2016 (4) TMI 206

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....see. During the course of search, additional income of Rs. 10,00,00,000/- was offered on behalf of the entire Group and in the returns of income filed in response to the notices issued under section 153A, an amount of Rs. 9,36,62,582/- was offered in the hands of the various assesses belonged to the Group. Out of the said amount, a sum of Rs. 14,38,310, Rs. 65,62,943/- and Rs. 1,25,05,270/- was offered in the hands of the assessee for A.Y. 2004-05, 2005-06 and 2006-07 respectively in the returns of income filed in response to notices issued by the Assessing Officer under section 153A of the Act. The return of income for A.Y. 2007- 08 was regularly filed by the assessee under section 139(1) wherein additional income of Rs. 99,91,050/- was declared by the assessee and the same was claimed to be set off against the loss declared in the said return. In the assessments completed under section 153A/143(3) of the Act, the income declared by the assessee in the returns of income for A.Y. 2004-05, 2005-06 and 2006-07 was accepted by the Assessing Officer. In the regular assessment completed under sect ion 143(3) for A.Y. 2007-08, the additional income of Rs. 76,665/- offered by the assessee....

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....sed expenditure and not on account of any income utilized for acquiring money, bullion, jewellery or other valuable article or things found during the course of search. He also noted that the assessee has not explained the source of income from which the undisclosed expenditure was made. He, therefore, held that the conditions stipulated under Clause 2 of Explanation 5 to section 271(1)(c) were not satisfied and the assessee was not entitled or eligible to claim the immunity provided therein. Accordingly, the penal ties imposed by the Assessing Officer under section 271(1)(c) for all the four years under consideration were confirmed by the ld. CIT(Appeals). Aggrieved by the orders of the ld. CIT(Appeals), the assessee has preferred these appeals before the Tribunal. 5. The ld. Counsel for the assessee mainly raised three contentions in support of the assessee's case that the penalties imposed by the Assessing Officer under section 271(1)(c) and confirmed by the ld. CIT(Appeals) for all the four years under consideration are not sustainable. Firstly, he took us through the assessment orders passed by the Assessing Officer to show that the satisfaction required for initiating th....

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....uvaprasanna Bhattacharya (supra) has considered this aspect in detail in the light of the provisions of section 271(1B) of the Act as well as the decision of the Hon'ble Delhi High Court in the case of Ms. Madhushree Gupta -vs.- Union of India reported in 317 ITR 107 (Del.) and that of the Hon'ble Supreme Court in the case of MAK Data Pvt. Limited -vs. - CIT reported in 358 ITR 593 (SC) and it is worthwhile to refer to the observations recorded in this context by the Tribunal in paragraphs no. 6 & 7 of its order, which are extracted below:- "6. We shall now deal with the question whether proper satisfaction was arrived at by the AO for initiating penalty proceedings u/s.271(1)(c), in the course of concluding the assessment proceedings, wherein the additions in respect of which penalty was imposed were made. On the above issue, the first aspect which, we notice is that in the order of assessment, which we have extracted in the earlier part of this order, nowhere spells out or indicates that the AO was of the view that the assessee was guilty of either concealing particulars of income or furnishing inaccurate particulars of income. The offer to tax of income by the assessee ....

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....f the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961. 10. The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing......." 7. The Revenue places reliance only on the sentence appearing in para-10 of the judgment without reading it in the context of the observations in the last portion of para-9 of the said judgment. Therefore even the Hon'ble supreme court's decision suggests that the satisfaction need not be recorded in a particular manner but from a reading of the assessment o....