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TMI Blog2014 (2) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... ken while making assessment order - the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings - It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the IT return filed by it - there cannot be any penalty only on surmises, conjectures and possibilities - Sec. 271(1)(c) has to be construed strictly - Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed - There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax - Relying upon Commissioner of Income-tax Versus SAS Pharmaceuticals [2011 (4) TMI 888 - Delhi High Court] There can be no justification for imposition of penalty on the income offered in the return of income by the Assessee, because there cannot be any penalty on income which is declared in a return of income – Decided in favour of Assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... In the assessment order, the AO initiated penalty proceedings u/s. 271(1)(c) of the Act. In response to the notice issued by the AO before imposing penalty, the assessee submitted that the income declared in the return of income has been accepted by the AO and therefore there was no question of any concealment of particulars of income and therefore there cannot be any imposition of penalty on the assessee. The AO, however, took the view that but for the Survey operations u/s. 133A of the Act, the assessee would not have declared income of Rs.81,36,400 from the joint venture carried out with E. Krishnappa for forming a layout known as 'Singapore Layout'. The AO accordingly held that the assessee has concealed his particulars of income to the extent of Rs.81,36,400 and imposed penalty on the assessee, which was 100% of the tax sought to be evaded. The AO also made a reference to the decision of the Hon'ble Supreme Court in the case of Union of India v. Dharmendra Textiles Processors , 295 ITR 244 (SC), wherein the Hon'ble Supreme Court took a view that penalty u/s. 271(1)(c) is a civil liability and is compensatory in nature, hence the element of mens rea is not required. 5. On app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urns, 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) -------------------- (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) ………………………. (ii) (iii) in the cases 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 income or fringe benefits: 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 Commissioner (Appeals)or the Commissioner to be false, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-section (1) of section 139, and also specifies in the statement the manner in which such income has been derived and pays the tax together with interest, if any, in respect of such income. Explanation 5A -- Where, in the course of a search initiated under section 132 on or after the 1st day of June, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., 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 in response to a notice under section 148, he would be caught within the mischief of this Explanation. 9. In the present case, Expln.-3 to sec.271(1) of the Act will not apply because, as we have seen the Assessee filed the original return of income on 09.06.2010 and in response to notice u/s.148 of the Act by letter dated 16.9.2010, requested the AO to treat the return filed earlier as a return filed in response to notice u/s.148 of the Act. Thus the return of income was filed within a period of 2 years from the end of AY 08-09. Moreover th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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