9911796707
TMI Blog2024 (7) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 of the Act as deemed concealed income of the assessee, but the same is only concerning specific circumstances therein provided, i.e. where the assessee had failed to file his return of income within the period specified in sub-section (1) of Section 153 of the Act and until expiry of period aforesaid, no notice was issued to him under Clause (i) to sub-section (1) of Section 142 or 148, which, however, is not the case of the assessee before us. No such facts that reveal the furnishing of inaccurate particulars of income or concealment of income by the assessee, but this is a case, where a claim for exemption of LTCG u/s. 10(38) of the Act in the original return of income was withdrawn initially vide letter filed with the department to buy peace of mind and to avoid protracted litigation, which, thereafter, was followed by offering of the said amount as income in the return of income filed in response to notice u/s. 148 of the Act We, thus, are of the view that as the penalty proceedings u/s. 271(1)(c) of the Act as held in the case of M/s Hindustan Steel Ltd. [ 1969 (8) TMI 31 - SUPREME COURT] are quasi-criminal proceedings, therefore, the assessee in absence of any material w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdraw the claim for exemption on sale of shares of the said scrip as was raised in its return of income u/s. 10(38) of the Act. 4. Subsequently, the A.O based on information that the assessee had in its return of income claimed exemption of Long Term Capital Gain (LTCG) of Rs. 2,78,42,063/- on the sale of shares of CCL International Ltd. a penny stock, viz. CCL International Ltd. u/s. 10(38) of the Act, initiated proceedings in its case u/s. 147 of the Act. 5. Notice u/s. 148 of the Act dated 04.05.2020 was issued to the assessee. In compliance, the assessee filed its return of income on 13.05.2020 declaring an income of Rs. 2,85,25,350/-, wherein LTCG of Rs. 2,78,42,063/- on the sale of shares of CCL International Ltd. that was earlier claimed by him as exempt u/s. 10(38) of the Act in its original return of income was offered as income under the head Other sources . 6. The A.O after referring to the modus operandi that was adopted across the country for laundering of unaccounted money by the assessee s in the garb of bogus LTCG transactions, referred to the facts involved in the case of the assessee before him. The A.O. observed that the assessee had through an off-market transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter, sone of the scrips were also suspended. The evidence gathered has to be evaluated in the background of what the Hon'ble Supreme Court referred to as the test of preponderance of human probability judged on the basis of surrounding circumstances. That there was a scheme, is not in doubt and that the assessee is a beneficiary of such a scheme is a fact. Keeping in view the background of the scheme and transactions carried out by the assessee and circumstantial facts (purchase is offline which is manipulated, it can be stated that the assessee has taken entry of bogus LTCG. ii) the evidentiary value of payment of STT cannot make a non-genuine transaction a genuine one and genuine claim u/s. 10(38) of the I.T. Act, 1961. iii) the assessee concealed the facts of share price rigging with a malafide planning by entry provider and assessee is beneficiary of such entries. iv) It is seen when the prices were being rigged upside, the number of share transactions were nominal/negligible but when the desired price height were reached, the volume of transaction jumped up many folds for booking the bogus LTCG/STCL by the respective beneficiaries and thereafter immediately fallen d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115BBE of the Act. 8. Accordingly, the A.O. based on his aforesaid observations determined the income of the assessee at Rs. 2,86,35,354/- (including addition u/s. 68 of the Act of Rs. 2,76,19,429/-). Also, the A.O. vide his order passed u/s. 147 r.w.s. 144B of the Act dated 30.03.2022 initiated penalty proceedings u/s. 271(1)(c) of the Act for concealment of particulars of income by the assessee. 9. The A.O. after the culmination of the assessment proceedings, vide his order passed u/s. 271(1)(c) of the Act dated 13.09.2022 imposed a penalty of Rs. 93,88,640/- on the assessee for deliberate concealment of income of Rs. 2,78,42,063/- (supra). 10. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, observations of the CIT(Appeals) on the multi-facet contentions that were raised by the assessee are culled out as under: 5. I have perused the order passed by the A.O and the written submission filed by the appellant. The appellant raised the following contentions: 1. The amount was offered voluntarily by him and hence penalty cannot be levied. This was his main contention. 2. A.O did not initiate penalty in other case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of Durga Prasad More 82 ITR 540. h) The assessee's purchases were made offline and no demat account was produced during assessment proceedings to show the exact date of entry in its demat account. Further, the documents submitted by the assessee were not proper. The Application for Equity Shares was undated and no application no. was mentioned on the application form. No acknowledgement of the same was seen on the application form. Further, the deposit slip of IDBI Bank dated 10/01/2011 does bear the date stamp to prove authenticity of the cheque presenting date and document. i) Exemption is bonafide but due to apprehensions, the assessee has offered to pay tax argument of the assessee cannot be accepted because no one will pay Rs. 94 lakhs based on apprehensions if its claim is correct. The fact that the assessee has paid Rs. 94 lakhs proves that he knows his transactions are bogus and will be out by the Department and taxed accordingly. This is the reason why reassessment proceedings were initiated in this case despite having filed revised ROI u/s. 148 with due tax of Rs. 94 lakh accepting thereby the impugned exemption claimed as irregular. j) In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls routed their undisclosed income in the form of purchase and sale of shares of those shell companies that were operated by those entry providers. Those entry operators facilitated such individuals to claim bogus LTCG and subsequent exemption. 7.4. It was an elaborate fraudulent practice adopted by those entry providers mainly to evade several thousand crores of tax through such unlawful activities carried over for a long period. Through effective coordination with several investigating agencies and SEBI, the Income Tax Department detected such modus operandi by identifying all those penny stock companies. 7.5. One of such penny stock companies was M/s CCL International Ltd. The appellant claimed that he bought those shares and sold the same in AY 2014-15. The LTCG out of that sale for a sum of Rs. 2,78,42,063/- was claimed as exempt income in the return filed by him voluntarily on 26.07.2014. 7.6, After 6 years of filing such return, the AO issued notice u/s 148 of the IT Act on 04.05.2020 to assess the income escaped in all those 6 years. After receipt of this notice only, the appellant filed the return of income on 13.05.2020 by admitting a sum of Rs. 2,78,42,063/- as additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was genuine as the details of transactions with evidences were filed before the AO. If his claim was correct and genuine, he need not have disclosed a sum of Rs. 2,78,42,063/- as income escaped from assessment. He was aware of the fact that M/s CCL International Ltd. was shell company / penny stock company and that was detected by the investigation unit. Hence, he surrendered his bogus claim of LTCG when he received the notice u/s 148 of the IT Act. As the income escaped was brought to taxation, penalty was levied in his case as the AO rightly initiated the penalty proceedings in the assessment order. Hence, his contention that claim of exemption was genuine is not acceptable. 10. Nothing proved against appellant. The appellant made another ground that nothing was proved against his claim. This plea is also devoid of any merit. The AO need not prove anything else in his case. The appellant himself accepted that he claimed bogus LTCG and enjoyed the benefit over the period of 6 years. When the AO received information above a penny stock company and issued notice u/s 148 of the IT Act to assess the income escaped by recording detailed reasons, the appellant surrendered his incorre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in its judgment in the case of CIT Vs Zoom Communication Pvt. Ltd [191 Taxman 179 (Delhi)/[2010] 327 ITR 510 (Delhi)/[2010] 233 CTR 465] held that If assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271(1)(c) would come into play and assessee will be liable to penalty. iv) Hon'ble Supreme Court in its judgment in the case of K.P.Madhusudhan Vs. CIT [2001] 118 Taxman 324 (SC)/[2001] 251 ITR 99 (SC)/[2001] 169 CTR 489 (SC) held that where assessee was unable to furnish evidence for loans and it offered amount of transaction as additional income, Assessing Officer was justified in imposing penalty u/s271(1)(c) after finding the explanation to be unacceptable and applying Explanation 1(B) of the section. v) Hon'ble Supreme Court in its judgment in the case of Mohan Steels Ltd. Vs. CIT [2017-TIOL-159-SC-IT] held that SLP dismissed after concurring with the views expressed by High Court that penalty for concealment would become leviable if it was discovered that allowances claimed were not bonafide in nature. vi) Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment orders and blank share transfer deeds duly signed had been impounded in the course of survey proceedings conducted in the case of (a sister concern of the assessee). By the show-cause notice, the Assessing Officer sought specific information regarding the documents pertaining to share applications found in the course of survey, particularly, bank transfer deeds signed by persons, who had applied for the shares. In reply, the assessee made an offer to surrender a sum of Rs. 40.74 lakhs with a view to avoid litigation and buy peace and to make an amicable settlement of the dispute. The Assessing Officer completed the assessment wherein amount surrendered was brought to tax, as 'income from other sources'. The Assessing Officer also passed a penalty order under section 271(1)(c). The Tribunal set aside penalty order holding that the imposition of penalty solely on the basis of assessee's surrender could not be sustained. of any explanation in respect of The High Court took a view that in the absence of any explanation in respect of the surrendered income, the first part of clause (A) of explanation 1 to 271(1)(c) was attracted. Holding so, the judgment of the the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain 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 Assessing Officer, 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. [Para 9] The Assessing Officer has to as to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the Assessing Officer is not required to record his satisfaction in a particular manner or reduce it into writing. [Para 10] In view of above, impugned penalty order passed by the High Court deserved to be confirmed. 13.5 The above said decision is squarely applicable to the present case. The appellant did not admit any LTCG or other sums earned out of the share transaction entered between him and the penny stock company in his original return of income filed on 26.07.2014. After he received notice u/s. 148 of the IT Act dated 04.05.2020, he filed the return of income on 13.05.2020 by admitting additional income of Rs. 2,78,42,063/- that was claimed as exempt in the original return of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s fully supported by documentary evidence which was foregone only as a matter of abundant caution, i.e. to buy peace of mind and avoid litigation. The Ld. AR also in support of his claim that now when the assessee had on its own come up with clean hands and had offered its additional income for tax, no penalty u/s. 271(1)(c) of the Act was warranted in its case, relied upon the judgment of the Hon'ble High Court of Chhattisgarh in the case of ACIT Vs. Agrawal Round Rolling Mills Ltd. (2013) 85 CCH 510 (C.G.). The Ld. AR submitted that the Special Leave Petition (SLP) filed by the revenue in the aforementioned case had been dismissed by the Hon'ble Supreme Court. 13. Apart from that, the Ld. AR submitted that now when the impugned amount of LTCG on the sale of shares of CCL International Ltd. had been offered for tax by the assessee in its return of income filed in response to the notice u/s. 148 of the Act, there could be no case of concealment or furnishing of inaccurate particulars leading to levy of penalty u/s. 271(1)(c) of the Act. The Ld. AR to buttress his aforesaid claim had relied on the order of ITAT, Mumbai in the case of DCIT Vs. Reliance General Insurance Co. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICL) which revealed the delivery of shares. The Ld. AR based on the aforesaid facts submitted that now when the assessee had duly substantiated the authenticity of the transaction of sale of shares of CCL International Ltd. which had not been dislodged by the department, therefore, on the said count itself no penalty u/s. 271(1)(c) of the Act was called for in its case. 15. The Ld. AR further submitted that now when the assessee had offered the LTCG of Rs. 2.78 crore (supra) as its additional income under the head income from other sources in its return of income filed u/s. 148 of the Act, therefore, the same could not have been brought within the meaning of concealment of income, based on which penalty was imposed by the A.O u/s. 271(1)(c) of the Act. The Ld. AR in support of his aforesaid contention relied on the judgment of the Hon'ble High Court of Andhra Pradesh in the case of CIT Vs. Sania Mirza (2013) 87 DTR 371 (AP). The Ld. AR took us through the facts involved in the aforementioned case and submitted that as the assessee before the Hon'ble High Court had disclosed prize money that was received by her in the statement of affairs that was filed with the return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income filed on 26.07.2014 and had offered the said amount as its additional income. On a perusal of the letter filed by the assessee with the Pr. CIT-2, Raipur dated 23.03.2020 (supra), we find that the withdrawal of exemption by the assessee was prompted by the fact that the sale of shares of CCL International Ltd. (supra) which was claimed as exempt by its co-parcener, viz. Shri Manish Kumar Sharma for A.Y.2015-16 was declined by the A.O, i.e. ACIT, Central Circle-1 vide order u/s. 143(3) dated 31.01.2017 and was held as an unexplained cash credit u/s. 68 of the Act. 19. Be that as it may, we shall first look into the assessee's claim that now when it had in its return of income filed in response to the notice issued u/s. 148 of the Act, dated 04.05.2020 offered the LTCG of Rs. 2.78 crore (supra) which was earlier claimed in its original return of income as exempt u/s. 10(38) of the Act, as its income from other sources and paid taxes thereon, then, there was no justification for the A.O. to have levied a penalty on the said amount. 20. To answer the aforesaid question, we have closely scrutinized the provisions of Section 271(1)(c) of the Act. As per Explanation 1 of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the income in respect of which particulars have been concealed. Accordingly, it is not a simpliciter addition/disallowance but the falsity of the explanation of the assessee as regards the same which would justify the imposition of penalty as per Explanation 1 to 271(1)(c) of the Act. 22. Be that as it may, it would be relevant to point out that the assessee had in its return of income filed in compliance to the notice u/s. 148 of the Act come forth with an explanation for offering the gain/surplus on the sale of shares of CCL International Ltd. as its income from other sources. The assessee in its letter dated 23.03.2020 that was filed with the Pr. CIT-2, Raipur; Jt. CIT-4, Raipur; and ITO-4(3), Raipur on 20/21.04.2020 had stated that the LTCG of Rs. 2.78 crore (approx.) which was earlier claimed as exempt u/s. 10(38) of the Act in its original return of income was being withdrawn, and the corresponding income was offered for tax to buy peace of mind and to avoid protracted litigation. Elaborating further, the assessee had stated in its letter dated 23.03.2020 (supra), that subject income was being offered for tax after taking cognizance of the fact that in the case of its co-pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain information that was received by him, i.e CCL International Ltd. , Scrip Code No.531900 was a penny stock, and had after referring to the modus-operandi that was adopted for laundering of tainted money through transactions in penny stocks drawn adverse inferences in the hands of the assessee. 25. Further, we find substance in the Ld. AR's claim that there has been no attempt on the part of the lower authorities to dislodge the genuineness of the assessee's claim of having earned LTCG of Rs. 2.78 crore (supra) on the sale of shares of CCL International Ltd. i.e by placing on record anything which would prove to the contrary. 26. It transpires on a careful perusal of the orders of the lower authorities, that they had observed that the assessee had participated in a pre-arranged transaction to launder its unaccounted income in the garb of transaction of purchase/sales of shares of CCL International Ltd. , i.e. a penny stock, based on their multi-facet observations, viz. (i) that had the assessee carried out genuine transactions then it would not have withdrawn its claim of exemption u/s. 10(38) of the Act as was raised in the original return of income and offered the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urity Transaction Tax (STT); and (vii) receipt of sale proceeds of shares of CCL International Ltd. in the assessee's bank account No.00000010822719448 with State Bank of India, Branch: Raipur. 28. All that can be gathered from the orders of the lower authorities, wherein they had drawn adverse inferences as regards the genuineness of the transaction of purchase/sale of shares of CCL International Ltd. by the assessee are certain general observations a/w. deliberations on the modus operandi that was adopted for laundering of unaccounted money through transaction in penny stocks. At this stage, we may observe that though the A.O/CIT(Appeals) had alleged that the assessee had participated in a prearranged transaction to launder its unaccounted income in the garb of transaction of purchase/sale of shares of CCL International Ltd. , i.e. a penny stock, but had failed to conclusively establish its said conviction. On a careful perusal of the orders of the lower authorities, we find that no evidence/material had been brought on record by them that would prove to the hilt that either the assessee or its broker was involved in rigging up the price of the scrip of CCL International Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdraw its aforesaid claim of exemption u/s. 10(38) of the Act but also, the documentary evidence which it had placed on record to substantiate the authenticity of the transaction of purchase/sale of shares of CCL International Ltd. had not been dislodged by the department. On the contrary, we find that the A.O while framing the assessment vide his order u/s 147 r.w.s 144B of the Act, dated 30.03.2022 had not drawn any adverse inferences as regards the purchase price of of 60000 shares of AAR Infrastructure Ltd. which had thereafter merged with CCL International Ltd. Our aforesaid view that in case, viz. (i). the A.O had though held the share transaction as bogus but had not made any addition as regards the purchase price of the scrip, i.e 60000 shares of AAR Infrastructure Ltd (supra) in lieu whereof the assessee on merger was allotted 150000 shares of CCL International Ltd ; and (ii). that in the absence of any evidence available on record suggesting the involvement of the assessee or its broker in rigging up the price of the scrips of CCL International Ltd. , the onus cast upon the A.O to disprove the authenticity of the transaction of purchase/sale of shares was not discharged, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no finding that the enquiry conducted either by the SEBI or the stock exchange with respect to rigging up of share price of M/s Shree Nath Commercial Finance Ltd. Similarly, there was no finding with subsequent market price of the impugned scipt. We also note that there was no dispute raised by the Revenue with respect to the following facts: 1. Shares were purchased through broker on recognized stock exchange. 2. Purchase consideration of share was made through cheque. 3. Share was duly dematerialized in D-mat account. 4. Shares were sold through stock exchange after the payment of STT. The transactions have been confirmed by brokers. 5. The payments were received through ECS in the D-mat account. 6. Inflow of shares are reflected in D-mat account. Shares are transferred through D-mat account and buyer are not known to the assessee. 7. There is no evidence that the assessee has paid cash to the buyer or the broker or any other entry provider for booking LTCG and share were purchased by the determined buyer. 4 Hence, the Tribunal held, and in our opinion rightly so that there was no evidence available on record suggesting that the assessee or his broker was involved in rigging up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 vs. NRA Iron Steel (P.) Ltd. 1 but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs. 33. We shall now deal with the adverse inferences drawn by the A.O as regards the authenticity of the assessee's claim of having carried out a genuine transaction of purchase/sale of shares of CCL International Ltd. for the reason that, viz. (i) price of a share of M/s. CCL International Ltd. had increased manifold within a short span; (ii) the trade pattern of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn adverse inferences much the less saddled the assessee with penalty u/s 271(1)(c) of the Act for raising a false claim of exemption. Our aforesaid view is supported by the judgment of the Hon'ble High Court of Rajasthan in the case of Pr. CIT-I Vs. Ritu Agarwal Shreeram Bhawan, (2023) 453 ITR 250 (Rajasthan). Also, the SLP filed by the department against the order of the Hon'ble High Court of Gujarat in the case of Pr. CIT Vs. Parasben Kasturchand Kochar (2021) 130 taxmann.com 176 (Guj) had been dismissed by the Hon'ble Supreme Court in (2021) 130 taxmann.com 177 (SC). 36. We, thus, based on our aforesaid observations are of a firm conviction that as the assessee had placed on record documentary evidence to substantiate its claim of having earned LTCG on sale of shares of CCL International Ltd. , which was claimed an exempt u/s. 10(38) of the Act, the A.O could not have based on his general observations and referring to the modus-operandi that was adopted for laundering of unaccounted money through transactions in penny stocks, therein, without placing on record any material which would irrefutably disprove the authenticity of the assessee's claim and prove th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had withdrawn its claim of exemption of LTCG on the sale of shares of CCL International Ltd. as was raised in the original return of income u/s. 10(38) of the Act, which information in turn had formed the very basis for initiating proceedings in its case u/s. 147 of the Act, therefore, there was no justification for the A.O. to have saddled the assessee with penalty u/s. 271(1)(c) of the Act; (III) that the assessee had duly offered the LTCG on the sale of shares of CCL International Ltd. as its income from other sources in its return of income filed in compliance to notice u/s. 148 of the Act; (IV) that the A.O had not drawn any adverse inferences as regards the purchase consideration of Rs. 6 lacs that was paid by the assessee for the purchase of shares of M/s. AAR Infrastructure Ltd. which thereafter had been merged with CCL International Ltd.; (V) that in the absence of any evidence available on record that suggests that either the assessee or its broker was involved in rigging up the price of scrip of CCL International Ltd. there was no justification for the A.O. to have drawn adverse inferences as regards the authenticity of the assessee's claim of exemption of LTCG on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 271(1)(c) of the Act. 40. We find that the Hon'ble High Court of Punjab and Haryana involving identical facts in the case of CIT Vs. Rajiv Garg Ors. (2009) 313 ITR 256 (P H) had quashed the penalty that was imposed by the A.O u/s. 271(1)(c) of the Act. 41. Ostensibly, in the case before the Hon'ble High Court of Punjab Haryana in the case of CIT Vs. Rajiv Garg Ors. (supra), the assessee who was engaged in the business of manufacturing cotton yarn and cotton waste, had filed his return of income on 30.10.1998, which, inter alia, included LTCG on sale of shares amounting to Rs. 29,74,951/-. The return of income filed by the assessee was processed as such u/s. 143(1) of the Act. Subsequently, based on information received from Dy. DIT (Inv.), Gurgaon that the sale of shares amounting to Rs. 32,40,385/- on which capital gain had been declared at Rs. 29,74,951/- by the assessee in the original return, was indeed bogus, a notice under section 148 of the Act was issued on March 31, 2003, on the ground that certain income chargeable to tax had escaped assessment. In response to the said notice, the assessee filed the return of income, wherein income was declared at Rs. 63,39,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was aware of the investigations carried out by the DDIT (Inv.), Gurgaon regarding the transaction of sale and purchase of shares, yet there was no evidence on record to suggest that it was the transaction of the assessee which have been found to be bogus. The Tribunal observed that in pursuance of Section 148 of the Act and subsequent penalty proceedings, the revenue had only placed reliance on the inquiries conducted by the DDIT (Inv.), Gurgaon, which in turn, was based on the statements of certain share brokers who were alleged to have conceded that certain transactions of sale and purchase of shares carried out through them were mere accommodation entries and were not genuine. Nevertheless, there was no material or evidence either brought on record by the revenue or was referred to by Income Tax Authorities at any stage to show that the statement of the brokers pertained to the share dealings done by the assessee. Based on the aforesaid facts, the Tribunal observed that merely because the income had been offered by the assessee in response to the notice u/s. 148 of the Act, it cannot be ipso facto inferred that the penal provisions of Section 271(1)(c) of the Act are attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such income. The burden shifted to the assessee only if he failed to offer any explanation for the undisclosed income or offered an explanation that is found to be false by the assessing authority. The Hon'ble High Court observed that the assessee in the case before them, in pursuance to the notice u/s. 148 of the Act had revised his return of income wherein he had surrendered the entire income with an explanation. It was further observed that the revenue had not placed on record any material or evidence to discharge the burden of proving concealment and had simply rested its conclusion on the act of the assessee of having offered additional income in the return filed in response to notice u/s. 148 of the Act. The Hon ble High Court observed that as the additional income was offered by the assessee in good faith and to buy peace of mind, and the revenue had failed to establish that the explanation of the assessee was not bonafide, thus, approved the view taken by the Tribunal in upholding the order of the CIT(Appeals) whereby the penalty imposed u/s. 271(1)(c) of the Act by the A.O. was deleted. For the sake of clarity, the observations of the Hon'ble High Court are cull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 29,74,951. The return was processed in terms of section 143(1)(a) of the Act on March 15, 1999. Subsequently, on the basis of some information with regard to sale proceeds of the shares amounting to Rs. 32,40,385 on which the capital gain was declared 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 dis-charge its burden of proving concealment. In the assessment order no such f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00) 241 ITR 124 (MP). For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: 6. We find ourselves in agreement with the view taken by the Tribunal. It is well settled that under Section 271(1)(c), the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority. However, the proviso to Explanation 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. 7. In the present case, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 271(1)(c) of the Act such person was mandatorily to be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after expiry of the period aforesaid in pursuance of a notice u/s. 148 of the Act. 48. Although, Explanation 3 to Section 271(1)(c) of the Act takes within its sweep the income disclosed by the assessee in its return of income filed u/s. 148 of the Act as deemed concealed income of the assessee, but the same is only concerning specific circumstances therein provided, i.e. where the assessee had failed to file his return of income within the period specified in sub-section (1) of Section 153 of the Act and until expiry of period aforesaid, no notice was issued to him under Clause (i) to sub-section (1) of Section 142 or 148, which, however, is not the case of the assessee before us. 49. We shall now deal with the judicial pronouncements that have been pressed into service by the Ld. DR, as under: A.) MAK Data (P) Ltd. Vs. CIT (2013) 38 taxmann.com 448 50. We may herein observe that the judgment of the Hon'ble Supreme Court in the case of MAK Data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncement will not carry the case of the revenue any further. B.) CIT Vs. Prasanna Dugar (2015) 371 ITR 19 (Cal) 52. As in the aforesaid case the assessee was subjected to search u/s. 132 of the Act, therefore, the Hon'ble High Court after referring to Explanation 5A(b) of Section 271(1)(c) of the Act, observed that as the assessee had before the initiation of search u/s. 132 of the Act not included the sum of Rs. 70 lacs that was disclosed in the course of the search proceedings, therefore, it was liable for imposition of penalty u/s. 271(1)(c) of the Act. 53. As the facts involved in the present case before us are distinguishable, therefore, reliance placed by the Ld. DR on the aforesaid judicial pronouncement will not carry the case of the revenue any further. C.) Pr. CIT Vs. Vandana Gupta (2018) 101 CCH 53 (Del.) 54. In the aforesaid case, the assessee who was a medical practitioner was subjected to survey u/s. 133A of the Act. The assessee in the course of survey proceedings surrendered certain amount. The A.O. imposed penalty u/s. 271(1)(c) of the Act on the ground that the assessee had concealed income and furnished inaccurate particulars. On appeal, the Tribunal vacated t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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