Rajasthan High Court - Jaipur
Commissioner Of Income-Tax vs Mohd. Mohtram Farooqui on 2 August, 2002
Equivalent citations: [2003]259ITR132(RAJ)
JUDGMENT
1. This appeal is directed against the impugned order of the Tribunal dated September 29, 2000. The cash amounting to Rs. 5,92,340 was seized by the police thana, Sikar, from the appellant on April 8, 1992. A panchnama was drawn by the Income-tax Department on April 9, 1992, and the said cash was requisitioned and taken into possession. Consequent to the seizure, the statement of the appellant was recorded by the Deputy Director of Investigation, Jaipur, wherein the assessee has stated that the cash belongs to his brother, brother-in-law and some cash belonging to him. The assessee could not give details how much amount belongs to his brother, how much amount belongs to his brother-in-law and how much amount belongs to him. On April 9, 1992, the assessee has surrendered the said cash of Rs. 5,92,340 for inclusion in his income for the assessment year 1993-94. The return of income was filed on April 26, 1993, declaring the income of Rs. 6,09,620. This includes the seized cash of Rs. 5,92,340. The assessment was completed and the income was assessed at Rs. 6,13,940 as against the income of Rs. 17,280 declared by the assessee in the original return.
2. The part of the income on account of concealment which was later on disclosed in the return and assessed, penalty proceedings under Section 271(1)(c) have been initiated for concealment of income and furnishing inaccurate particulars of income. The case of the assessee was that he disclosed the concealed income voluntarily, i.e., Rs. 5,92,340, therefore, no penalty is leviable under Section 271(1)(c) of the Income-tax Act, 1961. He is not satisfied with the explanation given. In his view, when the income has been shown in the revised return, that has been shown after seizure, therefore, if the cash amount of Rs. 5,92,340 which has been seized has been shown in the income, that is not tantamount to voluntary disclosure and he imposed the penalty to the extent of 100 per cent. which has been confirmed by the Commissioner of Income-tax (Appeals) in appeal.
3. In appeal before the Tribunal, the Tribunal has taken the view that the assessee has filed the return voluntarily before receipt of the notice from the Income-tax Department and when the cash which was found by the police has been surrendered for tax, no penalty for concealment of income should be imposed on these facts. The Tribunal has also taken the view that when the brother and brother-in-law of the assessee have not been examined, penalty should not be imposed.
4. Heard learned counsel for the parties.
5. Mr. Mathur, learned counsel for the appellant, submits that the assessee has shown the concealed income after seizure not prior to that and when he himself has surrendered it for taxation, it amounts to admission of guilt and after amendment in the Section 271(1)(c), the ratio laid down in the case of CIT v. Anwar Ali [1970] 76 ITR 696 (SC) does not help the assessee.
6. Mr. Jhanwar, learned counsel for the assessee-respondent, submits that the assessee has surrendered the amount seized for taxation to buy peace and if any addition is made, the penalty under Section 271(1)(c) is not automatic on the basis of such addition. He placed reliance on the following decisions ;
(1) CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 (SC) ;
(2) CIT v. Suresh Chandra Mittal [2000] 241 ITR 124 (MP) ;
(3) Chikkam Koteswara Rao v. Chikkam Subbarao, AIR 1971 SC 1542 ;
(4) CIT v. Gurudayalram Mukhlal [1991] 190 ITR 39 (Gauhati) ;
(5) CIT v. Jayaraj Talkies [1999] 239 ITR 914 (Mad) ;
(6) CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) ;
(7) CIT v. K.R. Chinni Krishna Chetty [2000] 246 ITR 121 (Mad) ;
(8) Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC) ;
(9) CIT v. Anwar Ali [1970] 76 ITR 696 (SC) ;
(10) Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) ;
(11) Jain Brothers v. Union of India [1970] 77 ITR 107 (SC) ;
(12) CIT v. Dharamchand L. Shah [1993] 204 ITR 462 (Bom) ;
(13) CIT v. J. K. Synthetics Ltd. [1996] 219 ITR 267 (Delhi) ; and (14) C. A. Abraham v. /TO [1961] 41 ITR 425 (SC).
7. The facts are not in dispute that on April 8, 1992, an amount of Rs. 5,92,340 was seized by the police thana, Sikar, from the assessee-respondent. The assessee claimed that part of the amount belongs to his brother, brother-in-law and part of the amount belongs to him, but he has not given any detail nor any specific purpose has been shown why he is carrying the amount belonging to his brother and brother-in-law. He has surrendered that amount for taxation by filing of the return. In our view, the income surrendered after that amount has been seized, cannot be said that the assessee has voluntarily disclosed the concealed income.
8. It is true that penalty under Section 271(1)(c) is not automatic after addition in the income but at the same time the ratio laid down by their Lordships in the case of CIT v. Anwar Ali [1970] 76 ITR 696 (SC) has undergone a change after insertion of the Explanation to Section 271(1)(c) reads as under :
"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) 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."
9. After the insertion of the Explanation to Section 271(1)(c), the requirement that the Department should establish that there has been a conscious concealment of particulars of income or a deliberate failure to furnish accurate particulars, is no longer necessary. In the case of Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244, 250 (SC), their Lordships observed as under :
"The question referred to the High Court in this case speaks of cash deposits. Whether it is a case of undisclosed or unexplained cash deposit or any other concealment, the standard is the same. The principle enunciated in Anwar Ali's case [1970] 76 ITR 696 (SC), that mere rejection of the explanation of the assessee is not sufficient for levying penalty and that the Revenue must go further and establish that there has been a conscious concealment of particulars of income or a deliberate failure to furnish accurate particulars, is no longer necessary. The cases to which the said Explanation is attracted have to be decided in the light of the law enunciated in Mussadilal Ram Bharose's case [1987] 165 ITR 14 (SC) and K.R. Sadayappan's case [1990] 185 ITR 49 (SC)."
10. In the case of CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14, 22 (SC), their Lordships observed as under :
". . . the presumption is raised against the assessee that the assessee is guilty of fraud or gross or wilful neglect as a result of which he has concealed the income but this presumption can be rebutted. The rebuttal must be on materials relevant and cogent. . . ."
11. In the case of CIT v. K.R. Sadayappan [1990] 185 ITR 49, 55 (SC), their Lordships observed as under :
"In our opinion, it cannot be said that, in this case, the Tribunal was justified in rejecting the claim and penalty may be imposed. The presumption raised as aforesaid, that is to say that the assessee was guilty of fraud or wilful neglect as a result of which the assessee has concealed the income, would be there. This presumption could have been rebutted by cogent, reliable and relevant materials. There was none, at least neither the Tribunal nor the High Court has indicated any."
12. In the case of Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244, 250 (SC), their Lordships observed as under :
"The question referred to the High Court in this case speaks of cash deposits. Whether it is a case of undisclosed or unexplained cash deposit or any other concealment, the standard is the same. The principle enunciated in CIT v. Anwar Ali [1970] 76 ITR 696 (SC), that mere rejection of the explanation of the assessee is not sufficient for levying penalty and that the Revenue must go further and establish that there has been a conscious concealment of particulars of income or a deliberate failure to furnish accurate particulars, is no longer necessary. The cases to which the said Explanation is attracted have to be decided in the light of the law enunciated in Mussadilal Ram Bharose's case [1987] 165 ITR 14 (SC) and K.R. Sadayappan's case [1990] 185 ITR 49 (SC)."
13. After this amendment the theory of deemed concealment has been brought in. In case addition is made and the explanation submitted by the assessee is not satisfactory, the income added should be treated as deemed concealment.
14. In the case in hand, the amount of Rs. 5,92,340 was seized from the assessee by the police. He disclosed that part of the amount belongs to his brother, brother-in-law and part of the amount belongs to him. No specific figure of amount has been given how much belongs to his brother, how much belongs to his brother-in-law and how much belongs to him. If what he explained was correct then it is obvious he must be knowing the figure of amount how much belongs to him, how much to his brother and how much to his brother-in-law, jointly or separately. He has not even given the purpose such as whether the amount was carried for or relates to any specific transaction to pay that amount to any specific person for any transaction.
15. It is unbelievable that any person who carries this huge amount does not know the exact purpose to whom the amount is to be paid and for what purpose or in respect of which transaction the amount was being carried. Therefore, it left no doubt that the explanation furnished by the assessee at the time of seizure is false. The penalty is not automatic but the penalty can be levied on considering the facts on record of a case. It is not necessary that some more material should be brought on record in such a case if sufficient material is available on record for penalty. No material on record has been placed to support the case of the assessee that the Department has pressurised him for surrendering the income of Rs. 5,92,340.
16. The assessee simply said that he has surrendered the income to buy peace. That type of explanation any assessee can take but unless it is supported by some material that cannot be accepted. Otherwise if this type of explanation is accepted without any material in support, the provisions of Section 271(1)(c) will be redundant and no purpose will be served by the Explanation inserted by the amendment in Section 271(1)(c). It is also not in dispute that the amended provisions of Section 271(1)(c) are applicable in the case in hand. Even counsel for the assessee has not suggested in this case what type of material should be brought on record by the Income-tax Officer for imposing penalty under Section 271(1)(c) of the Act of 1961.
17. When the income has been surrendered after seizure, it cannot be said that the assessee has surrendered the income voluntarily. After seizure of any amount or income that no more remains concealed income for the Department. The explanation given by the assessee was not found satisfactory, therefore, it is a fit case of penalty on deemed concealment. The Assessing Officer as well as the Commissioner of Income-tax (Appeals) have rightly imposed the penalty under Section 271(1)(c), the Tribunal has committed an error in cancelling the penalty.
18. In the result, the appeal is allowed.