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TMI Blog2012 (10) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the assessee in the instant case did not discharge the said onus, thus no hesitation in upholding the order of the CIT(A) in confirming the penalty imposed by the AO u/s 271(1)(c) - against assessee. - ITA No.4411/Del/2009 - - - Dated:- 5-10-2012 - SHRI R.K.GUPTA, AND SHRI A.N. PAHUJA, JJ. Assessee by Sh. Vikram Kapoor,, AR Revenue by Mrs. Anusha Khurana, DR O R D E R A.N. Pahuja:- This appeal filed on 18.11.2009 by the assessee against an order dated 31-08-2009 of the ld. CIT(A)-XXII, New Delhi, raises the following grounds :- 1. Whether in the facts and in the circumstances of the case the Ld. CIT(A) was justified in sustaining the penalty as imposed by the I.T.O U/s 271(1)(c) of the Act. 2. In the facts and in the circumstances of the case, it is most humbly prayed that the order imposing the penalty may kindly be cancelled. 2. Facts, in brief, as per relevant orders are that assessment in this case was completed on a loss of Rs.22,62,919/- in pursuance to return filed on 31-10- 2005, declaring nil income. The additions of Rs.31,08,400/- made by the Assessing Officer [AO in short] were set off against b/s loss of Rs.53,71,319/-. Inter ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the AO did not accept the submissions of the assessee and imposed a penalty of Rs.10,97,700/- on the tax sought to be evaded on the aforesaid amount of Rs.30,00,000/- relying, inter alia, on the provisions of Explanation 4 to section 271(1)(c) of the Act. 3. On appeal, the ld. CIT(A) upheld the findings of the AO in the following para:- I have carefully considered the submissions made on behalf of the appellant and perused facts and circumstances of the case. The main plea of the assessee is that the addition to the capital account is made by the partners, so this cannot be added to the income of the firm and as there is no concealment on the part of the firm. Secondly, the assessed income despite additions is nil (because of carry forward losses) and the tax could not be levied, hence penalty was not leviable. The argument put forth does not hold good because the cash amount is found credited in the books of account of the firm in the name of partners for which no explanation offered and subsequently surrendered as unexplained credit. The ultimate beneficiary of this deposit is the firm hence A.O had validly treated this as concealed income of the firm u/s 68 of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the source of aforesaid cash. Before proceeding further, we may have a look at the relevant provisions of sect ion 271(1) (c) of the Act, which read as under: 271.Failure to furnish returns, comply with notices, concealment of income, etc. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- . . (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,- (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Explanation 1. -Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Deputy Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... script ." 5.2 I f the disclosure of facts is incorrect or false to the knowledge of the assessee and it is established, then such disclosure cannot take it out from the purview of the act of concealment of particulars or furnishing inaccurate particulars thereof for the purpose of levy of penalty. The penalty u/s 271(1) (c) of the Act is leviable if the AO is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. In this context, Hon ble Gujrat High Court in the case of AM Shah Co. vs. CIT, 238 ITR 415(Guj ) observed that;- there cannot be a straight jacket formula for detect ion of these defaults of concealment or of furnishing inaccurate particulars of income and indeed concealment of particulars of income and inaccurate particulars of income may at times overlap, as for example when half of the income under a particular head is not at all disclosed, that would be concealed to that extent while the remaining half which is in fact disclosed would, not being his complete disclosure amount to inaccurate particulars of income as regards that constituent item of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence between the returned and assessed income, there is inference of concealment. The explanation 1 to sec. 271(1)(c) of the Act raises a presumption that can be rebut ted by the assessee with reference to facts of the case. Thus, the onus is on the assessee to rebut the inference of concealment. The absence of explanation itself would at tract penalty. In the case of New Bijli Foundry vs. CIT, 135 ITR 593, Hon ble Punjab and Haryana High Court have held that the findings recorded in the assessment proceedings are certainly relevant in the penalty proceedings. In the absence of any fresh material during the course of penalty proceedings, specially when the assessee failed to establish that the aforesaid findings of the AO during the course of assessment proceedings were based on improper facts or wrong appreciation of the facts, we are afraid that in the penalty proceedings we are unable to take a different view. The onus laid down upon the assessee to rebut the presumption raised under explanation 1 would not be discharged by any fantastic or fanciful explanation. I t is not the law that any and every explanation has to be accepted. In the absence of any explanation regarding so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lse by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1, the onus to establish that the explanation offered was bona f ide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The Assessing Officer is not obliged to intimate the assessee that Explanation 1 to sect ion 271(1) (c) is proposed to be applied. The scheme of the provisions does not provide for such a requirement either directly or inferentially. In Sir Shadilal's case [1987] 168 ITR 705, what the Supreme Court observed was that there may be several reasons for which the assessee may have offered an amount for addition, but that itself is not sufficient to infer concealment. It has not laid down as a rule of general application that whenever such is the case, penalty cannot be imposed. On the contrary, in such cases also the assessee is required to discharge t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty provided by that section. No express invocation of the Explanation to section 271 in the notice under section 271 is, in our view, necessary before the provisions of the Explanation therein are applied. The High Court at Bombay was, therefore, in error in the view that it took and the Division Bench in the impugned judgment was right. 5.6 Therefore, in view of the facts and circumstances and in the light of above noted authoritative pronouncements, when the assessee failed to discharge the onus laid down upon him in terms of explanation 1 to sect ion 271(1)(c) of the Act and nor even at tempted to explain the source of cash credi ted in the books of the firm in the name of aforesaid two partners even during the penalty proceedings, we have no opt ion but to uphold the findings of the ld. CIT(A), confirming the levy of penalty .Even otherwise the breach of civil obligation which at tracts a penalty under the provisions of an Act would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intent ion or not, vide Chairman, SEBI v. Shri ram Mutual Fund [2006] 131 Comp Cas 591 (SC) ; [2006] 5 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily. It shall be appropriate to reproduce the relevant portion from the judgment of Bhairav Lal Verma (supra) as under: The position thus settled is that the word voluntarily in section 273A of the Act means out of free will without any compulsion. Disclosure of concealed income after the Department has seized the incriminating material with regard to the income so disclosed, cannot be voluntary disclosure, because it was made under the constraint of exposure to adverse action by the Department. But it cannot be held as a principle of law that the disclosure of income made after the search/raid cannot be voluntary. It is a question which has to be decided by the Department in each case on the basis of the material on the record. If on record there is incriminating material with regard to the disclosed income, the disclosure cannot be voluntary. But if the Department has no incriminating material with regard to the income disclosed, the disclosure is liable to be treated as voluntary having been made without any compulsion or constraint of exposure to adverse action by the Department. In a case where the assessee has disclosed not only the income regarding which the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X
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