KIRLOSKAR CHILLERS PVT.LTD,PUNE vs. JOINT COMMISSIONER OF INCOME-TAX, RANGE - 11, PUNE

2 & 595/PUN/2019 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.594/PUN/2019 for the assessment year 2011-12 are stated herein. ITA No.594/PUN/2019, A.Y. 2011-12 : 4. The appellant raised the following grounds of appeal :- “1. The learned CIT(A) erred on facts and in law in upholding penalty of Rs.7,25,958/- levied on assessee without appreciating the facts and submissions made before the learned A.O. as well as learned CIT(A) in this behalf.

We heard the rival submissions and perused the material on record. The issue in the present appeal relates to whether the Assessing Officer was correct in law in levying penalty of Rs.7,25,958/- u/s 271(1)(c) of the Act, when the assessee had shown additional income in the revised return of income. The Hon’ble Delhi High Court in the case of SAS Pharmaceuticals (supra) involving the identical facts held that no penalty could be imposed as there was no concealment or furnishing inaccurate particulars of income as the assessee had made a complete disclosure in the return of income and offered the additional amount for the purpose of tax. The relevant paragraph of the said judgment of the Hon’ble Delhi High Court (supra) are as under :- “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 5 & 595/PUN/2019 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 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.”

The ratio of the Hon’ble Delhi High Court (supra) is squarely applicable to the facts of the present case. Therefore, we reverse the order of the ld. CIT(A) confirming the levy of penalty and direct the Assessing Officer to delete the penalty of Rs.7,25,958/- u/s 271(1)(c) of the Act.

In the result, the appeal of the assessee in ITA No.594/PUN/2019 for A.Y. 2011-12 stands allowed.