ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR vs. JITENDRA KUMAR AGARWAL, JAIPUR

2. "Whether on the facts and circumstances of this case, the Ld. CIT(A) is justified in deleting the penalty of Rs.1,34,14,976/- u/s 271(1)(c) of the Income Tax Act, 1961 ignoring the fact that the penalty was levied for concealing the income of Rs.3,94,67,426/- which was detected during the survey proceedings u/s 133A of the I.T. Act?" the Revenue has raised the following grounds of appeal:-

1. Whether on the facts and circumstances of this case, the Ld. CIT(A) is justified in deleting the penalty of Rs.94,83,138/- u/s 271(1)(c) of the Income Tax Act, 1961 without appreciating the facts and circumstances of the case?

2. "Whether on the facts and circumstances of this case, the Ld. CIT(A) is justified in deleting the penalty of Rs.94,83,138/-u/s 271(1)(c) of the Income Tax Act, 1961 ignoring the fact that the penalty was levied for concealing the income of Rs.3,16,10,463/- which was detected during the survey proceedings u/s 133A of the I.T. Act?"

Revenue has raised the following grounds of appeal:- “1.

1. Whether on the facts and circumstances of this case, the Ld. CIT(A) is justified in deleting the penalty of Rs. 1,01,50,594/- u/s 271(1)(c) of the Income Tax Act, 1961 without appreciating the facts and circumstances of the case?

2. Whether on the facts and circumstances of this case, the Ld. CIT(A) is justified in deleting the penalty of Rs. 1,01,50,594/- u/s 271(1)(c) of the Income Tax Act, , 196 & 197/JPR/2024 4 Shri Nath Corporation & Ors., Jaipur. 1961 ignoring the fact that the penalty was levied for concealing the income of Rs.3,38,35,315/- which was detected during the survey proceedings u/s 133A of the I.T. Act?"

3.4 As is evident from the grounds of appeal that the issue raised in all these bunch of appeal are identical relating to the levy of penalty u/s. 271(1)(c) and we have heard these cases together with the consent of the parties and have decided to dispose these appeals by common order.

4. With the consent of the parties the facts of the case in is considered as lead case.The brief facts of the case in culled out from the records are that a search and seizure action u/s 132 of the Act and survey action u/s 133A of the Act was carried out by the Income Tax Department on the members of Chandra Prakash Agarwal Group on 28.07.2016 to which the assessee is one of the members. Because of that action notices were issued to the above named assessee u/s 153A of the Act. In response to notice u/s 153A return declaring income of Rs. 3,95,19,200/- was filed on 20.09.2017 whereas original return declaring income of Rs. 3,95,19,200/- was filed u/s 139(1) on 15.09.2015 which include undisclosed income of Rs. 3,94,67,426/-surrendered in survey operation u/s 133A conducted on 09.12.2014 at the business premises of the assessee situated at 1756, Telepada, SMS Highway, Jaipur. The assessment u/s 143(3) r.w.s 153A was completed at Rs. 3,95,19,200/- vide order dated 24.12.2018 and penalty proceedings for concealment of particulars of , 196 & 197/JPR/2024 5 Shri Nath Corporation & Ors., Jaipur. income were initiated u/s 271(1)(c) vide show cause notice dated 24.12.2018.

A further opportunity of being heard was granted vide notice dated 07.07.2015. It would be worthwhile to mention that no further appeal had been filed by the assessee against the assessment order u/s 143(3) r.w.s 153A dated 24.12.2018. In reply to the said show cause, Ld. AR of the assessee submitted written submission vide letter dated 23.04.2019 which was filed before the ld. AO on 24.04.2019. The ld. AO noted that the submission of the assessee was considered but was not found not acceptable for the reasons discussed as under:-

During the course of survey at the business premises of the assessee on dated 09-12-2014 excess stock of Rs. 3,94,67,426/-was found which was surrendered by the assessee as his undisclosed income for AY 2015-16 and incorporated the same in ITR for AY 2015-16 under head "income from business and profession" and the case was selected manually for scrutiny u/s 143(3) of the Act. Meanwhile, the search action was conducted on 28-07- 2016 and proceeding for AY 2015-16 was abated and assessment u/s 143(3) r.w.s 153A of the I.T. Act was not completed. Hence, the claim of the assessee that there is no difference in the return filed u/s 139(1) and 153A of the Act has no substance as return filed u/s 139(1) was not assessed u/s 143(3) of the I.T. Act.

, 196 & 197/JPR/2024 6 Shri Nath Corporation & Ors., Jaipur. Further, the claim of the assessee that no document and any other discrepancy were found during the course of search. However same is not sustainable as excess stock amounting to Rs. 3,94,67,426/- was found during the course of survey dated 09-12-2014 which the assessee himself admitted and surrendered as his unaccounted income and incorporated the same in the ITR. The assessment for this income i.e. AY 2015-16 was abated hence, there is no requirement of incriminating documents as such for initiation of penalty in the assessment completed u/s 153A of the Act.

Furthermore, excess stock of Rs. 3,94,67,426/- was found during the course of survey action u/s 133A of the Act resulting in surrendered of the same in ITR. However, the assessee incorporated the surrendered amount under head income from business income which was held under income from other sources in the assessment order. As it is evident that assessee did not surrender the excess stock of Rs. 3,94,67,426/-voluntary but compelled by survey action u/s 133A dated 09-12-2014. If the survey action would not have been conducted the assessee would never have disclosed the same in his return ofincome. The assessee was intentionally and knowingly concealing his investment in stock which was unearth while survey proceeding.

In view of the above discussions and the facts of the case it is clear that the assessee was indulged in concealing his income which was unearth , 196 & 197/JPR/2024 7 Shri Nath Corporation & Ors., Jaipur. during the course of survey proceeding as excess stock of Rs. 3,94,67,426/- resulting in surrendered of the same in the ITR. Hence, the above mentionedconcealment of income leads to attract penal provisions by virtue of section 271 (1) (c). Further, the explanation put forth by the assessee in his defence has not been found satisfactory and in this way also the case of the assessee falls in the category of Explanation-1 to section 271(1)(c) and therefore, penalty u/s 271 (1) (c) is imposed on the concealed income for an amount of Rs. 1,34,14,976/-.

5. Aggrieved by the above order of the ld. AO the assessee preferred an appeal before the ld. CIT(A). After perusing the submissions of the assessee, the ld. CIT(A) has allowed the appeal of the assessee by observing as under:-

“4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the penalty order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this case the impugned income on which the penalty proceedings were initiated in the assessment order was surrendered by the appellant during the survey proceedings which took place on 09.12.2014. Subsequently the return of income under section 139(1) was filed by the appellant on the date of 15.09.2015 at total income of Rs. 3,95,19,200/- and tax payable as per ITR is NIL and the income so surrendered during the survey was offered in the return of income. Subsequently a search action took place on the appellant on 28.07.2016 as mentioned in the assessment order and a return in response to notice under section 153A of the Act was filed by the appellant on 20.09.2017 at an income of Rs. 3,95,19,200/- wherein the income as offered in the initial return of income filed under section 139(1) was again repeated i.e. the return of income declared in the return filed under section 153A of the Act and 139(1) of the Act are same. In the penalty order the main contention of the Learned Assessing Officer is that had the survey action not taken place the income so surrendered by the appellant would have remained undetected and there is also a reference to the point that the surrendered income was offered by the appellant under the head business income whereas the same should have been offered under the head income from other sources.

, 196 & 197/JPR/2024 8 Shri Nath Corporation & Ors., Jaipur. As far as the issue of head of income under which the income was offered by the appellant in the return of income is concerned from the perusal of the assessment order and penalty order it is noted that there is no addition to the income on account of change of head of income. No additional tax burden has been mentioned in the orders passed by the learned assessing officer in this regard. As per Explanation 4 in the Sub Section (1) of the Section 271 whereby the tax sought to be evaded is to be computed on the basis of total income assessed and thus irrespective of the head of income. This explanation reads as under:- Explanation 4.-For the purposes of clause (ni) of this sub-section, - (a) the amount of tax sought to be evaded shall be determined in accordance with the following formula-(A - B) + (C - D) where, A = amount of tax on the total income assessed as per the provisions other than the provisions contained in section 11518 or section 115]C (herein called general provisions); B = of tax that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished; C=amount of tax on the total income assessed as per the provisions contained in section 1151B or section 115/C D = amount of tax that would have been chargeable had the total income assessed as per the provisions contained in section 115/B or section 115]C been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished: Provided that where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished on any issue is considered both under the provisions contained in section 11518 or section 1151C and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D: Provided further that in a case where the provisions contained in section 115JB or section 115JC are not applicable, the item (C - D) in the formula shall be ignored, (b) where in any case the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, the amount of tax sought to be evaded shall be determined in accordance with the formula specified in clause (a) with the modification that the amount to be determined for item (A - B) in that formula shall be the amount of tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income; (c) where in any case to which Explanation 3 applies, the amount of tax sought to be evaded shall be the tax on the total income assessed as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148.] , 196 & 197/JPR/2024 9 Shri Nath Corporation & Ors., Jaipur. Accordingly as there is no adverse impact on the tax liability due to the change of head of income in the present case, considering the explanation 4 in sub section (1) in the section 271 no penalty is leviable due to this aspect. Further, regarding the surrender during survey, the penalty was initiated in the assessment order on the ground that the income was detected during the survey action and neither in the assessment order nor in the penalty order there is any finding regarding the retraction of the surrendered income by the appellant. Further as noted in the penalty order "It would be worthwhile to mention that no further appeal had been filed by the assessee against the assessment order u/s 143(3) r.w.s. 153A dated 24.12.2018." meaning thereby that the appellant adhered to the surrender of income which was made during survey. Further the main contention in the penalty order is that had the survey action not taken place the income surrendered in survey and resultantly offered in the return filed u/s 139(1) would have remained undetected and thus the appellant is liable for penalty. It is held in the penalty order in this regard as under:- "5. In view of the above discussions and the facts of the case it is clear that the assessee was indulged in concealing its income which was unearth during the course of survey proceeding as excess stock of Rs. 3,94,67,426/- resulting in surrendered of the same in the ITR. Hence, the above mentioned concealment of income leads to attract penal provisions by virtue of section 271 (1) (c). Further. the explanation put forth by the assessee in his defence has not been found satisfactory and in this way also the case of the assessee falls in the category of Explanation-1 to section 271(1)(c) and therefore, penalty u/s 271 (1) (c) is imposed on the concealed income as per working given below." As against the above argument, the appellant has relied upon number of judgments of honorable courts and Tribunal in his submissions. Some of the judgments on the issue are as under:- Commissioner of Income-tax v. SAS Pharmaceuticals [2011] 11 taxmann.com 207 (Delhi)/[2011] 199 Taxman 255 (Delhi) (Mag.)/[2011] 335 ITR 259 (Delhi)/[2011] 244 CTR 51 (Delhi)[08-04-20111 Some of the arguments made on behalf of the assesse as noted in the judgement are as under:- "It was also argued that the legislative intent in connection with section 271 of the Act is further fortified from the various Explanations provided in the said provision. In this regard, Explanation 4 is relevant wherein it is specifically provided as to what would be included in the expression the amount of tax sought to the evaded, which is the basis for imposition of penalty contemplated under section 271(1)(c) of the Act. The perusal of the said Explanation also clearly establishes the direct nexus between the concealment/inaccurate particular being furnished with the return filed.

10. To bolster this submission, the learned counsel for the assessee took refuge of Explanation 5 and Explanation 5A of section 271 of the Act and submitted that these Explanations provide that in cases of search by way of deeming fiction, the liability towards penalty has been prescribed even in cases where the return of , 196 & 197/JPR/2024 10 Shri Nath Corporation & Ors., Jaipur. income for such year has not been furnished before the said date of search. Therefore, wherever the Legislature intended to impose a penal liability covering a case where return was yet to be filed, a deeming fiction has been consciously provided. In the absence of any such deeming fiction imposing penalty in a case of survey where return is yet to be filed, the penal provision of section 271 of the Act cannot be invoked as the mandatory ingredients thereof are not met at all.

11. He also sought to draw sustenance from the judgment of Supreme Court in the case of CIT. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 twherein, inter alia, it has been held that unless the conditions under section 271(1)(c) of the Act exist in a particular case, penalty cannot be imposed and it was further held that 271 of the Act being a penal provision is required to be construed strictly. The following observations made in the said judgment were specifically referred to: "8. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise.” Further the extracts from the finding and judgement of the Hon'ble Delhi High Court in the case are as under:- "12. After considering the respective submissions of the learned counsel for the parties, we are of the view that the argument of the learned counsel for the assessee has to prevail as it curried substantial weight. It is to be kept in mind that section 271(1)(c) of the Act is a penal provision and such a provision has to be strictly construed. Unless the case falls within the four-corners of the said provision, penalty cannot be imposed. Sub-section (1) of section 271 stipulates certain contingencies on the happening whereof the Assessing Officer or the Commissioner (Appeals) may direct payment of penalty by the assessee. We are concerned herewith the fundamentality provided in clause (c) of section 271(1) of the Act, which authorizes imposition of penalty when the Assessing Officer is satisfied that the assessee has either; (a) Concealed the particulars of his income; or (b) Furnished inaccurate particulars of such income.

13. It is not the case of furnishing inaccurate particular of income, as in the income-tax return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the income-tax return. The question is whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the income-tax return filed by the assessee, viz., whether concealment is to be found in the income-tax return.

14. We may, first of all, reject the contention of the learned counsel for the revenue relying upon the expression in the course of any proceedings under this Act' occurring in sub-section (1) of section 271 of the Act and contending that even during survey when it was found that the assessee had concealed the particular of his income, it would amount concealment in the course of any proceedings'. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the Assessing Officer or the Commissioner of income-tax (Appeals). When the survey is conducted by a survey team, the 196 & 197/JPR/2024 11 Shri Nath Corporation & Ors., Jaipur. question of satisfaction of Assessing Officer or the Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is the Assessing Officer who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression in the course of any proceedings under this Act' cannot have the reference to survey proceedings, in this case.

15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income-tax return filed by it. There is sufficient indication of this in the judgment of this Court in the case of CIT v. Mohan Das Hassa Nand [1983] 141 ITR 203/13 Taxman 328 and in Reliance Petroproducts (P.) Ltd. (supra), the Supreme Court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the income-tax return filed by the assessee. This view gets supported by Explanation 4 as well as Explanations 5 and 5A to section 271 of the Act as contended by the learned counsel for the respondent.

16. No doubt, the discrepancies were found during the survey. This has yielded income from the assessee in the form of amount surrendered by the assessee. Presently, we are not concerned with the assessment of income, but the moot question is to whether this would attract penalty upon the assessee under the provisions of section 271(1)(c) of the Act. Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises, conjectures and possibilities. Section 271(1)(c) of the Act has to be construed strictly. Unless it is found that there is actually aconcealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax." The following judgements also are on the issue at hand:- Judgement of Hon'ble ITAT Ahmedabad in the case of DCIT vs NBM Iron & Steel, Trading Pvt. Ltd.

"6. We have given our thoughtful consideration and perused the material available on record. It is an undisputed fact that during the course of search on 12.01.2010, the Director of the assessee company declared income of Rs. 1,80,00,000/- belongs to the assessee company and paid taxes thereon ad filed its Return of Income on 07.10.2010 for the Assessment Year 2010-11. Further the time limit of filing of Return of Income for A.Y. 2010-11 was not expired on the date of survey namely 12.01.2010 i.e. much before the end of the financial year itself. However the assessee in its Return of Income duly declared the sum of Rs. 1,80,00,000/- which was admitted during the course of survey. Thus it cannot be said that the assessee had furnished "inaccurate particulars of income" which is not disputed by the Assessing Officer. 6.1. Further as per Explanation 5A to Section 271(1)(c), penalty is not leviable since the assessee has paid the taxes thereon in the Return of Income filed u/s. , 196 & 197/JPR/2024 12 Shri Nath Corporation & Ors., Jaipur. 139(1) of the Act. This view of our is supported by the Co-ordinate Benches of the Tribunal in the case of CIT vs. Jupiter Distillery [2012] 23 taxmann.com 303 (Ahmedabad - Trib.) and in the case of Muninaga Reddy vs. ACIT [2013] 37 taxmann.com 440 (Bangalore - Trib.) wherein deleted the levy of penalty u/s. 271(1)(c) of the Act. 6.2. Similarly, the Hon'ble Delhi High Court in the case of CIT vs. SAS Pharmaceuticals [2011] 11 taxmann.com 207 (Delhi) wherein it was held where income surrendered by assessee during survey had been shown by it in its regular income-tax return filed within prescribed time, penalty could be imposed. Thus the Ld. CIT(A) has followed the above decisions and deleted the penalty on the declared income of Rs. 1,80,00,000/-. However the Ld. CIT(A) confirmed the levy of penalty on the balance disputed income of Rs. 4,08,097/-. Thus, we do not find any infirmity in the order passed by the Ld. CIT(A), who partly deleted the penalty levied u/s. 271(1)(c) of the Act. Thus the grounds raised by the Revenue is devoid of merits and the same is dismissed." Judgement of Hon'ble ITAT Bengaluru in the case of Muninaga Reddy v. Assistant Commissioner of Income-tax [2013] 37 taxmann.com 440 (Bangalore Trib.) [14-08-2013]

7. We have considered the rival submissions. As far as imposition of penalty on the income offered in the return of income by the Assessee is concerned, we are of the view that there cannot be any penalty on income which is declared in a return of income, on the facts and circumstances of the present case. Penalty u/s.271(1)(c) of the Act is imposed for "concealing particulars of income or furnishing inaccurate particulars of income". When an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inaccurate particulars of income". The starting point of determining concealment for imposing penalty is the return of income. If the return of income declares income which is ultimately brought to tax there can be no complaint by the revenue that the Assessee is guilty of "concealing particulars of income or furnishing inaccurate particulars of income". This legal position would be implicit if one reads Sec.271(1)(c) of the Act together with Expln.3, 5 and 5A of the Act, which carves out exception for the legal position as stated above. ......................

11. Expln 5 and 5A are also an exception to the rule that when an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inaccurate particulars of income". Those Explanations will also not apply in the present case because those Explanations are applicable only when there is a search u/s.132 of the Act and to a case of Survey u/s.133A of the Act.

12. For the reasons given above we hold that there can be no justification for imposition of penalty on the income offered in the return of income by the Assessee, because there cannot be any penalty on income which is declared in a return of income, on the facts and circumstances of the present case."

, 196 & 197/JPR/2024 13 Shri Nath Corporation & Ors., Jaipur. As per the ratio of the above judgements, it is not the case of furnishing inaccurate particular of income, as in the income-tax return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the income-tax return. The question is whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the income-tax return filed by the assessee, viz., whether concealment is to be found in the income-tax return. Further, explanation 3 is an exception to the rule that when an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having concealed particulars of income or furnished inaccurate particulars of income Explan. 4(b) to Sec. what is "the amount of tax sought to be evaded on which penalty can be imposed and clause (b) lays down in any case to which Explanation 3 applies, means the tax on the total income assessed as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self assessment tax paid before the issue of notice under section 148. However in the present case the return of income was filed by the appellant u/s 139(1) of the Act wherein the income surrendered during the survey was duly disclosed. The argument in the penalty order that penalty was initiated in assessment order u/s 153A is immaterial as the surrendered stock was detected during earlier survey, and ITR u/s 139(1) was already filed before search and seizure action. The main ground of the Id. AO is that the income would have remained undetected in the absence of survey. As per the judgement of Hon'ble Delhi High Court and other judgements, there is no such concealment or non- disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. The appellant has also relied upon the judgement of Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax-19 v. Neeraj Jindal [2017] 79 taxmann.com 96 (Delhi)/[2017) 393 ITR 1 (Delhi)/[2017] 293 CTR 298 (Delhi)[09-02-2017]. It is held by the Hon'ble Delhi High Court in this case as under:- "20. Therefore, the position that emerges from the above-mentioned provision is that once the assessee files a revised return under Section 153A, for all other provisions of the Act, the revised return will be treated as the original return filed under Section 139. On similar lines, the Gujarat High Court in the case of Kirit Dahyabhai Patel v. Asstt. CIT (2015) 280 CTR 216, held that: "In view of specific provision of s. 153A of the I.T. Act. the return of income filed in response to notice under s. 153A of the I.T. Act is to be considered as return filed under s. 139 of the Act, as the AO has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under s. 271(1)(c) of the IT. Act and the penalty is to be levied on the income assessed over and above the income returned under s. 153A, if any."

, 196 & 197/JPR/2024 14 Shri Nath Corporation & Ors., Jaipur.

is hereby allowed.

5. Ground of Appeal No. 3 is that the appellant craves right to add, alter or amend any of the grounds of appeal. 5.1 The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off.

6. In the result, the appeal of the appellant is allowed.”

, 196 & 197/JPR/2024 16 Shri Nath Corporation & Ors., Jaipur. 6. Before us both the parties have supported the orders of the lower authority as favourable to them and thereby they stood up with the finding recorded in that orders they relied upon.

7. Ld. DR in support of the contention raised in the grounds of appeal vehemently submitted that it was because of the action of the revenue the assessee has disclosed the excess stock had it not taken that action the assessee had not offered that income and thereby he supported the levy of penalty by the ld. AO.

8. Per contra, ld. AR of the assessee vehemently stated that since there is a reasoned order of the ld. CIT(A) and there is reasoning as to what are the reasons the order of the ld. CIT(A) is not sustainable there is no merits in the grounds of appeal raised and thereby he stood up with the finding recorded in the order of the ld. CIT(A). He in furtherance also filed a detailed written submission which reads as under:-

“Brief Facts: Kindly refer the orders of authorities below. Submissions:

1. 1. At the outset we strongly rely upon the detailed submission filed before the CIT(A) and the categorical finding recorded by him starting from page 14 para 4.2.

2. We also strongly relied upon the various case laws cited before the Ld. CIT(A) and also those cited by the CIT(A) in his order.

3. The undisputed rather admitted facts are as under: 3.1 A survey u/s 133A was carried out on 09.12.2014 i.e.before the close of the relevant previous year, during which, the assessee admitted income of Rs. 3.94 , 196 & 197/JPR/2024 17 Shri Nath Corporation & Ors., Jaipur. cr./- and including the same, ROA was filed u/s 139(1) on 15.09.2015 at total income of Rs. 3,95,19,200/-which was a voluntary declaration.

3.2 The very fact of the assessee declaring additional income during the course of survey itself, is admitted by the AO at various places including penalty order page 3 para (e) and even in their D-GOA. 3.3 The search action took place at a later point of time on 28.07.2016. Notably and admittedly again in the ROI filed u/s 153A on 08.04.2017, same income of Rs. 3.94Cr. was declared.

3.4 There was no variation was made so far as the additional income of Rs. 3.95Cr. declared by the assessee is concerned. Kindly refer pg. 2 of assessment order. 3.5 There is no finding that even this additional income of Rs. 3.38 crore was concealed income recorded. Neither in the penalty order nor in the assessment order. 3.6 The allegation that had there not been a survey, the assessee would not have declared, is nothing more than a suspicion, more particularly, when the additional income was declared before the close of the year and no ROI was or/could be filed which could binding the assessee.

3.7 The law is well settled that penalty provisions must be construed strictly and penalty can be imposed only when all the conditions are fulfilled.

5.1 The order imposing penalty is quasi-criminal in nature and, thus, the burden lies on the department to establish that the assessee had concealed his income or furnished inaccurate particular. Since the burden of proof in penalty proceeding varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income or that a deduction has wrongly been claimed, cannot automatically be adopted, though a finding in the assessment proceedings constitutes good evidence in the penalty proceeding. In , 196 & 197/JPR/2024 18 Shri Nath Corporation & Ors., Jaipur. the penalty proceedings, thus, the AO is required to bring positive material showing intentional concealment, which is completely missing in this case.

5.2 In the present case, survey u/s 133(A) was carried out ondated 09.12.2014 even before close of the F.Y. The assessee on his own much before receiving notice u/s 153A or 148 voluntarily declared the income in ROI u/s 139(1) and paid taxes thereon i.e. even before providing reason recorded or information. The aforesaid explanation given by the assessee through ROI was neither rejected nor it was held to be mala fide by the AO and once the AO had failed to take any objection in the matter, the offer so made came from the assessee on its own and was a voluntary offer made i.e. without any detection.

6.1 No difference between the returned and assessed income: There is no dispute that the ld. AO assessed the same very income which was declared by assessee vide his ROI u/s139(1) dated 15.09.2015 at Rs.3,27,91,120/- (PB 5-8). The same was assessed as it is without any variation.

It is submitted that in the cases of penalty of concealment/furnishing inaccurate particular, the very starting point is the (last) return of income filed by the assessee which has been acted upon by the AO and it is only the difference between the income so returned and the income finally assessed by the AO, which invites imposition of penalty. In a case where however, there is no such difference, there cannot be any question of imposition of penalty.

Penalty of concealment can be imposed only when there is a variation between the returned income and the assessed income. This is also evident from Expl.4 to Section 271(1)(c). On filing ROI under Section 139 and even on assessment, there was no additional tax liability raised w.r.t additional income.

6.2A useful reference on this aspect can be made to the decision in the case of Reliance Petro Products (P) Ltd. (2010) 322 ITR 158 (SC) wherein, the Supreme Court's held as under: “If we accept the contention of the Revenue, then In the case of every return, where the claim is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the legislature.”

7. No penalty in S.148/153A cases: 7.1 It is further pertinent to note that even in the cases where the assessee did not disclose the income in the return of income filed originally u/s 139(1) but later on when notice u/s153A has been issued and the assessee disclosed in the return of income filed in response thereto than too, it has been held that no penalty u/s 271(1)(c) can be imposed in as much as a comparison has to be made between the return of income filed u/s 153 A viz-a-viz the assessed income.However, the facts , 196 & 197/JPR/2024 19 Shri Nath Corporation & Ors., Jaipur. of the present case are on much stronger footing because the assessee admitted additional income before the closing of previous year itself and included in the ROI filed u/s 139(1) of the Act.

7.2 Further, behind issuing a notice u/s 153A, the legislative intent is, to give a second chance to such assessee who might not have filed any ROI mistakenly or inadvertently despite having taxable income so as to give him one more opportunity to come clean. If despite such opportunity, the notice does not care of filling ROI or a lesser income is declared if filed, the AO may impose penalty but not in a case where an assessee bonafide acted in compliance and the assessment is also completed on the income declared in the ROI filed u/s 153A. Otherwise, there is no purpose behind asking the assessee to file ROI if the original ROI u/s 139(1) was to be considered for the purpose of imposing penalty. This intention is also supported by the further fact that the ROI filed u/s 153A is deemed to be an ROI filed u/s 139(1) and all the provisions of the Act shall apply accordingly. Looking from this angle in absence of any difference in the returned and assessed income.

8. Supporting case laws u/s 271(1)(c) r.w.s. 153A: 8.1 In Pr. CIT vs. Neeraj Jindal (2017) 393 ITR 0001 (Delhi), it was held that: “…………. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that “assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate.” What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and becomes non-est. Now, it is trite to say that the “concealment” has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of levying penalty under Section 271(1)(c), what has to be seen is whether there is any concealment in the return filed by the assessee under Section 153A, and not vis-a vis the original return under Section 139…….” Finally, the Hon`ble Court confirmed the deletion of penalty. 8.2 In Kirit Dahyabhai Patel vs. ACIT [2017] 80 taxmann.com 162 (Gujarat)wherein it was held as under (at para 13 &14)(DPB 1-5):

, 196 & 197/JPR/2024 20 Shri Nath Corporation & Ors., Jaipur. “……………….13. Considering the facts and circumstances of the case and also considering the decisions relied upon bylearned senior advocate for the appellant, we are of the considered opinion that the view taken by the Tribunalis erroneous. The CIT (A) rightly held that it is not relevant whether any return of income was filed by theassessee prior to the date of search and whether any income was undisclosed in that return of income. In viewof specific provision of Section 153A of the I.T. Act, the return of income filed in response to notice underSection 153(a) of the I.T. Act is to be considered as return filed under Section 139 of the Act, as the AssessingOfficer has made assessment on the said return and therefore, the return is to be considered for the purpose ofpenalty under Section 271(1)(c ) of the I.T. Act and the penalty is to be levied on the income assessed overand above the income returned under Section 153A, if any.

14. Further, in the present case, it appears from the record that the assessees had satisfied all the conditionswhich are required for claiming immunity from payment of penalty under Section 271(1) of the Act. Theprovision does not specify any time limit during which the aforesaid amount i.e. the amount of penalty withinterest has to be paid. Admittedly when the assessees herein have paid the entire amount with interest, theAssessing Officer ought to have granted them immunity available under Section 271(1)(C ) of the Income TaxAct…………..” 8.3Prem Arora vs. DCIT (2012) 78 DTR 91 (Delhi) (Tribunal) wherein, it was held as under: “Section 271(1)(c), read with section 153A, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 2004-05 - Whether for purpose of imposition of penalty under section 271(1)(c) resulting as a result of search assessments made under section 153A, original return of income filed under section 139 cannot be considered - Held, yes - Whether concealment of income has to be seen with reference to additional income brought to tax over and above income returned by assessee in response to notice issued under section 153A and, therefore, once returned income under section 153A is accepted by Assessing Officer, it can neither be a case of concealment of income nor furnishing of inaccurate particulars of such income - Held, yes - Search was conducted on 22- 11-2006 and cash was found from possession of assessee - Assessee had drawn cash flow statement for entire period of six years in order to determine undisclosed income based on seized material for each of six assessment years - Whether penalty under section 271(1)(c) cannot be imposed by invoking Explanation 5 in assessment year 2004-05 in respect of cash found in previous year relevant to assessment year 2007-08, merely on presumption that assessee might have been in possession of cash throughout period covered by search assessments - Held, yes [In favour of assessee] “ 8.4 PCIT vs. Trisha Krishnan [2019] 111 taxmann.com 97 (SC)wherein, it was held as under:

, 196 & 197/JPR/2024 21 Shri Nath Corporation & Ors., Jaipur.

Section 4, read with section 271(1)(c), of the Income-tax Act, 1961 - Income - Chargeable as (Advances) - Assessment year 2010-11 - Assessee was a Cine artist - For relevant year, assessee filed her return declaring certain taxable income - Subsequently, assessee filed a revised return admitting additional income - Difference between income originally declared and total income admitted in revised return represented advance received by assessee in said assessment year from various cinema producers towards work to be done by her - In course of assessment, Assessing Officer opined that assessee filed revised returns only after revenue issued notice under section 143 and, therefore, it should be construed that assessee was guilty of deliberate concealment of income - Assessing Officer further noted that assessee had made payments of audit fee, professional charges and commission etc. on which tax was deducted at source but no proof of remittance of same into Government account was produced - He, thus, disallowed said payments - Assessing Officer also passed penalty order under section 271(1)(c) in respect of aforesaid two issues - As regards amount received by assessee as advance, Tribunal found that since said amount had been shown in balance sheet annexed to original return, there was no intention on part of assessee to conceal - With regard to disallowance qua TDS on account of non- deposit of same with Government, Tribunal opined that it was an inadvertent error on part of accountant - Tribunal, thus, set aside impugned penalty order - High Court by impugned order held that, on facts, no substantial question of law arose from Tribunal's order and, thus, same deserved to be upheld - Whether Special leave petition filed against impugned order was to be dismissed - Held, yes [Paras 3 and 4] [In favour of assessee].

9 Supporting case laws u/s 271(1)(c) r.w.s. 148: 9.1 In the case of CIT vs. Pushpendra Surana (2014) 264 CTR 0204 (Raj) wherein it was held that (DPB- 6-8): “6. In our considered view, the CIT (Appeals) and so also the Income Tax Appellate Authority both have considered the matter, in detail, and finally arrived at a conclusion that the income declared by the assessee from the long term capital gain by selling agricultural land, disclosed by the assessee in his revised return of Income was accepted by the Assessing Authority and there was no material available on record by which there could be an inference drawn by the authority that it was a deliberate concealment on the part of the assessee and it could not be considered that there was an inaccurate particulars of income that was made the basis for inflicting penalty upon the assessee in exercise of powers conferred u/S.271(1)(c) of the Act.

9.3In CIT vs Suresh Chand Mittal (2001) 170 CTR 182, 281 ITR 0009 (SC)

9.4 All the cases cited in the decision compilation.

Hence, the ld. CIT(A) rightly deleted the impugned penalty and appeal of the department deserves to be dismissed.”

, 196 & 197/JPR/2024 23 Shri Nath Corporation & Ors., Jaipur. 9. The ld. AR of the assessee has relied upon the following evidence to support the contentions raised in the written submission:-

S. Particulars Page No. Nos.

10. Copy of order of The hon'ble Karnataka High Court in the case of 77-185 Commissioner of Income Tax vs. Manjunatha Cotton And Ginning Factory 7 (2013) 359 ITR 565 11. Copy of order of The Hon'ble Rajasthan High Court in the case of 186- Commissioner of Income Tax v. Kanhaiyalal, (2008) 299 ITR 19 (Raj) 192 13. Copy of order of the Hon'ble Supreme Court in the case of 193- Commissioner of Income Tax Vs Suresh Chand Mittal 241 ITR 124 194 14. Copy of order of the Hon'ble Delhi High Court in the case of 195- Commissioner of Income Tax Vs. M/s SAS Pharmaceuticals Pvt. Ltd. 200 335 19 ITR 259 (Delhi)

"It was also argued that the legislative intent in connection with Section 271 of the Act is further fortified from the various Explanations provided in the said provision. In this regard, Explanation 4 is relevant wherein it is specifically provided as to what would be included in the expression „the amount of tax sought to the evaded‟, which is the basis for imposition of penalty contemplated under Section 271 (1) (c) of the Act. The perusal of the said Explanation also clearly establishes the direct nexus between the concealment/inaccurate particular being furnished with the return filed.

10. To bolster this submission, the learned counsel for the assessee took refuge of Explanation 5 and Explanation 5A of Section 271 of the Act and submitted that these Explanations provide that in cases of search by way of deeming fiction, the liability towards penalty has been prescribed even in cases where the return of income for such year has not been furnished before the said date of search. Therefore, wherever the legislature intended to impose a penal liability covering a case where return was yet to be filed, a deeming fiction has been consciously provided. In the absence of any such deeming fiction imposing penalty in a case of survey where return is yet to be filed, the penal provision of Section 271 of the Act cannot be invoked as the mandatory ingredients thereof are not met at all.

, 196 & 197/JPR/2024 25 Shri Nath Corporation & Ors., Jaipur.

13. It is not the case of furnishing inaccurate particular of income, as in the income tax return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the income tax return. The question is whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the income tax return filed by the assessee, viz., whether concealment is to be found in the income tax return.

11. In the present case, it is evident that the assessee’s additional disclosure made during the survey was duly incorporated in the return filed u/s 153A, which was also accepted by the AO. Hence, considering the principle laid down by CIT vs. SAS Pharmaceuticals (supra), penalty could not be imposed. Not only that Hon’ble Apex Court further clarified, relying on CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC), that , 196 & 197/JPR/2024 27 Shri Nath Corporation & Ors., Jaipur. unless the conditions under section 271(1)(c) are satisfied, no penalty can be imposed. The concealment or furnishing of inaccurate particulars must directly relate to the particulars disclosed in the return of income. The ratio of this decision is directly relevant, as in the present case the assessee has duly disclosed the surrendered income in the return filed u/s 153A, and therefore, no concealment can be attributed. Even as regards the filling of the return in response to notice u/s. 153A of the Act and thereby the levy of penalty has been decided in the case of Pr. CIT vs. Neeraj Jindal (2017) 393 ITR 1 (Del.), wherein the Hon’ble Delhi High Court held that once a return filed u/s 153A is accepted, the original return under section 139 abates and becomes non-est. Concealment has to be seen only with reference to the return filed u/s 153A. The Court reiterated that suspicion cannot substitute proof, and that additions or penalties cannot be sustained in the absence of incriminating material found during search.The relevant extract from Neeraj Jindal reads as under:

“…………. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that “assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate.” What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and , 196 & 197/JPR/2024 28 Shri Nath Corporation & Ors., Jaipur. becomes non-est. Now, it is trite to say that the “concealment” has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of levying penalty under Section 271(1)(c), what has to be seen is whether there is any concealment in the return filed by the assessee under Section 153A, and not vis-a vis the original return under Section 139…….”

Applying the above principle, we note that in the present case, the AO has accepted the assessee’s return filed u/s 139(1)& 153A of the Act where the income in question were duly disclosed in the books of account and duly offered for tax. Therefore, no concealment can be inferred merely on the basis of a loose paper, particularly in the absence of corroborative evidence. This reasoning, flowing from SAS Pharmaceuticals and Neeraj Jindal, becomes the main basis for deciding this matter in favour of the assessee.

12. Conclusion 12.1 In light of the above analysis, we conclude that the ld. CIT(A) was fully justified in deleting the impugned penalty u/s 271(1)(C) of Rs. 1,49,00,000/-. Therefore, respectfully following the binding precedents of SAS Pharmaceuticals (Delhi HC), Neeraj Jindal (Delhi HC) and Chandra Prakash Agarwal (HUF) (ITAT Jaipur) as serviced by the assessee, we find no merit in the Revenue’s appeal and thereby the same is dismissed.

In the result, the appeals filed by the Revenue are dismissed.

Order pronounced in the open Court on 24/09/2025.