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TMI Blog2014 (2) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. - Writ Tax No. - 539 of 2013 - - - Dated:- 15-1-2014 - Hon'ble Sudhir Agarwal,JJ. For the Petitioner : S. D. Singh, Ravi Kant, S. P. Nigam For the Respondent : C.S.C. (I.T.), Shambhoo Chopra ORDER 1. Heard Sri Ravi Kant, learned Senior Advocate, assisted by Sri S.P. Nigam, learned counsel for petitioner; and learned Standing Counsel and Sri Shambhoo Chopra, learned counsel for respondents. 2. This writ petition is directed against the order dated 29.6.2011 passed by Assistant Commissioner, Income Tax, Central Circle, Meerut (hereinafter referred to as "ACIT"), i.e., respondent no. 2, under Section 271 of Income Tax Act, 1961 (hereinafter referred to as "Act, 1961") imposing a penalty of Rs. 1,46,69,958.40 upon petitioner and the revisional order dated 28.3.2013 passed by Commissioner of Income Tax (Central), Tilak Nagar, Kanpur Nagar (hereinafter referred to as "CIT"), i.e., respondent no. 1 dismissing petitioner's revision and confirming ACIT's order dated 29.6.2011. 3. The facts in brief giving rise to dispute in the present writ petition are as under. 4. Petitioner M/S Crossing Infracture Private Limited is engaged in business of real estate, devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... errides Sub-section (1). He further contended that in the present case, Assessee pleaded and placed entire facts on record to show that all the three requirements of Sub-section (2) of Section 271AAA of Act, 1961 have been complied with, but respondents 1 and 2 in a cursory manner have rejected it by observing that petitioner has failed to substantiate one of those conditions without giving any reason therefor and in this respect impugned orders, besides being otherwise illegal, are also bad for want of reasons. He placed reliance on Apex Court's decision in Assistant Commissioner of Income Tax Vs. Gebilal Kanhailal (2012) 348 ITR 561 and Commissioner of Income Tax, Indore Vs. Suresh Chandra Mittal (2003) 11 SCC 729 whereby the Court affirmed Madhya Pradesh High Court's decision in CIT Vs. Suresh Chandra Mittal (2000) 241 ITR 124 (MP HC). 9. Per contra, Sri Shambhoo Chopra, learned counsel appearing for Revenue, contended that it is not the mere compliance of one or two conditions of Sub-section (2) of Section 271AAA of Act, 1961, but if the compliance is not satisfactory and shows that Assessee has followed a mischievous conduct, penalty would be justified and Sub-section (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch and seizure and thereafter: (1) Assessee must have admitted, in the statement under Section 132 (4) of Act, 1961, undisclosed income; and, must also have specified the manner in which such income has been derived, (2) Assessee must also substantiate the manner in which undisclosed income was derived, i.e., must adduce adequate material to support the manner in which undisclosed income was derived by him which he has specified, if any, in his statement under Section 132 (4); and, (3) Assessee pays tax together with interest, if any, in respect to undisclosed income. 12. If all these steps have been taken by Assessee, besides saving liability of penalty under Section 271AAA (1), he would also himself save from another penalty under Section 271 (a) (c). Sub-section (3) further provides that no penalty under Clause (c) of Sub-section (1) of Section 271 shall be imposed upon Assessee in respect to undisclosed income referred to in Sub-section (1) if Sub-section (2) stands complied. 13. Therefore, when the steps provided in Sub-section (2) of Section 271AAA are observed by Assessee, besides the fact, he shall absolve himself from the liability of penalty under Sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely concealed the particulars of its income to the extent of Rs. 14,66,99,584/- (610504382-463804798) added as the assessee has not fulfilled the conditions as per the provision of section 271AAA by not paying taxes on total undisclosed income and substantiated the manner in which such undisclosed income was derived; and admitted the total undisclosed income and specified the manner in which such income has been derived for filing return as stated in the Assessment order". 18. Except of recording his own satisfaction, i.e. conclusion that the conditions under Section 271AAA of Act, 1961 have not been complied with, ACIT himself has not discussed as to how and in what manner, conditions have not been complied. Moreover, ACIT has referred to the assessment order which is also on record as Annexure-6 but a careful perusal thereof also could not show at all as to in which part of the said order, ACIT has discussed about the factum, whether conditions under Sub-section (2) of Section 271AAA of Act, 1961 have been observed and satisfied by Assessee or not except of saying that penalty notice under Section 271 (1) (c) and 271AAA be issued separately. There is no discussion with respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income has been derived and pays the tax, together with interest, if any, in respect of such income." 21. Section 271AAA and Explanation 5 (2) of Section 271 (1) (c) came to be considered before Apex Court in Assistant Commissioner of Income Tax Vs. Gebilal Kanhailal (supra). The Court said that it provides, where, in the Course of search under Section 132, the Assessee, found to be owner of unaccounted assets, claims that such assets have been acquired by him by utilizing, wholly or partly, his income for any previous year which has ended before the date of search or which is to end on or after the date of search, then in such a situation, notwithstanding that such income is declared by him in any return of income furnished on or after the date of search, he shall be deemed to have concealed particulars of his income for the purpose of imposition of penalty, but there are two exceptions to such deeming provision or to such a presumption of concealment which are given in sub-clauses (1) and (2) of Explanation (5). Referring to Clause (2) of Explanation 5, the Court said that three conditions have to be satisfied by the Assessee for claiming immunity for payment of penalty thereu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra Mittal (supra) said: " ... though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer, but once the revised assessment was regularised by the Revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner of Income-tax (Appeals) in the facts and circumstances of the case. This reference is accordingly answered in the affirmative holding that the Tribunal was justified in doing so." 23. The aforesaid judgment has been confirmed by Apex Court by dismissing appeal, and the order of dismissal of appeal is reported in 2003 (11) SCC 729. 24. In Mak Data Private Limited Vs. CIT (supra) there is no case set up by Assessee that he complied with the conditions provided in exception clause of Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mind is applied to the subject matter for a decision whether it is purely administrative or quasi-judicial. They should reveal a rational nexus between the facts considered and the conclusions reached." 30. Referring to the above case law, Apex Court in Gurdial Singh Fijji Vs. State of Panjab Ors (1979) 2 SCC 368 in para 18 said: "We may also indicate, since the High Court saw the file and discovered that the appellant was not brought on the Select List because he was "not found suitable otherwise", that regulation 5 which deals with the preparation of a list of suitable officers provides by Clause 7 that "if in the process of selection, review or revision it is proposed to supersede any member of the State Civil Service, the Committee shall record its reasons for the proposed supersession". While dealing with an identical provision in Clause 5 of regulation 5 of the same Regulations as they stood then, this Court observed in Union of India v. Mohan Lal Capoor and Ors. (1973)2 SCC 836 that "rubber-stamp" reasons given for the supersession of each officer to the effect that the record of the officer concerned was not such as to justify his appointment "at this stage in prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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