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TMI Blog2016 (12) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee - ITA No. 4593, 4594, 4595 & 4596 /Mum/2016 - - - Dated:- 21-10-2016 - Shri R. C. Sharma, AM And Shri Pawan Singh, JM Assessee by : Shri. Vimal Punmiya Revenue by : Shri Jeevanlal Lavedia ORDER Per R. C. Sharma (A.M) These are the appeals filed by the assessee against the order of CIT(A) for the assessment year 2007-2008 to 2010-2011 in the matter of imposition of penalty under Section 271(1)(c) in respect of income surrender during course of survey on account of purchases. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that assessee is a firm engaged in the business of civil construction. Returns for the relevant assessment years under consideration was filed well within the stipulated time limit and assessment was framed under Section 143(3). There was survey at assessee s business premises on 19/03/2013. During survey, a statement of Shri Kishore Golani, Partner was recorded. llegation of the department is that the purchases from M/s. Thane Steel Pvt. Ltd., Manish Barkha Parshva Co. are not genuine. During survey proceeding one of the partners Shri Kishore Golani offered 50% of purchase as additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani Brothers and what is the modus operandi of business of your firm. Ans. Sir, I am basically an engineer and was looking after the technical aspects of construction contract undertaken by M/ s Golani Brothers. As can be seen from the answer to Q.No.6, our partnership firm has suffered several changes in its constitution since past few years. There have been few deaths in the family and accordingly, only two of us i.e. myself and my brother are the present partners of the said firm. Presently, I am looking after all the affairs of M/ s Golani Brothers. The said firm is engaged in the business of civil construction works with government agencies like MMRDA, MCGM and MIDC, lIT Mumbai etc. Our firm bids for the tenders of the above mentioned government agencies published in newspapers. When the tender is awarded to us, we execute the work and receive payment against the same. Q.13 Please state as to who looks after the purchase requirements of M/ s Golani Brothers. Ans. Sir, as mentioned earlier the partnership firm has undergone several changes in its constitution. Mr. N D Golani, my uncle and the founder partner having 36% stake, was in charge of purchase requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six years are as under:- Name of Purchase Parties FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Grand Total M/s. Thane Steel Pvt. Ltd., 80,62,640 17,37,075 1,02,98,048 1,86,85,097 81,92,315 0 0 4,69,75,175 M/s. Manish Barkha 43,60,189 8,68,342 38,95,619 0 0 0 0 91,24,150 M/s. Parshva Co., 0 0 7,21,966 0 0 0 0 7,21,966 Total 1,24,22,829 26,05,417 1,49,15,633 1,86,85,097 81,92,315 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were purchased from these two parties. As a technical person and qualified civil engineer, I would like to categorically state that the construction contract works completed by us during the relevant period would not have been possible without delivery and consumption of quantity of TMT bars represented by the purchases bills of the said two parties. However, since we are unable to produce the complete documentation, and with a view to avoid litigation and to but peace of offering a sum of ₹ 2,84,10,644/- as under which represents, 50% of the purchases from the said two parties in respective assessment years as additional income over and above the regular income of M/s Golani Brothers. I also promise to revise my returns and pay taxes accordingly. Name of Purchase Parties FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Grand Total M/s. Thane Steel Pvt. Ltd., 40,31,320 8,68,537 51,49,024 93,42,548 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s just to buy peace and same is accepted by Ld. AO after independent verification. 9. The issue under consideration is squarely covered by the decision of Bombay High Court in case of Hiralal Doshi ITA No.2231 of 2013 order dated 09/02/2016, wherein the Hon ble High Court has held as under:- (i) The reliance by the Revenue upon the decision of the Apex Court in Mak Data P. Ltd 358 ITR 593 (SC) to contend that the justification of having deleted and accepted the amount of ₹ 1.62 Crores as business income, to buy peace is not available. We find that the facts in that case are completely distinguishable and the observations made therein would not be universally applicable. In that case, a sum of ₹ 40.74 lakhs had never been disclosed to the Revenue. During the course of survey, the assessee therein had surrendered that amount with a covering letter that this surrender has been made to avoid litigation and buy peace with the Revenue. In the aforesaid circumstances, the Apex Court held that the words like to avoid litigation and buy peace is not sufficient explanation of an assessee s conduct. It held that the assessee had to offer an explanation for the concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prima facie conclusion that the income could be regarded as long term capital gain. Once the aforesaid conclusion has been reached coupled with two further facts viz. the authorities have rendered a finding of fact that the Respondent-assessee had not concealed its income nor filed inaccurate particulars attributable to capital gains in its regular return of income, the view taken to delete the penalty is a possible view. (iv) In the present fact, the view taken by the CIT(A) as well as the Tribunal is a reasonable and possible view. Nothing has been shown to us to hold that the findings of the CIT(A) and Tribunal was perverse and/or arbitrary warranting any interference by this Court. It may be pointed out that even in the Memo of Appeal, it is not urged by the Revenue that the finding of the CIT(A) and Tribunal are in any manner perverse. In the above view, we see no reason to entertain the question as proposed, as it does not give rise to any substantial question of law. Accordingly, the Appeal is dismissed. No order as to costs. 10. Learned AR also relied on the decision of Co-ordinate Bench in the case of Vipul Life Sciences Ltd., 57 taxmann.com 25 in support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO levying penalty u/s 271(1)(c) in assessment years 2009-10 and 2010-11. 11. Reliance was also placed by learned AR on the decision of Bankgalore Tribunal in the case of Muninaga Reddy vs. ACIT 37 taxmann.com 440 in support of the proposition that where assessee consequent to survey conducted under Section 133A had declared income from business at ₹ 81 lakhs and further in return of income filed and declared said income, which was accepted and brought to tax, Assessing Officer was wrong in imposing penalty under Section 271 (1) ( c). 12. Reliance was also placed by learned AR on the decision of Gujarat High Court in the case of Shankerlal Nebhumal Uttamchandani wherein High Court has held as under: In the circumstances, it is apparent that the same income, namely the amounts in the bank accounts alongwith interest thereon, have been assessed in the hands of the assessee as well as different family members. Hence, even the Department is not certain as to the right person who is amenable to tax que the said income in the circumstances, the Tribunal rightly came to the conclusion that no penalty is exigible under the provisions of section 271(1) ( c) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act dated 15.12.2009 at an income ofRs.1,34,62,840/-. 14. When the explanation was accepted by the Ld. AO, then there is no question of invoking explanation 1 to Section 271(1)(c). 15. We also found that CIT(A) has wrongly distinguished the facts in the case of Hiralal Doshi(supra) of Bombay High Court in so far as the Ld. CIT(A) failed to consider ,that in present case the Ld. AO himself stated that details are in order and even allowed the 50% of purchases. Thus, Ld. AO accepted genuineness of the purchase. Therefore, the facts of the instant case is much stronger than facts of the Hiralal Doshi where appellate authority (i.e. CIT(A)) accepted the genuineness of transaction but, in the instant case the assessing authority himself had accepted the genuineness Therefore, finding of Hon'ble Bombay High Court is squarely applies in assessee case. 16. The CIT(A) has also distinguished the decision of Hon ble Jurisdictional Mumbai tribunal in case of Vipul Life. Sciences Ltd. Vis DCIT [2015J 57 taxmann.com 25 (Mumbai - Trib.) on ground that in that case additional income surrendered by the assessee was accepted by the Ld. AO and no addition was made, but in present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the judicial pronouncements cited by learned AR and also decision recorded by CIT(A) in its appellate order. After going through the statement so recorded during survey, the revised return filed by the assessee offering the income to stop the litigation and to purchase piece of mind and the findings given by the AO while framing assessment under Section 143(3) read with Section 147 wherein he has accepted the purchases so made. We found that in present case also assessee explain the genuineness of purchases. But assessee voluntarily offered @50% of purchases as additional income just to buy peace and avoid litigation. The same accepted by AO. The relevant para of AO order (A.Y. 2007-08) are reproducing below.- In this reply the assessee submitted that to buy peace of mind, he has already admitted to withdrawn 50% of purchases claim amounting to ₹ 62,11,414/- ) 50% of amount of Purchase during the financial year i.e. ₹ 1,24,22,829/ -) and offer it as income. For the year under consideration, assessee filed revised return of Income at ₹ 1,96, 74,259/ - which is inclusive of ₹ 62, 11,414 (50% of amount of purchases during the financial year i.e. 1,24,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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