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Income Tax Appellate Tribunal, “B”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Revenue is directed against the order of ld.Commissioner of Income Tax(Appeals)-5, Pune for the A.Y. 2015-16 dated 22.02.2019, emanating out of order under section 271(1)(c) of the Act, 1961. The Revenue raised the following grounds of appeal: “1. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in deleting the penalty levied u/s 271(1)(c) of Rs.2,96,82,300/-.
2. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) was justified to hold that the imposition of penalty u/s 271(1)(c) of the Income tax Act, 1961 was not justified, despite the fact that had the case of assessee not been covered under survey action, he neither would have declared the additional income of Rs.8,73,26,560/- nor would have filed return of income declaring the said income.
A.Y. 2015-16 ACIT, Circle-7, Pune Vs. M/s.Tirupati Construction [R]
3. The appellant prays the order of the A.O may be restored.
4. The appellant prays to adduce such further evidence to substantiate his case.” 2. The ld.Authorised Representative(ld.AR) of the assessee submitted a paper book and he submitted that in this case, there is no addition in the assessment order. The Assessing Officer(AO) has accepted returned income. He took us through the assessment order. The ld.AR of the assessee explained that there was a survey in the case of the assessee on 23.02.2015. During the survey, certain income was declared by the assessee, accordingly, assessee filed Return of Income under section 139(1) of the Act on 30.09.2015 declaring total income of Rs.26,47,73,730/-. The AO has accepted the returned income. Therefore, the ld.AR stated that there is no concealment and hence, the penalty under section 271(1)(c) of the Act is bad in law. The ld.AR further explained that the AO has not recorded any satisfaction in the assessment order for initiating penalty under section 271(1)(c) of the Act, which is mandatory as held by various Hon’ble High Courts.
Per contra, the ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the AO.
We have heard both the parties, perused the records. It is a fact that in the assessment order Return of Income has been accepted and A.Y. 2015-16 ACIT, Circle-7, Pune Vs. M/s.Tirupati Construction [R] there are no additions. Since there is no addition to returned income, there is no concealment of income. To initiate penalty under section 271(1)(c) of the Act, there has to be concealment of income or filing of inaccurate particulars but in this case, there is neither concealment of income as Returned Income has been accepted by the Assessing Officer, nor filing of inaccurate particulars. 4.1. The Hon’bleDelhi High Court has held in the case of CIT Vs. SAS Pharmaceuticals 335 ITR 259 (Delhi) held as under: Quote “ 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 subsection (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 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.
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.
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 A.Y. 2015-16 ACIT, Circle-7, Pune Vs. M/s.Tirupati Construction [R] 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 a concealment 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.
We, thus, answer the questions as formulated above, in favour of the assessee and against the revenue finding no fault with the decisions of the CIT(A) as well as the Tribunal.” Unquote. 4.2. The Hon’ble Karnataka High Court has held in the case of CIT Vs. Parasmal Babulal Jain (2012) 208 Taxmann 303 (Karnataka) as under : Quote “This appeal was admitted on 5.3.2007 to consider the following substantial questions of law : -
(1) Whether the Tribunal was correct in holding that no penalty under Section 271(1)(c) of the Act can be levied despite the fact that the assessee came forward to file a return only after a survey disclosing a sum of Rs. 16,15,702/- and on scrutiny it was found that the assessee had claimed an expenses of Rs, 5,87,512/-which was not in a position to substantiate and consequently penalty had been correctly levied? (2) Whether the Tribunal was correct in holding that no penalty can be levied if the return of income is filed within time and expenses claimed by the assessee are disallowed in the course of regular assessment?
6. Section 271(1)(c) provides that, if the Assessing Officer in the course of any proceedings under this Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty. 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.
A.Y. 2015-16 ACIT, Circle-7, Pune Vs. M/s.Tirupati Construction [R]
In the instant case the return is filed after the survey. In the return filed the assessee has declared a total income of Rs. 18,25,180/- for the assessment year 2000-01 on 25.10.2000 within the time prescribed under law. The return filed was taken up for scrutiny under Section 143(3) of the Act. As is clear from the order of the assessing authority nowhere it is stated whether any income has been concealed by the assessee which is brought to tax. Similarly it is nobody's case that the assessee has furnished inaccurate particulars. The order discloses the assessee had claimed 2% expenses. However, the assessing authority has accepted 1.5% as the expenses on the estimated turnover. It is because of this reduction in the percentage of expenses the total income has gone up to Rs. 19,89,820/-. In other words it is nobody's case that in the return filed by the assessee that he has concealed income or that the particulars furnished in the income are inaccurate. It is because of the disallowance of the expenditure the total amount representing total income is enhanced to the extent of disallowance. Therefore, the conditions which are to be fulfilled before section 271(1)(c) is attracted do not exist. Therefore, the Tribunal was right in holding that there is no concealed income which attracts the provision of penalty. As the question whether the income was concealed or not is purely a question of fact and the Tribunal has recorded a finding that there is no concealment of income, in our view no substantial question of law do arise for consideration. Even otherwise, the substantial questions of law which are framed at the time of admission are answered in favour of the assessee and against the revenue. Accordingly, the appeal is dismissed.” Unquote. 5. In the case under consideration it is a fact that returned income has been accepted in the assessment order and there is no concealment detected qua the return of income. Therefore, there is no concealment of income qua the return of income. Respectfully following the proposition of law laid down by the Hon’ble High Court(supra), the penalty is not maintainable. Hence the order of the Ld.CIT(A) is upheld to that extent. Therefore, the AO is directed to delete the impugned penalty u/s 271(1)(c) accordingly, the grounds of appeal raised by the revenue are dismissed.
A.Y. 2015-16 ACIT, Circle-7, Pune Vs. M/s.Tirupati Construction [R]
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on 19th July, 2022.