TaxTMI 
TaxTMI 
2026 (4) TMI 335
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.... of assessment proceedings for A.Y. 2009-10, 2011-12 and 2012-13 which are in appeal before this Tribunal, assessee furnished return in compliance to notice u/s. 153A of the Act and offered undisclosed income at Rs. 70.00 lakh towards share capital for A.Y. 2009-10; Rs. 32,22,111/- towards alleged undisclosed investment in land for A.Y. 2011-12; and Rs. 3.50 lakh towards undisclosed investment in land for A.Y. 2012-13. All the additions referred in the above referred amounts have been reflected in the return of income filed in compliance to notice u/s. 153A of the Act and ld. Assessing Officer has accepted those returns and due taxes have been paid and thereafter no appeal is pending before this Tribunal. However, while concluding the assessments, minor additions of Rs. 1.40 lakh for A.Y. 2009-10 has been made for the deemed brokerage for arranging the share capital Rs. 1,27,839/- and Rs. 1,11,500/- has been further added towards some calculation errors/deemed court fee expenses for A.Y. 2011-12 and A.Y. 2012-13. Now after the conclusion of the assessment proceedings, ld. Assessing Officer initiated penalty proceedings and in the penalty order the penalty has been levied on the amo....
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....compliance to notice u/s. 153A of the Act. Now it has been consistently held by the Coordinate Benches of the Tribunal that such returns filed in response to notice u/s. 153A of the Act are to be treated as returns filed u/s. 139(1) of the Act. Coordinate Bench, Guwahati has taken similar view after following the ratio laid down by the Hon'ble Gujarat High Court in the case of Kirit Dahyabhai Patel Vs. ACIT (2017) 80 taxmann.com 162 (Gujarat). For the sake of convenience, finding of this Tribunal in the case of ACIT Vs. Brahmaputra Metallics Limited (supra) reproduced below : "5. We have heard the rival contentions and perused the records available on record. We notice that the assessee which is a limited company disclosed loss of Rs.54.99 crore (approx.) in the return filed u/s 139(1) of the Act for A.Y. 2015-16 on 13th September, 2015. Thereafter, the assessee which is a part of the Lohia Group of companies was subjected to search and seizure proceedings u/s 132 of the Act carried out on 24th October, 2017. On the basis of the data backup found at the assessee premises, the assessee surrendered additional business income of Rs.5 crore. Thereafter, in compliance to notice....
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....7) 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 intended to hide his income. When an assessee has filed revised returns after a search has been conducted, and such revised returns have been accepted by the Assessing Officer, merely by virtue of the fact that such return showed a higher income, penalty under section 271(1)(c) _cannot _be automatically. imposed. Considering that the non obstante clause under section 153A excludes the application, inter alia, of section 139 it is clear that the revised return filed under section 153A_takes the place of the original return under section 139, for the purposes of all other provisions of the Act. Thus....
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....is 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 penalty u/s 271(1)(c) of the Act was not held to be justified and finding of this Tribunal, read as under: - "9. We have heard rival contentions and perused the records placed before us. Revenue is aggrieved with 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 and penalty levied 271AAB(1)(a) of the Act for AY 2016-17. As far as penalty levied u/s 271(1)(c) of the Act for AY 2014-15 & AY 2015-16 is concerned we find that ld. CIT(A) has deleted the penalty observing as follows (relevant extract): ....
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....ing 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 that Section 271 uses the word "'may" and not "shall". The word "may" cannot be equated with "shall" especially in penalty proceedings. Using the word may which is discretionary in nature, gives a discretion to the assessing officer to levy or not to levy the penalty even if the assessee had made some default under the said provision. Whether any 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 circumstance....
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....ed 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 proceedings. The Hon'ble Kerala High Court in the case of CIT vs. P.K. Narayanan [(1999) 238 ITR 905 (Ker.)] has held that despite the addition being confirmed by Tribunal in quantum proceedings, the penalty can still be deleted by the Tribunal, if the facts so justify. Penalty can be based on the material which was used by the Ld. A0 while making the assessment. Even if there is a legal proposition that penalty was an additional tax imposed on an assessee for his contumacious cond....
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....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 the statute has been contravened, either by doing what was prohibited or by omitting to do what was required to be done by the statute. Offence is used to refer to what is punishable as a "crime" on prosecution before a Court of Law, but in the case of what is popularly known as a "statutory offence", there is nevertheless an offence which is punishable by the law, though by a different tribunal or an administrative authority. Thus, anything "penal" comprises "not only prosecutions a....
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....ement 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 conceal particulars of income or an attempt to hide something or an attempt to evade taxes, (c) no incriminating evidence having been found or recovered against the Appellant during the course of search operation and (d) the bona-fides of the Appellant being evident from record by way of suo-motto disclosure without the Revenue even possessing any minutes of documentary evidence against the Appellant, there is no reason for the undersigned to sustain the penalty, which ....
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..... - 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 "Addition" it does not represent any adding up of the income but narration of the income returned by the assessee in response to notice u/s 153A of the Act. There was no addition made by the AO. There is no deeming fiction for the levy of penalty the provisions applicable whether it is an assessment u/s 153A or assessment u/s 143(3) or u/s 148 the provision essentially remain the same. In the instant case, the asses....
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....untary 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 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. Ld. 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 income surrendered by the assessee. Further, surrendered income stated in the statement recorded u/s 132(4) of the Act has been offered to tax in the income tax return and the same stands accepted by the Assessing Officer. It is also noticed that the assessee had declared loss of Rs.54.99 crore in the original return filed on 30th April, 2019 and even after surrendering the undisclosed income of Rs.5 crores, the ld. AO has accepted the income ....