Income Tax Appellate Tribunal - Jaipur
Ram Saran Gupta vs Assistant Commissioner Of Income Tax on 20 January, 1997
ORDER
M.K. Chaturvedi, J.M.
1. These three appeals by the assessee are directed against the maintenance of penalties imposed under s. 271(1)(c) of the IT Act, 1961, and relate to the asst. yrs. 1982-83 to 1984-85.
2. We have heard the rival submissions in the light of material placed before us and the precedents relied upon. The assessment order for the relevant assessment years were completed. Search action under s. 132 of the Act was conducted at the premises of the assessee, in the course of which some material was found which reflected unrecorded investment/expenditure. The material was stated to be relatable to the asst. yrs. 1985-86 and 1986-87. On 20th February, 1989 assessee filed returns for the years under consideration declaring therein additional income of Rs. 2,25,000, Rs. 3,20,000 and Rs. 1,55,000 respectively. It was also argued before the CIT(A) that these returns were filed on the basis of assurance given by the CIT that no penalty shall be initiated against the assessee. We find that these returns were regularised on 30th March, 1989 by issuance of notice under s. 148.
3. It was contended on behalf of Revenue that no prudent businessman would ever offer any income which otherwise is not earned by him and the assessee cannot be an exception to this. The very fact that it was offered for taxation bears eloquent testimony to the fact that the income offered was the concealed income of the assessee and it was reflected in the return because of the lurking fear of detection.
4. We find that the assessee agreed to surrender the income by incorporating the additional income in the returns which got subsequently regularised under s. 148. The apex Court in the case of Sir Shadilal Sugar & General Mills Ltd. & Anr. vs. CIT (1987) 168 ITR 705 (SC), has held that from the mere fact of the assessee agreeing to additions to his income, it does not follow that the amount agreed to be added was concealed income. There can be a hundred and one reasons for such an admission, i.e., when the assessee realises the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of quasi-criminal offence. In that view of the matter, where the assessee for one reason or the other, agrees or surrenders certain amount for assessment, the imposition of penalty solely on the basis of the assessee's surrender, will not be well-founded.
5. It was stated before us that the income was surrendered with a predominent object to buy peace. Assessee was not inclined to drag the matter in the labyrinth of law. We find that the Department did not sufficiently prove the factum of concealment by independent enquiry. Addition is based solely on the basis of admission made by the assessee. It was also alleged by Shri Ranka, the learned counsel for the assessee that no incriminating material having nexus with the years under consideration was ever found in the custody of the assessee at the time of search. Therefore, there was no occasion to assume the existence of lurking fear in the mind of the assessee. The mere fact that the returns filed consequent upon the completion of assessment got regularised under s. 148 of the Act on the very next day gives the indication that the amount was surrendered subject to the conditions. There were no further additions. No reasonings were adduced to justify the additional income as concealment.
The word 'conceal' is derived from the Latin word "concelare" which implies "con + celare = to hide". Webster in his new International Dictionary equates its meaning "to hide or withdraw from observation"; to cover or keep from sight; to prevent the discrepancy of; to withhold knowledge".
The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the IT authorities. It is implict in the word "concealed" that there has been a deliberate act on the part of the assessee. The meaning of the word "concealment" as found in Shorter Oxford English Dictionary, 3rd Edn., Vol. 1 is as follows :
"In law, the intentional suppression of truth or fact known, to the injury or prejudice of another"
6. The Revenue relied on the ratio laid down in the case of Badri Prasad Omprakash vs. CIT (1987) 163 ITR 440 (Raj). In catena of cases a consistent opinion was expressed that the blameworthiness attached to the assessee with reference to the original return cannot be avoided by filing a fresh return after concealment was detected by the AO. It is abundantly clear from the perusal of the facts that in the instant case return was not filed consequent upon the detection of concealment. There is nothing in the records to suggest that the Department, in the instant case, has brought any evidence or material to establish the factum of concealment. As such the facts of the case of Badri Prasad Omprakash vs. CIT (supra) were different from the facts of the present case.
7. Having regard to the facts of the present case, we are of the opinion that the issue in question stands covered by the decision of the apex Court rendered in the case of Sir Shadilal Sugar & General Mills Ltd. vs. CIT (supra). Respectfully following the precedent, we decide the issue in favour the assessee and against the Revenue. Accordingly, we direct the AO to delete the penalties imposed under s. 271(1) (c) of the Act.
8. In the result the appeals of the assessee stand allowed.