TMI Blog2018 (6) TMI 1678X X X X Extracts X X X X X X X X Extracts X X X X ..... d pursuant to Survey, which admittedly, was a valid return of income under section 139(1) of the Act. Applying the ratio laid down by the Hon ble High Court of Delhi in CIT Vs. SAS Pharmaceuticals [2011 (4) TMI 888 - DELHI HIGH COURT] we find no merit in levy of penalty on the additional income which was offered to tax in the revised return of income filed after Survey. Accordingly, penalty levied under section 271(1)(c) of the Act is hereby cancelled. - ITA No. 1227/PUN/2016 - - - Dated:- 5-6-2018 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For the Appellant : Shri R.G. Nahar For the Respondent : Shri Vivek Aggarwal ORDER PER SUSHMA CHOWLA, JM: The appeal filed by the assessee is against order of CIT(A)-6, Pune, dated 22.02.2016 relating to assessment year 2007-08 against penalty levied under section 271(1)(c) of the Income Tax Act 1961 (in short the Act ). 2. The assessee has raised the following ground of appeal:- 1. On facts and circumstances prevailing in the case and as per provisions of the law it be held that penalty u/s 271(1)(c) levied by the AO confirmed by the 1st appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for concealment of income. I therefore levy a penalty of ₹ 2,20,617/-. 5. The CIT(A) after deliberating upon the issue and various judicial pronouncements had dismissed the plea of assessee. 6. The assessee is in appeal against the order of CIT(A). 7. The learned Authorized Representative for the assessee first referred to the additional ground of appeal raised in the present appeal and pointed out that no satisfaction was recorded by the Assessing Officer while initiating penalty proceedings as to which limb of section 271(1)(c) of the Act has not been fulfilled by the assessee. He further pointed out that Explanation 1 is attracted only in cases where there is addition or disallowance made in the hands of assessee. He further pointed out that penal provisions are to be interpreted strictly and penalty for concealment could be levied only if it fits into four corners of law. He further placed reliance on the ratio laid down by the Hon ble High Court of Delhi in CIT Vs. SAS Pharmaceuticals (2011) 335 ITR 259 (Del). The learned Authorized Representative for the assessee further referred to the decisions of the Pune Bench of Tribunal in Nandkishor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin time and hence, no merit in rejecting the plea of assessee that no addition was made in the hands of assessee after it had filed the revised return of income and the penalty was levied on the returned income filed after the survey but before the start of assessment proceedings. He further placed reliance on the ratio laid down by the Hon ble High Court of Delhi in SAS Pharmaceuticals (supra), which was relied upon by the Pune Bench of Tribunal in the cases of Nandkishor Tulsidas Katore Vs. ACIT (supra) and Shri Anand Suresh Jain Vs. DCIT (supra). 10. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against levy of penalty under section 271(1)(c) of the Act. In the facts of the case, the assessee had originally filed the return of income declaring total income of ₹ 8,70,514/-. Survey action under section 133A of the Act was carried out in the case of assessee. During the course of survey action, the Assessing Officer had duly inventoried the physical stock found and the business premises of assessee and discrepancies found were confronted to assessee. Thereafter, assessment was completed under section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is not covered under Explanation 5A to section 271(1)(c) of the Act. We find merit in the stand of assessee in this regard, wherein Explanation 5A to section 271(1)(c) of the Act categorically provides that the same is applicable in case of searches. However, the Statute is silent about the additional income offered by the persons in the revised return of income filed pursuant to Survey proceedings. The additional income was declared during the Survey and if offered by the person in the revised return of income filed thereafter, then the same does not partake the nature of additional income taken note in Explanation 5A to section 271(1)(c) of the Act. In this regard, we find support from the ratio laid down by the Hon‟ble Delhi High Court in CIT Vs. SAS Pharmaceuticals reported in 335 ITR 259 (Del), wherein it has been 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 s. 271(1)(c) of the Act is a penal provision and such a provision has to be strictly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT vs. Mohan Das Hassa Nand (1983) 34 CTR (Del) 361 : (1983) 141 ITR 203 (Del) and in Reliance Petroproducts (P) Ltd. (supra), the Supreme Court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the IT return filed by the assessee. This view gets supported by Explns. 4 as well as 5 and 5A of s. 271 of the Act as contended by the learned counsel for the respondent. 16. No doubt, the discrepancies were found during the survey. This has yielded 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 as to whether this would attract penalty upon the assessee under the provisions of s. 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. Sec. 271(1)(c) of the Act has to be construed strict ..... X X X X Extracts X X X X X X X X Extracts X X X X
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