Santosh Hastimal Gugale, Ahmednagar V. Assistant Commissioner of Income-tax,

ITA 1336/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1646 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: HARI KRISHAN
• Keywords: Revised return
• Section: 143(3); 142(1); 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. 1 33 6 /P U N/20 16 / ASSESSMENT YEAR : 20 12 - 13 SHRI SANTOSH HASTIMAL GUGALE AT. 4253, CHITALE ROAD, DIST. AHMEDNAGAR . / APPELLANT PAN: A EAPG2716G VS. THE ASST. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR . / RESPONDENT A PPELLANT BY : S HRI HARI KRISHAN RE SPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 2 9 . 0 8 .201 8 / DATE OF PRONOUNCEMENT: 31 . 0 8 .201 8 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF CIT(A) - 2 , PUNE , DATED 16 .0 3 .20 16 RELATING TO ASSESSMENT YEAR 20 12 - 13 AGAINST PENALTY LEVIED 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. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY OF RS.9 , 26,999/ - UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT APPRECIATING THAT WHILE INITIATING THE PENALTY BY ISSUING NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT THE ASSESSING OFFICER IS NOT SURE AS TO FOR WHICH SPECIFIC CHARGE THE PENALTY IS BEING INITIATED. HE HAD ISSUED THE NOTICE FOR EITHER OF THE CHARGES CONTAINED IN SECTION 271(1)(C) OF THE INCOME TAX ACT. AS SUCH THE CONSEQUENT PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT LEVYING PENALTY OF RS.9,26,999/ - IS NOT SUSTAINABLE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAS MADE FULL DISCLOSURE OF HIS ENTIRE INCOME INCLUDING THE ADDITIONAL INCOME OF RS.30,00,000/ - OFFERED DURING THE SURVEY OPERATION IN THE BELATED RETURN FILED WELL WITHIN THE TIME PERMITTED BY SUB SECTION (4) OF SECTION 9 OF THE INCOME TAX ACT THAT HAS NOT EXPIRED ON THE DATE OF SURVEY. THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION TO THE RETURNED INCOME. ACCORDINGLY NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE IN SUC H SITUATION. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT APPRECIATING THAT THE PENALTY OF RS.9,26,999/ - LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT IS NOT J USTIFIED FOR THE REASONS THAT THE OFFER OF ADDITIONAL INCOME OF RS.30,00,000/ - MADE BY THE ASSESSING OFFICER WAS SUBJECT TO THE CONDITION THAT THE PENALTY SHOULD NOT BE INITIATED. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF ASSESSEE ON 01.11.2012. DURING THE COURSE OF SURVEY, ASSESSEE DECLARED ADDITIONAL INCOME OF 30 LAKHS. THE ASSES SEE INCLUDED THE SAID ADDITIONAL INCOME IN THE RETURN OF INCOME FILED UNDER SECTION 139(4) OF THE ACT, WHICH WAS FILED ON 23.01.2013. THE ASSESSING OFFICER PASSED ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT ON THE INCOME DECLARED BY THE ASSESSEE. HO WEVER, PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE DURING THE COURSE OF PENALTY PROCEEDINGS POINTED OUT THAT NO PENALTY WAS LEVIABLE SINCE THE ADDITIONAL INCOME OFFERED IN SURVEY WAS INCLUDED IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND TAXES WERE PAID THEREON. THE ASSESSING OFFICER HOWEVER, WAS OF THE VIEW THAT ADDITIONAL INCOME WAS OFFERED DURING THE COURSE OF SURVEY WHEN THE ASSESSEE 3 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE WAS QUESTIONED ABOUT TRANSACTIONS AND HENCE, THE SAID INCOM E WAS UNEARTHED ONLY BECAUSE OF SURVEY ACTION CONDUCTED BY THE DEPARTMENT. THE ASSESSING OFFICER THUS, HELD THE ASSESSEE LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF TOTAL INCOME OF 30 LAKHS AND LEVIED PENALTY OF 9,26,9 99/ - . 5. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER REJECTING THE PLEA OF ASSESSEE THAT THE ADDITIONAL INCOME WAS OFFERED SUBJECT TO THE CONDITION THAT PENALTY SHOULD NOT BE INITIATED. THE CIT(A) OBSERVED THAT THE ASSESSEE HAD FAILED TO FURNISH THE RETURN OF INCOME SINCE ASSESSMENT YEAR 2008 - 09 ONWARDS AND RETURN WAS FILED ONLY AFTER SURVEY CONDUCTED UNDER SECTION 133A OF THE ACT. EVEN THE ADDITIONAL INCOME WAS DETECTED DURING THE COURSE OF SURVEY AND THE SAME WAS ADMITTED BY THE ASSESSEE. THE CIT (A) VIDE PARA 4.3.4 PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN MAK DATA PVT. LTD. VS. CIT (2013) 358 ITR 593 (SC) AND OBSERVED THAT EVEN IN CASES WHERE VOLUNTARY DISCLOSURE WAS MADE TO BUY PEACE AND TO AVOID LITIGATION, ETC. BUT THE LAW DOES NOT PROVIDE THAT HE HAS TO BE ABSOLVED FROM PENALTY. THE CIT(A) UPHELD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT DUE DATE FOR FILING THE RETURN OF INCOME WAS 31.07.2012, HOWEVER, NO RETURN OF INCOME WAS FILED WITHIN THE PERIOD PRESCRIBED UNDER SECTION 139(1) OF THE ACT. BUT AFTER SURVEY ON 01.11.2012, WHEREIN THE ADDITIONAL INCOME OF 30 LAKHS WAS FURNISHED, THE ASSESSEE FILED RETURN OF INCOME WITHIN TIME ALLOWED UNDER SECTION 139(4) OF THE ACT. THE SAID RETURN WHICH WAS FILED FOR THE FIRST TIME WAS FILED ON 4 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE 23.01.2013 . HE THEN POINTED OUT THAT IN SUCH CIRCUMSTANCES, WHERE THE ADDITIONAL INCOM E HAS BEEN OFFERED TO TAX BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE FIRST TIME, THERE IS NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FOR THE SAID PROPOSITION, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS OF THE TRIBUNA L: - I) SHRI ANAND SURESH JAIN VS. DCIT IN ITA NO.353/PUN/2015 AND SHRI SURESH N. JAIN VS. DCIT IN ITA NO.354/PUN/2015, BOTH RELATING TO ASSESSMENT YEAR 2006 - 07, ORDER DATED 13.01.2017; II) DR. BAPUSAHEB EKNATH KANDEKAR VS. DCIT IN ITA NO.1147/PUN/2014, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 20.01.2017; AND III) M/S. D.P. JAGTAP VS. ACIT IN ITA NO.418/PUN/2015, RELATING TO ASSESSMENT YEAR 2010 - 11, ORDER DATED 15.02.2017 8. HE FURTHER POINTED OUT THAT THE TRIBUNAL IN EARLIER DECISION IN THE CAS E OF 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 HAD RELIED ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF DELHI IN CIT VS. SAS PHARMACEUTICALS REPOR TED IN 335 ITR 259 (DEL) . 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A) WITH SPECIAL EMPHASIS ON THE FINDING IN PARA 4.3.4 OF THE APPELLATE ORDER AND THE RATIO LAID DOWN BY THE APEX COURT IN MAK DATA PVT . LTD. VS. CIT (SUPRA). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE BEFORE US, SURVEY AT THE PREMISES OF ASSESSEE HAD TAKEN PLACE ON 01.11.2012. DURING THE COURSE OF SURVEY, WHEN CONFRONTED THE ASSESS EE OFFERED ADDITIONAL INCOME OF 30 LAKHS. THE ASSESSEE HAD NOT FURNISHED ANY RETURN OF INCOME WITHIN DUE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. HOWEVER, HE FURNISHED THE RETURN OF INCOME ON 5 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE 23.01.2013 IN WHICH ADDITIONAL INCOME OF 30 LAKHS WAS OFFERED TO TAX, THE SAID RETURN OF INCOME WAS FILED WITHIN TIME ALLOWED UNDER SECTION 139(4) OF THE ACT. THE ASSESSING OFFICER HAS ACCEPTED INCOME RETURNED BY THE ASSESSEE AND COMPLETED ASSESSMENT UNDER SECTIO N 143(3) OF THE ACT. HOWEVER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT AND EVENTUALLY LEVIED PENALTY OF 9,26,999/ - . 11. THE ISSUE WHICH IS ARISING IN THE PRESENT APPEAL IS THAT IN THE CIRC UMSTANCES WHERE THE ASSESSEE HAD ALREADY OFFERED ADDITIONAL INCOME IN THE RETURN OF INCOME FILED FOR THE FIRST TIME THOUGH WITHIN TIME FRAME PRESCRIBED UNDER SECTION 139(4) OF THE ACT AND THE SAID INCOME OFFERED BY THE ASSESSEE HAVING BEEN ACCEPTED, CAN TH E ASSESSEE BE HELD TO BE LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 12. WE FIND THAT THE TRIBUNAL ON SIMILAR FACTS HAD DECIDED THE ISSUE IN NANDKISHOR TULSIDAS KATORE VS. ACIT (SUPRA) AND HAD APPLIED THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF DELHI IN CIT VS. SAS PHARMACEUTICALS (SUPRA) AND HAD HELD AS UNDER: - 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. HOWEVE R, 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 SU RVEY, THE DECISION TO INITIATE PENALTY PROCEEDINGS BEING TAKEN WHILE MAKING THE 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. SIN CE 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 THE 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. 6 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE 13. THE SAID DECISION HAS BEEN APPLIED BY THE TRIBUNAL IN SHRI ANAND SURESH JAIN VS. DCIT (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER: - 11. 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) OF THE ACT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF JEWELLERY. SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF ASSESSEE ON 27.04.2005. SIMULTANEOUSLY, SEARCH ACTION WAS ALSO CARRIED OUT AT THE RESIDENTIAL PREMISES OF ASSESSEE. THE INSTANT ASSESSMENT YEAR IN APPEAL IS THE YEAR OF SEARCH. DURING THE COURSE OF SUR VEY, THE ASSESSEE DECLARED CERTAIN ADDITIONAL INCOME ON ACCOUNT OF EXCESS STOCK FOUND FROM HIS PREMISES OF GOLD AND SILVER AMOUNTING TO RS.2,30,498/ - . THE ASSESSEE INCLUDED THE SAID ADDITIONAL INCOME IN THE RETURN OF INCOME FILED. UNDOUBTEDLY, NO PROCEED INGS UNDER SECTION 153A OF THE ACT ARE TO BE CARRIED OUT IN THE YEAR OF SEARCH. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE CAPTIONED ASSESSMENT YEAR AFTER DUE DATE PRESCRIBED UNDER SECTION 139(1) OF THE ACT BUT WITHIN THE PERIOD ALLOWED UNDER SECTION 139(4) OF THE ACT. THE SAID RETURN OF INCOME WAS FILED PURSUANT TO NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT. THE ASSESSEE HAD INCLUDED THE ADDITIONAL INCOME IN HIS HANDS IN THE SAID RETURN OF INCOME AND THE ASSESSING OFFICER HAD ACCEPTED THE SAID I NCOME OFFERED BY THE ASSESSEE ALONG WITH CERTAIN ADDITIONS I.E. ON ACCOUNT OF ERRORS AND OMISSIONS OF RS.9,502/ - . THE EXPLANATION OF ASSESSEE IS THAT SINCE HE DID NOT FIND ANY ERRORS AND OMISSIONS IN ITS RETURN OF INCOME, IT HAD NOT INCLUDED THE SAID INCO ME AS PART OF ITS ADDITIONAL INCOME BY FILING THE RETURN OF INCOME, THOUGH THE SAME WAS OFFERED AS ADDITIONAL INCOME DURING THE COURSE OF SURVEY. THE ISSUE WHICH NEEDS TO BE ADJUDICATED IN THE PRESENT APPEAL IS THAT WHERE THE ADDITIONAL INCOME WAS OFFERED WHICH WAS DETECTED DURING THE COURSE OF SURVEY AT THE PREMISES OF ASSESSEE, WHETHER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED. THE ANSWER TO THE SAID QUESTION IS NO, SINCE IT IS NOT THE CASE OF SEARCH UNDER WHICH THE ASSESSEE HAD OFFER ED THE ADDITIONAL INCOME. EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS APPLICABLE ONLY IN THE CASE OF SEARCH. IN THE FACTS OF THE PRESENT CASE, ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE WHEN SURVEY ACTION HAD TAKEN PLACE AT ITS BUSINESS PREMISES AND CERTAIN EXCESS STOCK WAS FOUND FROM ITS PREMISES. IN SUCH CASES, WHERE THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME DURING THE COURSE OF SURVEY, THEN THE SAME DOES NOT PART TAKE THE NATURE OF ADDITIONAL INCOME REFERRED TO IN EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, HENCE EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS NOT ATTRACTED IN THE PRESENT CASE. SINCE THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME IN THE RETURN OF INCOME WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER PERSE WITH MINOR VARIATIONS, THEN IN SUCH CIRCUMSTANCES, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE UPON THE ASSESSEE. THE ADDITIONAL INCOME OF RS.9,502/ - ADDED IN THE HANDS OF ASSESSEE ON ACCOUNT OF ERRORS AND OMISSIONS DOES NOT ATTRACT ANY PENALTY SINCE NO MALAFIDES HAVE BEEN ATTRIBUTED TO THE ASSESSEE IN NOT OFFERING THE SAME AS ITS INCOME. 12. WE FIND THAT PUNE BENCH OF TRIBUNAL IN NANDKISHOR TULSIDAS KATORE VS. ACIT (SUPRA) WHILE DECIDING THE SIMILAR ISSUE OF ADDITIONAL INCOME OFFERED DURING THE COUR SE 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 AGAINST THE ASSES SEE 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 UNACCOUNTED RECEIP TS, ROUGH PAGES, NOTE 7 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE 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 TO 2008 - 09 O N 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 RESIDENCE 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 THE RES IDENCE 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 UNDISCLOSE D 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 ASSESSEE 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 BASIS 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 INCOME FI LED 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 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 WHET HER THE SAME IS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST ISSUE RAISED BY THE 8 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IS THAT IN CASE ANY INCOME IS DECLARED PURSUANT TO SURVEY, THEN THE SAME IS NOT COVERED UNDER E XPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. WE FIND MERIT IN THE STAND OF ASSESSEE IN THIS 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 S ILENT ABOUT THE ADDITIONAL INCOME OFFERED BY THE PERSONS IN THE REVISED RETURN OF INCOME FILED 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 THEREAFT ER, 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 REPORT ED IN 335 ITR 259 (DEL), WHEREIN IT HAS BEEN HELD 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 S. 271(1)(C) OF THE ACT IS A PENAL PROVISION 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. (C) OF S. 271(1) OF THE ACT, WHICH AUTHORIZES IMPOSITION OF P ENALTY WHEN THE AO IS SATISFIED THAT THE ASSESSEE HAS EITHER : A) CONCEALED THE PARTICULARS 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 RETU RN, 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 WHETH ER THIS CONCEALMENT HAS REFERENCE TO THE IT RETURN FILED BY THE ASSESSEE, VIZ., WHETHER CONCEALMENT 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 TH E COURSE OF ANY PROCEEDINGS UNDER THIS ACT OCCURRING IN SUB - S. (1) OF S. 271 OF THE ACT AND 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 ARI SE. WE HAVE TO KEEP IN MIND THAT IT IS THE AO WHO INITIATED THE PENALTY PROCEEDINGS AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED ANY SATISFACTION DURING THE COURSE OF SURVEY. DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING ASSES SMENT ORDER. IT IS, THUS, OBVIOUS THAT THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT CANNOT HAVE THE REFERENCE TO SURVEY PROCEEDINGS IN THIS CASE. 9 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE 15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF IN ACCURATE 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 I N 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 AS SESSEE. PRESENTLY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION 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 COND ITIONS 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 SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJ ECTURES AND POSSIBILITIES. SEC. 271(1)(C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT 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 - DISCLO SURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE IT RETURN AND OFFERED THE SURRENDERED AMOUNT FOR THE PURPOSES OF TAX. 17. WE, THUS, ANSWER THE QUESTIONS AS FORMULATED ABOVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE FINDING NO FAULT WI TH THE DECISIONS OF THE CIT(A) AS WELL AS THE TRIBUNAL. AS A RESULT, THIS APPEAL IS DISMISSED. 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 THE 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 L EVY OF PENALTY. APPLYING THE SAID PROPOSITION TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE 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 TH E REVISED RETURN OF INCOME FILED AFTER THE SURVEY. 10 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE 13. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WHICH WAS ATTRACTED IN RESPECT OF SEARCHES CONDUCTED PRIOR TO 01.06.2007 AND EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS ATTRACTED TO THE SEARCHES CARRIED OUT ON OR AFTER 01.06.2007. BUT BOTH THE PROVISIONS DEAL WITH THE CASES OF ADDITIONAL INCOME OFFERED PURSUANT TO SEARCH ACTION AT THE PREMISES OF ASSESSEE. AS POINTED OUT IN THE PARAS HERE INABOVE, THE ADDITIONAL INCOME IN THE PRESENT CASE WAS OFFERED AFTER SURVEY ACTION AND CONSEQUENTLY, THERE IS NO MERIT IN THE LEVY OF PENALTY FOR CONCEALMENT UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. 14. S IMILAR PROPOSITION HAS BEEN LAID DOWN IN DR. BAPUSAHEB EKNATH KANDEKAR VS. DCIT (SUPRA) AND M/S. D.P. JAGTAP VS. ACIT (SUPRA). 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED STRONG RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN MAK DATA (P.) LTD. VS. C IT (SUPRA). HOWEVER, THE FACTS OF THE SAID CASE ARE AT VARIANCE, WHEREIN DURING THE COURSE OF ASSESSMENT PROCEEDINGS CERTAIN DISCREPANCIES IN DOCUMENTS WERE NOTED BY THE ASSESSING OFFICER, WHICH WERE IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDINGS. NO DISCLOSURE WAS MADE ON ACCOUNT OF DOCUMENTS SO IMPOUNDED ; HOWEVER, WHEN THE ASSESSING OFFICER SOUGHT SPECIFIC INFORMATION, THE ASSESSEE MADE AN OFFER TO SURRENDER SUM OF 40.74 LAKHS WITH A VIEW TO AVOID LITIGATION AND TO BUY PEACE . THE ASSESSING OFFICER MADE ADDITION AND LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE APEX COURT IN SUCH CIRCUMSTANCES HELD THAT SURRENDER OF INCOME WAS NOT VOLUNTARY, SINCE IT WAS MADE BY ASSESSEE WHEN CONFRONTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE MAJ OR FACT WHICH IS AT VARIANCE IS THAT DURING THE COURSE OF SURVEY IN THE CASE OF MAK DATA (P.) LTD. VS. CIT (SUPRA), NO DISCLOSURE WAS MADE BY THE ASSESSEE AND WHEN CONFRONTED BY THE ASSESSING OFFICER, THE ASSESSEE MADE AN OFFER TO SURRENDER SUM OF 40.74 LAKHS. HOWEVER, IN THE FACTS OF THE PRESENT CASE BEFORE US, THE SURRENDER WAS MADE DURING THE COURSE OF SURVEY AND THE ADDITIONAL INCOME WAS OFFERED TO TAX IN THE RETURN OF INCOME FILED 11 ITA NO. 1 336 /PUN/20 16 SANTOSH H GUGALE THEREAFTER, WHICH WAS THE FIRST RETURN OF INCOME FILED BY THE ASSESSE E. CONSEQUENTLY, THERE IS NO MERIT ON THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE, WHEREIN THE FACTS ARE AT VARIANCE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS NOT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C ) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE SAME. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 6 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 3 1 S T D AY OF AUGUST , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 3 1 S T AUGUST , 201 8 . G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 2 , PUNE ; 4. THE PR. CIT - 1 , PUNE ; , 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE