The ACIT, Circle-5,, Baroda v. Shri Akshay R.Patel, Baroda

ITA 446/AHD/2009 | 1995-1996
Pronouncement Date: 04-11-2011 | Result: Dismissed

Appeal Details

RSA Number 44620514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 446/AHD/2009
Duration Of Justice 2 year(s) 8 month(s) 23 day(s)
Appellant The ACIT, Circle-5,, Baroda
Respondent Shri Akshay R.Patel, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 04-11-2011
Date Of Final Hearing 01-11-2011
Next Hearing Date 01-11-2011
Assessment Year 1995-1996
Appeal Filed On 11-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD .'# '# $% $ & BEFORE SHRI MUKUL KR.SHRAWAT JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ./ I.T.A. NO.446/AHD/2009 ( # ( # ( # ( # ( / / / / ASSESSMENT YEAR : 1995-96) THE ASST.CIT CIRCLE-5 BARODA # # # # / VS. SHRI AKSHAY R.PATEL PROP. OF M/S.AJAY AUTO PARTS NR.NAVRANG CINEMA RAOPURA BAORDA ) $% ./*+ ./ PAN/GIR NO. : PY 3849 ( ) / // / APPELLANT ) .. ( -.) / RESPONDENT ) ) / $/ APPELLANT BY : SHRI B.L. YADAV D.R. -.) 0 / $ / RESPONDENT BY : SHRI M.K. PATEL A.R. #1 0 %/ // / DATE OF HEARING : 01/11/2011 2'( 0 % / DATE OF PRONOUNCEMENT : 4/11/2011 $3/ O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-V BARODA DA TED 07/11/2008 PASSED FOR ASSESSMENT YEAR 1995-96 WHEREIN THE LEA RNED CIT(APPEALS) HAS CANCELLED THE PENALTY OF RS.5 65 000/- LEVIED U /S.271(1)(C) OF THE I.T.ACT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING PENALTY ORDER PASSED U/S. 271(1)(C) OF THE I.T. ACT 1961 DATED 20/12/2007 AND THE ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 2 - ASSESSMENT ORDER U/S.143(3) OF THE I.T.ACT DATED 31 /12/1997 WERE THAT THE ASSESSEE-INDIVIDUAL DEALS IN SPARE PARTS AND ACCESS ORIES OF TWO-WHEELERS. A SURVEY U/S.133A OF THE I.T.ACT WAS CARRIED OUT ON 09/11/1994 AT THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COU RSE OF SURVEY ASSESSEE DECLARED UNACCOUNTED INCOME OF RS.14 24 3 37/-. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME OF RS.1 3 40 838/- WHEREIN ADMITTEDLY THE ASSESSEE HAS DISCLOSED THE SAID UNAC COUNTED INCOME OF RS.14 24 337/- AS DECLARED DURING THE COURSE OF SU RVEY. THE ASSESSMENT WAS FINALLY COMPLETED ON AN INCOME OF RS.16 93 269/ . THE PENALTY WAS IMPOSED ON THE BASIS OF THE FOLLOWING TABULATION:- SL.NO(S) PARTICULARS AMOUNT (IN RS.) (I) TAX AND SURCHARGE ON INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED FOR RS.13 65 058/- RS.5 64 423/- (II) MINIMUM PENALTY LEVIABLE: 100% OF TAX SOUGHT TO BE EVADED RS.5 64 423/- (III) MAXIMUM PENALTY LEVIABLE : 300% OF TAX SOUGHT TO BE EVADED RS.16 93 269/- 2.1. IN RESPONSE TO SHOW CAUSE NOTICE ISSUED BY TH E AO BEFORE LEVY OF PENALTY THE ASSESSEES BRIEF EXPLANATION WAS IN THE FOLLOWING MANNER:- DURING THE SURVEY ON 9.11.1994 THE SURVEY PARTY PREPARED THE INVENTORY OF STOCK OF SPARE PARTS CONTAINING 9 1 PAGES WITHIN COUPLE OF HOURS AND WITHIN THAT PERIOD ANOTHER INVE NTORY OF BOOKS OF ACCOUNT FILES OTHER PAPERS ETC. WERE ALSO MAD E AND ON THE ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 3 - SAME DAY STATEMENT WAS ALSO RECORDED. THE ASSESSEE WAS COMPELLED TO DECLARE TO DISCLOSE THE EXCESS STOCK O F THE VALUE OF RS.15 00 000/- AND FORCED TO MAKE ADVANCE TAX PAYME NT THEREON. A FEW DAYS AFTER THE SURVEY PROCEEDINGS THE ASSESS EE HAD INFORMED THE CONCERNED OFFICER THAT THE DIFFERENCE OF THE ST OCK IN QUESTION WAS ONLY DUE TO THE REASON THAT STOCK OF RS.1 LAKHS OUT OF THE STOCK PHYSICALLY TAKEN AT THE TIME OF SURVEY WAS DEAD STO CK OLD AND NOT SALEABLE AND WAS REQUIRED TO BE EXCLUDED FROM THE INVENTORY MADE AT THE TIME OF SURVEY AND THAT THOSE DEAD STOCK WOR TH RS.2 LAKHS WERE DISPOSED OF FOR ONLY RS.30 000/- AND THEREFORE REQUESTED FOR APPROPRIATE EFFECT OF LOSS OF RS.1 70 000/-. WHILE PASSING THE ASSESSMENT ORDER THE AO ADOPTED THE EXCESS STOCK O F THE VALUE RS.12 16 544/- AFTER DEDUCTING THEREFROM RS.22 766/ - ON ACCOUNT OF MISTAKE IN ADOPTION OF RATES IN WORKING OUT THE VALUE OF EXCESS STOCK AND RS.1 95 164/- ON ACCOUNT OF MISTAKE IN AR ITHMETICAL CALCULATION. THE ASSESSING OFFICER ALSO DISALLOWED THE LOSS OF RS.1 70 000/- AND ULTIMATELY ARRIVED AT THE TOTAL I NCOME OF RS.13 40 838/-. 2.2 ASSESSEE CITED IN SUPPORT THE FOLLOWING CASES:- 1. CIT VS. VINAYCHAND HARILAL 120 ITR 752 (GUJ.) 2. PAUL MATHEWS & SONS VS. CIT (2003) 129 TAXMAN 416 (KER.) 3. DILIP N. SHROFF VS. JT. CIT SPECIAL RANGE MU MBAI 2007 (291 ITR 0519)[SUPREME COURT] 4. DELHI CLOTHES & GENERAL MILLS CO.LTD. VS. CIT ( 1984) 042 CTR 0188 (DEL) 5. GRAND POLYCOATES CO.(P) LTD. VS. DCIT ITA NO. 613/AHD/2005 (ITAT AHMEDABAD) 2.3. THE ASSESSING OFFICER WAS HOWEVER NOT SATISF IED. HE WAS OF THE VIEW THAT DEPARTMENT HAS DISCOVERED CONCEALMENT BY CARRYING OUT SURVEY AND THEREFORE ASSESSEE IS GUILTY OF CONCEALMENT O F INCOME AND FURNISHING OF INACCURATE PARTICULARS. HE ACCORDING LY PROCEEDED TO LEVY PENALTY OF RS.5 65 000/- THE CALCULATION ALREADY RE PRODUCED ABOVE. ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 4 - 3. ON APPEAL THE LEARNED CIT(APPEALS)CANCELLED TH E PENALTY BY OBSERVING AS UNDER:- 4. I HAVE CONSIDERED THE FACTS OF THE CASE SUBMIS SION OF THE AR AS ALSO THE OBSERVATIONS OF THE AO. THE DISCLOSURE HAS BEEN MADE DURING THE COURSE OF SURVEY OPERATION FOR WHICH THE RETURN OF INCOME WAS NOT DUE. THE SAID DISCLOSED AMOUNT WAS INCLUDED IN THE RETURN OF INCOME EXCEPT RS.5 61 544/-. THE EXP LANATION FOR ITS NON-INCLUSION WAS ALSO PROVIDED BY THE APPELLANT. THE CIT(A) HAS ALLOWED THE APPEAL PREFERRED AGAINST THE ORDER U/S. 143(3) AFTER CONSIDERING THE CONTENTION OF THE APPELLANT. THOUG H THE SAME WAS NOT UPHELD BY THE HON'BLE ITAT THE APPELLANT HAS D ISCHARGED THE ONUS CAST UPON HIM. SINCE THE DISCLOSURE MADE DURING THE SURVEY HAS BEEN REFLECTED IN THE ORIGINAL RETURN ITSELF IN AS MUCH AS IN THE FORM OF EXCESS STOCK THERE CANNOT BE THE QUESTI ON OF CONCEALMENT OF PARTICULARS OF INCOME SO FAR AS THE ORIGINAL RETURN OF INCOME IS CONCERNED. THE CHARGE OF PENALTY EITHER FOR CONCEALMENT OF PARTICULARS OF INCOME CAN BE ESTABLI SHED ONLY WITH RESPECT TO THE RETURN OF INCOME FILED BY THE APPELL ANT. THE CONTENTION OF THE APPELLANT THAT THE DEEMING PROVIS ION AS CONTAINED IN THE EXPLANATION 5 TO SECTION 271(1)(C) ARE APPLICABLE TO SEARCH CASES ONLY IS FOUND TO BE CORRECT AND CAR RY WEIGHT. IN VIEW OF THE ABOVE DISCUSSION IT CANNOT BE HELD THAT ON THE DATE WHEN THE ORIGINAL RETURN WAS FILED BY THE APPELLANT ON 31.08.1995 THERE WAS EITHER CONCEALMENT OF PARTICULARS OF INCO ME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. I N THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY IMPOSED BY THE AO CANNOT BE SUSTAINED AND THEREFORE PENALTY OF RS.5 6 5 000/- IMPOSED BY THE AO IS HEREBY DELETED. 4. FROM THE SIDE OF THE REVENUE THE LD.DR MR. B.L. YADAV APPEARED AND BASICALLY RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT MERELY BECAUSE THE ASSESSEE HAS DISCLOSED DECL ARED INCOME IN THE RETURN OF INCOME WILL NOT BE SUFFICIENT TO PROVE TH AT CASE OF THE ASSESSEE ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 5 - DOES NOT FALL UNDER THE PROVISIONS OF SECTION 271(1 )(C) OF THE I.T.ACT. THE IMPUGNED CONCEALED INCOME WAS DETECTED AFTER THE SU RVEY OPERATION HENCE PENALTY WAS RIGHTLY IMPOSED. 5. ON THE OTHER HAND FROM THE SIDE OF THE ASSESSEE LD.AR MR.M.K.PATEL APPEARED AND SUBMITTED THAT PENALTY CA NNOT BE LEVIED IF IMPUGNED AMOUNT HAS BEEN DECLARED IN THE RETURN OF INCOME. THE PENALTY HAS TO BE CONSIDERED ON THE BASIS OF RETURN FILED B Y THE ASSESSEE AND IF NO ADDITION IS MADE OF THE IMPUGNED AMOUNT THEN THERE IS NO CASE FOR LEVY OF PENALTY. HE REFERRED TO THE MACHINERY SECTION O F 271(1)(C) OF THE I.T.ACT WHICH REFERS TO CALCULATION OF PENALTY ACCO RDING TO WHICH PENALTY IS LEVIABLE EQUIVALENT 100% TO 300% OF TAX SOUGHT T O BE EVADED AND TAX SOUGHT TO BE EVADED IS A DIFFERENCE BETWEEN TAX LEV IED ON RETURNED INCOME AND TAX LEVIED ON ASSESSED INCOME. HE HAS PL ACED RELIANCE ON A LATEST DECISION OF THE TRIBUNAL DISCUSSED HEREINB ELOW. 5.1. AFTER HEARING BOTH THE SIDES WE FIND THAT A SIMILAR ISSUE HAD COME UP BEFORE THE RESPECTED COGNATE BENCH ITAT AHMEDA BAD BENCH C PASSED IN ITA NO.1482/AHD/2010 FOR ASSESSMENT YEAR 2006-07 TITLED AS DCIT VS. DR.SATISH B.GUPTA ORDER DATED 06/08/2010 WHEREIN THE TRIBUNAL HELD AS UNDER:- 4. WE HAVE HEARD THE ID. DR AND THE ID. AR. THE ID . DR BASICALLY RELIED ON THE ORDER OF AO AND SUBMITTED THAT IN THE STATEMENT RECORDED ON OATH ASSESSEE HAS ADMITTED THAT RECEIPTS ARE NOT PREPARED AND ISS UED TO ALL THE PATIENTS. THUS ASSESSEE HAS ADMITTED CONCEALMENT OF INCOME. M ERELY BECAUSE ASSESSEE HAS DISCLOSED DECLARED INCOME IN THE RETURN OF INCO ME WILL NOT BE SUFFICIENT TO PROVE THAT CASE OF THE ASSESSEE DOES NOT FALL UNDER THE PROVISIONS OF SECTION 271(L)(C). ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 6 - 5. ON THE OTHER HAND ID. AR HAD SUBMITTED THAT PEN ALTY CANNOT BE LEVIED IF IMPUGNED AMOUNT HAS BEEN DECLARED IN THE RETURN OF INCOME. THE PENALTY HAS TO BE CONSIDERED ON THE BASIS OF RETURN FILED BY TH E ASSESSEE AND IF NO ADDITION IS MADE OF THE IMPUGNED AMOUNT THEN THERE IS NO CAS E FOR LEVY OF PENALTY. HE REFERRED TO THE MACHINERY SECTION OF 271(L)(C) WHIC H REFERS TO CALCULATION OF PENALTY ACCORDING TO WHICH PENALTY IS LEVIABLE EQUI VALENT 100% TO 300% OF TAX SOUGHT TO BE EVADED AND TAX SOUGHT TO BE EVADED IS A DIFFERENCE BETWEEN TAX LEVIED ON RETURNED INCOME AND TAX LEVIED ON ASS ESSED INCOME. SINCE IN THE PRESENT CASE TAX LEVIED ON RETURNED INCOME AND ON T HE ASSESSED INCOME IS THE SAME BARRING FEW MINOR ADDITIONS PENALTY COULD NO T BE LEVIED IN RESPECT OF AMOUNT DECLARED BY THE ASSESSEE IN SURVEY. THE ID. AR THEN REFERRED TO THE FOLLOWING DECISIONS :- - CIT VS. M. PACHAMUTHU & ANOTHER (2007) 295 ITR 50 2 (MAD) - AMIR CHAND VS. ITO (1994) 49ITD 606 (DEL) - ACIT VS. GANDEVIKAR JEWELLERS P. LTD. - BHAGAT & CO. VS. ACIT (2006) 101 TTJ (MUM) 553 - ORIENT PRESS LTD. VS. JCIT (2006) 99 TTJ 1091 (MU MBAI) 6. FOR THE SAKE OF CONVENIENCE WE REPRODUCE SECTION 271(L)(C) AS UNDER :- 'SEC. 271(1) -IF THE ASSESSING OFFICER OR THE COMMI SSIONER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON - (A)....... (B)....... (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME OR (D)...... HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY - EXPLANATION -1 -WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER(APPEALS) OR T HE COMMISSIONER TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCL OSED BY 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 REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEE N CONCEALED. ' FROM THE LAST PORTION OF THE SECTION I.E.' THE AMOU NT ADDED OR DISALLOWED IN COMPUTING TOTAL INCOME........ BE DEEMED TO REPRESE NT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED' WOULD INDICA TE THAT IT IS ONLY THE ADDITION OR DISALLOWANCE TO THE TOTAL INCOME THAT W OULD REPRESENT THE INCOME FOR THE PURPOSES OF LEVY OF PENALTY WITHIN THE MEAN ING OF EXPLANATION-1 TO SECTION 271(L)(C). IN OTHER WORDS IF NO ADDITION OR DISALLOWANCE IS MADE IN ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 7 - COMPUTING TOTAL INCOME THEN THERE WILL NOT BE ANY I NCOME WHICH CAN BE DEEMED AS INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. CLAUSE (C) TO EXPLANATION-4 TO SECTION 271(L)(C) EX PLAINS THE AMOUNT OF TAX SOUGHT TO EVADE. IT MEANS THE DIFFERENCE BETWEEN TA X ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABL E AT SUCH TOTAL INCOME IS REDUCED BY THE AMOUNT ADDED. SINCE IN THE PRESENT C ASE THE AO HAS NOT MADE ANY ADDITION IN THE RETURNED INCOME QUESTION OF WO RKING OUT ANY TAX SOUGHT TO BE EVADED WOULD NOT ARISE. FOR THE SAKE OF CONVENIE NCE WE REPRODUCE EXPLANATION-4 TO SECTION 271(L)(C) AS UNDER :- EXPLANATION-4 - FOR THE PURPOSES OF CLAUSE (HI) OF THIS SUB-SECTION THE EXPRESSION 'THE AMOUNT OF TAX SOUGHT TO BE EVADED'- [(A) IN ANY CASE WHERE THE AMOUNT OF INCOME IN RESP ECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNI SHED HAS THE EFFECT OF REDUCING THE LOSS DECLARED IN THE RETURN OR CONVERTING THAT LOSS INTO INCOME MEANS THE TAX THAT WOULD HAVE BEEN CHARGEABLE ON THE INCOME IN RESPECT OF WHICH PARTIC ULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED HAD SUCH INCOME BEE N THE TOTAL INCOME;] (B) IN ANY CASE TO WHICH EXPLANATION 3 APPLIES MEA NS THE LAX ON THE TOTAL INCOME ASSESSED [AS REDUCED BY THE AMOUNT OF ADVANCE TAX TAX DEDUC TED AT SOURCE LAX COLLECTED AT SOURCE AND SELF-ASSESSMENT TAX PAID BEFORE THE ISSUE OF NOTICE UNDER SECTION 148]; (C) IN ANY OTHER CASE MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TO TAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED.] THUS IN GENERAL WHERE A CASE DOES NOT FALL WITHIN CLAUSE (A) OR CLAUSE (B) THERE CANNOT BE ANY 'TAX SOUGHT TO BE EVADED' IF TH ERE IS NO ADDITION TO THE RETURNED INCOME. 7. THUS THE BASIS FOR LEVY OF PENALTY IS RETURN OF INCOME. IF ANY AMOUNT HAS BEEN SHOWN IN THE RETURN OF INCOME THEN IT CANNOT B E SAID THAT ASSESSEE HAS CONCEALED ANY PARTICULAR ABOUT THAT INCOME OR FURNI SHED INACCURATE PARTICULARS IN RELATION THERETO. THERE CANNOT BE AN Y CONCEALMENT PRIOR TO FILING OF RETURN. QUESTION OF CONSIDERING WHETHER A SSESSEE IS LIABLE FOR ACTION UNDER SECTION 271(L)(C) WOULD ARISE ONLY WHEN RETUR N OF INCOME IS SCRUTINIZED BY THE AO AND HE FINDS SOME MORE ITEMS OF INCOME OR ADDITIONAL INCOME OVER AND ABOVE WHAT IS DECLARED IN THE RETURN. IF IT IS SO THE ASSESSEE WOULD BE LIABLE FOR ACTION UNDER SECTION 271(L)(C) IN RESPEC T OF SUCH ITEMS ONLY WHICH ARE DISCOVERED BY THE AO ON THE SCRUTINY OF RETURN OF INCOME OR AFTER CARRYING OUT INVESTIGATION AND DISCOVERING SOME MORE ITEMS O F INCOME NOT FOUND DECLARED OR MENTIONED IN THE RETURN OF INCOME. PRIO R TO FILING OF RETURN OF INCOME THERE IS NO CONCEPT OF CONCEALMENT OR FURNIS HING OF INACCURATE PARTICULARS. 8. THE INITIAL PHRASE USED IN SECTION 271(L)( C) SUGGESTS THAT AO HAS TO FIND IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT.... . ..THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 8 - SUCH INCOME. IN FACT THE PROCEEDINGS AGAINST THE AS SESSEE WOULD START ONLY AFTER RETURN OF INCOME IS FILED BY THE ASSESSEE OR AFTER ISSUANCE OF STATUTORY NOTICE AGAINST HIM SUCH AS UNDER SECTION 142(1) OR U/S 143(2). CARRYING OUT SURVEY UNDER SECTION 133A IS NOT AT ALL ANY PROCEED INGS. PROCEEDINGS AS USED IN SECTION 271(L)(C) ARE STATUTORY PROCEEDINGS INIT IATED AGAINST THE ASSESSEE EITHER BY ISSUANCE OF STATUTORY NOTICE OR AFTER FIL ING OF RETURN OF INCOME. SURVEY U/S 133A OR SEARCH UNDER SECTION 132 OR ISSU ANCE OF NOTICE U/S 133(6) FOR EXAMPLE ARE ONLY MEANS OF COLLECTING EVIDENCE AGAINST THE ASSESSEE AND ARE NOT EQUIVALENT TO STATUTORY PROCEEDINGS. ANOTHE R CRITERIA OF FINDING OUT AS TO WHETHER PARTICULAR ACTION IS A STATUTORY PROCEED INGS OR NOT IT IS TO BE SEEN WHETHER IT CAN BE BROUGHT TO A LEGAL CONCLUSION AGA INST THE ASSESSEE BY DETERMINING HIS RIGHT OR LIABILITY. MERELY CARRYING OUT SURVEY UNDER SECTION 133A DOES NOT CREATE ANY LIABILITY AGAINST THE ASSE SSEE WHICH IS CREATED ONLY THROUGH ASSESSMENT PROCEEDINGS OR PENALTY PROCEEDIN GS. THEREFORE THE ID. DR IS INCORRECT IN HIS SUBMISSION THAT SURVEY BEING A PROCEEDINGS AND AO HAS DISCOVERED CONCEALMENT DURING SURVEY THEREFORE TH E ASSESSEE IS LIABLE FOR PENALTY UNDER SECTION 271(L)(C). IN THIS REGARD WE REFER TO SOME COMMON DEFINITIONS OF WORD PROCEEDINGS. PROCEEDINGS - PROCEEDINGS HAVE BEEN DEFINED IN VARIOUS WAYS. IT INCLUDES ANY SUIT APPEAL OR APPLICATION. IT INCLUDES ANY PROCED URAL MEANS FOR SEEKING REDRESS FROM THE TRIBUNAL OR COURT; THE BUSINESS CO NDUCTED BY A COURT OR OTHER OFFICIAL BODY THE TERM 'PROCEEDINGS' MAY INC LUDE THE INSTITUTION OF ACTION AGAINST DEFENDANT THE SUBMISSIONS OF DEFENC E AND TRIAL. IT ALSO MEANS A LEGAL ACTION OR PROCESS AND ACT DONE BY AN AUTHORIT Y OF A COURT OF LAW; ANY STEP TAKEN BY EITHER PARTY IN A LEGAL PROCEEDING A N ACTION OR COURSE OF ACTION BEFORE A COURT. IT IS ALSO A PRESCRIBED MODE OF ACT ION FOR CARRYING INTO EFFECT A LEGAL RIGHT. IN ITS ORDINARY ACCEPTANCE PROCEEDINGS MEANS FORM AND MANNER OF CONDUCTING JUDICIAL BUSINESS BY A QUASI JUDICIAL AU THORITY THE FORM IN WHICH ACTIONS ARE TO BE BROUGHT AND DEFENDED AND THE MODE OF DECIDING SUITS OR OF OPPOSING JUDGMENTS OR OF EXECUTING THEM. THE WORD ' PROCEEDINGS' ALSO INCLUDES WITHIN ITS AMBIT ALL MATTERS COMING UP FOR ADJUDICATION. IT IS ALSO A PRESCRIBED COURSE OF ACTION FOR THE ENFORCEMENT OF LEGAL RIGHT. IT HAS BEEN HELD IN DBS FINANCE SERVICES (P) LTD. VS. SMT. M. GEORGE ITO (1994) 207 ITR 1077 (BOM) BY HON. BOMBAY HIGH COURT IN THE CONTEX T OF ACTION U/S 133(6) THAT A PROCEEDING UNDER THE INCOME-TAX ACT BY ITS V ERY NATURE MUST BE SPECIFIC AND IT MUST RELATE TO SPECIFIC INDIVIDUAL OR ENTITY . THE TERM OF PROCEEDINGS USED IN SECTION 133(6) MEANS A PENDING OR EXISTING PROCEEDINGS. IN OTHER WORDS CALLING FOR INFORMATION IN ITSELF IS NOT A PR OCEEDING. SINCE SECTION 133A IS AN ACTION FOR CALLING OF INFORMATION IN ITSELF IT IS NOT A PROCEEDINGS. 9. FURTHER CLAUSE (C) TO SECTION 271(1) MENTI ONS 'AS CONCEALED..... ...OR FURNISHED'. THEY ARE PAST TENSE WORDS INDICATING TH AT ASSESSEE HAS COMMITTED CERTAIN ACT ON WHICH PENALTY IS LEVIABLE. THUS THE ACT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS SHOULD BE VIEW ED BY THE AO AS DONE WITH RESPECT TO RETURN OF INCOME. THE OMISSION OR COMMIS SION OR CONTUMACIOUS CONDUCT HAS TO BE VIEWED FROM THE RETURN OF INCOME AND IF CERTAIN THING IS NOT ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 9 - DISCLOSED OR NOT FURNISHED THEREIN ONLY THEN IT CAN BE SAID THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. PRIOR TO THIS ASSESSEE HAS NOT DONE ANY CON TUMACIOUS CONDUCT ON WHICH PENALTY CAN BE LEVIED. MERELY BECAUSE CERTAIN RECEIPTS ARE NOT RECORDED IN THE BOOKS OF ACCOUNT OR RECEIPTS ARE NOT ISSUED TO THE PATIENTS BUT INCOME THEREFROM WAS FINALLY DECLARED IN THE RETURN OF INC OME THEN THERE IS NO CONTUMACIOUS CONDUCT. FOR NOT MAINTAINING BOOKS OF ACCOUNT OR NOT ISSUING RECEIPTS TO THE PATIENTS FOR THE AMOUNT RECEIVED BY THE ASSESSEE THE BOOKS AT THE BEST CAN BE REJECTED BY INVOKING PROVISIONS OF SECTION 145(3) AND INCOME CAN BE ESTIMATED IN ACCORDANCE WITH SECTION 144. BU T WHERE THE AO ACCEPTS THE INCOME DECLARED IN THE RETURN OF INCOME THEN AS SESSEE CANNOT BE CHARGED FOR ANY CONTUMACIOUS CONDUCT. THERE ARE IN FACT SEV ERAL JUDGMENTS ACCORDING TO WHICH PENALTY IS NOT LEVIABLE IF ADDITION IS DEL ETED. HON. PUNJAB & HARYANA HIGH COURT IN CIT VS. PRAKASH INDUSTRIES LTD. (2010 ) 322 ITR 622 (P & H) HELD THAT BASIS FOR LEVY OF PENALTY IS RETURNED INC OME. IF ADDITIONS ARE DELETED IN QUANTUM PROCEEDINGS PENALTY COULD NOT BE IMPOSED . THE HON. HIGH COURT HAS HELD AS UNDER :- 'A SEARCH SHOWED THAT THE ASSESSEE HAD RECEIVED AMO UNT OF RS.3.5 CRORES FROM THE BANK ACCOUNT OF S. FARIDABAD. IT WAS OBSERVED THAT THE FIRM WAS A BOGUS FIRM AND THE CLAIM OF THE ASSESSEE THAT THE AMOUNT WAS RECEI VED TOWARDS CONSIDERATION FOR SALE OF MATERIAL WAS NOT ACCEPTED. HENCE ADDITION WAS MADE TO THE DECLARED INCOME. FURTHER ADDITIONS WERE MADE BY HOLDING THAT LEASE RENT SHOWN TO HAVE BEEN PAID BY THE ASSESSEE HAD NOT BEEN IN FACT BEEN PAI D AND THE CLAIM FOR DEPRECIATION COULD NOT BE ALLOWED AS THE MACHINERY WAS NOT IN TH E POSSESSION OF THE ASSESSEE DURING PHYSICAL VERIFICATION. THE COMMISSIONER (APP EALS) UPHELD THE ADDITION IN RESPECT OF RECEIPTS SHOWN TO HAVE BEEN MADE FROM S BUT DELETED THE ADDITION TOWARDS LEASE RENT AND DEPRECIATION ALLOWANCE TAKING INTO ACCOUNT ADDITIONAL EVIDENCE LED BY THE ASSESSEE. ON FURTHER APPEAL THE TRIBUNAL UP HELD THE PLEA OF THE ASSESSEE IN RESPECT OF AMOUNT RECEIVED FROM S BUT DISMISSED THE APPEAL OF THE REVENUE IN RESPECT OF DELETIONS IN RESPECT OF LEASE RENT AND DEPRECIAT ION ALLOWANCE. THE TRIBUNAL CANCELLED THE PENALTY LEVIED UNDER SECTION 271(1 )( C) OF THE INCOME-TAX ACT 1961. ON APPEAL TO THE HIGH COURT: HELD DISMISSING THE APPEAL THAT AS REGARDS THE DE LETION BY THE COMMISSIONER (APPEALS) AFTER REFERRING TO THE ADDITIONAL EVIDENC E LED BEFORE HIM THE TRIBUNAL HAD EXAMINED THE MATTER AND RECORDED THAT A REMAND REPO RT WAS DULY SOUGHT AND THUS NO PREJUDICE WAS CAUSED BY CONSIDERING THE ADDITIONAL EVIDENCE. WITH REGARD TO THE AMOUNT RECEIVED FROM S THE MATTER WAS IN THE REALM OF APPRECIATION OF EVIDENCE. EVEN IF IT IS HELD THAT TWO VIEWS ARE POSSIBLE THE INFERENCE DRAWN BY THE TRIBUNAL BEING THE FINAL FACT FINDING AUTHORITY COULD NOT B E HELD TO BE PERVERSE. THE CANCELLATION OF PENALTY WAS VALID.' SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDGME NTS ALSO: CITVS. RELIANCE PETRO PRODUCTS 322 ITR 158 (SC) ADDL. CIT V. BADRI KASHI PRASAD (1993] 200 ITR 0206 (ALL) PRABHAT OIL TRADERS V. ITO(NO. 3) (1996) 218 ITR (A .T.) 0039ITAT AHD. CITY DRY FISH COMPANY V. CIT (1999) 238 ITR 0063 (A .P.) CITVS. MOHD. BUX SOKAT ALI (2004) 265 ITR 326 (RAJ) ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 10 - ACITVS. VIP INDUSTRIES (2009) 122 TTJ 289 (MUM) 10. OUR VIEW THAT NO PENALTY IS LEVIABLE IF IMPUGNED A MOUNT IS DISCLOSED IN THE RETURN OF INCOME IS SUPPORTED BY THE DECISION O F HON. ALLAHABAD HIGH COURT IN THE CASE OF SMT. GOVINDA DEVI VS. CIT (200 8) 304 ITR 0340 (ALL). IN THAT CASE ASSESSEE RECEIVED LOTTERY PRIZE MONEY IN JANUARY 1992 AND DISCLOSED THE SAME IN THE RETURN FILED FOR ASST. YE AR 1992-93 AND PAID THE TAXES. THE ASSESSING AUTHORITY PASSED AN EX PARTE A SSESSMENT ORDER AND EX PARTE PENALTY ORDER IN ASST. YEAR 1991-92. IT WAS H ELD BY THE HON. COURT THAT ONCE PRIZE MONEY HAS BEEN DISCLOSED IN THE RETURN O F INCOME FOR ASST. YEAR 1992-93 AND ALSO TAXES WERE PAID THEN ASSESSING AUT HORITY HAD APPARENTLY COMMITTED AN ERROR IN LEVYING THE PENALTY. IN K.C. BUILDERS VS. ACIT (2004) 265 ITR 562 (SC) IT WAS HELD BY THE HON. APEX COU RT THAT WHERE ADDITIONS ARE MADE IN THE ASSESSMENT ORDER ON THE BASIS OF WH ICH PENALTY FOR CONCEALMENT IS LEVIED ARE DELETED THERE REMAINS N O BASIS AT ALL FOR LEVYING PENALTY FOR CONCEALMENT. NO PENALTY WOULD SURVIVE I F ADDITION DID NOT SURVIVE. IN CIT VS. ARTHANARISWAMY CHETTIAR (S.S.K.G.) (1982 ) 136 ITR 145 (MAD) HON. MADRAS HIGH COURT HELD THAT PENALTY CAN BE IMP OSED WITH REFERENCE TO THE CONCEALMENT DONE IN THE ORIGINAL RETURN FILED U NDER SECTION 139. IN THE CASE OF SULEMANJI GANIBHAI VS. CIT (1980) 121 ITR 0 373 (M.P.) IT WAS HELD THAT AN ASSESSEE INCURS PENALTY UNDER SECTION 271(L )(C) IF HE FILES INACCURATE PARTICULARS OF HIS INCOME IN THE RETURN OR CONCEALS THE PARTICULARS OF INCOME THEREIN. THERE CAN BE NO CONCEALMENT UNTIL THERE IS A DUTY TO DISCLOSE. THE DUTY TO DISCLOSE PARTICULARS OF INCOME ARISES AT TH E TIME WHEN ASSESSEE FURNISHES RETURN OF INCOME UNDER SECTION 139 AND IF IN FILING HIS RETURN HE CONCEALS THE PARTICULARS OF INCOME OR FURNISHES INA CCURATE PARTICULARS HE INCURS PENALTY UNDER SECTION 271(L)(C). IN THE CASE OF PATNA GUINEA HOUSE VS. CIT (2000) 243 ITR 0274 (PAT) IT IS HELD THAT THERE IS NO CASE FOR LEVY OF PENALTY IF INCOME IS DISCLOSED IN THE RETURN OF INC OME BUT ASSESSEE HAS REFUSED TO DISCLOSE SOURCE OF INCOME. 11. THUS WHERE RETURNED INCOME IS ACCEPTED THERE IS NO CASE FOR LEVY OF PENALTY. 12. ACCORDINGLY WE UPHOLD THE ORDER OF ID. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. ONCE A RESPECTED CO-ORDINATE BENCH ON IDENTICAL FACTS HAS TAKEN A VIEW IN FAVOUR OF THE ASSESSEE BY REJECTING REVENUE S APPEAL THEREFORE WE HAVE NO REASON TO TAKE ANY OTHER VIEW BUT TO FOL LOW THE VIEW ALREADY ITA NO .446/AHD/2009 ACIT VS. SHRI AKSHAY R.PATEL ASST.YEAR - 1995-96 - 11 - TAKEN IN REVENUES CASE SUPRA. CONSEQUENTLY REVENU ES GROUNDS ARE HEREBY DISMISSED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS HER EBY DISMISSED. SD/- SD/- (A. MOHAN ALANKAMONY) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 04 / 11 /2011 4..# .#../ T.C. NAIR SR. PS $3 0 -5 6$5( $3 0 -5 6$5( $3 0 -5 6$5( $3 0 -5 6$5(/ COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT 2. -.) / THE RESPONDENT. 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-V BARODA 5. 5:; -# / DR ITAT AHMEDABAD 6. ; <1 / GUARD FILE. $3# $3# $3# $3# / BY ORDER .5 - //TRUE COPY// = == =/ // / * * * * ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION..01.11.2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01.11.2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.4.11.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 4.11.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER