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TMI Blog2014 (1) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... ee should be considered as concealed income - In the reassessment the AO has accepted the turnover and depreciation as returned by the Assessee - The additions made by the Assessing Officer in the reassessment order is merely based on his estimate that profitability should be at 8% in the place of the profits offered by the Assessee - This is merely an adhoc estimate made by the AO without any cogent reason for adopting such percentage - The issue was restored to the files of AO to determine the income eligible for penalty at the income returned by the Assessee in his return of income filed on 5.10.2009 and re-work and levy minimum penalty. X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer imposed penalty @ 100% of the tax sought to be added. Accordingly, the Assessing Officer computed the penalty at Rs.21,34,298/- for the assessment year 2007-2008 and Rs.6,91,500/- for the assessment year 2008-2009. 4. Aggrieved, the assessee filed an appeal before the CIT(A) against the order imposing penalty under section 271(1)(c) for the assessment years 2007-2008 and 2008- 2009. It was submitted by the learned Counsel for the assessee before the CIT(A) that although this was a survey case, no incriminating material was found. It was submitted by the learned Counsel for the assessee before the CIT(A) that imposition of penalty is not automatic, and merely because assessment proceeding has been completed resulting in some addition, penalty cannot be imposed. It was further submitted that law is well established as a principle that, penalty proceeding and assessment proceedings are different. Penalty proceedings are not continuation of assessment proceedings and relied on the Judgment of the Hon'ble Supreme Court in the case of Jain Broths v Union of India 42 ITR 216 SC wherein it has been held that "What is good evidence for assessment may not be good evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter, the appellant furnished its return of income u/s. 148 of the Act for A.Y. 2007-08 on 05.10.2009 disclosing total income of Rs.46,82,540/-. Secondly, a survey operation u/s. 133A was carried out in the business premises of the appellant company on 29.10.2007 and during the said survey operation certain books of accounts and documents pertaining to the appellant company were found and impounded by the survey team. Hon'ble Courts in the following cases have held that such offer of income by the assessee may provide sound foundation for the imposition of penalty u/s.271(1)(c) of the Act." 7. The CIT(A) relied on the following decisions while confirming the penalty order passed by the Assessing Officer under section 271(1)(c) of the I.T. Act, 1961. (i) Durga Timber Works vs. CIT (1971) 79 ITR 63 (Del.) (ii) Banaras Chemical Factory vs. CIT (1977) 108 ITR 96 (All.) (iii) Ayyasami Nadar & Bros. vs. CIT (1956) 30 ITR 565 (Mad.) (iv) India Sea Foods vs. CIT (1978) 114 ITR 124 (Ker.) (v) HV Venugopal Chettiar vs. CIT (1985) 153 ITR 376 (Mad.) (vi) Western Automobiles (India) vs. CIT (1978) 112 ITR 1048 (Bom.) (vii) CIT vs. Krishna and Co. (1979) 120 ITR 144 (Mad.) (viii) CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 taxmann.com 448 (SC) has dealt with cases in which the Assessee had offered income 'voluntarily' to 'buy peace' and "avoid litigation". The Supreme Court held that: 1) Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income. The burden then shift on the assessee to show otherwise, by cogent and reliable evidence; 2) When the initial onus placed by the Explanation, has been discharged by assessee, the onus shifts on the revenue to show that the amount in question constituted the income and not otherwise; 3) The Assessing Officer shall not be carried away by the plea of the assessee like 'voluntary disclosure', 'buy peace', 'avoid litigation', 'amicable settlement', etc., to explain its conduct; 4) Assessee had only stated that he had surrendered the additional sum with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income-tax department. Statute does not recognize those types of defences under the Explanation 1 to section 271(1)(c); 5) It is trite law that the voluntary disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concealed income and exigible to penalty u/s 271(1)(c). However as regards the quantum of concealed income, we hold that only income which was returned in the return filed by the Assessee should be considered as concealed income. In the reassessment the AO has accepted the turnover and depreciation as returned by the Assessee. The additions made by the Assessing Officer in the reassessment order is merely based on his estimate that profitability should be at 8% in the place of the profits offered by the Assessee. This is merely an adhoc estimate made by the AO without any cogent reason for adopting such percentage. This addition therefore cannot be considered as concealed income of the Assessee. 12. We, therefore, direct that the Assessing officer to determine the income eligible for penalty at the income returned by the Assessee in his return of income filed on 5.10.2009 and re-work and levy minimum penalty based on the income filed by the Assessee in his return of income. 13. In the result, appeal of the Assessee in ITA No 531/H/13 is partly allowed for statistical purposes. ITA.No.532/Hyd/2013 - AY 2008-09 14. The facts for AY is similar to those of AY 2007-08. After the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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