B.R. Jain, Accountant Member - This appeal by assessee against the order dated 7th June, 2011 of Id. CIT (A)-l, Jaipur raises the following grounds :—
| "1. |
The Ld. CIT (Appeals) has erred on facts and in law in holding that order passed by A.O. u/s 271(1)(c) is not barred by limitations and thereby affirming the legality of the order. |
2. |
The Ld. CIT (Appeals) has erred on facts and in law in confirming the levy of penalty u/s 271(1)(c) at Rs. 1,01,76.653/- |
3. |
The Ld, CIT (Appeals) has erred on facts and in law in confirming the said penalty without correlating the incriminating material found with the surrender made by the assessee voluntarily on the basis of the annexure 'A' enclosed with statement which was prepared by directors of the company suo-moto." |
2. Briefly the facts are that the appellant company returned income of Rs. 1,87,697/- on 29.11.2006 from the business of developer. The case was selected for scrutiny and notice under section 143(2) as well as under section 115WE(2) were issued on 2.11.2007. Thereafter an action under section 133A of the IT Act (hereinafter referred to as 'Act') was carried at Registered Office, site office as well as corporate office of the assessee between 26.2.2008 to 28.2.2008. During the course of survey proceedings, statement of one Shri Ram Kishore Jat son of Shri Ram Lal Jat employed at its site office was recorded. In his statement said Shri Ram Kishore Jat had made the following assertions
| (a) |
Agricultural land measuring 25-30 bigha was purchased by the company in his name and the same land was got registered in the name of the company thereafter. The original payment was made by the company and Shri Ram Kishore Jat has not made any investment in the land which shows that the company has benami land transactions. |
(b) |
The company has purchased agricultural land on an average Rs. 14 lacs per bigha in the year 2007 and Rs. 15 lacs per bigha in the year 2008 depending upon the location of the land and period of purchase. |
(c) |
The sale deeds of the land were registered at the lesser value than the actual purchase consideration and the difference was settled by way of making cash payment. |
(d) |
Details of some of the transactions are as under :- |
(i) |
Agricultural land purchased from Shri Neeraj measuring 15 bigha on 8.8.2005 @ Rs. 70,000/- per bigha but the sale deed was executed @ Rs. 30.000/- per bigha. |
(ii) |
Agricultural land purchased from Shri K.M. Shah & C.H. Shah (HUF) vide sale deed dated 8.8.2005 measuring 58 bigha @ Rs. 70.000/- per bigha but the sale deed was executed @ Rs. 30,000/- per bigha. |
(iii) |
Agricultural land purchased from Shri Karan Singh S/o Shri Chet Ram measuring 11 bigha 20 biswa vide sale deed dated 28.7.2005 wherein the actual sale consideration was of Rs. 4.60 lacs and the sale deed was executed for Rs. 2 lacs only. The difference was paid in cash. |
(iv) |
Agricultural land purchased from Shri Bhanwar Singh S/o Shri Gopal Singh measuring 21 bigha 14 biswa vide sale deed dated 19.9.2005. Shri Bhanwar Singh was an employee of Shri Sunil Bansal wherein the payment was made by the company and the land was purchased in the name of Shri Bhanwar Singh. |
(v) |
The incriminating papers found and impounded at Annexure A-1 page no. 1,2, 11, 12, 13 and Annexure A-2, page 13 were confronted and the company has made undisclosed investment in purchase of agricultural land. The transactions found noted on these papers, therefore, were included in the undisclosed investment admitted by the company. |
When the above assertions made by Shri Ram Kishore Jat were confronted to the Director Shri Sunil Bansal, he stated to have made undisclosed investment in purchase of agricultural land. For the year under consideration the undisclosed investment in purchase of agricultural land as was admitted in his statement made during such survey amounted to Rs. 3,02,33,672/-. The appellant furnished a revised return declaring total income of Rs. 3,04,21,370/- on 27.3.2008. This included offer of additional income of Rs. 3,02,33,672/- disclosed under the head Income from business or profession. The Assessing Officer was of the opinion that the income so offered was result of survey operation at the business places of the assessee company. Since there was unexplained investment made in purchase of agricultural land, the return so revised was not treated voluntary. Disregarding the said return where assessee has declared additional income as income from business, the AO proceeded to assess the income on the basis of original return of income of Rs. 1,87,697/- and made addition therein for Rs. 3.02,33,672/- as unexplained investment under section 69B of the Act. The total income thus stood assessed at Rs. 3,04,21,470/-. The AO also initiated penalty proceedings under section 271(l)(c) for concealment and furnishing of inaccurate particulars in respect of the aforesaid income of Rs. 3,02,33,672/-.
3. In response to show cause notice, the assessee furnished a reply on 2.3.2010 contending therein that the ld. CIT (A) has directed the AO to assess income of Rs. 3,02,33,672/- as income from business and as there is no concealed income, hence no penalty can be levied on the assessee.
4. The said reply of the assessee was found not tenable as the assessee did not revise the return prior to the date of survey. Such return was not taken as voluntary. Since the assessee company has disclosed lesser business income, he was of the opinion that the penalty provisions under section 271(1)(c) are attracted and as such he held the assessee to be guilty of furnishing inaccurate particulars of income to the extent of Rs. 3,02,33,672/- on which penalty of Rs. 1,01,76,653/- equal to 100% of tax sought to be evaded is to be imposed vide order dated 26.3.2010.
5. In appeal before ld. CIT (A), the assessee contended that in survey proceedings no papers/documents suggesting any unrecorded payment of Rs. 3,02,33,672/- in respect of the land purchased by the assessee during the year under consideration was found. The documents mentioned at para 6 of the assessment order do not suggest any unrecorded payment to the extent of Rs. 3,02,33,672/- which assessee agreed to offer as additional income in his statement made during the course of survey. The land so acquired are sold to M/s. Grass Field Fire Capital Developers Pvt. Ltd. which have made payment of full consideration to the assessee being a FD1 concern in the subsequent years. No under consideration is involved in the sale of such lands. Even otherwise, there being lower cost of land acquisition and sales being at higher and appreciated prices have resulted into higher profit in the year of sale. The disclosure made has gone to increase the cost of acquisition of land and, therefore, the ultimate profit on sale is less. The surrender so made, therefore, was tax neutral. There was thus no concealment of income by the assessee. That besides, in survey proceedings, the assessee was asked to file the revised return and an assurance was given that no penalty would be levied. In other words, the assessee agreed to surrender the income merely because the survey party required him to do so and assessee filed a revised return only because the payment of tax is preponed to this year by which the tax rate being same in the year of sale, payment of tax in this year under consideration would make no difference to the assessee. Since the addition made is not on account of any material found as a result of survey, it could not be a case of concealment of income by the assessee. It was, therefore, submitted that the assessing authority did not record independent findings as to how there was concealment of income made by the assessee and proceeded erroneously to hold that the assessee is guilty of furnishing inaccurate particulars of income though all the purchases made by the assessee were duly registered with the Sub Registrar and were evidenced by the documentary evidence and all the actual payments and particulars of investment were duly disclosed in the balance sheet furnished with the return of income. It, therefore, could not be a case of furnishing of inaccurate particulars of income. The assessee, therefore, requested the ld. CIT (A) that this is neither a case of furnishing inaccurate particulars of income nor concealment of income and as such penalty so imposed is required to be deleted.
6. The ld. CIT (A) perused the survey record and statement taken during the course of survey. This included registered sale deed for purchase of land as well as certain loose papers which were minutely examined by her. Considering the submissions, he opined that the assessee has made partial presentation of facts before her. She did not agree that no evidence was found at the time of survey as from the statement recorded during the course of survey, it was very clear that the assessee has acquired large tracks of land and in order to evade payment of stamp duty, the assessee was using modus operandi of making payment in cash which has also been admitted by its employee leading to the surrender of income by the assessee. The department did not impound the sale deed or loose papers since it was a survey operation. The Ld. CIT (A) admits that the primary evidence in this case being the statement of Shri Sunil Bansal and its annexures is the basis made for making addition of Rs. 3,02,33,672/-. The ld. CIT (A) considering the legal position as well as facts on record reached a finding that even though the assessee has revised the return, the said revised return of the assessee filed on 27.3.2008 declaring total income of Rs. 3,04,21,370/- has not been accepted by him very rightly. Since the revised return was not filed suo moto on discovery of bona fide mistake, but action of the department that resulted in discovery of proactive role of the assessee in making unrecorded investment in purchase of land, the ld. CIT (A) held that to that extent the AO was justified in holding that the assessee has filed inaccurate particulars of income. She further placed reliance on the judgment of Apex Court in the case of CIT v.Reliance Petroproduct (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) and also further judicial pronouncement in the cases of M.S. Mojammed Marzook v. ITO [2006] 283 ITR 254 (Mad.), CIT v. Mahabit Prasad Bajaj [2008] 298 ITR 109 (Jhar.) and LMP Precision Engg. Co. Ltd. v. Dy. CIT (Asst.) [2011] 330 ITR 93/[2009] 183 Taxman 12 (Guj.) wherein it has been held that when revised return is filed after action of the department by way of search and seizure or survey operations and the assessee files revised return of additional income on the basis of evidence found during these operations it cannot be considered that the amount of wrong statement in the original return was bona fide or inadvertent mistake. These findings are applicable to the facts of the case of the assessee. Reliance is also placed on the finding of Madras High Court in the case of H.V. Venugopal Chettiar v. CIT [1985] 153 ITR 376/23 Taxman 412 wherein it was held that it was not necessary for the department to make any independent enquiry to find out whether there was, in fact, any suppression and whether such suppression was due to any dishonest intention on the part of the assessee. Merely because penalty proceedings are independent of investment proceedings, it cannot be said that the assessing authority should ignore all the materials collected at the assessment stage including the admission made by the assessee. The Tribunal was, accordingly, justified in confirming the levy of penalty. No question of law arose out of its order.
7. The ld. CIT (A) vide para 7.1 of the impugned order also took support from the judgment by the Hon'ble Jurisdictional High Court in the case of CIT v. Dr. R.C. Gupta & Co. [1980] 122 ITR 567/3 Taxman 501 (Raj.) where it was held that penalty under section 271(l)(c) could validly be levied for concealing the profit of the company on income recorded in books and not shown in the return but assessee's agreeing to inclusion in his assessable income. In the concluding para she concurred with the Assessing Officer that penalty under section 271(1)(c) of the Act is imposable on the assessee for furnishing inaccurate particulars to the extent of Rs. 3,02,33,672/- and as such the penalty imposed for Rs. 1.01,76,653/- stood confirmed by her order dated 7.6.2011.
8. Assailing the impugned order, ld. Counsel for the assessee made elaborate written submissions dated 10.1.2012 and 16.4.13 and also filed paper book consisting of 135 pages. It has been contended that in the survey proceedings carried by the Income Tax Department from 26.2.2008 to 28.2.2008, no documentary evidence suggesting any unrecorded payment in the shape of loose slips or otherwise was discovered from the assessee's premises nor was available with the AO in assessment proceedings or in penalty proceedings which could suggest that the assessee has made payment of "on money" for purchase of land during the year under consideration. None of the papers referred in assessment order at pages 2 & 3 indicate any undisclosed payment made during the year in purchase of land for which he referred to the explanation placed at paper book pages 98-99. The ld. CFT (A) herself at para 6.3 of the impugned order has recorded a finding that all the sale deeds and loose papers found as a result of survey were neither seized nor impounded by the department. She has further recorded a finding that the primary evidence in this case is the statement of Shri Sunil Bansal and its annexures. This statement of Shri Sunil Bansal and annexures made to the statement were prepared in the survey proceedings at the instance of survey party. There was no documentary evidence found as a result of survey nor the same is in possession of the department to support that the assessee has not correctly disclosed the investment made in the land by the assessee. The statement so given by said Shri Sunil Bansal during survey proceedings has no evidentiary value as has also been laid down by Apex Court in the case ofCIT v. S. Khader Khan Son [2012] 25 taxmann.com 413/210 Taxman 248.
9. It has further been contended that neither the AO nor the Ld. CIT (A) in penalty proceeding themselves have brought on record any evidence to show that any payment over and above that recorded in the books of account has been made by assessee. All particulars have truly been disclosed by the appellant in the books of account and the balance sheet drawn on that basis forming part of Income tax return originally filed on 29.11.2006. Undisputedly, the land purchased by the assessee stands sold to a company, namely, M/s. Grass Field Fire Capital Developers Pvt. Ltd. which has foreign direct investment. This company has made payment of full value of sale consideration and such payment has neither been doubted by the department nor found understated in any manner whatsoever. The correct purchase price disclosed by the assessee in the balance sheet filed with the original return has been taken as a cost for deducing its income in the subsequent year of sale for assessment purposes. The tax rate for company in assessment years 2007-08 and 08-09 is the same as the tax rate in assessment year 2006-07. The assessee, therefore, agreed to prepone the payment of tax to assessment year 2006-07 instead of its payment in subsequent years i.e. 2007-08 and 08-09 and in survey proceedings agreed to offer an income of Rs. 3,02,33,672/- as its business income so that it becomes cost of stock of land of the assessee for assessment year 2006-07 and the consequent profit in subsequent years 2007-08 & 08-09 comes down by that amount. All these admissions were made as the assessee was advised to do so by the survey party, The explanation is not found to be false or mala fide by the lower authorities. In any event, the case of the appellant is that the addition of Rs. 3,02,33,672/- has been made only on the basis of statement elicited during the course of survey and same not being supported by any documentary evidence or material found as a result of survey, did not have any evidentiary value in the light of judgment of Hon'ble Supreme Court in the case of S Khader Khan Son (supra). The assessee in appeal has demonstrated before ld. CIT (A) that this was neither a case of concealment of income nor furnishing of inaccurate particulars of income by him as in the penalty proceedings which are independent of assessment proceedings, the AO did not make out a case to show as to how the assessee can be said to have furnished inaccurate particulars or concealed its income by the amount of Rs. 3,02,33,672/-. The AO even after such claim made no field enquiry from the persons who sold land to the assessee to establish that any "on money" has been paid by the assessee. He, therefore, pleaded to cancel the penalty levied by Assessing Officer. In support of his case, the assessee has placed reliance on the following case laws:—
Dilip Yeshwant Oak v. Asstt. CIT [2011] 10 taxmann.com 264/[2012] 51 SOT 136 (Pune)(URO)
Dy. CIT v. Bhanwar Lal Mahendra Kumar Soni [2012] 20 taxmann.com 253 (Jodh.)
Ajay Sangari & Co. v. Addl. CIT [2011] 16 taxmann.com 115/[2012] 51 SOT 127 (URO) (Chd.)
Asstt. CIT v. Dr. Raj Dhariwal [2012] 23 taxmann.com 284 (Jodh.)
Shabbir Allauddin Latiwala v. Dy. CIT [2012] 49 SOT 137 (URO)/[2011] 16 taxmann.com 177 (Rajkot.)
CIT v. Suresh Chand Bansal [2010] 329 ITR 330 (Cal.)
CIT vs. Shankerlal Nebhumal Uttamchandani [2009] 311 ITR 327 (Guj.)[2009] 311 ITR 327 (Guj.)
CIT v. Radhey Shyam [2000] 245 ITR 342/113 Taxman 618 (Delhi)
CIT v. Shyamlal M. Soni [2005] 276 ITR 156/144 Taxman 666 (MP)
CIT v. Navni Lal Pochalal [1995] 213 ITR 69/[1996] 85 Taxman 623 (Guj.)
Sohinder Singh & Bros. v. CIT [1980] 121 ITR 834 (Punj. & Har.)
CIT v. S. Sankaran [2000] 241 ITR 825/[2002] 124 Taxman 237 (Mad.)
CIT v. Jayaraj Talkies [1999] 239 ITR 914 (Mad.)
CIT v. C.J. Rathnaswamy [1947] 223 ITR 5/[1996] 89 Taxman 509 (Mad.)
10. The Ld. D/R on the other hand contends that the assessee has admitted unexplained investment in the stock of land purchased during the year by an amount of Rs. 3,02,33,672/-. On the basis of such admission, he has revised the return of income. This revision had to be done by the assessee after the unexplained investment was detected by Income-tax Department. The revised return so filed by the assessee, therefore was not a voluntary return. It, therefore, is clear that the assessee has concealed income by the aforesaid amount of Rs. 3,02,33,672/- which was not disclosed truly in its return of income by the assessee. The Assessing Officer as well as the Ld. CIT (A) has considered all the arguments that have been advanced by the assessee before the Appellate Tribunal. It is after considering the entire gamut of arguments advanced by the assessee as well as the surrender made in the revised return, the Assessing Authority held the assessee guilty of furnishing inaccurate particulars and imposed only minimum penalty equal to 100% of tax sought to be evaded. The Ld. CIT (A) did not find any merit in the arguments advanced by the assessee in support of his explanation filed in penalty proceedings and thus upheld the decision of assessing authority by a reasoned order. The statement given by the assessee during the course of survey proceedings is relevant material which cannot be disregarded in this case for imposing penalty on him. There is thus no merit in the grounds raised by the assessee in appeal which need to be rejected.
11. We have heard parties with reference to material on record and case laws brought to our notice. This is a case of a company which was incorporated on 12.07.2005, a period which falls in assessment year 2006-07 impugned before us. The company was incorporated for carrying out business as dealer in lands. The appellant has sold only a small piece of land for Rs. 23,20,000/- to one of its Director during the year under consideration with a marginal profit thereon. All other lands which were appearing as stock-in-trade as at the end of 31st March, 2006 and has become opening stock as on 1.4.2006 for assessment year 2007-08 were largely sold to a company who had foreign direct investment (for short FDI funds). The appellant had returned income of Rs. 1,87,697/- on 29.11.2006. Thereafter, a survey under section 133A of the Act was carried at the business premises as well as site office of the assessee company. No documentary evidence revealing unexplained investment in the land held as stock-in-trade was found or detected. One of the Director Shri Sunil Bansal, however, in his statement recorded during survey proceedings agreed to disclose an income of Rs. 3,02,33,672/- towards investment in the said lands. The appellant company thereafter revised the cost of stock held by it as well as its return of income by honouring the surrender as was agreed to be done during the course of survey on the basis of such statement of one of its Directors. The Assessing Officer, however, did not treat this return as voluntary return and proceeded to assess the same as unexplained investment under section 69B of the IT Act. The Ld. CIT (A), in quantum appeal accepted assessee's declaration that the said investment is his income from business and not unexplained investment under section 69B of the Act. As a result, the increased cost of stock-in-trade by the amount of Rs. 3,02,33,672/- also stood admitted. It is also admitted fact that while making assessment for subsequent assessment years i.e. 2007-08 and 08-09 such increased cost has been taken as a cost against the sales made to companies under FDI for computing assessable income of those years.
12. In the back drop of the aforesaid facts, the Assessing Officer entertained the view that the assessee has furnished inaccurate particulars and rejected assessee's explanation given during penalty proceedings. He, therefore, proceeded to impose penalty under section 271(l)(c) of the Act being the amount equal to 100% of the tax sought to be evaded.
13. The Ld. CIT (A) in the impugned order also admits that the primary evidence that leads to making the surrender and additions of income of Rs. 3,02,33,672/- is only the statement made by Shri Sunil Bansal. No documentary evidence in the shape of loose papers or any other agreements reflecting payment as "on money" is available on record of the assessing authority. The Ld. CIT (A), however, took the position that as the revised return was not filed suo moto on discovery of bona fide mistake, she upheld the action of the Assessing Authority that the assessee has filed inaccurate particulars of income and confirmed the penalty so imposed by him.
14. On the peculiar facts of this case, we find that there was no omission or any wrong statement in the return of income originally filed by the assessee on 29.11.2006. He, however, revised the return within the statutory period as provided under section 139(5) of the Act by disclosing business income of Rs. 3,02,33,672/- and taking the same as cost of stock-in-trade held by him as on 31.3.2006. This was so done as the survey party required him to do so and by doing so it did not make any difference in payment of taxes to the appellant in either of the years i.e. in the year under consideration nor in the subsequent years being the year of sale of such land to a company having FDI funds because the tax rate in both the years was the same. In other words, the sale price being fixed and admitted by revenue in the assessment of subsequent years, assessee's cost without disclosure of additional income from business gives more profit by Rs. 3,02,33,672/- in the subsequent year of sale of land to FDI company, but the assessee having agreed to offer this amount as income of the impugned year took it as cost of financial year 2005-06 relevant to assessment year 2006-07 and paid tax thereon in the impugned year. The appellant's case and as we also find is that the tax which he was forced to pay in the impugned year by way of surrender of income of Rs. 3,02,33,672/-, was in fact liable to be paid in the subsequent year when it actually sold the stock to the FD£ concern. The surrender of income so made, therefore, was tax neutral. It is a case where only the year of payment has changed. Here, it is useful to make reference to the observations of Hon'ble Bombay High Court in the case of CIT v. Nagri Mills Co. Ltd. [1959] 33 ITR 681 at page 684 as under :—
"We have often wondered why the Income-tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other."
The aforesaid observations of Hon'ble Bombay High Court were reiterated by Hon'ble Delhi High Court in the case of CIT v. Ram Pistons & Rings Ltd. [2008] 174 Taxman 147 and again in the case of CIT v. Triveni Engg. & Industries Ltd. [2011] 336 ITR 374/196 Taxman 94/[2010] 8 taxmann.com 146 (Delhi). In this view of the matter, the return that came to be revised was in good faith and because of the insistence of survey party and not because the assessee actually made any investment over and above what was disclosed in the books of account. The appellant has tendered an explanation before the Assessing Authority that the Ld. CIT (A) has accepted the assessee's disclosure of income under the head Income from business and there was thus no concealment of income made by the assessee requiring liability of penalty on him. The Assessing Authority in the penalty proceedings made no field enquiry into the facts to find out as to whether the assessee really made any investment over and above what was disclosed originally in the books of account. The explanation thus tendered by the assessee has not been found to be false. A surrender rested on statement elucidated during the course of survey has no evidentiary value. This principle is fairly stands affirmed by Apex court in the case ofS. Khader Khan Son (supra). The perusal of orders of authorities below reveals that there is no positive material on record to show that there was any concealment or furnishing of inaccurate particulars by the assessee when we made reference to the return of income on record. The appellant has stated all the facts of investment correctly in the return of income filed by it. We find that this is not the case of distortion of profits as no reliable evidence was found as a result of survey to allege concealed income. There is also no finding by the authorities below that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act in a case like this as has also been held by Apex Court in the case of Reliance Petroproduct (P.)Ltd. (supra). A mere making of surrender in the peculiar situation and there being no documentary evidence on record to show payment of any "on money" or to suggest that there is unexplained investment in stock-in-trade, it will not amount to furnishing of inaccurate particulars by the appellant. We, therefore, do not find any justification in holding assessee liable to penalty under the peculiar facts and circumstances of the case. Accordingly the penalty so imposed is hereby cancelled.
15. In the result, appeal by assessee stands allowed.
V. Durga Rao, Judicial Member - I have carefully gone through the order of Id. Accountant Member. Despite discussion and deep study of the order, I am unable to persuade myself to agree with his views and conclusions; I proceed to write my separate order as under.
The grounds of the assessee intrinsically raise following issues.
| "1. |
The ld. CIT (Appeals) has erred on facts and in law in holding that order passed by A.O. u/s 271(1)(c) is not barred by limitations and thereby affirming the legality of the order. |
2. |
The ld. CIT (Appeals) has erred on facts and in law in confirming the levy of penalty u/s 271 (1) (c) at Rs. 1,01,76,653/-. |
3. |
The ld. CIT (Appeals) has erred on facts and in law in confirming the said penalty without correlating the incriminating material found with the surrender made by the assessee voluntarily on the basis of the annexure 'A' enclosed with statement which was prepared by directors of the company suo-moto. " |
17. Brief facts of the case are that the assessee is a company. It has a project of developing Farm House Scheme at BH-8, Near Village Mehala, Distt. Jaipur. The assessee initially filed return of income of Rs. 187,697/-on 29.11.2006. In assessee's case, there was a survey under section 133A of the Income Tax Act conducted on 26.02.2007 to 28.02.2008 at the business premises of assessee company.
18. During the course of survey operation, certain incriminating documents were found and impounded and were controverted with the Directors of the company The incriminating documents relating to loose papers having details in respect of purchase of agricultural land and the actual purchase consideration paid. The details found noted on some of the loose papers were recorded at a lesser value than to the actual value of the transaction. During the course of survey, the Department has recorded statement under section 131 of the Act with some of the persons relating to the assessee company i.e. Shri Nagesh Bhaskar, Shri Ram Kishore Jat and Shri Sunil Kumar Bansal, Director of the Company admitted the fact that the company has made undisclosed investment in purchase of agricultural land, wherein the real transaction was recorded at a lesser value in the regular books of account. The other Directors of the company Shri Atma Ram Gupta and Shri Vimal Singhvi have also admitted this fact. Thereafter, all the Directors have submitted detailed working of undisclosed investment made in purchase of agricultural land in all the years i.e. assessment years 2006-07, 2007-08 and 2008-09.
19. The precise working submitted by the Directors have been placed on record and as per that working, the undisclosed investment in purchase of agricultural land admitted relevant to the assessment year 2006-07 was calculated at Rs. 3,02,33,672/-. Subsequently, the Assessing Officer has asked the assessee to explain as to why the sum of Rs. 3,02,33,672/- should not be added as undisclosed investment within the meaning of section 69B of the Act Before the Assessing Officer it was submitted by the assessee that on the confrontation accepted by the Directors of the assessee's company and assurance for not to initiate/impose penalty under section 271(1)(c) by the Income Tax authorities during the survey conducted on 26.02.2008 to 28.02.2008 under section 133A we make it good to file the revised income tax return and that the payment due tax liability of Rs. 3,02,33,672/- being the amount accepted as purchase consideration paid over and above the disclosed purchase condition for acquiring agricultural land. Thereafter, on 27.03.2008, the assessee company had furnished revised return declaring total income of Rs. 3,04,21,370/-, wherein the additional income of Rs. 3,02,33,672/- [which as detected during the course of survey operation as unexplained investment in purchase of agricultural land] has been declared as income from business or profession.
20. The Assessing Officer after considering the explanation of the assessee and revised return filed by the assessee, the assessee's claim of declaring additional income as business or profession of Rs. 3,02,33,672/- stand rejected and the same was assessed to tax as undisclosed investment within the meaning of section 69B of the Act. The Assessing Officer also rejected the revised return filed by the assessee by declaring additional income of Rs. 3,02,33,672/- on the ground that this income was offered as a result of survey operation conducted on 26.02.2008 to 28. 02.2008 The assessee filed revised return due to finding of survey operation. Therefore, the revised return filed is not voluntary and rejected the same. On appeal by the assessee, the CIT (Appeals) directed that the addition of Rs. 3,02,33,672/- made under section 69B on account of unexplained investment in purchase of agricultural land treated as business income. Thereafter, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act. On 17.02.2010, the Assessing Officer issued a show-cause notice to the assessee as to why penalty under section 271(1)(c) be imposed.
21. In response to the notice issued by the Assessing Officer, the assessee has submitted vide letter dated 02.03.2010 by stating that the CIT (Appeals) has reversed the order of the Assessing Officer directed him to treat the unexplained investment under section 69B as business income, the return filed after the survey was voluntary and no concealment was made and requested to drop the penalty proceedings.
22. The Assessing Officer, after considering the submissions of the assessee observed that the assessee filed original return of income for the assessment year 2006-07 on 29.11.2006 declaring total income of Rs. 1, 87,697/-. Survey was conducted on 26.02.2008 to 28.02.2008. Till the date of survey, no revised return was filed. Only after the survey, the assessee filed revised return of Rs. 3,04,21,369/-. Had the survey not been conducted, the assessee would not have filed the revised return. Therefore, the revised return filed by the assessee was not voluntary, but as a result of survey operation and also assessee company unable to explain the reason for earlier omission of declaring the income. The revised return for filing after 'detection' of concealed income offers no immunity from penalty and therefore, the assessee is found guilty of furnishing inaccurate particulars of income to the extent of Rs. 3,02,33,672/- and penalty was imposed under section 2711 (c) of the Act.
23. On being aggrieved, the assessee carried the matter before the CIT (Appeals) and he confirmed the penalty order passed by the Assessing Officer.
24. Aggrieved, the assessee preferred appeal before the Tribunal.
25. The Id. Counsel for the assessee has submitted that the addition was made by the Assessing Officer by taking into consideration of statement given by Shri Sunil Bansal, Director of the company during the course of survey The statements made during the course of survey have no evidential value and relied on the decision of the Hon'ble Supreme Court in the case of S. Khader Khan Son (supra). He further submitted that there is no material on record which suggests that on money was paid. The Department has pressurized to file revised return. The assessee neither concealed the income nor filed inaccurate particulars. The Assessing Officer had not made any enquiry either during assessment proceedings or penalty proceedings. Therefore, the revised return filed by the assessee is a voluntary return and no penalty can be imposed. The ld.Counsel for the assessee relied on the following case law and submitted that no penalty can be imposed.
Dilip Yeshwant Oak (supra)
Bhanwar Lai Mahendra Kumar Soni (supra)
Ajay Sangari & Co. (supra)
Dr. Raj Dhariwal (supra)
Shabbir Allauddin Latiwala (supra)
Suresh Chand Bansal (supra)
Shankerlal Nebhumal Uttamchandani (supra)
Radhey Shyam (supra)
Shyamlal M. Soni (supra)
Navni LaL Pochalal (supra)
Sohinder Singh & Bros. (supra)
S. Sankaran (supra)
Jayaraj Talkies (supra)
C.J. Rathnaswamy (supra)
26. On the other hand, the Id. DR submitted that the assessee in the initial return filed on 29.11.2006 declared only nominal amount of Rs. 1,87,697/-. After survey, when the Department brought to the notice of the assessee with regard to undisclosed income by way of loose papers and other incriminating documents, the assessee has offered the income of Rs. 3,02,33,672/- as business income Therefore, the income offered by the assessee by way of revised return was rightly rejected by the Assessing Officer and it is a clear case of concealment. The assessee in his original return of income not filing correct and true and complete particulars and by doing the same, it has concealed the income. He supported the order passed by the CIT (A) and submitted that the penalty may be confirmed.
27. Both parties have been heard and perused the materials available on record.
28. The assessee filed return declaring income of Rs. 1,87,697/- on 29.11.2006. After the survey, the assessee has filed revised return of income of Rs. 3,04,21,370/- on 27.03.2008. During the survey some incriminating documents relating to purchase of property were found and the same were confronted with Shri Sunil Bansal, Director of the assessee company. Shri Sunil Bansal admitted the fact that the company had made undisclosed investment in purchase of agricultural land, wherein the real transaction was recorded at a lesser value in the regular books of account. This fact has also been accepted by other Directors of the assessee company Shri Atma Ram Gupta and Shri Vimal Singhvi. Thereafter, the Directors of the assessee company have worked the undisclosed investment in the purchase of agricultural land to the extent of Rs. 3,02,33,672/- for the assessment year under consideration and thereafter assessee has filed the revised return on 28.03.2008. The Assessing Officer has treated this amount of Rs. 3,02,33,672/- as undisclosed investment under section 69B of the Act. On appeal, the CIT (Appeals) treated the same as business income. The Assessing Officer rejected the revised return filed by the assessee on the ground that the same is not voluntary.
29. So far as first issue raised in the grounds of appeal of the assessee that the order passed by the Assessing Officer under section 271(1)(c) is barred by limitation is concerned, the CIT (Appeals) rejected the ground raised by the assessee by passing a detailed order. Even before the Tribunal, the ld. Counsel for the assessee has not advanced any argument in relation to limitations for passing penalty order. Therefore, the first issue raised by the assessee stands rejected.
30. The first point for consideration is whether, the assessee has filed correct particulars of income before the Assessing Officer. It is immaterial whether the undisclosed investment is business income or not. The assessee has purchased agricultural land for higher price, but recorded it at a lesser value in the regular books of account. This fact was admitted by the Directors of the company when the survey team confronted with incriminating material. The Directors of the company calculated undisclosed investment of Rs. 3,02,33,672/- and thereafter filed revised return of income. Therefore, it is very clear that the assessee has not filed true, complete and correct particulars of income at the time of filing original return.
31. The second aspect for consideration is whether the revised return filed by the assessee is voluntary or not. When survey under section 133A of the Act was taken place at the premises of the assessee, the Department detected some incriminating documents relating to purchase of the property. Wherein, the Department found that the assessee has paid excess payment, but in the books, it has shown lower value. After enquiry with the employees of the assessee and thereafter recording their statement, which were confronted with the Director of the assessee company Shri Sunil Bansal admitted the same that they have recorded lesser value in the books. Thereafter, the Directors of the assessee company calculated the concealed income and filed revised return on 28.03.2008. Therefore, the revised return filed by the assessee cannot be considered as voluntary return and the Assessing Officer has rightly rejected the same. Even, in fact, before the Assessing Officer, the assessee has not given any reason for filing the revised return. Insofar as the argument of the counsel for the assessee is concerned, the statement given during the course of survey have no value in the eyes of law, it has no application for the simple reason that if the Assessing Officer proceeding to impose penalty simply on the basis of statement recorded during the course of survey, the argument of the Id. Counsel for the assessee may be acceptable. But, in the present case, during the survey, the Department found incriminating material, statement of the employees and Directors of the company were recorded and thereafter, the Directors of the assessee company have calculated the concealed income and filed the revised return on 28.03.2008. Under these facts and circumstances, the case law relied on by the assessee in the case of Khader Khan Son (supra) have no application.
32. So far as argument of the assessee is concerned, there is no material available on record with regard to on money payment, during the course of survey certain incriminating documents were found and the same were brought to the notice of the Directors of the company and the Directors of the company themselves accepted there is undisclosed investment. Therefore, the argument of the assessee is rejected.
33. Further, as argued by the Id. Counsel for the assessee that the revised return was filed due to pressure from the Department, there is nothing on record that the assessee filed revised return of income due to pressure from the Department. In fact, the Directors of the assessee company themselves have calculated the undisclosed income and thereafter revised return was filed. Hence, the ld. Counsel for the assessee's argument stands rejected.
34. Further, the contention of the Id. Counsel for the assessee that the Assessing Officer has not made any enquiry either in the assessment proceedings or in the penalty proceedings, the penalty cannot survive, appears to be incorrect. When the incriminating material brought to the notice of the Directors of the assessee company, they themselves calculated the undisclosed income and therefore, there is no necessity the Assessing Officer to conduct further enquiry in this case. It is not necessary that in each and every case enquiry has to be conducted. It is open to the Assessing Officer whether to conduct enquiry or not depending upon the facts and circumstances. In this case, when the Directors themselves calculated the undisclosed income, there is no necessity the Assessing Officer to further conduct enquiry about the undisclosed income. Accordingly, the argument of the Id. Counsel for the assessee is rejected.
35. Further, the case law cited by the Id. Counsel for the assessee have been carefully considered and find that they have no application to the facts of the case in hand.
36. In this case, the assessee failed to explain before the lower authorities and even before us as to why the assessee was not able to file correct particulars of income in the original return filed on 29.11.2006, which has been filed subsequent to the survey, the assessee filed revised return on 28.03.2008. It is found from the record that the assessee has not furnished true and complete particulars of income at the time of filing original return of income on 29.11.2006 and the revised return filed by the assessee on 28.03.2008 is not voluntary. The assessee by filing inaccurate particulars concealed the income. Thus, it is a fit case to impose penalty under section 271 (1)(c) of the Act.
37. The first appellate authority, after careful consideration of the issue and distinguishing various case law cited by the ld. Counsel for the assessee and by referring catena of case law in the cases of Late M.S. Mohammed Marzook (supra), Mahabit Prasad Bajaj (supra) and LMP Precision Engg. Co. Ltd. (supra), confirmed the penalty imposed by the Assessing Officer. Since the assessee, in this case, by filing inaccurate particulars and concealed income, it is a fit case to impose penalty and there is no valid reason to interfere with the order passed by the CIT (Appeals), the order of the CIT (A) is upheld.
REFERENCE UNDER SECTION 255(4) OF INCOME TAX ACT, 1961
As there is a difference of opinion between the members, the following question is referred to be answered by Third Member as may be appointed by the Hon'ble President, Income-tax Appellate Tribunal as per provisions of law :—
"Whether on the peculiar facts and circumstances of this case, there is any justification in sustenance of penalty imposed under section 271(l)(c) of the Act?"
THIRD MEMBER ORDER
G.D. Agrawal, Vice-President (As a Third Member) - On account of difference in opinion between the learned Accountant Member and learned Judicial Member of ITAT, Jaipur Bench, this matter has been referred to me by the Hon'ble President, ITAT for consideration and disposal under Section 255(4) of the Income Tax Act, 1961. The Hon'ble President has referred the following point of difference between the learned Members of the Jaipur Bench, as framed by the learned Members:—
"Whether on the peculiar facts and circumstances of this case, there is any justification in sustenance of penalty imposed under section 271(l)(c)of the Act?"
2. The facts of the case are that the return for Assessment Year 2006-07 declaring total income of Rs. 1,87,697/- was filed on 29.11.2006. The assessee-company has undertaken a project of developing Farm House Scheme at NH-8, at Village Mehla, Distt. Jaipur. A survey u/s 133A of IT Act, 1961 was conducted on 26.02.2008 to 28.2.2008 at following business premises of the assessee company:-
| (a) |
Registered office located at K-107, Kishan Nagar, Shyam Nagar, Jaipur; |
(b) |
Corporate office located at B-32, Raj Bhawan Road, Civil Lines, Jaipur; |
(c) |
Site office at village Mehla, Distt. Jaipur |
3. During the course of survey operations certain incriminating documents were found and some were impounded u/s 133A(3)(ia) of IT Act, 1961. These incriminating documents were found at the site office of the company located at village Mehala, Distt. Jaipur and included loose papers having details in respect of registered price of purchase of agricultural land and the actual purchase consideration paid. Statements of Shri Ramkishore Jat, Shri Nagesh Bhaskar and other employees were taken regarding the details found in the papers and purchase deeds. Finally, statement of Sh. Sunil Bansal, Director of the company was recorded. The incriminating documents found at the site office and other business places and the statements of the employees of the company were shown to him. When confronted with all the above evidence, Shri Sunil Bansal admitted the fact that the company has made undisclosed investments in purchase of agricultural land wherein the real transactions were recorded at a lesser value in the regular books of account while payment in cash had been made to the sellers which was not recorded in the books of account. This fact was also admitted by the other Directors of the company namely Shri Atma Ram Gupta and Shri Vimal Singhvi. Thereafter, all the directors submitted a detailed working of undisclosed investment made in purchase of agricultural land in all the yearsi.e. AYs 2006-07, 2007-08 & 2008-09 as per Annexure-A to the statement of Sh. Sunil Bansal. On 27.03.2008, the assessee-company furnished a revised return declaring total income of Rs. 3,04,21,370/- wherein an additional income of Rs. 3,02,33,672/-(which was detected during the course of survey operations as unexplained investment in purchase of agricultural land) was declared as income from business or profession. While finalizing the assessment order, the Assessing Officer made the following observations on pages 6 & 7 of his order.
"In view of the detailed discussion, it is an established fact that the company has made undisclosed investment in purchase of agricultural land which was detected during the course of survey operation and admitted by the Directors of the Company in the statements recorded during the course of survey operation. In view of this fact of the case it is concluded that during the AY 2006-07, the Company has made unexplained investment in purchase of agricultural land to the tune of Rs. 3,02,33,672/- and accordingly this is being added as undisclosed investment within the meaning of section 69B of the I.T.Act,1961 in the original income declared. The assessee's claim of declaring additional income as business or profession of Rs. 3,02,33,672/- is rejected. And the same is assessed as undisclosed investment within the meaning of section 69B of the Income tax Act, 1961.
As the assessee company has filed revised return due to the finding of survey operation, therefore, the revised return filed is not voluntary one but a result of survey operation. Therefore, the penalty proceedings u/s. 271(1)(c) are initiated for concealment of income and furnishing of inaccurate particulars."
4. With these remarks the Assessing Officer proceeded to compute the income of the assessee by taking the income at Rs. 1,87,697/- as shown by it in its original return and added Rs. 3,02,33,672/- to this declared income of the assessee as unexplained investment in purchase of agricultural land u/s.69B of the IT. Act.
5. Against the assessment order, the assessee filed an appeal before the CIT (A), wherein the only claim of the assessee was that the additional income of Rs. 3,02,33,672/- offered by the assessee should not be assessed as undisclosed income u/s 69B, but should be assessed as business income. The CIT (A) accepted the assessee's contention with the following findings:—
"The contention of the A/R is that the appellant is engaged in the activity of real estate. The purchase of land by the appellant is its trading activity. The assessee company has voluntarily accepted to have incurred an amount of Rs. 3,02,33,672/- on purchase of these land over and above what has been recorded in books of account. As such this amount needs to be considered as business income instead of income from undisclosed source u/s 69B.
The contention of the A/R is considered. The AO has not pointed out whether any other activity other than sale and purchase of land has been carried out by the appellant. The dispute is not about the quantum but only of head of income. As the only activity of the company is trading in real estate, the income offered by the appellant may be business income only. The AO is therefore directed to tax the income u/s 69B under the head Business income. The ground of appeal is decided in favour of the appellant"
6. Both the parties have accepted the order of the CIT (A); therefore, the above order of the CIT (A) has become final. The Assessing Officer levied penalty u/s 271(l)(c), amounting to RS. 1,01,76,653/- vide his order dated 26.03.2010. The CIT (A) sustained the penalty. The assessee filed appeal before the Income tax Appellate Tribunal. The learned Accountant Member vide his proposed order cancelled the penalty. The learned Judicial Member did not agree with the proposed order of the learned Accountant Member and wrote a dissent order in which he proposed to sustain the order of the CIT (A) thereby confirming the penalty levied by the Assessing Officer. In the above circumstances, the matter has been referred to me to answer the question as reproduced above.
7. At the time of hearing before me, the learned Counsel for the assessee argued at length. He submitted that the disclosure of additional income was made at the behest of the survey party and there was no evidence of actual payment of on-money by the assessee. No documentary evidence was found for payment of any on-money. No documents were seized by the authorized officer at the time of survey. Thus, there is no incriminating material against the assessee. The assessee has filed the revised return only to buy peace with the Department. This is evident from the fact that the revised return was filed within one month of the survey and the income disclosed in the revised return was accepted by the Assessing Officer within three days.
8. That the Assessing Officer in the penalty order as well as the learned CIT (A) in the appellate order heavily relied upon the statement recorded during the course of survey. That as per the decision of Hon'ble Apex Court in the case of S. Khader Khan Son (supra), the statement recorded at the time of survey has no evidentiary value.
9. That the year under consideration is the first year of the incorporation of the assessee-company; effectively there was no sale of any plot or bungalow, except sale of small piece of land to one of the Directors of the Company. Thus, there was no occasion of earning of any undisclosed income to the assessee-company during the year under consideration. Therefore, levy of penalty u/s 271(l)(c) is not justified.
10. That, the surrender made by the assessee was towards the alleged excess amount paid for acquisition of agricultural land which is stock-in-trade of the assessee. Thus, by the amount of surrender, the value of the stock-in-trade has increased. The assessee will get the set off of the same in the year in which such stock-in-trade would be sold. Thus, ultimately there would be no tax effect as the assessee is a company and rate of tax is similar in all the years. Under these facts of the case, the levy of penalty u/s 271(l)(c) would not be justified.
11. That in the assessment order the Assessing Officer has initiated the penalty for concealment of income as well as furnishing of inaccurate particulars of income, both. The notice issued u/s 271(l)(c) also included both the charges. However, penalty has been levied for furnishing of inaccurate particulars of income. In the penalty order, the Assessing Officer has invoked Explanation (1) to Section 271(l)(c). Explanation (1) does not apply for furnishing of inaccurate particulars of income. Therefore, the levy of penalty u/s 271(l)(c) underExplanation (1) for furnishing of inaccurate particulars of income is contrary to law and the same should be cancelled. In support of his contention, the learned Counsel for the assessee relied upon the following decisions:—
| (a) |
Dy. CIT v. Nepa Ltd. [2015] 58 taxmann.com 137 (Ind.) |
(b) |
CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 (Kar.) |
12. The learned Counsel for the assessee stated that the levy of penalty u/s 271(l)(c) is barred by limitation. He stated that the penalty proceedings have been initiated by issue of notice u/s 271(l)(c) dated 31.03.2008. As per Section 275(1)(c) no order imposing penalty shall be passed after the expiry of the financial year in which the proceedings have been initiated or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. This period of limitation expired on 30.09.2008; therefore, the penalty imposed on 26.03.2010 is barred by limitation. He further pointed out that Section 275(1)(a) is not applicable as the assessee has not filed the appeal against the quantum of the addition made by the Assessing Officer. The only ground of appeal of the assessee before the CIT (A) was for change of head of income under which the sum of Rs. 3,02,33,672/- was added. In support of his contention, the learned Counsel for the assessee has relied upon the following decisions :—
| (a) |
Dilip Yeshwant Oak (supra) |
(b) |
Bhanwar Lal Mahendra Kumar Soni (supra) |
(c) |
Ajay Sangari & Co. (supra) |
(d) |
Dr. Raj Dhariwal (supra) |
(e) |
Shabbir Allauddin Latiwala (supra) |
(f) |
Suresh Chand Bansal (supra) |
(g) |
Shankerlal Nebhumal Uttamchandani (supra) |
(h) |
Radhey Shyam (supra) |
(i) |
Shyamlal Soni (supra) |
(j) |
Navnit Lal Pochalal (supra) |
13. The learned Departmental Representative, on the other hand, relied upon the order of the Assessing Officer, CIT (A) as well as Judicial Member of the ITAT. He referred to the order of the CIT (A) and pointed out the statement of the various persons which were recorded during the course of survey and which were discussed at length by the CIT (A). He stated that the assessee purchased the agricultural land in the name of the employees and ultimately this agricultural land was got transferred in the name of the company at a much lesser rate than the actual purchase price. That, when the incriminating documents found at the time of survey, which were also fortified by the statement of the employees, were confronted to the Director of the assessee-company, the Director admitted to have purchased the land at a higher rate than what is recorded in the books of account. The Director of the assessee-company has made the calculation of actual purchase price paid, purchase price recorded in the books of account and the difference. Such detailed statement prepared by the Director of the company at the time of survey itself was annexed to the statement of Shri Sunil Bansal, Director of the assessee-company. He, therefore, submitted that the contention of the learned Counsel that no incriminating material was found and the surrender was made at the instance of the Revenue Authorities is factually incorrect. He further stated that it is a clear case of concealment of income as well as furnishing of inaccurate particulars of income. Therefore, the levy of penalty u/s 271(l)(c) by the Assessing Officer was rightly sustained by the CIT (A) and the learned Judicial Member, and the same should be upheld.
14. In the rejoinder, the learned Counsel for the assessee relied upon the decision of Hon'ble Apex Court in the case of CIT v. Suresh Chandra Mittal [2001] 251 ITR 9/119 Taxman 433 and stated that merely because the assessee surrendered the income cannot be sufficient to levy the penalty u/s 271(l)(c),
15. I have carefully considered the arguments of both the sides and perused the material placed before me. The first contention of the learned Counsel for the assessee was that the disclosure was made at the behest of the survey party and there was no evidence of actual payment of on-money by the assessee for purchase of land. I find this contention of the learned Counsel for the assessee to be factually incorrect. During the course of survey, large number of documents were found. The statements of the employees of the assessee were recorded. The employees of the assessee, namely Shri Ramkishore Jat and Shri Nagesh Bhaskar, have clearly admitted that the land was purchased at much higher rate than the rate mentioned in the Registry. The documentary evidence found from the assessee's premises also establishes this fact and when the statement of the employees as well as those documents were confronted to Shri Sunil Bansal, Director of the assessee-company, he not only admitted to have made the cash payment over and above the value recorded in the sale deed but also agreed to surrender the same. Shri Sunil Bansal, the Director of the assessee-company, in consultation with other Directors and with reference to the documents found from the assessee's premises, prepared a detailed chart giving the purchase price of land by the assessee, the village where the land is situated, khasra number, area of the land, name of the seller, date of purchase, purchase value, the value recorded in the books of account and the cash amount paid on such purchases. The detailed chart is annexed to the statement of Shri Sunil Bansal. In his statement, Shri Sunil Bansal summarized the figures of unrecorded investment for Assessment Years 2006-07, 2007-08 and 2008-09 and declared the same as undisclosed income as under:—
| Assessment Year 2006-07 |
Rs. 3,02,33,672/- |
Assessment Year 2007-08 |
Rs. 5,57,72,494/- |
Assessment Year 2008-09 |
Rs. 5,68,10,943/- |
Total |
Rs. 14,28,17,110/- |
16. The statement given during the course of survey was never retracted by the assessee. On the other hand, the assessee itself has furnished the revised return during the course of assessment proceedings for Assessment Year 2006-07, offering the additional income of Rs. 3,02,33,672/-. During the assessment proceedings, the assessee never claimed that the statement given by the assessee during the course of survey was at the behest of survey party and there was no actual payment of on-money for purchase of land. On the other hand, the statement given during the course of survey is duly supported by the chart prepared and signed by the assessee-company's Director and ultimately the revised return have been filed disclosing the income as per the said chart. Against the assessment order, the assessee filed appeal before the CIT (A) in which also the assessee never claimed that it did not have the income of Rs. 3,02,33,672/- and the disclosure is made due to coercion or pressure of the Income-tax Department. On the other hand, the learned Counsel for the assessee admitted before the CIT (A) that the assessee made the payment over and above what has been recorded in the books of account for purchase of land. This income has been voluntarily offered by the assessee and therefore, it should be accepted as business income and not as income from undisclosed sources. The contention of the learned Counsel before the CIT (A), has been recorded by him in his order at paragraph 2, which reads as under:—
"The contention of the A/R is that the appellant is engaged in the activity of real estate. The purchase of land by the appellant is its trading activity. The assessee company has voluntarily accepted to have incurred an amount of Rs. 3,02,33,672/- on purchase of these land over and above what has been recorded in books of account. As such this amount needs to be considered as business income instead of income from undisclosed source u/s 69B.
The contention of the A/R is considered. The AO has not pointed out whether any other activity other than sale and purchase of land has been carried out by the appellant. The dispute is not about the quantum but only of head of income. As the only activity of the company is trading in real estate, the income offered by the appellant may be business income only. The AO is therefore directed to tax the income u/s 69B under the head Business Income. The ground of appeal is decided in favour of appellant."
17. The above order of the CIT (A) is accepted by the assessee as well as Revenue and therefore, it has become final. Even during penalty proceedings, the assessee never contended before the Assessing Officer that the surrender made by the assessee by filing the revised return was under coercion or pressure from the Revenue Authorities. It would be evident from the assessee's reply dated 02.03.2010 furnished before the Assessing Officer during the penalty proceedings which is reproduced by the Assessing Officer in paragraph 2 of the penalty order, which reads as under:—
"In the above case, it is submitted that:
| (i) |
Considering the income offered of Rs. 3023672.00 as unexplained investment u/s 69B by then learned ITO have been rejected by the Hon'ble CIT (A) Jaipur in his order dt. 16.10.2008 |
(ii) |
Then learned Assessing Officer's observation that the revised return filed by the assessee was not voluntary but as a result of survey operation, has also been rejected by the Hon'ble CIT (A) Jaipur. |
After order of the learned CIT (A), Jaipur there is no concealed income and no penalty can be imposed. You are therefore requested to kindly drop the penalty proceedings."
18. In view of the above facts, I have no hesitation to hold that the contention of the learned Counsel before me that the disclosure of the additional income was made at the behest of the survey party and there was no evidence of actual payment of on-money by the assessee on purchase of land, is not only factually incorrect but contrary to the record and assessee's own assertion before the lower authorities.
19. The next contention of the learned Counsel for the assessee before me was that the addition is based on the basis of statement recorded during the course of survey. Such statement recorded at the time of survey has no evidentiary value in the light of decision of Hon'ble Apex Court in the case of S. Khader Khan Son (supra). I find that in the above mentioned case, the Hon'ble Apex Court dismissed the Revenue's appeal with the observation "In view of the concurrent findings of fact, this civil appeal is dismissed". Thus, their Lordships of Hon'ble Apex Court upheld the order of the Hon'ble Madras High Court passed in the case of CIT v. S. Khader Khan Son [2008] 300 ITR 157. Therefore, it would be relevant to look at the facts of the case and the finding of the Hon'ble Madras High Court. The fact of the case was that a survey was conducted in the premises of the assessee-firm. One of the partners in his sworn statement offered an additional income of Rs. 20 lakhs for the assessment year 2001-02 and Rs. 30 lakhs for the assessment year 2002-03. However, the said statement was retracted by the assessee through its letter dated August 3, 2001, stating that the partner from whom a statement was recorded during the survey operation under section 133A, was new to the management and he could not answer the enquiries made and as such, he agreed to an ad hoc addition. The Assessing Officer based on the admissions made by the assessee, which were directly relatable to the defects noticed during the action under section 133A of the Act, recomputed the assessment. The order was set aside by the Commissioner of Income-tax (Appeals) and this order was upheld by the Tribunal. On appeal to the High Court, the Hon'ble High Court dismissed the Revenue's appeal. Their Lordships of the Madras High Court, after discussing the legal position at length, at page No.166 of the report, i.e., 300 ITR, summarized the principles which is to be followed while considering the statement recorded during the course of survey and the same is reproduced herein below:—
'14. From the foregoing discussion, the following principles can be culled out:
| (i) |
An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of account do not correctly disclose the correct state of facts, vide decision of the apex Court in Pullangode Rubber Produce Co. Ltd. v.State of Kerala (supra); |
(ii) |
In contradistinction to the power under s. 133A, s. 132(4) of the IT Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. On the other hand, whatever statement is recorded under s. 133A of the IT Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews & Sons v. CIT (supra); |
(iii) |
The expression "such other materials or information as are available with the AO" contained in s. 158BB of the IT Act, 1961, would (not) include the materials gathered during the survey operation under s. 133A, vide CIT v. G.K. Senniappan (supra); |
(iv) |
The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this Court in Tax Case (Appeal) No. 2620 of 2006 (between CIT v. S. Ajit Kumar); |
(v) |
Finally, the word "may" used in s. 133A(3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act", as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under s. 133A are not conclusive piece of evidence by itself' |
20. From the above, it is evident that their Lordships of the Madras High Court have not ruled that the statement recorded during the course of survey is totally irrelevant. On the other hand, their Lordships in paragraph 1 itself mentioned that an admission is extremely important piece of evidence but it cannot be said to be conclusive. In paragraph 5 again, while concluding the principles laid down, their Lordships reiterated that the statement recorded during the course of survey u/s 133A are not conclusive piece of evidence by itself. That, in the above mentioned case the partner of the assessee-firm, soon after making the statement, has retracted it by filing a letter before the Revenue Authorities. Considering the totality of the facts, the CIT (A) had deleted the additions. The ITAT has upheld the order of the CIT (A) and their Lordships of the Madras High Court held that the addition based purely upon the statement of the partner, which was retracted by the assessee, cannot be the sole basis for making the addition.
21. That the facts in the case of the assessee are altogether different. Here, the statement is based upon the detailed working of undisclosed income. The chart of working of the undisclosed income is annexed to the statement of the Director of the assessee-company. The assessee never retracted such statement. On the other hand, a revised return was filed disclosing the additional income as declared in the statement. In the quantum appeal before the CIT (A), the assessee claimed such additional income disclosed in the revised return to be assessed as business income and not as unexplained investment in the property. In view of these facts, the decision of Hon'ble Apex Court in the case of S. Khader Khan Son (supra) would be of no help to the assessee.
22. The next contention of the learned Counsel for the assessee was that during the year under consideration, there was effectively no sale of any plot or bungalow and therefore, there was no occasion of earning of any undisclosed income to the assessee. From the facts of the case as discussed above earlier, it is undisputed that the assessee filed a revised return during the course of assessment proceedings, admitting undisclosed income of more than Rs. 3 crores. The Assessing Officer assessed such income as undisclosed investment u/s 69B. The assessee took the matter in appeal before the CIT (A) and claimed the additional income to be assessed as business income. Therefore, in this case, now under appeal before me, there is no dispute of existence of additional income which is to be finally assessed after the order of the CIT (A). Therefore, the contention of the Id. Counsel for the assessee that there was no occasion of earning of any undisclosed income to the assessee-company during the year under consideration is irrelevant.
23. The next contention of the learned Counsel for the assessee was that the addition during the year under consideration is taxed neutrally because on account of investment of additional income in the stock-in-trade, the value of stock-in-trade has increased and the assessee will get the set off of the same in the year in which such stock-in-trade is sold; therefore, the levy of penalty u/s 271(l)(c) is not justified. I am unable to agree with this contention of the learned Counsel for the assessee. Under the scheme of Income-tax Act, the income-tax is levied in respect of income of each year. Admittedly, for the year under consideration, in the return of income originally filed, the assessee had declared the income of Rs. 1,87,697/-. During the course of survey, various documents relating to purchase of land were found on the basis of which it was detected that the actual purchase price paid by the assessee was much more than the purchase price recorded in the sale deed. The assessee made the surrender of additional income by filing the revised return. The Assessing Officer assessed the additional income declared by the assessee as unexplained investment u/s 69B. On appeal, the CIT (A), accepting the assessee's contention, directed the Assessing Officer to tax the additional income of Rs. 3,02,33,672/- under the head 'business income'. Thus, it is conclusively established that in the return of income for the year under consideration the assessee has not disclosed the correct income. The business income to the extent of Rs. 3,02,33,672/- remained undisclosed as per return of income. Whether such undisclosed income is investment in the stock and whether the assessee will get the set off of the same in the year in which such stock would be sold would not be the relevant consideration so far as the levy of penalty u/s 271(l)(c) is concerned. For the purpose of levy of penalty u/s 271(l)(c), it has to be seen whether for the year under consideration the assessee concealed the particulars of income or furnished inaccurate particulars of income. What was the application of such undisclosed income and what would be the consequence of such application of income in the subsequent year would not be the relevant consideration.
24. The next contention of the learned Counsel of the assessee was that in the assessment order the Assessing Officer has initiated the penalty for concealment of income as well as for furnishing of inaccurate particulars of income. The notice issued u/s 271(l)(c) also included both the charges. However, penalty is levied for furnishing of inaccurate particulars of income and the same is illegal. In support of this contention, he relied upon the decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory(supra).
25. I have carefully considered the arguments of learned Counsel for the assessee and have gone through the decision of Hon'ble Karnataka High Court. The learned Counsel, at the time of hearing before me, has specifically referred to paragraph 60 and 61 of the report, i.e., Manjunatha Cotton & Ginning Factory, which reads as under:
"60. Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law. It is needless to point out satisfaction of the existence of the grounds mentioned in Section 271(l)(c) when it is a sine qua non for initiation or proceedings, the penalty proceedings should be confined only to those grounds and the said grounds have to be specifically stated so that the assessee would have the opportunity to meet those grounds. After, he places his version and tries to substantiate his claim, if at all, penalty is to be imposed, it should be imposed only on the grounds on which he is called upon to answer. It is not open to the authority, at the time of imposing penalty to impose penalty on the grounds other than what assessee was called upon to meet. Otherwise though the initiation of penalty proceedings may be valid and legal, the final order imposing penalty would offend principles of natural justice and cannot be sustained. Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable.
61. The Assessing Officer is empowered under the Act to initiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under clause (c). Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujrat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 Taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind."
26. From the above, it is evident that their Lordships of Hon'ble Karnataka High Court have noticed that the penalty u/s 271(l)(c) can be levied for two specific offences; one is concealing the particulars of income and second for furnishing of inaccurate particulars of income. The Assessing Officer cannot initiate penalty proceedings for one offence and then finally levy the penalty for another offence, because in such circumstance the assessee will not get proper opportunity to explain the charge levelled against him. Their Lordships have also noticed that the facts of some cases may attract both the offences and in some cases there may be overlapping of these two offences, but in such cases the initiation of penalty proceedings should also be for both the offences. In my opinion, under the facts of the assessee's case, it may attract both the offences,i.e., the concealment of income as well as furnishing of inaccurate particulars of income and therefore, the Assessing Officer rightly initiated the penalty proceedings for both the offences. In the penalty notice also both the offences were mentioned and therefore, the assessee got the adequate opportunity to explain its stand with regard to both the offences. Thereafter, the Assessing Officer levied the penalty only for furnishing of inaccurate particulars of income. Since the initiation of penalty proceedings included both the offences and the show-cause notice also included both the offences, the assessee got the adequate opportunity to explain both the offences and therefore, there is no illegality in levying the penalty with reference to only one offence. It is not a case where the notice was issued for one offence and the penalty is levied for another offence. Therefore, in my opinion, the above decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory (supra) does not support the case of the assessee.
27. The next contention of the learned Counsel for the assessee was that the Assessing Officer has levied the penalty for furnishing of inaccurate particulars of income and at the same time invoked the Explanation (1) to section 271(l)(c). Explanation (1) to Section 271(l)(c) would be applicable only for concealment of income and not for furnishing of inaccurate particulars of income. In support of this contention, the learned Counsel for the assessee relied upon the decision of ITAT, Indore Bench in the case of Nepa Ltd. (supra). The relevant finding of the ITAT, Indore Bench reads as under:—
'8. Explanation (1) is a deeming provision and it is applicable when an amount is added or disallowed in computation of total income is deemed to represent the income in respect of which particulars have been concealed. Explanation (1) is not applicable in this case of furnishing inaccurate particulars of income. In this case, we noted that the Assessing Officer has initiated penalty proceedings u/s 271(l)(c) without pointing out whether the assessee has concealed the particulars of income. The penalty ultimately was levied on the assessee for furnishing inaccurate particulars by observing that the case of the assessee is covered by the Explanation to Section 271(1)(c). We may observe that in the case of furnishing inaccurate particulars of income, the onus is on the Revenue to, prove that the assessee had furnished the inaccurate particulars, while in the case of concealment of particulars of income, where the Explanation (1) is applicable, the onus is on the assessee to prove that he has not concealed the particulars of income. As is apparent from the Explanation, this explanation clearly states where in respect of any facts material to the computation of total income of any person such person fails to offer an explanation or offers explanation which is found by the Assessing Officer to be false or such person offers an explanation, which he is not able to substantiate or fails to prove that such explanation is bona fide and with all the facts relating to the same and material to the computation of his total income have been disclosed by him. This is not denied that the particulars of provisions of doubtful debts have duly been shown by the assessee and debited in the audited profit and loss account. It is also not denied that the assessee has submitted the explanation in reply to show cause notice issued by the Assessing Officer. Even though the Assessing Officer, in our opinion, failed to discharge his onus as he was not sure at the initiation of penalty u/s 271(1)(c) for which specific charge penalty has been initiated by the Assessing Officer. Even while levying the penalty also, the Assessing Officer simply relied on the Explanation to Section 271(1)(c) even though he levied the penalty for furnishing the inaccurate particulars of income. This is apparent from the provisions of Section 271(1)(c) that explanation of Section 271(1)(c) is not applicable in case inaccurate particulars are furnished. Therefore, in our opinion, the basis of levy of penalty itself is not correct. In this regard, we rely on the decision of Hon'ble Gujarat High Court in the case of New Sorathia Engineering Co. v. CIT(2006) 282 ITR 642 (Guj), in which it was held (Head Note):-"It is incumbent upon the Assessing Officer to state whether penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee."'
28. From the above, it is clear that in the above mentioned case the Assessing Officer has initiated the penalty proceedings u/s 271(l)(c) without pointing out the offence under which assessee is liable to be penalized. While in the case of the assessee, the penalty proceedings have been initiated, both for concealment of income and for furnishing of inaccurate particulars of income. In the above mentioned case before the ITAT Indore Bench, the penalty has been levied in respect of provision of doubtful debts which have been duly shown by the assessee and debited in the audited profit and loss account. While in the case of the assessee, in the original return of income, the assessee disclosed total income of Rs. 1,87,697/-. During the course of survey, there was detection of undisclosed income and its investment in the purchase of agricultural land. After such detection, the assessee filed the revised return disclosing additional income of Rs. 3,02,33,672/-. Thus, it was a clear case where the particulars of income furnished by the assessee in the original return were incorrect. On the other hand, in the case of ITAT Indore Bench, all the relevant facts were duly disclosed in the original return, i.e., the provision for bad and doubtful debt. It was only a legal dispute whether the provision for bad and doubtful debt is an allowable deduction or not. Therefore, the facts of the case under consideration before me are altogether different than the facts before the ITAT, Indore Bench.
29. I have carefully perused the penalty order at page Nos 1 & 2, wherein the Assessing Officer has discussed the facts of the case, the assessee's written submission, and thereafter at page No.3, the Assessing Officer has discussed the provisions of Section 271(l)(c), Explanation (1) and then his conclusion for levying the penalty u/s 271(l)(c) was as under:—
". . . in this case assessee company was engaged in undisclosed investment in purchase of agricultural land wherein the real transaction was recorded at a lesser value in the regular books of account. The Directors of the Company admitted the same. Further, during course of survey the fact was proved that assessee had concealed the correct particulars of income by not showing correct position of stock in books and as such assessee has shown lesser business profit which was detected by the department. Hence, assessee company furnished of inaccurate particulars of income by disclosing lesser business income which leads to attract penal provisions by virtue of section 271(l)(c).
In view of totality of the facts and keeping in view the provisions of section 271(l)(c) as well as submission of the assessee, the assessee is found guilty of furnishing of inaccurate particulars of income to the extent of Rs. 3,02,33,672/- within the meaning of sec. 271(l)(c) and, therefore, penalty u/s 271(l)(c) is imposed on the concealed income as per working given below. . . . "
30. From the above, it is evident that after discussing the legal provision, including Explanation (1), the Assessing Officer discussed the facts of the case and then levied penalty for furnishing of inaccurate particulars of income. However, in the conclusion, the Assessing Officer has not mentioned the levy of penalty under Explanation (1); though in the earlier part of his order, the Assessing Officer has discussed the main section as well as Explanation (1) thereof and has also mentioned the circumstances under which theExplanation (1) would be applicable. But, thereafter, he discussed the facts of the assessee's case pointed out how there was a furnishing of inaccurate particulars of income by the assessee and then levied the penalty for furnishing of inaccurate particulars of income. In the concluding paragraph, when the penalty has been finally levied, the Assessing Officer has not relied upon the Explanation (1) to Section 271(l)(c). Therefore, the contention of the learned Counsel for the assessee that Assessing Officer levied penalty for furnishing of inaccurate particulars of income under Explanation (1) is contrary to the facts on record. The Assessing Officer has not invoked Explanation (1). Therefore, this contention of the learned Counsel for the assessee is also rejected.
31. It was also contended by the learned Counsel for the assessee that the levy of penalty u/s 271(l)(c) is barred by limitation, because the Assessing Officer has initiated the penalty proceeding vide notice u/s 271(l)(c) dated 31.03.2008 and finally, the penalty is imposed on 26.03.2010. He contended that the provision of Section 275(l)(a) would not be applicable because in the appeal filed before the CIT (A), the assessee has not disputed the quantum of addition made by the Assessing Officer and therefore, the period of limitation would be covered by Section 275(l)(c), by which the penalty is to be levied within six months from the end of the month in which action for imposition of penalty is initiated. Section 275(1) reads as under:—
"275 [(1)] No order imposing a penalty under this Chapter shall be passed -
[(a) in a case where the relevant assessment or other order is the subject matter of an appeal to the Commissioner (Appeals) under section 246 [or section 246A] or an appeal to the Appellate Tribunal under Section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, whichever period expires later:
[Provided that in a case where the relevant assessment or other order is the subject matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 dispsing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, whichever is later;]
(b) in a case where the relevant assessment or other order is the subject matter of revision under section 263 [or section 264], after the expiry of six months from the end of the month in which such order of revision is passed;
(c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.]"
32. From the above, it is evident that as per Section 275(1)(a), the Assessing Officer can levy the penalty within six months from the end of the month in which order of the CIT (A) is received provided the assessment order was subject matter of the appeal to the CIT (A) u/s 246/246A of the Income-tax Act. As per proviso to clause (a) which is inserted by Finance Act, 2003 with effect from 01.06.2003, where the relevant appellate order is passed by the CIT (A) on or after the first day of June 2003, then the Assessing Officer can levy the penalty within one year from the end of the financial year in which the order of the CIT (A) is received by the Commissioner. Admittedly, the order of the CIT (A) is dated 16.10.2008. The exact date of the receipt of this order of the CIT (A) in the office of the CIT is not furnished before me, but it has to be after the date of the order of the CIT (A). Therefore, presuming the service of the order within reasonable time, the same would be received in the office of the CIT (A) during the Financial Year 2008-09 and one year from the end of this financial year ended on 31.03.2010. The penalty order is dated 26.03.2010. Thus, the same is within the period of one year from the end of the financial year in which the order of the First Appellate Authority was received in the office of the CIT. The contention of the learned Counsel for the assessee was that sub-section (a) to Section 275(1) is not applicable on the ground that in the appeal filed by the assessee, it has not disputed the addition made by the Assessing Officer. However, the condition for applicability of clause (a) to Section 275(1) is filing of the appeal against the relevant assessment order before the CIT (A) u/s 246/246A. What is in dispute before the CIT (A) is not relevant. Admittedly, the assessee had filed the appeal against the relevant assessment order before the CIT (A) u/s 246 of the Income-tax Act. Therefore, I reject the contention of the learned Counsel for the assessee that the clause (a) to section 275(1) was not applicable.
33. At the end, it was contended by the learned Counsel that merely because the assessee surrendered the income he cannot be liable for penalty u/s 271(l)(c). In support of this, he relied upon the decision of Hon'ble Apex Court in the case of Suresh Chandra Mittal (supra). We find that the order of the Hon'ble Apex Court is a brief order, which reads as under:—
"We have read the order of the High Court (see [2000] 241 ITR 124) and the statement of case. Given the facts and circumstances, we do not think that any interference with the order of the High Court is called for."
34. Therefore, it would be relevant to refer the decision of Hon'ble Madhya Pradesh High Court so as to gather the facts of the case. In the said case, the assessee's returns were filed originally showing a meager income. Later on, in pursuance of a notice issued under section 148 of the Income-tax Act, 1961, revised returns were filed showing higher income to purchase peace of mind and avoid vexations litigation. The revised returns were accepted and regularized by the Revenue. On initiation of penalty proceedings under section 271(l)(c), the Tribunal held that penalty could not be levied because there was no concealment. On a reference. . . .
"Held, that the assessment was made by the Revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and the 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. Accordingly, no penalty could be levied for concealment."
35. However, the facts of the assessee's case are altogether different. In the case under consideration before me, as already noted, there was survey at the assessee's premises. During the course of survey, various incriminating documents, including the purchase deed for purchase of agricultural land, were found. The statements of the employees were recorded. On the basis of those documents and statements, it was established that the assessee was recording the purchase of the land at a much lesser value than the actual purchase price. When these facts were confronted to the Director of the Company, he admitted to have made the cash payment for purchase of agricultural land which was not recorded in the books of account. He, with the help of those documents, prepared a detailed chart and worked out the un-recorded investment in the land by the assessee-company in three assessment years. The revised return was filed to include those unexplained investment in the purchase of agricultural land. Therefore, it is a case where the revised return is filed by the assessee after the detection of understatement of purchase price by the survey authorities. It is not a case where the revised return was furnished by the assessee voluntarily to buy peace with the Income-tax Department. In view of above, in my opinion, the above decision of Hon'ble Apex Court would not be applicable to the facts of the assessee's case.
36. After considering the arguments of both the sides and the facts of the case, I agree with the finding of the Assessing Officer in the penalty order that the assessee did not disclose the correct purchase consideration of the agricultural land. The purchase price of the land was recorded at a lesser value in the regular books of account. These facts were detected by the Revenue as a result of survey at the assessee's premises. During the course of survey, the Director of the Company admitted these facts. Thus, it is a clear case where the assessee furnished incorrect particulars in the original return of income with regard to purchase price of agricultural land, value of closing stock as well as the business income. The revised return modifying the figure of purchase value of agricultural land, value of closing stock as well as business income was furnished only after the detection of these discrepancies during the course of survey. In view of above, I have no hesitation to hold that on the facts and circumstances of the case, learned Judicial Member rightly proposed to sustain the penalty imposed u/s 271(l)(c).
37. Before I part with the matter, I would like to mention that the learned Counsel for the assessee while concluding his arguments has relied upon large number of decisions which are noted in paragraph 12 above in this order. I have gone through all those decisions and I find that the facts in all those cases are altogether different and therefore, they would not support the case of the assessee. The learned Counsel for the assessee has also not pointed out how those decisions would be applicable to the facts of the assessee's case. Since the facts of all those cases are altogether different, for the sake of brevity they are not being discussed in details in this order.
38. The matter will now go back to the Division Bench for passing the order as per majority view.
ORDER
R.P. Tolani, Judicial Member - Since there was a difference of opinion between the learned Members, constituting a Division Bench of I.T.A.T., Jaipur and the Hon'ble President, I.T.A.T. nominated Shri G.D. Agrawal, Vice President as Third Member. The Hon'ble Third Member vide order dated 11.09.2015 concurred with the findings of the Hon'ble Judicial Member and held as under:—
"After considering the arguments of both the sides and the facts of the case, I agree with the finding of the Assessing Officer in the penalty order that the assessee did not disclose the correct purchase consideration of the agricultural land. The purchase price of the land was recorded at a lesser value in the regular books of account. These facts were detected by the Revenue as a result of survey at the assessee's premises. During the course of survey, the Director of the Company admitted these facts. Thus, it is a clear case where the assessee furnished incorrect particulars in the original return of income with regard to purchase price of agricultural land, value of closing stock as well as the business income. The revised return modifying the figure of purchase value of agricultural land, value of closing stock as well as business income was furnished only after the detection of these discrepancies during the course of survey. In view of above, I have no hesitation to hold that on the facts and circumstances of the case, learned Judicial Member rightly proposed to sustain the penalty imposed u/s 271(l)(c).
Before I part with the matter, I would like to mention that the learned Counsel for the assessee while concluding his arguments has relied upon large number of decisions which are noted in paragraph 12 above in this order. I have gone through all those decisions and I find that the facts in all those cases are altogether different and therefore, they would not support the case of the assessee. The learned Counsel for the assessee has also not pointed out how those decisions would be applicable to the facts of the assessee's case. Since the facts of all those cases are altogether different, for the sake of brevity they are not being discussed in details in this order.
The matter will now go back to the Division Bench for passing the order as per majority view."
2. Therefore, in accordance with majority view, the appeal of the assessee is dismissed.