ACIT CENTRAL CIRCLE 2, COIMBATORE vs. S.MARTIN, COIMBATORE

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

All the appeals of the Revenue are directed against the

respective orders of the Commissioner of Income Tax (Appeals)-18,

Chennai, for the assessment years 2009-10 and 2015-16.

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Therefore, we heard all these appeals together and disposing of the same by this common order.

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the delayed payment of TDS to the extent of ₹11,687/- and capital gain to the extent of ₹47,07,30,598/-. The Assessing Officer found that the assessee surrendered his Life Insurance Policy on 31.01.2009 and received a sum of ₹3,26,73,685/-. According to the Ld. D.R., the assessee in fact, took the policy on 20.04.2005 for ₹2 Crores and paid a premium of ₹1,26,73,685/- on the same day. Therefore, according to the Ld. D.R., the Assessing Officer found that the excess amount received over and above the premium of ₹1,26,73,685/- has to be treated as income. According to the Ld. D.R., the assessee has also availed pension plus regular policy during the assessment year 2009-10. On surrender of the said policy, the assessee received an amount of ₹40,22,708/- on 11.08.2008. Since the premium paid by the assessee was claimed as deduction, according to the Ld. D.R., the amount received by the assessee on 11.08.2008 is liable for taxation. Accordingly, the Assessing Officer made an addition of ₹40,22,708/-. Similarly, according to the Ld. D.R., the assessee has claimed ₹88,81,129/- towards business expenditure. The assessee has paid ₹2,05,220/- for security services of his own residential bungalow and claimed the same as business expenditure. According to the Ld. D.R., the

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Assessing Officer found that personal expenditure cannot be

allowed as business expenditure.

deduction, according to the Ld. D.R., the Assessing Officer found that the assessee willfully concealed and deliberately furnished inaccurate particulars of income, therefore, he rightly levied penalty

under Section 271(1)(c) of the Act. According to the Ld. D.R., the CIT(Appeals) without considering the finding of the Assessing Officer with regard to capital gain, found that there was no

concealment of income. The CIT(Appeals), according to the Ld. D.R., has failed to consider that the assessee purchased the

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property and within a short span of time sold the same at much

higher rate and earned short term capital gain. According to the Ld.

D.R., this is a clear case of evasion of tax as held by the Apex Court

in McDowell and Co. Ltd. v. Commercial Tax Officer (1985) 154 ITR

148, therefore, the CIT(Appeals) is not justified in allowing the claim

of the assessee.

assessee, submitted that the assessee is engaged in the business

of lottery. According to the Ld. counsel, the Assessing Officer made

additions to the total income by disallowing the claim of the

assessee. The assessee has furnished the entire details with

regard to insurance receipt, expenditure claim, dividend income,

prepaid expenditure and short term capital gain. The Assessing

Officer without appreciating the facts, made additions in the

assessment proceeding. According to the Ld. counsel, penalty

proceeding is different from assessment proceeding. All the

additions / disallowances cannot automatically result in levy of

penalty. According to the Ld. counsel, the entire transactions were

placed before the Assessing Officer and the Assessing Officer after

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considering the claim of the assessee found that certain claims are not allowable. It does not mean that the assessee has furnished inaccurate particulars of his income or concealed part of his income. Placing reliance on the judgment of Apex Court in CIT Vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158, the Ld.counsel submitted that mere claim cannot be construed as concealment of income or furnishing of inaccurate particulars of income. Having furnished all the particulars, according to the Ld. counsel, the assessee made claim bonafidely as per the provisions of Income- tax Act, therefore, there is no question of concealment of income or furnishing inaccurate particulars of income.

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premium of ₹1,26,73,685/- was to be treated as income of the assessee. The fact remains that the assessee has disclosed the payment of insurance premium of ₹1,26,73,685/- for sum assured of ₹2 Crores and also the receipt of ₹3,26,73,685/-. Therefore, this Tribunal is of the considered opinion that there is no concealment of income or furnishing of inaccurate particulars of income. The question whether the excess amount received over and above ₹1,26,73,685/- was income of the assessee is a matter to be decided by the Assessing Officer. Therefore, this cannot be considered to be a concealment of income. The assessee apparently disclosed pension plus regular policy availed from AVIVA Life Insurance company and also the amount received on surrender of policy. Therefore, even in this case, there is no concealment of income. The entire particulars were available before the Assessing Officer.

Now coming to the business expenditure of ₹88,81,129/-, the 8. Assessing Officer found that a sum of ₹2,05,220/- was paid for security services of residence of the assessee. The fact remains that the entire facts were placed before the Assessing Officer and

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the assessee claimed the same as deduction. Mere claim, as rightly pointed out by the Ld.counsel, cannot be construed as concealment of income or inaccurate particulars of income. Similarly, the dividend income of ₹71,19,981/- was also disclosed by the assessee and the assessee claimed deduction as provided under Section 14A of the Act. The Assessing Officer by applying Rule 8D of Income-tax Rules, 1962 disallowed ₹5,24,393/- out of ₹71,19,981/-. When the entire facts were available before the Assessing Officer, it cannot be said that there is a concealment of income or furnishing of inaccurate particulars of income. Moreover, the interest on delayed payment of TDS was placed before the Assessing Officer and the assessee claimed deduction. It does not mean that the assessee has concealed particulars of income. Similarly, details of prepaid expenses of ₹1,98,990/- were also available before the Assessing Officer.

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considered to be a short term capital gain. The fact remains that

the assessee retired from partnership firm and received a lump sum

compensation from the firm. This was disclosed before the

Assessing Officer. Therefore, there is no question of any

concealment of income or furnishing inaccurate particulars of

income. In those circumstances, this Tribunal is of the considered

opinion that the judgment of Apex Court in Reliance Petroproducts

(P) Ltd. (supra) is squarely applicable to the facts of the case.

Therefore, the CIT(Appeals) has rightly deleted the disallowance

made by the Assessing Officer. Hence, this Tribunal do not find any

reason to interfere with the order of the lower authority and

accordingly the same is confirmed.

No.3147/Chny/2017.

the Assessing Officer under Section 271(1)(c) of the Act.

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in the Profit & Loss account. According to the Ld. D.R., the

assessee explained before the Assessing Officer that M/s Gaming &

Hotel Services (P) Ltd. is a separate entity assessed to tax and he

has not given any instruction to Shri Nagarajan, who is an employee

of M/s Gaming & Hotel Services (P) Ltd. to make any payment.

According to the Ld. D.R., this claim of the assessee was not

substantiated by producing necessary evidence, therefore, the

Assessing Officer disallowed the claim of the assessee.

Moreover, in respect of the expenditure, the assessee has not

raised any objection for making addition to the total income.

Therefore, according to the Ld. D.R., the Assessing Officer found

that the assessee concealed the particulars of income. Hence,

according to the Ld. D.R., the Assessing Officer levied penalty

under Section 271(1)(c) of the Act.

assessee, submitted that no doubt, the assessee claimed in the Profit & Loss account expenditure to the extent of ₹2,88,22,870/-.

According to the Ld. counsel, mere making claim of expenditure in

the Profit & Loss account or before the Assessing Officer does not

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amount to furnishing inaccurate particulars of income or concealing

any part of income. According to the Ld. counsel, the assessee has

furnished entire details of income earned by him. The assessee

has also furnished details of expenditure and claimed the

expenditure as deduction while computing the total income.

Therefore, according to the Ld. counsel, the entire particulars of

income and expenditure were available before the Assessing

Officer. The Assessing Officer during the course of assessment

proceeding, found that certain claims of the assessee as

expenditure were not allowable, therefore, according to the Ld.

counsel, he made the addition. Merely because the assessee has

not contested the disallowance made by the Assessing Officer with

regard to the claim of expenditure, according to the Ld. counsel, that

will not amount to admission for disallowance, therefore, the

CIT(Appeals) has rightly deleted the penalty levied by the Assessing

Officer.

perused the relevant material available on record. It is not in

dispute that the assessee has claimed an expenditure of

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₹2,88,22,870/-., which includes a sum of ₹30,00,000/- said to be

paid by one Shri Nagarajan to Shri Ramesh Krishan on so-called

instruction of the assessee. The fact remains that the assessee has

furnished entire details of income and also furnished entire details of

the so-called expenditure. The Assessing Officer found that the

assessee has not substantiated the claim of expenditure. The

question arises for consideration is when the assessee claimed

expenditure and the Assessing Officer disallowed the claim of the

assessee on the ground that such a claim was not substantiated,

whether there was any concealment of income or furnishing

inaccurate particulars of income? This issue was considered by the

Apex Court in the case of Reliance Petroproducts (P) Ltd. (supra).

The Apex Court found that mere claim of expenditure would not

amount to furnishing of inaccurate particulars of income or

concealing any part of income. In view of the above, this Tribunal

has no hesitation to confirm the order of the CIT(Appeals).

Accordingly, the order of the CIT(Appeals) is confirmed.

year 2015-16.

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therefore, the Assessing Officer has rightly levied penalty under

Section 271AAB of the Act.

assessee, submitted that the assessee offered an additional income of ₹50 Crores during the course of search operation, for

assessment. According to the Ld. counsel, the assessee has not

specified the manner in which such undisclosed income was

derived. Moreover, referring to Sections 153A and 153C of the Act,

the Ld.counsel submitted that undisclosed income shall be with

reference to material found during the course of search operation

and the information which is relatable to the material found during

the course of search operation. In this case, according to the Ld.

counsel, no material was found during the course of search

operation. Therefore, what was offered by the assessee as

additional income cannot be construed as undisclosed income.

Hence, the provisions of Section 271AAB of the Act is not

applicable at all. Therefore, according to the Ld. counsel, the

CIT(Appeals) has rightly deleted the penalty levied by the Assessing

Officer.

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perused the relevant material available on record. Admittedly, there

was search operation in the premises of the assessee on

13.01.2015. In the course of search operation, the assessee offered an additional income of ₹50 Crores under the head “Income

from Other Sources”. The Assessing Officer levied penalty under

Section 271AAB of the Act in respect of the additional income

offered by the assessee. It is not the case of the Revenue that any

incriminating material was found during the course of search

operation with regard to income offered by the assessee. The term

“undisclosed income” is not defined in Section 271AAB of the Act,

but it is defined in Section 158B(b) of the Act. Section 158B(b) of

the Act reads as follows:-

“158B(b) “undisclosed income” includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act [ or any expense, deduction or allowance claimed under this Act which is found to be false].”

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in the Income-tax Act, 1961. Therefore, on the basis of material

found during the course of search operation, if the Assessing Officer

comes to a conclusion that the material found represents wholly or

partly of the assessee’s income, which would not have been

disclosed but for the purpose of search, may be construed as

undisclosed income. In this case, it is not the case of the Revenue

that any incriminating or other material was found during the course

of search operation which represents wholly or partly the

undisclosed income of the assessee. It is a definite case of the Revenue that the assessee offered an additional income of ₹50

Crores. Therefore, offer made by the assessee is not admitted on

the basis of any material or document, bullion, etc. Therefore, as

rightly found by the CIT(Appeals), this cannot be construed as

undisclosed income for the purpose of levy of penalty under Section

271AAB of the Act. Hence, the CIT(Appeals) has rightly deleted the

penalty levied by the Assessing Officer. This Tribunal do not find

any reason to interfere with the order of the lower authority and

accordingly the same is confirmed.

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Order pronounced in the court on 5th October, 2018 at Chennai.

sd/- sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद�य/Accountant Member �या�यक सद�य/Judicial Member

चे�नई/Chennai, �दनांक/Dated, the 5th October, 2018.

Kri. आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A)-18, Chennai-34 4. Principal CIT, Central-2, Chennai 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.