Uttamchand Jain, Hyderabad V. DCIT, Hyderabad

ITA 275/HYD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1369 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2002-2003
• Appeal Filed On: 20-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E S NAGENDRA PRASAD
• Keywords: Period of limitation; Revised return; Set aside
• Section: 271(1)(c); 205; 6; 2

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'B' BEFORE SHRI N.R.S.GANESAN AND SHRI CHANDRA POOJARI I.T.A.NO.275/HYD/2006 ASSESSMENT YEAR 2002-03 UTTAMCHAND JAIN, HYDERABAD. .. APPELLANT (PAN AETPJ7382R) VERSUS DY. CIT, CIRCLE 6(1), HYDERABAD. ..RESPONDENT APPELLANT BY : SHRI C.SUBRAHMANYAM RESPONDENT BY : SHRI E.S.NAGENDRA PRASAD O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT (APPEALS), TIRUPATI, DATED 13-1-2006, AND PERTAINS TO ASST. YEAR 2002-03. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS AP PEAL IS LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. SHRI C.SUBRAHMANYAM, LEARNED REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE FILED THE RETURN ADMITT ING AN INCOME OF RS.4,81,572. A SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 6-1- 2003. ACCORDING TO THE LEARNED REPRESENTATIVE, THE ORIGINAL RETURN WAS FILED ON 31-7-2002. SUBSEQUENTLY, THE ASSESSEE ALSO FILED A REVISED RETURN ADMITTING INVESTMENT OF RS.50,00,000 BESIDES THE ORIGINAL INC OME DECLARED TO THE EXTENT OF RS.4,81,572. THE REVISED RETURN WAS FILED ON 30- 12-2002. THEREFORE, MUCH BEFORE THE DATE OF SURVEY THE ASSESSEE VOLUNTARILY FILED THE RETURN OF INCOME DISCLOSING THE INVESTMENT MADE. HOWEVER, THE ASSESS ING OFFICER LEVIED PENALTY 2 UNDER SEC. 271(1)(C) ON THE GROUND THAT THERE WAS C ONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. ACCORDING TO THE LEARNED REPRESENTATIVE, THE ASSESSEE FILED THE REVISED RETURN VOLUNTARILY BEFORE THE DAT E OF SEARCH AND THE ASSESSEE AGREED FOR ADDITION BEFORE THE AO SINCE THERE WAS A TECHNICAL PROBLEM IN THE HARDWARE OF THE COMPUTER. THE LEARNED REPRESENTATIV E PLACED HIS RELIANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE O F CIT V. S.I. PARIPUSHPAM (2001) 249 ITR 550, AND SUBMITTED THAT AGREED ADDIT ION BY ITSELF DOES NOT ESTABLISH WILLFUL NEGLECT ON THE PART OF THE ASSESS EE. ACCORDING TO THE LEARNED REPRESENTATIVE, THERE IS NO EVIDENCE ON RECORD TO S UGGEST THAT THE ASSESSEE HAS WILLFULLY CONCEALED ANY PART OF HIS INCOME. THE LEA RNED REPRESENTATIVE ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF DAHOD SAHAKARI KHARID VECHAN SANGH LTD. V. CIT (200 6) 282 ITR 321, AND SUBMITTED THAT WHEN THE ASSESSEE VOLUNTARILY DECLAR ED MORE INCOME BY FILING REVISED RETURN, THERE CANNOT BE LEVY OF PENALTY. TH E LEARNED REPRESENTATIVE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE KARNATAKA HI GH COURT IN THE CASE OF CIT V. M.M.GUJAMGADI (2007) 290 ITR 168, AND SUBMITTED THAT MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION IN THE ASSESSMENT PROC EEDINGS, THAT CANNOT BE A REASON TO LEVY PENALTY UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT. THE LEARNED REPRESENTATIVE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. RAJIV GARG & OTHER S (2009) 313 ITR 256. 3. ON THE CONTRARY, SHRI E.S.NAGENDRA PRASAD, LEARN ED DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT BUT FOR THE SURVEY T HE ASSESSEE WOULD NOT HAVE FILED THE REVISED RETURN. THE ENTIRE INVESTMENT CAM E TO LIGHT ONLY BECAUSE OF SURVEY CARRIED OUT BY THE DEPARTMENT. THEREFORE, AC CORDING TO THE LEARNED 3 DEPARTMENTAL REPRESENTATIVE, THE AO HAS RIGHTLY LEV IED PENALTY WHICH WAS CONFIRMED BY THE CIT (A). THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF THE PUNJAB & HARYANA HI GH COURT IN THE CASE OF SURENDER PAUL V. CIT (2006) 287 ITR 223, AND SUBMIT TED THAT SINCE THE RETURN WAS FILED AFTER THE SURVEY OPERATION, THE AO HAS RI GHTLY LEVIED PENALTY. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF CIT V. R.KESAV AN NAIR (2006) 287 ITR 276, AND SUBMITTED THAT WHEN THE ASSESSEE AGREED TO ADDI TION ON THE BASIS OF SURVEY PROCEEDINGS, PENALTY HAS TO BE LEVIED IN VIEW OF TH E JUDGMENT OF THE KERALA HIGH COURT. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF ADDL. CIT V. JEEVAN LAL SAH (1994) 205 ITR 244, AND SUBMITTED THAT IT IS FOR TH E ASSESSEE TO SHOW THAT THERE WAS NO CONCEALMENT OF INCOME. THE BURDEN IS A LWAYS ON THE ASSESSEE IN VIEW OF THIS JUDGMENT OF THE APEX COURT. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE REVENUE IS THAT THE ASSESSEE FILED THE REVISED RETURN SUBSEQUENT TO THE SURVEY O PERATION AND BUT FOR THE SURVEY THE ASSESSEE WOULD NOT HAVE FILED THE REVISE D RETURN ADMITTING THE UNDISCLOSED INVESTMENT. HOWEVER, THE FACTS ON RECOR D SHOW THAT THE ASSESSEE FILED THE ORIGINAL RETURN ON 31-7-2002. THE REVISED RETURN WAS FILED ON 30-12- 2002. THE SURVEY OPERATION WAS ADMITTEDLY CARRIED O UT ON 6-1-2003. THEREFORE, IT IS OBVIOUS THAT THE ASSESSEE FILED THE REVISED R ETURN BEFORE THE SURVEY OPERATION. THEREFORE, IT MAY NOT BE CORRECT TO SAY THAT BUT FOR THE SURVEY THE ASSESSEE WOULD NOT HAVE FILED THE REVISED RETURN. 4 5. THE QUESTION THAT ARISES FOR CONSIDERATION IS CA N THERE BE LEVY OF PENALTY WHEN THE ASSESSEE FILED REVISED RETURN VOLUNTARILY WITHIN THE PERIOD OF LIMITATION. PENALTY PROCEEDING IS INDEPENDENT OF THE ASSESSMENT PROCEEDING. EVERY ADDITION IN THE ASSESSMENT DOES NOT AUTOMATICALLY RESULT IN LEVY OF PENALTY. THE ASSESSING OFFICER HAS TO EXAMINE EACH AND EVERY ADD ITION AND FIND OUT WHETHER THERE WAS CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS. IN THIS CASE, THE EXPLANATI ON OF THE ASSESSEE WAS THAT THERE WAS A DEFECT IN THE COMPUTER HARDWARE AND, TH EREFORE, THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE. THE TOTAL DIFFERENCE WAS ONLY TO THE EXTENT OF RS.6,35,057. DUE TO DEFECT IN THE COMPUTER HARDWARE , THE ASSESSEE AGREED FOR ADDITION WITHOUT DRAGGING THE MATTER ANY FURTHER. E VEN THOUGH THE ASSESSEE AGREED FOR THE ADDITION, THE AO HAS TO EXAMINE THE EXPLANATION OF THE ASSESSEE AND FIND OUT WHETHER THERE WAS ANY CONCEALMENT OF I NCOME OR NOT. THE ADMISSION OF THE ASSESSEE IN THE ASSESSMENT PROCEED ING DOES NOT AUTOMATICALLY RESULT IN LEVY OF PENALTY AS HELD BY THE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF RAJIV GARG AND OTHERS (SUPRA). THE AO WAS EXPECT ED TO EXAMINE THE FACTUAL SITUATION AND THE EXPLANATION OF THE ASSESSEE AND C OME TO A CONCLUSION WHETHER THERE WAS CONCEALMENT OF INCOME. IN THIS CASE, THE AO, WITHOUT EXAMINING THE EXPLANATION OF THE ASSESSEE, LEVIED PENALTY ONLY ON THE GROUND THAT THERE WAS AN ADDITION OF RS.6,35,057 IN THE ASSESSMENT PROCEE DING. IN OUR OPINION, A RIGHTLY POINTED OUT BY THE LEARNED REPRESENTATIVE F OR THE ASSESSEE, THE ASSESSEE COULD NOT EXPLAIN TO THE SATISFACTION OF THE AO IN THE ASSESSMENT PROCEEDING DUE TO TECHNICAL DEFECT IN THE COMPUTER HARDWARE. HOWEV ER, IT WOULD NOT CONCLUSIVELY PROVE THAT THERE WAS A CREDIT BALANCE OUTSTANDING OVER AND ABOVE 5 THAT DISCLOSED BY THE ASSESSEE. IN OUR OPINION, THO UGH THERE WAS JUSTIFICATION FOR MAKING ADDITION SINCE THE ASSESSEE AGREED, THAT WOU LD NOT AUTOMATICALLY GIVE JURISDICTION TO THE AO TO LEVY PENALTY UNDER SEC. 2 71(1)(C). IN OUR OPINION, THE EXPLANATION OF THE ASSESSEE THAT THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE TO THE EXTENT OF RS.6,35,057 DUE TO TECHNICAL PROBL EM IN THE COMPUTER HARDWARE CANNOT BE BRUSHED ASIDE. THEREFORE, THE DIFFERENCE OF RS.6,35,057 MIGHT HAVE OCCURRED DUE TO TECHNICAL PROBLEM IN THE COMPUTER H ARDWARE. 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN THE CASE OF JEEVAN LAL SAH (SUPRA). IN THE CASE BEF ORE THE APEX COURT, THE TOTAL INCOME RETURN BY THE ASSESSEE WAS LESS THAN 80% OF THE TOTAL INCOME ASSESSED. THEREFORE, THE APEX COURT FOUND THAT THERE WAS A PR ESUMPTION THAT THE ASSESSEE WAS GUILTY OR NEGLIGENT AS A RESULT OF WHI CH HE CONCEALED INCOME. AS OBSERVED BY THE APEX COURT, THE PRESUMPTION ARISING UNDER THE INCOME-TAX ACT IS A REBUTTABLE ONE. IN THE CASE BEFORE US, THE ASS ESSEE DISCLOSED AN INVESTMENT OF RS.54,81,570. THE ASSESSEE COULD NOT EXPLAIN THE DIFFERENCE OF RS.6,35,057. THEREFORE, THE RETURNED INCOME IS MORE THAN 80% OF THE ASSESSED INCOME. EVEN IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CA SE OF JEEVAN LAL SAH (SUPRA), THERE CANNOT BE ANY PRESUMPTION THAT THE A SSESSEE CONCEALED ANY PART OF HIS INCOME. 7. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SURENDER PAUL (SU PRA). IN THE CASE BEFORE THE PUNJAB & HARYANA HIGH COURT, THE ASSESSEE DID NOT F ILE THE RETURN IN TIME IN RESPECT OF THE INCOME FOUND DURING THE COURSE OF SE ARCH OPERATION. DURING THE COURSE OF SEARCH OPERATION, THE ASSESSEE MADE A DIS CLOSURE OF RS.3,00,000 6 UNDER SEC. 132(4). THE RETURN OF INCOME WAS TO BE F ILED ON OR BEFORE 31-10- 1993, BUT IT WAS NOT FILED WITHIN THE TIME. THE RET URN WAS FILED ON 23-5-1994. IN THOSE FACTS AND CIRCUMSTANCES, THE PUNJAB & HARYANA HIGH COURT HELD THAT PENALTY WAS RIGHTLY LEVIED UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT. IN THIS CASE, EVEN BEFORE THE SURVEY THE ASSESSEE FILED THE REVISED RETURN. THE SURVEY OPERATION WAS CARRIED MUCH AFTER THE FILING OF REVI SED RETURN. IN THE REVISED RETURN, THERE WAS A DIFFERENCE BETWEEN THE INVESTME NT DISCLOSED BY THE ASSESSEE AND THE ACTUAL INVESTMENT. THE DIFFERENCE TO THE EXTENT OF RS.6,35,057 COULD NOT BE RECONCILED BY THE ASSESSEE DUE TO TECH NICAL PROBLEM IN THE COMPUTER HARDWARE. WHEN THE ASSESSEE MAINTAINED THE DETAILS IN THE COMPUTER HARD DISK, IN OUR OPINION, THE TECHNICAL DEFECT IN THE HARDWARE CANNOT BE IGNORED. IN THOSE CIRCUMSTANCES, THERE MAY BE JUSTI FICATION FOR ADDITION ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SU RVEY OPERATION. HOWEVER, DUE TO DEFECT IN THE COMPUTER HARDWARE THE ASSESSEE WAS PREVENTED FROM SATISFYING THE AO BY RECONCILING THE DIFFERENCE. IN THOSE CIRC UMSTANCES, IN OUR OPINION, IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED ANY PART OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS. 8. IN VIEW OF THE ABOVE DISCUSSION, IN OUR OPINION, THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE INCOME- TAX ACT. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE PENALTY IS DELETED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 7 ITA NO.275/HYD/2006 ORDER PRONOUNCED IN THE COURT ON 20-11-09. SD SD (CHANDRA POOJARI) (N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, 20TH NOVEMBER, 2009. RRRAO. COPY OF THE ORDER FORWARDED TO:- 1. UTTAMCHAND JAIN, 6-1-623, KHAIRATABAD, HYDERABAD. 2. DCIT, CIRCLE 6(1), HYDERABAD. 3. CIT 3, HYDERABAD. 4. CIT (A), HYDERABAD. 5. DR, ITAT, HYDERABAD. 1. DATE OF DICTATION : 4-11-2009 2. DATE ON WHICH TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER: 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER: 5-11-09 AND OTHER MEMBERS: 5. DATE ON WHICH THE FAIR ORDER GOES TO THE SR. P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR: 9. DATE OF DESPATCH OF THE TRIBUNAL ORDER: