TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 978
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....der : The assessee is a partnership firm, carrying on business as developer and builder of residential houses. A return of income for the period under consideration, was furnished on October 31, 2005 admitting an income of Rs. 2.65 crores. There was a search operation under section 132 of the Act on the premises of the assessee on April 13, 2005. Consequent to search under section 132 of the Act, the assessment was completed on December 28, 2007 making addition of Rs. 1.64 crores. The Assessing Officer had observed that seized documents indicated profit at Rs. 4.21 crores whereas net profit shown in the return was only at Rs. 2.56 crores and, thus, the assessee had inflated the expenditure and not declared the correct profit. Accordingly, the difference of Rs. 1.64 crores (Rs. 4.21 crores âEUR" Rs. 2.56 crores) was treated as inflation of expenditure and added to the income returned. This addition made in quantum assessment was upheld by the Tribunal in I. T. A. No. 336/Bang/2009 dated September 25, 2009. 4. Simultaneously, the assessee was required to show cause under section 271(1)(c) of the Act, as....
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.... group and that the profit element therein was the total profits of the entire group and not the profit of the assessee alone and that the noting and entries in the loose sheets were not a conclusive proof of inflated expenditure of the assessee as the alleged loose sheets did not bear the name of the assessee ; -that while filing the return of income, profit returned by the assessee group companies was more than Rs. 4 crores ; -that there was confusion regarding the year to which this alleged loose sheets belong; on page 72 of the seized material, it was stated as March 1, 2004 whereas on page 74, it was mentioned as advance tax for the year 2004-05 ; and that even in relation to the year 2004-05, there was no reference as to it assessment year or previous year ; -that the alleged loose sheets mentions that a sum of Rs. 77 lakhs as tax paid whereas the advance-tax paid by the assessee was Rs. 98 lakhs as observed in the assessment order (page 39 of the paper book) which also strengthens that the loose sheets does not belong to the assessee ; -that the assessment in the assessee's case was made in pursuance of search operation and in fact, the Assessing Officer had all the ....
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....er section 271(1)(c) read with Explanation 1(B) cannot be levied-Dholu Construction and Projects Ltd. v. ITO (ITA No. 413/Ahd/2007 dated March 31, 2010) ; [2011] 12 ITR (Trib) 438 (Ahd) ; -that merely because the assessee claimed deduction of certain expenditure which has not been accepted by the Revenue, penalty under section 271(1)(c) is not attracted-CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) ; -that the anticipated profit cannot be concluded to be the actual profit for the year as this was contingent and subject to (i) the sale of sites ; (ii)sale of sites at the desirable rate ; (iii) accrual or revenue-in this case execution of sale deed and completion of registration formalities ; (iv)booking corresponding expenditure like development expenses, land development expenses and marketing expenses ; -that though the assessee conceded the addition arising out of the alleged loose sheets during the assessment proceedings, but, penalty proceedings were separate; and that what merits addition during the assessment proceedings need not necessarily merit levy of penalty in the penalty proceedings as penalty under section 271(1)(c) can come into play when the condi....
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....in the contents of the seized materials which have been seized from the premises of the assessee. Further illustrating the provisions of section 132(4) of the Act, the learned Departmental representative submitted that the said section states that where any books of account, other documents etc., are found in the possession or control of any person in the course of search, it may be presumed that (i) such books of account, other documents belong to such person ; (ii) the signature and every part of such books of account or documents shall be purported to be in the handwriting of such person. 7. Thus, the legal presumption as per section 132(4A) which is as rebuttable presumption has not been rebutted by the assessee with necessary evidence. It was, further, contended that as the assessee had merely claimed that the noting made therein was by its staff which was devoid of any evidence has been rightly rejected by the Assessing Officer. In respect of the assessee's argument of the question of "satisfaction" of the Assessing Officer, it was submitted by the learned Departmental representative that as per the amended provisions of section 271(1B) of the Act which has been amended ....
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....e Act be upheld and the appeal of the assessee be dismissed. 11. We have carefully considered the rival submission, perused the relevant materials on record and also the case law on which either of the party have placed their reliance. The business premises of the assessee were subjected to an action under section 132 of the Act on April 13, 2005. According to the assessee, the search operation covered its group, namely, (i) Concorde Developers, (ii) Concorde Garden City, (iii) Concorde Homes, (iv) Concorde Shelters Pvt. Ltd., (v) Gopal Reddy and (vi) B. S. Shivaram as the group was housed under one roof. It was the stand of the assessee all along that the alleged loose sheets unearthed during the course of search operation does not belong to the assessee, as apparently, they do not bear the name of the assessee. When the assessee was confronted during the course of search operation, it took a stand that those loose sheets were rough working of one of the staff members and that the profits mentioned therein were the profits of the entire group. This has been explicitly vouched by Sri B.S. Shivaram, partner of Concorde Developers in his statement on oath on June 13, 2005 (courtesy ....
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....(1)(c) are initiated." (Refer : page 10 of the assessment order). 7.2. During the course of penal proceedings under section 271(1)(c) of the Act, after due consideration of the assessee's submissions as recorded in his penalty order under dispute, the Assessing Officer had levied penalty of Rs. 49,49,686 under section 271(1)(c) of the Act for the following reasons, namely : "4. (On page 5) To summarise, it is evident from the seized materials that the actual business profit of the assessee for the assessment year under consideration was Rs. 4,21,71,890. The assessee has, however, disclosed its profits only at Rs. 2,56,72,936 and, thereby concealed its income to the tune of Rs. 1,64,98,954. It can be drawn or deduced from the totality of facts and circumstances of the case that there was a deliberate act on the part of assessee in withholding the true facts from the Department. It is also evident from the materials available on records that the assessee has consciously made the concealment or furnished inaccurate particulars of his income. The case squarely falls under Explanation 1(B) to sec....
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....varam recorded. When the above discrepancies have been pointed out, the learned Departmental representative fairly conceded that there were material differences in the original statement of Shri Shivaram recorded and what has been reproduced in the assessment order (paragraph 3.2 of the assessment order). 7.6. Taking into consideration of the facts and circumstances of the issue as discussed above, we are of the view that the Assessing Officer arrived at a conclusion, on misconception, that the actual profit of the assessee is worked at Rs. 4,21,71,890 instead of its group of companies and, accordingly, treated the difference of Rs. 1,64,98,954 (Rs. 42,12,71,890 - Rs. 2,56,72,936 (as admitted by the assessee in its return of income)) as inflated expenditure. Based on the above conclusion and facts, penalty proceedings were initiated under section 271(1)(c) of the Act and, subsequently, imposed a penalty of Rs. 49.49 lakhs on the assessee. We have, further, noticed that while issuing a notice under section 274 read with section 271 of the Act dated December 28, 2007, as rightly highlighted by the assessee, the Assessing Officer was not sure as to whether the assessee had concealed ....