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TMI Blog2019 (1) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... er And Shri O.P.Meena, Accountant Member Assessee by Shri Mehul Shah - CA Revenue by Shri Srinivas T.Bidari - Sr.DR ORDER PER BENCH: 1. This appeal filed by the Revenue pertaining to 2013-14 arising out of order passed by the CIT(A)-4, Surat dated 18.05.2016 wherein the quashing of the penalty proceedings u/s.271(1)(c) has been assailed. 2. The ground raised by Revenue read as under : "1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the penalty of ₹ 3,10,02,580/- u/s.271(1)(c) of the Act without appreciating the fact that had there been no survey action, undisclosed income of ₹ 10,03,31,960/- would have remained undetected and whole amount would have escaped from the gaze of tax. Further, assesee's intention to avoid paying taxes is clear from the fact that entries in diaries found during the survey proceedings were not entered in the books of account. Moreover, during the penalty proceedings, the assessee has failed to give any justification or acceptable explanation against charge of furnishing inaccurate particulars of income. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) oug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces. 3. Without prejudice to our aforesaid contention, even otherwise we would like to bring to the kind notice of your honor the fact that the our firm has fully offered the disclosed income of ₹ 10,03,31,960/- for the tax under the head 'Business Income" without claiming any expanses, depreciation or set off of carry forward losses or any deduction under chapter VI-A and hence, treating the said income under any head would not alter the total tax liability. In the said scenario when there would even no change in the tax liability, there would even be no question of filing of inaccurate particulars of income or concealment of income for initiating penalty u/s 271(1)(c) as there would be no 'tax sought to be evaded' since, the tax on the returned income and tax on the assessed income would remain the same." 4. The explanation was not accepted. The learned AO issued a letter to the appellant referring to the first penalty noticed issue along with the assessment order stating that penalty proceeding u/s.271(1)(c) of the Act were "initiated in your case vide notice dated 26-02-2015 and in this regard, you are once again granted an opportunity to put forth your case before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dential plots at Gokuldham, Varachha were sold and the details of on money receipt and how exactly the income has been worked out. b) The AO held that in absence of such details, the amount credited to the books of account (as income) is not explained and the addition of the income is required u/s. 68 of the Act. Consequently, the AO taxed it under the 'Income from Other Sources' as against it being declared as 'Business Income' during the course of survey as well as in the return of income. c) The AO held that in the above circumstances, the appellant has furnished inaccurate particulars of such income and went on to levy penalty @ 100% u/s.271(1)(c) for such default. d) The appellant has not appealed against the change of head of income in the quantum proceedings. e) The AO has relied on the decision of Hon'ble ITAT, 'D' Bench, Mumbai in the case of Armour Chemicals Ltd. vs. ACIT in ITA No.309/Mum/06 27 January, 2009; wherein the decision of Hon'ble Supreme Court in the case of Dharmendra Textile Processors & Others (2008) 306ITR 277 (SC) has been relied upon. 8.1 Considering the entire gamut of facts and circumstances, the following pertine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt any other income nor it found/establish that the income disclosed was not full and true. The department can be imposed where the income has been disclosed merely because of change of head of income. This has been held in numerous cases including d) No penalty can be imposed where the income has been disclosed merely because of change of head of income. This has been held in numerous cases including 1) The Hon'ble High Court of Delhi in the case of CIT Vs. Amit Jain (2013) 351 ITR 0074 has held that merely because assessee has shown income in return as short term capital gain, which was assessed by AO as business income, it cannot amount to furnishing of inaccurate particulars for purpose of levy of penalty u/s.271 (1)(c). 2) The Hon'ble Mumbai Bench of the ITAT in the case of ITO Vs. Roborant Investments (P) Ltd. (2006) 7 SOT 181 (Mumbai) has held that the assessee having made full and complete disclosure, merely because income returned by assessee under a particular head was assessed by the AO under another head is not sufficient to impose penalty by invoking Expln. 1 to s. 271 (1 )(c). e) The reliance placed by the AO on the decision of Hon'ble ITAT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has declared additional income based on notings in small diary in his original return of income which was filed on 14.10.2013 within due date of extended date by CBDT and same was accepted without making any addition although by change of head, therefore there was no dispute with regard to the fact that particulars of income were reflected in the return of income. Therefore, no penalty should be levied when the return of income was accepted by the AO as has been held by the Hon'ble Jurisdiction of Gujarat High Court in the case of PCIT-1 vs Valibhai Khanbhai Mankad (Tax Appeal No.445/2015 dated 07.09.2015) wherein the Hon'ble High Court observed in para 5 as under: "5. From the findings recorded by the Tribunal, it is evident that the factum of deletion of addition in respect of non-deduction of tax by the assessee was not controverted by the revenue. The Tribunal has further found that the penalty had been levied on the amount which was reflected in the original return as income. That it was an undisputed fact that the assessee had declared this income in his original return of income, although it was a belated return. The Tribunal was of the view that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, hence, the assessee has not concealed the particulars of its income and furnished inaccurate particulars of such income as per Clause (C) of section 271 of the Act makes it clear that the act of the concealment of or furnishing of inaccurate particulars is relatable only in respect of return being filed and as such in case where the such of filing of return has not been breached, there was no question of invocation of penal provisions of section 271(1)(c) of the Act. In support of this contention, the ld.AR has placed reliance in the case of ACIT, Circle-4, Surat vs. Jupiter Distillery 1555/Ahd/2009 dated 16.12.2011 wherein relying on the decision of CIT, Ahmedabad vs Reliance Petro Products Ltd [2010] 322 ITR 158 (SC), the penalty levied on the amount disclosed during the survey and included in the return of income was deleted. The ld.AR further placed reliance on the decision in the case of ITO vs Roborant Investments Pvt. Ltd [2006] 7 SOT 181. 10. Ld.AR also submitted that the reliance placed by the Revenue on the decision in the case of Mak Data Pvt. Ltd. vs. CIT [2013] 358 ITR 593 (SC), is misplaced in the present case. In the said case, a survey was conducted more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue. The assessment of the assessee has also been completed u/s.143(3) duly accepting the declared income in the assessment order albeit with a change of head from business income to income u/s.68. Now the question which arises for consideration is whether is whether there is any justification on the part of the AO to levy the penalty u/s.271(1)(c)? when there is no difference in the return of income and assessed income. For the sake of convenience the provisions of section 271(1)(c) are produced as under : ""Sec. 271(1) -If the Assessing Officer or the Commissioner (Appeals) [or the Commissioner] in the course of any proceedings under this Act, is satisfied that any person - (a)…………. (b)………… (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d)………. He may direct that such person shall pay by way of penalty - Explanation - 1 -Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source, tax collected at source and self-assessment tax paid before the issue of notice under section 148]; (c) in any other case, means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished.] Thus in general, where a case does not fall within clause (a) or clause (b) there cannot be any "tax sought to be evaded" if there is no addition to the returned income. 14. Thus the basis for levy of penalty is return of income. If any amount has been shown in the return of income, then it cannot be said that assessee has concealed any particular about that income or furnished inaccurate particulars in relation thereto. There cannot be any concealment prior to filing of return. Question of consideration whether assessee is liable for action under section 271(1)(c) would arise only when return of income is scrutinized by the AO and he finds some more items of income or additional income over and above what is declared in the return. If it is so, the assessee would be liable for act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared this income in his original return of income, although it was a belated return. The Tribunal was of the view that as per the provisions of section 271(1)(c) of the Act, penalty can be imposed if the assessee had concealed the particulars of income or has furnished inaccurate particulars of such income. That in the present case, there was no dispute with regard to the fact that the particulars of income were reflected in the return of income. Moreover, it was not the case of the revenue that the returns of income filed were invalid and in fact, the Assessing Officer had proceeded on the basis of the return filed by the assessee and particulars furnished therein. From the findings recorded by the Tribunal, it is evident that the Tribunal has found as a matter of fact that there was no concealment of particulars of income on the part of the respondent assessee and in fact, the Assessing Officer had proceeded on the basis of the return filed by the assessee and particulars furnished therein. Under the circumstances, in the absence of any concealment of the particulars of income or furnishing of inaccurate particulars of income on the part of the assessee, no infirmity can be fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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