Income Tax Appellate Tribunal - Chandigarh
Sh. Gajjan Singh Thind, Ludhiana vs Acit, C-7, Ludhiana on 1 July, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A' , CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा गु%ता, लेखा सद य
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.1402/Chd/2018
नधा रण वष / Assessment Year : 2014-15
Sh.Gajjan Singh Thind, बनाम The A.C.I.T.,
H.No. 85-C, Udham Singh Nagar, Circle-7,
Civil Lines, Ludhiana. Ludhiana.
थायी लेखा सं./PAN NO: AANPT 4503 C
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Ash w a ni Kuma r , C A
राज व क ओर से/ Revenue by : Shri Abhishek Pal Garg, Sr.DR
सन
ु वाई क तार$ख/Date of Hearing : 02.04.2019
उदघोषणा क तार$ख/Date of Pronouncement : 01.07.2019
आदे श/ORDER
Per Sanjay Garg, Judicial Member :
Th e p r e se nt a p p e a l h a s b e e n p r e fe r re d b y t h e a s s e s se e a ga i n st t he or d e r of th e C om mi ssi on e r of I n co me Ta x (A p pe a ls )-
3, Lud h ia n a [( h e re i na f te r re fer r e d to as 'CI T( A) '] d a te d 2 4 .8 . 20 1 8 , a gi ta ti n g th e a cti on o f th e CI T( A ) i n co nf ir mi ng t he p e n a lt y of Rs. 16 , 2 8, 6 2 4/- l e v ie d by the As se s sing Of fi ce r (i n 2 ITA No.1402/Chd/2018 A.Y.2014-15 sh or t 'A. O. ') u /s 2 7 1 (1 ) ( c) of th e In come Ta x Act , 1 9 6 1 ( in s hor t 'A ct') .
2. Th e b r i e f fa c ts r e le v a nt to the i ss ue a re th a t fo r t he a ss e s sme n t ye ar u nd e r c on si de r a tio n, the a ss e ssee f i le d or i gi na l r e tu rn of in come on 3 1 .7 . 2 01 4 d e cl a r i ng a n e t t a xa b le i nc ome of Rs .9 8 ,3 6 ,4 3 0 /- a n d c la i me d a n e xe mpt i nc ome of Rs .4 1 ,4 5 ,6 6 5 /- on a cc oun t of Lo ng Te r m C a p it a l G a i ns. The a ss e s see w a s su m mone d b y the D y. D i r e ct or of I nc ome Ta x ( I n ve s ti ga ti on ) in r e s pe ct of a n e ntr y re ga r di ng Lon g Te r m C a p i ta l Ga i n s vi d e le tte r d a te d 3 0 .9 . 20 1 5 . Th e re a f te r t he a ss e s see fi le d a r e v ise d re tu r n on 8 .1 0 . 20 1 5 d e cl a r i ng the sa i d i nc ome of Rs .4 1 , 5 5 ,8 7 6 /- sh ow n i n th e or i gi na l r etu r n a s Long Te r m C a pi ta l G a i ns , a s "in co me f r om ot he r sou r ce s " a n d p a i d th e d ue ta xe s t he re up on . Th e r e a fte r the a sse ss men t u /s 1 4 3( 3 ) of the A ct w a s c a r ri e d ou t in the ca se o f th e a ssess ee . D ur i ng th e a sse ssme nt p r ocee d in gs, the A. O . obse r ve d th a t t he a f or e sa i d s ur re nd e r of i n come of Rs .4 1 ,5 5 , 87 6 /- a s "i n come f ro m oth e r sou r ce s " in the re v ised r e tu r n, w a s a n "un d is cl ose d i nc ome " of th e a ss e ssee a s th e ass e s see in th e ori gi na l r e tu rn , h a d cl a ime d the sa me to b e ta x ex e mp t. Ha d t he a sse ssee be e n n ot s um mon e d b y t he I n ve sti ga tion W in g, th e a sse ssee wo uld n ot h a ve re v i se d hi s r e tu rn to o ff e r f or t a xa ti on th e a fore sa i d a mou nt of Rs. 4 1 , 5 5 ,8 7 6 . Th e A. O. f ur th e r o bs e r ve d th a t t hou gh 3 ITA No.1402/Chd/2018 A.Y.2014-15 th e a sse ssee ha d s ur r e n de re d the a f ore s a id a mou nt of Rs .4 1 ,5 5 ,8 7 6 /- i n fr on t of th e DD I T (I nv e st iga t ion) , Lud hi a n a b ut d i d n ot su b mit th e r e tu r n (I TR-V ) on li n e to th e Ce n tr al P r oce ssi n g Ce n tr e (CPC), B a n ga l ur u b ut d ur in g sc ru ti ny a ss e s sme n t p r ocee d i ng s, the a sses see of fe re d the s a id i n come f or ta xa ti on . Th a t si n ce the a ss e ssee ha d f ile d t he re vi se d r e tu r n a fte r comme nc e me n t o f s cr u tin y a sse ssme nt p r oce e d in gs a n d a l so d i d n ot s ub mi t I TR-V o nl i ne to C P C , Ba ng a lu r u, h e, th e re f ore , he ld tha t i t w a s a ca se of con ce a l men t of i nc ome .
Th e A. O. fu r the r n oti ce d t ha t th e re was a di f fe re nce of Rs .2 , 00 , 01 5 /- b e t w ee n the a mo u n t sh ow n by th e a s se s se e a s r e ce i ve d fr om sha re p r ofi ts , whi ch was fu r the r of fe re d as 'i nc ome fr om oth e r s our ce s' a nd th e a mou nt a c tua l l y re cei ve d i n th e b a n k a cc o un t of th e a s se sse e . O n b e i ng a ske d to e xp l a in , th e a sse ssee a cce p te d tha t the amoun t s ho wn i n co mpu ta ti on w a s le ss a nd a gre e d to a dd i ti on of the d if fe re n ce , a mou nt in g t o Rs .2 , 00 , 01 5 /-. The A. O . a cco rd i ngly , ma de a n a dd it ion of the a f or e sa i d a mou nt t ota l in g Rs .4 , 35, 5 9 1/- i n to th e i n come of the a ss e s see u/s 6 8 of t he A ct. The A. O. a cc or di n gl y, i n iti a te d t he p e n a lt y pr ocee din gs u /s 27 1 ( 1) ( c) o f th e Ac t. I n th e pe na l ty p r oce e d in gs , the A .O . h e l d t ha t i n v ie w o f th e a b ove f a ct s, t he a ss e s see ha d c once a le d the pa r ti cul a r s of i nc ome a mou nt in g to 4 ITA No.1402/Chd/2018 A.Y.2014-15 Rs .4 3 ,5 5 ,8 9 1 /- a n d l e v ie d the pe na lt y @ 11 0 % of t h e ta x s oug ht to b e e va de d of Rs .1 6 , 28 , 62 4 /-.
3. Th e a s s e s se e p r e f e r re d a n a p p e a l b e f o r e the L d . CI T( A ) b u t r e m a i ne d u n s u c ce s sf u l .
4. Before us, t he L d . C o u n se l fo r t he asssessee has s u b m i t t e d a c h a r t s h o w i n g t he s e q u e n ce o f e v e n t s , w h i c h i s r e p r o d u ce d a s un d e r :
Return of Income filed on declaring income at Rs.98,36,430/- 31.07.2014 Notice u/s 143(2) issued on Served on 19.09.2015 18.09.2015 Case transferred to other charge and another notice u/s 143(2) was received on 22.09.2015 Summons issued by DDIT, Ludhiana on 30.09.2015 Return was revised and declared income at Rs. 1,39,92,3107- (including Rs. 41,55,880/-
on account of profit on sale of Shares) 08.10.2015
Notice u/s 142(1) issued on 01.04.2015
Reply to notice u/s 142(1) dated
01.04.16 filed on 11.04.2016
Notice u/s 142(1) issued on 09.05.2016
Reply to notice u/s 142(1) dated
09.05.16 filed on 26.05.2016
Order u/s 143(3) passed on 20.06.2016
After adding a sum of Rs. 2,00,020/- on
Account purchase price of shares) assessed at Rs. 1,41,92,330/-5 ITA No.1402/Chd/2018
A.Y.2014-15
5. Th e assessee has also p l a ce d a copy of the I TR - V a l o n g w i t h c o m p u t e r i z e d a ck n o w l e d ge m e n t of r e c e i p t o f I TR - V f r o m C P C , B a n ga l u r u t o s h o w th a t t he a ss e s se e h a d e - f i le d t he r e vi se d r e tu r n on 8 . 1 0 . 2 0 1 5 . Th e L d . C o u n se l f o r t h e a s s se s se e h a s f u r t h e r i n v it e d o u r a t te n t i o n t o t h e p r o v i si on s o f s e c ti o n 1 3 9 ( 5 ) o f t he A ct , a s a p p l i c a b le i n t he a s se s s me n t y e a r u n de r c o n s i d e r a t i o n , w h i c h r e a d a s u n de r :
" 1 3 9 (5 ) If a n y p e r so n , h a v i n g f u r n i sh e d a r e t u r n u n d e r s u b - se c ti o n ( 1 ) , o r i n p u r su a n c e of a n o ti c e i s s u e d u n d e r su b - se c ti o n ( 1 ) of se c tio n 1 4 2 , d i s c o v e r s an y o mi s s i o n o r a n y wr o n g s ta te me n t th e r e i n , h e m a y f u rn i sh a r e v i se d r e tu r n a t a n y t i m e b ef o r e th e e x pi r y of o n e y e a r f r o m th e e n d of th e r e l e v a n t a s se ss m e n t ye ar o r b e f o re t h e c o m p l e t i o n o f th e a s se s sm e n t, wh ic h e v e r i s e ar l i e r . "
6. Th e Ld.Counsel for t he a s ss e ss e e , t he r e f or e , has s u b m i t t e d t h a t a s p e r t he re le v a n t p r o v i s i o n s o f se c ti o n 1 3 9 ( 5 ) o f t h e A c t , a n a s se s se e i s e n t it le d t o f i le a re vi se d re t ur n w i t h i n t h e s t i p u la t e d pe r i o d a s p r e s c r i b e d u nd e r t h e a f o r e s a i d p r o v i s i o ns o f s e c t i o n 1 3 9 ( 5 ) o f t h e A ct , i f h e d i s c o v e r s a ny o m i s s i o n o r a n y w r o n g s ta te m e n t i n t he r e t u r n o r i g i n a l l y f i le d u / s 1 3 9 ( 1 ) o f t h e A ct . Th a t i n t h i s c a s e , t he a s s e s s e e h a s f i l e d the re v i se d r e tu r n on 8.10.2015, which was within t he limitation p e r i od prescribed f or filing th e revised return.
H e n ce , the r e vi se d r e t u rn f i le d b y t h e a s s e s s e e w a s a v a l i d r e t u r n a n d t he A . O . w a s s u p p os e d to m a k e t h e a s s e s s m e nt 6 ITA No.1402/Chd/2018 A.Y.2014-15 t a k i n g t he r e v i s e d r e t u r n a s t h e b a s e r e t ur n o f t h e a s se sse e .
S i n ce t he r e w a s n o a d d i t i on m a d e b y t he a ss e s s e e in r e s p e c t of t h e i n c o m e of Rs . 4 1 , 5 5 , 87 6 s h o w n i n t he r e v is e d r e t u r n a s " i n c o m e fr o m o t h e r s o u r c e s " a n d d u e t a x w a s p a id t h e r e u p on , h e nc e n o a d d i t i on w a s m a d e b y t h e A. O . o n t h is a c c o u n t . S o f a r a s t h e d i f f e r e n ce o f R s . 2 , 0 0 , 0 1 5 / - w a s c o n c e r n e d , t he assessee had v o l u n t a r i ly offered t he sa i d d i f fe r e n ce f or t a x a t i o n . H e n ce , i t w a s n o t a c a s e o f c o n ce a l m e n t o f i n c o m e to w a r r a n t le v y o f pe n a l t y u / s 2 7 1 ( 1 ) ( c ) o f t h e I . T. A c t .
7. Th e L d . D R , o n t h e o t h e r h a n d , h a s s u b m i t t e d t h at s i n ce t h e r e v i s e d r e t u r n w a s f i l e d b y t he a s se sse e a f te r t h e a s s e s se e w a s s u m m o n e d b y t h e I n v e s t i g a t i o n W i n g a n d e v e n a f te r t he i s s u a n c e o f e a r l i e r n o ti ce u / s 1 4 3 ( 2 ) o f t he A c t o n 1 8 . 9 . 2 0 1 5 , h e nc e t h e a s se s se e d e c l a r e d t he a f o r e s a i d i n c o m e w h e n h e w a s s h o w c a u se d. Th a t i t w a s c le a r - c u t c a se of c o n c e a l m e nt o f i n c o me a n d f u r ni s h i n g o f i n a c c u r a t e p a r t i c u l a r s of i n c o m e .
8. W e h a v e c o ns i d e r e d t he r iv a l c on t e n t i o n s a n d h a v e a l s o m i n u t e l y p e r u se d t h e re le v a n t p r o v i s i o n s o f t h e A c t . I n t he c a s e i n h a n d , t h o u g h t h e a s se s se e h a d f i le d t he r e vi se d re t u r n a f t e r a n e n q u i r y w a s i n i ti a t e d b y t h e I n ve st i g a ti o n W i n g o f t he I n co m e Ta x D e p a r t m e n t a b ou t th e L o n g Te r m C a p i t a l G a i n s d e cl a r e d b y t h e a s se s se e , ye t , t h e r e v is e d r e t u r n f i l e d b y t he 7 ITA No.1402/Chd/2018 A.Y.2014-15 a s s e s s e e w a s w i th i n t h e s t i p u l a t e d p e r i o d p r e s c r i b e d u n d e r t he A c t . A s p e r t h e p r o v i s i o n s of se c t i o n 1 3 9 ( 5 ) o f t h e A c t , t h e r e is no bar to file a r e v i se d i n co m e e ve n during a s s e s s m e nt p r o ce e d i n g s b u t b e f o re c o m p l e t i o n o f t he a s se s sm e n t s u b j e ct t o t h e c o n d i t i o n t h a t t he pe r i o d p r e s c r i b e d f o r f i l i n g t h e s a me has not e x p i re d . Under these c i r c u m s t a n c e s, the r e v i se d r e t u r n f i l e d b y a n a s se s se e w i l l be a v a l id r e tu r n . Th e A . O .
u n d e r s u ch c i r cu m s t a n c e s ne i t h e r c a n , n o r is s u p p o se d t o m a k e f u r t he r a d d i t i o n i n t o t h e i n c o me o f th e a s s e s s e e i n r e sp e c t o f i n c om e w h i c h h a s a l r e a d y be e n d e c l a r e d b y t he a s s e s s e e i n t h e v a l i d l y f i le d r e v i se d r e t u r n . I f t h e r e i s no a d d i t i o n ma d e t o t h e i n c o me o f th e a s se s se e , t he r e w i l l n ot b e a n y t a x s o u g h t to b e e v a d e d b y a n a s se s se e . I f t he r e is n o t a x s o u g h t to be e v a d e d , no pe na l t y c a n b e c om p u t e d or l e v i e d u n d e r t h e p r o v i s i o ns o f se c t i o n 2 7 1 ( 1 ) (c ) o f t h e A ct . Th e r e l i a n ce i n t hi s r e sp e c t c a n b e p l a ce d o n t h e d e c i s i o n o f t he C o o r d i n a te B e n c h o f t h e Tr i b u n a l i n t h e c a se o f ' CI T V s.
Ku lw a n t Si n gh' ( 2 0 1 9 ) 1 0 4 Ta x m a n n . c o m 3 4 0 ( C h a n d i g a r h -
Tr i b . ) , w he r e i n th e f o l l o w i n g o b se r v a t i o n s h a v e be e n m a d e b y t h e C o o r di n a t e C h a n d i g a r h B e n c h o f t h e Tr i b u n a l :
"15. Before proceedings further, we deem it fit to first discuss the relevant provisions of section 271(1)(c) of the Act as they stood during the relevant period / assessment year under consideration.8 ITA No.1402/Chd/2018
A.Y.2014-15 " 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-- .......
(c ) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or] ......
he may direct that such person shall pay by way of penalty,--
.....
[( 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.
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. ...
[Explanation 3.--Where any person fails, without reasonable cause, to furnish within the period specified in sub-section (1) of section 153 a return of his income which he is required to 9 ITA No.1402/Chd/2018 A.Y.2014-15 furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1989, and until the expiry of the period aforesaid, no notice has been issued to him under clause (i) of sub-section (1) of section 142 or section 148 and the Assessing Officer or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148.] Explanation 4.--For the purposes of clause (iii) of this sub- section, the expression "the amount of tax sought to be evaded",--
[( a) in any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, means the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income;
(b ) in any case to which Explanation 3 applies, means the tax on the total income assessed [as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148;
(c ) in any other case, means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished."
16. A perusal of the above referred to section 271(1)(c) of the Act reveals that there are two parts of this section. The first part speaks about the charge which may invite penalty i.e. a person has concealed 10 ITA No.1402/Chd/2018 A.Y.2014-15 'particulars' of his income or furnished inaccurate particulars of income, he may be directed to pay certain sum by way of penalty as penalty. Now, the second part speaks about the quantum of amount payable. As per clause (iii), the Assessing officer may direct such a person against whom the above charge is established to pay in addition to the tax, if any, payable a sum which is not less than, but which shall not exceed three times, the amount of tax sought to the evaded by a reason of such concealment of particulars of income or furnishing of inaccurate particulars of income.
17. Now, Explanation 1 strongly relied upon by the Ld. DR speaks about of deeming fiction regarding the concealment of particulars of income which speaks that if a person fails to offer an 'explanation' or which is found by the concerned income tax authorities to be false or such person could not substantiate in respect of any fact material to the computation of his total income, then the amount added or disallowed in computing total income of such person as a result thereof, shall be deemed to represent the income in respect of which particulars have been concealed. Further, as per the Explanation 3, where a person fails to furnish within the stipulated period his return of income for any assessment year and thereafter, the concerned incom e tax authority, either the Assessing officer or the CIT (A) finds that in respect of such assessment year, such person has taxable income, then such person shall be deemed to have concealed the particulars of his incom e in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after expiry of the period aforesaid in pursuance of a notice u/s 148 of the Act. Vide Explanation 4, the term "the amount of tax sought to be evaded" has been defined / explained for the purpose of computation of levy of penalty.
18. A per clause (a) to Explanation 4, where the amount of income tax in respect of which particulars have been concealed or inaccurate particulars of income have been furnished, has the effect of reducing the loss declared in the return or converting that loss into taxable income, then the tax sought to be evaded 11 ITA No.1402/Chd/2018 A.Y.2014-15 will the amount which would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars of income have been furnished had such income been the total income; meaning thereby there should be a resultant effect of reducing the loss declared or converting that loss into income by the act or omission of the concerned person for concealment of income or furnishing of inaccurate particulars of income. Then as per the clause (b) of Explanation 4, wherein, in a case to which Explanation 3 applies i.e. where the concerned person fails to file within the stipulated period a return of income despite having taxable income, in that case, the tax sought to be evaded will be the tax on the total income assessed but reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice u/s 148 of the Act.
As per the above said provision what is material is the evasion of the tax and in that scenario, if a person does not file a return and, hence, does not disclose his particulars of income and meaning thereby concealed his particulars of income but if he before the issuance of notice for the reopening of the assessment u/s 148 of the Act, had deposited due taxes and the resultant addition after assessment does not create any liability to pay any further tax, there will be no tax sought to be evaded.
19. Now coming to the relevant clause (c) to Explanation 4, which is residuary clause which speaks that in any other case, the difference between the total income assessed and the tax that would have been chargeable, had such total income been reduced by the amount of income in respect of which particulars have been concealed which means that the tax payable on the income in respect of which particulars have been concealed or inaccurate particulars of income furnished.
20. A collective reading of all the three clauses reveal that for the calculation of the quantum of penalty, it is not the income in respect of which particulars have been concealed or furnished or inaccurate particulars of 12 ITA No.1402/Chd/2018 A.Y.2014-15 income furnished that is relevant but it is the resultant addition to the income of the assessee on account of such concealed particulars of income or furnishing of inaccurate particulars of income. If despite the detection of concealment of income or furnishing of inaccurate particulars of income, in the resultant effect, there is no addition into the income of the assessee or the assessee has already paid taxes on such income in respect of which particulars have been concealed or inaccurate particulars of income have been furnished, then, as per Explanation 4, there will be no tax sought to be evaded and thereby no penalty will be leviable u/s 271(1)(c) of the Act. In our view, clause (c) to Explanation 4 is a residuary clause and can not be segregated and independently interpreted in divorce to clauses (a) or (b) of Explanation 4 to give giving it an entirely different meaning and any such an interpretation, will not be a correct interpretation of the statutory provision. A collective reading of the entire provisions of section 271(1)(c) of the Act reveal beyond doubt that what is material is the resultant addition to the taxable income of an assessee which may invite penalty under the relevant provisions of section 271(1)(c) of the Act. Though the words used in the first part, i.e. charging provision are 'Particulars' of income, however, for levy of penalty it is not the 'Particulars' of income but rather the 'quantum of income itself, that is added to the taxable income of the assessee is relevant for the purpose of calculation of the amount of penalty leviable as per the aforesaid provision. Explanation 4 to section 271(1)(c) was introduced vide Taxation Law Amendment Act, 1975. The relevant part of Circular No. 204 dated 24.7.1976 giving explanatory note on the aforesaid inserted provisions reads as under:-
"61.11 New Explanation 4 defines 'the amount of tax sought to be evaded'. According to the definition, this expression will ordinarily mean the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the am ount of incom e in respect of which particulars have been concealed. In a case, 13 ITA No.1402/Chd/2018 A.Y.2014-15 however, where on setting off the concealed income against any loss incurred by the assessee under other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure, 'the tax sought to be evaded' will mean the tax chargeable on the concealed income as if it were the total income. Another exception to the general definition of the expression 'tax sought to be evaded' given earlier is a case to which Explanation 3 applies. Here, the tax sought to be evaded will be the tax chargeable on the entire total income assessed."
21. Even in the Explanation 1, what is relevant is any fact material to computation of total income of any person regarding which such person fails to offer an 'Explanation' or Explanation which is found to be false by the Income-tax authorities or an Explanation which is not able to substantiate, then, the amount added or disallowed in computing total income of such person as a result thereof deem ed to represent the incom e in respect of which particulars have been concealed. So, firstly what is relevant is the material fact to the computation of total income. The word 'computation' here is relevant which means that the fact must be material which has the effect of any addition or disallowance in the income to be computed after the assessment proceedings and it has also been provided that the am ount added or disallowed into the self- assessed incom e represents the incom e, particulars of which has been concealed and further a combined reading of the sub sections (a), (b) (c) and Explanation 4 would show that tax sought to be evaded is the tax payable on such amount in respect of which particulars have been concealed. The word 'Explanation' here is not to be applied broadly to include explanation regarding each and every fact or particulars of income such as the source of income, manner of earing of income etc., rather, the word 'explanation' here has a limited scope, whereby, it has restricted that the offering of explanation that the material fact which had been detected by the Assessing officer has a result of 14 ITA No.1402/Chd/2018 A.Y.2014-15 addition of disallowance into the income of the assessee and the assessee has no explanation that why the same be not treated as taxable income of the assessee for that relevant year. The words 'particulars of income' though in general will have a wide and broader aspect as to of the relevant particulars such as the source of income, manner of earning of income and genuineness of transaction etc., however, the second part of this section 271(1)(c) of the Act has limited the above wider scope and for the purpose of computation of penalty, stress is given on the resultant addition of an amount to the income of the assessee. The tax thereupon represents the tax sought to be evaded and the penalty can be levied upon such concealed income equal to a sum which may be 100% of 300% of the amount of tax sought to be evaded.
22. So far as the arguments of the Ld. DR that such an interpretation would defeat the purpose of provisions of section 115BBE substituted by Taxation Law (2nd Amendment) Act, 2016 w.e.f. 1.4.2017 and section 271AAC of the Act w.e.f. 1.4.2017. In our view, the above contention of the Ld. DR is not tenable. The relevant section 115 BBE and section 271AAC for the sake of convenience are reproduced as under;-
115BBE. (1) Where the total income of an assessee,--
(a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or
(b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of--
(i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and 15 ITA No.1402/Chd/2018 A.Y.2014-15
(ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance 16[or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) 16a[and clause (b)] of sub-section (1)."
Section 271AAC "271AAC. (1) The Assessing Officer may, notwithstanding anything contained in this Act other than the provisions of section 271AAB, direct that, in a case where the income determined includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under section 115BBE, a sum computed at the rate of ten per cent of the tax payable under clause (i) of sub-section (1) of section 115BBE:
Provided that no penalty shall be levied in respect of income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D to the extent such income has been included by the assessee in the return of income furnished under section 139 and the tax in accordance with the provisions of clause (i) of sub-section (1) of section 115BBE has been paid on or before the end of the relevant previous year. (2) No penalty under the provisions of section 270A shall be imposed upon the assessee in respect of the income referred to in sub-section (1).
(3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section."
23. Prior to s ub stitutio n of sub section ( 1) of sect ion 115BBE w. e.f. 14 .2 017, the sectio n 11 5 BBE was inse rted by Finance Act 2012 w. e. f. 1. 4. 201 3, which rea ds as under:-
16 ITA No.1402/Chd/2018A.Y.2014-15 (1) Where the total income of an assessee includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, the income-tax payable shall be the aggregate of--
(a) the amount of income-tax calculated on income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, at the rate of thirty per cent; and
(b) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a).
16. Inserted by Finance Act, 2016 w.e.f, 1-4-2017 16a Inserted by Finance Act, 2018 w.e.f. 1-4-2017"
24. It is pertinent to mention here that prior to 1.4.2013, there was no section 115BBE. Section 115 BBE was inserted vide Finance Act 2012 to tax the income referred to in section 68, 69, 69A, 69 B, 69 C or 69D at a flat rate of 30%. Prior to 1.4.2013, any unexplained income of the assessee either offered by himself or detected by the Assessing officer are to be taxed as per the normal rate as prescribed from time to; time. However, during the period of demonetarization in the year 2017, it was noticed that the assessees had started taking benefit of the provisions of sections 68, 69, 69A and started depositing their unaccounted for / undisclosed income in the bank account declaring the sam e as their income of the assessment year under consideration in the return of income and paying taxes @ 30% as provided u/s 115BBC of the Act, act of the assessee was taken as contributory factor in failure of the Voluntary Disclosure Scheme. Hence, to curb this practice, the government substituted sub section (1) of section 115 BBE to provide that wherein in the return of income furnished by the assessee, the total income of an assessee includes an income referred to in sections 68, 69, 69A, 69B and 69 C or section 69D, or otherwise added or determ ined by the Assessing officer during the assessment proceedings under the above provisions, then the tax at the flat rate of 60% will be payable on such an income disclosed or determined. Further to mark a difference between the self-declared income in 17 ITA No.1402/Chd/2018 A.Y.2014-15 the aforesaid provisions and the cases where the Assessing officer determined /detected such income in the aforesaid sections 68, 69, 69A, 69B and 69 C or section 69D, the penalty provisions of section 271AAC comes into operation which provides that if such an income is suo moto declared by the assessee in his return, then no penalty is leviable and if it is otherwise detected by the Assessing officer, in addition to the tax payable u/s 115BBC, such an assessee will be liable to pay penalty equal to a sum computed @ 10% of the tax payable on such unexplained income as per the provisions of section 115BBE of the Act. A cumulative reading of section 271(1)(c) read with section 115 BBE and 271AAC, would reveal that it is not barred under the Act for an assessee to declare an income in his return as an unexplained income. It may otherwise be detected or found by the Assessing officer also during the assessment proceedings. Prior to 1.4.2013, the tax on such unexplained income either declared by the assessee or detected by the Assessing officer was payable at a normal rates applicable. H owever, if such an unexplained income was declared by the assessee him self in a return filed u/s 139(1) of the Act, and then no penalty was leviable. However, if such an unexplained income is determined by the Assessing officer on account of concealment of material facts or on account of furnishing of inaccurate particulars of income relating to the computation of income which has the resultant effect of some addition into the taxable returned income then the penalty is liable to be imposed and computed taking into consideration the amount of tax so payable by the assessee on the such unexplained income detected or added by the income tax authorities.
25. It is pertinent to mention here that even though, the Government noticed that the aforesaid provisions of sections 68, 69A, 69B, 69C and 69D can be misused by the assessees to circumvent the 'Voluntary Disclosure Scheme' and to get their income into rotation / accounted for by paying 30% tax and declaring the same under the aforesaid sections in the return of income yet, the Government still has not come with the penalty provisions in respect of such voluntarily declared 18 ITA No.1402/Chd/2018 A.Y.2014-15 income in the return of income, rather has chosen to enhance the tax rate form 30% to 60%. The penalty u/s 271AAC of the Act is leviable only if such an income is not declared in the return of income. In view of our above discussion of the matter, since in these cases the assesse have decaled the income in question in the return of income itself, the tax at the maximum rate slab duly paid thereupon, the returned income accepted as such without any addition on this issue, hence, there was amount of tax sought to be evaded, hence, it cannot be said to be a fit case for levy of penalty u/s 271(1)(c) of the Act.
26. Even otherwise, a perusal of clause (iii) to section 271(1) reveals that as per the relevant provisions, the Assessing officer may direct a person who as per clause
(c) has concealed the particulars of incom e or furnished inaccurate particulars of such income to pay by way of penalty, 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. So as per the above provisions for the levy of penalty there must be some amount of tax sought to be evaded which should be by reason of the concealment of particulars of income or furnishing of inaccurate particulars of income of such income by the assessee. Hence, if there is no amount of tax sought to be evaded by reason of concealment of particulars of income or inaccurate particulars of income, the penalty cannot be computed or to say that the penalty under the provisions will be 'Nil'. It is pertinent to mention here that Explanation-1 to section 271(1)(c) of the Act also provides that if a person fails to offer an explanation or explanation offered is found to be false by the Income-
tax Authority or he fails to substantiate such explanation, and that fails to prove the such explanation is bonafide, then the am ount added or disallowed in computing the total income of such person as a result thereof, shall for the purpose of clause (c) be deemed to represent the income in respect of which particulars have been concealed. It becomes clear from the reading of Explanation -1 that there must be some addition or disallowance in computing the total income of such 19 ITA No.1402/Chd/2018 A.Y.2014-15 person in respect to which it is deemed that he has evaded the payment of tax for computing the penalty so leviable. . H owever, if there is no addition to the income of the assessee either by way of the positive addition or by way of reducing the losses etc., then there m ay be no amount of tax which the assessee which can be said to be sought to be evaded by the assessee, then under the circumstances, there will not be any penalty leviable or payable by the assessee as per the provisions of the Act and in the circumstances, no penalty will be leviable u/s 271(1)(c) of the Act.
9. Th e p r o v i s i o n s of se c t i on 2 7 1 (1 ) (c ) o f th e A c t a re p e n a l i n n a t u r e a n d t h e y a re r e q u i r e d to b e s t r i c t l y c on st r ue d . Th e s e c a n n o t be e x te nd e d b y w a y o f l i b e ra l i n te rp r e t a t i o n t o i n c l ud e t h e c a s e s, w h i c h o t h e r w i s e , d o no t f a l l w i t h i n t h e p u r v i e w a n d s c o p e o f t he p r ov i s i o n s of s e c t i on 2 7 1 ( 1 ) ( c ) o f t h e A c t . I n v ie w o f t h i s , s i n c e t he i n c o m e o f R s .4 1 , 5 5 , 8 7 6 /- h a s a l r e a d y be e n d e cl a r e d i n t h e r e v i se d r e t u r n, w h i c h w a s v a li d a n d f i l e d w i t h i n t he l i m i t a t i o n p e r i o d p r e s c r i b e d f o r f i l i ng t h e s a m e , h e nc e , in v ie w of o u r d i s c u s s i o n m a d e a b o ve , t h e pe n a l ty i n r e sp e c t o f t he a f o r e s a i d i nc o m e d e c l a r e d i s n o t l e vi a b l e a n d t h e s a m e i s a c c or d i n g l y or d e r e d t o b e d e le te d .
10. S o f a r a s t h e d if fe r e n c e o f a n a m o u n t o f R s . 2 , 0 0 , 0 1 5 /-
b e tw e e n t h e i n co m e shown in the revised re tu r n a n d t he a m o u n t a c t u a l l y r e c e iv e d i n t he b a n k a c c o u n t o f t h e a s se s se e i s c o n c e r ne d , t h e L d . C o u n se l f o r t h e a s s se s se e c o u l d not address convincing arguments in this r e s p ec t . Th e said d i f fe r e n c e be tw e e n t he a m o u n t o f f e r e d f o r t a x a t i o n a n d t he 20 ITA No.1402/Chd/2018 A.Y.2014-15 a m o u n t a c t u a l l y r e c e i v e d b y the a s se s se e w a s fo u n d b y t he A . O . d u r i n g t he a s s e ss m e n t p r o c e e d i n g s . H e n ce , t h e r e w a s c o n ce a l m e n t o f i n c o m e in r e s p e c t o f t he a f o r e sa i d a m o u n t .
H e n ce t h e p e n a lt y i n r e s p e c t o f t h e i n c o m e d e te c te d d u r i n g s c r u t i n y a s se s sm e n t p r o c e e d i n gs a m o u n t i n g t o R s . 2 , 0 0 , 0 1 5 / -
i s c o n f ir m e d @ 10 0 % o f t h e ta x a m o u n t s o u g h t t o be e v a de d on t h e s a i d i n co me . I n v i e w o f o ur f i n d i n g s gi ve n a b o v e , t he a p p e a l o f t h e a s se s se e i s t r e a te d a s p a r t l y a l l ow e d .
11. I n t h e r e s u l t , t h e a p p e a l o f t he a ss e ss e e i s p a r t l y a l l o w e d .
O r d e r p r on o u n ce d i n t h e O p e n C o u r t o n 0 1 . 0 7 . 2 0 1 9 .
Sd/- Sd/-
अ नपण
ू ा ग%ु ता संजय गग
(ANNAPURNA GUPTA) (SANJAY GARG)
लेखा सद य/ Accountant Member याय क सद य/ Judicial Member
)दनांक /Dated: 01/July, 2019
*रती*
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar