Commissioner Of Income Tax v. M/S Careers Education & Infotech Pvt. Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.14 of 2011 Date of decision: 31.3.2011 Commissioner of Income Tax -----Appellant. Vs. M/s Careers Education & Infotech Pvt. Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Rajesh Katoch, Standing Counselfor the appellant. --- ADARSH KUMAR GOEL, J. This appeal has been preferred by the revenue underSection 260-A of the Income Tax Act, 1961 (for short, “the Act”)against the order of the Income Tax Appellate Tribunal, NewDelhi dated 31.7.2009 in ITA No.1868/Del/2007 for theassessment year 2003-04 claiming following substantialquestions of law:- “1. Whether on the facts and circumstances of thecase and in law, the Hon’ble ITAT was right indeleting the penalty imposed u/s 271(1)(c)without appreciating that the act of disclosing theconcealed income was not voluntary butconsequent upon the survey operation u/s 133Aof the I.T. Act, 1961 wherein several fallacies anddiscrepancies were detected and as a resultthereof the assessee revised his Income TaxReturn and surrendered the amount ofRs.15,00,000/-?case and in law, the Hon’ble ITAT was right indeleting the penalty imposed u/s 271(1)(c)without appreciating that the act of disclosing theconcealed income was not voluntary butconsequent upon the survey operation u/s 133Aof the I.T. Act, 1961 wherein several fallacies anddiscrepancies were detected and as a resultthereof the assessee revised his Income TaxReturn and surrendered the amount ofRs.15,00,000/-? 2. Whether on the facts and circumstances of thecase and in law, the Hon’ble ITAT was right indeleting the penalty imposed u/s 271(1)(c)without appreciating that disclosure of concealedincome was consequent upon the surveyoperation when during the course of surveyoperation itself, the assessee surrendered a sumof Rs.15,00,000/- for this assessment yearthereby admitting to concealment of income?”case and in law, the Hon’ble ITAT was right indeleting the penalty imposed u/s 271(1)(c)without appreciating that disclosure of concealedincome was consequent upon the surveyoperation when during the course of surveyoperation itself, the assessee surrendered a sumof Rs.15,00,000/- for this assessment yearthereby admitting to concealment of income?” 2. The assessee is a Coaching Centre. During thecourse of survey, the assessee surrendered additional incomeand also filed revised return accordingly. The Assessing Officeraccepted the revised return made by the assessee but alsoinitiated penalty proceedings. Thereafter, penalty was also leviedon the assessee which was upheld by the CIT(A) followingjudgment of the Madras High Court inP. Govindaswamyv. CIT{2000} 244 ITR 510. Therein, it was held that since underSection 58 of the Evidence Act, 1872, admitted facts need not beproved, once the assessee made surrender, it could be taken tobe admitted that the assessee had concealed income. Onappeal, the Tribunal set aside the above view as follows:- “5. …..From the record, we found that addition ofRs.15 Lakhs was made only on the basis of surrendermade during the course of survey and by acceptingthe revised return filed by the assessee. In theassessment order, the AO has not pointed out even asingle defect either in the books of accounts or vouchers etc. maintained by the assessee or in the “5. …..From the record, we found that addition ofRs.15 Lakhs was made only on the basis of surrendermade during the course of survey and by acceptingthe revised return filed by the assessee. In theassessment order, the AO has not pointed out even asingle defect either in the books of accounts or vouchers etc. maintained by the assessee or in the system of accounting being followed for disclosingtrue and correct income. Not only the survey team butduring the course of assessment the AO has all thematerials before him to find out if there are anydiscrepancies which can be co-related to the amountof surrender made by the assessee. However, theAO has not uttered a single word in the assessmentorder to say that there was any concealment ofincome of assessee having noticed by the surveyteam or by the AO himself. The offer of additionalincome of Rs.15 Lakhs was made to buy peace at thetime of survey in order to avoid the harassment at thehands of the survey team. Even after surrender, allkinds of enquiries were made by the survey team aswell as by the AO while framing assessment on thebasis of seized documents, books of account,vouchers etc. maintained by the assessee, and afterthorough enquiry, the income of the business wasaccepted at original return income alongwith theadditional income offered by the assessee. The AOhas imposed the penalty considering the additionalincome as income from undisclosed sources and hasalleged the assessee has filed revised return onlyafter detection of concealed income during the courseof survey. In case there was any detection ofconcealed income either by the survey team or by theAO, why the same has not been pointed out in theassessment order. Not an iota of evidence wasnarrated to support the addition made except thesurrender made by the assessee himself. When noconcealment was ever detected by the survey team or by the AO, no penalty was imposable. Recently,Hon’ble Punjab & Haryana High Court in the case ofSiddharth Enterprises, vide order dated 14.07.2009held after considering the decision of Hon’bleSupreme Court in the case of Dharmendra Textiles-306 ITR 277 that the judgment of Hon’ble SupremeCourt in the case of Dharmendra Textiles (supra)cannot be read as laying down that in every casewhere particulars of income are inaccurate, penaltymust follow. Wheat has been laid down is thatqualitative difference between criminal liability u/s276C and penalty u/s 271(1)(c) had to be kept in mindand approach adopted to the trial of a criminal caseneed not be adopted while considering the levy ofpenalty. Even so, concept of penalty has notundergone change by virtue of the said judgment. Itwas categorically observed that penalty is imposedonly when there is some element of deliberate defaultand not a mere mistake. This being the position, thefurnishing of inaccurate particulars was simply amistake and not a deliberate attempt to evade tax.Hon’ble Supreme Court in the case of Suresh ChandMittal – 251 ITR 9 observed that where assessee hasfiled revised return showing higher income and theassessee has surrendered the income afterpersistence queries by the AO and where revisedreturn has been regularized by the Revenue,explanation of the assessee that he has declaredadditional income to buy peach of mind and to comeout of waxed litigation could be treated as bona-fide,accordingly levy of penalty u/s 271(1)(c) was held tobe not justified. In the instant case before us, as perthe surrender made by the assessee, a revised return was filed and which has been accepted as it is withoutmaking any alteration therein nor there was anyadverse observation in the assessment order withregard to any discrepancies to correlate the same withthe amount of surrender. We accordingly do not findany merit in the action of the lower authorities forimposing penalty u/s 271(1)(c). On the facts andcircumstances, the instant case is not a fit case forlevy of penalty.” 3. We have heard learned counsel for the appellant. 4. Learned counsel for the appellant submits thatconcealment was rightly inferred and penalty was justified. 5. We are unable to accept the submission. No doubteven voluntary surrender of concealed income may not exoneratethe assessee of its liability to pay penalty if it can be held thatthere was concealment of income or furnishing of inaccurateparticulars. In the present case, the Tribunal has recorded acategoric finding that there was no material to infer concealmentof income or furnishing of inaccurate particulars. The contentionthat in every case where surrender is made inference ofconcealment of income must be drawn under Section 58 of theEvidence Act cannot be accepted. Judgment of the Madras HighCourt also does not lay down such wide proposition. Theobservations therein are on facts of that case. The said judgmentis, thus, distinguishable. 6. No substantial question of law arises. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE March 31, 2011ashwani ( AJAY KUMAR MITTAL ) JUDGE