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Income Tax Appellate Tribunal, MUMBAI BENCHES “I”, MUMBAI
Before: SHRI SHAMIM YAHYA (AM) & SHRI RAM LAL NEGI (JM)
O R D E R PER RAM LAL NEGI, JM These appeals have been filed by the assessee Mr. Mukesh Rajmal Parekh and Mahesh Rajmal Parekh against the two orders dated 12.01.2017 passed by the Commissioner of Income Tax (Appeals)-37, Mumbai, for the assessment year 2009-10, whereby the Ld. CIT (A) has dismissed the appeals Assessment Year: 2009-10 filed by the aforesaid assessees against penalty order passed u/s 271 (1)(c) of the Income Tax Act, 1961 (for short ‘the Act’). Since both the assessees are partners of M/s Parekh Ornaments and the issues involved are identical, both the appeals were clubbed, heard together and are being disposed of by this common and consolidated order for the sake of convenience.
Brief facts of the case are that the assessee an individual and partner of M/s Parekh Ornaments, filed its return of income for the assessment year under consideration declaring the total income of Rs. 11,75,105/-. Subsequently, the Dy. Director of Investigation (DI) Unit-II (3), Mumbai issued notice u/s 131 of the Act, asking the assessee to explain about the payment of Rs. 13,00,000/- made towards premium of Prudential Life Insurance Policy in the year 2009. The assessee explained the source of cash receipt of Rs. 13,00,000 invested in ICICI Prudential Life Insurance Policy. In view of his said explanation, the appellant furnished the revised return for the assessment year under consideration and declared the amount of Rs. 13,00,000/- which had inadvertently been not included in the original return. Accordingly, the assessee declared the total income of Rs. 24,75,110/- against the original return of Rs. 11,75,105/-. The return of income was processed u/s 143 (1) of the Act.
In the year 2013 i.e., after four years, the AO reopened the said assessment for concealment of income amounting to Rs. 13,00,000/-. The assessee challenged the validity of notice u/s 148 and without prejudice submitted that the appellant has already filed a revised return which may be treated as return filed in response to notice u/s 148 of the Act. The assessee further contended that since the AO has accepted the revised return and not brought on record any material to show that assessee had concealed the particulars of income, the question of concealment of income does not arise. However, the AO holding that there is escapement of income within the Assessment Year: 2009-10 meaning of explanation 2(a) of section 147 of the Act, reopened the assessment and issued notice u/s 143 (2) and 142 (1). In response to the said notices, the authorized representative (AR) of the assessee attended the proceedings and furnished the details called for. The AR explained that the assessee had earned the said income from repairing and polishing of ornaments and commission received for various activities done by the assessee. The AR further submitted that out of the said income the assessee made investment in ICICI Prudential Life Insurance during the year under consideration. The explanation furnished by the assessee was accepted by the AO. However, the AO initiated penalty proceedings u/s 271 (c) holding that the assessee has revised the return after the investigation made by the Investigation Wing.
The assessee challenged the penalty order before the Ld. CIT (A). However, the Ld. CIT (A) after hearing the assessee dismissed the appeal and confirmed the penalty levied by the AO u/s 271 (1) (c) of the Act holding that the assessee has failed to prove that his explanation is bona fide and that all the facts relating to same and material to the computation of his total income have been disclosed within the meaning of explanation (1) to section 271(1)(c) of the Act. The assessee in appeal against the said findings of the Ld. CIT(A).
The assessee has challenged the impugned order passed by the Ld. CIT (A) by raising the following effective grounds of appeal:
1. “On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the penalty order u/s 271 (1)c) of the I.T. Act, 1961 ignoring the fact that the appellant had declared the income of Rs. 13,00,000 in the revised return filed on 29 September 2009 and paid full taxes thereon.
2. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred, in confirming the penalty order u/s 271 (1)(c) of the I.T. Act, 1961, without considering the fact that consequent upon the declaration of income of Rs. 13,00,000 in the revised return and payment of taxes thereon, there is no Assessment Year: 2009-10 concealment of particulars of income and or furnishing inaccurate particulars of income in the return of income.”
At the outset, the Ld. counsel for the assessee submitted that the Ld. CIT
(A) has wrongly confirmed the penalty levied by the AO, ignoring the fact that the assessee had declared the income of Rs. 13,00,000/- in the revised return filed on 29.09.2009. Further, since the AO has accepted the revised return considering the explanation given by the assessee, penalty cannot be imposed for concealment of income or furnishing incorrect particulars of income.
On the other hand, the Ld. Departmental Representative (DR) relied on the findings of the Ld. CIT (A).
We have heard the rival submissions and also perused the material on record including the cases relied upon by the authorities below. The undisputed facts of the case are that the assessee filed its return of income for the assessment year under consideration on 29.07.2009 declaring the total income of Rs. 11,75,105/-. Subsequently, the assessee filed revised return on 29.09.2009 declaring the total income of Rs. 24,75,110/-. The return of income was processed u/s 143(1) of the Act. The AO re-opened the assessment on the ground that the assessee has offered the additional income of Rs. 13,00,000/- in revised return after the investigation conducted by the DCIT (Investigation) Unit. Further, as per the balance sheet, the assessee had given loan to Rajmal D Prakash and Citi Estate Developers amounting to Rs. 82,25,000/- and Rs. 2,50,000/- respectively and in the balance sheet the assessee has shown obtained unsecured loan amounting to Rs. 53,65,410/-. The assessee furnished the details called for by the AO. The AO after verification of all the details and explanation furnished by the assessee accepted the contention of the assessee and accepted the revised return of income filed by the assessee without making any addition/disallowance. Assessment Year: 2009-10
However, the AO initiated penalty proceedings and levied penalty of Rs. 4,41,870/- holding that the action of the assessee in filing revised return was not voluntary but it was filed after the enquiry conducted by the Investigation Wing. We notice that the AO has accepted the income of the assessee declared in the revised return filed by the assessee in assessment order passed u/s 143
(3) read with section 147 of the Act. Penalty under section 271(1) (c) of the Act is levied if the AO is satisfied that the assessee has concealed the particulars of income or furnished inaccurate particulars of such income. Hence, concealment of income or furnishing of inaccurate particulars is a pre requisite for levy of penalty u/s 271(1) (c) of the Act. In the present case, the AO has not pointed out any concealment or inaccurate furnishing of particulars of income and accepted the revised return filed by the assessee. However, levied the penalty on the ground that assessee had filed the revised return and disclosed the income of Rs. 13,00,000/- in the revised return. Admittedly, the assessee has filed the revised return before issuing notice u/s 148 of the Act. In view of the facts and circumstances of the case, we are of the considered view that the explanation furnished by the assessee that the amount of Rs. 13,00,000/- was left inadvertently in the original return and the assessee filed the revised return immediately when this fact came to the notice, is plausible and the assessee has proved that the said explanation is bona fide. Mere fact that the assessee’s statement was recorded by the Investigation Wing on 14.09.2009 does not ipso facto establish that the explanation offered by the assessee is not bona fide. Hence, in our considered view, the explanation offered by the assessee is bona fide and that the assessee has disclosed the entire facts necessary for computation of his total income. Hence, in our considered view, it is not a fit case for levying penalty u/s 271 (1) (c) of the Act. We therefore set aside the impugned order passed by the Ld. CIT (A) and direct the AO to delete the penalty. Assessment Year: 2009-10 The facts of the present case are identical to the facts of the appeal ITA No. 2189/Mum/2017. In the present case, the assessee filed its return of income for the assessment year under consideration declaring the total income of Rs. 14,87,613/- on 27.03.2015. The return was revised and addition of Rs. 13,00,000/- was made by the assessee in revised return. The revised return was accepted by the AO vide assessment order dated 26.03.2015 passed u/s 143(3) read with section 147 of the Act. However, the AO initiated proceedings u/s 271 (1)(c) of the Act and imposed penalty of Rs. 4,41,870/- holding that the revised return was filed by the assessee subsequent to the enquiry conducted by the Investigation Wing of the Department. In appeal, the Ld. CIT
(A) confirmed the penalty levied by the AO. The assessee is in appeal against the impugned order passed by the Ld. CIT (A). 2. The assessee has raised the following effective ground of appeal against the impugned order passed by the Ld. CIT (A):-
1. “On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the penalty order u/s 271 (1)c) of the I.T. Act, 1961 ignoring the fact that the appellant had declared the income of Rs. 13,00,000 in the revised return filed on 29 September 2009 and paid full taxes thereon.
2. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred, in confirming the penalty order u/s 271 (1)(c) of the I.T. Act, 1961, without considering the fact that consequent upon the declaration of income of Rs. 13,00,000 in the revised return and payment of taxes thereon, there is no possibility of concealment of particulars of income and or furnishing inaccurate particulars of income in the return of income.