AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 807
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....r concealment of particulars of income or furnishing inaccurate particulars of income. A survey was conducted u/s 133A of the Act on the professional premises of the assessee on 23.9.2008. During the course of survey, it was noticed that the assessee has not filed any return of income for the assessment year in question and also for the assessment year 2007-08. It was further noticed that a few loose slips found during the course of survey, reveals the professional receipts collected by the assessee. The A.O. has confronted the loose slips and asked to explain, whether these receipts are accounted in the books of accounts? In reply, the assessee stated that he did not maintain regular books of accounts, therefore, he is unable to explain whether these receipts were accounted in the books of accounts or not. On a further query from the Assessing Officer, the assessee stated that his average daily collections from the profession from inpatient and out-patient is about Rs. 6,000/-. By taking into account average daily collections of Rs. 6,000/- per day, his annual collections would be around Rs. 20 to 25 lakhs and after all expenditure towards maintenance of hospital, the net annual i....
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....nt year in question and also for the assessment year 2007-08. From these facts, it is very clear that if survey could not have taken place, the assessee would not have filed his return of income and disclosed true and correct income and pay taxes. Since, the survey party gathered some information, the assessee was compelled to admit additional income, therefore, it cannot be considered as voluntary disclosure of income. With these observations, the Assessing Officer levied penalty of Rs. 10 lakhs u/s 271(1)(c) of the Act. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the Assessing Officer. The CIT(A) after considering the explanations furnished by the assessee, upheld the penalty levied by the Assessing Officer by holding that the assessee has concealed particulars of income. The CIT(A) further held that despite survey, the assessee has not disclosed referral income received from two diagnostic centers, which clearly shows his intention not to disclose true and correct income to the department. However, modified the penalty order and directed the Assessing Officer t....
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.... that the assessee did not offer any explanations, therefore requested to uphold the penalty order passed by the assessing officer. The D.R. further submitted that the assessee has willfully concealed the particulars of income and also furnished inaccurate particulars of income. As on the date of survey i.e. on 23.9.2008, the assessee did not filed any return of income for the assessment year in question and also for the assessment year 2007-08. From these facts, it is very clear that if survey could not have taken place, the assessee would not have filed his return of income and disclosed true and correct income and pay taxes. The survey party gathered some information, therefore, the assessee was compelled to admit additional income, which cannot be considered as voluntary disclosure of income. Therefore, requested to uphold the penalty order passed by the A.O. 7. We have heard both the parties and perused the materials available on record. The factual matrix of the case is that there was a survey u/s 133A of the Act in this case on 23.9.2008. As on the date of survey, the assessee did not filed return of income for the assessment year in question and also for the assessment y....
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....f income. The assessee further stated that he has filed the return of income, disclosed the income admitted during the course of survey and also paid taxes before filing the return of income. He further submitted that he had made a fair estimation of income and disclosed over and above his probable income to buy peace and to cooperate with the department for smooth completion of assessment proceedings. It was further stated that the declaration of income was made with a request to immunity from penalty provisions and his request at the time of survey have to be taken as impliedly accepted. 9. We have considered the submissions of the assessee and also orders of the authorities below. Before we go into the merits of this case, let us understand the position of law as enumerated u/s 271(1)(c) of the Act. Section 271(1)(c) of the Act, provides for levy of penalty, in a case where the A.O. or CIT(A) is satisfied that the person has concealed the particulars of his income or furnished inaccurate particulars of such income, such person may be directed to pay penalty a sum not less than 100% and not more than 300% of tax sought to be evaded. Explanation (1) appended to section 271(1)(c....
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....rtain incriminating documents, which is the basis of estimation of income disclosed during survey. What was found and seized during survey was 12 loose slips, which pertains to assessment year 2009-10 and which was the basis for surrender of income. Therefore, we are of the opinion that the explanation offered by the assessee is bonafide and which is not a case of willful concealment of income, so as to levy penalty under explanation 1 to section 271(1)(c) of the Act. 10. Explanation 3 appended to section 271(1)(c) of the Act provides for levy of penalty, in a case where any assessee, fails without reasonable cause, to furnish within the period specified in sub section 1 of section 153 of the Act, a return of his income which he is required to furnish under section 139 of the Act, in respect of any assessment year and the A.O. and CIT(A) is satisfied that in respect of such assessment year, such person has taxable income, than such person shall for the purpose of clause (c) of this sub section, may deemed to be concealed the particulars of his income. The A.O. was of the opinion that the assessee has not filed return of income and also not paid any advance tax for the assessment....
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....s or not. The assessee explained that he has fairly estimated his income based on the available information and arrived at annual gross receipts of Rs. 20 to 25 lakhs and after all expenses for maintenance of hospital, net income would be around Rs. 15 lakhs which is probable and estimated. However, he disclosed Rs. 20 lakhs which is over and above his estimated income with a request to immunity from the penalty proceedings. The assessee surrendered the income during the course of survey and also paid taxes before filing the return of income. Though, A.O. assessed slightly higher income over and above income declared by the assessee, which was on account of referral income from two hospitals amounting to Rs. 2,14,177/- which is subsumed in the extra income declared during the course of survey. The A.O. had his own apprehension that assessee would not have declared his true and correct income, if survey could not taken place. Whether survey is taken place or not, the fact remains that the due date for furnishing return for both the assessment years was not over as on the date of survey. Therefore, there is no scope for such suspicion and surmises in the penalty proceedings. ....
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....his view gets supported by Explns. 4 as well as S and 5A of s. 271. obviously, no penalty can be Imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Sec. 271 (1) (c) has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax.-CIT vs. Mohan Das Hassa Nand (1983) 34 CTR (Del) 361 (1983) 141 ITR 203 (Del) and CIT vs. Reliance Petro products (P) Ltd. (2010) 230 CTR (Sc) 320: (2010) 36 DIR (Sc) 449: (2010) 3 SCR 510 relied on." 13. The assessee relied upon ITAT, Visakhapatnam bench decision in the case of Godavari Townships (P) Ltd. Vs. DCIT (2014) 148 ITD 463. The coordinate bench of this Tribunal, under similar circumstances held the issue in favour of the assessee.....