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TMI Blog2018 (6) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal is right in law in not cancelling the levy of penalty? 2. Whether the Income Tax Appellate Tribunal is right in law in not considering the specific grounds raised by the appellant herein on the leviability of penalty? 3.Whether the Income Tax Appellate Tribunal was right in confirming the levy of penalty where the alleged income admittedly is spread over a period of several years? 4.Whether the Income Tax Appellate Tribunal is right in law in holding that reality would be imposed notwithstanding that the assessee had agreed to the additions on the specific understanding that penalty would not be impact? 5.Whether the Income Tax Appellate Tribunal was right in disposing the appeal and confirming the levy of penalty in the light of its observation that the validity of the assessment proceedings could not be challenged in the penalty proceedings, when a specific contention had been raised regarding the pendency of the revision petition before the Commissioner? 4. In the Tax Case (Appeals), the assessee challenges the levy of penalty for the aforesaid two assessment years and in the Writ Petitions, the assessee questions the order passed by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, It is submitted that the order passed by the Commissioner rejecting the petition under Section 263 of the Act is erroneous. 6. With regard to the levy of penalty, it is submitted that the Tribunal ought to have considered as to whether the levy of penalty was justified, when the assessee had agreed to certain additions on the specific contention that the penalty would not be levied by the department. The Tribunal failed to take into consideration that when the correctness of the penalty proceedings were considered by the Tribunal, the revision petition before the Commissioner to revise the assessment proceedings were pending and the Tribunal was not right in observing that the validity of the assessment proceedings could not be challenged in a penalty proceedings. The learned counsel placed reliance on the decision of the Hon'ble Supreme Court in the case of Distributors (Baroda) P., Ltd., vs. Union of India & Ors., [(1985) 155 ITR 0120] and submitted that the revision petition ought to have been considered by the Commissioner in a proper prospective and the correctness of the assessment proceedings cannot be tested based upon the reasons in the penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed their business and their whereabouts were not known. According to the assessee, it cannot be safely concluded that the credit balances have become time barred or not recoverable by the concerned party. Further it was contended that in view of their voluntarily offering substantial amount for the assessment year 2002-03, in the wake of survey, the assessee has chosen to accept the department's proposal to make additions for the assessment year 2001-02, to avoid prolonged litigation and purchase peace. It was further submitted that the issue is an arguable matter and merely because, the assessee had agreed for addition, the act of concealment cannot be presumed. For the penalty notice for the assessment year 2002-03, the assessee stated that the assessment was completed on 17.04.2003, on the basis of the revised return filed by them on 12.03.2003 after including the additional income of Rs. 1,68,45,194/-, and this amount has been offered voluntarily in the course of survey operations. Further, it was stated that the assessee in their letter dated 10.03.2003, that they are offering the differences in the 4 sundry creditors cases, as they could not reconcile the same and thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn was filed voluntarily, therefore penal action was not attracted; (ii) the revised return was filed only after an assurance given by the department that no penalty proceedings will be initiated; (iii) Revenue has not proved that income was really concealed. 14. On the first question, the Tribunal took note of the findings during the survey proceedings and that the actual purchase was inflated and the inflation of purchase was admitted to the tune of Rs. 90,63,508/-, credit balances had been inflated by the assessee and disclosure of the concealed income after the department has seized material, cannot be voluntary disclosure, because, it was made under the constrains of exposure of adverse action by the Department. 15. On the second issue, the Tribunal held that there was no material to show that there was any assurance on the part of the revenue, that no penalty will be imposed if the assessee agrees to offer additional income. Accordingly, the same was rejected. 16. On the third issue, the assessee contended that the credit balances stood inflated on account of accumulation of various years and it cannot be said that income belonged to a particular year, much less the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., (supra), pointed out that the Assessing Officer 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. It was further pointed out that the question is whether the assessee has offered any explanation for concealment of particular income of furnishing inaccurate particulars of income. It was pointed out that explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer between the reported and assessed income. That burden is then on the assessee to show, otherwise, by cogent and reliable evidence, when the initial onus placed by the explanation, has been discharged by the assessee, the ownership's is on the revenue to show that the amount in question constituted the income and not otherwise. 20. In Mak Data, on facts, it was found that the surrender of income was after deduction was made by the Assessing Officer in the search conducted in the sister concern of the assessee. Applying the decision in the case of Mak Data (P) Ltd.,(supra), to the facts and circumstances of the case, irresistible conclusion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences, which were recovered during the course of survey. Thus, in the absence of any explanation, the assessee has come forward by filing revised return. Thus, we are unable to agree with the stand taken by the learned counsel for the assessee that the contentions advanced by the assessee were not considered by the CIT (A) or for that matter the Tribunal. 24. It was argued that merely by filing a revised return and offering additional income will not by itself be a ground to levy penalty. This is a broad legal principle, but has to be applied by taking note of the facts of each case. The assessee has to satisfy the test that he has a satisfactory explanation regarding such income offered in the revised return. The explanation as to why there was an omission or wrong statement in the original return must be due to bona fide inadvertence or bona fide mistake on the part of the assessee. Even if the assessee agreed to the addition with a condition that penalty could not be imposed, the Department is not precluded from initiating penalty proceedings. In the instant case on facts, it was found that there was no such assurance. 25. Reading of the order passed by the CIT (A) as confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings were confirmed by the Tribunal and none of the aspects, which have been pointed out by the petitioner in the revision petition have been dealt with. We are unable to persuade ourselves to accept the said contention for the reason that the Commissioner has taken note of the conduct of the assessee and has come to the conclusion that the addition was made after the assessee offered the same for taxation and the assessee also admitted that the said trade creditors are not traceable. After rendering such a finding, the Commissioner has referred to the order passed by the ITAT confirming the penalty proceedings. Therefore, the revision petition for the assessment year 2001-02, was not rejected, solely for the reason that the ITAT had confirmed the penalty proceedings. Thus, we find that there are no extraneous circumstances warranting interference on the factual findings recorded by the Commissioner affirming the findings recorded by the Assessing Officer for the year 2001-02. 29. With regard to the assessment year 2002-03, the sum and substance of the contention of the assessee is that the disclosure of additional income of Rs. 1,68,45,194/- does not represent the correct figure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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