TaxTMI 
TaxTMI 
2019 (1) TMI 1603
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.... 2. The grounds raised by Revenue in ITA No.2961/Ahd/2016 for A.Y. 2013-14 as under : "1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the penalty of Rs. 1,,08,15,000/- u/s.271(1)(c) of the Act without appreciating the fact that had there been no survey action, undisclosed income of Rs. 3,50,00,000/- would have remained undetected and whole amount would have escaped from the gaze of tax. Further, assessee's intention to avoid paying taxes is clear from the 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 and in law, the Ld.CIT(A) has erred in deleting the penalty of Rs. 1,08,15,000/- u/s.271 (1)(c) of the Act without appreciating the fact that the assessee has failed to fulfill its legal obligation to explain the nature and source of each cash credit entry appearing in its books of account. Onus to substantiate the claim that....
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....rate particulars of income. 3.2 It is respectfully submit that the act of concealment is committed at the time of filing of the return. What is punishable u/s 271(1)(c) is actual concealment of income in the return of income and not merely an intention to make concealment. If the assessee rectifies itself and declares the correct income in the valid return of income and does not file any return by concealing the income then such act is not punishable u/s 271(1)(c) of the Act. In other way, the assessee should not be held to be liable to penalty u/s.271(1)(c) in respect of disclosure made in the return of income which he had declared in the original return of income filed within the due time. 3.3 The basis of charging the assessee with the act of concealment or for that matter with furnishing of inaccurate particulars of his income is the return. The return filed in the instant case is not even a revised return. For establishing concealment in a case, it is necessary that a return of income was filed and that the income concealed is omitted from being included in the income returned. The mere fact that a survey took place and the assessee, in his return for the rel....
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....w on the issue including that relied upon by the AO and the appellant. The appellant in the submissions has challenged the imposition of penalty and has pleaded that the penalty cannot be levied on merits, pleading that the income in question was disclosed during the course of survey itself as income earned outside books of account from project, the income was duly introduced into the books of account, was disclosed in the return of income and the AO has only changed the head of income without making any addition on this issue. 7.1 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 fro....
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....in case of CIT vs. Khoday Eswarsa & Sons 1972 CTR (SC) 295 : (1972) 83 ITR 369, the same position was reiterated. In that case, the Tribunal had stated that there might be justification for making additions in the original assessment order to the amount shown in the return, but those additions by themselves could not lead to the inference that the assessee had concealed its income or had deliberately furnished incorrect particulars. 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 on 05-03-2013, wherein a small pocket diary showing receipts of on-money in the current year was found and impounded as Annexure- A/10, Page 1. A statement of the main person of the group viz. Shri Rajendra D.Shah was recorded on oath wherein he stated that the total of all the entries in the impounded diary worked out to Rs. 3,50,00,000/- and he admitted the same as unaccounted income being on....
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....rayer that the impugned order may be set-aside and the penalty order may be upheld. 8. The ld.AR inviting our attention to the material available on record submitted that in the facts of the present case, the assessee has consistently accepted the fact that on-money has been received from the business of sale of plots of the project Milestone Aquatic. It was his submission that in the related concerns no doubt various other objects may have been stated. However, it was consistently the fact on record that this was the only activity carried out by the assessee boking of plots at Milestone Aquatica. Referring 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. 9. The ld.AR further submitted that th....
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.... the impugned order passed by the Tribunal, it is not possible to state that the impugned order gives rise to any question of law much less, any substantial question of law so as to warrant interference. The appeal accordingly dismissed." 10. The ld.AR further submitted relying on decision in the case of M/s.Vaibhav Enterprises vs. ACIT, Circle-3 in ITA No.430/Ahd/2011 dated 08.06.2016 (Ahd. ITAT) which is squarely applicable to the assessee's case. The Ld.AR also relied in the DCIT, Circle-3, Surat vs. M/s.Suyog Corporation in ITA No.568/Ahd/2012 for A.Y. 2008-09 cited by some other AR in group cases to the proposition that the moment the additions have been made in the taxable income of the assessee, even on account of disclosure made by the assessee during the course of survey proceedings then that amount would be considered as business profit of the assessee. Hence, the disclosure made by the assessee on the basis of material found during the course of survey pertaining to sale of plotting 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.A....
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....o which the penalty could be calculated with reference to the income of which tax sought to be evaded whereas in the present case the assessee has duly paid taxes along with while filing the return of income, therefore there was no evasion of tax sought to be evaded. The ld.AR also placed reliance on the following decisions in support of contentions i.e. CIT vs. Unique Precured Retraders [2008] 13 DTR (Raj-215), CIT vs SAS Pharmaceuticals [2011] 335 ITR 259 (Del), M/s.Sadbhava Builders vs ITO 1418/Ahd/2008, Ahmedabad Tribunal, CIT Vs. Amit Jain [2013] 351 ITR 74 Del, CIT vs Reliance Petro Products Pvt. Ltd., [2010] 322 158 ITR (SC) and other as per their comes law paper book. 13. We have heard the parties and perused the material available on record and gone through the above case laws. There is no dispute about the fact that there was a survey action u/s.133A, and the assessee 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.....
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....planation-4 to section 271(1)(c) explains the amount of tax sought to evaded. It means the difference between tax on the total income assessed and the tax that would have been chargeable at such total income is reduced by the amount added. Since in the present case, the AO has not made any addition in the returned income, question of working out any tax sought to be evaded would not arise. For the sake of convenience we reproduce Explanation - 4 to section 271(1)(c) as under :- "Explanation-4 - For the purposes of clause (iii) of this sub-section, the expression 'the amount of tax sought to be evaded'- [(a) in any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, means the tax that would have been chargeable 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....
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....of collecting evidence against the assessee and are not equivalent to statutory proceedings. Another criteria of finding out ks to be seen whether it can be brought to a legal conclusion against the assessee by determining his right or liability. Merely carrying out survey under section 133A does not create any liability against the assessee which is created only through assessment proceedings or penalty proceedings. Therefore, the ld.DR is incorrect in his submission that survey being a proceedings and AO has discovered concealment during survey, therefore, the assessee is liable for penalty under section 271(1)(c). 17. We further find support from the reliance placed by the ld.AR on the decision in the case of PCIT vs Valibhai Khanbhai Mankad [TIOL 2164-HCAHM- IT [2015] wherein Hon'ble Gujarat High Court in para 5 the observed 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 wa....
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....ulars or reported in the return as an "inaccurate particulars" or as suppression of facts. The court is also conscious of the decision of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 where it was held that it is up to the Assessing Officer to interpret the return and discern as to which head of income the amount had to be brought to tax" 19. Therefore, in the light of ratio of above decision no penalty is leviable wherein even in the change of heads of income is made by the AO during the course of assessment proceedings. 20. The ld.DR has relied on the judgment of Mak Data Pvt. Ltd. vs. CIT [2013] 358 ITR 593 (SC), however, same is not applicable in the present case as in that case the survey was conducted more than 10 months before filing of returns and the disclosure was made by the assessee later during the course of assessment proceedings, whereas in the present case the amount disclosed during survey was duly included in the original return of income filed after the date of survey. Therefore, the facts of the said case are distinguishable. Further, there is no difference in the return of income and the income. 21. In the light of above fact....