SHRI CHANDRESH ROSHNALAL JAIN,,GODHRA vs. THE ASSTT. COMMISSIONER OF INCOME TAX, PANCHMAHAL CIRCLE,, GODHRA

आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:

The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-4, Vadodara, dated 20/03/2017 (in short “Ld.CIT(A)”) arising in the matter of penalty order passed under s.271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") dt.15/03/2016 relevant to the Assessment Year 2011-2012.

The assessee has raised the following grounds of appeal.

2. The only issued raised by the assessee vide ground No. 1 to 3 is that the learned CIT (A) erred in confirming the levy of penalty of Rs. 22,94,009/- under section 271(1)(c) of the Act, without appreciating the fact that the income offered in the revised computation has been accepted.

3. The fact in the brief is that the assessee is an individual working as property dealer/ broker and investor in property. The assessee for the year under consideration declared income of Rs. 12,12,400/- only. The return of the assessee selected for scrutiny and the notice u/s 143(2) was issued upon the assessee. Subsequently the questionnaire u/s 142(1) of the Act was issued with respect to cash payment above Rs. 20000 and expenses incurred for earning agricultural income. However during assessment proceeding the assessee voluntary filed the revised computation of income by offering an additional income of Rs. 76,46,699/- only. The assessee explained that there was the search operation at the premises of third party namely Dhanjimama Group where some incriminating materials related to land deal were found which is related to him. Hence in order to buy peace with department he is offering the additional income. The AO accepted additional income and added the same to total income of the assessee. The AO further initiated penalty proceeding under section 271(1)(c) on the same for filing inaccurate particular of income and concealment of income.

3.1 During the penalty proceedings the assessee submitted that he has not concealed or furnished inaccurate particular of income as he has voluntary offered additional income without any finding from the AO in this regard. Therefore no penalty should be warranted on voluntary admission. The assessee in support of his contention relied on various judgment of Supreme Court and High Courts which is available on record.

Aggrieved assessee preferred an appeal before the learned CIT (A).

Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us.

• AO further relied upon judgment of Goetz India that appellant is barred from making any claim without filing revised return which is with reference to claim of deduction whereas in appellant's case additional income is offered. • Ld. CIT (A) dismisses appeal relying on judgment of Mak Data P. Ltd. (SC) on mistaken belief that appellant's facts are identical to Apex Court judgment. Ld.CIT (A) erred in not appreciating that no specific query with respect to any incriminating material pertaining to the appellant found at searched premises was raised by AO. Appellant is not exigible to levy of penalty on suo moto declaration of additional income to buy peace and to avoid lengthy litigations as held in 1. Suresh Chand Mittal 251 ITR 9 (SC) 2. Dilip N Shroff 291 ITR 519 (SC) 3. T. Ashok Pai 292 ITR 11(SC) 4. Manjunath Cotton 359 ITR 565 (Kar) (Distinguishing Mak Data)

10.1 Undisputedly, the assessee has admitted the undisclosed income of Rs. 1 crores approximately for his family in the statement furnished under section 131 of the Act in connection with search proceedings at M/s DhanjiMama Group which was conducted dated 30th July 2012. As such, the assessee was issued a notice under section 131(1A) of the Act in connection with the search proceedings at M/s DhanjiMama Group wherein the undisclosed income of Rs.1 crores approximately was accepted for the entire family of the assessee. A sum of Rs. 76,46,698/- out of the total undisclosed income of Rs.1 crores approximately pertained to the assessee for the year under consideration.

10.2 The main thrusts of the revenue are twofold for holding that the assessee has concealed the particulars of income as detailed under: i. The assessee disclosed the impugned income as a result of search at M/s Dhanjimama Group wherein the assessee was called upon as witness under the provisions of section 131(1A) of the Act. The assessee while furnishing the statement under section 131 of the Act has admitted the undisclosed income as discussed above. Thus, the Revenue held that had there not been any search at M/s DhanjiMama Group, the assessee would not have disclosed the impugned income. ii. The assessee did not file any revise return of income disclosing the income admitted in the statement furnished under section 131 of the Act despite there was sufficient time available with the assessee. 10.3 There is no dispute to the fact that there was no proceeding initiated under section 153C of the Act against the assessee on account of search conducted at M/s DhanjiMama Group. Non-initiation of the proceedings under section 153C of the Act establishes the fact that there was no incriminating document found during the course of such qua the assessee. Thus in the absence of any incriminating document found during the search proceedings at M/s DhanjiMama Group suggesting undisclosed income, it is transpired that the assessee has admitted the impugned income in his hands voluntarily in the statement furnished under section 131 of the Act.

10.4 It is also equally important to note that there was no communication by the Investigation office of the Income Tax Baroda who recorded the statement under section 131 of the Act of the assessee in connection with the search proceedings at M/s DhanjiMama Group about the fact that the assessee has disclosed such income which was not offered in the income tax return. We are holding so based on the order of the authorities below as this fact/information was not emanating from the respective orders.

10.5 It is also pertinent to note that there was questionnaire issued by the AO having jurisdiction over the assessee under section 142(1) of the Act which were filed before us. But, in none of the questionnaire the question regarding the undisclosed income admitted by the assessee in the statement furnished under section 131 of the Act was made. Accordingly, we are not impressed with the argument of the learned DR that there was a question raised about the reasons which has affected the income of the assessee. In our view, such question raised by the AO is a general question and has nothing to do with the income of the assessee admitted by him in the statement furnished under section 131 of the Act. Accordingly we can safely assume that the assessee has disclosed the impugned income voluntarily prior to the detection by the Income Tax Office.

10.6 We also find that the assessee filed his original return of income dated 30- 03-2012 which is belated income tax return under section 139(4) of the Act. It is the settled law that the belated return cannot be revised under the provisions of section 139(5) of the Act. In view of the above we hold that there was no possibility for the assessee to revise the return of income under the provisions of the Act. Accordingly, the assessee had no option except to revise the computation of income.

10.7 Taking up the matter further, we note that the principles laid down by the Hon’ble Apex Court in the case of MAK Data (P) Ltd vs. CIT reported in 358 ITR 593, in our humble opinion are factually different from the present facts of the case. In that case there were many documents found during the survey proceedings which were incriminating in nature. Thereafter a specific query was raised by the AO with respect to such incriminating documents found during the course of survey. Thus, the assessee in response to such specific query surrendered income of Rs. 40.74 lacs. However, in the present case there was no any incriminating documents were discovered during the course of search at M/s DhanjiMama Group belonging to the assessee. Similarly, there was no specific query raised by the AO during the assessment proceedings regarding the income admitted by the assessee in the statement furnished under section 131 of the Act. Accordingly, we conclude that the assessee has made suo moto disclosure of income as discussed above. Hence, the penalty in the instant case cannot be attracted under the provisions of section 271(1)(c) of the Act in the present facts and circumstances. Thus the ground of appeal of the assessee is allowed.

Order pronounced in the Court on 06/02/2020 at Ahmedabad.