High Court Of Madras
CIT vs. Sri Krishna Saraf
Section 132B(4), 154, 271(1)(c)
Asst. Year 2004-05
F.M. Ibrahim Kalifulla & B. Rajendran, JJ.
Tax Case (Appeal) Nos. 477 & 478 of 2009
7th July, 2009
Counsel Appeared :
J. Narayanaswamy, for the Appellant
JUDGMENT
F.M. IBRAHIM KALIFULLA, J. :
The Revenue filed these appeals against the order of the Tribunal, Chennai Bench “C”, made in ITA Nos. 2457 and 2172/Mad/2007, dt. 30th June, 2006.
2. In these two appeals, the substantial questions of law which arise for consideration are :
“(i) whether on the facts and circumstances of the case, the Tribunal was right in holding that the penalty under s. 271(1)(c) cannot be levied ?
(ii) whether on the facts and circumstances of the case, the issue of claim of interest under s. 132B (4)(a) can be considered in a rectification petition under s. 154 ?, and
(iii) whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for interest under s. 132B(4)(a) when there was no search under s. 132 in the assessee’s premises ?”
Having heard Mr. J. Narayanaswamy, learned standing counsel for the appellant Revenue, we are not inclined to interfere with the order of the Tribunal. To state the facts in brief, a search was conducted on l7th July, 2003 under s. 132 in the premises of one Shri G. Ashok Kumar at No. 13, Badrachala Mudali Street, Porur, Chennai-600116. The accounts and other incriminating materials were seized from the said premises. Based on the seizure, a notice was issued to the respondent assessee, pursuant to which, a return of income for the asst. yr. 2004-05 was filed by the respondent on 28th March, 2005 admitting his total income to the tune of Rs. 1,13,79,337. The return was processed under s. 143(1) which was subsequently scrutinised by issuing the notice under s. 143(2) and after hearing the respondent assessee, the return of income filed by the respondent was accepted and the assessment was concluded. Thereafter the tax liability was determined. The AO passed his order of assessment on 27th March, 2006.
In the order of assessment, there is a specific statement to the effect that during the course of search, safe deposit vault was found in the premises, which belonged to the respondent assessee, and it contained cash of Rs. 60 lakhs, Indira Vikas Patras worth Rs. 50 lakhs and jewellery and bullion worth Rs. 17,84,865 (as per valuation report). The order of assessment was appealed against and thereafter, the assessing authority, by his order dt. 19th Oct., 2006 gave effect to the appellate authority’s order dt. 1st Sept., 2006 and revised the order passed under s. 143(3), by which the amount refundable to the assessee was also determined. The respondent assessee sought for rectification of the said order dt. 19th Oct., 2006 by filing an application under s. 154 of the Act, which came to be rejected by the AO on 3rd May, 2007. As against which the assessee approached the CIT(A), and the first appellate authority, by his order dt. 2nd July, 2007 held that the omission of grant of interest under s. 132B(4) was a mistake apparent on record, and therefore, the assessing authority should rectify the said mistake and grant interest as per s. 132B (4) of the Act. That apart, as against the levy of penalty, the respondent assessee approached the CIT(A) independently, and, by order dt. 8th Aug., 2007, the first appellate authority took the view that even going by the order of assessment, there being no concealment nor undisclosed income, the levy of penalty under s. 271(1)(c) was uncalled for and set aside that part of the order. The Tribunal, by the impugned common order dt. 30th June, 2008, having confirmed the above referred orders of the first appellate authority, the Revenue has come forward with these two appeals.
Mr. J. Narayanaswamy, learned standing counsel for the appellant Revenue, in his submissions, after referring to s. 132B(4), contended that in as much as no seizure was effected by invoking s. 132 of the Act in the premises of the respondent assessee, the application under s. 132B(4)(a) would not arise. The learned counsel then contended that in any event, the non-grant of interest in the order dt. 19th Oct., 2006 cannot fall under s. 154 of the Act to enable the respondent assessee to seek for rectification of a mistake apparent on the face of the record. As far as the deletion of penalty is concerned, the learned counsel contended that inasmuch as the production of the entries contained in a diary was after the seizure, there was every justification for the assessing authority to have levied penalty by invoking s. 271(1)(c) of the Act. Though, in the first blush, the submission of the learned standing counsel appears to be forceful, on a perusal of the orders of the Tribunal, as well as, that of the first appellate authority, we find that none of the contentions raised by the learned standing counsel merits acceptance. As far as the contention, viz., the seizure was not effected in the premises of the respondent assessee is concerned, in the first place, the very fact that the seizure was effected from the safe deposit vault belonging to the respondent assessee as stated in uncontroverted terms in the order of assessment itself would be the answer to reject the said contention. When once it is admitted that there was seizure of the cash, the Indira Vikas Patras and the bullion in the course of the search made under s. 132 from the safe deposit vault belonging to the respondent assessee, it is too late in the day for the appellant to contend that the same were not recovered from the premises of the respondent assessee. In fact, though the search was said to have been held in the premises of one Thiru. G. Ashok Kumar at No. 13, Badrachala Mudali Street, Porur, Chennai-600 116, the seizure and recovery were from the safe deposit lockers belonging to the respondent assessee and the very fact that after the seizure, the appellant proceeded to issue the notice under s. 142(1) to the assessee was sufficient to hold that the seizure made under s. 132 of the Act had every nexus to the assessee and the safe deposit lockers belonging to him and consequently the resultant proceedings in continuation of such seizure by way of an assessment made under s. 143(3) of the Act, were all to be considered in favour of the assessee. Consequently, it would enable him to seek for the necessary relief under s. 132B(4)(a) of the Act in the event of any default in the application of the said provision. We are, therefore, convinced that the conclusion of the first appellate authority as well as that of the Tribunal in having held that the respondent assessee was entitled to invoke s. 132B(4)(a) was perfectly justified.
Insofar as the contention that the respondent assessee was not entitled to invoke s. 154 of the Act is concerned, a plain reading of s. 154 makes it clear that under s. 154(1)(a), if in the event of any mistake apparent from the record in respect of any order passed by the IT authorities referred to in s. 116 is found, the amending of such an order can be made on its own motion by the authority concerned or at the instance of the assessee by invoking s. 154(2)(a)/(b) of the Act. Therefore, in the case on hand, when the assessing authority, having passed its order of refund dt. 19th Oct., 2006 and in as much as we have held that s. 132B(4)(a) gets attracted to the case on hand, when under the said provision, the assessee is entitled for grant of interest as provided therein and when the same did not find a place in the order of refund dt. 19th Oct., 2006, it is nothing but a mistake apparent on the face of the record which could have been rectified either on its own motion by the assessing authority himself under s. 154(2)(a) and in the absence of any such rectification carried out, the assessee was fully entitled to invoke s. 154(2)(b) and seek for necessary rectification. Therefore, we hold that the order of the first appellate authority and confirmation of the same by the Tribunal was fully justified.
The assessing authority himself, in his order of assessment dt. 27th March, 2006, has noted that the case was selected for scrutiny by issuing notice under s. 143(2) and after hearing, the assessee as well as his representative accepted the return of income and completed the assessment. While holding so, the assessing authority has fully noted the value of the jewellery and bullion found at the time of search, which were valued in the presence of the assessee by the registered valuer, who valued the same at Rs. 17,84,865, whereas according to the assessee, the value was only Rs. 17 lakhs. Though the assessee sought to explain the difference in the value, the assessing authority declined to accept the explanation and treated the difference of Rs. 84,865 as unaccounted investment in the relevant assessment order. The first appellate authority, in the order dt. 8th Aug., 2007, therefore, rightly held that there was neither concealment nor furnishing of inaccurate particulars. In fact, the first appellate authority has noted that the assessing authority while issuing the penalty proceedings used the printed form of ITNS-29 and the assessing authority has not even chosen to strike off either “concealed the particulars of your income” or “furnished inaccurate particulars of such income”. The first appellate authority has observed that ‘even the AO passed the impugned penalty order has not arrived at a clear conclusion whether the assessee had concealed the particulars of income or furnished inaccurate particulars of income in respect of value of jewellery and maintenance of diary. It is relevant to note that in the assessment order passed under s. 143(3), no addition was made on account of maintenance of diary. The only addition made was in respect of value of jewellery.
10. As far as the levy of penalty is concerned, going by s. 271(1)(c) of the Act, the provisions make it clear that such levy of penalty would be warranted if at all the assessee had concealed particulars of his income or furnished inaccurate particulars of such income. In such circumstances, even going by the assessing authority’s order itself, none of the above two ingredients of s. 271(1) (c) gets attracted, and therefore, the question of levy of penalty did not arise at all. The assessing authority therefore, ought not to have proceeded to levy any such penalty. The order of the first appellate authority as well as that of the Tribunal in having interfered with the said order of the appellant as regards the levy of penalty cannot therefore, be found fault with.
For the above stated reasons, the questions of law raised by the appellant are answered against the Revenue. The appeals fail and the same are dismissed. No costs. Consequently, Misc. Petn. No. 1 of 2009 is closed.
[Citation : 329 ITR 342]
