Principal Commissioner Of Income Tax Vadodara 1 v. M/S. Mission Corporation

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 129 of 2022 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 1 VersusM/S. MISSION CORPORATION ==========================================================Appearance:MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1 for the Opponent(s) No. 1========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAand HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 31/01/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.This appeal under Section-260A of the Income Tax Act, 1961[for short ‘The Act, 1961] is at the instance of the revenue and isdirected against the order passed by the Income Tax AppellateTribunal, ‘A’ Bench, Ahmedabad dated 2nd March 2021 in the ITA2096/AHD/2018 for the A.Y. 2014-15. 2.The revenue has proposed the following questions of law forthe consideration of this Court:- (a) Whether in the facts and circumstances of the case, theHon’ble ITAT has erred in law and on facts in deleting thepenalty of Rs.3,39,78,900/- levied under section 271(1)(c) of theIncome Tax Act, 1961? (b) Whether in the facts and circumstances of the case, Hon’bleITAT has erred in law and on facts in upholding the CIT(A)’sdecision of deleting the penalty u/s.271(1)(c) without verifying the true nature of disclosure made by the assessee? (c) Whether in the facts and circumstances of the case, Hon’bleITAT has erred in law and on facts in upholding the CIT(A)’sdecision of deleting the penalty u/s.271(1)(c) when no directnexus has been established by the assessee between the disclosureand its complete break up? (d) Whether in the facts and circumstances of the case, Hon’bleITAT has failed to find the break up of disclosure made by theassessee, its nature and relevance as business income? 3.We have heard Mr. Varun K. Patel, the learned seniorstanding counsel appearing for the revenue. 4.It appears from the impugned order passed by the AppellateTribunal that the only question that fell for the consideration of theTribunal was whether the CIT(A) was justified in deleting thepenalty imposed under Section 271(1)(c) of the Act in the facts andcircumstances of the case. 5.The Tribunal while dismissing the appeal of the revenuerecorded the following findings:- “7.On perusal of the above provision what is inferred isthat, if the AO or the learned CIT(A) during any proceedingsunder this Act is satisfied that the assessee has concealed orfurnish inaccurate particular of income then he/she may imposepenalty. The provision of explanation-1 attached to the sectionalso cover the situation; (a) where the assessee failed to offer anexplanation or explanation offered found to be false with regardto any facts or material in the computation of income, or (b)where the assessee fails to substantiate the explanation offeredand also failed to prove that such explanation is bona fide andhas disclosed all the material facts related to the same, then, theamount added or disallowed in computing the total income ofsuch person as a result thereof shall, for the purpose of clause(c) of this sub-section, be deemed to represent the income inrespect of which particulars have been concealed. 7.2 Now in view of the above discussion, we proceed toadjudicate the issue on hand in the given facts andcircumstances. We find that when the survey proceeding dated25.03.2014 was conducted at the assessee premises the financialyear was not ended and also there was plenty of time for filingthe return of income under the provision of section 139(1) of theAct. Subsequently, the assessee incorporated the amount ofincome which was admitted during survey in the computation ofincome. Further the AO also accepted the returned income whilefinalizing assessment proceeding under Section 143(3) dated23.12.2016. In other words the AO was satisfied for the incomedisclosed in the computation of income. Thus, the AO was notjustified in invoking the penalty proceeding for concealment ofincome or furnishing inaccurate particulars of income for thereason that there was no disallowance/ addition to the totalincome of the assessee during the assessment proceedings. Thepresumption of the AO that the assessee would not havedisclosed the income in return in future is mere a suspicionhaving no any base. The assessee cannot be visited with penaltyonly on the basis of suspicion or presumption. Therefore, we donot find any reason to interfere in order of the learned CIT(A).Hence, the ground of appeal of the revenue is dismissed.” 6.The questions of law as proposed by the revenue referred toabove are no longer res-integra in view of the order passed by aCo-ordinate Bench of this Court in the case of PrincipalCommissioner of Income Tax-3 Vs. R. Umedbhai Jewellers Pvt. Ltd.;Tax Appeal No.549 of 2016; decided on 22.08.2016. 7.We quote the relevant observations made by the Co-ordinateBench in the Paragraphs-11 and 12 as under:- “11. The vital difference in the aforesaid case, thus, was that theassessee had already filed a return disclosing an amount ofRs.16.17 lacs. It was only during the assessment proceedings thatthe assessee agreed to surrender further sum of Rs.40.74 lacs byway of income. It was on account of the material collected bythe revenue during survey operation carried out in case ofassessee’s sister concern. In our case, the assessee had neither made additional disclosure nor revised the return after filing thereturn within the time provided under the Statute. 12. The decision of this Court in case of Deepak Construction Co.(Supra) also was rendered in different fact situation. It was acase where for the Assessment Year 1983- 84, the assessee hadfiled the return of income which was taken in scrutiny. Duringthe scrutiny assessment, the Assessing Officer issued a showcause notice confronting the assessee with certain squared upcash credits. Upon receipt of the notice, the assessee filed arevised return offering such sum by way of additional income.The revised return was accepted by the Assessing Officer. He,however, instituted penalty proceedings for the additional incomesurrendered by the assessee. In such background, the questionarose whether after the assessee having filed the revised return,could the revenue have imposed penalty without making anyadditions to the income so returned. The High Court in the saidjudgment held that since the revised return was filed afterdetection of concealment of income, penalty under Section 271(1)(c) of the Act would be levied. Likewise, in case of Dr. A. Mohd.Abdul Khadir (Supra) also, the Madras High Court was concernedwith the similar situation where the assessee revised his returnpursuant to the search operation during which he had admittedto have concealed the income. The Court held that such revisedreturn could not be treated as voluntary return and penaltyunder Section 271(1)(a) of the Act would be leviable.” 8.In view of the aforesaid, we see no good reason to disturbthe order passed by the Appellate Tribunal. 9.In the result, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) A. B. VAGHELA (NISHA M. THAKORE,J)