AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1573
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....ssessee submitted that the appeals for assessment 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 in....
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....ner of Income Tax (Appeals) has further erred both in law and, on facts in holding that, aggregate 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 i....
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....ts 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 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 ....
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....e, the same neither in law and nor on fact could have been made a basis to assume much less conclude that income declared by the appellant in 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. 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 la....
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....f objections and pointed out a number of anomalies in the appellant's submissions both in the assessment order and in the remand report and, the appellant had not been able to counter the above objections or explain the anomalies by any documentary evidence 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....
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....additions made together with interest levied are unsustainable and, therefore be directed to be deleted. It be also held that the income declared by the appellant in the returns of income filed on 21.08.2006 and, 12.2.2007 was voluntary and appeal of the appellant-company be allowed." 5. The brief facts are 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 Niga....
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....s. 10,01,78,738/-, 8/52 parts thereof amounting to Rs. 1,54,12,114/- is allocated for appropriation of profits of the current previous year relevant to the assessment 2004-05. To it is being added the Rupee equivalent of another business receipt of GB Pounds 502/- converted @ Rs. 78.65 to a GB Pound, which works out to Rs. 39,482/-. Against these revenues, 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 L....
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....in his opinion, while filing return of income, on his interpretation was of the opinion that sine the entire receipt had not yet accrued and has not yet attained the character of income and, is thus not income for the instant Asstt. Year. Since the assessee company may have no objection of including the entire receipt as income, it only seeks to pray a deduction of 15% of total receipts to be allowed as deduction, keeping 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....
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....03.06 alongwith Notes of Accounts (Annexure-X) 7. Details of Traveling and Lodging of one of director of the assessee company, which are self explanatory are enclosed (Annexure-XI) 8. It is prayed that tax on the aforesaid sum may kindly be collected from bank account no. 140-00-21000697 (Currency U. S. Dollars), 18009336 (Currency G.B. Pounds) with Natwest Bank, London and 1096-247000 Deutsche Bank, Ece House, 28, Kasturba Gandhi Marg, New Delhi-110001 of the assessee 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/- ....
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....and also filed written submissions vide letter dated 03.06.2008. The AO, (ACIT, Circle 15(1)/Addl. CIT) submitted the remand report on the written submissions vide letter dated Addl. CIT/R-15/2008- 09/1319 dated 15.10.2008. The assessee filed the reply to the above report of the AO vide two separate letters dated 15.02.2010. The learned CIT (Appeals), although admitted the additional evidence; however on merits of the issue he substantially dismissed the appeals and now the assessee has approached the ITAT against the dismissal of the appeals by the Ld. CIT (A). 6. The Ld. AR submitted that ground nos. 1 to 1.4 for AY 2004-05 and 2005-06 pertain to claim of the assessee that the income declared by the assessee company relating to 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 o....
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....e return of income filed in response to notice under section 148 of the Act and, in the revised return filed on 12.2.2007 (kindly see pages 52 to 66 of PB - I) was not voluntary, is wholly misconceived and misplaced and contrary to the facts and circumstances of the case and settled interpretation of law and, therefore, unsustainable. 2. It is submitted that, learned Additional Commissioner of Income Tax has failed to appreciate that, six letters declaring the receipts from M/s TPE in Natwest Bank Account as income of the appellant company were filed voluntarily by the appellant and, without any detection of income by the Income Tax Department. 3. 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 (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....
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.... 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. 7. It will be seen from the reading of the aforesaid, that the said FIR 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 decla....
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....31 of CIT (A)'s order), it is submitted as follows: 9.1 That bare perusal of comments of learned AO in the remand report would show that, revenue in no manner has established that, declaration of income by the assessee in the return of income for assessment year 2004-05 was not voluntary. In fact, a cursory look of the comments would also show that, the learned Officer and CIT (A), though has devoted as many as 8 pages, but in doing so, in the respectful submission of appellant the learned officer appears to have misdirected himself and, overlooked the factual substratum of the case. 9.2 It is submitted that, the aforesaid conclusion of the revenue is essentially based on the erroneous assumption that, the return of income was filed after the action was taken by CBI. It is submitted that, it is a matter of record 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 th....
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.... evident from the first letter written on 1.04.2006 and, thereafter in various replies furnished to the learned AO. It is further submitted that, mere mis-interpretation of the statutory provisions cannot lead to an assumption above lack of bonafides of the assessee. The assessee seeks to further clarify here that, in the preceding years, the assessee did not include any income credited in the Bank Account at London, as according to the opinion of the assessee, the same was earned outside India and, therefore not taxable in India. This is also evident from the letters dated 27.02.2006 and, 6.03.2006 written by assessee-company to Shri Girish Shukla, Advocate, copies of which are enclosed at pages 745 and 746 of the Paper BookIII. In fact, in the letter dated 27.2.2006 written by the assessee to Mr. Girish Shukla, it has been stated as under: ...... 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 assesse....
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....stated that, income of the assessee had escaped assessment. In compliance to this notice u/s 148, the assessee furnished return on income on 21.06.2006 declaring an income of Rs. 1,86,28,990/- which was duly accompanied by computation of income. Thereafter again, the assessee revised its return of income, which was filed on 21.06.2006. In response to section 147/148 on 12.02.2007 u/s 139(5) of the Act." 10 In view of the reasons stated above, it is submitted that, it be held that, income declared by the assessee relating to receipts from M/s TPE and, credited in Natwest Bank Account at London in the Assessment Years 2004-05 and 2005-06 are voluntary. 8. On the other hand, the Ld. CIT DR relied upon the order of the authorities below and requested that the claim of the assessee be rejected. In the written submissions filed by the Department, it was stated as under: "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 ....
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.... in agreement with the books of accounts. The auditors further opined that proper books of accounts as required by law have been kept by the company so far as appeared from there examination of the books. In 3CD reports, the nature of business or profession has been stated to be travel agent. The income declared in the original return is that of air ticketing business for Aerofloat (Russian Air Lines). In fact, in the tax audit reports, the auditors had mentioned that "these receipts from M/s Technopromexport and expenditure in foreign currency were never recorded by the assessee in its books of accounts for the assessment year 2004-05 and 2005-06. These transactions in foreign exchange were only observed at the time of audit for the assessment year 2006-07 from the letter, Dt. April 01, 2006 by the assessee company through its Directors." The assessee company has claimed the receipts from TPE and other 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 ....
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....-20. We had opened this account only to facilitate and ensure speedy collection of remittances from our clients and remittances of payment to our suppliers. 4. We had always in the past carried an impression that income arising from providing technical and support services to the foreign enterprises in foreign exchange is not liable to be included in our income for taxation in India. We had, therefore, never in the past included the still unascertained profits accruing to us from such operations in our income returned for taxation in India. These profits have not yet been distributed either. We nevertheless have regularly maintained accounts of these transactions separately. 5. However, while we were discussing our Russian business with a well-wisher Mr. Ram Jethmalani at the fag end of February, 2006, we were shocked to learn that income arising from providing technical and support services in foreign exchange was liable to be included in 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 Agree....
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....nce our authorized representative had with you on 5.4.2006. 2. In furtherance thereto we are submitting herewith, as annexure 'A-1 & A-II*, summaries of transactions in our two bank accounts maintained by us with Nat West Bank, London, separately indicating the total amounts received therein from our clients and the interest accruing in the bank account, total outgoings there from on account of various expenditure incurred in connection with our business, including bank charges and the resultant surplus in respect of all the fiscal years from 2003-04 to 2005-06, indicated in the currency in which these accounts are maintained. Annexure "A-III" being submitted is a consolidated summary of annexures "A-I & A-II" indicating the aggregate surplus in Indian rupees. ( Copies enclosed at Pages 137 to 139 of ATR) 3. Annexure "A-1 & A-II" have been prepared by us based on the entries in the Journal maintained by us for our foreign ventures and the figures reported are subject to correction with reference 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 entire....
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....4,40,204 - on deposits with Syndicate Bank, F-40, Connaught Place, New Delhi. 2. Professional tax - Rs. 12,50,000 - Received from Sohail Khan (Services - ticket ) Production ½ Coral Reaf, Bandra, Mumbai 3. Commission - From Aeroflot - New Delhi - From Aeroflot - Mumbai - From Bandhu Travels (P) Ltd. - From ISI Travel Services Private Ltd. - New Airways Travels (Delhi) DUF Ltd. Perusal of letter dated 11/4/06 filed in this office on 13/4/06 shows that these are credit entries (deposits) of Rs. 10,49,03,405/- in A/c No. 140-00-21000697 with Nat West Bank London (Currency US $) and in A/c No. 18009336 with Nat West Bank London (Currency GB Pounds) Perusal of extracts from journal register from 1.4.03 to 31.3.04 filed with the shows that the sum of Rs. 10,49,03,405/- has been received from TPE, Russia. This receipt has not been included in its receipts as shown in return of income and thus not offered for tax. On the facts and in the circumstances of this case as discussed above, I have reason to believe that income of Rs. 10,49,03,405/- chargeable to tax preceding Assessment Year 2004-05 has escape....
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....avina Associates received a deposit in excess of US$ 20 million from a Russian Entity TPE. The deposit was payment for assisting TPE in obtaining a contract with Indian National Thermal Power Corporation for a Super Thermal Power Project in Barh region and that the details could be made available subject to a formal request. It was further informed that the funds were available for restraint if sought and the account details would be provided to the relevant United Kingdom Authority upon receipt of a formal request." 9.5 A perusal of the above shows that this FIR was in respect of a contract between M/s National Thermal Power Corporation (hereinafter referred to as 'NTPC') and M/s TPE, Moscow and had nothing to do with the receipts received by the assessee and declared as income in the returns of income for the instant year. 9.6 It has been submitted by the Ld. AR that though the FIR was filed on 6.3.2006, the assessee became aware of the same only on 2.5.2006, on receipt of a fax from Central Confiscation Branch, Crown Prosecution Service, London. It has also been submitted that, prior thereto, the assessee had only received on 29.04.2006, a letter from the Natwest bank date....
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....s of income. The Ld. counsel for the assessee has further submitted that the belief of the assessee was bona fide is evident from the fact that sums received outside India from the foreign entities were not disclosed in preceding assessment years and such receipts have not been disclosed as income in the instant year. It has, thus, been claimed that it is a case of ignorance of law till 1.4.2006 and, once the assessee came to know of its liability to tax, the assessee voluntarily and, on its own provided the particulars of income. 9.8 It has also been argued that during the assessment proceedings, the assessee, vide reply dated 12.07.2007, had specifically requested the Assessing Officer that voluntary disclosure was not in consequence of action taken by the CBI but on account of legal opinion obtained from Shri Girish Shukla and Sh. Ram Jethmalani which fact was also stated in the letter dated 1.4.2006 and it was contended that no material rebutting the above explanation has been placed on record by the revenue. The revenue, in the appellate proceedings either before the Ld. CIT (A) or before us, has not placed on record any material to rebut the aforesaid specific evidences pl....
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....n record, the reasons recorded clearly point out that action under section 148 of the Act was based on the communication by the assessee and claim of the assessee is tenable and has merit and, therefore, accepted as such. Having regard to the above, the grounds raised by the assessee are allowed. 9.10 Accordingly grounds nos. 1 to 1.4 raised in ITA No. 1004/Del/2011 for Assessment Year 2004-05 and ITA No. 1005/Del/2011 for Assessment Year 2005-06 are allowed. 10. Grounds nos. 2 to 2.1 of Grounds of Appeal for AY 2004-05 and AY 2005-06 relate to the claim of the assessee that the revised returns furnished during the assessment proceedings were valid returns. 10.1 The relevant facts are that return was filed in response to notice under section 148 of the Act on 21.06.2006 declaring an income of Rs. 1,86,28,990/-. This return of income filed was revised on 12.02.2007 declaring an income of Rs. 10,80,57,290/- The Assessing Officer has held that since the revised return, filed on 12.2.2007, was after the expiry of period of one year from the end of the assessment year i.e. 31.3.2006 the same was non est in terms of the provisions of section 139(5) of the Act. As regards AY 2005....
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....he appellant on 28.2.2007 (pages 191 to 197 of Paper Book-I). The relevant portion of the aforesaid reply are extracted hereunder: 3. It is evident from the aforesaid statutory provisions that, return of income filed by the assessee in response to notice u/s 148 of the Act is to be treated as if such return were required to be furnished u/s 139 of the Act and, the provisions of the Act shall, so far as may be, apply accordingly. It is further submitted that, perusal of the provisions contained in section 139 of the Act would show that, the assessee is required to furnish return only in section 139(1) of the Act; other provisions contained in section 139 of the Act are voluntary and, not obligatory i.e. they do not require the assessee to furnish a return u/s 139 of the Act. It may be added here that, prior to 1-4-1989, the only difference in the provisions was that, a notice calling for the return was to be issued containing all or any of the requirements which may be included in a notice under section 139(2) of the Act deeming it a notice under that section, while present provision mandates issuance of notice under section 148 and refers to "as if such return were a retur....
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....vised on 12.2.2007. The limitation provided under section 139(5) of the Act is one year from the end of the relevant assessment year. This means that the revised return could be filed up to 31.3.2007 and since the last revised return was filed on 12.2.2007, therefore, such revised return filed on 12.2.2007 is held to be valid. Further, for assessment year 2004- 05, the claim of the assessee is that a return of income had been furnished on 21.6.2006 in response to the notice dated 22.5.2006 under section 148 of the Act and the revised return filed on 12.2.2007 was in respect of return furnished in response to notice under section 148 of the Act. It has been contended that the return filed in response to notice under section 148 of the Act was a return under section 139(1) of the Act and, therefore, revised in terms of section 139(5) of the Act. Having considered the above argument, we find substantial force in the same. Section 148(1) of the Act stipulates that section 139, so far as is applicable, shall apply in respect of a return furnished in response to notice under section 148 of the Act and, therefore, a return voluntarily filed on 21.6.2006 can be revised in terms of section ....
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.... The assessee company has claimed the receipts from TPE and other receipts in NATWEST 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. These receipts have been incorporated in its profit and loss account filed with the return of income on 12.2.07. The assessee has not been able to furnish copy of invoice raised as per terms of agreement with TPE, regarding the receipts in its London account. The agreement did not provide for payment of any advance. Assessee has not explained the source of receipts in GB Pounds. The assessee has not furnished any confirmation from TPE that the payments made in the NATWST account was on account of Obra Project. Merely filing of copy of agreement between TPE and RAPL and a few correspondence in this regard cannot lead to the conclusion that the receipts were commission on account of the Obra Project. In fact, it has been admitted that the Obra Project did not take off and on MOU had to be signed on 20.4.06 between TPE and UPRVUNL whereby time for completing Phase I of the project was extended up till 4.11.06. ....
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....s to and with no details of job carried out by the assessee company for TPE. Assessee could not submit proof of delivery of this letter to TPE or any reverse correspondence from TPE in this regard. In view of the same, the genuineness of this letter being Quarterly report as mentioned in the agreement with TPE is rejected. The assessee has also not furnished any confirmation from TPE that the payments made in Natwest Account is in account of Obra Project nor produced original agreement with TPE. The assessee further submitted that no invoices were raised by the assessee to the TPE. Further, the counsel stated that the receipts from TPE could not be correlated exactly with the terms and conditions of the agreement. Merely filing a copy of agreement between TPE and assessee and a few correspondences in this regard cannot establish that receipts were commission on account of the Obra project. In fact it has been submitted that Obra project did not take off and an MOU had to be signed on 20.4.06 between TPE and UPRVUNL whereby time for completing phase I of the project was extended till 4.11.2006. The correspondences filed by the assessee does not explain the nature of work carried out....
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.... assessee company, other than owing up the credits in the bank accounts as its income for both the year under appeal has not been able to establish the nature and source of such receipts by any satisfactory documentary evidence or books of accounts. In the event the appellant's claim that the said income represents its income from the business of consultancy is rejected. Considering the above since the said investments are not recorded in the books of account of the assessee company and , the assessee company has not been able to offer any satisfactory explanation about the nature and source of th above investments in her bank account find that the value of the investments is to be rightfully treated as unexplained investment of the appellant u/s 69 of the Act. This issue of the appellant is therefore rejected." 10.12 In the written submissions before us the assessee has contended as under: "11. That appellant company had received sums under the agreement dated 23rd of July, 2003 with M/s Technopromexport, 18/1, Ovchinnikovskaya nab., Moscow, 115324, Russia. (hereinafter referred to as "TPE"). The sums were received by the assessee company under the aforesaid agreement ....
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....een recorded in Journals maintained by the appellant company in respect of foreign ventures. A copy of the journals so maintained had also been placed on record and, are placed at page 759 to 768 of Paper Book-III. 16. That aforesaid sum was only not disclosed in the original return for the fact that, appellant company was of the opinion that, entire sum received was not liable to tax in India and it was only at the fag end of February, 2006 that, appellant had made aware in the course of discussions with Mr. Ram Jeth Malani, Senior Advocate that all such income arising from providing technical and support services were liable to be included in income for taxation in India. 17. That observation that agreement did not provide payment of any advance and, assessee has not explained the source of receipts in GP pounds are factually misplaced. Infact, perusal of the details of remittances received would show that, no sum was received in GP Pounds and entire sums have been received in US Dollars (page 76 of Paper Book-I). It is also submitted that, each of the sums received are duly supported by certificate from bank which has been placed in the Paper Book-I and page 26....
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....l submissions and perused the material on record. In the instant case, the assessee company had entered into two agreements with M/s. TPE, a government company incorporated in Russia for providing support services during implementation of their contracts in India. The details of agreements are as under: (a) 23.07.2003: UPRVUNL agreement for implementation of contract of TPE dated 5of February, 2003 with M/s Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (herein after referred to as "UPRVUNL"). for refurbishment of Obra Thermal Power Station, Uttar Pradesh State, India (b) 25.10.2004 : NTPC Agreement for implementation of contract of TPE dated 25of March'2005 with NTPC for design, manufacturing, delivery, transportation to the site, unloading, storing, erection, testing, start-up, adjustment and commissioning of Boiler Islands equipment at Barh Super Thermal Power Project (3X660 MW), Bihar, India 10.15 Under the aforesaid two agreements, according to the assessee, following sums were received by the assessee company: a) In respect of UPRVUNL Agreement: Rs. 14,58,65,794/- b) In respect of NTPC Agreement Rs. 97,13,86,901/- Rs....
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....l all the information became known to him in the course of implementation of this Agreement. 2.4 Agent and TECHNOPROMEXPORT consider all the information and data the parties exchanged in the course of implementation hereof to be confidential. 2.5 Agent shall not have the right to create or undertake any obligations on behalf of TECHNOPROMEXPORT without prior written instructions of TECHNOPROMEXPORT. 2.6 RAPL shall submit to TECHNOPROMEXPORT quarterly reports in writing about performance of his obligations under this Agreement without any supplementary reminding of TECHNOPROMEXPORT. In case of non-presentation of these reports TECHNOPROMEXPORT shall have the right to suspend payment of current invoice of the Agent submitted in conformity with Article 4 hereof." 10.19 The assessee has placed on record invoices issued by the appellant to TPE, remittance certificates issued by the Natwest Bank certifying that the sums received by the assessee company were from TPE, correspondence of assessee with TPE and UPRVUNL and, a letter from TPE dated 19.5.2016 which reads as under: "Dear Sir, Please be informed hereby that the Russian Government ow....
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....Barh" TPP, is designed for the work on the sliding parameters. This will make it possible to reach high EFFICIENCY, even with operation of the power plant at low capacity TPE possesses wide experience in realization of such projects. For example, TPS "SUYCHZHUM" IN China of 1600 MW (2x800MW) capacity built with the assistance of TPE specialists. Today the station runs successfully with by the declared parameters. The reputation of TPE in International circles is well known as a clean, law abiding and pioneering company in the power sector. The International tender bidding the "Barh" STPP was started in 2002, and bids were finally opened in the premises of NNTPC, Noida, on 05.11.2005 in presence of the participants: M/s. TPE (Russia), M/s. Doosan (Korea), M/s.BHEL (India), TPE's bid was the lowest one. Nevertheless, we believe that the team of NTPC experts (including technical, commercial, legal, etc staff) has done very careful investigation of the submitted bids, verification of the declared parameters. Moreover, the above team visited manufacturing plants designing institutes and the similar TPS "Suychzhun" in China. Upon completion of the above job, the Tender ....
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....ments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. Thus, the precondition for bringing to tax any sum as unexplained investment under section 69 of the Act is that there must be investment for which, either no explanation has been furnished by the assessee or explanation furnished about the nature and source of the investment is not satisfactory. Here is not a case of 'no explanation' but it is a case where the authorities below have held that explanation about the nature and source is not satisfactory. To arrive at the above conclusion, the reasoning adopted by the Ld. CIT (A) is that the documents produced by the assessee company in the course of assessment proceedings namely photocopy of agreements with M/s TPE confirmation from M/s. TPE and copy of some correspondence do not in any way throw sufficient light on the nature and source of the huge deposits made in the accounts maintained by the assessee company. To our mind, the confirmation from TPE is quite specific and unambiguous and in any case, thereafter despite specific req....
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....ontemplated to find out the genuineness of the address or the genuinenity of the applicants before allotting the shares. If for any reason the address given in the application were to be incorrect or for any reason if the said applicants have changes their residence or the notices sent by the assessing officer has not been received by such applicants, the assessee company cannot be blamed. Therefore, we are of the view that the Tribunal was not justified in allowing the appeal of the revenue only relying upon the statement of Sri Anil Raj Mehta, a Chartered Accountant." 10.23 Therefore, having regard to the aforesaid judicial pronouncements, since the evidence furnished by the assessee has not been shown to be otherwise by any other leading evidence so as to reject the said claim, the claim of the assessee must be held to be maintainable for the reason that it would be fall in the realm of arbitrariness to reject a claim which is supported by an evidence and accept a conclusion which is based on presumptions and assumptions and therefore, untenable. The agreement, invoices and remittances certificates are a clear pointer to the claim as to the origination of money from TPE and a....
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....n ITA No. 6564/Del/2013 for Assessment year 1999-00 dated 12.4.2017 has held as under: "20. Even otherwise also the entire order is based on the basis of assessment order in the case of Bishan Chand Mukesh Kumar which was been upheld by the CIT (A). On perusal of the assessment order we find the Assessting Officer nowhere has confronted the same to the assessee. As regards the observation of the ld. CIT (A) that the assessee has not pressed the ground relating to cross examination is concerned, the same in our opinion is incorrect in view of the specific ground taken before the ld. CIT (A) and in absence of any material on record to show that the assessee has not pressed the ground before him. 21. We find the Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise (supra) while decing an issue regarding not allowing the cross examination has held that not allowing the assessee to cross examine the witness by the adjudicating authority though statement of those witnesses were made as basic of the Impugned order amounted to a serious flaw makes the order a nullity as it amounted to violation of principles of natural justice.....
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.... tenable claim. In fact, the origination of receipts from the TPE cannot be disputed having regard to the certificates from the bank. Thus, the nature of receipts has been supported from the agreements, invoices and correspondence along with the confirmations placed on record. The essence of the case of the revenue is that FIR was filed by the CBI which apparently does not pertain to the instant contract. Moreover, the aspect that this income was not declared in the original return of income cannot be a ground to automatically conclude that it is unexplained investment particularly having regard to the aforesaid evidences and factual position placed on record which remains un-assailed despite examination at various levels. Having regard to the above, we are of the considered view that the income declared does not warrant assessment under section 69 of the Act. With these findings, we allow the Grounds raised by the assessee for both the assessment years. 10.28 Ground nos. 4 to 4.1 for assessment years 2004-05 and 2005-06 are regarding disallowance of claim of deduction of 15% of the total receipts in view of the principles laid down in the case of Calcutta Company Ltd reported i....
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....ely to carry out the same, it was not dependent on any condition being fulfilled or the happening of any event, the only condition being that it was to be carried out within six months which in the view of fact that the time was not the essence of the contract meant the reasonable time..... It was thus accrued liability and estimated expenditure which would be incurred in discharging the same could very well be deducted from the profits and gains of the business." In the present case, the receipts from M/s Technopromexport has not been considered as income from "profit and gains of business of profession". Rather, the AO has treated these receipts as unexplained money u/s 69A of the I.T. Act. So the deduction was not allowed to the assessee. In this case even the agreement with Technopromexport did not provide for any expenditure to be incurred by the assessee. So the question of any future liability did not arise in the case of assessee. Hence there was not question of it being a contingent liability or accrued liability. So, the claim of the assessee of allowing 15% of the receipts from M/s Technopromexport as expenditure was disallowed by the AO." 10.29 The Ld. CIT (....
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....ncurred and, claimed by the assessee company. 10.34 We have considered the rival submissions and perused the material on record. The Ld. CIT (A) has sustained the disallowances by concluding as under: "11.5 I have carefully considered the assessment order, remand report and the submissions made by the ld. AR. I find that the appellant has not produced any evidence to justify its claim of expenditure either during assessment or the appellate proceeding, other than merely arguing that the disallowance is adhoc in nature and hence untenable. I find that the AO has relied on the auditor's report expenses vouchers were not supported by documentary evidences. Under the above facts and circumstances, the disallowance made by the AO on the basis of reasonable estimate cannot be found default with. The said disallowances are, therefore, confirmed and this issue is decided against the appellant." 10.35 From the aforesaid, it is apparent that the Ld. CIT (A) has noted that the Assessing Officer had made the disallowance since this audit report mentions that the expenses vouchers were not supported by documentary evidence. It has been also noted that during the appellate proceed....
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....010 and writ petition no. 758 of 2010 published in http://www.itatonline.org. Considering the above, the disallowance of Rs. 10,000/- made by the AO is upheld and this issue of the appellant is rejected." 10.39 The learned counsel for the assessee has not brought any material on record to rebut the aforesaid cogent findings recorded by the Ld. CIT (A). In view of the aforesaid, the claim of the appellant lacks substance and is therefore, rejected. Even otherwise, it is noted that the disallowance made is reasonable and as such, it does not call for any interference. 10.40 Ground raised by the assessee is, therefore, rejected. 10.41 Ground nos. 8 to 8.2 for assessment year 2004-05 and Ground nos. 7 to 7.2 for assessment year 2005-06 are regarding levy of interest u/s 234B, 234C, 234, 244A and 220(1) of the Act. 10.42 In the written submissions before us the assessee has contended as under: "....25. At the outset, it is submitted that, no interest is leviable on the facts of the instant case, since it cannot be validly held that, assessee was in a position to estimate the advance tax on the income assessed by the learned AO in the order of assessment. It is submi....
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....en of the incidental inadvertent lapse on our part in the matter." 25.2 It is further, submitted that Hon'ble High Court of Delhi vide its order dated 06.08.2012 (at pages 14 to 17 of PB - IV), had also directed the Special Judge, to bring back the money appropriated in Natwest Bank in India and also directed to remit the money to SBI Branch of Tis Hazari Court. That a bare perusal of the said order of Hon'ble High Court will fortify the submission of assessee - appellant that the money was lying and was frozen at the behest of Government of India in Natwest Bank, UK and direction was given by the court to bring back the said money and appropriate the same to pay off various Government dues. Thus, in view of the above, no interest could be levied 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. 25.3 Reliance is placed on the following judgments: a) CIT v. Rainbow Industries (P.) Ltd. (Guj.) 148 Taxman 267 b) Haryana Warehousing Corpn. v. DCIT (Del.)(TM) 75 ITD 155 c) Janak Raj Chauhan & ORS. V....
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....ded for levy of interest. Ernakulam District Co-operative Bank Ltd. Vs. ACIT 272 ITF 95 (Ker) After referring certain earlier decision, including the decision of Delhi High Court in the case of CIT Vs. Prem Nath Motors Pvt. Ltd. (2002) 253 ITR 705 (Del) it was held that levy of interest u/s 201 (1A) is compensatory measure for withholding tax which ought to have been given to the exchequer. The provisions makes it clear that levy is mandatory and there is no pre-condition of considered of 'reasonable cause' for non-payment in time of tax deducted u/s 192 of the Act. Therefore, the ITO was not required to take into consideration the reasonable cause. Further the use of word 'shall' cause presumption that the particular provision is imperative. Upper Doab Sugar Mills Vs. CIT 263 ITR 97 (All). In the facts of above case though the Assessing Officer specifically mentioned in the order for charge of interest u/s 215 there was no specific mention for charging interest u/s 216. There was general mention to the effect that "Charge interest as per law". The High Court though principally observed that under estimation itself may not be sufficient to attrac....
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....ing the above clear statutory and judicial positions, the levy of interest u/s 234B, 234C and 234D is confirmed. The issue of the appellant is, accordingly, rejected." 10.45 Before us, the learned counsel for the assessee has made two fold submissions that having regard to the fact that the assessee had bona fide belief and, therefore, the income arising from services was not included as income in the original return of income and, therefore, the assessee is not liable for interest under section 234B and 234C of the Act. It was alternatively contended that once the assessee had filed a letter voluntarily on 1.4.2006, no interest ought to have levied subsequent to the said letter. 10.46 As far as the primary claim of the assessee that there is bona fide belief is concerned, it proceeds on the basis that the assessee had receipts from a non-resident company which had been credited in a bank account maintained outside India and thus, the assessee was of the bona fide belief that such sum was not taxable in India. It has been contended that the assessee had been maintaining memoranda accounts for such sums received outside India but were not declared as income in the original ret....
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....y. 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 declare that all the monies in the said bank stand assigned to the Government of India in trust for paying away my tax liabilities when precisely determined. 10. To discuss our tax liability and work out the modalities for its prompt, effective and full discharge, we will be obliged to have an audience with you, which may kindly be granted and intimated to me at my address indicated above at your earliest." 10.49 Having considered the same, we find merit in the same in as much as assessee had intimated the revenue authorities on 1.4.2016 and had also requested specifically that all the monies in the said bank be adjusted against the tax liabilities. Therefore, no interest could be levied under any provisions of the Act after 1.4.2006 i.e. after the income had been declared by the assessee voluntarily and, deposits stood assigned for payment of tax. This aspect has not been disputed by the learned CIT DR during the course of hearing. The Assessing Officer is accordingly directed to compute the interest in terms of the directions her....
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....the date of filing of return on 12.2.2007 when assessee had revised return of income by including an amount of Rs. 4.10 crores, no enquiry was either initiated or launched and thus, income offered in the 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 incom....
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....been recorded in the order of assessment the penalty levied was otherwise not sustainable. It is therefore, prayed that it be held that penalty so levied and sustained is illegal, invalid and therefore, may kindly be deleted and appeal of the appellant be allowed." 11.2 Identical grounds have been raised by the assesse in the appeal for assessment year 2005-06 in ITA No. 4389/Del/2014 which read as under: "1 That the learned Commissioner of Income Tax (Appeals) XVIII New Delhi has erred both in law and on facts in upholding penalty levied of Rs. 1,50,95,320/- 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....
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....ed on misinterpretation of provisions of law 1.6 That the learned Commissioner of Income Tax (Appeals) has sustained the penalty mechanically, arbitrarily and in complete disregard of the written submission and evidence furnished on record by the appellant company and therefore, penalty so sustained is wholly misconceived and untenable. 1.7 That the learned Commissioner of Income Tax (Appeals) while framing the penalty, has also overlooked the fact that the various findings recorded in the order imposing penalty had been mechanically and bodily lifted from the order of assessment framed under section 147/143(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 (....
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.... 11.4 On appeal, the Ld. CIT (A) upheld the conclusion of the Assessing Officer and confirmed the levy of penalty under section 271(1)(c) of the Act for both the years. 11.5 Before us, the learned counsel for the assessee has contended as under: "1 It is submitted that, it is undisputed that, income assessed by learned AO is on the basis of income declared by the assessee in letters dated 1.04.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 20.5.2006 and, thereafter in the returns furnished by the appellant on 21.06.2006 and 12.02.2007 filed by the assessee company. 2 Thus, once income declared voluntarily has been assessed as such, it cannot be alleged that, there is furnishing of inaccurate particulars of income. In fact, the aforesaid letters/return of income would show that no enquiry was either initiated or launched by the learned Assessing Officer before disclosure of income and thus, income voluntarily offered has been assessed as such. It is thus, submitted that there is no concealment of any income. All what could be alleged is that, in the return filed on 31.10.2005, the assessee omitted to include a sum of Rs. 10.48 crores, However, bona....
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.... 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 may kindly be noted these are all subsequent developments and are of a date later than appellant on its own addressing a communication to the tax authorities. It may also be stated here that this letter was issued since appellant had approached the bank several times since March' 2006 [6.03.2006) 28.03.2006, 30.03.2006, 12.04.2006, 13.04.2006, 19.04.2006, 22.04.2006 and 25.04.2006, for closure of the bank accounts, obtaining the bank statements and remitting the funds to India. Infact, letters addressed to the bank in March' 2006 were only as a result of discussions held by the assessees with the Advocate in February' 2006 who apprised them of the liability to pay tax in respect of the sums credited in the Natwest Bank account at London written by the assessee to the advocate in the respective years. Hence, in light of the aforesaid, it is respectfully submitted that, the income was voluntarily offered firstly vide letters dated 01.04.2006 & 11.04.2006 and thereafter in the returns of income dated 21.08.2006 and 12.02.2007. The assess....
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....proceedings have been initiated in a mechanical manner when along with the notice of demand a printed notice u/s 271 (1)(c) was also forwarded to the assessee. It is submitted that, satisfaction of the learned officer is not a cause for inference but must be clearly discernible from the order of assessment. This view has been expressed by Hon'ble Delhi Court in the case of CIT Vs. Madhu Shri Gupta reported in 317 ITR 107. In this context, reliance is also placed on the observations of their lordship of the jurisdictional High Court, which is binding in nature, in the case of CIT v. Auto Lamp reported in 278 ITR 32. 8 In light of the above submissions, it be held that the assessee has not concealed any income and the penalty imposed u/s 271(1)(c) may be cancelled considering the bonafide explanation of the assessee. It is again reiterated that, there was no attempt to intentionally evidence taxes by concealing particulars of income which would warrant imposition of penalty u/s 271(1)(c) of the Act." 11.6 It has thus been contended inter-alia that the returns of income were filed by the assessee voluntarily and it was only on account of letters filed by the assessee that ....
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....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. 3 CIT v. Escorts Finance Ltd. [2010) 328 ITR 44 (Del) (Copy enclosed) where Hon'ble Delhi High Court held that if claim made in return of income appears to be ex facie bogus, it would be treated as a case of concealment or furnishing of inaccurate particulars and penalty proceeding would be justified. 4 CIT v. Zoom Communication (P) Ltd. (2010) 327 ITR 510 (Del) (Copy enclosed) Where Hon'ble Delhi High Court held that if assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271(1)(c) would come into play and assessee will be liable to penalty 5 CIT v. Usha International Ltd. (Delhi High Court) (Copy enclosed as Annexure-6) The mere fact that revised return was filed withdrawing a claim or offering additional income before issue of a formal notice by the AO does not necessarily mean that the return is voluntary. ....
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....s and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income?" 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.). 4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for de....
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....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 fact. To find out that or to decide which, all the attending circumstances have to be taken into account. The question is at what point of time this material fact is to be found out. Generally it is with reference to the return of income and at that time it is to be seen whether there was concealment of income from or furnishing of inaccurate particulars thereof in the return of income chargeable to tax. But there may be cases, where an income is not declared in the return or the particulars of income shown inaccurately in the return but assessee on realization of mistake, omission or misdeed rectifies that and corrects himself and cleans his breast can he still be accused of concealment though in the return there has been the omission. By the time the AO takes up the issue and comes across the information in his possession, if the assessee makes up the deficiency and offers the income or furnishes accurate particulars he, in our opinion, cannot be held guilty of concealment of income or furnishing o....
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....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 the surrender there was nothing more on record to hold the assessee guilty of offering the said amount on detection of the concealment. Even in assessment order there is nothing of that sort. 24. There was no specific provocation or an apprehension of detection prevailing at the time when the offer was made and in the absence of any such imminent fear from the side of the Revenue, if the assessee came forward and paid the tax thereon by adding the same in the returned income, it has to be taken as a voluntary offer to tax. On the face of the evidence in the shape of confirmation letters, bank accounts, passport etc. in the hands of the assessee, it might be valid gift that would have convinced a reasonably minded person, specially a person exercising a judicial function. The accepted position of law is that merely because an assessee had agreed to the assessment that cannot bring in automatic levy of penalty. 25. The facts and circumstances and the merit....
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....ding 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 disclosure of higher income in the return filed by the assessee was a consequence of the search conducted and hence, such disclosure cannot be said to be "voluntary". Hence, in the A.O.'s opinion, the assessee had "concealed" his income. However, the mere fact that the assessee has filed revised returns disclosing higher income than in the original return, in the absence of any other incriminating evidence, does not show that the assessee has "concealed" his income for the relevant assessment years. On this point, several High Courts have also opined that the mere increase in the amount of income shown in the revised return is not sufficient to justify a levy of penalty. 18. The Punjab & Haryana High Court in CIT v. Suraj Bhan [2007] 294 ITR 481/159 Taxman 26, held that when an assessee files a revised return showing higher income, penalty cannot be imposed merely on account of such higher income filed in the revised return. Similar....
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....x (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 the return of income filed by the appellant on 12.02.2007 and therefore, conclusion that return of income was not voluntary is wholly misconceived, misplaced and untenable. 1.2 That the learned Commissioner of Income Tax (Appeals) in arriving at the aforesaid conclusion, has failed to appreciate that a criminal case was registered under the Indian Penal Code and Prevention of Corruption Act against the unknown officials of NTPC of India and others on 6.3.2006 and not against the appellant and therefore, the same neither in law and nor on fact could have been made a basis to assume much less conclude that income declared by the appellant in letter dated 1.4.2006 and return of income filed by the appellant on 12.2.2007 is not voluntary. 1.3 That the adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are not only factually misconceived but also legally unsustainable an....
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....orrespondence 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 a number of objections and pointed out a number of anomalies in the appellant's submissions both in the assessment order and in the remand report. I find that the appellant has not been able to counter the above objections or explain the anomalies by any documentary evidence or clarification" is factually incorrect, overlooks the statement made by the appellant and documentary evidence tendered both in the course of assessment proceedings and appellate proceedings and therefore not tenable. 2.6 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate submission of the appellant that original copy of the appellant was not retained by the appellant and therefore, could not be produced. Infact, the appellant had requested the learned Officer to issue summons to M/s Intersputnik and despite such specific request having been made....
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....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 Date of Filing ofReturn of Income Total Income Declared 2000-01 30.08.2000 1,26,200/- 2001-02 31.07.2001 1,27,100/- 2002-03 01.08.2002 1,67,719/- 2003-04 22.12.2003 1,79.390/- 2004-05 21.09.2004 1,69,135/- 12.3 The aforesaid returns were processed u/s 143(1) of the Act. 12.4 An explanatory note was attached to each of the above returns of income filed on 12.02.2007. The explanatory note for AY 2000-01, which is similar in content to notes for other years, is reproduced hereunder: "1. For the instant assessment year, the assessee named above, had furnished a return of income u/s 139(1) of the Act on 30.8.2000 disclosing an income of Rs. 1,26,200/-. 2. The assessee company however now offering receipts received in the Natwest Bank Accoun....
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....aid 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 heard, the impugned assessment orders u/s 142(3)/147 were passed by the AO determining the total income of the assessee for the year under consideration as under: Sr. No. Particulars Assessment Year 2000-01 2001-02 2002-03 2003-04 2004-05 1. Total income assessed 6,83,03,103 1,31,46,854 39,91,310 14,66,018 1,12,22,573 2. Total addition made 6,23,03,193/- 1,29,244/- 1,29,180/- 1,29,128/- 1,42,683/- 3. Nature of additions i) National rental income from house property 45,000 45,000 45,000 45,000 45,000 ii) Disallowance of claim of expend....
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....hese 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 careful consideration of the matter, I am of the view that since the said amount has not been paid by the appellant during the year under consideration, following he cash system of accounting being followed by the appellant, the said disallowance has been correctly made. The same is therefore, confirmed." 12.11 On careful consideration of the facts, we do not find any merit in the said claim of the appeal and therefore, the same is rejected. Grounds raised are accordingly rejected. 12.12 Grounds 4 to 4.2 relating to levy of interest in each of these appeals for as....
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....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 no explanation about the nature and source of the investment or the explanation offered by him is not, in the opinion of the AO, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." (emphasis supplied). The above statutory provision is identical in nature to the year of taxation of unexplained cash credit u/s 68 of the Act also. It is settled law that correct income is to be taxed in correct hands and in the correct year. This has been judicially upheld in a large number o....
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....he 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 Assessing Officer was not justified in making the impugned addition under section 68 of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A). 9. The above being the position, no fault can be found with the view taken by the Tribunal. Identical view has been expressed by the Hon'ble Rajasthan High Court in the case of CIT V Prameshwar Bohra reported in 301 ITR 404, wherein it has been held as under: "5. On the me....
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....al 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 revenue's allegation that the assessee stone-walled the investigations also cannot be appreciated because in case the assessee was not furnishing the details required by the Assessing Officer, he had ample power under the Income-tax Act to make necessary enquiry at his own level and should not have allowed the assessee to escape the liability of proper tax. 5. In view of above facts and circumstances, we are of the opinion that as far as the addition ....
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....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 appellant is the main Director, the only other Director being her mother Mrs. Govinda Khurana. Therefore, it can by no stretch of imagination be said that the appellant was not aware of the aforesaid criminal investigation in progress, and the filing of FIR, the issue of letter rogatory and restraint order on the bank account prior to 25.04.2006" is based on subjective assumptions and presumption and not any material....
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....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 findings recorded by the learned Commissioner of Income Tax (Appeals) overlook the written submissions and judicial pronouncements relied upon by the appellant. 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 notice was ....
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....4.4 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 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 c....