T.Satyanarayana, Visakhapatnam V. The Addl. CIT-1, Visakhapatnam, Visakhapatnam

ITA 679/VIZ/2013

• Counselvise Citation: 67925314 RSA 2013
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Keywords: Unexplained investment; Search and seizure; Onus to prove; Revised return
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI SAKTIJIT DEY, JM ITA NO.679/VIZAG/2013 : ASST.YEAR 2005-2006 SRI T.SATYANARAYANA D/NO.47-11-9, DWARKANAGAR DIAMOND POINT VISAKHAPATNAM. PAN : AAQPT9170N. VS. THE ADDL.COMMISSIONER OF INCOME - TAX - 1 VISAKHAPATNAM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.V.N.HARI RESPONDENT BY : SMT.KOMALI KRISHNA, ADDL.CIT DATE OF HEARING : 0 4 .03 .2014 DATE OF PRONOUNCEMENT : 07 .0 3 .2014 O R D E R PER J.SUDHAKAR REDDY (AM) : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), VISAKHAPATNAM , DATED 22 ND OCTOBER, 2013, WHEREIN PENALTY LEVIED U/S 271(1)(C) BY THE ASSESSI NG OFFICER VIDE ORDER DATED 31 ST OCTOBER, 2012 WAS CONFIRMED. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIV IDUAL AND DERIVED INCOME FROM BUSINESS AND HOUSE PROPERTY. HE ORIGINALLY FILED H IS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-2006 ON 03.01.2006 ADMITTING T HE INCOME OF RS.18,71,310. SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED IN THE CASE OF M/S. SAI RAM PARLOUR GROUP ON 30.01.2008. SIMULTANE OUSLY, SEARCH AND SEIZURE WERE ALSO CARRIED OUT IN THE RESIDENTIAL PREMISES O F THE ASSESSEE. DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS, CERTAIN INCRIMIN ATING DOCUMENTS RELATING TO THE ASSESSEE WAS FOUND. NOTICE U/S 153A WAS ISSUED AND THE ASSESSEE FILED REVISED RETURN DECLARING TOTAL INCOME OF RS.50,66,050. THE ASSESSING OFFICER PASSED AN ORDER U/S 143(3) READ WITH SECTION 153A MAKING AN A DDITION OF RS.4,37,500 TO THE INCOME RETURNED IN PURSUANCE TO NOTICE U/S 153A. ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 2 2.1 THE ASSESSING OFFICER INITIATED PENALTY PROCEED INGS U/S 271(1)(C) OF THE ACT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 31.1 2.2009. LATER, ANOTHER SHOW CAUSE NOTICE U/S 274 READ WITH SECTION 271(1)(C) DA TED 10.01.2012 WAS ISSUED. THIS PROCEEDING WAS CARRIED FORWARD BY ISSUE OF LET TERS TO THE ASSESSEE ON 25.09.2012 AND 10.10.2012. THE ASSESSEE FURNISHED E XPLANATION ON 12.10.2012. A FURTHER SHOW CAUSE NOTICE WAS ISSUED ON 22.10.2012 AND THE ASSESSEE FILED AN EXPLANATION ON 28.10.2012. AFTER CONSIDERING THIS E XPLANATION, THE ASSESSING OFFICER CONFIRMED THE PENALTY BY OBSERVING AS FOLLO WS:- 8. IN THE ORIGINAL RETURN FILED ON 03.01.2006, THE ASSESSEE HAD ADMITTED TOTAL INCOME OF RS.18,71,310/-. SUBSEQUENT TO SEARCH AND SEIZURE OPERATION ON 30.01.2008, THE UNDISCLOSE D INVESTMENT WAS DETECTED BY THE DEPARTMENT. SUBSEQUENTLY AGAINS T THE NOTICE U/S 153A, THE ASSESSEE HAD FILED REVISED RETURN ON 11.09.2009 ADMITTING TOTAL INCOME OF RS.50,66,050/- WHICH INCL UDED UNDISCLOSED INVESTMENT OF RS.31,94,000/-. BY ADMITT ING THE UNDISCLOSED INVESTMENT IN THE REVISED RETURN, THE A SSESSEE HIMSELF HAS ADMITTED THE CONCEALMENT. HENCE, IT IS CLEAR FROM THE ABOVE EXPLANATION 5A OF SECTION 271(1)(C) THAT THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INC OME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 9. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE UNDERSIGNED IS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PART ICULARS OF HIS INCOME TO THE TUNE OF RS.32,38,490/- [RS.31,94,740/ - WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT TOWARDS INVEST MENT IN PURCHASE OF LAND + RS.43,750/- TOWARDS UNACCOUNTED EXPENSES] AND HENCE, THE ASSESSEE IS LIABLE TO PAY PENALTY WH ICH SHALL NOT BE LESS THAN 100% OF TAX SOUGHT TO BE EVADED, BUT S HALL NOT EXCEED 300% OF THE AMOUNT OF TAX SOUGHT TO BE EVADE D AND THE PENALTY SO LEVIABLE IS IN ADDITION TO THE TAX PAYAB LE BY THE ASSESSEE. ACCORDINGLY, CONSIDERING THE OVERALL FACT S AND CIRCUMSTANCES OF THIS CASE AN AMOUNT OF RS.16,35,11 6/- IS LEVIED (BEING 150% OF TAX SOUGHT TO BE EVADED) BY THE UNDE RSIGNED. THIS SHOULD BE PAID AS PER CHALLAN ENCLOSED, DEMAND NOTI CE ENCLOSED. 3 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APP EAL. ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 3 3.1 THE FIRST APPELLATE AUTHORITY CONSIDERED VARIOU S CONTENTIONS OF THE ASSESSEE AND AT PARA 6.2 HELD THAT (A) AO HAS VALIDLY INIT IATED PENALTY PROCEEDINGS; (B) THE ADDITIONAL INCOME OFFERED IN THE REVISED R ETURN IS CONSEQUENT TO THE SEARCH OPERATION WITH REFERENCE TO THE SEIZED MATERIAL IND ICATING UNEXPLAINED INVESTMENTS; (C) THE ESTIMATED ADDITION OF RS.43,750 ALSO EMANAT E FROM THE SEIZED RECORDS; AND (D) IT IS EVIDENT THAT THE ASSESSEE HAS CONCEALED T HE PARTICULARS OF HIS INCOME, IN NOT DISCLOSING CERTAIN INVESTMENT IN LAND, WHICH SU RFACED ON ACCOUNT OF SEARCH OPERATION CONDUCTED IN HIS CASE ON 30.01.2008. 3.2 AS THE SEARCH AND SEIZURE OPERATION IN THIS CAS E WAS CONDUCTED ON 31.02.2008, WHICH WAS AFTER THE INSERTION OF EXPLANATION 5A TO SECTION 271(1)(C) WITH EFFECT FROM 01.06.2007, HE HELD THAT EXPLANATION 5A IS APPLICABLE AND HENCE THE PENALTY IS CONFIRMED. 4. AGGRIEVED, THE ASSESSEE IS BEFORE US ON THE FOLL OWING GROUNDS:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND ALSO THE LAW APPLICABLE TO THE FACTS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) IS NOT JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY AMOUNTI NG TO RS.16,35,116 U/S 271(1)(C) OF THE INCOME TAX ACT, 1 961. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE APPRECIATED THAT THE EXPLANATION OF T HE APPELLANT WAS NEITHER FOUND TO BE FALSE NOR UNSUBSTANTIATED A ND HENCE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT WARRANTE D. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE RESTRICTED TH E LEVY TO 100% OF TAX SOUGHT TO BE EVADED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, SRI G.V.N. HARI, DREW THE ATTENTION OF THE BENCH TO THE ASSESSMENT ORDER AND POINTED OUT T HAT NOWHERE IN THE ASSESSMENT ORDER A MENTION WAS MADE ABOUT ANY CONCEALMENT OF I NCOME VIS--VIS PURCHASE OF LAND AT MADHURAWADA AND THAT WHAT WAS DISCUSSED WAS AN ADDITION ONLY TO THE TUNE ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 4 OF RS.4,37,500. HE SUBMITTED THAT AFTER THE NOTICE WAS ISSUED U/S 271(1)(C) ON 31.12.2009, THE ASSESSEE SUBMITTED EXPLANATION ONLY ON THE ASPECT OF ADDITION MADE IN THE ASSESSMENT ORDER TO THE TUNE OF RS.4,37 ,500 AND NOT ON ANY OTHER ASPECTS. HE PLEADED THAT THE ASSESSEE DURING THE CO URSE OF SEARCH PROCEEDINGS, HAD, ONLY ON AN ASSURANCE GIVEN BY THE REVENUE AUTH ORITIES, MADE A DISCLOSURE AND HE STRUCK TO HIS WORD AND PAID THE TAXES AND FILED RETURNS AND THAT UNDER SUCH CIRCUMSTANCES, THE BONAFIDE BEHAVIOR OF THE ASSESSE E SHOULD HAVE BEEN CONSIDERED BY THE REVANUE AUTHORITIES AND THE PENALTY PROCEEDI NGS DROPPED. HE DREW THE ATTENTION OF THE BENCH TO THE FACT THAT EXPLANATION 5A WAS INTRODUCED IN THE STATUTE WITH EFFECT FROM 01.06.2007 AND THAT THE SEARCH WAS CONDUCTED ON 31.01.2008 AND THE LEGAL POSITION WAS NOT KNOWN TO THE ASSESSEE AN D THAT THE REVENUE AUTHORITIES HAVE NOT EXPLAINED THE LEGAL POSITION. HE RELIED ON THE FOLLOWING CASE LAWS:- (I) CIT V. B.VENKATESAM [(2012) 349 ITR 413 (AP)] FOR THE PROPOSITION THAT NO PENALTY CAN BE LEVIED W HEN THE ASSESSEE IS HAS NOT ACTED IN A CONTUMACIOUS MANNER WHEN HE H AD FULLY COMPLIED WITH THE PROVISIONS OF CLAUSE (2) OF EXPLANATION 5. (II) V.V.PROJECTS & INVESTMENTS (P) LTD. V. DCIT [ (2008) 300 ITR 40 (A)] FOR THE PROPOSITION THAT THE PENALTY CANNOT BE IMPO SED WHEN THE ASSESSMENT ORDER DID NOT REFLECT ANY SATISFACTION A ND DECLARATION OF ADDITIONAL INCOME BY THE ASSESSEE IN THE REVISED RE TURN AND THE EXPLANATION THAT IT WAS DONE SO TO BUY PEACE WITH T HE DEPARTMENT AND TO AVOID PROTRACTED LITIGATION, NO PENALTY CAN BE LEVIED. (III) CIT V. MUKTA SRIDHAR [(2012) 80 CCH 268 KAR HC] FOR THE PROPOSITION THAT THE IMMUNITY FROM IMPOSIN G PENALTY AVAILABLE UNDER TWO CLAUSES OF EXPLANATION (5) , CAN BE EXTENDED TO THE EXPLANATION TO THE SATISFACTION OF THE ASSESSING OF FICER CONCERNED. ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 5 (IV) TULSIRAM DELUX THEATRE V. ITO [(1987) 27 TTJ (HYD) 597] FOR THE PROPOSITION THAT THE BURDEN OF PROOF IS ON REVENUE TO PROVE CONCEALMENT OF INCOME AND THAT QUANTIFICATION OF PE NALTY IS TO BE DONE IN STRICT COMPLIANCE OF EXPLANATION 4(A). 5.1 THE LEARNED DEPARTMENTAL REPRESENTATIVE, SMT.KO MALI KRISHNA, ADDL.CIT, ON THE OTHER HAND, SUBMITTED THAT EVIDENCE WAS FOUND D URING THE COURSE OF SEARCH THAT THE ASSESSEE HAD PAID ON-MONEY FOR PURCHASE OF LAND . THUS, SHE SUBMITTED THAT THE CONCEALED INCOME OF RS.31,94,000 WAS DETECTED TOWAR DS UNEXPLAINED INVESTMENT AND THE RETURN OF INCOME WAS FILED ONLY BASED ON SU CH EVIDENCE. SHE DISPUTED THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE DEPARTMENTAL OFFICERS PROMISED IMMUNITY FROM PENALTY TO THE ASSESSEE. SHE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. V. CIT [(2013) 358 ITR 593 (SC)]. 6. THE LEARNED COUNSEL FOR THE ASSESSEE IN REPLY RE LIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. GEM GRANITES (KARNATAKA), IT APPEAL NO.504 OF 2009, JUDGMENT DATED 12 TH NOVEMBER, 2013. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERAT ION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAP ERS ON RECORD AND ORDERS OF THE AUTHORITIES BELOW, CASE LAWS CITED, WE HOLD AS FOLL OWS. 7.1 THE ASSESSMENT ORDER IN THIS CASE IS PASSED U/S 143(3) READ WITH SECTION 153A. THE ASSESSEE HAS FILED THE RETURN DISCLOSING INCOME OF RS.50,66,500. THE ASSESSING OFFICER HAS NOT DISCUSSED NOR DISPUTED TH E AMOUNT RETURNED BY THE ASSESSEE. AFTER VERIFYING THE BOOKS OF ACCOUNT AND INFORMATION DURING THE SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER CONFRONTED THE A SSESSEE WITH A PARTICULAR SEIZED MATERIAL I.E. A-SRP/04 PAGE NO.26, WHICH IS A SLIP RECOVERED DURING THE COURSE OF SEARCH AND CAME TO THE CONCLUSION THAT THE AMOUNT T HEREIN REPRESENTS UNACCOUNTED ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 6 EXPENSES. HE MADE THE ADDITION. NO OTHER ASPECT IS DEALT BY THE AO IN HIS ORDER. THUS ON A PLAIN READING OF THE ORDER, WE HAVE COME TO A CONCLUSION THAT THE ASSESSMENT ORDER DOES NOT DEMONSTRATE SATISFACTION OF THE ASSESSING OFFICER ON THE ASPECT OF THE ASSESSEE CONCEALING INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF THE INCOME DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME. THE ASSESSEE IN THIS CASE HAS MADE A DISCLO SURE AND FILED RETURN IN A BONAFIDE MANNER STICKING TO HIS DISCLOSURE IN RESPO NSE TO NOTICE U/S 153A. THIS FIGURE HAS BEEN ACCEPTED BY THE A.O. WITHOUT ANY DI SCUSSION. ONLY AN ADDITION OF RS.4,37,500 WAS MADE BASED ON SEIZED MATERIAL. 7.2 IN RESPONSE TO NOTICE U/S 271(1)(C), VIDE LETTE R DATED 28.10.2012, THE ASSESSEE EXPLAINED THAT (A) THE AMOUNT DECLARED I N THE RETURN OF INCOME FILED IS PURSUANT TO DECLARATION U/S 132(4), ON WHICH THE RE QUIRED TAX HAS BEEN PAID; (B) THE DECLARATION HAS BEEN MADE IN THE STATEMENT RECORDED WITH A SPECIFIC REQUEST THAT NO PENAL PROCEEDINGS SHOULD BE INITIATED, (C) THE ASSE SSING OFFICER STARTED THE COMPUTATION OF INCOME IN THE ASSESSMENT ORDER FROM THE INCOME DECLARED IN THE RETURN FILED IN PURSUANCE OF SECTION 153A, (D) THAT THE INCOME RETURNED IN THE REVISED RETURN FILED IN RESPONSE TO SECTION 153A CANNOT BY ANY STRETCH OF IMAGINATION BE CONSIDERED AS CONCEALED INCOME IN THE ABSENCE OF FI NDING RECORDED IN THIS REGARD IN THE ASSESSMENT ORDER, (E) PENALTY CANNOT BE LEVIED WHEN THERE IS NO DIFFERENCE BETWEEN THE RETURNED INCOME AND ASSESSED INCOME. 7.3 IN OUR VIEW THERE ARE TWO CATEGORIES OF INCOME ON WHICH PENALTY HAS BEEN LEVIED. THE FIRST IS THE INCOME THAT IS ALREADY DEC LARED IN THE RETURN OF INCOME AND THE SECOND IS THE ADDITION MADE TO THE RETURN OF IN COME BASED ON SEIZED MATERIAL. IN OUR VIEW NO PENALTY CAN BE LEVIED ON THE AMOUNT ALR EADY DECLARED IN THE RETURN OF INCOME AS THERE IS NO CONCEALMENT VIS--VIS THAT PA RTICULAR RETURN OF INCOME. LEVY OF PENALTY IS NOT AUTOMATIC AND SHOULD BE BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. WE ARE DISCUSSING THE CONCEALMENT WITH REGARD TO THE RETURN OF INCOME FILED IN PURSUANCE OF A NOTICE U/S 153A. IN OUR VIEW WHEN TH E RETURNED INCOME IS NOT ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 7 DISPUTED, AS FAR AS THIS ITEM OF INCOME IS CONCERNE D, THEN NO PENALTY CAN BE LEVIED AS THERE IS NO FURNISHING OF INACCURATE PARTICULARS VIS--VIS THIS RETURN OF INCOME. THE ASSESSEE HAS TRUTHFULLY AND IN A BONAFIDE MANNER OF FERED THIS FIGURE AS INCOME IN THE RETURN OF INCOME FILED IN PURSUANCE OF NOTICE U /S 153A OF THE ACT. THE SAME IS NOT TRUE WITH REGARD TO THE ADDITION OF RS.4,37,500 /-. THIS ADDITION WAS MADE BASED ON SEIZED MATERIAL. THUS TO THIS EXTENT IT CAN BE S AID THAT THERE IS CONCEALMENT OF INCOME. PENALTY MAY BE RESTRICTED TO TAX ON THIS FI GURE. 7.4 WE NOW DISCUSS THE CASE LAWS CITED. THE JURISDI CTIONAL HIGH COURT IN THE CASE OF CIT V. B.VENKATESAM (SUPRA) AT PARA 14 HELD AS FOLLOWS:- WE ARE IN AGREEMENT WITH THE VIEW EXPRESSED BY THE TRIBUNAL. THE MATERIAL ON RECORD CONCURRENTLY SHOWS THAT THE ASSESSEE HAD FULLY COMPLIED WITH THE PROVISIONS OF CLAUSE (2) OF EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. MOREOVER, THE ASSESSE E HAD NOT ACTED IN A CONTUMACIOUS MANNER. IN FACT, THE ASSESS EE HAD MADE A CLEAN BREAST OF THE ENTIRE FACTS AND HAD ADMITTED THE PURCHASE OF THE PROPERTY FROM THE INCOME WHICH WAS NOT DISCL OSED. THE NON-DISCLOSURE OF THE INCOME WAS DUE TO THE CIRCUMS TANCES MENTIONED ABOVE VIZ., THAT THE ASSESSEE WAS AN UNED UCATED AND ILLITERATE PETTY CONTRACTOR WHO RECEIVED PAYMENTS O NLY AFTER DEDUCTION OF TAX AT SOURCE. IT IS UNDER THESE CIRCU MSTANCES THAT THE ASSESSEE BELIEVED BONA FIDE THAT NO FURTHER TAX WAS REQUIRED TO BE PAID. 7.5 BY APPLYING THE PROPOSITION IN THE CASE ON HAND , WE HOLD THAT THE ASSESSEE HAS NOT ACTED IN A CONTUMACIOUS MANNER AND THAT HE MADE A CLEAN BREAST OF THE ENTIRE FACTS AND ADMITTED THE PURCHASE OF THE PROPE RTY FROM THE INCOME WHICH IS NOT DISCLOSED AND UNDER THOSE CIRCUMSTANCES, HIS EXPLAN ATION IS BONAFIDE AND NO PENALTY CAN BE LEVIED UNDER SUCH CIRCUMSTANCES, ON THE INCOME ALREADY DISCLOSED IN THE RETURN OF INCOME. 7.6 IN THE CASE OF V.V.PROJECTS & INVESTMENTS (P) L TD. V. DCIT, THE JURISDICTIONAL HIGH COURT AT PARA 16, HELD AS UNDER:- ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 8 THE SEARCH COMMENCED ON 6.1.2004 AND THE STATEMENT UNDER SECTION 132(4) OF THE ACT WAS OBTAINED. UNDER THESE CIRCUMSTANCES, NATURALLY THE ASSESSEE WOULD START T HINKING THAT IF A DECLARATION IS MADE UNDER SECTION 132(4) ALONG WI TH THE TAXES TOGETHER WITH INTEREST PAYABLE IS PAID, NO PENALTY WOULD BE IMPOSED. THE DEPARTMENT WOULD ALSO BE KEEN TO GET D ECLARATION UNDER SECTION 132(4) SO AS TO COLLECT TAX AND AVOID LITIGATION. ONLY WITH THIS VIEW, THE EXCEPTION WAS CREATED IN EXPLAN ATION 5 TO SECTION 271(1)(C) UNDER CLAUSES (1) AND (2) TO GIVE IMMUNITY TO ASSESSEE FROM LEVY OF PENALTY. DURING THE COURSE OF SEARCH, IF THE ASSESSEE SURRENDERED THE INCOME AGREEING TO PAY THE TAX AND INTEREST AND IF EXPLANATION IS GIVEN TO THE SATISFA CTION OF THE OFFICER CONCERNED, ASSESSEE WOULD BE UNDER THE IMPRESSION T HAT NO PENALTY WOULD BE LEVIED WHICH WOULD BE SUBJECT TO E XPLANATION OFFERED. 7.7 THE FACTS OF THE PRESENT CASE ARE SIMILAR TO TH E FACTS DISCUSSED ABOVE AND HENCE WE HOLD THAT THIS CASE LAW APPLIES TO THE CAS E ON HAND AND THE PENALTY IN QUESTION HAS TO BE CANCELLED, ON THE INCOME WHICH I S DISCLOSED IN THE RETURN OF INCOME. 7.8 COMING TO THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF MAK DATA P. LTD. V. CIT (SUPRA), WE FIND THAT THE HONB LE MADRAS HIGH COURT IN THE CASE OF CIT V. GEM GRANITES (KARNATAKA) (SUPRA) HAD CONS IDERED THIS DECISION AND AT PARA 11 HELD AS UNDER:- 11. IN A RECENT DECISION OF THE HON'BLE SUPREME CO URT IN CIVIL APPEAL NO.9772 OF 2013, DATED 30.10.2013 (MAK DATA P. LTD., VS. COMMISSIONER OF INCOME TAX-II), THE HON'BLE SUPREME COURT WHILE CONSIDERING THE EXPLANATION TO SECTION 271(1) , HELD THAT THE QUESTION WOULD BE WHETHER THE ASSESSEE HAD OFFERED AN EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOM E OR FURNISHING INACCURATE PARTICULARS OF INCOME AND THE EXPLANATIO N TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE ASSESSING OFFICER BETWEEN THE REPORT ED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE AND WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY THE ASSESSEE, THE ONUS SHIFTS ON THE REVENUE TO SHOW TH AT THE AMOUNT IN QUESTION CONSTITUTED THEIR INCOME AND NOT OTHERWISE. ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 9 FACTUALLY, WE FIND THAT THE ONUS CAST UPON THE ASSE SSEE HAS BEEN DISCHARGED BY GIVING A COGENT AND RELIABLE EXPLANAT ION. THEREFORE, IF THE DEPARTMENT DID NOT AGREE WITH THE EXPLANATIO N, THEN THE ONUS WAS ON THE DEPARTMENT TO PROVE THAT THERE WAS CONCE ALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. IN THE INSTANT CASE, SUCH ONUS WHICH SHIFTE D ON THE DEPARTMENT HAS NOT BEEN DISCHARGED. IN THE CIRCUMST ANCES, WE DO NOT FIND THAT THERE IS ANY GROUND FOR THIS COURT TO SUBSTITUTE OUR INTERFERE WITH THE FINDING OF THE TRIBUNAL ON THE A SPECT OF THE BONAFIDES OF THE CONDUCT OF THE ASSESSEE. 7.9 THE HONBLE SUPREME COURT IN THE CASE OF MAK DA TA P. LTD. (SUPRA) WAS CONSIDERING A CASE WHERE CERTAIN MATERIAL WAS FOUND DURING THE COURSE OF SURVEY U/S 133A. THE SURVEY WAS CONDUCTED IN DECEMBER 2003 . THE ASSESSEE FILED RETURN OF INCOME IN OCTOBER 2004 AND HAS NOT DECLARED ANY ADDITIONAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE ASSESSIN G OFFICER SOUGHT SPECIFIC INFORMATION, THE ASSESSEE MADE AN OFFER TO SURRENDE R CERTAIN SUM BY WAY OF VOLUNTARY DISCLOSURE WITHOUT ADMITTING CONCEALMENT. IT WAS NOT A CASE WHERE THE DISCLOSURE WAS PART OF THE RETURNED INCOME. THE ASS ESSING OFFICER MADE A SEPARATE ADDITION OF THE SURRENDERED AMOUNT. UNDER THOSE CIR CUMSTANCES, THE HONBLE SUPREME COURT UPHELD THE LEVY OF PENALTY. IN THIS C ASE THE ADDITION TO THE RETURNED INCOME IS RS.4,37,500. THE OTHER ITEM IS PART OF TH E RETURNED INCOME. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THA T THE PENALTY, IF ANY, HAS TO BE RESTRICTED TO THE TAX ON THE ADDITION OF RS.4,37,50 0, WHICH IS BASED ON SEIZED MATERIAL. THE PENALTY LEVIED ON THE BALANCE AMOUNT IS HEREBY DELETED. THE ASSESSING OFFICER IS DIRECTED TO LEVY PENALTY AT 10 0% OF THE TAX ON THE ADDITION OF RS.4,37,500 TO THE INCOME OF THE ASSESSEE. 7.9 IN VIEW OF THE ABOVE DISCUSSION AND AS WE ARE O F THE CONSIDERED OPINION THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IS BONAFI DE, WE DELETE THE PENALTY LEVIED ON THE AMOUNT OF INCOME OF RS.31,94,000 AND CONFIRM THE PENALTY ON THE INCOME OF RS.4,37,500. ITA NO.679/VIZAG/2013. SRI T.SATYANARAYANA. 10 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED IN PART. ORDER PRONOUNCED ON THIS 7 TH DAY OF MARCH, 2014. SD/- SD/- ( SAKTIJIT DEY ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM; DATED : 7 TH MARCH, 2014. DEVDAS* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, VISAKHAPATNAM. 4. CIT(A) VISAKHAPATNAM. 5. DR, ITAT, VISAKHAPATNAM. 6. GUARD FILE. BY ORDER, //TRUE COPY// (SENIOR PRIVATE SECRETARY) ITAT, VISAKHAPATNAM