Income Tax Appellate Tribunal - Chennai
Selva Gold Covering P Ltd., Chennai vs Dcit, Coimbatore on 29 March, 2017
आयकर अपील
य अ धकरण, 'बी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी ड.एस. सु दर $संह, लेखा सद य केसम)
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.3262/Mds/2016
नधा+रण वष+ / Assessment Year : 2012-13
M/s Selva Gold Covering Pvt. Ltd.,
C/o Shri S. Sridhar, The Deputy Commissioner of
Sh. A.S. Sriraman, Advocate , v. Income Tax,
New No.14, Old No.82, Flat No.5, Corporate Circle - 2,
1st Avenue, Indira Nagar, Adyar, Coimbatore.
Chennai - 600 020.
PAN : AADCS 0688 Q
(अपीलाथ//Appellant) (01यथ//Respondent)
अपीलाथ/ क2 ओर से/Appellant by : Shri S. Sridhar, Advocate
01यथ/ क2 ओर से/Respondent by : Shri Supriyo Pal, JCIT
सन
ु वाई क2 तार
ख/Date of Hearing : 21.02.2017
घोषणा क2 तार
ख/Date of Pronouncement : 29.03.2017
आदे श /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -1, Coimbatore, dated 30.09.2016 and pertains to assessment year 2012-13 confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').
2 I.T.A. No.3262/Mds/16
2. Shri S. Sridhar, the Ld.counsel for the assessee, submitted that there was a survey in the premises of the assessee on 06.08.2013. The assessee voluntarily filed revised return declaring a total income of `15,93,50,630/- and the same was accepted by the Assessing Officer without any further addition except a small disallowance of `5,43,708/- under Section 40A(2)(a) of the Act. According to the Ld. counsel, the Assessing Officer levied penalty under Section 271(1)(c) of the Act. Referring to the judgment of Delhi High Court in CIT v. SAS Pharmaceuticals in ITA No.1058 of 2009 dated 08.04.2011, the Ld.counsel submitted that Section 271(1)(c) of the Act is penal in nature, therefore, unless the case of the assessee falls within four corners of Section 271(1)(c) of the Act, there cannot be any levy of penalty.
3. The Ld.counsel for the assessee further submitted that the Delhi High Court in SAS Pharmaceuticals (supra), after referring to Section 271(1)(c) of the Act, found that penalty under Section 271(1)(c) of the Act can be imposed in the course of any proceeding under the provisions of Income-tax Act. The Delhi High Court after interpreting the word "any proceeding under the Income-tax Act"
has observed that the satisfaction shall be of the Assessing Officer 3 I.T.A. No.3262/Mds/16 or of the Commissioner of Income Tax (Appeals) who levies the penalty. When there was a survey conducted by a team of officer, the question of satisfaction of Assessing Officer or Commissioner of Income Tax (Appeals) or Commissioner does not arise. According to the Ld. counsel, the Assessing Officer has not recorded any satisfaction during the survey operation or during assessment proceedings. The Assessing Officer was not satisfied that the assessee has concealed any part of income or furnished any inaccurate particulars of its income. Therefore, in the light of the judgment of Delhi High Court, it is obvious that the Assessing Officer has not recorded any satisfaction for levy of penalty under Section 271(1)(c) of the Act.
4. The Ld.counsel for the assessee submitted that the Delhi High Court further observed that the concealment of particulars of income or furnishing of inaccurate particulars of such income has to be in the return filed by the assessee. In this case, according to the Ld. counsel, the return filed by the assessee under Section 139(5) of the Act, was very much accepted by the Assessing Officer without making any further addition. Even for disallowance made under Section 40A(3) of the Act, the particulars are very much 4 I.T.A. No.3262/Mds/16 available on record. Merely because the Assessing Officer disallowed under Section 40A(3) of the Act in view of the statutory provision, it cannot be said that the assessee has furnished inaccurate particulars or concealed any part of its income. Therefore, according to the Ld. counsel, it is not a case for levy of penalty under Section 271(1)(c) of the Act.
5. The Ld.counsel for the assessee also placed his reliance on the decision of this Bench of Tribunal in VBC Jewellers v. ACIT in I.T.A. Nos.2255 & 2256/Mds/2015 dated 22.08.2016 and submitted that on identical set of facts, this Tribunal deleted the penalty levied by the Assessing Officer.
6. On the contrary, Shri Supriyo Pal, the Ld. Departmental Representative, submitted that the assessee claimed before the Assessing Officer that it co-operated with the Assessing Officer for completion of assessment. The assessee has also claimed before the Assessing Officer that the undisclosed income admitted during the survey operation was offered for taxation by means of revised return filed under Section 139(5) of the Act. According to the Ld. D.R., the Assessing Officer found bogus purchase through accommodation bills and suppression of sales were also found 5 I.T.A. No.3262/Mds/16 during the survey operation and the assessee also admitted the same and filed the revised return. Since the assessee admitted in the revised return the undisclosed income found during the course of survey operation, the Assessing Officer found that the assessee has willfully furnished inaccurate particulars of income. According to the Ld. D.R., the assessee constantly evaded the payment of taxes. Since the assessee was adopting a set pattern of accommodation bogus purchase in its accounts and suppressed sales, according to the Ld. D.R., the Assessing Officer has rightly levied penalty under Section 271(1)(c) of the Act which was also confirmed by the CIT(Appeals).
7. We have considered the rival submissions on either side and perused the relevant material available on record. The assessee is engaged in the business of gold covering and fancy items. There was a survey in the premises of the assessee under Section 133A of the Act on 06.08.2013 and the assessee filed the revised return under Section 139(5) of the Act declaring total income of `15,93,50,630/-. During the course of survey operation, it appears the Revenue authorities found that the assessee-company did not account for a part of its business turnover. The Revenue authorities 6 I.T.A. No.3262/Mds/16 have also found that the assessee generated unaccounted income by way of suppression of sales and also inflated purchases through accommodation entries. Therefore, the survey team found that the assessee has concealed its income. Accordingly, penalty was levied under Section 271(1)(c) of the Act. The fact remains that the assessee filed revised return voluntarily under Section 139(5) of the Act. The return filed by the assessee was processed and the same was accepted by making a disallowance of `5,43,708/- under Section 40A(2)(a) of the Act.
8. The question now arises for consideration is when the survey team found that there was suppression of sales, and the assessee has filed revised return under Section 139(5) of the Act, whether there was concealment of income or the assessee has furnished inaccurate particulars of such income. This matter was examined by the Delhi High Court in SAS Pharmaceuticals (supra). In fact, the Delhi High Court has held as follows at paragraphs 13, 14 & 15 of its order:-
"13. It is not the case of furnishing inaccurate particular of income, as in the income-tax return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the income-tax return. The question is whether the particulars of income were 7 I.T.A. No.3262/Mds/16 concealed by the assessee or not. It would depend upon the issue as to whether this concealment has reference to the income-tax return filed by the assessee, viz. whether concealment is to be found in the income-tax return.
14. We may, first of all, reject the contention of the learned counsel for the Revenue relying upon the expression 'in the course of any proceedings under this Act' occurring in sub-section (1) of Section 271 of the Act and contending that even during survey when it was found that the assessee had concealed the particular of his income, it would amount concealment in the course of 'any proceedings'. The words 'in the course of any proceedings under this Act' are prefaced by the satisfaction of the A.O. or the Commissioner of Income Tax (Appeals). When the survey is conducted by a survey team, the question of satisfaction of A.O. or the Commissioner (Appeals) or the Commissioner does not arise. We have to keep in mind that it is the A.O. who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings, in this case.
15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income-tax return filed by it. There is sufficient indication of this in the judgment of this Court in the case of Commissioner of Income Tax, Delhi-I Vs. Mohan Das Hassa Nand 141 ITR 203 and in Reliance Petroproducts Pvt. Ltd. (supra), the Supreme Court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the income-tax return filed by the assessee. This view gets supported by Explanation 4 as well as 5 and 5A of Section 271 of the Act as contended by the learned counsel for the Respondent."8 I.T.A. No.3262/Mds/16
7. This Tribunal also had an occasion to examine an identical set of facts in VBC Jewellers (supra). After considering another order of Division Bench of this Tribunal in ACIT v. Ram Thanga Nagai Maligai in I.T.A. No.2183/Mds/2014 dated 10.06.2015, this Tribunal found that the concealment of income started only after filing of return of income. When the assessee has filed revised return under Section 139(5) of the Act and the same was accepted by the Assessing Officer, this Tribunal found that there cannot be any levy of penalty under Section 271(1)(c) of the Act.
8. It is an admitted fact that the assessee has filed revised return of income under Section 139(5) of the Act voluntarily disclosing all the income earned during the year under consideration. Other than the statutory disallowance of `5,43,708/- under Section 40A(2)(a) of the Act, the entire income disclosed by the assessee was accepted without any further addition. When the assessee has filed revised return within the statutory period, under Section 139(5) of the Act, this Tribunal is of the considered opinion that it cannot be said that the assessee has concealed any part of income or furnished any inaccurate particulars of income. The statutory provision allows the assessee to file revised return 9 I.T.A. No.3262/Mds/16 whenever there was omission to disclose the income which is otherwise taxable under the Income-tax Act. In this case, after the survey operation, the assessee found there was omission to disclose the income otherwise taxable under the Income-tax Act and accordingly filed revised return within the statutory period and offered the same for taxation. Therefore, this Tribunal is of the considered opinion that it is not a fit case for levy of penalty under Section 271(1)(c) of the Act.
9. Furthermore, as found by Delhi High Court in SAS Pharmaceuticals (supra), the survey team found that the assessee has not disclosed its income by suppressing the sales turnover and also booking inflated purchases. The Delhi High Court found that satisfaction of survey team cannot be construed as proceeding under the Income-tax Act. Only the Assessing Officer or Commissioner or Commissioner of Income Tax (Appeals) can initiate penalty proceeding in the course of any proceeding pending before them. When the survey team found that the assessee has inflated the purchases and suppressed the sales turnover, it cannot be said that any proceeding was pending before the Assessing Officer or Commissioner or Commissioner of Income Tax (Appeals). 10 I.T.A. No.3262/Mds/16 In view of the above, this Tribunal is of the considered opinion that it is not a fit case for levy of penalty. Accordingly, this Tribunal is unable to confirm the order of the CIT(Appeals). Hence, the orders of both the authorities below are set aside and the penalty levied by the Assessing Officer as confirmed by the CIT(Appeals) is deleted.
10. In the result, the appeal filed by the assessee is allowed.
Order pronounced on 29th March, 2017 at Chennai.
sd/- sd/-
ु दर $संह)
( ड.एस. स (एन.आर.एस. गणेशन)
(D.S. Sunder Singh) (N.R.S. Ganesan)
लेखा सद य/Accountant Member या यक सद य/Judicial Member
चे नई/Chennai,
th
8दनांक/Dated, the 29 March, 2017.
Kri.
आदे श क2 0 त$ल9प अ:े9षत/Copy to:
1. अपीलाथ//Appellant
2. 01यथ//Respondent
3. आयकर आयु;त (अपील)/CIT(A)-1, Coimbatore
4. Principal CIT-1, Coimbatore
5. 9वभागीय 0 त न ध/DR
6. गाड+ फाईल/GF.