THE issue before the Bench is - Whether omission of facts
furnished consistently in several assessment years cannot be construed as
innocuous and does warrant impositon of penalty. And the reference is answered
in favour of the Revenue.
Facts of the
case
Assessee is a
firm. Premises of father of the partners of assessee firm were raided on
16.7.1987 and account books pertaining to transactions for the period ranging
from 1978 to
1987 were seized. In September 1987, assessee approached the CIT
with a proposal of settlement offering additional income of Rs.29 lacs for the
AYs 1982-83 to 1986-87. However, when the assessee got information that the
Department was issuing notices u/s 148, assessee worked overtime and filed
revised returns for the year 1982-83 to 1986-87. Notices u/s 148, however, was
served upon the assessee for all these AYs. The notices had also been issued for
initiation of penalty proceedings. Assessee had filed an application u/s 273
seeking waiver of penalty on the ground that it had voluntarily offered
additional amount and further that there was no detection by the revenue and,
thus, no concealment could be attributed to it. Notwithstanding the case of the
assessee having been recommended by the authorities below, plea of the assessee
was not accepted; neither waiver was granted by the CBST nor by CIT (Central) to
whom application had been moved u/s 273(4). Contention of the assessee before HC
was that disclosure had been made by it voluntarily and there was no detection
by the revenue. It was claimed that such disclosure should not have
automatically resulted into initiation of proceedings u/s 148, resulting in
revised assessment and consequent imposition of penalty u/s 271(1)(c). On the
other hand, Revenue's counsel had contended that exercise of power u/s 271(1)(c)
was statutory in nature and income of the assessee having escaped assessment due
to concealment and furnishing of inaccurate particulars in its returns by the
assessee, such power had rightly been exercised by the AO. Recommendations of
the Tribunal were challenged.
Held that,
++ when rival contentions of the
parties are evaluated, it becomes clear that it was not an innocuous omission on
the part of the assessee but was a deliberate act of concealment of income by
furnishing inaccurate particulars in its returns for the assessment years
1982-83 to 1986-87. Had it been a case of single year, plea of the assessee that
it was merely an omission and there was no mens-rea, could possibly be
considered. Furnishing of inaccurate particulars was clearly with a view to
conceal income consecutively for five assessment years. It speaks volumes of
contrivance by the assessee with apparent element of mens-rea. Thus authority
cited by the assessee, reported as Dilip N. Shroff v. JCIT, Mumbai and
another, (2007-TIOL-96-SC-IT), wherein it was held that
for imposition of penalty, an element of mens-rea is needed, does not support
the case of the assessee;
++
looking the matter from another angle, the assessee itself had filed revised
returns giving fresh particulars of its income but it was only when the assessee
was cornered consequent upon search and seizure proceedings and had received
disturbing information of initiation of proceedings u/s 148 being contemplated
against it. Thus, by no means, was it a voluntary exercise of furnishing of
fresh particulars by way of revised returns for all these years. When there is
no explanation offered by the assessee for having furnished inaccurate
particulars of its income (in original assessment framed against it) resulting
in concealment of income which had escaped assessment, authority cited by the
assessee as The CIT, West Bengal v. Anwar Ali, (2002-TIOL-190-SC-IT), holding that there
should be sufficiency of grounds for rejection of assessee's explanation as
false in assessment proceedings, does not come to the rescue of assessee. Thus,
on these facts and circumstances projected by CIT(A), there remains no doubt
that it was not only a case of furnishing of inaccurate particulars in earlier
assessments but is also a case of concealment of income which thus had escaped
assessment. Sequelly, evenwhen strict compliance in terms of CIT, Ahmedabad v.
Reliance Petroproducts Private Limited,(2010-TIOL-21-SC-IT) sought by the assessee is
made of the provisions of Section 271(1)(c) of the Act, it is clearly a case of
concealment of income and by no means can be said to be a disclosure made
voluntarily or bona fide. Considerations for adjudication of an
application/petition under Section 273 of the Act for waiver of penalty and
interest are that stand of the assessee should be of voluntary disclosure in
good faith and that cooperation was extended by it to the income tax authorities
and further that the tax due on the basis of returned income had already been
paid and it was case of genuine hardship. However, in the present case, these
facts are lacking;
++ it
has already been noticed that surrender of additional income of Rs.29.00 lacs
and action of filing of fresh returns by the assessee for the assessment years
1982-83 to 1986-87 was neither a voluntary affair nor was made in good faith
much less by extending cooperation to the authorities. Rather, this entire
exercise by the assessee was preceded by search and seizure operations resulting
in seizure of books of account of the assessee which had positively suggested
concealment of income which had earlier escaped assessment. It has already been
noticed in this context that proceedings for escapement, viz, under Section 148
of the Act had been initiated against the assessee. Chain of events and
concomitant conduct of the assessee is a clear indicator that there was complete
absence of good faith and when the the assessee was placed in a very tight and
rather vulnerable position, only then additional income had been disclosed by
him. Assessee had rather conducted unfairly. In short, had there been no search
and consequent seizure of account books disclosing concealment of huge income,
the assessee was sitting pretty since 1982 and had already got finalized its
assessments for the year 1982-83 to 1986-87 clearly by furnishing inaccurate
particulars and concealing correct and real income. Claim of the assessee that
it was an honest move made by it in good faith while extending cooperation to
the authorities and that it was rather a case of genuine hardship to the
assessee is a farce. When faced with facts, the assessee has not been able to
support and sustain this stand; conduct of the assessee rather is entirely the
other way round and belies the case of claimed good faith and alleged genuine
hardship;
++ in
the said authority, it was a case of voluntary disclosure scheme and the
assessee had made the disclosure prior to the coming into force of the said
scheme and long before the Department could initiate any coercive action in
respect of the concealed income of the assessee. However, the facts of the case
in hand are entirely different as it is not a case of voluntary disclosure
scheme; rather, it is a case of search and seizure and as a sequel thereto,
accounts were sealed and large scale concealment of income was detected.
Circumstances in which revised returns for five years were submitted, when
notice under Section 148 had been issued to the assessee etc., have been dealt
with in detail in earlier part of the judgment. Consequently, the authority
cited by the petitioner does not come to the rescue of the petitioner. In the
present writ petition, no fault in order Annexure P-16 could be successfully
pointed out to make out a case of genuine hardship. Sequelly, the writ petition
having no merit, is dismissed. It is further held that the Tribunal was wrong in
cancelling the penalty imposed on the assessee under Section 271(1)(c) of the
Income Tax Act, 1961. Thus, the references on their own merits and circumstances
are answered in favour of the revenue and against the assessee.
No comments:
Post a Comment