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2016 (9) TMI 812 - ITAT KOLKATA

2016 (9) TMI 812 - ITAT KOLKATA - TMI - Penalty u/s. 271(1)(c) - Held that:- It is a judicially acknowledged fact that the tax laws of this country are complex and complicated and often requires for compliance therewith, the assistance of a tax practitioner specializing in this field. It is possible that mistake could happen by improper understanding of the law and practice. Viewing from this angle coupled with the fact of the voluntary rectification of the mistake by the assessee besides he is .....

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or The Appellant: Shri G. Hukuga Sema, JCIT, Sr. DR For The Respondent: Shri Rajeeva Kumar, Advocate ORDER Per Shri K. Narasimha Chary, JM: This appeal by revenue is arising out of order of CIT(A)-XXXVI, Kolkata vide appeal No. 69/CIT(A)-XXXVI/Kol/Wd.55(4)/2012-13/663 dated 31.07.2013. Assessment was framed by ITO, Ward-55(4), Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2009-10 vide his order dated 23.12.2011. Penalty imposed by ITO, Wd-55(4), Kol .....

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le system of accounting, the assessee should have included this income in the relevant assessment year but under the mistaken impression on actual receipt basis they have included the same in the income of next year. However, on coming to know of this lapse, the assessee claims to have filed a revised computation of income voluntarily and even before the AO detected the said lapse. However, the AO initiated penalty proceedings holding that the act of the assessee amounts to deliberate avoidance .....

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allenging the said order of the CIT(A) the revenue came in appeal before us on the following Grounds: 1. That, on the facts and under the circumstances of the case, Ld CIT(A) has erred in deleting the penalty of ₹ 25,06,868/- imposed u/s 271(1)( c) of Income-tax Act 1961 on account of concealment of commission income as per IT return . 2. That, on the facts and under the circumstances of the case, the assessee did not voluntarily and in good faith disclose the commission received from the .....

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case, Ld CIT(A) has erred in law in relying on certain old judgments which call for establishing the mens rea of the assessee which are reversed by the Hon'ble Supreme Court in subsequent judgments and holding penalty u/s 271 (1 )( c) as of civil liability. 6. That, on the facts and under the circumstances of the case, Ld CIT(A) has erred in law in not appreciating the true import of section 271 (1)( c) which is to spread deterrent effect and bring fiscal discipline amongst the assessees. 4. .....

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culars of income, which would also attract penal proceedings and for this purpose, mens rea is not an essential ingredient. He further submitted that the Act of the assessee for omitting this particular item of income in the original return but declaring the same only in the revised computation after being confronted with the same amounts tantamount to furnishing inaccurate particulars or concealment of income and for these reasons, the conclusion reached by the CIT(A) are not at all acceptable. .....

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or the relevant year and it is evident from the fact that not only in the next year income it was included but also that the moment the assessee came to know of this lapse, without any demur he offered the same to tax. For the sake of deterrence, the bona fide wrong doers cannot be punished and it is not the intent of the penalty proceedings. 6. Basing on the above facts and contentions the issue that arises for our consideration is whether the CIT(A) is justified in deleting the penalty imposed .....

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why the same was included in the return in the subsequent year. According to the Ld. DR it is a deliberate attempt to conceal the income on the part of the assessee. 8. The Ld. CIT(A) had extensively gone into this question and discussed various factors involving in this matter. He referred to the letter dated 18.11.2011 received by the AO on 21.11.2011 whereunder the assessee acknowledged his mistake in omitting the income in respect of the AY 2009-10 and prayed to include the same in the retu .....

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paying the commission, an amount of ₹ 9,39,238/- was deducted as tax by Grasim Industries Ltd. In that event, it is very difficult to understand how the assessee stands to gain by not showing this particular income in the return. 9. The Ld. CIT(A) has called for the record relating to AY 2009-10 and 2010-11 for verification and on verification he recorded a finding that the record corroborates the contention of the assessee that the commission amount of ₹ 73,77,914/- was received in .....

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appeal, a lenient view is to be taken and accordingly, deleted the penalty. 10. We find that the assessee by making an additional disclosure of income of ₹ 73,77,914/- for the Asst Years 2009-10 before any detection by the department in order to meet the deficiencies, if any, on the outflows of the assessee, had sought to genuinely rectify the omission or misdeed which had been made in the original disclosure statement u/s 132(4) of the Act. On this point we profitably make reference to t .....

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l fact is to be found out. Generally it is with reference to the return of income and at that time it is to be seen whether there was concealment of income from or furnishing of inaccurate particulars thereof in the return of income chargeable to tax. But there may be cases, where an income is not declared in the return or the particulars of income shown inaccurately in the return but assessee on realization of mistake, omission or misdeed rectifies that and correct himself and cleans his breast .....

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he return. When the Assessing Officer starts scrutiny of the return and initiate assessment proceedings there is nothing concealed and the inaccuracy, if any, disappeared. Therefore the assessee cannot be held guilty of concealment. 20. A perusal of the provision of Section 271(1)(c ) read with Explanation 1 clearly show that it is in the course of any proceedings under the Act, assessment proceedings in this case, that the Assessing Officer is to be satisfied that the assessee has concealed the .....

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d as alleged gifts as his income,but no details of loans are given in the return nor any other particulars thereof given by the assessee at that stage, not to speak of inaccurate one. When the assessment was taken up and a general enquiry was made by the Assessing Officer requiring him to furnish details of any loans / gifts, if any, the assessee offered the amounts received as alleged gifts as his income and before it could be detection by the Assessing Officer. There was thus no concealment of .....

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t convert an offer to tax as concealment of income. Therefore, in my opinion the assessee has not furnished inaccurate particulars of the income in the returns. 22. Therefore, mere omission of the surrendered income from the return of an item of receipt does neither amount to concealment nor furnishing of inaccurate particulars of income unless and until there is some evidence to show exist or some circumstances found from which it can be gathered that the omission was attributable to an intenti .....

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tement of all bank accounts maintained by you individually or Jointly with any other person during the financial year along with Narration of each debit / credit entry. Sr.No. 9 - Cash flow statement for the financial year under consideration. Sr.No.10-Had you taken / given any loan / gift during the financial year under Consideration ? If yes, please furnish details. 23. On a perusal of the questionnaire, it is evident is general in nature without specifying the names of the donor or any other .....

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ossession of the revenue, nor the manner of its communication to the assessee which might lead to a detection of concealment. 24. There was no specific provocation or an apprehension of detection prevailing at the time when the offer was made and in the absence of any such imminent fear from the side of the revenue, if the assessee came forward and paid the tax thereon by adding the same in the returned income, it has to be taken as a voluntary offer to tax. On the face of the evidence in the sh .....

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