TaxTMI 
TaxTMI 
2019 (4) TMI 1666
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....eration and if yes, to furnish the following details: "(a) Details of income/loss derived from these transactions and its treatment in the return of income. In case of income, please intimate detail of its utilization indicating the nature of investment, date or investment and mode of investment of each party with name and complete address with PAN. (b) Complete details of purchase of shares indicating a. Name & complete address of company b. Date of purchase c. Mode of payment d. Mode of transaction whether off line or online transaction indicating the name of stock exchange. e. Complete name and address f the broker f. Basis of investment in each shares (c). Complete details of sales of shares indicating:- a. Name & complete address of the company indicating the date of sale and purchase of shares. b. Mode of payment c. Complete name & address of the broker. (d) Whether you have undertaken any transaction such transactions in earlier and subsequent years." 4. In response, the assessee submitted as under: "During the year, sales and purchases of shares h....
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....t the assessee furnished inaccurate particulars of income amounting to Rs. 37 lacs and accordingly, he levied penalty of Rs. 12,57,630/- u/s 271(1)(c) of the Act. 6. Being aggrieved, the assessee carried the matter to the Ld.CIT(A) and furnished the written submissions, which has been incorporated in para 4.1 of the impugned order and is reproduced verbatim, as under: "This is with reference to an appeal filed by Smt. Neelu Garg(herein after referred to as "the appellant'') against the order U/s 271(l)(c)of the Income-Tax Act, 1961 for the above captioned assessment year. Brief, Facts For the previous year relevant in assessment year 2014-15, the year under consideration, assessee filed its return of income on 04.11.2014 declaring a net taxable income of Rs. 12,81,720/-, and, claimed an exempt income of Rs. 36,75,134/- under the head "Income the head Capital Gains ". An investigation through a letter was conducted by the Pr. Director of Income Tax (Investigation), Aayakar Bhawan (Annex), P-13, Chowringhee Square, Kolkata in respect of entry regarding Long-Term Capital Gains. Investigation report has been received through the office of ....
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....d also to save himself from any penal action. During the course of assessment, the aforesaid explanation given by the assessee was neither rejected nor it was held to be mala fide. The Tribunal had recorded a pure finding of fact to the effect that the Assessing Officer had not placed on record any material or evidence to discharge his burden of proving concealment. In the assessment order, no such finding had been recorded. The Assessing Officer had simply rested his conclusion on the act of the assessee of having offered additional income in the revised return filed in response to the notice issued under section 148. The Tribunal had further held that the additional income so offered by the assessee was done in good faith and to buy peace of mind. The Apex Court, in case of CIT v. Suresh Chandra Mittal[2001] 251 ITR 9/119 Taxman 433, has upheld the decision of the Madhya Pradesh High Court rendered in the case of CIT v. Suresh Chandra Mittal[2000] 241 ITR 124, wherein similar circumstances it was held that the initial burden lies on the revenue to establish that the assessee had concealed the income and had furnished if accurate particulars of such income. The burden shi....
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....t as an investor with a view to earn profit from the appreciation, whether long term/short term, in the price of the underlying shares. There was no evidence to even remotely suggest that the appellant had taken an accommodation entry of Bogus Long Term Capital Gains. This was done with a view to avoid protected litigation and purchase peace of mind. There was no contumacious conduct on the part of the appellant. It can no way, be said that an additional income was declared after detection by the Revenue. Attention is also invited to the following judgements of the relevant courts of law, wherein, it has been upheld that, no penalty, would be levied U/s 271(l)(c) of the Income-Tax Act, 1961 on surrender of income, as under: I. The Hon'ble High Court of Delhi in the case of Commissioner of Income-Tax Vs. SAS Pharmaceuticals reported at [2011] 244 CTR 51 (Delhi) has laid down that: "No doubt, the assessee had surrendered certain income during the course of survey and discrepancies noticed by the survey team would suggest that the assessee was not maintaining proper accounts in respect to cash, stock and renovation expenses, etc. Therefore, there could b....
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....Officer or the Commissioner (Appeals) or the Commissioner does not arise. It was the Assessing Officer who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It was, thus, obvious that the expression 'in the course of any proceedings under this Act' could not have the reference to survey proceedings in the instant case. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income-tax return filed by it. There is sufficient indication of this in the judgment in the case of CIT v. Mohan Das Hassa Nand[1983] 141 ITR 203/ 13 Taxman 328 (Delhi) and in CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/ 189 Taxman 322. 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 assesses. This view gets supported by to Explanation 4 as well as Explanation 5 and 5A to section 271. ....
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....oting because no return of income was revised and the transportation charges were directly made by the suppliers and not V the assessee and, therefore, there was no question of concealment of income or furnishing of inaccurate particulars of income. The penalty could not be levied merely on account of inaccurate particulars by presuming that the payment,, were made by the assessee, whereas the facts were otherwise. Even otherwise, the Tribunal had given a finding of fact that neither there was concealment of income nor furnishing of inaccurate particulars. Thus, there was no error in the order of the Tribunal and the appeal was to be dismissed." Considering the entire submissions in entirety, and, the above judicial pronouncements in the light of facts of the case of the appellant, the appellant had nt furnished any inaccurate particulars of income, which, could attract levy, and, therefore, it is prayed that the penalty levied in question, may kindly be deleted, as no such penalty is leviable in the facts and circumstances of the case." 7. The Ld.CIT(A) after considering submissions of the assessee, observed that the case of the assessee was selected in scruti....
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....d, had been found to be involved into bogus entry operations underline garb of long term capital gain. In the penalty order Assessing Officer has mentioned that the investigations revealed that the company M/S Turbo Tech Engineering Limited, did not carry out any operations during the period except in that year ending March 2009. In the year ending March 2009 the company had only turnover of Rs. 2 .2 crore. The company had issued 232 lakh shares in the financial year 2010-2011 from 8 lakh shares to 240 lakh shares, but the earning per share remained in negative. The company had no fixed assets no turnover and profitability. The Assessing Officer has also mentioned, the detailed analysis and the financial result of the company from pages 7 to 11 of the assessment order. The Assessing Officer further observed from the balance sheet of M/S Turbo Tech Engineering Limited, that it had no actual financial credentials "o support these share movement patterns. Further the Assessing Officer has mentioned in the order, that in the country wide searches carried out by investigation department the share brokers namely M/s Gateway financial services Ltd, M/s Intellect stock broking Ltd, Sh.Sudh....
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....ch M/S Turbo Tech Engineering Limited was also involved. Therefore it was beyond any doubt before the Assessing Officer the company M/S Turbo Tech Engineering Limited, was a penny stock company used for providing bogus long term capital gain. 4.5 Assessing Officer has made out a clear case against the assessee, wherein the assessee had been found to be indulged into taking entries of long-term bogus long capital gain from penny stock company M/S Turbo Tech Engineering Limited. The investigation Department carried out enquiries against the assessee thereafter only the assessee on 12/05/2015 surrendered this long capital gain of Rs. 37,00,000/- before the investigation wing Ludhiana and paid due taxes, hereafter assessee filed revised income computation dated 12/10/2015 during the course of assessment proceedings, informing that the assessee has already surrendered this long term capital gain on its own. However that is not the case, as the Assessing Officer has clearly mentioned, that the investigation Department Ludhiana was already conducting an enquiry whether the assessee was also called for the statement, thereafter in her statement the assessee surrendered the fictiti....
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....on by the Assessing Officer, is of no help as far as levy of penalty is concerned [Bilandram Hargandas v. CIT 171 ITR 390 (All)]. It has been held by the Hon'ble KeralaHigh court in the case of Jugal Kishore Hargopaldas 243 ITR 220 that: "There is no general principle laid down in the said case [ Sir Shadilal Sugar & General Mills Ltd. v. CIT[(1987) 168 ITR 705 (SC)] that whenever addition is made of an amount offered by assessee to be added, there cannot be any levy of penalty, or that the assessee is not required to explain sources. The actual position in law is that merely because the assessee had agreed to the assessment, that cannot automatically bring in levy of penalty. If the assessee offers an explanation, the revenue authorities have to consider the acceptability of the explanation and pass necessary orders. If the explanation is found acceptable, notwithstanding the addition made by treating the amount offered by the assessee as income from undisclosed sources, penalty may not be levied. But if the explanation is found to be vague or fanciful and without any foundation or basis, it is certainly open to the revenue authorities to impose penalty. It would all ....
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.... on 24.6.2016, thereafter the A.O. passed an assessment order u/s 143(3) of the Act on 28.10.2016. Therefore, it is clear that the assessee surrendered the amount of Rs. 37 lacs suo moto much before the notice was issued by the A.O. u/s 142(1) of the Act and the assessment order dated 28.10.2016 was passed. It was also stated that even the Investigation Wing had not pointed out any specific amount and only issued a summon dated 5.10.2015 to the assessee. Therefore, it cannot be said that the assessee furnished inaccurate particulars of income or concealed the income, as such, the penalty levied by the A.O. and sustained by the Ld.CIT(A) u/s 271(1)(c) of the Act was not justified. It was clarified that the assessee could not file the revised return since original return filed by the assessee was belated. It was pointed out that in para 3 of the assessment order the A.O. clearly mentioned that the information was received by him from the Investigation Wing on 24.2.2016, while the assessee surrendered the amount of Rs. 37 lacs on 12.102015 and had deposited the income tax alongwith interest due thereon much before the information was received by the A.O. Therefore, the penalty u/s ....
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....me and deposited the due tax on the said surrender on 12.10.2015. The A.O. issued the notice u/s 142(1) of the Act on 8.4.2016 and asked the assessee to furnish various details. According to the A.O. the assessee concealed the income to the extent of Rs. 37 lacs. It is noticed that the assessee furnished various details asked by the A.O. vide letter dated 30.4.2016, copy of which is placed at page No.16 of the assessee's Paper Book and informed that an amount of Rs. 37 lacs was surrendered (equivalent to Long Term Capital Gain of Rs. 36,23,134/-) and an amount of Rs. 12,55,871/- as income tax & interest thereon was deposited on 12.10.2015. Therefore, from the facts of the present case, it is clear that the assessee suo moto surrendered an amount of Rs. 37 lacs before any of the authorities of the Income Tax pointed out any undisclosed income of the assessee. It is noticed that the assessee informed the D.D.I.(Investigation-II), Ludhiana vide letter dated 12.10.2015 (in response to the summon u/s 131(1A) of the Act dated 29.9.2015) that a recomputation of taxable income was filed, wherein an amount of Rs. 37 lacs was surrendered under the head 'miscellaneous income', which is ....