9911796707
TMI Blog2019 (4) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees here-in-above are the promoters and directors of M/s Janta Land Promoters Pvt Ltd. The original returns u/s 139(1) of the Income-tax Act, 1961 (in short 'the Act') for different assessment years by the assessees were filed within the due dates prescribed for the same, detailed as under: Name of assessee the as sessee A.Y. Date of filing Kulwant Singh 2008-09 23.09.2008 Kulwant Singh 2009-10 30.07.2009 Kulwant Singh 2010-11 29.07.2010 Kulwant Singh 2012-13 29.09.2012 Kulwant Singh 2011-12 28.09.2011 Manjit Kaur 2008-09 10.12.2008 Manjit Kaur 2009-10 31.07.2009 Manjit Kaur 2011-12 28.09.2011 Paramjit Singh 2008-09 31.03.2009 Paramjit Singh 2010-11 31.07.2010 Paramjit Singh 2011-12 28.09.2011 Jaswant Kaur 2007-08 31.03.2008 Jaswant Kaur 2009-10 31.07.2009 Jaswant Kaur 2010-11 27.09.2010 Jaswant Kaur 2011-12 28.09.2011 The assesseesin their income tax returns had disclosed / offered certain incomes as detailed below for different assessment years as under the head 'income from other sources' with the remarks "subject to no explanation" and paid due taxes thereupon. Name of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds orevidence relating to the source of income so earned. Therefore, the Assessing officer levied the penalty u/s 271(1)(c) of the Act, observing as under:- "10. Based on above discussion the following conclusions may be drawn A. The assessee has deposited various amounts in cash in her hank accounts, offered the same in his return of income under the head "Income from other "sources", has not submitted any explanation regarding the source of the same either during assessment proceedings or current penalty proceedings. B. The case of the assessee is covered under explanation 1(A) of 271(l)(c) of the I T Act. As well as various judgments of superior courts. 11. Sufficient opportunities to present her case has been afforded to the asSessee. The replies filed by the assessee have been considered and found to be not correct. 11. Based on the above discussion, I am satisfied that this is a fit case for imposition of penalty in terms of Sec. 271(l)(c) of the I.T.Act,1961." 5. Being aggrieved by the identical penalties levied by the Assessing officer for different assessment years, the assessees preferred appeals before the Ld. CIT(A). The Ld. CIT(A) considering the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by s. 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s. 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the I. T. Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise, one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, the Assessing officer made additons as undisclosed income and initiated penalty proceedings. The facts of the case are different as in this case discussed above, the assessee had disclosed the said income in the return filed in response to the notice u/s 153C after-certain amount of cash, books of accounts and documents in respect of assesses were seized during the search and was not a case of voluntary disclosure as in the case of the appellant. 5.1.4 MAK DATA (P) Ltd Vs. CIT-II {2013} 38 Taxmann.com 448 (SC) In this case, the appellant filed its return declaring certain income. During the course of the assessment proceedings, it was noticed by the AO that certain documents were impounded in the course of survey proceedings in the case of sister concern of the assessee. Thereafter, a show cause was issued by the AO in response to which the assessee made an offer to surrender a sum of R.s. 40.74 lakhs with a view to avoid litigation and bar peace. The AO completed the assessment wherein amount surrendered was brought to tax under the head Income from other sources and thereafter penalty was imposed u/s 27l (l) (c ). It was held by the Apex court that the surrender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eesand then declared in their returns of income spread over six yearstotaling to Rs. 60.02 crores. That the volume of transactions toearn Rs. 60.02 crores would bemanytimes of this amount. Such volume of transactionsspread over six years undertaken byfour different individuals could not be withoutmaintenance of theproper records. Therefore, theexplanation of theassesseese that they have not maintained any accounts in this respect was not bonafide and, thus,theassessees have failed to disclose truly and fully all the material facts relating to the computation of their total income. Thus,the condition laid down inExplanation 1(B) to section 271(1)(c)of the Act was not fulfilled and, therefore, Assessing officer has rightly imposed / levied penalty. That as per Explanation 1 to section 271(1)(c) of the Act, it was not necessary for the Assessing officer to add or to disallow something to attract the penalty provisions. Further, as per the Explanation 4(c) read with Explanation I to section 271(1)(c) of the Act,it is a case of deemed tax sought to be evaded whereuponthe Assessing officer rightly levied the impugned penalty. Moreover, there was no evidence produced by the assessees to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no concealment was detected bythe Department. That evenotherwiseExplanation 4 was not attracted in this case. That thepurpose of Explanation 4 of section 271(1)(c) was that the quantum of penalty imposable for concealment of income should be with reference to the tax sought to be evaded instead of income concealed. That tax sought to be evaded shall be difference betweenthe tax determined in respect of total income assessed and that taxthat would have been payable, had the income, other thanthe concealed income, been total income. That it was never the intention of the Parliament to include declared income in the ambit of concealed income for the purpose of levyof penalty u/s 271(1)(c) of the Act. The Ld. Counsel for the assessee, therefore, has submitted that since the declared income and assessed income inthis case was sameand that the returns filed by theassessees were under the same head without anychange of disturbance, the penalty u/s 271(1)(c) of the Act was not warranted in this case. Apart from that, the counsel has also contended on the additional ground regarding defect in thenotice of penalty taken in the Cross objections. 9. In rebuttal of the above arguments of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeals relating up to assessment years 2010-11 wherein the original assessment proceedings already stood completed and not abated as on the date of search action and that no incriminating material found during the search action go to the root of the case and is crucial to determine the very validity of the initiation of penalty proceedings in an assessment framed u/s 153A of the Act, hence the same is taken first for adjudication. The Ld. Counsel for the assesseesin this respect has relied upon various judicial decisions including the decision of the Hon'ble Bombay High Court in the case of 'CIT Vs. Murli Agro Products Pvt Ltd', (2014) 49 taxman.com 172 (Bom.), ITA No.36 of 2009 and in the case of 'CIT Vs. Continental Warehousing Corporation' ITA No. 523 of 2013 reported in (2015) 279 CTR 0389 (Bombay) and of the Hon'ble Delhi High Court in the case of 'CIT Vs. Kabul Chawla' 234 Taxman 300 (Delhi) and subsequent decision of the Delhi High Court in the case of 'Principal CIT Vs. MeetaGutgutia Prop M/s Ferns 'N' Petals", ITA 306/2017 and others decided vide order dated 25.5.2017.to submit that if no incriminating material is found during the search action, the addition i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing officer that there was any attempt or overt act on the part of the assessee to evade payment of due taxes. Under the circumstances, we hold that the action of the Assessing officer in initiating the penalty in the assessment proceedings carried out u/s 153A of the Act was not justified and the consequential levy of penalty being illegal is not sustainable in the eyes of law for the cases relating up to AY 2010-11. We order accordingly. 12. Another legal ground taken by the assessee which goes to the root of the case is that so far as the assessment year 2012-13 is concerned, the Assessing officer was not justified initiating or levying penalty u/s 271(1)(c) of the Act. That for the year under consideration, the penalty proceeding , if any, thatcould be initiated was to be under the provisions of section 271AAA of the Act as the assessment year 2012-13, falls in the definition of specified previous year as defined under the provisions of section 271AAA of the Act. That as per the provisions of sub section (3) of section 271 AAA, no penalty under the provisions of clause (c) of sub section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not have been found to be so had the search not been conducted; (b) "specified previous year" means the previous year- (i) which has ended before the date of search, but the date of filing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the said date; or (ii) in which search was conducted." 13. A perusal of the above provisions reveals sub section (3) to section 271AA of the Act bars the levy of penalty under the provisions of section 271(1)(c) of the Act in respect of undisclosed income referred to in sub section (1). The undisclosed income has also been defined under the provisions of section 271AAA of the Act, as reproduced above, which refer to the income found during the search action butnot recorded in the books of account or otherwise not disclosed before the date of search to the competent Income-tax authorities as referred to in the provisions reproduced above of section 271AAA. Admittedly, in this case, no incriminating material was found during the search action and, hence, no undisclosed income of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner (Appeals) or the Commissioner to be false, or (B ) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. ... [Explanation 3.-Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of section 153 a return of his income which he is required to furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989, and until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of subsection (1) of section 142 or section 148 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson fails to offer an 'explanation' or which is found by the concerned income tax authorities to be false or such person could not substantiate in respect ofany fact material to thecomputation of his total income, then theamount added or disallowed incomputing total income of such person as a result thereof, shall be deemed torepresent the income in respect of which particulars have been concealed. Further, as per the Explanation 3, where a person fails to furnish within the stipulated period his return of income for any assessment year and thereafter, the concerned income tax authority, either the Assessing officer or the CIT (A) finds that in respect of such assessment year, such person has taxable income, then such person shall be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after expiry of the period aforesaid in pursuance of anotice u/s 148 of the Act. Vide Explanation 4, the term "the amount of tax sought to be evaded" has been defined/explained for the purpose of computation of levy of penalty. 18. A per clause (a) to Explanation4,where the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is relevant but it is the resultant addition to the income of the assessee on account of such concealed particulars of income or furnishing of inaccurate particulars of income. If despite the detection of concealment of income or furnishing of inaccurate particulars of income,in the resultant effect, there is no addition into the income of the assessee or the assessee has already paid taxes on suchincome in respect of which particulars have beenconcealed or inaccurate particulars of income have been furnished, then, as per Explanation4, there will be no tax sought to be evaded and therebyno penalty will beleviable u/s 271(1)(c) of the Act. In our view, clause (c) to Explanation 4 is a residuary clause and can notbe segregated and independently interpreted in divorce to clauses (a) or (b) of Explanation 4 to give giving it an entirely different meaning and any such an interpretation, will not bea correct interpretation of the statutory provision. A collective reading of the entire provisions of section 271(1)(c)of the Act reveal beyond doubt that what is material is the resultant addition to the taxable income of an assessee which may invite penalty under the relevant provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount added or disallowed into theself-assessed income represents the income, particulars of whichhas been concealed and further a combined reading of the sub sections (a), (b) (c) and Explanation 4 would show that tax sought to be evaded is the tax payable on such amount in respect of which particulars have been concealed.The word 'Explanation' here is not to be applied broadly to include explanation regarding each and every fact or particulars of income such as the source of income, manner of earing of income etc., rather, the word 'explanation' here has a limited scope, whereby, it has restricted that the offering of explanation that the material fact which had been detected by the Assessing officer has a result of addition of disallowance into the income of the assessee and the assessee has no explanation that why the same be not treated as taxable income of the assessee for that relevant year. The words 'particulars of income' though in general willhave a wide and broader aspect as to of the relevant particulars such as the source of income, manner of earning of income and genuineness of transaction etc., however, the second part of this section 271(1)(c) of the Act has limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5BBE: Provided that no penalty shall be levied in respect of income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D to the extent such income has been included by the assessee in the return of income furnished under section 139 and the tax in accordance with the provisions of clause (i) of sub-section (1) of section 115BBE has been paid on or before the end of the relevant previous year. (2) No penalty under the provisions of section 270A shall be imposed upon the assessee in respect of the income referred to in sub-section (1). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section." 23. Prior to substitution of sub section (1) of section 115BBE w.e.f. 14.2017, the section 115 BBE was inserted by Finance Act 2012 w.e.f. 1.4.2013, which reads as under:- (1) Where the total income of an assessee includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, the income-tax payable shall be the aggregate of- (a) the amount of income-tax calculated on income referred to in section 68, section 69, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable on such unexplained income as per the provisions of section115BBE of the Act. A cumulative reading of section 271(1)(c) read with section115 BBE and 271AAC, would reveal that it is not barred under the Act for an assessee to declare an income in his return as an unexplained income. It mayotherwise be detected or found by the Assessing officer also during the assessment proceedings. Prior to 1.4.2013, the tax on such unexplained income either declared by the assessee or detected by the Assessing officer was payable at anormal rates applicable. However, if such an unexplained income was declared by the assessee himself in a return filed u/s 139(1) of the Act, and then no penalty was leviable. However, if suchan unexplained income is determined by the Assessing officer on account of concealment of material facts or on account of furnishing of inaccurate particulars of income relating to thecomputation of income which has the resultant effect of some addition into the taxable returned income then the penalty is liable to be imposed and computed taking into consideration theamount of tax so payable by the assessee on the such unexplained income detected or added by the income ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t added or disallowed in computing the total income of such person as a result thereof, shall for the purpose of clause (c) be deemed to represent the income in respect of which particulars have been concealed. It becomes clear from the reading of Explanation -1 that there must be some addition or disallowance in computing the total income of such person in respect to which it is deemed that he has evaded the payment of tax for computing the penalty so leviable. . However, if there is no addition to the income of the assessee either by way of the positive addition or by way of reducing the losses etc., then there may be no amount of tax which the assessee which can be said to be sought to be evaded by the assessee, then under the circumstances, there will not be any penalty leviable or payable by the assessee as per the provisions of the Act and in the circumstances, no penalty will be leviable u/s 271(1)(c) of the Act. 27. Even otherwise, the Ld. Counsel for the assessees has invited our attention to the pages 59, 67, 69, of paper book-2 and pages 114, 153, 190 and 227 of paper book-I to show that the assessees not only explained to the Assessing officer during the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxed income.The Hon'ble Calcutta High Court in the case of 'Commissioner of Income Tax Kolkata-II Vs. Palani Investment & Industries Corporation Ltd.', (2016) 67 taxman.com 60 has held that the disclosure and concealment cannot coexist. That when a finding is recorded that the assessee has indeed disclosed, then the conclusion as regards concealment is bad. Even it cannot be said that the assessee furnished inaccurate particulars of income. There was no material on record to indicate that the particulars furnished by the assessee were factually incorrect. Under the circumstances, even otherwise, on merits, the penalty u/s 271(1)(c) of the Act is not attracted in this case. In view of the discussion made above, we do not find any merit in the appeals of the revenue, the same are accordingly dismissed. Now coming to the cross objection filed by the assesses. C.O. Nos. 16 to 19/Chd/2018, 26 to 29/Chd/2018, 30/Chd/2018 & 20 to 22/Chd/2018 and 23 to25/Chd/2018: 28. So far as the Cross objections, as taken by the assesseesfor relevant assessment years are concerned, the same are delayed by 378 to 429 days. Separate applications have been filed for the condonation of delay, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
