M/s. Seasons Catering (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 788/DEL/2012

• Counselvise Citation: 78820114 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-10-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 16-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NIDDI SRIVASTAVA
• Assessee Lawyers: SANJEEV KWATRA
• Keywords: Rejection of books of accounts; Document seized; Documents seized
• Section: 133A; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.788/DEL/2012 ASSESSMENT YEAR : 2005-06 SEASONS CATERING (P) LTD., DCIT, B-6, ANUPAM PLAZA, OPP. CIRCLE-8 (1), AZAD APARTMENTS, HAUZ KHAS, NEW DELHI. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAFCS AAFCS AAFCS AAFCS- -- -6016 6016 6016 6016- -- -G GG G APPELLANT BY : SHRI SANJEEV KWATRA, C.A. RESPONDENT BY : MRS. NIDDI SRIVASTAVA, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 23.11.2012. THE GROUNDS OF APPEALS TAKEN BY TH E ASSESSEE ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY CIT(A), NEW DELHI (HEREINAFTER REFERR ED TO AS CIT(A) IS BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN NOT ADDRESSING ALL THE ARGUMENTS RA ISED DURING THE COURSE OF APPEAL BY THE APPELLANT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE IMPOSITIO N OF PENALTY ITA NO788/DEL/2012 2 OF ` .9,14,750/- LEVIED U/S 271(1)( C ) OF THE INCOME TAX ACT, 1961. 4. THAT THE APPELLANT CRAVES RIGHT TO ADD, ALTER, AMEND , MODIFY ANY OF THE GROUNDS OF APPEAL AT THE TIME OF APPEARING OR AT THE TIME OF HEARING. 2. FROM THE GROUNDS OF APPEALS IT IS APPARENT THAT T HE SOLE GRIEVANCE OF ASSESSEE IS UPHOLDING OF ORDER OF ASSESSING OF FICER U/S 271(1)( C ) OF THE INCOME TAX ACT, 1961 . THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CATERIN G. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WA S FILED AT ` .10,41,470/-. ON 14.12.2004 I.E. YEAR UNDER CONSIDER ATION THERE WAS A SURVEY OPERATION U/S 133A OF THE ACT AND CERTAIN DOCU MENTS WERE IMPOUNDED. THE ASSESSEE VIDE LETTER DATED 11.2.2005 MAD E A SURRENDER OF ` .25 LAKHS TO COVER DISCREPANCIES IF ANY IN THE DOCUMEN TS SIEZED BY THE DEPARTMENT. THE LETTER OF SURRENDER FUR THER STATED THAT SURRENDER WAS SUBJECT TO THE PRE-CONDITION THAT DEPART MENT SHALL NOT INITIATE ANY ACTION FOR LEVY OF PENALTY OR PROSECUTI ON. FROM THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE SURRENDERED AMOUNT OF ` .25 LAKHS WAS NOT REFLECTED IN THE P&L ACCOUNT. THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN TH E SAME. THE ASSESSEE VIDE LETTER DATED 6.12.2007 SUBMITTED AS UNDER:- WE HAVE SURRENDERED ` .25 LAKHS AT THAT POINT OF TIME. THE SURRENDER WAS MADE IN SPITE OF THERE BEING NO CLARITY ABOUT THE EXISTENCE/NATURE AND EXTENT OF UNDISCLOSED INCOME THAT CAN BE EXPECTED DURING SURVEY PROCEEDINGS. A LOT OF MATERIA L MOSTLY IRRELEVANT WAS IMPOUNDED BY THE DEPARTMENT AND AT T HAT POINT OF TIME WE HAVE DEPOSITED AD HOC PAYMENT OF ` .9,15,000/-. SUBSEQUENTLY AFTER CLOSING OF THE YEAR ON 31ST MARCH 2005 WHEN WE FINALIZED OUR ACCOUNTS AND ARRIVED AT OUR TOTAL T AX LIABILITY OF ITA NO788/DEL/2012 3 THE YEAR ON WHICH WE DULY PAID THE ENTIRE TAX AFTER ADJUSTING THE AD HOC PAYMENT OF ` .9,15,000/-. THE ASSESSING OFFICER AFTER NARRATING THE NATURE OF DOC UMENTS DID NOT ACCEPT THE SUBMISSIONS OF ASSESSEE AND MADE AN ADDITION OF ` .25 LAKHS. THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) WHO DISMISSED THE APPEAL OF ASSESSEE AND FURTHER APPEAL TO ITAT DID NOT BRING ANY RELIEF TO THE ASSESSEE. THE REFORE, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS VIDE NOT ICE DATED 2.5.2011. IN RESPONSE TO SHOW CAUSE NOTICE THE ASSESSEE SUBMITTED AS UNDER:- I) THAT THE PENALTY PROCEEDINGS ARE TIME BARRED AND IN VIEW OF PROVISO TO CLAUSE (A) OF SUB SECTION (1) OF SECTION 271 OF THE ACT. II) THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS AR E DIFFERENT PROCEEDINGS AND THE MATERIAL COLLECTED DUR ING ASSESSMENT PROCEEDINGS CANNOT BE USED AS RES JUDICATA. HOWEVER, THE SAME CAN BE USED TO INITIATE PENALTY PROCEEDINGS BUT THE ENQUIRY IN THE CASE MUST BE MADE A FRESH IN ORDER TO PROVE THAT THE ASSESSEE HAS CONCEALED THE I NCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS MERELY O N THE BASIS OF NON INCORPORATION OF SOME OF THE DOCUMEN TS IMPOUNDED DURING SURVEY IN THE REGULAR BOOKS OF ACCOU NTS. THE BOOKS OF ACCOUNTS ARE WRONGLY REJECTED AND NOT IN THE TRUE SPIRIT OF LAW. III) CHARGING THE ASSESSEE WITH THE PENALTY U/S 271(1)( C) W OULD BE HIGHLY UNCALLED FOR AND UNJUSTIFIED. 3. THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENT IONS OF ASSESSEE AND IMPOSED A PENALTY OF ` .9,14,750/-. THE APPEAL FILED ITA NO788/DEL/2012 4 BEFORE THE LD CIT(A) ALSO DID NOT BRING ANY RELIEF T O THE ASSESSEE. LD CIT(A) HAS UPHELD THE PENALTY. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE OUTSET THE LD AR EXPLAINED THE FACTS AND CI RCUMSTANCES OF THE CASE AND SUBMITTED THAT AFTER SURVEY A LUMP SUM AMO UNT OF ` .25 LAKHS WAS SURRENDERED WITH THE CONDITION THAT NO PENAL TY WILL BE IMPOSED AND TAXES ON THE SURRENDERED INCOME WAS PAID A CCORDINGLY. HOWEVER, WHEN ASSESSEE REALIZED THAT SURRENDER WAS NOT BE CAUSE OF THE SEIZED DOCUMENTS THEREFORE IT CONTESTED AND DID NO T INCLUDE THE SAID SURRENDERED AMOUNT IN THE RETURN OF INCOME. HOWE VER, THE ASSESSING OFFICER MADE THE ADDITION HOLDING THAT THE SUR RENDER WAS VOLUNTARILY. IN VIEW OF THE ABOVE, HE ARGUED THAT T HOUGH IN QUANTUM PROCEEDINGS THE ADDITION WAS UPHELD BUT ON THE BASIS OF QUANTUM ADDITIONS PENALTY CANNOT BE LEVIED AS THERE HAS TO BE SEPARATE EVIDENCE FOR CONCEALMENT OF INCOME FOR IMPOSING PENA LTY U/S 271(1)(C) OF THE ACT. CONTINUING HIS ARGUMENTS, HE FURTHER SUBMI TTED THAT ASSESSMENT ORDER DOES NOT CONTAIN ANY FINDING AS TO CONCE ALMENT OF INCOME AND THEREFORE THERE WAS NO RECORDING OF SATISFA CTION AND MOREOVER PENALTY ORDER WAS PASSED WITHOUT GOING THROUG H THE SUBMISSIONS OF THE ASSESSEE. HE SUBMITTED THAT THE REPLY OF THE ASSESSEE AGAINST PENALTY PROCEEDINGS CONTAINED EACH AND E VERY EXPLANATION OF DOCUMENTS SEIZED DURING SURVEY. IN TH IS RESPECT HE INVITED OUR ATTENTION TO PAGE 39 OF PAPER BOOK WHER E A COPY OF LETTER DATED 21.2.2011 ADDRESSED TO DCIT, CIRECLE-8(1), NEW DELHI WAS PLACED. IN VIEW OF THIS LETTER WHICH CONSISTED OF 20 P AGES THE LD AR ARGUED THAT EACH AND EVERY DOCUMENT CEASED DURING SUR VEY WAS EXPLAINED AND ASSESSING OFFICER WITHOUT MENTIONING ANY THING ABOUT THIS LETTER IMPOSED THE PENALTY. IN VIEW OF THE EXPLA NATION FURNISHED TO ASSESSING OFFICER VIDE THIS LETTER HE ARGUED THAT WHEN A LL SEIZED DOCUMENTS WERE EXPLAINED, THE PENALTY WAS NOT IMPOSABL E. HE FURTHER ITA NO788/DEL/2012 5 SUBMITTED THAT EVEN IF THE ASSESSEE LOST IN QUANTUM PROCE EDINGS THE PENALTY WAS NOT IMPOSABLE. HE FURTHER STRESSED THAT THE SURRENDER WAS MADE CONDITIONAL WITH THE PRE-CONDITION THAT PENALT Y FOR CONCEALMENT WILL NOT BE IMPOSED. BESIDES RELYING UPON VARIOUS JUDIC IAL PRONOUNCEMENTS AS RELIED BEFORE LD CIT(A) THE LD AR RELIED UPON IN THE CASE OF NATIONAL TEXTILES V. CIT 249 ITR 125 (GUJ.) AND IN THE CASE OF PUNEET SEHGAL & OTHERS V. ITO 123 TTJ 566 WHICH WAS F OLLOWED BY ITAT IN 16 TAXMAN.COM115 (CHD.). IN VIEW OF THE ABOVE AR GUMENTS AND JUDICIAL PRONOUNCEMENTS THE LD AR ARGUED THAT PENALT Y SHOULD NOT HAVE BEEN IMPOSED AND IT NEEDS TO BE REVERSED. 6. THE LD DR, ON THE OTHER HAND, SUBMITTED THAT LD C IT(A) HAS GONE INTO ALL FACTS AND CIRCUMSTANCES OF THE CASE. HE FURTHE R SUBMITTED THAT DOCUMENTS WERE IMPOUNDED WHICH WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS AS DURING SURVEY PROCEEDINGS THE ASSESSEE MUST HAVE THOUGHT OF MORE ADDITIONS AND THAT IS WHY HE SURRENDER ED THE AMOUNT OF ` .25 LAKHS ON ACCOUNT OF SEIZED MATERIAL. THE LD DR, H EAVILY RELIED UPON THE ORDER OF ASSESSING OFFICER AND LD CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. SECTION 271(1)( C) OF THE ACT HAS A DIRECT BEARING ON THE CONTROVERSY AN D THEREFORE IT IS SALUTARY UPON US TO TAKE NOTE OF THE RELEVANT PROVISIO NS OF SECTION 271(1)( C) ALONG WITH EXPLANATION-1 WHICH READS AS UN DER:- 271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICE S, CONCEALMENT OF INCOME, ETC. (1). IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEAL S) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, I S SATISFIED THAT ANY PERSON (A) AND (B)******** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME. ITA NO788/DEL/2012 6 HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF P ENALTY. (I) AND (INCOME-TAX OFFICER,)******** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLAUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NO T BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICU LARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURAT E PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1.- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFE RS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR T HE COMMISSIONER(APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT A BLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATE RIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED B Y HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING TH E TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESE NT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONC EALED. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THAT FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEED INGS BEFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I ) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICUL ARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY I S CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BE TWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING ITA NO788/DEL/2012 7 INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FEA TURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH T HE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PART ICULARS, IN CERTAIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEMING FICTION FOR CONCEALMENT OF INCO ME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANAT ION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER I N RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL I NCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPE ALS); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE CO MPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSE E IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAI LS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MA TERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UNDER FIRST SITU ATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAIL ED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASSESSI NG OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO P LAY BY THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL IN COME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL IN COME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDE D IN ITA NO788/DEL/2012 8 EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN TH E ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE I N COMPUTING THE TOTAL INCOME OF THE ASSESSEE, FOR THE PURPOSE OF SEC TION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INC OME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FUR NISHED. 8. NOW LOOKING INTO THE FACTS OF THE PRESENT CASE WE F IND THAT ASSESSEE HAD MADE SURRENDER DURING SURVEY WITH THE PRE C ONDITION THAT PENALTY WILL NOT BE IMPOSED. HOWEVER, AFTER FINALIZA TION OF ACCOUNTS AND AFTER GOING THROUGH THE MATERIAL IMPOUNDED THE ASSESSEE FOUND THAT SURRENDER WAS NOT REQUIRED AND THEREFORE IT DID NOT INCLUDE THE AMOUNT OF SURRENDER IN THE INCOME TAX RETURN. HOWEVE R, THE ASSESSING OFFICER MADE THE ADDITION WHICH WAS UPHELD BY ITAT. ALL THE SEIZED MATERIAL IMPOUNDED BY THE DEPARTMENT WAS EXPLAINED B Y THE ASSESSEE VIDE LETTER DATED 21.2.2011 PLACED AT PAPER BOOK PA GES 39 TO 59. THE RELEVANT PART OF THIS LETTER HAS BEEN REPRODUCED BY L D CIT(A) ALSO AT PAGES 8 TO 16 OF THE IMPUGNED ORDER. WE HAVE GONE TH ROUGH THE OBSERVATIONS OF THE LD ASSESSING OFFICER ABOUT THE NATURE OF MATERIAL FOUND DURING SURVEY AND THE EXPLANATION OF THE ASSESSEE. THE ONE OF THE DOCUMENT CONSIDERED BY THE LD ASSESSING OFFICER IS A NNEXURE (5). IT IS A DOCUMENT SHOWING RECEIPT OF CATERING OF 600 PERSO NS @ ` .450/- PER PERSON. THE PARTY WAS TO BE HELD ON 15.12.2004. SINCE THERE WAS A SURVEY AT THE PREMISES OF THE ASSESSEE, IT WAS CANCELLED. N OW ACCORDING TO THE ASSESSEE NO PARTY WAS ORGANIZED. THE L D ASSESSING OFFICER DID NOT CROSS VERIFY FROM THE PERSON WHO BOOK ED THE PREMISES FOR THE PARTY BUT PRESUMED THAT PARTY HAVE BEEN ORGA NIZED BY THE ASSESSEE AT SOME OTHER PLACE OTHERWISE HE WILL LOOSE ITS CR EDITABILITY OF CATERER IN THE MARKET. IN OUR VIEW, THIS TYPE OF REA SONING MAY BE SUFFICIENT FOR ADDITION BUT FOR VISITING AN ASSESSEE WITH THE PENALTY. LD ITA NO788/DEL/2012 9 ASSESSING OFFICER OUGHT TO HAVE CONCLUSIVELY RECORDED A FINDING THAT SUCH A FACTUAL SUBMISSION WAS INCORRECT. HAD HE ISSUED A L ETTER TO THE PERSON WHO ORGANIZED THE PARTY EVERY THING WOULD HAV E BEEN CRYSTAL CLEAR. THE ASSESSING OFFICER AND HIGHER APPELLATE AUTHO RITIES UPHELD THE ADDITION OF ASSESSING OFFICER HOLDING THAT ASSESSEE ITSELF HAD SURRENDERED THE AMOUNT. WE FIND THAT LD ASSESSING OFFICE R HAS NO WHERE POINTED OUT AS TO HOW THE EXPLANATION OF THE A SSESSEE IN THE LETTER DATED 21,2,2011 IS FACTUALLY INCORRECT. HIS RE ASONING IS NOT BASED ON CROSS VERIFICATION FROM THIRD PARTIES RATHER THEY A RE BASED ON INFERENCE, WHICH IS NOT SUFFICIENT FOR VISITING ANY ASSESSEE WITH PENALTY. MOREOVER, WE FIND THAT SURRENDER WAS CONDITI ONAL SUBJECT TO NO PENALTY AND THEREFORE THIS IS NOT A FIT CASE FOR IMPOSI TION OF PENALTY U/S 271(1)( C) OF THE ACT. THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF AJAY SANGARI & CO. V. ADDL. CIT REPORTED IN 16 T AXMAN.COM 115 CHD. UNDER SIMILAR CIRCUMSTANCES HELD AS UNDER:- WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE LEV Y OF PENALTY FOR CONCEALMENT U/S 271(1)( C) OF THE ACT. T HE BASIS FOR MAKING THE ADDITION IN THE PRESENT CASE WAS THE DOCUME NTS FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE SURVEY PROCEEDINGS CARRIED OUT ON 24 TH FEB. 2006. THE PROVISIONAL TRADING AND P&L ACCOUNT WAS FOUND FOR THE PERIOD END ING 31 ST MARCH, 2005 WHICH DID NOT TALLY WITH THE FIGURES SHOW N IN THE SAID ACCOUNT FURNISHED ALONG WITH THE RETURN OF INCO ME,. THE ASSESSEE WHEN CONFRONTED DURING THE ASSESSMENT PROCEEDINGS FILED AN EXPLANATION. HOWEVER, IN ORDER TO BUY PEAC E OF MIND THE ASSESSEE SURRENDERED A SUM OF ` .25 LAKHS AS ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION. THE SAID SURRENDER W AS MADE SUBJECT TO NON LEVY OF PENALTY FOR CONCEALMENT U/S 27 1(1)( C) OF THE ACT. THE ASSESSING OFFICER HOWEVER, ACCEPTED THE SUR RENDER ITA NO788/DEL/2012 10 OF ` .25 LAKHS INITIATED THE PENALTY PROCEEDINGS U/S 271(1) ( C) OF THE ACT. THE PENALTY UNDER SEC. 271(1)( C) OF THE AC T WAS LEVIED ON THE ACT OF ASSESSEE IN SURRENDERING THE ADDITIONAL I NCOME OF ` .25 LAKHS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. T HOUGH THE ASSESSEE HAD FURNISHED AN EXPLANATION IN RESPECT OF THEN ENTRIES IN THE PROVISIONAL TRADING AND P&L A/.C WHICH WAS SUBMITTED TO THE BANK FOR AVAILING CERTAIN LIMITS, TH E ASSESSING OFFICER HAS FAILED TO POINT OUT ANY DISCREPANCY IN TH E EXPLANATION FURNISHED BY THE ASSESSEE AND HAS PROCEEDED TO ASSESS THE INCOME IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE SURRENDER MADE BY THE ASSESSEE. IN THE ENTIRETY OF THE F ACTS AND CIRCUMSTANCES, THE ONLY ISSUE IS WHETHER THE ASSESSEE IS EXIG IBLE TO LEVY OF PENALTY U/S 271(1)( C) OF THE ACT. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE HON'BLE KAR NATAKA HIGH COURT IN THE CASE OF TP INDRAKUMAR V. ITO (2010 ) 322 ITR 454 WHEREIN IT HAS BEEN HELD AS UNDER:- WHILE IT IS NO DOUBT TRUE THAT AN ADMISSION WHICH IS OTHERWISE NOT AN ADMISSION OF THE VERY NATURE BY ITSEL F CAN CONSTITUTE AN ADMISSION OF THE LIABILITY HAS TO BE PRO BED FURTHER, AN ADMISSION OF THE NATURE THAT THE ASSESSEE VOLUNTARILY OFFERED I.E. ` .10 LAKHS BY WAY OF INCOME TO AVOID ANY FURTHER SCRUT INY BY THE ASSESSING OFFICER CAN BE ACTED UPON AT ITS FACE VALU E WITHOUT FURTHER PROBE. THE ENTIRE EXERCISE BY THE ASSESSING OFFI CER IS TO DETERMINE THE INCOME OF THE ASSESSEE, WHERE UPON IN TAX LIABILITY GETS AUTOMATICALLY FIXED IN TERMS OF THE RATES AS PROVI DED FOR BY THE FINANCE ACT. IF THE ASSESSING OFFICER IS PREEMPTED F ROM PERFORMING THIS EXERCISE OF DETERMINATION OF THE ACTU AL INCOME OF THE ASSESSEE, THERE IS NOTHING ELSE FOR THE ASSESSING OFFICER TO ITA NO788/DEL/2012 11 FURTHER PROBE INTO THE MATTER AS TO WHETHER THE INCO ME SO DECLARED IS CORRECT OR NOT AND IF THE ASSESSEE HIMSELF IS VOLUNTEERING TO OFFER THE AMOUNT AS HIS INCOME, THER E IS NOTHING FURTHER THAT IS REQUIRED TO BE DONE BY THE ASSESSING OFF ICER. AS TO WHETHER THE PRECISE TAX LIABILITY WOULD HAVE CRYSTAL LIZED IN THE AMOUNT NOW DETERMINED BY THE ASSESSING OFFICER IS SPECUL ATIVE AND IT COULD HAVE BEEN EITHER LESS OR MORE WHEN THE A SSESSEE ON HIS OWN IN THE WAKE OF HIS NEED FOR AVOIDING FURTHER PROBE AND SCRUTINY OFFERED THIS AMOUNT, IT CAN BE REASONABLY INF ERRED THAT THE ASSESSEE IS OBVIOUSLY STRIKING A BALANCE TO AVOID A BI GGER LIABILITY OR HARSHER CONSEQUENCES. BE THAT AS IT MAY W HEN THE ASSESSEE HAD VOLUNTARILY OFFERED THE AMOUNT BY WAY OF I NCOME, THERE WAS NOTHING FURTHER FOR THE AUTHORITY TO DO WH EN THE AUTHORITY IS ACCEPTING IT AT ITS FACE VALUE. WE FURTHER FIND THAT THE HON'BLE PUNJAB & HARYANA H IGH COURT IN THE RAJIV GARG HAD IN SIMILAR CIRCUMSTANCES UPHELD TH E ORDER OF THE TRIBUNAL IN DELETING THE PENALTY LEVIED UNDER SE C. 271(1)( C) OF THE ACT ON THE ADDITIONAL INCOME SURRENDERED BY T HE ASSESSEE. THE ASSESSING OFFICER AND THE CIT(A) HAD PLACED RELIANC E ON THE RATIO LAID DOWN IN THE CASE OF RAJESH CHAWLA. ON THE FACTS OF THE CASE BEFORE THE HON'BLE COURT THE ASSESSEE WAS FOUND TO BE A MEMBER OF GROUP KNOWN AS M/S BALDEV ELECTRICALS, LUDH IANA AGAINST WHICH INFORMATION WAS RECEIVED BY THE INTELL IGENCE WING THAT THE MEMBERS OF THE GROUP WERE INDULGING IN A TA X EVASION BY SHOWING THE INCOME FROM OTHER SOURCES AS AGRICULTURA L INCOME. DURING THE COURSE OF INVESTIGATION THE PERSONS WERE ASKED TO PRODUCE EVIDENCE ABOUT AGRICULTURAL INCOME AND IN THE ABSENCE OF ANY DOCUMENTS BEING PRODUCED THE SAID PERSON S OFFERED TO DISCLOSE INCOME/S SUBJECT TO NO PENALTY. THE HON'BLE HIGH COURT HELD THAT IN SUCH CIRCUMSTANCES IT COULD NO T BE HELD ITA NO788/DEL/2012 12 THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND THE ASSESSEE WAS HELD TO BE LIABLE TO LEVY OF PENALTY UNDER SECTIO N 271(1)( C). 9. WE FIND THAT FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO THE ABOVE NOTED CASES AND FOLLOWING THE ABO VE AND KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE DELETE THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND UPHELD BY T HE LD CIT(A). 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE A SSESSEE IS ALLOWED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY O F DECEMBER, 2013. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.31.12.2013. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 24.10.2013 DATE OF DICTATION 18.12.2013 DATE OF TYPING 19.12.2013 DATE OF ORDER SIGNED BY BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED. ITA NO788/DEL/2012 13