Validity of Penalty under section 271(1)(c) if Additional income declared in survey under section 133A is incorporated in ITR filed u/s 139

Short Overview:

Where assessee disclosed additional income in survey and also included it in the return of income filed and neither the date of filing of return under section 139(1) had expired nor he filed his return up to the date of survey, then there could not be the case of “concealment” or “furnishing of the inaccurate particulars of income”. Hence, penalty levied under section 271(1)(c) was not tenable.

During the course of survey, assessee had disclosed additional income and included it in his return of income for relevant assessment year. AO imposed penalty under section 271(1)(c) alleging that additional income was declared by the assessee only as a result of survey.

It is held that, The fact of “concealment of income” and “furnishing of inaccurate particulars of income” would be established only with reference to the income declared in the return of income. In the instant case, as neither the date of filing of return under section 139(1) had expired nor the assessee had filed his return of income upto the date of survey and as the additional income declared by the assessee in the return of income was accepted, there could not be the case of ” concealment of income” or “furnishing of the inaccurate particulars of income”. Accordingly, penalty levied under section 271(1)(c) was not sustainable.

Decision: In assessee’s favour.

Relied: Dy. CIT, Circle-9, Pune v. Dr. Ranjana Ravindra Kadam in (ITA No. 91/PUN/2017, dt. 1-2-2019) : 2019 TaxPub(DT) 971 (Pune-Trib).

Referred: Mak Data (P) Ltd. v. CIT-II (2013) 358 ITR 593 (SC) : 2013 TaxPub(DT) 2358 (SC).

IN THE ITAT, PUNE BENCH

ANIL CHATURVEDI, A.M. & PARTHA SARATHI CHAUDHURY, J.M.

Dy. CIT v. Dr. Ravindra Babasaheb Kadam

ITA No. 92/PUN/2017

8 March, 2019

Assessee by: Santosh Jadhav/Bharat Shah.

Revenue by: Pankaj Garg

Anil Chaturvedi, A.M.

This appeal filed by Revenue is emanating out of the order of Commissioner (Appeals)-13, Pune dated 25-10-2016 for the assessment year 2012-13.

2. The relevant facts as culled out from the material on record are as under :–

Assessee is an individual and a Doctor by profession. A survey operation was carried out under section 133A of Act in the case of assessee on 12-1-2012. During the course of survey, assessee has disclosed additional income of Rs. 1,49,59,870 for assessment year 2012-13 and the aforesaid income was included in the return of income filed by the assessee on 13-8-2012 for assessment year 2012-13. The case was taken up for scrutiny and thereafter assessment was framed under section 143(3) of the Act vide Order, dt. 5-11-2014 and the total income was determined at Rs. 2,18,19,100, after making ad hoc disallowance of Rs. 1,42,642 on account of certain expenditure being not verifiable. On the additional income disclosed during the survey action and which was included in the return of income, assessing officer in the penalty order passed under section 271(1)(c) of the Act dated 15-5-2015 held that the additional income was declared by the assessee only as a result of survey and had the survey under section 133A of the Act not been conducted, the assessee would have never offered such additional income in the return of income.

He accordingly held that assessee is liable for penalty under section 271(1)(c) of the Act and vide penalty Order, dt. 15-5-2015 levied penalty of Rs. 46,22,600. Aggrieved by the order of assessing officer, assessee carried the matter before learned Commissioner (Appeals), who vide order dt.25-10-2016 (in Appeal No. PN/Commissioner (Appeals)-13/ACommissioner Cir-09/104/2016-17) deleted the penalty.

Aggrieved by the order of learned Commissioner (Appeals), Revenue is now in appeal before us and has raised the following grounds :–

“1. Whether in facts and circumstances of the case the learned Commissioner (Appeals) was justified in deleting the penalty levied of Rs. 46,22,600-when the addition on which the penalty was levied was based on survey operation on assessee’s hospital & a large difference was noticed between assessee’s actual daily collection from hospital & manual recording in the books of accounts & daily accounting package.

2. Without prejudice to the above, the learned Commissioner (Appeals) erred in not considering the Hon’ble Supreme Court’s decision in the case of MAK Data (P) Ltd. v. CIT-II (Civil Appeal No. 9772 of 2013, arising out of Special Leave Petition (Civil) No. 18389 of 2013) In which Hon’ble Supreme Court stated that under the explanation 1 to section 271(1)(c) of the Act, It is trite law that the voluntary disclosure does not release the assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty.”

3. Both the grounds being inter-connected are considered together.

4. Before us, learned Departmental Representative took us through the assessment order and submitted that assessee had disclosed additional income of Rs. 149.59 lacs on the basis of alleged receipts which were not reflected in the books of accounts. He submitted that the income was declared by the assessee only on account of survey conducted under section 133A of the Act and had the survey not been conducted, the assessee would have never offered such additional income in the return. He therefore submitted that assessing officer was fully justified in levying the penalty under section 271(1)(c) of the Act. Learned Authorised Representative on the other hand, reiterated the submissions made before assessing officer and learned Commissioner (Appeals) and further submitted that on identical facts resulting out of the same survey, addition was also made in the case of Dr. Ranjana, the wife of assessee. On such addition, penalty under section 271(1)(c) of the Act was levied by the assessing officer. The Co-ordinate Bench of the Tribunal vide Order, dt. 1-2-2019 in ITA No. 91/PUN/2017 had dismissed the appeal of Revenue. He placed on record the copy of the aforesaid order. He therefore relying on the order of Tribunal in the case of assessee’s wife supported the order of learned Commissioner (Appeals).

5. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to levy of penalty under section 271(1)(c) of the Act. It is an undisputed fact that additional income of Rs. 1.49 crores was offered by the assessee during the course of survey conducted on 12-1-2012. It is also a fact that aforesaid additional income was offered by the assessee in his return of income and the same has been accepted by the assessing officer in the assessment framed under section 143(3) of the Act. We find that learned Commissioner (Appeals) while deleting the penalty has noted that on the date of survey, the date of filing of return under section 139(1) of the Act had not expired and assessee had also not filed his return of income upto the date of survey. He has further noted that the fact of “concealment of income” and “furnishing of inaccurate particulars of income” can be established only with reference to the income declared in the return of income. In the present case, since the income declared by the assessee in the return of income has been accepted, there cannot be the case of “concealing the particulars of income” or “furnishing the inaccurate particulars of income”. We further find that the case of Dr. Ranjana, the wife of assessee, penalty levied under section 271(1)(c) of the Act on the additional income declared out of the same survey was deleted by the Co-ordinate Bench of the Tribunal vide Order, dt. 1-2-2019.

Considering the totality of the facts, we find no reason to interfere with the order of learned Commissioner (Appeals), more so when no fallacy has been pointed out by the Revenue in the order of learned Commissioner (Appeals). Thus, the grounds of the Revenue are dismissed.

6. In the result, the appeal of Revenue is dismissed.