TaxTMI 
TaxTMI 
2015 (1) TMI 513
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.... "Kaleva Sweets Group" of cases. However the record shows that income is derived from the sources of "income from house property" and "income from other sources". Return for the year under consideration was filed on 19.03.2007 declaring an income of Rs. 2,89,966/-. In view of the fact that surrendered income was not offered in response to the notice u/s 153A the AO required the assessee to explain the same. The record shows that in the course of search the statement of the assessee was recorded on oath u/s 132(4) on 10.11.2005/11.11.2005 wherein a disclosure of Rs. 1.00 crore as additional income for the year under consideration on various accounts had been made. This was subsequently further enhanced by offering Rs. 75.00 Lacs as per statement of the assessee recorded on 21.11.2005. The assessee in response to the notice during the assessment proceedings is found to have stated that the statements were given under mental strain and duress in order to buy peace of mind/subject to verification of seized material and cash available if any at the premises as belonging to various family members and the group. It was submitted that since the copies of accounts made available on 22.12.20....
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.... a fresh show-cause notice to the assessee on 16.02.2012 fixing the date of hearing on 24.02.2012. In view of the fact that the assessee did not appear in response thereto the AO concluded that the assessee has nothing to say in this regard. Accordingly he held that since the assessee has nothing further to state it was concluded that the assessee had concealed his income and furnished inaccurate particulars of income. In view thereto penalty was imposed equal to 100% of tax sought to be evaded. 4. Aggrieved by the order the assessee came in appeal before the CIT(A) who considering the arguments on facts and law confirmed the action of the AO. Still aggrieved the assessee is in appeal before the Tribunal. 5. The Ld. AR inviting attention to the material available on record submitted that no doubt in the facts of the case surrender of Rs.One crore during the search was made on oath and it was enhanced by an amount of Rs. 75 lacs. Referring to the English translated version reproduced in internal page No.-10 & 11 (Paper Book page 47 to 48) it was submitted that the assessee has repeatedly made reference to the fact that surrender is being made for documents showing jewellery, cash ....
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....0 (Del.) 12. CIT vs Navnitlal Pochalal 213 ITR 69 (Guj.) 13. CIT vs Suresh Chand Bansal 22 DTR (Cal.) 14. Shabbir Allauddin Lattiwala vs DCIT 138 TTJ (Rajkot) 104 15. ACIT vs PRem Chand Garg 123 TTJ (Del.) (TM) 433 16. Sh. P.V.Ramana Reddy vs ITO-ITA No.-1857/Hyd/2011 order dtd. 06.01.2012 17. CIT vs Devsons Logistics (P.) Ltd. 329 ITR 483 (Del.) 18. CIT vs Pradeep Agencies Joint Venture 349 ITR 477 (Del.) 19. H.M.A. Udyog P. Ltd. 211 CTR (Del.) 543 20. DCIT vs Shivalik Global Ltd. (2012) 49 SOT 145 (Del.) (URo) 21. Mayor Overseas vs ACIT 920090 24 DTR (Del.) (TRIB) 269 22. CIT vs Lotus Trans Travels P. Ltd. 177 Taxman 37 (Del.) 5.1. Specific attention was invited to Dilip N Shroff vs JT.CIT 291 ITR 519 (SC) in para 54 and Holland tractors India (P.) Ltd vs CIT (ITA No.-182/2002) in para 26. 6. The Ld. CIT DR, Smt. A.Misra heavily relying upon the quantum order passed by the ITAT and the Hon'ble High Court wherein the relief granted by the CIT(A) was reversed and the finding of the ITAT was upheld submitted that on facts the impugned order deserves to be upheld. Reliance was placed upon the judgement of the Hon'ble Supreme High Court in the case of MAK Data Pvt. Ltd. v....
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.... various hands. I also promise to pay the due tax as soon as possible." 7.1. It is seen from the record that the penalty has been imposed by the AO holding that the assessee had nothing to say as in response to notice issued on 16.02.2005 fixing the date of hearing on 29.02.2012 no one appeared on behalf of the assessee. The AO apart from this 8 days time given passed the order on 27.02.2012 holding that the assessee was liable for concealment and for filing incorrect particulars. Before the CIT(A) it is seen that assessee's written submissions are found extracted in pages 3 to 7 of his order however vide para 7 to 7.4 he confirmed the imposition of penalty. A perusal of the Said paras shows that while in para 7 he dismissed the assessee's ground posing challenge to the action of the AO as being beyond limitation. This finding is not assailed in the present proceedings before us. Vide para 7.1 the CIT(A) after extracting the finding of the ITAT in the quantum proceedings upholds the penalty order observing as under:- 7.2. "In this case, I find that subsequent to the search and seizure operation against the appellant and his statements recorded u/s 132(4) the appellant had made a ....
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....come of any person under this Act,-- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Deputy Commissioner (Appeals) or the Commissioner (Appeals) to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 7.3. A perusal of the above mandates that penalty can be imposed as per Clause (A) to Explanation 1 to section 271(1)(c) if an assessee fails to offer an explanation or offers an explanation which is found by the Assessing Officer to be false. It is seen that Clause (B) to Explanation 1 provides that where the assessee offers an explanation it is required to be substantiated and the same has to be bonafide. However incase the explanation remains unsubstantiate....
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....book was referred indicating unaccounted income of appellant. Such surrender was not corroborated by any independent evidences or incriminating papers. Further the surrender is in respect of all family members, their firms and companies but not confined to assessee alone. The additional income has to be assessee wise and year wise. Overall statement covering all family relates and for all years cannot be based for only one assessee and for one year. Such addition made basing on such general nature of admission without any specific items cannot stand before law. It has to be linked to specific items of discrepancies noticed either in search or in the assessment proceedings. When comes to specifics it is clear that the AO has not brought any document on record to suggest unaccounted income nor discussed anything to that extent to conclude that there is existence of unaccounted income of the assessee. Similarly no property has been specified as acquired by assessee but not disclosed in the-books of accounts or in the returns. In fact, as admitted by assessee, there is no property acquired by any of the family members, during the period under reference. Hence investment in properties ....
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....Amar Natwarlal Vs. ACIT, 60 ITD 560 (Ahd.) 9. The learned counsel for the assessee further drew our attention towards the CBDT instructions bearing No.286/2/2003-IT-(Inv) issued on 10.3.2003. In these instructions, CBDT has appraised its officers that instances were reported to the CBDT alleging that assessees have been forced to confess the undisclosed income during the course of search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing return of income. In these circumstances, confession taken during the course of search and surveys do not serve any useful purpose, therefore, officers should focus on collection of evidence of income which leads to an information etc. instead of taking the confessional statements. The learned counsel for the assessee relied upon this circular and submitted that confession without any supporting evidence cannot be made the basis for any addition. 10. With regard to the cash found, he submitted that cash belongs to the business concern. Learned CIT(Appeals) has rejected the contention of assessee on the ground that business cash cannot be found at the r....
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....r to the judgement of the Hon'ble Jurisdictional High Court in the case of Holland Tractors on which heavy reliance has been placed by the assessee as their Lordships in para 30 and 31, while taking note of the fact that despite the strong observations and the adjective used by them while writing the quantum appeal where such strong words like "erroneous, fallacious and untenable" with reference to various contentions and submissions made by the assessee in the quantum appeal has been used they held that they would not be contradicting themselves when they would hold on facts that the conduct of the assessee was bonafide. A perusal of the above judgement shows that vide paras 30 onwards, the Hon'ble High Court considering the facts of the assessee on that case have proceeded to examine the explanation of the assessee in terms of clause (B) of Explanation-1 so as to consider whether the explanation offered was bonafide or not. 7.8. Relevant extracts addressing the settled legal position are reproduced hereunder wherein para 26 was specifically relied upon by the Ld. AR.:- 25. "We have had the advantage of penning the judgment in the appeal preferred in relation to the quantum proc....
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....osed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 26. The word 'conceal' inherently and per-se refers to an element of mens rea, albeit the expression ―furnishing of inaccurate particularsǁ is much wider in scope. The word 'conceal' implies intention to hide an item of income or a portion thereof. It amounts to suppression of truth or a factum so as to cause injury to the other. (See CIT vs. A. Subramania Pillai [1997] 226 ITR 403 (Mad). The word 'conceal' means to hide or to keep secret. As held in Law Lexicon, the said word is derived from the latin word 'concelare' which implies 'con' & 'celare' to hide. It means to hide or withdraw from observation; to cover or keep from sight; to prevent discovery of; to withhold knowledge of. The word 'inaccurate' in Webster's Dictionary has been defined as 'not accurate; not exact or correct; not according to truth; erroneous; as inaccurate statement, copy or transcript'....