Case Law Details
The assessee submitted revised return since in the original return long term capital gain on UTI liquid plus fund institution plan was claimed exempt u/s 10(38) of the Act as also to reflect correct figures of sale of land at Kheri Sadh and rental income. Merely because the assessee disclosed additional income suo motu after issue of a notice u/s 143(2) of the Act, does not amount to detection of concealment by the AO.
Apparently, the assessee had given all particulars of his income and had disclosed all facts to the AO during the assessment proceedings.. It is not the case of the AO that in reply to a query of the AO, some new facts were discovered or the AO had dug out some information which was not furnished by the assessee. In such circumstances, we are of the opinion that no penalty is leviable. It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon’ble Supreme Court in the case of Ananthraman Veerasinghaiah & Co. Vs. CIT, 123 ITR 457, the finding in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1 )(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the additions. The Hon’ble Kerala High Court in the case of CIT v. M. George & Bros. [1986] 160 ITR 511 held that where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the surrender will not be well-founded. Hon’ble Punjab and Haryana High Court in the case of CIT v. Suraj Bhan [2007] 159 Taxman 26 while following the decision in CIT v. Suresh Chandra Mittal [2001] 251 ITR 9(SC), held that when an assessee files a revised return showing higher income and gives an explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared. The Hon’ble Apex Court in CIT v. Suresh Chandra Mittal, [2001] 251 ITR 9/119 Taxman 433, upheld the decision of the Hon’ble Madhya Pradesh High Court rendered in the case of CIT vs. Suresh Chandra Mittal [2000] 241 ITR 124, where in similar circumstances it was held that the initial burden lies on the revenue to establish that the assessee had concealed the income had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the Assessing Officer.
In Qudai International vs. Income Tax Officer 2009 (13) MTC 622 (Trib), the ITAT Lucknow Bench ‘A’ held that “mere raising of query by the Assessing Officer did not amount to detection of concealment. It cannot therefore, be said that the revised return was filed after detection of concealment and was not voluntary. The term “detection” itself implies the Assessing Officer had reached a conclusion but the query raised by the Assessing Officer was only first step in detection of concealment. If the assessee voluntarily revised the return, it could not be said that it does not fulfill requirements of section 139(5) of the Act.” The facts of the present case are also similar to the facts of the aforesaid referred to case.
Similarly, in the case of Dy. CIT vs. Tarun Agarwal 2009 (13) MTC 831, the ITAT Lucknow Bench ‘A’ held that “the assessee had surrendered the amount before any specific detection of undisclosed income or even before the issue of notice. Even though a general enquiry was going on and notices had been issued to some of his relatives and the amount might have been surrendered because of compulsion of circumstances, it was not sufficient to penalise the assessee as the factum of detection was not there.” In the instant case also, nothing is brought on record that there was any detection at the level of the AO to suggest that the assessee concealed the income on account of capital gains, which was offered for taxation suo motu in the revised return.
Merely because a notice u/s 143(2) had already been issued and the assessee filed revised return thereafter, disclosing additional income towards capital gains, which was not correctly shown in the original return, does not tantamount to detection of concealment of income u/s. 271(1)(c) of the Act .
Hon’ble Madhya Pradesh High Court in the case of CIT v. S.V. Electricals P. Ltd., 155 Taxman 158 and Hon’ble Jharkhand High Court in CIT v. Ashim Kumar Agarwal, 153 Taxman 226 held that where the assessee surrenders his full income, though at a later stage, there was no question of any concealment on his part and consequently, no penalty under Section 271(1)(c) was leviable, and that a omission from return of income did not amount to concealment. Hon’ble jurisdictional High Court while adjudicating the issue of levy of penalty u/s 271(1)(c) of the Act in the case of CIT vs. Harnarain in their decision dated 31st October,2011 in ITA no.2072/2010 concluded that “surrender of the amount by the assessee after receipt of the questionnaire could not lead to an inference that it was not voluntary, in the absence of any material on record to suggest that it was bogus or untrue. It is further evident that there was neither any detection nor any information in the possession of the Revenue which might lead to a conclusion that there was a detection by the Revenue of concealment. Accordingly, the question of law framed is answered against the Revenue and in favour of the assessee.”
In the instant case, the assessee voluntary disclosed additional income during the course of assessment proceedings and paid tax thereon. In the light of view taken in the aforesaid decisions, it cannot be said in the case before us, additional income disclosed during the course of assessment proceedings was not voluntary or that the assessee wanted to conceal the income. Even though the revised return was found to be invalid, the AO accepted the income as declared in the revised return and computation. The AO did not bring any material on record that the declaration of income made by the assessee in his revised return or his explanation was not bonafide. In these circumstances, there appears to be no basis for imposition of penalty on the ground that the assessee furnished inaccurate particulars of income. Since the Revenue have not placed before us any material nor brought to our notice any contrary decision so as to enable us to take a different view in the matter, we are not inclined to interfere.
