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Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O. P. KANT
The aforesaid appeal has been filed by the Revenue against impugned order dated 30/04/2013 passed by the ld. CIT (Appeals)-XIII, New Delhi in relation to penalty proceedings u/s.271(1)(c) for the Assessment Year 2009-10.
The Revenue is mainly aggrieved by deletion of penalty of Rs.3,59,84,728/- by Ld. CIT (Appeals) which was declared by the assessee in his revised return of income.
The brief facts qua the issue involved are that the assessee is an individual, who has filed his return of income u/s.139(1) on 30th September, 2009 declaring total income of Rs.69,26,801/-. After the period of three months, the assessee suo-motto filed a revised return of income on 18.01.2010 declaring total income of Rs.11,38,33,301/-, thereby showing additional income of Rs.10,69,06500/-. The Assessing Officer, has accepted the revised return, however initiated the penalty proceedings u/s.271(1)(c) on the ground that assessee has surrendered the amount of Rs.10,69,06,500/- after the search operation in the case of N. Suryanarayan Group of cases. Accordingly, in the penalty proceedings also Assessing Officer had observed that it was in the wake of search and seizure operation conducted in the case of N. Suryanarayn Group on 09.10.2010, that assessee had offered the additional income in the revised return and after incorporating the relevant extract from the assessment order, he held that assessee has concealed the income to the extent of additional income offered in the revised return and accordingly, levied the penalty after invoking Explanation-1 to Section 271(1)(c) for a sum of Rs.3,59,84,728/-.
Before ld. CIT(A), the assessee had submitted that the additional income which has been offered was already accounted for in books of account by the assessee as the income from business for the next year Assessment Year 2010-11 at Rs.10,09,06,500/- and in fact first installment of advance tax of Rs.80 lakhs was also paid on 29.10.2009 for the Assessment Year 2010-11. When the original return was filed on 30.09.2009 for Assessment Year 2009-10, the assessee had not included the said sum on the ground that assessee has accounted the same in the next year. Subsequently the assessee shifted this amount to be taxed in the Assessment Year 2009-10 and a revised return was filed voluntarily on 18.01.2010 and the credit for advance tax of Rs.80 lakhs was also claimed for the Assessment Year 2009-10, which has been duly allowed by the Assessing Officer. The brief facts pertaining to additional income offered in this year were stated in the following maner:-
“3. Search u/s 132 was conducted in the case of N. Suryanarayanan Group of cases on 09/10/2009. During the course of search certain documents were found. One of the documents is the agreement dated 11/11/2008 between Advitiya Fabrics Pvt. Ltd. and New Idea Asia, a proprietary concern of the appellant according to which Rs. 4,27,62,600/- were received as advance by M/s New Idea Asia by way of ch. No. 410911 dt. 11/11/2008 drawn on HDFC Bank. M/s New Idea Asia was to provide, at its cost and expense, various services to the other party like obtaining requisite licenses, permissions, sanctions and approvals of all the concerned statutory and other authorities for the development, construction, completion and sale of the residential project to be constructed by the other party. In the next year, some disputes arose between the two parties and the amount was forfeited. The other document was an MOU dated 17/11/2008 between M/s New Idea Asia and M/s Chandragupta Traders Pvt. Ltd. according to which M/s New Idea Asia will be constructing 38 Bungalows to be purchased by the other party for a consideration of Rs.42,46,00,000/-. The purchaser paid Rs.6443900/- to M/s. New Idea Asia as earnest money vide cheque no.432365 dated 11.11.2008 drawn on HDFC Bank. The MOU also provided that in case the purchaser rescinds the MOU, the vendor shall forfeit the earnest money. There was another MOU between M/s. New Idea Asia and M/s. Chandragupta Traders Pvt. Ltd. signed in the next year vide which the above MOU dated. 17.11.2008 was cancelled and the amount of Rs.64143900/- was forfeited. This fact was confirmed vide letter dated 24.11.2009 written by M/s. New Idea Asia to M/s. S. Chandragupta Traders Pvt. Ltd. confirming the rescission of the MOU dated 17.11.2008 which was duly signed by both the parties. In view of these facts, both the amounts accrued in the F.Y. 2009-10 pertaining to A.Y.2010-11. Therefore, the assessee accounted for the income of Rs.10,09,06,500/- (42762600 + 64143900) in A.Y. 2010-11 and paid advance tax thereon.”
It was further submitted that no search and survey action was undertaken in the case of the assessee and assessee himself has accounted for the entire amount in the books of account of M/s. New Idea Asia, a proprietorship concern of the assessee, as business income in the financial year 2009-10. In the revised return the assessee had made following disclosure.
“In respect of above said matter, it is stated that I have already offered certain advances as income for the purpose of taxation for the year ended 31/03/2009 instead of the same being reflected as income for the immediately succeeding year. Undoubtedly, the said advances were received through normal banking channel and were duly reflected in the books of accounts. Nothing was hidden or veiled as such and only taxation of such receipt, instead of having been offered in the financial year 2009-10 was voluntarily offered by me in the immediately preceding financial year i.e. 2008-09. It is therefore requested that neither any penalty nor any other punitive action of any nature whatsoever will either be initiated or imposed against me or any of my concerns consequent to the offer made as stated above.”
It was further submitted that much after the filing of revised return, first notice u/s. 143(2) was issued on 25.08.2010 and show cause notice on this point was issued on 09.12.2011 by the Assessing Officer. Thus, the revised return was filed voluntarily much before the investigation was started or query was raised by the Assessing Officer on 09.12.2011. Thereafter, assessee had relied upon various judgments and case laws which has been dealt and incorporated by the ld. CIT (A) in his order from pages 5 to 11 of the appellate order.
7. Ld. CIT(A), has deleted the said penalty after taking note of the factual background and held that here the return has been revised by offering the additional income much before the issuance of notice u/s.143(2), i.e., prior to the selection of the case for scrutiny which was on 28.05.2010 and the first show cause notice by the Assessing Officer was issued on 09.12.2011. He held that in such facts and circumstances the revised return is not only voluntarily but also no penalty u/s. 271(1)(c) can be levied for concealment of income. He also took not of the fact that no survey or search was conducted in the case of the assessee, albeit it was in the case of the third party and the additional income which is subject matter of the levy of penalty the assessee has reflected in the books as his business income in the subsequent Assessment Year and assessee has merely shifted the income from Assessment Year 2010-11 to 2009-10 and hence there is no case of concealment of income. While coming to his conclusion he also referred and also relied upon catena of decisions as cited by him in his order.
Before us ld. D.R. strongly relied upon the order of the Assessing Officer and submitted that the very fact that the revised return of income was filed when documents and material found in the course of a search of a third party which was conducted prior to the filing of the revised return and it was based this event that the assessee was forced to offer this additional income in the revised return and hence same cannot be treated as voluntarily and Assessing Officer has rightly levied the penalty on such additional income offered in the revised return of income.
On the other hand, learned counsel for the assessee after reiterating the observations made by the ld. CIT(A) in the impugned appellate order, submitted that herein in this case it cannot be disputed that, firstly, no search and survey action was taken in the case of the assessee which could be said to have persuaded the assessee for offering the additional income and the revised return of income; secondly, revised return was filed on 18.01.2010 much before the assessee’s case was selected for scrutiny which is evident from the fact that notice u/s.143(2) was issued after the period of eight months and show cause notice was issued by the Assessing Officer almost after the two years from the date of filing of revised return; and lastly, this income was already accounted for as business income in the books of account of the assessee to be offered in the Assessment Year 2010-11 for which already advanced tax was paid. In view of these facts and circumstances, it cannot be held that assessee had tried to either conceal the income or the income which has been offered in the revised return was not voluntarily. Thus, order of the ld. CIT (A) in deleting the penalty should be sustained.
We have heard the rivals submissions, perused the relevant findings given in the impugned order as well as the material referred to before us at the time of hearing. Going by sequence of events as per the facts narrated above, following chronology of event can be drawn.
Date Event
30.09.2009 The assessee has filed original return of income u/s.139(1) declaring an income of Rs.69,26,801/-
09.10.2009 A search and seizure action u/s.132 was conducted in the case of N. Suryanarayan Group. In one of the documents found in the search, was an agreement dated 11.11.2008 between Advitiya Fabrics Pvt. Ltd. and New Idea Asia, (a proprietary concern of the assessee) according to which Rs. 4,27,62,600/- were received as advance by M/s New Idea Asia by way of ch. No. 410911 dt. 11/11/2008 drawn on HDFC Bank. M/s New Idea Asia was to provide, at its cost and expense, various services to the other party like obtaining requisite licenses, permissions, sanctions and approvals of all the concerned statutory and other authorities for the development, construction, completion and sale of the residential project to be constructed by the other party. In the next year, some disputes arose between the two parties and the amount was forfeited. The other document was an MOU dated 17/11/2008 between M/s New Idea Asia and M/s Chandragupta Traders Pvt. Ltd. according to which M/s New Idea Asia will be constructing 38 Bungalows to be purchased by the other party for a consideration of Rs.42,46,00,000/-. The purchaser paid Rs.6443900/- to M/s. New Idea Asia as earnest money vide cheque no.432365 dated 11.11.2008 drawn on HDFC Bank. The MOU also provided that in case the purchaser rescinds the MOU, the vendor shall forfeit the earnest money. There was another MOU between M/s. New Idea Asia and M/s. Chandragupta Traders Pvt. Ltd. signed in the next year vide which the above MOU dated. 17.11.2008 was cancelled and the amount of Rs.64143900/- was forfeited. This fact was confirmed vide letter dated 24.11.2009 written by M/s. New Idea Asia to M/s. S. Chandragupta Traders Pvt. Ltd. confirming the rescission of the MOU dated 17.11.2008 which was duly signed by both the parties. The assessee accordingly had accounted for this amount accrued in the financial year 2009-10 pertaining to Assessment Year 2010- 11 on which advance tax of Rs.80 lakhs was paid.
18.01.2010 The assessee filed revised return of income declaring income of Rs.11,38,33,301/- which included the said additional income of Rs.10,69,06,500/-. In the revised return of income assessee had clearly disclosed that, already this amount has been offered as income for the purpose of taxation in the books of account in the financial year 2009-10 and these advances had been received through normal banking channel duly reflected in the books of account and only taxation of receipt has been shifted in this year which is purely voluntarily and therefore no penalty or any other punitive action of any nature should be initiated.
25.08.2010 Notice u/s. 143(2) has been issued by the Assessing Officer for scrutiny.
09.12.2011 The first show cause notice was issued by the Assessing Officer whereby this issue was raised by the Assessing Officer.
30.12.2011 Assessment order u/s.143(3) has been passed, wherein the revised return filed by the assessee has been accepted by the Assessing Officer in the following manner: “In response, assessee files various details through its authorized representative, which are placed on record. Shri Ashish Jain has already accepted Rs. 10,69,06,500/- as additional income. The contention of Shri Ashish Jain is acceptable. Shri Ashish Jain been accounted in the books of M/s New Idea Asia (proprietary Mr. Ashish Jain) as business income and same has been offered to tax for the ASSESSMENT YEAR 2009-10. Shri Ashish Jain has revised his return and deposited tax by declaring income of Rs.106906500/-. No further addition on this issue is being made and revised return of the assessee is accepted.
From the aforesaid facts and events, it is quite apparent that:-
� firstly, no search and survey was carried out in the case of the assessee albeit it was in the case of the third party from where it was found from the documents that one of the purchaser had paid amount to the proprietorship concern of the assessee, was in the form of earnest money received through cheque drawn on an HDFC bank and there was a clear cut provision in the MOU that in case the purchaser rescinds the MOU the vendor shall forfeit the earnest money and later on the amounts aggregating to Rs.10,69,06,500/- stood forfeited which assessee had treated is as business income in the books of account in the financial year 2009-10 relevant for the Assessment Year 2010-11;
� secondly, the assessee by way of revised return filed on 18.01.2010 has decided to offer this receipt in the financial year 2008-09, i.e., in the Assessment Year 2009-10 and also requested that advance tax paid for sum of Rs.80 lakhs on 29.10.2009 should be treated allowed as credited on this income for the Assessment Year 2009-10 which has been allowed by the Assessing Officer;
� lastly, no inquiry or notice in the case of the assessee was carried out prior to the filing of the revised return. The first show cause notice in this regard was issued by the Assessing Officer almost after a gap of two year and thus, it can be reckoned that the filing of revised return is purely voluntarily and nothing has been produced on record.
The Income Tax Department or Investigation Wing never asked the assessee about the alleged additional income on account of forfeiture of earnest money prior to the filing of revised return. Thus, the observation and the finding of the ld. CIT(A) while deleting the said additions are upheld, because at no point of time assessee was cornered by the Department which would compelled the assessee for filing of revised return. It was purely a voluntarily act and that to be it was a business income which was accounted for in the books of account for the subsequent year and assessee has merely shifted the taxability in this year; and hence; there could not be a remotest case for levy of penalty either for concealment of income or for furnishing of any inaccurate particulars. Accordingly, the appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 14th December, 2017.