Income Tax Appellate Tribunal - Jaipur
R.N.Marbles (P) Ltd., Kishangarh vs Ito, Kishangarh on 30 November, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES , JAIPUR
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BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM
vk;dj vihy la-@ITA No. 762/JP/2014
fu/kZkj.k o"kZ@Assessment Year : 2009-10
M/s. R.N. Marbles (P) Ltd. cuke The ITO
5, Savitri Sadan. Agrasem Bhawan Street, Vs. Kishangarh
Ajmer Road, Madanganj-Kishangarh
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACR 9817 M
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@Assessee by: Shri Manish Agarwal, CA
jktLo dh vksj ls@ Revenue by :Shri R.A. Verma, Addl.CIT- DR
lquokbZ dh rkjh[k@ Date of Hearing : 28/11/2016
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30/11/2016
vkns'k@ ORDER
PER KUL BHARAT, JM
This appeal of the assessee is directed against the order of the ld. CIT(A), Ajmer dated 19-08-2014 for the assessment year 2009-10. The assessee has raised the following grounds of appeal.
''1. On the facts and in the circumstances of the case the ld.CIT(A) has grossly erred in upholding the levy of penalty u/s 271(1)(c ) of the I.T. Act at Rs. 5,19,507/- without appreciating that there was no concealment of income on part of the assessee nor any inaccurate particulars of income were furnished. Therefore, the penalty so levied deserves to be deleted.
2 ITA No. 762/JP/2014
M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
2. On the facts and in the circumstances of the case the ld. CIT(A) has grossly erred in upholding the levy of penalty u/s 271(1)(c )of the I.T. Act imposed on account of difference in claim of expense pertaining to the cost of improvement of land in the original return of income vis-a- vis revised return of income, without appreciating the fact that the differential amount was surrendered voluntarily by assessee in the revised return of income after noticing the inadvertent mistake having occurred in the original return of income, therefore, there being no concealment of income in the facts of the case, penalty so levied on account of such addition deserves to be deleted.'' 2.1 Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the I.T. Act, 1961 (hereinafter referred to ''Act''). The AO made addition on account of trading addition of Rs. 1,71,350/- and capital gain computed by adopting the sale of value of Rs. 60 lacs in place of Rs. 50,28,750/- as adopted by the assessee during the course of assessment proceedings. The assessee filed the revised computation thereby he surrendered a sum of Rs. 12,50,630/- on account of payment made for improvement of land which was not supported by the vouchers. The AO while framing the assessment also initiated the penalty proceedings u/s 271(1)© of the Act. Subsequently, the AO levied the penalty on the addition confirmed at Rs. 5,19,507/-.
3 ITA No. 762/JP/2014
M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
2.2 Assessee aggrieved by this order preferred appeal before the ld. CIT(A) who after considering the submissions partly allowed the appeal thereby a penalty on sum of Rs. 15,50,630/- was confirmed. However, the penalty levied on the differential amount of sale value was deleted. 2.3 Being aggrieved, the assessee has filed the present appeal. 2.4 During the course of hearing, it was noticed that the appeal was barred by 7 days of delay and an application for condation of delay has been filed on behalf of the assessee by ld. Counsel for the assessee. The ld. Counsel for the assessee reiterated the submissions as made in the application and an affidavit in support of the contents of the application has been filed.
2.5 The ld. DR has opposed the conondation application of the assessee.
2.6 We have heard the rival contentions and perused the materials available on record. In view of the averment in the affidavit, we are of the view that the assessee had reasonable cause in filing the present appeal. Therefore, the delay is condoned, the appeal is taken up for hearing. 3.1 The only effective ground of the assessee is against confirming the penalty of Rs. 5,19,507/- u/s 271(1)© of the Act. 4 ITA No. 762/JP/2014
M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
3.2 During the course of hearing, the ld. Counsel for the assessee vehemently argued that the ld. CIT(A) was not justified in confirming the penalty. The ld. Counsel for the assessee reiterated the submissions as made in the written brief. He submitted that the penalty is confirmed on the amount which was claimed as cost of improvement by the assessee and for want of supporting vouchers the amount was offered for taxation. He further submitted that merely offering the amount for taxation would not ipso facto bring such surrender within the ambit of concealment or furnishing inaccurate particulars of income. The ld. Counsel for the assessee further submitted that on identical facts the Coordinate Bench of this Tribunal had deleted the penalty for which he placed reliance in the case of Smt. Sumitra Devi Agarwal in ITA No. 687/JP/2011 (ITAT Jaipur Bench). The ld. Counsel for the assessee also placed in reliance in the following cases.
(i) CIT vs. Ashok Thaker, 170 Taxman 471 (Delhi High Court),
(ii) CIT vs. Reliance Petro Products P. Ltd. 322 ITR 158 (SC) and
(iii) CIT vs. Suresh Chandra Mittal, 251 ITR 9 (SC) The ld. Counsel for the assessee further submitted that assessment proceedings and penalty proceedings operate in different fields merely because the addition is confirmed by the appellate authority would not be 5 ITA No. 762/JP/2014 M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
sufficient for the AO to levy penalty. The AO has to give a finding whether the lapse is bona fide or is done with a view to avoiding taxation. In the case in hand, the claim for improvement of land was made but the facts remains that the improvement was made on the land. However, due to non-availability of vouchers at the point of assessment proceedings the assessee thought it proper to offer the same amount for taxation to avoid litigation and to buy peace of mind.
3.3 On the contrary, the ld. DR opposed the submission of the ld. Counsel for the assessee and submitted that surrender is not bona fide or voluntary Therefore, the assessee would not get the benefit and the authorities below have rightly deleted this benefit. In support of this contention, the ld. DR placed following case laws.
(i) Mak Data P Ltd. vs. CIT, 358 ITR 539 (SC)
(ii) Badri Prasad Om Prakash vs. CIT, 163 ITR 440 (Raj.) 3.4 In rejoinder, the ld. Counsel for the assessee submitted that both these judgements relied on by the ld. DR would not apply on the facts of the present case. The ld. Counsel for the assessee submitted that the case of Mak Data P Ltd. vs. CIT, 358 ITR 539 (SC) may help the assessee. 6 ITA No. 762/JP/2014
M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
3.5 We have heard the rival contentions and gone through the orders of the authorities below. The observation of the Hon'ble Supreme Court in the case of Mak Data P Ltd. vs. CIT (supra) is as under:-
''6. We have heard counsel on either side. We fully concur with the view of the High Court that the Tribunal has not properly understood or appreciated the scope of Explanation 1 to section 271(1)(c) of the Act, which reads as follows :
"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 expla nation 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 sub stantiate 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."
7. The Assessing Officer, in our view, shall not be carried away by the plea of the assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc., to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. The Explanation to section 271(1) raises a presumption of concealment, when a difference is noticed by the Assessing Officer, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, 7 ITA No. 762/JP/2014 M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise.
8. The assessee has only stated that he had surrendered the additional sum of Rs. 40,74,000 with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the Income-tax Department. The statute does not recognize those types of defences under Explanation 1 to section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty.
9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the Assessing Officer in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. The Assessing Officer during the course of assessment proceedings has noticed that certain documents comprising share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income-tax returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under section 133A conducted on December 16, 2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The Assessing Officer, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is 8 ITA No. 762/JP/2014 M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
liable for penalty proceedings under section 271 read with section 274 of the Income-tax Act, 1961.
10. The Assessing Officer has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the Assessing Officer is not required to record his satisfaction in a particular manner or reduce it into writing. The scope of section 271(1)(c) has also been elaborately discussed by this court in Union of India v. Dharamendra Textile Processors [2008] 13 SCC 369 and CIT v. Atul Mohan Bindal [2009] 9 SCC 589.
11. The principle laid down by this court, in our view, has been correctly followed by the Revenue and we find no illegality in the Department initiating penalty proceedings in the instant case. We, therefore, fully agree with the view of the High Court. Hence, the appeal lacks merit and is dismissed. There shall be no order as to costs.'' In the present case, the assessee claimed the cost of improvement but during the assessment proceedings the assessee filed the revised computation of income thereby the assessee surrendered an amount of Rs. 12,50,630/- for non-availability of vouchers. The undisputed facts remains that total amount claimed by the assessee on account of cost of improvement at Rs. 25,22,637/-. The AO accepted the revised computation by restricting the cost of improvement at Rs. 12,72,007/-. Therefore, it cannot be inferred that entire claim of the assessee was bogus. In the absence of the vouchers, the assessee surrendered the amount of cost of improvement claimed in the return of income. It is not a case where the AO had detected the excessive claim of the assessee. However, during the course of assessment proceedings, the AO noticed 9 ITA No. 762/JP/2014 M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh .
that the vouchers were not available with the assessee. The AO neither in the quantum proceedings nor in the penalty proceedings has given a finding of fact that assessee has not carried out any improvement on the land. Therefore, in our considered view, the surrender made by the assessee is volunteer who deserves the benefit of explanation of Section 271(1)© of the Act. The ld. Counsel for the assessee relied on the judgment of Hon'ble Apex Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. (supra) wherein the held portion is reproduced as under:-
''A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961,suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate parti- culars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or 10 ITA No. 762/JP/2014 M/s. R.N. Marbles (P) Ltd. vs. ITO, Kishangarh . erroneous or false there is no question of inviting the penalty under section 271(1)(c) . A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.
In view of the above deliberations and facts and circumstances of the present case, the AO is directed to delete the penalty. Hence, the appeal of the assessee is allowed.
4.0 In the result, the appeal of the assessee is allowed Order pronounced in the open Court on 30 -11-2016.
Sd/- Sd/- ¼HkkxpUn½ ¼dqy Hkkjr½ (Bhagchand) (KUL BHARAT) ys[kk lnL;@Accountant Member U;kf;d lnL; /Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 30 /11/ 2016 *Mishra
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s. R.N. Marbles (P) Ltd. ,Kishangarh
2. izR;FkhZ@ The Respondent- The ITO, Kishangarh
3. vk;dj vk;qDr¼vihy½@ CIT(A).
4. vk;dj vk;qDr@ CIT,
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 762/JP/2014) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar