SELVA GOLD COVERING P LTD.,CHENNAI vs. DCIT, COIMBATORE

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

This appeal of the assessee is directed against the order of

the Commissioner of Income Tax (Appeals) -1, Coimbatore, dated

30.09.2016 and pertains to assessment year 2012-13 confirming

the penalty levied by the Assessing Officer under Section 271(1)(c)

of the Income-tax Act, 1961 (in short 'the Act').

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that there was a survey in the premises of the assessee on

06.08.2013. The assessee voluntarily filed revised return declaring a total income of `15,93,50,630/- and the same was accepted by

the Assessing Officer without any further addition except a small disallowance of `5,43,708/- under Section 40A(2)(a) of the Act.

According to the Ld. counsel, the Assessing Officer levied penalty

under Section 271(1)(c) of the Act. Referring to the judgment of

Delhi High Court in CIT v. SAS Pharmaceuticals in ITA No.1058 of

2009 dated 08.04.2011, the Ld.counsel submitted that Section

271(1)(c) of the Act is penal in nature, therefore, unless the case of

the assessee falls within four corners of Section 271(1)(c) of the

Act, there cannot be any levy of penalty.

Delhi High Court in SAS Pharmaceuticals (supra), after referring to

Section 271(1)(c) of the Act, found that penalty under Section

271(1)(c) of the Act can be imposed in the course of any proceeding

under the provisions of Income-tax Act. The Delhi High Court after

interpreting the word “any proceeding under the Income-tax Act”

has observed that the satisfaction shall be of the Assessing Officer

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or of the Commissioner of Income Tax (Appeals) who levies the

penalty. When there was a survey conducted by a team of officer,

the question of satisfaction of Assessing Officer or Commissioner of

Income Tax (Appeals) or Commissioner does not arise. According

to the Ld. counsel, the Assessing Officer has not recorded any

satisfaction during the survey operation or during assessment

proceedings. The Assessing Officer was not satisfied that the

assessee has concealed any part of income or furnished any

inaccurate particulars of its income. Therefore, in the light of the

judgment of Delhi High Court, it is obvious that the Assessing

Officer has not recorded any satisfaction for levy of penalty under

Section 271(1)(c) of the Act.

High Court further observed that the concealment of particulars of

income or furnishing of inaccurate particulars of such income has to

be in the return filed by the assessee. In this case, according to the

Ld. counsel, the return filed by the assessee under Section 139(5)

of the Act, was very much accepted by the Assessing Officer

without making any further addition. Even for disallowance made

under Section 40A(3) of the Act, the particulars are very much

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available on record. Merely because the Assessing Officer

disallowed under Section 40A(3) of the Act in view of the statutory

provision, it cannot be said that the assessee has furnished

inaccurate particulars or concealed any part of its income.

Therefore, according to the Ld. counsel, it is not a case for levy of

penalty under Section 271(1)(c) of the Act.

the decision of this Bench of Tribunal in VBC Jewellers v. ACIT in

I.T.A. Nos.2255 & 2256/Mds/2015 dated 22.08.2016 and submitted

that on identical set of facts, this Tribunal deleted the penalty levied

by the Assessing Officer.

Representative, submitted that the assessee claimed before the

Assessing Officer that it co-operated with the Assessing Officer for

completion of assessment. The assessee has also claimed before

the Assessing Officer that the undisclosed income admitted during

the survey operation was offered for taxation by means of revised

return filed under Section 139(5) of the Act. According to the Ld.

D.R., the Assessing Officer found bogus purchase through

accommodation bills and suppression of sales were also found

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during the survey operation and the assessee also admitted the

same and filed the revised return. Since the assessee admitted in

the revised return the undisclosed income found during the course

of survey operation, the Assessing Officer found that the assessee

has willfully furnished inaccurate particulars of income. According

to the Ld. D.R., the assessee constantly evaded the payment of

taxes. Since the assessee was adopting a set pattern of

accommodation bogus purchase in its accounts and suppressed

sales, according to the Ld. D.R., the Assessing Officer has rightly

levied penalty under Section 271(1)(c) of the Act which was also

confirmed by the CIT(Appeals).

perused the relevant material available on record. The assessee is

engaged in the business of gold covering and fancy items. There

was a survey in the premises of the assessee under Section 133A

of the Act on 06.08.2013 and the assessee filed the revised return

under Section 139(5) of the Act declaring total income of `15,93,50,630/-. During the course of survey operation, it appears

the Revenue authorities found that the assessee-company did not

account for a part of its business turnover. The Revenue authorities

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have also found that the assessee generated unaccounted income

by way of suppression of sales and also inflated purchases through

accommodation entries. Therefore, the survey team found that the

assessee has concealed its income. Accordingly, penalty was

levied under Section 271(1)(c) of the Act. The fact remains that the

assessee filed revised return voluntarily under Section 139(5) of the

Act. The return filed by the assessee was processed and the same was accepted by making a disallowance of `5,43,708/- under

Section 40A(2)(a) of the Act.

team found that there was suppression of sales, and the assessee

has filed revised return under Section 139(5) of the Act, whether

there was concealment of income or the assessee has furnished

inaccurate particulars of such income. This matter was examined

by the Delhi High Court in SAS Pharmaceuticals (supra). In fact,

the Delhi High Court has held as follows at paragraphs 13, 14 & 15

of its order:-

“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

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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.

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set of facts in VBC Jewellers (supra). After considering another

order of Division Bench of this Tribunal in ACIT v. Ram Thanga

Nagai Maligai in I.T.A. No.2183/Mds/2014 dated 10.06.2015, this

Tribunal found that the concealment of income started only after

filing of return of income. When the assessee has filed revised

return under Section 139(5) of the Act and the same was accepted

by the Assessing Officer, this Tribunal found that there cannot be

any levy of penalty under Section 271(1)(c) of the Act.

return of income under Section 139(5) of the Act voluntarily

disclosing all the income earned during the year under consideration. Other than the statutory disallowance of `5,43,708/-

under Section 40A(2)(a) of the Act, the entire income disclosed by

the assessee was accepted without any further addition. When the

assessee has filed revised return within the statutory period, under

Section 139(5) of the Act, this Tribunal is of the considered opinion

that it cannot be said that the assessee has concealed any part of

income or furnished any inaccurate particulars of income. The

statutory provision allows the assessee to file revised return

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whenever there was omission to disclose the income which is

otherwise taxable under the Income-tax Act. In this case, after the

survey operation, the assessee found there was omission to

disclose the income otherwise taxable under the Income-tax Act

and accordingly filed revised return within the statutory period and

offered the same for taxation. Therefore, this Tribunal is of the

considered opinion that it is not a fit case for levy of penalty under

Section 271(1)(c) of the Act.

Pharmaceuticals (supra), the survey team found that the assessee

has not disclosed its income by suppressing the sales turnover and

also booking inflated purchases. The Delhi High Court found that

satisfaction of survey team cannot be construed as proceeding

under the Income-tax Act. Only the Assessing Officer or

Commissioner or Commissioner of Income Tax (Appeals) can

initiate penalty proceeding in the course of any proceeding pending

before them. When the survey team found that the assessee has

inflated the purchases and suppressed the sales turnover, it cannot

be said that any proceeding was pending before the Assessing

Officer or Commissioner or Commissioner of Income Tax (Appeals).

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In view of the above, this Tribunal is of the considered opinion that it is not a fit case for levy of penalty. Accordingly, this Tribunal is unable to confirm the order of the CIT(Appeals). Hence, the orders of both the authorities below are set aside and the penalty levied by the Assessing Officer as confirmed by the CIT(Appeals) is deleted.

Order pronounced on 29th March, 2017 at Chennai.

sd/- sd/- (�ड.एस. सु�दर �संह) (एन.आर.एस. गणेशन) (D.S. Sunder Singh) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member

चे�नई/Chennai, �दनांक/Dated, the 29th March, 2017.

Kri. आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-1, Coimbatore 4. Principal CIT-1, Coimbatore 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.