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TMI Blog2014 (4) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... had stated that he had voluntarily accepted for the agreed addition in respect of deduction wrongly claimed by his consultant. Thus the asset purchased in the year 2004 has been taken as 1999 to treat the profit on sale of the asset as long-term capital gain and assessee has neither filed any revised return nor brought the mistake to the notice of the AO before the same was detected. We set aside the order of the CIT(A) and confirm the penalty levied by the AO. Grounds raised by the Revenue are accordingly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... within 2 years from the date of the purchase. The AO accordingly determined the short-term capital gain at ₹ 63 lakhs. The assessee did not file any appeal. In the meantime the AO initiated penalty proceedings under s. 271(1)(c) of the IT Act. 2.5 The assessee during the penalty proceedings submitted that he had filed his return of income voluntarily and has not concealed the income. The entire particulars/details in respect of transfer of property were duly disclosed. He had no taxation knowledge and his return of income was prepared and filed without any mala fide intention and the deduction was claimed through oversight. It was argued that the entire capital receipt has been reflected in the regular books of account. It was further submitted that during the assessment proceedings when the mistake was pointed out the assessee suo motu agreed and has paid the tax. Relying on the decision of the Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 and the decision of the Hon'ble Rajasthan- High Court in the case of CIT v. Harshwardhan Chemical & Mineral Ltd. [2003] 259 ITR 212/133 Taxman 320 it was argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrawing the deductions claimed under s. 54B and suo motu voluntarily accepted the agreed addition in respect of deduction claimed inadvertently and through oversight on account of the transfer of property. 3.2 It was argued that the AO has wrongly levied the penalty in spite of the fact that, the assessee neither intentionally concealed the income nor furnished inaccurate particulars of the income during the assessment proceeding and therefore the said penalty is not justified. The assessee has already declared in the return of his income particulars of the capital gain in respect of the sale of land at Mohamadwadi and the books of accounts of the assessee already reflects the above-said transaction and therefore the said penalty is not justified. It was argued that the assessee has co-operated in the assessment proceeding and that there was no conscious breach of law. The assessee did not conceal any income or facts and neither intentionally furnished any inaccurate particulars of income nor was there any concealment. It was accordingly argued that the penalty levied by the AO be deleted. 4. Based on the arguments advanced by the assessee the learned CIT(A) deleted the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition was incorrectly mentioned as 1999 instead of 2004 being the correct year. The appellant had, however, calculated the cost of index of 480 by considering the actual year of acquisition of 2004-05 and not 1999 as is clearly evident from the statement of compensation of total income. Therefore, the inference drawn by the AO is not correct so far as the contention of the AO regarding urban land and agricultural land and the claim of deduction under s. 54B of the IT Act, is concerned, the appellant has contended that the exemption claimed by the consultant was inadvertent and through oversight and which was corrected during the assessment proceedings by suo motu voluntarily admitting for agreed addition of short-term capital gain on sale of the said land. It has thus been contended that there was no conscious breach of law and the appellant did not conceal any income or fact and neither intentionally furnished any inaccurate particulars. It has also been contended that the AO had wrongly levied the penalty as the appellant had neither intentionally concealed the Income nor furnished inaccurate particulars. The appellant has relied on the following case law in support of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. During the assessment proceedings the assessee has accepted this mistake and has also explained that it had happened inadvertently or through oversight and that it as a genuine clerical/typographical mistake with no mala fide intentions, therefore, could not be held as concealment. Therefore, where there is nothing to suggest gross or wilful neglect, the Explanation to s. 271(1)(c) cannot be of help to justify penalty. In the case of CIT v. Mehta Engineers Ltd. [2008] 219 CTR (P&H) 285 : [2008] 8 DTR (P&H) 136 : [2008] 300 ITR 308 (P&H) it was held that where the facts are disclosed but, inference is different, there is no case for penalty. 3.5 Coming to the judgment of the Hon'ble Apex Court in the case of CIT v. Reliance Petroproducts Ltd. (supra) it was held as under : 'Reading the words 'inaccurate' and 'particulars' in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income have been duly disclosed by the assessee.' The Tribunal also held that as long as penalty is for default, an innocent violation may merit compensation but not penalty. The Tribunal concluded after an elaborate discussion on the subject as under : 'With mens rea or without mens rea, a penalty can only be imposed where there is failure deemed failure, to discharge an obligation.' 3.5.2 In the case of Devi Doss Subhani v. ITO (supra), the Tribunal Jodhpur, on the assessee having wrongly claimed exemption under s. 54 in the relevant assessment year after withdrawing such claim made in an earlier year under bona fide misconception and belief, held penalty under s. 271(1)(c) could not be levied in the absence of any evidence to establish that the assessee had deliberately furnished inaccurate particulars or had consciously concealed taxable income. 3.5.3 Cancellation of penalty for a wrong claim of deduction in computation of non-agricultural income bona fide made and for a wrong claim of relief under s. 80P were found to be decisions on fact on which no question of law would arise as held in CIT v. Shahabad Co-op. Sugar Mills Ltd. [2010] 322 ITR 73 (P&H). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of CIT v. D&H Secheron Electrodes Ltd. [2006] 203 CTR (MP) 164 : (2008) 296 ITR 193 (MP), wherein the assessee had surrendered income and explanation of assessee given in factual version was acceptable, it was held that there existed no mens rea as contemplated under s. 271(l)(c), penalty would not be leviable. The appellant has also cited the Jodhpur Tribunal decision in the case of Rajendra Kumar v. ITO (supra) wherein it has been held that mere non-filing of appeal against the assessment order does not ipso facto lead to levy of penalty under s. 271(1)(c) on similar fact when assessee agreed to addition, it was held to be bona fide explanation where no penalty was leviable as held in Permindar Kumar Gupta v. ITO [1988] 32 TTJ (Del) 549. 3.5 In view of the above facts and the decisions cited supra including that of the apex Court in the case of CIT v. Reliance Petroproducts (P) Ltd. (supra), the penalty levied under s. 271(l)(c) is not sustainable and is deleted. Grounds of appeal Nos. a, b, c and d raised by the appellant are treated to be allowed." 5. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : " 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered, neither any consideration had been paid nor the possession of the land had been taken. 8. The learned CIT(A) grossly erred in accepting the assessee's contention that he had no knowledge of Act without appreciating that the assessee had been in the business for a long time and had assistance of the qualified professional. 9. The learned CIT(A) grossly erred in failing to appreciate that while every legal disallowance may not lead to penalty, a disallowance based on an incontesibe provision would justifiably lead to levy of penalty. 10. For these and such other grounds as may be urged at the time of the hearing, the order of the learned CIT(A) may be vacated and that of the AO be restored. 11. The appellant craves leave to add, alter or amend any or all the grounds of appeal." 6. The learned Departmental Representative heavily relied on the order of the AO. He submitted that knowing fully well that the asset sold is held for a period of less than 3 years the assessee claimed capital gain as long-term capital gain and claimed deduction under s. 54B. He submitted that the assessee has not filed any revised return prior to the detection by the Department and onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. CIT [2012] 348 ITR 306/211 Taxman 40/25 taxmann.com 400 (SC) he submitted that penalty was deleted on account of inadvertent mistake. He submitted that mistake In the instant case has happened in the office of the chartered accountant. Therefore, in view of the decision of the Hon'ble Supreme Court in the case of PricewaterhouseCoopers (P.) Ltd. (supra), the penalty deleted by the learned CIT(A) is justified. He accordingly submitted that the grounds raised by the Revenue should be dismissed. 8. We have considered rival arguments made by both the sides, perused The orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the asset in the instant case was purchased on 13th April, 2004 for a consideration of ₹ 12 lakhs and sold on 6th Oct., 2006 for a consideration of ₹ 75 lakhs, the details of which are at p. 5 of the assessment order. The assessee filed the return of income on 31st Dec., 2007 claiming the year of acquisition of the asset as 1999 instead of the correct year as 2004. The notice issued under s. 143(2) of the Act dt. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dwadi. ** ** **" 8.1 From the above, it is clear that the addition made by the AO is an agreed addition and therefore, the submission of the learned counsel for the assessee that it is not an agreed addition is not correct. 8.2 We find the Hon'ble Delhi High Court in the case of Zoom Communication (P.) Ltd. (supra) after considering the decision of Hon'ble Supreme Court in the case of Reliance petroproducts (P.) Ltd. (supra) has observed as under (short notes) : "Held, that admittedly, in view of the provisions contained in s. 40(a)(ii) of the Act, the amount of income-tax could not have been claimed as a deduction while computing income of the assessee. As regards the amount claimed on account of unusable and discarded assets, the Tribunal was entirely incorrect in taking the view that the deduction claimed by the assessee was admissible to it under s. 32(l)(iii). Clause (i) of sub-s. (1) of s. 32 relates to assets of an undertaking engaged in generation and/or distribution of power. Admittedly, the assessee-company was not engaged in generation and for distribution of power, during the relevant year. Thus, the provisions, of cl. (i) of sub-s. (1) of s. 32 wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. Explanation to s. 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged 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 ₹ 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 IT Department. Statute does not recognize those types of defences under the Expln. 1 to s. 271(l)(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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee as long-term by substituting the year of acquisition as 1999 instead of 2004 and since no revised return was filed nor the mistake was brought to the notice of the AO suo motu before it was detected by the Department for which the assessee had to finally surrender the addition, therefore, following the decision of the Hon'ble Supreme Court in the case of MAK Data (P) Ltd. (supra) and the decision of Hon'ble Delhi High Court in the case of Zoom Communications (P) Ltd. (supra), we hold that the learned CIT(A) was not Justified in deleting the penalty levied by the AO. 8.5 So far as the decision of the Hon'ble Supreme Court in the case of PricewaterhouseCoopers (P) Ltd. (supra) is concerned the same in our opinion was under different context and not applicable to the facts of the present case. In that case, the assessee provided multi-disciplinary management consultancy services. For the asst. yr. 2OO0-01 it filed its return of income under s. 139(6) r/w s. 139(6A) of the It Act, 1961 accompanied by tax audit report under s. 44AB of the Act and statement of particulars in Form 3CD. Even though the statement indicated that the provision towards payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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