Sanjay balkrushba Mundada, Dhule V. ACIT, Cir.-3(1)., Dhule

ITA 1360/PUN/2011

• Counselvise Citation: 136024514 RSA 2011
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Initiation of penalty proceedings; Reasonable cause
• Section: 143(3); 142(1); 148; 6; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1360 / P N/ 20 11 ASSESSMENT YEAR : 2006 - 07 SANJAY BALKRUSHNA MUNDADA, GHAR NO. 4498/A, AGRA ROAD, DEOPUR, DHULE VS. ACIT, CIRCLE - 3(1), DHULE (APPELLANT) (RESPONDENT) PAN NO. AEMPM9897D APPELLANT BY: SHRI NIKHIL PATHAK RESPONDENT BY: SMT. SHAILJA RAI DATE OF HEARING : 07 - 08 - 2013 DATE OF PRONOUNCEMENT : 27 - 08 - 2013 ORDE R P ER R.S. PADVEKAR , JM : - IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A) - II, NASHIK DATED 23 - 08 - 2011 FOR THE A.Y. 2006 - 07 CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS.3,96,401/ - U/S 271(L)(C)OF THE ACT. 2. THE ASSESSEE SUBMITS THAT THE LEVY OF PENALTY IS NOT VALID SINCE NO PROPER SATISFACTION HAS BEEN RECORDED B Y THE A.O. AT THE TIME OF INITIATION OF THE PENALTY PROCEEDINGS OR AT THE TIME OF LEVYING THE PENALTY AND HENCE, THE PENALTY ORDER PASSED IS NULL AND VOID. 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME AN D THEREFORE, THE LEVY OF PENALTY U/S 271(L)(C) WAS VALID. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD NOT CONCEALED HIS INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY, THE PENALTY LEVIED WAS NOT JUSTIFIED. 5. THE LEARN ED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAD NO INTENTION TO CONCEAL HIS INCOME AS ADVANCE TAX WAS PAID BY HIM AND HENCE, SIMPLY BECAUSE THE RETURN WAS FURNISHED AFTER THE RECEIPT OF 2 ITA NO. 1360/PN/2011, SANJAY BALKRUSHNA MUNDADA, DHULE NOTICE U/S 148 WAS NOT A REASON FOR HOLDING THAT THE ASSESSE E HAD CONCEALED HIS INCOME. 2. THE FACTS IN BRIEF ARE AS UNDER. THE DEPARTMENT GOT THE INFORMATION FROM THE SUB - REGISTRAR OFFICE THAT THE ASSESSEE HAS SOLD PROPERTY IN SURVEY NO. 1350 TO HASTI CO - OPERATIVE BANK LTD., DONDAICHA FOR RS.85,00,000/ - ON 25 - 08 - 2005 BUT THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME. THE ASSESSEE WAS ISSUED NOTICE U/S. 148 OF THE ACT IN RESPONSE TO NOTICE ISSUED TO THE ASSESSEE , RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS.18,26,420/ - . THE ASSESSING OFFICER COMPLET ED THE ASSESSMENT OF THE ASSESSEE U/S. 143(3) R.W.S. 147 ALMOST ACCEPTING THE CAPITAL GAIN S DECLARED BY THE ASSESSEE , ONLY MAKING THE AD - HOC ADDITION OF RS. 25,000/ - . THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT TO THE EXTENT AN AMOUNT OF RS. 16,37,379/ - THAT WAS IN RESPECT OF THE LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE OF RS. 13,29,779/ - AND SHORT TERM CAPITAL GAINS OF RS. 3,07,600/ - . 3. THE ASSESSEE RESISTED THE ACTION OF THE ASSESSING OFFICER BY FILING HIS RE PLY I N RESPONSE TO NOTICE ISSUED BY THE ASSESSING OFFICER WHICH IS REPRODUCED IN THE PENALTY ORDER DATED 29 - 06 - 2009 PASSED U/S. 271(1)(C) OF THE INCOME - TAX ACT. THE ASSESSEE TOOK THE STAND THAT THERE WAS NO CONCEALMENT ON THE PART OF THE ASSESSEE AND ONLY THERE WAS A DELAY IN FILING THE RETURN OF INCOME. HE ALSO TOOK THE STAND THAT THE ASSESSEE WAS ADVISED TO OBTAIN THE CONFIRMATION LETTERS FROM THE TENANTS REGARDING THE AMOUNT PAID TO THEM FOR GETTING VACA NT POSSESSION OF THE PROPERTY SOLD IN QUESTION. THE ASSESSING OFFICER WAS NOT IMPRESSED TO THE EXPLANATION OF THE ASSESSEE AND THE ASSESSING OFFICER , THEREFORE, LEVIED THE PENALTY OF RS.3,96,408/ - U/S. 271(1)(C) OF THE ACT. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A) BUT WITHOUT SUC CESS A S THE PENALTY 3 ITA NO. 1360/PN/2011, SANJAY BALKRUSHNA MUNDADA, DHULE WAS CONFIRMED. THE REASONS GIVEN BY THE LD. CIT(A) FOR CONFIRMING THE PENALTY ARE AS UNDER: 5. I HAVE CAREFULLY GONE THROUGH THE SUBMISSION OF THE APPELLANT, ASSESSMENT ORDER, PENALTY ORDER AND MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE APPELLANT FILED RETURN OF INCOME ON 30/04/2007 ONLY AFTER NOTICE U/S 148 'OF THE ACT WAS ISSUED ON 02/04/2007. A PERUSAL OF APPELLANT'S SUBMISSION REVEALS THAT HIS RELIANCE ON HON'BLE ITAT, PUNE IN THE CASE OF SHELAT FAMILY TRUST (ITA NO. 14 82 & 1483/PN/09) IS MISPLACED. THE FACTS OF THAT CASE WERE DIFFERENT. IN THAT CASE THE APPELLANT HAD FILED RETURN ALONGWITH THE RELEVANT ANNEXURES. AO MAKING USE OF THOSE ANNEXURES HAD REOPENED THE ASSESSMENT AFTER RECORDING REASONS FOR TAXING THE CORRECT SHORT TERM INCOME REVISING THE INCOME UPWARDS. IN THE RE - ASSESSMENT PROCEEDINGS THE AO ACCEPTED THE INCOME RETURNED BY THE ASSESSEE IN RESPONSE TO THE NOTICE U/S. 148 WITHOUT MAKING ANY ADDITIONS. PENALTY LEVIED BY AO U/S 271(1)(C) ON THE INCOME REVISED BY THE ASSESSEE DURING RE - ASSESSMENT PROCEEDINGS WAS DELETED BY THE HON'BLE ITAT. HOWEVER, IN THE PRESENT CASE THE APPELLANT DID NOT FILE THE RETURN AT ALL AND CONCEALED PARTICULARS OF INCOME ON ACCOUNT OF SHORT /LONG TERM CAPITAL GAINS FROM THE DEPARTME NT. IT WAS ONLY AFTER THE NOTICE U/S 148 WAS ISSUED THAT THE APPELLANT FILED RETURN OF INCOME. APPELLANT'S CONTENTION DURING THE ASSESSMENT PROCEEDINGS THAT HE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT FILING THE RETURN U/S 139(1) (FOR WANT OF CONFIRMATION S FROM THE TENANTS) HAS NO MERIT AND WAS RIGHTLY REJECTED BY THE AO. THERE IS NO CONNECTION WHATSOEVER IN ARRANGING CONFIRMATIONS AND FILING INCOME TAX RETURN ON TIME AND SHOWING CAPITAL GAINS THEREIN. THE APPELLANT WAS NOT REQUIRED TO ENCLOSE ANY DOCUME NT OF SUCH NATURE ALONGWITH THE RETURN. APPELLANT'S INTENTION TO EVADE TAX IS ALSO SUPPORTED BY HIS NON - PAYMENT OF ANY ADVANCE TAX ON ACCOUNT OF CAPITAL GAINS ON SALE OF HIS PROPERTY. THE APPELLANT'S CONTENTIONS WITH REGARD TO VALIDITY OF NOTICE U/S 148 OF THE ACT AND JURISDICTION OF THE OFFICER HAVE NO BASIS AS FAR AS PENALTY PROCEEDINGS ARE CONCERNED. APPELLANT IF AGGRIEVED ON THESE ISSUES, SHOULD HAVE FILED APPEAL BEFORE CIT(A) AGAINST THE ASSESSMENT ORDER. THE APPELLANT'S RELIANCE ON CIT VS. RELIANCE PE TRO PRODUCTS (P) LTD. IS ALSO MISPLACED. IN THIS CASE THE HON'BLE SC HAS HELD THAT IN ORDER TO BE COVERED U/S 271(1)(C) OF THE I.T. ACT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. IN THIS CASE THE APPELLANT CONCEALED PART ICULARS OF INCOME ON ACCOUNT OF SHORT /LONG TERM CAPITAL GAINS BY NOT FURNISHING THE RETURN OF INCOME AT ALL. IT WAS ONLY AFTER THE DEPARTMENT ISSUED NOTICE U/S 148 OF THE IT ACT ON RECEIPT OF INFORMATION FROM THE OFFICE OF THE SUB - REGISTRAR IN REGARD TO SALE OF IMMOVABLE PROPERTY BY THE APPELLANT, THAT HE FILED THE RETURN OF INCOME. APPELLANT'S HAD NO CHANCE TO HIDE THE INCOME ON ACCOUNT OF CAPITAL GAINS IN HIS RETURN FILED IN RESPONSE TO NOTICE U/S 148 ONCE THE DEPARTMENT GOT THE RELEVANT DETAILS OF SALE CONSIDERATION (RS.85,00,000/ - ) FROM THE OFFICE OF THE SUB - REGISTRAR. ALL DETAILS REGARDING THIS SALE TRANSACTION INCLUDING THE STAMP DUTY 4 ITA NO. 1360/PN/2011, SANJAY BALKRUSHNA MUNDADA, DHULE PAID BY THE APPELLANT (RS.13,67,000/ - ) WERE MADE AVAILABLE BY THE OFFICE OF THE SUB - REGISTRAR. IN THESE CIRCUMSTAN CES THE APPELLANTS' ARGUMENTS THAT THE RETURNED INCOME IN RESPONSE TO NOTICE U/S 148 OF THE I T ACT WAS ACCEPTED BY THE AO IN TOTO IS MEANINGLESS. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAD MALAFIDE INT ENTION IN NOT FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT. HE IN THE FIRST PLACE TRIED TO EVADE TAX BY CONCEALING THE PARTICULARS OF CAPITAL GAINS FROM THE DEPARTMENT. ONCE CONFRONTED WITH THE INFORMATION OBTAINED FROM THE SUB - REGISTRAR OFFICE, THE A PPELLANT HAD NO OPTION BUT TO SHOW CAPITAL GAINS IN HIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148. IN VIEW OF THE AFORESAID DISCUSSION IT IS ESTABLISHED THAT THE APPELLANT HAD CONCEALED PARTICULARS OF HIS INCOME AND AO WAS THEREFORE, JUSTIFIED IN LEVYING PENALTY U/S 271(L)(C) OF THE ACT. THE HON'BLE SUPREME COURT'S DECISION IN THE CASE OF DILIP N. SHROFF (CITED BY THE APPELLANT) ALSO SUPPORTS LEVY OF PENALTY BY AO IN THIS CASE. THE HON'BLE SC HAS HELD THAT A PENALTY U/S 271(L)(C) MAY BE IMPOSED ONLY IF IT IS PROVED THAT THE ASSESSEE HAS CONSCIOUSLY MADE THE CONCEALMENT OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE GROUND NO.L OF THE APPELLANT IS DISMISSED AND AO'S ACTION IN LEVYING PENALTY U/S 27 1(1)(C) IS CONFIRMED. 6. AS REGARDS SECOND GROUND, THAT 'THE AO HAS NEITHER RECORDED THE SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS NOR WHILE LEVYING THE PENALTY IN TERMS OF SECTION 271(L)(C) OF THE IT ACT AND HENCE PENALTY ORDER IS BAD IN LAW AND THEREFORE THE SAME MAY BE ANNULLED, I FIND NO FORCE/ MERIT IN IT AS A.O HAS RECORDED THE SATISFACTION TAKING INTO CONSIDERATION THE FACTS OF THE CASE. THEREFORE, THIS GROUND OF APPEAL IS HEREBY DISMISSED 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL SUBMITS THAT DUE DATE FOR FILING OF THE RETURN OF INCOME FOR THE A.Y. 2006 - 07 WAS 31 - 07 - 2006. HE SUBMITS THAT THE ASSESSEE HAS BEEN GIVEN THE LIBERTY TO FILE THE RETURN OF INCOME BELATEDLY U/S. 139(4) OF THE INCOME - TAX ACT . S O FA R AS A.Y. 2006 - 07 IS CONCERNED T HE ASSESSEE COULD HAVE FILED THE RETURN VALIDLY TILL 31 - 03 - 2008. HE SUBMITS THAT MERELY BECAUSE NOTICE U/S. 148 IS ISSUED THAT ITS ELF CANNOT BE THE GROUND FOR DRAWING THE PRESUMPTION AGAINST THE ASSESSEE , AS THE ENTIRE SHOR T TERM AS WELL AS LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HE SUBMITS THAT EVEN THE EXPLANATION - 3 BELOW SEC. 271(1)(C) IS NOT ALSO ATTRAC TED IN THE CASE OF THE ASSESSEE AS THE SAID EXPLANATION OPERATE IN THE DIFFERENT SITUATION. THE LEARNED COUNSEL ALSO 5 ITA NO. 1360/PN/2011, SANJAY BALKRUSHNA MUNDADA, DHULE RELIED ON THE DECISION IN THE CASE OF CHHAGAN LAL S. U TERI Y A VS. ITO & ANOTHER 337 ITR 350 (GUJ.) . HE SUBMITS THAT FOR LEVY OF THE PENALTY DEPENDS ON THE DIFFERENCE BETWEEN THE INCOME DECLARED BY THE ASSE SSEE IN RETURN AND THE ADDITIONS MADE AND NOT ON THE ENTIRE INCOME DECLARED AS IN THE CASE OF THE PRESENT ASSESSEE. HE REFERRED TO THE ASSESSMENT ORDER AND SUBMITTED THAT AS THE ASSESSING OFFICER HAS ACCEPTED THE ENTIRE INCOME DECLARED BY THE ASSESSEE BY MERELY MAKING THE AD - HOC ADDITION OF RS. 25,000/ - AND HENCE , NO PENALTY CAN BE LEVIED. WE HAVE ALSO HEARD THE LD. DR. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND ANXIOUSLY CONSIDERED THE ARGUMENTS OF THE LEARNED COUNSEL. IN THIS CASE, IT IS NOT IN DISPUTE THAT THERE WAS SALE OF THE PROPERTY BY THE ASSESSEE IN THE F.Y. 2005 - 06 RELEVANT TO THE A.Y. 2006 - 07. THE ASSESSEE DID NOT FILE THE RETURN OF INCOME AND HENCE ON THE BASIS OF THE INFORMATION FROM THE SUB - REGISTRAR THE ASSESSING OFFICER ISS UED NOTICE U/S. 148 ON 02 - 04 - 2007. THE ASSESSEE FILED THE RETURN OF INCOME ON 31 - 04 - 2007 DECLARING THE SHORT TERM AS WELL AS LONG TERM CAPITAL GAINS AND ALSO PAID THE TAX ON IT. ON THE PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT THE ENTIRE CAPITAL GAINS DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER WITHOUT DISTURBING. NOW THE CORE QUESTION BEFORE US WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY ON THE ASSESSEE ON THE CAPITAL GAINS DECLARED I.E. SHORT TERM AS WE LL AS LONG TERM IN RESPECT OF THE SALE OF THE PROPERTY . 6. EXPLANATION - 3 BELOW SEC. 271(1)(C) READS AS UNDER: WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (1) OF SECTION 153 A RETURN OF HIS I NCOME WHICH HE REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB - SECTION (1) OF SECTION 6 ITA NO. 1360/PN/2011, SANJAY BALKRUSHNA MUNDADA, DHULE 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PERSON SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB - SECTION, BE DEEMED T O HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148. 7 . THE SAID EXPLANATION HAS BEEN EXPLAINED BY THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF CHHAGAN LAL S. UTERI Y A (SUPRA) AND IT IS HELD AS UNDER: 13. THOUGH IT HAS BEEN CONTENDED ON BEHALF OF THE RESPONDENTS THAT IN THE PRESENT CASE EXPLANATION 3 HAS NOT BEE N APPLIED, AS NOTICED EARLIER MERE NON - FURNISHING OF A RETURN PER SE IS NOT TANTAMOUNT TO CONCEALMENT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THE ONLY EVENTUALITY UNDER WHICH NON - FURNISHING OF RETURN OF INCOME AMOUNTS TO CONCEALMENT IS AS PROVI DED UNDER EXPLANATION 3 TO SUB - SECTION (1) OF SECTION 271 OF THE ACT. HENCE, UNLESS EXPLANATION 3 OF SECTION 271(1) OF THE ACT IS ATTRACTED, THERE CAN BE NO CONCEALMENT AS ENVISAGED UNDER SECTION 271(1)(C) OF THE ACT. IN THE CIRCUMSTANCES, IT IS REQUIRED T O BE EXAMINED AS TO WHETHER THE PROVISIONS OF EXPLANATION 3 TO SECTION 271(1) COULD HAVE BEEN INVOKED IN THE PRESENT CASE. FOR THE PURPOSE OF INVOKING THE PROVISIONS OF EXPLANATION 3 TO SECTION 271(1) OF THE ACT, THE CONDITIONS ENUMERATED HEREINBEFORE ARE REQUIRED TO BE SATISFIED. IF ANY OF THE SAID CONDITIONS ARE NOT SATISFIED, THE PROVISIONS OF EXPLANATION 3 TO SECTION 271(1) OF THE ACT WOULD NOT BE APPLICABLE. 14. IN THE PRESENT CASE, ADMITTEDLY, THE PETITIONER HAD NOT BEEN PREVIOUSLY ASSESSED UNDER THE PROVISIONS OF THE ACT, HENCE, THE FIRST REQUIREMENT OF EXPLANATION 3 IS DULY SATISFIED. THE PETITIONER HAD NOT FILED HIS RETURN OF INCOME WITHIN THE PERIOD SPECIFIED UNDER SUB - SECTION (1) OF SECTION 153 OF THE ACT AND AS SUCH, THE SECOND CONDITION IS ALSO SATISFIED. HOWEVER, AS NOTED EARLIER, IN THE PRESENT CASE A NOTICE HAD BEEN ISSUED TO THE PETITIONER UNDER SECTION 148 OF THE ACT ON MARCH 10, 1997, WHICH WAS WITHIN THE PERIOD SPECIFIED UNDER SECTION 153(1) OF THE ACT. IN THE CIRCUMSTANCES, THE THIRD CON DITION, NAMELY, THAT NO NOTICE UNDER SECTION 142(1) OR SECTION 148 OF THE ACT SHOULD HAVE BEEN ISSUED WITHIN THE PERIOD SPECIFIED UNDER SUB SECTION (1) OF SECTION 153 OF THE ACT IS CLEARLY NOT SATISFIED. AS DISCUSSED EARLIER, THE CONDITIONS FOR THE APPLICA BILITY OF EXPLANATION 3 TO SECTION 271(1) ARE CUMULATIVE AND EACH OF THE CONDITIONS HAS TO BE ESTABLISHED FOR THE PURPOSE OF INVOKING THE SAID PROVISION. IN THE PRESENT CASE, ALL THE CONDITIONS ARE NOT CUMULATIVELY SATISFIED. THE FAILURE ON THE PART OF THE PETITIONER TO FURNISH RETURN OF INCOME WITHIN 7 ITA NO. 1360/PN/2011, SANJAY BALKRUSHNA MUNDADA, DHULE THE SPECIFIED PERIOD, THEREFORE, CANNOT BE DEEMED TO BE CONCEALMENT WITHIN THE MEANING OF EXPLANATION 3 TO SECTION 271(1) OF THE ACT. 15. IN THE LIGHT OF THE AFORESAID, IT IS APPARENT THAT THE CASE OF THE PET ITIONER DOES NOT FALL WITHIN THE AMBIT OF EXPLANATION 3 TO SECTION 271(1) OF THE ACT AND AS SUCH, NO PENALTY COULD BE LEVIED ON THE PETITIONER UNDER SECTION271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF HIS INCOME ON THE GROUND THAT THE PETITIONER HAD FAILED TO FURNISH RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE IMPUGNED ORDER, THEREFORE, BEING CONTRARY TO THE PROVISIONS OF THE ACT CANNOT BE SUSTAINED. 8 . IN THE CASE OF THE ASSESSEE , THE REQUIREMENT OF EXPLANATION - 3 IS NOT SATISFIED AS T HE ASSESSEE HAS FILED RETURN OF INCOME WITHIN THE PERIOD SPECIFIED U/S. 153(1) OF THE ACT AND THE SAID PERIOD WAS UP TO 31 - 12 - 2007. THE ASSESSING OFFICER ISSUED THE NOTICE TO THE ASSESSEE U/S. 148 ON 07 - 04 - 2007 WHICH WAS ADMITTEDLY BEFORE THE TIME LIMIT P RESCRIBED U/S. 153(1) OF THE ACT. EXPLANATION - 3 IS IN THE NATURE OF LEGAL FICTION AND HENCE , THE CONDITIONS PRESCRIBED IN THE EXPLANATION - 3 ARE CUMULATIVE AND MUST BE FULFILLED BEFORE APPLYING THE SAID EXPLANATION. IF THE ASSESSEE WOULD HAVE BEEN ISSUED THE NOTICE U/S. 148 OF THE ACT , IN CASE THE RETURN WAS NOT FILED AFTER THE TIME LIMIT EXPIRED AS PROVIDED IN SEC. 153(1) , THEN ONLY IT CAN BE A CASE THAT THE ENTIRE INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148 CAN BE S UBJECTED TO THE PENAL CONSEQUENCES . A S PER THE LANGUAGE USE IN THE SEC. 271(1)(C) OF THE ACT THAT THE CONCEALMENT TAKES PLACE IN THE RETURN , MORE PARTICULARLY , ON THE DIFFERENCE BETWEEN INCOME RETURN AND INCOME ASSESSED IF THE EXPLANATION - 3 IS NOT APPLICA BLE AS IN THE PRESENT CASE. THE SHORT TERM AS WELL AS LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE IN THE RETURN ON WHICH PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER HAS NOT BEEN DISTURB ED. M ORE OVER EXPLANATION - 3 IS ALSO NOT APPLICABLE. IN SUC H A SITUATION THERE IS NOT CONCEPT OF THE EVASION OF THE TAX WHICH ONE OF THE MANDATE APPEARS FROM THE LANGUAGE USED IN SEC. 271(1)(C) OF THE INCOME - TAX ACT . W E, THEREFORE, FIND NO JUSTIFICATION TO SUPPORT THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THE SHORT TERM AS 8 ITA NO. 1360/PN/2011, SANJAY BALKRUSHNA MUNDADA, DHULE WELL AS LONG TERM CAPITAL GAINS. SO FAR AS THE AD - HOC ADDITION IS CONCERNED IT HAS NO BASE WE FIND THAT IT IS ONLY ON THE SUMMARIZED. WE, ACCORDINGLY ALLOW THE GROUNDS TAKEN BY THE ASSESSEE AND DELETE THE ENTIRE PENALTY. 9 . IN THE RESU LT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 - 08 - 20 1 3 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 27 TH AUGUST, 20 1 3 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - II, NASHIK 4 THE CIT - II, NASHIK 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE