Sri Surya Prakash Bagla Kolkata v. Dcit Cen Cir Vii Kolkata Kolkata

In The Income Tax Appellate Tribunal D Bench Kolkata Before Honble Shri M Balaganesh Am Shri S S Viswanethra Ravi Jm I T A No 398 Kol 201 4 Assessment Year 2010 1 1 Shri Surya Prakash Bagla Vs Dcit Cen Tral Circle Vii Kolkata Pan Aebpb 4558 F Appellant Respondent For The Appellant Shri J P Khaitan Sr Advocate Shri Sujay Sen For The Respondent Shri A K Tiwari Cit Date Of Hearing 09 11 2017 Date Of Pronouncement 13 12 2017 Order Per M Balaganesh Am 1 This Appeal By The Assessee Arises Out Of The O Rder Of The Learned Commissioner Of Income Tax Appeals Central I Kolkata In Short Th E Ld Cit A In Appeal No 184 Cc Vii Cit A C I 13 14 Dated 17 02 2014 Aga Inst The Order Passed By The Dcit Central Circle Vii Kolkata In Short The Ld Ao Under Section 271 1 C Of The Income Tax Act 1961 In Short The Act Dated 02 07 2013 For The Assessment Year 2010 11 2 The Only Issue To Be Decided In This Appeal Is A S To Whether The Ld Cita Was Justified In Upholding The Levy Of Penalty U S 271 1 C Of The Act In The Facts And Circumstances Of The Case 2 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 2 3 The Brief Facts Of This Issue Is That The Assesse E Filed His Original Return Of Income For The Asst Year 2010 11 U S 139 1 Of The Act On 15 9 2010 Declaring Total Income Of Rs 2 74 57 560 Later He Filed A Revised Return Of Income On 27 12 2010 Declaring Revised Total Income Of Rs 10 15 47 560 The Main Source S Of Income Of The Assessee Was Under The Heads Income From House Property Capital Gains And Other Sources Like Dividend And Interest From Bank Etc He Was One O F The Working Partners Of A Partnership Firm M S Saltee Estate Which Was Subjec Ted To Tax Audit U S 44 Ab Of The Act During The Year As Such The Due Date Of Filing T He Return Of Income For The Assessee Being A Partner In A Firm U S 139 1 Of The Act Was 30 9 2010 Hence The Revised Return Filed U S 139 5 Of The Act On 27 12 2010 Wa S A Valid Revised Return A Search Was Conducted U S 132 Of The Act On 25 2 2009 And S Ubsequent Dates At The Residence Of The Assessee And Also At The Business Premises Of H Is Group Companies Pursuant To The Search Search Assessments For The Asst Years 2003 04 To 2008 09 Were Completed U S 143 3 153 A Of The Act On 31 12 2010 Whereas The Regular Assessment For The Asst Year 2009 10 Was Completed U S 143 3 Of The Act On 31 12 2010 Number Of Additions Were Made In Those Assessments Which Were Agitated By The Assessee Before The Ld Cita And The Said Appeals Were Disposed Off By A Consolidated Order Dated 6 8 2012 For The Asst Years 2003 04 To 2009 10 In A Ppeal Nos 236 To 242 Cc Vii Cit A C I Kol 2010 11 By The Ld Cita Granting Certain Relief 3 1 The Assessment Under Dispute Pertains To Asst Year 2010 11 Wherein The Revised Return Filed By The Assessee Within The Due Date Pr Escribed U S 139 5 Of The Act Was Duly Considered By The Ld Ao And Assessment For The Asst Year 2010 11 Was Completed U S 143 3 Of The Act On 31 3 2013 Determining Tota L Income At Rs 10 15 62 560 As Against The Revised Returned Income Of Rs 10 15 47 560 The Difference Represents Only Denial Of Deduction U S 80 D Of The Act To The Tune Of Rs 15 000 The Primary Facts Involved In This Issue Are As Under 3 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 3 3 2 M S Saltee Infotech Pvt Ltd Was Holding 100 S Hares In M S Graphitech India Ltd A Company Incorporated Under The Companies Act 195 6 One Mr Surya Prakash Bagla Assessee Herein Is Its Director M S Graphitech I Ndia Ltd Has Long Term Lease On A Piece Of Land Measuring About 60 Cottahs And There Was No Legal Impediment To Construct Commercial Building On The Said Land There Was A Memorandum Of Understanding Mou On 4 8 2005 Between Saltee Infotech Pvt Ltd R Epresented By Its Director Mr Surya Prakash Bagla And One Mr Vivek Kathotia Wit H A Recital That The Shareholders Of M S Graphitech India Ltd Went To Transfer Their 100 Holding In M S Graphitech India Ltd To Mr Vivek Kathotia For A Consideration Of Rs 16 51 00 000 In The Said Mou There Was A Recital To The Effect That All The Orig Inal Share Certificates And Transfer Deed Shall Be Deposited With Mr B K Jain Advocate In Trust And The Same Shall Be Handed Over To The Transferee On Making Their Full And Fin Al Payment Of The Consideration Amount Further Vide Clause 4 In Liabilities And Responsibilities Of The Transferor It Was Stipulated That The Transferor At His Cost And Effo Rts Shall Be Responsible To Get Building Plans Which Shall Be Prepared By The Transferee Sa Nctioned From The Concerned Authorities And Also Obtain All Other Permissions W Hich Shall Include Clearances From The Departments Of Fire Airport Authority Pollution C Ontrol Board Water Sewerage Etc As May Be Essential And Necessary To Enable The Tra Nsferee To Construct And Complete The Building On The Said Land Without Any Problem Fur Ther Vide Clauses 13 And 14 Thereof It Was Stipulated That The Transferor Has Assured The Transferee That It Shall Get The Plan Sanctioned Prepared As Per Prevailing Rules And Re Gulation Of The Competent Authority Of Different Govt Department Of Govt Of West Bengal Central Govt Bidhannagar Municipality Have Sanctioned The Plan Up To A Heigh T Of 75 Metres And Or More Subject To Noc From Airport Authority Of India Transferor Has Assured To Get The Plan Sanctioned Upto Maximum Height Of 75 Metres Mention Ed Hereinbefore If The Transferor Fails To Get Plan Sanctioned Then The Transferor Shall Refund The Entire Amount Received From Transferee Within One Month T He Transferor Shall At His Cost And Responsibility Get The Lease Deed Modified From Urban Development Ud 4 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 4 Department To The Extent That The Land Can Be Used For Construction Of Building For Use Of Information Technology Industry Vide Clause 4 Of C Onsideration Part It Is Stated That The Consideration Amount Shall Be Paid To The Share Holders Of Graphitech And This Will Be Valid Discharge Of Payment 3 2 1 Out Of The Sale Consideration Rs 16 51 Cr A Sum Of Rs 6 00 90 000 Was Paid In Ay 2006 07 And Rs 1 40 00 000 Was Paid In Ay 2007 08 Towards Cash Portion Subsequently Transferor Pleaded That The Municipal Ity Refused To Sanction The Plan Prepared By The Transferee For Its I T Complex And Ultimately The Transferee Decided To Abandon The Project And Accordingly About The 1 St Week Of February 2007 The Parties Mutually Agreed To Rescind The Contract And To Rele Ase Each Other From The Obligation There Under At That Time Large Amounts Remained O Utstanding To The Transferor And Others In Relation To The Sale And Purchase Of Shar Es 3 2 2 M S Saltee Infotech Filed Title Suit No 21 6 Of 2007 In The Court Of The Civil Judge Senior Division Iind Court At Barasat Seek Ing A Decree Declaring The Memorandum Dated 04 08 2005 As Terminated With Mutu Al Consent Letters Dated 01 11 2007 And 19 11 2007 As Void Delivery Up And Cancellation Of Such Letters And A Decree For Perpetual Injunction Restraining The Tra Nsferee From Demanding Delivery Of Possession Of The Shares And From Giving Effect To The Mou Dated 04 08 2005 In The Said Suit It Was Pleaded That Pursuant To The Mou T He Original Share Certificates Were Deposited With Advocate Shri B K Jain And Subsequ Ently All The Steps Were Taken To See That The Terms Of Mou Are Implemented But Inspite Of Various Corrections Made From Time To Time To The Building Plan Got Prepared By The Transferee The Same Could Not Be Accomplished And Bidhannagar Municipality Refused T O Approve The Plan As Such The Transferee Ultimately Decided To Abandon The Projec T And With Mutual Consent The Contract Was Rescinded But To The Surprise Of The T Ransferor A Letter Was Received From Mr B K Jain Advocate Wherein The Rescinding Of Contract Was Disputed And Delivery Of Shares Was Insisted In Those Circumstances Th E Declaratory Suit Came To Be Filed 5 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 5 3 2 3 The Transferee Also Filed Another Suit In T S No 222 Of 2007 Before The Civil Judge Sr Division 2 Nd Court At Barasat Disputing The Recession Of Contra Ct And Praying For Specific Performance Thereof Accordin G To The Transferee After Receipt Of Substantial Amounts The Transferor With Oblique Mo Tive Alleged That There Is Rescinding Of Contract With Mutual Consent According To Them Only A Sum Of Rs 2 59 10 000 Was Due And A Sum Of Rs 13 91 90 000 Was Paid From T Ime To Time As Such The Transferee Demanded The Delivery Of Shares According To The T Ransferee By Incurring Huge Expenditure They Got The Building Plan Prepared And Cooperated With The Transferor To Get Them Approved By The Municipality And According To Them Such Building Plans Were Almost Approved And At The Final Stage Of Receiving The Amounts And Issue Formal Sanction Letter However It Was Effectively Thwar Ted By The Transferor Only To Concoct The Story Of Non Approval Of Plans By The Municipal Ity He Further Alleged That For The First Time By Way Of Letter Dated 22 11 2007 Mr B K Jain Advocate Informed The Transferee That The Transferor Deposited Only The S Hare Certificates But No Share Transfer Deeds In These Circumstances Specific Performanc E Of Contract Was Prayed For 3 2 4 While The Matter Stood Thus There Was A Sea Rch And Seizure Operation At The Premises Of Saltee Group Of Companies On 25 2 2009 By The Income Tax Department U S 132 Of The Act Including The Residential And Busine Ss Premises Of The Assessee Subsequently The Parties Entered Into A Settlement Pursuant To Which T S No 216 Of 2007 Was Dismissed And The Other Ts No 222 Of 2007 Was Decreed Under The Terms Of Settlement The Transferor Agreed To Transfer The 100 Shares Except 30 Shares To The Transferee Handover All The Papers Books Etc The Transferee Has To Pay Rs 2 59 10 000 To The Transferor Whereas The Tr Ansferor Had To Pay Rs 2 50 00 000 To The Transferee Towards Cost Of Litigation Compensa Tion Etc As Such After Adjustment Of The Amounts The Transferee Paid A Sum Of Rs 9 10 000 To The Transferor Etc This Was Implemented By Both The Parties Pursuant To The Dec Ree 6 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 6 3 2 5 Now The Questions Are When The Transfer Of Shares Took Place And What Is The Actual Sale Consideration For The Purpose Of Reckon Ing Capital Gains According To Cbdt Circular No 704 Dated 28 04 1995 With Referen Ce To Section 2 42 A Of The Act The Board In Case Of Transactions Take Place Direc Tly Between The Parties And Not Through Stock Exchanges The Date Of Contract For Sale As D Eclared By The Parties Shall Be Treated As The Date Of Transfer Provided It Is Followed Up By Actual Delivery Of Shares And The Transfer Deeds In View Of This Circular The Date Of Contract For Sale Assumes Importance According To The Revenue The Date Of Contract For Sale Is The Date Of Mou Whereas According To The Assessee The Date Of Subsequent C Ompromise By Way Of Which The Condition As To The Approvals By Different Authorit Ies Was Got Rid Of Further According To The Revenue The Sale Consideration Is The Entire R S 16 51 Cr Whereas The Assessee Claims It To Be Only 14 01 Cr As Reduced In The Com Promise Decree By Way Of Adjustment 3 3 The Assssee Offered Capital Gains For Sale Of Shares In Asst Year 2010 11 On The Basis Of Transfer Of Shares That Happened Pursuant To Decree And Revised Mou Dated 25 5 2009 In The Original Return Filed On 15 9 2010 The Assessee Also Offered The Sums Of Rs 7 40 90 000 In The Revised Return Filed On 27 12 2010 For The Asst Year 2010 11 Under The Head Income From Other Sources Being The Cash Component Received On Sale Of Shares But During The Course Of Assessment Proceedings The Assessee Pleaded Before The Ld Ao To Treat The Sums Of Rs 7 40 90 000 As Part Of Share Sale Consideration And Assess Capital Gains Accordingly This Request Was Rejected By The Ld Ao The Ld Ao Ultimately Framed The Search Assessm Ents For The Asst Years 2006 07 And 2007 08 By Adding The Sums Of Rs 6 00 90 000 And Rs 1 40 00 000 Respectively And Capital Gains In Asst Year 2010 11 As Disclosed By The Assessee By Taking The Consideration At Rs 16 51 Crores And Assessed The Sums Of Rs 7 40 90 000 As Income From Other Sources For The Asst Year 2010 11 As Dis Closed In The Revised Return By The Assessee 7 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 7 3 4 The Ld Cita In His Order Appreciated The Conte Ntions Of The Assessee And Deleted The Additions Of Rs 6 00 90 000 And Rs 1 40 00 000 Made By The Ld Ao In Asst Years 2006 07 And 2007 08 In The Search Assessments Frame D And Also Held That The Same Are To Be Treated Only As Advance Received By The Asses See Against Share Sale Consideration And Further Held That Capital Gains Arose Only In A Sst Year 2010 11 As Per The Compromise Decree Entered Into And Revised Mou Date D 25 5 2009 3 5 Arguments Of The Revenue In Search Assessments In The Search Assessments For The Asst Years 2006 0 7 And 2007 08 It Was The Contention Of The Revenue That The Parties Intended The Transf Er Of A Particular Number Of Shares Of A Particular Company For A Particular Consideration A Nd Ultimately The Same Thing Happened Even After The Court Recording The Comprom Ise Decree As Such For All Practical Purposes What Was Enforced Is Only The Mou Dated 4 8 2005 As Such The Date Of Contract For Sale Is 4 8 2005 Only According To Re Venue What Is Specifically Enforced By Way Of Compromise Decree Is The Mou Dated 04 08 2005 And All The Terms Of Compromise Reached By The Parties Are Nothing But R Eaffirmation Of The Terms Of Mou Dated 04 08 2005 In Respect Of Consideration The Revenues Argument Is That All Along The Sale Consideration Remained Same Because Of Th E Intervening Litigation The Transferor Was Fastened With The Liability To Pay C Ompensation To The Transferee At Rs 2 50 00 000 And It Is Only By Way Of Adjustmen T The Amount Payable Had Come Down But As A Matter Of Fact There Was No Reductio N In The Sale Consideration The Revenue Contended In The Search Assessments That Th E Parties Never Intended To Reduce The Sale Price Of The Shares But There Is An Agreem Ent To Pay Compensation Of A Sum Of Rs 2 5 Cr Which Liability Does Not Arise With Refe Rence To The Price Of Shares As Stated In The Mou But Arose Due To The Intervening Litigatio N Since The Transfer Could Not Have Materialised In The Absence Of Payment Of Such Comp Ensation It Forms Part Of Sale Consideration According To Revenue In Search Asse Ssments Sale Consideration 8 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 8 Remained The Same Although The Transaction But The Liability Of The Transferor For Compensation Only Intervened Hence It Was Contend Ed By The Revenue That The Date Of Mou Is The Date Of Contract For Sale And The Sale C Onsideration Is The Entire Amount Of Rs 16 51 00 000 On This Premise The Revenue In The Search Assessments Argued That The Sale Consideration Of Shares Of The Assessee Is Rs 16 51 Cr And Following The Cbdt Circular 704 Dated 28 04 1995 Such Date I E The Date Of Mou Dt 4 8 2005 Will Be Treated As The Date Of Transfer Since It Is Only Pursuant To The Terms Of The Mou The Delivery Took Place 3 6 The Assessee Contended That The Mou Dated 04 08 2005 Came To An End With Rescinding Thereof By The Parties With Mutual Conse Nt And Also When It Was Substituted By A De Novo Contract By Way Of Compromise Decree It Was Further Submitted That As Per The Agreement In Compromise Decree Rs 2 5 Cr Was Adjustable Against The Balance Sale Consideration Of Rs 2 591 Cr As Such To The Extent Of Rs 2 5 Cr The Sale Consideration Was Reduced And This Amount Alone Has To Be Reckoned And In The Year Of Compromise Decree Reliance Was Placed On The Deci Sion Reported In Commissioner Of Wealth Tax Vs Babulal Jatia Decd 137 Itr 540 Cal Wherein It Was Held That When Shares In The Joint Stock Company Were The Sub Ject Matter Of Transfer The Provisions Of The Transfer Of Property Act Were No T Conclusive And It Should Be Seen Whether There Was Transfer In Accordance With The Provisions Of Companies Act And The Transfer Of The Interest In The Shares From The Transferor To The Transferee Was Independent Of The Requirement Of It S Registration For The Purposes Of The Companies Act Further Reliance Was Placed On A Decision In The Ca Se Of Cit Vs Bhaskar Mitter Reported In 1994 73 Taxman 437 Cal At Para 8 At P 442 Referred In Maynak Poddar Huf Vs Wealth Tax Officer 2003 262 Itr 0633 In This Decision This Court Observed 9 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 9 An Assessee Is Liable To Pay Tax Only Upon Such Income As Can Be In Law Included In His Total Income And Which Can He Lawfu Lly Assessed Under The Act The Law Empowers The Ito To Assess The Income Of An Assessee According To Law And Determine The Tax Payable Thereon In Doing So He Cannot Assess An Assessee On An Amount Which Is Not Taxable In Law Even If The Same Is Shown By An Assessee There Is No Estoppel By Conduct Against L Aw Nor Is There Any Waiver Of The Legal Right As Much As The Legal Liability To B E Assessed Otherwise Than According To The Mandate Of The Law Sic It Is Al Ways Open To An Assessee To Take The Plea That The Figure Though Shown In His Retur N Of Total Income Is Not Taxable In Law 3 7 Arguments Of The Assessee In The Search Assess Ments The Assessee Rebutted The Circular Relied Upon By T He Ld Ao By Pointing Out That Even As Per The Boards Circular Taxability Of Shares Aris E Only In The Year Of Transfer Of Share Certificates The Assessee Relied On The Considera Tion Part Of The Mou Dated 4 8 2005 At Clause 5 Wherein It Has Been Categorically Me Ntioned That Share Transfer Deed Were To Be Deposited With Mr B K Jain Advocate In T Rust And Were To Be Transferred To Transferee I E Vivek Kathotia Only On Full And F Inal Payment Of Consideration The Assessee Further Relied On The Letter Written By Hi M To The Solicitor Mr B K Jain Which Shows That The Solicitor Was Holding Such Share Cer Tificates Only In Trust In Terms Of The Mou Dt 4 8 2005 And The Shares Were Never Transfer Red To Mr Vivek Kathotia And Or His Assignees Associates As Mentioned In Mou The Assessee Further Relied On The Roc Returns For Asst Years 2006 07 2007 08 As Well A S For Asst Year 2010 11 And Contended That Since The Share Certificates Have Be En Transferred By The Assessee And Recorded In The Financial Year 2009 10 Relevant To Asst Year 2010 11 The Fact So Contended By The Revenue Is Not Correct And In Term S Of The Circular No 204 Itself The Transfer Had Happened Only In Financial Year 2009 1 0 Relevant To Asst Year 2010 11 The Assessee Further Contended That The Value Of Co Nsideration At Rs 14 01 00 000 Is In Terms Of Direction Of The Court Only 10 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 10 4 Hence It Could Be Seen From The Above Facts Tha T The Assessee Had Treated The Cash Component Received On Sale Of Shares Of Graphitech Ltd From Mr Vivek Kathotia In Asst Year 2006 07 To The Tune Of Rs 6 00 90 000 A Nd In Asst Year 2007 08 To The Tune Of Rs 1 40 00 000 As Advance From Sale Of Shares And The Same Was Offered During The Asst Year 2010 11 Under The Head Income From Other Sources In The Revised Return Filed On 27 12 2010 Which Was Well Within The Time Limit Prescribed U S 139 5 Of The Act The Assessee Based On The Final Settlement Re Ached Between The Parties As Decreed By The Court Dated 25 5 2009 Concluded That The Ca Pital Gains On Transfer Of Shares Of Graphitech Ltd Is To Be Offered Only In Asst Year 2 010 11 But Due To Confusion Prevailing In This Regard As To The Year In Which T He Said Capital Gain Is To Be Offered The Assessee Offered The Same In Respect Of The Cheque Component Alone In The Original Return Of Income Filed On 15 9 2010 For The Asst Ye Ar 2010 11 However The Assessee Had Duly Paid The Entire Taxes Due On The Said Capi Tal Gains Transaction Including Cash Component Portion For The Asst Year 2010 11 As Und Er 31 3 2010 50 00 000 In The Form Of Advance T Ax 23 7 2010 1 00 00 000 In The Form Of Part Of Se Lf Assessment Tax 14 9 2010 78 58 600 In The Form Of Self Asse Ssment Tax From The Above It Could Be Seen That Eventhough T He Assessee Did Not Offer The Cash Component Of Rs 7 40 90 000 In The Capital G Ains On Sale Of Shares Of Graphitech Ltd In The Original Return Filed On 15 9 2010 The Entire Taxes Due Thereon On The Capital Gains Were Paid Before The D Ate Of Filing The Original Return Of Income 4 1 The Ld Ao Pursuant To The Search Conducted On The Assessee And His Group On 25 2 2009 Proceeded To Process The Search Assessme Nts For The Asst Years 2003 04 To 11 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 11 2008 09 2009 10 Being The Year Of Search Issu Ed Notice U S 142 1 Of The Act Dated 7 7 2010 Wherein He Proposed To Add The Cash Compo Nent Of Sale Consideration Of Sale Of Shares Of Graphitech Ltd In The Asst Years 2006 07 2007 08 In The Sums Of Rs 6 00 90 000 And Rs 1 40 00 000 Respectively The Assessee Having Arrived At The Conscious Conclusion That The Capital Gains On Sale Of Shares Of Graphitech Ltd Got Crystallized Pursuant To Final Settlement Reached B Etween The Parties On 25 5 2009 And That The Share Certificates And Share Transfer Deed S Were Duly Executed And Transferred Only On That Date The Capital Gains On The Same Wo Uld Arise Only In Asst Year 2010 11 Admittedly The Assessee Had Admitted Only The Cheq Ue Portion Of Share Sale Consideration In The Original Return Of Income File D On 15 9 2010 The Cash Component Of Share Sale Consideration Of Rs 7 40 90 000 Was Offered By The Assessee In The Revised Return Of Income Filed On 27 12 2010 Even Though The Entire Taxes Due Thereon Were Paid Prior To 15 9 2010 As Detailed Above A Dmittedly The Assessee Had Offered The Cash Component Of Share Sale Consideration In The R Evised Return Filed On 27 12 2010 Under The Head Income From Other Sources In The S Um Of Rs 7 40 90 000 During The Course Of Assessment Proceedings It Was Pleaded By The Assessee That The Said Cash Component Be Treated As Share Sale Consideration On Sale Of Shares Of Graphitech Ltd And Hence The Same Should Only Go To Increase The S Ale Consideration Of Shares And Consequential Increase In Capital Gains Liability But This Was Rejected By The Ld Ao 4 2 Action Of The Ld Ao In Asst Year 2010 11 A The Ld Ao Accepted The Revised Return Filed On 2 7 12 2010 Wherein The Capital Gains For Cheque Portion Was Offered And Other Sources Fo R Cash Portion Was Offered By The Assessee On Sale Of Shares Of Graphitech Ltd B The Ld Ao Made An Addition Of Only Rs 15 000 T Owards Denial Of Deduction U S 80 D Of The Act In The Regular Assessment Framed U S 143 3 Of The Act For The Asst Year 2010 11 Determining Total Income At Rs 10 15 62 560 In Other Words The Revised 12 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 12 Return Filed By The Assessee On 27 12 2010 Was Acce Pted By The Ld Ao Subject To The Disallowance Of Rs 15 000 U S 80 D Of The Act C The Ld Ao Observed That Since The Assessee Had C Ome Forward To Offer The Cash Component Of Share Sale Consideration Only In The R Evised Return Filed On 27 12 2010 And That The Proceedings For The Search Assessments Had Been Initiated By Issuance Of Notice U S 142 1 Of The Act Dated 7 7 2010 Itself The A Ssessee In Order To Escape From The Taxation At Higher Rate And For The Purpose Of Savi Ngs On Interest And Immunity From Penalty Had Come Forward To Offer The Cash Compone Nt Of Share Sale Consideration Of Rs 7 40 90 000 In The Revised Return Hence There W As Malafide On The Part Of The Assessee By Not Offering The Same In The Original Return Fil Ed For The Asst Year 2010 11 On 15 9 2010 And Accordingly Initiated Penalty Proceed Ings U S 271 1 C Of The Act For The Same D The Ld Ao Thereafter Proceeded To Levy Penalty U S 271 1 C Of The Act In The Sum Of Rs 2 28 93 810 On The Cash Component Of Rs 7 40 9 0 000 On The Following Reasons I That The Cash Component Of The Transaction Came To The Notice Of The Department In Consequence Of The Search Operation C Onducted On 25 2 2009 Ii The Department Was Thus In Possession Of The M Aterial Indicating Cash Component In The Transaction Of Shares Iii Since The Department Is Already In Possession Of The Incriminating Material Suggesting Undisclosed Receipts The Subsequent Adm Ission By The Assessee Could Not Be Considered As Voluntary Disclosure Moreove R The Assessee Had Failed To Disclose The Cash Component Of The Share Sale Consi Deration In The Original Return Filed U S 139 1 Of The Act On 15 9 2010 For The As St Year 2010 11 13 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 13 5 This Action Of The Ld Ao In Levying Penalty U S 271 1 C Of The Act Was Upheld By The Ld Cita Aggrieved The Assessee Is In Appeal Before Us On The Following Grounds 1 For That In View Of The Facts And Circumstances Of The Case The Ld Cit A Is Wholly Wrong And Unjustified In Arbitrarily Confirm Ing The Penalty Of Rs 2 28 93 810 Imposed By The Ao U S 271 1 C Of Th E Act 100 Of The Tax Sought To Evade On The Alleged Concealed Income Of Rs 7 40 90 000 Without At All Considering And Appreciating The Facts Elaborat Ely Explained Before Him That There Was Neither Any Concealment Of Income Nor Fur Nishing Of Any Inaccurate Particulars Of Income Nor There Was Any Evasion Of Tax As Wrongly Alleged On Total Misinterpretation Misconception Of The Stat Utory Provision Both The Orders Of The Ao And The Ld Cit A Impos Ing And Confirming The Penalty U S 271 1 C Being Unreasonable Uncal Led For And Bad In Law Are Liable To Be Quashed Cancelled 2 For That In View Of The Facts And Circumstances Of The Case The Ld Cit A Is Wholly Wrong And Unjustified In Confirming The Abov E Penalty U S 271 1 C Without Considering The Basic Fact That The Total I Ncome For The A Y 2010 11 Declared In The Valid Return Was Rs 10 15 47 560 Whereas The Total Income Assessed U S 143 3 Dated 31 03 2013 Was Rs 10 15 47 560 Causing Difference Of Rs 15 000 Only Owing To Disallowance Of Rs 1 5 000 U S 80 D In Respect Of Which The Ld Cit A In His Order No 172 Dated 14 02 2014 In Quantum Appeal Directed The Ao To Verify And Allow The Orders Of The Ao And The Ld Cit A Holding The Said Sum Of Rs 7 40 90 000 As Undisclosed Concealed Income On Wh Ich Tax Was Sought To Be Evaded Are Wholly Unreasonable Uncalled For And Ba D In Law 3 For That In View Of The Facts And Circumstances Of The Case The Ld Cit A Is Wholly Wrong And Unjustified In Confirming The Abov E Penalty U S 271 1 C Without At All Considering Or Otherwise Overlooking His Own Conscious Decision Clearly Given In His Earlier Consolidated Order Nos 236 242 Cc Vii Cit A C I Kol 10 11 Dated 06 08 2012 For The A Ys 2003 04 To 2009 10 That The Sum Of Rs 7 40 90 000 Received In Cash As Advance Earne St Money In The F Ys 2005 06 2006 07 Against The Proposed Sale Of 9 30 000 Sha Res Of M S Graphitech India Ltd Was A Part Of The Sale Consideration Of Rs 14 01 00 000 Assessable To Capital Gain Only In The A Y 2010 11 By Virtue Of The Honble Courts Order 14 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 14 Dated 25 05 2009 Following Which Those Shares Were Actually Effectively Sold In May 2009 A Y 2010 11 After Finalization Of Th E Deal 4 For That In View Of The Facts And Circumstances Of The Case The Ld Cit A Is Wholly Wrong And Unjustified In Confirming The Abov E Penalty U S 271 1 C Without At All Considering Or Otherwise Overlooking His Own Conscious Decision Clearly Given In His Recent Order No 172 Cc Vii Ci T A C I 13 14 Dated 14 02 2012 That The Cash Component Of Rs 7 40 90 0 00 Received As Advance Earnest Money In Earlier Years Was Part Of The Sale Consideration Of Rs 14 01 00 000 Assessable Only Under The Head Capi Tal Gain In A Y 2010 11 As Was Already Decided In The Aforesaid Consolidate D Order Nos 236 242 Dated 06 08 2012 5 For That In View Of The Facts And Circumstances Of The Case The Ld Cit A Is Wholly Wrong And Unjustified In Confirming The Abov E Penalty U S 271 1 C Without Considering The Basic Fact That The Income Of Rs 7 40 90 000 Representing The Advance Earnest Money Received Ea Rlier Out Of The Total Revised Sale Consideration Of Rs 14 01 00 000 Against Th E Sale Of Said Shares In May 2009 Was Duly Disclosed Declared In The Revised Return For The A Y 2010 11 Voluntarily Validly Filed U S 139 5 On 27 12 201 0 After The Original Return Was Filed U S 139 1 On 15 09 2010 Within The Due Date And Furthermore The Tax On The Entire Capital Gain On Such Sale Which Includes The Said Sum Of Rs 7 40 90 000 Was Paid In Full Even Before The Due Date Filing Th E Return U S 139 1 6 For That Your Petitioner Craves The Right To Put Additional Grounds And Or To Alter Amend Modify The Present Grounds Before Or On The Date Of Hearing 6 We Have Heard The Rival Submissions And Perused The Materials Available On Record At The Outset The Ld Ar Did Not Press The Aspect O F Defective Show Cause Notice Issued U S 274 Read With Section 271 1 C Of The Act And Hence No Finding Is Given On The Same In This Order Accordingly The Issue Of Levy Of Penalty Is Adjudicated Herein On Merits Of The Case The Facts Stated Hereinabove Have Been Adjudicated By This Tribunal Very Elaborately While Deciding The Quantum Appeals For The Search Assessment Years 2006 07 To 2009 10 And 2010 11 In It Ss A Nos 34 To 37 Kol 2012 And Ita No 857 Kol 2014 Respectively Dated 5 10 2016 Wherein I T Was Finally Held As Under 15 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 15 A The Share Transfer Deeds Of Graphitech Ltd Were Executed By The Transferor Assessee Herein In Favour Of The Transferee Mr Vivek Katho Tia Pursuant To The Final Compromise Settlement Reached On 25 5 2009 As Decre Ed By The Honble Court Hence The Capital Gains Liability Arose Only In Asst Year 2010 11 And Not In Asst Years 2006 07 And 2007 08 As Contended By The Revenue B The Cash Component Of Rs 7 40 90 000 Cannot Be Taxed In Asst Years 2006 07 And 2007 08 As No Transfer Of Shares Had Taken Place Du Ring Those Years C The Cash Component Of Rs 7 40 90 000 Is Part O F The Share Sale Consideration Only And The Same Should Not Be Assessed As Income From Other Sources For The Asst Year 2010 11 Even Though The Same Was Offered To Tax By The Assessee Under That Head In The Revised Return Filed On 27 12 2010 In Other Word S It Was Held By This Tribunal That The Cash Component Of Rs 7 40 90 000 Should Be Treate D As Share Sale Consideration Only And Only Capital Gains Is To Be Computed Thereon I Ncidentally It Would Be Pertinent To Mention That This Fact Has Been Accepted By The Ld Cita Also In His Appellate Order Dated 17 2 2014 For The Asst Year 2010 11 While Confirmin G The Levy Of Penalty U S 271 1 C Of The Act 6 1 Now Coming To The Validity Of Levy Of Penalty On This Cash Component Of Rs 740 90 Lacs U S 271 1 C Of The Act For The Asst Year 20 10 11 We Find That It Is Not In Dispute That The Assessee Had Received The Cash Component O F The Subject Mentioned Transaction Amounting To Rs 7 40 90 000 As Per The Mou Dated 4 8 2005 In Asst Years 2006 07 And 2007 08 Which Was Not Disclosed By Him In His Regular Books Of Accounts On The Face Of It It Might Look Undisclosed Receipt But In The Search Proceedings It Surfaced That The Assessee Was In Receipt Of The Cash Compo Nent Of Rs 740 90 Lacs Only Towards The Share Sale Consideration The Said Receipt Can Not Be Taxed Treated Separately Under Any Other Head Other Than Capital Gains We Hold That The Character Of The Receipt Does 16 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 16 Not Change Pursuant To The Search Infact The Sear Ch Proceedings Had Rather Sanctified The Nature And Character Of Such Receipt To Be Part Of Share Sale Consideration It Is Also Not In Dispute That The Said Cash Component Has Bee N Received By The Assessee In Two Parts As Under In Asst Year 2006 07 6 00 90 000 In Asst Year 2007 08 1 40 00 000 6 2 It Is Not In Dispute That No Proceedings Were Initiated By The Revenue For The Asst Year 2010 11 I E The Year Under Appeal To Prove T Hat There Was Concealment In The Return Of Income For The Asst Year 2010 11 The M Ost Crucial Fact Which Could Not Be Brushed Aside Or Swept Under The Carpet Is That The Assessee Was Conscious Of The Fact That He Has To Offer The Capital Gains On Sale Of S Hares Of Graphitech Ltd In Asst Year 2010 11 Accordingly He Offered The Same In The O Riginal Return Of Income Filed On 15 9 2010 The Taxes Paid On The Cash Component Of Rs 740 90 Lacs Are As Under 31 3 2010 50 00 000 In The Form Of Advance T Ax 23 7 2010 1 00 00 000 In The Form Of Part Of Se Lf Assessment Tax 29 9 2010 78 93 811 In The Form Of Self Asse Ssment Tax 2 28 93 811 7 40 90 000 30 9 2 28 93 811 Hence The Very Fact Of Payment Of Taxes For The Cas H Component Also In The Capital Gains Goes To Prove That The Assessee Had No Intention To Conceal The Same Infact We Find That The Assessee Had Paid Taxes At The Rate Of 30 90 A S Against 20 60 Which Is The Rate Applicable For Long Term Capital Gains This Cle Arly Proves The Fact That The Assessee Had Some Confusion In His Mind With Regard To The C Ash Component Of Share Sale Consideration With Regard To The Head Of Income To Be Offered But Never Had Any Intention To Conceal The Same For The Asst Year 201 0 11 These Facts Prove The Bonafide Conduct Of The Assessee Beyond Any Doubt We Are Not Inclined To Accept The Arguments Of The Revenue That The Assessee Came Forward To Of Fer This Cash Portion Of Rs 740 90 17 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 17 Lacs Only After The Issuance Of Notices U S 142 1 Of The Act For The Search Assessments Admittedly The Said Notices U S 142 1 Dated 7 7 2 010 And 14 12 2010 Were Issued For The Asst Years 2003 04 To 2009 10 And Not For T He Asst Year 2010 11 Moreover Even In The Said Notice The Revenue Was Of The View That The Cash Component And The Cheque Portion Of Share Sale Consideration Should Be Taxed Only In Asst Years 2006 07 And 2007 08 Hence It Could Be Seen That T He Revenue Had Actually Changed Its Stand While Framing The Regular Assessment For The Asst Year 2010 11 U S 143 3 Of The Act By Making Double Addition For Capital Gains I E Once In Asst Years 2006 07 2007 08 And Again In Asst Year 2010 11 We Have Alre Ady Held In The Quantum Appeals In Respect Of The Subject Mentioned Share Sale Transac Tion That Capital Gains On The Same Arises Only In Asst Year 2010 11 Which Has Been D Uly Offered By The Assessee In The Original As Well As In The Revised Return Of Income And Paid The Entire Taxes Thereon As Stated Hereinabove We Also Find That The Ld Ao H Ad Duly Acted On The Revised Return Filed By The Assessee On 27 12 2010 And Completed T He Assessment For The Asst Year 2010 11 U S 143 3 Of The Act By Only Making A Meag Er Addition To The Income By Rs 15 000 Hence There Cannot Be Any Concealment O F Income Or Filing Of Inaccurate Particulars Of Income That Could Be Attributed On T He Part Of The Assessee In Respect Of Cash Component Of Share Sale Consideration Of Rs 74 0 90 Lacs 6 3 The Yet Another Excruciating Fact Which Proves The Doubt In The Mind Of The Assessee Stands Strengthened Is When The Original R Eturn Of Income Was Filed By The Assessee On 15 9 2010 For The Asst Year 2010 11 He Offered The Capital Gains On The Subject Mentioned Share Transaction By Including Th E Cheque Portion Alone But Claimed Credit For Tds To The Tune Of Only Rs 2 00 040 An D Self Assessment Tax Of Rs 78 58 600 Paid On 14 9 2010 He Did Not Take Cre Dit Of Tax Paid In The Sum Of Rs 1 00 00 000 On 23 7 2010 In The Said Original Ret Urn Filed On 15 9 2010 Since The Ld Ao Had Raised The Very Same Issue Of Taxing The Cas H Component In Asst Years 2006 07 And 2007 08 In The Search Assessments For Which No Tices Were Already Issued By The Ld 18 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 18 Ao The Assessee Entertained A Doubt And Belief Tha T In Case If He Loses In Those Two Asst Years And Parallely Offers The Cash Component In As St Year 2010 11 Then It Would Result In Double Taxation Of The Very Same Receipt Of Rs 7 40 90 Lacs These Facts Clearly Prove The Bonafide Belief Entertained By The Assessee Wit H Regard To The Offer Of The Said Sum Of Rs 740 90 Lacs And The Same Cannot Be Doubted With Even The Revenue Had The Same Doubt Of Taxing The Cash Component In Two Different Years While It Is So There Is Nothing Unusual For An Assessee Who Is Not Convers Ant With Income Tax Provisions To Entertain A Doubt Belief With Regard To The Year Of Taxation Of The Subject Mentioned Transaction Hence There Could Be No Penalty On Th E Same U S 271 1 C Of The Act In This Regard The Reliance Placed By The Ld Ar On Th E Decision Of The Honble Jurisdictional High Court In The Case Of Durga Kama L Rice Mills Vs Cit Reported In 2004 265 Itr 25 Cal Is Very Well Founded It Was Held In That Case As Under 2 Mr J P Khaitan Learned Counsel For The Assessee Has Pressed Three Contentions For Our Consideration First The Amount Shown In The O Pening Balance Of The Next Previous Year Can Be Treated To Be An Income For The Next Pr Evious Year Though It Could Be Treated As Income Of The Earlier Previous Year By R Eason Of The Addition Yet The Finding With Regard To The Quantum Proceedings Will Not Con Clusively Determine The Case For The Purpose Of Penalty Proceedings The Court Cannot Re Ly On The Finding In The Quantum Proceedings As A Factor For The Imposing Penalty I T Requires To Be Decided Independent Thereof It Therefore Seems That Two Views Are Po Ssible Viz The Income Could Be That Of The Following Previous Year Or It Could Also Be Tha T Of The Relevant Previous Year When Two Views Are Possible Then Penalty Cannot Be Impos Ed On Account Of Concealment In Respect Of The Relevant Previous Year When The Acco Unt Could Be Disclosed In The Following Previous Year Secondly That This Amount Was Claimed To Be The Amount At The Hands Of The Partners As It Was Shown In The Capita L Accounts Of The Partners At The Same Time The Partners In Their Revised Returns Ha D Shown This Amount In Their Account Such Returns Have Since Been Accepted By The Revenu E Therefore The Income Did Not Belong To The Assessee But To The Partners Though On Identical Grounds Yet The Decision In The Quantum Proceeding Cannot Be Treated To Have Reached Finality For The Purpose Of Penalty Proceedings The Question Has To Be Determi Ned Independent Of The Said Finding And Decided Accordingly Again He Submits When It C Annot Be Conclusively Determined That Whether This Amount Is An Income Of The Assess Ee Or At The Hands Of The Partners Included In Their Capital Account Therefore When Two Views Are Possible No Penalty Could Be Imposed Thirdly This Amount Admittedly H As Been Added As Income Of The Assessee For The Previous Year At The Same Time T His Was Shown In The Return Filed By The Partners As Their Income And Such Returns Have Since Been Accepted The 19 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 19 Department Itself Had Treated The Same Amount Once As Income Of The Assessee And Again As Income At The Hands Of The Partners Unles S The Amount Is Owned By The Assessee In View Of Section 69 A There Cannot Be An Y Question Of Concealment When The Department Itself Had Accepted The Same In Both Way S There Cannot Be Any Conclusive Proof That This Amount Was Owned By The Assessee T Herefore No Penalty Can Be Imposed In Such A Case Underlining Provided By Us 5 We Have Occasion To Hear This Matter At Length It Is An Admitted Proposition In Law That The Finding In The Quantum Proceeding Is Not A Factor For Determining The Question For The Purpose Of Imposing Penalty Such A Questio N Arose For Our Consideration In The Case Of Cit V Bimal Kumar Damani It Reference No 39 Of 1997 Dated 10 2 2003 In The Said Decision We Have Considered A Few Of T He Decisions Operating In The Field And Had So Held This Proposition Has Not Been Disp Uted By Either Of The Learned Counsel Appearing For The Parties We Cannot Look I Nto The Findings Arrived At By The Authorities In The Quantum Proceedings This Questi On Has To Be Decided Independent Of Such Finding If We Do Not Fall Back On The Finding In The Quantum Proceedings Then It Seems On Facts That This Income Was Shown As The O Pening Balance Of The Following Previous Year And It Was Open To The Assessee To Di Sclose The Said Income In The Returns For The Following Previous Year That In Law It Co Uld Be Treated As Income Of The Relevant Previous Year But There Is Nothing To Pre Vent The Assessee To Treat The Income As Income Of The Following Previous Year It Might Have Been A Concealment For The Relevant Previous Year But Whether It Is A Conceal Ment For The Following Previous Year Cannot Be Determined Without A Reference To The Ass Essment For The Following Previous Year Therefore It Appears To Us That Two Views Ar E Possible 11 In The Present Case There Was Nothing To Indicate That The Explanation Was False Or Mala Fide The Learned Tribunal Has Not Arrived At Any Such Conclusion Having Regard To The Facts And Circumstances Of The Case As Was Held In National Textiles Case Supra No Reasonable And Positive Inference Could Be Drawn Because Of The Two Stands Taken By Income Tax Authority In This Case B Y Adding The Amount In The Income Of The Assessee And Again Accepting The Same At The Ha Nds Of The Partners The Income Tax Authority Cannot Fall Back On One And Reject The Ot Her In Ashok Timber Industries Case Supra In A Similar Circumstance It Was Held Tha T It Could Have Been Treated To Be An Income Of The Following Previous Year When It Is Sh Own As The Opening Balance Of That Previous Year Thus Also Two Views Are Possible When Two Views Are Possible And When No Clear And Definite Inference Can Be Drawn In A Penalty Proceeding Penalty Cannot Be Imposed 6 4 Now Let Us Come To The Decision Of The Honble Delhi High Court Relied Upon By The Ld Dr In The Case Of Cit Vs Usha International Ltd Reported In 2012 27 20 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 20 Taxmann Com 227 Del Hc We Find From The Perusal Of The Said Judgement T He Facts And Decision Rendered Thereon Are As Under Facts The Assessee Had Made A Claim For Deduction In Term S Of Section 35 Cca In Its Original Return Which Represented A Donation Purpor Tedly Made To A Trust M However The Claim Was Withdrawn In The Revised Ret Urn Of Income Subsequent To A Survey Conducted By The Department At The Assessee S Premises The Assessing Officer Observed That The Assessee Ha D Filed The Revised Return Of Income Withdrawing The Claim For Deduction As A Res Ult Of Survey Action In The Assessees Premises In The Course Of Which The Cash Book Maintained By The Assessee Was Impounded As It Contained The Entry Made For Th E Donation Which Was Bo Gus As Revealed By A Series Of Searches Conducted By The I Ncome Tax Authorities Under Section 132 In The Premises Of Certain Persons Stat Ed To Be Connected With The Racket Of Making False Claim Under Section 35 Cca In Respec T Of Certain Donations The Assessing Officer Accordingly Disallowed The Cl Aim Thereafter Penalty Was Imposed Of Under Section 27 1 1 C The Commissioner Appeals Deleted The Penalty The Tribunal Upheld The Findings Of The Commissione R Appeals And Based Its Conclusion On An Order Of The Tribunal In The Case Of Deepak Singh Family Huf V Asstt Cit 1994 48 Itd 465 Delhi Which Was Also A Case Where A Claim Of Deduction Was Made Under Section 35 Cca In Respect Of Donation S Made Through V And P In That Case The Tribunal Had Cancelle D The Penalty On The Ground That The Filing Of The Revised Return Before Any Concrete Ev Idence Was Gathered By The Authorities Would Exonerate The Assessee From Any G Uilt The Honble Court Held As Under There Was Concerted Design To Enable Reduction Of T Axable Income The Tribunal Was Not Right In Upholding The Cancell Ation Of The Penalty It Cannot Be Denied That There Were Searches And Investigations Which Resulted In The Income Tax Authorities Unearthing A Concerted Design To En Able The Reduction Of The Taxable Income Of The Assessee By Making Use Of The Provisions 21 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 21 Of Section 35 2 A Section 35 1 Ii And Section 35 Cca The Assessee Made A Donation Of Rs 10 Lakhs To Tru St M By Cheque And Subsequently Got The Cheque Encashed Through A Bogu S Account Opened In The Bank For The Said Purpose It Has Also Been Found T Hat Though The Donation Was Made By A Cheque Which Was C Rossed Account Payee Only The Special Crossing Was Later Changed To A Simple Crossing I E Co The Bank Account Had Been Opened In A Fictitious Na Me Merely For The Purpose Of Misappropriating The Amount Of Rs 10 Lakhs Alle Gedly Donated By The Assessee To The Trust Further Evidence Is Supplied By The Fact That The Entire Amount Of Rs 10 Lakhs Was Withdrawn By Issue Of Fo Ur Self Or Bearer Cheques Finally The Account Was Closed The Above Fact Show That The Purpose For Which The Account Was Opened In The Bank Was Only To Take Away The Amount Of Rs 10 Lak Hs Purportedly Given As A Donation To The Donee Trust In Order To Claim The Relief Under Section 35 Cca Which Would Reduce The Taxable Income Of The Assess Ee The Amount Never Lef T The Coffers Of The Assessee It Also Did Not Reach The Donee Trust It Was Brought Back To The Assessee However A Receipt Had Been F Iled By The Assessee Company Purporting To Be Issued By The Donee Trust Obviously The Genuineness Of The Receipt In Th E Background Of The Facts And Circumstances Was Op En To Serious Doubts Para 13 The Contention That The Assessee Was Also A Victim Of A Fraud Played By Several Persons Acting In Concert Cannot Be Accepted Revised Return Was Not Filed Voluntarily The Further Contention Of The Assessee That The Revised Return Withdrawing The Claim For Deduction Under Section 35 Cca Was Filed Voluntarily And Without Any Prompting Or Provocation From The Income Tax Department Is Not Acceptable The Survey Of The Assessees Premises Under Section 133 A Took Place Two Months Prior To The Date Of Filing The Revised Return The Survey Itself Was A Result Or As A Follow Up Action To The Searches And Other Inquiries Conducted Earlier The Cash Book Of T He Assessee Was Impounded During The Survey The Proceeds Of The Donation Cheque Had Already Been Taken Out Of The Bank Account 22 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 22 Opened In The Name Of C The Account Itself Had Been Closed In The Light Of These Facts The Contention That The Revised Return Was Filed Voluntarily Is Untenable It Was Provoked By The Evidence Collected By The Revenue And The Survey Conducted In The Assessees Premises In Other Words The Revised Return Was Filed By The Assessee Only When It Was Cornered And The Income Tax Authorities Had Collected Material On The Basis Of Which It Could Be Said That The Claim For Deduction Was False Or Bogus The Filing Of The Revised Return Is Thus An Act Of Despair And The Assessee Can Gain Nothing From It Para 16 Subs Equent Conduct Of The Assessee After Filing The Original Return Is Relevant And That Should Be Taken Into Account While Judging The Guilt Of The Assessee It Would However Depend On The Facts And Circumstances Of The Each Case As To Whether The Filing Of T He Revised Return Of Income Would Purge The Assessee Of Any Guilt And Would Avail Him In Penalty Proceedings The Condition Is That The Revised Return Should Have Been Filed Before The Department Discovered Anything Remiss Therein Or Before Any Material Wa S Gathered By The Assessing Officer Which Would Throw Doubts On The Bona Fide Of The Assessee Para 17 The Question Whether A Revised Return Filed By The Assessee Withdrawing A Claim Or Offering Additional Income Was Voluntary Or Not Is Essentially A Question Of Fact To Be Decided In The Light Of The Entire Material Brought On Record And The Facts And Circu Mstances Of Each Case And Particularly Having Regard To The Fact Whether The Revised Return Was Filed By The Assessee When Cornered By The Evidence Or Material Collected By The Revenue Authorities Or Before That Stage Para 19 23 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 23 Both The Commissioner Appeals And The Tribunal Have Not Examined The Facts Of The Present Case In The Manner Expected Of Them The Tribunal Has Merely Based Its Conclusion On Certain Previous Orders Without Any Discussion Of The Facts Of The Present Case The Question Of Concealment Of Income And Whether The Revised Return Was Filed Voluntarily Or Not Is A Question Of Fact To Be Examined And Decided Upon The Facts And Circumstances Of The Each Case And Therefore It Was Not Permissible To The Tribunal To Merely Rely O N Earlier Orders Where This Issue Was Considered And Penalties Were Cancelled It May Be That In Those Cases Also Similar Claims For Deduction Were Involved Nevertheless The Question Of Concealment And The Relevance Of Filing A Revised Return Withdrawing The Claim For Deduction Are All Fact Dependent And Merely Because In One Case It Was Held That There Was No Concealment It Does Not Follow As A Matter Of Law That In All Such Cases Penalty Cannot Be Imposed At Best Those Earlier Cases Could Only Hav E A Persuasive Value The Tribunal Has Committed An Error In Upholding The Order Of The Commissioner Appeals Cancelling The Penalties Without Assigning Any Valid Reason And Without Examining The Facts Para 21 For The Above Reasons The Order Of The Tribunal Is To Be Reversed And It Is To Be Held That Penalty Under Section 271 1 C Was Rightly Imposed Para 22 Hence It Could Be Seen That The Revised Return Was Filed Pursuant To The Survey And There Was Also A Clear Finding In That Case To The Effect That The Donation Made By The Assessee Had Been Encashed At A Later Point Of Time Hence Malafide Intent Was Proved Beyond Doubt In That Case Hence Assessee Had No Other Op Tion But To Withdraw Its Claim Of Deduction Towards Donation Paid Which It Did In The Revised Return Filed Such Revised 24 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 24 Return Filed Was Considered By The Honble Court As Not Filed Voluntarily By The Assessee But In The Instant Case It Could Be Seen From The Aforesaid Facts The Assessee Had Bonafide Doubt And Belief As To In Which Year The C Apital Gains Had To Be Offered Ie In Asst Years 2006 07 2007 08 Or In 2010 11 This C Onfusion Gets Further Strengthened By The Act Of The Ld Ao By Trying To Levy Capital G Ains In Asst Years 2006 07 And 2007 08 In The Search Assessments For Which Show Cause N Otices Were Issued By The Ld Ao Even Though The Cash Component Got Surfaced Only P Ursuant To The Search The Year Of Taxability Of Capital Gains Was In Dispute Between The Assessee And The Revenue Moreover The Assessee Had Offered The Entire Cash Component In The Revised Return And The Assessment For The Asst Year 2010 11 Was Framed By The Ld Ao U S 143 3 Of The Act On 31 3 2013 Accepting The Same There Was Ab Solutely No Concealment Of Income Or Furnishing Of Inaccurate Particulars Of Income B Y The Assessee For The Asst Year 2010 11 For Which Penalty U S 271 1 C Of The Act Ha S Been Levied By The Ld Ao Hence We Hold That The Facts Before The Honble Delhi High C Ourt Are Squarely Distinguishable From The Facts Of The Instant Case Hence The Deci Sion Relied Upon By The Ld Dr Does Not Advance The Case Of The Revenue 6 5 In View Of The Aforesaid Facts And Findings An D By Placing Reliance On The Decision Of The Honble Jurisdictional High Court In The Cas E Of Durga Kamal Rice Mills Supra We Hold That The Revenue Had Not Made Out Any Case For Levying The Penalty U S 271 1 C Of The Act For The Asst Year 2010 11 Accordingly The Grounds Raised By The Assessee Are Allowed 25 Ita No 398 Kol 2014 Surya Prakash Bagla A Yr 2010 11 25 7 In The Result The Appeal Of The Assessee Is All Owed Order Pronounced In The Court On 13 12 2017 Sd Sd S S Viswanethra Ravi M Balaga Nesh Judicial Member Accountant Mem Ber Dated 13 12 2017 Sb Sr Ps Copy Of The Order Forwarded To 1 Shri Surya Prakash Bagla Cd 315 Sector 1 Salt Lake City Kolkata 700064 2 Dcit Cc Vii Aayakar Bhawan Purva 110 Shanti Pally Kolkata 700107 3 C I T 4 C I T Kolkata 5 Cit Dr Kolkata Benches Kolkata True Copy By Order Senior Privat E Secretary Head Of Office D D O Itat Kolkata Benche S