TaxTMI 
TaxTMI 
2021 (5) TMI 58
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....ich is absolutely erroneous and bad-in-law and needs to be deleted in the interest of natural justice and equity. 2. The assessee craves to add, amend, alter, substitute, modify the above ground of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing." 2. Additional Grounds raised by assessee is as follows: "On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in levying penalty u/s. 271(1)(c) and ld. CIT(A) has erred in confirming the penalty when assessing officer had not specified in the notice u/s.271(1)(c) r.w.s. 274 and in the penalty order whether the penalty was leviable for concealment of income or for furnishing inaccurate particulars thereof." 3. Brief facts qua the issue are that assessee is a private limited company and engaged in the business of Coal trade. The assessee company filed its return of income on 30.09.2008 declaring total income of Rs. 10,37,714/-. The scrutiny assessment under section 143(3) of the Act was finalized on 29.12.2010, with total income of Rs. 9,51,17,548/-. During the scrutiny assessment, the assessing officer has made two additions, on....
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.... addition based on estimation made by the Assessing Officer observing as follows: "6.6 The assessee's contention has been examined. As regards the net profit addition, the assessee's contention is accepted to be a bonafide explanation, as non - production of certain details at the time of assessment proceedings may be due to personal problems of the director. Consequently, the penalty levied by the assessing officer in respect of net profit addition is cancelled and the ground no.1(a) of the appeal is decided in favour of the assessee." 5. However, the ld. CIT(A) has confirmed the penalty under section 271 (1) (c ) of the Act, in respect of addition made by the assessing officer under the head Long Term Capital Gain(LTCG). That is, the penalty, under section 271 (1) (c ), imposed by the assessing officer, in respect of addition of LTCG of Rs. 9,31,56,643/-, was confirmed by the ld CIT(A). 6. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us in respect of the penalty, under section 271 (1) (c ) of the Act pertaining to addition of LTCG of Rs. 9,31,56,643/- which was confirmed by the ld CIT(A). 7. Shri Rasesh Shah, ld. Counsel for the assessee sub....
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...., the employee and the auditor of the assessee company were not aware of the fact that the sale agreement was executed by the Director of the assessee company with Ambuja Cement Ltd. and accordingly, they showed the amount received from the Ambuja Cement Ltd. as Loans, and Advances instead of transferring it to fixed asset account and thereby recognizing long term capital gain. However, during the course of assessment proceedings, the said fact was drawn to the attention of the Director of the assessee company viz. Shri Rajendra Singh Yadav and he immediately, voluntarily offered the long term capital gain in the hands of the assessee company by revising the return of income. Therefore, considering these circumstances, there is no concealment of income on the part of the assessee company. 9. On the other hand, Shri Ritesh Mishra, ld. Departmental Representative for the Revenue submitted that so far charge for initiation of penalty under section 271(1) (c ) of the Act is concerned, it is only a typographical error made by the assessing officer to levy penalty in assessment order on account of concealment of income and to levy penalty in the penalty order for concealment of income a....
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....and cannot be accepted to be a bona-fide mistake as claimed by the assessee. The ld CIT(A) further noted that revised return of income was filed by assessee only after the AIR information was handed over to the assessee. But, for the same, Long Term Capital Gain would not have been offered for tax. Therefore, though the personal problems of the assessee are not denied, the same cannot be accepted as 'reasonable cause' for not disclosing the LTCG, for such a long period. The explanation of the assessee in this regard, was not accepted by ld CIT(A) to be a bonafide explanation. Therefore, the penalty imposed by the assessing officer, in respect of addition of LTCG of Rs. 2,31,56,643/- was confirmed by the ld CIT(A). 12. We note that the first grievance of the ld. Counsel, in respect of long term capital gain is that there is no any definite charge/ accusation on the assessee, whether initiation of penalty proceeding is on account of 'concealment of income' or on account of 'furnishing inaccurate particulars of income'. Let us first examine the charge in the assessment order and penalty order: (1) Charge in assessment order: We note that in respect of the above two additions....
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....; Income estimated as above Rs. 19,60,875/- Income From Capital Gains Long Term Capital Gains Rs. 9,31,56,673/- Rs. 9,51,17,548/- 11. Assessed u/s.143(3).Give credit for prepaid taxes after due verification. Interest u/s.234A, 234B, 234C is charged as per calculation given in ITNS-150 which is part of this order. Issue notice under section 271(l)(c) for concealment of income and furnishing inaccurate particulars of income." From the above (A), (B) and (C) analysis it is abundantly clear that in the assessment order itself the assessing officer has made different charge on the assessee under section 271(1) (c ) of the Act. Thus, there is no definite charge on the assessee under section 271(1) (c ) of the Act during the assessment proceedings. Thus, the assessing officer was not certain that for which limb he wanted to initiate penalty proceedings, that is, for concealment of income or for furnishing inaccurate particulars of income. 13. Whereas in penalty order under section 271(1) (c ) of the Act, the Assessing Officer made a charge on account of both limbs, that is, concealment of income and furnishing inaccurate particulars of income, in respect of t....
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....ng the invocation of the limb in the penalty order. The assessing officer levied the penalty for both the limbs "for concealment and furnishing inaccurate particulars of income." under section 271(1 )(c) of the Act, whereas in the assessment order the assessing officer initiated penalty only on one limb that is "for "concealment of income". We note that Hon`ble Supreme Court in the case of T Ashok Pai - 292 ITR 11 (SC) held. that "concealment of income" and "furnishing of inaccurate particulars of income" carry different connotations. The Hon`ble Gujarat High Court in case of Manu Engineering Works -122 ITR 306 (Guj.) held. that the penalty order has to be clear as to limb for which it is levied and the position being unclear penalty is not sustainable. Further, on the identical facts, Hon`ble Gujarat High Court in case of Nayan C. Shah vs. ITO [Tax Appeal No. 543 of 2012 (Guj- HC)] held. as follows: "11. Another notable aspect of the matter is that while the Assessing Officer has imposed penalty on the ground that the assessee has furnished inaccurate particulars of income, the Tribunal has set aside the order of the Commissioner (Appeals) by holding that the assessee has suppre....
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....that language of "and/or" may be proper in issuing a notice for penalty, but it was incumbent upon the Assessing Authority to come to a positive finding as to whether there was concealment of income by the assesses or whether any inaccurate particulars of such income had been furnished by them. If no such clear cut finding is reached by the authority, penalty cannot be levied. It was a case in which in final conclusion the authority had recorded that "I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income. "It was in this respect the Bench observed that "Now the language of "and/or" may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi-criminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down. " 5. A perusal of the ab....
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....r has initiated the penalty proceedings on one footing and concluded on other footing. The assessing officer made charge in respect of income from capital gain in penalty order stating "concealment of income and furnishing inaccurate particulars of income" that is on account of both limbs, whereas in assessment order the charge in respect of income from capital gain is "concealment of income" only. Therefore, in our opinion, the basis of levy of penalty itself is not correct, hence penalty order under section 271(1)(c) of the Act needs to be quashed. 17. On merits of the case, we are of the view that this is not a case, where the amount for sale of property has been received outside the regular books of accounts or that the property is not reflected in the regular books of accounts. That is, in assessee`s case, the property is duly reflected in the regular books of the assessee company and even the amount received for sale thereof has been accounted for in the regular books but the same has been shown as advances instead of transferring it to fixed asset account and recognizing capital gain on sale of property. Therefore, it is not a case of concealment. In the assessee company t....
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.... Cement Ltd. as loans, and advances instead of transferring it to fixed asset account and thereby recognizing long term capital gain. We note that assessee has not concealed the particulars of income as the sale of property (long term capital gain) was shown under the head loans and advances. Hence, there is no any conscious concealment of income. The assessee company sold the land to Ambuja Cement for a consideration of Rs. 9,61,76,433/- and out of the said receipt the bank loans were to be paid by the company. When this fact was drawn to the attention of the Director, Shri Rajendra Singh Yadav, he immediately and voluntarily offered the long term capital gain in the hand of the company by revising the return of income. The amount received by the transferree company of Ambuja Cement has been shown by the assessee-company under the head loan and advances, therefore, penalty is not leviable unless it is shown that there is a conscious concealment or furnishing of inaccurate particulars of income. Reference in this regard can be usefully made to the judgment of Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. vs. CIT (1980) 123 ITR 457 (SC), wherein it was h....
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....n and the assessment is made on the basis of such disclosure, penalty should not be imposed. An inadvertent omission for error in the original return, particularly when it is corrected by a revised return, or a rectification petition, would not attract penalty under section 271(1) (c ) of the Act. Reference in this regard can be usefully made to the judgment of Hon`ble High Court of Madras in the case of Sivagaminatha Moopanar & Sons Vs. Commissioner Of Income-Tax,( 27 June, 1961)52 ITR 591 (Mad), wherein it was held as follows: " Section 22(3) provides that, where a person furnishing a return discovers an omission or wrong statement therein, he could furnish a revised return at any time before the assessment is made. Therefore, in a case where the original return does not contain the true particulars by reason of a genuine mistake or accidental omission, it would be open to the assessee to furnish a revised return containing the correct particulars at any time before the assessment." Although, it is old judgment decided in the context of 1922 Act, but the ratio of this judgment applies to the facts of the assessee`s case under consideration. 20. Hon`ble High Court of Madras in....
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....mutual discussion, especially of item which are either under controversy or require clarification or elucidation. It is during these sittings or hearings, or "inquiry", as it is described by the marginal note to s. 142, that the final shape of the assessment emerges. In the very nature of things, a perusal of the return of income alone would give an inadequate or even a misleading idea of the course of assessment proceedings. For, return is but the starting point of the proceedings, and even in the best of assessments, the return alone cannot give a true indication of the course and thrust of the proceedings. When, therefore, s. 271(1)(c) speaks about the ITO having to be satisfied "in the course of any proceedings", it means that the officer's satisfaction must be obtained on an appraisal of the stand taken by the assessee in the whole course of the proceedings and not merely in his formal return of income. 5. In the present case, it is quite true that the assessee was found to have filed his original returns which could by no mean, be regarded as true returns, even on a mere comparison with what the assessee himself subsequently furnish by way of revised returns. But it is ....
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....ied. The court went into the rationale behind the statutory provision enabling the assessee to file a revised return. The court pointed out that a revised return can be filed by an assessee only in a case where an omission or a wrong statement in the original return was discovered and not to enable an assessee to expiate himself from a false return. 7. We do not regard the above decision as a complete tract on the construction or s. 271(1)(c). The court, in that case, was merely minding to deal with and dispose of contentions raised before them, one based on s. 271(4A) and the other based on s. 139(4) of the Act. There was no attempt in that case to define what would be the proper subject of discourse on the issue as to concealment, much less an attempt to construe the expression "in the course of any proceedings" under this Act occurring in s. 271(1)(c). We are, therefore, not constricted in any manner in basing our decision in the present case on our view of s. 271(1)(c). It does not appear that the Tribunal's view of s. 271(1)(c) was in very way similar to ours. Nevertheless, their conclusion on the facts in with our view of the relevant statutory provisions. 8. The resu....