DCIT, New Delhi V. M/s. A.T. Invofin India Pvt. Ltd., New Delhi

ITSSA 12/DEL/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0544 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-01-2015
• Assessment Year: misc
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MISRA
• Assessee Lawyers: ROHIT JAIN
• Keywords: Search and seizure; Question of law; Difference of opinion; Block assessment; Onus to prove; Documents seized
• Section: 260A

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI N.K. SAINI , ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K. , JUDICIAL MEMBER IT (SS) NO . 12 / DEL / 20 13 BLOCK PERIOD 01.04.1989 TO 13.01.2000 DCIT, CENTRAL CIRCLE - 2, NEW DELHI VS. M/S. A.T. INVOFIN INDIA P. LTD., A - 60, NARAINA INDUSTRIAL AREA - I, NEW DELHI - 110028 . (PAN AAACA 4248 B ) (APPELLANT ) (RESPONDENT) APPELLANT BY : SMT. A. MISRA, CIT. D.R. RESPONDENT BY: SHRI ROHIT JAIN, ADVOCATE AND MS. DEEPASHREE RAO, CA ORDER PER SHRI GEORGE GEORGE K. , J M : 1. THIS APPEAL, AT THE INSTANCE OF THE DEPARTMENT , IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 01 .0 2 .2013 , PERTAINING TO BLOCK PERIOD 01.04.1989 TO 13.01.2000 . 2. THE SO LITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE CIT(A) IS JUSTIFIED IN CANCELLING THE LEVY OF PENALTY IMPOSED U/S 158 BFA(2) OF THE I.T. ACT, AMOUNTING TO RS.5,72,226/ - . IT (SS) NO 12 /DEL /20 13 2 3. BRIEF LY STATED THE FACTS OF THE CASE ARE AS FOLLOWS. THERE WAS A SEARCH OPERATION U/S 132 OF THE ACT , IN SHYAM TELECOM GROUP OF CASES ON 13.01.2000. DURING THE COURSE OF SEARCH, DOCUMENTS PERTAINING TO ASSESSEE FOR THE A.Y. 1999 - 2000 WERE SEIZED. ACCORDINGLY, THE PROCEEDING U/S 1 58 BC R.W.S. 158BD WAS INITIATED AGAINST THE ASSESSEE. FROM THE DOCUMENTS SEIZED, IT WAS NOTICED THAT THE ASSESSEE HAD EARNED A LONG TERM CAPITAL GAINS OF RS.18,94,080/ - . THE SAID CAPITAL GAIN WAS DECLARED IN THE RETURN OF INCOME FILED FOR A.Y. 1999 - 2000 ( RETURN WAS FILED ON 31.03.2000) . SINCE THE RETURN OF INCOME WAS FILED AFTER THE DUE DATE MANDATED U/S 139(1) OF THE ACT , T HE CAPITAL GAINS DECLARED WAS ASSESSED AS UNDISCLOSED INCOME IN VIEW OF THE PROVISIONS OF SECTION 158BB (1)(C) OF THE ACT. THE ASSES SEE FILED APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO HIDE THE SAID INCOME AND IT WAS ONLY THE TECHNICAL DE FAULT THAT THE RETURN OF INCOME WAS FILED BELATEDLY U/S 139(4) OF THE ACT . THE ASSESSEE RELIED ON THE TRIBUNAL S ORDER IN THE CASE OF VIDYA MADAN LAL MALANI VS. ACIT REPORTED IN 115 ITD 316. THE CIT(A), HOWEVER, DID ACCEDE TO THE CONTENTION OF THE ASSESSEE AND TREATED THE LONG TERM CAPITAL GAIN AS THE UNDISCLOSED INCOME . ON FURTHER APPEAL, THE TRI BUNAL VIDE ORDER DATED 03.08.2007 HELD THAT THE CAPITAL GAIN WAS NOT AN UNDISCLOSED INCOME OF THE ASSESSEE. THE REVENUE FILED AN APPEAL U/S 26 0A OF THE ACT AND THE IT (SS) NO 12 /DEL /20 13 3 HON BLE HIGH COURT BY THE JUDGMENT DATED 29.11.2010 ALLOWED THE APPEAL OF THE REVENUE. THE HON BLE HIGH COURT HELD THAT SINCE RETURN OF INCOME WAS NOT FILED WITHIN DUE DATE PRESCRIBED U/S 139(I), T HE PROVISION OF SECTION 158BB(1)(C) HAS APPLICABLE AND CAPITAL GAINS IS TO BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. 4. WHEN THE ASSESSMENT ORDER TREATED THE CAPITAL GAIN AS THE UNDISCLOSED INCOME WAS CONFIRMED BY THE HON BLE HIGH COURT , T HE ASSESSING OFFICER LEVIED THE PENALTY U/S 158BFA OF THE ACT AMOUNTING TO RS.5,72,226/ - . 5. AGAINST THE ORDER IMPOSING PENALTY U/S 158BFA O F THE ACT , ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT FINDING OF THE CIT(A) READS AS UNDER: - (PARA 4 TO 4.9) 4. I HAVE GONE THROUGH THE ABOVE SUBMISSIONS OF THE APPELLANT AND HAVE PERUSED THE AO'S ORDER AND CONSIDERED THE FACTS AND EVIDENCES ON RECORD AND JUDICIAL PRONOUNCEMENTS ON THIS ISSUE. 4.1 IT IS AN ESTABLISHED PREPOSITION THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO ALL TOGETHER DIFFERENT PROCEEDINGS. AN ISSUE MAY CALL FOR AN ADDITIONS IN THE ASSESSMENT PROCEEDINGS, BUT THAT ADDITION IN ITSELF CANNOT BE THE SOLE GROUND FOR IMPOSITION OR LEVY OF PENALTY. FOR THE PURPOSE OF IMPOSING A PEN ALTY, THE AO HAS TO WALK A LITTLE EXTRA MILE TO PROVE THAT THE APPELLANT HAS CONCEALED OR LIKELY TO CONCEAL THE INCOME OR FURNISHED THE INACCURATE PARTICULAR OF ITS INCOME. 4.2 FURTHER BEFORE DISCUSSING THE FACTS OF THE PRESENT CASE AND TO SEE WHETHER THE PENALTY UNDER SECTION 158BFA{2} IS IMPOSABLE, IT IS IT (SS) NO 12 /DEL /20 13 4 WORTH RE - ITERATING HERE THE GENERAL RULES TO BE FOLLOWED FOR THE PURPOSE OF LEVING THE PENALTY AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. CIT (2007) (291 ITR 519 (SE) AN D T. ASHOKE PAI VS. CIT (2007) (292 ITR 11) (SE). I.E. (I) BOTH THE EXPRESSIONS 'CONCEALMENT OF INCOME' AND '1URNISHING OF INACCURATE PARTICULARS' INDICATE SOME DELIBERATION ON THE PART OF THE ASSESSEE, THOUGH THE WORD 'DETIBEROTETV' AND THE WORD UWILLFUL LY' ARE NO LONGER PART OF THE STATUE. (II) MERE OMISSION O~ NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSIIO VERI OR - SUGGESTIO FALSI. (III) PRIMARY BURDEN OF PROOF IS ON THE REVENUE. THE STATUTE REQUIRES SATISFACTION ON THE PART OF THE AS SESSING OFFICER. HE IS REQUIRED TO ARRIVE AT A SATISFACTION SO AS TO SHOW THAT THERE IS PRIMARY EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAD CONCEALED THE AMOUNT OR FURNISHED INACCURATE PARTICULARS AND THIS ONUS IS TO BE DISCHARGED BY THE DEPARTMENT. (IV) THE ASSESSING OFFICER WHILE CONSIDERING LEVY OF PENALTY SHOULD CONSIDER WHETHER THE ASSESSEE HAS BEEN ABLE TO DISCHARGE HIS PART OF THE BURDEN. HE SHOULD NOT BEGIN WITH THE PRESUMPTION THAT THE ASSESSEE IS GUILTY. (IV) THOUGH PENALTY PROCEEDINGS UNDER THE INCOME - TAX LAW MAY NOT BE CRIMINAL IN NATURE, THEY ARE STILL QUASI - CRIMINAL REQUIRING THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HAS CONCEALED HIS INCOME. 4.3 NOW LOOKING INTO THE FACTS .OF THE PRESENT CASE IT IS OBSERVED THAT: (I) THE INVESTMENT IN SHARES (WHICH WERE SOLD DURING THE YEAR AND ON WHICH LONG TERM HAS BEEN EARNED) WERE DULY BEEN REFLECTED IN THE FINANCIAL ACCOUNT OF THE YEAR IN WHICH THEY WERE PURCHASED. (II) THE SALE CONSIDERATION/GAIN WHICH HAS BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION HAS DULY BEEN DEPOSITED IN THE DECLARED BANK ACCOUNT OF THE APPELLANT. (III) THE UNAUDITED PROFIT AND LOSS ACCOUNT AND BALANCE IT (SS) NO 12 /DEL /20 13 5 SHEET WHICH WERE FOUND DURING THE SEARCH, DULY CONTAINS THE RECORDING OF THE TRANSACTION OF SALE OF THESE SHAR ES, ON WHICH THE CAPITAL GAIN OF RS. 18,94,080 HAS BEEN EARNED AND (IV) THE RETURN OF INCOME FOR ASSESSMENT YEAR 1999 - 2000 THOUGH WAS NOT FILED BY THE DUE DATE I.E. 31.12.1999, BUT THE SAME WAS FILED ON 31.03.2000 I.E. THE TIME ALLOWED AS PER THE PROVISION OF SECTION 139(4), AND IN THEIR RETURN OF INCOME THE LONG TERM CAP ITAL GAIN HAVE DULY BEEN REFLECTED. 4.4 NOW LOOKING INTO THE ABOVE FACTS, SINCE THE SEARCH TOOK PLACE ON 13.01.2000, AND BY THAT TIME THE RETURN OF INCOME FOR ASSESSMENT YEAR 1999 - 2000 WAS NOT FILED BEFORE THE DUE DATE I.E. 31.12.1999, THEREFORE THE AMOUNT OF LONG TERM CAPITAL WAS RIGHTLY B EEN ASSESSED AS 'UNDISCLOSED INCOME' WITH THE MEANING OF SECTION 158BB(1)(C). BUT THE FACT THAT SUCH SHARES WERE DULY BEEN RECORDED IN UNAUDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND SALE PROCEEDS HAVE BEEN DEPOSITED IN THE DECLARED BANK ACCOUNT AND ALSO THE INVESTMENT IN SHARES (WHICH WERE SOLD IN THE YEAR UNDER CONSIDERATION) WERE FOUND TO BE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS, IN MY HUMBLE VIEW ALL THE THESE FACTS DOESN'T CALLS FOR IMPOSITION OF PENALTY UNDER SECTION 158BFA{2}. THE AD W HILE CONSIDERING THE LEVY OF PENALTY SHOULD NOT BEGIN WITH THE PRESUMPTION THAT THE APPELLANT IS GUILTY OF CONCEALING THE PARTICULARS OF INCOME, THE AD BEFORE LEVYING THE PENALTY MUST BRING ON RECORD THE PRIMARY EVIDENCE TO ESTABLISH THAT THE APPELLANT HAD UNDISCLOSED INCOME WHICH HE WAS CONCEALING OR LIKELY TO CONCEAL. THE LEVY OF PENALTY UNDER SECTION 158BFA(2) IS NOT AN AUTOMATIC ACTION, THE WORDS 'MAY DIRECT' MENTIONED IN SECTION 158BFA{2} HAS TO BE GIVEN ITS NORMAL MEANING. THE WORD 'MAY' CANNOT BE RE AD AS 'SHALL'. 4.5 LOOKING INTO THE FACTS OF THE APPELLANT'S CASE, IT IS QUITE LIKELY THAT THE APPELLANT MIGHT BE WAITING FOR THE REQUISITE DETAILS OF SHARES SOLD AND THIS MAY BE THE GENUINE REASON FOR NOT BEEN ABLE TO FILE THE RETURN OF INCOME BY DUE DA TE I.E. 31.12.1999, BUT THE FACT REMAINS THAT HE DID FILE THE RETURN WITHIN THE TIME ALLOWED UNDER SECTION 139{4}. FURTHER, WHILE INVOKING THE PENAL PROVISION APART FROM ABOVE THE AD CANNOT OVERLOOK THIS FACT, THAT THE FINANCIAL STATEMENTS {FOUND DURING TH E SEARCH} DID RECORD THE TRANSACTION RELATING TO IT (SS) NO 12 /DEL /20 13 6 SHARES ON WHICH CAPITAL GAIN IS EARNED AND DULY BEEN DECLARED IN THE RETURN OF INCOME FILE ON 31.03.2000. 4.6 HERE 1 WOULD LIKE TO RELY ON THE DECISION OF ITAT CHENNAI BENCH DATED 07.06.2011 IN THE CASE OF K . RAMAKRISHNAN {HUF} VS. DCLT (IT(55) NO. 7 OF 2011}, WHERE ON THE SIMILAR FACTS THE. ITAT HAS HELD PENALTY UNDER SECTION 158BFA {2} IS NOT LEVIABLE IF THE RETURN OF INCOME IS NOT FILED BY THE DUE DATE, BUT THE INCOME BE ASSESSED AS UNDISCLOSED INCOME WITH IN THE MEANING OF SECTION 158BB(1)(C). FACTS A SEARCH AND SEIZURE ACTION UNDER SECTION 132 WAS CARRIED OUT IN THE CASE OF THE ASSESSEE. THE SEIZED MATERIALS MADE OUT A CASE OF UNDISCLOSED INCOME. THE ASSESSING OFFICER THUS INITIATED PROCEEDINGS UNDER SECT ION 15880. THE ASSESSEE FURNISHED A RETURN, DECLARING NIL UNDISCLOSED INCOME. THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT TREATING THE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE AS UNDISCLOSED INCOME. THE CAPITAL GAINS BEING ASSESSED IN THE BLOCK ASSESSMENT, TAX WAS LEVIED AT RATE OF 60 PER CENT. IT WAS IN VIEW OF THE ABOVE THAT THE PENALTY WAS ALSO LEVIED. HOWEVER, IT WAS ALSO ON RECORD THAT IMMEDIATELY AFTER THE SEARCH ACTION, THE ASSESSEE HAS FILED A VOLUNTARY RETURN OFFERING THE CAPITAL G AINS FOR TAXATION. THE ASSESSEE COMPUTED THE TAX LIABILITY AT 20 PER CENT, APPLICABLE TO LONG TERM CAPITAL GAINS. THE RETURN FILED BY THE ASSESSEE WAS ANYHOW BELATED. THE ASSESSING OFFICER DID NOT TAKE INTO COGNIZANCE THE BELATED RETURN AND COMPLETED THE A SSESSMENT ACCORDINGLY. ON APPEAL, THE COMMISSIONER {APPEALS} CONFIRMED THE BLOCK ASSESSMENT ORDER AS WELL AS PENALTY ORDER PASSED UNDER SECTION 1588FA(2). HELD IT WAS A UNIQUE CASE. TECHNICALLY SPEAKING, THE RETURN FILED BY THE ASSESSEE IMMEDIATELY AFTER THE SEARCH OPERATION WAS NOT VALID IN THE EYE OF LAW. THE SAID BELATED R~TUQ:L.. WAS NON EST. THEREFORE, THE NIL RETURN FILED BY THE ASSESSEE COULD NOT HAVE BEEN ACCEPTED BY THE ASSESSING AUTHORITY FOR THE PURPOSE OF BLOCK ASSESSMENT. THE BLOCK ASSESSMENT SHOULD HAVE BEEN COMPLETED BY TAKING INTO CONSIDERATION THE CAPITAL GAINS AND RIGHTLY CHARGING TAX AT 60 PER CENT. THE TAX PAID BY THE ASSESSEE AT 20 PER CENT AL ONG WITH ITS RETURN COULD NOT HAVE BEEN ACCEPTED. ALL THESE FACTORS WERE VERY IT (SS) NO 12 /DEL /20 13 7 RELEVANT FOR COMPLETING THE QUANTUM ASSESSMENT AND DEMANDING THE TAX AT 60 PER CENT FROM THE ASSESSEE. BUT THE ABOVE FACTORS WERE NOT SUFFICIENT TO IMPOSE PENALTY UNDER SECTION 158BFA. THE REASON THAT THE ASSESSEE HAD NOT FURNISHED ANY UNDISCLOSED INCOME IN THE BLOCK RETURN FILED BY IT IN PURSUANCE OF NOTICE UNDER SECTION 158BO WAS NOT A GRIEVOUS MISTAKE WHEN THE EARLIER BELATED RETURN FILED BY THE ASSESSEE AND AVAILABLE IN THE FILES OF THE ASSESSING AUTHORITY WAS ALSO LOOKED INTO. THE FACT THAT THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME THROUGH ITS BLOCK RETURN WAS A LEGAL ERROR BUT NOT A GROUND TO IMPOSE PENALTY. THE BLOCK ASSESSMENT ITSELF HAD BEEN COMPLETED BY THE ASSESS ING OFFICER BY ADOPTING THE AMOUNT OF CAPITAL GAINS OFFERED BY THE ASSESSEE IN ITS BELATED RETURN FILED IMMEDIATELY AFTER THE SEARCH OPERATION . THEREFORE , EVEN THOUGH LEGALLY AND TECHNICALLY NOT VALID, THE ASSESSEE HAD ALREADY RETURNED THE CAPITAL GAINS L IABLE FOR TAXATION IN ITS HANDS. IF THAT AMOUNT OF CAPITAL GAINS WAS IMPREGNATED IN THE BLOCK RETURN FILED BY THE ASSESSEE, THE EQUATION WOULD BECOME COMPLETED. THE ONLY CORRECTION WAS CALCULATING TAX AT 60 PER CENT INSTEAD OF 20 PER CENT. IF THE ASSESSEE HAD NOT FURNISHED ITS BELATED RELATED IMMEDIATELY AFTER THE SEARCH, THE ASSESSEE WOULD HAVE DEFINITELY OFFERED THE CAPITAL GAINS FOR TAXATION IN ITS BLOCK RETURN. IF THAT AMOUNT WAS OFFERED THROUGH THE BLOCK RETURN THERE WOULD BE NO CAUSE OF ACTION TO IMP OSE PENALTY. THEREFORE, THE ONLY MISTAKE COMMITTED BY THE ASSESSEE WAS THAT IT ACTED A LITTLE OVER SMART AND OVER CAUTIONS, EVEN THOUGH THE ENDEAVOUR OF THE ASSESSEE WAS NOT PRODUCTIVE. [PARA6] IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT WAS OPINED THA T THE LEVY OF PENALTY WAS NOT JUSTIFIED. IT WAS TO BE DELETED. [PARA8] IN RESULT APPEAL FILED BY THE ASSESSEE WAS TO BE ALLOWED. N 4.7 HERE, I WOULD ALSO LIKE TO TAKE STRENGTH FROM THE DECISION DATED 12.11.2008 OF DELHI HIGH COURT IN THE CASE OF CIT VS. HARKARAM DAS VED PAL (117 TAXMAN 398) DELHI WHERE HON'BLE COURT HAS HELD THAT THE PENALTY IMPOSABLE UNDER SECTION 158BFA(2) IS NOT MANDAT ORY, AND AD MUST USE HIS JUDICIAL CONSIDERATION BEFORE IMPOSING, THE PENALTY. THE FOOT NOTES OF THE SAID DECISION READ AS UNDER: IT (SS) NO 12 /DEL /20 13 8 'SECTION 158BFA OF THE INCOME - TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - LEVY OF INTEREST AND PENALTY IN CERTAIN CASES - BLOCK PERIOD 1 - 4 - 1999 TO 6 - 7 - 2000 - WHETHER LEGISLATURE DID NOT INTEND IMPOSITION OF PENALTY UNDER SECTION 158BFA{2} BY ITSELF TO BE MANDATORY; RATHER IT INTENDED SAME TO BE LEFT TO DISCRETION, WHICH OF COURSE HAS TO BE EXERCISED UPON JUDICIAL CONSIDERA TIONS OF ASSESSING OFFICER - HELD, YES - WHETHER A PRE - CONDITION FOR IMPOSITION OF PENALTY UNDER SECTION 158BFA{2} IS THAT THERE MUST BE A DETERMINATION OF UNDISCLOSED INCOME BY ASSESSING OFFICER UNDER CLAUSE (C) OF SECTION 158BC - HELD, YES - WHETHER WHER E UNDISCLOSED INCOME HAD BEEN COMPUTED MERELY ON BASIS OF SURRENDER MADE BY ASSESSEE IN COURSE OF BLOCK ASSESSMENT PROCEEDINGS AND DE HORS SURRENDER, THERE WAS NO EVIDENCE WHICH COULD HAVE BEEN SAID TO HAVE BEEN FOUND AS A RESULT OF SEARCH, 'COMPUTATION' O F UNDISCLOSED INCOME BY ASSESSING OFFICER IN BLOCK ASSESSMENT PROCEEDINGS COULD NOT BE CONSTRUED AS A 'DETERMINATION' OF UNDISC!OSED INCOME CONTEMPLATED UNDER SECTION 158BC{C} OR SECTION 158BB AND NO PENALTY WOULD BE IMPOSABLE UNDER SECTION 158BFA{2} IN SU CH CASE - HELD, YES 4.8 ALSO IT IS A TRITE LAW THAT WHERE TWO VIEWS ARE POSSIBLE ON THE ISSUE, THE PENALTY IS NOT IMPOSABLE IN SUCH CASES. APPLYING, THIS PRINCIPLE TO THE FACTS OF THE PRESENT CASE, IT IS SEEN THAT AS PER ITAT'S DECISION DATED 03.08.2007 I N THE FACTS OF THE APPELLANT'S CASE THE CAPITAL GAIN ON SHARES IS 'NOT TO BE TREATED AS UNDISCLOSED INCOME', WHEREAS THE HON'BLE DELHI HIGH COURT VIDE THEIR DECISION DATED 29.11.2010, WAS OF THE VIEW THAT SINCE THE RETURN OF INCOME IS NOT FILED BY DUE DATE , THE CAPITAL GAIN IN QUESTION HAS TO BE TREATED AS 'UNDISCLOSED INCOME', FURTHER EVEN AGAINST THE SAID ORDER OF HIGH COURT THE APPELLANT HAS FILED AN SLP BEFORE THE APEX COURT ON 01.03.2011. THEREFORE IN SUCH AN EVENT AS PER THE SPIRIT OF DECISION OF DELH I HIGH COURT IN THE RECENT CASE OF CIT VS. SARLA FABRICS P. LTD. {ITA 788/2011} DATED 20.07.2012} THE HON'BLE COURT BY RELYING ON THEIR OWN DECISION IN THE CASE OF CLT - IV DELHI VS. IP INDIA P. LTD. (204 TAXMAN 368) (2012) HAVE HELD THAT: 'WHERE THERE IS A DIFFERENCE OF OPINION EITHER BETWEEN DIFFERENT BENCHES OF TRIBUNAL OR THE HIGH COURTS, WHICH IS FINALLY SETTLED BY THE PENDING JUDGMENT OF THE SUPREME COURT AND ALL NECESSARY FACTS HAVE BEEN DISCLOSED BY THE ASSESSES IN ITS RETURN, THE PENALTY IS NOT IT (SS) NO 12 /DEL /20 13 9 WARR ANTED. 11 4.9 THUS IN VIEW OF THE ABOVE DISCUSSIONS, I AM OF THE CONSIDERED VIEW THAT IN THE FACTS OF THE APPELLANT'S CASE, THE IMPOSITION OF PENALTY UNDER SECTION 158BFA{2} IS NOT ON AUTOMATIC FALL OUT OR MANDATORY, HENCE THE PENALTY LEVIED BY THE A O , IS DELETED. 6. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD. D.R. RELIED ON THE ORDER OF THE PENALTY. THE LD. A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES AND RELIED ON THE CONCLUSION/FINDING OF THE CIT(A). 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE UNCONTROVERTED FACTS OF THE CASE AS NOTICED BY THE CIT(A) ARE AS FOLLOWS: - (I) THE INVESTMENT IN SHARES (WHICH WERE SOLD DURING THE YEAR AND ON WHICH LONG TERM HAS BEEN EARNED) WERE DULY BEEN REFLECTED IN THE FINANCIAL ACCOUNT OF THE YEAR IN WHICH THEY WERE PURCHASED. (II) THE SALE CONSIDERATION/GAIN WHICH HAS BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION HAS DULY BEEN DEPOSITED IN THE DECLARED BANK ACCOU ; NT OF THE APPELLANT. (III) THE UNAUDITED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WHICH WERE FOUND DURING THE SEARCH, DULY CONTAINS THE RECORDING OF THE TRANSACTION OF SALE OF THESE SHARES, ON WHICH THE CAPITAL GAIN OF RS. 18 ,94,080 HAS BEEN EARNED AND (IV) THE RETURN OF INCOME FOR ASSESSMENT YEAR 1999 - 2000 THOUGH WAS NOT FILED BY THE DUE DATE I.E. 31.12.1999, BUT THE SAME WAS FILED ON 31.03.2000 I.E. THE TIME ALLOWED AS PER THE PROVISION OF SECTION 139(4), AND IN THEIR RETUR N OF INCOME THE LONG TERM CAPITAL GAIN HAVE DULY BEEN REFLECTED. IT (SS) NO 12 /DEL /20 13 10 7.1 . FROM THE ABOVE FACTS, IT IS CLEAR THAT RETURN OF INCOME WAS NOT FILED WITHIN DUE DATE PRESCRIBED U/S 139(1) AND IN THE MEANWHILE SINCE THERE WAS A SEARCH , LONG TERM CAPITAL GAIN WAS RI GHTLY ASSESSED AS UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 158BB(1)(C) OF THE ACT. HOWEVER, TO HOLD THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND PENALTY U/S 158BFA(2) IS TO IMPOSED ON FACTS OF THIS CASE IS UNJUSTIFIED. T HE PENALTY U/S 158BFA IS NOT AUTOMATIC AND THE ASSESSEE DID NOT HAVE ANY INTENTION TO CONCEAL THE SAID CAPITAL GAIN FOR THE PURPOSE OF TAXATION . THE REASON FOR US TO HOLD THAT THE ASSESSEE DID HAVE ANY INTENTION TO CONCEAL THE CAPITAL GAINS IS EVIDENT FROM THE UNDISPUTED FACT THAT THE INVESTMENT OF THE IMPUGNED SHARES WERE DULY REFLECTED IN THE FINANCIAL STATEMENT OF THE AS SESSEE IN THE YEAR OF PURCHASE AND THE SALE CONSIDERATION/GAIN RECEIVED DURING THE A.Y. 1999 - 2000 WAS DEPOSITED IN THE BANK ACCOUNT WHICH WAS DULY DISCLOSED TO THE INCOME TAX DEPARTMENT. FURTHER, THE UN AUDITED P&L ACCOUNT AND BALANCE SHEET WHICH WERE SEIZED IN THE COURSE OF SEARCH CONTAINED THE RECORDING OF THE TRANSACTION OF THE SALE OF THE SHARES AND RESULTING CAPITAL GAINS. 7 . 2 FURTHER, WHETHER L ONG TERM CAPITAL GAINS CAN BE TREATED AS UNDISCLOSED INCOME IS DEBATABLE ISSUE . THE ASSESSEE HAD SUCCEED ED IN THE QUANTUM ASSESSMENT BEFORE THE TRIBUNAL . O N FURTHER APPEAL BY THE REVENUE U/S 260A OF THE ACT THE HON BLE HIGH COURT REVERSE D THE IT (SS) NO 12 /DEL /20 13 11 TRIBUNAL S ORDER. IT HAS BEEN BROUGHT TO OUR NOTICE THAT SLP HAS BEEN FILED BEFORE THE HON BLE SUPREME COURT ( SLP NO. 9018 - 022/2011 ) AND NOTICE HAS BEEN ISSUED ON THE SAME AND THE MATTER CONTINUES TO BE SUB JUDICE BEFORE THE HON BLE SUPREME COURT. THE HON BLE JURISDI CTION HIGH COURT HAS HELD IN THE CASE OF CIT VS. H.B. LEASING AND FINANCE CO. LTD. (334 ITR 367) THAT THE ISSUE CAN BE SAID TO BE DEBATABLE WHEN SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED AND WHEN QUANTUM PROCEEDING IS DEBATABLE, THE PENALTY CANNOT BE I MPOSED. THE RELEVANT FINDING OF THE HON BLE HIGH COURT READ AS FOLLOWS: (AT PAGE 369) IN THE FACTS OF THIS CASE, WE ARE OF THE OPINION THAT THIS ISSUE IS DEBATABLE. WE SAY SO BECAUSE OF THE REASON THAT NOT ONLY IN THE QUANTUM PROCEEDINGS THE COMMISSIONER OF INCOME - TAX (APPEALS) HAD DELETED THE ADDITIONS, EVEN WHEN THE TRIBUNAL REVERSED THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) AND THIS COURT ALSO DISMISSED THE APPEAL OF THE ASSESSEE, THE SUPREME COURT HAS REMITTED THE CASE BACK TO THIS COURT A ND THE ISSUE STANDS ADMITTED. ONCE THE APPEAL, I.E., I.T.A. NO. 612 OF 2004 PREFERRED BY THE ASSESSEE HAS BEEN ADMITTED THAT WOULD SHOW THAT SUBSTANTIAL QUESTION OF LAW ON THE INTERPRETATION IS INVOLVED. THE ISSUE IS THUS CLEARLY DEBATABLE. 7.3 A SIMILAR VIEW HAS BEEN HELD BY ANOTHER JUDGMENT OF HON BLE HIGH COURT IN THE CASE OF CIT VS. DEVSONS LOGISTICS (P) LTD. (329 ITR 483). THEREFORE, FOLLOWING THE DICTUM LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASES OF CIT VS. H.B. LEASING AND FINAN CE CO. LTD. REPORTED IN 334 ITR 367 AND CIT VS. DEVSONS LOGISTICS (P) LTD. REPORTED IN 329 ITR 483 , WE H O LD THAT THE PENALTY IS NOT IMPOSABLE ON FACTS AND IT (SS) NO 12 /DEL /20 13 12 CIRCUMSTANCES OF THIS CASE. IN VIEW OF THE AFORESAID REASON ING, WE UPHO LD THE ORDER OF THE CIT(A) AS CORRECT AND IN ACCORDANCE WITH LAW, AND NO INTERFERENCE IS CALLED FOR. IT IS ORDERED ACCORDINGLY. 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. TH E ORDER IS PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY , 201 5 . SD/ - SD/ - ( N.K. SAINI ) ( GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH JANUARY , 201 5 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITAT, NEW D ELHI