2015 (7) TMI 607

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....earch u/s.132 of the Act in the residential and business premises of the assessee on 21.09.2005 and notice u/s.153A was issued. The assessee filed his returns of income pursuant to search, admitted income in addition to undisclosed income, income from agricultural lands of 12.13 acres owned by him for agricultural purpose only. The assessment was completed u/s.153 r.w.s. 143(3) of the Act by making the following additions:- 1. Agricultural income treated as undisclosed income. 2. Unexplained investment in bank/deposits in bank account. 3. Investment in Koilpatti land. 4. Income from House property. Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed the additions made by the Assessing Officer. Against this, the assessee preferred an appeal before the Tribunal. The Tribunal vide its order dated 19.05.2010 in ITA No.384/Mds/2010 set aside the issue of agricultural income to the file of the Assessing Officer to redetermine agricultural income for the assessment years 2000-01 to 2006-07 based on the assessment order of assessment year 2007- 2008. Accordingly vide order u/s.153 r.w....

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....the assessee earned the same from any undisclosed source. Accordingly, the Authorised Representative for the assessee contended that penalty cannot be levied where the income is estimated. He relied on the judgment of Supreme Court in the case of CIT vs. Reliance Petro Products 322 ITR 158, wherein it was held that merely because the assessee claimed deduction of interest expenses it has not been accepted by the Revenue, penalty u/s.271(1)(c) of the Act is not attracted. Merely making of the claim is not sustainable in law, by itself will not amount to furnishing inaccurate particulars regarding income of the assessee. He also relied in the case of CIT vs. Cafco Syndicate Shipping Company, 294 ITR 134, wherein expenses having been recorded in assessee's book, failure to produce supporting voucher by itself would not constitute concealment attracting penalty u/s.271(1) (c) of the Act. Further, he also relied in the case of CIT vs. Chennupati Tyres & Rubber Product 90 CCH 191 (APHC) wherein it was held that when there was no intention on the part of the assessee to conceal the income and the assessee had agreed to offer sundry credit which were carried forward from previous year as i....

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.... agricultural income, the Assessing Officer treated entire agricultural income declared as G1,84,550/- for levy of penalty u/s.271(1)(c) of the Act. The assessee was not able to produce any evidence in support of the agricultural income. Whenever the assessee claimed any income exempted from tax, the assessee is liable to place necessary evidence to show that income in fact is exempted from tax. In this case, the assessee though declared an amount of G1,84,550/- as agricultural income, after the Tribunal remitted the issue back to the file of the Assessing Officer to re-compute the agricultural income in the light of the assessment of assessee in the assessment year 2007-2008 and 2008-09 vide order dated 19.5.2010 in ITA No.384/Mds/2010, the Assessing Officer considered only 20% of G1,84,550/- as agricultural income which worked out to G36,910/- as income of assessee. Thus it means that the Assessing Officer was not sure what the exact income of the assessee from agricultural income. In other words, the Assessing Officer has estimated the agricultural income. Now the question before us is when the income was estimated and assessment was completed u/s.153A consequent to search actio....

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....f G9,60,000/- vide order dated 05.06.2008, and levied penalty of G2,67,396/-. During the course of search, it was found that the assessee has made deposits of above amount in the saving bank account no.1397 with Indian Overseas Bank, Santhome Branch, Chennai. The assessee was not able to explain the source of deposits. Hence it was treated as income of the assessee and levied penalty u/s.271(1) (c) of the Act. On appeal, the Commissioner of Income Tax (Appeals) deleted the penalty by placing reliance on the judgment of the Supreme Court in the case of CIT vs. Suresh Chandra Mittal, 251 ITR 09. Against this, the Revenue is in appeal before us. 7.1 We have heard both the parties and perused the material on record. Any amount deposited in bank account of the assessee, the assessee has to explain the source from which it was deposited. In the present case, the assessee is not able to explain the deposits. According to the assessee, the assessee is not educated and return subsequent to the search was filed by a Chartered Accountant who obviously has not made out a proper disclosure. The intention of the assessee was to make a proper disclosure, come out clean and pay the taxes. Howev....

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....he Act. There was no illegality in the Department initiating penalty proceedings'' Hence, we are inclined to reverse the order of the Commissioner of Income Tax (Appeals) and restore the order of the Assessing Officer in levy of penalty u/s.271(1)(c) of the Act. 7.2 In the result, the appeal of the Revenue in ITA No.954/Mds/2013 is allowed. 8. ITA No.939/Mds/2014, assessment year: 2003-2004 The assessee declared agricultural income of G.4,11,350/-. The Assessing Officer treated 20% of G4,11,350/- i.e. 82,270/- as non agricultural income, consequent to assessment u/s.153A r.ws. 143(3) r.w.s 254 of the Act. As discussed in the earlier assessment year 2000-2001 in earlier para (supra), penalty cannot be levied. We delete the penalty for the assessment year 2003-2004. In the result, the assessee's appeal in ITA No.939/Mds/2014 is allowed. 9 ITA No.940/Mds/2014, assessment year: 2004-05. In this year, the penalty was levied on the following additions:- 1) Unexplained bank deposits of G18,20,000/-. 2) Treating agricultural income as non agricultural income of G4,45,350/- 3) Unexplained cash deposits of G4,00,000/- 4) Regarding unexplained bank deposit of G18....

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....10, he levied penalty in respect of other two items at G4,83,541/- as tax was evaded. 11.1 In respect of agricultural income, addition was reduced to 20% of G4,45,350/-, i.e G89,070/- which is only on estimation basis consequent to order of the Tribunal for the assessment year 2007-08 and 2008-2009 (cited supra). In our opinion, since these facts are similar to the one already considered in assessment year 2000-01 in para 4 and 4.1 of this order, accordingly levy of penalty on this ground is deleted. 11.2 Regarding levy of penalty for deemed dividend of G10,00,000/-, the assessee accepted the addition in the course of assessment proceedings and offered no explanation regarding these lapses. The only contention of the assessee's counsel is that this addition was voluntarily offered to buy peace and to avoid litigation and penalty cannot be levied. In our opinion, this cannot be a bonafide explanation so as to go out of the rigours of penalty proceedings. As held by the Supreme Court in the case of Mak Data Pvt. Ltd. vs. CIT (supra), that penalty is leviable. In our opinion, the assessee failed to substantiate non offering of G10,00,000/- as income which was received by the ass....