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TMI Blog1995 (2) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... er the said decree assessee was to make the payment of Rs. 39,60,000 by 15-11-1984 and if the payments were made by the assessee in time as referred to above, the decree for a sum of Rs. 42,45,477 would stand satisfied. In the event of assessee's failure to pay any of the instalments as stipulated in the decree by due dates up to 31-7-1982 or if the assessee defaulted twice to pay instalments from August 1982 onwards, the concession of Rs. 2,85,477 would not be available to the assessee and the entire decreed amount would become immediately due with interest at 16 per cent p.a. Though assessee paid some amounts from time to time towards the satisfaction of the decree, the entire amount agreed to be paid to the bank of Rs. 39,60,000 was not paid by 15-11-1984. A sum of Rs. 26,06,000 was in fact paid till end of November 1984 as against Rs. 39,60,000 that was required to be paid. Assessee liquidated the entire amount by November 1987. Apart from decreed amount, a sum of Rs. 3 lakhs was collected by the bank on account of interest on defaulted payments. 2. Though there was compromise between the assessee and Citi Bank, assessee did not pass any entries in the books of account reflec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess interest credited to the same bank as on 31-8-1982. Thus the sum of Rs. 17,34,664.23 on account of interest was offered to tax in the return filed in response to notice u/s 148. The Assessing Officer completed the assessment for assessment year 1983-84 at an income of Rs. 14,52,846. Out of the claim of interest of Rs. 1,06,663, Assessing Officer made a disallowance of Rs. 98,054. The disallowance of interest was on the basis that interest payable to the Citi Bank @ 16 per cent as per the decree was on the defaulted instalments whereas assessee had claimed interest on the entire amount of outstandings. Similarly for assessment years 1984-85 and 1985-86 excess interest claimed by the assessee earlier was offered to tax. The claim of interest in the returns filed in response to notice u/s 148 was restricted to the interest on the outstanding decreed amount. The Assessing Officer allowed the claim of interest on the basis of defaulted instalments only. The matter went in appeal upto the level of the Tribunal and the latter vide order dated 16-12-1994 in ITA Nos. 7149 to 7154/ Delhi/ 1991 for assessment years 1983-84 to 1988-89 has confirmed the disallowance. 3. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns for assessment years 1983-84 to 1987-88 claiming interest on the outstandings of Rs. 52,07,873 notwithstanding a compromise decree passed on 30th April, 1982 as a result of which the liability of the assessee had been reduced to Rs. 42,45,277 with a scope for further reduction to the extent of Rs. 2,85,477. It is a matter of record that assessee had not disclosed the fact of having reached to a settlement with Citi Bank either in the books of account or in the statement of accounts filed along with the returns. Nor was the copy of the decree provided to the Assessing Officer. During the course of assessment proceedings for assessment years 1983-84, 1984-85 and 1985-86. Though there was a search on 30th March, 1984 at the premises of the assessee, there is no evidence on record that the fact of compromise decree had come to the knowledge of the Assessing Officer. We may hasten to add that even if the compromise decree would have been available in the records of the assessee at the time of search, the fact remains that assessee did not disclose to the Assessing Officer the terms of the compromise and the decree passed by the Court in respect of the Citi Bank loan. Assessee had cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed inaccurate particulars of income in the original returns. Section 139(1) makes it obligatory upon the assessee to furnish return of income giving true and full particulars of the income. Section 139(5) enables the assessee to file a revised return in case assessee discovers any omission or any wrong statement in the original return within a specified period. For assessment years 1983-84 to 1985-86, no such returns were filed and assessments were completed on the basis of original returns. For these three years, assessee had made a wrong claim as under. 8. For assessment year 1983-84 though there was a compromise between the assessee and the Citi Bank as a result of which the liability of the assessee got reduced by a sum of Rs. 10,22,770 assessee did not offer this amount to tax under section 41 of the Act. Not only this, the assessee provided interest in respect of the entire amount of Rs. 52,07,873 and claimed it as a deduction. No satisfactory explanation has been given for this omission in the original return of income. The explanation of the assessee is that the decree was subject to certain condition and the same would be satisfied only on liquidation of the entire loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as per our finding had failed to disclose the true income in its original return for assessment year 1983-84, they are liable to penalty u/s 271(1)(c). We are, therefore, satisfied that assessee is liable to penalty in respect of Rs. 10,22,770 for assessment year 1983-84. We also do not see any justification for the assessee to have claimed interest in respect of the entire amount of Rs. 52,07,873. The said interest was not payable at all in view of the compromise decree. The assessee has itself surrendered the amount of Rs. 7,11,894 being the excess interest claimed in the original returned. No doubt assessee had volunteered the information during the course of assessment proceedings for assessment year 1986-87, yet as already observed that is not sufficient for absolving the assessee from liability of the penalty. Assessee may commit a bona fide mistake in the original return and may subsequently rectify that mistake by filing a revised return or by giving information to the Assessing Officer relating to such mistake or omission. If the mistake or omission is bona fide, penalty may not be attracted. However, the burden in this regard is upon the assessee to establish that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his sum of Rs. 98,054 is accordingly deleted. 10.The Assessing Officer has imposed the penalty at 200%. The CIT(A) has directed to calculate the penalty @ 150%. Considering the fact that assessee had given the information voluntarily during the assessment and Assessing Officer had not detected any concealment during the course of assessment proceedings for assessment year 1986-87, the penalty at the minimum imposable would be justified. We accordingly direct the Assessing Officer to calculate the penalty @ 100% only. 11. For assessment year 1984-85 also assessee had made excess claim of interest on the basis of outstandings of Rs. 52,07,873.15. Assessee had surrendered a sum of Rs. 2,60,472 at the time of filing of the return in response to notice u/s 148. In fact this amount was offered for taxation to the Assessing Officer even prior to the notice issued u/s 148. The Assessing Officer had made further disallowance of Rs. 4,42,114. The disallowance of Rs. 4,42,114 on account of interest on the basis of the entire decretal amount outstanding and not on the basis of the defaulted instalments has been confirmed by the Tribunal. For the reasons given in regard to assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had submitted inaccurate particulars of this income while filing the original returns. This decision of the Gauhati High Court has been confirmed by the Hon'ble Supreme Court in the case of G. C. Aggarwal v. CIT [1990] 186 ITR 571. 14. Since in this case assessee has failed to explain satisfactorily as to how a wrong claim was made in the original returns by taking the outstandings of Rs. 52,07,873 as on 30th April, 1982 as against the decretal amount of Rs. 42,45,477, we are of the view that provisions of section 271(1)(c) are attracted notwithstanding that Assessing Officer had failed to detect the concealment. The assessee was, however, not liable to penalty in respect of sum of (Rs. 2,71,689 for 1986 and in respect of Rs. 2,82,753 for assessment year 1987-88). The Assessing Officer is directed to re-calculate the penalty @ 100% on the basis of finally assessed income, after excluding the aforementioned amount. 15. As already pointed out, assessee has the option to make out the case before the administrative authorities for waiver of the penalty if all the conditions are satisfied. But as far as the imposition of penalty is concerned, we have to proceed in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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