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TMI Blog2015 (12) TMI 1240X X X X Extracts X X X X X X X X Extracts X X X X ..... For The Assessee : Shri K.C. Devdas, AR For The Revenue : Shri Rama Krishna, Bandi, DR ORDER This is an assessee s appeal against the orders of the Commissioner of Income Tax (Appeals)-XI, Hyderabad dated 10-06-2015, confirming the penalty of ₹ 2,80,394/- levied on assessee u/s. 271(1)(c) of the Income Tax Act [Act] by the Assessing Officer (AO) vide the order dt. 15-06-2010. Assessee has raised as many as eight grounds on the issue of levy of penalty. I have heard Ld. Counsel and Ld. DR in detail and perused the Paper Book placed on record from pages 1 to 61 and index of precedents filed in separate Paper Book supporting various submissions. 2. Briefly stated, assessee is an individual and a Sales Tax Practitioner by profession. He has filed return of income for the AY. 2002-03 u/s. 139(1) on 31-03-2003 disclosing an income of ₹ 2,99,263/-. This return was processed u/s. 143(1) of the Act. Assessee has admitted income from house property and income from profession in the said return. There were search and seizure operations conducted in assessee s case on 16-06-2008, when he was intercepted at Rajiv Gandhi International Airport at Hyderabad on his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Hon'ble Supreme Court in the case of Jain Brothers Vs. Union of India [77 ITR 107]. With reference to burden of establishing the concealment, assessee relied on judgment of Hon'ble Supreme Court in the case of Dilip N. Shroff Vs. JCIT [291 ITR 519] (SC). It was further contended that penalty will not be ordinarily be imposed unless the party applied either acts deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Assessee also relied on the following case law: i. CIT Vs. Sunilchand Mittal [251 ITR 9] (SC); ii. CIT Vs. Ram Commercial Enterprises Ltd., [246 ITR 568] (Del); iii. CIT Vs. Vikas Promoters Pvt. Ltd., [277 ITR 337] (Del); iv. Diwan Enterprises Vs. CIT Ors. [246 ITR 571] (Del); and v. CIT Vs. B.R. Sharma [275 ITR 303] (Del) 4. Ld. AO however, did not agree with assessee s submissions. AO has come to a conclusion that even though assessee declared income, it was in response to notice u/s. 148 which amounts to furnishing on inaccurate/concealment of particulars in the original return of income filed by assessee. He also concluded that provisions of Explanation-5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 205] (SC) It was the submission that the facts of the case does not warrant penalty u/s. 271(1)(c) as assessee has bonafidely declared the incomes as declared in the statement u/s. 132(4). 7. Ld. DR however, relied on the orders of the authorities to submit that penalty is warranted. He has relied on the following case law: i. LMP Precision Engg. Co. Ltd. Vs. DCIT (Asstt.) Spl. Range [183 Taxman 12] (Guj); ii. CIT Vs. Mahabir Prasad Bajaj [298 ITR 109] (Jharkhand); iii. B.A. Balasubramanian and Bros. CO. Vs. CIT [236 ITR 977] (SC); iv. Addl. CIT Vs. Jeevanlal Sah [205 ITR 244] (SC); v. Raj Kumar Chaurasia Vs. CIT [288 ITR 329 (ALL); vi. CIT Vs. Anwar Ali [76 ITR 696 (SC); vii. CIT Vs. Handloom Emporium [282 ITR 431 (ALL); viii. M.S. Mohammed Marzook (Late) and Another (Represented by legal heirs) Vs. ITO [283 ITR 254] (Mad); ix. Sardar Bhagwan Singh Chawla Vs. CIT [279 ITR 142] (ALL); x. Madanlal Kishorilal Vs. CIT (ALL) [144 CTR: Vol. 197 Dtd. 19-08-2005]; xi. CIT Vs. Gurbachan Lal [250 ITR 157] (Delhi); xii. Kamal Chand Jain Vs. ITO [277 ITR 429] (Del); xiii. Mak Data (P) Ltd., Vs. CIT [358 ITR 0593] 8. I have considered the issue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; [(ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E;] (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed;] [(d) where a person is found to have any asset (including financial interest in any entity) located outside India.] 11. Section 147 authorises the AO to initiate proceedings u/s. 147, if there is any escapement of income as contemplated. It is to be noted that escapement of income is different from concealment of income or furnishing of inaccurate particulars. Therefore, in all cases where proceedings u/s. 147 are initiated, it does not automatically become concealment of income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts which assessee was maintaining are not considered at the time of original return of income, even though assessee is aware about the transactions. Only when confronted with search and seizure proceedings and identification of 27 bank accounts maintained by him, not only in Hyderabad but also in other places like Chennai, complete transactions have come to the knowledge of the department. Since assessee has not bonafidely acted in disclosing of his transactions at the time of filing original return, subsequent conduct, consequent to the search, may not give immunity to assessee in the reassessment proceedings. It is contended that in all other years, where assessee has disclosed the incomes in response to Section 153A proceedings, penalty was dropped. The scheme of assessing incomes identified in search have been modified and in the revised procedure, assessments u/s. 153A are independent of original assessment proceedings. Therefore, the immunity provided in proceedings u/s. 153A cannot be extended to the present proceedings being reassessment proceedings U/s 147. 14. Explanation-1 to Section 271(1)(c) is certainly applicable to the facts of the case. Assessee has not giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in section 271(1)(c) of the Income-tax Act, 1961, corresponding to section 28(1)(c) of the Act of 1922, would govern a situation where such particulars had been concealed in the original proceedings which had already terminated. The purpose of the proceedings under section 34 is to bring to tax the income which should have been assessed during the original assessment proceedings. When an assessment is re-opened under section 34, the finding with regard to the original return stands re-opened and the ultimate finding as to whether a return is correct or not is to be found in the order passed under section 34 . The provisions therein under the old Act are similar to the provisions in Income Tax Act, 1961. Therefore, I am of the opinion that the decision of the Full Bench of Allahabad High Court will equally apply to the facts of the case. 17. As considered by the Hon'ble Supreme Court in the case of Mak Data (P) Ltd., Vs. CIT [358 ITR 0593], there cannot be any surrender of income with a view to avoid litigation by peace and to channelise energy and resources towards productive working and to make amicable settlement with the Income Tax Department. Statute does not re ..... 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