A.C.I.T., CIRCLE-39,KOLKATA, KOLKATA vs. M/S M.B.JEWELLERS & SONS, KOLKATA

The assessee in the present case is a partnership firm, which is engaged in the business of manufacturing and trading of jewellery. A survey under section 133A was carried out at the business premises of the assessee on 26.02.2009 and 27.02.2009. During the course of survey, the value of stock as determined on physical verification was found to be more than the value of stock recorded by the assessee in its books of ./2013 Assessment year: 2009-2010 Page 2 of 4 account. As a result of this adverse finding, the assessee agreed to surrender additional income of Rs.50,00,000/-. Accordingly, in the return of income filed for the year under consideration declaring total income of Rs.1,19,92,979/-, the income of Rs.50,00,000/- surrendered during the course of survey was offered by the assessee and tax thereon was also duly paid. In the assessment completed under section 143(3) vide an order dated 20.12.2011, the total income of the assessee was determined by the Assessing Officer at Rs.1,20,30,210/- after making some small additions. Thereafter penalty proceedings under section 271(1)(c) were initiated by the Assessing Officer in respect of the income of Rs.50,00,000/- surrendered by the assessee during the course of survey on the ground that the assessee could not have disclosed its income of Rs.50,00,000/- but for the survey taken place at his premises. The explanation offered by the assessee in this regard in response to the notice issued during the course of penalty proceedings that the income of Rs.50,00,000/- surrendered during the course of survey having been declared in the return of income and tax thereon also having been paid, there was no case of concealment of particulars of its income by the assessee or furnishing of inaccurate particulars of such income was not found acceptable by the Assessing Officer and he proceeded to impose penalty of Rs.15,45,000/- under section 271(1)(c) being 100% of the tax allegedly sought to be evaded by the assessee in respect of the income of Rs.50,00,000/- surrendered during the course of survey.

The penalty imposed by the Assessing Officer under section 271(1)(c) was challenged by the assessee in an appeal filed before the ld. CIT(Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) found that the issue involved in the case of the assessee was squarely covered in favour of the assessee by the various judicial pronouncements. In one of such judicial pronouncements relied upon by the ld. CIT(Appals) in the case of CIT –vs.- Sas Pharmaceuticals [335 ITR 259], it was held by the Hon’ble Delhi High Court that income surrendered during the course of ./2013 Assessment year: 2009-2010 Page 3 of 4 survey having been declared by the assessee in his return of income and tax thereon having been paid by him, there was no case of concealment or non-disclosure of the particulars of income, as such concealment or non-disclosure has to be seen with reference to the return of income filed by the assessee. The ld. CIT(Appeals) also noted that in the case of Vinod Goyal –vs.- ACIT reported in 115 TTJ 559, it was held by the Nagpur Bench of this Tribunal that the cash found during the course of survey having been surrendered by the assessee as his income and the income so surrendered having been declared in the return of income, which was duly accepted by the Department, there was no case of concealment of particulars of his income by the assessee or furnishing of inaccurate particulars of such income attracting the penal provisions of section 271(1)(c). Relying on these judicial pronouncements as well as the other case laws discussed in his appellate order, the ld. CIT(Appeals) cancelled the penalty of Rs.15,45,000/- imposed by the Assessing Officer under section 271(1)(c). Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that there was some difference found in the valuation of stock as made during the course of survey on physical verification and the value of stock as appearing in the books of account of the assessee. As a result of this adverse finding, the assessee agreed to surrender additional income of Rs.50,00,000/- during the course of survey and in the return of income filed regularly for the year under consideration, the additional income of Rs.50,00,000/- as surrendered during the course of survey was offered to tax by the assessee. In the assessment completed under section 143(3) vide an order dated 20.12.2011, the Assessing Officer accepted this disclosure made by the assesese without recording any adverse observation. The additional income surrendered during the course of survey thus was duly declared by the assessee in the return of income filed regularly for the year under consideration after payment of tax due thereon and the return ./2013 Assessment year: 2009-2010 Page 4 of 4 of income so filed by the assessee was accepted by the Assessing Officer on this issue. It is a settled position of law that the concealment as envisaged in section 271(1)(c) is to be inferred with reference to the return of income filed by the assessee and when the income surrendered during the course of survey was duly declared by the assessee in the return of income regularly filed, there was no case of concealment of particulars of his income by the assessee or furnishing of inaccurate particulars of such income as rightly held by the ld. CIT(Appeals) by relying on the various judicial pronouncements. We, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) cancelling the penalty of Rs.15,45,000/- imposed by the Assessing Officer under section 271(1)(c) and upholding the same, we dismiss this appeal filed by the Revenue.