RAVINDER PAL MEHRA vs. C I T

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ITA/407/2007HC Punjab & HaryanaPHHC01073108200705 September 2008Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY TEWARI3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the proposed question of law was essentially a question of fact, which cannot be examined under Section 260A of the Income Tax Act, 1961. The Court found that the issue of whether the revised return was voluntary or not, and whether there was concealment of income, were factual matters. Since the appeal was filed under Section 260A, which is for substantial questions of law, and the presented question was not a substantial question of law but a mixed question of law and fact, the Court concluded that the proposed question did not arise. Consequently, the appeals were dismissed. No order as to costs was made. The operative direction was the dismissal of the appeals.

What were the facts?

The assessee, Ravinder Pal Mehra, originally filed a return of income on March 31, 1999. During search operations on October 19, 2001, at the premises of Shri Mohan Lal Arya & Sons group, partnership deeds of several firms were seized. Inquiries revealed a network of firms providing export profits through Hawala entries, where beneficiaries became partners in bogus export firms, signed fake partnership deeds, purchased shares of profits, and claimed exemptions. The assessee was identified as one such beneficiary. On March 27, 2002, the assessee filed a revised return declaring additional income of Rs. 17.50 lacs. The assessment was finalized at Rs. 21,74,440/-. A penalty of Rs. 5.25 lacs was imposed. The assessee's explanation was that he discovered the money in his father's almirah, and being semi-literate, invested it on his Chartered Accountant's advice. The assessee argued the revised return was voluntary and filed before any notice under Section 148 was issued, thus the penalty was illegal.

What were the issues?

1. Whether the decision of the ITAT and authorities below is perverse in holding that the revised return of income was not voluntary, even though it was filed without the issuance of any notice under Section 142(1) or 148 or any other enabling provision of the Income Tax Act, 1961, thereby rendering the penalty levied under Section 271(1)(c) illegal and unjustified? (Question of mixed law and fact, concerning Sections 142(1), 148, and 271(1)(c) of the Income Tax Act, 1961). Assessee's contentions: The revised return was filed voluntarily before any notice was issued. There was no concealment of income. Therefore, the penalty under Section 271(1)(c) is illegal and unjustified. Revenue's contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 260A,Section 142(1),Section 148,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

Date of decision : September 05, 2008

1.

CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI *** Present : Mr.S.K.Mukhi, Advocate for the appellant. ***

1.

Whether Reporters of Local Newspapers may be allowed to see the judgment ?

2.

To be referred to the Reporters or not ?

3.

Whether the judgment should be reported in the Digest ? *** AJAY TEWARI, J This order shall dispose of ITA Nos.406 and 407 of 2007, as common questions of law and facts are involved therein. For the sake of convenience, facts are being extracted from ITA No.407 of 2007. The present appeal filed under Section 260A of the Income Tax Act, 1961 proposes the following question of law :- “Whether the decision of ITAT and authorities below is perverse in holding that the revised return of income is not voluntary through the same was filed without the issuance of any notice u/s 142(1) or 148 or under any other enabling provisions of the Income Tax Act, 1961 so that so there was no concealment on the part of the appellant and thus the penalty as levied u/s 271(1)(c) is illegal and unjustified ? The appellant had originally filed return of income on 31.3.1999. Thereafter, during search operations conducted on 19.10.2001 at the premises of Shri Mohan Lal Arya & Sons group, copies of several partnership deeds of some firms based at Amritsar were seized which, on inquiries, unearthed a whole network of firms giving export profit by way of Hawala entries. It transpired that beneficiaries would become partners in bogus export firms by signing bogus partnership deeds, purchase the profits/shares in the firms' income and claim exemption in their hands as share of profit. The appellant was also one of such beneficiaries. On 27.3.2002, the appellant filed a revised return including the additional income of Rs.17.50 lacs and the assessment was ultimately framed at an income of Rs.21,74,440/-. Separate penalty proceedings were initiated and a penalty of Rs.5.25 lacs was imposed upon the appellant. The penalty having been confirmed by the authorities below the appellant is before us. Interestingly the explanation put-forth by the appellant is that he discovered the money in an almirah of his father at Haridwar and, being illiterate, or in any case semi literate, he invested the same as per the advice of his Chartered Accountant and that since he had voluntarily declared the same but before the notice under Section 148 of the Act was issued, albeit after a period of three years, penalty should not have been imposed. We find that the proposed question is a question of fact which cannot be gone into under Section 260A of the Income Tax Act, 1961. Consequently, the proposed question does not arise and the present appeals are dismissed with no order as to costs. ( AJAY TEWARI ) JUDGE

( ADARSH KUMAR GOEL )

JUDGE September 05, 2008

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