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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
PER G.MANJUNATHA, AM:
This appeal filed by the Revenue is directed against
order passed by the learned Commissioner of Income Tax
(Appeals), Coimbatore-1, dated 31.01.2020 and pertains to
assessment year 2008-09.
The Revenue has raised following grounds of appeal:-
“1. The order of the learned CIT(Appeals), Coimbatore-1 is against facts and circumstances of the case.
2.The learned CIT(Appeals), Coimbatore-1 has erred in allowing assessee’s appeal against the penalty order u/s.
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271(1)(c) passed n 29.03.2017 by the Assessing Officer, as bared by the limitation u/s.275(I) of the Income tax Act, 1961.
The Learned CIT (AppeaIs) Coimbatore-1 has erred to appreciate the fact that the penalty order can be imposed within one year from the end of the financial year in which the order of the Commissioner(Appeals) is received by the (Principal Chief Commissioner) or envisaged in paragraph 2 of Section 275(1) of the Income Tax Act, 1961.
The learned CIT(Appeals), Coimbatore-1 has erred to appreciate the fact that in the instant case, the penalty order has been passed on 29.03.2017, which is within one year from the date of receipt of order from the Id. CIT(A).
From these and other grounds that may be adduced at the time of hearing, the order of the Commissioner of Income tax (Appeals), Coimbatore-1 may be cancelled and that of the Assessing Officer restored.”
At the outset, we find that there is a delay of 119 days in
appeal filed by the revenue. During the course of hearing, when
defect was brought to the notice of learned DR present for
the submitted that delay in filing of appeal is mainly due to
lockdown imposed by the Govt. on account of spread of Covid-
19 infections and in view of Hon’ble Supreme Court suo motu
Writ Petition No.3 of 2020, if the period of delay is covered
within the period specified in the order of the Apex Court , then
same needs to be condoned in view of specific problem faced
by the public on account of Covid-19 pandemic.
3 ITA No. 698/Chny/2020
The learned AR, on the other hand, fairly agreed that
delay may be condoned in the interest of justice.
Having heard both sides and considered reasons given by
the learned DR, we find that the Hon’ble Supreme Court in suo
motu Writ Petition No.3 of 2020, has extended limitation
applicable to all proceedings in respect of courts and tribunals
across the country on account of spread of Covid-19 infections
w.e.f. 15.03.2020, till further orders and said general exemption
has been extended from time to time. We further noted that
delay noticed by the Registry pertains to the period of general
exemption provided by the Hon'ble Supreme Court extending
limitation period applicable for all proceedings before Courts
and Tribunals and thus, considering facts and circumstances of
the case and also in the interest of natural justice, we condone
delay in filing appeal filed by the Revenue .
Brief facts of the case are that the assessee company
has filed its return of income for assessment year 2008-09 on
31.03.2009 admitting total income of Rs.4,23,718/- and said
4 ITA No. 698/Chny/2020
return was subsequently revised on 30.09.2009 declaring total
loss of Rs.18,01,000/- . The assessment for the impugned
assessment year has been completed u/s.143(3) of the Act, on
28.12.2010, assessing long term capital gain of
Rs.10,11,12,800/- on protective basis, because substantive
addition was made for the assessment year 2006-07. The
assessee preferred an appeal before the learned CIT(A). The
learned CIT(A) directed the Assessing Officer to assess long
term capital gain on substantive basis for the assessment year 2008-09. The assessee preferred further appeal before ITAT.,
Chennai, and the Tribunal, confirmed order of the learned
CIT(A). In the meantime, on appeal filed by the revenue for the
assessment year 2006-07, the Tribunal has directed the
Assessing Officer to treat additions made towards long term
capital gain for the assessment year 2008-09 on substantive
basis. Subsequently, a survey u/s.133A of the Income Tax Act,
1961, was conducted on 29.10.2012 in the office premises of
the assessee. Consequent to survey, assessment has been
reopened u/s. 147 of the Income Tax Act, 1961, and assessment has been completed u/s.143(3) r.w.s 147 of the
Act on 31.03.2014 and determined total income at
5 ITA No. 698/Chny/2020
Rs.39,31,14,573/-. The assessee challenged reassessment
order and the learned CIT(A) for reasons stated in his appellate
order allowed relief to the assessee. The revenue has
accepted order of the learned CIT(A) and has not filed further
appeal to the Tribunal. Thereafter, the Assessing Officer
initiated penalty proceedings u/s.271(1)(c) of the Act, and
levied penalty of Rs.54,08,488/- on difference between long
term capital gain admitted by the assessee and long term
capital gain computed by the Assessing Officer which is equal
to 100%of tax sought to be evaded. The relevant findings of the
Assessing Officer are as under:-
The submissions of the assessee company and the facts of the case have been carefully considered. It is a fact that the assessee had disclosed the revised income only after the survey was conducted on the premise of the assessee company and the revised return of income was filed by the assessee only after receipt of the notice u/s 148. It was the statutory obligation on the part of the assessee to disclose such income and tile the return of income in the manner prescribed within the due date prescribed in section 139(1) or u/s 139(4) of the Income tax Act, 1961. Failure to do so has attracted provisions of section 271(1) (c) for concealment of income and the claim of the assessee that there was no concealment of income is summarily rejected. 8. Assessee’s plea that they have no intention to conceal the income and that once survey operations had been conducted, they had voluntarily admitted the undisclosed income in the return of income subsequent to the survey operations and paid the taxes, is not a tenable argument. Assessee’s intention of concealing the income to the Department has been proven beyond doubt during survey operations and with the impounding of evidences during the course of survey, based on which the undisclosed income was admitted by the Director of the company. Thus, voluntary disclosure of the undisclosed incomes and payment of taxes thereon after the findings of survey
ITA No. 698/Chny/2020
operations will not absolve the assessee from the rigors of being penalized under appropriate sections of the Income tax Act, 1961.
Further, The Hon’ble Supreme Court in the case of MAK Data P. Ltd. vs. CIT-Il reported in 38 taxmann.com 448(SC)(2013) had clearly held that “Voluntary disclosure does not release assessee from mischief of penal proceedings under section 271(1)(c).The Hon’ble Court had in the course of its judgment held that surrender of income in the sense that the offer of surrender was made in view of detection made by the AU. In delivering the judgment, the Hon’ble Supreme Court held that
• The Assessing Officer shall not be carried away by the plea of the assessee like ‘voluntary disclosure’, ‘buy peace’, ‘avoid litigation’, ‘amicable settlement’, etc., to explain away its conduct.
• The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. The Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income.
• The burden is then on the assessee to show otherwise, by cogent and reliable evidence.
• Statute does not recognize those types of defenses under Explanation 1 to Section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the assessee from the mischief of penal proceedings u/s 271(1)(c). The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he has to be absolved from penalty. The surrender of income on this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the Assessing Officer in the search conducted in the sister concern of the assessee. It that situation, it cannot be said that the surrender of income was voluntary.
In the instant case, only after detection during the survey proceedings, the assessee offered the revised capital gains when confronted with the sale deed found during the survey. It is also pertinent to mention that the provisions of Explanation-1 to section 271(1)(c) of the Act which provides as under:
“Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act,
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A. Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer to be false or B. Such Person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then , the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purpose of clause(c) of this subsection, be deemed to represent the income in respect of which particulars have been concealed”. 11. Therefore, considering the facts and circumstances of the case, I hold that the assessee company has willfully concealed its income thereby being eligible and a fit case for levy of penalty u/s 271(1) (c) of the Income-Tax Act, 1961. I hold that in the interest of natural justice and at the same time adjudicating the assessee to be liable for penalty, a minimum penalty of 100% of the tax sought to be evaded u/s 271(1)(c) of the I.T.Act,l96l which is worked out as under will meet the ends of justice in the assessee’s case. Tax sought to be evaded on the Undisclosed Long Term Capital Gains of Rs.2,38,68,000 @20% Rs. 47,73,600 /- (Rs. 13,99,68,000-Rs. l1,61,00,000) Surcharge @10% : Rs. 4,77,360/- Add Education Cess @ 3% : Rs. 1,57,528 /- TOTAL PENALTY LEVIED Rs. 54,08,488/-“
Being aggrieved by the penalty order, the assessee
preferred an appeal before the learned CIT(A). Before the
learned CIT(A), the assessee challenged penalty order passed
by the Assessing Officer dated 29.03.2017 on limitation in light
of provisions of section 275(1)(a) of the Income Tax Act, 1961,
and argued that order passed by the Assessing Officer on
8 ITA No. 698/Chny/2020
29.03.2017 is beyond the period of six months from the end of
the month in which order from the ITAT was received. The
learned CIT(A), after considering relevant facts and also taken
note of facts that the Tribunal order has been received by the
O/o. Pr.CIT on 02.02.2016, held that penalty order passed by
the Assessing Officer on 29.03.2017 is beyond six months from
the end of the relevant month in which order of the Tribunal has
been received by Pr.CIT and thus, quashed penalty order
passed by the Assessing Officer and deleted penalty levied
u/s.271(1)(c) of the Act. Aggrieved by the learned CIT(A) order,
the Revenue is in appeal before us.
The learned DR submitted that the learned CIT(A) has
erred in not appreciating fact that as per the provisions of
section 275(1)(a) of the Income Tax Act, 1961, limitation for
passing penalty order u/s.271(1)(c) of the Act, is within one year
from the end of the financial year in which order of the learned
CIT(A) is received by O/o. the Pr.CIT concerned or within six
months from the end of the month in which order of the Tribunal
is received by O/o. the Pr.CIT concerned, whichever period
expires later. In this case, if you consider date of receipt of
9 ITA No. 698/Chny/2020
order of the learned CIT(A), then penalty order passed by the
Assessing Officer on 29.03.2017 is within the period of one year
from the end of the relevant assessment year and thus, the
learned CIT(A) has clearly erred in considering limitation from
the period order of the ITAT received by the O/o. the Pr.CIT
concerned.
The learned AR for the assessee, on the other hand,
supporting order of the learned CIT(A) submitted that as per
second part of provisions of section 275(1)(a) of the Act, time
limit prescribed for passing penalty order u/s.271(1)(c) of the
Act, is within six months from the end of the month in which
order of the ITAT is received by O/o. the Pr. CIT concerned. In
this case, order of the Tribunal was received by O/o. the Pr.CIT
concerned on 22.01.2016 and the period of six months expired
on 31.07.2016. Since, penalty order passed by the Assessing
Officer on 29.03.2017, is beyond limitation provided under the
Act, and thus, learned CIT(A) has very rightly held that penalty
order passed by the Assessing Officer is barred by limitation
and cannot be sustained.
10 ITA No. 698/Chny/2020
We have heard both the parties, perused material
available on record and gone through orders of the authorities
below. The provisions of section 275(1)(a) of the Act, deals
with limitation for passing penalty order u/s.271(1)(c) of the Act .
As per said section, the Assessing Officer can complete
penalty proceedings u/s.271(1)(c) of the Act, within one year
from the end of the financial year in which the order of the
learned CIT(A) is received by O/o. Pr.CIT concerned or within
six months from the end of the month in which order of the
ITAT is received by O/o. the Pr.CIT concerned. In this case,
order of the ITAT was received by the O/o. the Pr.CIT
concerned on 22.01.2016 as confirmed by the Assessing
Officer. As per provisions of section 275(1)(a), limitation for
passing order levying penalty u/s.271(1)(c) of the Act, is six
months from the end of the month in which order of the ITAT is
received by the O/o. the Pr. CIT concerned and said period
was expired on 31.07.2016.
The learned CIT(A), after considering relevant facts has
recorded categorical finding that order of the ITAT was received
by the O/o. the Pr.CIT concerned on 22.01.2016 and period of
11 ITA No. 698/Chny/2020
six months for passing penalty order expires on 31.07.2016
and thus, learned CIT(A) opined that penalty order passed by
the Assessing Officer on 29.03.2017 is beyond due date
prescribed u/s.275(1)(a) of the Income Tax Act, 1961. The said
findings of the learned CIT(A) is uncontroverted. Therefore, we
are of the considered view that there is no error in the reasons
given by the learned CIT(A) to cancel order passed by the
Assessing Officer levying penalty u/s.271(1)(c) of the Act, and
thus, we are inclined to uphold order of the learned CIT(A) and dismiss appeal filed by the Revenue.
In the result, appeal filed by the revenue is dismissed.
Order pronounced in the open court on 23rd February, 2022
Sd/- Sd/- (वी. दुगा� राव) (जी. मंजुनाथ) (V.Durga Rao) (G.Manjunatha) #या�यक सद&य /Judicial Member लेखा सद&य / Accountant Member
चे#नई/Chennai, )दनांक/Dated 23rd February, 2022 DS
आदेश क� ��त+ल,प अ-े,षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आयु.त (अपील)/CIT(A) 4. आयकर आयु.त/CIT 5. ,वभागीय ��त�न2ध/DR 6. गाड� फाईल/GF.