PRAPHULL KALURAM SHIVALE,,PUNE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 12,, PUNE

ITAT-Pune Page 1 of 14 Shri Praphull Kaluram Shivale PAN :BFQPS4176B Asstt Yr.: 2015-16 2. The extant appeal is to address sole dispute over applicability of 271(1)(c) penal provision, where the income is assessed on the basis of material impounded in a survey action u/s 133A, in variation to original return filed.

Before proceeding for adjudication, it is apropos to reproduce the grounds raised

The learned CIT(A) failed to appreciate that the addition of Rs.2,55,12,629/- made in respect of alleged undisclosed business income was based on estimation basis and in view of the settled law that penalty u/s 271(1)(c) is not leviable on additions made on estimation basis, the levy of penalty in the instant case was not justified.”

The appellant craves, leave to add, alter, amend and delete any of the above grounds of appeal.”

Ground number 1 is general and ground number 2 & 3 alleged against levy of penalty for estimated business income, in omnibus, the only ground to adjudicate is the applicability of 271(1)(c) penal provision for concealing the particulars of income, and to deal therewith, it is appropriate to quote the relevant text of penal provision first; 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) If the [Assessing] Officer or the [Commissioner (Appeals)] [or the Commissioner] in the course of any proceedings under this Act, is satisfied that any person- (a ) . . . . . (b ) . . . . . ITAT-Pune Page 8 of 14 Shri Praphull Kaluram Shivale PAN :BFQPS4176B Asstt Yr.: 2015-16 (c ) has concealed the particulars of his income or [* * *] furnished inaccurate particulars of [such income, or ( d) . . . . . he may direct that such person shall pay by way of penalty,— (i ) . . . . . (ii) . . . . . (iii) in the cases referred to in clause (c) [or clause (d)], [in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. (Emphasis supplied)

From the records it transpired that, scrutiny assessment was culminated in the light of impounded material and the statement recorded on oath to the effect that, “no proper books of accounts were maintained and the original returns were filed on estimation basis not reflecting the true and fair view of business transaction under taken for the impugned assessment year” and a written submission of the appellant detailing the ITAT-Pune Page 9 of 14 Shri Praphull Kaluram Shivale PAN :BFQPS4176B Asstt Yr.: 2015-16 reworking of total business receipts including of bank/cheque & cash receipts, development charges received and profit earned therefrom for the impugned assessment year, which collectively in the opinion of the Ld. AO de-jure sufficient to hold the concealment of particulars of income while filing the original return by the appellant, and this ispo-facto in the absence of deprecative material, indeed is good and substantive to hold as such.

Glaringly, the appellant did not file any revised returnduring the course of scrutiny assessment proceedings, but mere a revised computation of income incorporating the business profit earned at certain percentage of business receipts deciphered out of bank account statements, bank receipts, cash receipts, development charges received and transaction of sales & purchases of lands, etc., which formed absolute basis for assessment and consequential imposition of penalty u/s 271(1)(c) of the Act, for concealing the particulars of income and when this fact was brought to the notice of ITAT-Pune Page 10 of 14 Shri Praphull Kaluram Shivale PAN :BFQPS4176B Asstt Yr.: 2015-16 the assessee during the course of penalty proceedings, the assessee offered to pay tax on the sum without answering the question posed to him. Therefore, it is not a case wherein a disclosure was voluntarily made, indeed the assessee accepted the differential amount of business profit earned by him only after the same was brought to surface owing to survey action u/s 133A of the Act, otherwise actual business profits would have remained un-assessed and untaxed, if survey action could not have taken place and in any case, so-called voluntary disclosure of business profit by furnishing re-computation cannot alter the consequences in the light of decision of the Hon’ble Apex Court in the similar facts and circumstances in “MAK Data Pvt Ltd Vs CIT” reported in 358 ITR 598.

Given that, section 274 provides that, no order imposing a penalty shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. In the present case, a penalty SCN was issued u/s 274 r.w.s. 271 of the Act, and upon failure to respond to first SCN, the appellant was put to further notice which ITAT-Pune Page 11 of 14 Shri Praphull Kaluram Shivale PAN :BFQPS4176B Asstt Yr.: 2015-16 remained unattended, ad-idem, it clearly indicates that, the due & sufficient opportunity of being heard was provided to the appellant before proceeding to actual levy, ergo, the requirement of section 274 of the Act stands complied with and penal provisions being a civil liability calling no act of or ingredient for wilful concealment as laid by Hon’ble Supreme Court vide 25 in the case of “UOI Vs Dharmendra Textile Processors” reported in 306 ITR 277 (SC).

Re-computation of business income upon the survey action in the light of impounded material spoke loudly about the conduct of the assessee, which could not be said to be anything else than disingenuous and thus filing of said recomputation of income did not obliterate the fact of the earlier act of concealment of particulars with a view to suppress the income and therefore was liable to penal action as contemplated in section 271(1)(c) of the Act, and we note that the tax authorities below ceased such finding adverse to the appellant, and is not shown to be perverse or arbitrary in any manner warranting interference, ergo ITAT-Pune Page 12 of 14 Shri Praphull Kaluram Shivale PAN :BFQPS4176B Asstt Yr.: 2015-16 we hold that, the Ld. AO was justified in levying the minimum penalty, and we see that, our view has been rightly fortified by the decision of Hon’ble jurisdictional High Court of Bombay, in the case of “Jyoti Laxman Konkar Vs CIT” reported in 292 ITR 163.

Nota bene, in the similar facts and circumstance, where the income of the appellant is assessed in variation to income returned, the Hon’ble Supreme Court in the case of “MAK Data Pvt Ltd Vs CIT” reported in 358 ITR 593 observed that, the explanation to section 271(1) raises a presumption of concealment when income is finally assessed in variation of returned income, and it was in this factual scenario where the income reported by the assessee in the return filed was lower than the income finally assessed and brought to tax, it is held that the penalty was rightly leviable.

Apropos, in view of the aforesaid discussion, the grounds appealed stands adjudicated against the appellant assessee and in favour of revenue and nothing ITAT-Pune Page 13 of 14 Shri Praphull Kaluram Shivale PAN :BFQPS4176B Asstt Yr.: 2015-16 contrary has been shown to us in the present facts which would warrant our taking a view different from Hon’ble Supreme Court in “MAK Data Pvt Ltd Vs CIT” (Supra) and Hon’ble jurisdictional High Court of Bombay in case of “Jyoti Laxman Konkar Vs CIT” (Supra).

Resultantly, the appeal of the appellant assessee is dismissed in terms of aforestated observation. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Friday 26th day of August, 2022.