Principal Commissioner Of Income Tax I vs. Smt. Prabhjot Kaur Chhabra

1 THE HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE ITA No.45 of 2018 (Principal Commissioner of Income Tax vs. Smt. Prabhjot Kaur Chhabra) Indore, dated : 28.09.2018 Ms. Veena Mandlik, learned counsel for the appellant. Heard on the question of admission. 2. This appeal under Section 260-A of the Income Tax Act, 1961 (in short “the Act”) has been filed against the order dated 28.09.2017 passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in ITA No.518/Ind/2015, by which learned Appellate Tribunal allowed the appeal of the assessee by holding that there was neither any concealment of income nor there was furnishing any inaccurate particulars thereof and no penalty under Section 271(1)(c) is leviable in the case of the assessee by directing the Assessing Officer to cancel the penalty of Rs.1,10,00,000/-. 3. Facts of the case are that the assessee has filed his return of income on 11.10.2010 for AY 2010-11 with returned income of Rs.39,36,829/-. Thereafter, a survey action took place at office premises of assessee's husband Shri Gurjeet Singh Chhabra on 26.11.2010 and in the statement recorded during survey, in reply of Query No.56, Shri Gurjeet Singh Chhabra disclosed unaccounted income of Rs.2.00 crore in the name of himself and his wife. Thereafter, on 11.02.2011, a search took place at the premises of Transword Furtichem Group and certain papers relating to assessee were found. On 14.04.2012, the assessee revised the return for AY 2010-11 in which additional income from long term capital gain of Rs.4,18,79,397/- and short term capital gain of Rs.72,78,532/- was shown. 4. According to the assessee, such capital gain was not offered in 2 THE HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE ITA No.45 of 2018 (Principal Commissioner of Income Tax vs. Smt. Prabhjot Kaur Chhabra) original return because land at Survey Nos.278 and 279 at Village Nipania ad-measuring 8293 sq. mt. and 3396 sq. mt., which was owned by Shri Yunus and Shri Manmohan Singh Bhasin, sold to the assessee went into dispute as one person named Shri Chandan Singh Rajput moved to Court against such deal and took an injunction against such transfer by order dated 28.10.2009. A compromise agreement was signed on 20.04.2011, whereby it was agreed that the assessee, Mrs. Prabhjot Kaur Chhabra could transfer such lands to M/s Catch Reality P. Ltd. Accordingly, the lands at Nipania were transferred through a sale deed which got registered on 03.05.2011. The sale deed was presented before the registration authority during FY 2009-10, hence amount of capital gain was offered on it in FY 2010-11 by the assessee through a revised return filed on 14.04.2012 beyond the time allowed under Section 139(5) of the Act to file revised return, which was available upto 31.03.2012. The Assessing Officer observed that the assessee had considered the above long term and short term capital gain of Rs.4,91,56,845/- in the return filed in response to notice under Section 153-C of the Act and thus, held that the assessee has concealed the particulars of her income and thereby reduced her due tax liability and levied penalty of Rs.1,10,00,000/- under Section 271(1)(c) of the Act. 5. In an appeal, the Commissioner of Income Tax (Appeals), after appreciating the arguments came to the conclusion that the sale deed got registered on 03.05.2011 (for long term capital gains) and on 07.04.2010 (for short term capital gains) and due date for filing of income tax return for FY 2011-12 was October, 2011, yet such income from capital gains was neither shown in the return for FY 3 THE HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE ITA No.45 of 2018 (Principal Commissioner of Income Tax vs. Smt. Prabhjot Kaur Chhabra) 2010-11 nor shown in FY 2011-12 and, therefore, it is clear that such income was meant to be concealed. The revised return filed by the assessee will not save the assessee from consequences of intentional filing of false or incorrect returns for FY 2010-11 and by affirming the penalty, dismissed the appeal. 6. Learned Appellate Tribunal considering the fact that notice under Section 153-C of the Act was issued on 04.01.2013 and in compliance thereof, the assessee filed the return of income on 19.02.2013 showing same income as shown in the revised return income on 14.04.2012 i.e., much before the date of notice issued under Section 153-C of the Act. It was also observed that no documentary evidence was found during the course of survey or search relating to capital gain shown in revised return and held that the assertion of the Assessing Officer that the assessee has filed return due to survey under Section 133-A of the Act is not based on facts on record and was of the opinion that no penalty is leviable where the Assessing Officer has accepted the return of income without making any addition on account of capital gains on the impugned sale of land under consideration. 7. The Punjab & Haryana High Court in the case of CIT vs. Suraj Bhan (2007) 294 ITR 481 (P&H), held that when an assessee files revised return showing higher income, penalty cannot be imposed merely on account of such higher income filed in the revised return. The Karnataka High Court in the case of Bhadra Advancing Pvt. Ltd. vs. ACIT (2008) 219 CTR 447 has held that merely because the assessee had filed a revised return and withdrawn some claim of depreciation, penalty is not leviable. The Delhi High Court in the 4 THE HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE ITA No.45 of 2018 (Principal Commissioner of Income Tax vs. Smt. Prabhjot Kaur Chhabra) case of Principal CIT-19 vs. Niraj Jindal in ITA No.463/2016 and CM No.26604/2016 dated 09.02.2017 has observed as under :- It is difficult to see any infirmity in the decision of the learned ITAT in the present case. Levy of penalty under Section 271(1)(c) cannot be on the basis of surmises and conjectures. Thus, Explanation-5 cannot assist the claim of the revenue in the present case for the relevant assessment years under consideration before this Court for the simple reason that for the relevant assessment years, 2005-06 & 2006-07, no material was recovered during the search. Rather, the assessee added ` 21,65,932/- in the return filed pursuant to notice under section 153A. That amount was not relatable to any sum recovered or article seized. Therefore, the question of adding or not adding amounts after the search and falling within the mischief of Explanation 5 to Section 271 (1) (c) cannot arise in the facts and circumstances of this case. 29. Based on the above discussion, this Court is of the opinion that Explanation-5 cannot be relied upon by the Revenue in the relevant assessment years under consideration before this Court, and in the absence of recourse to Explanation-5, there is no incriminating evidence to show that the assessee has concealed the particulars of his income, within the meaning of Section 271(1)(c) of the Act. In conclusion, this Court is of the view that there is no illegality in the order of the learned ITAT in the present case. In all four appeals, the question of law involved is thus answered in favour of the assessee. The revenue's appeals are therefore dismissed. 8. In the case of MAK Data P. Ltd. vs. Commissioner of Income Tax-II reported in (2013) 358 ITR 593 (SC), there was no explanation by the assessee for the concealed income and in absence of any explanation in respect of the surrendered income, the Apex Court has held that the law does not provide that when an assessee 5 THE HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE ITA No.45 of 2018 (Principal Commissioner of Income Tax vs. Smt. Prabhjot Kaur Chhabra) makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. The voluntary disclosure does not release the assessee from the mischief of penal proceedings and dismissed the appeal of the assessee. 9. In the light of the law laid down by the Delhi High Court in the case of Principal of CIT-19 vs. Niraj Jindal (supra) and Punjab & Haryana High Court in the case of CIT vs. Suraj Bhan (supra), learned ITAT has held that penalty levied is not justified because there was no concealment of income nor furnishing any inaccurate particulars thereof. The facts of the case in the case of MAK Data P. Ltd. (supra) is distinguishable and will not be applicable in the present facts and circumstances of the case. 10. On due consideration of the aforesaid, it cannot be said that learned ITAT has not appreciated the evidence of the Assessing Officer and the order passed by the Appellate Authority. In the case in hand, the return was revised much prior to the date of issuance of notice under Section 153-C of the Act. The Assessing Officer has no-where recorded his satisfaction to the fact that the assessee has concealed the particulars of income or furnished any inaccurate particulars of such income. Thus, we are of the view that there is no illegality in the order passed by the learned ITAT nor any substantial question of law is arising in this appeal. The income tax appeal filed by the Revenue has no merit and is accordingly, dismissed. (P. K. Jaiswal)

(Vivek Rusia) Judge

Judge gp Geeta Pramod Digitally signed by Geeta Pramod DN: c=IN, o=High Court of Madhya Pradesh, ou=Administration, postalCode=452001, st=Madhya Pradesh, 2.5.4.20=1dc3d93a178bbacd0e9485f9f6e9933549 9bddb32501850a4984b5b63f6d7a38, cn=Geeta Pramod Date: 2018.10.26 17:46:21 +05'30'