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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI A.T.VARKEY, JM & DR. A.L.SAINI, AM
O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the assessee pertaining to the Assessment Year 2008-09, is directed against the order passed by ld. CIT(A)-VI, Kolkata in Appeal No.32/CIT(A)-VI/Cir-5/11-12/Kol, dated 22.11.2012, which in turn arises out of an order passed by the Assessing Officer (AO) Under Section 271(1)(c) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 27.05.2011.
Brief facts of the case qua the assessee are that the a survey U/s 133A of the I.T. Act was conducted at the office premises of the assessee on 14.01.2008 and it was found that the assessee had certain transactions which were out of books. During the course of assessment it was found that the assessee had disclosed the unexplained income/receipts as other income in the Profit & Loss account. The cash received was actually on money received by the assessee for sale of flats the assessee did not disclosed the unaccounted income in the manner in which it has been Officer.
3.Aggrieved from the order of AO, the assessee filed an appeal before the ld. CIT(A), who has confirmed the order passed by the AO observing the followings :-
The above facts and circumstances where the appellant has disclosed the income during survey and file the return accordingly. The income has been accepted without variation by the Assessing Officer during the assessment proceedings. The Hon’ble Delhi High court in the case of CIT vs. SAS Pharmaceuticals (Supra) in the similar circumstances has cancelled the penalty by holding that there is no 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. 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 concealed by the assessee or not. No doubt, the discrepancies were found during the survey and this had yielded income from the assessee in the form of amount surrendered by the assessee.
At present in the penalty proceedings, the moot question is to whether this would attract penalty upon the assessee under the provisions of Section 271(1)(c) of the Act. It upheld in the facts and no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Therefore, in the facts and circumstances and relying upon the judgments of the various Appellate Authorities as discussed supra and Hon’ble Delhi High Court in the case of CIT Vs. SAS Pharmaceuticals, the penalty of Rs.17,46,261/- is deleted. The ground of appeal
no.2,3&4 are accordingly allowed.
4. Not being satisfied with the order of ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal :-
1. That the Ld. CIT(A) has erred in deleting the penalty of Rs.17,46,261/- imposed u/s 271(1)(c) stating that no penalty can be imposed unless the conditions stipulated in the provisions u/s 271(1)(c) are duly and unambiguously satisfied.
2. That the Ld. CIT(A) has erred in relying upon judgments of the various Appellate Authorities. It is important to state that the income of Rs.56,51,330/- was not found to be reflected in the 3 M/s J.P.Nirman Pvt. Ltd. books of assessee during the course of survey. The transactions not recorded on the day of survey cannot be construed that the particulars of income was duly furnished. 3. That the appellant crabs leave to add, alter or withdraw any ground or grounds of appeal before or at the time of hearing of the Appeal.
5. Ld. DR for the revenue has also primarily relied on the findings of the AO which we have already noted in our earlier para and is not being repeated for the sake of brevity. However, from the order of the ld CIT(A) we noted that the appellant has disclosed the income during survey and file the return accordingly. The income has been accepted without variation by the Assessing Officer during the assessment proceedings. We observed from the order of CIT(A) that there is no 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. 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 concealed by the assessee or not. No doubt, the discrepancies were found during the survey and this had yielded income from the assessee in the form of amount surrendered by the assessee.
The Ld CIT(A) while deleting the penalty U/s 271 (1) (c ) observed the following:
4 M/s J.P.Nirman Pvt. Ltd.
7. I have considered the observations of the Assessing Officer in the assessment order and submissions of the appellant. There was a Survey operation in the business premises of the appellant and the appellant had declared as an amount of Rs.42,30,000/- as additional income on sale of flats and further excess cash of Rs.9,17,825/-, the same was disclosed in the return of income and the returned income of Rs.56,51,325/- was accepted without any variation by the assessing Officer in the assessment order passed u/s.143(3) dated 29.11.2010. Therefore, there was no variation in the returned income and assessed income.
The appellant has relied on the case of Hon'ble High Court of Delhi at New Delhi in the case of CIT vs. SAS Pharmaceuticals in on 2009 reported in 335 ITR 259 (Delhi) and 244 CTR-51. The Hon'ble High Court has held that 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. It further held that the question is whether the particulars of income were concealed by the assessee or not. No doubt, the discrepancies were found during the survey. This has yield income from the assessee in the form of amount surrendered by the assessee. It further held that it 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. It upheld in the facts that no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. It observed as under:-
"After considering the respective submission of the learned counsel for the parties, we are of the view that the argument of the learned counsel for the assessee has to prevail as it carried substantial weight. It is to be kept in mind that Section 271(1)(c) of the Act is a penal provision and such a provision has to be strictly construed. Unless the case falls within the four-corners of the said provision, penalty cannot be imposed. Sub-section (1) of Section 271 stipulates certain contingencies on the happening whereof the AO or the Commissioner (Appeals) may direct payment of penalty by the assessee. We are concerned herewith the fundamentality provided in Clause (C) of Section 271(1) of the Act, which authorizes imposition of penalty when the AO is satisfied that the assessee has either:
(a) Concealed the particulars of his income: or (b) Furnished inaccurate particulars of such income.
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 5 M/s J.P.Nirman Pvt. Ltd. particulars of income were 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.
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 Sub-section (1) of Section 271 of the Act of the Act and contending that even during survey when it was found that the assessee had concealed the particular of has 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 Act or the Commissioner of Income Tax (Appeals). When the survey is conducted by a survey team, the question of satisfaction of AO or Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is the AO 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 particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income tax return fifed by it. There is sufficient indication of this in the judgment of this Court in the case of Commissioner of Income Tax, Delhi-I Vs. Moihan Das Hassa Nand 141 ITR 203 and in Reliance Petroproducts Pvt. 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-s as well as 5 and 5A of 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 yield 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 concealment or 6 M/s J.P.Nirman Pvt. Ltd. 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. 6. Having heard the ld DR for the Revenue, perused the material on record, we are of the view that there is merit in the order passed by the ld CIT (A). The Ld CIT(A) has rightly observed that the appellant has disclosed the income during survey and file the return accordingly. The income has been accepted without variation by the Assessing Officer during the assessment proceedings. Therefore, there is no concealment of income or furnishing inaccurate particulars of income. We do not find any infirmity in the order passed by the ld CIT(A), therefore, we, accordingly confirm the order passed by the ld CIT(A).
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on this 22/02/2017.