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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The appeal is filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-I, Madurai in dated 28.08.2014 for the assessment year 2010- 11 passed u/s.271(1)(c) of the Income Tax Act (in short the ‘’Act”).
ITA No. 2753/Mds/2014 :- 2 -:
The department has raised only one substantive ground of Commissioner of Income Tax (Appeals) erred in deleting the penalty levied u/s.271(1)(c) of the Act though assessee has disclosed income in survey operations u/s.133A of the Act and filed revised return and paid taxes.
The brief facts of the case are that the assessee is a retired teacher from Palayamkottai, took voluntary retirement from service and engaged in real estate business, filed income tax return on 31.07.2010 disclosing total income of �3,08,770/-. Subsequent to the filing of return, survey u/s.133A of the Act was conducted on 03.02.2011 and in survey operations, the assessee voluntary disclosed income of �80 lakhs for the assessment year 2009-2010 and �80 lakhs for the assessment year 2010-2011 being total amount aggregating to �1.60 crores. The assessee being a retired teacher offered additional income and filed revised return on 18.05.2011 and paid taxes �29,92,370/- including interest. The ld. Assessing Officer completed assessment treating the revised return filed within the stipulated time under provisions of law and passed order u/s.143(3) of the Act dated 27.03.2013. The assessee wanted to buy peace with the department and surrendered income and not filed appeal against the order of the Assessing Officer u/s.143(3) but paid the assessed tax.
ITA No. 2753/Mds/2014 :- 3 -:
Subsequently, notice u/s.271(1)(c) was issued for levy of penalty. It is a fact that the assessee being a teacher and has co- operated in survey operations and in assessment proceedings with the Income Tax Department and came forward voluntary after survey and disclosed additional income and paid taxes. He has not retracted the statement recorded in survey operations neither filed any petition.
These facts being on record the Assessing Officer applying the single agenda decision but for survey the assessee would not offered income to taxes issued show cause notice. In reply to notice, assessee filed a detailed explanations to avoid any action by the department, offered additional income and submitted that he has not concealed income or furnished inaccurate particulars in the proceedings which called for levy of penalty u/s.271(1) (c) of the Act. But the Assessing Officer observed that due to survey operations amount has been unearthed and there is a concealment of income relied on the judicial decisions without considering the real and factual situation and circumstances were assessee hast come forward to pay taxes and levied penalty of �24,52,303/-. The fact that assessee has not filed an appeal against the order u/s.143(3) of the Act to buy peace with the department.
The assessee aggrieved by the penalty order of the Assessing Officer filed an appeal before the Commissioner of Income Tax (Appeals).
ITA No. 2753/Mds/2014 :- 4 -:
In the appellate proceedings, the assessee has submitted explanations and statement made before the Assessing Officer in assessment u/s.143(3) and also in the penalty proceedings and objected to levy of penalty by the Assessing Officer. The assessee has submitted that no notice was issued for filing revised return and the return was filed voluntary and also furnished details about his business transaction and concluded that the survey operations does not warrant for levy of penalty further relied on the decision of the Income Tax Appellate Tribunal ‘C’ bench in DCIT vs. Dr. Satish B.
Gupta 42 SOT 48 wherein it was held as under:-
The initial phrase used in section 271(1)(c) suggests that Assessing Officer has to find in the course of any proceedings under this Act that assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. In fact the proceedings against the assessee would start only after return of income is filed by the assessee or after issuance of statutory notice against him such as under section 142(1) or under section 143(2). Carrying out survey under section 133A is not at all any proceedings. Proceedings as used in section 271(1)(c) are statutory proceedings initiated against the assessee either by issuance of statutory notice or after filing of return of income. Survey under section 133A or search under section 132 or issuance of notice under section 133(6) for example, are only means of collecting evidence against the assessee and are not equivalent to statutory proceedings. Another criteria of finding out as to whether particular action is a statutory proceedings or not it is to be seen whether it can be brought to a legal conclusion against the assessee by determining his right or liability. Merely carrying out survey under section 133A does not create any liability against the assessee which is created only through assessment proceedings or penalty proceedings. Therefore, the ld. DR is incorrect in his submission that survey being a proceedings and Assessing Officer has discovered concealment during survey, therefore, the assessee is liable for penalty under section 271(1)(c). Further clause (c) to section 271(1) mentions "as
ITA No. 2753/Mds/2014 :- 5 -: concealed.......or furnished". They are past tense words indicating that assessee has committed certain act on which penalty is leviable. Thus the act of concealment or furnishing of inaccurate particulars should be viewed by the Assessing Officer as done with respect to return of income. The omission or commission or contumacious conduct has to be viewed from the return of income and if certain thing is not disclosed or not furnished therein only then it can be said that assessee has concealed the particulars of income or furnished inaccurate particulars of income. Prior to this assessee has not done any contumacious conduct on which penalty can be levied. Merely because certain receipts are not recorded in the books of account or receipts are not issued to the patients, but income therefrom was finally declared in the return of income, then there is no contumacious conduct. For not maintaining books of account or not issuing receipts to the patients for the amount received by the assessee, the books, at the best, can be rejected by invoking provisions of section 145(3) and income can be estimated in accordance with section 144. But where the Assessing Officer accepts the income declared in the return of income then assessee cannot be charged for any contumacious conduct. Thus where returned income is accepted there is no case for levy of penalty. The ld. Commissioner of Income Tax (Appeals) relied on 6. the decisions of ITAT on the grounds of surrender of income were there is no concealment and the assessee has made complete disclosures of information and there is no contumacious conduct of the assessee.
Godavari Townships (P) Ltd. vs. DCIT 45 taxmann.com 175 (Vizag) 2. Muninaga Reddy vs. ACIT, 37 taxmnn.com 440(Bangalore) 3. CIT vs. SAS Pharmaceuticals 11 taxmann.com 207 (Delhi) 4. Vasavi Shelters vs. ITO, 32 taxmann.com 26 (Bangalore)
The ld. Commissioner of Income Tax (Appeals) examined the legal position and made distinction to the decisions relied by the Assessing Officer which are not applicable to the assessee further considered the ITA No. 2753/Mds/2014 :- 6 -: factual position, legal aspect and circumstances and relied on the conditions for issue of notice and assessment order u/sec 143(3) of the Act were the assessee offered additional income and paid the taxes; has deleted the penalty levied by observing at para 12.1 of page no.15 as under:-
‘’The proceedings for imposition of penalty though independent and separate aspect of the proceedings, emanate from assessment proceedings. The omission or commission or contumacious conduct has to be view from the return of income and if certain thing is not disclosed or not furnished therein only then it can be said that appellant has concealed the particulars of income or furnished inaccurate particulars of income. The assessment order is very brief and does not bring out any contumacious conduct of the appellant or that appellant concealed the particulars of income or furnished inaccurate particulars of income. It is the duty of the Assessing Officer to bring out how method of concealment so that it forms a basis for penalty order at a later date. This a missing in the instant case.’’ Aggrieved by the order of ld.CIT(A), the Revenue has filed an appeal before the Tribunal.
The ld. Departmental Representative argued vehemently that but for survey operations the assessee would not have come forward to admit income and referred to the grounds raised from para 2.1 to 2.8 of grounds of appeal and also relied on the case laws and requested the Tribunal to set aside the order of the ld.CIT(A) and restore the order of the Assessing Officer.
On the other hand, the ld. Authorised Representative for 8. assessee submitted that the assessee’s want to buy peace with the ITA No. 2753/Mds/2014 :- 7 -: department. To avoid vexatious litigation has come forward to offer additional income to live in peace. The assessee was sincere in his attempts and proved his bonafides by paying taxes including interest of �29,92,370/- and also no appeal was filed against the additions made in the assessment order u/s.143(3) of the Act and prayed for dismissal of Revenue appeal.
We after hearing the rival submissions of the parties and also 9. perused the material on record and lower authorities order are of the opinion that the assessee being retired teacher served in school and upon voluntary retirement has entered into real estate business only to make his living out of the available funds through real estate business.
The Income Tax Department has conducted survey operations and has not found any incrementing material or impounded any evidence at the assessee’s premises. The fact that the assessee has cooperated in the survey operations and in assessment proceedings is not disputed. There was no contumacious conduct of the assessee and offered additional income and paid taxes and no appeal was filed against the order u/s. 143(3) of the Act. The levy of penalty is not automatic. The principles laid down for levy of penalty should be considered and it is well settled law that the penalty proceedings are distinct and separate from assessment proceedings and just because the addition made in the assessment proceedings is sustained. Levy of ITA No. 2753/Mds/2014 :- 8 -: penalty is not automatic and after considering the decisions relied by the Revenue and also factual circumstances and the principles laid down in the case CIT vs. Manjunatha Cotton and Ginning Factory, 359 ITR 565, (Karnataka) and CIT vs. S. Khader Khan Son 352 ITR 480(SC), we are inclined not to interfere with the order of the ld. Commissioner of Income Tax (Appeals) who has dealt in detailed and examined the Judicial decisions and Hence we dismiss the ground of the Revenue.
In the result , the appeal of the Revenue in ITA 10. No.2753/Mds/2014 is dismissed. Order pronounced on Friday, the 27th day of November, 2015, at Chennai.