TaxTMI 
TaxTMI 
2016 (2) TMI 237
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.... surgeon and he is also the Managing Director of M/s. Sarvejana Health Care Pvt. Ltd. He filed the returns of income for the assessment year 2007-08 admitting income of Rs. 1,56,15,550 and for the assessment year 2008-09 and of Rs. 3,08,55,184 for the assessment year 2009-10. Consequent to search and seizure operations conducted on 20.08.2009 and survey operations conducted on the premises above company, proceedings under S.153A were initiated. Assessee filed revised returns declaring income of Rs. 2,31,62,130, thereby admitting additional income of Rs. 75 lakhs for the assessment year 2007-08 and of Rs. 3,33,45,263 for the assessment year 2008-09, thereby admitting additional income of Rs. 25,00,000 for that year. Assessments were completed on total income of Rs. 2,12,57,442 for the assessment year 2007-08 and of Rs. 3,38,84,018 for assessment year 2008-09, viz. on incomes which are less than the incomes returned by the assessee. Even though the assessee admitted income as declared under S.132(4), the Assessing Officer however in the assessment orders brought these amounts to tax separately and initiated proceedings under S.271(1)(c). For the assessment year 2007-8, an amount of R....
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....of Rs. 6,45,312/-, unexplained investment in property of Rs. 45,00,000/- and unexplained advances received of Rs. 4,50,000/- and issued the penalty notice u/s.271(1)(c) of I.T. Act. However, while passing the penalty order u/s. 271(1)(c}, he considered the addition of Rs. 45,00,000/- only and did not give any reasons for excluding the other two items of addition and concluded that the appellant would not have offered the income of Rs. 45,00,000/- but for the search conducted by the department. It is a fact that the appellant offered additional income after the search was carried out in his premises and it is also noticed from the declaration of income made by him before the ADIT(Inv), Unit-II(3), Hyderabad that he declared Rs. 1,OO,OO,OOO/- for Asst. years 2007-08 and 2008-09 as below: Particulars Additional declarations Assessment Year Investments in construction 25,50,000 2007-08 Payment towards property purchased at Hyderguda Village 45,00,000 2007-08 Misc. advances given 4,50,000 2007-08 Advances towards purchase of property 25,00,000 2008-09 TOTAL 1,00,00,000 06.1 Regarding the investment in property at Hyderguda, it is noticed from seized ma....
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.... the particulars of his income or furnished inaccurate particulars of income; He may direct ...." That above provision shows that the Assessing Officer is vested with a discretionary power to levy or not to levy any penalty in a deserving case. In the case of Hindustan Steel Ltd. vs State of Orissa (83 ITR 26) (Se), held that penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. If an assessee files the revised return though at a later stage or disclosed true income, penalty need not believed. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee's case, came forward with additional income though after deduction on account of that the assessee was not in a position to explainproperly, the seized material and express remorse, in his conduct un-hesitantly, the Assessing Officer might have to exercise the discretion in favour of such assessee as otherwise the expression 'may' in section 271(1)(c) of the Act remains redundant. If it is to be understood that in a case of admitted concealment, penalty is ....
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....on of income does not justify penalty, more so when the alleged investment in the property was made out of the disclosed/undisclosed income in the earlier years and not 'in the year under consideration. Therefore, the penalty levied of Rs. 14,13,720/- u/s.271(1)(c) is not justified and hence, cancelled. Assessment year 2008-09 "06.0 The assessment order, penalty order and the submissions of the appellant have been carefully considered. It is rioted that the appellant filed return of income in response to notice u/s.153A declaring an income of Rs. 3,33,45,263/- which included the additional income offered of Rs. 25 lakhs and the AO completed the assessment accepting the same and made a further addition of Rs. 5,38,758/- on account of difference in the cost of construction. The contention of the AO that but for the search, the appellant would not have offered the amount of Rs. 25 lakhs may sound good but penalty cannot be levied on surmises, on conjectures and possibilities and unless it is established that there is actually concealment or non-disclosure of the particulars of income. Page nO.19 & 20 of seized Annexure-A/AVGR/Res/04 have been perused and they are only some s....