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TMI Blog2021 (2) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... issue to be decided in this appeal is as to whether the penalty u/s.271(1)( c) of the Act be levied in respect of additional income offered to tax by the assessee pursuant to survey and which was also disclosed by him in the return of income filed. 3. We have heard rival submissions and perused the materials available on record. We find that assessee is a company engaged in the business of manufacturing and marketing of plastic products and had filed its return of income for the A.Y.2009-10 on 24/09/2009 declaring total income of Rs. 2,99,94,911/-. During the year under consideration, the assessee has purchased land along with house at Hyderabad for Rs. 10.50 Crores vide sale deed dated 10/06/2008. The survey u/s.133A of the Act was condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sum of Rs. 3 Crores ultimately offered by the assessee pursuant to the survey. This action of the ld. AO was upheld by the ld. CIT(A) on the ground that assessee had not recorded the cash of Rs. 3 Crores in its regular books of accounts, and that , but for the survey, the assessee would not have come forward to offer the same to the Income Tax department. 3.1. We find that on perusal of page 10 read with page 13 of the factual paper book filed by the assessee comprising of the profit and loss account for the year ended 31/03/2009 and the schedule for the other income thereon, the sum of Rs. 3 Crores has been disclosed by the assessee exclusively as income declared under survey under the head 'other income'. This itself goes to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elatable only in respect of a return being filed. Therefore, in a case where the stage of filing return itself had not been reached, there is no question of invocation of the penal provision of Section 271 of the Act, as is the position in the present case. In the present case, the return was filed well within the prescribed time, i.e., on 02.12.2003 and in the said return the entire amount had been duly shown as income. Therefore, invoking a penal provision merely on the basis of assumption that the assessee 'would not have included' the said amount while filing his return is completely erroneous and unsustainable. It is a settled position of law as enunciated in various judicial pronouncements that 'penalty cannot be based on presumptions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts Pvt. Ltd. (2010) 3 SCR 510 wherein inter alia it has been held that unless the conditions under Section 271 (1)(c) of the Act exist in a particular case, penalty cannot be imposed and it was further held that 271 of the Act being a penal provision is required to be construed strictly. The following observations made in the said judgment were specifically referred to: "8. Therefore, it is obvious that it must be shown that the conditions under Section 271 (1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me tax return. 14. We may, first of all, reject the contention of the learned counsel for the Revenue relying upon the expression 'in the course of any proceedings under this Act' occurring in Sub-section (1) of Section 271 of the Act and contending that even during survey when it was found that the assessee had concealed the particular of his income, it would amount concealment in the course of 'any proceedings'. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the AO or the Commissioner of Income Tax (Appeals). When the survey is conducted by a survey team, the question of satisfaction of AO or the Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed 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 non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income tax return and offered the surrendered amount for the purposes of tax. 17. We, thus, answer the questions as formulated above, in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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