ORDER
N.K. Saini, Accountant Member - These four appeals by the assessee are directed against the separate orders of learned CIT(A) (Central), Jaipur each dt. 3rd May, 2010. In all these appeals common issue is involved and the appeals were heard together so these are being disposed of by this common order for the sake of convenience. First we will deal with ITA No. 434/Jd/2010 for asst. yr. 2000-01. Following grounds have been raised in this appeal:
ITA No.434/Jd/2010
| "(1) | | The CIT(A), Central erred in law as well as on the facts and circumstances of the case in upholding the penalty imposed under s. 271(1)(c) of the Act. |
| (2) | | The CIT(A) Central erred in law as well as on the facts and circumstances of the case in confirming the penalty imposed on the concealed income of Rs. 2,87,921 under s. 271(l)(c) of the Act. |
| (3) | | The appellant reserves the right to add to the above grounds of appeal and/or to amend, modify and to delete any of them on or before the hearing of appeal." |
2. From the above grounds it is clear that only grievance of the assessee relates to the confirmation of the penalty levied by the AO under s. 271(l)(c) of the IT Act, 1961, (hereinafter referred to as the 'Act'). The facts of the case in brief are that a search operation under s. 132 of the Act was conducted at the business and residential premises of the assessee on 11th Dec., 2003. During the course of search various incriminating documents were seized which included loose paper No. 14 of Annex. A2 pertaining to unrecorded sales of marble slabs/tiles of Rs. 2,62,300. This amount was declared in the revised return of income filed by the assessee on 24th March, 2006. The assessment was completed under s. 153C r/w s. 153A/143(3) of the Act on 27th March, 2006 wherein additions of Rs. 79,192 and Rs. 18,712 were made on account of unaccounted and understated sales respectively on the basis of the seized documents. These additions were upheld in appeal by the learned CIT(A), Central, Jaipur vide his order dt. 23rd Nov., 2007. The AO levied the penalty under s. 271(l)(c) of the Act amounting to Rs. 1,38,779, being 100 per cent of the tax sought to be evaded on Rs. 3,60,204 (Rs. 2,62,300 + Rs. 79,192 + Rs. 18,712). The AO held that the assessee was not entitled to get immunity from Expln. 5 of s. 271(l)(c) because the offer of additional income of Rs. 2,62,300 was not voluntary and also that the additions of Rs. 79,192 and Rs. 18,712 had been upheld by the learned CIT(A).
3. Being aggrieved the assessee carried the matter to the learned CIT(A) and submitted that Shri Yashwant Chordia, director of the assessee-company voluntarily admitted and surrendered income of Rs. 2,62,300 in respect of unrecorded sales in his statement recorded on 24th Feb., 2004 by Dy. Director of IT (Inv.)-I, Udaipur. This amount was also voluntarily surrendered in the revised return filed on 24th March, 2006 and tax thereon had been paid. As regards the addition of Rs. 97,904 (Rs. 79,192 + Rs. 18,712) it was stated that the Tribunal, Jodhpur vide its order dt. 4th March, 2009 had held that the entire addition of Rs. 97,904 was not called for and only the profit from those unrecorded sales could be treated as the assessee's income. It was further submitted that real addition does not tantamount to concealment of income or furnishing of inaccurate particulars of income and that in the absence of positive evidence of concealment/furnishing of inaccurate particulars of income penalty under s. 271(l)(c) of the Act cannot be imposed. It was also submitted that the AO had not recorded satisfaction in the assessment order for initiating penalty proceedings, therefore, the penalty proceedings were liable to be quashed. Reliance was placed on the following case laws :
4. The learned CIT(A) after considering the submissions of the assessee observed that the various documents which were found and seized during the course of search operation clearly indicated that the assessee had made unaccounted sales of Rs. 2,62,300 and had also made unrecorded sales of Rs. 97, 192, understated sale of Rs. 18,712. He further observed that Rs. 2,62,300 was claimed to be offered for taxation in the statement of Shri Yashwant Chordia recorded on 25th Feb., 2004 and that the said amount was declared in the revised return filed on 24th March, 2006. According to the learned CIT(A) the above disclosure of additional income was not voluntary because it was made only after evidence was found during the search operation and had there been no search in the assessee's case those sales would never have been shown. Therefore, it was only after detection of concealment as a result of search operation that the assessee came forward to disclose additional income of Rs. 2,62,300. The learned CIT(A) further observed that statement of Shri Yashwant Chordia was recorded under s. 131 of the Act on 25th Feb., 2004 in the post-search investigation and no statement was recorded under s. 132(4) of the Act during the search. Therefore, the assessee was not entitled to immunity under the exceptions in Expln. 5 to s. 271(l)(c) of the Act. He further observed that the Tribunal, Jodhpur upheld the AO's action in respect of undisclosed sales/under-billing on the ground that the assessee failed to discharge his burden to explain the entries in the seized documents, however, directed the AO to tax only the profit on those unrecorded transactions and after giving effect to the Tribunal's order on 30th April, 2009, the addition on this account had been reduced to Rs. 25,621. Therefore, the quantum of concealment only had undergone change as a result of Tribunal's order as such it could not be said that this addition was made on estimated basis. On the contrary the addition was made by applying the GP rate of 26.17 per cent as declared by the assessee on those sales. The learned CIT(A) held that the cases relied by the assessee were not relevant in the light of s. 271(1B) inserted by the Finance Act, 2008 w.e.f. 1st April, 1989 and since the assessment herein involved is after 1989-90 and contained directions for initiating the penalty proceedings under s. 271(l)(c) in the assessment order which deem to constitute satisfaction of the AO for initiation of penalty proceedings under s. 271(l)(c), in view of the provisions of s. 271(1B) of the Act. The learned CIT(A) accordingly upheld the action of the AO for imposing the penalty under s. 271(l)(c) of the Act. However, directed the AO to levy the penalty on the income of Rs. 2,87,921 (Rs. 2,62,300 + Rs. 25,621) instead of concealed income of Rs. 3,62,204 taken by him. Now the assessee is in appeal.
5. The learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the amount of Rs. 2,62,300 was surrendered by the assessee suo motu in the revised return of income which was accepted by the Department, therefore, the penalty under s. 271(l)(c) of the Act on the said amount was not leviable. He further submitted that the other addition of Rs. 25,621 was on estimate basis therefore, on the said addition also no penalty was leviable. The reliance was placed on the following case laws :
6. In his rival submissions the learned Departmental Representative supported the orders of the authorities below.
7. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is an admitted fact that an income of Rs. 2,62,300 was offered by the assessee for taxation in the revised return which has been accepted by the Department in its entirety without detailed discussion for the seized documents. Therefore, the penalty under s. 271(l)(c) of the Act on the said amount of Rs. 2,62,300 was not leviable. On a similar issue the Hon'ble Calcutta High Court in the case of Suresh Chand Bansal (supra) has held as under (headnote) :
"The assessee filed a return in response to notice under s. 153A of the IT Act, 1961 offering additional income for asst. yrs. 1999-2000 to 2005-06. On the basis of the addition as undisclosed income an order levying penalty under s. 271(l)(c) was passed. On appeal, the CIT(A) set aside the penalty holding that the assessee offered additional income for asst. yrs. 1999-2000 to 2005-06 and it was held to be a good offer, that it was accepted in its entirety, that the factual context must be considered before taking a decision about whether the assessee should be held guilty of concealment of the income offered in each of the assessment years under consideration, that while the offer was in consequence of search action, the assessment order in accepting the offer of the assessee also admitted that the income that might properly be assessed in the case of different persons or may also be properly explained with sufficient effort or where no offer need be made, additional income was offered, there was an estimate of undisclosed income considered necessary for the purpose of avoiding uncertainties, and that therefore, levy of penalty on such offer was not justified without detailed discussion of the documents and their explanation which compelled the offer of additional income. The Tribunal, on appeal by the Department, upheld the decision of the CIT(A), relying on the decision of the Supreme Court in the case of
Dilip N. Shroff v.
Jt. CIT [2007] 291 ITR 519 (SC)."
It has further been held that:
"the matter was covered by the Supreme Court decision and did not call for interference."
8. Similarly the Hon'ble Supreme Court in the case of Sudarshan Silks & Sarees (supra) has held as under :
"On a search conducted in the premises of the assessee, apart from cash and jewellery, incriminating documents evidencing concealment of income were unearthed. It was found that the assessee was maintaining double sets of books of account and was accounting for only 50 per cent of the sales in the regular set of books and certain purchases were not accounted for. In order to avoid difficulties and litigation, the assessee came forward with an offer of income additional to that estimated by the AO and filed revised returns. In the course of the assessment proceedings penal action was initiated under s. 271(l)(c) of the IT Act, 1961, in which the maximum penalty was levied repelling the assessee's contention that a promise had been made not to levy penalty. On appeal, the CIT(A) held (i) that the assessee offered the amount for taxation for the purpose of purchasing peace; (ii) that no books of account or other documentary evidence was discovered that proved any concealment, and that, on the facts and circumstances of the case, no case for penalty was made out. The Tribunal upheld the findings of the CIT(A) and recorded that although there was nothing on record to show that the assessee was given an assurance that no penalty was levied, the facts clearly suggested that such an inducement must have been given by the searching party; that when only partial evidence in support of concealment for a very limited period was detected there was no reason why any person would go to offer much higher amounts for a large number of years; that in view of the deposition given under s. 132(4) followed by the co-operating attitude of the assessee in paying the tax no penalty would be leviable under s. 271(l)(c); that the incriminating materials found during the search were not used by the Departmental authorities in making the assessments; and the revised returns should, therefore, be considered to have been filed in good faith. The Tribunal referred to the High Court the question whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the CIT(A) in cancelling the penalty under s. 271(l)(c). The High Court answered the reference in favour of the Department."
The Hon'ble Supreme Court reversed the decision of the Hon'ble High Court and held that:
"the final fact-finding authority was the Tribunal and its decision on the facts could be gone into by the High Court only if a question had been referred on whether the finding of the Tribunal was perverse, in the sense that it was such as could not reasonably have been arrived at on the material placed before the Tribunal. In the absence of such a question the High Court had to accept the finding of fact arrived at by the Tribunal and then proceed to decide the question of law referred. In this case the question of law referred to the High Court was whether the Tribunal was right in upholding the findings of the CIT(A) in cancelling the penalty levied under s. 271(l)(c). The question as to the perversity of the findings recorded by the Tribunal was neither raised nor referred to the High Court.
The Tribunal is the final Court of fact. The decision of the Tribunal on the facts can be gone into by the High Court in the reference jurisdiction only if a question has been referred to it whether the finding arrived at by the Tribunal on the facts was perverse in the sense that no reasonable person could have taken such a view."
9. In the present case also the additional income of Rs. 2,62,300 was disclosed by the assessee in the revised return which was accepted by the AO in its entirety and the other additions amounting to Rs. 25,621 were made only on the basis of the estimated income by applying the rate declared by the assessee itself. Therefore, the penalty on the said additional income was not leviable. We, therefore, considering the totality of the facts as discussed hereinabove are of the view that the present case is not a fit case for levying the penalty under s. 271(l)(c). In that view of the matter we delete the penalty under s. 271(l)(c) of the Act levied by the AO and sustained by the learned CIT(A).
10. In the remaining appeals in ITA Nos. 435 to 437/Jd/2010 for the asst. yrs. 2002-03, 2003-04 and 2004-05 respectively the facts are similar as were involved for the asst. yr. 2000-01 in ITA No. 434/Jd/2010. Therefore, our findings given in respect of this year i.e. asst. yr. 2000-01 shall apply mutatis mutandis for the remaining asst. yrs. 2002-03 to 2004-05.
11. In the result appeals are allowed.
USP 
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