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TMI Blog2012 (7) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... s 143(2) of the Act, issued on 14.11.2005. In this case, a survey was conducted u/s 133A of the Act on 12th December, 2003 in the business premises of the assessee, when the assessee disclosed additional income of Rs. 10,39,079/- on account of unaccounted raw material and machinery. However, the assessee did not disclose the surrendered amount in his return filed on 01.02.2005. During the course of assessment proceedings, to a query by the Assessing Officer[AO in short] the assessee replied that tax was paid on the surrendered amount and entries passed in the relevant accounts. The assessee also submitted revised computation of income[pg 15 of the PB] ,wherein total income of Rs.11,07,480/- has been worked out. However, in the assessment order taxable income as per revised computation has been shown at Rs.11,14,254/- in the body of the order and Rs. 11,14,225/- in the computation of income.. The assessee also submitted that during the survey, excess stock to the tune of Rs. 5,28,050/- and unaccounted machinery purchased outside the books to the tune of Rs. 5,11,000/-was disclosed and is accounted for in the revised computation. Accordingly, the AO completed the assessment vide orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had already paid taxes on the surrendered amount with the condition that no penalty proceedings would be initiated against him. The Assessing Officer has invoked the provisions of section 271(1)(c) merely by taking an adverse view of non-declaration of the surrendered income. 4.2 As far as the argument, that the material of inventory and machinery of Rs.10,39,079/- found un-recorded in the books of accounts was pending to be entered in the books in the usual course of business; is concerned. I find the contention of the assessee a far fetched idea. If the same was not entered in the books till the date of survey, it could have been done while drawing the trading account and balance sheet during the survey proceedings. Even, for the sake of natural justice it might be understood that the assessee was in duress and tense at the time of survey, the assessee was free to rectify this mistake and point out the same before the Assessing Officer in a follow-up after completion of survey proceedings. Neither the assessee opted to enter the same in the books of account and retract from his surrender nor the assessee opted to account for the alleged 'pending' entries to streamline his boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e while carrying us through the impugned order contended that the assessee had no intention of concealment of income in the return, amount having been surrendered at the time of survey and disclosed in the revised computation of income filed during the course of assessment proceedings. To a query by the Bench, the ld. AR replied that the assessee had also paid advance tax of Rs. 3 lacs through post dated cheques handed over during the survey in instalments of Rs.1 lac each on 19.12.2003,20.2.2004 & 23.12.2004. While relying upon decisions in CIT vs. V Narsimha Prasad, 250 ITR 852 (Karnataka); & CIT Vs. S.A.S. Pharmaceuticals, 335 ITR 259(Del.), the ld. AR vehemently argued that levy of penalty was not justified. 6. On the other hand, the ld. DR supported the impugned order of the ld.CIT(A) while relying d upon the decisions in CIT vs. K. P. Sampath Reddy,197 ITR 232 (Karnataka) & CIT vs. C Ananthan Chettiar,273 ITR 401 (Madras). The ld. DR added that mere surrender of the amount does not absolve the assessee from levy of penalty. 7. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions. Indisputably, the disclosure of an amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded several erroneous entries. While the investigation was in progress as to the stocks, sales and various cash credit entries, the assessee filed his revised returns for the years 1972-73, 1973-74 and 1974-75, in response to a notice issued under section 148, in which the assessee disclosed a total income of`Rs. 3,00,840 for the three years. The ITO found the books of account not dependable and the income stated in the revised returns unacceptable. Ultimately, on a consideration of several factors, the total income for the years 1972-73 to 1977-78 was estimated at Rs. 6,00,000 For the assessment year 1976-77, the income allocated for the period thus arrived at was Rs. 1,44,000.On the date of the assessment, the assessee gave a letter to the ITO, agreeing to the total income of Rs. 6,00,000 as estimated by the Income-tax Officer. The ITO, accordingly, concluded the assessments and then simultaneously penalty proceedings were initiated, inter alia, u/s 271(1)(c) for concealment of income by the assessee in the returns filed by the assessee ; subsequently, penalty was levied at 100 per cent. of the tax levied. The assessee appealed and contended that he agreed to have the assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhusudhanan v. CIT [2001] 251 ITR 99 (SC), upheld the levy of penalty, the reason for not having disclosed the income earlier having not been stated. As is apparent from these facts, such is not the situation in the case before us nor the ld. DR demonstrated before us as to how this decision helps the Revenue. 8. Mere enquiry about surrendered income having not been shown in the return, does not tantamount to detection of concealment of income u/s. 271(1)(c) of the Act . Hon'ble Madhya Pradesh High Court in the case of CIT v. S.V. Electricals P. Ltd., 155 Taxman 158 and Hon'ble Jharkhand High Court in CIT v. Ashim Kumar Agarwal, 153 Taxman 226 held that where the assessee surrenders his full income, though at a later stage, there was no question of any concealment on his part and consequently no penalty under Section 271(1)(c) was leviable, and that a omission from return of income did not amount to concealment. Hon'ble jurisdictional High Court while adjudicating the issue of levy of penalty u/s 271(1)(c) of the Act in the case of CIT vs. Harnarain in their decision dated 31st October,2011 in ITA no.2072/2010 concluded that "surrender of the amount by the assessee after receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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