Income Tax Appellate Tribunal - Chandigarh
Jai Parkash vs Assistant Commissioner Of Income Tax on 25 April, 2007
Equivalent citations: (2008)116TTJ(CHD)269
ORDER
Joginder Singh, J.M.
1. This appeal is by the assessee challenging the order of the learned CIT(A), dt. 19th Sept., 2005. During arguments, we have heard Shri Ashwani Kumar learned Counsel for the assessee and Dr. Rajiv Harit learned Departmental Representative for the Revenue. The contention of the assessee is that levy of penalty under Section 158BFA(2) is not mandatory rather discretionary and this discretion has to be used judiciously. Plea was also raised that the assessee had been regularly filing the return and merely for the asst. yr. 1996-97, it was not filed till the date of search which was conducted on 2nd Jan., 1997 and admittedly was filed after the search. It was strongly contended that the assessee had already paid the tax @ 60 per cent and also the advance tax on the impugned amount, therefore, the penalty should not have been imposed. Reliance was placed upon the decision in Dy. CIT v. Suresh Kumar , Enfield Industries Ltd. v. Dy. CIT and Nemichand v. Asstt. CIT (Inv.) . On the other hand the contention of the Revenue is that penalty was rightly imposed as once the concealment is deduced, penalty is automatic. Plea was raised that the return was filed only due to the search after the due date. The learned Departmental Representative placed reliance upon the decision in K.P. Madhusudhanan v. CIT , CIT v. Mangha Ram Om Parkash and Rukmini Bai v. CIT . The learned Departmental Representative also tried to distinguish the cases relied upon by the assessee. In counter reply the assessee also tried to distinguish the cases relied upon by the Revenue. We have considered the rival submissions and perused the records available on the file.
2. A search and seizure operation under Section 132(1) of the Act was carried out on 2nd Jan., 1997 wherein three savings bank accounts maintained with Oriental Bank of Commerce bearing numbers 1449, 1453 and 1760 were detected wherein the total deposits of Rs. 69,33,866, Rs. 54,72,439 and Rs. 57,15,604 respectively were found. Notice under Section 158BC of the Act, in pursuance of search was issued to the assessee. In response to the notice, the assessee filed the return of income for the block period ending on 30th April, 1997. The AO thereafter scrutinised the information/details and completed the assessment under Section 158BC vide order dt 31st Dec, 1998 at an income of Rs. 3,38,01,250 for the entire block period and also initiated penalty under Section 158BFA(2) r/w Section 158BC(c)of the Act.
The assessment order was carried in appeal before the learned first appellate authority who vide his order dt. 12th Nov., 1999 deleted all these additions except the addition of Rs. 3,76,640 made on account of undisclosed income. The relevant para 5.1 of the order of learned CIT(A) is reproduced herewith:
I have carefully considered the contention of the appellant and there is no force in the same. The return of income for the asst. yr. 1996-97 was due to be filed on 30th Oct., 1996. The same had not been filed and the search and seizure operation under Section 132(1) took place on 2nd Jan., 1997 whereas the return was filed on 17th Jan., 1997 i.e., after the search and seizure operation. The undisclosed income in the block period is to be calculated as per the provisions of Section 158BC(1) of the IT Act, 1961. The appellant's case is covered by Sub-clause (c) to Clause (1) of Section 158BB which reads as under:
Where the due date for filing a return of income has expired but no return of income has been filed, as nil Thus, it is evident that while computing the income for the block period, the appellant is entitled to deduction of nil amount from the amount of income worked out for the block period. The income Rs. 3,76,640 has to be declared by the appellant himself and the entire income has been taxed in the block assessment as no portion of the same is eligible for deduction under Section 158BB(l)(c) of the IT Act 1961. No interference on this account regarding the action of the AO is called for. The appellant's plea on this ground is dismissed.
The conclusion of the learned CIT(A) was carried in appeal before the Tribunal. There also appeal of the assessee was dismissed. Thereafter, the learned AO initiated penalty proceedings under Section 158BFA and imposed a penalty of Rs. 2,26,020 on the plea that assessee deliberately did not disclose the income of Rs. 3,76,640 which tantamounts to concealment of income. The penalty order was sustained by the learned CIT(A) against which the assessee is in appeal before the Tribunal.
3. Now the question arises whether the levy of penalty under Section 158BFA is automatic or discretionary. This is an admitted fact that for the asst. yr. 1996-97 the assessee did not file its return till due date rather filed on 17th Jan., 1997, after the search operation, which was conducted on 2nd Jan., 1997. This fact was also not disputed that the assessee paid the advance tax before the search. Admittedly, the assessee also paid the tax @ 60 per cent. The only contention of the Revenue is that assessee filed the return only after the search that too after the due date. We are also supposed to analyse whether Sections 158BFA(2) and 271(l)(c) are on the same footing. If the wording of Sub-clause (2) to Section 158BFA is analysed, it clearly says that the AO or the CIT(A) in the course of any proceedings under this chapter may direct that a person shall pay by way of penalty a sum.... But in Section 271(l)(c) the world "shall" has been used meaning thereby in Section 158BFA(2), there is a discretion with the assessing authority but in Section 271(l)(c), it is compulsory, if it is established that either the assessee concealed its income or furnished inaccurate particulars.
4. In the present appeal the assessee paid the advance tax of Rs. 36,000 on 13th Sept., 1995, Rs. 36,000 on 14th Dec, 1995 and Rs. 55,000 on 14th March, 1996 (total Rs. 1,27,000). It means that the assessee paid the advance tax before the date of search i.e., 2nd Jan., 1997. Admittedly, the assessee did not file the return upto due date which expired on 31st Oct., 1996 as permissible under Section 139(1) of the Act. However, still there was a time with the assessee to file the return under Section 139(4) i.e., upto 31st March, 1997 but before the expiry of the period as provided under Section 139(4), the search took place. But the fact remains that the assessee paid the entire advance tax and was claiming refund. In such a situation, we are of the view that assessee is saved by the proviso (ii) to Sub-clause (2) to Section 158BFA of the Act. Admittedly, the assessee filed the return on 17th Jan., 1997, before the expiry of time provided under Section 139(4) of the Act though before that the search took place. There is no doubt to conclude that it is a good case for levy of interest but not for penalty being penal in nature.
5. The only contention raised by the Revenue is that the assessee filed the return only due to search but at the same time the fact remains that the assessee was still having time to file the return as provided in Sub-clause (4) to Section 139. As we have discussed earlier that for imposing of penalty under Section 158BFA(4), there is a discretion with the AO/CIT(A) but at the same time that discretion has to be used in a judicious way and that too in the case of a penalty specially when the assessee has already paid the advance tax on the amount. At the same time, being a search case, since the assessee had paid the tax (r) 60 per cent, we are of view that the assessee should not be permitted to be further crushed by imposing a penalty under the facts of the present appeal. This view is further fortified by the fact that there is no concealment of income since the assessee had already paid the advance tax. If the Revenue is taking the plea that only due to search the assessee filed the return, another option is also available with the assessee of having the time upto March as provided under Section 139(4) of the Act. From this point of view also, we are of the view that the penalty is not imposable. For coming to this conclusion, we are fortified by the decision of the Hon'ble apex Court in the case of Hindustan Steel Ltd. v. State of Orissa wherein it was held that penalty is not imposable if there is no conscious breach of law. For imposition of penalty, the Hon'ble apex Court in the case of K.C. Builders v. Asstt. CAT held that conduct of the assessee must be conscious. It can be said that whatever may be the reasons, rather the assessee was conscious enough to pay the due tax. If the assessee was having any intention not to pay the tax, he would not have paid the advance tax.
6. The assessee is fortified by the decision of the Tribunal in the case of Enfield Industries Ltd. v. Dy. CIT (supra) wherein the AO failed to prove that there was conscious or deliberate concealment of income or furnishing of inaccurate particulars thereof. Since the penalty under Section 158BFA(2) is optional, unlike the interest chargeable under Sub-section (1), penalty is not leviable under Section 158BFA(2) of Act.
The learned Departmental Representative during arguments relied upon the decision of the Hon'ble apex Court in the case of K.P. Madhusudhanan v. CIT (supra). We are of the view that this case of the Hon'ble apex Court pertains to deemed concealment and that too for penalty under Section 271{l)(c) of the Act. Reliance was also placed upon the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Mangha Ram Om Parkash (supra) wherein penalty was imposed for the concealment of income and specially the returned income was less than 80 per cent of the assessed income. There was no proper explanation regarding cash credit. The imposition was held to be justified. There is a specific finding by the Hon'ble High Court that the assessee failed to discharge the onus which laid upon it to explain cash credit in the name of L. But in the present appeal the assessee duly deposited the advance tax rather was claiming a refund, and still there was time available to file the return under Section 139(4). Similar is the situation in the case of Rukmini Bai v. CIT (supra) wherein no explanation was offered when penalty proceedings initiated. The impugned addition was under Section 69A of the Act. We are of the view that these judicial pronouncements may not help the Revenue being different on facts as we have mentioned in the preceding paras. It is not the case of the Revenue that the assessee either concealed the income or furnished inaccurate particulars of such income. It can be said rather the assessee is on more sound wicket due to the fact that the assessee filed the advance tax before the search and secondly there was still time available with the assessee to file the return under Section 139(4) of the Act.
In view of these facts and judicial pronouncements, we allow the appeal of the assessee and reverse the order of the learned first appellate authority.