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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The appeal filed by the assessee is directed against order of the Commissioner of Income-tax (Appeals)-I, Coimbatore in Appeal No.55/11-12, dt 03.04.2012 for the assessment year 2008-2009
ITA No.1177/Mds/2012. :- 2 -: passed u/s.271(1)(c) and 250 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’).
The assessee has raised substantive ground that 2.
Commissioner of Income Tax (Appeals) confirmed penalty levied by the Assessing Officer without appreciating revised statement filed by the assessee and also no proper reasons assigned in confirming the penalty.
The facts of the case are that the assessee is an Architect 3. individual and proprietor of M/s. Prabhu Associates and filed return of income on 30.09.2008 and was processed u/s.143(1) of the Act. Due to survey u/s.133A of the Act on 07.08.2009, Revenue found copies of documents of investment in immovable property in the financial year 2007-08. The ld. Authorised Representative of the assessee appeared from time to time and filed details and assessee admitted additional income of �55,56,000/-. The assessee was having two PAN numbers and one PAN was deactivated and directed by the Assessing Officer to use only above referred PAN number. The assessee filed revised statement in the assessment proceedings on 26.08.2010 with total income of �59,90,072/- and the Assessing Officer accepted and assessed the total income and raised demand. Subsequently, the Assessing Officer initiated penalty proceedings by letter dated
ITA No.1177/Mds/2012. :- 3 -:
28.12.2010. In compliance to the penalty notice, the assessee filed submissions and explained that the investment are supported by source. Since survey operation are conducted till evening on 07.08.2009 and because of confused and disturbed mind, the assessee has offered income to buy peace with the department. The sources for purchase of immovable property are through proper bank channel, loans from financial institutions, share of profit from the partnership firm and professional income. Further no material was seized or impounded in survey operations by the Department. The assessee demonstrated the bonafides by voluntary filing revised statement on 26.08.2010 and paid taxes as per Assessment order u/s.143(3) of the Act dated 28.12.2010. The assessee emphasized that he has co-operated in survey and assessment proceedings and paid the entire tax and interest on the admitted income and disclosed complete income details. But the ld. Assessing Officer has not accepted the explanations due to survey operations by the Department, undisclosed income was traced. The assessee could not explain the investments in immovable property at the time of filing of return of income and considered the explanations are not satisfactory and neither produced any evidence for sources for investments in the survey or in assessment proceedings, and levied a minimum penalty
ITA No.1177/Mds/2012. :- 4 -: of �15,63,020/- u/s.271(1) (c) of the Act dated 30.03.2011. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals).
In the appellate proceedings, the ld. Authorised Representative reiterated the submissions made in the assessment proceedings and in penalty proceedings. The assessee has co- operated and paid taxes and to substantiate the bonadifes the ld. Authorised Representative argued the grounds of appeal and prayed for deletion of penalty. But the Commissioner of Income Tax (Appeals) on perusal of the survey and assessment records found certain investments are made in impugned immovable properties though the assessee has offered additional income voluntarily in the assessment proceedings. The assessee to substantiate his co-operation has paid the taxes including interest and not filed quantum appeal against the order u/s.143(3) of the Act. Though the Commissioner of Income Tax (Appeals) considered the bonafides and cooperation but for survey the unaccounted income could not have come to light and assessee has not explained in original Return of income. The Commissioner of Income Tax (Appeals) observed and confirmed the order of the Assessing Officer. Aggrieved by the order of the Commissioner of ITA No.1177/Mds/2012. :- 5 -:
Income Tax (Appeals), the assessee assailed an appeal before Tribunal.
Before us, the ld. Authorised Representative reiterated his submissions made in the assessment proceedings, penalty proceedings and appellate proceedings and substantiated his arguments that the assessee has voluntarily surrendered the income in the survey and offered the same for tax during the assessment proceedings. The assessee is an architect made investments in the impugned property and the source being the banking channel and professional income and loan from financial institution but in order to buy peace with the department, the assessee has offered income and paid the taxes and prayed for deletion of penalty.
Contra, the ld. Departmental Representative relied on the 6. orders of the lower authorities and opposed the grounds of the assessee.
We heard the rival submissions and perused the material on 7. record. The ld. Authorised Representative substantiated his arguments on a limited issue that in survey operations due to confusion and disturbed state of mind the assessee has accepted the disclosure though have valid explanations for investments in impugned property
ITA No.1177/Mds/2012. :- 6 -: being bank loan, professional income and other but in order to buy peace he has voluntarily accepted and not retracted the disclosure and filed revised statement of income of �59,90,072 in the assessment proceedings. The fact that due to survey operations, the assessee has voluntarily offered income in the assessment proceedings to the satisfaction of the Assessing Officer. The assessee has not contested the additions in the assessment order and paid the taxes including interest and produced the challans in the penalty proceedings but the ld. Assessing Officer though considered the facts of co- operation and payment of taxes but for survey this income was offered and taxed. The Department could not substantiate the addition with any corroborative evidence of survey operations and the income offered by the assessee is based on revised statement filed on 26.08.2010. Considering the factual aspects the Assessing Officer has only considered the income offered by the assessee and made assessment without any creditable documentary evidence found in the survey operations. The penalty proceedings are not automatic and every addition is not a gateway for levying penalty We draw support from the principles laid down in case of case of CIT vs. Manjunatha Cotton and Ginning Factory, 359 ITR 565, (Karnataka) were it was held that the penalty proceedings are not automatic and they are ITA No.1177/Mds/2012. :- 7 -: distinct and we also rely on jurisdictional High Court decision of CIT vs. S. Khader Khan & Son 300 ITR 0157 and accordingly we set aside the order of Commissioner of Income Tax (Appeals) and direct the Assessing Officer to delete the penalty.
In the result, the appeal of the assessee is allowed. 8.
Order pronounced on Thursday, the 24th day of March, 2016, at Chennai.