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TMI Blog2016 (11) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... by both the appellate authorities in unison based on evidence and is a finding of fact. - Decided against assessee - Income Tax Appeal No. 60 of 2016 - - - Dated:- 1-6-2016 - M. N. Bhandari And J. K. Ranka, JJ. For the Appellant : Gunjan Pathak JUDGMENT J. K. Ranka, J. 1. The instant appeal at the instance of the assessee under section 260A of the Income-tax Act, 1961, is directed against the order dated October 27, 2015 passed by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur. It relates to the assessment year 2006-07. 2. Brief facts for disposal of the present appeal, are that the appellant is a private limited company, incorporated on July 12, 2005 and is, inter alia, engaged in developing farm houses at the National highway No. 8 near Village Mehala District Jaipur. It filed return declaring an income of ₹ 1,87,697 on November 29, 2006. A survey operation was directed against the appellant on February 26, 2008 which continued up to February 28, 2008 at the business premises of the appellant and during the survey operation, certain incriminating documents were found and impounded under section 133A(3)(ia) of the Income-tax Act, 1961. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly observed that the dispute is not about the quantum but only on account of head of income and since the only activity of the assessee company is trading in real estate, the income offered by the appellant may be business income and accordingly directed to tax the income under the head business income as against income under section 69B of the Act. The said appellate order became final and was not challenged by the appellant or by the Revenue. Since the addition was made in the assessment order, notice under section 271(1)(c) of the Act was also issued along with the assessment order, and a show-cause notice was issued as to why the penalty proceedings under section 271(1)(c) of the Act may not be initiated for concealment and furnishing inaccurate particulars in respect of the surrendered income. 5. After the appellate order having become final, the Assessing Officer again issued a show-cause notice under section 271(1)(c) of the Act as to why penalty may not be imposed. An explanation was offered by the assessee as under : In the above case, it is submitted that : (i) Considering the income offered of ₹ 30,23,672.00 as unexplained investment under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oticed by the survey team. He further noticed that the statements were recorded of two persons and also directors who themselves calculated the concealed income and filed revised return on March 27, 2008. He also came to the conclusion that there is nothing on record that the assessee filed revised return of income due to pressure from the Department, rather in fact the directors of the assessee company themselves have calculated the undisclosed income and thereafter filed revised return. Thus, learned Judicial Member disagreed with the findings of the learned Accountant Member and upheld the penalty. Since there was difference of opinion, the same was referred to a Third Member on the following question : Whether on the peculiar facts and circumstances of this case, there is any justification in sustenance of penalty imposed under section 271(1)(c) of the Act ? Learned Vice-President of the Tribunal (Shri G.D. Agrawal) who acting as a Third Member, heard the matter again and held as under : 35. However, the facts of the assessee's case are altogether different. In the case under consideration before me, as already noted, there was survey at the assessee's p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty imposed under section 271(1)(c). (emphasis supplied) Thus, even the learned Vice-President being the Third Member of the Tribunal, discarded the finding of the learned Accountant Member that there was no incriminating document or no documentary evidence on record to show payment of any on money . Thus, penalty was upheld. 8. Learned counsel for the appellant contended that statements of two persons were recorded, however, since they were employees of the company, they had no authority to give any statement. He also supported the findings of the learned Accountant Member that except statements recorded, there was no document/incriminating documents found. He further contended that merely on the basis of statements recorded in survey and no document or loose papers having been found, or evidence of payment of on money having been found the very inclusion was not proper. He contended that the offer of revising the return was voluntary, without delay and it was assured by the authorities during the course of statements that the income being offered is subject to non initiation of penalty proceedings and once there was subjective offer/surrender, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... *1 Relevant portion of statement of Mahesh Kumar Gupta, who was looking after the accounts of the assessee, is reproduced hereunder : In question No.11 he categorically stated as follows : * * * * * * * * *1 Relevant portion of statement of Ramkishore Jat, the key operator of the business of the assessee, is reproduced hereunder : * * * * * * * * *1 Thereafter all the statements as aforesaid, as well as registered and un- registered sale deeds and loose papers found during the course of survey, were confronted with Sunil Bansal, director of the company, and it would also be relevant to observe his statement, which is reproduced hereunder : * * * * * * * * *1 On perusal of the statements of various persons including Sunil Bansal and confirmation by the other two directors, who were also present during the course of statements, it was categorically accepted and agreed by the three directors, which had also been placed on record as annexure A , * Portions in vernacular not printed here-Ed. stating about undisclosed investment in purchase of the various properties during the following assessment years : (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned Accountant Member is wholly perverse, based on no material and contrary to the material on record referred to hereinbefore and was available before all the authorities including the Tribunal. We have reproduced the statements of various persons/directors just to show the extent of loose papers and incriminating documents found and admitted by the appellants to counter the perverse finding of the learned Accountant Member of the Tribunal. 12. On the contrary, not only the Assessing Officer but the learned Commissioner of Income-tax (Appeals) as well as the learned Judicial Member and the learned Third Member have categorically found, as reproduced hereinbefore, that there was ample material, voluminous documents found at the time of survey which resulted into surrender by the appellant. There is concurrent finding of the two appellate authorities. 13. A bare perusal of the aforesaid submission of the assessee clearly makes out that in the penalty proceedings the assessee has not even attempted to establish its bona fides nor submitted any explanation worth considering, before the Assessing Officer during the penalty proceedings. In our view, when the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case, it may not be proper for the court to enter upon the merits of the controversy at all, and unless it is demonstrated that the indication made by the Assessing Officer to initiate penalty proceedings is mala fide, perverse, based on no evidence, misreading of evidence or which a reasonable man could not form or that the person concerned was not given due opportunity resulting in prejudice, the said proceedings need no interference, and accordingly the court finding no question of law, much less a substantial question of law, the appeal was dismissed. 15. The Madras High Court in the case of CIT v. J. K. A. Subramania Chettiar [1977] 110 ITR 602 (Mad), had an occasion to consider a case under section 271(1)(c) of the Act where a revised return was filed showing higher income, still higher income was assessed by the Assessing Officer, and in the said case the assessee had filed original return disclosing an income of ₹ 27,556. The assessee filed a second return of income for the assessment year 1963-64 disclosing a total income of ₹ 75,044 which included business income of ₹ 69,143. However, the assessment was ultimately completed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney added the said amount of ₹ 40,74,000 and brought to tax as income from other sources and assessed the total income at ₹ 57,56,700. The penalty proceedings were initiated for concealment of income and not furnishing true particulars of its income under section 271(1)(c) of the Act. The Assessing Officer imposed penalty under section 271(1)(c) at ₹ 14,61,547 which was upheld by the Commissioner of Income-tax (Appeals), however, was deleted by the Tribunal. The Delhi High Court accepted the plea of the Revenue that there was absolutely no explanation by the assessee for the concealed income of ₹ 40,74,000. The High Court took the view that in the absence of any explanation in respect of the surrendered income, the first part of clause (A) of Explanation 1 is attracted, and reversed the finding of the Tribunal and allowed the appeal. On a further appeal the apex court, taking into consideration, the words voluntary disclosure , buy peace , avoid litigation , amicable settlement , etc., was of the opinion that the Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The Assessing Officer, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under section 271 read with section 274 of the Income-tax Act, 1961. The Assessing Officer has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the Assessing Officer is not required to record his satisfaction in a particular manner or reduce it into writing. The scope of section 271(1)(c) has also been elaborately discussed by this court in Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC) ; [2008] 13 SCC 369 and CIT v. Atul Mohan Bindal [2009] 317 ITR 1 (SC) ; [2009] 9 SCC 589. (emphasis supplied) 18. Taking into consideration the above facts vis-a-vis the instant case, in our view the facts are exactly identical where voluminous unrecorded material was found during the course of survey which were impounded by the Assessing Officer and consequent thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. In CIT v. Anwar Ali (supra), the issue was on different proposition. It held that though addition made in the quantum proceedings is good evidence, but before penalty can be imposed the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. The judgment of the apex court is inapplicable as the facts of the instant case the assessee himself has come forward and after noticing various statements and the voluminous documents found from the business premises of the assessee itself about offering of an income which was not originally shown or recorded in the books of account. 23. The case of CIT v. Suresh Chandra Mittal (supra), relied upon by the learned counsel for the appellant, is yet again on a different proposition as the apex court found that the Department has not discharged its burden of proving concealment and has simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith. However, we have already noticed the judgment in the case of Mak Data P. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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