TMI Blog2019 (12) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 24.08.2018 of the Commissioner of Income Tax (Appeals)-3, Ludhiana [hereinafter referred to as CIT(A)] agitating the action of the CIT(A) in confirming the penalty of ₹ 7,46,000/- levied by the Assessing Officer u/s 271 (1)(c) of the Income Tax Act, 1961 (in short 'the Act'). 3. The Ld. Counsel for the assessee, at the outset, has submitted that under the similar facts and circumstances, the Coordinate Bench of the Tribunal, in the case of Gajjan Singh Thind vs ACIT, ITA No. 1402/Chd/2018, decided the issue vide order dated 1.7.2019 has held that the provisions of section 271 (1)(c) being penal in nature and required to be strictly construed. The Coordinate Bench of the Tribunal has observed that if the income declared in the revised return which is valid and filed within the limitation period prescribed for filing the same, the penalty in respect of such declared income under the provisions of section 271 (1)(c) of the Act is not leviable. The Ld. counsel for the assessee has submitted that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding of the lower authorities. 5. We have gone through the decision of the Coordinate Bench of the Tribunal in the case of Gajjan Singh Thind vs ACIT , (supra), wherein, the facts and circumstances of the case, the issue involved and even the relevant date of events are exactly identical to that of the case of assessee except the figure of amount of income declared and the figure of amount of penalty levied. The relevant part of the order of the Tribunal in the case of Gajjan Singh Thind vs ACIT (supra) is reproduced as under;- 4. Before us, the Ld.Counsel for the asssessee has submitted a chart showing the sequence of events, which is reproduced as under: Return of Income filed on declaring income at ₹ 98,36,430/- 31.07.2014 Notice u/s 143(2) issued on Served on 19.09.2015 18.09.2015 Case transferred to other charge and another notice u/s 143(2) was received on 22.09.2015 Summons issued by DDIT, Ludhiana on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the assessee was a valid return and the A.O. was supposed to make the assessment taking the revised return as the base return of the assessee. Since there was no addition made by the assessee in respect of the income of ₹ 41,55,876 shown in the revised return as income from other sources and due tax was paid thereupon, hence no addition was made by the A.O. on this account. So far as the difference of ₹ 2,00,015/- was concerned, the assessee had voluntarily offered the said difference for taxation. Hence, it was not a case of concealment of income to warrant levy of penalty u/s 271(1)(c) of the I.T. Act. 7. The Ld. DR, on the other hand, has submitted that since the revised return was filed by the assessee after the assessee was summoned by the Investigation Wing and even after the issuance of earlier notice u/s 143(2) of the Act on 18.9.2015, hence the assessee declared the aforesaid income when he was show caused. That it was clear-cut case of concealment of income and furnishing of inaccurate particulars of income. 8. We have considered the rival contentions and have also minutely perused the relevant provisions of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer may direct such a person against whom the above charge is established to pay in addition to the tax, if any, payable a sum which is not less than, but which shall not exceed three times, the amount of tax sought to the evaded by a reason of such concealment of particulars of income or furnishing of inaccurate particulars of income. 17. Now, Explanation 1 strongly relied upon by the Ld. DR speaks about of deeming fiction regarding the concealment of particulars of income which speaks that if a person 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 of any fact material to the computation of his total income, then the amount added or disallowed in computing total income of such person as a result thereof, shall be deemed to represent 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference between the total income assessed and the tax that would have been chargeable, had such total income been reduced by the amount of income in respect of which particulars have been concealed which means that the tax payable on the income in respect of which particulars have been concealed or inaccurate particulars of income furnished. 20. A collective reading of all the three clauses reveal that for the calculation of the quantum of penalty, it is not the income in respect of which particulars have been concealed or furnished or inaccurate particulars of income furnished that 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 such income in respect of which particulars have been concealed or inaccurate particulars of income have been furnished, then, as per Explanation 4, there will be no tax sought to be evaded and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o offer an Explanation or Explanation which is found to be false by the Income-tax authorities or an Explanation which is not able to substantiate, then, the amount added or disallowed in computing total income of such person as a result thereof deemed to represent the income in respect of which particulars have been concealed. So, firstly what is relevant is the material fact to the computation of total income. The word computation here is relevant which means that the fact must be material which has the effect of any addition or disallowance in the income to be computed after the assessment proceedings and it has also been provided that the amount added or disallowed into the self-assessed income represents the income, particulars of which has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction in respect of any expenditure or allowance 16[or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) 16a[and clause (b)] of sub-section (1). Section 271AAC 271AAC. (1) The Assessing Officer may, notwithstanding anything contained in this Act other than the provisions of section 271AAB, direct that, in a case where the income determined includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under section 115BBE, a sum computed at the rate of ten per cent of the tax payable under clause (i) of sub-section (1) of section 115BBE: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein in the return of income furnished by the assessee, the total income of an assessee includes an income referred to in sections 68, 69, 69A, 69B and 69 C or section 69D, or otherwise added or determined by the Assessing officer during the assessment proceedings under the above provisions, then the tax at the flat rate of 60% will be payable on such an income disclosed or determined. Further to mark a difference between the self-declared income in the aforesaid provisions and the cases where the Assessing officer determined /detected such income in the aforesaid sections 68, 69, 69A, 69B and 69 C or section 69D, the penalty provisions of section 271AAC comes into operation which provides that if such an income is suo moto declared by the assessee in his return, then no penalty is leviable and if it is otherwise detected by the Assessing officer, in addition to the tax payable u/s 115BBC, such an assessee will be liable to pay penalty equal to a sum computed @ 10% of the tax payable on such unexplained income as per the provisions of section 115BBE of the Act. A cumulative reading of section 271(1)(c) read with section 115 BBE and 271AAC, would reveal that it is not barred under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch income to pay by way of penalty, a sum which shall not be less than but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income. So as per the above provisions for the levy of penalty there must be some amount of tax sought to be evaded which should be by reason of the concealment of particulars of income or furnishing of inaccurate particulars of income of such income by the assessee. Hence, if there is no amount of tax sought to be evaded by reason of concealment of particulars of income or inaccurate particulars of income, the penalty cannot be computed or to say that the penalty under the provisions will be Nil . It is pertinent to mention here that Explanation 1 to section 271(1)(c) of the Act also provides that if a person fails to offer an explanation or explanation offered is found to be false by the Income-tax Authority or he fails to substantiate such explanation, and that fails to prove the such explanation is bonafide, then the amount 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
