TaxTMI 
TaxTMI 
2011 (12) TMI 390
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.... the business premises of the assessee. The assessee had taken the entire liability of the undisclosed transactions towards undisclosed income, investments and expenditure and accordingly, admitted of unaccounted income of Rs.3.2 crores. In compliance with the issuance of notice under s. 153C of the Act, the assessee furnished a return of income admitting Nil income. Brushing aside the various contentions put-forth by the assessee and for the reasons recorded therein, the learned AO concluded the assessment under s. 143(3) r/w s. 153C of the Act, determining the total taxable income at Rs.Nil on account of accumulated losses and depreciation claims. However, he made an addition of Rs.89.98 lakhs pertaining to income on account of unaccounted production, sale and suppression of profit. 3.1 It was the case of the Revenue that survey under s. 133A of the Act was conducted at the business premises of the assessee and during the survey operations, several documents including digital documents maintained on the main computer server were unearthed and impounded. Those computerized documents revealed and evidenced parallel business run by the appellant for which an alternate set ....
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....o and tests laid down for levy of penalty as in the cases of National Textiles vs. CIT (2000) 164 CTR (Gig) 209: (2001) 249 ITR 125 (Guj) of jurisdictional High Court and Dy. CIT vs. Smt Jayshree M Pethani [IT(SS)A No. 169/Ahd/2002] [reported at (2006) 99 TTJ (Ahd) 644-Ed.] of the jurisdictional Hon'ble Tribunal, Ahmedabad are clearly applicable to the case of the assessee; 4. In the penalty proceedings, the assessee has failed to advance any evidence in support of its claims and contentions and all the arguments of the assessee have been found to be of no consequence. The element of animus is blatant in assessee's evasive and baseless replies. Hence, logically and inescapably, this case falls within the mischief of s. 271(1)(c). The case of the assessee clearly attracts the penal provision of s. 271(l)(c) and on the facts of the case, satisfied that the assessee is at fault in regards to the provisions of s. 271(1)(c) of the IT Act, 1961, I hold that it is a fit case for levy of penalty of the IT Act, 1961. Since, the instant case pertains to reduction in loss on account of concealment of income, as per Expln. 4(a) to s. 271, the amount of tax sought ....
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....d the income. Therefore, it was submitted that the penalty should be deleted." 4.1 After due consideration of the facts and submission of the assessee, the learned CIT(A) observed thus- "4............I agree with the appellant's view. Penalty cannot be levied on addition of Rs.89,40,079 under s. 40A(3) made by disallowing 20 per cent of cash expenditure. All the expenditure are genuine and incurred for earning the income and disallowance does not call for imposition of penalty for concealment. For addition of Rs.89,98,810 being profit out of books, the assessee has already surrendered amount of Rs.1,60,00,000 at the time of survey/statement recorded and also offered it in return of income. When he has offered it as income, the levy of penalty under s. 271{l)(c) on this amount is not justified." 5. Agitated, the Revenue has come up with the present appeal before this Bench. It was strongly argued by the learned Departmental Representative that the learned CIT(A) had erred in law and on facts in deleting the penalty without considering the facts that the assessee had failed to explain the out-of books production and unrecorded sales as per impo....
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....ments, the learned Authorised Representative had placed strong reliance on the following case laws: (i) Dy. CIT vs. Dr. Satish B. Gupta (2011) 135 TTJ (Ahd) 611: (2011) 49 DTR (Ahd)(Trib) 262; (ii) Sadbhav Builders vs. ITO (ITA No. 1418/Ahd/2008, order dt. 21st Jan., 2011); and (iii) CIT vs. SAS Pharmaceuticals - IT Appeal No. 1058 of 2009, order dt. 8th April, 2011 of Hon'ble Delhi High Court [reported at (2011) 244 CTR (Del) 51: (2011) 60 DTR (Del) 258-Ed]. 6. We have duly considered the rival submissions and carefully perused the materials available from the records. At the outset, it is observed that the documentary evidences adduced by the learned Authorised Representative during the course of hearing in the shape of a voluminous paper book running into 1-330 pages and also various case laws on which the respective parties have placed their unstinted confidence. 6.1. It was the case of the Revenue that the assessee had grossly failed to (at the cost of repetition)- (i) give any justification or acceptable explanation for reporting of lower than actual income as per the impounded digital files named as 'sample files'; ....
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....claring additional income of Rs.78.56 lakhs with a contention that while disclosing the said Rs.78.56 lakhs, it had withdrawn the declaration of Rs.18 lakhs each for the other two years was not supported by any evidence on record. The assessee had at no stage made a categorical assertion that the amount of Rs.18 lakhs each was not concealed income of the assessee for the asst. yrs/1986-87 and 1987-88, but it was only stated that the disclosure of Rs.18 lakhs each in the subsequent years was required to be deleted on account of additional disclosure in the asst. yr. 1985-86. Considering the assessee's contention, the Hon'ble Court held that this cannot be equated with withdrawal or retraction of the disclosure made by the assessee and that it cannot be accepted that the revised returns for all the three years were filed voluntarily in good faith and the fact that the assessee has not challenged any of the assessment orders for, the relevant assessment years, in conjunction with the overall conduct of the assessee is a definite pointer to the conclusion that the assessee indulged in the act of concealment of income and therefore, levy of penalty under s. 271(l)(c) was justified. &nbs....
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....e Department was able to lay its hands on the documentary evidence exhibiting the conduct of the assessee for avoiding; tax and carrying out the business activity out of the regular books. 6.7 In this regard, we like to point out that in the case of the above mentioned assessee, estimation of addition was made on the basis of books of account whereas in the present assessee, its books of accounts were rejected under s. 145 of the Act, and thus, in our view, the case law referred by the Revenue has no relevance. Case laws relied on by the assessee: (i) Sadhbhav Builders vs. ITO (supra): The issue, in brief, was that the assessee filed its return of income admitting an income of Rs.69,880, however, the learned AO concluded the assessment on a total income of Rs.14.88 lakhs after disallowing various expenses that certain defects in the vouchers and increase in expenses disproportionate to the turnover. Suo motu action, the learned CIT directed the AO under s. 263 of the Act to make a separate addition of Rs.8 lakhs which was disclosed by the assessee as undisclosed income during the course of survey. The Tribunal in the quantum appeal observed that the re....
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....s actually concealed particulars of income in the return of income filed by it or has furnished any inaccurate particulars of income in the return of income and the same has no relevance with the quantum of assessed income as a number of times of the returned income. It is settled position of law that the consideration which applies in a penalty proceedings is different from the consideration which applies in an assessment proceedings. Merely inability of the assessee to substantiate its return of income and, therefore, estimation of income does not necessarily mean either concealment of income or furnishing of inaccurate particulars of income in the return of income by the assessee. There is difference between 'unproved' and 'disproved'. Thus, it is observed that no material could be brought on record by the Revenue to show that the assessee has either concealed any particulars of income in the return of income or has furnished any inaccurate particulars of income in the return of income filed by it. We, therefore, delete the penalty of Rs.4,58,240 levied under s. 271(l)(c) of the Act......." 6.8 We are in total agreement with the findings of the Hon'ble Bench cited supr....
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....akhs which included the surrendered sum. While framing the assessment, the learned AO also initiated penal proceedings with reasoning that the assessee had concealed its income and, subsequently penalized for Rs.32.39 lakhs for concealment of its income, On appeal, penalty imposed was cancelled on the premise that there was no concealment of income as the same was reflected in its return. The Tribunal had also upheld the finding of the CIT(A). Frustrated, the Revenue took up the issue with the Hon'ble Court for redress. While furnishing its return, the assessee had accepted the difference unearthed during survey and no attempt was made by it even after to surrender to retract therefrom or to explain that there were no such discrepancies. In this context, a question had arisen as to whether the assessee can be penalized under s. 271(1)(c) of the Act when it had shown its income in its return and contended that it had voluntarily declared the same in its regular return. After analyzing the (i) provisions of the relevant section (ii) the contention of the Revenue that the intention of the assesses in maintaining false records relating to cash, stock and renovation etc., was manifest i....
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....during survey when it was found that the assessee had concealed the particulars of his income, it would amount to concealment in the course of 'any proceedings'. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the AO or the CIT(A). When the survey is conducted by a survey team, the question of satisfaction of AO or the CIT(A) or the CIT does not arise. We have to keep in mind that it is the AO who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings in this case. 15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the IT return filed by it. There is sufficient indication of this in the judgment of this Court in the case of CIT us. Mohan Das Hassa Nand (1983) 34 CTR (Del) 361: (1983) 141 ITR 203 (Del) and in Reliance Petro Products (....