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TMI Blog2024 (12) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... in her return of income filed in compliance to notice u/s. 148 of the Act had included the income on sale of shares of M/s Capital trade links which, thereafter, had been accepted by the A.O vide his order u/ss. 147/144B as such, therefore, in absence of any amount having been added/disallowed while framing the said assessment, no penalty u/s. 271(1)(c) of the Act could have been imposed on her. Explanation 1 of Section 271(1)(c) pre-supposes an addition/disallowance made in the hands of the assessee. Apart from that, the machinery provision contemplated in Explanation 4 for computing the amount of penalty as per Section 271(1)(iii) of the Act, in absence of any addition/disallowance made in the course of assessment/reassessment proceedings is also rendered as unworkable. Our aforesaid view is fortified by the order of Renu Behl [ 2023 (12) TMI 1334 - ITAT RAIPUR ] wherein the Tribunal involving identical facts had vacated the penalty imposed by the A.O on the assessee. In Puspendra Surana [ 2013 (8) TMI 969 - RAJASTHAN HIGH COURT ] the Tribunal had held that as the assessee had declared the income from LTCG on sale of agricultural land in his revised return of income, which therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O that no penalty u/s. 271(1)(c) of the Act was called for in her case but the same did not find favour with him. The A.O was of the view that as the assessee had wrongly claimed exemption u/s. 10(38) of the Act of Rs. 33.08 lacs (approx.), therefore, it was a fit case for levying penalty for concealment of income u/s. 271(1)(c) of the Act. For the sake of clarity, the observation of the A.O are culled out as under: The assessee has filed her ITR for the A.Y.2016-17 declaring total income at Rs. 17,77,290/-. The assessee has derived income from salary, house property, from other sources and agricultural income. During the assessment proceedings, the information available with the Revenue, it was observed that the assessee has claimed exempt income B/s 10(38) in her ITR of Rs 33,04,236/- by claiming long term capital gain on sale of shares of Capital Trade Links. Accordingly case of the assessee was reopened and notice u/s 148 of the Income Tax Act 1961 was issued to the assessee was 29.06.2022. In response to the statutory notice issued to the issued to the assessee has submitted a copy of revised ITR filed on 06.02.2023 declaring total income at Rs. 49,21,530/- alongwith comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the due tax cannot mitigate the deliberate default of concealment of true income committed by the appellant earlier so as to escape the levy of penalty, otherwise, it would give premium to dishonest taxpayers who try to take chances with the exchequer by first claiming bogus exemption for laundering their undisclosed income and then subsequently paying the due tax only when caught without any additional cost. 8. Further, this issue regarding levy of penalty u/s 271(1)(c), when the income was not declared in Original ITR but was declared later in the ITR filed u/s 148 or 139(5) has previously been decided in various judicial pronouncements which are quoted below for reference 1) If the act of concealment or furnishing of particulars of income is committed while filing original return, the revised return by itself would not mitigate the default- 171 ITR 390 All, 163 ITR 440 Raj, 32 ITR 677 Bom, 84 STC 271 Del, 96 STC 6 MP, 178 ITR 643 Pb,178 ITR 430 Ker, 186 ITR 571 SC. 2) If the revised return u/s 139(5) has been filed voluntarily before detection and conduct of 'A' is bona fide then penalty would not be leviable-100 JTR 524 Guj. 107 ITR 423 On, 129 ITR 703 Del 156 ITR 63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assessment, the imposition of penalty solely on the basis of assessee's surrender could not be sustained. The Tribunal, therefore, allowed the appeal and set aside the penalty order. 5. The Revenue took up the matter in appeal before the High Court by filing ITA No.415 of 2012. The High Court accepted the plea of the Revenue that there was absolutely no explanation by the assessee for the concealed income of Rs. 40,74,000/-. The High Court took the view that in the absence of any explanation in respect of the surrendered income, the first part of clause (A) of Explanation 1 is attracted. Holding so, the judgment of the Tribunal was set aside and the appeal filed by the Revenue was allowed. 6. We have heard counsel on either side. We fully concur with the view of the High Court that the Tribunal has not properly understood or appreciated the scope of Explanation 1 to Section 271(1)(c) of the Act, which reads as follows:- Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act,-- A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961. 10. The AO has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Hon'ble Supreme court in CIT vs Suresh Chandra Mittal (SC) 251 ITR 0009 whereby the judgment of Hon'ble jurisdictional Madhya Pradesh High Court in [2000] 241 ITR 124 (MP) dated 20.07.1999 was upheld. In the said case, disclosure was made in revised return in pursuance of notice u/s 148 after search. Facts of that case show that revised returns were filed in respect of earlier years and not in respect of the year of search. Further, there was no search material in respect of earlier years. The revised returns were filed just to avoid litigation. On such facts, the Hon'ble High Court, following the Apex Court's decision in the case of Sir Shadilal 168 ITR 705 held that penalty was not leviable. This judgment has been affirmed by SC by passing a short order (251 ITR 9). However, subsequently, the apex court in the case of K.P.Madhusudan 251 ITR 99 has held that decision in Sir Shadilal case (supra) is no more good law after insertion of Expl-1 to section 271(1)(c) inserting a deeming fiction in favour of presumption of concealment of income. Further, in the case of G.C.Aggarwal 186 ITR 571 SC, the Apex court upheld the levy of penalty where higher income was dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments of the Apex Court are not found considered by the Tribunal. Thus, with due respect, this decision relied upon by the appellant is found to be 'per incuriam and sub-silentio vis- a vis the aforesaid judgments of the Apex Court in the case of K.P.Madhusudan 251 ITR 99 case and Mak Data (P) Ltd vs CIT directly on the issue involved. In view of the same, the said order of the Hon'ble ITAT in Renu Behl case (supra) cannot be relied upon as a binding precedent. 10. Following the above discussions and respectfully following the judgment of the Apex court in the case of Mak Data P. Ltd vs Commissioner Of Income Tax II (supra), levy of impugned penalty u/s 271(1)(c) in the instant case is found justified. Accordingly, the impugned penalty of Rs. 10,90,397/- levied u/s 271(1)(c) by the AO is hereby upheld. Consequently, the appeal is hereby dismissed. 11. In the result, the appeal is dismissed. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had on a suo-motto basis paid the tax on the amount of capital gain clearly establishes her bonafide, and thus, as per Explanation 1(B) of Sec. 271(1)(c) of the Act was not liable to be penalized.. 8. Alternatively, the Ld. AR submitted that as the assessee pursuant to the notice u/s. 148 of the Act, dated 29.06.2022, had offered the income of Rs. 33.04 lacs (supra) arising on sale of shares of M/s Capital trade links for taxes in her return of income filed in compliance to the said notice, which, thereafter, had been accepted by the A.O who vide his order passed u/s. 147/144 of the Act, dated 11.05.2023 assessed her income at the same amount as was so returned by her, therefore, there remained no occasion for levying any penalty u/s. 271(1)(c) of the Act. The Ld. AR in support of his aforesaid contention had relied on the orders of the ITAT, Raipur in the case of DCIT-1(1), Raipur Vs. Renu Behl, ITA No.289/RPR/2022, dated 11.12.2023 and that of the ITAT, Jaipur in the case of Pooja Upadhyay Vs. ITO-5(1), Jaipur, ITA No.258/JP/2022, dated 17.04.2023. Also, the Ld. AR had pressed into service the order of the ITAT, Mumbai in the case of DCIT 3(3)(1) Mumbai Vs. M/s. Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also find substance in the Ld. AR s contention that as the assessee in her return of income filed in compliance to notice u/s. 148 of the Act had included the income on sale of shares of M/s Capital trade links which, thereafter, had been accepted by the A.O vide his order u/ss. 147/144B of the Act dated 11.05.2023, as such, therefore, in absence of any amount having been added/disallowed while framing the said assessment, no penalty u/s. 271(1)(c) of the Act could have been imposed on her. We, say so, for the reason that the Explanation 1 of Section 271(1)(c) pre-supposes an addition/disallowance made in the hands of the assessee. Apart from that, the machinery provision contemplated in Explanation 4 for computing the amount of penalty as per Section 271(1)(iii) of the Act, in absence of any addition/disallowance made in the course of assessment/reassessment proceedings is also rendered as unworkable. Our aforesaid view is fortified by the order of the Tribunal in the case of DCIT-1(1), Raipur Vs. Renu Behl, ITA No.289/RPR/2022, dated 11.12.2023, wherein the Tribunal involving identical facts had vacated the penalty imposed by the A.O on the assessee. For the sake of clarity, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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