ACIT CIR 3, THANE V. D.J. BUILDERS & DEVELOPERS, MUMBAI

ITA 1731/MUM/2012

• Counselvise Citation: 173119914 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 13-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH B SHAH
• Keywords: Unexplained expenditure; Income from undisclosed sources; Search and seizure; Difference of opinion
• Section: 133A; 27; 15

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./I.T.A. NO.1731/MUM/2012 ( / ASSESSMENT YEAR: 2007-08) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-3, 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN (W), PIN 421301 / VS. M/S D J BUILDERS AND DEVELOPERS GROUND FLOOR, ADESHWAR PARK, BAIL BAZAR, SHIL ROAD, KALYAN (W). ( !' / APPELLANT) .. ( #$!' / RESPONDENT) ! ./ % ./PAN/GIR NO. : AACFD9039N !' & / APPELLANT BY : SHRI DURGA DUTT #$!' ' & /RESPONDENT BY : SHRI RAJESH B SHAH ( ) ' *+ / DATE OF HEARING : 17.6.2014 ,- ' *+ /DATE OF PRONOUNCEMENT : 25 .7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 12.12.2011 PASSED BY LD CIT(A)-1, THANE AND IT RE LATES TO THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN DELETING THE PENALTY OF RS.35,34,300/- IMPOSED BY THE ASSESSIN G OFFICER U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 (THE ACT). 3. FACTS RELATING TO THE ABOVE SAID ISSUE ARE STATE D IN BRIEF. THE ASSESSEE HEREIN FILED ITS RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION ON 31.10.2007 DECLARING A TOTAL INCOME OF RS.1,70,69,561/-. THE AO COMPLETED THE ASSESSMENT I.T.A. NO.1731/MUM/2012 2 BY MAKING CERTAIN DISALLOWANCES AND ACCORDINGLY ARR IVED AT A TOTAL INCOME OF RS.1,82,16,100/-. THE INCOME DECLARED IN RETURN O F INCOME FILED BY THE ASSESSEE INCLUDED THE AMOUNT OF RS.1,55,00,000/- SU RRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY OPERATIONS CONDUCTED B Y THE DEPARTMENT AT HIS BUSINESS PREMISES ON 2.8.2007 U/S 133A OF THE ACT. DURING THE COURSE OF SURVEY OPERATIONS, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND ONE OF THE PARTNERS OF THE ASSESSEE FIRM SHRI JAYANTIBHAI D SH AH DECLARED ADDITIONAL INCOME OF RS.1,55,00,000/- IN RESPECT OF FOLLOWING ITEMS : 1.UNACCOUNED CASH LOAN ADVANCED RS.70,00,000 2.UNACCOUNTED EXPENDITURE ON ACCOUNT OF PURCHASE OF PLOT RS.35,00,000 3.UNACCOUNED EXPEN SES I NCURRED TO REMOVE SLUM DWELLERS RS.30,00,000 4.UNACOUNTED PURCHASE OF BUILDING MATERIAL RS.7,25,000 5.TO COVER UP THE DISCREPANCIES RS.12,75,000 TOTAL RS.1,55,00,000 4. AT THAT POINT OF TIME THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME FOR THE YEAR ENDED ON 31.3.2007 I.E. ASSESSMENT YEAR 20 07-08, EVEN THOUGH THE PREVIOUS YEAR HAD ALREADY ENDED. HENCE THE ASSESSE E INCLUDED THE ABOVE SAID AMOUNT OF RS.1.55 CRORES IN THE TOTAL INCOME RETURN ED BY IT FOR THE ABOVE SAID ASSESSMENT YEAR. THE INCOME SO DECLARED BY THE AS SESSEE WAS ACCEPTED BY THE AO IN THE ASSESSMENT PROCEEDINGS. 5. THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT, AS HE WAS OF THE VIEW THAT THE ASSESSEE WAS CONSTRAINED TO AD MIT THE ADDITIONAL INCOME ONLY DUE TO THE INCRIMINATING MATERIALS UNEARTHED D URING THE COURSE OF SURVEY OPERATIONS. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE ADDITIONAL INCOME OF RS.1.55 CRORES HAS ALREADY BEEN DISCLOSED IN THE RE TURN OF INCOME FILED FOR THE ASST. YEAR 2007-08 AND THE SAME HAS ALREADY BEEN AC CEPTED IN THE ASSESSMENT I.T.A. NO.1731/MUM/2012 3 PROCEEDING. SINCE THERE WAS NO ENHANCEMENT OF RETU RNED INCOME, IT WAS CONTENDED THAT THE ADDITIONAL INCOME OF RS.1.55 CRO RES CANNOT BE CONSIDERED AS CONCEALED INCOME. IT WAS FURTHER SUBMITTED THAT TH E BOOKS OF ACCOUNT FOR THE YEAR ENDING 31.3.2007 WERE INCOMPLETE AT THE TIME S URVEY OPERATIONS WERE CONDUCTED AND HENCE THE ASSESSEE HAS INCLUDED ALL T HE DISCREPANCIES NOTICED DURING THE COURSE OF SURVEY OPERATIONS IN ITS BOOKS OF ACCOUNT AND THE RETURN OF INCOME WAS FILED ACCORDINGLY. THE AO NOTICED THAT THE ASSESSEE HAS CREDITED THE CAPITAL ACCOUNT OF THE PARTNERS WITH RS.1,05,00,00 0/-, I.E., THE AGGREGATE AMOUNT REPRESENTED BY UNACCOUNTED CASH LOAN OF RS. 70,00,000/- AND UNEXPLAINED EXPENDITURE ON PURCHASE OF FLAT OF RS .35,00,000/- UNEARTHED DURING THE COURSE OF SEARCH. THE AO TOOK THE VIE W THAT THE ABOVE SAID TWO ITEMS REPRESENTS THE INCOME CONCEALED BY THE ASSESS EE, WHICH WAS UNEARTHED BY THE REVENUE DURING THE COURSE OF SURVEY OPERATIONS. IN RESPECT OF REMAINING THREE ITEMS REFERRED IN THE TABLE ABOVE, THE AO A CCEPTED THE SUBMISSIONS OF THE ASSESSEE THAT THEY WERE NOT INCORPORATED IN THE BOO KS OF ACCOUNT DUE TO NON- COMPLETION OF ACCOUNTS. ACCORDINGLY, AO LEVIED MIN IMUM PENALTY OF RS.35,34,300/- ON THE AMOUNT OF RS.1,05,00,000/- R EFERRED ABOVE. 6. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND CONTENDED THAT THE AMOUNT ADMITTED DURING THE COURS E OF SURVEY, HAVING BEEN INCLUDED IN THE RETURN OF INCOME FILED BY IT, THER E IS NO SCOPE FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT AS THE INCOME, SINCE AMOUN T SO DECLARED IN THE RETURN FILED BY IT HAS BEEN ACCEPTED BY AO. THE ASSESS EE FURTHER SUBMITTED THAT THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT REQUIRE THA T THE PENALTY UNDER THAT SECTION MAY BE IMPOSED ONLY IF THE AO, IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED ABOUT THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FURNISHING I.T.A. NO.1731/MUM/2012 4 OF INACCURATE PARTICULARS OF SUCH INCOME. IT WAS S UBMITTED THAT THE SURVEY OPERATIONS CARRIED U/S 133A CANNOT BE CONSIDERED AS A STATUTORY PROCEEDING, SINCE IT IS ONLY ONE OF THE METHODOLOGIES PROVIDED IN THE ACT TO COLLECT EVIDENCES AGAINST THE ASSESSEE. IT WAS ALSO SUBMITTED THAT T HE AO COULD NOT HAVE ARRIVED AT SATISFACTION DURING THE SURVEY OPERATIONS, SINCE IT WAS NOT A PROCEEDING. IT WAS FURTHER SUBMITTED THAT THE INITIATION OF PENALT Y PROCEEDINGS WOULD DEPEND UPON THE INCOME DECLARED IN THE RETURN OF INCOME FI LED BY AN ASSESSEE. IT WAS ALSO SUBMITTED THAT THE PENALTY IMPOSED U/S 271(1)( C) IS COMPUTED ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. THE EXPRESSION AMOUNT OF TAX SOUGHT TO BE EVADED IS DEFINED IN EXPLANATION 4 U/S 271 OF THE ACT. IT WAS SUBMITTED THAT, SINCE THE ASSESSEE HAS INCLUDED THE AMOUNT DECLARED DURING THE COURSE OF SURVEY IN ITS RETURN OF INCOME, THE ASSESSED INCOME AND TH E RETURNED INCOME BEING THE SAME IN RESPECT OF RS.1.05 CRORES REFERRED ABOVE, T HE COMPUTATION PROVISION PROVIDED IN EXPLANATION 4 FAILS. IT WAS SUBMITTED T HAT THE PENALTY CANNOT BE LEVIED IF THE COMPUTATION PROVISION FAILS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED DETAILS RELATING TO THE RS.1 .05 CRORES IN ITS RETURN OF INCOME AND HENCE IT CANNOT BE SAID THAT THE ASSESSE E HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. IN SUPPORT OF THE ABOVE CONTENTIONS, THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING CASE LAWS BEFORE LD CIT(A) : I) CIT VS. RELIANCE PETRO PRODU C T S 3 22 ITR 15 8 ( SC) II) ADDL. CIT V . BADRI KASHI PRASAD (1993J 200 ITR 0206 ( AL L) III) PRABHAT OIL TRADERS V. ITO(NO. 3) (1996) 218 ITR (A. T . ) IV) CITY DRY FISH COMPANY V. CIT (1999) 238 ITR 0063 (A.P. ) V) CIT VS. MOHD. BUX SOKAT ALI (2004) 265 ITR 326 (RAJ) VI) ACIT VS. VIP INDUSTRIES (2009) 122 ITJ 289 (MUM) VII) DY.CIT, BHARUCH V I S DR. SATISH B. GUPTA (ITA 1482/AHD/2010) VIII) JOINT COMMISSIONER OF INCOME-TAX V.SIGNATURE ( [ 2 005J 143 TAXMAN 28 (DELHI)) IX) SM T . GOV I NDA DEVI VS. CIT ( 200 8 ) 304 ITR 03 4 0 (AL L ) I.T.A. NO.1731/MUM/2012 5 X) CIT V.HARSHVARDHAN CHEMICALS & MINERALS LTD. (2003) 259 ITR212(RAJ) ACCORDINGLY, THE ASSESSEE SUMMARIZED ITS ARGUMENTS AS UNDER:- A) THE A SSE S SING OFF I CER HAS WRONGLY L EV I E D P E NA L TY W H E N COND I T I ON S STAT E D I N SECTIO N 27 1 ( 1)( C ) DID NOT E XI STED. B) TH E A S SE S SE E HAS NOT CONCEALED I N C OM E . C) THE LEARNED ASSESSING OFFICER ERRED HELD IN CONCLU DING THAT SURVEY I S PROCEED I NGS AND PENALTY CAN BE IMPOSED BASED ON SURVEYS. D) TH E BOO K S OF ACCOUNT WERE INCOMPLETE AND T HE SAME WE R E DU LY C OMPLET E D ACCOUNTING ALL TRANSACTIONS BEFORE FILING RETURN OF INCOME AND A U D I T . E) THE A SS E SSEE HAS OFFERED AN EXPLANATION WHICH IS BONAFIDE A ND HEN CE C OVERED BY E X PLANATION 1 EXEMPTION . F) THE PENALTY RS.35,34,300/- BE DELETED. 7. THE LD.CIT(A) WAS CONVINCED WITH THE CONTENT ION OF THE ASSESSEE AND ACCORDINGLY DELETED THE PENALTY BY OBSERVING AS UND ER : I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDE R, PENALTY ORDER AND THE SUBMISSION OF THE APPELLANT. UNDISPUTEDLY, THE DATE OF FILING RETURN OF INCOME U/S. 139(1) HAS NOT EXPIRED AS ON THE DATE OF SURVE Y AND NO RETURN OF INCOME HAS BEEN ALSO FILED BEFORE SUCH DATE. THE A.O HIMSE LF HAS CONSIDERED AN AMOUNT OF RS.50 LAKHS OUT OF TOTAL DISCLOSURE MAY BE ATTRI BUTABLE TO NON-COMPLETION OF BOOKS OF ACCOUNT AS ON THE DATE OF SURVEY, AS LAST DATE OF FILING OF RETURN HAS NOT EXPIRED. IT IS ALSO NOTICED THAT THE DISCREPANCIES POINTED OUT BY THE SURVEY PARTY HAVE BEEN DULY INCLUDED IN THE BOOKS OF ACCOUNT AND TAX AUDIT REPORT U/S. 44AB OF THE ACT WHICH IS COMPLETED ON 30TH OCTOBER, 2007 . SCHEDULE I OF THE TAX AUDIT REPORT WHICH CONTAINS 'NOTES FORMING PART OF ACCOUN TS' CLEARLY SHOWS THAT THE ASSESSEE HAD DISCLOSED AN INCOME OF RS. 1.5 CRORE F OR A.Y. 2007-08 IN RESPONSE TO THE SURVEY OPERATIONS. ALL THE TAXES ON DISCLOSE D INCOME HAVE BEEN PAID BEFORE THE DATE OF AUDIT AND THE INCOME DECLARED HA S BEEN APPROPRIATELY ACCOUNTED. IT IS ALSO RELEVANT TO POINT OUT THAT TH E A.O HAS NOT DISTURBED THE RETURNED INCOME SO FAR AS THE DISCLOSURE IS CONCERN ED. IT IS A WELL SETTLED LEGAL POSITION THAT THE DEFAULT OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IS COMMITTED ONLY AT THE TIME OF FILING OF RETURN OF INCOME EXCEPT IN CERTAIN SPECIFIC SITUATIONS PROVIDED UNDE R THE ACT. THE SITUATIONS WHERE CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME, MAY BE DEEMED ARE IN THE CASES WHERE SEARCH AND SEIZURE OP ERATIONS HAVE BEEN CARRIED OUT AND PROVISIONS OF EITHER EXPLANATION 5 TO SECTI ON 271(1)(C) OR SECTION 271AAA ARE APPLICABLE. ANOTHER SUCH SITUATION IS WHERE EXP LANATION 3 TO SECTION 271(1)(C) IS APPLICABLE. UNDISPUTEDLY, NO SUCH SITUATION EXIS TS IN THE APPELLANT'S CASE BY WHICH THE INCOME DISCLOSED IN THE RETURN OF INCOME FILED BEFORE THE DUE DATE U/S. 139(1) CAN BE DEEMED TO BE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNI SHED BECAUSE THIS IS NEITHER A SEARCH CASE NOR THE RETURN IS FILED U/S.148 AFTER T HE EXPIRY OF TIME LIMIT U/S. I.T.A. NO.1731/MUM/2012 6 153(1). THE A.O WHILE IMPOSING THE PENALTY HAS INVOKED THE PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C) WHICH ARE APPLIC ABLE ONLY WHEN ANY DISALLOWANCE OR ADDITION IS MADE TO THE RETURNED IN COME. SINCE NO DISALLOWANCE OR ADDITION IS MADE TO THE RETURNED INCOME WITH REF ERENCE TO DISCLOSURE MADE DURING THE COURSE OF SURVEY, THE PROVISIONS OF EXP LANATION I TO SECTION 271(L)(C) ARE NOT AT ALL APPLICABLE. 4.1 UNDER THESE FACTS AND CIRCUMSTANCES OF THE CAS E AND ALSO THE SETTLED LEGAL, I AM INCLINED TO ACCEPT SUBMISSION OF THE AP PELLANT THAT THERE CAN NOT BE A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BEFORE FILING OF THE ORIGINAL RETURN OF INCOME AND ALSO TH E RELIANCE ON THE RATIO LAID DOWN BY THE HON.BLE SUPREME COURT IN THE CASE OF RELIANC E PETRO PRODUCTS PVT LTD. (SUPRA) THAT THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME WHEN FOUND TO BE INACCURA TE, THE LIABILITY WOULD ARISE. THE SUBMISSION OF THE A.R. THAT IN THE INSTANT CASE , PROVISIONS OF EXPLANATION-4 TO SECTION 271(1)(C) WHICH ARE RELATED TO COMPUTATI ON OF 'TAX SOUGHT TO BE EVADED' FOR THE PURPOSE OF QUANTIFICATION OF PENALT Y U/S. 271(1)(C) WHICH ARE RELATED TO COMPUTATION OF TAX SOUGHT TO BE EVADED FOR THE PURPOSE OF QUANTIFICATION OF PENALTY U/S 271(1)( C ) FAIL, IS ALSO ACCEPTABLE. HIS RELIANCE ON THE DECISION OF HON'BLE ITAT, AHMEDABAD IN THE CASE OF DCLT, BHARUCH CIRCLE VS. DR. SATISH B. GUPTA [ITA NO.1482 /AHD/2010 (A.Y. 2006-07)] DT. 06.08.2010, COPY OF WHICH IS ENCLOSED ALONG WIT H THE SUBMISSION, IS WELL FOUNDED, WHEREIN ON THE IDENTICAL FACTS AFTER ANALY ZING THE PROVISIONS OF SECTION 271 (1 ) (C) EXPLANATION -4, MEANING OF PROCEEDINGS ETC. IT HAS BEEN HELD THAT THE INCOME ADMITTED DURING SURVEY U/S. 133A WHEN DI SCLOSED IN THE RETURN OF INCOME FURNISHED ON OR BEFORE DUE DATE AND THE SAME IS ACCEPTED BY A.O, THERE IS NO CASE FOR LEVY OF PENALTY. THEREFORE, I HOLD T HAT IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C) AND HENCE PENAL TY SO IMPOSED AT RS.35,34,300/- IS CANCELLED. 8. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 9. THE LD D.R SUBMITTED THAT THE INCRIMINATING DOC UMENTS RELATING TO THE IMPUGNED ADDITION, VIZ., ADVANCING OF CASH LOANS AS WELL AS PURCHASE OF LAND, WERE UNEARTHED BY THE DEPARTMENT DURING THE COURSE OF SURVEY OPERATIONS ONLY. HE FURTHER SUBMITTED THAT THE SURVEY OPERATIONS WER E CONDUCTED ON 02-08-2007 AND ON THAT DATE THE PREVIOUS YEAR RELATING TO THE ASSESSMENT YEAR 2007-08 HAS ALREADY ENDED AND IT WAS A FACT THAT THE ASSESSEE H AD NOT RECORDED THE TRANSACTIONS RELATING TO THE ABOVE SAID ITEMS IN IT S BOOKS OF ACCOUNT. ACCORDINGLY, THE LD D.R CONTENDED THAT THE ASSESSEE WAS CONSTRAINED TO DECLARE THE INCOME RELATING TO THESE INVESTMENTS ONLY AS A CONSEQUENCE OF SURVEY I.T.A. NO.1731/MUM/2012 7 OPERATIONS AND THE ASSESSEE WOULD NOT HAVE DECLARE D THE ABOVE SAID ITEMS IN ITS RETURN OF INCOME, IF THE SURVEY OPERATIONS HAD NOT TAKEN PLACE. THE LD D.R SUBMITTED THAT THE INCRIMINATING DOCUMENTS UNEARTHE D DURING THE COURSE OF SURVEY OPERATIONS HAVE ALSO ESTABLISHED THE FACT AB OUT THE CONCEALMENT OF INCOME. ACCORDINGLY HE SUBMITTED THAT THE CONCEALM ENT CANNOT BE MADE GOOD BY SIMPLY DECLARING THOSE ITEMS IN THE RETURN OF IN COME FILED SUBSEQUENTLY. 10. ON THE CONTRARY, THE LD A.R PLACED STRONG REL IANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF RELIANCE PE TRO PRODUCTS (SUPRA), WHEREIN THE HONBLE APEX COURT HAS OBSERVED THAT EV ERY THING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCU MENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME WHEN FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. HE ALSO PLACED RELIANCE ON THE DECISION DAT ED 06-08-2010 RENDERED BY THE AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF DR. SATI SH B. GUPTA IN ITA NO.1482/AHD/2010, WHEREIN THE ITAT HAS HELD THAT SU RVEY OPERATIONS CONDUCTED U/S 133A CANNOT BE CONSIDERED AS A STATUTORY PROCEE DING. HE FURTHER SUBMITTED THAT THE AHMEDABAD BENCH OF TRIBUNAL, IN THE ABOVE CITED CASE, HAS DELETED THE PENALTY LEVIED BY THE AO UNDER IDENTICAL CIRCUMSTAN CES, I.E., DURING THE COURSE OF SURVEY OPERATIONS CONDUCTED ON 22.09.2006, THE ASSE SSEE THEREIN DECLARED UNACCOUNTED INCOME OF RS.32,84,663/- AND HE INCLUDE D THE SAME IN THE RETURN OF INCOME FILED FOR AY 2006-07. THE RETURN OF INCOME WAS ACCEPTED BY THE AO, BUT HE LEVIED PENALTY U/S 271(1)(C) OF THE ACT. IT WAS CANCELLED BY THE TRIBUNAL BY HOLDING AS UNDER:- 9.. THUS THE ACT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS SHOULD BE VIEWED BY THE AO AS DONE WITH RESPECT TO RETURN OF INCOME. THE OMISSION OR COMMISSION OR CONTUMACIOUS CONDUCT HAS TO BE VIEWED FROM THE RETURN OF INCOME AND IF CERTAIN THING IS NOT DISCLOSED OR NOT FURNISHED THEREIN ONLY THEN IT I.T.A. NO.1731/MUM/2012 8 CAN BE SAID THAT ASSESSEE HAS CONCEALED THE PARTICU LARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. PRIOR TO THIS ASS ESSEE HAS NOT DONE ANY CONTUMACIOUS CONDUCT ON WHICH PENALTY CAN BE LEVIED . MERELY BECAUSE CERTAIN RECEIPTS ARE NOT RECORDED IN THE BOOKS OF ACCOUNT O R RECEIPTS ARE NOT ISSUED TO THE PATIENTS, BUT INCOME THERE FROM WAS FINALLY DEC LARED IN THE RETURN OF INCOME, THEN THERE IS NO CONTUMACIOUS CONDUCT. .. 10. OUR VIEW THAT NO PENALTY IS LEVIABLE IF IMPUG NED AMOUNT IS DISCLOSED IN THE RETURN OF INCOME IS SUPPORTED BY THE DECISION OF HO N. ALLAHABAD HIGH COURT IN THE CASE OF SMT. GOVINDA DEVI VS. CIT (2008) 304 IT R 0340 (ALL) THE LD A.R ALSO PLACED RELIANCE ON THE VARIOUS CASE LAWS THAT WERE PRESSED BEFORE LD CIT(A). 11. IN THE REJOINDER, THE LD D.R SUBMITTED THAT T HE ASSESSEE DID NOT RECORD THE TRANSACTIONS RELATING TO CASH LOANS AND PURCHASE OF LAND IN ITS BOOKS OF ACCOUNT IN ITS BOOKS OF ACCOUNT, EVEN THOUGH THE ACCOUNTING YE AR HAD ALREADY EXPIRED, BUT HAS ACCOUNTED THE SAME AFTER DETECTION BY THE SURVE Y TEAM. ACCORDINGLY, HE CONTENDED THAT THE PENALTY LEVIED BY THE AO SHOULD BE SUSTAINED. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND CA REFULLY PERUSED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E ASSESSEE HAD NOT ACCOUNTED THE TRANSACTIONS RELATING TO CASH LOAN AND PURCHASE OF LAND IN ITS BOOKS OF ACCOUNT RELATING TO THE ASSESSMENT YEAR 2007-08 BY THE TIME THE SURVEY OPERATIONS WERE CONDUCTED, I.E. ON 02-08-2007. THE RE IS ALSO NO DISPUTE THAT THE BOOKS OF ACCOUNT RELATING TO THE AY 2007-08 WERE IN COMPLETE. SINCE THE AO HAD ACCEPTED THIS FACT, HE DID NOT LEVY PENALTY IN RESP ECT OF THREE OTHER ITEMS AGGREGATING TO RS.50.00 LAKHS. SINCE THE BOOKS OF ACCOUNT WERE INCOMPLETE, IT IS THE CONTENTION OF THE ASSESSEE THAT IT CANNOT BE PR ESUMED THAT THE ASSESSEE WOULD NOT HAVE ACCOUNTED THE INCOME RELATING TO CAS H LOAN AND PURCHASE OF LAND. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE H AS INCLUDED THE AMOUNT OF RS.1.55 CRORES DECLARED DURING THE COURSE OF SURVEY OPERATION IN ITS RETURN OF I.T.A. NO.1731/MUM/2012 9 INCOME FILED FOR AY 2007-08 AND PAID THE TAX THEREO N. IT WAS ALSO SUBMITTED THAT THE AO HAS ACCEPTED THE SAID RETURN OF INCOME IN SO FAR AS IT RELATES TO THE AMOUNT OF RS.1.55 CRORES REFERRED ABOVE. ACCORDING LY IT WAS SUBMITTED THAT THE QUESTION OF CONCEALMENT OF INCOME WOULD NOT ARISE, SINCE THERE WAS NO DIFFERENCE BETWEEN THE RETURNED INCOME AND THE ASSE SSED INCOME IN RESPECT OF RS.1.55 CRORES REFERRED ABOVE. IT WAS ALSO SUBMITT ED THAT THE ASSESSING OFFICER HAS LEVIED PENALTY ON RS.1.05 CRORES ONLY AND DID N OT LEVY PENALTY ON RS.50.00 LAKHS BY ACCEPTING THE CONTENTION OF THE ASSESSEE T HAT THE TRANSACTIONS RELATING TO THE ABOVE SAID RS.50.00 LAKHS DID NOT FIND PLACE IN THE BOOKS OF ACCOUNT DUE TO INCOMPLETE BOOKS. THE LD A.R ALSO CONTENDED TH AT THE SURVEY OPERATIONS CANNOT BE CONSIDERED AS STATUTORY PROCEEDING. AC CORDINGLY, THE LD A.R CONTENDED THAT THE AO COULD ARRIVE AT THE SATISFACT ION ABOUT THE CONCEALMENT OF INCOME ONLY DURING THE COURSE OF A STATUTORY PROCEE DING AND SINCE THE ASSESSEE HAS ALREADY INCLUDED THE AMOUNT OF RS.1.05 CRORES I N ITS RETURN OF INCOME, THE AO COULD NOT HAVE ARRIVED AT THE SATISFACTION ON THE B ASIS OF RETURN OF INCOME. THE LD A.R ALSO SUBMITTED THAT THE PENALTY PROCEEDINGS WOULD ENTIRELY DEPEND UPON THE RETURN OF INCOME. 13. WE NOTICE THAT THE HONBLE DELHI HIGH COURT HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF CIT VS. SAS PHARMACEUTICALS (3 35 ITR 259), WHEREIN THE HONBLE HIGH COURT HAS EXPRESSED FOLLOWING VIEW:- 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-SECTION (1) OF SECTION 271 OF THE ACT AND CONTENDING THAT EVEN DURING SURVEY WHEN IT WAS FOUND THAT THE ASSES SEE HAD CONCEALED THE PARTICULAR OF HIS INCOME, IT WOULD AMOUNT CONCEALME NT IN THE COURSE OF ANY PROCEEDINGS. THE WORDS IN THE COURSE OF ANY PROCE EDINGS UNDER THIS ACT ARE PREFACED BY THE SATISFACTION OF THE ASSESSING OFFIC ER OR THE COMMISSIONER OF INCOME-TAX (APPEALS). WHEN THE SURVEY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF SATISFACTION OF ASSESSING OFFICER OR TH E COMMISSIONER (APPEALS) OR I.T.A. NO.1731/MUM/2012 10 THE COMMISSIONER DOES NOT ARISE. WE HAVE TO KEEP IN MIND THAT IT IS THE ASSESSING OFFICER WHO INITIATED THE PENALTY PROCEED INGS AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED ANY SATISFA CTION DURING THE COURSE OF SURVEY. DECISION TO INITIATE PENALTY PROCEEDINGS WA S TAKEN WHILE MAKING ASSESSMENT ORDER. IT IS, THUS, OBVIOUS THAT THE EXP RESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT CANNOT HAVE THE REFEREN CE TO SURVEY PROCEEDINGS, IN THIS CASE. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICUL ARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE 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 CIT V. MOHAN DAS HASSA NAND [1983] 141 ITR 203(DELHI) IN RELIANCE PETROPRODUCTS (P.) LTD. (2010) 322 ITR 158 (SC), 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 EXPLANATIONS 5 AND 5A TO SECTION 271 OF THE ACT AS CONTENDED BY THE LEARNED COUNSEL FOR THE RESPONDENT. NO DOUBT, THE DISCREPANCIES WERE FOUND DURING THE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMO UNT 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 EXP OSED 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. SECTION 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 PAR TICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON-DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE INCO ME-TAX RETURN AND OFFERED THE SURRENDERED AMOUNT FOR THE PURPOSES OF TAX. WE, THUS, ANSWER THE QUESTIONS AS FORMULATED ABOVE , IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE FINDING NO FAULT W ITH THE DECISIONS OF THE CIT(A) AS WELL AS THE TRIBUNAL. AS A RESULT, THIS A PPEAL IS DISMISSED. 14. ON CONSIDERATION OF THE RIVAL SUBMISSION S AND THE DECISIONS REFERRED ABOVE, WE NOTICE THAT THE JUDICIAL VIEW IS THAT THE PENALTY U/S 271(1)(C) OF THE ACT SHOULD NOT BE LEVIED IF THERE IS NO DIFFERENCE BETWEEN THE RETURNED INCOME AND ASSESSED INCOME. NORMALLY, THERE SHOULD NOT BE ANY DIFFERENCE OF OPINION IN RESPECT OF THIS PROPOSITION. HOWEVER, THE QUESTION THAT ARISES IS WHETHER THIS GENERAL PROPOSITION CAN BE EXTENDED TO THE CASES LI KE THAT OF INSTANT CASE, WHERE I.T.A. NO.1731/MUM/2012 11 PECULIAR FACTS EXIST, VIZ., THE DECLARATION OF CERT AIN INCOME IN THE RETURN OF INCOME AS A RESULT OF OR CONSEQUENT TO THE SURVEY OPERATIO NS. 15. THE STRONG CONTENTION OF THE REVENUE IS THA T THE ASSESSEE WOULD NOT HAVE DECLARED THE INCOME, IF THE REVENUE HAD NOT DETECTE D THE SAME DURING THE COURSE OF SURVEY OPERATIONS. IN FACT, THE HONBLE DELHI H IGH COURT HAS ADDRESSED THIS CONTENTION IN THE CASE OF SAS PHARMACEUTICAL (REFER RED SUPRA). IN FACT, THE HONBLE DELHI HIGH COURT HAS CONSIDERED THE EXPRESS ION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT OCCURRING IN SEC. 271(1 ) OF THE ACT AND HELD THAT THE SAID EXPRESSION CANNOT HAVE REFERENCE TO THE SURVEY PROCEEDINGS. IT HAS ALSO HELD THAT THE PENALTY PROCEEDINGS WOULD DEPEND UPON THE RETURN OF INCOME FILED BY THE ASSESSEE. THE HIGH COURT HAS ALSO HELD THAT THE CONTENTIONS OF THE REVENUE DISCUSSED IN THE OPENING OF THIS PARAGRAPH IS RELEVANT ONLY FOR ASSESSMENT PROCEEDINGS. FOR PENALTY PROCEEDINGS, T HE HIGH COURT HAS HELD THAT THE PENALTY U/S 271(1)(C) CANNOT BE IMPOSED UNLESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAMBIGUOUSLY SATI SFIED. 16. IN THE INSTANT CASE, THE INCOME SURRENDERED DURING THE COURSE OF SURVEY HAS BEEN DULY OFFERED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. IT IS ALSO A FACT THAT THE ASSESSEE HAS ACCOUNTED FOR THE CASH L OAN AND LAND VALUE AGGREGATING TO RS.1.05 CRORES IN THE BOOKS OF ACCOU NT BY MAKING CORRESPONDING CREDIT TO THE CAPITAL ACCOUNT, WHICH FACT PROVES TH AT BOTH THE ITEMS CANNOT BE SAID TO HAVE BEEN OMITTED TO BE ACCOUNTED DUE TO IN COMPLETE NATURE OF BOOKS OF ACCOUNTS. THE ENTRY PASSED BY THE ASSESSEE CLEARLY SHOWS THAT THE ASSESSEE HAS USED ITS UNACCOUNTED MONEY ONLY TO GIVE CASH LOANS AND TO PURCHASE THE LAND. I.T.A. NO.1731/MUM/2012 12 HENCE, AS CONTENDED BY LD D.R, THERE IS A POSSIBILI TY THAT THE ASSESSEE MIGHT NOT HAVE DISCLOSED THOSE ITEMS, HAD THE SURVEY OPERATIO N WAS NOT THERE. 17. HOWEVER, THE HONBLE DELHI HIGH COURT HAS EX PRESSED THE VIEW THAT THE PENALTY CANNOT BE IMPOSED ON SURMISES, CONJECTURES AND POSSIBILITIES. IT HAS HELD THAT SECTION 271(1)(C) OF THE ACT HAS TO BE CO NSTRUED STRICTLY. IT HAS ALSO HELD THAT UNLESS IT IS FOUND THAT THERE IS ACTUALLY A CONCEALMENT OR NON-DISCLOSURE OF PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED . IF THE ASSESSEE HAS MADE A COMPLETE DISCLOSURE IN THE INCOME TAX RETURN AND OF FERED THE SURRENDERED AMOUNT FOR THE PURPOSES OF TAX, ACCORDING TO HONBL E DELHI HIGH COURT THERE IS NO CONCEALMENT OR NON-DISCLOSURE OF PARTICULARS OF INCOME. 18. THUS, IN THE VIEW OF THE HONBLE DELHI HIGH COURT, THE PROVISIONS OF SEC. 271(1)(C) SHOULD BE INTERPRETED STRICTLY. IF THE R ATIO OF THE DECISION RENDERED BY THE DELHI HIGH COURT IS APPLIED TO THE FACTS OF THE PRESENT CASE, THE ASSESSEE CANNOT BE IMPOSED PENALTY U/S 271(1)(C), SINCE IT H AS ALREADY DISCLOSED THE SURRENDERED AMOUNT AS ITS INCOME IN THE RETURN OF I NCOME. THE DECISION RENDERED BY LD CIT(A) IS IN ACCORDANCE WITH THE RAT IO LAID DOWN BY HONBLE DELHI HIGH COURT. ACCORDINGLY, WE DO NOT FIND ANY INFIRM ITY IN THE DECISION TAKEN BY LD CIT(A). 19. IN THE RESULT, THE APPEAL FILED BY THE REVE NUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COUR T ON 25TH JULY , 2014. ,- ( ./ 0 1 25TH JULY, 2014 - ' ) 2 SD SD ( /SANJAY GARG) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER . ( ) MUMBAI: 25TH JULY,2014. I.T.A. NO.1731/MUM/2012 13 . . ./ SRL , SR. PS ! '#$%& '&($ / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT. 3. ( 4* ( ) / THE CIT(A)- CONCERNED 4. ( 4* / CIT CONCERNED 5. 5 #* 6 , + 6 , . ( ) / DR, ITAT, MUMBAI CONCERNED 6. 7) / GUARD FILE. 8 ( / BY ORDER, TRUE COPY 9 (ASSTT. REGISTRAR) + 6 , . ( ) /ITAT, MUMBAI