Income Tax Appellate Tribunal - Agra
Mohan Lal Rastogi (Decd), Farrukhabad vs Assessee on 15 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND
SHRI A.L. GEHLOT, ACCOUNTANT MEMBER
ITA Nos.129, 130, 131 & 103/Agr/2009
Assessment Years : 1999-2000, 2001-02, 2002-03 & 2000-01 respectively
Shri Mohan Lal Rastogi (Decd), vs. Income Tax Officer,
Through L/H. Smt. Manju Rastogi, Ward 1, Farrukhabad.
Rastogi Mohalla,
Farrukhabad.
(PAN: ABHPR 6608 K).
(Appellant) (Respondent)
Appellant by : Shri K.C. Agarwal, Advocate
Respondent by : Shri R. K. Jain, Jr. D.R.
Date of Hearing : 15.05.2012
Date of Pronouncement : 25.05.2012
ORDER
PER A.L. GEHLOT, ACCOUNTANT MEMBER:
These are appeals filed by the assessee against separate orders dated 02.01.2009 passed by the learned CIT (Appeals), Ghaziabad for Assessment Years 1999-2000, 2001-02, 2002-03 and order dated 28.11.2008 for Assessment Year 2000-01 respectively.
2 ITA Nos.129, 130, 131 & 103/Agr/2009
A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
2. The common ground raised in all these appeals relates to levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter).
3. Ld. Representatives of the parties submitted that the facts of all these cases are identical, therefore, the facts for Assessment Year 1999-2000 may be considered for deciding all these appeals.
4. The brief facts of the case are that a survey under section 133A of the Act was carried out on 19.12.2003 in the case of M/s Shri Mahabir Cold Storage, Farrukhabad. During the course of post survey enquiry, some bank account of Oriental Bank of Commerce, Farrukhabad were detected. The accounts of M/s. Ashish Potato Co. and M/s M.M. Traders were introduced by the assessee in the Bank. The assessee Shri Mohan Lal Rastogi has surrendered both the above Bank accounts as his undisclosed benami accounts. Meanwhile, the assessee revised his return which was filed on 15.01.2004. The brief summary of original returns filed, revised returns filed, additions made and penalty levied for different years noted from page no.9 of assessee's Paper Book are as under :-
A.Y. Dt. of filing Income Dt. of Income shown in revised Dt. of issue Income assessed by Amount of of original shown in filing return notice u/s Income Tax Appellate penalty levied return original revised 148 Tribunal order by ITO, return return Farrukhabad.
1999-00 05.12.1999 182255 15.01.04 182255+278000=460255 30.01.04 182255+298080=480335 94000.00 2000-01 27.11.2000 214969 15.01.04 214969+64000=278969 30.01.04 214969+89204=304173 20000.00 2001-02 28.11.2001 242607 15.01.04 242607+54000=296607 30.01.04 242607+75202=317809 33500.00 2002-03 30.12.2002 269550 15.01.04 269550+72000=341550 30.01.04 269550+100471=370021 30000.00 3 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
5. The case of the Assessing Officer is that before filing the revised returns by the assessee the undisclosed bank accounts maintained by the assessee with Oriental Bank of Commerce were unearthed by the Department and the statement of assessee was recorded. The Assessing Officer was of the view that the income escaped assessment and revised return filed by the assessee was non-est. The notice under section 148 of the Act was issued to regularize the proceedings. In the revised return, apart from salary and share income from firm, the assessee declared profit from Potato business and his entire sale proceeds were credited in bank count maintained with Oriental Bank of Commerce, Farrukhabad. The total turnover in the name of M/s Ashish Potato Co. & M/s M.M. Traders were Rs.10,32,927/- & Rs.15,69,188/- respectively. The submission of the assessee was that income from partnership concerns had been shown in the revised return alongwith explanation filed with the revised return. Investment and credit purchases were offered for taxation on peak basis in absence of full evidence. The income from Potato business was shown at 5% on total sales. The Assessing Officer did not accept the assessee's contention because during the course of survey operation in the case of M/s. Shri Mahavir Cold Storage, in which the assessee is a partner, no books nor any documents found which warrants that trading of Potatoes were being carried out in the name of M/s. Ashish Potato Co. in distinction to that of M/s. Shri Mahavir Cold Storage. Also no proof of individual 4 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
business of M/s. Shri Mahavir Cold Storage was found nor claimed. Further during the course of assessment proceedings, the firm M/s Shri Mahavir Cold Storage, for Assessment Year 2001-02, the assessee Shri Mohan Lal Rastogi never appeared to adduce evidences to the fact that retail trading of potatoes was carried out. Nor was any evidence of such nature furnished by the assessee through any written communication. The transaction in bank as per copy of account reveals that account was for discounting of drafts only. The assessee failed to produce Mandi Samiti Register, purchase and sale register, evidence regarding transportation bill etc. The bank account was only for draft coming and immediate withdrawal of cash. The Assessing Officer levied penalty in Assessment Year 1999-2000 observing as under :-
"I have gone through the reply filed by the assessee. In this connection, it is mentioned here that the assessee had filed revised return of income only after detecting an undisclosed account in the names of M/s Ashish Potato Co. and M/s M.M. Traders with oriental Bank of Commerce consequent to special survey conducted in the case of Shri Mahabir Cold Storage, Farrukhabad in which Shri Mohan Lal Rastogi is a partner. The assessing Officer on page 2 of the assessment order has mentioned that before filing the revised return by the assessee the undisclosed bank accounts maintained by the assessee with OBC, Farrukhabad were unearthed by the department and statement of assessee was recorded. The revised return filed by the assessee was treated as Non-est. In this connection, I would like to place reliance on the judgement in the case in CIT vs. Mohd. Mohatram Farroqui (2002) 177 CTR (Raj.) 434 wherein it was held that disclosure of income in the revised return after seizure of unexplained cash from the assessee can not be said to be a voluntary disclosure. Reliance is also placed in the case in P.C. Joseph & Bros vs. CIT (2000) 158 CTR (Ker) 104 wherein it was held that where the 5 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
surrender of income in the revised return is not voluntary but is as a result of detection by assessing authority, the filing of revised return is of no consequence.
Considering the above facts, it is a fit case for levy of penalty u/s 271(1)(c) of the I.T. Act. Therefore, the assessee is liable for levy of penalty u/s 271(1)(c) of the I.T. Act, 1961. Maximum and minimum penalty leviable in this case works out to Rs.2,80,575/- & Rs.93,525/- respectively.
Since the quantum of levy of penalty is more than Rs.10,000/-, this order has been passed with the approval of the Joint Commissioner of Income Tax, Range-2, Farrukhabad vide F.No.JCIT- FKBD/2005-06/1250 dated 22.03.2007. Penalty of Rs.94,000/- has been imposed u/s 271(1)(c) of the I.T. Act, 1961."
6. The CIT(A) has confirmed the order of Assessing Officer.
7. Ld. Authorised Representative submitted that the assessee has filed the revised return alongwith reasons for revised return of which copy is placed at page no 65 of the assessee's Paper Book. Ld. Authorised Representative submitted that apart from salary and share income from firm, the assessee had been carrying on potato business as his individual proprietorship concern. The income earned from the individual proprietorship business was not included at the time of filing of the original return under the impression that income of each business is to be assessed separately. However, on legal advice the assessee has come to know that the income from individual business is also to be included with the other income, hence revised return was filed applying 5% rate of profit on sales at Rs.53,000/- for 6 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
Assessment Year 1999-2000 for proprietory business. On account of investment in such business, the assessee offered for taxation Rs.2,25,000/- in the revised return in respect of investment and credit purchase on the basis of peak theory. Ld. Authorised Representative submitted that I.T.A.T. has accepted the income declared by the assessee on the basis of peak theory. However, in respect of rate of profit the I.T.A.T. has applied 7% rate of profit instead of 5%. Ld. Authorised Representative further submitted that the assessee has filed complete details in respect of amount surrendered in the form of chart of accounts with Oriental Bank of Commerce in the name of M/s Ashish Potato Co. & M/s M.M. Traders which were not shown in the original return. Ld. Authorised Representative submitted that the assessee has voluntarily revised the return and furnished all the details which have been accepted by the I.T.A.T. Therefore, the Ld. Authorised Representative submitted that in the light of the facts, penalty under section 271(1)(c) is not leviable. The Ld. Authorised Representative in support of his contention relied upon the following decisions :-
1) CIT vs. Guru Ram Dass Fruit and Vegetable Agency, 251 ITR 361 (P&H)
2) CIT vs. Ved Prakash, 269 ITR 255 (P&H)
3) CIT vs. Suresh Chandra Mittal, 251 ITR 9 (SC)
4) CIT vs. Suresh Chandra Mittal, 241 ITR 124 (M.P.)
5) Shiv Lal Tak vs. CIT, 251 ITR 373 (Raj.)
6) Cheap Cycle Store vs. CIT, 196 CTR 173 (All.)
7) CIT vs. Raj Bans Singh, 276 ITR 351 (All.)
8) Sudarshan Silks and Sarees vs. CIT, 300 ITR 205 (SC) 7 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
9) Decision of I.T.A.T., Agra Bench in the case of ITO vs. Smt. Parwati Devi (Deceased), ITA No.51/Agr/2008 A.Y. 2000-01 order dated 03.02.2009.
10) Decision of I.T.A.T., Agra Bench in the case of Sunil Chandra Gupta vs. ACIT, ITA Nos.75 & 76/Agr/2007 order dated 23.04.2009. (11) CIT vs. (1) Rajiv Garg, (2) Siya Ram Garg (3) Sanjay Garg, 313 ITR 256 (P&H) (12) Dr. Ajit Kumar Pandey vs. I.T.A.T., 310 ITR 195 (Patna).
8. We have heard the ld. Representatives of the parties, records perused and gone through the decisions cited. The case under consideration is in respect of levy of penalty under section 271(1)(c) of the Act. The said section reads as under:-
"271. (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--
(a) .............
(b) .............
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or [(d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits,] he may direct that such person shall pay by way of penalty,--
(i) [* * *] [(ii) in the cases referred to in clause (b), [in addition to tax, if any, payable] by him, [a sum of ten thousand rupees] for each such failure ;] [(iii) in the cases referred to in clause (c) [or clause (d)], [in addition to tax, if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income [or fringe benefits] or the furnishing of inaccurate particulars of such income [or fringe benefits].8 ITA Nos.129, 130, 131 & 103/Agr/2009
A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
[* * *] [Explanation 1.--Where in respect of any facts material to the computation of the total income of any person under this Act,-- (A) such person fails to offer an explanation or offers an explanation which is found by the [Assessing] Officer or the [Commissioner (Appeals)] [or the Commissioner] to be false, or (B) such person 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], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed."
8.1 The basic conditions for invoking section 271(1)(c) of the Act are that during the course of any proceedings under this Act including assessment proceedings, if the Assessing Officer found that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income, the penalty under section 271(1)(c) of the Act is leviable. The explanation to said section provides certain deemed circumstances where concealment from penalty is leviable. The admitted facts in the case under consideration are that the assessee was running a business of potatoes in proprietorship of which income has not been shown in the return filed by the assessee. The Department noticed in a survey under section 133A of the Act conducted in the case of M/s. Shri Mahabir Cold Storage, Farrukhabad and during the course of post survey enquiry, it has been found that the assessee was doing business in the name of M/s. Ashish Potato 9 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
Company and M/s. M.M. Traders through bank account with Oriental Bank of Commerce, Farrukhabad. The assessee was the introducer of those bank accounts. The assessee surrendered the investment in that business along with profit by filing a revised return. To appreciate the issue whether the action of the assessee was voluntary in filing the revised return or it is a case of detection of concealed income by the assessee by filing original return and concealing particulars of income and furnishing inaccurate particulars of income, we would like to go through some judicial pronouncement which are as under :-
8.2 Hon'ble Allahabad High Court in the case of CIT vs. Rakesh Suri, 331 ITR 458 (All) after noting facts held as under :- (head note) "The assessee filed his return for the assessment year 2004-05 disclosing total of Rs. 1,17,600. The case was selected for scrutiny. It was found that the assessee had shown long-term capital gains on sale of shares. He had constructed a house between financial years 2001-02 and 2004-05 investing Rs.56,74,567. The income-tax authorities repeatedly required the assessee to furnish the contract note of purchase and sale of shares sold with a copy of bill of broker, justify holding of shares, which were sold, year-wise investment in the house property, valuation report of the approved valuer, confirmation of salary received from the company and other documents. The assessee did not furnish full details. His statement that the shares had been sold through the Delhi Stock Exchange was found to be false.
The assessee was directed to furnish reply in terms of the order dated November 9, 2006. He was further directed to furnish the name of the stock exchange through which shares were purchased and sold, rate of shares in the stock exchange on date of purchase and sale on or before December 6, 2006. On December 6, 2006, the assessee surrendered the entry appearing in his bank account on sale of shares 10 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
amounting to Rs. 61,35,844 on agreed basis. The Assessing Officer treated the sum of Rs. 61,35,844 as income from undisclosed sources under section 69A of the Income-tax Act, 1961, and also levied penalty. The Commissioner (Appeals) cancelled the penalty and this was confirmed by the Tribunal. On appeal to the High Court:
Held, allowing the appeal, that the assessee had concealed the material facts and given incorrect statement of facts in the application and also not provided information required by the Assessing Officer, after receipt of notice. Accordingly the action of the assessee was neither bona fide nor voluntary. The manner in which the assessee had tried to prolong the case before the Assessing Officer by not providing information immediately and by narrating incorrect facts in the letter dated December 6, 2006 showed that the assessee had concealed the income and disclosure was not voluntary but under compulsion being cornered by the Assessing Officer. Penalty had to be imposed."
8.3 Hon'ble Gujrat High Court in the case of LMP Precision Engg. Co. Ltd. vs. DCIT, 330 ITR 93 (Guj) after noting facts, held as under :- (head note) "The Deputy Director of Income-tax (Investigation), Bombay undertook survey action some time in September, 1988 and on verification of certain purchases made by the assessee it was found that the purchases did not appear to be genuine. Before the proceedings could be finally concluded the assessee filed a declaration under section 273A of the Act disclosing additional income of Rs. 54,71,463 as being relatable to assessment year 1985-
86. On the same day, declaration was also made of a sum of Rs.18 lakhs each for assessment years 1986-87, 1987-88 and 1988-89. This application under section 273A of the Act was followed by revised returns filed on February 14, 1989 for all the three assessment years declaring identical additional income in the revised returns. Before assessments could be finalised, after regularising the same by issuance of notice under section 148 of the Act, the assessee came forward with another application declaring additional income of Rs.
78,56,613. The first declaration was in relation to purchases from ISC while the second disclosure was in relation to purchase made from 11 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
SC, NB and NPST. The assessments were not challenged by the assessee. The Assessing Officer initiated penalty proceedings under section 271(l)(c). The explanation of the assessee for all the three years was that revised returns were voluntary, additional income in each of the revised returns was declared to purchase peace and no concealment was involved. It was submitted that the returns were revised even before issuance of notice under section 148 of the Act. The Assessing Officer did not accept the explanation of the assessee and levied penalties. Successive appeals filed by the assessee before the Commissioner (Appeals) and the Tribunal were dismissed by the two appellate authorities confirming the penalties levied by the Assessing Officer. However, the Tribunal came to the conclusion that the assessee had co-operated in finalisation of the assessment and accepted the assessment of additional income and so, the Tribunal reduced the penalty levied from the maximum to the minimum. On a reference:
Held, that it was only after the statement of the chairman and managing director was recorded by the Deputy Director of Income- tax (Investigation Mumbai, that the first disclosure dated October 20,1988, Rs. 54,71,463 was made accompanied by another disclosure of Rs. 54 lakhs in a round figure being divided into three segments of Rs. 18 lakhs each for assessment yean 1986-87, 1987-88 and 1988-89. The revised return declaring a sum of Rs.78,56,613 came about as a consequence of follow-up proceedings undertaken by the Deputy Director of Income-tax in relation to the other three suppliers, viz., SC, NB and NPST. Therefore, the assessee could not be stated to have voluntarily come forward to disclose income which had unintentionally been omitted from the original return of income. The imposition of penalty was valid."
8.4 Hon'ble Punjab & Haryana High Court in the case of Prem Pal Gandhi vs. CIT, 335 ITR 23 held - (head note) "The assessee derived income from property dealings. After assessment was completed, the Assessing Officer noticed that the assessee had substantial transactions in the bank which were not disclosed and proceedings were Initiated for reassessment. The 12 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
assessee filed a revised return and offered the peak credits in the bank account and interest thereon, with a condition that no penalty be imposed and he may not be prosecuted. The Assessing Officer did not accept the conditions. The Assessing Officer completed the assessment and also imposed penalty. The Commissioner (Appeals) accepted the plea of the assessee to the effect that the assessee having filed higher return and surrendered the undisclosed income, penalty was not leviable. The Tribunal reversed the order on the ground that the assessee furnished inaccurate particulars of his income and also concealed particulars of his income while filing the original return and was not able to establish the inadvertent mistake or omission in the original return, when he declared showing much larger income in the revised return. On appeal:
Held, dismissing the appeal, that the plausibility or otherwise of the explanation of the assessee was a pure question of fact. Admittedly, the assessee concealed the transactions in the bank account and when notice of reassessment was issued, finding no other way out, the assessee surrendered income to avoid penal consequences. In such a situation, it could not be held that the assessee wanted to buy peace of mind and there was no evidence of concealment, which called for penalty. This was not a case where penalty had been imposed only because the assessee disclosed higher income voluntarily but a case of clear concealment where the assessee having found no other way out, was forced to surrender the undisclosed income. No substantial question of law arose."
8.5 Hon'ble Bombay High Court in the case of Jyoti Laxman Konkar vs. CIT, 292 ITR 163 held - (head note) "The assessee had filed a return for the assessment year 1999-
2000 declaring an income of Rs.7,40,510. Not satisfied therewith, the Assessing Officer carried out a survey under section 133A of the Income-tax Act, 1961, and during the survey found that there was a discrepancy in stock to the tune of Rs.18,28,706 which was brought to the notice of the assessee, and the assessee filed a revised return disclosing additional income of Rs.18,28,706. The Assessing Officer 13 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
imposed penalty under section 271(1)(c) and this was upheld by the Tribunal. On appeal to the High Court :
Held, dismissing the appeal, that the question whether there is concealment of income or not has to be decided with reference to the facts of a given case and the fact finding authorities under the Act having come to the conclusion that in the facts of the case, the assessee had concealed the income initially with a view to avoid the payment of tax, the imposition of penalty was valid."
8.6 The ld. Authorised Representative, however, relied upon the decision of Hon'ble Punjab & Haryana High Court and others (supra) in support of his contention that it is not a case of concealment in which decision in the case of Suresh Chand Mittal (supra) has also been considered. However, the said decision in the case of Suresh Chand Mittal has been considered by the Hon'ble Punjab & Haryana High Court in its later decision in the case of Prem Pal Gandhi vs. CIT (supra) and penalty has been confirmed. Therefore, said decisions would not support the case of the assessee. Further the assessee made surrender of undisclosed income only when he was confronted with the incriminating material against him and cornered by the Revenue Department after making detailed enquiry. Therefore, the said decision would not support the case of the assessee.
The ld. Authorised Representative further relied upon the orders of I.T.A.T., Agra Bench in which the Tribunal found that explanation furnished by the assessee stands substantiated by evidence brought on record. In the light of the decisions of various High courts, noted above, first of all decision of Tribunal cannot be given 14 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
preference and further when the assessee himself surrendered the undisclosed income at the assessment stage after detecting income from potato business which was running systematically out of books of account, by the Department. 8.7 All the above decisions squarely apply to the case of the assessee and prove that the assessee had intentionally and deliberately filed inaccurate particulars of his income in the original return and, therefore, penalty was leviable in the present case.
8.8 In the light of the above discussions and after considering the facts of the case, we find that it is a clear cut case of concealing and furnishing inaccurate particulars of income of proprietary potato business of the assessee which was systematically run through bank account. The assessee was very much aware about this income of potato which is subject to tax in accordance with law. Inspite of this fact, he tried to operate this business under the name and style of two proprietary concerns by introducing bank accounts. These facts clearly show that the assessee has concealed the particulars of his income, furnished inaccurate particular of his income with his knowledge and intention to conceal his income. We, therefore, are of the considered view that penalty under section 271(1)(c) of the Act has been rightly imposed by the Assessing Officer and has rightly 15 ITA Nos.129, 130, 131 & 103/Agr/2009 A.Ys. 99-2000, 01-02, 02-03 & 2000-01 .
confirmed by the CIT(A). In the light of the above discussions, order of the CIT(A) is confirmed.
9. In the result, all the four appeals filed by the assessee are dismissed.
(Order pronounced in the open Court)
Sd/- Sd/-
(BHAVNESH SAINI) (A.L. GEHLOT)
Judicial Member Accountant Member
PBN/*
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