Punjab & Haryana H.C : Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that penalty proceedings under s. 271(1)(c) of the IT Act, 1961 had been validly initiated by the AO ?

High Court Of Punjab & Haryana

Smt. Ram Piari vs. CIT

Section 271(1)(c)

Asst. Year 1977-78

Adarsh Kumar Goel & Mrs. Daya Chaudhary, JJ.

IT Ref. No. 289 of 1995

9th July, 2009

Counsel Appeared :

Akshay Bhan, for the Applicant : Ms. Urvashi Dhugga, for the Respondent

JUDGMENT

ADARSH KUMAR GOEL, J. :

The Tribunal, Chandigarh Bench, Chandigarh has referred, at the instance of the assessee, following questions of law for opinion of this Court under s. 256(1) of the IT Act, 1961 (for short, “the Act”) arising out of its order dt. 15th March, 1993 in ITA No. 1247/Chd/1987 for the asst. yr. 1977-78 :

“1. Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that penalty proceedings under s. 271(1)(c) of the IT Act, 1961 had been validly initiated by the AO ?

Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the penalty especially when AO levied the penalty on account of wilfully and deliberately concealing the particulars of income whereas it has been sustained by the CIT(A) on a different ground of showing inaccurate particulars of income in the return ?

Whether on the facts and in the circumstances of the case, the finding recorded by the Tribunal regarding concealment of particulars of income is based on evidence on record ?”

The assessee derives income from property. The assessment was completed for the assessment year but the same was reopened under s. 147(a) of the Act. Notice under s. 148 of the Act was served on the assessee but no revised return was filed in spite of the said notice. The AO found undisclosed income from capital gains on account of sale of property and penalty proceedings were also initiated. Thereafter penalty was imposed, which was upheld by CIT(A) as well as by the Tribunal. Contention of the assessee that while the AO levied penalty on the ground of concealment of particulars, CIT(A) sustained the same for showing inaccurate particulars. The Tribunal did not find any difference in the approach nor any discrepancy on that account. The Tribunal held as under : “13. The learned Departmental Representative has argued that the sale had taken place on 29th April, 1976, whereas the return had been filed on 30th July, 1977, but the income resulting from capital gain was not shown by her. Not only that, the assessee did not think it appropriate to file a revised return after notice under s. 148. It has been therefore, argued that the assessee had wilfully and deliberately concealed her income not only in the original return filed on 30th July, 1977 but even subsequently. As regards income from property shown by the assessee for the relevant year, it has been pointed out by the learned Departmental Representative that income from property was shown as if to represent it to be income from property which was actually sold by her. It was represented to be income from that property and thereby it was attempted to represent that property had not been sold. Therefore, it has been argued by the learned Departmental Representative that it was a case of concealment. It has also been urged by the learned Departmental Representative that the assessee had at her disposal legal advice and the return had been filed under legal advice and the column prescribed in the return for showing capital gain was deliberately left blank. Not only that, the advocate representing the assessee attended the assessment proceedings also and it cannot be inferred that the assessee had any wrong advice or had some misconception about taxability of capital gain. It has also been argued on behalf of the Revenue that even if the assessee had given any information regarding her agreement to sell, it will not absolve her of the responsibility and liability for disclosing income from capital gain. The learned Departmental Representative has invited our attention to a decision of the Supreme Court in the case of CIT vs. Smt. P.K. Kochammu Amma Peroke (1980) 19 CTR (SC) 196 : (1980) 125 ITR 624 (SC), wherein it was found that the assessee had not shown in the return certain amount representing share of her husband and minor daughter in a firm. These amounts were includible in her total income. It was held by the Hon’ble Supreme Court that she had concealed particulars of her income and was guilty of concealment of the amount, which attracted applicability of s. 271(1) (c) of the Act. Reliance has also been placed on a decision of the Calcutta High Court in the case of Mrs. Leela Nath vs. CIT (1986) 55 CTR (Cal) 89 : (1987) 164 ITR 216 (Cal). In that case also, the AO had completed the assessment on the basis of return filed by the assessee. Subsequently, it was found that the assessee had sold 1,000 shares of a company and had capital gains but she had failed to furnish necessary particulars in the original return. The AO reopened the assessment under s. 147(a) and completed the assessment, treating the receipt as capital gains. It was pleaded by the assessee in that case that the AO could have noticed from the WT returns filed by the assessee for two years that the assessee had sold certain shares. It was held by the Hon’ble Calcutta High Court that it was the duty of the assessee to disclose all primary facts. The learned Departmental Representative has, on the basis of aforesaid decision, contended before us that by mere filing an application for obtaining clearance certificate, the assessee cannot be said to have disclosed particulars and any benefits on her appeal cannot be assumed on that basis. Looking to the entire facts and circumstances of the case, we find that bona fides on the part of the assessee are not reflected at all. This is a clear case of concealment of particulars of income.

It has also been brought to our notice by the learned Departmental Representative that the assessee has been convicted by the learned Chief Judicial Magistrate, Chandigarh on 21st Feb., 1984 for six months imprisonment under s. 276C(1) and for another six months imprisonment under s. 277 of the Act. This order of conviction is said to have been upheld by the appellate Court.

Looking to the entire facts and circumstances of the case, we are of the considered opinion that the order of penalty does not suffer from any defect. Since the concealment of particulars of income is very evident on the part of the assessee and it is found to be a deliberate act, the orders passed by the learned lower authorities are upheld.”

We have heard learned counsel for the parties and perused the record. The only contention raised on behalf of the assessee is that the assessee had made an application for clearance certificate in Form 34A for sale of the property and, thus, the matter was brought to the notice of the AO. This plea was rightly rejected as mere disclosure of agreement to sell in application for clearance certificate in Form 34A cannot be equated to disclosure in the IT return. The assessee failed to file a revised return in spite of notice under s. 148 of the Act. The assessee was also convicted for concealment.

In view of above undisputed facts, we find that there was material for the AO to initiate penalty proceedings. Contention that the penalty was liable to be set aside on account of CIT(A) describing the action of the assessee as “showing inaccurate particulars”, while the AO described the same as “concealing the particulars” cannot be upheld. The observations of the CIT(A) are also in the context of concealing and mere fact that mention of inaccurate particulars was also made, did not make any difference. On admitted facts, it was clear that the assessee had concealed the particulars of income as well as given inaccurate particulars. We may also notice that in recent judgment of the Hon’ble Supreme Court in Union of India vs. Dharamendra Textile Processors (2007) 212 CTR (SC) 432 : 2008 (13) SCC 369, overruling the view taken in Dilip N. Shroff vs. Jt. CIT (2007) 210 CTR (SC) 228 : 2007 (6) SCC 329, it was observed that parameters for determining criminal liability under s. 276C were different from those applicable to determining civil liability for penalty under s. 271(1)(c). The penalty provision was to provide remedy for loss of revenue for which element of ‘wilful’ concealment was not essential. It was observed that finding of Tribunal could not be interfered with unless perverse. In the present case, the assessee has been convicted even in criminal proceedings. Findings of the Tribunal cannot be held to be perverse by any standard.

The questions referred are, thus, decided against the assessee and in favour of the Revenue. The reference is disposed of.

[Citation : 327 ITR 318]

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