Satish Kumar Mittal, J. - (1.) THIS order shall dispose of I.T.A. Nos. 353, 354, 355 and 356 of 2008. The Revenue has filed these four appeals under Section 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 under Section 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 under Section 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 under Section 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 under Section 148 of the Act. Meanwhile, the Assessing Officer initiated the penalty proceedings against the assessee under Section 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 under Section 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. 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.
(3.) 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 under Section 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 under Section 148 of the Act. Undeniably the notice under Section 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 under Section 148 of the Act. Therefore, the return of income filed by the assessee in pursuance of notice under Section 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 under Section 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 under Section 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 under Section 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 CIT v. : [2001]251ITR9(SC) which, in our view, squarely covers the controversy on hand.;