THE ACIT, Bhopal V. M/s Shree Coal Enterprises (India) Pvt. Ltd., Bhopal

ITA 685/IND/2013

• Counselvise Citation: 68522714 RSA 2013
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: M K SHARMA
• Keywords: Revised return
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER PAN NO.AAJCS0305A ITA NO. 685 /IND/2013 A.Y.2009-10 ACIT, 3(1), BHOPAL VS. M/S.SHREE COAL ENTERPRISES (INDIA)PVT.LTD., BHOPAL (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.A.VERMA, SR. DR ASSESSEE(S) BY : SHRI M.K.SHARMA, C. A. / // / DATE OF HEARING : 08.09.2014 /DATE OF PRONOUNCEMENT: 19.09. 2014 / O R D E R PER P.K.BANSAL, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE CIT(A)-II, BHOPAL, DATED 05.09.2013 F OR CANCELLING PENALTY OF RS. 41 LAKHS IMPOSED U/S 271(1)(C) OF T HE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS SURV EY U/S 133 AT THE BUSINESS PREMISES OF THE ASSESSEE ON 28. 01.2009. DURING THE COURSE OF SURVEY, THE ASSESSEE SURRENDER ED AN AMOUNT OF RS. 1,50,00,000/- ON ACCOUNT OF STOCK AND CASH DISCREPANCIES DETECTED. IN THE RETURN FILED ON 27.0 2.2010, THE SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 2 ASSESSEE INCLUDED A SUM OF RS. 1,18,83,000/- AS ADD ITIONAL INCOME SURRENDERED IN PLACE OF RS. 1,50,00,000/- AN D THE BALANCE SUM OF RS. 31,17,000/- IN THE HANDS OF SMT. NEELAM JAIN. THE ASSESSING OFFICER DULY ACCEPTED THE INCOM E AND ASSESSED THE SAME. SUBSEQUENTLY, THE ASSESSING OFFI CER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND UL TIMATELY IMPOSED THE PENALTY AMOUNTING TO RS. 41 LAKHS ON TH IS INCOME OF RS. 1,18,83,000/- HOLDING THAT THE COMPANY INCLUDED RS. 1,18,83,000/- IN ITS RETURN OF INCOME ONLY BECAUSE OF THE REASON THAT THE SURVEY TOOK PLACE IN THE PREMISES OF THE A SSESSEE AND SOME DISCREPANCIES WERE FOUND BY THE DEPARTMENT. TH E ASSESSEE WOULD NOT SURRENDER THE AMOUNT VOLUNTARILY AND, THE REFORE, HE WAS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE P ARTICULARS OF INCOME TO THE EXTENT OF RS. 1,18,83,000/-. THE ASSE SSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) CANCELLED THE PENALTY RELYING ON THE DECISION OF CIT VS. SURESH CHAND MITTAL, 241 ITR 224 (MP) IN WHICH IT WAS HELD AS UNDER :- IT IS WELL-SETTLED THAT UNDER SECTION 271(1)(C), THE INITIAL BURDEN LIES ON THE REVENUE TO ESTABLISH THAT THE ASSESSEE HAS CONCEALED THE INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 3 INCOME. THE BURDEN SHIFTS TO THE ASSESSEE ONLY IF HE FAILS TO OFFER ANY EXPLANATION FOR THE UNDISCLOSED INCOME OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE BY THE ASSESSING AUTHORITY. HOWEVER, THE PROVISO TO EXPLANATION I PROVIDES FOR SHIFTING OF THIS BURDEN AGAINST WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE BONA FIDE. IN THE INSTANT CASE, THOUGH IT WAS TRUE THAT THE ASSESSEE HAD NOT SURRENDERED AT ALL AND THAT HE HAD DONE SO ON THE PERSISTENT QUERIES MADE BY THE ASSESSING OFFICER, BUT ONCE THE REVISED ASSESSMENT WAS REGULARIZED BY THE REVENUE AND ONCE THE ASSESSING AUTHORITY HAD FAILED TO TAKE ANY OBJECTION IN THE MATTER, THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN HIS REVISED RETURNS AND HIS EXPLANATION THAT HE HAD DONE SO TO BUY PEACE WITH THE DEPARTMENT AND TO COME OUT OF VEXED LITIGATION COULD BE TREATED AS BONA FIDE. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN CANCELLING THE PENALTY LEVIED. SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 4 3. BEFORE US, THE LD. SENIOR DR VEHEMENTLY RELIED O N THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F MAK DATA (P) LIMITED VS. CIT-II, 358 ITR 593 (S.C.). 4. THE LD. AUTHORIZED REPRESENTATIVE, ON THE OTHER HAN D, RELIED ON THE DECISION OF THE HON'BLE M.P.HIGH COUR T IN THE CASE OF SURESH CHAND MITTAL (SUPRA). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERUSE D THE RECORDS CAREFULLY. IN OUR OPINION, THE DECISION OF THE HON'BLE M. P. HIGH COURT IN THE CASE OF SURESH CHAND MITTAL (SUPRA) AS RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE G OT OVER-RULED BY THE DECISION OF THE HON'BLE SUPREME COURT IN TH E CASE OF MAK DATA (P) LTD, IN WHICH THE HON'BLE SUPREME COURT HA S HELD AS UNDER :- 7. THE AO, IN OUR VIEW, SHALL NOT BE CARRIED AWAY B Y THE PLEA OF THE ASSESSEE LIKE 'VOLUNTARY DISCLOSURE', 'BUY PEACE', 'AVOID LITIGATION', 'AMICABLE SETTLEMENT', ETC. TO EXPLAIN AWAY ITS CONDUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS O FFERED ANY EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOM E OR FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO SE CTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERE NCE IS NOTICED BY THE AO, BETWEEN REPORTED AND ASSESSED INCOME. TH E BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT A ND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLA NATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVE NUE TO SHOW SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 5 THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE. 8. ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM OF RS. .40,74,000/- WITH A VIEW TO A VOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCE S TOWARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WIT H THE INCOME TAX DEPARTMENT. STATUTE DOES NOT RECOGNIZE THOSE TY PES OF DEFENCES UNDER THE EXPLANATION I TO SECTION 271 (1) ( C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE THE APPELLANT-ASSESSEE FROM THE MISCHIEF OF PENAL PROCE EDINGS. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAD TO BE AB SOLVED FROM PENALTY. 9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURREN DER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH COND UCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEME NTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. TH E SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE F ILED ITS SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 6 RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HA VE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH W AS SURRENDERED LATER DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASS ESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STA TUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOK S OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DE CLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEA R TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PART ICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 10. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCEEDIN GS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMEN T PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTI ON IN A PARTICULAR MANNER OR REDUCE IT INTO WRITING. THE SC OPE OF SECTION 271(1)(C) HAS ALSO BEEN ELABORATELY DISCUSSED BY TH IS COURT IN UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS [2 008] 13 SCC 369 AND CIT VS. ATUL MOHAN BINDAL, [2009] 9 SCC 58 9. 6. HOWEVER, WE MAY OBSERVE THAT IN THE CASE OF THE ASSESSEE, THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MAK DATA (SUPRA) AS RELIED UPON BY THE LD. SENIO R DR WILL ALSO NOT APPLY. IN THAT CASE, SURVEY HAS BEEN CONDU CTED IN SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 7 THE CASE OF THE SISTER CONCERN OF THE ASSESSEE AND THEN THE ASSESSING OFFICER PROCEEDED TO SEEK INFORMATION FRO M THE ASSESSEE AND ISSUED SHOW CAUSE NOTICE DATED 26.10.2 006 ON THE BASIS OF THE DOCUMENTS FOUND DURING THE COURSE OF SURVEY IN REPLY THERETO DATED 22.11.2006 AND THE AS SESSEE MADE AN OFFER OF SURRENDER OF SUM OF RS. 40.74 LAKH S FOR THE ASSESSMENT YEAR 2004-05. THUS, THE SURRENDER WAS MA DE AFTER THE RETURN FOR THE ASSESSMENT YEAR HAD BEEN F ILED. THIS IS SETTLED LAW IN VIEW OF THE DECISION OF THE HON'B LE SUPREME COURT IN THE CASE OF BRIJ MOHAN VS. CIT, 120 ITR 1, THAT THE DEFAULT IS COMMITTED WHEN A RETURN IS FILED. IN THE CASE OF THE ASSESSEE, WE NOTED THAT THE SURVEY HAS TAKEN PL ACE PRIOR TO THE ENDING OF THE ASSESSMENT YEAR AND THE INCOME HAS BEEN DECLARED BY THE ASSESSEE DURING THE COURSE OF THE SURVEY, WHICH HAS TAKEN PLACE PRIOR TO THE ASSESSME NT YEAR. THUS, THE ASSESSEE HAS INCLUDED THE INCOME SURRENDE RED IN THE RETURN FILED BY HIM. THEREFORE, IN OUR OPINION, WHEN THE RETURN WAS FILED, THERE REMAINED NO DEFECTS COMMITT ED BY THE ASSESSEE. 7. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE DECISI ON OF THE HON'BLE DELHI HIGH IN THE CASE OF CIT VS. SAS SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 8 PHARMACEUTICALS, 335 ITR 259 IN WHICH UNDER SIMILAR FACTS, THE HON'BLE SUPREME COURT HAS HELD AS UNDER : IT IS NOT A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME, AS IN THE INCOME-TAX RETURN, PARTICULARS OF INCOME HAVE BEEN DULY FURNISHED AND THE SURRENDERED AMOUNT OF INCOME WAS DULY REFLECTED IN THE INCOME-TAX RETURN. THE QUESTION IS WHETHER THE PARTICULARS OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT. IT WOULD DEPEND UPON THE ISSUE AS TO WHETHER THIS CONCEALMENT HAS REFERENCE TO THE INCOME-TAX RETURN FILED BY THE ASSESSEE, VIZ ., WHETHER CONCEALMENT IS TO BE FOUND IN THE INCOME- TAX RETURN. WE MAY, FIRST OF ALL, REJECT THE CONTENTION OF THE LEARNED COUNSEL OR THE REVENUE RELYING UPON THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT OCCURRING IN SUB-SECTION (1) OF SECTION 2 71 OF THE ACT AND CONTENDING THAT EVEN DURING SURVEY WHEN IT WAS FOUND THAT THE ASSESSEE HAD CONCEALED THE PARTICULAR OF HIS INCOME, IT WOULD AMOUNT TO CONCEALMENT IN THE COURSE OF ANY PROCEEDINGS. THE WORDS IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT ARE PREFACED BY THE SATISFACTION OF THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS). WHEN THE SURVEY IS CONDUCTED BY A SURVEY TEAM, THE QUESTION OF SATISFACTION OF THE ASSESSING OFFICER O R THE COMMISSIONER (APPEALS) OR THE COMMISSIONER DOES NOT ARISE. WE HAVE TO KEEP IN MIND THAT IT IS THE ASSESSING OFFICER WHO INITIATED THE PENALTY PROCEEDINGS AND DIRECTED THE PAYMENT OF PENALTY. HE HAD NOT RECORDED ANY SATISFACTION DURING THE COURSE OF SURVEY. THE DECISION TO INITIATE PENALTY PROCEEDINGS WAS TAKEN WHILE MAKING THE ASSESSMENT ORDER. IT IS, THUS, OBVIOUS THAT THE EXPRESSION IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT CANNOT HAVE THE REFERENCE TO THE SURVEY PROCEEDINGS, IN THIS CASE. SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 9 IT NECESSARILY FOLLOWS THAT CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE HAS TO BE IN THE INCOME-TAX RETURN FILED BY IT. THERE IS SUFFICI ENT INDICATION OF THIS IN THE JUDGMENT OF THIS COURT IN THE CASE OF CIT VS. MOHAN DAS HASSA NAND (1983) 141 ITR 203(DELHI) AND IN RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) THE SUPREME COURT HAS CLINCHED THIS ASPECT, VIZ., THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME IN HIS RETURN AND EVERYTHING WOULD DEPEND UPON THE INCOME TAX RETURN FILED BY THE ASSESSEE. THIS VIEW GETS SUPPORTED BY EXPLANATION 4 AS WELL AS EXPLANATION 5 AND EXPLANATION 5A TO SECTION 271 OF THE ACT AS CONTENDED BY THE LEARNED COUNSEL FOR THE RESPONDENT. NO DOUBT, THE DISCREPANCIES WERE FOUND DURING THE SURVEY. THIS HAS YIELDED INCOME FROM THE ASSESSEE IN THE FORM OF AMOUNT SURRENDERED BY THE ASSESSEE. PRESENTLY, WE ARE NOT CONCERNED WITH THE ASSESSMENT OF INCOME, BUT THE MOOT QUESTION IS TO WHETHER THIS WOULD ATTRACT PENALTY UPON THE ASSESSEE UNDER THE PROVISIONS OF SECTION 27(1)(C) O F THE ACT. OBVIOUSLY, NO PENALTY CAN BE IMPOSED UNLESS THE CONDITIONS STIPULATED IN THE SAID PROVISIONS ARE DULY AND UNAMBIGUOUSLY SATISFIED. SINCE THE ASSESSEE WAS EXPOSED DURING SURVEY, MAY BE, IT WOULD HAVE NOT DISCLOSED THE INCOME BUT FOR THE SAID SURVEY. HOWEVER, THERE CANNOT BE ANY PENALTY ONLY ON SURMISES, CONJECTURES AND POSSIBILITIES. SECTION 271(1)(C) OF THE ACT HAS TO BE CONSTRUED STRICTLY. UNLESS IT IS FOUND THAT THERE I S ACTUALLY A CONCEALMENT OR NON-DISCLOSURE OF THE PARTICULARS OF INCOME, PENALTY CANNOT BE IMPOSED. THERE IS NO SUCH CONCEALMENT OR NON-DISCLOSURE AS THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN THE INCOME-TAX RETURN AND OFFERED THE SURRENDERED AMOUNT FOR THE PURPOSES OF TAX. SHREE COAL ENTERPRISES, BHOPAL I.T.A.NO. 685 685 685 685/ // / IND/ 2013 2013 2013 2013 A.Y. 2009 2009 2009 2009- -- -10 1010 10 10 8. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) CANCELLING THE PENALTY BUT ON A DIFFERENT GROUND. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. SD/- SD/- (MUKUL KR. SHRAWAT) (P. K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE DATED 19 /09/2014 CPU,SPS !'#$% &'$ !'#$% &'$ !'#$% &'$ !'#$% &'$/ COPY OF THE ORDER FORWARDED TO : 1. &%(#)* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. -.-/0 , , 1 / CONCERNED CIT 4. , , 1 ( &%(# ) / THE CIT(A), INDORE 5. $45(, !!/0 , , &%(# , &/0 , &67. / DR, ITAT, INDORE 6. 589 :# / GUARD FILE. / BY ORDER, 6, %-;( 6, %-;( 6, %-;( 6, %-;( ( ASSTT.REGISTRAR) ITAT, INDORE 1. DATE OF DICTATION- 17.09.2014 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.09.2014 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 26. 09.2014 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER