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Income Tax Appellate Tribunal, “RAJKOT” BENCH, RAJKOT
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER BENCH:
The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals), Jamnagar (CIT(A) in short) dated 28/05/2019 relevant to Assessment Year (AY) 2010-11.
The only issue raised by the assessee is that the learned CIT (A) erred in confirming the penalty imposed by the AO under section 271(1)(c) of the Act for Rs. 95,441/- only.
The facts in brief are that the assessee in the present case is a partnership firm and its assessment was framed under section 143(3) r.w.s. 147 of the Act after making the addition of Rs. 3,08,865/-only to the total income of the assessee vide order dated 18-12-2017 on account of unaccounted sale. The AO in the assessment order initiated the penalty proceedings under section 271(1)(c) of the Act by issuing a show cause notice under section 274 of the Act. The AO finally levied the penalty for concealment of the particulars of income at Rs. 95,441/- being 100% of the amount of tax sought to be evaded.
Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing as under:
“5. The penalty order u/s. 271(1)(c) of the Act of the AO as well as written submission of AR of the appellant have been considered. The grounds of appeal of the appellant are reproduced in initial paragraph of this appeal order. With regard to two grounds of appeal of the appellant as reproduced in initial paragraph of this appeal order, it is mentioned that the AO during the course of assessment proceedings on perusal of records and information received from Central Excise Department from Jamnagar as per its letter dated 08/07/2015 found that the appellant had made unaccounted sales of Rs. 3,08,86,570/- during the year under consideration. In view of this, the AO reopened the assessment of the appellant for the year under consideration and completed the assessment for such year by making addition of Rs, 3,26,520/- on the basis of estimation of 1% profit; of unaccounted sates of Rs. 3,08,86,570/-. The AO also initiated penalty proceedings u/s. 271(l)(c) on this addition of Rs. 3,26,520/-. Subsequently the AO levied the penalty of Rs, 95,441/- u/s. 271(1)(c) of the Act on the ground that the appellant had concealed the particulars of income by way of not disclosing the correct income. In my opinion, the AO has correctly levied the penalty of Rs 95,441/- u/s, 271(1)(c) of the Act in view of the fact that as per information received by the AO from Central Excise Department, Jamnagar there was unaccounted sales of Rs, 3,08,86,570/-. It may be the case that the AO has made addition at the rate of 1% of the total sales, but the facts remain that the sales to the extent of Rs. 3,08,86,570/- were not accounted for by the appellant in its books of account. Thus it can be said that the profit which was required to be disclosed by the appellant in its books of account on the basis of sales of Rs. 3,08,86,570/- was not disclosed and it was only when the case of the appellant was reopened u/s. 148 for the year under consideration that the appellant came forward and admitted such sales of Rs. 3,08,86,570/-. Thus it can not be said that the appellant had made suo-moto disclosure of the profit on the sales of Rs. 3,08,86,570/-. Considering these facts, it is held that the AO has correctly fevied the penalty of Rs. 95,441/- u/s. 271(1)(c) of the Act and therefore, the same is confirmed.”
Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us.
The learned AR before us filed a paper book running from pages 1 to 20 and claimed that the assessee has not concealed particulars of income deliberately and therefore there cannot be any penalty under section 271(1)(c) of the Act. As such the addition made under the excise Act, was accepted to avoid the dispute and to buy the peace of mind.
On the other hand the learner DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, the controversy before us arises so as to adjudicate whether the assessee has concealed the particulars of income with respect to such business turnover not disclosed in the income tax return. The term concealment of particular of income has not been defined under the provisions of section 271(1)(c) or elsewhere in the Act the Act. However, the meaning of the term concealed /inaccurate has been discussed by the Hon’ble Supreme Court in the case of Reliance Petroproducts (P) Ltd reported in 189 taxman 322 wherein it was held that the term ‘inaccurate’ signifies deliberate act or omission on the part of the assessee. As such, the details/informations contained in the return of income /financial statements /audit report which are not correct according to truth, and were furnished by the assessee with the dishonest intent shall be treated as inaccurate particulars. In holding so, we find support and guidance from the judgement of Hon’ble Supreme Court in the case of Reliance Petroproducts (P) Ltd (supra).
We are not concerned in the present case with the mensrea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as :—
"not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript."
We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous.
[Decent Metal Products vs. ITO] A.Y. 2010-11 - 4 - We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false Now, if we analyses the facts of the present case in the light of the above stated discussion, we find that there was no information available with the Revenue for the unaccounted sale made by the assessee. Thus it is transpired that there was no deliberate act, on the part of the assessee not to disclose the business receipts in the income tax return.
The Revenue has also not brought any material suggesting that the assessee deliberately furnished the inaccurate particulars of income.
In our considered view any addition/disallowances made during the quantum proceedings does not automatically justify the levy of the penalty under section 271(1)(c) of the Act. Besides the element of income added in the quantum proceedings, there must be some material/circumstantial evidences leading to the reasonable conclusion that there was conscious concealment or the act of furnishing of inaccurate particulars on the part of the assessee. Accordingly, we are not convinced with the finding of the authorities below. Hence we set aside the order of the learned CIT (A) and direct the AO to delete the penalty levied by him under section 271(1)(c) of the Act.
9. Before we part with the issue/appeal as discussed above, it is pertinent to note that the clause (c) of rule 34 of the Appellate Tribunal Rules 1963 requires the bench to make endeavour to pronounce the order within 60 days from the conclusion of the hearing. However the period of 60 days can be extended under exceptional circumstances but the same should not ordinarily be further extended beyond another 30 days. In simple words the total time available to the Bench is of 90 days upon the conclusion of the hearing.
However, during the prevailing circumstances where the entire world is facing the unprecedented challenge of Covid 2019 outbreak, resulting the lockdown in the country, the orders though substantially prepared but could not be pronounced for the unavoidable reasons within the maximum period of 90 days.
In such circumstances we find that the Hon’ble Mumbai Tribunal in the case of JSW Limited Vs Deputy Commissioner of Income Tax in vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under:
Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon’ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon’ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that “In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown”. Hon’ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, “It is also clarified that while calculating time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”, and also observed that “arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020”. It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure…”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an “ordinary” period.
10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed “while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken suo motu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.
To sum up, the appeal of the assessee is allowed, and appeal of the Assessing Officer is dismissed. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.
Considering the above, we express to pronounce the order beyond the period of 90 days. Accordingly, we proceed to pronounce the order as on date.
In the result, appeal of the assessee is allowed.
This Order pronounced in Open Court 01/06/2020
Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 01/06/2020 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file.