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TMI Blog2009 (3) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration, assessee had visited Dubai and stayed there for different periods. He also noticed that assessee had brought ₹ 69.97 lacs from abroad on different dates during the year. The AO found that the assessee was in India for a period of 80 days during the current assessment year and on examining the details of stay in India and abroad in the earlier years, it was found that the assessee was a resident and not a non-resident . The assessee filed revised return in which the entire amount of ₹ 69.97 lacs was offered for taxation and added to the income of the assessee. The AO also found that on account of low withdrawal for house hold expenses, an addition of ₹ 1 lac was made to the income of the assessee. The AO initiated penalty proceedings under section 271(1)(c) of the Act and levied a penalty under section 271(1)(c) of the Act of ₹ 23,42,010/- observing that assessee had concealed the particulars of his income and also furnished inaccurate particulars of such income on the ground that if scrutiny had not taken place than the assessee would not have revised the return by changing the status from non-resident to resident . 4. The Learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andolan (252 ITR 471) stated that what would constitute reasonable cause cannot be laid down with precision . It would depend upon the factual background. Reasonable cause, as applied to human actions is that which would constrain a person of average intelligence and ordinary prudence. Reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence, acting under normal circumstances, without negligence or inaction or want of bonafide. In this light the present case will be examined. 2.3.5 The appellant was having the passport in his own position. A reasonable and rational person would consult the passport to know as to how much days he has been in India and how much abroad. This is a simple thing that any C.A. asks while filing the return of a person who was abroad for quite sometime. Therefore, in the present case, the explanation given by the appellant that it was not aware of the law is not correct. Further as has been held by the Hon'ble M.P. High Court in the case of D H Secheron Electrodes Pvt. Ltd. v/s CIT 144 Taxman 689 (2005), the fact of suppression is very much within the knowledge of the appellant especial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sunanda Ram Deka vs. CIT 210 ITR 988 (Gauhati), the Hon'ble court held filing revised returns after discovery of the omission whether it is inadvertence due to a bonafide inadvertence or mistake or not aware there was deliberate concealment. 2.3.6 The preponderant view of the courts as regards its effect on penalty has been that the assessee could not avoid the consequences of a deliberately false and original return by filing a revised return after the concealment has been brought home by the A.O. This view can be taken to have become final after the decision of the Hon'ble Supreme Court by a bench of 3 members in the case of G.C.Agarwal vs. CIT 186 ITR 571 and decision of the High Court in F.C.Agarawal vs. CIT 102 ITR 408 (Gauhati) where it was found that the penalty was exigible as the assessee was not able to establish that the mistake in the original return was inadvertent. In view of this decision, reliance placed by the appellant on various decision is not found to be applicable to the assessee's case. In view of the above decision, it is clear that the assessee had deliberately shown wrong residential status in the original income and it is only when unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowed the three earlier decisions, these should no doubt, be read together for understanding the full scope of the Explanation. 3.3 In CIT v. Mussadilal Ram Bharose's case (1987) 165 ITR 14 (SC), the difference between the returned and assessed income arose because both sales and profits were estimated, since the books were not verifiable. The Tribunal found that though the books contained defects on the basis of which the return was filed, the difference did not arise due to any gross or willful negligence and much less on account of fraud. After review of the various decisions of High Court on the subject, the Supreme Court concluded that it is not a case, where there was no evidence or there was such evidence on the basis of which no reasonable man would have accepted the explanation of the assessee. It was pointed out that the presumption raised by the Explanation stood rebutted in the facts of the case, because of the absence of anything to suggest gross or willful negligence or fraud. 3.4 In CIT vs. K.R. Sadayappan (1990) 185 ITR 49, the assessee who had paid on-money of ₹ 18,750/- for purchase of a plot in his son's name was unable to explain the source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish details of purchasers of the licenses, though required of him. It was, in this context, the income came to be estimated at market quotations of premium published in commercial journals. The Tribunal found that there was nothing to suggest inference of concealment, since receipt of extra consideration for sale of license had not been proved by the Revenue. The High Court, however found that merely because an estimate had been made, penalty cannot be ruled out in the light of the assessee's failure to give particulars of the purchasers of the licenses even on demand on alleged non availability of particulars due to the time lag and the fact that even the names given were of persons, who could not be traced. The rule of evidence in the Explanation would, therefore, have application and the assessee had not established that the difference between the returned and assessed income was not due to any fraud or willful neglect inasmuch as it withheld the requisite material even when called for. It is in these circumstances, that the High Court found that the Tribunal was not correct in canceling the penalties and the Supreme Court in the present case has endorsed the view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Non-Resident and thereby tried to avoid taxation on his foreign remittance - para 2.3.1 to 2.3.3, 2.3,5, 2.3.6. This action of the appellant has led to concealment of real income consciously. Similarly with respect to the estimation of addition on account of low withdrawal for household expenses as discussed in para 3.7, the appellant has concealed its real income which was used to meet his daily household expenses. Therefore, both the ingredients set by the decisions of Hon'ble Gujarat High Court in the case of National Textiles 249 ITR 125 are established. In view of the above, the penalty levied by the A.O. is upheld. 5. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case the AO levied ₹ 23,42,010/- as penalty under section 271(1)(c) of the Act on finding as under:- .. I am therefore convinced that the assessee had concealed the particulars of his income and also furnished inaccurate particulars of such income. The assessee has committed clear default within the meaning of section 274 r.w.s. 271(1)(c) of the Act. 5. Accordingly, I impose a penalty of ₹ 23,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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