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TMI Blog2014 (8) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts and figures furnished in the returns, the Department undertook a survey on 21.12.1993 under Section 133A of the Income Tax Act (for short 'the Act') vis-à-vis the respondent. In the course of survey, it was noticed that there was a deficit of tax to the extent of Rs. 12,94,666/- and shortage of cash of Rs. 1,69,860/-. The respondent accepted those figures and filed revised returns and offered to pay tax. Certain adjustments were also sought on the basis of the sales that have taken place during the relevant period. Ultimately, a revised order of assessment was passed by adding a sum of Rs. 6,68,850/- as income in addition to what was assessed earlier. 3. The Assessing Officer initiated proceedings under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department and but for the survey, those two substantial amounts would not have become part of the assessment. He contends that the intention on the part of the respondent to conceal the income is evident from the fact that it did not include those items in the returns, till the survey is conducted. He submits that the Commissioner as well as the Tribunal proceeded on hyper-technicalities and ignored certain important factors. He submits that this is a typical case, which attracts Section 271(1)(c) of the Act. 6. Sri B. Ravindra, learned counsel for the respondent, on the other hand, submits that the respondent has a valid explanation to offer for the discrepancy in the stock and the cash; and in spite of that, the facts and figures me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. In addition to adding substantial amount as income in the order of assessment, the Assessing Officer initiated proceedings under Section 271(1)(c) of the Act, proposing to levy penalty. The explanation offered by the respondent was that though it had valid explanation for the discrepancies, it has accepted the figures only with a view to buy peace. The Assessing Officer took the view that it is almost an acceptance of the concealment and the failure to give any explanation was obviously on account of the fact that there is nothing to explain. Accordingly, the order imposing penalty of Rs. 4,23,001/- was passed. 9. The exercise to be undertaken by an Assessing Officer in the proceedings under Section 271(1)(c) of the Act is somewhat typi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h that there was an intention on the part of the assessee to conceal an item of income, though not deliberate, that the occasion to levy penalty would arise. The law in this behalf was aptly stated by the Hon'ble Supreme Court in Anantharam Veerasinghaiah & Co. v. Commissioner of Income Tax, A.P., 123 ITR 457. After reviewing the precedents on the subject, the Supreme Court observed as under: "A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration. It is open to the revenue to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the undisclosed income came to be made and the like. 14. The readiness on the part of the assessee to accept the facts and figures noticed in the survey, with the objective of avoiding further complication in the matter or to purchase peace, cannot be treated as unconditional acceptance of the allegation or accusation against him much less does it basis for levy of penalty. If every variation that is noticed in the course of assessment is to be treated as concealment, the very computation of the income tax and the exercise to be undertaken thereunder, undergoes substantial change, which the Parliament may not have intended. At any rate, the Commissioner was convinced on the facts that there was no act on the part of the respondent. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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