TMI Blog2015 (8) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to explain the facts, but the assessee could not prove this amount before the AO. WE find that similar issue had come up before the Hon'ble A.P. High Court in the case of Chennupatti Tyres Rubber Products [ 2014 (11) TMI 510 - ANDHRA PRADESH HIGH COURT] , wherein the penalty was deleted. The Hon'ble Andhra Pradesh High Court has discussed the decision of Mak Data Mak Data Private Limited vs. CIT, [ 2013 (11) TMI 14 - SUPREME COURT] and after considering the decision of Mak Data, deleted the penalty. Penalty deleted - Decided in favor of assessee. - I.T.A.No.36/Ind/2015 - - - Dated:- 10-8-2015 - SHRI D.T. GARASIA AND SHRI B.C.MEENA, JJ. Appellant by : Shri Ravi Sarda, C.A. Respondent by : Shri R.A.Verma, Sr. DR ORDER GARASIA, J. This is an appeal filed by the assessee against the order of CIT(A), Ujjain, dated 01.10.2014 for the assessment year 2009-10. 2. The short facts of the case are as under. 3. The assessee has filed the return of income for the first time in assessment year 2009-10. The assessee has shown the opening capital at ₹ 13,43,020/-. The assessee was asked to furnish the relevant documents in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessee. In order to justify levy of penalty, there must be some material or circumstances leading to reasonable conclusion that amount does not represent assessee s income and circumstances must show that there was conscious concealment or act of furnishing of inaccurate particulars, penalty was not imposable in present case. AO imposed penalty on erroneous assumptions which was wrongly confirmed by CIT(A). Assessee version is supported in number of decisions of Courts including Hon ble Supreme Court and Hon'ble High Courts and Hon'ble Tribunals. No Penalty is leviable. Gist of the cases are as under:- In the case of Mak Data P. Ltd., vs. Commissioner of Income Tax-II Civil Appeal No.9772, (2013) 263 CTR 0001 (SC) the Hon'ble Supreme Court while considering the Explanation to Section 271(1), held that the question would be whether the assessee had offered an explanation for concealment of particulars of income or furnishing inaccurate particulars of income and the Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer between the reported and assessed income. The burden is then on the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee is found to be bona fide. In the present case, though it is true that assessee had not surrendered at all and that he had done so on the persistent queries made by AO but once the revised assessment was regularised by the Revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, Tribunal was justified in cancelling the penalty levied by AO and affirmed by CIT(A) in the facts and circumstances of the case. Commissioner Of Income Tax Vs. D H Secheron Electrodes Ltd. (2008) 296 ITR 0193 MP Penalty under s. 271(1)(c)-Concealment-Absence of mens rea-Tribunal has given reasons for accepting the factual version of the assessee and found that there was no mens rea as contemplated under s. 271(1 )(c) for imposing the penalty- There is no good ground to upset the aforesaid finding of the Tribunal-Levy of penalty under s. 271 (1 )(c) rightly cancelled Assessee having surre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search-Assessee stated that he had made expenditure out of business income but had not noted in his books of account-As per note book, total income came to Rs. X which assessee admitted to be undisclosed income of FY 1991-92 and on which he was ready to pay tax-Statement was admittedly made during search that assessee was ready to make payment of tax No further detail was required regarding undisclosed income Therefore, following judgments of Madras High Court. Rajasthan High Court and Gujarat High Court order of I.T.A.T. is upheld Appeal is dismissed. C.I.T. Vs. Chennupati Tyre Rubber Products (2014)90 CCH 0181 APHC Penalty u/s 271(l)(c)-Concealment of income-Assessee filed a return, showing loss for AY 1994-95-Intimation was given u/s 143(1)(a) by AO reducing loss-Assessee filed an application for rectification thereof and said request was accepted by AO-Thereafter an exercise u/s 143(2) was undertaken and scrutiny of each and every item was made-In respect of two items of sundry credits, explanation offered by assessee was not found satisfactory-Assessee agreed for treating those two items as income and it paid tax-AO imposed penalty u/s 271(l)(c) in respect of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty proceedings -Denying explanation given by legal representative, AO levied penalty u/s 271(1 )(c) on grounds that assessee had filed revised return only after the survey was conducted u/s 133A and assessee had failed to disclosed unexplained investment-CIT(A) and ITA T dismissed assessee s appeal-Held, once an explanation is submitted, onus shifts to Revenue to come to a conclusion that explanation was not acceptable and therefore case falls u/s 271(l)(c)-It was incumbent on authorities to consider details given by legal representatives of assessee along with annexures, before it proceeds to invoke Section 271(l)(c) and if on perusal of details supplied, authorities still found that Explanation was not justified or reasonable, they could take a different view on penalty proceedings-Also, when assessee had given some reasonable explanation, it was incumbent on part of Authority to consider same on its own merits before proceeding further In present case, explanation made on basis of Explanation B to Section 271 (I)(c) was satisfied by assessee and his legal heirs to some extent, but, same was not considered by revenue authorities-Order of Tribunal confirming penalty proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee for submitting the revised return was acceptable. The present case is not a case of mentioning of inaccurate particulars or concealment. Appeal dismissed. Commissioner Of Income Tax Vs. Gem Granites (2013) 86 CCH 0160 Chen HC Penalty u/s 271(l)(c)-Concealment of income-Bona fide claim-Leviability-Search was conducted u/s 132, which revealed that in real estate dealings there were on-money transactions- Assessee offered to admit on-money, but on completion of projects under completed contract method-AO included on-money component and completed assessment- Penalty proceedings initiated u/s 271(l)(c)-CIT(A) stated that inevitably and infallibly assessee had received on- money, therefore penalty was sustained-IT A T cancelled penalty- Held, in case of Union of India v.v. Rajasthan Spinning and Weaving Mills (2009) 13 SCC 448, it was held that mere making of claim, which is not sustainable in law, would not amount to furnishing of inaccurate particulars- For sustaining penalty u/s 271(l)(c), penalty being multiple liability, bona fide conduct of assessee (necessarily assumes significance, even though willfulness of assessee may not be criteria, conduct is to be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and secondly, assessee did not carry out issue in further litigation? SC in MAK DATA (P) Ltd. vs C.I.T. s case has held that voluntary surrender is not a cover to provide immunity from penalty but if explanation of assessee is found to be considerable and bona fide, then penalty will not be imposable as per Explanation 1 to section 271(l)?There was no finding from authorities below that it was not a mistake of omission, therefore, authorities below were wrong in holding that assessee made a wrong claim which was detected and disallowed by AO ?Since explanation offered by assessee during penalty proceedings that mistake committed by assessee was just an error of omission which was identified by assessee during preparation of details for assessment and tax impact of addition on account of conveyance expenses was quite insignificant in view of size of assessee company and the amount of FBT paid by the assessee was acceptable which was wrongly rejected by authorities below, penalty was not imposable on assessee? Appeal filed by assessee allowed Saket Agarwal Vs. Income Tax Officer (2014) 147 ITD 0686 (Delhi) Assessee consented to pay tax to avoid further litigation and to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e persons as his income- Return was subsequently revised by assessee for recording correct figure of deposits in five bank accounts, reworking correct figure of deposits in Bank account, by including bank account of R, owned up by assessee, as his own for AYs 2009-10. Held, concealment of income is to be determined with reference to return of income filed in respect to notice u/s. 153A and there is complete detachment of such proceedings from regular assessment proceedings-Income offered by assessee through his declaration dated 28.01.2010, filed on 29.01.2010. prior to search operation cannot be considered as sum which was concealed or sum on which inaccurate particulars were filed, in respect of assessments completed u/s. 153A and 143(3), after search - Once a concealment or furnishing of inaccurate particulars was not coming out as such from returns filed vis-avis finally assessed income, it becomes necessary to see whether any of deeming provisions set out in explanations to Section 271(l)(c) will come into play-Since there was no survey or search at any place, prior to disclosure of bank accounts in name of five persons as his own by the assessee on 28.01.2010 and well before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent the concealed income. On analysis of provisions of Section 271(1)(c), it is observed that Explanation 1 to Section 271(1)(c) provides the situation, where no explanation for the failure is offered by the assessee or where the explanation that has been offered is found to be false or where the assessee is not about to substantiate the explanation offered by him. In all the cases, the amount added or disallowed in computing the total income of such person shall be deemed to represent the income in respect of which the particulars have been concealed. As per proviso to this explanation, the onus to establish that explanation offered was bona fide and facts relating to same and material to the computation of his income even disclosed by him will be on the persons charged for concealment. As per the provisions 2 to Explanation 1(B) now the entire onus is on the assessee to not only offer an explanation but also to substantiate it and to prove that the presumption was bona fide. At the same time the presumption so raised by the Explanation 1 is rebuttable. The effect is that unless and until rebuts the presumption, he would be liable to penalty u/s 271(1)(c) of the Income-tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out that in order to bring the case under Section 271(1)(c), there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision could not be invoked. Thus, the Hon'ble Supreme Court pointed out that a mere making of claim, which is not sustainable in law, by itself, would not amount to furnishing of inaccurate particulars regarding the income of the assessee. The reading of the decision of the Hon'ble Supreme Court referred to above, thus points out that for sustaining penalty, the bona fide explanation of the assessee must be looked at, so that the contumacious conduct of the assessee for the purpose of sustaining the penalty would be taken as condition that is the main requirement under Section 271(l)(c) of the Act. Referring to the decision in the case of Dharmendra Textile Processors, (supra), the Hon'ble Supreme Court pointed out that in the background of Section 271(l)(c) of the Act, there is no necessity of mens rea being shown by the Revenue, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot per se provide a ground for levy of penalty-In instant case assessee agreed to treat two sundry creditors as income as a measure of purchasing peace-Lack of any mala fide intention on part of assessee clear from the fact that those two items were carried forward from previous year and were not new additions at all- There was no ingredients of concealment-Thus penalty imposed by AO u/s 271 (I )(c) was rightly deleted by CIT(A)- Revenues appeal dismissed. 10. We find that the Hon'ble Andhra Pradesh High Court has discussed the decision of Mak Data Mak Data Private Limited vs. CIT, 358 ITR 593, and after considering the decision of Mak Data, deleted the penalty. 11. We also get support from the decision of Hon'ble Chennai High Court in the case of CIT vs. Gem Granites, (2013) 86 CCH 0160 (Chennai), wherein it is held as under :- Held, that merely because the assessment proceedings were confirmed by Court holding the addition valid cannot automatically lead to conclusion that the penalty proceedings were justified. In the said judgment, the Hon'ble High Court of Madras after referring the decision of Apex Court in the cases of Union of India vs Dharmend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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