Shri Manharlal N.Modi,HUF, Surat V. The Income tax Officer,Ward-2(4), Surat

ITA 2063/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9201 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 26-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Unexplained cash credit; Onus to prove; Revised return
• Section: 271(1)(c); 251; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI H.L. KARWA, JUDICIAL MEMBER AND SHRI A.N.PAHUJA, ACCOUNTANT MEMBER ITA NO.2063 TO 2066/AHD/2009 ASSESSMENT YEAR:2005-06 DATE OF HEARING:27.8.09 DRAFTED:27.8.09 1.SHRI MANHARLAL N MODI HUF, 2/625, SURMAVAD, RUSTAMPURA, SURAT [PAN:AACHM3696J] 2. SHRI MANHARLAL N MODI,631/1,GIDC,SACHIN SURAT [PAN:ABXPM7527Q] 3. SMT. PRITY BUNTYKUMAR MODI, PROP. SITA TEX, 2/623, SURMAVAD, RUSTAMPURA, SURAT [PAN:ABDPM3437B] 4. SHRI BUNTYKUMAR S MODI, PROP. RAM TEX, 2/623, SURMAVAD, RUSTAMPURA, SURAT [PAN :ABDPM3250E] V/S . INCOME TAX OFFICER, WARD-2(4),602,AAYAKAR BHAWAN,MAJURA GATE, SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI VIJAY RANJAN, AR REVENUE BY:- SHRI M.C. PANDIT, SR. DR O R D E R A.N.PAHUJA:- THESE APPEALS BY FOUR DIFFERENT ASSESSEES DIR ECTED AGAINST FOUR SEPARATE ORDERS DATED 31-03-2009 OF THE LD. CIT(APPEALS)-II, SURAT , RAISE THE FOLLOWING COMMON GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN CONFIRMING PENALTY OF RS.2,80,388 IN CASE OF SHRI MANHARLAL N MODI HUF,RS.65,331 IN CASE OF SHRI MANHARLAL N MO DI, RS.3,13,038/- IN CASE OF SMT. PRITY BUNTYKUMAR MODI AND ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 2 RS.1,12,682/- IN CASE OF SHRI BUNTYKUMAR S MODI, LEVIED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE I.T. ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 2. THE ONLY ISSUE IN THESE APPEALS RELATES THE LEV Y OF PENALTY U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) ON THE AMOUNTS OF CASH LOANS DISCLOSED BY THE RESPECTIVE ASSESSEES IN THEIR REVISED RETURNS FILED AFTER ISSUE OF NOTICE U/S.143(2) OF T HE ACT. FACTS , IN BRIEF, AS PER RELEVANT ORDERS REVEAL AS UNDER:- NAME OF THE ASSESSEE DATE OF FILING RETURN & AMOUNT(IN RS.) DATE OF FILING REVISED RETURN & INCOME DECLARED(IN RS.) DATE OF ISSUE OF NOTICE U/S.143(2) DATE OF COMPLETION OF ASSESSMENT /TOTAL INCOME /CONCEALED INCOME(IN RS.) DATE OF PENALTY LEVIED U/S. 271(1)(C) AND AMOUNT(IN RS.) SH.MANHARLAL N MODI (HUF) 27-10-05/ 1,23,230 27-10-06/ 9,56,230 18-10-06 23.10.07/ 9,57,725/ 8,33,000 28.04.08/ 2,80,388 SH. MANHARLAL N MODI 25.10.05/ 1,68,100 27.10.06/ 3,81,600 18.10.06 23.10.07/ 4,09,014/ 2,13,500 28.04.08 65,331 SMT. PRITY BUNTYKUMAR MODI, 21.10.2005/ 1,23,340 27.10.06/ 10,35,340 18.10.06 22.10.07/ 11,63,820/ 9,30,000 28.4.08/ 3,13,038 SHRI BUNTYKUMAR S MODI 27.10.2005/ 1,52,470 27.10.06/ 5,00,446 18.10.06 22.10.07/ 5,75,591/ 3,67,000 28.4.08/ 1,12,682 WHILE COMPLETING THE ASSESSMENTS , THE ASSESSING OF FICER[AO IN SHORT] ISSUED A NOTICE U/S 271(1)(C) OF THE ACT SINCE THESE ASSES SEES DID NOT ESTABLISH EITHER IDENTITY OR CREDITWORTHINESS OF THE PERSONS FROM WH OM CASH LOANS WERE RECEIVED NOR THE GENUINENESS OF TRANSACTIONS WITH T HEM. THESE ASSESSES DID NOT FILE ANY APPEAL AGAINST THE ASSESSMENTS COMPLET ED IN PURSUANCE TO ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 3 REVISED RETURNS FILED BY THE RESPECTIVE ASSESSES. S UBSEQUENTLY, IN RESPONSE TO A SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY U/S.271( 1)(C) OF THE ACT, THE ASSESSEES SUBMITTED VIDE THEIR LETTERS DATED 17-04 -2008 THAT THE REVISED RETURNS HAD BEEN FILED VOLUNTARILY WHEREIN THE CASH LOANS RAISED DURING THE YEAR WERE DISCLOSED AS INCOME FROM OTHER SOURCES IN ORDER TO BUY PEACE OF MIND AND AVOID LITIGATION. SINCE THERE WAS NO MATER IAL ON RECORD REGARDING CONCEALMENT OF INCOME BY THESE ASSESSEES WHILE RELY ING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SURESH CHANDRA MITTAL (2001) 251 ITR 9 (SC), THEY CONTENDED THAT NO PENALTY IS L EVIABLE. HOWEVER, AO DID NOT ACCEPT THESE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE REVISED RETURNS FILED U/S.139(5) OF THE ACT WERE INVALID RE TURNS, THERE BEING NO OMISSION OR WRONG STATEMENT IN THE ORIGINAL RETURNS OF INCOM E PROCESSED U/S.143(1) OF THE ACT AND THE RETURNS WERE REVISED ONLY AFTER THE ISSUE OF NOTICE U/S.143(2) OF THE ACT. ACCORDING TO THE AO, THERE WAS DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEES TO CONCEAL THEIR INCOME, SINCE REVISED RE TURNS HAD NOT BEEN FILED VOLUNTARILY. ACCORDINGLY, RELYING UPON THE DECISION S IN THE CASE OF CIT V. K. MAHIM (1984) 149 ITR 737 (KER) AND RANI AND CO. V ACIT 271 ITR 286 (MAD) AND DISTINGUISHING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF SURESH CHANDRA MITTAL (SUPRA), THE AO LEVIED PENALTY U/S RS.271(1)(C) OF THE ACT ON THE AMOUNT OF CASH LOANS DISCLOSED IN THE R ESPECTIVE REVISED RETURNS. 4. ON APPEAL, THE LD. CIT(APPEALS) UPHELD THE LEVY OF PENALTY, HOLDING AS UNDER IN THE CASE OF MANHERLAL N MODI,HUF:- 5. I HAVE CAREFULLY CONSIDERED THE ISSUE. IT HAS B EEN STATED BY THE AR THAT THE NOTICE FOR SCRUTINY ASSESSMENT WERE SERVED ON THE MEMBERS OF THE GROUP IN OCTOBER, 2006. TWO OF THE MEMBERS OF T HE GROUP HAD FIELD THEIR REVISED RETURNS IN SEPTEMBER, 2006 WHEREAS, T HE REMAINING HAD FILED IN OCTOBER, 2006. INTERESTINGLY, THE AR TALKS OF THE GROUP AND DOES NOT IDENTIFY THE ASSESSEE; WHEN THE NOTICE U/S.143( 2) WAS SERVED AND WHEN THE REVISED RETURN WAS FILED BY HER. IT HAS BE EN CLEARLY RECORDED BY THE AO THAT THE NOTICE U/S.143(2) DATED 18-10-2006 WAS SERVED ON THE ASSESSEE ON 19-10-2006. THE REVISED RETURN WAS FIE LD ON 27-10-2006 I.E. 8 DAYS AFTER THE SERVICE OF THE NOTICE. THE AR 'S ARGUMENT IS THEREFORE FACTUALLY INCORRECT & TOTALLY IRRELEVANT. ALSO IRRELEVANT IS HIS CLAIM REGARDING THE ROLE OF THE NEW TAX ADVISOR APP OINTED BY THE SO- ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 4 CALLED GROUP AND THE ADVICE RENDERED BY THEM REGA RDING THE DISCLOSURE OF THE CASH LOANS. IT IS THEREFORE ABSOL UTELY CLEAR THAT THE FILING OF THE REVISED RETURN BY THE ASSESSEE WAS NOT REALL Y A VOLUNTARY ACT. IT IS ALSO CLEAR THAT THE ASSESSEE AND THE OTHER MEMBE R OF THE GROUP HAD TAKEN THE CHANCE OF INTRODUCING UNACCOUNTED MONIES IN THE FORM OF CASH LOANS, AND WAITED TO SEE WHETHER THEIR CASES WERE S ELECTED FOR SCRUTINY. THE ASSESSEE HAD FILED THE ORIGINAL RETURN OF INCOM E ON 27-10-2005 WHICH WAS PROCESSED U/S.143(1) ON 02-03-2006 ACCEPT ING THE RETURNED INCOME OF RS.1,23,230. THE ASSESSEE WAITED FOR A W HOLE YEAR TO REVISE THE RETURN OF INCOME AND DID SO NOT AFTER BEING PRO CESSED U/S.143(1), BUT ONLY AFTER THE CASE WAS SELECTED FOR SCRUTINY A ND THE NOTICE U/S.143(2) WAS ISSUED. 5.1 IT HAS BEEN ARGUED BY THE AR THAT NO EFFORT WAS MADE BY THE AO TO MAKE ANY INQUIRY OR GATHER ANY INFORMATION. HE HAD THUS FAILED TO DISCHARGE THE BURDEN THAT LAY ON HIM TO SHOW THAT T HE CASH CREDITS WERE NOT GENUINE. SUCH ARGUMENT IS COMPLETELY MISPLACED. THE BURDEN WAS ENTIRELY ON THE ASSESSEE TO DECLARE THE TRUE INCOME OF THE YEAR IN THE RETURN FILED U/S.139(1) OF THE IT ACT. THIS BURDEN WAS NOT DISCHARGED AND THE DECLARATION OR DISCLOSURE OF THE UNDISCLOSED IN COME OF RS.8,33,000 WAS MADE ONLY AFTER THE PROCEEDINGS FOR SCRUTINY WA S INITIATED BY THE AO. ONCE THE DECLARATION HAD BEEN MADE AND THE CASH LOANS ACCEPTED, THERE WAS NOTHING LEFT FOR THE AO TO MAKE ANY INQUI RY OR ANY INVESTIGATION. 5.2 GIVEN SUCH FACTS OF THE CASE AS DISCUSSED ABOVE . THERE REMAINS NO DOUBT ABOUT THE ASSESSEES LIABILITY TOWARDS THE LE VY OF PENALTY U/S.271(1)(C) OF THE IT ACT. THE AO'S ACTION IS THE REFORE SUSTAINED, AND THE LEVY OF PENALTY OF RS.2,80,388 IS CONFIRMED. 4.1 SIMILAR FINDINGS WERE RECORDED BY THE LD. CI T(A) IN OTHER THREE CASES WHILE UPHOLDING LEVY OF PENALTY. 5. THESE ASSESSEES ARE NOW IN APPEAL BEFORE US AGA INST THE AFORESAID FINDINGS OF THE LD. CIT(APPEALS). THE LD. AR ON BE HALF OF THE ASSESSEE CONTENDED THAT IN THE CASE OF SMT. NIRUPABEN S MOD I AND SMT. RESHMA JITESHKUMAR MODI, WHEREIN RETURNS WERE REVISED IN S EPTEMBER,2006 BEFORE ISSUE OF NOTICE U/S.143(2) OF THE ACT, THE LD. CIT( APPEALS) CANCELLED THE PENALTY ON THE GROUND THAT FILING OF RETURNS WAS VO LUNTARY WHILE IN SIMILAR CIRCUMSTANCES, WHEREIN THE REVISED RETURNS WERE FIL ED AFTER ISSUE OF NOTICE U/S.143(2) OF THE ACT, THE LD. CIT(APPEALS) UPHELD THE LEVY OF PENALTY ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 5 U/S.271(1)(C)OF THE ACT .RELYING ON THE DECISIONS I N THE CASE OF SURESH CHANDRA MITTAL (SUPRA); CIT V. RAJENDRA PRASAD GUPTA (1996) 220 ITR 558 (PATNA); CIT V. SRI RAJRAM CLOTH STORES (1995) 214 ITR 262 (MAD); CIT V. SURAJ BHAN (2007) 294 ITR 481 (P & H); CIT V. RAJIV GARG & OTHERS (2009) 313 ITR 256 (P & H) AND ACIT V. PREM CHAND GARG (2009) 31 SOT 97 (DEL)[TM], THE LD. AR CONTENDED THAT SINCE THE AMOU NT OF CASH LOANS WERE DISCLOSED IN THE REVISED RETURNS VOLUNTARILY, BEFOR E DETECTION OF ANY CONCEALMENT BY THE AO,THERE IS NO JUSTIFICATION FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. ON THE OTHER HAND, THE LD. DR SUPPORTE D THE FINDINGS OF THE LD. CIT(APPEALS). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT NEITHER THE ASSESSMENT ORDER NOR THE PENA LTY ORDER CONTAINS ANY MATERIAL SUGGESTING THAT THE DIFFERENTIAL INCOME DECLARED BY THE ASSESSEE IN THE REVISED RETURNS, WAS DETECTED BY THE DEPARTMENT BEFORE THES E ASSESSEES CAME FORWARD TO FURNISH THE REVISED RETURNS. UNDISPUTEDLY, THE LD. CIT(APPEALS) CANCELLED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IN THE CASE OF SMT . NIRUPABEN S MODI AND SMT. RESHMA JITESHKUMAR MODI, WHEREIN THE RETURNS WERE R EVISED BEFORE ISSUE OF NOTICE U/S.143(2) OF THE ACT, DECLARING CASH LOANS AS INCO ME FROM OTHER SOURCES WHILE IN THESE FOUR APPEALS BEFORE US, THE LD. CIT(APPEALS) UPHELD THE PENALTY U/S.271(1)(C) OF THE ACT SIMPLY BECAUSE THE RETURNS WERE REVISED VOLUNTARILY AFTER ISSUE OF NOTICE U/S.143(2) OF THE ACT. THERE IS NOTHING TO SUGGEST THAT AO UNDERTOOK ANY INQUIRIES REGARDING CASH LOANS SURRENDERED BY THESE ASSESSEES IN THEIR RESPECTIVE REVISED RETURNS . THESE ASSESSEES STATED THAT RETURNS WERE REVISED VOLUNTARILY SINCE THE NEW TAX CONSULTANT ENGAGED BY THEM REALISED THAT CONCER NED PERSONS MAY NOT COME FORWARD TO CONFIRM THE LOANS AND ACCORDINGLY, THE A MOUNT OF CASH LOANS WAS DECLARED AS INCOME FROM OTHER SOURCES IN ORDER TO BUY PEACE AND AVOID LITIGATION. THERE IS NOTHING TO SUGGEST THESE ASSESSEES HAD ADMITTED WHI LE FILING THEIR REVISED RETURNS THAT THEY HAD CONCEALED THE PARTICULARS OF INCOME . THERE WAS NO ACKNOWLEDGMENT OF CONCEALMENT. THERE IS ALSO NO ADMISSION BY THESE AS SESSEES, WHICH CAN BE USED AGAINST THEM THAT THE CREDITS REPRESENTED THEIR INC OME AND THEY HAD CONCEALED THE INCOME IN THE ORIGINAL RETURN. THE BURDEN IS ON THE DEPARTMENT TO PROVE THAT THE ASSESSEES HAD CONCEALED THE PARTICULARS OF INCOME A ND THAT THE AMOUNTS ADDED ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 6 REPRESENTED THE INCOME OF THE ASSESSEE. THE TWIN CO NDITIONS MUST BE SATISFIED BEFORE THE LEVY OF PENALTY. THE INCOME-TAX OFFICER HAS NOT DONE ANY FURTHER ENQUIRY BY ISSUE OF NOTICE TO THESE CREDITORS OR TO THE ASS ESSEES NOR HAS HE OBTAINED A STATEMENT FROM THE ASSESSEE TO ESTABLISH THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IS NOT JUS TIFIED. IN THIS CONNECTION, IN THE CASE OF SURESH CHANDRA MITTAL, THE HON'BLE SUPREME COURT AFFIRMED THE DECISION OF THE HON'BLE M.P. HIGH COURT IN CIT V. SURESH CHANDRA MI TTAL [2000] 241 ITR 124 , WHEREIN IT WAS HELD THAT ' THE REVENUE DID NOT AT A LL DISCHARGE THE BURDEN TO PROVE THAT THERE WAS CONCEALMENT OF INCOME BY THE ASSESSE E. IT SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER BY THE ASSESSEE, WHICH OBVIOUSLY WAS DONE IN GOOD FAITH AND TO BUY PEACE.' THIS WAS A CA SE WHEREIN ON A REFERENCE, THE HIGH COURT HELD THAT NO PENALTY COULD BE LEVIED FOR CONCEALMENT. THE DEPARTMENT PREFERRED AN APPEAL TO THE SUPREME COURT AND THE HO N'BLE SUPREME COURT DISMISSED THE APPEAL HOLDING THAT NO INTERFERENCE IN THE ORDE R OF THE HIGH COURT WAS CALLED FOR. IN THE LIGHT OF THIS DECISION, WE ARE OF THE OPINIO N THAT WHERE THE ASSESSEE OFFERS CERTAIN AMOUNT IN GOOD FAITH, IT DOES NOT AUTOMATIC ALLY LEAD TO LEVY OF PENALTY. IN THE INSTANT CASE, THERE IS NO POSITIVE PROOF OF CONCEAL MENT. 6.1 SIMILARLY, HONBLE PUNJAB AND HARYANA HIGH COURT IN THEIR DECI SION IN THE CASE OF CIT VS. RAJIV GARG & OTHERS,313 ITR 256, UP HELD THE ORDER OF THE ITAT IN AFFIRMING CANCELLATION OF PENALTY ON THE GR OUND THAT REVENUE HAD NOT PLACED ON RECORD ANY MATERIAL TO DISCHARGE THE BURD EN OF PROVING CONCEALMENT WHILE ADDITIONAL INCOME OFFERED BY THE ASSESSEE WAS DONE IN GOOD FAITH AND TO BUY PEACE AND THAT THE ASSESSING AUTHORITY HAD FAIL ED TO TAKE ANY OBJECTION THAT THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN THE REVISED RETURN AND HIS EXPLANATION WAS NOT BONAFIDE. 6.2 HERE WE MAY REFER TO THE OBSERVATIONS OF THE HONBLE THIRD MEMBER IN THE CASE OF PREM CHAND GARG (SUPRA) WHEREIN IT WAS HELD THAT THE SURRENDER OF THE AMOUNT AFTER RECEIPT OF THE QUESTIONNAIRE CO ULD NOT LEAD TO AN INFERENCE THAT IT WAS NOT VOLUNTARY IN ABSENCE OF ANY MATERIA L ON RECORD SUGGESTING IT TO BE BOGUS OR UNTRUE. THE ISSUE AS TO WHETHER THERE I S CONCEALMENT OF INCOME ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 7 OR WHETHER INACCURATE PARTICULARS THEREOF HAVE BEEN FURNISHED, IS ESSENTIALLY A QUESTION OF FACT. BY THE TIME THE ASSESSING OFFICER TAKES UP THE ISSUE AND COMES ACROSS THE INFORMATION IN HIS POSSESSION, IF THE ASSESSEE MAKES UP THE DEFICIENCY AND OFFERS THE INCOME OR FURNISHES ACCUR ATE PARTICULARS THEREOF, HE CANNOT BE HELD GUILTY OF CONCEALMENT OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF HIS INCOME. ANY ACTION RECTIFIED REL ATES BACK TO ORIGINAL ACT AND TO THE DATE AND TIME OF FILING THE RETURN. WHEN THE ASSESSING OFFICER STARTED SCRUTINY OF THE RETURN AND INITIATED ASSESSMENT PRO CEEDINGS THERE WAS NOTHING CONCEALED AND THE INACCURACY, IF ANY, DISAPPEARED. THEREFORE, THE ASSESSEE COULD NOT BE HELD GUILTY OF CONCEALMENT, HONBLE TH IRD MEMBER, HELD. IT WAS FURTHER OBSERVED THAT THE CORRECT AND ACCURATE DISC LOSURE MAY BE MADE BY FILING THE REVISED RETURN OR BY FURNISHING THE PART ICULARS OF SUCH INCOME BEFORE THE DETECTION BY THE ASSESSING OFFICER. THE MERE OM ISSION OF THE SURRENDERED INCOME FROM THE RETURN OF AN ITEM OF RECEIPT DOES N EITHER AMOUNT TO CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULAR S OF INCOME, UNLESS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUM STANCES ARE FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTR IBUTABLE TO AN INTENTION OR A DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCE AL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. APART FROM THE SURRENDER, THERE WAS NOTHING MORE ON RECORD TO HOLD THE ASSESSEE GUILTY OF OFFERING THE SAID AMOUNT ON DETECTION OF THE CONCEALMENT. 6.3 IN THE LIGHT OF VIEW EXPRESSED IN THE AFORES AID DECISIONS ,IF WE ANALYSE THE FACTS IN THE CASES UNDER CONSIDERATION, IT CANNOT BE SAID THAT THESE ASSESSEES HAVE NOT TENDERED ANY EXPLANATION. THE ISSUE IS WHETHER THE EXPLANATION OFFERED BY THESE ASSESSEES IS BONA FIDE OR NOT. EXPLANATION (1) OF S ECTION 271(1)(C) SHIFTS THE ONUS ON TO THE DEPARTMENT, IF THE EXPLANATION OF THE ASSESS EE IS FOUND TO BE BONA FIDE. THE QUESTION WHETHER THE EXPLANATION OF THE ASSESSEE TH AT HE HAS FILED REVISED RETURN TO BY PEACE AND TO AVOID VEXATIOUS LITIGATION, CAN BE CONSIDERED AS A BONA FIDE EXPLANATION OR NOT, HAS TO BE EXAMINED IN THE FACTS AND CIRCUMSTANCES OF EACH CASE. NO DOUBT, WHEN THE ASSESSEE HAS REVISED THE RETURNS AND DECLARED THE ADDITIONAL INCOME ON ACCOUNT OF CASH LOANS , THERE WAS NO OCCA SION FOR THE ASSESSING OFFICER ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 8 TO POINT OUT THAT HE HAS DETECTED CERTAIN FACTS WHI CH WOULD GO TO SHOW THAT THE ASSESSEE HAS NOT CORRECTLY DECLARED INCOME. BUT AT LEAST IN PENALTY PROCEEDINGS, WHERE THE ASSESSEE HAD GIVEN AN EXPLANATION, THE DU TY IS CAST UPON THE REVENUE TO HIGHLIGHT THAT THE REVISED RETURNS WERE FILED NOT M ERELY TO BUY PEACE WITH THE DEPARTMENT BUT ON ACCOUNT OF DETECTION BY THE REVEN UE AUTHORITIES SOME FACTS AND FIGURES. IN THE INSTANT CASE, SUCH AN EXERCISE HAVI NG NOT BEEN DONE BY THE REVENUE AUTHORITIES, IN CONFORMITY WITH THE DECISION OF THE APEX COURT IN THE CASE OF SURESH CHANDRA MITTAL, WE ARE OF THE OPINION THAT THE ASSE SSING OFFICER HAS NOT MADE OUT A CASE FOR THE LEVY OF PENALTY. 6.4 IN THE CASE OF SMT. BRIJ BALA CHAUDHARY VS. I TO (2004) 82 TTJ (LUCKNOW) 355 : (2003) 87 ITD 173 (LUCKNOW), THE ASSESSEE COULD NOT EXPLAIN A PART OF CAPITAL INTRODUCED IN HER BUSINESS AND THEREFORE, SHE SURRE NDERED RS. 35,000 FOR ADDITION UNDER S. 68 DUE TO UNEXPLAINED CASH CREDIT IN HER C APITAL ACCOUNT. THE AO IMPOSED PENALTY FOR CONCEALMENT OF INCOME. THE TRIBUNAL HEL D THAT SINCE ASSESSEE HAD MADE SURRENDER ONLY TO PURCHASE PEACE WITH THE DEPARTMEN T AND AFTER BEING COMPELLED BY THE AO, IT WAS NOT A FIT CASE FOR IMPOSITION OF PEN ALTY FOR CONCEALMENT OF INCOME BECAUSE CONCEALMENT OF INCOME OR PARTICULARS OF INC OME WAS NOT FOUND TO BE ESTABLISHED FROM THE MATERIAL ON RECORD AND DEPARTM ENT HAD ALSO FAILED TO PROVE BY INDEPENDENT MATERIAL THAT THE ASSESSEE HAD CONCEALE D HER INCOME OR PARTICULARS THEREOF. THE TRIBUNAL CANCELLED THE PENALTY IMPOSED UNDER S. 271(L)(C) OF THE ACT. IT IS RELEVANT TO STATE THAT WHILE DECIDING THIS CASE, TH E TRIBUNAL RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MTTTAL (2001) 170 CTR (SC) 182 : (2001) 251 ITR 9 (SC). IN THE INSTAN T CASE, THE DEPARTMENT HAD NOT DISCHARGED ITS BURDEN OF PROVING CONCEALMENT AND IT SIMPLY RESTED ITS CONCLUSION ON THE ACT OF VOLUNTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH AND THEREFORE NO PENALTY CAN BE VALIDLY LEVIED IN THESE CASES. 6.5. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M.P. NARAYANAN (1998) 149 CTR (MOD) 1 : (2000) 244 ITR 528 (MAD) HELD THAT IN THE PENALTY PROCEEDINGS UNDER S. 271(1)(C) OF THE ACT, IT IS THE DUTY OF THE ITO TO ESTABLISH BY EVIDENCE THAT THERE WAS CONCEALMENT OF INCOME AND THE AMOUNT ADDED REPR ESENTS ASSESSEE'S INCOME. THE HON'BLE HIGH COURT FURTHER HELD THAT IT IS WELL SETTLED THAT A MERE FACT THAT THE ASSESSEE AGREED TO INCLUSION OF CASH CREDIT AND OTH ER AMOUNTS IN THE TOTAL INCOME ON ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 9 ACCOUNT OF INABILITY TO PROVE SOURCE OR TO AVOID PR OTRACTED LITIGATION WOULD NOT JUSTIFY DEPARTMENT IN LEVYING PENALLY. THE HON'BLE MADRAS H IGH COURT CATEGORICALLY HELD THAT IT IS FOR THE DEPARTMENT TO PROVE THAT THERE W AS CONSCIOUS AND DELIBERATE CONCEALMENT ON THE PART OF THE ASSESSEE AND THE AMO UNT ADDED REPRESENTED ASSESSEE'S INCOME. 6.6 IN ANOTHER DECISION ,HONBLE MADRAS HIGH CO URT IN THE CASE OF CIT V. C. J. RATHNASWAMY [1997] 223 ITR 5 HELD THAT THE MERE FACT THAT THE ASSESSEE HAD ADMITTED THE INCOME IN THE REVISED RETURN IS NOT CO NCLUSIVE OF THE FACTUM OF CONCEALMENT OF INCOME BY THE ASSESSEE IN THE ORIGIN AL RETURN. 7. IN VIEW OF THE FOREGOING, ESPECIALLY THE RETURNS WE RE FILED BY THE AFORESAID ASSESSEES VOLUNTARILY BEFORE DETECTION OF ANY CONCE ALMENT BY THE DEPARTMENT, WE ARE OF THE OPINION THAT LEVY OF PENALTY IS NOT JUSTIFIED. IN VIEW THEREOF, WE VACATE THE FINDINGS OF LD. CIT(APPEALS) AND CANCEL THE PENALTY LEVIED BY THE ASSESSING OFFICER. THEREFORE GROUND NO.1, IN THESE FOUR APPEALS IS ALLOWED. 8. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF RESIDUARY GROUND NO.2 IN THESE FOUR APPEALS, THEREFORE, THESE GROUND S ARE DISMISSED. 9. IN THE RESULT, ALL THE FOUR APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH SEPTEMB ER 2009 SD/- SD/- (H.L.KARWA) (A.N.PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED : 4TH SEPTEMBER,2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEES. 2. INCOME TAX OFFICER, WARD-2(4), SURAT 3. THE CIT(APPEALS)-II, SURAT 4. THE CIT CONCERNS. ITA NO.2063-66/AHD/2009 A.Y. 2005-06 SH. M N MODI, SMT. P B MODI & B.S.MODI V. ITO WD-2( 4) SURAT PAGE 10 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD