COMMISSIONER OF INCOME-TAX v. SURESH CHANDRA MITTAL.
IT Ref. No. 64 of 1996, decided on July 20, 1999.
HIGH COURT OF MADHYA PRADESH
S. K. Pawanekar, for the Revenue : J. W. Mahajan, for the Assessee
B. A. KHAN, J. :
The Tribunal has made this reference and has filed statement of the case, for opinion of this Court on the following question :
“Whether, on the facts and in the circumstances of the case, Tribunal was justified in canceling the penalty levied under section 271 (1) (c) of the IT Act, 1961.
2. Scorn of all details, it emerges that assessee first filed his returns for asst. yrs. 1983-84, 1984-85, 1985-86 and 1986-87 showing income ranging between Rs. 10,000 and Rs. 12,000. Later action under section 132 was taken against him which led to reopening of the assessment. A notice under section 148 was served on him, and pursuant thereto he filed revised returns of income for these assessment years showing higher income. Eventually assessment orders were passed and the returns submitted regularised under section 148.
3. Meanwhile AO took penalty proceedings against the assessee under section 271 and levied penalty for all the assessment years rejecting assessee’s contention that he had revised his returns suo motu and had offered additional income to buy peace of mind and to avoid litigation.
4. Assessee took appeal against this to CIT(A) but failed. He then carried the matter to Tribunal and succeeded. The Tribunal held as under :
“Assessee had no chance of carrying through his explanation and AO too did not record any finding as to the acceptability or otherwise of the explanation of the assessee. Under these circumstances proviso to Expln. 1 to section 271 is not attracted. The Revenue did not at all discharge the burden to prove that there was concealment of income by the assessee. It simply rested its conclusion on the act of voluntary surrender by the assessee, which obviously was done in good faith and to buy peace.”
5. Tribunal also placed reliance on Supreme Court judgment in Sir Shadilal Sugar & General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) in support holding as under :
“We find that the assessee admitted that these were the incomes of the assessee but that was not an admission that there was deliberate concealment. From agreeing to additions, it does not follow that the amount agreed to be added was concealed income. There may be a hundred and one reasons for such admission, i.e. when the assessee realises the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of a quasi criminal offence.”
6. We find ourselves in agreement with the view taken by the Tribunal. It is well settled that under section 271(c), initial burden lies on the Revenue to establish that assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers explanation which is found to be false by the assessing authority. However, proviso to Expln. 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide.
7. In the present case, though it is true that assessee had not surrendered at all and that he had done so on the persistent queries made by AO but once the revised assessment was regularised 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 his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, Tribunal was justified in cancelling the penalty levied by AO and affirmed by CIT(A) in the facts and circumstances of the case. This reference is accordingly answered in affirmative holding that Tribunal was justified in doing so.