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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI RAMIT KOCHAR
सुनवाई क" तार"ख /Date of Hearing : 27-09-2016 घोषणा क" तार"ख /Date of Pronouncement : 07-11-2016 आदेश / O R D E R
PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee, being 6th November, 2012 passed by learned Commissioner of Income Tax (Appeals)- 23, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2006-07, the appellate proceedings before the learned CIT(A) arising from the penalty order dated 29th June, 2011 passed by the learned Assessing Officer (hereinafter called “the AO”) u/s 271(1)(c) of the Income-tax Act,1961 (Hereinafter called “the Act”).
ITA 1282/Mum/2013 2
The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the Tribunal”) read as under:-
“On the facts and in the circumstances of the case the learned Commissioner of Income Tax (A)- 23, Mumbai has erred in law in confirming the penalty levied of Rs. 3,13,540/- u/s 271(1)(c) by the A.O. “
The Brief facts of the case are that the assessee filed original return of income on 30th March, 2007 declaring total income of Rs. 1,63,557/- and subsequently filed another return of income on 15-01-2009 declaring total income of Rs.11,23,860/- . Since this return of income filed on 15-01-2009 was not filed u/s 139 of the Act , proceedings were initiated u/s 147 of the Act and at the time of completion of the assessment, penalty proceedings were initiated u/s. 271(1)(c) of the Act. On the basis of information received by the Investigation Wing that the assessee and family members were receiving funds mostly from three different persons namely, Shri Rohit Kapadia, , Ms. Neeta Jain & Shri Daulat Jain. Besides this the information was also received that there were substantial cash deposits in the said accounts which were subsequently transferred to the account of the assessee or his wife Smt. Sunita Kantilal Vardhan or daughter Ms. Ruchita Kantilal Vardhan. These bank accounts were not disclosed by the assessee to the Revenue. When confronted, it was accepted by the assessee that the assessee and family members were involved in purchase & sale of shares and profit from these transactions were not reflected in the regular returns of income filed with the Revenue. Therefore in order to pre-empt any action by the Revenue, the assessee had filed another return of income for assessment years 2004-05 to 2007-08 which return of income were not filed u/s 139 of the Act wherein the ITA 1282/Mum/2013 3 assessee had declared additional income over the income shown in the regular return of income filed with the Revenue. Since the another return of income was filed showing an additional income, details of undisclosed bank account and DEMAT accounts, subsequent to its detection by the Revenue, penalty proceedings were initiated by the AO u/s 271(1)(c) of the Act. Vide letter dated 29th January, 2011, it was stated by the assessee that he had committed certain mistakes in filing of return of income for the year and on realizing that income had escaped taxation for the year he consulted tax consultants and quantified his correct income for the year and paid self assessment tax of Rs. 4,59,660/- on 15th January, 2009. A revised return of income was filed on 15th January, 2009 declaring income of Rs.11,23,680/ - after paying the self assessment tax and thereafter the revised return of income was regularized by issue of notice u/s. 148 of the Act on 30th July, 2009. It was submitted that the assessee had voluntarily filed her revised return of income before the notice for re-opening of the assessment u/s 148 of the Act was sent to the assessee and that the assessment was completed accepting the returned income of income. It was submitted that there was no conscious or deliberate intention to conceal income or furnishing in-accurate particulars of income and hence no penalty u/s 271(1)(c) of the Act should be levied. The A.O. observed that another return of income was filed subsequent to the investigations made by the Department and detection of various evidences confirming the transactions, income from which was never disclosed to the Department. The various deposits below Rs.50,000 /- in cash were made so that no queries are raised and it was a conscious action . Smt. Sunita K. Vardhan, the wife of the assessee confirmed that the family members were involved in undisclosed share transactions. As such, the return of income filed subsequent to such detection cannot be considered to be a voluntary disclosure. It was further observed by the AO that in the instant case there was no disclosure in the original return of income filed and in the subsequent return of income was filed which was filed beyond the time ITA 1282/Mum/2013 4 prescribed u/s 139 of the Act and that too after finding of the Revenue that the assessee was involved in undisclosed share trading activity, hence, it cannot be considered to be voluntary and sufficient compliance of law so as not to attract the penalty action u/s 271(1)(c) of the Act. Thus, the AO held that the assessee has concealed the particulars of income and deliberately furnished inaccurate particulars of income and is liable for penalty u/s 271(1)(c) of the Act. Thus minimum penalty @ 100% being Rs. 3,13,540/- was levied u/s 271(1)(c) of the Act for not only furnishing inaccurate particulars of income but also concealing correct taxable income to the extent of Rs.9,60,303/- , vide penalty orders dated 29-06-2011 passed by the AO u/s. 271(1)(c) of the Act.
Aggrieved by the penalty order dated 29-06-2011 passed by the A.O. u/s 271(1)(c) of the Act , the assessee preferred first appeal before the learned CIT(A).
Before the ld. CIT(A) , the assessee submitted that there was some mistake committed by the assessee in the return of income filed with the Revenue and the revised return of income was filed on 15-01-2009 by the assessee declaring correct income of Rs.11,23,860/- after paying self assessment tax of Rs. 4,59,660/- on 15-01-2009 , which return of income was subsequently regularized by the Revenue by issue of notice u/s 148 of the Act on 30-07-2009. The assessee submitted that the assessee has voluntarily filed revised return of income before issue of notice u/s. 148 of the Act for re-opening of the assessment. The assessee submitted detailed explanation while contentions of the assessee were not agreed by the AO and penalty of Rs. 3,13,540/- was levied by the AO u/s 271(1)(c) of the Act. In the assessment completed, the returned income of the assessee at Rs. 11,23,860/- has been accepted by the Revenue. The assessee submitted that there is no finding in the assessment completed by the Revenue that there is ITA 1282/Mum/2013 5 concealment of income by the assessee. The assessee submitted that it accepted the assessment framed by the Revenue in quantum proceedings and no appeal was filed against the assessment order in quantum. The assessee has relied upon several case laws vide submissions before the learned CIT(A). The ld. CIT(A) observed that assessee had filed the initial return of income dishonestly with a view to conceal the income and the revised return was filed out of compulsion i.e. after having been found by the Revenue that the assessee had concealed the income which was on the basis of investigation conducted by the Revenue , unearthing incriminating documentary evidences / material in respect of undisclosed share transactions of the assessee. The ratio of decisions cited by the assessee is not applicable to the facts of the assessee’s case. The ld. CIT(A) distinguished the case laws relied upon by the assessee vide his appellate orders dated 06-11-2012 and accordingly confirmed the penalty of Rs. 3,13,540/- levied by the A.O. as it was held by learned CIT(A) that it cannot be said that the disclosure of additional income in ‘revised return’ after the same was detected by the Revenue and that the omission in the original return of income was due to any bonafide mistake or inadvertence on the part of the assessee.
Aggrieved by the appellate order dated 06-11-2012 of the ld. CIT(A), the assessee is in appeal before the tribunal.
The ld. Counsel for the assessee , at the outset, submitted that the A.O. has levied the penalty of Rs.3,13,540/- against the assessee u/s 271(1)(c) of the Act. It is submitted that on similar circumstances, the Tribunal in ITA No. 6181/Mum/2012 & ITA No. 6182/Mum/2012 for assessment years 2004-05 to 2006-07 vide orders dated 23rd December, 2015 in the case of assessee’s sister Smt Sunita K Vardhan in appeal before the Tribunal in Smt. Sunita K. Vardhan v. ITO ordered deletion of the penalty ITA 1282/Mum/2013 6 levied u/s 271(1)(c) of the Act. The co-ordinate benches of the tribunal in the afore-stated orders held as under:-
“We have considered the submissions of the parties and perused the material available on record. Undisputedly, the assessee in the present case, has filed a revised return of income offering additional income on her own before any notice was issued by the Department. However, it is the allegation of the Department that only because in an investigation conducted by the Department, it was found that assessee has not disclosed income from share transaction she was compelled to file return of income offering additional income. However, the validity of such allegation has to be examined on the basis of facts and material on record. It is the assertion of the assessee before us that the investigation done by the Department and information obtained in the form of bank statements, etc., are relating to assessment year 2007-08 and 2008-09 and as far as assessment years 2004-05 to 2006-07 are concerned, neither the Department has conducted any investigation nor there is any material before the Department to show undisclosed share transactions of the assessee. When the learned Departmental Representative was called upon to have his say on the aforesaid contention of the learned counsel, he agreed that the information obtained through investigation pertained to assessment year 2007-08 and 2008-09. Thus, this fact proves that as far as assessment year 2004-05 and 2006-07 are concerned, there are no material before the Department to indicate that assessee has not disclosed income from share transactions. Therefore, considered in the aforesaid context the explanation of the assessee that having become aware of the fact that income from share transaction have not been offered in these assessment years she voluntarily came forward to file revised return of income offering additional income appears plausible. It is also a fact on record that revised returns of income filed by the assessee are prior to issuance of any notice by the Department. It is also a fact to be taken note of that apart from the additional income offered in the revised return of income Department has not assessed any other income. In other words, the income offered in the revised return of income was accepted by the Department without any variation. It is pertinent to note here that in assessment years 2007-08 and 2008-09, wherein the Department was in possession of information regarding non-disclosure of income by the assessee from share transactions, the income declared by the assessee from such transaction in the revised return of income has ultimately been accepted by the Department in assessments completed under section 143(3) and assessee’s claim that no proceedings for imposition of penalty under section 271(1)(c) have been ITA 1282/Mum/2013 7 initiated remains uncontroverted by the Department. In the aforesaid facts and circumstances, in our opinion, it cannot be said that filing of revised return of income by the assessee offering additional income is not voluntary. Therefore, on consideration of overall facts and circumstances, we are of the view that there being no conscious or deliberate act on the part of the assessee to either conceal particulars of income or furnish inaccurate particulars of income imposition of penalty under section 271(1)(c) is uncalled for. The decision relied upon by the learned counsel also supports this view. As far as the decision of the Hon'ble Supreme Court in Mak Data Pvt. Ltd. (supra) is concerned, same is factually distinguishable. In case of Mak Data Pvt. Ltd. (supra), even after non-disclosure of income was detected by the Department, assessee did not voluntarily come forward to file any revised return of income offering additional income. Only in course of assessment proceedings on the basis of material obtained during survey when it was proved that assessee had not disclosed certain income, he came forward to offer additional income. Therefore, taking into consideration that fact, Hon'ble Supreme Court upheld imposition of penalty under section 271(1)(c). However, in the present case, undisputedly, assessee had filed return of income offering additional income voluntarily before issuance of any notice by the Department. It is also a fact that income offered in the revised return of income has been accepted by the Department. In these circumstances, in our view, imposition of penalty under section 271(1)(c) is not justified and, accordingly, the same is hereby deleted.
8. Facts being identical in the appeals for assessment years 2005- 06 and 2006-07, following our decision herein above, we delete the penalty imposed under section 271(1)(c) in these years also. Thus, ground raised by the assessee in these appeals is allowed.”
The ld. Counsel submitted that the matter is clearly covered by the above decision of the Tribunal in the case of the assessees’ sister and the Tribunal has deleted the penalty.
8. The ld. D.R. relied on the orders of authorities below.
We have considered the rival contentions and also perused the material available on record including the case laws relied upon. We have observed that as cited by the ld. Counsel for the assessee, on identical facts ITA 1282/Mum/2013 8 the Tribunal in the case of sister of the assessee Smt. Sunita K. Vardhan (supra) has deleted the penalty so levied by the A.O. u/s 271(1)(c) of the Act and as confirmed/ sustained by the ld. CIT(A) by holding as under:-
“We have considered the submissions of the parties and perused the material available on record. Undisputedly, the assessee in the present case, has filed a revised return of income offering additional income on her own before any notice was issued by the Department. However, it is the allegation of the Department that only because in an investigation conducted by the Department, it was found that assessee has not disclosed income from share transaction she was compelled to file return of income offering additional income. However, the validity of such allegation has to be examined on the basis of facts and material on record. It is the assertion of the assessee before us that the investigation done by the Department and information obtained in the form of bank statements, etc., are relating to assessment year 2007-08 and 2008-09 and as far as assessment years 2004-05 to 2006-07 are concerned, neither the Department has conducted any investigation nor there is any material before the Department to show undisclosed share transactions of the assessee. When the learned Departmental Representative was called upon to have his say on the aforesaid contention of the learned counsel, he agreed that the information obtained through investigation pertained to assessment year 2007-08 and 2008-09. Thus, this fact proves that as far as assessment year 2004-05 and 2006-07 are concerned, there are no material before the Department to indicate that assessee has not disclosed income from share transactions. Therefore, considered in the aforesaid context the explanation of the assessee that having become aware of the fact that income from share transaction have not been offered in these assessment years she voluntarily came forward to file revised return of income offering additional income appears plausible. It is also a fact on record that revised returns of income filed by the assessee are prior to issuance of any notice by the Department. It is also a fact to be taken note of that apart from the additional income offered in the revised return of income Department has not assessed any other income. In other words, the income offered in the revised return of income was accepted by the Department without any variation. It is pertinent to note here that in assessment years 2007-08 and 2008-09, wherein the Department was in possession of information regarding non-disclosure of income by the assessee from share transactions, the income declared by the assessee from such transaction in the revised return of income has ultimately been accepted by the Department in assessment s ITA 1282/Mum/2013 9 completed under section 143(3) and assessee’s claim that no proceedings for imposition of penalty under section 271(1)(c) have been initiated remains uncontroverted by the Department. In the aforesaid facts and circumstances, in our opinion, it cannot be said that filing of revised return of income by the assessee offering additional income is not voluntary. Therefore, on consideration of overall facts and circumstances, we are of the view that there being no conscious or deliberate act on the part of the assessee to either conceal particulars of income or furnish inaccurate particulars of income imposition of penalty under section 271(1)(c) is uncalled for. The decision relied upon by the learned counsel also supports this view. As far as the decision of the Hon'ble Supreme Court in Mak Data Pvt. Ltd. (supra) is concerned, same is factually distinguishable. In case of Mak Data Pvt. Ltd. (supra), even after non-disclosure of income was detected by the Department, assessee did not voluntarily come forward to file any revised return of income offering additional income. Only in course of assessment proceedings on the basis of material obtained during survey when it was proved that assessee had not disclosed certain income, he came forward to offer additional income. Therefore, taking into consideration that fact, Hon'ble Supreme Court upheld imposition of penalty under section 271(1)(c). However, in the present case, undisputedly, assessee had filed return of income offering additional income voluntarily before issuance of any notice by the Department. It is also a fact that income offered in the revised return of income has been accepted by the Department. In these circumstances, in our view, imposition of penalty under section 271(1)(c) is not justified and, accordingly, the same is hereby deleted.
Facts being identical in the appeals for assessment years 2005- 06 and 2006-07, following our decision herein above, we delete the penalty imposed under section 271(1)(c) in these years also. Thus, ground raised by the assessee in these appeals is allowed.”
Respectfully following the decision of the co-ordinate Bench of this Tribunal in assessee’s sister case in Sunita K. Vardhan(supra) wherein facts are identical as in the assessee’s case, we order deletion of the penalty of Rs. 3,13,540/- levied by the A.O. u/s 271(1)(c) of the Act and allow the appeal filed by the assessee. We order accordingly.
ITA 1282/Mum/2013 10
In the result, the appeal filed by the assessee in 2006-07 is allowed.