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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 ..... 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 corporate/administrative office premises, various business premises of the companies of Orris Group, residential premises of directors of Orris Group. Simultaneous, surveys under section 133A of the Act were also conducted in the premises of some of the assessees in the group. During the search operation various documents were seized. The AO noticed that at page Nos. 24 to 27 of seized Annexure A-I, there was a copy of Ikrarnama made between M/s. Crozy Developers Pvt. Ltd., M/s. Matrix Properties Pvt. Ltd., M/s. Quantum Land & Housing Pvt. Ltd. and Sh. Sumit Garg S/o Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 case of one of the parties to the same agreement found during the search operation in question, as noted above. The relevant observations of Tribunal are being reproduced for ready reference as under : "7. The sole question arises for determination is, "as to whether Ld. CIT(A) has erred in quashing the penalty of Rs. 13,46,400/- imposed by the A.O. u/s 271(1)(c) of the Act". 8. We have heard Authorized Representatives of the parties, gone through the material placed on record in the light of facts and circumstances of the case and orders of tax authorities below. 9. Undisputedly, during the search and seizure operation conducted by the Revenue on 30.03.2008 at the premises of Orris group companies an amount of Rs. 1,15,00,000/- was found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 impugned advance received by the assessee company in fact belonged to the assessee company in the form of forfeiture of the same. It was also suggested that since no evidence of forfeiture of the said amount in the F/Y 2009-10 had been filed it could be easily concluded that the said forfeiture actually happened in F/Y 2006-07 and same was in the knowledge of Shri Vijay Gupta and that is why he agreed to disclose the same as income for the F/Y 2006-07 as on the date of Search i.e. 13th March, 2008. The AR in response to this submitted his arguments that neither the receipt of advance nor its forfeiture constituted taxable income as the receipt of advance on account of proposed sale would remain the liability of the assessee till the transaction of sale actually takes place. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid 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. The Assessing Officer has failed to notice and bring on record the fact that the same is not taxable and accordingly it cannot form the basis for initiating / levying penalty u/s 271 (1) (c ) of the LT. Act, 1961. 8. It would also be relevant to refer to the judgement of Hon'ble Apex Court in the case of CIT Vs. Suresh Chandra Mittal 251 ITR 9(SC), wherein, the assessee had originally filed returns showing meager income. After search u/s 132 and notice for re-opening, revised returns were filed showing higher income. In penalty proceedings under section 271, assessee claimed that he had offered additional income to purchase peace and avoid litigation. Penalty orders were passed and Commissioner (Appeals) confirmed the orders. The Tribunal held that the department had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 inaccurate particulars of such income". 13. Undisputedly, penalty proceedings as well as assessment proceedings are to be decided independently and the penalty proceedings are not to be influenced by the assessment proceedings. In the instant case, no doubt, assessee has surrendered the income of Rs. 40,00,000/- during search and seizure operation but Hon'ble Apex Court in the judgement CIT Vs Suresh Chandra Mittal (supra) held that in this case, "the assessee initially filed return with meager income and subsequently filed revised return showing higher income after search and seizure operation, for reopening of assessment, in order to buy peace of mind and to avoid protracted litigation, the Appellate Tribunal has rightly held that burden of proving concealment into discharge, the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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