The DCITKheda Circle, Nadiad V. Shri Ajay Kumarlal Tehalyani, Nadiad

ITA 2295/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6248 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHRY
• Assessee Lawyers: D K PARIKH
• Keywords: Residential status; Document seized; Bonafide belief; Wrong claim; Onus to prove; Revised return; Documents seized; Bonafide mistake; Ignorance of law
• Section: 153A; 32; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI D K TYAGI,JM & SHRI A N PAHUJA, AM ITA NO.2295/AHD/2009 (ASSESSMENT YEAR:-2005-06) DEPUTY COMMISSIONER OF INCOME-TAX, KHEDA CIRCLE, NADIAD V/S SHRI AJAY KUMARLAL TEHALYANI, C/O ASIAN FOOD INDUSTRIES, N.H. NO.8, DABHAN, TAL: NADIAD PAN: ACAPT 9844 M [APPELLANT] [RESPONDENT] ITA NO.2296/AHD/2009 (ASSESSMENT YEAR:-2005-06) INCOME-TAX OFFICER, WARD- 1, 1 ST FLOOR, AAYAKAR BHAVAN, GITANJALI CHAR RASTA, PIJ ROAD, NADIAD V/S SMT. RADHABEN K TEHALYANI, C/O ASIAN FOOD INDUSTRIES, OPP. ESCORT TRACTOR, N H NO.8, DABHAN, TAL: NADIAD PAN: ABAPT 8063 F [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI M R CHAUDHRY, DR ASSESSEES BY:- SHRI D K PARIKH, AR O R D E R A N PAHUJA: THESE TWO APPEALS BY THE REVENUE AGAINST TWO SEPARATE ORDERS DATED 13 TH JANUARY, 2009 OF THE LD. CIT(APPEALS)-IV, AHMEDABAD, FOR THE ASSESSMENT YEAR 2005-06, RAISE T HE FOLLOWING COMMON GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIE D U/S 271(1)(C) OF RS.5,63,200/- ON DISCLOSURE OF INTEREST INCOME OF RS.1 9,63,940/- BY SHRI AJAY KUMARLAL TEHALYANI AND RS.5,78,000/- ON DI SCLOSURE OF INTEREST INCOME OF RS.20,13,264/- BY SMT. RADHABEN K TEHALYANI, IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A, I GNORING THE FACT THAT THE SAID INCOME WAS DETECTED DURING THE SEARCH U/S 1 32 OF THE INCOME TAX ACT, 1961 AND IT WAS NOT REFLECTED IN THE ORI GINAL RETURN OF INCOME FILED U/S 139(1), OVERLOOKING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTI LE PROCESSORS (2008) 306 ITR 277 (SC) WHEREIN IT WAS LAID D OWN THAT PENALTY U/S 271(1)(C) WAS CIVIL WRONG & MENS REA IS NOT IS NOT REQUIRED TO BE ESTABLISHED. 2 ITA NOS.2295 & 2296/AHD/2009 [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN THE A FORESAID GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT] WAS CONDUCTED ON 19-01-2006 IN THE PREMISES OF KUMAR M EGHRAJ GROUP OF CASES INCLUDING SHRI AJAY KUMARLAL TEHALYANI PARTNER IN M/S ASIAN FOOD INDUSTRIES AND INDIAN FOOD INDUSTRIES AS ALSO IN THE PREMISES OF SMT. RADHABEN K TEHALYANI WIFE OF SHRI KUMAR MEGHRAJ. CONSEQUENTLY, A NOTICE DATED 19-05-2006 U/S 153A(A) OF THE ACT WAS ISSUED TO SHRI AJAY KUMARLAL TEHALYANI, REQUIRING HIM TO FURNISH RETURN OF INCOME FOR SIX YEARS INCLUDING THE YEAR U NDER CONSIDERATION. IN RESPONSE, THE ASSESSEE FILED RETU RN U/S 153A OF THE ACT ON 14-05-2007 DECLARING INCOME OF RS.24,95,420 /-, AS AGAINST INCOME OF RS.5,31,480/- DECLARED IN THE ORIGINAL RE TURN FILED U/S 139(1) OF THE ACT ON 23-05-2005. THE ASSESSEE DISCLOSED ADDITIONAL INTEREST INCOME OF RS.19,63,940/- EARNED ON FCNR FDRS IN THE SAID RETURN. THE ASSESSMENT WAS COMPLETED U/S 153A(B) O F THE ACT ON 20-09-2007 ON THE RETURNED INCOME OF RS.24,95,420/- . INTER ALIA, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE I NITIATED ON ACCOUNT OF CONCEALMENT OF INCOME OF RS.19,63,940/- . 2.1 LIKEWISE IN CONSEQUENCE OF SEARCH, A NOTICE DA TED 29-06-2006 U/S 153A(A) OF THE ACT WAS ALSO ISSUED TO SMT. RADH ABEN K TEHALYANI, REQUIRING HER TO FURNISH RETURN OF INCO ME FOR SIX YEARS INCLUDING THE YEAR UNDER CONSIDERATION. IN RESPONSE , THE ASSESSEE FILED RETURN U/S 153A OF THE ACT ON 14-05-2007 DECL ARING INCOME OF RS.20,21,850/-, AS AGAINST INCOME OF RS.20,585/- IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT. THE ASSESSEE D ISCLOSED ADDITIONAL 3 ITA NOS.2295 & 2296/AHD/2009 INTEREST INCOME OF RS.20,13,264/-EARNED ON FCNR FDR S IN THE SAID RETURN. THE ASSESSMENT WAS COMPLETED U/S 153A(B) O F THE ACT ON 20-09-2007 ON THE RETURNED INCOME OF RS.20,21,850/- . INTER ALIA, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE I NITIATED ON ACCOUNT OF CONCEALMENT OF INCOME OF RS. 20,13,264/-/-. 3. SUBSEQUENTLY, IN RESPONSE TO A SHOW CAUSE NOTI CE DATED 20-09- 2007 AND 03-03-2008, THE ASSESSEE SHRI AJAY KUMARLA L TEHALYANI REPLIED AS UNDER:- 2. BEFORE COMING TO THE ISSUE OF CONCEALMENT OF INCOME A S INFERRED BY YOUR HONOUR, THE ASSESSEE CONSIDERS IT APPROPRIATE TO PLAC E CERTAIN FACTS ON THE RECORD. THE ASSESSEE'S FAMILY INCLUDING ASSESSEE SHIFTE D TO U.A.E. UNDER A PERMANENT RESIDENTIAL PERMIT SINCE GOVERNMENT OF THE U.A.E. AND THE ASSESSEE ALSO CONTINUOUSLY STAYED IN U.A.E. IN ALL THE FINANCIAL YEARS AS PER THE SUITABILITY & CONVENIENCE OF THE BUSINESS AFFAI RS /FAMILY AFFAIRS OF THE ASSESSEE. THE ASSESSEE GROUP OPERATED ONE LIMITED LIA BILITY COMPANY AT U.A.E. AND DUE TO CERTAIN FAMILY PROBLEMS, IT WAS CO MPULSION FOR THE ASSESSEE GROUP .TO START A FIRM IN INDIA, WHICH CAN PROCUR E THE SPICES FOR THE U.A.E. COMPANY AND EXPORT THEM TO U.A.E. UNDER T HE CIRCUMSTANCES, THE ASSESSEE AND HER FAMILY MEMBERS DECIDED TO TRANSFER T HEIR FUNDS FROM U.A.E. TO INDIA. ACCORDINGLY, THE FUNDS WERE TRANSFERR ED AND DEPOSITED IN VARIOUS BANKS IN FCNR AJC I.E. FOREIGN CURRENCY NON RESIDE NT A/C. TLTESE REMITTANCES WERE INFORM AFFIXED DEPOSITS. 3. THE ASSESSEE WAS EARNING INTEREST INCOME ON SUCH FCNR DEP OSITS. PROVISIONS OF SEC. 6 DETERMINE THE RESIDENTIAL STATUS OF A PERSON. UPON SUCH STATUS, THE INCOME EITHER BECOMES CHARGEABLE OR EXEM PT FROM THE PURVIEW OF THE INCOME-TAX ACT. SEC. 10(15)(IV)(FA) GOV ERNS THE EXEMPTION AND IT STIPULATES THAT, THE INTEREST INCOME ON FCNR DE POSITS IS EXEMPT IN CASE OF A PERSON WHO IS EITHER NON-RESIDENT OR RESIDENT B UT NOT ORDINARILY RESIDENT. PROVISIONS OF SEC.6 DETERMINES THE RESIDENTIAL STATUS OF A PERSON INTO THREE CATEGORIES NAMELY; (A) RESIDENT & ORDINARIL Y RESIDENT (B) RESIDENT BUT NOT ORDINARILY RESIDENT & (C) NON RESIDENT . THE ASSESSEE WAS HAVING ACCORDINGLY THE STATUS OF SEC.6 UPTO A.Y.2003 -04. ACCORDINGLY, THE FCNR INTEREST INCOME WAS EXEMPT WITHIN THE PROVISIO NS OF SEC. 10(15)(IV)(FA) OF THE ACT. IT IS PERTINENT TO SUBMIT T HAT, THIS ASPECT IS UNDISPUTED ONE. SUBSEQUENTLY, THE PROVISIONS OF SEC.6 AP PLICABLE TO A.Y.2004-05, WERE AMENDED AND NEW SUB-SECTION 6 WAS INT RODUCED WHICH MODIFIED THE CONDITIONS FOR DETERMINATION OF THE RESID ENTIAL STATUS ESPECIALLY IN THE CASES OF RESIDENT BUT NOT ORDINARILY R ESIDENT PERSONS. THIS ASPECT OF AMENDMENT REMAINED OUT OF OUR ATTENTIO N ESPECIALLY DUE TO THE FACT THAT, I AM STAYING AT A SMALLER TOWN LIKE; NAD IAD AND BESIDES, EVEN IN THE F.YS. 2003-04 AND SUBSEQUENT YEARS ALSO, I WAS O UT OF INDIA FOR 4 ITA NOS.2295 & 2296/AHD/2009 QUITE A SOME TIME DUE TO MY PERMIT FOR PERMANENT RESI DENCY AT U.A.E. BESIDES, THE BANK BROCHURES WHICH WERE BEING PUBLISHED SUBSE QUENT TO THE AMENDMENT IN THE INCOME-TAX ACT ESPECIALLY SEC.6(6), WERE ALSO SHOWING THE INCOME OF FCNR AS EXEMPT. BESIDES, NO TAX WA S EVER DEDUCTED BY THE BANKING AUTHORITIES ON SUCH INTEREST IN COME. UNDER THE CIRCUMSTANCES, YOUR ASSESSEE BEING IGNORANT OF THE HIGHLY TE CHNICAL PROVISIONS OF THE TAXATION LAWS AND UNDER PREVAILING O F THE SAME STANDARDS BY THE BANKING AUTHORITIES, WAS UNDER A BONAFIDE BELIE F THAT, THE INTEREST INCOME FROM THE FCNR WAS EXEMPT EVEN IN THE ASSESSMENT Y EARS SUBSEQUENT TO A.Y.2003-04. BESIDES, IN INDIA, THERE ARE TWO ACTS WHICH DETERMINES THE RESIDENTIAL STATUS, ETC. I.E. FEMA AND I NCOME-TAX ACT. ALL SUCH COMPLEXITIES OF LAWS, AMENDMENTS, ETC. WERE THEREFORE BEYOND THE LEVEL OF UNDERSTANDING EITHER BY THE ASSESSEE OR HER AD VOCATES ESPECIALLY IN A SMALL TOWN LIKE NADIAD. THEREFORE, YOUR HONOUR W ILL APPRECIATE THAT, THE NON-INCORPORATION OF THE INTEREST INCOME IN THE O RIGINAL RETURN OF INCOME FILED U/S. 139 OF THE ACT WAS A BONAFIDE BELIEF UNDE R IGNORANCE OF LAW AND ESPECIALLY THE SUBSEQUENT AMENDMENT BEING BROUGHT IN L AW. ALL THE DEPOSITS WERE IN BANKING CHANNELS AND ALL THE ACCOUNTS WERE DULY BEING REFLECTED AND SHOWN. SUBSEQUENT TO THE SEARCH PROCEEDIN GS, THE ASSESSEE LOOK OPINION AND GUIDANCE FROM THE SENIOR LAWYERS OF AHMEDABAD & MUMBAI AND AS SOON AS IT WAS FOUND THAT, THE FCNR INTER EST INCOME WAS LEFT TO BE INCORPORATED IN THE RETURNS OF INCOME PERT AINING TO A.YS.2004-05 & ONWARDS, THE ASSESSEE VOLUNTARILY OFFERED THE SAME INT O THE RETURN FILED U/S. 153A OF THE ACT. ALL THE TAXES WITH INTEREST HAVE ALSO DULY BEEN PAID AND THE DETAILED CLARIFICATION WAS SUBMITTED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS VIS-A-VIS EVEN IN A NOTE ACCOMPANYING OUR RETURN OF INCOME. 4. WITHOUT PREJUDICE TO THE ABOVE FACTUAL SUBMISSION, I T MAY FURTHER BE SUBMITTED THAT, THERE WAS NO DELIBERATE ATTEMPT ON TH E PART OF THE ASSESSEE TO CONCEAL ANY INCOME. THE INCOME BECAME CHARGEAB LE TO TAX BY VIRTUE OF SOME AMENDMENT IN THE LAW WHICH WAS NOT N OTICED BY THE ASSESSEE. DUE TAXES WITH INTEREST HAVE BEEN PAID AND THE BONAFIDE MISTAKE HAS BEEN RECTIFIED AT THE FIRST AVAILABLE OPPOR TUNITY ON VOLUNTARY BASIS. THE HON'BLE SUPREME COURT IN THE CASE OF CEMENT MARKETING CO. OF INDIA LTD. V/S ASSTT. C.S.T. (124 ITR 15) HAS HELD THAT , A RETURN CAN NOT BE SAID TO BE 'FALSE' UNLESS THERE IS AN ELEMENT OF DELIBER ATENESS IN IT. THE HON'BLE COURT HAS HOLD THAT, WHERE THE ASSESSEE DOES NO T INCLUDE A PARTICULAR ITEM IN THE TAXABLE INCOME UNDER A BONAFID E BELIEF THAT HE IS NOT LIABLE SO TO INCLUDE IT, IT WOULD NOT BE RIGHT TO COND EMN THE RETURN AS A FALSE RETURN INVITING IMPOSITION OF PENALTY. SIMILARLY, TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF D.M. DAHANUKAR V/S CIT (65 ITR 280 ) AND HON'BLE MADRAS HIGH COURT IN THE CASE OF M. HUSAIN ALT & SONS V/ S CIT (58 ITR 787) HAVE LAID DOWN THE PRINCIPLE THAT, MERE OMISSION FROM RETURN OF AN ITEM OF RECEIPT DOES NEITHER AMOUNT TO CONCEALMENT NO R DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUMSTANCES FOUND FROM WHICH IT CAN BE GATHERED THAT, THE OMISSION WAS ATTRIBUTABLE TO AN INT ENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE 5 ITA NOS.2295 & 2296/AHD/2009 IMPOSITION OF TAX THEREON. BESIDES, IT IS A VERY WELL A CCEPTED PROPOSITION OF LAW THAT PENALTY PROCEEDINGS ARE INDEPENDENT AND SEPA RATE FROM THE ASSESSMENT PROCEEDINGS. IT IS NOT MANDATORY U/S.27I THAT A PENALTY MUST BE IMPOSED IN EVERY CASE. THE HON'BLE CALCUTTA HIGH COU RT HAS UPHOLD THIS DOCTRINE AND FURTHER HAS HELD THAT, IF THE' CONDI TIONS LAID DOWN IN THE SAID SECTION ARE ESTABLISHED THEN THE AUTHORITY CONCERNED 'MAY DIRECT' THAT THE PERSON COMMITTING THE DEFAULT WITHIN THE MEANING OF THE SAID SECTION PAY PENALTY IMPOSED (165 ITR 249). FURTHER THE HON 'BLE SUPREME COURT AS WELL AS VARIOUS HIGH COURTS HAVE LAID DOWN THAT, AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGAT ION IS THE RESULT OF QUASI- CRIMINAL PROCEEDINGS AND PENALTY WILT NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT, CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIENCE DISRE GARD OF ITS OBLIGATIONS. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE A UTHORITY TO BE EXERCISED JUDICIALLY ON A CONSIDERATION OF ALL THE RELEVANT CIRCUM STANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM THE BELIEF THAT, THE OFFENDER IS NOT LIABL E TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE [HINDUSTAN STEEL LTD. VS. STAT E OF ORISSA (83 ITR 23 (SC)] 5. IF YOUR HONOUR WILL APPLY THE ABOVE REFERRED LEG AL DOCTRINES ON THE FACTS OF THE CASE OF THE ASSESSEE AS DISCUSSED (SUPRA), IT IS CR YSTAL CLEAR THAT THERE WAS IGNORANCE ABOUT AMENDMENT IN THE LAW, WHICH IN ITSELF IS A COMPLEX POSITION FOR A LAYMAN TO UNDERSTAND AND EVEN F OR THE ADVOCATES IN A TOWN LIKE; NADIAD, AND THEREFORE, THERE IS NO CO NSCIOUS EFFORT ON THE PART OF THE ASSESSEE TO CONCEAL ANY INCOME. ACCORDINGLY, T HE ASSESSEE MAY KINDLY BE SPARED FROM THE QUASI-CRIMINAL PROCEEDINGS FOR A BONAFIDE TECHNICAL BREACH OF LAW, FOR WHICH ACT OF JUDICIOUSNESS, T HE ASSESSEE SHALL EVER REMAIN THANKFUL TO YOUR HONOUR. 3.1 HOWEVER, THE AO DID NOT ACCEPT THE PLEA OF I GNORANCE OF AMENDMENTS TO PROVISIONS OF SEC. 6 OF THE ACT, THE ASSESSEE BEING A PARTNER IN M/S ASIAN FOOD INDUSTRIES AND THE RETURN HA VING BEEN FILED THROUGH AUTHORIZED REPRESENTATIVE, A PERSON WITH GOOD KNOWLEDG E OF PROVISIONS OF THE ACT. SINCE ADDITIONAL INCOME WAS DISCLOSED ONLY IN CONSEQU ENCE OF SEARCH ONLY, THE AO IMPOSED PENALTY OF RS. 5,63,200/- U/S 271(1) (C) OF THE ACT @100% OF THE TAX SOUGHT TO BE EVADED ON THE AFORESAID ADDITIONAL I NCOME DISCLOSED IN CONSEQUENCE OF SEARCH, THE ASSESSEE HAVING FAILED TO DISCH ARGE ONUS WITHIN THE MEANING OF EXPLANATION-1 BELOW SECTION 271(1)(C) O F THE ACT . 6 ITA NOS.2295 & 2296/AHD/2009 4 LIKEWISE IN THE CASE OF SMT. RADHABEN K TEHALYAN I, A PENALTY OF RS. 5,78,000/- U/S 271(1)(C) OF THE ACT @100% OF THE TAX SOUGHT T O BE EVADED BY HER ON THE AFORESAID ADDITIONAL INCOME DISCLOSED IN CONSEQUENCE OF SEARCH, WAS IMPOSED. 5. ON APPEAL, THE LEARNED CIT(A) CANCELLED THE PE NALTY IN THE CASE OF SHRI AJAY KUMARLAL TEHALYANI IN THE FOLLOWING T ERMS:- 2.0 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LE ARNED COUNSEL AS WELL GONE THROUGH THE RECORDS. ON PERUSAL OF PENAL TY ORDER, IT HAS BEEN NOTICED THAT A SEARCH WAS CONDUCTED ON THE APPELLANT'S P REMISES ON 19.01.2006. THE ONLY EFFECTIVE ISSUE RAISED IN THIS APPE AL IS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING 100% PENA LTY ON ACCOUNT OF DISCLOSURE OF INTEREST INCOME EARNED ON FOREIGN CURRE NCY NON- RESIDENT(FCNR) FDRS OF RS.19,63,940/- IN THE RETURN FI LED IN RESPONSE TO NOTICE ISSUED U/S 153A DECLARING TOTAL INCOME OF RS.24,95, 420/- AS AGAINST TOTAL INCOME OF RS.5,31,480/- DECLARED U/S 139(1). BASE D ON SUCH RETURNS, THE ASSESSMENT WAS ALSO COMPLETED U/S. 153A(A) R.W.S. 143(3 ) ACCEPTING THE INCOME RETURNED. LEARNED COUNSEL CONTENDED THAT T HE APPELLANT'S INTEREST INCOME WAS BONAFIDE BELIEVED TO BE EXEMPT U/S 1 0(15)(IV)(FA) OF INCOME TAX ACT, 1961. WHEN THE APPELLANT CAME TO KNOW, T HE CORRECT LEGAL POSITION, THE INCOME WAS OFFERED AND TAX PAID TH EREON SUO MOTU IN THE RETURN FILED IN RESPONSE TO THE NOTICE ISSUED U/S 153A. FURTHER, THE SOURCES OF MAKING INVESTMENT IN THE RELEVANT FCNR ACCOUNT WE RE EXPLAINED WHICH WERE NOT DOUBTED BY THE ASSESSING OFFICER. THE DISCLOSED ASSET WAS HELD BY THE APPELLANT, THERE CANNOT BE ANY INTE NTION NOT TO DISCLOSE THE INTEREST ACCRUED ON FOREIGN CURRENCY NON-RESIDE NT(FCNR) FDRS. HOWEVER, IT WAS NOT DECLARED IN THE RETURN FILED U/S 139(1) UNDER THE BONAFIDE BELIEF THAT THE SAME CONTINUED TO BE EXE MPT FROM TAX U/S 10(15)(IV)(FA) OF INCOME TAX ACT, 1961. THE HON'BLE SUP REME COURT IN CASE OF CIT VS. SURESHCHANDRA MITTAL (251 ITR 009) HAS H ELD THAT IN THIS CASE, REVISED RETURN SHOWING HIGHER INCOME AFTER SEARCH WAS FILED TO PURCHASE PEACE AND AVOID LITIGATION. THE TRIBUNAL HEL D THAT BURDEN OF PROVING CONCEALMENT IS NOT DISCHARGED AND PENALTY CANNOT B E LEVIED. THE APEX COURT UPHELD ABOVE FINDINGS OF ITAT. HOWEVER, THE HON'BLE SUPREME COURT IN UNION OF INDIA V/S. DHARMENDRA TEXTILES PROCESSOR S (2008) HAS HELD THAT THE PENALTY U/S 271(1)(C) IS CIVIL LIABILITY AN D THE WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MATTER OF PROSECUTION U/S 276C. IT HAS FU RTHER BEEN HELD THAT THE MENS REA IS NOT AN ESSENTIAL INGREDIENT FOR I MPOSING PENALTY UNDER THIS SECTION. HOWEVER, HON'BLE SUPREME COURT HAS NOT HEL D THAT IN ALL CASES WHERE ADDITION IS CONFIRMED, THE PENALTY SHALL MECHAN ICALLY FOLLOW. THE RATIO DECIDENDI OF THE JUDGMENT IS CONFINED TO TR EATING THE WILLFUL CONCEALMENT AS NOT VITAL FOR IMPOSING PENALTY U/S 271(1)(C) . HOWEVER, IT MAY NOT BE CORRECT TO INFER THAT BECAUSE THE LIABILITY IS CIVIL LIABILITY, IT 7 ITA NOS.2295 & 2296/AHD/2009 CEASES TO BE PENAL IN CHARACTER. THERE IS NO CONTRADICTION IN A LIABILITY BEING A CIVIL LIABILITY AND SAME LIABILITY BEING A PENA L LIABILITY THOUGH A CIVIL LIABILITY CANNOT CERTAINLY BE A CRIMINAL LIABILITY AS WELL . 2.1 THE ADDITIONAL INCOME OFFERED BY ASSESSEE U/S 153A AFT ER THE SEARCH HAVING BEEN ACCEPTED IN ITS ENTIRETY WITHOUT DETAI LED DISCUSSION OF THE SEIZED DOCUMENTS. AN ASSESSEE'S STATUTORY OBLIGATION U/S 1 39(1) IS TO GIVE CORRECT AND COMPLETE INFORMATION WITH THE RETURN O F INCOME COMPLIED WITH, THEN THERE IS NO CONTRAVENTION WHICH CAN ATTRACT PE NALTY, IN OTHER WORDS, THE ASSESSEE CONCEALED THE INCOME COMES TO AN END WH EN THE CORRESPONDING AMOUNT WAS OFFERED FOR TAXATION WHEN ALL THE NECESSARY PARTICULARS ARE DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FILED U/S 153A. IN A CASE WHERE ALL THE NECESSARY PARTICULARS ARE D ECLARED BY THE ASSESSEE IN THE RETURN OF INCOME, IT CANNOT BE SAID THAT T HE ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE UNDISCLOSED INCOME. THE A.O. HAS NOT DISCHAR GED THE BURDEN TO PROVE THE CONCEALMENT OF INCOME, WHICH WAS LEVI ED PURELY ON THE BASIS OF ADDITIONAL INCOME DISCLOSED IN THE RETURN FI LED U/S 153A BY THE ASSESSEE IN GOOD FAITH. THEREFORE, THE APPELLANT HAD MA DE DISCLOSURE AFTER THE SEARCH CANNOT BE TREATED AS CONCEALMENT. IT CANNOT BE SAID TO BE THE AMOUNT OF TAX SOUGHT TO BE EVADED BECAUSE THE UNDISCLOSE D INCOME WAS DECLARED IN THE RETURN FIFED U/S 153A ONLY. KEEPING IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE, CASES (SUPRA), T HE PENALTY IMPOSED U/S 271(1)(C) IS HEREBY DELETED. HENCE, THE APPE AL IS ALLOWED . 5.1 FOR SIMILAR REASONS , THE LD. CIT(A) CANCELLED THE PENALTY IN THE CASE OF SMT. RADHABEN KUMARLAL TEHALYANI. 6. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A) IN THESE TWO APPEALS . THE LEARNED DR SUPPORTED THE ORDER OF AO, LEVYING PENALTY WHILE T HE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF TH E LEARNED CIT(A) AND FURTHER CONTENDED THAT THESE ASSESSEES IN THEIR RESP ECTIVE ORIGINAL RETURNS FOR THE A.Y. 2005-06 FILED U/S 139(1) OF TH E ACT HAD BONAFIDELY SHOWN STATUS AS RESIDENT BUT NOT ORDINARILY RESIDENT (RBNOR) A ND CONSEQUENTLY, THE INCOME FROM DEPOSITS UNDER FCNR WAS BONAFIDELY BELIEVE D TO BE EXEMPT IN TERMS OF PROVISIONS OF S. 10(15)(IV)(FA) OF THE ACT, PRO VIDING FOR EXEMPTION OF INTEREST ON FCNR DEPOSITS IN THE HANDS OF A NON RESIDENT OR A PERSON WHO IS NOT ORDINARILY RESIDENT WITHIN THE MEANING OF S. 6(6) OF THE ACT. HOWEVER, FROM THE AY 2004-05, THERE WAS AN AMENDMENT IN S. 6(6) AND THE SE ASSESSEES CEASED TO 8 ITA NOS.2295 & 2296/AHD/2009 BE RESIDENT BUT NOT ORDINARILY RESIDENT AND BECAME R & O R. SINCE THE BONAFIDE EXPLANATION OF THE ASSESSEE THAT THE CHANGE IN THE PROVISIONS OF S. 6(6) ESCAPED ATTENTION OF THE ASSESSEE AND THE RETURN PREPA RERS WHO FILED ORIGINAL RETURNS AND THAT IT WAS HONESTLY BELIEVED AT THE TIME OF ORIGINAL RETURN BASED ON BANK BROCHURES THAT INTEREST ON FCNR RFDS WAS EXEMPT AND HENCE EVEN IN ORIGINAL RETURN BONAFIDELY, STATUS WAS SHOWN AS 'R BUT N OT R,' HAVE NOT BEEN FOUND TO BE FALSE, PENALTY HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A), THE LD. AR PLEADED . INTER ALIA, THE LD. AR RELIED UPON DECISION S IN SHREENATH BUILDERS VS. DCIT (2000) 111 TAXMAN 142; ACIT VS. VINMAN FINANCE & LEASING LTD (2009) 120 TTJ (VISHAKHA) (TM) 462 ; SUNILCHANDRA VOHRA VS ACIT , (2010) 127 TTJ (MUM) (UO) 100 ;ITO VS. CHIRAG FAMILY TRUST 56 TTJ (A HD), 115 / 58 ITD 382 ; DILIP N. SHROFF (2007) 291 ITR 519 (SC) AND RELIANCE PETRO PRODUCTS P LTD., 322 ITR 158 (SC). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. INDI SPUTABLY, THE ASSESSEE SHRI AJAY KUMARLAL TEHALYANI CLAIMED THE S TATUS OF RBNOR IN THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT IN THE AYS 2000-01 TO 2005-06 WHILE SMT. RADHABEN KUMARLAL TEHALYANI ALSO CLAIMED THE SAME STATUS IN THE AYS 2000-01,2001-02; 2004-05 & 2005-06 AND NON-RESIDENT IN THE AYS 2002-03 & 2003-04. THUS , FOR THE YEAR UNDER CONSIDERATION BOTH THESE ASSESSEES REFLECTED STATUS OF RBNOR IN THEIR RETURNS FILED U/S 139 OF THE ACT EVEN A FTER AMENDMENT TO PROVISIONS OF SEC. 6(6) OF THE ACT BY THE FINANCE ACT,2003 W.E.F 1.4.2004 AND CONSEQUENTLY THESE ASSESSEES DID NOT R EFLECT INTEREST EARNED OF THEIR FCNR DEPOSITS, MADE OUT OF REMITTAN CES FROM UAE THROUGH BANKING CHANNELS ON THE BONAFIDE BELIEF THA T SUCH INCOME CONTINUED TO BE EXEMPT U/S 10(15)(IV)(FA) OF THE AC T. IN TERMS OF THE AMENDED PROVISIONS, THE STATUS OF THESE ASSESSEES B ECAME R &OR AND CONSEQUENTLY, INTEREST ON FCNR DEPOSITS BECAME LIABLE TO TAX. HOWEVER, THESE ASSESSEES CLAIMED IN THEIR EXPLANATI ON THAT DUE TO INTRICATE AND COMPLEX PROVISIONS OF THE ACT AND ON THE ADVISE OF THE PERSON WHO PREPARED THEIR TAX RETURNS, STATUS CONTI NUED TO BE SHOWN 9 ITA NOS.2295 & 2296/AHD/2009 AS R BNOR AND IT WAS ONLY AFTER THE SEARCH THAT THI S MISTAKE WAS SET RIGHT AND AMOUNT OF INTEREST ON FCNR DEPOSITS WAS O FFERED TO TAX VOLUNTARILY. IT IS WELL ESTABLISHED THAT MAKING O F WRONG CLAIM UNDER SOME BONAFIDE BELIEF IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION, WHICH MAY CALL FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. I T IS NOT THE CASE OF THE REVENUE THAT THESE ASSESSEES WERE NOT UNDER THE BONAFIDE BELIEF OR THE EXPLANATION OFFERED BY THE ASSESSEE WAS FOUND TO BE FALSE OR UNTRUE.WE ARE OF THE VIEW THAT MAKING A WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATIO N, WHICH MAY CALL FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. HON 'BLE APEX COURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158/ 1 89 TAXMAN 322, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519/ 161 TAXMAN 218 (SC) AND UNION OF INDIA V. DHAR MENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 / 174 TAXMAN 571 (SC) CONCLUDED TH AT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL N OT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF REGARDING THE INCOME OF THE ASSE SSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCUR ATE PARTICULARS. SIMILAR VIEW WAS TAKEN IN CIT VS. SIDHARTHA ENTERPRISES (2010 ) 322 ITR 80 (P&H) AND CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. (2010) 322 ITR 73(P&H). HON'BLE SUPREME COURT IN THE CASE OF MOTILAL PADAMP AT SUGAR MILLS CO. LTD. V. STATE OF UTTAR PRADESH [197 9] 118 ITR 326 HELD THAT THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. FOLLOWING THIS VIEW, IN ITO V. CHIRAG FAMILY TRUST 58 ITD 382, A CO- ORDINATE BENCH CONCLUDED THAT BONA FIDE IGNORANCE OF NEWLY INSERTED PROVISIONS OF LAW, WOULD NOT LEAD TO LEVY OF PENALTY UNDER S. 271 (1) (C) OF THE ACT .LIKEWISE, IN SUNILCHANDR A VOHRA VS. ACIT [2010) 127 TTJ (MUMBAI) (UO) 100, IT WAS HELD THAT BONA FIDE IGNORANCE OF THE LAW REGARDING APPLICABILITY OF PROVI SIONS OF THE ACT AND THE CA HAVING NOT DRAWN THE ATTENTION OF THE ASSESSEE TO THE RELEVANT PROVISIONS OF LAW, IS A VALID GROUND FOR NOT IMPOSING PENALTY FOR CONCEALM ENT. IN THE INSTANT CASE ALSO, THESE ASSESSEES CONTINUED TO CLAIM STATUS OF RBNOR EVE N AFTER AMENDMENT TO PROVISIONS OF SEC. 6(6) OF THE ACT WHILE TH E LEGAL ADVISER ,WHO 10 ITA NOS.2295 & 2296/AHD/2009 PREPARED THE ORIGINAL RETURNS ALSO DID NOT DRAW THE ATTENTION OF THESE ASSESSEES TO THE RELEVANT PROVISIONS AND CONSEQUENTLY, INTEREST INCOME FROM FCNR DEPOSITS CONTINUED TO BE CLAIMED AS EXEMPT U/S 10(15)(IV)(FA) OF THE ACT. SINCE THE BANK ALSO DID NOT DEDUCT TAX AT SOURCE EVEN AFTER AM ENDMENT IN LAW, THESE ASSESSEES EXPLAINED THAT THEY WERE UNDER THE BONA FIDE B ELIEF THAT THEIR INCOME CONTINUED TO BE EXEMPT. IT WAS ONLY AFTER THE SEARCH TH AT THEY WERE ADVISED THAT INCOME WAS NO LONGER EXEMPT DUE TO AMENDMENT IN LAW AND CONSEQUENTLY, INTEREST INCOME FROM FCNR DEPOSITS IN THE BANK WAS DECLARE D IN THEIR RETURNS FILED IN CONSEQUENCE OF SEARCH. 8. IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DE CISIONS AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, WE ARE OF THE OPINION THAT MERE ERRONEOUS CLA IM ON MISTAKEN BONAFIDE BELIEF, IS NO GROUND FOR LEVYING PENALTY U /S 271(1)(C) OF THE ACT. IN VIEW THEREOF, WE ARE OF THE OPINION THAT LEVY OF PENALTY IS NOT JUSTIFIED. CONSEQUENTLY, WE HAVE NO HESITATION IN UPHOLDING THE CONCLUSION OF THE LD. CIT(A). THEREFORE, GROUND NOS .1 & 2 IN THESE TWO APPEALS ARE DISMISSED . 9.IN THE RESULT, BOTH THESE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 30 -06-2011 SD/- SD/- ( D K TYAGI ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 30 -06-2011 COPY OF THE ORDER FORWARDED TO: 1. 2. SHRI AJAY KUMARLAL TEHALYANI, C/O ASIAN FOOD INDUST RIES, N.H. NO.8, DABHAN SMT. RADHABEN K TEHALYANI, C/O ASIAN FOOD INDUSTRIE S, OPP. ESCORT TRACTOR, N H NO.8, DABHAN, TAL: NADIAD 3. THE DCIT, KHEDA CIRCLE, NADIAD 4. CIT CONCERNED 11 ITA NOS.2295 & 2296/AHD/2009 5. CIT(A)-IV, AHMEDABAD 6. DR, ITAT, AHMEDABAD BENCH-, AHMEDABAD 7. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD