Case Law Details
RELEVANT PARAGRAPH
15. Though a search and seizure operation was conducted on 31.05.2003, but no indiscrirninating material was found therein. It seems that consequent upon the search in response to a notice under section 153A the assessee opted that the original return be taken as a return under the aforesaid provision. Thereafter, a questionnaire was issued requiring the assessee to inter-alia file the details of loans and gifts given or taken in this year. The assessee furnished the details of the gifts from NRI persons, furnished copies of gift deed. The receipt of gifts is through banking channel. The course of event narrated above showed that the Assessing Officer .did not have any-information to -come to the conclusion that the gifts were not genuine so as to treat them as undisclosed income of the assessee. Until this stage there was nothing on record about the gifts and within four days of the receipt of this notice, the assessee offered the amounts of gifts for taxation by way of a letter. The assessments were completed on the basis of the returns and the surrender made by the assessee without further going into any details of the gifts. This fact, by itself, it is true, may not lead to a conclusion that the assessee had not furnished inaccurate particulars of income in the returns filed by him but cannot be lost sight of in the light of the fact that there is no material on record also to suggest that assessee concealed particulars of income, there being no mention of the impugned gifts in the returns or as addition by way of capital annexed with the returns. The position regarding genuineness or otherwise of the gifts remained the same at the time of filing the return and after receipt of the questionnaires. By offer made by the assessee, one may infer that at all times the assessee was aware that something was amiss with regard to gifts. But in view of the affidavits and the gift deeds filed it might not be concluded that it was sure case of in genuineness of the gifts. It cannot be said that he would not be able to discharge the initial burden cast on him under section 68 of the Act. In any case the assessee could be said to have substantiated its explanation as regards to Explanation to section 271(1)(c) of the Act. The gifts are surrendered to be taxed in order to buy peace and to avoid litigation in the matter. It was made subject to the condition that penalty proceedings be not initiated. Therefore, the decision in the case of K.P. Madhusudhanan (Supra) was not applicable, on the contrary CIT v/s Suresh Chandra Mittal 251 ITR 9 (SC) would be squarely applicable.
16. It is true that letter of surrender does not obliterate the original return and suppression of income therein but when the surrender was made before detection or without any material on record suggesting income withheld, it would be a case of voluntary offer and would in that case be not a concealment of income by the assessee. It is true that the assessments cannot be made by bargaining and the Assessing Officer is within his right to consider the whole issue as per law for initiation and levy of the penalty, but on the basis of material on record.
17. After the insertion of Explanation in 1976 the decision in the case of Sir Shadilal Sugar and General Mills Ltd. may no longer be a good law as held by the Supreme Court in the case of K.P. Madhusudhanan (Supra), but the fact remains that it was an voluntary action of the assessee to come forward and state its true income and therefore it would not be a case of concealment by the assessee at the time when the assessment was taken up.
18. After the Full Bench decision of the Supreme court in Dharmendra there is no requirement of mens rea to be established and it is only a civil liability and therefore K C Builders decision of the Supreme Court holding that the word “concealment” inherently involves the mental condition of the assessee with regard to the default may not be a good law. However, that does not mean that the provision contained in Explanation 1 are given a complete go bye and are not applicable. The surrender of the amount after receipt- of the questionnaire cannot lead to an inference that it was not voluntary in absence of any material on record suggesting it to be bogus or untrue or the income the assessee before such surrender.
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