ITO, Jaipur V. PRAVEEN CHAND SANGHI, Jaipur

ITA 70/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99557 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: G G MUNDRA
• Keywords: Date of conversion; Wrong claim; Revised return; Ignorance of law
• Section: 10B; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 70/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2005-06 INCOME TAX OFFICER, WARD 3(4), JAIPUR. CUKE VS. PRAVEEN CHAND SANGHI, C-98, SUBHASH MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AFPPS 1255 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI G.G. MUNDRA (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/11/2015 MN?KKS'K .KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 30/11/2015 VKNS'K@ ORDER PER: R.P. TOLANI, J.M.: THIS IS AN APPEAL FILED BY DEPARTMENT AGAINST THE O RDER OF LD. CIT (A) I, JAIPUR DATED 09-11-2012 FOR AY 2005-06, SO LE GROUND RAISED IS AS UNDER : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF TH E CASE AND IN LAW THE LD. CIT (A) IS JUSTIFIED IN DELETING THE P ENALTY OF RS. 4,33,052/- IMPOSED BY THE A.O. WHICH WAS BASED ON FA CTS AND SUPPORTED BY DECISIONS OF VARIOUS COURTS. ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 2 2. BRIEF FACTS OF THE CASE ARE THAT SHRI PRAVEEN C HAND SANGHI (HUF) BY VIRTUE OF A WILL OF SHRI MANGI LAL SANGHI D ATED 18-10-77, INHERITED THE PROPERTY C-98, SUBHASH MARG, C-SCHEME , JAIPUR. ASSESSEE CLAIMS THAT IT WAS ASSUMED TO BE HUF PROPER TY WHICH ON 15- 10-87 WAS PARTITIONED IN EQUAL SHARE TO EACH OF FOLL OWING PERSONS (EACH HAVING SHARE). PRAVEEN CHAND SANGHI SMT. SUSHILA DEVI SHRI PRADEEP KUMAR JAIN SHRI RAJEEV SANGHI IT IS CLAIMED THAT BY SAID PARTITION, ITS STATUS B ECAME HUF QUA THE PROPERTY AS A CO-OWNER HAVING SHARE IN A PLOT NO. C-98, SUBHASH MARG, JAIPUR ADMEASURING TO 1944.44 SQ. YDS WITH OLD HOUSE THEREON USED FOR RESIDENCE. THE ASSESSEE ALONG WITH OTHER CO- OWNERS ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S UPASANA COLONI ZERS & RESORTS P. LTD. ON 4-10-97 FOR CONSTRUCTION OF A COMMERCIAL COMPLEX ON THE SAID PLOT OF LAND AFTER DEMOLITION OF OLD CONSTRUCT ION. THE ENTIRE COST OF CONSTRUCTION WAS TO BE BORNE BY DEVELOPERS. 2.1 THE ASSESSEE TREATED THE DATE OF 4-10-97 I.E. AG REEMENT WITH DEVELOPER WAS AS DATE OF CONVERSION OF CAPITAL A SSET INTO STOCK IN TRADE. THE COST AS ON 1-4-81 WAS FURTHER INCREASED BY COST INDEX U/S ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 3 48 WAS DEDUCTED FROM THE MARKET VALUE OF LAND AS ON 4-10-97 AS PER REGISTERED VALUERS REPORT AND DIFFERENCE WAS DECLAR ED AS CAPITAL GAIN IN ACCORDANCE WITH SECTION 45 (2) OF I. T. ACT, 61 AN D REMAINING SALE VALUE WAS DECLARED AS BUSINESS PROFIT IN THE RETURN OF INCOME FROM A.Y. 2004-05 ONWARDS. 2.2 FOR A.Y. 2004-05 SHRI PRAVEEN CHAND SANGHI FIL ED RETURN OF INCOME CLAIMING STATUS OF HUF. AO ISSUED NOTICE U/S 143 (2) BY ACIT, CIR-6, JAIPUR WHO HELD THAT CONSEQUENT TO PARTITION OF HUF THE PROPERTY BECAME INDIVIDUAL AND NOT HUF PROPERTY. LD . AO THUS, DID NOT ACCEPT THE STATUS OF HUF AND A PROTECTIVE ASSES SMENT WAS MADE HOLDING THAT THE SAID CO OWNERSHIP PROPERTY WAS ASSES SABLE IN THE HANDS OF PRAVEEN CHAND SANGHI INDIVIDUAL. THE ACIT, CIR-6, JAIPUR ACCORDINGLY INTIMATED TO THE A.O. OF PRAVEEN CHAND INDIVIDUAL I.E. I.T.O. WD -3(4), JAIPUR TO INITIATE PROCEEDINGS U/S 148 WHICH WAS INITIATED VIDE NOTICE DATED 23-3-07 (SERVED ON ASSE SSEE ON 28-3-07). ASSESSEE FILED A RETURN IN RESPONSE TO NOTICE U/S 1 48 DECLARING INCOME FROM SAID PROPERTY IN HIS INDIVIDUAL STATUS. 2.3 ALL OTHER THREE PERSONS FILED APPEAL(S) AGAINST THOSE ASSESSMENT ORDERS AND IN COURSE OF HEARING OF APPEA L SHRI PRAVEEN CHAND SANGHI ADMITTED THAT THE SAID INCOME FROM DEV ELOPMENT FROM ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 4 PROPERTY IS ASSESSABLE IN HIS INDIVIDUAL CAPACITY A ND HE HAS FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 INCL UDING THE INCOME FROM DEVELOPMENT OF PROPERTY IN HIS INDIVIDUAL HAND S. 2.4 THE CIT (A) II, JAIPUR ON THESE FACTS CANCELLED THE PROTECTIVE ASSESSMENTS ORDER PASSED IN THE CASE OF M/S PRAVEEN CHAND SANGHI (HUF) AND IN OTHER TWO CASES I.E. SUSHI LA DEVI INDIVIDUAL AND RAJEEV SANGHI HUF DELETED ALL THE ADDITIONS MADE IN ASSESSMENT. THEREAFTER THE A.O. WD- 3(4) COMPLETED A SSESSMENT U/S 148 IN THE STATUS OF INDIVIDUAL ON 28-12-2007 BY IN CLUDING INCOME RETURNED IN HUF CAPACITY BUT MADE ADDITIONS REPEATI NG THE ADDITIONS MADE EARLIER IN PROTECTIVE ASSESSMENT ORDER IN CASE OF ASSESSEE HUF AND INITIATED PROCEEDINGS U/S 271 (1)(C) OF I. T. AC T, 1961. THE ASSESSEE AGAINST THIS ASSESSMENT U/S 148 FILED APPE AL BEFORE CIT (A) I, WHICH APPEALS STAND DISMISSED BY ITAT VIDE ORDER DATED 8-1- 2010. THUS ASSESSMENT FOR A.Y. 2004-05 U/S 148 IN CA SE OF ASSESSEE BECAME FINAL IN INDIVIDUAL INCLUDING THE INCOME QUA THIS PROPERTY. THE LD. A.O. HOWEVER, IN A.Y. 2004-05 ON THE PROCEEDINGS INITIATED BY HIM U/S 271 (1) (C) IMPOSED NO PENALTY. 2.5 THIS COURSE OF ACTION WAS REPEATED FOR A.Y. 2005- 06 ASSESSMENT, LD. A.O. IN ASSESSMENT PROCEEDINGS INDI CATED THE SAME ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 5 MISTAKE CONSEQUENTLY, ASSESSEE SUBMITTED REVISED CO MPUTATION OF INCOME INCLUDING THE INCOME FROM SAID PROPERTY. IMP UGNED PENALTY PROCEEDINGS WERE INITIATED, AFTER HEARING THE ASSESS EE LD. AO LEVIED A PENALTY OF RS. 4,33,052/- BY FOLLOWING OBSERVATIONS: THE REVISED COMPUTATION OF INCOME WAS FILED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS DECLARING THE INCO ME AT RS. 18,10,900/-. THE REVISED COMPUTATION OF INCOM E SHEET WAS NOT FILED VOLUNTARILY AND THE ASSESSEE WAS FORCED TO REVISE THE INCOME FROM (I) HOUSE PROPERTY (II) BUSINESS OR PROFESSION AND (III) CAPITAL GAINS. HER E THE ASSESSEE DID NOT FILE ANY REVISED RETURN SURRENDERI NG THE UNDISCLOSED INCOME NOR HE OFFERED A CONVINCING EXPLANATION AS TO THE CIRCUMSTANCES LEADING TO REVI SED COMPUTATION OF INCOME AND CAPITAL GAINS OFFERED FOR TAXATION. IN THE CASE OF B.A. BALA SUBRAMANIAN AND BROS. CO. VS CIT (1999) 236 ITR 977 (SC), THE HON'BLE SUPREME COURT TO UPHELD THE DECISION OF THE MADRAS HIGH COURT HOLDING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN IMPOSING PENALTY UDER SECTION 271(1)(C ) AS THE ASSESSEE HAD FAILED TO DISCHARGE HIS ONUS UNDER THE EXPLANATION. THE HON'BLE SUPREME COURT HAS IN THE CA SE OF K.P. MADHUSUDHANAN V CIT (2001) 251 ITR 99 (SC) HELD THAT THE EXPLANATION 1 TO SECTION 271(1)(C) IS A PART OF SECTION 271. WHEN THE ASSESSING OFFICER ISSUES A NOTICE UNDER SECTION 271, HE MAKES THE ASSESSEE AWAR E THAT PROVISIONS THEREOF HAS TO BE USED AGAINST HIM. THESE PROVISIONS INCLUDE EXPLANATION. THE ASSESSEE IS THEREBY PUT TO NOTICE THAT IF HE DOES NOT PROVE THA T HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO FRAMED OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME. IN THE INS TANT ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 6 CASE, THE ASSESSEE MERELY STATED THAT AFTER THE APP ELLANT DECISION, THE PROVISIONS OF SECTION ARE NO MORE APPLICABLE. ON THE OTHER HAND, THE ASSESSEE WAS REQUIRED TO EXPLAIN THAT THE REVISED COMPUTATION OF INCOME DISCLOSING THE INCOME OF RS. 18,10,900/- AS AGAINST THE RETURNED INCOME OF RS. 1,50,260/- WAS NO T DUE TO FRAUD OR NEGLECT. THE ASSESSEE HAS NOT DISCHARGED HIS DUTY IN HIS CONTEXT. IN VIEW OF THIS AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 IS HELD APPLICABLE TO THIS CASE. 3. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL, LD. CIT(A) DELETED THE PENALTY BY FOLLOWING OBSERVATIONS: I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND TH E SUBMISSIONS OF THE AR AND CONCUR WITH THE SUBMISSION S OF THE AR ON THE FOLLOWING GROUNDS: I) PARTITION OF THE HUF ANCESTRAL PROPERTY WHETHER TOTA L OR PARTIAL, RESULTS IN DISTRIBUTION OF THE FAMILY PROP ERTY AMONG ITS COPARCENERS WHO THUS FORM A SEPARATE FAMI LY UNIT. EACH COPARCENER GETS A PART OF THE FAMILY PRO PERTY ON ITS PARTITION AND RECEIVES THE SAME AS ANCESTRAL PROPERTY QUA HIS SONS. THUS A PARTITION CREATES A NUCLEUS OF FAMILY OF ANCESTRAL PROPERTY AND A NEW HUF OR A BRANCH IS CREATED THEREBY. II) THEREFORE, ON PARTITION OF THE HUF PROPERTY THE ANCE STRAL PROPERTY DEVOLVED ON SHRI PRAVEEN CHAND SANGHI A NE W HUF OR BRANCH WAS CREATED THEREBY QUA HIS SONS. IT I S PROBABLY BECAUSE OF THIS LAW THAT THE APPELLANT DECL ARED THE INCOME FROM THE TRANSACTIONS OF THIS PROPERTY I N HIS ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 7 HUF CAPACITY. HOWEVER, WHEN IT WAS DECIDED BY THE DEPARTMENT THAT THE INCOME FROM THE TRANSACTION OF THIS PROPERTY WAS REQUIRED TO BE TAXED IN HIS INDIVIDUAL CAPACITY IN ASSESSMENT YEAR 2004-05, HE PROMPTLY REVISED HIS RETURN FOR ASSESSMENT YEAR 2005-06 AND DECLARED THE INCOME FROM THE TRANSACTION OF THIS PROPERTY IN HIS INDIVIDUAL CAPACITY. III) MOREOVER, ON PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT WHILE COMPUTING THE INCOME OF THE ASSESSEE, THE AR HAS ACCEPTED THE INCOME SHOWN BY THE APPELLANT IN HI S REVISED RETURN. SINCE, THE AO HAS ACCEPTED THE REVI SED RETURN AS PER THE COMPUTATION OF INCOME IN THE ASSESSMENT ORDER, IT CANNOT BE SAID THAT THE ASSESS EE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IV) FURTHERMORE, IN THE CASE OF THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE AT ANY POINT OF TIME TRIED T O CONCEAL HIS INCOME. THIS APPEARS TO BE A CASE OF INTERPRETATION OF LAW REGARDING INHERITANCE OF PROPE RTY, IN CASE OF PARTITION OF HUF. IT IS NOT THE CASE OF THE AO THAT THE INCOME FROM THE TRANSACTION OF THIS PROPERTY WAS CONCEALED OR WAS NOT OFFERED FOR TAXATION AT ALL. THE ONLY DISPUTE IS WHETHER IT WAS REQUIRED TO BE TAXED IN THE HUF CAPACITY OR IN THE INDIVIDUAL CAPACITY. ACCORDING T O THE INTERPRETATION OF LAW BY THE APPELLANT THE INCOME WA S OFFERED FOR TAXATION IN HIS HUF CAPACITY WHILE THE DEPARTMENT TREATED THE INCOME IN HIS INDIVIDUAL CAP ACITY. THUS, AS PER RECORDS, THERE WAS NO ATTEMPT BY THE APPELLANT TO CONCEAL HIS INCOME FROM THE TRANSACTIO N OF PROPERTY. ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 8 THEREFORE, IN VIEW OF THE FACTS OF THE CASE OF THE AS SESSEE AND LAW APPLICABLE TO THESE FACTS, THE PENALTY OF RS. 4, 33,052/- IMPOSED U/S 271 (1) (C) IS DELETED. 4. AGGRIEVED REVENUE IS BEFORE US. 5. LD. DR VEHEMENTLY CONTENDS THAT THE PENALTY HAS BEEN DELETED BY LD. CIT(A) WITHOUT APPRECIATING THE FACTS OF THE CASE AND CLEAR PROVISIONS OF LAW. IT IS ADMITTED BY THE ASSES SEE THAT THE HUF WAS TOTALLY PARTITIONED ON 15/1-/87. AS PER SETTLED LAW, ONCE THE HUF PROPERTY IS TOTALLY PARTITIONED THE CO OWNERSHIP SHA RE BECOMES INDIVIDUAL PROPERTY OF THE PERSON WHO IS PARTY TO TH E PARTITION. THIS IS A BASIC AND FUNDAMENTAL TENANT OF HINDU LAW, THE ASS ESSEES PLEA THAT THERE WAS MISTAKE IN THIS BEHALF IS UNBELIEVABL E. BESIDES THE IGNORANCE OF LAW, WHOSE BENEFIT WAS SOUGHT TO BE ENJOY ED IS NO EXPLANATION AS IGNORANCE OF LAW IS NO EXCUSE. THE ASS ESSEE HAS BEEN WHEELING DEALING IN ALL SORTS OF COMMERCIAL AND PROP ERTY TRANSACTION. THE ATTEMPT OF TREATING INDIVIDUAL PROPERTY AS HUF P ROPERTY WAS DELIBERATED AS IT ENTAILED LESSER TAX IN THE HANDS OF NEW ENTITY IN THE FORM OF TAXABLE INCOME, LOWER SLABS AND OTHER BENEFI TS WHICH MAY BE KNOWN TO ASSESSEE. 5.1 THE IMPOSITION OF PENALTY IS FURTHER JUSTIFIED A ND ORDER OF LD. CIT(A) IS ASSAILED ON FOLLOWING POINTS: ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 9 I. ASSESSEE HAS NOT FILED ANY PAPER BOOK, CONSEQUENTLY HOW AND IN WHAT FACTS AND CIRCUMSTANCES, THE PENALTY FOR AY 2004-05 DID NOT CAME TO BE NOT LEVIED IS NOT ASCERT AINABLE. THUS THIS PLEA HAS NO EFFECTS ON THE PENALTY OF THIS YEAR WHICH IS A SEPARATE UNIT OF ASSESSMENT AND PRINCIPLE S OF RES JUDICATA DO NOT APPLY TO I T PROCEEDINGS. II. THE FINDINGS OF ; III. LD. CIT(A) GIVING BENEFIT OF DOUBT TO ASSESSEE REGAR DING HIS ASSUMPTIONS OF THERE BEING A MISTAKE HAVE NO LEGAL FORCE OR CORROBORATION. ASSESSEE HAS HIMSELF CLAIMED IT TO B E A TOTAL PARTITION WHICH IMPLIES THAT THERE WAS SUFFICIENT KNO WLEDGE ABOUT RELEVANT ASPECTS OF HINDU LAW. ONLY TO AVOID T AXES ASSESSEE IS FEIGNING IGNORANCE TO TAKE IT AS AN EXC USE. BESIDES IT IS SETTLED LAW THAT PENALTY ALSO IS A CIV IL LIABILITY AND THERE IS NO BURDEN ON THE DEPARTMENT TO PROVE ASSES SEES MEN REA. THE ACT OF CLAIMING THE INDIVIDUAL PROPERTY IS A DELIBERATE ATTEMPT TO AVOID THE TAXES BY MISLEADING THE DEPARTMENT BASED ON A RETURN OF INCOME OF HUF WHICH WAS BASED ON DELIBERATE FURNISHING OF INACCURATE PARTIC ULAR. WHEN CONFRONTED ASSESSEE CUT A SORRY FIGURE PRETENDING I T TO BE A MISTAKE. THUS ASSESSEE GAVE A PATENTLY UNRELIABLE EXPLANATION TO GET RID OF THE INEVITABLE CONSEQUENC ES OF PENALTY. THUS IMPUGNED EXERCISE OF FILING WRONG RETUR N OF HUF BY MAKING A BASELESS CLAIM WAS A GRAND DESIGN BY THE ASSESSEE TO AVOID TAXES. LD. CIT(A) INSTEAD OF APPRE CIATING THESE SERIOUS FACTS AND ISSUES REWARDED THE ASSESSEE WITH BENEFIT WHICH IRONICALLY MEANS IGNORANCE OF LAW CA N BE AN EXCUSE . THUS LD CIT(A) HAS DELETED THE PENALTY WITHO UT ANY JUSTIFICATION WHICH IS IN IGNORANCE OF RELEVANT FACT S AND CONTRARY TO VARIOUS JUDICIAL PRONOUNCEMENT. THE ORDE R OF LD. AO IMPOSING THE PENALTY IS RELIED ON. 6. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT HUF RETURN WAS FILED ONLY DUE TO BONAFIDE LEGAL MISTAKE WHICH HAS N OT BEEN FOUND FALSE BY LD. A.O. THE FACT THAT SAME LEGAL MISTAKE WA S IN A.Y. 2004- 05 WHICH CONTINUED IN AY 2005-06. THE LD. A.O. THOUGH INITIATED ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 10 PENALTY PROCEEDINGS U/S 271 (1) (C) ON SIMILAR FACT S IN A.Y. 2004-05 BUT NOT IMPOSED ANY PENALTY. IN THESE FACTS AND CIR CUMSTANCES OF THE CASE PENALTY IMPOSED ON ASSESSEE ON THE SAME FACTS IN THIS A.Y. 2005-06 IS UNSUSTAINABLE. ORDER OF LD. CIT(A) IS REL IED ON RELIANCE ON THE JUDGEMENT OF HONBLE SUPREME COURT IN CASE OF CIT VS. RELIANCE PETROPRODUCTS P. LTD. (2010) 322 ITR 158 WHEREIN IT IS HELD THAT A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO CONCEALMENT OR TO FURNISHING INACCURA TE PARTICULARS OF INCOME OF ASSESSEE. FURTHER RELIANCE FOR DELETION O F PENALTY IS PLACED ON: (I) PRICEWATER HOUSE COOPERS P. LTD. VS. CIT (2012) 348 I TR 306 (SC) (II) CIT VS. SKYLINE PRODUCTS P. LTD. (2004) 217 ITR 335 (MP) IT IS SUBMITTED THAT APPEAL ORDER PASSED BY LD. CI T (A) IS JUST, REASONABLE AND IN ACCORDANCE WITH LAW WHICH DESERVES T O BE CONFIRMED. 7. LD. DR IN REJOINDER CONTENDS THAT IT IS ONLY AF TER FINDING THAT INCOME HAS ESCAPED ASSESSMENT AND ISSUANCE OF 148 N OTICES BY AO THE ASSESSEE REALIZED THAT HIS BLUFF HAS BEEN CALLE D. AFTER REALIZING THE GRAVITY OF HIS ACTS AND OMISSION AGREED THAT THE WRO NGLY CLAIMED HUF ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 11 INCOME MAY BE INCLUDED IN INDIVIDUAL INCOME. THEREFO RE, THERE IS NO MERIT IN THE PLEA THAT MISTAKE WAS BONAFIDE. ADVERTING TO CASE LAWS LD. DR CONTENDS THAT RECENTL Y HONBLE DELHI HIGH COURT IN THE RECENT CASE OF NARESH KUMAR VERMA V. CIT 2014-TIOL-968-HC-DEL-IT HAS LAID DOWN THE PARAMETERS FOR APPLICATION OF THE RELIANCE PETROPRODUCTS PVT. LTD. JUDGMENT BY FOLLOWING OBSERVATIONS: 9. THIS COURT IS OF THE OPINION THAT THE ASSESSEE'S SUBMISSIONS BASED UPON THE READING OF THE PROVISIONS OF THE EXIM POLICY ARE OF NO ASSISTANCE. SO LONG AS THE TERMS OF THE STATUTE ARE CLEAR AND THEY DO NOT ALLUDE TO OR REFER TO ANY EXTERNAL DOCUMENT OR INSTRUMENT OR EVEN OTHER ENACTMENTS, THE ADMISSIBILITY OF BENEFITS IN THOSE EXTERNAL DOCUMENTS OR ENACTMENTS CANNOT AUTOMATICALLY BE USED AS AIDS OF CONSTRUCTION OR READ INTO THE PROVISIONS OF THE CONTROLLING ENACTMENT, WHIC H IN THE PRESENT CASE IS THE INCOME TAX ACT, 1961. IN OTHER WORDS, SANS THE REFERENCE TO THE EXIM POLICY OR A POINTED REFERENCE TO ADMISSIBILITY OF SUCH RELIEFS AS AR E GIVEN IN THAT POLICY, UNDER SECTION 10B, IT WOULD NOT BE OPEN TO THE ASSESSEE TO CLAIM THAT TRANSACTIONS, WHICH ARE NOT EXPORTS IN A STRICT SENSE OF THE TERM AND IN WHICH THE ASSESSEE DOES NOT RECEIVE FOREIGN EXCHANGE REMITTANCE, BE TREATED AS SUCH. THE PLAIN TEXT OF SECTION 10B PARTICULARLY SECTION 10 B (3) EXCLUDE THE POSSIBILITY OF A REASONABLE ARGUMENT IN THIS REGARD. THE REVENUE IS RIGHT WHEN IT CONTENDS THAT THERE IS SOME RELIEF TO THE ASSESSEE, TO THE EXTENT THAT CONVERTIBLE FOREIGN EXCHANGE MAY BE RECEIVED OR BROUGHT INTO INDIA BY THE ASSESSEE. HOWEVER, THAT ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 12 BENEFIT HAS NOT BEEN CLAIMED, THE EXISTENCE OF SUCH LIMITED RELIEF IN ANOTHER PART OF THE STATUTE IN FACT EXCLUDES THE POSSIBILITY OF BEING READ INTO IN SECTION 10B HAVING REGARD TO THE LATTER'S STRUCTURE. 10. EXPLANATION TO SECTION 271 (1) (C) UNDERLINES T HAT WHERE INACCURATE PARTICULARS ARE FURNISHED BY THE ASSESSEE OR SOMETHING WHICH IS PLAINLY INADMISSIBLE, IS CLAIMED, PENALTY PROCEEDINGS ARE WARRANTED. IN CIT V. RELIANCE PETROPRODUCTS PVT. LTD., (2010) 322 ITR 158 (SC) = 2010-TIOL-21-SC-IT , THE COURT AFTER REVIEWING THE PREVIOUS LAW WAS OF THE OPINION THAT THE EXPRESSION 'PARTICULARS' WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. AFTER ELABORATE EXAMINATION OF THE PREVIOUS PRECEDENTS, THE COURT HEL D AS FOLLOWS: - WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. 11. IN THE CIRCUMSTANCES OF THE CASE, THERE CAN BE NO SHADOW OF DOUBT THAT THE CLAIM TO SECTION 10B BENEFIT WAS INACCURATE IN A SENSE AS WAS UNDERSTOOD IN RELIANCE PETROPRODUCTS MATTER (SUPRA). IT WAS PLAINLY ERRONEOUS, AND NEITHER IN ACCORD WITH THE STATUTE NOR BASED ON THE TRUTH. IN THESE CIRCUMSTANCES, THE LEVY OF PENALTY WAS JUSTIFIED. 7.1 THUS HONBLE DELHI HIGH COURT HAS HELD THAT WHEN T HE PROVISIONS OF LAW ARE VERY CLEAR IT CANNOT BE ELUDED BY MERELY CALLING A MISTAKE. WHERE INACCURATE PARTICULARS ARE FURNISHED BY THE ASSESSEE OR SOMETHING WHICH IS PLAINLY INADMISSIBLE, IS CLAI MED, ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 13 PENALTY PROCEEDINGS ARE WARRANTED. THE DETAILS SUPPLIED BY ASSESSEE IN THE RETURN OF HUF WERE NOT ACCURATE, NOT EXACT OR CO RRECT, NOT ACCORDING TO TRUTH AND WERE SIMPLY ERRONEOUS. THEREFORE THE EXPLANATIONS TO SEC. 271(1)(C) ARE FULLY APPLICABLE. LO OKING AT THESE PECULIAR FACTS AND CIRCUMSTANCES, THE ASSESSEES CASE IS A FIT CASE FOR IMPOSITION OF PENALTY. 8. WE HAVE HEARD THAT RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. FACTS AND CIRCUMSTANCES HAVE BEE N DETAILED ABOVE. AS PER SETTLED CANONS OF HINDU LAW, HUF HAVING BEE N COMPLETELY PARTITIONED THE SHARE OF PROPERTY BECAME IN DIVIDUAL PROPERTY OF THE ASSESSEE BY OPERATION OF LAW. TAX ADVAN TAGES DERIVED BY THE ASSESSEE HAVE NOT BEEN DENIED. THE ONLY EXPLANAT ION OFERRED IS TO THE EFFECT THAT IT WAS A MISTAKE ABOUT PROVISION S OF LAW. IT IS AXIOMATIC THAT IGNORANCE OF LAW IS NO EXCUSE. BESIDES AS SESSEE HAS FAILED TO DEMONSTRATE THAT IT WAS A CONVINCIBLE MISTAK E. LOOKING AT THE FACTS IT APPEARS TO BE AN ATTEMPT TO AVOID TAX. TH E RISK TAKERS HAVE TO FACE THE CONSEQUENCES WHEN THERE ACT IS CAUGHT. 8.1 WE ARE NOT CONVINCED THAT LD. CIT(A) HAS CITED COGEN T AND CONVINCIBLE REASONS TO JUSTIFY THE DELETION OF PENALTY IMPOSED BY LD. AO AFTER DETAILED OBSERVATION. THE CASE LAW OF RELIAN CE PETRO PRODUCT ALSO DOES NOT HELP THE CAUSE OF THE ASSESSEE IN THESE PECULIA R FACTS OF ITA 70/JP/2013_ ITO VS PRAVEEN CHAND SANGHI 14 THE CASE WHICH ARE DISTINGUISHABLE FROM THE RELIANCE PETR O JUDGMENT. HONBLE DELHI HIGH COURT IN NARESH KUMAR VERMAS CASE (SUP RA) HAS THROWN SUFFICIENT LIGHT AS TO WHAT TYPE OF CLAIMS THOUG H MADE IN THE RETURN, THEIR DISALLOWANCE ATTRACT PENALTY U/S 271(1)(C ). IN OUR CONSIDERED VIEW FOLLOWING THE GUIDING LIGHT OF THIS CASE THE ASSESSEES POTENTIAL WRONG CLAIM DRIVEN BY A DESIRE OF AVOIDING TAXES DESERVES IMPOSITION OF PENALTY U/S 271(1)(C), WHICH IS CONFIRMED. THE ORDER OF LD. CIT(A) IS REVERSED AND THAT OF LD. AO UPHELD. 9. IN THE RESULT REVENUE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2015. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH NOVEMBER, 2015 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD 3(4), JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- SHRI PRAVEEN CHAND SANGHI, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 70/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR