2017 (8) TMI 412

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....essing Officer observed that a survey operation was conducted in the case of M/s Nikhil Refineries Pvt. Ltd., on 07-06-2012 wherein the assessee is a Director. During the course of survey proceedings, statement of Sri Kailash Chandra Agarwal, one of the Directors was recorded and he stated that the company M/ s Nikhil Refineries Pvt. Ltd., had received share capital of Rs. 5,62,79,400/- and share application money of Rs. 2,04,26,000/-. Out of this, with regard to the investment of Rs. 5,05,00,000/- he admitted his inability to explain the sources and hence, offered the same as unexplained investment for the A.Y. 2012-13. Subsequently, the company filed a letter offering the additional income of Rs. 5,05,00,000/- in the hands of the Directors, viz., Sri Amit Kumar Agarwal, Sri Sandeep Kumar Agarwal and Sri Akash Kumar Agarwal, of Rs. 1,85,00,000/-, Rs. 1,40,00,000/- and Rs. 1,80,00,000/- respectively. Subsequent to survey operation, the assessee filed return of income admitting total income of Rs. 1,88,38,510/- including additional income of Rs. 1,40,00,000/-. 3. Thereafter, the AO initiated penalty proceedings u/s 271(1)(c) and issued a notice u/s 274 r.w.s. 271 dated 31/03/2015 o....

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....ed that on verification, it was found that the assessee has not filed revised return of income within due date but subsequent to survey in compliance to the statement of one of the director Sri Kailash Chandra Agarwal, the three directors including the assessee, disclosed undisclosed income and filed the returns of income. Further he observed that the undisclosed income found at the time of survey operation was disclosed by the three directors after the survey proceedings and, therefore, the assessee's submission that there is proceedings pending and there is no escapement of income is not acceptable. Accordingly, he confirmed the penalty levied by AO. 6. Aggrieved by the order of the CIT(A), the assessee is in appeal before us raising 12 grounds of appeal. Ground Nos. 1 to 3 are against the action of the CIT(A) in confirming the penalty levied by the AO u/s 271(1)(c) of the Act. Ground No. 4 is that the CIT(A) failed to appreciate that the AO has not stated in the notice u/s 274 r.w.s. 271 whether it is alleged case of concealment of particulars of income or a case of furnishing inaccurate particulars of such income. 6.1 Ground Nos. 5 to 12 are argumentative in nature, hence, ne....

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....ct implication on the statement of affairs, the income offered cannot said to be voluntary to buy peace of mind. Accordingly, he levied penalty. However, we noticed that in the assessment order u/s 143(3), the AO has not indicated any discrepancy in the book entry nor observed any hint of income being concealed or assessee furnished inaccurate particulars. AO has accepted the return of income filed by the assessee. Since AO accepted the return of income filed by the assessee and computed the assessment u/s 143(3) and not found any discrepancy in the details filed by the assessee, now the AO cannot bring any issues in the penalty proceedings after accepting financial statements and return of income filed by the assessee. In our considered view, the assessee neither concealed any particulars of income nor furnished inaccurate particulars in the return of income filed , which was duly accepted and assessment was completed. Hence, penalty cannot be levied in this case. 9.1 With regard to ground No. 4, in the case of Manjunatha Cotton & Ginning Factory (supra), the Hon'ble Karnataka High Court has observed that the condition precedent for levying the penalty is the satisfaction of the ....

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....oncerned, the very same judgment has been considered by the Hon'ble Madras High Court in the case of CIT Vs. M/s Gem Granites (supra), observed that the Hon'ble Supreme Court while considering the Explanation to section 271(1), held that the question would be whether the assessee had offered an explanation for concealment of particulars of income or furnishing inaccurate particulars of income and the Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the assessing officer between the reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence and when the initial onus placed by the explanation, has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted their income and not otherwise. Factually, we find that the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation. Therefore, if the department did not agree with the explanation, then the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income. 10. As regards....