IT : Where Tribunal set aside penalty order passed under section 271(1)(c) holding that penalty was not leviable inasmuch as assessee itself had disclosed additional income before passing of assessment order, no substantial question of law arose from said order
■■■
[2013] 38 taxmann.com 47 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax
v.
Deewan Tourism Ltd.*
SUNIL AMBWANI AND ADITYA NATH MITTAL, JJ.
IT APPEAL NO. 207 OF 2009†
SEPTEMBER 13, 2012
Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income [Disclosure made before passing of assessment order] - Tribunal set aside penalty order passed under section 271(1)(c) holding that penalty was not leviable inasmuch as assessee itself had disclosed additional income before passing of assessment order -Whether on facts, no substantial question of law arose from Tribunal's order and, therefore, revenue's appeal was to be dismissed - Held, yes [Para 7] [In favour of assessee]
Dhananjay Awasthi for the Petitioner. Saurabh Jain for the Respondent.
ORDER
1. We have heard Sri Dhananjay Awasthi for the appellant. Sri Saurabh Jain appears for the respondent-assessee.
2. This Income Tax Appeal under Section 260-A of the Income Tax Act, 1961 (the Act) has been filed against the judgment and order dated 11.11.2008, passed by the Income Tax Appellate Tribunal, Amristar Bench, Camp at Meerut in Income Tax Appeal No. 4285/Del/2007 for Assessment Year 2003-04.
3. The appeal was preferred on the ground that the Tribunal erred in law in deleting the penalty of Rs.9,87,719/- imposed under Section 217 (1) (c) of the Act and further that the Tribunal erred in holding that the assessee had made full disclosure of its concealed income even though a notice had been issued to the assessee before it filed a letter offering its undisclosed income to tax.
4. The Tribunal, affirming the order of the CIT (Appeals) and directing the AO to cancel the penalty of Rs.9,87,719/-, held as follows:—
"We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material placed on record. In this case, it is obvious that there is no detection of any concealment by the assessing authority. The assessee has offered the additional income on account of long term capital gains by himself before detection by the AO and it cannot be said that the department has detected the concealment or furnishing of inaccurate particulars of income. The additional income was assessed on account of offer made by the assessee vide letter dated 2.11.2004, and as such penalty cannot be levied. The judgment relied upon by the ld. counsel for the assessee in the case of CIT v. Suresh Chand Mittal 251 ITR 9 (SC) is squarely applicable to the facts of the present case, wherein it has been held that though the assessee has surrendered additional income by way of revised return, once the revised return has been regularized by the revenue, the explanation of the assessee that he has declared additional income to buy peace and to come out of vexed litigation can be treated as bonafide and penalty u/s 271 (1) (c) is not leviable. In view of the above, we are of the considered view that the ld. CIT (A) was justified in deleting the penalty."
5. We find that the assessee had disclosed long term capital loss of Rs. 21,71,434/-. In the computation of income, the assessee has taken cost of acquisition of land at Rs.26,10,000/- and shown sale consideration at Rs.26,10,000/-. Later on, vide his letter dated 26.11.2004, the assessee revised the sale consideration at Rs.53,98,000/- as per Section 50 C of the IT Act and offered the capital gains for taxation. Since the assessee in its original return has not offered this amount for taxation, the AO initiated penalty proceedings u/s 271 (1) (c) of the Act. The assessee did not produce the sale deed. He however, on the enquires made by the AO, submitted the value of the land at Rs.23,60,190/- as per circle rate of the land in the financial year 1993-94. The AO took the cost of acquisition at Rs.23,60,190 and after indexation of cost at Rs.43,23,790/-, the long term capital gain was worked at Rs.10,74,210/-.
6. In CIT v. Reliance Petro-products (P.) Ltd. [2010] 189 Taxman 322 (SC), the Apex Court revisited the conditionalities of levying penalty under Section 271(1)(c) of the Act and held in para 10, 11, 12 and 18 as follows:—
'10. Section 271(1)(c) is as under:—
"271(1). Failure to furnish returns, comply with notices, concealment of income tax etc. - (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person
| ** | ** | ** |
| (c) | has concealed the particulars of his income or furnished inaccurate particulars of such income." |
A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular"; is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars"; used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars.
11. The Learned Counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In Commissioner of Income Tax, Delhi v. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India v. Dharamendra Textile ProcessorsUnion of India Vs.Rajasthan Spg. & Wvg. Mills [2009(13) SCC 448] and reiterated in para13 that (Atul Mohan Bindal case, SCC p.597, para 13).
"13. It goes without saying that for applicability of Section 271(1) (c), conditions stated therein must exist."
12. Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise.
| ** | ** | ** |
18. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.'
7. We do not find any error in the reasons recorded by the Tribunal in holding that the penalty was not leviable inasmuch as the assessee himself had disclosed the additional income vide letter dated 26.11.2004, before passing of the assessment order dated 31.03.2006
8. The Income Tax Appeal does not raise any substantial question of law to be considered, and is accordingly dismissed.
Regards
Prarthana Jalan
__._,_.___
No comments:
Post a Comment