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TMI Blog2018 (6) TMI 1714X X X X Extracts X X X X X X X X Extracts X X X X ..... HON BLE MRS.JUSTICE S.SUJATHA JUDGMENT Mr. K.V.Aravind, Adv. for Appellants - Revenue This Appeal has been filed by the Revenue under Section 260-A of the Income Tax Act, 1961 ['Act' for short], raising certain alleged substantial questions of law arising from the Order of the learned Income Tax Appellate Tribunal dated 29.12.2016 passed in I.T.A.Nos.782 to 785/Bang/2014 in Deputy Commissioner of Income-tax v. M/s. Deccan Mining Syndicate Pvt. Ltd., for Assessment Years 2007-08 to 2010-11, setting aside the penalty imposed on the Respondent-Assessee by the Assessing Authority. 2.The reasons assigned by the learned Tribunal in the impugned Order are quoted below forready reference: 14. Thus, applying the ratio laid down by the Hon ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. (supra) and also the decision of the Hon ble jurisdictional High Court in the case of Manjunatha Cotton Ginning Factory (supra), since the present case in the absence of any finding by the AO that the explanation filed in response to show cause notice for levy of penalty is false or not bona fide and in absence ofany conclusive evidence brought by the AO, we are of the considered op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(c) of the Act. In the absence of such finding, the penalty order is liable to be quashed. Reliance in this regard is placed on the following judicial precedents the learned AO had not given finding the in the penalty order as to how and in what manner the assessee had furnished inaccurate particulars of income resulting in additions to the returned income, except making a bald charge against the assessee that it had furnished the inaccurate particulars, which is an essential requisite of section 271(1)(c) of the Act. In the absence of such finding, the penalty order is liable to be quashed.Reliance in this regard is placed on the following judicial precedents: (a)CIT v. Balbir Singh (2008) 304 ITR 125/(2007) 164 Taxman 65 (Punj. Har.) (b)National Taxtiles v. CIT (2001) 249 ITR 124/114 Taxman 203 (Guj) (c)Nainu Mal Het Chand v. CIT (2007) 294 ITR 185/160 Taxman 49 (All) (d)CIT v. Super Metal RE-rollers (P) Ltd. (2004) 265 ITR 82/135 Taxman 407 (Delhi) (e)Diwan Enterprises v. CIT (2000) 246 ITR 571 (Delhi) (f)CIT v. Shivnarayan Jamnalal Co. (1998) 232 ITR 311/(1996) 89 Taxman 420 (MP) (g)CIT v. T.Abdul Majeed (1998) 232 ITR 50/(1997) 93 Taxman 491 (Ker) 17.1 The Hon ble apex cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he has not disclosed all the facts which was material to the computation of his income. 17.3 Even the Hon ble Karnataka High Court in the case of CIT v. Sandur Manganese Iron Ores Ltd. (2010) 327 ITR 242 has laid down the same proposition of law. The reasoning of the CIT(A) that penalty is exigible because excess stock was detected during course of search proceedings is not borne out of any material or assessment records. Therefore, the finding of the CIT(A) on this is contrary to evidence on record and cannot be accepted. 18. In the result, appeals filed by the revenue are dismissed and the cross objections filed by the assessee-company are allowed. 3.Learned Counsel for the Revenue submitted that since the Assessee surrendered his income to taxation after a search was conducted at his business premises u/s 132 of the Act and therefore such a surrender cannot amount to voluntary surrender and the Assessing Authority was justified in imposing penalty under Section 271[1][c] of the Act, rejecting the explanation given by the Respondent-Assessee. He has relied upon the decision of this Court in the case of Commissioner of Income Tax v. Manjunatha Cotton Ginning Factory and Othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as closing stock in a particular year would be taken as opening stock at the beginning of the next year and therefore the tax effect of such alleged excess stock is Nil and thus it being a tax neutral entry, the learned Tribunal found that there was no concealment on the part of the Assessee, attracting penalty under Section 271[1][c] of the Act. 5.The Judgment relied upon by the learned Counsel for the Revenue in the case of MAK Data [P] LTd., v. Commissioner of Income Tax II [2013] 38 taxmann.com 448 [SC] is on diagonally opposite to facts of this case. In that case on facts, it was found that there was no explanation offered by the Assessee for concealment of income of ₹ 40.74 lakhs and theHigh Court setting aside the findings of the Tribunal, held that explanation of the Assessee when such surrender of income was made by it to buy peace or to avoid litigation was not sufficient to satisfy the Explanation-1 to Section 271[1][c] of the Act and in these circumstances upholding the order of the HighCourt, the Hon ble Supreme Court upheld the imposition of penalty in that case. The relevant portion of the Judgment of the Hon ble Supreme Court is also quoted below for ready ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by itfrom year to year. The AO, 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. 10. The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO 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 vs. Dharmendra Textile Processors (2008) 13 SCC 369 and CIT vs. Atul Mohan Bindal (2009) 9 SCC 589. 11. The principle laid down by this Court, in our view, has been correctly followed by the Revenue and we find no ille ..... X X X X Extracts X X X X X X X X Extracts X X X X
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