Commissioner Of Income Tax,Chennai v. Dr.r.jayabalan,Nirmala Nursing Home

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMand THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case (Appeal) No.917 of 2008 Commissioner of Income Tax,Chennai. ... Appellant -vs- Dr.R.Jayabalan,Nirmala Nursing Home,No.38 East R.K.Puram,Karur.... Respondent Tax Case (Appeal) filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, Madras 'D' Bench dated 14.12.2007 in ITANo.2177/Mds/2007 for the assessment year 2004-05. against theorder dated 24.08.2007 and made in ITA.345/06-07 on the file ofCommissioner of Income Tax(A), Tiruchirapalli against the orderdated 27.09.2006 and made in PAN.ADIPJ46974/04-05 on the fie ofDeputy Commissioner of Income Tax Central Circle II,Tiruchirapalli and against the order dated 28.03.2006 and madein PAN/GIR.No.ADIPJ46974/703-J on the file of AssistantCommissioner of Income Tax Central Circle II, Tiruchirapalli. JUDGMENT Heard Mr.T.R.Senthil Kumar, learned Senior Standing Counselassisted by Mr.S.Rajesh, learned Senior Standing Counsel and https://hcservices.ecourts.gov.in/hcservices/ M/s.K.G.Usha Rani, learned Junior Standing Counsel for theappellant; and Mr.G.Baskar, learned counsel for the respondent. 2.This tax case appeal has been filed challenging the orderof the Income Tax Appellate Tribunal, Madras 'D' Bench, dated14.12.2007, in ITA No.2177/Mds/2007 for the assessment year2004-05. 3.The above appeal has been admitted on the followingsubstantial questions of law:-“1.Whether on the facts and circumstances ofthe case, the Tribunal was right in deleting thepenalty u/s 271(1)(c) on the ground that theundisclosed income related to on money paid forpurchase of immovable property and explanation 5 toSec.271(1)(c) is not applicable to immovableproperty? 2.Whether on the facts and circumstances ofthe case, the Tribunal was right in deleting thepenalty u/s 271(1)(c) on the ground that becausethe Department had not asked relevant questions, itis to be presumed that the assessee had given bestinformation regarding the source? 4.Before we proceed to consider as to whether thesubstantial questions of law as framed arise for consideration,we need to take note of the factual position. 5.The learned Senior Standing Counsel appearing for theRevenue vehemently contended that the assessee, in his ownstatement, had candidly admitted the payment of money towardsthe purchase of the property, which was not disclosed and thisis sufficient to hold that the assessee is liable for payment ofpenalty under Section 271(1)(c) of the Income Tax Act, 1961(hereinafter referred to as “the Act”). 6.We have gone through the order passed by the Tribunal.The Tribunal, in paragraph 14, took note of the statement of theassessee, which is to the following effect:-The Tribunal, in paragraph 14, took note of the statement of theassessee, which is to the following effect:- ““Do you want to say anything?”, the honestassessee stated that he had admitted Rs.1 Croreapproximately in the purchase of immovable propertyand this was not accounted and he admitted to paythe tax with a further request that in view of theabove surrender, he may be relieved of the penaltyand prosecution.” 7.After taking note of the above statement, the Tribunalproceeded to discuss the effect of the statement and the conductof the assessee on the following lines:- 6.We have gone through the order passed by the Tribunal.The Tribunal, in paragraph 14, took note of the statement of theassessee, which is to the following effect:-The Tribunal, in paragraph 14, took note of the statement of theassessee, which is to the following effect:- ““Do you want to say anything?”, the honestassessee stated that he had admitted Rs.1 Croreapproximately in the purchase of immovable propertyand this was not accounted and he admitted to paythe tax with a further request that in view of theabove surrender, he may be relieved of the penaltyand prosecution.” 7.After taking note of the above statement, the Tribunalproceeded to discuss the effect of the statement and the conductof the assessee on the following lines:- “Going through the statement recorded on4.2.2004, by replying to the question No.6, whichhas already been reproduced above in this order, wefind that the assessee surrendered the same as inhis individual unaccounted investment for thecurrent year and he will file the return and hisletter dated 29.12.2003 written to the assessingauthority also supports this contention. Thesearch took place on 24.12.2003. but, the letteris dated 29.12.2003, i.e., after five days, whichclearly explains the approach of the assessee todisclose this as his income in the return duringthis current year itself. This factum is alsoagain repeated in his sworn statement dated4.2.2004. From all these, the act of the assesseeclearly establishes that he is entitled forimmunity available under Explanation 5 to Section271(1)(c) on two counts – firstly the immovableproperty is not an article or thing so as to applyExplanation 5 and secondly, even if Explanation 5is applicable, the assessee has given at bestinformation regarding the source and particularlyno question was asked by the Department. For thefailure of the Department, the assessee cannot bevitiated with such penalty. Under thecircumstances, we set aside the orders of theauthorities below and direct the Assessing Officerto delete the penalty” 8.On a perusal of the above decision of the Tribunal, it isevidently clear that the Tribunal reiterated the factualposition before it came to the conclusion about the conduct ofthe assessee and that he is entitled for immunity availableunder Explanation 5 to Section 271(1)(c) of the Act on twocounts - firstly, the immovable property is not an article orthing so as to apply Explanation 5 and secondly, even ifExplanation 5 to Section 271(1)(c) of the Act is applicable, theassessee has given at best information regarding the source andparticularly, no question was asked by the Department. 9.Thus, we find that the Tribunal on reappreciation of thefactual position, deleted the levy of penalty. Thus, the entireissue revolves around the factual position and we find that nosubstantial question of law arises for consideration. Apartfrom that, we note that the quantum of penalty, which was levied https://hcservices.ecourts.gov.in/hcservices/ by the Department, is lesser than the threshold limit prescribedin the Circulars of the Central Board of Direct Taxesprescribing the limits of the Revenue to pursue the appeals,which are pending before this Court. 10.Thus, for all the above reasons, the tax case appeal isdismissed. No costs. Sd/- Assistant Registrar(CCC) //True Copy// Sub Assistant RegistrarabrTo1.The Commissioner of Income Tax, Chennai.2.The Income Tax Appellate Tribunal, Madras 'D' Bench.3.The Commissioner of Income-tax (Appeals), No.4, Williams Road, Cantonment, Tiruchirappalli-620 001.4.The Deputy Commissioner of Income Tax Central Circle II, Tiruchirapalli5.The Assistant Commissioner of Income Tax Central Circle II, Tiruchirapalli.+1cc to Mr.T.R.Senthil Kumar, Advocate, S.R.No.49242+1cc to Mr.N.Muthu Kumar, Advocate, S.R.No.49113 (18/09/18) Tax Case (Appeal) No.917 of 2008 VD(Co)CS/30/08/18 https://hcservices.ecourts.gov.in/hcservices/