Shri. Dilipkumar Ramkisan Lakhotiya, Buldhana V. Income Tax Officer,Khamgaon,

ITA 60/NAG/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9564 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 23-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH DAWANDE
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Section: 148

Judgement Text

ITA NO. 60/NAG/PUR/2010 DILIPKUMAR RAMKISAN LAKHOTIYA, BULDHANA IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH , NAGPUR BEFORE: SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI D.T. GARASIA , JUDICIAL MEMBER ITA NO. 60 / NAG / 20 10 ASSESSMENT YEAR : 2004 - 05 DILIPKUMAR RAMKISAN LAKHOTIA BULDHANA VS . ITO KHAMGAON (APPELLANT) (RESPONDENT) PAN NO.ABGPL 4814L APPELLANT BY: SHRI C.J. THAKAR, ADVOCATE & SHRI S.C. THAKAR, ADVOCATE RESPONDENT BY: SHRI RAMESH DAWANDE, SR. DR DATE OF HEARING: 11.10.2012 DATE OF PRONOUNCEMENT: 15.10.2012 ORDER PE R P.K. BANSAL, ACCOUNTANT MEMBER: - THE ONLY ISSUE INVOLVED IN THIS APPEAL FILED BY THE ASSESSEE IS THE LEVY OF PENALTY U/S 271(1)(C) AMOUNTING TO RS.2,15,255/ - . THE BRIEF FACTS OF THE CASE ARE THAT THERE HAD BEEN SURVEY IN THE CASE OF THE ASSESSEE CON DUCTED ON 8 TH & 9 TH DECEMBER, 2003. DURING THE COURSE OF SURVEY, THE ASSESSEE DECLARED AN ADDITIONAL INCOME OF RS.10 LAKHS. THE RETURN WAS NOT FILED BY THE ASSESSEE ON THE DUE DATE BUT THE ASSESSEE PAID THE TAX AS UNDER ON THE INCOME DECLARED AS WELL AS ON THE REGULAR INCOME: TAXES PAID I) RS.1,00,000/ - ON 31.12.2003 II) RS. 50,000/ - ON 31.03.2004 III)RS.1,50,000/ - ON 29.10.2007 IV) RS. 5,563/ - ON 15.11.2007 RS.3,05,563/ - 2. NO RETURN U/S 139(1) WAS FILED. HOWEVER, TAX WAS PAID AMO UNTING TO RS.1,50,000/ - UPTO 31.3.2004 . NOTICE U/S 148 DATED 8.1.2007 WAS ISSUED. IN RESPONSE THERETO, RETURN DECLARING AN INCOME OF RS.11,93,508/ - WAS FILED ON 15.11.2007. DEMAND OF RS.1,55,563/ - WAS RAISED WHICH WAS PAID SUBSEQUENTLY. THE ASSESSING O FFICER ACCEPTED THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 BUT HE LEVIED THE PENALTY U/S 271(1)(C) HOLDING THAT THE ITA NO.60/NAG/PUR/2010 DILIPKUMAR RAMKISAN LAKHOTIYA, BULDHANA 2 ASSESSEE HAS CONCEALED THE INCOME AS WELL AS FURNISHED THE INACCURATE PARTICULARS ON INCOME. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 3 . WE HAVE HEARD THE RIVAL CONTENTION OF BOTH PARTIES AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE AUTHORITIES BELOW. SECTION 271 (1)(C) READS AS UNDER: - 271 (1) IF THE AS SESSING OFFICER OR THE COMMISSIONER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) .. (B) .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SU CH INCOME, OR (D) .. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - EXPLANATION 1 - WHERE IN RESPECT OF ANY FACTS MATERIAL 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 AO OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE OF THIS S UB - SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 4. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT PENALTY U/S 271 (1)(C) IS LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF THE INCOME. THIS IS THE SETTLED LAW THAT THE PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE DIFFERENT. THE PENALTY PROCEEDINGS CAN BE INI TIATED ON 2 CHARGES I.E. I) CONCEALMENT OF PARTICULARS OF INCOME AND II) FURNISHING OF INACCURATE PARTICULARS OF INCOME. BOTH THE CHARGES ARE ENTIRELY DIFFERENT. IF THE PROCEEDINGS ARE INITIATED ON CHARGE OF CONCEALMENT, THEN PENALTY CANNOT BE LEVIED ON TH E CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND VICE ITA NO.60/NAG/PUR/2010 DILIPKUMAR RAMKISAN LAKHOTIYA, BULDHANA 3 VERSA. THUS, THERE MUST BE A CLEAR FINDING ABOUT THE CHARGE FOR WHICH PENALTY IS IMPOSED OR INITIATED. IT IS INCUMBENT UPON THE AO TO STATE WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF SUCH FINDINGS, THE ORDER WOULD BE BAD IN LAW. THE CASE OF NEW SORATHIA ENGINEERING CO. LTD., 282 ITR 642, HON BLE GUJARAT HIGH COURT HAS 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 BEEN FURNISHED BY THE ASSESSEE. HELD, THAT THE PENALTY ORDER AND THE ORDE R OF THE COMMISSIONER (APPEALS) SHOWED THAT NO CLEAR CUT FINDING HAD BEEN REACHED. THE TRIBUNAL HAD FAILED TO APPRECIATE THIS LEGAL ISSUE. THE RATION IN CIT V. MANU ENGINEERING WORKS 132 ITR 306 (GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT BE UP HELD BY THE TRIBUNAL. THE ORDER WAS INVALID. 5. IN THE CASE OF COMMISSIONER OF INCOME TAX V. RAJAN AND CO. 291 ITR 340 (DEL ), IT IS HELD THAT THE PROVISION OF SECTION 271 (1) (C) OF THE INCOME TAX 1961 WOULD REQUIRE PROPER APPLICATION OF MIND AND RECORDI NG OF AT LEAST A BARE MINIMUM OPINION ON THE PART OF AO THAT A CASE FOR INITIATION OF PENALTY PROCEEDING WAS MADE AS THERE WAS CONCEALMENT OF INCOME OR THAT INCORRECT PARTICULARS HAD BEEN FURNISHED BY THE ASSESSEE WITH THE INTENTION TO AVOID PAYMENT OF TAX ES. AO HAS NOT MADE OUT ANY CHARGE EITHER OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. THE PENALTY U/S 271(1) (C) CAN BE LEVIED FOR EITHER OF THE CHARGE. THE PENALTY ORDER SIMPLY STATES THAT PENALTY IS AT TRACTED ON THIS ADDITION AS IT IS MANDATORY AND AUTOMATIC. IT DOES NOT STATE FOR WHAT DEFAULT PENALTY IS LEVIED S. 271(1) (C) (III) IS EXPRESSLY CLEAR THAT THE PENALTY CAN BE LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTI CULARS OF INCOME. IT IS THE PARTICULARS OF INCOME WHICH IS THE COMMON SUBJECT MATTER OF BOTH THE CHARGES. THE WORD CONCEAL AS PER WEBSTER S DICTIONARY MEANS TO HIDE, WITHDRAW, OR REMOVE FROM OBSERVATION; COVER OR KEEP FROM SIGHT; TO KEEP SECRET; TO AVOI D DISCLOSING OR DIVULGING. THAT MEANS NON DISCLOSURE OF PARTICULARS OF INCOME. ON THE OTHER HAND, WHERE PARTICULARS ARE DISCLOSED BUT SUCH DISCLOSURE IS NOT CORRECT, TRUE OR ACCURATE, IT WOULD AMOUNT TO FURNISHING ITA NO.60/NAG/PUR/2010 DILIPKUMAR RAMKISAN LAKHOTIYA, BULDHANA 4 OF INACCURATE PARTICULARS OF INCOME. FOR E XAMPLE, IN CASE OF BUSINESSMAN, IF A PARTICULAR TRANSACTION OF SALE IS NOT SHOWN IN THE BOOKS, IT WOULD AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME WHILE SALE IS SHOWN BUT AT A LESSER VALUE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INC OME. 7. IN OUR OPINION, EXPLANATION 1 TO SECTION 271(1) (C) CANNOT BE APPLIED WHERE CHARGE AGAINST THE ASSESSEE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME SINCE IT PROVIDES A DEEMING FICTION QUA CONCEALMENT OF PARTICULARS OF INCOME ONLY AND CONSE QUENTLY CANNOT BE EXTENDED TO A CASE WHERE CHARGE AGAINST THE ASSESSEE IS FURNISHING OF INACCURATE PARTICULARS OF INCOME. ON THE OTHER HAND, WHERE CHARGE AGAINST THE ASSESSEE IS CONCEALMENT OF PARTICULARS OF INCOME, THE AO HAS TO ESTABLISH EITHER THAT ASSESSEE HAS NOT DISCLOSED THE PARTICULARS OF INCOME UNDER THE MAIN PROVISIONS OR THE CASE OF ASSESSEE FALLS WITHIN THE SCOPE OF THE DEEMING FICTIONS CREATED UNDER THE EXPLANATIONS. FOR EXAMPLE, THE ASSESSEE MIGHT NOT DISCLOSE PARTICULAR SALES OR DI VIDEND INCOME OR INCOME FROM ANY SOURCE. SUCH INSTANCES WOULD FALL UNDER THE MAIN PROVISIONS ITSELF. IN SUCH CASES, THE BURDEN IS ON THE AO TO ESTABLISH THE EXISTENCE OF THE CHARGE ON THE BASIS OF MATERIAL ON RECORD. 8. EXPLANATION 1 TO SECTION 271(1) (C) STATES THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION IS NOT ABSOLUTE ONE BUT IS REBUTTABLE 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. IT IS NOT APPLICABLE WHERE THE CHARGE AGAINST THE ASSESSEE IS FURNISHING INACCURATE PARTICULARS OF THE INC OME. 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 AO OR THE COMMISSIONER TO BE FALSE. THE SECOND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME OFFERS AN EXPLANATION, WHICH, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONA FIDE ONE AND THAT ALL THE FACTS RELATIN G TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE ITA NO.60/NAG/PUR/2010 DILIPKUMAR RAMKISAN LAKHOTIYA, BULDHANA 5 PRESUMPTION 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). 9. IN THIS CASE, THE AO HAS N OT BROUGHT OUT ANY SPECIFIC CHARGE FOR WHICH THE PENALTY HAS BEEN IMPOSED ON THE ASSESSEE U/S 271(1) (C) OF THE ACT. HE HAS NOT BROUGHT OUT WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTIC ULARS OF INCOME. 10. THE AO IN THIS CASE LEVIED THE PENALTY FOR BOTH THE CHARGES WITHOUT MENTIONING ANY SPECIFIC CHARGE. IN CIT V. ATUL MOHAN BINDAL (2009) 9 SCC 589, WHERE HON BLE SUPREME COURT WAS CONSIDERING THE SAME PROVISION, IT OBSERVED THAT THE AS SESSING OFFICER HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THUS THE SATISFACTION OF THE AO ABOUT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PAR TICULARS OF SUCH INCOME IS ESSENTIAL BEFORE LEVYING ANY PENALTY U/S 271(1) (C). THE AO AS IS APPARENT FROM THE PENALTY ORDER HAS NOT SATISFIED ABOUT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF T HE ASSESSEE. ON THIS BASIS ITSELF THE PENALTY DELETED. 11. IN THE RESULT , THE APPEAL OF THE ASSESSE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 15.10 .20 1 2 SD/ - SD/ - ( D.T. GARASIA ) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R VG/SPS NAGPUR DATED 15 TH OCTOBER , 20 1 2 ITA NO.60/NAG/PUR/2010 DILIPKUMAR RAMKISAN LAKHOTIYA, BULDHANA 6 COPY TO 1 SHRI DILIPKUMAR RAMKISAN LAKHOTIYA, AT POST: SAKARKHED, DIST. BULDHANA 2 THE ITO, KHAMGAON. 3 THE CIT (A) , NAGPUR 4 THE DR, ITAT, NAGPUR 5 GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL NAGPUR