Dr. Bapusaheb Eknath Kandekar, Ahmednagar V. Deputy Commissioner of Income-tax,

ITA 1147/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7227 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL SHRI P L KUREEL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Initiation of penalty proceedings; Condonation of delay; Revised return; Documents seized
• Section: 143(3); 133A; 153A; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1147 /P U N/201 4 / ASSESSMENT YEAR : 20 07 - 08 DR. BAPUSAHEB EKNATH KANDEKAR KANDEKAR HEART HOSPITAL, LALTAKI ROAD, AHMEDNAGAR . / APPELLANT PAN: AJUPK1636P VS. THE DY. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCL E, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : S HRI HARI KRISHAN / RESPONDENT BY : SHRI P.L. KUREEL / RESPONDENT BY : SHRI P.L. KUREEL / DATE OF HEARING : 0 5 . 0 1 .201 7 / DATE OF PRONOUNCEMENT: 20 . 0 1 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - IT/TP , PUNE, DATED 06 . 0 9 .20 1 3 RELATING TO ASSESSMENT YEAR 20 07 - 08 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 ( IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE IMPUGNED PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER AND AS CONFIRMED AND BY THE LEARNED CIT(A) IS BAD IN LAW, PATENTLY ILLEGAL, AND WITHOUT JURISDICTION AND BEING VOID AB INITIO, THE SAME MAY PLEASE BE DELETED. ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 2 2. IN THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) / IT/TP HAS FAILED TO APPRECIATE THE FACT THAT, THE APPELLANT HAS VOLUNTARILY DECLARE D THE INCOME OF RS.18,10,000/ - CONSEQUENT TO IT SURVEY DURING THE ASSESSMENT PROCEEDINGS TO HAVE A PEACE OF MIND AND ACCORDINGLY PAID THE ENTIRE INCOME TAX ALONG WITH INTEREST THEREON. IT IS THEREFORE HUMBLY PRAYED THAT THE PENALTY LEVIED MAY PLEASE BE DE LETED. 3. THE PRESENT APPEAL IS FILED BELATEDLY AFTER THE DELAY OF 158 DAYS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY IN FILING THE APPEAL LATE BEFORE THE TRIBUNAL. IT HAS BEEN CONTENDED T HAT THE ORDER OF CIT(A) WAS RECEIVED BY THE ASSESSEE ON 23.10.2013 AND HENCE, THE APPEAL WAS REQUIRED TO BE FILED ON OR BEFORE 22.1 2 .2013. HOWEVER, THE APPEAL WAS FILED ON 29.05.2014, I.E. AFTER DELAY OF 158 DAYS. THE ASSESSEE IN THIS REGARD STATES THAT THE ACCOUNTANT SHRI RA HUL RAMCHANDRA HIRAY , WHO WAS HANDLING THE ACCOUNTS AND ALSO INCOME TAX FILES / MATTERS HAD MET WITH SERIOUS ROAD ACCIDENT ON 13.12.2013 AND HAD SUFFERED HEAD INJUR Y AND HAD TO BE HOSPITALIZED AND OPERATED UPON. HE WAS HOSPITALIZED F ROM 13.12.2013 TO 23.12.2013 AND THEN WAS ADVISED REST FOR SIXTY DAYS I.E. UP TO 21.02. 2014. THE ASSESSEE HAS ATTACHED THE COPY OF FINAL DISCHARGE BILL AND MEDICAL CERTIFICATE ISSUED IN THIS REGARD. HE FURTHER CLAIMED THAT THE GENERAL FITNESS OF THE SAID PERSON WAS ADVERSELY AFFECTED AND BECAUSE OF HIS LONG ABSENCE, THERE WAS PENDING WORK AND THERE WAS DELAY IN FILING THE APPEAL LATE BEFORE THE TRIBUNAL. THE ASSESSEE ALSO FILED AN AFFIDAVIT IN THIS REGARD, WHICH IS ALSO SUPPORTED BY THE AFFIDAVIT OF SHRI R AHUL RAMCHANDRA HIRAY , THE ACCOUNTANT. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE CIRCUMSTANCES WERE BEYOND THE CONTROL OF ASSESSEE, SINCE HIS ACCOUNTANT HAD MET WITH AN ACCIDENT, WE CONDONE THE DELAY IN FURNISHING THE PRESENT APPEAL LATE AND WE PROCEED TO TAKE UP THE APPEAL FOR HEARING. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD FURTHER POINTED OUT THAT DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS WERE SEIZED AND THE STATEMENT OF ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 3 ASSESSEE WAS RECOR DED. HE MADE DECLARATION OF RS. 18,10,000/ - , WHICH WAS INCLUDED BY THE ASSESSEE IN THE RETURN OF INCOME FILED THEREAFTER. NO APPEAL WAS FILED AGAINST THE ASSESSMENT ORDER. OUR ATTENTION WAS DRAWN TO THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, WHEREIN THE SATISFACTION WAS RECORDED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HOWEVER, WHILE COMPLETING PENALTY PROCEEDINGS, THE ASSESSING OFFICER FIRST COMES TO THE CONCLUSION THAT ENTRIES ARE NOT PROFESSIONAL RECEIPTS BUT FOR THE SAKE OF ARGUM ENTS, THESE MAY BE CONSIDERED AS SUPPRESSED RECEIPTS. THE ASSESSING OFFICER FINALLY VIDE PARA 7 OF THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT LEVIES PENALTY FOR SUPPRESSION OF PROFESSIONAL RECEIPTS. HOWEVER, IN PARA 7, HE MENTIONS THAT IT IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER IN THE FINAL CONCLUSION IN PARA 8 HOLDS THAT IT IS CONCEALMENT OF INCOME MERITING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE FURTHER POINTED OUT THAT THE CIT(A) DOES NOT SPECIFY THE CHARGE FOR LEVY OF PENALTY UNDER SECTION OUT THAT THE CIT(A) DOES NOT SPECIFY THE CHARGE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE O N MERITS OF LEVY OF PENALTY POINTED OUT THAT THE DOCUMENT DOES NOT SAY ANYTHING ABOUT SUPPRESSION OF RECEIPTS AND NO NAMES OF PATIENTS ARE MENTIONED THEREIN. HE FURTHER POINTED OUT THAT DURING THE COURSE OF SURVEY ON 06.10.2009 AND THEREAFTER WHILE RECORD ING STATEMENT ON 09.10.2009, THE ASSESSEE HAD FORWARDED THE LIST OF THIRTY DOCTORS. COMING TO THE LEGAL PLEAS ARISING IN THE PRESENT APPEAL, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE SATISFACTION RECORDED IS WRONG. HE ST RESSED THAT WHERE THE ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 4 DOCUMENT WAS FOUND DURING THE COURSE OF SURVEY, SO IT CAN AT BEST BE CASE OF CONCEALMENT AND NOT CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME, WHICH CONCLUSION OF THE ASSESSING OFFICER WAS WRONG. HE STRESSED THAT WHERE THE SAT ISFACTION RECORDED IS WRONG, THEN THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HE CONCLUDED BY STATING THAT PENALTY IN THE CASE WAS FINALLY LEVIED FOR CONCEALMENT OF INCOME. HOWEVER, IN THE NOTICE ISSUED, THERE WAS NO STRIKING OFF OF INAPPLICABLE PORTION OF NOTICE. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELYING ON AT THE ORDERS OF AUTHORITIES BELOW POINTED OUT THAT WHERE THE ASSESSEE HAD FAILED TO FURNISH RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT, NO IMMUNITY FROM LEVY OF PENALTY FOR CONCEALMENT IS ALLOWED TO THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) ARISING IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 6,09, 247/ - . IN THE FACTS OF THE CASE, SURVEY PROCEEDINGS UNDER SECTION 133A OF THE ACT WERE CARRIED OUT AT NOBLE HOSPITAL & RESEARCH CENTRE. THE ASSESSEE WAS PRACTICING AS CARDIOLOGIST IN HIS PROPRIETORY CONCERN KANDEKAR HEART HOSPITAL & SUPER SPECIALTY CLINI C, LAL TAKI, AHMEDNAGAR. THE ASSESSEE WAS ALSO MANAGING TRUSTEE AT NOBLE HOSPITAL AND RESEARCH FOUNDATION . DURING THE COURSE OF SURVEY, THE ASSESSEE HAD VOLUNTARILY DECLARED SUM OF RS.18,10,000/ - AS HIS UNACCOUNTED PROFESSIONAL RECEIPTS. THE SAID RECEIP TS WERE ADDED IN THE TOTAL INCOME AND THE ASSESSEE DECLARED THE INCOME AT RS.38,93,024/ - IN HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE SAID INCOME DECLARED BY THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFI CER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT BY RECORDING SATISFACTION THAT THE ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 5 ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE FIRST PLEA OF THE ASSESSEE BEFORE US IS THAT THE SATISFACTION RECORDED BY THE ASSESSING OF FICER IS WRONG, WHERE THE DOCUMENT WAS FOUND DURING THE COURSE OF SURVEY AND AT BEST IT IS CASE OF CONCEALMENT OF INCOME. HE POINTED OUT THAT WHERE THE ASSESSING OFFICER HAS RECORDED THE SATISFACTION INCORRECTLY, THEN PENALTY PROCEEDINGS ARE VITIATED. HE FURTHER REFERRED TO THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND POINTED OUT THAT THE ASSESSING OFFICER HAD FINALLY LEVIED PENALTY FOR CONCEALMENT OF INCOME. WHERE INITIATION OF PENALTY PROCEEDINGS WAS FOR FURNISHING OF INACCURATE PAR TICULARS OF INCOME AND PENALTY WAS LEVIED FOR CONCEALMENT OF INCOME, HE STRESSED THAT THERE IS NO MERIT IN LEVY OF PENALTY SINCE NO PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO DEFEND ITS CASE. HE ALSO POINTED OUT THAT IN THE NOTICE ISSUED UNDER SECTIO N 274 R.W.S. 271(1)(C) OF THE ACT , INAPPROPRIATE PART OF THE SAID NOTICE WAS NOT STRUCK OFF. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE RELIED ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT IN ITA NOS.1201 TO PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT IN ITA NOS.1201 TO 1205/PN/2014, RELATING TO ASSESSMENT YEARS 2003 - 04 TO 2007 - 08 , DATED 30.11.2016. HE FURTHER POINTED OUT THAT EVEN ON MERITS, THERE IS NO MERIT IN LEVY OF PENALTY WHERE THE DOCUMENTS SEIZED DOES NOT TALK OF SUPPRESSED RECEIPTS AS NO NAME OF PATIENTS ARE ME NTIONED THEREIN. HOWEVER, NAMES OF THIRTY DOCTORS ARE MENTIONED AND THE ASSESSING OFFICER WHILE PASSING ORDER UNDER SECTION 271(1)(C) OF THE ACT COMES TO THE CONCLUSION THAT THE SEIZED PAPERS NARRATES THE NAMES OF DOCTORS, AMOUNTS, INTEREST AND THE SAME C OULD NOT BE CORROBORATED AS SUPPRESSED PROFESSIONAL RECEIPTS. HE COMES TO THE CONCLUSION THAT THE ENTRIES APPEARING IN THE SAID DOCUMENTS WERE NOT SUPPRESSED RECEIPTS. HE QUESTIONS THE ACTION OF ASSESSEE IN ADMITTING THE SAME TO BE PROFESSIONAL RECEIPTS. HE FURTHER HOLDS THAT EVEN FOR THE SAKE OF ARGUMENT, IF THE ASSESSEE WAS SUPPRESSING RECEIPTS, THEN ALSO HE WAS ALSO TO BE PENALIZED UNDER SECTION ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 6 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HOLDS THAT THE ASSESSEE WAS IN HABIT OF CONCEALING INCOME. HE CONCLUDES THAT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT STATES THAT THE PENALTY FOR CONCEA LMENT OF INCOME WOULD BE LEVIED. VIDE PARA 7, THE ASSESSING OFFICER HOLDS THAT WHERE THE ASSESSEE WAS INDULGED INTO PRACTICE OF SUPPRESSION OF PROFESSIONAL RE CEIPTS, TO AVOID TAX LIABILITY AND HENCE, HAD FURNISHED INACCURATE PARTICULARS OF INCOME WITH AN INTENTION TO EVADE THE TAX. IN LIGHT THEREOF, THE ASSESSING OFFICER IN PARA 8 HOLDS THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF INCOME WITHIN MEANING OF SECTION 271(1)(C) OF THE ACT AND THEREFORE, PENALTY WAS LEVIED AT RS.6,09,247/ - . THE CIT(A) HAD HELD THE ASSESSEE TO HAVE DEFAULTED IN BOTH CLAUSES OF EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT AND ALSO EXPLANATION 1A AND 1B WAS ALSO HELD TO BE ATTR ACTED. 8. BEFORE ADDRESSING THE ISSUE ON LEGAL ASPECT OR MERITS, ONE POINT WHICH NEEDS TO BE TAKEN NOTE OF IS THAT THE ASSESSEE HAD MADE DECLARATION OF NEEDS TO BE TAKEN NOTE OF IS THAT THE ASSESSEE HAD MADE DECLARATION OF ADDITIONAL INCOME IN PREVIOUS YEARS FROM ASSESSMENT YEARS 2004 - 05 TO 2007 - 08. THE ASSESSEE HAS FILED THE ASSESSMENT ORDERS RELATING TO ASSESSMENT YEARS 2005 - 06 TO 2006 - 07 AND 2008 - 09, WHEREIN THE ADDITIONAL INCOME DETECTED DURING THE COURSE OF SURVEY WAS ADDED AS ADDITIONAL INCOME . THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT PROCEEDINGS FOR THE RE SPECTIVE YEARS HAD NOTED THE SURVEY ACTION AGAINST THE ASSESSEE CARRIED OUT UNDER SECTION 133A OF THE ACT ON 06.10.2009 AND THE LOOSE DOCUMENT FOUND DURING THE COURSE OF SURVEY AND THE ASSESSEE HAVING OFFERED THE ADDITIONAL INCOME . W HILE RECODING THE STAT EMENT OF ASSESSEE, THE SAID ADDITIONAL INCOME WAS DECLARED BY THE ASSESSEE IN THE RESPECTIVE YEARS AND HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. THESE FACTS ARE MENTIONED IN THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) OF THE ACT IN THE RESPECTIVE YEARS. HOWEVER, NO PENALTY ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 7 PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT HAVE BEEN INITIATED EXCEPT IN THE INSTANT ASSESSMENT YEAR . T HERE IS NOT EVEN MENTION OF ISSUE OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT IN THOSE YEARS . ON THE OTHER HAND, IN ASSESSMENT YEAR 2007 - 08, THE ASSESSING OFFICER HAD RECORDED SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 9. NOW, COMING TO THE SATISFACTION RECORDED BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT PR OCEEDINGS , WE FIND THAT THE SAME LACKS JURISDICTION AS THE ASSESSEE WAS HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE ON THE BASIS OF DOCUMENTS FOUND DURING THE COURSE OF SURVEY. SINCE IN T HE INSTANT YEAR, THE ADDITIONAL INCOME WAS OFFERED ON ACCOUNT OF SURVEY, THE SAME WA S CASE OF CONCEALMENT OF INCOME. THE ASSESSING OFFICER IN THE FINAL ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT ALSO DEVIATES AS TO WHETHER IT IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME , BUT IN THE FINAL INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME , BUT IN THE FINAL ANALYSIS, HOLDS THE ASSESSEE TO HAVE CONCEALED ITS INCOME AND HENCE, LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WHERE SATISFACTION HAS BEEN RECORDED WHILE INITIATING PENALTY PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME BUT THE PENALTY HAS FINALLY BEEN LEVIED ON THE SECOND LIMB OF CONCEALMENT OF INCOME, THEN THE SAID ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT SUFFERS FROM INFIRMITY, SINCE THE ASSESSEE HAS NO T BEEN GIVEN PROPER SHOW CAUSE NOTICE TO MEET THE CHARGE OF ASSESSEE. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN KANHAIYALAL D. JAIN VS. ACIT (SUPRA) . SECONDLY, EVEN ON MERITS, WHERE THE ADDITIONAL INCOME HA S BEEN OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND THE RETURNED INCOME HAVING BEEN ACCEPTED BY THE ASSESSING OFFICER, NO PENALTY FOR CONCEALMENT COULD BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. IN THIS REGARD, ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 8 WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN NANDKISHOR TULSIDAS KATORE VS. ACIT IN ITA NOS.2174 TO 2180/PN/2014, RELATING TO ASSESSMENT YEARS 2002 - 03 TO 2008 - 09, VIDE ORDER DATED 14.12.2016 WHILE DECIDING THE SIMILAR ISSUE OF ADDITIONAL INCOME OFFERED DURI NG THE COURSE OF SURVEY AND WHETHER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED HAD OBSERVED AS UNDER: - 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE BEFORE US DUAL ACTION WAS TAKEN AGAINS T THE ASSESSEE I.E. SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE RESIDENCE OF ASSESSEE ON 16.01.2009. SIMULTANEOUSLY, SURVEY WAS CARRIED OUT AT THE HOSPITAL OF ASSESSEE ON 16.01.2009. DURING THE COURSE OF SURVEY, EVIDENCE OF CERTAIN UNACCOU NTED RECEIPTS, ROUGH PAGES, NOTE BOOKS, DIARIES, RECEIPT BOOKS, ETC. WERE FOUND. THE ASSESSEE ADMITTED THE FACT OF SUPPRESSION OF RECEIPTS FROM OPD, IPD, ENDOSCOPY CHARGES, ETC. THE ASSESSEE HAS DECLARED SUPPRESSED RECEIPTS FOR ASSESSMENT YEARS 2003 - 04 T O 2008 - 09 ON ESTIMATE BASIS AS UNDER: - RECEIPTS FROM OPD FOR A.Y. 2003 - 04 TO 2008 - 09 - RS.15,40,000/ - RECEIPTS IPD PATIENTS FOR A.Y. 2003 - 04 TO 2008 - 09 - RS.22,12,750/ - ENDOSCOPY CHARGES FOR A.Y. 2005 - 06 - RS.4,50,000/ - 12. FURTHER, FROM THE RESI DENCE OF ASSESSEE, CERTAIN RECEIPTS OF INVESTMENTS/EXPENDITURE WERE FOUND DURING THE COURSE OF SEARCH. THE CASE OF ASSESSEE BEFORE US IS THAT THE SOURCE OF SAID INVESTMENT WAS ALSO OUT OF RECEIPTS FROM THE HOSPITAL AND THOUGH THE EVIDENCE WAS FOUND FROM T HE RECEIPTS FROM THE HOSPITAL AND THOUGH THE EVIDENCE WAS FOUND FROM T HE RESIDENCE OF ASSESSEE DURING THE COURSE OF SEARCH BUT IT RELATED BACK TO THE SURVEY CONDUCTED AT THE HOSPITAL PREMISES OF ASSESSEE. THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.15,51,235/ - FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 ON ACCOUNT OF UNDI SCLOSED INVESTMENT IN INSURANCE POLICIES AND MUTUAL FUNDS, RS.6 LAKHS FOR ASSESSMENT YEAR 2002 - 03 ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CONSTRUCTION OF HOUSE AND RS.1.70 LAKHS FOR ASSESSMENT YEAR 2003 - 04 ON INVESTMENT IN CONSTRUCTION OF HOSPITAL. THE AS SESSEE IS A SOLE PROPRIETOR OF HOSPITAL AND HAD DISCLOSED ADDITIONAL INCOME IN THE RETURN OF INCOME PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS VEHEMENTLY STATED BEFORE US THAT THE BA SIS OF ADDITIONAL INCOME WAS SURVEY AND NOT SEARCH AND ONCE THE ADDITIONAL INCOME WAS BASED ON SURVEY PROCEEDINGS, THEN EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT APPLICABLE. THE DETAILS OF ORIGINAL RETURN OF INCOME FILED AND THE RETURNS OF INC OME FILED UNDER SECTION 148 OF THE ACT FOR ASSESSMENT YEAR 2002 - 03 AND UNDER SECTION 153A OF THE ACT FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 AND ALSO THE INCOME ASSESSED THEREAFTER AND THE PENALTIES IMPOSED FROM YEAR TO YEAR IS TABULATED HEREUNDER: - A.Y . INCOME AS PER ORIGINAL RETURN OF INCOME (`) DATE OF ORIGINAL RETURN OF INCOME INCOME AS PER RETURN U/S 148/153A (`) INCOME ASSESSED U/S 148/153A (`) INCOME CONCEALED (`) PENALTY IMPOSED U/S 271(1)(C) (`) 2002 - 03 3,42,664 06/08/2002 9,47,960 9,47,960 6, 05,291 1,80,052 2003 - 04 2,36,714 08/01/2004 5,71,710 6,09,657 3,72,947 1,17,479 2004 - 05 2,38,950 30/10/2004 6,05,710 7,56,152 5,60,437 1,55,713 2005 - 06 2,97,960 26/02/2005 8,73,410 9,91,232 7,16,379 2,35,927 ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 9 2006 - 07 8,41,190 31/10/2006 14,57,430 17,11, 731 8,70,949 2,93,160 2007 - 08 13,65,163 30/10/2007 16,45,164 17,20,604 3,55,442 1,19,641 2008 - 09 11,39,880 03/10/2008 15,34,880 16,00,084 4,60,210 1,56,425 13. THE PERUSAL OF ABOVE DETAILS REFLECTS THAT THE RETURNED INCOME HAS BEEN ACCEPTED WITH MINOR VARIATIONS IN THE FINAL ASSESSED INCOMES. THE ISSUE WHICH ARISES FOR ADJUDICATION BEFORE US IS THAT WHERE THE ADDITIONAL INCOME HAS BEEN DECLARED IN HIS HANDS WHETHER THE SAME IS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST IS SUE RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IS THAT IN CASE ANY INCOME IS DECLARED PURSUANT TO SURVEY, THEN THE SAME IS NOT COVERED UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. WE FIND MERIT IN THE STAND OF ASSESSEE IN TH IS REGARD, WHEREIN EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT CATEGORICALLY PROVIDES THAT THE SAME IS APPLICABLE IN CASE OF SEARCHES. HOWEVER, THE STATUTE IS SILENT ABOUT THE ADDITIONAL INCOME OFFERED BY THE PERSONS IN THE REVISED RETURN OF INCOME FIL ED PURSUANT TO SURVEY PROCEEDINGS. THE ADDITIONAL INCOME WAS DECLARED DURING THE SURVEY AND IF OFFERED BY THE PERSON IN THE REVISED RETURN OF INCOME FILED THEREAFTER, THEN THE SAME DOES NOT PARTAKE THE NATURE OF ADDITIONAL INCOME TAKEN NOTE IN EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. SAS PHARMACEUTICALS REPORTED IN 335 ITR 259 (DEL), WHEREIN IT HAS BEEN HELD AS UNDER: - 12. AFTER CONSIDERING THE RES PECTIVE 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 S. 271(1)(C) OF THE ACT IS A PENAL PROVI SION AND SUCH A PROVISION HAS TO BE STRICTLY CONSTRUED. UNLESS THE CASE FALLS WITHIN THE FOUR CORNERS OF THE SAID PROVISION, PENALTY CANNOT BE IMPOSED. SUB - S. (1) OF S. 271 STIPULATES CERTAIN CONTINGENCIES ON THE HAPPENING WHEREOF THE AO OR THE CIT(A) MAY DIRECT PAYMENT OF PENALTY BY THE ASSESSEE. WE ARE CONCERNED HEREWITH THE FUNDAMENTALITY PROVIDED IN CL. ASSESSEE. WE ARE CONCERNED HEREWITH THE FUNDAMENTALITY PROVIDED IN CL. (C) OF S. 271(1) OF THE ACT, WHICH AUTHORIZES IMPOSITION OF PENALTY WHEN THE AO IS SATISFIED THAT THE ASSESSEE HAS EITHER : A) CONCEALED THE PARTICULA RS OF HIS INCOME; OR (B) FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 13. IT IS NOT THE CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME, AS IN THE IT RETURN, PARTICULARS OF INCOME HAVE BEEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLECTED IN THE IT RETURN. THE QUESTION IS WHETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT. IT WOULD DEPEND UPON THE ISSUE AS TO WHETHER THIS CONCEALMENT HAS REFERENCE TO THE IT RETURN FILED BY THE ASSESSEE, VIZ., WHETHER CON CEALMENT IS TO BE FOUND IN THE IT RETURN. 14. WE MAY, FIRST OF ALL, REJECT THE CONTENTION OF THE LEARNED COUNSEL FOR THE REVENUE RELYING UPON THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT OCCURRING IN SUB - S. (1) OF S. 271 OF THE ACT AN D CONTENDING THAT EVEN DURING SURVEY WHEN IT WAS FOUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULAR OF HIS INCOME, IT WOULD AMOUNT TO CONCEALMENT IN THE COURSE OF ANY PROCEEDINGS. THE WORDS IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT ARE PREFACED BY THE SATISFACTION OF THE AO OR THE CIT(A). WHEN THE SURVEY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF SATISFACTION OF AO OR THE CIT(A) OR THE CIT DOES NOT ARISE. WE HAVE TO KEEP IN MIND THAT IT IS THE AO WHO INITIATED THE PENALTY PROCEEDINGS AND DIR ECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED ANY SATISFACTION DURING THE COURSE OF SURVEY. DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING ASSESSMENT ORDER. IT IS, THUS, OBVIOUS THAT THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 10 UND ER THIS ACT CANNOT HAVE THE REFERENCE TO SURVEY PROCEEDINGS IN THIS CASE. 15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME BY THE ASSESSEE HAS TO BE IN THE IT RETURN FILED BY IT. THERE IS SUFFICIENT INDICATION OF THIS IN THE JUDGMENT OF THIS COURT IN THE CASES OF CIT VS. MOHAN DAS HASSA NAND (1983) 34 CTR (DEL) 361 : (1983) 141 ITR 203 (DEL) AND IN RELIANCE PETROPRODUCTS (P) 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 IT RETURN FILED BY THE ASSESSEE. THIS VIEW GETS SUPPORTED BY EXPLNS. 4 AS WELL AS 5 AND 5A OF S. 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 QUESTIO N IS AS TO WHETHER THIS WOULD ATTRACT PENALTY UPON THE ASSESSEE UNDER THE PROVISIONS OF S. 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 AS SESSEE WAS EXPOSED DURING SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND POSSIBILITIES. SEC. 271(1)(C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS I T IS FOUND THAT THERE IS ACTUALLY A CONCEALMENT OR NON - DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON - DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE IT RETURN AND OFFERED THE SURREN DERED AMOUNT FOR THE PURPOSES OF TAX. 17. WE, THUS, ANSWER THE QUESTIONS AS FORMULATED ABOVE, IN FAVOUR 17. WE, THUS, ANSWER THE QUESTIONS AS FORMULATED ABOVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE FINDING NO FAULT WITH THE DECISIONS OF THE CIT(A) AS WELL AS THE TRIBUNAL. AS A RESULT, THIS APPEAL IS DISMISS ED. 14. ANOTHER FACET WHICH HAS TO BE CONSIDERED IS THAT THE ADDITIONAL INCOME WAS OFFERED DURING THE COURSE OF SURVEY, WHICH WAS CONDUCTED AT THE PREMISES OF ASSESSEE. HOWEVER, IT WAS THE ASSESSING OFFICER WHO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE AND LEVIED THE SAME. THE HONBLE DELHI HIGH COURT HAS CATEGORICALLY LAID DOWN THAT WHERE THE ASSESSING OFFICER HAD NOT RECORDED ANY SATISFACTION DURING THE COURSE OF SURVEY, THE DECISION TO INITIATE PENALTY PROCEEDINGS BEING TAKEN WHILE MAKING TH E ASSESSMENT ORDER, THEN IT WAS HELD THUS, THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT COULD NOT HAVE THE REFERENCE TO SURVEY PROCEEDINGS, IN THIS CASE. SINCE THE ASSESSEE HAD MADE COMPLETE DISCLOSURE IN THE RETURN AND SURRENDERED THE AMOUNT FOR THE PURPOSE OF TAX, THE HONBLE HIGH COURT HELD THAT THERE WAS NO SUCH CONCEALMENT OF NON - DISCLOSURE AND THE ASSESSEE WAS HELD TO BE NOT LIABLE FOR LEVY OF PENALTY. APPLYING THE SAID PROPOSITION TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT T HE ASSESSEE IS NOT LIABLE TO LEVY OF PENALTY ON THE ADDITIONAL INCOME WHICH WAS DECLARED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND WAS OFFERED TO TAX IN THE REVISED RETURN OF INCOME FILED AFTER THE SURVEY. 10. ACCORDINGLY, WE HOLD THAT SINCE THE SA TISFACTION RECORDED WHILE INITIATING PENALTY PROCEEDINGS WAS NOT CORRECT, THEN PENALTY ORDER IS VITIATED. IN ANY ITA NO. 1147 /P U N/20 1 4 DR BAPUSAHEB EKNATH KANDEKAR 11 CASE, THIS IS CASE OF SURVEY, WHERE THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE HAS BEEN ACCEPTED AS SUCH WITHOUT ANY ADDITION, THEN THERE I S NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. LASTLY, ON SIMILAR CIRCUMSTANCES, NO PENALTY PROCEEDINGS HAVE BEEN INITIATED BY THE ASSESSING OFFICER IN RESPECT OF OTHER YEARS WHERE SIMILAR ADDITIONAL INCOME WAS OFFERED BY ASSESSEE AND A SSESSED IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 20 TH JANUARY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - IT/TP , PUNE ; 4. / THE CIT - I, PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // ASSISTANT REGISTRAR