High Court Of Calcutta
CIT vs. Suresh Chand Bansal
Section 153A, 271(1)(c)
Asst. Year 1999-2000 to 2005-06
Pinaki Chandra Ghose & Sankar Prasad Mitra, JJ.
IT Appeal No. 9 of 2009
13th March, 2009
JUDGMENT
By the court :
The question in this matter arose is whether the implementation of the penalty imposed under s. 271(1)(c) of the IT Act, 1961 against the assessee is correct.
2. The facts of the case briefly are as follows : An order was passed under s. 271(1)(c) of the IT Act, 1961. A return was filed by the assessee as per notice under s. 153A issued by the Revenue Department on 20th May, 2005 which was duly served upon the assessee on 24th May, 2005. The assessee filed a revised return under s. 153A showing income of Rs. 27,04,280 while in the revised return of income-tax it has been shown as Rs. 3,00,278. Hence, the order was passed assessing the total income of the assessee at Rs. 30,04,280. Therefore, for such addition of Rs. 27,04,000 as undisclosed income the notice under s. 271(1)(c) was issued and served on the assessee.
3. After considering the facts it appears that the Asstt. CIT held as follows :
“The assessee had in fact concealed the income by not showing the undisclosed income so disclosed after search, in his regular return filed under s. 139(1). It is also important to be noted here that the assessee had not filed the return suo motu and shown greater income but it was only done because the assessee had been searched under s. 132 and issued notice under ss. 153A and 143(2) of the IT Act. This proves that the assessee had willingly concealed the income. Previously by the Tribunal, Bombay has held that ‘if filing of return is not voluntary, then penalty is justified.[B. Tex Corporation vs. ITO (1993) 46 TTJ (Bom) 668 : (1993) 202 ITR 17 (Bom)(AT)] and again it is also ruled by the Madras High Court (sic) that ‘if assessee himself admitted concealment by filing revised return to by peace, penalty on such concealed income is valid S. Sivakumar vs. Asstt. CIT (1998) 64 ITD 149 (Mad)’]…….
Under these circumstances, I impose the 100 per cent penalty of tax sought to be evaded under s. 271(1)(c), r/w Expln. 1, i.e. Rs. 9,09,228.”
4. Being aggrieved appeal was filed before the CIT(A). It appears that the grounds of appeal were against the order of penalty under s. 271(1)(c) of the said Act and the amount of penalty of Rs. 9,09,228. It appears from the facts that the CIT(A) dealt with the matter and held as follows :
“There are a number of High Courts judgments where it is held that provision of s. 271(1)(c) are not attracted to cases where income of an assessee is assessed on estimate basis and additions are made therein on that basis [Harigopal Singh vs. CIT (2002) 177 CTR (P&H) 580 : (2002) 258 ITR 85 (P&H)]. Where assessment had been made on estimate basis and there was no finding regarding concealment of income, levy of penalty was not justified. [CIT vs. Suresh Kumar Bansal & Anr. (2002) 173 CTR (P&H) 7 : (2002) 254 ITR 130 (P&H)]. The judicial authorities cited here were further discussed in the context of the Supreme Court judgment in the case of Dilip N. Shroff vs. Jt. CIT (2007) 210 CTR (SC) 228 : (2007) 291 ITR 519 (SC). The Authorised Representative of the appellant rightly pointed out that penalty would be leviable if the assessee conceals particulars of his income or furnishes inaccurate particulars thereof. But, by reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Position of penalty is not automatic ‘not only is the levy of penalty discretionary in nature but the discretion is also required to be exercised on the part of the AO keeping the relevant factors in mind. Some of those factors, apart from being inherent in the nature of penalty proceedings, inhere on the face of the statutory provisions. Penalty proceedings are not to be initiated merely to harass the assessee. The approach of the AO in this behalf must be fair and objective.”
The CIT(A) after considering the facts as well as the materials placed before it and after considering the decisions reported in Harigopal Singh vs. CIT (2002) 177 CTR (P&H) 580 : (2002) 258 ITR 85 (P&H), Suresh Kumar Bansal & Anr. (2002) 173 CTR (P&H) 7 : (2002) 254 ITR 130 (P&H) as also the decision in the case of Dilip N. Shroff vs. Jt. CIT (2007) 210 CTR (SC) 228 : (2007) 291 ITR 519 (SC) came to the conclusion and held as follows : “The discretion to be exercised by the AO before deciding about levy of penalty is proper evaluation of the facts on the basis of which the total income is determined. If it is found on facts that the additional income assessed is the same as the additional income offered even if the offer came in consequence of search action, it is likely that the offer is made in a spirit of settlement. Such offer by itself is not an admission of concealment of income. In the case of CIT vs. L.K.S. Ganee (2000) 244 ITR 130 (Mad), Madras High Court did not interfere with the order of the Tribunal deleting penalty imposed on assessee lottery agent, whose income had been estimated after taking judicial notice of peculiar features of the business of sale of lottery tickets. The AO in that case found the verification of expenses on advertisements and expenses on unsold ticket as impossible and held that the income had to be necessarily estimated. A similar approach is adopted by Punjab & Haryana High Court in a number of cases [Harigopal Singh vs. CIT (2002) 177 CTR (P&H) 580 : (2002) 258 ITR 85 (P&H), CIT vs. Suresh Kumar Bansal & Anr. (2002) 173 CTR (P&H) 7 : (2002) 254 ITR 130 (P&H); CIT vs. Ravail Singh & Co. (2002) 173 CTR (P&H) 429 : (2002) 254 ITR 191 (P&H)]. The reason for this is that the burden is on the AO to specially point out the amount of income concealed by the appellant and to further prove that the appellant had no explanation about the sources of such income and if the explanation is offered, it is found to be false. This would require investigation at various points even after the assessment order is passed. The basis of this specific amount of addition must be discussed in detail. This would require reference to the documents which formed the basis of inference about additional income. It should be further shown that the appellant was given the opportunity to offer explanation and that in spite of such opportunity, no explanation was offered. On receipt of explanation, the AO should further give a finding that the explanation is false and not bona fide. It is in this manner that the order of penalty goes beyond the findings in the order of assessment. While the content of the assessment order remains relevant, in the order of penalty something more is required to be done even after introduction of Explanation to s. 271.
5.2 The appellant offered additional income for asst. yrs. 1999-2000 to 2005-06. The order of penalty relies entirely on the observation in the order of the Tribunal that if the assessee himself admitted concealment by filing revised return to buy peace, penalty on such concealed income is valid. No additional facts are brought on record and there is nothing to indicate that the appellant had no explanation regarding the documents which indicated existence of additional income. On the other hand, Annex. I referred to in the assessment order gives yearwise break-up of the nature of additional income offered by the appellant. For asst. yr. 2004-05 the inference about miscellaneous outflow is based on document RK/6, the contents of which are nowhere discussed. It appears to be an inference drawn on grounds of probability or a case of deemed income. The expenditure or the outflow of cash would remain unexplained if explanation with reference to contents of RK/6 was directed to be furnished. No such attempt is on record. Therefore, the offer of Rs. 24,04,000 as unexplained outflow is the offer for tax in a spirit of settlement. In asst. yr. 200001 the major portion of the estimated income is similar in nature as in asst. yr. 1999-2000, apart from IVP investment. In neither case is there any attempt to obtain the explanation of the appellant. Document RK/6 is mentioned but its contents are not discussed. The disclosure for asst. yrs. 2001-02 and 2002-03 must be subjected to the same observation as the earlier two assessment years. Reference is to be seized document identified as RK/6 seized from flat No. 3D,29 Balfour Road, Kelly’s Chennai. The Panchanama was drawn in the name of Shri O.P. Bansal. But, the seized document was stated to be about the inflows and outflows relating to regular books of accounts of the group concerns of the appellant. The total figure of Rs. 29,82,889 is considered an unaccounted profit and offered for tax spread over a number of years. This spread over is given in the Annex. I prepared by the appellant and accepted by the AO. Now this amount of Rs. 29,82,889 is the profit of the group concerns. The document was found from the premises of Shri O.P. Bansal. However, the appellant offered estimated profit on the inflows and outflows in RK/6 as his income in a spirit of settlement. In asst. yr. 2003-04 business income is offered on the basis of seized documents BLB/7 and BLB/8. These are computer printouts. Co-relating them with books of account could have been admitted in the respective cases of the companies. However, the appellant offered a certain percentage of the transaction in the printouts as the profit of the company not disclosed in the books of account of the companies. The appellant stated in the course of assessment proceedings :
‘without prejudice and with an intention of not being drawn into long drawn controversy I have owned up the same (seized documents BLP/7 and BLP/8) stating that the same may be treated as my unrecorded trading transaction.’
That such income belonged to the appellant is a conclusion based on the offer of the appellant and not entirely on the seized documents. As far as the jewellery found at the time of search is concerned, it was found with three persons and the gross of weight jewellery found was less than the gross weight of jewellery declared by 15 wealth-tax assessees in the family. Therefore, the jewellery found was less than the jewellery disclosed in terms of quantity. The disclosure of Rs. 19,21,927 in respect of jewellery is only on account of mismatch between the description of jewellery in the wealth-tax record and description of jewellery in the valuation report following the search. Conclusion of concealment is not valid in such circumstances. It would appear from the above that the documents were found at different places in different premises and were related to the business of different concerns. No excess jewellery was found. The appellant offered substantial amount of income. The offer of the appellant was accepted inasmuch as no detailed discussion of the seized documents is found in the assessment orders. The offer was made to avoid litigation and the offer is an estimate of income that might not have been taxed. The offer of additional income and its acceptance in all the assessment years is a rough estimate. No attempt is made even to find out the locus of the earning and the person who concealed such earning. There was an offer of additional income and it was held to be a good offer. It was accepted in its entirety. All these together present the factual context which must be considered before taking a decision about whether the appellant should be held guilty of concealment of the income offered in each of the assessment years under consideration. If a penalty is not automatic, the relevance of such circumstances has to be taken into account. In my opinion, while the offer is in consequence of search action, the assessment order in accepting the offer of the appellant also admitted that the income that might properly be assessed in the cases of different persons or may also be properly explained with sufficient effort or where no offer need be made, additional income is offered, there is an estimate of undisclosed income considered necessary for the purpose of avoiding uncertainties. Therefore, levy of penalty on such offer is not justified without detailed discussion of the documents and their explanation which compelled the offer of additional income. Accordingly, the order of penalty is cancelled and the appeal is allowed.” By this order the appeal was allowed and penalty was set aside.
Being aggrieved the Department filed an appeal before the Tribunal. The Tribunal considering the decision of the CIT(A) upheld the decision of the CIT(A) relying on the decision of the Hon’ble Supreme Court in the case of Dilip N. Shroff (supra).
Accordingly, in our considered opinion, the matter is covered under the said decision of the Hon’ble Supreme Court and does not call for interference and accordingly we do not find that there is any substantial question of law involved at this stage. Hence this application is dismissed.
We also dismiss the application for condonation of delay as in our considered opinion no sufficient cause has been shown to condone such delay of 202 days. Hence, the application for condonation of delay is also dismissed.
[Citation : 329 ITR 330]
