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TMI Blog2015 (7) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer under Section 271(1(c ) of the Income Tax Act, 1961 in relation to the Assessment Year 2004-05 ? " The facts and circumstances of the case briefly stated are as follows:- The assessment order dated 19th May, 2006 in so far as the same is material for our purpose reads as follows:- " In the case the assessment u/s.143(3) of the I.T. Act was completed on 28.12.2005 to a total income of Rs. 5,91,48,819/- and tax was charged u/s 115JB of the I.T. Act. On 3rd April 2006 the assessee filed a revised return showing a total income of Rs. 9,63,48,819/- under Normal Provisions of the Act. However Book-Profit was shown at Rs. 65,49,20,882/- u/s 115 JB of the Act. On scrutiny of the said return it was observed that assessee had disclosed additional amount of Rs. 3,40,00,000/-. The assessment was, thus, reopened u/s147 and notice u/s 148 was issued on 18.04.06 and served on the assessee. The assessee replied on 22nd April, 2006 to consider the return filed on 03.04.2006 as return filed u/s 148. A notice u/s.143(2) was issued and served on 10.05.06. In response, Mr. Ravi Tulsyan, A/R of the assessee appeared on 15.05.06. The case was heard and discussed. It appeared that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment U/s. 143(3) of the Income Tax Act, 1961 was completed this return is treated as invalid return. But since the assessee disclosed additional amount of Rs. 3,00,00,000/- as income which required verification in the context of the original return, the case was re-opened U/s. 147 of the Income Tax Act, 1961 and notice U/s. 148 was issued. The re-assessment proceedings U/s. 147 / 143(3) of the I.T. Act'61 were completed on 19.05.2006. It was observed that a search was conducted U/s. 132 of the Act, in the office of the U.P. Distillers' Association by the directorate of Income Tax (Investigation), New Delhi and in the seized record a payment of Rs. 3,00,00,000/- was found to be made by the assessee to the U.P. Distillers' Association. On the basis of the above detection the assessee offered income by way of disallowance of expenditure under explanation to Section 37(1) of the Act. The assessee in its submission stated that to avoid protracted litigation and to put a quietus to the whole issue the assessee had offered this amount as disallowable item U/s. 37(1) of the Act. The tax was charged in the assessment U/s. 143(3), U/s.115JB of the Act. In the so called revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the alleged payments reflected in the seized papers were actually made by the appellant. The assessee itself filed a revised return offering the amount found out in the papers with the third party to be included within its total income and at the later stage of the proceedings also, cooperated with the A.O. in completing the re-assessment by including the amount under consideration in its total income. In this context it is appropriate to consider the assessee's letter dated 27.03.2006 to The Jt. Director of Income-tax(Inv), stating as under:- " Your goodself has also informed that certain payments were made by us to UPDS which were in the records belonging to UPDA. At this stage, we would not like to make any comment about the genuineness of the aforesaid information. However, we are offering the amount, representing the alleged payments made by us to UPDA during the Financial Years pertaining to A.Y. 2003-04, 004-05 & 05- 06 as our income and are also paying tax on it, to avoid protracted litigation and to put a quitous to the whole issue. In the light of our voluntarily surrendering the aforesaid sum as our income in the respective years to which they pertain, it is reque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h stressed that the assessee itself offered the additional income. The department did not find out that there had been any concealment of income on the part of the assessee which, he submitted, is factually incorrect. He added that it would appear from the assessment order that the so called voluntary act arose out of a search conducted under Section 132 of the Act in the office of UP Distilleries Association. From the seized records it transpired that a sum of Rs. 3.40 crores was paid by the assessee. When this fact was brought to the notice of the assessee and his record was called for, it is at that stage that the assessee offered to pay tax on the sum without answering the question posed to him. Therefore, it is not a case wherein a disclosure was voluntarily made. Far less is that an act arising out of any pricking of conscience. In any case he added that the so-called voluntary disclosure cannot alter the consequences. He, in support of his submissions, relied upon a judgment of the Apex Court in the case of Mak Data Private Limited Vs. C.I.T. reported in 2014(1) SCC 674 wherein the following view was taken:- " 5. THE AO, in our view, shall not be carried away by the plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961. 7. THE AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing. The scope of Section 271(1)(c) has also been elaborately discussed by this Court in Union of India vs. Dharmendra Textile Processors (2008) 13 SCC 369 and CIT vs. Atul Mohan Bindal (2009) 9 SCC 589. " Mr. Kapoor, learned senior Advocate, appearing for the assessee drew our attention to the first Explanation to Section 271(1) which reads as follows:- " Explanation 1.- Where in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the learned Tribunal. He submitted that the C.I.T.(A), in its order dated 27th June, 2007, has recorded that "the department has not brought any independent evidence on records to prove that the alleged payments reflected in the seized papers were actually made by the appellant". He submitted that this finding has been upheld by the Tribunal and the Tribunal is the final fact finding authority with which the High Court cannot interfere unless the finding is perverse which he added is not the case of revenue. He in support of his submission drew our attention to a judgment of the Apex Court in the case of Sudarshan Silks & Sarees Vs. C.I.T., Karnataka reported in (2008) 12 SCC 458 wherein Their Lordships opined that " The Tribunal is the final court of fact " (see paragraph 16) He also drew our attention to paragraph 12 of the judgment, which reads as follows;- " 12. The only contention raised by the learned counsel for the appellant is that the Tribunal is the final fact-finding authority and its decision on the facts can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chance of carrying through his explanation and the Assessing Officer too did not record any finding as to the acceptability or otherwise of the explanation of the assessee. Under these circumstances, the proviso to Explanation 1 to section 271 is not attracted. The Revenue did not at all discharge the burden to prove that there was concealment of income by the assessee. It simply rested its conclusion on the act of voluntary surrender by the assessee, which obviously was done in good faith and to buy peace. The Tribunal also placed reliance on the Supreme Court judgment in Sir Shadilal Sugar and General Mills Ltd. v. CIT (1987) 168 ITR 705, in support holding as under (page 713):- We find that the assessee admitted that these were the incomes of the assessee but that was not an admission that there was deliberate concealment. From agreeing to additions, it does not follow that the amount agreed to be added was concealed income. There may be a hundred and one reasons for such admission, i.e., when the assessee realises the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of a quasi-criminal offence. We find ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared at Rs. 29,74,951 by the assessee in the original return, a notice under section 148 of the Act was issued. Pursuant to the said notice, the assessee filed the revised return of income showing higher income. The said return of income was accompanied by a note in which the assessee submitted that he surrendered the entire amount of sale proceeds of shares to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action. Later on, on the basis of revised return, the assessment was framed and the return submitted by the assessee was regularized as it is. During the course of assessment, the aforesaid explanation given by the assessee was neither rejected nor was it held to be mala fide. The Tribunal has recorded a pure finding of fact to the effect that the Revenue has not placed on record any material or evidence to discharge its burden of proving concealment. In the assessment order no such finding was recorded. The Department has simply rested its conclusion on the act of the assessee of having offered additional income in the return filed in response to the notice issued under section 148 of the Act. The Tribunal has further held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty must be imposed equal to the duty determined under sub-section (2) of Section 11-A. That is what Dharamendra Textile decides. " The last submission advanced by Mr. Kapoor was that by the impugned judgment penalty was levied for the years 2003-04, 2004-05 and 2005-06. The present appeal is directed against a judgment of the learned Tribunal passed on 18th January, 2008, which pertains to the assessment years 2003-04 and 2004-05. The Revenue by the present appeal has challenged the impugned judgment in so far as the same is relatable to the assessment year 2004-05. There is nothing to show that identical challenge was thrown to the impugned judgment in so far as the same is relatable to the assessment year 2003-04. Mr. Nizamuddin, learned advocate appearing for the Revenue, is also not aware as to whether the impugned judgment, in so far as the same is relatable to the assessment year 2003-04, has been challenged by any separate appeal. Mr. Kapoor submitted that in the absence of any challenge to the impugned judgment in so far as the same is relatable to the assessment year 2003-04, the present appeal is also bad because the law is that rule of consistency has to be applied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee requiring the latter to appear on 30th March, 2006 at 3 p.m., both for the purpose of giving evidence and producing documents required and indicated therein. From the letter dated 27th March, 2006 addressed by the assessee to the Joint Director of Income Tax, it appears that the assessee was informed that the summons have been issued with regard to the payments appearing to have been made by the assessee to U.P. Distilleries Association. The assessee rather than appearing on the appointed day to give evidence and to produce documents as required by the summons dated 17th March, 2006 wrote to the Joint Director of Income Tax, inter alia, as follows:- " Your goodself has also informed that certain payments were made by us to UPDA which were in the records belonging to UPDA. At this stage, we would not like to make any comment about the genuineness of the aforesaid information. However, we are offering the amount, representing the alleged payments made by us to UPDA during the Financial Years pertaining to Assessment Years 2003-04, 2004-05 & 2005-06, as our income and are also paying tax on it, to avoid protracted litigation and to put a quitous to the whole issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Evidence Act which provides as follows:- " that, if a man refuses to answer a question which he is not compelled to answer by law, the answer, if given, would be unfavourable to him; " On the top of that the submission made on behalf of the assessee before the Assessing Officer appearing from the assessment order reads as follows:- " It was submitted by the A/R, that to avoid protracted litigation and to put a quite to the whole issue the assessee had offered this amount as disallowable item u/s 37(1) of the Act, through the return dated 3rd April, 2006" When the case of the assessee is that the return already filed by him for the assessment year 2004-2005 under Section 139 includes an expenditure disallowable under Section 37 (1) of the I.T. Act, it would automatically follow that inaccurate particulars had been furnished in the return originally filed, assessment whereof was completed on 28th December, 2005. The provisions of Sub-section 1 of Section 271 noticed above suggests that if the assessee furnishes inaccurate particulars coupled with absence of satisfactory explanation, that would per se make the assessee liable to pay penalty. Concealment of income in that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tirely indicates the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The judgment in Dilip N. Shroff case has not considered the effect and relevance of Section 276-C of the IT Act. Object behind enactment of Section 271 (1) (c) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276-C of the IT Act. " The judgements cited by Mr. Kapoor are all distinguishable because they proceeded on the theory of wilful concealment. In the case of Sir Shadilal Sugar and General Mills (supra) Their Lordships opined that "there may be a hundred and one reasons for such admission....... " because the relevant assessment year was with respect to pre-amendment period. The judgment of M. P. High Court in the case of CIT -Vs- Suresh Chandra Mittal cited by Mr. Kapoor followed that judgment of the Supreme Court. The judgement is also distinguishable on facts because in that case th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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