VIKRAM TANNAN,MUMBAI vs. ASST CIT CEN CIR 20, MUMBAI

O R D E R PER RAM LAL NEGI, JM These appeals filed by the assessee are directed against the three orders dated 16.10.2015, 16.10.2015 and 18.11.2015 passed by the Ld. Commissioner of Income Tax (Appeals)-51, Mumbai, for the assessment years 2009-2010, 2010-11 and 2011-2012 respectively, whereby the Ld. CIT (A) has dismissed all the three appeals filed by the assessee against penalty orders passed by the AO u/s 271 (1)(c) of the Income Tax Act, 1961 (for short ‘the Act’). Since, all the three appeals pertain to the same assessee for different assessment years and the issues involved in all the appeals are similar, the same were clubbed, heard together and are being disposed of by this common order for the sake of convenience. Assessment Years: 2009-10, 2010-11 & 2011-12 2. Brief facts of the case are that a search u/s 132 of the Act was conducted on the Universal Medicare Group and other group concerns and individuals. The assessee Director of the Universal Group was covered under search and seizure action. Accordingly, notice u/s 153 was issued and served upon the assessee. In response thereof the assessee filed return of income declaring the total income of Rs. 6,85,06,800/- and exempt income of Rs. 5,51,26,023/- as against the original return of income at Rs. 6,66,11,691/-, current loss of Rs. (-) 92,60,436/-. The assessment u/s 153A read with section 143 (3) was completed on 31.03.2014 determining the total income at Rs. 6,85,06,800/- after making addition of Rs. 15,38,500/- made on account of income from salary and Rs. 3,56,612/- income from other sources.

3. Penalty proceedings u/s 271 (1) (c) of the Act was initiated for concealing income of Rs. 18,95,112/-. After hearing the contention of the assessee, the AO imposed penalty to the tune of Rs. 13,00,000/- i.e. more than 200% of the tax sought to be evaded after obtaining approval from the competent authority. The assessee challenged the said order by filing appeal before the CIT (A). The Ld. CIT (A) after hearing the assessee dismissed the appeal and confirmed the penalty levied by the AO. The assessee is in appeal before the Tribunal against the said order raising the following effective grounds of appeal:-

1. “The learned Commissioner of Income Tax (Appeals) erred in upholding the Assessing Officer’s action of levying penalty of Rs. 13,00,000/- u/s 271 (1)(c) of the Income Tax Act, 1961 (‘Act’), in respect of income of Rs. 18,95,112.

2. The learned Commissioner of Income Tax (Appeals) erred in disregarding the fact that the appellant had suo moto offered income of Rs. 18,95,112 to tax in the return of income filed under section 153A, Assessment Years: 2009-10, 2010-11 & 2011-12 which was missed out in the return of income filed under section 139 (1) due to genuine oversight, and there was neither deliberate omission nor furnishing of any inaccurate particulars on the part of the appellant.

3. The learned Commissioner of Income Tax (Appeals) erred in holding that the appellant committed deliberate act of furnishing inaccurate particulars of income.

4. The penalty of more than 200% of alleged amount of tax evaded was excessive and not justified.”

4. Before us, the Ld. counsel for the assessee submitted that there was no basis for issuing notice u/s 153A and as per the law laid down by the Hon’ble Bombay High Court in CIT vs. Gurinder Singh Baba 386 ITR 483 proceedings u/s 153A are bad and without jurisdiction as no assessments were pending at that time and no incriminating evidence was found during search. The Ld. counsel further submitted that since the appellant/assessee has suo moto offered income of Rs. 18,95,112/- to tax in the return of income filed u/s 153A, which had been missed out due to oversight, the Ld. CIT (A) ought to have allowed the appeal of the assessee. In any case penalty of more than 100% of the alleged amount of tax evaded was excessive and not justified.

5. On the other hand, the Ld. Departmental Representative (DR) relying on the orders passed by the authorities below submitted that the Ld. CIT (A) has rightly dismissed the appeal of the assessee and confirmed the penalty as the assessee has deliberately concealed his income from salary. Even if, it is assumed that no specific evidence was found during search showing the salary income in question of the assessee, the same could have been detected during the post search investigation. The assessee offered interest income only after the Foreign Bank Accounts details were found during the course of search. It is in the same foreign bank account that the salary in question was credited. Assessment Years: 2009-10, 2010-11 & 2011-12

In this case, the AO levied penalty of Rs. 5,00,000/- u/s 271 (1) (c) of the Act in respect of income of Rs. 2,45,439/- interest income from foreign bank accounts and Rs. 4,89,739/- excess of travellers cheques deposited in foreign bank account. The assessee challenged the action of the AO by filing appeal before the CIT (A). The Ld. CIT (A) after hearings the assessee affirmed the action of the AO and dismissed the assessee’s appeal.

2. The assessee has challenged the impugned order before the Tribunal by raising the following effective grounds of appeal:-

1. “The learned Commissioner of Income Tax (Appeals) erred in upholding the Assessing Officer’s action of levying penalty of Rs. 50,00,000/- u/s 271 (1)(c) of the Income Tax Act, 1961 (‘Act’), in respect of income of Rs. 7,35,178.

2. The learned Commissioner of Income Tax (Appeals) erred in disregarding the fact that the appellant had suo moto offered income of Rs. 7,35,178 to tax in the return of income filed under section 153A, which was missed out in the return of income filed under section 139 (1) due to genuine oversight, and there was neither deliberate omission nor furnishing of any inaccurate particulars on the part of the appellant.

3. The learned Commissioner of Income Tax (Appeals) erred in holding that the appellant committed deliberate act of furnishing inaccurate particulars of income.

4. The penalty of more than 200% of alleged amount of tax evaded was excessive and not justified.”

3. So far as the income from foreign bank account amounting to Rs. 2,45,439/- is concerned, we have already decided this issue against the assessee in assessee’s own case for the A.Y. 2009-10 discussed above. We therefore, hold that the assessee is liable for penalty u/s 271 (1) (c) for concealing the particulars of income earned as interest from foreign bank Assessment Years: 2009-10, 2010-11 & 2011-12 accounts. As regards, second issue pertaining to excess of traveller cheques the contention of the assessee cannot be accepted that due to oversight this income could not be brought to tax and that the assessee had suo moto offered income of Rs. 7,35,178/- to tax in the return of income filed u/s 153A of the Act. The contention of the assessee that the said income was not brought to tax under the impression that this amount was not liable to tax being the nature of reimbursement of expenses. The traveller cheques were given by the company for expenses to be incurred by the assessee in the overseas trips. The assessee deposited the unused cheques in his personal accounts in foreign bank. Since, the company had claimed the entire expenditure as business expenses, the assessee was under obligation to declare the said income in the return. Since, the assessee declared the said income at the time of filing return u/s 153A, we are of the considered opinion that the assessee has concealed the particulars of income in its return filed u/s 139 (1) of the Act. Therefore, he is liable for penalty u/s 271 (1) (c). So far as the amount of penalty is concerned, we are of the considered view that penalty of more than 200% of the total amount of tax sought to be evaded is excessive and not justified. We therefore, modify the impugned order passed by the Ld. CIT (A) and direct the AO to compute the amount of penalty @ 100% of the total amount sought to be evaded by the assessee by furnishing inaccurate particulars of income. The facts of this appeal are identical to the facts of the assessee’s own case for the A.Y. 2010-11 discussed above except the amount of income disclosed by the assessee in return of income filed u/s 153A. The Ld. CIT (A) confirmed the penalty imposed by the AO u/s 271 (1)(c) of the Act.

1. “The learned Commissioner of Income Tax (Appeals) erred in upholding the Assessing Officer’s action of levying penalty of Rs. 3,00,000- u/s 271 (1)(c) of the Income Tax Act, 1961 (‘Act’), in respect of income of Rs. 5,16,416.

2. The learned Commissioner of Income Tax (Appeals) erred in disregarding the fact that the appellant had suo moto offered income of Rs. 5,16,416 to tax in the return of income filed under section 153A, which was missed out in the return of income filed under section 139 (1) due to genuine oversight, and there was neither deliberate omission nor furnishing of any inaccurate particulars on the part of the appellant.

3. The learned Commissioner of Income Tax (Appeals) erred in holding that the appellant committed deliberate act of furnishing inaccurate particulars of income.