Income Tax Appellate Tribunal - Delhi
Ms. Ravina Khurana, New Delhi vs Dcit, New Delhi on 26 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'F' NEW DELHI
BEFORE
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 1004/Del /2011
Assessment Year: 2004-05
Ravina & Associates Pvt. Ltd., Addl. Commissioner of
201, Mohadeo Building, Income Tax,
Vs.
Tolstoy Marg, Range-15,
New Delhi. New Delhi.
(PAN: AAACR4696N)
(Appellant) (Respondent)
ITA 1005/Del/2011, 4388/D/2014, 4389/D/2014,
Assessment year 2005-06, 2004-05, 2005-06, 2000-01
Ravina & Associates Pvt. Ltd., DCIT,
201, Mohadeo Building, Circle 15(1),
Vs.
Tolstoy Marg, New Delhi.
New Delhi.
(PAN: AAACR4696N)
(Appellant) (Respondent)
ITA No. 1877/Del /2013, 1878/Del /2013, 1879/Del /2013,
1880/Del /2013, 1881/Del /2013
Assessment Year: 2000-01, 2001-02, 2002-03, 2003-04,
2004-05
Ravina Khurana, DCIT,
189, Golf Links, Circle 15(1),
Vs.
New Delhi. New Delhi.
(Appellant) (Respondent)
1
ITA No. 1004, 1005/D/2011,
4388/D/14 & Others
Assessment year 2004-05 & Othrs
ITA No. 3173/D/2010
Assessment year: 2000-01
DCIT, Ravina Khurana,
Circle 15(1), 189, Golf Links,
Vs.
New Delhi. New Delhi.
(Appellant) (Respondent)
ITA No. 1946/D/2010, 1948/D/2010,
1949/D/2010
Assessment Year: 2000-01, 2002-03, 2003-04
Ravina Khurana, DCIT,
189, Golf Link, Coy.Circle-15(1),
Vs.
New Delhi. New Delhi.
(PAN: AAJPK6331P)
(Appellant) (Respondent)
ITA No.1947/Del /2010, 1950/D/2010
Assessment year 2001-02, 2004-05
Ravina Khurana, ACIT,
189, Golf Link, Range 15,
Vs.
New Delhi. New Delhi.
(PAN: AAJPK6331P)
(Appellant) (Respondent)
Appellant by: S/Shri Salil Aggarwal,Gautam Jain, Advocates
Shri Shailesh Gupta, CA
Respondent by: Smt. Paramita Tripathy, CIT DR
Date of Hearing: 16.01.2018
Date of Pronouncement: 26.03.2018
ORDER
PER BENCH:
These are fifteen appeals out of which fourteen appeals have been preferred by the two assessee's namely Ravina ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Khurana and M/s. Ravina & Associates (P) Ltd. and one appeal has been preferred by the revenue. Since these appeals involve consideration of common issues, they were heard together and are thus being disposed of by this consolidated order for the sake of convenience.
2. At the outset, the learned counsel of the assessee submitted that the appeals for assessment years 2004-05 and 2005-06 in ITA Nos. 1004/Del/2011 and ITA No. 1005/Del/2011 respectively in the case of M/s. Ravina & Associates (P) Ltd (hereinafter referred to as "RAPL") may be taken as the lead matters in this batch of appeals. The learned CIT DR did not object to the aforesaid prayer of the learned counsel. As such, we take up the appeals filed by RAPL for assessment years 2004-05 and 2005-06.
3. In ITA No. 1004/Del/2011 for assessment year 2004-05, the appellant/assessee has raised the following grounds of appeal:
"1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that income declared by the appellant company relating to receipts from M/s TPE, a semi-government company incorporated in Russia and, credited in Natwest Bank Account, London is not voluntary.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 1.1 That in arriving at the aforesaid conclusion, the learned Commissioner of Income Tax (Appeals) has overlooked the reasons recorded for initiation of proceedings under section 147 of the Act wherein it has been stated that proceedings under section 147 of the Act had been initiated on the basis of income declared by the appellant-company in letter dated 11.4.2006 and therefore, conclusion that return of income was not voluntary is wholly misconceived, misplaced and untenable.
1.2 That the learned Commissioner of Income Tax (Appeals) in arriving at the aforesaid conclusion, has failed to appreciate that a criminal case was registered under the Indian Penal Code and Prevention of Corruption Act against the unknown officials of NTPC of India and others on 6.3.2006 and not against the appellant and therefore, the same neither in law and nor on fact could have been made a basis to assume much less conclude that income declared by the appellant company in letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in returns of income dated 21.6.2006 and, 12.2.2007 was not voluntary.
1.3 That the adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are not only factually misconceived but also legally unsustainable and infact, overlook the submissions made by the appellant company and judicial pronouncements to establish that income declared by the appellant company was not voluntary in as much as no material has been gathered or obtained by the Department prior to furnishing of declaration of income by the appellant to suggest or even hold that income declared relating to sums credited in the Natwest Bank Account at London was not voluntary.
1.4 That the entire basis adopted by the learned Commissioner of Income Tax (Appeals) is based on assumptions and presumptions, unsupported by any material and hence not tenable.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 2 That the learned Commissioner of Income Tax (Appeals) further erred both in law and on facts in holding that the revised return of income filed by the assessee on 12.2.2007 declaring an income of Rs. 10,80,57,290/- and, revising the return filed in response to notice under section 148 of the Act on 22.5.2006 was nonest and invalid return. 2.1 That the learned Commissioner of Income Tax (Appeals) has overlooked the written submissions duly supported by judicial pronouncements wherein it was established that, a return filed in response to notice under section 148 of the Act can also be revised under section 139(5) of the Act and as such, the revised return filed on 12.2.2007 was a valid return.
3 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in holding that, aggregate sum of Rs. 10,48,44,798/- disclosed by the assessee in the revised return filed on 12.2.2007 represented unexplained investment under section 69 of the Act. 3.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, sum of Rs. 10,48,44,798.60 represented sums received by the appellant company under an Agreement dated 23.7.2003 with M/s TPE for providing support services during implementation of their contract dated 29.7.2003 with M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh and, as such, the aforesaid sums could not be held to be unexplained investment under section 69 of the Act and, infact, were sums received in the course of business of appellant company and, thus assessable under the head "Profits and Gains of business of profession".
3.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the documentary evidence furnished by the appellant to demonstrate the nature of the income received by the assessee and, as such, the conclusion so arrived is wholly misconceived, unsustainable and unwarranted. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 3.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, mere fact that original agreement was not filed by the assessee with M/s TPE could not be made a basis to hold that, receipts of Rs. 10,48,44,798.60 did not represent the income received by the appellant from M/s TPE particularly, when photocopy of the agreement and, also illustrative correspondence regarding support services provided by the appellant to M/s TPE had been placed on record during the course of both assessment and, appellate proceedings.
3.4 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in holding that, AO has raised a number of objections and pointed out a number of anomalies in the appellant's submissions both in the assessment order and in the remand report and, the appellant had not been able to counter the above objections or explain the anomalies by any documentary evidence or clarification. The observations so made is factually misplaced and has been recorded by overlooking written submissions, documentary evidence and, is thus invalid. 3.5 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that adverse observations recorded in the order of assessment on the basis of information obtained under section 133(6) of the Act from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh was misconceived and without confronting the same to the assessee in the course of assessment proceedings. 3.6 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that finding of the learned Assessing Officer the advance paid by M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh to M/s TPE did not correlate with the sums received by the appellant company from M/s TPE was factually incorrect and entirely misplaced. In fact, the sums received by the appellant ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs company have full correlation with the advances received by M/s TPE from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited.
4 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in not allowing the claim of deduction of 15% of total receipts in view of the principles laid down by the Apex Court in the case of Calcutta Company Ltd. reported in 37 ITR 1.
4.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that clause 2 of the agreement dated 23.7.2003 clearly provided that the assessee company has to discharge several obligations and in view thereof, it was highly unjustified and unreasonable to tax the entire receipt as income of the appellant company in the instant assessment year.
5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that the bank interest of Rs. 37,866.73 represented unexplained investment u/s 69 of the Act.
6 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in confirming the adhoc disallowance of Rs. 1,00,000/- out of expenditure incurred and, claimed by the appellant company.
7. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in upholding disallowance of Rs. 10,000/- u/s 14A of the Act.
8. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest under section 234B and 234C of the Act, which on the facts of the case was not leviable. 8.1 That while upholding the levy of interest under section 234B and 234C of the Act, the learned Commissioner of Income Tax (Appeals) has failed to appreciate submissions made by the appellant to establish that no interest is liable on the facts of the case of the appellant and thus interest confirmed was not in accordance with law.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 8.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that even otherwise, no interest was leviable after such sum had been duly offered to tax vide letter dated 01.04.2006 and thus interest levied and, sustained mechanically is illegal, invalid and, not sustainable.
It is, therefore, prayed that, it be held that income declared by the assessee of Rs. 10,48,44,798.60 represented sums received by the appellant company under an Agreement with M/s TPE for providing support services during implementation of their contract dated 29.7.2003 with M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh and, as such, the aforesaid sums could not be held to be unexplained investment under section 69 of the Act. It be further held that, other disallowances together with interest levied are unsustainable and, therefore be directed to be deleted. It be also held that the income declared by the appellant in the returns of income filed on 21.06.2006 and, 12.2.2007 was voluntary and appeal of the appellant- company be allowed."
4. Identical grounds have also been raised in the appeal for assessment year 2005-06 in ITA No. 1005/Del/2011 which read as under:
"1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that income declared by the appellant company relating to receipts from M/s TPE a semi-government company incorporated in Russia and, credited in Natwest Bank Account, London is not voluntary.
1.1 That the learned Commissioner of Income Tax (Appeals) in arriving at the aforesaid conclusion, has failed to ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs appreciate that a criminal case was registered under the Indian Penal Code and Prevention of Corruption Act against the unknown officials of NTPC of India and others on 6.3.2006 and not against the appellant and therefore, the same neither in law and nor on fact could have been made a basis to assume much less conclude that income declared by the appellant in letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary.
1.2 That the adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are not only factually misconceived but also legally unsustainable and infact, overlook the submissions made by the appellant and judicial pronouncements to establish that income declared by the appellant was not voluntary in as much as no material has been gathered or obtained by the Department prior to furnishing of declaration of income by the appellant to suggest or even hold that income declared by the appellant relating to sums credited in the Natwest Bank Account at London was not voluntary.
1.4 That the entire basis adopted by the learned Commissioner of Income Tax (Appeals) is based on assumptions and presumptions, unsupported by any material and hence not tenable.
2 That the learned Commissioner of Income Tax (Appeals) further erred both in law and on facts in holding that the revised return of income filed by the assessee on 12.2.2007 declaring an income of Rs. 4,60,13,040/- was nonest and invalid return.
2.1 That the learned Commissioner of Income Tax (Appeals) has overlooked the written submissions duly supported by judicial pronouncements wherein it was established that, revised under section 139(5) of the Act was a valid return. 3 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in holding that, ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs aggregate sum of Rs. 4,10,20,996.81/- disclosed by the assessee in the revised return filed on 12.2.2007 represented unexplained investment under section 69 of the Act. 3.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, sum of Rs. 4,10,20,996.81 represented sums received by the appellant company under an Agreement dated 23.7.2003 with M/s TPE for providing support services during implementation of their contract dated 29.7.2003 with M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh and, as such, the aforesaid sums could not be held to be unexplained investment under section 69 of the Act and, infact, were sums received in the course of business of appellant company and, thus assessable under the head "Profits and Gains of business of profession".
3.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the documentary evidence furnished by the appellant to demonstrate the nature of the income received by the assessee and, as such, the conclusion so arrived is wholly misconceived, unsustainable and unwarranted. 3.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, mere fact that original agreement was not filed by the assessee with M/s TPE could not be made a basis to hold that, receipts of Rs. 4,10,20,996.81 did not represent the income received by the appellant from M/s TPE particularly, when photocopy of the agreement and, also illustrative correspondence regarding support services provided by the appellant to M/s TPE had been placed on record during the course of both assessment and, apellate proceedings.
3.4 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in holding that, AO has raised a number of objections and pointed out a number of anomalies in the appellant's submissions both in the assessment order and in the remand report and, the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs appellant had not been able to counter the above objections or explain the anomalies by any documentary evidence or clarification. The observations so made is factually misplaced and has been recorded by overlooking written submissions, documentary evidence and, is thus invalid. 3.5 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that findings of the learned Assessing Officer the advance paid by M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh to M/s TPE did not correlate with the sums received by the appellant company from M/s TPE was factually incorrect, wholly misconceived and entirely misplaced. Infact, the sums received by the appellant company have full correlation with the advances received by M/s TPE from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited.
4 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in not allowing the claim of deduction of 15% of total receipts in view of the principles laid down by the Apex Court in the case of Calcutta Company Ltd. reported in 37 ITR 1.
4.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that clause 2 of the agreement dated 23.7.2003 clearly provided that the assessee company has to discharge several obligations and in view thereof, it was highly unjustified and unreasonable to tax the entire receipt as income of the appellant company in the instant assessment year.
5 That the learned Commissioner of Income Tax (Appeals) in law and on facts in holding that the bank interest of Rs. 611.08 represented unexplained investment under section 69 of the Act.
6 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in confirming the adhoc disallowance of Rs. 2,30,882.05/- out of expenditure incurred and, claimed by the appellant company. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 7 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest under section 234B, 234C, 234D and 244A of the Act which on the facts of the case was not leviable. 7.1 That while upholding the levy of interest under section 234B, 234C, 234D and 244A of the Act, the learned Commissioner of Income Tax (Appeals) has failed to appreciate submissions made by the appellant to establish that no interest is liable on the facts of the case of the appellant and thus interest confirmed was not in accordance with law.
7.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that even otherwise, no interest was leviable after such sum had been duly offered to tax vide letter dated 01.04.2006 and thus interest levied and, sustained mechanically is illegal, invalid and, not sustainable.
It is, therefore, prayed that, it be held that income declared by the assessee of Rs. 4,10,20,996.81 represented sums received by the appellant company under an Agreement with M/s TPE for providing support services during implementation of their contract dated 29.7.2003 with M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh and, as such, the aforesaid sums could not be held to be unexplained investment under section 69 of the Act. It be further held that, other disallowances/additions made together with interest levied are unsustainable and, therefore be directed to be deleted. It be also held that the income declared by the appellant in the returns of income filed on 21.08.2006 and, 12.2.2007 was voluntary and appeal of the appellant-company be allowed."
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
5. The brief facts are that the assessee company had filed original returns of income for AYs 2004-05 and 2005-06 as under:
Assessment year Date of Filing of Total income Return of declared income (Rs.) 2004-05 31.10.2004 31,77,400/-
2005-06 30.10.2005 49,97,160/-
5.1 Thereafter, proceedings were initiated by the AO u/s 147 of the Income Tax Act, 1961 (hereinafter called "the Act') for A.Y. 2004-05 and notice u/s 148 was served upon the assessee on 22.05.2006. In response to the same, the assessee filed return of income on 21.06.2006 declaring income at Rs. 1,86,28,990/- by including income stated to have been earned from providing support services to M/s. TPE, a company incorporated in Russia (hereinafter referred to as 'TPE') under an agreement dated 23.07.2003 during implementation of their contract dated 5.02.2003 with M/s. Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Ltd. (hereinafter referred to as "UPRVUNL") for the latter's ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Obra Project. In the note to the return of income, it was stated as under:
"We, vide our letter dated 1.4.2006, addressed to the Assessing Officer, supplemented by our subsequent letters addressed to him, have disclosed having received payment of U.S. Dollars 23,08,797.84 from TPE (hereinafter TPE), during the previous year ending on 31.3.2004 as advance revenue under our agreement dated 23.7.2003 with them, for providing support services to TPE during implementation of their contract dated 5.2.2003 with Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Ltd. (hereinafter UPRVUNL) for letter's Obra Project.
The implementation of the said project was originally scheduled to last for 30 months from 5.2.2003 i.e. up till 4.8.2005 (Page 74 of the Paper Book submitted under our letter dated 27.4.2006). However, due to certain impediments its implementation was delayed and the time for completion of Phase I, initially scheduled to be completed in 18 months (supra) up till 4.8.2004, has been extended vide MOU between UPRVUNL said TPE dated 20.4.2006 (Page 72 of the aforesaid Paper Book), by 27 months up till 4.11.2006. The Phases II and III of the project originally scheduled to be completed in 30 months, and since placed under suspension vie MOU dated 20.4.2006, whenever resumed, cannot be expected to be completed earlier than 27 months behind the original schedule i.e. before 4.11.2007. The implementation of the project is thus expected to last at least till 1.11.2007, for a period 57 months. Our own obligation in the project however commenced from 23.7.2003 only and is therefore, expected to last for a total period of 52 months only. Out of these 52 months 8, 12, 12, 12 and 8 months fall in the previous years 2003-04, 2004-05, 2005-06, 200-07 and 2007-08 respectively.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs The advance revenue received during the current previous year 2003-04, with implementations may be received in future, will have to provide for expenses to be incurred during all the previous years 2003-04 to 2008, till 4.11.2007, a total period of 52 months.
Accordingly, as suggested in our letter dated 19.4.2006, out of the advance revenues received during the previous year relevant to the assessment year 2004-05 amounting to US Dollars 23,08,797.84 converted to Indian Rupees @ Rs. 43.39 to a US Dollar at Rs. 10,01,78,738/-, 8/52 parts thereof amounting to Rs. 1,54,12,114/- is allocated for appropriation of profits of the current previous year relevant to the assessment 2004-05. To it is being added the Rupee equivalent of another business receipt of GB Pounds 502/- converted @ Rs. 78.65 to a GB Pound, which works out to Rs. 39,482/-. Against these revenues, no expenses are claimed. The since disclosed income, which was omitted be included in the original return of our income due to a misconception already explained on record, accordingly works out as under:
Advance revenues received during the
current year 10,01,78,738
Allocated to current year & appropriated to its profit (8/52 parts) 1,54,12,114 Add: Other unaccounted receipts 39,482 Total Current Revenues 15,54,51,596 Less Deduction on account of expenses Nil Net income since disclosed in this return of income 1,54,51,596 Un-appropriated advance revenues received in previous years 2003-04, which is carried over for allocation and appropriation to compute the profits of subsequent previous year works out as under:
Advance revenues received during The current year 10,01,78,738 Less: Allocated to current year & appropriated ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs To its profit (8/52 parts) 1,54,12,114 Un-appropriated advance revenue c/f to A.Y.2005-06 8,47,66,624 Reservation:
The inclusion of since disclosed income in this computation of our total income on the basis indicated hereinabove is without prejudice to any other gad available to us, or, as may be necessitated by the circumstances developing during the period the assessment/appellate proceedings may continue."
5.2 Thereafter, on 12.02.2007 the assessee filed another revised return of income showing total income of Rs. 10,80,57,290/- by including additional income represented by the deposits in their bank accounts maintained with the Natwest Bank at London. An explanatory note was also attached with the said return filed on 12.02.2007 which read as under:
"The assessee named above had furnished a Income Tax Original Return on 31.10.04 disclosing an income of Rs. 31,77,400/-. However the said Return of Income was revised on 21.06.06, wherein income was declared at Rs. 1,86,28,990/- in respect to notice dated 22.05.06 u/s 148 of the Act, 1961. The aforesaid return was filed along with an Explanatory Note, which reads as under:-
Not repeated as the same is extracted in Para 7.1.
2. It will be seen that, in the aforesaid Explanatory note, the assessee company on basis of the interpretation of the agreement dated 23.07.2003 and, the decision of the Income Tax appellate Tribunal in the case of OTIS Elevators v DCIT reported in 99 ITD 135, was advised by sh. Girish Shukla, Advocate that the entire sum received in the instant ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs assessment year, cannot be said to have accrued in the instant year and, would only accure, in the previous years relating in the Asstt. Years 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09 on proportionate basis and hence the receipt by itself is not in the nature of income for the Asstt.
Years 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09. However, the assessee company would have no objection, if the aforesaid sum is brought to tax in the instant year.
3. Therefore entire receipt received during the year of Rs. 10,48,44,798.60 under the agreement dated 23.07.03 with M/s T P E, Russia (copy of which is enclosed as Annexure-I) may considered to be taxed as income of the instant assessment year, despite the fact that Sh. Girish Shukla in his opinion, while filing return of income, on his interpretation was of the opinion that sine the entire receipt had not yet accrued and has not yet attained the character of income and, is thus not income for the instant Asstt. Year. Since the assessee company may have no objection of including the entire receipt as income, it only seeks to pray a deduction of 15% of total receipts to be allowed as deduction, keeping in view of the principle laid down by the apex Court in the case of Calcutta Co. Ltd. Vs CIT, 37 ITR 1. Perusal of clause 2 of the agreement shows that the assessee company has to discharge several obligations which has been specified therein. It is therefore, not justifiable to tax the entire receipt as income in the instant year and not to allow any deduction whatsoever from gross receipts. The assessee however, is willing to pay tax on the entire receipts, subject to aforesaid claim. Details of the income received by the assessee under the agreement dated 23.07.03 with M/s T P E, Russia are enclosed as Annexure - II to this return of income. It may be clarified here that assessee company had earlier computed the revenues received during the year at Rs. 10,01,78,738/- on the basis of exchange rate prevailing at the end of the year on the basis of Rule 115A of the Income Tax Act. The aforesaid sum has however now been adopted, which are ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs now computed at Rs. 10,48,44,798.60. This difference is on account of the fact that the assessee company had earlier adopted the exchange rates prevailing at the end of the year i.e. 31.03.04 instead of exchange rate on the date of credit in the account. It would be seen that the total credit in the Bank at London is in Dollars/Sterling Pounds & since the amount have actually been received, itis the exchange rate of the date of receipt which is to be adopted for declaring the total income. Since Natwest Bank Statements have not been received in spite of repeated requests as much the amount are approximate according to TPE remittance made from Moscow (Russia). Thus, as a result, the income offered under TPE Agreement earlier at an income of Rs. 1,54,51,596/- now stands enhanced to Rs. 10,48,44,798.60. Apart there from the assessee company is offering income of Rs. 37,866.73 representing the bank interest/other receipts credited in the account maintained by the assessee company at London. The details of such income are placed as Annexure-III Accordingly, total income offered by assessee company as a result of an agreement with TPE, Russia and other receipts is Rs. 10,48,82,665.33 as would be seen from revised Profit and Loss account enclosed as Annexure-IV.
4. From the aforesaid income, the assessee company has claimed a deduction of Rs. 2,776.07 representing the bank charges debited by the bank. The details of such charges are enclosed as Annexure-V.
5. Accordingly the net income of Rs. 10,48,79,889.26 is being offered in the instant revised return of income. The revised profit and loss account for the financial year 2003-04 is also enclosed as Annexure-IV.
6. Apart from above, following documents are enclosed with this return of income:-
a. Copy of Original Return of Income (Annexure-VI) b. Copy of Original Balance Sheet, Original Profit & Loss Account and Auditor's Report alongwith all the annexure (Annexure-VII) ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs c. Copy of Tax Audit Report (Annexure-VIII) d. Copy of Return of Income filed in lieu of notice u/s 148 of Income Tax Act, 1961 (Annexure-IX) e. Copy of Balance Sheet and Profit & Loss Account as on 31.03.06 alongwith Notes of Accounts (Annexure-X)
7. Details of Traveling and Lodging of one of director of the assessee company, which are self explanatory are enclosed (Annexure-XI)
8. It is prayed that tax on the aforesaid sum may kindly be collected from bank account no. 140-00-21000697 (Currency U. S. Dollars), 18009336 (Currency G.B. Pounds) with Natwest Bank, London and 1096-247000 Deutsche Bank, Ece House, 28, Kasturba Gandhi Marg, New Delhi-110001 of the assessee company, which has been placed under attachment, at the instance of the order of Special Jude, CBI Court, before whom, the assessee is also making a separate request. A copy of order of Special Judge, CBI Court is enclosed as Annexure - XII) and, intimation thereof to us by the Bank is enclosed as Annexure - XIII.
9. The interest of 234B and 234C of the Act has been computed by the assessee with a right of waiver available to assessee under the Act."
5.3 Likewise, assessment proceedings were also commenced for AY 2005-06 by issue of a notice u/s 143(2) of the Act dated 25.07.2006. The assessee furnished a revised return of income on 21.08.2006 declaring total income at Rs. 3,90,10,580/-
including income stated to have been earned from providing support services to M/s. TPE. The said return of income was again revised on 12.02.2007 declaring total income of Rs. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 4,60,13,040/-. Both the above returns of income were appended with explanatory notes which are almost identical to the explanatory notes appended with the returns for AY 2004-05.
5.4 In a nutshell the undisputed position is as under:
Sr. Particulars Assessment Year
No. 2004-05 2005-06
1 Income originally (A) 31,77,400/- 49,97,160/-
declared
2 Income declared in (B) 1,86,28,990/- 3,90,10,580/-
return filed on
21.06.2006 in
response to notice u/s
148 of the Act dated
22.05.2006 for AY
2004-05 and, return
filed on 21.08.2006 for
AY 2005-06
3 Additional income (C)=(B)-(A) 1,54,51,590/- 3,40,13,420/-
declared including
income stated to be
from providing support
services to TPE
4 Income declared in (D) 10,80,57,290/- 4,60,13,040/-
return of income filed
on 12.02.2007
5 Net Additional Income (E)=(D)-(A) 1048,79,890/- 4,10,15,880/-
6 Nature of Income
i) Revenue Received from 10,48,44,798/- 4,10,20,997/-
M/s TPE
ii) Indian Interest Income 37,867/- 611/-
a) Less: Bank Charges 2,776/- 5,726/-
iii) Total 10,48,79,889/- 4,10,15,882/-
ITA No. 1004, 1005/D/2011,
4388/D/14 & Others
Assessment year 2004-05 & Othrs
5.5 In the impugned assessment orders u/s 143(3)/147 for AY 2004-05 and, u/s 143(3) of the Act for AY 2005-06 the AO determined total income of the assessee for the years under consideration as under:
Sr.No. Particulars Assessment year
2004-05 2005-06
1 Total Income Assessed 10,81,70,065/- 4,62,49,650/-
2 Total Addition Made 1,12,775/- 2,36,610/-
3 Nature of Additions
i) Disallowance out of 1,00,000/- 2,30,882.05/-
expenditure incurred
ii) Disallowance out of 10,000/- ------
business expenditure
u/s 14A
iii) Disallowance of bank 2,776/- 5,726.12
charges
5.6 During the appellate proceedings, the assessee, vide letter dated 28.05.2008, filed application for admission of additional evidences under Rule 46A of the Income Tax Rule, 1962 and also filed written submissions vide letter dated 03.06.2008. The AO, (ACIT, Circle 15(1)/Addl. CIT) submitted the remand report on the written submissions vide letter dated Addl. CIT/R-15/2008- 09/1319 dated 15.10.2008. The assessee filed the reply to the above report of the AO vide two separate letters dated 15.02.2010. The learned CIT (Appeals), although admitted the additional evidence; however on merits of the issue he ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs substantially dismissed the appeals and now the assessee has approached the ITAT against the dismissal of the appeals by the Ld. CIT (A).
6. The Ld. AR submitted that ground nos. 1 to 1.4 for AY 2004-05 and 2005-06 pertain to claim of the assessee that the income declared by the assessee company relating to the receipts from M/s. TPE, a semi-government company incorporated in Russia and, credited in Natwest Bank Account, London was 'voluntary'. The Ld. AR submitted that the assessee had maintained two accounts with the Natwest Bank, London bearing account nos. 140-00-21000697 (US dollar account) and 18009336 (Pound sterling account). The assessee did not disclose the above bank account and any income in respect of the receipts in the said accounts in the original returns of income filed for both the assessment years. It was further submitted that the assessee suo moto and voluntarily filed a letter dated 1.4.2006 before the AO indicating its willingness to discharge the tax liability in respect of the credits in the aforesaid bank accounts.
6.1 The Ld. AR further submitted that, vide letters dated 11.04.2006, 19.04.2006, 21.04.2006, 22.04.2006, 27.04.2006 and 20.05.2006, the assessee furnished summaries of ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs transactions in the above two bank accounts indicating the total amounts received therein and the interest accruing in the said bank accounts as well as the outgoings from the above bank accounts including the bank charges. The assessee also computed the resultant surplus/deficit in respect of both the financial years 2003-04 and 2004-05. It was submitted that the details, as furnished to the AO, were based on the entries in the journal maintained by the assessee and the figures reported were subject to correction with reference to the bank account statements which the assessee was still in the process of obtaining from the bank. The Ld. AR vehemently submitted that under the circumstances, the income declared in the returns filed by the assessee firstly on 21.06.2006 for AY 2004-05 and 21.08.2006 for AY 2005-06 and thereafter on 12.02.2007 in respect of the deposits in the bank accounts are prior to detection by the revenue and are voluntary in nature.
6.2 The Ld. AR further submitted that the AO did not accept the claim essentially on the ground that a criminal case, vide FIR RC-
DAI/2006-A-0006 dated 6.3.2006, was registered under the Indian Penal Code and under Prevention of Corruption Act, 1988 against unknown officials of NTPC of India and others which was ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs prior to the letters dated 1.4.2006 to 11.4.2006 filed by the assessee company. The Ld. CIT (A) also rejected the claim of the assessee.
7. The Ld. AR also filed written submissions which are being reproduced for a ready reference:
"1. It is submitted that initiation of the proceedings under section 147 of the Act on 22.5.2006 (kindly see reasons recorded at page 43 to 44 of PB - I) were itself based on the disclosure made by the appellant in the letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 (kindly see pages 26 to 41A of PB - I) and therefore, the conclusion that, the income declared in the return of income filed in response to notice under section 148 of the Act and, in the revised return filed on 12.2.2007 (kindly see pages 52 to 66 of PB - I) was not voluntary, is wholly misconceived and misplaced and contrary to the facts and circumstances of the case and settled interpretation of law and, therefore, unsustainable.
2. It is submitted that, learned Additional Commissioner of Income Tax has failed to appreciate that, six letters declaring the receipts from M/s TPE in Natwest Bank Account as income of the appellant company were filed voluntarily by the appellant and, without any detection of income by the Income Tax Department.
3. It is further submitted that, the fact that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 (kindly see pages Pg 160 to 166 of PB - I) was not in respect of the contract entered by the appellant company with M/s TPE or the contract entered by M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. and thus, the same could not be made a basis to ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs hold that, income declared by the assessee vide letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary. It may be stated here that, entire income as accruing to M/s RAPL on the basis of its contract with M/s TPE and, contract of M/s TPE with M/s NTPC has been declared by M/s RAPL in A.Y. 2006-2007. Infact, this submission has also not even been specifically disputed by the learned AO (see reply dated 12.7.2007 (pages 201 to 219 of PB-I at page 206 to 213))
4. Lastly, the aforesaid income was not declared by the appellant in the original return of income only because it was of the opinion that income was not taxable under the Act and soon it came to know of her obligation, the appellant had duly declared such income in the seven letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 See judgment of the Apex Court in the case of Motilal Padampat Sugar Mills Co. Ltd. reported in 118 ITR
326.This is also evident from the letters dated 27.02.2006 and, 6.03.2006 written by assessee-company to Shri Girish Shukla, Advocate, copies of which are enclosed at pages 745 and 746 of Paper Book-III.
5. Even otherwise, and without prejudice, assuming for the sake of an argument as has been (erroneously) assumed by the learned Assessing Officer that, there was detection of income by the CBI and it was only on account of detection by CBI that appellant had declared such income firstly in the letter dated 1.4.2006 and thereafter, in the seven letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 return of income filed on 12.02.2007, it is submitted that, the same is too misplaced since viz-a-viz the department, income in any case was declared voluntarily by the assessee. Reliance is placed on the following:
a) Bhairav Lal Verma Vs. Union of India reported in 230 ITR 855 (Allahabad) ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
b) K.L. Swamy v. CIT reported in 239 ITR 386 (Mad)
c) Smt. Shantha Devi v. WTO, (1980) 121 ITR 703 (Karn)
d) A.N. Sarvaria v. CWT (1986) 158 ITR 803 (Del)
6. The learned CIT (A) has failed to appreciate that, the fact that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 was not in respect of the contract entered by the appellant company with M/s TPE or the contract entered by M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. and thus, the same could not be made a basis to hold that, income declared by the assessee vide letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary.
7. It will be seen from the reading of the aforesaid, that the said FIR was in respect of a contract between M/s National Thermal Power Corporation (hereinafter referred to as 'NTPC') and M/s TPE (hereinafter refered to as 'TPE') Moscow and has nothing to do with the appellant company. It is submitted that, allegations in the aforesaid letter of rogatory are not in respect of any contract of the appellant either with M/s TPE or contract of M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. (hereinafter referred to as "UPRVUNL"). It may be pertinent to state here that appellant company has a contract with M/s TPE in respect of agreement of TPE with NTPC. No receipts have been received in the instant year in respect of such contracts. In fact, the entire income declared by the assessee in the instant year is in respect of agreement with M/s TPE for services to be provided in respect of contract of M/s TPE with M/s UPRVUNL. It is thus submitted that, the aforesaid allegations have nothing to do with the income received by the appellant in the instant year. It may be stated here that, entire income as accruing to M/s RAPL on the basis of its contract with M/s TPE and, contract of M/s TPE with M/s NTPC has been ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs declared by M/s RAPL in A.Y. 2006-2007. A copy of the return of income filed by M/s RAPL for A.Y. 2006-2007 is placed at pages 644 to 752 of PB-III. Infact, this submission has also not even been specifically disputed by the learned AO. It is submitted that, appellant in the course of assessment proceedings had submitted the same, in its reply dated 12.2.2007 (pages 51 to 66 of PB-I).
8. The appellant even otherwise, and without prejudice further submits that, assuming for the sake of an argument as has been (erroneously) assumed by the learned Assessing Officer that, there was detection of income by the CBI and it was only on account of detection by CBI that appellant had declared such income firstly in the letter dated 1.4.2006 and thereafter, in the seven letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 return of income filed on 2.8.2007. It is submitted that, even this highly arbitrary hypothesis of the learned Assessing Officer is legally unsustainable. It is submitted that, to determine as to whether income declared by the assessee in the return of income was not voluntary or not, what has to be seen is, whether the income was detected by the learned AO or whether the same was voluntarily offered by the appellant and, not that, it was allegedly detected by CBI. In the instant case, it is not in dispute that, learned Officer had not detected such income but it is a case, where income was voluntarily offered by the appellant. It is submitted that, mere fact that CBI had allegedly detected such income though there is no evidence to that effect too, yet the same cannot in law still be made a basis to hold that, return of income filed by the assessee was not voluntary.
9. That further, in rebuttal to the comments so made by the learned AO in its remand report dated 15.10.2008 (at pages 25 to 27 of CIT (A)'s order and so relied on by learned CIT (A) (at page 31 of CIT (A)'s order), it is submitted as follows:
9.1 That bare perusal of comments of learned AO in the remand report would show that, revenue in no manner has ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs established that, declaration of income by the assessee in the return of income for assessment year 2004-05 was not voluntary. In fact, a cursory look of the comments would also show that, the learned Officer and CIT (A), though has devoted as many as 8 pages, but in doing so, in the respectful submission of appellant the learned officer appears to have misdirected himself and, overlooked the factual substratum of the case.
9.2 It is submitted that, the aforesaid conclusion of the revenue is essentially based on the erroneous assumption that, the return of income was filed after the action was taken by CBI. It is submitted that, it is a matter of record that, no action whatsoever had been taken by CBI in respect of the sum received and, credited to bank account in the instant assessment year. In fact, it is submitted that, a criminal case registered under the Indian Penal Code and the Prevention of Corruption Act against unknown officials of NTPC of India and others.
9.3 It will be therefore seen from the reading of the aforesaid FIR/ letter of rogatory that this was in respect of a contract between M/s National Thermal Power Corporation (hereinafter referred to as 'NTPC') and M/s TPE (hereinafter refered to as 'TPE') Moscow and has nothing to do with the appellant company. It is submitted that, allegations in the aforesaid letter of rogatory are not in respect of any contract of the appellant either with M/s TPE or contract of M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd.
(hereinafter referred to as "UPRVUNL"). It may be pertinent to state here that appellant company has a contract with M/s TPE in respect of agreement of TPE with NTPC. No receipts have been received in the instant year in respect of such contracts. In fact, the entire income declared by the assessee in the instant year is in respect of agreement with M/s TPE for services to be provided in respect of contract of M/s TPE with M/s UPRVUNL. It is thus submitted that, the aforesaid allegations have nothing to do with the income received by ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs the appellant in the instant year. It may be stated here that, entire income as accruing to M/s RAPL on the basis of its contract with M/s TPE and, contract of M/s TPE with M/s NTPC has been declared by M/s RAPL in A.Y. 2006-2007. In fact, this submission has also not even been specifically disputed by the learned AO. It is submitted that, appellant in the course of assessment proceedings had stated the above submissions even in reply dated 12.7.2007 (pages 201 to 219 of PB-I at page 206 to 213), which have not been shown to be incorrect in any manner. In fact, the learned Assessing Officer has not even made any comments in this regard. 9.4. The learned Officer in this context has held that appellant cannot take the plea of ignorance of law because the appellant company filing its regular return of income and also deriving income from consultancy. It is submitted that, such an observation is contrary to the judgment of the Apex Court in the case of Motilal Padampat Sugar Mills Co. Ltd. reported in 118 ITR 326, wherein it was held as under:
....
9.5 It is further submitted that, the learned AO is factually incorrect to suggest that, appellant came to know of the tax liability in May'2003. In fact, the appellant has consistently stated that, she became aware of the tax liabilities only in February'2006. This would be evident from the first letter written on 1.04.2006 and, thereafter in various replies furnished to the learned AO. It is further submitted that, mere mis-interpretation of the statutory provisions cannot lead to an assumption above lack of bonafides of the assessee. The assessee seeks to further clarify here that, in the preceding years, the assessee did not include any income credited in the Bank Account at London, as according to the opinion of the assessee, the same was earned outside India and, therefore not taxable in India. This is also evident from the letters dated 27.02.2006 and, 6.03.2006 written by assessee-company to Shri Girish Shukla, Advocate, copies of which are enclosed at pages 745 and 746 of the Paper Book-
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs III. In fact, in the letter dated 27.2.2006 written by the assessee to Mr. Girish Shukla, it has been stated as under:
......
9.6 It is further most respectfully submitted that, the observation that the assessee had been providing services since 1995 and, the assessee had not offered any income as and when it accrue till 1.4.2006 goes to support the contention that it was only on discussion with Sh. Ram Jethmalani, Senior Advocate, the assessee came to know of her obligation under the statutory provisions of the Act and, tax liability on such income. It is submitted that, the situation would have been entirely different had assessee offered any such income prior to 1.4.2006 and, the income declared by the assessee in the instant year would not have been offered.
It is thus a clear case of ignorance of law till 1.4.2006, as would be evident from detailed submissions made separately. It is thus submitted that, once the assessee came to know of his liability to tax, the assessee voluntarily and, of its own furnished the return of income.
9.7 It is further submitted that, various other reasons stated in paras (v) to (xi) of the remand report are wholly irrelevant consideration and, in no manner suggest or establish for that matter that, income declared by the appellant was not voluntary. In fact, in making the above comments, the learned officer has further failed to appreciate that, to determine as to whether income declared by the assessee in the return of income was not voluntary or not, what has to be seen is, whether the income was detected by the learned AO or whether the same was voluntarily offered by the appellant and, not that, it was allegedly detected by CBI. In the instant case, it is not in dispute that, learned Officer had not detected such income but it is a case, where income was voluntarily offered by the appellant, as would be also seen from the reasons recorded at page 12 of written submissions. It is submitted that, mere fact that CBI had allegedly detected such income though there is no evidences to that effect too, ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs yet the same cannot in law still be made a basis to hold that, return of income filed by the assessee was not voluntary. In fact, if the reasons recorded are perused, it will be self evident that, initiation of proceedings u/s 147 of the Act and, assessment framed are only based on the letter of the assessee filed on 11.04.2006 and as such, both legally and, logically, it ought to be held that, declaration of income was voluntary. This submission is also supported from admission made by the Assessing Officer when he states at pages 753 of Paper Book-III as under:
"That on the basis of information furnished by the assessee through these letters, the AO issued notice u/s 148 on 22.05.2006 directing the assessee to furnish a return of income as it was stated that, income of the assessee had escaped assessment. In compliance to this notice u/s 148, the assessee furnished return on income on 21.06.2006 declaring an income of Rs. 1,86,28,990/- which was duly accompanied by computation of income. Thereafter again, the assessee revised its return of income, which was filed on 21.06.2006. In response to section 147/148 on 12.02.2007 u/s 139(5) of the Act."
10 In view of the reasons stated above, it is submitted that, it be held that, income declared by the assessee relating to receipts from M/s TPE and, credited in Natwest Bank Account at London in the Assessment Years 2004-05 and 2005-06 are voluntary.
8. On the other hand, the Ld. CIT DR relied upon the order of the authorities below and requested that the claim of the assessee be rejected. In the written submissions filed by the Department, it was stated as under:
"During the hearing proceedings before Hon'ble F-Bench, ITAT, Delhi on 08.01.2008, the ld. Counsel of the assessee ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs argued that the return of income filed by the appellant on 12.02.2007 should be accepted as valid, and voluntary return of income. The ld. Counsel of appellant further argued that the AO issued notice u/s 148 of the Act because of the letters filed by the assessee showing its credit entries in the NAT West Bank, London. That the appellant had suo-motto come forward to reveal its income and offered the same for taxation.
In this regards, it may be mentioned that a criminal case vide FIR RC-DA/2006-A-2006, dt. 06.03.2006 was registered under IPC and Prevention of Corruption Act, 1988 against unknown officials of NTPC of India and others. In the said FIR, it has been observed "it is also learnt that in consideration of the award of contract of M/s FGUP 'VO' TECHNOPROMEXPORT certain officials of NTPC by abusing the official position received illegal gratification kickbacks in excess of IS $20 million from M/s FGUP 'VO'TECHNOPROMEXPORT which have been paid into the bank account of Ravina & Associates in United Kingdom in 2005.
A letter rogatory/letter of request for assistance for investigation in UK was issued by the Court of Special Judge, Tis Haari Court, Delhi in the above said CBI case on 22.3.2006. A restraint order was served on the Natwest bank on 20.4.2006 by the Crown Prosecution, London. The account restrained was in the name of Ravina & Assocaites held with natwest bank, A/c No. NXNBCSL-USD-00, sort code 60-18-20. The signatories to the bank account are Ravina Khurana and Mrs. Govinda Khurana."
It may also be noted that all the earlier returns of income i.e. for the Assessment year 2005-06 were revised after 01.04.2006 i.e. after a search was conducted by the CBI in the case of assessee on 28.3.2006 (reference assessment order of the A for AY 2006-07-Annexure-1). A letter rogatory/letter of request for assistance for investigation in UK was issued by the Court of Special Judge, Tis Hazari ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Courts, Delhi in the above said CBI case on 22.03.2006. A restrain of order was served on the Natwest bank on 20.04.2006 by the Crown Prosecution, London. The account restrained was in the name of Ravina and Associates, held with the Natwest Bank St. Johns Wood Branch London, A/c No. NXNBCSL-USD-00 sort code 60-18-20. The signatories to the bank account are Ravina Khurana and Mrs. Govinda Khurana."
In the original return of the assessee, it enclosed auditors report dated 02.08.2004 in form 3CA and 3CD where the auditors had certified that the balance sheet and profit and loss account dealt with in their report were in agreement with the books of accounts. The auditors further opined that proper books of accounts as required by law have been kept by the company so far as appeared from there examination of the books. In 3CD reports, the nature of business or profession has been stated to be travel agent. The income declared in the original return is that of air ticketing business for Aerofloat (Russian Air Lines).
In fact, in the tax audit reports, the auditors had mentioned that "these receipts from M/s Technopromexport and expenditure in foreign currency were never recorded by the assessee in its books of accounts for the assessment year 2004-05 and 2005-06. These transactions in foreign exchange were only observed at the time of audit for the assessment year 2006-07 from the letter, Dt. April 01, 2006 by the assessee company through its Directors." The assessee company has claimed the receipts from TPE and other receipts in its NAT West Bank A/c in London, as business receipt. The assessee did not disclose the bank accounts and the receipts of money in the original return or in the books of account maintained by it. It is apparent that after the above bank accounts of the assessee got detected by the CBI through an FIR and subsequent search, the assessee furnished those bank accounts to the AO. The AO had analysed in the assessment order why receipts in NAT ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs West Bank of assessee in London should be considered as the assessee's its unexplained money u/s 69A of the Act and why the same should not be treated as voluntary disclosure of the income. The assessee failed to explain the reason for receipt of such huge amount in its foreign bank accounts."
9. We have heard the rival submissions and have also perused the material on record. The undisputed facts are that in the original return of income filed by the assessee for the instant years, the income representing the deposits in the bank account with Natwest Bank, London was not declared by the assessee. It is also undisputed that the said income was subsequently declared in the returns of income furnished during the re-
assessment proceedings and also assessed in the impugned orders of assessment. There is no dispute as to taxability of income. The claim of the assessee is that the said income was duly disclosed voluntarily by letter dated 1.4.2006 addressed to DCIT, Company Circle-15(1), New Delhi. In the said letter, it was stated as under:
"1. We are a company engaged in providing technical and support services to all sorts of business enterprises in global market and are assessed to income tax within your jurisdiction, our PAN is AAACR4696N.
2. We entered into an understanding with M/s. TPE Moscaw for providing them technical services preparatory to their bid for the UPRVUNI, OBRA, R & M, TPS and BARH, ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs NTPC projects and support both thermal power plants projects and support services during implementation of their contracts in India in culmination thereto.
3. All the services at the preparatory stages, which are since over, were rendered by us out of India. We have received on account payments from our clients namely TPE, Moscow, which comprises apart from our dues for our involvement at the preparatory stage, advances towards services to be rendered during implementation stage of the above said projects. We have received all these payments by bank transactions in foreign exchange outside India in our accounts with Nat West Bank at London in Account Nos. 140-00-21000697, Sort Code 60-18-20 and Current account no. 18009336, Sort Code No. 60-18-20. We had opened this account only to facilitate and ensure speedy collection of remittances from our clients and remittances of payment to our suppliers.
4. We had always in the past carried an impression that income arising from providing technical and support services to the foreign enterprises in foreign exchange is not liable to be included in our income for taxation in India. We had, therefore, never in the past included the still unascertained profits accruing to us from such operations in our income returned for taxation in India. These profits have not yet been distributed either. We nevertheless have regularly maintained accounts of these transactions separately.
5. However, while we were discussing our Russian business with a well-wisher Mr. Ram Jethmalani at the fag end of February, 2006, we were shocked to learn that income arising from providing technical and support services in foreign exchange was liable to be included in our income for taxation in India. We have been advised that as a resident of India, we are liable to tax in India on our global income subject to exceptions and concessions provided by the various Double Taxation Avoidance Agreements India ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs has various countries/States. We have also been advised to take immediate steps to inform the RBI.
6. Immediately on being advised of the correct position of law in this regard, we have instructed Nat West Bank, London to close down our accounts with them and remit the money held in balance with them to our accounts in India. We have already initiated steps to ascertain our true profits from these foreign operations. We are firmly resolved to discharge our liability to tax in full in respect of our income in all the years we have been operating outside India, which, although inadvertently, has remained undischarged due to our unfortunate ignorance of correct position of law in these regards.
7. We have been waiting all these days for the money to be credited in our account in India to enable us to pay advance tax in respect of our income for the fiscal year 2005- 06 and also to pay up our tax liability in respect of the earlier years together with interest due for the delayed payment of taxes. Even after waiting for all these days since 6th March, 06 when instructions were first issue to Nat West Bank, London to remit our monies held in balance with them to our account in India we have not received any intimation of remittance from them (copies enclosed)
8. Accordingly, we have to request you to intercede in the matter and arrange for the collection of taxes, which may be determined as due from us, from Nat West Bank, London in satisfaction of our tax liability provisionally. We are ready and willing to execute the requisite authority in any form advised by you as may serve all desired end.
9. I hereby declare that all the monies in the said bank stand assigned to the Government of India in trust for paying away my tax liabilities when precisely determined.
10. To discuss our tax liability and work out the modalities for its prompt, effective and full discharge, we will be obliged to have an audience with you, which may kindly be granted ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs and intimated to me at my address indicated above at your earliest.
We will also appreciate if a lenient view may be taken of the incidental inadvertent lapse on our part in the matter."
9.1 Furthermore, in another letter dated 11.4.2006, it was submitted as under:
"Kindly refer to our letter dated 1st April, 2006 on the above subject and the audience our authorized representative had with you on 5.4.2006.
2. In furtherance thereto we are submitting herewith, as annexure 'A-1 & A-II*, summaries of transactions in our two bank accounts maintained by us with Nat West Bank, London, separately indicating the total amounts received therein from our clients and the interest accruing in the bank account, total outgoings there from on account of various expenditure incurred in connection with our business, including bank charges and the resultant surplus in respect of all the fiscal years from 2003-04 to 2005-06, indicated in the currency in which these accounts are maintained. Annexure "A-III" being submitted is a consolidated summary of annexures "A-I & A-II" indicating the aggregate surplus in Indian rupees. ( Copies enclosed at Pages 137 to 139 of ATR)
3. Annexure "A-1 & A-II" have been prepared by us based on the entries in the Journal maintained by us for our foreign ventures and the figures reported are subject to correction with reference to the bank account statements we are trying to arrange from the bank. In the meanwhile, relevant extracts from the said Journal are being submitted herewith in its entirety.
4. The surpluses so indicated indicate the maximum quantum of our income in the relevant years from our hitherto unreported foreign ventures that can be assessed to tax. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
5. Needless to mention here that the receipts in our bank accounts largely comprise advances on our clients account provided to us for meeting expenditure necessary to be incurred by us in future in several years during which the implementation and execution of our clients' contract in India may continue and we are in law and equity entitled to provide for these.
6. We hope that the information provided herein will enable you to proceed with the determination of our tax liability in respect of our income from hitherto unreported foreign ventures.
7. Accordingly, we have to request you to kindly assess our income from these foreign ventures on some just and reasonable basis and determine the tax we are liable to ay in respect thereof.
In you need further details, the same will be provided on hearing from you"
9.2 Subsequently, in letters dated 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006 and 23.5.2006, further information was filed to support the claim of the assessee. It has been contended that initially the income was offered on the advice of Shri Girish Shukla that on interpretation of the agreement dated 23.7.2003 and decision of the ITAT in the case of Otis Elevators vs. DCIT reported in 99 ITD 132, he was of the opinion that entire sum could not be said to have accrued in the instant years but would accrue from AY 2004-05 to 2008-09. However, later the entire sum was offered for tax.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 9.3 In the reasons recorded, the Assessing Officer, while assuming jurisdiction, for issue of notice under section 148 of the Act, stated as under:
"22/5/06- Return showing total income of Rs. 31,77,400 has been filed on 31/12/04 which has been processed u/s 143(1) on 31/3/05. Total income is computed as under:-
1. Income from Business & Profession . - Rs. 22,17,179
2. Short term capital gain - Rs. 9,60,218 Dividend income of Rs. 1,97,361 has been claimed exempt u/s 10 of the Act.
Perusal of Form 3CD filed with the return of income shows that the assessee carried on business & profession of 'travel agent' only. Details of receipts shown as assessable under business head are as under:-
1. Interest income - Rs. 14,40,204 - on deposits with Syndicate Bank, F-40, Connaught Place, New Delhi.
2. Professional tax - Rs. 12,50,000 - Received from Sohail Khan (Services - ticket ) Production ½ Coral Reaf, Bandra, Mumbai
3. Commission - From Aeroflot - New Delhi
- From Aeroflot - Mumbai
- From Bandhu Travels (P) Ltd.
- From ISI Travel Services Private Ltd.
- New Airways Travels (Delhi) DUF Ltd.
Perusal of letter dated 11/4/06 filed in this office on 13/4/06 shows that these are credit entries (deposits) of Rs.
10,49,03,405/- in A/c No. 140-00-21000697 with Nat West Bank London (Currency US $) and in A/c No. 18009336 with Nat West Bank London (Currency GB Pounds) Perusal of extracts from journal register from 1.4.03 to 31.3.04 filed with the shows that the sum of Rs. 10,49,03,405/- has been received from TPE, Russia. This receipt has not been included in its receipts as shown in return of income and thus not offered for tax. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs On the facts and in the circumstances of this case as discussed above, I have reason to believe that income of Rs. 10,49,03,405/- chargeable to tax preceding Assessment Year 2004-05 has escaped assessment within the meaning of section 147 of I.T. Act 1961.
Issue notice u/s 148 for Assessment Year 2004-05 immediately."
9.4 The above reasons recorded establish that the Assessing Officer did not have any other information except disclosure made by the assessee in communication dated 1.4.2006 and 11.4.2006. In fact, in the reasons recorded as extracted above, it is the admitted position that action under section 148 of the Act was taken on the basis of letter dated 11.4.2006 furnished by the assessee which also refers to the earlier letter dated 1.4.2006 furnished by the assessee. In such circumstances, once the Assessing Officer himself admits that the initiation of proceedings was based on the letter furnished by the assessee, it cannot be validly suggested that the declaration of income by the assessee vis-a-vis the Income Tax Department was not voluntary. The case made out by the revenue against the assessee was that a criminal case was registered, vide FIR No. FIR RC-DAI/2006-A-0006 dated 6.3.2006, under the Indian Penal Code and the Prevention of Corruption Act against unknown officials of NTPC of India and ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs others. It is seen that FIR filed on 6.03.2006 has absolutely no connection with receipts received by the assessee company in the year under consideration but to receipts for the Assessment Year 2006-07 which were duly declared in the original return for Assessment Year 2006-07. This aspect has not been disputed by the revenue in these appeals. Para 2.7 and 2.8 of the aforesaid FIR state as under:
"2.7 That it is further alleged that there were technical objections in respect of the bid of M/s. FGUP 'VO' TPE but the contract was still awarded to M/s FGUP 'VO' TPE. It is also reliably learnt that in consideration of the award of contract to M/s FGUP 'VO' TPE, certain officials of NTPC by abusing their official position received illegal gratification/kickbacks in excess of US$ 20 million from M/S FGUP 'VO' TPE' which have been paid into the bank account of Ravina Associates in United Kingdom in 2005. Reliable information exists that the said bank account is being maintained and operated in United Kingdom directly/indirectly by certain persons for the benefit of accused public servants in India/others. 2.8 That Interpol-London vide their message dated 1-2-05 informed Interpol-New Delhi that in May, 2005 on account held by Ravina Associates received a deposit in excess of US$ 20 million from a Russian Entity TPE. The deposit was payment for assisting TPE in obtaining a contract with Indian National Thermal Power Corporation for a Super Thermal Power Project in Barh region and that the details could be made available subject to a formal request. It was further informed that the funds were available for restraint if sought and the account details would be provided to the relevant United Kingdom Authority upon receipt of a formal request."
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 9.5 A perusal of the above shows that this FIR was in respect of a contract between M/s National Thermal Power Corporation (hereinafter referred to as 'NTPC') and M/s TPE, Moscow and had nothing to do with the receipts received by the assessee and declared as income in the returns of income for the instant year.
9.6 It has been submitted by the Ld. AR that though the FIR was filed on 6.3.2006, the assessee became aware of the same only on 2.5.2006, on receipt of a fax from Central Confiscation Branch, Crown Prosecution Service, London. It has also been submitted that, prior thereto, the assessee had only received on 29.04.2006, a letter from the Natwest bank dated 25.04.06 in the case of M/s Ravina & Associates P. Ltd., wherein they had intimated that operations in the bank accounts of the assessee and M/s Ravina & Associates P. Ltd. had been temporarily 'suspended' on account of restraint order served on the bank on 20.04.2006. It has been further contended that it was only after discussion with Sh. Ram Jethmalani, Senior Advocate in February 2006, that the assessee came to know of its obligation under the statutory provisions of the Act and, tax liability on such income. The learned counsel of the appellant has also vehemently submitted that, once the assessee came to know of ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs its liability to tax, it voluntarily approached the revenue authorities. Letters dated 27.02.2006 and 6.03.2006 written by assessee to Shri Girish Shukla, Advocate, were also highlighted.
In the letter dated 27.2.2006, it has been stated as under:
"Dear Mr. Shukla, As explained to you on the phone I am sending all the relevant papers relating to my company's tax assessment. When I discussed my Russian business with our family friend Mr. Ram Jethmalani I was quite shocked to learn that my foreign exchange earnings are also liable to taxation in India.
He has advised me to see you and advice a proper return and discuss my tax liabilities. Most of the income is derived in the current year that should present no problem as far as I understand.
The much smaller amount is earlier and kindly do whatsoever is required to be done under the law to regularize the income.
Kindly look into all aspects of the mater and see that all relevant law is complied with..."
9.7 It has also been submitted that the assessee had approached the bank several times since March 2006 i.e. on 6.03.2006 28.03.2006, 30.03.2006 12.04.2006, 13.04.2006, 19.04.2006, 22.04.2006 and 25.04.2006 for the closure of the bank accounts, obtaining the bank statements and remitting the funds to India. The submission was that letters addressed to the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs bank in March 2006 were only as a result of the discussions held by the assessee with the Advocate in February 2006 who apprised them of the liability to pay tax in respect of the sums credited in the Natwest Bank account at London. In light of the aforesaid, it has been argued that the income was voluntarily offered firstly vide letters dated 01.04.2006 and 11.04.2006 and thereafter in the returns of income. The Ld. counsel for the assessee has further submitted that the belief of the assessee was bona fide is evident from the fact that sums received outside India from the foreign entities were not disclosed in preceding assessment years and such receipts have not been disclosed as income in the instant year. It has, thus, been claimed that it is a case of ignorance of law till 1.4.2006 and, once the assessee came to know of its liability to tax, the assessee voluntarily and, on its own provided the particulars of income.
9.8 It has also been argued that during the assessment proceedings, the assessee, vide reply dated 12.07.2007, had specifically requested the Assessing Officer that voluntary disclosure was not in consequence of action taken by the CBI but on account of legal opinion obtained from Shri Girish Shukla and Sh. Ram Jethmalani which fact was also stated in the letter ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs dated 1.4.2006 and it was contended that no material rebutting the above explanation has been placed on record by the revenue.
The revenue, in the appellate proceedings either before the Ld. CIT (A) or before us, has not placed on record any material to rebut the aforesaid specific evidences placed on record to support the claim that the disclosure was voluntary in as much as it was on account of the letters dated 1.4.2006 and 11.4.2006 that the action had been taken against the assessee to assess the income disclosed in the said letters by the Assessing Officer. The fact of the FIR filed on 6.3.2006 has not been shown in any manner to be in the knowledge of the assessee by any evidences placed on record. It is our considered opinion that a mere hypothetical assumption, that since the date of FIR is 6.3.2006 and letters were furnished by the assessee on 1.4.2006 and 11.4.2006, cannot be a ground to assume to the contrary. It is well settled position of law that suspicion, howsoever strong, cannot partake the character of evidence. The Hon'ble Supreme Court in the case of Uma Charan Shaw & Bros. Co. v. CIT reported in 37 ITR 271 (SC) has held as under:
"Taking into consideration the entire circumstances of the case, we are satisfied that there was no material on which the Income-tax Officer could come to the conclusion that the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs firm was not genuine. There are many surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof in these matters. It was contended that there were three orders, viz., the order of assessment, the order under section 25A and the one under section 26A, and merely reversing the order under section 26A cannot be of any consequence particularly as the order under section 25A stands. We are not concerned in these appeals in deciding what advantage will accrue to the appellant firm. That is its look-out, and we do not, therefore, accept the argument.
The result is that the order of the Appellate Tribunal is reversed. The firm shall be registered under section 26A of the Act for the assessment year 1948-49. The appeal against the order of the High Court need not be considered, since it is not necessary to pass any orders thereon. There will be no order in that appeal.
9.9 Moreover, it is also pertinent to note that once there is no dispute as to the taxability of income, the issue becomes academic. However, since the same has been raised, the issue has been examined and is found as a matter of fact that the edifice of the present proceedings was communicated by the assessee and not by any other authority. In absence of any other communication having been placed on record, the reasons recorded clearly point out that action under section 148 of the Act was based on the communication by the assessee and claim of the assessee is tenable and has merit and, therefore, accepted ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs as such. Having regard to the above, the grounds raised by the assessee are allowed.
9.10 Accordingly grounds nos. 1 to 1.4 raised in ITA No. 1004/Del/2011 for Assessment Year 2004-05 and ITA No. 1005/Del/2011 for Assessment Year 2005-06 are allowed.
10. Grounds nos. 2 to 2.1 of Grounds of Appeal for AY 2004-05 and AY 2005-06 relate to the claim of the assessee that the revised returns furnished during the assessment proceedings were valid returns.
10.1 The relevant facts are that return was filed in response to notice under section 148 of the Act on 21.06.2006 declaring an income of Rs. 1,86,28,990/-. This return of income filed was revised on 12.02.2007 declaring an income of Rs. 10,80,57,290/-
The Assessing Officer has held that since the revised return, filed on 12.2.2007, was after the expiry of period of one year from the end of the assessment year i.e. 31.3.2006 the same was non est in terms of the provisions of section 139(5) of the Act. As regards AY 2005-06, the revised return of income filed by the assessee on 12.02.2007 has been held to be non est by the AO on the ground that revised return can be filed only to cure an omission or wrong statement i.e. when it was inadvertent or accidental and, not ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs deliberate. The Ld. CIT (A) rejected the claim by observing as under:
"7.3 I have carefully considered the assessment orders and the submissions made by the Ld. AR on the above issue. It needs to be emphasized here that subsection (5) of section 139 of the Act relating to filing of "revised" returns reads as under:
"If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier".
Thus any return to qualify as a "revised" return under the Act, must satisfy two conditions, viz (i) it should be on account of "discovery" of "any omission or wrong statement"
in the original return, which presupposes a voluntary act on the part of the assesseee to remedy any bonafide mistke in the original return after discovering the same; and (ii) it must be filed within the time limit of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. In the instant case, the appellant's claim of filing "revised" return is not at all acceptable as the same, as discussed above, has not been done voluntarily to correct any bonafide mistake and for AY 2004-05 has also been filed much after the expiry of the prescribed time limit. Considering the above, the above issue of the appellant is rejected."
10.2 In the written submissions dated 16.1.2018, before us, the assessee has contended as under:
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs "10. It is submitted that, the basis for holding the revised return of income filed by the appellant on 12.2.2007 is non est is that revised return filed on 12.2.2007 was after the expiry of period of one year from the end of the assessment year i.e. 31.3.2006 as has been provided under section 139(5) of the Act. It is submitted that, while arriving at the aforesaid conclusion, the learned Officer has overlooked the detailed reply filed by the appellant on 28.2.2007 (pages 191 to 197 of Paper Book-I). The relevant portion of the aforesaid reply are extracted hereunder:
3. It is evident from the aforesaid statutory provisions that, return of income filed by the assessee in response to notice u/s 148 of the Act is to be treated as if such return were required to be furnished u/s 139 of the Act and, the provisions of the Act shall, so far as may be, apply accordingly. It is further submitted that, perusal of the provisions contained in section 139 of the Act would show that, the assessee is required to furnish return only in section 139(1) of the Act; other provisions contained in section 139 of the Act are voluntary and, not obligatory i.e. they do not require the assessee to furnish a return u/s 139 of the Act. It may be added here that, prior to 1-4-1989, the only difference in the provisions was that, a notice calling for the return was to be issued containing all or any of the requirements which may be included in a notice under section 139(2) of the Act deeming it a notice under that section, while present provision mandates issuance of notice under section 148 and refers to "as if such return were a return required to be furnished under section 139".
3.1 Therefore, once the return filed in response to notice u/s 148 of the Act is a return u/s 139(1) of the Act, it cannot validly be held that, such a return cannot be revised u/s 139(5) of the Act, as has also been correctly noted by your goodself in the captioned letter."
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 10.3 On the other hand, the Ld. CIT DR has relied upon the order of the authorities below and requested that the claim of the assessee be rejected.
10.4 We have considered the rival submissions, perused the material on record and the contentions raised by both the sides.
Section 139(5) of the Act states as under:
"If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier."
10.5 On a perusal of the aforesaid provisions, it is noted that if any person, having furnished a return under sub-section (1) or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year, whichever is earlier. The primary case of the revenue is that the revised return postulates discovery of any omission or any wrong statement in the original return of income which presupposes a voluntary act on the part ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs of the assessee to remedy any bona fide mistake in the original return after discovering the same. It was thus held by the Ld. CIT (A) that since the returns were not filed voluntarily and were not to correct any bona fide mistake, therefore, the claim of revised return is not maintainable. We have already held, while deciding Grounds 1 to 1.4 that returns filed by the assessee were voluntary and therefore, to that extent to the basis adopted by the revenue is held as incorrect and is rejected.
10.6 As regards the period of limitation, it is noted that the original return for assessment year 2005-06 was furnished on 30.10.2005 and the revised return was furnished on 21.8.2006 which was further revised on 12.2.2007. The limitation provided under section 139(5) of the Act is one year from the end of the relevant assessment year. This means that the revised return could be filed up to 31.3.2007 and since the last revised return was filed on 12.2.2007, therefore, such revised return filed on 12.2.2007 is held to be valid. Further, for assessment year 2004- 05, the claim of the assessee is that a return of income had been furnished on 21.6.2006 in response to the notice dated 22.5.2006 under section 148 of the Act and the revised return filed on 12.2.2007 was in respect of return furnished in response ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs to notice under section 148 of the Act. It has been contended that the return filed in response to notice under section 148 of the Act was a return under section 139(1) of the Act and, therefore, revised in terms of section 139(5) of the Act. Having considered the above argument, we find substantial force in the same.
Section 148(1) of the Act stipulates that section 139, so far as is applicable, shall apply in respect of a return furnished in response to notice under section 148 of the Act and, therefore, a return voluntarily filed on 21.6.2006 can be revised in terms of section 139(5) of the Act in response to notice under section 148 of the Act. The Hon'ble Apex Court in the case of R. Dalmia v.
CIT reported in 236 ITR 480 (SC) has held as under:
"We do not doubt that assessment under section 143 and assessments and reassessments under section 147 are different, but in making assessment and re-assessments under section 147 the procedure laid down in sections subsequent to section 139, including that laid down by section 144B has to be followed"
10.7 Moreover, it is also pertinent to note that once there is no dispute as to the taxability of income, the issue becomes academic. However, since the same has been raised, the issue has been examined and is found as a matter of fact that the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs edifice of the present proceedings was communicated by the Also, the Hon'ble Punjab and Haryana High court in the case of Mrs. Rama Sinha vs. CIT reported in 256 ITR 481 (P&H) has held as under:
"Once a return in pursuance of notice under section 148 of the Income Tax Act' 1961 is filed the provisions of this act shall so far as may be apply accordingly as if such return were a return required to be furnished under section 139. The position was the same even prior to the amendment of section 148 with effect from April 1, 1989. The unamended provision also provided that on issue of a notice under section 148, the provisions of the is act shall so far as may be apply accordingly as if a notice were a notice issued under sub section (2) of section 148 has to be treated as if it has been filed under section 139. That being so, the procedural provisions for making an assessment under section 143(3) of the act also come into play."
10.8 Having regard to the aforesaid findings, grounds raised in ground nos. 2 to 2.1 in ITA No. 1004/Del/2011 for Assessment year 2004-05 and grounds nos. 2 to 2.1 in ITA No. 1005/Del/2011 for Assessment year 2005-06 by the assessee are allowed.
10.9 Ground Nos. 3 to 3.5 are regarding the treatment of receipts of Rs. 10,48,44,798/- in AY 2004-05 and Rs.
4,10,20,996.81 in AY 2005-06 as unexplained investment under ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs section 69 of the Act. The Assessing Officer, in the order of assessment for assessment year 2004-05, has held the above additional income to be unexplained money under section 69A of the Act for the following reasons:
"10. Receipts in NATWEST BANK - unexplained money u/s 69A The assessee company has claimed the receipts from TPE and other receipts in NATWEST Bank A/c in London, as business receipt. The assessee did not disclose the bank accounts and the receipts of money in the original return or in the books of account maintained by it. These receipts have been incorporated in its profit and loss account filed with the return of income on 12.2.07. The assessee has not been able to furnish copy of invoice raised as per terms of agreement with TPE, regarding the receipts in its London account. The agreement did not provide for payment of any advance. Assessee has not explained the source of receipts in GB Pounds. The assessee has not furnished any confirmation from TPE that the payments made in the NATWST account was on account of Obra Project. Merely filing of copy of agreement between TPE and RAPL and a few correspondence in this regard cannot lead to the conclusion that the receipts were commission on account of the Obra Project. In fact, it has been admitted that the Obra Project did not take off and on MOU had to be signed on 20.4.06 between TPE and UPRVUNL whereby time for completing Phase I of the project was extended up till 4.11.06.
Information was received u/s 133(6) of the I.T. Act on 28.12.07 from UPRVUNL Obra regarding amount paid by UPRVUNL to TPE Russia during the period 2003-04. The amount paid during the period in Rupees is as under:-
Date Amount (Rs.) Remarks 17.7.03 67,484,970 Invoice No. 1 ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs dt. 18.7.03 25.7.03 118,795,933 as 10% advance 186,280,903 29.03.04 21 816,915 Invoice No. 2 dt. 23.3.04 29.03.04 28,588,217 Total 504,05,132 Total for FY 2003-04 Rs. 236,686,035/-
The assessee company has claimed to have received total of Rs. 104,844,798/- in Oct. 2003, which comes to 56.28% of the amount paid by UPRVUNL to TPE Russia till October 2003. This is no way correlates with the supposed payment by TPE to the Agent (RAPL) at the rate of 12.25% of the price of the contract. Thus, it cannot be said that the amounts received from TPE/others in its Natwest bank account is on account of the agreement of assessee with TPE relating to Obra project.
Assessee has filed copies of correspondence with D.M. Krasstov, Resident Representative of TPE in India, regarding visa support for Russian exports for execution of the contract of Obra 'A' TPS package I (5x50 MW), Refurbishment of Obra 'A' & 'B' TPS-Package III (5x200 MW) - Revised price bids by UPRVUNL etc. But, such correspondence do not seem to justify, such huge payments in the account of the assessee company, during the year. In such circumstances, the receipts in the NATWEST Bank account of Rs. 104,882,665/- is treated as unexplained money u/s 69A and income from other sources. As these receipts were not disclosed in the original return it is treated as undisclosed income from other sources and is added to assessee's company"
10.10 Further in order for assessment year 2005-06, the Assessing Officer has held as under:
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs "As per para 2.6 of the agreement with TPE, assessee company was required to submit quarterly reports in writing about the performance of its obligations. Assessee was asked to produce these reports. Assessee could submit only one letter dated 16.7.2004, stated to be faxed to the TPE on 16.7.04 detailing meeting held with officials of Energy, UPRVUNL and TPS OBRA on 13-14 July, 2004. This letter does not talk about as to which quarter it pertains to and with no details of job carried out by the assessee company for TPE. Assessee could not submit proof of delivery of this letter to TPE or any reverse correspondence from TPE in this regard. In view of the same, the genuineness of this letter being Quarterly report as mentioned in the agreement with TPE is rejected. The assessee has also not furnished any confirmation from TPE that the payments made in Natwest Account is in account of Obra Project nor produced original agreement with TPE. The assessee further submitted that no invoices were raised by the assessee to the TPE. Further, the counsel stated that the receipts from TPE could not be correlated exactly with the terms and conditions of the agreement. Merely filing a copy of agreement between TPE and assessee and a few correspondences in this regard cannot establish that receipts were commission on account of the Obra project. In fact it has been submitted that Obra project did not take off and an MOU had to be signed on 20.4.06 between TPE and UPRVUNL whereby time for completing phase I of the project was extended till 4.11.2006.
The correspondences filed by the assessee does not explain the nature of work carried out by the assessee company for TPE which would justify huge payments in the account of the assessee company. In the above facts and circumstances, the explanation given by the assessee is found to be unsatisfactory and hence the deposits in the Natwest Bank London to the tune of Rs. 4,10,21,607.89 (including bank interest of Rs. 611.08) is treated as unexplained investment u/s 69 of the Act and deemed to be income of the assessee. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs In view of the above facts and circumstances, I am satisfied that assessee has concealed its particulars of income and therefore penalty proceedings u/s 271(1)(c) is initiated."
10.11 The Ld. CIT (A), after considering the submissions and additional evidences furnished by the assessee and calling for a remand report and rejoinder submissions of the assessee, held that income declared represented undisclosed income under section 69 of the Act. He has held as under:
"Para 8.9 Coming to the merit of the case regarding the nature and source of income on careful consideration of the matter I find that the appellant company has clearly failed to explain the nature and source of the credits of Rs. 10,48,44,798/- in A.Y. 2004-05 and Rs. 4,10,20,996.81 in A.Y. 2005-06. The documents produced by the appellant company in the course of assessment proceedings namely photocopy of agreements with M/s TPE confirmation from M/s TPE and copy of some correspondence do not in any way throw sufficient light on the nature and source of the huge deposits made in the accounts maintained by the assessee company. The AO has also raised a number of objections and pointed out a number of anomalies in the appellants submissions both in the assessment order and in remand report I find that the appellant has not been able to counter the above objections or explain the anomalies by any documentary evidence or clarification. Even the original copy of the agreement with M/s TPE is not produced by the assessee company for reasons best known to it. I find that the assessee company has not been able to prove the nature of details of service claimed to have been rendered by it by way of any books of account, records, bills raised or any ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs other documentary evidences, other than mere copy of agreement/confirmation as stated above or to given any correlation between the service rendered and amounts received.
Para 8.10 From the above, it is clear that the assessee company, other than owing up the credits in the bank accounts as its income for both the year under appeal has not been able to establish the nature and source of such receipts by any satisfactory documentary evidence or books of accounts. In the event the appellant's claim that the said income represents its income from the business of consultancy is rejected. Considering the above since the said investments are not recorded in the books of account of the assessee company and , the assessee company has not been able to offer any satisfactory explanation about the nature and source of th above investments in her bank account find that the value of the investments is to be rightfully treated as unexplained investment of the appellant u/s 69 of the Act. This issue of the appellant is therefore rejected."
10.12 In the written submissions before us the assessee has contended as under:
"11. That appellant company had received sums under the agreement dated 23rd of July, 2003 with M/s Technopromexport, 18/1, Ovchinnikovskaya nab., Moscow, 115324, Russia. (hereinafter referred to as "TPE"). The sums were received by the assessee company under the aforesaid agreement was for providing support services to M/s TPE during implementation of their contract dated 5th of February, 2003 with M/s Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (herein after referred to as "UPRVUNL"). for refurbishment of Obra Thermal Power Station, Uttar Pradesh State, India. The nature of the support services so provided to M/s TPE is ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs very illustrated in the correspondences exchanged between M/s TPE and appellant and, is duly supported by following evidences:
S.No. Particulars Page of Paper Book
1. Copy of agreement between M/s 67 to 70 of Paper
TPE and appellant dated Book-I
23.07.2003
2. Copy of addendum no. 1 dated 71 of Paper Book-I
23.7.2003 to the agreement dated
23.7.2001
3. Copy of addendum no. 2 dated 72-73 of Paper
24.9.2003 Book-I
4. Copy of addendum no. 3 dated 74 to 75 of Paper
30.4.2004 Book-I
5. Copy of remittances certificate 76 to 77 of Paper
issued by Bank certifying the Book-I.
sums received by assessee
company from M/s TPE
6. Copy of details of various 264 to 372 of Paper
expenditures incurred by assessee Book-II
company
7. Copy of illustrated correspondence 483 to 670 of Paper
of M/s TPE ` Book-II
8. Copy of agreement of M/s TPE 915 to 934 of Paper
with M/s UPRVUNL Book-III
9. Copy of Brochure of TPE 798 to 823 of Paper
Book-III
10. Copy of MOU dated 20.4.2006 872 to 874 of Paper
between M/s TPE and M/s Book-III
UPRVUNL
11. Copy of letter from M/s TPE dated 875 of Paper Book-III
26.4.2006
12. That Director of the appellant company namely Miss Ravina Khurana had also been examined on oath by learned A.O. and, she had duly stated that, she was providing services and, had also furnished supported evidences and, stood the task of cross-examination.
13. That no summons were issued to M/s TPE despite specific request of the assessee ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
14. That mere fact that the aforesaid sum was not disclosed by the assessee in the original return of income could not be made a basis to hold that, such sum was represented unexplained money under section 69A of the Act, particularly, in light of the evidences furnished by the appellant.
15. That so far as the recording of such income in the books of accounts maintained by the appellant, appellant had stated in its letter dated 11.4.2006 that, sums received had been recorded in Journals maintained by the appellant company in respect of foreign ventures. A copy of the journals so maintained had also been placed on record and, are placed at page 759 to 768 of Paper Book-III.
16. That aforesaid sum was only not disclosed in the original return for the fact that, appellant company was of the opinion that, entire sum received was not liable to tax in India and it was only at the fag end of February, 2006 that, appellant had made aware in the course of discussions with Mr. Ram Jeth Malani, Senior Advocate that all such income arising from providing technical and support services were liable to be included in income for taxation in India.
17. That observation that agreement did not provide payment of any advance and, assessee has not explained the source of receipts in GP pounds are factually misplaced. Infact, perusal of the details of remittances received would show that, no sum was received in GP Pounds and entire sums have been received in US Dollars (page 76 of Paper Book-I). It is also submitted that, each of the sums received are duly supported by certificate from bank which has been placed in the Paper Book-I and page 262 and 263 of Paper Book-II. The allegation that, agreement did not provide for any payment of advance, is also misplaced as would be seen from the Annexure A to this submission and, therefore, no adverse inference be drawn.
18. That he has also erred both in law and on facts in recording adverse observations on the basis of information obtained under section 133(6) of the Act from M/s Uttar ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Pradesh Rajkiya Vidyut Utpadan Nigam Limited for refurbishment of Obra Thermal Power Station, Uttar Pradesh and that too, without confronting the same to the assessee in the course of assessment proceedings and, in any case, the sums received by the appellant company have full correlation with the advances received by M/s TPE from M/s Uttar Pradesh Rajkiya Vidyut Utpadan Nigam Limited and, as would be seen from Annexure-1 to this submission.
19. It is further submitted that, the fact that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 was not in respect of the contract entered by the appellant company with M/s TPE or the contract entered by M/s TPE with M/s Uttar Pradesh Rajiya Vidyut Utpadan Nigam Ltd. and thus, the same could not be made a basis to hold that, income declared by the assessee vide letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 23.5.2006 and, subsequently in return of income dated 21.6.2006 and, 12.2.2007 was not voluntary. It may be stated here that, entire income as accruing to M/s RAPL on the basis of its contract with M/s TPE and, contract of M/s TPE with M/s NTPC has been declared by M/s RAPL in A.Y. 2006-2007. A copy of the return of income filed by M/s RAPL for A.Y. 2006- 2007 is placed at pages 644 to 752 of PB-III. Infact, this submission has also not even been specifically disputed by the learned AO (see reply dated 12.2.2007 (pages 51 to 66 of PB-I).
20. That conclusion that, Quarterly Report furnished by the appellant vide letter dated 16.07.04 was not a Quarterly Report furnised in terms of the agreement dated 23.07.03 to M/s TPE is factually incorrect as would be seen from letter dated 16.07.2004."
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 10.13 On the other hand, the Ld. CIT DR relied upon the order of the authorities below and requested that the claim of the assessee be rejected.
10.14 We have considered the rival submissions and perused the material on record. In the instant case, the assessee company had entered into two agreements with M/s. TPE, a government company incorporated in Russia for providing support services during implementation of their contracts in India. The details of agreements are as under:
(a) 23.07.2003: UPRVUNL agreement for implementation of contract of TPE dated 5th of February, 2003 with M/s Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (herein after referred to as "UPRVUNL"). for refurbishment of Obra Thermal Power Station, Uttar Pradesh State, India
(b) 25.10.2004 : NTPC Agreement for implementation of contract of TPE dated 25th of March'2005 with NTPC for design, manufacturing, delivery, transportation to the site, unloading, storing, erection, testing, start-up, adjustment and commissioning of Boiler Islands ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs equipment at Barh Super Thermal Power Project (3X660 MW), Bihar, India 10.15 Under the aforesaid two agreements, according to the assessee, following sums were received by the assessee company:
a) In respect of UPRVUNL Agreement: Rs. 14,58,65,794/-
b) In respect of NTPC Agreement Rs. 97,13,86,901/-
----------------------
Rs. 111,72,52,695/-
10.16 It has been stated that the said sums were received in three assessment years in the following manner:
Sr. A.Y. Total Income Total Income Total
No Received from TPE Received from TPE
and, Credited in and, Credited in
Natwest Bank Deutsche Bank
Account Account
in UK in India
1. 04-05 10,48,44,798 ---- 10,48,44,798
2 05-06 4,10,20,996 ---- 4,10,20,996
3 06-07 93,80,80,778 3,33,06,123 97,13,86,901
Total 108,39,46,572 3,33,06,123 111,72,52,695
10.17 It has been submitted by the Ld. AR that as far as the income of Rs. 97,13,86,901/- under the NTPC agreement is concerned, the same was declared in the original return of income filed on 12.02.2007 for A.Y. 06-07; and further, sum of ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Rs. 10,48,44,798/- has been offered for tax as income in assessment year 2004-05 and Rs. 4,10,20,996.81 in assessment year 2005-06.
10.18 It is further seen that Article 2 of the agreement dated 23.7.2003 provides as under:
"2.1.1 Ravina & Associate Pvt. Ltd. (RAPL) shall render comprehensive assistance to TECHNOPROMEXPORT in arranging talks and meetings with the Indian Purchaser, local sub-contractors and enterprises. 2.1.2 RAPL shall act only in the interests of TECHNOPROMEXPORT while dealing with the Purchaser, officials of the Indian Government and other companies. 2.1.3 RAPL shall render assistance to representatives of TECHNOPROMEXPORT in setting of administrative matters within the period of execution of the signed Contract. 2.1.4 RAPL shall render assistance to TECHNOPROMEXPORT in setting matters connected with due execution of the Contract, such as: making payments, arranging payments of local taxes and duties, customs clearance, obtaining required permissions, licences, visas from the Indian Government officials, settlement of disputes as well as rent of accommodation, meeting of the specialists of TECHNOPROMEXPORT etc. 2.1.5 RAPL shall render assistant to TECHNOPROMEXPORT in settlement of currency and financial matters under the Contract, including ensuring of timely receipt of payments due to TECHNOPROMEXPORT by the Purchaser and releasing of the bank guarantees issued in favour of the Purchaser.
2.3 RAPL shall strictly watch over all industrial and commercial interests of TECHNOPROMEXPORT and keep ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs confidential all the information became known to him in the course of implementation of this Agreement. 2.4 Agent and TECHNOPROMEXPORT consider all the information and data the parties exchanged in the course of implementation hereof to be confidential. 2.5 Agent shall not have the right to create or undertake any obligations on behalf of TECHNOPROMEXPORT without prior written instructions of TECHNOPROMEXPORT. 2.6 RAPL shall submit to TECHNOPROMEXPORT quarterly reports in writing about performance of his obligations under this Agreement without any supplementary reminding of TECHNOPROMEXPORT. In case of non-presentation of these reports TECHNOPROMEXPORT shall have the right to suspend payment of current invoice of the Agent submitted in conformity with Article 4 hereof."
10.19 The assessee has placed on record invoices issued by the appellant to TPE, remittance certificates issued by the Natwest Bank certifying that the sums received by the assessee company were from TPE, correspondence of assessee with TPE and UPRVUNL and, a letter from TPE dated 19.5.2016 which reads as under:
"Dear Sir, Please be informed hereby that the Russian Government owned JSC "Technopromexport" (TPE) is a well established company in the power sector which celebrated in 2005 half a century jubilee from the day of its foundation. In the years of the planned economy in the USSR TPE was engaged in realization of the inter governmental agreements and contracts for power projects construction abroad, particularly in India. Since the 1960s, at least 400 power projects have ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs been constructed by TPE all over the world, including 11 projects in India. During these times the USSR rendered wide- scale technical and economic assistance to friendly countries. Some of the first power projects constructed by TPE in India were HPP "Bhakra" TPS "Neyveli", TPS "Obra" and HPP Lower Sileru", which total capacity exceeds 1600 MW. Many of them were awarded with special prizes for the high efficiency and TPS "Neyveli" (600 MW) was marked with government rewards. Built by NTPC with assistance of TPE specialists, SRTPP "Vindhyachal" till now keeps occupying one of the first places for a number of its economic parameters among the thermal power stations in India. Since then TPE has put into operations 11 power projects in India of total capacity over 3000 MW TPE catalogue is enclosed herewith for your reference).
Taking into account such plans of India in the power sector of the country, TPE has taken the active position in advancing its services and rendering assistance to Indian associates in realization of the stated projects. Among the projects, which TPE realizes at present is reconstruction of TPS "Obra" for UPRVUNL and delivery installation and bringing into service of the hydro-mechanical equipment at the hydroelectric power plant "Indira Sagar" for NHSDC. But the most significant event is the signing during March 2005 of the contract with NTPC for construction of the "boiler island" of " Barh" STPP of 1980 MW capacity within the framework the "mega-project"
program for the sum of approximately 20 billion Indian rupees.
This Power Plant will consider of 3 Units of 660 MW each, designed for the supercritical parameters of steam on the sliding pressure. Traditionally, the efficiency of unit directly depends on the mode under which the power unit is operated. The higher the capacity, the higher is the efficiency and, on the contrary, the lower the capacity, the lower is the efficiency. The equipment, which will be installed at "Barh" TPP, is designed for the work on the sliding parameters. This ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs will make it possible to reach high EFFICIENCY, even with operation of the power plant at low capacity TPE possesses wide experience in realization of such projects. For example, TPS "SUYCHZHUM" IN China of 1600 MW (2x800MW) capacity built with the assistance of TPE specialists. Today the station runs successfully with by the declared parameters.
The reputation of TPE in International circles is well known as a clean, law abiding and pioneering company in the power sector. The International tender bidding the "Barh" STPP was started in 2002, and bids were finally opened in the premises of NNTPC, Noida, on 05.11.2005 in presence of the participants: M/s. TPE (Russia), M/s. Doosan (Korea), M/s.BHEL (India), TPE's bid was the lowest one. Nevertheless, we believe that the team of NTPC experts (including technical, commercial, legal, etc staff) has done very careful investigation of the submitted bids, verification of the declared parameters. Moreover, the above team visited manufacturing plants designing institutes and the similar TPS "Suychzhun" in China.
Upon completion of the above job, the Tender Committee of NTPC approved TYPE proposal issued Notification of Award in the favour of TPE on 14.03.2005 and invited for the contract negotiations which resulted in the signing of the contract agreement between NTPV and TPE on 25.03.2005. Sao, the decision to award the contract was taken strictly in accordance with the Government of India policy to award contracts to the lowest bidder.
Summing up the above mentioned, we would like to draw your attention to the fact that the FIR is baseless and has been registered at the instance of business. As regards M/s. "Ravina & Associates Pvt.Ltd", please be informed that TPE has a good business association with this company on the basis of official agreement signed by the both parties for "Barh" STPP. All payments made to M/s. " Ravina & Associates Pvt.Ltd." by TPE were the amounts paid for ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs rendering services to TPE both in preparation of the bid documents and in implementation of the contract which duration will be at least 6 years.
We do believe that our explanation will suffer you to be sure that TPE is an honest company, working in accordance with the world rules and regulations of tendering as well as caring for its reputation in the world power market. Yours faithfully, Sergey V.Molozhavy General Director Encl: 1 Catalogue"
10.20 Having regard to these evidences, the question, therefore, arises as to whether the receipts from TPE, can be held to be unexplained investment under section 69 of the Act. Section 69 of the Act provides as under:
"69 Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year."
10.21 Thus, according to section 69, where in the financial year immediately preceding the assessment year the assessee has ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs made investments which are not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. Thus, the precondition for bringing to tax any sum as unexplained investment under section 69 of the Act is that there must be investment for which, either no explanation has been furnished by the assessee or explanation furnished about the nature and source of the investment is not satisfactory.
Here is not a case of 'no explanation' but it is a case where the authorities below have held that explanation about the nature and source is not satisfactory. To arrive at the above conclusion, the reasoning adopted by the Ld. CIT (A) is that the documents produced by the assessee company in the course of assessment proceedings namely photocopy of agreements with M/s TPE confirmation from M/s. TPE and copy of some correspondence do not in any way throw sufficient light on the nature and source of the huge deposits made in the accounts maintained by the assessee company. To our mind, the confirmation from TPE is ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs quite specific and unambiguous and in any case, thereafter despite specific request by the assessee in the assessment proceedings and appellate proceedings, no further enquiries were made by the Assessing Officer from TPE or any other authorities to reject the claim of the assessee. The Hon'ble Delhi High Court in the case of CIT vs. Genesis Comnet (P) Ltd reported in 163 Taxman 482 (Del) has held as under:
"9. The Tribunal took a view that the fact that the assessee was not in a position to produce the two commission agents is not its fault and the Assessing Officer could have exercised powers available to him to summon and cross-examine these two parties if, for some reason, he did not accept the statement furnished by these two parties. The Assessing Officer could also have made independent enquiries from the customers of the assessee. However, none of this was done.
10. Therefore, we are of the opinion that the Tribunal has not committed any error in the view that it has taken. The assessee produced all the material that it could possibly produce and if the Assessing Officer was not inclined to believe the material produced, he could have used the coercive powers available to him, which he failed to exercise.
11. Therefore, we are of the view that in this case, no substantial question of law arises for our consideration."
10.22 Also in the case of CIT vs. M/s Kamdhenu Steel and Alloys Ltd. reported in 361 ITR 220, it has been held has under:
"16. The Court thus clearly held that once documents like PAN Card, bank account details or details from the bankers were given by the assessee, onus shifts upon the Assessing ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Officer and it is on him to reach the shareholders and the Assessing Officer cannot burden the assessee merely on the ground that summons issues to the investors were returned back with the endorsement 'not traceable'. Same view is taken by the Karnataka High Court in Madhuri Investments Pvt. Ltd. v. ACIT (in ITA No. 110 of 2004, decided on 18.02.2006). In this case also, some of share applicants did not appear and notices sent to them were returned with remarks 'with no such person'. Addition was made on that basis which was turned down by the High Court in the following words:
"6. Having heard the learned counsel for the parties, we notice that whenever a company invites applications for allotment of shares from different applicants, there is no procedure contemplated to find out the genuineness of the address or the genuinenity of the applicants before allotting the shares. If for any reason the address given in the application were to be incorrect or for any reason if the said applicants have changes their residence or the notices sent by the assessing officer has not been received by such applicants, the assessee company cannot be blamed. Therefore, we are of the view that the Tribunal was not justified in allowing the appeal of the revenue only relying upon the statement of Sri Anil Raj Mehta, a Chartered Accountant."
10.23 Therefore, having regard to the aforesaid judicial pronouncements, since the evidence furnished by the assessee has not been shown to be otherwise by any other leading evidence so as to reject the said claim, the claim of the assessee must be held to be maintainable for the reason that it would be ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs fall in the realm of arbitrariness to reject a claim which is supported by an evidence and accept a conclusion which is based on presumptions and assumptions and therefore, untenable. The agreement, invoices and remittances certificates are a clear pointer to the claim as to the origination of money from TPE and also the purpose for which such sum of money was remitted to the appellant. The agreement of the assessee with TPE and agreement of TPE with UPRVUNL leave no iota of doubt and establish that remittances for the instant year represents income of the assessee received from the TPE under the aforesaid agreements. It has been held by the Ld. CIT (A) that the assessee has been unable to counter the objections or explain the anomalies by the documentary evidence or clarifications and even the original copy of the agreement has not been placed on record.
As regards the original agreement, the assessee, in one of the replies dated 6.11.2007, had stated as under:
"1 Kindly refer to order-sheet entry dated 11.10.2007, wherein the assessee company has been directed to furnish a copy of the original agreement dated 23.07.2003 entered between M/s TECHNOPROMEXPORT and the assessee company. The assessee company in reply, respectfully submits that, it has already furnished before you a photocopy of the original agreement. The original copy of the agreement is not to be retained by M/s TECHNOPROMEXPORT and the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs assessee is being supplied with only photocopy thereof. In such circumstances, it is submitted that the photocopy of the agreement as furnished is that of the original agreement.
10.24 Furthermore, the objection that agreement did not provide payment of any advance and the assessee had not explained the source of receipts in GP pounds is factually misplaced. The perusal of the details of remittances received would show that no sum was received in GP Pounds and the entire sum had been received in US Dollars. Each of the amounts received are duly supported by a certificate from bank which have been placed on record. Moreover, from page 1129 of Paper Book-4 for assessment year 2005-06, it is noted that the assessee had duly furnished the recognition towards advances received by TPE from UPRVUNL and the payments made to assessee by TPE has not been adversely commented either in the appellate order or even by the Ld. CIT DR in the course of hearing and, therefore, the same too cannot be made a ground to draw adverse inference.
10.25 Further, adverse observations on the basis of information obtained u/s 133(6) of the Act cannot be relied upon as the same have not been confronted to the assessee. The Delhi Bench of ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs the ITAT in the case of G.R. Kalra HUF v. ITO in ITA No. 6564/Del/2013 for Assessment year 1999-00 dated 12.4.2017 has held as under:
"20. Even otherwise also the entire order is based on the basis of assessment order in the case of Bishan Chand Mukesh Kumar which was been upheld by the CIT (A). On perusal of the assessment order we find the Assessting Officer nowhere has confronted the same to the assessee. As regards the observation of the ld. CIT (A) that the assessee has not pressed the ground relating to cross examination is concerned, the same in our opinion is incorrect in view of the specific ground taken before the ld. CIT (A) and in absence of any material on record to show that the assessee has not pressed the ground before him.
21. We find the Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise (supra) while decing an issue regarding not allowing the cross examination has held that not allowing the assessee to cross examine the witness by the adjudicating authority though statement of those witnesses were made as basic of the Impugned order amounted to a serious flaw makes the order a nullity as it amounted to violation of principles of natural justice.
22. So far as the reliance of the ld. DR in the case of Income Tax Officer vs. Pirai Ghoodi (supra) is concerned we find the same was prior to the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise (supra). It is the settled proposition of law that when two decisions of the Hon'ble Supreme Court are available on the same issue the later decision shall prevail. Since in the instant case the entire addition is based on the outcome of the assessment order in the case of M/s Bishan Chand Mukesh Kumar which was never confronted to the assessee, therefore in view the decision of the Hon'ble ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Supreme Court in the case of Andaman Timber India (supra) we hold that the assessment order is null and void as it amounted to violation of principles of natural justice. Thus the assessee succeeds on both the legal grounds. Since the assessee succeeds on both the legal grounds, the ground relating to the merit of the case becomes academic in nature and therefore the same is not being adjudicated."
10.26 Also, the Hon'ble Delhi High Court in the case of Sabh Infrastructure Ltd. v. ACIT reported in 398 ITR 198 (Del) has held as under:
"... (iii) where the reasons make a reference to another document, whether as a letter or report, such document and/ or relevant portions of such report should be enclosed along with the reasons; (iv) the exercise of considering the Assessee's objections to the reopening of assessment is not a mechanical ritual. It is a quasi judicial function. The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. No attempt should be made to add to the reasons for reopening of the assessment beyond what has already been disclosed."
10.27 It has been the contention of the assessee that the impugned income is in the nature of consultancy income by providing support services to TPE and voluminous documentary evidence/s have been placed on record to support the same and the revenue has not led a shred of evidence to reject the above documentary evidences tendered by the assessee both in the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs assessment proceedings as well as the appellate proceedings.
Thus, the investigation made at the assessment stage or at the remand stage or even before us has not brought any material to conclude that the claim made by the assessee is not a tenable claim. In fact, the origination of receipts from the TPE cannot be disputed having regard to the certificates from the bank. Thus, the nature of receipts has been supported from the agreements, invoices and correspondence along with the confirmations placed on record. The essence of the case of the revenue is that FIR was filed by the CBI which apparently does not pertain to the instant contract. Moreover, the aspect that this income was not declared in the original return of income cannot be a ground to automatically conclude that it is unexplained investment particularly having regard to the aforesaid evidences and factual position placed on record which remains un-assailed despite examination at various levels. Having regard to the above, we are of the considered view that the income declared does not warrant assessment under section 69 of the Act. With these findings, we allow the Grounds raised by the assessee for both the assessment years.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 10.28 Ground nos. 4 to 4.1 for assessment years 2004-05 and 2005-06 are regarding disallowance of claim of deduction of 15% of the total receipts in view of the principles laid down in the case of Calcutta Company Ltd reported in 37 ITR 1 (SC). The asessee has raised a claim that it ought to have been allowed 15% of the total receipts as deduction so as to enable the assessee to discharge several obligations. The Assessing Officer in the remand report to the Ld. CIT (A) held that there was no basis to support the aforesaid claim made by the assessee. Relevant portion of the remand report is as under:
"Further, the assessee has relied upon the judgment of the Hon'ble Supreme Court in the case of Calcutta Company Ltd. v. CIT West Bengal (37 ITR 1) in support of its contention of allowance of deduction of 15% of the total receipts from M/s Technopromexport. It is stated that the ratio of the judgment is not applicable in the case of assessee. The facts and circumstances for this case are different from the fact and circumstances of the aforesaid mentioned case. In the case of Calcutta Company Ltd. the assessee was dealing in land and property and was carrying on the land developing business it so as to make it fit for building purposes and sale it at a profit in plots. The developments under taken were in the main, lay roads, to provide drainage systems, to intal street lights and they were to be maintained till the same were taken over by the Municipality. The procedure to be followed was that when the plot was sold, the buyer was to pay about 25% of the purchase price in cash and the balance amount installments with interest. The assessee i.e. the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Calcutta Company Ltd. claimed Rs. 24,809/- as the expenditure for the developments to be carried out which was disallowed by the AO on the ground that the expenses were not actually incurred in the year of account and also on the ground that the estimate had not been proved to be based on a consideration of real expenses which the company would have to incur for the purpose. So the question before the Hon'ble Court was to determine what was the nature of liability which was undertaken by the assessee in regard to the developments of land in question, whether it was an accrued liability or was one which was contingent on the happening of a certain even in future. In this context the Hon'ble Court observed that "there is no doubt that the undertaking to carry out developments within six months from the dates of the deeds of sale was incorporated therein and that the undertaking was unconditional, the appellant binding itself absolutely to carry out the same, it was not dependent on any condition being fulfilled or the happening of any event, the only condition being that it was to be carried out within six months which in the view of fact that the time was not the essence of the contract meant the reasonable time..... It was thus accrued liability and estimated expenditure which would be incurred in discharging the same could very well be deducted from the profits and gains of the business."
In the present case, the receipts from M/s Technopromexport has not been considered as income from "profit and gains of business of profession". Rather, the AO has treated these receipts as unexplained money u/s 69A of the I.T. Act. So the deduction was not allowed to the assessee. In this case even the agreement with Technopromexport did not provide for any expenditure to be incurred by the assessee. So the question of any future liability did not arise in the case of assessee. Hence there was not question of it being a contingent liability or accrued liability. So, the claim of the assessee of allowing ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 15% of the receipts from M/s Technopromexport as expenditure was disallowed by the AO."
10.29 The Ld. CIT (A), having regard to the aforesaid remand report, confirmed the action of the Assessing Officer. We have considered the rival submissions and perused the material on record. During the appellate proceedings, the learned counsel was specifically directed to support its claim by any evidence representing the expenditure incurred and not allowed. However, no evidence was placed before us; therefore, we find merit in the conclusion arrived by the authorities below. In view of the above, claim raised by the assessee is held to be not maintainable and the Grounds raised are rejected.
10.30 Ground 5 is regarding the conclusion that the bank interest of Rs. 37,866.73 in AY 2004-05 and Rs. 611.08 in AY 2005-06 has been erroneously held as unexplained investment under section 69 of the Act.
10.31 Having considered the rival submissions and perused the material on record, it is noted that the edifice for treating the aforesaid sums as unexplained investment is that the sums were not duly disclosed in the original return of income by the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs assessee. To our mind, the treatment of receipts as unexplained investment is not dependent on the declaration in the return of income. On the contrary, if the source of investment is duly disclosed then such investment cannot be regarded as unexplained investment under section 69 of the Act. In the instant case, the nature of investment is in respect of interest which accrued to the assessee on the deposits in the Natwest Bank, London. We have already held above that the assessee has duly explained even the nature and source of the deposits in the Natwest Bank accounts and thus, said the deposits cannot be regarded as unexplained investment under section 69 of the Act.
The deposits represent income from support services provided by the assessee to TPE and therefore, the conclusion of the revenue to regard the sum offered as income and assess under section 69 of the Act has no validity in law. In view of the above, we do not find merit in the claim of the revenue to treat the interest and income from deposits as unexplained investment under section 69 of the Act.
10.32 Having regard to the above, the Grounds raised by the assessee are allowed for both the assessment years. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 10.33 Ground 6 is regarding disallowance of Rs. 1,00,000/- for assessment year 2004-05 and Rs. 2,30,882/- for assessment year 2005-06 out of expenditure incurred and, claimed by the assessee company.
10.34 We have considered the rival submissions and perused the material on record. The Ld. CIT (A) has sustained the disallowances by concluding as under:
"11.5 I have carefully considered the assessment order, remand report and the submissions made by the ld. AR. I find that the appellant has not produced any evidence to justify its claim of expenditure either during assessment or the appellate proceeding, other than merely arguing that the disallowance is adhoc in nature and hence untenable. I find that the AO has relied on the auditor's report expenses vouchers were not supported by documentary evidences. Under the above facts and circumstances, the disallowance made by the AO on the basis of reasonable estimate cannot be found default with. The said disallowances are, therefore, confirmed and this issue is decided against the appellant."
10.35 From the aforesaid, it is apparent that the Ld. CIT (A) has noted that the Assessing Officer had made the disallowance since this audit report mentions that the expenses vouchers were not supported by documentary evidence. It has been also noted that during the appellate proceedings, the assessee has not produced any evidence to justify the claim of expenditure. It has been held ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs that mere contention that disallowance is ad hoc was not a valid basis. Thus, having regard to the reasonable estimate made by the learned Assessing Officer, the aforesaid disallowances were deleted. We do not find any reason to deviate from the aforesaid findings recorded by the Ld. CIT (A). The learned counsel for the assessee has not brought any material so as to warrant a view different from the aforesaid conclusion. In view of the aforesaid reasons, claim raised by the assessee is rejected.
10.36 Grounds raised by the assessee are thus rejected for both the assessment years.
10.37 Ground No. 7 for AY 2004-05 is regarding disallowance of Rs. 10,000/- u/s 14A of the Act.
10.38 Having considered the rival submissions and perused the material on record, we notice that the Ld. CIT (A) has rejected the aforesaid claim by holding as under:
"12.2 On careful examination of the matter, I find that no income, whether exempt or not, can be earned without making some expenditure. Often times such expenditure are not segregated in the accounts of the assessee and remain clubbed with overall administrative/financial and other expenses for the business as a whole. It, thus, becomes the duty of the AO to reasonably allocate expenses relatable to such income and disallow the same. I find that section 14A of the Act (inserted by the Finance Act, 2001 with retrospective ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs effect from 01.04.1962) specifically addresses this issue by providing that 'no deduction shall be allowed in respect of expenditure incurred in relation to such income which does not form part of total income" under the Act. Further, sub- section (2) of section 14A empowers the AO to determine the amount of expenditure incurred in relation to exempt income in accordance with the method as may be prescribed. Sub- section (3) of section 14A mandates that the above provisions of sub-section (2) shall also apply to a case where an assessee claims that no expenditure has been incurred by him in relation to exempt income. In this connection, I find that the constitutional validity of section 14A read with sub- sections (1), (2) & (3) thereof has been upheld by the Hon'ble Bombay High Court vide its recent order dated 12.08.2010 in the case of Godrej & Boyce Mfg. Co .Ltd. vs. DCIT in ITA No. 626 of 2010 and writ petition no. 758 of 2010 published in http://www.itatonline.org. Considering the above, the disallowance of Rs. 10,000/- made by the AO is upheld and this issue of the appellant is rejected."
10.39 The learned counsel for the assessee has not brought any material on record to rebut the aforesaid cogent findings recorded by the Ld. CIT (A). In view of the aforesaid, the claim of the appellant lacks substance and is therefore, rejected. Even otherwise, it is noted that the disallowance made is reasonable and as such, it does not call for any interference.
10.40 Ground raised by the assessee is, therefore, rejected. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 10.41 Ground nos. 8 to 8.2 for assessment year 2004-05 and Ground nos. 7 to 7.2 for assessment year 2005-06 are regarding levy of interest u/s 234B, 234C, 234, 244A and 220(1) of the Act.
10.42 In the written submissions before us the assessee has contended as under:
"....25. At the outset, it is submitted that, no interest is leviable on the facts of the instant case, since it cannot be validly held that, assessee was in a position to estimate the advance tax on the income assessed by the learned AO in the order of assessment. It is submitted that, appellant has consistently contended that, as in past, it always had a bona fide belief that, income arising from services and, credited in bank accounts outside India was not liable to be included as income for taxation in India. In view thereof, never in the past, appellant had included profits accruing to it from such endeavors in the return of income for the taxation in India. Infact, In view of aforesaid belief, it cannot be validly said that appellant was in a position to estimate the advance tax and, therefore, learned Officer has incorrectly levied interest under section 234B of the Act.
25.1 It is respectfully submitted that, in any case, no interest could be levied under 234B and, 234C or even under section 220(1) of the Act after 1.04.2006 i.e. after the income had been declared by the appellant voluntarily as would be evident from letter dated 01.04.2006 (pages 26 to 28 of PB-I) as under:
7. We have been waiting all these days for the money to be credited in our account in India to enable us to pay advance tax in respect of our income for the fiscal year 2005- 06 and also to pay up our tax liability in respect of the earlier years together with interest due for the delayed payment of taxes. Even after waiting for all these days since 6th March, ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 06 when instructions were first issue to Nat West Bank, London to remit our monies held in balance with them to our account in India we have not received any intimation of remittance from them (copies enclosed) (page 756 of Paper Book-III).
8. Accordingly, we have to request you to intercede in the matter and arrange for the collection of taxes, which may be determined as due from us, from Nat West Bank, London in satisfaction of our tax liability provisionally. We are ready and willing to execute the requisite authority in any form advised by you as may serve all desired end.
9. I hereby declare that all the monies in the said bank stand assigned to the Government of India in trust for paying away my tax liabilities when precisely determined.
10. To discuss our tax liability and work out the modalities for its prompt, effective and full discharge, we will be obliged to have an audience with you, which may kindly be granted and intimated to me at my address indicated above at your earliest.
We will also appreciate if a lenient view may be taken of the incidental inadvertent lapse on our part in the matter." 25.2 It is further, submitted that Hon'ble High Court of Delhi vide its order dated 06.08.2012 (at pages 14 to 17 of PB - IV), had also directed the Special Judge, to bring back the money appropriated in Natwest Bank in India and also directed to remit the money to SBI Branch of Tis Hazari Court. That a bare perusal of the said order of Hon'ble High Court will fortify the submission of assessee - appellant that the money was lying and was frozen at the behest of Government of India in Natwest Bank, UK and direction was given by the court to bring back the said money and appropriate the same to pay off various Government dues. Thus, in view of the above, no interest could be levied under 234B and, 234C or even under section 220(1) of the Act after 1.04.2006 i.e. after the income had been declared by the appellant voluntarily as would be evident from letter dated 01.04.2006. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 25.3 Reliance is placed on the following judgments:
a) CIT v. Rainbow Industries (P.) Ltd. (Guj.) 148 Taxman 267
b) Haryana Warehousing Corpn. v. DCIT (Del.)(TM) 75 ITD 155
c) Janak Raj Chauhan & ORS. Vs. ACIT (Asr.) 75 TTJ 260
d) Income Tax Officer vs. Dr. Manjit Singh Sekhon (Chd.) 91 TTJ 393
e) 67 ITD 407 Devinder Kaur Sekhon v ACIT (Chd)
f) 96 Taxman 188 Vikshara Trading and Investment (P) Ltd v DCIT (Ahd)
g) 107 Taxman 121 Lakshmi Narayan Tulsi Dass Thakkar v ACIT (Ahd)
h) 247 ITR 701 Bulund Motor and Land Finance (P) Ltd. v ACIT (All)
i) Datamatics Ltd. vs. ACIT reported in 111 TTJ 55 (Mum) 21.2 It is thus respectfully submitted that, the appellant cannot be fastened with the liability to pay interest under section 234B, 234C, 220(1) of the Act."
10.43 On the other hand, the Ld. CIT DR relied upon the order of the authorities below and requested that the claim of the assessee be rejected.
10.44 Having considered the rival submissions and perused the material on record, we notice the learned Ld. CIT (A) has upheld levy of interest by holding as under:
"14.3 I have carefully considered the assessment order, remand report of the AO and the submissions made by the ld. AR on the above. The appellant's argument regarding not ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs being aware of its tax liability in respect of credits in the bank accounts maintained outside India has been rejected by me as per detailed reasons recorded in the discussion relating to issue no. 1earlier in this order. Further, the appellant's argument regarding non-applicability of section 234B is also not acceptable due to detailed reasons cited by the AO in his remand report reproduced above which I agree. I find that it is settled position of law that levy of interest u/s 234B, 234C and 234D is mandatory. It has been held so by the Apex Court in the case of Anjum M. H. Ghaswala and others reported in 252 ITR 1 as under:
Similar view has also been expressed in the following cases: Ranchi Club Limited Vs. Commissioner of Income Tax (1996) 217 ITR 72 on paged 74 interest levied under section 234A, 234B and 234C are compensatory in nature.
CIT Vs. R.Ramalingair, (2000) 241 ITR 753 (Ker) on 756. Dr. S. Rodappa & Others vs. UOI (1198) 232 ITR 62 (Kar) Mrs. Prabhu lal Vs. CIT 269 ITR 212 (Pat) on page 216 Balkrishna Breading Farms Pvt. Ltd. Vs. CCIT (2004) 266 ITR 15 (Ker).
Section 234B as well as the dictum of Supreme Court in CIT Vs. Anjum M. H. Ghaswala (2000) 252 ITR had categorically provided for levy of interest.
Ernakulam District Co-operative Bank Ltd. Vs. ACIT 272 ITF 95 (Ker) After referring certain earlier decision, including the decision of Delhi High Court in the case of CIT Vs. Prem Nath Motors Pvt. Ltd. (2002) 253 ITR 705 (Del) it was held that levy of interest u/s 201 (1A) is compensatory measure for withholding tax which ought to have been given to the exchequer. The provisions makes it clear that levy is mandatory and there is no pre-condition of considered of `reasonable cause' for non-payment in time of tax deducted u/s 192 of the Act. Therefore, the ITO was not required to take into consideration the reasonable cause. Further the use ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs of word `shall' cause presumption that the particular provision is imperative.
Upper Doab Sugar Mills Vs. CIT 263 ITR 97 (All). In the facts of above case though the Assessing Officer specifically mentioned in the order for charge of interest u/s 215 there was no specific mention for charging interest u/s
216. There was general mention to the effect that "Charge interest as per law". The High Court though principally observed that under estimation itself may not be sufficient to attract the provision of Section 216 of the Act for levy of interest if there had been bonafide mistake on his part while making the under estimation. On the facts of the case, however, it was held that the assessee had not been able to furnish any explanation for the difference of Rs. 48 lac in the first return and in revised return and therefore, sustained levy of interest u/s 216 of the Act. )principally observed that under estimation itself may not be sufficient to attract the provisions of section 216 of the Act for levy of interest if there had been bonafide mistake on his part while making the under estimation. On the facts of the case, however it was held that the assessee had not been able to furnished any explanation for the difference of Rs. 48 lacs in the first return and in revised return and therefore, sustained levy of interest u/s 216 of the Act). It is to be noted that in this case inspite of the fact that there was no specific mention of Section 216 of the Act in the assessment order the High Court has upheld the levy considering the facts of the case Sita Holiday Reports Ltd. Vs. CCIT (2002) 258 ITR 751 (Del) In the facts of the case the assessee had not included interest earned on investment of borrowed funds prior to commencement of business for the reasons that there was legal controversy. Subsequently, by virtue of decision of Supreme Court in the case of Tuticorin Alkali Chemicals and Fertilizers Ltd. Vs.CIT (1197) 227 ITR 172, the Supreme Court has held that such interest is chargeable to interest. The assessee company filed an application before the Chief ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Commissioner of Income Tax of waiver of interest levied under section 2364B of the Income Tax Act CCIT waived 75% of interest. He however, upheld levy of the extent of 25% of interest stating that same is justified as the Departmental has been deprived of its taxes. The High Court made reference to the decision of Supreme Court in the case of CIT Vs. Anjum M. H. Ghaswala (2001) 252 ITR 1 (SC) wherein it has been held by the Supreme Court hat interest contemplated under section 234B of the Act for deficiency or default in payment of advance tax is mandatory in nature and same cannot be reduced or waived by the Settlement Commission. The High Court, however, refused to interfere in the matter for the reasons that waiver is within the discretionary powers of CCIT.
Considering the above clear statutory and judicial positions, the levy of interest u/s 234B, 234C and 234D is confirmed. The issue of the appellant is, accordingly, rejected."
10.45 Before us, the learned counsel for the assessee has made two fold submissions that having regard to the fact that the assessee had bona fide belief and, therefore, the income arising from services was not included as income in the original return of income and, therefore, the assessee is not liable for interest under section 234B and 234C of the Act. It was alternatively contended that once the assessee had filed a letter voluntarily on 1.4.2006, no interest ought to have levied subsequent to the said letter.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 10.46 As far as the primary claim of the assessee that there is bona fide belief is concerned, it proceeds on the basis that the assessee had receipts from a non-resident company which had been credited in a bank account maintained outside India and thus, the assessee was of the bona fide belief that such sum was not taxable in India. It has been contended that the assessee had been maintaining memoranda accounts for such sums received outside India but were not declared as income in the original returns of income furnished by the assessee company. It has been contended that such income was declared only once the advice received in February, 2006. It has, thus, been contended that since the assessee was under a bona fide belief, therefore, assessee was not liable to pay any advance tax and since assessee was not liable to pay advance tax, interest levied under section 234B and 234C of the Act was not leviable. We, however, find no merit in the said claim. The Hon'ble Apex Court in the case of Anjum M.H. Ghaswala and Others reported in 252 ITR 1 (SC) has held as under:
"If the scheme of levy of interest is thus to be analysed on the anvil of the provisions referred to hereinabove, it shows that the interest contemplated under Sections 234A, 234B and 234C is mandatory in nature and the power of waiver or reduction having not been expressly ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs conferred on the Commission, the same indicates that so far as the payment of statutory interest is concerned, the same is outside the purview of the settlement contemplated in Chapter XIX-A of the Act."
10.47 In view of the above binding dicta, we hold that levy of interest is mandatory and we reject the claim raised by the appellant.
10.48 The alternative claim made by the assessee before us is that since the assessee had filed a letter dated 1.4.2006 before the Assessing Officer and had requested that the deposits in bank account be adjusted towards the tax liability, no interest is leviable after 1.4.2006. The relevant portion of the letter dated 1.4.2006 reads as under:
"7. We have been waiting all these days for the money to be credited in our account in India to enable us to pay advance tax in respect of our income for the fiscal year 2005- 06 and also to pay up our tax liability in respect of the earlier years together with interest due for the delayed payment of taxes. Even after waiting for all these days since 6th March, 06 when instructions were first issue to Nat West Bank, London to remit our monies held in balance with them to our account in India we have not received any intimation of remittance from them (copies enclosed) (page 756 of Paper Book-III).
8. Accordingly, we have to request you to intercede in the matter and arrange for the collection of taxes, which may be determined as due from us, from Nat West Bank, London in ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs satisfaction of our tax liability provisionally. We are ready and willing to execute the requisite authority in any form advised by you as may serve all desired end.
9. I hereby declare that all the monies in the said bank stand assigned to the Government of India in trust for paying away my tax liabilities when precisely determined.
10. To discuss our tax liability and work out the modalities for its prompt, effective and full discharge, we will be obliged to have an audience with you, which may kindly be granted and intimated to me at my address indicated above at your earliest."
10.49 Having considered the same, we find merit in the same in as much as assessee had intimated the revenue authorities on 1.4.2016 and had also requested specifically that all the monies in the said bank be adjusted against the tax liabilities. Therefore, no interest could be levied under any provisions of the Act after 1.4.2006 i.e. after the income had been declared by the assessee voluntarily and, deposits stood assigned for payment of tax. This aspect has not been disputed by the learned CIT DR during the course of hearing. The Assessing Officer is accordingly directed to compute the interest in terms of the directions hereinabove and therefore, Grounds raised by the assessee are partly allowed for both the assessment years.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 10.50 In the result, both the appeals viz. ITA 1004/Del/2011 and ITA 1005/Del/2011, filed by the assessee are partly allowed.
11. Now we take up the two appeals preferred by RAPL (the assessee) in ITA No. 4388/Del/2014 and 4389/Del/2014 for assessment years 2004-05 and 2005-06 which are appeals against levy of penalty under section 271(1)(c) of the Act arising from the orders dated 30.3.2012 made by Deputy Commissioner of Income Tax, Circle-15(1), New Delhi and confirmed in appeal by orders dated 30.6.2014 of Ld. CIT(A) -XVIII, New Delhi.
11.1 In ITA No. 4388/Del/2014 for assessment year 2004-05, the assessee has raised grounds of appeal which read as under:
"1 That the learned Commissioner of Income Tax (Appeals) XVIII New Delhi has erred both in law and on facts in upholding penalty levied of Rs. 3,76,26,700/- under section 271(1)(c) of the Act.
1.1 That the learned Commissioner of Income Tax (Appeals) while upholding the penalty has failed to appreciate that income in respect of which penalty have been levied was the income declared voluntarily by the appellant firstly by letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006 and 23.5.2006 and thereafter in return filed on 21.6.2006 and, 12.2.2007 and also in return filed in response to notice u/s 148 of the Act and as such, it cannot be validly held that assessee has either concealed income or furnished inaccurate particulars of income merely on the ground that, such receipts were not disclosed in the original return of income.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 1.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the fact that income assessed was not based on the revised return but on the basis of return filed in response to notice u/s 148 of the Act and the reasons recorded for initiation u/s 147 of the Act established that proceedings had been initiated on the basis of information contained in the revised return and not by way of any detection and hence the finding that there was intentional attempt to evade tax overlooks this factual fundamental aspect and material on record and as such order upholding the levy of penalty is vitiated and untenable. 1.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that till the date of filing of return on 12.2.2007 when assessee had revised return of income by including an amount of Rs. 4.10 crores, no enquiry was either initiated or launched and thus, income offered in the said return represented the income which had been shown to be assessed and as such no part of income assessed could represent an income which can be said to have been concealed by the appellant.
1.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that filing of FIR on 6.3.2006 was in respect of the amount of Rs. 97,13,86,901/- received in Natwest Bank pertaining to appellant company for assessment year 2006-07 which was declared in the original return of income and, not for the sum declared and, assessed in the instant assessment year and as such, the same could not be ground to hold that appellant had not declared the income voluntarily.
1.5 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that assuming for the sake of an argument (though the same is seriously disputed) that there was detection of income by the CBI and it was only on account of detection by CBI that assessee had declared such income then too to determine as to whether income declared by the assessee in the return of income was not voluntary or ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs not, what has to be seen is, whether the income was detected by the learned AO or whether the same was voluntarily offered by the appellant and, not that, it was allegedly detected by CBI and as such the conclusion of the learned officer is based on misinterpretation of provisions of law 1.6 That the learned Commissioner of Income Tax (Appeals) has sustained the penalty mechanically, arbitrarily and in complete disregard of the written submission and evidence furnished on record by the appellant company and therefore, penalty so sustained is wholly misconceived and untenable. 1.7 That the learned Commissioner of Income Tax (Appeals) while framing the penalty, has also overlooked the fact that the various findings recorded in the order imposing penalty had been mechanically and bodily lifted from the order of assessment framed under section 147/143(3) of the Act and therefore, the said penalty levied and sustained is invalid and unwarranted.
1.8 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the observation of the learned Assessing Officer in the order of penalty that "either the appellant company was maintaining account with Natwest Bank, London since 1992 or had not furnishing documentary evidence in support of existence of business is factually incorrect and contrary to the evidence on record. 1.9 That the learned Commissioner of Income Tax (Appeals) while upholding levy of penalty, has failed to appreciate that as regards receipt of Rs. 14.58 crores in assessment year 2004-05 and 2005-06, these receipts pertain to Obara Project of UPRUVNL for which, there is no registration of case by CBI or any other investigation agency and as such, declaration of said income by the appellant company could not otherwise be a basis to impose penalty under section 271(1)(c) of the Act. 2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that notice issued for levying the penalty was vague, non-specific and as such penalty levied ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs on the basis of the said notice was invalid and not in accordance with law.
3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that in absence of any valid satisfaction having been recorded in the order of assessment the penalty levied was otherwise not sustainable. It is therefore, prayed that it be held that penalty so levied and sustained is illegal, invalid and therefore, may kindly be deleted and appeal of the appellant be allowed."
11.2 Identical grounds have been raised by the assesse in the appeal for assessment year 2005-06 in ITA No. 4389/Del/2014 which read as under:
"1 That the learned Commissioner of Income Tax (Appeals) XVIII New Delhi has erred both in law and on facts in upholding penalty levied of Rs. 1,50,95,320/- under section 271(1)(c) of the Act.
1.1 That the learned Commissioner of Income Tax (Appeals) while upholding the penalty has failed to appreciate that income in respect of which penalty have been levied was the income declared voluntarily by the appellant firstly by letters dated 1.4.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006 and 23.5.2006 and thereafter in return filed on 21.6.2006 and, 12.2.2007 and also in return filed in response to notice u/s 148 of the Act and as such, it cannot be validly held that assessee has either concealed income or furnished inaccurate particulars of income merely on the ground that, such receipts were not disclosed in the original return of income.
1.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the fact that income assessed was not based on the revised return but on the basis of return filed in response to notice u/s 148 of the Act and the reasons ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs recorded for initiation u/s 147 of the Act established that proceedings had been initiated on the basis of information contained in the revised return and not by way of any detection and hence the finding that there was intentional attempt to evade tax overlooks this factual fundamental aspect and material on record and as such order upholding the levy of penalty is vitiated and untenable. 1.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that till the date of filing of return on 12.2.2007 when assessee had revised return of income by including an amount of Rs. 10.48 crores, no enquiry was either initiated or launched and thus, income offered in the said return represented the income which had been shown to be assessed and as such no part of income assessed could represent an income which can be said to have been concealed by the appellant.
1.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that filing of FIR on 6.3.2006 was in respect of the amount of Rs. 97,13,86,901/- received in Natwest Bank pertaining to appellant company for assessment year 2006-07 which was declared in the original return of income and, not for the sum declared and, assessed in the instant assessment year and as such, the same could not be ground to hold that appellant had not declared the income voluntarily.
1.5 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that assuming for the sake of an argument (though the same is seriously disputed) that there was detection of income by the CBI and it was only on account of detection by CBI that assessee had declared such income then too to determine as to whether income declared by the assessee in the return of income was not voluntary or not, what has to be seen is, whether the income was detected by the learned AO or whether the same was voluntarily offered by the appellant and, not that, it was allegedly ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs detected by CBI and as such the conclusion of the learned officer is based on misinterpretation of provisions of law 1.6 That the learned Commissioner of Income Tax (Appeals) has sustained the penalty mechanically, arbitrarily and in complete disregard of the written submission and evidence furnished on record by the appellant company and therefore, penalty so sustained is wholly misconceived and untenable. 1.7 That the learned Commissioner of Income Tax (Appeals) while framing the penalty, has also overlooked the fact that the various findings recorded in the order imposing penalty had been mechanically and bodily lifted from the order of assessment framed under section 147/143(3) of the Act and therefore, the said penalty levied and sustained is invalid and unwarranted.
1.8 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the observation of the learned Assessing Officer in the order of penalty that "either the appellant company was maintaining account with Natwest Bank, London since 1992 or had not furnishing documentary evidence in support of existence of business is factually incorrect and contrary to the evidence on record. 1.9 That the learned Commissioner of Income Tax (Appeals) while upholding levy of penalty, has failed to appreciate that as regards receipt of Rs. 14.58 crores in assessment year 2004-05 and 2005-06, these receipts pertain to Obara Project of UPRUVNL for which, there is no registration of case by CBI or any other investigation agency and as such, declaration of said income by the appellant company could not otherwise be a basis to impose penalty under section 271(1)(c) of the Act. 2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that notice issued for levying the penalty was vague, non-specific and as such penalty levied on the basis of the said notice was invalid and not in accordance with law.
3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that in absence of any valid ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs satisfaction having been recorded in the order of assessment the penalty levied was otherwise not sustainable. It is therefore, prayed that it be held that penalty so levied and sustained is illegal, invalid and therefore, may kindly be deleted and appeal of the appellant be allowed."
11.3 All the aforesaid grounds as stated above relate to levy of penalty of Rs. 3,76,26,700/- and Rs. 1,50,95,320/- in assessment years 2004-05 and 2005-06 respectively under section 271(1)(c) of the Act. From the perusal of orders dated 30.3.2012 passed by the DCIT, Circle 15(1), New Delhi, it is noted that the penalty has been levied on the basis that the returns of income have been filed after the fact of having income abroad had already become known to the department. It has been noted that FIR was filed on 6.3.2006 and assessee had waited for a period of more than 10 months for filing revised return and after realizing that there is no exit route available, it had furnished the revised returns on 12.2.2007. It was held that the claim of the assessee as to the declaration of income voluntarily had remained un- substantiated and that the assessee had failed to furnish documentary evidence to support expenses of business and had failed to successfully contradict the findings that the money lying in the bank account was not unexplained investment. It was held ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs that the receipts declared by the assessee in both the assessment years was not a voluntary declaration but was a case of intentional attempt to conceal the particulars of income by the assessee company.
11.4 On appeal, the Ld. CIT (A) upheld the conclusion of the Assessing Officer and confirmed the levy of penalty under section 271(1)(c) of the Act for both the years.
11.5 Before us, the learned counsel for the assessee has contended as under:
"1 It is submitted that, it is undisputed that, income assessed by learned AO is on the basis of income declared by the assessee in letters dated 1.04.2006, 11.4.2006, 19.4.2006, 21.4.2006, 22.4.2006, 27.4.2006, 20.5.2006 and, thereafter in the returns furnished by the appellant on 21.06.2006 and 12.02.2007 filed by the assessee company. 2 Thus, once income declared voluntarily has been assessed as such, it cannot be alleged that, there is furnishing of inaccurate particulars of income. In fact, the aforesaid letters/return of income would show that no enquiry was either initiated or launched by the learned Assessing Officer before disclosure of income and thus, income voluntarily offered has been assessed as such. It is thus, submitted that there is no concealment of any income. All what could be alleged is that, in the return filed on 31.10.2005, the assessee omitted to include a sum of Rs. 10.48 crores, However, bonafide of assessee is established when assessee itself on 12.02.2007 included the entire sum received even though it did not pertain to the instant assessment year but was relatable to the succeeding years. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs It is thus submitted that, no part of income assessed could represent an income which can be said to have been concealed. In fact, it is on the basis of income shown by assessee the learned Assessing Officer had made detailed examination and, in absence thereof he had no source which could make him believe that there was even an attempt to conceal income.
3 This is evident from the reasons recorded for initiating proceedings u/s 147 of the Act. The expression "concealment of income" has been elaborately discussed in the judgment of jurisdictional High Court in the case of LR Gupta v UOI reported in 194 ITR 32 and, if the said law is applied, it cannot be remotely alleged that, there is concealment of income. The expression concealment of income and, omission are not akin. The appellant, at this juncture alone, also seeks to refer to decision of Third Member in the case of Addl. CIT vs. Premchand Garg reported in 123 TTJ 433. 4 As regards the filing of FIR on 6.03.2006, it is submitted that, FIR filed on 6.03.2006 has absolutely no connection with receipts received by the appellant company in the year under consideration but to receipts for the Assessment Year 2006-07 which were duly declared in the original return for Assessment Year 2006-07. It is also stated here that a criminal case was registered under Indian Penal Code and Prevention of Corruption Act against unknown officials of NTPC of India and others on 6.3.2006 and, not against the appellant company; thus the same could not be made any basis to assume that, income declared by the assessee vide letters dated 1.4.06, 11.04.2006 and, subsequently in the return of income was not voluntary.
5 It is further added that, the filing of FIR on 6.03.2006 (which the assessee was not even aware and was not known till 02.05.2006) when a copy of fax was received by her from Central Confiscation Branch, Crown Prosecution Service, London. However, it was submitted that, prior thereto, the assessee had only received on 29.04.2006, a letter from the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Natwest bank dated 25.04.06 in the case of M/s Ravina & Associates P. Ltd., wherein they had intimated that operations in the bank accounts of the assessee and M/s Ravina & Associates P. Ltd. had been temporarily 'suspended' on account of restraint order served on the bank on 20.04.2006. It may kindly be noted these are all subsequent developments and are of a date later than appellant on its own addressing a communication to the tax authorities. It may also be stated here that this letter was issued since appellant had approached the bank several times since March' 2006 [6.03.2006) 28.03.2006, 30.03.2006, 12.04.2006, 13.04.2006, 19.04.2006, 22.04.2006 and 25.04.2006, for closure of the bank accounts, obtaining the bank statements and remitting the funds to India. Infact, letters addressed to the bank in March' 2006 were only as a result of discussions held by the assessees with the Advocate in February' 2006 who apprised them of the liability to pay tax in respect of the sums credited in the Natwest Bank account at London written by the assessee to the advocate in the respective years. Hence, in light of the aforesaid, it is respectfully submitted that, the income was voluntarily offered firstly vide letters dated 01.04.2006 & 11.04.2006 and thereafter in the returns of income dated 21.08.2006 and 12.02.2007. The assessee further submits that the belief of the assessee was bonafide is evident from the fact that sums received outside India from foreign entities were not disclosed in preceding assessment years and such receipts have not been disclosed as income in the instant year. It is submitted that it is a matter of record, the Assessing Officer who was assessing the assessee was well aware, as could be evident from record of assessment for such of the years. It is thus a clear case of ignorance of law till 1.4.2006 and, once the assessee came to know of its liability to tax, the assessee voluntarily and, of its own furnished the return of income.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 6 It is also submitted that, the notice dated 31.12.2007 and 6.3.2012 was highly vague, non-specific and, hence unsustainable. Infact, it will be seen from the notice that neither the items for which proceedings had been initiated had been specified and nor the charge against the assessee in respect of which purported items had been specified. It is thus respectfully submitted that since notice itself issued was highly vague, therefore, the same cannot be a ground to levy penalty under section 271(1)(c) of the Act. Reliance is placed on the judgement of the Hon'ble Delhi High Court in the case of CIT v Ajay Hari Dalmia 157 ITR 145 wherein it has been held as under:
"In penalty proceedings, it was not only necessary to inform the assessee of the particular concealment but also necessary for the Department to prove positively that there was such a concealment. In such a case, it becomes the duty of the Department to inform the assessee of the particular concealment that had taken place so that he could defend the case. This has led to the cancellation of the penalty order both by the Commissioner as well as the Tribunal which has merely affirmed the Commissioner's order." [Emphasis Supplied] 7 It is also respectfully submitted that, no penalty is leviable on the facts of the instant case in as much as there is no satisfaction recorded in the order of the assessment u/s 147/143(3) of the Act for the levy of penalty. The mere general and vague observations in the order of assessment cannot in law or on facts as be held to be a satisfaction recorded in conformity with the provisions contained in section 271(1)(c) of the Act. Infact no satisfaction has been reached by the learned Assessing Officer and, proceedings have been initiated in a mechanical manner when along with the notice of demand a printed notice u/s 271 (1)(c) was also forwarded to the assessee. It is submitted that, satisfaction of the learned officer is not a cause for inference but must be clearly discernible from the order of assessment. This view ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs has been expressed by Hon'ble Delhi Court in the case of CIT Vs. Madhu Shri Gupta reported in 317 ITR 107. In this context, reliance is also placed on the observations of their lordship of the jurisdictional High Court, which is binding in nature, in the case of CIT v. Auto Lamp reported in 278 ITR 32.
8 In light of the above submissions, it be held that the assessee has not concealed any income and the penalty imposed u/s 271(1)(c) may be cancelled considering the bonafide explanation of the assessee. It is again reiterated that, there was no attempt to intentionally evidence taxes by concealing particulars of income which would warrant imposition of penalty u/s 271(1)(c) of the Act."
11.6 It has thus been contended inter-alia that the returns of income were filed by the assessee voluntarily and it was only on account of letters filed by the assessee that it became known to the department and there was no independent enquiry or information available with the department so as to hold that there was detection on the part of the revenue prior to the declaration of income by the assessee. Apart from the above, it has been contended that the notices issued were non-specific and vague and, therefore, no penalty was leviable. The learned counsel for the assessee sought to rely upon various judicial pronouncements to contend that no penalty was leviable. The list ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs of such judgments as relied upon in the course of hearing are as under:
i) Aditya Chemicals v. ITO in ITA No. 5006/Del/2013 dated 21.11.2017
ii) Meta Gutgutia ITA No. 327/Del/2014 dated 31.3.2016
iii) Mohd. Irshad v. ITO in ITA No. 4994/Del/2013 dated 22.6.2015
iv) Vaish Degree College Trust v. ACIT in ITA No. 4538/Del/2011 dated 28.9.2012
v) Mrs. Archana D. Talati in ITA No. 2696/Del/2016 dated 5.6.2017
vi) Mrs. Premila Bhatia v. DCIT in ITA No. 1929/Del/2011 dated 3.2.2012
vii) ACIT v. TRN Energy (P) Ltd. in ITA No. 453/Del/2016
viii) CIT v. Smt. Vinay Sharma in ITA No. 187/2014 dated 2.5.2014 (Del)
ix) CIT v. Control & Switchgear Contractors Ltd. in ITA No. 290/2015 dated 24.8.2015
x) CIT v. Prashant Shrivastava in ITA No. 393/2015 (Del)
xi) R. Umedbhai Jewellers (P) Ltd. v. CIT in ITA No. 221/Del/2015 ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
xii) CIT v. M/s Preet Land Promoters & Developers (P) Ltd.
in ITA No. 518/Chd/2012 11.7 On the other hand, the learned CIT DR supported the action of the authorities below and filed written submission wherein it was submitted as under:
"It is humbly submitted that the following decisions may kindly be considered with regard to levy of penalty u/s 271(1)(c) of the I.T. Act.
1 MAK Data (P) Ltd. v. CIT [358 ITR 593 (SC) (2013(Copy enclosed) where Hon'ble Supreme Court held that under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails to offer an explanation which is bonafide and proves that all the material facts have been disclosed. 2 S. Rudramuniyappa v. CIT (75 taxmann.com 241) (Copy enclosed) where Hon'ble Supreme Court held that under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails to offer an explanation which is bonafide and proves that all the material facts have been disclosed. 3 CIT v. Escorts Finance Ltd. [2010) 328 ITR 44 (Del) (Copy enclosed) where Hon'ble Delhi High Court held that if claim made in return of income appears to be ex facie bogus, it would be treated as a case of concealment or furnishing of inaccurate particulars and penalty proceeding would be justified. 4 CIT v. Zoom Communication (P) Ltd. (2010) 327 ITR 510 (Del) (Copy enclosed) Where Hon'ble Delhi High Court held that if assessee makes a claim which is not only incorrect in law, but is also wholly ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs without any basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271(1)(c) would come into play and assessee will be liable to penalty 5 CIT v. Usha International Ltd. (Delhi High Court) (Copy enclosed as Annexure-6) The mere fact that revised return was filed withdrawing a claim or offering additional income before issue of a formal notice by the AO does not necessarily mean that the return is voluntary. The filing of a revised return does not expatiate the contumacious conduct, if any, on the part of the assessee in not having disclosed he true income in the original return."
In view of the above decisions, it is humbly requested that appeals of the assessee may be dismissed.
11.8 We have considered the rival submissions and perused the material on record. It is evident from the notices u/s 274 r.w.s.
271 of the Act dated 27.12.2007 and 6.3.2012 that the AO has not specifically specified under which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon'ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 (Kar) has inter-alia held as under:
"(p) Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) i.e., whether ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs it is for concealment of income or for furnishing of inaccurate particulars of income
(q) Sending printed form where all the ground mentioned in section 271 are mentioned would not satisfy requirement of law."
11.9 The above said decision of Hon'ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton & Ginning Factory (supra) has been followed by the Hon'ble High Court of Karnataka in the case of CIT v. SSA's Emerald Meadows 73 taxmann.com 241 and the relevant portion is as under:
"2. This appeal has been filed raising the following substantial questions of law:
1 Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?
2 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is bad in law and invalid despite the amendment of Section 271(1B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same?
3 Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs order when the assessing officer has specified that the assessee has concealed particulars of income?"
3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.).
4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.
11.10 The SLP filed by the revenue against the above judgment has been dismissed by Hon'ble Supreme Court of India and the decision of Hon'ble Supreme Court is reproduced here in below:
"1 Delay condoned 2 We do not find any merit in this petition. The special leave petition is accordingly dismissed. 3 Pending application, if any stands disposed off."
11.11 Therefore, in the circumstances and on the facts of the present case and in light of the judgments of the Hon'ble ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Karnataka High Court and the Hon'ble Supreme Court reproduced hereinabove, we are of the considered view that the Assessing officer is required to specify as to under which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. From the perusal of the notice u/s 274 r.w.s. 271 of the Act, Assessing officer has not specified as to under which of the two limbs the penalty is imposable. In the circumstances and facts of the case, the penalty proceedings so initiated by the AO are bad in law and accordingly the penalties so initiated are ordered to be cancelled and the order/s of the learned CIT (A) are reversed. Thus, the legal ground raised is decided in favour of the assessee and is allowed.
11.12 Moreover, even on merits, the reason which led the authorities below to levy the impugned penalty is that there was no voluntary declaration by the assessee. We have already held, while disposing off Grounds 1 to 1.4 and Grounds 3 to 3.6 in ITA Nos. 1004/Del/2011and 1005/Del/2011 for assessment years 2004-05 and 2005-06, that the income declared by the assessee was voluntary and the nature of income was not ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs unexplained investment under section 69 of the Act. In view of the above findings, we are of the considered view that penalty is not leviable even on the facts of the case of the assessee company and it is not a case where there was any detection of income by the authorities below prior to the declaration of income by the assessee. On the contrary, the reasons recorded establish that income was sought to be assessed on the basis of declaration of income by the assessee company.
11.13 The Third Member of the ITAT in the case of Addl. CIT vs. Premchand Garg reported in 123 TTJ 433 has held as under:
"19. The fact, whether there is concealment of income or whether inaccurate particulars thereof have been furnished is essentially a question of fact. To find out that or to decide which, all the attending circumstances have to be taken into account. The question is at what point of time this material fact is to be found out. Generally it is with reference to the return of income and at that time it is to be seen whether there was concealment of income from or furnishing of inaccurate particulars thereof in the return of income chargeable to tax. But there may be cases, where an income is not declared in the return or the particulars of income shown inaccurately in the return but assessee on realization of mistake, omission or misdeed rectifies that and corrects himself and cleans his breast can he still be accused of concealment though in the return there has been the omission. By the time the AO takes up the issue and comes across the information in his possession, if the assessee makes up the deficiency and offers the income or furnishes ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs accurate particulars he, in our opinion, cannot be held guilty of concealment of income or furnishing of inaccurate particulars of his income. Any action rectified relates back to original act and to the date and time of filing the return. When the AO starts scrutiny of the return and initiates assessment proceedings there is nothing concealed and the inaccuracy, if any, disappeared.
.....
20. A perusal of this provision clearly shows that it is in the course of any proceedings under the Act, assessment proceedings in this case, that the AO is to be satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. It is thus to be judged at this stage and if at this stage he has declared the correct income and/or furnished accurate particulars of his income then there is no scope, in our opinion, to arrive at the satisfaction by the AO because at that stage there in no such concealment. It disappeared by an action of the AO. In this case the assessee has no doubt did not show the amounts received as alleged gifts as his income, but no details of loans - are given in the return nor any other particulars thereof given by the assessee at that stage, not to speak of inaccurate one. When the assessment was taken up and a general enquiry was made by the AO requiring him to furnish details of any loans/gifts, if any, the assessee offered the amounts received as alleged gifts as his income and before it could be detected by the AO. There was thus no concealment of the particulars of his income nor there remained furnishing of any inaccurate particulars of his income. It vanished before it could be detected.
21. The correct and accurate disclosure may be by filing the revised return or by furnishing the particulars of such income before the detection by the AO. The mere fact that the assessee had not revised returns or that the offer was by letter to avoid harassment to the assessee and the donors who were non-resident persons, it cannot convert an offer to ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs tax as concealment of income. Therefore, in my opinion the assessee has not furnished inaccurate particulars of the income in the returns before detection by the Revenue.
22. Therefore, mere omission of the surrendered income from the return of an item of receipt does neither amount to concealment nor furnishing of inaccurate particulars of income unless and until there is some evidence to show/exist or some circumstances found from which it can be gathered that the omission was attributable to an intention or a desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. Apart from the surrender there was nothing more on record to hold the assessee guilty of offering the said amount on detection of the concealment. Even in assessment order there is nothing of that sort.
24. There was no specific provocation or an apprehension of detection prevailing at the time when the offer was made and in the absence of any such imminent fear from the side of the Revenue, if the assessee came forward and paid the tax thereon by adding the same in the returned income, it has to be taken as a voluntary offer to tax. On the face of the evidence in the shape of confirmation letters, bank accounts, passport etc. in the hands of the assessee, it might be valid gift that would have convinced a reasonably minded person, specially a person exercising a judicial function. The accepted position of law is that merely because an assessee had agreed to the assessment that cannot bring in automatic levy of penalty.
25. The facts and circumstances and the merits of the case and the cogent evidences placed on record are such as to exonerate the assessee from concealment penalty. The CIT(A) in my opinion is right in deleting the penalty, his order is affirmed and the appeals of the Revenue are dismissed."
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 11.14 Also, the Hon'ble Punjab & Haryana High Court in the case of CIT v. Rajiv Garg reported in 313 ITR 256 (P &H) has held as under:
"The Department has simply rested its conclusion on the act of the assessee of having offered additional income in the return filed in response to the notice issued under section
148. Therefore, in view of the aforesaid finding, the Tribunal was justified in upholding the order of the CIT (A), whereby the penalty imposed u/s 271(1)(c) by the AO was order to be deleted."
11.15 Further, the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Suresh Chandra Mittal reported in 241 ITR 124 (MP), which has been affirmed by the Hon'ble Apex Court in the case of CIT vs. Suresh Chandra Mittal reported in 251 ITR 9 (SC) has held as under:
"It is well settled that under section 271(1)(c) the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority. However the proviso to Explanation 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. In the present case though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer but once the revised assessment was regularised by the Revenue and once the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs assessing authority had failed to take any objection in the matter the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner of Income-tax (Appeals) in the facts and circumstances of the case. This reference is accordingly answered in the affirmative holding that the Tribunal was justified in doing so."
11.16 The Hon'ble Delhi High Court in the case of Pr. CIT v.
Neeraj Jindal reported in 393 ITR 1 (Del) has held as under:
"17. In this case, the A.O. in his order noted that the disclosure of higher income in the return filed by the assessee was a consequence of the search conducted and hence, such disclosure cannot be said to be "voluntary". Hence, in the A.O.'s opinion, the assessee had "concealed" his income. However, the mere fact that the assessee has filed revised returns disclosing higher income than in the original return, in the absence of any other incriminating evidence, does not show that the assessee has "concealed" his income for the relevant assessment years. On this point, several High Courts have also opined that the mere increase in the amount of income shown in the revised return is not sufficient to justify a levy of penalty.
18. The Punjab & Haryana High Court in CIT v. Suraj Bhan [2007] 294 ITR 481/159 Taxman 26, held that when an assessee files a revised return showing higher income, penalty cannot be imposed merely on account of such higher income filed in the revised return. Similarly, the Karnataka High Court in the case of Bhadra Advancing (P.) Ltd v. Asstt. CIT [2008] 175 Taxman 551, held that merely ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs because the assessee has filed a revised return and withdrawn some claim of depreciation penalty is not leviable. The additions in assessment proceedings will not automatically lead to inference of levying penalty. The Calcutta High Court in the case of CIT v. Suresh Chand Bansal [2010] 329 ITR 330 held that where there was an offer of additional income in the revised return filed by the assessee and such offer is in consequence of a search action, then if the assessment order accepts the offer of the assessee, levy of penalty on such offer is not justified without detailed discussion of the documents and their explanation which compelled the offer of additional income. The Madras High Court in the case of S.M.J. Housing v. CIT [2013] 357 ITR 698/38 taxmann.com 203 held that where after a search was conducted, the assessee filed the return of his income and the Department had accepted such return, then levy of penalty under Section 271(1)(c) was not justified. From the above cases it would be clear that when an assessee has filed revised returns after search has been conducted, and such revised return has been accepted by the A.O., then merely by virtue of the fact that such return showed a higher income, penalty under Section 271(1)(c) cannot be automatically imposed."
11.17 In view of the aforesaid, having regard to the above, we find that no penalty is leviable on the facts of the case of appellant and penalty levied is deleted. Grounds raised by the assessee are therefore allowed for both assessment years.
11.18 In the result, ITA Nos. 4388/Del/2014 and 4389/Del/2014 filed by the assessee are allowed. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
12. ITA Nos. 1946/Del/2010 to 1950/Del/2010 for Assessment Years 2000-01 to 2004-05 are the five appeals in the case of Ravina Khurana, director of M/s RAPL. In ITA No. 1946/Del/2010 for AY 2000-01, the assessee has raised the following grounds of appeal:
"1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that return of income filed by the appellant on 12.2.2007 declaring income representing the receipts credited in Natwest Bank Account, London is not voluntary.
1.1 That in arriving at the aforesaid conclusion, the learned Commissioner of Income Tax (Appeals) has overlooked the reasons recorded for initiation of proceedings under section 147 of the Act wherein it has been stated that proceedings under section 147 of the Act had been initiated on the basis of income declared by the appellant in letter dated 1.4.2006 and the return of income filed by the appellant on 12.02.2007 and therefore, conclusion that return of income was not voluntary is wholly misconceived, misplaced and untenable. 1.2 That the learned Commissioner of Income Tax (Appeals) in arriving at the aforesaid conclusion, has failed to appreciate that a criminal case was registered under the Indian Penal Code and Prevention of Corruption Act against the unknown officials of NTPC of India and others on 6.3.2006 and not against the appellant and therefore, the same neither in law and nor on fact could have been made a basis to assume much less conclude that income declared by the appellant in letter dated 1.4.2006 and return of income filed by the appellant on 12.2.2007 is not voluntary. 1.3 That the adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are not only factually misconceived but also legally unsustainable and infact, ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs overlook the submissions made by the appellant and judicial pronouncements to establish that income declared by the appellant was not voluntary in as much as no material has been gathered or obtained by the Department prior to furnishing of declaration of income by the appellant to suggest or even hold that income declared by the appellant relating to sums credited in the Natwest Bank Account at London was not voluntary.
1.4 That the entire basis adopted by the learned Commissioner of Income Tax (Appeals) to arrive at the conclusion is based on assumptions and presumptions which are unsupported by any material and hence not tenable.
2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and, on facts in holding that, aggregate sum of Rs. 59,58,975/- represented unexplained investment under section 69 of the Act.
2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, sum of Rs.59,58,975/- represented retainership charges from M/s Intersputnik of Rs. 35,41,479/-, bank interest of Rs. 21,47,047/- and other miscellaneous receipts received in the course of business of consultancy of Rs. 2,70,449/- and, as such, the aforesaid sums neither in law and, nor on fact could validly be held to be unexplained investment u/s 69 of the Act. 2.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the documentary evidence furnished by the appellant to demonstrate the nature of income received by the appellant and as such, conclusion so arrived overlooks the facts and, is also not in accordance with law and hence unsustainable.
2.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that sums brought to tax as retainership charges were on the basis of bank statements credited in the bank account maintained by the appellant with Natwest Bank London and, since bank statement itself demonstrate the nature of receipts being retainership charges ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs from Intersputnik, there was no valid justification for the learned Commissioner of Income Tax (Appeals) to have concluded that such sums represented unexplained investment under section 69 of the Act.
2.4 That the finding recorded by the learned Commissioner of Income Tax (Appeals) that documents produced by the appellant in the shape of agreements, confirmation and correspondence do not in any way throw sufficient light on the source and nature of the huge deposits made in the above accounts maintained by the appellant is misconcieved, misplaced and hence unsustainable.
2.5 That further the findings recorded by the learned Commissioner of Income Tax (Appeals) that "AO has also raised a number of objections and pointed out a number of anomalies in the appellant's submissions both in the assessment order and in the remand report. I find that the appellant has not been able to counter the above objections or explain the anomalies by any documentary evidence or clarification" is factually incorrect, overlooks the statement made by the appellant and documentary evidence tendered both in the course of assessment proceedings and appellate proceedings and therefore not tenable.
2.6 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate submission of the appellant that original copy of the appellant was not retained by the appellant and therefore, could not be produced. Infact, the appellant had requested the learned Officer to issue summons to M/s Intersputnik and despite such specific request having been made, no summons were issued, in such circumstances, it could not thus have been validly held that sums so received were not for services rendered and did not represent retainership charges received by the appellant. 2.7 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in holding the miscellaneous receipts as credited in the bank account at Natwest Bank London representing unexplained investment ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs u/s 69 of the Act. In fact, that the finding that, the appellant has not been able to explain the nature and source of such receipts by any satisfactory documentary evidence or books of accounts is highly misconceived in as much as it is contrary to the factual matrix of the case of the appellant.
3. That the learned Commissioner of Income Tax has further erred both in law and on facts in upholding the disallowance of Rs. 84,180/- representing professional charges paid by the appellant.
4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest under section 234B and 234C of the Act which on the facts of the case was not leviable. 4.1 That while upholding the levy of interest under section 234B and 234C of the Act, the learned Commissioner of Income Tax (Appeals) has failed to appreciate submissions made by the appellant to establish that no interest is liable on the facts of the case of the appellant and thus interest confirmed was not in accordance with law. 4.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that even otherwise, no interest was leviable after such sum had duly offered to tax vide letter dated 01.04.2006 and thus interest levied and, sustained mechanically is illegal, invalid and, not sustainable.
It is, therefore, prayed that, it be held that income declared by the assessee of Rs. 59,58,975/- represented retainership charges from M/s Intersputnik of Rs. 35,41,479/-, bank interest of Rs. 21,47,047/- and other miscellaneous receipts of Rs. 2,70,449/- and, not unexplained investment 69 of the Act. It be also held that, income declared by the appellant in the return of income filed on 12.2.2007 and also in the return of income filed in response to notice under section 147 of the Act was voluntary and further, disallowance made along- with interest levied be deleted and, appeal of the appellant be allowed."
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 12.1 Identical grounds have also been raised in the appeals for assessment years 2001-02 to 2004-05 in ITA Nos.
1947/Del/2010 to 1950/Del/2010.
12.2 The relevant facts in brief are that the assessee had filed her original returns of income for the different assessment years as mentioned below:
Assessment Date of Filing of Total Income Declared Year Return of Income 2000-01 30.08.2000 1,26,200/-
2001-02 31.07.2001 1,27,100/-
2002-03 01.08.2002 1,67,719/-
2003-04 22.12.2003 1,79.390/-
2004-05 21.09.2004 1,69,135/-
12.3 The aforesaid returns were processed u/s 143(1) of the Act.
12.4 An explanatory note was attached to each of the above returns of income filed on 12.02.2007. The explanatory note for AY 2000-01, which is similar in content to notes for other years, is reproduced hereunder:
"1. For the instant assessment year, the assessee named above, had furnished a return of income u/s 139(1) of the Act on 30.8.2000 disclosing an income of Rs. 1,26,200/-. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
2. The assessee company however now offering receipts received in the Natwest Bank Accounts-London during the year of Rs. 59,58,973.55/- as income of the instant assessment year by revising the return already filed by the assessee. The details of the entire receipts in the Natwest Bank Accounts-London received by the assessee are enclosed as Annexure-B (pages 11 of Paper Book-I) to this return of income. The perusal of the details would disclose that the assessee has received retainership charges from M/s intersputnik of Rs. 35,41,478.37/- bank interest of Rs. 21,47,046.47/- and, other miscellaneous receipts of Rs. 2,70,448.71/-. Further apart from the above receipts, the assessee is also offering an amount Bank interest of Rs. 4,351/- to be added in the returned income in place of Rs. 4,284/- which has already been added in the original return of income.
It may be stated and, clarified here that, the assessee is following cash system of accounting and, as income has been offered as income of the assessee for the instant assessment year.
3. Apart from above, following documents are enclosed with this return of income.
a) Copy of Original Return of Income (Annexure-C)
b) Copy of Original Computation of Income (Annexure-D)
c) Balance Sheet and income & Expenditure Account for the year ending 31.03.2000 (Annexure-E)
d) Tax Audit Report for the year ending on 31.03.2000 (Annexure-F)
4. Details of Foreign Travel the assessee during the instant year are enclosed as Annexure-G. It is stated that, expenditure of traveling and , lodging of the assessee stands debited in the books of M/s Ravina & Associates (P) Ltd.
since she has traveled abroad for the business purposes of the aforesaid company.
5. It is prayed that tax of Rs. 35,26.00/- may kindly be collected from bank account nos. 44259816 & 140-01- ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 03368092 with Natwest Bank, London and 051-223899006 with HSBC, Birla Tower, Earakhamba Road, New Delhi- 110001 of the assessee, which are lying attached probably, at the instance of the order of Specail judge, CBI Court, before whom, the assessee is also making a separate request. A copy of order of Special Judge, CBI Court is enclosed as Annexure-H and, intimation thereof to us by the Bank is enclosed as Annexure-I.
6. The interest of 234B and 234C of the Act has been computed by the assessee with right of waiver available to the assessee under the Act.
7. It is lastly prayed that, the aforesaid return of income be regularized by issuing notice u/s 148 of the Act."
12.5 Thereafter, proceedings were initiated by the AO u/s 147 of the Act and notice u/s 148 was served upon the assessee on 19.02.2007. In response to same, the assessee filed reply dated 28.02.2007 stating that the returns of income filed on 12.02.2007 may be treated as returns in response to the notice u/s 148 of the Act. Subsequently, after providing the assessee an opportunity of being heard, the impugned assessment orders u/s 142(3)/147 were passed by the AO determining the total income of the assessee for the year under consideration as under:
Sr. Particulars Assessment Year
No. 2000-01 2001-02 2002-03 2003-04 2004-05
1. Total income assessed 6,83,03,103 1,31,46,854 39,91,310 14,66,018 1,12,22,573
2. Total addition made 6,23,03,193/- 1,29,244/- 1,29,180/- 1,29,128/- 1,42,683/-
ITA No. 1004, 1005/D/2011,
4388/D/14 & Others
Assessment year 2004-05 & Othrs
3. Nature of additions
i) National rental income 45,000 45,000 45,000 45,000 45,000
from house property
ii) Disallowance of claim of 84,180 84,180 84,180 84,180 84,180
expenditure on account
of professional charges
iii) Opening balance in the 6,23,72,953 ----- ----- ------ -----
bank account
iv) Disallowance claim 67 62 ----- ------ ------
deduction u/s 80L
12.6 During the first appellate proceeding, the assessee, vide letter dated 28.05.2008, filed application for admission of additional evidence under rule 46A of the Income-Tax Rules, 1962. The same was forwarded to the AO for remand report.
Further, the assessee also filed written submissions which were also forwarded to the AO seeking his comments. The AO submitted his remand report on the additional evidence/s and comments on the written submissions vide two separate letters and the assessee filed her reply to the above reports of the AO vide two separate letters dated. Thereafter, the learned CIT (A) proceeded to dismiss the appeals and hence these appeals before us.
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 12.7 Both the parties before us agreed that the findings recorded by us in ITA No. 1004/Del/2011 and ITA No. 1005/Del/2011 in the case of RAPL would apply mutatis mutandis to the case of the assessee for the instant assessment years and having regard to the same, we decide each of the Grounds raised in these appeals.
12.8 Grounds 1 to 1.4 for assessment years 2000-01 to 2004-05 are identical to Grounds 1 to 1.4 in ITA No. 1004/Del/2011 and ITA No. 1005/Del/2011 for Assessment years 2004-05 and 2005- 06 in the case of RAPL. We have already held, while adjudicating the said grounds, that income declared by the assessee was voluntary. In view of the above, having regard to the findings referred by us in Ground No(s) 1 to 1.4 for assessment years 2004-05 and 2005-06, the instant grounds in all the five appeals are also allowed.
12.9 Grounds 2 to 2.7 for assessment years 2000-01 to 2004-05 are identical to Grounds 3 to 3.5 in ITA No. 1004/Del/2011 and 1005/Del/2011 for assessment years 2004-05 and 2005-06 in the case of RAPL. On consideration of the aforesaid Grounds, we have already held that the receipts were not unexplained investment under section 69 of the Act. Thus, having regard to the findings recorded in the said grounds, we hold that the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs impugned income is not unexplained investment under section 69 of the Act. Thus, Grounds 2 to 2.7 in the five appeals are allowed.
12.10 Ground no. 3 in each of these appeals for the assessment years 2000-01 to 2004-05 challenges the disallowance of professional charges paid by the assessee. The learned CIT (A) had rejected the claim by concluding as under:
"9.1 The AO has disallowed the above amount of Rs. 84,180/- claimed as expenditure on account of auditor's fees on the ground that the appellant is following cash system of accounting and the said amount of Rs. 84,180/- has not been paid during the year. The ld. AR has argued that the mere fact that sum has not been paid cannot be made a basis to hold that this expenditure is not eligible business expenditure. On careful consideration of the matter, I am of the view that since the said amount has not been paid by the appellant during the year under consideration, following he cash system of accounting being followed by the appellant, the said disallowance has been correctly made. The same is therefore, confirmed."
12.11 On careful consideration of the facts, we do not find any merit in the said claim of the appeal and therefore, the same is rejected. Grounds raised are accordingly rejected.
12.12 Grounds 4 to 4.2 relating to levy of interest in each of these appeals for assessment years 2000-01 to 2004-05 are ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs identical to Grounds 8 to 8.2 and Grounds 7 to 7.2 in ITA Nos.
1004/Del/2011 and 1005/Del/2011 for assessment years 2004- 05 and 2005-06 in the case of RAPL. We have already held therein that the levy of interest is compensatory but no interest is chargeable after 1.4.2006 under the Act. In view of the above, the grounds raised by the assessee are allowed in all the five appeals.
12.13 In the result, ITA Nos. 1946/Del/2010 to 1950/Del/2010 are partly allowed.
13. ITA No. 3173/Del/2010 is an appeal preferred by the revenue for AY 2000-01 in the case of Mrs. Ravina Khurana. The revenue has raised the following grounds of appeal which read as under:
"1 That on the facts and circumstances of the case and in law the ld. CIT(A) erred in deleting the addition of Rs. 6,23,75,953/- treated as income for the AY 2000-01 u/s 69 of the I.T. Act, 1961 which was not explained by the assessee.
2 That on the facts and circumstances of the case as well as in law, the ld. CIT(A) erred in deleting the addition simply relying on bank account even when the assessee failed to explain the nature and source of the deposits. The bank statement cannot be considered as the books of the account of the assessee. The nature of amount may be advance or deposit which has to be ascertained by examination of the nature of the transaction leading to the deposit. Since the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs nature of the transactions leading to the deposit was not explained by the assessee, the AO was justified in making the addition.
3 The appellant craves to be allowed to add, delete or amend any other grounds of appeal."
13.1 We have considered the rival submissions and have perused the material on record. The Ld. CIT (A) has deleted the impugned addition by holding as under:
"8.6 I have carefully considered the assessment order, remand report of the AO and the submissions made by the ld. AR on the above issue. The appellant's argument that the bank account can be equated with books of accounts maintained by the appellant is not acceptable for detailed reasons cited by me in para 7.9.2 above. However, I find that this issue is not material to deciding the taxability of the opening balance of Rs. 6,23,72,953/- in the bank account of the appellant as on 01.04.1999. It is not in dispute that the above amount represents the brought forward closing balance in the aforesaid bank accounts as on 31.03.1999. It is settled law that what can be brought under the ambit of unexplained investment u/s 69 is the value of such investment made by the assessee during the financial year immediately preceding the relevant assessment year under consideration and not the brought forward balances of earlier years. This is clearly borne out by the provisions of section 69 which specifies that "Where in the financial year immediately preceding the assessment year the assessee has made investment which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investment or the explanation offered by him is not, in the opinion of the AO, satisfactory, the value of the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs investments may be deemed to be the income of the assessee of such financial year." (emphasis supplied). The above statutory provision is identical in nature to the year of taxation of unexplained cash credit u/s 68 of the Act also. It is settled law that correct income is to be taxed in correct hands and in the correct year. This has been judicially upheld in a large number of cases. In identical circumstances, the Hon'ble High Court of Delhi in the case of CIT v. Om Prakash Mahajhan 152 ITR 583 held as under:
"If an explanation is offered regarding the cash credit entry which is rejected in to, the amount may be added in the year in which the entry appears, i.e., in the present case, it would be taxed in the assessment year 1967-68. If the explanation is partially accepted to the extent that the entry elates to the income earned in some 'previous period, then the entry cannot be taxed in 1967-68, but has to be taxed in the correct year. Learned counsel for the Commissioner urged that it could only be taxed in 1967-68 on the footing that a partially accepted explanation means rejection of the explanation. However, the wording of s. 68 says that the amount may be taxed in the previous year. If this income relates to some other year, it must be taxed in the correct year. Therefore, the application of the provision depends on the facts actually found in any particular case.
Learned counsel for the Department also urged that he did not really challenge this point of view but he submitted that the Tribunal had wrongly accepted the explanation to the extent of holding that the amount was in existence in March, 1966. We think this is a finding of fact. The Tribunal could have rejected the explanation, but in order to make it taxable in the hands of the assessee, there had to be a finding that the amount was benami and did not belong to the wife. The wife's point of view was that this was the same amount which was disclosed under the Voluntary Disclosure Scheme on March, 1966. When this explanation was rejected on the footing that the wife had never any source of income, an ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs inference of fact was drawn that this was the husband's money which was disclosed by the wife. It would, therefore, follow that the finding that the amount was in existence in March, 1966, followed from the explanation given by the assessee and that given by his wife.
It is a conclusion of fact."
This view has recently been expressed by the Hon'ble Delhi High Court in the case of CIT V Usha Stud Agricultural Farms Ltd. reported in 301 ITR 384, wherein it has been held as under:
"7. Here, the CIT(A) has deleted the addition of Rs. 15 lakhs mainly on the ground that this credit balance of Rs. 15 lakhs is being reflected in the accounts of the assessee over the past four to five years or so and hence this was not a fresh credit entry of the previous year under consideration and these credit entries were already made and accounted for in the assessment years 1995-96 and 1997-98 which were introduced in the form of advance against breeding stallions owned by the assessee and thus these credit entries did not relate to the year under consideration for being considered under section 68 of the Act.
8. Since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assessee, does not pertain to the year under consideration, under these circumstances, the Assessing Officer was not justified in making the impugned addition under section 68 of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A).
9. The above being the position, no fault can be found with the view taken by the Tribunal.
Identical view has been expressed by the Hon'ble Rajasthan High Court in the case of CIT V Prameshwar Bohra reported in 301 ITR 404, wherein it has been held as under:
"5. On the merit, of the additions made in the income of the assessee, there is a clear finding, and about which there is no dispute, that the amount added in the income of the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs assessee as unexplained investment or cash credit in the asst. yr. 1993-94 was the same amount which was credited in the books of account of the assessee for previous year ending on 31st March, 1992. The Tribunal has categorically come to a finding, and that finding is not under challenge, that this is not a case of cash credit entered in the books of account of the assessee during the year but it is a case in which the assessee has invested the capital in. the business and this amount was shown as a closing capital as on 31st March, 1992 and on 1st April, 1992 it was an opening balance. Considering this aspect, the Tribunal has come to the conclusion that what was already credited in the books of account ending on 31st March, 1992 for financial year 1991- 92 relevant to asst. yr. 1992-93 cannot be an unexplained cash credit or investment in the books of account maintained for the financial year 1992-93, the accounting period of which ends on 31st March, 1993 so as to warrant its consideration as unexplained investment or cash credit for its relevant asst. yr. 1993-94.
6. It does not require any elaborate argument that a carried forward amount of the previous year does not become an investment or cash credit generated during the relevant year 1993-94. This alone is sufficient to sustain the order of the Tribunal in deleting the amount of Rs. 1,55,316 from the assessment for asst. yr. 1993-94. Since the appeal succeeds on the merit of the assessee's case in respect of the additions made in the income computed on reassessment, the validity of notice dt. 17th June, 1997 need not be gone into.
7. Accordingly, this appeal fails and is hereby dismissed. No order as to costs."
Further, the Hon'ble ITAT, Delhi in the case of Jagtar Singh vs. ITO 69 ITD 47 has held as under:
"4. After considering the rival submissions, facts and circumstances of the case and the assessee's Statement of Affairs, and the case law relied by the assessee's counsel, we are of the opinion that the submission of the learned ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs Department Representative that addition should be sustained under section 69 has no force because the provisions of sections 69 and 69A are quite different in the material respect, and the revenue cannot support its case on the plea that in case the addition cannot be sustained under section 69A, the same should be sustained under section 69 of the Income-tax Act. On the other hand, we are inclined to agree with the submission of the assessee's counsel that in view of the assessee's statement of affairs available with the revenue since 1982-83, the genuineness of the brought- forward capital cannot be doubted. Simply because the assessee's income became taxable in this year and the assessee filed the return complying with the provisions of law cannot be a ground to penalize the assessee by not accepting its brought forward capital and that too without bringing any evidence to the contrary. The revenue's allegation that the assessee stone-walled the investigations also cannot be appreciated because in case the assessee was not furnishing the details required by the Assessing Officer, he had ample power under the Income-tax Act to make necessary enquiry at his own level and should not have allowed the assessee to escape the liability of proper tax.
5. In view of above facts and circumstances, we are of the opinion that as far as the addition of opening capital is concerned, the same cannot be sustained."
8.7 Considering the above position of law and respectfully following the plethora of judicial pronouncements on the subject as mentioned above, I find that the addition of Rs. 6,23,72,953/- representing the brought forward opening balance in the bank account for the year under consideration cannot be sustained either on facts or in law. The same is, therefore, deleted."
ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 13.2 From the aforesaid findings, it is apparent that the sum brought to tax does not represent any income for the instant year. On the contrary, it represented opening balance as on 1.4.1999 and therefore, such opening balance was incorrectly brought to tax for the instant year. The revenue has not placed on record any material to rebut the factual and the legal conclusions arrived at by the learned CIT (A) and thus, for the reasons stated by the Ld. CIT (A) and having regard to the aforesaid factual matrix, we concur with the same. The grounds raised by the revenue are, therefore, rejected.
13.3 ITA No. 3173/Del/2010 filed by the revenue is dismissed.
14. ITA Nos. 1877 to 1881/Del/2013 for AYs 2000-01 to 2004- 05 are the penalty appeals filed by the assessee in the case of Ravina Khurana.
14.1 In ITA No. 1877/Del/2013 for AY 2000-01, the assessee has raised grounds of appeal which read as under:
"1 That the learned Commissioner of Income Tax (Appeals) XVIII New Delhi has erred both in law and on facts in upholding penalty levied of Rs. 17,87,700/- under section 271(1)(c) of the Act.
1.1 That the learned Commissioner of Income Tax (Appeals) while upholding the penalty has failed to appreciate that income in respect of which penalty have been levied was the ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs income declared voluntarily by the appellant firstly by letters dated 1.4.2006 and 11.4.2006 and thereafter in return filed on 12.2.2007 and also in return filed in response to notice u/s 148 of the Act and as such, it cannot be validly held that assessee has either concealed income or furnished inaccurate particulars of income merely on the ground that, such receipts were not disclosed in the original return of income. 1.2 That the learned Commissioner of Income Tax (Appeals) has overlooked the fact that income assessed was not based on the revised return but on the basis of return filed in response to notice u/s 148 of the Act and the reasons recorded for initiation u/s 147 of the Act established that proceedings had been initiated on the basis of information contained in the revised return and not by way of any detection and hence the finding that there was "willful attempt" to evade tax overlooks this factual fundamental aspect and material on record and as such order upholding the levy of penalty is vitiated and untenable. 1.3 That finding of the learned Commissioner of Income Tax (Appeals) that "it is pertinent to mention here while the FIR was filed by the CBI on 6.03.2006, this must have been preceded by a detailed investigation which must have continued for a length of time. Further, the said investigation and FIR were in respect of contracts entered into by RAPL of which the appellant is the main Director, the only other Director being her mother Mrs. Govinda Khurana. Therefore, it can by no stretch of imagination be said that the appellant was not aware of the aforesaid criminal investigation in progress, and the filing of FIR, the issue of letter rogatory and restraint order on the bank account prior to 25.04.2006" is based on subjective assumptions and presumption and not any material much less valid material. Infact no opportunity was granted to the appellant before arriving at such an arbitrary conclusion.
1.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate and is otherwise is a matter of record ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs that no notice or proceedings were initiated against the appellant by CBI till the date of filing of FIR much less any criminal investigation. Infact till date no connection have been established between any payments received by the appellant and NTPC officials.
1.5 That further finding of the learned Commissioner of Income Tax (Appeals) that "letter dated 1.04.2006 filed by the appellant with the department acknowledging her tax liability was not a voluntarily act, but was pursuant to the filing of FIR by the CBI" is also based on surmises, conjecture and suspicion and not based on any valid material and hence untenable 1.6 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that till the date of filing of return on 12.2.2007 when assessee had revised return of income by including an amount of Rs. 59.58 lacs, no enquiry was either initiated or launched and thus, income offered in the said return represented the income which had been shown to be assessed and as such no part of income assessed could represent an income which can be said to have been concealed by the appellant.
1.7 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that it was only on discussions with Sh. Ram Jethmalani Senior Advocate in February' 2006 in the context of support services provided by M/s Ravina &Associates Pvt. Ltd. a company in which assessee is a director, the assessee came to know of her obligation under the statutory provisions of the Act and, tax liability on such income and as such, on advice of her chartered accountant she filed the revised return of income.
1.8 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that filing of FIR on 6.3.2006 was in respect of the amount of Rs. 97,13,86,901/- received in Natwest Bank pertaining to M/s Ravina & Associates Pvt. Ltd. for assessment year 2006-07 which was declared in the original return of income and, not for the sum declared and, ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs assessed in the instant assessment year and that too, in her individual capacity and as such, the same could not be ground to hold that appellant had not declared the income voluntarily.
1.9 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that assuming for the sake of an argument (though the same is seriously disputed) that there was detection of income by the CBI and it was only on account of detection by CBI that assessee had declared such income then too to determine as to whether income declared by the assessee in the return of income was not voluntary or not, what has to be seen is, whether the income was detected by the learned AO or whether the same was voluntarily offered by the appellant and, not that, it was allegedly detected by CBI and as such the conclusion of the learned officer is based on misinterpretation of provisions of law 1.10 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) overlook the written submissions and judicial pronouncements relied upon by the appellant.
2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that notice issued for levying the penalty was vague, non-specific and as such penalty levied on the basis of the said notice was invalid and not in accordance with law.
3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that in absence of any valid satisfaction having been recorded in the order of assessment the penalty levied was otherwise not sustainable. It is therefore, prayed that it be held that penalty so levied and sustained is illegal, invalid and therefore, may kindly be deleted and appeal of the appellant be allowed."
14.2 Identical grounds have also been raised in the appeals for assessment years 2001-02 to 2004-05 in ITA Nos. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 1878/Del/2013 to 1881/Del/2013. All the aforesaid grounds as stated above relate to the levy of penalty of Rs. 17,87,700, Rs.
45,69,700/- Rs. 11,70,120/- Rs. 4,05,560/- and Rs. 35,76,070/-
in assessment years 2000-01 to 2004-05 respectively under section 271(1)(c) of the Act. From the perusal of orders dated 30.3.2012 passed by the DCIT, Circle 15(1), New Delhi, it is noted that the penalty has been levied on the ground that the receipts declared by the assessee in the assessment years were not a voluntary declaration but was a case of intentional attempt to conceal the particulars of income by the assessee company. The Ld. CIT (A) upheld the conclusion of the Assessing Officer and confirmed the levy of penalties under section 271(1)(c) of the Act.
14.3 We have considered the rival submissions and have also perused the material on record. It is evident from the notices u/s 274 r.w.s. 271 of the Act dated 20.12.2007, 17.12.2007 and 9.3.2012 for the impugned years that the AO has not specifically specified as to under which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. In this regard, reliance is placed upon the decision of Hon'ble High Court of Karnataka in ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs the case of CIT v. Manjunatha Cotton & Ginning Factory reported in 359 ITR 565 (Kar) and the relevant portion of the judgment is as under:
"(p) Notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income
(q) Sending printed form where all the ground mentioned in section 271 are mentioned would not satisfy requirement of law."
14.4 The above said decision of Hon'ble High Court of Karnataka in the case of CIT v. Manjunatha Cotton & Ginning Factory (supra) has been followed by the Hon'ble High Court of Karnataka in the case of CIT v. SSA's Emerald Meadows 73 taxmann.com 241 and the relevant portion is as under:
"2. This appeal has been filed raising the following substantial questions of law:
1 Whether, omission if assessing officer to explicitly mention that penalty proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?
2 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is bad in law and invalid despite the amendment of Section 271(1B) ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same?
3 Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income?"
3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.).
4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.
14.5 The SLP filed by the revenue against the above judgment has been dismissed by Hon'ble Supreme Court of India and the decision of Hon'ble Supreme Court is reproduced here in below:
"1 Delay condoned 2 We do not find any merit in this petition. The special leave petition is accordingly dismissed. ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs 3 Pending application, if any stands disposed off."
14.6 Therefore, in the circumstances and on the facts of the present case and in light of the judgments of the Hon'ble Karnataka High Court and the Hon'ble Supreme Court reproduced hereinabove, we are of the considered view that the Assessing officer is required to specify as to under which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. From the perusal of the notice u/s 274 r.w.s. 271 of the Act, Assessing officer has not specified as to under which of the two limbs the penalty is imposable. In the circumstances and facts of the case, the penalty proceedings so initiated by the AO are bad in law and accordingly the penalties so initiated are ordered to be cancelled and the order/s of the learned CIT (A) are reversed. Thus, the legal ground raised is decided in favour of the assessee and is allowed.
14.7 Moreover, even on merits, the reason which has led the authorities below to levy the impugned penalty is that there was no voluntary declaration by the assessee. We have already held, ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs while disposing off the penalty appeals in the case of RAPL, in ITA Nos. 4388/Del/2014 and 4389/Del/2014 for assessment years 2004-05 and 2005-06 that no penalty is leviable. In view of the above findings and since the facts of these appeals are identical, we are of the considered view that no penalty is leviable. The penalties levied therefore, are deleted. Grounds raised by the assessee are allowed in all the five appeals.
14.8 In the result, ITA Nos. 1877 to 1881/Del/2013 filed by the assessee are allowed.
15. In the final result,
i) ITA Nos 1004/Del/2011 and 1005/Del/2011 for AYs 2004-05 and 2005-06 in the case of RAPL are partly allowed;
ii) ITA Nos 4388/Del/2014 and 4389/Del/2014 for AYs 2004-05 and 2005-06 in the case of RAPL are allowed;
iii) ITA Nos 1946/Del/2010 to 1950/Del/2010 for AYs 2000-01 to 2004-05 in the case of Ravina Khurana are partly allowed;
iv) ITA No. 3173/Del/2010 for AY 2000-01 in the case of Ravina Khurana filed by revenue is dismissed; ITA No. 1004, 1005/D/2011, 4388/D/14 & Others Assessment year 2004-05 & Othrs
v) ITA Nos 1877/Del/2013 to 1881/Del/2013 for AYs 2000-01 to 2004-05 in the case of Ravina Khurana are allowed.
The order is pronounced in the open court on 26.03.2018.
Sd/- Sd/-
(PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 26th March, 2018
'GS'
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order
ASSISTANT REGISTRAR