Income Tax Appellate Tribunal - Delhi
Devender Singh (Huf) vs Income-Tax Officer on 18 March, 1996
Equivalent citations: [1982]1ITD350(DELHI)
ORDER
Shri V. Dongzathang, Accountant Member
1. The IT Appeal No. 335 (Delhi) of 1981 filed by the assessee is against the order of the ITO under section 273(c) and IT Appeal No. 336 (Delhi) of 1981 is filed against the order under section 271(1) (c) of the Income-tax Act, 1961 ("the Act"). The facts on the basis of which the penalties were levied being identical, they are disposed of in a consolidated order for the sake of convenience.
2. Shri Devender Singh, HUF, was having a share income in the firm of Kirpal Singh Devender Singh and Devender Singh & Co. The original return for the assessment year 1976-77 was filed on 20-6-1976 declaring an income of Rs. 28,270. A revised return was filed on 15-1-1977 in which certain unexplained investment in household furniture for Rs. 7,700 were surrendered. The ITO completed the assessment and initiated penalty proceedings under section 271(1) (c). As no compliance was stated to have been made to the notices, the ITO imposed a penalty of Rs. 5,000 for concealment under section 271(1) (c). When the matter was taken up before the AAC, the same was taken upheld. The assessee is aggrieved and is in appeal before us.
3. It is the contention of the learned counsel of the assessee that the revised return was made on the basis of certain changed situations that arose after the filing of the return. In this case, the Special Squad of the Income-tax Department conducted a survey at the premises No. 120/913 Ranjit Nagar on 19-7-1975. This survey was conducted to find out the investment of the assessee's mother who constructed the said house. In the course of the survey, furniture worth Rs. 7,700 was discovered in the portion occupied by Shri Devender Singh. The survey was not related to the case of the assessee. Subsequently when the matter reached a sort of settlement, it was decided that the value of these furniture should be included in the return of the assessee and the same was not taken in the hands of Smt. Vidyawanti against whom the cost of investment in the property was investigated. This arrangement was made to buy peace and avoid unnecessary further investigation. In the covering letter to the ITO the full fact was declared. In this view of the matter and also considering the fact that at no stage these furnitures were proved to be that of the assessee and further the investment cannot be said to have been made during the previous year relevant to the assessment year 1976-77; even if it has to be taken as unexplained investment, then the date of survey, which is the date of discovery, was only on 17-9-1975 which was much after the close of the previous year. In any case, it cannot be considered as income of the year and penalty on that basis cannot be imposed. The mere fact that the same was offered for this assessment year does not make the same to be the current income of the assessee. Therefore, no penalty is leviable. Reliance is placed on CIT v. Vinaychand Harilal [1974] 120 ITR 752 (All.) and Mohd. Ibrahim Azimulla v. CIT [1981] 131 ITR 680 (All.). On the other hand, the learned departmental representative relied on the orders of the lower authorities. Since this case is within the jurisdiction of the Allahabad High Court and Explanation to section 271(1) (c) being applicable, the decisions of the Allahabad High Court would squarely apply. As such, no interference is called for in the matter. Reliance is placed on the following decisions-Addl. CIT v. Quality Sweet House [1981] 130 ITR 309 (All.), CIT v. Chiranji Lal Shanti Swarup [1981] 130 ITR 651 (All.), Mirzapur Construction Co. v. CIT [1981] 122 ITR 828 (All.) and Addl. CIT v. Lakshmi Industries Cold Storage Co. [1980] 122 ITR 993 (All.) etc. Since the onus is not discharged by the assessee in this case, mere filing of voluntary return will not absolve the assessee from the levy of penalty in view of the decisions quoted above.
4. We have carefully considered the rival submissions. On a careful study of the case, we find that the revised return was filed by the assessee on the basis of the understanding made between the assessee and Smt. Vidyawanti, mother. If the law is to be strictly applied, the investment and assets found in the house of Smt. Vidyawanti is to be considered in the hands of Smt. Vidyawanti. However, it was agreed that these investments should be considered in the hands of the assessee. The revenue did not object to this arrangement and assessed the mount in the hands of the assessee without any further enquiry. This, however, did not prove the fact that the investment was actually made by the assessee. As rightly pointed out by the learned counsel of the assessee, the source of investment and the date of investment was not investigated in this case. The assessee simply included in the revised return to buy peace and avoid further investigation in the hands of the assessee and the mother. If this amount is surrendered on that basis and if the ITO decided not to find out the real owner of these investments, it cannot be said that it is the investment of the assessee in the relevant previous year. On this basis, the decision of the Gujarat High Court relied upon by the learned counsel of the assessee is squarely applicable. It is also seen that the Allahabad High Court in Mohd. Ibrahim's case (supra) held that if the assessee had established that it could have been disclosed in the original return if it had taken care, then the burden placed on it by the Explanation to section 271(1) (c) stood discharged and it could not be said that the assessee failed to prove that the disclosure was not due to fraud or gross or wilful neglect. Therefore, no presumption could be raised that the assessee could be deemed to be guailty or concealment of that amount. Having regard to these decisions, it is seen that penalty for concealment cannot be levied in the instant case.
5. Before parting we would like to record our finding that the cases relied upon by the learned departmental representative are distinguishable on the peculiar facts of the case as obtained here. Since we find that there was no element of fraud or wilful neglect in the above case and that the disclosure of the additional income, that arose due to the agreement between the parties after the filing of the original return, being beyond the control of the assessee and also that the said income cannot be said to have arisen in the relevant previous year, the penalty is not exigible. It is accordingly deleted.
6. IT Appeal No. 336 (Delhi) of 1981 - With regard to this penalty, the facts of the case are entirely the same as in the above penalty proceedings under section 271(1) (c). In this case the penalty was levied by the ITO, on the basis that the assessee failed to file the revised estimate under section 212(3A). He imposed penalty of Rs. 531 under section 273(c). As this extra income of Rs. 7,700 cannot be taken into account during the relevant previous year not being the income directly earned, as fully discussed in the concealment proceedings above, we are inclined to exonerate the assessee on this account on the same reasoning's as recorded therein. The penalty is, accordingly, deleted.
7. In the result, the appeals are allowed.