Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 6798 (ITAT-AGRA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 1 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-06-2010
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
25-05-2010
Assessment Year
2002-2003
Appeal Filed On
02-05-2008
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.619/AGR/2008 ASST. YEAR: 2003-04 A.C.I.T. 4(1), AGRA. VS. DR. S.D. MAURYA, 404, KAUSHALPUR, BYE PASS ROAD, AGRA. (PAN : ABFPM 3782 K). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. MISHRA, SR. D.R. RESPONDENT : SHRI R.C. TOMAR, I.T.P. & SHRI ANIL VERMA, ADVOCATE ITA NO.189/AGR/2008 ASST. YEAR: 2002-03 A.C.I.T. 4(1), AGRA. VS. DR. R.C. MI SHRA, 2/4AB, SWADESHI BIMA NAGAR AGRA. (PAN : AFLPM 2085 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. MISHRA, SR. D.R. RESPONDENT BY : SHRI R.C. TOMAR, I.T.P. ORDER PER P.K. BANSAL, A.M.: THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINS T TWO SEPARATE ORDERS OF THE CIT(A) DATED 17.07.2008 AND 04.02.2008 RESPECTIVELY AGAINS T THE DELETION OF THE PENALTY UNDER SECTION 271(1) (C) OF THE INCOME-TAX ACT, 1961 (THE ACT H EREINAFTER) IN EACH CASE. 2 2. SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS AR E SIMILAR, WE ARE DISPOSING OF BOTH THE APPEALS TOGETHER BY TAKING THE FACTS IN THE CASE OF DR. S.D. MAURYA IN ITA NO.619/AGR/2008. 3. BOTH THE LD. D.R. AND THE LD. A.R. AGREED THAT T HE FACTS INVOLVED IN BOTH THE CASES ARE SIMILAR EXCEPT CHANGE IN THE QUANTUM OF THE LTCG SU RRENDERED BY EACH OF THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN DISCLOSING THE INCOME OF RS.20,69,809/- IN THE COMPUTATION OF THE INCOME ENC LOSED WITH THE RETURN. THE ASSESSEE HAS SHOWN LTCG OF RS.9,95,700/- ON SALE OF SHARES AND C LAIMED EXEMPTION UNDER SECTION 54F OF THE ACT FOR THE SAME. HOWEVER DURING THE ASSESSMENT PR OCEEDINGS THE ASSESSEE FILED REVISED RETURN ON 22.12.2004 SURRENDERING THE LTCG AND PAID TAX TH EREON WITH THE CONDITION THAT NO PENAL ACTION WILL BE TAKEN AGAINST HIM AS MENTIONED IN TH E REASONS FOR REVISING THE RETURN AND AS REPRODUCED IN THE ORDER OF THE CIT(A) UNDER PARA NO .2.1. THE A.O. MADE ADDITION OF RS.10,95,700/- INCLUDING RS.1,00,000/- INVESTED IN THE PURCHASE OF SHARES. THE TRIBUNAL DELETED THE ADDITION OF RS.1,00,000/-. THE A.O. IMPOSED PE NALTY UNDER SECTION 271(1)(C) HOLDING THAT THE ASSESSEE HAS DELIBERATELY CONCEALED THE PARTICULARS AND FURNISHED INACCURATE PARTICULARS IN RESPECT OF RS.10,95,700/- CLAIMED BY THE ASSESSEE AS LTCG I N THE RETURN FILED BY HIM. HE ACCORDINGLY IMPOSED THE PENALTY OF RS.10,50,243/-. 5. WHEN THE MATTER WENT BEFORE THE CIT(A) THE CIT(A ) DELETED THE PENALTY BY OBSERVING UNDER PARA NO.7 AS UNDER :- I HAVE CONSIDERED THE PENALTY ORDER, SUBMISSIONS O F THE ASSESSEE, ARGUMENTS OF THE A.R. AND THE EXPLANATION 4(B) UNDE R SECTION 271 AMENDED BY 3 THE FINANCE ACT 2007 WITH RETROSPECTIVE EFFECT. TH E A.O. EXCEPT DISBELIEVING THE SUBMISSIONS OF THE ASSESSEE HAS NOT BROUGHT ANY EVI DENCE ON RECORD TO JUSTIFY IMPOSITION OF PENALTY. IT HAS ALSO BEEN ARGUED THA T THE PENALTY NOTICE ISSUED BY THE A.O. WAS FOR THE TWIN DEFAULTS I.E. CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS SHOWS THAT THE A.O. EVEN AT THE STAGE OF INITIATION OF PENALTY PROCEEDINGS WAS NOT CLEAR IN HIS MIND AS TO WHETHER ASSESSEE HAS CONCEALED THE INCOME OR HAS FURNISHED INACCURAT E PARTICULARS OF INCOME OR DONE BOTH BUT PENALTY HAS BEEN IMPOSED FOR CONCEALM ENT OF INCOME. THE ABOVE FACTS AND VARIOUS CASE LAWS CITED BY THE ASSESSEE S UPPORT THE CONCLUSION THAT LEVY OF PENALTY U/S 271(1)(C) AMOUNTING TO RS.3,50,081/- IS NOT JUSTIFIED. THE PENALTY OF RS.3,50,081/- IS, THEREFORE, DELETED. 6. LD. D.R. RELIED ON THE ORDER OF THE A.O. WHILE T HE LD. A.R. RELIED ON THE ORDER OF THE CIT(A) AND CONTENDED THAT THE PENALTY HAS BEEN IMPO SED BY THE A.O. ON THE TWIN DEFAULTS WHERE THE A.O. HAS NOT IDENTIFIED THE PARTICULAR DEFAULT FOR WHICH THE PENALTY HAS BEEN IMPOSED. THE ASSESSEE HAS SUBMITTED RETURN VOLUNTARILY MAKING SU RRENDER OF ADDITIONAL INCOME BEFORE THE COMPLETION OF THE ASSESSMENT BY FILING THE REVISED RETURN. THE ASSESSMENT HAS BEEN MADE ON THE REVISED RETURN AND SHOWING DIFFERENCE IN THE INCOME ASSESSED AND THE REVISED RETURN FILED. THE ASSESSEE PURCHASED 10000 SHARES OF M/S. SURYA UDYOG THROUGH M/S. S.J. CAPITAL LIMITED FOR RS.1,00,000/- THROUGH D.D. THE ADDITION MADE FOR T HE SAID INVESTMENT WAS DELETED BY THE I.T.A.T. VIDE ORDER IN ITA NO.268/AGR/2006. THE SH ARES WERE SOLD THROUGH M/S S.J. CAPITAL LIMITED, NEW DELHI AS PER PAPER BOOK PAGE NOS.32 TO 33 @ RS.110/- PER SHARE. THE RETURN WAS FILED ON 28.11.2003 WHICH WAS REVISED ON 23.12.2004 SUO MOTU. THE REASONS FOR REVISING THE RETURN CLEARLY STATES THAT RETURN IS VOLUNTARY AND IN GOOD FAITH ON CONDITION THAT NO PENAL ACTION WILL BE TAKEN AGAINST THE ASSESSEE. THE ASSESSEE H AD ALL THE EVIDENCES FOR THE PURCHASE AND SALE OF THE SHARES. NOTICE UNDER SECTION 143(2) AND 142 (1) WAS ISSUED ON 29.04.2005 AND 06.07.2005 I.E. AFTER FILING OF THE RETURN. THE PENALTY PROCE EDINGS WERE INITIATED WITHOUT ANY SPECIFIC CHARGE. RELIANCE WAS PLACED IN THIS REGARD ON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF NEW 4 SORATHIA ENGINEERING CO. VS. CIT, 282 ITR 642 (GUJ) . RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS :- ITO VS. SMT. LALITA IN ITA NO.433/AGR/2009 FOR A.Y. 1998-99 KM. RUCHI RATHORE VS. ITO IN ITA NO.97/AGR/2007 FOR A.Y. 1998-99 SMT. RAJ RANI MITTAL VS. ITO IN ITA NO.2275/DEL/200 9 OF ITAT DELHI BENCH A 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE H AVE ALSO GONE THROUGH THE CASE LAWS CITED BEFORE US. SECTION 271(1)(C ) READS AS UNDER: 271.(1) IF THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDE R THIS ACT, IS SATISFIED THAT ANY PERSON - (A) .. (B) .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) .. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEA LS) OR THE COMMISSIONER TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 8. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT PENALTY U/S 271(1)(C ) IS LEVIABLE IF THE A.O. IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF THE INCOME. 5 THE PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDI NGS, BOTH ARE DIFFERENT. EXPLANATION 1 TO SECTION 271(1)(C) STATES THAT THE AMOUNT ADDED OR D ISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RE SPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION IS NOT ABSOLUTE ONE BUT IS REBUT TABLE ONE. IT ONLY SHIFTED THE ONUS ON THE ASSESSEE. EXPLANATION 1 REFERS TO THE TWO SITUATIONS IN WHICH PRESUMPTION OF THE CONCEALMENT OF THE PARTICULARS OF INCOME IS DEEMED. THE FIRST SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUND BY THE AO OR THE COMMISSIONER TO BE FALSE. THE SECOND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY F ACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME OFFERS AN EXPLANATION, WHICH THE ASSESSEE I S NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONAFIDE ONE AND TH AT ALL THE FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESU MPTION AVAILABLE UNDER EXPLANATION TO SECTION 271(1), CANNOT BE DRAWN UNLESS THE CASE OF THE ASSESSEE FALLS UNDER EITHER OF THE CLAUSES (A) OR (B). IN THIS CASE, WE NOTED THAT THE AO HAS NOT BROUGHT OUT ANY SPECIFIC CHARGE FOR WHICH THE PENALTY HAS BEEN IMPOSED ON THE ASSESSEE U/S 27 1(1)(C) OF THE INCOME-TAX ACT. HE HAS NOT BROUGHT OUT WHETHER THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED THE INACCURATE PARTICULARS OF THE INCOME. THIS IS APPARENTLY CLEA R FROM PAGE 2 OF THE ASSESSMENT ORDER AS WELL AS PAGE 2 OF THE PENALTY ORDER WHERE THE AO HELD THAT THIS AMOUNTS TO CONCEALMENT OF TRUE PARTICULARS AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. WE HAVE GONE THROUGH THE DECISION OF THE GUJARAT HI GH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. LTD., 282 ITR 642, IN WHICH IT WAS HELD AS UNDER:- 6 IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STAT E WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED BY THE ASSESSEE. --------------------------------------------------- ----------------- --------------------------------------------------- ------------------------ HELD, THAT THE PENALTY ORDER AND THE ORDER OF THE C OMMISSIONER (APPEALS) SHOWED THAT NO CLEAR CUT FINDING HAD BEEN REACHED. THE TRIBUNAL HA D FAILED TO APPRECIATE THIS LEGAL. ISSUE. THE RATIO IN CIT V. MANU ENGINEERING WORKS 122 ITR 306(GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT BE UPHELD BY THE TRIBUNAL. THE ORDER WAS INVALID. 9. WE ARE OF THE VIEW THAT ON THIS BASIS ITSELF PEN ALTY ORDER PASSED UNDER SECTION 271(1)(C) CANNOT BE SUSTAINED AND ACCORDINGLY THE PENALTY IMP OSED STAND DELETED. 10. SINCE BOTH THE PARTIES HAVE ARGUED THE CASE EXT ENSIVELY, WE, THEREFORE, DEAL WITH THE OTHER SUBMISSION MADE BY THEM. WE NOTED FROM THE FACTS T HAT THE ASSESSEE HAS SURRENDERED A SUM OF RS.9,95,700/- IN RESPECT OF THE CAPITAL GAIN ON THE PURCHASE AND SALE OF 10000 SHARES OF M/S. SURYA UDHYOG LIMITED. THE TRANSACTION FOR THE PURC HASE AND SALE OF THE SHARES HAS CARRIED OUT THOUGH ASSESSEES REGULAR BANK ACCOUNT. THE SURREN DER HAS BEEN MADE BY THE ASSESSEE BY FILING THE REVISED RETURN ENCLOSING REASONS THEREON AS GIV EN IN PAGE NO.42 OF THE PAPER BOOK. IN THE REASONS, IT WAS CLEARLY MENTIONED THAT THE REVISED RETURN IS FILED VOLUNTARILY IN GOOD FAITH ON THE CONDITION THAT NO PENAL OR OTHER CONSEQUENCE WILL B E TAKEN AGAINST THE ASSESSEE. THE OFFER FROM THE ASSESSEE WAS CONDITIONAL. THE A.O. ALTHOUGH MA DE THE ASSESSMENT AS PER THE REVISED RETURN BUT IMPOSED PENALTY ON THE BASIS OF THE AMOUNTS SUR RENDERED BY THE ASSESSEE IN THE REVISED RETURN. THESE FACTS ARE APPARENT FROM THE ASSESSME NT ORDER. THE SURRENDER IS MADE BY THE ASSESSEE BEFORE THE ISSUE OF ANY NOTICE FROM THE A. O. UNDER SECTION 143(2) OR 142(1). EXPLANATION-1, IN OUR OPINION, WILL NOT APPLY TO TH E FACTS OF THE CASE AND THE ONUS REMAINS ON THE DEPARTMENT TO PROVE THAT THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF THE INCOME. THE ONUS IS ON THE DEPA RTMENT TO PROVE THAT THE ASSESSEE HAS CONCEALED 7 THE INCOME. THE ASSESSEE WAS HAVING EVIDENCE FOR T HE PURCHASE AND SALE OF THE SHARES. CLAIM OF THE ASSESSEE THAT HE WAS IN POSSESSION OF THE SHARE IS NOT DISPUTED OR DOUBTED BY THE REVENUE. THE ASSESSEE HAS DULY PAID THE TAXES BEFORE THE ISS UANCE OF NOTICE UNDER SECTION 143(2) OR 142(1). THE SURRENDER OF INCOME WAS VOLUNTARY AND NOT AFTER THE INCOME WAS DETECTED BY THE REVENUE. THE ACTION OF THE ASSESSEE IS BONAFIDE SO AS TO ABS OLVE HIM FROM LEVY OF PENALTY. THE CASE OF THE ASSESSEE, IN OUR OPINION, IS DULY COVERED BY THE DE CISION OF SMT. RAJ RANI MITTAL VS. ITO IN ITA NO.2275/DEL/2009 AS RELIED ON BY THE LD. A.R. AND T HAT OF ITO VS. SMT. LALITA IN ITA NO.433/AGR/2009 AND THAT OF KM. RUCHI RATHORE VS. I TO IN ITA NO.97/AGR/2007 TO WHICH THE UNDERSIGNED IS THE AUTHOR. IN THE CASE OF KM. RUCH I RATHORE VS. ITO, THIS BENCH HAS HELD AS UNDER :- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT WHEN THE ASSESSEE FILED ORIGINAL RETURN OF INCOME, HE WAS IN POSSESSI ON OF VALID DOCUMENTS SHOWING THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS ARISING ON TRANSFER OF SHARES AND GIVING RISE TO LONG TERM CAPITAL GAIN. THE SAME WA S DULY OFFERED AS INCOME. THE ASSESSEE FILED REVISED RETURN AFTER ISSUANCE OF NOT ICE U/S.143(2), BUT PRIOR TO CONDUCTING ANY FURTHER ENQUIRY BY THE ASSESSING OFF ICER. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE REVISED RETURN WAS FILED AFTER THE ASSESSEE WAS CORNERED AND HE COULD NOT EXPLAIN THE GENUINENESS OF CAPITAL GAINS IN VIEW OF THE EVIDENCE IN POSSESSION OF THE ASSESSING OFFICER. RATHER, TH E ASSESSING OFFICER DID NOT HAVE IN HIS POSSESSION ANY EVIDENCE TO HOLD THAT THE CAP ITAL GAIN DECLARED BY THE ASSESSEE WAS BOGUS. UNDER SECTION 139(5) OF THE AC T, THE ASSESSEE CAN FILE A REVISED RETURN IF HE DISCOVERS ANY OMISSION OR A WR ONG STATEMENT THEREIN. PRIOR TO FILING OF REVISED RETURN, THE ASSESSING OFFICER HAD NOT MADE ANY ENQUIRY NOR WAS IN POSSESSION OF ANY INFORMATION THAT THE CLAIM OF ASSESSEE FOR REALIZING LONG TERM CAPITAL GAIN IS BOGUS. EVEN THE ENQUIRY CONDUCTED BY THE DDI WAS AFTER FILING OF THE REVISED RETURN. THEREFORE, IT CAN BE SAID THAT THE REVISED RETURN WAS FILED VOLUNTARILY AND IN GOOD FAITH. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHAND MITTAL, 251 ITR 9 (SC) HELD THAT IN A CASE WHERE THE ASSESSEE ORIGINALLY FILED RETURN SHOWING MEAGER INCOME, BUT AFTER ACTION U/S.132 IN RESPONSE TO NOTICE U/S.148, THE ASSESSEE FILED REVI SED RETURN SHOWING HIGHER INCOME AND THE EVENTUAL ASSESSMENTS WERE BASED ON S UCH RETURN, PENALTY U/S.271(1)(C) IS NOT LEVIABLE WHERE THE ADDITIONAL INCOME IS OFFERED TO BUY PEACE OF MIND AND TO AVOID LITIGATION. HONBLE SUPREME C OURT HELD THAT WHERE THE CONCLUSION OF THE TRIBUNAL WAS THAT THE ACT OF SURR ENDER WAS VOLUNTARILY DONE BY THE ASSESSEE IN GOOD FAITH, IN SUCH A SITUATION, PE NALTY IS NOT LEVIABLE. SINCE IN THE 8 PRESENT CASE, THE FACTS ARE IDENTICAL, WE HOLD THAT THE PENALTY IS NOT LEVIABLE U/S.271(1)(C) OF THE ACT. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. 11. RESPECTFULLY FOLLOWING THE SAID DECISIONS AND S INCE THE FACTS ARE IDENTICAL WE HOLD THAT THE PENALTY IS NOT LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2010). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY
