2016 (5) TMI 818

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.... short 'the Act'). 2. In both the appeals, the issue is common and, therefore, these appeals were heard together and are being disposed off by this common order for the sake of convenience. 3. Since the facts and circumstances are identical in both the appeals, we may refer to the discussion in the orders of the Income Tax Authorities in the case of assessee in ITA No.581/Chd/2012. 4. Briefly, the facts of the case are that the original return was filed at nil income. A survey operation was carried out at the business premises of the assessee as on 6.3.2009 and during the course of survey, certain incriminating documents were found. The assessee agreed to surrender an additional income of Rs. 1 crore. On a return filed in p....

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..... Aggrieved, the Department has come up in appeal, raising the following grounds of appeal : "1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case. 2. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the penalty imposed by the Assessing Officer u/s 271(l)(c) of the Income-tax Act, 1961 on concealed income of Rs. 1,00,00,000/-. 3. It is prayed that the order of the Ld. CIT (A) be set aside and that of the Assessing officer may be restored. 4. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard or disposed off." ....

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.... account of interest on FDRs over the returned income. Heavy reliance was placed by the learned D.R. on the judgment of Hon'ble Supreme Court in the case of MAK Data (P) Ltd. (supra). Therefore, we begin to analyze the said judgment vis-à-vis the facts of the present case. 10. The relevant findings of the Hon'ble Supreme Court in the case of MAK Data (P) Ltd. (supra) are as follows : The AO, in our view, shall not be carried away by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars....

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....than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of 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....

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....to surrender the same and pay additional taxes on it, is not a question, before us, to go into. 14. In these circumstances, it cannot be said that the income was surrendered after detection by the Department. 15. There is another aspect to the present case. The assessee had maintained before the learned CIT (Appeals) that it is following project completion method for revenue recognition. On perusal of the copy of Balance Sheet for the relevant year, we see that there are no reserves and no profits recognized during the year. In the Notes of Accounts and Significant Accounting Policies, it has been mentioned specifically, as follows : "Sales & Other Income : The company is in the process of development of Mega Housing....