Dr. G. D. Tripath, C-125, Vidya Vihar, Pilani v. Commissioner Of Income Tax (Iii), Statute Circle, Central Revenuebuilding, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 188 / 2005 Dr. G. D. Tripath, C-125, Vidya Vihar, Pilani. Versus ----Appellant Commissioner of Income Tax (III), Statute Circle, Central RevenueBuilding, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. P.K. KasliwalFor Respondent(s) : Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment Per Hon’ble Jhaveri J. 07/02/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the department and reversed the finding ofthe CIT(A) confirmed the order of the Assessing Officer. 2.This Court while admitting the appeal on 02.08.2005 hasframed the following substantial question of law: “Whether the findings of the Tribunal areperverse on levying the penalty underSection 271(1)(c) on Rs.2,88,905/- which was voluntarily surrendered by theassessee?” 3.The brief facts of this case are that the Assessment in thiscase was completed u/s 143(3) of the I.T. Act, 1961 on 28-1-2000at total income of Rs. 5,69,110/- for the A. Yr. 97-98 and penaltyproceedings u/s 271 (1)(c) of the I.T. Act, 1961 was initiated forconcealment of income by the assessee by way of issue of noticeu/s 274 dt. 28-1-2000 and reply was to be received on 28-2-2000. On the fixed date the A/R of the assessee has filed a writtenreply on 23-2-2000 stating therein that:- “I have filed my return bonafidely true based on informations anddocuments available with me and supplied to me by the personson the site of the construction. I have made the payments as andwhen demanded by them. I have not concealed any facts andinformations and have not filed the incorrect return and particularsin the return. There is no mensrea or malafide on my part. Even during the course of hearing I requested in person and inwriting that I have voluntarily and in goodfaith surrendered theamount and paid the taxes to purchase peace and avoid anylitigation. Whatever additions have now been made are purelybased on conjectures and have no basis to the facts andcircumstances of the case. Therefore, additions are bad-in-law”. 4.Counsel for the appellant Mr. Kasliwal has taken us toSection 271(1)(c) and contended that the Tribunal whileconsidering the fact has missed the important question which isrequired to be considered that the Assessing Officer while issuingthe notice has observed as under: “Assessed. Issue demand notice andchallan, charge interest as per rules.Enclosed I.T.-30 i.e. calculation of tax whichforms a part of this order. Penalty noticeu/s 271(1)(c) of the Income Tax Act, 1961has also been issued for not furnishing ofaccurate particulars of income.” 5.He has further contended that in view of the decision ofUnion of India Vs. Dharmendra Textiles- 306 ITR 277 (SC)and the decision of High Court of Karnataka at Bengalure inthe case of Commissioner of Income Tax, Central Revenue,Bildings vs. the Income Tax Officer [I.T.A.No. 380 of 2015]decided on 23.11.2015 which was affirmed by the Supreme Courtin case of Commissioner of Income Tax & Anr. vs. M/s SSA’sEmerald Meadows- Special Leave To Appeal (CCNo.11485/2016) decided on 05.08.2016. The Karnataka HighCourt in the case of Commissioner of Income Tax, CentralRevenue, Bildings (supra)in para 3 has observed as under: 5.He has further contended that in view of the decision ofUnion of India Vs. Dharmendra Textiles- 306 ITR 277 (SC)and the decision of High Court of Karnataka at Bengalure inthe case of Commissioner of Income Tax, Central Revenue,Bildings vs. the Income Tax Officer [I.T.A.No. 380 of 2015]decided on 23.11.2015 which was affirmed by the Supreme Courtin case of Commissioner of Income Tax & Anr. vs. M/s SSA’sEmerald Meadows- Special Leave To Appeal (CCNo.11485/2016) decided on 05.08.2016. The Karnataka HighCourt in the case of Commissioner of Income Tax, CentralRevenue, Bildings (supra)in para 3 has observed as under: “3.The Tribunal has allowed the appealfiled by the assessee holding the noticeissued by the Assessing Officer underSection 274 read with Section 271(1)(c) ofthe Income Tax Act, 1961 (for short ‘theAct’) to be bad in law as it did not specifywhich limb of Section 271(1)(c) of the Act,the penalty proceedings had been initiatedi.e., whether for concealment of particularsof income or furnishing of inaccurateparticulars of income. The Tribunal, whileallowing the appeal of the assessee, hasrelied on the decision of the Division benchof this Court rendered in the case ofCommissioner of Income Tax vs.Manjunatha Cotton And GinningFactory (2013) 359 ITR 565.” 6.He has further contended that in view of the fact that theCIT(A) while considering the case of the appellant has held at page 36 in para 5 as under: “After considering the issue in totality I amof the view that penalty is leviable only onthe figure of Rs.36915. This finding isbased on the ratio of Mad. High Court asalso of the Hon’ble Supreme Court in thecase of Sh. Suresh Chand Mittal in 251 ITR-9 (where the Hon’ble S.C. has upheld thedecision of the M.P. High Court in a casewhere after search revised return showingan extra income was filed and the M.P. HighCourt had held that the provisions ofSection 271(1)(c) were not applicable)wherein even after the most stringentaction of the department by declaring theamounts penalty under section 271(1)(c)was not held to be leviable. Similarly howhousehold withdrawals being estimates donot call for levying of concealment penalty.In the above back ground the penalty leviedis reduced and the AO is directed to re-calculate it on Rs.36,915/-. The assesseewill get the resultant relief.” 7.However, counsel for the department Mr. Mathur hascontended that in view of the decision of this Court in the case ofCommissioner of Income Tax vs. Mohd. Mohtram Farooqui,(2003) 259 ITR 132 has held as under: “11. After this amendment the theory ofdeemed concealment has been brought in.In case addition is made and theexplanation submitted by the assessee isnot satisfactory, income added should betreated as deemed concealment. In the case in hand, the amount of Rs.5,92,340 was seized from the assessee bythe police. He disclosed that part of theamount belongs to his brother, brother-in-law and part of the amount belongs to him.No specific figure of amount has been givenhow much belongs to his brother, how muchbelongs to his bother-in-law and how muchbelongs to him. If what he explained wascorrect then it is obviously he must beknowing the figure of amount how muchbelongs to him, how much to his brotherand how much to his brother-in-law, jointly or separately. He has not even given thepurpose such as whether the amount wascarried for or relates to any specifictransaction to pay that amount to anyspecific person for any transaction. In the case in hand, the amount of Rs.5,92,340 was seized from the assessee bythe police. He disclosed that part of theamount belongs to his brother, brother-in-law and part of the amount belongs to him.No specific figure of amount has been givenhow much belongs to his brother, how muchbelongs to his bother-in-law and how muchbelongs to him. If what he explained wascorrect then it is obviously he must beknowing the figure of amount how muchbelongs to him, how much to his brotherand how much to his brother-in-law, jointly or separately. He has not even given thepurpose such as whether the amount wascarried for or relates to any specifictransaction to pay that amount to anyspecific person for any transaction. It is unbelievable that if any person whocarries this huge amount does not know theexact purpose to whom the amount is to bepaid and for what purpose or in respect ofwhich transaction the amount being carried.Therefore, it left no doubt that explanationfurnished by the assessee at the time ofseizure is false. The penalty is notautomatic but the penalty can be levied onconsidering the facts on record of a case. Itis not necessary that some more materialshould be brought on record in such case ifsufficient material is available on record forpenalty. No material on record has beenplaced to support the case of assessee thatdepartment has pressurised him forsurrendering income of Rs. 5,92,340. The assessee simply said that he hassurrendered the income to buy peace. Thattype of explanation any assessee can takebut unless it is supported by some materialthat cannot be accepted. Otherwise if thistype of explanation is accepted without anymaterial in support, the provisionsof section 271(1)(c) will be redundant, andno purpose will be served of theExplanation inserted by amendmentin section 271(1)(c). It is also not in disputethat amended provisions of section 271(1)(c) is applicable in the case in hand. Evencounsel of assessee has not suggested inthis case what type of material should bebrought on record by Income Tax Officer forimposing penalty under section 271(1)(c) ofthe Act, 1961.” 8.Therefore, he has contended that the view taken by theTribunal is required to be affirmed and the appeal deserves to bedismissed. 9.We have heard counsel for both the sides. 10.Section 271(1)(c) reads as under: “1.If the [Assessing] Officer or the[Commissioner (Appeals)] [or the [PrincipalCommissioner or] Commissioner] in thecourse of any proceedings under this Act, issatisfied that any person a…….b…….c.has concealed the particulars of hisincome or furnished inaccurate particulars of[such income, or].” 11.On notice or having brought to the notice of the assesseethat he is required to be explained in terms of Rs.288905/-. Whenhe was confronted with the return, he filed the revised return andthe same has been accepted. The CIT(A) in para 4 has held asunder: “4.The matter has been considered andthe records have been examined. Thefollowing facts are clear: 1.The assessee had filed return for theA.Y. 97-98 on an income of Rs.1,93,170/-only on 30.6097. while filing the returnoutstanding liabilities were shown atRs.2,92,500. 2.There is evidence from file regardingenquiries conducted.3.Subsequently revised return was filedon 12.09.1997 surrendered an amount ofRs.2,88,905.4.Assessment order was framed additionthe total liabilities shown amounting toRs.3,25,802 (288905+36915).5.In appeal this order was confirmed. 12.Taking into consideration the language in true spirit of theprovisions of section 271(1)(c), he has revered the order of theAssessing Officer, however, the Tribunal in para 6 thoughconsidering the fact that the assessee has with a view to purchasepeace with the revenue and to come out of vexed litigation could be treated as bonafide has filed the revised return. We are of theopinion that the contention raised by the counsel for the appellantis required to be accepted. 2.There is evidence from file regardingenquiries conducted.3.Subsequently revised return was filedon 12.09.1997 surrendered an amount ofRs.2,88,905.4.Assessment order was framed additionthe total liabilities shown amounting toRs.3,25,802 (288905+36915).5.In appeal this order was confirmed. 12.Taking into consideration the language in true spirit of theprovisions of section 271(1)(c), he has revered the order of theAssessing Officer, however, the Tribunal in para 6 thoughconsidering the fact that the assessee has with a view to purchasepeace with the revenue and to come out of vexed litigation could be treated as bonafide has filed the revised return. We are of theopinion that the contention raised by the counsel for the appellantis required to be accepted. 13.In that view of the matter, the issue is answered in favour ofthe assessee and against the department. 14.The appeal stands allowed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. Asheesh Kr. Yadav/13