9911796707
TMI Blog2013 (12) TMI 1553X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- levied u/s 271(1)( c ) of the Income Tax Act, 1961. 4. That the appellant craves right to add, alter, amend, modify any of the grounds of appeal at the time of appearing or at the time of hearing. 2. From the grounds of appeals it is apparent that the sole grievance of assessee is upholding of order of Assessing Officer u/s 271(1)( c ) of the Income Tax Act, 1961 . The brief facts of the case are that assessee company is engaged in the business of catering. The return of income for the year under consideration was filed at ₹ 10,41,470/-. On 14.12.2004 i.e. year under consideration there was a survey operation u/s 133A of the Act and certain documents were impounded. The assessee vide letter dated 11.2.2005 made a surrender of ₹ 25 lakhs to cover discrepancies if any in the documents siezed by the Department. The letter of surrender further stated that surrender was subject to the pre-condition that Department shall not initiate any action for levy of penalty or prosecution. From the return of income filed by the assessee, the Assessing Officer observed that the surrendered amount of ₹ 25 lakhs was not reflected in the P L Account. Therefore, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld AR explained the facts and circumstances of the case and submitted that after survey a lump sum amount of ₹ 25 lakhs was surrendered with the condition that no penalty will be imposed and taxes on the surrendered income was paid accordingly. However, when assessee realized that surrender was not because of the seized documents therefore it contested and did not include the said surrendered amount in the return of income. However, the Assessing Officer made the addition holding that the surrender was voluntarily. In view of the above, he argued that though in quantum proceedings the addition was upheld but on the basis of quantum additions penalty cannot be levied as there has to be separate evidence for concealment of income for imposing penalty u/s 271(1)(c) of the Act. Continuing his arguments, he further submitted that assessment order does not contain any finding as to concealment of income and therefore there was no recording of satisfaction and moreover penalty order was passed without going through the submissions of the assessee. He submitted that the reply of the assessee against penalty proceedings contained each and every explanation of documents seized dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may direct that such person shall pay by way of penalty. (i) and (Income-tax Officer,)******** (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 benefit 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 CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of Clause (c) of this sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee, for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 8. Now looking into the facts of the present case we find that assessee had made surrender during survey with the pre condition that penalty will not be imposed. However, after finalization of accounts and after going through the material impounded the assessee found that surrender was not required and therefore it did not include the amount of surrender in the income tax return. However, the Assessing Officer made the addition which was upheld by ITAT. All the seized material impounded by the Department was explained by the assessee vide letter dated 21.2.2011 placed at paper book pages 39 to 59. The relevant part of this letter has been reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igures shown in the said account furnished along with the return of income,. The assessee when confronted during the assessment proceedings filed an explanation. However, in order to buy peace of mind the assessee surrendered a sum of ₹ 25 lakhs as additional income for the year under consideration. The said surrender was made subject to non levy of penalty for concealment u/s 271(1)( c) of the Act. The Assessing Officer however, accepted the surrender of ₹ 25 lakhs initiated the penalty proceedings u/s 271(1)( c) of the Act. The penalty under sec. 271(1)( c) of the Act was levied on the act of assessee in surrendering the additional income of ₹ 25 lakhs during the course of assessment proceedings. Though the assessee had furnished an explanation in respect of then entries in the provisional trading and P L A/.c which was submitted to the bank for availing certain limits, the Assessing Officer has failed to point out any discrepancy in the explanation furnished by the assessee and has proceeded to assess the income in the hands of the assessee on the basis of the surrender made by the assessee. In the entirety of the facts and circumstances, the only issue is whet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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