Appeal details
Counselvise Citation
18419914 RSA 2010
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-05-2011
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
23-03-2011
Assessment Year
2001-2002
Appeal Filed On
08-01-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R.S. SYAL R.S. SYAL R.S. SYAL R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) (AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO. 184/MUM/2010 ASSESSMENT YEAR-2001-02 MR. BHAVANJI S. BHADRA, 24, SOLAPUR STREET, DANA BUNDER, MUMBAI-400 009 PAN-AABPB 4429M VS. THE ACIT (OSD - 1) CEN. RANGE - 7, AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SANJAY R. PARIKH RESPONDENT BY: SHRI S.T. BIDARI O R D E R O R D E R O R D E R O R D E R PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 9.11.2009 PASSED BY THE LD. CIT(A)-40 FOR THE ASSESSMENT YEAR 2001-02. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH A ND SEIZURE ACTION U/S. 132(1) OF THE I.T. ACT ON 28.6.2006, ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S. 153A OF THE I.T. ACT ON TOTAL INC OME OF `. 40,05,170/-. IN COURSE OF THE SEARCH, `. 2.77 CRORES WAS OFFERED AS A DDITIONAL INCOME REPRESENTING `. 2.27 CRORES ON ACCOUNT OF BOGUS SHORT AND LONG TERM CAPITAL GAINS AND `. 50 LACS ON ACCOUNT OF BOGUS GIFTS PURCHASED IN THE NAME OF THE ASSESSEE AND HIS FAMILY MEMBERS. THE GIFT OF `. 50 LACS WAS OFFERED AS THE ASSESSEE WAS UNABLE TO PROVE ITS GENUINE NESS IN COURSE OF THE SEARCH AND SEIZURE OPERATION. OUT OF `. 50 LACS, `. 40 LACS WAS ATTRIBUTED TO THE PRESENT ASSESSMENT YEAR UNDER CONSID ERATION. ITA NO. 184/M/2010 2 THIS AMOUNT WAS NOT INCLUDED IN THE RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE U/S. 153A OF THE I.T. ACT. WHE N CONFRONTED WITH THIS OMISSION DURING THE ASSESSMENT PROCEEDINGS VIDE QUESTIO NNAIRE DT. 6.5.2008, THE ASSESSEE REVISED HIS RETURN OF INCOME ON 12.12.2008 AND INCLUDED THE AMOUNT. HOWEVER, IN THE ASSESSMENT OR DER, ONLY `. 2 LACS WAS PAID ON THIS ADDITIONAL INCOME AS AGAINST THE R EQUIRED TAX AND INTEREST OF `. 28,34,000/-. SINCE THE ASSESSEE HAD FAIL ED TO COMPLY WITH THE PROVISIONS OF SEC. 132(A), PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED. IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WA S SUBMITTED THAT ALL TAXES HAD BEEN PAID. IT WAS EMPHASIZED THAT THE A MOUNT HAD BEEN OFFERED TO AVOID PROTRACTED LITIGATION. WHILE FILI NG THE RETURN IN RESPONSE TO NOTICE U/S. 153A, THE INCOME REMAINED TO B E INCLUDED. IT WAS ALSO SUBMITTED THAT THE NECESSARY DETAILS IN SUPPORT O F THE GIFT HAD BEEN SUBMITTED. REFERENCE WAS MADE TO THE DECISION OF THE HONBLE ITAT H BENCH IN THE CASE OF DCIT VS. JAYKUMAR B. GA LA. POINT WAS ALSO MADE THAT THE ASSESSEE HAD SUBSTANTIATED HIS CLAIM OF GIFT . RELIANCE WAS PLACED ON SEVERAL DECISIONS OF THE HONBLE ITAT HOL DING THAT ADDITIONAL INCOME SURRENDERED IN THE REVISED RETURN DOES NOT ATTRACT PENALTY U/S. 271(1)(C). THE ASSESSEES EXPLANATION WAS N OT ACCEPTED BY THE ASSESSING OFFICER. IT WAS HIS POINT THAT THE ASSESSEE S MALAFIDE INTENTION STANDS PROVED BY OMISSION FOR THE ADDITIONAL INCOME IN THE RETURN FILED. ATTENTION WAS ALSO DRAWN TO THE FACT T HAT THE TAXES HAD ALSO NOT BEEN FULLY PAID. IT WAS PARTICULARLY EMPHA SIZED THAT THE ASSESSEE HAD ACTUALLY RETRACTED HIS ADMISSION MADE IN THE STATEMENT U/S. 132(4) OF THE I.T. ACT. DISTINGUISHING THE ASSESSEE S CASE FROM THE CASES RELIED UPON BY THE ASSESSEE, IT WAS POINTED OUT THAT UNLIKE IN THE ASSESSEES OWN CASE, IN THE CASES RELIED UPON BY THE ASSESSEE, THE ADDITIONAL INCOME WAS OFFERED DURING THE ASSESSMENT PROC EEDINGS. BASED ON ALL THIS, THE AO FOUND THIS TO BE A FIT CASE F OR LEVY OF PENALTY. 3. THE ASSESSING OFFICER IN THE ORDER OF PENALTY HELD A S FOLLOWS: ITA NO. 184/M/2010 3 I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE ASSESSEE AND FOUND NO FORCE IN THEM INASMUCH AS THE ASSESSEE HAS FA ILED TO COMPLY WITH THE PROVISIONS OF SEC. 132(4) OF THE I .T. ACT, 1961. THE MALAFIDE INTENTION OF THE ASSESSEE HAS BEEN PROVED BY NOT OFFERING THE ADDITIONAL INCOME OF `. 40,00,000/- IN THE RETURN FILED IN COMPLIANCE WITH THE NOTICE U/S. 153A. THE MALAFI DE INTENTION OF THE ASSESSEE HAS FURTHER BEEN PROVED AS THE ASSESSEE HAD PAID TAX ONLY `. 2,00,000/- TILL THE DATE OF FILING OF THE REVISED RETURN AND EVEN TILL TODAY AS AGAINST REQUIRED TAX OF `. 28,34,000/- ON THE ABOVE ADDITIONAL INCOME. HAD TH E INTENTION OF THE ASSESSEE BEEN BONAFIDE, HE WOULD HAVE DEPOSITED THE TAX WELL IN TIME I.E. BEFORE MARCH, 2007. BY REVISING T HE RETURN OF INCOME, THE ASSESSEE CANNOT BE ESCAPED FROM THE PENAL PROVISIONS. IN FACT THE ASSESSEE HAS RETRACTED FROM HIS STA TEMENT BY NOT DISCLOSING THE ADDITIONAL INCOME OF `. 40,00,0 00/- IN THE RETURN FILED IN COMPLIANCE WITH NOTICE U/S. 153A. M OREOVER, THE FACTS IN THE CASE OF THE ASSESSEE ARE TOTALLY DIFFERENT T O THE FACTS OF THE CASES RELIED UPON BY THE ASSESSEE. IN THE CASE OF THE ASSESSEE THERE WAS A SEARCH AND SEIZURE OPERATION AND DUR ING THE COURSE OF SEARCH THE ASSESSEE HAD ADMITTED HIS ADDITIO NAL INCOME U/S. 132(4) WHEREAS IN THE CASES RELIED UPON BY THE ASSESSEE THE ADDITIONAL INCOME WAS OFFERED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE RATIO OF CASE LAW S RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS I AM SATISFIED THAT THIS IS A FIT CASE FOR LEVYING PENALTY WITHIN THE MEANING OF S EC. 271(1)(C) OF THE I.T. ACT, 1961. THE MINIMUM AND MAXIMUM PEN ALTY WORKS OUT TO `. 13,75,395/- AND `. 41,26,185/-. HOWEVER, AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE A P ENALTY OF `. 14,00,000/- IS IMPOSED U/S. 271(1)(C) OF THE I.T. A CT, 1961. ISSUE NOTICE OF DEMAND AND CHALLAN. 4. ON FURTHER APPEAL BEFORE THE LD. CIT(A), THE CIT (A) HELD AS FOLLOWS: HAVE CONSIDERED THE PENALTY ORDER AND THE SUBMISSIONS OF THE APPELLANT. LOOKING INTO THE DISCLOSUR E OF THE ADDITIONAL INCOME U/S. 132(4) OF THE I.T. ACT , THE MANNER OF THE DISCLOSURE, THE OMISSION TO INCLUDE THE DISCLOSURE IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/S. 153A OF THE I.T. ACT AND THE CIRCUMSTANCE S LEADING TO THE FILING OF REVISED RETURN I FIND THE PENALTY L4EVIED JUSTIFIED. TO THIS END, IN THE FIRST PLACE, I FIND THAT AFTER OMITTING TO INCLUDE THE ADDITIONAL INCOME OFF ERED IN THE RETURN OF INCOME DESPITE OFFERING IT U/S. 132(4) OF THE ITA NO. 184/M/2010 4 I.T. ACT, THE APPELLANT LOST THE IMMUNITY GRANTED B Y THE EXEMPTION PROVIDED IN CLAUSE 2 OF EXPLANATION 5 TO S EC. 271(1)(C)/ WITH THE EXEMPTION GONE, THE APPELLANT FELL SQUARELY UNDER THE EXPLANATION. AS MAY BE SEEN, ONCE THE ADMISSION MADE U/S. 132(4) WAS NOT EXTENDED TO THE RET URN OF INCOME AND PAYMENT OF TAX, THERE WAS A VIRTUAL RETRACTION OF THE STATEMENT U/S. 132(4) AND THIS BEING SO, THE APPELLANTS CASE COMES OUT OF THE AMBIT OF THE EXEMPTION PROVIDED IN EXPLANATION 5 AND BY SO, EXPOSE S ITSELF TO THE GENERAL TESTS OF APPLICABILITY OF THE PR OVISIONS OF SEC. 271(1)9C) OF THE I.T. ACT. PLACED ON THIS T OUCHSTONE, I FIND THAT THE APPELLANT DID NOT VOLUNTARILY INCLU DE THE INCOME IN THE REVISED RETURN BUT WAS ONLY FORCED TO D O SO WHEN CONFRONTED WITH THE QUESTIONNAIRE DT. 6.5.2008. AS I FIND, THE REVISED RETURN WAS FILED ON 12.12.2008 I.E. 7 MONTHS AFTER THE QUESTIONNAIRE. THIS IS A POINTER TO T HE FACT THAT DRIVEN BY THE QUESTIONNAIRE AND THE SUBSEQUE NT QUESTIONING DURING THE ASSESSMENT PROCEEDING ON THE BOGUS GIFTS, THE APPELLANT HAD NO ALTERNATIVE BUT TO FINALLY DISCLOSE THE INCOME. OTHERWISE THERE WAS NOTHING TO PREVENT THE APPELLANT FROM, I) HONOURING THE DISCLOSU RE MADE IN THE STATEMENT U/S. 132(4) AND II) IF NOT SO, A T LEAST, FILE THE REVISED RETURN OF INCOME BEFORE BEING QUESTI ONED ON THE OMISSION TO HONOUR THE DISCLOSURE MADE IN THE STATEMENT U/S. 132(4). THAT THE APPELLANT DID NOT RE SORT TO THIS ONLY GOES ON HIS INTENTION THAT HE WAS JOT WILLIN G TO VOLUNTARILY COME CLEAN ON THE ISSUE OF BOGUS GIFTS EVE N AFTER HAVING MADE ADMISSION U/S. 132(4) OF THE I.T. AC T. THIS CHAIN OF EVENTS PROMPTS ME TO HOLD THAT CONTRARY TO WHAT THE APPELLANT CLAIMS, THE DISCLOSURE WAS NOT VOLUNTARY. IN THIS RESPECT, THE DECISIONS IN THE CASES BILAND RAM HARGAN DASS VS CIT 171 ITR 390 (ALL), CIT VS K. SAMPATH REDDY 197 ITR 232 (KAR) AND CIT VS MOHD M. FAROOQUI 259 ITR 132 (RAJ) BEAR SPECIAL MENTION. AS MAY BE NOTED, IN THESE DECISIONS, STHE HONBLE COURTS HAVE V ERY CATEGORICALLY HELD THAT ANY ADMISSION OR DISCLOSURE COM ING AFTER THE DETECTION OF CONCEALMENT CANNOT BE TREATE D AS VOLUNTARY AND AS SUCH, IS LIABLE TO LEVY OF PENALTY U/ S. 271(1)(C) OF THE I.T. ACT. I WOULD ALSO LIKE TO DRA W ATTENTION TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS EXPRESS NEWSPAPERS LTD. 206 ITR 443. THIS DECISIO N IS IN THE CONTEXT OF ADMISSIBILITY OF A CASE BEFORE THE INCOME TAX SETTLEMENT COMMISSION AND IT GRAPHICALLY ENCAPSULATES THE SPIRIT IN WHICH AN HONEST DISCLOSURE SHOULD BE MADE. IN THIS CASE, DELINEATING THE SPIRIT O F CHAPTER XIXA DEALING WITH THE SETTLEMENT COMMISSION T HE ITA NO. 184/M/2010 5 HONBLE SUPREME COURT OBSERVES, THE CHAPTER IS MEANT FOR THOSE ASSESSEES WHO WANT TO DISCLOSE INCOME NOT DISCLOSED TILL THEN TOGETHER WITH THE MANNER IN WHICH THAT INCOME IS DERIVED. IT IS NOT MEANT FOR THOSE WHO COME AFTER THE EVENT I.E. AFTER THE DISCOVERY OF THE PART ICULARS OF INCOME AND ITS SOURCE, OR DISCOVERY OF PARTICULARS OF F RAUD PERPETRATED BY THE ASSESSEE.. WHEN SEEN AGAINST THE BACKGROUND OF THESE OBSERVATIONS OF THE HONBLE SUPREME COURT, I FIND THAT THE DISCLOSURE BY THE APPELLANT DOES NOT PASS THE TEST OF BEING AN HONEST DISCLOSURE AS IT CAME ONLY AFTER DISCOVERY OF PARTICUL ARS OF INCOMEDURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. I ALSO FIND THE CHARACTER OF THE ADDITION ATTRACTING THE PENALTY. TO THIS END, I FIND THAT THE INCOME IN QUE STION REPRESENTS BOGUS GIFTS. THIS IS AGAIN A CLEAR POINTER TO CONSCIOUS CONCEALMENT OF INCOME BY CREATING A FAADE. THE APPELLANT HAS ARGUED THAT ALL NECESSARY DETAILS HAV E BEEN FILED. AT THE SAME TIME, THE APPELLANT HAS ALSO ONCE ADMITTED TO THE BOGUS GIFTS IN THE DISCLOSURE U/S. 132( 4) AND SUBSEQUENTLY, IN THE REVISED RETURN OF INCOME. T HIS SEE-SAW ARGUMENT OF THE APPELLANT IS BLATANTLY CONTRADICTORY IMPLYING THAT THE DETAILS FILED ARE IN ACCURATE AND NOT CREDIBLE. THE APPELLANT IS THUS ALSO GUILTY O F FURNISHING INACCURATE PARTICULARS. THE APPELLANTS R ELIANCE ON THE DECISIONS QUOTED BY HIM IS ALSO MISPLACED IN THAT UNLIKE IN THESE DECISIONS, IN THE APPELLANTS CASE, THER E WAS A DISCLOSURE U/S. 132(4) AND THE ADDITION IS NOT BASED O N THE DISCLOSURE BUT ON INDEPENDENT DETECTION OF BOGUS G IFTS DURING THE SEARCH AND SEIZURE OPERATION. IN LINE WIT H THE FOREGOING, I FIND THE PENALTY JUSTIFIED. IT IS CONFI RMED AND THE GROUND OF APPEAL ARE DISMISSED. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE US. T HE LD. DEPARTMENTAL REPRESENTATIVE SHRI S.T. BIDARI SUBMITTE D THAT THE ASSESSEE HAS ACCEPTED THE QUANTUM ADDITION AND HAS NOT GO NE ON APPEAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SHRI SANJAY R. PARI KH POINTED OUT AT PAGE 40 OF THE PAPER BOOK WHEREIN THE CAPIT AL ACCOUNT HAS BEEN PRODUCED AND THE GIFT GIVEN AT `. 41,00,000/- IS REFLECTED. HE SUBMITTED THAT THE CAPITAL ACCOUNTS OF SHRI DINESH K . SHAH WAS PART OF ITA NO. 184/M/2010 6 THE RETURN FILED. THE LD. COUNSEL FURTHER SUBMITTED T HAT THE AO HAS PROCEEDED ONLY ON THE BASIS OF THE DECLARATION MADE B Y THE ASSESSEE SUO MOTTO WITH RESPECT TO THE GIFTS. HE TOOK US THROUG H PAGE 26 OF THE PAPER BOOK WHERE QUESTION NO. 17 IS AS FOLLOWS: Q.17. HAVE YOU OR YOUR FAMILY MEMBERS RECEIVED GIFT IN CASH/CHEQUE OR IN KIND FROM ANY OTHER PERSONS. IF SO PLEASE GIVE DETAILS OF THE SAME. ANS. MY FAMILY MEMBERS HAVE RECEIVED GIFT OF `. 20,00,000/- APPROX. ABOUT SEVEN AND EIGHT YEARS BACK. I DO NOT REMEMBER THE NAME OF THE DONOR. 7. FURTHER AT PAGE 28 OF THE QUESTIONNAIRE, THE ASSESSEE HAS DECLARED THAT THE TOTAL GIFT RECEIVED BY ME AND MY FAMILY MEMBER AMOUNTS TO `. 50,00,000/-. THE GIFTS AMOUNT OF `. 50 ,00,000/- IS OFFERED FOR TAXATION THOUGH HE WAS NOT ABLE TO PROVE THE IDE NTITY OF THE DONOR AND ELEMENT OF LOVE AND AFFECTION. ALSO AT PAGE 30 & 31 THE ASSESSEE HAS STATED AS FOLLOWS: Q. DO YOU WANT TO SAY ANYTHING? ANS. I HAVE OFFERED AMOUNT OF `. 50,00,000/- ON ACCO UNT OF GIFTS RECEIVED BY VARIOUS FAMILY MEMBERS HAS RECORDED ON PAGES NO. 104, 105 & 39 TO 135 OF FILE A.11. BESIDE S I ALSO AGREED TO PAY TAX ON AMOUNT OF `. 9730755/- BEING T HE S.T.C.G (SHORT TERM CAPITAL GAINS). I REQUEST THAT N O INTEREST AND PENALTY SHOULD BE LEVIED ON THE ABOVE AM OUNT OFFERED BY ME FOR TAXATION, AS THE AMOUNT IS OFFERED VOLUNTARILY. I HAVE READ THE ABOVE STATEMENT. THE STATEMENT IS EXPLAINED BY MY SON PRASHANT BHADRA. THE STATEMENT IS CORRECTLY RECORDED. 8. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISIO N OF ITAT DELHI BENCH G (THIRD MEMBER) IN THE CASE OF ACIT V S PREM CHAND GARG 31 SOT 97 . ITA NO. 184/M/2010 7 9. WE HEARD BOTH THE PARTIES. IN THE PRESENT CASE THE DISCLOSURE BY THE ASSESSEE HAS COME ONLY AFTER DISCOVERY OF PARTICULARS OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE F ILED REVISED RETURN ONLY AFTER THE ASSESSEE HAD ADMITTED OF THE BOGUS GIFTS IN THE DISCLOSURE U/S. 132(4). HENCE THE FACT IS THAT THE ADDITION IS BASED ON INDEPENDENT DETECTION OF BOGUS GIFTS DURING T HE SEARCH AND SEIZURE OPERATION AND ONLY SUBSEQUENTLY THE REVISED RE TURN OF INCOME WAS FILED BY THE ASSESSEE. THE CASE OF BILAND RAM HARG AN DASS VS CIT 171 ITR 390, THE ALLAHABHAD HIGH COURT HAS HELD THAT ANY ADMISSION OR DISCLOSURE COMING AFTER THE DETECTION OF C ONCEALMENT CANNOT BE TREATED AS VOLUNTARY AND AS SUCH, IS LIABLE T O LEVY OF PENALTY U/S. 271(1)(C) OF THE I.T. ACT. HENCE WE CONFIRM TH E PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON THIS 4 TH DAY OF MAY, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 4 TH MAY, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 184/M/2010 8 DATE INITIALS 1 DRAFT DICTATED ON: 2 . 5.2 011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 2 .0 5 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10. DATE OF DISPATCH OF ORDER: _________ ______
