DCIT CEN CIR -3, THANE V. GOPICHAND ROOPCHAND RAJANI, ULHASNAGAR

ITA 2158/MUM/2010

• Counselvise Citation: 215819914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M P MAKHIJA
• Keywords: Bogus purchase; Unexplained investment; Gift
• Section: 271(1)(c); 133A; 153A; 251; 143(2); 139(1); 131; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND R.K.PANDA (A.M ) ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, PAWAR INDUSTRIAL ESTATE, 2 ND FLOOR, EDULJI ROAD, CHARAI, THANE (W) GOPICHAND ROOPCHAND RAJANI, NILIMA CHS LTD., HILL AREA, SECTOR-17, ULHASNAGAR -421003 PAN:AAQPR6230B APPELLANT V/S RESPONDENT APPELLANT BY : SHRI R. K. GUPTA RESPONDENT BY : SHRI M.P.MAKH IJA. O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30.11.2009 PASSED BY THE L EARNED COMMISSIONER OF INCOME TAX(A) FOR THE ASSESSMENT YE AR 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS PARTNER IN TWO PARTNERSHIP FIRMS AND ALSO ENGAGED I N THE BUSINESS OF CLOTH SUPPLIER. IN ADDITION, HE ALSO DERIVES INCOME FROM HOUSE PROPERTY, CAPITAL GAIN AND OTHER SOURCES. THE RETURN OF INCOME WAS FILED ON 28.2.2005 ADMI TTING TOTAL INCOME OF RS.4,12,180/-. A SEARCH AND SEIZUR E ACTION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961(THE ACT) WAS ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 2 CARRIED OUT IN THE GROUP CASES OF SHAH/PANCHMATIA GROUP ON 20.09.2005. A SEARCH ACTION WAS ALSO TAKEN IN TH E PREMISES OF THE ASSESSEE ON 20.9.2005. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153(A)(A) OF THE ACT, THE ASSESSEE FILED RETURN DECLARING TOTAL INCOME AT RS.14,12,180/- ON 6.9.2007. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 143(2) THE ASSESSEE ATTENDED AND FIL ED DETAILS CALLED FOR. AT PAGE 2 OF THE ASSESSMENT ORDER THE A O OBSERVED AND HELD AS UNDER :- A SURVEY U/S 133A WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE AT ULHASNAGAR. DURING THE COURSE OF SURVEY, SHRI GOPICHAND RAJANI S STATEMENT WAS RECORDED U/S 131 OF THE I.T.ACT. IN REPLY TO Q.NO.37, SHRI RAJANI HAS ADMITTED TO HAVE INVE STED RS.10 LACS IN THE CONSTRUCTION OR PROPERTY. HE HAS DECLARED THE SAME AS HIS ADDITIONAL INCOME OVER AND ABOVE HIS REGULAR INCOME. THIS INCOME OF RS.10 HA S BEEN SHOWN IN THE RETURN FILED IN RESPONSE TO NOTIC E U/S 153A. PREVIOUSLY, THE ASSESSEE FILED HIS ORIGINAL RETURN IN WARD 1(1), KALYAN, ON 28.02.2005 DECLARING HIS INCOME AT RS.4,12,180/-. THIS INCOME OF RS.10 LACS HAS BEEN DETECTED AS A RESULT OF SURVEY AND NOT ON THE VOLUNTARY PART OF T HE ASSESSEE. IT IS THUS CLEAR THAT THE ASSESSEE HAS T RIED TO EVADE TAXES ON THIS INCOME. PENALTY PROCEEDINGS U/S 271(1) (C) ARE THUS INITIATED FOR CONCEALMENT A ND FILING OF INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY THE AO ASSESSED THE INCOME AT RS.14,12,176/- AS DISCLOSED BY THE ASSESSEE, VIDE ORDER DATED 27.12.2007 PASSED UNDER SECTION 153A R.W.S.14 3(3) OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE AS TO WHY THE ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 3 PENALTY UNDER SECTION 271(1)(C) SHOULD NOT BE IMPO SED, THE ASSESSEE STATED AS UNDER : SIR, IN THIS REGARD I SUBMIT THAT IN THE CASE OF MY ABOVE CLIENT SURVEY ACTION AT HIS BUSINESS PREMISES WAS C ARRIED OUT IN F.Y.2005-06 WHEN IN THE STATEMENT RECORDED U /S 131 HE HAD DECLARED AN ADDITIONAL INCOME OF RS.16,00,000/- REPRESENTING ALLEGED UNACCOUNTED INVESTMENT MADE IN CONSTRUCTION OF BUSINESS PREMISE S WHICH AMOUNT WAS DIVIDED IN TWO PARTS IN AS MUCH AS A SUM OF RS.10 LACS WAS OFFERED IN A.Y. 2004-05 AND BALANCE AMOUNT OF RS.6 LACS WAS OFFERED IN A.Y. 2 005- 06. THE ASSESSEE ACCORDINGLY OFFERED THESE AMOUNTS IN THE RETURN FILED FOR A.Y.2005-06 AS WELL IN THE RE VISED RETURN FILED FOR A.Y. 2004-05 AND ASSESSMENTS HAVE BEEN COMPLETED ON THE BASIS OF OFFER MADE BY HIM ON LY. SIR, YOUR HONOURS WILL APPRECIATE THAT IN THE COURS E OF SURVEY NO INCRIMINATING MATERIAL WAS FOUND INDICATI NG ANY UNRECORDED/ UNEXPLAINED INVESTMENT HAVING BEEN MADE IN THE CONSTRUCTIONS BUT ASESEEE HAD VOLUNTARILY OF FERED THESE AMOUNTS FOR TAXATION. YOUR HONOURS WILL FURT HER APPRECIATE THAT NOT ONLY THE QUANTIFICATION OF AMOU NT BUT EVEN THE BIFURCATION OF ALLEGED UNEXPLAINED INVESTM ENTS WAS MADE ONLY ON ESTIMATE BASIS AND AS STATED HEREI N ABOVE DISCLOSURE WAS MADE JUST TO BUY PEACE AND AVO ID PROTRACTED LITIGATION WITH THE DEPARTMENT AND THE REFORE, IN MY HUMBLE VIEW NO PENALTY PROVISIONS U/S 271(1)( C ) ARE ATTRACTED IN HIS CASE. SIR, IT IS NEEDLESS TO SAY THAT IN SIMILAR CIRCUMST ANCES VARIOUS COURTS INCLUDING HONBLE APEX COURT HAS TAK EN A VIEW THAT IN CASE WHERE ADDITIONS ARE MADE ON ESTIM ATED BASIS NO PENALTY IS LEVIABLE AND I THEREFORE SUBMIT THAT FOLLOWING THE SAID RATIO NO PENALTY IS LEVIABLE IN THE CASE OF MY CLIENT. SIR, INCIDENTALLY I MAY SUBMIT THAT WHERE PARTICUL ARLY THE ADDITION IS MADE ON THE BASIS OF MERE ESTIMATE OF C OST OF CONSTRUCTION, THE SAME DOES NOT CONSTITUTE A MATERI AL ON WHICH A FINDING OF CONCEALMENT CAN BE RECORDED AS H AS BEEN HELD BY HONBLE MADRAS HIGH COURT IN THE CASE OF T.P.K.RAMALINGAM V/S COMMISSIONER OF INCOME TAX (21 1 ITR 520). SIR, THEIR LORDSHIPS OF MADRAS HIGH COURT WHILE DECIDING THE ISSUE HAD ALSO MADE A REFERENCE TO THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE O F COMMISSIONER OF INCOME TAX V/S MOHAMMAD KUNCHI (87 ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 4 ITR 189) AS WELL DECISION OF THE SAME HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S ASPARA TALKIES (155 ITR 303) (MADRAS) WHERE ALSO SIMILAR V IEW HAS BEEN TAKEN. SIR, WITHOUT PREJUDICE TO AND IN ADDITION TO THE CO NTENTION RAISED HEREIN ABOVE I SUBMIT THAT FROM THE RECORDS IT CAN BE SEEN THAT ADDITION IN THE CASE OF MY ABOVE CLIEN T HAS BEEN MADE ONLY ON THE BASIS OF STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY AC TION U/S 133A. I HOWEVER SUBMIT THAT AS PER PROVISIONS O F LAW AS HELD BY HONBLE KERALA HIGH COURT IN THE CASE O F PAUL MATHEW & SONS V/S COMMISSIONER OF INCOME TAX (263 ITR 101) STATEMENT RECORDED DURING THE COURSE OF SU RVEY HAS NO EVIDENTIARY VALUE BECAUSE UNDER THE ACT OFFI CER IS NOT AUTHORIZED TO ADMINISTER OATH AND TAKE ANY SWOR N IN STATEMENT WHICH ALONE HAS THE EVIDENTIARY VALUE A S CONTEMPLATED UNDER THE LAW. I, THEREFORE, SUBMIT T HAT SINCE THE PENALTY PROCEEDINGS HAS BEEN INITIATED NO T IN ACCORDANCE WITH THE PROVISIONS OF LAW, AS SUBMITTE D ABOVE IN DETAIL THE SAME MAY PLEASE BE DROPPED THE ASSESSEE AGAIN FILED HIS SUBMISSIONS DATED 12. 6.2008 WHEREIN THE ASSESSEE WHILE GIVING FUNDAMENTAL DIFF ERENCE BETWEEN THE ACTION CARRIED ON BY THE DEPARTMENT UND ER SECTION 132(1) VIS--VIS ACTION UNDER SECTION 133A REITERATED THE SAME SUBMISSIONS AS SUBMITTED EARLIER AND FURTH ER STATED THAT EVEN AT THE TIME OF SURVEY OR EVEN SUBSEQUENTL Y THERE WAS NO MATERIAL EITHER FOUND OR EVEN WITH THE ASS ESSEE TO SUPPORT THE ALLEGED UNRECORDED INVESTMENT HAVING BE EN MADE, LEAVE ASIDE THE PERIOD IN WHICH IT HAS BEEN MADE WHICH MAY LEAD TO HOLD THAT THE ASSESSEE HAS COMM ITTED DEFAULT UNDER SECTION 271(1)( C) OF THE ACT AND AC CORDINGLY HE REQUESTED TO DROP THE PENALTY. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION. THE AO AFTER RELYING ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 5 ON THE DECISION IN THE CASE OF K,P,MADHUSUDHANAN V /S CIT (2001) 251 ITR 99(SC) OBSERVED THAT IT ONLY AFTER THE SEARCH THAT THE ASSESSEE HAS FILED INCOME ON HIGHER SIDE U NDER SECTION 153A OF THE ACT. BY DOING SO, THE ASSESSE E HAS TRIED TO EVADE THE TAX ALSO ON INCOME BY FILING INA CCURATE PARTICULARS OF HIS INCOME AND THEREBY CONCEALING TH E SAME AND ACCORDINGLY HE IMPOSED THE PENALTY OF RS.3,39,7 66/- VIDE ORDER DATED 25.6.2008 PASSED UNDER SECTION 271(1) ( C ) OF THE ACT. 3. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (A) WHILE DELETING THE PENALTY HAS HELD VIDE PARAG RAPHS 6 OF HIS ORDER AS UNDER : 6. THE ABOVE SUBMISSIONS AND THE DECISIONS RELIED UPON ARE PERUSED AND CONSIDERED. AS STATED ABOVE, T HE APPELLANT HAS DISCLOSED THE INCOME ARISING OUT OF INVESTMENT IN THE FLAT, ADMITTED IT DULY IN THE RET URN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 153A AND PA ID TAXES WITH INTEREST. SINCE INCOME RETURNED HAS BEEN ACCEPTED BY THE AO IN THE ASSESSMENT, THERE IS NO C ASE FOR LEVY OF PENALTY U/S 271(1)(C). EXPLANATION 5 TO SECTION 271(1)(C) PROVIDES IMMUNITY TO THE APPELLANT. THE DECISIONS RENDERED BY THE HON. SUPREME COURT IN THE CASE OF K.P.MADHUSUDANAN IS NOT RELEVANT FOR THIS C ASE. DULY FOLLOWING THE DECISIONS RENDERED IN THE CASES OF SHYAM BIRI WORKS (P) LTD V/S ACIT (70 TTJ 880), CIT V/S CHHABRIA EMPORIUM (264 ITR 249), CIT V/S SDV CHANDRU (266 ITR 175). GEBILAL KANHAIYALAL (HUF) V/ S ACIT (270 ITR 523), CIT V/S RADHA KISHAN GOEL (278 ITR 545), CIT V/S NEM KUMNAR JAIN (202 CTR 328), I HOLD THAT THIS IS NOT A CASE LIABLE FOR LEVY OF PEN ALTY. I FURTHER HOLD THAT, LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT AMOUNTING TO RS.87,443/- ON THE RETURNED INCOM E IS UNWARRANTED AND UNJUSTIFIED. I CANCEL THE PENALTY ACCORDINGLY ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 6 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A), THE REVENUE IS IN A PPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DELETI ON OF PENALTY IMPOSED BY THE AO U/S 271(1)( C) OF THE ACT. 5. AT THE TIME OF HEARING, THE LEARNED D.R. WHILE R ELYING ON THE ORDER OF THE AO SUBMITS THAT FOR THE REASONS A S MENTIONED IN THE PENALTY ORDER, THE LEARNED COMMISS IONER OF INCOME TAX (A) WAS NOT JUSTIFIED IN DELETING THE P ENALTY IMPOSED BY THE AO. HE, THEREFORE, SUBMITS THAT THE PENALTY IMPOSED BY THE AO BE RESTORED. THE RELIANCE WAS AL SO PLACED ON THE DECISION IN A.M.SHAH & CO. V/S CIT ( 1998) 150 CTR(GUJ) 1. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LEARNED COMMISSIO NER OF INCOME TAX (A) ALSO REFERS QUESTION NO.36 AND ITS ANSWER RECORDED AT THE TIME OF SURVEY APPEARING AT PAGE 24 OF THE ASSESSEES PAPER BOOK TO SHOW THAT THE SURRENDER OF RS.10 LACS FOR THE RELEVANT ASSESSMENT YEAR 2004-05 WAS M ADE VOLUNTARILY DESPITE THE FACT THAT NO SUCH MATERIAL WAS FOUND DURING THE COURSE OF SURVEY AND SEARCH. HE, THER EFORE, SUBMITS THAT SINCE IT WAS VOLUNTARILY SURRENDER, WH ICH WAS DISCLOSED BY THE ASSESSEE IN THE RETURN FILED BY T HE ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 7 ASSESSEE AND THE SAME WAS ACCEPTED BY THE AO, THER EFORE, THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY UNDER SECTION 271(1)(C ) OF THE ACT AND THE LEARNED COMMISSION ER OF INCOME TAX (A) HAS RIGHTLY DELETED THE SAME. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF THE TRIBUNAL IN ADDL. CIT V/S PREM CHAND GARG (2009) 119 ITD 97(TM). HE, THER EFORE, SUBMITS THAT THE ORDER PASSED BY THE LEARNED COMMIS SIONER OF INCOME TAX (A) IN DELETING THE PENALTY BE UPHEL D.. 7. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. WE FIND THAT THERE IS NOT DISPUTE THAT DURING THE COUR SE OF SURVEY UNDER SECTION 133A CARRIED ON AT THE BUSINESS PREMI SES OF THE ASSESSEE ON 20.9.2005, THE AO RECORDED THE STA TEMENT OF THE ASSESSEE ON 20.9.2005. THE RELEVANT QUESTI ON NO.36 AND ANSWER ARE AS UNDER : Q.NO.36 PLEASE STATE HOW MUCH EXPENDITURE HAS BEEN MADE ON THIS PREMISES FOR CONSTRUCTION AND RENOVATION ETC.? ANS. I ADMIT THAT THE EXPENDITURE INCURRED FOR CONSTRUCTION OF THIS PREMISES ARE OVER AND ABOVE SH OWN IN ROI. IN ORDER TO AVOID LITIGATION ETC. I VOLU NTARILY OFFER RS.16 LAKHS I.E. FOR AY 2004-05 RS.10 LAKHS AND FOR AY 2005-06 RS.6 LAKHS (TOTAL 16 LAKHS) AS MY ADDITIONAL INCOME OVER AND ABOVE MY REGULAR INCOME. THE SAME HAS BEEN INCURRED FOR RENOVATION, CONSTRUC TION, INVESTMENT IN FURNITURE AND FIXTURE ETC IN MY INDIV IDUAL CAPACITY ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 8 WE FURTHER FIND THAT AS THE ASSESSEE HAS VOLUNTA RILY OFFERED RS.10 LAKHS AS HIS ADDITIONAL INCOME OVER AND ABOVE HIS REGULAR INCOME, THE ASSESSEE IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A HAS FILED THE RETURN OF INCOME DECLARING THE ADDITIONAL INCOME OF RS.10 LACS. THE AO WITH OUT POINTING OUT ANY DEFECT IN THE BOOKS OF ACCOUNT OR TO THE COST OF CONSTRUCTION HAS ACCEPTED THE RETURN FILED BY T HE ASSESSEE SHOWING ADDITIONAL INCOME OF RS.10 LACS FOR THE YEAR UNDER CONSIDERATION AND MADE ASSESSMENT AT THE SAME INCOME AS DISCLOSED BY THE ASSESSEE. IT IS NOT THE CASE OF THE REVENUE THAT DURING THE COURSE OF SURVEY OR SE ARCH ANY INCRIMINATING MATERIAL WAS FOUND TO SHOW THAT THE COST OF CONSTRUCTION WHICH WAS DISCLOSED BY THE ASSESSEE IS UNTRUE OR LOW. EVEN DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THERE IS NO IOTA OF EVIDENCE TO SHOW THAT THE DISCL OSURE OF RS.10 LAKHS WAS MADE AS A RESULT OF SEARCH CARRI ED OUT BY THE DEPARTMENT. IT HAS BEEN HELD BY THE AO IN THE IMPUGNED PENALTY ORDER THAT IT IS ONLY AFTER THE SEARCH THA T THE ASSESSEE HAS FILED INCOME ON HIGHER SIDE UNDER SECT ION 153A FROM RS.4,12,180/- UNDER SECTION 139(1) TO RS.14,12,180/-, HENCE THE ASSESSEE HAS TRIED TO EV ADE TAXES. THE AO RELYING ON THE DECISION OF THE HONB LE SUPREME COURT IN K,P,MADHUSUDHANAN (SUPRA) HAS HEL D THAT THE ASSESSEE BY NOT OFFERING RS.10 LACS AS HIS INCO ME IN THE ORIGINAL RETURN FILED INACCURATE PARTICULARS AND C ONCEALED HIS ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 9 INCOME, THEREFORE, LIABLE TO PENALTY. PER CONTRA, THE CASE OF THE ASSESSEE IS THAT THE SAID SURRENDER OF RS.10 LACS WAS MADE VOLUNTARILY DURING THE COURSE OF SURVEY AND T HE SAID AMOUNT WAS DISCLOSED IN THE RETURN FILED BY THE AS SESSEE IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 153A(A) , THEREFORE, THERE IS NO CONCEALMENT ON THE PART OF T HE ASSESSEE. THE AO HAS FOUND NO INCRIMINATING MATE RIAL RELATING TO SAID DISCLOSURE AND THE ASSESSEE HAS P AID DUE TAXES THEREFORE THERE IS NO CONCEALMENT. 8. IN K,P,MADHUSUDHANAN (SUPRA) IT HAS BEEN HELD B Y THEIR LORDSHIPS AS UNDER : HELD, AFFIRMING THE DECISION OF THE HIGH COURT, TH AT THE PENALTY WAS VALIDLY LEVIED. THE EXPLANATION TO S. 271(1)(C) IS A PART OF S. 271 . WHEN THE ITO OR THE AAC ISSUES TO AN ASSESSEE A NOTICE U NDER S. 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVIS IONS THEREOF ARE TO BE USED AGAINST HIM. THESE PROVISION S INCLUDE THE EXPLANATION. BY REASON OF THE EXPLANATI ON, WHERE THE TOTAL INCOME RETURNED BY THE ASSESSEE IS LESS THAN 80 PER CENT OF THE TOTAL INCOME ASSESSED UNDER S. 143 OR 144 OR 147, REDUCED TO THE EXTENT THEREIN PROVIDED, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, UNLESS HE PROVES THAT THE FAIL URE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FR AUD OR NEGLECT ON HIS PART. THE ASSESSEE IS, THEREFORE, BY VIRTUE OF THE NOTICE UNDER S. 271 PUT TO NOTICE THAT IF HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED IN THE EXPLANATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS THEREOF AND, CONSEQUENTLY, B E LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. NO EXPRESS ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 10 INVOCATION OF THE EXPLANATION TO S. 271 IN THE NOTI CE UNDER S. 271 IS NECESSARY BEFORE THE PROVISIONS OF THE EXPLANATION ARE APPLIED 9. THERE IS NO QUARREL ON THE PRINCIPLE OF LAW LAID DOWN BY THEIR LORDSHIPS IN THE ABOVE CASE AND IT IS NOT T HE CASE OF THE ASSESSEE THAT THE PENALTY UNDER SECTION 271(1)( C ) IS NOT LEVIABLE AS THE AO HAS NOT REFERRED ANY EXPLANATION TO SECTION 271(1)(C ) OF THE ACT. 10. IN A.M.SHAH & CO.(SUPRA) RELIED ON BY THE LEARN ED D.R., THE AO DURING THE DETAILED SCRUTINY OF THE BOOKS OF ACCOUNT FOUND THAT THERE WERE SUBSTANTIAL DISCREPAN CIES BY WAY OF MANIPULATION OF STOCKS, AMOUNT OF SALES, IN FLATION OF PURCHASE, MAKING OUT BOGUS BILLS ETC. HE ACCORDIN GLY BROUGHT TO TAX A SUM OF RS.1,72,775/- BY HIS ASSES SMENT ORDER. THEREAFTER PENALTY UNDER SECTION 271 (1)( C ) WAS IMPOSED. IT HAS BEEN HELD BY THEIR LORDSHIPS THAT ANY CONCEALMENT OR INACCURACY IN THE PARTICULARS OF INC OME IN THE RETURN OCCURRING AT ANY STAGE UPTO AND INCLUSIVE OF THE ULTIMATE STAGE OF WORKING OUT OF TOTAL INCOME WOULD ATTRACT THE PENALTY PROVISION OF S. 271(1)(C); AS THE ASSES SEE HAD CLEARLY RESORTED TO RECORDING BOGUS PURCHASES AND N ON- RECORDING OF CERTAIN ITEMS EITHER IN SALES OR STOCK S THERE WAS CONCEALMENT OF PARTICULARS OF INCOME WHICH ATTRACTE D PENALTY UNDER S. 271(1)( C ). ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 11 11. WHEREAS IN THE CASE BEFORE US, DURING THE COUR SE OF SURVEY THE ASSESSEE HAS SURRENDERED RS.10 LACS O N ACCOUNT OF COST OF CONSTRUCTION AND THE SAME WAS AL SO OFFERED IN THE RETURN FILED BY THE ASSESSEE AND TH E AO WITHOUT FINDING ANY FAULT IN THE BOOKS OF ACCOUNT D URING THE COURSE OF ASSESSMENT PROCEEDINGS HAS ACCEPTED THE ADDITIONAL INCOME WHICH WAS OFFERED BY THE ASSESSEE AS CORRECT INCOME AND ASSESSED THE SAME IN THE ASSESSM ENT WITHOUT MAKING ANY FURTHER INVESTIGATION OR ADDITIO N. THEREFORE, THE DECISION RELIED UPON BY THE LEARNED D.R. IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS O F THE PRESENT CASE. 12. IN PREM CHAND GARG (SUPRA) THE TRIBUNAL HAS HE LD AS UNDER : VOLUNTARY OFFER OF INCOME IN ORDER TO BUY PEACE AN D AVOID LITIGATION BEFORE TAKING UP ASSESSMENT BY THE AO DE HORS ANY MATERIAL WITH THE AO CANNOT AMOUNT TO CONCEALMENT; ASSESSEE HAVING SURRENDERED THE AMOUNT OF NRI GIFT ON A GENERAL QUERY RAISED BY AO ON THE CONDITION OF NOT INITIATING PENALTY PROCEEDINGS BEF ORE ASSESSMENT WAS TAKEN UP, AO COULD NOT HAVE IMPOSED PENALTY UNDER S. 271(1)(C) WHEN THERE WAS NO MATERI AL WITH THE AO TO ARRIVE AT SATISFACTION ABOUT CONCEAL MENT 13. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271 (1)(C) THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOM E, SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURAT E PARTICULARS OF INCOME. ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 12 14. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISION S INCLUDING DILIP N. SHROFF VS. JCIT (2007) 291 ITR 519(SC), UN ION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) AND SREE KRISHNA ELECTRICALS VS. STATE OF T AMIL NADU (2009) 23 VST 249 (SC) HAVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXP OSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTL Y COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCUR ATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DET AILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS . WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 13 15. APPLYING THE RATIO OF THE ABOVE DECISION TO THE FACTS OF THE PRESENT CASE, WE OBSERVED THAT SINCE NO INCRIM INATING MATERIAL WAS FOUND DURING THE COURSE OF SURVEY AND SEARCH FOR THE RELEVANT ASSESSMENT YEAR 2004-05 AND THE SU RRENDER OF RS.10 LACS WAS MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY WHICH WAS ALSO DISCLOSED IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE UNDER SECTION 153A( A) AND THE AO WITHOUT POINTING OUT ANY INCRIMINATING MATERIAL , DISCREPANCY OR DEFICIENCY HAS ACCEPTED THE ADDITIO NAL INCOME OF RS.10 LACS AS INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR 2004-05, WE ARE OF THE VI EW THAT THE ASSESSEE HAS NEITHER FURNISHED ANY INACCURATE P ARTICULARS OF HIS INCOME NOR CONCEALED HIS INCOME AND ACCORDIN G THE LEARNED COMMISSIONER OF INCOME TAX (A) WAS FULLY J USTIFIED IN DELETING THE PENALTY IMPOSED BY THE AO. THE GR OUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 16. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH MAY,20 11 SD SD (R.K.PANDA) ( D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 27 TH MAY, 2011 ITA NO.2158/MUM/2010 (ASSESSMENT YEAR: 2004-05) 14 SRL:23511 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILED. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI