Chhaya P. Gangar, Mumbai vs Assessee

Smt. Chhaya P. Gangar, Commissioner of Income C/311, Satyam Apartments, Tax[Central]-III, Opp. M.H.B. Police Station, Room No.109, First Floor, Vs. Link Road, Aayakar Bhavan, Borivali (W), Maharshi Karve Road, Mumbai - 400 091 Mumbai - 400020 PAN: AEHPG9964J (Appellant) (Respondent)

Assessee by : Shri Ashok Suthar, A.R. Revenue by : Ms. Parminder, D.R.

Date of Hearing : 06.04.2015 Date of Pronouncement : 06.04.2015

ORDER

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 28.03.2013 of the Commissioner of Income Tax [(hereinafter referred to as CIT] relevant to assessment year 2007-08 passed under section 263 of the Income Tax Act setting aside the order of the Assessing Officer (hereinafter referred to as the AO) dropping the penalty proceedings under section 271(1)(c) of the Act.

2. The Ld. CIT observed that the penalty proceedings were dropped by the AO vide order dated 30.06.2010 without proper verification and that the order passed by the AO dropping the penalty proceedings was not a speaking order. The brief facts are that the assessee had filed the return of income for the year under consideration i.e. A.Y. 2007-08 on 31.03.2008 declaring total income at 2 ITA No.4107/M/2013 Smt. Chhaya P. Gangar

Rs.2,07,550/-. A search action was carried out in the case of Shri Prakash Savla on 17.01.2008. A notice under section 153C was also issued to the assessee. In response to the said notice, the assessee filed the return of income on 28.08.09 declaring the total income of Rs.26,37,550/-. The AO passed the assessment order under section 143(3) read with section 153C determining the total income of the assessee as per return of income filed by the assessee i.e. at Rs.26,37,550/-. In the consequential penalty proceedings under section 271(1)(c) of the Act, the AO observed that since the assessee had voluntarily disclosed income under section 132(4) of the Act and in view of the decision of the Hon'ble Bombay High Court in the case of "CIT vs. Haji Gaffar Haji Dada Chini" reported in 169 ITR 33, the penalty under section 271(1)(c) of the Act could not be levied on the assessee. He, therefore, dropped the penalty proceedings.

3. The Ld. CIT, however, observed that the penalty proceedings were dropped by the AO without proper verification of the facts. He observed that the AO had not discussed the facts of the case and as to whether the assessee's submissions in the course of assessment proceedings amounted to concealment of income or not? He, therefore, set aside the order of the AO and restored the matter to the file of the AO to pass a fresh order under section 271(1)(c) of the Act. Aggrieved by the order of the Ld. CIT, the assessee has come in appeal before us.

4. At the outset, the Ld. A.R. of the assessee has stated that in the set aside penalty proceedings, the AO has again dropped the penalty proceedings. He has, however, stressed that the assessee would still prefer to contest the revision order passed under section 263 of the Act by the Ld. CIT.

3 ITA No.4107/M/2013 Smt. Chhaya P. Gangar

5. We have considered the rival submissions of both the parties. We find that the AO had passed a non speaking order merely relying upon the decision of the Hon'ble Bombay High Court in the case of "Haji Gaffar Haji Dada Chini" (supra) and observing that the assessee had voluntarily offered the income pursuant to search action. We may observe that the Hon'ble Supreme Court, in the case of "MAK Data P. Ltd. vs. Commissioner of Income Tax-II"

civil appeal No.9772 of 2013 date of decision 30.10.13, has categorically held that it is the statutory duty of the assessee to record all its transactions correctly and to clear its true income in the return of income. The AO should not be carried away by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct. In this case, the additional income was declared by the assessee pursuant to notice under section 153C of the Act.

6. The AO had not examined as to whether the declaration of income pursuant to notice under section 153C of the Act amounted to concealment of income or not. Hence, in the absence of a specific finding in this regard, the order of the AO was erroneous and prejudicial to the interest of Revenue. Hence, in our view, the Ld. CIT was justified in invoking the provisions of section 263 in this respect. We, therefore, do not find any infirmity in the order of the Ld. CIT in invoking the provisions of section 263 of the Act. There is no merit in the appeal of the assessee and the same is accordingly dismissed.

Order pronounced in the open court on 06.04.2015.

Sd/- Sd/- (Sanjay Arora) (Sanjay Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 06.04.2015. * Kishore, Sr. P.S. 4 ITA No.4107/M/2013 Smt. Chhaya P. Gangar

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [

By Order

Dy/Asstt. Registrar, ITAT, Mumbai.