The ITO, Ward-12(1), Ahmedabad V. M/s. Vatan Chemicals, Ahmedabad

ITA 2869/AHD/2009

• Counselvise Citation: 286920514 RSA 2009
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-11-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 16-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIAAR
• Keywords: Business income; Income from undisclosed sources; Difference of opinion
• Section: 142(1); 133A

Judgement Text

, , . .. . . .. . , , , , !' ! !' ! !' ! !' !. .. .#$ '#$ #$ '#$ #$ '#$ #$ '#$ , %& ' %& ' %& ' %& ' % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD BEFORE SHRI G.C.GUPTA, HONBLE V.P. & SHRI A.MOHAN ALANKAMONY, HONBLE A.M.) ' '' ' . ITA NO.2869/AHD./2009 :ASSESSMENT YEAR 2004-2005 ITO, WARD-12(1), AHMEDABAD ( () /APPELLANT) -VS- M/S. VATAN CHEMICALS, AHMEDABAD ( *+() /RESPONDENT ) (PAN : AACFV 9325P) () , - % / APPELLANT BY : SHRI VINOD TANWANI, SR.D.R. *+() , - % / RESPONDENT BY : SHRI S.N.DIVATIA, A.R. $. , /0& / DATE OF HEARING : 29/11/2011 1#2 , /0& / DATE OF PRONOUNCEMENT : 27/02/2012 %3 %3 %3 %3 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE IMPUGNED ORDER OF THE LD. CIT (A)XX, AHMEDABAD IN APPEAL NO. CIT(A )-XX/8/09-10 DATED 28.7.2009 FOR THE ASSESSMENT YEAR 2004-05 PASSED UN DER SECTION 250 R.W.S. 271(1)(C) OF THE ACT IN THE CASE OF M/S. VAT AN CHEMICALS, AHMEDABAD. 2. THE SOLITARY GROUND RAISED BY THE REVENUE WAS TO THE EFFECT THAT THE LD. CIT (A) HAD ERRED IN CANCELING THE PENALTY OF R S.2,45,465/- IMPOSED BY THE LD.AO U/S 271(1)(C) OF THE ACT. 3. THE ISSUE, IN BRIEF, WAS THAT THE ASSESSEE FIRM (THE ASSESSEE HENCE-FORTH) ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF ITA NO.2869-AHD-2009 2 DETERGENT SOAP AND POWDER. THERE WAS A SURVEY U/S 133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 6.1.2004. DURING THE SURVEY, EXCESS STOCK AMOUNTING TO RS.6,84,219/- WAS UNEARTH ED AND, ACCORDING TO THE LD.AO, THE PARTNER OF THE ASSESSEE HAD AGREE D TO DISCLOSE THIS STOCK IN THE ACCOUNTS FOR THE CURRENT FINANCIAL YEAR AND PAY TAX. HOWEVER, IT WAS THE CASE OF THE LD.AO THAT THE ASSESSEE HAD NOT DIS CLOSED THE EXCESS STOCK, IN STEAD, INCLUDED THE SAME IN ITS BOOKS ON 7.1.2004 AND DECLARED STOCK AND, THUS, REFLECTED IN THE CLOSING STOCK AS ON 31.3.2004. HOWEVER, THE LD.AO, APPLYING THE RATIO OF THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF FAKIR MOHOMED HAJI HUSSAIN [247 ITR 290] AN D MADE A SEPARATE ADDITION OF RS.6,84,219/- TO THE BUSINESS INCOME OF THE ASSESSEE WITHOUT REDUCING THIS AMOUNT FROM THE CLOSING STOCK SHOWN A S ON 31.3.2004 AS PER BOOKS. SIMULTANEOUSLY INITIATED PENAL PROCEEDIN GS AND SUBSEQUENTLY IMPOSED PENALTY OF RS.2,45,465/- U/S 271(1)(C) OF T HE ACT FOR THE REASONS RECORDED THEREIN. 4. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE WITH T HE LD.CIT (A) FOR RELIEF. AFTER TAKING INTO ACCOUNT THE ASSESSEES S UBMISSIONS AND ALSO PERUSING VARIOUS CASE LAWS AS RELIED UPON BY IT, TH E LD.CIT (A) HAD OBSERVED THUS: 2.3..IT IS QUITE EVIDENT THAT THE APPELLANT FIR M HAD CONSIDERED THE EXCESS STOCK AMOUNT IN THE BOOKS OF ACCOUNT ON THE NEXT DAY I.E., ON 7.1.2004 ASS PER THE ADVICE O F THEIR C A WHO WAS IN THE KNOWLEDGE OF THE DISCLOSURE MADE BY THE PARTNER OF THE APPELLANT FIRM, BECAUSE THE CA WAS PRESENT AT THE T IME OF SURVEY IN THE PREMISES OF SISTER CONCERN VIZ., M/S. VATAN SOAP INDUSTRIES. SECONDLY, BY INCLUDING THIS STOCK IN THE BOOKS SAND CONSEQUENTLY IN THE TRADING ACCOUNT, THE FIRM HAS SHOWN BETTER P ROFITS WHICH ARE MORE BY ABOUT 1.5 LAKHS THIS YEAR AS COMPARED TO TH E PROFITS SHOWN IN THE PRECEDING YEAR. THEREFORE, THE INTENT ION OF THE APPELLANT CANNOT BE SAID TO BE MALA FIDE. THE AMOU NT OF RS.6,84,219/- CAME TO BE ADDED SEPARATELY IN THE AS SESSMENT ORDER BECAUSE OF THE DECISION IN THE CASE OF FAKIR MOHOMED HAJI ITA NO.2869-AHD-2009 3 HUSSEIN (247 ITR 290). AS SUBMITTED BY THE A R OF THE APPELLANT, THERE CAN ALWAYS BE SOME GENUINE DIFFERENCE OF OPIN ION AND THERE CAN POSSIBLY BE MORE THAN TWO OPINIONS ONE OF WHICH MIGHT BE FAVOURABLE TO THE REVENUE. BUT THE DIFFER ENCE IN THE RETURNED INCOME AND THE ASSESSED INCOME WOULD NOT I N EACH CASE BE THE RESULT OF CONCEALMENT OF PARTICULARS OR DUE TO FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. IN THE CASE OF THE APPELLANT FIRM THERE IS DIFFERENCE IN THE RETURNED INCOME AND THE ASSESSED INCOME ONLY BECAUSE OF THE DIFFERENT TREATMENT GIVEN BY THE AO. THE FACT CANNOT BE DISP UTED THAT THE APPELLANT FIRM HAD DISCLOSED ALL RELEVANT FACTS AND FIGURES IN THE ACCOUNT BOOK AS WELL AS THEY WERE ALSO FURNISHED BE FORE THE AO. THEREFORE, FOLLOWING THE RATIO OF THE ITAT, BENCH B -1, MUMBAI IN THE CASE OF MIMOSA INVESTMENT CO. (P) LTD (SUPRA), I AM INCLINED TO HOLD THAT THE APPELLANT FIRM HAD NOT CONCEALED P ARTICULARS OF ITS INCOME NOR THEY HAD FURNISHED INACCURATE PARTICULAR S THEREOF. ALL THE RELEVANT PARTICULARS WERE FURNISHED ALONG WITH THE RETURN OF INCOME AND THE ASSESSING OFFICER COULD RECALCULATE THE TOTAL INCOME OF THE FIRM IN ACCORDANCE WITH LAW AND THIS HAS RESULTED IN THE DIFFERENCE IN THE RETURNED INCOME AND THE ASSES SED INCOME IN THIS CASE. IN REPLY TO THE PENALTY SHOW-CAUSE NOTI CE, THE APPELLANT HAD CITED A FEW DECISIONS WHICH HAVE BEEN REPRODUCED IN THE PENALTY ORDER, BUT, IT APPEARS THAT THE AO H AS NOT CONSIDERED THOSE DECISIONS TO FIND OUT WHETHER AND HOW FAR THOSE DECISIONS WOULD BE APPLICABLE IN THE CASE OF THE AP PELLANT FIRM. MOREOVER, THE PENALTY PROCEEDINGS ARE INDEPENDENT P ROCEEDINGS WHERE THE MATTER HAS TO BE CONSIDERED AFRESH FROM T HE ANGLE REQUIRED BY LAW RELATING TO PENALTY AND THAT THE BU RDEN OF PROOF PLACED ON THE ASSESSEE UNDER THE EXPLANATION IS SUB JECT TO THE CONDITIONS THEREIN. IT IS A FACT THAT THE PENALTY PROCEEDINGS IN THIS CASE WERE INITIATED ONLY FOR THE DEFAULT OF FURNISH ING INACCURATE PARTICULARS OF INCOME, AS COULD BE SEEN FROM THE SA TISFACTION RECORDED IN THE ASSESSMENT ORDER. IT IS SEEN THAT T HE CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCOME IS NO T ESTABLISHED IN THIS CASE. I AM, THEREFORE, OF THE CONSIDERED OPIN ION THAT IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, PENALTY IMPOS ED UNDER SECTION 271(1)(C) CANNOT BE SAID TO BE ATTRACTED AT ALL BECAUSE IN THE GIVEN SET OF FACTS, THERE SEEMS NO ANY CONCEALM ENT OF PARTICULARS OF INCOME SAND ALSO NO ANY DEFAULT OF F URNISHING INACCURATE PARTICULARS OF INCOME. THE DIFFERENCE IN THE RETURNED INCOME AND THE ASSESSED INCOME IS ONLY ON ACCOUNT O F GENUINE DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING ITA NO.2869-AHD-2009 4 AUTHORITY. AS SUCH, I HOLD THAT THE PENALTY OF RS. 2,45,465/- IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX A CT IS NOT JUSTIFIED AND IS HEREBY CANCELLED. 5. AGITATED, THE REVENUE HAS COME UP WITH THE PRESE NT APPEAL. IT WAS THE CASE OF THE REVENUE THAT:- (I) THE CIT (A) HAD ERRED IN CANCELING THE PENALTY IMPOSED WITHOUT PROPERLY APPRECIATING THE FACTS OF THE ISSU E AND THE MATERIALS BROUGHT ON RECORD; (II) WHILE DOING SO, THE CIT (A) ERRED IN HOLDING T HAT THE DIFFERENCE IN THE RETURNED AND THE ASSESSED INCOME WAS ONLY ON ACCOUNT OF GENUINE DIFFERENCE OF OPINION BETWEEN THE ASSESS EE AND THE ASSESSING AUTHORITY WITHOUT APPRECIATING THE VE RY FACT THAT THE ADDITION OF RS.6,84,219/- WAS ON ACCOUNT OF EXC ESS STOCK DETECTED AS A RESULT OF SURVEY CARRIED OUT IN THE ASSESSEES PREMISES; (III) WITHOUT APPRECIATING THE RATIO LAID DOWN IN T HE DECISION IN THE CASE OF MIMOSA INVESTMENT CO. PVT. LTD CITED WHICH HAD NO APPLICATION IN THE CASE OF THE PRESENT ASSESSEE, TH E CIT (A) HAD ERRED IN CANCELING THE PENALTY IMPOSED; AND (IV) THE DELHI HIGH COURT IN ITS RULING IN THE CASE OF CIT V. SOHAN SINGH (244 ITR 177) HAD MADE QUITE CLEAR THAT THE A SSESSEE MUST OFFER AN EXPLANATION TO SHOW THAT THERE WAS NO FRAUD, GROSS OR WILLFUL NEGLIGENCE INVOLVED IN RETURNING T HE CORRECT INCOME IN HIS RETURN AND IT WAS NOT SUFFICIENT IF A NY FANCIFUL OR TOTALLY UNTENABLE EXPLANATION OFFERED. THIS RULING OF THE COURT HAS NOT BEEN KEPT IN VIEW BY THE CIT (A) WHILE DECI DING THE ASSESSEES APPEAL. ITA NO.2869-AHD-2009 5 5.1. IN CONCLUSION, THE REVENUE HAD PLACED STRONG R ELIANCE ON THE RULING OF THE HONBLE APEX COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS LTD V. CIT REPORTED IN 306 ITR 227 (SC). 5.2. ON THE OTHER HAND, THE LD. A R HAD VEHEMENTLY CONTESTED THE CLAIM OF LD. D R ON THE ISSUE. IT WAS THE STAND OF THE L D A R THAT THE PENAL PROCEEDINGS WERE INITIATED AS PER THE ASSESSMENT OR DER ONLY FOR THE DEFAULT OF FURNISHING INACCURATE PARTICULARS OF INC OME WHILE ON THE BASIS OF THE ABOVE FACT, IT WAS EVIDENT THAT THE ASSESSEE HA D FURNISHED ALL THE REQUIRED PARTICULARS IN THE ACCOUNT SUBMITTED IN IT S RETURN OF INCOME. IT WAS, FURTHER, ALLEGED BY THE AR THAT THE ASSESSMENT WAS FRAMED ONLY ON THE BASIS OF SURVEY PROCEEDINGS AND IN PARTICULAR, THE ADMISSION OF EXCESS STOCK FOUND DURING THE SURVEY THAT TOO BEFORE THE E ND OF THE CURRENT ACCOUNTING YEAR. THEREFORE, IT WAS ARGUED, IT CANN OT BE DISPUTED THAT THE ASSESSEE HAD NOT TAKEN INTO CONSIDERATION THE TOTAL STOCK FOUND DURING SURVEY WHICH HAS DULY BEEN REFLECTED IN THE CLOSING STOCK AND MORE PROFIT SHOWN AS ON 31.3.2004. IT WAS, FURTHER, STRESSED T HAT ACCORDING TO THE PRACTICE FOLLOWED BY THE ASSESSEE, THE PHYSICAL STO CK OF GOODS WOULD HAVE BEEN TAKEN AT THE END OF THE ACCOUNTING PERIOD I.E., 31.3.2004 WHEN THE BOOKS WERE TO BE CLOSED EVEN IF THERE WAS NO SU RVEY IN THE PREMISES OF THE ASSESSEE. IN CONCLUSION, REFERENCE OF THIS B ENCH WAS DRAWN TO THE BOARDS CIRCULAR F. NO.286/2/2003/IT/(IND) DATED 10 .3.2003 WHEREIN ITS SUB-ORDINATE OFFICERS WERE INSTRUCTED TO THE EFFECT THAT FROM THE FORE-GOING INSTRUCTION, IT IS CLEAR THAT IT WOULD NOT BE OPEN FOR THE AO TO MAKE AN ASSESSMENT WRONGLY RELYI NG ON CONFESSIONAL STATEMENT OF THE ASSESSEE. THE AO WOU LD BE BOUND TO MAKE AN ASSESSMENT ONLY ON THE BASIS OF EVIDENCE AND MATERIALS GATHERED DURING SURVEY/SEARCH OPERATIONS . ITA NO.2869-AHD-2009 6 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF EITHER PARTY, DULY PERUSED THE RELEVANT CASE RECORDS AND ALSO THE CASE LAWS ON WHICH THE RIVAL PARTIES HAVE PLACED THEIR STRONG RELIANCE. 6.1. AT THE OUTSET, WE WOULD LIKE TO REITERATE THAT THE ASSESSEE HAD CONSIDERED THE VALUE OF EXCESS STOCK AND ACCOUNTED FOR THE SAME IN ITS BOOKS OF ACCOUNT. BY INCLUDING THIS STOCK IN ITS B OOKS OF ACCOUNT AND CONSEQUENTLY IN ITS TRADING ACCOUNT, THE ASSESSEE H AD SHOWN ENHANCED PROFITS WHICH WAS MORE THAN RS.1.5 LAKHS CORRESPOND ING TO THE PROFIT RETURNED IN THE PRECEDING YEAR. THIS IMPLICITLY EXH IBITS THE ASSESSEES BONA-FIDE INTENTION. TAKING REFUGE IN THE RULING OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HUSSAIN CITED SUPRA, THE AO ADDED THE AMOUNT OF RS.6,84,219/- TO ITS TOTAL INCO ME WHICH HAS BEEN OBJECTED TO BY THE ASSESSEE IN ITS QUANTUM APPEAL. THE QUANTUM APPEAL OF THE ASSESSEE, HAD, HOWEVER, BEEN TURNED DOWN BY THE CIT (A) WHO HAPPENED TO BE THE SAME FIRST APPELLATE AUTHORITY I N ALLOWING THE PENALTY APPEAL OF THE ASSESSEE UNDER CONSIDERATION IN ITS F AVOUR. THIS CLEARLY VINDICATES THE ASSESSEES CONTENTION THAT THE PENAL PROCEEDINGS ARE DIFFERENT, DISTINCT AND INDEPENDENT FROM THAT OF TH E ASSESSMENT PROCEEDINGS. AS RIGHTLY POINTED OUT, THE DIFFERENC E IN THE RETURNED AND ASSESSED INCOME WOULD NOT BE THE RESULT OF CONCEALM ENT OF PARTICULARS OR DUE TO FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THERE WAS DIFFERENCE IN THE RETURNED AND ASSESSED INCOME IN THE CASE OF THE ASSESSEE ONLY DUE TO DIFFERENT TREATMENT METED OUT BY THE AO. AS A MATTER OF FACT, THE ASSESSEE HAD DISCLOSED ALL RELE VANT MATERIALS AND FIGURES IN ITS BOOKS OF ACCOUNT AS WELL AS DETAILS FURNISHED BEFORE THE AO. WHEN THE ASSESSEE HAD FURNISHED ALL RELEVANT PARTIC ULARS IN ITS POSSESSION AND WITH REGARD TO THE BOOKS OF ACCOUNT MAINTAINED, IT CANNOT BE CASTIGATED THAT THE ASSESSEE HAD WITH MALA-FIDE I NTENTION FURNISHED ITA NO.2869-AHD-2009 7 INACCURATE PARTICULARS OF ITS INCOME. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS AND VERIFICATION OF DETAILS FURNISHED B Y THE ASSESSEE, THE AO COULD RECALCULATE THE TOTAL INCOME OF AN ASSESSEE W HICH MAY RESULT IN THE DIFFERENCE IN THE RETURNED AND ASSESSED INCOME WHIC H CANNOT BE ATTRIBUTED THAT THE ASSESSEE HAD CONCEDED THE PARTI CULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME WHICH AT TRACTS THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 6.2. FURTHER, IN COMPLIANCE TO A SPECIFIC QUERY OF THIS BENCH (ON AN EARLIER OCCASION) TO FURNISH A COPY OF ENTRY, IF AN Y, RECORDING THE DISCLOSURE OF ADDITIONAL STOCK OF RS.6,84,219/- DETECTED DURIN G THE COURSE OF SURVEY, THE LD. A R FURNISHED A NOTE ALONG WITH COPY OF ENT RY, ACCORDING TO WHICH, RELEVANT ENTRY WAS PASSED IN ITS REGULAR BOOKS OF ACCOUNT WHEREBY THE CLOSING STOCK AS ON 31.3.2004 WAS SHOWN AT RS.8,90, 215/- WITH CORRESPONDING CREDIT TO THE SALES ACCOUNT [SOURCE: NOTE DT.16.8.2011 ALONG WITH ITS ENCLOSURES). THUS, THE ASSESSEE HAD INCREASED THE QUANTITY OF THE RELEVANT ITEMS OF STOCK FOUND IN EXCESS DURI NG SURVEY AND AT THE END OF THE YEAR, THE CLOSING STOCK INCLUDED THE ADD ITIONAL STOCK AS ON 31.3.2004 AFTER CONSUMPTION WHICH TOOK PLACE AFTER THE SURVEY. THE RELEVANT QUANTITY RECORD WAS GIVEN AS PART OF AUDIT ED ANNUAL ACCOUNTS WHICH EXHIBITS THAT THE ITEMS FOUND IN EXCESS DURIN G SURVEY, THE CORRESPONDING QUANTITY HAS BEEN INCREASED AND THE C LOSING STOCK REMAINING AFTER THE CONSUMPTION WAS SHOWN. THUS, TH E VALUE OF CLOSING STOCK ADMITTED AT RS.8,90,215/- WAS INCLUSIVE OF DE CLARED QUANTITY HELD IN STOCK. AT A GLIMPSE OF FORM 3CD OF THE ASSESSEE, I T WAS OBSERVED THAT THE ADDITIONAL STOCK QUANTITY-WISE WAS DECLARED AND RECORDED IN ITS BOOKS OF ACCOUNT ON 7.1.2004 [COURTESY: PAGES 11 & 12 OF 3CD]. ITA NO.2869-AHD-2009 8 6.3. FOR RECORDS, IT IS PERTINENT TO MENTION THAT T HE PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER VIDE HIS IMPUGNED ORDER DATED 25.3.2009 WHEREAS THE APPROVAL LETTER OF THE ADDL. COMMISSIO NER OF INCOME-TAX, RANGE 12, AHMEDABAD HAS BEEN DATED 26.3.2009 [REFER: PAGE 8 OF THE PENALTY ORDER] . THIS CLEARLY VITIATES THE VERY CONCEPT OF THE PROVISIONS OF S. 274(2)(A) OF THE ACT. 6.4. LET US NOW TURN OUR ATTENTION TOWARDS THE JUDI CIAL VIEW ON A SIMILAR ISSUE. (1) DCIT V. DR. SATISH B GUPTA (2010) 42 SOT 48 (AH D) : THE ISSUE BEFORE THE JURISDICTIONAL EARLIER BENCH W AS, IN BRIEF, THAT A SURVEY U/S 133A WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE WHO WAS A PRACTICING DOCTOR, DURING THE COURSE OF WHICH HE DECLARED UNACCOUNTED INCOME OF RS.32.84 LAKHS. THEREUPON, T HE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.37.57 LAKHS WHEREIN APPARENTLY THE ASSESSEE DISCLOSED UNACCOUNTED INCOME OF RS.32. 84 LAKHS AS WAS DECLARED BY HIM DURING THE COURSE OF SURVEY. THE A SSESSMENT WAS FINALLY COMPLETED ON AN INCOME OF RS.38.12 LAKHS AFTER MAKI NG MINOR ADDITIONS. THE ASSESSING OFFICER ALSO LEVIED PENALTY U/S 271(1 )(C) IN RESPECT OF THE SUM OF RS.32.84 LAKHS DECLARED DURING THE COURSE OF SURVEY. ON APPEAL, THE COMMISSIONER (A) SET ASIDE THE PENALTY ORDER. ON REVENUES APPEAL, IT HAS BEEN HELD THAT: THE INITIAL PHRASE USED IN SECTION 271(1)(C) SUGGE STS THAT THE ASSESSING OFFICER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT HAS TO FIND THAT THE ASSESSEE HAS CONCEALED THE PAR TICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF S UCH INCOME. IN FACT, THE PROCEEDINGS AGAINST THE ASSESSEE WOULD ST ART ONLY AFTER RETURN OF INCOME IS FILED BY THE ASSESSEE OR AFTER ISSUANCE OF A STATUTORY NOTICE AGAINST HIM SUCH AS UNDER SECTION 142(1) OR UNDER SECTION 143(2). CARRYING OUT A SURVEY UNDER SECTION 133A IS NOT AT ALL ANY PROCEEDING. PROCEEDINGS AS USED IN SECTION 271(1)(C) ARE STATUTORY PROCEEDINGS INITIATED AGAIN ST THE ASSESSEE ITA NO.2869-AHD-2009 9 EITHER BY THE ISSUANCE OF A STATUTORY NOTICE OR AFT ER FILING OF RETURN OF INCOME FURTHER, CLAUSE (C) OF SECTION 271(1) MENTIONS AS CONCEALEDOR FURNISHED. THEY ARE THE WORDS IN THE PAST TENSE I NDICATING THAT THE ASSESSEE HAS COMMITTED CERTAIN ACT ON WHICH PEN ALTY IS LEVIABLE. THUS, THE ACT OF CONCEALMENT OR FURNISHI NG OF INACCURATE PARTICULARS SHOULD BE VIEWED BY THE ASSESSING OFFIC ER AS DONE WITH RESPECT TO RETURN OF INCOME. THE OMISSION OR COMMISSION OR CONTUMACIOUS CONDUCT HAS TO BE VIEWED FROM THE RETU RN OF INCOME AND IF CERTAIN THING HAS NOT BEEN DISCLOSED OR HAS NOT BEEN FURNISHED THEREIN ONLY, THEN IT CAN BE SAID TH AT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF HIS INCOME. PRIOR TO THI S THE ASSESSEE HAD NOT DONE ANY CONTUMACIOUS CONDUCT ON WHICH PENA LTY COULD BE LEVIED. MERELY BECAUSE CERTAIN RECEIPTS WERE NO T RECORDED IN THE BOOKS OF ACCOUNT OR RECEIPTS WERE NOT ISSUED TO THE PARTIES, BUT INCOME THERE-FROM WAS FINALLY DECLARED IN THE R ETURN OF INCOME, THEN THERE WOULD BE NO CONTUMACIOUS CONDUCT . FOR NOT MAINTAINING BOOKS OF ACCOUNT OR NOT ISSUING RECEIPT S TO THE PARTIES FOR THE AMOUNT RECEIVED BY THE ASSESSEE, THE BOOKS, AT THE BEST, CAN BE REJECTED BY INVOKING THE PROVISIONS OF SECTI ON145(3) AND INCOME CAN BE ESTIMATED IN ACCORDANCE WITH SECTION 144. BUT WHERE THE ASSESSING OFFICER HAD ACCEPTED THE INCOME DECLARED IN THE RETURN OF INCOME THEN THE ASSESSEE COULD NOT BE CHARGED FOR ANY CONTUMACIOUS CONDUCT. (2) CIT V. SAS PHARMACEUTICALS (2011) 11 TAXMANN.CO M 207 (DEL) : IT WAS HELD BY THE HONBLE COURT THAT: OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLESS THE CO NDITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAM BIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING S URVEY, MIGHT BE, IT WOULD HAVE NOT DISCLOSED THE INCOME, BUT, FO R THE SAID SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND POSSIBILITIES. SECTION 271(1)(C) H AS 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. IN THE INSTANT CASE, TH ERE WAS NO SUCH CONCEALMENT OR NON-DISCLOSURE AS THE ASSESSEE HAD MADE A ITA NO.2869-AHD-2009 10 COMPLETE DISCLOSURE IN THE INCOME-TAX RETURN AND OF FERED THE SURRENDERED AMOUNT FOR THE PURPOSE OF TAX. 6.5. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES O F THE ISSUE AND IN CONFORMITY WITH THE FINDINGS OF THE JUDICIARY CITED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT (A) WAS JUSTIFIED IN C ANCELING THE PENALTY IMPOSED FOR THE REASONS RECORDED IN HIS IMPUGNED OR DER WHICH WARRANTS NO INTERVENTION OF THIS BENCH. IT IS ORDERED ACCOR DINGLY. 6.6. BEFORE PARTING WITH, WE WOULD LIKE REITERATE T HAT WITH DUE RESPECTS WE HAVE PERUSED THE CASE LAW ON WHICH THE LD. D R H AD PLACED STRONG RELIANCE [306 ITR 227 (SC)] AND OF THE CONSIDERED V IEW THAT THE RULING OF THE HONBLE COURT WAS QUITE DISTINGUISHABLE AND, TH US, IT CANNOT COME TO THE RESCUE OF THE REVENUE IN THE PRESENT CASE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. 4 %3 , 1#2 5$'6 27 / 02 /201 2 # 7 , . SD/- SD/- (G.C.GUPTA) (A.MOHAN ALANKAMONY) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 27/02/2012 %3 %3 %3 %3 , ,, , * ** */8 /8 /8 /8 9%82/6 9%82/6 9%82/6 9%82/6- -- - 1. () 2. *+() 3. '' / > 4. >- - 5. 8A */$ , , B 6. D E4 %3 %, / ' , B TALUKDAR/ SR. P.S. ITA NO.2869-AHD-2009 11