TaxTMI 
TaxTMI 
2019 (1) TMI 1602
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....he fact that entries in diaries found during the survey proceedings were not entered in the books of account. Moreover, during the penalty proceedings, the assessee has failed to give any justification or acceptable explanation against charge of furnishing inaccurate particulars of income. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) ought to have upheld the penalty order of the Assessing Officer. 3. It is, therefore, prayed that the order of the CIT(A) may be set aside and that of Assessing Officer may be restored to the above extent." 3. The ld.CIT-DR, Mr.Srinivas T.Bidari referring to the statements of facts filed by the DCIT, Central Cricle-3, Surat and the findings recorded in the assessment year submitted that the assessee has disclosed income in the survey action conducted on the assessee on 05.03.2013. 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 an afterthought even though it was included in the income of the assessee under the head of business and professio....
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...., the tax on the returned income and tax on the assessed income would remain the same." 4. The explanation was not accepted. The learned AO issued a letter to the appellant referring to the first penalty noticed issue along with the assessment order stating that penalty proceeding u/s.271(1)(c) of the Act were "initiated in your case vide notice dated 26-02-2015 and in this regard, you are once again granted an opportunity to put forth your case before the said penalty proceedings are finalized and therefore, the appellant was requested to attend the office of the undersigned in person or through its AR on 29-072015 stating that in case of failure it will be decided that you have nothing to submit and the issue of levy of penalty will be decided on merits". It may be noted that on 29-07-2015, the AR of the appellant could not appear before the AO on account of ill health and thereafter, the learned AO without issuing any show cause notice or any other letter whatsoever, straight away passed the impugned penalty order on 24-08-2015 levying a penalty of Rs. 3,10,02,580/- u/s. 271(1)(c) of the Act alleging concealment of income by way of furnishing of inaccurate ....
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....rate particulars of such income and went on to levy penalty @ 100% u/s.271(1)(c) for such default. d) The appellant has not appealed against the change of head of income in the quantum proceedings. e) The AO has relied on the decision of Hon'ble ITAT, 'D' Bench, Mumbai in the case of Armour Chemicals Ltd. vs. ACIT in ITA No.309/Mum/06 27 January, 2009; wherein the decision of Hon'ble Supreme Court in the case of Dharmendra Textile Processors & Others (2008) 306ITR 277 (SC) has been relied upon. 8.1 Considering the entire gamut of facts and circumstances, the following pertinent observations/decisions are made on the issue: a) The total income returned and the assessed income is the same. The penalty u/s. 271(l)(c) of the Act starts from the furnishing of details of income in the return and not before that. This is clear from the scheme of the Act and has been held and observed time and again including in the following cases: i) The Hon'ble High Court of Rajasthan in the case of CIT v. Unique Precured Retraders (2008) 13 DTR (Raj) 215. ii) The Hon'ble Jurisdictional High Court of Gujarat in the case of Princ....
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.... CIT Vs. Amit Jain (2013) 351 ITR 0074 has held that merely because assessee has shown income in return as short term capital gain, which was assessed by AO as business income, it cannot amount to furnishing of inaccurate particulars for purpose of levy of penalty u/s.271 (1)(c). 2) The Hon'ble Mumbai Bench of the ITAT in the case of ITO Vs. Roborant Investments (P) Ltd. (2006) 7 SOT 181 (Mumbai) has held that the assessee having made full and complete disclosure, merely because income returned by assessee under a particular head was assessed by the AO under another head is not sufficient to impose penalty by invoking Expln. 1 to s. 271 (1 )(c). e) The reliance placed by the AO on the decision of Hon'ble ITAT, 'D' Bench, Mumbai in the case of Armour Chemicals Ltd. vs. ACIT in ITA No.309/Mum/06 27 January, 2009; is erroneous on the facts of the case. Unlike in that case no addition has been made to the total income returned nor the AO has build a case where it can be said that a portion of income has been taken away from the gaze of the revenue, as the AO has merely changed the head of income without a rupee being added to the income disclosed ....
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.... 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 findings recorded by the 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 incom....
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....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] 322 ITR 158 (SC), the penalty levied on the amount disclosed during the survey and included in the return of income was deleted. The ld.AR further placed reliance on the decision in the case of ITO vs Roborant Investments Pvt. Ltd [2006] 7 SOT 181. 10. Ld.AR also submitted that the reliance placed by the Revenue on the decision in the case of Mak Data Pvt. Ltd. vs. CIT [2013] 358 ITR 593 (SC), is misplaced in the present case. In the said case, a survey was conducted more than 10 months before and the disclosure was made by the assessee later during the course of assessment proceedings. Therefore, the Hon'ble Supreme Court had held that the assessee had no intention to include the income found during the cou....
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....albeit with a change of head from business income to income u/s.68. Now the question which arises for consideration is whether 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 person shall pay by way of penalty - Explanation - 1 -Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false or (B) such perso....
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.... 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. 14. 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 to filing of return. Question of consideration whether assessee is liable for action under section 271(1)(c) would arise only when return of income is scrutinized by the AO and he finds some more items of income or additional income over and above what is declared in the return. If it is....
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.... 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 respondent assessee and in fact, the Assessing Officer had proceeded on the basis of the return filed by the assessee and particulars furnished therein. Under the circumstances, in th....