Income Tax Appellate Tribunal - Jodhpur
Income Tax Officer vs Madan Lal on 13 September, 2002
Equivalent citations: (2003)78TTJ(JODH)573
ORDER
S.R. Chauhan, J.M.
1. This appeal by Revenue for asst. yr. 1990-91 is directed against the order of CIT(A), Jodhpur, dt. 1st Nov., 1994.
2. I have heard the arguments of both the sides and have also perused the records including the written statement of the learned authorised representative of assessee furnished on record before me.
3. The Revenue has raised the sole ground disputing the cancellation of penalty levied by AO under Section 271(1)(c). The learned Departmental Representative of Revenue has referred to AO's order and contended that the assessee having concealed his income, the AO rightly levied the penalty. He has contended that the concealment has to be considered on the basis of revised return containing sum surrendered by assessee. He has contended that the surrender in revised return will not nullify the concealment resulting from original return. He has contended that the onus is on the assessee to explain that there was no fraud or wilful neglect on his part to furnish the correct return of income. He has contended that the assessee did not give any explanation before AO before penalty proceedings.
4. As against the above, the learned authorised representative of assessee has contended that the expenditure of Rs. 20,000 comprises of two components (i) Rs. 13,000 on mines, and (ii) Rs. 7,000 on house repair. He has contended that accordingly this expenditure amount of Rs. 20,000 was surrendered in the revised return. He has contended that the assessee had filed original return showing assessee's income at Rs. 44,940 without claiming depreciation, but thereafter the assessee file revised return showing income at Rs. 42,260 by adding' Rs. 20,000 being out of above-mentioned expenditure and claiming depreciation at Rs. 23,455. He has contended that once the assessee has filed revised return, the income returned therein has been accepted by the Department, then no penalty under Section 271(1) (c) should be levied. He has cited Sant Dass Nihalchand v. ITO (1992) 43 TTJ (Jp). 503. He has relied on the following decisions:
(1) Amirchand v. ITO (1994) 48 TTJ (Del) 308; (2) ITO v. Bechanlal Amarnath (1982) 1 ITD 358 (All); (3) Paramount Radio Service v. ITO 22 BCAJ 124 (Ahd); (4) CIT v. Subash Trading Co.; and (5) Asstt. CIT v. Bansiwala Iron & Steel Re-Rolling Mills 21 Tax World 533 (Jp).
In the alternative, he has also contended that the penalty has been levied for the whole amount of addition of Rs. 41,600 which also includes estimated profit of contractual amount; and so the estimated profit may be reduced.
5. The learned authorised representative of assesses has also contended that it seems that prior permission of Dy. CIT for levying penalty was not taken by the AO as is required under Section 274 in respect of penalty above Rs. 10,000. At this juncture, it may be observed that the learned Departmental Representative of Revenue objected to this plea being raised by the learned authorised representative of assessee for the reason that no such objection can be taken by assessee in this appeal of Revenue.
6. I have considered the rival contentions as also the relevant material on record, as also the cited decision.
7. In (1992) 43 TTJ 503 (JP) (supra) it has been contended that the case was of allegedly receiving 'on money' on sale of certain brands of cigarettes. The assessee had surrendered Rs. 40,000 through a revised return, covering partly the impugned addition of Rs. 53,119 as a result of which the actual addition worked out to Rs. 13,119 only. It was noticed that addition in similar circumstances on account of alleged understatement of sale proceeds was deleted by the Tribunal in the case of assessee's sister concern. In the circumstances, it was held that the deletion was required in assessee's case also. It was further held that the assessee having made a voluntary surrender and the Revenue having not adduced any positive evidence to show that the assessee had, in fact, earned that income, the surrender of income did not mean concealment and that the penalty under Section 271(1)(c) was rightly cancelled. Considering all the facts and circumstances of the case, as also the legal position, as emanating from the above judicial pronouncements, I find that the addition/disallowance being of the nature based upon estimate made by AO, the said resultant amount of addition/disallowance cannot necessarily be stated to have been concealed and the assessee guilty of concealment, particularly in view of the fact of there being no positive evidence brought by Revenue on record to establish the fact of the above amount of addition/disallowance being actually the income of assessee and the same having been concealed by assessee.
8. In (1994) 48 TTJ (Del) 308 (supra) it has been held that Expln. 5 to Section 271(1)(c) is applicable only in proceedings under Section 132, and is not applicable to a case of survey under Section 133A. It has been held that no concealment can be said to have been involved when income returned has been accepted. It has been held that mere surrender of income on account of survey would not per se lead to concealment of income.
9. In ITO v. Moti Ram Subhash Chand Jain (1988) 27 ITD 44 (Del), Tribunal Delhi has held that penalty for concealment cannot be imposed in respect of cash credit added to assessee's income due to want of evidence produced by assessee to the satisfaction of ITO. It has also been held therein that no penalty can be levied in respect of addition made to assessee's income on the basis of statement when these amounts were mentioned in the returns filed by assessee and no deletion (sic) of concealment was made by ITO in respect of them after filing of return. It was also held that this was not a case where return was raised on the detection of concealment or after the assessee felt driven to the wall.
10. In the Hon'ble Gujarat High Court has held that where penalty under Section 271(1)(c), Explanation, is sought to be imposed on the basis of estimated income after rejecting book results, the preponderance of probability is that failure to return the assessed income was not on account of any fraud or gross or wilful neglect on the part of the assessee. It has been held that the onus on assessee stands discharged and the presumption under Explanation to Section 281(1)(c) stands rebutted. It has been held that penalty under Section 271(1)(c) cannot be imposed in such a case in the absence of any evidence to conclude a positive finding that there was concealment of income.
11. In 21 TW 533 (Jp) (supra), Tribunal Jaipur has held that no penalty for concealment can be levied for application of higher g.p. rate unless there is a positive finding of concealment of income based on concrete evidence.
12. From the perusal of record, I find that the ultimate addition that remained sustained after CIT(A)'s order was of Rs. 41,600 (Rs. 83,860 minus Rs. 42,260) which comprised of Rs. 20,000, being addition made on account of Rs. 13,000 being investment in purchase of mines plus Rs. 7,000 being investment in house repair, and Rs. 21,600 resulting from g.p. addition. As regards the amount of Rs. 21,600 being trading addition due to application of higher profit rate than that declared by assessee, the same being the result of estimation cannot be treated to be the income concealed by assessee, and in turn, the assessee having not furnished particulars in respect thereof. As such considering all the facts and circumstances of the case, as also the legal position, I find the levy of penalty for concealment under Section 271(1)(c) in respect of the addition amount of Rs. 21,600 based on application of higher g.p. rate to be not tenable in law, and so the same needs be cancelled. I order accordingly.
13. As regards the balance concealed amount of Rs. 20,000, I find no force in the contention of the learned authorised representative of assessee regarding the assessee's fault having been nullified due to the said amount of Rs. 20,000 having been included in the assessee's income in the revised return, for the reason that the assessee filed the revised return only after survey, i.e., after having 'already been cornered by the IT authorities, and so the inclusion of the aforesaid amount in assessee's total income by way of surrender cannot be said to be voluntary. However, I find force in the learned authorised representative's contention that penalty levied by AO being of more than Rs. 10,000 required Dy: CIT's prior approval for the same, and the AO seems to have not obtained the said prior approval of the Dy. GIT. for the same, and so the levy of penalty is not tenable in law. As the learned CIT(A)'s order is in favour of assessee and, on this point also there is nothing against assessee in this order, so the assessee could not have filed cross-objection in respect of this objection under Section 253(4). In the circumstances, the assessee can obviously raise this objection during hearing of appeal before the Tribunal. This appeal, before the Tribunal, is no doubt by Revenue, but the appellant seeks relief against the learned CIT(A)'s impugned order in cancelling the penalty, and the objection being used by learned authorised representative of assessee is undoubtedly to challenge the AO's action of levying penalty, and, thereby supporting the learned CIT(A)'s action in cancelling the penalty which is under challenge by Revenue in their appeal. As such, considering all the facts and circumstances of the case, and taking a circumspect view of the entire fact-situation, including the fact that the learned Departmental Representative of Revenue submitted that he does not have the complete record of assessment before him, so he was not in a position, at the moment, to submit the correct/actual position regarding the obtaining of the Dy. CIT's prior approval by AO for the levy of penalty, I direct the AO to verify the fact of Dy. CIT's prior approval having been obtained by AO, and if he finds the same to have been obtained, the penalty levied by AO under Section 271(1)(c) in respect of the concealed amount of Rs. 20,000 shall stand, or else, in case of the said prior approval of Dy. CIT having not been obtained by AO, the levy of penalty under Section 271(1)(c) in respect of the concealed amount of Rs. 20,000 shall stand cancelled. I order accordingly.
14. In the result, this appeal of Revenue may be treated as allowed in part as indicated above.