TaxTMI 
TaxTMI 
2010 (3) TMI 889
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....e assessee had given explanation and reasons for revising the return, which was reproduced by the Assessing Officer in his order, which reads as under :- "(i)Original return was filed on 26-8-2005 (ii)Late Shri Shailesh Gandhi, brother of the assessee, was operating savings bank accounts (joint accounts) that were opened with Union Bank of India, Ghatkopar Br., details of which are as under :- A/c. No. Opened on Name of account holders 17154 Prior to 31-3-2003 Rajesh Gandhi & Alka Gandhi 76630 1-7-2004 Alka Gandhi, Rajesh Gandhi & Kinjal Gandhi (iii)The assessee being the younger brother used to handover signed cheque books to his elder brother and used to sign on papers that were put up to him by his brother. All stay in the joint family. (iv)Shri Shailesh Gandhi expired on 18-4-2007 at the age of 51 years. After his sudden demise, the assessee and his family in the 1st week of August 2007, came to know about the investments made in the names of the assessee and his wife and the bank accounts. He approached the bank in August, 2007 and obtained duplicate passbooks. Some working papers were also found from the cupboard of Shri Shailesh Gandhi. ....
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....the assessment is completed as per the revised return filed by him; thereby finding all his working and explanations to be correct is not acceptable as independent enquiries were carried out with the bank and details of the bank accounts were called for from the bank. Upon receipt of the bank statement, the assessee was asked to furnish the bank summary of both the accounts and explain each and every entry in the bank statement. Further Authorised Representative was asked to submit the working of total additional income offered in three years viz., assessment years 2003-04, 2004-05 and 2005-06 and income earned out of the additional income vis-a-vis stock of mutual fund, bank balance and a balancing figure. After verification of these submissions only the income as per revised statement was accepted. The Assessing Officer after considering the submissions and various decisions levied the said penalty observing that he satisfied that the assessee has concealed the particulars of his income for assessment year 2005-06. The Assessing Officer levied minimum penalty leviable 100 per cent of tax sought to be evaded. The CIT(A) confirmed the order of Assessing Officer observing that the f....
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....ate particulars of income, for which he relied upon the decision of ITAT, Delhi Bench (Third Member) in the case of Addl. CIT v. Prem Chand Garg [2009] 31 SOT 97 (Delhi) (TM). The learned AR submitted that in the said decision the ITAT has also considered the application of judgment of Hon'ble Supreme Court in the case of Dharamendra Textiles Processors (supra). The learned AR has also relied upon the following cases in support of assessee's case : (i) CIT v. Shankerlal Nebhumal Uttamchandani [2009] 311 ITR 327 (Guj.) (ii) CIT v. Sidhartha Enterprises [2009] 184 Taxman 460 (Punj. & Har.) (iii) CIT v. Escorts Finance Ltd. [2009] 183 Taxman 453 (Delhi). 5.1 It is also submission of the learned AR that similar revised returns for assessment years 2003-04 and 2004-05 were filed but in these years penalty proceedings have been dropped by the Assessing Officer himself. The learned AR files copies of those orders of the Assessing Officer which are put on record. 6. The learned DR, on the other hand, relied upon the orders of the revenue authorities and submitted that by referring the balance sheet, which appearing at pages 30 and 31 of assessee's paper book, submitted that balance sh....
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....uch income, no concealment of income and penalty could not be imposed under section 271(1)(c) of the Act. 8. We have heard the learned representatives of the parties and perused the record as well as gone through the decisions cited. The crux of the matter to be examined in this case is whether surrender of additional income during the course of assessment proceedings amounts to concealment of income or furnishing of inaccurate particulars of income. In case of penalty under section 271(1)(c), the revenue is heavily relied upon the judgment of the Apex Court in the case of Dharamendra Textile Processors (supra). 8.1 Income-tax is collected from taxpayers, who are having taxable income for the welfare of the State. The citizens are bound to pay such income-tax as it is a part of their duty to the nation. The income-tax is payable yearly on the annual taxable income, that means, this duty towards the nation is yearly duty of the taxpayers. Under the circum-stances some time taxpayers agree to certain additions during assessment proceedings not always because they are convinced that such addition is warranted or otherwise justified, but with a view to bring finality to the whole mat....
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....us as per the provisions of Explanation 1(B) of section 271 of the Act, the burden is on the assessee to substantiate the matters stated in the Explanation, that it is settled position in law that there cannot be an estoppels against a statute. It is for the Department to consider the explanation offered by the assessee in respect of an amount which was offered as tax. It is not automatic that whenever an amount was offered by the assessee, penalty is to be levied. Therefore, in the penal proceedings which conceptually differ from assessment proceedings, the assessee can file an explanation justifying its action in not including a particular item of income in its return, though it may have offered the amount to be taxed subsequently, that if such an explanation is offered, the Department has to examine its acceptability and record a finding as to whether the explanation is acceptable or not. Only if the explanation is not found acceptable, the question of penalty will arise. In other words, the explanation of the assessee has to be considered on the merits. During assessment proceedings, if the Assessing Officer accept the surrender amount, in other words, it can be said that whate....
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....der a bona fide belief that the amount of freight did not form part of the sale price and was not includible in the taxable turnover. The contention of the assessee throughout was that on a proper construction of the definition of "sale price" in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958, and section 2(h) of the Central Sales Tax Act, 1956, the amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. This was the reason why the assessee did not include the amount of freight in the taxable turnover in the returns filed by it. Now, it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It was a highly arguable contention which required serious consideration by the court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover, could not be said to be mala fide or unreasonable. What section 43 of the Madhya Pradesh General Sales Tax Act, 1958, requires is that the assessee should have filed a "false" return and a return cannot be said to be "false" unless there is an element of de....
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.... taxable turnover of the assessee but allow the appeals insofar as they relate to imposition of penalty and set aside the orders passed by the Assistant Commissioner imposing penalty on the assessee." 8.4 We may refer following decisions which are directly on the issue : (a)The Punjab & Haryana High Court in the case of CIT v. Rajiv Garg [2009] 313 ITR 256 held as under :- "Pursuant to the notice under section 148 the assessee filed the revised return of income showing higher income. The said return of income was accompanied by a note in which the assessee submitted that he surrendered the entire amount of sale proceeds of shares to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action. Later on, on the basis of revised return, the assessment was framed and the return submitted by the assessee was regularized as it is. During the course of assessment, the aforesaid explanation given by the assessee was neither rejected nor was it held to be mala fide. The Tribunal has recorded a pure finding of fact to the effect that the revenue has not placed on record any material or evidence to discharge its burden of proving concealment. In the ....
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....Co. (P.) Ltd. [IT Appeal No. 2983/Mum./07 for assessment year 2004-05 order dated 15-1-2009] wherein it was held that the proceedings under section 271(1)(c) can be initiated only if the Assessing Officer or the first Appellate authority is satisfied in the course of any proceedings under the Act. If he is satisfied as per clause (c) that any person has concealed the particulars of his income or has furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty the sum mentioned in sub-clause (iii) of clause (c). The expression used in clause (c) is 'has concealed the particulars of his income' or 'furnished inaccurate particulars of such income'. Therefore, both in cases of concealment and inaccuracy the phrase 'particulars of income' are used. It will be noted that as regards concealment, the expression in clause (c) is 'has concealed the particulars of his income' and not 'has concealed his income'. The expressions "has concealed the particulars of income" and "has furnished inaccurate particulars of income" have not been defined either in section 271(1)(c) or elsewhere in the Act. There cannot be a straight jacket formula for detecti....
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....basis of detailed discussions in this regard the ITAT observed that after furnishing particulars regarding determination of income the assessee has right to claim exemption and deduction according to him which are as per law .The Assessing Officer while discharging his duty allow or disallow assessee's claim and arrived at a different figure of total income then the total income declared by the assessee, that case cannot be said to be a case of furnishing inaccurate particulars or concealing of particulars of income." (c)We may also referred relied upon the judgments cited by the learned AR in the case of Shankerlal Nebhumal Uttamchandani (supra) and Escorts Finance Ltd. ( supra) in support of above view. 8.5 (i) In the case under consideration, the CIT(A) has heavily relied upon the latest judgment of Dharamendra Textile Processor's case (supra). The applicability of this judgment has been discussed in an another judgment by the Supreme Court in the case of Union of India v. Rajasthan Spg. & Wvg. Mills [2009] 180 Taxman 609. The relevant discussion of the Apex Court is reproduced as under:- 20. At this stage, we need to examine the recent decision of this Court in Dharamendra T....
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....n interpretation and construction of statutory provisions, the court observed and held as follows : 28. In Union Budget of 1996-97, section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the notes on clauses also the similar indication has been given. 29. The above being the position, the plea that the rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip N. case [2007] 8 SCALE 304 (SC) was not correctly decided but Chairman, case [2006] 5 SCC 361 has analysed the legal position in the correct perspectives. The reference is answered...." (p. 302) 21. From the above, we fail to see how the decision in Dharamendra Textile case (supra) can be said to hold that section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. (22) There is another very strong reason for holding that Dharamendra Textile case (supra) could not have interpreted section 11AC in the manner....
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....e Punjab and Haryana High Court in the case of CIT v. Sidhartha Enterprises [2009] 184 Taxman 460 cited by the learned AR. 8.6 We noticed that the judgment in Dharamendra Textile Processors' case (supra) is applicable in case where it was found that all the conditions laid down in the section 271(1)(c) are satisfied. Once the section is applicable in that case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed as prescribed/determined under the section. In the light of above discussion we find that in the case under consideration conditions laid down in section 271(1)(c) are not satisfied therefore penalty provisions of section 271(1)(c) not applicable even in accordance with above judgment of the Apex Court. Similarly, the judgment in the case of B.A. Balasubramaniam Bros. Co. (supra) is a also distinguishable on facts as in the said judgment it was held the assessee did not discharge his onus. 8.7 In the light of the above discussion, if we consider the facts of the case under consideration, we find that the allegation of the revenue is that the Assessing Officer has detected concealment of particulars of income. The Assessing....