Smt. Neelu Garg, Ludhiana V. ITO, W-7(5), Ludhiana

ITA 1472/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6971 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 28-11-2018
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC , CHANDIGARH . . , BEFORE SHRI N.K. SAINI, VICE PRESIDENT ./ ITA NO.1472/CHD/2018 / ASSESSMENT YEAR : 2014-15 SMT.NEELU GARG, 61-A, SANT NAGAR, CIVIL LINES, LUDHIANA. THE INCOME TAX OFFICER, WARD-7(5), LUDHIANA. ./PAN NO: ACZPG7151K /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI ASHWANI KUMAR, CA ! / REVENUE BY : SMT.ZEENIA HANDA, SR.DR ' # $ /DATE OF HEARING : 02.04.2019 %&'( $ /DATE OF PRONOUNCEMENT: 26.04.2019 /ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 23.10.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-3, LUDHIANA (IN SHORT CIT(A)). 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO SUSTENANCE OF PENALTY OF RS.12,50,630/- LEVIED B Y THE A.O. U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS ACT). 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE ORIGINALLY FILED RETURN OF INCOME ON 4.11.2014 THRO UGH E- FILING MODULE, DECLARING NET TAXABLE INCOME OF RS.12,81,720/-. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS WITH THE REASON SUSPICIOUS LONG TERM CA PITAL ITA NO.1472/CHD/2018 A.Y.2014-15 2 GAIN. THE A.O. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS ASKED THE ASSESSEE TO CONFIRM AS TO WHETHER SHE HAS UNDERTAKEN ANY SALE OR PURCHASE DURING THE YEAR UND ER CONSIDERATION AND IF YES, TO FURNISH THE FOLLOWING DETAILS: ( A) DETAILS OF INCOME/LOSS DERIVED FROM THESE TRANSACTIONS AND ITS TREATMENT IN THE RETURN OF INCOME. IN CASE OF INCOME, PLEASE INTIMATE DETAIL OF ITS UTILIZATION INDICATING THE NATURE OF INVESTMENT, DATE OR INVESTMENT AND MODE OF INVESTMENT OF EACH PARTY WITH NAME AND COMPLETE ADDRESS WITH PAN. (B) COMPLETE DETAILS OF PURCHASE OF SHARES INDICATING A. NAME & COMPLETE ADDRESS OF COMPANY B. DATE OF PURCHASE C. MODE OF PAYMENT D. MODE OF TRANSACTION WHETHER OFF LINE OR ONLINE TRANSACTION INDICATING THE NAME OF STOCK EXCHANGE. E. COMPLETE NAME AND ADDRESS F THE BROKER F. BASIS OF INVESTMENT IN EACH SHARES (C). COMPLETE DETAILS OF SALES OF SHARES INDICATING:- A. NAME & COMPLETE ADDRESS OF THE COMPANY INDICATING THE DATE OF SALE AND PURCHASE OF SHARES. B. MODE OF PAYMENT C. COMPLETE NAME & ADDRESS OF THE BROKER. (D) WHETHER YOU HAVE UNDERTAKEN ANY TRANSACTION SUCH TRANSACTIONS IN EARLIER AND SUBSEQUENT YEARS. 4. IN RESPONSE, THE ASSESSEE SUBMITTED AS UNDER: DURING THE YEAR, SALES AND PURCHASES OF SHARES HAVE BEEN DONE BY ME AND THE DETAILS OF INCOME DERIVED FROM THESE TRANSACTIONS IS AS PER ANNEXURE ATTACHED. FURTHER, I WISH TO INFORM YOUR GOODSELF THAT I HAVE SURRENDERED AN AMOUNT OF RS.37,00,000/- (EQUIVALENT TO THE LONG TERM CAPITAL GAIN OF RS.36,23,134/-) ON 12.10.2015 AND HAVE DEPOSITED AN AMOUNT OF RS.12,55,871/- AS INCOME TAX DUE AND INTEREST THEREON. PHOTO COPY OF CHALLANS DEPOSITED AND REVISED COMPUTATION CHART IS ENCLOSED. ITA NO.1472/CHD/2018 A.Y.2014-15 3 5. THE A.O. MADE THE ADDITION OF RS.37 LACS, WHICH WAS ALREADY SURRENDERED BY THE ASSESSEE, ON WHICH TAX O F RS.12,55,871/- WAS ALSO PAID. THE A.O. ALSO INITIAT ED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, ON TH E ISSUE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. DURING THE COURSE OF PENALTY PROCEEDINGS, THE A. O. POINTED OUT THAT AT THE TIME OF ASSESSMENT PROCEEDI NGS, AN INVESTIGATION REPORT DATED 24.2.2016 WAS RECEIVED, WHICH REVEALED THAT BEFORE THE ACTUAL TRANSACTION STARTS TAKING PLACE, THERE WERE BROKERS IN DIFFERENT TOWNS WHO CO NTACTED THE PROSPECTIVE CLIENTS TO TAKE PAPER BOOKING FOR E NTRIES, THE COMMISSION TO BE PAID TO THE OPERATORS, WAS DEC IDED AT THAT STAGE, HOWEVER, NO MONEY WAS PAID. HE ALSO OBS ERVED THAT ONCE THE BOOKING WAS COMPLETED, THE OPERATORS HAD A REASONABLY GOOD IDEA OF HOW MUCH LONG TERM CAPITAL GAIN WAS TO BE PROVIDED ALONGWITH WITH THE BREAK-UP OF INDIVIDUAL BENEFICIARIES AND THIS DATA WAS ESSENTIA L TO DECIDE WHICH PENNY STOCK OR COMPANIES TO USE FOR TH E JOB AND WHICH BENEFICIARIES TO BUY HOW MANY SHARES. THE A.O. WAS OF THE VIEW THAT A WELL PLANNED TRANSACTIONS HA D BEEN UNDERTAKEN IN ORDER TO LAUNDERING OF MONEY WITHOUT PAYING TAXES AND THAT THE ASSESSEE HAD NO OPTION BUT TO SU RRENDER THE AMOUNT OF BOGUS LONG TERM CAPITAL GAIN, CLAIMED AS EXEMPT INCOME U/S 10(38) OF THE ACT IN THE RETURN O F INCOME. HE ALSO OBSERVED THAT THE ASSESSEE WAS WELL AWARE OF THE FACTS THAT THE TRANSACTIONS OF SHARES HAD BE EN MANIPULATED FOR BOGUS LONG TERM CAPITAL GAIN AND TH AT AT ITA NO.1472/CHD/2018 A.Y.2014-15 4 THE TIME OF ASSESSMENT PROCEEDINGS THE MATTER WAS DISCUSSED WITH THE ASSESSEE WITH REGARD TO THE MODU S OPERANDI ADOPTED FOR GAINING BOGUS LONG TERM CAPITA L GAIN. HE ADMITTED THAT THE ASSESSEE HAD PAID TAXES BEFORE IMPOSITION OF THE PENALTY BUT WAS OF THE VIEW THAT THE SAME WAS DUE TO THE DEPARTMENTAL (INVESTIGATION WING) HA RD WORK, WHICH UNEARTHED THE SAID MODUS OPERANDI TO EA RN BOGUS LONG TERM CAPITAL GAIN. THE A.O. HELD THAT TH E ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AMOUNTING TO RS.37 LACS AND ACCORDINGLY, HE LEVIED PENALTY OF RS.12,57,630/- U/S 271(1)(C) OF THE ACT. 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) AND FURNISHED THE WRITTEN SUBMISSIONS, WH ICH HAS BEEN INCORPORATED IN PARA 4.1 OF THE IMPUGNED ORDER AND IS REPRODUCED VERBATIM, AS UNDER: THIS IS WITH REFERENCE TO AN APPEAL FILED BY SMT. N EELU GARG(HEREIN AFTER REFERRED TO AS 'THE APPELLANT'') AGAINST THE ORDER U/S 271(L)(C)OF THE INCOME-TAX ACT, 1961 FOR TH E ABOVE CAPTIONED ASSESSMENT YEAR. BRIEF, FACTS FOR THE PREVIOUS YEAR RELEVANT IN ASSESSMENT YEAR 2014- 15, THE YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 04.11.2014 DECLARING A NET TAXABLE INCOME OF RS.12,81,720/-, AND, CLAIMED AN EXEMPT INCOME OF RS. 36,75,134/- UNDER THE HEAD 'INCOME THE HEAD CAPITAL GAINS '. AN INVESTIGATION THROUGH A LETTER WAS CONDUCTED BY T HE PR. DIRECTOR OF INCOME TAX (INVESTIGATION), AAYAKAR BHAW AN (ANNEX), P-13, CHOWRINGHEE SQUARE, KOLKATA IN RESPE CT OF ENTRY REGARDING LONG-TERM CAPITAL GAINS. INVESTIGATION REP ORT HAS BEEN RECEIVED THROUGH THE OFFICE OF THE PRINCIPAL CO MMISSIONER OF INCOME-TAX-I, LUDHIANA. THE APPELLANT, VIDE A LETTER DATED 12.10.2015[A COPY OF LETTER ENCLOSED], SUBMITTED A FRESH COMPUTATION OF INCOME ALO NG WITH A COPY OF TAX CHALLAN FOR THE A.Y. 2014-15, WHEREIN, THE APPELLANT HAD MADE A REVISED CALCULATION IN RESPECT O F ITA NO.1472/CHD/2018 A.Y.2014-15 5 TREATMENT OF LONG-TERM CAPITAL GAINS, AND, SHOWN RS. 37,00, 000/- AS INCOME FROM OTHER SOURCES. THE LD. ASSESSING OFFICER VIDE ORDER DATED 28.10.20 16 PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961 CONSIDERED A N AMOUNT OF RS. 37,00,000/- IS UNDISCLOSED INCOME, AND, ACCORD INGLY INITIATED PENALTY PROCEEDINGS FOR FURNISHING INACCURA TE PARTICULARS OF INCOME U/S 271(L)(C) OF THE INCOME-TAX ACT, 1961. A PENALTY NOTICE -WAS ISSUED TO SHOW CAUSE AS TO WHY AN ORDER IMPOSING A PENALTY SHOULD NOT BE MADE U/S 271(L)(C) OF THE INCOME- TAX ACT, 1961. PENALTY ORDER WAS PASSED U/S 271(L)(C) OF THE INCOM E-TAX ACT, 1961 DATED 28.04.2017 LEVYING A PENALTY OF RS. 12,57,63 0/-. AGGRIEVED BY THE ORDER DATED 28. 04.2017, THE APPELLANT F ILED AN APPEAL BEFORE YOUR HONOR. THE APPELLANT SEEKS TO PLACE ON RECORD, ITS PRELIMINA RY LEGAL ASSERTIONS, CHALLENGING THE LEGITIMACY OF THE PENALTY IMPOSED IN THE ASSESSMENT ORDER, AS UNDER: IN THIS CONNECTION, IT IS RESPECTFULLY SUBMITTED THAT, NO PENALTY WOULD BE LEVIABLE, AS THE APPELLANT HAD NOT FURNISHED INACCURATE PARTICULARS OF INCOME. THE APPELLANT SURRENDERED AN AMOUNT OF RS.37,00,000 /- FROM LONG-TERM CAPITAL GAINS[SHOWN AS INCOME FROM OT HER SOURCES IN A REVISED CALCULATION FOR COMPUTATION OF INCOME BEFORE THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGAT ION)- II, LUDHIANA. MOREOVER, IN THE INSTANT CASE, THERE IS NO QUESTION OF LEVY OF PENALTY, SINCE, THE APPELLANT, VOLUNTARILY SURREN DERED AN AMOUNT OF RS 37,00,000/-EARNED AS LONG-TERM CAPITAL GA INS SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES' BE FORE ANY FURTHER INVESTIGATION BY THE INVESTIGATION WING. REFERENCED DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT OF PUNJAB & HARYANAIN THE CASE OF RAJIV GARG VS. COMMI SSIONER OF INCOME-TAX, KARNAL [2009] 313 ITR 256 (PUNJAB & HARYANA), WHICH HAS HELD AS UNDER: 'THE REVISED RETURN FILED BY THE ASSESSEE WAS ACCOMP ANIED BY A NOTE IN WHICH HE HAD SUBMITTED THAT HE HAD SURREND ERED THE ENTIRE AMOUNT OF SALE PROCEEDS OF SHARES TO BUY PEACE OF MIND AND TO AVOID HAZARDS OF LITIGATION AND ALSO TO SAVE HIMSELF FROM ANY PENAL ACTION. DURING THE COURSE OF ASSESSMENT, THE AFORESAID EXPLANATION GIVEN BY THE ASSESSEE WAS NEITHER REJECTED NOR IT WAS HELD TO BE MALA FIDE. THE TRIBUNAL HAD RECORDED A PURE FINDING OF FACT TO THE EFFECT THAT THE ASSESSING OFFICER HAD NOT PLACED ON RECORD ANY MATERIAL OR EVIDENCE TO DISCHARGE HIS BURDEN OF PRO VING CONCEALMENT. IN THE ASSESSMENT ORDER, NO SUCH FINDING HAD BEEN RECORDED. THE ASSESSING OFFICER HAD SIMPLY RES TED HIS CONCLUSION ON THE ACT OF THE ASSESSEE OF HAVING OFF ERED ADDITIONAL INCOME IN THE REVISED RETURN FILED IN RE SPONSE TO THE NOTICE ISSUED UNDER SECTION 148. THE TRIBUNAL HAD FU RTHER ITA NO.1472/CHD/2018 A.Y.2014-15 6 HELD THAT THE ADDITIONAL INCOME SO OFFERED BY THE AS SESSEE WAS DONE IN GOOD FAITH AND TO BUY PEACE OF MIND. THE APEX COURT, IN CASE OF CIT V. SURESH CHANDRA MITTAL[2001] 251 ITR 9/119 TAXMAN 433, HAS UPHELD THE DECISION OF THE MADHYA PRADESH HIGH COURT RENDERED IN THE CASE OF C IT V. SURESH CHANDRA MITTAL[2000] 241 ITR 124, WHEREIN SIMILA R CIRCUMSTANCES IT WAS HELD THAT THE INITIAL BURDEN LIES O N THE REVENUE TO ESTABLISH THAT THE ASSESSEE HAD CONCEALED THE INCOME AND HAD FURNISHED IF ACCURATE PARTICULARS OF SUCH INCOME. THE BURDEN SHIFTS TO THE ASSESSEE ONLY IF H E FAILS TO OFFER ANY EXPLANATION FOR THE UNDISCLOSED INCOME OR O FFERS AN EXPLANATION -WHICH IS FOUND TO BE FALSE BY THE ASSESS ING OFFICER. IN THE INSTANT CASE, IN PURSUANCE TO THE NO TICE UNDER SECTION 148, THE REVISED RETURN OF INCOME WAS FILED I N WHICH THE ENTIRE INCOME WAS SURRENDERED WITH AN EXPLANATIO N. THE REVISED ASSESSMENT WAS REGULARIZED BY THE REVENUE. T HE ASSESSING AUTHORITY HAD FAILED TO TAKE ANY OBJECTION THAT THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN HIS RE VISED RETURN AND HIS EXPLANATION WERE NOT BONA FIDE. THEREF ORE, THE IMPUGNED ORDER OF THE TRIBUNAL WAS JUSTIFIED AND DESE RVED TO BE UPHELD.' THE DECISION OF THE SAID COURT HAS, ALSO BEEN FOLLOW ED BY THE HON'BLE INCOME-TAX APPELLATE TRIBUNAL, CHANDIGARH BEN CH 'A 'IN THE CASE OF AJAY SANGARI & CO. REPORTED AT [2011 ] 140 TTJ388 (CHANDIGARH). CONSIDERING THE ABOVE JUDGEMENT IN THE LIGHT OF THE CASE OF THE APPELLANT, IN THE INSTANT CASE ALSO, THE APPELLANT VOLUNT ARILY SURRENDERED AN AMOUNT OF RS.37,00,000/- EARNED AS LON G- TERM CAPITAL GAINS IN ITS REVISED COMPUTATION OF INC OME BEFORE THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION), L UDHIANA, AND, MOREOVER, THE DISCLOSED AMOUNT WAS FOUND TO BE ACCEPTED AS SUCH BY THE LD. ASSESSING OFFICER IN ITS ORDER D ATED 04.08.2016 PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961. FURTHERMORE, DURING THE COURSE OF ASSESSMENT PROCEE DINGS FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION, T HE EXPLANATION FURNISHED BY THE APPELLANT REGARDING THE CALCULATION OF LONG-TERM CAPITAL GAINS WAS, NEITHER, TU RNED DOWN, NOR, WAS HELD TO BE MALAFIDE. THE LD. ASSESSING OFFICER HAD FAILED TO POINT OUT ANY DISCREPANCY IN THE EXPLAN ATION PROVIDED BY THE APPELLANT, AND, HAD PROCEEDED TO ASS ESS THE . INCOME IN THE HANDS OF THE APPELLANT ON THE BASIS OF SURRENDER MADE BY THE APPELLANT. THEREFORE, THERE WAS NO MERIT IN LEVYING PENALTY U/S 271(L)(C) OF THE INCOME-TAX ACT, 1961. MOREOVER, IT IS SUBMITTED THAT THE TRANSACTION OF PU RCHASE AND SALE OF EQUITY SHARES WAS A GENUINE ONE. THE SALES OF THE SECURITIES TOOK PLACE THROUGH A REGISTERED BROKER O N THE RECOGNISED STOCK EXCHANGE IN ACCORDANCE WITH THE PR ESCRIBED REGULATORY PROCEDURES, RULES AND, APPLICABLE LAWS. TH E TRANSACTIONS WERE ALSO, IN ALL CASES, CONCLUDED THROU GH REGULAR BANKING CHANNELS. THAT THE TRANSACTIONS WERE ENTERE D INTO BY THE APPELLANT AS AN INVESTOR WITH A VIEW TO EARN PRO FIT FROM THE APPRECIATION, WHETHER LONG TERM/SHORT TERM, IN THE P RICE OF THE UNDERLYING SHARES. THERE WAS NO EVIDENCE TO EVEN REMO TELY ITA NO.1472/CHD/2018 A.Y.2014-15 7 SUGGEST THAT THE APPELLANT HAD TAKEN AN ACCOMMODATION ENTRY OF BOGUS LONG TERM CAPITAL GAINS. THIS WAS DONE WITH A VIEW TO AVOID PROTECTED LITIGATION AND PURCHASE PEACE OF MIN D. THERE WAS NO CONTUMACIOUS CONDUCT ON THE PART OF THE APPE LLANT. IT CAN NO WAY, BE SAID THAT AN ADDITIONAL INCOME WAS DE CLARED AFTER DETECTION BY THE REVENUE. ATTENTION IS ALSO INVITED TO THE FOLLOWING JUDGEMENTS O F THE RELEVANT COURTS OF LAW, WHEREIN, IT HAS BEEN UPHELD THAT , NO PENALTY, WOULD BE LEVIED U/S 271(L)(C) OF THE INCOME-TAX ACT, 1961 ON SURRENDER OF INCOME, AS UNDER: I. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. SAS PHARMACEUTICALS REPORTED AT [2011] 244 CTR 51 (DELHI) HAS LAID DOWN THAT: 'NO DOUBT, THE ASSESSEE HAD SURRENDERED CERTAIN INCOME D URING THE COURSE OF SURVEY AND DISCREPANCIES NOTICED BY T HE SURVEY TEAM WOULD SUGGEST THAT THE ASSESSEE WAS NOT MAINTAINING PROPER ACCOUNTS IN RESPECT TO CASH, STOCK AND RENOVATION EXPENSES, ETC. THEREFORE, THERE COULD BE A POSSIBILITY THAT BUT FOR THAT SURVEY, THE DISCREPANC IES BROUGHT TO THE NOTICE OF THE ASSESSEE AND PHYSICAL VERIFICATION OF THE STOCK AND OTHER ACCOUNTS WOULD HAVE GONE UNNOTICED AND THE ASSESSEE MIGHT HAVE SUPPRESSED IN THE INCOME-TAX RE TURN AS WELL. HOWEVER, FACT REMAINED THAT IT HAD DISCLOSED SAME IN THE RETURN FILED BY IT. IN THIS CONTEXT, THE QUESTION WOULD BE AS TO WHETHER THE ASSESSEE COULD BE IMPOSED PENALTY UNDER SECTION 27 1(1) (C) - WHEN IT HAD SHOWN THAT INCOME IN INCOME-TAX RETURN FILED BY IT AND CONTENDED THAT IT HAD VOLUNTARILY DECLARED THE SA ME IN THE 'REGULAR RETURN FILED FOR THE RELEVANT YEAR'. SECTION 271(L)(C) IS A PENAL PROVISION AND SUCH A PROV ISION HAS TO BE STRICTLY CONSTRUED. UNLESS THE CASE FALLS WITH IN THE FOUR- CORNERS OF THE SAID PROVISION, PENALTY CANNOT BE IMP OSED. SUB-SECTION (1) OF SECTION 271 STIPULATES CERTAIN CONTING ENCIES ON THE HAPPENING WHEREOF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) MAY DIRECT PAYMENT OF PENALTY BY THE ASSESSEE. CLAUSE (C) OF SECTION 271(1) AUTHORIZES IMPOS ITION OF PENALTY WHEN THE ASSESSING OFFICER IS SATISFIED TH AT THE ASSESSEE HAS EITHER CONCEALED THE PARTICULARS OF HIS INCOME; OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT WAS NOT THE CASE OF FURNISHING INACCURATE PARTICU LARS OF INCOME, AS IN THE INCOME-TAX RETURN, PARTICULARS OF INCOME HAD BEEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCO ME WAS DULY REFLECTED IN THE INCOME-TAX RETURN. THE QUESTIO N WAS WHETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT. IT WOULD DEPEND UPON THE ISSUE AS TO WHETHER CONCEALMENT HAD REFERENCE TO THE INCOME-TAX RETURN F ILED BY THE ASSESSEE, VIZ., WHETHER CONCEALMENT WAS TO BE FOUND IN THE INCOME-TAX RETURN. ITA NO.1472/CHD/2018 A.Y.2014-15 8 THE REVENUE RELYING UPON THE EXPRESSION 'IN THE COU RSE OF ANY PROCEEDINGS UNDER THIS ACT' OCCURRING IN SUB-SECTIO N (1) OF SECTION 271 CONTENDED THAT EVEN DURING SURVEY -WHEN IT WAS FOUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULA R OF HIS INCOME, IT WOULD AMOUNT CONCEALMENT IN THE COURSE OF ' ANY PROCEEDINGS'. SUCH CONTENTION COULD NOT BE ACCEPTED . THE WORDS 'IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT' A RE PREFACED BY THE SATISFACTION OF THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS). WHEN THE SURVEY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF SATISFACTION OF ASSESSING OFFICER OR TH E COMMISSIONER (APPEALS) OR THE COMMISSIONER DOES NOT ARISE. IT WAS THE ASSESSING OFFICER WHO INITIATED THE PENALTY PRO CEEDINGS AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECO RDED ANY SATISFACTION DURING THE COURSE OF SURVEY. DECISION T O INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING ASSESSMEN T ORDER. IT WAS, THUS, OBVIOUS THAT THE EXPRESSION 'IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT' COULD NOT HAVE THE REFERENCE TO SURVEY PROCEEDINGS IN THE INSTANT CASE. IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME BY TH E ASSESSEE HAS TO BE IN THE INCOME-TAX RETURN FILED BY IT. THERE IS SUFFICIENT INDICATION OF THIS IN THE JUDGMENT IN THE CASE OF CIT V. MOHAN DAS HASSA NAND[1983] 141 ITR 203/ 13 TAXMAN 328 (DELH I) AND IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158/ 189 TAXMAN 322. 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 I NCOME TAX RETURN FILED BY THE ASSESSES. THIS VIEW GETS SUPP ORTED BY TO EXPLANATION 4 AS WELL AS EXPLANATION 5 AND 5A TO SECTION 271. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLESS THE COND ITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAMBI GUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SU RVEY MIGHT BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEVER., THERE CANNOT BE ANY PENALTY ONLY O N SURMISES, CONJECTURES AND POSSIBILITIES. SECTION 271(L )(C) HAS TO BE CONSTRUED STRICTLY. UNLESS, IT IS FOUND THAT THERE IS EQUALLY A CONCEALMENT OR NON-DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. IN THE INSTANT CASE, THERE WAS NO SUCH CONCEALMENT OR NON-DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE INCOME-TAX RETURN AND O FFERED THE SURRENDERED AMOUNT FOR THE PURPOSES OF TAX. THEREFORE, THE TRIBUNAL WAS CORRECT IN LAW IN DELET ING THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTI ON 271(L)(C).' II. THE HON'BLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE A/COMMISSIONER OF INCOME-TAX VS. CAREERS EDUCATI ON AND INFOTECH (P.) LTD. REPORTED AT [2011] 336 ITR 2 57 (PUNJAB & HARYANA) HAS HELD AS UNDER: IN EVERY CASE, WHERE SURRENDER IS MADE, INFERENCE O F CONCEALMENT OF INCOME CANNOT BE DRAWN UNDER SECTION 58 OF EVIDENCE ACT. ITA NO.1472/CHD/2018 A.Y.2014-15 9 III. THE HON'BLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF COMMISSIONER OF INCOME TAX-II, LUDHIANA VS. RAJNISH NATH AGGARWAL REPORTED AT [2008] 219 CTR 590 (PUNJAB & HARYANA) HAS LAID AS UNDER: 'FROM THE JUDICIAL PRONOUNCEMENTS, IT IS CRYSTAL CL EAR , HAT THE DEPARTMENT HAS TO PROVE MENS REA BEFORE LEVYING PENA LTY UNDER SECTION 211(1) (C) AND IT CANNOT BE MADE OUT T HAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURA TE PARTICULARS MERELY BECAUSE HE HAS SURRENDERED CERTAI N AMOUNTS TO AVOID LITIGATION AND TO BUY PEACE OF MIND. THE H IGH COURT, IN CASE OF CIT V. SURAJ BHAN [2007] 159 TAXMA N 26 (PUNJAB & HARYANA), HELD THAT PENALTY CANCAN BE IMPOS ED MERELY ON ACCOUNT OF HIGHER INCOME HAVING BEEN,, SUBS EQUENTLY, DECLARED. SIMILARLY, THE APEX COURT, IN THE CASE OF CI T V. SURESH CHANDRA MITTAL [2001] 251 ITR 9/119 TAXMAN 4 33, OBSERVED THAT WHEN AN ASSESSEE FILES A REVISED RETU RN SHOWING HIGHER AND GIVES AN EXPLANATION THAT HE OFFERED H IGHER INCOME TO BUY PEACE OF MIND AND TO AVOID LITIGATION, PENALTY CANNOT BE IMPOSED MERELY ON ACCOUNT OF HIGHER INCOME HAVING BEEN, SUBSEQUENTLY, DECLARED. IN THE INSTANT CASE, THE ASSESSEE WAS ON MUCH BETTE R FOOTING BECAUSE NO RETURN OF INCOME WAS REVISED AND THE TRANS PORTATION CHARGES WERE DIRECTLY MADE BY THE SUPPLIERS AND NOT V THE ASSESSEE AND, THEREFORE, THERE WAS NO QUESTION OF C ONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PENALTY COULD NOT BE LEVIED MERELY ON ACCOUNT OF INACC URATE PARTICULARS BY PRESUMING THAT THE PAYMENT,, WERE MAD E BY THE ASSESSEE, WHEREAS THE FACTS WERE OTHERWISE. EVEN OTH ERWISE, THE TRIBUNAL HAD GIVEN A FINDING OF FACT THAT NEITH ER THERE WAS CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS. THUS, THERE WAS NO ERROR IN THE ORDER OF THE TRIBUN AL AND THE APPEAL WAS TO BE DISMISSED.' CONSIDERING THE ENTIRE SUBMISSIONS IN ENTIRETY, AND , THE ABOVE JUDICIAL PRONOUNCEMENTS IN THE LIGHT OF FACTS OF TH E CASE OF THE APPELLANT, THE APPELLANT HAD NT FURNISHED ANY INACC URATE PARTICULARS OF INCOME, WHICH, COULD ATTRACT LEVY, AN D, THEREFORE, IT IS PRAYED THAT THE PENALTY LEVIED IN QUESTION, MA Y KINDLY BE DELETED, AS NO SUCH PENALTY IS LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LD.CIT(A) AFTER CONSIDERING SUBMISSIONS OF T HE ASSESSEE, OBSERVED THAT THE CASE OF THE ASSESSEE WA S SELECTED IN SCRUTINY DUE TO THE REASON THAT THE ASS ESSEE HAD BEEN FOUND TO BE INDULGED IN SUSPICIOUS LONG TERM C APITAL GAIN OF M/S TURBO TECH ENGINEERING LIMITED BY WAYOF PURCHASE AND SALE OF SHARES REGARDING WHICH THE ITA NO.1472/CHD/2018 A.Y.2014-15 10 INFORMATION CAME FROM INVESTIGATION WING AND AT THE TIME OF ASSESSMENT PROCEEDINGS A REPORT FROM INVESTIGATION WING WAS RECEIVED ON 24.2.2016, WHEREIN IT WAS REVEALED THAT THE INVESTIGATION WING HAD CARRIED OUT ACTIONS IN EARLI ER YEARS IN CASE OF SHELL COMPANIES, WHEREIN THE INVOLVEMENT OF THE COMPANY; NAMELY M/S TURBO TECH ENGINEERING LIMITED HAD ALSO CAME INTO LIGHT AND THAT THE ASSESSEE HAD FILE D RETURN OF INCOME SHOWING THE LONG TERM CAPITAL GAIN AMOUNT ING TO RS.36,75,134/- AS EXEMPT U/S 10(38) OF THE ACT ON 4.11.2014 AND THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND THE A.O. ISSUED INITIAL QUESTIONNAIRE ALONGWITH NOTICE U/S 143(2) OF THE ACT DATED 18.9.2015 AND THE ASSES SEE IN HER FIRST REPLY DID NOT SUBMIT ANY WRITTEN SUBMISSI ON WITH REGARD TO THE TAXABILITY OF THIS SHARE TRANSACTION WITH M/S TURBO TECH ENGINEERING LIMITED, UPON WHICH, THE ASS ESSEE HAD CLAIMED LONG TERM CAPITAL GAIN AS EXEMPTED. THE LD.CIT(A) ALSO OBSERVED THAT MEANWHILE THE ASSESSEE RECEIVED NOTICE FROM THE INVESTIGATION WING AND VOL UNTARILY SURRENDERED LONG TERM CAPITAL GAIN ORIGINALLY CLAIM ED AS EXEMPT U/S 10(38) OF THE ACT, AFTER HAVING THE KNOW LEDGE THAT THE DEPARTMENT WAS ALREADY IN POSSESSION OF TH E DATA, WHEREIN IT WAS CLEAR THAT THE ASSESSEE HAD TAKEN EN TRY FROM A PENNY STOCK COMPANY; NAMELY M/S TURBO TECH ENGINEERING LIMITED TO BRING HER UNACCOUNTED MONEY INTO BOOKS OF ACCOUNT AND THAT THE FIRST NOTICE U/S 143( 2) FOR SELECTION OF SCRUTINY HAD ALREADY BEEN SERVED ON TH E ASSESSEE ON 19.9.2015. THEREAFTER THE SURRENDER WAS MADE BY THE ASSESSEE N 12.10.2015 BEFORE THE INVESTIGATI ON WING. ITA NO.1472/CHD/2018 A.Y.2014-15 11 THEREFORE, THE ASSESSEE HAD NOT SURRENDERED THE LON G TERM CAPITAL GAIN VOLUNTARILY, SHE CAME FORWARD ONLY WHE N WAS ENQUIRED BY THE INVESTIGATION DEPARTMENT, LUDHIANA. THE LD.CIT(A) SUSTAINED THE PENALTY LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.12,57,630/ -. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 4.4, 4.5 AND 4.7 OF THE IMPUGNED ORDER, WHICH READ AS UNDER 4.4 THE ASSESSING OFFICER IN THE PENALTY ORDER HAS ALSO MENTIONED, THAT THE INVESTIGATION CARRIED OUT IN THE PENNY STOCK COMPANIES .REVEALED THAT THE CONCERNED COMPANY M/S TURBO TECH ENGINEERING LIMITED, HAD BEEN FOUND TO BE INVOLVE D INTO BOGUS ENTRY OPERATIONS UNDERLINE GARB OF LONG TERM CAPITAL GAIN. IN THE PENALTY ORDER ASSESSING OFFICER HAS MENTIONED THAT THE INVESTIGATIONS REVEALED THAT THE COMPANY M/S TURBO TECH ENGINEERING LIMITED, DID NOT CARRY OUT ANY OPERATION S DURING THE PERIOD EXCEPT IN THAT YEAR ENDING MARCH 2009. I N THE YEAR ENDING MARCH 2009 THE COMPANY HAD ONLY TURNOVER OF RS. 2 .2 CRORE. THE COMPANY HAD ISSUED 232 LAKH SHARES IN THE FINANCIAL YEAR 2010-2011 FROM 8 LAKH SHARES TO 240 LAKH SHARES, BUT THE EARNING PER SHARE REMAINED IN NEGAT IVE. THE COMPANY HAD NO FIXED ASSETS NO TURNOVER AND PROFITA BILITY. THE ASSESSING OFFICER HAS ALSO MENTIONED, THE DETAILED ANALYSIS AND THE FINANCIAL RESULT OF THE COMPANY FROM PAGES 7 TO 11 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER FURTHER OBSERVED FROM THE BALANCE SHEET OF M/S TURBO TECH ENGINEERIN G LIMITED, THAT IT HAD NO ACTUAL FINANCIAL CREDENTIALS 'O SUPP ORT THESE SHARE MOVEMENT PATTERNS. FURTHER THE ASSESSING OFFIC ER HAS MENTIONED IN THE ORDER, THAT IN THE COUNTRY WIDE SE ARCHES CARRIED OUT BY INVESTIGATION DEPARTMENT THE SHARE B ROKERS NAMELY M/S GATEWAY FINANCIAL SERVICES LTD, M/S INTEL LECT STOCK BROKING LTD, SH.SUDHIR KUMAR KAYAN AND CO ETC , HAVE BEEN FOUND TO BE INDULGED IN THE TRANSACTION OF THE SE PENNY STOCK COMPANIES INCLUDING M/S TURBO TECH ENGINEERING LIMITED. THE ASSESSING OFFICER HAS OBSERVED ON PAGE 6 OF THE PENALTY ORDER, THAT AT THE TIME OF ASSESSMENT P ROCEEDINGS THE ASSESSING OFFICER CAME TO KNOW FROM THE INFORMATIO N RECEIVED FROM INVESTIGATION DEPARTMENT ,THAT THE ASSE SSEE HAS DONE THESE FICTITIOUS TRANSACTIONS THROUGH M/S L SE SECURITIES PRIVATE LIMITED AND ALSO M/S CALCUTTA ST OCK EXCHANGE, M/S GATEWAY FINANCIAL SERVICES LTD, M/S INTELLE CT STOCK BROKING LTD. WHICH WERE FOUND TO BE INDULGED I N THE ACTIVITIES OF PROVIDING BOGUS LONG TERM CAPITAL GAI N/LOSS. THE ASSESSING OFFICER HAS MENTIONED ON PAGE 7 OF THE PE NALTY ORDER THAT FROM THE STATEMENTS OF SHRI ANIL KHEMKA, BIKASH SUREKHA (MEMBER OF CALCUTTA STOCK EXCHANGE), SHRI P RAVEEN KUMAR AGRAWAL, SHRI MUKESH AGGARWAL, SHRI AMIT DALMI A (DESIGNATED DIRECTOR OF M/S INTELLECT STOCK BROKING LTD), AT THE ITA NO.1472/CHD/2018 A.Y.2014-15 12 TIME OF SEARCH/ SURVEYS PROCEEDINGS IN THEIR RESPEC TIVE CASES, THEY ADMITTED THAT THEY HAVE PROVIDED ACCOMMODATION ENTITIES OF LONG-TERM CAPITAL GAIN/LOSS BY PREARRANGING TRADIN G IN SHARES. THE INVESTIGATION WING HAD ALSO ENQUIRED M/S CALCU TTA STOCK EXCHANGE AS A BROKER AND AS A WHOLE WHO HAD PLEADED TO BE INVOLVING IN SUCH BOGUS PENNY STOCKS WHICH INCLUDED TRADING IN M/S TURBO TECH ENGINEERING LIMITED AMOUNTING TO RS.1,79,38,678/- FURTHER IN THE CASE OF M/SGATEWAY FINANCIAL SERVICES LTD., WHO HAD ALSO DISCLOSED RS. 2 5 CRORE ON ACCOUNT OF TRADING IN SUCH PENNY STOCKS ALSO ADMITT ED TO BE TRADING IN M/S TURBO TECH ENGINEERING LTD AMOUNTING T O RS. 242,00,37,441/-. SIMILAR WAS THE CASE WITH M/S INTELLECT STOCK BROKING LTD. ACCORDINGLY THE ASSESSING OFFICE R HAS IN DETAIL MENTIONED THAT DURING VARIOUS SEARCH/ SURVEY PROCEEDINGS, AGAINST PENNY STOCK COMPANIES DIFFERENT DIRECTORS OF DIFFERENT COMPANIES AND BROKERS HAD AD MITTED TO BE PROVIDING ACCOMMODATION ENTRY THROUGH VARIOUS CO NCERNS INCLUDING THE M/S TURBO TECH ENGINEERING LIMITED . IN THE PENALTY ORDER, THE ASSESSING OFFICER HAS MENTIONED T HAT IN HIS STATEMENT DATED 30/03/2015 RECORDED BY THE INVESTIG ATION WING AT THE TIME OF SURVEY UNDER SECTION 133A, SHRI AMIT DALMIA DESIGNATED DIRECTOR OF M/S INTELLECT STOCK B ROKING LTD AND SHRI BIKASH SUREKHA MEMBER OF CALCUTTA STOCK EXC HANGE LTD. HAD ALSO ADMITTED TO PROVIDE ACCOMMODATION ENT RIES OF LONG-TERM CAPITAL GAIN IN WHICH M/S TURBO TECH ENGI NEERING LIMITED WAS ALSO INVOLVED. THEREFORE IT WAS BEYOND ANY D OUBT BEFORE THE ASSESSING OFFICER THE COMPANY M/S TURBO TECH ENGINEERING LIMITED, WAS A PENNY STOCK COMPANY USED FOR PROVIDING BOGUS LONG TERM CAPITAL GAIN. 4.5 ASSESSING OFFICER HAS MADE OUT A CLEAR CASE AGA INST THE ASSESSEE, WHEREIN THE ASSESSEE HAD BEEN FOUND TO BE INDULGED INTO TAKING ENTRIES OF LONG-TERM BOGUS LON G CAPITAL GAIN FROM PENNY STOCK COMPANY M/S TURBO TECH ENGINEERING LIMITED. THE INVESTIGATION DEPARTMENT CARRIED OUT ENQUI RIES AGAINST THE ASSESSEE THEREAFTER ONLY THE ASSESSEE O N 12/05/2015 SURRENDERED THIS LONG CAPITAL GAIN OF RS.37,00,000/- BEFORE THE INVESTIGATION WING LUDHIANA AND PAID DUE TAXES, HEREAFTER ASSESSEE FILED REVISED INC OME COMPUTATION DATED 12/10/2015 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, INFORMING THAT THE ASSESSEE HAS ALREADY SURRENDERED THIS LONG TERM CAPITAL GAIN ON IT S OWN. HOWEVER THAT IS NOT THE CASE, AS THE ASSESSING OFFI CER HAS CLEARLY MENTIONED, THAT THE INVESTIGATION DEPARTMENT LUDHIANA WAS ALREADY CONDUCTING AN ENQUIRY WHETHER THE ASSES SEE WAS ALSO CALLED FOR THE STATEMENT, THEREAFTER IN HER ST ATEMENT THE ASSESSEE SURRENDERED THE FICTITIOUS LONG-TERM CAPITA L GAIN TAKEN BY THE ASSESSEE FROM M/S TURBO TECH ENGINEERING LIMI TED. BEFORE THE DEPARTMENT DIR OF INCOME TAX INVESTIGATI ON II , LUDHIANA AND FILED ITS REVISED CALCULATION FOR ASSESS MENT YEAR 2014-15 ON 12/10/2015. THUS THE ASSESSING OFFI CER HAS MADE OUT A CASE THAT THIS SURRENDERED MADE BY T HE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IS NOT VOLUNTARILY AT ALL AS THE ASSESSEE HAD SURRENDERED B EFORE THE INVESTIGATION WING LUDHIANA, WHEN IT CAME INTO THE K NOWLEDGE ITA NO.1472/CHD/2018 A.Y.2014-15 13 THAT THE INVESTIGATION WING WAS HAVING INFORMATION WITH REGARD TO BOGUS LONG TERM CAPITAL GAIN TAKEN BY THE ASSESS EE FROM M/S TURBO TECH ENGINEERING LIMITED. THE ASSESSING O FFICER HAS MENTIONED IN THE PENALTY ORDER ALSO THAT THE AS SESSEE ONLY SURRENDERED THE AMOUNT ALREADY TREATED AS EXEMPTED, WHEN HER CASE WAS SELECTED FOR SCRUTINY. ASSESSEE,S CLAIM FO R VOLUNTARY SURRENDER BEFORE THE INVESTIGATION WING CANNOT PREV ENT THE ASSESSEE FROM THE PENALTY ACTION AS THAT NOTICE DATE D 18/09/2015 UNDER SECTION 143(2) FOR SELECTION OF SC RUTINY HAD ALREADY BEEN SERVED TO THE ASSESSEE ON 19/09/2015, THEREA FTER THE SURRENDER WAS MADE BY THE ASSESSEE ON 12/10/201 5 BEFORE THE INVESTIGATION WING. THEREFORE IT IS UNDOUBTED F ACT THAT THE ASSESSEE HAD NOT SURRENDERED THE LONG TERM CAPITAL GAIN VOLUNTARILY, BUT WHEN THE ASSESSEE WAS ENQUIRE BY T HE INVESTIGATION DEPARTMENT LUDHIANA THEN ONLY THE ASSES SEE CAME FORWARD WITH THE SURRENDER. ACCORDINGLY THIS CANN OT BE TERMED AS VOLUNTARY SURRENDER. . .. 4.7 ACCORDINGLY AS DISCUSSED, GOING BY THE ABOVE FACT S IT IS EVIDENT THAT GOING BY THE DUTY OF PROBABILITY, THE ASSESSING OFFICER HAS RIGHTLY RELIED UPON THE DECISIONS IS OF HON. APEX COURT IN THE CASES OF DURGA PARSAD MORE 82 ITR 540 AND CIT VS. SUMATI DAYAL 214 ITR 801. IT HAS BEEN HELD BY V ARIOUS HIGH COURTS IN LARGE NUMBER OF CASES [VADILAL ICHHACHAND V. CIT 32 ITR 569 (BOM), CALICUT TRADING CO. V. CIT, 178 ITR 430 (KER), SPECIAL LEAVE PETITION DISMISSED BY SUPREME COURT (180 ITR) (STATUTE 40) (SC), BACHHUMAL UTTAMMAL V. CIT 111 TAXATION 424 (RAJ)], THAT THE SUBSEQUENT FILING OF REVISED RETURN OR SURRENDER OF INCOME IN THE REVISED RETURN, WHICH WAS NOT VOLUNTARY BUT WAS A R ESULT OF DETECTION BY THE ASSESSING OFFICER, IS OF NO HEL P AS FAR AS LEVY OF PENALTY IS CONCERNED [BILANDRAM HARGANDAS V. CIT 17 1 ITR 390 (ALL)]. IT HAS BEEN HELD BY THE HON'BLE KERALAHIGH COURT IN THE CASE OF JUGAL KISHORE HARGOPALDAS 243 ITR 220 THAT: 'THERE IS NO GENERAL PRINCIPLE LAID DOWN IN THE SAID C ASE [ SIR SHADILAL SUGAR & GENERAL MILLS LTD. V. CIT[(1987) 16 8 ITR 705 (SC)] THAT WHENEVER ADDITION IS MADE OF AN AMOUNT O FFERED BY ASSESSEE TO BE ADDED, THERE CANNOT BE ANY LEVY OF P ENALTY, OR THAT THE ASSESSEE IS NOT REQUIRED TO EXPLAIN SOURCE S. THE ACTUAL POSITION IN LAW IS THAT MERELY BECAUSE THE ASSESSEE HAD AGREED TO THE ASSESSMENT, THAT CANNOT AUTOMATICALLY BRING IN LEVY OF PENALTY. IF THE ASSESSEE OFFERS AN EXPLANATION, THE R EVENUE AUTHORITIES HAVE TO CONSIDER THE ACCEPTABILITY OF TH E EXPLANATION AND PASS NECESSARY ORDERS. IF THE EXPLANATION IS FOU ND ACCEPTABLE, NOTWITHSTANDING THE ADDITION MADE BY TREA TING THE AMOUNT OFFERED BY THE ASSESSEE AS INCOME FROM UNDIS CLOSED SOURCES, PENALTY MAY NOT BE LEVIED. BUT IF THE EXPLAN ATION IS FOUND TO BE VAGUE OR FANCIFUL AND WITHOUT ANY FOUNDAT ION OR BASIS, IT IS CERTAINLY OPEN TO THE REVENUE AUTHORITIE S TO IMPOSE PENALTY. IT WOULD ALL DEPEND UPON THE ACCEPTABILITY OF THE EXPLANATION OFFERED BY THE ASSESSEE IN THE BACKGROUND OF THE STATUTORY PROVISIONS AS PREVAILING AT THE RELEVANT TIME .' ITA NO.1472/CHD/2018 A.Y.2014-15 14 ON THE ISSUE OF LEVY OF PENALTY IN CASE OF SURRENDER OF INCOME, THE HON'BLE SUPREME COURT IN THE CASE OF K.P.MDHUSUDAN 251 ITR 99 OBSERVED THAT: 'LEARNED COUNSEL FOR THE ASSESSEE THEN DREW OUR ATT ENTION TO THE JUDGMENT OF THIS COURT IN SIR SHADILAL SUGAR AND GENERAL MILLS LTD V. CIT [1987] 168 ITR 705. HE SUBMITTED T HAT THE ASSESSEE HAD AGREED TO THE ADDITIONS TO HIS INCOME REFERRED TO HEREINABOVE TO BUY PEACE AND IT DID NOT FOLLOW THEREFRO M THAT THE AMOUNT THAT WAS AGREED TO BE ADDED WAS CONCEALED IN COME. THAT, IT DID NOT FOLLOW THAT THE AMOUNT AGREED TO B E ADDED WAS CONCEALED INCOME, IS UNDOUBTEDLY WHAT WAS LAID DOWN BY THIS COURT IN THE CASE OF SIR SHADILAL SUGAR AND GENERAL M ILLS LTD. [1987] 168 ITR 705 AND THAT, THEREFORE, THE REVENUE WAS REQUIRED TO PROVE THE MENS REA OF A QUASI-CRIMINAL OF FENCE. BUT IT WAS BECAUSE OF THE VIEW TAKEN IN THIS AND OTHER J UDGMENTS THAT THE EXPLANATION TO SECTION 271 WAS ADDED. BY REASON OF THE ADDITION OF THAT EXPLANATION, THE VIEW TAKEN IN THIS CA SE CAN NO LONGER BE SAID TO BE APPLICABLE.' ACCORDINGLY, IN THIS CASE, EVEN THOUGH THE ASSESSEE HAD SURRENDERED THE INCOME, LEVY OF PENALTY WAS UPHELD B Y THE HON'BLE SUPREME COURT. 8. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL F OR ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AS SESSEE SUO MOTO SURRENDERED THE AMOUNT BEFORE ANY OMISSION ON THE PART OF THE ASSESSEE WAS POINTED OUT EITHER BY THE A.O. OR THE INVESTIGATION WING. IT WAS SUBMITTED THAT TH E ASSESSEE FILED RETURN OF INCOME ON 4.11.2014 AND TH E A.O. ISSUED NOTICE U/S 143(2) OF THE ACT ON 18.9.201`5 B UT NO INFORMATION WAS CALLED FOR IN THE SAID NOTICE. AS SUCH, NO INFORMATION WAS FILED BY THE ASSESSEE. HOWEVER, A P OWER OF ATTORNEY WAS FILED ON 5.10.2015 IN COMPLIANCE TO TH E NOTICE ISSUED ON 18.9.2015. THEREAFTER THE ASSESSEE HERSEL F VIDE LETTER DATED 12.10.2015 SUBMITTED TO THE D.D.I.T., LUDHIANA, SURRENDERED A SUM OF RS.37 LACS AND PAID THE DUE TAXES ON THE SAID AMOUNT. A REFERENCE WAS MADE TO PAGE NO.9 OF THE ASSESSEES COMPILATION. IT WAS FURTHER SUBMITTED ITA NO.1472/CHD/2018 A.Y.2014-15 15 THAT THE A.O. ISSUED THE NOTICE U/S 142(1) OF THE A CT ON 8.4.2016 AND THE ASSESSEE FILED THE REPLY TO THE SA ID NOTICE ON 24.6.2016, THEREAFTER THE A.O. PASSED AN ASSESSM ENT ORDER U/S 143(3) OF THE ACT ON 28.10.2016. THEREFOR E, IT IS CLEAR THAT THE ASSESSEE SURRENDERED THE AMOUNT OF R S.37 LACS SUO MOTO MUCH BEFORE THE NOTICE WAS ISSUED BY THE A.O. U/S 142(1) OF THE ACT AND THE ASSESSMENT ORDER DATED 28.10.2016 WAS PASSED. IT WAS ALSO STATED THAT EVEN THE INVESTIGATION WING HAD NOT POINTED OUT ANY SPECIFIC AMOUNT AND ONLY ISSUED A SUMMON DATED 5.10.2015 TO THE ASS ESSEE. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE FURN ISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE I NCOME, AS SUCH, THE PENALTY LEVIED BY THE A.O. AND SUSTAIN ED BY THE LD.CIT(A) U/S 271(1)(C) OF THE ACT WAS NOT JUSTIFIE D. IT WAS CLARIFIED THAT THE ASSESSEE COULD NOT FILE THE REVI SED RETURN SINCE ORIGINAL RETURN FILED BY THE ASSESSEE WAS BEL ATED. IT WAS POINTED OUT THAT IN PARA 3 OF THE ASSESSMENT OR DER THE A.O. CLEARLY MENTIONED THAT THE INFORMATION WAS REC EIVED BY HIM FROM THE INVESTIGATION WING ON 24.2.2016, WHILE THE ASSESSEE SURRENDERED THE AMOUNT OF RS.37 LACS ON 12.102015 AND HAD DEPOSITED THE INCOME TAX ALONGWIT H INTEREST DUE THEREON MUCH BEFORE THE INFORMATION WA S RECEIVED BY THE A.O. THEREFORE, THE PENALTY U/S 271 (1)(C) OF THE ACT LEVIED BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. RELIANCE WAS PLACED ON THE JUDGM ENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJIV GARG REPORTED AT 313 ITR 256 AND DECISIO N OF THE ITAT CHANDIGARH BENCH A IN THE CASE OF AJAY SANGA RI & ITA NO.1472/CHD/2018 A.Y.2014-15 16 CO. VS. ADDL.CIT (2011)16 TAXMANN.COM 115 (CHD.) CO PY OF THE SAID ORDER WAS FURNISHED, WHICH IS PLACED ON RE CORD. 8. IN HER RIVAL SUBMISSIONS, THE LD. SR.DR REITERAT ED THE OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS AND FURTHER SUBMITTED THAT THE AS SESSEE HAD NOT FILED REVISED RETURN AND THE INCOME COULD N OT BE REVISED BY FILING THE COMPUTATION. IT WAS ALSO STAT ED THAT THE ASSESSEE SURRENDERED THE AMOUNT ONLY WHEN THE SUMMON WAS RECEIVED BY HER FROM THE INVESTIGATION W ING, SO IT WAS NOT A VOLUNTARY SURRENDER. AS REGARDS TO THE DECISION RELIED UPON BY THE LD. COUNSEL FOR ASSESSE E, IT WAS SUBMITTED THAT IN THE SAID CASE, THE ENQUIRY MADE B Y THE INVESTIGATION WING WAS NOT COMMUNICATED TO THE ASSE SSEE BUT IN THE PRESENT CASE IT WAS IN THE KNOWLEDGE OF THE DEPARTMENT THAT THE ASSESSEE HAD NOT DISCLOSED TRUE AND CORRECT INCOME, SO THERE WAS CONCEALMENT OF THE INC OME BY THE ASSESSEE, THE PENALTY WAS RIGHTLY LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT AND THE LD.CIT(A) WAS FULLY JU STIFIED IN SUSTAINING THE SAME. RELIANCE WAS ALSO PLACED ON TH E FOLLOWING DECISION: PREMPAL GANDHI VS. CIT, ITA NO.335 ITR 23 (P&H). 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN TH E PRESENT CASE, IT IS NOTICED THAT THE INVESTIGATION WING OF THE DEPARTMENT SUMMONED THE ASSESSEE U/S 131(1A) OF THE ACT VIDE SUMMON DATED 29.9.2015, THE ASSESSEE WAS ASKED TO ATTEND ON 12.10.2015 AND PRODUCE THE FOLLOWING DOCU MENTS: ITA NO.1472/CHD/2018 A.Y.2014-15 17 - PERSONAL APPEARANCE. - BRIEF NOTE ON BUSINESS ACTIVITIES CARRIED OUT BY YOU. - PHOTOCOPIES OF COPIES OF ITRS, COMPUTATION CHART AN D AUDITED BALANCE SHEET FOR THE A.Y. 2011-12 TO A.Y . 2015- 16. - DETAILS OF ALL BANK ACCOUNTS IN YOUR NAME ALONGWI TH ACCOUNTS NUMBER, BRANCH ADDRESS AND BANK ACCOUNT STATEMENTS FOR THE PERIOD 01.04.2010 TO 31.03.2015. - COPY OF CASH BOOK/ BANK BOOK AND SALE/PURCHASE BO OK FOR THE PERIOD 01.04.2010 TO 31.03.2015. 10. THE ASSESSEE SUO MOTO SURRENDERED RS.37 LACS AN D FILED THE REVISED STATEMENT OF NET ASSESSABLE INCOM E AND DEPOSITED THE DUE TAX ON THE SAID SURRENDER ON 12.1 0.2015. THE A.O. ISSUED THE NOTICE U/S 142(1) OF THE ACT ON 8.4.2016 AND ASKED THE ASSESSEE TO FURNISH VARIOUS DETAILS. ACCORDING TO THE A.O. THE ASSESSEE CONCEALED THE IN COME TO THE EXTENT OF RS.37 LACS. IT IS NOTICED THAT THE A SSESSEE FURNISHED VARIOUS DETAILS ASKED BY THE A.O. VIDE LE TTER DATED 30.4.2016, COPY OF WHICH IS PLACED AT PAGE NO.16 OF THE ASSESSEES PAPER BOOK AND INFORMED THAT AN AMOUNT O F RS.37 LACS WAS SURRENDERED (EQUIVALENT TO LONG TERM CAPITAL GAIN OF RS.36,23,134/-) AND AN AMOUNT OF RS.12,55,871/- AS INCOME TAX & INTEREST THEREON WAS DEPOSITED ON 12.10.2015. THEREFORE, FROM THE FACTS OF THE PRESENT CASE, IT IS CLEAR THAT THE ASSESSEE SUO MOT O SURRENDERED AN AMOUNT OF RS.37 LACS BEFORE ANY OF T HE AUTHORITIES OF THE INCOME TAX POINTED OUT ANY UNDIS CLOSED INCOME OF THE ASSESSEE. IT IS NOTICED THAT THE ASSE SSEE INFORMED THE D.D.I.(INVESTIGATION-II), LUDHIANA VID E LETTER DATED 12.10.2015 (IN RESPONSE TO THE SUMMON U/S 131 (1A) OF THE ACT DATED 29.9.2015) THAT A RECOMPUTATION OF TAXABLE INCOME WAS FILED, WHEREIN AN AMOUNT OF RS.37 LACS W AS ITA NO.1472/CHD/2018 A.Y.2014-15 18 SURRENDERED UNDER THE HEAD MISCELLANEOUS INCOME, WHICH IS EVIDENT FROM PAGE NOS.9 TO 11 OF THE ASSESSEES PAPER BOOK, WHICH ARE THE COPIES OF THE REPLY, COMPUTATIO N INCOME AND COPY OF CHALLAN IN RESPECT OF TAX AND INTEREST AMOUNTING TO RS.12,55,871/-, DEPOSITED ON 12.10.201 5. IT IS NOTICED THAT THE A.O. GOT THE INVESTIGATION REPO RT FROM THE PRINCIPAL CIT-I, LUDHIANA VIDE LETTER DATED 24. 2.2016 THAT THERE WERE CERTAIN BROKERS IN DIFFERENT TOWNS, WHO CONTACTED THE PROSPECTIVE CLIENTS AND TOOK PAPER BO OK ENTRIES, THIS FACT HAS BEEN MENTIONED AT PARA 3 OF THE ASSESSMENT ORDER DATED 28.10.2016. HOWEVER, THE ASS ESSEE SUO MOTO SURRENDERED A SUM OF RS.37 LACS MUCH BEFOR E THE SAID DATE. THEREFORE, IT CANNOT BE SAID THAT THE DE PARTMENT POINTED OUT TO THE ASSESSEE THAT THE INCOME AMOUNTI NG TO RS.37 LACS HAD ESCAPED ASSESSMENT. ON THE CONTRARY, THE ASSESSEE HERSELF SURRENDERED THE AMOUNT OF RS.37 LA CS AND PAID THE DUE TAXES & INTEREST ON THE SAID SURRENDER ED INCOME ON 12.10.2015 MUCH BEFORE THE DISCREPANCY, I F ANY, WAS POINTED OUT BY ANY OF THE DEPARTMENTAL AUTHORIT IES. ON A SIMILAR ISSUE, THE HON'BLE JURISDICTION; HIGH COU RT IN THE CASE OF CIT VS. RAJIV GARG (2009) 313 ITR 256 (SUPR A) HELD AS UNDER: THAT THE TRIBUNAL HAD RECORDED A PURE FINDING OF FACT TO THE EFFECT THAT THE REVENUE HAD NOT PLACED ON RECORD ANY MATERIAL OR EVIDENCE TO DISCHARGE ITS BURDEN OF PROVING CONCEALMENT. NO SUCH FINDING WAS RECORDED IN THE ASSESSMENT ORDER. THE TRIBUNAL FURTHER HELD THAT THE ADDITIONAL INCOME SO OFFERED BY THE ASSESSEE WAS DONE IN GOOD FAITH AND TO BUY PEACE. THE BURDEN SHIFTS TO THE ASSESSEE ONLY IF HE FAILS TO OFFER ANY EXPLANATION FOR THE UNDISCLOSED INCOME OR OFFERS AN EXPLANATION ITA NO.1472/CHD/2018 A.Y.2014-15 19 WHICH IS FOUND TO BE FALSE BY ASSESSING AUTHORITY. THE REVISED RETURN OF INCOME WAS FILED IN WHICH THE ENTIRE INCOME WAS SURRENDERED WITH AN EXPLANATION. THE REVISED RETURN WAS REGULARIZED BY THE REVENUE. THE ASSESSING AUTHORITY HAD FAILED TO TAKE ANY OBJECTION THAT THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN HIS REVISED RETURN AND HIS EXPLANATION WERE NOT BONA FIDE. THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE ORDER OF THE COMMISSIONER (APPEALS) DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 11. BY FOLLOWING THE AFORESAID JUDGMENT OF THE HON' BLE JURISDICTIONAL HIGH COURT, THE ITAT CHANDIGARH BENC H A IN THE CASE OF AJAY SANGARI & CO. VS. ADDL.CIT (SUP RA) HELD AS UNDER: 10. THE AO AND THE CIT(A) HAD PLACED RELIANCE ON T HE RATIO LAID DOWN IN THE CASE OF RAJESH CHAWLA (SUPRA ). ON T HE FACTS OF THE CASE BEFORE THE HON'BLE COURT, THE ASSES SEE WAS FOUND TO BE A MEMBER OF GROUP KNOWN AS M/S. BALDAV ELECTRICALS, LUDHIANA AGAINST WHICH INFORMATION WAS RECEIVE D BY THE INTELLIGENCE WING THAT THE MEMBERS OF THE GRO UP WERE INDULGING IN TAX EVASION BY SHOWING INCOME FROM OTHER SOURCES AS AGRICULTURAL INCOME. DURING THE COURSE OF INVESTIGATION THE PERSONS WERE ASKED TO PRODUCE EVIDEN CE ABOUT AGRICULTURAL INCOME AND IN THE ABSENCE OF ANY DOCUMENTS BEING PRODUCED THE SAID PERSONS OFFERED T O DISCLOSE INCOME/S SUBJECT TO NO PENALTY. THE HON'BLE HIGH COURT HELD THAT IN SUCH CIRCUMSTANCES IT COULD NOT BE HELD THAT THE ASSESSEE HAD (SIC - NOT) CONCEALED ITS INCOME AND THE ASSESSEE WAS HELD TO BE LIABLE TO LEVY OF PENALTY UN DER S. 27L(L)(C ) OF THE ACT. 12. IN THE PRESENT CASE ALSO, THE ASSESSEE SUO MOTO SURRENDERED AN AMOUNT OF RS.37 LACS AND PAID THE DU E TAX ALONGWITH INTEREST THEREON MUCH BEFORE THE INVESTIG ATION WING OR THE A.O. POINTED OUT ANY DISCREPANCY ABOUT THE UNDISCLOSED OR CONCEALED INCOME OF THE ASSESSEE. I, THEREFORE, CONSIDERING THE FACTS OF THE PRESENT CAS E AM OF THE VIEW THAT THE IMPUGNED PENALTY LEVIED BY THE A. O. U/S 271(1)(C) OF THE ACT AND SUSTAINED BY THE LD.CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, THE SAME IS DELETED. THIS F INDING HAS ITA NO.1472/CHD/2018 A.Y.2014-15 20 BEEN GIVEN BY CONSIDERING THE PECULIAR FACTS OF THE PRESENT CASE, THEREFORE, IT IS MADE CLEAR THAT IT MAY NOT B E CONSIDERED AS A PRECEDENT IN THE OTHER CASES. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2009.) SD/- (N.K.SAINI) VICE PRESIDENT '# /DATED: 26 TH APRIL, 2019 * * &) *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $ 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5# / GUARD FILE &) ' / BY ORDER, ! / ASSISTANT REGISTRAR