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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RAMIT KOCHAR
सुनवाई क� तार�ख /Date of Hearing : 28-04-2016 घोषणा क� तार�ख /Date of Pronouncement : 13-07-2016 आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the assessee , being 08-01-2009 passed by learned Commissioner of Income Tax (Appeals)- XVI, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2002-03, the appellate proceedings before the learned CIT(A) arising from the penalty order dated 26-02-2007 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 2553/Mum/2009 2
The grounds of appeal raised by the assessee in memo of appeal filed before the Income Tax Appellate Tribunal, Mumbai (hereinafter called “the Tribunal”) read as under:-
“1. The Ld CIT(A) erred in disregarding the facts of the case & confirmed the order levying penalty u/s 271(1)(c) of the Income Tax Act, 1961.”
The brief facts of the case are that in this case DGIT (Inv.), Mumbai had received the information from Pune Directorate regarding bogus gifts taken by the Shah group during the course of search in the month of October, 2002. There were many beneficiaries of the said bogus gifts. The Pune Directorate had identified the beneficiaries of these bogus gifts of Mumbai region and the assessee is one of the beneficiaries who had received Rs. 5 lacs.
On the basis of the information received, the assessee’s case was reopened u/s 147 of the Act by recording of reasons for re-opening the assessment u/s. 147 of the Act , and notice u/s. 148 of the Act dated 14.07.2005 was issued to the assessee. The assessment was completed by the AO u/s 143(3) r.w.s. 147 of the Act vide assessment orders dated 28th August, 2006 whereby the said amount of Rs.5,00,000/- of gift received by the assessee and Rs.33/- being interest on saving bank account was brought to tax by the Revenue , albeit the assessee had already filed revised return of income with the Revenue on 21-10-2004 i.e. prior to issue of notice u/s 148 of the Act on 14- 07-2005 whereby the said amount of Rs.5,00,000/- was disclosed as miscellaneous income under the head ‘income from other sources’ and due taxes paid to the Revenue , as it was held by the AO in the assessment orders dated 28-08-2006 u/s 147 r.w.s. 143(3) of the Act that the aforesaid additional income has not been offered voluntarily by the assessee and the revised return was filed only after the assessee was cornered as the same was detected by the Revenue during searches on Shah Group in October 2002 , that the assessee was one of the recipient beneficiary of bogus gift of ITA 2553/Mum/2009 3 Rs.5,00,000/-. Consequently, the AO initiated penalty proceedings u/s 271(1)(c) of the Act against the assessee.
The assessee submitted in penalty proceedings that he has filed revised return of income on 21st October, 2004 wherein the amount of Rs.5,00,000/- was declared as miscellaneous income under the head ‘income from other sources’ and the due taxes has been duly paid to the Revenue and thus there was no concealment of income , and hence penalty u/s 271(1)(c) of the Act cannot be imposed.
The AO rejected the contentions of the assessee and observed that there was a search on Shah group by Pune Directorate in the month of October, 2002 wherein it was found that some of the beneficiaries have received bogus gifts. The name of the assessee as beneficiary of bogus gift of Rs. 5,00,000/- was there in the list prepared by Pune Directorate for Mumbai region . The assessee had filed revised return on 1st August, 2004 ( correct date as per claim of the assessee is 21-10-2004) wherein he had offered the said sum of Rs. 5 lacs as miscellaneous income under the head ‘income from other sources’ and paid due taxes to the Revenue. During the assessment proceedings u/s 147 read with Section 143(3) of the Act, it was held by the AO that the assessee failed to produce any explanation or details or any documentary evidence to prove the genuineness of the miscellaneous receipt amount of Rs. 5 lacs by the assessee and hence the A.O. treated the same as the assessee’s income from undisclosed sources u/s 68 of the Act. The AO observed that the assessee filed his revised return of income only after the same was detected by the Revenue and it was not a voluntary declaration by the assessee. The assessee has also not filed appeal against the quantum assessment order u/s 143(3) read with Section 147 of the Act of the Act, although no separate addition was made to the income declared in the revised return of income filed with the Revenue. The A.O., however, treated the ITA 2553/Mum/2009 4 additional income as concealed income and thus penalty of Rs. 1,45,089/- u/s 271(1)(c) of the Act was levied by the A.O. vide penalty orders dated 26- 02-2007 passed u/s 271(1)(c ) of the Act.
Aggrieved by the penalty order of the A.O. dated 26-02-2007 passed u/s 271(1)(c) of the Act, the assessee filed his first appeal before the learned CIT(A).
Before the learned CIT(A), the assessee reiterated the same submissions what were made before the A.O. and submitted that the assessee has filed his original return on 23rd July, 2002 and the revised return on 21st October, 2004. The additional income of Rs.5,00,000/- was duly offered by the assessee in the revised return of income filed on 21st October, 2004 as miscellaneous income under the head ‘income from other sources’ and due taxes were also paid to the Revenue. The notice u/s 148 of the Act was issued on 14-07-2005 which is subsequent to the filing of revised return by the assessee on 21-10-2004.
The contention of the assessee was not acceptable to the learned CIT(A). The learned CIT(A) held that the reason behind the filing of revised return of income on 21-10-2004 was the search conducted by the Directorate of Investigation in Shah group of cases in October 2002, whereby it was detected that the Shah Group has received bogus gifts. The assessee is also beneficiary of bogus gift of Rs.5,00,000/- as per the list prepared by Pune Directorate for Mumbai region. The assessee has not declared the said income by way of bogus gift of Rs.5,00,000/- in his original return of income filed on 23-07-2002 u/s 139(1) of the Act, whereby returned income was Rs.1,00,820/-. Therefore, the submission of the assessee that he filed revised return of income suo motu does not appear to be correct and the assessee filed revised return of income after detection by the Revenue during course of ITA 2553/Mum/2009 5 search on Shah group in October 2002. Accordingly the learned CIT(A) confirmed the penalty levied by the A.O. u/s 271(1)(c) of the Act, vide appellate orders dated 08-01-2009.
Aggrieved by the appellate orders dated 08-01-2009 passed by the learned CIT(A), the assessee is in appeal before the Tribunal.
The ld. Counsel for the assesse submitted that the assessee has filed revised return on 21st October, 2004 whereby income of Rs 5,00,000/- being gift received was declared in the revised return of income as miscellaneous income under the head ‘income from other sources’ and due taxes paid to Revenue, which is prior to the issue of notice u/s 148 of the Act i.e. on 14th July, 2005. The revised return of income filed by the assesse was accepted by the Revenue. The search was conducted by the Directorate of Investigation in Pune in the case of Shah Group in the month of October, 2002 and later on revised return was filed on 21st October, 2004 whereby the assessee declared the gift of Rs. 5 lacs as miscellaneous income under the head ‘income from other sources’. Taxes were duly paid to the Revenue by the assessee before filing of revised return of income on this income of Rs.5,00,000/- declared as miscellaneous income under the head ‘income from other sources’. It is submitted that the revised return of income filed by the assessee on 21-10- 2004 was also submitted as return of income in pursuance to notice u/s 148 of the Act. The said return of income is accepted by the Revenue while framing assessment orders dated 28-08-2006 passed u/s 147 read with Section 143(3) of the Act. Hence, the ld. Counsel prayed that no tax has been evaded by the assessee as there is no concealment of income u/s 271(1)(c) of the Act and no penalty can be levied.
The ld. D.R., on the other hand, relied upon the orders of the learned CIT(A).
ITA 2553/Mum/2009 6
We have considered the rival contentions and also perused the material available on record including case laws relied upon. We have observed that the assessee has filed his original return of income with the Revenue for the impugned assessment year on 23rd July, 2002 u/s 139(1) of the Act whereby the income declared was Rs. 1,00,820/-. There was a search operation u/s 132(1) of the Act conducted by Pune Directorate in the case of Shah Group in the month of October, 2002. It was found by the Revenue during the searches that the said Shah group has received bogus gifts , and it was revealed that the assessee is also one of the beneficiary of bogus gifts of Rs.5,00,000/- . The list was prepared by Pune Directorate for Mumbai region consequent to the search on Shah Group in October 2002 and the assessee’s name also figured in the said list being beneficiary of bogus gift received of Rs.5,00,000/- . Thus, as per list prepared by Pune Directorate, the assessee was beneficiary of gift of Rs. 5,00,000/- as detected by Revenue. Post search operations in October 2002 on Shah Group, the assessee filed his revised return on 21-10-2004 (copy of the acknowledgement of revised return is placed in the file) whereby the so called bogus gift of Rs.5,00,000/- received by the assessee was surrendered by the assessee and declared in the revised return of income filed with revenue on 21-10-2004 as miscellaneous income under the head ‘income from other sources’. We have observed that the assessee has filed his revised return of income on 21-10-2004 which is beyond the prescribed time limit as stipulated u/s 139(5) of the Act and the said revised return of income shall be deemed to be a non-est return of income being non-existent in the eyes of law. The Revenue recorded reasons for re-opening being receipt of bogus gifts of Rs.5,00,000/- by the assessee during the relevant previous year and notice dated 14-07-2005 u/s 148 of the Act was issued to the assessee asking the assessee to file return of income in pursuance to notice u/s 148 of the Act. The said revised return which was filed by the assessee on 21-10-2004 was also submitted by the assessee ITA 2553/Mum/2009 7 before the Revenue to be treated as the return of income in pursuance of notice dated 14-07-2005 u/s 148 of the Act. Since the revised return of income filed on 21-10-2004 was filed beyond the period prescribed u/s 139(5) of the Act, the said revised return of income shall be deemed to be non-est and any disclosure made therein shall have no evidentiary value. The disclosure of the said bogus gift of Rs.5,00,000/- which was made by the assessee in the return of income filed in pursuance of notice dated 14-07- 2005 issued u/s 148 of the Act is post recoding of reasons by the Revenue about escapement of income to the tune of Rs.5,00,000/- being by virtue of bogus gifts received by the assessee detected pursuant to the searches conducted on Shah group on October 2002. The Revenue then processed the said return of income u/s 147/148 of the Act and passed assessment orders dated 28-08-2006 u/s 147 read with section 143(3) of the Act whereby returned income which , inter-alia, also consisted of surrendered income of Rs.5,00,000/- being receipt of bogus gift , was accepted by the AO. The assessee did not contest during the assessment proceedings about surrender of bogus gift of Rs.5,00,000/- as miscellaneous income under the head ‘income from other sources’ as no explanation whatsoever was submitted by the assessee about these alleged bogus gifts of Rs.5,00,000/- nor the assessee filed any appeal against the quantum assessment orders dated 28- 08-2006 u/s 147 read with Section 143(3) of the Act declaring the said income by the Revenue as not voluntary and unaccounted income of the assessee and the said quantum assessment order reached its finality. Thus keeping in view the factual matrix of the case, the revised return of income filed by the assessee on 21-10-2004 was not a voluntary act of the assessee rather when the assessee was cornered after detection by the Revenue during the course of searches on Shah group in October 2002, the said revised return probably was filed by the assessee on 21-10-2004 , albeit notice u/s 148 of the Act was issued by Revenue later on 14-07-2005 as per the facts as emerging from the records before us. The assessee did not offer any ITA 2553/Mum/2009 8 explanation whatsover about the surrender of the bogus gift of Rs.5,00,000/- during the assessment proceedings u/s 143(3) read with Section 147 of the Act nor any explanations with respect to these gift of Rs.5,00,000/- received by the assessee during relevant previous year were submitted during the penalty proceedings u/s 271(1)(c) of the Act . Even during the appellate proceedings with respect to levy of penalty u/s 271(1)(c) of the Act with the learned CIT(A) and even before us , no explanation with respect to the receipt of these gifts of Rs.5,00,000/- were furnished by the assessee. Thus keeping in view the explanation 1 to Section 271(1)(c) of the Act , the primary onus was on the assessee to offer explanation with respect to the receipt of gift of Rs.5,00,000/- while the assessee did not offer any explanations whatsover with respect to the receipt of these gifts of Rs.5,00,000/- during the relevant previous year and hence the assessee has rendered himself liable for penalty u/s 271(1)(c) of the Act. The assessee has relied upon the decisions of the Mumbai Tribunal in the case of Parinee Developers Private Limited v. ACIT in vide orders dated 11.09.2015 and also decision in the case of Prema Gopal Rao v. DCIT in ITA no 8653/Mum/2911 vide orders dated 07.01.2015 , with due respect, we would like to submit that the facts are completely distinguishable in these case vis-a-vis facts in the case of the assessee and these decisions are not relevant for deciding the levying of penalty against the assessee keeping in view facts and circumstances of the assessee’s case . The above cases deals with estimation of income or postponement of sale , change of method of accounting , change of head of income etc. but they did not deal with the case of bogus gifts which was admittedly declared as income by the assessee in revised return filed beyond the period stipulated u/s 139(5) of the Act , while the said bogus gifts were not declared as income in the original return of income filed u/s 139(1) of the Act. In the case of Prema Gopal Rao(supra) , the tax-payer filed revised return of income declaring long term capital gains after issuance of notice u/s 143(2) of the Act , the penalty was deleted because the AO in the notice did not ITA 2553/Mum/2009 9 specifically asked question about discrepancy in long term capital gains and hence it was held that the said discrepancy was not detected by the Revenue prior to filing of revised return of income which return was held to be voluntary but in the instant case under appeal there is detection by revenue authorities of the assessee being beneficiary of bogus gift of Rs.5,00,000/- consequent to searches on Shah group in October 2002 and lists were prepared by Pune directorate for Mumbai region whereby the assessee was listed as one of the beneficiary of bogus gift of Rs.5,00,000/- and the assessee filed revised return of income on 21-10-2004 declaring and surrendering Rs.5,00,000/- as miscellaneous income under the head ‘income from other sources’ in the said revised return of income which was filed beyond the prescribed time limit u/s 139(5) of the Act for filing revised return and was an invalid return being non-existent in the eyes of law. The assessee filing return in response to notice dated 14-07-2005 u/s 148 of the Act whereby the said gift of Rs.5,00,000/- was surrendered and offered as miscellaneous income was post recording of the reasons for re-opening and cannot be said to be voluntary act on the part of the assessee. In our considered view, the action of the A.O. in levying the penalty u/s 271(1)(c) of the Act of Rs. 1,45,089/- for concealment of income , which was later confirmed/sustained by the learned CIT(A) was quite justified and we confirm the same. We order accordingly.
In the result, the appeal filed by the assessee in ITA N0. 2553/Mum/2009 for the assessment year 2002-03 is dismissed. Order pronounced in the open court on 13th July , 2016. आदेश क� घोषणा खुले �यायालय म� �दनांकः 13-07-2016 को क� गई ।