DCIT, Tirunelveli V. M.Lazar Adaikalam, Tirunelveli

ITA 2753/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96428 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL IRS
• Assessee Lawyers: G GOPALAN JCIT RETD
• Keywords: Revised return
• Section: 143(3); 142(1); 133A; 132; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO. 2753/MDS/2014 ' $ %$ / ASSESSMENT YEAR : 2010-2011 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, TIRUNELVELI. VS. M. LAZAR ADAIKALAM, NO.1, PIONEER KUMARSAMY NAGAR, PHASE II, PERUMALPURAM, TIRUNELVELI. [PAN AARPL 2320D] ( / APPELLANT) ( /RESPONDENT) &' ( ) / APPELLANT BY : DR. B. NISCHAL, IRS, JCIT. *+&' ( ) /RESPONDENT BY : SHRI. G. GOPALAN, JCIT (RETD) ( , / DATE OF HEARING : 17-11-2015 -.% ( , / DATE OF PRONOUNCEMENT : 27-11-2015 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, MADURAI IN ITA NO.0094/2013-2014 DATED 28.08.2014 FOR THE ASSESSME NT YEAR 2010- 11 PASSED U/S.271(1)(C) OF THE INCOME TAX ACT (IN S HORT THE ACT). ITA NO. 2753/MDS/2014 :- 2 -: 2. THE DEPARTMENT HAS RAISED ONLY ONE SUBSTANTIVE GROU ND OF COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT THOUGH ASSESSEE HAS DISCLOSED INCOME IN SURVEY OPERATIONS U/S.133A OF THE ACT AND FILED REVISED RETURN AND PAID TAXES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A RETIRED TEACHER FROM PALAYAMKOTTAI, TOOK VOLUNTARY RETIREM ENT FROM SERVICE AND ENGAGED IN REAL ESTATE BUSINESS, FILED INCOME T AX RETURN ON 31.07.2010 DISCLOSING TOTAL INCOME OF =3,08,770/-. SUBSEQUENT TO THE FILING OF RETURN, SURVEY U/S.133A OF THE ACT WAS CO NDUCTED ON 03.02.2011 AND IN SURVEY OPERATIONS, THE ASSESSEE V OLUNTARY DISCLOSED INCOME OF =80 LAKHS FOR THE ASSESSMENT YEAR 2009-20 10 AND =80 LAKHS FOR THE ASSESSMENT YEAR 2010-2011 BEING TOTAL AMOUN T AGGREGATING TO =1.60 CRORES. THE ASSESSEE BEING A RETIRED TEACHER OFFERED ADDITIONAL INCOME AND FILED REVISED RETURN ON 18.05.2011 AND P AID TAXES =29,92,370/- INCLUDING INTEREST. THE LD. ASSESSIN G OFFICER COMPLETED ASSESSMENT TREATING THE REVISED RETURN FILED WITHIN THE STIPULATED TIME UNDER PROVISIONS OF LAW AND PASSED ORDER U/S.143(3) OF THE ACT DATED 27.03.2013. THE ASSESSEE WANTED TO BUY PEACE WITH THE DEPARTMENT AND SURRENDERED INCOME AND NOT FILED APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER U/S.143(3) BUT PAID THE ASSESSED TAX. ITA NO. 2753/MDS/2014 :- 3 -: 4. SUBSEQUENTLY, NOTICE U/S.271(1)(C) WAS ISSUED FOR L EVY OF PENALTY. IT IS A FACT THAT THE ASSESSEE BEING A TE ACHER AND HAS CO- OPERATED IN SURVEY OPERATIONS AND IN ASSESSMENT PRO CEEDINGS WITH THE INCOME TAX DEPARTMENT AND CAME FORWARD VOLUNTARY AF TER SURVEY AND DISCLOSED ADDITIONAL INCOME AND PAID TAXES. HE HAS NOT RETRACTED THE STATEMENT RECORDED IN SURVEY OPERATIONS NEITHER FIL ED ANY PETITION. THESE FACTS BEING ON RECORD THE ASSESSING OFFICER A PPLYING THE SINGLE AGENDA DECISION BUT FOR SURVEY THE ASSESSEE WOULD N OT OFFERED INCOME TO TAXES ISSUED SHOW CAUSE NOTICE. IN REPLY TO NOTI CE, ASSESSEE FILED A DETAILED EXPLANATIONS TO AVOID ANY ACTION BY THE DE PARTMENT, OFFERED ADDITIONAL INCOME AND SUBMITTED THAT HE HAS NOT CO NCEALED INCOME OR FURNISHED INACCURATE PARTICULARS IN THE PROCEEDINGS WHICH CALLED FOR LEVY OF PENALTY U/S.271(1) (C) OF THE ACT. BUT THE ASSESSING OFFICER OBSERVED THAT DUE TO SURVEY OPERATIONS AMOUNT HAS BEEN UNEARTHED AND THERE IS A CONCEALMENT OF INCOME RELIED ON THE JUDICIAL DECISIONS WITHOUT CONSIDERING THE REAL AND FACTUAL SITUATION AND CIRCUMSTANCES WERE ASSESSEE HAST COME FORWARD TO PAY TAXES AND L EVIED PENALTY OF =24,52,303/-. THE FACT THAT ASSESSEE HAS NOT FILED AN APPEAL AGAINST THE ORDER U/S.143(3) OF THE ACT TO BUY PEACE WITH THE DEPARTMENT. THE ASSESSEE AGGRIEVED BY THE PENALTY ORDER OF THE ASSESSING OFFICER FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME T AX (APPEALS). ITA NO. 2753/MDS/2014 :- 4 -: 5. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS SUBM ITTED EXPLANATIONS AND STATEMENT MADE BEFORE THE ASSESSIN G OFFICER IN ASSESSMENT U/S.143(3) AND ALSO IN THE PENALTY PROCE EDINGS AND OBJECTED TO LEVY OF PENALTY BY THE ASSESSING OFFICE R. THE ASSESSEE HAS SUBMITTED THAT NO NOTICE WAS ISSUED FOR FILING REVI SED RETURN AND THE RETURN WAS FILED VOLUNTARY AND ALSO FURNISHED DETA ILS ABOUT HIS BUSINESS TRANSACTION AND CONCLUDED THAT THE SURVEY OPERATIONS DOES NOT WARRANT FOR LEVY OF PENALTY FURTHER RELIED ON T HE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL C BENCH IN DCIT VS. DR. SATISH B. GUPTA 42 SOT 48 WHEREIN IT WAS HELD AS UNDER :- THE INITIAL PHRASE USED IN SECTION 271(1)(C) SUGGES TS THAT ASSESSING OFFICER HAS TO FIND IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ASSESSEE HAS CONCEALED THE PART ICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF S UCH INCOME. IN FACT THE PROCEEDINGS AGAINST THE ASSESSEE WOULD START ONLY AFTER RETURN OF INCOME IS FILED BY THE ASSESSEE OR AFTER ISSUANCE OF STATUTORY NOTICE AGAINST HIM SUCH AS UNDER SECTI ON 142(1) OR UNDER SECTION 143(2). CARRYING OUT SURVEY UNDER SEC TION 133A IS NOT AT ALL ANY PROCEEDINGS. PROCEEDINGS AS USED IN SECTION 271(1)(C) ARE STATUTORY PROCEEDINGS INITIATED AGAIN ST THE ASSESSEE EITHER BY ISSUANCE OF STATUTORY NOTICE OR AFTER FILING OF RETURN OF INCOME. SURVEY UNDER SECTION 133A OR SEAR CH UNDER SECTION 132 OR ISSUANCE OF NOTICE UNDER SECTION 133 (6) FOR EXAMPLE, ARE ONLY MEANS OF COLLECTING EVIDENCE AGAI NST THE ASSESSEE AND ARE NOT EQUIVALENT TO STATUTORY PROCEE DINGS. ANOTHER CRITERIA OF FINDING OUT AS TO WHETHER PARTI CULAR ACTION IS A STATUTORY PROCEEDINGS OR NOT IT IS TO BE SEEN WHETH ER IT CAN BE BROUGHT TO A LEGAL CONCLUSION AGAINST THE ASSESSEE BY DETERMINING HIS RIGHT OR LIABILITY. MERELY CARRYING OUT SURVEY UNDER SECTION 133A DOES NOT CREATE ANY LIABILITY AG AINST THE ASSESSEE WHICH IS CREATED ONLY THROUGH ASSESSMENT PROCEEDINGS OR PENALTY PROCEEDINGS. THEREFORE, THE LD. DR IS INCORRECT IN HIS SUBMISSION THAT SURVEY BEING A PRO CEEDINGS AND ASSESSING OFFICER HAS DISCOVERED CONCEALMENT DURING SURVEY, THEREFORE, THE ASSESSEE IS LIABLE FOR PENALTY UNDER SECTION 271(1)(C). FURTHER CLAUSE (C) TO SECTION 271(1) ME NTIONS 'AS ITA NO. 2753/MDS/2014 :- 5 -: CONCEALED.......OR FURNISHED'. THEY ARE PAST TENSE WORDS INDICATING THAT ASSESSEE HAS COMMITTED CERTAIN ACT ON WHICH PENALTY IS LEVIABLE. THUS THE ACT OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS SHOULD BE VIEWED BY THE ASSE SSING OFFICER AS DONE WITH RESPECT TO RETURN OF INCOME. T HE OMISSION OR COMMISSION OR CONTUMACIOUS CONDUCT HAS TO BE VIE WED FROM THE RETURN OF INCOME AND IF CERTAIN THING IS NOT DI SCLOSED OR NOT FURNISHED THEREIN ONLY THEN IT CAN BE SAID THAT ASS ESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. PRIOR TO THIS ASSESSEE HAS N OT DONE ANY CONTUMACIOUS CONDUCT ON WHICH PENALTY CAN BE LEVIED . MERELY BECAUSE CERTAIN RECEIPTS ARE NOT RECORDED IN THE BO OKS OF ACCOUNT OR RECEIPTS ARE NOT ISSUED TO THE PATIENTS, BUT INCOME THEREFROM WAS FINALLY DECLARED IN THE RETURN OF INC OME, THEN THERE IS NO CONTUMACIOUS CONDUCT. FOR NOT MAINTAINI NG BOOKS OF ACCOUNT OR NOT ISSUING RECEIPTS TO THE PATIENTS FOR THE AMOUNT RECEIVED BY THE ASSESSEE, THE BOOKS, AT THE BEST, C AN BE REJECTED BY INVOKING PROVISIONS OF SECTION 145(3) A ND INCOME CAN BE ESTIMATED IN ACCORDANCE WITH SECTION 144. BU T WHERE THE ASSESSING OFFICER ACCEPTS THE INCOME DECLARED IN TH E RETURN OF INCOME THEN ASSESSEE CANNOT BE CHARGED FOR ANY CONT UMACIOUS CONDUCT. THUS WHERE RETURNED INCOME IS ACCEPTED TH ERE IS NO CASE FOR LEVY OF PENALTY. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RELIED ON THE DECISIONS OF ITAT ON THE GROUNDS OF SURRENDER OF INCOME WERE THERE IS NO CONCEALMENT AND THE ASSESSEE HAS MADE C OMPLETE DISCLOSURES OF INFORMATION AND THERE IS NO CONTUMAC IOUS CONDUCT OF THE ASSESSEE. 1. GODAVARI TOWNSHIPS (P) LTD. VS. DCIT 45 TAXMANN.COM 175 (VIZAG) 2. MUNINAGA REDDY VS. ACIT, 37 TAXMNN.COM 440(BANGALOR E) 3. CIT VS. SAS PHARMACEUTICALS 11 TAXMANN.COM 207 (DEL HI) 4. VASAVI SHELTERS VS. ITO, 32 TAXMANN.COM 26 (BANGALO RE) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) EXAMIN ED THE LEGAL POSITION AND MADE DISTINCTION TO THE DECISIONS RELI ED BY THE ASSESSING OFFICER WHICH ARE NOT APPLICABLE TO THE ASSESSEE FU RTHER CONSIDERED THE ITA NO. 2753/MDS/2014 :- 6 -: FACTUAL POSITION, LEGAL ASPECT AND CIRCUMSTANCES AN D RELIED ON THE CONDITIONS FOR ISSUE OF NOTICE AND ASSESSMENT ORDER U/SEC 143(3) OF THE ACT WERE THE ASSESSEE OFFERED ADDITIONAL INCOME AND PAID THE TAXES; HAS DELETED THE PENALTY LEVIED BY OBSERVING AT PARA 12.1 OF PAGE NO.15 AS UNDER:- THE PROCEEDINGS FOR IMPOSITION OF PENALTY THOUG H INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS, EMANATE FROM ASSESSMENT PROCEEDINGS. THE OMISSION OR COMMI SSION OR CONTUMACIOUS CONDUCT HAS TO BE VIEW FROM THE RETURN OF INCOME AND IF CERTAIN THING IS NOT DISCLOSED OR NOT FURNIS HED THEREIN ONLY THEN IT CAN BE SAID THAT APPELLANT HAS CONCEALED T HE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF IN COME. THE ASSESSMENT ORDER IS VERY BRIEF AND DOES NOT BRING O UT ANY CONTUMACIOUS CONDUCT OF THE APPELLANT OR THAT APPEL LANT CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. IT IS THE DUTY OF THE ASSES SING OFFICER TO BRING OUT HOW METHOD OF CONCEALMENT SO THAT IT FORM S A BASIS FOR PENALTY ORDER AT A LATER DATE. THIS A MISSING I N THE INSTANT CASE. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE HA S FILED AN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ARGUED VEHEMENT LY THAT BUT FOR SURVEY OPERATIONS THE ASSESSEE WOULD NOT HA VE COME FORWARD TO ADMIT INCOME AND REFERRED TO THE GROUNDS RAISED FROM PARA 2.1 TO 2.8 OF GROUNDS OF APPEAL AND ALSO RELIED ON THE CAS E LAWS AND REQUESTED THE TRIBUNAL TO SET ASIDE THE ORDER OF TH E LD.CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 8. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIV E FOR ASSESSEE SUBMITTED THAT THE ASSESSEES WANT TO BUY PEACE WITH THE ITA NO. 2753/MDS/2014 :- 7 -: DEPARTMENT. TO AVOID VEXATIOUS LITIGATION HAS COME FORWARD TO OFFER ADDITIONAL INCOME TO LIVE IN PEACE. THE ASSESSEE W AS SINCERE IN HIS ATTEMPTS AND PROVED HIS BONAFIDES BY PAYING TAXES I NCLUDING INTEREST OF =29,92,370/- AND ALSO NO APPEAL WAS FILED AGAINS T THE ADDITIONS MADE IN THE ASSESSMENT ORDER U/S.143(3) OF THE ACT AND PRAYED FOR DISMISSAL OF REVENUE APPEAL. 9. WE AFTER HEARING THE RIVAL SUBMISSIONS OF THE PARTI ES AND ALSO PERUSED THE MATERIAL ON RECORD AND LOWER AUTHORITIE S ORDER ARE OF THE OPINION THAT THE ASSESSEE BEING RETIRED TEACHER SER VED IN SCHOOL AND UPON VOLUNTARY RETIREMENT HAS ENTERED INTO REAL EST ATE BUSINESS ONLY TO MAKE HIS LIVING OUT OF THE AVAILABLE FUNDS THROUGH REAL ESTATE BUSINESS. THE INCOME TAX DEPARTMENT HAS CONDUCTED SURVEY OPER ATIONS AND HAS NOT FOUND ANY INCREMENTING MATERIAL OR IMPOUND ED ANY EVIDENCE AT THE ASSESSEES PREMISES. THE FACT THAT THE ASSE SSEE HAS COOPERATED IN THE SURVEY OPERATIONS AND IN ASSESSMENT PROCEEDI NGS IS NOT DISPUTED. THERE WAS NO CONTUMACIOUS CONDUCT OF TH E ASSESSEE AND OFFERED ADDITIONAL INCOME AND PAID TAXES AND NO APP EAL WAS FILED AGAINST THE ORDER U/S. 143(3) OF THE ACT. THE LEVY OF PENALTY IS NOT AUTOMATIC. THE PRINCIPLES LAID DOWN FOR LEVY OF PE NALTY SHOULD BE CONSIDERED AND IT IS WELL SETTLED LAW THAT THE PEN ALTY PROCEEDINGS ARE DISTINCT AND SEPARATE FROM ASSESSMENT PROCEEDINGS AND JUST BECAUSE THE ADDITION MADE IN THE ASSESSMENT PROCEEDINGS IS SUSTAINED. LEVY OF ITA NO. 2753/MDS/2014 :- 8 -: PENALTY IS NOT AUTOMATIC AND AFTER CONSIDERING THE DECISIONS RELIED BY THE REVENUE AND ALSO FACTUAL CIRCUMSTANCES AND THE PRINCIPLES LAID DOWN IN THE CASE CIT VS. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 , (KARNATAKA) AND CIT VS. S. KHADER KHAN SON 352 ITR 480(SC) , WE ARE INCLINED NOT TO INTERFERE WITH THE ORDER O F THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WHO HAS DEALT IN DETAILED AND EXAMINED THE JUDICIAL DECISIONS AND HENCE WE DISMI SS THE GROUND OF THE REVENUE. 10. IN THE RESULT , THE APPEAL OF THE REVENUE IN ITA NO.2753/MDS/2014 IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 27TH DAY OF NO VEMBER, 2015, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI / / DATED:27.11.2015 KV 0 ( *',23 43%, / COPY TO: 1 . &' / APPELLANT 3. 5, () / CIT(A) 5. 389 *',' / DR 2. *+&' / RESPONDENT 4. 5, / CIT 6. 9 $ : / GF