Suresh Chand Laxmi Chand Suthar, Village Kesunda, Chottisadari, Chittorgarh v. Income Tax Officer, Ward-3, Chittorgarh

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 1/2015 Suresh Chand Laxmi Chand Suthar, Village Kesunda, ChottiSadari, Chittorgarh. ----Appellant Versus Income Tax Officer, Ward-3, Chittorgarh ----RespondentFor Appellant(s) : Mr. Sharad Kothari HON'BLE MR. JUSTICE SANGEET LODHA HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHURJudgment 03/07/2018 1.This appeal preferred by the appellant under Section 260A ofIncome Tax Act, 1961 (for short “the Act”) is directed againstorder dated 25.7.14 of the Income Tax Appellate Tribunal (ITAT),Jodhpur Bench, Jodhpur, whereby an appeal preferred by theappellant against the order of Commissioner of Income Tax(Appeals) [CIT (A)] dated 28.5.12 pertaining to Assessment Year2002-03, affirming the order of penalty dated 27.6.11 passed bythe I.T.O. Ward III, Chittorgarh under Section 271 (1)(c) of theAct, stands dismissed. 2.The appellant was awarded a license for poppy straw for theFinancial Year 2001-02 by the Department of Excise, Ratlam(M.P.). The appellant deposited a sum of Rs.1,16,05,000/- aslicense fee. The appellant did not file return of income. TheAssessing Officer (A.O.) issued a notice under Section 148 of theAct to the appellant after recording the reasons. In response to the notice, the assessee did not file any details and therefore, theA.O. proceeded to pass the assessment order under Section 144of the Act assessing the income of assessee at Rs.1,27,65,500/-,which included undisclosed deposit of license fee ofRs.1,16,65,000/- and estimated profit of Rs.11,60,500/- earnedfrom poppy straw contract. Aggrieved by the ex parte assessmentorder dated 27.3.06, the appellant preferred an appeal beforeCIT (A). The appeal was dismissed by the CIT (A) vide order dated26.12.08 as barred by limitation. However, the appeal preferredby the appellant against the order dated 26.12.08 passed by theCIT (A) was allowed by the ITAT, Jodhpur Bench vide order dated30.6.09 and the matter was remanded to the Assessing Officer forpassing the assessment order afresh. After restoration of the caseto the files of A.O., the appellant filed Return of Income for theAssessment Year 2002-03 showing a loss of Rs.4,18,889/-. Whilefiling the return, the appellant submitted Computation of Income,Profit & Loss Account and Capital Account showing an openingbalance of Rs.92,69,420/- and offered a sum of Rs.91,00,000/- asincome without disclosing the source. Since the appellant failed toexplain the claim of opening balance, the A.O. treated the amountof opening balance of Rs.92,69,420/- as its undisclosed income.Further addition of Rs.2,71,000/- was also made as assesseefailed to prove the creditworthiness of Creditors. The A.O. alsoinitiated penalty proceedings under Section 271 (1)(c) of the Actagainst the appellant for concealment of the income andfurnishing of inaccurate particulars of income. In response to thenotice, the appellant filed reply contending that no penalty can belevied inasmuch as, the appellant’s case does not fall within theambit of provisions of Section 271 (1)(c) of the Act. The explanation furnished by the appellant was not found plausibleand acceptable by the A.O. and accordingly, vide order dated27.6.11 a penalty of Rs.28,92,789/- was imposed upon theappellant. 3.Aggrieved by the penalty order dated 27.6.11, the appellantpreferred an appeal which was dismissed by the CIT (A), Udaipurvide order 28.5.12. Aggrieved thereby, the second appealpreferred by the appellant has been dismissed by the ITAT. Hencethis appeal. explanation furnished by the appellant was not found plausibleand acceptable by the A.O. and accordingly, vide order dated27.6.11 a penalty of Rs.28,92,789/- was imposed upon theappellant. 3.Aggrieved by the penalty order dated 27.6.11, the appellantpreferred an appeal which was dismissed by the CIT (A), Udaipurvide order 28.5.12. Aggrieved thereby, the second appealpreferred by the appellant has been dismissed by the ITAT. Hencethis appeal. 4.Learned counsel appearing for the appellant contended thatit was not a case of concealment of the income inasmuch as, theappellant had not earlier filed the return and in response to thenotice under Section 148, he has voluntarily offered income ofRs.91,00,000/- in the Profit & Loss Account stated to be out ofopening capital. Learned counsel would submit that the appellanthaving made disclosure of the income voluntarily, the same cannotbe treated to be a case of concealment of particulars of income orfurnishing of inaccurate particulars of such income and thus, theprovisions of Section 271(1)(c) of the Act are not attracted in thematter. 5.We have considered the submissions of the learned counselfor the appellant and perused the material on record. 6.Indisputably, the Assessing Officer detected the undisclosedincome from the information of the Department of Excise,Ratlam. The appellant for the first time disclosed opening capitalof Rs.92,69,427/- in the return of income filed, after setting asideof the best judgment assessment passed by the Assessing Officerafter issuing notice under Section 144 of the Act. Admittedly, theappellant did not produce any evidence to prove the amount of opening balance as disclosed in the return filed. Thus, provisionsof Explanation 1 to Section 271(1)(c) is rightly held applicable tothe present case by the learned ITAT. 7.Moreover, as laid down by the Hon’ble Supreme Court in‘Make Data (P) Ltd. Vs. Commissioner of Income Tax-II’ 358 ITR593, the law does not provide that when an assessee makes avoluntary disclosure of his concealed income, he had to beabsolved from penalty. In the instant case, the disclosure of theincome by the appellant cannot be considered to be voluntaryinasmuch as the disclosure was made in view of detection madeby the Assessing Officer. Further, by virtue of Explanation 3 toSection 271(1)(c) of the Act, the appellant having failed to file thereturn within the specified period, which he was required tofurnish in respect of taxable income for the relevant assessmentyear, notwithstanding that he has furnished a return of his incomepursuant to notice under Section 148, for the purposes of clause(c) of sub-section (1) of Section 271, he will be deemed to haveconcealed the particulars of his income in respect of suchassessment year. 8.Thus, viewed from any angle, the order impugned passed bythe ITAT confirming the order passed by the CIT(A) upholding theorder of penalty passed by the Assessing Officer does not sufferfrom any infirmity or illegality and thus, the present appeal doesnot involve any substantial question of law requiring considerationof this Court. 9.In the result, the appeal fails, it is hereby dismissed. (VIRENDRA KUMAR MATHUR),J (SANGEET LODHA),J