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Income Tax Appellate Tribunal, “ B” BENCH, AHMEDABAD
Before: SHRI SANDEEP GOSAIN & SHRI AMARJIT SINGH
आदेश / O R D E R
PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER :
The captioned appeal has been filed at the instance of the Revenue against the order of the Commissioner of Income Tax (Appeals)–12, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-12/629/CC-2/16-17 dated 08/01/2018 relevant to Assessment Year (AY) 2013-14.
The Revenue has raised the following grounds of appeal:-
1. On facts and circumstances of the case and in law, the Ld.CIT(A) has erred in law and/or on facts in deleting the penalty levied u/s.271(1)(c) of the Act, of Rs.1,18,00,000/- despite the fact that the disclosure of on-
Jt. CIT (OSD) vs. M/s.Shreedhar Associates Asst.Year – 2013-14 - 2 - money income was made only due to the survey action by the Department and the on-money income was not accounted for in the regular books of account of the assessee on the date of survey. 2. It is, therefore, prayed that the order of the Ld.CIT(A) may be set aside and that of Assessing Officer may be restored to the above extent.
Brief facts of the case are that survey u/s.131(1A) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was conducted at the premises of the assessee on 09/01/2013. The case was selected for scrutiny and serving a statutory notice and after seeking reply of the assessee, assessment order u/s.143(3) of the Act was finalized determining total income of Rs.4,26,92,360/-. Penalty proceedings u/s.271(1)(c) was also initiated for concealment of particulars of income.
3.1. After serving notices and seeking reply to the assessee, order of penalty u/s.271(1)(c) of the Act was passed on 29/06/2016 thereby imposing penalty of Rs.1,18,00,000/- u/s.271(1)(c) of the Act for concealing particulars of income thereby leading to concealment of income.
Aggrieved by the order of the penalty, assessee preferred appeal before Ld.CIT(A), who after considering the case of both the parties, allowed the assessee’s appeal and deleted the penalty.
Aggrieved by the order of the ld.CIT(A), now the Revenue is in appeal before us on the grounds mentioned hereinabove. The solitary grievance of the assessee is that the Ld. CIT(A) erred in deleting the penalty levied u/s.271(1)(c) of the Act.
Jt. CIT (OSD) vs. M/s.Shreedhar Associates Asst.Year – 2013-14 - 3 -
The Ld.DR relied upon the assessment order as well as the order of penalty and submitted that the disclosure of ‘onmoney’ income was made only due to the survey action by the Department and ‘onmoney’ income was not accounted for in the regular books of accounts of the assessee on the date of survey, therefore Ld.CIT(A) has committed illegality by deleting penalty.
On the other hand, Ld.AR relied upon the order passed by the Ld.CIT(A) and also the decision of Hon’ble Gujarat High Court in the case of Principal Commissioner of Income Tax vs. R Umedbhai Jewellers Pvt.Ltd. in Tax Appeal No.549 of 2016, dated 22/08/2016.
We have heard the Learned Representatives for both the parties. We have also perused the material placed on record as well as the orders passed by the revenue authorities. Before we decide this issue on merits, it is necessary to evaluate the orders passed by the Ld.CIT(A) while deciding this ground. The Ld.CIT(A) has dealt with this ground in paragraph Nos.4 & 5 of his order, however, the relevant portion contained in paragraph No.5 to 5.4 of his order is reproduced hereunder:
“5. I have perused the assessment order and considered the appellant's submission. There is no dispute to the facts that the appellant made a disclosure of Rs.3.8 crores during the survey operation for the current year, included the “on- money receipts" in the books of account, paid tax due, showed it in its return of income u/s 139(1) and the assessment u/s 143(3) was completed without any addition being made to the returned income. I am of the considered view that as there was no addition made to the returned income there was 110 case of initiation
Jt. CIT (OSD) vs. M/s.Shreedhar Associates Asst.Year – 2013-14 - 4 - of penalty proceedings u/s 271(l)(c) as there was neither any concealment of income nor any furnishing of inaccurate particulars of such income. It is well settled principle on penalty proceedings u/s 271(l)(c that a case of concealment of income or of furnishing of inaccurate particulars of such income has to be made out by the AO on the basis of the return of income and not otherwise. I also hold that 'in the course of any proceedings under this Act' for penalty means the assessment proceedings and not survey per se. But however, I find that nonetheless the AO initiated the penalty proceedings u/s 271(l)(c).
5.1 During the penalty proceeding it was submitted by the assessee that the amount offered as additional business income pursuant to survey operation was for the ongoing year which was dully incorporated in the books of accounts and in the regular return of income with taxes duly paid. However, the AO was of the view that the "unaccounted income of Rs.3.8 crore offered to tax came to the surface only because of survey, that had there been no survey that amount could not have been brought to tax, that the on-money received was unaccounted income which was admitted by the assessee when it was confronted with, the 'diary' during the survey. For the purpose of 'particular(s)' the AO has relied upon Kanbay Software India (P) Ltd. 122 TTJ 721 (Pune) wherein it was held that the expression 'particular' refers to facts, details, specifics or the information about someone or something and that the details or information about the Income' could deal with factual details of income". With due respect, I do not find that these help the case of the penalty.
5.2 I further note that the penalty has been imposed by the AO holding that "the assessee had concealed his income from on-money receipt in his regular books of accounts. 'Particulars of income' includes books of accounts and in the case of the assessee, the on-money receipt was not finding mentioned in his regular books of accounts". I am of considered opinion that the conclusion of the AO that the amount was not finding mention in the regular books of accounts is over sweeping over statement because the fact remains that the books of accounts were not closed then as the year was yet not over. It is not the case that the books were completed, accounts were audited and returns were filed and there after only the ‘unaccounted income of Rs.3.8 crore came to the surface because of the survey by the Department'. This is the inherent disability/challenge in any disclosure if it pertains to the ongoing financial year. The year in the case of the appellant being the first year of operation it cannot even be implied that that the amount pertained to earlier year(s) of its business.
Jt. CIT (OSD) vs. M/s.Shreedhar Associates Asst.Year – 2013-14 - 5 - 5.3 I also note that the appellant's case does not fall under any of the explanations to section 271(l)(c). I also find that the case is squarely covered by CIT Vs. R Umedbhai Jewellers Pvt. Ltd. relied upon by the appellant.
5.4 In view of the facts of the case, the provisions of section 171(l)(c) and the case laws relied upon by the appellant, the penalty imposed by the AO cannot be sustained. The AO is directed to delete the penalty imposed of Rs. 1.18 Cr.”
After having gone through the facts of the present case and hearing the parties at length, we find that the assessee had offered the amount as additional business income pursuant to survey operation for the ongoing year, which was duly incorporated in the books of accounts and in the regular return of income with taxes duly paid. Since the Assessing Officer was of the view that the “unaccounted income” of Rs.3.8 crores was offered to tax by the assessee. As the same came to the surface only because of survey and that had there been no survey, then that amount could not have been brought to tax. Therefore, it was held that the ‘onmoney’ received was unaccounted income which was admitted by the assessee when it was confronted with the ‘diary’ during the survey. However, we are of the view that the conclusion of the Assessing Officer that amount was not finding mention in the regular books of accounts is over-sweeping over statement, because the fact remains that the books of accounts were not “closed”, then as the year was yet not over. Even otherwise, It was not the case of the Revenue that the books were completed, accounts were audited and returns were filed and thereafter only the ‘unaccounted’ income of Rs.3.8 crores came to the surface because of the survey by the Department. This particular facts, according to us, is the inherent disability/challenge in any disclosure if it pertains to the “ongoing financial year”. The year in the case
Jt. CIT (OSD) vs. M/s.Shreedhar Associates Asst.Year – 2013-14 - 6 - of the assessee being the first year of operation, it cannot even be implied that that the amount pertained to earlier year(s) of its business.
11.1. We are also found that the Hon’ble Jurisdictional High Court under the identical circumstances in the case of CIT vs. R Umedbhai Jewellers Pvt.Ltd. in ITA Nod.549 of 2016 held that “where assessee having filed the return of income by the due date, in which disclosed income during the survey was also offered to tax and no further addition has been made during the assessment, the question of assessee having furnished inaccurate particulars of the income and imposing penalty thereon would not arise. [(2016) TaxCorp (DT) 66134 (HC- GUJARAT)].”
11.2. The Ld.CIT(A) had also relied upon the decision of Hon’ble Gujarat High Court in the Case of CIT vs. R Umedbhai Jewellers Pvt.Ltd.(supra) and even before us, no new facts or circumstances have been placed on record and the orders passed by the revenue authorities have also gone unrebutted, therefore, we find no reason to interfere into or to deviate from such findings of the authorities below and we uphold the decision of the Ld.CIT(A) and reject the ground raised by the Revenue.