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TMI Blog2015 (9) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay an additional tax of Rs. 10 Lakhs for the current year. It was stated- to quote- "to cover the deficiencies of earlier years a well as current year and to purchase peace with the department, I offer an additional tax of Rs. 10 Lakhs for the current year." Accordingly, assessee paid advance tax and corresponding amount of Rs. 29,42,000/-covering the tax effect of Rs. 10 Lakhs was included as 'Other Income' and filed return of income when it was due. Assessing Officer (AO) in the scrutiny assessment accepted the income returned. However, he initiated proceedings u/s. 271(1)(c) on the reason that the additional income was offered in the course of survey to cover up the discrepancies which attracts penalty proceedings. He levied penalty of Rs. 10 Lakhs concluding that assessee has concealed particulars of income. 3. It was contended before the Ld. CIT(A) that provisions of Section 271(1)(c) were not attracted as the conditions stipulated in the provisions were not satisfied. It was submitted that even though there were no incriminating material or concealed income identified in the course of survey, assessee voluntarily offered to pay additional tax and filed return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer is satisfied that the assessee has either a. Concealed the particulars of his income; or b. Furnished inaccurate particulars of his income. 6.3 It is not a case of furnishing inaccurate particulars of income, as in the income tax Return, particulars of income have been duly furnished and the surrendered amount was duly reflected in the Income Tax Return. The question is whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the income tax return filed by the assessee viz whether concealment is to be found in the Income Tax Return. 6.4 It necessarily follows that concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee has to be in the Income tax Return filed by it. There is sufficient indication of this in the Judgment of this Court in the case of CIT Vs Mohan Das Hassa Nand (1983) 141 ITR 203 (Delhi) and in Reliance Petro Products Pvt. Ltd. [2010] 322 ITR 158 (SC), the Supreme Court has clinched this aspect viz the assessee can furnish the particulars of income in his Return and everything would depend upon the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion it did not dispute certain disallowance but that did not absolve the revenue from proving the mens rea. It is for the Income Tax Authority to prove that a particular receipt is taxable. If, however, the receipt is accepted and certain amount is accepted as taxable, it cannot be added but from that it does not follow that it is accepted by the assessee as income." This decision cannot support the plea that in all cases where the assessee agrees for addition, penalty is not imposable. Every case is required to be decided on its own facts. The ratio of the above decision has been affirmed by the Apex court in the case of CIT Vs Suresh Chandra Mittal (2001) 251 ITR 9(SC); (iv) The appellant, in his sworn statement dated 23-6-2009 during the course of survey operations, offered additional income voluntarily to purchase peace with the department and on the understanding that that no penalty would be levied. 6.5 On the facts of the case, it is a fact not disputed that there was no specific incriminating material found during the course of survey in the business premises of the appellant, for the AY under consideration. The appellant has been consistently contending during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the appellant for the AY under consideration. 6.7 Hence, in view of the above factual position and in the absence of any cogent evidence, I am of the considered view that the penalty imposed by the AO u/s 271(1)(c), is not sustainable, especially, in absence of any adverse material, except basing on a voluntary disclosure/surrendered income. Thus, the view taken by Assessing Officer cannot be said to be permissible in law particularly when the appellant had voluntarily came forward and offered additional income in order to buy peace with the department. More so, I cannot ignore the fact that the most important factor is the intention of the assessee in offering the voluntary disclosure, in the absence of any incriminating material by the Department in appellant's business premises. 7. Thus, after careful consideration of facts and circumstances of the case, I am of the considered opinion that the penalty provisions u/s 271(1)(c) are not automatic provisions and the words "concealment" and "inaccurate" must be taken in good spirit. Considering the act of the appellant with his intention and in the case in hand, on micro reading of the penalty order, which is not a speaking o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the additional in AY 2009-10, to explain as to why additional income was offered only in AY 2009-10 for the discrepancies of all the years upto AY 2009-10". 5. Ld. Counsel however, reiterated the submissions made before the Ld. CIT(A). 6. I have considered the rival contentions, perused the written submissions and facts on record. First of all, it is to be noted that even though a survey was conducted 22-03-2009 i.e., during the financial year relevant to the AY. 2009-10, even though there was no incriminating material and only certain discrepancies have been found, assessee volunteered to pay additional taxes of Rs. 10 Lakhs. The statement itself, as extracted by the Ld. CIT(A) in the order, do indicate that there was no quantification of concealed income in the course of survey. In fact, what assessee has admitted was payment of Rs. 10 Lakhs as additional tax, accordingly, he worked out the income to be offered which he did in the return filed subsequently. As per the provisions of the Act in order to attract penalty u/s. 271(1)(c) either there should be concealment of income or furnishing of inaccurate particulars. In this case, there is no concealment of income as assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d his income or has deliberately furnished inaccurate particulars thereof is essentially a finding of fact which has to be spelt out by way of recording the satisfaction of the AO as required under s. 271(1). Therefore, in the absence of such a finding in the assessment order no penalty proceedings can be initiated. The declaration of income made by the assessee company in revised return and the explanation that it had done so to buy peace with the Department and to avoid protracted litigation was accepted by the AO in his order dt. 16th March, 2001 without raising any objection. Admittedly the AO accepted the returns filed by the assessee after verification of the information filed and books of accounts produced. Thus, the assessment was completed accepting the returned net income as per the revised return of income. Not only the assessment order did not reflect any satisfaction as required under s. 271(1) but even the show-cause notice was silent with reference to the satisfaction arrived at by the AO with reference to the concealment of income by the assessee company. Nothing has been placed before this Court by the Revenue to show that any other material was available with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, while appreciating the efforts of learned CIT(A) in improving the order of the A.O., we have no hesitation in setting set aside the order of Ld. CIT(A) and delete the penalty levied under section 271(1)(c)". 8. The Hon'ble Delhi High Court in the case of CIT Vs. SAS Pharmaceuticals [335 ITR 259] has considered the issue elaborately on similar facts. The Hon'ble Delhi High Court held as under: "Held, dismissing the appeal, that clause (c) of section 271(1) of the Act authorizes imposition of penalty when the Assessing Officer is satisfied that the assessee had either concealed particulars of his income or furnished inaccurate particulars of such income. It was not a case of furnishing inaccurate particulars of income, as in the income-tax return, particulars of income had been duly furnished and the surrendered amount was duly reflected in the return. The question is whether the particulars of income were concealed by the assessee or not would depend upon whether this concealment had reference to the return filed by the assessee. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the Assessing Officer or the Commissioner (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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