TaxTMI 
TaxTMI 
2007 (12) TMI 257
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....rt) was conducted at various premises of the group of the assessee on 6-6-2003. In response to notice issued under section 153A of the Act, on 1-11-2003, the assessee filed return on 30-7-2004 by declaring 'nil' income. In the assessment framed under section 153A read with section 143(3) of the Act, the following additions were made to the declared income of the assessee : (i) Extra income earned which was not found recorded in the regular books of accounts amounting to Rs. 5,67,926 and (ii) expenditure paid in cash amounting to Rs. 56,085 added under section 40A(3) of the Act. The Assessing Officer initiated penalty proceeding under section 271(1)(c) of the Act for concealment of income/filing of inaccurate particulars of income. The assessee replied the show-cause notice so issued vide letter dated 5-9-2006. After carefully considering the reply of the assessee the learned Assessing Officer finally levied a penalty of Rs. 2,08,480 under section 271(1)(c) of the Act, as per law at the rate of 100 per cent of the tax sought to be evaded. The above action of the Assessing Officer was also confirmed by the learned CIT(A). Now, the assessee is in further appeal. The assessee has not f....
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....p; 55,356 44,644 --------------------------------------------------------------- 2002-03 3,11,578 (-) 95,503 4,07,081 --------------------------------------------------------------- Total 20,92,639 14,78,180 6,14,459 --------------------------------------------------------------- Thus, the Assessing Officer made addition to the declared income of the assessee. Likewise, the Assessing Officer also added an amount of Rs. 56,085 under section 40A(3) of the Act, which is the second ground on which the impugned penalty is based. In the assessment order, the Assessing Officer has mentioned that "the penalty proceedings under section 271(1)(c) have been separately initiated for filing inaccurate particulars of income/concealment of income". 5. First of all, we are dealing with the legal object....
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....pport from the Hon'ble Supreme Court given in the cases of Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244 (SC) and K.C. Builders v. Asstt. CIT [2004] 265 ITR 562 (SC). In a recent decision of the Hon'ble Bombay High Court in the case of Jyoti Laxman Konkar v. CIT [2007] 292 ITR 163 (Bom.) it has held that even if there is discrepancy which was noticed during survey and the assessee meanwhile filed a revised return admitting the value of such discrepancy, there was no concealment of income in the original return and as such no penalty was exigible. A concealment of income and furnishing inaccurate particulars of income are different, however, both are referred to deliberate act on the part of the assessee. The mere omission and notice would not constitute a deliberate act as is required under this section. By the reason of such concealment of income/furnishing inaccurate particulars of income, the assessee does not ipso facto become liable to penalty. Imposition of penalty is not automatic. The discretion given to the Assessing Officer in this regard has to be exercised keeping in mind the relevant factors with a fair and objective approach. 7. Now coming to the recording of satisf....
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....ikewise, reliance has also been placed on the other decision of the Hon'ble Delhi High Court given in the case of Diwan Enterprises v. CIT [2000] 246 ITR 571 in which it has been held as under : "In spite of the abovesaid plea of the petitioner having been rejected. The penalty imposed under section 271(1)(c) has still to be set aside though for a different reason and because the very foundation for initiation of the penalty proceedings is conspicuous by its absence. The opening clause of sub-section (1) of section 271 itself contemplates a finding as regards satisfaction of availability of grounds under clause (c) being recorded during the assessment proceedings. Recently, in ITC No. 13 of 1996 decided on 8-10-1998-since reported in, CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 (Delhi), following the law laid down by their Lordships of the Hon'ble High Court in D.M. Manasvi v. CIT [1972] 86 ITR 557 (SC) and CIT v. S.V. Angidi Chettiar [1962] 44 ITR 739 (SC), we have held that unless requisite satisfaction was recorded in the proceedings under the Act, which would mean the assessment proceedings, the jurisdiction to initiate the penalty proceedings could not have been....
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....uring search has been disclosed by the assessee in the return filed by it but even by declaring such facts and figures the assessee has come to a conclusion that it did not earn income over and above what has been declared in the return filed under section 153A of the Act. The Assessing Officer has come to a different conclusion only on the basis of computation substituted by him, which according to him was a consistent method of accounting adopted by the assessee. The addition in question resulted from re-computation which was done by the Assessing Officer and which is extracted in the form of table hereinabove. In these circumstances we are not in agreement with learned Departmental Representative that the "requisite satisfaction" is manifest and "inferable" from the assessment order itself. What is required to be recorded is the satisfaction in so many words and failure to do so cannot amount to mere and sheer irregularities. We are not concerned with the irregularities of evidence but we are concerned with a specific note of satisfaction, which is required to initiate penalty under section 271(1)(c) of the Act. The learned Authorised Representative has relied on the decision of....
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....e evidence that the amount assessed was in fact the income of the assessee; no penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does; if an assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and Positive inference that the assessee's case is false the explanation cannot help the Department because there will be no material to show that the amount in question was the income of the assessee; alternatively, treating the explanation as dealing with both the ingredients (i) and (ii) above, where the circumstances do not lead to the reasonable and positive inference that the assessee's explanation is false, the assessee must be held to have proved that there was no mens rea or guilty mind on his part; even in this view of the matter, the explanation alone cannot justify levy of penalty and absence of proof acceptable to the Department cannot be equated with fraud or willful default." Thus, the Assessing Officer is required to prove positive concealment. If it is found no....