Cas€Cot Saraswathaiestate,Mudigeretalukekchickmagalur District v. The Commissioner Ofagricultural Income Tax, Karnataka, Bangaloreand Another' Reported Inz2001(S1) Kar.l.j. 1 (Hcj} (Dwhile Interpreting Section 22 (1) (D) Of Th

IN THB HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 20 DAY OF AUGUST 2014 PRESEN T | THR HON’BLE MR. JUSTICE N. KUMAR. AN D| THR HON’BLE MRS. JUSTICK RATHNAKALA CRP No.283/ 2011) BBRITWEHRMR. J.L. SALDANAMAJOR PROPRIBTOR M/S. MAHAMANE ESTATEBALUR POST, MUDIGERE TALUKCHIC KMAGALUR DISTRICPETITIONER(BY SRI S.P. BHAT, ADV.)AND: |THE STATEB OF KARNATAKARBEPRBESEBENTBD BY ITS SKHCRETFINANCK DEPARTMENTVIDHANA SOUDHABANGALORE — 560 OO1. ooRESPONDENT.(BY SMT. 8S. SUJATHA, AGA)KRRRERERR THIS CRP IS FILED UNDER SECTION 595 OF KAIT ACT, 1979, AGAINSTTHE;JUDGMENTDATED30.03.2010PASSEDLN|S8TA.2234/2004 ON THE FILE OF THE KARNATAKA APPELLATETRIBUNAL, BANGALORE, DISMISSING THE APPEAL. THIS CRP COMING ON FOR HEARING THIS DAY,N. KUMAR,J.,MADBTHR FOLLOWING: - ORDER The assessee has preferred this revision petition|challenging the order passed by the Karnataka AppellateTribunal upholding the levy of penalty of Rs.1,00,000/- onthe assessee for furnishing inaccurate particulars. 2.|The assessee was a partner in a partnership firm by|name M/s. Mahamane Estate at Chickmagalur. He retiredfrom the partnership firm on 31.03.1995. He was entitledto back pool payments received from the curers during theyear ending on 31.03.1995 for the assessment year 199951996. He filed the returns disclosing the back pool. payments relating to the earlier years on the basis of backpool payment statement dated 23.8.19995 received from thecurers. As per the said statement he received a sum ofRs.2,09,231/- during the relevant accounting year. Theassessment was finalized on 10.3.1999. Subsequently onthe basis of information received from the curers theAssessingOfficer|initiatedre-assessmentproceedings under Section 36 of the Karnataka Agricultural Income TaxAct, 1957 (for short hereinafter referred to as ‘the Act) onthe ground that in the original returns the assessee hasomitted to disclose Rs.2,607,598/- which has resulted inunder assessment. Notice under Section 22 (1) (d) of theAct was issued tor deliberately furnishing inaccurateparticulars of income. Immediately after receipt of notice,the assessee filed a revised return including the omittedpool payment of Rs.2,67,598/- and paid the difference intax at the time of filing revised return itself. The Assessing Authority accepted the revised return and finalized theassessment. However, he levied penalty of Rs.1,62,471/-under Section 22 (1) (d) of the Act for furnishing inaccurateparticulars of income. Aggrieved by the said order, theassessee preferred an appeal to the Joint Commissioner,theJointCommissionerreduced.thepenaltyfromRs.1,602,471/- to Rs.1,00,000/-. Aggrieved by the saidorder the assessee preferred an appeal to the KarnatakaAdministrative Tribunal. By the impugned order theKarnataka Administrative Tribunal has affirmed the orderof the Joint Commissioner. Aggrieved by these two ordersthe assessee has preferred this revision petition. 3.|The learned counsel appearing for the assessee|assailing the impugned orders contends that in the facts ofthis case, it is clear that it was a mere omission, there wasno intention to furnish inaccurate particulars, because the 3.|The learned counsel appearing for the assessee|assailing the impugned orders contends that in the facts ofthis case, it is clear that it was a mere omission, there wasno intention to furnish inaccurate particulars, because the earlier return was filed on the basis of the statementfurnished to him by the curers in which the aforementionedAmount was not mentioned. Once the curer rectified themistake after receipt of the notice, immediately revisedreturn is filed and difference of tax amount is paid. |Therefore, it is not a case where the assessee deliberatelysuppressed the income by furnishing inaccurate particularsand therefore Section 22(1) (d) of the Act is not attracted. —In support of his contention the learned counsel for the|assessee relied upon the decision inD.M. DAHANUKAR Vs.COMMISSIONER OF INCOME-TAX, BOMBAY' reported inITR LXV 1967 page 280' wherein by interpreting theprovisions of Section 28(1) (c) of the Income Tax Act, 1922,it was held that mere omissions will not amount to’concealment of or deliberate furnishing of inaccurate|particulars. Unless the omissions is attributable to an|intention or desire on the part of the assessee to hide or conceal the income so as to avoid imposition of tax thereon, There cannot be any quarrel with the aforesaid legal|position. However, we have a judgment of this Court in the CaS€Cot SARASWATHAIESTATE,MUDIGERETALUKEKCHICKMAGALUR DISTRICT Vs. THE COMMISSIONER OFAGRICULTURAL INCOME TAX, KARNATAKA, BANGALOREAND ANOTHER' reported inZ2001(S1) KAR.L.J. 1 (HCj} (Dwhile interpreting Section 22 (1) (d) of the Act the HighCourt held as under: - “In the instant case, the particulars as disclosed bythe assessee, the conduct of the assessee and thepositive indication on the part of the assessee,clearly indicate that the act of the _ petitioneassessee in claiming the agricultural expenses atasum of Rs.94,64,000/- ts not an innocuous act andthe assessee merely estimated sucha sum in thethe assessee, the conduct of the assessee and thepositive indication on the part of the assessee,clearly indicate that the act of the _ petitioneassessee in claiming the agricultural expenses atasum of Rs.94,64,000/- ts not an innocuous act andthe assessee merely estimated sucha sum in the absence of books of accounts. In fact, there are tworeasons not to accept the theory put forward onbehalf of the assessee. One is that even whilefiling the return of income the assessee did have inits possession, the statement of profit and lossaccount. Nevertheless, the assessee, though wasaware that it did not have its books of account, didnot make any reference to this in the statement ofagricultural income appended to the Form 3 returnof income filed by it. The act of the assessee infurnishing the different figures towards agriculturalexpenses cannot also be construed as a voluntaryact inasmuch as, the assessee came up with thisinformation only after a notice was issued by theauthorities calling upon the assessee to produceproper particulars with reference to the return thathad been filed by the assessee. These aspects apart, what is more important is, the assesseenever came forward to file a revised return of his:income disclosing the true and correct particulars.TheaASSCSSCEcannotbeobliviousof|theimplications of claiming an astronomically hugeSUTIof|Rs. 94,64,000/7towardsagriculturalexpenses as against a sum of Rs.6,95,703.11P.which came to be allowed towards agriculturalexpenses ultimately by the Assessing Officer. ..Under Section 18(2)(b) of the Act, the assessee isentitled to file a return of its income. The assesseein fact did file a return of “Loss”. The significanceof filing a return of “loss” cannot be termed as anact of innocence or inadvertence and the assesseeis not totally ignorant in the matter of its statutoryobligations under the Act. The assessee is beingregularly assessed under the provisions of the Act apart, what is more important is, the assesseenever came forward to file a revised return of his:income disclosing the true and correct particulars.TheaASSCSSCEcannotbeobliviousof|theimplications of claiming an astronomically hugeSUTIof|Rs. 94,64,000/7towardsagriculturalexpenses as against a sum of Rs.6,95,703.11P.which came to be allowed towards agriculturalexpenses ultimately by the Assessing Officer. ..Under Section 18(2)(b) of the Act, the assessee isentitled to file a return of its income. The assesseein fact did file a return of “Loss”. The significanceof filing a return of “loss” cannot be termed as anact of innocence or inadvertence and the assesseeis not totally ignorant in the matter of its statutoryobligations under the Act. The assessee is beingregularly assessed under the provisions of the Act and it cannot be said that the assessee was totallyunaware of the implications of claiming a loss of asum of Rs.70,12,091.25 P. in tits return.....In tinstant case the assessee, initially had filed a verySketchy return which neither conformed to therequirement of law nor gave full and trueparticulars of all facts, The assessee did not on itsown come forward with any correct particularseven thereafter, but only in response to a noticeissued by the Department, placed the statement ofprofit and loss, which it had in its possession evenearlier also. It was only thereafter the assesseereconciled to the position that the claim ofexpenditure at a sum of Rs.94,64,000/- as hadbeen indicated in its statement along with thereturn, was not correct, but on the other hand,restricted its claim towards agricultural expenditure to a sum of Rs.11,98,449.22 P. Such an act cannotbe characterized as a voluntary act. In fact, theassessee did not come forward to file a revisedreturnatanypointof|time.Underthecircumstances, it is very difficult to accept thesubmissions on behalf of the assessee that therewas absolutely no contumacious conduct on thepart of the assessee to justify the levy of penalty. ©Conductjustifying the levy ofpenalty is a matterforinterference under the circumstances of the caseand not a thing which ts written in so many wordsanywhere. In the instant case, the conduct of theassessee 1s definitely not one indicating totalinnocence or mere inadvertence on the part of theassessee, but definitely much more than that.....Othe facts of the present case, the assessee cannotbe exonerated of the consequence of levy ofpenalty totally, inasmuch as the act of furnishing of theagricultural expenditure at a lower sum cannot alsobe characterized as a voluntary act inasmuch asthe assessee came forward with this figure only inresponse to a notice issued by the department inthe context of incorrectness of the return filed by theassessee. The difference between the two figuresis also so very vast that it cannot be accepted thatthe initial claim was as a result of either innocenceor inadvertence. In the instant case the material onrecord itself is sufficient to draw the inference thatthe assessee had knowingly furnished inaccurateparticulars in its return of income particularly inclaimingthequantumof|agriculturalexpenses.....There is absolutely no Justification fointerference in a case of this nature, particularlywhen the facts of the case very clearly reveal the contumacious conduct of the assessee, which leadsto the inevitable inference that the assessee hasconsciously and deliberately furnished inaccurateparticulars in the return submitted by it and moreso when the assessee in fact had the informationas had been culled out from the profit and lossstatement of account in its possession even at thetime offilling such account. The case does not callfor any interference in the exercise of revisionaljurisdiction by this Court under Section 55 of theAct. (paras 14, 15, 15, 19 and 29)”a |In the instant case, return was filed on the basis of)the back pool statement dated 23.8.1995. The contentionraised is, subsequently, only when the statement of backpool payment dated 30.9.2009 was made available, theassessee became aware of the aforesaid additional income. A perusal of the said back pool statement produced atAnnexure E shows that although the statement is dated30.9.2000 the entries shows that it refers to the paymentmade during the period 1.4.1994 to 31.3.1995. In fact theentries shows the assessee was paid money in advance onfour occasions roughly amounting to Rs.2,50,000/- and thetotal payment which was made to him during the saidperiod is Rs.4,76,829/-. Conveniently this amount is notreflected in the return filed by him. Merely because he fileda return on the basis of the statement of pool paymentissued by the curers, he cannot avoid the liability. He keptback the amounts which he had received by way of advanceduringthat.periodandonly|whenre-assessment.proceedings notice was issued having realized that it is notpossible to get over the situation, he has promptly filed arevised return and paid the taxes. But for the enquiryconducted by the Department this would not have been detected as he had retired from the partnership firm andwas no more in the business. Therefore, taking intoconsideration this undisputed fact the two authoritiesbelow have rightly come to the conclusion that it is not a |mere case ot omission but deliberate omission andintention was to conceal the income, to avoid payment oftax. As the said findings are based on legal evidence, we donot find any error committed by the two authorities inpassing the impugned orders. 5.|We do not see any merit in this Revision Petition. —Accordingly, the revision petition is dismissed. Sd/-JUDGE| Sd/-.JUDGE NG