DELHI HIGH COURT
PR. CIT VS DR.
VANDANA GUPTA
ITA 219/2017,
DATED : 20.02.2018
Summarised Judgement (Scroll for Complete Judgement)
The question of law
framed for this appeal is as follows:
"Did the Income
Tax Appellate Tribunal (ITAT) fall into error in holding that the penalty of
`67,98,000/- imposed under Section 271(1)(c) of the Income Tax Act was not
leviable in the facts and circumstances of the case?"
Facts of the Case:
An individual, filed
her return of income on 25.09.2009 in which she declared a total income of
9,18,060/-. During the pendency of proceedings for that assessment year, survey
was conducted under Section 133A by the Revenue at her business premises on
22.02.2010. In these search proceedings, the assessee who is a Medical Practitioner,
surrendered 2,00,00,000/- and filed a revised return declaring that amount as
additional income. The AO completed scrutiny assessment, by assessing total of
the two figures i.e. 2,09,18,060/-. He initiated penalty proceedings, on the
footing that the assessee had concealed the income and filed inaccurate
particulars when she, in fact, filed the return on 25.09.2009. The penalty
order was subsequently made on 29.06.2012.
Observation of Court:
The amount during the
search in the absence of any explanation for the source of income, renders the
assessee's argument insubstantial in the totality of circumstances.
Judgement:
For the foregoing
reasons, the question framed is answered against the assessee and in favour of
the revenue; the appeal is therefore allowed but without order on costs.
================================================
Complete Judgement
DELHI HIGH COURT
PR. CIT VS DR.
VANDANA GUPTA
ITA 219/2017,
DATED : 20.02.2018
IN
THE HIGH COURT OF DELHI AT NEW DELHI
Reserved
on: 29.01.2018
Pronounced
on: 20.02.2018
ITA
219/2017
PR.
COMMISSIONER OF INCOME TAX-21
.....
Appellant
Through:
Mr. Zoheb Hossain, Sr.
Standing
Counsel for Revenue.
Versus
DR.
VANDANA GUPTA ..... Respondent
Through:
Mr. Abhinav Sharma,
Advocate.
CORAM:
HON'BLE
MR. JUSTICE S. RAVINDRA BHAT
HON'BLE
MR. JUSTICE A.K. CHAWLA
MR.
JUSTICE S. RAVINDRA BHAT
1.
The question of law framed for this appeal is as follows:
"Did
the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the
penalty of `67,98,000/- imposed under Section 271(1)(c) of the Income Tax Act
was not leviable in the facts and circumstances of the case?"
2.
The brief facts are that the assessee - an individual, filed her return of
income on 25.09.2009 in which she declared a total income of `9,18,060/-.
During the pendency of proceedings for that assessment year, survey was
conducted under Section 133A by the Revenue at her business premises (B-1,
Rohit Kunj, Pitampura, New Delhi) on 22.02.2010. In these search proceedings,
the assessee who is a Medical Practitioner, surrendered `2,00,00,000/- and
filed a revised return declaring that amount as additional income. The AO
completed scrutiny assessment, by assessing total of the two figures i.e.
`2,09,18,060/-. He initiated penalty proceedings, on the footing that the
assessee had concealed the income and filed inaccurate particulars when she, in
fact, filed the return on 25.09.2009. The penalty order was subsequently made
on 29.06.2012. The assessee appealed to the CIT (A) against imposition of
penalty contending that she neither concealed particulars of income nor
furnished inaccurate particulars and that all material disclosures were made
during the assessment proceedings. The revised return merely reflected the
voluntary disclosures made by her.
3.
In the appellate proceedings, the assessee also urged that during survey, no
documents or evidence was gathered by the Revenue Department, establishing that
she did not, in fact, conceal any particulars of income. The disclosures were
not related to any incriminating document or material recovered or gathered
during the survey action. The assessee stated that she disclosed the amount to
buy peace of mind and avoid further proceedings. The assessee relied upon the
statement made by her in the course of the survey in this regard.
4.
The CIT (A) considered the contentions of the assessee as well as the decisions
cited before him (including the judgments of the Supreme Court in Dilip &
Shroff v. Joint Commissioner of Income Tax 291 ITR 519 (SC); MAK Data Pvt. Ltd.
v. Commissioner of Income Tax (2014) 1 SCC 674 and observed as follows:
"..........
I find that the appellant has disclosed the income only after a survey was
conducted by the Department. Moreover, the disclosure was made as the appellant
was unable to produce the books of account for F.Y. 2008-09. She admitted that
part of the receipts had not been declared for taxation while filing the Income
Tax Return for A Y. 2009-10. This shows that the claim of the Appellant was not
bona fide. Therefore, the information furnished by the appellant in the return
of income was factually incorrect and the appellant cannot escape the rigors of
section 27l(l)(c) of the LT. Act, 1961. The Hon'ble Delhi High Court in the
case of CIT vs. Escort Finance Ltd., 328 I.T.R. 44 has held that even if there
is no concealment of income or furnishing of inaccurate particulars, but if a
claim which is ex-facie bogus is made, the same will still attract penalty provisions.
Similar views have been expressed by the Hon'ble Court in the case of CIT vs.
Zoom Communications (P) Ltd. holding that very few returns are selected for
scrutiny and therefore, non- sustainable claims cannot be said to be
bonafide."
7.
Lastly, counsel relied upon the judgment of a Division Bench of this Court in
Commissioner of Income Tax v. Zoom Communications Pvt. Ltd. (2010) 327 ITR 510.
Counsel for the assessee argued that Section 271(1)(c) plainly states that an
act of concealment or furnishing inaccurate particulars can relate only to a
return. It is submitted that in the present case, returns were filed and the
mere circumstance that the survey was conducted leading to further disclosures
that led to additions could not have legitimately led to the Revenue
authorities concluding that there was concealment of material particulars. The
assessee did all that she was expected to do when the survey was conducted.
Concededly, no material was seized; the record bears testimony to the fact that
she voluntarily offered `2,00,00,000/-. Learned counsel placed heavy reliance
upon the judgment of this Court in SAS Pharmaceuticals (supra) and stated that
in that decision the Court in similar circumstances where additions were made
based upon disclosures during the survey, nevertheless held that the initiation
and imposition of penalty, would be based on surmises unless there is some
intentional omission. Learned counsel also points out the decision of the Court
in Commissioner of Income Tax v. Mohandas Hassanand 141 ITR 203 in support of
his submission.
8.
Learned counsel submitted that like in the facts of the present case, penalty
imposed in the cases of additional income surrendered after survey were held to
be unwarranted by different High Courts. Reliance was placed upon the judgment
of the Punjab & Haryana High Court in Commissioner of Income Tax v. Bharat
Rice Mills 201 Taxation 633; Additional Commissioner of Income Tax v. Bharatiya
Bhandar (1979) 13 CTR 159 (MP) and Commissioner of Income Tax v. SI Paripushpam
249 ITR 550 (Mad.).
9.
Learned counsel contended that in the case of search assessments, if the
conditions spelt out in Explanation 5 to Section 271(1)(c) are satisfied,
penalty cannot be levied. In the present case, however, no search took place
and; a mere survey was conducted. Admittedly, no incriminating or damaging
material or documents were seized. The assessee of her own record and in order
to buy peace, surrendered `2,00,00,000/-. Without a finding that the returns
(subsequently revised in consonance with law) did not furnish material
particulars or were inaccurate in material facts, penalty could not have been
imposed. It was stated that for these reasons, the impugned order is reasonable
and does not call for interference.
10.
The above factual background shows that when originally filed, the assessee had
not disclosed the income that she ultimately declared. On 22.02.2010, during
the course of survey, she voluntarily surrendered `2,00,00,000/- and filed a
revised return declaring that amount as additional income. She later filed a
revised return. Based on it, the assessment was completed and accepted. The AO
imposed and the CIT (A) affirmed penalty under Section 271 (1) (c) of the Act.
The ITAT, professing to follow certain decisions of this court, held that there
was no concealment of income or filing of inaccurate particulars.
"15.
It necessarily follows that concealment of particulars of income or furnishing
of inaccurate particular of income by the assessee has to be in the income tax
return filed by it. There is sufficient indication of this in the judgment of
this Court in the case of Commissioner of Income Tax, Delhi-I Vs. Mohan Das
Hassa Nand 141 ITR 203 and in Reliance Petroproducts Pvt. Ltd. (supra), the
Supreme Court has clinched this aspect, viz., the assessee can furnish the
particulars of income in his return and everything would depend upon the income
tax return filed by the assessee. This view gets supported by Explanation 4 as
well as 5 and 5A of Section 271 of the Act as contended by the learned counsel
for the Respondent.
16.
No doubt, the discrepancies were found during the survey.
17.
This has yielded income from the assessee in the form of amount surrendered by
the assessee. Presently, we are not concerned with the assessment of income,
but the moot question is to whether this would attract penalty upon the
assessee under the provisions of Section 271 (1) (c) of the Act. Obviously, no
penalty can be imposed unless the conditions stipulated in the said provisions
are duly and unambiguously satisfied. Since the assessee was exposed during
survey, may be, it would have not disclosed the income but for the said survey.
However, there cannot be any penalty only on surmises, conjectures and
possibilities. Section 271 (1) (c) of the Act has to be construed strictly.
Unless it is found that there is actually a concealment or non-disclosure of
the particulars of income, penalty cannot be imposed. There is no such
concealment or non-disclosure as the assessee had made a complete disclosure in
the income tax return and offered the surrendered amount for the purposes of
tax."
"The
offer of surrender is by way of voluntary disclosure of without admitting any
concealment whatsoever or with any intention to conceal and subject to
non-initiation of penalty proceedings and prosecution." All the appellate
authorities and the High Court upheld throughout the ensuing penalty. Rejecting
the assessee's appeal, the Supreme Court observed as follows:
"The
AO, in our view, shall not be carried away by the plea of the assessee like
"voluntary disclosure", "buy peace", "avoid
litigation", "amicable settlement", etc. to explain away its
conduct. The question is whether the assessee has offered any explanation for
concealment of particulars of income or furnishing inaccurate particulars of
income. Explanation to Section 271 (1) raises a presumption of concealment,
when a difference is noticed by the AO, between reported and assessed income.
The burden is then on the assessee to show otherwise, by cogent and reliable
evidence. When the initial onus placed by the explanation, has been discharged
by him, the onus shifts on the Revenue to show that the amount in question
constituted the income and not otherwise.
8.
Assessee has only stated that he had surrendered the additional sum of
Rs.40,74,000/- with a view to avoid litigation, buy peace and to channelize the
energy and resources towards productive work and to make amicable settlement
with the income tax department. Statute does not recognize those types of
defences under the explanation 1 to Section 271 (1) (c) of the Act. It is trite
law that the voluntary disclosure does not release the Appellant-assessee from
the mischief of penal proceedings. The law does not provide that when an
assessee makes a voluntary disclosure of his concealed income, he had to be
absolved from penalty.
13.
In the present case too, the assessee merely made a voluntary surrender; she
did not offer any explanation as to the nature of income or its source. The
observations in MAK Data (supra) are that the authorities are not really
concerned with the statement- whether voluntarily or otherwise and have to see
whether there was any non disclosure of material facts, or income. The complete
failure to furnish any details with respect to the income, which if given could
have been the only reasonable basis for deletion of penalty, in the opinion of
the court, reinforced the views of the AO and CIT (A) that the revised return
was an afterthought, based on the subsequent event of disclosure of
`2,00,00,000/-. The court further notices that by reason of Explanation 1 to
Section 271(1)(c), an assessee is not absolved of penalty, if she or he
"offers an explanation which he is not able to substantiate and fails to
prove that such explanation is bona fide and that all the facts relating to the
same and material to the computation of his total income have been disclosed by
him". The mere offer therefore, of the amount during the search in the
absence of any explanation for the source of income, renders the assessee's
argument insubstantial in the totality of circumstances.
14.
For the foregoing reasons, the question framed is answered against the assessee
and in favour of the revenue; the appeal is therefore allowed but without order
on costs.
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