MR. SHAMY E. MAJOR,MUMBAI vs. ACIT, CIRL.17(3),, MUMBAI

O R D E R

PER RAVISH SOOD, JM

1. The present appeal filed by the assessee is directed against the order passed by the CIT(A)-28, Mumbai, dated 21.01.2019 which in turn arises from the order passed by the A.O under Sec.271(1)(c) of the Income Tax Act, 1961 (for Mr. Sammy E. Major Vs. ACIT, Circle 17(3), Mumbai A.Y 2013-14 short ‘Act’), dated 23.12.2017 for A.Y.2013-14. The assessee has assailed the impugned order on the following grounds of appeal before us:

1. The learned Assessing Officer has erred in levying the penalty of Rs. 3,24,0000/- u/s 271(1)(c) of the Income-tax Act, 1961. 1.1 It is submitted that Commissioner of Income-tax (Appeals) has erred in upholding the same. 1.2 It is submitted that your appellant had neither concealed any income nor furnished any inaccurate particulars of income. Hence penalty ought to be deleted. 2. Your appellant craves the right to amend or alter the aforesaid ground of appeal

2. Briefly stated, the assessee who is a life insurance agent and consultant had filed his return of income for A.Y 2013-14 on 15.07.2013, declaring a total income of Rs. 33,38,580/-. Subsequently, on the basis of information received from the Directorate of Investigation, Kolkata, that the assessee was a beneficiary of a bogus claim of deduction of Rs. 10,50,000/- u/s 35(1)(ii) in relation to a non- genuine contribution of Rs. 6,00,000/- made to School of Human Genetics & Population Health, his case was reopened under Sec. 147 of the Act. Notice under Sec. 148, dated 23.03.2017 was issued to the assessee. In compliance to the notice issued under Sec. 148 the assessee filed his return of income on 30.03.2017, wherein he after withdrawing his earlier claim of deduction u/s 35(1)(ii) of Rs. 10,50,000/- declared an income of Rs. 43,88,580/-. Income of the assessee Mr. Sammy E. Major Vs. ACIT, Circle 17(3), Mumbai A.Y 2013-14 was assessed by the A.O under Sec. 143(3) r.w.s 147, vide his order dated 21.06.2017 at the returned income. The A.O while culminating the assessment initiated penalty proceedings under Sec. 271(1)(c) for furnishing of inaccurate particulars of income by the assessee as regards the claim of deduction under Sec. 35(1)(ii) of Rs. 10,50,000/-.

3. Subsequently, the A.O issued a ‘Show cause’ notice to the assessee, therein calling upon him to explain as to why penalty under Sec. 271(1)(c) for furnishing of inaccurate particulars of income as regards his claim of deduction under Sec. 35(1)(ii) may not be imposed on him. The reply filed by the assessee did not find favour with the A.O who imposed a penalty under Sec. 271(1)(c) of Rs. 3,24,450/- for raising of a non-genuine claim of deduction.

4. Aggrieved, the assessee assailed the order imposing penalty under Sec. 271(1)(c) in appeal before the CIT(A). Observing, that the assessee had intentionally raised a false claim of deduction u/s 35(1)(ii), which was withdrawn by him only after a notice u/s 148 was issued, the CIT(A) upheld the penalty imposed by the A.O u/s 271(1)(c) of the Act.

5. The assessee being aggrieved with the upholding of the penalty imposed u/s 271(1)(c) has challenged the order of the CIT(A) before us. We have heard the Mr. Sammy E. Major Vs. ACIT, Circle 17(3), Mumbai A.Y 2013-14 authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. As observed by us hereinabove, the assessee had in his ‘Original’ return of income raised a weighted claim of deduction u/s 35(1)(ii) of Rs. 10,50,000/- in relation to a contribution of Rs. 6,00,000/- made to School of Human Genetics & Population Health. Subsequently, information was shared by the DDIT(Inv.), Kolkata, that survey proceedings conducted on 27.01.2015 u/s 133A on School of Human Genetics & Population Health had revealed that the said institute was not carrying out genuine activities, and in connivance with donors, brokers and accommodation entry providers was into providing of bogus entries. In the backdrop of the aforesaid information the case of the assessee was reopened by the A.O under Sec. 147 of the Act. In compliance to the notice issued u/s 148 of the Act the assessee filed his return of income at Rs. 43,88,580/- i.e after withdrawing the claim of deduction that was earlier raised u/s 35(1)(ii) in the ‘Original’ return of income. Although, the returned income was accepted by the A.O u/s 143(3) r.w.s 147, vide his order dated 21.06.2017, however, the assessee was thereafter visited with penalty u/s 271(1)(c) for furnishing of inaccurate particulars of income by raising a non- genuine claim of donation.

Mr. Sammy E. Major Vs. ACIT, Circle 17(3), Mumbai A.Y 2013-14

6. We have given a thoughtful consideration to the issue before us and are unable to persuade ourselves to subscribe to the view taken by the lower authorities. In our considered view, the assessee on learning about the fact that School of Human Genetics & Population Health was found to have indulged in ingenuine activities, had thus, in the return of income filed by him in compliance to Notice u/s 148, had in all fairness withdrawn the claim of deduction u/s 35(1)(ii) of the Act, that was earlier raised by him in the ‘Original’ return of income. At this stage, we may herein observe that though serious irregularities were found in the activities of the aforesaid institute viz. School of Human Genetics & Population Health, but then, we cannot also remain oblivious of the fact that no clinching evidence had emerged which would prove beyond doubt that the assessee had not made any genuine contribution to the said institute. In fact, we find that in a host of judicial pronouncements by co-ordinate benches of the Tribunal, as under:

“ The Commissioner of Income Tax (A) has rightly taken a view that no penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. If the assessee gives an explanation which is unproved but not disproved, i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assesse’s case is false. The view taken by the Tribunal is a reasonable and possible view.” In the case of the present assesse before us, his claim that he had in his ‘Original’ return of income made a genuine contribution to the aforesaid institute viz. School of Human Genetics & Population Health, and on the said basis had therein raised Mr. Sammy E. Major Vs. ACIT, Circle 17(3), Mumbai A.Y 2013-14 the claim of deduction u/s 35(1)(ii), we find had not been disproved by the revenue. Accordingly, in our considered view, though the aforesaid explanation of the assessee is unproved but as it falls short of being in the nature of a disproved explanation, therefore, he could not have been visited with penalty u/s 271(10(c) of the Act.

We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment Mr. Sammy E. Major Vs. ACIT, Circle 17(3), Mumbai A.Y 2013-14 In the rule so framed, as a result of these directions, the expression “ordinarily” has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether or not the passing of this order, beyond a period of ninety days in the case before us was necessitated by any “extraordinary” circumstances.

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. The epidemic situation 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 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 Mr. Sammy E. Major Vs. ACIT, Circle 17(3), Mumbai A.Y 2013-14 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.