TaxTMI 
TaxTMI 
2021 (9) TMI 120
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....d to law and unsustainable in the facts and the circumstances of the case. 2. The learned CIT(A) ought to have held that in the facts and the circumstances of the case and in law, the levy of penalty u/s. 271(1)(c) is unsustainable and therefore, deleted the penalty levied by the learned AO. 3. The learned CIT(A) has grossly erred in not deleting the penalty levied u/s. 271(1)(c), as the AO did not have jurisdiction to levy the penalty, in the facts of the case of the appellant. 4. For these and other additional grounds of appeal that may be adduced at the time of hearing, the order of the CIT(A)-1, Coimbatore, is opposed to law and unsustainable in the facts and the circumstances of the case." 3. The brief facts of the case are that the assessee is an individual engaged in real estate business, was not filing his income tax returns regularly. The Investigation Wing of Income-Tax Department conducted enquiry on the basis of suspicious transaction report generated by the system about huge investments made by the assessee in real estate business. During the course of investigation, it was noticed that the assessee has made huge investments in real estate....
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....f business was to purchase a few cents of lands in and around Dr. Nanjappa Road, Coimbatore and then construct commercial complex and sell the same to prospective buyers. In addition to this, the assessee speculated in shares and commodities. He has not maintained any books of accounts in respect of any of his business. On the basis of the depositions made by him and documents submitted by him during the course of enquiry, it is seen that the investments to the tune of Rs. 3,35,50,000/- were not disclosed to the department. It was also found out that the assessee was maintaining 8 bank accounts in four different banks and these accounts had a total credit of Rs. 15.9 crores and a debit of Rs. 15.8 crores. The assessee had also undertook 33 numbers of immovable property transaction from the year 2005 in his own capacity and also as a power agent. 4. The assessee's explanation that he has not concealed or furnished inaccurate particulars is not acceptable as the assessee had not file any return of income so far and has not disclosed his details of investment to the department. It was only found out by the department due to an enquiry conducted u/s. 131(1A) of the Act bas....
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....n response to notice issued u/s. 148 of the Act and admitting income therein does not absolve the assessee from levy of penalty u/s. 271(1)(c) of the Act for concealment of income. Although, the assessee claims to have admitted income voluntarily in the return of income filed u/s. 148 of the Act, but such admission is not voluntary, because of investigation carried out by the Department u/s. 131(1A) of the Act, where the assessee was confronted with lot of materials which shows huge investments in real estate business. Had an enquiry was not conducted by the Department, the income of the assessee was gone unnoticed. Therefore, there is no merit in the arguments of the assessee that there is no concealment of income, which warrants levy of penalty u/s. 271(1)(c) of the Act. The CIT(A) has also rejected arguments of the assessee that the AO has not recorded satisfaction as required under law, in light of decision of Hon'ble Supreme Court in the case of MAK Data (P) Ltd., vs. CIT, [2013] 358 ITR 593 and held that the AO may not have been explicitly recorded satisfaction in the assessment order, but fact that penalty proceedings have been initiated during assessment proceedings, th....
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.... filing belated return is treated as if that return never exists in the eyes of law. The appellant herein has not voluntarily filed the return even after the time limit permitted for filing belated return u/s. 139(4) expired. Therefore, it should be construed as a case similar to where regular return has been filed without showing some income and the same was subsequently a return filed in response to notice u/s. 148 consequent to detection of such income by the Department. In such cases where assessees surrendered income by filing revised returns after: Departmental actions like survey, search and other enquiries and such returns/surrenders were accepted in assessment, penalty levied u/s. 271(1)(c) has been held as justified by a number of Courts. 4.1 In the case of DCIT vs. R. Padmanabhan [2015] 371 ITR 211, High Court of Madras held as below after considering the facts and circumstances of that case: "It is seen from the order of the assessing officer that after the survey being conducted in the premises of the assessee, the assessee offered the NRE gifts as income and filed the revised return. Hence, the assessing officer initiated penalty proceedings. A perus....
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....ficer, which is admittedly a minimum penalty'" 4.2 In a case where a search took place during which voluntary disclosure of certain income was made by the assessee even though no incriminating document suggesting undisclosed income was found and the assessee filed a revised return disclosing that income, penalty levied u/s. 271(1)(c) on that income was upheld by High court of calcutta in the case of CIT v Prasanna Dugar [2015] 371 ITR 19. Further, SLP filed by the assessee against this judgement was also dismissed by the Hon'ble Supreme Court reported at [2015] 373 ITR 681. Relevant portion of the High Court's order is reproduced as below: "On the basis of the disclosure, the assessee filed a return on March 31, 2010, offering a sum of Rs. 70,00,000 for taxation earned during the assessment year 2008-09. It is not in dispute that for the assessment year 2008-09, the assessee had earlier filed his return in which the aforesaid sum of Rs. 70,00,000 was not disclosed. The case of the assessee, as such, came squarely within the provision of section 271(1)(c) of the Income Tax Act." 4.3 In another case viz., CIT (Delhi) vs Usha International Ltd. [....
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....ording satisfaction in the assessment order, it is relevant to refer to the observations of Hon'ble Supreme Court in the case of MAK Data (P). Ltd. v CIT [2013] 358 ITR 593 on this subject, which are as below: "The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing. The scope of section 271(1)(c) has a/so been elaborately discussed by this Court in Union of India v. Dharmendra Textile Processors [2008] 13 SCC 369 and CIT v. Atul Mohan Bindal [2009] 9 SCC 589." In the instant case, AO's satisfaction may not have been explicitly recorded in the assessment order but the fact that penalty proceedings have been initiated during assessment proceedings, that too after discussion of facts and circumstances, would amount to AO's satisfaction. In view of the above observations of the Hon'ble Supreme Court, the AR's objection to explicit non- recording of satisfaction is not acceptable and rejected. 4.6 As far as not being specific about the grounds whether on concealment of part....
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....lty is levied for another offence. Therefore, in my opinion, the above decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra) does not support the case of the assessee." In the light of the above, I do not find anything illegal in so far as the notice or the levy of penalty. Having been convinced that it is a fit case for levy of penalty, I hold that AO is justified in levying this penalty in the given facts and circumstances and accordingly uphold the same. The grounds are therefore dismissed." 7. The ld. AR for the assessee submitted that the ld. CIT(A) has erred in sustaining penalty levied by the AO u/s. 271(1)(c) of the Act, without appreciating the fact that although the AO has not specifically referred Explanation-(3), but facts of the present case squarely covered under Explanation - (3) to Section 271(1)(c) of the Act, where penalty can be levied only when the assessee has not filed regular return of income within due date and further, no notice u/s. 142(1) or 148 of the Act was issued before the due date specified u/s. 153(1) of the Act for completion of assessment. In this case, the AO had issued notice u/s. 14....
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....nd gone through orders of the authorities below. The AO levied penalty u/s. 271(1)(c) of the Act, on the ground that assessee has concealed particulars of income in respect of income declared in return of income filed in response to notice issued u/s. 148 of the Act. The triggering point for assessment of income and consequent levy of penalty u/s. 271(1)(c) of the Act is investigation conducted by the Department in the case of the assessee u/s. 131(1A) of the Act. The Department has carried out an enquiry on the basis of suspicious report generated from income-tax database about investments made by the assessee in real estate properties. During the course of investigation, it was noticed that although the assessee was carrying out real estate business for past several years, but has not filed return of income for impugned assessment years including for earlier assessment years. Therefore, a statement was recorded and deposition was taken for declaration of income and investments made in business activity. Based on investigation carried out by the Department, assessment has been reopened u/s. 147 of the Act and in response the assessee has filed return admitting income and paid rele....
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....n'ble High Court of Madras in the case of DCIT vs R. Padmanabhan, [2015] 371 ITR 211. The Hon'ble High Court of Calcutta in the case of CIT vs. Prasanna Dugar, [2015] 371 ITR 19 has considered an identical issue and held that where a search took place, assessee had declared additional income and pursuant to search assessee filed revised return admitting additional income then penalty u/s. 271(1)(c) of the Act is leviable. The said decision has been upheld by the Hon'ble Supreme Court while dismissing SLP filed by the assessee reported in [2015] 373 ITR 681. The Hon'ble Delhi High Court in the case of CIT vs. Usha International Ltd., [2012] 254 CTR 509 has considered an identical issue in light of survey conducted in the case of the assessee and declared additional income pursuant to survey, held that when assessee has filed revised return only when it was cornered by the Income-Tax Authorities by collecting various materials, then such filing of revised return cannot be considered as voluntary but it is an act of despair and the assessee can gain nothing from it. Although, these decisions are rendered in light of assessee filing original return and subsequently file....
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....case of CIT vs. Manjunatha Cotton and Ginning Factory, supra and the decision of Hon'ble Supreme court in the case of SSA's Emerald Meadows, supra, is rejected. 13. Be that as it may. Even in the case of CIT vs. Manjunatha Cotton and Ginning Factory, supra, the Hon'ble Karnataka High Court clearly held that the AO may have initiated penalty proceedings on both the grounds, as the issues of additions apparently overlap over both the grounds. The Hon'ble High Court further noted that facts of some case may attract both the offences. But, in some case, there may be overlapping of these two offences. However, in such case, the initiation of penalty proceedings should also be for both offenses. In this case, although the AO has issued notice on the ground of concealment of particulars of income or furnishing inaccurate particulars of income, but finally he has levied penalty for concealment of particulars of income. It is not the case of the assessee that the AO has initiated penalty proceedings for concealment of particulars of income, but has levied penalty for furnishing inaccurate particulars of income. Therefore, we are of the considered view that the case law ci....