TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1295
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....he assessee on 04.02.2022. The assessee filed the return of income on 25.03.2022 u/s 153A of the Act, wherein the assessee declared the total income of Rs. 3,16,08,250/- as against the original returned income of Rs. 1,16,08,250/- u/s 139(1) of the Act on 26.03.2017. The ld. AO during the assessment proceedings observed that there was a huge gap of income between the income as per return filed u/s 139(1) of the Act vis-à-vis return filed u/s 153A of the Act as the assessee has offered for taxation of Rs. 2.00 crores as undisclosed income following a disclosure admitted u/s 132(4) of the Act. Consequently, the penalty proceedings were initiated u/s 271(1)(c) of the Act. Similarly, an addition of Rs. 1,83,640/- also made u/s 68 of the Act in respect unexplained credit. Thus, the penalty proceedings were initiated on a total amount of Rs. 2,01,83,642/-. The assessee submitted before the ld. AO that the penalty proceedings may be dropped as it was suo motto declared in the return filed u/s 153A of the Act and there was no seizure of any incriminating material qua the said income during search. The plea of the assessee did not find favor with the AO and he, ultimately imposed pen....
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.... and imposing the penalty u/s 271(1)(c) of the Act. Therefore, the order passed by the ld. CIT (A) upholding the order of the ld. AO is correct and may kindly be affirmed. 07. After hearing the rival contentions and perusing the materials available on record, we find that in this case undoubtedly there was no incriminating material found during the course of search qua this income. The assessee made disclosure in respect of outstanding liabilities which were outstanding in the books of accounts of the assessee. We have noticed that in the assessment order there was no discussion by the ld. AO apart from the fact that these disclosures were made in respect of outstanding liabilities for which no bills/ vouchers were available with the assessee. We further note that the income has been disclosed by the assessee in the return filed in response to notice u/s 153A of the Act which has also been accepted by the ld. AO. Then there is no question of concealment of income or/ furnishing of inaccurate particulars of income as has been held by the co-ordinate Bench in the case of Brahmaputra metallics Limited (supra). For the sake of ready reference, we reproduce the operative part of the sa....
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.... vs. ACIT [(2017) 80 taxmann.com 162 (Gujarat}], it was held, as follows, by the Hon'ble Gujarat High Court: "In view of specific provision of section 153A, the return of income filed in response to notice under section 153A is to be considered as return filed under section 139, 'as the Assessing Officer has made assessment on the said return and, therefore, the return is to be considered for the purpose of penalty under section 271{1){c} and the penalty is to be levied on the income assessed over and above the income returned under section 153A, if any. In the case of Pr. CIT vs. Neeraj Jindal [(2017) 393 (TR 1 {Del)], it was held, as follows, by the Hon'ble Delhi High Court: - The levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, is not automatic. For levy of penalty under section 271(1)(c), the conditions laid out therein have to be specifically fulfilled. Section 271(1)(c) of the Act, being in the nature of a penal provision, requires strict construction. The word "conceal" in section 271(1)(c) would require the Assessing Officer to prove that specifically there was some conduct on the part of the assessee which would show that the assessee consciously ....
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.... officer, without any variation. Therefore, in the absence of any undisclosed income being found in the assessment vis-a-vis the return filed, the Issue of imposition of penalty does not, arise. - Decided in favor of assessee."" 6. From perusal of the above judgements, we noticed that it has been consistently held that return filed in response to notice u/s 153A of the Act is to be considered as return filed u/s 139 of the Act. Further, concealment of particulars of income or furnishing of inaccurate particulars of income / undisclosed income has to be seen vis-a-vis return filed by the appellant and once the income declared in the return u/s 139 read with 153A of the Act, is accepted as such in the assessment u/s 143(3) read with section 153A of the Act then the question of there being concealment / furnishing of inaccurate particulars of income does not arise at all. 7. We further observe that similar issue came for adjudication before this Tribunal in the case of Hitech Construction (supra), in which also examining the issue of levy of penalty u/s 271(1)(c) of the Act on the undisclosed income offered to tax in the return and the same being accepted by the ld. AO, levy of pe....
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....ing the assessments pertaining to search cases can be made on any account until and unless some incriminating material on that account has been recovered by the Department. It is a settled proposition and requires no authority to bring home the contention that no penalty can be levied when the additions have been made merely on estimated basis. It cannot be said that the Appellant did not have access or could not have had to appropriate legal advice. Despite that there was no intention on the part of the Appellant to contest the additions pertaining to the income offered to tax, sans any incriminating material and not pay the amount of tax due to the exchequer. In this regard, it would also be relevant to peruse Section 271(1)(c) of the Income Tax Act, 1961, which is reproduced as hereunder: "271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or] Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or...... he may direct that such person shall pay by way of penalty, ......" Thus, it is clear tha....
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....uent return under section 153A and paid the admitted taxes on the same, it cannot be said that there transpired any intention on the part of the Appellant of hiding any such income from the Department or to not pay the amount of tax due to the exchequer or that the conduct of the Appellant was contumacious and there was an intention to evade any tax. In that scenario, the discretion which vested in the AO for imposition of penalty should have been exercised in favour of the Appellant. It is settled law that any imposition of penalty under the Income Tax Act, 1961 is discretionary and not mandatory and whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion to be exercised judicially and on consideration of all relevant circumstances. Thus, penalty should not be imposed mechanically but must be based on the facts and circumstances of each case. It is also an admitted position of law that penalty proceedings are distinct and separate from assessment proceedings. The Hon'ble Calcutta High Court in the case of Durga Kamal Rice Mills Vs. CIT [(2004) 265 ITR 25 (Cal.)] has held that quantum proceedings are different from penal pro....
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....n if any assessee is not able to establish, by satisfactory evidence, the source of any income, it does not mean that the explanation furnished was false or that the assessee is guilty of deliberate suppression. Generally, a 'penalty' means a sum of money recoverable in a summary manner, for breach of some statutory provision. A penalty is provided for by a statute to punish a contravention of a statute or the doing of something which is prohibited by the statute. In order to enforce the mandatory provisions of a statute, the Legislature may impose sanctions of either of two kinds i.e. either declare it as an "offence" under the general law of crimes and make the person guilty of such offence punishable judicially or alternatively provide that the contravention will be punishable extra-judicially, by the prescribed administrative authority by way of a penalty. Any penalty falls in the latter case. So, a penalty may have slight affinity to a criminal offence in the sense that there is an offence in the broader sense, namely, a contravention of the mandate of the law and there is a punishment provided for such offence and the charge for which the punishment is awarded is that....
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....ment in their investigations prior to the assessment proceedings, which could conclusively prove concealment of particulars of income or furnishing of inaccurate particulars of income by the Appellant. In the impugned penalty order or the assessment order, there is no shred of reference to any incriminating material whatsoever which was seized or recovered by the Investigation Wing either during the course of search proceedings or even later at the time of recording of the Statement under Section 132(4) of the Income Tax Act, 1961 and which was used by the Ld. AO for framing the assessment order and making the additions in the assessment order. The entire construction of the assessment order rests only on the bald edifice of a Statement recorded under Section 132(4) of the Income Tax Act, 1961 in which the Appellant voluntarily and suo-motto disclosed the income. To sustain any penalty tangible evidence has to be brought on record to foist some culpability on the Appellant. In view of the above, (a) in the absence of anything incriminating against the Appellant being on record, (b) no evidence being on record that there was any contumacious Conduct on the part of the Appellant to....
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....nt or penalty or the CIT (A) order referring to any specific incriminating documents. As relying on Ajay Traders Vs. DCIT [2016 (6) TMI 422 - ITAT JAIPUR] there cannot be any penalty under explanation 5A to section 271(1)(C) of the Act until and unless the quantum addition is based on some incriminating document. Accordingly, we hold that there cannot be any penalty under section 271(1)(C) of the Act in the given facts and circumstances. - Decided in favour of assessee. 11. Similar was the view taken by Coordinate Bench of Delhi in the case of Rishabh Buildwell P. Ltd vs. DOT [2019 (7) TMI 383 - ITAT DELHI] reads as under: "Penalty u/s. 271(1)(c) - income disclosed by the assessee under Section 153A - assessee has filed revised returns disclosing higher income than in the original return - HELD THAT: - AO has not brought anything on record to assess any income over and above the returned income filed by the assessee. AO in the assessment order could not bring into fore as to how the seized material has been analyzed and to prove as to how the concealment or furnishing of inaccurate particulars of income has arisen. Though the assessing officer has mentioned the word "Additi....
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.... 12. Thus, respectfully following the judicial precedence and also considering the fact that the additional income offered by the assessee in the return filed in compliance to the notice u/s 153A of the Act which partakes the character of regular income filed u/s 139 of the Act and the said additional income being not offered on the basis of any incriminating material but is the voluntary disclosure made by the assessee and there being no other legal binding precedence referred to by ld. D/R, we fail to find any infirmity in the finding of ld. CIT(A) deleting the penalty levied u/s 271(1)(c) of the Act for AY 2014-15 & AY 2015-16, respectively. Thus, the grounds of appeal raised by the Revenue in ITA Nos. 133 & 134/GTY/2020 are dismissed. 8. We find that the above decisions of this Tribunal in Hitech Construction (supra) is squarely applicable on the facts of the case of the assessee. DR has failed to bring forth any other binding precedence in its favour before us. Under the given facts of the case we observe that the surrendered income of Rs. 5 crore was calculated on estimated basis on unrecorded sales and there is no specific incriminating material indicating the alleged inc....