TaxTMI 
TaxTMI 
2015 (2) TMI 941
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.... offered Rs. 34,73,047/-, which it included in its return in response to notice u/s 148. The assessee had filed its original return at Rs. 84,36,018/- and in response to notice u/s 148, the assessee filed its return at Rs. 1,19,10,300/-. 4. The AO finalized the assessment u/s 143(3) read with section 148 at returned figure plus a small difference of Rs. 1,235/-, which was at Rs. 1,19,11,555/-, and included the same in its return of income u/s 148, the AO initiated penalty proceedings on the difference amount and levied the penalty of Rs. 11,80,489/-. 5. Since the assessee had himself offered the additional income, the assessee did not file any appeal u/s 250 before the CIT(A). 6. The assessee being subjected to penal proceedings, approached the CIT(A) on penalty issue. Before the CIT(A), the assessee reiterated its submissions and the CIT(A) observed, "We would further like to point out that appellant has filed the return u/s 148 by adding Rs. 34,73,047/- on account of peak working and the Learned Assessing Officer in the assessment order has made the further addition of Rs. 1235/- in the assessment order. Please note that the allegation against the appellant is that the appella....
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....ffered the income in A.Y. 2009-10. The appellant then have relied upon decision of Supreme Court in the case of &mr. of Income Tax vs Suresh Chandra Mittal 251 ITR ,decision of Hon'ble Bangalore ITAT in case of Vasavi Shelters vs ITO Bangalore 141 ITD ,decision of Karnataka High Court in case of CIT vs Vega Auto Accessories Pvt. Ltd., 26 Taxmann.com 335, decision of Gujarat High Court in case of CIT vs Shankerlal Nebhumal Uttamchandani 311 ITR 327, decision of Bangalore ITAT in case of Maninaga Reddy vs ACIT 6(1), Bangalore 37 Taxmann.com 440, decision of Vishakapatnam ITAT in case of SVS Projects (F) Ltd vs JCIT, Range-4 12 Taxmann.corn 155, decision of Chandigarh ITAT in case of Ajay Sangari& Co vs Add. CIT 16 Taxmann.com 115 and decision of Hyderabad Tribunal in case of Dilip Kedia vs ACIT (2013) 40 Taxmann.com 102. During the appellate proceedings, the appellant have reiterated these very submissions which was taken before the AO. As there is no dispute that appellant had been able to reconcile the quantity of the stock purchases and sold which is admitted by the AO also, I have gone through the audit report filed in Form 3CB along with the return and noted that as per cla....
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....he decisions given by Hon'ble Bangalore ITAT in case of Vasavi Shelters vs ITO Bangalore 141 ITD and decision of Karnataka High Court in case of CIT vs Vega Auto Accessories Pvt. Ltd., 26 Taxmann.com 335 and A.O on the given facts have relied on decisions by Hon'ble High Court of Delhi in CIT vs Zoom Communication (P) Ltd (2010) 191Taxman 179, by Hon'ble High Court of Allahabad in Bajrang Glass Entprium vs CIT(2013) 20 Taxman.Com 18(All) and Standard Hind Co. vs CIT(2012) 27axman.com 62(All) High Court of Bombay in Sanghvi Swiss Refills(P) Ltd vs fT(2012) 28 Taxman.com 208(Bom) and Hon'ble ITAT Delhi in Ajay Jain vs ACIT(20 13) 32 Taxman.com 270(Delhi) . I have gone through the decisions relied upon by appellant and found that same were delivered min survey proceedings and resulting income was offered by filing return of income which was due for the relevant A.Y. or by revising return already filed as per provisions of sec 139 (5) of the Act. Here admitted facts are that income for A.Y. 200910 was already assessed u/s 143(3) and thus was reassessed u/s 147. This plea could have worked for A.Y. 2010-11 if the income would have been detected in survey, however for the....
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....f purchases of material. I have considered, however I am not inclined to accept the same as supporting their case n that consequent to statement given already and then cross examination appellant, the fact has been confirmed that these parties are hawala dealers, which has not been disputed by appellant before Sales Tax Authorities earlier and even later before A.O. by furnishing supporting document of material or alternatively by furnishing name of those parties with details from whom the appellant have actually purchased . The appellant have not been able to furnish any reason also that if it was so why that genuine party was not paid by the appellant who have chosen to issue the cheque in the name of these bogus 18 parties, and are now relying upon mere encashment of these cheques done by these havala dealers Mere payment alone even routed through bank in case of these 18 parties, in absence of genuine purchase transaction, thus are of no help to the appellant. They fail on this count also. 3.6 Thus even though the appellant have maintained the stock register meaning thereby purchases of goods are not doubted, they have not been able to explain or give details of transactions d....
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....reated as obtained against cash paid and same cash is taken as returned after deducting commission for the job of providing bogus bills when the cheques issued in their names are encashed by such hawala dealers. Thus only the peak amount is taxed as the concealed income and hence the plea taken by appellant that since the peak amount does not reflect the specific transactions and concealment penalty is not leviable and so it cannot be calculated, is not sustainable and hence is dismissed. Thus appellant fails on this ground also. 3.8 In view of this, I am in agreement with the AO. that having furnished wrong particulars which were found to be wrong only subsequently , i.e. after assessment was over for A.Y. 2009-10 and then for A.Y. 2010-11 , appellant could not rebut the findings made by VAT authorities before them and again before A.O. thus attracted penalty in their case. Now having concealed the particulars, merely because appellant have offered the income which was detected and thus has become due and was so accepted while assessing the income, does not absolve the appellant from provision of penalty u/s.27 1(1)(c) which are attracted so , following the ratio of decision give....
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....ck register/records and its books. The AR also pointed out that carriage details had been filed, showing description of goods, quantity, consignee and finally the consigner, i.e. the assessee. This evidence the AR demonstrated that it was recorded in its book and details prepared for the purposes of preparing regular accounts. 13. The AR also submitted before us that in the year under consideration, its G.P. & N.P. were much better than the subsequent two years. 14. The AR, submitted that since there is no discrepancy as such in the book results, the penalty should not have been levied. The AR then took us through the technical infirmities, committed by the AO. 15. The AR pointed out that notice u/s 274, mandatorily required to be issued for the initiation of penalty, giving out reasons for the initiation of penalty. But in the instant case, the notice under section 274 does not mention against which charge, the penalty is being initiated. Besides this, the AO in assessment order as well as in the penalty order mentions, "on careful perusal of all submissions, it cannot be denied that purchase have not been made. However, the assessee has taken bills from these parties and....
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....e that there was a survey operation conducted on the assessee on 22.11.2012, wherein the assessee declared Rs. 34,73,047/- in assessment year 2009-10 and based on the surrender, the AO initiated reassessment proceedings u/s 148. In response to that the assessee filed its return of income, adopting the figure of normal return and the amount surrendered at Rs. 34,73,047/-, at Rs. 1,19,10,300/-. Similarly in assessment year 2010-11, the assessee filed its original return at Rs. 48,21,950/- and as a consequence of survey offered Rs. 43,46,339/- as peak of purchases under scan, and the ROI was filed on aggregate amount of Rs. 91,68,290/-. 25. The difference in the two years is that assessment year 2009-10 was reassessment proceedings and assessment year 2010-11 was regular assessment proceedings. Rest all facts are similar and identical. 26. It is a fact that in live assessments, no addition whatsoever was made by the AO. It is also a fact that while examining the books in the course of assessment proceedings, the AO did not lay his hands on any item of income, which the assessee had not declared in the return or till the assessment was framed. It is also a fact that the AO has accept....
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....ssee. This view gets supported by Explanations 4, 5 and 5A of section 271 (1). Obviously no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Section 271(1)(c) has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure, as the assessee had made a complete disclosure in the return and offered the surrendered amount for the purposes of tax". This is an identical case, where survey operations had taken place and the assessment was reopened u/s 148, the coordinate Bench deleted the penalty. 31. In the case of Valavi Shelters vs ITO, reported in 2013-32 taxman.com 26, the coordinate Bench at Bangalore held, "There can be no concealment or non-disclosure as the assessee had made a complete disclosure in the return and offered the surrendered amount for the purposes of tax and therefore no penalty under section 271(1)(c) could be levied. The words 'in the course of any proceedings under this Act' in section 271(1)(c) are prefaced by the satisfaction of the Assessing O....
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....e been assessed in the hands of the assessee as well as different family members. Hence, even the Department is not certain as to the right person who is amenable to tax qua the said income. in the circumstances, the Tribunal rightly came to the conclusion that no penalty is exigible under the provisions of section 271(1)(c) of the Act when the Tribunal has found that admittedly the family members have not been treated as benamidars of the assessee nor have the family members stated that they are the benamidars of the assessee. 13. In the view that the court has taken it has not been found necessary to enumerate and deal with more than a dozen authorities cited by both the sides. The question referred for the opinion of this court is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue. The reference stands disposed of accordingly with no order as to costs". 34. In the case of Dilip Kedia vs ACIT, reported in 2013-40 taxman.com 102, the coordinate Bench at Hyderabad held, "considering all the aspects viz., the assessee had declared the amount he will be offering in the course of statement recorded under section 132(4), the Assess....
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....sment years Explanation 2 to section 271 (1) cannot be invoked even then the assessee claimed the additional income offered in earlier assessment years to be the source of any receipt, deposit, outgoing or investment in succeeding year. It is also a settled position of law that the rule of strict interpretation be applied to the penal provision under the I.T. Act. In the instant case, undisputedly no additions were made in the assessment for the assessment year 2004- 05 as the Assessing Officer has accepted the revised return filed by the assessee without tinkering with accounts prepared by him and computed his income. Therefore, the Explanation 2 to section 271(1) cannot be invoked and the penalty under section 271(1)(c) cannot be levied in assessment year 2004-05 for the additional income offered during the course of survey. We therefore, set aside the order of the CIT(A) and delete the penalty". 36. As it can be noted, that the in all the above cases extracted by us, either there was a search operation or there was a survey operation on the assessee and as a consequence thereof, the assessee filed its return/revised return/reassessment return including the amount offered for t....
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....he consumer, the goods receipt clearly shows that, and which was demonstrated by the AR at the time of hearing. In such a situation, the allegation that the assessee has not been able to clearly show the stock position is not correct. In fact, we find complete details had been supplied to the revenue authorities in the form of stock books, bank statements and goods carriage challans. 40. The scheme of section 271(1)(c) visualizes imposition of penalty when the assessee has concealed income or when the assessee has furnished inaccurate particulars of income. In addition to these two situations, penalty can also be imposed when the assessee is deemed to have concealed particulars of income under the Explanation 1 to section 271(1)(c). This Explanation provides that the assessee will be deemed to have concealed particulars of income where in respect of any facts, material to the computation of the total income of any person under this Act, (i) the assessee fails to provide an explanation; (ii) when the assessee provides an explanation which is found to be false; and (iii) when the assessee provides an explanation which he fails to substantiate and he fails to prove that the explan....
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.... assessee. In the instant case, what had been treated as furnishing of inaccurate particulars was offering an income on ad hoc basis, i.e. peak of questioned purchases, this was not contested by the assessee. The admission or rejection of a claim is a subjective exercise, whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particulars of income. The revenue authorities had apparently proceeded to treat the assessee's surrender of income as furnishing of inaccurate particulars. What is a correct claim and what is an incorrect claim is a matter of perception, which in the instant case was accepted as such. In fact, the revenue authorities actually never questioned the books results of the assessee. Expression, 'inaccurate' is something factually incorrect, but once it is accepted as such to be correct, it does not remain inaccurate. We are aware that various decisions have been consistently reversed by the decisions of the Hon'ble Supreme Court at regular intervals on the above issue. The development of law is a dynamic process which is affected by the innumerable factors, and it is always an ongoing exercise. In such circumstances, a b....
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....d material for computation of income had not been duly disclosed by the assessee. In the instant case, the above ingredients are germane to the case and therefore, the burden shifted on the AO, as to how the penalty became exigible, when the returns were accepted as such. Coming to the fact, whether the conduct of the assessee was bona fide or not is essentially a question of fact and the related facts are always in the exclusive knowledge of the assessee. The assessee's contention that the entire purchases as had been made had been recorded in the primary and final books, such as stock and ledger books have not been negated or controverted by the revenue authorities and even by the DR. The assessee had also shown the evidence of movement of goods in and out of the warehouse and goods transport receipts. These evidences bore the character of bona fide conduct of business by the assessee. The revenue authorities therefore, clearly erred in holding the issue against the assessee, even on an assumption. In any event, when an explanation is offered by the assessee in discharge of onus cast upon him by the Explanation 1 to section 271(1)(c), it is not for the AO to explain the condu....