Suresh N. Jain, Pune V. Deputy Commssioner of Income-tax,

ITA 354/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7263 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Revised return
• Section: 143(3); 142(1); 133A; 153A; 27; 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. 353 /P U N/20 1 5 / ASSESSMENT YEAR: 20 06 - 07 SHRI ANAND SURESH JAIN, 59, NEW BAZAR, KIRKEE, KIRKEE, PUNE - 411003 . / APPELLANT PAN: AAQPJ5728A VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE . / RESPONDENT . / ITA NO. 354 /P U N/201 5 . / ITA NO. 354 /P U N/201 5 / ASSESSMENT YEAR: 20 06 - 07 SHRI SURESH N. JAIN, 59, NEW BAZAR, KIRKEE, PUNE - 411003 . / APPELLANT PAN: AAQPJ5725P VS. THE DY. COMMISSIONER OF INCOME TAX, C ENTRAL CIRCLE 2(2), PUNE . / RESPONDENT / APPELLANT BY : SHRI SUHAS BORA / RESPOND ENT BY : SHRI P.L. KUREEL / DATE OF HEARING : 04 . 0 1 .201 7 / DATE OF PRONOUN CEMENT: 13 . 0 1 .201 7 DATE OF HEARING : 04 . 0 1 .201 7 DATE OF PRONOUN CEMENT: 13 . 0 1 .201 7 ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 2 / ORDER / ORDER PER SUSHMA CHOWLA, JM: BOTH THE APPEAL S FILED BY RELATED ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT( A ) - 12 , PUNE , BOTH DATED 1 2 . 0 1 .201 5 RELATING TO ASSESSMENT YEAR 20 06 - 07 AGAINST PENALTY LEVIED UNDER SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . SHORT THE ACT) . 2. BOTH THE APPEALS FILED BY RELATED ASSESSEE ON IDENTICAL ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE T O THE FACTS AND ISSUE IN ITA NO.353/PUN/2015 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE IN ITA NO.353/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF 3. THE ASSESSEE IN ITA NO.353/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 . THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO AMOUNTING TO R S .74998/ - U /S 271(1)(C) OF THE ACT FOR A.Y.2006 - 07 ON THE GROUND THAT RETURN WAS NOT FILED BY THE APPELLANT WITHIN THE DUE DATE U/S 139(1) WITHOUT APPRECIATING THE FACTS OF THE CASE AND SUBMISSIONS OF THE APPELLANT. 2 . THE LEARNED CIT (APPEALS) ERRED IN NOT APPRECIA TING THE CONTENTION OF THE APPELLANT THAT RETURN OF INCOME FILED BY THE APPELLANT IS NOT IN RESPONSE TO NOTICE U/S 153A BUT A REGULAR RETURN WHERE IN CORRECT INCOME IS DISCLOSED AND MERELY REJECTED THE CONTENTION WITHOUT PROVING IT TO BE FALSE. 3 . THE LE ARNED CIT (APPEALS) ERRED IN NOT APPRECIATING THE FOLLOWING IMPORTANT FACTS AND THE SUBMISSIONS OF THE APPELLANT THAT: A . APPELLANT HAS DISCLOSED THE CORRECT INCOME IN THE RETURN OF INCOME FILED RELATING TO YEAR IN WHICH SURVEY U/SEC. 133A IS CARRIED OUT AT THE BUSINESS PREMISES. B . THE DISCLOSURE MADE ON ACCOUNT OF ERRORS AND OMISSION AMOUNTING TO RS.9502.00 IS NOT MADE BECAUSE NO SUCH ERRORS AND OMISSION WERE FOUND. C . THE LEARNED A.O. HAS NOT FOUND THAT THE EXPLANATION OF THE ASSESSEE IS FALSE. D . THE DEC LARATION OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY HAS BEEN OFFERED BY THE APPELLANT. BEEN OFFERED BY THE APPELLANT. E . THE APPELLANT HAS FURNISHED THE EXPLANATION IN RESPECT OF THE NON DISCLOSURE OF INCOME DECLARED ON ACCOUNT OF ERRORS AND OMISSION. ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 3 F . THERE IS NOTHING TO SUGGEST I N THE PENALTY ORDER THAT THE EXPLANATION FURNISHED BY THE APPELLANT WAS FALSE. FURNISHED BY THE APPELLANT WAS FALSE. G . NON SUBSTANTIATION OF EXPLANATION FURNISHED COULD LEAD TO ADDITION BUT CANNOT BE THE SAID JUSTIFY THE IMPOSITION OF PENALTY. H . IN THE YEAR OF SURVEY PROVISIONS OF SEC. 271(1)(C ) AND EXPLANATION 5 OF THE ACT, ARE NOT APPLICABLE TO THE CASE OF APPELLANT. 4. THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR IMMUNITY AS PROVIDED IN EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. 4. THE ISSUE ARISIN G IN BOTH THE APPEALS IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. SECTION 271(1)(C) OF THE ACT. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS AN INDIVIDUAL AND WAS CARRYING ON THE BUSINESS OF JEWELLERY UNDER THE NAME AND STYLE OF M/S. VARDHAMAN JEWELLERS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME ON 25.09.2006 DECLARING TOTAL INCOME OF RS. 5,34,270/ - . SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF ASSESSEE ON 27.04.2005 AND SEAR CH ACTION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, THE ASSESSEE IN ORDER TO BUY PEACE OF MIND AND TO AVOID LITIGATION HAD OFFERED ADDITIONAL INCOME AS UNDER: - A) VALUE OF EXCESS STOCK OF GOLD RS. 44,5 00/ - B) VALUE OF EXCESS STOCK OF SILVER RS. 1,85,998/ - C) ON ACCOUNT OF ERRORS AND OMISSIONS RS. 9,502/ - TOTAL AMOUNT OF INCOME AGREED RS.2,40,000/ - 6. THE ASSESSEE HAD INCLUDED THE AFORESAID ADDITIONAL INCOME IN ITS RETURN OF 6. THE ASSESSEE HAD INCLUDED THE AFORESAID ADDITIONAL INCOME IN ITS RETURN OF INCOME ON ACCOUNT OF EXCESS STOCK OF GOLD AND SILVER BUT HAD NOT INCLUDED THE INCOME OF RS. 9,502/ - ON ACCOUNT OF ERRORS AND OMISSIONS. THE ASSESSING OFFICER HAD ACCEPTED THE INCOME OFFERED BY THE ASSESSEE BUT HAD MADE FURTHER ADDITION OF RS. 9,502/ - . THE ASSESSING OFFICER DIRECTED ISSUE OF NOTICE UNDER SECTION 274 OF THE ACT INITIATING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT IMMUNITY PROVIDED IN PENALTY PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT IMMUNITY PROVIDED IN CLAUSES (1) (2) TO EXPLANATION 5 TO SECTION 27 1(1)(C) OF THE ACT WAS NOT AVAILABLE TO ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 4 THE ASSESSEE IN RESPECT OF ADDITIONS MADE. THE ASSESSING OFFICER NOTED TWO THINGS AS TO WHETHER THE STOCK WHICH WAS FOUND TO BE EXCESSIVE DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT, WHETHER THE ASSESS EE COULD DECLARE IT AND WHETHER THE IMMUNITY PROVIDED UNDER SECTION 132(4) OF THE ACT COULD BE ENJOYED BY HIM AND SECONDLY, IF IT IS ASSUMED THAT THE IMMUNITY WAS AVAILABLE, WHETHER THE RETURN WHICH WAS NOT FILED WITHIN TIME PRESCRIBED UNDER SECTION 139(1) OF THE ACT, COULD SAVE THE ASSESSEE FROM THE CLUTCHES OF PENALTY. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE EXPLAINED THAT THE EXCESS STOCK WAS FOUND FROM HIS POSSESSION DURING THE COURSE OF SURVEY AND THE SAID AMOUNT WAS OFFERED AS ADDITIONAL INCO ME AND THE ASSESSEE PAID THE TAXES THEREON. THE ASSESSING OFFICER NOTED THAT THOUGH THE ASSESSEE HAD INCLUDED EXCESS STOCK OF GOLD AND SILVER BUT HAD NOT INCLUDED THE ADDITION ON ACCOUNT OF ERRORS AND OMISSIONS OF RS.9,502/ - IN ITS RETURN OF INCOME. SINC E HE HAD NOT OFFERED THE SAID INCOME, THE ASSESSING OFFICER HELD THE ASSESSEE LIABLE FOR PENALTY ON ADDITION OF RS.9,502/ - . SIMILARLY, IN THE ABSENCE OF ANY IMMUNITY PRESCRIBED IN EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT, THE INCOME OF RS.2,30,498/ - REPRESENTING THE EXCESS STOCK OF GOLD AND SILVER WAS TREATED AS CONCEALED INCOME, ON WHICH TAX WAS SOUGHT TO BE EVADED. THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CONCEALED THE PARTICULARS OF INCOME AND EVADED THE TAX ON ADDITION OF RS.2,49,495/ - AND PENALTY OF RS.74,998/ - WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 7. THE CIT(A) UPHELD THE LEVY OF PENALTY ON TWO COUNTS I.E. FIRST OF ALL, THE ASSESSEE HAD FAILED TO FURNISH THE RETURN OF INCOME WITHIN TIME PRESCRIBED UNDER SECTION 139(1) OF THE ACT . THE CIT(A) NOTED THAT SINCE THE ASSESSMENT ORDER WAS NOT PASSED UNDER SECTION 153A OF THE ACT, EXPLANATION 3 WAS NOT APPLICABLE TO THE FACTS OF THE CASE. THE CIT(A) FURTHER HELD THAT EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT WAS APPLICABLE AS THE A SSE T S W ERE FOUND DURING THE COURSE OF SEARCH, ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 5 WHEREIN HE WAS FOUND TO BE THE OWNER OF UNACCOUNTED GOLD AND SILVER. THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. 8. THE ASSESSEE IS IN APPEAL AGAINST T HE ORDER OF CIT(A). 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ADDITIONAL INCOME WAS OFFERED CONSEQUENT TO SURVEY ACTION UNDER SECTION 133A OF THE ACT ON THE BUSINESS PREMISES OF ASSESSEE ON 27.04.2005. HE ADMITTED THA T THOUGH SEARCH WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF ASSESSEE BUT THE DECLARATION WAS IN RESPECT OF EXCESS STOCK IN GOLD AND SILVER, WHICH WAS FOUND FROM THE BUSINESS PREMISES OF ASSESSEE. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF JEWELLERY. IN RESPECT OF ADDITION ON ACCOUNT OF ERRORS AND OMISSIONS OF RS.9,502/ - , THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AND OMISSIONS OF RS.9,502/ - , THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD NOT OFFERED THE SAID INCOME , SINCE NO SUCH ERRORS WERE NOTICED BY HIM. HE ADMITTED THAT THE A SSESSEE HAS ACCEPTED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.9,502/ - . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT THE RETURN OF INCOME WAS FILED NOT IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT, BUT WAS REGULAR RETURN IN WHICH THE ASSESSEE HAD INCLUDED THE DISCLOSURE MADE DURING THE COURSE OF SURVEY. THE SAID RETURN WAS FILED IN RESPONSE TO NOTICE UNDER SECTION 142(1) OF THE ACT. HE FURTHER STRESSED THAT EXPLANATION 5 TO SECTION 271(1)(C) OF THE AC T WAS NOT ATTRACTED AS THE AMOUNT WAS DISCLOSED DURING THE COURSE OF SURVEY AND NOT DURING THE COURSE OF SEARCH. HE PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN NANDKISHOR TULSIDAS KATORE VS. ACIT IN ITA NOS.2174 TO 2180/PN/2014, RELATING TO ASSESSMENT YEAR 2002 - 03 TO 2008 - 09 , ORDER DATED 14.12.2016 . ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 6 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISI NG 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 SURVEY, THE ASSESSEE DECLARED CERTAIN ADDITIONAL INCOME ON ACCOUNT OF EXCESS ST OCK 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 PROCEEDINGS UNDER SECTION 153A OF THE ACT ARE TO BE CARRIED OUT IN THE YEAR OF SEAR CH. THE ASSESSEE FILED THE 153A OF THE ACT ARE TO BE CARRIED OUT IN THE YEAR OF SEAR CH. 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 . T HE ASSESSEE HAD INCLUDED THE ADDITIONAL INCOME IN HIS HANDS IN THE SAID RETURN OF INCOME AND THE ASSESSING OFFICER HAD ACCEPTED THE SAID INCOME OFFERED BY THE ASSESSEE ALONG WITH CERTAIN ADDITIONS I.E. ON ACCOUNT O F 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 INCOME AS PART OF ITS ADDITIONAL INCOME BY FILING THE RETURN OF INCOME, THOUGH T HE 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 ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 7 ATTRACTED. THE ANSWER TO THE SAID QUESTION IS NO, SINCE IT IS NOT THE CASE OF SEARCH UNDER WHICH THE ASSESSEE HAD OFFERED 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 I S 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 A S 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 COURSE OF SURVEY AND WHETHER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT IS A TTRACTED 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 ASSESSEE I.E. SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE RESIDEN CE 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 RECEIPTS, ROUGH PAGES, NOTE BOOKS, DIARIES, RECEIPT BOOKS, ETC. WERE FOUND. THE ASSESSEE ADMITTED THE FACT OF SUPPRESSION OF RECEIPTS FROM OPD, IPD, ENDOSCOPY CHARGES, ETC. THE ASSESSEE HAS DECLARED SUPPRESSED RECEIPTS FOR ASSESSMENT YEARS 2003 - 04 TO 2008 - 09 ON ESTIMATE BASIS AS UNDER: - RECEIPTS FROM OPD FOR A.Y. 2003 - 04 TO 2008 - 0 9 - 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/ - ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 8 12. FURTHER, FROM THE RESIDENCE OF ASSESSEE, CERTAIN RECEIPTS OF INVESTMENTS / EXPENDITURE WERE FOUND DURING T HE 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 RESIDENCE OF ASSESSEE DURING THE COURSE OF SEARCH BUT IT RELATED BACK TO THE SU RVEY 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 UNDISCLOSED INVESTMENT IN INSURANCE POLICIES AND MUTUAL FUNDS, RS.6 LAKHS FOR ASSESSME NT 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 FILED UNDER SECTION 148 OF THE ACT FOR ASSESSMENT YEAR 2002 - 03 AND UNDER SECTI ON 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 INC OME 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 - 2,36,714 08/01/2004 5,71,710 6,09,657 3,72,947 1,17,479 2003 - 04 2,36,714 08/01/2004 5,71,710 6,09,657 3,72,947 1,17,479 2 004 - 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 WHETHER THE SAME IS LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST ISSUE RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IS THAT IN CAS E ANY INCOME IS DECLARED PURSUANT TO SURVEY, THEN THE SAME IS NOT COVERED UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. WE FIND MERIT IN THE STAND OF ASSESSEE IN THIS REGARD, WHEREIN EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT CATEGORICALLY PRO VIDES THAT THE SAME IS APPLICABLE IN CASE OF SEARCHES. HOWEVER, THE STATUTE IS SILENT ABOUT THE ADDITIONAL INCOME OFFERED BY THE PERSONS IN THE REVISED RETURN OF INCOME FILED PURSUANT TO SURVEY PROCEEDINGS. THE ADDITIONAL INCOME WAS DECLARED DURING THE S URVEY AND IF OFFERED BY THE PERSON IN THE REVISED RETURN OF INCOME FILED THEREAFTER, THEN THE SAME DOES NOT PARTAKE THE NATURE OF ADDITIONAL INCOME TAKEN NOTE IN EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. IN THIS REGARD, WE FIND SUPPORT FROM THE RATI O LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. SAS PHARMACEUTICALS REPORTED IN 335 ITR 259 (DEL), WHEREIN IT HAS BEEN HELD AS UNDER: - ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 9 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 FUNDAMENTAL ITY PROVIDED IN CL. (C) OF S. 271(1) OF THE ACT, WHICH AUTHORIZES IMPOSITION OF PENALTY WHEN THE AO IS SATISFIED THAT THE ASSESSEE HAS EITHER : A) CONCEALED THE 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 RETURN, PARTICULARS OF INCOME HAVE BEEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLECTED IN THE IT RETURN. THE QUESTION IS WHETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT. IT WOULD DEPEND UPON THE ISSUE AS TO WHETHER THIS CONCEALMENT HAS REFERENCE TO THE IT RETURN FILED BY THE ASSESSEE, VIZ., WHETHER CONCEALMENT IS TO BE FOUND IN THE IT RETURN. 14. WE MAY, FIRST OF ALL, REJECT THE CON TENTION OF THE LEARNED COUNSEL FOR THE REVENUE RELYING UPON THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT OCCURRING IN SUB - S. (1) OF S. 271 OF THE ACT AND CONTENDING THAT EVEN DURING SURVEY WHEN IT WAS FOUND THAT THE ASSESSEE HAD CONCEAL ED 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 PROCEEDINGS UNDER THIS ACT ARE PREFACED BY THE SATISFACTION OF THE AO OR THE CIT(A). WHEN THE SURVEY IS CONDUCTED BY A SURV EY TEAM, THE QUESTION OF SATISFACTION OF AO OR THE CIT(A) OR THE CIT DOES NOT ARISE. WE HAVE TO KEEP IN MIND THAT IT IS THE AO WHO INITIATED THE PENALTY PROCEEDINGS AND 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 ASSESSMENT 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. 15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME BY THE ASSESSEE HAS TO BE IN THE IT RETURN FILED BY IT. THERE IS SUFFICIENT INDICATION OF THIS IN THE JUDGMENT OF THIS COURT IN THE CASES OF CIT VS. MOHAN DAS HASSA NAND (1983) 34 CTR (DEL) 361 : (1983) 141 ITR 203 (DEL) AND IN RELIANCE PETROPRODUCTS (P) LTD. (SUPRA), THE SUPREME COURT HAS CLINCHED THIS ASPECT, VIZ., THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME IN HIS RETURN AND EVERYTHING WO ULD DEPEND UPON THE IT RETURN FILED BY THE ASSESSEE. THIS VIEW GETS SUPPORTED BY EXPLNS. 4 AS WELL AS 5 AND 5A OF S. 271 OF THE ACT AS CONTENDED BY THE LEARNED COUNSEL FOR THE RESPONDENT. 16. NO DOUBT, THE DISCREPANCIES WERE FOUND DURING THE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMOUNT SURRENDERED BY THE ASSESSEE. PRESENTLY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT 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 CONDITIONS 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, CONJECTURES AND POSSIBILITIES. SEC. 271(1)(C) OF THE ACT ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 10 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 - DISCLOSURE 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 FORMUL ATED ABOVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE FINDING NO FAULT WITH THE DECISIONS OF THE CIT(A) AS WELL AS THE TRIBUNAL. AS A RESULT, THIS APPEAL IS 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 D OWN 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 PROC EEDINGS 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 C ONCEALMENT 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 DECL ARED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND WAS OFFERED TO TAX IN THE REVISED RETURN OF INCOME FILED AFTER THE SURVEY. 1 3 . THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF EXPLANATION 5 TO 1 3 . 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 SEAR CHES 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 HEREINABOVE, 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. ANOTHER ASPECT TO BE TAKEN NOTE IN THE PRESENT CASE IS THE RECORDING OF SATISFACTION WHILE INITIATING PENALTY PROCEEDINGS AGAINST THE ASSESSEE WHILE COMPLETING ASSESSMENT ORDER. THE PERUSAL OF ASSESSMENT ORDER PASSED UN DER SECTION 143(3) OF THE ACT, DATED 29.10.2007 REFLECTS NO SATISFACTION WHATSOEVER RECORDED BY THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS IN THE CASE ITA NO S . 353 & 354 / P U N /201 5 SHRI ANAND SURESH JAIN & ANR 11 OF ASSESSEE. THE SATISFACTION BY THE ASSESSING OFFICER IS MISSING EXCEPT FOR DIRECTION T O ISSUE NOTICE UNDER SECTION 274 OF THE ACT INITIATING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE ABSENCE OF THE SAME, THE ASSESSING OFFICER IS NOT EMPOWERED TO INITIATE AND COMPLETE PENALTY PROCEEDINGS AGAINST THE ASSESSEE. ACCORDINGLY, WE HOLD SO. THE PENALTY PROCEEDINGS FOR CONCEALMENT ARE THUS, NOT LEVIABLE EVEN ON THIS JURISDICTIONAL ISSUE. 15. THE FACTS AND ISSUE IN ITA NO.354/PUN/2015 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.353/PUN/2015 AND OUR DECISION IN ITA NO.353/PUN/2015 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.353/PUN/2015. 16. IN THE RESULT, BOTH THE APPEAL S OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 13 TH DAY OF JANUARY , 201 7 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 13 TH JANUARY, 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - 12 , PUNE ; 4. / THE C I T - CENTRAL, PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDE R , // TRUE COPY // ASSISTANT REGISTRAR