TaxTMI 
TaxTMI 
2021 (9) TMI 964
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....NURM) funds as under: 1) Rs. 13,46,51,890/- on account of interest income from RGCTP project funds and JNNURM funds kept in FDRs in bank. 2) Rs. 1,41,14,269/- interest earned on RGCTP project kept in FDR's in escrow account. 3. The said addition was upheld by the Ld.CIT(A). Thereafter penalty proceedings were initiated and after giving due opportunity of hearing to the assessee and considering the replies filed by it, the AO held that it was a clear case of concealment of particulars of income and accordingly, proceeded to levy penalty on the same @ 100% of tax sought to be evaded amounting to Rs. 4,59,68,743/-. The assessee carried the matter in appeal before the Ld.CIT(A) where he pleaded that non-disclosure of the said interest income was under the bonafide belief that the said interest income was not the income of the assessee at all as the funds on which it accrued, was believed to be kept by it in the capacity of being nodal agent of the Government for carrying out the specific projects for which the funds have been given. That it was only later that this issue, of the capacity in which funds were being kept by it, was amicably settled with the department....
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....593? 7. It is prayed that the order of the Ld. CIT(A) be cancelled and that of the assessing officer may be restored. 8. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard or is disposed off." 5. During the course of hearing before us, the Ld.DR stated that her solitary argument against the order of the Ld.CIT(A) pertained to Ground No.5 raised. She contended that the dispute amicably settled between the assessee and the department in 2013 was year specific i.e. it related to the year i.e. assessment year 2007-08, which was there before the High Court, and the agreement between the two parties of no penalty being levied mentioned in the record of discussion did not apply to other years. The assessee, therefore, it was contended, was not entitled to any benefit on account of such agreement between the two parties noted in the record of discussion. 6. The Ld.Counsel for the assessee, on the other hand, relied upon the order of the Ld.CIT(A). He further drew our attention to the order of the ITAT setting aside the order of the Ld.CIT passed in revisionary proceedings u/s 263 of the Act relating to assessment year 2011-12....
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.... (d), in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. [Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. 5.2.1. For t....
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....ssing Officer, shall not be carried away by the plea of the assessee like Voluntary disclosure', 'buy peace', 'avoid litigation', 'amicable settlement', etc. to explain away its conduct. • The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income. • The burden is then on the assessee to show otherwise, by cogent and reliable evidence. • When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the revenue to show that the amount in question constituted the income and not otherwise. 7. CIT vs Gates Foam & Rubber Co [91 ITR 467] ClT vs India Seafood [105 ITR 708] where Hon'ble Kerala High Court held that Claiming excessive deduction also amounts to concealment of income. 8. Steel Ingots Ltd vs. CIT [296 ITR 228] where Hon'ble Madhya Pradesh High Court held that in case of concealment of true income chargeable....
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....gency and the physical possession was handed over for the development work for RGTCP Project. As per the guidelines issued by the Government of India, the funds may be kept in such a way that these are available for construction of houses as and when required and simultaneously these do not remain idle. Funds were kept in the nationalized banks and earned interest on the same. The appellant during the year has earned the interest income on FDR's. The AO has made additions of Rs. 13,46,51,890/- on account of Interest Income from the RGCTP Project Funds and JNNRUM Funds kept in FDRs in Banks during the relevant assessment year. The addition of Interest Income of Rs. 1.41.14.269/- is related with RGCTP Project (Rajiv Gandhi Chandigarh Technology Park) at Chandigarh on the funds kept in FDRs in Escrow Account. The AO initiated penalty proceedings u/s 271(1)(c) for addition made during the assessment. The Ld. CIT (Appeals) vide order dated 28.01.2016 in Appeal No. 02/14-15 upheld the additions made by the assessing officer. 5,3.1. After settlement of Income Tax matter by the Secretary Finance, MOF, GOI on 14.03.2013 as per directions of the Hon'ble Punjab and Haryana Hi....
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....erein it was decided that "As an amicable view, it may be appropriate that penalty is not levied on Chandigarh Housing Board in respect of the Income Tax Dues. A decision in this regard can however be taken only by the Competent Income Tax Authority or in any appellate proceedings. Hon'ble High Court may consider passing appropriate orders in this regard." Against the interim order passed by the Hon'ble High Court of Punjab & Haryana, the Revenue filed an SLP before the Hon'ble Supreme Court. The Hon'ble Supreme Court passed order in SLP No. IA No.2 in SLP(C) No. 5346/13 in CIT vs Chandigarh Housing Board order dated 30.4.2014 as under: "This special leave petition is filed against an interim order dated 07.05.2012 passed by the High Court in ITA No. 41/12. Since the matter is between the Income Tax Department and the Chandigarh Housing Board, which is a statutory Board under the provisions of Chandigarh Administrative, there was some discussion of an amicable settlement of the dispute between the parties. The 'Record of Discussion' held on 14.05.2013 is placed on record in IA. No. 2 of 2014, A perusal thereof would demonstrate that a sum of Rs. 278....
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....quashing of penalty in the appeal pending before the Income Tax Appellate Tribunal. Liberty is granted to counsel for the assessee to file an application before the Tribunal for preopening the appeal. In case, such an application is filed, we hope and expect that the appellate authority takes up the appeal for hearing before the end of the year." 5.4.2. It is reiterated that in these facts and circumstances of the case the Hon'ble ITAT Chandigarh Bench has decided to delete the penalty on similar grounds for AY 2007-08, AY 2008-09 and AY 2009-10 by holding that the reading of the above order particularly along with order passed by Hon'ble Supreme Court clearly shows that parties have ultimately reached to an amicable settlement with regard to the taxability of the proceeds received on auction of the plots. The Hon'ble Supreme Court in its order dated 30.04.2014 has clearly observed that no penalty proceedings would be initiated. 5.5. The major issue on which addition has been made in the AY 2012-13 is "Disallowance of Interest at Rs. 14,87,66,159/-". After discussing the entire gamut of facts in the preceedings paras, I am of the considered opinion tha....
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.... between the parties for no levy of penalty on settlement of the dispute, which was approved by the hon'ble apex court, the ITAT deleted penalty levied u/s 271(1)(c) of the Act, for non disclosure of the said interest income in A.Y 2007-08, 2008-09 and 2009-10. 9. Further in A.Y 2010-11 and 2011-12, we find, the order of the Ld.Pr.CIT directing levy of penalty on identical interest income earned during the year ,passed in exercise of his revisionary powers u/s 263 of the Act, was set aside by the ITAT considering the aforestated facts and further holding that the agreement for no levy of penalty was not year specific but was issue related and applied to all years affected by it, i.e. till the resolution of the dispute noted in the Record of settlement dated 14-03-2013. That in any case the non disclosure of the interest income, till the settlement of the dispute, was under a bonafide belief of the same not belonging to the assessee and hence not taxable. The relevant findings of the ITAT at para 24-27 of the order are as under: "24. It is not disputed that in the impugned year also penalty proceedings were initiated on the same addition made of interest on FDR's, in the....
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....he date of agreement, being filed on 29-09-10 while the agreement was recorded in the ROD on 14-03-13.Thus the agreement for no penalty applied to the impugned year also and the AO we hold had therefore rightly held that the facts of the impugned year were identical to that in A.Y 2007-08,while dropping the penalty proceedings initiated. 26. Even otherwise, we hold, that the claim of the assessee that the interest income was not taxable in its hands, was based on a bonafide belief that the funds invested in FDR's did not belong to it and were collected by it as a nodal agency of the Chandigarh administration. This stand was consistently taken by the assessee and was conceded only by amicable settlement with the department on taking a prima facie view of the matter. It is not that the claim was found outrightly untenable by any authority. Therefore till the date of settlement of the dispute the claim of the assessee was undoubtedly under a bonafide belief. In view of the same therefore the assessee could not be charged with having concealed or furnished any inaccurate particulars of income so as to levy penalty u/s 271(1)(c) of the Act. 27. We therefore hold that t....