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TMI Blog2013 (4) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of survey it transpired that the Assessee had sold sites to the extent of Rs. 3,25,14,790 and Rs. 69,06,710/- in the previous year relevant to AYs 07-08 & 08-09 respectively. The Assessee in the course of survey agreed to offer 11.5% of the sales which was a sum of Rs. 37,39,200 & Rs 7,94,271, as income in AYs 07-08 & 08-09 respectively. 3. The AO issued notice u/s. 148 of the Act dated 22.2.2010 for AYs 07-08 & 08-09 which was duly served on the Assessee on 26.2.2010. In response to the same the Assessee filed return of income on 31 3.2010 declaring income of Rs.35,76,630 & Rs. 7,59,740 for AYs 07-08 & 08-09 respectively. The income so returned was 11% of the sale value of sites as against 11.5% of the sale value of sites that was declared in the course of survey. The Assessee in the course of assessment proceedings agreed that the income declared in the course of survey be adopted as the total income of the Assessee. The assessment was completed by adopting the income offered at the time of survey as the total income of the Assessee. The AO initiated penalty proceedings against the Assessee for the income determined in the reassessment proceedings including the income decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee cannot be said to have concealed the particulars of income or furnished inaccurate particulars of income. In this regard, the ld. counsel for the assessee submitted that the starting point for imposing penalty is the return of income and when income is declared in the return of income, that cannot be ignored and penalty imposed for concealment. Even in respect of the difference between the income returned and the income ultimately assessed, the ld. counsel for the assessee submitted that addition was made purely on the basis of estimate and in respect of the additions made on estimate, without any incriminating evidence and therefore there cannot be any penalty imposed on the assessee. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd., wherein at page 164 of the report, the Hon'ble Supreme Court has held that a penalty for concealment has to be with reference to the return of income filed by the assessee. 7. The ld. DR, on the other hand, relied on the orders of the revenue authorities. Reliance was also placed on the decision of the ITAT, Bangalore Bench in the case of B. Gajendra Kumar v. ITO [IT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccurate particulars of income". This legal position would be implicit if one reads Sec.271(1)( c) of the Act together with Explns. 3, 5 and 5A of the Act, which carves out exception for the legal position as stated above. "Sec.271(1)(c): 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 (a) to (b)-------- (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. (d) (i) to (ii)-------- (iii) in the eases referred to in clause (c) or clause (d), in addition to tax, if any, 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 fringe benefits or the furnishing of inaccurate particulars of such inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished before the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search; then, notwithstanding that such income is declared by him in any return of income furnished on or alter the date of the search, he shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless - (1) such income is, or the transactions resulting in such income are recorded, - (i) in a case falling under clause (a), before the date of the search; and (ii) in a case falling under clause (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief Commissioner or Commissioner before the said date; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source, tax collected at source and self assessment tax paid before the issue of notice under section 148. This means that the income declared in the return of income can be ignored and penalty can be imposed even in respect of such income. Explanation 3 of section 271(1)(c)(iii) applies also in the case of assessees, who have not been assessed as yet. According to this section, if a person fails, without reasonable cause, to furnish a return of his income voluntarily under section 139 within the period specified under section 153(1), i.e., within two years from the end of the assessment year in which the income was first assessable, he shall be deemed to have concealed the particulars of his income in respect of such assessment year if he has taxable income for that year. But this is subject to two limitations - firstly, it applies to assessment year 1989-90 and subsequent years and secondly, no notice under section 142(1) or 148 was issued within the said period of two years. In other words, Explanation 3 shall have no application if a notice under section 142(1) or 148 was issued within two years. But if an assessee files a return of his income after the period of two years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax 14. Explns. 5 and 5A are also an exception to the rule that when an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inaccurate particulars of income" Those Explanations will also not apply in the present case because those Explanations are applicable only when there is a search u/s.132 of the Act and to a case of Survey u/s. 133A of the Act. 15. For the reasons given above we hold that there can be no justification for imposition of penalty on the income offered in the return of income by the Assessee for both the A.Ys., because there cannot be any penalty on income which is declared in a return of income, on the facts and circumstances of the present case. 16. As far as justification for imposing penalty on the second part is concerned, viz., the difference between the income declared in the return of income and the income which was actually determined by the AO in the assessment proceedings, is concerned, we find that the plea of the Assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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