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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 ..... f the case, which was accepted by DR as well. Looking at either way, the conditions specified u/s. 271(1)(c) are not satisfied. Moreover, the returned income and assessed income being the same, the computation of penalty also fails. Explanation-I with reference to expression Concealed income has deemed the amount concealed income indicates that the amount added or disallowed in computing the total income of such person shall for the purpose of Clause-C of this sub-section be deemed to represent the income in respect of which particulars have been concealed”. As already stated, there is no amount added or disallowed in computing the total income of assessee as the returned income was accepted as such. Therefore, under Explanation-I, the amount of concealment is NIL. Therefore, no amount can be considered as concealed income under the facts of the case. There is also no provision in the Act to levy penalty on an income identified/un-earthed in the course of survey proceedings. - Decided in favour of assessee. - I.T.A. No. 1789/HYD/2013 - - - Dated:- 21-8-2015 - SHRI B. RAMAKOTAIAH, J. For The Revenue : Shri Rama Krishna Bandi, DR For The Assessee : Shri A.V. Raghu Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ro Products Pvt. Ltd., [322 ITR 158 (SC)] and also the case of CIT Vs. Mohan Das Hassa Nand [141 ITR 203 (Delhi). He also relied on the explanations to Section 271(1)(c) to submit that there is no case for penalty as contemplated under the provisions of Section 271(1)(c) of the Act. Ld. CIT(A) considered the submissions and deleted the penalty vide impugned order which is as under: 6.2 I have carefully considered the assessment order, submissions of the appellant and I find force in the argument of the appellant. Regarding the discrepancy found in cash of ₹ 2.5 lakhs, the explanation of the appellant is acceptable, particularly in view of the fact that the appellant offered the same to tax. The question of concealing the particulars of income or furnishing of inaccurate particulars of income will arise only with reference to the return of income. In this regard, the Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products Limited (supra) held that there could be no dispute that everything would depend upon the return filed because that was the only document where the assessee could furnish the particulars of his income and when such particulars were found to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied. Since the assessee was exposed during survey, may be/ it would have not disclosed the income but for the said survey. However, there cannot be any penalty only on surmises/ conjectures and possibilities. Section 271 (1)(c) of the Act 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 has made a complete disclosure in the income tax Return and offered the surrendered amount for the purpose of tax 6.4 It is also pertinent to mention my following observations: (i) The penalty order which imposed penalty has no mention of what kind of concealment the appellant has concealed. It just states that discrepancy found in cash of ₹ 2.5 lakhs was a stark reality which goes to say that the assessee had not recorded all his transactions in his regular books of accounts and it was not certainly a case giving room for surmises, conjectures and inferences (possibilities) and hence, penalty was levied. Here, the AO loses jurisdiction since it is a well settled principle that what is good for addition is not goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant and has gone forward in levying the penalty on the pretext that the appellant had concealed the income. However, while doing so, the AO has not brought out any corroborative evidence/circumstances in his penalty order to prove that the appellant had in fact concealed the particulars of income. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in the instant case, it is seen that at no stage the appellant admitted the surrendered amount/voluntary income, as its concealed income. Except the offer made by the appellant, nothing was available with the AO on the basis of which it can be inferred that the appellant had concealed the income, therefore, justifying the penalty. The AD was having no evidence available with him, which could have otherwise justified the levy of penalty and even the offer of amount made by the appellant was more than the AD could have visualized on the basis of appreciation of any material found during the course of survey. The appellant came forward with additional income voluntarily. In a case of admitted/voluntary income, concealment penalty is not automatic. The discretion vested in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the action of the AO in levying the penalty of ₹ 10,00,000/- is not justified and the same is ordered to be deleted . 4. Ld. DR vehemently argued that the facts of the case calls for levy of penalty and CIT(A) erred in cancelling the penalty. He filed the following written submissions in support of his contentions: 3. It is, in this regard, submitted that penalty U/s. 271(1)(c) is leviable on two counts viz., (1) for furnishing inaccurate particulars of income; (2) for concealing particulars of income. On close analysis of the above two reasons for initiation of penalty U/s. 271(1)(c), it is evident that furnishing inaccurate particulars of income is with reference to return of income, whereas concealing particulars of income can be with reference to either filing of return of income or books of accounts or both. Since survey took place in this specific case on 23.03.2009, survey declaration was also for the Financial Year 2008-09 (relevant to AY 2009-10) and also since the assessee had shown the declared amount in the return of income, though penalty U/s. 271(1)(c) cannot be levied on grounds of furnishing inaccurate particulars of income, but penalty U/s. 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions specified u/s. 271(1)(c) are not satisfied. Moreover, the returned income and assessed income being the same, the computation of penalty also fails. Explanation-I with reference to expression Concealed income has deemed the amount concealed income indicates that the amount added or disallowed in computing the total income of such person shall for the purpose of Clause-C of this sub-section be deemed to represent the income in respect of which particulars have been concealed . As already stated, there is no amount added or disallowed in computing the total income of assessee as the returned income was accepted as such. Therefore, under Explanation-I, the amount of concealment is NIL. Therefore, no amount can be considered as concealed income under the facts of the case. 7. There is also no provision in the Act to levy penalty on an income identified/un-earthed in the course of survey proceedings. This issue was considered by the co-ordinate Bench in ITA. No.54/Vizag/2012 dt. 29-01-2014 in the case of Godavari Townships Pvt. Ltd., Vs. DCIT [148 ITD 463] as under: 16.2 More importantly on similar issue, the Hon ble High Court of A. P. in the case of V. V. Projects an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being arbitrary and illegal. 16.3. Respectfully following the above Judgment of the jurisdictional High Court, since the facts of the case equally fits into the principles laid down by the Hon ble A. P. High Court, we have no hesitation in holding that penalty under section 271(1)(c) is not imposable on the facts of the case. Even otherwise, assessee having given bonafide explanation that he has offered higher income even though that much income is not taxable, this contention of the assessee was not rebutted. As briefly stated above in the facts, A.O. has neither brought any calculations on record nor mentioned how the amount was quantified. In these set of circumstances, assessee s contention that it had unexplained expenditure in earning that gross receipts cannot be rejected. Therefore, even the provisions of Explanation 1 to section 271(1)(c) come into operation as the assessee s explanation has not been disproved. Therefore, the conditions for imposing penalty does not satisfy. In view of the various factors discussed above, we have no hesitation in cancelling the penalty. 16.4. There is one more aspect to the issue. Unlike in a search case there is no presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. The decision to initiate penalty proceedings was taken while making assessment order. Thus, the expression in the course of any proceedings under this Act could not have the reference to survey proceedings, in this case. The concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee had to be in the return filed by it. No penalty could be imposed unless the conditions stipulated in the provisions were duly and unambiguously satisfied. Since the assessee was exposed during the survey, may be, it would have not disclosed the income but for the survey. However, there could not be any penalty only on surmises, conjectures and possibilities. Section 271(1)(c) of the Act had to be construed strictly. Unless it was found that there was actually concealment or non-disclosure of the particulars of income, penalty could not be imposed. There was no such concealment or non-disclosure as the assessee had made a complete disclosure in the return and offered the surrendered amount for the purposes of tax . 9. In view of the above principl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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