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TMI Blog2016 (4) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is subsumed in the extra income declared during the course of survey. The A.O. had his own apprehension that assessee would not have declared his true and correct income, if survey could not taken place. Whether survey is taken place or not, the fact remains that the due date for furnishing return for both the assessment years was not over as on the date of survey. Therefore, there is no scope for such suspicion and surmises in the penalty proceedings. This is not a fit case for levy of penalty under explanation 1 and 3 of section 271(1)(c) of the Act, as the conditions stipulated for levy of penalty is not fulfilled. The explanations offered by the assessee under explanation 1 of section 271(1)(c) of the Act appeared to be bonafide. The conditions stipulated under explanation 3 of 271(1)(c) of the Act are not fulfilled to hold that the assessee shall deemed to be concealed the income so as to levy penalty. Therefore, we direct the A.O. to delete the penalty of ₹ 10 lakhs levied u/s 271(1)(c) of the Act. - Decided in favour of assessee - I.T.A.No.314/Vizag/2013, I.T.A.No.318/Vizag/2013 - - - Dated:- 18-3-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee further stated that he is not having regular accountant, therefore could not maintain regular books of accounts, hence, the estimation made for the financial year is probable and estimated. The assessee filed return of income for the above assessment years and admitted income disclosed during the course of survey and also paid taxes before filing the return of income. The Assessing Officer has completed the assessment u/s 143(3) of the Act and determined total income of ₹ 22,78,580/-. While doing so, the Assessing Officer has accepted the return of income filed by the assessee, in addition made separate additions towards referral income received from two diagnostic centers, which was not considered by the assessee in the return of income. 3. Thereafter, the Assessing Officer issued a show cause notice u/s 271(1)(c) r.w.s. 274 of the Act and asked to explain why penalty shall not be levied for concealment of income and also furnishing inaccurate particulars of income. In reply to show cause notice, the assessee submitted that he has admitted the additional income during the course of survey on estimation basis. The survey party could not gather any information so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Representative further submitted that the CIT(A) was not justified in sustaining minimum penalty of 100% levied u/s 271(1)(c) of the Act. The Authorised Representative further submitted that the assessee has disclosed additional income during the course of survey under estimation basis. It was not a case of Assessing Officer that there was incriminating material found during survey, which suggest concealment of income or furnishing inaccurate particulars of income. The Authorised Representative further submitted that the assessee has filed return of income admitting income disclosed during the course of survey and paid taxes before filing the return of income, which shows his intention not to hide any income for the taxation. Despite filing the return and paid taxes as admitted during survey, the Assessing Officer levied penalty by holding that the assessee did not filed the return of income as on the date of survey. The Authorised Representative further submitted that as on the date of survey, i.e. on 23.9.2008, the due date for furnishing return of income for the assessment year in question was not over. Therefore, the Assessing Officer was not correct in holding that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollection receipts, however, stated that he did not maintain regular books of accounts to say whether these are accounted or not in the absence of regular books of accounts. The assessee, in reply to a further query from the A.O. admitted that his average daily collection from inpatient and outpatient is around ₹ 6,000/-, by taking into account the average daily collection his professional collections would be around ₹ 20 to 25 lakhs per annum. From this, after meeting the expenditure for maintenance of hospital, the net income would be around ₹ 15 lakhs per annum, which is probable and estimated. Since, I am not in a position to substantiate my receipts and expenditure with necessary evidence agreed to admit ₹ 20 lakhs each for the assessment year 2007-08 and 2008-09 and ₹ 10 lakhs for the first half of the current financial year. Accordingly, filed a return of income for the assessment year 2008-09 on 17.10.2008 and admitted income declared during the course of survey and paid taxes before filing return of income. 8. The A.O. levied penalty u/s 271(1)(c) of the Act, on the ground that the assessee with a malafide intention willfully concealed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computation of his total income has been disclosed by him represents the concealed income. Similarly, explanation (3) appended to section 271(1)(c) of the Act, provides for levy of penalty in a case, where any person fails, without reasonable cause, to furnish within the period specified in sub-section 1 of section 153, a return of his income, which he is required to furnish u/s 139 of the Act, in respect of any assessment year commencing on or after 1st day of 1989 and on the expiry of the period aforesaid no notice has been issued to him u/s 142(1) of the Act or u/s 148 of the Act and the A.O. or CIT(A) is satisfied that in respect of such assessment year, such person has taxable income, then such person shall for the purpose of clause (c) of this sub section, be deemed to have concealed the particulars of his income, notwithstanding the fact that such person furnishes a return of his income at any time after the expiry of the period aforesaid. The concealment of particulars of income and furnishing inaccurate particulars of income should be referred to return of income filed by the assessee, books of accounts and other documents available with the authorities at the time of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the A.O. that assessee would not have filed return and not disclosed true and correct income. In the present case on hand, as on the date of survey i.e. on 23.9.2008, the due date of furnishing return of income for the assessment year 2008-09 was not over. Therefore, the A.O. was not correct in coming to the conclusion that the assessee would not have filed return of income if survey was not conducted. Similarly, the A.O. stated that assessee has not filed any return of income for the assessment year 2007-08. Though, the due date of furnishing return under sub section (1) of section 139 of the Act was over as on the date of survey, the assessee shall always file his return under sub section (4) of section 139 of the Act, which was not over as on the date of survey. Therefore, we are of the opinion that even under explanation 3 of section 271(1)(c) of the Act, the penalty is not leviable. 11. The question whether there was a reasonable cause for which the requirement of concerned provisions of section could not be complied with is primarily an essential question of fact and it has to be decided in each case on consideration of materials placed before the concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of survey. The relevant portion is reproduced hereunder: It is to be kept in mind that s. 271(1)(c) is a penal provision and such a provision has to be strictly construed. Unless the case falls within the four corners of the said provision, penalty cannot be imposed. Sub-s. (1) of s. 271 stipulates certain contingencies on the happening whereof the AO or the CIT(A) may direct payment of penalty by the assessee. Sec. 271(1)(C) authorizes imposition of penalty when the AO is satisfied that the assessee has either : (a) concealed the particulars of his income; or (b) furnished inaccurate particulars of such income. It is not the case of furnishing inaccurate particulars of income, as in the IT return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the IT return. The quest/on 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 IT return filed by the assessee, viz., whether concealment is to be found in the IT return. The words 'in the course of any proceedings under this Act' are prefaced by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her material was available with Assessing Officer to effect that assessee concealed income, it is not open to Assessing Officer to invoke power u/s 271(1)(c) levying penalty. Following said decision penalty u/s 271(1)(c) was not imposable. Even otherwise, assessee having given bonafide explanation that he had offered higher income even though that much income was not taxable, was not rebutted. Assessing Officer had neither brought any calculations on record nor mentioned how amount was quantified. Thus, assessee had unexplained expenditure in earning that gross receipts. Therefore, even provisions of Explanation 1 to section 271(1)(c) came into operation as assessee s explanation had not been disproved. Therefore, conditions for imposing penalty did not satisfy. Hence, penalty cancelled. Unlike in a search case there is no presumption that the amount unearthed during the course of survey will automatically be considered as 'concealed income'. No pm vision/explanation similar to Explanation-5 was provided in the section to cover survey cases. Since, the income detected/offered in survey cannot be deemed to be concealed income', treating the same as 'concealed i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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