TMI Blog2022 (10) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... ified on the addition and therefore, the same is required to be deleted. Surrender made after the conceled income was detected by the department cannot be held to be voluntary or bonafide but under compulsion - As in the case of S.P.Goel vs DCIT [ 2002 (4) TMI 952 - ITAT MUMBAI] Mere entry on a loose sheet of paper does not indicate undisclosed income unless circumstantial evidence in the form of extra cash, jewellery or investment outside books is found , in the case of Ashwini Kumar [ 1991 (8) TMI 142 - ITAT DELHI-D] In the case of dumb document, revenue should collect necessary evidence that the figures represent incomes earned by the assessee. In the case of JCIT vs West Bengal Trading Agency, [ 2004 (1) TMI 303 - ITAT CALCUTTA-B] . There has to be direct or circumstantial material to establish that the intention expressed in the seized document/books has actually been implemented and in the case of P.R.Patel [ 2000 (5) TMI 1070 - ITAT MUMBAI] No addition can be made on the basis of a seized documents which do not bear the name of assessee. Based on judicial precedent and the detailed discussion made here in above the penalty levied on the sustained addition is de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of the learned AO in passing the order under section 271(1)(c) of the Income Tax Act, 1961 without striking off the irrelevant portion of the printed show cause notice dated 15.09.2017 viz., furnished inaccurate particulars of income or concealed particulars of such income is bad in law. 3. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the learned AO in passing the order under section 271(1)(c) of the Act is against the principles of judicial consistency and therefore, bad in law. 4. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the learned AO in passing the order under section 271(1)(c) of the Income Tax Act, 1961 is void ab-initio deserved to be quashed as no satisfaction was recorded with reference to concealment of income or furnishing inaccurate particulars of income. 5. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the learned AO in imposing the penalty of Rs. 1,85,400/- u/s 271(1)(c) of the Income Tax Act, 1961. 6. The assessee craves your indulgence to add amend or alter all or any grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 u/s. 143(3) r.w.s. 153B(b)(1) r.w.s. 245A of the Act at Rs. 20,19,995/- as against the returned income of the assessee at Rs. 8,06,240/-. The assessee carried this quantum proceeding in the appeal and the on the disposal of appeal the ld. AO proceeded to levy the penalty u/s. 271(1)(c) of the Act vide order dated 19.03.2020. While passing the order of levying the penalty he has concluded as under : The written submission of the assessee s AR requesting to drop the penalty proceedings has been duly considered but not found acceptable for the reasons that the AR of the assessee gave a generic reply without specifically pointing out that why penalty wouldn t be levied on concealed income based on the evidences available on record. The assessee has also himself admitted that the amount noted in seized documents are related to advances given by him out of his undisclosed income. However, now he is changing his stand that the same needs to be taxed in the hands of someone else which clearly appears to be an afterthought at this stage. The assessee could not rebut the fact that why penalty should not be levied despite the fact that addition was confirmed by CIT(A) as well. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be considered in his hands only. Similarly an affidavit was also filed by Sh. R.K. Kandoi on 13.09.2017 stating that any addition pertaining to Rs. 12.41 Lakhs may only be made in the hands of the appellant. Sh. Manglalkandoi. The AO observed that the appellant has himself admitted that the amount noted in the seized documents are related to advances given by him out of his undisclosed income. In view of the above facts, the AO held that the appellant on his own has accepted the facts related to his undisclosed income without any force, pressure or coercion. Aggrieved by the aforesaid addition, the appellant filed appeal before the Ld. CIT(A)-4, Jaipur which was disposed off vide order dt. 01.11.2018 wherein addition of Rs 6,00,000/- on account of undisclosed advances made by the appellant was confirmed by the Ld. CIT(A). Accordingly, after issuing show cause notice in this regard, the AO imposed a penalty of Rs. 1,85,400/- u/s 27111)(c) of the Act. (ii) Before me, the Ld. AR of the appellant contended that the aforesaid documents does not relate to him but relates to one Sh. Subhashdi who has remained unexamined by the Department. It was further contended that the AO has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also worthwhile to mention here that the above discrepancy in respect of which addition has been made was detected only during the course of search proceedings, which otherwise would have escaped assessment and this amounts to concealment of income. From all the above facts observed in the case of the appellant, it is quite apparent that the appellant had concealed the particulars of income for which he also had no valid explanation to offer (vi) Therefore in the facts of the case, Explanation 1 of section 271(1)jej of the Act is clearly attracted, where in the explanation offered by the appellant has not been substantiated and appellant has failed to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him in the return of income so filed. (vii) Further, as regards to the contention of the appellant that the addition finally sustained by the Hon'ble ITAT is based on acceptance by the assessee to purchase peace of mind and avoid prolonged litigations, it is mentioned that the Hon'ble Supreme Court in its decision dated 30.10.2013 in Civil appeal No. 9772 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumption of concealment when difference is noticed by AO between reported and assessed income. Initial burden is on assessee to show cogent and reliable evidence. Voluntary disclosure does not release assessee from mischief of penal proceedings. Further, surrender of income was found to be nonvoluntary as it was made after detection in search conducted in sister concern. Survey was conducted more than 10 months before assessee filed return. Had it been intention of assessee to make full and true disclosure it would have filed return declaring income inclusive of amount which was surrendered later. Accordingly, initiation of penalty proceedings was confirmed by the Supreme Court. (ix) Therefore, in view of the above facts, it is absolutely clear that the appellant has not substantiated his claim with cogent evidences and that the appellant has failed to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him in the return of income so filed. (x) The surrender of income in this case was not voluntary in the sense that the offer of surrender was made in view of detection m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. 3. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the Learned AO in passing the order under Section 271(1)(c) of the Act is against the principles of judicial consistency and therefore, bad in law. 4. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the Learned AO in passing the order u/s 271(1)(c) of the Income Tax Act, 1961 is void ab-initio deserves to be quashed as no satisfaction was recorded with reference to concealment of income or furnishing inaccurate particulars of income. NOT PRESSED. Ground No. 5 :- In the facts and circumstances of the case the learned CIT(A) has erred in confirming the action of the Learned AO in imposing the penalty of Rs. 1,85,400/- u/s 271(1)(c) of the Income Tax Act, 1961. 1. Addition of Rs. 6,00,000/- is on the basis of annexure A-1 and no further enquiry was made The addition of Rs. 6,00,000/- has been made by the Learned Assessing Officer with reference to annexure 'A-1' page 2 which is scanned below: - The above page very apparently discloses the following: - (i) It relates to one Shri Subhash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or penalty can be fastened to the assessee. Therefore no penalty is leviable without bringing any credible and positive evidences on record against the assesse to prove that the assessee has actually concealed the particulars of his income. In the instant case there is only acceptance of the assessee and nothing more was brought on record to prove the concealment. Therefore the addition finally sustained by the ITAT is based on acceptance by the assessee for levy of taxes to purchase peace of mind and avoid prolonged litigations and no any positive material or credible evidence was brought on record to substantiate that the assessee has concealed the income. It is settled principle of law that penalty cannot be imposed where the additions have been made only on the basis of confession u/s 132(4) of the IT Act. It is submitted that it is a case where addition was made purely on assessee s confession during search. There is no material on record either at the time of assessment proceedings or at the time of penalty proceedings which may establish any gross or willful negligence on the part of the assessee. No any particular or specific defect was pointed out by the Learned Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is that the penalty has been levied with respect to an addition which has been made purely on guess work and conjectures and surmises. The learned AO has initiated the penalty u/s 271(1)(c) in the assessment order by mentioning that the assessee has concealed the income . But there is no evidence or credible documents on the basis of which it can be said that the assessee has concealed the income. Therefore no penalty is leviable without bringing any evidence on record. 3. Penalty should not have been imposed as the additions made in the quantum proceedings It is submitted that the penalty should not have been imposed as they are entirely based on the additions made in the quantum proceedings. Simply because additions have been sustained it was argued does not automatically lead to the levy of penalty. Addressing the basis of the additions it was stated that these are based on rough notings on loose papers and cannot be held as evidence leading to the conclusion that these were suppressed income of the assessee. Apart from the reason that the addition was sustained in the quantum, the AO has made no effort or enquiry to justify levying of penalty. No reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The Learned CIT(A) further relied upon certain case laws. In this regard our submission is that (i) The paper on the basis of which addition has been made is totally a dump paper. (ii) In the statement recorded u/s 132(4), the assessee stated that the amount required to be considered in the hands of Shri Anand Singhal but for no reason later on an affidavit is furnished and the assessee has agreed to pay tax on the entries which were not related to him for the family dispute reasons. (iii) That no enquiry was made and no any material was brought on record to substantiate or prove that the income accepted by the assessee was his concealed income. There may be hundred other reasons for acceptance of payment of tax. (iv) Since the entire addition was based on confessional statement. Such statements are directly in violation of board circular. Therefore, on such addition penalty u/s 271(1)(c) cannot be levied. (v) The documents have no dates and it cannot be considered in any period unless it is linked with the affairs of the assessee. (vi) It has no narration so as to indicate that it pertains to the business/personal affairs of the assessee. (vii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitted that the settlement application was rejected merely on the ground that assessee could not make any sound basis for explaining the manner of earning such undisclosed income and working out such income. Thus, it may please be appreciated that the addition confirmed in this on account of the figure of the loan given for an amount of Rs. 6,00,000/- recorded in the seized material without any head or tail and it is also not sure that whether amount given or taken. It is merely dump document and has not relation with the business of the assessee. The AO has not further examined this issue and not placed on record any document or evidence. The penalty cannot be levied on the amount of loan taken on which the assessee did not own any assets and accepted the addition to buy the peace with the department. The ld. AO has not made any enquiry to confirm the fact that whether assessee has given the loan or taken the loan. Thus, on this fact the addition sustained there is no element of income and thus the levy of penalty is not sustainable. The ld. AR of the assessee has drawn our attention to page 2 of the penalty order where in the ld. AO extracted the question no. 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed is subject to levy of penalty u/s. 271(1)(c) of the Act. The ld. DR further drawn our attention to the findings of the ld. CIT(A) recorded in the para 5.2(vii) at page 11 where in the relying the apex court decision he submitted that the explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the assessing officer, between reported and assessed income. The burden then shifts on the assessee to show otherwise, by cogent and reliable evidence. He further submitted that the assessing officer shall not carried away by the plea of the assessee like voluntary disclosure, buy peace, avoid litigation, amicable settlement etc., to explain their conduct. 14. We have considered the rival contentions, perused the material available on record and also gone through the findings of the lower authorities recorded in their respective orders. We have also gone through the various judicial ruling placed before us by both the parties to drive home to their contentions. The ld. AR of the assessee has not pressed the ground no. 1 to 4 therefore, the same stands dismissed. The bench noted that ground no. 5 raised by the assessee is related to levy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or taken but merely stated the income is confessed as his own income. On the other hand the ld. AR of the assessee submitted that the seized paper based upon with the addition is made it related to one Shri Subhas Ji who has remained unexamined by the department. Without examining Shri Subhasji the truth cannot be known. It has not signature of the assessee nor there is signature of Mr. Subhas Ji. It does not contain the name of the assessee as such there was no ground with the ld. AO to consider the same in the hands of the assessee. Further the assessee was examined related this page in the statement recorded at question no. 25 that related facts is not disputed or there is no whisper in the orders of the lower authorities. In the said question no. 25 the name of Shri Anand Singhal was submitted but no further facts is placed on record by the revenue. Further the ld. AR submitted that ld. AO has made the addition of Rs. 6 lac in the hands of the assessee in view of an affidavit in respect of this matter filed by the assessee on 13.09.2017 stating that the addition if any are required to be made the same may be made in the hands of the assessee. However, the ld. AO could not be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular assets based upon which this can be considered as income/assets, as revenue has not taken any action against that person which suggest that the advance cannot be termed as an undisclosed income earned from undisclosed sources and thereby lead to levy of penalty for concealment of income. Not only that in the statement u/s. 132(4) it was brought on record that these papers pertain to Shri Anand Singhal and were admittedly in his handwriting and as such deserves to be considered in his hands. The main thrust of argument of the assessee was that the paper on the basis of which addition was made did not pertain to the assessee. Hence there was no occasion for making addition in the hands of the assessee but was confirmed only based on the affidavit voluntary surrendering. The assessee had further pleaded that the addition was made by the Learned Assessing Officer in the hands of the assessee despite the fact that in statement u/s 132(4) it was brought on record that these papers pertain to Shri Anand Singhal and were admittedly in his handwriting and as such deserved to be considered in his hands . The Learned CIT(A) has not at all considered the submissions of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y can be levied on such additions. The penalty proceeding are separate proceeding and the findings given in the assessment proceeding may not always be correct in the penalty proceeding and this proceeding all the aspect is required to be seen as the penalty proceedings are quasi criminal proceedings and the ultimate finding of assessment is required to be tested in the ultimate aim of levy of penalty. On conjoint reading of the provision of law for levy of penalty and the definition of undisclosed income and the facts as narrated here in above that ld.AO has not proved that whether the advance in question are in fact taken or given by the assessee or Mr. Anand Singhal. Not only that the revenue has not done any exercise to confirm with Shri Subhas Ji that whether the money in question is related to the person named in or not? Since, the assets being the advances itself is not tested and statement recorded at the time search where in the assessee has categorically submitted that the money in fact taken and not given and the same is not pertain to the assessee. In the assessment proceeding this very basic fact is not establish and in the absence of this fact being not confirmed we a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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