ITO, Agra V. Smt.Lalita, Agra

ITA 433/AGR/2009

• Counselvise Citation: [2010] 137 COUNSELVISE.COM (IT) 0031 (ITAT-AGRA)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-01-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 29-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SAHU
• Assessee Lawyers: R C TOMAR I T P
• Keywords: Retrospective amendment; Reasonable cause; Revised return
• Section: 142(1); 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.433/AGR/2009 ASST. YEAR: 1998-99 INCOME-TAX OFFICER 1(2), AGRA. VS. SMT. LALITA, 53, BAGH FARZANA, AGRA (PAN : AATPL 1748 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.R. SAHU, JR. D.R. RESPONDENT BY : SHRI R.C. TOMAR, I.T.P. ORDER THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 16.06.2009 BY WHICH THE CIT(A) HAS DELETED THE PENA LTY AMOUNTING TO RS.2,13,476/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER HAS IMPOSED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT STATING THEREIN THAT O N THE BASIS OF THE FACTS IT IS PROVED THAT THE ASSESSEE HAS SUBMITTED INACCURATE PARTICULARS IN RE SPECT OF HER INCOME AND ALSO CONCEALED THE PARTICULARS OF INCOME AMOUNTING TO RS.6,40,428/- AN D, THEREFORE, HE IMPOSED PENALTY UNDER SECTION 271(1)(C) OF RS.2,13,476/- AS PER OBSERVATI ONS MADE UNDER PARA NO. 8 OF HIS ORDER. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELET ED THE PENALTY BY OBSERVING AS UNDER :- (9) I HAVE CONSIDERED THE AFORESAID ARGUMENTS OF T HE APPELLANT AND FIND THAT THE DISCLOSURE OF THE IMPUGNED INCOME AND THE REVIS ED RETURN PRECEDED THE ACTION TAKEN BY THE AO U/S.147 OF THE ACT. THE ASSESSMENT ORDER U/S.143(3)/147 OF THE ACT WAS PASSED ON THE BASIS OF SUCH REVISED RETURN FILED BY THE APPELLANT WITHOUT ANY ENQUIRIES OR INVESTIGATION. IT IS ALSO SEEN TH AT THE APPELLANTS EXPLANATION AS TO THE REASONS FOR THE SURRENDER OF THE IMPUGNED LO NG TERM CAPITAL GAINS TO BE 2 TAXED AS INCOME FROM OTHER SOURCES HAS NOT BEEN F OUND TO BE FALSE. HENCE, THE DEEMING PROVISIONS OF EXPLANATION 1 OF SECTION 271( 1)(C) ARE NOT ATTRACTED. REFERENCE IS MADE TO THE AMENDMENT OF EXPLANATION 4 (B) OF SECTION 271(1)(C) OF THE ACT BY THE FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FROM 01 ST APRIL, 2003 WHEREBY EXPLANATION 4(B) HAS BEEN AMEND ED AS UNDER : (B) IN ANY CASE TO WHICH EXPLANATION 3 APPLIES, ( MEANS THE TAX ON THE TOTAL INCOME ASSESSED AS REDUCED BY THE AMOUNT OF A DVANCE TAX, TAX DEDUCTED AT SOURCE, TAX COLLECTED AT SOURCE AND SEL F ASSESSMENT TAX PAID BEFORE THE ISSUE OF NOTICE UNDER SECTION 148) THE ABOVE PROVISIONS APPLY W.E.F. A.Y. 2003-04 SPEC IFICALLY IN THE CASE OF A PERSON COVERED BY EXPLANATION 3, BEING AN ASSESSE E WHO HAS FAILED WITHOUT REASONABLE CAUSE TO FURNISH A RETURN OF INCOME WHIC H HE IS REQUIRED TO FURNISH U/S 139 AND NO NOTICE U/S 142(1) OR NOTICE U/S 148 HAS BEEN ISSUED. IN SUCH CASE, THE ASSESSEE SHALL BE DEEMED TO HAVE CONCEALED THE PART ICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING TH AT SUCH ASSESSEE FURNISHES HIS RETURN IN PURSUANCE OF A NOTICE U/S 148. EVEN IN S UCH A CASE, FOR THE PURPOSE OF LEVY OF PENALTY U/S 271(1)(C) READ WITH EXPLANATION 4, THE ASSESSEE IS ENTITLED TO REDUCTION OF ADVANCE TAX, TDS, TCS & SA PAID BEFORE THE ISSUE OF NOTICE U/S 148, FOR THE PURPOSE OF COMPUTING THE AMOUNT OF TAX SOU GHT TO BE EVADED. TE ABOVE AMENDED PROVISIONS OF EXPLANATION 4(B) OF SECTION 271(1)(C) ARE NOT APPLICABLE TO THE APPELLANTS CASE AS THE YEAR IN QUESTION IS A.Y. 1998-99 AND THE APPELLANT HAD FILED THE ORIGINAL RETURN U/S. 13 9 OF THE ACT. HOWEVER, BY THE SAME RATIONALE, THE APPELLANT IS FOUND TO HAVE PAID THE ENTIRE SELF-ASSESSMENT TAX PRIOR TO ISSUE OF NOTICE U/S.148 OF THE ACT. IN VIEW OF THE FOREGOING, PENALTY IMPOSED U/S.271(1 )(C) OF THE ACT IS NOT SUSTAINABLE AND ACCORDINGLY, DELETED. 3. LD. D.R. BEFORE ME VEHEMENTLY RELIED ON THE ORDE R OF THE A.O. PASSED UNDER SECTION 271(1)(C) OF THE ACT. THE LD. A.R., ON THE OTHER H AND, VEHEMENTLY CONTENDED THAT THE ASSESSEE HAS VOLUNTARILY SURRENDERED THE INCOME BY FILING TH E REVISED RETURN. THE ASSESSING OFFICER HAS ISSUED NOTICE U/S. 148 ON AFTER FILING THE RETURN B Y THE ASSESSEE. ATTENTION WAS INVITED TOWARDS THE SEQUENCE OF THE EVENTS AS UNDER:- DATE PARTICULAR 06.10.1998 FILED RETURN OF INCOME OF RS.1,09,910/- BEFORE WARD-1(2), AGRA F.Y. 2003-04 THROUGH NEWSPAPER THE ASSESSEE COMES TO KNOW THAT CERTAIN SHARE 3 BROKERS WERE INVOLVED IN PROVIDING BOGUS ENTRIES OF CAPITAL GAIN. 14.06.2004 ASSESSEE FILED A LETTER BEFORE THE DDIT (INV.) AGRA AND OFFERED LTCG TO NORMAL TAXATION JUST TO BUY PEACE WITH THE DEPAR TMENT AND TO COME OUT OF VEXED LITIGATION. LETTER DT. 17.06.2004 SUMMON U/S.131(1A) READ WITH SECTION 131(1) OF INCO ME TAX ACT, 1961 WAS RECEIVED REQUIRING INFORMATION FROM DDIT ( INV.) 27.04.2005 ASSESSEE FILED A REVISED RETURN OF INCOM E BY DECLARING INCOME ON SHARES AS INCOME FROM OTHER SOURCES. 28.03.2005 NOTICE U/S. 148 OF THE I.T. ACT, 1961 WA S ISSUED BY ITO-1(2), AGRA. 3.1 THUS, IT WAS CONTENDED THAT THE SURRENDER WAS M ADE PRIOR TO THE DETECTION OF THE INCOME BY THE REVENUE. EVEN IT WAS CONTENDED THAT THERE I S NEITHER ANY CONCEALMENT OF THE INCOME NOR FILING OF THE INACCURATE PARTICULARS OF THE INCOME. EVEN IT WAS POINTED OUT THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF THIS BE NCH OF THE TRIBUNAL IN ITA NO. 296/AGRA/2007 IN THE CASE OF SHRI CHANDRA SHEKHAR GUPTA. IT WAS ALSO POINTED OUT THAT THE ASSESSING OFFICER HAS ALSO NOT MADE OUT THE SPECIFIC CHARGE WHETHER T HE PENALTY HAS BEEN IMPOSED FOR CONCEALMENT OF THE INCOME OR FOR FURNISHING OF THE INACCURATE P ARTICULARS OF THE INCOME RELYING ON THE DECISION REPORTED IN 282 ITR 642 (GUJ). 4. I HAVE HEARD THE PARTIES AND CAREFULLY CONSIDERE D THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. I NOTED THAT THE A.O. HAS IMPOSED THE PENALTY ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT ON THE BASIS OF THE FACTS THAT THE ASSESSEE HAS SUBMITTED INACCURATE PARTICULARS IN RESPECT OF HER INCOME AND ALSO CONCEALED THE PARTICULARS OF INCOME AS PER OBSERVATIONS MADE UNDER PARA NO. 8 OF HIS ORDER . 5. SECTION 271(1)(C) READS AS UNDER :- 271.(1) IF THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDE R THIS ACT, IS SATISFIED THAT ANY PERSON - 4 (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- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEA LS) OR THE COMMISSIONER TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 6. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT PENALTY U/S 271(1)(C ) IS LEVIABLE IF THE A.O. IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF THE INCOME. THE PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDI NGS, BOTH ARE DIFFERENT. EXPLANATION 1 TO SECTION 271(1)(C) STATES THAT THE AMOUNT ADDED OR D ISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RE SPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION IS NOT ABSOLUTE ONE BUT IS REBUT TABLE ONE. IT ONLY SHIFTS THE ONUS ON THE ASSESSEE. EXPLANATION 1 REFERS TO THE TWO SITUATIONS IN WHICH PRESUMPTION OF THE CONCEALMENT OF THE PARTICULARS OF INCOME IS DEEMED. THE FIRST SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUND BY THE A.O. O R THE COMMISSIONER TO BE FALSE. THE SECOND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY F ACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL 5 INCOME OFFERS AN EXPLANATION, WHICH, THE ASSESSEE I S NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONAFIDE ONE AND TH AT ALL THE FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESU MPTION AVAILABLE UNDER EXPLANATION TO SECTION 271(1)(C), CANNOT BE DRAWN UNLESS THE CASE OF THE ASSESSEE FALLS UNDER EITHER OF THE CLAUSES (A) OR (B). 7. IN THIS CASE, I NOTED THAT THE A.O. HAS NOT BROU GHT OUT ANY SPECIFIC CHARGE FOR WHICH THE PENALTY HAS BEEN IMPOSED ON THE ASSESSEE UNDER SECT ION 271(1)(C) OF THE ACT. HE HAS NOT BROUGHT OUT WHETHER THE ASSESSEE HAS CONCEALED THE PARTICUL ARS OF INCOME OR WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THIS I S APPARENTLY CLEAR FROM THE FINDING OF THE A.O. GIVEN UNDER PARA NO.8 OF HIS ORDER. 8. I HAVE GONE THROUGH THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. LTD., 282 ITR 642, IN WHICH IT WAS HELD AS UNDER: IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STATE WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BE EN FURNISHED BY THE ASSESSEE. --------------------------------------------------- ----------------- --------------------------------------------------- ------------------------ HELD, THAT THE PENALTY ORDER AND THE ORDER OF THE C OMMISSIONER (APPEALS) SHOWED THAT NO CLEAR CUT FINDING HAD BEEN REACHED. THE TRI BUNAL HAD FAILED TO APPRECIATE THIS LEGAL. ISSUE. THE RATIO IN CIT V. MANU ENGINE ERING WORKS 132 ITR 306(GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT B E UPHELD BY THE TRIBUNAL. THE ORDER WAS INVALID. 6 9. I NOTED THAT SIMILAR VIEW HAS BEEN TAKEN BY A BENCH OF I.T.A.T. DELHI IN ITA NO.2275/DEL/2009 IN THE CASE OF RAJ RANI MITTAL TO WHICH THE UNDERSIGNED IS THE AUTHOR. SINCE THE A.O. HAS NOT BROUGHT OUT ANY SPECIFIC CHARGE WH ETHER THE PENALTY HAS BEEN IMPOSED ON THE CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURA TE PARTICULARS OF INCOME, IN MY VIEW, THE PENALTY CANNOT BE SUSTAINED. I HAVE ALSO GONE THRO UGH THE DECISION OF THIS BENCH IN ITA NO.296/AGR./2007 IN THE CASE OF SHRI CHANDRA SHEKHA R GUPTA AND NOTED THAT THE CASE OF THE ASSESSEE IS ALSO COVERED BY THAT DECISION. I, ACCO RDINGLY, CONFIRM THE ORDER OF THE CIT(A) DELETING THE PENALTY. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT ON 22.01.2010) SD/- (P.K. BANSAL) ACCOUNTANT MEMBER PLACE: AGRA DATE: 22 ND JANUARY, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, AGRA TRUE COPY