P.V. Ramana Reddy Vs. ITO (ITAT Hyderabad)- Assessing Officer is vested with a discretionary power to levy or not to levy any penalty in a deserving case. In the case of Hindustan Steel Ltd Vs. State of Orissa (83 ITR 26) (SC), held that penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. If an assessee files the revised return though at a later stage or disclosed true income, penalty need not be levied. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee’s case, came forward with additional income though after deduction on account of that the assessee was not in a position to explain properly, the seized material and express remorse, in his conduct un-hesitantly, the Assessing Officer might have to exercise the discretion in favor of such assessee as otherwise the expression ‘may’ in section 271(1)(c) of the Act remains redundant. If it is to be understood that in a case of admitted concealment penalty is not automatic. The discretion vested in the officer should be used not to levy the penalty. In our opinion, the case before us is most befitting case to exercise such discretion, particularly there is divergent of opinion among the lower authorities as well as the Tribunal while deleting or sustaining the addition. It shows that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. Further as seen from the facts of the case, to avoid litigation the assessee accepted the additions or made fresh offer in the course of the proceedings before the lower authorities. After the Assessing Officer had the clinching evidence of concealment then the offer may not have been accepted and the same should have been proceeded on the basis of material available on record. The lower authorities relied on proceedings before assessing officer for levying the penalty. The same do not constitute admission for the purpose of levying penalty. The addition made on the basis of more or less on the offer made by the assessee and the Assessing Officer not brought enough incriminating material for concealment and there is no material for establishing the concealment independently in the given facts and circumstances of the penalty is not leviable and the same is deleted.
INCOME TAX APPELLATE TRIBUNAL, HYDERABAD
I.T.A. No. 1852/Hyd/2011 : A.Y. 1999- 00
I.T.A. No. 1853/Hyd/2011 : A.Y. 2000-01
I.T.A. No. 1854/Hyd/2011 : A.Y. 2001-02
I.T.A. No. 1855/Hyd/2011 : A.Y. 2002-03
I.T.A. No. 1856/Hyd/2011 : A.Y. 2003-04
I.T.A. No. 1857/Hyd/2011 : A.Y. 2005-06
Shri P.V. Ramana Reddy
vs.
Income Tax Officer
Date of pronouncement: 06.01.2012
O R D E R
PER CHANDRA POOJARI, AM:
These six appeals by the assessee are directed against the different orders of the CIT(A)-IV, Hyderabad dated 22.9.2011 for the assessment year 1999- 2000 to 2003- 04 and A.Y. 2005- 06. Since all these appeals belong to same assessee and the issue involved in all these appeals being identical, they were heard together and are being disposed of by this common order for the sake of convenience.
2. The grievance of the assessee in these appeals is with regard to levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961.
3. Brief facts of the issue are that there was a search operation conducted in this along with the persons and concerns related to Sujana Group of companies on 7th October, 2004. Consequent to the search, notice u/s. 153A of the Act was issued. In response, returns of income for A.Ys. 1999- 2000 to 2003- 04 and A.Y. 2005- 06 were filed on 13.12.2006 declaring incomes as under:
A.Y. Income returned (Rs.)
1999-00 2,25,000
2000-01 1,95,400
2001-02 1,95,400
2002-03 1,90,400
2003-04 1,85,400
2004-05 9,22,000
2005-06 9,54,040
3.1 During the course of search and seizure operation, documents identified as A/PVR/1 to A/PVR/7 were seized from the residence of the assessee. These seized documents along with a document identified as A/SUIL/100 seized from the premises of M/s. Sujana Universal Industries Ltd., have been considered by the Assessing Officer for computing undisclosed income in the same of the assessee. During the course of search and post search investigations, statements under oath were recorded. The statements were recorded on 7.10.2004 and 1.12.2004 u/s. 132(4) of the Act during the course of search and subsequently on 14.2.2004 u/s. 131 of the Act.
3.2 On the basis of seized documents A/PVR/1 to A/PVR/4, additions have been made for A.Ys. 1999-2000, 2000-01 and 2001-02 for amounts of Rs. 36,00,000, Rs. 1,05,00,000 and Rs. 2,03,00,000, respectively. On the basis of A/PVR/5 to A/PVR/7 substantial amounts added as undisclosed income consisting of original amounts and interest as narrated in the grounds of appeal. A show cause letter was issued on 28.9.2006 by the Assessing Officer wherein various issues were raised and additions proposed on the basis of A/PVR/5 to A/PVR/7 and A/SUIL/100. The details of additions on the basis of A/PVR/1 to A/PVR/4 and A/PVR/5 to A/PVR/7 are as under:
A/PVR/1 to A/PVR/4
