CHOUDHARY CONSTRUCTION CO.,GOREGAON -W vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 31(1), MUMBAI

4. From the records, we noticed that the assessee is a road contractor mainly for BMC. During the year under consideration, the assessee had originally filed return of income, declaring net income at Rs.79,99,860/-. A survey action under section 133A of the act was conducted on 24th January 2012 and during the course of survey, some general discrepancies towards purchase expenses were pointed out and therefore assessee by mutual discussion has declared an additional income of Rs.70 lakhs and accordingly revised the return on 25th February 2012 and paid the required amount of tax.

5. Since according to the assessee, the declaration was made on good faith, requesting the department not to levy penalty under the provisions of income tax act. However, subsequently, the assessment was completed, accepting the said additional income on 10.03.2014 and order was passed under section 143(3) of the income tax act, thereby initiating penalty under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income and for concealment of income.

6. Ld. AR specifically argued that since during the initial proceedings, the assessee had made voluntarily declaration, thereby declaring Rs.70 lakhs as additional income only on the condition that no penalty be levied and the said amount was disclosed just to buy peace. It was father submitted in the circumstances when once the statement of additional income, thereby declaring of Rs. 70,00,00 was made voluntarily to buy peace and taxes were paid thereon and the revised return filed by the assessee was also accepted, therefore there was no occasion for the department to levy penalty. In this regard Ld. AR relied upon the following judicial decisions:

1. CIT VS SAS pharmaceutical [2011] 335 ITR 259 Delhi, 2. CIT Vs. Shankarlal nebhamal Uttamchandani, 311 ITR 327 (Guj). 3. CIT Vs Suraj Bhan, [2007], 294, ITR, 481 4. Ajay Sangari & Co Vs ACIT 140 TTJ 388 Chandigarh

Section 271(1)(c) of the Income-tax Act, 1961 Penalty For concealment of income Assessment years 1985-86 to 1987-88 Where process of detection of allegedly concealed income was not complete, till date of filing of revised returns, imposition of penalty on assessee was not justified [In favour of assessee) During the course of search of the assessee's premises various documents, loose papers, passbooks, bank statements, etc., were found and seized. On the basis of various passbooks of Vysya Bank and Canara Bank in relation to bank accounts in the names of various family members of the assessee, certain queries were raised by the Revenue. On 27-2-1989, the assessee surrendered the amounts reflected by the various bank accounts in the names of the family members as his own income from undisclosed sources followed by revised returns filed on 31-3-1989. The Assessing Officer came to the conclusion that the assessee was guilty of concealment of income by furnishing inaccurate particulars in the original returns of income and for this purpose, apart from the factum of the assessee having declared the amounts standing to the credit of the family members in the bank accounts, the Assessing Officer noted that such an amount reflected in the bank accounts in the names of the family members was not commensurate with the known sources of income of those family members and that the passbooks of the bank accounts were found from the custody of the assessee, the bank accounts were operated by the assessee, and the funds utilised by the assessee for investment in the firm. Therefore, he held that the amount actually belonged to the assessee. He, therefore, imposed penalty on the assessee under section 271(1)(c). Held that the Tribunal had in terms found that though certain queries were raised and put to the assessee there was no specific pinpointing of particular items of income which had been concealed by the assessee. The Tribunal had found, as a matter of fact, that till 31-3-1989, the process of detection of allegedly concealed income was not complete, being the date of filing of the revised returns. The Tribunal had also noted as a matter of fact that the very same amounts standing to the credit of the bank accounts of various family members had already been assessed by the Departmental authorities along with interest in the hands of the family members and it was also an admitted position that those family members had nowhere admitted that the family members were benamidars of the assessee. In the circumstances, the Tribunal rightly came to the conclusion that no penalty was exigible under the provisions of section 271(1)(c).

Section 271(1) (c) of the Income-tax Act, 1961 Penalty For concealment of income Assessment years 1969-70 and 1970-71 Whether when an assessee files a revised return showing higher income and gives an explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared Held, yes

Section 271(1)(c) of the Income-tax Act, 1961-Penalty For concealment of income Assessment year 2005-06 After filing of return of income, a survey action was carried out at business premises of assessee-company during which certain documents were found and impounded Trading accounts provisionally prepared for year in question did not tally with figures shown in accounts furnished with return of income Assessee explained that entries in provisional trading account were made for availing credit limits from bank Further, in order to buy peace of mind, it surrendered a sum of Rs. 25 lakhs as additional income which was made subject to non-levy of penalty for concealment Assessing Officer accepted said additional income disclosure but initiated penalty proceedings and levied certain penalty under section 271(1)(c), which was upheld by Commissioner (Appeals) Whether since Assessing Officer had failed to point out any discrepancy in explanation furnished by assessee and had proceeded to assess income in hands of assessee on basis of surrender made by assessee, it could not be said that assessee had concealed any income and there was no merit in levy of penalty under section 271(1)(c) Held, yes In favour of assessee) 14. After having gone through the facts of the present case and also keeping in view, the principles laid down by the different higher judicial authorities as mentioned above, we are of the view that when an assessee filed a revised return showing higher income and gives an explanation that he is offering higher income to buy peace of mind and avoid litigation then in that eventuality penalty under section 271(1)(c) of the Act cannot be imposed, merely on account of higher income, having been subsequently declared as accepted by the AO.

Order pronounced in the open court on 25.02.2025.

Sd/- Sd/- (PADMAVATHY S) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 25/02/2025 KRK, PS आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / The CIT(A) 3. आयकर आयु�(अपील) / Concerned CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मु�बई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�ािपत �ित //True Copy//