RAJESH D. SHAH, MUMBAI V. ITO 25(2)-4, MUMBAI

ITA 28/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75538 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJENDRA C THAKKAR
• Keywords: Reasonable cause
• Section: 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIJAY PAL RA O, JM ./ I.T.A. NO. 28/MUM/2012 ( / ASSESSMENT YEAR: 2007-08) RAJESH D. SHAH RAJHSHREE-1, 1804, 18 TH FLOOR, ROYAL COMPLEX, EKSAR ROAD, BORIVALI (W), MUMBAI-400 092 / VS. INCOME TAX OFFICER 25(2)(4), C-11, 1 ST FLOOR, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA, MUMBAI-400 051 ./ ./PAN/GIR NO. ASUPS 6196 B ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ! $ % / APPELLANT BY : SHRI RAJENDRA C. THAKKAR '#! $ % / RESPONDENT BY : SHRI SANJEEV JAIN & ' ( $ ) * / DATE OF HEARING : 04.02.2014 +,- $ ) * / DATE OF PRONOUNCEMENT : 12.02.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-35, MUMBAI (CIT(A) FOR SH ORT) DATED 14.10.2011, DISMISSING THE ASSESSEES APPEAL CONTESTING THE LEVY OF PENALT Y U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEA R 2007-08 VIDE ORDER DATED 30.06.2010. 2.1 THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASS ESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE YEAR ON 02.04.2008 AT RS.17,11,812/- , WHICH STOOD PROCESSED U/S.143(1) OF THE ACT AT THE RETURNED INCOME. SUBSEQUENTLY, NOTIC E U/S.148 WAS ISSUED ON 25.03.2009, 2 ITA NO. 28/MUM/2012 (A.Y. 2007-08) RAJESH D. SHAH VS. ITO CLAIMING THAT THE INVESTMENT BY WAY OF UNACCOUNTED DEPOSITS IN DIFFERENT BANK ACCOUNTS, SPECIFIED THEREIN AND, FURTHER, ADMITTED U/S.131 OF THE ACT, AT A GROSS AMOUNT OF RS.34,77,340/-, INCLUDING RS.13,31,500/- FOR THE CURRENT YEAR, HAD ESCAPED ASSESSMENT AS INCOME. THOUGH THE SAID NOTICE WAS NOT RESPONDED TO BY THE ASSESSEE, INCOME STOOD FINALLY ASSESSED AT RS.17,11,810/-, I.E., AS RETURN ED AND PROCESSED U/S.143(1), VIDE ORDER U/S.143(3) R.W.S. 147 DATED 30.12.2009. 2.2 PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT W ERE INITIATED BY THE ISSUE OF NOTICE U/S.274 ON 30.04.2010, PROPOSING TO LEVY PENALTY ON THE SAID INCOME OF RS.13,31,500/-, AND PENALTY LEVIED AS WELL AS CONFIRMED IN FIRST AP PEAL IN ITS RESPECT AT 100% OF THE TAX SOUGHT TO BE EVADED THEREON (RS.4,54,720/-). AGGRIE VED, THE ASSESSEE IS IN SECOND APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE ASSESSEES CASE IS THAT IT HAD RETURNED THE IMPUGNED INCOME VOLUNTARILY, AND THE FACT THAT THIS WAS DONE BELATEDLY IS SECONDARY AND OF NO CONSEQUENCE. IN ANY CASE, EVEN ASSUMING THAT THE RETURN WAS NOT VOLUNTARY, TH E SAME WOULD BE TO NO EFFECT INASMUCH AS THE TAX SOUGHT TO BE EVADED IS NIL; THE TAX ON THE ASSESSED AND RETURNED INCOME BEING THE SAME. NO EXPLANATION TO THE PROVISION IS ATTRACTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE REVENUES CASE, ON T HE OTHER HAND, IS BASED ON THE FACT THAT THE INCOME UNDER REFERENCE IS ADMITTEDLY A CON CEALED INCOME (BY WAY OF DEPOSITS IN VARIOUS BANK ACCOUNTS), NEITHER RETURNED FOR ANY EA RLIER YEAR NOR FOR THE CURRENT YEAR, I.E., EITHER BY THE DUE DATE FOR FURNISHING THE RETURN (I .E., 31.07.2007) OR AT ANY TIME PRIOR TO ITS DETECTION BY THE REVENUE DURING SURVEY ON 24.11.200 7. THE SAME WAS SUBSEQUENTLY ALSO ADMITTED BY THE ASSESSEE VIDE STATEMENT ON OATH U/S .131 ON 23.01.2008. THE SUBSEQUENT RETURNING OF THE SAID INCOME ON 02.04.2008 WOULD TH EREFORE BE OF NO CONSEQUENCE IN LAW, I.E., AS FAR AS THE PENALTY PROCEEDINGS ARE CONCERN ED. THE SURVEY ITSELF HAD BEEN CONDUCTED ONLY AFTER THE DUE DATE OF FILING THE RETURN, I.E., 31.07.2007. COULD THE ASSESSEE, IT IS POSED, BE PLACED ON A BETTER FOOTING THAN ONE WHO H AS FURNISHED A RETURN BY THE DUE DATE, THOUGH NOT DISCLOSING THE INCOME, AND REVISED THE SAME SUBSEQUENTLY ON DETECTION OF INCOME. 3 ITA NO. 28/MUM/2012 (A.Y. 2007-08) RAJESH D. SHAH VS. ITO 3.2 WHAT HAS PREVAILED WITH THE REVENUE AUTHORITIES IS THAT THE FURNISHING OF THE RETURN OF INCOME IS ONLY AN AFTER-THOUGHT AND, THUS, OF NO VALUE OR CONSEQUENCE IN LAW, I.E., IN- SO-FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED. TH E LD. DEPARTMENTAL REPRESENTATIVES (DRS) ARGUMENT QUA THE NON-CONSEQUENTIALITY OF THE ACCEPTANCE OF THE RETURN INASMUCH AS THE SAME WAS NOT VOLUNTARY, I.E., TO THE EXTENT OF INCOME DETECTED DURING SURVEY, ALSO CANNOT BE FAULTED WITH INSOFAR AS THE PENALTY PROCE EDINGS ARE CONCERNED. THERE IS, IN FACT, NO DOUBT ON THIS ASPECT OF THE MATTER. WE SAY SO AS THE INCOME UNDER REFERENCE IS BY WAY OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNTS, WHICH WERE NOT DISCLOSED BY THE ASSESSEE EVEN FOR THE EARLIER YEARS, I.E., FOR A.YS. 2005-06 AND 2006-07, AND NEITHER ANY REASONABLE CAUSE FURNISHED EITHER FOR THE SAME OR FOR NOT FURN ISHING THE RETURN OF INCOME FOR THE CURRENT YEAR BY ITS DUE DATE (31.07.2007). THE LD. AUTHORIZED REPRESENTATIVE (AR) ALSO COULD NOT, ON BEING QUERIED BY THE BENCH IN THIS RE GARD, FURNISH ANY SATISFACTORY ANSWER. 3.3 SO HOWEVER, PENALTY COULD BE LEVIED ONLY WITHIN THE FRAMEWORK OF LAW. IT WOULD BE RELEVANT TO EXAMINE EXPLANATION 3 TO S. 271(1)(C) OF THE ACT, WHICH READS AS UNDER: FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CO NCEALMENT OF INCOME, ETC. 271. (1) IF THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) . (B) (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - EXPLANATION 1. EXPLANATION 2. EXPLANATION 3. - WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, T O FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NO TICE HAS BEEN ISSUED TO 4 ITA NO. 28/MUM/2012 (A.Y. 2007-08) RAJESH D. SHAH VS. ITO HIM UNDER CLAUSE ( I ) OF SUB-SECTION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INC OME, THEN, SUCH PERSON SHALL, FOR THE PURPOSES OF CLAUSE ( C ) OF THIS SUB-SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORESAID IN PU RSUANCE OF A NOTICE UNDER SECTION 148. ACCORDINGLY, THE DEEMING OF THE EXPLANATION 3 WOULD APPLY ON SATISFACTION OF THE FOLLOWING INGREDIENTS: A) NON-FURNISHING OF RETURN OF INCOME WITHIN THE PE RIOD SPECIFIED U/S. 153(1); OR B) FURNISHING A RETURN OF INCOME UPON ISSUE OF NOTI CE U/S. 142(1)(I)/148 WITHIN THE TIME PERIOD AFORESAID PURSUANT TO A SATISFACTION TH AT THE ASSESSEE HAS TAXABLE INCOME. THE LAW, PER EXPLANATION 3 TO SECTION 271(1)(C), CONTEMPLATES A SITUATION WHE RE THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE RETURN OF INCOME. IT, PROVIDING FOR SUCH A SITUATION, PRESCRIBES A PERIOD AS SPECIFIED IN SECT ION 153(1) FOR FURNISHING THE RETURN OF INCOME. A FAILURE TO FURNISH THE RETURN OF INCOME W ITHIN THIS PERIOD, COUPLED WITH THE NON-ISSUE OF NOTICE U/S. 142(1)(I) OR SEC. 148 BY T HE EXPIRY OF THE SAID PERIOD, WOULD ATTRACT EXPLANATION 3 TO SECTION 271(1)(C). THE LAW THUS ALLOWS THE SAME PERIOD TO THE ASSESSEE, AS IT DOES TO THE REVENUE FOR THE PURPOSE OF FRAMING THE ASSESSMENT, FOR FURNISHING THE RETURN OF INCOME SO AS TO AVOID LEVY OF PENALTY, AND WHERE HE SO DOES, PENAL CONSEQUENCES QUA CONCEALMENT OR FURNISHING INACCURATE PARTICULARS O F INCOME WILL NOT FOLLOW. THE SAID PERIOD, BEING TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR (REFER SECTION 153(1)(A)), IS CLEARLY NOT BREACHED IN THE INSTANT CASE; THE ASSESSEE FILING THE RETURN OF INCOME ON 02.04.2008 . WE NO DOUBT APPRECIATE THAT THE SAID PRESCRIPTION CONTEMPLATES A VOLUNTARY RETURN, AND NOT THE ONE WH ICH IS FILED TO COVER A DETECTION. THE LAW, HOWEVER, IS NOT CLUELESS OR UNEQUIPPED TO MEET SUCH A SITUATION, ALSO ADDING THE REQUIREMENT OF NON-ISSUE OF ANY NOTICE EITHER U/S.1 42(1)(I) OR SEC. 148, COUPLED WITH THE SATISFACTION ON THE PART OF THE ASSESSEE HAVING TAX ABLE INCOME, FOR THE NON-APPLICATION OF EXPLANATION 3 . THE REVENUE IN THE INSTANT CASE COULD HAVE ISSUED A NOTICE U/S.142 OR S. 5 ITA NO. 28/MUM/2012 (A.Y. 2007-08) RAJESH D. SHAH VS. ITO 148 ON THE DETECTION OF THE UNDISCLOSED INCOME IN N OVEMBER, 2007 OR EVEN IN JANUARY, 2008, IN WHICH CASE EXPLANATION 3 WOULD GET ATTRACTED. HOWEVER, HAVING NOT DONE SO, THE ASSESSEES CASE GETS EXCLUDED BY THE SAVING PROVIDE D IN EXPLANATION 3 ITSELF. IN THE INSTANT CASE, BOTH THE CONDITIONS (A) AND (B) LISTE D SUPRA ARE NOT SATISFIED, SO THAT EXPLANATION 3 TO SEC. 271(1)(C) WOULD NOT APPLY. 3.4 TO RECAPITULATE, THE ASSESSEE FILED THE RETURN OF INCOME ON 02.04.2008. NO NOTICE EITHER U/S. 142(1)(I) OR U/S. 148 FOR THE CURRENT Y EAR STOOD ISSUED TO HIM PRIOR TO THAT DATE. THE SAID RETURN, HAVING BEEN FURNISHED WITHIN THE T IME PRESCRIBED IN LAW FOR FURNISHING A BELATED RETURN U/S.139(4), IS A VALID RETURN IN LAW . THE CONDITION OF EXPLANATION 3 FOR NON- FURNISHING THE RETURN OF INCOME BY THE TIME SPECIFI ED U/S. 153(1) FOR THE RELEVANT ASSESSMENT YEAR IS THUS NOT SATISFIED. FURTHER, ADM ITTEDLY THE INCOME DETECTED AND SURRENDERED IN SURVEY, I.E., RS.13,31,500/-, STANDS INCLUDED IN THE RETURNED INCOME OF RS.17,11,812/-, AT WHICH IT STANDS ASSESSED. THE DE EMING OF EXPLANATION 1 WOULD ALSO NOT GET ATTRACTED INASMUCH AS NO AMOUNT CAN BE SAID TO HAVE BEEN ADDED OR DISALLOWED BY THE A.O. IN ASSESSING THE INCOME U/S.143 R.W.S 147, HAV ING ACCEPTED THE RETURN AS SUCH, SO THAT THERE IS NO INCOME, PARTICULARS OF WHICH HAVE BEEN CONCEALED BY THE ASSESSEE, I.E., UNDER LAW. 3.5 IN VIEW OF THE FOREGOING, NO CASE FOR THE LEVY OF PENALTY UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW IN THE MATTER IS MADE OUT. THE IMPUGNED PENALTY IS, THEREFORE, DELETED. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. /- )0 '1 2/) $ 3 ) $ ) 45 ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 12, 2014 SD/- SD/- (VIJAY PAL RAO) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER & 6( MUMBAI; 7' DATED : 12.02.2014 6 ITA NO. 28/MUM/2012 (A.Y. 2007-08) RAJESH D. SHAH VS. ITO .'../ ROSHANI , SR. PS !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. & 8) ( ) / THE CIT(A) 4. & 8) / CIT CONCERNED 5. ; < ')'=1 , * =1- , & 6( / DR, ITAT, MUMBAI 6. < >2 ? ( / GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , & 6( / ITAT, MUMBAI