Sh. Babu Lal Motawat S/o Sh. Bhanwarlal Motawat, UDAIPUR V. DCIT, UDAIPUR

ITA 32/JODH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70245 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGALCIT
• Keywords: Bogus Share capital
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 32/JODH/2013 (A.Y. 2005-06) SHRI BABU LAL MOTAWAT VS DCIT, CENTRAL CIRCLE-1 , C/O SHRI BHANWAR LAL MOTAWAT UDAIPUR. 5, SHANTIVAN, BEDLA ROAD UDAIPUR. PAN NO. AGGPM 0658 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT KOTHARI. DEPARTMENT BY : DR. DEEPAK SEHGAL-CIT- DR. DATE OF HEARING : 24/09/2013. DATE OF PRONOUNCEMENT : 26/09/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2005-06 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), DATED 20/12/2012 AND HAS EMANATED FROM A PENALTY ORDER DATED 13/05/2011 PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT), PASSED BY LD. DCIT, CENTRAL CIRCLE- 1, UDAIPUR. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED RETURN OF INCOME ON 31/10/2005 DECLARING TOTAL INCO ME OF RS. 3,53,690/- FOR A.Y. 2005-06. SUBSEQUENTLY, A SEARCH AND SEARCH ACTION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 30.9.2008. AS A CONSEQUENCE OF THIS NOTICE U/S 153A OF THE INCOME-T AX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT', FOR SHORT] W AS ISSUED AND IN RESPONSE THEREOF THE ASSESSEE FILED RETURN OF INCOM E [ROI] ON 29.3.2010, FOR A.Y. 2005-06 DECLARING TOTAL INCOME OF RS. 8,82,690/-. THE ASSESSMENT U/S 153C R.W.S. 143(3) WAS COMPLETED ON 16/12/2012. THIS ASSESSED INCOME INCLUDED THE FOLLOWING ADDITI ONS:- (I) UNDISCLOSED INCOME DECLARED BY THE ASSESSEE AMO UNTING TO RS. 5.30 LAKHS WHICH HAS NOT BEEN DISCLOSED IN THE ORIGINAL RETURN BUT SHOWN IN RETURN OF INCOME U/S 153A (II) ADDITION AMOUNTING TO RS. 38 LAKHS ON ACCOUNT OF BOGUS SHARE CAPITAL NOT SHOWN IN THE RETURN OF INCOME FIL ED U/S 153A OR ORIGINAL RETURN. 3 (III) ADDITION ON ACCOUNT OF RS. 1,25,000/- BEING A MOUNT RECEIVED OUT OF BOOKS AGAINST SALE OF FLAT M/S SHUB H BUILDERS NOT SHOWN IN RETURN FILED U/S 153A. 2.1 AS A RESULT, PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED AND FINALLY IMPUGNED PENALTY WAS IMPOSED. 2.2 IN FIRST APPEAL, THE ASSESSEE WAS SUCCESSFUL I N GETTING THE ENTIRE PENALTY DELETED. THE REVENUE IS IN APPEAL. 2.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. IN FACT, DURING THE COURSE OF SEARCH PROCEEDINGS, VARIOUS INCRIMINATING EVIDENCE WERE FO UND. STATEMENTS OF THE ASSESSEE AND OTHER MEMBERS OF HIS FAMILY WER E RECORDED U/S 132(4) OF THE ACT. THE ASSESSEE OFFERED A SUM OF R S. 7 CRORES FOR TAXATION IN HIS HANDS AND IN THE HANDS OF OTHER FAM ILY MEMBERS. THE ASSESSEE FILED RETURN OF INCOME [ROI] U/S 153A AND HAS HONOURED THE SURRENDERED AMOUNT BY OFFERING THEM FOR TAXATION IN DIFFERENT A.YS. HE HAS PAID DUE TAX ALSO. DURING THIS YEAR, ORIGIN ALLY, THE ASSESSEE RETURNED INCOME OF RS. 8,82,690/- WHICH HAS BEEN RE VISED TO RS. 4,33,000/- AND THE ADDITION MADE IS ADMITTEDLY A PA RT OF SURRENDERED 4 INCOME OF RS. 7 CRORES. IN SUCH CIRCUMSTANCES, THE ASSESSEE CANNOT BE SAID TO HAVE EITHER CONCEALED THE PARTICULARS OF HI S INCOME NOR THAT HE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE INCOMES OF RS. 5,30,000/- OF RS. 38 LAKHS AND OF RS. 1.25 LAKHS OF FERED FOR TAX ARE A PART OF TOTAL SURRENDER MADE U/S 132(4) AND IS COVE RED BY EXPLANATION 5 APPENDED TO SECTION 271(1)(C) OF THE ACT. 2.4 FOR READY REFERENCE, WE MAY DISCUSS THE SCHEME OF THE ACT REGARDING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. BEFORE WE CONSIDER THE FACTUAL MATRIX OF THIS CASE, TO ASCERTAIN AS TO WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT AS EXPLAINED BY NUMERO US JUDICIAL PRONOUNCEMENTS, PENALTY CAN BE LEVIED IN THIS CASE OR NOT, WE WOULD LIKE TO DISCUSS IN NUT SHELL THE RELEVANT LEGAL POS ITION REGARDING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND AS TO HOW AND WHEN SUCH PENALTY CAN BE LEVIED UNDER THIS SECTION. THERE ARE NO TWO OPINIONS ABOUT THE SETTLED POSITION OF LAW THAT REGULAR ASSESSMENT PR OCEEDINGS AND PENALTY PROCEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJ ECTS WHICH OPERATE IN DISTINCT AND SEPARATE SPHERES SO MUCH SO THAT E NTIRELY DIFFERENT PARAMETERS ARE APPLICABLE FOR MAKING QUANTUM ADDITI ON AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE C AN BE NO DISPUTE WITH REGARD TO THE POSITION OF LAW THAT UNDER SECTI ON 271(1)(C) PENALTY 5 CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALME NT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS O F INCOME' IS FOUND TO HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS ALBEIT THEY REFER TO DELIBERA TE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD N OT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGEST IO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT, IPSO FACT O, BECOME LIABLE TO A PENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOM ATIC. MEANING THEREBY, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENA LTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPI NG THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO THE DECISIONS IN THE CA SE OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UNION OF INDIA VS. DH ARMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UNION OF I NDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448, THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD, 322 ITR 158, HAS RECENTLY HELD AS UNDER: 6 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 PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING 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, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT 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 IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE 7 PARTICULARS. 3. ADVERTING TO THE FACTS OF THE CASE, WE ARE OF TH E CONSIDERED OPINION THAT NO PENALTY U/S 271(1)(C) OF THE ACT IS , THUS, LEVIABLE IN THE GIVEN FACTS AND THE CIRCUMSTANCES OF THE CASE. THE DECISIONS ON WHICH THE LD. CIT(A) HAS RELIED ARE ALL DISTINGUISHABLE O N FACTS. RATHER, THIS ISSUE STANDS COVERED BY THE DECISION OF THIS BENCH IN THE CASE OF M/S POONAM MARBLES P. LTD VS. DCIT ORDER DATED 3.6.2013 , COPY ENCLOSED AT PAGES 14 TO 22 OF APB. ACCORDINGLY, WE ORDER TO DELETE THE IMPUGNED PENALTY OF RS. 14,99,553/- AND ALLOW THE A PPEAL OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH SEPTEMBER, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 8 5. THE DR