TMI Blog2019 (8) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... o in the case of Pr. CIT vs. Valibhai Khanbhai Mankad, Tax [ 2015 (9) TMI 849 - GUJARAT HIGH COURT] held that in the absence of any concealment of the particulars of income or furnishing of inaccurate particulars of income on the part of the assessee, no infirmity can be found in the impugned order passed by the Tribunal in confirming the order passed by the CIT(A) in deleting the penalty u/s 271(1)(c) We have reached to the conclusion that no error not to speak of any error of law could be said to have been committed by the Tribunal in passing the Impugned order. No interference is warranted in this appeal u/s 260-A - Decided in favour of assessee. - R/TAX APPEAL NO. 498 of 2019 - - - Dated:- 23-7-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Appellant (s) : MRS MAUNA M BHATT(174) For The Opponent (s) : None ORAL ORDER ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. This Tax Appeal under Section 260-A of the Income Tax Act, 1961 (for short the Act, 1961 ) is at the instance of the Revenue and is directed against the order passed by the Income Tax Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed by the AO preferred an appeal before the CIT(A). The CIT(A) deleted the penalty levied by the AO. 3.3 The Revenue being dissatisfied with order of the CIT(A) preferred an appeal before the Appellate Tribunal. The Appellate Tribunal dismissed the appeal preferred by the revenue and thereby affirmed the order passed by the CIT(A). 3.4 Being dissatisfied with the order passed by the Tribunal, the Revenue is here before this Court with the present appeal. 4. Mrs. Mauna Bhatt, the learned senior standing counsel appearing for the Department submitted the following : ( a) In this case, it is found that the assessee disclosed income of ₹ 1,78,50,000/- only on account of Survey proceeding conducted by the Income-tax department. Had there been no Survey action, undisclosed income of ₹ 1,78,50,000/- would have remained undetected and the entire amount would have escaped from the gaze of tax. ( b) Further, assessee s intention to avoid payment of taxes is clear from the fact that entries in the diary found during the survey proceeding were not entered in the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of return of income. Survey u/s. 133A or search under section 132 or issuance of notice u/s. 133(6) for example, are only means of collecting evidence against the assessee and are not equivalent to statutory proceedings. Another criteria of finding out ks to be seen whether it can be brought to a legal conclusion against the assessee by determining his right or liability. Merely carrying out survey under section 133A does not create any liability against the assessee which in created only through assessment proceedings or penalty proceedings. Therefore, the Ld.DR. is incorrect in his submission that survey being a proceedings and AO has discovered concealment during survey, therefore, the assessee is liable for penalty under section 271(1)(c). 18. The ld.DR has relied on the judgment of Mak Data Pvt. Ltd. vs. CIT [2013] 358 ITR 593 (SC), however, same is not applicable in the present case as in that case the survey was conducted more than 10 months before filing of returns and the disclosure was made by the assessee later during the course of assessment proceedings, whereas in the present case the amount disclosed during survey was duly included in the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 271(1)(c) of the Act, held as under : 12. After considering the respective submissions of the learned counsel for the parties, we are of the view that the argument of the learned counsel for the assessee has to prevail as it carried substantial weight. It is to be kept in mind that Section 271(1)(c) of the Act is a penal provision and such a provision has to be strictly construed. Unless the case falls within the four-corners of the said provision, penalty cannot be imposed. Subsection (1) of Section 271 stipulates certain contingencies on the happening whereof the AO or the Commissioner (Appeals) may direct payment of penalty by the assessee. We are concerned herewith the fundamentality provided in Clause (c) of Section 271 (1) of the Act, which authorizes imposition of penalty when the AO is satisfied that the assessee has either; ( a) Concealed the particulars of his income; or ( b) Furnished inaccurate particulars of such income. 13. It is not the case of furnishing inaccurate particulars of income, as in the income-tax return, particulars of income have been duly furnished and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ielded income from the assessee in the form of amount surrendered by the assessee. Presently, we are not concerned with the assessment of income, but the moot question is to whether this would attract penalty upon the assessee under the provisions of Section 271(1)(c) of the Act. Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Section 271(1) (c) of the Act has to be construed strictly. Unless it is found that there is actually a concealment or nondisclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or nondisclosure as the assessee had made a complete disclosure in the income tax return and offered the surrendered amount for the purposes of tax. 6.4 The Supreme Court in the case of Mak Data Pvt. Ltd. vs. Commissioner of Income Tax reported in [2013] 358 ITR 593 (SC) considered Section 271(1)(c) of the Act. The Supreme Court took the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment has not built a case where the explanation of the appellant has been proved to be false or not bona fide. Even the conditions or Explanation 1 of section 271(1)(c) are not applicable in such a case. 6.6 We may also refer to one decision of this High Court in the case of Principal Commissioner of Income Tax vs. Valibhai Khanbhai Mankad, Tax Appeal No.445 of 2015 decided on 7th September, 2015 . In the said decision, the Assessing Officer had made various disallowances and additions under Sub-section (3) of Section 143 of the Act. The Assessing Officer also initiated penalty proceedings under Section 271(1)(c) of the Act. The very same argument was canvassed before the coordinate Bench that the penalty had been levied by the Assessing Officer as the assessee had shown additional income after the same was detected during the course of survey action under Section 133A of the Act. It was argued before the coordinate Bench that the Tribunal had failed to appreciate the fact that the assessee had filed his return beyond the period prescribed under Sub-section (1) of Section 139 of the Act. It was also pointed out that the assessee had filed the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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