AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 1601
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....t wherein the quashing of the penalty proceedings u/s.271(1)(c) has been assailed. 2. The ld.CIT-DR Mr.Srinivas T.Bidari referring to these Ten appeals submitted that he would be referring to the facts as recorded in ITA No.3177/Ahd/2016 which are identical in each of these appeals. Referring to the statements of facts filed by the DCIT, Cricle-2(3), Surat and the findings recorded in the assessment year the ld.CIT(DR) submitted that the assessee has disclosed income in the survey action conducted on the assessee on 17.07.2012. The assessee was required to give the relevant details of the persons from whom on-money was stated to have been received. It was his submission that the amount disclosed in the survey is afterthought though was included in the income of the assessee under the head of business and profession but since details were not made available, the AO in the absence of relevant details held it taxable u/s.68 of the Income Tax Act. On the basis of this penalty proceedings have been initiated and the penalty has been levied. Inviting our attention to the penalty order and the reply of the assessee in the assessment proceedings vide letter dated 09.03.2015 was consider....
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....on this issue. 7.2 As far as the imposition of penalty is concerned, the AO's case is basically built on the following premise: a) Although it has shown the income accepted during the course of survey in its returns, it has not been able to substantiate with details and evidences, the claim that it has been earned as business income from the project'. It is alleged that the appellant failed to give the details of persons to whom the residential plots at Gokuldham, Varachha were sold and the details of on money receipt and how exactly the income has been worked out. b) In the absence of evidence to prove that the income has been earned from on money, and also as the firm as per the partnership deed is allowed to do other activities also; it cannot be accepted that the income has been earned from business of construction only. c) The AO held that in absence of such details, the amount credited to the books of account (as income) is not explained and the addition of the income is required u/s. 68 of the Act. Consequently, the AO taxed it under the 'Income from Other Sources' as against it being declared as 'Business Income' d....
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....s. It was furthermore stated that cogent material or evidence is necessary before penalty can be levied. Another judgment which I would like to cite is the CIT vs. Koduri Papa Rao (1976) 102 ITR 834 (AP), a decision of the Andhra Pradesh High Court to the same effect. c) A survey action was carried out at the business premises of the appellant firm. The income declared in return of income filed by the appellant included the amount surrendered by the appellant during the course of survey operations conducted by the department at business premises. During the course of survey operations, certain incriminating documents were found and one of the partners of the assessee firm Shri Lavjibhai Dungarbhai Daliya declared addition income of Rs. 8,03,40,000/- for A.Y. 2013-14. The survey team did not make further enquiries nor was it established that these represented any other income. It is not a case where it was found/established that the income'disclosed was not full and true. The department has not built a case where the explanation of the appellant has been proved to be false or not bona fide. Even the conditions of Explanation 1 of section 271(1 )(c) are not appl....
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....ng to the replies of the assessee in each of these cases, it was submitted that the assessee in the course of the assessment proceedings has carried out business as consistently made out the case that the respective assessees were engaged in plotting etc., It was submitted that since there was no other business except this business thus merely because the AO did not accept the source of the income and changed the head of income from business income to income from other sources etc., the penalty provisions u/s.271(1)(c) are not attracted. 7. The ld.AR further submitted that the assessee has declared additional income in his original return of income and same was accepted without making any addition with only change of head, therefore there was no dispute with regard to the fact that particulars of income were reflected in the return of income. Therefore, no penalty should be levied when the return of income was accepted by the AO as has been held by the Hon'ble Jurisdiction of Gujarat High Court in the case of PCIT-1 vs Valibhai Khanbhai Mankad (Tax Appeal No.445/2015 dated 07.09.2015) wherein the Hon'ble High Court observed in para 5 as under: "5. From the findi....
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.... profit of the assessee. Hence, the disclosure made by the assessee on the basis of material found during the course of survey pertaining to plotting / construction / development are related to only business income as the AO has not brought out anything contrary to the record that the income disclosed during the course of survey was from the other sources. The ld.AR contended that the assessee has disclosed the amount surrendered during the course of survey in the return of income, hence, the assessee has not concealed the particulars of its income and furnished inaccurate particulars of such income as per Clause (C) of section 271 of the Act makes it clear that the act of the concealment of or furnishing of inaccurate particulars is relatable only in respect of return being filed and as such in case where the such of filing of return has not been breached, there was no question of invocation of penal provisions of section 271(1)(c) of the Act. In support of this contention, the ld.AR has placed reliance in the case of ACIT, Circle-4, Surat vs. Jupiter Distillery 1555/Ahd/2009 dated 16.12.2011 wherein relying on the decision of CIT, Ahmedabad vs Reliance Petro Products Ltd [2010] 3....
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....offered additional income therein. The income so offered was duly declared in the return of income and the assessment was framed. Apart from his activity of plotting and development it was submitted that there was no other source of income. This position we find has not been disputed by the Revenue. The assessment of the assessee has also been completed u/s.143(3) duly accepting the declared income in the assessment order albeit with a change of head from business income to income u/s.68. Now the question which arises for consideration is whether there is any justification on the part of the AO to levy the penalty u/s.271(1)(c)? when there is no difference in the return of income and assessed income. For the sake of convenience the provisions of section 271(1)(c) are produced as under : ""Sec. 271(1) -If the Assessing Officer or the Commissioner (Appeals) [or the Commissioner] in the course of any proceedings under this Act, is satisfied that any person - (a)............. (b)............ (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d).......... He may direct that such pe....
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.... on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income;] (b) in any case to which Explanation 3 applies, means the tax on the total income assessed [as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148]; (c) in any other case, means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished.] Thus in general, where a case does not fall within clause (a) or clause (b) there cannot be any "tax sought to be evaded" if there is no addition to the returned income. 13. Thus the basis for levy of penalty is return of income. If any amount has been shown in the return of income, then it cannot be said that assessee has concealed any particular about that income or furnished inaccurate particulars in relation thereto. There cannot be any concealment prior....
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.... Tribunal, it is evident that the factum of deletion of addition in respect of non-deduction of tax by the assessee was not controverted by the revenue. The Tribunal has further found that the penalty had been levied on the amount which was reflected in the original return as income. That it was an undisputed fact that the assessee had declared this income in his original return of income, although it was a belated return. The Tribunal was of the view that as per the provisions of section 271(1)(c) of the Act, penalty can be imposed if the assessee had concealed the particulars of income or has furnished inaccurate particulars of such income. That in the present case, there was no dispute with regard to the fact that the particulars of income were reflected in the return of income. Moreover, it was not the case of the revenue that the returns of income filed were invalid and in fact, the Assessing Officer had proceeded on the basis of the return filed by the assessee and particulars furnished therein. From the findings recorded by the Tribunal, it is evident that the Tribunal has found as a matter of fact that there was no concealment of particulars of income on the part of the res....