Sh. Jagjit Singh, Ludhiana V. ACIT, Ludhiana

ITA 886/CHANDI/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5370 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 05-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: LALIT TAKYAR
• Keywords: Initiation of penalty proceedings; Onus to prove; Revised return
• Section: 133A; 139(5); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 886/CHD/2013 ASSESSMENT YEAR : 2007-08 JAGJIT SINGH VS. A.C.I.T. CIRCLE IV C/O J.S. MILK PRODUCTS LUDHIANA DASHMESH NAGAR LUDHIANA AWNPS 4773 K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI LALIT TAKYAR RESPONDENT BY: SHRI AKHILESH GUPTA DATE OF HEARING 2.1.2014 DATE OF PRONOUNCEMENT 17. 1.2014 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 5.7 .2013 OF THE LD CIT(A)-II, LUDHIANA. 2 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1 THAT THE LD. CIT(A) HAS ERRED IN PARTLY ALLOWING THE PENALTY IMPOSED BYTEH ACIT CIRCLE IV, LUDHIANA U/S 271(1)(C ) WHICH IS AGAINST LAW AND FACTS OF THE CASE. 2 THAT THE ASSESSEE MADE A VOLUNTARILY AND BONAFIDE LY SURRENDER A SUM OF RS. 40 LAKHS AS ADVANCE RECEIVED FROM SHRI RAJESH GUPTA AND FILED A REVISED RETURN INCLUDING T HE SAID AMOUNT, BEFORE BEING POINTED OUT BY THE DEPARTMENT OF THIS AMOUNT AND HAS PAID ALL THE TAXES THEREON. 3 THAT THE SURRENDER WAS MADE TO PURCHASE PEACE OF MIND AND TO AVOID PROLONG LITIGATION. THAT NO OTHER ADDITIO N HAS BEEN MADE IN THIS CASE EXCEPT OF RS 40 LAKHS SURRENDERED BY T HE ASSESSEE. 3 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED RETURN OF INCOME DECLARING INCOME OF RS. 6,60,084/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND DURING ASSESSM ENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAS MA DE VARIOUS 2 DEPOSITS. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAM E. INITIALLY IT WAS SUBMITTED THAT NO BALANCE SHEET WA S BEING MAINTAINED BUT AFTER SOME ADJOURNMENTS BALANCE SHEE T WAS FILED IN WHICH FOLLOWING LOANS WERE SHOWN AS UNDER: 1. GURBIR BAJAJ RS. 9,00,000/- 2.JAGJIT SINGH & SONS (HUF) RS. 28,080/- 3. RAJESH GUPTA S/O. VED PARKASH RS. 40,00,000/- 4.JMA BUILDCON PVT LTD., RS. 33,00,000/- 5. SUSHMA JAIN RS. 17,90,466/- IT WAS ALSO NOTICED FROM THE BALANCE SHEET THAT THE ASSESSEE HAD TAKEN VARIOUS LOANS AND ADVANCES FOR PURCHASE O F PROPERTIES. INITIALLY THE ASSESSEE DID NOT FILE AN Y CONFIRMATION FOR THE LOANS AND VARIOUS ADJOURNMENTS WERE SOUGHT. ULTIMATELY ON 13.10.2009 CONFIRMATION IN RESPECT OF THE PARTIES EXCEPT RAJESH GUPTA WAS FILED. THE ASSESSING OFFIC ER AGAIN ASKED THE ASSESSEE TO FILE CONFIRMATION IN RESPECT OF LOAN OF RS. 40 LAKHS SAID TO HAVE BEEN TAKEN FROM SHRI RAJ ESH GUPTA. AGAIN ON 20.10.2009 ADJOURNMENT WAS TAKEN. ON 23.1 0.2009 IT WAS INTIMATED THAT THIS AMOUNT IS BEING SURRENDERED AND REVISED RETURN HAS ALREADY BEEN FILED ON 19.10.2009 . IN THIS REVISED RETURN SURRENDER LETTER WAS ALSO ATTACHED. ON PERUSAL OF REVISED RETURN THE ASSESSING OFFICER FURTHER NOT ICED THAT TAX DUE TO THIS ADDITIONAL AMOUNT OF INCOME HAS NOT BEE N PAID. HE ALSO OBSERVED THAT REVISED RETURN WAS FILED MERELY TO CAMOUFLAGE THE DEPARTMENT THUS TO GIVE COLOUR OF VO LUNTARY SURRENDER BECAUSE THE ASSESSEE WAS NOT ABLE TO FILE ANY EXPLANATION IN RESPECT OF SAID LOAN. HE ALSO OBSE RVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE EVEN THE ADDR ESS OF RAJESH GUPTA OR EVEN THE PARTICULARS OF THE PROPERT Y AGAINST WHICH THIS ADVANCE IS SAID TO HAVE BEEN TAKEN. IN THIS BACKGROUND PENALTY PROCEEDINGS U/S 271(1)(C) WERE I NITIATED. 4 IN RESPONSE TO SHOW CAUSE NOTICE AGAINST LEVY OF PENALTY VARIOUS ADJOURNMENTS WERE SOUGHT. ULTIMATELY WRITTE N SUBMISSIONS WERE FILED IN WHICH ACCORDING TO THE AS SESSING OFFICER IT WAS MAINLY STATED THAT NO PENALTY SHOULD BE LEVIED BECAUSE THE ASSESSEE HAD MADE SURRENDER VOLUNTARILY . SOME CASE LAWS WERE ALSO RELIED. ASSESSING OFFICER AFTE R CONSIDERING 3 THE SUBMISSIONS OBSERVED THAT THE ASSESSEE HAS NOT SHOWN ADVANCES IN RETURN FORMS AND IT WAS ONLY AFTER ENQU IRIES BY THE ASSESSING OFFICER THAT THE DETAILS OF ADVANCES WERE FURNISHED. HOWEVER, NO DETAILS INCLUDING THE ADDRESS OF RAJESH GUPTA WAS PROVIDED DESPITE PERSISTENT ENQUIRIES BY THE DEPART MENT. IT IS STATED IN THE SUBMISSIONS THAT THIS MONEY WAS TAKEN AS ADVANCE BUT EVEN THE PARTICULARS OF PROPERTY AGAINS T WHICH SUCH ADVANCES WAS TAKEN, WAS NOT MENTIONED. 5 HE ALSO DISTINGUISHED THE DECISION RELIED ON BY T HE ASSESSEE. HE HIMSELF RELIED ON THE DECISION OF HON 'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF RAJESH CHAWLA VS. C IT, 154 TAXMAN 364 AND ALSO THE DECISION OF SUMITI DAYAL VS . CIT, 214 ITR 801 (S.C) AND LEVIED PENALTY @ 150% OF THE TAX. 6 AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APP EAL BEFORE THE LD. CIT(A). 7 BEFORE HIM IT WAS MAINLY SUBMITTED THAT THE ASSES SEE HAS FILED REVISED RETURN ON 19.10.2009 AND TILL THAT DA TE NO ENQUIRY REGARDING RAJESH GUPTA WAS MADE BY THE REVENUE AND THEREFORE THE SURRENDER WAS MADE VOLUNTARILY. RELI ANCE WAS PLACED ON VARIOUS CASE LAWS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN CASE OF SIR SHADI LAL V CIT, 168 I TR 705. IN SUBSEQUENT WRITTEN SUBMISSIONS DATED 26.6.2013, I T WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD FILED THE B ALANCE SHEET FOR THE FIRST TIME ON 26.8.2009 AND ONLY AFTER SUCH FURNISHING OF BALANCE SHEET THE ENQUIRY LETTER WAS SENT TO THE AS SESSEE ON 24.9.2009 MAKING GENERAL ENQUIRIES ABOUT THE LOAN. THE LD. CIT(A) EXAMINED THE SUBMISSIONS AND NARRATED THE CHRONOLOGICAL EVENTS AND NOTED THAT THE ASSESSEE WA S REQUIRED TO FURNISHED THE DETAILS OF LOANS AND CONFIRMATION FOR SUCH LOANS INCLUDING THAT FROM RAJESH GUPTA. HOWEVER, N OTHING WAS FILED. THEREFORE IT CAN NOT BE SAID THAT NO ENQUIRY WAS MADE BEFORE THE REVISED RETURN WAS FILED. HE THEN REFERR ED TO THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. ZOOM COMMUNICATION P. LTD, 327 ITR 510 (DELHI) WHEREIN I T WAS OBSERVED THAT ONLY SMALL PERCENTAGE OF RETURNS WERE BEING SCRUTINIZED BY THE DEPARTMENT AND THE ASSESSEE WOUL D GO SCOOT 4 FREE IF NO SUCH SCRUTINY TOOK PLACE AND THE CONSEQU ENCES OF THE SAME WOULD BE THAT THE PERSONS WHO MAKE CLAIM WITH MALAFIDE INTENTION TO AVOID TAX WOULD ALSO GO SCOOT FREE. TH EREFORE WHENEVER SUCH PERSONS ARE DETECTED THEN CONSEQUENCE S MUST BE APPLIED SO THAT DETERRENT EFFECT IS THERE. IN R ESPECT OF REVISED RETURN HE REFERRED TO THE DECISION OF HON'B LE GAUHATI HIGH COURT IN CASE OF F.C. AGGARWAL VS. CIT, 102 IT R 408 WHICH HAS BEEN LATER ON CONFIRMED BY THE HON'BLE SU PREME COURT IN CASE OF G.C. AGGARWAL VS. CIT, 186 ITR 571 WHEREIN IT WAS OBSERVED THAT SUBSEQUENT REVISED RETURN DECLARI NG ADDITIONAL INCOME CANNOT BE TERMED OR TREATED AS RE VISED RETURN IF SAME IS NOT AS PER THE PROVISIONS OF SECT ION 139(5). SINCE REVISED RETURN CAN BE FILED ONLY IN CASE OF O MISSION, THEREFORE REVISED RETURN DECLARING ADDITIONAL INCOM E, COULD NOT BE CONSIDERED FOR THE PURPOSE OF DECIDING THE ISSUE OF PENALTY. THEREAFTER HE FURTHER DISCUSSED VARIOUS CASE LAWS E LABORATELY AND CONFIRMED THE PENALTY. HOWEVER, HE REDUCED THE PENALTY TO 100% OF TAX. 8 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE MAINL Y REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND T HE LD. CIT(A). HE EMPHASIZED THAT IN THIS CASE REVISED RE TURN WAS FILED VOLUNTARILY AND THEREFORE PENAL ACTION SHOULD NOT HAVE BEEN TAKEN. HE PARTICULARLY REFERRED TO PAGE 16 OF THE IMPUGNED ORDER WHEREIN APPELLATE AUTHORITY HAS CLEA RLY MENTIONED THAT EVEN IF THE DEPARTMENT HAD NOT COME ACROSS ANY FURTHER TANGIBLE EVIDENCE WITH REGARD TO THE CONCEALMENT, YET SO LONG AS THE QUESTION WHETHER TH ERE WAS ANY SUCH CONCEALMENT WAS OPEN BEFORE THE DEPARTMENT AND THE LATER HAD THE OPTION TO INITIATE APPROPRIATE PR OCEEDINGS, THE SUBMISSIONS OF REVISED RETURN AND SURRENDER LET TER BY THE APPELLANT CANNOT BE VIEWED IN ISOLATION. MOREO VER THE APPELLANT WAS NOT ABLE TO ESTABLISH ANY BONAFIDE RE ASON OR GIVE PROPER EXPLANATION THAT THE INCOME NOT DISCLOS ED IN THE ORIGINAL RETURN WAS ON ACCOUNT OF AN INADVERTEN T ERROR. 9 THIS CLEARLY SHOWS THAT REVENUE DID NOT HAVE ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAS CONCEALED TH E PARTICULARS OF INCOME. HE ALSO STRONGLY RELIED ON THE ORDER OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN CASE OF DCI T VS. 5 INDERMOHAN TULI KARTA L/H SHRI MEHNGA RAM TULI & SO NS (HUF), LUDHIANA, ITA NO. 1396/CHD/2010 WHEREIN IN S IMILAR CIRCUMSTANCES VOLUNTARILY SURRENDER WAS MADE, THE P ENALTY WAS HELD TO BE NOT LEVIABLE. 10 ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE REFERRED TO PAGE 10 OF THE IMPUGNED ORDER WHERE THE LD. CIT( A) HAS CLEARLY MENTIONED CHRONOLOGICAL EVENTS WHICH CLEARL Y SHOW THAT ENQUIRIES WERE MADE BEFORE THE ASSESSEE FILED REVIS ED RETURN. HE SUBMITTED THAT FIRST OF ALL MERELY BECAUSE REVIS ED RETURN HAS BEEN FILED IT DOES NOT MEAN THAT THE PENALTY IS NOT LEVIALBE BECAUSE REVISED RETURN CAN BE FILED IN TERMS OF SEC 139(5) ONLY IF THE ASSESSEE DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT. REVISED RETURN IS NOT POSSIBLE FOR DECLA RING ADDITIONAL INCOME OR TO SHOW AN ITEM AS INCOME WHIC H WAS SHOWN EARLIER AS LOAN. EVEN IF THE REVISED RETURN IS FILED PENALTY STILL IS LEVIABLE. IN THIS CONNECTION HE S TRONGLY RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF G.C. AGGARWAL VS. CIT (SUPRA). 11 HE FURTHER REFERRED TO THE ASSESSMENT ORDER WHE REIN THE ASSESSING OFFICER HAS EXTRACTED THE SURRENDER LETTE R FILED BY THE ASSESSEE WHICH CLEARLY SHOWS THAT RETURN WAS RE VISED TO BUY PEACE OF MIND ETC. WHICH IS NOT POSSIBLE PARTIC ULARLY IN VIEW OF THE LATEST DECISION OF HON'BLE SUPREME COUR T IN CASE OF MAK DATA P. LTD. VS. CIT, CIVIL APPEAL NO. 9772 OF 2013. HE SUBMITTED THAT PENALTY HAS BEEN CONFIRMED EVEN BY H ON'BLE PUNJAB AND HARYANA HIGH COURT IN SIMILAR CIRCUMSTAN CES WHERE A SURRENDER WAS MADE IN CASE OF RAJESH CHAWLA VS. C IT (SUPRA). 12 IN THE REJOINDER THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE DECISION OF RAJESH CHAWLA (SUPRA ) IS NOT APPLICABLE BECAUSE IN THAT CASE CONCEALMENT WAS DET ECTED BY THE REVENUE WHEREAS IN CASE BEFORE US, NO CONCEALME NT HAS BEEN DETECTED BY THE REVENUE. 13 WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS CAREF ULLY IN THE LIGHT OF MATERIAL ON RECORD. IN THIS CASE DURI NG THE ASSESSMENT PROCEEDINGS IT CAME TO LIGHT THAT THE AS SESSEE HAD 6 MADE VARIOUS INVESTMENTS FOR WHICH MONEY WAS DEPOSI TED IN THE BANK ACCOUNT. THEREFORE ASSESSEE WAS ASKED TO FILE THE BALANCE SHEET OR STATEMENT OF AFFAIRS. INITIALLY V ARIOUS ADJOURNMENTS WERE TAKEN AND ULTIMATELY THE ASSESSEE FILED BALANCE SHEET ON 26.8.2009 THROUGH WHICH IT WAS NOT ICED THAT THE ASSESSEE HAS RAISED VARIOUS LOANS INCLUDING A L OAN FROM RAJESH GUPTA SON OF SHRI VED PARKASH. THE ASSESSEE WAS ASKED TO FILE PAN AS WELL AS CONFIRMATION FOR SUCH LOANS. IT IS WRONG TO SAY THAT NO ENQUIRY WAS MADE BEFORE 19.10. 2009 BECAUSE THE ASSESSEE VIDE LETTER DATED 26.8.2009 IT SELF HAS SUBMITTED AS UNDER: AS REGARDS THE SOURCE OF INVESTMENT, KINDLY REFER TO THE BALANCE SHEET OF THE ASSESSEE IN WHICH THERE IS AN OPENING CAPITA L OF RS. 37,57,159/-. THE BALANCE IS CURRENT ASSETS AGAINST WHICH THE SEC URED LOAN HAS BEEN RAISED DURING THE YEAR AS UNDER:- -GURBIR BAJAJ RS. 9,00,000/- -RAJESH (AS PER AGREEMENT) RS. 40,00,000/- -JMA BUILDCON PVT LTD., RS. 33,00,000/- -SUSHMA JAIN RS. 17,90,466/- CERTIFICATE OF JMA BUILDERS, SUSHMA JAIN AND GURBIR SINGH, SON OF THE ASSESSEE ARE ENCLOSED HEREWITH. AGAINST THIS THE AS SESSEE MADE INVESTMENT AS PER THE BALANCE SHEET. IN SHORT, THE LAND WAS PURCHASED BY THE ASSESSEE AS PER STOCK-IN-TRADE OF RS. 54,87, 934/- DURING THE YEAR. COPY OF THE REGISTRY OF THE SAME IS ENCLOSED. OTHER S ARE ADVANCES AND THE OLD RESIDENTIAL PROPERTY ETC. FROM ABOVE IT BECOMES CLEAR THAT SOME ENQUIRIES WER E MADE BEFORE 26.8.2009 I.E. WHY THE ASSESSEE FURNISHED TH IS REPLY. IN ANY CASE THIS HAS BEEN SUMMARIZED VIDE PARA 2.1 OF PENALTY ORDER WHICH READS AS UNDER: THE ABOVE SUBMISSIONS RECEIVED ON BEHALF OF THE ASS ESSEE HAVE BEEN PERUSED THOROUGHLY AND THE CONTENTS OF THE SAME HAV E BEEN CONSIDERED IN THE LIGHT OF THE FACTS OF THE CASE. AS MENTIONED EARLIER ALSO, DESPITE THERE BEING SPECIFIC COLUMNS IN THE RETURN FOR THE PURPOSE, THERE WAS NO REFERENCE TO THE RECEIPT OF THE ADVANCES BY THE AS SESSEE IN THE RETURN OF INCOME. IT WAS ONLY DURING ASSESSMENT PROCEEDINGS T HAT THE FACT OF THESE ADVANCES WAS REVEALED. AFTER THIS REVELATION, THE A SSESSEE WAS ASKED TO FURNISH THE EVIDENCE OF THE SOURCE OF THE PERSONS W HO MADE THIS ADVANCE ALONGWITH HIS IDENTITY, CAPACITY AND CREDIT WORTHIN ESS. NO SUCH EVIDENCE FROM SH. RAJESH GUTPA AS ADVANCE AGAINST SALE OF PR OPERTY. EVEN THE ADDRESS OF SH. RAJESH GUPTA WAS NOT FURNISHED. AFTE R TAKING A NUMBER OF ADJOURNMENTS, THE AMOUNT WAS SURRENDERED, AS MENTIO NED ABOVE, BY FILING A REVISED RETURN. NOTHING WAS STATED ABOUT T HE PROPERTY AGAINST WHICH THE ADVANCE WAS RECEIVED OR WHAT WAS THE TOTA L AMOUNT OF AGREEMENT FOR SALE. EVEN DURING PENALTY PROCEEDING, WHEN SPECIFIC QUERY WAS MADE REGARDING THE SAME ON 24.02.2012, NO REPLY HAS BEEN FURNISHED. THIS CLEARLY SHOWS THAT THE ASSESSEE HAS NO EVIDENCE REGARDING THE SAME. IN FACT, THE MONEY HAD NOT BEEN RECEIVED FROM ANYBODY. THIS IS THE MONEY OF THE ASSESSEE HIMSELF, WHICH HAS NOT BEEN DISCLOSED TO THE INCOME TAX DEPARTMENT IN ANY MANNE R. IT WAS TRIED TO 7 BE INTRODUCED IN THE REGULAR BOOKS OF A/C IN THE SH APE OF ADVANCE. IT IS CLEARLY A CASE OF CONCEALMENT OF INCOME. 14 THE LD. CIT(A) HAS SUMMARISED CHRONOLOGICAL FIND INGS AT PAGE 10 TO 12 WHICH ARE AS UNDER: DATE REMARKS 28.09.2007 RETURN DECLARING INCOME OF RS. 6,60,084/ - WAS FILED. 07.08.2009 THE CASE WAS SELECTED FOR SCRUTINY AND N OTICE U/S 143(2) WAS ISSUED. 29.05.2009 DETAILED QUESTIONNAIRE ISSUED AND SERVED UPON THE APPELLANT. VIDE THIS QUESTIONNAIRE, THE APPELLANT WAS ASKED IN TER-ALIA TO FURNISH THE BALANCE SHEET, COPIES OF BANK ACCOUNTS WITH SOURCE OF DEPOSITS, DETAILS OF LOANS TAKEN DURING T HE YEAR. 13.08.2009 AFTER TAKING SEVERAL ADJOURNMENTS ON 11. 06.2009, 26.06.2009, 14.07.2009 AND 28.07.2009, THE APPELLANT FILED HIS REPLY ON 13.08.2009 VIDE WHICH, BESIDES FILING SOME DETAILS OF THE LOANS, THE APPELLANT FILED COPY OF BANK ACCOUNT IN STANDAR D CHARTED BANK, WHEREIN, HUGE DEPOSITS WERE MADE DURI NG THE YEAR. VIDE THE SAID LETTER, THE COUNSEL ALSO INITIATED TH AT THE APPELLANT HAS RAISED SOME LOANS DURING THE YEAR . HOWEVER, NO DETAILS OF THE LOANS WERE FILED. THE APPELLANT A LSO INFORMED THAT HE IS NOT MAINTAINING ANY REGULAR BALANCE SHEE T AND P/L A/C BUT STATED THAT THE STATEMENT OF AFFAIRS IS BEI NG PREPARED AND WILL BE FILED ON NEXT DATE OF HEARING. 20.08.2009 ON HEARING DATED 20.08.2009, THE APPELLA NT ONCE AGAIN DID NOT FILE ANY BALANCE SHEET OR DETAILS OF LOANS RAISED B Y HIM. VIDE ORDER SHEET ENTRY DATED 20.08.2009, THE APPELLANT WAS AGAIN ASKED SPECIFICALLY TO FURNISH VARIOUS DETAILS INCLU DING STATEMENT OF AFFAIRS AND SOURCES OF BANK DEPOSITS B ESIDES DETAILS OF LOANS RAISED DURING THE YEAR ALONGWITH P URPOSE AND EVIDENCE THEREOF. THE CASE WAS ADJOURNED TO 26.08.2009. 26.08.2009 VIDE REPLY DATED 26.08.2009, THE APPELLA NT FILED CERTAIN DETAILS / BALANCE SHEET AS ON 31.03.2007. AS PER THE BALANC E SHEET FOLLOWING LOANS WERE RAISED:- GURBIR BAJAJ RS. 9,00,000/- RAJESH GUPTA (AS PER AGREEMENT) RS. 40,00,000/- JMA BUILDCON PVT. LTD. RS. 33,00,000/- SUSHMA JAIN RS. 17,90,466/- THE APPELLANT HOWEVER DID NOT FILE CONFIRMATION IN RESPECT OF SHRI RAJESH GUPTA. VIDE ORDER SHEET ENTRY DATED 26.08.2009, ONCE AGAIN THE APPELLANT WAS SPECIFICAL LY ASKED TO FILE THE CONFIRMATION OF SH. RAJESH GUPTA WITH PAN/CIRCLE/WARD ETC. WHERE ASSESSED. THE APPELLANT WAS ALSO ASKED TO FURNISH PROOF OF FILING RETURNS BY TH E PERSONS GIVING UNSECURED LOANS AND EVIDENCE OF CREDITWORTHI NESS. 24.09.2009 VIDE QUESTIONNAIRE DATED 24.09.2009, THE APPELLANT WAS ONCE AGAIN SPECIFICALLY ASKED TO FURNISH THE COMPLE TE DETAILS OF UNSECURED LOANS/DEPOSITS DURING THE YEAR ALONGWITH NECESSARY CONFIRMATIONS. 13.10.2009 IN RESPONSE THE APPELLANT AFTER SEEKING MORE ADJOURNMENTS, VIDE LETTER DATED 13.10.09 FILED CONFIRMATIONS ALON GWITH ACKNOWLEDGMENT OF RETURN IN RESPECT OF OTHER CREDIT ORS MENTIONED ABOVE BUT NO CONFIRMATIONS WITH RESPECT TO SHRI. RAJESH GUPTA WAS FILED. ONCE AGAIN VIDE ORDER SHEET ENTRY DATED 13.10.2009, THE APPELLANT WAS ASKED TO FURNIS H COMPLETE INFORMATION. 19.10.2009 IN RESPONSE TO THIS QUERY, THE APPELLANT DID NOT FILE ANY CONFIRMATION BUT FILED A REVISED RETURN ON 19.10.20 09 DECLARING AN INCOME OF RS. 46,60,084/- INCLUDING THE AMOUNT O F RS. 40.00 LAKHS AS INCOME FROM OTHER SOURCES. 8 ABOVE CLEARLY SHOWS THAT VIDE ENTRY SHEET DATED 26. 8.2009 THE ASSESSEE WAS SPECIFICALLY ASKED TO FILE CONFIRMATIO N FROM RAJESH GUPTA WHICH WAS REPEATED ON 24.9.2009 AND 13.10.2009. SINCE THE ASSESSEE HAD NOT SHOWN ANY E VIDENCE BUT CHOOSE TO FILE REVISED RETURN. THE LD. COUNSEL FOR THE ASSESSEE HAS MADE TWO FOLD SUBMISSIONS ON THIS POIN T THAT ONCE THE REVISED RETURN IS FILED VOLUNTARILY THEN I T CANNOT BE TREATED A CASE OF CONCEALMENT. SEC 139(5) DEALING WITH REVISED RETURN, READS AS UNDER: SEC 139(5) - IF ANY PERSON, HAVING FURNISHED A RET URN UNDER SUB-SEC (1) OR IN PURSUANCE OF A NOTICE ISSUED UNDE R SUB-SEC (1) OF SEC 142, DISCOVERS ANY OMISSION OR ANY WRONG STATEM ENT THEREIN, HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT AY OR BEFORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER. ABOVE CLEARLY SHOWS THAT REVISED RETURN CAN BE FILE D ONLY WHERE THE ASSESSEE DISCOVERS ANY OMISSION OR ANY WRONG ST ATEMENT THEREIN. THIS PROVISION WILL NOT COVER THE SITUATI ON WHERE AN ITEM HAS BEEN INITIALLY SHOWN AS LOAN AND ONCE THE CASE IS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER ASK ED FOR CONFIRMATION THEN REVISED RETURN CAN BE FILED TO SH OW SUCH LOAN AS INCOME BY SURRENDERING THE SAME. THIS BECOMES C LEARY FROM THE DECISION OF HON'BLE SUPREME COURT IN CASE OF G.C. AGGARWAL VS. CIT (SUPRA) WHEREIN THE DECISION OF HO N'BLE GAUHATI HIGH COURT IN CASE OF F.C. AGGARWAL (SUPRA ) WAS CONFIRMED. IN THAT CASE THE ASSESSEE HAS FILED REV ISED RETURN DECLARING HIGHER INCOME. IT WAS CONTENDED THAT EAR LIER RETURNS WERE FILED ON ESTIMATED BASIS AND THAT IS WHY LATER ON REVISED RETURNS WERE FILED. PENALTY PROCEEDINGS WERE INITI ATED AND PENALTY U/S 271(1)(C) WAS LEVIED WHICH WAS CONFIRME D BY THE HON'BLE HIGH COURT AND LATER ON BY HON'BLE SUPREME COURT. THEREFORE IT IS VERY CLEAR THAT MERELY BECAUSE THE ASSESSEE FILED REVISED RETURN, WILL NOT LEAD TO THE CONCLUSI ON THAT THE ASSESSEE IS DISCHARGED FROM THE BURDEN OF PROVING A PARTICULAR ITEM OF INCOME. SECOND CONTENTION IS THAT THE REVE NUE HAS NOT PROVED CONCEALMENT. AFTER INSERTION OF EXPLANATION THE ONUS IS ON THE ASSESSEE TO PROVE A PARTICULAR ITEM OF INCOM E AND THE ASSESSEE HAS TO DISCHARGE SUCH ONUS. THIS HAS BEEN CLARIFIED 9 BY THE HON'BLE SUPREME COURT IN CASE OF K.P. MADHUS UDHANAN VS. CIT, 251 ITR 99. IN THAT CASE THE ASSESSEE HAD PURCHASED RICE FROM A SUPPLIER IN ANDHRA PRADESH. RICE WAS DI RECTLY SENT BY THE SUPPLIER AND THEREFORE THE PAYMENT WAS MADE THROUGH DEMAND DRAFT OR TELEGRAPHIC TRANSFER. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT DEMAND DRAFT AND TELEGRAPHIC TRANSFER WAS NOT ENTER ED BY THE ASSESSEE IN ITS CASH BOOK ON THE DATES ON WHICH SAM E WAS PURCHASED AND MADE RESPECTIVELY. A DEMAND DRAFT OF RS. 50,000/- HAD BEEN PURCHASED ON JAN 27,1986 IN FAVOU R OF SREE JAYALAXMI ENTERPRISES, BYRAVAPATANAM, ANDHRA PRADES H, BUT IN THE ASSESSEES ACCOUNTS, THIS AMOUNT WAS ENTERED ON LY ON FEB 4, 1986. THE ASSESSEE HAD MADE A TELEGRAPH TRANSFE R THROUGH THE ANDHRA BANK, CALICUT, ON MAR 24, 1986, TO MADAVENKATARATANAM AND OTHERS, BHIMAVARAM, ANDHRA PRADESH; THIS TRANSACTION AGAIN WAS ENTERED ONLY ON APR 24, 1986. WHEN THESE WERE POINTED OUT TO THE ASSESSEE, IT SUBMITTED A LETTER DATED AUG 28, 1989, STATING THAT AS SUFFICIENT CASH BALANCE WAS NOT AVAILABLE TO IT ON THE DATES O F THE TRANSACTIONS, I HAD OBTAINED HAND LOANS FROM FRIEND S AND AS IT EXPECTED TO REPLAY SUCH LOANS WITHIN A SHORT TIME, NO ENTRIES WERE MADE IN THE BOOKS OF ACCOUNT IN RESPECT THEREO F. THE LETTER ALSO STATED THAT SINCE IT WAS UNABLE TO FURN ISH EVIDENCE FOR SUCH LOANS, IT OFFERED THE AMOUNT OF RS. 93,000 AS ADDITIONAL INCOME. THE ASSESSMENT WAS ACCORDINGLY MADE TREATING THE SUM OF RS. 93,000 AS UNEXPLAINED INVES TMENT. 15 THE PENALTY PROCEEDINGS WERE INITIATED AGAINST T HE ASSESSEE U/S 271(1)(C) AND ULTIMATELY AFTER APPLYIN G EXPLANATION THE ASSESSING OFFICER LEVIED THE PENALT Y. THE TRIBUNAL DELETED THE PENALTY. HOWEVER, HON'BLE HI GH COURT REVERSED THE DECISION OF THE TRIBUNAL. WHEN THE MAT TER TRAVELED TO THE HON'BLE SUPREME COURT IT WAS OBSERVED BY THE HON'BLE SUPREME COURT AS UNDER: IN CIT V. P.M. SHAH[1993] 203 ITR 792, THE HIGH COU RT AT BOMBAY OBSERVED THAT THE EXPLANATION TO SETION 271(1)(C) C REATED A LEGAL FICTION. IT WAS THAT THE ASSESSEE WOULD BE DEEMED TO HAVE CO NCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS THEREOF IN THE CIRCUMSTANCES SET OUT IN THE EXPLANATION. BUT F OR SUCH A LEGAL FICTION, IT COULD NEVER HAVE BEEN SAID THAT THERE WAS ANY CO NCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SIMP LY BECAUSE THE 10 RETURNED INCOME WAS LESS THAN 80 PER CENT. OF THE A SSESSED INCOME. THE EXPLANATION SHIFTED THE BURDEN OF PROOF ON THE ASSE SSEE. THEREFORE, IT SAID (PAGE 797): WHEN THE EXPLANATION IS BEING RES ORTED TO BY THE INCOME-TAX OFFICER OR BY THE INSPECTING ASSISTANT C OMMISSIONER IN PENALTY PROCEEDINGS, IT IS ESSENTIAL THAT THE ASSES SEE MUST BE INFORMED THAT PENALTY PROCEEDINGS, IT IS ESSENTIAL THAT THE ASSESSEE MUST BE INFORMED THAT PENALTY PROCEEDINGS AGAINST HIM ARE B EING COMMENCED UNDER THE EXPLANATION TO SECTION 271(1)(C). IT ADD ED (PAGE 799): THE INSPECTING ASSISTANT COMMISSIONER COULD NOT HAVE PR OCEEDED TO LEVY THE PENALTY UNDER THE EXPLANATION TO SECTION 271(1)(C) IN THE ABSENCE OF ANY INITIATION OF PENALTY PROCEEDINGS UNDER THE EXPLANA TION TO SECTION 271(1) (C). THESE ARE PENALTY PROCEEDINGS AND THE SECTION MUST BE STRICTLY CONSTRUED. THE ASSESSEE, IN OUR VIEW, HAD NO OPPORT UNITY OF MEETING THE CASE UNDER THE EXPLANATION TO SECTION 271(1)(C). THE BENCH OF THE HIGH COURT AT BOMBAY THAT DELIVERE D THE JUDGMENT IN THE CASE OF P.M. SHAH [1993]203 ITR 792 FOLLOWED IT IN THE CASE OF CIT V. DHARAMCHAND L.SHAH [1993]204 ITR 462 (BOM). IT SAID (PAGE 468): IN THE ABSENCE OF INVOKING THE EXPLANATION SPECIFICALL Y, THE BURDEN WOULD REMAIN ON THE REVENUE TO BRING THE ASSESSEES CASE WITHIN THE MISCHIEF OF THE MAIN PROVISIONS OF SECTION271(1) (C) OF THE ACT. WE FIND IT DIFFICULT TO ACCEPT AS CORRECT THE TWO J UDGMENTS AFOREMENTIONED. THE EXPLANATION TO SECTION 271(1) ( C) IS A PART OF SECTION 271. WHEN THE INCOME-TAX OFFICER OR THE APP ELLATE ASSISTANT COMMISSIONER ISSUES TO AN ASSESSEE A NOTICE UNDER S ECTION 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREO F ARE TO BE USED AGAINST HIM. THESE PROVISIONS INCLUDE THE EXPLANATI ON . BY REASON OF THE EXPLANATION, WHERE THE TOTAL INCOME RETURNED BY THE ASSESSEE IS LESS THAN 80 PER CENT. OF THE TOTAL INCOME ASSESSED UNDE R SECTION 143 OR 144 OR 147, REDUCED TO THE EXTENT THEREIN PROVIDED, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, UNLESS HE PROVES THAT THE FAIL URE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR NEGLECT ON H IS PART. THE ASSESSEE IS, THEREFORE, BY VIRTUE OF THE NOTICE UNDER SECTIO N 271 PUT TO NOTICE THAT IF HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED I N THE EXPLANATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DU E TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF AND, CONSE QUENTLY, BE LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. NO EXPRESS IN VOCATION OF THE EXPLANATION TO SECTION 271 IN THE NOTICE UNDER SECT ION 271 IS, IN OUR VIEW, NECESSARY BEFORE THE PROVISIONS OF THE EXPLAN ATION THEREIN ARE APPLIED. THE HIGH COURT AT BOMBAY WAS, THEREFORE IN ERROR IN THE VIEW THAT IT TOOK AND THE DIVISION BENCH IN THE IMPUGNED JUDGMENT WAS RIGHT. LEARNED COUNSEL FOR THE ASSESSEE THEN DREW OUR ATTE NTION TO THE JUDGEMENT OF THIS COURT IN SIR SHADILAL SUGAR AND G ENERAL MILLS LTD. V. CIT[1987] 168 ITR 705. HE SUBMITTED THAT THE ASSESS EE HAD AGREED TO THE ADDITIONS TO HIS INCOME REFERRED TO HEREINABOVE TO BUY PEACE AND IT DID NOT FOLLOW THEREFROM THAT THE AMOUNT THAT WAS A GREED TO BE ADDED WAS CONCEALED INCOME. THAT IT DID NOT FOLLOW THAT T HE AMOUNT AGREED TO BE ADDED WAS CONCEALED INCOME IS UNDOUBTEDLY WHAT W AS LAID DOWN BY THIS COURT IN THE CASE OF SIR SHADILAL SUGAR AND GE NERAL MILLS LTD. [1987] 168 ITR 705 AND THAT, THEREFORE, THE REVENUE WAS RE QUIRED TO PROVE THE MENS REA OF A QUASI-CRIMINAL OFFENCE. BUT IT WAS BE CAUSE OF THE VIEW TAKEN IN THIS AND OTHER JUDGMENTS THAT THE EXPLANAT ION TO SECTION 271 WAS ADDED. BY REASON OF THE ADDITION OF THAT EXPLAN ATION, THE VIEW TAKEN IN THIS CASE CAN NO LONGER BE SAID TO BE APPLICABLE . FROM ABOVE IT BECOMES CLEAR THAT AFTER INSERTION OF THE EXPLANATION THE BURDEN WAS ALWAYS ON THE ASSESSEE A ND THERE WAS NO NEED TO INVOKE THE EXPLANATION. FURTHER DEC ISION OF HON'BLE SUPREME COURT IN CASE OF SIR SHADI LAL (SUP RA) WAS HELD TO BE NO MORE GOOD LAW IN VIEW OF THE INSERTIO N OF 11 EXPLANATION. THUS IT IS VERY CLEAR THAT REVENUE IS NOT REQUIRED TO PROVE THE CONCEALMENT AND IT IS THE ASSESSEE WHO HAS TO OFFER EXPLANATION, IF ANY. ONCE THE EXPLANATION IS FILED ONLY THEN THE REVENUE IS REQUIRED TO PROVE WHETHER SUCH EXPLANATION IS BONAFIDE OR FALSE, PENALTY CAN BE LE VIED IF SUCH EXPLANATION IS FOUND TO BE FALSE BUT WHERE NO EXPLA NATION IS GIVEN OBVIOUSLY IN THE LIGHT OF THE EXPLANATION TO SECTION, PENALTY CAN BE LEVIED BECAUSE EXPLANATION ITSELF PR ESUME CONCEALMENT ON THE PART OF THE ASSESSEE. 16 THE LD. COUNSEL FOR THE ASSESSEE HAD ALSO RELIE D ON THE DECISION OF THE TRIBUNAL IN CASE OF CIT VS. INDERM OHAN (SUPRA). IN THIS CASE THE ASSESSEE HAD FILED RETUR N DECLARING INCOME OF RS. 11,53,680/- AND THE ASSESSEE WAS ASKE D TO EXPLAIN THE CREDIT ENTRY IN HIS BANK ACCOUNT IN RE SPECT OF ACCOUNT NO. 6800 WITH UNION BANK OF INDIA, LUDHIANA . THE ASSESSEE, HOWEVER, MADE SURRENDER OF RS. 10 LAKHS. IN THE ORDER OF THE TRIBUNAL IT HAS BEEN SPECIFICALLY RECO RDED THAT SUCH SURRENDER WAS MADE VOLUNTARILY (AS OBSERVED BY THE ASSESSING OFFICER), THEREFORE IN THIS CASE PENALTY WAS DELETE D. AS NOTED EARLIER IN CASE BEFORE US VARIOUS ENQUIRIES WERE MA DE BY THE ASSESSING OFFICER IN RESPECT OF LOAN AND WHEN THE A SSESSEE WAS FULLY CORNERED ONLY THEN SURRENDER WAS MADE. T HEREFORE IN CANNOT BE SAID THAT THE SURRENDER WAS MADE VOLUNTAR ILY AND THEREFORE THIS CASE IS NOT APPLICABLE. 17 IN ANY CASE IT IS TO BE NOTED THAT SURRENDER LET TER GIVEN ALONG WITH THE REVISED RETURN READS AS UNDER: KINDLY REFER TO THE ORIGINAL RETURN FILED IN THIS CASE SHOWING AN INCOME OF RS. 6,60,080/-. IN THIS RESPECT IT IS SUBMITTED AS UNDER:- (I) THAT WHILE GOING THROUGH THE RECORD WE HAVE FOU ND THAT THERE IS AN ADVANCE OF RS. 40 LACS RECEIVED FROM SH. RAJESH GUPTA S/O. SH. VED PARKASH DURING THE YEAR UNDER CONSIDERATION. SH. GU PTA SHALL NOT BE IN A POSITION TO EXPLAIN THE SOURCE OF THIS AMOUNT. THER EFORE, TO BUY THE PEACE OF MIND AND TO AVOID PROLONGED LITIGATION IT HAS BEEN THOUGHT FIR TO SURRENDER THIS AMOUNT OF RS. 40 LAKHS IN THE HANDS OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCE AS ON 31/03/2007. (II) THAT THIS IS BEING DONE BEFORE ANYTHING POINTE D OUT BY THE DEPARTMENT IN THIS REGARD. (III) THAT THE ASSESSEE IS MAKING ARRANGEMENT FOR PAYMENT OF TAX DUE THEREON. (IV) THAT THE SURRENDER HAS BEEN MADE SUBJECT TO N O PENALTY U/S 271(1)(C) WHICH MAY KINDLY BE ACCEPTED 12 SURRENDER WAS MADE TO BUY PEACE OF MIND TO AVOID LI TIGATION. THIS SITUATION HAS BEEN RECENTLY DISCUSSED BY THE H ON'BLE SUPREME COURT IN MAK DATA P. LTD VS. CIT, CIVIL AP PEAL NO. 9772 OF 2013. IN THAT CASE IT WAS NOTICED BY THE A SSESSING OFFICER THAT SOME DOCUMENTS COMPRISING SHARE APPLIC ATION FORM, BANK STATEMENT, MEMORANDUM OF ASSOCIATION OF COMPAN IES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSES SMENT ORDER AND BANK STATEMENTS DULY SIGNED HAD BEEN IMPOUNDED. THESE DOCUMENTS WERE FOUND DURING THE COURSE OF SURVEY PR OCEEDINGS IN CASE OF MARKETING SERVICES (A SISTER CONCERN OF THE ASSESSEE) ON 16.12.2003. THE ASSESSING OFFICER SOU GHT INFORMATION FROM THE ASSESSEE AND ISSUED A SHOW C AUSE NOTICE AND THROUGH THIS NOTICE ASSESSING OFFICER SO UGHT SPECIFIC INFORMATION REGARDING THESE DOCUMENTS. IN REPLY TO THE SHOW CAUSE NOTICE ON 22.11.2006 THE ASSESSEE MADE AN OFF ER TO SURRENDER A SUM OF RS. 40.74 LAKHS WITH A VIEW TO A VOID LITIGATION AND TO BUY PEACE OF MIND AND TO MAKE AN AMICABLE SETTLEMENT OF THE DISPUTE. THE DEPT LEVIED PENALTY U/S 271(1)(C). THE PENALTY WAS DELETED BY THE TRIBUNAL BECAUSE ASSESSEE MADE A SURRENDER TO SETTLE THE DISPUTE FOR ONE REASON OR THE OTHER AND IMPOSITION OF PENALTY SOLELY ON TH E BASIS OF SURRENDER OF ASSESSEE, COULD NOT BE SUSTAINED. 18 ON FURTHER APPEAL HON'BLE HIGH COURT AGREED WIT H THE PLEA OF THE REVENUE THAT THERE WAS ABSOLUTELY NO EX PLANATION IN VIEW OF ABSENCE OF EXPLANATION AND THEREFORE LEV Y OF PENALTY WAS JUSTIFIED. HON'BLE APEX COURT AFTER REFERRING TO ITS DECISION IN CASE OF UNION OF INDIA V. DHARMENDRA TEXTILES PR OCESSORS, 13 SCC 369 CONFIRMED THE PENALTY. IT WAS OBSERVED AT PARA 7 TO 9 OF MAK DATA P. LTD VS. CIT (SUPRA) AS UNDER: 7. THE AO, IN OUR VIEW, SHALL NOT BE CARRIED AWAY B Y THE PLEA OF THE ASSESSEE LIKE VOLUNTARY DISCLOSURE, BUY PEACE, AVOID LITIGATION, AMICABLE SETTLEMENT, ETC. TO EXPLAIN AWAY ITS CON DUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FO R CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICE BY THE AO, BETWEEN REPO RTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS S HIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTIT UTED THE INCOME AND NOT OTHERWISE. 13 8. ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM OF RS. 40,74,000/- WITH A VIEW TO AVOID LITIGAT ION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCT IVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME TAX DEPART MENT. STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENSES UNDER THE EXP LANATION 1 TO SECTION 271(1)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLU NTARY DISCLOSURE DOES NOT RELEASE THE APPELLATE-ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKE S A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAD TO BE AB SOLVED FORM PENALTY. 9 WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME I N THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SA ID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSES SMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SH ARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION O F COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESS MENT ORDERS AND BANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IM POUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CON DUCTED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESS EE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSE E TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERE D LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOM E. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FRO M YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING TH AT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCO ME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SEC TION 274 OF THE INCOME TAX ACT, 1961. THEREFORE IT IS CLEAR THAT ONCE AN ENQUIRY HAS BEEN MADE AND THE ASSESSEE FAILS TO OFFER AN EXPLANATION THEN THE PENALTY PROVISIONS ARE CLEARLY ATTRACTED. IN THE CASE BEFO RE US AS NOTED EARLIER, THE ASSESSEE HAS NOT OFFERED ANY EXPLANATI ON REGARDING LOAN OF RS. 40 LAKHS FROM RAJESH GUPTA. EVEN THE A DDRESS OF THIS ASSESSEE WAS NOT FURNISHED BEFORE THE ASSESSIN G OFFICER OR THE LD. CIT(A) OR EVEN BEFORE US. THEREFORE TO THI S CASE THE DECISION OF HON'BLE SUPREME COURT IN CASE OF MAK DA TA P. LTD VS. CIT (SUPRA) IS CLEARLY APPLICABLE AND ACCORDING LY WE CONFIRM THE ORDER OF THE LD. CIT(A). 19 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.1.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17.1.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 14