Kartik Mehara, Kolkata V. D.C.I.T CC - XVII,kolkata, Kolkata

ITA 931/KOL/2013

• Counselvise Citation: 93123514 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBASH AGARWAL
• Keywords: Search and seizure
• Section: 132

Judgement Text

I.T.A. NO . 9 31 / KOL ./20 1 3 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SM C BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER I.T.A. NO. 931 / KOL / 20 1 3 ASSESSMENT YEAR : 200 7 - 20 0 8 KARTIK MEHRA,.................................... .... ................ ....... ... .. .APP ELL ANT 69, GIRISH PARK (NORTH), KOLKATA - 700 006 [PAN : A IDPM 7054 M ] - VS. - DEPUTY COMMISSIONER OF INCOME TAX, ... ... . ............... RESPONDENT CENTRAL CIRCLE - XVII, KOLKATA, 110, SHANTI PALLI, KOLKATA - 700 107 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE , FOR THE ASSESSEE S MT. MADHUMALATI GHOSH, J CIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 03 , 2 01 5 DATE OF PRONOUNCING THE ORDER : JUNE 04 , 201 5 O R D E R THIS A PPEAL HA S BEEN FILED BY THE ASSESSE E AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS) , CENTRAL - I I , KOLKATA D ATED 2 5 . 0 2 .20 1 3 FOR THE ASSESSMENT YEAR 200 7 - 0 8 FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). 2. BRIEF FACTS RELATING TO THIS CASE ARE THAT THE SEARCH AND SEIZURE OPERATION UNDER SECTION 13 2 OF THE ACT HAD TAKEN PLACED IN KAUSHALYA GROUP OF CASES ON 26.03.2009 AT VARIOUS BUSINESS PREMISES AND THE RESIDENTIAL PREMISES OF THE DIRECTORS AND ASSOCIATES. THE GROUP MADE TOTAL DISCLOSURE OF RS.6 CRORES IN THE HANDS OF VARIOUS ASSESSES OF THE GROU P. IN THE CASE OF INSTANT ASSESSEE, DISCLOSURE OF ADDITIONAL INCOME OF RS.7,96,291/ - WAS MADE FOR THE ASSESSMENT YEARS 2004 - 05 TO 2007 - 08. I.T.A. NO . 9 31 / KOL ./20 1 3 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 2 OF 6 FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSURE OF RS.2,25,659/ - WAS MADE. THE ASSESSEE FILED HIS RETURN OF INCOME DECLAR ING TOTAL INCOME OF RS.4,31,767/ - WHICH INCLUDES THE ADDITIONAL INCOME OF RS.2,25,659/ - . THE ORIGINAL RETURN OF INCOME WAS FILED ON 31.01.2008 , WHEREIN THE ADDITIONAL INCOME WAS NOT DECLARED. THE ASSESSMENT WAS COMPLETED ON 31.12.2010 AT THE ASSESSED INCOM E OF RS.4,32,330/ - . THE ASSESSING O FFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY THE PENALTY WAS IMPOSED ON THE ASSESSEE AMOUNTING TO RS.64,747/ - . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS) AND CIT(APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE. 3 . I HAVE HEARD THE RIVAL CONTENTION OF BOTH PARTIES AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE AUTHORITIES BELOW. I NOTED THAT THE ASSESSING OFFICER CONFIRMED THE IMPOSITION OF PENALTY BY OBSERVI NG AS UNDER: - ON THE BASIS OF THE DETAILED DISCUSSION ABOVE, I AM OF THE OPINION THAT THE ASSESSEE DESERVES NO LENIENCY SO FAR AS THIS PROCEEDINGS UNDER SECTION 271(1)(C) IS CONCERNED. HIS REPLY IS NOT AT ALL SATISFACTORY AND HENCE REJECTED. THE QUANTUM OF TAX SOUGHT TO BE EVADED IS CALCULATED AT RS.64,747/ - , WHICH IS THE DIFFERENCE BETWEEN QUANTUM OF TAX DETERMINED IN THE ORDER UNDER SECTION 153C/143(3) ON 31.12.2010 AND THE TAX LIABILITY SHOWN BY THE ASSESSEE IN HIS ORIGINAL RETURN FOR THIS YEAR SUBMITT ED ON 31.02.2008 (RS.81,293 RS.16,546). HOWEVER, KEEPING IN MIND THAT ON THE DATE OF SEARCH ITSELF THE ASSESSEE HAD MADE A PROPER DISCLOSURE. I HEREBY DECIDE TO RESTRICT THE QUANTUM OF PENALTY TO 100% OF TAX SOUGHT TO BE EVADED WHICH COMES TO RS.64,747/ - . ACCORDINGLY, I HEREBY DIRECT THE ASSESSEE TO PAY A SUM OF RS.64,747/ - AS PENALTY UNDER SECTION 271(1)(C). THIS ORDER IS PASSED WITH PRIOR APPROVAL DATED 30.06.2011 OF ADDL. CIT, RANGE - IV (CENTRAL), KOLKATA U/S. 274(2) OF THE I.T. ACT . 4. SECTION 271 (1)(C) READS AS UNDER: - 271 (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON I.T.A. NO . 9 31 / KOL ./20 1 3 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 3 OF 6 (A) .. (B) .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH 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 SHA LL, FOR THE PURPOSES OF CLAUSE OF THIS SUB - SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 5. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT PENALTY U/S 271 (1)(C) IS LEVIABLE IF THE A SSESS ING O FFICER 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 PROC EEDINGS ARE DIFFERENT. THE PENALTY PROCEEDINGS CAN BE INITIATED 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 C HARGE OF CONCEALMENT, THEN PENALTY CANNOT BE LEVIED ON THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND VICE VERSA. THUS, THERE MUST BE A CLEAR FINDING ABOUT THE CHARGE FOR WHICH PENALTY IS IMPOSED OR INITIATED. IT IS INCUMBENT UPON THE A SS ESSING O FFICER 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 BEE N FURNISHED BY THE ASSESSEE. HELD, THAT THE PENALTY ORDER AND THE ORDER 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 I.T.A. NO . 9 31 / KOL ./20 1 3 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 4 OF 6 WORKS 13 2 ITR 306 (GUJ) WAS APPLICABLE AND THE ORDER OF PENALTY COULD NOT BE UPHELD BY THE TRIBUNAL. THE ORDER WAS INVALID. 6. 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 T HE INCOME TAX 1961 WOULD REQUIRE PROPER APPLICATION OF MIND AND RECORDING OF AT LEAST A BARE MINIMUM OPINION ON THE PART OF A SSESSING O FFICER THAT A CASE FOR INITIATION OF PENALTY PROCEEDING WAS MADE AS THERE WAS CONCEALMENT OF INCOME OR THAT INCORRECT PAR TICULARS HAD BEEN FURNISHED BY THE ASSESSEE WITH THE INTENTION TO AVOID PAYMENT OF TAXES. A SSESSING O FFICER HAS NOT MADE OUT ANY CHARGE EITHER OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 7. THE PENALTY U/S 271(1) (C) CAN BE LEVIED FOR EITHER OF THE CHARGE. THE PENALTY ORDER SIMPLY STATES I AM SATISFIED THAT THIS IS A FIT CASE WHERE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT ARE CLEARLY ATTRACT. 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 PARTICULARS OF INCOME. IT IS THE PARTICULARS OF INCOME WHICH IS THE COMMON SUBJECT MATTER OF BOTH THE CHARGES. THE WO RD CONCEAL AS PER WEBSTER S DICTIONARY MEANS TO HIDE, WITHDRAW, OR REMOVE FROM OBSERVATION; COVER OR KEEP FROM SIGHT; TO KEEP SECRET; TO AVOID DISCLOSING OR DIVULGING. THAT MEANS NON DISCLOSURE OF PARTICULARS OF INCOME. ON THE OTHER HAND, WHERE PARTICUL ARS ARE DISCLOSED BUT SUCH DISCLOSURE IS NOT CORRECT, TRUE OR ACCURATE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. FOR EXAMPLE, IN CASE OF BUSINESSMAN, IF A PARTICULAR TRANSACTION OF SALE IS NOT SHOWN IN THE BOOKS, IT WOULD AMOUNT T O CONCEALMENT OF PARTICULARS OF INCOME WHILE SALE IS SHOWN BUT AT A LESSER VALUE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 8. IN MY 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 CONSEQUENTLY 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 A SSESSING O FFICER HAS I.T.A. NO . 9 31 / KOL ./20 1 3 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 5 OF 6 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 DIVIDEND INCOME OR INCOME FROM ANY SOURCE. SUCH INSTANCES WOULD FALL UNDER THE MAIN PROVISIONS ITSEL F. IN SUCH CASES, THE BURDEN IS ON THE A SSESSING O FFICER TO ESTABLISH THE EXISTENCE OF THE CHARGE ON THE BASIS OF MATERIAL ON RECORD. 9. EXPLANATION 1 TO SECTION 271(1) (C) STATES THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE AS SESSEE 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 PRES UMPTION 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 INCOME. THE FIRST SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACT MATERIAL TO T HE COMPUTATION OF HIS TOTAL INCOME FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUND BY THE A SSESSING O FFICER OR THE COMMISSIONER TO BE FALSE. THE SECOND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATI ON 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 RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE 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). 10. IN THIS CASE, THE A SSESSING OFFICER HAS NOT BROUGHT OUT ANY SPECIFIC CHARGE FOR WHICH THE PEN ALTY 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 PARTICULARS OF INCOME. 11. THE A SSESSING OFFICER 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 I.T.A. NO . 9 31 / KOL ./20 1 3 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 6 OF 6 A SSESSING O FFICER HAS TO BE SATISFIED TH AT A PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THUS THE SATISFACTION OF THE A SSESSING O FFICER ABOUT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IS ESSENTIAL BEFORE LEVYING ANY PENALTY U/S 271(1) (C). THE A SSESSING O FFICER 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 THE ASSES SEE. ON THIS BASIS ITSELF THE PENALTY DELETED. 12 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE S TANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JUNE , 201 5 . SD/ - P.K. BANSAL ( ACCOUNTANT MEMBER) KOLKATA, THE 04 TH D AY OF JUNE , 201 5 COPIES TO : (1) KARTIK MEHRA, 69, GIRISH PARK (NORTH), KOLKATA - 700 006 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - XVII, KOLKATA, 110, SHANTI PALLI, KOLKATA - 700 107 (3) COMMISSIONER OF IN COME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .