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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI I.C.SUDHIR & SHRI PRASHANT MAHARISHIDr. Sanjay Chugh,
O R D E R PER PRASHANT MAHARISHI, A. M.
This is an appeal filed by the assessee against the order of the ld CIT(A)- XXVIII, New Delhi dated 23.11.2007 for the Assessment Year 2004-05.
The assessee has raised the following grounds of appeal:- “That on the facts and in the circumstances of the case and in law, the ld CIT(A) erred in holding the appellant guilty of contravening the provisions envisaged in Section 271(1)(c) of the Income Tax Act, 1961, 1961 and consequently sustaining the penalty levied in a sum of Rs. 723673/-.”
This appeal has been remitted back by the Hon’ble Delhi High Court in of 2009 by the order dated 26th of June 2009. The Hon’ble high court wide para No. 17 of the order has held that that the tribunal, while examining the issue on remand will take into consideration the evidences placed by the revenue as well as the contention of the respondent assessee that the evidence found during the survey or the evidences placed on record do not justify any enhancement calculation and that income of Rs. 12,000 per day is just an estimate without basis of foundation and is not supported by any material. The Hon’ble high court clarified that the observation made in the order of the Hon’ble high court for the purpose of disposal of the Page 2 of 7 present appeal and the tribunal will independently apply its mind to all factual issues and contentions. Therefore in view of the direction of the Hon’ble high court this issue is required to be decided afresh.
The assessee is a doctor and practicing psychiatrist at New Delhi. During the year under consideration the assessee has shown the gross professional receipt of Rs. 3203134 and declared that profit of Rs. 2344629, as per profit and loss account filed with the return of income of the assessee. The assessee filed its return of income declaring total income of Rs. 303750/- on 01/11/2004. Subsequently the survey under section 133A of the income tax act, 1951 of conducted on the business premises of the assessee on 16/12/2004. Subsequent to the survey. The original return of income filed by the assessee on 01/11/2004 at Rs. 3 03750 was revised on 14/01/2005 where the total income declared was Rs. 2 496700/–. The total income was assessed on the same income, which was revised by the assessee after the date of survey. However, the penalty proceedings under section 271 (1) © of the income tax act was initiated.
During the course of survey various papers were impounded and during the course of survey. It was revealed that the average professional receipts of the assessee are approximately Rs. 12,000 per day, which is not reflected in the profit and loss account filed by the assessee along with the original return of income. Therefore, during the course of survey White statement regarding surrender of income on 18/12/2004 the assessee surrendered Rs. 60 lakhs for to assessment year 2004 – 05 and 2005 – 06. In the original return of income. The assessee is shown the professional receipt of Rs. 8 91287/– and syndication receipt of Rs. 5 9158/– and claim total expenditure of Rs. 5 28809/– resulting into the excess of income or expenditure of Rs. 4 21653/–. However, pursuant to the survey the professional receipts of the assessee was disclosed at Rs. 2 903976/–, syndication receipt of Rs. 5 9158/– and professional receipt of Rs. 2 Lacs 40,000/–. Further, the total expenditure of the assessee was also reminded Rs. 8 58505/– resulting into the excess of income or expenditure of Rs. 2 3446 2 8/–. Therefore, the contention of the Ld. assessing officer was that that the Rs. 2252689/- was shown any increase in the income of the assessee. Pursuant to the revised return filed further after the date of survey operation. Consequent to that the notice under section 271 (1) © of the act Page 3 of 7 was issued on 18/12/2006, where the assessee submitted that assessee has disclosed the above sum to buy the peace and with a precondition that no penalty interest would be levied upon the assessee upon such surrender. However, the Ld. assessing officer rejected the contention of the assessee and levied a penalty of Rs. 7 23673 on total concealment of income of Rs. 2 192950/–.
6. The assessee aggrieved with the order of the Ld. assessing officer preferred an appeal before the Ld. CIT (A) who confirmed the penalty. Therefore, assessee filed appeal before us. The coordinate bench wide order dated 26/06/2009 deleted the penalty allowing the appeal of the assessee for the reason that though the assessing officer has attempted to work out the income of the assessee at Rs. 12,000 daily receipt for to written 61 days, that is only an estimate which does not match with the income declared by the assessee. On the facts and circumstances of the case in the opinion of the coordinate bench the surrender by the assessee was before any detection or investigation done by either the survey Timor the assessing officer. It was further held by the coordinate bench that it was also not based on any record found during the search. Therefore, we fact that there is been a survey under section 133A, without any material on record justify the existence of concealment of income the penalty for concealment cannot be levied if the assessee surrenders the income before the assessing officer. Therefore, the coordinate bench held that levy of penalty in the aforesaid facts and circumstances of the case are not justified.
Revenue aggrieved with the order of the coordinate bench preferred the appeal before the Hon’ble high court wherein Hon’ble high court was pleased to remand the matter back to the file of the tribunal.
Ld. authorized representative before us submitted the same arguments, which were earlier placed before the coordinate bench as well as before the lower authorities. It was the claim of the Ld. authorized representative that the assessee has offered the income on the basis of the estimate and there were no records available with the revenue. He further submitted that before the detection the assessee has filed a revised return, which was voluntarily in nature. He further submitted that the papacy bounded were pertaining to the assessment year 2002 and not to assessment year 2004 2005 for which the impugned penalty has been levied and therefore from the earlier years Page 4 of 7 paper, the penalty cannot be levied on the assessee were this year. He further referred to the copy of the statement given by the assessee at the time of survey. He further referred to the impounded pages of the diaries which were pertaining to 2002. He further referred to the issue that there was no detection by the revenue officers because the 1st notice was issued on 05/01/2005 and immediately on receipt of the notice without asking any question the assessee has filed return of income on 14/01/2005 revising its earlier income. He therefore submitted that the disclosure’s voluntary nature. He further referred to the assessment order of the assessee for that year wherein there was no incriminating metal found during the course, which were disclosed in the assessment order because of that income has been enhanced by the assessee. He submitted that there is no material available with the revenue. It is voluntarily disclosed by the assessee. He further submitted that it is merely in estimated there is no material available with the revenue, which can justify the above estimate of rupees Rs. 12,000 per day of professional fees. Therefore he submitted that the penalty levied by the Ld. assessing officer is against the principle of natural Justice and also against the principle of estoppel when the disclosure has been made by the assessee under the pretext and assurance that no penalty would be levied.
Ld. departmental representative vehemently submitted that when the assessee has disclosed the income in the revised return, but not in the original return and that too after the detection therefore the assessee is liable for the penalty. He further submitted that the authorities of the Ld. CIT appeal as well as the Hon’ble high court have held that the assessee is liable for penalty.
We have carefully considered the rival contentions. Admittedly, the assessee has disclosed the additional income in its return of income only after the survey was carried out by the revenue authorities. The identical the identical question before the Hon’ble Gujarat High Court in case of CIT versus Girish Devcahnd Rajani in ITA number of 13 of 2013 dated 18/03/2013 wherein Hon’ble Gujarat High Court held as under:-
“Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') dated August 03, 2012. The following questions have been presented for our consideration :
Page 5 of 7 (a) Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal is right in deleting the penalty levied by the Assessing officer levied by the u/s.271(1)(c) of the Act amounting to Rs.1261050/- ? (b) Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal has failed to appreciate the fact that the assessee filed revised return only after the case was selected for scrutiny and after issue of a questionnaire and as such, the additional income disclosed by the assessee in revised return was not voluntary ?
Issue pertains to penalty of Rs.12.61 lac (rounded off) imposed by the Assessing Officer, which came to be deleted by the Commissioner of Appeals and which order came to be upheld by the Tribunal. Briefly stated the facts are that the assessee for the assessment year 2005-06 had filed his original return of income declaring total income of Rs.5.96 lac (rounded off). During the course of assessment under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), the assessee filed revised return and declared further income of Rs.37 lac. Upon completion of the assessment proceedings, the Assessing Officer initiated penalty proceedings for such additional income of Rs.37 lac disclosed by the assessee in the revised return. The Assessing Officer holding that the assessee had furnished inaccurate particulars of his income to the tune of Rs.37 lac imposed penalty at the rate of 100% of the tax sought to be avoided under Section 271(1)(c) of the Act and quantified the same at Rs.12.61 lac.
Assessee carried the penalty order in appeal. CIT (Appeals) deleted the penalty making following observations :
7. In the instant case, on perusal of facts, I find that the appellant had filed his original return of income on 31.10.2005 declaring total taxable income of Rs.5,96,580 and also filed revised return of income on 01.02.2007 declaring total taxable income of Rs.42,96,580/-. The revised return filed by the appellant was within the time limit prescribed u/s.139(5) of the Act. I am of the view that liability to penalty u/s.271(1)(c) and filing of revised return u/s.139(5) are mutually exclusive. If a case falls within the scope of section 139(5), there would be no chance for levy of penalty u/s. 271(1)(c) on the basis of original return. This view has been confirmed by Madras High court in case of CIT v. J.K.A. Subramania Chettiar (110 ITR 602). The similar view has been taken by P & H High Court in case of CIT v. Gururam Das Fruit and Vegetable Agency (254 ITR 361) wherein it was held that where the assessee has filed revised return disclosing his entire income and paid taxes thereon before the issuance of notice u/s.148, no penalty u/s.271(1)(c) is leviable. The jurisdictional high court in case of CIT Vs. Shankerlal Nebhmal Uttamchandani 311 ITR 327 (Guj.) has held that revised return filed before the detection of concealment, in such case no penalty is leviable. Respectfully following above decision & in view of the above discussion, the penalty levied by the AO of Rs.12,61,050/- is hereby ordered to be cancelled.
The Revenue carried such order of CIT (Appeals) before the Tribunal. The Tribunal by the impugned judgment rejected Revenue's appeal. The Tribunal made the following observations :
Having heard the ld.D.R., we have carefully gone through the orders of authorities below. The assessee before the AO has submitted that to buy peace as assessee was disturbed after death of his brother and to avoid any protracted litigation with the department he opted filing revised return of income on 1st February, 2007 by offering further income of Rs.37,00,000/- over and above income offered in the original return of income. This covers loan taken by him from various persons of Rs.19,00,000/- as well as further amount to cover error of omission and commission and other discrepancy if any. The reason given for filing revised return was that most of the business was looked after by his brother who was in a position to comply with the details and since he was no more in this world, he opted to file revised return. Looking to these facts, we convinced that ld.CIT(A) is legally and factually correct in canceling the penalty of Rs.12,61,050/- levied by AO u/s.271(1)(c) of the I.T. Act, 1961. Consequently, we decline to interfere.
Having heard the learned counsel for the Revenue, having perused the orders on record, we see no reason to interfere. The Tribunal had come to the conclusion that the assessee to buy peace and being disturbed by the death of his brother, to avoid protracted litigation filed the revised return and disclosed additional income. Such additional disclosure of Rs.37 lac included loans taken from various persons totalling to Rs.19 lac and to cover error of omission and commission, if any. Reason for filing revised return was shown to be that the business was Page 6 of 7 substantially looked after by the brother, who would have been in a position to comply with the details. In his absence, such details would not be easily available and it was, therefore, that the assessee opted to file the revised return. In our view, the Tribunal having appreciated the relevant facts in its proper perspective and having considered the various decisions, committed no error in deleting the penalty. We additionally notice that this Court in the case of Commissioner of Income-Tax v. Shankerlal Nebhumal Uttamchandani, reported in 311 ITR 327, had held that when during the course of assessment proceedings, there was detection of undisclosed income before filing of the revised return, the Tribunal correctly deleted the penalty. This Court made the following observations in this regard : 11. As noted hereinbefore, the Tribunal has in terms found that though certain queries were raised and put to the assessee there was no specific pin pointing of particular items of income which have been concealed by the assessee. The Tribunal has found, as a matter of fact, that till 31.3.1989 the process of detection was not complete, the date 31.3.1989 being the date of filing of revised returns. In face of these findings recorded on the basis of evidence appreciated by the Tribunal, the Court does not find it necessary to deal with any other issues considering the question referred for the opinion of this Court. In fact, there is no material on record to indicate that the aforesaid finding of the Tribunal is incorrect in any manner whatsoever. Furthermore, the Tribunal has also noted as a matter of fact that the very same amounts standing to the credit of the bank accounts of various family members had already been assessed by the departmental authorities along with interest in the hands of the family members and it was also an admitted position that those family members have nowhere admitted that the family members were benamidars of the assessee. In the present case also, it is not the case of the Revenue that the assessee filed revised return since some of the details of inaccurate particulars of the income were detected by the Assessing Officer during the course of assessment. In our opinion, the Tribunal therefore committed no error. We may, however, clarify that we should not be seen to have approved the observation of the CIT (Appeals) to the effect that once the revised return was filed within the time limit prescribed under Section 139(5) of the Act, there could be no penalty because the liability to penalty and filing of the revised return are mutually exclusive and that if the case falls within the scope of Section 139(5) of the Act, there would be no chance of levying penalty underSection 271(1)(c) of the Act on the basis of the original return. We may examine such a question in future when such a situation presents before us.”
In the present case also, the assessee has furnished original return of income on 01/11/2004 and revised return was also filed on 14/01/2005 on which the Ld. assessing officer has accepted the same and acted upon the same. Therefore, facts of the present case also fall on the similar lines on the issue decided by Hon’ble Gujarat High Court. Therefore, respectfully following the decision of the Hon’ble Gujarat High Court on the above issue we direct the Ld. assessing officer to delete the penalty of Rs. 7 23673/– on this count too.
Even on the other aspect of the penalty. It is apparent that the disclosure was made by the assessee based on the diary of year 2002. There were no incriminating material is found during the course of survey in that particular diary about the name of the patient or the fees charged from them. Further, the list of precedents for the year. Posted related and the assessee has given answer with respect to each of one stating that most of the details of the visits of those passions are pertaining to earlier years and