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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 ..... e not genuine. During survey proceeding one of the partners Shri Kishore Golani offered 50% of purchase as additional income to buy peace and avoid litigation. 4. After the survey assessee voluntarily revised its return of income duly incorporating the income offered. The revised return incorporating the income offered during survey was filed on 31/03/2013. On 05/02/2014, AO issued notice under Section 148 and the re-assessment order was framed on 30/03/2015. In the re-assessment order income was assessed as offered by the assessee in the revised return. In the re-assessment order so framed, AO has independently verified the details and found the same in order and accordingly accepted the additional income offered by the assessee. Thereafter, AO levied penalty under Section 271(1)( c) on the plea that assessee has concealed particulars of income. 5. By the impugned order CIT(A) confirmed the order of AO by observing that additional income offered by the assessee is over and above the original return income. Therefore, the assessee conceal the income and liable for penalty against the order of CIT(A) assessee is in further appeal before us. 6. We have considered rival contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Golani, my uncle and the founder partner having 36% stake, was in charge of purchase requirements and procurements thereof. After his demise on 17.02.2011, Mr. B D Golani. my other uncle who was assisting him earlier had been looking after of the purchase & procurement work. He also passed away on 18.09.2011. Subsequently. I was left with no choice but manage the purchase along with project execution works of this firm. Q.14 Please state the modus operandi of purchase of material by M/ s Golani Brothers. Ans. Sir, as stated earlier I was not handling the purchases and hence am not aware of the exact modus operandi followed by earlier persons, who looks after the purchases. After I have taken over the reigns of purchase from 18.09.2011 (After Death of Mr. BD Golani), I am trying to follow a streamline the purchase procedures which is a under:- As per the requirement we make local enquires and after negotiation we place order through phone, email etc. The material is directly supplied by the supplier to the concerned site alongwith a delivery challan, weightment slip, LP etc. The delivery challan. is duly signed by the concerned person at site and same is returned to the suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments and statement of Shri Ashok Asrani. I am of view that purchase were made. But, I agree that there are certain discrepancies and procedural lapses regarding the documentation involved in the purchases shown from MI s Manish & Barkha and M/s Thane Steel Private. Limited. As I was not involved in the purchase process earlier 1 am not in position to establish the genuineness of the purchases claimed from the said concerns. Hence, I take this opportunity to offer adhoc amount of 50% of the purchases, debited on account of above said two parties and also in respect of M/s Parshva& Co., as my additional income and promise to revise my returns and pay tax accordingly. Q.25 Please refer to your answer to Q.No.24 above wherein you have admitted to withdraw the claim of 50% of the purchases made from MI s Manish & Barkha, MI s Thane Steels Private Limited and MI s Parshva& co., Please state the basis of such working particularly since the entire purchases shown from the said two parties are not having the requisite supporting documents and also it is seen from the statement of Shri Ashok Asrani Prop: MI s Manish & Barkha that the entire purchases were without any actual delivery of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are certain discrepancies and procedural lapses regarding the documentation. But since he was not involved in the purchase process earlier, he was not in position to establish the genuineness of the purchases claimed from the said concerns. Hence, he offered ad-hoc amount of 50% of the purchases, and revised his returns and paid tax accordingly to buy the peace of mind. Even M/s. Thane Steels Pvt. Ltd., had confirmed the transaction and also provided confirmation of transactions alongwith certified bills. 8. It is also clear from the statement that income was offered just because of improper documentation, even parties confirmed the transactions and not offered because of bogus purchase. Therefore, the taking the same facts and giving name to transaction as "Bogus" and initiating the penalty proceeding is bad-in- law, Further the assessee has offered the Income on agreed basis 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 relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the change of head of income but not with regard to a claim for full exemption from payment of tax as in this case. We are unable to accept the aforesaid submission. According to us, the distinction sought to made on behalf of the Revenue is not acceptable as the ratio of the decision in M/s Bennett Coleman (supra) is where complete disclosure of income had been made in the return of income and head of the income undergoes a change at the hands of the Assessing Officer would not by itself justify the imposition of penalty under Section 271(1)(c) of the Act. (iii) We find that the Commissioner of Income Tax(A) during the penalty proceedings had again examined the issue whether the claim of capital gain made in the regular return of income to the extent of Rs. 1.62 Crores with the particulars in support of the same. On examination, the CIT(A) reaches 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 gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted the books of accounts go to prove that accept for the reliance on assessee's statement, and the statements of 18 persons, whose statements were taken at the back of the assessee and without affording an opportunity for cross examination, the revenue authorities did not have anything to show and prove that here is the concealment of income, resulting from furnishing of inaccurate particulars of income. This is so because there has been nothing with the revenue authorities to prove and show that any income has been concealed. The assessee filed its ROI declaring the amount surrendered. This income was accepted by the AO. By no stretch of logic, this situation could be treated as a situation in which any income was concealed by the assessee. We, therefore, set aside the orders of the CIT(A) and cancel the orders passed by 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 Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO mentioned that:- The assessee company submitted copies of Invoice, ledger account, payment details and reconciliation of the same with the bank statement. The assessee also filed details of Thane Steel P Ltd from the Maharashtra Government Sales Tax website in which the companies status is shown as active. This fact was independently verified and was found in order. It is pertinent to mention here that M/ s Thane Steel Private Limited is also a registered company under companies Act, 1956 and is also Excise Registered and ISO certified company. In addition to this the assessee submitted VAT audit report for the financial year. In the light of the above discussion, 50% of the purchases made during the year, as offered by the assessee is hereby added to the Income assessed vide order u/s 143(3) of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no concealment of income. 19. Furthermore, penalty under Section 271(1)(c) cannot be levied on estimated addition. Since AO has made addition on 50% of the alleged purchase, the same was on estimation without pointing out which part of purchase was genuine and which part was non-genuine. 20. As per learned AR, no penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent the concealed income as with the hypothesis that it does. If the assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances does not head to the reasonable and positive inference that the Assessee's case is false, and then the same amount cannot be disallowed. 21. We have deliberated 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 accept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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