Income Tax Appellate Tribunal - Kolkata
Anandamoy Bhattacharjee vs Income Tax Officer on 2 September, 2005
Equivalent citations: [2007]105ITD365(KOL), (2007)107TTJ(KOL)671
ORDER
Dinesh K. Agarwal, Judicial Member
1. This appeal preferred by the assessee is directed against the order passed by the Ld. CIT(A) dated 18.03,2004 for the Asstt. year 1995-96.
2. Briefly stated facts of the case are that the assessee is an individual and Ex Chief Justice of Hon'ble Calcutta and Bombay High Court. It was observed by the Assessing Officer that in the instant case, no return of income was filed by the assessee though he had income by way of salary and royalty for the impugned assessment year 1995-96. therefore, proceedings Under Section 147 of the I. T. Act was initiated by issuing notice Under Section 148 which was served on 07.02.2001 But the assessee did not file his return of income in response to notice Under Section 148. Consequently notice Under Section 142(1) was also issued but again there was no compliance. Thereafter a letter was issued to the assessee for furnishing the details as per requisition made Under Section 142(1) fixing the date for hearing on 20.03.2002. The Ld. Authorised Representative of the assessee appeared and tiled a written objection challenging the jurisdiction of the Assessmg Officer over the assessee and also confirmed that no return for the assessment year 1995-96 was tiled. Since the assessment was due to be barred by limitation, the assessment Under Section 144/14/was completed vide order dated 27.3.2002 on a total income of Rs. 27,67,850/- as under:
1. Income from salary after allowing exemption Rs. 1,78,403/- and deductions 2 Income from other sources:
a) Receipt credited in bank account treating Rs. 25.40,464/-
as royalty
b) Estimated undisclosed Rs. 18,000/-
interest income
c) Estimated undisclosed
income on past Rs. 15,000/-
investments
d) Bank interest Rs. 25,982/- Rs. 25,99,446/-
Rs. 27,77,849/-
3. Less : Deduction Under Section Rs. 10,000/-
80L Deduction 80 RR Nil Rs. 10.000/-
is not applicable Rs. 27,67,849/-
Or
Rs. 27,67,850/-
The assessee preferred first appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 10.7.2002 deleted the addition of undisclosed interest income of Rs. 18,000/- and Rs. 15,000/-. Besides this, he has directed the Assessing Officer to allow deduction Under Section 80RR in respect of the sum of Rs. 25,40,464/- added by the Assessing Officer as royalty income and accordingly, allowed the assessee's appeal. Being aggrieved, the revenue preferred second appeal before the Tribunal. The Tribunal in IT A No. 1841/K/2002 vide order dated 19th August, 2003 upheld the order passed by the Ld. CIT(A) and accordingly dismissed the revenue's appeal.
3. In the penalty proceedings initiated Under Section 271(1)(c) it was submitted by the assessee that the disallowance of additions made at the time of assessment were struck down in appeal, therefore, there is no question of concealment of income or furnishing inaccurate particulars of his income and, therefore, the penalty proceedings initiated Under Section 271(1)(c) be dropped. However, the Assessing Officer did not accept the assessee's explanation and observed that the assessee did not voluntarily file his return of income disclosing the income received from various sources which he was required to do so as per provisions of the Act, therefore, he was of the view that the assessee deliberately concealed the particulars of his income and, therefore, considered it to be a lit case for imposition of penalty Under Section 271(1)(c) and accordingly imposed a penalty amounting to Rs. 1,87,610/- Under Section 271(1)(c) of the I. T. Act. The assessee preferred first appeal before the Ld. CIT(A). The Ld. CIT(A) was of the view that the Assessing Officer was absolutely justified in levying penalty Under Section 271(i)(c) and, therefore, while sustaining the order of the Assessing Officer dismissed the assessee's appeal.
4. Being aggrieved by the order of the Ld. CIT(A) the assessee is in appeal before us taking following sole ground of appeal:
1. That, the income disclosed voluntarily by the appellant and the income finally determined by the Ld A O are same Therefore there is no question of concealment penalty Under Section 271(1)(c) which was wrongly confirmed by Ld. CIT(A).
5. The Ld. Counsel for the assessee while reiterating the same submissions as submitted before the Ld. CIT (A) further submits vide his written note as under:
The assessee retired as Chief Justice of Mumbai H.C. on 31.03.1995, After retirement he went to Bangalore as a Honourary Professor in National Law College, Bangalore and being a scholar was completely involved in teaching law to his students till December, 2000. The matter of filing I. T. Return did not come to his mind, because for last 20 years since 1976 as a Judge, his Form No. 16, I. T. Returns etc used to be taken care by his office Staff Accounts Officers etc. Moreover, he thought, in Mumbai, tax was deducted from his salary and for his foreign earning he had already paid advance tax. However, in January 2001 he had parked up from Bangalore and landed in Kolkata with various ailments Unfortunately he was so unwell and practically bed ridden, could not file his return of income. Doctor's Certificate is already filed.
6. He further submits that in the course of the assessment proceedings, Ld. Authorised Representative of the assessee appeared and suo motu filed a letter dated 26.3.2002, appearing at pages 4 to 6 of the assessee's paper book, where he categorically mentioned that apart from salary the assessee earned professional income as an author from a foreign publisher and claimed deduction Under Section 80RR and also disclosed all relevant facts relating to his income, therefore, there is no concealment on the part of the assessee. He further submits that as per order Under Section 254 dated 14.10.2003, the total income computed by the Assessmg Officer and the income disclosed by the assessee on 26.3.2002 and the total income finally assessed were same, therefore, the Assessmg Officer has erred m holding that the assessee has concealed his particulars of income. He further submits that the entire amount of tax is fully covered by the TDS from the salary and advance tax paid by the assessee, therefore, there was no intention on the part of the assessee not to disclose his income. The Ld. Counsel for the assessee while strongly relying on the order of the Tribunal in ITO v. Bombaywala Readymade Stores submits that since in this case no return was tiled, therefore, no penalty Under Section 271(1)(c) can be levied. The Ld. Counsel for the assessee also submits that in this case no satisfaction was recorded by the Assessing Officer while initiating proceedings Under Section 271(1)(c), therefore, on this account also the penalty Under Section 271(1)(c) is not leviable and for this proposition the reliance was placed on the decisions reported in 246 ITR 568 (Del.) and 265 ITR 82 (Del). He, therefore, submits that the penalty imposed by the Assessmg Officer and sustained by the Ld. CIT(A) be deleted.
7. On the other hand, the Ld. Departmental Representative while strongly relying on the order of the Assessmg Officer and the Ld. CIT(A) further submits that in this case it was found that the assessee was having taxable royalty income which he failed to disclose, therefore, proceedings Under Section 147 was initiated by issuing notice Under Section 148. He further submits that since the assessee tailed to tile any return either Under Section 139 or in compliance to the notice issued Under Section 148, therefore, it is a fit case for levy of penalty and, therefore, there is no error in the order of the Ld. CIT(A) in sustaining the penalty imposed by the Assessing Officer Under Section 271(1)(c) of the I. T. Act. The reliance was placed on the decision reported in 253 ITR 145 (Kar.), 243 ITR 818 (Ker) and 195 ITR 1 (SC).
8. We have carefully considered the rival submission of the parties and perused the material available on record. We find that there is no dispute that no return for the impugned assessment year 1995-96 was tiled by the assessee. We further find that the plea of the Ld. Counsel for the assessee that the matter of filing income tax return did not come to the mind of the assessee because for last 20 years since 1976 as a Judge, his Form No. 16, I. T. returns etc. used to be taken care of by his office staff, Accounts Officer etc. and the tax was deducted from his salary and for his foreign earnings he had already paid advance tax and thereafter he was confined to bed, therefore, could not tile his return for which doctor's certificate has already been filed, was not controverted by the Ld. Departmental Representative. We further find that there is no dispute that the assessee has paid TDS Rs. 44,185/- on salary and advance tax Rs. 2,56.400/- on his royalty income and alter adjusting the same the balance amount of 'Rs.2039/- along with interest Under Section 234A Rs. 2850/- was also deposited by the assessee. We further find that the Tribunal in ITO v. Bombaywala Readymade Stores while relying on the decisions m Thoppil Kutti Eroor v. CTT (1958) 34 ITR 850 (Ker), S. Narayanappa & Brothers v. CIT and S. Santhosa Nadar v. Fust Addl. I.T.O. (1962) 46 ITR 411 (Mad) it has been held by the Hon'ble President ITAT as a Third Member at page 13 as under:
I have carefully considered the submissions of both the parties. It is clear from the above quoted case law that the matter in issue is not res integra but is covered by three decisions of the High Courts. No decision taking a contrary view was cited on behalf of the Revenue. The decisions cited by the Ld. Departmental Representative in the cases of K. P. Reddy v. CIT (1968) 68 ITR 638 (AP) Thakur Veerpal Singh v. CIT and CIT v. Dass Jewellers (2002) 258 ITR 668 (Delhi) do not deal with the controversy before me. In all the above cases, the asscssee submitted a return and did show in retnrn income which was much less than the assessed income and accordingly it was held that the onus was on the assessee to prove that it was not a case of concealment or of deemed concealment No such situation arises in this case Likewise omission of word "deliberate" from section 271(1)(c) of the Income tax Act, is not relevant to solve the controversy. The above omission has shifted burden of proof from the Revenue to the assessee. It has nothing to do with the effect of non-submission of the return. In the light of the above discussion I hold that no penalty can be levied on the assessee under Section 271(1)(c) where no return of income is submitted. I Concur with the view taken by the learned Judicial Member.
9. We further find that the assessment order does not record the satisfaction as warranted by Section 271 of the Income Tax Act for initiating the penalty proceedings. Merely because the penalty proceedings have been initiated, it can not be assumed that such satisfaction was arrived at in the absence of the same being spelt out by the order of the assessmg authority vide Kshetra Mohan Roy v. ITO , CIT v. Ram Commercial Enterprises Ltd. , Drwan Enterprises v. CIT (2000) 246 ITR 5/1 (Del.) and CIT v. B. R. Sharma .
10. In CIT v. Onkar Saran & Sons , relied on by the Ld. Departmental Representative, it has been held by the Hon'ble Supreme Court at page 2 (short notes) as under:
Held, affirming the decision of the High Court, that, even in a case where a return filed in respones to a notice under Section 148 involved an element of concealment, the law applicable would be the law as it stood at the time when the original return was tiled for the assessment year in question and not the law as it stood on the Hate on which the return was filed in response to the notice under Section 148.
11. In P.C. Joseph & Brothers v. CIT , relied on by the Ld. Departmental Representative, it has been held by the Hon'bie Kerala High Court at page 822 as under:
... Where the surrender of income made in the revised return was not voluntary, but was as a result of detection by the assessing authority, the tiling of the revised return is of no consequence The very word "omission" connotes an intentional act. The factual position is that the revised return was a veiled attempt to present a mitigating circumstance. Further, a return in response to a notice under Section 148 is not to be treated at par with or compared to a revised return. That being the position, the filing of the return including the agreed concealed income does not constitute a mitigating circumstance and penalty has been rightly levied.
12. In CIT v. Sudharshan Silks & Sarees , relied on by the Ld. Departmental Representative, it has been held by the Hon'ble Karnataka High Court at page 154 as under:
...Mere tiling of a revised return is not enough. The background and the circumstances in which such returns are filed hold the key to the answer whether such returns are bona fide. What the revised returns in the present cases meant was to pre-empt any action on the part of the Department for reopening of the earlier assessments on the basis of seizures and disclosures made in the course of the search proceedings. Our answer to the question referred by the Tribunal is therefore in the negative. The Income-tax Appellate Tribunal was not in our view justified in canceling the penalty levied upon the petitioners under Section 271(1)(c)...
13. In all the above cases, relied on by the Ld. Departmental Representative, the returns were filed by the assessee. Whereas in the case before us, the assessee did not tile any return either Under Section 139 or Under Section 148 or in response to notice Under Section 142(1), therefore, the decisions relied on by the Ld. Departmental Representative are distinguishable and not applicable to the facts of the present case.
14. In this view of the matter and keeping in view the bona fide belief of the assessee which was not controverted by the Ld. Departmental Representative and in view of the ratio of decision of Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa and the other decisions as referred hereinabove, we are of the view that the assessee has not concealed the particulars of his income or furnished inaccurate particulars of such income, therefore, the penalty imposed by the Assessing Officer and sustained by the Ld. CIT(A) is directed to be deleted. The ground taken by the assessee is, therefore, allowed.
15. In the result, the appeal stands allowed.