M/S. Yashoda Hybrid Seeds Pvt. Ltd. Thr. Md v. Assistant Commissioner Of Income Tax, Wardha

IN THE HIGH COURT OF JUDICATURE AT BOMBAYNAGPUR BENCH : NAGPUR INCOME TAX APPEAL NO. 8 OF 2015 (M/S. Yashoda Hybrid Seeds Pvt. Ltd. thr. MD vs. Assistant Commissioner of Income Tax, Wardha) Office Notes, Office Memoranda ofCoram, appearances, Court's orders or directions and Registrar's orders. Court's or Judge's orders CORAM : B.P. DHARMADHIKARI &V.M. DESHPANDE, JJ.NOVEMBER 30, 2015. Heard Shri Samarth, learned counsel for theappellant - assessee and Shri Parchure, learned counselfor the respondent – Department. Following two questions are pressed intoservice by Shri Samarth, learned counsel for theappellant. “(I)When there is no concealment of income bythe appellant and when the appellant has paid the taxesfully upon disclosure of income, which may be underwrong head, whether penalty under the provisions ofsection 271(1)(c) of Income Tax Act, could be levied ? (II)Whether the Income Tax authorities belowhave exceeded the jurisdiction in imposing the penalty,when entire income was disclosed by the appellant andthe appellant has paid all the taxes on it ?” The assessee filed the return for theAssessment Year 2007-08 and in that return, filed on15.11.2007, disclosed total income of Rs.9,59,620/-and agricultural income of Rs.87,98,520/-. It wasprocessed under Section 143(1) on 05.03.2009 andduring scrutiny, notice under Section 143(2) was issued on 18.09.2008. The facts show that survey under Section133A of the Income Tax Act was undertaken at the fourestablishments between 12.11.2009 to 14.11.2009.The survey revealed that three concerns to whomagricultural produce was sold by the assessee company,did not have any separate existence. The address ofR.S.P.L. was in fact the address of residence of theDirectors Shri Shankar and Smt. Uma Pawade. Therewas no shop or office of Ashtavinayak Seeds or BalajiSeeds. Gumashta license and stamps of Ashtavinayakwere recovered from the Directors chambers atregistered office of the assessee. The information was sought under Section133(6) from the Tahsildar, Hinganghat and it revealedthat as per 7/12 extracts, on the land on which cottonwas claimed to have been grown, Soyabean crop andTur was cultivated. Part of the lands were lying barren.No records relating to expenses pertaining toagricultural or any separate agriculture division wasfound or produced. From the office of the assessee, thedocuments showing sale of plots under various nameswere also found. Income from those sales was neveroffered to tax at the hands of company or its Directors.“Gupchup” ledger was also found and it recorded out ofbook sales. On 13.11.2009, statement of ManagingDirector was recorded and that statement has beenreproduced in penalty order dated 17.06.2010 in para5. representative of assessee furnished letter duly signedby Managing Director, offering additional income ofRs.88 lakh to tax for the Assessment Year 2007-08. Thecontention that this was offered to buy peace or thenincome was already disclosed and as such there is noconcealment of income, raised by Shri Samarth, learnedcounsel, needs to be looked into in this background. The Assessment Year 2007-08 wascompleted on 24.12.2009 after survey and AssessmentYear also mentions statement of Managing Directorrecorded on 13.11.2009. He has stated that - representative of assessee furnished letter duly signedby Managing Director, offering additional income ofRs.88 lakh to tax for the Assessment Year 2007-08. Thecontention that this was offered to buy peace or thenincome was already disclosed and as such there is noconcealment of income, raised by Shri Samarth, learnedcounsel, needs to be looked into in this background. The Assessment Year 2007-08 wascompleted on 24.12.2009 after survey and AssessmentYear also mentions statement of Managing Directorrecorded on 13.11.2009. He has stated that - “In Assessment Year 2007-09 we had donefarming on leased land but income shown fromthe above agriculture in the return is notcorrect. We have maintained “Gupchup” ledgersales which were never accounted in regularbooks maintained by us. Along with thisincome, the income of the company from sale ofplots in the names of Radha Nagar, YashodaNagar, Ganesh Nagar etc. was by mistakerecorded as agriculture income in the return ofincome. We accept this mistake. Hence, we willrevise the return for A.Y. 2007-08 in whichagricultural income was shown asRs.88,00,000/- and in the revised return weshould offer to tax Rs.88,00,000/- as “Incomefrom Other sources”. This would be over andabove the regular returned income.” The provisions of Section 271(1)(c) of theIncome Tax Act, are attracted when inaccurate particulars of income are given or income isappropriated under wrong head, so as to avoid the taxliability. The judgment of the Hon'ble Apex Court inthe case of C.I.T., Ahmedabad vs. Reliance PetroproductsPvt. Ltd., reported at AIR 2010 SC 1881, shows thatthere the assessee had filed a return declaring loss andreturn was finalized under Section 143(3), determiningincome at Rs.2,22,688/-. The penalty proceedingsunder Section 271(1)(c) of the Income Tax Act wereinitiated on account of concealment of income/furnishing of inaccurate particulars of income. Thatparticular expenditure was claimed by the assessee onthe basis of expenditure made for paying interest on theloans incurred by it, by which amount the assesseepurchased some IPL shares by way of its businesspolicies. The Hon'ble Apex Court has found that theassessee did not earn any income by way of dividendfrom those shares. The company had in its returnclaimed disallowance of the amount of expenditure forthe sum of Rs.28,77,242/- under Section 14A of theAct. It is in this background that the Hon'ble ApexCourt found that it was not amounting to furnishinginaccurate particulars or concealment of income. Thefinding, therefore, is after considering the facts and nogeneral proposition, as such, has been laid down. In the case of Anoopgarh Kraya VikrayaSahakari Samiti Ltd. vs. Assistant Commissioner ofIncome Tax, at (2015) 124 DTR (Raj) 165, the assesseehad disclosed details about his income including thefact of sale of Dal mill and receipt of consideration. Depreciation was claimed by the assessee treating thesame as a depreciable asset. The written down valuetoo was referred but the error crept in treating thetransaction as long term capital gain. The High Courtheld that it could not have been treated as concealmentof particulars of its income as the claim was debatableone and there was no specific finding that the assesseehad submitted false or incorrect amount. In the case of Commissioner of Income-Taxvs. S. Khader Khan Son, reported at (2008) 300 ITR 157(Mad), the learned Single Judge has found that theword “may” used in Section 133A(3)(iii) of the IncomeTax Act, makes it clear that the materials collected andthe statement recorded during the survey, under thatsection, are not conclusive piece of evidence by itself. Depreciation was claimed by the assessee treating thesame as a depreciable asset. The written down valuetoo was referred but the error crept in treating thetransaction as long term capital gain. The High Courtheld that it could not have been treated as concealmentof particulars of its income as the claim was debatableone and there was no specific finding that the assesseehad submitted false or incorrect amount. In the case of Commissioner of Income-Taxvs. S. Khader Khan Son, reported at (2008) 300 ITR 157(Mad), the learned Single Judge has found that theword “may” used in Section 133A(3)(iii) of the IncomeTax Act, makes it clear that the materials collected andthe statement recorded during the survey, under thatsection, are not conclusive piece of evidence by itself. In facts before us, the existence of Gupchupledger, out of book sales, not disclosing of said incomein regular books of account, are all admitted facts.These admitted facts are further supported by thestatement of Managing Director, recorded on13.09.2009 during survey operations. The incomewhich was not even disclosed as business income wastreated as agricultural income in the return which waspresented and in relation to which during scrutiny,notice under Section 143(2) was issued. In this situation, it is apparent that all abovejudgments which take a particular view on the strengthof material found on record, have no application. Here,the assessee has on one hand stated that the incomewas disclosed to buy peace and on the other hand, has also contended that the statement to that effect hasbeen recorded under duress. The stand, therefore, isinconsistent. Apart from this inconsistent statement,the material on record is also sufficient to show thatthere was concealment, warranting penalty underSection 271(1)(c) of the Act. In view of the arguments advanced, we findthat substantial questions of law do not arise fordetermination. Income Tax Appeal is, therefore,dismissed. No costs. JUDGE JUDGE *GS.