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TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 807
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....t aspect of the matter ld. DR submitted that in the Case of Shri Nath Corporation ld. CIT(A) passed order on 01.01.2024 which was received on 09.02.2024 [ proof enclosed vide letter filed on 11.03.2024 ]and therefore, if that date of service if counted then there is no delay as such. 2.2 During the course of hearing, the ld. AR fairly not objected to the contention of the revenue and submitted that Court may decide the issue as deem fit in the interest of justice. 2.3 We have heard both the parties and perused the materials available on record. The bench noted that the date of service of the order is not disputed and thereby as such there is not delay and thereby we consider this appeal as having been filed in time. 3.1 In ITA No. 267/JPR/2024, the Revenue has raised the following grounds of appeal:- "1. Whether on the facts and circumstances of this case, the Ld. CIT(A) is justified in deleting the penalty of Rs. 1,34,14,976/- u/s 271(1)(c) of the Income Tax Act, 1961 without appreciating the facts and circumstances of the case?" 2. "Whether on the facts and circumstances of this case, the Ld. CIT(A) is justified in deleting the penalty of Rs. 1,34,14,97....
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....n response to notice u/s 153A return declaring income of Rs. 3,95,19,200/- was filed on 20.09.2017 whereas original return declaring income of Rs. 3,95,19,200/- was filed u/s 139(1) on 15.09.2015 which include undisclosed income of Rs. 3,94,67,426/-surrendered in survey operation u/s 133A conducted on 09.12.2014 at the business premises of the assessee situated at 1756, Telepada, SMS Highway, Jaipur. The assessment u/s 143(3) r.w.s 153A was completed at Rs. 3,95,19,200/- vide order dated 24.12.2018 and penalty proceedings for concealment of particulars of income were initiated u/s 271(1)(c) vide show cause notice dated 24.12.2018. A further opportunity of being heard was granted vide notice dated 07.07.2015. It would be worthwhile to mention that no further appeal had been filed by the assessee against the assessment order u/s 143(3) r.w.s 153A dated 24.12.2018. In reply to the said show cause, Ld. AR of the assessee submitted written submission vide letter dated 23.04.2019 which was filed before the ld. AO on 24.04.2019. The ld. AO noted that the submission of the assessee was considered but was not found not acceptable for the reasons discussed as under:- During the course ....
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....f section 271 (1) (c). Further, the explanation put forth by the assessee in his defence has not been found satisfactory and in this way also the case of the assessee falls in the category of Explanation-1 to section 271(1)(c) and therefore, penalty u/s 271 (1) (c) is imposed on the concealed income for an amount of Rs. 1,34,14,976/-. 5. Aggrieved by the above order of the ld. AO the assessee preferred an appeal before the ld. CIT(A). After perusing the submissions of the assessee, the ld. CIT(A) has allowed the appeal of the assessee by observing as under:- "4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the penalty order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this case the impugned income on which the penalty proceedings were initiated in the assessment order was surrendered by the appellant during the survey proceedings which took place on 09.12.2014. Subsequently the return of income under section 139(1) was filed by the appellant on the date of 15.09.2015 at total income of Rs. 3,95,19....
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....1B or section 115/C D = amount of tax that would have been chargeable had the total income assessed as per the provisions contained in section 115/B or section 115]C been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished: Provided that where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished on any issue is considered both under the provisions contained in section 11518 or section 1151C and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D: Provided further that in a case where the provisions contained in section 115JB or section 115JC are not applicable, the item (C - D) in the formula shall be ignored, (b) where in any case 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, the amount of tax sought to be evaded shall be determined in accordance with the formula ....
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....of Explanation-1 to section 271(1)(c) and therefore, penalty u/s 271 (1) (c) is imposed on the concealed income as per working given below." As against the above argument, the appellant has relied upon number of judgments of honorable courts and Tribunal in his submissions. Some of the judgments on the issue are as under:- Commissioner of Income-tax v. SAS Pharmaceuticals [2011] 11 taxmann.com 207 (Delhi)/[2011] 199 Taxman 255 (Delhi) (Mag.)/[2011] 335 ITR 259 (Delhi)/[2011] 244 CTR 51 (Delhi)[08-04-20111 Some of the arguments made on behalf of the assesse as noted in the judgement are as under:- "It was also argued that the legislative intent in connection with section 271 of the Act is further fortified from the various Explanations provided in the said provision. In this regard, Explanation 4 is relevant wherein it is specifically provided as to what would be included in the expression the amount of tax sought to the evaded, which is the basis for imposition of penalty contemplated under section 271(1)(c) of the Act. The perusal of the said Explanation also clearly establishes the direct nexus between the concealment/inaccurate partic....
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....ngencies on the happening whereof the Assessing Officer or the Commissioner (Appeals) may direct payment of penalty by the assessee. We are concerned herewith the fundamentality provided in clause (c) of section 271(1) of the Act, which authorizes imposition of penalty when the Assessing Officer is satisfied that the assessee has either; (a) Concealed the particulars of his income; or (b) Furnished inaccurate particulars of such income. 13. It is not the case of furnishing inaccurate particular of income, as in the income-tax return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the income-tax return. The question is whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the income-tax return filed by the assessee, viz., whether concealment is to be found in the income-tax return. 14. We may, first of all, reject the contention of the learned counsel for the revenue relying upon the expression in the course of any proceedings under this Act' occurring in sub-section (1) of section 271 of the Act and conten....
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....the Act has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax." The following judgements also are on the issue at hand:- Judgement of Hon'ble ITAT Ahmedabad in the case of DCIT vs NBM Iron & Steel, Trading Pvt. Ltd. ITA No. 205/Ahd/2022 "6. We have given our thoughtful consideration and perused the material available on record. It is an undisputed fact that during the course of search on 12.01.2010, the Director of the assessee company declared income of Rs. 1,80,00,000/- belongs to the assessee company and paid taxes thereon ad filed its Return of Income on 07.10.2010 for the Assessment Year 2010-11. Further the time limit of filing of Return of Income for A.Y. 2010-11 was not expired on the date of survey namely 12.01.2010 i.e. much before the end of the financial year itself. However the assessee in its Return of Income duly declared the sum of Rs. 1,80,00,000/- which ....
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....return of income declares income which is ultimately brought to tax there can be no complaint by the revenue that the Assessee is guilty of "concealing particulars of income or furnishing inaccurate particulars of income". This legal position would be implicit if one reads Sec.271(1)(c) of the Act together with Expln.3, 5 and 5A of the Act, which carves out exception for the legal position as stated above. ...................... 11. Expln 5 and 5A are also an exception to the rule that when an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inaccurate particulars of income". Those Explanations will also not apply in the present case because those Explanations are applicable only when there is a search u/s. 132 of the Act and to a case of Survey u/s. 133A of the Act. 12. For the reasons given above we hold that there can be no justification for imposition of penalty on the income offered in the return of income by the Assessee, because there cannot be any penalty on income which is declared in a return of income, on the fac....
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....m the above-mentioned provision is that once the assessee files a revised return under Section 153A, for all other provisions of the Act, the revised return will be treated as the original return filed under Section 139. On similar lines, the Gujarat High Court in the case of Kirit Dahyabhai Patel v. Asstt. CIT (2015) 280 CTR 216, held that: "In view of specific provision of s. 153A of the I.T. Act. the return of income filed in response to notice under s. 153A of the I.T. Act is to be considered as return filed under s. 139 of the Act, as the AO has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under s. 271(1)(c) of the IT. Act and the penalty is to be levied on the income assessed over and above the income returned under s. 153A, if any." 21. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee wonder Section 153A, no occasion arises to refer to the previous return filed sunder Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In....
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.... In the present case, though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer, but once the revised assessment was regularised by the revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner (Appeals) in the facts and circumstances of the case. This reference is, accordingly, answered in the affirmative holding that the Tribunal was justified in doing so." In the present case the additional income was offered or surrendered during the survey action and the same was duly offered in the income tax return filed under section 139(1) of the Act and there is no allegation regarding the any other issue in this regard and the same income was repeated in the income tax return filed in respo....
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.... ld. AR of the assessee vehemently stated that since there is a reasoned order of the ld. CIT(A) and there is reasoning as to what are the reasons the order of the ld. CIT(A) is not sustainable there is no merits in the grounds of appeal raised and thereby he stood up with the finding recorded in the order of the ld. CIT(A). He in furtherance also filed a detailed written submission which reads as under:- "Brief Facts: Kindly refer the orders of authorities below. Submissions: 1. At the outset we strongly rely upon the detailed submission filed before the CIT(A) and the categorical finding recorded by him starting from page 14 para 4.2. 2. We also strongly relied upon the various case laws cited before the Ld. CIT(A) and also those cited by the CIT(A) in his order. 3. The undisputed rather admitted facts are as under: 3.1 A survey u/s 133A was carried out on 09.12.2014 i.e.before the close of the relevant previous year, during which, the assessee admitted income of Rs. 3.94 cr./- and including the same, ROA was filed u/s 139(1) on 15.09.2015 at total income of Rs. 3,95,19,200/-which was a voluntary declaration. 3.2 The ....
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....ding in the assessment proceedings constitutes good evidence in the penalty proceeding. In the penalty proceedings, thus, the AO is required to bring positive material showing intentional concealment, which is completely missing in this case. 5.2 In the present case, survey u/s 133(A) was carried out ondated 09.12.2014 even before close of the F.Y. The assessee on his own much before receiving notice u/s 153A or 148 voluntarily declared the income in ROI u/s 139(1) and paid taxes thereon i.e. even before providing reason recorded or information. The aforesaid explanation given by the assessee through ROI was neither rejected nor it was held to be mala fide by the AO and once the AO had failed to take any objection in the matter, the offer so made came from the assessee on its own and was a voluntary offer made i.e. without any detection. 6.1 No difference between the returned and assessed income: There is no dispute that the ld. AO assessed the same very income which was declared by assessee vide his ROI u/s139(1) dated 15.09.2015 at Rs. 3,27,91,120/- (PB 5-8). The same was assessed as it is without any variation. It is submitted that in the cases of pena....
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....liance and the assessment is also completed on the income declared in the ROI filed u/s 153A. Otherwise, there is no purpose behind asking the assessee to file ROI if the original ROI u/s 139(1) was to be considered for the purpose of imposing penalty. This intention is also supported by the further fact that the ROI filed u/s 153A is deemed to be an ROI filed u/s 139(1) and all the provisions of the Act shall apply accordingly. Looking from this angle in absence of any difference in the returned and assessed income. 8. Supporting case laws u/s 271(1)(c) r.w.s. 153A: 8.1 In Pr. CIT vs. Neeraj Jindal (2017) 393 ITR 0001 (Delhi), it was held that: "............. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that "assessment or reassessment, if any, relating to any assessment year fall....
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....ount i.e. the amount of penalty with interest has to be paid. Admittedly when the assessee's herein have paid the entire amount with interest, the Assessing Officer ought to have granted them immunity available under Section 271(1)(C ) of the Income TaxAct.............." 8.3 Prem Arora vs. DCIT (2012) 78 DTR 91 (Delhi) (Tribunal) wherein, it was held as under: "Section 271(1)(c), read with section 153A, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 2004-05 - Whether for purpose of imposition of penalty under section 271(1)(c) resulting as a result of search assessments made under section 153A, original return of income filed under section 139 cannot be considered - Held, yes - Whether concealment of income has to be seen with reference to additional income brought to tax over and above income returned by assessee in response to notice issued under section 153A and, therefore, once returned income under section 153A is accepted by Assessing Officer, it can neither be a case of concealment of income nor furnishing of inaccurate particulars of such income - Held, yes - Search was conducted on 22- 11-2006 and cash was found from p....
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....led against impugned order was to be dismissed - Held, yes [Paras 3 and 4] [In favour of assessee]." 9 Supporting case laws u/s 271(1)(c) r.w.s. 148: 9.1 In the case of CIT vs. Pushpendra Surana (2014) 264 CTR 0204 (Raj) wherein it was held that (DPB- 6-8): "6. In our considered view, the CIT (Appeals) and so also the Income Tax Appellate Authority both have considered the matter, in detail, and finally arrived at a conclusion that the income declared by the assessee from the long term capital gain by selling agricultural land, disclosed by the assessee in his revised return of Income was accepted by the Assessing Authority and there was no material available on record by which there could be an inference drawn by the authority that it was a deliberate concealment on the part of the assessee and it could not be considered that there was an inaccurate particulars of income that was made the basis for inflicting penalty upon the assessee in exercise of powers conferred u/s. 271(1)(c) of the Act. 7. We do not find any substance in the submissions made by counsel for appellant and apart from that even if there appears some substance, this court has a....
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....upport the contentions raised in the written submission:- S. No. Particulars Page Nos. 1. Copy of Return of income and computation of income filed u/s 153A on 20.09.2017 1-4 2. Copy of Return of income and computation of income filed u/s 139(1) on 15.09.2015. 5-7 3. Copy of Tax Audit Report in Form 3CB & 3CD 8-23 4. Copy of Balance Sheet, Profit & Loss Account and other enclosures 24-29 5. Copy of Notice u/s 153A dated 14.09.2017 30 6. Copy of Notice u/s 143(2) dated 19.09.2016 31-32 7. Copy of written submission filed before CIT(A)-4 33-43 8. Copy of order of Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax Vs. Neeraj Jindal in ITA No. 463, 464, 465 & 466/2016 44-57 9. Copy of order of The Hon'ble Jaipur Bench of ITAT in the case of Smt. Durga Devi Somani Vs. ITO, Kishangarh in ITA No. 672/JP/2011 58-76 10. Copy of order of The hon'ble Karnataka High Court in the case of Commissioner of Income Tax vs. Manjunatha Cotton And Ginning Factory 7 (2013) 359 ITR 565 77-185 11. Copy of order of The Hon'ble Rajasthan High Court in the case of ....
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.... and submitted that these Explanations provide that in cases of search by way of deeming fiction, the liability towards penalty has been prescribed even in cases where the return of income for such year has not been furnished before the said date of search. Therefore, wherever the legislature intended to impose a penal liability covering a case where return was yet to be filed, a deeming fiction has been consciously provided. In the absence of any such deeming fiction imposing penalty in a case of survey where return is yet to be filed, the penal provision of Section 271 of the Act cannot be invoked as the mandatory ingredients thereof are not met at all. 11. He also sought to draw sustenance from the judgment of Supreme Court in the case of Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts Pvt. Ltd. (2010) 3 SCR 510 wherein inter alia it has been held that unless the conditions under Section 271 (1)(c) of the Act exist in a particular case, penalty cannot be imposed and it was further held that 271 of the Act being a penal provision is required to be construed strictly. The following observations made in the said judgment were specifically referred to: ....
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....vey is conducted by a survey team, the question of satisfaction of AO or the Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is the AO who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression "in the course of any proceedings under this Act" cannot have the reference to survey proceedings, in this case. 15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income tax return filed by it. There is sufficient indication of this in the judgment of this Court in the case of Commissioner of Income Tax, Delhi-I Vs. Mohan Das Hassa Nand 141 ITR 203 and in Reliance Petroproducts Pvt. Ltd. (supra), the Supreme Court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the income tax return filed by the assessee. This view gets supported by Explanation 4 as well as 5 ....
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.... seen only with reference to the return filed u/s 153A. The Court reiterated that suspicion cannot substitute proof, and that additions or penalties cannot be sustained in the absence of incriminating material found during search.The relevant extract from Neeraj Jindal reads as under: "............. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that "assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate." What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good om....