TaxTMI 
TaxTMI 
2018 (3) TMI 1573
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....ssment years 2004-05 and 2005-06 in ITA Nos. 1004/Del/2011 and ITA No. 1005/Del/2011 respectively in the case of M/s. Ravina & Associates (P) Ltd (hereinafter referred to as "RAPL") may be taken as the lead matters in this batch of appeals. The learned CIT DR did not object to the aforesaid prayer of the learned counsel. As such, we take up the appeals filed by RAPL for assessment years 2004-05 and 2005-06. 3. In ITA No. 1004/Del/2011 for assessment year 2004-05, the appellant/assessee has raised the following grounds of appeal: "1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that income declared by the appellant company relating to receipts from M/s TPE, a semi-government company incorporated in Russia and, credited in Natwest Bank Account, London is not voluntary. 1.1 That in arriving at the aforesaid conclusion, the learned Commissioner of Income Tax (Appeals) has overlooked the reasons recorded for initiation of proceedings under section 147 of the Act wherein it has been stated that proceedings under section 147 of the Act had been initiated on the basis of income declared by the appellant-company in letter dated 11.....
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....gate sum of Rs. 10,48,44,798/- disclosed by the assessee in the revised return filed on 12.2.2007 represented unexplained investment under section 69 of the Act. 3.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, sum of Rs. 10,48,44,798.60 represented sums received by the appellant company under an Agreement dated 23.7.2003 with M/s TPE for providing support services during implementation of their contract dated 29.7.2003 with M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh and, as such, the aforesaid sums could not be held to be unexplained investment under section 69 of the Act and, infact, were sums received in the course of business of appellant company and, thus assessable under the head "Profits and Gains of business of profession". 3.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the documentary evidence furnished by the appellant to demonstrate the nature of the income received by the assessee and, as such, the conclusion so arrived is wholly misconceived, unsustainable and unwarranted. 3.3 That the learned Commissioner of Income Tax (....
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....ned Commissioner of Income Tax (Appeals) has failed to appreciate that clause 2 of the agreement dated 23.7.2003 clearly provided that the assessee company has to discharge several obligations and in view thereof, it was highly unjustified and unreasonable to tax the entire receipt as income of the appellant company in the instant assessment year. 5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that the bank interest of Rs. 37,866.73 represented unexplained investment u/s 69 of the Act. 6 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in confirming the adhoc disallowance of Rs. 1,00,000/- out of expenditure incurred and, claimed by the appellant company. 7. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in upholding disallowance of Rs. 10,000/- u/s 14A of the Act. 8. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest under section 234B and 234C of the Act, which on the facts of the case was not leviable. 8.1 That while upholding the le....
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....22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary. 1.2 That the adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are not only factually misconceived but also legally unsustainable and infact, overlook the submissions made by the appellant and judicial pronouncements to establish that income declared by the appellant was not voluntary in as much as no material has been gathered or obtained by the Department prior to furnishing of declaration of income by the appellant to suggest or even hold that income declared by the appellant relating to sums credited in the Natwest Bank Account at London was not voluntary. 1.4 That the entire basis adopted by the learned Commissioner of Income Tax (Appeals) is based on assumptions and presumptions, unsupported by any material and hence not tenable. 2 That the learned Commissioner of Income Tax (Appeals) further erred both in law and on facts in holding that the revised return of income filed by the assessee on 12.2.2007 declaring an income of Rs. 4,60,13,040/- was nonest and invalid return. 2.1 That the learned Commissioner of Income Tax....
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....ence or clarification. The observations so made is factually misplaced and has been recorded by overlooking written submissions, documentary evidence and, is thus invalid. 3.5 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that findings of the learned Assessing Officer the advance paid by M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh to M/s TPE did not correlate with the sums received by the appellant company from M/s TPE was factually incorrect, wholly misconceived and entirely misplaced. Infact, the sums received by the appellant company have full correlation with the advances received by M/s TPE from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited. 4 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in not allowing the claim of deduction of 15% of total receipts in view of the principles laid down by the Apex Court in the case of Calcutta Company Ltd. reported in 37 ITR 1. 4.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that clause 2 of the agreement dated 23.7.2003 clearly p....
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....re that the assessee company had filed original returns of income for AYs 2004-05 and 2005-06 as under: Assessment year Date of Filing of Return of income Total income declared (Rs.) 2004-05 31.10.2004 31,77,400/- 2005-06 30.10.2005 49,97,160/- 5.1 Thereafter, proceedings were initiated by the AO u/s 147 of the Income Tax Act, 1961 (hereinafter called "the Act') for A.Y. 2004-05 and notice u/s 148 was served upon the assessee on 22.05.2006. In response to the same, the assessee filed return of income on 21.06.2006 declaring income at Rs. 1,86,28,990/- by including income stated to have been earned from providing support services to M/s. TPE, a company incorporated in Russia (hereinafter referred to as 'TPE') under an agreement dated 23.07.2003 during implementation of their contract dated 5.02.2003 with M/s. Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Ltd. (hereinafter referred to as "UPRVUNL") for the latter's Obra Project. In the note to the return of income, it was stated as under: "We, vide our letter dated 1.4.2006, addressed to the Assessing Officer, supplemented by our subsequent letters addressed to him, have disclosed having received payment of U.S. Dollars 23....
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....enues, no expenses are claimed. The since disclosed income, which was omitted be included in the original return of our income due to a misconception already explained on record, accordingly works out as under: Advance revenues received during the current year 10,01,78,738 Allocated to current year & appropriated to its profit (8/52 parts) 1,54,12,114 Add: Other unaccounted receipts 39,482 Total Current Revenues 15,54,51,596 Less Deduction on account of expenses Nil Net income since disclosed in this return of income 1,54,51,596 Un-appropriated advance revenues received in previous years 2003-04, which is carried over for allocation and appropriation to compute the profits of subsequent previous year works out as under: Advance revenues received during The current year 10,01,78,738 Less: Allocated to current year & appropriated To its profit (8/52 parts) 1,54,12,114 Un-appropriated advance revenue c/f to A.Y.2005-06 8,47,66,624 Reservation: The inclusion of since disclosed income in this computation of our total income on the basis indicated hereinabove is without prejudice to any other gad available to us, or, as may be necessitated by the circumst....
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....in view of the principle laid down by the apex Court in the case of Calcutta Co. Ltd. Vs CIT, 37 ITR 1. Perusal of clause 2 of the agreement shows that the assessee company has to discharge several obligations which has been specified therein. It is therefore, not justifiable to tax the entire receipt as income in the instant year and not to allow any deduction whatsoever from gross receipts. The assessee however, is willing to pay tax on the entire receipts, subject to aforesaid claim. Details of the income received by the assessee under the agreement dated 23.07.03 with M/s T P E, Russia are enclosed as Annexure - II to this return of income. It may be clarified here that assessee company had earlier computed the revenues received during the year at Rs. 10,01,78,738/- on the basis of exchange rate prevailing at the end of the year on the basis of Rule 115A of the Income Tax Act. The aforesaid sum has however now been adopted, which are now computed at Rs. 10,48,44,798.60. This difference is on account of the fact that the assessee company had earlier adopted the exchange rates prevailing at the end of the year i.e. 31.03.04 instead of exchange rate on the date of credit in the ac....
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....see company, which has been placed under attachment, at the instance of the order of Special Jude, CBI Court, before whom, the assessee is also making a separate request. A copy of order of Special Judge, CBI Court is enclosed as Annexure - XII) and, intimation thereof to us by the Bank is enclosed as Annexure - XIII. 9. The interest of 234B and 234C of the Act has been computed by the assessee with a right of waiver available to assessee under the Act." 5.3 Likewise, assessment proceedings were also commenced for AY 2005-06 by issue of a notice u/s 143(2) of the Act dated 25.07.2006. The assessee furnished a revised return of income on 21.08.2006 declaring total income at Rs. 3,90,10,580/- including income stated to have been earned from providing support services to M/s. TPE. The said return of income was again revised on 12.02.2007 declaring total income of Rs. 4,60,13,040/-. Both the above returns of income were appended with explanatory notes which are almost identical to the explanatory notes appended with the returns for AY 2004-05. 5.4 In a nutshell the undisputed position is as under: Sr. No. Particulars Assessment Year 2004-05 2005-06 1 Income o....
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.... the receipts from M/s. TPE, a semi-government company incorporated in Russia and, credited in Natwest Bank Account, London was 'voluntary'. The Ld. AR submitted that the assessee had maintained two accounts with the Natwest Bank, London bearing account nos. 140-00-21000697 (US dollar account) and 18009336 (Pound sterling account). The assessee did not disclose the above bank account and any income in respect of the receipts in the said accounts in the original returns of income filed for both the assessment years. It was further submitted that the assessee suo moto and voluntarily filed a letter dated 1.4.2006 before the AO indicating its willingness to discharge the tax liability in respect of the credits in the aforesaid bank accounts. 6.1 The Ld. AR further submitted that, vide letters dated 11.04.2006, 19.04.2006, 21.04.2006, 22.04.2006, 27.04.2006 and 20.05.2006, the assessee furnished summaries of transactions in the above two bank accounts indicating the total amounts received therein and the interest accruing in the said bank accounts as well as the outgoings from the above bank accounts including the bank charges. The assessee also computed the resultant surplus/deficit ....
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.... Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 (kindly see pages Pg 160 to 166 of PB - I) was not in respect of the contract entered by the appellant company with M/s TPE or the contract entered by M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. and thus, the same could not be made a basis to hold that, income declared by the assessee vide letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary. It may be stated here that, entire income as accruing to M/s RAPL on the basis of its contract with M/s TPE and, contract of M/s TPE with M/s NTPC has been declared by M/s RAPL in A.Y. 2006-2007. Infact, this submission has also not even been specifically disputed by the learned AO (see reply dated 12.7.2007 (pages 201 to 219 of PB-I at page 206 to 213)) 4. Lastly, the aforesaid income was not declared by the appellant in the original return of income only because it was of the opinion that income was not taxable under the Act and soon it came to know of her obligation, the appellant had duly decl....
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....lant either with M/s TPE or contract of M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. (hereinafter referred to as "UPRVUNL"). It may be pertinent to state here that appellant company has a contract with M/s TPE in respect of agreement of TPE with NTPC. No receipts have been received in the instant year in respect of such contracts. In fact, the entire income declared by the assessee in the instant year is in respect of agreement with M/s TPE for services to be provided in respect of contract of M/s TPE with M/s UPRVUNL. It is thus submitted that, the aforesaid allegations have nothing to do with the income received by the appellant in the instant year. It may be stated here that, entire income as accruing to M/s RAPL on the basis of its contract with M/s TPE and, contract of M/s TPE with M/s NTPC has been declared by M/s RAPL in A.Y. 2006-2007. A copy of the return of income filed by M/s RAPL for A.Y. 2006-2007 is placed at pages 644 to 752 of PB-III. Infact, this submission has also not even been specifically disputed by the learned AO. It is submitted that, appellant in the course of assessment proceedings had submitted the same, in its reply dated 12.2.2007 (pa....
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....that, no action whatsoever had been taken by CBI in respect of the sum received and, credited to bank account in the instant assessment year. In fact, it is submitted that, a criminal case registered under the Indian Penal Code and the Prevention of Corruption Act against unknown officials of NTPC of India and others. 9.3 It will be therefore seen from the reading of the aforesaid FIR/ letter of rogatory that this was in respect of a contract between M/s National Thermal Power Corporation (hereinafter referred to as 'NTPC') and M/s TPE (hereinafter refered to as 'TPE') Moscow and has nothing to do with the appellant company. It is submitted that, allegations in the aforesaid letter of rogatory are not in respect of any contract of the appellant either with M/s TPE or contract of M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. (hereinafter referred to as "UPRVUNL"). It may be pertinent to state here that appellant company has a contract with M/s TPE in respect of agreement of TPE with NTPC. No receipts have been received in the instant year in respect of such contracts. In fact, the entire income declared by the assessee in the instant year is in respect of agreem....
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........ 9.6 It is further most respectfully submitted that, the observation that the assessee had been providing services since 1995 and, the assessee had not offered any income as and when it accrue till 1.4.2006 goes to support the contention that it was only on discussion with Sh. Ram Jethmalani, Senior Advocate, the assessee came to know of her obligation under the statutory provisions of the Act and, tax liability on such income. It is submitted that, the situation would have been entirely different had assessee offered any such income prior to 1.4.2006 and, the income declared by the assessee in the instant year would not have been offered. It is thus a clear case of ignorance of law till 1.4.2006, as would be evident from detailed submissions made separately. It is thus submitted that, once the assessee came to know of his liability to tax, the assessee voluntarily and, of its own furnished the return of income. 9.7 It is further submitted that, various other reasons stated in paras (v) to (xi) of the remand report are wholly irrelevant consideration and, in no manner suggest or establish for that matter that, income declared by the appellant was not voluntary. In fact, in....
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...."During the hearing proceedings before Hon'ble F-Bench, ITAT, Delhi on 08.01.2008, the ld. Counsel of the assessee argued that the return of income filed by the appellant on 12.02.2007 should be accepted as valid, and voluntary return of income. The ld. Counsel of appellant further argued that the AO issued notice u/s 148 of the Act because of the letters filed by the assessee showing its credit entries in the NAT West Bank, London. That the appellant had suo-motto come forward to reveal its income and offered the same for taxation. In this regards, it may be mentioned that a criminal case vide FIR RC-DA/2006-A-2006, dt. 06.03.2006 was registered under IPC and Prevention of Corruption Act, 1988 against unknown officials of NTPC of India and others. In the said FIR, it has been observed "it is also learnt that in consideration of the award of contract of M/s FGUP 'VO' TECHNOPROMEXPORT certain officials of NTPC by abusing the official position received illegal gratification kickbacks in excess of IS $20 million from M/s FGUP 'VO'TECHNOPROMEXPORT which have been paid into the bank account of Ravina & Associates in United Kingdom in 2005. A letter rogatory/letter of request for a....
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.... receipts in its NAT West Bank A/c in London, as business receipt. The assessee did not disclose the bank accounts and the receipts of money in the original return or in the books of account maintained by it. It is apparent that after the above bank accounts of the assessee got detected by the CBI through an FIR and subsequent search, the assessee furnished those bank accounts to the AO. The AO had analysed in the assessment order why receipts in NAT West Bank of assessee in London should be considered as the assessee's its unexplained money u/s 69A of the Act and why the same should not be treated as voluntary disclosure of the income. The assessee failed to explain the reason for receipt of such huge amount in its foreign bank accounts." 9. We have heard the rival submissions and have also perused the material on record. The undisputed facts are that in the original return of income filed by the assessee for the instant years, the income representing the deposits in the bank account with Natwest Bank, London was not declared by the assessee. It is also undisputed that the said income was subsequently declared in the returns of income furnished during the reassessment proceedin....
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....n our income for taxation in India. We have been advised that as a resident of India, we are liable to tax in India on our global income subject to exceptions and concessions provided by the various Double Taxation Avoidance Agreements India has various countries/States. We have also been advised to take immediate steps to inform the RBI. 6. Immediately on being advised of the correct position of law in this regard, we have instructed Nat West Bank, London to close down our accounts with them and remit the money held in balance with them to our accounts in India. We have already initiated steps to ascertain our true profits from these foreign operations. We are firmly resolved to discharge our liability to tax in full in respect of our income in all the years we have been operating outside India, which, although inadvertently, has remained undischarged due to our unfortunate ignorance of correct position of law in these regards. 7. We have been waiting all these days for the money to be credited in our account in India to enable us to pay advance tax in respect of our income for the fiscal year 2005- 06 and also to pay up our tax liability in respect of the earlier years toge....
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....ce to the bank account statements we are trying to arrange from the bank. In the meanwhile, relevant extracts from the said Journal are being submitted herewith in its entirety. 4. The surpluses so indicated indicate the maximum quantum of our income in the relevant years from our hitherto unreported foreign ventures that can be assessed to tax. 5. Needless to mention here that the receipts in our bank accounts largely comprise advances on our clients account provided to us for meeting expenditure necessary to be incurred by us in future in several years during which the implementation and execution of our clients' contract in India may continue and we are in law and equity entitled to provide for these. 6. We hope that the information provided herein will enable you to proceed with the determination of our tax liability in respect of our income from hitherto unreported foreign ventures. 7. Accordingly, we have to request you to kindly assess our income from these foreign ventures on some just and reasonable basis and determine the tax we are liable to ay in respect thereof. In you need further details, the same will be provided on hearing from you" 9.2 Subsequentl....
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....able to tax preceding Assessment Year 2004-05 has escaped assessment within the meaning of section 147 of I.T. Act 1961. Issue notice u/s 148 for Assessment Year 2004-05 immediately." 9.4 The above reasons recorded establish that the Assessing Officer did not have any other information except disclosure made by the assessee in communication dated 1.4.2006 and 11.4.2006. In fact, in the reasons recorded as extracted above, it is the admitted position that action under section 148 of the Act was taken on the basis of letter dated 11.4.2006 furnished by the assessee which also refers to the earlier letter dated 1.4.2006 furnished by the assessee. In such circumstances, once the Assessing Officer himself admits that the initiation of proceedings was based on the letter furnished by the assessee, it cannot be validly suggested that the declaration of income by the assessee vis-a-vis the Income Tax Department was not voluntary. The case made out by the revenue against the assessee was that a criminal case was registered, vide FIR No. FIR RC-DAI/2006-A-0006 dated 6.3.2006, under the Indian Penal Code and the Prevention of Corruption Act against unknown officials of NTPC of India and ....
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....06, a letter from the Natwest bank dated 25.04.06 in the case of M/s Ravina & Associates P. Ltd., wherein they had intimated that operations in the bank accounts of the assessee and M/s Ravina & Associates P. Ltd. had been temporarily 'suspended' on account of restraint order served on the bank on 20.04.2006. It has been further contended that it was only after discussion with Sh. Ram Jethmalani, Senior Advocate in February 2006, that the assessee came to know of its obligation under the statutory provisions of the Act and, tax liability on such income. The learned counsel of the appellant has also vehemently submitted that, once the assessee came to know of its liability to tax, it voluntarily approached the revenue authorities. Letters dated 27.02.2006 and 6.03.2006 written by assessee to Shri Girish Shukla, Advocate, were also highlighted. In the letter dated 27.2.2006, it has been stated as under: "Dear Mr. Shukla, As explained to you on the phone I am sending all the relevant papers relating to my company's tax assessment. When I discussed my Russian business with our family friend Mr. Ram Jethmalani I was quite shocked to learn that my foreign exchange earnings are also ....
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....es placed on record to support the claim that the disclosure was voluntary in as much as it was on account of the letters dated 1.4.2006 and 11.4.2006 that the action had been taken against the assessee to assess the income disclosed in the said letters by the Assessing Officer. The fact of the FIR filed on 6.3.2006 has not been shown in any manner to be in the knowledge of the assessee by any evidences placed on record. It is our considered opinion that a mere hypothetical assumption, that since the date of FIR is 6.3.2006 and letters were furnished by the assessee on 1.4.2006 and 11.4.2006, cannot be a ground to assume to the contrary. It is well settled position of law that suspicion, howsoever strong, cannot partake the character of evidence. The Hon'ble Supreme Court in the case of Uma Charan Shaw & Bros. Co. v. CIT reported in 37 ITR 271 (SC) has held as under: "Taking into consideration the entire circumstances of the case, we are satisfied that there was no material on which the Income-tax Officer could come to the conclusion that the firm was not genuine. There are many surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of....
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....d return of income filed by the assessee on 12.02.2007 has been held to be non est by the AO on the ground that revised return can be filed only to cure an omission or wrong statement i.e. when it was inadvertent or accidental and, not deliberate. The Ld. CIT (A) rejected the claim by observing as under: "7.3 I have carefully considered the assessment orders and the submissions made by the Ld. AR on the above issue. It needs to be emphasized here that subsection (5) of section 139 of the Act relating to filing of "revised" returns reads as under: "If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier". Thus any return to qualify as a "revised" return under the Act, must satisfy two conditions, viz (i) it should be on account of "discovery" of "any omission or wrong statement" in the original return, which presupposes a voluntary act on the part of the a....
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.... 3.1 Therefore, once the return filed in response to notice u/s 148 of the Act is a return u/s 139(1) of the Act, it cannot validly be held that, such a return cannot be revised u/s 139(5) of the Act, as has also been correctly noted by your goodself in the captioned letter." 10.3 On the other hand, the Ld. CIT DR has relied upon the order of the authorities below and requested that the claim of the assessee be rejected. 10.4 We have considered the rival submissions, perused the material on record and the contentions raised by both the sides. Section 139(5) of the Act states as under: "If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier." 10.5 On a perusal of the aforesaid provisions, it is noted that if any person, having furnished a return under sub-section (1) or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omi....
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..... The Hon'ble Apex Court in the case of R. Dalmia v. CIT reported in 236 ITR 480 (SC) has held as under: "We do not doubt that assessment under section 143 and assessments and reassessments under section 147 are different, but in making assessment and re-assessments under section 147 the procedure laid down in sections subsequent to section 139, including that laid down by section 144B has to be followed" 10.7 Moreover, it is also pertinent to note that once there is no dispute as to the taxability of income, the issue becomes academic. However, since the same has been raised, the issue has been examined and is found as a matter of fact that the edifice of the present proceedings was communicated by the Also, the Hon'ble Punjab and Haryana High court in the case of Mrs. Rama Sinha vs. CIT reported in 256 ITR 481 (P&H) has held as under: "Once a return in pursuance of notice under section 148 of the Income Tax Act' 1961 is filed the provisions of this act shall so far as may be apply accordingly as if such return were a return required to be furnished under section 139. The position was the same even prior to the amendment of section 148 with effect from April 1, 1989. The....
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....d by UPRVUNL to TPE Russia during the period 2003-04. The amount paid during the period in Rupees is as under:- Date Amount (Rs.) Remarks 17.7.03 67,484,970 Invoice No. 1 dt. 18.7.03 25.7.03 118,795,933 as 10% advance 186,280,903 29.03.04 21 816,915 Invoice No. 2 dt. 23.3.04 29.03.04 28,588,217 Total 504,05,132 Total for FY 2003-04 Rs. 236,686,035/- The assessee company has claimed to have received total of Rs. 104,844,798/- in Oct. 2003, which comes to 56.28% of the amount paid by UPRVUNL to TPE Russia till October 2003. This is no way correlates with the supposed payment by TPE to the Agent (RAPL) at the rate of 12.25% of the price of the contract. Thus, it cannot be said that the amounts received from TPE/others in its Natwest bank account is on account of the agreement of assessee with TPE relating to Obra project. Assessee has filed copies of correspondence with D.M. Krasstov, Resident Representative of TPE in India, regarding visa support for Russian exports for execution of the contract of Obra 'A' TPS package I (5x50 MW), Refurbishment of Obra 'A' & 'B' TPS-Package III (5x200 M....
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....is found to be unsatisfactory and hence the deposits in the Natwest Bank London to the tune of Rs. 4,10,21,607.89 (including bank interest of Rs. 611.08) is treated as unexplained investment u/s 69 of the Act and deemed to be income of the assessee. In view of the above facts and circumstances, I am satisfied that assessee has concealed its particulars of income and therefore penalty proceedings u/s 271(1)(c) is initiated." 10.11 The Ld. CIT (A), after considering the submissions and additional evidences furnished by the assessee and calling for a remand report and rejoinder submissions of the assessee, held that income declared represented undisclosed income under section 69 of the Act. He has held as under: "Para 8.9 Coming to the merit of the case regarding the nature and source of income on careful consideration of the matter I find that the appellant company has clearly failed to explain the nature and source of the credits of Rs. 10,48,44,798/- in A.Y. 2004-05 and Rs. 4,10,20,996.81 in A.Y. 2005-06. The documents produced by the appellant company in the course of assessment proceedings namely photocopy of agreements with M/s TPE confirmation from M/s TPE and copy of some ....
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....). for refurbishment of Obra Thermal Power Station, Uttar Pradesh State, India. The nature of the support services so provided to M/s TPE is very illustrated in the correspondences exchanged between M/s TPE and appellant and, is duly supported by following evidences: S.No. Particulars Page of Paper Book 1. Copy of agreement between M/s TPE and appellant dated 23.07.2003 67 to 70 of Paper Book-I 2. Copy of addendum no. 1 dated 23.7.2003 to the agreement dated 23.7.2001 71 of Paper Book-I 3. Copy of addendum no. 2 dated 24.9.2003 72-73 of Paper Book-I 4. Copy of addendum no. 3 dated 30.4.2004 74 to 75 of Paper Book-I 5. Copy of remittances certificate issued by Bank certifying the sums received by assessee company from M/s TPE 76 to 77 of Paper Book-I. 6. Copy of details of various expenditures incurred by assessee company 264 to 372 of Paper Book-II 7. Copy of illustrated correspondence of M/s TPE ' 483 to 670 of Paper Book-II 8. Copy of agreement of M/s TPE with M/s UPRVUNL 915 to 934 of Paper Book-III 9. Copy of Brochure of TPE 798 to 823 of Paper Book-III 10. Copy of MOU dated 20.4.2006 between M/s TPE and M/s UPRVUNL 872 to 874 of Paper Book-I....
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.... on the basis of information obtained under section 133(6) of the Act from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh and that too, without confronting the same to the assessee in the course of assessment proceedings and, in any case, the sums received by the appellant company have full correlation with the advances received by M/s TPE from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited and, as would be seen from Annexure-1 to this submission. 19. It is further submitted that, the fact that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 was not in respect of the contract entered by the appellant company with M/s TPE or the contract entered by M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. and thus, the same could not be made a basis to hold that, income declared by the assessee vide letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary. It may be stated he....
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....,10,20,996 ---- 4,10,20,996 3 06-07 93,80,80,778 3,33,06,123 97,13,86,901 Total 108,39,46,572 3,33,06,123 111,72,52,695 10.17 It has been submitted by the Ld. AR that as far as the income of Rs. 97,13,86,901/- under the NTPC agreement is concerned, the same was declared in the original return of income filed on 12.02.2007 for A.Y. 06-07; and further, sum of Rs. 10,48,44,798/- has been offered for tax as income in assessment year 2004-05 and Rs. 4,10,20,996.81 in assessment year 2005-06. 10.18 It is further seen that Article 2 of the agreement dated 23.7.2003 provides as under: "2.1.1 Ravina & Associate Pvt. Ltd. (RAPL) shall render comprehensive assistance to TECHNOPROMEXPORT in arranging talks and meetings with the Indian Purchaser, local sub-contractors and enterprises. 2.1.2 RAPL shall act only in the interests of TECHNOPROMEXPORT while dealing with the Purchaser, officials of the Indian Government and other companies. 2.1.3 RAPL shall render assistance to representatives of TECHNOPROMEXPORT in setting of administrative matters within the period of execution of the signed Contract. 2.1.4 RAPL shall render assistance to TECHNOPROMEXPORT in setting ....
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....g these times the USSR rendered widescale technical and economic assistance to friendly countries. Some of the first power projects constructed by TPE in India were HPP "Bhakra" TPS "Neyveli", TPS "Obra" and HPP Lower Sileru", which total capacity exceeds 1600 MW. Many of them were awarded with special prizes for the high efficiency and TPS "Neyveli" (600 MW) was marked with government rewards. Built by NTPC with assistance of TPE specialists, SRTPP "Vindhyachal" till now keeps occupying one of the first places for a number of its economic parameters among the thermal power stations in India. Since then TPE has put into operations 11 power projects in India of total capacity over 3000 MW TPE catalogue is enclosed herewith for your reference). Taking into account such plans of India in the power sector of the country, TPE has taken the active position in advancing its services and rendering assistance to Indian associates in realization of the stated projects. Among the projects, which TPE realizes at present is reconstruction of TPS "Obra" for UPRVUNL and delivery installation and bringing into service of the hydro-mechanical equipment at the hydroelectric power plant "Indira Sa....
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....registered at the instance of business. As regards M/s. "Ravina & Associates Pvt.Ltd", please be informed that TPE has a good business association with this company on the basis of official agreement signed by the both parties for "Barh" STPP. All payments made to M/s. " Ravina & Associates Pvt.Ltd." by TPE were the amounts paid for rendering services to TPE both in preparation of the bid documents and in implementation of the contract which duration will be at least 6 years. We do believe that our explanation will suffer you to be sure that TPE is an honest company, working in accordance with the world rules and regulations of tendering as well as caring for its reputation in the world power market. Yours faithfully, Sergey V.Molozhavy General Director Encl: 1 Catalogue" 10.20 Having regard to these evidences, the question, therefore, arises as to whether the receipts from TPE, can be held to be unexplained investment under section 69 of the Act. Section 69 of the Act provides as under: "69 Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained ....
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....examine these two parties if, for some reason, he did not accept the statement furnished by these two parties. The Assessing Officer could also have made independent enquiries from the customers of the assessee. However, none of this was done. 10. Therefore, we are of the opinion that the Tribunal has not committed any error in the view that it has taken. The assessee produced all the material that it could possibly produce and if the Assessing Officer was not inclined to believe the material produced, he could have used the coercive powers available to him, which he failed to exercise. 11. Therefore, we are of the view that in this case, no substantial question of law arises for our consideration." 10.22 Also in the case of CIT vs. M/s Kamdhenu Steel and Alloys Ltd. reported in 361 ITR 220, it has been held has under: "16. The Court thus clearly held that once documents like PAN Card, bank account details or details from the bankers were given by the assessee, onus shifts upon the Assessing Officer and it is on him to reach the shareholders and the Assessing Officer cannot burden the assessee merely on the ground that summons issues to the investors were returned back wi....
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....ssee, in one of the replies dated 6.11.2007, had stated as under: "1 Kindly refer to order-sheet entry dated 11.10.2007, wherein the assessee company has been directed to furnish a copy of the original agreement dated 23.07.2003 entered between M/s TECHNOPROMEXPORT and the assessee company. The assessee company in reply, respectfully submits that, it has already furnished before you a photocopy of the original agreement. The original copy of the agreement is not to be retained by M/s TECHNOPROMEXPORT and the assessee is being supplied with only photocopy thereof. In such circumstances, it is submitted that the photocopy of the agreement as furnished is that of the original agreement. 10.24 Furthermore, the objection that agreement did not provide payment of any advance and the assessee had not explained the source of receipts in GP pounds is factually misplaced. The perusal of the details of remittances received would show that no sum was received in GP Pounds and the entire sum had been received in US Dollars. Each of the amounts received are duly supported by a certificate from bank which have been placed on record. Moreover, from page 1129 of Paper Book-4 for assessment year....
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....in view the decision of the Hon'ble Supreme Court in the case of Andaman Timber India (supra) we hold that the assessment order is null and void as it amounted to violation of principles of natural justice. Thus the assessee succeeds on both the legal grounds. Since the assessee succeeds on both the legal grounds, the ground relating to the merit of the case becomes academic in nature and therefore the same is not being adjudicated." 10.26 Also, the Hon'ble Delhi High Court in the case of Sabh Infrastructure Ltd. v. ACIT reported in 398 ITR 198 (Del) has held as under: "... (iii) where the reasons make a reference to another document, whether as a letter or report, such document and/ or relevant portions of such report should be enclosed along with the reasons; (iv) the exercise of considering the Assessee's objections to the reopening of assessment is not a mechanical ritual. It is a quasi judicial function. The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. No attempt should be made to add to the reasons for reopening of the assessment beyond what has already been disclosed." 10.27 It has been the contention of t....
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....rt. It is stated that the ratio of the judgment is not applicable in the case of assessee. The facts and circumstances for this case are different from the fact and circumstances of the aforesaid mentioned case. In the case of Calcutta Company Ltd. the assessee was dealing in land and property and was carrying on the land developing business it so as to make it fit for building purposes and sale it at a profit in plots. The developments under taken were in the main, lay roads, to provide drainage systems, to intal street lights and they were to be maintained till the same were taken over by the Municipality. The procedure to be followed was that when the plot was sold, the buyer was to pay about 25% of the purchase price in cash and the balance amount installments with interest. The assessee i.e. the Calcutta Company Ltd. claimed Rs. 24,809/- as the expenditure for the developments to be carried out which was disallowed by the AO on the ground that the expenses were not actually incurred in the year of account and also on the ground that the estimate had not been proved to be based on a consideration of real expenses which the company would have to incur for the purpose. So the que....
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.... of Rs. 37,866.73 in AY 2004-05 and Rs. 611.08 in AY 2005-06 has been erroneously held as unexplained investment under section 69 of the Act. 10.31 Having considered the rival submissions and perused the material on record, it is noted that the edifice for treating the aforesaid sums as unexplained investment is that the sums were not duly disclosed in the original return of income by the assessee. To our mind, the treatment of receipts as unexplained investment is not dependent on the declaration in the return of income. On the contrary, if the source of investment is duly disclosed then such investment cannot be regarded as unexplained investment under section 69 of the Act. In the instant case, the nature of investment is in respect of interest which accrued to the assessee on the deposits in the Natwest Bank, London. We have already held above that the assessee has duly explained even the nature and source of the deposits in the Natwest Bank accounts and thus, said the deposits cannot be regarded as unexplained investment under section 69 of the Act. The deposits represent income from support services provided by the assessee to TPE and therefore, the conclusion of the revenue....
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....the assessment years. 10.37 Ground No. 7 for AY 2004-05 is regarding disallowance of Rs. 10,000/- u/s 14A of the Act. 10.38 Having considered the rival submissions and perused the material on record, we notice that the Ld. CIT (A) has rejected the aforesaid claim by holding as under: "12.2 On careful examination of the matter, I find that no income, whether exempt or not, can be earned without making some expenditure. Often times such expenditure are not segregated in the accounts of the assessee and remain clubbed with overall administrative/financial and other expenses for the business as a whole. It, thus, becomes the duty of the AO to reasonably allocate expenses relatable to such income and disallow the same. I find that section 14A of the Act (inserted by the Finance Act, 2001 with retrospective effect from 01.04.1962) specifically addresses this issue by providing that 'no deduction shall be allowed in respect of expenditure incurred in relation to such income which does not form part of total income" under the Act. Further, subsection (2) of section 14A empowers the AO to determine the amount of expenditure incurred in relation to exempt income in accordance with the me....
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....d under 234B and, 234C or even under section 220(1) of the Act after 1.04.2006 i.e. after the income had been declared by the appellant voluntarily as would be evident from letter dated 01.04.2006 (pages 26 to 28 of PB-I) as under: 7. We have been waiting all these days for the money to be credited in our account in India to enable us to pay advance tax in respect of our income for the fiscal year 2005- 06 and also to pay up our tax liability in respect of the earlier years together with interest due for the delayed payment of taxes. Even after waiting for all these days since 6th March, 06 when instructions were first issue to Nat West Bank, London to remit our monies held in balance with them to our account in India we have not received any intimation of remittance from them (copies enclosed) (page 756 of Paper Book-III). 8. Accordingly, we have to request you to intercede in the matter and arrange for the collection of taxes, which may be determined as due from us, from Nat West Bank, London in satisfaction of our tax liability provisionally. We are ready and willing to execute the requisite authority in any form advised by you as may serve all desired end. 9. I hereby ....
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....ival submissions and perused the material on record, we notice the learned Ld. CIT (A) has upheld levy of interest by holding as under: "14.3 I have carefully considered the assessment order, remand report of the AO and the submissions made by the ld. AR on the above. The appellant's argument regarding not being aware of its tax liability in respect of credits in the bank accounts maintained outside India has been rejected by me as per detailed reasons recorded in the discussion relating to issue no. 1earlier in this order. Further, the appellant's argument regarding non-applicability of section 234B is also not acceptable due to detailed reasons cited by the AO in his remand report reproduced above which I agree. I find that it is settled position of law that levy of interest u/s 234B, 234C and 234D is mandatory. It has been held so by the Apex Court in the case of Anjum M. H. Ghaswala and others reported in 252 ITR 1 as under: Similar view has also been expressed in the following cases: Ranchi Club Limited Vs. Commissioner of Income Tax (1996) 217 ITR 72 on paged 74 interest levied under section 234A, 234B and 234C are compensatory in nature. CIT Vs. R.Ramalingair, (2000....
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....oted that in this case inspite of the fact that there was no specific mention of Section 216 of the Act in the assessment order the High Court has upheld the levy considering the facts of the case Sita Holiday Reports Ltd. Vs. CCIT (2002) 258 ITR 751 (Del) In the facts of the case the assessee had not included interest earned on investment of borrowed funds prior to commencement of business for the reasons that there was legal controversy. Subsequently, by virtue of decision of Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs.CIT (1197) 227 ITR 172, the Supreme Court has held that such interest is chargeable to interest. The assessee company filed an application before the Chief Commissioner of Income Tax of waiver of interest levied under section 2364B of the Income Tax Act CCIT waived 75% of interest. He however, upheld levy of the extent of 25% of interest stating that same is justified as the Departmental has been deprived of its taxes. The High Court made reference to the decision of Supreme Court in the case of CIT Vs. Anjum M. H. Ghaswala (2001) 252 ITR 1 (SC) wherein it has been held by the Supreme Court hat interest contemplated under sect....
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....icates that so far as the payment of statutory interest is concerned, the same is outside the purview of the settlement contemplated in Chapter XIX-A of the Act." 10.47 In view of the above binding dicta, we hold that levy of interest is mandatory and we reject the claim raised by the appellant. 10.48 The alternative claim made by the assessee before us is that since the assessee had filed a letter dated 1.4.2006 before the Assessing Officer and had requested that the deposits in bank account be adjusted towards the tax liability, no interest is leviable after 1.4.2006. The relevant portion of the letter dated 1.4.2006 reads as under: "7. We have been waiting all these days for the money to be credited in our account in India to enable us to pay advance tax in respect of our income for the fiscal year 2005- 06 and also to pay up our tax liability in respect of the earlier years together with interest due for the delayed payment of taxes. Even after waiting for all these days since 6th March, 06 when instructions were first issue to Nat West Bank, London to remit our monies held in balance with them to our account in India we have not received any intimation of remittance from ....
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....under section 271(1)(c) of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) while upholding the penalty has failed to appreciate that income in respect of which penalty have been levied was the income declared voluntarily by the appellant firstly by letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006 and 23.5.2006 and thereafter in return filed on 21.6.2006 and, 12.2.2007 and also in return filed in response to notice u/s 148 of the Act and as such, it cannot be validly held that assessee has either concealed income or furnished inaccurate particulars of income merely on the ground that, such receipts were not disclosed in the original return of income. 1.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the fact that income assessed was not based on the revised return but on the basis of return filed in response to notice u/s 148 of the Act and the reasons recorded for initiation u/s 147 of the Act established that proceedings had been initiated on the basis of information contained in the revised return and not by way of any detection and hence the finding that there was intentional attempt to evade tax overlo....
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....143(3) of the Act and therefore, the said penalty levied and sustained is invalid and unwarranted. 1.8 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the observation of the learned Assessing Officer in the order of penalty that "either the appellant company was maintaining account with Natwest Bank, London since 1992 or had not furnishing documentary evidence in support of existence of business is factually incorrect and contrary to the evidence on record. 1.9 That the learned Commissioner of Income Tax (Appeals) while upholding levy of penalty, has failed to appreciate that as regards receipt of Rs. 14.58 crores in assessment year 2004-05 and 2005-06, these receipts pertain to Obara Project of UPRUVNL for which, there is no registration of case by CBI or any other investigation agency and as such, declaration of said income by the appellant company could not otherwise be a basis to impose penalty under section 271(1)(c) of the Act. 2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that notice issued for levying the penalty was vague, non-specific and as such penalty levied on the basis of the said no....
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....said return represented the income which had been shown to be assessed and as such no part of income assessed could represent an income which can be said to have been concealed by the appellant. 1.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that filing of FIR on 6.3.2006 was in respect of the amount of Rs. 97,13,86,901/- received in Natwest Bank pertaining to appellant company for assessment year 2006-07 which was declared in the original return of income and, not for the sum declared and, assessed in the instant assessment year and as such, the same could not be ground to hold that appellant had not declared the income voluntarily. 1.5 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that assuming for the sake of an argument (though the same is seriously disputed) that there was detection of income by the CBI and it was only on account of detection by CBI that assessee had declared such income then too to determine as to whether income declared by the assessee in the return of income was not voluntary or not, what has to be seen is, whether the income was detected by the learned AO or whether the same wa....
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....ant be allowed." 11.3 All the aforesaid grounds as stated above relate to levy of penalty of Rs. 3,76,26,700/- and Rs. 1,50,95,320/- in assessment years 2004-05 and 2005-06 respectively under section 271(1)(c) of the Act. From the perusal of orders dated 30.3.2012 passed by the DCIT, Circle 15(1), New Delhi, it is noted that the penalty has been levied on the basis that the returns of income have been filed after the fact of having income abroad had already become known to the department. It has been noted that FIR was filed on 6.3.2006 and assessee had waited for a period of more than 10 months for filing revised return and after realizing that there is no exit route available, it had furnished the revised returns on 12.2.2007. It was held that the claim of the assessee as to the declaration of income voluntarily had remained unsubstantiated and that the assessee had failed to furnish documentary evidence to support expenses of business and had failed to successfully contradict the findings that the money lying in the bank account was not unexplained investment. It was held that the receipts declared by the assessee in both the assessment years was not a voluntary declaration bu....
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....Garg reported in 123 TTJ 433. 4 As regards the filing of FIR on 6.03.2006, it is submitted that, FIR filed on 6.03.2006 has absolutely no connection with receipts received by the appellant company in the year under consideration but to receipts for the Assessment Year 2006-07 which were duly declared in the original return for Assessment Year 2006-07. It is also stated here that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 and, not against the appellant company; thus the same could not be made any basis to assume that, income declared by the assessee vide letters dated 1.4.06, 11.04.2006 and, subsequently in the return of income was not voluntary. 5 It is further added that, the filing of FIR on 6.03.2006 (which the assessee was not even aware and was not known till 02.05.2006) when a copy of fax was received by her from Central Confiscation Branch, Crown Prosecution Service, London. However, it was submitted that, prior thereto, the assessee had only received on 29.04.2006, a letter from the Natwest bank dated 25.04.06 in the case of M/s Ravina & Associates P. Ltd., w....
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....r section 271(1)(c) of the Act. Reliance is placed on the judgement of the Hon'ble Delhi High Court in the case of CIT v Ajay Hari Dalmia 157 ITR 145 wherein it has been held as under: "In penalty proceedings, it was not only necessary to inform the assessee of the particular concealment but also necessary for the Department to prove positively that there was such a concealment. In such a case, it becomes the duty of the Department to inform the assessee of the particular concealment that had taken place so that he could defend the case. This has led to the cancellation of the penalty order both by the Commissioner as well as the Tribunal which has merely affirmed the Commissioner's order." [Emphasis Supplied] 7 It is also respectfully submitted that, no penalty is leviable on the facts of the instant case in as much as there is no satisfaction recorded in the order of the assessment u/s 147/143(3) of the Act for the levy of penalty. The mere general and vague observations in the order of assessment cannot in law or on facts as be held to be a satisfaction recorded in conformity with the provisions contained in section 271(1)(c) of the Act. Infact no satisfaction has been....
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....ol & Switchgear Contractors Ltd. in ITA No. 290/2015 dated 24.8.2015 x) CIT v. Prashant Shrivastava in ITA No. 393/2015 (Del) xi) R. Umedbhai Jewellers (P) Ltd. v. CIT in ITA No. 221/Del/2015 xii) CIT v. M/s Preet Land Promoters & Developers (P) Ltd. in ITA No. 518/Chd/2012 11.7 On the other hand, the learned CIT DR supported the action of the authorities below and filed written submission wherein it was submitted as under: "It is humbly submitted that the following decisions may kindly be considered with regard to levy of penalty u/s 271(1)(c) of the I.T. Act. 1 MAK Data (P) Ltd. v. CIT [358 ITR 593 (SC) (2013(Copy enclosed) where Hon'ble Supreme Court held that under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails to offer an explanation which is bonafide and proves that all the material facts have been disclosed. 2 S. Rudramuniyappa v. CIT (75 taxmann.com 241) (Copy enclosed) where Hon'ble Supreme Court held that under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails ....
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.... Ginning Factory (supra) has been followed by the Hon'ble High Court of Karnataka in the case of CIT v. SSA's Emerald Meadows 73 taxmann.com 241 and the relevant portion is as under: "2. This appeal has been filed raising the following substantial questions of law: 1 Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? 2 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is bad in law and invalid despite the amendment of Section 271(1B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same? 3 Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued un....
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.... assessee and is allowed. 11.12 Moreover, even on merits, the reason which led the authorities below to levy the impugned penalty is that there was no voluntary declaration by the assessee. We have already held, while disposing off Grounds 1 to 1.4 and Grounds 3 to 3.6 in ITA Nos. 1004/Del/2011and 1005/Del/2011 for assessment years 2004-05 and 2005-06, that the income declared by the assessee was voluntary and the nature of income was not unexplained investment under section 69 of the Act. In view of the above findings, we are of the considered view that penalty is not leviable even on the facts of the case of the assessee company and it is not a case where there was any detection of income by the authorities below prior to the declaration of income by the assessee. On the contrary, the reasons recorded establish that income was sought to be assessed on the basis of declaration of income by the assessee company. 11.13 The Third Member of the ITAT in the case of Addl. CIT vs. Premchand Garg reported in 123 TTJ 433 has held as under: "19. The fact, whether there is concealment of income or whether inaccurate particulars thereof have been furnished is essentially a question of fac....
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....detected by the AO. There was thus no concealment of the particulars of his income nor there remained furnishing of any inaccurate particulars of his income. It vanished before it could be detected. 21. The correct and accurate disclosure may be by filing the revised return or by furnishing the particulars of such income before the detection by the AO. The mere fact that the assessee had not revised returns or that the offer was by letter to avoid harassment to the assessee and the donors who were non-resident persons, it cannot convert an offer to tax as concealment of income. Therefore, in my opinion the assessee has not furnished inaccurate particulars of the income in the returns before detection by the Revenue. 22. Therefore, mere omission of the surrendered income from the return of an item of receipt does neither amount to concealment nor furnishing of inaccurate particulars of income unless and until there is some evidence to show/exist or some circumstances found from which it can be gathered that the omission was attributable to an intention or a desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. Apart from....
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....he proviso to Explanation 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. In the present case though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer but once the revised assessment was regularised by the Revenue and once the assessing authority had failed to take any objection in the matter the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner of Income-tax (Appeals) in the facts and circumstances of the case. This reference is accordingly answered in the affirmative holding that the Tribunal was justified in doing so." 11.16 The Hon'ble Delhi High Court in the case of Pr. CIT v. Neeraj Jindal reported in 393 ITR 1 (Del) has held as under: "17. In this case, the A.O. in his order noted that the disclosu....
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....ing regard to the above, we find that no penalty is leviable on the facts of the case of appellant and penalty levied is deleted. Grounds raised by the assessee are therefore allowed for both assessment years. 11.18 In the result, ITA Nos. 4388/Del/2014 and 4389/Del/2014 filed by the assessee are allowed. 12. ITA Nos. 1946/Del/2010 to 1950/Del/2010 for Assessment Years 2000-01 to 2004-05 are the five appeals in the case of Ravina Khurana, director of M/s RAPL. In ITA No. 1946/Del/2010 for AY 2000-01, the assessee has raised the following grounds of appeal: "1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that return of income filed by the appellant on 12.2.2007 declaring income representing the receipts credited in Natwest Bank Account, London is not voluntary. 1.1 That in arriving at the aforesaid conclusion, the learned Commissioner of Income Tax (Appeals) has overlooked the reasons recorded for initiation of proceedings under section 147 of the Act wherein it has been stated that proceedings under section 147 of the Act had been initiated on the basis of income declared by the appellant in letter dated 1.4.2006 and th....
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....ome received by the appellant and as such, conclusion so arrived overlooks the facts and, is also not in accordance with law and hence unsustainable. 2.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that sums brought to tax as retainership charges were on the basis of bank statements credited in the bank account maintained by the appellant with Natwest Bank London and, since bank statement itself demonstrate the nature of receipts being retainership charges from Intersputnik, there was no valid justification for the learned Commissioner of Income Tax (Appeals) to have concluded that such sums represented unexplained investment under section 69 of the Act. 2.4 That the finding recorded by the learned Commissioner of Income Tax (Appeals) that documents produced by the appellant in the shape of agreements, confirmation and correspondence do not in any way throw sufficient light on the source and nature of the huge deposits made in the above accounts maintained by the appellant is misconcieved, misplaced and hence unsustainable. 2.5 That further the findings recorded by the learned Commissioner of Income Tax (Appeals) that "AO has also raised ....
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....of Income Tax (Appeals) has further failed to appreciate that even otherwise, no interest was leviable after such sum had duly offered to tax vide letter dated 01.04.2006 and thus interest levied and, sustained mechanically is illegal, invalid and, not sustainable. It is, therefore, prayed that, it be held that income declared by the assessee of Rs. 59,58,975/- represented retainership charges from M/s Intersputnik of Rs. 35,41,479/-, bank interest of Rs. 21,47,047/- and other miscellaneous receipts of Rs. 2,70,449/- and, not unexplained investment 69 of the Act. It be also held that, income declared by the appellant in the return of income filed on 12.2.2007 and also in the return of income filed in response to notice under section 147 of the Act was voluntary and further, disallowance made alongwith interest levied be deleted and, appeal of the appellant be allowed." 12.1 Identical grounds have also been raised in the appeals for assessment years 2001-02 to 2004-05 in ITA Nos. 1947/Del/2010 to 1950/Del/2010. 12.2 The relevant facts in brief are that the assessee had filed her original returns of income for the different assessment years as mentioned below: Assessment Year ....
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.... company. 5. It is prayed that tax of Rs. 35,26.00/- may kindly be collected from bank account nos. 44259816 & 140-01- 03368092 with Natwest Bank, London and 051-223899006 with HSBC, Birla Tower, Earakhamba Road, New Delhi- 110001 of the assessee, which are lying attached probably, at the instance of the order of Specail judge, CBI Court, before whom, the assessee is also making a separate request. A copy of order of Special Judge, CBI Court is enclosed as Annexure-H and, intimation thereof to us by the Bank is enclosed as Annexure-I. 6. The interest of 234B and 234C of the Act has been computed by the assessee with right of waiver available to the assessee under the Act. 7. It is lastly prayed that, the aforesaid return of income be regularized by issuing notice u/s 148 of the Act." 12.5 Thereafter, proceedings were initiated by the AO u/s 147 of the Act and notice u/s 148 was served upon the assessee on 19.02.2007. In response to same, the assessee filed reply dated 28.02.2007 stating that the returns of income filed on 12.02.2007 may be treated as returns in response to the notice u/s 148 of the Act. Subsequently, after providing the assessee an opportunity of being he....
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....unds 2 to 2.7 for assessment years 2000-01 to 2004-05 are identical to Grounds 3 to 3.5 in ITA No. 1004/Del/2011 and 1005/Del/2011 for assessment years 2004-05 and 2005-06 in the case of RAPL. On consideration of the aforesaid Grounds, we have already held that the receipts were not unexplained investment under section 69 of the Act. Thus, having regard to the findings recorded in the said grounds, we hold that the impugned income is not unexplained investment under section 69 of the Act. Thus, Grounds 2 to 2.7 in the five appeals are allowed. 12.10 Ground no. 3 in each of these appeals for the assessment years 2000-01 to 2004-05 challenges the disallowance of professional charges paid by the assessee. The learned CIT (A) had rejected the claim by concluding as under: "9.1 The AO has disallowed the above amount of Rs. 84,180/- claimed as expenditure on account of auditor's fees on the ground that the appellant is following cash system of accounting and the said amount of Rs. 84,180/- has not been paid during the year. The ld. AR has argued that the mere fact that sum has not been paid cannot be made a basis to hold that this expenditure is not eligible business expenditure. On c....
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....sessment order, remand report of the AO and the submissions made by the ld. AR on the above issue. The appellant's argument that the bank account can be equated with books of accounts maintained by the appellant is not acceptable for detailed reasons cited by me in para 7.9.2 above. However, I find that this issue is not material to deciding the taxability of the opening balance of Rs. 6,23,72,953/- in the bank account of the appellant as on 01.04.1999. It is not in dispute that the above amount represents the brought forward closing balance in the aforesaid bank accounts as on 31.03.1999. It is settled law that what can be brought under the ambit of unexplained investment u/s 69 is the value of such investment made by the assessee during the financial year immediately preceding the relevant assessment year under consideration and not the brought forward balances of earlier years. This is clearly borne out by the provisions of section 69 which specifies that "Where in the financial year immediately preceding the assessment year the assessee has made investment which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers....
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....he finding that the amount was in existence in March, 1966, followed from the explanation given by the assessee and that given by his wife. It is a conclusion of fact." This view has recently been expressed by the Hon'ble Delhi High Court in the case of CIT V Usha Stud Agricultural Farms Ltd. reported in 301 ITR 384, wherein it has been held as under: "7. Here, the CIT(A) has deleted the addition of Rs. 15 lakhs mainly on the ground that this credit balance of Rs. 15 lakhs is being reflected in the accounts of the assessee over the past four to five years or so and hence this was not a fresh credit entry of the previous year under consideration and these credit entries were already made and accounted for in the assessment years 1995-96 and 1997-98 which were introduced in the form of advance against breeding stallions owned by the assessee and thus these credit entries did not relate to the year under consideration for being considered under section 68 of the Act. 8. Since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assessee, does not pertain to the year under consideration, under these circumstances, the Asse....
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....e case of Jagtar Singh vs. ITO 69 ITD 47 has held as under: "4. After considering the rival submissions, facts and circumstances of the case and the assessee's Statement of Affairs, and the case law relied by the assessee's counsel, we are of the opinion that the submission of the learned Department Representative that addition should be sustained under section 69 has no force because the provisions of sections 69 and 69A are quite different in the material respect, and the revenue cannot support its case on the plea that in case the addition cannot be sustained under section 69A, the same should be sustained under section 69 of the Income-tax Act. On the other hand, we are inclined to agree with the submission of the assessee's counsel that in view of the assessee's statement of affairs available with the revenue since 1982-83, the genuineness of the broughtforward capital cannot be doubted. Simply because the assessee's income became taxable in this year and the assessee filed the return complying with the provisions of law cannot be a ground to penalize the assessee by not accepting its brought forward capital and that too without bringing any evidence to the contrary. The re....
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....t cannot be validly held that assessee has either concealed income or furnished inaccurate particulars of income merely on the ground that, such receipts were not disclosed in the original return of income. 1.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the fact that income assessed was not based on the revised return but on the basis of return filed in response to notice u/s 148 of the Act and the reasons recorded for initiation u/s 147 of the Act established that proceedings had been initiated on the basis of information contained in the revised return and not by way of any detection and hence the finding that there was "willful attempt" to evade tax overlooks this factual fundamental aspect and material on record and as such order upholding the levy of penalty is vitiated and untenable. 1.3 That finding of the learned Commissioner of Income Tax (Appeals) that "it is pertinent to mention here while the FIR was filed by the CBI on 6.03.2006, this must have been preceded by a detailed investigation which must have continued for a length of time. Further, the said investigation and FIR were in respect of contracts entered into by RAPL of which the app....
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.... that filing of FIR on 6.3.2006 was in respect of the amount of Rs. 97,13,86,901/- received in Natwest Bank pertaining to M/s Ravina & Associates Pvt. Ltd. for assessment year 2006-07 which was declared in the original return of income and, not for the sum declared and, assessed in the instant assessment year and that too, in her individual capacity and as such, the same could not be ground to hold that appellant had not declared the income voluntarily. 1.9 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that assuming for the sake of an argument (though the same is seriously disputed) that there was detection of income by the CBI and it was only on account of detection by CBI that assessee had declared such income then too to determine as to whether income declared by the assessee in the return of income was not voluntary or not, what has to be seen is, whether the income was detected by the learned AO or whether the same was voluntarily offered by the appellant and, not that, it was allegedly detected by CBI and as such the conclusion of the learned officer is based on misinterpretation of provisions of law 1.10 That various adverse findin....
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...."(p) Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income (q) Sending printed form where all the ground mentioned in section 271 are mentioned would not satisfy requirement of law." 14.4 The above said decision of Hon'ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton & Ginning Factory (supra) has been followed by the Hon'ble High Court of Karnataka in the case of CIT v. SSA's Emerald Meadows 73 taxmann.com 241 and the relevant portion is as under: "2. This appeal has been filed raising the following substantial questions of law: 1 Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case? 2 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the....