Smt Renu Madnani, Kanpur V. ITO, Kanpur

ITA 154/LKW/2011

• Counselvise Citation: 15423714 RSA 2011
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 04-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Keywords: Gift; Income from undisclosed sources; Revised return
• Section: 143(3); 139(5); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, LUCKNOW. BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.154(LKW.)/2011 A.Y. : 2001-02 SMT.RENU MADNANI, VS. THE ITO-2(3), 122/317, SHASTRI NAGAR, KANPUR. KANPUR. PAN ADEPM77355H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH GARG, ADVOCATE RESPONDENT BY : SHRI P.K.BAJAJ, SR.D.R. O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 2.12.2010 OF THE LD. CIT(A)-I, DEHRADUN HOLDING CONCURRENT JURIS DICTION OVER THE CASE BY VIRTUE OF THE ORDER OF THE CCIT, KANPUR, LUCKNOW DA TED 23.6.2010. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE CONFIRMATION OF PENALTY OF RS.30,000 LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT TH E ACT). 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE FILED THE RETURN OF INCOME ON 31.7.2001 SHOWING AN INCOME OF RS.2,84,04 1. SUBSEQUENTLY, THE RETURN WAS REVISED ON 4.2.2003 DECLARING AN INCOME OF RS.3,84,041. IN THE REVISED RETURN, THE ASSESSEE INCLUDED A SUM OF RS. 1,00,000 ON ACCOUNT OF SURRENDER OF GIFT. THE SAID REVISED RETURN WAS PR OCESSED UNDER SECTION 143(1). LATER ON THE CASE WAS SELECTED FOR SCRUTINY . FROM THE DETAILS FILED 2 ALONGWITH THE REVISED RETURN, THE AO FOUND THAT THE ASSESSEE SURRENDERED A SUM OF RS.1 LAC ON ACCOUNT OF GIFT STATED TO HAVE B EEN RECEIVED FROM SMT. REKHA AGARWAL W/O SHRI R.C.AGARWAL, R/O 50/57, KAHO O KOTHI, KANPUR. THE ASSESSEE WAS ASKED TO JUSTIFY THE GENUINENESS OF THE GIFT WITH DOCUMENTARY EVIDENCE. IT WAS EXPLAINED BY THE ASS ESSEE THAT SHE RECEIVED GIFT OF RS.1,00,000 FROM SMT.REKHA AGARWAL. IT WAS FURTHER SUBMITTED THAT WHEN SHE DESIRED MORE DETAILS FROM THE DONOR ABOUT THE ASSESSMENT AND BANK PARTICULARS, SHE AVOIDED TO FURNISH SUFFICIENT EVID ENCE AND THEREFORE, SHE SURRENDERED THE ABOVE GIFT FOR WANT OF ADEQUATE P ROOF OF GENUINENESS AND TO PURCHASE PEACE OF MIND. THE AO WAS, HOWEVER, OF THE VIEW THAT THE GIFT FROM SMT. REKHA AGARWAL WAS NOTHING BUT THE INCOME OF THE ASSESSEE FROM THE SOURCES NOT DISCLOSED TO THE DEPARTMENT AND THE ASSESSEE TRIED TO CONVERT HER UNDISCLOSED INCOME IN THE SHAPE OF BOGUS GIFT STATED TO HAVE BEEN RECEIVED FROM THE SAID PERSON. ACCORDING TO THE AO SINCE THE ENQUIRIES REGARDING BOGUS GIFT WERE STARTED BY THE D.I.WING O F THE DEPARTMENT AND THEREFORE, THE ASSESSEE SURRENDERED THE AMOUNT OF R S.1,00,000 IN HER RETURN OF INCOME FILED ON 4.2.2003 AND THE SURRENDER OF TH E SAID AMOUNT CANNOT BE SAID TO BE VOLUNTARY AND IN GOOD FAITH BUT IT WAS M ADE IN THE FEAR OF THE INVESTIGATION BEING CARRIED OUT BY THE D.I. WING. A CCORDINGLY, THE AO TREATED THE SUM OF RS.1,00,000 AS INCOME OF THE ASS ESSEE FROM UNDISCLOSED SOURCES AND ASSED THE INCOME OF THE ASSESSEE UNDER SECTION 143(3) OF THE ACT AT RS.3,99,041 BY MAKING AN ADDITION OF RS.15,0 00 ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. 4. THE AO INITIATED PENALTY PROCEEDINGS UNDER SECTI ON 271(1)(C) OF THE ACT AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE I N RESPONSE TO WHICH THE ASSESSEE FILED A DETAILED REPLY AND PLACED RELIANCE ON SEVERAL DECISIONS. THE 3 AO WAS OF THE VIEW THAT THE DECISIONS RELIED UPON B Y THE ASSESSEE WERE DISTINGUISHABLE ON FACTS. ACCORDING TO HIM, THE IN TENTION OF THE ASSESSEE WAS MALA FIDE REGARDING BOGUS GIFT OF RS.1,00,000 AND T HE ASSESSEE FURNISHED FALSE INFORMATION REGARDING BOGUS GIFT OF RS.1,00,0 00 IN HER ORIGINAL RETURN OF INCOME. THUS, THE ASSESSEE FAILED TO DISCLOSE TR UE AND CORRECT FACTS ABOUT HER INCOME AND IT WAS ONLY WHEN THE ASSESSEE FEARE D WITH THE ENQUIRIES OF BOGUS GIFT, SHE REVISED HER RETURN OF INCOME AND PA ID TAXES ON IT. ON THESE FACTS, THE AO CONCLUDED THAT THAT THE ASSESSEE WAS LIABLE TO PENALTY AND HE ACCORDINGLY IMPOSED A PENALTY OF RS.1,00,000 UNDER SECTION 271(1)(C) OF THE ACT. 5. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) AND SUBMITTED THAT THE REVISED RETURN HAD BEEN FURNISHED VOLUNTARILY B EFORE THE ASSESSEE HAD BEEN CONFRONTED WITH ANY ADVERSE COMMENTS WHICH TH E DEPARTMENT MIGHT HAVE AGAINST HIM. THEREFORE, THE PENALTY WAS NOT LE VIABLE UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON THE JU DGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SURESH CHANDRA MITTAL (SUPRA) AND THE DECISION OF THE I.T.A.T., LUCKOW BENCH IN THE CASE OF SUNITA TULI VS. ITO IN ITA NO.942(LUC.)/2006. 6. THE LD.CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE DEPARTMENT HAD DETECTED THE BANK ACCOUNT (THROUGH WHICH THE BOGUS GIFTS HAD BEEN CHANNELISED) AS EARLY AS FEBRUARY, 2002, WHICH REVEALED THAT THE ASSESSEE WAS A BENEFICIARY OF THE RACKET AND INFORMATION TO THAT EFFECT WAS AVAILABLE WITH THE DEPARTMENT. ACC ORDING TO THE LD.CIT(A), IT WAS A DIFFERENT MATTER THAT THE ASSESSEE FURNIS HED THE REVISED RETURN BEFORE SHE WAS CONFRONTED WITH THE ADVERSE EVIDENCE AGAIN ST HER, BUT WHETHER SHE 4 FURNISHED THE REVISED RETURN OR NOT, THE DEPARTMENT WAS GOING TO QUESTION HER ANYWAY AND INITIATE PROCEEDINGS FOR TAXING THE CONCEALED INCOME. THE LD.CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD IN TENDED TO PLOUGH BACK HER INCOME IN THE FORM OF ALLEGED GIFTS AND THEREBY EVA DE THE PAYMENT OF TAX ON THE SAME BY DECIDING TO JOIN THE RACKET OF THE BOGU S GIFTS. HE ALSO POINTED OUT THAT THE ALLEGED GIFT WAS RECEIVED BEFORE MARC H, 2001 AND THE RETURN OF INCOME WAS FURNISHED ON 31.7.2001 BY SHOWING THE AM OUNT AS GIFT WHICH SHOWS THAT IN SPITE OF KNOWING FULLY WELL THAT THE ASSESSEE HAD PLOUGHED BACK HER UNACCOUNTED INCOME IN THE GARB OF ALLEGED GIFTS AND IF CAUGHT, WAS LIABLE TO PENAL ACTION AND PROSECUTION, SHE DECIDED TO GO AHEAD WITH HER PLAN. THEREFORE, THE OFFENCE OF CONCEALMENT OF PARTICUL ARS OF INCOME HAD BEEN COMMITTED WHEN THE ORIGINAL RETURN SHOWING THE AMOU NT AS GIFT WAS FURNISHED. THE LD.CIT(A) CONFIRMED THE PENALTY LEVI ED BY THE AO. 7. NOW, THE ASSESSEE IS IN APPEAL. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE RETURN OF INCOME WAS REVISED BY THE ASSESSEE WITHIN THE STIPULATED P ERIOD WHICH WAS AVAILABLE UPTO 31.3.2003. HE FURTHER SUBMITTED THAT THE AO MA DE THE ASSESSMENT BY CONSIDERING THE INCOME OF RS.3,84,041 SHOWN BY THE ASSESSEE IN HER REVISED RETURN OF INCOME. THEREFORE, IT WAS NOT ESTABLISHE D THAT THE ASSESSEE EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME. THEREFORE, THE PENALTY UNDER SECTION 271(1)(C) WAS NOT LEVIABLE. HE ACCORDINGLY PRAYED TO DELETE THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LD.CIT(A). 5 9. IN HIS RIVAL SUBMISSIONS, THE LD.D.R. STRONGLY S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE FURNISHED ORIGINAL RETUR N OF INCOME ON 31.7.2001 UNDER SECTION 139(1) OF THE ACT. THE ASSESSEE REVIS ED THE SAID RETURN UNDER SECTION 139(5) OF THE ACT ON 4.2.2003. THE PROVIS IONS CONTAINED IN SECTION 139(5) OF THE ACT READ AS UNDER : IF ANY PERSON, HAVING FURNISHED A RETURN UNDER SU B-SECTION (1), OR IN PURSUANCE OF A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142, DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT THERE IN, HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE EXP IRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE T HE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER: PROVIDED THAT WHERE THE RETURN RELATES TO THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF AP RIL, 1988, OR ANY EARLIER ASSESSMENT YEAR, THE REFERENCE TO ONE YEAR AFORESAID SHALL BE CONSTRUED AS A REFERENCE TO TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 10.1 FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT TH E ASSESSEE COULD HAVE REVISED THE RETURN BEFORE THE EXPIRY OF ONE YEAR F ROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE AS SESSMENT, WHICHEVER IS EARLIER. IN THE INSTANT CASE, THE ASSESSMENT YEAR INVOLVED IS 2001-02. THEREFORE, THE ASSESSEE COULD HAVE REVISED THE RETU RN OF INCOME UPTO 31.3.2003, SINCE THE ASSESSMENT WAS NOT COMPLETED B Y THE AO. THE ASSESSEE REVISED THE RETURN OF INCOME ON 4.2.2003 I.E. MUCH BEFORE THE STIPULATED TIME ALLOWED UNDER SECTION 139(5) OF THE ACT. THE SAID REVISED RETURN WAS FILED BY THE ASSESSEE SUO MOTU AND THE DEPARTMENT HAD NOT BROUGHT ANY MATERIAL 6 ON RECORD TO SUBSTANTIATE THAT ANY ACTION WAS TAK EN AGAINST THE ASSESSEE BY CONSIDERING THE SUM OF RS.1,00,000 AS CONCEALED/UNE XPLAINED INCOME. IN THE INSTANT CASE, WHEN THE ASSESSEE REVISED THE RET URN WITHIN STIPULATED PERIOD AND THE AO CONSIDERED THE INCOME DISCLOSED IN THE REVISED RETURN FOR THE PURPOSES OF ASSESSMENT FRAMED UNDER SECTION 143(3)/ 148 OF THE ACT, THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE CON CEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS SUCH , THE PENALTY UNDER SECTION 271(1)(C) WAS NOT LEVIABLE IN THE PRESENT C ASE. IN THAT VIEW OF THE MATTER, THE IMPUGNED ORDER OF THE LD.CIT(A) IS SET ASIDE AND THE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) IS CANCELL ED. 11. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 15. 6.2011. SD. (N.K.SAINI) ACCOUNTANT MEMBER JUNE 15TH ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.