DCIT, Circle-4, Pune V. Shri Sandeep Manikrao Jagdhane, Pune

ITA 363/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93753 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V L JAIN
• Keywords: Unexplained expenditure; Search and seizure; Revised return; Bonafide mistake
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE M S . SUSHMA CHOWLA , JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 363 /PN/201 3 ITA NO. 363 /PN/201 3 ASSESSMENT YEAR: 200 8 - 09 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE . APPELL ANT VS. SHRI SANDEEP MANIKRAO JAGDHANE, 11/22, SAKALNAGAR, BANER ROAD, PUNE 411007 . RESPONDENT PAN: AAPPJ9197G PAN: AAPPJ9197G ITA NO. 2212 /PN/2013 ASSESSMENT YEAR: 200 9 - 1 0 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE . APPELLANT VS. SHRI SANDEEP MANIKRAO JAGDHANE, 11/22, SAKALNAGAR, BANER ROAD, PUNE 411007 . RESPONDENT PUNE 411007 . RESPONDENT PAN: AAPPJ9197G A PPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI V.L. JAIN DATE OF HEARING : 1 6 - 0 4 - 201 5 DATE OF PRONOUNCEMENT : 27 - 0 5 - 201 5 ORDER PER SUSHMA CHOWLA, J.M : BOTH THE APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDER S OF CIT(A) - II , PUNE DATED 04 . 09 .201 2 AND 19.08.2013 REL ATING TO ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 , RESPECTIVELY AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. BOTH THE APPEALS RELATING TO SAME ASSESSEE ON SIMILAR ISSUE S WERE HEARD 2. BOTH THE APPEALS RELATING TO SAME ASSESSEE ON SIMILAR ISSUE S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 2 CONVENIENCE. THE FACTS IN BOTH THE APPEA LS ARE IDENTICAL. HOWEVER, WE MAKE A REFERENCE TO THE FACTS IN ITA NO. 363 /PN/2013 TO ADJUDICATE THE ISSUE. 3. THE REVENUE IN ITA NO. 363 /PN/2013 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LD CIT(A) ERRED IN DELETING THE PENALTY OF RS.88,44,000/ - IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT. 2) THE LD CIT(A) ERRED IN NOT APPRECIATING THAT A REVISED RETURN OF INCOME WAS FILED BY THE ASSESSEE ONLY AS A CONSEQUENCE OF THE SURVEY ACTION AND AS SUCH THE REVISED RETURN REFLECTED CONCEALED IN COME WHICH WAS DETECTED BY THE SURVEY PARTY. 3) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL THE GROUNDS OF APPEAL. 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE AC T. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS A CIVIL CONTRACTOR. THE ASSESSEE HAD FURNISHED RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 ON ASSESSEE HAD FURNISHED RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 ON 22.09.2008 DECLARING TOTAL INCOME OF RS.1,85,87,150/ - . SURVEY UNDER SECTION 133A OF THE ACT WAS CARR IED OUT AT THE BUSINESS PREMISES OF ASSESSEE ON 19.01.2010, IN WHICH THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS. 2,60,00,000/ - RELATING TO ASSESSMENT YEAR 2008 - 09 . CONSEQUENT THERETO, THE ASSESSEE FILED RETURN OF INCOME ON 17.03.2010 DECLARING TOTAL INC OME OF RS. 4,45,87,150/ - . 6. SIMILARLY, IN ASSESSMENT YEAR 2009 - 10, THE ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 2,01,13,760/ - . PURSUANT TO THE SURVEY CARRIED OUT AT THE PREMISES OF THE ASSESSEE UNDER SECTION 133A OF THE ACT ON 19.01.2010, THE ASSESSEE DECLARE D ADDITIONAL INCOME OF RS. 2,20, 00,000/ - RELATING TO ASSESSMENT YEAR 2009 - 10. THE ASSESSEE THEREAFTER, FILED REVISED RETURN OF INCOME ON 12.03.2010 DECLARING INCOME OF RS.4,21 ,13,760/ - . ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 3 7. THE ASSESSING OFFICER DURI NG THE COURSE OF SCRUTINY ASSESSMENT NOTED THE ABOVE SAID FACTS OF BUSINESS CARRIED ON BY THE ASSESSEE AND THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT AND REVISED RETURN FILED THEREAFTER BY THE ASSESSEE. THE AS SESSING OFFICER THEREAFTER, ASSESSED INCOME IN THE HANDS OF THE ASSESSEE AT RS. 4,45,87,150/ - IN ASSESSMENT YEAR 2008 - 09 I.E. THE INCOME DECLARED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME. THE COPY OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT IS PLACED ON RECORD, IN WHIC H THE SAID FACTS ARE ENUMERATED. THE ASSESSING OFFICER HOWEVER, INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WHILE COMPLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. 8. DURING THE COURSE OF PENALTY PROCEEDINGS, THE PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE DECLARATION MADE DURING THE COURSE OF SURVEY WAS CONDITIONAL, BASED ON NON - LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT THERE WAS NO IOTA OF CONCEALMENT OF INCOME OR INCRIMINATING MATERIAL FOUND DURING THE COURSE OF PROCEEDINGS AND CONSEQUENTLY, THERE WAS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHERE THE DECLARATION WAS MADE ON AGREED BASIS TO A VOID LITIGATION AND BUY PEACE OF MIND. THE ASSESSING OFFICER OBSERVED THAT WHERE THE ASSESSEE CONSEQUENT TO THE SURVEY, HAD DECLARED ADDITIONAL INCOME AND FILED REVISED RETURN OF INCOME AND IF THERE W ERE NO INACCURACIES REGARDING THE INCOME DISCLOSED FOR THE YEAR UNDER APPEAL, THERE WAS NO NEED FOR THE ASSESSEE TO DECLARE ADDITIONAL INCOME. WHERE THE ASSESSEE HAD AGREED TO DECLARE ADDITIONAL INCOME UPON SURVEY CONDUCTED ON HIS BUSINESS PREMISES, THEN IT IS ESTABLISHED THAT THE PARTICULARS FURNISHED IN THE ORIGINAL RETURN WERE INACCURATE AND IN SUCH CIRCUMSTANCES, LEVY OF PENALTY IS JUSTIFIED. RELIANCE WAS PLACED ON SERIES OF DECISIONS FOR THIS PROPOSITION BY THE ASSESSING OFFICER . THE ARGUMENT OF THE ASSESSEE THAT WHERE REVISE D RETURN WAS ACCEPTED, THEN THE PENALTY CANNOT BE LEVIED, WAS REJECTED BY THE ASSESSING OFFICER. FURTHER, THE CONTENTION OF THE ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 4 ASSESSEE THAT THERE WAS NO IOTA OF CONCEALMENT OR INACCURACIES FOUND DURING THE COURSE OF SURVEY PROCEEDINGS WAS ALSO NOT ACCEPTED. THE SECOND CONTENTION OF THE ASSESSEE REGARDING CONDITIONAL DECLARATION WAS ALSO REJECTED BY THE ASSESSING OFFICER AS THERE WERE NO PROVISIONS IN THE INCOME - TAX ACT FOR WAIVER OF PENALTY ON THE CONDITION LAID DOWN BY THE ASSESSEE THAT PENALTY MAY NOT BE LEVIED. ANOTHER ASPECT NOTED BY THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAD NOT ELABORATED ON THE OMISSIONS IN THE ORIGINAL RETURN AND HOW IT WAS A BONAFIDE OMISSION AND WHETHER THE ADDITIONAL INCOME DECLARED DURING SURVEY WAS TO RECTIFY THE BONAFIDE OMISSION MADE IN THE ORI GINAL RETURN. IN THE ABSENCE OF SUCH A CLARIFICATION, THE ASSESSING OFFICER HELD THAT ADDITIONAL INCOME DECLARE D DURING THE COURSE OF PROCEEDINGS UNDER SECTION 133A OF THE ACT WAS CONCEALED INCOME OFFERED TO TAX AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS TO BE IMPOSED AS THE ASSESSEE HAD FAILED TO DISCLOSE THE PARTICULARS OF INCOME ACCURATELY AND THEREFORE, ADMITTED T O DECLARE ADDITIONAL INCOME AND FILED REVISED INCOME IN COMPLIANCE. CONSEQUENTLY, PENALTY UNDER SECTION 271(1)(C) OF THE ACT INCOME IN COMPLIANCE. CONSEQUENTLY, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVI ED AT RS. 88,40,000/ - RELATING TO ASSESSMENT YEAR 2008 - 09 AND AT RS. 73,39,200/ - RELATING TO ASSESSMENT YEAR 2009 - 10 . 9. BEFORE THE CIT(A), THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED UNDER PARA 3.2 AT PAGES 3 TO 5 OF THE APPELLATE ORDER . THE PLEA OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE ASSESSING OFFICER HAD NOT POINTED OUT ANY INACCURACIES OR OMISSIONS TO SUPPORT THE ADDITION BEYOND THE VOLUNTARY DECLARATION MADE BY THE ASSESSEE AND THE ASSESSING OFFICER HAD USED ONLY INFERENTIAL LOGIC TO JUSTIFY THE PENALTY. RELIANCE WAS PLACED ON NUMBER OF DECISIONS FOR THE PROPOSITION THAT NO PENALTY IS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT . THE CIT(A) OBSERVED THAT ON GOING THROUGH THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF TH E ACT, THERE IS NO MENTION OF ANY CONCEALMENT OF INCOME HAVING BEEN UNEARTHED BY THE ASSESSING OFFICER OR OF ANY DELIBERATE MANIPULATION OF ACCOUNTS . E VEN THE STATEMENT RECORDED OF THE ASSESSEE APPARENTLY DOES NOT INDICATE OF ANY DISCREPANCIES HAVING BEEN NOTED BY THE ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 5 ASSESSING OFFICER DURING THE COURSE OF SURVEY ACTION UNDER SECTION 133A OF THE ACT. THE ADDITIONAL INCOME WAS ADMITTED BY THE ASSESSEE TO THE EXTENT OF RS.2.60 CRORES FOR ASSESSMENT YEAR 2008 - 09 ON THE CONDITION THAT NO PENALTY ON THIS ACCOU NT BE LEVIED. THEREAFTER, THE ASSESSEE INCLUDED THE SAID ADDITIONAL INCOME IN THE REVISED RETURN OF INCOME FILED ON 17.03.2010 . THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLET ED ON THE SAME RETURN ED INCOME, BY THE ASSESSING OFFICER. THE CIT(A ) POINTED OUT THAT THE CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE HAS TO BE IN THE FACTS OF THE INCOME TAX RETURN FILED BY IT AND EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE. REFERENCE WAS MADE TO EXPLANATIONS (4) A S WELL AS (5 ) AND 5A OF SECTION 271 OF THE ACT AND IT WAS HELD BY THE CIT(A) THAT NO PENALTY COULD BE IMPOSED UNLESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS WERE DULY AND UNAMBIGUOUSLY SATISFIED. THE CIT(A) FURTHER HELD THAT NO PENALTY COULD BE LEVIED ON SUR MISES, CONJECTURE, POSSIBILITIES AND PROVISIONS OF SECTION 271(1)(C) OF THE ACT HAD TO BE CONSTRUED STRICTLY, UNLESS IT WAS FOUND THAT THERE WAS ACTUALLY A ACT HAD TO BE CONSTRUED STRICTLY, UNLESS IT WAS FOUND THAT THERE WAS ACTUALLY A CONCEALMENT OR NON - DISCLOSURE OF PARTICULARS OF INCOME, PENALTY COULD NOT BE IMPOSED. SINCE THE ASS ESSEE HAD MADE COMPLETE DISCLOSURE IN INCOME TAX RETURNS AND FURNISHED INCOME FOR THE PURPOSE OF TAX, THERE WAS NO NON - DISCLOSURE OF INCOME BY THE ASSESSEE. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN IN SAMPATH RAJ VS. ACIT (2014) 1 SOT 218 (BOM) AND BY PUNE BENCH OF TRIBUNAL IN DILIP Y. OAK AND ALSO IN CIT VS. SURESH CHAND BANSAL (2009) 223 CTR 120 (CAL) AND IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE FURNISHED ADDITIONAL INCOME FOR TAXATION CONSEQUENT TO SURVEY OPERATION, THERE WAS NO MATERIAL TO INFER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. RELIANCE PLACED UPON BY THE ASSESSING OFFICER ON VARIOUS JUDICIAL DECISIONS WERE DISTINGUISHABLE AS PER THE CIT(A) , SINCE IN THOSE CASES, THE CONCEALMENT OF INCOME HAD BEEN DETECTED, WHEREAS IN THE PRESENT CASE, THE ASSESSING OFFICER WAS INFERRING THE CONCEALMENT BASED ON REVISED RETURN OF INCOME. IN THE ABSENCE OF ANY INACCURACIES OR OMISSIONS HAVING BEEN POINTED ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 6 OUT BY THE ASSESSING OFFICER TO SUPPORT THE ADDITION AND IN T HE ABSENCE OF ANY REBUTTAL OF CONTENTIONS RAISED BY THE ASSESSEE , THE CIT(A) HELD THAT THERE WAS NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THE SAME WAS DELETED. 10. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 11. TH E LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE TOOK US THROUGH THE FACTS OF THE CASE AND POINTED OUT THAT THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE WAS NOT VOLUNTARY AND THE DECLARATION OF ADDITIONAL INCOME WAS MADE RELATING TO YEARS PRIOR TO THE SURVEY YEAR. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN TRIBHOVANDAS BHIMJI ZAVERI VS. UNION OF INDIA (1993) 204 ITR 368 (SC) AND IN MAK DATA P. LTD. VS. CIT REPORT ED IN 358 ITR 593 (SC) AND ALSO THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT IN CIT VS. ZOOM COMMUNICATION P. LTD. (2010) 327 ITR 510 (DELHI). COMMUNICATION P. LTD. (2010) 327 ITR 510 (DELHI). 12. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER DOES NOT CO ME TO A FINDING AS TO WHAT WAS CONCEALED BY THE ASSESSEE AND WHAT W ERE THE INACCURATE PARTICULARS OF INCOME FILED BY THE ASSESSEE. IT WAS CONTENDED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT NOTHING WAS FOUND DURING THE COURSE OF SURVE Y AND NOT AN IOTA OF EVIDENCE WAS FOUND DURING THE COURSE OF SURVEY. FURTHER, IT WAS SUBMITTED BY HIM THAT THERE WAS NO MANIPULATION, NO JOTTING AND / OR NO EVIDENCE AND ONLY THERE WAS DECLARATION OF ASSESSEE , WHICH WAS VOLUNTARILY MADE, UNDER WHICH ADDIT IONAL INCOME WAS OFFERED TO TAX. OUR ATTENTION WAS DRAWN TO THE COPY OF STATEMENT RECORDED DURING THE COURSE OF SURVEY PLACED AT PAGE 22 OF THE PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACING RELIANCE ON THE ORDER OF CIT(A) POI NTED OUT THAT IN THE CASE OF MAK DATA P. LTD. VS. CIT (SUPRA), INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SURVEY AND CONSEQUENT THERETO, DECLARATION WAS MADE. HOWEVER, THAT WAS NOT THE CASE OF ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 7 THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTAT IVE FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS: - I. CIT VS. M. PACHAMUTHU (2007) 295 ITR 502 (MAD) II. CIT VS. RAJENDRA PRASAD GUPTA (1996) 220 ITR 558 (PAT) III. DILIP YESHWANT OAK VS. ACIT (2011) 55 DTR 113 IV. GODAVARI TOWNSHIPS PVT . LTD. VS. DCIT (2014) 148 ITD 463 (VISAKHAPATNAM) V. SVC PROJECTS PVT. LTD. VS. JCIT (2011) 10 ITR 552 (VISAKHAPATNAM) 13. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS ON CASES WHICH WERE FACTUALLY DIFFERENT. WITH REGARD TO THE RELIANCE ON TRIBHOVANDAS BHIMJI ZAVERI VS. UNION OF INDIA (SUPRA), IT WAS POINTED OUT THAT THE FACTUAL ASPECTS OF THE CASE WERE WITH REFERENCE TO VDIS SCHEME. DECISION I N CIT VS. ZOOM COMMUNICATION P. LTD. (SUPRA) WAS A CASE OF INCORRECT CLAIM AND THE FACTS WERE MATERIALLY DIFFERENT FROM THE FACTS OF THE ASSESSEE. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE IN REJOINDER POINTED O UT THAT DURING THE COURSE OF SURVEY BLANK CHEQUE BOOKS OF SUB - CONTRACTORS WERE FOUND AND THE ASSESSEE HAD DECLARED LOW PROFITS DURING THE CURRENT YEAR AND ALSO DURING EARLIER YEARS. IT WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT WHERE THE ASSESSEE OFFERED ADDITIONAL INCOME, HE SHOULD HAVE EXPLAINED THE BONAFIDE MISTAKES IN THE ORIGINAL RETURN OF INCOME AND WHEN HE IS FILING THE REVISED INCOME, THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE REASONS FOR REVISING THE I NCOME . WHERE THE REVIS ED RETURN HAD BEEN FILED BY THE ASSESSEE ON THE BASIS OF WEAKNESS IN ACCOUNTS, LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS JUSTIFIED. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN BOTH THE APPEALS BEFORE US IS IN RELATION TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1.85 CRORES. SURVEY ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 8 UNDER SECTIO N 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF ASSESSEE ON 19.01.2010 . DURING THE COURSE OF SURVEY, STATEMENT OF THE ASSESSEE WAS RECORDED, COPY OF WHICH IS PLACED AT PAGES 22 TO 26 OF THE PAPER BOOK. DURING THE COURSE OF RECORDING THE STATEMENT, T HE ASSESSEE EXPLAINED THAT HE WAS DOING CONSTRUCTION WORK, EARTH WORK IN HIS INDIVIDUAL CAPACITY AND IN ADDITION, HE WAS PARTNER IN THREE FIRMS AND WAS DIRECTOR OF TWO COMPANIES AND FURTHER MEMBER OF AOPS, WHICH ALL WERE ENGAGED IN THE BUSINESS OF CONSTRUC TION AND CIVIL WORK AND LAND DEVELOPMENT. THE ASSESSEE ADMITTED , IN REPLY TO QUESTION NO.1 THAT HE WAS MAINTAINING BOOKS OF ACCOUNT IN ELECTRONIC FORM. THE SURVEY TEAM THEREAFTER CONFRON TED THE ASSESSEE WITH BOOKS & ACCOUNTS AND SALES & VOUCHERS OF M/S. P AND URANG CONSTRUCTIONS ; IN REPLY TO WHICH THE ASSESSEE STATED THAT THE SAID CONCERN WAS HIS SUB - CONTRACTOR , WHO WAS DOING CIVIL WORK AT SITES IN REMOTE AREAS, WHICH WERE FAR AWAY FROM PUNE. FURTHER, CHEQUE BOOK DULY DISCHARGED I.E. SIGNED BY S.S. KATE OF THE KAR AD JANATA SAHKARI BANK LTD. WAS FOUND IN THE PREMISES OF THE ASSESSEE AND THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME VIDE PREMISES OF THE ASSESSEE AND THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME VIDE QUESTION NO.13. IN REPLY, THE ASSESSEE SUBMITTED THAT SHRI S ANTOSH SAMPATRAO KATE WAS ONE OF THE SUB - CONTRACTORS, WHO EXECUTED HIS CONTRACT WORK AT VARIOUS PLACES AWAY FROM PUNE AND IN ORDER TO FACILITATE THE PAYMENTS BY HIM TO HIS LABOURERS / SUPPLIERS, THE CHEQUES HAD BEEN KEPT WITH THEM. VARIOUS OTHER QU E RIES WERE RAISED TO THE ASSESSEE WITH REGARD TO THE DOCUMENTS FOUND DURI NG THE COURSE OF SURVEY AND ALSO THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE ALONG WITH LIST OF SUB - CONTRACTORS AND THEIR ADDRESSES AND SEPARATE AGREEMENTS WITH THE CONTRACTORS. AS PER QUERY NO.23, THE COPY OF PROFIT & LOSS ACCOUNT EXTRACTED FROM THE ASS ESSEES COMPUTER SHOWING PROFIT OF RS.8.63 CRORES WAS CONFRONTED TO THE ASSESSEE AND IN REPLY, HE SUBMITTED THAT TAX WA S DEDUCTED AT SOURCE OUT OF THE CONTRACT RECEIPTS BESIDES HE HAD PAID RS.6 LAKHS BY WAY OF ADVANCE TAX AND HE PROPOSED TO PAY THE BALANCE TAX BY WAY OF THREE INSTALLMENTS BEFORE 15.03.2010. THE ASSESSEE ALSO EXPLAINED THE HIGHER GP RATE REFLECTED FOR THE CURRENT YEAR BECAUSE OF EARTH WORK TO THE EXTENT OF RS.36.07 CRORES HAVING ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 9 BEEN CARRIED OUT BY THE ASSESSEE. FURTHER, VIDE QUESTION NO.2 5, THE ASSESSEE WAS ASKED TO STATE ANYTHING MORE AND I N ANSWER HE STATED AS UNDER: - A. I HAVE TO STATE THAT THE INCOME ESTIMATED FOR THE YEAR ENDING 31 MARCH 2010 SHALL BE IN THE VICINITY OF 9.5 CRORES AND I UNDERTAKE TO PAY THE TAXES BEFORE 31 ST MARCH 20 10 I FURTHER PROPOSE TO REVISE MY RETURN FOR ASST YR 08 - 09 AND ASST YR 2009 - 10 TO INCORPORATE ADDITIONAL INCOME OF RS.2.60 CRORES AND 2.20 CRORES RESPECTIVELY AND PAY THE TAXES DUE THEREON WITH THE UNDERSTANDING THAT I SHALL NOT BE VISITED WITH ANY PENALTY ON THIS ACCOUNT BY FILING REVISED RETURNS. I HAVE NOTHING TO FURTHER TO STATE THAN EXCEPT THAT THE STATEMENT IS GIVEN VOLUNTARILY AND WITHOUT ANY COERCION OR FEAR OR ANY PROMISE. 16. PURSUANT TO THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY FOR TWO ASSESSMENT YEARS PRECEDING THE YEAR IN WHICH SURVEY WAS CONDUCTED UNDER SECTION 133A OF THE ACT , THE ASSESSEE FURNISHED REVISED RETURN S OF INCOME AND OFFERED THE ADDITIONAL INCOME FOR TAXATION. THE ASSESSING OFFICER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS NOTED THE FACTUAL ASPECTS OF THE CASE I.E. ASSESSEE HAVING FILED THE ORIGINAL RETURN OF INCOME AND REVISED RETURN OF INCOME AND THEREAFTER, THE CASE HAVING BEEN SELECTED FOR SCRUTINY AND NOTICE ISSUED UNDER SECTION 143(2) OF T HE ACT ALONG WITH QUESTIONNAIRE , I N RESPONSE TO WHICH, THE COUNSEL FOR THE ASSESSEE ATTENDED FROM TIME TO TIME AND SUBMITTED DETAILS. THE ASSESSING OFFICER THEREAFTER, HELD AS UNDER: - 3. THE ASSESSEE IS A CIVIL CONTRACTOR. VARIOUS DETAILS REGARDING LIST OF FAMILY MEMBERS, DETAILS OF HOUSEHOLD EXPENSES, DETAILS OF IMMOVABLE PROPERTY, COPY OF LEAVE & LICENSE AGREEMENT, DETAILS OF INVESTMENT, EXPENSES INCURRED AND BANK ACCOUNT DETAILS HAVE BEEN CALLED FOR AND THE SAME HAVE BEEN VERIFIED. 4. ON 19.1.2010, A SURVEY U/S.133A OF THE I.T. ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE IN WHICH THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.2,60,00,000/ - FOR A.Y. 2008 - 09. THE ASSESSEE FILED A REVISED RETURN ON 17.03.2010 & OFFERED THE ADDITIONAL INCOM E FOR TAXATION. PENALTY PROCEEDINGS ARE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. 5. AFTER VERIFICATION AND ON DISCUSSION, THE REVISED INCOME OF THE ASSESSEE IS ACCEPTED. ASSESSED INCOME RS.4,45,87,1 50/ - 6. ASSESSED U/S. 143(3)(II) OF THE INCOME - TAX ACT, 1961. CHARGE INTEREST U/S.234A, 234B, 234C IF APPLICABLE AND ISSUE DEMAND NOTICE AND CHALLAN AS THE CASE MAY BE. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT HAVE BEEN INITIATED SEPARATEL Y FOR CONCEALMENT OF PARTICULARS OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. 17. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THAT THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE PURSUANT TO ADDITIONAL INCOME BEING OFFERED DURING THE ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 10 COURSE OF SURVEY ON 19.01.2010 , THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ACCEPTED THE REVISED RETURN OF INCOME WITHOUT ANY FURTHER ENQUIRIES. HOWEVER, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME / FURNISHING INACCURATE PARTICULARS. THE ASSESSING OFFICER THEREAFTER, LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT HOLDING THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME, WHICH WAS DELETED BY THE CIT(A). 18. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE WHERE THE ASSESSEE HAS EITHER CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE SAID PROVISIONS ARE ATTRACTED ONLY WHEN THE CONDITIONS STIPULATED IN SECTION 271(1) (C) OF THE ACT ARE FULFILLED AND IN CASE, THE SAID CONDITIONS ARE NOT FULFILLED, THERE IS NO QUESTION OF EXERCISING THE POWER UNDER THE SAID PROVISIONS TO IMPOSE PENALTY. THE SECTION LAYS DOWN THAT IF THE ASSESSING OFFICER OR THE CIT(A) IN THE COURSE OF P ROCEEDINGS UNDER THE ACT IS SATISFIED THAT, ANY PERSON HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN HE MAY DIRECT SUCH PERSON, SHALL PAY BY WAY OF PENALTY , THE SUM AS STIPULATED IN THE SAID SECTION. IN E XPLANATION TO SECTION 271(1)(C) OF THE ACT , THERE ARE SETS OF CIRCUMSTANCES, UNDER WHICH LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS JUSTIFIABLE. THE EXPLANATION (1) PROVIDES THAT WHERE A PERSON FAILS TO OFFER EXPLANATION OR OFFERS EXPLANATION, WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER OF APPEALS OR THE PRINCIPAL COMMISSIONER OR COMMISSIONER , TO BE FALSE OR WHERE SUCH PERSONS OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS B ONAFIDE AND ALL FACTS RELATING THERETO AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING TOTAL INCOME OF SUCH PERSON, WOULD BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEALED. ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 11 19. THE VISAKHAPATNAM BENCH OF TRIBUNAL IN GODAVARI TOWNSHIPS PVT. LTD. VS. DCIT (SUPRA) WHILE EXPLAINING THE IMPORT OF EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT HAD OBSERVED AS UNDER: - 271(1)(C) OF THE ACT HAD OBSERVED AS UNDER: - 14.7 THEREFORE, EXPLAN ATION 1 UNDERSTOOD IN THE PROPER CONTEXT, IN PARTICULAR, CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271 MAKES THE INTENTION OF THE LEGISLATURE MANIFEST. THE CONDITION PRECEDENT FOR LEVYING THE PENALTY IS THE SATISFACTION OF THE AUTHORITY THAT THERE IS A CON CEALMENT OF THE PARTICULARS OF THE INCOME OR INACCURATE PARTICULARS ARE FURNISHED TO AVOID PAYMENT OF TAX. ONCE THE AUTHORITY COMES TO SUCH CONCLUSION, THE LAW MANDATES THAT BEFORE IMPOSING PENALTY, THE ASSESSEE MUST BE HEARD. THE ASSESSEE IS GIVEN THE O PPORTUNITY TO OFFER HIS EXPLANATION. ONCE SUCH AN OPPORTUNITY IS GIVEN AND THE ASSESSEE FAILS TO OFFER THE EXPLANATION OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE, THEN THE PENALTY WILL FOLLOW AS PRESCRIBED UNDER SUB - CLAUSE (III) OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271. WHERE THE ASSESSEE OFFERS AN EXPLANATION AND SUBSTANTIATES THE EXPLANATION, THE QUESTION OF IMPOSING PENALTY WOULD NOT ARISE. EVEN IN CASES EXPLANATION, THE QUESTION OF IMPOSING PENALTY WOULD NOT ARISE. EVEN IN CASES WHERE HE FAILS TO SUBSTANTIATE THE EXPLANATION BUT IF HE PROVES THAT THE EXPLANATION OFFERED IS A BONAFIDE ONE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAS BEEN DISCLOSED BY HIM, THEN, IN LAW A DISCRETION IS VESTED WITH THE AUTHORITY NOT TO IMPOSE PENALTY. IN OTHER WORDS, IF THE ASSESSEE O FFERS EXPLANATION BUT FAILS TO SUBSTANTIATE THE SAME, BUT IF HE PROVES THAT EXPLANATION OFFERED IS BONAFIDE BUT IS NOT SUFFICIENT TO SUBSTANTIATE THE EXPLANATION AND DISCLOSES ALL MATERIAL FOR THE COMPUTATION OF HIS TOTAL INCOME, THE QUESTION OF IMPOSING P ENALTY WOULD NOT ARISE. 20 . THE VISAKHAPATNAM BENCH OF TRIBUNAL IN GODAVARI TOWNSHIPS PVT. LTD. VS. DCIT (SUPRA) FURTHER REFERRED TO THE RATIO LAID DOWN BY THE HONBLE SUPREME VS. DCIT (SUPRA) FURTHER REFERRED TO THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN MAK DATA P. LTD. VS. CIT (SUPRA) AND OBSERVED AS UNDER: - 14.11 IN AD DITION TO THE ABOVE PRINCIPLES LAID D OWN BY THE HON ' BLE KARNATAKA HIGH COURT , THE HON'BLE SUPREME COURT IN THE CASE OF C I T VS. MAK DATA (P) LTD. IN CIVIL APPEAL NO.977 OF 2013 (SUPRA) ALSO HELD THAT AO HAS TO SATISFY WHETHER THE PENALTY PROCEEDINGS BE INIT IATED OR NOT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE AO IS NOT REQUIRED TO REFER HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT INTO WRITING. FURTHER, IT WAS HELD THAT WHEN ASSESSEE HAD SURRENDERED WITH A VIEW TO AVOID LITIGATION AND TO B UY PEACE AND TO CHANNEL ITS ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE IT DEPARTMENT, SUCH TYPE OF EXPLANATIONS ARE NOT RECOGNISED BY TH E STATUTE UNDER EXPLN. 1 TO S. 271(L)(C) . THE QUESTION IS WHETHER THE ASSESS EE HAS STATUTE UNDER EXPLN. 1 TO S. 271(L)(C) . THE QUESTION IS WHETHER THE ASSESS EE HAS OFFERED ANY EXPLANATION FOR CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO S . 271(1) RAIS E S A PR E SUMPTION OF CONCEALMENT WHEN THERE IS DIFFERENCE BETWEEN REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY EXPLANATION HAS B E EN DISCHARGED BY HIM, THE ONUS IS ON OF THE REVENUE TO - SHOW THAT THE AMOUNT IN QUESTION CONSTITUTE THE INCOME AND NOT OTHERWISE. 14.12 THER E FOR E, EVEN THOUGH THE ASSESSEE MAY DECLARE TH E INCOMES BY USING TH E WORDS VOLUNTARY DISCLOSURE TO BUY PEACE AND TO AVOID LITIGATION , AMICABLE S E TTLEMENT ETC. , UNDER THE PROVISIONS WHAT IS TO BE SEEN IS , WHETHER THE ASSESSEE HAD GIVEN ANY BONA FIDE REASONS INITIALLY PLACED BY EXPLANATION TO S . 271(L)( C ). ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 12 2 1 . FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY HONBLE HIGH COURT OF AP IN V.V. PROJECTS & INVESTMENTS (P) LTD. VS. DY.CIT (2008) 300 ITR 40 (AP) AND IT WAS HELD AS UNDER: - 16.2 M ORE IMPORTANTLY ON SIMILAR ISSUE, THE HONBLE HIGH COURT OF AP IN THE CASE OF V.V. PROJECTS & INVESTMENTS (P) LTD. VS. DY. CIT (2008) 216 CTR (AP) 196 : (2008) 6 DTR (A P) 265 (2008) 300 ITR 40 (AP) CONSIDERED SIMILAR SITUATION AND HELD THAT PENALTY IS NOT IMPOSABLE. THE HON'BLE HIGH COURT CONSIDERING THE FACTS HELD AS UNDER: 'THE LANGUAGE OF SUB - S . (1) OF S. 271 ITSELF MAKES IT CLEAR THAT RECORDING OF SATISFACTION OF CONCEALMENT OF INCOME BY A PERSON OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME I S A CONDITION PRECEDENT FOR LEVYING PENALTY INVOKING THE POWER UNDER S. 2 7 1(1). THE AO HAS TO FORM HIS OWN OPINION AND RECORD HIS SATISFACTION OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME BEFORE INITIATING PENALTY PROCEEDINGS UNDER S. 271(1)(C). IT IS ALSO CLEAR THAT SUCH SATISFACTION OF THE AO MUST BE SPELT OUT IN THE ORDER OF ASSESSMENT ITSELF BUT CANNOT BE ASSUMED FROM THE ISSUE OF A NOTICE UNDER S. 271(1)(C). FAILURE TO RECORD SUCH SATISFACTION AMOUNTS TO A JURISDICTIONAL DEFECT WHICH CANNOT BE CURED. IT IS ALSO RELEVANT TO NOTE THAT WHETHER THE ASSESSEE HAS CONCEALED HIS INCOME OR HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS THEREOF IS ESSENTIALLY A FINDING OF FACT WHICH HAS TO BE SPELT OUT BY WAY O F RECORDING THE SATISFACT ION OF THE AO AS REQUIRED UNDER S. 271(1). THER E FORE, IN THE ABSENCE OF SUCH A FINDING IN THE ASSESSMENT ORDER NO PENALTY PROCEEDINGS CAN BE INITIATED. THE DECLARATION OF INCOME MADE BY THE ASSESSEE COMPANY IN REVISED RETURN AND THE EXPLANATION THAT IT HAD DONE SO TO BUY PEACE WITH THE DEPARTMENT AND TO AVOID PROTRACTED LITIGATION WAS ACCEPTED BY THE AO IN HIS ORDER DT. 16TH, MARCH, 2001 WITHOUT WAS ACCEPTED BY THE AO IN HIS ORDER DT. 16TH, MARCH, 2001 WITHOUT RAISING ANY OBJECTION, ADMITTEDLY THE AO ACCEPTED TH E RETURNS FILED BY THE ASSESSEE AFTER VERIFICATION OF THE IN FORMATION FILED AND BOOKS OF ACCOUNTS PRODUCED. THUS, THE ASSESS M ENT WAS COMPLETED ACCEPTING THE RETURNED NET INCOME AS PER THE REVISED RETURN OF INCOME. NOT ONLY THE ASSESSMENT ORDER DID NOT REFLECT ANY SATISFACTION AS REQUIRED UNDER S. 271(1) BUT EVEN TH E SHOW - CAUSE NOTICE WAS SILENT WITH REFERENCE TO THE SATISFACTION ARRIVED AT BY THE AO WITH REFERENCE TO THE CONCEALMENT OF INCOME BY THE ASSESSEE COMPANY. NOTHING HAS BEEN PLACED BEFORE THIS COURT BY THE REVENUE TO SHOW THAT ANY OTHER MATERIAL WAS A VAILAB LE WITH THE AO TO THE EFFECT THAT THE ASSESSEE CONCEALED THE INCOME. IN THE CIRCUMSTANCES, IT IS NOT OPEN TO THE A O TO INVOKE THE POWER UNDER S. 271(1)(C) LEVYING PENALTY. THE IMPUGNED PENALTY PROCEEDINGS ARE WITHOUT JUR I SDICTION APART FROM BEING ARBITRARY AND ILLEGAL.' 16.3 RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF THE JURISDICTIONAL HIGH COURT , SINCE THE FACTS OF THE CASE EQUALLY FITS INTO THE PRINCIPLES LAID DOWN BY THE HO N 'BLE A.P. HIGH COURT, WE HAVE NO HESITATION IN HOLDING THAT PENALTY UNDER S. 271(1)(C) IS NOT IMPOSABLE ON THE FACTS OF THE CASE. EVEN OTHERWISE, ASSESSEE HAVING GIVEN BONA FIDE EXPLANATION THAT HE HAS OFFERED HIGHER INCOME EVEN THOUGH THAT MUCH INCOME IS NOT TAXABLE, THIS CONTENTION OF THE ASSESSEE WAS NOT REBUTTED. AS BRIEFLY STA TED ABOVE IN THE FACTS, AO HAS NEITHER BROUGHT ANY CALCULATIONS ON RECORD NOR MENTIONED HOW THE AMOUNT WAS QUANTIFIED. IN THESE SET OF CIRCUMSTANCES, ASSESSEE'S CONTENTION THAT IT HAD UNEXPLAINED EXPENDITURE IN EARNING THAT GROSS RECEIPTS CANNOT BE REJECTE D. THEREFORE, EVEN THE PROVISIONS OF EXPLN. 1 TO S.271(1)(C) COME INTO OPERATION AS THE ASSESSEES EXPLANATION HAS NOT BEEN DISPROVED. THEREFORE, THE CONDITIONS FOR IMPOSING PENALTY DOES NOT SATISFY. IN VIEW OF THE VARIOUS FACTORS DISCUSSED ABOVE, WE HA VE NO HESITATION IN CANCELLING THE PENALTY. ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 13 2 2 . THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS. CAREERS EDUCATION & INFOTECH (P) LTD. (2011) 336 ITR 257 (P&H) I N SIMILAR CIRCUMSTANCES, WHERE CONSEQUENT TO SURVEY OPERATIONS, THE ASSESSEE REVISED HIS INCOME TAX RETURN AND DECLARED SUM OF RS.15 LAKHS, IT WAS HELD THAT IN EVERY CASE WHERE SURRENDER WAS MADE, INFERENCE OF CONCEALMENT OF INCOME CAN NOT BE DRAWN. THE HONBLE HIGH COURT HELD AS UNDER: - 5. WE ARE UNABLE TO ACCEPT THE SUBMISSION. NO DOUBT E VEN VOLUNTARY SURRENDER OF CONCEALED INCOME MAY NOT EXONERATE THE ASSESSEE OF ITS LIABILITY TO PAY PENALTY IF IT CAN BE HELD THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. IN THE PRESENT CASE, THE TRIBUNAL HAS RECORDED A CAT EGORICAL FINDING THAT THERE WAS NO MATERIAL TO INFER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THE CONTENTION THAT IN EVERY CASE WHERE SURRENDER IS MADE INFERENCE OF CONCEALMENT OF INCOME MUST BE DRAWN UNDER S. 58 OF THE EVIDENCE ACT CANNOT BE ACCEPTED. JUDGMENT OF THE MADRAS HIGH COURT ALSO DOES NOT LAY DOWN SUCH SIDE PROPOSITION. THE OBSERVATIONS THEREIN ARE ON FACTS OF THAT CASE. THE SAID JUDGMENT IS, THUS, DISTINGUISHABLE. 2 3 . THE HONBLE PUNJAB & HARYANA HIGH COURT IN TURN RE LYING ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. SURESH CHANDRA MITTAL (2001) 170 CTR (SC) 192 : (2001) 251 ITR 9 (SC), OBSERVED THAT WHERE ASSESSEE HAS 170 CTR (SC) 192 : (2001) 251 ITR 9 (SC), OBSERVED THAT WHERE ASSESSEE HAS FILED REVISED RETURN SHOWING HIGHER INCOME AND THE ASSESSEE HAS SURRENDERED THE INC OME AFTER PERSISTENCE QUERIES BY THE AO AND WHERE REVISED RETURN HAS BEEN REGULARIZED BY THE REVENUE, EXPLANATION OF THE ASSESSEE THAT HE HAS DECLARED ADDITIONAL INCOME TO BUY PEACE OF MIND AND TO COME OUT OF WAXED LITIGATION COULD BE TREATED AS BONAFIDE, ACCORDINGLY LEVY OF PENALTY UNDER S. 271(1)(C) OF THE ACT WAS HELD TO BE NOT JUSTIFIED. IN THE INSTANT CASE BEFORE US, AS PER THE SURRENDER MADE BY THE ASSESSEE, A REVISED RETURN WAS FILED AND WHICH HAS BEEN ACCEPTED AS IT IS WITHOUT MAKING ANY ALTERATION THEREIN NOR THERE WAS ANY ADVERSE OBSERVATION IN THE ASSESSMENT ORDER WITH REGARD TO ANY DISCREPANCIES TO CORRELATE THE SAME WITH THE AMOUNT OF SURRENDER. WE ACCORDINGLY DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR IMPOSING PENALTY UN DER S. 271(1)(C) OF THE ACT. ON THE FACTS AND CIRCUMSTANCES, THE INSTANT CASE IS NOT A FIT CASE FOR LEVY OF PENALTY . ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 14 2 4 . IN THE INSTANT CASE BE FORE US ADMITTEDLY DURING THE COURSE OF SURVEY ACTION UNDER SECTION 133A OF THE ACT SURRENDER WAS MADE BY THE A SSESSEE BY OFFERING ADDITIONAL INCOME FOR NOT ONLY THE YEAR OF SURVEY, BUT FOR TWO PRECEDING YEARS. PURSUANT THERETO, THE ASSESSEE FURNISHED REVISED RETURN OF INCOME INCORPORATING THE SAID ADDITIONAL INCOME WHICH HAS BEEN ACCEPTED IN TOTO WITHOUT ANY ADVE RSE OBSERVATION IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER AND WITHOUT ANY CORRELATION TO ANY DISCREPANCIES FOUND DURING THE COURSE OF SURVEY. WHERE THE ADDITIONAL INCOME HAD BEEN ACCEPTED AS SUCH BY THE ASSESSING OFFICER AND IN THE ABSENCE OF ANY E VIDENCE FOUND TO CORRELATE TO ANY DISCREPANCIES IN THE ACCOUNTS OF THE ASSESSEE, WE FIND NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . SECONDLY, WHERE THE ASSESSEE HAD FURNISHED THE I NCOME IN ORDER TO BUY PEACE OF MIND AND IN THE ABS ENCE OF ANY INCRIMINATING DOCUMENT HAVING BEEN FOUND FROM THE POSSESSION OF ASSESSEE DURING THE COURSE OF SURVEY, MERELY BECAUSE ADDITIONAL INCOME HAS BEEN OFFERED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME, DOES NOT JUSTIFY THE STAND OF ASSESSING OF FICER THAT THE REVISED RETURN OF INCOME, DOES NOT JUSTIFY THE STAND OF ASSESSING OF FICER THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, IN TURN JUSTIFYING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT . WE HOLD THAT THE ASSESSEE IN SUCH CIRCUMSTANCES IS NOT EXI G IBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) O F THE ACT. ACCORDINGLY, WE HOLD SO. 2 5 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE SERIES OF DECISIONS ON SIMILAR PROPOSITION . HOWEVER, REFERENCE IS BEIN G MADE TO DECISION AS QUOTED ABOVE IN ORDER TO ADJUDICATE THE ISS UE IN THE PRESENT APPEAL. 2 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND HAD PLACED STRONG RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN MAK DATA P. LTD. VS. CIT (SUPRA) FOR THE PROPOSITION THAT IN THE FA CTS OF THE CASE BEFORE THE HONBLE SUPREME COURT, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME PURSUANT TO SURVEY ACTION AND THE HONBLE SUPREME COURT HAD UPHELD THE ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 15 LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE FACTS OF THE CASE BEFORE THE HON BLE SUPREME COURT, IT WAS OBSERVED BY THEIR LORDSHIPS THAT THE EXPLANATION TO SECTION 271(1)(C) OF THE ACT RAISES A PRESUMPTION OF CONCEALMENT , WHEN A DIFFERENCE IS NOTICED BY THE ASSESSING OFFICER BETWEEN THE REPORTED AND ASSESSED INCOME. IN THE FACTS O F THE SAID CASE DURING THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A OF THE ACT CONDUCTED ON THE PREMISES OF THE ASSOCIATE OF ASSESSEE , INCRIMINATING DOCUMENT S W ERE FOUND ON 16.12.2003 . T HE ASSESSEE FILED THE ORIGINAL RETURN OF INCOME ON 27.10.2004 DECL AR ING AN INCOME OF RS.16,17,040/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE ASSESSEE WAS SHOW CAUSED ON 26.10.2006 REGARDING THE DOCUMENTS PERTAINING TO SHARE APPLICATION FOUND DURING SURVEY , THE ASSESSEE FURNISHED REPLY ON 22.11.2006 AND MADE AN OFFER TO SURRENDER SUM OF RS.40.74 LAKHS , WITH A VIEW TO AVOID LITIGATION AND TO MAKE AN AMICABLE SETTLEMENT OF THE DISPUTE. IN SUCH CIRCUMSTANCES, THE HONBLE SUPREME COURT HELD THAT HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILE D THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILE D THE RETURN OF INCOME DECLARING INCOME INCLUSIVE OF THE AMOUNT WHICH WAS FURNISHED LATTER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE HONBLE SUPREME COURT HELD THAT CONSEQUENTLY IT IS CLEAR THAT THE ASSE SSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME AND IN SUCH CIRCUMSTANCES, IT WAS HELD THAT THE ASSESSEE HAD CONCEALED THE TRUE PARTICULARS OF ITS INCOME AND WAS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 27. THE FACTS OF THE PRESENT CASE B EFORE US ARE AT VARIANCE TO THE FACTS BEFORE THE HONBLE SUPREME COURT IN MAK DATA P. LTD. VS. CIT (SUPRA) . THE ASSESSEE THOUGH ORIGINALLY HAD FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,85,87,150/ - ON 22.09.2008, HOWEVER, PURSUANT TO THE DE CLARATION DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT ON THE BUSINESS PREMISES OF THE ASSESSEE CONDUCTED ON 19.01.2010, ADDITIONAL INCOME OF RS.2.60 CRORES WAS OFFERED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09. THEREAFTER, THE ASSESSEE FIL ED REVISED RETURN ON 17.03.2010 OFFERING THE ADDITIONAL INCOME FOR TAXATION AT ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 16 RS.4.45 CRORES. THE ASSESSING OFFICER HAS ACCEPTED THE SAID INCOME OF RS. 4.45 CRORES AFTER VERIFICATION AND DISCUSSION WITHOUT GOING INTO THE NATURE OF ADDITIONAL INCOME AND IN TURN HAS ACCEPTED THE OFFER OF ADDITIONAL INCOME AT ITS FACE VALUE. 28. ANOTHER ASPECT TO BE NOTED IN THE FACTS OF THE PRESENT CASE IS THE SAID ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDINGS WITH THE UNDERSTANDING THAT HE SHALL NOT BE VISIT ED WITH ANY PENALTY ON THIS ACCOUNT BY FILING RE SPECTIVE RETURNS. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAD ON ITS OWN MOTION OFFERED ADDITIONAL INCOME DURING THE COURS E OF SURVEY, WHICH I N TURN, WAS INCORPORATED IN THE REVISED RETURN FILED BY THE ASSESSEE AND DUE TAX ES HAVING BEEN PAID ON THE SAME AND IN THE ABSENCE OF ANY INCRIMINATING MATERIAL HAVING BEEN FOUND BY THE ASSESSING OFFICER , EITHER DURING THE COURSE OF SURVEY OR DURING THE CO URSE OF ASSESSMENT PROCEEDINGS AND THE SAID DECLARATION HAVING BEEN ACCEPTED IN ENT IRETY BY THE ASSESSING OFFICER, IT COULD NOT BE SAID THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME, MAKING IT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT. 2 9 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURTHER PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. ZOOM COMMUNICATION P. LTD. (SUPRA) , WHEREIN THE ASSESSEE HAD MADE CERTAIN CLAIMS IN I TS RETURN OF INCOME, WHICH WERE FOUND TO BE NOT ALLOWABLE TO THE ASSESSEE AND THE PLEA OF THE ASSESSEE THAT IT HAD COMMITTED A BONAFIDE MISTAKE AND ALL THE FACT MATERIAL TO THE COMPUTATION WERE DISCLOSED, WAS HELD NOT ENOUGH TO JUSTIFY NON - LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS REFERRED TO BY US IN THE PARAS HEREINABOVE, NO SUCH INCRIMINATING MATERIAL WAS FOUND IN THE CASE OF THE ASSESSEE AND ON THE OTHER HAND, THE ASSESSEE ON ITS OWN MOTION HAD OFFERED ADDITIONAL INCOME, WHICH WAS DECLARED IN ITS RETURN OF INCOME AND NO OTHER ADDITION WAS MADE BY THE ASSESSING OFFICER AND IN SUCH CIRCUMSTANCES, WE FIND NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ITA NO . 363 /PN/201 3 ITA NO.2212/PN /2013 SHRI SANDEEP MANIKRAO JAGDHANE 17 30. ANOTHER RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENT ATIVE FOR THE REVENUE IS IN RESPECT OF VOLUNTARY DISCLOSURE MADE AFTER SEARCH AND SEIZURE FOR THE YEAR IN WHICH SEIZURE WAS MADE AND EARLIER YEARS. THE HONBLE APEX COURT ELABORATED ON THE OBJECT OF THE VDIS SCHEME AND THE PROPOSITION LAID DOWN BY THE HON BLE SUPREME COURT IN TRIBHOVANDAS BHIMJI ZAVERI VS. UNION OF INDIA (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN DELETING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 31 . THE FACTS AND ISSUE S IN ITA NO. 363 /PN/ 201 3 ARE IDENTICAL TO THE FACTS AND ISSUE S IN ITA NO. 2212 /PN/201 3 AND OUR DECISION IN ITA NO. 363 /PN/201 3 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 2212 /PN/2013 . 3 2 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER P RON OUNCED ON THIS 27 TH DAY OF MAY , 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH MAY , 201 5 . GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMEN T; 2) THE ASSESSEE; 3) THE CIT(A) - II , PUNE ; 4) THE CIT - II , PUNE ; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE