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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-2, Chennai in 18/AY 2011-12/CIT(A)-2 dated 20.08.2018 for assessment year 2011- 12, wherein the Ld. CIT(A) upheld the penalty imposed by the AO u/s. 271(1)(c) of the Act.
Smt. Latha C. Mohan, the assessee, is the proprietorex of Kanya Beauty Salon and Bounce in Chennai. She filed her return of income for the assessment year 2011-12 on 30.09.2011. On 10.05.2013, a survey operation was carried out in the assessee’s business premises which resulted in a finding that the assessee understated her turnover and concealed her income. Subsequently, the A O issued notice u/s. 148, the assessee filed a revised return admitting a total income of Rs. 56,63,140/-, which was scrutinised and accepted in the re-assessment, resulting an additional demand. While completing the re-assessment, the A O observed that the original return filed by the assessee failed to reflect true state of affairs, there was suppression of turnover, there was concealment on the part of the assessee and inaccurate particulars were furnished at the time of filing original return and initiated penalty proceedings u/s. 271(1)(c). The quantum addition attained finality.
During the penalty proceedings, the assessee submitted that the disclosures was only to buy peace with the department and to avoid protracted litigation. However, the A O held that the assessee’s original return failed to reflect the true state of affairs, assessee understated the turnover and concealed her income. It was only through the survey, this concealment was brought on record and when the notice u/s. 148 was issued, the assessee filed a revised return accommodating
:-3-: the findings of the survey. Therefore, the AO levied the penalty u/s. 271(1)(c). Aggrieved, the assessee filed an appeal before the CIT(A).
The Ld. CIT(A) dismissed the appeal. Aggrieved against that order the assessee filed this appeal.
The Ld. AR primarily submitted that during survey, the authorities found a hard disk which had projected financials. The authorities mistook it as the actual financials. In response to the notice u/s. 148, the assessee filed a revised return with the sole purpose of buying peace and to avoid protracted litigation. The survey report alleged suppression of income of Rs. 1.86 crores, however, the assessee returned an income of Rs. 57,63,134/- in its revised return, an increase of about Rs. 30 lakhs more than the original income admitted at Rs. 27,77,857/- before the survey. The assessee did not offer the exact amount discovered during the survey in the revised return. The A O has also brushed away the alleged survey report and accepted revised return. Thus, the AO has passed the order without disputing the assessee’s submission and revised return. Therefore, the penalty should have been dropped accepting the assessee’s submission.
Therefore, the initiation of penalty proceedings are illegal and bad in law. There is no evidence to substantiate the metrics as real income.
The addition made purely without recording any incriminating material and substantial evidence. Therefore, the AO cannot initiate penalty u/s. :-4-: 271(1)(c). Thereafter, the AR pleaded that the penalty initiated vide notice u/s. 274 r.w.s. 271(1)(c) is without any specific charge. Thus, the Ld. AR pleaded to set aside the order of the Hon’ble CIT(A), set aside the order of the Ld. AO, strike down the notice issued u/s. 274 r.w.s. 271(1)(c) and quashe the penalty order. Per contra, the Ld. DR supported the order of the Ld. CIT(A).
We heard the rival submissions and considered them carefully.
The assessee filed her original return of income for assessment year 2011-12 on 30.09.2011 admitting a total income of Rs. 27,77,857/-. On 10.05.2013, a survey operation was carried out in the assessee’s business premises which resulted in a finding that the assessee understated her turnover and concealed her income. Subsequently, the A O issued notice u/s. 148, the assessee filed a revised return admitting a total income of Rs. 56,63,140/-, which was scrutinised and accepted in the re-assessment, resulting an additional demand. While completing the re-assessment, the A O recorded in the assessment order that the original return filed by the assessee failed to reflect true state of affairs, there was suppression of turnover, there was concealment on the part of the assessee and inaccurate particulars were furnished at the time of filing original return and initiated penalty proceedings u/s. 271(1)(c),
:-5-: towards which the assessee submitted that the assessee made disclosure only to buy peace and avoid protracted litigation. Thus, the AO has clearly indicated the charge for the proposed levy of penalty u/s. 271(1)(c), that is how the assessee has understood and submitted her explanation towards the penalty notice. Therefore, the assessee’s plea that the notice issued u/s. 274 r.w. 271(1)(c) is without specific charge is untenable. We have considered the assessee’s plea that the hard disk found by the authorities has the projected financials, they mistook them as the actual financials, based on which the survey report alleged that there was suppression of income at Rs. 1.86 crores. However, the income admitted by the assessee in the revised return is about Rs. 30 lakhs more than the original return that too by an estimation only, to buy peace and avoid protracted litigation. The assessee has absolutely no intention of concealing income from the Income Tax Department for the escapement of tax etc. The facts remain that the assessing authority accepted the revised return, concluded the assessment with the finding that the assessee supressed its turnover, income, there was concealment on the part of the assessee and inaccurate particulars were furnished at the time of filing of original return. The quantum of income admitted after the survey in the revised return is at Rs. 57,63,134/- , which is just more than double of the income admitted in the original income at Rs. 27,77,857/-. This quantum defies the :-6-: explanation of the assessee. Therefore, the assessee’s explanation that the quantum admitted in the revised return is an estimate to buy peace with the department etc is untenable. Therefore, we find merit in the order of the Ld. CIT (A) based on the case laws relied on by him viz S.R. Arulpraksam Vs ITO 163 ITR 487(Mad) , Ravi & Co. vs ACIT 271 ITR 280(Mad) , CIT vs Krishna & Co., 120 ITR 144(Mad) etc. On the above facts and circumstances, the case laws relied on by the assessee are not applicable to the facts of this case and hence, the corresponding grounds of the assessee fail.
In the result, the assessee’s appeal is dismissed.
Order pronounced on 23rd December, 2019 at Chennai.