IN INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDHAR) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A No. 542 (Asr)/2015 Assessment Year: 2010-11 Sh. Ravinder Bagga, Vs. Dy. CIT, Prop. M/s Bagson Phagwara Circle, Foundries, Phagwara. Khera Road, Phagwara. PAN:AAOPB3695G (Appellant) (Respondent) Appellant by: Sh. J.S. Bhasin & Smt. Jasmine Kaur (Advs.) Respondent by: Sh. Bhawani Shankar (DR) Date of hearing: 30.06.2016 Date of pronouncement: 15.09.2016 ORDER PER T. S. KAPOOR (AM): This is appeal filed by assessee against order of learned CIT(A), Jalandhar dated 13.08.2015 for Asst. Year: 2010-11. 2. assessee has taken five grounds of appeal, however, crux of grievance of assessee is action of learned CIT(A), by which he had upheld penalty imposed by Assessing Officer u/s 271(1)(c ) of Act. 3. brief facts of case as noted in penalty order are that scrutiny proceedings in this case were initiated on basis of suspicious transactions report received from Assistant Director of Income Tax, Jalandhar and it was observed that assessee had made investments in various insurance policies to tune of Rs.7,50,000/-. assessee offered 2 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 said investment in insurance polices as additional income for taxation purposes. assessment was completed u/s 143(3) on basis of revised return wherein assessee had declared amount of Rs.7,50,000/-. In view of above, assessee was confronted as to why penalty u/s 271(1)(c) be not imposed. In response to notice, assessee submitted that assessee had filed revised return at higher income than original return but Assessing Officer held that as per record available with office revision of return was not voluntarily as assessee had revised return of income after initiation of proceedings by Addl. (Inv.), Jalandhar. assessee had also relied upon various case laws which Assessing Officer distinguished and then, imposed penalty equivalent 100% of tax sought to be evaded. 4. Aggrieved assessee filed appeal before learned CIT(A) and reiterated his submissions, however learned CIT(A) also dismissed appeal by holding as under: I have considered observations of Assessing Officer as made by him in penalty order. I have also considered written submissions of assessee filed vide letter dated 24.07.2014 as well as other material placed on record. I have further considered various judicial pronouncements relied upon by assessee as well as by Assessing Officer on issue under reference. On careful consideration of rival contentions as well as other material brought on record more specifically submissions made by assessee before ADIT (Inv.), Jalandhar, I am of opinion that revised return filed by assessee on 02.03.2011 for year under consideration cannot be said to be voluntary return under any stretch of imagination. Moreover, assessee was fully aware about hi s investment in LIC Policies and could have disclosed investment in original return filed by hi m but deliberately did not disclose same in hi s originally filed return of income which h e has earned from undisclosed sources: Even, sources of undisclosed income have not been disclosed in any of proceedings under Act. 3 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 From records one thing is very clear that assessee decided to revise return only when enquiries about hi s investment in LIC Policies were initiated and h e was cornered from all angles and Department got to know about hi s unaccounted investment in LIC Policies. As soon as ADIT(Inv.), Jalandhar asked certain information from assessee including information in respect of source of investment in LIC policies, assessee immediately decided to file revised return disclosing additional income of Rs.7 ,5 0 , 0 0 0 /- which represented hi s investment in LIC Policies from undisclosed sources. fact that revised return is not voluntary return is also apparent from correspondence made by assessee with ADIT(Inv.), Jalandhar. Had enquiries not been initiated by ADIT(Inv.), Jalandhar, assessee would never have filed revised return. In view of these facts, disclosure of additional income of Rs. 12,00,000/- in revised return cannot be said to be voluntary disclosure. In fact assessee came forward to file revised return when he was cornered from all angles by Department. Moreover, there was no alternative left with assessee except to admit concealment and pay tax thereon. Even otherwise it would not have made any difference as Department was going to take action against assessee on basis of specific information in its possession. submission of assessee that return has been revised voluntarily and to win peace of mind do not hold good in view of above stated facts. Reliance is also placed on following decisions:- [2014] 49 taxman.com 361 (Mumbai-Trib.)/ 152 ITD 578 (Mumbai-Trib.). In decision, it lias been held by Honorable Tribunal that where assessee. engaged in business of real estate consultancy and broking, filed revised return pursuant to survey proceedings declaring certain undisclosed income on account of commission received in cash, said return could not be regarded as voluntary return and, therefore, assessee being guilty of concealment of particulars of income, was liable to pay penalty under section 271(1 )(c) of Act. It is pertinent to mention here that Honorable Tribunal has also considered decisions of Honorable Punjab & Haryana High Court in case of Sh. Suresh Chandra Mittal [CIT Vs. Suresh Chandra Mittal reported at 241 ITR 0124] and of Honorable Supreme Court in same case reported at 251 ITR 0009 while giving decision in favour of revenue. decisions have been heavily relied upon by assessee in her written submissions. 2013-TIOL-58-SC-IT MAK DATA PVT LTD VS. COMMISSIONER OF INCOME TAX having heard parties, Supreme Court held that, we fully concur with view of High Court that Tribunal has not properly understood or appreciated scope of Explanation 1 to Section 271(l)(c) of Act. AO, in our view, shall not be carried away by plea of assessee like voluntary disclosure , buy peace , avoid litigation , amicable settlement , etc. to explain away its conduct. question is whether assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises presumption of concealment, when difference js noticed by AO, between reported and assessed income. burden is then on assessee to show otherwise, by cogent and reliable evidence. When initial onus placed by explanation, has been discharged by him, onus shifts on Revenue to show that amount in question constituted income and not otherwise; 4 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 + assessee has only stated that he had surrendered additional sum of Rs.40,74,000/- with view to avoid litigation, buy peace and to channelize energy and resources towards productive work and to make amicable settlement with income tax department. Statute does not recognize those types of defences under explanation 1 to Section 27 l(l)(c) of Act. It is trite law that voluntary disclosure does not release Appellant-assessee from mischief of penal proceedings. law does not provide that when assessee makes voluntary disclosure of her concealed income, he had to be absolved from penalty: + we are of view that surrender of income in case is not voluntary in sense that offer of surrender was made in view of detection made by AO in search conducted in sister concern of assessee. In that situation, it cannot be said that surrender of income was voluntary. It is stannary duty of assessee to record all its transactions in hooks of account, to explain source of payments made by it and to declare its true income in return of income filed by it from year to year. AO, in our view, has recorded categorical finding that he was satisfied that assessee had concealed true particulars of income and is liable for penalty proceedings under Section 211 read with Section 274 of Income Tax Act. 1961: + AO has to satisfy whether penalty proceedings he initiated or not during course of assessment proceedings and AO is not required to record her satisfaction in particular manner or reduce it into writing. scope of Section 271(l)(c) has also been elaborately discussed by liter Court in Union of India vs. Dharmendra Textile Processors and CIT vs. Atul Mohan Bindal. principle laid down by ther Court, in our view, has been correctly followed by Revenue and we find no illegality in department initiating penalty proceedings in instant case. We therefore, fully agree with view of High Court. Hence, appeal lacks merit and is dismissed. 5. 3 N ow , I d e al w it h t h e d e ci si on s r eli e d u p o n by t h e ss e ss e e. p ar t f r o m t h e d e ci si on s of H on or bl e P un ja b & H ar yan H igh C o ur t d H on or bl e S u pr em e C o ur t in t h e c as e of S h r i S ur es h Ch n dr Mit t al, t h e as s es s e e h d al s o pl ac e d r el ia n c e o n t he f ol l ow i n g d ec is i on s: - (i) CIT Vs. Suraj Bhan (2007) 294 ITR 0481 (P & H). (ii) CIT Vs. Guru Ram Dass Fruit & Vegetable (2003) 254 ITR 0361 (P&H) (iii) Jaysuck M Parmar Vs. ACIT (2012) 20 ITR (Trib.) 687 (Ahm) (iv) CIT Vs. SAS Pharmaceuticals (201 1) 335 ITR 259 (Del.) (v) CI T Vs. Reliance Petroproducts (P) Ltd. (2010) 230 CTR (SC) 320. (vi) CIT Vs. Ved Parkash (2004) ITR 255 (P&H). (vii) Cheap Cycle store Vs. CIT (2006) 281 ITR 166 (All). (viii) Smt. Parkash Kumari Vs. CIT (2010) 326 ITR 82 (Bom). (ix) RP Handa Vs. CIT (1992) 198 ITR 54 (P&H). (x) CIT Vs. Suresh Chandra Mittal (2001) 251 ITR 9 (P&H). (xi) CIT Vs Suraj Bhan (2007) 294 ITR 481 (P&H). (xii) CIT Vs. Gurbax Lai & Co. (2002) 256 ITR 0133 (P & H) (xiii) CIT Vs. Balwant Rai (2009) 221 CTR (P&H) 573. (xiv) CIT Vs Suresh Chand Bansal (2010) 329 ITR 330 (Cal). (xv) Sudarshan Silk & Sarees Vs CIT (2008) 300 ITR 0205 (SC) In my opinion, none of decisions which have been relied upon by assessee support her case as facts of these cases are distinguishable case of CIT Vs. Suraj Bhan, penalty levied by Assessing Offn was deleted as in that case there was no evidence except that addition amounts constituted assessee s income in years in question but in case of assessee there is evidence with Department in form of 5 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 investment in LIC Policies to prove that assessee has concealed particulars of income. Moreover, concealment has been confessed by assessee by filing revised return. So facts of case of CIT Vs. Suraj Bhan are distinguishable from facts of case of assessee. Moreover, decision is based on Suresh Chandra Mittal s case which was considered by Honorable Mumbai ITAT while giving decision in favour of revenue. In case of CIT Vs. Guru Ram Dass Fruit & Vegetable, penalty was deleted as revenue could not produce copy of statement recorded by ADIT and even report of ADIT was withheld by Department. Moreover, most of drafts were found to be entered in books of account but on incorrect dates whereas in case of assessee nothing was disclosed in books and investment is made from undisclosed sources. In case of CIT Vs. Gurbax Lai & Co., assessee had volunteered information after assessment was complete and thus no motive much less any malicious conduct was attributable to assessee whereas in case of assessee, there was lot of information with Department to prove malicious conduct of assessee. So, facts of this case are also distinguishable from facts of case of assessee. In case of Sudarshan Silks & Sarees, Honorable Apex Court deleted penalty, as ITAT has held that assessments were made totally on basis of estimated income disclosed in revised returns rather than on basis of incriminating material found during search. Moreover it was held by Honorable Court that additional income was disclosed pursuant to assurance possibly given by search party that no penalty would be levied. Whereas facts of case of assessee are entirely different as there was no such commitment from Department. So, facts of this case are also distinguishable from facts of case of assessee. facts of other cases relied upon by assessee are also distinguishable from facts of case of assessee. In view of these facts, none of case laws relied upon by assessee support her case as all decisions have different facts from facts of case of assessee. 5.4 In view of above stated facts and in circumstance, I am of opinion that assessee has certainly concealed and furnished inaccurate particulars of his income to extent of Rs.7,50,000/- which represent undisclosed investment of assessee in LIC Policies. penalty of Rs.23,750/- levied by Assessing Officer in this case under section 271(1) (c) of Act for concealing and furnishing inaccurate particulars of income to extent of Rs.7,50,000/- is, therefore, upheld. In result, ground No.1,2 and 3 of appeal taken by assessee are dismissed. 6. ground No.4 of appeal taken by assessee is general in nature and do not require any adjudication at all. 7. As result appeal filed by assessee is dismissed. 5. Aggrieved assessee is in appeal before us. 6 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 6. learned AR submitted that return was revised well in time wherein inadvertent error was rectified and revised return was accepted and was not held to be invalid and therefore, no case of concealment could have been made by Assessing Officer. It was further submitted that Assessing Officer before completing assessment examined relevant details of investment in insurance policies and found same to be correct. learned AR further submitted that when no concealment was found during course of assessment proceedings, learned Assessing Officer could not fall back upon purported proceedings before ADIT, to infer concealment of any income in assessment. learned AR relied upon judgment of Hon ble ITAT, Mumbai Benches, Mumbai in case of Jaysuck M Parmar vs. ACIT (2012) 20 ITR (Trib) 687 and also Delhi High Court in case of CIT vs. SAS Pharmaceuticals (2011) 335 ITR 359 (Del), for proposition that proceedings before ADIT are not proceedings in course of which, satisfaction with regard to concealment was to be recorded. It was submitted that satisfaction had to be recorded by Assessing Officer in course of assessment, that too qua return filed. It was submitted that if revised return was accepted as such, there was no concealment of income or furnishing of inaccurate particulars of income. learned AR further submitted that neither Sec. 139(5), nor Sec. 271(1)(c) postulate situation that return revised by assessee, must be voluntary else it would invite penalty. learned AR relied upon following case laws: 7 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 (i) CIT vs. Guru Ram Dass Fruit & Vegetable Agency (2002) 254 ITR 316 (P&H). (ii) CIT vs. Ved Parkas (2004) 269 ITR 0255 (iii) Mak Data Pvt. Ltd. vs. CIT, 358 ITR 539 (SC) (iv) ACIT vs. Ashok Raj Nath (2012) 19 ITR 70 (Trib) Delhi. 7. learned DR, on other hand, heavily placed his reliance on order of authorities below. 8. We have heard rival parties and have gone through material placed on record. We find that assessee was entitled to file revised return of income as per provisions of Sec.139(5) till 31st March,2011 and he has filed return of income on 02.03.2011, therefore, there is no dispute about validity of revised return. In revised return assessee declared all investments in Insurance Policies as additional income and paid taxes thereon. Assessing officer while completing assessment did not find any discrepency in revised return of income and assessed income at same amount which was offered by assessee in his revised return. 9. ADIT (Inv.) vide letter dated 25.01.2011 had required assessee to provide various details of Bank Accounts, investments, movable and immovable assets, vechicles and details about foreing trips undertaken by him. There is no specific indication in above said letter regarding information with department of assessee having invested in Insurance Policies. 10. On 02.03.2011 assessee filed return declaring additional income of Rs.7.5 lacs in form of investment in Insurance Policies. Though assessee filed revised return only after receipt of notice u/s 133(6) dated 8 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 25.01.2011 but fact remains that revised return was filed within prescribed period of time and before date of filing of revised retrun assessee was not confronted with information which deparmtent was having in its passession. Now when revised return was filed in time and not held invalid and furthermore, income declared in revised return has been accepted with no further addiiton, allegation of concealment of income by falling back upon proceeding before ADIT to infer concealment of income in assessment proceeedings is not justified. Here it is important to visit provisions of Sec.271(1)(c) of Act which for sake of conveneicne are reproduced below. 271. (1) If [Assessing] Officer or [***] [Commissioner (Appeals)] [or [Principal Commissioner or] [Commissioner] in course of any proceedings under this Act, is satisfied that any person- (a) [***] (b) has [***] failed to comply with notice [under sub-section (2) of section 115WD or under sub-section(2) of section 115WE or] under sub-section (1) of section 142 or sub-section (2) of section 143 [or fails to comply with direction issued under sub-section (2A) of section 142], or (c) has concealed particulars of his income or [***] furnished inaccurate particulars of [such income, or] 11. Now expression in course of any proceedings under this Act has different meanings in sub-clause a, b & c of Sec.271(1). Sub-clause has been omitted w.e.f. 1.4.1989. In clause b menaing of any proceedings is failure to comply with various notices. In clause c 9 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 meaning of any proceedings is with reference to concealment of income or furnishing of inaccurate particulras of income in return of income. 12. Hon ble Delhi High Court in case of CIT vs. SAS Pharmaceuticals 335 ITR 0259 has held that in course of survey proceedings under Act cannot have reference to survey proceedings and has further held that concealment of particulars of income has to be in Income Tax Return. relevant findings of Hon ble Delhi High Court are reproduced below. It is to be kept in mind that s. 271(l)(c) is penal provision and such provision has to be strictly construed. Unless case falls within four corners of said provision, penalty cannot be imposed. Sub-s. (1) of s. 271 stipulates certain contingencies on happening whereof AO or CIT(A) may direct payment of penalty by assessee. Sec. 271(l)(c) authorizes imposition of penalty when AO is satisfied thai assessee has either : (a) concealed particulars of his income; or (b) furnished inaccurate particulars of such income. It is not case of furnishing inaccurate particulars of income, as in IT return, particulars of income have been duly furnished and surrendered amount of income was duly reflected in IT return. question is whether particulars of income were concealed by assessee or not. It would depend upon issue as to whether this concealment has reference to IT return filed by assessee, viz., whether concealment is to be found in IT return. words 'in course of any proceedings under this Act' are prefaced by satisfaction of AO or CIT(A). When survey is conducted by survey team, question of satisfaction of AO or ihe CIT(A) or CIT does not arise. One has to keep in mind that it is AO who initiated penalty proceedings and directed payment of penalty. He had not recorded any satisfaction during course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that expression 'in course of any proceedings under this Act' cannot have reference to survey proceedings in this case. It necessarily follows that concleament of particulars of income or furnishing of inaccurate particular of income by assessee has to be in IT return filed by it. assessee can furnish-the-parttcufars of income in his return and everything would depend upon IT return filed by assessee. 10 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 This view gets supported by Explns. 4 as well as 5 and 5A of s. 271. Obviously, no penalty can be imposed unless conditions stipulated in said provisions are duly and unambiguously Satisfied. Since assesses was exposed during survey, may be, it would have not disclosed income but for said survey. However, there cannot be any penalty only on surmises, conjectures, and possibilities. Sec. 271(l)(c) has to be construed strictly. Unless it is found that there is actually concealment or non- disclosure of particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure as assessee had made complete disclosure in IT return and offered surrendered amount for purposes of tax. CIT vs. Mohan Dass Hassa Nand(1983) 34 CTR (Del) 361 1983): (1983) 141 203 (Del) and CIT vs. Reliance Petroproducts (P) Ltd. (2010) CTR (SC) 320 : (2010) 36 DTR (SC) 449: (2010) 3 SCR 510 relied on. 13. In present case there is no dispute about fact that assessee had disclosed investment in Insurance Polices in revised return of income which was not held to be invalid. Assessing Officer completed assessment on basis of revised return and accepted income declared in revised return and therefore, there was no concealment of income in revised return of income. 14. In view of above facts and circumstances and in view of judicial precedents, we accept grounds of appeal of assessee and delete penalty imposed by learned CIT(A). 15. In result, appeal filed by assessee is allowed. Order pronounced in open Court on 15.09.2016. Sd/- Sd/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15.09.2016. /PK/ Ps. 11 ITA No.542 (Asr)/2015 Asst. Year: 2010-11 Copy of order forwarded to: (1) Assessee: (2) (3) CIT(A), (4) CIT, (5) SR DR, I.T.A.T., True copy By Order Ravinder Bagga v. Dy. CIT, Phagwara Circle, Phagwara