SMT. RAM PIARI vs. C.I.T. PATIALA

The Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh has referred, at the instance of the assessee, following questions of law for opinion of this Court under Section 256 (1) of the Income Tax Act, 1961 (for short, “the Act”) arising out of its order dated 15.3.1993 in ITA No. 1247/Chandi/87 for the assessment year 1977-78:- 1. “Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that penalty proceedings under Section 271(1)(c) of the I.T. Act, (2) 1961 had been validly initiated by the Assessing Officer?

Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the penalty especially when Assessing Officer levied the penalty on a/c of willfully and deliberately concealing the particulars of income whereas it has been sustained by the CIT (A) on a different ground of showing inaccurate particulars of income in the return?

Whether on the facts and in the circumstances of the case, the finding recorded by the Tribunal regarding concealment of particulars of income is based on evidence on record?”

The assessee derives income from property. The assessment was completed for the assessment year but the same was reopened under Section 147 (a) of the Act. Notice under Section 148 of the Act was served on the assessee but no revised return was filed inspite of the said notice. The Assessing Officer found undisclosed income from capital gains on account of sale of property and penalty proceedings were also initiated. Thereafter penalty was imposed, which was upheld by CIT(A) as well as by the Tribunal.

Contention of the assess that while the Assessing Officer levied penalty on the ground of concealment of particulars0, CIT (A) sustained the same for showing inaccurate particulars. The Tribunal did not find any difference in the approach nor any discrepancy on that account. The Tribunal held as under:- “13. The Ld. D.R. has argued that the sale had taken place on 29.4.1976, whereas the return had been (3) filed on 30.7.1977, but the income resulting from capital gain was not shown by her. Not only that, the assessee did not think it appropriate to file a revised return after notice u/s 148. It has been therefore, argued that the assessee had willfully and deliberately concealed her income not only in the original return filed on 30.7.1977 but even subsequently. As regards income from property shown by the assessee for the relevant year, it has been pointed out by the ld. D.R. that income from property was shown as if to represent it to be income from property which was actually sold by her. It was represented to be income from that property and thereby it was attempted to represent that property had not been sold. Therefore, it has been argued by the ld. D.R. that it was a case of concealment. It has also been urged by the Ld. D.R. that the assessee had at her disposal legal advice and the return had been filed under legal advice and the column prescribed in the return for showing capital gain was deliberately left blank. Not only that, the advocate representing the assessee attended the assessment proceedings also and it cannot be inferred that the assessee had any wrong advice or had some mis-conception about taxability of was held by the Hon’ble Supreme Court that she had concealed particulars of her income and was guilty of concealment of the amount, which attracted applicability of section 271 (1) (c) of the Act. Reliance has also been placed on a decision of the Calcutta High Court in the case of Smt. Leela Nath v. CIT (164 ITR 216). In that case also, the assessing officer had completed the assessment on the basis of return filed by the assessee. Subsequently, it was found that the assessee had sold 1,000 shares of a company and had capital gains but she had failed to furnish necessary particulars in the original return. The assessing officer reopened the assessment u/s 147 (a) and completed the assessment, treating the receipt as capital gains. It was pleaded by the assessee in that case that the assessing officer could have noticed from the wealth-tax returns filed by the assessee for two years that the assessee had sold certain shares. It was held by (5) the Hon’ble Calcutta High Court that it was the duty of the assessee to disclose all primary facts. The ld. D.R. has, on the basis of aforesaid decision, contended before us that by mere filing an application for obtaining clearance certificate, the assessee cannot be said to have disclosed particulars and any benefits on her appeal cannot be assumed on that basis.

Looking to the entire facts and circumstances of the case, we find that bona fides on the part of the assessee are not reflected at all. This is a clear case of concealment of particulars of income.

It has also been brought to our notice by the Ld. D.R. that the assessee has been convicted by the Ld. Chief Judicial Magistrate, Chandigarh on 21.2.84 for six months imprisonment u/s 276 C (1) and for another six months imprisonment u/s 277 of the Act. This order of conviction is said to have been upheld by the appellate court.

Looking to the entire facts and circumstances of the case, we are of the considered opinion that the order of penalty does not suffer from any defect. Since the concealment of particulars of income is very evident on the part of the assessee and it is found to be a deliberate act, the orders passed by the ld. Lower authorities are upheld.”

We have heard learned counsel for the parties and perused the record.

The only contention raised on behalf of the assessee is that the assessee had made an application for clearance certificate in form 34- A for sale of the property and, thus, the matter was brought to the notice of the Assessing Officer. This plea was rightly rejected as mere disclosure of agreement to sell in application for clearance certificate in form 34-A cannot be equated to disclosure in the income tax return. The assessee failed to file a revised return inspite of notice under Section 148 of the Act. The assessee was also convicted for concealment.

In view of above undisputed facts, we find that there was material for the Assessing Officer to initiate penalty proceedings. Contention that the penalty was liable to be set aside on account of CIT (A) describing the action of the assessee as “showing inaccurate particulars, while the Assessing Officer described the same as “concealing the particulars” cannot be upheld. The observations of the CIT (A) are also in the context of concealing and mere fact that mention of inaccurate particulars was also made, did not make any difference. On admitted facts, it was clear that the assessee had concealed the particulars of income as well as given inaccurate particulars. We may also notice that in recent judgment of the Hon'ble Supreme Court in UOI Vs. Dharamendra Textile determining criminal liability under Section 276-C were different from those applicable to determining civil liability for penalty under Section 271(1)(c). The penalty provision was to provide remedy for loss of revenue for which element of 'wilful' concealment was not essential. It was observed that finding of Tribunal could not be interfered with unless perverse. In the present case, the assessee has been convicted even in criminal proceedings. Findings of the Tribunal cannot be held to be perverse by any standard.

The questions referred are, thus, decided against the assessee and in favour of the revenue.

The reference is disposed of. (ADARSH KUMAR GOEL) JUDGE July 09, 2009