Ms. Devinder Kaur, Mohali V. ACIT, Mohali

ITA 902/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86112 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 27-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital asset; Bonafide belief; Revised return
• Section: 133A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 902/CHD/2014 ASSESSMENT YEAR: 2010-11 MS. DEVINDER KAUR, VS THE ACIT LEGAL HEIR OF CIRCLE 6(1), LATE SHRI PIARA SINGH BAJWA, MOH ALI. # 123, PHASE 5, MOHALI. PAN: ABJPB2863J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SI NGH RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 31.12.2014 DATE OF PRONOUNCEMENT : 12.01.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) CHANDIGARH DATED 13.08.2014 FOR ASSESS MENT YEAR 2010-11, CHALLENGING THE LEVY OF PENALTY UNDER SECT ION 271(1)(C) OF THE INCOME TAX ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/ S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF M /S ORBIT APARTMENT WEST (P) LTD ON 1 ST & 2 ND DECEMBER, 2011. THE APPELLANT IS A DIRECTOR IN THIS COMPANY. DURING THE COURSE OF SURVEY, CERTAIN INCRIMINATING DOCUMENTS, SHOWING TH E ACTUAL SALE CONSIDERATION FOR TRANSFER OF LAND BY THE APPE LLANT WERE FOUND AND WHEN CONFRONTED WITH THESE DOCUMENTS, THE APPELLANT 2 AGREED TO PAY TAX ON CAPITAL GAINS AS PER THE SALE CONSIDERATION SHOWN IN THE AGREEMENT WITH THE COMPANY. 3. IN THE ORIGINAL RETURN OF INCOME, LONG TERM CAPITAL GAIN WAS DECLARED AT RS. 4,76,42,000/-. AFTER THE AFORESAID SURVEY, THE APPELLANT FILED A REVISED RETURN OF INCOME ON 07.02 .2011 AND AN AMOUNT OF RS. 5,41,42,000/- WAS SHOWN IN THIS RETUR N BY WAY OF CAPITAL GAIN. THE INCOME RETURNED IN THE REVISED RE TURN WAS ACCEPTED BY THE ASSESSING OFFICER AND PENALTY PROCE EDINGS U/S 271(L)(C) OF THE ACT WERE INITIATED. THE APPELLANT FILED A REPLY IN THE PENALTY PROCEEDINGS, BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE APPELLANT ON THE GROUND THAT THE ADDITIONAL INCOME DISCLOSED OF RS. 65,00,0 00/- WAS AS A RESULT OF SURVEY ACTION. THE ASSESSING OFFICER IMPO SED MINIMUM LEVIABLE PENALTY OF RS. 20,08,500/- ON THE ADDITION AL INCOME DISCLOSED BY THE APPELLANT. 4. THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFO RE LD. CIT(APPEALS) AND FILED WRITTEN SUBMISSIONS WHICH WA S CONSIDERED ON MERITS AND THE LD. CIT(APPEALS), AFTE R CONSIDERING THE FACTS AND MATERIAL ON RECORD, CONFIRMED THE LEV Y OF PENALTY. HIS FINDINGS IN PARA 5 TO 6 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : I HAVE CONSIDERED THE FACTS OF THE CASE. AS PER TH E PROVISIONS OF SECTION 271(L)(C), PENALTY CAN BE LEV IED, IF THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FO R THE SAKE OF READY REFERENCE, EXPLANATION-1 BELOW SECTIO N 271(1) IS REPRODUCED BELOW: 'EXPLANATION 1.-WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- 3 (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) O R THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SU CH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED.' 5.1 THUS, WHEN THE ASSESSEE HAS CONCEALED PARTICUL ARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS, CONDITIONS LAID DOWN IN EXPLANATION-1 (SUPRA) HAVE TO BE EXAMINED. IN THE INSTANT CASE, THE APPELLANT HAD DECLARED LONG TERM CAPITAL GAIN OF RS. 4,76,42,000/ - IN THE ORIGINAL RETURN OF INCOME. SURVEY U/S 133A OF T HE ACT WAS CARRIED OUT ON 1 ST & 2 ND DECEMBER, 2011 AT THE BUSINESS PREMISES OF M/S ORBIT APARTMENT WEST (P) L TD, IN WHICH THE APPELLANT WAS A DIRECTOR. DURING THE C OURSE OF SURVEY, THE APPELLANT HAD SURRENDERED RS. 65,00,000/-. THE APPELLANT HAD SURRENDERED RS. 65,00,000/- ON ACCOUNT OF CAPITAL GAIN AND AGREED T O PAY TAX BECAUSE OF SURVEY OPERATION AFTER WHICH THE CAS E WAS SELECTED FOR SCRUTINY, MEANING THEREBY THAT IF THER E WAS NO SURVEY, THE APPELLANT WOULD HAVE CONCEALED INCOM E OF RS. 65,00,000/-. THE CASE OF THE APPELLANT IS SQUAR ELY COVERED BY THE JUDGEMENT OF HON'BLE DELHI HIGH COUR T IN THE CASE OF M/S ZOOM COMMUNICATION (P) LTD. (327 IT R 510), IN WHICH IT WAS HELD: 'IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA_ FIDE. IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA- FIDE, EXPLANATION 1 TO SECTION 271 (1) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALS O WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FAMISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONAFIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY-UNDER SECTION 271(L)(C) OF THE ACT. IF WE TAKE THE VIEW 4 THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BONA FIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS ASSESSEES TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF-ASSESSMENT UNDER SECTION 143(1) OF THE ACT AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALA FIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE. 5.2 FROM THE FACTS OF THE CASE AS DISCUSSED HEREIN ABOVE, IT IS EVIDENT THAT THE APPELLANT HAD SHOWN INCORREC T INCOME IN THE ORIGINAL RETURN WITH CLEAR AND DELIBE RATE INTENTION TO EVADE TAX. IN FACT, THE APPELLANT HAD TAKEN A CALCULATED RISK, BUT WAS CAUGHT ON THE WRONG FOOT BECAUSE OF THE SURVEY OPERATION IN THE CASE OF THE COMPANY, IN WHICH THE APPELLATE WAS A DIRECTOR. THE LD. COUNSEL HAS ALSO ARGUED THAT CERTAIN ADDITIONAL INC OME WAS DECLARED IN THE PRECEDING YEAR I.E. A.Y. 2009-1 0 ALSO, BUT PENALTY PROCEEDINGS FOR CONCEALMENT WERE NOT INITIATED. THIS ARGUMENT OF THE LD. COUNSEL IS NOT ACCEPTABLE. EACH ASSESSMENT IS A SEPARATE PROCEEDIN G AND THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS. MOREOVER, IF AN ASSESSING OFFICER DECIDED NOT TO INITIATE PENALTY PROCEEDINGS U/S 271(L)(C) IN A PARTICULAR YEAR ON AN ISSUE, IT DOES NOT MEAN THAT THE ASSESSEE GETS IMMUNITY FROM SUCH PROCEEDINGS IN SUBSEQUENT YEARS. BE AS IT MAY, THE PENALTY FOR CONCEALMENT LEVIED IN THIS YEAR IS CONF IRMED. GROUNDS OF APPEAL TAKEN BY THE APPELLANT ARE DISMIS S. 6. IN THE RESULT, THE APPEAL IS DISMISSED. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT AS SESSEE PAID TAX ON THE RETURNED INCOME AS PER REVISED RETURN ON CAPITAL GAINS. THE ASSESSEE WAS HAVING A BONAFIDE BELIEF T HAT WHENEVER THE BALANCE AMOUNT WAS TO BE RECEIVED, WOULD BE SHO WN AS 5 CAPITAL GAINS AND AS SUCH IT WAS A DEBATABLE ISSUE AND LEVY OF THE PENALTY IS NOT JUSTIFIED. 6. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND REFERRED TO THE SURRENDER LET TER FILED ON BEHALF OF THE ASSESSEE AS NOTED IN THE PENALTY ORDE R AND SUBMITTED THAT THE SAME WOULD DISBELIEVE THE CLAIM OF THE ASSESSEE. THE LD. DR ALSO SUBMITTED THAT THERE IS NO VOLUNTARY SURRENDER CONCEPT APPLICABLE IN VIEW OF THE DECISIO N OF THE HON'BLE SUPREME COURT IN THE CASE OF MAC DATA 358 I TR 593. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE THAT THE ASSESSEE FILED ORIGINAL RETURN OF INCOME O N 23.07.2010 DECLARING LESS CAPITAL GAINS. IT IS ALSO NOT IN DI SPUTE THAT SUBSEQUENTLY, SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF M/S ORBIT APARTMENT WE ST PVT. LTD. ON 1 ST & 2 ND NOVEMBER, 2011 I.E. AFTER FILING OF THE ORIGINAL RETURN OF INCOME. THE ASSESSEE IS DIRECTOR IN THIS COMPANY. DURING THE COURSE OF SURVEY, CERTAIN INCRIMINATING DOCUMENTS SHOWING THE ACTUAL SALE CONSIDERATION FOR TRANSFER OF LAND BY ASSESSEE WERE FOUND AND WHEN CONFRONTED WITH THESE DOCUMENTS, ASSESSEE AGREED TO PAY TAX ON CAPITAL GAINS AS PER THE SALE CONSIDERATION SHOWN IN THE AGREEMENT WITH THE COMPA NY. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE, LATER ON FIL ED REVISED RETURN ON 07.02.2011 DECLARING HIGHER CAPITAL GAINS IN THE REVISED RETURN ON WHICH TAX WAS ALSO PAID. THE ASSE SSING OFFICER HAS REPRODUCED THE RELEVANT EXTRACT OF THE SURRENDE R LETTER FILED ON BEHALF OF THE ASSESSEE IN THE PENALTY ORDER IN W HICH THE ASSESSEE HAS CLEARLY ADMITTED CERTAIN DISCREPANCIES POINTED OUT 6 IN THE BOOKS BY THE SURVEY PARTY AND ASSESSEE AGREE D THAT HE HAS PAID LESS TAX ON CAPITAL GAINS AS PER THE BOOKS OF THE COMPANY. THE ASSESSEE, THEREFORE, AGREED TO PAY TH E PROPER TAX ON THE CAPITAL GAINS EARNED BY HIM. IT WOULD, THER EFORE, CLEARLY REVEAL THAT DESPITE THE ASSESSEE WAS HAVING DOCUMEN TS IN HIS POWER AND POSSESSION BUT DECLARED LESSER INCOME ON ACCOUNT OF CAPITAL GAINS IN THE ORIGINAL RETURN OF INCOME AND IT WAS ONLY WHEN SURVEY WAS CONDUCTED AND CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AGAINST THE ASSESSEE, ASSESSEE AGREED TO SHOW PROPER INCOME ON ACCOUNT OF CAPITAL GAINS AND LATER ON, FILED THE REVISED RETURN SHOWING THE PROPER CAPITAL GAINS IN THE REVISED RETURN. IT IS, THEREFORE, CLEAR THAT ASSES SEE HAS CONCEALED HIS PARTICULARS OF INCOME UNDER THE HEAD CAPITAL GAINS IN THE ORIGINAL RETURN OF INCOME. THE HON'B LE BOMBAY HIGH COURT IN THE CASE OF JYOTI LAXMAN KONKAR VS CI T 292 ITR 163 HELD AS UNDER : THE ASSESSEE HAD FILED A RETURN FOR THE ASSESSMENT YEAR 1999-2000 DECLARING AN INCOME OF RS. 7,40,510. NOT SATISFIED THE REWITH, THE ASSESSING OFFICER CARRIED OUT A SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT, 1961, AND DURING THE SURVEY FOUND THA T THERE WAS A DISCREPANCY IN STOCK TO THE TUNE OF RS. 18,28,706/- WHICH WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, AND THE ASSE SSEE FILED A REVISED RETURN DISCLOSING ADDITIONAL INCOME OF RS. 18,28,706. THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271( L)(C) AND THIS WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COU RT: HELD, DISMISSING THE APPEAL, THAT THE QUESTION WHETH ER THERE IS CONCEALMENT OF INCOME OR NOT HAS TO BE DECIDED WIT H REFERENCE TO THE FACTS OF A GIVEN CASE AND THE FACT FINDING AUTHORIT IES UNDER THE ACT HAVING COME TO THE CONCLUSION THAT IN THE FACTS OF THE CASE, THE ASSESSEE HAD CONCEALED THE INCOME INITIALLY WITH A VIEW TO AVOID THE PAYMENT OF TAX, THE IMPOSITION OF PENALTY WAS VALID. 8. THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF LMP PRECISION ENGG. CO. LTD. VS DCIT (ASSESSMENT) 330 ITR 93 CONF IRMED THE 7 PENALTY FOR FILING REVISED RETURN AFTER SURVEY OPER ATION WOULD SHOW CONCEALMENT OF INCOME. IT WAS HELD AS UNDER : HELD, THAT IT WAS ONLY AFTER THE STATEMENT OF THE CHAIRMAN AND MANAGING DIRECTOR WAS RECORDED BY THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION), MUMB AI, THAT THE FIRST DISCLOSURE DATED OCTOBER 20,1988, RS . 54,71,463 WAS MADE ACCOMPANIED BY ANOTHER DISCLOSUR E OF RS. 54 LAKHS IN A ROUND FIGURE BEING DIVIDED INT O THREE SEGMENTS OF RS. 18 LAKHS EACH FOR ASSESSMENT YEARS 1986-87, 1987-88 AND 1988-89. THE REVISED RETURN DECLARING A SUM OF RS. 78,56,613 CAME ABOUT AS A CONSEQUENCE OF FOLLOW-UP PROCEEDINGS UNDERTAKEN BY THE DEPUTY DIRECTOR OF INCOME-TAX IN RELATION TO THE OT HER THREE SUPPLIERS, VIZ., SC, NB AND NPST. THEREFORE, THE ASSESSEE COULD NOT BE STATED TO HAVE VOLUNTARILY CO ME FORWARD TO DISCLOSE INCOME WHICH HAD UNINTENTIONALL Y BEEN OMITTED FROM THE ORIGINAL RETURN OF INCOME. T HE IMPOSITION OF PENALTY WAS VALID. 9. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ABOVE DECISIONS, IT IS CLEAR THAT WHATEVER ARGUMENTS HAVE BEEN RAISED BY LD. COUNSEL FOR THE ASSESSEE, ARE IRRELEVANT TO THE MATTER IN ISSUE BECAUSE NO DEBATE IS PERMISSIBLE AND EVEN THE ASSESSEE HAS NOT MADE OUT ANY DEBATABLE ISSUE WHILE MAKING A SURRENDER AT THE TIME OF SURVEY. IT IS A CLEAR CASE OF CONCE ALMENT OF INCOME, THEREFORE, THE CLAIM OF ASSESSEE COULD NOT BE SAID TO BE BONAFIDE. MERELY BECAUSE ASSESSEE HAS PAID TAXES O N THE CORRECT CAPITAL GAINS DECLARED IN THE REVISED RETURN WOULD NOT ABSOLVE THE ASSESSEE FROM LEVY OF THE PENALTY. THE CONCEPT OF VOLUNTARY SURRENDER IS NO MORE APPLICABLE AS IS HELD BY HON'B LE SUPREME COURT IN THE CASE OF MAC DATA (SUPRA). THE LD. CIT (APPEALS) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT EXPLANATION-I TO SECTION 271(1)(C) OF THE ACT IS CLEARLY ATTRACTED IN THE CA SE OF THE ASSESSEE. 10. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCU MSTANCES , IT IS CLEAR THAT DURING THE COURSE OF SURVEY, THE INCR IMINATING 8 DOCUMENTS WERE FOUND TO SHOW THAT ASSESSEE HAS CONC EALED THE PARTICULARS OF INCOME ON ACCOUNT OF CAPITAL GAINS, THEREFORE, AUTHORITIES BELOW WERE JUSTIFIED IN LEVY OF THE PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT. WE DO NOT FIND ANY M ERIT IN THE APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY DI SMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH JANUARY,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH