TMI Blog2021 (10) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Cr. had already been declared in the return itself. Both the authorities concurrently have correctly held following the decision of PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R UMEDBHAI JEWELLERS PVT. LTD [ 2016 (9) TMI 9 - GUJARAT HIGH COURT] that no penalty can be levied in such circumstances. Adverting to the facts of the present appeal, return was filed after about eight (8) months of conducting of survey and books of accounts were not closed also - neither it is a case of filing of revised return disclosing undisclosed income nor the case of books of accounts having been closed. Therefore, as rightly held by both the CIT(Appeals) and ITAT, no penalty can be imposed. - Decided in favour of assessee. - R/TAX APPEAL NO. 178 of 2021 - - - Dated:- 14-9-2021 - HONOURABLE MS. JUSTICE SONIA GOKANI AND AND HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Appearance: MR. VARUN K.PATEL(3802) for the Appellant(s) No. 1 MR MANISH J SHAH (1320) for the Opponent(s) No. 1 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. The Revenue is in appeal before this Court against the judgment of the Income-Tax Appellate Tribunal dated 05.03.2020 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of this Court rendered in case of PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R UMEDBHAI JEWELLERS PVT. LTD passed in Tax Appeal No.549 of 2016. 5. This was carried before the Income Tax Appellate Tribunal ( the ITAT for short), which had not entertained the appeal following the decision of this Court passed in Tax Appeal No.549 of 2016 noting that these findings and directions were in the identical circumstances. The ITAT had noted that the Assessee had offered an amount as additional business income, which was duly incorporated in the books of account and in the regular return of income taxes were duly paid. The ITAT also on account of the fact that the books of account were not closed as the year was not over and since it was not the case of revenue that the books were completed and and accounts were audited and the returns were filed had treated this as an unaccounted income. This is an ongoing financial year and it was Assessee s first year of operation therefore, also it was not possible for it to consider as the amount pertained to earlier years of business. This has been challenged by the revenue. 6. We have heard the learned standing counsel, Mr. Varun Patel, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us share application money to the tune of ₹ 5.86 Cr. Before the expiry of the due date for filing return, the return was filed by Assessee and he made a matching disclosure. No addition was made in the income by the Assessing Officer, but he levied the penalty on the ground that Assessee had furnished inaccurate particulars. The Court held that penalty could not have been imposed as rightly held by the Tribunal by following observations and directions: 6. To our mind, such penalty could not have been imposed as rightly held by the Tribunal. Section 271 of the Act provides for penalty. Clause (c) of sub-section (1) of Section 271 of the Act provides that if the Assessing Officer during the course of any proceeding under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct such person to pay by way of penalty which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded by the reason of concealment of particulars or furnish inaccurate particulars of such income. Relevant provision or Section 271 of the Act reads, thus; 271.(1) If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the grounds on which the penalty under Section 271(1)(c) of the Act can be imposed. The grounds are specific, namely, of the assessee having concealed particulars of the income or having furnished inaccurate particulars of such income. When neither of these two conditions apply, penalty cannot be levied under the said provision. 9. Attempt on the part of counsel for the revenue to rely upon explanation (1) to Section 271(1) of the Act would also be futile. Said explanation provides that if a person fails to offer an explanation or offers explanation which is found by the Assessing Officer to be false or offers an explanation which he is not able to substantiate or fails to prove that such explanation is bonafide, the amount added or disallowed in computing total income of such person, as a result thereof for the purpose of clause (c) of sub-section (1) be deemed to represent the income in respect of which particulars have been concealed. This explanation would, thus, apply at the stage of assessment since it refers to in respect of any facts material to the computation of total income. At such a stage. If the assessee fails to offer an explanation or offers an explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961. 11. The vital difference in the aforesaid case, thus, was that the assessee had already filed a return disclosing an amount of ₹ 16.17 lacs. It was only during the assessment proceedings that the assessee agreed to surrender further sum of ₹ 40.74 lacs by way of income. It was on account of the material collected by the revenue during survey operation carried out in case of assessee s sister co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant Member (Shri B.R.Jain) in his order taking into consideration the peculiar situation, observed that there was no documentary evidence on record to show payment of any on money or to suggest that there is any unexplained investment in stock entry. He chose to allow the appeal and cncelled the penalty. However, learned Judicial Member (Shri V. Durga Rao) wrote a separate judgment observing that after carefully going through the order of the learned Accountant Member, he was unable to persuade to agree with the views and conclusion drawn by the learned Member that there being no material or documentary evidence on record to show payment of any on money , while he found that there was ample evidence on record in the shape of incriminating documents and clear working of the on money which was noticed by the survey team. He further noticed that the statements were recorded of two persons and also directions who themselves calculated the concealed income and filed revised return on March 27, 2008. he also came to the conclusion that there is nothing on record that the assessee filed revised return of income due to pressure from the Department, rather in fact the directors of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular books of account. These facts were detected by the Revenue as a result of survey at the assessee s premises. During the course of survey, the director of the company admitted these facts. Thus, it is a clear case where the assessee furnished incorrect particulars in the original return of income with regard to purchase price of agricultural land, value of closing stock as well as the business income. The revised return modifying the figure of purchase value of agricultural land, value of closing stock as well as business income was furnished only after the detection of these discrepancies during the course of survey. In view of the above, I have no hesitation to hold that on the facts and circumstances of the case, learned Judicial Member rightly proposed to sustain the penalty imposed under Section 271(1) (c). (Emphasis supplied). Thus, even the learned Vice-President being the Third Member of the Tribunal, discarded the finding of the learned Accountant Member that there was no incriminating document or no documentary evidence on record to show payment of any on money . Thus, penalty was upheld. As it is quite clear the facts in case of Prasanna Dugar (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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