Jaichand Topandas Wadhwani, Pune V. ITO wd 8[4] Pune, Pune

ITA 690/PUN/2012

• Counselvise Citation: 69024514 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI SMT S PRAVEENA
• Assessee Lawyers: DINESH GULABANI
• Keywords: Reasonable cause; Reason to believe
• Section: 143(3); 133A; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 690 / P N/ 20 1 2 ASSESSMENT YEAR : 200 7 - 08 JAICHAND TOPANDAS WADHWANI, C/O AD VOCATE DINESH GULABANI, GULABANI & COMPANY, P.W.D. 5/2, ASHOK CINEMA ROAD, PIMPRI, PUNE VS. INCOME TAX OFFICER, WARD - 8(4), PUNE (APPELLANT) (RESPONDENT) PAN NO. AABPW3831C APPELLANT BY: SHRI DINESH GULABANI RESPONDENT BY: SHRI A.K. MODI/ SMT . S. PRAVEENA DATE OF HEARING : 10 - 0 7 - 2014 DATE OF PRONOUNCEMENT : 27 - 0 8 - 2014 ORDER PER R.S . PADVEKAR , JM : - IN THIS APPEAL, THE ASSESSEE HAS CHALLENG ED THE IMPUGNED ORDER OF THE LD. CIT(A) - V, PUNE DATED 15 - 02 - 2012 FOR THE A.Y. 2007 - 08. THE AS SESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. ON THE FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, IT BE HELD THAT THE LEARNED AUTHORITIES HAVE ERRED IN LAW WHILE IMPOSING PENALTY U/S 271(1)(C) FOR CONCEALMENT OF INCOME & ALSO FURNISHING OF INACCURATE PARTICULAR AMOUNTING TO RS.15,75,895/ - THE LEARNED CIT(APPEAL) - V HAVE UPHELD THE PENALTY IMPOSED U/S 271(1)(C) BY THE INCOME TAX OFFICER, AKURDI IN HIS ORDER AND THE APPELLANT PRAYS THAT THE PENALTY IMPOSED BE DELETED. 2. ON THE FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, THE ORDER OF THE LEARNED CIT(APPEAL) - V IS DISTINGUISHABLE AND THE DOES NOT MATCH WITH THE FINDINGS OF THE ORDER OF INCOME TAX OFFICER ON THE FACTS THAT THE LEARNED CIT(APPEALS)V HAS GIVEN DIFFERENT REASONING IN ORDER TO CONFIRM 2 ITA NO . 690/PN/2012, JAICHAND TOPANDAS WADHWANI, PUNE THE PENALTY ORDER I.E. ROI OF INCOME NOT FILED U/S 139(1) OR 139(4) WHILE THE ASSESSING OFFICER RELIED ON THE FACTS THAT ROI INCOME FILED AFTER INITIATION OF SURVEY PROCEEDINGS. THE CIT(APPEALS) - V IS SILENT ON THE FINDING OF ASSESSMENT ORDER OF ITO, THOUGH HE HAS UPHELD THE PENALTY ORDER U/S 271(1)(C). 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. A SURVEY ACTION U/S. 133A OF THE I.T. ACT WAS CARRIED OUT AGAINST THE ASSESSEE ON 13 - 03 - 2009. AT THE TIME OF SURVEY ACTION , IT WAS NOTICED THAT THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME FOR THE A.Y. 2007 - 08. THE ASSESSING OFFICER ISSUED THE NOTICE U/S. 148 FOR THE A.Y. 2007 - 08 ON 16 - 03 - 2009 REQUIRING THE ASSESSEE TO FILE HIS RETURN OF INCOME. TH E ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2007 - 08 DECLARING TOTAL INCOME OF RS.79,86,290/ - ON 15 - 04 - 2009 IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) R.W.S. 147 OF THE ACT ON 24 - 12 - 2009 ON TH E BASIS OF RETURN FILED IN RESPONSE TO NOTICE U/S. 148 . THE ASSESSING OFFICER ALSO INITIATED THE PENALTY PROCEEDINGS ON THE CHARGE OF CONCEALING THE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC. 271(1)(C) OF THE ACT. THE ASSESSEE RESISTED THE ACTION O F THE ASSESSING OFFICER. THE ASSESSEE TOOK THE PLEA THAT HE WAS REGULARLY FIL ING HIS RETURN S OF INCOME FOR MORE THAN 30 YEARS AND HAS NEVER CONCEALED HIS INCOME. IT WAS ONLY DURING A.Y. 2006 - 07 AND F.Y. 2007 - 08 THAT THERE WAS DELAY IN FILING THE RETURN O F INCOME DUE TO FINANCE CRISIS AND SOME PROPERTY LITIGATIONS AS HE WAS HIGHLY DISTURBED AND HAD GONE INTO DEPRESSION. THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE FOR NOT LEVYING THE PENALTY BY OBSERVING THAT THE ASSESSEE HAS NOT GIVEN ANY SPEC IFIC REASON FOR NON - FILING OF THE RETURN OF INCOME . HE ALSO OBSERVED THAT THE ASSESSEE HAS CO - OPERATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS . T HE ENTIRE COMPLIANCE IN THE MATTER WAS MADE ONLY AFTER INITIATION OF THE PROCEEDINGS BY THE DEPARTMENT. THE ASSESSING OFFICER, THEREFORE, LEVIED THE PENALTY TO THE EXTENT OF 3 ITA NO . 690/PN/2012, JAICHAND TOPANDAS WADHWANI, PUNE RS.15,75,895/ - . THE ASSESSEE CHALLENGED THE PENALTY BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESSES. THE LD. CIT(A) CONFIRMED THE PENALTY BY GIVING THE FOLLOWING REASONS: 9. I HAVE CAREFUL LY CONSIDERED THE FACTS OF THE CASE AND REPLY OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT HAS NOT FILED HIS RETURN OF INCOME EITHER U/S. 139(1) OR U/S. 139(4) OF THE I.T. ACT. THEREFORE, THE CONTENTION OF THE APPELLANT THAT THE RETURN OF INCOME WAS F ILED DISCLOSING HIS INCOME VOLUNTARILY CANNOT BE ACCEPTED, OF COURSE, CONDITIONS INVOKING EXPLANATION 3 TO SECTION 271(L)(C) OF THE I.T. ACT ARE NOT SATISFIED IN THIS CASE. THE PENALTY IS ATTRACTED ON THE MAIN PROVISION OF SECTION 271(21)(C) OF THE I.T. AC T ITSELF. IT HAS BEEN HELD BY VARIOUS COURTS THAT PENALTY U/S. 271(1)(C) HAS TO BE CONSIDERED WITH REFERENCE TO RETURN OF INCOME FILED BUT THAT RETURN OF INCOME HAS TO BE VALID RETURN OF INCOME FILED EITHER U/S. 139(1) OR U/S. 139(4) OF THE I.T, ACT, IN TH IS CASE, SINCE THE RETURN HAS BEEN FILED IN RESPONSE TO NOTICE U/S. 148 OF THE I.T. ACT AFTER LAST DATE OF FILING OF RETURN U/S. 139(4), IT CANNOT BE SAID THAT THE APPELLANT HAS NOT CONCEALED THE PARTICULARS OF INCOME, THE EXPLANATION CONCEALMENT OF INCOM E IMPLIES THAT AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED UP SO AS IT CANNOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. THE FACT OF NON - FILING OF RETURN EITHER U/S. 139(1) OR U/S, 139(4) OF THE I.T. ACT CLEARLY ESTABLISHES THAT THE INCOME WAS NEVER IN TENDED TO BE DISCLOSED TO THE DEPARTMENT BUT FOR THE SURVEY U/S. 133A OF THE I.T. ACT AND SUBSEQUENT NOTICE ISSUED U/S. 148 OF THE I.T. ACT. THIS FACT ALSO GETS THE SUPPORT FROM THE FACT, THE APPELLANT HAD NOT PAID CORRESPONDING ADVANCE TAX WITHIN THE STIP ULATED TIME. IN FACT, THE APPELLANT HAS PAID ADVANCE TAX OF RS.1 LAKH ONLY ON 28/03/2007 WHICH GOES ON TO PROVE THAT THE APPELLANT NEVER INTENDED TO DISCLOSE THE INCOME IN ITS RETURN AND ADVANCE TAX WAS NOT COMMENSURATE WITH THE INCOME DETECTED DURING THE COURSE OF SURVEY. THE LEARNED COUNSEL OF THE APPELLANT HAS RELIED ON VARIOUS CASE LAWS, I FIND THAT THE CASE LAWS RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE ON. FACTS THAT IN. THOSE CASES, VALID RETURN U/S. 139(1)/139(4) WERE FILED, BUT IN THIS CASE THE FACTS ARE DIFFERENT. I, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE ASSESSING OFFICER AND ACCORDINGLY PENALTY U/S. 271(L)(C) OF THE I.T. ACT AMOUNTING TO RS.15,75,895/ - IS CONFIRMED. BOTH GROUNDS OF APPEAL, ARE THUS DISMISSED . 4 ITA NO . 690/PN/2012, JAICHAND TOPANDAS WADHWANI, PUNE NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE MAIN PLANK OF THE ARGUMENT OF THE LD. COUNSEL IS THAT THE ASSESSEE HAD A TIME LIMIT TILL 31 - 03 - 2009 TO FILE HIS BELATED RETUR N AS PER THE PROVISIONS OF SEC. 139(4) OF THE INCOME - TAX ACT. HE SUBMITS THAT THE ASSESSEE IS REGULARLY ASSESSED TO TAX FOR MORE THAN 30 YEARS AND ONLY FOR THE TWO ASSESSMENT YEARS I.E. A.YS. 2006 - 07 AND 2007 - 08 THERE WAS A DELAY BY THE ASSESSEE FOR NON - F ILING OF THE RETURNS OF INCOME. HE SUBMITS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ISSUING THE NOTICE U/S. 148 OF THE ACT AS THE TIME LIMIT FOR FILING THE RETURN OF INCOME U/S. 139(4) WAS STILL AVAILABLE TO THE ASSESSEE. HE SUBMITS THAT THE RETUR N FILED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AND NO ADDITION IS MADE. HE SUBMITS THAT THE ASSESSING OFFICER COULD HAVE WAITED TILL THE EXPIRY OF THE TIME LIMIT GIVEN U/S. 139(4) AND THEREAFTER IF THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME , HE COULD HAVE ISSUED NOTICE U/S. 148 OF THE ACT. HE PLACED THE RELIANCE ON THE DECISION OF THE ITAT, HYDERABAD IN THE CASE OF ITO VS. SHRI PABBISETTY VENKATESWARLU, NELLORE AND ORS., ITA NOS. 1066 TO 1069/HYD/2011 ORDER DATED 29 - 09 - 2011. WE H AVE ALSO HEARD THE LD. DR. 4. IN THIS CASE THE FACTS ARE NOT IN CONTROVERSY. THE ASSESSEE DID NOT FILE THE RETURN OF INCOME FOR THE A.Y. 2007 - 08 WITHIN THE TIME LIMIT SPECIFIED U/S. 139(1) OF THE ACT. THERE WAS A SURVEY ACTION AGAINST THE ASSESSEE U/S . 133A ON 13 - 03 - 2009 AND THE ASSESSEE VOLUNTARILY SURRENDERED SOME INCOME. THE ASSESSING OFFICER ISSUED THE NOTICE TO THE ASSESSEE U/S. 148 OF THE ACT ON 16 - 03 - 2009 WHICH IS ADMITTEDLY IN CONSEQUENCE OF SURVEY ACTION AGAINST THE ASSESSEE U/S. 133A OF THE ACT. IT IS A CASE OF THE ASSESSEE THAT HE IS REGULARLY FILING THE RETURN OF INCOME FOR LAST 30 YEARS AND DUE TO THE PERSONAL AND FAMILY PROBLEMS T HERE WAS A DELAY IN FILING THE RETURN OF INCOME FOR THE A.Y. 2007 - 08. IT IS ALSO NOT 5 ITA NO . 690/PN/2012, JAICHAND TOPANDAS WADHWANI, PUNE DISPUTED THAT IT IS THE ONLY RETURN FILED BY THE ASSESSEE FOR THE A.Y. 2007 - 08 WHICH IS ALSO IN RESPONSE TO NOTICE ISSUED U/S. 148 OF THE ACT DECLARING TOTAL INCOME AT RS.79,86,290/ - . LET US DEAL WITH THE ARGUMENT OF THE ASSESSEE . T HE FIRST CONTENTION OF THE ASSESSEE IS THAT T HE ASSESSEE HAD TIME LIMIT U/S. 139(4) FOR FILING HIS RETURN OF INCOME IF THE HE HAS NOT FURNISHED THE RETURN OF INCOME WITHIN THE TIME ALLOWED U/S. 139(1) AND IN THE SAID SITUATION EVEN IF NOTICE U/S. 148 IS I SSUED TO THE ASSESSEE THAT DOES NOT MEAN THAT THE ASSESSEE HAS CONCEAL THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. ON PERUSAL OF SEC. 147 WHICH EMPOWERS THE ASSESSING OFFICER TO INITIATE ASSESSMENT OR RE - ASSESSMENT PROCEEDINGS IF HE HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT. IT CANNOT BE SAID THAT THE ASSESSING OFFICER OUGHT TO HAVE ISSUED THE NOTICE U/S. 148 UNLESS THE TIME LIMIT PROVIDED FOR FILING THE BELATED RETURN U/S. 139(4) OF THE ACT IS EXPIRED . BUT AT THE SAME TIME THE PENALTY PRO VISIONS AR E TO BE HARMONIOUSLY INTERPRETED WITH THE OTHER PROVISIONS OF THE ACT. IN SEC. 271(1)(C) BY WAY OF EXPLANATION - 3 IT IS PROVIDED AS UNDER: SEC. 271(1)(C) - EXPLANATION 3. WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECI FIED IN SUB - SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNISH UNDER SECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PERIOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE (I) OF SUB - SECTION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PERSON SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB - SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AFORE SAID IN PURSUANC E OF A NOTICE UNDER SECTION 148 . 5. AS PER THE SAID EXPLANATION THERE IS A LEGAL PRESUMPTION AGAINST THE ASSESSEE . I F HE FAILS TO FURNISH (WITHOUT REASONABLE CAUSE) HIS RETURN 6 ITA NO . 690/PN/2012, JAICHAND TOPANDAS WADHWANI, PUNE OF INCOME WITHIN THE TIME LIMIT PROVIDED U/S S . 139 OR 153(1) OF THE ACT, IN THAT CASE THE SAID ASSESSEE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR E VEN THOUGH IF HE FILE S HI S RETURN OF INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD AS GIVEN U/S. 139, THAT IN CLUDES THE EXTENDED PERIOD U/S. 139(4) ALSO OR PERIOD U/S. 153(1) OF THE ACT. IN THE PRESENT CASE THE NOTICE TO THE ASSESSEE WAS ISSUED U/S. 148 OF THE ACT FOR A.Y. 2007 - 08 ON 16 - 03 - 2009 WHICH WAS PRIOR TO THE TIME LIMIT PRESCRIBED U/S. 139(4) OF THE ACT. EVEN U/S. 153(1) THE TIME LIMIT GIVEN FOR THE COMPLETION OF THE ASSESSMENT IS 21 MONTHS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE . H ENCE, IN OUR OPINION THERE IS A SUBSTANCE IN THE CONTENTION OF THE ASSESSEE THAT THE L EGAL FICTION CREATED IN EXPLANATION - 3 BELOW U/S. 271(1)(C) AGAINST THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE EVEN T HOUGH THE ASSESSEE HAS FILED THE RETURN AFTER 31 - 03 - 2009 WHICH IS ADMITTEDLY IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. TO THE EXTE NT OF APPLICABILITY OF THE PROVISIONS OF SEC. 271(1)(C) IN A SITUATION CONTEMPLATED IN EXPLANATION - 3 , IN OUR OPINION THE SAME CAN BE MADE APPLICABLE IF THE NOTICE U/S. 148 IS ISSUED AFTER THE PERIOD PROVIDED IN SEC. 139 OR 153(1) OF THE ACT. IN OUR OPINIO N EXPLANATION - 3 TO SEC. 271(1)(C) CANNOT BE APPLIED TO THE ASSESSEE. NOW, THE NEXT QUESTION IS CAN IT BE SAID THAT THE ASSESSEE HAS EVADED THE TAX ON WHICH ONLY THE PENALTY U/S. 271(1)(C) CAN BE LEVIED AS PER THE OPERATIVE PART OF THE SAID PROVISION. IN THIS CASE FOR THE FIRST TIME THE ASSESSMENT HAS BEEN FRAMED BY THE ASSESSING OFFICER U/S. 143(3) ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE U/S. 148 OF THE ACT. THE ASSESSING OFFICER HAS MADE SOME MINOR ADDITION BUT IN OUR OPINION THOSE ADDITIONS CA NNOT BE TREATED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR UNDERSTANDING THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 271(1)(C) FOR LEVYING THE PENALTY. WE, 7 ITA NO . 690/PN/2012, JAICHAND TOPANDAS WADHWANI, PUNE ACCORDINGLY, DELETE THE PENALTY AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 - 0 8 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 27 TH AUGUST, 20 1 4 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - V, PUNE 4 THE CIT - V, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE