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TMI Blog2016 (3) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... dings and hence the assessee cannot be attributed with any concealment of income or furnishing of inaccurate particulars of income for the Asst Year 2008-09 in this regard. In view of the aforesaid findings and judicial precedents, we hold that once a particular income was not assessable in the Asst Year 2008-09 then even though the income might have been assessed in Asst Year 2008-09, penalty u/s 271(1)(c) of the Act cannot be imposed on the same. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/Kol/2013 The brief facts of the case are that a survey operation u/s 133A of the Act was conducted on 11.93.2008 in the office /business premises of assessee consortium at No. 74, Lenin Sarani, Kolkata - 700013 in connection with the search operation u/s 132 of the Act in the "Akshara Group of Cases". During the course of survey operation, lot of assets and documents were found and impounded by the survey team. During the course of search and seizure operation u/s 132 of the Act, Shri Prakash Chandra Agrawalla , one of the key persons of the group, filed a disclosure petition u/s 132(4) of the Act before the ADIT (Investigation) , Kolkata disclosing an amount of ₹ 37,85,080/- and ₹ 8,37,200/- being the unaccounted income of the assessee consortium from sale of residential flats during the financial year 2007-08 relevant to Asst Year 2008-09 based on the documents seized u/s 132 of the Act with Identification Mark ALT/22 (page 2 and page 3 respectively) from the office premises of M/s Akshara Shelters Pvt Ltd and others at "Supra Court" , 35, Lansdowne Terrace, Kolkata - 700026. Considering the above, notices u/s 153C read with section 153A of the Act were issued to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not assessable at all in Asst Year 2008-09. The assesses pleaded that they were following 'completed contract method ' for recognition of revenue for their construction of flats activity and accordingly the construction projects got completed only in Asst Year 2009-10 and regular returns were filed by the assesses offering the profit derived thereon. It was further argued that admittedly the income offered in Asst Year 2008-09 represented the cash portion received on sale of those flats which have been duly regularly offered to tax in Asst Year 2009-10. The assesses pleaded that this could be evident from the sworn statement recorded by the Learned AO u/s 131 of the Act from one of the key persons of the group Shri Prakash Chandra Agrawalla who had clearly demonstrated the manner of deriving the undisclosed income vis a vis the relevant seized documents. In other words, it was pleaded before the Learned CIT(A) that during the course of search, a paper showing sale of flats was found which included full details of sale of flats comprising cash and cheque portion separately. The key person of the group Shri Prakash Chandra Agrawalla admitted that the cash amount received on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese submissions to the Learned AO for his comments in the remand proceedings. The Learned AO in the remand report gave a counter argument that Shri Prakash Chandra Agrawalla himself in his statement u/s 132(4) of the Act admitted that the assessee received the cash component on sale of flats (sold in Asst Year 2009-10) in the assessment year 2008-09 and it was on that basis the income was correctly assessed in Asst Year 2008-09. In response to this, the assessee filed objections before the Learned CITA stating that there is no dispute about the facts between the department and assessee that the said amount was received against proposed sale of flats, the income of which have been recognized by the assessee and assessed by the department u/s 143(3) of the Act in Asst Year 2009-10 on the basis of system of accounting being sale or project completion method which has been accepted by the department in all the years. Hence even if Shri Prakash Chandra Agrawalla had stated that the cash was received in Asst Year 2008-09 and he, not knowing the provisions of law, have disclosed such receipts for assessment in Asst Year 2008-09, the same cannot be assessed as income for Asst Year 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated herein for the sake of brevity. 5.1. Fresh plea could be taken in penalty proceedings. We hold that the issue of jurisdiction to impose penalty in a particular year can be raised at any time in the course of proceedings . We place reliance on the decision of the Hon'ble Supreme Court in the case of Kiran Singh vs Chaman Paswan reported in AIR 1954 SC 340 at page 342 , wherein it was held that : "It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction whether it is pecuniary or territorial, or whether it is in respect of the subject matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties." 5.1.1. We also place reliance on the decision of the co-ordinate bench of Delhi Tribunal in the case of Tidewater Marine International Inc vs DCIT reported in 96 ITD 406 wherein, an appeal was filed before the tribunal against the confirmation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which states that "No tax shall be levied or collected except by authority of law". We also place reliance on the following decisions in support of our proposition :- 5.2.1. Decision of Hon'ble Supreme Court in the case of Co-operative Sugar (Chitpur) Ltd vs State of Tamilnadu reported in 1993 Supp (4) SCC 42 , wherein it was held that the icnome is to be assessed in accordance with the provisions of law and not in accordance with the agreement with the assessee to be assessed in a particular year. 5.2.2. Decision of Hon'ble Supreme Court in the case of CIT vs A.Gajapathy Naidu reported in (1964) 53 ITR 114 (SC) , wherein it was held that no power is conferred on the ITO under the Act to relate back on income that accrued or arose in a subsequent year to another earlier year on the ground that the said income arose out of an earlier transaction. 5.2.3. Decision of Hon'ble Bombay High Court in the case of CIT vs Nadiad Electric Supply Co Ltd reported in 80 ITR 650 , wherein it was held that even if the assessee credited more amount or excess amount, income can be assessed only which relates to the particular year. 5.2.4. Decision of co-ordinate bench decision of Pune Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi vs ITO in ITA No. 1046/Kol/2009 for Asst Year 2005-06 dated 30.6.2011, wherein it was held that 6. We find from the above facts and the case law of Hon'ble Bombay High Court in the case of Jaynarain Babulal (supra) that in case the income is disclosed, in respect to capital gain, in assessment year 2005-06 and the same is to be assessed in assessment year 2008-09, penalty u/s 271(1)(c ) cannot be levied in the relevant assessment year 2005-06 because the income of capital gain is not at all assessable in that assessment year. Accordingly, we delete the penalty levied and confirmed by lower authorities and this appeal of the assessee is allowed. 5.3. But for the search, income would not have been disclosed We find that the Learned DR argued that but for the search and survey action, the assessee would not have come forward with the offer of undisclosed income by way of disclosure petition u/s 132(4) of the Act followed by offering the same in the return filed in response to notice issued u/s 153C of the Act. In this regard, we find that this aspect has been duly considered by the Hon'ble Delhi High Court in the case of CIT vs SAS Pharmaceuticals reported in 335 ITR 259 (Del) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uously satisfied. 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 had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. 17. We, thus, answer the questions as formulated above, in favour of the assessee and against the revenue finding no fault with the decisions of the CIT(A) as well as the Tribunal. As a result, this appeal is dismissed. *In favour of assessee." 5.3.1. It will be relevant to discuss the following case law at this juncture i.e the decision of ITAT Delhi Bench in the case of Prem Arora vs DCIT reported in (2012) 24 taxmann.com 260 (Delhi) wherein the head notes are reproduced herein below:- "Section 271(1)(c ), read with section 153A, of the Income Tax Act, 1961 - Penalty - For Concealment of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement recorded u/s 132(4) of the Act during the search operation itself, in the wealth tax return the Tribunal has approved the findings in quantum with regard to the genuineness of the declaration of gold and diamonds. Accordingly the assessee is not liable to have penalty u/s 271(1)(c ) of the Act. 5.3.3. We would like to place reliance on the decision of the Jurisdictional High Court in the case of CIT vs Shri Samit Roy in ITA 354 of 2009 dated 3.9.2015, wherein the questions raised before their Lordships and their decision rendered thereon is as below:- "(a) WHETHER on the facts and in the circumstances of the case the Income Tax Appellate Tribunal erred in law in upholding the order of Commissioner of Income Tax (Appeal) holding their amounts disclosing after search, which was not previously offered to tax is not a concealment on the part of the respondent / assessee ? (b) WHETHER on the facts and in the circumstances of the case the Income Tax Appellate Tribunal erred in law in upholding the order of Commissioner of Income Tax (Appeal) holding the Assessing Officer was not justified in levying penalty under section 271(1)(c ) of the Income Tax Act, 1961 for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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