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2020 (9) TMI 27
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.... Tax, (Appeals)-5, Vadodara (" the CIT(A)" erred in fact and in law in confirming the action of the Deputy Commissioner of Income Tax, Circle-1(3), Baroda ("the AO") in levying penalty amounting to Rs. 17,19,850/ u/s. 271(1)(c) of the Income Tax Act, 1961 ("the Act)" 2. The learned AO erred in fact in law in levying penalty without specifying the charge (i.e whether for inaccurate particulars of income or for concealment of particular of income) of penalty. 3. Your appellant craves the right to add to alter, amend , substitute, delete or modify all or any of the above grounds of appeal. 3. The solitary ground raised by the assessee is that the learned CIT (A) erred in confirming the penalty levied by the AO for Rs. 17,19,850/- on the income disclosed by the assessee for the investment made in the insurance policies under the charge concealment of income under section 271(1)(c) of the Act. 4. The facts in brief are that the assessee in the present case is an individual and engaged in the business of real estate and is also a partner/ director in various firms/companies. The assessee for the year under consideration filed his return of income dated 26th Septem....
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....1 However, the AO was of the view that the assessee has neither disclosed such additional income in the original income tax return filed under section 139 of the Act nor during the course of assessment framed under section 143(3) of the Act. Thus it is evident that the assessee never wanted to disclose such income. But he had to disclose such income in the return filed under section 148 of the Act as the facts about such income was unearthed during the survey conducted under section 133A of the Act dated 30th August 2013. 5.2 As per the AO, had the action not been taken by the department by conducting survey under section 133A of the Act, the assessee would not have offered the undisclosed investment in the insurance policies as income. Accordingly, the AO proposed to levy the penalty by issuing notice under section 274/271(1)(c) of the Act upon the assessee on account of concealment of income for the investment in the insurance policies. 5.3 The assessee in response to such notice submitted that he has already voluntary disclosed the investments made by him in the insurance policies as additional income by way of letter dated 24th July 2013 to the ld. CIT. As such, the undis....
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....pecific charge mention in the show cause notice issued under section 274 read with section 271(1)(c) of the Act whether it was for concealment of income or furnishing inaccurate particulars of income. Thus in the absence of any specific charge, the penalty under section 271(1)(c) of the Act is not sustainable. 8. On the other hand, the ld. DR filed the written submission as forwarded by the AO which reads as under: It is pertinent to mention that after receipt of the STR in the Investigation Directorate, enquiries were conducted by the investigation wing regarding the insurance policies. The Deputy Director of Income Tax (Investigation)-II issued several statutory notices to the assessee and the Bank and called for documents/details regarding the investments made by Shri Mral K Patel and his family members. The details of such notices are given as under: i. A summons u/s. 131(1A) was issued on 28.05.2013 to the assessee Shri Niral K Patel to provide various details including details of all insurance policies held by him or his family members. (Copy enclosed as Exhibit A). By this letter itlself, it is clear that the assessee was required to furnish the details ....
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....ments made in insurance policies by the Department. Thus, this cannot be considered as voluntary disclosure in any circumstances. 5. It is also important to note here that the disclosure made on behalf of other family members during the course of survey was also not voluntary. As evident from the para 3 above, the Department had already been repeatedly asking details of investments made by the family members from the assessee Shri Niral K Patel and also from the Bank. The Bank had also provided details in case of some of the family members, which was available with the Department. Apart from that it is also pertinent to mention that the disclosure was made by Shri Niral K Patel on behalf of his family members on 01.09.2013 but even before that on 31.08.2013 itself the Bank was requested through summons to provide the details of insurance policies taken by the family members. A specific list of 13 family members were also provided to the Bank. (A copy of the notice dated 31.08.2013 issued to the Bank alongwith the enclosure is attached herewith as Exhibit G). A copy of the statement of Shri Niral K Patel recorded during the Survey proceedings is enclosed as (Exhibit H). It ....
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.... well as your companies/business concerns for the period from 01.04,2010 till date. Also giving the bank account no., type of account, name and address of the bank branch. 4. Details of all insurance policies held by you or by your family members. Dy. Director of Income-tax (Investigation)-II, Baroda 9.1 On making reference to the enquiries referred in the notice issued under section 131(1A) of the Act on standalone basis, it appears that these enquiries were general in nature. It is because, there was no reference mentioned about any specific insurance policies or the periods which the ADIT was looking for. Furthermore, the ADIT was requiring the details of the insurance policies held by the assessee as well as his family members. As such, the ADIT has not issued separate notices the family members of the assessee to provide the details of the insurance policies despite the fact all of them were income tax assessee. 9.2 However, we further note that the ADIT has again issued a summon under section 131(1A) of the Act dated 24th of June 2013 requiring the assessee to furnish the details of insurance policies held by him along with his associated concern. The extract o....
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....tions mentioned therein. For this purpose, we need to make reference to the provisions of section 271(1)(c) of the Act which reads as under: 1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- (a) [***] (b) has failed to comply with a notice under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or 9.6 A bare reading of the above provision reveals that initiation of penalty proceedings under section 271(1)(c) of the Act is subject to the fulfilment of the conditions namely, The Assessing Officer should be 'satisfied' that: (a ) the assessee has either concealed particulars of his income; or (b ) furnished inaccurate particulars of his income; or (c ) infracted both (a) and (b) above. 9.7 The 'satisfaction' should be ....
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....ara 6] Section 271(1)(c) is a penal provision and such a provision has to be strictly construed. Unless the case falls within the four-corners of the said provision, penalty cannot be imposed. Sub-section (1) of section 271 stipulates certain contingencies on the happening whereof the Assessing Officer or the Commissioner (Appeals) may direct payment of penalty by the assessee. Clause (c) of section 271(1) authorizes imposition of penalty when the Assessing Officer is satisfied that the assessee has either (a) concealed the particulars of his income; or (b) furnished inaccurate particulars of such income. [Para 12] It was not the case of furnishing inaccurate particulars of income, as in the income-tax return, particulars of income had been duly furnished and the surrendered amount of income was duly reflected in the income-tax return. The question was whether the particulars of income were concealed by the assessee or not. It would depend upon the issue as to whether concealment had reference to the income-tax return filed by the assessee, viz., whether concealment was to be found in the income-tax return. [Para 13] The revenue relying ....
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....re as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. [Para 16] 9.10 We also draw support and guidance from the judgment of Hon'ble Madhya Pradesh High Court in the case of CIT vs. Suresh Chandra Mittal reported in [2000] 241 ITR 124 (MP) which was also affirmed by the Hon'ble Supreme Court reported in [2001] 251 ITR 9 (SC) wherein it was held as under: It is well-settled that under section 271(1)(c ), the initial burden lies on the revenue to establish that the assessee has concealed the income or has furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority. However, the 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 instant case, though it was 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 reg....