Smt. Kiran Rthore W/o Ganpat Singh Rathore, UDAIPUR V. DCIT, UDAIPUR

ITA 428/JODH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4887 (ITAT-JODHPUR)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGALCIT
• Keywords: Reopening of assessment; Gift; Search and seizure; Document seized; Revised return; Documents seized; Reassessment proceedings
• Section: 143(3); 153A; 147; 27; 132; 139

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 428/JODH/2012 (A.Y. 2007-08) SMT. KIRAN RATHORE VS DCIT, CENTRAL CIRCLE-1, W/O SHRI GANPAT SINGH RATHORE UDAIPUR. C/O. R.K. POKHARNA, C.A. 212, SHUBHAM COMPLEX, 11-A, NEW FATEHPURA, UDAIPUR. PAN NO. ADYPR0898L (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT KOTHARI. DEPARTMENT BY : DR. DEEPAK SEHGAL-CIT- DR. DATE OF HEARING : 24/09/2013. DATE OF PRONOUNCEMENT : 27/09/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2007-08 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), DATED 12/10/2012 AND HAS EMANATED FROM A PENALTY ORDER DATED 13/05/2011 PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT), PASSED BY LD. DCIT, CENTRAL CIRCLE- 1, UDAIPUR. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SHRI GANPAT SINGH RATHORE ON 23/04/2008. THIS ASSESSEE IS THE WIFE OF SHRI GANPAT RATHORE. DURING THE SEARCH CERTAIN INCRIMINATING EV IDENCE WAS FOUND AND SEIZED AS PER ANNEXURE A-5. AS PER PAGE NO. 24 OF THIS ANNEXURE, THE HUSBAND OF THIS ASSESSEE ADMITTED UNDISCLOSED C ASH PAYMENT TOWARDS A TRANSACTION RECORDED ON THE PAGE, PERTAIN ING TO A.Y. 2008- 09. CONSEQUENTLY PROCEEDINGS U/S 153C R.W.S. 153A O F THE ACT WERE INITIATED AND THE ASSESSEE FOR A.Y. 2003-04 TO 2008 -09 FILED RETURNS OF INCOME ON 29/10/2010 DECLARING TOTAL INCOME OF RS. 98,63,990/- FOR A.Y. 2007-08. SHE HAD FILED ORIGINAL RETURN ON 31/1 2/2007 DECLARING TOTAL INCOME OF RS. 1,63,990/-. THE ASSESSMENT U/S 153C R.W.S. 143(3) WAS PASSED ON 29/11/2010. THIS ASSESSED INCOME ALSO INCLUDED A SUM OF RS. 97 LACS, WHICH HAD NOT BEEN ORIGINALLY DISCL OSED BUT DISCLOSED IN THE RETURN FILED IN COMPLIANCE OF THE NOTICE US/ 15 3C OF THE ACT. THEREFORE, THE AO HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IN RESPECT OF THIS INCOME OF RS. 97 LACS. D URING PENALTY PROCEEDINGS THE ASSESSEE INSISTED AND ASSESSED THAT THE PROVISIONS OF SECTION 271(1)(C) ARE NOT ATTRACTED WHEN A SURRENDE R IS MADE U/S 132(4) OF THE ACT BECAUSE IT IS CLEARLY SAVED BY EX PLANATION 5 OF THIS SECTION. HOWEVER, LD. AO WAS NOT AGREEABLE. FURTHER , IN FIRST APPEAL 3 THE LD. CIT(A) ALSO FOLLOWED SUIT AND HAS CONFIRMED THE PENALTY OF RS. 32,55,808/- IMPOSED @ 100% OF THE TAX SOUGHT TO BE EVADED. 3. BEFORE US, BOTH PARTIES HAVE REITERATED THEIR EA RLIER STAND. THE LD. AR HAS REPEATED SUBMISSION MADE BEFORE LD. CIT( A), WHICH ARE AS UNDER:- IT IS SUBMITTED THAT SEARCH PROCEEDINGS WERE EARNE D OUT AT THE RESIDENCE PREMISES OF 5H. GANPAT SINGH RATHO RE, RISHABHDEO, DISTRICT UDAIPUR ON 23/04/2008 AND LOOS E PAPERS, DIARIES WERE FOUND. ON BEING ASKED ABOUT TH ESE SMT. KIRAN RATHORE W/O SHRI GANPAT SINGH RATHORE ADMITTED THOSE PAPERS PAGE 24- ANNEXURE -5 ( COPY O F SAME IS ENCLOSED) AND 1.41 CRORE WERE OFFERED FOR TAXATION. THEREFORE, NOTICE U/S 153C WAS ISSUED IN HER CASE FOR THE A.Y. 2003-04 TO 2008-09. THE ASSESSEE HAS P REPARED CASH FLOW AND OFFERED FOR TAXATION AS UNDER: A.Y. AMOUNT 2004 - 2005 11,40,000/ - 2007 - 2008 97,00,000 - 2008 - 2009 10,00,000 - IOTA! 1,18,40,000/ - DURING THE PENDING PROCEEDINGS IT WAS EXPLAINED 'HA T AMOUNT OFFERED FOR TAXATION IN THE COURSE OF SEARCH IN A STATEMENT RECORDED U/S 132(4) WAS BIFURCATED IN EAR LIER YEARS AND ACCORDINGLY RETURN WAS FILED AND TAX WAS DEPOSITED. YOUR HONOUR WILL PLEASE OBSERVE THAT THE ABOVE REFERRED ANNEXURE ON THE BASIS OF WHICH SURRENDER W AS 4 MADE DO NOT SHOW ANY ENTRY OF FINANCIAL YEAR 2006-0 7 PERTAINING TO ASST. YEAR 2007-08. THEREFORE EVEN IF EXPLANATION 5A TO BE APPLIED THEN ALSO THERE IS NO SUCH ENTRY IN THE LOOSE PAPER WHICH CAN COMPLY THE CONDI TION PRESCRIBED UNDER EXPLANATION 5A, THEREFORE THIS IS OUT OF AMBIT OF SECTION 271(1) (C) OF THE ACT, THE ASSESSE E HAS FILED THE RETURN OF INCOME FOR THE ASST. YEAR UNDER CONSIDERATION U/S 153C AT RS. 98,63,990/- AND WAS A SSESSED AT THE SAME INCOME FOR THE ASSTT YEAR 2007-08. FURT HER ASSESSEE HAS EXPLAINED ALL THE RELEVANT ENTRIES IN THE BOOKS AND MATERIAL/PAPERS SEIZED AND NO ADVERSE REMARK WA S MADE BY A.O. THAT DURING THE COURSE OF PENALTY PROCEEDINGS IT WA S SUBMITTED THAT PENALTY U/S 271(1)(C) COULD NOT BE L EVIED ON THE INCOME DECLARED IN RETURN FILED IN RESPONSE TO NOTICE U/S 153A AS THE INCOME DECLARED HAS TO BE TREATED A - INCOME DISCLOSED TO THE DEPARTMENT AND THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS REGARDING THE SAID INCOME. ALSO IT WAS STATED THAT ISSUANCE OF NOTICE U/S 153C AND ASSESSMENT REASSESSMENT IF ANY RELATING TO ANY ASST, YEAR; FAL LING WITHIN A PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB SECTION PENDING ON THE DATE OF INITIATION OF SE ARCH U/S 132 SHALL ABATE AND' THE PROCEEDINGS STARTS DE NOVO . 5 WHILE IMPOSING PENALTY THE ID. A.O. OBSERVED AS UND ER: 'FURTHER THE ASSESSEE IS NOT ENTITLED FOR IMMUNITY UNDER EXPLANATION 5 OF SECTION 271 (1) (C) OF THE I.T. AC T AS THE ASSESSEE'S CASE IS COVERED UNDER AMENDED EXPLANATIO N 5A OF SECTION 271(1) (C) OF THE I.T. ACT (AS DISCUSSED SU PRA) IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, I AM OF T HE OPINION THAT THERE IS CONSCIOUS CONCEALMENT ON THE PART OF THE ASSESSEE WHICH IS NOT ACCIDENTAL OR UNINTENTION AL BUT CONCEALMENT OF INCOME WITH A GUILTY MIND TO EVADE O R AVOID TAX. IT WAS FAILURE OF THE ASSESSEE TO RETURN CORRECT INCOME IN HIS REGULAR RETURN OF INCOME FILED- IT AR OSE FROM GROSS WILLFUL NEGLECT ON HIS PART WHICH WAS DISCOVE RED BY ACTION U/S 132 AND OTHERWISE IT COULD NEVER BEEN DI SCLOSED BY THE ASSESSEE, THEREFORE, HE SHOULD BE DEEMED TO HAVE DISCLOSED THE PARTICULARS OF HIS INCOME. THE FILING OF RETURN AFTER THE SEARCH AND SEIZURE ACTION CANNOT EXONERAT E HIM FROM THE BLAMEWORTHINESS OF CONCEALING OF HIS TRUE PARTICULAR OF INCOME IN REGULAR RETURN OF INCOME FI LED. THEREFORE, THE ASSESSEE IS HELD GUILTY OF CONCEALME NT OF INCOME TO THE EXTENT OF RS. 97,00,000/- BY CONCEALI NG THE PARTICULARS OF INCOME AND LIABLE FOR PENALTY U/S 27 1(1)(C) OF I.T. ACT, 1961'. 3.1 BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTE D AS UNDER: 6 IT IS SUBMITTED THAT IN THIS CASE SEARCH WAS CARRIE D OUT ON 23/04/2008 AND AT THE TIME OF SEARCH ACTION LEGAL P ROVISION APPLICABLE WAS EXPLANATION 5A INSERTED BY FINANCE A CT 2007 W.E.F. 1/06/2007 AND AT THAT TIME EXPLANATION 5A SUBSTITUTED BY FINANCE ACT 2009 W.R.E.F. 1/06/2007 WAS NOT IN EXISTENCE. THEREFORE, IN OUR CASE PROVISION OF EXPLANATION 5A OF FINANCE ACT 2007 ARE APPLICABLE A ND NOT OF FINANCE ACT 2009 AS HELD BY THE A.O., I.E. LAW O N THE DATE OF ACTION U/S 132 AS THESE ARE PENAL PROVISION , AS PER EXPLANATION 5A OF FINANCE ACT, 2007 ASSESSEE IS NOT COVERED UNDER EXPLANATION 5A AND THEREFORE PENALTY IS NOT IMPOSSIBLE. THE RETURNS UPTO THE A.Y. 2007-2008 IN THE CASE OF THE ASSESSEE WERE FILED U/S 139 (1) ON 31.1 2.2007. AFTER SEARCH THE ASSESSEE HAS DRAWN THE CASH FLOW STATEMENT AND MADE RECONCILIATION WITH SISTER CONCE RN FOR ALL THE SIX YEAR AND ACCORDINGLY ALL THE RETURNS WE RE FILED FROM THE ASSTT YEAR 2003-04 TO 2009-10 AND OFFERED SUCH INCOME OF RS. 97,00,000/-AND THE TAX WERE PAID BEFO RE FILING OF INCOME. SO FILLING OF RETURN U/S 153C AND OFFERING ABOVE INCOME FOR TAXATION DOES NOT FALL WITHIN THE SCOPE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AND TRULY PROVISION OF SEC. 271(1)(C) A RE NOT ATTRACTED. THE HON'BLE HIGH COURT: IN S.A.S. PHARMACEUTICALS JUDGMENT HAS SPECIFICALLY HELD THAT PENALTY U/S 271 (1) (C) CANNOT BE IMPOSED ON THE AMOUNT OF ADDITIONAL INCOM E RETURNED AFTER SURVEY ON THE PLEA; THAT IN ABSENCE OF 7 SURVEY THE ASSESSEE WOULD NOT HAVE DISCLOSED THE SA ID ADDITIONAL INCOME. THE HIGH COURT HAS ALSO SPECIFIC ALLY CONSIDERED THE ABOVE MENTIONED NEWLY INSERTED PROVI SION OF PENALTY AFTER SEARCH IN PARA 15 ON INTERNAL PAGE 13 OF THE SAID ORDER. THUS, IT CANNOT BE SAID THAT THE SA ID JUDGMENT IS ONLY APPLICABLE TO SURVEY PROCEEDINGS B UT IS ALSO APPLICABLE IN RESPECT OF ADDITIONAL INCOMES OF FERED IN THE RETURNS SUBMITTED AFTER SEARCH AS THE EXPLANATI ONS 5 AND 5A ARE APPLICABLE ONLY IN RESPECT OF INCOMES AS SESSED U/S 153A OF THE ACT AFTER SEARCH PROCEEDINGS HOWEVE R, THERE IS A DIFFERENCE THAT AFTER SURVEY THE ORIGINA L RETURN STANDS ON THE RECORD BUT W.E.F. 01/06/2003, AFTER A SEARCH ' THE EARLIER PROCEEDINGS TECHNICALLY BECOME NON-ES T AND THE ASSESSING OFFICER IS DUTY BOUND TO PASS ASSESSM ENT ORDERS U/S 153A FOR SEVEN YEAR; WHETHER THERE WAS A NY EARLIER ASSESSMENT OR NOT. OUR CONTENTION THAT THE RETURN OF INCOME FILED UNDE R SECTION 153C IS VOLUNTARY AND ASSESSEE CAN DECLARE THE INCOME, WHICH WAS NOT EARLIER DISCLOSED FOR ANY REA SON SEC.L53.A WAS INSERTED INTO STATUTE W.E.F. 11 JUNE, 2003 BY FINANCE ACT, 2003 WHICH READS AS UNDER: THE ASST. PROCEEDINGS ARE COVERED IN THE MANNER PROVIDED IN SEC.153A. '153A. NOTWITHSTANDING ANYTHING CONTAINED IN SECTIO N 139 SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS 8 INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OT HER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SEC TION 132A AFTER THE 15 TH DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL- (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTI CE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( H), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANN ER END SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRES CRIBED AND THE PROVISIONS OF THIS ACT SO FAR AS MAY BE, A PPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX A SSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUC TED OR REQUISITION IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, I F ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF ASSESSMENT YEARS REFERRED TO IN THIS SECTION PENDIN G ON THE DATE OF INITIATION OF THE SEARCH UNDER 132 OR MAKIN G OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL 9 ABATE. EXPLANATION,- FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, - (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTI ON, SECTION 153B AND SECTION 153C ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX S HALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SU CH ASSESSMENT YEAR.' ON BARE READING OF SEC. 153A IT IS SEEN THAT THIS S ECTION STARTS WITH A NON-OBSTANTE CLAUSE RELATING TO NORMA L ASSESSMENT PROCEDURE COVERED BY SECTION 139, 147, 1 48, 149, 151 AND 153 IN RESPECT OF SEARCHES MADE AFTER 31ST MAY. 2003. THE SECTIONS, SO EXCLUDED, RELATE TO FIL ING OF RETURN ASSESSMENT AND RE-ASSESSMENT PROCEEDINGS. FU RTHER SECTION 153A INTENDS TO ASSESS OR REASSESS TOTAL IN COME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SE ARCH IS CONDUCTED OR REQUISITION IS MADE. THUS THE LEGISLAT IVE INTENTION IS NOT TO ASSESS ESCAPED INCOME AS IN SEC TION 147 OR UNDISCLOSED INCOME AS WAS ASSESSED U/S 158BC OF THE ACT. THE FIRST PROVISO TO SEC, 153BA MAKES IT CLEAR , THAT NOTICE UNDER SEC. 153A WILL BE FOR EACH SUCH SIX AS SESSMENT YEARS FOR ASSESSMENT OR REASSESSMENT OF TOTAL INCOM E. SECOND PROVISO TO SECTION 153A PROVIDES THAT SUCH N OTICE WILL HAVE THE EFFECT OF ABATING ALL THE PENDING ASS ESSMENT OR REASSESSMENT PROCEEDINGS, SO AS TO AVOID MULTIP LICITY OF 10 PROCEEDINGS, WHICH WAS A FEATURE OF BLOCK ASSESSMEN T. HON'BLE ALLAHABAD HIGH COURT IN THE CASE CIT (CENTR AL), KANPUR V SHAILA AGARWAL [2011] 16 TAXMANN.COM 232 ( ALL.) HAS HELD THAT THE WORLD ABATEMENT' IS REFERRABLE TO SOMETHING, WHICH IS PENDING ALIVE, OR IS SUBJECT TO DEDUCTION. THE ABATEMENT REFERS TO SUSPENSION OR TERMINATION OF THE PROCEEDINGS EITHER OF THE MAIN A CTION, OR THE PROCEEDINGS ANCILLARY OR COLLATERAL TO IT. T HE WORD IS COMMONLY USED IN THE LEGISLATIONS, WHICH PROVIDE FO R .ABATEMENT OF ACTION/SUIT; ABATEMENT OF LEGACIES; ABATEMENT OF NUISANCE; AND ALL ACTIONS FOR SUCH NAT URE, WHICH HAVE THE PENDENCY OR CONTINUANCE THE PROCEEDI NGS, WHICH HAVE ALREADY TERMINATED ARE NOT LIABLE FOR ABATEMENT UNLESS STATUTE EXPRESSLY PROVIDED FOR SUC H CONSEQUENCE THEREOF. THE WORD 'PENDING' OCCURRING I N THE SECOND PROVISO TO SECTION 153A OF THE ACT, IS ALSO SIGNIFICANT, QUALIFIED BY THE WORD 'ON THE DATE OF INITIATION OF THE SEARCH', AND MAKES IT ABUNDANTLY CLEAR THAT ONLY SUCH ASSESSMENT OR REASSESSMENT PROCEEDINGS ARE LIA BLE TO ABATE. THUS WHILE SECTION 153A DESCRIBES FOR ASSESSMENT OR REASSESSMENT OF TOTAL INCOME IN SEARCH CASES, SECTI ON :153B PRESCRIBES THE TIME LIMIT FOR COMPLETION OF ASSESSM ENT UNDER SEC. 153A. SECTION 153C RELATES TO THE CASES WHERE BOOKS OF ACCOUNTS OR DOCUMENTS OR ASSETS SEIZED UND ER SEC. 132 OR REQUISITION UNDER SEC. 132A BELONG TO A PERS ON OTHER THAN A PERSON IN WHOSE CASE SEARCH UNDER SEC. 132 O R REQUISITION UNDER 132A WAS MADE. THUS PROVISIONS 15 3A, 11 53B AND 153C ARE CODE FOR SEARCH ASSESSMENT, WHEREI N SEARCH HAS BEEN INITIATED AFTER 31ST MAY, 2003, THE EXISTENCE OF THE WORDS 'ALL OTHER PROVISION:, OF TH IS ACT. SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTI ON' IN EXPLANATION (I) OF SECTION 153A MAKES IT CLEAR THAT IN SEARCH ASSESSMENTS, AMONGST OTHERS THE PROVISIONS R ELATING TO PENALTY AND PROSECUTION WILL ALSO BE APPLICABLE. HOWEVER, WHEN NORMAL ASSESSMENT PROCEDURE COVERED B Y SECTIONS 139, 147, 148, 149, 15I AND 153 HAS BEEN COMPLETELY EXCLUDED BY OPERATION OF NON-OBSTANTE CL AUSE 'NOTWITHSTANDING ANYTHING CONTAINED' THE SEARCH ASSESSMENTS MADE U/S SECTION 153A OF THE ACT CANNOT BE TREATED AS CONTINUANCE OF NORMAL ASSESSMENT PROCEED INGS WHETHER ABATED OR NOT. THUS THERE IS COMPLETE DETAC HMENT ASSESSMENT PROCEEDINGS U/S 143 OR 147 FROM SEARCH PROCEEDINGS U/S 153A OF ACT. WHEN SCHEME OF SEARCH ASSESSMENT AS DESIGNED BY THE LEGISLATURE DOES NOT PRESCRIBE TO TAKE INTO ACCOUNT THE EARLIER ASSESSME NT PROCEEDINGS WHETHER ABATED OR NOT, IT WILL NOT BE P ROPER OR JUSTIFIED TO REFER TO RETURNED INCOME U/S 139 FOR P URPOSE IMPOSITION OF PENALTY U/S 271 (1) (C) OF THE ACT. I T FOLLOWS THAT THE CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO ADDITIONAL INCOME BROUGHT TO TAX OVER AND ABOVE RETURNED BY THE ASSESSEE IN RESPONSE TO NOTIC E ISSUED U/S 153A OF THE ACT. ACCORDINGLY FOR THE PURPOSE OF IMPOSITION OF PENALTY U/S 271 (1) (C) RESULTING INT O SEARCH ASSESSMENTS MADE U/S 153A, THE ORIGINAL RETURN OF I NCOME FILED U/S 139 CANNOT BE CONSIDERED. 12 FURTHER IN CASE OF SEARCH INITIATED AFTER 01.06.200 3 A RETURN OF INCOME IS ALWAYS FILED ON ISSUED OF NOTIC E U/S 153A/153C. AS DISCUSSED ABOVE THE PENALTY U/S 271(1 )(C) IS IMPOSABLE WHEN THERE IS VARIATION IN ASSESSED AND R ETURNED INCOME. IF THERE IS NO VARIATION, THERE WILL BE NO CONCEALMENT. WHEN THERE IS NO CONCEALMENT, QUESTION LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WILL NOT ARISE. THIS IS SETTLED POSITION OF LAW. THE CONCEPT OF VOLUNTARY R ETURN OF INCOME MAY BE IMPORTANT IN PENALTY PROCEEDINGS INIT IATED IN COURSE OF NORMAL ASSESSMENT PROCEEDINGS MADE U/S 143 (3) OR 147 BUT NOT U/S 153A. FORM ABOVE DISCUSSION IT FOLLOWS THAT WHERE RETURNED INCOME FILED U/S 153C I S ACCEPTED BY THE ASSESSING OFFICER THERE WILL BE NO CONCEALMENT OF INCOME AND CONSEQUENTLY PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. HON'BLE SUPREME COURT IN VARKEY CHACKO V. CIT 203 I TR 885 (SC) HAS HELD THAT A PENALTY FOR CONCEALMENT OF PAR TICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME CAN BE IMPOSED ONLY WHEN THE ASSESSING AUTHO RITY IS SATISFIED THAT THERE HAS BEEN SUCH CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. A PENALTY PRO CEEDING, THEREFORE, CAN BE INITIATED AFTER AN ASSESSMENT ORD ER HAS BEEN MADE WHICH FINDS SUCH CONCEALMENT OR FURNISHIN G OF INACCURATE PARTICULARS. THE PENALTY WAS PERMISSIBLE UNDER THE LAW ON THE DATE ON WHICH THE OFFENCE OF CONCEAL MENT OF INCOME WAS COMMITTED, THAT IS TO SAY, ON THE DAT E OF THE OFFENDING RETURN, HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. K.R. CHIMNI KRISHNA CHETTY [2000] 24 6 ITR 13 121 HAS HELD THAT UNDER SECTION 271 (1) (C) OF THE ACT THE AUTHORITY IS GIVEN THE DISCRETION TO LEVY A PENALTY IF THERE IS CONCEALMENT OF PARTICULARS OF INCOME AND EVEN AS REGARDS THE QUANTUM OF THE PENALTY THERE IS A DISCR ETION. OF GREATER IMPORTANCE IS THE NECESSITY FOR A DEFINI TE FINDING THAT THERE IS CONCEALMENT, AS WITHOUT SUCH A FINDING OF CONCEALMENT, THERE CAN BE NO QUESTION OF IMPOSING ANY PENALTY. IN CIT V. SURESH CHANDRA MITTAL [2001] 251 ITR 9 (S C) THE ASSESSEE FILED REVISED RETURNS SHOWING HIGHER INCOM E AFTER SEARCH AND NOTICE FOR REOPENING OF ASSESSMENT, TO P URCHASE PEACE AND AVOID LITIGATION AND DEPARTMENT, SIMPLY R ESTED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER DO NE BY THE ASSESSEE IN GOOD FAITH. HIGH COURT WAS JUSTIFIE D IN HOLDING THAT NO PENALTY COULD BE LEVIED. THE ASSESS EE'S CASE IS ON MORE STRONG FOOTINGS AS THAT OF SURESH CHANDR A MITTAL DECIDED BY HON'BLE SUPREME COURT. AS HELD IN EARLIE R PARAGRAPHS THERE SHOULD BE VARIATION IN ASSESSED AN D RETUNED INCOME AND SUCH VARIATION SHOULD BE AS A RE SULT CONCEALMENT. IT IS NOT THE CASE OF ASSESSING OFFICE R THAT PENALTY U/S 271(1)(C) 'HAS BEEN IMPOSED ON CERTAIN ADDITIONS MADE BASED ON SEIZED MATERIAL WHICH HAD N OT BEEN ADMITTED BY THE ASSESSEE IN THE RETURN FILED I N RESPONSE TO NOTICE UNDER SEC. 153A OF THE ACT. RATH ER IT IS A CASE WHERE THE STATUTE HAS GIVEN AN OPPORTUNITY T O THE ASSESSEE TO RECTIFY THE OMISSIONS ON PART OF THE AS SESSEE. HENCE NO PENALTY WILL BE LEVIED IF THE ASSESSEE DE CIDES UNDISCLOSED INCOME U/S 153A OF THE ACT. 14 HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. SURESH CHAND BANSAL (2010) 329 ITR 330 HAS HELD THAT ADDIT IONAL INCOME OFFERED BY ASSESSEE AFTER THE SEARCH HAVING BEEN ACCEPTED IN ITS ENTIRETY WITHOUT DETAILED DISCUSSIO N OF THE SEIZED DOCUMENTS AND WITHOUT MAKING ANY ATTEMPT TO OBTAIN THE EXPLANATION OF THE ASSESSEE, PENALTY ORD ER UNDER SECTION 271(1)(C) IS NOT LEVIABLE. HON'BLE ITAT, DELHI 'G' THIRD MEMBER BENCH IN THE C ASE OF ACIT VS. PREM CHAND GARG (2009) 119 ITD 97 HAS HELD THAT VOLUNTARY OFFER OF INCOME IN ORDER TO BUY PEACE AND AVOID LITIGATION BEFORE TAKING UP ASSESSMENT BY THE AO DE HORS ANY MATERIAL WITH THE AO CANNOT AMOUNT TO CONCEALME NT; ASSESSEE HAVING SURRENDERED THE AMOUNT OF NRI GIFT ON A GENERAL QUERY RAISED BY AO ON THE CONDITION OF NOT INITIATING PENALTY PROCEEDINGS BEFORE ASSESSMENT WA S TAKEN UP, AO COULD NOT HAVE IMPOSED PENALTY UNDER SECTION 271 (1) (C) WHEN THERE WAS NO MATERIAL WITH THE AO TO A RRIVE AT SATISFACTION ABOUT CONCEALMENT. IN THIS CASE ASSESS EE HAS OFFERED SUCH INCOME EVEN BEFORE ANY SUCH QUERY, THE REFORE OUR CASE IS MORE STRONG. HON'BLE ITAT', MUMBAI 'G' BENCH IN THE CASE OF DCIT VS. EVER SMILE CONSTRUCTION CO, (P) LTD. (2012) 61 DTR 39 HA S HELD THAT REQUIREMENT OF SECTION 153A IS TO COMPUTE THE TOTAL INCOME OF EACH OF SUCH ASSESSMENT YEARS AND SUCH DETERMINATION OF THE TOTAL INCOME HAS TO BE DONE AF RESH WITHOUT ANY REFERENCE TO WHAT WAS DONE IN THE ORIGI NAL 15 ASSESSMENT; ASSESSEE IS ENTITLED TO SEEK RELIEF ON ANY ADDITION WHICH WAS MADE IN THE ORIGINAL ASSESSMENT, IN OUR CASE THE ASSESSEE HAS DISCLOSED UNDISCLOSED INCOME IN THE RETURN OF INCOME FILED IN RESPONSE! TO NOTICE U /S 153 OF THE ACT WHICH HAS BEEN ACCEPTED BY THE ASSESSING OF FICER. YOUR HONOUR WILL PLEASE OBSERVE THAT UNDER THE SCHE ME OF SEARCH ASSESSMENT U/S 153A, THE TOTAL INCOME OF THE ASSESSEE IS TO BE DETERMINED FOR EACH OF SIX ASSESS MENT YEARS. THE ASSESSMENT OR RE-ASSESSMENT PROCEEDINGS U/S 153A IS NOT IN CONTINUATION OF ASSESSMENT PROCEEDIN GS U/S 143 OR SEC. 147 OF THE ACT. SINCE THERE IS COMPLETE DETACHMENT OF 153A PROCEEDINGS FROM REGULAR ASSESSM ENT PROCEEDINGS U/S 143 OR 147. ONCE RETURNED INCOME IS ACCEPTED BY THE ASSESSING OFFICER IT CAN NEITHER BE A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE O F PARTICULARS OF SUCH INCOME. THE ASSESSEE HAD DISCLO SED INCOME IN THE RETURN OF INCOME FILED DETERMINED ON THE BASIS OF ENTRIES RECORDED IN SEIZED MATERIAL. HON'BLE DELHI HIGH COURT IN THE CASE OF M/S S.A.S. PHARMACEUTICALS (SUPRA) WHILE DECIDING THE ISSUE LE VY OF PENALTY U/S 271(1)(C) IN PARA NOS 15 & 16 HAS HELD AS UNDER: '15. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PAR TICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME BY THE ASSESSEE HAS TO BE IN THE INCOME TAX RETURN FILED BY IT. THERE IS SUFFICIENT INDICATION OF HON'BLE COUR T IN THE 16 JUDGMENT IN THE CASE OF COMMISSIONER OF INCOME TAX, DELHI VS MOHAN DAS HASSA NAND 141 ITR 203 AND IN RELIANCE PETRO PRODUCTS PVT LTD. (SUPRA), THE SUPREME COURT CLINCH ED THIS ASPECT, VIZ., THE ASSESSEE CAN FURNISH THE PARTICUL ARS OF INCOME IN HIS RETURN AND EVERYTHING WOULD DEPEND UP ON THE INCOME TAX RETURN FILED BY THE ASSESSEE. THIS VIEW GETS SUPPORTED BY EXPLANATION 4 AS WELL AS 5 AND 5A OF S ECTION 271(1)(C) OF THE ACT AS CONTENDED BY THE LD. COUNSE L FOR THE RESPONDENT. 16. NO DOUBT, THE DISCREPANCIES WERE FOUND DURING T HE SURVEY THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMOUNT SURRENDERED BY THE ASSESSES. PRESENT LY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BU T THE MOOT QUESTION IS TO WHETHER THIS WOULD ATTRACT PENA LTY UPON THE ASSESSEE UNDER PROVISIONS OF SECTION 271 ( 1) (C) OF THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLES S THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DU LY AND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXP OSED DURING SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEVER, THERE CANN OT BE ANY PENALTY ON SURMISES, ON CONJECTURES AND POSSIBI LITIES. SECTION 271 (1) (C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND THAT THERE IS ACTUALLY A CONCEAL MENT OR NON-DISCLOSURE OF THE PARTICULARS OF INCOME, PENALT Y CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON- DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISC LOSURE IN THE INCOME TAX RETURN AND OFFERED THE SURRENDERE D 17 AMOUNT FOR THE PURPOSE OF TAX.' 4. THE LD. CIT(DR) HAS ALSO REPEATED THE REASONS GI VEN IN THE PENALTY ORDER FOR IMPOSITION OF THE IMPUGNED PENALT Y U/S 271(1)(C) OF THE ACT. AFTER CONSIDERING RIVAL SUBMISSIONS, WE HA VE FOUND THAT THIS PENALTY CANNOT SURVIVE. BUT BEFORE WE CONSIDER THE FACTUAL MATRIX OF THIS CASE TO ASCERTAIN AS TO WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT AS EXPLAINED BY NUMEROUS JUDICIAL PRONOUNCEMENT S, PENALTY CAN BE LEVIED IN THIS CASE OR NOT, WE WOULD LIKE TO DISCUS S IN NUT SHELL THE RELEVANT LEGAL POSITION REGARDING LEVY OF PENALTY U /S 271(1)(C) OF THE ACT AND AS TO HOW AND WHEN SUCH PENALTY CAN BE LEV IED UNDER THIS SECTION. THERE ARE NO TWO OPINIONS ABOUT THE SETTL ED POSITION OF LAW THAT REGULAR ASSESSMENT PROCEEDINGS AND PENALTY PRO CEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHICH OPERATE IN DIST INCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIRELY DIFFERENT PARAMETE RS ARE APPLICABLE FOR MAKING QUANTUM ADDITION AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE CAN BE NO DISPUTE WITH REGARD TO THE POSITION OF LAW THAT UNDER SECTION 271(1)(C) PENALT Y CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALMENT OF PARTICULARS O F INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IS FOUND TO HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS ALBEIT THEY REFER TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. 18 A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGESTIO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICUL ARS ALONE, THE ASSESSEE DOES NOT, IPSO FACTO, BECOME LIABLE TO A P ENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOMATIC. MEANING THEREB Y, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISHING OF INACCURATE PARTICU LARS OF INCOME. NOT ONLY IS THE LEVY OF PENALTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPING THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO THE DECISIONS IN THE CASE OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS [2 008] 13 SCC 369, AS WELL AS UNION OF INDIA VS RAJASTHAN SPG. & WVG. MIL LS [2009] 13 SCC 448, THE HON'BLE SUPREME COURT IN THE CASE OF CIT V S RELIANCE PETROPRODUCTS PVT. LTD, 322 ITR 158, HAS RECENTLY HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO 19 INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 5. ADVERTING TO THE FACTS OF THIS CASE AND IN THE L IGHT OF EXPLANATION- 5 AND THE LEGAL POSITION ON THE SUBJECT, WE ORDER D ELETION OF THE IMPUGNED PENALTY. AND ALLOW APPEAL OF THE ASSESSEE. THE ASSESSEE 20 MADE A SURRENDER OF INCOME US/ 132(4) OF THE ACT AN D HAS OFFERED THE SURRENDERED AMOUNT RELATABLE TO THIS A.Y. AND HAS P AID DUE TAXES THEREON. THEREFORE, THE ASSESSEE HAS NEITHER CONCEA LED PARTICULARS OF HER INCOME NOR SHE HAS FURNISHED INACCURATE PARTICU LARS OF HER INCOME, AS SUCH NO PENALTY U/S 271(1)(C) CAN BE IMPOSED ON HER HAND. WE ALSO DERIVE SUPPORT FROM THE DECISION OF THIS BENCH REND ERED IN THE CASE, ON IDENTICAL FACTS OF M/S. POONAM MARBLE (P) LTD. VS. DCIT ORDER DATED 03/06/2013, A COPY OF WHICH ENCLOSED. ACCORDINGLY, WE DELETE THE ENTIRE PENALTY AND ALLOW HER APPEAL. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH SEPTEMBER, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR