Shri Kishorbhai M. Karia, RAJKOT-GUJARAT V. The Assistant Commissioner of Tax, Circle-5, RAJKOT-GUJARAT

ITA 464/RJT/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67318 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-06-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 07-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS DR N
• Assessee Lawyers: KALPESH DOSHI CA Y N
• Keywords: Reopening of assessment; Income from undisclosed sources; Onus to prove; Revised return
• Section: 143(3); 133A; 147; 27; 148; 28

Judgement Text

1 . , IN THE INCOME TAX APPELLATE TRIBU N AL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVASTAVA, AM IT A NO . 464 / RJT/20 12 G / ASSESSMENT YEAR S 20 0 1 - 0 2 SHRI KISHOR M KARIA C/O KSD & ASSOCIATES, CHARTERED ACCOUNTANTS, 411, COSMO COMPLEX, NR. MAHILA COLLEGE CIRCLE, RAJKOT - 360001 PAN : ADGPK 8151 R ( , / APPELLANT) VS. ACIT, CIRCLE - 5 , JAMNAGAR R, / RESPONDENT GN / ASSESSEE BY SHRI KALPESH DOSHI, CA Y N / REVENUE BY SHRI K C MATHEWS, DR N 1 /DATE OF HEARING 05 . 0 6 .2013 N 1 / DATE OF PRONOUNCEMENT 31 . 0 7 . 2013 / ORDER . . [ , OS / T. K. SHARMA, J. M . : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 30.05.2012 OF LD . CIT (A) - IV , RAJKOT, CONFIRMING THE PENALTY OF RS.11,09,816/ - LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 FOR THE ASSESSMENT YEAR 200 1 - 0 2 . 2 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED HIS ORIGINAL R ETURN OF I NCOME ON 30.07.2001 DECLARING TOTAL INCOME AT RS.2,16,935/ - . A SURVEY U/S 133A OF THE INCOME - TAX ACT WAS CONDUCTED ON 04.01.2007 AT THE BUSINESS PREMISES OF M/S M P SCRAP TRADERS, RAJKOT IN WHICH THE ASSESSEE IS A PARTNER. DURING THE COURSE OF SURVEY PROCEEDINGS, A STATEMENT OF THE ASSESSEE NAMELY SHRI KISHOR M KARIA WHO IS A PARTNER IN THE FIRM WAS RECORDED U/S 133A(4) OF THE INCOME - TAX ACT. DURING THE COURSE OF S URVEY ON 04.01.2007, THE DDIT (INVS.), RAJKOT NOTICED THAT THE ASSESSEE HAD MADE FD S WITH VARIOUS BANKS IN HIS AND IN THE NAMES OF HIS FAMILY MEMBERS TO THE TUNE OF RS.24,00,000/ - . IN ADDITION TO ABOVE, IT WAS ALSO NOTICED THAT ASSESSEE HAD EARNED ACCRUED INTEREST ON FDS IN HIS NAME AND IN THE NAMES OF HIS FAMILY MEMBERS TO THE TUNE OF RS.7,61,869/ - ITA NO. 464/RJT/2012 2 FOR THE RELEVANT PERIOD. ON THE BASIS OF SURVEY , THE ASSESSING OFFICER REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEAR UNDER APPEAL AND THE REASONS RECORDED F OR REOPENING OF ASSESSMENT READ AS UNDER: - THE ASSESSEE IS AN INDIVIDUAL HAD FILED THE RETURN OF INCOME FOR A.Y. 2001 - 02 ON 30.07.2001 DECLARING TOTAL INCOME OF RS.216935/ - WHICH HAS BEEN ACCEPTED ON SUMMARY MANNER U/S. 143(1) OF THE I.T. ACT, 1961. IN THIS CASE, THE DDIT (INVS.), RAJKOT HAS CARRIED OUT A SURVEY OPERATION U/S.133A OF THE I.T. ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 04.01.2007. DURING THE COURSE OF SURVEY PROCEEDINGS, IT HAS BEEN NOTICED THAT THE ASSESSEE HAS MADE F.DS WITH VARIO US BANKS IN HIS AND IN THE NAMES OF HIS FAMILY MEMBERS TO THE TUNE OF RS.2400000/ - . IN ADDITION TO ABOVE, THE ASSESSEE HAS ALSO EARNED ACCRUED INTEREST ON F.DS IN HIS NAME AND NAMES OF HIS FAMILY MEMBERS OF RS.761869/ - FOR THE RELEVANT PERIOD. THE ASSESSE E HAD NOT DISCLOSED THESE INCOME IN THE RETURN OF INCOME FILED BY HIM FOR THE ABOVE ASSESSMENT YEAR WHICH IS ALSO EVIDENT FROM THE STATEMENT RECORDED ON OATH U/S.131(3) DURING THE COURSE OF SURVEY. THEREFORE, I HAVE REASONS TO BELIEVE THAT THE INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. 3. IN RESPONSE TO NOTICE U/S 148 SERVED ON 19.03.2007, THE ASSESSEE REQUESTED TO TREAT THE RETURN OF INCOME FILED ON 22.01.2007 AS FILED IN RESPONSE TO NOTICE U /S 148 OF THE INCOME - TAX ACT, 1961. THEREAFTER THE ASS ESSEE FILED STILL A REVISED R ETURN OF I NCOME ON 31 .0 3 .2007 IN RESPONSE TO NOTICE U/S. 148 OF THE ACT . THE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 143(3) (AFTER ISSUANCE OF NOTICE U/S 148 OF THE ACT ) ON 31.12.2007 AT A TOTAL INCOME OF RS.39,86,800/ - . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER MADE ADDITION OF RS.6,20,000/ - TOWARDS THE SHARE TRANSACTION DONE BY HIM DURING THE ASSESSMENT YEAR UNDER APPEAL AND ALSO INITIATED THE PENALTY PROCEEDING S U/S 271(1)(C) OF THE INCOME - TAX ACT . AGAINST THE AFORESAID ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A) - IV , RAJKOT ON 08.02.2008 AND THE LD CIT(A) VIDE HIS ORDER DATED 09.04.2009 DELETED THE ADDITION OF RS.6,20,000/ - . 4. S UBSEQU ENTLY, VIDE ORDER DATED 14 .03.2011 , THE ASSESSING OFFICER LEVIED PENALTY OF RS.11,09,816/ - IN RESPECT OF UNDISCLOSED INVESTMENT IN FDS FOR RS.24,00,000/ - WITH VARIOUS BANKS AND THE ACCRUED INTEREST EARNED THEREON AMOUNTING TO RS.7,61,869/ - (TOTALING RS.31 ,61,869/ - ) FOR THE ASSESSMENT YEAR UNDER APPEAL . AGAINST THE PENALTY ORDER , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) - IV, RAJKOT . B EFORE THE LD CIT(A), THE ASSESSEE PLEADED ITA NO. 464/RJT/2012 3 THAT HE HAD FILED THE R ETURN OF I NCOME VOLUNTARILY AND THE ADDITIONA L INCOME , WHICH WAS ADMITTED AT THE TIME OF SURVEY, WAS OFFERED ONLY TO BUY PEACE AND TO AVOID LITIGATION AND THEREAFTER CONCEALMENT CANNOT BE INFERRED MERELY ON THE BASIS OF FILING VOLUNTARILY RETURN TO BUY PEACE. IT WAS ALSO SUBMITTED THAT MERE AGREEMEN T TO ADDITION DOES NOT SHOW THAT THE AGREED INCOME IS CONCEALED INCOME AND THERE MAY BE 101 REASONS FOR SUCH AGREEMENT. IN SUPPORT OF THIS, RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SURESH CHANDRA MITTAL (201) 251 ITR 9. THE LD CIT(A), AFTER CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE , IN THE IMPUGNED ORDER CONFIRMED THE PENALTY FOR THE DETAILED REASON GIVEN IN PARAGRAPH 4 OF THE IMPUGNED ORDER WHICH READS AS UNDER: - 4. I HAVE GONE THROUGH THE P ENALTY ORDER AND SUBMISSIONS OF APPELLANT. I FIND THAT THE ASSESSING OFFICER HAD INITIATED ASSESSMENT PROCEEDINGS U/S 147 AFTER RECEIVING INFORMATION VIDE LETTER DATED 18.1.2007 FROM THE INVESTIGATION WING WHICH WAS COLLECTED DURING A SURVEY U/S 133A OF T HE I.T. ACT ON 4.1.2007. APPELLANT HIMSELF HAD FILED A RETURN OF INCOME ON 22.1.2007 DECLARING FURTHER INCOME OF RS.24,00,000/ - INVESTED IN FIXED DEPOSITS IN HIS NAME AND IN THE NAME OF FAMILY MEMBERS AND ACCRUED INTEREST THEREON OF RS.7,61,869/ - . APPELL ANT CLAIMED BEFORE THE ASSESSING OFFICER DURING THE PENALTY PROCEEDING THAT SUCH FURTHER DECLARATION OF RS.31,61,869/ - WAS MADE TO BUY PEACE. I FIND THAT APPELLANT FILED THE OUT OF DATE RETURN OF INCOME AFTER THE INVESTIGATION WING CARRIED OUT SURVEY ON 4 .1.2007 IN THE PREMISES OF THE FIRM WHERE APPELLANT IS A PARTNER. I FIND THAT THE ASSESSING OFFICER HAS ASSESSED THE AMOUNT OF RS.24,00,000/ - INVESTED IN FDRS AS INCOME OF APPELLANT FROM BUSINESS AND PROFESSION WHICH WAS SO OFFERED BY APPELLANT IN THE OUT OF DATE REVISED RETURN OF INCOME WHICH WAS REGULARIZED AFTER THE ASSESSING OFFICER ISSUED NOTICE U/S 148. THE CORRESPONDING ACCRUED INTEREST INCOME OF RS.7,61,869/ - WAS OFFERED BY APPELLANT AS INCOME FROM OTHER SOURCES IN THE SAME RETURN AND WAS SO ASSESS ED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER. APPELLANT HAS RELIED ON THE DECISION IN CASE OF CIT V/S SURESH CHANDRA MITTAL (2001) 251 ITR - 9 AND (2000) 241 ITR 124 (MP) WHERE IT WAS HELD THAT PENALTY FOR CONCEALMENT U/S 271(1)(C) IS NOT IMPOSABLE MERELY ON THE BASIS OF SURRENDERED INCOME AND REVISED RETURN EVEN AFTER A SEARCH OR SURVEY. I FIND THAT IN CASE OF CIT V/S SURESH CHANDRA MITTAL (SUPRA) NO SURRENDER OF INCOME WAS MADE AT THE TIME OF SEARCH. THE SURRENDER OF INCOME WAS MADE BY THE ASSESSEE LATER DUE TO PERSISTENT QUERIES MADE AFTER A SEARCH OPERATION BY THE DEPARTMENT AND TO BUY PEACE AND TO COME OUT OF VEXED LITIGATION. IN PRESENCE CASE THE APPELLANT HAS SURRENDERED THE INCOME ON THE BASIS OF FDRS OF RS.24,00,000/ - FOUND AT TH E TIME OF SURVEY ITSELF ON 4.1.2007 WHICH WERE NOT DISCLOSED IN THE RETURN OF INCOME FILED BY THE APPELLANT ON 30.07.2001 DECLARING TOTAL INCOME OF RS.2,16,935/ - . IN FACT THE VALUABLES AND ASSETS FOUND DURING THE SURVEY WERE MUCH MORE AT ABOUT RS.1.31 CRO RE BUT THE UNDISCLOSED FDRS PERTAINING TO THE ASSESSMENT YEAR UNDER APPEAL AND NOT DISCLOSED BY APPELLANT IN THE RETURN OF INCOME FILED ON 30.7.2001 WERE ONLY CONSIDERED FOR THE ASSESSMENT FOR ASSESSMENT YEAR UNDER APPEAL. THEREFORE IN PRESENT CASE THE SU RRENDER OF RS.24,00,000/ - AS INCOME BY APPELLANT IS A DIRECT CONSEQUENCE OF DETECTION OF ITA NO. 464/RJT/2012 4 CORRESPONDING UNDISCLOSED FDRS BY THE INVESTIGATION WING OF THE DEPARTMENT DURING SURVEY U/S 133A ON 4.1.2007. EVEN IF APPELLANT EXPLAINS SUCH SURRENDER OF FDRS AND A CCRUED INTEREST ON THEM AS AN ACT TO BUY PEACE, THE EXPLANATION IS NOT ACCEPTABLE BECAUSE THERE IS HARDLY ANY POSSIBILITY OF LITIGATION IN TAXING INVESTMENT IN UNDISCLOSED FDRS AS INCOME OF APPELLANT EVEN IF APPELLANT HAD NOT SURRENDERED THE SAME IN AN OUT OF DATE RETURN OF INCOME. THE BURDEN IS ON APPELLANT TO EXPLAIN AS HOW THE SURRENDER MADE BY HIM IN RESPECT OF UNDISCLOSED FDRS WAS NOT HIS CONCEALED INCOME AFTER HE ACCEPTED THE SAME TO BE HIS INCOME DURING THE A SSESSMENT PROCEEDINGS. APPELLANT HAS NOT D ISCHARGED THE BURDEN BY ONLY SAYING THAT THE REASON WAS TO BUY PEACE. THE EXPLANATION THAT THIS DISCLOSURE WAS MADE TO BUY PEACE IS NOT BACKED BY THE FACTS OF THE CASE AS MENTIONED ABOVE. THE ADMISSION OF INCOME BY THE APPELLANT AFTER THE DETECTION OF UN DISCLOSED FDRS DURING THE SURVEY OPERATION WAS ONLY THE ACCEPTANCE OF THE OBVIOUS RATHER THAN BUYING PEACE. THE SURVEY WAS CARRIED OUT ON 4.1.2007 WHERE THE UNDISCLOSED INVESTMENT IN FDRS BY APPELLANT WAS DETECTED AND APPELLANT FILED THE OUT OF DATE RETUR N OF INCOME ON 22.1.2007 TO ACCEPT THE OBVIOUS RATHER THAN TO BUY PEACE BECAUSE THERE WAS NO POSSIBILITY OF ANY LONG DRAWN LITIGATION IN THE CASE OF APPELLANT IN RESPECT OF UNDISCLOSED FDRS FOUND DURING SURVEY. THE ACT OF READILY ACCEPTING THE UNDISCLOSED FDRS AS INCOME BY THE APPELLANT AT THE TIME OF SURVEY ALSO CONFIRMS THE SAME. HBLE MADRAS HIGH COURT HELD IN CASE OF CIT VS. POPULAR LUNGI CO 238 ITR 229 (MAD) THAT WHEN THE ASSESSEE HAD READILY AGREED TO THE INCLUSION OF THE AMOUNT AS ITS INCOME AND WHEN THE ASSESSEE ITSELF HAD ADMITTED THAT IT HAS NOT DISCLOSED THE INCOME IN THE ORIGINAL RETURNS AND NOT ACCOUNTED FOR THE SAME IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY IT AND NO FURTHER EVIDENCE WOULD BE NECESSARY TO SHOW THAT THE AMOUNT DISCLOSED IN T HE ASSESSMENT PROCEEDINGS WAS ITS INCOME AND IT REPRESENTED ITS CONCEALED INCOME. HONBLE DELHI HIGH COURT HAS HELD IN CASE OF JASWANT RAI VS. CBDT (1982) 133 ITR 19 (DEL) THAT WHERE THE ASSESSEE HAD CONCEALED HIS INCOME, ANY SUBSEQUENT ACT OF VOLUNTARY D ISCLOSURE WOULD NOT AFFECT THE IMPOSITION OF PENALTY FOR CONCEALMENT. HBLE KARNATAKA HIGH COURT HELD IN CASE OF CIT VS. SUDHARSHAN SILKS AND SAREES (253 ITR 145) THAT MERE FILING OF A REVISED RETURN IS NOT ENOUGH. THE BACKGROUND AND THE CIRCUMSTANCES IN WHICH SUCH RETURNS ARE FILED HOLD THE KEY TO THE ANSWER WHETHER SUCH RETURNS ARE BONA FIDE. THE REVISED RETURN WAS TO PRE - EMPT ANY ACTION ON THE PART OF THE DEPARTMENT FOR REOPENING OF THE EARLIER ASSESSMENTS ON THE BASIS OF SEIZURES AND DISCLOSURES MADE IN THE COURSE OF THE SEARCH PROCEEDINGS. THE FACTS IN CASE OF APPELLANT ARE SIMILAR TO THE FACTS NARRATED IN THE DECISIONS OF VARIOUS HIGH COURTS MENTIONED ABOVE AND THEREFORE I CONFIRM THE PENALTY OF RS.11,09,816/ - IMPOSED BY THE ASSESSING OFFICER U/S 27 1(1) (C ) OF THE I.T. ACT. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 5 . AT THE TIME OF HEARING BEFORE US, ON BEHALF OF ASSESSEE SHRI KALPESH DOSHI, CA APPEARED AND DREW OUR ATTENTION TO THE PEN ALTY ORDER AS WELL AS SHOW - CAUSE NOTICE DATED 25.01.2011 ISSUED BY ACIT, CIRCLE - 5, RAJKOT BEFORE ISSUING THE PENALTY AND CONTENDED THAT THE ASSESSING OFFICER LEVIED THE PENALTY MAINLY ON THE GROUND THAT ADDITIONS MADE BY HIM ARE CONFIRMED BY THE LD. CIT(A) . THE LD COUNSEL FOR THE ASSESSEE POINTED OUT THAT THIS IS NOT TRUE. HE ITA NO. 464/RJT/2012 5 ALSO SUBMITTED THAT BOTH THE ADDITIONS TOTALING TO RS.31,61,869/ - , FOR WHICH THE ASSESSING OFFICER LEVIED U/ S 143(3), IN RESPECT OF UNDISCLOSED INCOME OFFERED IN RESPECT OF FDRS AMOU NTING TO RS.20,00,000/ - AND ACCRUED INTEREST THEREON AMOUNTING TO RS.7,61,869/ - WERE DULY DECLARED BY THE ASSESSEE IN THE R ETURN OF I NCOME FURNISHED BEFORE THE ISSUANCE OF NOTICE U/S 148. THESE ADDITIONS WERE NOT MADE BY THE ASSESSING OFFICER AND THEREFOR E THERE IS NO SATISFACTION FOR ISSUING SHOW - CAUSE NOTICE FOR LEVYING PENALTY U/S 271(1)(C) OF THE INCOME - TAX ACT. HE PLEADED THAT ON THIS GROUND ALONE, THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) BE CANCELED. THE OTHER PLEA TAKEN BY THE LD COUNSEL FOR THE ASSESSEE IS THAT AS PER JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SURESH CHANDRA MITTAL (SUPRA) THE PENALTY U/S 271(1)(C) IS NOT LEVI ABLE BECAUSE THE ASSESSEE HIMSELF HAS DECLARED BOTH THE AFORESAID TWO ITEMS OF INCOME , TOTALI NG RS.31,61,869/ - , IN HIS R ETURN OF I NCOME FURNISHED VOLUNTARILY. FOR THIS , RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS: - A . SAS PHARMACEUTICALS 335 ITR 259 (DEL.) B . VIRGO MARKETING PVT LTD 171 TAXMAN 156 (DEL) C . EVER PLUS SECURITIES & FINANCE LTD. 101 ITD 151 (DEL TRIB) D . HINDUSTAN MILK FOOD LTD. 94 TTJ 436 (CHD. TRIB) E . HOE LEATHER GARMENTS LTD. 39 SOT 210 (HYD. TRIB) F . SIGNATURE 85 TTJ 117 (DEL. TRIB) G . U.P. STATE BRIDGE CORP LTD 17 DTR 297 (LUCKNOW TRIB.) H . VIKRAM CHADHA 115 TTJ 123 (ASR TRIB.) I . CIT VS. SURESH CHANDRA MITTAL 251 ITR 9 (SC) J . CIT VS. SURESH CHANDRA MITTAL 241 ITR 114 (HC) K . CIT VS. RAJIV GARG & ORG. 224 CTR 321 (P&H) L . CIT VS. SURAJ BHAN 294 ITR 481 (P&H) M . CIT VS. RAJNISH NATH AGARWAL 219 CTR 590 (P&H) N . A.V.R. PRASAD VS. ITO 99 TTJ 920 (HYDERABAD) 6 . O N THE OTHER HAND, SHRI K C MATHEWS, LD DR, ON BEHALF OF REVENUE VEHEME NTLY SUPPORTED THE ORDER OF LD CIT(A). HE POINTED OUT THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF MOH D IBRAHIM AZIMULLA VS. CIT 131 ITR 68 0 HELD THAT THE ORIGINAL R ETURN OF I NCOME I S THE BASIS OF LEVYING PENALTY U/S 271(1)(C). SLP AGAINST THIS ORDER OF HONBLE MADRAS HIGH COURT IS REJECTED BY HONBLE SUPREME COURT AS REPORTED IN 135 ITR ST.3. HE FURTHER RELIED UPON THE JUDGMENTS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAK DATA LTD, REPORTED IN (2013) 31 TAXMANN.COM 35 (DELHI) ON IDENTICAL FACT S, AFTER CONSIDERING JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SURESH ITA NO. 464/RJT/2012 6 CHANDRA MITTAL (SUPRA) , HELD THAT PENALTY IN SUCH SITUATION IS LEV I ABLE WHEN THERE WAS ABSOLUT ELY NO EXPLANATION FROM THE ASSESSEE IN RESPECT OF AMOUNT OF RS.40,74,000/ - , WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PRODUCE THE EVIDENCE AS TO THE NATURE AND SOURCE OF THE AMOUNT RECEIVED AS SHARE CAPITAL, THE CREDITWORTHINESS OF THE APPLIC ANTS AND THE GENUINENESS OF THE TRANSACTIONS THE ASSESSEE SIMPLY FOLDED UP AND SURRENDERED A SUM OF RS.56.49 LACS IN ITS HANDS INITIALLY, WHICH WAS LATER SCALED DOWN TO RS.40,74,000/ - . THE LD DEPARTMENTAL REPRESENTATIVE ALSO POINTED OUT THAT THE FACTS OF THE ASSESSEE ARE IDENTICAL AS IN THIS CASE ALSO WHEN THE ASSESSEE CORNERED BY SURVEY TEAM HE SURRENDERED AND DECLARED THE INCOME IN THE R ETURN OF I NCOME FURNISHED IN RESPONSE OF NOTICE U/S 148 OF THE INCOME - TAX ACT, 1961. THIS INCOME WAS CONCEALED BY THE ASSESSEE IN THE ORIGINAL R ETURN OF I NCOME FURNISHED ON 30.07.2001; THEREFORE PENALTY U/S 271(1)(C) WAS RIGHTLY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED THE SAME BY LD CIT(A) IN THE IMPUGNED ORDER, THEREFORE THE VIEW TAKEN BY THE LD CIT(A) BE UPHELD. THE LD DEPARTMENTAL REPRESENTATIVE FURTHER RELIED ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF LMP PRECISION ENGG. CO. LTD. V. DCIT REPORTED IN [2011] 330 ITR 93 (GUJ.), WHEREIN ALSO IT WAS HELD THAT IN RESPECT OF REVISED RETURNS AFTER SU RVEY OPERATION S , WHICH SHOWS CONCEALMENT OF INCOME, PENALTY U/S 271(1)(C) IS INEVITABLE. FINALLY, THE LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF G.C. AGARWAL V. CIT REPORTED IN [1990] 186 ITR 571 (SC), W HEREIN ALSO IT WAS HELD THAT DIFFERENCE BETWEEN TAX ASSESSED IN FIRST RETURNS AND THE TAX ON THE INCOMES ASSESSED SHOULD BE TAKEN AS THE TAX WHICH WOULD HAVE BEEN EVADED FOR THE PURPOSE OF LEVYING PENALTY U/S 271 (1)(C) OF THE INCOME - TAX ACT. 7. THE LD D EPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT T HE HONBLE SUPREME COURT IN THE CASE OF G.C. AGARWAL V. CIT (SUPRA) HELD THAT WHEN THE ASSESSEE FILED REVISED RETURNS DISCLOSING MUCH LARGER INCOMES THAN THOSE DISCLOSED IN THE ORIGINAL RETURNS BUT WAS UNA BLE TO DISCHARGE THE BURDEN OF PROOF UNDER THE EXPLANATION, PENALTY U/S 271(1)(C) IS LEVIABLE. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF LMP PRECISION ENGG. CO. LTD. V. DCIT (SUPRA) HELD THAT ITA NO. 464/RJT/2012 7 IN THE CASE OF REVISED RETURN AFTER SURVEY OPERATIONS SHOWS CONCEALMENT OF INCOME, PENALTY U/S 271(1)(C) IS LEVIABLE. THE HONBLE DELHI HIGH COURT RECENTLY IN THE CASE OF CIT V. MAK DATA LTD. (SUPRA) HELD AS UNDER: - THERE WAS A SURVEY UNDER SECTION 133A OF THE INCOME - TAX ACT, 1961, IN THE COURSE OF WHICH DOCUME NTS PERTAINING TO THE ASSESSEE WERE FOUND AND WERE IMPOUNDED. THE DOCUMENTS CONSISTED OF BLANK TRANSFER DEEDS FOR SHARES DULY SIGNED, AFFIDAVITS, SHARE APPLICATION FORMS, COPIES OF BANK ACCOUNTS, INCOME - TAX RETURNS AND ASSESSMENT ORDERS OF CERTAIN OTHER C OMPANIES. THOSE DOCUMENTS WERE FORWARDED TO THE ASSESSING OFFICER ASSESSING THE ASSESSEE WHO CALLED UPON THE ASSESSEE TO EXPLAIN THE CONTENTS OF THE DOCUMENTS AND THE GENUINENESS OF THE TRANSACTIONS REPRESENTED BY IT. THE DOCUMENTS BELONGED TO CERTAIN ENT ITIES WHO HAD APPLIED FOR SHARES IN THE ASSESSEE. THE ASSESSING OFFICER WANTED THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF THE MONIES RECEIVED AS SHARE CAPITAL, THE CREDITWORTHINESS OF THE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSE E ADMITTED CONCEALMENT OF INCOME TO THE EXTENT OF RS.40.74 LAKHS AND OFFERED THE AMOUNT FOR TAXATION. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) IN WHICH AN ADDITION OF RS.40.74 LAKHS WAS MADE. SUBSEQUENTLY, HE INITIATED PENALTY PR OCEEDINGS FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME UNDER SECTION 271(1)(C). THE ASSESSEES REPLY WAS THAT THE AMOUNT WAS OFFERED AS INCOME ONLY TO BUY PEACE AND AVOID PROTRACTED LITIGATION AND WITH THE CONDITION THAT NO PENALTY OR PROSECUTION P ROCEEDINGS WOULD BE LAUNCHED. THE OFFER WAS MADE BEFORE ANY INVESTIGATION WAS CARRIED OUT INTO THE MATTER AND, THEREFORE, WAS VOLUNTARY. HOWEVER, THE SUBMISSIONS WERE REJECTED BY THE ASSESSING OFFICER WHO IMPOSED THE MINIMUM PENALTY OF RS.14,16,600/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.40.74 LAKHS. THE COMMISSIONER (APPEALS) CONFIRMED THE PENALTY. THE TRIBUNAL OPPOSED THE PENALTY ON THE GROUND THAT THE SURRENDER OF INCOME WAS MADE SUO MOTU BEFORE ANY INVESTIGATION, THAT TH ERE WAS NO OTHER EVIDENCE IN THE POSSESSION OF THE INCOME - TAX AUTHORITIES EXCEPT THE SURRENDER AND THAT THE LEVY OF PENALTY WITHOUT RECORDING ANY FINDING ON THE MERITS OF THE ASSESSEES PLEA WAS UNTENABLE. ON APPEAL: HELD, ALLOWING THE APPEAL, THAT THERE WAS NO EXPLANATION FROM THE ASSESSEE IN RESPECT OF THE AMOUNT OF RS.40.74 LAKHS WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PRODUCE THE EVIDENCE AS TO THE NATURE AND SOURCE OF THE AMOUNT RECEIVED AS SHARE CAPITAL, THE CREDITWORTHINESS OF THE APP LICANTS AND THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE SURRENDERED A SUM OF RS.56.49 LAKHS IN ITS HANDS INITIALLY, WHICH WAS LATER SCALED DOWN TO RS.40.74 LAKHS. IN THE ABSENCE OF ANY EXPLANATION IN RESPECT OF THE SURRENDERED INCOME, THE FIRST PART OF CLAUSE (A) OF EXPLANATION 1 WAS ATTRACTED. IT COULD NOT BE DENIED THAT THE NATURE AND SOURCE OF THE AMOUNT SURRENDERED WERE FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF THE ASSESSEE. IN THE ABSENCE OF ANY EXPLANATION REGARDING THE RECEIPT O F THE MONEY, WHICH WAS IN THE EXCLUSIVE KNOWLEDGE OF THE ASSESSEE, AN ADVERSE INFERENCE WAS SOUGHT TO BE DRAWN AGAINST THE ASSESSEE UNDER THE FIRST PART OF CLAUSE (A) OF EXPLANATION 1. IN REJOINDER, THE LD COUNSEL FOR THE ASSESSEE REITERATED HIS SUBMISS IONS MADE EARLIER. ITA NO. 464/RJT/2012 8 8 . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. THREE PROPOSITIONS OF LAW WITH REGARD TO LEVY OF PENALTY U/S 271(1)(C) ARE FAIRLY WELL - SETTLED. ONE , IT IS NO LONGER RES INTEGRA , IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN CIT V. ONKAR SARAN & SONS, 195 ITR 1, THAT THE CHARGE OF CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO THE INCOME ORIGINALLY RETURNED. JUDGMENT IN G.C. AGARWAL V. CIT, 186 ITR 571 (SC), IS ALSO QUITE RELEVANT IN THIS B EHALF. THEREFORE CHARGE OF CONCEALMENT HAS TO BE SEEN WITH REFERENCE TO THE ORIGINALLY RETURNED INCOME AND THE PARTICULARS OF INCOME FURNISHED IN THE ORIGINAL RETURN . TWO , A BENCH OF FIVE JUDGES OF THE HONBLE SUPREME COURT IN CIT V. ANGIDI CHETTIAR, 44 IT R 739, 745 (SC) HAS HELD: THE ASSESSMENT ORDER IS DATED THE 10 TH NOVEMBER 1951 AND THERE IS AN ENDORSEMENT AT THE END OF THE ASSESSMENT ORDER BY THE INCOME - TAX OFFICER THAT ACTION UNDER SECTION 28 HAD BEEN TAKEN FOR CONCEALMENT OF INCOME INDICATING CLEA RLY THAT THE INCOME - TAX OFFICER WAS SATISFIED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE FIRM HAD CONCEALED ITS INCOME. IT IS THUS CLEAR THAT MERE DIRECTION BY THE AO AT THE END OF THE ASSESSMENT ORDER FOR INITIATING THE PROCEEDINGS U/S 271(1)(C ) IS INDICATIVE OF THE FACT THAT HE WAS SATISFIED IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD CONCEALED HIS INCOME EXIGIBLE TO TAX. PROVISIONS OF SUB - SECTION (1B) INSERTED IN SECTION 271 OF THE INCOME - TAX ACT IN THIS BEHALF WITH RETROSPEC TIVE EFFECT FROM 1.4.1989 ARE ALSO QUITE APPOSITE. THREE , THE ISSUE AS TO WHETHER AN ASSESSEE HAS ACTUALLY CONCEALED HIS INCOME OR AS TO WHETHER HIS CASE IS COVERED BY EXPLANATION (1) TO SECTION 271(1)(C) IS ESSENTIALLY A QUESTION OF FACT TO BE DECIDED ON THE BASIS OF FACTS AND CIRCUMSTANCES OF A PARTICULAR CASE. JUDGMENT OF THE HONBLE SUPREME COURT IN CIT V. KOTRIKA VENKATASWAMY & SONS, 79 ITR 499 (SC) IS APPOSITE. 9. TURNING TO THE FACTS OF THE CASE AS PRESENTED BEFORE US, IT IS CLEAR THAT THE ASSESSEE HAD FURNISHED HIS ORIGINAL R ETURN OF I NCOME ON 30.07.2001 DECLARING TOTAL INCOME AT RS.2,16,935/ - . IT IS THIS ORIGINALLY RETURNED INCOME WITH REFERENCE TO WHICH CHARGE OF CONCEALMENT HAS TO BE SEEN. SU RVEY U/S 133A OF THE INCOME - TAX ACT WAS C ARRIED OUT ON 04.01.2007 BY THE INVESTIGATION WING OF THE INCOME - TAX DEPARTMENT AT THE BUSINESS PREMISES OF M/S M P SCRAP TRADERS, RAJKOT ( IN ITA NO. 464/RJT/2012 9 WHICH THE ASSESSEE WAS A PARTNER ) DURING WHICH IT TRANSPIRED THAT THE ASSESSEE HAD INVESTED A SUM OF RS.24 LAKHS IN FIXED DEPOS ITS AND ALSO RECEIVED INTEREST AMOUNTING TO RS.7,61,869/ - . STATEMENT OF THE ASSESSEE WAS RECORDED DURING THE COURSE OF SURVEY. ON BEING CONFRONTED ABOUT THE NATURE AND SOURCE OF THE AFORESAID INVESTMENT, THE ASSESSEE STATED ON OATH THAT THE SAID INVESTMENT WAS MADE OUT OF HIS UNACCOUNTED INCOME AND RESULTANTLY SURRENDERED A SUM OF RS. 24 LAKHS BEING INVESTMENT IN FIXED DEPOSITS AS HIS UNEXPLAINED INCOME AND ALSO OFFERED INTEREST THEREON TO TAX. BEFORE THE AO COULD ISSUE STATUTORY NOTICES TO BRING THE AFORES AID AMOUNTS TO TAX, THE ASSESSEE FILED A RETURN OF INCOME ON 22.1.2007 IN WHICH HE OFFERED THE SAID SUM , I.E., RS. 24,00,000/ - + 7,61,869/ - , TO TAX. SINCE THE AFORESAID RETURN WAS NEITHER A RETURN U/S 139(1) NOR 139(4) NOR 139(5), THE AO TREATED THE SAME AS NON - EST AND ACCORDINGLY IGNORED THE SAME. HE ISSUED A NOTICE U/S 147/148 PURSUANT TO WHICH ORDER OF RE - ASSESSMENT HAS BEEN PASSED IN WHICH BOTH THE AFORESAID SUMS HAVE BEEN TAXED IN ADDITION TO TAXING A SUM OF RS.6,20,000/ - BEING THE INCOME FROM SHARE T RANSACTIONS. IN THE COURSE OF RE - ASS ESS MENT PROCEEDINGS, THE AO HAS ALSO IN ITIATED PROCEEDINGS FOR LEVY OF PENALTY U/S 271(1)(C). ON APPEAL, THE LD. CIT(A) DELETED THE AFORE SAID ADDITION OF RS.6,20,000/ - MADE BY THE AO . IN OTHER WORDS, THE ACTION OF THE AO IN TAXING RS.24,00,000 + 7,61,869 AS UNEXPLAINED INCOME OF THE ASSESSEE HAS ATTAINED FINALITY. IT IS WITH REFERENCE TO THE AFORESAID AMOUNT THAT THE AO HAS LEVIED THE IMPUGNED PENALTY. 10. ON PERUSAL OF ENTIRE MATERIALS ON RECORD, IT IS CRYSTAL CLEAR TH AT (I) THE ASSESSEE DID NOT OFFER THE SAID SUM OF RS.24,00,000 + 7,61,869 TO TAX IN HIS ORIGINAL RETURN OF INCOME IN SPITE OF BEING FULLY AWARE THAT THE SAID SUM REPRESENTED HIS UNEXPLAINED INCOME; (II) THE SAID SUM WOULD HAVE ESCAPED TAX NET IF THE REVENU E AUTHORITIES HAD NOT CARRIED OUT SURVEY OPERATIONS U/S 133A; (III) THE ACTION OF THE ASSESSEE IN NOT RETURNING HIS INCOME TRULY , CORRECTLY AND FAITHFULLY IN HIS ORIGINAL RETURN OF INCOME WAS INTENTIONAL AND DELIBERATE SO AS TO WILLFULLY SUPPRESS HIS INCOM E WITH A VIEW TO EVADE TAXES DUE TO THE STATE; (IV) THE ASSESSEE HAS CONCEALED AND/OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME IN THE ORIGINAL RETURN OF INCOME; (V) THE ASSESSEE HAS SQUARELY FAILED TO ESTABLISH ITA NO. 464/RJT/2012 10 HIS BONA - FIDE IN NOT RETURNING HIS INCO ME TRULY AND FULLY AND IN NOT DISCLOSING THE RELEVANT PARTICULARS OF HIS INCOME IN THE ORIGINAL RETURN OF INCOME ; (VI) THE ASSESSEE HAS FAILED TO OFFER ANY CONVINCING EXPLANATION AS TO WHY THE PARTICULARS RELATING THE AFORESAID TWO INCOMES WERE NOT DISCLOS ED IN THE ORIGINAL RETURN OF INCOME; (VII) THE ACTION OF THE ASSESSEE IN FILING A RETURN ON 22.01.2007 IN WHICH THE AFORESAID TWO ITEMS OF INCOME WERE OFFERED TO TAX WAS NEITHER VOLUNTARY NOR BONA - FIDE IN THAT IT WAS FILED AFTER THE REVENUE HAD DETECTED TH E CONCEALMENT AND ALSO RECORDED THE STATEMENT OF THE ASSESSEE IN THAT BEHALF; AND (VIII) THE FACT THAT THE AO HAS INITIATED THE PROCEEDINGS FOR LEVY OF PENALTY U/S 271(1)(C) AT THE FOOT OF THE RE - ASSESSMENT ORDER IS ALSO INDICATIVE OF HIS SATISFACTION THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME IN THE ORIGINAL RETURN OF INCOME . ON THE AFORESAID FACTS, OUR FINDING IS THAT THE CASE OF THE ASSESSEE FALLS SQUARELY UNDER SECTION 271(1)(C) READ WITH EXPLANATION (1) THERETO. THE LD. CIT(A) HAS RI GHTLY CONFIRMED THE IMPUGNED PENALTY. HIS ORDER IS FULLY SUPPORTED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN LMP PRECISION ENGG. CO. LTD. V. DCIT, 330 ITR 93 (GUJ.) RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE . 11 . NOW LET US EXAMI NE THE PLEA OF SATISFACTION RAISED BY THE ASSESSEE. FAC TS OF THE CASE CLEARLY INDICATE THAT NOTICE U/S 148 WAS ISSUED TO TAX THE INCOME IN RESPECT OF WHICH RELEVANT PARTICULARS WERE NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME. THIS SHOWS THAT THE ASS ESSING OFFICER WAS SATISFIED THAT THE ASSESSEE HA D N EITHER DISCLOSED HIS TRUE AND CORRECT INCOME NOR THE RELEVANT PARTICULARS IN RESPECT THEREOF IN THE R ETURN OF I NCOME ORIGINALLY FURNISHED BY HIM ON 30.07.2007. THIS FACT IS ALSO EVIDENT FROM THE UNDISCLOS ED INCOME DETECTED BY THE SURVEY TEAM IN THE SURVEY CONDUCTED AT THE BUSINESS PREMISES OF M/S M P SCRAP TRADERS, RAJKOT IN WHICH THE ASSESSEE IS A PARTNER. WE ARE, THEREFORE, CONVINCED THAT THE ASSESSING OFFICER HAS RIGHTLY INITIATED THE PENALTY PROCEEDING U/S 271(1)(C) AFTER HIS SATISF ACTION THAT THE ASSESSEE HA D CONCEALED THE PARTICULARS OF HIS INCOME IN THE ORIGINAL R ETURN OF I NCOME FURNISHED ON 30.07.2007. ITA NO. 464/RJT/2012 11 1 2 . THE AUTHORITIES REFERRED TO BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ARE DISTI NGUISHABLE ON FACTS AND HENCE DO NOT HELP THE ASSESSEE. HOWEVER, PROPOSITIONS OF LAW F LOWING FROM THEM HAVE BEEN KEPT IN VIEW. 1 3 . TO SUM UP, WE ARE OF THE VIEW THAT THE LD CIT(A) HAS GIVEN COGENT REASON S IN CONFIRMING THE PENALTY OF RS.11,09,816/ - LEVI ED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961. WE THEREFORE ENDORSE HIS ORDER. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( D. K. SRIVASTAVA ) (T. K. SHARMA) / ACCOUNTANT MEMBER G Y / JUDICIAL MEMBER / ORDER DATE 31 . 0 7 .2013 . /RAJKOT BT T OJ / COPY OF ORDER FORWARDED TO: - 1 . , / APPELLANT - SHRI KISHOR M KARIA, C/O KSD & ASSOCIATES, CHARTERED ACCOUNTANTS, 411, COSMO COMPLEX, NR. MAHILA COLLEGE CIRCLE, RAJKOT - 360001 2 . R, / RESPONDENT - ACIT, CIRCLE - 5, JA MNAGAR 3 . . O / CONCERNED CIT III, RAJKOT 4 . O - / CIT (A) - IV, RAJKOT 5 . GG. , 1 . , / DR, ITAT, RAJKOT 6 . / GUARD FILE. / BY ORDER , TRUE COPY PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT