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TMI Blog2025 (2) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax before the survey was conducted and the date for filing of return of income has not expired on the date of survey, therefore, penalty levied by the AO and sustained by the Ld. CIT(A) is not justified - Appeal filed by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... y action u/s 133A of the Act, the assessee would not have disclosed the above mentioned business income of Rs. 79 lakhs and long term capital gains of Rs. 10.74 crores. 4. During the penalty proceedings, the Assessing Officer asked the assessee to explain as to why penalty should not be levied. Rejecting the various explanations given by the assessee, the Assessing Officer levied penalty of Rs. 2,70,22,050/- being 100% of the tax sought to be evaded on business income of Rs. 79 lakhs and long term capital gain of Rs. 10.74 crores by observing as under: "05. Subsequently the assesses has raised the issue that when the survey was conducted the assessee had not filed the return of income. Also the assessee has claimed the entire disclosure made in the 133A proceedings have been adhered when the return of income was filed. The above points raised by the assessee is not acceptable. Mere fact that the return was not due u/s 139(1) on the date of survey and assessee had included such declaration in its return filed u/s. 139(4) subsequent to survey action cannot absolve it from the consequences of concealing such income. Subsequently it is abundantly clear from the provisions of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income the meaning of provision of sec. 271(1)(c) of the IT Act. Accordingly, I am satisfied the assessee is liable for penalty u/s 271[1](c) of the Income Tax Act, 1961. The penalty leviable is computed as under: Computation of Penalty u/s 271(1)(c) for the A.Y. 2016-17 1. Income sought to be evaded Rs. 11,53,00,000/- 2. Tax on sought to be evaded Rs 2,70,22,050/- 3. Penalty @ 100% of tax Rs. 2,70,22,050/- 4. Penalty @ 300% Rs. 8,10,66,150/- 5. Minimum Penalty levied @ 100% sought to be evaded Rs. 2,70,22,050/- 09. Thus, penalty u/s. 271(1)(c) of the Act which is 100% of the tax sought to be evaded is levied on assessee at Rs. 2,70,22,050/-. Order is passed accordingly Issue demand notice and challan after proper verification." 5. Before the Ld. CIT(A), it was submitted that the amount was voluntarily declared in the survey and since the return was not due on the date of survey, the assessee was anyhow going to declare the said income in the return of income. It was further submitted that the land was inherited capital asset which was converted into stock-in-trade in F.Y. 2010-2011. Since the assessee was not subjected to tax audit for A.Y. 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in Survey proceeding conducted on 14-06-2016 i.e., well before the due date for filing return of income. The learned CIT(A) ought to have appreciated that the learned AO has accepted the returned income vide assessment order u/s 143(3) dated 15-12-2018 without making any addition to the returned income, as such the question of concealment of income does not arise. 3. Appellant craves leave to add, alter, clarify, explain, modify, delete any of the grounds of appeal, and to seek any just and fair relief. 8. The Ld. Counsel for the assessee referring to Form 26AS for assessment year 2016-17, copy of which is placed at pages 9 to 14 of the paper book, drew the attention of the Bench to the same and submitted that the assessee has paid an amount of Rs. 1 crore on 15.12.2015 and another Rs. 50 lakh on 15.03.2016 as advance tax, apart from TDS of about Rs. 6.84 lakhs. Further, the due date for filing of the return has not expired on the date of survey. Therefore, it cannot be said that the assessee would not have declared the income had there been no survey action. He further submitted that since the assessee was not maintaining any regular accounts and the accounts were not audited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of penalty on the addition of Rs. 10.74 crores on account of long term capital gain income declared by the assessee during the course of survey is concerned, we find the Assessing Officer levied the penalty on the ground that during the course of survey it was noticed that the assessee has converted the land in question which was a capital asset into stock in trade in financial year 2010-11 and never disclosed the same to the department and only when the survey was conducted, the assessee, on being pointed out on this, has offered the income to tax and filed the return. Therefore, according to the Assessing Officer, had there been no survey, the assessee would not have declared the income and therefore, according to the Assessing Officer, the assessee has concealed the particulars of income within the meaning of section 271(1)(c) of the Act for which he levied the penalty on account of surrender of income of Rs. 10.74 crores. We find the Ld. CIT(A) upheld the action of the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that although the land was converted into stock in trade during the financial year 2010-11 relevant to assessment year 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS / TCS and the due date for filing of return has not expired on the date of return, it cannot be said that the assessee would not have disclosed the income during the financial year 2016-17 had there been no survey. In our opinion, both the Assessing Officer and the Ld. CIT(A) have completely ignored the fact of sufficient advance tax paid by the assessee and the due date for filing of return has not expired. It is also an admitted fact that the income returned by the assessee has been accepted without any variation. 15. We find the Hon'ble Delhi High Court in the case of CIT vs. SAS Pharmaceuticals (2011) 335 ITR 259 (Del) has held that where income surrendered by the assessee during survey had been shown by it in its regular income tax return filed within prescribed time, penalty could not be imposed upon it u/s 271(1)(c) of the Act. We find the relevant observations of the Hon'ble Delhi High Court read as under: "12. After considering the respective submissions of the learned counsel for the parties, we are of the view that the argument of the learned counsel for the assessee has to prevail as it carried substantial weight. It is to be kept in mind that Section 271(1)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has to be in the income tax return filed by it. There is sufficient indication of this in the judgment of this Court in the case of Commissioner of Income Tax, Delhi-I Vs. Mohan Das Hassa Nand 141 ITR 203 and in Reliance Petroproducts Pvt. Ltd. (supra), the Supreme Court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the income tax return filed by the assessee. This view gets supported by Explanation 4 as well as 5 and 5A of Section 271 of the Act as contended by the learned counsel for the Respondent. 16. No doubt, the discrepancies were found during the survey. This has yielded income from the assessee in the form of amount surrendered by the assessee. Presently, we are not concerned with the assessment of income, but the moot question is to whether this would attract penalty upon the assessee under the provisions of Section 271(1) (c) of the Act. Obviously, no penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, then that cannot be said to be added by the AO for the purposes of Explanation 1 to section 271(1). Explanations 5 and 5A of section 271(1) deal with the imposition of penalty under this provision even where the income in the given circumstances is declared in any return of income. The Explanations apply only in the case of search u/s.132 and not the survey u/s.133A of the Act. If the Explanations are excluded from the purview, which are applicable only in search cases and not otherwise, then, addition to income is sine qua non for imposition of penalty u/s.271(1)(c) of the Act. In the absence of any addition or disallowance made by the AO in the computation of total income, there can be no question of any penalty on the income suo motu offered by the assessee in his return of income. 4. The ld. DR heavily banked on the judgment of the Hon'ble Supreme Court in MAK Data Pvt. Ltd. Vs. CIT (2013) 358 ITR 593 (SC) for bolstering his submission that the amount surrendered by the assessee also attracts imposition of penalty. The assessee in that case filed his return on 27-10-2004 declaring income of Rs. 16.17 lakh. Prior to that, a survey action was taken against the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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