TMI Blog2020 (8) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... but also a case of concealment of income. The information came to the Department through the AIR, which was forwarded by the Registration Department and after verifying the same, when notice was issued under Section 143(2), the assessee, for the first time statef that due to inadvertence, they did not disclose the particulars relating to the capital gains. The above facts will clearly show that the assessee did not act bonafidely and the belated explanation sought to be offered deserves to be rejected. One more attempt made by the assessee was 24 months after the assessment were completed by attempting to file a revised statement of income on 01.03.2017. This statement can never improve the case of the assessee nor exonerate them from penalty. Another contention advanced by M/s.S.Yogalakshmi is that the AO had not recorded his satisfaction that penalty proceedings have to be initiated, by relying to the decision in the case of D.M.Manasvi to support the argument that the enire circumstances should have been considered, more particularly, the financial distress to which the assessee was thrown. As carefully perused the penalty order dated 25.09.2015 and we find that the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had sold two landed properties at Kalapatti and Dharapuram and the capital gain was worked out for both the properties at ₹ 1,37,31,142/-. However this was not admitted by the assessee in the return of income. Further, the Assessing Officer found that the sale of windmill amounting to ₹ 21,60,00,000/- was not admitted by the assessee in the return of income filed and the short term capital gain arising on the sale of windmill was ₹ 21,59,90,469/- after reducing the opening WDV of ₹ 9,531/-. The Assessing Officer called upon the assessee to explain this aspect and in the course of assessment, the assessee admitted to have omitted the sale of land and windmill and filed a letter dated 03.03.2015 along with a computation of Long Term Capital Gain [LTCG] on the sale of lands and the Short Term Capital Gain [STCG] on the sale of windmill. Taking note of the admission made by the assessee, the LTCG and the STCG were added to the total income of the assessee and accordingly assessment was completed. The assessment order stated that the penalty proceedings under Section 271(1)(c) is initiated separately. A notice under Section 274 r/w. 271(1)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal reiterating the stand that there was no willful concealment of particulars and prayed for deleting the penalty. The Tribunal took note of the submissions, more particularly, the submission that it was an inadvertent mistake and rejected the same, after noting the conduct of the assessee and accordingly confirmed the order passed by the CIT(A) and dismissed the appeal. 6. M/s. S.Yogalakshmi, learned counsel for the appellant strenuously contended that the notice dated 12.03.2015 issued under Section 274 r/w. 271(1)(c) of the Act is defective and it is an outcome of non-application of mind and therefore, the notice is non-est in law. Consequently, all proceedings culminating in the order of the Tribunal have to be declared as non-est. Secondly, it was submitted that the assessee acted with bonafide that there was no malafide intention on the part of the assessee, that the assessee incurred huge loss, that there was no positive income as the banks have sold the property and that on re-working of the capital gains, the loss got reduced from RS.33 Crores to ₹ 11 Crores which was a paper loss. It is further submitted that the imposition of penalty under Section 271(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Andhra Pradesh HC) 11. Nayan C. Shah vs. Income Tax Officer ITA No.2822/ Ahd/2011 12.Muninaga Reddy vs. Assistant Commissioner of Income Tax ITA NOS. 251/2016 390/2016 (T-IT) 13. Safina Hotels Private Limited vs. CIT ITA No.240/2010 III- Sec 271 (1) (C) of IT Act Concealment of income Furnishing inaccurate particulars of income have different connotations: 1. Sri T.Ashok Pai vs. CIT [(2007) 292 ITR 11 (SC)] 2. Dilip N Shroff [291 ITR 519 (SC)] 3. CIT Vs Lakhdhir lalji [85 ITR 77(Guj),] 4. CIT Vs Raj Trading Co. [(1996) 217 ITR 208 (Raj.)] 5. CIT vs Samson Perinchery [(2017) 392 ITR 4 (Bom.)] IV- Sec 271 (1) (C) of IT Act Satisfaction of the AO is essential while holding penalty: 1. Mak Data P. Ltd vs Commissioner Of Income Tax- (2013) 358 ITR 593 2. D.M. Manasvi - 86 ITR 557 (SC) 3. CIT vs. SSA Emerrald Meadows - ITA No. 380/2015 (Kar) 4. PCIT vs M/S Deccan Mining Syndicate Pvt - 2018 I.T.A. No.501/2017 (Kar HC) 5. Madhushree Gupta Vs UOI - 317 ITR 143(Del) 6. Commissioner of Income Tax vs. Dee Control and Electric Pvt. Ltd (2017) 100 CCH 0185 AllHC 7. CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gains came to light based on the annual information report and that is how the Assessing Officer came to know that the sale of the land and windmill were not admitted by the assessee in the return of income, which led to issuance of notice under Section 143(2) of the Act. The assessee never declared anywhere in the return of income about the sale of the lands and windmill and the copy of the annual report was not placed before the Assessing Officer or before the CIT(A). The learned standing counsel placed reliance on the decisions in the case of N.G. Technoligies (In Liquidation) vs. Commissioner of Income Tax [(2016) 70 Taxmann.com 37 (SC)], Kuldeep Wines vs. Commissioner of Income Tax [(2014) 52 Taxmann.com 248(SC)], Jivanlal and Sons vs. Assistant Commissioner of Income Tax [(2019) 103 Taxmann.com 208 (SC)], Hamirpur District Cooperative Bank Ltd. vs. Commissioner of Income Tax, Kanpur [(2020) 113 taxmann.com 447 (SC)], Sundaram Finance Ltd. vs. Deputy Commissioner of Income Tax [(2018) 99 taxmann.com 152 (SC)] and [(2018) 93 taxmann.com 250(Madras)] and Chemmancherry Estates Co. vs. Income Tax Officer, Ward-VIII(2) [(2019) 111 taxmann.com 66 (Madras)]. 8. After ela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court taking note of the fact that the authorities concurrently rejected the explanation offered by the assessee and refused to interfere with the factual finding. In paragraph 16 of the judgment, the argument regarding the defective notice was considered and answered against the assessee which is quoted herein below: 16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessee s case, as it is purely a question of fact. Apart from that, the assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put to prejudice. All violations will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Section 142(1) dated 09.09.2014 calling for details. The assessee submitted their reply dated 22.09.2014 in which, admittedly no information was disclosed about the sale the lands and windmill. On 03.03.2015, a letter was filed by the assessee, which is in response to the notice under Section 143(2), in which, the assessee states that due to oversight, they had not offered the capital gains in their return and attached a summary of total income adjusting profit on the LTCG and the STCG. To be noted, the assessee did not file a revised return. The assessment was completed under Section 143(3). In response to the penalty notice dated 12.03.2015, the assessee stated that there is no concealment of income or furnishing of any inaccurate particulars and therefore, Section 271(1)(c) will not stand attracted. Further opportunity was given to the assessee and submissions were made, after which, the Assessing Officer considered and levied penalty which order has been affirmed by the CIT(A) and the Tribunal. From the above dates and events, it is seen that the assessee took 19 months to respond to the notice dated 13.08.2013 issued under Section 143(2) and for the first time stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decisions was dealt with. The Assessing Officer placed reliance on the decision of the Hon ble Supreme Court in Mak Data P. Ltd vs. CIT-II [(2018) 38 taxmann.com 448 (SC)] and stated that voluntary disclosure does not release the assesee from mischief of penalty proceedings under Section 271(1)(c) of the Act. Therefore, we find that the penalty order is a reasoned order. 15.The learned counsel had argued that the defect in the penalty notice is a question of law which can be raised by the assessee at any point of time. We have considered this submission and we have rejected it. The learned counsel relied on the decision of the Hon ble Supreme Court in the case of K.Lubna to submit that if the factual foundation for a case has been laid and the legal consequences of the same having been examined, the examination of such legal consequences would be a pure question of law. We have noted the factual position. The assessee understood the notice to be under both heads, namely, furnishing of inaccurate particulars and concealment of income. This is evident from the assessee s reply dated 08.04.2015 to the show cause notice dated 12.03.2015. Therefore, the decision in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ull. Unless and until the legal provision then in force permitted exclusion of the amount of income tax already paid, the Chartered Accountant could not have done this. The Chartered Accountant cannot feign ignorance of Section 40(ii) of the Income Tax Act as he is well trained and well versed in law representing not only the assessee, but various other clients. As far as the assessee s malafide intention is concerned, the burden was entirely on the assessee to then show in terms of Explanation-I to the provision permitting imposition of penalty that such intention never existed when the above act was committed. For that, there was no material either in the form of evidence of the assessee or the affidavit of the Chartered Accountant. Hence the Commissioner was right, according to the Tribunal, in imposing this penalty. The attempt to blame the Chartered Accountant cannot result in the assessee s exoneration and claimed in absolute terms. In the circumstances, the penalty was rightly imposed. 18. Thus, for the above reasons, we find that the order passed by the Tribunal does not call for any interference and the Substantial Questions of law framed for consideration have to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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