Coromandel Agrico Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5737/DEL/2011

• Counselvise Citation: 573720114 RSA 2011
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENU JAIN GUPTA
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI A.N. PAHUJA ITA NO. 5737/DEL/11 ASSTT. YR: 2006-07 COROMANDEL AGRICO PVT. LTD., VS. DCIT CIR. 3(1), 7, COMMUNITY CENTRE, 3 RD FLOOR, NEW DELHI. EAST OF KAILASH, NEW DELHI-110065. PAN/GIR NO. AABCC6812A (APPELLANT) ( RESPONDENT ) APPELLANT BY : SHRI P.C. YADAV RESPONDENT BY : MS. RENU JAIN GUPTA SR. DR O R D E R PER R.P. TOLANI, J.M : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER DA TED 24-10-2011 RELATING TO A.Y. 2006-07. SOLE EFFECTIVE GROUND RAI SED IS AS UNDER: THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) IS NOT JUSTIFIED IN CONFIRMING PENALTY OF RS. 1,00,107/- I MPOSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. BRIEF FACTS ARE: ASSESSEE FILED RETURN DECLARING INCOME OF RS. 1,10,90,446/-, WHICH WAS PROCESSED U/S 143(1). THER EAFTER, NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE AND ASSESSMENT WAS COMPL ETED MAKING VARIOUS ADDITIONS/ DISALLOWANCES, INCLUDING ADDITION OF RS. 2,97,410/- ON ACCOUNT OF LOSS ON SALE OF FIXED ASSETS WHICH WAS DEBITED TO P &L A/C. ACCORDING TO ASSESSEE DURING THE COURSE OF ASSESSMENT IT WAS REA LIZED THAT THIS AMOUNT SHOULD HAVE BEEN ADDED BACK BY THE ASSESSEE TO HIS RETURN OF INCOME. CONSEQUENTLY, ASSESSEE ACCEPTED THIS ADDITION. THE APPEAL WAS FILED IN ITA NO. 5737/DEL/11 COROMANDEL AGRICO PVT. LTD. 2 RESPECT OF OTHER ADDITIONS BEFORE CIT(A) AND ALL O THER ADDITIONS WERE DELETED. 2.1. AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) IN RESPECT OF ABOVE ADDITION OF RS. 2,97,410/- AND IMPOSED A PENALTY OF RS. 1,00,107/- UNDER THE AFORESAID SECTION. AGAINST IMPOSITION OF PENALTY, T HE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE CIT(A), FOLLOWING CONTENTIONS WER E RAISED BY WAY OF WRITTEN SUBMISSIONS: I) THE COMPANY HAD VIDE LETTER DATED 21 ST OCTOBER 2008 BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THE FACT WITH A REQUEST THAT THE LOSS ON SALE OF ASSETS OF RS. 2,94,710/- BE ADDED TO INCOME AND THE INCOME-TAX RE TURN ALREADY FILED BE TREAT ED TO HAVE BEEN REVISED TO T HIS EXTENT. THIS ACT WAS VOLUNTARILY. II) THE QUESTIONNAIRE DATED 9THJ APRIL, 2008 ISSUED BY THE ASSESSING OFFICER DID NOT CALL FOR INFORMATION IN RESPECT OF THE ABOVE SURRENDER. NOR THERE WAS ANY O THER INFORMATION IN HIS POSSESSION AS TO NON INCLUSION O F ABOVE INCOME. HENCE THE DISCLOSURE WAS VOLUNTARILY. III) A PERUSAL OF THE QUESTIONNAIRE IT IS EVIDENT T HAT IT WAS GENERAL IN NATURE WITHOUT SPECIFYING ANY DETAIL ON THE BASIS OF WHICH IT COULD BE PRESUMED THAT THE ASSESS ING OFFICER HAD INFORMATION FOR A SPECIFIC QUERY AS ALL EGED CONCEALMENT. 4. IN SUPPORT OF THE ABOVE KIND ATTENTION IS INVITE D TO THE JUDGMENT OF ITAT, DELHI (THIRD MEMBER) IN THE CASE OF ADDITIONAL COMMISSIONER OF INCOME-TAX, CENTRAL CIRC LE-14, NEW DELHI V. PREM CHAND GARG (2009) 31 SOT 97 (DELH I) TM [2009] 23 TTJ 433 (DELHI) TM WHEREIN IT HAS BEEN HE LD AS UNDER:- I) THE LETTER OF SURRENDER DID NOT OBLITERATE THE ORIGINAL RETURN AND SUPPRESSION OF INCOME THEREIN ITA NO. 5737/DEL/11 COROMANDEL AGRICO PVT. LTD. 3 BUT WHEN THE SURRENDER WAS MADE BEFORE DETECTION OR WITHOUT ANY MATERIAL ON RECORD SUGGESTING INCOME WITHHELD, IT WOULD BE A CASE OF VOLUNTARILY OFFER AND THERE WOULD NOT BE CONCEALMENT OF INCOME BY THE ASSESSEE. II) AFTER THE INSERTION OF EXPLANATION TO SECTION 271(1)(C) THE FACT REMAIN THAT SURRENDER OF INCOME BY VOLUNTARILY ACTION OF THE ASSESSEE TO STATE HIS TRUE INCOME WOULD NOT BE A CASE OF CONCEALMENT. III) THE SURRENDER OF THE AMOUNT AFTER RECEIPT OF T HE QUESTIONNAIRE COULD NOT LEAD TO AN INFERENCE THAT I T WAS NOT VOLUNTARY IN ABSENCE OF ANY MATERIAL ON RECORD SUGGESTING IT TO BE BOGUS OR UNTRUE. IV) WHETHER THIS CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS IS ESSENTIALLY A QUESTION OF FACT. BY THE TIME THE ASSESSING OFFICER TAKES UP TH E ISSUE AND COMES ACROSS THE INFORMATION IN HIS POSSESSION, IF THE ASSESSEE MAKES UP THE DEFICIENCY AND OFFERS THE INCOME OR FURNISHES ACCURATE PARTICULARS THEREOF, HE CANNOT BE HELD GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME. ANY ACTION RECTIFIED RELATES BACK TO ORIGINAL ACT AND TO THE DATE AND TI ME OF FILING THE RETURN. WHEN THE ASSESSING OFFICER STARTED SCRUTINY OF THE RETURN AND INITIATED ASSESSMENT PROCEEDINGS THERE WAS NOTHING CONCEALED AND THE INACCURACY, IF ANY, DISAPPEARED. THEREFORE, THE ASSESSEE COULD NOT BE HELD GUILTY OF CONCEALMENT. V) AS PER PROVISION OF SECTION 271(1)(C) THE ASSESSING OFFICER IS TO BE SATISFIED AS TO THE STAG E AT WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED AND IN CASE RECTIFICATION HAS BEEN MADE PRIOR TO THAT THERE CAN NOT BE SATISFACTION OF THE ASSESSING OFFICER FOR CONCEALMENT. ITA NO. 5737/DEL/11 COROMANDEL AGRICO PVT. LTD. 4 VI) THOUGH THE CORRECT COURSE OF DISCLOSURE MAY BE FILING OF A REVISED RETURN BUT AN OFFER MADE BY A LETTER CANNOT CONVERT THE OFFER TO TAX AS CONCEALMENT OF INCOME. VII) MERE OMISSION OF INCOME OF AN ITEM FROM THE RETURN NEITHER AMOUNT TO CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS THERE IS SOME EVIDENCE TO SHOW THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR A DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCE AL THE INCOME SO AS TO AVOID TAX THEREON. 2.2. CIT(A), HOWEVER, CONFIRMED THE PENALTY LEVIED BY THE AO, HOLDING THAT ASSESSEES CLAIM EX FACIE WAS BOGUS AND FOR THE PURPOSE OF SEC. 271(1)(C) MENS REA WAS NOT REQUIRED TO BE PROVED B Y THE DEPARTMENT. ASSESSEE OFFERED TO DISALLOW THE AMOUNT ONLY AFTER THE ISSUE OF A QUESTIONNAIRE BY THE AO. BUT FOR THE SCRUTINY ASSES SMENT, THIS DISALLOWANCE WOULD NOT HAVE MATERIALIZED. AGGRIEVED, ASSESSEE IS BEFORE US. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE A SSESSEE HAS ALL ALONG PAID HIS DUE TAXES AND FILED A RETURN DECLARING TAX ABLE INCOME OF RS. 1.10 CRORES AND PAID TAXES OF ABOUT 40 LACS THEREON. ALL OTHER ADDITIONS, MADE BY THE AO, STAND DELETED. THE QUESTIONNAIRE ISSUED WAS NOT IN RESPECT OF THIS SPECIFIC ITEM AND THE AMOUNT WAS VOLUNTARILY OFFERE D ON DETECTION OF MISTAKE. NEITHER IN THE ASSESSMENT ORDER NOR IN THE PENALTY ORDER AO HAS MADE A MENTION THAT THE AMOUNT WAS OFFERED BY THE A SSESSEE ONLY AFTER ISSUE OF THE QUESTIONNAIRE. CIT(A) IN ORDER TO CONFIRM TH E PENALTY HAS MADE OBSERVATIONS BEYOND ASSESSMENT ORDER AND HELD, BUT FOR THE SCRUTINY ASSESSMENT THIS DISALLOWANCE WOULD HAVE GONE WITHO UT NOTICE. THUS, THIS FINDING OF CIT(A) IS BASED ON AN ASSUMPTION. BEFORE CIT(A) IT WAS PLEADED ITA NO. 5737/DEL/11 COROMANDEL AGRICO PVT. LTD. 5 THAT SURRENDER WAS BY WAY OF LETTER DATED 21-10-200 8, AO NEITHER IN THE ASSESSMENT ORDER NOR IN THE PENALTY ORDER HAS MADE A REFERENCE TO THIS OFFER LETTER FILED BY THE ASSESSEE. IF THE AO WAS OF THE BELIEF THAT IT WAS DETECTED ONLY BECAUSE OF THE ISSUE OF QUESTIONNAIRE THE FAC T WOULD HAVE BEEN RECORDED IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER. UNDER THESE CIRCUMSTANCES, THE BONA FIDES OF THE ASSESSEE ABOUT A BONA FIDE COMPUTATION MISTAKE IS ESTABLISHED. 4. LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORD ER OF LOWER AUTHORITIES AND CONTENDS THAT HONBLE SUPREME COUR T JUDGMENT IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESSORS 306 ITR 27 1 (SC), HAS CLEARLY HELD THAT PENALTY IS A CIVIL LIABILITY AND THE DEPA RTMENT IS NOT TO PROVE THE ELEMENTS OF MENS REA. FURTHER RELIANCE IS PLACED ON THE HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. ZOOM COMMUNIC ATION PVT. LTD. 327 ITR 510 (DEL.). THE ASSESSEE HAD CLAIMED AN ITEM IN THE RETURN OF INCOME, WHICH WAS NOT ALLOWABLE AND THE SUBSEQUENT DISCLOSU RE, BEING AFTER ISSUE OF QUESTIONNAIRE AND THE AMOUNT WAS ACCEPTED BY THE AS SESSEE AFTER INQUIRIES WERE CONDUCTED, PENALTY HAS BEEN RIGHTLY IMPOSED. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE ISSUE ABOUT ASSESSEES LETTER DATED 21-10-2008 IS CONCERNED, AO NEITHER IN THE ASSESSMENT ORDER NOR I N THE PENALTY ORDER HAS REFERRED TO THIS FACT. BESIDES, THERE IS NO FINDING EITHER IN ASSESSMENT OR PENALTY ORDERS THAT THE AMOUNT WAS OFFERED BY THE A SSESSEE ONLY AFTER A SPECIFIC QUERY WAS ASKED BY THE AO. IN THE ABSENCE OF SUCH FINDINGS IN THE ASSESSMENT ORDER OR PENALTY ORDER, THE OBSERVATIONS OF LD. CIT(A) SEEM TO BE ON ASSUMPTION. IT HAS NOT BEEN DISPUTED THAT THE AS SESSEE HAS FILED A RETURN OF RS. 1.10 CRORE, WHICH INVOLVES TAX OF AROUND RS. 45 LACS. THIS HAS NOT BEEN ITA NO. 5737/DEL/11 COROMANDEL AGRICO PVT. LTD. 6 DISPUTED THAT ALL OTHER ADDITIONS MADE BY AO HAVE B EEN DELETED. UNDER THESE CIRCUMSTANCES, THE ASSESSEES CONTENTION THAT THE A SSESSEE ITSELF FILED A LETTER WITHDRAWING THIS INADVERTENT MISTAKEN CLAIM IS A R EASONABLE EXPLANATION. 5.1. COMING TO THE ISSUE OF PENALTY BEING CIVIL LIA BILITY, HONBLE SUPREME COURT HAS IMPLIED THAT THE PENALTY IS ALBEIT A STRI CT CIVIL LIABILITY. HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL VS. ST ATE OF ORISSA 83 ITR 26 HAS HELD THAT PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO AND EACH AND EVERY DISALLOWANCE DOES NOT AUTOMAT ICALLY LEAD TO IMPOSITION OF PENALTY. FROM THE EXPLANATION AND CON DUCT OF THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT ON THE FACTS AND CI RCUMSTANCES OF THE PRESENT CASE IT CANNOT BE HELD GUILTY OF FILING INACCURATE PARTICULARS. THEE PENALTY LEVIED IS, THEREFORE, DELETED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 29-02-2012. SD/- SD/- ( A.N. PAHUJA) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:29-02-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA NO. 5737/DEL/11 COROMANDEL AGRICO PVT. LTD. 7