TaxTMI 
TaxTMI 
2012 (10) TMI 367
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.... 143(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act). During the course of assessment proceedings, the Assessing officer [AO in short] after obtaining details of creditors, issued notice u/s 133(6) of the Act to M/s N.K. Jain & Company and M/s GTM Sales Corporation. In the light of details reflected in the copy of account of the assessee received from the said parties vis-à-vis books of the account of the assessee, the AO noticed the following differences:- As per Hi-tech As per N.K. Jain Difference Rs.1,00,000/- nil Rs.1,00,000/- As per Hi-tech As per GTM Difference Rs.2,99,715/- Rs.2,52,395/- Rs.47,320/- 2.1 To a query by the AO, the assessee replied as under:- "In N.K. Jain & Co. Rs. 1 lac is the opening as well as closing balance of this creditor which is coming from earlier years. In GTM Sales Corporation, there remains a difference of Rs. 47,320/- after reconciliation. These creditors and difference is fully explainable. However, due to paucity of time and the matter becoming time barred, therefore, to purchase peace of mind and to bring an end to the issue, these 2 amounts may be added as incom....
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.... which a reply was, given by the appellant on 06.01.2010. Another notice u/s. 274 r.w.s. 271 was issued to the appellant on 02.06.2010, which was replied by him on 11.06.2010. Therefore, it would not be proper to say that reasonable opportunities were not provided to the appellant before passing the impugned order of penalty. The ground taken by the appellant is therefore dismissed. 4.4 In Ground Nos. 5 & 6, the appellant has impugned the penalty on merits and has submitted that in view of letters dt. 06.01.2010 and 11.06.2010, no penalty should have been levied. I have perused the penalty order as well as the justification given by the appellant. Regarding creditor Sh. N.K. Jain, the opening and closing balance as per books of accounts of the appellant is Rs. l lac. However, as per information called from She N.K. Jain by the AO u/s. 133(6) of the Act, the closing balance is NIL. The appellant submitted that it is an old reconciliation which was pending on the part of the appellant in this case and the appellant still admits his liability which has not been written off in his books. As regards the closing balance of the creditor M/s. GTM Sales Corporation, it was Rs. 2,99;71....
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....n nature of credit .On the other hand, the ld. DR supported the order of the ld. CIT(A). 6. We have heard both the parties and gone through the facts of the case. Admittedly, the assessee did not reconcile the accounts of the year under consideration in the light of information received u/s 133(6) of the Act in the form of copy of account of the assessee from the said parties M/s NK Jain & Co. and GTM Sales Corporation vis-à-vis assessee's books and accordingly, vide his letter dated 7.12.2009 surrendered the two amounts as income of the year under consideration to purchase peace of mind. Subsequently, in response to a showcause notice before levy of penalty, the assessee reiterated that amount of Rs. 1 lac in the a/c of NK Jain & Co/was brought forward while difference in the a/c of GTM Sales Corporation remained irreconciled. Apparently, the assessee did not improve upon his case in the penalty proceedings. In any case, the AO did not accept the submissions of the assessee and imposed a penalty of Rs. 48,413/- u/s 271(1)(c) of the Act. The assessee claimed that penalty imposable worked out to be Rs. 45,073/-. Admittedly, the assessee did not reconcile the difference ....
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.... From this it would be apparent that penal provision would operate when there is a failure to disclose fully or truly all the particulars. The words 'particulars of income' refer to the facts which lead to the correct computation of income in accordance with the provisions of the Act. So when any fact material to the determination of an item as income or material to the correct computation is not filed or that which is filed is not accurate, then the assessee would be liable to penalty under s. 271(1) (c) of the Act. The expression 'has concealed the particulars of income' and 'has furnished inaccurate particulars of income' have not been defined either in section 271 or elsewhere in the Act. However, notwithstanding the difference in the two circumstances, it is now well established that they lead to the same effect namely, keeping off a certain portion of the income from the return. According to Law Lexicon, the word "conceal" means: "to hide or keep secret . The word 'conceal' is concealer which implies to hide. I t means to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of; to withhold knowledge of. Th....
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....he assessment proceedings by the ITO, who on being satisfied about each concealment or inaccuracy of particulars of income would be in a position to initiate the penalty proceedings on one or both of the grounds of default as may have been specifically and directly detected. The opportunity of hearing given by the notice under section 271(1)(c), obviously is against such concealment and inaccuracy as is detected in the assessment proceedings". 6.3. Indisputably, as a result of enquiries made by the AO, the assessee did not reconcile the difference in the account of aforesaid two parties and instead surrendered the amount as income of the year under consideration. In the course of penalty proceedings, the assessee did not bring any material before the AO to rebut the inferences drawn by the AO in the course of assessment proceedings. In terms of provisions of sec. 271(1) (c) of the Act read with explanation 1 thereto and the judicial pronouncements in the case of B.A. Balasubramaniam & Bros. Co. v. CIT [1999] 157 CTR 556(SC), CIT v. B.A. Balasubramaniam & Bros. [1984] 40 CTR (Mad.)/[1985] 152 ITR 529 (Mad.), CIT v. Mussadi lal Ram Bharose [1987] 60 CTR (SC) 34/ [ 1987] 165 ITR 14....
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....lars he had furnished in his return, had to be examined and if found unacceptable, penalty was liable to be imposed. The Hon'ble Kerala High Court observed as follows: "Section 271(1) (c) of the Income- tax Act, 1961, is attracted where, in the course of any proceedings under the Act, the Assessing Officer or the first appellate authority is satisfied that: (a) any person has concealed the part iculars of his income; or (b) has furnished inaccurate particulars of such income. The expressions 'has concealed' and 'has furnished inaccurate particulars' have not been defined either in the sect ion or elsewhere in the Act. However, notwithstanding differences in the two circumstances, they lead to the same effect, viz., keeping off a certain port ion of income. The former is direct while the latter may be indirect in its execution. A conspectus of the Explanation added by the Finance Act, 1964, and the subsequent substituted Explanations makes it clear that the statute visualized the assessment proceedings and penalty proceedings to be wholly distinct and independent of each other. In essence, the Explanation (both after 1964 and 1976) is a rule of evidence. ....
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....on dates when there was sufficient cash balance. The intent ion to hide the actual state of affairs was clear. The explanation offered was fanciful and vague. The imposition of penalty was valid and the Tribunal erred in cancel ling it." 6.5 Hon'ble Supreme court in the case of K.P. Madhusudanan vs. CIT, 251 ITR 99(SC) while affirming the aforesaid view held that;- "We find it difficult to accept as correct the two judgments aforementioned. The Explanation to sect ion 271(1) (c) is a part of section 271. When the Income-tax Officer or the Appellate Assistant Commissioner issues to an assessee a notice under section 271, he makes the assessee aware that the provisions thereof are to be used against him. These provisions include the Explanation. By reason of the Explanation, where the total income returned by the assessee is less than 80 per cent. of the total income assessed under section 143 or 144 or 147, reduced to the extent therein provided, the assessee is deemed to have concealed the particulars of his income or furnished inaccurate particulars thereof, unless he proves that the failure to return the correct income did not arise from any fraud or neglect on his part . T....
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....igating circumstance and penalty has been rightly levied. This view is supported by decision in PC Joseph & Bros. vs. CIT, 158 CR 104 (Ker). 6.7 In the instant case, the assessee claimed before the AO and the ld. CIT(A) that the addition of Rs. 1,47,320/- was accepted in order to purchase peace of mind and to bring an end to the issue. But this explanation was tendered only after the AO confronted the evidence in the form of copies of account of the assessee in the books of the aforesaid two parties. .Apparently, only when the assessee was cornered, the assessee surrendered the amount .We are of the opinion that the surrender was not at all voluntary. Here, we may have a look at the meaning of word 'Voluntary.' The meaning of word "Voluntarily" has been deliberated upon by the Hon'ble Allahabad High Court in the case of CIT vs. Shri Rakesh Suri reported in as under:- "41. A Full Bench of the Allahabad High Court in the case reported in (1998) 230 ITR 855:Bhairav Lal Verma Versus Union of India, while interpreting the word '.voluntarily' given in Section 273(A) of the Act held that voluntarily means out of free will without any compulsion. When the assessee concealed....
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....riminating material with regard to the income so disclosed, cannot be voluntary surrender, because it was made under the constraint of exposure to adverse action by the Department. In the present case, the Department has collected sufficient material against the assessee and only after incriminating material collected by the Department was brought to the knowledge of the assessee, the surrender was, thus, made by the assessee under the constraint of exposure to adverse action by the AO. We totally agree with the conclusion of the ld. CIT(A) that the surrender was made only after the detection of concealment by the AO and the assessee had nothing to rebut the evidence gathered by the department and the assessee miserably failed to discharge the initial onus laid down upon the assessee in terms of explanation 1 to sec. 271(1) (c) of the Act. 7. As regards view taken in decision in Sir Shadilal Sugar & General Mills Ltd. & another (supra) relied upon by the ld. AR, Hon'ble Apex Court in K.P. Madhusudanan (supra) discarded the said view. As pointed out by the ld. CIT(A),facts in the decisions relied upon by the assessee before him, were altogether different. The ld. AR has not demon....