Dr. Vempala Bala Manohar, Visakhapatnam V. THE ITO, Visakhapatnam

ITA 7/VIZ/2015

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9956 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; Application of stay; Reasonable cause; Wrong claim; Corroborative evidences; Revised return
• Section: 143(3); 142(1); 133A; 68; 69; 148

Judgement Text

ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.7, 9 & 11/VIZAG/2015 ( / ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 RESPECTIVELY) DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM VS. ITO, WARD - 1(3), VISAKHAPATNAM [PAN: AAVPM1093N ] ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NOS.36, 37 & 38/VIZAG/2015 ( / ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 RESPECTIVELY) ITO, WARD-1(3), VISAKHAPATNAM VS. DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) S.P. NOS.39, 41 & 43/VIZAG/2015 (ARISING OUT OF I.T.A.NOS.7, 9 & 11/VIZAG/2015) ( / ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 RESPECTIVELY) DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM VS. ITO, WARD - 1(3), VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 2 / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI M.K. SETHI, DR / DATE OF HEARING : 26.07.2016 / DATE OF PRONOUNCEMENT : 12.08.2016 / O R D E R PER BENCH: THESE CROSS APPEALS FILED BY THE ASSESSEE, AS WELL AS REVENUE ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE CIT (A), VISAKHAPATNAM DATED 13.11.2014 FOR THE ASSESSMENT Y EAR 2009-10, 2010-11 & 2011-12. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE HEARD TOGETHER AND DISPOSED OFF, B Y THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PHYSICIAN DERIVING INCOME FROM RUNNING HOSPITAL, DIAGNOSTIC C ENTRE VIZ., CHANDANA HOSPITAL, SIDDHARTHA MEDICAL CENTRE AND ALAKANANDA SONO SCAN. THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2009-10, 2010-11 & 2011-12 ON 29.3.2010, 25.2.2011 & 17.2.20 12 DISCLOSING TOTAL INCOME OF RS.3,28,544/-, RS.4,01,691/- & RS.6 ,03,632/- RESPECTIVELY. A SURVEY OPERATION U/S 133A OF THE I NCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS CONDUCTED IN THE BUSINESS PREMISES ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 3 OF THE ASSESSEE ON 6.7.2012. DURING THE COURSE OF S URVEY OPERATION, CERTAIN INCRIMINATING DOCUMENTS WERE IMPOUNDED WHIC H REVEALED SUPPRESSION OF PROFESSIONAL RECEIPTS. DURING THE C OURSE OF SURVEY OPERATION AND POST SURVEY INVESTIGATION, IT WAS NOT ICED THAT THE ASSESSEE HAS MADE SUBSTANTIAL INVESTMENTS DURING THE LAST 3 FINANCIAL YEARS IN VARIOUS FIRMS IN THE FORM OF SHARE CAPITAL AND LOAN S TO THE EXTENT OF RS.1,05,50,000/- AND THE SOURCES FOR THE INVESTMEN TS IN THE SAID FIRMS WERE CLAIMED TO BE OUT OF GIFTS RECEIVED FROM HIS B ROTHER TO THE TUNE OF RS.1,02,07,400/- DURING THE SUBJECT YEARS AND ALSO OUT OF HIS PAST SAVINGS FOR THE RELEVANT FINANCIAL YEARS. DURING T HE COURSE OF SURVEY OPERATION, WHILE RECORDING STATEMENT U/S 133A OF TH E ACT, THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME OF RS.14 LAKHS EACH FOR THE ASSESSMENT YEARS 2010-11 & 2011-12. SUBSEQUENTLY, THE ASSESSI NG OFFICER ISSUED NOTICE U/S 148 OF THE ACT, IN RESPONSE TO WHICH THE ASSESSEE HAS FILED REVISED RETURN OF INCOME FOR THE ASSESSMENT YEARS 2 010-11 & 2011-12 ADMITTING ADDITIONAL INCOME OF RS.14 LAKHS EACH OFF ERED DURING THE COURSE OF SURVEY OPERATION. THE CASE HAS BEEN SELE CTED FOR SCRUTINY AND ACCORDINGLY, NOTICE U/S 143(2) & 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED DETAILS CA LLED FOR. ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 4 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXP LAIN THE GIFTS RECEIVED FROM HIS BROTHER WITH NECESSARY EVIDENCES. IN RESPONSE, THE ASSESSEE HAS FILED DETAILS OF GIFTS RECEIVED FROM H IS BROTHER FOR LAST 3 FINANCIAL YEARS ALONG WITH BANK STATEMENTS OF DONOR , HIS SOURCE OF INCOME AND ALSO PROOF OF TRANSFER OF MONEY THROUGH BANKING CHANNELS, HOWEVER, FAILED TO FURNISH THE GIFT DEEDS AS REQUIR ED BY THE ASSESSING OFFICER. THE A.O., AFTER CONSIDERING THE DETAILS F URNISHED BY THE ASSESSEE HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE GENU INENESS OF ALLEGED GIFTS STATED TO BE RECEIVED FROM HIS BROTHER AND AL SO FAILED TO PROVE THE CAPACITY OF THE DONOR TO GIVE SUCH HUGE GIFTS. THE A.O. FURTHER HELD THAT THOUGH ASSESSEE FURNISHED PROOF OF TRANSFER OF MONE Y THROUGH BANKING CHANNEL, FAILED TO PROVE THE SOURCES OF THE ALLEGED GIFT IN THE HANDS OF THE DONOR AND ALSO THERE IS NO OCCASION FOR THE DON OR TO GIVE GIFT TO HIS BROTHER AND THE GIFTS HAVE BEEN GIVEN PERIODICALLY ACCORDING TO THE NECESSITY OF THE ASSESSEE. THEREFORE, OPINED THAT THE ALLEGED GIFTS STATED TO BE RECEIVED FROM THE ASSESSEE ARE UNEXPLA INED CREDITS. WITH THESE OBSERVATIONS, MADE ADDITIONS OF RS.15 LAKHS, FOR THE ASSESSMENT YEARS 2009-10, RS.22,90,000/- FOR THE ASSESSMENT YE AR 2010-11, RS.64,17,900/- FOR THE ASSESSMENT YEAR 2011-12. ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 5 4. THEREAFTER, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) AND ASKED TO EXPLAIN WHY PENALTY SHALL NOT BE LEVIE D FOR CONCEALMENT OF PARTICULARS OF INCOME AND ALSO FURNISHING INACCURAT E PARTICULARS OF INCOME IN RESPECT OF ADMISSION OF ADDITIONAL INCOME TOWARDS SUPPRESSION OF GROSS RECEIPTS AND ALSO UNEXPLAINED CREDITS BEIN G GIFT RECEIVED FROM BROTHER. IN REPLY, THE ASSESSEE SUBMITTED THAT HE HAD PREFERRED APPEAL BEFORE THE APPELLATE AUTHORITIES AND CHALLENGED THE ADDITIONS MADE BY THE A.O. TOWARDS ALLEGED GIFT RECEIVED FROM BROTHER , THEREFORE, TILL DISPOSAL OF THE APPEAL BY THE FIRST APPELLATE AUTHO RITY, THE PENALTY PROCEEDINGS MAY BE KEPT IN ABEYANCE. THE A.O. DID NOT ACCEPT THE ASSESSEES REQUEST FOR KEEPING PENALTY PROCEEDINGS IN ABEYANCE AND ACCORDINGLY A DETAILED SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE FIXING THE DATE OF HEARING ON 27.12.2013. IN RESPO NSE TO THE SHOW CAUSE-NOTICE, THE ASSESSEE HAS FILED LETTER DATED 2 3.12.2013 AND SUBMITTED THAT THE PENALTY CANNOT BE IMPOSED WHEN T HE ASSESSEES APPEAL IS PENDING BEFORE THE FIRST APPELLATE AUTHOR ITY AS PER SECTION 275 OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT TIL L DISPOSAL OF THE APPEAL BY THE FIRST APPELLATE AUTHORITY REQUESTED TO KEEP IN ABEYANCE THE PENALTY PROCEEDINGS. HOWEVER, THE A.O. DID NOT ACC EPT THE ASSESSEES REQUEST TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE TILL DISPOSAL OF ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 6 APPEAL BY THE CIT(A), PASSED PENALTY ORDER AND LEVI ED PENALTY U/S 271(1)(C) OF THE ACT. WHILE LEVYING PENALTY, THE A .O. TOOK THE VIEW THAT THE ASSESSEE PREFERRED TO SURRENDER ADDITIONAL INCO ME DURING THE COURSE OF SURVEY ONLY A PART OF CLAIM OF BOGUS GIFT AND HA S BEEN MISGUIDED THE DEPARTMENT BY MAKING SERIES OF FALSE CLAIMS. WITH T HESE OBSERVATIONS OPINED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY LEVIED MAXIMUM PENALTY OF 300% FOR THE ASSESSMENT YEAR 200 9-10, 2010-11 & 2011-12. TO SUPPORT HIS ARGUMENTS RELIED UPON THE FOLLOWING DECISIONS: 1) G.C. AGGARWAL VS. CIT ITR 4571 (SC) 2) G.C. AGGARWAL S. CIT 102 ITR 408 (GAUHATI) 3) CIT DELHI VS. USHA INTERNATIONAL LTD. ITR 1696/2 006 DATED 5.11.2012 (DELHI HIGH COURT) 4) B.A. BALASUBRAMANIAM & BROS CO. VS. CIT 236 IT R 977 (SC) 5) K.P. MADHUSUDHAN (2001) 251 ITR 99 (SC). 5. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS. THE ASSESSEE FURTHER CONTENDE D THAT THE A.O. WAS ERRED IN HOLDING THAT THE ASSESSEE HAS DELIBERATELY CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF IN COME, IN RESPECT OF ADDITIONAL INCOME OFFERED DURING THE COURSE OF SURV EY AND ALSO ADDITIONS TOWARDS ALLEGED GIFT RECEIVED FROM HIS BROTHER. THE ASSESSEE FURTHER SUBMITTED THAT HE HAD ADMITTED ADDITIONAL INCOME OF RS.14 LAKHS EACH FOR THE ASSESSMENT YEAR 2010-11 & 2011-12, BECAUSE HE WAS UNABLE TO ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 7 SUBSTANTIATE THE PAYMENT OF REFERRAL FEES TO RMP DO CTORS WITH SUPPORTING EVIDENCES. THE ASSESSEE FURTHER SUBMITT ED THAT HE HAD ADMITTED GROSS RECEIPTS FROM THE BUSINESS AFTER DED UCTING FEES PAID TO REFERRAL DOCTOR BECAUSE OF WHICH, THERE IS A DIFFER ENCE IN GROSS RECEIPTS AS PER THE IMPOUNDED DOCUMENTS AND RECEIPTS DECLARE D IN THE RETURN FILED FOR THOSE FINANCIAL YEARS. THE ASSESSEE FURT HER SUBMITTED THAT HE IS A SMALL DOCTOR RUNNING A 12 BED HOSPITAL AND ALSO A DIAGNOSTIC CENTRE AND HE WILL GET PATIENTS MOSTLY FROM OTHER DOCTORS FOR WHICH HE PAID SOME AMOUNT OF FEES. THE ASSESSEE FURTHER SUBMITTED THAT HE HAD ADMITTED ADDITIONAL INCOME TO COVER UP THE DIFFEREN CES IN GROSS RECEIPTS AND OTHER DISCREPANCIES AS WELL AS TO AVOID PROTRAC TED LITIGATION AND TO PURCHASE PEACE WITH THE DEPARTMENT WITH A REQUEST T O NOT TO LEVY PENALTY FOR CONCEALMENT OF INCOME. 6. AS REGARDS ADDITIONS TOWARDS GIFT RECEIVED FROM HIS BROTHER, THE ASSESSEE SUBMITTED THAT RIGHT FROM THE BEGINNING HE HAD CONTENDED THAT THE INVESTMENT IN FIRMS AND COMPANIES IS OUT OF THE GIFT RECEIVED FROM HIS BROTHER. THE ASSESSEE FURTHER SUBMITTED THAT H E HAD RECEIVED GIFT FROM HIS BROTHER FOR THE PAST 3 FINANCIAL YEARS. T O THIS EFFECT FURNISHED NECESSARY EVIDENCES IN THE FORM OF BANK STATEMENTS OF DONOR, PROOF OF HIS SOURCE OF INCOME AND ALSO MONEY TRANSFER VOUCHE RS ISSUED BY MONEY ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 8 EXCHANGER IN ABROAD. THE A.O., DESPITE FURNISHING NECESSARY EVIDENCES, DISOWNED THE EVIDENCES FILED TO JUSTIFY ADDITIONS S IMPLY ON THE REASON THAT THE DONOR DOES NOT HAVE SUFFICIENT SOURCE OF I NCOME TO GIVE SUCH A HUGE GIFT. THE A.O. FURTHER OPINED THAT IT IS UNCO MMON FOR ANY PERSON TO GIVE GIFT PERIODICALLY WITHOUT ANY OCCASION, BUT THE FACT IS THAT BETWEEN THE RELATIVES THERE IS NO NEED OF ANY OCCAS IONS TO GIVE GIFT AND GIFT CAN BE GIVEN OUT OF NATURAL LOVE AND AFFECTION , THEREFORE, THE A.O. WAS NOT CORRECT IN IMPOSING PENALTY BY HOLDING THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME. 7. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE ASSESSEE HAS NOT SUBSTANTIATED ADDITI ONAL INCOME OFFERED DURING THE COURSE OF SURVEY WITH NECESSARY EVIDENCE S. THE CIT(A), FURTHER, HELD THAT THE ASSESSEE HAD OFFERED ADDITIO NAL INCOME BECAUSE THE DEPARTMENT HAS GATHERED INFORMATION DURING THE COURSE OF SURVEY, WHICH SUGGEST THAT THERE IS A SUPPRESSION OF GROSS TURNOVER. THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE IS NOT V OLUNTARY, UNLESS THE SURVEY HAD NOT TAKEN PLACE THE ASSESSEE WOULD NOT H AVE DISCLOSED THE ADDITIONAL INCOME, THEREFORE, UPHELD THE ACTION OF THE A.O. LEVYING THE PENALTY IN RESPECT OF ADDITIONAL INCOME ADMITTED DU RING THE COURSE OF ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 9 SURVEY. AS REGARDS ADDITION TOWARDS GIFT RECEIVED FROM HIS BROTHER, THE CIT(A) HELD THAT THE A.O. AFTER EXAMINING THE DONOR SHRI V. BALA SUDHAKAR AND ALSO VERIFIED DETAILS, CAME TO THE CON CLUSION THAT THE DONOR DID NOT HAVE SUFFICIENT FINANCIAL CAPACITY TO MAKE IMPUGNED GIFTS. THE A.O. ALSO HELD THAT THE GIFTS ARE NOT GENUINE A S ASSESSEE FAILED TO LINK THE CREDITS IN THE ASSESSEES BANK ACCOUNT WIT H TRANSFER OF MONEY BY SHRI V. BALA SUDHAKAR FROM QATAR. THUS, THE ASSESS EE FAILED TO PROVE THE CREDITS REPRESENTS GIFT WITH SATISFACTORY EVIDE NCE. THE MATERIAL PARTICULARS RELATING TO THE CLAIM OF GIFT WERE NOT FURNISHED. THE CIT(A), FURTHER, HELD THAT THE ASSESSEE HAS NOT DISCLOSED C ORRECT PARTICULARS OF HIS INCOME FOR THE ASSESSMENT YEAR 2009-10, 2010-11 & 2011-12 THEREFORE, THE A.O. IS JUSTIFIED IN LEVYING CONCEAL MENT PENALTY WITH REGARD TO ADDITIONS MADE TOWARDS GIFT RECEIVED FROM HIS BROTHER. HOWEVER, SCALED DOWN PENALTY LEVIED BY THE A.O., FR OM 300% TO 100% BY HOLDING THAT THE MATERIAL INFORMATION FURNISHED BY THE ASSESSEE SUGGESTS THAT PART OF GIFT RECEIVED BY THE ASSESSEE IS TRUE. THEREFORE, OPINED THAT THIS IS NOT A FIT CASE TO LEVY PENALTY AT 300%. ACCORDINGLY, DIRECT THE A.O. TO RE-COMPUTE PENALTY OF 100% AS AG AINST 300% WITH REGARD TO ADDITIONS MADE AND SUSTAINED TOWARDS GIFT FOR THE ASSESSMENT YEAR 2009-10, 2010-11 & 2011-12. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US . ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 10 8. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED THAT TH E LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING 100% PENALTY LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT. THE A.R. FURTHER SUBMITTED THAT THE CIT(A ) OUGHT TO HAVE HELD THAT IN THE CASE OF ASSESSEE, THERE IS NO CONCEALME NT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. THE A.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS OFFERED BONAFIDE EXPLANATION THAT WAS NOT FOUND TO BE FALSE AND THEREFORE PROVISIONS OF EXPLANATION TO SECTION 271( 1)(C) OF THE ACT ARE NOT ATTRACTED. 9. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT T HE LD. CIT(A) ERRED IN RESTRICTING PENALTY TO 100%, AS THE ASSESS EE FAILED TO SUBSTANTIATE HIS CLAIM OF SERIES OF GIFT WITHOUT AN Y EVIDENCES. THE D.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED I NACCURATE PARTICULARS AND HAS RESORTED TO MISREPRESENTATION OF FACTS, AMO UNTING TO INACCURATE PARTICULARS OF INCOME IN THE GARB OF GIFT FROM HIS BROTHER WHEREIN THE CREDITWORTHINESS AND GENUINENESS OF GIFTS WERE NOT PROVED. THEREFORE, THE ASSESSEES CASE SQUARELY FALLS WITHIN THE PURVI EW OF SECTION 271(1)(C) OF THE ACT AND LEVY OF PENALTY AT 300% IS JUSTIFIAB LE. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE FACTUAL MATRIX OF THE CAS E IS THAT, IN THIS CASE ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 11 THERE WAS A SURVEY U/S 133A OF THE ACT IN THE BUSIN ESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, CERTAIN INCR IMINATING DOCUMENTS FOUND AND IMPOUNDED REVEALS THAT THE ASSESSEE HAD S UPPRESSED GROSS RECEIPTS FROM HIS PROFESSION. IT WAS ALSO NOTICED THAT THE ASSESSEE HAS MADE INVESTMENTS IN VARIOUS FIRMS AND COMPANIES IN THE FORM OF SHARE CAPITAL AND LOANS. WHEN THESE DOCUMENTS ARE CONFRONT ED TO THE ASSESSEE, THE ASSESSEE ADMITTED ADDITIONAL INCOME O F RS.14 LAKHS EACH FOR THE ASSESSMENT YEAR 2010-11 & 2011-12. THE ASS ESSEE EXPLAINED THE INVESTMENT IN FIRMS AND COMPANIES OUT OF THE GI FT RECEIVED FROM HIS BROTHER RESIDING IN ABROAD. THE ASSESSEE FURTHER S UBMITTED THAT HE HAD RECEIVED GIFTS FROM HIS BROTHER OVER A PERIOD OF 3 YEARS AND SUBMITTED DETAILS OF GIFT RECEIVED FROM HIS BROTHER. THE A.O . DISBELIEVED THE CLAIM OF THE ASSESSEE WITH REGARD TO ALLEGED GIFT RECEIVE D FROM HIS BROTHER AND MADE ADDITIONS OF RS.15 LAKHS FOR THE ASSESSMENT YE AR 2009-10, RS.22,90,000/- FOR THE ASSESSMENT YEAR 2010-11 & RS . 64,17,400/- FOR ASSESSMENT YEAR 2011-12. 11. THE A.O. LEVIED PENALTY U/S 271(1)(C) OF THE AC T, ON THE GROUND THAT THE ASSESSEE DELIBERATELY CONCEALED PARTICULAR S OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME WHICH IS EVIDENT FROM THE FACT THAT HE DID NOT DISCLOSE CORRECT INCOME FROM HIS PR OFESSION. THE A.O. ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 12 WAS OF THE OPINION THAT IF THE SURVEY COULD NOT TAK EN PLACE, THE ASSESSEE WOULD NOT HAVE DISCLOSED HIS TRUE AND CORRECT INCOM E. THE SURVEY PARTY FOUND CERTAIN INCRIMINATING DOCUMENTS, BECAUSE OF W HICH THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME WHICH CANNOT BE CONS IDERED AS VOLUNTARY DISCLOSURE OF ADDITIONAL INCOME. THE DEPARTMENT HA S GATHERED SOME INFORMATION WHICH WAS THE REASON FOR DISCLOSURE OF ADDITIONAL INCOME BY THE ASSESSEE. THEREFORE, IT IS A CLEAR CASE OF WILL FUL CONCEALMENT OF INCOME WHICH ATTRACTS PENALTY U/S 271(1)(C) OF THE ACT. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS MADE VARIOUS INVESTM ENTS IN FIRMS AND COMPANIES AND FAILED TO EXPLAIN THE SOURCES FOR THE INVESTMENT. THOUGH ASSESSEE CLAIMS TO HAVE RECEIVED PURPORTED GIFTS FR OM HIS BROTHER, FAILS TO PROVE THE ABOVE WITH NECESSARY EVIDENCES. THE A SSESSEE HAS FAILED TO PROVE GENUINENESS OF THE GIFTS AND ALSO CAPACITY OF THE DONOR TO GIVE SUCH A HUGE GIFT. 12. IT IS THE CONTENTION OF THE ASSESSEE THAT HE HA D OFFERED ADDITIONAL INCOME DURING THE COURSE OF SURVEY PURELY ON THE BA SIS OF ESTIMATION AND WHICH WAS NOT SUPPORTED BY ANY MATERIAL INFORMA TION, THEREFORE, IT CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FU RNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE FURTHER SUBMIT TED THAT HE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS AND ESTIMATED HIS GROSS RECEIPTS ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 13 FROM THE BUSINESS AND SUCH ESTIMATION WAS MADE AFTE R DEDUCTING REFERRAL FEES PAID TO DOCTORS WHO REFERRED THE CASE S TO HIS DIAGNOSTIC CENTERS, BECAUSE OF WHICH THERE IS A DIFFERENCE IN GROSS RECEIPTS RECORDED IN THE IMPOUNDED DOCUMENTS AND RECEIPTS DI SCLOSED IN THE REGULAR RETURN FILED FOR THE RESPECTIVE FINANCIAL Y EARS. HE HAD ADMITTED ADDITIONAL INCOME TO COVER UP THE DISCREPANCIES AND ALSO TO END PROTRACTED LITIGATION WITH THE DEPARTMENT. THEREFO RE, THE A.O. WAS NOT CORRECT IN LEVYING PENALTY ON ADDITIONAL INCOME ADM ITTED DURING THE COURSE OF SURVEY. AS REGARDS ADDITION TOWARDS GIFT RECEIVED FROM HIS BROTHER, THE ASSESSEE CONTENDED THAT HE HAD RECEIVE D GIFT FROM HIS BROTHER THROUGH BANKING CHANNEL AND FURNISHED NECES SARY PROOF OF GIFTS IN THE FORM OF BANK STATEMENTS OF DONOR, PROOF OF H IS SOURCE OF INCOME AND ALSO TELEGRAPHIC TRANSFER VOUCHERS OF MONEY EXC HANGER ISSUED IN ABROAD. THE ASSESSEE FURTHER CONTENDED THAT THE A.O . HAS RECORDED STATEMENT FROM DONOR, WHEREIN THE DONOR HAS CATEGOR ICALLY STATED THAT HE HAD GIFTED MONEY TO HIS BROTHER. UNDER THESE CI RCUMSTANCES, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION TH AT THERE IS A CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESS EE AND ALSO ORDERS OF THE AUTHORITIES BELOW. BEFORE, WE GO INTO THE MERITS OF THE ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 14 CASE, LET US UNDERSTAND THE POSITION OF LAW AS ENUM ERATED U/S 271(1)(C) OF THE ACT. SECTION 271(1)(C) OF THE ACT, PROVIDES FOR LEVY OF PENALTY IN A CASE, WHERE THE A.O. OR CIT(A) SATISFIED THAT THE P ERSON HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME, SUCH PERSONS MAY BE DIRECTED TO PAY PENALTY , A SUM NOT LESS THAN 100% AND NOT MORE THAN 300% AND THE TAX SOUGHT TO BE EVADED. EXPLANATION 1 APPENDED TO SECTION 271(1)(C) OF THE ACT, PROVIDES FOR LEVY OF PENALTY, IF THAT PERSON FAILS TO OFFER AN E XPLANATION OR THE EXPLANATION OFFERED BY SUCH PERSON IS FOUND TO BE F ALSE, OR THE EXPLANATION OFFERED BY HIM IS NOT SUBSTANTIATED AND HE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND THE MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOW ED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF, SH ALL FOR THE PURPOSE OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRES ENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. T HE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME SHOULD BE REFERRED TO RETURN OF INCOME FILED BY THE ASSESSEE, BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AVAILABLE WITH THE AUTHORITIES AT THE TIME OF ANY PROCEEDINGS UNDER THIS ACT. IN THE PRESENT CASE ON HAND, ADMITTEDLY AS ON THE DATE OF SURVEY, THE ASSESSEE HAS FILED RETUR N. THE ASSESSEE ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 15 FURTHER CONTENDED THAT RIGHT FROM THE BEGINNING HE DID NOT MAINTAIN REGULAR BOOKS OF ACCOUNTS OF HIS PROFESSION EXCEPT FEW REGISTERS, DETAILS OF INPATIENT AND OUT PATIENTS WITH AMOUNT OF FEES C OLLECTED. DURING THE COURSE OF SURVEY OPERATION, THE ASSESSEE HAS ADMITT ED ADDITIONAL INCOME ON ESTIMATION BASIS TO COVER UP THE DISCREPANCIES A ND ALSO TO END PROTRACTED LITIGATION. FURTHER THE ASSESSEE HAS FI LED RETURN OF INCOME ADMITTING INCOME DISCLOSED IN THE SURVEY AND ALSO P AID TAXES BEFORE FILING RETURN OF INCOME. IT IS NOT A CASE OF A.O. THAT HE HAD DISCOVERED CONCEALMENT OF INCOME, BASED ON CERTAIN INCRIMINATI NG DOCUMENTS WHICH IS THE BASIS OF ESTIMATION OF INCOME DISCLOSED DURI NG THE COURSE OF SURVEY. WHAT WAS FOUND AND SEIZED DURING THE SURVE Y ARE CERTAIN LOOSE SLIP WHICH IS THE BASIS FOR SURRENDER OF INCOME. TH EREFORE, WE ARE OF THE VIEW THAT THE EXPLANATION OFFERED BY THE ASSESSEE T HAT THE DIFFERENCE BETWEEN GROSS RECEIPTS AS PER IMPOUNDED RECORDS AND GROSS RECEIPTS DECLARED IN THE RETURN OF INCOME IS ON ACCOUNT OF R EFERRAL FEES PAID TO DOCTORS WHO HAD REFERRED THE CASES IS A BONAFIDE EX PLANATION AND ACCORDINGLY, THE A.O. WAS NOT CORRECT IN LEVY OF PE NALTY UNDER EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. 14. THE QUESTION WHETHER THERE WAS A REASONABLE CAU SE, FOR WHICH THE REQUIREMENT OF CONCERNED PROVISIONS OF SECTION COUL D NOT BE COMPLIED ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 16 WITH IS PRIMARILY AN ESSENTIAL QUESTION OF FACT AND IT HAS TO BE DECIDED IN EACH CASE ON CONSIDERATION OF MATERIAL PLACED BEFOR E THE CONCERNED AUTHORITY. THE LEVY OF PENALTY U/S 271(1)(C) OF TH E ACT IS NOT AUTOMATIC. BEFORE LEVYING PENALTY, THE CONCERNED OFFICER IS RE QUIRED TO FIND OUT THAT EVEN THERE WAS ANY VIOLATION REFERRED TO IN THE SAI D SECTION AND THE SAME WAS WITHOUT A REASONABLE CAUSE. THE INITIAL BU RDEN IS ON THE ASSESSEE TO SEE THAT THERE EXISTS A REASONABLE CAUS E WHICH WAS THE REASON FOR THE VIOLATION REFERRED TO IN THE CONCERN ED PROVISIONS. THEREFORE, THE ASSESSING OFFICER DEALING WITH THE M ATTER IS TO CONSIDER WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE OR THE PERSON AS THE CASE MAY BE AND AS REGARDS THE REASON WAS ON ACCOUN T OF REASONABLE CAUSE. IN THE PRESENT CASE ON HAND, THE ASSESSEE RI GHT FROM THE BEGINNING CONTENDED THAT HE HAS NOT MAINTAINED REGU LAR BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME ON ESTIMATION BAS IS. THE ASSESSEE ADMITTED ADDITIONAL INCOME ON ESTIMATION BASIS TO C OVER UP THE DISCREPANCIES IN GROSS RECEIPTS WHICH WAS FURTHER F OLLOWED BY ADMISSION OF ADDITIONAL INCOME AND FILING OF RETURN. THEREFO RE, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN LEVY OF PENALTY TO WARDS ADDITIONAL INCOME ADMITTED DURING THE COURSE OF SURVEY. ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 17 15. THE A.O. LEVIED PENALTY ON THE ADDITIONS MADE T OWARDS GIFT RECEIVED FROM HIS BROTHER. WE FIND THAT IN ITA NO.6 & 8/VIZAG/2015, THE TRIBUNAL HAS DELETED THE ADDITIONS MADE BY THE A.O. TOWARDS ALLEGED GIFTS RECEIVED FROM HIS BROTHER FOR THE ASSESSMENT YEAR 2009-10 & 2010-11. SIMILARLY, FOR THE ASSESSMENT YEAR 2011-12 IN ITA.NO. 10/VIZAG/2015, THE TRIBUNAL HAS DIRECTED THE A.O. T O DELETE A SUM OF RS. 43,00,879/- OUT OF TOTAL GIFT OF RS.64,17,400/-, WI TH AN OBSERVATION THAT THE ASSESSEE HAS PROVED THE IDENTITY, GENUINENESS O F THE TRANSACTIONS AND CAPACITY OF THE DONOR. IN RESPECT OF REMAINING AMOUNT OF RS.21,16,521/-, THE TRIBUNAL HAS SET ASIDE THE ISSU E TO THE FILE OF THE A.O. AND DIRECTED THE A.O. TO EXAMINE THE ISSUE WIT H REFERENCE TO THE ADDITIONAL CLAIM MADE BY THE ASSESSEE. WE FIND THAT THE A.O. LEVIED PENALTY ON THE TOTAL ADDITIONS MADE TOWARDS GIFT. T HE ASSESSEE EXPLAINED THAT HE HAS RECEIVED GIFT FROM HIS BROTHER AND ALSO FURNISHED NECESSARY PROOF SUCH AS BANK STATEMENT OF DONORS AND PROOF OF SOURCE OF INCOME OF THE DONOR AND ALSO PROOF OF TRANSFER OF MONEY FR OM FOREIGN BANK ACCOUNT TO INDIAN BANK ACCOUNT. THE ASSESSEE ALSO C ORRELATED BANK ENTRIES WITH REFERENCE TO THE DEBITS APPEARING IN T HE DONORS BANK ACCOUNT FURTHER SUPPORTED BY TRANSFER OF MONEY FROM FOREIGN BANK ACCOUNT TO INDIAN BANK ACCOUNT. THEREFORE, WE ARE OF THE VIEW THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS A BONAFIDE E XPLANATION AND A.O. ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 18 IS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 16. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSEE. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE HIGH C OURT OF DELHI, IN THE CASE OF CIT VS. BHARTESH JAIN (2010) 323 ITR 358. THE HONBLE DELHI HIGH COURT, UNDER SIMILAR FACTS HELD THAT WHERE TRI BUNAL HAS RECORDED FINDING OF FACTS WHILE DELETING PENALTY U/S 271(1)( C) OF THE ACT IN RESPECT OF ADDITION U/S 68 OF THE ACT, NO SUBSTANTIAL QUEST ION OF LAW ARISES. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUND ER: 8. INSOFAR AS THE ADDITION OF RS. 19 LACS UNDER S. 69 OF THE SAID ACT IS CONCERNED, THE TRIBUNAL RETURNED THE FOLLOWING FIND INGS: 'REGARDING ADDITION OF RS. 19 LACS UNDER S. 68, WE FIND THAT AS PER THE CLAIM OF THE ASSESSEE, FOUR CHEQUES WERE RECEIVED BY THE ASS ESSEE FROM M/S SUJATA SECURITIES (P) LTD. TOTALLING RS. LG LACS. FOR THIS LOAN ALSO, THE ASSESSEE HAS GIVEN LOAN CONFIRMATION AND IN RESPONSE TO SUMMONS, SHRI MADHUP JAM, DIRECTOR OF M/S SUJATA SECURITIES (P) LTD. HAS APPEARED BEFORE THE AO AND IN HIS STATEMENT RECORDED BY THE A0 1 HE HAS CONFIRMED THAT HE HAS GIVEN LOAN TO THE ASS ESSEE BUT HE HAS NOT TAKEN ANY SECURITY. THE ADDITION WAS MAD E FOR THE REASON THAT THIS CHEQUE OF P.S. 19 LACS WAS GIVEN BY M/S SUJATA SECU RITIES (P) LTD. TO THE ASSESSEE OUT OF THE FUND OF RS. 25 LACS SAID TO BE RECEIVED BY THAT COMPANY FROM M/S MODEL TRADING CO., PROP. URMILLA BATRA AND IT I S NOTED BY THE AO, SHRI MADHUP JAIN, DIRECTOR OF M/S SUJATA SECURITIES (P) LTD., HAS STATED IN HIS STATEMENT THAT HE DOES NOT REMEMBER THE ADDRESS OF M/S MODEL TRADING CO. WHICH CREATE SERIOUS DOUBT ABOUT THE GENUINENESS. IT IS FURTHER FOUND THAT IN THE BANK ACCOUNT OF M/S MODEL TRADING CO. CASH OF P.S. 25 LACS WAS DEPOSITED. ON THIS BASIS, THE ADDITION MADE MAY BE JUSTIFIED BUT IT CANNOT BE SAID THAT THE EXPLANATION OF THE ASSESSEE WAS NOT BONA FIDE AND H ENCE AS DISCUSSED IN THE ABOVE PARAS REGARDING LOAN OF RS. 4 LACS, FOR THIS LOAN OF P.S. 19 LACS ALSO, THE EXPLN. 1 TO S. 271(1)(C) IS NOT APPLICABLE AND HENC E FOR THIS LOAN ALSO, THE AO IS DOUBTING THE SOURCE OF SOURCE WHICH CANNOT BE THE B ASIS FOR IMPOSING PENALTY.' ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 19 17. THE ASSESSEE RELIED UPON THE DECISION OF HONBL E HIGH COURT OF DELHI, IN THE CASE OF CIT VS. SAS PHARMACEUTICALS, REPORTED IN (2011) 335 ITR 239. THE HONBLE HIGH COURT, HELD THAT NO PENALTY CAN BE LEVIED FOR INCOME SURRENDERED DURING THE COURSE OF SURVEY. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED AS UNDER: IT IS TO BE KEPT IN MIND THAT S. 271(1)(C) IS A PE NAL 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 IM POSED. SUB-S. (1) OF S. 271 STIPULATES CERTAIN CONTINGENCIES ON THE HAPPENI NG WHEREOF THE AO OR THE CIT(A) MAY DIRECT PAYMENT OF PENALTY BY THE ASS ESSEE. SEC. 271(1)(C) AUTHORIZES IMPOSITION OF PENALTY WHEN THE AO IS SAT ISFIED THAT THE ASSESSEE HAS EITHER : (A) CONCEALED THE PARTICULARS OF HIS I NCOME; OR (B) FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS NOT TH E CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME, AS IN THE IT RETU RN, PARTICULARS OF INCOME HAVE BEEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLECTED IN THE IT RETURN. THE QUEST/ON IS WHETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT. IT WOU LD 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. THE WORDS 'IN THE COURSE OF ANY PROCEEDINGS UNDER T HIS ACT' ARE PREFACED BY THE SATISFACTION OF THE AO OR THE CIT('A). WHEN THE SURVEY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF SATISFACTION OF A O OR THE CIT(A) OR THE CIT DOES NOT ARISE. ONE HAS 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 SURV EY. DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING ASSESSME NT ORDER. IT IS, THUS, OBVIOUS THAT THE EXPRESSION 'IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT' CANNOT HAVE THE REFERENCE TO SURVEY PROCE EDINGS IN THIS CASE. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME BY TH E ASSESSEE HAS TO BE IN THE IT RETURN FILED BY IT. THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME IN HIS RETURN AND EVERYTHING WOULD DEPEND UP ON THE IT RETURN FILED BY THE ASSESSEE. THIS VIEW GETS SUPPORTED BY EXPLNS. 4 AS WELL AS S AND 5A OF S. 271. OBVIOUSLY, NO PENALTY CAN BE IMPOS ED UNLESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DU LY AND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SU RVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAI D SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJE CTURES AND POSSIBILITIES. SEC. 271 (1) (C) HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND THAT THERE IS ACTUALLY A CONCEALMENT OR NON-D ISCLOSURE OF THE ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 20 PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. T HERE IS NO SUCH CONCEALMENT OR NON-DISCLOSURE AS THE ASSESSEE HAD M ADE A COMPLETE DISCLOSURE IN THE IT RETURN AND OFFERED THE SURREND ERED AMOUNT FOR THE PURPOSES OF TAX.CIT VS. MOHAN DAS HASSA NAND (1983 ) 34 CTR (DEL) 361 (1983) 141 ITR 203 (DEL) AND CIT VS. RELIANCE P ETRO PRODUCTS (P) LTD. (2010) 230 CTR (SC) 320: (2010) 36 DIR (SC) 44 9: (2010) 3 SCR 510 RELIED ON. 18. THE ASSESSEE RELIED UPON THE DECISION OF ITAT, VISAKHAPATNAM BENCH IN THE CASE OF GODAVARI TOWNSHIPS (P) LTD. VS . DCIT (2014) 148 ITD 463. THE COORDINATE BENCH OF THIS TRIBUNAL, UND ER SIMILAR CIRCUMSTANCES HELD AS UNDER: ON SIMILAR ISSUE, HIGH COURT OF A.P. IN CASE OF V. V. PROJECTS AND INVESTMENTS PVT. LTD. VS. DCIT 300 ITR 40 (A.P.) CON SIDERED SIMILAR SITUATION AND HELD THAT PENALTY IS NOT IMPOSABLE. FURTHER, HELD THAT IN ABSENCE OF ANYTHING TO SHOW THAT ANY OTHER MATERIAL WAS AVAILABLE WITH ASSESSING OFFICER TO EFFECT THAT ASSESSEE CONCEALED INCOME, IT IS NOT OPEN TO ASSESSING OFFICER TO INVOKE POWER U/S 271(1)(C) LEVYING PENALTY. FOLLOWING SAID DECISION PENALTY U/S 271(1)(C) WAS N OT IMPOSABLE. EVEN OTHERWISE, ASSESSEE HAVING GIVEN BONAFIDE EXPLANATI ON THAT HE HAD OFFERED HIGHER INCOME EVEN THOUGH THAT MUCH INCOME WAS NOT TAXABLE, WAS NOT REBUTTED. ASSESSING OFFICER HAD NEITHER BR OUGHT ANY CALCULATIONS ON RECORD NOR MENTIONED HOW AMOUNT WAS QUANTIFIED. THUS, ASSESSEE HAD UNEXPLAINED EXPENDITURE IN EARNING THAT GROSS R ECEIPTS. THEREFORE, EVEN PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)( C) CAME INTO OPERATION AS ASSESSEES EXPLANATION HAD NOT BEEN DISPROVED. THEREFORE, CONDITIONS FOR IMPOSING PENALTY DID NOT SATISFY. HENCE, PENAL TY CANCELLED. UNLIKE IN A SEARCH CASE THERE IS NO PRESUMPTION THA T THE AMOUNT UNEARTHED DURING THE COURSE OF SURVEY WILL AUTOMATI CALLY BE CONSIDERED AS 'CONCEALED INCOME'. NO PM VISION/EXPLANATION SIMILA R TO EXPLANATION-5 WAS PROVIDED IN THE SECTION TO COVER SURVEY CASES. SINC E, THE INCOME DETECTED/OFFERED IN SURVEY CANNOT BE DEEMED TO BE C ONCEALED INCOME', TREATING THE SAME AS 'CONCEALED INCOME' AS WAS DONE BY AG DOES NOT ARISE. AG HAS TO ESTABLISH THE NATURE OF INCOME AS 'CONCEALED INCOME' BEFORE LEVY OF PENALTY. NOTHING WAS DONE BY AD EXCE PT ACCEPTING THE REVISED INCOME RETURNED IN THE ASSESSMENT PROCEEDIN GS U/S. 143(3) OF THE ACTS ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 21 CIT(A) IN HIS DETAILED ORDER HAD ELABORATELY DISCUS SED PRINCIPLES OF LAWS HOWEVER, CIT(A) HAD MISSED APPLICATION OF VARIOUS P RINCIPLES ON THE GIVEN SET OF FACTS. IN ASSESSEE'S CASE, PENALTY WAS NOT I MPOSABLE. THEREFORE, WHILE APPRECIATING EFFORTS OF CIT(A) IN IMPROVING O RDER OF AO, ORDER OF CIT(A) SET ASIDE AND PENALTY DELETED. ASSESSEE'S AP PEAL ALLOWED. V.V. PROJECTS AND INVESTMENTS PVT. LTD. VS. DCIT 300 PR 40 (A.P.), FOLLOWING 19. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO FOLLOWING THE RATIOS OF THE JUDGEMENTS CITED ABOVE, WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UND ER EXPLANATION 1 OF SECTION 271(1)(C) OF THE ACT, AS THE CONDITIONS STI PULATED FOR LEVY OF PENALTY IS NOT FULFILLED. THE EXPLANATION OFFERED B Y THE ASSESSEE IS BONAFIDE AND THERE IS NO DELIBERATE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME DURING THE COURSE OF SUR VEY ON ESTIMATION BASIS FURTHER FOLLOWED BY FILING OF RETURN ADMITTIN G ADDITIONAL INCOME DECLARED IN THE COURSE OF SURVEY. SIMILARLY, AS RE GARDS GIFT RECEIVED FROM HIS BROTHER, THE ASSESSEE HAS PROVED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE DONOR. THEREFORE, WE ARE O F THE VIEW THAT THE A.O. WAS NOT CORRECT IN LEVYING PENALTY U/S 271(1)( C) OF THE ACT. ACCORDINGLY, WE DIRECT THE A.O. TO DELETE PENALTY L EVIED U/S 271(1)(C) OF THE ACT, FOR THE ASSESSMENT YEAR 2009-10 AND 2010-1 1. IN SO FAR AS ASSESSMENT YEAR 2011-12, SINCE WE HAVE REMITTED BAC K THE ISSUE TO THE ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 22 FILE OF THE A.O. TO VERIFY THE CLAIM OF THE ASSESSE E, IN RESPECT OF REMAINING UNEXPLAINED AMOUNT OF RS. 21,16,521/-, WE DEEM IT APPROPRIATE TO SET ASIDE THE PENALTY ORDER FOR THE A.Y. 2011-12, DIRECT THE A.O. TO MODIFY PENALTY ORDER IN ACCORDANCE WITH FINAL OUTCOME OF THE ASSESSMENT ORDER IN THE LINE OF OUR DISCUSSION IN I TA.NO.10/VIZAG/2015. IN SO FAR AS AMOUNT OF GIFT DELETED, THE A.O. IS DI RECTED TO DELETE PENALTY LEVIED TO THE EXTENT OF GIFTS OF RS. 43.00.879/-. I N RESPECT OF REMAINING AMOUNT OF RS. 21,16,521/-, THE A.O. IS DIRECTED TO TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW AFTER COMPLETION OF ASSESSMENT. 20. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E IN ITA NOS.7 AND 9 ARE ALLOWED AND APPEAL IN ITA. NO. 11/VIZAG/2015 IS ALLOWED FOR STATISTICAL PURPOSE . SIMILARLY, THE APPEALS FILED BY THE REVENUE IN IT A NO.36, 37 & 38/VIZAG/2015 ARE DISMISSED. 21. THE ASSESSEE HAS FILED STAY PETITIONS, SEEKING STAY OF DEMAND FOR THE ASSESSMENT YEARS 2009-10, 2010-11 & 2011-12. S INCE, THE APPEALS FILED BY THE ASSESSEE AND REVENUE FOR THE ABOVE ASS ESSMENT YEARS HAVE ITA NOS.7, 9, 11, 36, 37 & 38/VIZAG/2015 & SP 39, 41 &43/VIZAG/2015 DR. VEMPALA BALA MANOHAR, VISAKHAPATNAM 23 BEEN DISPOSED OFF, THE STAY PETITIONS FILED BY THE ASSESSEE BECOME INFRUCTUOUS AND HENCE THE SAME WERE DISMISSED AS IN FRUCTUOUS. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 TH AUG16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 12.08.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT DR. VEMPALA BALA MANOHAR, D.NO.1 8-1-27, HARITHA SAPTAGIRI PLAZA, K.G.H. DOWN, VISAKHAPATNAM 2. / THE RESPONDENT THE ITO, WARD-1(3), VISAKHAPATN AM 3. / THE RESPONDENT THE ITO, WARD-1(4), VISAKHAPATN AM 4. + / THE CIT-1, VISAKHAPATNAM 5. + ( ) / THE CIT (A), VISAKHAPATNAM 6. # . , . , # / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM