ 10,01,78,738/- on the basis of exchange rate prevailing at the end of the year on the basis of Rule 115A of the Income Tax Act. The aforesaid sum has however now been adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enclosed (Annexure-XI) 8. It is prayed that tax on the aforesaid sum may kindly be collected from bank account no. 140-00-21000697 (Currency U. S. Dollars), 18009336 (Currency G.B. Pounds) with Natwest Bank, London and 1096-247000 Deutsche Bank, Ece House, 28, Kasturba Gandhi Marg, New Delhi-110001 of the assessee company, which has been placed under attachment, at the instance of the order of Special Jude, CBI Court, before whom, the assessee is also making a separate request. A copy of order of Special Judge, CBI Court is enclosed as Annexure XII) and, intimation thereof to us by the Bank is enclosed as Annexure XIII. 9. The interest of 234B and 234C of the Act has been computed by the assessee with a right of waiver available to assessee under the Act. 5.3 Likewise, assessment proceedings were also commenced for AY 2005-06 by issue of a notice u/s 143(2) of the Act dated 25.07.2006. The assessee furnished a revised return of income on 21.08.2006 declaring total income at ₹ 3,90,10,580/- including income stated to have been earned from providing support services to M/s. TPE. The said return of income was again revised on 12.02.2007 declaring total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05 2005-06 1 Total Income Assessed 10,81,70,065/- 4,62,49,650/- 2 Total Addition Made 1,12,775/- 2,36,610/- 3 Nature of Additions i) Disallowance out of expenditure incurred 1,00,000/- 2,30,882.05/- ii) Disallowance out of business expenditure u/s 14A 10,000/- ------ iii) Disallowance of bank charges 2,776/- 5,726.12 5.6 During the appellate proceedings, the assessee, vide letter dated 28.05.2008, filed application for admission of additional evidences under Rule 46A of the Income Tax Rule, 1962 and also filed written submissions vide letter dated 03.06.2008. The AO, (ACIT, Circle 15(1)/Addl. CIT) submitted the remand report on the written submissions vide letter dated Addl. CIT/R-15/2008- 09/1319 dated 15.10.2008. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. 6.2 The Ld. AR further submitted that the AO did not accept the claim essentially on the ground that a criminal case, vide FIR RCDAI/ 2006-A-0006 dated 6.3.2006, was registered under the Indian Penal Code and under Prevention of Corruption Act, 1988 against unknown officials of NTPC of India and others which was prior to the letters dated 1.4.2006 to 11.4.2006 filed by the assessee company. The Ld. CIT (A) also rejected the claim of the assessee. 7. The Ld. AR also filed written submissions which are being reproduced for a ready reference: 1. It is submitted that initiation of the proceedings under section 147 of the Act on 22.5.2006 (kindly see reasons recorded at page 43 to 44 of PB I) were itself based on the disclosure made by the appellant in the letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 (kindly see pages 26 to 41A of PB I) and therefore, the conclusion that, the income declared in the return of income filed in response to notice under section 148 of the Act and, in the revised return filed on 12.2.2007 (kindly see pages 52 to 66 of PB I) was not voluntary, is wholly misconceived and misplaced and contrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by CBI that appellant had declared such income firstly in the letter dated 1.4.2006 and thereafter, in the seven letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 return of income filed on 12.02.2007, it is submitted that, the same is too misplaced since viz-a-viz the department, income in any case was declared voluntarily by the assessee. Reliance is placed on the following: a) Bhairav Lal Verma Vs. Union of India reported in 230 ITR 855 (Allahabad) b) K.L. Swamy v. CIT reported in 239 ITR 386 (Mad) c) Smt. Shantha Devi v. WTO, (1980) 121 ITR 703 (Karn) d) A.N. Sarvaria v. CWT (1986) 158 ITR 803 (Del) 6. The learned CIT (A) has failed to appreciate that, the fact that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 was not in respect of the contract entered by the appellant company with M/s TPE or the contract entered by M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. and thus, the same could not be made a basis to hold that, income declared by the assessee vide letters dated 1.4.2006, 11.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustainable. It is submitted that, to determine as to whether income declared by the assessee in the return of income was not voluntary or not, what has to be seen is, whether the income was detected by the learned AO or whether the same was voluntarily offered by the appellant and, not that, it was allegedly detected by CBI. In the instant case, it is not in dispute that, learned Officer had not detected such income but it is a case, where income was voluntarily offered by the appellant. It is submitted that, mere fact that CBI had allegedly detected such income though there is no evidence to that effect too, yet the same cannot in law still be made a basis to hold that, return of income filed by the assessee was not voluntary. 9. That further, in rebuttal to the comments so made by the learned AO in its remand report dated 15.10.2008 (at pages 25 to 27 of CIT (A) s order and so relied on by learned CIT (A) (at page 31 of CIT (A) s order), it is submitted as follows: 9.1 That bare perusal of comments of learned AO in the remand report would show that, revenue in no manner has established that, declaration of income by the assessee in the return of income for assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply dated 12.7.2007 (pages 201 to 219 of PB-I at page 206 to 213), which have not been shown to be incorrect in any manner. In fact, the learned Assessing Officer has not even made any comments in this regard. 9.4. The learned Officer in this context has held that appellant cannot take the plea of ignorance of law because the appellant company filing its regular return of income and also deriving income from consultancy. It is submitted that, such an observation is contrary to the judgment of the Apex Court in the case of Motilal Padampat Sugar Mills Co. Ltd. reported in 118 ITR 326, wherein it was held as under: . 9.5 It is further submitted that, the learned AO is factually incorrect to suggest that, appellant came to know of the tax liability in May 2003. In fact, the appellant has consistently stated that, she became aware of the tax liabilities only in February 2006. This would be evident from the first letter written on 1.04.2006 and, thereafter in various replies furnished to the learned AO. It is further submitted that, mere mis-interpretation of the statutory provisions cannot lead to an assumption above lack of bonafides of the assessee. The assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions. It is submitted that, mere fact that CBI had allegedly detected such income though there is no evidences to that effect too, yet the same cannot in law still be made a basis to hold that, return of income filed by the assessee was not voluntary. In fact, if the reasons recorded are perused, it will be self evident that, initiation of proceedings u/s 147 of the Act and, assessment framed are only based on the letter of the assessee filed on 11.04.2006 and as such, both legally and, logically, it ought to be held that, declaration of income was voluntary. This submission is also supported from admission made by the Assessing Officer when he states at pages 753 of Paper Book-III as under: That on the basis of information furnished by the assessee through these letters, the AO issued notice u/s 148 on 22.05.2006 directing the assessee to furnish a return of income as it was stated that, income of the assessee had escaped assessment. In compliance to this notice u/s 148, the assessee furnished return on income on 21.06.2006 declaring an income of ₹ 1,86,28,990/- which was duly accompanied by computation of income. Thereafter again, the assessee revised its retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search was conducted by the CBI in the case of assessee on 28.3.2006 (reference assessment order of the A for AY 2006-07-Annexure-1). A letter rogatory/letter of request for assistance for investigation in UK was issued by the Court of Special Judge, Tis Hazari Courts, Delhi in the above said CBI case on 22.03.2006. A restrain of order was served on the Natwest bank on 20.04.2006 by the Crown Prosecution, London. The account restrained was in the name of Ravina and Associates, held with the Natwest Bank St. Johns Wood Branch London, A/c No. NXNBCSL-USD-00 sort code 60-18-20. The signatories to the bank account are Ravina Khurana and Mrs. Govinda Khurana. In the original return of the assessee, it enclosed auditors report dated 02.08.2004 in form 3CA and 3CD where the auditors had certified that the balance sheet and profit and loss account dealt with in their report were in agreement with the books of accounts. The auditors further opined that proper books of accounts as required by law have been kept by the company so far as appeared from there examination of the books. In 3CD reports, the nature of business or profession has been stated to be travel agent. The income decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E Moscaw for providing them technical services preparatory to their bid for the UPRVUNI, OBRA, R M, TPS and BARH, NTPC projects and support both thermal power plants projects and support services during implementation of their contracts in India in culmination thereto. 3. All the services at the preparatory stages, which are since over, were rendered by us out of India. We have received on account payments from our clients namely TPE, Moscow, which comprises apart from our dues for our involvement at the preparatory stage, advances towards services to be rendered during implementation stage of the above said projects. We have received all these payments by bank transactions in foreign exchange outside India in our accounts with Nat West Bank at London in Account Nos. 140-00-21000697, Sort Code 60-18-20 and Current account no. 18009336, Sort Code No. 60-18-20. We had opened this account only to facilitate and ensure speedy collection of remittances from our clients and remittances of payment to our suppliers. 4. We had always in the past carried an impression that income arising from providing technical and support services to the foreign enterprises in foreign exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are ready and willing to execute the requisite authority in any form advised by you as may serve all desired end. 9. I hereby declare that all the monies in the said bank stand assigned to the Government of India in trust for paying away my tax liabilities when precisely determined. 10. To discuss our tax liability and work out the modalities for its prompt, effective and full discharge, we will be obliged to have an audience with you, which may kindly be granted and intimated to me at my address indicated above at your earliest. We will also appreciate if a lenient view may be taken of the incidental inadvertent lapse on our part in the matter. 9.1 Furthermore, in another letter dated 11.4.2006, it was submitted as under: Kindly refer to our letter dated 1st April, 2006 on the above subject and the audience our authorized representative had with you on 5.4.2006. 2. In furtherance thereto we are submitting herewith, as annexure A-1 A-II*, summaries of transactions in our two bank accounts maintained by us with Nat West Bank, London, separately indicating the total amounts received therein from our clients and the interest accruing in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2008-09. However, later the entire sum was offered for tax. 9.3 In the reasons recorded, the Assessing Officer, while assuming jurisdiction, for issue of notice under section 148 of the Act, stated as under: 22/5/06- Return showing total income of ₹ 31,77,400 has been filed on 31/12/04 which has been processed u/s 143(1) on 31/3/05. Total income is computed as under:- 1. Income from Business Profession . ₹ 22,17,179 2. Short term capital gain ₹ 9,60,218 Dividend income of ₹ 1,97,361 has been claimed exempt u/s 10 of the Act. Perusal of Form 3CD filed with the return of income shows that the assessee carried on business profession of travel agent only. Details of receipts shown as assessable under business head are as under:- 1. Interest income ₹ 14,40,204 on deposits with Syndicate Bank, F-40, Connaught Place, New Delhi. 2. Professional tax ₹ 12,50,000 Received from Sohail Khan (Services ticket ) Production Coral Reaf, Bandra, Mumbai 3. Commission - From Aeroflot New Delhi - From Aeroflot Mumbai - From Bandhu Travels (P) Ltd. - From ISI Travel Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther alleged that there were technical objections in respect of the bid of M/s. FGUP VO TPE but the contract was still awarded to M/s FGUP VO TPE. It is also reliably learnt that in consideration of the award of contract to M/s FGUP VO TPE, certain officials of NTPC by abusing their official position received illegal gratification/kickbacks in excess of US$ 20 million from M/S FGUP VO TPE which have been paid into the bank account of Ravina Associates in United Kingdom in 2005. Reliable information exists that the said bank account is being maintained and operated in United Kingdom directly/indirectly by certain persons for the benefit of accused public servants in India/others. 2.8 That Interpol-London vide their message dated 1-2-05 informed Interpol-New Delhi that in May, 2005 on account held by Ravina Associates received a deposit in excess of US$ 20 million from a Russian Entity TPE. The deposit was payment for assisting TPE in obtaining a contract with Indian National Thermal Power Corporation for a Super Thermal Power Project in Barh region and that the details could be made available subject to a formal request. It was further informed that the funds were availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that all relevant law is complied with... 9.7 It has also been submitted that the assessee had approached the bank several times since March 2006 i.e. on 6.03.2006 28.03.2006, 30.03.2006 12.04.2006, 13.04.2006, 19.04.2006, 22.04.2006 and 25.04.2006 for the closure of the bank accounts, obtaining the bank statements and remitting the funds to India. The submission was that letters addressed to the bank in March 2006 were only as a result of the discussions held by the assessee with the Advocate in February 2006 who apprised them of the liability to pay tax in respect of the sums credited in the Natwest Bank account at London. In light of the aforesaid, it has been argued that the income was voluntarily offered firstly vide letters dated 01.04.2006 and 11.04.2006 and thereafter in the returns of income. The Ld. counsel for the assessee has further submitted that the belief of the assessee was bona fide is evident from the fact that sums received outside India from the foreign entities were not disclosed in preceding assessment years and such receipts have not been disclosed as income in the instant year. It has, thus, been claimed that it is a case of ignorance of law till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That is its look-out, and we do not, therefore, accept the argument. The result is that the order of the Appellate Tribunal is reversed. The firm shall be registered under section 26A of the Act for the assessment year 1948-49. The appeal against the order of the High Court need not be considered, since it is not necessary to pass any orders thereon. There will be no order in that appeal. 9.9 Moreover, it is also pertinent to note that once there is no dispute as to the taxability of income, the issue becomes academic. However, since the same has been raised, the issue has been examined and is found as a matter of fact that the edifice of the present proceedings was communicated by the assessee and not by any other authority. In absence of any other communication having been placed on record, the reasons recorded clearly point out that action under section 148 of the Act was based on the communication by the assessee and claim of the assessee is tenable and has merit and, therefore, accepted as such. Having regard to the above, the grounds raised by the assessee are allowed. 9.10 Accordingly grounds nos. 1 to 1.4 raised in ITA No. 1004/Del/2011 for Assessment Year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, as discussed above, has not been done voluntarily to correct any bonafide mistake and for AY 2004-05 has also been filed much after the expiry of the prescribed time limit. Considering the above, the above issue of the appellant is rejected. 10.2 In the written submissions dated 16.1.2018, before us, the assessee has contended as under: 10. It is submitted that, the basis for holding the revised return of income filed by the appellant on 12.2.2007 is non est is that revised return filed on 12.2.2007 was after the expiry of period of one year from the end of the assessment year i.e. 31.3.2006 as has been provided under section 139(5) of the Act. It is submitted that, while arriving at the aforesaid conclusion, the learned Officer has overlooked the detailed reply filed by the appellant on 28.2.2007 (pages 191 to 197 of Paper Book-I). The relevant portion of the aforesaid reply are extracted hereunder: 3. It is evident from the aforesaid statutory provisions that, return of income filed by the assessee in response to notice u/s 148 of the Act is to be treated as if such return were required to be furnished u/s 139 of the Act and, the provisions of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g statement in the original return of income which presupposes a voluntary act on the part of the assessee to remedy any bona fide mistake in the original return after discovering the same. It was thus held by the Ld. CIT (A) that since the returns were not filed voluntarily and were not to correct any bona fide mistake, therefore, the claim of revised return is not maintainable. We have already held, while deciding Grounds 1 to 1.4 that returns filed by the assessee were voluntary and therefore, to that extent to the basis adopted by the revenue is held as incorrect and is rejected. 10.6 As regards the period of limitation, it is noted that the original return for assessment year 2005-06 was furnished on 30.10.2005 and the revised return was furnished on 21.8.2006 which was further revised on 12.2.2007. The limitation provided under section 139(5) of the Act is one year from the end of the relevant assessment year. This means that the revised return could be filed up to 31.3.2007 and since the last revised return was filed on 12.2.2007, therefore, such revised return filed on 12.2.2007 is held to be valid. Further, for assessment year 2004- 05, the claim of the assessee is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for making an assessment under section 143(3) of the act also come into play. 10.8 Having regard to the aforesaid findings, grounds raised in ground nos. 2 to 2.1 in ITA No. 1004/Del/2011 for Assessment year 2004-05 and grounds nos. 2 to 2.1 in ITA No. 1005/Del/2011 for Assessment year 2005-06 by the assessee are allowed. 10.9 Ground Nos. 3 to 3.5 are regarding the treatment of receipts of ₹ 10,48,44,798/- in AY 2004-05 and ₹ 4,10,20,996.81 in AY 2005-06 as unexplained investment under section 69 of the Act. The Assessing Officer, in the order of assessment for assessment year 2004-05, has held the above additional income to be unexplained money under section 69A of the Act for the following reasons: 10. Receipts in NATWEST BANK unexplained money u/s 69A The assessee company has claimed the receipts from TPE and other receipts in NATWEST Bank A/c in London, as business receipt. The assessee did not disclose the bank accounts and the receipts of money in the original return or in the books of account maintained by it. These receipts have been incorporated in its profit and loss account filed with the return of income on 12.2.07. The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, regarding visa support for Russian exports for execution of the contract of Obra A TPS package I (5x50 MW), Refurbishment of Obra A B TPS-Package III (5x200 MW) Revised price bids by UPRVUNL etc. But, such correspondence do not seem to justify, such huge payments in the account of the assessee company, during the year. In such circumstances, the receipts in the NATWEST Bank account of ₹ 104,882,665/- is treated as unexplained money u/s 69A and income from other sources. As these receipts were not disclosed in the original return it is treated as undisclosed income from other sources and is added to assessee s company 10.10 Further in order for assessment year 2005-06, the Assessing Officer has held as under: As per para 2.6 of the agreement with TPE, assessee company was required to submit quarterly reports in writing about the performance of its obligations. Assessee was asked to produce these reports. Assessee could submit only one letter dated 16.7.2004, stated to be faxed to the TPE on 16.7.04 detailing meeting held with officials of Energy, UPRVUNL and TPS OBRA on 13-14 July, 2004. This letter does not talk about as to which quarter it pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,10,20,996.81 in A.Y. 2005-06. The documents produced by the appellant company in the course of assessment proceedings namely photocopy of agreements with M/s TPE confirmation from M/s TPE and copy of some correspondence do not in any way throw sufficient light on the nature and source of the huge deposits made in the accounts maintained by the assessee company. The AO has also raised a number of objections and pointed out a number of anomalies in the appellants submissions both in the assessment order and in remand report I find that the appellant has not been able to counter the above objections or explain the anomalies by any documentary evidence or clarification. Even the original copy of the agreement with M/s TPE is not produced by the assessee company for reasons best known to it. I find that the assessee company has not been able to prove the nature of details of service claimed to have been rendered by it by way of any books of account, records, bills raised or any other documentary evidences, other than mere copy of agreement/confirmation as stated above or to given any correlation between the service rendered and amounts received. Para 8.10 From the above, it is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Bank certifying the sums received by assessee company from M/s TPE 76 to 77 of Paper Book-I. 6. Copy of details of various expenditures incurred by assessee company 264 to 372 of Paper Book-II 7. Copy of illustrated correspondence of M/s TPE 483 to 670 of Paper Book-II 8. Copy of agreement of M/s TPE with M/s UPRVUNL 915 to 934 of Paper Book-III 9. Copy of Brochure of TPE 798 to 823 of Paper Book-III 10. Copy of MOU dated 20.4.2006 between M/s TPE and M/s UPRVUNL 872 to 874 of Paper Book-III 11. Copy of letter from M/s TPE dated 26.4.2006 875 of Paper Book-III 12. That Director of the appellant company namely Miss Ravina Khurana had also been examined on oath by learned A.O. and, she had duly stated that, she was providing services and, had also furnished supported evidences and, stood the task of cross-examination. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by the appellant company have full correlation with the advances received by M/s TPE from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited and, as would be seen from Annexure-1 to this submission. 19. It is further submitted that, the fact that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 was not in respect of the contract entered by the appellant company with M/s TPE or the contract entered by M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. and thus, the same could not be made a basis to hold that, income declared by the assessee vide letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary. It may be stated here that, entire income as accruing to M/s RAPL on the basis of its contract with M/s TPE and, contract of M/s TPE with M/s NTPC has been declared by M/s RAPL in A.Y. 2006-2007. A copy of the return of income filed by M/s RAPL for A.Y. 2006- 2007 is placed at pages 644 to 752 of PB-III. Infact, this submission has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48,44,798 2 05-06 4,10,20,996 ---- 4,10,20,996 3 06-07 93,80,80,778 3,33,06,123 97,13,86,901 Total 108,39,46,572 3,33,06,123 111,72,52,695 10.17 It has been submitted by the Ld. AR that as far as the income of ₹ 97,13,86,901/- under the NTPC agreement is concerned, the same was declared in the original return of income filed on 12.02.2007 for A.Y. 06-07; and further, sum of ₹ 10,48,44,798/- has been offered for tax as income in assessment year 2004-05 and ₹ 4,10,20,996.81 in assessment year 2005-06. 10.18 It is further seen that Article 2 of the agreement dated 23.7.2003 provides as under: 2.1.1 Ravina Associate Pvt. Ltd. (RAPL) shall render comprehensive assistance to TECHNOPROMEXPORT in arranging talks and meetings with the Indian Purchaser, local sub-contractors and enterprises. 2.1.2 RAPL shall act only in the interests of TECHNOPROMEXPORT while dealing with the Purchaser, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the years of the planned economy in the USSR TPE was engaged in realization of the inter governmental agreements and contracts for power projects construction abroad, particularly in India. Since the 1960s, at least 400 power projects have been constructed by TPE all over the world, including 11 projects in India. During these times the USSR rendered widescale technical and economic assistance to friendly countries. Some of the first power projects constructed by TPE in India were HPP Bhakra TPS Neyveli , TPS Obra and HPP Lower Sileru , which total capacity exceeds 1600 MW. Many of them were awarded with special prizes for the high efficiency and TPS Neyveli (600 MW) was marked with government rewards. Built by NTPC with assistance of TPE specialists, SRTPP Vindhyachal till now keeps occupying one of the first places for a number of its economic parameters among the thermal power stations in India. Since then TPE has put into operations 11 power projects in India of total capacity over 3000 MW TPE catalogue is enclosed herewith for your reference). Taking into account such plans of India in the power sector of the country, TPE has taken the active position in advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract agreement between NTPV and TPE on 25.03.2005. Sao, the decision to award the contract was taken strictly in accordance with the Government of India policy to award contracts to the lowest bidder. Summing up the above mentioned, we would like to draw your attention to the fact that the FIR is baseless and has been registered at the instance of business. As regards M/s. Ravina Associates Pvt.Ltd , please be informed that TPE has a good business association with this company on the basis of official agreement signed by the both parties for Barh STPP. All payments made to M/s. Ravina Associates Pvt.Ltd. by TPE were the amounts paid for rendering services to TPE both in preparation of the bid documents and in implementation of the contract which duration will be at least 6 years. We do believe that our explanation will suffer you to be sure that TPE is an honest company, working in accordance with the world rules and regulations of tendering as well as caring for its reputation in the world power market. Yours faithfully, Sergey V.Molozhavy General Director Encl: 1 Catalogue 10.20 Having regard to these evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The Hon ble Delhi High Court in the case of CIT vs. Genesis Comnet (P) Ltd reported in 163 Taxman 482 (Del) has held as under: 9. The Tribunal took a view that the fact that the assessee was not in a position to produce the two commission agents is not its fault and the Assessing Officer could have exercised powers available to him to summon and cross-examine these two parties if, for some reason, he did not accept the statement furnished by these two parties. The Assessing Officer could also have made independent enquiries from the customers of the assessee. However, none of this was done. 10. Therefore, we are of the opinion that the Tribunal has not committed any error in the view that it has taken. The assessee produced all the material that it could possibly produce and if the Assessing Officer was not inclined to believe the material produced, he could have used the coercive powers available to him, which he failed to exercise. 11. Therefore, we are of the view that in this case, no substantial question of law arises for our consideration. 10.22 Also in the case of CIT vs. M/s Kamdhenu Steel and Alloys Ltd. reported in 361 ITR 220, it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant year represents income of the assessee received from the TPE under the aforesaid agreements. It has been held by the Ld. CIT (A) that the assessee has been unable to counter the objections or explain the anomalies by the documentary evidence or clarifications and even the original copy of the agreement has not been placed on record. As regards the original agreement, the assessee, in one of the replies dated 6.11.2007, had stated as under: 1 Kindly refer to order-sheet entry dated 11.10.2007, wherein the assessee company has been directed to furnish a copy of the original agreement dated 23.07.2003 entered between M/s TECHNOPROMEXPORT and the assessee company. The assessee company in reply, respectfully submits that, it has already furnished before you a photocopy of the original agreement. The original copy of the agreement is not to be retained by M/s TECHNOPROMEXPORT and the assessee is being supplied with only photocopy thereof. In such circumstances, it is submitted that the photocopy of the agreement as furnished is that of the original agreement. 10.24 Furthermore, the objection that agreement did not provide payment of any advance and the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imber Industries vs. Commissioner of Central Excise (supra). It is the settled proposition of law that when two decisions of the Hon ble Supreme Court are available on the same issue the later decision shall prevail. Since in the instant case the entire addition is based on the outcome of the assessment order in the case of M/s Bishan Chand Mukesh Kumar which was never confronted to the assessee, therefore in view the decision of the Hon ble Supreme Court in the case of Andaman Timber India (supra) we hold that the assessment order is null and void as it amounted to violation of principles of natural justice. Thus the assessee succeeds on both the legal grounds. Since the assessee succeeds on both the legal grounds, the ground relating to the merit of the case becomes academic in nature and therefore the same is not being adjudicated. 10.26 Also, the Hon ble Delhi High Court in the case of Sabh Infrastructure Ltd. v. ACIT reported in 398 ITR 198 (Del) has held as under: ... ( iii) where the reasons make a reference to another document, whether as a letter or report, such document and/ or relevant portions of such report should be enclosed along with the reasons; (iv) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand report to the Ld. CIT (A) held that there was no basis to support the aforesaid claim made by the assessee. Relevant portion of the remand report is as under: Further, the assessee has relied upon the judgment of the Hon ble Supreme Court in the case of Calcutta Company Ltd. v. CIT West Bengal (37 ITR 1) in support of its contention of allowance of deduction of 15% of the total receipts from M/s Technopromexport. It is stated that the ratio of the judgment is not applicable in the case of assessee. The facts and circumstances for this case are different from the fact and circumstances of the aforesaid mentioned case. In the case of Calcutta Company Ltd. the assessee was dealing in land and property and was carrying on the land developing business it so as to make it fit for building purposes and sale it at a profit in plots. The developments under taken were in the main, lay roads, to provide drainage systems, to intal street lights and they were to be maintained till the same were taken over by the Municipality. The procedure to be followed was that when the plot was sold, the buyer was to pay about 25% of the purchase price in cash and the balance amount installments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel was specifically directed to support its claim by any evidence representing the expenditure incurred and not allowed. However, no evidence was placed before us; therefore, we find merit in the conclusion arrived by the authorities below. In view of the above, claim raised by the assessee is held to be not maintainable and the Grounds raised are rejected. 10.30 Ground 5 is regarding the conclusion that the bank interest of ₹ 37,866.73 in AY 2004-05 and ₹ 611.08 in AY 2005-06 has been erroneously held as unexplained investment under section 69 of the Act. 10.31 Having considered the rival submissions and perused the material on record, it is noted that the edifice for treating the aforesaid sums as unexplained investment is that the sums were not duly disclosed in the original return of income by the assessee. To our mind, the treatment of receipts as unexplained investment is not dependent on the declaration in the return of income. On the contrary, if the source of investment is duly disclosed then such investment cannot be regarded as unexplained investment under section 69 of the Act. In the instant case, the nature of investment is in respect of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable estimate made by the learned Assessing Officer, the aforesaid disallowances were deleted. We do not find any reason to deviate from the aforesaid findings recorded by the Ld. CIT (A). The learned counsel for the assessee has not brought any material so as to warrant a view different from the aforesaid conclusion. In view of the aforesaid reasons, claim raised by the assessee is rejected. 10.36 Grounds raised by the assessee are thus rejected for both the assessment years. 10.37 Ground No. 7 for AY 2004-05 is regarding disallowance of ₹ 10,000/- u/s 14A of the Act. 10.38 Having considered the rival submissions and perused the material on record, we notice that the Ld. CIT (A) has rejected the aforesaid claim by holding as under: 12.2 On careful examination of the matter, I find that no income, whether exempt or not, can be earned without making some expenditure. Often times such expenditure are not segregated in the accounts of the assessee and remain clubbed with overall administrative/financial and other expenses for the business as a whole. It, thus, becomes the duty of the AO to reasonably allocate expenses relatable to such income and disallow t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included as income for taxation in India. In view thereof, never in the past, appellant had included profits accruing to it from such endeavors in the return of income for the taxation in India. Infact, In view of aforesaid belief, it cannot be validly said that appellant was in a position to estimate the advance tax and, therefore, learned Officer has incorrectly levied interest under section 234B of the Act. 25.1 It is respectfully submitted that, in any case, no interest could be levied under 234B and, 234C or even under section 220(1) of the Act after 1.04.2006 i.e. after the income had been declared by the appellant voluntarily as would be evident from letter dated 01.04.2006 (pages 26 to 28 of PB-I) as under: 7. We have been waiting all these days for the money to be credited in our account in India to enable us to pay advance tax in respect of our income for the fiscal year 2005- 06 and also to pay up our tax liability in respect of the earlier years together with interest due for the delayed payment of taxes. Even after waiting for all these days since 6th March, 06 when instructions were first issue to Nat West Bank, London to remit our monies held in balance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g) 107 Taxman 121 Lakshmi Narayan Tulsi Dass Thakkar v ACIT (Ahd) h) 247 ITR 701 Bulund Motor and Land Finance (P) Ltd. v ACIT (All) i) Datamatics Ltd. vs. ACIT reported in 111 TTJ 55 (Mum) 21.2 It is thus respectfully submitted that, the appellant cannot be fastened with the liability to pay interest under section 234B, 234C, 220(1) of the Act. 10.43 On the other hand, the Ld. CIT DR relied upon the order of the authorities below and requested that the claim of the assessee be rejected. 10.44 Having considered the rival submissions and perused the material on record, we notice the learned Ld. CIT (A) has upheld levy of interest by holding as under: 14.3 I have carefully considered the assessment order, remand report of the AO and the submissions made by the ld. AR on the above. The appellant s argument regarding not being aware of its tax liability in respect of credits in the bank accounts maintained outside India has been rejected by me as per detailed reasons recorded in the discussion relating to issue no. 1earlier in this order. Further, the appellant s argument regarding non-applicability of section 234B is also not acceptable due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the first return and in revised return and therefore, sustained levy of interest u/s 216 of the Act. )principally observed that under estimation itself may not be sufficient to attract the provisions of section 216 of the Act for levy of interest if there had been bonafide mistake on his part while making the under estimation. On the facts of the case, however it was held that the assessee had not been able to furnished any explanation for the difference of ₹ 48 lacs in the first return and in revised return and therefore, sustained levy of interest u/s 216 of the Act). It is to be noted that in this case inspite of the fact that there was no specific mention of Section 216 of the Act in the assessment order the High Court has upheld the levy considering the facts of the case Sita Holiday Reports Ltd. Vs. CCIT (2002) 258 ITR 751 (Del) In the facts of the case the assessee had not included interest earned on investment of borrowed funds prior to commencement of business for the reasons that there was legal controversy. Subsequently, by virtue of decision of Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs.CIT (1197) 227 ITR 172, the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and since assessee was not liable to pay advance tax, interest levied under section 234B and 234C of the Act was not leviable. We, however, find no merit in the said claim. The Hon ble Apex Court in the case of Anjum M.H. Ghaswala and Others reported in 252 ITR 1 (SC) has held as under: If the scheme of levy of interest is thus to be analysed on the anvil of the provisions referred to hereinabove, it shows that the interest contemplated under Sections 234A, 234B and 234C is mandatory in nature and the power of waiver or reduction having not been expressly conferred on the Commission, the same indicates that so far as the payment of statutory interest is concerned, the same is outside the purview of the settlement contemplated in Chapter XIX-A of the Act. 10.47 In view of the above binding dicta, we hold that levy of interest is mandatory and we reject the claim raised by the appellant. 10.48 The alternative claim made by the assessee before us is that since the assessee had filed a letter dated 1.4.2006 before the Assessing Officer and had requested that the deposits in bank account be adjusted towards the tax liability, no interest is leviable after 1.4.2006. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee) in ITA No. 4388/Del/2014 and 4389/Del/2014 for assessment years 2004-05 and 2005-06 which are appeals against levy of penalty under section 271(1)(c) of the Act arising from the orders dated 30.3.2012 made by Deputy Commissioner of Income Tax, Circle-15(1), New Delhi and confirmed in appeal by orders dated 30.6.2014 of Ld. CIT(A) -XVIII, New Delhi. 11.1 In ITA No. 4388/Del/2014 for assessment year 2004-05, the assessee has raised grounds of appeal which read as under: 1 That the learned Commissioner of Income Tax (Appeals) XVIII New Delhi has erred both in law and on facts in upholding penalty levied of ₹ 3,76,26,700/- under section 271(1)(c) of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) while upholding the penalty has failed to appreciate that income in respect of which penalty have been levied was the income declared voluntarily by the appellant firstly by letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006 and 23.5.2006 and thereafter in return filed on 21.6.2006 and, 12.2.2007 and also in return filed in response to notice u/s 148 of the Act and as such, it cannot be validly held that assessee has eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as such the conclusion of the learned officer is based on misinterpretation of provisions of law 1.6 That the learned Commissioner of Income Tax (Appeals) has sustained the penalty mechanically, arbitrarily and in complete disregard of the written submission and evidence furnished on record by the appellant company and therefore, penalty so sustained is wholly misconceived and untenable. 1.7 That the learned Commissioner of Income Tax (Appeals) while framing the penalty, has also overlooked the fact that the various findings recorded in the order imposing penalty had been mechanically and bodily lifted from the order of assessment framed under section 147/143(3) of the Act and therefore, the said penalty levied and sustained is invalid and unwarranted. 1.8 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the observation of the learned Assessing Officer in the order of penalty that either the appellant company was maintaining account with Natwest Bank, London since 1992 or had not furnishing documentary evidence in support of existence of business is factually incorrect and contrary to the evidence on record. 1.9 Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the reasons recorded for initiation u/s 147 of the Act established that proceedings had been initiated on the basis of information contained in the revised return and not by way of any detection and hence the finding that there was intentional attempt to evade tax overlooks this factual fundamental aspect and material on record and as such order upholding the levy of penalty is vitiated and untenable. 1.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that till the date of filing of return on 12.2.2007 when assessee had revised return of income by including an amount of ₹ 10.48 crores, no enquiry was either initiated or launched and thus, income offered in the said return represented the income which had been shown to be assessed and as such no part of income assessed could represent an income which can be said to have been concealed by the appellant. 1.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that filing of FIR on 6.3.2006 was in respect of the amount of ₹ 97,13,86,901/- received in Natwest Bank pertaining to appellant company for assessment year 2006-07 which was declared in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant company could not otherwise be a basis to impose penalty under section 271(1)(c) of the Act. 2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that notice issued for levying the penalty was vague, non-specific and as such penalty levied on the basis of the said notice was invalid and not in accordance with law. 3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that in absence of any valid satisfaction having been recorded in the order of assessment the penalty levied was otherwise not sustainable. It is therefore, prayed that it be held that penalty so levied and sustained is illegal, invalid and therefore, may kindly be deleted and appeal of the appellant be allowed. 11.3 All the aforesaid grounds as stated above relate to levy of penalty of ₹ 3,76,26,700/- and ₹ 1,50,95,320/- in assessment years 2004-05 and 2005-06 respectively under section 271(1)(c) of the Act. From the perusal of orders dated 30.3.2012 passed by the DCIT, Circle 15(1), New Delhi, it is noted that the penalty has been levied on the basis that the returns of income have been filed after the fact of ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is on the basis of income shown by assessee the learned Assessing Officer had made detailed examination and, in absence thereof he had no source which could make him believe that there was even an attempt to conceal income. 3 This is evident from the reasons recorded for initiating proceedings u/s 147 of the Act. The expression concealment of income has been elaborately discussed in the judgment of jurisdictional High Court in the case of LR Gupta v UOI reported in 194 ITR 32 and, if the said law is applied, it cannot be remotely alleged that, there is concealment of income. The expression concealment of income and, omission are not akin. The appellant, at this juncture alone, also seeks to refer to decision of Third Member in the case of Addl. CIT vs. Premchand Garg reported in 123 TTJ 433. 4 As regards the filing of FIR on 6.03.2006, it is submitted that, FIR filed on 6.03.2006 has absolutely no connection with receipts received by the appellant company in the year under consideration but to receipts for the Assessment Year 2006-07 which were duly declared in the original return for Assessment Year 2006-07. It is also stated here that a criminal case was registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing the assessee was well aware, as could be evident from record of assessment for such of the years. It is thus a clear case of ignorance of law till 1.4.2006 and, once the assessee came to know of its liability to tax, the assessee voluntarily and, of its own furnished the return of income. 6 It is also submitted that, the notice dated 31.12.2007 and 6.3.2012 was highly vague, non-specific and, hence unsustainable. Infact, it will be seen from the notice that neither the items for which proceedings had been initiated had been specified and nor the charge against the assessee in respect of which purported items had been specified. It is thus respectfully submitted that since notice itself issued was highly vague, therefore, the same cannot be a ground to levy penalty under section 271(1)(c) of the Act. Reliance is placed on the judgement of the Hon ble Delhi High Court in the case of CIT v Ajay Hari Dalmia 157 ITR 145 wherein it has been held as under: In penalty proceedings, it was not only necessary to inform the assessee of the particular concealment but also necessary for the Department to prove positively that there was such a concealment. In such a case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty was leviable. The learned counsel for the assessee sought to rely upon various judicial pronouncements to contend that no penalty was leviable. The list of such judgments as relied upon in the course of hearing are as under: i) Aditya Chemicals v. ITO in ITA No. 5006/Del/2013 dated 21.11.2017 ii) Meta Gutgutia ITA No. 327/Del/2014 dated 31.3.2016 iii) Mohd. Irshad v. ITO in ITA No. 4994/Del/2013 dated 22.6.2015 iv) Vaish Degree College Trust v. ACIT in ITA No. 4538/Del/2011 dated 28.9.2012 v) Mrs. Archana D. Talati in ITA No. 2696/Del/2016 dated 5.6.2017 vi) Mrs. Premila Bhatia v. DCIT in ITA No. 1929/Del/2011 dated 3.2.2012 vii) ACIT v. TRN Energy (P) Ltd. in ITA No. 453/Del/2016 viii) CIT v. Smt. Vinay Sharma in ITA No. 187/2014 dated 2.5.2014 (Del) ix) CIT v. Control Switchgear Contractors Ltd. in ITA No. 290/2015 dated 24.8.2015 x) CIT v. Prashant Shrivastava in ITA No. 393/2015 (Del) xi) R. Umedbhai Jewellers (P) Ltd. v. CIT in ITA No. 221/Del/2015 xii) CIT v. M/s Preet Land Promoters Developers (P) Ltd. in ITA No. 518/Chd/2012 11.7 On the other hand, the learned CIT DR supported the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct dated 27.12.2007 and 6.3.2012 that the AO has not specifically specified under which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton Ginning Factory reported in 359 ITR 565 (Kar) has inter-alia held as under: ( p) Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income ( q) Sending printed form where all the ground mentioned in section 271 are mentioned would not satisfy requirement of law. 11.9 The above said decision of Hon ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton Ginning Factory (supra) has been followed by the Hon ble High Court of Karnataka in the case of CIT v. SSA s Emerald Meadows 73 taxmann.com 241 and the relevant portion is as under: 2. This appeal has been filed raising the following substantial questions of law: 1 Whether, omission if asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.11 Therefore, in the circumstances and on the facts of the present case and in light of the judgments of the Hon ble Karnataka High Court and the Hon ble Supreme Court reproduced hereinabove, we are of the considered view that the Assessing officer is required to specify as to under which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. From the perusal of the notice u/s 274 r.w.s. 271 of the Act, Assessing officer has not specified as to under which of the two limbs the penalty is imposable. In the circumstances and facts of the case, the penalty proceedings so initiated by the AO are bad in law and accordingly the penalties so initiated are ordered to be cancelled and the order/s of the learned CIT (A) are reversed. Thus, the legal ground raised is decided in favour of the assessee and is allowed. 11.12 Moreover, even on merits, the reason which led the authorities below to levy the impugned penalty is that there was no voluntary declaration by the assessee. We have already held, while disposing off Grounds 1 to 1.4 and Grounds 3 to 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is to be satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. It is thus to be judged at this stage and if at this stage he has declared the correct income and/or furnished accurate particulars of his income then there is no scope, in our opinion, to arrive at the satisfaction by the AO because at that stage there in no such concealment. It disappeared by an action of the AO. In this case the assessee has no doubt did not show the amounts received as alleged gifts as his income, but no details of loans - are given in the return nor any other particulars thereof given by the assessee at that stage, not to speak of inaccurate one. When the assessment was taken up and a general enquiry was made by the AO requiring him to furnish details of any loans/gifts, if any, the assessee offered the amounts received as alleged gifts as his income and before it could be detected by the AO. There was thus no concealment of the particulars of his income nor there remained furnishing of any inaccurate particulars of his income. It vanished before it could be detected. 21. The correct and accurate disclosure may be by fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f having offered additional income in the return filed in response to the notice issued under section 148. Therefore, in view of the aforesaid finding, the Tribunal was justified in upholding the order of the CIT (A), whereby the penalty imposed u/s 271(1)(c) by the AO was order to be deleted. 11.15 Further, the Hon ble Madhya Pradesh High Court in the case of CIT vs. Suresh Chandra Mittal reported in 241 ITR 124 (MP), which has been affirmed by the Hon ble Apex Court in the case of CIT vs. Suresh Chandra Mittal reported in 251 ITR 9 (SC) has held as under: It is well settled that under section 271(1)(c) the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority. However the proviso to Explanation 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. In the present case though it is true that the assessee had not surrendered at all and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income in the revised return filed by the assessee and such offer is in consequence of a search action, then if the assessment order accepts the offer of the assessee, levy of penalty on such offer is not justified without detailed discussion of the documents and their explanation which compelled the offer of additional income. The Madras High Court in the case of S.M.J. Housing v. CIT [2013] 357 ITR 698/38 taxmann.com 203 held that where after a search was conducted, the assessee filed the return of his income and the Department had accepted such return, then levy of penalty under Section 271(1)(c) was not justified. From the above cases it would be clear that when an assessee has filed revised returns after search has been conducted, and such revised return has been accepted by the A.O., then merely by virtue of the fact that such return showed a higher income, penalty under Section 271(1)(c) cannot be automatically imposed. 11.17 In view of the aforesaid, having regard to the above, we find that no penalty is leviable on the facts of the case of appellant and penalty levied is deleted. Grounds raised by the assessee are therefore allowed for both assessment years. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax (Appeals) to arrive at the conclusion is based on assumptions and presumptions which are unsupported by any material and hence not tenable. 2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in holding that, aggregate sum of ₹ 59,58,975/- represented unexplained investment under section 69 of the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, sum of ₹ 59,58,975/- represented retainership charges from M/s Intersputnik of ₹ 35,41,479/-, bank interest of ₹ 21,47,047/- and other miscellaneous receipts received in the course of business of consultancy of ₹ 2,70,449/- and, as such, the aforesaid sums neither in law and, nor on fact could validly be held to be unexplained investment u/s 69 of the Act. 2.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the documentary evidence furnished by the appellant to demonstrate the nature of income received by the appellant and as such, conclusion so arrived overlooks the facts and, is also not in accordance with law and hence unsustainable. 2.3 That th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the appellant has not been able to explain the nature and source of such receipts by any satisfactory documentary evidence or books of accounts is highly misconceived in as much as it is contrary to the factual matrix of the case of the appellant. 3. That the learned Commissioner of Income Tax has further erred both in law and on facts in upholding the disallowance of ₹ 84,180/- representing professional charges paid by the appellant. 4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest under section 234B and 234C of the Act which on the facts of the case was not leviable. 4.1 That while upholding the levy of interest under section 234B and 234C of the Act, the learned Commissioner of Income Tax (Appeals) has failed to appreciate submissions made by the appellant to establish that no interest is liable on the facts of the case of the appellant and thus interest confirmed was not in accordance with law. 4.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that even otherwise, no interest was leviable after such sum had duly offered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-London received by the assessee are enclosed as Annexure-B (pages 11 of Paper Book-I) to this return of income. The perusal of the details would disclose that the assessee has received retainership charges from M/s intersputnik of ₹ 35,41,478.37/- bank interest of ₹ 21,47,046.47/- and, other miscellaneous receipts of ₹ 2,70,448.71/-. Further apart from the above receipts, the assessee is also offering an amount Bank interest of ₹ 4,351/- to be added in the returned income in place of ₹ 4,284/- which has already been added in the original return of income. It may be stated and, clarified here that, the assessee is following cash system of accounting and, as income has been offered as income of the assessee for the instant assessment year. 3. Apart from above, following documents are enclosed with this return of income. a) Copy of Original Return of Income (Annexure-C) b) Copy of Original Computation of Income (Annexure-D) c) Balance Sheet and income Expenditure Account for the year ending 31.03.2000 (Annexure-E) d) Tax Audit Report for the year ending on 31.03.2000 (Annexure-F) 4. Details of Foreign Travel the assessee during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) National rental income from house property 45,000 45,000 45,000 45,000 45,000 ii) Disallowance of claim of expenditure on account of professional charges 84,180 84,180 84,180 84,180 84,180 iii) Opening balance in the bank account 6,23,72,953 ----- ----- ------ ----- iv) Disallowance claim deduction u/s 80L 67 62 ----- ------ ------ 12.6 During the first appellate proceeding, the assessee, vide letter dated 28.05.2008, filed application for admission of additional evidence under rule 46A of the Income-Tax Rules, 1962. The same was forwarded to the AO for remand report. Further, the assessee also filed written submissions which were also forwarded to the AO seeking his comments. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration of the matter, I am of the view that since the said amount has not been paid by the appellant during the year under consideration, following he cash system of accounting being followed by the appellant, the said disallowance has been correctly made. The same is therefore, confirmed. 12.11 On careful consideration of the facts, we do not find any merit in the said claim of the appeal and therefore, the same is rejected. Grounds raised are accordingly rejected. 12.12 Grounds 4 to 4.2 relating to levy of interest in each of these appeals for assessment years 2000-01 to 2004-05 are identical to Grounds 8 to 8.2 and Grounds 7 to 7.2 in ITA Nos. 1004/Del/2011 and 1005/Del/2011 for assessment years 2004- 05 and 2005-06 in the case of RAPL. We have already held therein that the levy of interest is compensatory but no interest is chargeable after 1.4.2006 under the Act. In view of the above, the grounds raised by the assessee are allowed in all the five appeals. 12.13 In the result, ITA Nos. 1946/Del/2010 to 1950/Del/2010 are partly allowed. 13. ITA No. 3173/Del/2010 is an appeal preferred by the revenue for AY 2000-01 in the case of Mrs. Ravina Khurana. The revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee offers no explanation about the nature and source of the investment or the explanation offered by him is not, in the opinion of the AO, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. (emphasis supplied). The above statutory provision is identical in nature to the year of taxation of unexplained cash credit u/s 68 of the Act also. It is settled law that correct income is to be taxed in correct hands and in the correct year. This has been judicially upheld in a large number of cases. In identical circumstances, the Hon ble High Court of Delhi in the case of CIT v. Om Prakash Mahajhan 152 ITR 583 held as under: If an explanation is offered regarding the cash credit entry which is rejected in to, the amount may be added in the year in which the entry appears, i.e., in the present case, it would be taxed in the assessment year 1967-68. If the explanation is partially accepted to the extent that the entry elates to the income earned in some previous period, then the entry cannot be taxed in 1967-68, but has to be taxed in the correct year. Learned counsel for the Commissioner urged that it coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration, under these circumstances, the Assessing Officer was not justified in making the impugned addition under section 68 of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A). 9. The above being the position, no fault can be found with the view taken by the Tribunal. Identical view has been expressed by the Hon ble Rajasthan High Court in the case of CIT V Prameshwar Bohra reported in 301 ITR 404, wherein it has been held as under: 5. On the merit, of the additions made in the income of the assessee, there is a clear finding, and about which there is no dispute, that the amount added in the income of the assessee as unexplained investment or cash credit in the asst. yr. 1993-94 was the same amount which was credited in the books of account of the assessee for previous year ending on 31st March, 1992. The Tribunal has categorically come to a finding, and that finding is not under challenge, that this is not a case of cash credit entered in the books of account of the assessee during the year but it is a case in which the assessee has invested the capital in. the business and this am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forward capital and that too without bringing any evidence to the contrary. The revenue s allegation that the assessee stone-walled the investigations also cannot be appreciated because in case the assessee was not furnishing the details required by the Assessing Officer, he had ample power under the Income-tax Act to make necessary enquiry at his own level and should not have allowed the assessee to escape the liability of proper tax. 5. In view of above facts and circumstances, we are of the opinion that as far as the addition of opening capital is concerned, the same cannot be sustained. 8.7 Considering the above position of law and respectfully following the plethora of judicial pronouncements on the subject as mentioned above, I find that the addition of ₹ 6,23,72,953/- representing the brought forward opening balance in the bank account for the year under consideration cannot be sustained either on facts or in law. The same is, therefore, deleted. 13.2 From the aforesaid findings, it is apparent that the sum brought to tax does not represent any income for the instant year. On the contrary, it represented opening balance as on 1.4.1999 and therefore, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th of time. Further, the said investigation and FIR were in respect of contracts entered into by RAPL of which the appellant is the main Director, the only other Director being her mother Mrs. Govinda Khurana. Therefore, it can by no stretch of imagination be said that the appellant was not aware of the aforesaid criminal investigation in progress, and the filing of FIR, the issue of letter rogatory and restraint order on the bank account prior to 25.04.2006 is based on subjective assumptions and presumption and not any material much less valid material. Infact no opportunity was granted to the appellant before arriving at such an arbitrary conclusion. 1.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate and is otherwise is a matter of record that no notice or proceedings were initiated against the appellant by CBI till the date of filing of FIR much less any criminal investigation. Infact till date no connection have been established between any payments received by the appellant and NTPC officials. 1.5 That further finding of the learned Commissioner of Income Tax (Appeals) that letter dated 1.04.2006 filed by the appellant with the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by CBI and as such the conclusion of the learned officer is based on misinterpretation of provisions of law 1.10 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) overlook the written submissions and judicial pronouncements relied upon by the appellant. 2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that notice issued for levying the penalty was vague, non-specific and as such penalty levied on the basis of the said notice was invalid and not in accordance with law. 3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that in absence of any valid satisfaction having been recorded in the order of assessment the penalty levied was otherwise not sustainable. It is therefore, prayed that it be held that penalty so levied and sustained is illegal, invalid and therefore, may kindly be deleted and appeal of the appellant be allowed. 14.2 Identical grounds have also been raised in the appeals for assessment years 2001-02 to 2004-05 in ITA Nos. 1878/Del/2013 to 1881/Del/2013. All the aforesaid grounds as stated above relate to the levy of penalty of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee had concealed income in the facts and circumstances of the case? 2 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is bad in law and invalid despite the amendment of Section 271(1B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same? 3 Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income? 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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