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TMI Blog2024 (8) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... closure accepted by the revenue without any change, then in that case it does not hold liable the assessee for any penalty u/s. 271(1)(c) of the Act. Decided in favour of assessee. - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai For the Assessee : Sh. Mahendra Gargieya, Adv. And Sh. Hemang Gargieya, Adv. For the Revenue : Smt. Monisha Choudhary, Addl. CIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These bunch of five appeals filed by assessee are arising out of the order of the National Faceless Appeal Centre, Delhi dated 26/02/2024 [here in after NFAC ) ] for assessment years 2012-13 to 2016-17 which in turn arise from the order dated 12.12.2018 passed under section 271(1)(c) of the Income Tax Act [ here in after as Act ], by DCIT/ACIT, Circle-01, BTD. 2. Since the issues involved in these appeals are almost identical on facts and are almost common, except the difference in figure disputed in each year, therefore, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA No. 543/JPR/2024 may be taken as a lead case for discussions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and illegitimate deduction. To bring this amount of income to tax, proceedings u/s 147 of the Act were initiated in the case by recording reasons and after obtaining prior approval of the Principal Commissioner of Income Tax, Bathinda. 5.1 A notice under section 148 of the Act was issued to the assessee on 26.03.2018, which was duly served upon the assessee on the same day. In response to the notices u/s 148, the assessee filed return of income on 09.06.2018 for the assessment year 2012-13. It is pertinent to mention here that in the return filed in response to notice u/s 148 of the Act for A.Y. 2012- 13 filed by the assessee, taxable income has been declared at Rs. 14,09,150/- after declaring income from other sources at Rs 1,80,097/-, without claiming loss of Rs 70,000/- from house property and after claiming deduction under u/s80C at Rs. 1,00,000/-. 5.2 During the course of assessment proceedings for the assessment year 2012-13 had been completed under section 143(3)/148 on 23.08.2018 at an income of Rs. 14,09,150/-. While framing assessment, penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income to the extent of wrong claim of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Drawing and Disbursing officer every year before the close of year in which all the documents are required to be submitted in respect of legitimate claim of deduction to be made from taxable income. As it is held in the assessment proceeding that the assessee made excessive claim on account of deduction of Rs. 1,59,000/- under Chapter VIA of the Act and loss from House property at Rs 70,000/- which lead to furnishing of inaccurate particulars of income. Further, the assessee failed to disclose interest income of Rs 1,21,350/- in the original return, which lead to concealing particulars of income. Had the Revenue not initiated any action under section 133(6) of the Act to make inquiries about claim of illegitimate and erroneous deduction of Rs. 1,59,000/- under Chapter VIA of the Act, loss from House property at Rs 70,000/- and non disclosure of interest income of Rs 1,21,350/-, the facts could never be brought on record. Thereby the assessee would have gone Scot free. Moreover, the assessee has failed to furnish any satisfactory explanation for furnishing inaccurate as well concealing particulars of income either during the assessment proceedings or during the penalty proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, in the return filed in response to notice u/s 148,deduction under Chapter VIA of the Act have been claimed at Rs 1,00,000/- only, u/s 80C and no other deduction has been claimed. It is pertinent to mention here that the assessee claimed deduction under Chapter VIA of the Act year after year, which were withdrawn while filing returns of income in response to notices issued u/s 148 of the Act for the A Ys 2012-13 to 2016-17. Similarly, the assessee claimed deduction of loss under the head 'Income from house property at Rs 70,000/-. However, after initiation of enquiries by the Department u/s 133(6) of the Act on 12.03.2018 and after issue of notice u/s 148 of the Act on 26.03.2018, the assessee filed his return of income and paid the due tax. Further, the assessee declared income from other sources at Rs 1,80,097/- in the retum filed in response to notice u/s 148, whereas Rs 58,747/- was declared in the return filed, which was invalid return of income. 6.3 The appellant has claimed that his wife was misguided by some unscrupulous elements who prepared the returns and made his wife invoke incorrect deductions to claim the refunds. His wife was ignorant that these deductions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion deduction Amount claimed 80CCF saving benefits for taxpayers who invest in government-approved infrastructure bonds. The maximum deduction amount that can be claimed under this section is Rs. 20,000 for an assessment year. Rs 20,000/- 80D Section 80D offers tax deductions of up to Rs 25,000 on health insurance premiums paid in a financial year. Rs 15,000/- 80DD income tax deductions can be claimed by an individual who belongs to a Hindu Undivided Family, as well as any other individual taking care of a disabled person in the family. Rs 1,00,000/- and 80G allowed for amount paid by the taxpayer as donation to any fund or institution or charitable Trust. Rs 24,000/- Loss on house property RS 70,000/- 6.6 The bare perusal of section makes it clear that who is eligible of claiming such deduction. Thus when the language of statute is clear and unambiguous and, in such circumstances, the expert s opinion may not be used as a shelter to avoid penalty, as the explanation of the assessee is not bonafide. The appellant can t claim that by mistake such deductions were claimed and cannot avoid paying penalty for claiming false deduction on grounds that its claim was supported by advice fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs 70,000/-thereby declaring net taxable income of Rs. 10,58,800/- and refund of Rs 54,810/- was claimed. The return was filed after time limit prescribed u/s 139(4) of the Act and was invalid return. Thereafter, on an information in possession of the Revenue in respect of erroneous and illegitimate deductions account of deductions under Chapter VIA of the Act, it was considered after due application of mind that income to the tune of Rs. 13,87,801/- had escaped assessment on account of non-filing of return and on account of such erroneous and illegitimate deduction. To bring this amount of income to tax, proceedings u/s 147 of the Act were initiated in the case by recording reasons and after obtaining prior approval of the Principal Commissioner of Income Tax, Bathinda. A notice under section 148 of the Act was issued to the assessee on 26.03.2018, which was duly served upon the assessee on the same day. In response to the notice s u/s 148, the assessee filed return of income on 09.06.2018 for the assessment year 2012-13. It is pertinent to mention here that in the return filed in response to notice u/s 148 of the Act for A.Y. 2012-13 filed by the assessee, taxable income has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see would have gone scot free. Moreover, the assessee has failed to furnish any satisfactory explanation for furnishing inaccurate particular as well concealing particulars of income either during the assessment proceedings or during the penalty proceedings. It is therefore, held that the assessee failed to declared his accurate income and further in the course of proceedings failed to offer any satisfactory explanation regarding furnishing of inaccurate particulars of income to the tune of Rs. 1,59,000/- under Chapter VIA of the Act and loss from House property at Rs 70,000 as well as concealing of particulars of interest income of Rs 1,21,350/-. In the instant case the assessee has also made a deliberate attempt by making claim of excessive deduction as discussed above and held not allowable at all as prescribed under the Law. Accordingly, the assessee is held to be in default u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income of Rs 1,59,000/- and Rs 70,000/- and for concealing of particulars of income of Rs 1,21,350/-. The assessee has knowingly, intentionally and fraudulently claimed this wrong deduction year after year and thus the conduct of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant can t claim that by mistake such deductions were claimed and cannot avoid paying penalty for claiming false deduction on grounds that its claim was supported by advice from some person. 6.7 The appellant has also contended that he revised his return and withdrawn the wrong claimed deduction suo-moto. I do not agree with the appellant s contention because for five years in a row he claimed these deductions had the Revenue not initiated any action under section 133(6) of the Act to make inquiries about claim of deduction under Chapter VIA of the Act, the original return, which was invalid, would have attained finality and after lapse of maximum time limit to initiate any action under the Income Tax Act, 1961, no action could have been taken leaving the Department at total loss of revenue claimed by the assessee by way of erroneous and illegitimate deductions under Chapter VIA of the Act. Thus only after initiation of enquiries by the Department u/s 133(6) of the Act on 12.03.2018 and after issue of notice u/s 148 of the Act on 26.03.2018 appellant has revised his return 09.06.2018. 6.8 Thus in view of above, the action of the assessee in respect of claim of such illegitimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely and even correcting the mistake, ROI were filed showing true income paying the full taxes applicable thereon. An honest consideration of the chronological events, stated herein below, shall establish that the assessee acted bonafidely without having any intention of suppressing its income. 2.1 Very firstly, while getting salary from the DDO the assessee neither made a declaration claiming the deductions u/s 80CCF, 80D, 80DD and 80G of the Act (which are the incorrect claims), nor he claimed any loss from the house property hence there was no question of submitting of any document in support thereof before the DDO. Notably the DDO also allowed only correct and legitimate deductions u/s 80C of Rs. 1,00,000/- (based on EPF deductions) as evident from form 16 (PB 10-11) therefore, the inference and allegations of the AO that the appellant did not declare complete statement of facts and did not submit any documentary evidence to his DDO towards claiming of deductions under Chapter VI A, is rather misleading. Interestingly, the AO very cunningly skipped to mention the fact as to whether such declaration was actually filed and if yes, whether such declaration contained the claim of wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h material coming to the record. However, in absence of any specific provisions, the poor appellant was not able to take corrective measures. He was unaware that notice u/s 148 may be issued. 4. It must be appreciated that the assessee very promptly and within the short period of 18 days only from the receipt of the said notice u/s 133(6), filed returns of income on 30.03.2018 u/s 148 (when issued on 26.03.2018 for all the years) (PB 4). The entire tax which became payable with interest was paid and there is no dispute on that aspect. 5A. Very pertinently notice u/s 133(6) was issued only only in AY 2016-17 yet the assessee filed the ROI in all other years. The AO intently avoided this fact. 5B. Human probabilities, the surrounding circumstances also plays an important role in the income tax proceedings as held in the case of Sumati Dayal v. CIT [1995] 80 Taxman 89 (SC). In this case, as stated, the assessee who is a military man since last 30 years and holding senior positions, can it be believed that a person of such stretcher would have been involved in such petty and minor wrong claim made in the ROI. As a matter of common knowledge normally a military man who is serving the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i (2009) 311 ITR 0327 (Guj) (DC 3-5), it was held that: Penalty under s. 271(1)(c) Concealment Revised return filed before detection of concealment Tribunal has found that though certain queries were raised and put to the assessee, no particular item of concealed income was specifically pinpointed As a matter of fact the process of detection was not complete till the date when the assessee filed revised returns surrendering the amounts reflected in various bank accounts in the names of his family members as his own income from undisclosed sources There is no material on record to indicate that the aforesaid finding of the Tribunal is incorrect in any manner whatsoever Further, Tribunal has also found that very same amounts have already been assessed along with interest in the hands of the family members and those family members have never admitted that they were benamidars of the assessee Hence, even the Department is not certain, as to who is the right person assessable to tax qua the said income Therefore, penalty under s. 271(1)(c) is not leviable. 6.4 PCIT vs. Trisha Krishnan [2019] 111 taxmann.com 97 (SC) (DC 10-11) Section 4, read with section 271(1)(c), of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timely manner. In absence of a regular tax consultant, to the misfortune of the assessee and his wife, some deductions (even though not applicable) could be wrongly claimed. Wife being quite ignorant of the complex tax laws, was not able to understand what was going on. On the other hand, the assessee remaining at the border and almost disconnected with the day-to-day developments, had no occasion even to have a look upon the computation of total income which were required and filed. Further the returns were filed in paper forms and there was no provision of e-verification at that time so the assessee was not at a position to verify the contents of the computation. All the defective returns were bearing mobile no. and email address of his wife only. ROI filed u/s 148 were prepared filed by the CA only. 7.2 The totality of facts circumstances being the adverse operating condition of the assessee during his posting at the border and hilly area like Ladakh, his inability to scrutinize the returns due to the circumstances beyond his control, his wife a layman preparing the computation without the aid of a regular tax consultant followed by immediate acceptance and withdrawal of the mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealment of income Further, explanation offered by assessee was accepted by Revenue during assessment and moreover, penalty notice was defective as it failed to specify grounds for imposing penalties Whether honesty of assessee in disclosing mistake and paying differential tax before assessment would not attract penalty provisions under Section 271(1)(c) Held,yes Whether thus, imposition of penalty for AY 2011-12 couldnot be legally sustained due to lack of essential pre-conditions and procedural defects in penalty notice Held,yes [Para 9][In favour of assessee] In that case also, after filing ROI the revenue suspected suppression of capital gain and therefore, initiated inquiry by issuing summons u/s 131 and the assessee while preparing the details for onward submissions, realised that he committed an inadvertent mistake (while preparing the reply) and on the review of the return initially filed therefore, offered to pay the differential amount of the capital gain which was offered vide letter dated 13.06.2014. Pursuant to the said letter, the department issued notice u/s 148 on 03.07.2014 in response to which the assessee offered correct income and also paid the tax, additional ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had paid TDS on salary and advance tax on his royalty income and after adjusting same, balance amount of tax along with interest was also deposited, it could be held that assessee had not concealed particulars of his income - Held, yes - Whether therefore, penalty imposed on assessee was to be deleted - Held, yes 8. Penalty so imposed being totally contrary to the provisions of law: 8.1 The order imposing penalty is quasi-criminal in nature and, thus, heavy burden lies on the department to establish that the assessee had concealed his income. Since the burden of proof in penalty proceeding varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income or that a deduction has wrongly been claimed, cannot automatically be adopted, though a finding in the assessment proceedings constitutes good evidence in the penalty proceeding. In the penalty proceedings, thus, the AO is required to bring positive material showing intentional concealment. However, in this case the AO failed to bring any positive evidence on record to show that the assessee really intended to conceal the subjected items of income. The AO accepted what the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come additionally declared. Otherwise also, the revenue may be technically correct in not considering the later return of income as a revised return but it cannot be denied that additional income was shown by the assessee himself and it is not the case of the revenue that they unearthed the additional income by carrying out investigations. In addition, we find force in the contention by the Ld. AR that there were justified reasons behind delayed declaration of additional income from these sources. Hence, it was not improbable if the original return could have been filed beyond the due date of Section 139(1) waiting for the correct and complete information of income to be included, necessitating an upward revision of income. Further had the assessee woke up only after issuance of notice u/s 143(2), he could have filed the revised return immediately but not after a long gap of 5 months i.e. on 31.03.2011. Undisputedly, the assessee is aged 61 years mainly deriving salary income and stationed at Mumbai whereas his chartered accountant was situated at Jaipur. It was a period when there was less or no automation and the department also could not bring on record that every income sufferi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the assessee cannot be held responsible for not showing income correctly and timely. There is no difference between the assessed income and the income declared in the revised return. It is not denied that the additional income from all the three sources, was subjected to TDS and we find force in the contention of the ld. AR that once the additional income has suffered TDS it cannot be said to be undisclosed income of the assessee. We have gone through the decisions cited by the ld. AR and find that 16 ITA NO. 968/JP/2019 SURESH MAL LODHA VS ACIT, CIRCLE-6, JAIPUR they support the case of the assessee. A cumulative consideration of all the facts and circumstances clearly establish that it was not a case of concealment of income with respect to the declaration of the additional income It is well settled principle of interpretation of penal provisions that the same has to be construed strictly and no penalty cannot be imposed unless the case strictly fall within the legal parameters. We, therefore, direct the AO to delete the penalty imposed u/s 271(1)(c) under challenge. 9.1. The CBDT, long back through a binding Circular no.14(XL-35), dated 11.04.1995 (DC 50-51) has directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 on 26.03.2018, pursuant to which, the Assessee filed ROI on 09.06.2018 at total income of Rs. 1,49,150/, wherein, neither such deduction was claimed nor loss from house property was claimed, as noted by the AO at pg. 3 para 4 of the impugned penalty order. This was the only ROI acted upon by the AO for making the assessment. Having held the ROI filed earlier as non-est, he could not fall back on an invalid ROI. It is not legally possible that for making assessment the ROI filed u/s 148 is considered whereas the imposition of penalty, the ROI filed earlier u/s 139(4) even though an invalid return, is considered, which is an inherent contradiction in the approach of the AO. 10.2 Supporting Case Laws: 10.2.1 In the case of Navbharat Enterprises Pvt. Ltd vs ACIT (2009) 118 ITD 8 (Hyd) (DC 29-35), it was held as under: 12. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the assessee filed return on 1-10-2004 showing a loss of Rs. 1,01,79,983, which comprises of business loss of Rs. 16,16,157 and depreciation loss of Rs. 85,63,826. While making the assessment, it was observed by the Assessing Officer that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence between the returned and assessed income hence no penalty leviable: 11.1 Only the last ROI acted upon can be a basis for penalty: Needless to say that in the cases of penalty of concealment/furnishing inaccurate particular, the very starting point is the last return of income filed by the assessee which has been acted upon by the assessing officer and it is the income so returned and the income finally assessed by the AO, which invites imposition of penalty. In a case where however, there is no such difference, there cannot be any question of imposition of penalty. The AO has not only accepted the figures mentioned in the (revised) return of income u/s 148 but also assessed the same. It is not disputed that the entire amount of the tax becoming payable on such a revision was duly deposited by way of the Self-assessment tax and TDS and was duly accepted by the AO as well. Admittedly, there is no upward variation made by the AO in the declared income. 11.2 The subsequent validly filed ROI substitutes the earlier one: It is well settled that if ROI has been filed u/s 139 within the permissible time limit, it can be revised u/s 139(5) and once so revised, the revised ROI substitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Neeraj Jindal 2017 393 ITR 0001 (Delhi) (DC 38-49), it was held that: Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee u/s 153A, no occasion arises to refer to the previous return filed u/s 139 of the Act. For all purposes, including for the purpose of levying penalty u/s 271(1)(c) of the Act, the return that has to be looked at is the one filed u/s 153A. In fact, the second proviso to Section 153A(1) provides that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search u/s 132 or making of requisition u/s 132A, as the case may be, shall abate. What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed u/s 153A, the original return u/s 139 abates and becomes non-est. Now, it is trite to say that the concealment has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deputed person, erroneous claim of deductions under Chapter VI A of the Act had been claimed in her case also. Pertinently, the DCIT - Mr. Arvind Bansal are also the same. Moreover, in her case also, notice u/s 133(6) was issued w.r.t deduction claimed u/s 80E of the Act. Thereafter, notice u/s 148 was issued, wherein the assessee filed her revised return and duly paid all the taxes. Even then penalty u/s 271(1)(c) was initiated. Importantly, thereafter, in her case the dept. went on to lodge prosecution complaint u/s 276C(1)/276C(2)/ 276CC and 277 of the Act. The said prosecution order consists of some very pertinent and crucial facts. Kindly refer ld. Chief Judicial Magistrate s order dated 21.08.2023 in the case of DCIT 1-, Bhatinda vs. Himani Sharma (CPB dated 03.07.2024 - Pg. 20- 43), wherein the ld. Chief Judicial Magistrate has recorded the following facts : a. That notice u/s 133(6) dated 07.07.2017 (CPB- Pg. 17) seeking information w.r.t deduction u/s 80E was sought (however, no mention of deduction u/s 80C, 80D,80DD, 80DDB, 80GG) was issued to Smt. Himani Sharma. The said information was sought by the said AO on his personal email id i.e [email protected] instead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 : Notice u/s 148 was issued for A.Y. 2014-15 by the said ITO. The Ld. Court has specifically noted that the said notice u/s 148 was barred by limitation as per S. 149 and further, there was no satisfaction of the competent authority u/s 151. g. Refer Para 11 : The said judgment notes that Accused has taken the plea that as in consequent of filing of returns due to her lack of knowledge and ignorance. She was subjected to ab-latent extortion attempt by her assessing officer ITO Bathinda and when she did not comply to extortion demand and aired her grievances on the IT Web portal, a malicious vandata was launched against her by ITO Mr. M.P. Singh and DCIT Mr. Arvind Bansal depicting the nexus existing at Bathinda IT office and instead of initiating disciplinary action against M.P. Singh, ITO Bathinda a hurried steps were taken for launching prosecution against her. h. Refer Para 29 : The ld. CJM has categorically observed that It has become amply clear that entire procedure adopted by assessing officer/ITO Bathinda was not as per the rules provided under Income Tax Act rather it is found that the procedure was hijacked to prejudice the accused Himani Sharma in a double zeopardy ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arvind Bansal were the same (2) The wife of assessee had already disclosed the said ITO in response to notice u/s 133(6) dated July 2017 w.r.t the erroneous deduction u/c VI A of the Act (3) the ITO was regularly contacting the wife of the assessee in the starting of the proceedings with depictive intent showing her that he is actually helping her. 3.2 The ITO Bathinda - Mr. M.P. Singh already knew the fact that the present assessee had also wrongly claim of deduction (just like in his wife s case). Thus, with a malicious vendetta and depictive intent to extort money later, he ill-advised the assessee. 3.3 Now, kindly refer the date chart below : S.No. Date Events Facts Remark 1. 31.01.2018 Notice u/s 133(6) in the case of Smt. Himani Sharma - - 2. 12.03.2018 Notice u/s 133(6) (PB 2) This notice was issued for A.Y. 2016-17 only wherein information was sought regarding deduction claimed u/s 80U only. Notice u/s 133(6) only w.r.t A.Y.2016-17 ( not other years) 3. 18.03.2018 Reply to Notice u/s 133(6) (PB 3) In reply, the assessee informed the AO that deductions (except u/s 80CCE 80G), have been claimed erroneously. He also requested for guidance w.r.t the amount to be refunded, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, straightforwardly and voluntarily admitted that some deductions had been wrongly claimed, even before the notice could be issued. In this regard, notice u/s 133(6) (PB-3) was issued seeking information regarding deduction claimed u/s 80U only (however, no mention of deduction u/s 80C, 80D,80DD, 80DDB, 80GG). Still the assessee voluntarily choose to disclose the fact of erroneous claim of deduction u/s 80C, 80D,80DD, 80DDB, 80GG. Hence, the assessee cannot be said to have failed to offer explanation when no notice in that regard had been issued. 5. Supporting Case Laws Distinguishing the judgment of Mak Data P. Ltd. vs CIT : 5.1 Covered Issue : Recent judgment of PCIT vs Ambady Krishna Menon[2024] 163 taxmann.com 141 (Kerala), wherein the relevant fact are that the assessee filed a return on 30.07.2011 for A.Y. 2011-12, which was processed under Section 143(1) on 28.12.2012. Later, the Dept. suspected suppression of capital gains and issued a summons under Section 131 on 19.05.2014, to which the assessee responded by 13.06.2014, admitting his mistake in the computation of capital gains and thereupon agreed to the differential tax. Upon admission of the assessee, notice u/s 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the respondent/assessee over and in addition to what was already disclosed and admitted by him before the Revenue authorities. 9 .It will be seen from a perusal of Section 271 of the I.T. Act that it is a specific provision providing for imposition of penalties, and is a complete code in itself, regulating the procedure for the imposition of penalties prescribed. The proceedings are therefore to be conducted in accordance therewith, subject always to the rules of natural justice. The provisions for the assessment and levy of tax will not apply as such for the imposition of penalty, and when there is a specific provision, it is trite that it alone will govern the imposition of penalties. In terms of Section 271(1)(c) of the I.T. Act, the penal provision is attracted only when the conditions therein are fulfilled namely, when there is a concealment of the particulars of an assessee's income or when the assessee has furnished inaccurate particulars of such income. The crucial question that arises for consideration before us is whether on the facts of the instant case those pre-conditions existed for initiating proceedings under Section 271 of the I.T. Act. Further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of defaults specified therein would attract a penalty. On the facts of this case, we fail to see how an assessee who disclosed his liability to tax, well before the Assessing Authority himself could determine it, can be seen as having concealed or incorrectly stated the facts leading to his liability. To invoke the penal provisions of the Act against an assessee in such a situation would throw to the winds the elements of fairness in tax administration and discourage assessees from disclosing defects in their tax returns before their Assessing Authorities. This is more so when, as in the present case, the assessee had also paid the interest on the differential tax to cover the period of delay in payment thereof. The payment of statutory interest having compensated the exchequer adequately, to further penalise the assessee would tantamount to an act of overkill and would be antithetical to the rule of law. We are of the firm view that the honesty of an assessee cannot attract the penal provisions under the I.T. Act and that, in the instant case, the essential pre-conditions for the invocation of the provisions of Section 271(1) (c) of the I.T. Act against the assessee were not est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the explanation offered by the assessee during penalty proceedings was acceptable which was wrongly rejected by the AO and the Commissioner of Income Tax(A) and penalty was not imposable on the assessee in this regard and we cancel the penalty orders. Thus, ground nos. 1, 2 and 3 of the assessee are allowed. 5.3 CIT vs. Chennupati Tyre Rubber Products (2014) 90 CCH 0181 APHC, wherein it was held as under : The principle that runs cutting across any systems of law is that before person is visited with punishment or penalty, the wrongful act on his part must be established. If not a deliberate intention, at least, intention, as such, must be proved to be existing. The intention of this nature may not be equated to the concept of mens rea. At the same time, the minimum contrast with an instance of mere omission, or failure must be made. Otherwise, every inadvertent omission, or a bona fide understanding of a particular provision, which is not accepted by the Income Tax Officer may expose the assessee to penalty. If that time is pursued, Act may turn out to be the one of the collection of penalties than the income tax. Recently, in I.T.T.A.No.180 of 2003, we observed as under: T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aises a presumption of concealment, when a difference is noticed by the Assessing Officer between the reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence and when the initial onus placed by the explanation, has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted their income and not otherwise. Factually, we find that the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation. Therefore, if the department did not agree with the explanation, then the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income. In the instant case, such onus which shifted on the department has not been discharged. In the circumstances, we do not find that there is any ground for this Court to substitute our interfere with the finding of the Tribunal on the aspect of the bonafides of the conduct of the assessee. 9. The ld. AR of the assessee in addition to the written submission vehemently argued that there is no difference in the return of income filed in response to no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was issued to the assessee on 26.03.2018. In response to the said notice the assessee filed return of income on 09.06.2018 declaring total income at Rs. 14,09,150/. The assessment u/s. 143(3)/148 of the Act was completed on 23.08.2018 at total income of Rs. 14,09,150/-. Thus, the returned income and assessee income becomes at the same figure. But the penalty proceedings u/s. 271(1)(c) was initiated separately by issue of show cause notice u/s. 271(1)(c) dated 23.08.2018 was issued and served upon the assessee. Thereafter, the A.O passed an order levying the penalty u/s.271(1)(c) of the I.T. Act vide order dated 12.12.2018 levying a penalty of Rs. 2,16,520/- for concealing and furnishing inaccurate particulars of income @ 200 %. In the first appeal the ld. CIT(A) has confirmed the action of the ld. AO in levying the penalty but the reduced it from 200 % to 100 %. The assessee has challenged that order of the ld. CIT(A) confirming the penalty @ 100 % of tax sought to be evaded. The assessee contended that the return of income in response to the notice u/s. 148 filed by the assessee and finally assessed income in the case of the assessee has same income of Rs. 14,09,150/-. Thus, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and made offer to surrender the income whereas in the case of the assessee is squarely covered by the decision of the jurisdictional high court in the case of Pushpendra Surana(Supra). Thus, the bench noted that it was not in dispute that the assessee has offered the income by filling the correct returned of income upon issue of notice and the assessment is completed on that returned income filed by the assessee without any change. Thus, the assessee though surrendered the income at the time of re-assessment notice by filling the return of income and has paid the tax due thereon along with the interest, thus, the said disclosure hold valid without any adjustment and made good faith voluntarily. We support this view from the decision of the Hon ble High Court of Gujarat in the case of Cheldas Khushalas Patel and Ors. Commissioner of Income Tax on 31 January, 1992, 1992 196 ITR 200 Guj wherein the Hon ble High Court held as under:- 7. The Commissioner, in the case of the firm, refused to waive penalty and interest for the assessment years 1976-77 and 1977-78 only on the ground that the returns filed beyond the prescribed period could not be considered to be returns in the eye of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by clause (ii) of sub-section (1) is concerned, such full and true disclosure has to be made prior to the detection by the Income-tax Officer of concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income. Such disclosure could also be by a revised return or an application or a letter addressed to the taxing authority. Disclosure contemplated by sub-clauses (a), (b) and (c) cannot have different meanings. In other words, it has the same meaning and such disclosure could be made by a return within or beyond the prescribed time for making assessment or by a letter or an application to the taxing authority. Respectfully following the finding of the binding decision of Jurisdictional high court in the case of Pushpendra Surana and decision of Hon ble Gujarat High Court wherein the similar view is taken that if the assessee filed correct income at the time of the re-assessment proceeding and such disclosure accepted by the revenue without any change, then in that case it does not hold liable the assessee for any penalty u/s. 271(1)(c) of the Act. In terms of these observations, the appeal of the assessee in ITA no. 543/JP/2024 is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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