The Commissioner Of Income Tax, Alwar v. Shri Ashok Kumar Jain

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 8 / 2013 The Commissioner of Income Tax, Alwar ----Appellant Versus Shri Ashok Kumar Jain, Prop. M/s Kumar Construction & M/s Jain Poles, 21, Scheme No. 10, Alwar ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo Jain with Ms. Shiva goyalFor Respondent(s) : Mr. Gunjan Pathak with Ms. Ishita Rawat _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 20/07/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal preferred by the department confirming theorder of CIT(A). 2.This court while admitting the matter framed the following question of law:- “Whether the Tribunal was legally justified incancelling the penalty imposed u/s 271(1)(c) bythe Assessing Officer specifically when theassessee filed revised computation of incomeduring the course of assessment proceedings bysurrendering a sum of Rs. 1.50 crores on accountof unverified creditors and Rs. 85,500/- onaccount of wrong claim of deduction u/s 80G?” where return was filed on 1[st] November, 2007 and 25[th] December,2008 and survey was conducted on 25[th] November, 2009 anddisclosure was made for the assessment year 2007-08 in 2 crore,for 2008-09, 5 crores and for 2009-10, 1 crore in spite of thefinding arrived at by the AO in proceedings which reads as under:- “On the basis of examination of account books andvouchers etc, it was noticed that the assessee hasbeen claiming bogus expenses and showing bogusliabilities etc. it was also noticed that theundisclosed income of the assessee was broughtback to his account books through accommodationentries taken by the assessee. All these facts wereclearly admitted by him in his statement recordedduring the course of survey in the presence of hisC.A. and Accountant etc. He stated that he hadbooked bogus expenses to reduce the tax liabilityand shown non genuine liability on account ofexpenses. He admitted that he had non genuineliabilities of Rs. 2 Crores in the assessment year2007-08, Rs. 1 Crore in the Asstt. Yead 2008-09and Rs. 1 Crore in AY 2009-10. On the basis ofhighly incriminating cash book and otherdocuments found, the assessee admitted to haveobtained bogus accommodation entries of Rs. 4Crores in the Asstt. Yead 2008-2009 through oneSh. Subhash Chand Gupta, Chartered Accountant,New Delhi, which have been surrendered as above.However, the assessee through a letter dated10.12.2009 admitted undisclosed income of Rs.1.50 Crores as against Rs. 2 Crores on account ofbogus liabilities in the Asstt. Year 2007-08.” 4.After considering the matter, the AO has imposed penaltyafter considering the concealment and other documents.However, CIT(A) merely observing in para 4.3 which reads asunder:- “4.3. I have gone through the penalty order aswell as submission of the assessee and casesrelied upon, the assessee originally surrenderedRs. 2 Crore which was finally revised incomputation of income at Rs. 1.5 Crore on adhocbasis without reference to any specificcreditor/employee. The list of creditor of Rs. 1.5 4.After considering the matter, the AO has imposed penaltyafter considering the concealment and other documents.However, CIT(A) merely observing in para 4.3 which reads asunder:- “4.3. I have gone through the penalty order aswell as submission of the assessee and casesrelied upon, the assessee originally surrenderedRs. 2 Crore which was finally revised incomputation of income at Rs. 1.5 Crore on adhocbasis without reference to any specificcreditor/employee. The list of creditor of Rs. 1.5 Crore was not identified by the AO. Further, thisliability paid by the assessee subsequently as theold items of the installation has to be depositedwith JVVNL. The JVVNL also releases the paymentafter verifying the inventory. The payments toeither creditor or the employee were madesubsequently when payment received fromJVVNL. The assessee has filed a liability chart ofunpaid salary of staff, SD deposited from theemployees, bonus payable and salary payableduring the course of appellate proceedings. Onverification of this chart it is found that theassessee has paid the liability subsequently. Theadhoc disclosure was made to buy peace and wasnot concealed income of the assessee or inrespect of inaccurate particulars. The assesseehad admitted the additional income during thecourse of survey on the basis of adhocoutstanding liabilities. The accommodation entrymentioned in the penalty order are not specificwrt liabilities. If any accommodation entries weretaken through the Shri Subhash Chand Gupta, CANew Delahi is pertained to AY 2008-09. The AOhad not mentioned in penalty order anyincriminating books of account found during thecourse of survey. The regular books wereproduced before the survey and after the survey.The AO himself had accepted the reduceddisclosure without any obhjection. The assesseedid not produce the exemption certificate to claim80G deduction for Rs. 85,500/- but particulars ofincome had been disclosed and claimed by theassessee in his return. The AR relied upon variousdecisions in his explanation which supports theassessee’s claim. The assessee has disclosed thefacts relating to the income before the AO. Aspenalty u/s 271(1)(c) is having quashi criminalnature, the burden lies on the department toestablish that assessee has concealed income orfurnish inaccurate particulars. In penaltyproceedings the matter must be considered afreshfrom an angle different from assessment. The AOdid not gather any incriminating material duringthe course of survey or during post surveyinquiry. By mare surrendering the additionalincome does not amount to concealed income orinaccurate particulars. Therefore, penalty imposedby the AO of Rs. 50,77,800/- is deleted.” 5.Counsel for the appellant has relied upon the decision ofGujarat High Court in case of LMP Precision Engineering. Co. Ltd. vs. Deputy Commissioner of Income Tax reported in [2011] 330 ITR 93 (Guj.), in our considered opinion in view of the factswhich are narrated in para 2 as under:- 5.Counsel for the appellant has relied upon the decision ofGujarat High Court in case of LMP Precision Engineering. Co. Ltd. vs. Deputy Commissioner of Income Tax reported in [2011] 330 ITR 93 (Guj.), in our considered opinion in view of the factswhich are narrated in para 2 as under:- “2. The assessment years in question are 1985-86,1986-87 and 1987-88. The respective accountingperiods are years ended on 30th June, 1984, 30thJune, 1985 and 30th June, 1986. The assessee, aprivate limited company, was assessed on totalincome of Rs. 34,75,190 on 28th May, 1986 underSection 143(3) of the Act for asst. yr. 1985-86.Similarly, the assessment was completed on 3rdJune, 1987 at a total income of Rs. 56,14,730 forasst. yr. 1986-87. For asst. yr. 1987-88 theassessment was completed on 1st March, 1988computing the total income at a sum of Rs.46,10,500. Subsequently, for asst. yr. 1985-86 arevised return of income was filed on 14th Feb.,1989 disclosing additional income of Rs. 54,71,463.For each of the two subsequent years viz. asst. yrs.1986-87 and 1987-88, revised returns were alsofiled on 14th Feb., 1989 disclosing additional incomeof Rs. 18 lacs for each of the two assessment years.Thereafter, on 30th March, 1990, the revised returnof asst. yr. 1985-86 was further revised upward bydisclosing additional income of Rs. 78,56,613 underforwarding letter dt. 30th March, 1990.” 6.It is clearly stated that after the reassessment the incomecomes to Rs. 2,26,03,078/- and the penalty was imposed. Shehas also relied upon the decision of Supreme Court in case ofMak Data P. Ltd. Commissioner of Income Tax reported in [2013] 358 ITR 593 (SC) wherein para 10 it has been held as under:- 10. We are of the view that the surrender ofincome in this case is not voluntary in the sensethat the offer of surrender was made in view ofdetection made by the AO in the search conductedin the sister concern of the Assessee. In thatsituation, it cannot be said that the surrender ofincome was voluntary. AO during the course ofassessment proceedings has noticed that certaindocuments comprising of share application forms,bank statements, memorandum of association ofcompanies, affidavits, copies of Income TaxReturns and assessment orders and blank share transfer deeds duly signed, have been impoundedin the course of survey proceedings Under Section133A conducted on 16.12.2003, in the case of asister concern of the Assessee. The survey wasconducted more than 10 months before theAssessee filed its return of income. Had it been theintention of the Assessee to make full and truedisclosure of its income, it would have filed thereturn declaring an income inclusive of the amountwhich was surrendered later during the course ofthe assessment proceedings. Consequently, it isclear that the Assessee had no intention to declareits true income. It is the statutory duty of theAssessee to record all its transactions in the booksof account, to explain the source of paymentsmade by it and to declare its true income in thereturn of income filed by it from year to year. TheAO, in our view, has recorded a categorical findingthat he was satisfied that the Assessee hadconcealed true particulars of income and is liablefor penalty proceedings Under Section 271 readwith Section 274 of the Income Tax Act, 1961. 7.Counsel for the respondent has taken us to the order of Tribunal and contended that in view of the observations made bythe Tribunal and decision relied upon rendered by Madras HighCourt in the case of CIT vs. M/s Cafco Syndicate Shipping Co.2007-TIOL-599-HC-MAD-IT, DCIT vs. Bhanwar Lal MahendraKumar Soni 54 DTR 271 (JD) (Trib) (2011) and Dilip YeshwantOad vs. ACIT 55 DTR 113 (Pune ‘B’) (2011), the Tribunal afterdiscussing the law upheld the order of CIT(A) and dismissed theappeal. 8.We have heard counsel for both the sides. 7.Counsel for the respondent has taken us to the order of Tribunal and contended that in view of the observations made bythe Tribunal and decision relied upon rendered by Madras HighCourt in the case of CIT vs. M/s Cafco Syndicate Shipping Co.2007-TIOL-599-HC-MAD-IT, DCIT vs. Bhanwar Lal MahendraKumar Soni 54 DTR 271 (JD) (Trib) (2011) and Dilip YeshwantOad vs. ACIT 55 DTR 113 (Pune ‘B’) (2011), the Tribunal afterdiscussing the law upheld the order of CIT(A) and dismissed theappeal. 8.We have heard counsel for both the sides. 9.Taking into consideration the first finding by the CIT(A) andaffirmed by the Tribunal holding that mere concealment will notbe the case for penalty but there should be some evidence toestablish that it was a concealment. Mere disclosure on thecontrary as facilitated by the AO is no reason for adding income. 10.We are in complete agreement with the view taken by theauthorities. The issue is required to be answered in favour of the assessee against the department. 11. The appeal stands dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/62