TMI Blog2023 (5) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty levied by the AO and sustained by the ld.CIT(A) in our opinion is fully justified. Decided against assessee. - ITA No.402/Hyd/2022 - - - Dated:- 22-5-2023 - Shri R.K. Panda, Accountant Member And Shri Laliet Kumar, Judicial Member For the Assessee : Shri K.C. Devdas, CA For the Revenue : Shri KPRR Murthy, CIT(DR) ORDER PER R.K. PANDA, A.M This appeal filed by the assessee is directed against the order dated 29.07.2022 of the learned CIT (A)-11, Hyderabad, relating to A.Y.2015-16. 2. Facts of the case, in brief, are that the assessee is an individual has filed his Return of Income for A.Y.2015-16 on 30.09.2015 admitting total income of Rs.8,50,600/-. A search and seizure operation u/s. 132 of the IT Act was conducted in the case of Mytrah Energy group On 30.08.2017 wherein the assessee was also covered u/s.132 of the IT Act. Accordingly notice u/s. 153A was issued to the assessee. In response to the notice issued u/s. 153A, the assessee filed his return of income on 15.02.2018 admitting total income of Rs.58,00,600/-. Assessment u/s. 143(3) r.w.s 153A was completed on 30.12.2019 by making addition of undisclosed investment u/s. 69B of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to material seized during the course of search and seizure operation u/s. 132 Which form the basis for questioning the appellant for the investments made in certain properties. It will not be out of place to mention that the material Seized during the search and seizure operation u/s. 132 of the IT Act ultimately lead to admission of income by the appellant and it was not even a voluntary disclosure. It is important to note that in the decision of Hon'ble Supreme Court in the case of Mak Data Pvt Ltd vs. CIT 358 ITR 593 (SC) dated 30.10.2013 it was held that voluntary disclosure does not release the appellant from the mischief of penal proceedings. The relevant part of the judgment is as under: 6. We have heard counsel on either side. We fully concur with the view of the High Court that the Tribunal has not properly understood or appreciated the scope of Explanation 1 to Section 271(1)(c) of the Act, which reads as follows: Explanation i - Where in respect of any facts material to the computation of the total income of any person under this Act, -- A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention 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 A0, 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 Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty notices and recording of satisfaction in assessment order. It is observed from the assessment order that the AO has mentioned penalty proceedings are initiated for concealment of income and made a specific reference to Explanation 5A as well. Further the penalty notices further issued clearly mention that the penalty proceedings had been initiated for Concealment of income In this regard, the relevant extract of section 271(1)(c) of the Act is reproduced below: 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal or Commissioner in the course of any satisfied that any person proceedings under this Act, is satisfied that any person - . (c) has concealed the particulars of his income or furnished particulars of such income, or (d) inaccurate has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits, he may direct that such person shall pay by way of penalty, _____ (i) *** (ii) in the cases referred to in clause (b), in addition to tax, if any, payable by him, a sum of ten thousand rupees for each such failure; (iii) in the cases referred to in clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer and the above discussion, it is held that there is no ambiguity in terms of which limb of section 271(1)(c) had been initiated when it is clear that the penalty has been initiated for concealment of particulars of income . In view of the same, the ground no.2 is dismissed accordingly. Further, with regards to facts of the case, the appellant had invested Rs. 6,00,000/- towards interiors and purchase of a villa bearing no. 3, SLR villas, Kondapur, Hyderabad. The details of the appellant's investment are found in the seized material Annexure No. NPIPL/133A/2 pages 33 to 35 and 38 to 40. With regard to the same, a statement u/s. 131 was recorded during the assessment proceedings on 19.12.2019 wherein the appellant stated as under: 4. Please go through the page no, 33 to 35 and 38 to 40 of Annexure No.NPIPL/133A/2 and explain the contents Ans: The sources for the above investment is out of savings of my earlier earnings. I confirm that the above amount of Rs. 1,00,000/- paid for Rs.5,00, 000/- interior and payment of towards purchase of villa was not disclosed in my return of now, I offer Rs.6,00, income ana 000/-to tax , The appellant had clearly state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith approval plans by the local authorities, the property was later agreed for and registered for Rs. 19,50,000/- only, which is the consideration mentioned in the registered sale deed. In support of his contentions, the appellant submitted a confirmation letter from the seller of the property M/s. Trident Constructions. It is observed that the said confirmation letter was undated. Even if the confirmation from the seller were considered and the contentions of the appellant with respect to the consideration paid towards acquisition of the property were correct, the fact that the appellant had already paid the seller an amount of Rs. 50,00,000/ remain undisputed. Hence, even if the property was actually acquired by the appellant for Rs. 19,50,000/-, he could not produce any documentary evidence substantiating the payments made of Rs. 50,00,000/ - were out of his admitted incomes. Further, the appellant has not furnished any bonafide reply within the meaning of Explanation 1 to Section 271(1)(c). The appellant is expected to file an explanation to the notice as to why penalty should not be levied u/s 271(1)(c). As per Explanation 1 to Section 271(1)(c), the appellant has failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book, he submitted that the assessee has paid only an amount of Rs. 19,50,000/- and not Rs.50 lacs as per the paper found and the seller has not received any amount over and above Rs. 19,50,000/-. He submitted that although a confirmation letter of the seller was filed before the AO, however, he was never called for examination. The ld.counsel for the assessee submitted that he can always make a new claim before the authorities during penalty proceedings, since the penalty proceedings and assessment proceedings are separate and distinct. He accordingly submitted that the penalty levied by the AO and sustained by the ld.CIT(A) is not justified. 6. The ld.DR on the other hand heavily relied on the order of the ld.CIT(A). He submitted that the ld.CIT(A) has given a finding that even if the property is registered for a lesser amount, still the assessee has already paid the seller an amount of Rs. 50 lacs which remains undisputed and since the so-called confirmation letter is undated, the Ld.CIT(A) has not considered the same to be a valid confirmation. Therefore, in light of the elaborate discussions made by the ld.CIT(A) while sustaining the penalty levied by the AO, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively. Considering the totality of the circumstances of the case, I levy a penalty of Rs.11,27,850/- u/s 271(1)(c) of the Act. 9. We find the ld.CIT(A) confirmed the penalty so levied by the AO which has already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the ld.CIT(A) on this issue. It is an admitted fact that the assessee could not explain the source of the undisclosed investment of Rs. 30,50,000/- toward purchase of the property at Bangalore and the amount of Rs. 6 lacs being payment made towards interiors for purchase of villa at Kondapur. So far as the argument of the ld.counsel for the assessee that undisclosed investment offered to tax only to put a quietus on the issues and to avoid protracted litigation is concerned, we find the addition was not voluntary but only after the search was conducted and incriminating evidence were found and confronted to the assessee for which the assessee had no other option but to pay the tax on the said amount. Had there been no search, the assessee would not have offered the above income to tax. So far as the confirmation from M/s. Trident Constructions in respect of sale of immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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