TaxTMI 
TaxTMI 
2012 (9) TMI 1007
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....sment year 2006-07. This is quantum appeal. (iv) ITA No.3817/Mum/2011 is directed against order passed by Ld. CIT(A) dated 24/1/2011 in respect of assessment year 2006-07. It is an appeal relating to penalty levied under section 271(1)(c) of the Act. 2. All these appeals were argued together by both the parties and are related to one assessee hence, for the sake of convenience all these appeals are disposed of by this consolidated order. 3. The common facts which will be relevant to decide these appeals are that a search operation was conducted on the premises of the assessee and its groups on 10/01/2006. The return of income were originally filed under section 139(1) of the Act. Subsequently, consequent to search notices under section 153-A were issued, in response to which the assessee has been again assessed under section 143(3) r.w.s. 153-A of the Act. Concealment penalty has been imposed for all these years which have been confirmed by Ld. CIT(A). 3.1 As relevant facts for A.Y 2001-02, 2002-03 and 2003-04 are almost identical and the appeals relating to penalty under section 271(1)(c) have been disposed by Ld. CIT(A) by a consolidated order, we shall first ad....
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....y the assessee in the return of income filed in response to notice u/s.153A. However, the AO initiated the concealment penalty on aforementioned addition on the ground that if search action had not been taken place against the assessee, the assessee may not have declared this amount, therefore, aforementioned addition was liable for concealment penalty under section 271(1) (c) r.w. Explanation-5 thereof. 4.4 Apart from that certain other additions were also made in the shape of vehicles expenses, depreciation thereon and telephone expenses etc. on which no penalty under section 271(1)(c) of the Act has been initiated or levied. Therefore, those additions are not subject matter of penalty. 5. After narrating the facts it was submitted by Ld. A.R that for these years there is no variation in the income assessed and returned on the issues on which concealment penalty has been imposed. It was submitted that the impugned amount on which concealment penalty has been imposed has already been incorporated as income in the return filed in response to notice under section 153A of the Act, therefore, concealment penalty cannot be imposed. He submitted that this issue has recently been c....
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.... covered by the aforementioned decisions of the Tribunal and no penalty should be held to be imposable on the amounts of income which were declared by the assessee in the return of income filed by it in response to notice under section 153A of the Act. He submitted that in the aforementioned cases it has been held that in such cases penalty cannot be levied relying on the return filed under section 139(1). 6. On the other hand, Ld. D.R relied upon the order passed by AO as well as Ld. CIT(A). He submitted that default of concealment has to be considered with reference to original return and, therefore, Ld. CIT(A) has rightly upheld the levy of concealment penalty and his order should be upheld. 7. We have carefully considered the rival submissions in the light of the material placed before us. Penalty in these cases has been imposed on the income disclosed in the return of income filed in response to notice u/s. 153A. The reason for imposition of such penalty is that the act of concealment related to return filed u/s. 139(1) and not to return filed u/s. 153A. Therefore, the question in the present appeals is limited only to the extent that whether concealment penalty can be l....
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.... entries recorded on note pad that Shri Prem Arora was handling unaccounted cash of MDH Limited for making purchases in cash of various raw materials such as spices required for manufacturing of various products of MDH Limited. He presumed certain entries on note pad for lot numbers as rates and quantities of certain spices/dry fruits and by multiplying the assumed quantities and rates estimates sales for the period from 10.4.2005 to 31.05.2005 at Rs. 3,35,19,690/- . He has completely ignored the other seized material which has been taken into consideration by the assessee while estimating undisclosed commission income. The assessing officer extrapolated sales based on estimation of sales of 52 days (10.4.2005 to 31.05.2005) for financial year 2005-06. He further extrapolated sales figures backward for the period relevant to assessment years 2001-02 to 2005-06 by presuming that there was 20% growth in business in each year. He has further estimated profits by presuming profits of 10%. Thus estimation of profits at Rs. 1,28,71,560/- for assessment year 2004-05 is based on multiple estimations and presumptions. The method of estimation of sales and profits for the assessment years co....
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....his Tribunal in quantum appeal. He has not given any finding in assessment order that the assessee had concealed any income or furnished inaccurate particulars of such income. He had simply accepted the returned income u/s 153A estimated by the assessee. Hence assessee's case is covered by the decisions referred to above and penalty u/s 271(1)(c) will not be imposable. 23. In CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 (SC) the assessee filed revised returns showing higher income after search and notice for reopening of assessment, to purchase peace and avoid litigation and Department simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, High Court was justified in holding that no penalty could be levied. The assessee's case is on more strong footings as that of Suresh Chand Mittal decided by Hon'ble Supreme Court. As held in earlier paragraphs there should be variation in assessed and returned income and such variation should be as a result of concealment. It is not the case of assessing officer that penalty u/s 271(1)(c) has been imposed on certain additions made based on seized material which had not been admitted by the as....
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.... of the Act. Once returned income is accepted by the assessing officer it can neither be a case of concealment of income nor furnishing of inaccurate of particulars of such income. The assessee had disclosed income in the return of income filed determined on the basis of entries recorded in seized material. 27. Hon'ble Delhi High Court in the case of M/S S.A.S. Pharmaceuticals (supra) while deciding the issue levy of penalty u/s 271(1)(c) in paragraph 15 & 16 has held as under: "15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee has to be in the income tax return filed by it. There is sufficient indication of this Court in the judgment in the case of Commissioner of Income Tax, Delhi-I Vs Mohan Das Hassa Nand 141 ITR 203 and in Reliance Petro products Pvt. Ltd (supra), the Supreme court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the income tax return filed by the assessee. This view gets supported by Explanation 4 as well as 5 and 5A of section 271 of the Act as contended by the learned counsel f....
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....isions of Explanation 5 of section 271(1) comes into operation in the cases where in the course of a search the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing, and the assessee claims that such assets have been acquired by him by utilizing (wholly or in part) his income - (a) for any previous year which has ended before the date of search but the return of income for such year has not been furnished before the said date or where such return has been furnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or before the date of search, he shall, for the purposes of imposition of a penalty under section 271(1)(c ) be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income unless the case falls in exceptions provided either under clause (1) or clause (2) of the Explanation 5. Clause (1) covers the cases where such income or transactions resulting in such income is/are recor....
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....on 5A.- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of- (i) any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any previous year; or (ii) any income based on any entry in any books of account or other documents or transactions and he claims that such entry in the books of account or other documents or transactions represents his income (wholly or in part) for any previous year, which has ended before the date (a) where the return of income for such previous year has been furnished before the said date but such income has not been declared therein; or (b) the due date for filing the return of income for such previous year has expired but the assessee has not filed the return, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-s....
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....ld that penalty u/s section 271(1)(c) is not imposable on the facts and in the circumstances of case discussed in detail as above. Explanation 5 is not applicable for the reasons mentioned above in our decision. Therefore, ld. CIT(A) was not justified in confirming the penalty u/s 271(1)(c) of the Act. The assessing officer is, therefore, directed to delete the penalty. 34. In the result, the appeal filed by the assessee is allowed" 7.1 The Tribunal in the case of Director of the assessee company (Shri Yogesh Parikh vs. ACIT (supra) ) has followed the aforementioned order and has held that penalty under section 271(1)(c) cannot be imposed on the income which was included by the assessee in the return filed in response to notice under section 153A of the Act. 7.2 In view of the above discussions, as there is no dispute regarding the fact that the income which has been made subject to levy of concealment penalty was already incorporated by the assessee in the return filed by it under section 153A of the Act, respectfully following the aforementioned decisions of the Co-ordinate Benches, we delete the penalty and these appeals filed by the assessee are allowed. ITA N....
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.... comes to Rs. 2.09 cr. Hence, Rs. 2.10 cr is added as unexplained credit in the income of the assessee. This amount was not declared by the assessee in the original return of income and also in the return filed in response to notice issued u/s.153A of Income tax Act. Only during the assessment proceedings, the assessee filed a revised computation. They declared the amount of Rs. 2.10 crore in the revised computation. Penalty proceedings u/s. 271(1)(c) read with explanation 5 is initiated against the assessee. There is no statement u/s. 132(4) of Income tax Act wherein this amount is declared for A.Y 2004-- 05." 8.2 So far as it relates to penalty levied on account of bogus purchases and payment to Government Departments as as they were disclosed in the return of income filed under section 153A of the Act, the issue is covered by the decision rendered by us in respect of assessment years 2001-02,2002- 03 & 2003-04. Therefore, concealment penalty is not leviable in respect of these additions. 8.3 Now coming to the issue of leviablity or otherwise of concealment penalty in respect of addition of Rs. 2,10,00,000/-, it is the contention of the assessee that principal amou....
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.... no concealment penalty is warranted in respect of addition of Rs. 2,10,00,000/- as this income was part of the income disclosed in the returns filed in response to notice under section 153A relating to the block period and it is only a case of shifting the income from one year to another. Ld. A.R has also filed before us copies of the revised computation for Assessment years 2004-05, 2005-06 and 2006-07, from where the figures in the aforementioned chart were verified and it was found that the figures mentioned in the chart are correct. 9. On the other hand, Ld. D.R submitted that a sum of Rs. 2,10,00,000/- is not the part of the return filed under section 153A for A.Y 2004-05, therefore, to that extent the assessee has concealed the particulars of its income in respepct of A.Y 2004-05and penalty should be confirmed thereon. 10. We have heard both the parties and their submissions have carefully been considered. The relevant observations of the AO while assessing this income for A.Y 2004-05 have already been reproduced. The AO has taken a view that the interest earned by the assessee during the year represented the principal amount which was declared in another year by the a....
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....luded in A.Y 2006-07. Therefore, it is a simple case of shifting of income of the block period from one year to another. Otherwise, if returned income under section 153A for Assessment years 2004-05, 2005-06 and 2006-07 are considered together then there is no difference whatsoever in the returned income and revised computation submitted by the assessee which has been taken into consideration by the AO while assessing the income for these years. This position has been made clear in the chart reproduced in para 8.2 of this order. Therefore, simple shifting of income from one year to other year of the same block period cannot be termed as concealment of income by the assessee. Therefore, considering the facts of the present case, we are of the opinion that concealment penalty cannot be levied with respect to the amount of Rs. 2,10,00,000/-. 11. Apropos concealment penalty levied in respect of the addition of Rs. 10,000/- made by the AO under section 14A of the Act on estimate basis for the expenses incurred by the assessee for earning exempted dividend income of Rs. 38,000/-, we find that this addition is based only on mere estimate. No material has been brought on record to show ....
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....e we have held that no penalty is leviable in respect of such addition of Rs. 10,000/-, therefore, penalty levied in respect of A.Y 2005-06 is deleted. ITA NO.292/MUM/2009(A.Y 2006-07): 13. Grounds raised in this appeal reads as under: "1. On the facts and circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the addition of Rs. 1,22,67,545/- made by the AO on the basis of seized loose per page No.6 of Annexure A-1. 2. In any event the Ld. CIT(A) erred in not allowing the expenditure of Rs. 66,38,475/- recorded in the same seized material on the basis of which the addition of Rs. 1,22,67,545/- made by the AO and confirmed by the Ld. CIT(A)." The only ground pressed by Ld.A.R in this appeal is with regard to ground No.2, which challenged the finding of Ld. CIT(A) whereby the assessee has not been allowed with expenditure of Rs. 66,38,475/- against addition of Rs. 1,22,67,545/- made by the AO and confirmed by Ld. CIT(A). 13.1 During the course of search, a document containing following entries was seized : 46000 Cash 05.09.05 9000 D.M.Scienific 8000 Orchid Enterprises 5000 Choksi Laboratorie....
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....r section 153A of the Act to cover errors and omissions. Thus the main contention of the assessee before Ld. CIT(A) was that addition of the entire credit side of the seized document should not be made and set off of debit entries stated therein should be granted. It was further submitted that balance amount of Rs. 56,29,070/- should be adjusted against the additional disclosure of Rs. 79,70,191/- made in the return filed in response to notice under section 153A of the Act. The assessee relied upon the following decisions: 1. Smt. Usha Tripathi vs. ACIT ITAT reported in 66 TTJ 508 (All) 2. Ellite Developers vs. DCIT reported in 68 TTJ 616 (Nag) 3. Dhanvarsh Builders & Developers Pvt. Ltd. vs. DCIT repored 289 ITR (AT) 50 (Pune) 4. Glass Lines Equipments Co. Ltd. vs. CIT reported in 253 ITR 454 (Guj) 5. Smt. Bommana Swarna Rekha vs. ACIT reported in 94 TTJ 885 (Visak) 6. Om Prakash Suresh Kumar vs. ACIT reported in 91 TTJ 193 (Del) 7. Mange Ram Mittal vs. ACIT reported in 289 ITR (AT) 112 (Del) (SB) 13.3 Ld. CIT(A) has rejected the first contention of the assessee on the ground that under section 37 of the Act, in ord....
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....aded that Ld. CIT(A) has rightly upheld the action of the AO. He further submitted that if expenses as claimed by the assessee are given set off then the assessable income of the assessee will come below returned amount, therefore, the said contention should not be accepted. He submitted that Ld. CIT(A) was reasonable enough in granting the set off of amount of Rs. 79,70,191/- against the income of Rs. 1,22,67,545/- . He submitted that the order of Ld. CIT(A) on this issue should be upheld and the appeal filed by the assessee should be dismissed. 16. We have carefully considered the rival submissions in the light of material placed before us. The entries in the seized documents have already been reproduced. It is not the case of the assessee that the seized documents do not belong to it. It is also clear that the entries stated therein to be increased by two zeros as the same is clear from the statement of Shri Mahesh Kaval who is Associate Director Finance of the assessee company, who has admitted that the amount 200 written therein is a sum of Rs. 20,000/-. As the documents has been totaled the same will show that all the entries stated therein are to be similarly interpreted.....
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....y be mentioned that in the case of Smt. Usha Tripathi vs. ACIT (supra) a diary was seized in which gross receipts were recorded at Rs. 20,73,974/-. Similar expenses were noted in the diary amounting to Rs. 2,73,283/-. These expenses were claimed by the assessee to be given as incentive / commission to the middle men. Those persons were examined by the AO and they had admitted in their statement that they had received the said amount for the purpose of paying the same as incentive to various middle men. Therefore, in the said case the assessee was able to place on record an evidence according to which the amount was spent for the purpose of business. 16.2 In the case of Elite Developers vs. DCIT (supra), the facts in that case are different as in the said case AO estimated a sum of Rs. 40.00 lacs as onmoney on sale of flats relying on the statement of the partner of the assessee firm and some seized documents. Partner had admitted an undisclosed income of Rs. 40.00 lacs in respect of whole group and not in respect of the assessee firm alone. On these facts it was observed that since AO has not examined the parties who were believed to have paid on-money and has not brought any co....
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....was treated by the AO to be relating to the transaction of the husband of the assessee. On these facts it was held that the loose paper bound and seized was to be read as a whole and it cannot be read as partly belonging to the husband of the assessee. Therefore, the facts of the said case are entirely different. 16.6 In the case of Om Prakash Suresh Kumar vs. ACIT (supra), the facts are entirely different from the facts of the assessee's case. The proposition laid down in the said case is that entire seized material was to be read as a whole and the documents believed as showing undisclosed income has also to be believed in respect of withdrawal entries contained therein. It was the case of the assessee that one "S" alone was dealing with sale of milk products from the Delhi Office of HDP to the exclusion of all other three partner of HDP and it was found that such plea of the assessee was corroborated from monthly peak credit of financial year 1992-93. The maximum peak of Rs. 45,08,832/- was in the month of November,1992 and admittedly by that time assessee "S" had withdrawn Rs. 1.29 crores. It was the contention of the revenue that amount withdrawn by "S" was not the same which ....
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.... in the same seized documents and the additional income declared by the assessee in the return field in response to notice under section 153A of the Act. Such contentions of the assessee have been rejected by the AO. 18.1 Before Ld. CIT(A) the assessee took the same plea. It was also contended that penalty should be restricted to the balance addition only after giving set off of additional income declared in the return field in response to notice under section 153A of the Act. However, Ld. CIT(A) did not accept any of such contentions of the assessee. According to Ld. CIT(A) the penalty is sustainable on the entire of Rs. 1,22,67,545/-. 18.2 The submissions made during the quantum appeal were reiterated Ld. A.R. It was submitted that penalty proceedings are different and the addition in assessment cannot solely be relied upon to uphold the penalty. It was submitted that assessee has been able to demonstrate that according to the well settled proposition of law seized document has to be read as whole and, therefore, the assessee is entitled to set off of expenditure mentioned in the seized document itself. He submitted that this was the view point supported by various judicial....