Priya Soparkar v. Itr 158(Sc

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.75 OF 2017 The Principal Commissioner of Income Tax-18 … Appellant V/s. Shri Ashokkumar Maneklal Parikh … Respondent --- Mr.P.C.Chhotaray for the Appellant.Mr.Nitesh Joshi i/b Mr.Atul Jasani for the Respondent. --- CORAM : AKIL KURESHI AND SARANG V.KOTWAL, JJ. DATE : APRIL 8, 2019. P.C.:- 1.This appeal is filed by the Revenue to challenge the judgment of the Income Tax Appellate Tribunal. Followingquestions have been presented for our consideration:- “I.Whether on the facts and in the circumstancesof the case and in law the ITAT was justified in notupholding the order of penalty passed by theAssessing Officer under Section 271(1)(c) of theAct? II.Without prejudice to above, whether on thefacts and in the circumstances of the case and inlaw, the CIT (A) was justified in reducing penaltyrelatable to excess claim of exemption u/s 54EC of the Act?” 2.Undisputed position is that identical questions in relationto the brother of the present assessee came up for considerationin Income Tax Appeal No.1812 of 2016 filed by the Department.The appeal of the Department was dismissed by an order dated 4[th] March, 2019 making following observations:- “2. The principle dispute of the revenue in thisappeal relates to the judgment of the Tribunaldeleting penalty imposed by the Assessing Officeragainst the respondent-assessee under Section271(1)(c) of the Income Tax Act, 1961 ("the Act"for short). 3.Case of the revenue is that the assessee hadearned sizable income, which should have beenoffered to the tax by way of capital gain, which inthe return of income filed by the assessee for theassessment year 2010-11, assessee had not done. Itis only upon the Assessing Officer noticing the hugemismatch between the assessee's declared incomeand the claim of the refund of advance tax, that therevenue decided to take the return of the assesseein scrutiny during which the necessary facts could begathered. After making additions in the hands of theassessee, the Assessing Officer instituted penaltyproceedings. Such penalty was confirmed by the CIT(Appeals), upon which the assessee carried thematter before the Tribunal. The Tribunal by theimpugned judgment deleted the penalty inter-aliaobserving that for the year under considerationthe assessee had filed return on 20[th] September, 2010. On the same day, the assessee had also fileda letter with the Assessing Officer giving relevantinformation to the effect that the capital gainaccruing on account of sale of leasehold rights in theproperty situated at Goregaon was not included inthe computation on the plea of self generated asset.A note was also appended at the end of thecomputation of the income, which suggests thatreceipt accrued out of sale of leasehold rights andthe assessee's justification for the same not beingexhibitable tax. During the course of theproceedings, the assessee had furnished furtherdetails which included the lease documents, lettermaking detailed grounds why according to theassessee receipt on sale of leasehold rights was notchargeable to capital gain tax etc. On such basis theTribunal recorded that there was no dispute that noinformation given in the return was found to beincorrect or inaccurate. Merely because the claimput forth by the assessee was found to beunsustainable in law, in the opinion of the Tribunalpenalty would not necessarily attach. In thiscontext, the Tribunal relied on the decision of theSupreme Court in case of Commissioner of IncomeTax, Ahmedabad Vs. Reliance Petroproducts Pvt.Ltd.[1]. The Tribunal also noted that before filing thereturn, the assessee had obtained an opinion of theChartered Accountant why the receipt in questionwas not exhibitable to tax. Primarily, on suchgrounds, the Tribunal deleted the penalty andallowed the assessee's appeal. 4.Appearing for the revenue, learned counsel ShriChhotaray vehemently contended that the assesseehad not made true and full disclosures of income inthe return filed. The existence of the so-called letterdated 20[th] September, 2010 was doubtful. In anycase, by merely writing the letter giving further details, the assessee cannot escape the penaltyproceedings. He submitted that there was clearattempt on the part of the assessee to suppress theincome and the attempt would have succeeded ifthe return had not been taken in scrutiny. He furthersubmitted that Chartered Accountant's opinion wasnot produced on record. Counsel relied on certaindecisions to which reference would be made at thelater stage. 5.On the other hand, the learned counsel ShriJoshi for the respondent-assessee opposed the appealcontending that full particulars were producedbefore the Department. CIT (Appeals) had alsoreferred to the assessee's letter dated 20[th]September, 2010. Before the Tribunal the revenuehad never questioned the existence of the said letteror of the certificate of the Chartered Accountantrelied upon by the Tribunal. 6.Having heard learned counsel for the partiesand having perused documents on record, we findthat the Tribunal has given elaborate reasons fordeleting the penalty. The record suggests thatassessee had not offered certain receipts to taxunder bonafide belief that the same was nottaxable. Quite apart from the existence of the letterdated 20[th] September, 2010 not being disputed bythe revenue either before the CIT (Appeals) or theTribunal, during the assessment proceedingsundoubtedly the assessee had made fullrepresentation why according to his belief thereceipt was not chargeable to tax. Merely becausethe Assessing Officer did not accept such a stand ofthe assessee, would not automatically permitrevenue to levy penalty. So much, it made abundantly clear by the SupremeCourt through series of judgments particularly incase of Reliance Petroproducts Pvt. Limited (supra). Further, the reference to the CharteredAccountant's opinion in favour of the assesseemade by the Tribunal also cannot be discarded. Wedo not find any assertion of the revenue at anystage of the proceedings that no such opinionexisted. (supra). Further, the reference to the CharteredAccountant's opinion in favour of the assesseemade by the Tribunal also cannot be discarded. Wedo not find any assertion of the revenue at anystage of the proceedings that no such opinionexisted. 7.We may now refer to the decision cited byShri Chhotaray. In case of Commissioner of Incometax Vs. A. Sreenivasa Pai[1] Division Bench of KeralaHigh Court referred to the explanation added bythe Finance Act, 1964 and subsequently, substitutedin the year 1976 to Section 271 and observed thatsuch explanation was introduced to shift the burdenof proof from the revenue to the assessee. Whiledoing so, the Court also observed that :-"It is for the fact finding body to judge the relevancyand sufficiency of the materials. If such a factfinding body, bearing the aforesaid principles inmind, comes to a conclusion that the assessee haddischarged the opinion, it becomes a conclusion ofthe fact and no question of law arises." Reliance was placed on the decision of the SupremeCourt in case of Union of India and others Vs.Dharmendra Textiles Processors and others[2], inwhich while examining the provisions of Section11AC of the Central Excise Act, 1944 in the contextof the penalty provisions contained in Section271(1)(c) of the Act, it was observed that the penaltyunder the said provision is in the nature of the civilliability and the requirement of the mens-rea doesnot exist. Reliance was also placed on the decision ofthe Supreme Court in case of Mak Data P. Ltd. Vs.Commissioner of Income Tax-II[3] in which it washeld that mere statement of an assessee that hehad surrendered the additional income with a view 1242 ITR 29 2(2008) 306 ITR 277(SC) 3Civil Appeal No. 9772 of 2013 (SC) to avoid litigation to buy peace would not be aproper defence under Section 271(1)(c) of the Act.These judgments thus cover different areas withwhich we are not concerned in the present appeal.We have given independent reasons for confirmingthe view of the Tribunal. No question of law in thisrespect arises. 8.The second question pertains to penalty forbreach of Section 54EC of the Act. Amount involvedis extremely small and we therefore, do notentertain the question without going into meritsthereof. We however record the confession of ShriJoshi for the assessee that the question whetherinvestment under section 54EC can be total of Rs.50lakhs in all or would be capped to Rs.50 lakhs in aassessment year, permitting similar such investmentin the next year was not free from doubt. Theassessee had no intention to breach this ceiling. 9.Income Tax Appeal is dismissed.” 3.In the result, without recording separate reasons, thisappeal is also dismissed. (SARANG V.KOTWAL,J.) (AKIL KURESHI,J.)….