The Commissioner Of Incometax, International Taxation-1,1[St] Floor, Room v. Ashutosh Bhatt701, Pooja, 155-A, S.v. Road, Khar (W), Mumbai-52

- Chitra Sonawane IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1424 OF 2017 The Commissioner of IncomeTax, International Taxation-1,1[st] Floor, Room no.107, Scindia House, Ballard Pier,NM road, Mumbai-400 038 .. Appellant. Versus Ashutosh Bhatt701, Pooja, 155-A, S.V. road, Khar (W), Mumbai-52. .. Respondent. ..... Mr. PC Chhotaray for the appellant. Mr. Nitesh Joshi i/b Mr. Atul K. Jasani for the respondent. CORAM : K. R. SHRIRAM & N.R. BORKAR, J.J.DATED : 11 APRIL, 2022. P.C. 1.Following substantial questions of law have been proposed in the appeal. (i) Whether on the facts and circumstances of thecase and in law, the Hon’ble ITAT erred in deletingthe penalty of Rs.1,17,82,234/- imposed u/s 271(1)(c) of the Act for concealment of income and alsofiling of inaccurate particulars of income pertainingto the amounts in the HSBC, Zurich accounts?” (ii)Whether on the facts and circumstances of thecase and in law, the Hon’ble ITAT erred in takingcognizance of the non-est revised returns of incomefiled beyond the time allowed u/s 139(5) of the Act to hold that the assessee voluntarily disclosed theimpugned income and then proceeding on thatincorrect premise to delete the aforesaid penalty? 2. 2.Facts briefly stated are that, the assessee was an individualand non-resident so far as assessment year under consideration wasconcerned. For assessment year 2007-2008 the assessee had filedreturn of income on 31.7.2007 declaring total income of Rs.8,31,287/-.Thereafter the assessee revised his income and further offered anincome of Rs.1,76,68,508/-. Notice u/s 148 of the Income Tax Act (forshort the ‘Act’) was issued thereafter on 29.3.2012 as a consequence ofwhich, assessment was finalized u/s 143(3) r/w 147 of the Act.Assessment order dated 21.3.2013 came to be passed where totalincome was assessed at Rs.1,85,69,800/- which is exactly the sameamount as was declared by the assessee originally plus the incomerevised subsequently. 3.Later, the Assessing Officer held the assessee guilty ofconcealment of income within the meaning of Section 271 (1) (c ) ofthe Act and levied penalty 200% of the tax sought to be levied on theamount of Rs.1,76,68,508/- which was declared subsequent to thefiling of original return of income. Consequently, penalty ofRs.1,17,82,234 has been levied. Assessee carried the matter in appealbefore CIT(A), who by an order dated 26.3.2014, deleted the entire penalty levied by the A.O. on the ground that the assessee has suo-motoand voluntarily offered additional income to tax and that the incomewhich was offered for tax by the assessee in the revised returns ofincome was in any case, not chargeable to tax in India. Against the saiddecision, the Revenue filed an appeal before the Tribunal. 4.Subsequent to his order dated 26.3.2014, CIT (A) issued a noticeu/s 148 of the Act on 10.11.2014 requiring the assessee to show causeas to why earlier order passed by him on 26.3.2014 to be not amendedas it was passed without taking note of the fact that assessee had madesupplementary affidavit declaring additional income ofRs.1,03,49,908/- which according to CIT(A) was not voluntary becausesummons dated 29.9.2011 by ADIT (Inv)Unit-II(3), Mumbai had beenissued u/s 131 of the Act. CIT (A) rejected reply of the assessee andby an order dated 8.12.2014 amended his earlier order dated 26.3.2014and upheld levy of penalty to the extent it related to additional incomeof Rs.1,03,49,908/- disclosed by assessee in his second revisionaldeclaration. Against that order, appeal was preferred by the assesseebefore the Tribunal and Revenue also filed cross appeal to the extent ofCIT(A) not adding Rs.73,18,600/- declared in first revised declaration. 5.The Tribunal after hearing the parties, dismissed the originalappeal filed by Revenue and cross appeal filed by Revenue and upheld 5.The Tribunal after hearing the parties, dismissed the originalappeal filed by Revenue and cross appeal filed by Revenue and upheld 6.Indisputable fact is that during the period when the assessee wasnon resident, from Assessment Year 2000-2001 to the year in question,the assessee was in employment with a U.S. Company and was residentof United States of America. During that time, he had set up a businessand was beneficial owner of a Company Jonah Worldwide Limited(JWL) and beneficiary of Foundation, viz., Selinos Foundation (SF),both set up in Mauritius in 2003. Both these entities were non-residents in as far as it is relevant for the purpose of the Act and did nothave any source of income in India. 7.In the year 2011 the assessee decided to settle down in India andafter returning to India, filed an affidavit dated 07.09.2011 offering totax income of Rs.73,18,600/- being peak balance lying in the accountsof these two entities JWL and SF and for this purpose filed revisedreturn on 20.9.2011. Immediately thereafter, assessee realized that hehad committed a mistake in calculating peak balance lying in bankaccounts held by these two entities JWL and SF and therefore, madesupplementary affidavit on 7.11.2011 offering to tax additional incomeof Rs.1,03,49,908/-. Consequent thereto, second revised return dated15.11.2011 was filed showing total additional income ofRs.1,76,68,508/- on account of funds lying in the bank accounts held by JWL and SF with HSBC Bank, Zurich. After receiving notice u/s 148 ofthe Act , as noted earlier, the Assessing Officer finalized assessment u/s143 r/w 147 of the Act by accepting income as per revised returnwithout making any further addition or raising any fresh demand.Even additional income assessed at Rs.1,76,68,508/- was exactly thesame as returned by the assessee in the revised returns. 8.After hearing the parties and considering the material beforethem, the Tribunal found that second affidavit of 7.11.2011 declaringadditional amount of Rs.1,03,49,908/- due to mistake in calculatingbank peak balance was filed not because of any issue of summons anddeclaration was purely because of the mistake committed in earliercalculation. The Tribunal came to a finding of fact that Revenue had noinformation of any undisclosed income in the hands of the assesseeexcept the declarations made by the assessee. What also impressed theTribunal was at no stage it was the case of the Revenue that the fundsthat were lying in the bank accounts held by the two entities JWL andSF with HSBC Bank, Zurich could have been brought to tax in India.These monies have been offered to tax in India because the assesseemade voluntary declarations and considering that aspect the Tribunalfelt that levy of penalty u/s 271 (1)(c ) of the Act, was not justified. 9.Mr. Chhotatray relied on Mak Data P.Ltd. Vs. Commissioner of Income Tax-(II) reported in Indian Kanoon-http://indiankanoon.org/ doc/149438153 to submit that just because the assessee voluntarilydisclosed his income, it can not be said that there was no concealment.Facts in the case at hand, are different in as much as in Mak Data Pvt.Ltd. (supra), the Apex Court came to conclusion that the surrender inthat case was not voluntary. In the case at hand, the Tribunal hascorrectly come to a conclusion that the declaration was voluntary. 10. In our view, the Tribunal has not committed any perversity orapplied incorrect principles to the given facts and when the facts andcircumstances are properly analysed and correct test is applied todecide the issue at hand, then, we do not think that question as pressedraises any substantial question of law. The appeal is devoid of merits and it is dismissed with no orderas to costs. (N.R. BORKAR, J.) (K.R. SHRIRAM, J.)