INFOTECH 2000 (INDIA) LTD, NAVI MUMBAI V. ASST CIT CEN CIR 3(2), MUMBAI

ITA 2806/MUM/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2121 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGAR ZAIN SR
• Assessee Lawyers: DILIP V LAKHANI
• Keywords: Business income; Search and seizure; Question of law; Initiation of penalty proceedings; Revised return
• Section: 139(5); 147; 148; 132

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NOS.2805 TO 2809/MUM/2015 ASSESSMENT YEARS: 2006-07 TO 2010-11 INFOTECH 2000 (INDIA) LIMITED, ROOM NO.503, CONCORD BLDG. 5 TH FLOOR, SECTOR-11, NAVI MUMBAI-410614 / VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-3(2), (EARLIER DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-18 & 19), 402, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( !'# $ /ASSESSEE) ( % / REVENUE) P.A. NO. AABCI0106R !'# $ / ASSESSEE BY SHRI DILIP V. LAKHANI % / REVENUE BY SHRI ASGAR ZAIN SR.A.R DR & !%' ( $ ) / DATE OF HEARING : 04/08/2015 ( $ ) / DATE OF ORDER: 07/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS BUNCH OF FIVE APPEALS IS BY THE ASSESSEE FOR ASSESSMENT YEARS 2006-07 TO 2010-11 AGAINST THE RESPECTIVE IMPUGNED ORDERS ALL DATED 12/02/2015 OF THE INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 2 LD. FIRST APPELLATE AUTHORITY, MUMBAI. THE ONLY GRO UND RAISED IN THESE APPEALS PERTAINS TO CONFIRMATION OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT ON T HE RESPECTIVE AMOUNTS AS CONTAINED IN THE RESPECTIVE APPEALS. 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD SHRI DILIP V. LAKHANI, LD. COUNSEL FOR THE ASSESSEE , AND SHRI ASGAR ZAIN V.P., LD. DR. THE CRUX OF ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE IS IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT PENALTY UNDER THE IMPUGNED SECTION IS NOT LEVIABLE AS THERE WAS CLEAR UNDERSTANDING WITH THE DEPARTMENT THAT THE REVISED RETURNS ARE BEING FILED PURELY ON THE UNDERSTANDING WITH THE DEPARTMENT TO BUY PEACE, TO AVOID LITIGATION AN D NO PENAL PROCEEDINGS WILL BE INITIATED FOR WHICH OUR ATTENTION WAS INVITED BY THE LD. COUNSEL TO THE LET TER DATED 31/08/2013 (FILED WITH THE OFFICE OF THE ACIT 02/09/2013) AVAILABLE ON RECORD. PLEA WAS RAISED T HAT THE INCOME, SO OFFERED, WAS ACCEPTED BY THE DEPARTM ENT. THE LD. COUNSEL CONTENDED THAT PENALTIES WERE LEVIE D UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE AC T BY CONTENDING THAT HAD THERE BEEN NO SEARCH OR SURVEY AGAINST THE ASSESSEE, THE INCRIMINATING MATERIAL CO ULD NOT HAVE BEEN RECOVERED. IT WAS SUBMITTED THAT THE ASSESSEE FILED RETURN ON 06/09/2012 VOLUNTARILY, WHEREAS, NOTICE U/S 148 WAS ISSUED ON 20/12/2012. PLEA WAS ALSO RAISED THAT WHATEVER PAPER WERE FOUND INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 3 BELONGS TO ISPAT GROUP AND NOT TO THE ASSESSEE. REL IANCE WAS PLACED UPON THE DECISION OF THE TRIBUNAL FROM T HE INDORE BENCH (ITA NO.222 AND 223/INDORE/2012), A.M. SHAH & COMPANY VS CIT 238 ITR 415 (GUJ.) AND 31 SOT 153 (PUNE). 2.1 ON THE OTHER HAND, THE LD. DR, STRONGLY DEFENDED IMPOSITION AS WELL AS CONFIRMATION OF PENA LTIES BY CONTENDING THAT DEPARTMENT MADE SEARCH UPON ISPA T GROUP, WHEREUPON INCRIMINATING MATERIAL WAS FOUND AND THEREUPON THE ASSESSEE SURRENDERED ADDITIONAL INCOME BY FILING REVISED RETURN. IT WAS FURTHER SUB MITTED THAT IN THE ORIGINAL RETURN, FILED ON 15/11/2006, L ESSER INCOME/LOSS WAS DECLARED BY THE ASSESSEE. THE PENAL TY ORDER AS WELL AS IMPUGNED ORDERS WERE DEFENDED. RELIANCE WAS PLACED UPON THE DECISION OF UNION OF I NDIA & ORS. VS DHARMENDRA TEXTILES PROCESSORS IN (2008) 306 ITR 277 AND ITA NO.275/INDORE/2012, ORDER DATED 13/02/2013. 2.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE THE ISSUE INVOLVED IN ALL THE APPEALS IS IDENTICAL, THE APPEALS WERE HEARD TOGETHER, THEREFORE, THESE APPEALS ARE B EING DISPOSED OFF BY THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF BREVITY AND CONVENIENCE. THE FACTS, IN BRIEF, ARE THAT FOR A.Y. 2006-07, THE ASSESSEE FILED ORIGI NAL RETURN OF INCOME ON 15/11/2006, DISCLOSING LOSS OF RS.1,76,408/-. A SEARCH AND SEIZURE ACTION WAS CAR RIED INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 4 OUT IN THE CASE OF ISPAT GROUP ON 30/11/2010, WHERE IN, AS PER THE DEPARTMENT, CERTAIN INCRIMINATING DOCUME NTS WERE FOUND. PURSUANT TO THE SEARCH, THE ASSESSEE V IDE LETTER DATED 30/05/2011, OFFERED INCOME TO THE EXTE NT OF RS.10,95,76,000/-, BY FILING A REVISED RETURNS, ON ACCOUNT OF SEIZURE OF INCRIMINATING DOCUMENT AND PA ID TAXES THEREUPON ON 30 TH AND 31 ST MARCH, 2011 FOR ASSESSMENT YEARS 2005-06 TO A.Y. 2011-12. TAX OF RS.14,49,690/- WAS PAID FOR A.Y. 2006-07 ON 30/03/2011. SUBSEQUENTLY, ASSESSEE FILED ANOTHER RETURN OF INCOME ON 06/09/2012 SHOWING THEREIN TOT AL INCOME OF RS.46,22,000/- WHICH WAS BEYOND THE TIME PRESCRIBED, FOR FILING A VALID RETURN, U/S 139(5) O F THE ACT. AS PER THE REVENUE, SINCE, THERE WAS ESCAPEMEN T OF INCOME (I.E. DIFFERENCE BETWEEN THE ORIGINAL RETURN AND THE REVISED RETURN), THE ASSESSMENT FOR A.Y. 2006-0 7 WAS REOPENED U/S 147 OF THE ACT WITH THE ISSUANCE OF NO TICE U/S 148 OF THE ACT DATED 20/12/2012. THE NOTICE WA S SERVED UPON THE ASSESSEE ON 21/12/2012. THE ADDITIONAL INCOME OF RS.46,22,000/- WAS NOT OFFERED WHILE FILING THE ORIGINAL RETURN U/S 139(1) OF THE ACT. IN VIEW OF THESE FACTS, PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT WERE INITIATED WITH ISSUANCE OF NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT, WHICH WERE SERVED UPON THE ASSESSEE ON 28/03/2013. 2.4. NOW QUESTION ARISES, WHETHER THE PENALTY PROCEEDINGS WERE INITIATED WITHIN THE AMBIT OF THE INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 5 PROVISIONS OF THE ACT AND ALSO WHETHER THE ASSESSEE FILED REVISED RETURN TO BUY PEACE WITH THE DEPARTMENT. U NDER THE FACTS, STATED HEREINABOVE, ONE UNDISPUTED FACT IS CLEARLY OOZING OUT THAT THE ORIGINAL RETURNS WERE F ILED BY THE ASSESSEE ON 15/11/2006 (A.Y. 2006-07), WHEREIN, LOSS OF RS.1,76,409/- WAS DECLARED, 31/10/2007 (A.Y. 200 7- 08), DECLARING NIL INCOME, 30/09/2008 (A.Y. 2008-09 ) DECLARING LOSS OF RS.34,123/-, 28/09/2009, (A.Y. 20 09-10) DECLARING LOSS OF RS.40,608/- AND 24/09/2010 (A.Y. 2010- 11) DECLARING LOSS OF RS.60,996/-. ALL THESE RETURN S WERE PROCESSED U/S 143(1) OF THE ACT, THE TOTAL LOSS DE CLARED BY THE ASSESSEE FOR ALL THE A.YS. BEFORE US WAS TO THE TUNE OF RS.3,12,136/-, WHEREAS, AS PER THE REVISED RETURNS, POSITIVE INCOME WAS DECLARED. THE SEARCH AND SEIZUR E OPERATION WAS CARRIED OUT ON THE ISPAT GROUP OF CAS ES ON 30/11/2010. THE ASSESSEE DECLARED TOTAL INCOME TO T HE TUNE OF RS.32.36 CRORES AND PAID TAXES THEREON. 2.5. DURING HEARING OF THIS APPEAL, THE LD. COUNSE L FOR THE ASSESSEE BROUGHT TO OUR NOTICE, BOARD LETTER NO.286/2/2003-IT(INV) DT.3 RD OCTOBER, 2013 (COPY PLACED ON RECORD) ADDRESSED TO ALL THE CHIEF COMMISSIONER OF INCOME TAX, WHEREIN, THE CENTRAL BOARD HAS INSTRUCT ED THAT WHEN THERE IS A FORCEFUL CONFESSION OF UNDISCLOSED INCOME DURING SEARCH AND SEIZURE/SURVEY OPERATION AND SUCH CONFESSION IS NOT BASED ON CREDIBLE EVIDENCE/LATER RETRACTED BY THE CONCERNED ASSESSEE, SUCH ACTION SHALL BE VIE WED ADVERSELY. THE ASSESSEE VIDE LETTER DATED 31/08/20 13 INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 6 ADDRESSED TO THE ACIT (CENTRAL CIRCLE-18 AND 19) MA DE FOLLOWING SUBMISSIONS WHICH ARE NECESSARY TO BE QUO TED AS THE SAME GOES TO THE ROOT OF THE MATTER:- INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 7 'THE ABOVE OFFER OF ADDITIONAL INCOME OF RS. 32.63 CR APPROX IS MADE WITH CLEAR UNDERSTANDING THAT: - A. THAT ALLEGED EXPENDITURE AS REFERRED TO AGAINST ENT RIES APPEARI.NG IN ANNEXURE -2 SEIZED FROM DELHI OFFICE OF ISPAT INDUSTRIES LIMITED AND APPEARING IN ANNEXURE A-I TO A-7 SEIZED FROM THE RESIDENCE OF MR. T.P. SUBRAMANIAN H AVE NOT ACTUALLY BEEN INCURRED BY ANY PERSON. B. THAT NO INCOME ARISING OUT OF ABOVE SEIZED MATER IAL IS TO BE CONSIDERED AGAIN AFTER THIS OFFER. C. AS SUCH NO INCOME HAS ACTUALLY BEEN EVADED SO FAR. HOWEVER, TO BUY PEACE AND TO FULLY CO-OPERATE WITH THE DEPARTMENTS IN CONNECTION WITH THE SEARCH PROCEEDINGS, ABOVE INCOME HAVE BEEN OFFERED FOR TAXATION. D. THIS IS WITH CLEAR CUT UNDERSTANDING THAT NO MORE EXPLANATION OR ENQUIRIES WOULD BE NECESSARY BY THE DEPARTMENT AFTER THIS OFFER OF INCOME OF RS.32.63 C R APPROX. IS MADE ONLY IN CONNECTION WITH THE SAID SEIZED MAT ERIAL, IE. ANNEXURE 2 FROM DELHI OFFICE OF ISPAT INDUSTRIES LT D AND ANNEXURE A-I TO A-7 SEIZED FROM RESIDENCE OF MR. T. P. SUBRAMANIAN. E. THIS IS ALSO WITH THE UNDERSTANDING THAT NO PENAL PROCEEDINGS WOULD BE INITIATED IN CONNECTION WITH S EIZED MATERIAL REFERRED ABOVE OR RELEVANT INCOME OFFERED AS ABOVE. F. THIS ADDITIONAL INCOME OF RS. 32.63 CR. APPROX. IS OFFERED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AS RESIDUE ITEM AS OTHER' BUSINESS INCOME.' 6. THE ABOVE FACTS CLEARLY SHOW THAT OUR CLIENT HAD OF FERED THE INCOME OF RS.32.63 CRORES SPREAD OVER SEVEN ASSESSM ENT YEARS VOLUNTARILY AND CLEARLY STATING IN THE LETTER DATED 30/05/2011 THAT OUR CLIENT HAS NOT EVADED ANY INCOME AND ONLY IN ORDER TO BUY PEACE AND TO COOPERATE WITH THE DEPARTMENT, THE INCOME IS OFFERED FOR TAX. PLEASE ALSO NOTE THAT THE OFFER WA S CONDITIONAL TO THE EFFECT THAT NO PENAL PROCEEDINGS WILL BE INITIA TED AGAINST OUR CLIENT IN CONNECTION WITH THE RELEVANT INCOME. 7. THE INCOME TAX DEPARTMENT ALSO HAS ACTED SUBSEQUENT TO THE VOLUNTARY OFFER OF INCOME AND THIS FACT IS ALSO EVI DENT FROM THE FACTUAL ASPECT THAT NOTICE U/S 148 IS DATED 20/12/2 012, THE INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 8 REASONS ARE RECORDED ALSO AFTER THE DATE OF VOLUNTA RY DISCLOSURE OF INCOME. 8. WE WOULD LIKE TO CLARIFY AT THIS JUNCTURE THAT IN L ETTER DATED 30/05/2011, IT IS ONLY THE BIFURCATION OF TOTAL 32. 63 CRORES IS GIVEN AND NOWHERE IT IS STATED THAT IN EACH OF THE RESPECTIVE YEAR SUCH INCOME WAS CONCEALED OR NOT OFFERED FOR TAX. W HENEVER AN BIFURCATION IS GIVEN OF THE TOTAL INCOME WHICH IS A GREED TO BE OFFERED FOR TAX VOLUNTARILY AND SUCH BIFURCATION IS SPREAD OVER SEVEN YEARS AND FOR EACH OF THE YEAR CERTAIN AMOUNT IS OFFERED FOR TAX DOES NOT TANTAMOUNT TO THAT FOR THAT PARTIC ULAR YEAR THAT PARTICULAR INCOME IS CONCEALED OR FOR THAT PARTICUL AR INCOME INCORRECT PARTICULARS OF INCOME IS FILED. 9. WE SUBMIT THAT IN ORDER TO INITIATE PENALTY PROCEED INGS AS WELL AS LEVY THE PENALTY U/S 271(1)(C) THE ASSESSING OFF ICER HAS TO WITHOUT ANY AMBIGUITY OR WITHOUT ANY DOUBT HAS TO F IRST COME TO CONCLUSION THAT A PARTICULAR AMOUNT OF INCOME IS CONCEALED BY THE ASSESSEE FOR A SPECIFIC PARTICULAR YEAR. UNLESS & UNTIL THIS CHARGE IS FRAMED AGAINST THE ASSESSEE BASED ON THE MATERIAL O N RECORD, UNDER NO CIRCUMSTANCES IT CAN BE CONSTRUED THAT THE ASSESSEE HAS CONCEALED THE INCOME OF A PARTICULAR AMOUNT FOR A PARTICULAR ASSESSMENT YEAR. THERE SHOULD BE A DIREC T NEXUS OR EVIDENCE FOR THE QUANTUM OF THE INCOME AS WELL AS F OR THE IDENTIFICATION OF THAT PARTICULAR ASSESSMENT YEAR B EFORE A PENALTY PROCEEDINGS CAN BE INITIATED U/S 271(1)(C). ON THE FACTS OF THE CASE THE ASSESSING OFFICER HAS ACCEPTED THE BIFURCATION OF THE INCOME (EVEN THOUGH THERE IS NOT A DIRECT EVIDE NCE OF EARNING THAT PARTICULAR INCOME FOR THAT PARTICULAR ASSESSMENT YEAR) AND THE SAID INCOME WHOSE BIFURCATION WAS GIV EN VOLUNTARILY BY THE ASSESSEE VIDE LETTER DATED 30/05 /2011. THIS ALSO CLEARLY PROVES THAT OUR CLIENT HAS NOT CONCEAL ED ANY INCOME NOR HAS FILED INCORRECT PARTICULARS OF INCOME. 10. AS REGARDS INITIATION OF PENALTY PROCEEDINGS ARE CO NCERNED, PLEASE REFER TO ASSESSMENT ORDER FOR A.Y. 2007-08 W HEREIN THE LEARNED ASSESSING OFFICER IN PARA 5 HAS STATED THAT THE ASSESSEE DID NOT OFFER THE ADDITIONAL INCOME IN THE ORIGINAL RETURN FILED U/S 139(1) OF INCOME TAX ACT,1961 AND IT IS ONLY ON CONSEQUENT TO THE SEARCH & SEIZURE ACTION THE ASSESSEE HAS DISCLOSED THE UNDISCLOSED INCOME. HAD THE SEARCH & SEIZURE ACTION HAD NOT BEEN CONDUCTED, THE UNDISCLOSED INCOME WOULD NOT HA VE BEEN UNEARTHED. WE SUBMIT THAT THE BASIS OF COMING TO TH E SATISFACTION ITSELF IS ON A WRONG INTERPRETATION OF FACTS. FIRST OF ALL THERE IS NO SEARCH ON OUR CLIENT. SECONDLY EVEN DURING THE INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 9 SEARCH ON ISPAT INDUSTRIES LTD NO MATERIAL OR EVIDE NCE IS FOUND WHICH COULD LEAD TO A CONCLUSION THAT UNDISCLOSED I NCOME BELONGING TO OUR CLIENT IS FOUND. THE QUESTION OF F INDING OF THE UNDISCLOSED INCOME DOES NOT ARISE AT ALL ON THE FAC TUAL ASPECT THAT NOT A SINGLE PIECE OF PAPER BELONGING TO OUR C LIENT WAS FOUND DURING THE COURSE OF SEARCH ON ISPAT INDUSTRI ES LTD. WHEN THE FOUNDATION ON WHICH THE SATISFACTION IS ARRIVED BY THE LEARNED ASSESSING OFFICER AT THE TIME OF PASSING TH E REASSESSMENT ORDER ITSELF IS CONTRARY TO THE FACTS OF THE CASE AND ESPECIALLY WHEN PENALTY PROCEEDINGS ARE QUASI CRIMINAL PROCEEDINGS, THE ASSESSING OFFICER HAS TO FRAME A C HARGE ON THE FACTS OF THE CASE TO THE EFFECT THAT OUR CLIENT HAS CONCEALED THE INCOME OR HAS FILED INCORRECT PARTICULARS OF INCOME FOR THAT RELEVANT YEAR. WHEN NOT A SINGLE PIECE OF PAPER IS FOUND DURING THE COURSE, OF SEARCH WE RESPECTFULLY SUBMIT THAT T HE ALLEGATION MADE BY THE LEARNED ASSESSING OFFICER IN THE REASSE SSMENT ORDER THAT THE UNDISCLOSED INCOME BELONGING TO THE ASSESS EE FOR THAT PARTICULAR YEAR HAS BEEN UNEARTH. WE RESPECTFULLY S UBMIT THAT THE BASIC CONDITIONS OF ISSUE OF NOTICE U/S 271(1)( C) ITSELF IS NOT SATISFIED. IT IS AN ESTABLISHED LEGAL POSITION THAT THE ASSESSING OFFICER WHO HAS FRAMED THE ASSESSMENT HAS TO BE SAT ISFIED BY INVOKING THE CONDITIONS OF SECTION 271(1)(C) THAT T HERE IS A CONCEALMENT OF INCOME OR FILING OF INCORRECT PARTIC ULARS OF INCOME. IN A CRIMINAL PROCEEDINGS THE CHARGE HAS TO BE SPECIFIC AGAINST THE ACCUSED AS TO WHAT IS HIS DEFAULT AND T HAT TO ALSO IT HAS TO BE ESTABLISHED THAT DEFAULT IS INTENTIONAL A ND WITH THE GUILT MIND AND WITH THE PURPOSE OF DEFRAUDING THE R EVENUE. WE SUBMIT THAT BASED ON THE FACTS OF THE CASE UNDER NO CIRCUMSTANCES IT COULD BE CONSTRUED THAT OUR CLIENT HAD INTENTIONALLY NOT DISCLOSED THE INCOME RELEVANT TO A.Y. 2007-08 TO THE EXTENT OF RS.2,86,24,000/-. 11. IN SUPPORT OF THE CLAIM THAT WHEN THE ASSESSEE OFFE RS INCOME VOLUNTARY AND EVEN IF IT IS DONE IN THE SEARCH PROC EEDINGS IN THE CASE OF THE SAME ASSESSEE, THEN ALSO NO PENALTY CAN BE LEVIED. WE RELY UPON THE DECISION OF SUPREME COURT IN THE CASE OF COMMR. OF INCOME TAX VS SURESH CHANDRA MITTAL 2511TR PG.9 IN WHICH IT WAS HELD THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIE D IF TO PURCHASE PEACE AND AVOID LITIGATION WITH INCOME TAX DEPARTMENT, ASSESSEE INITIALLY FILING RETURN WITH M EAGRE INCOME AND FILING REVISED RETURN SHOWING HIGHER INCOME AFT ER SEARCH AND NOTICE FOR REOPENING ASSESSMENT. WE ALSO RELY U PON THE DECISION OF HON'BLE BANGALORE ITAT IN CASE OF VASAV I SHELTERS VS ITO BANGALORE 141 ITO PG.590 IN WHICH IT WAS HELD T HAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED IN CASE ASSESSEE FIL ED REVISED RETURN OF INCOME DISCLOSING AMOUNT SURRENDERED IN S URVEY INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 10 PROCEEDINGS. THE RATIO OF THIS DECISION IS DIRECTLY APPLICABLE ON THE FACTS OF THE CASE. 12. WE FURTHER SUBMIT THAT IN LETTER DATED 30/05/2011 T HE OFFER OF INCOME WAS A CONDITIONAL OFFER THAT NO PENAL PRO CEEDINGS WILL BE INITIATED AGAINST OUR CLIENT. WE SUBMIT THAT WHE NEVER A CONDITIONAL OFFER IS MADE BY THE ASSESSEE AND IF TH E OFFER IS ACCEPTED IN TOTALITY THEN NO PENALTY U/S 271(1)(C) CAN BE LEVIED. WE RELY UPON DECISION IN CASE OF GIRIRAJ GUPTA VS I TO (2007) 162 TAXMANN PG.81, DELHI ITAT WHEREIN THE HON'BLE COURT HAS HELD THAT ON A CONDITIONAL OFFER OF INCOME THE PENALTY U /S 271(1)(C) CANNOT BE LEVIED. THE RATIO OF THIS DECISION IS DIR ECTLY APPLICABLE ON THE FACTS OF THE CASE. 13. WE ALSO RELY UPON THE DECISION OF HON'BLE PUNJAB AN D HARYANA HIGH COURT IN CASE OF CIT VS SURAJ BAN REPO RTED IN 249 ITR PG.481 WHEREIN IT HAS BEEN HELD THAT IF THE ASS ESSEE HAS OFFERED HIGHER INCOME AND HAS GIVEN AN EXPLANATION THAT HIGHER INCOME IS OFFERED TO BUY PEACE AND AVOID LITIGATION , THEN NO PENALTY U/S 271(1)(C) CAN BE LEVIED. THE FACTS OF T HE CASE BEFORE YOU ARE MUCH STRONGER WHERE EVEN THERE IS NO EVIDEN CE OF CONCEALMENT OF INCOME AND THE INCOME IS OFFERED TO BUY PEACE AND AVOID LITIGATION. THE RATIO OF THIS DECISION IS DIRECTLY APPLICABLE ON THE FACTS OF THE CASE. 14. BASED ON ABOVE FACTUAL & LEGAL MATRIX, WE RESPECTFULLY SUBMIT THAT THE PENALTY PROCEEDINGS MAY BE DROPPED. 2.6. IF THE AFORESAID LETTER OF THE ASSESSEE AND T HE BOARD LETTER NO.286/2/2003-IT(INV) DT.3 RD OCTOBER, 2013, ARE KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THA T IN THE LETTER OF THE ASSESSEE DATED 31/08/2013 (FILED IN T HE OFFICE OF THE ACIT ON 02/09/2013), INCOME WAS REVISED, WHE REIN, THE ASSESSEE HAS SPECIFICALLY CONTENDED THAT THE AL LEGED EXPENDITURE AGAINST ENTRIES APPEARING IN ANNEXURE-2 (SEIZED FROM DELHI OFFICE OF ISPAT INDUSTRIES) AND ANNEXURE -A1 TO A7(SEIZED FROM RESIDENCE OF MR. T.P. SUBRAMANIAN) W AS ACTUALLY NOT INCURRED BY ANY PERSON/ASSESSEE . THE OFFER OF INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 11 ADDITIONAL INCOME WAS WITH CLEAR UNDERSTANDING WITH THE DEPARTMENT THAT NO MORE EXPLANATION OR ENQUIRIE S WOULD BE MADE BY THE DEPARTMENT AND FURTHER THE OFF ER IS MADE TO BUY PEACE WITH THE DEPARTMENT AND NO PENAL PROCEEDINGS WOULD BE INITIATED . IN SUCH SITUATION, IT IS INFERRED THAT ADDITIONAL INCOME WAS OFFERED AS INCO ME OF THE ASSESSEE SUBJECT TO THE CONDITIONS/UNDERSTANDING MENTIONED IN THE LETTER DATED 31/08/2013. THIS FAC TUAL MATRIX WAS NOT DENIED BY THE LD. DR. THE AFORESAID LETTER IS, EVEN OTHERWISE, SELF EXPLANATORY, THEREFORE, TH E RATIO LAID DOWN IN CIT VS SURAJ BHAN (249 ITR 481) (PUNJAB & HARYANA), WHEREIN, IT WAS HELD THAT IF THE ASSESSEE OFFER HIGHER INCOME AND GIVE AN EXPLANATION THAT HIGHER I NCOME WAS OFFERED TO BUY PEACE AND TO AVOID LITIGATION TH EN NO PENALTY U/S 271(1)(C) CAN BE LEVIED, SUPPORTS THE C ASE OF THE ASSESSEE. IDENTICAL RATIO WAS LAID DOWN BY THE HON BLE APEX COURT IN CIT VS SURESH CHANDRA MITTAL (2001) 251 ITR 9 (SC) . THE RELEVANT PORTION FROM THE ORDER IS REPRODUCED HEREUNDER:- THE ASSESSEE HAD ORIGINALLY FILED RETURNS SHOWING MEAGRE INCOME. WHEN, AFTER ACTION UNDER SECTION 132 OF THE ACT, 1961, A NOTICE UNDER SECTION 148 WAS SERVED ON HIM, HE FILED REVISED RETURNS SHOWING HIGHER INCOME. EVENTUALLY, ASSESSMENT ORDERS WERE PASSED AND THE RETURNS SUBMITTED REGULARISED UNDER SECTION 148. IN PENALTY PROCEEDINGS UNDER SECTION 271, THE ASSESSEE CLAIMED THAT THE HE HAD OFFERED ADDITIONAL INCOME TO BUY PEACE OF MIND AN INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 12 AVOID LITIGATION. PENALTY ORDERS WERE PASSED AND THE COMMISSIONER (APPEALS) CONFIRMED THE ORDERS. BUT THE APPELLATE TRIBUNAL HELD THAT THE DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND HAD SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH, AND THE PENALTY COULD NOT BE LEVIED. ON A REFERENCE, THE HIGH COURT HELD THAT NO PENALTY COULD BE LEVIED FOR CONCEALMENT (SEE [2000] 241 ITR 124). THE DEPARTMENT PREFERRED APPEALS TO THE SUPREME COURT. THE SUPREME COURT DISMISSED THE APPEALS HOLDING THAT NO INTERFERENCE WITH THE ORDER OF THE HIGH COURT WAS CALLED FOR. THE HONBLE APEX COURT AFFIRMED THE DECISION OF HONBLE M.P. HIGH COURT IN THE AFORESAID CASE (241 ITR 124), THUS, IT CAN BE SAID THAT THE AFOREMENTIONED JUDICIAL REASONING SQUARELY SUPPORTS THE CASE OF THE ASSESSE E, RATHER IT CAN BE SAID THAT IN THE PRESENT CASE, THE SEARCH ACTION WAS TAKEN ON ISPAT GROUP OF CASES AND NOT ON THE ASSESSEE, THEREFORE, THESE APPEALS OF THE ASSESSEE ARE ON MUCH STRONGER FOOTING. 2.7. NOW, WE SHALL ANALYZED CERTAIN OTHER CASES, WHEREIN, THE HONBLE COURTS HAS TAKEN A VIEW WITH R ESPECT TO PENALTY U/S 271(1)(C) OF THE ACT. IN CIT VS KIRA N & COMPANY (1996) 217 ITR 326,329 (BOMBAY), IT WAS HEL D THAT NO PENALTY COULD BE IMPOSED ON THE ASSESSEE ME RELY ON THE BASIS OF OFFER OF SETTLEMENT. THE RATIO LAI D DOWN IN AKSHAY BHANDAR VS CIT (220 ITR 325, 332,333)(GAUH) INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 13 HOLDING THAT PENALTY U/S 271(1)(C) OF THE ACT CANNO T BE SUSTAINED ON THE BASIS OF STATEMENT RECORDED IN DIF FERENT PROCEEDING, SUPPORTS THE CASE OF THE ASSESSEE. IDEN TICAL RATIO WAS LAID DOWN IN CIT VS T. ABDUL MAJID 232 IT R 50,60-61(KERALA) AND CIT VS P.K. NARAYANAN 238 ITR 905,911,912 (KERALA). THE RATIO LAID DOWN IN CIT V S BEST SUPPLY AGENCY 241 ITR 208 (MADRAS) ALSO SUPPORTS TH E CASE OF THE ASSESSEE. IT IS ALSO NOTED THAT THE HON BLE PUNJAB & HARYANA HIGH COURT IN CIT VS JASWANT RAI 142 CTR (PUNJAB), FOLLOWING CIT VS BADRILAL CHATURBHUJ 265 ITR 329 (RAJASTHAN), WHERE THERE WAS A RECORDING OF FACTS BY THE TRIBUNAL THAT THE ASSESSEE AGREED TO T HE ADDITION IN ORDER TO BUY PEACE OF MIND AND AVOID LITIGATION ON AN UNDERSTANDING AND ASSURANCE THAT N O PENALTY WILL BE LEVIED, IN SUCH A CASE, IT WAS HELD THAT IT DOES NOT GIVE RISE TO ANY QUESTION OF LAW, STRONGLY SUPPORTS THE CASE OF THE ASSESSEE. THE RATIO LAID DOWN IN CIT VS PRADIP KUMAR GANADIWAL (2002) 253 ITR 361, 3 63 (MP), WHEREIN THE ASSESSEE REVISED THE RETURN TO BUY PEACE WITH THE DEPARTMENT, THE PENALTY WAS HELD TO BE NOT LEVIABLE . THE RATIO LAID DOWN IN CIT VS RAJIV GARG, ETC. (2009) 313 ITR 256 (P &H), SLP DISMISSED BY HONBLE APEX COURT IN 2009 313 ITR (ST.) (29)(SC), WHEREIN, REVI SED RETURN WAS FILED IN WHICH ENTIRE INCOME WAS SURREND ERED WITH EXPLANATION. THE REVISED RETURN WAS REGULARIS ED BY THE REVENUE. THE TRIBUNAL WAS HELD TO BE JUSTIFIED IN HOLDING THAT PENALTY IS NOT IMPOSABLE. INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 14 2.8. WE ARE AWARE THAT THERE ARE CERTAIN DECISIONS WHICH ARE IN FAVOUR OF THE REVENUE LIKE DEEPAK CONSTRUCTION COMPANY LTD. VS CIT 293 ITR 285 (GUJ.) , D & H SECHERON ELECTRODS PVT. LTD. 281 ITR 421 (MP), CI T VS MAHABIR PRASAD BAJAJ 298 ITR 109 (JHAR.). HOWEVER, IT IS WORTH MENTIONING HERE THAT THE ASSESSEE DECLARED ADDITIONAL INCOME ON THE UNDERSTANDING WITH THE DEPARTMENT THAT NO PENAL PROCEEDINGS WILL BE INITIA TED AGAINST THE ASSESSEE AS HAS BEEN DEMONSTRATED BY TH E ASSESSEE, THEREFORE, THESE JUDICIAL PRONOUNCEMENTS MAY NOT HELP THE REVENUE. EVEN OTHERWISE, IN VIEW OF THE DE CISION, FROM HONBLE APEX COURT IN THE CASE OF CIT VS M/S VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC) THE VIEW WH ICH FAVOURS THE ASSESSEE HAS TO BE ADOPTED. THE HONBLE APEX COURT HELD AS UNDER:- THE ACCEPTANCE OF ONE OR THE OTHER INTERPRETATION SOUGHT TO BE PLACED ON S. 271(1) (A) (1) BY THE PARTIES WOULD LE AD TO SOME INCONVENIENT RESULT; BUT THE DUTY OF. THE COURT IS TO READ THE SECTION, UNDERSTAND ITS LANGUAGE AND GIVE EFFECT TO IT. IF THE LANGUAGE IS PLAIN, THE FACT THAT THE CONSEQUENCE OF GIVING EFFECT TO IT MAY LEAD TO SOME ABSURD RESULT IS NOT A FACTO R TO BE TAKEN INTO ACCOUNT IN INTERPRETING A PROVISION. IT IS FOR THE LEGISLATURE TO STEP IN AND REMOVE THE ABSURDITY. ON THE OTHER HAND , IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADO PTED. 2.9. IF THE AFORESAID JUDICIAL PRONOUNCEMENTS ARE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPE AL AND THE INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 15 LETTER OF THE ASSESSEE DATED 31/08/2013 (REPRODUCED IN PRECEDING PARA OF THIS ORDER) IT IS EVIDENT THAT TH E REVISED POSITIVE INCOME WAS FILED BY THE ASSESSEE, FIRSTLY TO BUY PEACE AND TO AVOID LITIGATION WITH THE DEPARTMENT A ND SECONDLY WITH A CLEAR UNDERSTANDING THAT NO PENAL PROCEEDINGS WILL BE INITIATED, THEREFORE, BY FOLLOW ING AFORESAID JUDICIAL PRONOUNCEMENTS, AND FURTHER THE ASSESSEE HAS ALREADY PAID TAXES TO THE TUNE OF RS.10,95,21,288/-, THE INTEREST OF REVENUE IS ALREA DY SAFEGUARDED. IN PARA 5 OF THE LETTER DATED 31/08/2 013 (REPRODUCED IN EARLIER PARA) MENTIONS ABOUT LETTERS DATED 24/05/2011 AND 30/05/2011, ADDRESSED TO THE DY. DIRECTOR OF INCOME TAX (INTELLIGENCE), NEW DELHI, S PEAKS ABOUT PERSONAL DISCUSSION AND THE CONTENTS OF THE S AME HAS BEEN REPRODUCED AT PAGE 26 OF THE PAPER BOOK WI TH RESPECT TO OFFERING ADDITIONAL INCOME TO BUY PEACE WITH THE DEPARTMENT SUBJECT TO THE CONDITIONS THAT PENAL PROCEEDINGS WILL NOT BE INITIATED WITH RESPECT TO T HE SEIZED MATERIAL. IT IS ALSO NOTED THAT THE DEPARTMENT, SUBSEQUENTLY, ACTED TO THE OFFER OF ADDITIONAL INCO ME BY ACCEPTING THE SAME AND THIS FACTUAL ASPECT IS MENTI ONED IN NOTICE UNDER SECTION 148 DATED 20/12/2012, AS THE REASONS WERE RECORDED AFTER THE DATE OF VOLUNTARILY DISCLOSURE OF INCOME. EVEN OTHERWISE, IN ORDER TO I NITIATE PROCEEDINGS AS WELL AS LEVY OF PENALTY U/S 271(1)(C ), THE ASSESSING OFFICER WITHOUT ANY AMBIGUITY OR DOUBT FI RST HAD TO COME TO THE CONCLUSION THAT PARTICULARS OF INCOM E ARE CONCEALED BY THE ASSESSEE. UNLESS AND UNTIL, THESE CHARGES INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 16 ARE FRAMED AGAINST THE ASSESSEE, BASED ON THE MATER IAL ON RECORD, UNDER NO CIRCUMSTANCES, IT CAN BE CONSTRUED THAT THE ASSESSEE CONCEALED THE INCOME OF A PARTICULAR A MOUNT FOR A PARTICULAR ASSESSMENT YEAR. THERE SHOULD BE A DIRECT NEXUS OR EVIDENCE FOR QUANTUM OF INCOME AS WELL AS THE IDENTIFICATION OF THAT PARTICULAR ASSESSMENT YEAR B EFORE PENALTY PROCEEDINGS ARE INITIATED U/S 271(1)(C) OF THE ACT. UNDER THE PRESENT FACTS, THE ASSESSING OFFICER HAS ACCEPTED THE BIFURCATION OF INCOME, WHICH WAS VOLUNTARILY SURRENDERED BY THE ASSESSEE VIDE LETTER DATED 30/05 /2011. THE FOUNDATION OF SATISFACTION, ARRIVED AT BY THE A SSESSING OFFICER, IS BASED UPON THE DISCLOSURE OF ADDITIONAL INCOME, WHICH WAS PURSUANT TO SEARCH ACTION UPON ISPAT GROU P, THUS, THE ALLEGATION ARE BASED UPON THAT GROUP AND NOWHERE IT HAS BEEN MENTIONED IN THE ASSESSMENT ORDER/PENALTY ORDER THAT THE ASSESSEE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULAR OF SUCH INCOME. EVEN OTHERWISE, IF THE AFORESAID DECISIONS ARE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEALS OF THE ASSESSEE, THERE IS A DIFFERENCE BETWEEN MERELY CLAI M OF BUYING PEACE AND FURNISHING DOCUMENTARY EVIDENCE FORTIFYING SUCH CLAIM, AS REPRODUCED EARLIER (PAGES 6 TO 10 OF THIS ORDER) IN LETTER DATED 31/08/2013 (AFFIXING THE SEAL OF ACIT CIRCLE 18 & 19 DATED 02/09/2013), EVIDENCIN G THAT THE ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE T O BUY PEACE WITH THE DEPARTMENT AND FURTHER SUBJECT TO TH E UNDERSTANDING THAT NO PENAL PROCEEDING WILL BE INIT IATED AGAINST THE ASSESSEE IN CONNECTION WITH THE SEIZED MATERIAL, INFOTECH 2000 INDIA LTD. ITA NO.2805 TO 2809/MUM/2015 17 THEREFORE, WE FIND THAT THE ASSESSEE HAS CLEARLY DEMONSTRATED ITS INTENTION/UNDERSTANDING WITH THE DEPARTMENT THAT CONDITIONAL ADDITIONAL INCOME WAS O FFERED BY THE ASSESSEE, AS DISCUSSED HEREINABOVE. IN VIEW OF THE FACTS AND THE AFORESAID DOCUMENTARY EVIDENCE, WE AR E OF THE CONSIDERED OPINION THAT IT IS A FIT CASE, WHERE THE PENALTY HAS TO BE DELETED, THUS, WE FIND MERIT IN THE APPEA LS OF THE ASSESSEE AND DIRECT THE LD. ASSESSING OFFICER TO DE LETE THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT, CONSEQUEN TLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 07/ 10/2015. SD/- SD/- ( R.C.SHARMA ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; *! DATED : 07/10/2015 F{X~{T? P.S/. !.. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1$ ( +, ) / THE CIT, MUMBAI. 4. 1$ / CIT(A)- , MUMBAI 5. 3%4/$!' , +,)+' 5 , / DR, ITAT, MUMBAI 6. 67 / GUARD FILE. ! / BY ORDER, 03,$/$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI