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TMI Blog2016 (9) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 on the following grounds of appeal : 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred both on facts and in law, in cancelling the penalty of ₹ 11,78,100/- levied u/s. 271(1)(c) by the A.O. even when the assessee deliberately concealed its income by not disclosing his income voluntarily prior to the ate of search. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred both on facts and in law, in cancelling the penalty by ignoring the provisions of explanation 5A of section 271(1)(c) of I.T. Act, 1961 which are squarely applicable to this case and where it is clearly mentioned that income declared in any return of income furnished on or after the date of search, assessee shall be deemed to have concealed the particulars of income or furnished inaccurate particulars of such income for the purposes of imposition of penalty under clause (c) of sub-section (1) of section 271. 2. The brief facts of the case are that assessee company is in the business of real estate. The assessee filed its return of income on 24.03.2008 declaring nil income. A search and seizure operation was carried out at the various corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. It was submitted that the surrender of ₹ 35,00,000/- made by the director Shri Vijay Gupta, was not voluntary surrender, but the amount was surrendered when the assessee was cornered by the department and had no explanation for the cash received. Therefore, in view of the provisions of law, the assessee was rightly saddled with penalty by the ld. AO, which the ld. CIT(A) wrongly deleted. 4. Repelling the contentions of the ld. DR, the ld. AR of the assessee submitted that similar penalty u/s. 271(1)(c) was imposed by the same Assessing Officer for the same assessment year for the similar payment in the case of one of the parties to the above mentioned agreement, i.e., M/s. Crazy Developers Pvt. Ltd. and the penalty so imposed has been deleted by the ITAT, Delhi Bench-B vide order dated 30.11.2015 in ITA No. 4250/Del./2011. Therefore, the case of the assessee is squarely covered by the said decision of coordinate bench in favour of the assessee. 5. Having considered the rival submissions and gone through the entire material available on record, we find that the issue in hand is covered in favour of the assessee by the decision of ITAT, Delhi Benches in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the amount disclosed during the course of search operation had been returned in a return of income filed in response to notice issued by the AO u/s 1S3C and therefore, the provisions of explanation SA read with S.271(1)(c) do seem to apply to the facts of the case. However, the AR of the appellant has taken the arguments that the receipt of cash in pursuance of an agreement to sell the land of the assessee company did not amount to generation of income for the A/Y 2007-08 It has been claimed that what was received was merely 'an advance and the transactions of sale of land to the buyer did not take place till date. The AR has filed copies of account of the Balance Sheet, wherein, the impugned piece of land stands reflected in the Stock-in-Trade of the company. This only means that first it needs to be deliberated upon as to whether the receipt of cash in pursuance of agreement to sell would amount to income or not. During the course of appellate proceedings, the AR was asked to explain as to how the agreement to sell did not culminate into transaction of sale for so many years and the amount received as advance also remained with the assessee. It was apparent that the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firstly the existence of taxable income will have to be established. It is clear that there was no income on the basis of the facts of the case and the amount returned by the appellate company in its return of Income in response to notice u/s 153C is only intended to honor the disclosure made during the course of search operation even if the same was not warranted as per the facts of the case. The Hon'ble Supreme Court in the case of Abraham (C.A.) Vs LT.O. (1961) 41 LT.R. 425 (SC) has held that penalty proceedings is part of machinery for assessment and penalty partakes character of additional tax. It should be possible for the taxpayer to question the validity of assessment / reassessment on merits, but limiting the claim for relief to cancellation of penalty, since a valid assessment/re-assessment is foundation for a valid penalty. In the present case the mount declared/surrendered for taxation by the assessee company is not at all taxable. The said amount was treated as taxable income by the Assessing Officer just due to the reason that the same was declared as income by the assessee company in its return of income filed in response to notice u/s 153C of the LT. Act 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing higher income. Eventually, assessment orders were passed and the returns submitted regularized under section 148. In penalty proceedings under section 271, the assessee claimed that he had offered additional income to buy peace of mind and avoid litigation. Penalty orders were passed and the Commissioner (Appeals) confirmed the orders. But the Appellate Tribunal held that the Department had not discharged its burden of proving concealment and had simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, and that penalty could not be levied. On a reference, the High Court held that no penalty could be levied for concealment (see (2000) 241 ITR 124). The Department preferred appeals to the Supreme Court. The Supreme Court dismissed the appeals holding that no interference with the order of the High Court was called for. 12. The ratio of judgement cited as CIT vs Harish Talwar (supra) and CIT Vs SAS Pharmaceuticals (supra) delivered by Hon ble Jurisdictional High Court is that, to proceed with the imposition of penalty u/s 271(1)(c), the A.O. has to prove that there was concealment of particulars of income or assessee has furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X
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