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TMI Blog2015 (8) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee simply retracted from the statement and did not include the amount of surrender in the return of income. The income was included through revised return which has not been accepted by the Assessing Officer because same was late. In any case the revised return was furnished only when the assessee was fully cornered during the assessment proceedings. In addition some more items of income were also found to be concealed particularly in respect of platinum and silver jewellery. Therefore, it is a clear case of concealment and penalty has been rightly levied and confirmed by the ld. CIT(A). - Decided against assessee. - ITA NO 725/CHD/2011 - - - Dated:- 27-8-2013 - T.R. SOOD SUSHMA CHOWLA ,JJ. For The Appellant : Tej Mohan Singh For The Respondent : Akhilesh Gupta ORDER This appeal is directed against the order dated 26.5.2011 of the ld. CIT(A)-I, Ludhiana. 2 In this appeal the assessee has raised following grounds: 1 That the ld. CIT(A) has erred in upholding the imposition of penalty of ₹ 67,75,500/- u/s 271 (1) (c of the Act which is arbitrary and unjustified. 2 That the assessee having surrendered the amount subject to no penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee firm that excess stock found at the time of search was belonging to customers and suppliers whose stock was lying with them for approval. The assessee has since procured affidavits from a few customers whose gold was lying with the assessee firm and they have confirmed having deposited the same with the assessee. The list of customers who have given these affidavits are as under: Sr. No. Name Address Pages 1. Shri Manish Khanna` # 290-C, Green Avenue, Amri tsar 1-3 2. Mrs. Monica Goyal ABM Avenue, Boat Club Road, Chennai . 4-5 3. Mrs. Santosh Reikhy # 1513, Sector 18, Chandigarh 6 4. Shri Rajpal Gupta # 51, Ward No. 10. Sodhi Colony, Kurali (Punjab) 7-9 5. Shri Ashu Verma # 159,Sector 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee as on the date of search i.e. 27.10.2006. The same is placed at Pages 56-58 of additional evidence. This evidence could not be submitted earlier for want of proper professional guidance. It is, therefore, respectfully prayed that in view of the peculiar facts of the instant appeal, the additional evidence may please be admitted and adjudicated upon. 6. First of all it would be seen clearly that whatever documents have been given, could have been procured earlier and filed before the Assessing Officer or the ld. CIT(A). Secondly all these documents pertained to proceedings which have already been finalized and the present appeal is regarding confirmation of levy of penalty u/s 271 (1) (c) of the Act through the impugned order. It is settled position of law that assessment proceedings and the penalty proceedings are independent. It is further well settled that any proceedings which have become final, can not be agitated in any other proceedings later on. Since the assessee has himself firstly made surrender of the income which have been assessed and secondly the assessee has not filed any appeal in the quantum proceedings which means the assessee has accepted the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. Before penalty can be imposed, the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. [Emphasis, supplied] A reading of the above observations shows that while assessment proceedings may constitute good evidence in penalty proceedings, they are not conclusive. The statutory authority dealing with penalty proceedings must be satisfied that the assessee had consciously concealed the particulars of his income which attracts the penal provisions of the Act. In the present case, the assessee himself told the Assessing Officer that there was a suppression of income to the extent of ₹ 11,027. This was also verified by the Assessing Officer, and hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee after consulting the facts with his Lawyers and the assessee promised to pay tax accordingly. In response to the notice u/s 153A of the Act, however, the assessee declared total income only at ₹ 1,06,48,173/- which consisted of ₹ 48,27,928/- on account of regular income and the balance on account of discrepancies found in stock and cash found during search operations. This shows that the assessee had retracted from his statement. In response to question raised to questionnaire dated 4.6.2008 why full income has not been declared. It was mainly stated that the assessee had filed correctified (expression used by the assessee) declaration before the ADIT and the assessee filed his return of income as per such correctified statement. According to the Assessing Officer, gist of such letter filed before the ADIT, was that diamond jewellery of the assessee found during search which has been valued by Shri Bhartesh Jain and Shri R.K. Gupta at ₹ 6,53,08,517/- has now been valued by Mr. Manoj Kakkar. Proprietar of M/s M.K. Jeweller on 8.11.2006 at ₹ 5,25,94,746/-. The Assessing Officer had found no force in the submissions because jewellery had been ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of amount at ₹ 2,37,597/- subject to no penalty/penal action. Similarly some jewellery was found at home of the assessee. The assessee stated that some items (S No. 54 to 59) represents stock in trade of the firm, M/s Nikka Mal Babu Ram Jain which was kept at the residence. Since the assessee had not included the value of items at S No. 54 to 57 for the purpose of disclosure. The value of such Stone jewellery was ₹ 25,000/- and Silver jewellery weighing 130 kgs at ₹ 15,60,000/-. When the assessee was asked why this sum of ₹ 15,85,000/- should not be added to the income, it was stated that some of the jewellery had been declared by Smt. Manju Jain, Shri Rohit Jain and Shri Neeraj Jain under VDIS. After verification of the five declarations it was found that there was an excess of Silver jewellery upto ₹ 4,80,000/- and ultimately the assessee submitted that this difference of Silver Jewellery may be considered as unexplained and he surrendered the sum for taxation. Similarly Stone jewellery valuing ₹ 25,000/- was also surrendered. Thus total income which was assessed became ₹ 3,07,70,525/-. On the basis of above conclusions the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok profit of ₹ 48,27,928/-, I made a disclosure of ₹ 2,50,00,000/-, which I realized was not correct disclosure. I , therefore, wrote a letter to Ld. ADIT to make necessary correction in that disclosure and filed my return of income keeping in view the correction in the disclosed amount. The following are the particulars of income disclosed in the originally filed return of income. Computation chart of total income Computat ion chart of total income Net Profit as per profit Los s A/ c 48,27,92 8/ - Add: Charity and Don at ion 13,700/ - Add: Total Excess Gold Stock 75,3 4,330/ - Total Excess of Diamond Stock 1,19,94,588/ - Total Excess cash found at home 50,0 0,000/ - 2,45,28,928/ - Total Surrender 2,50,00,00 0/ - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me at ₹ 1,06,48,173/-. However, in order to avoid any litigation and to buy peace also the assessee revised the return of income to ₹ 2,98,41,628/ which included surrendered amount of ₹ 2.5 crores. Certain decisions were also relied upon including the decision of Dilip N Shroff V JCIT (supra) and CIT V. Reliance Petroproduct, 328 ITR 158. The ld. CIT(A) observed that whether revised return filed by the assessee would be treated as validly revised return u/s 139 (3) or not? In this regard he discussed the decision of Hon'ble Allahabad High Court in case of Mohd. Ibrahim Azimulla V CIT, 131 ITR 680 (All) and held that mere filing of the revised return does not rule out the applicability of Section 271 (1) (c) because whatever is disclosed by way of filing revised return may relate back to become part of the total income provided it is covered by Section 139(5) i.e. same has been filed because of bonafide mistake. The ld. CIT(A) ultimately confirmed the penalty vide paras 11 12 which are as under: 11 The broader factual picture is that the appellant was searched u/s 132 of the I.T.Act 1961 and disclosed an amount of ₹ 2.5 Crores u/s 132(4) in order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases of Apex Court is that the current view with regard to imposition of penalty under section 271 (1) (c) has to be kept in mind before deciding such cases. A strict liability has been cast upon the assessee in view of these judgments. None of the judgments quoted by the AR of the appellant apply to the facts of the case and in fact most of them are favouring the imposition of penalty in the instant case. For instance the case of reliance petroproducts only excludes imposition of penalty in cases of legal deductions claimed and disallowed and the ratio of Hon ble Apex Court in the case of Dharmendra Textile has been diluted only to that extent. Further the reliance on the case of CIT Karnal Vs. Rajiv Garg (Punjab Haryana High Court) is also misplaced as in the said case the AO had not placed on record any evidence or material to discharge his burden of proving concealment and had rested his conclusion simply on the Act of assessee having offered additional income. Whereas in the case under consideration the AO has conducted detailed investigation and proved the falsity of claim made by the assessee during the course of the assessment proceedings and the assessee disclosed additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book is not correct because at page 350 which is a copy of Annexure referred A . Reference to in the said letter shows that the said firm has simply stated that no stock has been given on consignment basis in Financial Year 2008-09 whereas period under consideration was much earlier because the search itself was conducted on 27.2.2006. He also referred to a letter of Ira Diamond Jewellery (Page 338 of paper book) and the details given by them at page 339 to 341 clearly shows that some items have been sent by them on approval basis. All these facts clearly show that the assessee was right in claiming that some of the stock belongs to the customers and or was received on consignment basis. However, the assessee later on declared the whole surrendered income in the revised return to buy peace of mind, therefore, this is not a fit case for levy of penalty because it has not been proved that the assessee has concealed the particulars of income. On the other hand, the ld. DR for the revenue strongly supported the orders of Assessing Officer and the ld. CIT(A). We have heard the rival submissions carefully and do not find any force in the submissions of the ld. counsel o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Weight as per valuat ion report Weight as per books of accounts GOLD 83029.500 77387.760 DIAMOND 65772737 53778149.00 Do you accept the quantitative determination of gold and valuation of diamonds as given above. Ans- Yes, I accept the above figures of valuation report and Books of accounts as true and correct. I accept the excessive quantity of gold and excessive value of diamond, in my closing stock. Q- As per your statement relating to valuation of closing stock recorded on 25th October, 2006, the excessive value of gold is as follows: Difference in quantity per Books of Accounts and Valuation report = 5641.74 Gms = Valuation of above gold is = 5641.74 x 800 =4513392 Making Charges @ 7% of ₹ 45,13,392 = ₹ 48,29,330.00 Please state whether the excessive stock found is acceptable to you ? Ans- I accept after the working of quantity and value thereof that there is an excess stock of gold amounting to ₹ 48.30 Lacs. Q 5- Do you accept the valuation of the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Bhartesh and Shri R.K. Gupta which was being done in the presence of the employees of the assessee as well as Shri Rohit Jain who is the son of the assessee. The assessee had clearly replied that valuation was being done by these two persons in a fully professional and ethical manner. Therefore, the assessee was given a chance to object to the method of valuation. During valuation process itself the assessee clearly accepted that S/Shri Bhartesh and R.K. Gupta were doing the valuation in a professional and ethical manner then he can not later on turn around and say that there was some mistake in the valuation of diamond. This was re-confirmed in the statement recorded on 30.10.2006 vide answer to Question no. 2. In Answer to question no. 3, he has accepted the amounts of valuation. Through answer to question no. 3 he has further accepted the existence of excess stocks cash which has been further confronted to the assessee through question no. 4, 5 6. 16 Before us, the ld. counsel of the assessee had stated that gold was received from some customers. Atleast few persons have accepted of such deposit. The Assessing Officer has given his finding in para 8 at page 11 which rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139(5) which reads as under: (5) If any person, having furnished a return under subsection (1), or in pursuance of notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant Assessment year or before the completion of the assessment, 2whichever is earlier. The above clearly show that right to file the revised return is available only if an assessee discovers any omission or any wrong statement therein. In the case before us, there is no justification at all in revising the return. Firstly the assessee surrendered the income during search on account of excess cash and stock then retracted from the same and submitted before the Investigation Wing that value of diamond jewellery is not correct and some other mistakes are there. But no good reasons have been given after having accepted excess cash and stock of excess gold and diamond jewellery. Even valuation and the process of valuation by S/Shri Bhartesh and R.K. Gupta was accepted in the statement recorded u/s 132 (4) as noted above. In this regard we recall the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations with reference to the case of Dilip N Shroff (supra) to Section 271(1)(c) of Income-tax Act, 1961. The Court at para 27 has observed as under: The Explanations appended to section 271 (1) (c) of the Income-tax Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N Shroff s case (2007) 8 Scale 304 (S.C) has not considered the effect and relevance of section 276C of the Income-tax Act. The object behind the enactment of section 271 (1) (c) read with the Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution u/s 276C of the Income-tax Act. The above clearly show that the judgment in case of Dilip N Shroff (supra) was not approved by the Hon'ble Apex Court itself. 20 In view of above detailed discussion, we are of the considered view that penalty has been rightly levied by the Assessing Officer and confirmed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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