Tca/410/2011 Of Commissioner Of Income Tax v. M/S.sri Meenakshisundaram & Co

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Tax Case (Appeal) No.410 of 2011 Commissioner of Income TaxChennai. ... Appellant -vs- M/s.Sri Meenakshisundaram & Co.,105, Harris Road,Chennai 600 002.... Respondent Tax Case (Appeal) filed under Section 260-A of the IncomeTax Act, 1961 against the order of the Income-tax AppellateTribunal, Chennai, Bench 'A', dated 26.05.2006, passed inI.T.A.No.1465/Mds/2003 for the assessment year 1995-96 andappeal against the order of the Commissioner of Income Tax(Appeals)-IX, 121, M.G.Road, Chennai - 34 dated 12/05/2003 inIT/Appeal No.146/2001-2002 and appeal against the Income TaxOfficer, Business Range VI(4), Chennai 34 dated 18/01/2002 inPAN/GIR No.640761-M. (Delivered by T.S.Sivagnanam, J.) This appeal, by the Revenue filed under Section 260A of theIncome-tax Act, 1961 (hereinafter referred to as “the Act”), isdirected against the order passed by the Income-tax AppellateTribunal, Chennai, Bench 'A' (for brevity “the Tribunal”), inI.T.A.No.1465/Mds/2003, dated 26.05.2006, for the assessmentyear 1995-96. 2.This tax case appeal has been filed raising the followingsubstantial question of Law:- https://hcservices.ecourts.gov.in/hcservices/ “Whether in the facts and circumstances of thecase, the Tribunal was right in holding thatpenalty u/s 271(1)(c) can not be levied in a casewhere the assessee filed its return under VDIS butfailed to pay the tax?”3.We have heard Mr.D.Prabhu Mukunth Arunkumar, learnedStandingCounselfortheappellant/Revenue;andMr.R.Venkatanarayanan, learned counsel appearing for therespondent/assessee. 4.The short issue, which falls for consideration is whetherthe Tribunal was right in holding that penalty under Section 271(1)(c) of the Act could not have been levied by the AssessingOfficer, by order dated 01.02.2002. 5.Penalty was imposed merely on the ground that the assesseehad mentioned the income admitted in the invalid declarationfiled under the Voluntary Disclosure Scheme, 1997 (hereinafterreferred to as “the VDIS, 1997”) in the return of income filed,cannot absolve the assessee from penal consequences. Further, itwas held that after admitting the income in the return, the verysame income was reduced from the total income claiming that thesame was already declared under the VDIS, 1997. It was furtherheld that the assessee knowing fully well that the declarationunder the VDIS, 1997 was not accepted by the Commissioner ofIncome Tax, the assessee had falsely claimed that the income wasalready offered under the VDIS,1997 and suffered tax and reducedthe same from the total income. Regarding this finding, maximumpenalty was imposed on the assessee. 6.The assessee filed appeal before the Commissioner ofIncome Tax (Appeals)-IX (for brevity “the CIT(A)”). The assesseeoffered an explanation as to why they had not initiallydisclosed the amount mentioned in the VDIS application. TheCommissioner examined the explanation given by the assessee forits correctness and found the same to be acceptable andaccordingly, allowed the appeal and deleted the penalty. 7.The correctness of the order passed by the CIT(A) waschallenged by the Revenue before the Tribunal. The Tribunal onceagain analysed the factual position, that is, the explanationoffered by the assessee, the conduct of the assessee anddismissed the appeal filed by the Revenue. At this juncture, itwould be useful to refer to paragraph nos.15 and 16 of the orderpassed by the Tribunal to appreciate the factual position in theinstant case and how the Tribunal was satisfied about thebonafides of the assessee:- 7.The correctness of the order passed by the CIT(A) waschallenged by the Revenue before the Tribunal. The Tribunal onceagain analysed the factual position, that is, the explanationoffered by the assessee, the conduct of the assessee anddismissed the appeal filed by the Revenue. At this juncture, itwould be useful to refer to paragraph nos.15 and 16 of the orderpassed by the Tribunal to appreciate the factual position in theinstant case and how the Tribunal was satisfied about thebonafides of the assessee:- “15.Analyzing the above with the facts availableand presented before us, the assessee has offered fortaxation in the revised return made by the assesseeson his own volition before concealment was deductedby the authorities in the course of assessmentprocess. The bona fide act of the assessees rightfrom the inception till filing of the revised returnshows the conduct of the assessees. The assesseeshave also cooperated with the Department in bringingsuch income to tax. 16.By way of dissection, two segments were cameout. The first one is that whether the assesseeshave concealed any particulars of income. On this,it is an admitted fact that initial declaration wasmade by the assessees under VDIS. The proof forpayment of advance tax within the allowable time isnot dispute. Till that stage, the Department wasabsolutely unaware of the fact that the assesseeshaving earned any such income. Had the VDIS compliedwith the payment of tax, etc. the question of levy ofpenalty would not have been agitated. Admittedly thetax has not been paid by the assessees on the incomedeclared under VDIS. This itself will not lead tothe conclusion that the assessee has concealed itsparticular of income as the concealment, as wediscussed, means something more with the malafideintention coupled with mens rea............” 8.We have gone through the order passed by the Tribunal andalso the reasons given by the Tribunal as to how the Tribunalfound that the explanation offered by the assessee wasacceptable and how the conduct was not contumacious ormalicious. Thus, we cannot re-examine the factual findingrecorded by the CIT(A) and the Tribunal. 9.Accordingly, we find no substantial question of law arisesfor consideration. Hence, the appeal filed by the Revenue isdismissed. No costs. Sd/- Assistant Registrar(CS-IV) //True Copy// ssb/abr https://hcservices.ecourts.gov.in/hcservices/ To 1)The Income-tax Appellate Tribunal, Chennai, Bench 'A'.Chennai, Bench 'A'. 2)The Commissioner of Income Tax (Appeals)-IX, 121, M.G.Road, Chennai - 34 121, M.G.Road, Chennai - 34 3)The Income Tax Officer, Business Range VI(4), Chennai 34.Business Range VI(4), Chennai 34. +1 cc to M/s.Subbaraya Aiyar Padmanabhan, S.R.No.7968 T.C.(A) No.410 of 2011KJI(CO)SSM(06/03/2019)