Satish Kumar Mittal, J.@mdashThis order shall dispose of I.T.A. Nos. 353, 354, 355 and 356 of 2008. The Revenue has filed these four appeals u/s 260A of the Income Tax Act (hereinafter referred to as "the Act") against the common order dated November 24, 2006, passed by the Income Tax Appellate Tribunal, Delhi Bench "I", New Delhi (hereinafter referred to as "the Tribunal") in I. T. A. Nos. 908/Delhi/2005, 909/Delhi/2005, 910/Delhi/2005 and 911/Delhi/2005 in the case of four different assessees for the assessment year 1998-99. In all these appeals, a common issue regarding imposition of penalty u/s 271(1)(c) of the Act has been raised in the case of the assessees, who are of the same family. The facts and circumstances in all these appeals are identical, therefore, we are taking up the facts from I. T. A. No. 353 of 2008.
2. In this case, the assessee derived income from manufacturing of cotton yarn and cotton waste. The assessee filed a return of income on October 30, 1998, which, inter alia, included long-term capital gain on sale of shares amounting to Rs. 29,74,951. The return of income so filed was processed u/s 143(1)(a) of the Act on March 15, 1999. Subsequently, on the basis of an information received from the Deputy Director of Income Tax (Investigation), Gurgaon, that the sale of shares amounting to Rs. 32,40,385, on which capital gain has been declared at Rs. 29,74,951 by the assessee in the original return, was indeed bogus, a notice u/s 148 of the Act was issued on March 31, 2003, on the ground that certain income chargeable to tax had escaped assessment. In response to the said notice, the assessee filed the return of income, wherein income was declared at Rs. 63,39,640, which, inter alia, included the entire amount of receipts on account of sale proceeds of the shares at Rs. 33,10,380 against long-term capital gain of Rs. 29,74,951 declared in the original return of income. This return of income was accompanied by a note in which the assessee submitted that return of income is being voluntarily revised to include the entire amount of receipt along with other amount to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action. Thereafter, the assessment order was framed on December 23, 2003, and the return submitted by the assessee was regularized as it is u/s 148 of the Act. Meanwhile, the Assessing Officer initiated the penalty proceedings against the assessee u/s 271(1)(c) of the Act. The Assessing Officer, after considering the submissions of the assessee, imposed a penalty of Rs. 3,95,930 while holding that the assessee had filed the return on April 30, 2003, after the issuance of notice u/s 148 of the Act. As such, the return was filed after the detection of the concealment of income by the Department and since the assessee had intentionally played fraud to avoid higher rate tax of 30 per cent. as against 20 per cent., applicable on declaration on capital gains, therefore, the assessee was held guilty in terms of Section 271(1)(c) of the Act.
3. Feeling aggrieved against the aforesaid order, the assessee went in appeal before the Commissioner of Income Tax (Appeals), Karnal, who, vide its order dated December 29, 2004, deleted the penalty of Rs. 3,95,930 by accepting the plea of the assessee that the additional income equivalent to entire amount of sale proceeds of shares was declared only to buy peace of mind and to avoid litigation with the Revenue and no material was found by the Assessing Officer during the assessment to show that the stand of the assessee, reflected by the transaction resulting in long-term capital gain was either non-genuine or bogus.
4. Against the aforesaid order of the Commissioner of Income Tax (Appeals), the Revenue filed an appeal before the Tribunal, who, vide its order dated November 24, 2006, dismissed the same, while observing as under:
We have considered the rival submissions carefully. In this case the income that has been held to be concealed by the assessee is the sale proceeds of shares sold by the assessee. Admittedly, the assessee declared the capital gain on sale of such shares in the original return of income. In the subsequent return filed in pursuance of notice u/s 148 of the Act, the assessee revised its claim in this regard and instead of offering for tax the amount of capital gain, he offered the entire sale proceeds as income. Such additional income offered has since been assessed to tax. Therefore, an important fact is that the finally assessed income is the same as income declared by the assessee in the return filed in response to the notice issued u/s 148 of the Act. Undeniably the notice u/s 148 of the Act was issued on March 21, 2003, and the assessee filed its return on April 30, 2003. The Commissioner of Income Tax (Appeals) has recorded a finding that the enquiries conducted by the DDIT (Inv.), Gurgaon, regarding the nature of transaction, sale and purchase of shares carried out through the broker Shri S. S. Mehta enabled the Assessing Officer to hold the capital gain as bogus. But this was not communicated to the assessee at the time of issuance of notice u/s 148 of the Act. Therefore, the return of income filed by the assessee in pursuance of notice u/s 148 of the Act wherein the income from sale of shares offered cannot be said to have been filed after detection of bogus capital gain by the Assessing Officer. The return of income so filed was voluntary and in fact the note appended to such return, which we have extracted in the earlier part of our order, brings out the state of mind of the assessee. The assessee had offered the additional income to buy peace of mind and to avoid litigation. If we assume that at the time of filing of such return the assessee was aware of the investigations carried out by the DDIT (Inv.), Gurgaon, regarding the transaction of sale and purchase of shares, yet there is no evidence on record to suggest that it were the transactions of the assessee which have been found to be bogus. It is pertinent to note that in the assessment proceedings carried out in pursuance of Section 148 of the Act and the subsequent penalty proceedings, the Revenue has only placed reliance on the enquiries conducted by the DDIT (Inv.), Gurgaon. The enquiries are based on the statements of certain share brokers who have alleged to have conceded that certain transactions of sale and purchase of shares carried out through them were mere accommodation entries and were not genuine. Nevertheless there is no material or evidence either brought on record by the Revenue and nor has been referred to by the Income Tax authorities at any stage in the instant case, to show that the statement of the brokers pertain to the share dealings done by the assessee. Merely because an income has been offered by the assessee in response to the notice u/s 148, it cannot be ipso facto inferred that the penal provisions of Section 271(1)(c) are attracted. In order to apply the penal provisions of Section 271(1)(c) it is to be necessarily inferred that there is positive act of concealment of income or furnishing of inaccurate particulars of such income by the assessee. In the instant case, it is clearly brought out by the Commissioner of Income Tax (Appeals) that no chance has been given to the assessee to examine the broker regarding his denials. The Commissioner of Income Tax (Appeals) has also referred to a communication of the DDIT (Inv.) dated March 11, 2003, addressed to the Commissioner of Income Tax, Karnal, wherein it is stated that the feasibility to produce the broker and cross-examination was difficult. Therefore, under such circumstances, it cannot be said that the Department has discharged its burden of proving concealment. The Department had simply rested its conclusion on the act of the assessee of having offered additional income in the return filed in response to notice u/s 148 of the Act. As noted earlier, the additional income so offered by the assessee was done in good faith and, therefore, in our view, penalty u/s 271(1) (c) of the Act could not be levied. At this stage, we may also refer to the judgment of the apex court in the case of
5. The Department has filed the instant appeal against the aforesaid order of the Tribunal raising the following substantial question of law for consideration of this Court:
Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was right in law in confirming the order of the Commissioner of Income Tax (Appeals), deleting the penalty levied u/s 271(1)(c)?
6. We have heard the learned Counsel for the appellant and gone through the impugned order. Learned Counsel for the appellant submitted that in the present case the assessee filed its revised return, including the entire amount of share proceeds, after issuance of the notice u/s 148 of the Act. By filing the revised return, the assessee owned the amount in question as his income and he had earlier filed the original return, concealing the said income by deliberately furnishing inaccurate particulars of that income in the original return. This amounts to admission of the assessee itself that it has earlier furnished inaccurate particulars of income and on its detection by the Department, the assessee offered the concealed income for tax after issuance of the notice u/s 148 of the Act. Learned Counsel submitted that this fact itself proves that the assessee had deliberately furnished inaccurate particulars of his income with the intention to avoid higher rate of tax. Learned Counsel further submitted that the assessee had accepted the order of assessment passed by the Assessing Officer u/s 143(3) of the Act and no further appeal has been filed by it against the said order. Learned Counsel submitted that the explanation submitted by the assessee that he surrendered the entire amount of sale proceeds of shares to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action, cannot be said to be bona fide. The assessee has not discharged its onus in this regard. Therefore, the Commissioner of Income Tax (Appeals) as well as the Tribunal were not justified in deleting the penalty in the present case.
7. After hearing the learned Counsel for the appellant, we do not find any merit in this appeal. Undisputedly, the assessee filed the return of income declaring its total income at Rs. 47,05,230, which, inter alia, included long-term capital gain on sale of shares amounting to Rs. 29,74,951. The return was processed in terms of Section 143(1)(a) of the Act on March 15, 1999. Subsequently, on the basis of some information with regard to sale proceeds of the shares amounting to Rs. 32,40,385 on which the capital gain was declared at Rs. 29,74,951 by the assessee in the original return, a notice u/s 148 of the Act was issued. Pursuant to the said notice, the assessee filed the revised return of income showing higher income. The said return of income was accompanied by a note in which the assessee submitted that he surrendered the entire amount of sale proceeds of shares to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action. Later on, on the basis of revised return, the assessment was framed and the return submitted by the assessee was regularized as it is. During the course of assessment, the aforesaid explanation given by the assessee was neither rejected nor was it held to be mala fide. The Tribunal has recorded a pure finding of fact to the effect that the Revenue has not placed on record any material or evidence to discharge its burden of proving concealment. In the assessment order no such finding was recorded. The Department has simply rested its conclusion on the act of the assessee of having offered additional income in the return filed in response to the notice issued u/s 148 of the Act. The Tribunal has further held that the additional income so offered by the assessee was done in good faith and to buy peace. The Tribunal has relied upon the decision of the apex court in case of
8. In view of the aforesaid discussion, we are of the opinion that no substantial question of law is arising in this appeal. Hence, finding no merits in the appeals, the same are hereby dismissed.
