The Income Tax Officer -5, BHILAI(CG) V. Shri Mshusudan Gupta, BHILAI(CG)

ITA 45/BIL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94003 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 19-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M DAS
• Assessee Lawyers: G S AGRAWAL
• Keywords: Gift; Revised return
• Section: 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI MUKUL K SHRAWAT, ( JM) AND SHAMIM YAHYA,(AM) I TA . NO . 45 / BLPR / 201 2 (ASSESSMENT YEAR : 200 3 - 04 ) THE INCOME TAX OFFICER - 5, AAYAKAR BHAVAN, CIVIC CENTRE, BHILAI, VS. SHRI MADHUSUDAN GUPTA, PRO.M/S ANAMICA INDUSTRIES, PLOT NO.77A , LIA, BHILAI (CG) APPELLANT .. RESPONDENT PAN/GIR NO. : ADAPG1022B APPELLANT BY : SHRI S M DAS RESPONDENT BY : SHRI G S AGRAWAL DATE OF HEARING : 1 6 .6.2015 DATE OF PRONOUNCEMENT : 19 . 6. 201 5 O R D E R PER MUKUL K SHRAWAT, ( JM) : T HIS IS AN APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 20.1.2012 FOR THE ASSESSMENT YEAR S 2003 - 04 . 2. IN THIS APPEAL T HE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. WHETHER IN LAW AND ON THE FACTS THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CANCELLING THE PENALTY OF RS.3,22,250/ - LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) FOR FU RNISHING INACCURATE PARTICULARS OF INCOME 2. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH IN LAW AND ON FACTS 3 . THE REASONS FOR INITIATION OF THE IMPUGNED PENALTY PROCEEDINGS WERE STATED TO BE THAT WHILE SCRUTINIZING THE CASE OF THE ASSESSEE FOR THE AY 2005 - 06, IT WAS NOTICED BY THE AO THAT GIFT TO THE TUNE OF RS.11,00,000/ - WAS RECEIVED IN THE ASSESSMENT YEAR 2003 - 04. CERTAIN INQUIRIES WERE MADE AND THEREUPON ON THAT BASIS OF TH O SE INQUIRIES , IT WAS ITA. NO. 45/BLPR/2012 2 DECIDED BY THE R EVENUE DEPARTMENT TO ISSUE NOTIC E U /S 148 OF THE INCOME TAX ACT, 1961 ( THE ACT ) FOR THE ASSESSMENT YEAR 2003 - 04. THE OBSERVATIONS OF THE AO AS PER THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2003 - 04 PASSED UNDER SECTIONS 143(3)/147 DATED 6.10.1983 WAS THAT THE NOTICE U/S 148 DATED 19.1 1 .20 07 WAS SERVED ON THE ASSESSEE ON 29.10.2007 , HOWEVER THE ASSESSEE HAD ALREADY SUBMITTED A REVISED RETURN ON 28.11.2007. I N THE SAID RETURN WHICH WAS FILED ON 28.11.2007 FOR ASSESSMENT YEAR 2003 - 04, THE INCOME DECLARED WAS AT RS.12,87,810/ - . ACCORDING TO THE AO , THE SAID AMOUNT OF GIFT OF RS.11 LAKHS WAS OFFERED FOR TAXATION IN THE SAID REVISED RETURN AND THE TAX THEREON AMOUNTING TO RS.5,73,709/ - WAS ALSO PAID ON 28.11.2007. 4 . THE ARGUMENTS OF THE ASSESSEE WAS THAT THE SAID AMOUNT WAS OFFERED FOR T AXATION TO GET MENTAL PEACE AS ALSO TO COOPERATE WITH THE REVENUE DEPARTMENT, HENCE, NO PENALTY SHOULD BE IMPOSED. OUR ATTENTION HAS ALSO BEEN DRAWN ON THE FACTS THAT THE RETURNED INCOME WAS ASSESSED AS SUCH AT RS.12,87,810/ - . WHILE IMPOSING THE PENALTY U/S 271(1)( C) OF THE ACT VIDE ORDER DATED NIL IT WAS HELD BY THE AO THAT THE REVISED RETURN COULD HAVE BEEN FILED BY THE ASSESSEE FO R THE ASSESSMENT YEAR 2003 - 04 UP TO 31.3.2005. THE IMPUGNED REVISED RETURN WAS NOT VALID RETURN. THE ASSESSEE HAS CONCEALE D THE GIFTED AMOUNT, HENCE, COMPUTED THE PENALTY U/S 271(1)( C ) AT RS.3,22,250/ - , WHICH WAS IMPOSED ON THE ASSESSEE. 5. WHILE DECIDING THE APPEAL OF THE ASSESSEE CHALLENGING THE LEVY OF THE PENALTY , IT WAS HELD BY THE LD. CIT(A) AS UNDER : 4. GROUNDS O F DECISION: I CONSIDERED THE SUBMISSION MADE BY T H E LD. AR AND PERUSED THE MATERIAL AVAILABLE ON RECORDS CAREFULLY. THE EXPLANTION - 1 TO SECTION 271(1)( C) AUTOMATICALLY APPLIED TO CASES WHERE THE RETURN INCOME IS LESS THAN THE INCOME FINALLY ASSESSED. THE CONSEQUENCES FOLLOW AS A MATTER OF LAW. THE BURDEN LIES ON THE ASSESSEE TO OFFER AN EXPLANATION AND SUBSTANTIATE THE SAME AND HE HAS TO FURTHER PROVE THAT SUCH EXPLANATION IS BONAFIDE AS CONTEMPLATED IN EXPLANATION - 1 TO SECTION 271(1)( C). IF THE ASSESSE E FAILS TO OFFER AN EXPLANATION OR HE IS NOT ABLE TO SUBSTA NT IATE ANY EXPLANATION OFFERED BY HIM OR HE FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE ONE, THE ASSESSEE SHALL BE DEEMED TO HAVE CONCEALED THE INCOME WITHIN THE ITA. NO. 45/BLPR/2012 3 MEANING TO SECTION 271(1)( C ) OF THE ACT. IN THE INSTANT CASE, THE APPELLANT CLAIMS TO HAVE RECEIVED GIFTS FROM ELEVEN PERSONS WHO ARE REGULARLY ASSESSED TO TAX IN VARIOUS WARDS OF BHILAI. THE GIFTS WERE EVIDENCED BY THE INSTRUMENT OF DEED OF GIFT DULY EXECUTED IN NOTARIZED STAMP PAPERS IN PRESENCE OF WITNESS(S). THE DONORS AND THE DONEES AND THE WITNESS AUTHENTICATED THE DEED OF GIFT BY PUTTING THEIR SIGNATURES . EACH AMOUNT OF GIFT WAS MADE BY CH A QUE AND CREDITED TO TH E ACCOUNT OF THE DONEE THROUGH BANKING CHANNEL. T HE MATERIAL EVIDENCES WERE FILED ALONG WITH THE RETURN OF THE YEAR UNDER CONSIDERATION. THE RETURN WAS PROCESSED BY THE AO . HOWEVER, IN COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005 - 06, THE AO ISSUED NOTICE U/S 131 TO VERIFY THE GENUINENESS OF THE GIF TS RECEIVED BY THE APPELLANT IN THE IMPUGNED ASSESSMENT YEAR. THE APPELLANT OFFERED THE SUM AS ADDITIONAL INCOME BY FILING A REVISED RETURN ON 28.11.2007 ALONG WITH CHALLAN OF RS.5,73,709/ - I.E. TAX AND INTEREST THEREON WITH A NOTE WHICH IS REPRODUCED HER EUNDER: GIFT WERE RECEIVED AMOUNTING TO RS.11,00,000/ - DURING THE YEAR AS PER DETAILS FILED ALONG WITH THE RETURN OF INCOME. HOWEVER, THE ASSESSEE APPREHENDS THAT HE WILL NOT BE IN A POSITION TO SUBSTANTIATE THE SAME AND WITH A VIEW TO COOPERATE WITH TH E DEPARTMENT AND BUYING PEACE, HE IS COMING FORWARD AND OFFERING THE SAME TO CONSIDER THE ABOVE AMOUNT AS INCOME OF THE YEAR UNDER CONSIDERATION WITH THE CONDITION THAT NO ACTION FOR PENALTY OR PROSECUTION WILL BE TAKEN BY THE DEPARTMENT WHICH THE DEPARTM ENT HAS ASSURED TOO. FURTHER, THE REVISED RETURN THOUGH NOT VALID WAS FILED BEFORE RECEIPT OF NOTICE U/S 148 OF THE ACT . THE ADDITIONAL INCOME WAS OFFERED FOR TAXATION IN ORDER TO AVOID INCONVENIENCE TO VARIOUS DONORS APPREH EN DING THAT THE DEPARTMENT MAY MAKE ENQUIRY FROM THEM AND THEY MAY BE PUT TO INTO INCONVENIENCE. THE EXPLANATION REGARDING THE GIFTS IS SUPPORTED BY THE GIFT DEEDS, DONORS ARE ASSESSED TO TAX AND THE GIFTED SUM WERE CHANNELIZED THROUGH BANKING CHANNEL. IN THE GIVEN FACTS AND CIRCU MSTANCES OF THE CASE, I FIND THAT THE APPELLANT HAS A BONAFIDE EXPLANATION WHICH HAS NOT BEEN FOUND TO BE FALSE BY THE AO. IT IS THE DUTY OF T HE OFFICER CONCERNED TO EXAMINE, BEFORE HE MAKES AN ORDER IMPOSING A PENALTY, THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THEN COME TO A FINDING WHETHER CONCEALMENT HAS BEEN PROVED INDEPENDENTLY FROM MERE REJECTION OF THE ASSESSES EXPLANATION REGARDING THE ITEMS SUSPECTED TO HAVE BEEN CONCEALED. UNLESS THE CONCEALMENT IS SO PROVED, PENALTY CANNOT BE IMPOSED EVEN I F, THE ASSESSEE HAD AGREED TO THE IMPOSITION. (RELIED ON D HALAPPA AND SONS V/S CIT (1974) 95 ITR 542 (MYS). THERE IS NO FINDING ON TH ESE ASPECTS AND ITA. NO. 45/BLPR/2012 4 THE ORDER OF PENALTY IS IMPUGNED ON THAT GROUND (RELIED ON B MUNIAPPA GOUNDER V/S CIT (1976) 102 ITR 78 7 (MAD). THE MERE FACT THAT THE APPELLANT HAD AGREED TO BE ASSESSED AT A HIGHER THEN RETURNED INCOME IS BY ITSELF HAS NOT A PROOF OF ADMISSION OF CONCEALMENT WHEN THE IMPLICATION OF T HE MADE BY HIM IS CLEAR AND CONCLUSIVE I.E. TO AVOID LITIGATION AND HARA SSMENT TO THE DONORS. IN THE CA S E OF ITO V/S DR. SAMEER KANT AGRAWAL (2009) 34 SOT 12(LUCK), THE ASSESSEE IS A DOCTOR. HE SURRENDERED RS.6.5 LACS BEING GIFT DURING THE ASSESSMENT PROCEEDING TO PURCHASE PEACE AND AVOID LITIGATION. THE LD. AO LEVIED PENALT Y OF RS.2.2 LAKHS. THE CIT(A) CANCELLED THE PENALTY WHICH THE HONBLE ITAT SUPPORTED . IT WAS HELD AS BELOW: IT WAS AN ADMITTED FACT THAT THE AMOUNT OF GIFTS WAS DULY SHOWN IN RETURN OF INCOME. THE DETAILS OF GIFTS WERE ALSO PRODUCED DURING THE COURSE O F THE ASSESSMENT PROCEEDINGS AS HAD BEEN MENTIONED IN THE ASSESSMENT ORDER BY THE AO HIMSELF. THUS, IN THE INSTANT CASE , THE ASSESSEE HAD MADE SURRENDER ONLY TO BUT PEACE WITH THE DEPARTMENT. IT WAS PERTINENT TO STATE THAT THE AO HAD FAILED TO PROVE BY INDEPENDENT MATERIAL THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. FURTHER, THE AO HAD NOT RECORDED ANY P ARTICULARS OF INCOME. FURTHER, THE AO HAD NOT RECORDED ANY FINDING THAT EXPLANATION OFFERED BY T HE ASSESSEE WAS FALSE AND BONAFIDE WAS NOT PROVED. IN VIEW OF THE AFORESAID, IT WAS CLEAR THAT THE ASSESSEE COULD NOT BE SAID TO HAVE CONCEALED HIS INCOME MERELY BECAUSE HE SURRENDERED CERTAIN AMOUNT TO BU Y PEACE WITH THE DEPARTMENT, AS HE COULD NOT PROVE D GENUINENESS OF GIFTS. AS A RESULT PENALTY U/S 271(1)( C ) COULD NOT BE LEVIED AS PER THE FOOT NOTE ATTACHED TO THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. IT IS SEEN THAT THERE IS A CONDITION FOR OFFERING ADDITIONAL INCOME, THE CONDITION THAT PE NALTY SHOULD NOT BE LEVIED ON THAT COUNT , IT IS W ELL SETTLED THAT AN OFFER IS COUPLE D WITH CONDITIONS WHICH ARE NOT REASONABLE OR ONE WHICH CANNOT BE ACCEPTED IN LAW COMPLETELY WOULD NOT RENDER UNCONDITIONAL THE OFFER WHICH IS IN TERMS MADE ON A CONDI TION. IF IT IS NOT POSSIBLE TO ACCEPT THAT CONDITION, THE ONLY RESULT WOULD BE THAT OFFER MUST BE REJECTED. BUT, WHERE AN OFFER IS COUPLED WITH CONDITIONS WHICH CANNOT BE ACCEPTED FULLY, THE OFFER CANNOT BE TREATED AS AN UNCONDITIONAL OFFER MERELY ON THA T COUNT. (RAMNATH JAGANNATH V/S STATE OF MAHARASHTRA (1984)57 STC 46, 51 (BOM). CONDITIONAL ADMISSION CANNOT BE MADE BASIS FOR PENALTY . (CIT V/S AMALENDU PAUL (1984) 145 ITR 439 (CAL), MORE SO ON THE STIPULATION THAT THE DISCLOSURE WAS DESIRED BY THE ADD L. CIT OR THE AO (RELIED ON CIT ITA. NO. 45/BLPR/2012 5 V/S MANSA RAM AND SONS (1977) 106 ITR 307 (ALL). THE JUDICIAL DECISION RELIED ON THE BY HELD. AR ARE RELEVANT , IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CA S E, I FIND THAT THE PENALTY IS NOT IMPOSABLE U/S 271(1)( C ) AND HENCE, IT IS CANCELLED. 6 . HAVING HEARD BOTH THE SIDES AN D AFTER CONSIDERING THE MATERIAL PLACED BEFORE US AS WELL AS THE CONTENTS OF THE COMPILATION FILED BEFORE US, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS RIGHT LY DELETED THE PENALTY AFTER FOLLOWING T HE FEW DECISIONS WHEREIN IT WAS HELD THAT AN INCOME WAS OFFERED AS ADDITIONAL INCOME IN THE RETURN WHICH WAS NOT DISTURBED BY THE REVENUE AND ASSESSE D AS SUCH, HENCE, THERE WAS NO CONCEALMENT VIZ - A - VIZ TO THE RETURN FILED. THE COMPILATION HAS ALSO CONSISTE D THE COPIES OF INCOME TAX RETURNED FILED BY THE DONORS ALONG WITH GIFT DEEDS. ON THIS SUBJECT THE HONBLE SUPREME COURT HAS PRONOUNCED A JUDGMENT IN THE CA S E OF CIT V/S SURESH CHANDRA MI T TAL (2001) 251 ITR 9 (S C ) AND THE RATIO LAID DOWN WAS THAT THO UGH THE ASSESSEE SURRENDERED ADDITIONAL INCOME BY WAY OF REVISED RETURN AFTER PERSISTENT QUERIES BY AO ONCE THE REVISED RETURNS HAVE BEEN REGULARIZED BY REVENUE THE EXPLANATION OF THE ASSESSEE THAT HE HAS DECLARED ADDITIONAL INCOME TO BUY PEACE AND TO CO ME OUT OF VEXED LITIGATION COLD BE TREATED A S BONAFIDE AND PENALTY UNDER SECTION 271(1)( C ) WAS NOT LEVIABLE. 7 . RESPECTFULLY FOLLOWING THIS DECISION AS WELL AS DECISIONS AS DISCUSSED BY THE LD. CIT(A) , WE CONFIRM THE FINDINGS OF THE FIRST APPELLATE AU THORITY AND DISMISS THIS GROUND OF REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STAND S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 19TH JUNE , 201 5 SD SD ( SHAMIM YAHYA ) ( MUKUL K SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAIPUR : 19TH JUNE,2015. ITA. NO. 45/BLPR/2012 6 SRL , SR. PS COPY OF THE ORDER FORWARDED TO : 1. TH E APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - CONCERNED 4. CIT CONCERNED 5. DR, ITAT, RAIPUR CONCERNED 6. GUARD FILE. BY ORDER, TRUE COPY SENIOR PRIVATE SECRETARY /AR