2016 (3) TMI 81

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ying penalty u/s 271(1(c) of the Income Tax Act, 1961." 3. The assessee filed its return of income on 28.10.2005 declaring total income of Rs. 6,49,080/- which was processed u/s 143(1). Subsequently, during the course of search and survey proceeding carried out by the department it was noticed that various parties were involved in bogus entries transaction by taking cash and giving entries through cheques in the various forms like loan, share application money and sale or purchase of shares. It was found that share application money of Rs. 6 lacs was received by the assessee from M/s. Shashi Jewellers, Shri Deepak Gupta and M/s. Milansar Impex & Traders Private Limited. In the assessment proceedings the AO issued summons to three parties....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....void the litigation, however when the assessee had filed necessary evidence along with PAN of these creditors then the penalty proceedings being separate from the assessment proceedings, the AO should have considered the same and no penalty can be levied once the assessee has produced the relevant record. Further the surrender would not constitute that this amount is assessee's own money. Even otherwise there was no basis of presumption that assessee's own money is rooted through these transaction or alleged accommodation entries. Thus, the ld AR of the assessee has submitted that the learned Commissioner of Income-tax (Appeals) relied upon the decision of the Hon'ble Kerala High Court in the case of CIT Vs.DKB & Co 243 ITR 618 ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....for imposition of penalty is not automatic. If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide and all facts relating to the same and material for the computation of his total income have been disclosed by him, no penalty could be imposed. He has also relied upon the judgment of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Chemicals Pvt. Ltd. 189 Taxman 322 (SC) and HP State Forest Corpn Ltd. 340 ITR 204. 5. On the other hand the ld DR relied upon the decision of Hon'ble Jurisdictional High Court in the Case of CIT Vs. Nova Promoters and Finlease Pvt. Ltd. reported on 342 ITR 0169, as well as the decision in the case of CIT Vs. N. P. Portfolio (P) Ltd. 264 CTR 25....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ived by the assessee. The Hon'ble Supreme Court in the case of Mak Data Vs. CIT (supra) while dealing with identical issue has held in para 6 to 11 as under:- "6. We have heard counsel on either side. We fully concur with the view of the High Court that the Tribunal has not properly understood or appreciated the scope of Explanation 1 to Section 271(1)(c) of the Act, which reads as follows:- "Explanation 1 - Where in respect of any facts material to the computation of the total income 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 Commissioner (Appeals) or the Commissioner to be false, or (B) Such pe....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ttlement with the income tax department. Statute does not recognize those types of defences under the explanation 1 to Section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the cour....