9911796707
TMI Blog2024 (12) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... s." 2. Succinctly stated, the assessee had filed her return of income for A.Y.2016-17 on 29.03.2017 declaring an income of Rs. 17,77,290/-. As the assessee had in her return of income raised a claim for exemption u/s 10(38) of "Capital gain" of Rs. 33,04,236/- arising on sale of shares of M/s Capital trade links, therefore, proceedings u/s. 147 of the Act were initiated by the A.O. Notice u/s. 148 of the Act, dated 29.06.2022 was issued to the assessee. 3. Assessment was, thereafter, framed by the A.O vide his order passed u/s. 147 r.w.s. 144B of the Act, dated 11.05.2023, wherein he declined the assessee's claim for exemption u/s. 10(38) of the Act of Rs. 33,04,236/-, and determined her income at Rs. 49,21,530/-. The A.O while culminating the assessment initiated penalty proceedings u/s. 271(1)(c) of the Act for "concealment of income" by the assessee. Thereafter, the A.O called upon the assessee vide "Show Cause Notice" (SCN) dated 12.05.2023 and 26.06.2023 to put forth an explanation as to why she may not be saddled with the penalty u/s. 271(1)(c) of the Act. Although the assessee vide her reply dated 24.07.2023 tried to impress upon the A.O that no penalty u/s. 271(1)(c) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations of the CIT(Appeals) are culled out as under: "FINDINGS 7. The rival contentions have been carefully considered. In my considered opinion, the act of the appellant of paying tax prior to the issue of Notice u/s 148 cannot be attributed as "Voluntary disclosure", as the appellant herself admits that such action was taken only when she found out through newspaper articles that the courts/tribunals were taking adverse view on the issue of bogus LTCG claims. Thus, the appellant who was very well aware of her wrongdoing in claiming incorrect exemption u/s 10(38) on bogus LTCG of Rs. 33,04,236 as a beneficiary of the widespread accommodation entry network involving Penny Stocks which were already exposed through extensive Investigations and search & seizure actions by the Income Tax department across the country. As remedial action in the hands of beneficiaries were being taken by the department in similar cases, thus, the appellant anticipated that sooner or later her actions would also be caught and thus decided to deposit the due tax evaded by claiming the exemption u/s 10(38) in the return filed originally u/s 139. Such subsequent act of paying the due tax cannot mit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of the hearing, the assessee contended that penalty proceedings are not maintainable on the ground that the AO had not recorded his satisfaction to the effect that there has been concealment of income/furnishing of inaccurate particulars of income by the assessee and that the surrender of income was a conditional surrender before any investigation in the matter. The AO did not accept those contentions and imposed a penalty of Rs. 14.61.547/- under Section 217(1)(c) of the Act. The assessee challenged that order before the Commissioner of Income Tax (Appeals) by filing Appeal No.2/07-08, which was dismissed vide order dated 17.2.2010. The assessee filed an appeal being ITA No. 1846/Del/10 before the Income Tax Appellate Tribunal, Delhi. The Tribunal recorded the following findings:- "The assessee's letter dated 22.11.2006 clearly mentions that "the offer of the surrender is without admitting any concealment whatsoever or any intention to conceal. The Tribunal took the view that the amount of Rs. 40,74,000/- was surrendered to settle the dispute with the department and since the assessee, for one reason or the other, agreed or surrendered certain amounts for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. 8. Assessee has only stated that he had surrendered the additional sum of Rs. 40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. Statute does not recognize those types of defences under the explanation 1 to Section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n wing's report had already unearthed the LTCG arising on shares of the scrip 'Capital Trade Links' to be bogus being a penny stock and a mere accommodation entry to launder the unexplained own money of the beneficiaries. In such background, the claim of the appellant that its claim of exempt LTCG was genuine does not hold any force. If the claim was genuine, why did the appellant subsequently withdrew the claim and offered the same as taxable income from 'Other Sources'? Voluntary' disclosure to buy 'peace of mind' or to avoid litigation etc. have already been held by the Hon'ble Apex Court in the above quoted judgment in Mak Data case (supra) as no good defenses to avoid imposition of penalty u/s 271(1)(c). Thus, it is noted that judgment of Hon'ble SC in Mak Data P. Ltd vs Commissioner Of Income Tax II (supra) is squarely applicable in the instant case and respectfully following the judgment of the Apex court, the instant case is also found to be a fit case for levy of penalty. 9. The case laws relied upon by the appellant in her submissions have also been gone through, however the same are found to be not applicable to the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable to the instant case and, thus, does not come to the appellant's rescue. iii) Dy.CIT-1(1) Raipur vs Renu Behl order dated 11.12.2023 by ITAT, Raipur in ITA No.289/RPR/2022:- Perusal of the said order of Hon'ble Jurisdictional ITAT, Raipur Bench shows that the Hon'ble Tribunal upheld decision of the CIT(A) who deleted the penalty levied by the Assessing Officer u/s 271(1)(c) in similar facts by relying upon the judgment of the Hon'ble SC in the case of CIT vs Suresh Chandra Mittal (supra), which is no-more a good law as held by the Hon'ble SC itself in K.P.Madhusudan 251 ITR 99 case, as already discussed in preceding point (i). Further it is noted that in the above case, the revenue specifically pointed out an grounds of appeal itself the decision of Hon'ble Supreme Court in the case of Mak Data (P) Ltd vs CIT (supra) wherein the apex court has held that Voluntary disclosure does not release the assessee from mischief of penal proceedings u/s 271(1)(c). However, perusal of referred ITAT order shows that the judgment of the Hon'ble Apex Court in KP Madhusudan (supra) and MAK Data (supra) cases was probably not brought to the attention of the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. The Ld. AR submitted that as the assessee was senior citizen of 70 years of age, therefore, it was only with an intent to avoid protracted litigation that she had decided to withdraw the aforesaid claim for exemption that was raised by her in the return of income Carrying his contention further, the Ld. AR submitted that the assessee had thereafter, on 15.02.2019 deposited the taxes a/w. interest of Rs. 10,90,690/- pertaining to the amount of capital gain on sale of shares of M/s Capital trade links (supra). The Ld. AR in order to fortify his aforesaid claim had taken us through the "Form 26AS" of the assessee for the year under consideration, Page 22-23 of APB. The Ld. AR submitted that the bonafides of the assessee could safely be gathered from the fact, that she being aware that she was not in a position to conclusively establish her claim for exemption of the capital gain on sale of shares of M/s Capital trade links (supra), that was raised u/s. 10(38) of the Act by her in the return of income filed u/s. 139(1) of the Act, had way back as on 15.02.2019 i.e much prior to the issuance of notice u/s. 148 of the Act, dated 29.09.2022 paid the taxes on the said amount of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in compliance to notice u/s. 148 of the Act, we find that the aforesaid amount of taxes of Rs. 10,90,690/- (supra) had been deposited by her on 14.02.2019, which corresponds to the tax liability on the income arising from sale of shares in the said return, Page 2 to 6 of APB. We, thus, in the backdrop of the aforesaid facts concur with the Ld. AR that though the assessee had in her original return of income filed u/s. 139(1) of the Act, dated 29.03.2017 raised a claim for exemption u/s. 10(38) of the Act of Rs. 33.04 lacs (supra) on sale of shares of M/s Capital trade links, but she had thereafter, on her own voluntarily deposited the taxes corresponding to the aforesaid income on 14.02.2019 i.e. three years prior to issuance of notice u/s. 148 of the Act by the A.O. We, thus, find substance in the claim of the Ld. AR that as the assessee had voluntarily paid tax on the income arising on sale of shares of M/s Capital trade links i.e. way back three years prior to initiation of proceedings u/s. 148 of the Act by the A.O, therefore, the same clearly establishes her bonafides, which, thus, clearly brings her explanation within the meaning of the concession provided in "Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spendra Surana (2014) 264 CTR 204 (Raj), the Tribunal had held that as the assessee had declared the income from LTCG on sale of agricultural land in his revised return of income, which thereafter, was accepted by the A.O and there was no material available on record by which it could be inferred that there was deliberate concealment on the part of the assessee, thus, there was no justification in imposing penalty u/s. 271(1)(c) of the Act. Also, a similar view had been taken by the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Rajib Garg (2009) 313 ITR 256 (P & H), wherein it was observed that as the additional income so offered by the assessee was done in good faith and to buy peace and the revenue had failed to establish the fact that the explanation of the assessee was not bona fide, thus, the deletion of the penalty by the Tribunal was approved. 14. We, thus, in terms of our aforesaid observations are unable to concur with the view taken by the lower authorities and, thus, set aside the order of the CIT(Appeals) and vacate the penalty of Rs. 10,90,397/- imposed by the A.O u/s 271(1)(c) of the Act. Thus, the Ground of appeal raised by the assessee is allowed in te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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