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TMI Blog2014 (8) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... e receipts - Rs. 1,11,67,378/-; and, (iii) Short term capital gain - Rs. 35,00,000/-. The CIT(A) has deleted the levy of penalty with respect to the addition on account of TDR sale receipts of Rs. 1,11,67,378/- and sustained the levy of penalty with respect to the other two additions on account of Interest on bank deposit and short term capital gain. In this background, Revenue is in appeal challenging the action of the CIT(A) in deleting the penalty on the income by way of TDR sale receipts whereas the assessee is in appeal by way of a Cross Objection challenging the sustenance of penalty with respect to the additions on account Interest on bank deposits and Short term capital gain. 3. Since the issues arise out of an assessment order passed by the Assessing Officer u/s 143(3) of the Act dated 31.12.2010 whereby the returned income was enhanced, it would be relevant to briefly note the following background. The assessee before us is an individual who filed her return of income for assessment year 2008-09 on 24.09.2008 declaring total income of Rs. 3,36,690/-. In the return of income filed assessee declared income from house property, salary from M/s Pooja Lottery Agency Private L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date on which the old FDRs had matured. It was pointed out that the Form No.26AS reflecting the annual tax statement u/s 203AA of the Act pertaining to the assessment year under consideration also shows that it is only in 2011 that Dena bank has credited the interest to assessee's account though it pertained to the period under consideration. It was therefore contended that omission to declare such income in the original return of income is for a bona-fide reason, and the same should not attract penalty u/s 271(1)(c) of the Act. 6. On this aspect, the learned Departmental Representative has defended the orders of the authorities below by pointing out that the assessee came forward to disclose the aforesaid income only during the assessment proceedings and thus penalty u/s 271(1)(c) of the Act has been correctly levied. 7. We have carefully considered the rival submissions. On this aspect, we find that the income by way of interest on FDRs with Dena bank was declared by the assessee only in the revised computation of income submitted in the course of assessment proceedings. Ostensibly, the said income was not declared in the return of income originally filed. The Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not ipso facto lead to levy of penalty u/s 271(1)(c) of the Act. In so far as the present issue is concerned, the overall circumstances explained by the learned counsel before us, in our view, mitigate the rigors of section 271(1)(c) of the Act qua the impugned sum of Rs. 4,60,091/-. Therefore, we set-aside the order of the CIT(A) on this aspect and direct the Assessing Officer to delete the penalty levied with respect to the addition at Rs. 4,60,091/- on account of interest on FDRs with Dena bank. 9. Now, we may take-up the penalty levied with regard to the addition of Rs. 35,00,000/- made on account of land as short term capital gain. In the 6 course of assessment proceedings, assessee was found to have received Rs. 25,00,000/- and Rs. 60,00,000/- from Karandikar Ganesh and P. P. Shinde respectively, which was explained by the assessee to be arising on sale of a Pirangut property (Gat No.1176). It was also explained by the assessee that the aforesaid property was purchased for an amount of Rs. 50,00,000/- and accordingly, Rs. 35,00,000/- was gain on sale of such property. The aforesaid short term capital gain was not declared by the assessee in the original return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account reflect TDR sales executed by her deceased husband Late Satish D. Misal, prior to 2002. The assessee explained that neither she was owner of any TDR assets and not she was a party to the aforesaid sale transaction, which was in-fact executed by her deceased husband. The assessee explained that the said amounts were merely received by the assessee as a result of the dispute being settled in Court. It was explained that such receipt was treated as a 'capital receipt' not chargeable to tax; and, therefore it was not offered to tax in the return of income. However, in the course of assessment proceedings, assessee agreed to pay tax on the same and accordingly the amount of Rs. 1,11,67,378/- was added to the total 8 income. The aforesaid sum has been subjected to levy of penalty by the Assessing Officer, primarily on the ground that assessee agreed to the addition and did not challenge it in appeal. As per the Assessing Officer, it was only due to the efforts made in the course of assessment proceedings that the impugned income was found and assessed , otherwise it would have remained untaxed. The CIT(A) has since deleted the levy of penalty on the said sum, and accordingly Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of money as legal heir of her deceased husband. The aforesaid factual aspects of the controversy are not in dispute. It is in this background that one has to examine as to whether or not the non-disclosure of such income in the return of income by the assessee was bona-fide or not. The case set-up by the Revenue is that assessee herself agreed to the said addition and therefore the taxability of the said sum is not in dispute thus leading to an inference of concealment of income within the meaning of section 271(1)(c) of the Act. 19. In our considered opinion, merely because an assessee has agreed to an addition, cannot be conclusive for the purpose of penalty u/s 271(1)(c) of the Act. Quite clearly, it is a trite law that assessment proceedings and the penalty proceedings are independent proceedings and that the findings in the assessment proceedings are not conclusive for the purposes of adjudicating the levy of penalty although such findings may be relevant for the purposes of 10 penalty proceedings. In-fact, as per the Hon'ble Supreme Court in the case of Anantharam Veerasingaiah & Co. vs. CIT, 123 ITR 457, penalty proceedings are independent of the assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of her deceased husband; the others being her daughters and son. Be that as it may, we are only pointing out the aforesaid explanation of the assessee for the purpose of evaluating whether the action of the assessee in not declaring such income in the return of income was on bona-fide grounds or not. One of her claims before the Assessing Officer was that such amount was presumed by her to be a capital receipt as it only reflected certain recoveries made by her on behalf of her late husband. Considering the entirety of above factors, we are satisfied that the explanation rendered by the assessee is bona-fide and in the absence of any dispute on the factual countours of such explanation, in our view, the initial onus cast on the assessee as per Explanation to section 271(1)(c) of the Act stands discharged. The presumption of concealment in terms of Explanation to section 271(1)(c) of the Act in the present case, in our view, is rebutted by the assessee having regard to the facts and circumstances of the case. Moreover, there is no material lead by the Revenue to show that the explanation of the assessee is either false or devoid of bona-fides. Therefore, in our view, the CIT(A) m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer 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 13 proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961." 23. However, in the case before us, factually we have concluded that the CIT(A) made no mistake in concluding that the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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