M/S.onkar Chand And Company v. Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA I.T.A No. 71 of 2006 alongwith ITA No.72 of 2006. Date of decision: 24.11.2009 ITA No.71 of 2006 M/s.Onkar Chand and Company …. Appellant Versus Assistant Commissioner of Income Tax. ….. Respondent ITA No.72 of 2006 M/s.Shankar Dass Balram Kumar …. Appellant Versus Assistant Commissioner of Income Tax Coram: ….. Respondent The Hon’ble Mr. Justice Deepak Gupta, J. The Hon’ble Mr.Justice V.K.Ahuja, J. Whether approved for reporting? No For the appellant: Mr. K.D.Sood, Advocate (in both the appeals). For the respondents: Mr.Diwan Singh, Advocate vice Mr.Vinay Kuthiala, Advocate (in both the appeals). Deepak Gupta, J. (Oral) These two appeals under Section 260 A of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) are being disposed of by this common judgment as the following identical questions of law are involved in both the appeals: “i) Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in upholding the order levying penalty when jurisdictional facts for initiation of penalty proceedings were lacking as no satisfaction had been recorded in that behalf? ii)Whether the levy of penalty without reduction of opening balances in the case of Sundry Debtors Rs.9,88,659/- from sundry debtors to Rs.20,79,2311 is sustainable in law when admittedly the findings recorded under the assessment proceedings was not conclusive for levy of penalty? iii) Whether on a proper construction of Section 271 (1)(5) of the Income Tax Act penalty could be imposed on the amounts surrendered in search iv) v) and survey proceedings and the Tribunal has misconstrued the provisions of the Income Tax Act? Whether the penalty could be imposed and be levied with references to the estimated additions and the Tribunal was right in affirming the order of the assessing authority as also the CIT (Appeals)? Whether in view of the fact that the assessment proceedings having not been concluded and the matter was pending before the Settlement Commission, assessing authority was justified in levying the penalty and the Appellate Authority was right in affirming the penalty levied?” Briefly stated the facts of the case are that both the appellants are sister concerns dealing in food grains and Kariana goods on wholesale and retail basis. A survey was conducted in the premises of the appellants which was converted into search and seizure operation under Section 132 of the Act. The said operation started on 16.12.1991 and concluded on 20.12.1991. Unaccounted cash to the extent of Rs.6.10 lacs and other documents were found and seized. It was found that the appellants were indulging in business which was not reflected in their books of account. The appellants offered aggregate sum of Rs.13 lacs for taxation purposes on behalf of both the firms. The appellant in ITA No.71 of 2006 M/s.Onkar Chand and Company filed return of income on 30.12.1992 declaring income of Rs.1,29,390/-. The Assessing Officer assessed the income at Rs.23,68,060/- which was confirmed by the CIT (Appeals). On appeal to the Tribunal, the matter was restored to the file of the Assessing Officer in respect of Rs.2,10,382/- only. Thereafter, the A.O computed the income of the assessee at Rs.14,20,120/-. The A.O imposed penalty under Section 271(1)(c) after obtaining approval of the JCIT. In the case of appellant M/s.Shankar Dass Balram Kumar (ITA No.72 of 2006), return was filed on 31.8.1992 declaring income of Rs.2,22,020/-. The Assessing Officer assessed the income at Rs.31,63,438/-. On appeal, The CIT (Appeals) reduced the income to Rs.25,37,120/-. On further appeal, the Tribunal reduced the income to Rs.18,66,158/-. The A.O imposed penalty of Rs.8,62,524/ under Section 271(1)(c) after obtaining prior approval of the JCIT. In the case of appellant M/s.Shankar Dass Balram Kumar (ITA No.72 of 2006), return was filed on 31.8.1992 declaring income of Rs.2,22,020/-. The Assessing Officer assessed the income at Rs.31,63,438/-. On appeal, The CIT (Appeals) reduced the income to Rs.25,37,120/-. On further appeal, the Tribunal reduced the income to Rs.18,66,158/-. The A.O imposed penalty of Rs.8,62,524/ under Section 271(1)(c) after obtaining prior approval of the JCIT. The penalty imposed in both cases was challenged by filing appeals before the CIT(A). The penalty was confirmed in the case of M/s.Shankar Dass Balram Kumar and in the case of M/s.Onkar Chand & Company, the penalty was reduced to Rs.7,26,814/- from Rs.12,57,360/-. The further appeals filed by the assessee before the Tribunal were disposed of by a common judgment. Hence the present appeals. Section 271 of the Income Tax Act empowers the Assessing Officer to impose penalty in case it is found that the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. There is no manner of doubt that in the present case, the assessee had not disclosed the true income and had furnished inaccurate particulars of its income. As is clear from the assessment, the assessee itself surrendered income of Rs.13 lacs after the search and seizure operations. Even after the operations were completed, the assessee chose to file returns disclosing very low income which were finally assessed at a much higher sum. Therefore, there can be no manner of doubt that Section 271 is applicable and question No.1 is decided against the assessee and in favour of the revenue. As far as question No.2 is concerned, the same is not a question of law and is pure question of fact and, therefore, need not be answered. In respect of question No.3, we find that there is nothing in Section 271(1)(v) which in any way lays down that penalty cannot be imposed on the amounts surrendered in search and survey proceedings. Furthermore, in this case, penalty has not been levied only on the basis of search and survey proceeding but on the basis of the income concealed by the assessee when it filed its returns after search and seizure operations. This question is also decided against the assesssee and in favour of the revenue. As far as question No.4 is concerned, learned counsel for the assessee has failed to bring to our notice any judgment or legal provision which lays down that penalty cannot be imposed with reference to the estimated additions. Therefore, this question is also decided against the assessee and in favour of the revenue. As far as question No.5 is concerned, even if the matter is pending before the Settlement Commission, the statutory provisions which empower the Assessing Officer to levy penalty cannot be set at naught merely because the assessee has chose to approach the Settlement Commission. This question is also answered against the assessee and in favour of the revenue. In view of the above discussion, all the questions are answered against the assessee and in favour of the revenue. Both the appeals are dismissed accordingly. No order as to costs. ( Deepak Gupta ) Judge November 24, 2009 (m) (V.K.Ahuja) Judge