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Income Tax Appellate Tribunal, “A”
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)-6, Pune dated 09.03.2020 arising out of proceedings under section 271(1)(c) of the Income Tax Act, 1961 for the A.Y. 2013-14. The Revenue raised the following grounds of appeal: “1. The Ld. CIT(A) erred in passing the order both on the facts and in the law.
2. The CIT(A) has erred in deleting the penalty of Rs. 1,18,96,500/- levied by the Assessing Officer u/s. 271(l)(c) of the I. T. Act, 1961.
3. The CIT(A) has erred in deleting the penalty ignoring the fact that the assessor has concealed income which was subsequently unearthed in survey action.
4. The CIT(A) has erred in deleting the penalty ignoring the fact
A.Y. 2013-14 DCIT, Circle-8, Pune Vs. M/s.N.D.Construction [R] the declaration made by the assessee during survey action was not voluntary and during the course of survey action books of account were impounded indicating details of on money and cash receipts, which were in the knowledge of the assessee, hence intention of the assessee is proved.
5. For these and such other reasons as may be urged at the time of hearing, the order of the CIT(A) may be vacated and that of the Assessing Officer be restored.
6. The appellant craves, leave to add, amend, alter or delete any of the above grounds of appeal
during the course of appellate proceedings before the Hon’ble Tribunal.”
2. Briefly stated facts as per the order of the ld.CIT(A) as under: “2. The brief facts of the case as per record are that a survey u/s.133A was conducted at the business premises of the appellant on 25.10.2012. During the course of survey, the appellant made a declaration of Rs.3.5 Crores for A.Y.2013-14 on account of on- money/cash receipts on the basis certain loose papers found during the course of survey. Subsequently, the appellant filed its Return of Income for A.Y. 2013-14 on 30.09.2013 declaring total income of Rs.6,15,42,650/- in which the declaration made during the survey was duly offered to tax. An order u/s.143(3) of the Act was passed on 18.03.2016, accepting the returned income at Rs.6,15,42,650/-. However, the AO initiated penalty proceedings u/s.271(1)(c) of the Act on grounds that if it was not for the survey, the appellant would not have disclosed the income of Rs.3.5 crores. Subsequently, the AO imposed a penalty of Rs.1,18,96,500/- vide order dated 29.09.2016.”
3. Aggrieved by the penalty order of the AO, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) deleted the penalty levied under section 271(1)(c) of the Act. Aggrieved by the order of the ld.CIT(A), the Revenue has filed appeal before this Tribunal.
A.Y. 2013-14 DCIT, Circle-8, Pune Vs. M/s.N.D.Construction [R]
Heard both the parties and perused the material available on record. In this case, the assessee has filed return of income incorporating the declaration made during the survey. The Return of Income was filed under section 139(1) of the Act. The AO passed order under section 143(3) of the Act accepting the income shown in the Return of Income. Thus, there is no addition of any concealed income in the assessment order. However, the AO levied penalty under section 271(1)(c) of the Act. 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 AO, nor filing of inaccurate particulars.
4.1. The Hon’ble Delhi 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 A.Y. 2013-14 DCIT, Circle-8, Pune Vs. M/s.N.D.Construction [R] 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 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 A.Y. 2013-14 DCIT, Circle-8, Pune Vs. M/s.N.D.Construction [R]
complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. 17. 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. 2013-14 DCIT, Circle-8, Pune Vs. M/s.N.D.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.
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 A.Y. 2013-14 DCIT, Circle-8, Pune Vs. M/s.N.D.Construction [R] 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 Assessing Officer is directed to delete the impugned penalty u/s.271(1)(c), accordingly, the grounds of appeal raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on 19th July, 2022.