Income Tax Appellate Tribunal - Kolkata
Amita Puri, Kolkata vs Assessee on 30 March, 2012
आयकर अपीलीय अधीकरण, Ûयायपीठ - " ǒब ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA
(सम¢)Before ौी ूमोद कुमार,
मार लेखा सदःय एवं/and ौी महावीर िसंह, Ûयायीक सदःय)
[Before Shri Pramod Kumar, AM & Shri Mahavir Singh, JM]
आयकर अपील संÉया / I.T.A Nos. 1682 to 1687/Kol/2010
िनधॉरण वषॅ/Assessment Years: 1997-98 to 2002-03
Smt. Amita Puri Vs Income Tax Officer, Wd-31(3), Kolkata
(PAN-AAJPP 6744 K)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
Date of hearing : 30.03.2012
Date of pronouncement: 20.04.2012
For the Appellant: Shri Siddharth Jhajharia
For the Respondent: Shri A. P. Roy
आदे श/ORDER
Per Mahavir Singh, JM ( महावीर िसंह, Ûयायीक सदःय)
सदःय These six appeals filed by assessee are arising out of the orders of CIT(A)-XIX, Kolkata in Nos. 70 to 75/CIT(A)-XIX/Wd.31(3)/09-10 vide orders dated 11.06.2010. Assessments were framed by ACIT- 25(3), Mumbai u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Years 1997-98 to 2002-03 vide his order dated 31.03.2005. The penalty in dispute was levied by ACIT- 25(3), Mumbai u/s 271(1)(c) of the Act vide his order dated 24.03.2008.
2. Only issue in these appeals of assessee is against orders of CIT(A) confirming levy of penalty by Assessing Officer u/s. 271(1)(c) of the Act. For this, the assessee has raised common ground in all the years, which are identically worded and for the sake of brevity, we are reproducing the ground as raised in ITA No. 1682/K/2010 for Assessment Year 1997-98, which reads as under:
"1.That the Ld. CIT(A)-XIX, Kolkata erred in upholding the action of Assessing Officer for imposing penalty u/s. 271(1)(c) of the I. T. Act 1961, without considering the full facts on records. Even otherwise the penalty imposed and confirmed was highly excessive and wholly unreasonable."
3. The brief facts leading to the above issue are that assessee's husband Sri V. K. Puri, who was Collector in Central Excise & Customs and was raided by CBI when he was posted in Mumbai on 22nd February, 2002. The assessee was filing her returns of income before search 2 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 was conducted by CBI on her husband. The particulars of returns of income filed for the relevant assessment years read as under:
Financial year Assessment Year Income returned (Rs.) Date of filing ending on 31-03-1997 1997-98 1,12,790 04-06-1997 31-03-1998 1998-99 1,88,110 09-06-1998 31-03-1999 1999-2000 1,89,040 19-08-1999 31-03-2000 2000-2001 5,78,680 27-07-2000 31-03-2001 2001-2002 5,84,316 27-06-2001 31-03-2002 2002-2003 3,30,050 31-07-2002 The assessee moved application u/s. 273A of the Act on 5.9.2002 to the Commissioner of Income-tax-XXV, Mumbai for waiver of interest and penalties relating to Assessment Years 1997-98 to 2002-03 (years under consideration for penalty). The assessee filed complete details of returns filed originally and estimated income now to be offered to the department as under:
Financial year Assessment Income returned Date of filing Estimated ending on Year (Rs.) income now to be offered Rs. In lakhs 31-03-1997 1997-98 1,12,790 04-06-1997 14.20 31-03-1998 1998-99 1,88,110 09-06-1998 3.40 31-03-1999 1999-2000 1,89,040 19-08-1999 13.25 31-03-2000 2000-2001 5,78,680 27-07-2000 15.40 31-03-2001 2001-2002 5,84,316 27-06-2001 7.20 31-03-2002 2002-2003 3,30,050 31-07-2002 15.00
4. Simultaneously, assessee filed returns of income in respect to these assessment years on 29.11.2002 and in the returns filed on 29.11.2002, which are neither filed u/s. 139(1) nor u/s. 139(4) of the Act, is as under:
Sl. No. A.Y Total income as per returns filed on
29.11.2002
1 1997-98 1500200
2 1998-99 582300
3 1999-2000 1389540
4 2000-01 2074450
5 2001-02 1356030
6 2002-03 1601520
Subsequently, on the basis of above returns which the revenue wanted to regularise, in all these assessment years notices u/s. 148 of the Act was issued on 29.3.2004 and in response thereto, the assessee filed letters dated 10.4.2004/21.7.2004 stating that the returns filed revising the 3 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 income be treated as filed in response to notice u/s. 148 of the Act. The assessee in her petition dated 5.9.2002, made u/s. 273A of the Act, stated the reasons for waiver of interest and penalties as under:
"I have to state that during the period 1992-95, I disposed of almost all assets received by me as stridhan and an amount of over Rs.87 lakhs was received by me from it. Most of this amount was invested in bank and company deposits and some in financial institutions and shares. Since the amounts were invested out of stridhan, an impression was given that the interest accrued/received on such deposits was not liable to Income Tax. Now, I have been properly informed that such income earned by way of interest and dividend is taxable. However, under the wrong impression carried by me, I did not include such income in my returns of income filed. The particulars of return of income filed are as under:
Xxx xxx xxx Your honour is requested to pass necessary instructions to the Ld. Assessing officer for issue of notice under section 148 to enable me to file my revised returns of income and pay taxes accordingly.
Estimated income to be offered for taxation I am trying to get it worked out and the above figures are only indicative. It may be appreciated that this disclosure of additional income is wholly voluntary on my part and no proceedings under I. T. Act are pending against me. In view of this, I most respectfully pray that penalty and interest imposable under various provisions of the I. T. Act may be waived."
5. The assessee finally informed that income as declared in view of the returns filed on 29.11.2002 and thereafter, on giving effect to the ITAT's order dated 11.5.2010, the income as returned in the returns filed on 29.11.2002 worked out as under:
Assessment Income returned Income declared in Income on giving Year originally the revised return effect to the ITAT on 29.11.2002 order 1997-98 1,12,790 15,00,197 15,00,200 1998-99 1,88,110 5,82,300 5,82,300 1999-00 1,89,040 13,89,540 13,89,540 2000-01 5,78,680 20,74,445 21,09,521 2001-02 5,84,316 13,56,030 13,55,799 2002-03 3,30,050 16,01,520 16,01,520 The AO completed assessments in view of the returns filed in response to notices u/s. 148 of the Act and also voluntary returns filed on 29.11.2002. The CIT(A) confirmed the action of the Assessing Officer. The assessee contested the additions before the Tribunal and Tribunal has deleted the additions made u/s. 69B of the Act by giving following findings:4 I.T.A Nos. 1682 to 1687/Kol/2010
Smt. Amita Puri, AY1997-98 to 2002-03 "6. Contentions raised before the lower authorities were reiterated by the Ld. counsel of the assessee here before the Tribunal. It was vehemently argued that provisions of sec. 69B are very clear by which it is provided that any investment made during the year under consideration which remained unexplained is liable to added u/s 69B.
6.1. In the present case, no investment has been made in the year under consideration, therefore, provisions of see. 69B cannot be invoked. It was further submitted that bank certificates were filed; however, they were not taken into consideration by the lower authorities. It was further explained that no jewellery were found by CBI at the time of search on the husband of the assessee. The jewellery was sold during the year 1992 to 1995 and the same was invested from time to time in the bank or in the companies or in shares. Copies of details which were filed before the lower authorities are placed at page 51 of the paper book. Attention of the Bench was drawn on various other details filed before the lower authorities. Copy of the written submissions filed before the AO was also filed. It was further submitted that before issuance of notice u/s 148 the assessee has filed petition u/s 273A explaining that a sum of Rs. 87 lacs or so has been invested in Bank FDs or in various companies after selling the gold and silver ornaments etc. during the year 1992 to 1995. Attention of the Bench was drawn on the copy of the petition filed u/s 273A. Copy of the return filed in respect to notice u/s 148 is also placed on record. It was further submitted that from the details of FDRs, it is clearly seen that the FDRs which were obtained in the year 1993 to 1996 were matured in the year 1997 to 1999. Accordingly, interest received during the AY 1997-98 to 1999- 00 have been disclosed by the assessee. Attention of the Bench was drawn on the copy of these details placed on record. It was further submitted that certain additions were made in the hands of her husband and children which were deleted by the CIT(A), by observing that the additions made in the hands of her husband and in the hands of her children have already been made in the hands of the assessee, therefore, no addition is warranted in the case of her husband and children. It was further submitted that the order of the CIT(A) has been confirmed by the Tribunal. Copy of the order of the Tribunal was also filed. Reliance was placed on the decision of the Hon'ble Gujarat High Court in the case of Ushakant N Patel reported in 282 ITR 553 (Guj). It was further submitted that jewellers M/s Ambika Jewellers have given confirmation that the jewelleries were sold by the assessee. Copy of the details etc., were filed. However, they were not taken into consideration by the AO or by the CIT(A). Therefore, it is not a case of investment made during the year under consideration and accordingly, no addition can be made u/s 69B.
6.2. On the other hand, the Ld DR placed strong reliance on the orders of the authorities below. It was further submitted that the assessee miserably failed to establish that investments were not made in the year under consideration but made in earlier year. Therefore, the AO was justified in making the addition u/s 69B of the Act.
7. We have heard the rival submissions and considered them carefully. We have also perused the relevant material on which our attentions were drawn. After considering the submissions and perusing the material on record, it is noted that addition u/s 69B can be made;
"where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable articles, and the AO finds that the amount expended in making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation 5 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 about such excess amount or the explanation offered by him is not, in the opinion of the AO, satisfactory the excess amount may be deemed to be the income of the assessee for such financial year."
7.1. Neither any part of jewellery nor other valuable article showing investment made during the year under consideration were found from the possession of the assessee, or from her husband by the CBI raid. The petition u/s. 273A was filed, by the assessee before issuance of notice u/s. 148. In the petition, it was disclosed by the assessee that she had sold gold jewellery etc., during the year 1992 to 1995 after receiving the same as gifts from her father-in-law during his lifetime. Interests on FDRs, deposits in banking companies have been offered for taxation for AY 1997 98 onwards. Interest earned and shown on FDRs and on deposits with various companies cannot be earned in the same year. Therefore, it is clearly established, that investments in the FDR or with various companies or in the shares were made in earlier year i.e. before AY 1997-98. Copies of details of deposits made prior to assessment year 1997-98 are placed at page 51 of the paper book. Jewellery and Silver utensils were sold at Rs. 32.25 lacs during the AY 1993-94. Jewellery of Rs. 37.97 lacs and Rs. 16.87 lacs were sold during the AYs 1994-95 and 1995-96 respectively. Out of this amount, FDs of Rs. 4.22 lacs, 27.82 lacs, 5.60 lacs and Rs. 7.48 lacs were made during the AYs 1993-94 to 1996-97. Company deposits of Rs. 8.29 lacs, Rs. 5.01lacs and Rs. 8.32 lacs were made during the AY 1993- 94, 94-95 and 96-97 respectively. Bonds of Rs. 0.80 lacs, Rs. 1.92 lacs, Rs. 1.52 lacs and Rs.1.05 lacs were purchased during the AYs 1993-94 to 1996-97 respectively. Similarly, shares of Rs. 2.76 lacs were purchased during these years. The total investment made in these four years was at Rs, 77.49 lacs. There was some bank balance during these years and also some Cash in hand as on 31.3.1996. There was a bank balance of Rs. 5.44 lacs and cash in hand at Rs. 4.08 lacs. Total of all these amounts comes to Rs. 87 lacs or so.
7.2. Copies of sale of jewellery issued by Ambika Jewellers are also placed on record. From these sale invoices, it is seen that jewellery was sold during the year 1992-92 to 1995-96. Details of bank deposits are placed at pages 70 to 74 of the paper book. Copies of bank statements in the name of the assessee and in the name of other family members i.e. Ms. Neha Puri, Divya Puri are placed on record. From these bank statements, it is seen that the deposits were made in earlier years.
7 3. Copies of share certificates were also placed on record from pages 99 to 107 of the paper book and it is seen that these shares were purchased before 1.4.1996. Copy of accounts issued by Kisu Corporate Services P Ltd. is also placed on record at page 109 of the paper book and it is seen that FDs were obtained during the period 1993 to 1996. Copy of account of Bank of Maharashtra is placed at page 194 of the paper book and it is seen that FDs were obtained during the period 1992-93 to 1996-97.
7.4. Similar other details are placed on record and on perusal of these details, it is seen that investments of Rs. 87 lacs or so was made prior to assessment year 1997-98. From all these details, as stated above, it is clearly established that no investment was made during the AY 1997-98. As per provisions of sec. 69B no addition can be made in the year in which investment has not been made. Therefore, we are of the considered view that addition made by the AO and then confirmed by the CIT(A) is not justified. According to the AO and the CIT(A), the jewellery was sold during the year under consideration as the assessee failed to substantiate that, the jewellery was sold in earlier year and not in the under consideration. Heavy onus lay upon the department to prove that the investment made in the year under consideration. The assessee has filed details of sale of jewellery made to M/s Ambika Jewellers along with details of FDs, company 6 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 deposits which was made before 31.3.1996. No enquiry whatsoever has been made either with the bank or with the jewellers to verify that whether any jewellery was sold to Ambika Jewellers or whether any FDs were obtained by the assessee from the bank and various companies, details of which were filed before the AO as well as before the CIT(A). Therefore, we are of the considered view that the AO and the CIT(A) are not justified in making and confirming the addition for the year under consideration. Accordingly, we delete the addition of Rs. 87,10,327/-."
6. It means that in all these assessment years assessee's declaration u/s. 273A of the Act declaring incomes as noted in para 07 page 09 and also declared same income in returns filed in response to section 148 of the Act, which remained as it is even after appeal effect given to the order of ITAT. The Assessing Officer initiated penalty proceedings in all these assessment years on the differential income offered by assessee in response to notice u/s. 148 of the Act and returns filed originally u/s. 139(1) of the Act. The difference between the assessed income and returned income in these assessment years is due to declaration made by assessee of unexplained investments and interest thereon in the FDs. Before the Assessing Officer, assessee's explanation was that assessee has filed voluntary returns and also filed petition u/s. 273A of the Act before CIT on 05.09.2002 much before issuance of notice u/s. 148 of the Act and hence, voluntary declaration cannot be subject matter of concealment in the present case. The assessee's argument before the Assessing Officer was that all material facts were disclosed in the return of income as well as at the time of assessment proceedings but Assessing Officer levied the penalty by stating that the assessee moved this petition u/s. 273A before CIT(A) in a premeditated move and disclosed the particulars of additional undisclosed income knowing fully well the assets of the family and her husband were under investigation and hence, to give legal sanctity to the undisclosed income in her name the declaration was made. According to Assessing Officer, the revised return was not furnished voluntarily and in good faith and the disclosure was neither full nor true. According to Assessing Officer, she could not substantiate any source of undisclosed investments from where these were acquired. According to Assessing Officer, she is neither working nor having any substantial income and hence, she resorted to story of having received 'stridhan' and sold the same and invested in FDRs and also acquired shares just to save her husband Shri V. K. Puri from CBI. The Assessing Officer also noted that this assessment is not protective and it is substantive in the hands of the assessee although the TDS certificates are in the name of Shri V. K. Puri showing him as the owner of FDRs. In view of the above, the Assessing Officer levied the penalty u/s. 271(1)(c) of the Act for all these assessment years. Aggrieved, assessee preferred appeal before CIT(A) who also confirmed the action of Assessing Officer by giving following finding in para 5 of his order:
7 I.T.A Nos. 1682 to 1687/Kol/2010Smt. Amita Puri, AY1997-98 to 2002-03 "5. I have considered the submission of the appellant and perused the penalty order.
I have also gone through the order of the Hon'ble I.T.AT. as well as orders passed by the A.O. giving effect to the orders of CIT(A) and the I.T.A.T. revising the total assessed income and quantum of penalty. In the assessment order dated 30.032005, the A.O. has made an addition of Rs.87,10,327/- u/s. 69 of the Act and addition of Rs.1,78,595/- by estimating interest income @ 18%. The CIT(A) upheld the addition of Rs.87,10,327/- and reduced the quantum of addition on account of interest, directing the A.O. to estimate the same by applying rate of interest on investments at 15% in place of 18%. Aggrieved by the order of the CIT(A), the appellant has filed appeal before the I.T.A.T., Mumbai. The appeal was decided in I.T.A. Nos. 6829, 6830, 6831, 6998, 6999 & 7105/Mum/2006 dated 11.05.2009 for assessments years 1997-98 to 2002-03. With regard to addition of Rs.87,10,327/- made by the A.O. u/s. 69B and confirmed by the CIT(A), the Hon'ble I.T.A.T. has held in Para No.7 to 7.4 that no addition u/s. 69B of the Act could be made in assessment year 1997-98 and accordingly the addition of Rs.87,10,327/- was directed to be deleted. With respect to addition on account of interest income on investments, in Para No. 11 the Hon'ble I.T.A.T. has held and directed as under:
"After considering the submissions and perusing the material record, we restore this issue to the file of the AO to ascertain the factual position once again. Contention of the assessee has not been considered that the assessee has shown the entire interest in the year in which the interest has been received. Contention of the assessee that on FDs or other deposits interest rate is very low, therefore, arbitrary estimation @ 18% or 15% is unjustified. There is nothing that stops the assessee from showing the interest receipts on cash form. Therefore, we restore this Issue to the file of the AO to examine this aspect afresh and after affording reasonable opportunity of being heard to the assessee. If the assessee has shown the interest receipt on cash basis, consistently, AO directed to accept it."
On receipt of order of the I.T.A.T., the A.O. has given effect and passed order u/s. 254/251/143(3) of the I. T. Act dated 12.0l.2010 and revised the total assessed income at Rs.15,00,200/-. Thus, the final assessed income, after giving effect to the order of I.T.A.T., is same as declared by the appellant in the return filed on 29.11.2002. It is observed that the A.O. has also passed another order u/s. 254/271(1)(c) of the Act dated 12.01.2010. In the said order, the A.O. has reduced the quantum of penalty u/s. 271(1)(c) of the Act at Rs. Nil on giving effect to the order of I.T.A.T. 5.1. On careful consideration of the facts of the case and various orders passed by the A.O., CIT(A) and Hon'ble LT.A.T., I am of the opinion that the A.O. has not correctly passed the order u/s. 254/271(1)(c) of the Act dated 12.01.2010 and he was wrong in his action in reducing the quantum of penalty at nil on the basis of order of the I.T.A.T. The A.O. has not appreciated the fact that in the penalty, order dated 24.03.2008 the A.O has levied penalty u/s. 271(1)(c) at Rs.40,38,372/- not only on the additions made by him to the total returned income but also on the additional income which was declared by the assessee in the second return filed on 29.11.2002. The Hon'ble I.T.A.T. has deleted the addition of Rs.87,10,327/- made u/s. 69B and the A.O. in his order u/s. 254/251/143(3) dated 12.01.2010 has observed that the appellant has disclosed interest income on the investments on receipt basis following the cash system of accounting and therefore, no further income on account of interest is to be added. Thus, it can be said that the additions made by the A.O. in the assessment order has been deleted and no penalty u/s. 271(1)(c) is leviable on such additions. However, the fact remains that the appellant has filed second return of income on 29.11.2002 declaring income of Rs.15,00,200/- and the original return of income was filed on 04.06.1997 declaring income of Rs.1,12,792/-. Therefore, the appellant has concealed the income and filed inaccurate particulars of income to the 8 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 extent of Rs.13,87,108/- (Rs.15,00,200 - Rs.1,12,792/-). I am not inclined to agree with the contention of the appellant that she had filed petition u/s. 273A of the Act and the said petition is yet to be disposed off and therefore, imposition of penalty u/s. 271(1)(c) is wrong and unjustified. In the case of S. R. Arulprakasam reported in 163 ITR 487 (Mad), the Hon'ble High Court has held that the original return of income is not wiped out on filing revised return. In the case of CIT vs. K. Mahim, 149 ITR 737 (Ker), it is held that filing of revised return voluntarily by the assessee would not exonerate him from the liability to penalty u/s. 271(1)(c) of the Act. The Hon'ble Jurisdictional High Court in the case of Kumar Jagdish Chandra Sinha reported in 137 ITR 722 (Cal) has held that act of concealment completes when original return was submitted by the assessee and original return cannot be wiped out on filing revised return. In the case of Calicut Trading reported in 178 ITR 430, the Hon'ble Kerala High Court has held that revised return including concealed income cannot lead to cancellation of penalty u/s. 271(1)(c) of the Act. In the case of CIT vs. R. Sadayappan, 253 ITR 203 (Mad), the Hon'ble High Court has observed that the subsequent admission by the assessee does not take away effect of wrongful conduct earlier displayed. In view of above, the A.O. is directed to revise the quantum of penalty u/s. 271(1)(c) on the basis of amount of tax payable on the total assessed income of Rs.15,00,200/- as per order u/s. 254/251/143(3) of the I. T. Act dated 12.01.2010 and reduced by the amount of tax payable on the income returned as per original return of income at Rs.1,12,790/-."
Aggrieved, now assessee is in appeal before us.
7. We have heard rival submissions and gone through facts and circumstances of the case. It is a fact that there is a CBI search on the husband of the assessee on 22nd February, 2002. The assessee filed a declaration declaring income therein vide petition filed u/s. 273A of the Act dated 04.09.2002. Thereafter, assessee filed returns declaring the same income as declared in the petition u/s. 273A of the Act in all these assessment years. Subsequently, revenue issued notices u/s. 148 of the Act dated 29.03.2004 and assessee filed letter dated 10.04.2004 submitting that the revised return filed be treated as return filed in response to notice u/s. 148 of the Act. On query from the Bench that what happened to the petition u/s. 273A of the Act, revenue filed copy of petition dated 05.09.2002 u/s. 273A of the Act moved to CIT, Mumbai- XXV along with repeating petition u/s. 273A of the Act with same contents which was filed before CCIT-XI, Kolkata dated 08.07.2010 before us. We find that vide petition u/s. 273A of the Act dated 05.09.2002 assessee requested to issue notices u/s. 148 of the Act to regularize the returns. The relevant petition dated 05.09.2002 enclosed in revenue's paper book reads as under:
"Amita Puri, Flat No. 505, Tower No 4, Challengers, Kandivli (East), Mumbai-400101 Dated: 5.9.2002 9 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 To, The Commissioner of Income Tax, Mumbai City XXV, Mumbai Dear Sir, Sub: Petition u/s 273A of I T Act for assessment years 1997-98 to 2002-03 - reg. I am an Income Tax payee having PAN AAJPP6744K. I am assessed to Income Tax in ward 25(3)(3), Mumbai. In this connection I have state that during the period 1992-95, 1 disposed of almost all assets received by me as stridhan and an amount of over Rs 87 lakhs was received by me from it. Most of this amount was invested in bank and company deposits and some in financial institutions and shares. Since the amounts were invested out of stridhan., an impression was given that the interest accrued/received on such deposits was not liable to Income Tax. Now I have been properly informed that such income earned by way of interest and dividend is taxable. However under the wrong impression carried by me, I did not include such income in my returns of income filed. The particulars of returns of income filed are as under:
Financial Assessment Income Date of filing Estimated income Year ending Year Returned Rs. now to be offered on Rs.
31,3.1997 1997-1998 1,12,790 04.06.1997 14.20 lakhs
31.3.1998 1998-1999 1,88,110 09.06.1998 3.40lakhs
31.3.1999 1999-2000 1,89,040 19.08.1999 13.25 lakhs
31.3.2000 2000-2001 5,78,680 27.07.2000 15.40 lakhs
31.3.2001 2001-2002 5,84,316 27.06.2001 7.20 lakhs
31.3.2002 2002-2003 3,30,050 31.07.2002 15.00 lakhs
Your honour is requested to pass necessary instructions to the Ld. Assessing Officer for issue of notice under section 148 to enable me to file my revised returns of income and pay taxes accordingly.
Estimated income to be offered for taxation I am trying to get it worked out and the above figures are only indicative. It may be appreciated that this disclosure of additional income is wholly voluntary on my part and no proceedings under IT Act are pending against me. In view of this, I most respectfully pray that penalty and interest imposable under various provisions of the IT Act may be waived.
For the above act of kindness, I always pray.
Yours faithfully, Sd/- Amita Puri"
Thereafter, there is a report of the revenue vide order sheet entry dated 18.03.2011 wherein DCIT, Hqrs-XI, Kolkata has mentioned that this petition may be taken up for hearing after the decision of ITAT in penalty proceedings and this was approved by CIT-XI, Kolkata, which reads as under:
"18.3.11 : A report of ITO Wd 31(3) Kolkata forwarded by the JCIT R-31 Kolkata vide no. JCIT, R-31u/s. 273A/10-11/941 dt. 22.11.10. It is seen that the concerned A.O has submitted para wise comment to the a's petition u/s. 273A. He has also suggested to reject the application of the 'a' for waiver of penalty u/s. 271(1)(c).10 I.T.A Nos. 1682 to 1687/Kol/2010
Smt. Amita Puri, AY1997-98 to 2002-03 It was further seen that the a's appeal is pending before ITAT. Accordingly the petition may be taken up for consideration after the outcome of the ITAT's order, if kindly approved.
Sd/ DCIT, Hq-11, Kol CIT, Kol-XI, Kol 'A' approved Sd/- 18.03.11"
It means that there is no dispute that the petition filed by assessee u/s. 273A of the Act is pending before Income-tax Department and no action has been taken till date. Even now, we have asked the revenue whether any action is taken, Ld. DR could not answer. In such circumstances, when the petition u/s. 273A is pending whether penalty can be levied u/s. 271(1)(c) of the Act or not?
8. Now the question arises, whether, in the given facts and circumstances, the voluntary disclosure made by the assessee before CIT-XXV, Mumbai u/s.273A of the Act can be used for levy of penalty u/s.271(1)© of the Act or not? The Ld. counsel for the assessee before us, on this proposition relied on case law under old Section 271(4A), which was inserted by the Income-tax (Amendment) Act, 1965 with the object to encourage voluntary disclosures of undisclosed income, and for promoting to allay fears about imposition of penalties for concealment or holding back such income from the Department and the same is para materia to new Section 273A as inserted by the Taxation Laws (Amendment) Act, 1975. In this respect Hon'ble Madhya Pradesh High Court in the case of Addl. CIT v. Kanhaiyalal Jessaram (1977) 106 ITR 168 (MP) at Page 170 held as under:-
" It is clear that this provision is made to persuade the evaders of tax to make full disclosure of income voluntarily and in good faith. In that case the Commissioner has been empowered to reduce or waive the amount of minimum penalty. The entire offer and acceptance has to be considered as one part and what the department tried to do was to dissect the offer and acceptance and to treat the so-called admission made in the offer binding on the assessee. Although the offer may not be accepted by the department, we would no permit such dissection of the offer and acceptance which, in our opinion, would go together. If the offer is not accepted and if the department insists on deciding the assessment case on merits, any facts said to be disclosed in such offer have altogether to be excluded and then it becomes incumbent on the department to resort to the usual assessment or the best judgment assessment, as the case ma be, and in that event the department would be empowered to impose the minimum penalty impossible under the section. The attempt of the department was on the lines "heads I win tails you lose". Such an interpretation of section 271(4A) of the Act can evidently not be permitted and we feel that the Appellate Assistant Commissioner and he appellate Tribunal were correct in holding that in the event of there being no settlement, the disclosures made in the offer ought to be excluded from consideration altogether. If the department's contention were to be accepted, it would defeat the very purpose of enacting section 271(4A) of the Act. We may observe that unless the offer is accepted and acted upon by the department, the other sub- sections of section 271 will be attracted in the matter of imposition of penalty and the two 11 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 provisions cannot be allowed to be mixed up to the entire advantage of the department and disadvantage of an assessee. We, therefore, do not think that the present case is one in which we should call upon the Appellate Tribunal to refer any question to us, as we are fully satisfied that even though the main question posed might be one of law, there can be no other interpretation except the one put by the Appellant Assistant Commissioner and the Appellate Tribunal."
We find from the arguments from the Ld. counsel for the assessee that the offer made u/s.273A of the Act before CIT-XXV, Mumbai was conditional offer with the condition attached to it that no penalty ought to be levied. We find that the assessee has made voluntary offer motivated by desire to clean her affair and this offer is in good faith and bona fide as the assessee has made a full and true disclosure of her income and has truly discharged her liabilities as claimed in application made before CIT-XXV, Mumbai u/s 273A of the Act. The CIT-XXV, Mumbai and subsequently CIT-XI, Kolkata has not passed the order on application u/s. 273A of the Act till levy of penalty u/s.271(1)(c) of the Act vide order dated 24-03-2008 and confirmed by CIT(A) vide order dated 22-06-2010. Whether for the inaction of the Department, can the assessee be punished by levying penalty u/s 271(1)(c) of the Act particularly when assessee co-operated with the Department, entire tax with interest has been paid, the disclosure is voluntary and in good faith and bona fide? This fact is supported by assessment orders passed by the Assessing Officer u/s.143(3) r.w.s. 147/148 of the Act as there is no detection by the Department or no inquiry or investigation was pending against this assessee.
9. Further, we find that Full Bench of Allahabad High Court in the case of Bhairav Lal Verma v. Union of India (1998) 230 ITR 855(All) (FB) has considered the full and true disclosure vis-à-vis voluntary disclosure, while deciding penalty u/s.18B of the WT Act, 1957 stating that full and true disclosure of income particulars made voluntarily and in good faith by the assessee is condition precedent for waiver of penalty under s. 273A. The word 'voluntarily' in Section 273A means out of free will without any compulsion. Disclosure of concealed income after the Department has seized the incriminating material with regard to the income disclosed, cannot be voluntary disclosure, because it was made under the constraint of exposure to adverse action by the Department. But it cannot be held as a principle of law that the disclosure of income made after the search / raid cannot be voluntary. It is a question which has to be decided by the Department in each case on the basis of the material on the record. If on record there is incriminating material with regard to the disclosed income, the disclosure cannot be voluntary. But if the Department has no incriminating material with regard to the income disclosed, the disclosure is liable to be treated as voluntary having been made without any 12 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 compulsion or constraint of exposure to adverse action by the Department. In a case where the assessee has disclosed not only the income regarding which the Department has incriminating material, but has also disclosed the income with regard to which no incriminating material was seized by the Department, the disclosure of the income with regard to which the Department has no incriminating material, is liable to be treated as voluntary. For example, if an assessee is having five accounts and the Department has incriminating material with regard to one of those accounts only, the disclosure of income relating to four accounts with regard to which the Department has no incriminating material, is voluntary, because it was made without any constraint or compulsion, even though the disclosure of the income relating to the account regarding which the Department has incriminating material, is liable to be treated as non- voluntary. The same principle will apply to the disclosure made under s. 18B of the WT Act, because under the said section also the disclosure must be made voluntarily and in good faith. Word "voluntarily'" in Section 273A means out of free will without any compulsion;' disclosure of concealed income after Department has seized incriminating material with regard to the income disclosed, the disclosure is liable to be treated as voluntary even if it was made after raid / search
10. We further are of the view that even Explanation to s. 271(1)(c) is not applicable to the facts of this case. Even if Explanation to s. 271(1)(c) is made applicable to the facts of this case, the explanation offered by the assessee, would go to show that the assessee discharged the burden placed upon it. Thus, in as much as on merits, the assessee had already declared the correct income before detection by the department by filing an application u/s273A of the act. The assessee moved a petition u/s 273A of the Act before CIT-XXV, Mumbai for all these assessment years vide application dated 05.09.2002 declaring undisclosed income arising out of sale of 'stridhan' and interest on FDRS giving complete particulars and declaring true income but CIT-XXV, Mumbai passed on information to the Assessing Officer along with enclosures and computation of income to the AO, who issued notices u/s 148 of the Act dated 29-03-2004. The assessments u/s.147 r.w.s. 143(3) of the Act was completed vide Assessing Officer's orders dated 30-03-2005 and penalties u/s.271(1)(c) was levied vide orders dated 24-03-2008. By these dates, no order was passed by CIT-XXV. Mumbai on application filed u/s.273A of the Act. We find that it was admitted by the Department that the information came from the assessee without any suggestion or detection from the Department and notice under s. 148 of the Act was issued long after the settlement petition to the CIT. This would show that no enquiry was made with reference to the declaration filed u/s 273A of the Act by the assessee 13 I.T.A Nos. 1682 to 1687/Kol/2010 Smt. Amita Puri, AY1997-98 to 2002-03 and no question was asked by the ITO as to the basis he is going to adopt for distributing the total income declared in the computation of income filed before CIT-XXV, Mumbai and determination made by the Assessing Officer for the respective assessment years. The Explanation was acting as a rule of evidence. It is always open to the assessee to prove that the failure to return the correct income did not arise from any fraud or any gross or willful neglect on this part. In the present case, the Assessing Officer did not detect any concealment while completing the assessment rather the assessee herself admitted the income. Once it is a fact that the CIT-XXV, Mumbai and subsequently, CIT-XI, Kolkata has not acted on the assessee's petition u/s. 273A of the Act, AO in such circumstances cannot levy penalty. Hence, we delete the penalty on this aspect.
11. Another aspect, i.e. on merits, the revenue's claim from the very beginning is that this income does not belong to her but it belongs to her husband Shri V. K. Puri, who is under the CBI search. The revenue's contentions from the very beginning that the income declared by assessee by way of petition u/s. 273A of the Act or in the alleged revised return or the returns in response to 148 of the Act filed by the assessee (vide letter assessee requested the AO to treat the returns filed as revised returns after filing petition u/s. 273A of the Act declaring the same income be treated as return filed in response to notice u/s. 148 of the Act.). The revenue's contention as noted by AO in his penalty order at page 4, 1st para, the relevant portion, reads as under:
"Consequent to the search, in a premeditated move, the assessee filed petition u/s. 273A before the CIT and disclosed particulars of additional undisclosed income knowing fully well that the assets of the family more so her husband were under investigation and hence to give the same a legal sanctity declared the same in her return."
The AO further noted the fact that this income belongs to Shri V. K. Puri as the assets are held by Shri V. K. Puri at page 5 of his penalty order, reads as under:
"The next ground put forth by the assessee is that as the assessment is a protective one hence penalty cannot be levied. On perusal of the assessment order as well as the appellate order it is seen that nowhere has it been mentioned that the assessment has been made on a protective basis and would be subject to revision on the completion of the assessment of Shri V. K. Puri. The CIT(A)'s has held that though the TDS certificates are in the name of Shri V. K. Puri, since appellant has disclosed investment in her return instead of offering it the hands of Shri V. K. Puri though it belongs to him, action of the A.O in taxing the whole income in the year under consideration is confirmed. However AO is directed to inform to the concerned AO, assessing income of Shri V. K. Puri to take action in his hands. Hence this plea of the assessee is not acceptable."14 I.T.A Nos. 1682 to 1687/Kol/2010
Smt. Amita Puri, AY1997-98 to 2002-03 It means that revenue is not sure that this income belongs to assessee or to her husband Shri V. K. Puri. First, revenue should determine that these FDRs belong to whom and investment is made by whom and then only can assess the income in appropriate hand. From the penalty order of the AO, it is clear that on one hand, income has been assessed in the hands of the assessee and on the other hand, there is direction to inform the concerned AO to take action in the hands of assessee's husband Shri V. K. Puri. From this, it is clear that revenue is not sure to whom this income belongs. Once this is a case, before levying any penalty the income has to be assessed as concealed income in the hands of assessee and for that there should not be any whisper that this income belongs to another person. Thereafter, in penalty proceedings, the revenue has to probe into and decide whether there has been any concealment of income or not. But where there is a dispute as to whether such income allegedly concealed would be assessed in the hands of X or Y, unless the determination is made by AO, no charge of concealment can be made against the person in whose hands the income assessed. She is liable for penalty only if her income which has been concealed has been added without any doubt. In such circumstances, even though the assessee herself has admitted undisclosed income but there is clear cut doubt expressed by revenue that this belongs to her husband and not to her, penalty for concealment of income cannot be levied on her because there is no concealment of income attributed to her. Even, according to AO, the CIT(A) has already directed the AO to assess this income in the hands of Shri V. K. Puri and appropriate action is to be taken in his hands. Hence, we are of the view that penalty levied by AO and confirmed by CIT(A) will not withstand. Hence, the same is deleted. Appeals of assessee are allowed.
12. In the result, appeals of assessee are allowed.
13. Order is pronounced in open court on 20.04.12 Sd/- Sd/-
ूमोद कुमार, लेखा सदःय ौी महाबीर िसंह, Ûयायीक सदःय
(Pramod Kumar) (Mahavir Singh)
Accountant Member Judicial Member
तारȣख)
तारȣख) Dated 20th April, 2011
(तारȣख
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
15 I.T.A Nos. 1682 to 1687/Kol/2010
Smt. Amita Puri, AY1997-98 to 2002-03
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - Smt. Amita Puri, C/o, V. K. Puri, Flat No.18, Type VI, Nizam Palace, 234/4, A.J.C. Bose Road, Kolkata-700 020.
2 ू×यथȸ/ Respondent, ITO, Ward-31(3), Kolkata.
3. आयकर किमशनर/CIT, Kolkata.
4. आयकर किमशनर (अपील)/CIT(A), Kolkata.
5. वभािगय ूितनीधी / DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt. Registrar.