Sh. Mohit Gawri, Chandigarh V. DCIT, Mohali

ITA 561/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90084 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Cost of acquisition; Agreed addition; Revised return
• Section: 69C; 133A; 27; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 561/CHD/2014 ASSESSMENT YEAR: 2006-07 SHRI MOHIT GAWRI, V THE DCIT, 3075, SECTOR 19-D, CIRCLE 6(1), CHANDIGARH. MOHALI PAN: AANPG0190Q & ITA NO. 562/CHD/2014 ASSESSMENT YEAR: 2006-07 SHRI PARVEEN KAUSHAL, V THE ITO, 94, PHASE 3B-1, WARD 6(3), MOHALI. MOHALI PAN: AKXPK8885G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGA L RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 07.04.2015 DATE OF PRONOUNCEMENT : 08.04.2015 O R D E R PER BHAVNESH SAINI,JM BOTH THE APPEALS BY DIFFERENT ASSESSEES ARE DIRECTE D AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS), CHANDIGARH DA TED 28.03.2014 FOR ASSESSMENT YEAR 2006-07, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. THE ISS UE IS COMMON IN BOTH THE APPEALS. THE LD. COUNSEL FOR THE ASSES SEE MAINLY 2 ARGUED IN ITA 561/CHD/2014 AND SUBMITTED THAT IT BE ING IDENTICAL MATTERS, THE ORDER IN THIS CASE MAY BE FO LLOWED IN ITA 562/CHD/2014. THE FACTS ARE, THEREFORE, TAKEN FROM ITA 561/CHD/2014 FOR THE PURPOSE OF DISPOSAL OF BOTH TH E APPEALS. 3. THE BRIEF FACTS OF THE CASE ARE THAT CERTAIN ENQ UIRIES WERE CARRIED OUT BY THE REVENUE DEPARTMENT IN THE CASE O F M/S MGF LTD. AND ITS SUBSIDIARY COMPANIES. IT WAS FOUND DU RING THE COURSE OF THESE ENQUIRIES THAT THESE COMPANIES HAD PAID TOTAL CONSIDERATION OF RS. 5 CRORES TO THE ASSESSEE AND T HIS AMOUNT WAS NOT DECLARED IN THE RETURN OF INCOME FILED BY H IM. BASED ON THIS INFORMATION, SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT ON 18.06.2009 IN THE CASE OF M/S MODAGE HOUSING DEVELOPMENT (P) LTD. IN WHICH BOTH ASSESSEES ARE DI RECTORS AND THE ASSESSEE ADMITTED DURING THE COURSE OF SURVEY T HAT MONEY RECEIVED BY HIM FROM M/S MGF LTD. AND ITS SUBSIDIAR Y COMPANIES WAS DEPOSITED IN THE BANK ACCOUNT OF M/S MODAGE HOUSING DEVELOPMENT (P) LTD. AND THIS AMOUNT HAD NO T BEEN DECLARED BY HIM IN HIS RETURN OF INCOME. THE ASSES SING OFFICER, ACCORDINGLY, ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT FOR RE-OPENING OF THE ASSESSMENT. THE ASSESSEE DID NOT FILE RETURN OF INCOME IN RESPONSE TO THE NOTICE UNDER SE CTION 148 OF THE ACT AND ALSO DID NOT FILE ANY REPLY AT THE ASSE SSMENT STAGE. THEREFORE, EX-PARTE ASSESSMENT ORDER WAS PASSED UND ER SECTION 144 OF THE ACT BY ADDING THE RECEIPT OF RS. 5,50,00 ,000/- (INCLUDING ADVANCE RECEIVED OF RS. 50 LACS AS PER A GREEMENT DATED 14.10.2004) TO THE TOTAL INCOME. THE ASSESSIN G OFFICER ALSO LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE A CT ON THE ENTIRE ADDITION OF RS. 5,50,00,000/-. IN APPEAL, V IDE ORDER DATED 3 21.01.2014, THE PROFIT ON SALE OF LAND TO THE SUBSI DIARY COMPANIES OF M/S MGF LTD. WAS REDUCED TO RS. 29,00, 000/- AFTER ALLOWING DEDUCTION OF THE PURCHASE COST. THE ADDITION OF RS. 50 LACS WAS CONFIRMED BECAUSE THIS GROUND WAS W ITHDRAWN. 4. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) T HAT BENEFIT OF PURCHASE PRICE WAS NOT GIVEN IN QUANTUM APPEAL. IT WAS FURTHER STATED THAT ADDITION COULD BE TERMED AS AGR EED ADDITION, THEREFORE, NO PENALTY IS LEVIABLE. THE LD. CIT(APP EALS), HOWEVER, CONFIRMED THE LEVY OF THE PENALTY. HOWEVER, ASSESS ING OFFICER WAS DIRECTED TO RECOMPUTE THE PENALTY AMOUNT. THE FINDINGS OF LD. CIT(APPEALS) IN PARA 5 TO 6 OF THE APPELLATE OR DER ARE REPRODUCED AS UNDER : 5. I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUN SEL. AS PER THE PROVISIONS OF SECTION 271(1)(C), PENALTY CAN BE LEV IED, IF THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. FOR THE SAKE OF READY REFERENCE, EXPLA NATION-1 BELOW SECTION 271(1) IS REPRODUCED BELOW: 'EXPLANATION 1.-WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT A BLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE 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 PURP OSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 5.1 THUS, WHEN THE ASSESSEE HAS CONCEALED PARTICULARS O F HIS INCOME OR FURNISHED INACCURATE PARTICULARS, CONDITIONS LAID D OWN IN EXPLANATION- 1(SUPRA) HAVE TO BE EXAMINED. 5.2 IN THE INSTANT CASE, THE PROFIT ARISING OUT OF THE CONSIDERATION RECEIVED FROM M/S MGF LTD AND ITS SUBSIDIARIES HAD NOT BEEN REFLECTED BY THE APPELLANT IN HIS RETURN OF INCOME. THIS P ROFIT HAS FINALLY BEEN DETERMINED AT RS. 29,00,000/-. THE ARGUMENT OF THE APPELLANT THAT 4 BENEFIT OF RS. 21,00,000/- OF PURCHASE PRICE SHOULD HAVE BEEN GIVEN, DOES NOT HOLD WATER, SINCE NAME OF THE APPELLANT WAS NOT MENTIONED ON THE SALE DEED. MOREOVER, THIS IS AN APPEAL AGAINST THE PE NALTY ORDER AND THE ADDITIONS MADE/ SUSTAINED IN QUANTUM APPEAL CANNOT BE QUESTIONED. THE CONTENTION OF THE LD. COUNSEL THAT THE ADDITION CON FIRMED IS EFFECTIVELY THE AGREED ADDITION IS NOT CORRECT, SINCE THE APPELLANT HAD NOT EVEN DECLARED THE AMOUNT RECEIVED FROM M/S MGF LTD AND ITS SUBSID IARY COMPANIES IN THE RETURN OF INCOME AND HAD NOT FILED ANY RETURN O F INCOME IN RESPONSE TO NOTICE U/S 148. THE ADDITION OF RS. 50,00,000/- M ADE U/S 69C WAS ALSO CONFIRMED, SINCE THE APPELLANT HAD WITHDRAWN THE RE SPECTIVE GROUND OF APPEAL. THE ARGUMENT OF THE APPELLANT IS THAT THIS ALSO BECOMES AN AGREED ADDITION IS NOT CORRECT FOR THE SIMPLE REASON THAT THE APPELLANT HAD NOT EVEN DECLARED THE IMPUGNED AMOUNT IN THE RETURN OF INCOME AND HAD NOT FILED ANY RETURN OF INCOME IN RESPONSE TO NOTICE U/ S 148. 5.3 THE APPELLANT HAS PLACED RELIANCE ON SEVERAL JU DGEMENTS OF VARIOUS COURTS, WHICH ARE DISCUSSED AS UNDER: (I) SURESH CHANDRA MITTAL (SUPRA) IN THIS CASE, THE PENALTY WAS CANCELLED BECAUSE THE APPELLANT HAD FILED A REVISED RETURN SHOWING HIGHER INCOME AFTER SEARCH. IN THE INSTANT CASE, THE APPELLANT DID NOT FILE ANY RETURN AFTER SURVEY AND EVEN AFTER ISSUE OF NOTICE U/S 148 AND SO THE RATIO OF THIS JUDGEMENT D OES NOT APPLY TO THE CASE OF THE APPELLANT. (II) RAJIV GARG (SUPRA) IN THIS CASE ALSO, THE APPELLANT HAD FILED REVISED RETURN IN RESPONSE TO NOTICE U/S 148 AND SO THE PENALTY WAS CANCELLED. TH E RATIO OF THIS JUDGEMENT DOES NOT APPLY TO THE CASE OF THE APPELLA NT, SINCE THE APPELLANT HAS NOT FILED HIS RETURN OF INCOME IN RES PONSE TO NOTICE U/S 148 OF THE ACT. (III) M. PACHAMUTHU (SUPRA) THE HONBLE HIGH COURT, IN THIS CASE, HAD CANCELLED THE PENALTY ON THE GROUND THAT ADDITION TO THE INCOME AGREED BY TH E ASSESSEE WAS NOT A PROOF OF CONCEALMENT. THE RATIO OF THIS JUDGE MENT ALSO DOES NOT APPLY TO THE CASE OF APPELLANT, SINCE THERE WAS NO AGREED ADDITION AND THE APPELLANT HAD NOT FILED ANY RETURN OF INCOM E IN RESPONSE TO NOTICE U/S 148. 5.4 THE ARGUMENT OF THE LD. COUNSEL THAT THE ASSESSING OFFICER HAS DROPPED PENALTY FOR CONCEALMENT IN THE CASE OF SH. JITENDER SINGH VIRK, BUT THE FACTS OF THAT CASE WERE DIFFERE NT, SINCE HE HAD DULY FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S 14 8 OF THE ACT. 5.5 HONBLE DELHI HIGH COURT, IN THE CASE OF M/S ZOOM COMMUNICATION (P) LTD. (327 ITR 510), HAS HELD AS U NDER : 'IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS I NCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS O F THE INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED THAT THE CL AIM MADE BY THE 5 ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDE S BEING INCORRECT IN LAW IS MALA FIDE, EXPLANATION 1 TO SECTION 271 (1) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. 20. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BU T IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONAFIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALIY-UNDER SECTION 27 1(1 L(C) OF THE ACT. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOL LY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSES WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NET ACTING BONA FIDE WHILE MAKING A CLAIM OF THIS NATUR E, THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS ASSESSEES TO MAKE WHOLLY UN TENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED U P FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF-ASSESSM ENT UNDER SECTION 143(1) OF THE ACT AND. EVEN IF THEIR CASE IS SELECT ED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CAS E, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALA FIDE INTENTION TO E VADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE T AX LEGALLY PAYABLE BY THEM, IF THEIR CASES ARE NOT PICKED UP F OR SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE P ENALTY PROVISIONS IN THE ACT HAVE.' 5.6 THE RATIO OF THE ABOVE JUDGEMENT OF HON'BLE DEL HI HIGH COURT (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE. THE APPELLANT HAD TAKEN A CALCULATED RISK OF NOT FILING HIS RETURN OF INCOME, BUT WAS CAUGHT ON WRONG FOOT. THE APPELLANT HAD FUR NISHED INACCURATE PARTICULARS OF HIS INCOME DURING THE YEAR UNDER CON SIDERATION TO THE EXTENT OF AMOUNT CONFIRMED IN APPEAL AND SO PENALTY FOR CONCEALMENT IS TO BE LEVIED. THEREFORE, PENALTY FOR CONCEALMENT IS CONFI RMED TO THE EXTENT OF ADDITIONS UPHELD IN APPEAL. THE ASSESSING OFFICER I S DIRECTED TO RECOMPUTE THE PENALTY ACCORDINGLY. GROUNDS OF APPEA L TAKEN BY THE APPELLANT ARE PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOW ED. 5. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY OPPOSED THE LEVY OF PENALTY. ON THE OTHER HAND, LD. DR RELIED UPON ORD ERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING RIVAL SUBMISS IONS, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE ASSESSEE. IT IS ADMITTED FACT THAT DURING THE COURSE OF ENQUIRIES CARRIED OU T IN THE CASES OF M/S MSG LTD. AND ITS SUBSIDIARY COMPANIES, IT WA S FOUND THAT 6 THESE COMPANIES HAD PAID TOTAL CONSIDERATION OF RS. 5 CRORES TO THE ASSESSEE AND THIS AMOUNT WAS NOT DECLARED IN TH E RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY. IT IS ALS O ADMITTED FACT THAT DURING SURVEY UNDER SECTION 133A CARRIED OUT I N THE CASE OF M/S MODAGE HOUSING DEVELOPMENT (P) LTD. IN WHICH BO TH THE ASSESSEES ARE DIRECTORS, THE ASSESSEE ADMITTED THAT MONEY RECEIVED BY HIM FROM M/S MSG LTD. AND ITS SUBSIDIAR Y COMPANIES WAS NOT DECLARED BY HIM IN THE RETURN OF INCOME. THEREFORE, THE AMOUNT IN QUESTION WAS NOT DISCLOSED IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. E VEN IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT , THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME SHOWING THE AMOUN T IN QUESTION. EVEN THE AMOUNT OF RS. 50 LACS AS PER AG REEMENT WAS ALSO NOT DECLARED IN THE ORIGINAL RETURN OF INCOME AND NO SUCH AMOUNT WAS ALSO DECLARED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. IT IS WELL SETTLED LAW THA T CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME HAS TO BE SEEN WITH REFERENCE TO THE ORIGINAL RETURN OF INCOM E. IT IS A CLEAR CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCUR ATE PARTICULARS OF INCOME BECAUSE THE AMOUNT IN QUESTIO N WAS NEVER DISCLOSED IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. HAD THE ENQUIRIES WERE NOT CONDUCTED IN THE CASES O F M/S MSG LTD. AND ITS SUBSIDIARY COMPANIES, THE AMOUNT IN QU ESTION WOULD NOT HAVE COME TO THE KNOWLEDGE OF THE REVENUE DEPARTMENT. THEREFORE, THE ASSESSEE DELIBERATELY C ONCEALED THE PARTICULARS OF INCOME FROM THE REVENUE DEPARTMENT. FURTHER, THE ASSESSEE ADMITTED DURING THE COURSE OF SURVEY T HAT AMOUNT IN QUESTION WAS NOT DECLARED BY HIM IN THE ORIGINAL RETURN OF 7 INCOME. IT IS, THEREFORE, A CLEAR CASE OF NO EXPLA NATION BY THE ASSESSEE TO EXPLAIN THE AMOUNT IN QUESTION FOR WHIC H ULTIMATELY ADDITIONS ARE CONFIRMED FOR THE PURPOSE OF LEVY OF THE PENALTY. THE ASSESSEE HAS SINCE NO DEFENSE IN THIS CASE, THE REFORE, THERE IS NO QUESTION OF ADDITION BEING MADE ON AGREED ADD ITION. THE ASSESSEE HAS EVEN DID NOT FILE ANY RETURN OF INCOME UNDER SECTION 148 OF THE ACT AND THE ASSESSMENT ORDER WAS PASSED ON EX-PARTE BASIS. FURTHER, HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. 358 ITR 593 DID NOT APPROVE THE CONCEPT OF VOLUNTARY SURRENDER AND CONFIRMED THE LEVY OF PENAL TY. THE LD. CIT(APPEALS) WAS THEREFORE, JUSTIFIED IN CONFIRMING THE LEVY OF THE PENALTY. THERE IS NO ERROR POINTED OUT IN THE FIND INGS OF THE LD. CIT(APPEALS), THEREFORE, APPEAL OF THE ASSESSEE HAS NO MERIT AND IS ACCORDINGLY, DISMISSED. 6. THE FACTS ARE SAME IN OTHER APPEAL IN ITA NO. 562/CHD/2014 IN THE CASE OF SHRI PARVEEN KAUSHAL. THEREFORE, FOLLOWING THE FINDINGS IN THE CASE OF M/S MOHIT GAW RI (SUPRA), WE DISMISS APPEAL OF THIS ASSESSEE AS WELL. IN THE RE SULT, THIS APPEAL OF ASSESSEE IS ALSO DISMISSED. 7. IN THE RESULT, BOTH APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH APRIL,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH