PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 1 vs. M/S. MISSION CORPORATION

C/TAXAP/129/2022 ORDER DATED: 31/01/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 129 of 2022 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 1 Versus M/S. MISSION CORPORATION ========================================================== Appearance: MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE

Date : 31/01/2022

ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. This appeal under Section-260A of the Income Tax Act, 1961 [for short ‘The Act, 1961] is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Ahmedabad dated 2 nd March 2021 in the ITA 2096/AHD/2018 for the A.Y. 2014-15. 2. The revenue has proposed the following questions of law for the consideration of this Court:- (a) Whether in the facts and circumstances of the case, the Hon’ble ITAT has erred in law and on facts in deleting the penalty of Rs.3,39,78,900/- levied under section 271(1)(c) of the Income Tax Act, 1961? (b) Whether in the facts and circumstances of the case, Hon’ble ITAT has erred in law and on facts in upholding the CIT(A)’s decision of deleting the penalty u/s.271(1)(c) without verifying Page 1 of 4

C/TAXAP/129/2022 ORDER DATED: 31/01/2022 the true nature of disclosure made by the assessee? (c) Whether in the facts and circumstances of the case, Hon’ble ITAT has erred in law and on facts in upholding the CIT(A)’s decision of deleting the penalty u/s.271(1)(c) when no direct nexus has been established by the assessee between the disclosure and its complete break up? (d) Whether in the facts and circumstances of the case, Hon’ble ITAT has failed to find the break up of disclosure made by the assessee, its nature and relevance as business income? 3. We have heard Mr. Varun K. Patel, the learned senior standing counsel appearing for the revenue. 4. It appears from the impugned order passed by the Appellate Tribunal that the only question that fell for the consideration of the Tribunal was whether the CIT(A) was justified in deleting the penalty imposed under Section 271(1)(c) of the Act in the facts and circumstances of the case. 5. The Tribunal while dismissing the appeal of the revenue recorded the following findings:- “7. On perusal of the above provision what is inferred is that, if the AO or the learned CIT(A) during any proceedings under this Act is satisfied that the assessee has concealed or furnish inaccurate particular of income then he/she may impose penalty. The provision of explanation-1 attached to the section also cover the situation; (a) where the assessee failed to offer an explanation or explanation offered found to be false with regard to any facts or material in the computation of income, or (b) where the assessee fails to substantiate the explanation offered and also failed to prove that such explanation is bona fide and has disclosed all the material facts related to the same, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purpose of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. Page 2 of 4

C/TAXAP/129/2022 ORDER DATED: 31/01/2022 7.2 Now in view of the above discussion, we proceed to adjudicate the issue on hand in the given facts and circumstances. We find that when the survey proceeding dated 25.03.2014 was conducted at the assessee premises the financial year was not ended and also there was plenty of time for filing the return of income under the provision of section 139(1) of the Act. Subsequently, the assessee incorporated the amount of income which was admitted during survey in the computation of income. Further the AO also accepted the returned income while finalizing assessment proceeding under Section 143(3) dated 23.12.2016. In other words the AO was satisfied for the income disclosed in the computation of income. Thus, the AO was not justified in invoking the penalty proceeding for concealment of income or furnishing inaccurate particulars of income for the reason that there was no disallowance/ addition to the total income of the assessee during the assessment proceedings. The presumption of the AO that the assessee would not have disclosed the income in return in future is mere a suspicion having no any base. The assessee cannot be visited with penalty only on the basis of suspicion or presumption. Therefore, we do not find any reason to interfere in order of the learned CIT(A). Hence, the ground of appeal of the revenue is dismissed.” 6. The questions of law as proposed by the revenue referred to above are no longer res-integra in view of the order passed by a Co-ordinate Bench of this Court in the case of Principal Commissioner of Income Tax-3 Vs. R. Umedbhai Jewellers Pvt. Ltd.; Tax Appeal No.549 of 2016; decided on 22.08.2016. 7. We quote the relevant observations made by the Co-ordinate Bench in the Paragraphs-11 and 12 as under:- “11. The vital difference in the aforesaid case, thus, was that the assessee had already filed a return disclosing an amount of Rs.16.17 lacs. It was only during the assessment proceedings that the assessee agreed to surrender further sum of Rs.40.74 lacs by way of income. It was on account of the material collected by the revenue during survey operation carried out in case of assessee’s sister concern. In our case, the assessee had neither Page 3 of 4

C/TAXAP/129/2022 ORDER DATED: 31/01/2022 made additional disclosure nor revised the return after filing the return within the time provided under the Statute. 12. The decision of this Court in case of Deepak Construction Co. (Supra) also was rendered in different fact situation. It was a case where for the Assessment Year 1983- 84, the assessee had filed the return of income which was taken in scrutiny. During the scrutiny assessment, the Assessing Officer issued a show cause notice confronting the assessee with certain squared up cash credits. Upon receipt of the notice, the assessee filed a revised return offering such sum by way of additional income. The revised return was accepted by the Assessing Officer. He, however, instituted penalty proceedings for the additional income surrendered by the assessee. In such background, the question arose whether after the assessee having filed the revised return, could the revenue have imposed penalty without making any additions to the income so returned. The High Court in the said judgment held that since the revised return was filed after detection of concealment of income, penalty under Section 271(1) (c) of the Act would be levied. Likewise, in case of Dr. A. Mohd. Abdul Khadir (Supra) also, the Madras High Court was concerned with the similar situation where the assessee revised his return pursuant to the search operation during which he had admitted to have concealed the income. The Court held that such revised return could not be treated as voluntary return and penalty under Section 271(1)(a) of the Act would be leviable.” 8. In view of the aforesaid, we see no good reason to disturb the order passed by the Appellate Tribunal. 9. In the result, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) A. B. VAGHELA Page 4 of 4