Punjab & Haryana H.C : surrender of income would not necessarily foreclose the action for concealment of income

High Court Of Punjab & Haryana

Shveta Nanda vs. CIT, Chandigarh

Assessment year : 2003-04

Section : 271(1)(C)

Adarsh Kumar Goel And Ajay Kumar Mittal, JJ.

IT Appeal No. 810 Of 2008

April  18, 2011

JUDGMENT
 
Ajay Kumar Mittal, J. – This appeal under section 260A of the Income-tax Act, 1961 (for short “the Act”) has been filed by the assessee against the order, dated 26-11-2007, passed by the Income-tax Appellate Tribunal Chandigarh Bench ‘A’, Chandigarh (in short “the Tribunal”) in IT Appeal No. 191/(Chd.)/2007, relating to the assessment year 2003-04.

2. The following substantial question of law has been claimed for determination of this Court:

“Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in setting aside the order of the CIT (Appeals), and restoring the order of the Assessing Officer whereby penalty of Rs. 78,750 has been imposed by the Assessing Officer in spite of the fact that no concealment has been found by the Assessing Officer at the time of survey as well as scrutiny and further the said amount has been voluntarily declared by the assessee.”

3. The facts, in brief, necessary for adjudication as narrated in the appeal, are that during a survey under section 133A of the Act carried out at the business premises of M/s. Cossets Marketing (P.) Ltd., on 28-2-2003, some discrepancies were detected in the record and some incriminating documents were found. From the documents, it was found that the aforesaid Company had been paying a handsome commission and incentives to its Directors and family members. Rohit Khanna, the Managing Director of the Company, who is the husband of the assessee, on being asked to explain the above discrepancies, gave an undertaking in writing on 12-3-2003 to get an additional amount of Rs. 90,00,000 surrendered from 14 persons, including Rs. 2,50,000 from his wife, i.e., the present assessee, subject to the condition that no penal action would be initiated against them.

4. The case of the assessee was later on selected for compulsory scrutiny under section 143(3) of the Act. During the course of assessment proceedings, it was noticed that the assessee had not declared any additional amount in the return of her income for the assessment year 2003-04. The assessee, however, agreed to pay Income-tax on the amount of additional income, along with interest under section 234B of the Act, subject to no penal action against her. The Assessing Officer did not agree with the submissions made on behalf of the assessee and made addition of an amount of Rs. 2,70,000 vide order dated 8-3-2006, besides ordering for charging interest thereon, under section 234B and initiating penalty proceedings under section 271(1)(c) of the Act.

5. During the course of penalty proceedings, it was observed that the surrender of the additional income by the assessee was not voluntary and in good faith rather she was compelled by the circumstances to do so. It was further observed that the assessee had not even declared any additional amount of income surrendered during the course of survey. The Assessing Officer, after considering various judicial enunciations cited before him held by his order dated 28-9-2006 that the assessee was liable to pay penalty under section 271(1)(c) of the Act for furnishing inaccurate particulars of her income of Rs. 2,50,000. The Assessing Officer imposed penalty at the rate of 100 per cent of the tax sought to be evaded, which worked out to Rs. 78,750.

6. The Commissioner of Income-tax (Appeals) [in short “CIT(A)”] accepted the appeal of the assessee and deleted the penalty vide order dated 15-12-2006. The CIT(A) was of the view that the burden was on the Department to prove that any particular amount was a revenue receipt and the assessee had consciously concealed the particulars of her income or had deliberately furnished inaccurate particulars of income.

7. The Tribunal accepted the appeal of the Revenue and vide the order under appeal, set aside the order of the CIT(A) and restored that of the Assessing Officer, and this is how the assessee is in appeal before us.

8. We have heard learned counsel for the parties and perused the record.

9. The solitary issue that arises in this appeal is, whether the assessee was liable for penalty under section 271(1)(c) of the Act.

10. Learned counsel for the assessee submitted that the surrender was made by the assessee subject to the condition of ‘no penalty’ and in spite of the same the authorities have decided the issue against her. The counsel further submitted that the onus was upon the revenue to establish concealment and on the strength of a judgment of the Calcutta High Court in CIT v. Amalendu Paul [1984] 145 ITR 439 /[1983] 13 Taxman 325 and judgment of this Court in CIT v. Suraj Bhan [2007] 294 ITR 481 /159 Taxman 600 and an order, dated 31-5-2007, of the Income-tax Appellate Tribunal, Chandigarh Bench (B), in ITO v. Rohit Nanda IT Appeal No. 192 (Chd.) of 2007, relating to the assessment year 2003-04 argued that the penalty was not exigible on the assessee. Learned counsel for the Revenue, on the other hand, supported the order passed by the Tribunal.

11. We have given our thoughtful consideration to the submissions made by learned counsel for the appellant and find no merit therein. The Tribunal, in para No. 9 of its order has recorded as under:

“9. We have considered the rival submissions and perused the material available on the record. In the instant case, the learned CIT(A) while deleting the penalty wrongly held that the Assessing Officer failed to prove concealment independent of the disclosure made by the assessee. It is noticed that the Assessing Officer while levying the penalty, categorically stated that the action on the part of the assessee was not voluntary and in good faith, assessee was compelled by the circumstances of the case to surrender additional income. He accordingly held that the assessee had furnished inaccurate particulars of his income. It is noticed that the assessee in the return of income had not declared any additional amount of income surrendered during the course of survey, therefore, non-disclosure of income which has already been surrendered tantamounts to concealment, as such the Assessing Officer was justified in levying the penalty under section 271(1)(c ) of the Income-tax Act, 1961 and the learned CIT(A) wrongly deleted the same. As regards the contention of the assessee in the written submission that in the similar circumstance penalty has been deleted in the case of Sh. Rohit Nanda, in ITA No. 192 (Chd.) 2007, vide order dated 31-5-2007 is concerned, in that case the amount surrendered was shown in the return of income. So the facts of the present case are different from the facts of the above referred case by the assessee.

The Hon’ble Jurisdictional High Court in the case of Rajesh Chawla v. CIT (supra) has held that in every case mere surrender would not foreclose the action for concealment of income. In the instant case, since the assessee did not truly disclosed his income which was surrendered, so it was a case of concealment, liable to the penalty under section 271(1)(c) of the Income-tax Act, 1961. We, therefore, set aside the impugned order of the learned CIT(A) and restore that of the Assessing Officer.”

12. Further, the judgments of the High Courts and the order of the Tribunal on which reliance has been placed by the learned counsel for the assessee do not help the assessee’s cause, inasmuch as those cases were decided on individual fact situation involved therein where a finding came to be recorded that there was no concealment or furnishing of inaccurate particulars on the part of the assessee therein. Here, the learned counsel for the assessee was unable to point out that the assessee had disclosed the surrendered amount in the return of income filed by her or that there was no concealment or that full particulars had been disclosed by the assessee. In the absence of this, the findings recorded by the Tribunal in the context aforesaid, cannot be faulted with and no error of law could be found therein.

13. In view of the above, the substantial question of law is answered against the assessee and accordingly, the appeal is dismissed.

[Citation : 336 ITR 298]

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