TMI Blog2017 (11) TMI 1824X X X X Extracts X X X X X X X X Extracts X X X X ..... plained in Mak Data [ 2013 (11) TMI 14 - SUPREME COURT] which is clearly applicable in the facts of the case. Reference in this context also be made to the recent decision in CIT v. Usha International Ltd. [ 2012 (11) TMI 589 - DELHI HIGH COURT] - Decided against assessee. - ITA No.899/Mds/2015 - - - Dated:- 1-11-2017 - SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For the Appellant : Shri K.Raghu, C.A For the Respondent : Mrs. Veni Raj, Jt. CIT ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-1, Coimbatore ( CIT(A) for short) dated 10.03.2015, dismissing the assessee s appeal contesting the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 ( the Act hereinafter) for the assessment year (AY) 2010-11 vide the order dated 28.08.2014. 2. The background facts leading to the levy and confirmation of penalty are that Surya Balaji Investment (P.) Ltd., a finance company, in which the assessee is a director, was subject to survey u/s. 133A of the Act on 10.09.2012 at its business premises. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore) was not established. Clearly, the offering of the impugned investment to tax as her income by the assessee, a director, is only to pre-empt inclusion of the amount, to that extent, in the assessment of the company. What else could explain the assessee s conduct; she being not one of the 21 share applicants (creditors), so that no part of the impugned sum could be ascribed to her. Notice u/s. 148 for bringing the income to the extent of ₹ 1.62 cr. to tax, had already been issued by the company by the Revenue as far back as on 14.12.2012. Apparently, and the clear inference that arises from the foregoing facts and circumstances is that, it is the Managing Director and the Director of the company, Surya Balaji Investments Pvt. Ltd., whose money had flown to the company in the name of the several persons, who were thus benamis or name lenders for them. How, we wonder, would the owning of ₹ 1.02 cr. (out of the total of ₹ 1.62 cr.); the balance ₹ 60 lacs, for all we know, may have been offered in the hands of the MD, be regarded as an act of piety or benevolence on the part of the assessee? How could, one may ask, the directors of a private limited company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise. (pgs. 597-598) The law, per Explanation 1 to s. 271(1)(c), clearly casts a burden on the assessee to furnish an explanation, and substantiate the same, proving his bona fides in-as-much as all the facts relating to the same and material to the computation of his income stand disclosed. An absence to do so leads to the statutory presumption of the assessee having concealed the particulars of his income, attracting the levy. The assessee has in the present case completely failed to furnish any explanation, much less substantiate it. The same has to be, we may clarify, only with reference to the omission (on the part of the assessee) in not returning the impugned sum per her original return filed in August, 2010. It is apparent that but for the survey action and enquiry by the Revenue, the assessee would not have returned her true income, which she claims to have voluntarily. The assessee has not led any evidence during the penalty proceedings to exhibit the same or any part of the impugned income as flowing from the persons in whose names the same stand credited, viz. prove their identity and capacity, much less the genuineness of the investment or the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate there-from. Further, that penalty u/s. 271(1)(c) is a civil liability and therefore mens rea and willful concealment are not essential ingredients for attracting the same. That the imposition of penalty, however, is not automatic, even if the tax liability is admitted. That the existence of the conditions stipulated in s. 271(1)(c) should though be discernible from the assessment or the appellate order. Further, even if these conditions do not exist in the assessment order a direction to initiate assessment proceedings by the AO is a must, i.e., for initiating penalty proceedings. The basis or the ground on which the penalty is levied in the present case is whether the revision by the assessee of her return of income, admitting additional income of ₹ 1.02 cr., is voluntary or not. Both in the assessment and the penalty proceedings, the assessee explained that her act was voluntary and guided only by her intent to purchase peace and avoid litigation. How, then, one may ask, can under the circumstances it be said that the assessee is not communicated or aware of the basis or the ground on which penalty is proposed to be levied, or the same are not known to her. There is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter and no one aspect would be decisive. (pg. 665(e-g)) [emphasis, ours] The said decisions thus make it abundantly clear that the notice u/s. 274 is an embodiment of the principle of natural justice, so that where no prejudice is caused to the assessee, as where he is made well aware of the default for which the penalty is proposed to be levied in pursuance to the said notice, which is only an administrative device to effect the communication, and provide opportunity of hearing, penalty proceedings cannot be assailed. This, it may be noted, is despite the absence of a provision as section 292B on the statute (introduced by Taxation Laws (Amendment) Act, 1975, w.e.f. 01/10/1975) at the relevant time, which specifically mandates that an omission, mistake or defect shall not invalidate, inter alia, a notice, where it is in substance and effect in conformity with or according to the intent and purpose of the Act, i.e., to provide, per a notice u/s. 274, an opportunity to the assessee to explain his case, as her conduct in not returning her correct income in the first instance in the present case. There is in fact no dichotomy or conflict between the decision in Manjunatha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng her return cannot be regarded as voluntary, which only follows a discovery and, in fact, an admission by the Managing Director of the company as to the share applications being unexplained. The law in the matter is well-settled, viz. Ravi Co. v. Asst. CIT [2004] 271 ITR 286 (Mad); S.R.Arulprakasam v. ITO [1987] 163 ITR 487 (Mad); CIT v. J.K.A. Subramania Chettiar [1977] 110 ITR 602 (Mad); Ayyasami Nadar Bros. v. CIT [1956] 30 ITR 565 (Mad), to cite some. The assessee was, accordingly, bound to explain the additional income per her revised return or, per contra, the omission of the said disclosure per her original return, satisfying the conditions of Explanation 1 to s. 271(1)(c), even as explained by the Hon'ble Apex Court per a series of decisions cited supra. The plea as to by peace or avoid litigation , etc., cannot be countenanced, even as explained in Mak Data (supra), which is clearly applicable in the facts of the case. Reference in this context also be made to the recent decision in CIT v. Usha International Ltd. [2012] 254 CTR 509 (Del). We decide accordingly. 4. In the result, the assessee s appeal is dismissed. Order pronoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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